Levy v Harpur
[2004] VSC 241
•2 July 2004
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
No. 6796 of 1999
| FRANK ERNEST WILLIAM LEVY AND OTHERS | Plaintiffs |
| who sue as the Executors of the Estate of PETER THOMAS EVAN RAND deceased | |
| v | |
| PAUL HENRY HARPUR AND OTHERS | Defendants |
| AND BETWEEN | |
| KAI TAK PTY LTD (ACN 005 568 721) as Trustee of the P & GR Harpur Trust | Plaintiff by Counterclaim |
| And | |
| FRANK ERNEST WILLIAM LEVY AND OTHERS | Defendants by Counterclaim |
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JUDGE: | HARPER J | |
WHERE HELD: | MELBOURNE | |
DATE OF HEARING: | 3 & 4 MAY 2004 | |
DATE OF JUDGMENT: | 2 JULY 2004 | |
CASE MAY BE CITED AS: | LEVY & ORS V HARPUR & ORS | |
MEDIUM NEUTRAL CITATION: | [2004] VSC 241 | |
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TRUSTS – Deceased estate – Application for judgment on basis defence unsustainable – Rule 23.01, Supreme Court Rules - Whether a deed of trust allegedly executed by the testator was effective to create a trust – Declaration in deed of future commencement date - Whether intention to create a trust in the future or a present creation of a trust with a postponement of enjoyment of benefits - Absence of evidence of any step by testator to affirm the gift at the date of commencement or otherwise - Effect of subsequent inconsistent Will – Whether testator beneficially owned property at the time of his death – In re Northcliffe [1925] 1 Ch 651 and Kavanaugh v Estate of Dubrowolski (1980) 407 NE 2d 856 applied.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiffs | Mr A J Myers QC with Mr R Rosenberg and Mr J Carney | Sackville Wilks & Co |
| For the Defendants | Mr D R Meagher QC with Mr M Wise | Mills Oakley |
HIS HONOUR:
I have before me an application made by summons dated 4 March 2004. It was filed on behalf of the plaintiffs. By it, the plaintiffs seek orders pursuant to r.23.01(2). That rule is in the following terms:
"23.01 Stay or judgment in proceeding
(2) Where the defence to any claim in a proceeding –
(a) does not disclose an answer; or
(b) is scandalous, frivolous or vexatious –
the court may give judgment in the proceeding generally or in relation to any claim."
The plaintiffs bring the principal proceeding as executors of the estate of Peter Thomas Evan Rand, who died on 7 October 1997. At the time of his death, he was a wealthy man. He was the registered proprietor of real property situated variously in Sorrento, South Yarra, Hawthorn, Richmond and East Melbourne. He also was the owner of certain personal property, including valuable jewellery. On 8 September 1997, he executed a Will probate of which was on 23 March 1999 granted to the plaintiffs as the executors named in it. On 7 October 1997, the plaintiffs informed the first defendant, as was the fact, that Mr Rand had died that day, and that they held his Will.
By letter dated 21 November 1997, a representative of the defendants forwarded to the solicitors for the plaintiffs a copy deed of trust dated 27 August 1997. According to the defendants, the original was executed by the deceased on the day of its date, held by the first defendant until the following day, given by him to his accountant, and on 27 November stolen from the accountant's car. It has not been recovered.
The deed and the Will are inconsistent one with the other. The defendants assert that the deed validly appointed Mr Rand as trustee of certain property - the title to which was, at the time the deed was executed, held by Mr Rand both at law and in equity. That property is described in the schedule to the deed. At the same time the deed, with (as the defendants assert) equal validity, transferred the beneficial title to all that property to Mr Rand as trustee of a trust.
The trust in question is known as “The P & G R Harpur Trust”. It was created not by Mr Rand but by persons associated with the family of the first and second defendants, who are husband and wife. The deed recites that Mr Rand was appointed “this day” [1] as its trustee. The original trustee was a company called “Kai Tak Pty Ltd”. The first and second defendants were on 27 August, and perhaps continue to be, its directors.
[1]This presumably means 27 August 1997, but may mean 1 October that year - that being the “commencement date of this deed”.
It follows from all the above, so the defendants submit, that the deed removed from Mr Rand’s estate all the real and personal property described in it. As a result, that property is not available to the executors of Mr Rand’s Will.
