Sharp v Union Trustee Co of Australia Ltd

The case of *Sharp v Union Trustee Co of Australia Ltd* concerned the interpretation of a will provision granting an option to purchase the testator's share in partnership assets. The testator, Australias Sharp, carried on business in partnership with his brother, John Brown Sharp (J.B. Sharp), and John Edmond Taylor. The testator's will stipulated that J.B. Sharp and J.E. Taylor, should they both be alive at the testator's death, or the survivor of them if one were deceased, would have a two-year option to purchase the testator's share in the partnership assets. J.E. Taylor died after the testator but within the two-year period. J.B. Sharp then sought to exercise the option alone. The Union Trustee Co of Australia Ltd, as executor, sought directions from the Supreme Court of Victoria, which held that the option had lapsed upon Taylor's death. J.B. Sharp appealed this decision to the High Court of Australia.

The central legal issue before the High Court was whether the option granted by the testator's will was exercisable by J.B. Sharp alone following the death of J.E. Taylor. This required the court to determine the testator's intention regarding the nature of the option, specifically whether it was intended as a joint right that would lapse if one of the optionees died, or if it was a right that could be exercised by the survivor, or if it was a proprietary right transmissible to the survivor. The court had to construe the phrase "should they both be living at the time of my decease or the survivor of them if one be deceased" in the context of the entire clause and the surrounding circumstances.

A majority of the High Court, comprising Latham C.J., Starke, and McTiernan JJ., held that the option lapsed on the death of J.E. Taylor. Their reasoning was that the will, on its proper construction, conferred the option jointly on J.B. Sharp and J.E. Taylor, and that this was a personal right. The phrase "if one be deceased" was interpreted as referring to the situation at the time of the testator's death, meaning that if only one partner survived the testator, that single partner would have the option. However, as both partners survived the testator, the option was intended to be exercised jointly. The court found no indication in the will that the testator intended the option to pass to the survivor if one of the joint optionees died after the testator's death but before exercising the option. The inclusion of provisions for the selection of specific assets and the personal nature of the decision to exercise the option further supported this interpretation.

The dissenting judges, Rich and Williams JJ., took a different view. They considered that the testator intended to confer a benefit on his surviving partners and that the language of the will, particularly the reference to "the survivor of them if one be deceased," indicated an intention that the option should be exercisable by the survivor. They viewed the option as a joint right that, upon the death of one joint owner, would pass to the other by survivorship, akin to a joint tenancy. The appeal was accordingly dismissed by the majority.