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1 of 10 DOCUMENTS: CaseBase Cases

Lawry v Harris

(1996) V ConvR 54-541; BC9600227

Court: VSC

Judges:Nathan J

Judgment Date: 9/2/1996

Catchwords & Digest

Real property -- Sale of land -- Settled land -- Sale of settled land by life tenant and trustee

Objection to sale by remainderman.Settled land consisting of dairy farm.Whether sale of property in the interests of the life tenant.Where proposed sale would not amount to a breach of trust.Where neither essential nor of much utility to the life tenant whether the property was sold or not.Consideration of the interests of the remainderwomen.Relevance of remainderwoman's sentimental attachment to the property and interest in keeping the propertyfor the ultimate use of her own son.Position with respect to the property itself that it would continue to be farmed in a proper and competentmanner during the life tenancy by the person to whom the land was to be sold.Consideration of terms of settlement.Where settlor had devised a larger farming property to his son when he attained the age of twenty-one yearsand the smaller property to all of his daughters in equal shares upon the expiration of the life term of hiswife.

Held: Declaration made that proposed sale not to proceed.

Cases considered by this case

Annotations: All Cases Sort by: Judgment Date (Latest First)

Annotation Case Name Citations Court Date Signal

Cited Chirnside v Chirnside[1947] VLR 183;[1947] ALR 225

VSC 5/2/1947

Cited Coffill's Settled Estate, In re(1920) 20 SR (NSW)412; (1920) 37 WN(NSW) 110

NSWSC 21/5/1920

Cited Lawry's Settled Estates, In re (1918) 19 SR (NSW) 1;(1918) 36 WN (NSW) 9 NSWSC 21/12/1918

Cited Lawry, Re(1913) 30 WN (NSW)69

NSWSC 20/5/1913

Cited Hope's Settled Estates, Re (1910) 26 TLR 413 - 15/4/1910

CitedSutherland, DowagerDuchess of v Duke ofSutherland

[1893] 3 Ch 169EWHCCh

21/6/1893

Cited Hampden v Earl of [1893] 2 Ch 531 EWCAC 24/4/1893


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Buckinghamshire iv

CitedLord Bruce v Marquis ofAilesbury & Laurence

[1892] AC 356 UKHL 9/8/1892

CitedAilesbury's Settled Estates, Inre Marquis of

[1892] 1 Ch 506EWCACiv

12/12/1891

Cited Earl of Radnor's Will Trusts,In re

(1890) 45 Ch D 402 EWCACiv

7/8/1890

Legislation considered by this case

Legislation Name & Jurisdiction Provisions

Settled Land Act 1958 (Vic) s 38(a), s 92(2)


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2 of 10 DOCUMENTS: Unreported Judgments Vic

18 Pages

LAWRY v HARRIS (WHO IS SUED AS TRUSTEE OF THE ESTATE

OF HARRIS, DECEASED) and ORS - BC9600227

SUPREME COURT OF VICTORIA CAUSESNATHAN J

8533 of 1994

29-30 January 1996, 9 February 1996

Settled Land Act 1958, s36, s38(a) and s92(2) -- Objection to sale of property by the life tenant and

trustees by remainderwoman to a will.

Nathan J

This case calls for the exercise of the court's discretion where a life tenant and her co-trustee want to sellsettled land but where one of the remainderwomen wants it to devolve in accordance with the settlor's will.Simply stated; this proposition obscures the difficulties of the case and the hostility between the parties.The plaintiff (Leila) is the daughter of the first defendant and co-trustee (Edna) and the sister of the thirddefendant (Donald), his wife (Elsie) is the fourth defendant The second defendant is a solicitor (McGuire)and he is sued as a co-trustee of the estate of the settlor (William), who was the father of both Leila andDonald, and the husband of Edna.

The essence of the dispute can be shortly stated. Leila, opposes the sale by her mother, Edna, the life tenant,of a family dairy farm to her brother, Donald. She wants to inherit it, with her other sisters, under the termsof her father's (William's) will. To this bare proposition the following facts are relevant Edna is now aged79 and is apparently in good health. In 1938 her husband became the proprietor of a relatively small dairyfarm near Warragul. I shall refer to it as "Cranbrae". There is no doubt it is "settled land" under the SettledLand Act 1958 (the Act). The following year Leila was born and she is now 56. Thereafter, at two yearlyintervals, four other children were born. They are all still alive. Gwen is now 53 and although aremainderwoman of her father's estate has not taken any part in this action and has failed to respond tocorrespondence in connection with it. Donald, the third defendant, was born in 1945, he is now 50 andmarried to Elsie, the fourth defendant. In 1949 Phyllis was born, she is now 45 and lives permanently inGermany. Phyllis

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has written to state she has no objection to the sale, so long as her financial interests are adequatelysafeguarded.