The plaintiffs take the opposite position. They allege that doubts have arisen about the authenticity of both the original and the copy deed. That, however, is not an allegation with which I am concerned. In determining the fate of the present application, I must proceed on the assumption that the copy document in evidence before me is what it purports to be – that is, a true copy of an original document freely executed by Mr Rand when of sound mind and when not subject to any improper influence. While these issues remain in contention, their resolution will necessitate the calling and evaluation of a considerable body of evidence. But the procedure under r. 23.01 is not the appropriate means of dealing with factual disputes; and these controversies are in any event not presently relevant.
One proper ground of application under r.23.01 is that the defendants’ arguments are bad in law. This, the plaintiffs submit, is the position here. They add that, in so far as those arguments are reflected in the pleadings, no viable amendment of the defence could cure the defect. It is on this basis that, calling in aid r.23.01(2), the plaintiffs seek judgment. The Court is asked by them to have regard, for this purpose, to a limited number of documents, including the copy deed and a copy of the Will. This the court may do pursuant to r.23.04.
The plaintiffs then put the argument with which I am presently concerned. If, as contended for by the defendants, the original deed was executed in unimpeachable circumstances and in accordance with its terms as disclosed by the copy deed that is in evidence, then the declaration of trust contained in it was only effective as and from the date described in the deed itself as "the commencement day"; that day being 1 October 1997. In other words, any gifts intended to be made by the deed were, on the day the Will was executed (8 September 1997), incomplete. More to the point, the deed was not effective to create a trust, or otherwise to effect any change in the legal or beneficial interests in the property to which it referred. After 27 August, Mr Rand continued to be the legal and beneficial owner of that property. It was therefore part of his estate at the time of his death, and was available to be disposed of in accordance with his Will.
The copy deed in evidence before me states, in effect, that Mr Rand, as the owner of all the property identified in the deed, “holds” that property as from 1 October 1997 for himself as trustee of the P & G R Harpur Trust. The property to which the deed refers includes the land known as “The Sisters” at Sorrento; several parcels of land in Domain Road South Yarra, including that known as “Mahonga” which the deceased used as his principal residence; the proceeds of sale of a further South Yarra property; 25 units at two different addresses in Richmond; an additional 42 units in Hawthorn and 12 in East Melbourne; the chattels, fixtures, fittings and contents of each of the premises thus described; and all the valuables then stored in safes at “Mahonga” and in Mr Rand’s bank safety deposit boxes.
The Will, on the other hand, gave the first and second defendants no more than the full use and occupation, for a limited period, of “The Sisters”. It also made provision for the payment, out of the residuary estate, of specified benefits to Guy Harpur, a son of those defendants. Otherwise, the members of the Harpur family are not beneficiaries under the Will; and (as I understand it) those non-family members who take under the Will are not beneficiaries under the P & G R Harpur Trust.
The different interests are now on the opposite sides of this litigation. But if the deed was not effective to create any relationship of trustee and beneficiary, the claims of the Harpur family under it must fail. And this, so the plaintiffs argue, is what can and should, in the exercise of the powers given by r.23.01(2), be the result. They submit that it is clear on the pleadings and from the limited and undisputed documentary evidence on which they rely that the defence is unsustainable.[2]
[2]Williams “Civil Procedure – Victoria” p.3416 at para. I 23.01.15
As I understand it, the first point is not in dispute. If the deed is ineffective, the defence cannot succeed; and if the defence cannot succeed, neither can the counterclaim. The latter pleading, in the defendants’ own words albeit in a different context, “mirrors” the defence.[3] What is more, the deed stands or falls largely on its terms. It is true that the defendants once challenged the validity of the Will. That challenge is no longer pursued; and probate has now been granted.
[3]Defendants ’ Outline of Argument on Plaintiffs’ Application Pursuant to Order [sic] 23.01(2) p.2 para.2.
In my opinion, this is a case that is therefore properly to be considered in an application pursuant to r.23.01. What is in issue is a question of law. Its determination involves no disputed facts, save perhaps in relation to whether a particular inference may be drawn from the circumstance that the deceased executed a Will in the terms of that of 8 September. If the application has merit then a long and costly trial will be avoided. If on the other hand that merit is not made out – and if any burden is imposed by this question, it lies on the plaintiffs - the defendants will have the trial to which on that hypothesis they are at least prima facie entitled. It is of course true that, if the application fails, the plaintiffs may at trial re-agitate their arguments; and the present hearing will have been a waste of time and money. As against that, the risk is worth taking when set against the possibility of avoiding protracted and bitter litigation. In these circumstances, it seems to me that the efficacy of the r.23.01 procedure is manifest.
