Westmore v Westmore

IN THE SUPREME COURT OF VICTORIA	Not Restricted
AT MELBOURNE COMMON LAW DIVISION

No. 9438 of 2008

IN THE MATTER OF the will and estate of MOIRA PATRICIA WESTMORE (deceased)

CARMEL ELIZABETH WESTMORE	Plaintiff
(Who brings this proceeding in her capacity as executrix of the Will of the abovenamed Deceased, and in her own personal capacity)
v
PHILIP JOHN WESTMORE	Defendant
(Who is sued as representing himself and all of the other next of kin of the Deceased)

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JUDGE:	EMERTON J
WHERE HELD:	Melbourne
DATE OF HEARING:	21 and 22 October 2009
DATE OF JUDGMENT:	23 December 2009
CASE MAY BE CITED AS:	Westmore v Westmore
MEDIUM NEUTRAL CITATION:	[2009] VSC 624

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WILLS AND ESTATES – Construction – Intent of the Testator - Whether the residuary disposition of the Will constitutes a gift of the net residuary estate to the trustee for her own use and benefit or whether that residue passes to the next of kin – Extent of trust in residuary clause.

(Vic) Administration and Probate Act 1958 s 53

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr R. Boaden	Pryles & Co
For the Defendant	Ms C. Sparke	Boothby & Boothby
HER HONOUR:

The present application was made by originating motion dated 23 October 2008 filed by the plaintiff, Carmel Elizabeth Westmore, seeking the Court’s determination of particular questions concerning the construction of the will of Moira Patricia Westmore (the “testatrix”).
The testatrix died on 29 July 2005. She left a will dated 15 January 2004 (the “Will”). Probate of the Will was granted on 25 June 2007.
The plaintiff is the executor of the Will. She is also the daughter-in-law of the testatrix and the recipient of a specific gift under the Will. The defendant is one of the sons of the testatrix. He represents himself and the other next of kin of the deceased.
The questions which the Court has been asked concern the residuary disposition. The residuary disposition is made by the final clause of the Will and reads as follows:
I GIVE the whole of the balance of my estate of whatsoever nature and wheresoever situated to my trustee on trust to sell, call in and convert into money such parts thereof as do not already consist of money with power in her absolute discretion to postpone such selling calling in and conversion for such periods as she may deem fit without being responsible for any loss caused by any postponement and out of all proceeds to pay all my just debts, funeral and testamentary expenses and the Probate and Estate duties (if any) payable on the whole of my dutiable estate and to stand possessed of the residue then remaining.
The Court is asked to determine the following questions:

(a) Whether the residuary disposition of the Will constitutes a gift of the net residuary estate to the plaintiff for her own use and benefit absolutely;
(b) Whether the residuary disposition in the Will makes no gift of the beneficial entitlement to the residuary estate so that the residue passes –
(i) under a partial intestacy to the defendants (they being the next of kin of the deceased);
(ii) to some other, and if so which, person or persons.

For the reasons that follow, the answers to the questions are:

(a)

The residuary disposition of the Will constitutes a gift of the net residuary estate to the plaintiff for her own use and benefit absolutely.
(b) This question does not arise.

