Tasmanian Perpetual Trustees Limited v Marshall
[2014] TASSC 26
•9 July 2014
[2014] TASSC 26
COURT: SUPREME COURT OF TASMANIA
CITATION:Tasmanian Perpetual Trustees Limited v Marshall & Ors [2014] TASSC 26
PARTIES:TASMANIAN PERPETUAL TRUSTEES LIMITED as Executor of the Estate of Basil Wilfred Reynolds
v
MARSHALL, Jan
LEVIS, Kevin
BURRELL, Alan
FRENCH, Leone
DI GUGLIEMO, Margaret
JONES, Barry
WHITCHURCH, Lynette
GRAY, John as personal representative of the Estate of Phyllis Maud Bradshaw
The personal representative of the Estate of Dorothy Pitfield
The personal representative of the Estate of Graham Burrell
The personal representative of the Estate of Pat Burgess
WEST, Sandra as the personal representative of the Estate of Lorna Reynolds
FILE NO: 436/2013
DELIVERED ON: 9 July 2014
DELIVERED AT: Hobart
HEARING DATES: 11 June and 9 July 2014
JUDGMENT OF: Holt AsJ
CATCHWORDS:
Succession – Construction and effect of testamentary dispositions – What interest passes – Vested or contingent interest – Vesting of remainders – Remainders predeceasing life tenant – Postponement of the period of payment does not suspend the vesting.
Bradshaw v Bradshaw[2003] TASSC 138 applied.
Aust Dig Succession [1320]
REPRESENTATION:
Counsel:
Applicant: T J Williams
1st, 2nd & 3rd Respondents: N R Readett
8th, 9th, 10th & 11th Respondents: Z W Nicholson
Solicitors:
Applicant: Gunson Williams
1st, 2nd & 3rd Respondents: Simmons Wolfhagen
4th Respondent: Walsh Day James Mihal
5th Respondent: Ian Guest & Associates
6th & 7th Respondents: Murdoch Clarke
8th, 9th, 10th & 11th Respondents: Page Seager
12th Respondent: James Crotty Barristers & Solicitors
Judgment Number: [2014] TASSC 26
Number of paragraphs: 27
Serial No 26/2014
File No 436/2013
TASMANIAN PERPETUAL TRUSTEES LIMITED v MARSHALL & ORS
REASONS FOR JUDGMENT HOLT AsJ
9 July 2014
The Executor of the estate of the late Basil Reynolds has applied for the determination of questions of construction arising under his will.
The testator died in July 1973 aged about 68 years. He was survived by his wife then aged 61 years and several sisters. His will was made in January 1973. Provision was made for a house to be acquired and for funds to be invested for the benefit of his widow until her death or remarriage. Thereafter the remainder was to be paid to five sisters of the testator named in the will, save that if a named sister died before payment to her of her share of the remainder that sister's share was to be paid to the surviving children then living of the deceased sister. The widow died in 2012, aged 100 years, without having remarried. Each of the named five sisters of the testator survived him. At the date of the testator's death the eldest sister was aged about 76 years and the youngest sister was aged about 57 years. All five sisters had children living at the date of the testator's death. However, before the testator's widow died each of the five sisters and some of their children died. In the case of the testator's sister Phyllis Bradshaw, all three of her children survived her and the testator but none survived the testator's widow. No child of a sister of the deceased has died between the time of the death of the widow and the present.
The construction questions arise as to the manner in which the remainder is now to be distributed.
The provision in the will which is the subject of the construction application is as follows:
"… upon the death or remarriage of my said wife I DIRECT my Trustee to divide the remaining capital and the accumulated income of my trust fund equally between my sisters as follows:- Phyllis Maud Bradshaw of Hamel Street Moonah Eileen Levis of Montague Street New Town Mabel Evelyn Burrell of Montague Street New Town Elvie Grace Adlard of Launceston in Tasmania and Marie Leon Jones of Austins Ferry I DIRECT that if any Beneficiary (other than my said wife) herein named should die before payment to her of any part of her share in my estate then her share shall go to the surviving children then living of such beneficiary so dying in equal shares".