In 1951 William executed his last will appointing Edna and one of his brothers as executors. The followingyear he died of cancer. In 1956 probate of that will was granted. Pursuant to it "Cranbrae", a property ofsome 28 hectares, was devolved by granting a life tenancy to Edna and upon her death to the daughters ofthe union, Leila, Gwen and Phyllis. During his lifetime William had purchased another dairy farm veryclose to "Cranbrae". It is called "Rotherham". It consists of some 40 hectares. By his will William devolved"Rotherham" to Donald upon him attaining the age of 21, which he did in 1966. "Rotherham" has now


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passed to him absolutely. At some time unknown to me, Donald purchased a third dairy farm contiguouswith "Rotherham" called "Scarborough" upon which he now lives with his wife Elsie and their family. Itwould appear that from the late 1960's Donald has managed, and run all three farms as a single dairyingconcern. He has done so to the satisfaction of the life tenant of "Cranbrae", his mother, and apparently also

to the satisfaction of the remainderwomen, his sisters. There is no suggestion other than Donald is acompetent and successful dairy farmer, who has for the last 30 years husbanded "Cranbrae" in a proficientway.

In 1993, the co-executor of William's estate, his brother, died, and "Cranbrae" was valued at about one-thirdof a million dollars. In the same year, Edna purportedly sold "Cranbrae" to Donald and Elsie. Objection tothat sale was made by Leila and she issued an originating motion and summons out of this court seekingorders to restrain the purported sale. Injunctions to that effect were granted by Beach, J and renewed

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by that judge the following year. The purported sale offended the provisions of the Act which prohibit a lifetenant and executor from acting alone in disposing of settled land. A further trustee was required in place ofthe deceased brother. Consequently the secondnamed defendant, McGuire, a solicitor was appointed. Leila,the plaintiff in this action, has objected to his appointment asserting he is not independent and subject topressure exerted upon Edna by Donald. Leila wants him replaced. McGuire has filed an affidavit stating heis of the view that a sale of "Cranbrae" is in the best interests of the property itself and of Edna and theremainderwomen. He proposes a sale, at what can be described as market rates, to Donald. The sale toDonald is favoured not only because it is a fair value but also because it would avoid advertising andauction costs. The Act does not require a sale by public auction.

It is in these circumstances that Leila seeks the following relief: "1. An order replacing McGuire with othertrustees. 2. A declaration that the intended sale of 'Cranbrae' to Donald and his wife would not benefit thewell-being of it and would not be reasonable having regard to the proper interests of all of the partiesentitled to the settled estate of her late father. 3. An order under the Act, s92(2) restraining the trustees, thatis her mother and the solicitor from selling or transfering 'Cranbrae' to Donald and his wife."

I now turn to the section of the Act invoked, namely, s92(2) which is in the same terms as the Act'spredecessor of 1928 and also of earlier colonial statutes. It is necessary to recite it:

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(2) If a question arises or a doubt is entertained - (a) respecting the exercise or intended exercise of any ofthe powers conferred by this Act, or any corresponding previous enactment, or the settlement, or any matterrelating thereto; or (b) otherwise in relation to property subject to a settlement - the tenant for life, orstatutory owner or the trustees of the settlement, or any other person interested under the settlement, mayapply to the Court for its decision or directions thereon, or for the sanction of the Court to any conditionalcontract, and the Court may make such order or give such directions respecting the matter as the Courtthinks fit."

