Shine v Green
[2018] NZHC 1382
•12 June 2018
IN THE HIGH COURT OF NEW ZEALAND TAURANGA REGISTRY
I TE KŌTI MATUA O AOTEAROA TAURANGA MOANA ROHE
CIV-2017-407-000184
[2018] NZHC 1382
BETWEEN NICOLA MEGAN SHINE as executor of the estate of Ms Jane Fox
Plaintiff
AND
JENNIFER LILLIAN GREEN and MEGAN
FRANCES SHINE as the executors of the estate of Sylvia Lily Fox
First Defendants
DIANA ELIZABETH FOX and WILLIAM
HUGH JONES as executors of the estate of Graham Glyn Fox
Second Defendants
SHANE GOODALL McLAUGHLIN
Third Defendant
Hearing: 23 April 2018 (Heard in Hamilton) Appearances:
Tim Conder for the Plaintiff
First Defendants abiding the decision of the Court Second Defendants abiding the decision of the Court David O’Neill for the Third Defendant
Judgment:
12 June 2018
JUDGMENT OF MOORE J
This judgment was delivered by me on 12 June 2018 at 2:00 pm pursuant to Rule 11.5 of the High Court Rules.
Registrar/ Deputy Registrar Date:
SHINE v GREEN & ORS [2018] NZHC 1382
Introduction
[1] Paula Fox died four days after she executed her last will. She left the residue, being the bulk of her estate, to her only son Jordan McLaughlin, to be held on trust for his “wellbeing, living, clothing, medical expenses as he requires”. He survived his mother, but only by about three months. He died intestate aged 25.
[2] A dispute has arisen as to the proper distribution of Ms Fox’s estate. The plaintiff, the sole surviving executor, is Ms Fox’s sister, Nicola Shine. Ms Shine seeks to distribute the residue to the executors of the estates of Sylvia and Graham Fox, Ms Fox’s parents. However, the father of Jordan claims the residue is properly part of his son’s estate. He is the third defendant, and the executor of Jordan’s estate.
[3] Ms Shine says Ms Fox created a valid trust in favour of Jordan. However, upon Jordan’s death, Ms Shine claims that trust failed and the residue resulted back to Ms Fox’s estate to be distributed on an intestacy. Mr McLaughlin disputes this, claiming he is entitled to the inheritance through his son.
Background
[4]The background facts may be stated quite briefly.
[5] Jordan was born on 14 July 1991, to Ms Fox and Mr McLaughlin. They later separated.
[6] On 22 June 2016 Ms Fox executed her last will. It seems likely her will was made in anticipation of her imminent death, because she died four days later, on 26 June 2016. She was aged 49. She was survived by Jordan and both her parents, Graham and Sylvia.
[7] The main assets of her estate were her car and an 87 per cent share in a house which she owned with her mother.
[8] Ms Fox’s will was made using a “will kit” template. It consists of two parts. The first is a pro forma, pre-printed will template. The blank spaces are filled out by
Ms Fox in long hand. These include the usual formalities such as her name, address and occupation and the names and occupations of those she appointed as her executors and trustees. The spaces reserved for recording bequests and legacies are left blank except for a handwritten note, “*see attached letter of my wishes”.
[9]Next the will records (Ms Fox’s handwritten insertions are shown in italics):
“4. I DIRECT my Trustees to hold all the rest of my Estate on the following trusts:
(a)to pay all my debts and funeral expenses, my trustees’ administration expenses and any death duty payable on my dutiable Estate;
(b)to transfer the balance of the residue of my Estate to Jordan
Thomas McLaughlin [NAME] of no fixed abode [PLACE OF RESIDENCE] PROVIDED HOWEVER that if she/he should predecease me leaving a child or children living at my death such child or children will take and if more than one as tenants in common in equal shares the share which their parent would have taken if he or she survived me.
*See attached list of wishes regarding Trust account for Jordan.”
[10] The formal part of the will is completed in the conventional fashion, being dated and signed by the testatrix in the presence of two witnesses.
[11] On what appear to be two separate pieces of note paper is the second part of the will. In handwriting it relevantly records:
“1. To Sylvia Fox I leave my two cats Louis and Ziggy with the proviso that she is the carer of them. If she is unable or unwilling to care for them then it is my wish for them to be euthanised in a humane way.
