Schreuders v Grandiflora Nominees Pty Ltd
[2016] VSCA 93
•6 May 2016
SUPREME COURT OF VICTORIA
COURT OF APPEAL
S APCI 2015 0103
| MARIUS JAN SCHREUDERS | Applicant |
| v | |
| GRANDIFLORA NOMINEES PTY LTD | Respondent |
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| JUDGES: | KYROU, FERGUSON and McLEISH JJA |
| WHERE HELD: | MELBOURNE |
| DATE OF HEARING: | 29 April 2016 |
| DATE OF JUDGMENT: | 6 May 2016 |
| MEDIUM NEUTRAL CITATION: | [2016] VSCA 93 |
| JUDGMENT APPEALED FROM: | Schreuders v Grandiflora Nominees Pty Ltd [2015] VSC 443 (Sifris J) |
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TRUSTS – Construction of trust deed – Definition of ‘Beneficiaries’ – Whether classes of beneficiaries in definition mutually exclusive – Whether deed of variation replaced trust deed as distinct from varying it – Whether effect of deed of variation was to exclude applicant as a beneficiary altogether or merely as a member of one class of beneficiaries such that he remained a beneficiary by coming within another class of beneficiaries – Principles for construing trust instruments, including interrelationship between a trust deed and a deed of variation – Application for leave to appeal granted but appeal dismissed.
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| APPEARANCES: | Counsel | Solicitors |
| For the Applicant | Mr P G Cawthorn QC with Ms K A O’Gorman | TF Grundy Lawyers |
| For the Respondent | Dr I J Hardingham QC with Mr P L Ehrlich | Norbury Solicitors |
KYROU JA
FERGUSON JA
McLEISH JA:
Introduction and summary
The applicant, Marius Schreuders, seeks leave to appeal against an order made by a judge in the Trial Division dismissing his application for a declaration that he is a beneficiary of the Schreuders Family Settlement (‘Trust’).[1]
[1]Schreuders v Grandiflora Nominees Pty Ltd [2015] VSC 443 (‘Reasons’).
The Trust was established by a Deed of Settlement dated 29 June 1976 (‘Trust Deed’). The respondent, Grandiflora Nominees Pty Ltd, became the trustee of the Trust on 15 June 1977. The schedule to the Trust Deed named Jan Schreuders as the ‘specified person’.
Jan and his wife Kitty had four children: the applicant, Barry, Herman and Neeltje. Jan died on 21 May 1989 and Barry died on 6 August 2006. Neither Jan nor Kitty — who is now 98 years of age — had children with any other partner. The applicant has five children and Herman has two children.
At the time of Jan’s death, he and Herman were the directors of the respondent. Herman is now the sole director.
Clause 4 of the Trust Deed defines the beneficiaries of the Trust. It provides:
In this Deed the term ‘Beneficiaries’ mean[s] the following persons and classes of persons and a reference to any class of Beneficiary is to the Beneficiaries classified in the following order:
A The specified person.
BThe spouse of the specified person as at the date hereof (who shall hereafter be referred to as ‘the said spouse’).
C Any future spouse or widow of the specified person.
D The children of the specified person.
E The issue other than the children of the specified person.
FThe children of the said spouse and the spouses widows or widowers of such children.
GThe issue other than the children of the said spouse and the spouses widows and widowers from time to time of such remoter issue.
In or about December 1990, the respondent executed a Deed of Variation of Trust (‘Variation Deed’), the operative provisions of which stated:
1With effect on and from the date of this Deed the Trust Deed is varied as follows:
(a)By amending … Clause 4D to read as follows:
‘The children of the specified person excluding Marius Jan Schreuders.’;
(b)By amending Clause 5(b)(i) by deleting the reference to ‘the specified person’ and inserting therefor:
‘Herman Edward Schreuders’.
2The Trustee otherwise acknowledges and declares that it shall henceforth hold the Trust Fund constituted by and under the Trust upon the trusts of the Trust as amended by this Deed of Variation and shall administer the same accordingly.