I turn to epitomise the parties' contentions. Leila asserts that the disposition of the settled land should takeeffect in accordance with the settlement. She does so because she has a son of her own whom she thinkswould be well suited to running "Cranbrae" as a dairy farm. She herself as an emotional attachment to it asbeing the place or a happy childhood and adolescence. She says the interests of Edna, in view of her age,would be best served by maintaining "Cranbrae" intact and further that were Edna to charge the present

tenant, her brother Donald, a reasonable rent, which she has never done, she would be financially wellserved. Leila asserts the fact that because Edna has willingly foregone income from "Cranbrae" during thelast 30 years in that she has not sought any rent from Donald in respect of his use of "Cranbrae", should notvalidate her now saying she needs the interest or the capital sum. Leila contends that as one of theremainderwomen remains neutral, that is Phyllis, and the other, Gwen, is silent about the matter, herinterests as a remainderwoman resident in the

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jurisdiction and positive in her attitude, should be weighed heavily in her favour.


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Edna, on the other hand, contends that her interests would be best served by a sale of the property and herincome assured. She refers to the fact that Donald has looked after her, while she lives in her own home ina nearby town. Edna inherited her present home from her own mother, she says she would like the comfortof an assured income for the remainder of her life. Edna also contends that the interests cf "Cranbrae" itself

would best be served if her son, who has worked the property for the whole of his life, rather than astranger to the family, were to become the proprietor of it.

With these contentions and the relevant facts in mind, I turn to the appropriate authorities before returningto the Act. I deal with the proposed sale first, leaving as a subsidiary issue the question of replacing thetrustee. There is a line of rather quaint English authority dealing with reprobate members of its nobilitywhich has led to the definition of the principles later considered in an authority which binds me. The lattercase is Chirnside v Chirnside (1947) VLR 183 to which I shall return. It should be noted that there is aslight difference between the English and Victorian positions. In this jurisdiction the Act requires theconsent of the court for the disposition by a life tenant or settled land, and various other provisions placethe court in a supervisory position, distinguishable from the position in England. They are not of furtherrelevance here and I shall not detail them. The first English authority to which I turn is In re the Earl ofRadnor's Will Trusts (1890) 40 Ch.D 402. The Earl had sought to sell part of the family collection namely

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three paintings by Holbein, Velasquez and Moroni, to the National Gallery. He was the life tenant of thefamily estate well-known as "Longford". Of the proposed sale of settled family heirlooms Chitty, J at firstinstance said this: "This controlling power of the court is a discretionary power and that it must beexercised with regard to all the circumstances of each particular case anxious attention being given to thesaid circumstances which vary greatly. For myself I say emphatically that this discretion ought not to becrystallised, as it would become in course of time by one judge attempting to prescribe definite rules with aview to bind other judges in the exercise of the discretion which the legislature has committed to them."

Due to the surfeit of other pictures by the aforesaid artists inter alia hanging on the walls of Longford,Chitty, J thought the sale of three of them was a mere bagatelle and sanctioned the proposed sale. Thesurviving trustee of the will ana other proponents appealed from his judgment, at which Lord Esher, M Ramongst other things said: "It seems to me therefore that he [the life tenant and trustee] is bound in the firstplace to exercise his discretion as if he were an independent trustee for himself and all other members of

the family. That is, he is to exercise his discretion as a fair and honest and careful trustee would under thecircumstances and the court ought I think to view the matter precisely in the same light."

And then later - "It is not that the court is a mere appeal from him but both he and the court are to come tothe opinion, the court being the superior, or at any rate the master of the situation to this extent but the thingcannot be done without its consent."

Lindley and Bowen, LLJ concurred and the appeal was dismissed.

In Re Marquis of Ailesbury's Settled Estates (1892) 1 Ch. 506 Stirling, J at first instance adopted thepassage from

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Radnor concerning the independence of the trustee and the requirement to act fairly, honestly and carefully.He held at first instance that a sale of a settled mansion house to meet the gambling debts of the noble who

had squandered his assets ought not to occur. Lindley, LJ of the Court of Appeal said: "The present marquisis a gentleman of about 28 years of age. He has managed since he came of age to get through a great deal ofmoney and I do not think he can be more compendiously described than as a spendthrift who has ruinedhimself by his own extravagance and folly and who has brought disgrace upon the family name and whohas exposed the family estate to the destruction for the rest of his life."

we then went on to find (at 537): "Looking at the main object of the Act namely to enable a limited ownerof a settled estate to sell the estate where circumstances render a sale desirable if we find as we do in thiscase, unfortunately, a large estate so situated that in all human probability everybody connected with it willbe ruined unless it is sold it appears to me to be absolute duty of the court to sanction the sale."


