R v Chapman

Re ESTATE McLAREN DECEASED
[2001] SASC 103

WILLIAMS J Executor Trustee Australia Ltd, the executor of the estate of Esme Stewart McLaren has applied to the Court for determination of a question arising under the will of Esme Stewart McLaren who died on 20 July 1927 leaving a will dated 10 March 1923 which was proved in this Court by the Testatrix’s husband, the sole executor. Upon the husband’s death on 19 December 1936, Executor Trustee Australia Ltd was appointed as trustee for the trusts of the Will. The deceased’s daughter Pamela Mayo McLaren was born on 26 January 1912 and is still living. By order dated 3 April 1946, Pamela adopted a child now known as Janet Esme Maclay who was born on 14 February 1945. The adoption order was made by a Special Magistrate and two Justices sitting at Adelaide and constituting a Court pursuant to the Adoption of Children Act 1925 - 1943 (SA).
Pamela has had no children apart from her adopted daughter Janet. The question at issue is whether by virtue of the adoption order made in 1946, Janet is to be treated as a daughter of Pamela with respect to provision made by cl 4(d) of the will in favour of the “child or children” of Pamela upon her death.
The provision of the will deals with the residuary estate of the Testatrix. Subject to a life interest in favour of Pamela, the clause confers upon Pamela a special power of appointment in favour of her children and exercisable by deed or will. In default of appointment, the residue (in terms of this clause) is then divisible amongst the children of Pamela who being male attain 21 years or being female attain that age or marry. There is then a gift over to a class of nephews and nieces in the event of failure of this disposition.
The question arises against a South Australian legislative history in which there has been progressive development since 1925 towards equating the position of an adopted child with that of a natural child.
At the time when it was made, the abovementioned adoption order did not extend so as to enable an adopted child to acquire any interest in property pursuant to a will executed prior to the date of the adoption order. That is the effect of a proviso to the Adoption of Children Act 1925 - 1943. However, that Act has now been repealed and the current Adoption Act 1988 (SA) upon its face contains no such limitation. The removal of this proviso is part of the progressive development to which I have referred. The Court is asked to decide whether the person or persons entitled upon the death of the life tenant should be ascertained by applying the current Adoption Act or the repealed legislation.
By cl 3 of the will, the testatrix made a specific bequest to “my daughter Pamela” and thereby identified her for the purposes of the following clause.
Clause 4(d) of the Will reads as follows:
“I give to my husband the balance of the income of my residuary trust funds during his life and from and after the decease of my said husband my trustee shall stand possessed of one moiety and of such further portion of the residuary trust funds as my husband shall by deed or will appoint or if no such appointment be made Then of the whole of the residuary trust funds Upon trust to pay the income thereof to my said daughter during her life she having no power while under coverture to dispose of such income or any part thereof by way of anticipation but the same to be for her sole and separate use And from and after the death of my said daughter In trust for the children of my said daughter or any of them in such shares (if more than one) and in such manner as she shall by any deed or deeds or by her will or any codicil thereto appoint And in default of such appointment and so far as any such appointment shall not extend In trust for the children of my said daughter who being male shall attain the age of twenty one years or being female shall attain that age or marry in equal shares And if there shall be only one such child the whole to be In trust for that one child But so nevertheless that no child who or any of whose issue shall take a share under any such appointment as aforesaid shall take any part of the trust funds remaining unappointed without bringing the share appointed to him or her into hotchpot and accounting for the same accordingly unless my daughter in making such appointment as aforesaid shall thereby direct the contrary And in case my said daughter shall die before attaining a vested interest in the residuary trust funds or any part thereof or if then there shall be no child of my same daughter who being male shall attain the age of twenty one years or being female shall attain that age or marry Then upon trust for my nephews George Alexander Turnbull David Paterson Turnbull and James Rolland Black or such one or more of them as shall survive my daughter and if more than one in equal shares and if none of my said nephews shall become entitled to the residuary trust funds or any part thereof Then in trust for such nephews and nieces of mine and their issue born in due time as shall survive my said husband and myself in equal shares the issue of such nephews and nieces taking per stirpes and not per capita.”