The Will

The Will is a home-made will which was apparently prepared with the assistance of one or more will ‘kits’. It was typed by the son of the testatrix, Peter Westmore, who is also the husband of the plaintiff. It is the last in a series of wills made by the testatrix, all but one of which were home-made wills. The testatrix had made her previous (penultimate) will less than one month earlier. That will was also a home- made will.
As it is a relatively short document, and since the Will must be construed as a whole, it is convenient to set out its most important provisions:
Executor Appointment
I APPOINT Carmel Elizabeth Westmore of 8 Maxwell Street, Kew, Victoria to be the Executor of this my will and to be the trustee of my estate but
IF Carmel Elizabeth Westmore does not survive me by 30 days or if she shall be unable or unwilling to act as my executor or renounces probate
THEN I APPOINT Katharine Carmel Westmore of 3 Childers Street, Kew, Victoria to be the Executor of this my will and to be the trustee of my estate but
IF Katharine Carmel Westmore does not survive me by 30 days or if she shall be unable or unwilling to act as my executor or renounces probate
THEN I APPOINT Ann Felicity Mary Hill of 13 Laver Street, Kew, Victoria to be the Executor of this my will and to be the trustee of my estate.
AND I DECLARE THAT the expression “my trustee” wherever used in this my Will shall mean and include the executor or the trustee hereof for the time being whether original or substituted.
Special Conditions and Notes
IF FOR ANY REASON WHATSOEVER any person should cause my trustee to incur legal or any other expenses in connection with the administration of my Estate, thereby diminishing its value, I direct my trustee to require that person to reimburse the Estate these expenses before transferring to that person his or her share of the Estate. If such expenses are not reimbursed to the Estate within twelve (12) months of granting of probate, that person’s share of the Estate shall pass to the Executor.
BECAUSE my son, Gerald Andrew Westmore of 63 Glenard Drive, Heidelberg, Victoria received a special payment of $39,000 from me many years ago to repay his National Bank loan, he will not be a beneficiary (I believe he deceived me in this matter).
THE guiding principles of this Will relate to the care various members of the family have extended to me and my late and dear husband, Gerald, as well as to the relative needs of various people as I have perceived them.
Beneficiaries
I GIVE my son, David Davoren Westmore … [property described]
I GIVE my son, Peter Anthony Westmore of 8 Maxwell Street,
Kew, Victoria the properties and everything of mine contained
thereon located at:
57 Molesworth Street, Kew Victoria (but excluding my Yellow
Toyota Corolla, which is to be given to my son, Andrew Edward
Westmore, and my red Toyota Corolla, which is to be given to
my daughter, Rosemary Clare Westmore); and my farm located
at 113 Forest Road, Newham, including the parts known in the
family as Mansfields and Alcorns.
I GIVE my daughter-in-law, Carmel Elizabeth Westmore of 8 Maxwell Street, Kew, Victoria the property and everything of mine contained thereon located at: 7/14 Jarvie Street, Brunswick, Victoria.
I GIVE my son, Michael Davoren Westmore … [property described]
I GIVE my daughter-in-law, Pauline Westmore … [property
described]
I GIVE my daughter, Margaret Patricia de Campo … [property described]
I GIVE my daughter, Ann Felicity Mary Hill … [property described]
I GIVE my daughter-in-law, Penny Westmore … [property described]
I GIVE my daughter, Moira Clare Westmore … [property described]
I GIVE my son, Anthony Francis Westmore … [property described]
I GIVE my son, Andrew Edward Westmore … [property described]
I have left Andrew properties in which to live and obtain some income, as he has made the farmhouse in which he currently resides at 113 Forest Road, Newham, virtually uninhabitable, having filled most of its rooms with foodstuffs, second-hand clothing and other materials, and he has left around unwashed dishes, cutlery and saucepans, in spite of my repeated requests to him to keep the farmhouse clean and tidy. Further, he has given me little assistance in the running of the farm. As Andrew is in receipt of a Disability Benefit which I want him to maintain, and receives no other income from me, I consider this gift sufficient to discharge any obligation I have to provide him with adequate provision for his proper maintenance and support.
I GIVE my daughter, Rosemary Clare Westmore … [property described]
When living at my home at 57 Molesworth Street, Kew, Rosemary was sometimes disagreeable to live with, and repeatedly refused my requests to her to keep her room and surrounding parts of the house tidy. She filled much of the lower level of my home with her possessions, despite my repeated requests for her to remove them. As Rosemary is in receipt of an income and receives no other support from me, I consider this gift sufficient to discharge any obligation I have to provide her with adequate provision for her proper maintenance and support.
I GIVE my son, Philip John Westmore … [property described]
I GIVE $1000 to Sister Anna (formerly Sister Antonia) of the
Sisters of Mercy Convent, 9 Fiddes Street, Reservoir.
The residuary clause then follows. That is the end of the Will.
At the time that she made the Will and at her death, the testatrix had 11 surviving children. The assets of her estate included 22 residential properties, one of those being a family farm which was run by the testatrix. The estate also comprised money held in bank and other accounts, along with shares, farm chattels, equipment and stock and personal effects. At the time of the grant of probate, the real estate was estimated to be worth $7,026,364 and the personal estate $1,141,420. The liabilities of the estate were estimated to be $432,039.
Accordingly, by the Will, the testatrix –

(a) Made specific gifts to members of her family of 21 of the 22 properties owned by her;
(b) With the exception of two cars and $1,000, left the possessions located at her residence and at the farm to Peter (who is given those properties), but otherwise made no gifts of her personal estate;
(c) Stated that one of her children (Gerald) was not to be a beneficiary because of a specific incident that had taken place some years earlier;
(d) Gave as the reasons for the gifts to her son Andrew, her wish that he retain eligible for government support as well as his conduct towards the testatrix;
(e) Gave as the reason for the gifts to Rosemary, Rosemary’s conduct towards the testatrix while she was living with the testatrix; and
(f) Apart from her children, gave specific bequests to three of her daughters- in-law, including the plaintiff, and made a small gift to Sister Anna of the Sisters of Mercy.

Importantly, by spelling out the ‘guiding principles’ of the Will, the testatrix made clear that the choices that she made in the Will were deliberate and considered, having regard to the care that had been given to her and her late husband by family members, as well as her perception of the relative needs of the persons in question. The fact that the testatrix sought to include in the Will a mechanism to sanction any beneficiary who caused the executor to incur legal or other expenses in connection with the administration of the estate suggests that she anticipated that members of the family might be disgruntled by the terms of the Will.