On 3 March 2015, the applicant sought a declaration that ‘pursuant to Clause 4F of the [Trust Deed]’ he ‘is and always was a beneficiary of the Trust from 29 June 1976.’
The judge held that the Variation Deed had the effect of excluding the applicant as a beneficiary of the Trust. The applicant contends that the judge erred in so holding because, although he no longer falls within cl 4D of the Trust Deed, he falls within cl 4F.
For the reasons that follow, we have concluded that leave to appeal should be granted but that the appeal should be dismissed.
Relevant provisions of the Trust Deed and the Variation Deed
In addition to cl 4, which is set out at [5] above, cls 3, 5, 6 and 17 of the Trust Deed are also relevant. Clause 3 provides that, subject to cl 17, the date of distribution is 30 June 2055 or such earlier date as the specified person shall appoint. Clause 17 defines ‘Vesting Day’ as ‘the date of distribution referred to in Clause 3 hereof or such earlier date as the Trustees may from time to time appoint’. Clauses 5 and 6 relevantly provide:
5 The Trustees shall hold the Trust Fund upon trust:
(a) Until the date of distribution, as to the income thereof:
(i)to be paid to or applied for the benefit of such of the Beneficiaries (and if thought fit for one or more to the exclusion of others or another) and in such shares and proportions as the Trustees shall in their absolute discretion from time to time think fit; …
…
(b) On the date of distribution as to the corpus thereof:
(i)for such of the Beneficiaries living at the date of distribution and on that date answering to the description of a Beneficiary and if thought fit for one or more to the exclusion of others or another and in such shares and proportions as the specified person[2] shall in his absolute discretion by deed (revocable or irrevocable) executed prior to the date of distribution appoint;
[2]As appears from [6] above, the Variation Deed substituted ‘Herman Edward Schreuders’ for ‘the specified person’ in cl 5(b)(i) of the Trust Deed.
(ii)to the extent that any part thereof is not validly and effectively appointed pursuant to sub-paragraph (i) hereof for such of the Beneficiaries as shall then be living and shall answer to the description of Beneficiaries if more than one in equal shares as tenants in common but so that no Beneficiary or class of Beneficiaries shall take unless there is no member of the preceding class who qualifies to take;
…
6Notwithstanding the provisions of clause 5 the Trustees may at any time and from time to time in their absolute discretion pay or appropriate the whole or some part or parts of the corpus of the Trust Fund to or apply the same for the benefit of any one or more of the Beneficiaries (and if thought fit for one or more to the exclusion of others or another and in such shares and proportions as the Trustees may in their absolute discretion determine).
The operative provisions of the Variation Deed have been set out at [6] above. Recital A to the Variation Deed defined ‘the Trust’ as the Schreuders Family Settlement established by a deed of settlement dated 29 June 1976, but did not include a definition of ‘Trust Deed’. Recitals D and E referred to ‘the Trust’ when the context indicates that the intended reference was to the Trust Deed. Thus, recital D commences with the words ‘Clause 19 of the Trust provides as follows:’ and then sets out cl 19 of the Trust Deed.
Relevant legal principles
The principles governing the interpretation of contracts apply also to trust instruments.[3] The High Court has ‘reaffirmed the objective approach to be adopted in determining the rights and liabilities of parties to a contract.’[4] The meaning of the terms of a contract is to be determined by what a reasonable person would have understood those terms to mean.
[3]Byrnes v Kendle (2011) 243 CLR 253, 275 [59], 286 [102] (‘Byrnes’).
[4]Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640, 656 [35] (‘Woodside’).
In Australian Broadcasting Commission v Australasian Performing Right Association Ltd,[5] Gibbs J stated:
It is trite law that the primary duty of a court in construing a written contract is to endeavour to discover the intention of the parties from the words of the instrument in which the contract is embodied. Of course the whole of the instrument has to be considered, since the meaning of any one part of it may be revealed by other parts, and the words of every clause must if possible be construed so as to render them all harmonious one with another.[6]
[5](1973) 129 CLR 99 (‘ABC v APRA’).