The proper examination of any application under that rule must begin with the pleadings. It is therefore appropriate to turn to them now. So far as is relevant, they begin with an admission that, at all material times before 27 August 1997, Mr Rand was the owner of the real and personal property described in paragraphs 5 and 6 of the statement of claim. The admission is no surprise: those paragraphs follow the descriptions given in the copy deed.
The defendants do take issue with the allegation that Mr Rand continued to own this property until his death. Nor is it admitted that that the deceased ever executed the Will of 8 September 1997, although there is no dispute about the allegation that on 23 March 1999 probate of that Will was granted to the plaintiffs.
Other undisputed allegations follow. On 7 October 1997, the first defendant (Mr Paul Harpur) was notified by the plaintiffs that Mr Rand had died, leaving a Will. Over a month later, on 21 November, the defendants forwarded a copy of the deed to the solicitors for the plaintiffs. Those solicitors claim that they received it on 26 November, and that their receipt constituted notice that the first defendant held documents affecting the estate. These allegations are not admitted. Both sides agree that the defendants have since 26 November 1997 contended that Mr Rand executed the original of the deed on the previous 27 August. The defendants further contend that this was in the presence of the first defendant and a Mr David Stewart. I observe that at the foot of the deed is the signature of someone whose name is printed by hand on the document as “David B Stewart”.
The pleadings then address the declarations, numbered 1-16, that appear in the deed as Recital A. I infer that their purpose is twofold. First, to explain why the document’s operative provisions gave the beneficial interest in all the property described in it to the beneficiaries of the P & G R Harpur Trust. Secondly, to explain why it was prepared after consultation with the first defendant and to the exclusion of the first plaintiff.
To a person who knows nothing about the deceased or his circumstances, the declarations are striking. This is in part because together they constitute the paradigm self-serving statement. Had they been asked, the beneficiaries of the P & G R Trust could not have drawn a more elaborate justification for the donor’s display of beneficence towards them. It is also in part because the first plaintiff was then, and remained thereafter until Mr Rand’s death, not only the deceased’s solicitor, and an executor of his Will and trustee of his estate, but also directly or indirectly (as a partner in the firm of solicitors acting for Mr Rand) involved in the preparation of the Will which was subsequently admitted to probate. The relevant declaration states that Mr Rand “feels unable to discuss the matter with [the first plaintiff] as he has concerns about him keeping the information confidential”.
I make no findings, and have come to no conclusions, about these matters. I mention them only because the next relevant allegation in the statement of claim is that the deed was not supported by consideration. This is an important allegation. Of course equity will enforce a properly constituted trust, and in doing so will not be concerned to ask whether consideration was given for it. But if in this case consideration was given, the transaction evidenced by the deed might, indeed doubtless would, have an independent foundation for its enforcement. In the absence of consideration, the defendants are reduced to seeking the assistance of equity in supporting a gift. This equity will give; but only if the intending donor has for his or her part done everything that is necessary for him or her to have done to enable the donee to effect a transfer of the legal title in the relevant property.[4]
[4]Corin v Patton (1990) 169 CLR 540 at 559 per Mason CJ and McHugh J.
The defendants in paragraph 17 of their defence deny the alleged lack of consideration. They now submit that their denial “therefore provides an answer to this allegation.” They add that: “The plaintiffs have put in no evidence to demonstrate that the denial is unsupportable.”[5]
[5]Defendants’ Outline of Argument op. cit., p. 8 at para. 10.