Principles of Construction

There was little dispute between the parties as to the legal principles to be applied in this case. The Will must be construed so as to give effect to the intention of the testatrix, such intention being gathered from the language of the Will, read in the light of the circumstances in which the Will was made.
Both counsel in this case referred the court to the ten ‘incontestable principles’ for the construction of wills described by Isaacs J in Fell v. Fell.[1] It is useful to set out these principles, as a number of them are applicable to the construction of the Will:
[1] (1922) 31 CLR 268, 273-275. Citations omitted.
1.        “Every will must by law be in writing, and it is a necessary consequence of that law that the meaning must be discovered from the writing itself, aided only by such extrinsic evidence as is necessary in order to enable us to understand the words which the testator has used” (Lord Cranworth in Abbott v Middleton; Lord Wensleydale in the same case).
2.        “The instrument … must receive a construction according to the plain meaning of the words and sentences therein contained. But … you must look at the whole instrument, and inasmuch as there may be inaccuracy and inconsistency, you must, if you can, ascertain what is the meaning of the instrument taken as a whole in order to give effect, if it be possible to do so, to the intention of the framer of it” (Lord Halsbury LC in Leader v Duffey; Ward v Brown; Buckley LJ in Kirby-Smith v Parnell).
3.        “If the will shows that the testator must necessarily have intended an interest to be given which there are no words in the will expressly to devise, the court is to supply the defect by implication, and thus to mould the language of the testator, so as to carry into effect, as far as possible, the intention which it is of opinion that the testator has, on the whole will, sufficiently declared (Towns v Wentworth).
4.        An inference cannot be made “that did not necessarily result from all the will taken together” (Sir RP Arden MR in Upton v Ferrers). A necessary inference is one the probability of which is so strong that a contrary intention cannot reasonably be supposed (James LJ in Crook v Hill).
5.        The court “cannot give effect to any intention which is not expressed or plainly implied in the language of” the “will”. “You have no right to fancy or to imply, unless there be something within the four corners of the will which is not only consistent with the implication you make, but which could hardly stand, if at all, in the will, without that implication being made. That is what is called necessary implication, and legitimate implication, in contradistinction to gratuitous, groundless, fanciful implication” (Lord Brougham LC in Langston v Langston).
6.        “If the contents of a will show that a word has been undesignedly omitted, or undesignedly inserted, and demonstrate what addition by construction, or what rejection by construction, will fulfil the intention with which the document was written, the addition or rejection will by construction be made” (Knight Bruce LJ in Pride v Fooks).
7.        “When the will is in itself incapable of bearing any meaning unless some words are supplied, so that the only choice is between an intestacy and supplying some words; but even there, as in every case, the court can only supply words if it sees on the face of the will itself clearly and precisely what are the omitted words, which may then be supplied upon what is called a necessary implication from the terms of the will, and in order to prevent an intestacy (Page Wood VC in Hope v Potter).
8.        “There are two modes of reading an instrument: where the one destroys and the other preserves, it is the rule of law, and of equity following the law in this respect (for it is a rule of common sense) … that you should rather lean towards that construction which preserves, than towards that which destroys (Lord Brougham LC in Langston v Langston).
9.        If on reading the will you can see some mistake must have happened, that is a legitimate ground in construing an instrument, because that is a reason derived not dehors the instrument, but one for which you have not to travel from the four corners of the instrument itself (Langston v Langston).
10.      The mind never inclines towards intestacy: that is a dernier ressort in the construction of wills (Lord Shaw in Lightfoot v Maybery).
The plaintiff initially sought to lead extrinsic evidence about the drafting of the Will, including direct evidence of the testatrix’s intentions. However, both parties ultimately submitted that the construction of the Will should occur within ‘the four corners’ of the Will.
Likewise, there was little disagreement between the parties on the effect of s 53(b) of the Administration and Probate Act 1958 (Vic). Section 53 provides that where a person dies leaving a will effectively disposing of part of his or her property, Division 6 of Part 1 of that Act (Distribution of Intestate’s Residuary Estate) shall have effect as respects the part of the property not disposed of, subject to the provisions contained in the will and the modifications in sub-sections (a) and (b). Section 53(b) provides that the personal representative shall, subject to his or her rights and powers for the purposes of the administration, be a trustee for the persons entitled under Division 6 in respect of the part of the estate not expressly disposed of unless it appears that the personal representative is intended to take such part beneficially.
Both parties submitted that s 53(b) only applies if part of the testatrix’s estate has not been expressly disposed of. Accordingly, the court has to first construe the Will to decide whether the Will directs the plaintiff to hold the remainder of the residuary estate on trust or whether she is given it beneficially.[2]
[2] Counsel for the plaintiff referred the court to the historical antecedents of s 53(b) of the Administration and Probate Act, including the Executors Act of 1830. From 1831 onwards, the executor was assumed to be holding property given to him by virtue of office and it was up to him to demonstrate from the will that this residue was given to him beneficially. The Executors Act was concerned with the surplus, that is, the balance that remained in the personal property after the executor had executed the will and paid debts and creditors. This is property that has not been expressly disposed of by the will. However, if the residue is given by the will to the executor, the court must decide the effect of the gift by construing the will in accordance with the usual principles which apply to the construction of a will. This analysis seems to me to be correct.
Both parties also submitted that it is for the court to construe the residuary clause in the context of the Will as a whole, having regard to the circumstances of the Will, without regard to any presumption in favour of the residuary estate being held on trust.

