Marshall v Tasmanian Perpetual Trustees Limited

[2015] TASFC 2

[2015] TASFC 2

COURT:       SUPREME COURT OF TASMANIA (FULL COURT)

CITATION:               Marshall v Tasmanian Perpetual Trustees Limited [2015] TASFC 2

PARTIES:  MARSHALL, Jan
  LEVIS, Kevin
  BURRELL, Alan
  v

TASMANIAN PERPETUAL TRUSTEES LIMITED
as Executor of the Estate of Basil Wilfred Reynolds
GRAY, John, as personal representative of the Estate of
Phyllis Maud Bradshaw
The personal representative of the Estate of
PITFIELD, Dorothy
The personal representative of the Estate of
BURRELL, Graham
The personal representative of the Estate of
BURGESS, Pat
FRENCH, Leone
DI GUGLIEMO, Margaret
JONES, Barry
WHITCHURCH, Lynette

FILE NO:  469/2014
JUDGMENT

APPEALED FROM:                  Tasmanian Perpetual Trustees Limited v Marshall

[2014] TASSC 26

DELIVERED ON:  10 March 2015
DELIVERED AT:  Hobart
HEARING DATE:  4 March 2015
JUDGMENT OF:  Blow CJ, Porter and Estcourt JJ

CATCHWORDS:

Succession – Construction and effect of testamentary dispositions – What interest passes – Vested or contingent interest – Vesting of remainders – Gift of income from residuary estate to widow for life – Gifts of remainder interests to sisters of testator – Gift over to children of sister dying before distribution – Time for ascertainment of class of surviving children.

Aust Dig Succession [1320]

REPRESENTATION:

Counsel:
           Appellants:  N R Readett
           First Respondent:  T J Williams
           Fifth Respondent and Personal   
           Representative of Estate of G Bradshaw:         D J Barclay
Solicitors:
           Appellants:  Simmons Wolfhagen
           First Respondent:  Gunson Williams
           Fifth Respondent and Personal
           Representative of Estate of G Bradshaw:         Page Seager

Judgment Number:  [2015] TASFC 2
Number of paragraphs:  32

Serial No 2/2015

File No 469/2014

JAN MARSHALL, KEVIN LEVIS and ALAN BURRELL v TASMANIAN PERPETUAL TRUSTEES LIMITED as Executor of the Estate of Basil Wilfred Reynolds, JOHN GRAY as personal representative of the Estate of Phyllis Maud Bradshaw, the personal representative of the Estate of DOROTHY PITFIELD,
the personal representative of the Estate of GRAHAM BURRELL, the personal representative of the Estate of PAT BURGESS, LEONE FRENCH, MARGARET DI GUGLIEMO, BARRY JONES and LYNETTE WHITCHURCH

REASONS FOR JUDGMENT  FULL COURT

BLOW CJ
PORTER J
ESTCOURT J
10 March 2015

Order of the Court

Appeal dismissed.

Serial No 2/2015

File No 469/2014

JAN MARSHALL, KEVIN LEVIS and ALAN BURRELL v TASMANIAN PERPETUAL TRUSTEES LIMITED as Executor of the Estate of Basil Wilfred Reynolds, JOHN GRAY as personal representative of the Estate of Phyllis Maud Bradshaw, the personal representative of the Estate of DOROTHY PITFIELD,
the personal representative of the Estate of GRAHAM BURRELL, the personal representative of the Estate of PAT BURGESS, LEONE FRENCH, MARGARET DI GUGLIEMO, BARRY JONES and LYNETTE WHITCHURCH

REASONS FOR JUDGMENT  FULL COURT

BLOW CJ

10 March 2015

1. I have read the judgment of Estcourt J in draft form. I agree that, for the reasons stated by him, this appeal should be dismissed.

2. The will to which this appeal relates, which is dated 24 January 1973, was drawn in a style that was once common, without any paragraphing or fullstops.  The testator made provisions to the following effect as to his residuary estate:

   ·    The residuary estate was to be sold, called in, and converted into money.

   ·    His trustee was given a discretion to postpone the sale, conversion and getting in of the whole estate or any part of it.