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In this case all of the remainderpersons opposed the sale citing their sentimental and noble attachments tothe property. Those factors were considered by the Court of Appeal to be relevant but not overwhelming. Itwas said by Bowen, LJ, that the court in considering what he appropriate duties of the trustee were, shouldtake into account sentiment as well as pecuniary interest but that the interests and sentimental attachments

of the remainderpersons to the settled property could not dictate the direction of the discretion of the court.All of this came to be reconsidered by the House of Lords in Lord Henry Bruce and Ors v Marquis ofAilesbury (1892) AC 356. The decision of the Court of Appeal was affirmed.

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The decision of their Lordships is best encompassed by Lord MacNaghten at 356 where he said this: "In theSettled Land Act the paramount object of the legislature was the well-being of the settled land. The interestsof the persons entitled under the settlement are protected by the Act as far as it was possible to protectthem. They must be duly considered by the trustees or by the court whenever the trustees or the court maybe called upon to act."

In Hampden v Earl of Buckinghamshire (1893) 2 Ch. 531 the earl proposed to mortgage his English but nothis Irish estates to meet his father's debts. The proposed mortgage of settled land was opposed by some ofthe annuitants. The court held that although the English Act gave life tenant power to mortgageunmortgaged parts of the settled land in order to pay off encumbrances on another part, nevertheless thecourt had power to interfere and ought to do so to restrain the proposed mortgage. There, much could havebeen said about the financial wisdom of the proposed mortgage, which was to meet a current exigency, butnevertheless the court did consider the interests of the annuitants, and the long term, rather the short.

More apposite to the fact situation before me, insofar as it involved intra family disputes is the DowagerDuchess of Sutherland v The Duke of Sutherland (1893) 3 Ch. 169. There the elderly duke sought to leasesettled land to his wife shortly before he anticipated she was to become his widow. The house he proposedto provide for his putative widow was three miles from the existing mansion house and there were morethan 25 miles of roadway upon the estate. Despite the distances the court declined to validate the proposedlease because it was not being granted for the bonafide exercise of the leasing powers of the tenant for lifebut were directed towards advantaging the

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forthcoming widow. Accordingly, so it was held, the lease was neither in the best interests of the land, thelife tenant or the remainderpersons. (See also Re hopes Settled Estates [1910] 26 TLR 413.)

There are some New South Welsh cases to which I should refer, as they deal with balancing the interests ofthe remainderpersons. Firstly, I note that Re Lawry (1913) NSW (WN) Vol 30 at 6-9 (coincidentallynamed) is not now good law. There Harvey, J held that the opposition of the life tenant to a proposed salewas fatal to its proceeding. Secondly, and even more coincidentally named, is In re Lawry's Settled Estates(1919) SR (NSW) 1. Street, CJ in Eq said: "The next objection is that the Court should not make an orderin face of the unanimous opposition of those entitled in remainder. Again I do not agree. The Court isrequired to have regard to the dissent, but what is has to consider in each case is whether the proposed saleis proper and consistent with a due regard for the interests of all parties entitled, and, if satisfied of this, Ican see no reason why it should refuse the request of a tenant for life for a sale merely because of theopposition of the remaindermen."

This case stands for the proposition that the court itself will assess the financial results of a proposed sale

and then evaluate those results vis-a-vis the interests of the life tenant to those of the remainderpeople.

Even more apposite to this case is In re Coffall's Settled Estate (1920) SR (NSW) Vol 20 412 Street, CJ inEq considered a settlement not dissimilar to William's but where the settlor had expressly fixed a time forsale. Most of the remainderpeople wanted an immediate sale because of favourable prevailing marketcircumstances. The judge thought that sale was not warranted although only a minority of the

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remainderpeople objected to it because there was insufficient reason to interfere with the settlor's expressedwish. He noted that the court had to take account of those who assent to a proposed sale as well as those


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who dissent. The court is always empowered to act in opposition to a majority of the remainderpeople.

