Marius Jan Schreuders v Grandiflora Nominees Pty Ltd
[2015] VSC 443
•28 August 2015
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL COURT
COMMERCIAL LIST
S ECI 2015 000068
BETWEEN
| MARIUS JAN SCHREUDERS & DANE MARIUS SCHREUDERS | Plaintiffs |
| v | |
| GRANDIFLORA NOMINEES PTY LTD AS TRUSTEE OF THE SCHREUDERS FAMILY SETTLEMENT (ACN 005 215 949) | Defendant |
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JUDGE: | SIFRIS J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 20 July 2015 |
DATE OF JUDGMENT: | 28 August 2015 |
CASE MAY BE CITED AS: | Marius Jan Schreuders & Anor v Grandiflora Nominees Pty Ltd |
MEDIUM NEUTRAL CITATION: | [2015] VSC 443 |
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TRUSTS – Construction of trust instrument – Where the words of the instrument are to be given their natural and ordinary meaning in the context of the whole of the document - Australian Broadcasting Commission v Australasian Performing Rights Association (1973) 129 CLR 99.
APPEARANCES: | Counsel | Solicitors |
| For the Plaintiffs | Mr E N Magee QC with Ms M J Harris | T F Grundy |
| For Defendant | Mr I J Hardingham QC with Mr P L Ehrlich | Macarthur Argyle Esmond Pty Ltd |
HIS HONOUR:
This application concerns the Schreuders Family Settlement (‘the Trust’). The first plaintiff (the plaintiff) seeks a declaration that he is a beneficiary of the Trust.[1]
[1]The second plaintiff’s case has been resolved by agreement.
Background
The Trust was established by Deed of Settlement (‘the Trust Deed’) made on 29 June 1976, by Catherine Ann Patnaude as settlor and, mistakenly, Fourth Harcoy Pty Ltd as trustee. The intended trustee was Sixth Harcoy Pty Limited, although nothing turns on this.
On 31 August 1976, Sixth Harcoy Pty Limited changed its name to Grandiflora Nominees Pty Ltd.
On 15 June 1977, Fourth Harcoy Pty Limited resigned as trustee of the Trust and Grandiflora Nominees Pty Ltd (‘the Trustee’) was appointed trustee of the Trust.
At the time of his death on 21 May 1989, Jan Schreuders (‘Jan’) and his son, Herman Edward Schreuders (‘Herman’) were the only directors of the Trustee. Upon his death, Jan was replaced by his wife, Kryntje (Kitty) Schreubers (‘Kitty’). Kitty is currently 97 years of age.
On 3 August 1990, Herman was appointed company secretary.
In or about December 1990, by Deed of Variation of Trust (‘Deed of Variation’) prepared by Gledhill Burridge and Cathro, solicitors, the Trustee purported to exclude Jan’s son, Marius Jan Schreuders (‘Marius’) as a beneficiary of the Trust.
At the time that the Deed of Variation was executed, in addition to Herman and Marius, two other children of Jan and Kitty were alive: Gysbert (Barry) Schreuders, who died on 6 August 2006 and Neeltje Clark (nee Schreuders) who is alive.
The relevant clauses of the Trust Deed provide as follows:
4In this Deed the term ‘Beneficiaries’ mean the following persons and classes of persons and a reference to any class of Beneficiary is to the Beneficiaries classified in the following order:
A. The specified person.
B.The spouse of the specified person as at the date hereof (who shall hereafter be referred to as ‘the said spouse’).
C. Any future spouse or widow of the specified person.
D. The children of the specified person.
E. The issue other than the children of the specified person.
F.The children of the said spouse and the spouses widows or widowers of such children.
G.The issue other than the children of the said spouse and the spouses widows and widowers from time to time of such remoter issue.