2.My household and personal effects I leave to my mother and sister to disperse as they see fit. Anything they don’t want for themselves can either be sold and put towards a trust account for Jordan.
3.My house and car are to be sold and the remainder of funds left after debts have been paid and mum’s share of the house paid to her are to be put into a Trust Account for my son Jordan.
I would like mother and sister to administer this. The money is to be used for Jordan’s wellbeing, living, clothing, medical expenses as he requires. I do not want him to have direct access until my mother and sister deem him responsible enough to handle it. He will need to ask
them directly for assistance and it is my wish that they lovingly watch over him on my behalf.
4.My Kiwisaver fund is to be used to pay my credit card debts and any surplus put into Jordan’s Trust account.
5.FUNERAL
…
I would like my ashes to be kept with my mother and given to Jordan on her passing so that when he passes we can be scattered together.”
[12]Both pages were initialled by Ms Fox and the two witnesses.
[13] Just three months after Ms Fox’s death on 4 October 2016, Jordan died. He died intestate. On 28 March 2017 Mr McLaughlin was granted letters of administration.
[14] Probate in respect of Ms Fox’s estate was not obtained until 15 June 2017. In the months which followed the family experienced two further tragedies. Both of Ms Fox’s parents died; Graham on 4 July 2017 and Sylvia on 28 October 2017. Sylvia was one of the executors of Ms Fox’s will.
[15] Ms Shine is now the sole surviving executor. She filed these proceedings on 17 November 2017 seeking payment of the residue of Ms Fox’s estate to the executors of the estate of Graham and Sylvia Fox.
The position of the parties
Ms Shine
[16] Mr Conder, for Ms Shine, submits Ms Fox’s will did create a valid trust in favour of Jordan. However, upon his death, that trust failed and the residue resulted back to the estate to be distributed on intestacy.
[17] At the date of Ms Fox’s death Jordan was the first in line to receive the residue on intestacy. But Mr Conder submits at no point did the assets vest in Jordan absolutely during his lifetime. Consequently, the interest was intestate to be held “on
the statutory trusts”,1 and passes to those next entitled to inherit, namely Ms Fox’s two parents who were both living when Jordan died.
Mr McLaughlin
[18] Mr O’Neill, for Mr McLaughlin, submits that adopting the conventional and well-settled principles of construction of wills Ms Fox’s intention, to benefit her only child, should be given effect to. He submits there was no partial intestacy.
[19] Alternatively, if the Court was to find a partial intestacy, he submits that Jordan attained an absolutely vested interest in the residue under s 78 of the Administration Act 1969.
First and second defendants
[20] The first and second defendants are the executors of Sylvia and Graham Fox’s estates respectively. They abide the decision of the Court.
Issues
[21]The resolution of this dispute turns on four questions:
(a)What is the correct approach to interpreting Ms Fox’s will?
(b)On a proper construction what did Ms Fox intend to do in her will?
(c)On Jordan’s death, is there an intestacy?
(d)In the event there is, who is entitled to inherit?
Jurisdiction
[22] This proceeding has been brought under s 66 of the Trustee Act 1956. That section sets out the right of trustees to apply to the Court for directions on trust matters:
“66 Right of trustee to apply to court for directions
1 Administration Act 1969, s 77.
(1)Any trustee may apply to the court for directions concerning any property subject to a trust, or respecting the management or administration of any such property, or respecting the exercise of any power or discretion vested in the trustee.
(2)Every such application shall be served upon, and the hearing may be attended by, all persons interested in the application or such of them as the court thinks expedient.”
[23]I now turn to consider each of the four issues identified above.
What is the correct approach to interpreting Ms Fox’s will?
[24]The parties are largely in agreement on this issue.
[25] As Mr Conder helpfully set out, the approach to interpreting wills is the same as that which applies to interpreting contracts:2
“The meaning to be ascertained is that which the trust deed would convey to a reasonable man having all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time the trust deed was entered into. That background includes absolutely anything which would have affected the way in which the language of the document would have been understood by a reasonable person, except for the previous negotiations of the parties and their declarations of subjective intent.”
