Ramsay v Trustees Executors and Agency Co Ltd

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.