The questions specified in the construction application are as follows:
"aDoes the share of the deceased sister, Phyllis Maud Bradshaw, who died before the life tenant, Lorna Joy Reynolds, leaving no children surviving her –
iPass to her estate; or
iiFall to be distributed to the beneficiaries found to be entitled pursuant to paragraph b hereof; or
iiiPass on a partial intestacy.
bDoes the reference in the Will to the surviving children then living of such beneficiary so dying refer to –
iOnly children who survived the Deceased and were alive at the death of their mother (thereby including the estate of any child who survived their mother but died before payment of the shares in the estate).
iiOnly children who survived their mother and were alive at the death of the life tenant Lorna Joy Reynolds (thereby including the estate of any child who survived Lorna Joy Reynolds but dies before payment of the shares in the estate).
iiiOnly children who survived the life tenant and who are alive at the date of payment of the shares in the estate."
All persons whose interests may be affected by the outcome of the application were represented save for the estates of the three deceased children of the testator's older sister, Phyllis Bradshaw. Their interests were the same as the interest of the estate of Phyllis Bradshaw, which was represented, as under the estate of Phyllis Bradshaw each of her children who survived her were entitled to a one-third share of her estate. Some of the represented persons chose not to participate at the hearing.
The following persons made submissions. Mr Nicholson on behalf of the estate of Phyllis Bradshaw. Mr Nicholson also made submissions on behalf of the estates of two nieces and a nephew, being the children of two other sisters of the testator and being children who did not survive the testator's widow, but survived their mothers. Mr Readett made submissions on behalf of two nephews and a niece of the testator who survived the testator's widow. Mr Williams made submissions on behalf of the executor of the estate of the testator.
The competing propositions as to the construction of the part of the will dealing with the remainder of the estate were in brief terms as follows.
Mr Nicholson submitted that all nieces and nephews who survived their mother take a share if they are still alive and if not their estates take their share.
The residuary estate is worth about $500,000. If Mr Nicholson is correct the following result will follow. The estates of the three deceased children of the testator's sister Phyllis will each get a one-third share of their mother's 20% interest. A 20% interest is worth about $100,000. Accordingly, the estates of Geoff Bradshaw, Peter Bradshaw and Gwen Rathbone will each receive about $33,000. The estate of the deceased daughter of the testator's sister Eileen, being the estate of Dorothy Pitfield, will share equally with Eileen's two living children being Jan Marshall and Kevin Levis so that each will take about $33,000. The estates of the two deceased children of the testator's sister Mabel, namely the estates of Graham Burrell and Pat Burgess will take an equal share with her living child Alan Burrell so that each will take about $33,000. The other two sisters being Elvie and Marie each left two children who survived the testator and have lived to survive the testator's widow. Those children are Leone French, Margaret Di Gugliemo, Barry Jones and Lynette Whitchurch. They will each take a half-share of what otherwise would have gone to their mother resulting in a payment to each of about $50,000.
Mr Readett, representing two nephews and a niece of the testator submitted that only those nephews and nieces living at the time payment is made could take a share. Further, he submitted that the share of the deceased sister Phyllis, who left no children surviving the testator's widow, should be divided equally amongst the shares allocated to the testator's other four sisters on the basis that the bequest to the five sisters was joint. However, he did not strongly press the latter submission and did not provide any authority which may have supported it.
If Mr Readett is correct each one-fourth remaining share would be worth about $125,000. The two surviving children of the deceased sister Eileen, namely Jan Marshall and Kevin Levis, would each take about $62,500. The sole surviving child of the testator's deceased sister Mabel, namely Alan Burrell, would take about $125,000. The two surviving children of the testator's deceased sister Elvie, namely Leone French and Margaret Di Gugliemo and the two surviving children of the testator's deceased sister Marie, namely Barry Jones and Lynette Whitchurch, would each take about $62,500.
Mr Williams, representing the applicant executor adopted the role of assisting in the Court in a neutral way.
