Re Tennant; Mortlock v Hawker

The case of *Re Tennant; Mortlock v Hawker* concerned the interpretation of a testator's will, specifically regarding the application of hotchpot clauses in the distribution of his residuary estate and its intermediate income. The dispute arose between beneficiaries who had received advances from the testator during his lifetime and those who had not, concerning how their respective shares in the estate should be calculated. The matter was heard on appeal from the Supreme Court of South Australia.

The primary legal issues before the court were: (1) at what point in time should the proportionate or fractional shares of the beneficiaries in the corpus of the residuary estate be ascertained for the purposes of a hotchpot clause; and (2) how should the intermediate income of the estate be divided amongst the beneficiaries pending the final distribution of the corpus. The testator's will included provisions for the sale and conversion of his estate, distribution to his children in equal shares, and two hotchpot clauses requiring advances made during his lifetime to be brought into account.

The court reasoned that the testator's intention, as evidenced by the will's provisions for postponing conversion and managing the estate, was that the proportionate shares of the beneficiaries in the residuary estate should be ascertained upon the actual conversion of the estate. This approach differed from a method that would fix values at the date of the testator's death. Regarding intermediate income, the court held that until the fractional shares of the corpus were definitively ascertained, income should be divided by adding interest at 4% per annum on the value of advances to the estate's income, then dividing the aggregate and deducting the calculated interest from the shares of advanced beneficiaries. Once the corpus proportions were fixed, income should be distributed in those same proportions.

The appeals were dismissed, affirming the decision of the Supreme Court of South Australia. The court ordered that the costs of all parties, including the trustees' costs as between solicitor and client, be paid out of the estate.