Ramsay v Trustees Executors and Agency Co Ltd - [1948] HCA 44

TRUSTEES EXECUTORS AND AGENCY

RESPONDENTS.

COMPANY LIMITED AND OTHERS DEFENDANTS,

ON APPEAL FROM THE SUPREME COURT OF WillConstruction-Public policy-Illegality-Condition defeating gift-Effect on H. C. OF

marital relations of donee-Gift to testator's son of income of fund SO long as married to " his present wife "-Gift of corpus to son on termination of marriage -Gift over if son should predecease wife.

A testator by his will directed his trustees to convert his estate and to hold the proceeds in trust " to pay the income such period

as he shall remain married to his present wife and on the termination of such period in trust for my provided however that should my

son predecease his said wife during such period my estate shall go to my my sister

in equal shares." Held, by Latham C.J., Starke and McTiernan JJ. (Dixon and Williams JJ. dissenting), that this provision contained nothing which offended against public policy as having, or tending to have, an adverse effect on the son's marriage and it was wholly valid.

In re Caborne; Hodge v. Smith, (1943) Ch. 224, not followed. Decision of the Supreme Court of Victoria (Lowe J.) affirmed.

APPEAL from the Supreme Court of Victoria.

George Binnie Ramsay died on 23rd April 1946, leaving a will dated 12th March 1946. On 8th May 1947 letters of administra- tion with the will annexed were granted to the Trustees Executors and Agency Co. Ltd. The will gave the testator's estate to his trustees on trust to convert and to hold the proceeds in trust to

77 CLR 322

pay debts &. and pecuniary legacies and "subject thereto to pay the income of my estate to my son George Binnie Ramsay for such period and SO long as he shall remain married to his present wife Irene Ramsay and on the termination of such period in trust for my said son absolutely provided however that should my said son predecease his said wife during such period my estate shall go to my

nephew Robert Ramsay and my sister Mary Marshall Baillieu in equal shares."

The son took proceedings in the Supreme Court of Victoria by originating summons for the determination of questions relating to the provision set out above. The defendants to the summons were the administrator and the testator's nephew and sister named in the will. The summons asked the following questions -1 (a) Is the plaintiff entitled to an immediate absolute interest in the residuary estate of the testator ? (b) If the answer to part (a) is in the negative, what is the nature and extent of the interest in the said residuary estate given to the plaintiff by the words " to pay the income of my estate to my son George Binnie Ramsay for such period and SO long as he shall remain married to his present wife Irene Ramsay and on the termination of such period in trust for my said son absolutely ? (c) Is the gift…

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: [1948] HCA 44
Decision Date: 14 December 1948

CaseChat Overview and Summary

The appeal concerned the validity of a provision in the will of George Binnie Ramsay, who died in 1946. The testator's residuary estate was to be held by his trustees to pay the income to his son, George Binnie Ramsay, for as long as he remained married to his current wife, Irene Ramsay. Upon the termination of this marriage, the corpus was to be held in trust for the son absolutely. However, a proviso stipulated that if the son predeceased his wife during the subsistence of their marriage, the estate would pass to the testator's nephew and sister. The son contended that this provision was invalid as it tended to encourage divorce. The Supreme Court of Victoria upheld the validity of the provision, and the son appealed to the High Court.

The High Court was required to determine whether the testamentary provision, which granted the son income during his marriage and the corpus upon its termination, with a gift over to others if the son died before his wife during the marriage, was void as contrary to public policy. Specifically, the court had to consider whether the provision created an undue inducement for the son to terminate his marriage, thereby offending the public policy that upholds the institution of marriage.

A majority of the High Court, comprising Latham C.J., Starke, and McTiernan JJ., dismissed the appeal. They reasoned that while public policy aims to uphold marriage, the provision in question did not, in general, present a substantial or real temptation to a person to bring about the dissolution of their marriage by improper means. The court adopted the "tendency test," which requires an examination of whether a provision, taken as a whole, is likely to expose contracting parties or beneficiaries to a real temptation to do something harmful, and whether they are likely to yield to it. The majority distinguished the present case from *In re Caborne; Hodge v. Smith*, finding that the provision did not create an effective inducement to divorce, particularly given the legal and moral deterrents against such actions. They concluded that the testator's intention to exclude his son's wife from benefiting from the estate was permissible, and the provision did not, in general, tend to injure public interests.

Dixon and Williams JJ. dissented. Williams J., in particular, found the provision invalid, following the reasoning in *In re Caborne; Hodge v. Smith*. He considered that the condition was framed to encourage the dissolution of the marriage, which was contrary to the policy of the law to preserve marriage. He viewed the gift over as a condition subsequent designed to divest the son's interest unless a divorce was secured, and concluded that such a condition was void.

Orders