The last statement is true. But in my opinion there is no need for the plaintiffs to respond, with evidence, to a denial made by the other side. Not only is it the defendants who make that denial, but it is they who have access to the relevant facts. After all, if any consideration was given, it was they who gave it. If they now wish positively to assert what by their pleading is implied (i.e. that they did give consideration), it is for them to assume the evidential burden in relation to this point. That, it seems to me, is particularly so given the way that the declarations contained in the deed have been framed. If consideration had been given as the defendants apparently assert, one would expect that these declarations, above all others, would have proclaimed that fact. Yet the denial is not supported by any particulars – whether in the deed itself, or in the defence. Still less has any relevant evidence been called. On the contrary, Recital B speaks of the trustee’s intention “to settle the property specified in Schedule A as a gift”. I must therefore proceed on the basis that this deed evidenced Mr Rand’s intention to make a gift to the beneficiaries of the P & G R Harpur Trust.
By paragraph 18 of the statement of claim, the plaintiffs reach the heart of the point that I have to decide on this application. It is alleged in that and the following paragraphs that, if Mr Rand did execute the deed, then the declarations of trust contained in it were “effective only as and from the commencement day” (that is, from 1 October 1997) and were incomplete and remained so. No immediate gift was made, and “any gift made thereby remained incomplete.”[6] In any event, by his last Will the deceased made inconsistent declarations of his intentions. He thereby revoked the dispositions made in the deed, which is now void and of no effect.
[6]Statement of claim, para. 19.
The defendants deny that the declarations of trust were effective only from 1 October 1997. They deny that the gifts made thereby were incomplete. They deny that the Will had the effect of revoking the deed, or that Mr Rand then made declarations which were inconsistent with those in the deed; and they deny that it is void and of no effect.
It is now appropriate to examine the deed in more detail. It opens with the statement that it “is made this 27th day of August 1997.” There follow Recital A, and the declarations which together form the complete contents of that recital. They in turn are succeeded by the remaining recitals. These are designated “B”-“D”. The document concludes with its six operative clauses, its single schedule (Schedule A) and the attestation clause and signatures.
Recital B states that the trustee (Mr Rand) “hereby intends to settle the property specified in Schedule A on the beneficiary specified in Schedule A as a gift and has executed this declaration of trust for that purpose.” I emphasise the word “beneficiary”. An oddity about the deed is that by it only one beneficiary is specified opposite the property and assets included in Schedule A. The beneficiary thus identified is "Peter Thomas Evan Rand as trustee of the P & G R Harpur Trust." An air of artificiality, if not of the absurd, is thus introduced. The scheme of the deed is that Mr Rand, as the owner of the relevant property, declares that, as from a day some five weeks hence, he as trustee “holds” the property for himself as beneficiary by virtue of his office as trustee of the P & G R Harpur Trust. Nothing, however, was made of this point in the hearing before me. And the intention of the draftsperson of the deed is perhaps clear enough.
Recital “B” concludes by describing the P & G R Harpur Trust as “a discretionary trust constituted pursuant to a deed of trust between Kai Tak Pty Ltd [a company of which the first and second defendants are directors] as trustee and Kenneth Walter Tunbridge as settlor.”
The remaining recitals, and the operative clauses, should, I think, be set out in full:
"C.The trustee has this day been appointed trustee of the P & G R Harpur Trust and he is aware that he will subsequently be replaced by Kai Tak Pty Ltd. He knows that the directors of Kai Tak Pty Ltd are Paul Henry and Pamela Fay Rand Harpur. He is aware that the P & G R Harpur Trust is a discretionary trust and that Pamela Fay Rand Harpur is the appointor. Guy Edward Peter Rand Harpur is the specified beneficiary but he is aware that the discretionary nature of the trust allows for the trustees [sic] to exercise discretions in relation to a variety of matters including vesting date, distribution of income and distribution of the trust fund as between the general beneficiaries. He has read the P & G R Harpur Trust Deed.
D.The trustee agrees to pay all costs of this Deed and any transfers required under the Transfer of Land Act 1958 to transfer the property referred to in Schedule A including any stamp duty and Titles Office lodging fees within 7 days of an assessment issuing.
NOW THIS DEED WITNESSES:
1.The trustee is the owner of the property and assets specified in Schedule A and he now irrevocably declares that as from the commencement day he holds the property and assets specified in Schedule A for the beneficiary specified opposite each of those specified properties and assets.
2.Where a property is subject to a mortgage as specified in Schedule A the trustee from the commencement day holds the property subject to the mortgage for the beneficiary specified opposite the property in Schedule A.
3.From the commencement day the trustee will, at the request of a beneficiary specified in Schedule A, transfer the property specified in Schedule A opposite the name of the beneficiary to the beneficiary and will execute all documents including transfers of land and all things necessary for that purpose.