[6]ABC v APRA (1973) 129 CLR 99, 109.
In the same case, Barwick CJ stated:
[I]f [a] result is produced by the application of the words in which the parties have expressed themselves, it is no part of the function of a court by some process of divination as distinct from construction of the language employed to attribute to parties an intention to do something for which their express words do not provide.[7]
[7]ABC v APRA (1973) 129 CLR 99, 105.
When objectively assessing the meaning of a contractual provision, it is sometimes permissible for the court to have regard to the surrounding circumstances known to the parties at the time the contract was executed.[8] However, if an expression in a contract is unambiguous or susceptible to only one meaning, evidence of surrounding circumstances cannot be adduced to contradict that meaning.[9]
[8]Woodside (2014) 251 CLR 640, 656–7 [35].
[9]Codelfa Construction Pty Ltd v State Rail Authority (NSW) (1982) 149 CLR 337, 352; Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 325 ALR 188, 198 [48], [52].
Where an amending agreement amends a principal agreement by discrete amendments rather than by replacing the principal agreement with a new consolidated version which incorporates the amendments, the amending agreement must be read as part of, or in conjunction with, the principal agreement.[10] The two documents must be construed together as this is the only way in which the nature and effect of the changes to the principal agreement made by the amending agreement can be identified.
[10]Commercial and General Acceptance Ltd v Dunlop [1975] 2 NSWLR 439, 443.
In Tallerman & Co Pty Ltd v Nathan’s Merchandise (Vic) Pty Ltd,[11] Taylor J stated:
It is firmly established by a long line of cases … that the parties to an agreement may vary some of its terms by a subsequent agreement. They may, of course, rescind the earlier agreement altogether, and this may be done either expressly or by implication, but the determining factor must always be the intention of the parties as disclosed by the later agreement.[12]
[11](1957) 98 CLR 93 (‘Tallerman’).
[12]Tallerman (1957) 98 CLR 93, 144. See also Federal Commissioner of Taxation v Sara Lee Household & Body Care (Australia)Pty Ltd (2000) 201 CLR 520, 533–4 [22]–[24] (‘Sara Lee’); Hillam v Iacullo [2015] NSWCA 196 [53]-[55], [57].
Where the parties enter into an agreement and then enter into a second agreement which varies the first agreement, it may be necessary for the court to determine whether the second agreement brings an end to the first agreement and replaces it with the second, or whether the effect is that the first agreement remains, subject to the variation.[13]
[13]Sara Lee (2000) 201 CLR 520, 533 [22].
The question whether an amending agreement supersedes rather than varies the principal agreement depends on the objective intention of the parties to the amending agreement as disclosed by the wording of that agreement.[14]
[14]See the authorities in n 12.
It is generally not permissible to construe an agreement by reference to words deleted from it.[15] Only the agreement that does not contain the removed words can be construed, as that is the agreement that was entered into by the parties.[16] However, in some circumstances, deleted words may be taken into account in construing the words that remain.[17]
[15]Inglis v John Buttery & Co (1878) 3 App Cas 552, 569 (‘Inglis’).
[16]Inglis (1878) 3 App Cas 552, 569.
[17]Centrepoint Custodians Pty Ltd v Lidgerwood Investments Pty Ltd [1990] VR 411, 421–423; Esso Australia Ltd v Australian Petroleum Agents’ & Distributors’ Association [1999] 3 VR 642, 647–8 [19]–[20]; A Goninan & Co Ltd v Direct Engineering Services Pty Ltd [No 2] [2008] WASCA 112 [40]; Gee Dee Nominees Pty Ltd v Ecosse Property Holdings Pty Ltd [2016] VSCA 23 [15], [92].
Consistently with the above principles, trust instruments are to be given their natural and ordinary meaning unless they have a special or technical meaning.[18] The terms of an instrument must be construed in the context of the entire document[19] and in such a way that renders them ‘all harmonious one with another’.[20]
[18]Hill (Viscount) v Hill (Dowager Viscountess) [1897] 1 QB 483, 486.