(Emphasis added to the crucial passages).
The three named nephews George Alexander Turnbull, David Paterson Turnbull and James Rolland Black have all died (and therefore have not survived the daughter Pamela).
The question at issue is whether Janet is entitled to succeed to the capital of the trust fund on the death of Pamela (either by virtue of or in default of exercise of the power of appointment) or whether the trust fund then passes to the class comprising the testatrix’s nephews and nieces and their issue mentioned in the will. Although there is some obscurity in cl 4(d) in the use of the phrase “born in due time,” it seems that to qualify as a member of this class it is necessary for such nephews and nieces and issue to have been living at the time of the testatrix’s death (in 1927) and also living at her husband’s death (in 1936). (The phrase to which I have called attention, may have the effect of extending the class to include persons who were en ventre at the relevant time and later born alive - see Theobald on Wills 15^th ed at 395).
Argument was presented by counsel on behalf of the Trustee as applicant and on behalf of Janet and on behalf of the nephews and nieces who are members of the class abovementioned. A surviving nephew (Mr Tim Stewart Paterson - born 14 March 1925) was appointed by the Court to represent those persons.
It is of some importance that the question be determined forthwith so as to enable Pamela (aged 88 years) to order her affairs. Pamela has made an affidavit in which she expresses her desire to obtain clarification of her daughter’s entitlement with respect to the estate of the Testatrix. Pamela has a power of appointment with respect to the capital and income arising in the estates of two aunts. It is relevant to the manner in which Pamela exercises her discretion in this behalf to know where her own daughter stands financially in terms of her expectations. The question is also relevant to enable Pamela to finalise her own testamentary dispositions based upon accurate information rather than surmise.
The parties by their counsel have recognised that strictly the point at issue might be regarded as having been raised prematurely. There is a possibility (although remote) that the factual situation could change before the death of Pamela. If she were much younger or if there was any likelihood that the adoption order might be set aside, then my attitude would be different. Nevertheless the point cannot be ignored.
In Bass v Permanent Trustee Co Ltd (1999) 198 CLR 334 at 357 the High Court has warned Judges against answering hypothetical questions. The propriety of determining the point now raised must be resolved. In my opinion the present case is very similar to Pedley-Smith v Pedley-Smith (“Pedley-Smith”) (1953) 88 CLR 177. In that case, the question was raised as to whether children adopted in New South Wales by virtue of State legislation were entitled to take under an appointment made after their adoption in exercise of a special power of appointment by deed in favour of the “issue” of the adoptive parent with respect to a settled fund; the instrument containing the power (in that case a will) was created before the date of the adoption order. It was important to those interested in the settled property to know whether the appointment was effective as it had revenue implications.
In a joint judgment five judges of the High Court said at 187 - 188:
“It will be seen that the question relates to future rights. Nothing appears as to the possibility of children coming into existence who qualify by birth and not adoption as objects of the power. If there be such a possibility, a decision in favour of the validity of the appointment that has been made would exclude the rights of a class who may, but have not yet, come into being. If there be no such possibility the question, as Roper CJ in Eq pointed out, really relates to the availability to Mrs Pedley-Smith of the special, rather than the general, power of appointment, for the purpose of appointing her shares to her adoptive sons. The distinction is of great importance both for the purposes of New South Wales death duty and of Commonwealth estate duty, and that no doubt is why the question is propounded during the life of Mrs Pedley-Smith.
A party was appointed to represent her next of kin who under the trusts of the testator’s will would take in default of children and in default of the exercise of the general power of appointment. This representation proved adequate in fact, however tenuous is the interest of the next of kin in the question at issue. But nevertheless the propriety of determining the question in the present state of affairs is open to doubt. It is a matter upon which it will be enough to refer to In re Staples; Owen v Owen, and In the Will of Sayer, where the considerations affecting such a question are discussed. Roper CJ in Eq was alive to the difficulty. His Honour said: “There is ... no doubt that in many respects the question is premature and its submission at this stage has some unsatisfactory features because of that. No objection has been taken to it being decided. In fact, all parties seek a decision upon it in this suit, and I think, though with some doubt, that there is sufficient present materiality in it to permit the Court to decide it, so that the first-named defendant will know whether the deed of appointment, so far as the trusts declared under it come into operation, has exhausted her power to appoint.”