4.From the commencement day the trustee, without limiting the generality of anything contained in his power of attorney dated 3 June 1997, hereby authorises his attorney Paul Henry Harpur to do all things necessary including the execution of transfers of the property and assets specified in Schedule A to vest such property and assets or any item or part thereof in the beneficiary specified opposite such property in Schedule A.
5.The commencement date of this deed shall be the 1st October 1997.
6.This deed and any disputes arising hereunder shall be governed and determined in accordance with the laws in force in the State of Victoria."
The parties are at odds about the proper construction of the deed. But each appear to accept that the applicable law recognises a relevant distinction. This (as I apprehend the parties to agree), is accurately described in the fourth edition (1988) of The Law of Trusts by A.W. Scott and W. F. Fratcher. It is between, on the one hand, a present intention to create a trust in the future and, on the other, the present creation of a trust with a postponement of enjoyment by the beneficiaries. The following passages set out, in my respectful opinion correctly, the principles by which, for the purposes of deciding the present application, I am bound:
"If an owner of property declares his intention to create a trust of the property in the future, or promises that he will create such a trust, whether by transferring the property to another as trustee or by constituting himself trustee, no trust is presently created. Although a manifestation of intention to create a trust is all that is needed for its creation, it must be a manifestation of intention to create a present trust and not merely to create a trust to arise at some future time. A promise to dispose of the beneficial interest in property at some time in the future is not a present disposition of the beneficial interest. This is true where the intending settlor owns the property at the time he makes the promise; it is true also where he has not yet acquired the property of which he intends to create a trust.[7]
…
A promise to create a trust in the future is to be distinguished from the present creation of a trust with a postponement of enjoyment by the beneficiaries. A trust can be created although the settlor is to receive the income for life or for some other period, and the beneficiaries other than the settlor himself are not to receive income or principal until the expiration of the period. Thus where the owner of property transfers it in trust to pay the income to himself for life and on his death to convey the property to or to hold it for designated beneficiaries, a trust is created at the time of the transfer. So also, where the owner of property declares himself trustee in trust to pay himself the income during his life, and on his death the property is to be distributed among designated beneficiaries or held in trust for them, a trust is created at the time of the declaration of trust. In either case it is immaterial that no one but the settlor himself has an interest presently enjoyable and that the interests of the other beneficiaries are postponed in enjoyment. The interests are created at the time of the transfer or declaration of trust.[8]
…
Where a person promises, not that he will transfer property in trust, but that he will himself be trustee of property at some time in the future, a trust does not automatically arise when that time arrives. It will arrive at that time, however, if the settlor then manifests an intention to be trustee. His subsequent conduct, taken in connection with his prior promise, may amount to a present declaration of trust."[9]
[7]At p.288, para. [26].
[8]At p.292, para.[26.1].
[9]At p.298, para.[26.5].
The plaintiffs contend that there is here a clear example of an owner of property, Mr Rand, doing no more than declaring his intention to hold that property - not immediately, but as from a designated future date - in trust for designated beneficiaries. In the meantime, the full legal and beneficial title to the property remained with Mr Rand. This being so, there was no remaining interest. It necessarily followed that nobody else could have an interest in those assets. And that position continued to obtain up to and beyond the designated (or “commencement”) date. The essential element - an intention to “presently” (that is, immediately) impress a trust upon the property - was most certainly not expressed in the deed itself; and nor was it expressed later.
The plaintiffs accordingly contend that the deed is of no effect. If it is of no effect, the defence to this proceeding is totally without substance. The plaintiffs should get now the judgment to which they are entitled.
The defendants take the opposite position. They contend that there is here a clear example of an owner of a property, Mr Rand, creating an immediate trust with a postponement of enjoyment. The use of the language “now irrevocably declares” and “he holds” “demonstrates a present intention to create a trust albeit that the trust may be postponed until October 1997.”[10]
[10]Defendants’ Outline ofArgument op. cit p. 9 at para.16.
