Smidmore v Makinson

This case concerned an appeal to the High Court of Australia from a decision of the Chief Judge in Equity regarding the construction of a testator's will. The testator bequeathed his real and personal estate to trustees, directing them to pay an annuity to his wife for life. Subject to this annuity, the income of the estate was to be held in trust for his two children, Albert and Vera, in equal shares. A key provision stipulated that up to the age of twenty-five years, the income was to be "employed so far as necessary for their maintenance," after which it was to be paid to them for life. Upon the death of each child, the estate was to pass to their issue. Albert, having reached the age of twenty-one, claimed entitlement to the accumulated balance of income from his share that had not been expended on his maintenance.

The legal issues before the High Court were whether the children were entitled to the balance of the income over and above what was necessary for their maintenance, or if such unexpended income should be added to the corpus of the estate. Specifically, the court had to determine if Albert was entitled to the accumulations of income from his half-share of the estate that had accrued since the testator's death, beyond what had been used for his maintenance. The Chief Judge in Equity had previously held that the children were only entitled to so much of the income as was necessary for their maintenance until they reached twenty-five, with any surplus to be accumulated and added to the capital.

The High Court, in allowing the appeal, reasoned that the will constituted an absolute gift of the income to the children in equal shares. Applying the principle established in cases such as *Gosling v. Gosling*, the Court held that a testator cannot postpone the enjoyment of an absolute vested gift beyond the age of twenty-one, unless the income during the intervening period is given for the benefit of another. In this instance, there was no gift over of the surplus income to any other person, nor was there a clear intention to create an intestacy or inequality. Therefore, each child was absolutely entitled, upon attaining the age of twenty-one, to the accumulations of the balance of income from their respective shares that exceeded their maintenance expenses.

Consequently, the High Court varied the order of the Chief Judge in Equity. It declared that Albert Smidmore was entitled to the accumulations of rents and profits from his half-share of the estate over and above what had been expended on his maintenance, and that Vera would be entitled to the accumulations of her share upon reaching the age of twenty-one. The Court declined to answer a third question concerning the investment of accumulations, deeming it unnecessary. Costs for all parties were ordered to be paid out of the estate on a solicitor-client basis.