There are a couple of rules of construction which should be stated at the outset. The first is that the Court inclines to construe words in a will to enable them to operate as a complete disposition rather than a partial disposition and intestacy, unless it is clear that the testator intended his will not to operate as a complete disposition. Fell v Fell (1922) 31 CLR 268 at 271. The second is that a direction to "divide" in a will creates a tenancy in common rather than a joint tenancy so that divided shares do not pass to the survivors within the class specified. Halsbury's Laws of England, 4th Ed Vol 50 at par571.
It is necessary to determine whether or not the bequests to the five sisters all vested at the date of the testator's death.
In my view, the terms of the will make it clear that vesting in the sisters occurred at the date of the testator's death. The will provides "if any Beneficiary (other than my said wife) should die before payment to her of … her share in my estate then her share shall go …." [emphasis added]. The wording makes it apparent that each sister has an identifiable share even if she is not alive at the payment date. This is consistent with a construction favouring early vesting subject to the beneficiary being divested should a later specified event occur. The later specified event being the death of the sister survived by one or more of her children.
If there is doubt, the matter is resolved by the rule of construction imposing a presumption in favour of early vesting. In Hickling v Fair [1899] AC 15, Lord Shand said at 28:
"The postponement of the period of payment till the death of a life-rentrix does not suspend the vesting …".
This Court has recognised the presumption in favour of early vesting. In Bradshaw v Bradshaw [2003] TASSC 138, Crawford J (as he then was) said at par[13]:
"As a general rule, if the postponement of division or payment is merely because there is a prior gift for life, the gift in remainder vests upon the death of the testator. Re Bennett's Will [1857] EngR 942; (1857) 3 K & J 280; Browne v Moody [1936] AC 635 at 646."
I conclude that the bequests to the five sisters of the testator each vested at the date of the testator's death, subject to being divested if the condition subsequent occurred. Namely, if the sister predeceased the life tenant leaving "surviving children then living".
The next matter concerns the construction of the words "surviving" and "then living" in the clause under consideration.
Mr Nicholson submitted that the word "surviving" is redundant and that "then living" means living at the date of the death of the child's mother.
Mr Readett pointed out that the words "surviving children" are connected with the words "of such beneficiary so dying" and submitted, accordingly, that the reference to surviving children is a reference to children surviving the mother. This being so he submitted that the words "then living" must refer to some other date which, in light of the requirement in the provision that a sister must be living at the payment date, should be construed also as a reference to the payment date.
If it had been the intention that only nieces and nephews living at the payment date should benefit it would have been a simple and obvious thing to have added after the words "then living of such beneficiary" the words "at the payment date". The testator did not do this. If he had, and all sisters, nieces and nephews had predeceased the widow, there would have been an intestacy, being the very thing which the testator was trying to avoid. An intestacy would have resulted in the testator's widow or her children receiving the whole of the remainder. The will makes it clear that the testator wanted the remainder to go to his side of the family and not to his wife's side of the family.
Admitting the word "surviving" as a redundancy gives the words "then living of such beneficiary so dying" an unambiguous meaning connecting the requirement to be living with the time of death of the testator's sister. This construction is consistent with the will being interpreted on the basis that the testator wanted to avoid intestacy and it is also consistent with the presumption in favour of early vesting. This construction also avoids what the testator plainly did not intend. Namely, that if there was delay between the date of death of the widow and payment (and the will provided to the trustee an "absolute and uncontrolled" discretion to postpone payment) the identity of the beneficiaries and the amount to be received might change.
In my opinion the word "surviving" and the words "then living" both relate to the time of the death of testator's sister and neither relates to the date upon which payment is made.
I conclude that a one-fifth share of the remainder of the estate vested in each of the testator's five sisters at the time of the testator's death. Further, that upon the death of each sister her share was divested and became vested in equal portions to each of her children who were living at the date of her death so that if a child died later his or her share is to be paid to his or her estate.
The questions are answered as follows:
(a)The share of the deceased sister Phyllis Maud Bradshaw falls to be distributed to the beneficiaries entitled under (b).
(b)Children who survived the testator and were then living at the date of their mother's death (thereby including the estate of any child who survived their mother, but died before payment) take in equal portions the one-fifth share of the remainder of the estate which would have passed to their mother had their mother survived the testator's widow.
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