McQuade v Morgan - [1927] HCA 21

MORGAN AND OTHERS

PLAINTIFFS AND DEFENDANTS,

ON APPEAL FROM THE SUPREME COURT OF

NEW SOUTH WALES. Deed of Appointment-Construction-Gift of income after appointor's death-Gift

over on appointee charging his interest-Charge given and released before appointor's death-Determination of interest-Forfeiture. SYDNEY,

The donee of a power of appointment appointed, by a deed-poll, that the April 11, 20;

trustees should after her death hold the property appointed upon trust for her four children for their maintenance during their minority and after their respectively attaining twenty-one to pay them the whole of the income in equal shares. It was then declared that "in case any of the said children

shall become bankrupt or do or suffer any act or thing whereby the

39 CLR 223

said income or his or her interest therein or any part thereof shall be charged or encumbered or become vested in or payable to any other person or persons

shall during the remainder of the life of such child whose interest shall have so determined apply the share or shares of income to which such child would have been entitled as the same shall from the maintenance of his or her issue," &. After the deed of appointment was executed the appellant, one of the children, charged his interest as collateral security for the payment of money advanced to him on mortgage and, before the death of the appointor, the mortgagee released by deed the mortgagor

Held, by Knox C.J., Higgins and Rich JJ. (Isaacs J. dissenting), that upon the charge being given the interest appointed to the appellant became forfeited. The rule as stated in Jarman on Wills, 6th ed., p. 1499, that no forfeiture is incurred if the charge is got rid of before the interest falls into possession, is too widely stated the rule is not applicable where no ambiguity can be

Decision of the Supreme Court of New South Wales (Harvey C.J. in Eq.)

APPEAL from the Supreme Court of New South Wales.

By a deed-poll dated 4th April 1901 Emily Carleton McQuade, pursuant to a power of appointment given to her by the will of her father, Charles Carleton Skarratt, over a one-eighth share of his residuary estate (called in the will his " residuary trust funds") appointed that the trustees of that estate should from and after her death hold that share upon trust for her named children in equal shares, to be used subject to the limitations thereinafter contained at the discretion of the trustees during the minorities of the children for their maintenance, education and advancement in life respectively, and the whole of the income of their respective shares to be paid to the children after they respectively should attain the age of twenty-one years or marry under that age, and if more than one in equal shares. The deed then proceeded It is hereby declared that in case any of the said children of the said Emily Carleton McQuade shall become bankrupt or do or suffer any…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [1927] HCA 21
Decision Date: 6 May 1927

CaseChat Overview and Summary

The case of *McQuade v Morgan* involved an appeal to the High Court of Australia from the Supreme Court of New South Wales. The dispute concerned the construction of a deed of appointment and a forfeiture clause contained within it. The appellant, Frederick Carleton McQuade, had been appointed an interest in income from a trust fund, subject to certain conditions. The respondents were other beneficiaries of the trust and the trustees.

The central legal issue before the court was whether the appellant had forfeited his appointed interest. This forfeiture was alleged to have occurred due to the appellant executing a deed charging his interest as collateral security for a loan, prior to the death of the appointor. The critical question was whether this charge, which was later released before the appointor's death, constituted a forfeiture under the terms of the deed.

A majority of the High Court, comprising Knox C.J. and Rich JJ., held that the appellant had forfeited his interest. They reasoned that the forfeiture clause was not ambiguous and should be interpreted according to its plain meaning. The court rejected the argument that a charge must be operative at the time the income becomes payable to avoid forfeiture, finding that the rule as stated in *Jarman on Wills* was too broadly stated. They concluded that the appellant had performed an act that charged his interest, thereby triggering the forfeiture clause, irrespective of the subsequent release of the charge. Isaacs J., dissenting, argued that the established rule of construction, which allows for forfeiture to be avoided if a charge is removed before the interest falls into possession, should have been applied, as the deed did not contain unambiguous language to override this rule.

The High Court, by majority decision, dismissed the appeal. Consequently, the decretal order of the Supreme Court of New South Wales, which declared that Frederick Carleton McQuade had forfeited the whole of his interest in the appointed share, was affirmed.

Orders