In the result the conclusion which his Honour reached could prejudice no unascertained interest. As we are of opinion that this conclusion is correct, we shall no doubt be safe enough in following the course the learned judge took of acceding to the desire of the parties and deciding the matter.”
In reaching my decision as to whether it is appropriate to make a declaration, I am influenced by Pamela’s great age and the fact that in the absence of an appropriate order she may exercise her dispositive powers without knowing the true effect of an order of a Court of this State as affecting Janet’s status.
As there is no opposition to my dealing with the matter and in view of the utility of a declaration which can be perceived from Pamela’s affidavit (so as to facilitate the ordering of her affairs immediately), I consider that I should deal with the question - which is one of statutory interpretation. The Court is required to consider the changes which have been made to the adoption legislation in this State as to the effect of an adoption order.
The order for adoption in 1946 was made pursuant to the provisions of the Adoption of Children’s Act 1925 - 1934.
Section 11 provided:
“11When an order of adoption has been made, the adopted child shall for all purposes, civil and criminal, and as regards all legal and equitable liabilities, rights, benefits, privileges, and consequences of the natural relation of parent and child, be deemed in law to be the child born in lawful wedlock of the adopting parent:
Provided always that such adopted child shall not by such adoption-
I.      acquire any right or title or any interest whatsoever in any property which would devolve on any child of the adopting parent by virtue of any deed, will, or instrument whatsoever executed or made prior to the date of such order of adoption, unless it is expressly so stated in such deed, will, or instrument; nor
II.     be entitled to take property expressly limited to the heirs of the body of the adopting parent, nor property from the lineal or collateral kindred of such parent by right of representation; nor
III.     acquire any property vested or to become vested in any child of lawful wedlock of the adopting parent in the case of the intestacy of such last-mentioned child, or otherwise than directly through such adopting parent.”
Section 12 provided:
“12.When an order of adoption has been made, the adopting parent shall for all purposes, civil, criminal, or otherwise howsoever, be deemed in law to be the parent of such adopted child, and be subject to all liabilities affecting such child as if such child had been born to such adopting parent in lawful wedlock; and such order of adoption shall thereby terminate all the rights and legal responsibilities and incidents existing between the child and his or her natural parents, except the right of the child to take property as heir or next of kin of his natural parents directly or by right of representation.”
(Proviso I to section 11 is the proviso to which I have earlier referred).
This legislation is to be compared with the provisions of the current Adoption Act (1988) s 9 which reads as follows:
“9(1)Subject to this section, where an adoption order is made, the adopted child becomes in contemplation of law the child of the adoptive parents and ceases to be the child of any previous natural or adoptive parents.
(2)If an adoption order is made in favour of a person who is cohabiting with a natural or adoptive parent of the child in a marriage relationship, the relationship of that parent to the child is not affected by the order.
(3)Where-
(a)     one of the natural or adoptive parents of a child dies;
(b)    the surviving parent cohabits with another person in a marriage relationship;
and
(c)    the child is adopted by that other person,
the adoption does not exclude rights of inheritance from or through the deceased parent.
(4)Where an order for the adoption of a child is made, any previous order for the adoption or guardianship of the child ceases to have effect.”
It seems to me to be clear upon the face of the Act as in force in 1946, that the adopted child Janet did not acquire any interest in any property by virtue of the will of the testatrix which was executed prior to the date of the order (see first proviso to s II above recited). It seems equally clear that s 9 of the current (1988) Adoption Act (whatever its ambit of operation) imposes no such restriction.
As a matter of history, I note that by the Act No 12 of 1967 (Adoption of Children Act 1966-67) the Adoption of Children Act 1925 (as amended) was wholly repealed - see s 3 and Schedule to the Act. Sections 30 and 31 of the 1967 Act dealt with the general effect of adoption orders; s 30 was amended in 1976.
