Reschke v Reschke - [2017] SASC 192

SUPREME COURT OF SOUTH AUSTRALIA
(Civil)
RESCHKE v RESCHKE
[2017] SASC 192
Judgment of The Honourable Justice Blue
22 December 2017
EQUITY - POWERS OF APPOINTMENT - CREATION AND CONSTRUCTION - OTHER MATTERS
EQUITY - POWERS OF APPOINTMENT - EXERCISE GENERALLY - DEVISE OR BEQUEST IN GENERAL TERMS
SUCCESSION - CONSTRUCTION AND EFFECT OF TESTAMENTARY DISPOSITIONS - TESTAMENTARY DISPOSITIONS GENERALLY - WHAT PROPERTY TRANSFERABLE BY WILL
SUCCESSION - CONSTRUCTION AND EFFECT OF TESTAMENTARY DISPOSITIONS - CONSTRUCTION GENERALLY - PRINCIPLES OR RULES OF CONSTRUCTION - GENERALLY
Determination of preliminary issues relating to construction of a trust deed and will.
The Rocky Castle Trust was established by a trust deed. The fourth defendant Fabriano Pty Ltd was appointed trustee of the trust. Trevor Reschke and the first defendant his wife Vivian were the shareholders and directors of Fabriano. Clause 28 provided that during his lifetime Trevor was to have power to remove and replace any trustee and upon his death the power was to vest in his legal personal representative.
On 1 August 2007, Trevor made his last will and testament. Clause 8 provided that Trevor gave his power of appointment in the trust and his shares in Fabriano to Vivian, Mr Scott and Mr Westley to hold and to act as trustees of the trust and in that capacity to vest the farming land owned by the trust in favour of his sons Dru and the first plaintiff Burke in such shares as would create equality in their landholdings. Trevor died in 2008.
It is common ground that the power of appointment conferred by clause 28 of the trust deed was limited so that it could only be exercised by Trevor during his lifetime and hence could not be left as a testamentary disposition.
Burke contends that by clause 8 of the will Trevor exercised his power of appointment inter vivos on 1 August 2007, merely postponing the date of effect of the change to the time of death. Fabriano and Vivian contend that by clause 8 Trevor purported to transfer his power of appointment by testamentary disposition.
Held:
1. The power of appointment granted to Trevor by clause 28 of the trust deed endured only during his lifetime and was incapable of being transferred by will as a testamentary disposition (at [26]).
2. By clause 8 of his will, Trevor purported to transfer the power of appointment by way of testamentary disposition and did not exercise the power of appointment inter vivos on 1 August 2007 (at [42]).
3. The purported transfer of the power of appointment by clause 8 of the will was invalid (at ([43]).
4. The transfer of Trevor’s share in Fabriano effected by clause 8 by way of testamentary disposition was valid (at [46]).
5. Fabriano is not obliged to vest the farming land in favour of Dru and Burke as purportedly directed by clause 8 of the will (at [53]-[56]). However, Fabriano is obliged to give consideration to Trevor’s wishes in this respect in the…

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.

Continue reading Reschke v Reschke

Details

AGLC: Reschke v Reschke [2017] SASC 192
Case: [2017] SASC 192
Decision Date: 22 December 2017

CaseChat Overview and Summary

In the case of Reschke v Reschke, the court was tasked with interpreting the trust deed of the Rocky Castle Trust and the will of the late Trevor Reschke. The dispute primarily revolved around the interpretation of a clause in the trust deed and the validity of certain powers of appointment. The plaintiffs, Burke Reschke, Dru Reschke, and Joanne Edwards, challenged the actions of their parents, Trevor and Vivian Reschke, who were the trustees of the Rocky Castle Trust and co-shareholders of Fabriano Pty Ltd. The core of the dispute was whether certain powers of appointment in Trevor's will were valid and how they should be exercised.