5 The Trustees shall hold the Trust Fund upon trust:
(a) Until the date of distribution, as to income thereof;
(i) …
(ii) …
(iii) …
(b) On the date of distribution as to the corpus thereof;
(i)for such of the Beneficiaries living at the date of distribution and on that date answering to the description of a Beneficiary and if thought fit for one or more to the exclusion of others or another and in such shares and proportions as the specified person shall in his absolute discretion by deed (revocable or irrevocable) executed prior to the date of distribution appoint;
(ii)to the extent that any part thereof is not validly and effectively appointed pursuant to sub-paragraph (i) hereof for such of the Beneficiaries as shall then be living and shall answer to the description of Beneficiaries if more than one in equal shares as tenants in common but so that no Beneficiary or class of Beneficiaries shall take unless there is no member of the preceding class who qualifies to take;
(iii) …
(iv) …
6Notwithstanding the provisions of clause 5 the Trustees may at any time and from time to time in their absolute discretion pay or appropriate the whole or some part or parts of the corpus of the Trust Fund to or apply the same for the benefit of any or more of the Beneficiaries (and if thought fit for one or more to the exclusion of others or another and in such shares and proportions as the Trustees may in their absolute discretion determine.
Clause 1(a) of the Deed of Variation varied clause 4D, and is in the following terms —
With effect on and from the date of the Deed the Trust Deed is varied… by amending Clause 4D to read as follows:
‘The children of the specified person excluding Marius Jan Schreuders’.
The ‘specified person’ is defined in the Trust Deed as ‘Jan Schreuders’. It is of note that in fact, Kitty did not re-partner and there are no children, the issue of Jan, who are not also the issue of Kitty.
The arguments
The principles relating to the construction of the Trust Deed are not in dispute. Both parties base their arguments on the general principle that trust instruments are to be given their natural and ordinary meaning unless they have a special or technical meaning,[2] and the words must be construed in the context of the entire document.[3]
[2]Hill (Viscount) v Hill (Dowager Viscountess) [1897] 1 QB 483, 486 (Lord Esher M R).
[3]Re Altson: Equity Trustees Executors & Agency Co Ltd v Spielvogel [1955] VLR 281, 284-286 (Herring CJ).
It was also not disputed that the Deed of Variation needs to be read as part of the Trust Deed.
The plaintiff submitted that the Trustee’s intention must be found on the face of the Deed of Variation.[4] Accordingly, the plaintiff contended that according to the natural and ordinary meaning of the words of Clause 1(a) of the Deed of Variation, expressly referring to Clause 4D of the Trust Deed, it does not purport to exclude Marius as a beneficiary under Clause 4F, that is, as a child of Kitty.
[4]Byrnes v Kendle(2011) 243 CLR 253, 573 -[53]–[59] (Hayne JJ, French CJ agreeing), 282- 290 [95]–[115] (Heydon and Crennan JJ).
The plaintiff further submitted that the court should generally construe the natural meaning of the provisions of the Trust Deed in such a way as to give them their most ample operation.[5] Accordingly, the term ‘beneficiary’ in Clause 4F should be read broadly to include Marius.
[5]Kearns v Hill(1990) 21 NSWLR 107 (CA), 108-109 (Meagher JA).
The defendant emphasised that the intention expressed in the Trust Deed and the Deed of Variation must be construed from the words of the deed within the context of the whole instrument.[6] As such, the defendant contended that Clause 4 creates a cascading hierarchy of beneficiaries and classes of beneficiaries. The classes created in each subclause are mutually exclusive such that no member of one class is a member of any other class. The defendant argued that any construction to the contrary would be inconsistent with the express and unambiguous operation of Clause 5(b)(ii) which specifically provides that ‘no Beneficiary or class of Beneficiaries shall take unless there is no member of the preceding class who qualifies to take’. In addition, the defendants pointed to words at the beginning of Clause 4 stating that ’a reference to any class of Beneficiary is to the Beneficiaries classified in the following order’.[7]
[6]See Australian Broadcasting Commission v Australasian Performing Rights Association (1973) 129 CLR 99. 109-110 (Gibbs J).
[7]Italics added.
According to the defendant’s construction, the class of beneficiaries created by Clause 4F extends only to children of the said spouse who are not also children of the specified person. The defendant submits that this is the only construction which is in harmony with the words of Clause 5(b)(ii), which show that a beneficiary cannot be a member of any earlier class.