I return to the case which I consider most apposite and binding. Chirnside considered most of the olderEnglish authority I have recited and it also turned upon facts relating to an intra family dispute. Thomaswas the brother of the settlor and the life tenant of a grazing property. He had not lived in Victoria for

almost 40 years and apparently developed a dislike for the remaindermen who were his nephew's aged 23and 21. The nephews and their families had conducted a sheep grazing run upon the subject land for manyyears and had done so with good husbandry and vigour. Thomas acted upon, what the court said were to berumours and misconceptions, and refused to lease the settled land to them and proposed to lease it to a totalstranger. S92 of the Act was considered in tandem with s107 which Provides that a life tenant shall, "inexercising any power under the Act have regard to the interests of all parties entitled under the settlementand shall in regard to the exercise thereof be deemed to be in a position and to have the duties and liabilitiesof a trustee for those parties."

As Herring, CJ observed there, and must be the fact here, this section puts the life tenant, when purportedlyexercising powers under the Act, in exactly the same position as an ordinary trustee and imposes the dutieswhich a court of equity would enforce against such a trustee. However, he considered the obligations of thecourt went further. He said (at 186):

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"And whilst the court will not enforce the exercise of a power where a trustee has a discretion whether hewill or will not do the act which he is empowered to do, it will still intervene to prevent him if he decides toexercise the power from exercising it improperly. The discretion that a trustee has as to the mode ofexercising the power thus becomes subject to the control of the court, and it will prevent him fromexercising that discretion in a way which is wrong or unreasonable."

The Chief Justice considered that whether a discretion was being exercised reasonably or not wasdependent upon the circumstances. But it would certainly be unreasonable if the life tenant deliberatelyshut eyes to the facts and acted upon rumours. The onus of showing unreasonableness was upon the personwho asserted it. However, the Chief Justice also considered that when a life tenant sought to exercise adiscretionary power it was his or her duty to regard the purposes for which the power was conferred, andthat was the mutual advantage of both possessor and successor. So it was incumbent upon the life tenant toconsider the interests of all the parties entitled under the settlement. Of the court's powers he said this: "It isthe duty of the court - a duty which the court is not at liberty to admit - also to keep in view the mainpurposes of the act from which it derives its powers (a quote from Lord MacNaghten in Ailesbury)." Healso said: "When where a proposed course of conduct is under review the question is not whether thebeneficiaries will or will not suffer pecuniary loss but whether the trustee is doing his duty. It is the heart ofthe trustee that has to be searched for the answer and not the pocket of the beneficiary."

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Of the facts before him the Chief Justice thought that the continued occupation of the land by theremaindermen would be for its benefit and they should continue. He thought the facts disclosed they hadshown a regard and an affection for the property and should be preferred to absolute strangers. It is in thesecircumstances that the court had to decide just how far it should go in interfering with the tenants for life'sdiscretion. In conclusion he said this: "In my opinion the court should in this case control the exercise ofthe tenant for life's discretion in this way [that is prohibit the lease to a stranger without first offering the

remaindermen an opportunity to lease] and it should do so because it is clearly in the interests of the settledland and indeed justice would seem to demand, that the applicants should be allowed to continue inoccupation."

Gavan Duffy, J concurred with the Chief Justice. He stated: "If the court is to intervene s92(2) gives it verywide powers, and on the facts before us I am satisfied that it will be for the benefit of all concerned that theremaindermen, if willing to pay an adequate rent, should be the lessees."

Fullagar, J also concurred, and after examining English authorities, he concluded that the court couldproperly veto a transaction under the terms of the Act although the carrying out of that transaction could notbe held to be a breach of trust involving liability in the tenant for life. More importantly he said this as to


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the court's powers: "The burden of proof may be regarded as different but the court must, I think, in eithercase, form its own opinion as to what is desirable and proper, profitable and just."

In my opinion the findings in Chirnside are in complete alignment with the dictates of the Act. It is the

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court which must apply its own discretion to the facts and give "such directions respecting the matter as theCourt thinks fit". Once reference to the court has been had, the supervisory functions of its equitablejurisdiction are invoked, the matter becomes one for the court to decide. In "thinking fit" certain guidelinesare provided by the authorities, for example the sentimental attachment of the parties to the settled land andcertainly the obligations of the life tenant as a trustee, but the ultimate disposition resides with the court.

With these principles in mind I can return to the case before me. Firstly, I am satisfied that the proposedsale by the trustees is not and could not amount to any breach of their trusts. I am satisfied, so far asMcGuire is concerned, that he genuinely and properly believes the sale of "Cranbrae" to Donald wouldprovide more assistance and stability to Edna during the remainder of her life and that the capital sum couldbe preserved for the benefit of the remainderwomen. However, that is not the only consideration to exercisemy mind and I now turn to the others.