The legal issues before the court included the construction of the trust deed, specifically clause 28, which granted Trevor the power to remove and replace trustees during his lifetime and his legal personal representatives upon his death. The court was required to determine whether this power constituted a direction that would be void for uncertainty or merely an expression of Trevor's wishes. Additionally, the court had to interpret the will to ascertain the validity and scope of the powers of appointment over various properties.

The court held that the power of appointment in clause 28 was not a direction but rather an expression of Trevor's wishes. Therefore, it did not suffer from any issue of voidness for uncertainty. The court further found that the will's provisions regarding the powers of appointment were valid and should be interpreted in light of the trust deed and the principles of equity. The court concluded that the powers of appointment were exercisable in accordance with Trevor's intentions as expressed in the will and trust deed. The court will hear further submissions from the parties to determine the precise form of the orders to be made.

Orders

Orders of the court

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Background

Background to the litigation

This is the determination of three preliminary issues arising in an action and cross action relating to the construction of the trust deed of the Rocky Castle Trust and the will of the late Trevor Reschke.Background Trevor Reschke (Trevor) was married to the first defendant Vivian Reschke. They have three children being the first plaintiff Burke Reschke, Dru Reschke and Joanne Edwards. Trevor had four sisters. On 20 June 1989 Trevor and Vivian incorporated the fourth defendant Fabriano Pty Ltd (Fabriano). At all material times up to 21 June 2008 Trevor and Vivian each held one share in and each was a director of Fabriano. On 21 June 1989 by a trust deed between a settlor and Fabriano (the Trust Deed) the Rocky Castle Trust (the Trust) was created. Fabriano was appointed the trustee of the Trust. The Trust was a discretionary trust. Eligible beneficiaries for distributions of income (the income beneficiaries) included Trevor, Vivian, their children and remoter issue (the personal beneficiaries); any company of which a share was beneficially owned by a personal beneficiary; any trust of which a personal beneficiary was a beneficiary; and any charity. Eligible beneficiaries for the distribution of capital were income beneficiaries together with the spouses and remoter issue of Trevor and Vivian’s children and remoter issue. Clause 28 of the Trust Deed (reproduced below) provided that Trevor during his lifetime was to have power from time to time to remove and replace any trustee of the Trust. It provided that upon his death the power of removal and replacement was to vest in Trevor’s legal personal representatives. I refer to the powers conferred by clause 28 as the power of appointment. In July 1989 Fabriano as trustee of the Trust acquired land comprising sections 239, 377 and 379 in the Hundred of Comaum in the Coonawarra. At some point Trevor incorporated or acquired Trevor Reschke Nominees Pty Ltd (TR Nominees), which became the trustee of the Reg Reschke Family Trust. At some point land at Coonawarra was acquired by TR Nominees as trustee of the Reg Reschke Family Trust. At some point or points Trevor acquired:· the land comprising sections 226 to 231 (sections 226 to 231); and· the land comprising section 438 (section 438);in the Hundred of Comaum in the Coonawarra. At some point Trevor and Vivian established a superannuation fund and the fund acquired land comprising sections 440, 441, 442 and 444 (sections 440 to 444) in the Hundred of Conaum in the Coonawarra. At some point Burke incorporated or acquired the second plaintiff Reschke Vineyards Pty Ltd (Reschke Vineyards), which became the trustee of the Koonara Property Trust. At some point the Altruism Trust was established by Dru with Altruism Pty Ltd as trustee. The second defendant Brenton Scott acted as accountant and the third defendant Peter Westley acted as solicitor for Trevor and Vivian. Trevor gave instructions to Mr Westley to draft his will and he was one of the witnesses to its execution.

Evidence

Evidence Before The Court

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Decision

Reasons for decision

Vivian and Fabriano contend that, if the relevant part of the clause comprised a direction, it would be void for uncertainty. However, given that it only operates as an expression of Trevor’s wishes, no issue of voidness for uncertainty arises.Conclusion I will hear the parties as to the precise form of the orders to be made answering the questions for determination in accordance with my reasons for judgment.

Ratio Decidendi

Legal Principle Established

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