[19]Re Altson: Equity Trustees Executors & Agency Co Ltd v Spielvogel [1955] VLR 281, 284; ABC v APRA (1973) 129 CLR 99, 109.
[20]ABC v APRA (1973) 129 CLR 99, 109.
The parties’ intention must be found in the wording of the trust instrument rather than in what was on their minds when they executed the instrument.[21] Evidence of the actual intention of the parties will not be admissible except in an action for rectification and other limited circumstances.[22] In Byrnes v Kendle,[23] Gummow and Hayne JJ stated:
[T]he expressed intention of the parties is to be found in the answer to the question, ‘What is the meaning of what the parties have said?’, not to the question, ‘What did the parties mean to say?’[24]
[21]Byrnes (2011) 243 CLR 253, 273 [53]–[59], 284–90 [98]–[115].
[22]Byrnes (2011) 243 CLR 253, 285–6 [101], 290 [115].
[23](2011) 243 CLR 253.
[24]Byrnes (2011) 243 CLR 253, 273 [53].
Decision of trial judge
The judge held that the words ‘but so that no Beneficiary or class of Beneficiaries shall take unless there is no member of the preceding class who qualifies to take’ in cl 5(b)(ii) of the Trust Deed apply generally to provide a default mechanism of distribution in the event that the discretion in cl 5(b)(i) has not been exercised. He also held that cl 4, when read with cl 5(b)(ii), created a ‘cascading hierarchy’ which had the effect of rendering the classes of beneficiaries mutually exclusive.[25]
[25]Reasons [22].
The judge then concluded as follows on the scope and interrelationship of cls 4D, 4E, 4F, and 4G of the Trust Deed:
On the proper construction of the Trust Deed:
(a)Clauses 4D and 4E deal exclusively with the children and the further issue of the specified person;
(b)Clauses 4F and 4G deal exclusively with the children and the further issue of the said spouse who are not also the children and the further issue of the specified person.
The classes created by clauses 4D and 4E (on the one hand) and the classes created by clauses 4F and 4G (on the other hand) are mutually exclusive. This is also demonstrated by the inclusion of the words ‘spouses, widows or widowers’ in clauses 4F and 4G.
Thus, if no child of the specified person is alive as at the date of distribution, any further issue of the specified person will take in absolute priority to any children (or spouses, widows or widowers) or further issue of the said spouse.
It follows that no child (or spouse, widow or widower) or remoter issue of the said spouse can take where a child or further issue of the specified person is living as at the date of distribution.
Indeed, once it is seen that grandchildren and even remoter issue of the specified person take in complete priority to living children of the said spouse where no children of the specified person are alive at the date of distribution, but children of the said spouse are, it is clear in my opinion that clause 4F cannot include within its class children of the said spouse who are also children of the specified person. To find otherwise is … to create incongruity and disharmony between classes 4D and 4E (on the one hand) and clauses 4F and 4G (on the other hand). The classes are dealing with different bloodlines.[26]
[26]Reasons [23]–[27] (emphasis in original).
The judge concluded that the applicant was not a beneficiary of the Trust.
Grounds of appeal
The applicant relies on the following proposed grounds of appeal:
1The learned primary judge erred in reading down the ordinary meaning of the words in Clause 4F of the Deed of Settlement. The learned primary judge erroneously found that Clause 4D of the Deed of Settlement as varied by the Deed of Variation ‘deal[s] exclusively with the children and the further issue of the specified person’, so that Clause 4F has no application to any child of the specified person. In concluding that the words of Clause 4D narrow the meaning of the words of Clause 4F, the learned primary judge erroneously failed to give effect to the plain meaning of the words in Clause 4F.
2The learned primary judge erred in finding that the ‘cascading hierarchy’ in Clause 4 meant that the Applicant could not be a beneficiary. His finding ignores the effect of the Deed as varied. Since he was not within Clause 4D of the Deed, the Applicant, being a child of the ‘said spouse’ comes within Clause 4F.