I must have regard to the interests of Edna, as well as all of the remainderwomen and not just those ofLeila, and of the care of "Cranbrae" itself. I cannot and should not divorce from these considerations thefact that the proposed purchaser of the settled land, Donald, is the son of the settlor and the life tenant. Hehas conducted from "Cranbrae" a successful dairying business with the consent of the life tenant, he has notpaid her rent but has rendered her other services.

Firstly, as to Edna's interests. At one time she was in receipt of the age pension but is not now. She iscomfortably positioned in her own home and with declining

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material demands. Were an adequate rent to be paid for "Cranbrae" she would lack no need. It is neitheressential nor of much utility to her whether "Cranbrae" is sold or not. The interest received on the proceedsof sale would certainly exclude her from eligibility from the pension as would receipt of a market basedrent. I was not proffered any evidence as to her current levels of expenditure but a cursory examination ofher past lifestyle would indicate she is not an habitue of casinos, gourmet restaurants or fashion houses,such as would require large sums of money. Apparently, she lives quietly in her own home in a congenialcountry town and is cared for lovingly by Donald. Therefore, there is in this case, unlike the earlier Englishauthorities, no compelling reason why "Cranbrae" should be sold.

It is arguable, but by no means certain, that sale of "Cranbrae" could produce a capital sum which mightadvantage the remainderwomen or that its value might be sustained by prudent investment. However thelaw reports are littered with cases about so-called prudent investments which proved not to be so. Again,this case is dissimilar to the English authorities to which I have referred, where the capital sum produced bya sale was to be applied to either liquidate debts or consolidate the financial position of the settled estate. Inthis case, no such considerations prevail. Once again, I am driven to the view that there is no compellingreason why "Cranbrae" should be sold, nor that the interests of the life tenant would be compromised by thesale not proceeding.

Next, I come to the interests of the remainderwomen. Leila expresses a sentimental attachment to the

property and does not want it sold despite the financial advantage to her,BC9600227 at 15

which McGuire says would result. That view must be respected despite the heavy discount I apply to heralleged sentimental attachment to the property itself. I am much more persuaded by her own affidavitwhich indicates she wants the property for the ultimate use of her own son, that is, she wishes to displaceher brother in favour of her son. There is no evidence as to whether the other remainderwomen wouldconsent to a sale of their interest to her but it is some slight evidence of her familial attachment to"Cranbrae".


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Next, there are the interests of Gwen and one must assume she is neutral or indifferent. Finally, there arethe interests of Phyllis. I take little account of Phyllis's interests as she is neither in Australia nor interestedin the property itself. The evidence discloses she has a family in Germany and has lived there for manyyears. She is merely concerned that her financial interests be sustained. Therefore the best summation of the

interests of the remainderwomen is that one vehemently opposes the transaction whilst the other two areindifferent although no active opposition is proffered. Their wishes are relevant but not determinative. (Irefer again to Coffall's Estate).

Finally, there are the interests or the concerns about "Cranbrae" itself. I am well satisfied it has beenadequately husbanded by Donald and there is no reason to presume he would not continue to do so as partof his overall dairying operations comprising the three properties. In my view I could not conclude thatwere the sale not to proceed the position which has prevailed for the last 30 years will not continue."Cranbrae" itself will continue to be farmed in a proper and competent manner during the life tenancy. It isnot likely to

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be wasted as was the case in some of the English authorities. There is some relevance of Chirnside in thisrespect. I have no reason in this case to suspect that the life tenant will displace her son in favour ofstrangers nor that he will not continue to adequately farm the property. The situation which has prevailedfor the last three decades is likely to continue. However, there is some support for the conclusion that Ednawants to sell "Cranbrae" so that Donald will obtain security of tenure. If that were the only reason for theproposed sale she would not be acting properly. She would be selling "Cranbrae" to favour a stranger to thesettlement, albeit her son, while acting contrary to the interests of one of the remainderwomen, albeit herdaughter.