[26] And as the Court of Appeal stated in Wilson v Davidson, ss 31 and 32 of the Wills Act 2007 apply when there are interpretation issues with a will or a will does not reflect a will-maker’s intentions.3 The sections draw on the previous position at common law, summarised by Fisher J in Re Jensen:4
“The overriding objective is to give effect to the intentions of the testator. All canons of construction must be subservient to that end. The testator's intentions are to be gleaned from an objective appraisal of the testamentary documents viewed as a whole but in cases of doubt the wording is to be interpreted in the context of those facts which must have been in the contemplation of the testator.”
[27] Section 32 expands the external indicia of the will-maker’s intention the Court can draw on when ascertaining what they intended by their will in cases of uncertainty
2 Manukau City Council v Lawson [2001] 1 NZLR 599 (HC) at [13].
3 Wilson v Davidson [2017] NZCA 468 at [10].
4 Re Jensen [1992] 2 NZLR 506 (HC) at 510.
or ambiguity. Section 31 allows for correction in cases where a will contains a clerical error or does not give effect to the will-maker’s instructions.
[28] Here there is no external evidence which sheds light on what Ms Fox intended, but I nevertheless consider her intentions should be the focal point of the inquiry in interpreting the will. As Fisher J stated, other canons of construction should be subservient to this end.
[29] Mr Conder submits the “letter of wishes” must be read to form part of the will itself, because it is clearly intended to have testamentary effect. Mr O’Neill offered no opposition to such an interpretation. I agree that the mode of execution and references to it in the pro forma will indicate it was clearly intended to have testamentary effect. In any event, reliance on the letter of wishes is consistent with the above-mentioned focus on the will-maker’s intention.
What did Ms Fox intend to do in her will? What happened after Jordan’s death?
[30] These are the second and third issues and the first two of the three key battlegrounds in the proceeding. It is convenient to address them together.
[31] Mr Conder for Ms Shine submits Ms Fox did not intend to absolutely gift the residue of her estate to Jordan. Rather she intended to create a trust, of which he was to be the sole discretionary and final beneficiary, but according to the terms of the trust only in the event the trustees made a determination that he was responsible enough to handle the funds.
[32] Mr O’Neill insists that an overly technical approach to interpreting the will should be discarded in favour of an interpretation which strives to give effect to Ms Fox’s overall intention. He submits that viewed holistically, Ms Fox’s intention was to provide for Jordan.
[33] Mr O’Neill relies strongly on the English decision Lassence v Tierney.5 He submits it stands for the proposition that:6
“If a testator leaves a legacy absolutely as regards his estate, but restricts the mode of the legatee's enjoyment of it, to secure certain objects for the benefit of the legatee, on the failure of such objects the absolute gift prevails …”
[34] However, that is only part of the proposition the case stands for. Lord Cottenham LC continued:7
“ … but, if there be no absolute gift as between the legatee and the estate, but particular modes of enjoyment are prescribed, and those modes of enjoyment fail, the legacy forms part of the testator's estate. In the latter case the gift is only for a particular purpose; in the former, the purpose is the benefit of the legatee as to the whole amount of the legacy, and the directions and restrictions are to be considered as applicable to a sum no longer part of the testator's estate, but already the property of the legatee. In every case, therefore, the question must be one of construction, and except for the purposes of such construction, very little assistance can be derived from former decisions. It is, however, obvious that the intention that the gift should be absolute as between the legatee and the estate is, as in all cases of construction, to be collected from the whole of the will, and not from there being words which, standing alone, would constitute an absolute gift.”
[35] Viewed in its full context the dicta cited by Mr O’Neill is not decisive. But the decision as a whole helpfully establishes the general legal principles. It stands for the proposition that:8
“… if you find an absolute gift to a legatee in the first instance, and trusts are engrafted or imposed on that absolute interest which fail, either from lapse or invalidity or any other reason, then the absolute gift takes effect so far as the trusts have failed to the exclusion of the residuary legatee or next of kin as the case may be.”
[36]As Lord Romer put it:9
“… the court endeavours to reconcile the two inconsistent [dispositions] made by the absolute gift on the one hand and by the trust on the other hand, and it does so by imputing to the testator the intention to modify the absolute gift only so far as is necessary to give effect to the trusts, whatever those trusts may be.”