The case for the plaintiff (executrix)

The plaintiff claims to be beneficially entitled to the remainder of the residue by reason of the words at the conclusion of the residuary clause, “and to stand possessed of the residue then remaining”. The Will directs that the executrix “stand possessed” of the remainder of the residue after executing the Will. Those words confer upon her the beneficial interest in the residuary estate, once the payment of the debts referred to in the residuary clause has been effected.
According to the plaintiff, the words “upon trust” convey nothing more than an indication that this residue is to be applied for some purpose. Those words do not answer the burning question of what happens to the surplus.
Moreover, there is no presumption that a gift made to an executor is not intended to give the beneficial interest or that property is given to an executor only by virtue of his or her office. The Will contains two gifts to the plaintiff that are plainly intended to carry the beneficial interest, in addition to the gift of the residue. There is no reason to infer that the gift of the residue should be treated differently from the two other gifts.
It is the plaintiff’s submission that the construction advanced by the defendant is an effort to detract from the words of the Will to deprive them of their meaning. Subtracting from the express words of the Will, or putting a gloss on the words, is permissible only if those adjustments can be inferred from the whole of the Will. Any such inference must be so obvious that the mind cannot resist it. There is nothing in the words of the Will, or its structure, or the pattern of dispositions, that militates against the giving of the residue to the plaintiff beneficially.
No implication can be put upon the Will, or upon any part of the Will, that is not plainly implied by the Will taken as a whole. It is not permissible for the defendant to simply make up and impose some gloss upon the Will because he thinks that the testatrix would not have intended to give the residue to the plaintiff. There is no basis for his arriving at that conclusion, and even if there were, it would not be a permissible tool in the interpretation of the Will. Nor is there any assumption to be made by the court that this would not have been intended.

The case for the defendant (next of kin)

On behalf of the defendant, it was submitted that the residuary clause ought to be construed as placing the residuary estate on trust for the statutory next of kin. The residuary clause is entirely sensible as a conferral of a trust upon the plaintiff, rather than as a gift to her personally. If, notionally, the words “for my children” were inserted at the end of the clause, it would be sensible on its face, and sensible in the light of surrounding circumstances. The meaning of the residuary clause is that the residuary does not fall beneficially into the hands of the plaintiff and it is held on a trust for the next of kin, as identified in the intestate provisions of the Administration and Probate Act.
The defendant submitted that the court may derive guidance from the following features of the Will, which support the construction of the residuary clause as the conferral of a trust on the plaintiff:

(a)

The use of the words “upon trust” in contrast to the unembellished “I give” in the other gifts in the Will;

(b)

The absence of words indicating that the residue is to be “for” the executor personally. Words such as ‘at her disposal’ or ‘absolutely’ or ‘for herself’ are missing. Other provisions in the Will suggest that the testatrix understands the need to ‘transfer’ or to ‘give’ assets in order for the gift to actually take place;

(c)

The fact that the ultimate taker of the residue could be any one of three possible executrices. The defendant contends that it is unlikely that such a large gift could fall to what is an essentially random choice;

(d)

The absence of any words suggesting that the clause is for the reward of the executrix (compare the explanations of the gifts to Andrew and Rosemary). Earlier wills show that the testatrix understood the concept of payment to executors. Moreover, the size of the gift makes it unlikely that it would be a reward for office;

(e)

The inclusion of a power to postpone “without being responsible for loss” is inconsistent with the benefit in the residuary clause being a personal one because it makes no sense for the executrix to forgive herself for losses caused by her own acts in respect of her own property.

No assistance can be gained from the ‘special condition’ because that clause begs the question for whose benefit the amount in question is given “to the executor”.
Importantly, the defendant submits that the words “to my trustee upon trust” have to be given real life and meaning, with the consequence that the plaintiff holds the residuary estate on trust for somebody. If the words “for my children” or “for my next of kin” cannot be read into the clause, the intestate provisions of the Administration and Probate Act supply the solution.
It is only if the Will shows with reasonable certainty that the interpretation put forward by the plaintiff should be adopted, that the plaintiff should take beneficially. In the words of Dixon J in Andrews v National Trustees Executors and Agency Co. of Australia Ltd,[3] the question is whether the testamentary paper contains sufficient to show with reasonable certainty that the testatrix intended the plaintiff to take the residue as devisee and legatee. Section 53 of the Administration and Probate Act does not cast a positive onus on the plaintiff to show that the gift in the residuary clause is meant beneficially, but the words of Dixon J indicate the degree of satisfaction the court must have.
[3] (1936) 56 CLR 1, 13.
The defendant conceded that there was a ‘golden rule’ that the court leans against intestacy in construing a will. That rule is often applied. However, the rule does not require the court to stretch the meaning of words in a will simply to avoid an intestacy. The real task is working out what the Will means. Is there an intestacy because the residuary estate is being held as a trusteeship, or is there the creation of a personal and beneficial interest? In the final analysis, the court has to decide the question of construction by considering the indicia of intention in the Will itself.