3The learned judge erred in construing Clauses 4D and 4F of the Deed as varied as mutually exclusive and thereby excluding the Applicant. If they were mutually exclusive then the Applicant could qualify as a beneficiary under clause 4F, since he was not one under Clause 4D.[27]
[27]Citations omitted.
As these grounds overlap, we will consider them together.
Did the judge misconstrue the Trust Deed as amended by the Variation Deed?
Parties’ submissions
The applicant submitted that, as the words in cl 4F of the Trust Deed when construed in accordance with their natural and ordinary meaning were unambiguous and did not create any absurdity, the judge was required to give effect to that natural and ordinary meaning. According to the applicant, cl 4F meant that any child of ‘the said spouse’ (Kitty) was a beneficiary of the Trust. The applicant argued that the judge impermissibly added to cl 4F a qualification that was not there, namely, although a person is a child of the said spouse, he or she could not be a beneficiary under cl 4F if he or she was a child or remoter issue of the specified person (Jan). The applicant contended that, as he was a child of Kitty, he was a beneficiary of the Trust under cl 4F.
The applicant contended that the judge’s reasons for adding the qualification to cl 4F of the Trust Deed could be summarised as follows:
(a)before the Deed of Variation, Clauses 4D and 4E dealt ‘exclusively with the children and the further issue of the specified person’ (premise 1);
(b)before the Deed of Variation, Clauses 4D and 4F were ‘mutually exclusive’ in their operation (premise 2);
(c)after the Deed of Variation, and by virtue of the continued operation of clause 5(b)(ii), Clauses 4D and 4F remained ‘mutually exclusive’ in their operation (premise 3);
(d)from these premises, it follows that, after the Deed of Variation, Clause 4F can have no application to a child ‘of the said spouse’ if that person was also a child of the specified person (the conclusion).[28]
[28]Amended Written Case for the Applicant [9] (emphasis in original) (citations omitted).
In his written submissions, the applicant accepted the accuracy of premises 1, 2 and 3 but contended that the conclusion reached by the judge did not follow from those premises. The judge was said to have erred because he made the scope of cl 4F post-variation dependent on the scope of cl 4D pre-variation and, in doing so, he ignored the fact that cl 4D had been varied by the Variation Deed.
The applicant submitted that, after the Variation Deed, a new deed was substituted, which consisted of the new provisions in the Variation Deed and those provisions of the Trust Deed that were not replaced. The intention was said to be to substitute a new deed for the old one so that the deed is to be read as if cl 4D, as amended, had always been there. According to the applicant, the judge did not apply this principle because, in concluding that the applicant did not fall within cl 4D, he proceeded on the basis that, even after the Variation Deed, cl 4D applied to every child of the specified person, including the applicant. In doing so, the judge was said to have failed to read the Trust Deed in conjunction with, and subject to the amendments made by, the Variation Deed.
The applicant contended that it is not permissible to construe a deed by reference to words deleted from it unless the deleted words would negative an inference sought to be drawn from surrounding circumstances or to negative the implication of a term in the form of the deleted words. According to the applicant, since the original cl 4D was, in effect, deleted and replaced by a new cl 4D, the judge should have ignored the original cl 4D rather than construing cl 4 by reference to the original cl 4D.
The applicant argued that his preferred construction of cl 4 gives effect to the judge’s findings that cls 4D and 4F are mutually exclusive and that cl 4D created a ‘cascading hierarchy’. This was said to be because, on that construction, cl 4D, as amended, applies to all children of the specified person, ‘excluding Marius Jan Schreuders’ and cl 4F applies to all children of the said spouse, including Marius Jan Schreuders. According to the applicant, the judge erred by failing to recognise that the mutual exclusivity of cls 4D and 4F meant that the narrowing of the scope of cl 4D by the Variation Deed (by excluding the applicant) had the effect of expanding the scope of operation of cl 4F (by including the applicant).