5 Lassence v Tierney [1843-60] ALL ER Rep 47.
6 At 51.
7 At 51-52.
8 Hancock v Watson [1902] AC 14 (HL) at 22 per Lord Davey.
9 Fyfe v Irwin [1939] 2 All ER 271 (HL) at 282.
[37] Overall, whether a gift should be seen as absolute is a question of construction; there is no presumption that a gift takes effect as absolute when a trust fails.
[38]I turn now to that exercise in construction. It is a logical place to start, because:
(a)if on a proper construction no trust is established, but the will makes an absolute gift to Jordan, that is the end of the inquiry; or
(b)if a trust was established, both parties agree that it failed upon Jordan’s death, and as such the principles set out in Lassence apply.
[39] As set out above, Ms Fox bequests the residue of her estate to Jordan in two parts of the will. First, in the pro forma part of the will, she directs that her trustees hold all of her estate on trust to pay all her debts and funeral expenses, her trustees’ administration expenses and any death duty payable on her dutiable estate; and then to transfer the balance of the residue of the estate to Jordan. Mr O’Neill submits this is an absolute gift.
[40] I accept that this evinces an intention to gift the residual estate to Jordan. Viewed in isolation, I agree it appears to be an absolute gift.
[41] But below that provision is the handwritten asterix followed by “see attached list of wishes regarding Trust account for Jordan”. It is in the list or letter of wishes that Ms Fox expressed her wish for the residue of her estate to be put into a trust account for Jordan, administered by her mother and Ms Shine, and to be used for Jordan’s well-being, living, clothing, and medical expenses as he requires. Under the list of wishes, he is not to have direct access until her trustees deem him responsible enough “to handle it”.
[42] These two expressions are, at least ostensibly, contradictory. Unsurprisingly, Mr O’Neill submits the pro forma bequest should take precedence, and Mr Conder submits the handwritten page contains the central operative bequest.
[43] I am satisfied a trust was established in the will, but that the gift was an absolute one. My reasons follow.
Did Ms Fox intend to establish a trust in the will?
[44] Clause 3 of the list of wishes plainly establishes a trust. It is trite that the subject matter, object and intention must be certain for an express trust to be created.10 First, at cl 3, Ms Fox expresses a clear intention for her residual estate to be held on trust for Jordan’s well-being and so forth, until such a time as he is deemed responsible enough to have the money. The object of the trust is certain; it is Jordan. Thirdly, the subject matter is also clear; the remainder of funds left after the sale of Ms Fox’s car and house, and the payment of her debts, as well as proceeds from the sale of unwanted household goods and the residue of her Kiwisaver account.
[45] That a trust is established by cl 3 of the letter of wishes is not seriously in dispute. Though it was raised only in passing, I reject Mr O’Neill’s submission that the use of the word “wishes” is precatory and indicates a trust was not intended.
[46] He draws a distinction between the directory language of the pre-printed part and the more permissive word “wishes” used by Ms Fox in the second handwritten part. However, in my view such a distinction is both strained and artificial when the document is read as a whole. The first part was not crafted by Ms Fox herself. The language follows the commonly accepted convention used in wills. Ms Fox adopted it only by signing. But plainly they are not her natural or usual use of words. The second part, although expressed in less direct language, plainly conveys the inference Ms Fox intended her trustees to follow her wishes. Any presumption against a trust created by the use of the word “wishes” is plainly displaced by the language used in the letter of wishes.
[47] I accept that the expressed desire to transfer the residue of Ms Fox’s estate to Jordan at cl 4(b) is subject to the trust created in the following letter of wishes. That conclusion follows from the asterix below cl 4(b), which clearly connects the transfer to Jordan of the balance of the residue to the trust Ms Fox intended to create for his benefit on the terms set out in the attached “list of wishes”. In that sense the handwritten notes setting out Ms Fox’s wishes complements the clause.
10 Knight v Knight (1840) 3 Beav 148 at 173, 49 ER 58 (Ch) at 68; Official Assignee v Wilson [2008] 3 NZLR 45 (CA) at [42].