   ·    His trustee was to invest the fund that arose from the sale, calling in, and conversion into money.

   ·    From that fund his trustee was to pay his wife $25 per week until her death or remarriage.

   ·    Thereafter, the trustee was to divide the fund equally between five of his sisters.

   ·    If any of those five sisters died before any payment was made to her, then her share was to go to "the surviving children then living of such beneficiary so dying in equal shares".

3. The appellants contend that the words "then living" referred not to the time of the sister's death, nor to any time connected with payment or expected payment, but to the time when the testator's widow died or remarried. 

4. I disagree.  There is no ambiguity about the words "the surviving children then living".  Their meaning is readily apparent from their context in the following sentence – a sentence that is not surrounded by fullstops:

   "I DIRECT that if any Beneficiary (other than my said wife) herein named should die before payment to her of any part of her share in my estate then her share shall go to the surviving children then living of such beneficiary so dying in equal shares".

5. There is no reason to think that the testator intended that the substitutional gift to a deceased sister's children should go only to those children who both (a) survived their mother and (b) were still living upon the death or remarriage of the testator's widow.  The references to the time of the death or remarriage of the widow were contained only in two earlier discrete provisions – one relating to the gift of income to the widow, and the other relating to the distribution of the fund to the five sisters of the testator.

6. Counsel for the appellants referred us to a number of authorities concerning wills in which the words "then living" or "then dead" were used: Harvey v Harvey (1832) 3 Jur 949; Archer v Jegon (1837) 8 Sim 446; 59 ER 177; Ex parte Hunter (1839) 3 Y & C Ex 610; 160 ER 845; Re Milne; Grant v Heysham (1888) 57 LTNS 828; Palmer v Orpen [1894] 1 IR 32; Macintosh v Macintosh (1916) 17 SR (NSW) 11. All of those cases are clearly distinguishable because the words in question were used in different contexts. No purpose would be served by a detailed analysis of them.

7. Counsel for the appellants also relied on the authorities that support the proposition that a will should be construed in such a way that effect is given to every word in it: Re Croxon; Croxon v Ferrers [1904] 1 Ch 252 at 257-258; Re Hewitt [1945] SASR 102 at 107; Re Evans; Public Trustee v Evans [1920] 2 Ch 304 at 309, 317; Chambers v Brailsford (1811) 18 Ves Jun 368; 34 ER 356. However that principle must give way in this case to the fundamental principles that it is the duty of the Court to ascertain the testator's intention, and that words ought ordinarily to be given their ordinary meaning.

8. Having regard to the context, I think it is clear that, in the words "the surviving children then living", the words "then living" are tautologous and unnecessary.  It seems clear that the person who drew this will was given to flamboyance and tautologies.  The deceased sister was not referred to as "that beneficiary" but as "such beneficiary so dying".  Earlier in the will, the testator's residuary estate was referred to as "all the rest of my residuary real and personal estate". 

9. In my view the only reasonable interpretation is that the words "the surviving children then living" were intended by the testator to refer to the children of a sister with a remainder interest who survived their mother or, to put it another way, were living at the time of their mother's death.  That is the interpretation that Holt AsJ adopted at first instance.  I do not wish to comment on his reasoning.

10. As I have said, I agree that the appeal should be dismissed.

    File No 469/2014

JAN MARSHALL, KEVIN LEVIS and ALAN BURRELL v TASMANIAN PERPETUAL TRUSTEES LIMITED as Executor of the Estate of Basil Wilfred Reynolds, JOHN GRAY as personal representative of the Estate of Phyllis Maud Bradshaw, the personal representative of the Estate of DOROTHY PITFIELD,
the personal representative of the Estate of GRAHAM BURRELL, the personal representative of the Estate of PAT BURGESS, LEONE FRENCH, MARGARET DI GUGLIEMO, BARRY JONES and LYNETTE WHITCHURCH

REASONS FOR JUDGMENT  FULL COURT

PORTER J
10 March 2015

1. I agree with the reasons for judgment of Estcourt J, and would also dismiss the appeal.  I have  read the reasons of Blow CJ and agree with his Honour's additional comments.