Analysis and Conclusions

The court is presented with two conflicting but plausible constructions of the residuary clause, each of which finds support in the words used in the clause and in the Will read as a whole. It is necessary to decide which sense the testatrix herself attached to the direction that the balance of her estate be given to the plaintiff “upon trust to sell, call in and convert” for the purpose of making specified payments and that the plaintiff “stand possessed of the residue then remaining”. This exercise must be undertaken by reference to the language and the circumstances of the Will itself, not by conjecture and speculation as to what the testatrix might have meant.
There is no doubt that the testatrix directed the plaintiff to hold the residue upon trust for specified purposes. The question is whether the testatrix intended the residuary clause to create a trust for the whole of the residue, or whether, by declaring her intention that the plaintiff “stand possessed of the residue then remaining” she intended the plaintiff to take a beneficial interest in the residuary property remaining once the payments referred to in the residuary clause had been made.
There is an important feature of the Will that must influence the interpretation of the residuary clause. It is plain from the way in which the testatrix divided up her property among members of her family that she did not mean to treat them equally. She made gifts (or declined to make gifts) to them on the basis of their conduct towards her and her late husband and in accordance with what she considered to be the relative needs of the persons in question. She was quite precise about which family members were to receive gifts, and what each of them was to receive. Consistently with this, the special condition suggests that she foresaw that the division of the estate that she had so carefully engineered might give rise to dissent among family members.
The exclusion of Gerald as a beneficiary and, generally, the unequal treatment of the next of kin makes it difficult to infer that the testatrix intended that her children share equally in what remained of the residuary estate, or was content to leave open the possibility that they might share in the remainder upon a partial intestacy. The testatrix made it clear in the Will that she did not intend her son Gerald to receive any benefit under the Will, and she wished Andrew to receive only a limited benefit in order that he to continue to receive (and therefore to be eligible for) a disability benefit. Their conduct towards the testatrix is also given as the reason why Andrew and Rosemary should receive only the particular gifts that are specified Will.
The interpretation of the residuary clause advanced by the defendant gives the words “and to stand possessed of the residue then remaining” uncertain effect. Although words of this kind will commonly be followed by words such as “for my children” or “for my next of kin” (which would make plain that the trust created in the opening phrase extends to the residue remaining after the payments described in the residuary clause have been made), the testatrix has chosen not to include words of that kind.[4] Having regard to “all of the Will taken together”, the inference that the testatrix intended to create a trust in favour of her next of kin is far from a necessary one; it is not an inference the probability of which is so strong that a contrary intention cannot reasonably be supposed. In this case, an intention that the testatrix did not intend to create a trust in favour of her children can be reasonably supposed, having regard to the way in which the next of kin are treated in the other parts of the Will.
[4] The defendant contended, albeit faintly, that the court should have regard to the penultimate will, which provided, “ … any money leftover is to be divided equally amongst my surviving children.” It was contended that similar formulations appeared in earlier wills and that it would be consistent with these wills to construe the residuary clause as giving the remainder on trust to the takers on intestacy, that is, the next of kin. Having perused the earlier wills, it is difficult to find any consistent pattern concerning the disposition of the residuary estate. The fact that the penultimate will leaves “leftover money” to the children of the testatrix does not assist in the interpretation of the Will. Why the words “for my children” were not included in the Will is a question that is best answered by reference to the provisions of the Will itself. In this case, reference to the penultimate will or to previous wills merely invites speculation and conjecture.
On the defendant’s construction, then, the court is left with uncertainty as to who the beneficiaries are, which gives rise to a partial intestacy.
On the other hand, the establishment of a trust for sale, the conferral of a power of postponement and the provision that the trustee is not responsible for any losses arising from postponement (“the indemnity”) does not sit comfortably with the plaintiff herself taking the remainder beneficially. It is difficult to see the need for the indemnity if the plaintiff was intended to take the remainder beneficially. The plaintiff’s construction therefore requires some flexibility in the interpretative approach to be taken. It is not a perfect fit.
The fact that the opening words of the residuary clause create a trust does not preclude the plaintiff taking the remainder beneficially. Where property is given to a person upon trust, there is a presumption that the property is given to him or her entirely as trustee and not to any extent beneficially. Where, however, the trust does not exhaust the whole beneficial interest in the property, this presumption can be rebutted by an indication in the instrument of disposition that he or she is intended to take the residue for his or her own benefit.[5]
[5] The Armenian General Benevolent Union v The Union Trustee Co of Australia Ltd (1952) 87 CLR 597 at 611 per William, Webb and Kitto JJ, referring to the statement in Halsbury, Laws of England, 2nd ed., vol 33, 193.
I have reached the conclusion that the testatrix has sufficiently declared her intention that the plaintiff take a beneficial interest in the residue remaining after the Will has been executed. This is the effect of the words at the end of the residuary clause directing the plaintiff “to stand possessed of the residue then remaining” without anything further. I have reached this conclusion notwithstanding indicia to the contrary in the Will, to which the defendant has referred me.
Such a construction does not ignore the words “to my trustee on trust” in the opening words of the residuary clause. These words have meaning in relation to the powers of sale, conversion and postponement conferred by the residuary clause for the purpose of making the payments specified. There is a trust to further administer the estate to turn that part of the estate which is not specifically given to the persons named as beneficiaries in the Will into money and to use that money to pay debts, expenses and duties. Once the executor has paid the debts, expenses and duties, the trust is exhausted.
Whether the recipient of a disposition, given subject to a charge or trust, is entitled to the remainder once the objective of the trust has been fulfilled depends on whether satisfying that objective was the sole purpose for which the disposition was made. If the testator’s intent was for the trustee to take the remainder beneficially, the disposition may be characterised as a gift given subject to the charge or trust[6]. The key distinction is whether the language of the testator reveals an intention only to achieve the stated purpose, or whether it also reveals an intention to benefit the recipient. This is the principle articulated by Lord Eldon in King v Denison[7].