In his oral submissions, the applicant argued, in the alternative, that the classes of beneficiaries in cl 4 of the Trust Deed were not mutually exclusive. According to him, the fact that the words ‘other than the children’ in cls 4E and 4G qualified the word ‘issue’ and thereby made it clear that there is no overlap between cls 4D and 4E and cls 4F and 4G could support an argument that there was no mutual exclusivity unless express provision was made for it. Such an argument was also said to be capable of being supported by Kitty falling not only within cl 4B as Jan’s spouse as at the date of the Trust Deed but also within cl 4C as Jan’s widow upon his death. The applicant submitted that, if mutual exclusivity did not apply, he was always a beneficiary under cl 4F and the Variation Deed did not alter that status.
The respondent submitted that the applicant’s preferred construction of cl 4 of the Trust Deed is logically fallacious and internally contradictory because it first relies upon, but then denies, the existence of the Variation Deed. According to the respondent, the applicant is asking the Court to create a counter-factual reality — that he was never a member of the class created by cl 4D — which is entirely opposite to the actual reality that he was, until the Variation Deed, a member of that class.
The respondent contended that the applicant’s preferred construction of cl 4 of the Trust Deed contains three errors.
The first alleged error is that the applicant’s preferred construction ignores the introductory words to cl 1 of the Variation Deed, namely, ‘With effect on and from the date of this Deed the Trust Deed is varied as follows’. This was said to be an immutable barrier to the applicant’s case that he should be treated as never having been a beneficiary under cl 4D.
The second alleged error is that, save where rectification is sought, there is no principle of construction that operates retrospectively in the manner alleged by the applicant.
The third alleged error is that the applicant’s preferred construction fails to acknowledge the judge’s unchallenged finding that the classes of beneficiaries created by cls 4D and 4E on the one hand and cls 4F and 4G on the other hand are mutually exclusive because they deal with different bloodlines. According to the respondent, as the applicant was and remains a child of the specified person (Jan), he cannot belong to the class created by cl 4F because that deals with a different bloodline, namely, children of the said spouse (Kitty) who are not children of the specified person.
The respondent submitted that the Variation Deed did not have the effect of creating a new deed in substitution for the Trust Deed. The respondent contended that the objective intention of the Variation Deed was to amend the Trust Deed in the limited manner specified and to otherwise preserve its ongoing operation. Having regard to the principles set out at [17]–[19] above, it was said there was nothing in the Variation Deed to suggest that the respondent, as trustee, intended to create a new deed. Moreover, according to the respondent, the intention of the Variation Deed was to exclude the applicant as a beneficiary of the Trust from the date of the Variation Deed, rather than to do so retrospectively or to migrate his status as a beneficiary from the class established by cl 4D to a lower level of the cascading hierarchy of beneficiaries, namely, the class established by cl 4F.
The respondent argued that the contention that the applicant ceased to be a beneficiary by virtue of cl 4D and became a beneficiary by virtue of cl 4F is absurd because there would be no useful purpose to such a change. This was said to be because, if the aim of the respondent, as trustee, was to prevent the applicant from receiving a default distribution of corpus on the date of distribution (30 June 2055) under cl 5(b)(ii), that aim could have been achieved by the exercise of the power in cl 5(b)(i) without amending the Trust Deed. Further, so it was said, the fact that the applicant had younger siblings, children and nieces who fell within the classes of beneficiaries established by cls 4D and 4E meant that there was no prospect of any corpus being distributed to him under cl 5(b)(ii) as a member of the class of beneficiaries established by cl 4F. The respondent also noted that it was unlikely that the applicant would be alive on the date of distribution as that would require him to live to 107 years of age.
Conclusion on proper construction of Trust Deed as amended by Variation Deed
We agree with the respondent’s submission that the Variation Deed did not have the effect of creating a new deed in substitution for the Trust Deed. The Variation Deed does not define ‘the Trust Deed’ and the recitals use the term ‘the Trust’ synonymously with ‘the Trust Deed’.[29] Accordingly, the references to ‘the Trust’ in cl 2 of the Variation Deed are to the Trust Deed as well as to the trust created by that deed. It follows that the statement in that clause that the trustee ‘otherwise acknowledges and declares that it shall henceforth hold the Trust Fund constituted by and under the Trust upon the trusts of the Trust as amended by this Deed of Variation and shall administer the same accordingly’ applies to the Trust Deed and the Trust. This means that, subject to the two discrete amendments to the Trust Deed that are set out in the Variation Deed, the Trust Deed continues to have operative effect.