Until 1976 s 30 took effect subject to any law of the State which expressly distinguished in any way between adopted children and children other than adopted children. After 1976 the substance of s 30(1) was that:
“...upon the making of an adoption order-
(a)the adopted child becomes a child of the adopter or adopters, and the adopter becomes a parent, or the adopters become the parents, of the child as if the child had been born to the adopter or adopters in lawful wedlock;
(b)the adopted child ceases to be a child of any person who was a parent (whether a natural parent or a parent by adoption) of the child before the making of the adoption order, and any such person ceases to be a parent of the child:”
...
Section 30(2) provided:
“The provisions of subsection (1) of this section do not have effect so as to deprive an adopted child of any vested or contingent proprietary right acquired by the child before the making of the adoption order.”
As now relevant s 31 read:
“(1)The provisions of subsection (2) of section 30 of this Act have effect in relation to dispositions of property, whether by will or otherwise, and whether made before or after the commencement of this Act, except that-
(a) those provisions do not affect a disposition of property by a person who, or by persons any of whom, died before the commencement of this Act;
...
(4)In relation to a disposition of property by a person who, or by persons any of whom, died before the commencement of this Act, an adoption order made under this Act has the same effect as if the repealed Act had continued in force and the adoption order had been made under that Act.
(5)Nothing in section 30 of this Act or in this section affects the operation of any provision in a will or other instrument (whether made or coming into operation before or after the commencement of this Act) distinguishing between adopted children and children other than adopted children.”
Section 3 contained transitional and savings provisions including:
“(1)The Acts set out in the first column of the Schedule to this Act are repealed to the extent indicated in the second column of that Schedule.
(2)Notwithstanding such repeal-
“(e) an adoption order or any other order or direction made under the repealed Act and in force immediately before the commencement of this Act shall, subject to this Act, continue in force until it expires, is discharged or is otherwise determined according to law;....”
This 1967 Act was itself repealed by the 1988 Adoption Act s 3; this lastmentioned Act contains no transitional provisions nor direction as to how orders should affect instruments which took effect before the current legislation came into force.
Before examining the opposing arguments of counsel, it is useful to restate two well-known rules of construction:
(1)Unless the contrary intention is clearly shown, a statute shall not be construed as taking away or altering the incidents of accrued rights the title to which consists in facts or events which have occurred before its enactment - Maxwell v Murphy (1957) 96 CLR 261 at 266-268 and 285.
(2)A statute which, if it does affect such accrued rights shall not be construed as taking away any wider category of such rights or as altering the incidents thereof to any greater extent than the statutory language clearly requires - Winsor v Boaden (1953) 90 CLR 345 at 347.
It is argued on behalf of Janet that until the death of the life tenant Pamela, the class which is then to benefit under the will is not closed and must be ascertained at that date. Counsel for Janet argues (applying the language of s 9(1) of the Adoption Act 1988) that Janet has become “in contemplation of law the child” of Pamela. Reliance was then placed on Williams on Wills 7^th ed Vol 1 at 650 dealing with “the first rule of convenience”:
“A class is prima facie composed of those members (if any) existing ascertainable and capable of taking at the death of the testator, but where the period of distribution is at a later date, the class opens so as to let in all those members coming into existence before the period of distribution.”
Counsel for Janet then argues that the class which is entitled to take upon the death of the life tenant Pamela cannot be determined until her death - at which time she, the adopted child is deemed for all purposes to be a child of Pamela. (The argument on behalf of Janet is somewhat similar to that which found favour with Judson J in dissent in a Canadian case - see Re Gage discussed below). It is of the essence of counsel’s submission that in determining the membership of the class, the adoption order is to operate in accordance with the Adoption Act 1988 and that the proviso to which I have referred has ceased to have effect by virtue of the repeal of the 1925 Act in which it appears.

From this point an argument was developed as to when the interests of the beneficiaries indefeasibly vest. Counsel for Mr TS Paterson argued that (as relevant) the residuary estate vested in either 1927 upon the death of the Testatrix, or in 1936 upon the death of her husband and that the legislation should not be construed so as to take away rights which had then accrued. Counsel for Mr Paterson argued that at the time of the creation of the trust in 1927 upon the death of the Testatrix, the identity of those who might take was ascertained and that upon the death of the testatrix’s husband in 1936, the identity of those who would take was ascertained with certainty.