There are difficulties with the defendants’ submissions. For one thing, they speak of the creation of a trust, when the trust in question had come into existence some time before. Mr Rand’s declaration was about transferring interests in property to that trust in the future. And the identification of that which is created, even given that Mr Rand was creating anything, has been so problematic that the defendants have had to resort to self-contradictory language. Thus, in written submissions in answer to the plaintiffs’ submissions, they speak of Mr Rand’s retention until 1 October 1997 of the legal and beneficial ownership in the relevant property - and yet assert in the same paragraph[11] that “An immediate trust was created on 27 August to commence on 1 October”. The same formula is adopted in paragraph 8 of those submissions: “…the settlor was immediately creating a trust, albeit one commencing some time later.” (Emphasis as in the original.) If Mr Rand could create immediately something that was to come into existence in the future, then he had powers denied to the rest of us.
[11]Para.2.
Although the deed is dated 27 August 1997, and undoubtedly speaks of Mr Rand’s intentions as at that date, it also states, by its very words, that its “commencement date…shall be 1 October 1997”. It does no more as of 27 August than express a presently irrevocable declaration that something will happen about five weeks later. It effects nothing at all before 1 October. It is in my opinion no more than a declaration by an owner of property of his intention to make that property, in the future but not at present, subject to a trust. There was, to adopt the words, previously quoted, from Scott and Fratcher’s The Law of Trusts no “present disposition of the beneficial interest.”[12] This was not an example of the present creation of a trust with a postponement of enjoyment. Indeed, as I have noted, no creation of a trust was involved at all; the P & G R Harpur was already in existence. But nor was there here an immediate transfer of property in trust – whether to the P & G R Trust or to any other.
[12]P. 290 at para.[26].
In these circumstances it is in my opinion clear beyond argument that, had Mr Rand died before 1 October 1997, the deed would have effected nothing. Assuming that the property mentioned in the deed had not otherwise been transferred from his ownership, it would have passed to his executors as part of his estate. The question is whether the fact that Mr Rand was still alive on 1 October alters this position. The significance of the execution of his Will on 8 September, especially in the light of the description of his declaration as being “irrevocable” must also be considered.
The defendants rely on Re Armstrong.[13] It gives them no support. In that case the settlor undoubtedly created an immediate trust, in which his sons took an immediate interest.
[13][1960] VR 202.
In In re Northcliffe[14] the settlor, Lord Northcliffe, on 18 November 1911 entered into a voluntary settlement of land in Kent. These were conveyed to trustees for sale. On the same day, the settlor by deed declared certain trusts of the proceeds of sale. He also covenanted with the trustees:
“…that if he the settlor shall at any time or from time to time during his life acquire…an estate of inheritance in fee simple in possession any other freehold [land] in…Kent…he…will forthwith…assure the same …upon the like trusts…as are hereinbefore expressed…and…until such assurances shall have been actually made he…shall and will stand seised of all and any such after acquired [land] upon such trusts …as… aforesaid.”
[14][1925] 1 Ch. 651.
Lord Northcliffe afterwards acquired four other parcels of real property that came within the terms of the covenant. The first two of these were bought in August 1913; the third in May 1920; and the last in February 1922. These properties were vested in him at the time of his death in August in the latter year.
By his Will, together with a number of codicils, Lord Northcliffe confirmed the conveyance on trust for sale dated 18 November 1911 and declared that the provisions made in his Will were intended to be in addition to and not in satisfaction of those in the covenant. By his second codicil, dated 23 June 1920, he declared that all the benefits given by it were in addition to any others whether given by his Will or otherwise. The third codicil, dated 27 April 1922, confirmed the Will.
The question before Russell J was whether the executors should “assure” to the trustees of the settlement all the land in Kent which was acquired by the deceased after 18 November 1911 and which continued to be vested in him at his death. His Lordship answered the question in the affirmative. It was held that the testator, “knowing that he had after acquired freeholds in the county of Kent”, confirmed the settlement and directed that the benefits conferred by them and by his Will were to be cumulative. His Lordship continued:
“… the beneficiaries under the settlement are to enjoy all the benefits contemplated by the settlement, including the benefit of the covenant and declaration contained therein. I read that as a declaration by the testator that he holds the Kent freeholds upon the trusts of the settlement … I am satisfied that when the testator executed his Will he recognised, and stated as a fact, that he held the Kent freeholds upon the trust of the settlement. The position is the same with regard to other properties, for in each case the testator, by a codicil executed after he had acquired the properties, confirmed and republished his Will. Accordingly I declare that the executors should and may assure to the present trustees of the settlement the four freehold properties in Kent mentioned in the evidence.”[15]
[15]Ibid at 654-655
As far as I am aware, the authority of In re Northcliffe has never been questioned. It is consistent with the proposition, already quoted from The Law of Trusts, that where a person promises, not that he will transfer the property in trust, but that he will himself be trustee of property at some time in the future, a trust does not automatically arise when that time arrives. The question nevertheless remains whether, in the absence of the “recognition” to which Russell J referred, no trust will arise.