[29]See [11] above.
It follows from the above that we reject the applicant’s submission that, in ascertaining the effect of the Variation Deed, regard must not be had to the original wording of the Trust Deed. As the effect of the Variation Deed on the Trust Deed is a key issue in the present case, both instruments must be read together to ascertain that effect. One must consider the wording of the Trust Deed as in force prior to the Variation Deed and then compare that wording with the wording of the Trust Deed as altered by the Variation Deed. In our opinion, it is not necessary for there to be ambiguity before this comparison can be undertaken. This is because the pre-amendment wording of the Trust Deed provides part of the relevant context within which the effect of the amendment falls to be determined.
We agree with the judge’s finding that the classes of beneficiaries in cl 4 of the Trust Deed are mutually exclusive. Such mutual exclusivity is necessary in order to enable cl 5(b)(ii) to have effect. Although that clause only applies if, on the date of distribution, any part of the corpus remains unallocated, it is an important provision of the Trust Deed and regard must be had to it in construing the deed as a whole in order to ascertain the meaning of a particular provision. While it is true that, for the purposes of distributions of income and corpus prior to the date of distribution, it is not necessary for the classes of beneficiaries in cl 4 to be mutually exclusive, to read cl 4 as requiring mutual exclusivity for some purposes and not for others would create undesirable inconsistency and potential confusion. Importantly, such an approach would be incompatible with the words ‘classified in the following order’ in the opening words of cl 4, which clearly indicate that the categories that follow those words are separate and distinct and that they are listed in descending order of priority.
We do not consider that the fact that cls 4E and 4G contain the words ‘other than the children’ — which have the effect of expressly providing for mutual exclusivity with cls 4D and 4F, respectively — means that mutual exclusivity is not required as between all other paragraphs. It is likely that these words were inserted because, without them, an obvious ambiguity would have been created, as the word ‘issue’ in cls 4E and 4G would include ‘children’. We do not agree with the applicant’s tentative suggestion that there is a lack of mutual exclusivity between cls 4B and 4C. This is because, as Kitty was Jan’s spouse at the date of the Trust Deed, she was then, and remains now, within cl 4B notwithstanding that she became his widow. The word ‘future’ in the phrase ‘[a]ny future spouse or widow’ in cl 4C qualifies both ‘spouse’ and ‘widow’. Properly construed, ‘widow’ in that clause means a future spouse who becomes Jan’s widow. It does not apply to Kitty.
As at the date of the Trust Deed, cls 4D and 4E did not overlap with cls 4F and 4G. This is because, if a person was a child or grandchild (or other remoter issue) of both Jan and Kitty, that person would fall within cl 4D or 4E and there would be no utility in treating them as also falling within cl 4F or 4G. It must follow that cls 4F and 4G applied only to persons who were children or grandchildren (or other remoter issue) of Kitty but not of Jan.[30] In this regard, we have avoided use of the phrase ‘bloodlines’ because that phrase would not cater for any adopted children of Jan or Kitty who, by virtue of ss 32 and 33 of the Adoption of Children Act 1964 and successor provisions, would be treated in the same way as the biological children of Jan or Kitty for the purposes of the Trust Deed.
[30]We note that, when the Trust Deed was executed, it was unlikely that the parties to the deed contemplated that any person would fall within cls 4F and 4G. This is because Kitty was then 57 years of age, remained married to Jan and all four of her children were also Jan’s children.
For the above reasons, upon the execution of the Trust Deed, the applicant was not a beneficiary under cl 4F; he was a beneficiary solely under cl 4D. It is common ground that, upon the execution of the Variation Deed, the applicant ceased to be a beneficiary under cl 4D. The critical issue is whether the Variation Deed had the effect of removing the applicant as a beneficiary of the Trust altogether or of conferring upon him the status of beneficiary under cl 4F.