The defendant argued further that in Clause 4, the Trust Deed draws a distinction between the bloodline of the specified person (Clauses 4D and 4E) and the bloodline of the said spouse (Clauses 4F and 4G), with the bloodline of the specified person given priority over any children of the said spouse who are not also children of the specified person (unless the discretion in Clause 5(b)(i) is otherwise exercised). Thus, unless the specified person decides otherwise under the discretion provided in Clause 5(b)(i), the distribution of the corpus on the day of distribution is according to the default hierarchy created in Clause 4, with no beneficiary of class of beneficiaries taking unless there is no member of a preceding class qualified to take. In other words, the defendant submitted that no child or remoter issue of Kitty, who is not also a child or further issue of Jan, can take where a child or further issue of Jan is alive at the date of distribution.
The plaintiff argued that Clause 5(b)(ii) has a narrower operation, applying only to surplus corpus on the date of distribution – that is at the end of life – in the case that the corpus has not been fully distributed to any living child. In that case, the plaintiff submitted, the surplus corpus is distributed according to the cascade mechanism provided for in Clause 5(b)(ii).
The plaintiff submitted further that according to the ‘bloodline’ construction, an absurdity arises under Clauses 4F and 4G, which include the spouses, widows or widowers of the children of the said spouse, or issue other than children of the said spouse. The plaintiff argued that under the defendant’s construction, spouses, widows and widowers of the said spouse’s line are included as beneficiaries, while the spouses, widows and widowers of the ‘bloodline’ of the specified person are excluded. The plaintiff asserted that this could not have been intended.
In contrast, the defendant argued that the words ‘spouses, widows or widowers’ do not appear in Clauses 4D and 4E because the intent of the Trust Deed is to distribute to direct lineal descendants of the specified person to the exclusion of spouses, widows or widowers. It was submitted that the inclusion of the words ‘spouses, widows or widowers’ in Clauses 4F and 4G are only rationalised on the basis that, according to the construction that two distinct lines are provided for, these clauses do not extend to lineal descendants of the specified person. Counsel for the defendants suggested that Jan intended for his ‘bloodline’ children and remoter issue to take, but was not concerned with regard to Kitty’s line (should she have children which were not also his children) whether the beneficiaries were a ‘bloodline’ or not.
Decision
I accept the submissions of the defendant with regard to the operation of Clause 4 as a cascading hierarchy when read, as it must be, in conjunction with Clause 5(b)(ii). The words ‘but so that no Beneficiary or class of Beneficiaries shall take unless there is no member of the preceding class who qualifies to take’, appear to me to apply generally to provide a default mechanism of distribution in the event that the discretion in Clause 5(b)(i) has not been exercised. In light of Clause 5(b)(ii), the classes of beneficiaries in Clause 4 can only in my view be read as being mutually exclusive.
On the proper construction of the Trust Deed:
(a) Clauses 4D and 4E deal exclusively with the children and the further issue of the specified person;
(b) Clauses 4F and 4G deal exclusively with the children and the further issue of the said spouse who are not also the children and the further issue of the specified person.
The classes created by clauses 4D and 4E (on the one hand) and the classes created by clauses 4F and 4G (on the other hand) are mutually exclusive. This is also demonstrated by the inclusion of the words ‘spouses, widows or widowers’ in clauses 4F and 4G.
Thus, if no child of the specified person is alive as at the date of distribution, any further issue of the specified person will take in absolute priority to any children (or spouses, widows or widowers) or further issue of the said spouse.
It follows that no child (or spouse, widow or widower) or remoter issue of the said spouse can take where a child or further issue of the specified person is living as at the date of distribution.
Indeed, once it is seen that grandchildren and even remoter issue of the specified person take in complete priority to living children of the said spouse where no children of the specified person are alive at the date of distribution, but children of the said spouse are, it is clear in my opinion that clause 4F cannot include within its class children of the said spouse who are also children of the specified person. To find otherwise is, I accept, to create incongruity and disharmony between classes 4D and 4E (on the one hand) and clauses 4F and 4G (on the other hand). The classes are dealing with different bloodlines.
Disposition
Accordingly, I find that Marius is not a beneficiary of the Trust.
Accordingly the application will be dismissed. I will hear from the parties as to the appropriate order for costs.
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