[6] The two terms are used interchangeably in In re West at 87, 88; see also Hourigan at 645: “To this extent, at any rate, she was a trustee of the residue” and at 647-8 (Dixon J).
[7] (1813) 1 V&B 260; 35 ER 102 at 272-3 (The Lord Chancellor [Lord Eldon]).
The rule was restated by Cotton LJ in Croome v Croome[8]:
I think Mr. Theobald has stated the correct rule to be applied in this case, which is, whether this is a devise for a particular purpose – by which I mean for that particular purpose only – or whether it is a devise subject to certain purposes described as trusts or charges. That, I think, is the rule laid down by Lord Eldon in King v Denison.
[8] (1889) 59 LT 582 at 585.
Likewise, in Hourigan v TEA[9], Dixon J said:
… an interpretation of a gift to one person to fulfil a purpose in favour of another may be adopted by which it is treated as a beneficial disposition to the first person, subject, however, to performance of the particular purpose.
[9] (1934) 51 CLR 619 at 645-646.
The beneficiary of a disposition given subject to a trust in this way can also be described as a trustee in respect of part of the property:
That is the pith and marrow of the whole matter. Are the donees in trust trustees in respect of the whole property given, or only in respect of the part that is given to others?[10]
[10] In re West [1900] 1 Ch 84 at 89.
As a result, the fact that the residuary clause commences by creating a trust does not have the necessary consequence that the plaintiff holds the whole of the residuary estate as trustee only. It is a question of discerning whether the testatrix intended to give the remainder to the plaintiff beneficially once the necessary payments had been made. This question must be answered by reference to the Will as a whole and the circumstances in which it was made.
On this question, the defendant relied on In re Pugh’s Will Trusts; Martin v Pugh & Anor[11] in which Pennycuick J considered the following direction to the executor:
And I direct him to dispose of the same in accordance with any letters or memoranda which I may leave with this my will and otherwise in such a manner as he may in his absolute discretion think fit.
[11] [1967] 1 WLR 1262.
His Honour held that the direction imposed on the trustee a degree of fiduciary obligation and that it was impossible to construe the gift as a simple and absolute. Although the second limb of the direction looked like a general power, where one finds a gift upon trust to apply the subject matter in such manner or for such purposes as the recipient of the gift may think fit, then that represents a trust for undefined objects which the court cannot execute and the trust is void. His Honour referred to Buckle v Bristow,[12] In re Chapman[13] and In re Rees.[14] In each case, the gift in question was held to be a trust – the residue was not severed from the trust with which the testator had clothed the relevant property. His Honour noted, however, that the construction of every will depends on the particular terms contained in the will read in their context, and placed particular emphasis on the primary direction to dispose of the residuary estate in accordance with letters or memoranda, which necessarily imported a trust. According to His Honour, this trust had to be applicable to both limbs of the direction, that is, the ‘primary’ direction to dispose of the same in accordance with any letters or memoranda, and the ‘default’ direction, to dispose of the residuary estate “otherwise in such manner as he may in his absolute discretion think fit”.
[12]             (1864) 10 Jur.N.S. 1095.
[13]             In re Chapman; Hales v Attorney-General [1922] 2 Ch 479.
[14]             In re Rees; Williams v Hopkins [1950] Ch 204.
In this case, the residuary clause plainly creates a trust that extends at least to the first ‘limb’ of the residuary clause – the direction to convert the residue to money and make the necessary payments. However, given the structure of the residuary clause, the words “to my trustee” are capable of referring separately to a disposition “upon trust” to convert the property and make the payments specified and to a disposition of the remainder to the trustee beneficially. Significantly, the word “otherwise” is not present at the beginning of the second limb of the residuary clause (directing the trustee to stand possessed of the residue then remaining). The second limb is not to be regarded merely as a ‘default’ direction.
Having regard to the language of the residuary clause, the context of the Will read as a whole - in particular the testatrix’s insistence that one of her children not be a beneficiary of the Will and others receive only limited gifts - I find that the trust was not intended by the executrix to extend to the gift of the residue remaining after the relevant payments had been made.
The words “stand possessed of” must be given their ordinary meaning. The expression “stand possessed of” does not have any fixed legal meaning which could be applied in aid of interpretation.[15] The testatrix simply meant those words to signify “to have” or “to take”.
[15] Pollock, in An Essay on Possession in the Common Law, (Oxford, Clarendon Press, 1888), quoted Bentham:
On this basis, I conclude that the testatrix intended that the plaintiff take the remainder of the residuary estate beneficially. The indicia to which the defendant points of a contrary intention are not, either singly or in combination, sufficient to displace the intention which is discernable from the pattern of bequests to members of the family of the testatrix and her determination that certain members of the family should not benefit or should derive only limited benefit from the Will. In addition, there is the direction to the executrix to stand possessed of the remainder with nothing more.
The absence of express words that the plaintiff is to take for her own benefit, and the fact that the residuary clause does not refer to the plaintiff by name or position within the family, does not require a different conclusion. The residual disposition is spelt out: the plaintiff is to stand possessed of the residue remaining, that is, the balance of the residue after the relevant purpose has been carried out. The residuary clause tells the executrix to take the residuary property, convert it into money, pay the relevant debts and liabilities and then directs her to stand possessed of the balance. More specific words - referring to the plaintiff by name, or giving the residue to her ‘absolutely’ - are not required.
Likewise, the size of the residuary estate and the fact that the Will provides for the appointment of two other persons as executor if the plaintiff is unwilling or unable to act does not lead me to conclude that the testatrix intended her executrix to hold the whole of the residue on trust for her next of kin or persons unspecified. In light of the Will’s treatment of some of her next of kin, it would be surprising if the testatrix intended them to come into a large sum of money after all as a result of inheriting the residue. In my view, this would be a more startling result than the
In connection with the word ‘seised’, it is often used as meaning to embrace all that the party is entitled to, both in realty and personalty; to embrace all interests which the party has or may have at any time, whether in possession, remainder or reversion; and vested or contingent. Another sense in which the term is used, is to describe an estate in possession, as distinguished from an estate in reversion or remainder. A third sense is that of reduction into actual, into manual possession.
plaintiff or one of the other persons named as a possible executrix inheriting that money. Although I cannot conclude that the remainder of the residue is given to the executrix as a reward for administering the estate, it is to be noted that there is no specific provision in the Will for the executrix to receive a commission. This, in circumstances where the administration of the estate was bound to be a complex and difficult exercise.

