Russell v Perpetual Trustee Co (Ltd)

The appeal concerned the construction of a will and the exercise of a special power of appointment. The appellants, Naida Russell, Charles Russell, and Lena Young, were beneficiaries under a trust established by the testatrix in purported exercise of a special power of appointment. The dispute arose because the limitations of the trust, which provided for life interests to the appellants and then for the corpus to go to their children, were partly void. The appellants argued they were entitled to the corpus absolutely, while the respondent, representing those entitled in default of appointment, contended they only received life interests.

The High Court was required to determine whether the testatrix's exercise of the special power of appointment created an absolute gift to the named beneficiaries in the first instance, or if the limitations imposed by the proviso effectively restricted their interest to a life tenancy. Specifically, the court had to consider the impact of the phrase "subject as hereinafter provided" on the initial gift and whether the subsequent void limitations to the beneficiaries' children meant the absolute gift, if established, would take effect.

The court reasoned that the rule in *Lassence v. Tierney* applied. This rule dictates that if an absolute gift is made in the first instance, and subsequent trusts engrafted upon that gift fail, the absolute gift takes effect to the extent of the failed trusts. The court found that the initial words of the trust, despite the qualifying phrase "subject as hereinafter provided," constituted an absolute gift to the appellants as tenants in common in equal shares. The subsequent limitations to their children were void as they were not objects of the power of appointment. Therefore, the void limitations did not defeat the initial absolute gift.

The High Court allowed the appeal, overturning the decision of the Supreme Court of New South Wales. The court declared that the appellants were entitled to the thirty-four parts of the residuary estate absolutely, as tenants in common in equal shares. The costs of all parties for the appeal were ordered to be paid out of the testator's estate.