   File No 469/2014

JAN MARSHALL, KEVIN LEVIS and ALAN BURRELL v TASMANIAN PERPETUAL TRUSTEES LIMITED as Executor of the Estate of Basil Wilfred Reynolds, JOHN GRAY as personal representative of the Estate of Phyllis Maud Bradshaw, the personal representative of the Estate of DOROTHY PITFIELD,
the personal representative of the Estate of GRAHAM BURRELL, the personal representative of the Estate of PAT BURGESS, LEONE FRENCH, MARGARET DI GUGLIEMO, BARRY JONES and LYNETTE WHITCHURCH

REASONS FOR JUDGMENT  FULL COURT

ESTCOURT J
10 March 2015

The background

1. This is an appeal against a decision of Holt AsJ of 9 July 2014, Tasmanian Perpetual Trustees Limited v Marshall [2014] TASSC 26, by which his Honour answered the following questions that had been asked by the executor of the estate of the late Basil Reynolds in an application for the construction of Mr Reynolds' will:

   "aDoes the share of the deceased sister, Phyllis Maud Bradshaw, who died before the life tenant, Lorna Joy Reynolds, leaving no children surviving her –

   i    Pass to her estate;  or

   ii   Fall to be distributed to the beneficiaries found to be entitled pursuant to paragraph b hereof;  or

   iii   Pass on a partial intestacy.

   bDoes the reference in the Will to the surviving children then living of such beneficiary so dying refer to –

   i    Only children who survived the Deceased and were alive at the death of their mother (thereby including the estate of any child who survived their mother but died before payment of the shares in the estate).

   ii   Only children who survived their mother and were alive at the death of the life tenant Lorna Joy Reynolds (thereby including the estate of any child who survived Lorna Joy Reynolds but dies before payment of the shares in the estate).

   iii   Only children who survived the life tenant and who are alive at the date of payment of the shares in the estate."

2. The learned associate judge answered those questions as follows:

   "(a)The share of the deceased sister Phyllis Maud Bradshaw falls to be distributed to the beneficiaries entitled under (b).

   (b)Children who survived the testator and were then living at the date of their mother's death (thereby including the estate of any child who survived their mother, but died before payment) take in equal portions the one-fifth share of the remainder of the estate which would have passed to their mother had their mother survived the testator's widow."

The background

1. The background to the construction application was set out by the learned associate judge at [2]-[4] of his reasons for judgment as follows:

   "2       The testator died in July 1973 aged about 68 years.  He was survived by his wife then aged 61 years and several sisters.  His will was made in January 1973.  Provision was made for a house to be acquired and for funds to be invested for the benefit of his widow until her death or remarriage.  Thereafter the remainder was to be paid to five sisters of the testator named in the will, save that if a named sister died before payment to her of her share of the remainder that sister's share was to be paid to the surviving children then living of the deceased sister.  The widow died in 2012, aged 100 years, without having remarried.   Each of the named five sisters of the testator survived him.  At the date of the testator's death the eldest sister was aged about 76 years and the youngest sister was aged about 57 years.  All five sisters had children living at the date of the testator's death.  However, before the testator's widow died each of the five sisters and some of their children died.  In the case of the testator's sister Phyllis Bradshaw, all three of her children survived her and the testator but none survived the testator's widow.  No child of a sister of the deceased has died between the time of the death of the widow and the present.

   3        The construction questions arise as to the manner in which the remainder is now to be distributed.

   4        The provision in the will which is the subject of the construction application is as follows:

   '… upon the death or remarriage of my said wife I DIRECT my Trustee to divide the remaining capital and the accumulated income of my trust fund equally between my sisters as follows:- Phyllis Maud Bradshaw of Hamel Street Moonah  Eileen Levis of Montague Street New Town  Mabel Evelyn Burrell of Montague Street New Town Elvie Grace Adlard of Launceston in Tasmania and Marie Leon Jones of Austins Ferry I DIRECT that if any Beneficiary (other than my said wife) herein named should die before payment to her of any part of her share in my estate then her share shall go to the surviving children then living of such beneficiary so dying in equal shares'."