[48] I thus conclude Ms Fox intended to create a trust in favour of Jordan in accordance with her list of wishes.
What happened on Jordan’s death?
[49] As noted, counsel agree that if a trust was established, it failed when Jordan died.
[50] Whether on the trust’s failure there is an absolute gift which prevails is a question of construction, as stated in Lassence v Tierney. To paraphrase Lord Romer, the issue is whether an intention to modify the absolute gift only so far as is necessary to give effect to the trust should be imputed. The gift will not be absolute if it is only for a particular purpose. But if the purpose is the benefit of the legatee as to the whole amount of the legacy, and the directions and restrictions are to be considered as applicable to a sum no longer part of the testator's estate, but already the property of the legatee, the gift is properly considered absolute.
[51] In support of the former proposition Mr Conder submits there are conditions and restrictions on the provision of the residue of Ms Fox’s estate to Jordan. He points out that until Jordan was regarded as responsible enough to receive the amount in full, it is to be held on trust and used for his well-being and so forth. On that issue Mr Conder must be correct. He also submits the trust created in the letter of wishes did not exhaust the beneficial interest in the trust property, such that a resulting trust is created and the residue reverts back in favour of the settlor, such that Ms Fox is intestate.
[52] However, in my view it would be an overly technical, and indeed perverse, reading of the will as a whole to conclude that the gift is not absolute. I agree with Mr O’Neill that considering the will as a whole, Ms Fox’s intention was plainly to provide for her son. Her only contemplation was that her son should receive the residue of her estate once her debts were paid off and her other family members selected certain chattels. As Mr Conder accepts, Jordan is the only discretionary and final beneficiary. The conditions on the provision should, in my view, be considered conditions on a sum which is already the absolute property of Jordan.
[53] I am also influenced by the general reluctance of Courts to render a construction leading to intestacy.11
[54] These considerations have led me to the conclusion that in accordance with the principle in Lassence v Tierney, upon failure of the trust set up by Ms Fox’s will, the residue of her estate nevertheless vests absolutely in Jordan, as a matter of construction.
[55] That means at the time of his death it was part of his estate, and Mr McLaughlin is entitled
[56] In case I am wrong, I turn now to consider what happens if the residue falls to be dealt with as part of Ms Fox’s estate by the intestacy rules.
In the event of intestacy, who is entitled to inherit?
[57] In the event Ms Fox’s residuary estate did not pass to Jordan absolutely under the will, its distribution falls to be determined under the intestacy rules in the Administration Act.
[58] Section 77 provides for distribution of an estate where a person dies intestate. It contains a table settling how the estate must be distributed, which relevantly includes:
4
Issue but no husband, wife, civil union partner, or surviving de facto partner All of the estate is held on the statutory trusts for the issue of the intestate 5
No husband, wife, civil union partner, or surviving de facto partner, and no issue, but one or both parents All of the estate is held in trust in equal shares for the parents, but if the intestate leaves only one parent, for that parent
[59] Presumptively cl 4 applies: Ms Fox left an issue but no spouse or partner.12 That means her estate would have been held on statutory trust for Jordan. Section 78
11 Re Collier [1998] 1 NZLR 81 (HC) at 95.
12 As Thomas J stated in Re Rundell (deceased) (1990) 6 FRNZ 437 (HC) at 442, “the ordinary meaning of [issue] is “descendants”, that is, progeny including but also going beyond the first generation …”.
provides for the operation of statutory trusts in favour of issue and other classes of relatives of intestate.
[60] Mr Conder submits that Jordan failed to obtain an “absolutely vested interest” in terms of s 78(2) because of his death, and that pursuant to s 78(2) the interest passed on intestacy as if Ms Fox had died without leaving issue living at the time of her death. The relevant part of subs (2) provides:
“(2)If the trusts in favour of the issue of the intestate fail by reason of no child or other issue attaining an absolutely vested interest—
(a)the estate of the intestate and the income thereof and all statutory accumulations, if any, of the income thereof, or so much thereof as may not have been paid or applied under any power affecting the same, shall go, devolve, and be held under the provisions of this Act as if the intestate had died without leaving issue living at the death of the intestate:
(b)references in this Act to the intestate “leaving no issue” shall, subject to the provisions of this section, be construed as “leaving no issue who attain an absolutely vested interest”:
(c)references in this Act to the intestate “leaving issue” or “leaving a child or other issue”" shall, subject to the provisions of this section, be construed as "“leaving issue who attain an absolutely vested interest”:
(d)references in the table in section 77 to “no issue” must be construed as “no issue who attain an absolutely vested interest”:
(e)references in the table in section 77 to “issue” must be construed as “issue who attain an absolutely vested interest”.”