The fact that the Will provides for three possible executrixes (two of whom are otherwise beneficiaries of the Will, and one of whom is not) might at first blush be regarded as a strong indication that the testatrix did not intend the executrix (whoever she may be) to receive such a large gift. However, the persons nominated are close family members: apart from the plaintiff, one is the grand-daughter of the testatrix and the other is her daughter. In this context, the limited uncertainty as to who will ultimately take the role of executor is not a strong indication that the testatrix intended her children - or persons unspecified - to take the remainder rather than her executor.
The most important signpost in the Will of an intention that the plaintiff should not take the remainder beneficially is the indemnity. It is not clear why such protection was thought to be necessary if the plaintiff was to take the remainder of the estate beneficially.
In Re West; George v George[16], Kekewich J considered the effect of a trust for sale “in the ordinary form” which included an indemnity and a right to reimbursement, and commented that the trust would be quite unnecessary if the property belonged to the donees beneficially. He could not look on the trust “as mere machinery”. It afforded a strong indication that the donees were to hold the proceeds as trustees generally. A finer point arose on the direction that the trustees would be chargeable only with such money as they actually received. That clause was unnecessary unless the testatrix contemplated that the donees were trustees of the whole property given. “Then follows the reimbursement clause, shewing that the testatrix contemplated that the
trustees might require reimbursement of moneys expended in the execution of their trust. The trust for sale and the indemnity and reimbursement clauses hang together, and shew that
the testatrix was contemplating a complete trust.”[17]
[16] [1900] 1 Ch 84 at 89.
[17] Ibid, at 90.
On the other hand, in Williams v Arkle,[18] the majority found that the executor did take the gift beneficially, despite the existence of an indemnity associated with powers to deal with the property and to appoint accountants and receivers. There was a strong dissenting judgment from Lord Chelmsford on this point.[19] For the majority, the most relevant indication in confirmation of the testator’s intention to grant the beneficial interest was the fact that the testator’s heirs, who would have been entitled to the residue if it was all given on trust, had already been specifically provided for.[20] In this context, the existence of an indemnity did not dissuade the majority from its view that the testator intended the executor to take beneficially. It should be noted, however, that in Williams v Arkle, there were annuities to administer from the estate, so the heirs had a continuing interest in the proper administration of the estate.
[18]             (1875) LR vol VII 606.
[19]             At 623-4 (Lord Chelmsford, in dissent), but see 628-9 (Lord Hatherley).
[20]             At 617-8 (The Lord Chancellor [Lord Cairns]), 627 (Lord Hatherley).
The indemnity is therefore an element of the Will that does not sit easily with the plaintiff taking the remainder beneficially. It is necessary, however, to interpret the Will with some flexibility.[21] The Will is home-made, and is composed (at least in part) of clauses taken from a will kit. Such clauses may well have been put into the Will without a complete appreciation of their legal meaning and consequences. The words comprising the trust for sale and indemnity have the strong flavour of words that have been taken from a pro forma provision for the payment of funeral and other testamentary expenses. In my view, the trust for sale and indemnity in the Will is a matter of mere machinery, and it is not sufficient to control the Will. Its influence on the construction of the residuary clause is not sufficiently strong to cause me to change my view about the intentions of the testatrix.
[21] In Brennan v Permanent Trustee Co of NSW Ltd (1945) 73 CLR 401 at 414, Dixon J acknowledged the need in some circumstances to discard or modify expressions in a will which are inconsistent with the declared intention of the testator:
How the court must weigh up different factors when discerning the testator’s intention and what level of satisfaction it must have was a matter of submission by the parties. In Hourigan, Rich J said[22]:
The whole tenour of the will indicates an intention on the part of the testator that his widow should take beneficially. In dealing with cases of this character, ‘the Court is prepared to hold that there is a beneficial gift to the first taker on slight expressions and indications of intention’ (In re Foord; Foord v Condor)
[22] (1934) 51 CLR 619 at 626.
However, in Andrews v National Trustees Executors and Agency Company[23] Dixon J stated the proposition that any claim by an executor must rest upon the interpretation of the Will. As a consequence:
The question is whether the testamentary paper contains sufficient to show with reasonable certainty that the testator intended the appellant [executor] to take his real and personal property as devisee and legatee.
[23] (1936) 56 CLR 1 at 13.
In the present case, there is more than a ‘slight’ indication that the testatrix intended the plaintiff to stand possessed of the residue remaining by taking a beneficial interest in the remainder. Indeed, having regard to the factors I have described, the court can be reasonably certain that the testatrix intended the plaintiff to take the remainder beneficially.
Finally, it is necessary to have regard to the presumption against intestacy. The Will should, if possible, on a fair and reasonable construction, be construed so as to lead to a testacy rather than an intestacy or partial intestacy.[24] If there are two possible constructions, one of which would result in intestacy and one of which would not, the court should adopt the latter.
[24] Fell v Fell (supra) at 275 - 276, 284;
Clearly, the court cannot strain the words used in a will in order to avoid an intestacy. However, in this case, it is not to strain the language of the residuary clause to interpret it as giving the residue to the plaintiff beneficially once the relevant payments have been made. To the contrary, such a construction accords with the ordinary meaning of the words in the Will.[25]
[25] In re Edwards; Jones v Jones [1906] 1 Ch 570 at 574; Re Wragg (dec’d); Hollingsworth v Wragg [1959] 1 WLR 922 at 929.