In my opinion, the question does not depend upon the vesting date and whether the interest is contingent or is indefeasibly vested. The question is whether the legislation discloses an intention to disturb the accrued rights (including the contingent interests of the nephews and nieces) acquired under a will which took effect upon the death of the testatrix before the relevant legislation came into force. The question can be expressed as depending upon the application of the general principles of construction as reinforced by s 16(1)(c) of the Acts Interpretation Act 1915 (SA) which reads as follows:
“(1)Where an Act is repealed or amended, or where an Act or enactment expires, then, unless the contrary intention appears, the repeal, amendment or expiry does not-
...
(c) affect any right, interest, title, power or privilege created, acquired, accrued, established or exercisable, or any status or capacity existing, prior to the repeal, amendment or expiry;...”
Applying this subsection in conjunction with general principles of construction, the crucial question is whether Parliament, in its repeal of the 1925 Act has shown a clear intention to take away or alter (ie “affect”) the accrued rights (whether contingent or otherwise) arising under the will of the Testatrix upon her death (see Ogden Industries Pty Ltd v Lucas (1967) 116 CLR 537 at 556-557 and 564).
The present question is very similar to that which arose in Re Rutledge, deceased [1973] VR 733 and discussed at 738-739 per Smith J. I note also the remarks of Pape J at 747-748:
“It may be thought (as Judson J appears to have thought in Re Gage [discussed below], and as McInerney J decided) that because of the class of the children does not close until the death of the life tenant, and because any children who are born in lawful wedlock to Margaret Crosby before that date are entitled to take under the gift in the codicil, adopted children who acquire full property rights at any time before the death of the life tenant are to be in the same position as those born in lawful wedlock. But, in my view, there is a vital distinction between these two cases, for there can never be any doubt about what children are born in lawful wedlock whereas when it is sought to convert children not born in lawful wedlock to Margaret Crosby into such children by means of subsequent legislation that legislation must always be subject to s 7(1)(b) of the Acts Interpretation Act 1958 and to the rule of construction that such statutes are not in the absence of clear words to be taken as derogating from accrued rights. I therefore am of opinion that upon the proper construction of this will and codicil the respondents, Andrew Charles Crosby and Belinda Marion Crosby, took no interest thereunder.
But the power of Parliament is supreme - it may if it chooses declare that black is thereafter to be regarded as white, and it is competent for it to enact legislation after the testator’s death which, if couched in sufficiently explicit language, will enable these adopted children to take on Margaret Crosby’s death. But as McInerney J observed an intention to affect wills of testators already dead is not to be presumed and such an intention must be clearly apparent in the legislation. Mr Griffith argued that the 1962 Act demonstrated such a clear intention, and it is, therefore, necessary to consider whether his argument can be sustained. At this point the problem becomes not one of the construction of the will and codicil, but one of the construction of the Adoption of Children (Property) Act 1962 (No 6971).
The general principle of construction of statutes was said by Kitto J in Ogden Industries Pty Ltd v Lucas (1967) 116 CLR 537 at p 564, to be that “a Statute changing the law ought not, unless the intention appears with reasonable certainty, to be understood as applying to facts or events that have already occurred in such a way as to confer or impose or otherwise affect rights or liabilities which the law had defined by reference to past events” and for this proposition he cited the authority of Maxwell v Murphy (1957), 96 CLR 261 at p 267; [1957] ALR 231; Chang Jeeng v Nuffield (Aust) Pty Ltd (1959), 101 CLR 629, at pp 637-8; [1959] ALR 1219, and Fisher v Hebburn Ltd (1960) 105 CLR 188 at p 202; [1961] ALR 244. His Honour then went on to say: “This principle is too narrowly interpreted I think if it is treated as referring only to rights and liabilities which are vested, in the sense that the individuals against whom or in whose favour they are to ensure are finally ascertained and the amounts fixed. The sense of it is that which Fullagar J, expressed succinctly in Fisher v Hebburn Ltd, supra, at (CLR) p 194 by saying that an amending enactment, or for that matter, any enactment is prima facie to be construed as not attaching new legal consequences to facts and events which occurred before its commencement.”