[61] He submits this is so because Jordan only held a beneficial interest in the residue until he was sufficiently responsible and a contingent interest to receive the residue if the trust failed. Therefore, at no time prior to his death did he have an absolute vested interest. The result, on this interpretation, is that cl 5 listed in s 77 would apply, and Ms Fox’s estate is held in trust for her parents.
[62] Mr O’Neill adopts a different interpretation of the operation of the intestacy rules, which I prefer. He submits that a distinction must be drawn between the nature of Jordan’s interest as a beneficiary under the will, and as an “issue” under the provisions of the Administration Act. He submits that because Jordan was of age, he
had an absolute interest in the estate at the date of his mother’s death for the purposes of the intestacy rules.
[63] The difficulty I have with Mr Conder’s submission is it assumes the meaning of “absolutely vested interest” is the same for the purposes of the purported disposition under the will, and s 78(2) of the Administration Act. As a matter of common sense that cannot be right. If the trust failed and Jordan did not have an absolutely vested interest, as counsel agree the estate was in partial intestacy and the provisions of Part 3 of the Administration Act apply. If that occurred the position at law is Ms Fox died intestate. Jordan’s beneficial interest or contingent interest arising out of the will ceases to be relevant. The fact that he has a beneficial or contingent interest rather than an absolute one arising out of the will cannot be transposed to the ss 77 and 78 analysis, because the application of Part necessarily assumes there has been no testamentary disposition; rather distribution is to occur in accordance with Part 3.
[64] As for the issue that Ms Fox’s estate only fell into partial intestacy upon Jordan’s death, Mr O’Neill helpfully referred me to the decision of Faire J in Napier Independent Trustees v Natusch.13 Considering the corresponding provisions of the Administration Act 1952, Faire J found that in cases of contingent intestacy, the correct date for considering the application of the intestacy rules is the date of the testator’s death.14 That has been the position since the Administration Act 1908.15 I agree with that approach for the reasons given by Faire J: some of the beneficiaries under an intestacy are specified identified as persons “living at the death of the intestate”, including children at s 78(1). Callan J in Anderson v Williams put it this way:16
“… although at the date of the testator's death it was impossible to say whether he had died testate or partially intestate, now that it is clear that he did in fact die partially intestate, the persons to take under these rules of law must be settled by considering, as the appropriate point of time, the date of the testator's death and not any later death; not, for example, the date on which it first became clear that he was a person who had died partially intestate. Throughout the various sections grouped together as Part III of the Administration Act, the language used is “who dies intestate” or “dying intestate” and not “found to be intestate” or any such expression. Under the
13 Napier Independent Trustees v Natusch [2014] NZHC 2829, [2015] 2 NZLR 755.
14 At [23], [25].
15 See In re Harrison (Deceased) [1916] NZLR 1098 (SC) at 1099, 1100 and In re Williams, Deceased; Anderson v Williams [1937] NZLR 872 (SC) at 874.
16 In re Williams, Deceased; Anderson v Williams, above n 17, at 874.
Statutes of Distribution, the persons to take were always ascertained as at the date of the death of the intestate.”
[65] The corresponding provisions considered in those cases are substantial similar to ss 77 and 78, and as such the in pari materia presumption applies; in the absence of a contrary indication the Court is entitled to presume Parliament intended the interpretation of the rules dating back to the Administration Act 1908 to be followed.17
[66] Therefore, although intestacy only occurred as a result of Jordan’s death three months after Ms Fox’s death, the correct distribution in accordance with ss 77 and 78 is to be fixed from the date of Ms Fox’s death, as though she was intestate from that point.