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… If I give to A. and his Heirs all my real Estate, charged with my Debts, that is a Devise to him for a particular Purpose, but not for that Purpose only. If the Devise is upon Trust to pay my Debts, that is a Devise for a particular Purpose, and nothing more; and the Effect of those Two Modes admits just this Difference. The former is a Devise of an Estate of Inheritance for the Purpose of giving the Devisee the beneficial Interest, subject to a particular Purpose: the latter is a Devise for a particular Purpose; with no Intention to give him any beneficial Interest. Where therefore the whole legal Interest is given for the Purpose of satisfying Trusts expressed, and those Trusts do not in their Execution exhaust the whole, so much of the beneficial interest as is not exhausted belongs to the Heir: but, where the whole legal Interest is given for a particular Purpose, with an intention to give to the Devisee of the legal Estate the beneficial Interest, if the whole is not exhausted by that particular Purpose, the Surplus goes to the Devisee; as it is intended to be given to him.

What is it to possess? This appears a very simple question:– there is none more difficult of resolution, and it is in vain that its solution is sought for in books of law…

The author identified several distinct established meanings of possession: actual possession, which can be de facto possession (effective occupation or control) or legal possession (effective control but not necessarily custody; eg giving your coat to a waiter to hang up), and constructive possession (the right to possess or have legal possession) (at 26-8). In Wilton v Colvin (1856) 3 Drew 617, 622-3, Kindersley V-C, attempting to discern the meaning of the words “possessed of” in a will, identified three different senses in which the term may be used:
To determine the meaning of the will, the language of the testator must be read in the sense which he himself appears to have attached to the expression he used, that is unless a rule of law gives some fixed operation. When the main purpose and intention of the testator are ascertained to the satisfaction of the court, if particular expressions are found in the will which are inconsistent with that intention, though not sufficient to control it, such expressions must be discarded or modified. The language of the testator should be moulded to carry into effect as far as possible the intention which, in the opinion of the court, the testator has, on the whole will, sufficiently declared.

[2009] VSC 624

23 December 2009