In our opinion, the Variation Deed resulted in the applicant ceasing to be a beneficiary of the Trust altogether rather than in the applicant becoming a beneficiary under cl 4F in substitution for cl 4D. Our reasons for this conclusion follow.
Although the applicant relied, in the alternative, on the argument that the classes of beneficiaries in cl 4 are not mutually exclusive, his principal submission was that mutual exclusivity applied both before and after the execution of the Variation Deed. In our opinion, the reasons we have set out above for construing as mutually exclusive the classes of beneficiaries in the original wording of cl 4 of the Trust Deed apply equally to the wording of cl 4 as amended by the Variation Deed. It follows that we reject the applicant’s alternative submission.
The obvious purposes of cls 1 and 2 of the Variation Deed were to exclude the applicant from cl 4D of the Trust Deed, to substitute Herman Schreuders for ‘the specified person’ in cl 5(b)(i) and to otherwise leave the Trust Deed unaltered. There is nothing in the Variation Deed to indicate that any additional purposes were intended. In particular, when the Variation Deed is read in the context of cl 4 both before and after its amendment, there is nothing to suggest that, although the applicant was being excluded as a beneficiary under cl 4D, he was being added as a beneficiary under cl 4F.
The issue can also be tested by a consideration of whether there is any objective familial or other consideration which supports the applicant’s contention that the Variation Deed had the effect of reclassifying him as a beneficiary under cl 4F instead of cl 4D. In our opinion, there are no such considerations. This is because, from a practical perspective, the applicant would have the same rights as a beneficiary under cl 4F as he had under cl 4D. The only detriment that he could possibly suffer from being reclassified as a beneficiary under cl 4F instead of cl 4D would be that he could not receive any of the corpus on the date of distribution (30 June 2055) if there is any person alive at that time who falls within cls 4D or 4E. We agree with the respondent’s submission set out at [41] above that it would be extremely unlikely that the applicant would receive a distribution in accordance with cl 5(b)(ii) as a beneficiary under either cl 4D or cl 4F, as he would need to live to 107 years of age.[31]
[31]The provisions of cls 3 and 17 of the Trust Deed do not make clear whether the death of the specified person (Jan) means that the date of distribution cannot be brought forward from 30 June 2055.
The above analysis is reinforced by the fact that a finding that the Variation Deed had the effect of conferring on the applicant the status of beneficiary under cl 4F would affect not only him but also his ‘spouses [and] widows’. This is because cl 4F refers to ‘[t]he children of [Kitty] and the spouses widows or widowers of such children’. Thus, on the applicant’s preferred construction of the Trust Deed as amended by the Variation Deed, his spouse would become a beneficiary under cl 4F even though she was not previously a beneficiary under that clause or any other clause. The amendment to cl 4D, which simply added the words ‘excluding Marius Jan Schreuders’, is incapable of effecting such a significant alteration to the scope of cl 4F. Construed objectively and from the perspective of a reasonable person, the words of exclusion in cl 1(a) of the Variation Deed had the effect of removing the applicant as a beneficiary under cl 4D and did not add him or anybody else as a beneficiary under any other clause.
We reject the applicant’s contention that the judge failed to consider the Variation Deed and that he construed the words of cl 4F of the Trust Deed as in force after the execution of the Variation Deed by reference to the original wording of cl 4D. Read as a whole, the judge’s reasons indicate that he found: that the classes of beneficiaries in cl 4 were mutually exclusive; that the applicant was a beneficiary under cl 4D but not cl 4F prior to the execution of the Variation Deed; and that, upon the applicant being removed as a beneficiary under cl 4D by the Variation Deed, he ceased to be a beneficiary of the Trust altogether. As explained above, we agree.
Conclusion
For the above reasons, leave to appeal will be granted, the appeal will be treated as having been heard immediately, and the appeal will be dismissed.
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