[67] Approaching s 77 in that way, at the date of Ms Fox’s death, by operation of law the estate was held on statutory trusts for Jordan.18 The sole question therefore is whether Jordan attained an absolutely vested interest in the statutory trust. The establishment and operation of the statutory trust in favour of Jordan is set out in s 78(1):
“78 Statutory trusts in favour of issue and other classes of relatives of intestate
(1)Where under this Act the estate of an intestate, or any part thereof, is directed to be held on the statutory trusts for the issue of the intestate, the same shall be held upon the following trusts, namely:
(a)in trust, in equal shares if more than 1, for all or any children or child of the intestate, living at the death of the intestate, who attain full age or marry or enter into a civil union under that age, and for all or any of the issue living at the death of the intestate who attain full age or marry or enter into a civil union under that age of any child of the intestate who predeceases the intestate, the said issue to take through all degrees, according to their stocks, in equal shares if more than 1, the share which their parent would have taken if living at the death of the intestate, and so that no issue shall take whose parent takes an absolutely vested interest:
provided that if any person capable of taking under this paragraph (including this proviso) dies before taking an absolutely vested interest leaving any child or children who shall be living at the expiration of 21 years from the death of
17 Napier Independent Trustees v Natusch, above n 15, at [30]. See generally the discussion at [26]- [31].
18 Administration Act 1969, s 77, cl 4.
the intestate or who shall sooner attain full age or marry or enter into a civil union under that age, that child or those children shall take, in equal shares if more than 1, the share which his, her, or their parent would have taken if he or she had not so died:
(b)the statutory power of advancement, and the statutory provisions which relate to maintenance, education, and benefit, and the accumulation of surplus income, shall apply, and when a person becomes entitled to a vested share or interest under the statutory trusts, that person shall be entitled on attaining the age of 18 years or sooner marrying or entering into a civil union to give a valid receipt for his or her share or interest:
(c)the administrator may permit any minor who has a vested or contingent interest in any personal chattels to have the use and enjoyment of the chattels in such manner and subject to such conditions (if any) as the administrator may consider reasonable, and without being liable to account for any consequential loss.”
[68] Section 78(2) refers to the trusts in favour of the issue of the intestate failing “by reason of no child or other issue attaining an absolutely vested interest”, but I agree with Mr O’Neill that read as a whole s 78 contemplates an issue not obtaining an absolutely vested interest only in prescribed circumstances. Drawing on the language of s 78(1), it is apparent the following requirements are necessary for a child of the deceased to obtain an absolutely vested interest in the statutory trust established in their favour:
(a)the child must be living at the death of the intestate; and
(b)the child must attain “full age”19 or “marry or enter into a civil union under that age”.
[69]As the authors of Wills and Intestacy in Australia and New Zealand put it:20
“No child or issue of a deceased child may claim unless obtaining full age or marrying earlier. If the child (or other issue) fails to meet either of these requirements (and, consequently, fails to acquire an absolutely vested interest), the shares of those who do obtain absolutely vested interests will prima facie be swollen accordingly.”
19 It is apparent from the language of s 78(1)(b) that “full age” refers to 18 years of age.
20 IJ Hardingham, MA Neave and HAJ Ford Wills and Intestacy in Australia and New Zealand (2nd ed, The Law Book Co Ltd, Sydney, 1989) at [2504].
[70] Jordan was living and aged 24 at the date of Ms Fox’s death. He acquired an absolutely vested interest in terms of s 78 of the Administration Act.
[71] Accordingly, if I am wrong that Jordan held an absolutely vested interest in the residue under Ms Fox’s will, under the intestacy provisions of the Administration Act it is nevertheless part of his estate.
Directions
[72] Jordan holds an absolutely vested interest in the residue under Ms Fox’s will, by virtue of the absolute gift made by Ms Fox in her will.
[73] Alternatively, if he did not obtain an absolutely vested interest in the residue under the will, under Part 3 of the Administration Act 1969 the residue was held for him on statutory trust following Ms Fox’s death, and he held an absolutely vested interest in the residue held on statutory trust.
[74] Accordingly, at his death the residue of Ms Fox’s estate was part of his estate and falls to be distributed as such.
Moore J
Solicitors/Counsel:
Holland Beckett, Tauranga Hamerton Lawyers, Whakatane Mr O’Neill, Hamilton
3
0