There is United States authority on the point. In Kavanaugh v Estate of Dobrowolski,[16] Mr Joseph Dobrowolski, in January 1970, established a trust over certain land. He was to continue during his lifetime to hold the beneficial interest “with full power to dispose of the entire beneficial interest [in the land], and in the case of his death, not having done so, then [to] Angeline R Kavanaugh.”
[16](1980) 407 N.E. 2nd 856.
This, then, was a case in which Mrs Kavanaugh’s interest was contingent upon her surviving Mr Dodrowolski without he having first disposed of the asset. She was not quite satisfied. She sought an assurance that, if the property were sold by the settlor during his lifetime, the proceeds would be held on trust for her. Mr Dubrowolski agreed, and on at least one occasion (in November 1970) signed documents “evidencing [his] intent”[17] to that effect. In December 1972, he sold the land; but without thereafter confirming the trust. The Appellate Court of Illinois held that the fact that the proceeds of sale of the property were deposited into a separate account while the settlor was still alive, where they remained until his death, was not sufficient evidence of an intent to continue the trust or to establish a new one. The Court continued:
“The only obligation imposed upon [Mr Dobrowolski when the land was sold] was his gratuitous declaration almost two years earlier that if that eventuality should occur, he would create a trust for Kavanaugh. Therefore…the [trust] was not an enforceable trust at the time of [Mr Dobowolski’s] death.”[18]
[17]Ibid at 859
[18]Ibid at 862 (emphasis as in the original)
I have found no Australian authority directly on the point. On the other hand, In re Northcliffe and Kavanaugh v Estate of Dobowlolski together provide support for the proposition set out by the learned authors in The Law of Trusts. In my respectful opinion that proposition accurately states the law. That being so, it concludes the present argument against the defendants. There is no suggestion in this case that, before his death, Mr Rand took any step to affirm his deed of 27 August.
In these circumstances, it is perhaps unnecessary to consider whether the Will of 8 September 1997 evidenced a change in Mr Rand’s intentions as expressed in the deed. The defendants submit that it did not; and, if the matter were to go to trial they would, I was informed, call evidence to the effect that the discrepancies between deed and Will are explicable on the basis that the latter was intended to deceive. It was not intended, the defendants suggest the evidence will show, that the Will should have the effect of contradicting the deed, no matter what the Will might say.
Nothing was put in evidence before me, however, to support this tangled tale. On its face, the Will undoubtedly expressed Mr Rand’s intention to dispose of his property, or part of it, in a way which was quite contrary to that to which the deed gave expression. The two cannot stand together. This, in my opinion, is in the circumstances conclusive. Were the defendants seriously to press this part of their case, then it was incumbent upon them to put before me some evidence in support. They produced none. If it is relevant, I for these reasons find that by his Will Mr Rand evidenced an intention that the deed be revoked.
But, in my opinion, it is not relevant. If by what he did on 27 August, Mr Rand created an interest, in favour of the defendants (or anybody else) in the property described in the deed, then that interest will not be affected by whether a declaration expressed in the deed was there said to be irrevocable. And if no such interest was then brought into being, the fact that the declaration was irrevocable will not assist in bringing that interest later into life. In this context, it might be appropriate to note that although in Kavanaugh Mr Dobrowolski did not say that his intention was irrevocable, it had not in fact been revoked before he died; the proceeds of sale of the land in question remained part of his estate. Yet this did not assist Mrs Kavanaugh.
There was some debate before me about the courts’ willingness or otherwise to perfect an imperfect gift. That is not a matter about which I need be concerned. If Mr Rand created a gift in August, or thereafter, there was nothing imperfect about it. The question is whether he created anything at all.
For these reasons it seems to me that the plaintiffs’ application should succeed, and that there should be judgment for them accordingly.
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