The proceedings below

1. The course of the proceedings below can be understood from the summary of the competing arguments advanced on behalf of the submitting parties as set out by the learned associate judge at [8]-[13] of his Honour's reasons as follows:

   "8       The competing propositions as to the construction of the part of the will dealing with the remainder of the estate were in brief terms as follows. 

   9        Mr Nicholson submitted that all nieces and nephews who survived their mother take a share if they are still alive and if not their estates take their share. 

   10       The residuary estate is worth about $500,000.  If Mr Nicholson is correct the following result will follow.  The estates of the three deceased children of the testator's sister Phyllis will each get a one-third share of their mother's 20% interest.  A 20% interest is worth about $100,000.  Accordingly, the estates of Geoff Bradshaw, Peter Bradshaw and Gwen Rathbone will each receive about $33,000.  The estate of the deceased daughter of the testator's sister Eileen, being the estate of Dorothy Pitfield, will share equally with Eileen's two living children being Jan Marshall and Kevin Levis so that each will take about $33,000.  The estates of the two deceased children of the testator's sister Mabel, namely the estates of Graham Burrell and Pat Burgess will take an equal share with her living child Alan Burrell so that each will take about $33,000.  The other two sisters being Elvie and Marie each left two children who survived the testator and have lived to survive the testator's widow.  Those children are Leone French, Margaret Di Gugliemo, Barry Jones and Lynette Whitchurch.  They will each take a half-share of what otherwise would have gone to their mother resulting in a payment to each of about $50,000. 

   11       Mr Readett, representing two nephews and a niece of the testator submitted that only those nephews and nieces living at the time payment is made could take a share.   Further, he submitted that the share of the deceased sister Phyllis, who left no children surviving the testator's widow, should be divided equally amongst the shares allocated to the testator's other four sisters on the basis that the bequest to the five sisters was joint.  However, he did not strongly press the latter submission and did not provide any authority which may have supported it.   

   12       If Mr Readett is correct each one-fourth remaining share would be worth about $125,000.  The two surviving children of the deceased sister Eileen, namely Jan Marshall and Kevin Levis, would each take about $62,500.  The sole surviving child of the testator's deceased sister Mabel, namely Alan Burrell, would take about $125,000.  The two surviving children of the testator's deceased sister Elvie, namely Leone French and Margaret Di Gugliemo and the two surviving children of the testator's deceased sister Marie, namely Barry Jones and Lynette Whitchurch, would each take about $62,500.

   13       Mr Williams, representing the applicant executor adopted the role of assisting in the Court in a neutral way." 

The decision below

1. The learned associate judge commenced his reasons for judgment by observing at [14] that there were two relevant rules of construction. The first being that the Court inclines to construe words in a will to enable them to operate as a complete disposition rather than a partial disposition and intestacy, unless it is clear that the testator intended his will not to operate as a complete disposition, Fell v Fell (1922) 31 CLR 268 at 271. The second was that a direction to "divide" in a will creates a tenancy in common rather than a joint tenancy so that divided shares do not pass to the survivors within the class specified, Halsbury's Laws of England, 4th ed, Vol 50, at 571.

2. His Honour then turned to the question whether or not the bequests to the five sisters all vested at the date of the testator's death. He answered that question in the following terms at [16]-[19]:

   "16  In my view, the terms of the will make it clear that vesting in the sisters occurred at the date of the testator's death.  The will provides 'if any Beneficiary (other than my said wife) should die before payment to her of … her share in my estate then her share shall go ….' [emphasis added].  The wording makes it apparent that each sister has an identifiable share even if she is not alive at the payment date.  This is consistent with a construction favouring early vesting subject to the beneficiary being divested should a later specified event occur.  The later specified event being the death of the sister survived by one or more of her children. 

   17   If there is doubt, the matter is resolved by the rule of construction imposing a presumption in favour of early vesting.  In Hickling v Fair [1899] AC 15, Lord Shand said at 28:

   'The postponement of the period of payment till the death of a life-rentrix does not suspend the vesting …'.