In this case the effect of the 1962 Act is, if Mr Griffith’s argument is correct, to substitute a much larger and different class of beneficiaries for those provided for by the will, with the result that the rights of those who would as at the date of death have taken interests are correspondingly reduced.”
In my opinion, s 9 of the Adoption Act 1988 is directed towards the effect of adoption orders which are made pursuant to that Act since its introduction. Neither that Act, nor the 1967 Act purport to deal with the effect of orders made under the 1925 Act as affecting the estates of persons dying before an adoption order was made under the 1925 Act.
My approach to this question is consistent with that followed in In re Pearson [1946] VLR 356 where the Court determined the effect of the Tasmanian adoption legislation containing a proviso that the adopted child did not acquire any right by virtue of an instrument made prior to the adoption order. It was held that legislation of this type operates so as to confer on the adopted child the full character and rights of a child naturally born of the adoptive parents except that he or she is not to have the character of a child capable of taking under a will made before the adoption order. The question as to the status of the child is to be determined by the law of the child’s domicil.
Although it will be important to consider the language of the will with a view to ascertaining the intention of the testator, that exercise in a case such as the present will not provide the answer. I consider that the question raised is one as to the effect of the order dated 3 April 1946. Nevertheless, the Court must guard against making a new will for the Testatrix by construing the language of her will according to legislation enacted subsequent to death - unless the legislation clearly so extends. There should not be attributed to a testator “the intention of extending his benevolence to persons who do not acquire such rights and status until after his death” - see In re Marshall deceased (1957) 1 Ch 507 at 524 per Lord Romer.
I have already referred to the facts of Pedley-Smith in another context. In 1940 the beneficiary adopted two children and exercised a power of appointment under a will; the testator had died in 1935. The Child Welfare Act 1939-1952 (NSW) made an adopted child a child for all purposes except with respect to prior wills. (A statutory proviso of the nature now in question was applicable). Despite the fact that the children’s entitlement was based upon an instrument executed after the adoption in exercise of a power of appointment contained in a will, the High Court treated the proviso as applicable. In a joint judgment five High Court Judges said at 189-190:
“What [the statutory provision containing the proviso] excludes is the acquisition of a right, title or interest in property under a deed will or instrument made or executed before the adoption order. But the interests appointed by the deed are surely acquired under the will creating the power within the meaning of the proviso. It is no doubt true that the appointment must combine with the power before an interest passes to or is acquired by the appointees. But it is the will that marks out “issue” as the objects to which the testator’s bounty is confined, and the will is the assurance by which the property is imparted to the appointees once the power is exercised. The adoption and the special power of appointment form two of the constituent elements of the appointee’s title. The evident purpose of par (a) of the proviso is to prevent dispository instruments already made in favour of children by birth receiving, because of the adoption, an unintended operation in favour of adopted children.”
The will now in question contains a special power of appointment. In light of Pedley-Smith, the purported exercise of the power of appointment would not produce a different outcome than if the property passes pursuant to the will in the absence of the exercise of the power.
The questions before me were canvassed in Re Gage before the Ontario Court of Appeal and on appeal before the Supreme Court of Canada (see 28 DLR (2d) 469 and 31 DLR (2d) 662). The argument presently advanced for the adopted child found favour with Judson and Ritchie JJ who were in dissent in the Court of Appeal; Judson J maintained his dissent during the appeal upon which he also sat. The Court expressed the issue as being one of construction of the will rather than as one of status. However, if one so regards the broad question, it is still necessary in a case such as the present to superimpose upon the terms of the will, the effect of a court order. In this sense, the language of the will itself requires that a determination be made of the status of the beneficiary. However, the Court will lean against the application of amending legislation passed after the death of a testator in such a way as to disturb the rights (including contingent benefits) arising under a will at the Testator’s death.
In my opinion, Janet Esme Maclay is not to be treated as a child of Pamela Mayo McLaren for the purposes of determining an entitlement under a will which took effect before the 1946 adoption order. The effect of that order is not governed by the Adoption Act 1988.
I will hear the parties as to the form of the declaration and other orders.

[2001] SASC 103

30 March 2001