   18   This Court has recognised the presumption in favour of early vesting.  In Bradshaw v Bradshaw [2003] TASSC 138, Crawford J (as he then was) said at par[13]:

   'As a general rule, if the postponement of division or payment is merely because there is a prior gift for life, the gift in remainder vests upon the death of the testator. Re Bennett's Will [1857] EngR 942; (1857) 3 K & J 280; Browne v Moody [1936] AC 635 at 646.'

   19   I conclude that the bequests to the five sisters of the testator each vested at the date of the testator's death, subject to being divested if the condition subsequent occurred.  Namely, if the sister predeceased the life tenant leaving 'surviving children then living". 

3. His Honour then turned to the construction of the words "surviving" and "then living" in the clause under consideration, and went on to say at [21]-[26] of his reasons:

   "21  Mr Nicholson submitted that the word 'surviving' is redundant and that 'then living' means living at the date of the death of the child's mother. 

   22   Mr Readett pointed out that the words 'surviving children' are connected with the words 'of such beneficiary so dying' and submitted, accordingly, that the reference to surviving children is a reference to children surviving the mother.  This being so he submitted that the words 'then living' must refer to some other date which, in light of the requirement in the provision that a sister must be living at the payment date, should be construed also as a reference to the payment date. 

   23   If it had been the intention that only nieces and nephews living at the payment date should benefit it would have been a simple and obvious thing to have added after the words 'then living of such beneficiary' the words 'at the payment date'.  The testator did not do this.  If he had, and all sisters, nieces and nephews had predeceased the widow, there would have been an intestacy, being the very thing which the testator was trying to avoid.  An intestacy would have resulted in the testator's widow or her children receiving the whole of the remainder.  The will makes it clear that the testator wanted the remainder to go to his side of the family and not to his wife's side of the family. 

   24   Admitting the word 'surviving' as a redundancy gives the words 'then living of such beneficiary so dying' an unambiguous meaning connecting the requirement to be living with the time of death of the testator's sister.  This construction is consistent with the will being interpreted on the basis that the testator wanted to avoid intestacy and it is also consistent with the presumption in favour of early vesting.  This construction also avoids what the testator plainly did not intend.  Namely, that if there was delay between the date of death of the widow and payment (and the will provided to the trustee an 'absolute and uncontrolled' discretion to postpone payment) the identity of the beneficiaries and the amount to be received might change.

   25   In my opinion the word 'surviving' and the words 'then living' both relate to the time of the death of testator's sister and neither relates to the date upon which payment is made. 

   26   I conclude that a one-fifth share of the remainder of the estate vested in each of the testator's five sisters at the time of the testator's death.  Further, that upon the death of each sister her share was divested and became vested in equal portions to each of her children who were living at the date of her death so that if a child died later his or her share is to be paid to his or her estate.

The grounds of appeal

1. There are seven grounds of appeal. They are that the learned associate judge:

   1 Erred in concluding that the will was not expressed in clear terms to the effect that a child of a deceased sister of the testator had to both survive their mother and be living upon the death or remarriage of the testator's wife, or in the alternative at the time payment would be made to the sister, in order to share in the mother's interest in the estate.

   2 Erred in concluding that the word "surviving" and the words "then living" both relate to the time of death of the testator's sister, and neither related to the date on which payment is made.

   3 Erred in applying rules of construction to the testator's will without first ascertaining, or attempting to ascertain, from the language of the will the intention of the testator without reference or regard to the consequences of any rule of law or canon of construction.

   4 Erred in concluding that the testator's intentions were not apparent from the words of the will.

   5 Erred in applying the rule of construction to avoid a complete or partial intestacy where there was no ambiguity in the terms of the will.

   6 Erred in concluding that upon the death of each sister her share became vested in equal portions to each of her children who were living at the date of death of the sister.

   7 Having concluded that gifts to each sister vested at the date of the testator's death, erred in concluding that there would be intestacy in the event of all sisters, nieces and nephews predeceasing the widow.

Discussion

1. In my view, whatever route was taken by the learned associate judge in arriving at the conclusion he did as to the proper construction of the will, the conclusion itself was correct and the answers his Honour gave to the questions posed were correct. Any error in reaching the conclusion his Honour arrived at, whether by way of the application of rules of construction, the interpretation of the rules of intestacy, the redundancy of words in the will or otherwise, does not constitute material appealable error.

2. There are in reality only two questions arising as to the construction of contested provision in the will. They are, first, did the gifts to the testator's sisters vest upon the testator's death, and second, do the words "surviving children then living" refer to children of the testator's sisters living at the date of their mother's death or do they refer to the date of the death of the testator's widow or, bearing in mind that the trustees had absolute power to postpone, do they refer only to children living at the time of payment of the gift.

3. To my mind the answers to both questions are quite clear and the terms of the will are not in any doubt.

4. As to the first question, which is not really in dispute, there is, as was pointed out by the learned associate judge, a presumption in favour of early vesting. In Bradshaw v Bradshaw [2003] TASSC 138, Crawford J (as he then was) said at [13]:

   "As a general rule, if the postponement of division or payment is merely because there is a prior gift for life, the gift in remainder vests upon the death of the testator. Re Bennett's Will [1857] EngR 942; (1857) 3 K & J 280; Browne v Moody [1936] AC 635 at 646."

5. That is the case here. The gift to each sister was made by the testator but the division of the remainder and its payment were postponed during the life of the testator's wife. The use of the words "her share" in the phrase "[if she] should die before payment to her of any part of her share in my estate" puts the matter beyond doubt.

6. As to the second question, ground 2 of the notice of appeal contends that the learned associate judge erred in concluding that the word "surviving" and the words "then living" both related to the time of death of the testator's sister and neither related to the date on which payment of the gift is made. It is submitted on behalf of the appellants that his Honour determined that the word "surviving" appearing in the will should be treated as redundant; meaning that children of a deceased sister only had to survive their mother but not the life tenant in order to take in equal portions the one-fifth (1/5) share of the remainder of the estate which would otherwise have passed to their mother had she survived the testator's widow. In doing so, the appellants say that his Honour fell into error.

7. The appellants argue that on the clear words of the will, any niece or nephew was required to both survive their mother and be living at the time of the death or remarriage of the life tenant. They say that the words "surviving children" create a potential class of substitutory beneficiaries and that the words "then living" create a sub-set of that class and only those children in the sub-set can take.

8. I do not accept that submission.  To my mind the words of the will are clear and are consistent with an intention on the part of the testator to benefit his sisters after his widow died, and if any of them had predeceased his widow then to benefit any of their children living at the date of their mother's death. 

9. The relevant part of the contested clause is as follows:

   "I DIRECT that if any Beneficiary (other than my said wife) herein named should die before payment to her of any part of her share in my estate then her share shall go to the surviving children then living of such beneficiary so dying in equal shares"

   The words "surviving children then living" can, in my view, only sensibly refer to surviving children of the sister living at the date of her death. Each sister's share vested upon the death of the testator and was divested upon each of their deaths before the testator's widow. At that point the mother's share vested in her surviving child or children then living, irrespective of whether they themselves survived the testator's widow.

10. The words "surviving" and "then living" may well be tautologous but I am of the view that those words cannot rationally refer to anything other than to children surviving their mother and living at the date of her death. I do not accept the appellants' submission that the words "then living" denote a requirement that the relevant niece or nephew be alive at the time of the death or remarriage of the life tenant. The testator's direction under consideration is discrete and deals with the event of the testator's sisters' deaths before payment of their share. It does not refer back to the earlier, also discrete, direction dealing with the event of the death or remarriage of the testator's widow.

11. The appellants refer to authorities that establish that the words "then living" may apply to close the class of children to which a substitution clause applies. Whether that is so in any given case however depends upon the terms of the will. Those words, in my view, do not have the effect contended for by the appellants with respect to the terms of the testator's will.

12. The respondents submit that it is apparent from his will, that the testator wished the residue of his estate, at the conclusion of the life estate, to be divided equally between his sisters or, had a particular sister died, to her children.  They submit that it is arbitrary to interpret the will in such a way as to mean that the testator intended only to dispose of his estate to his sisters or their children living after the death of the life tenant as opposed to those children who outlived their mother but not the life tenant.  I agree.

13. I would dismiss the appeal on all grounds.