I am entitled to ask myself what are the reasons for the proposed sale and who would really benefit from it.To the latter issue first. The only persons likely to substantially benefit from the sale are Donald and Elsie.Although they propose to pay the appropriate market value for "Cranbrae" and to that extent would bepaying for improvements they themselves have effected, the fact is that "Cranbrae" has for many years,formed part of an integrated dairy farming operation which depends upon an optimum size and herd forsuccess. It is notorious that, as a general proposition, dairy farming, like other rural industries, has seen theconsolidation of small holdings over the last half century, and this is so because economic necessity

demands it. Donald does not want "Cranbrae" as a home as he already lives on a property he ownsabsolutely. Donald wants "Cranbrae" so to continue his existing farming operations. It is natural to assumethat Donald would want "Cranbrae" absolutely, rather than being dependent upon the will

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of the life tenant, who it must be said is approaching the end of her life. His present farming position is,therefore, insecure. These are very probably the real motivations underlying the proposed sale. The lifetenant is indebted to her son for nurture and material support given by him in her own home, she could beexpected to extend to him all the love and affection a mother would give especially in respect of a son whohas worked the traditional family farm. However, by pursuing such concerns the life tenant Edna reallyproposes to displace the interests of her daughters, as provided for by her husband, in favour of a son whohas already benefited under his will, by being devised the larger farming property "Rotherham". In effect,what Edna proposes is to allow Donald to obtain security for his farming operations whilst the terms of thesettlement specifically devised one of the farms to his sisters. William decided to recognise the interests of

his son and daughters. He devised the larger farming property to his son when he attained 21 and thesmaller property to all of his daughters in equal shares upon the expiration of the life-term of his wife. Onemight observe a less than equal disposition of his largesse but nevertheless one which recognised the claimsand interests of all his children. It is to be further observed that at the time of his death Donald was 7 andthe daughters ages ranged accordingly.

I am of the view that the terms of settlement should not be ignored or brought to nothing by the exercise ofthe court's discretion to allow the sale of settled land. Deference and recognition must be paid and given tothe terms of settlement relating to settled land. Especially so when the

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settlement relates to the division and disposition of land between siblings.

It might be said that Donald comes to this purchase as a stranger to the transaction. That is simply not thecase for the reasons I have given. This is not a case where the family situation is irrelevant or where Donaldis a purchaser at arm's length. Despite the proper sum he proposes to pay for "Cranbrae", and it has been

part of his life since birth, it was also part of the lives of the remainderwomen during their childhood andadolescence. Both Donald's father, the settlor, and his mother have favoured him. He received a largerproportion of his father's estate than did his sisters and his mother, the life tenant, has not extracted fromhim a realistic rent. He does not come to this transaction as a disinterested party. I am mindful of the Dukeof Sutherland's case where the court refused to sanction a transaction where the real object was to benefit aparty foreign to the settlement at the expense of others (as I am also of Lawry (1919)). In this case Donaldwas removed in the settlement in favour of his sisters, yet he seeks to displace that entitlement in favour ofhimself despite, as I have already observed, adequate financial recompense. Accordingly, the court which isenjoined to dispense justice in the exercise of its discretion should take into account these factors which Ihave considered relevant.

I accept the comments of the Chief Justice in Chirnside that the exercise of discretion is not to beconstrained by preset rules. I accept that it is the responsibility of the court to regard all of thecircumstances of all of those interested in the settlement and to oblige the trustees to act in accordance withall of those considerations

BC9600227 at 19

and not merely to avoid illegality. Therefore, for the reasons I have given, I am satisfied that on balance theproposed sale should not proceed and I shall make the declaration sought in the summons.

I turn to the issue of the replacement of the trustee McGuire. I have no evidence to suggest that he has beenacting improperly or in any way in breach of trust. To the contrary, I am satisfied that the position adoptedby him was reasonable in the light of the instructions given to him. He could not have been expected toknow of all of the details of this case as has now been disclosed in the hearing. It is only appropriate that awoman of Edna's age should be assisted by a co-trustee. I have no reason to suspect that the solicitorMcGuire is in any way an inappropriate person to act as a trustee. On the contrary, I was impressed with hisaffidavit concerning his experience and expertise in the area of trusteeship.

Order

I propose to dismiss the summons insofar as it relates to this issue. I shall hear counsel as to costs.

Counsel for the Plaintiff: Mr M G Moore

Solicitors for the Plaintiff: Davies Moloney

Counsel for the Defendants: Mr A Chernov QC with Mr P Cosgrove

Solicitors for the Defendants: Hamilton and Telford


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Esders v New Zealand Guardian Trust Co

[1996] 1 NZLR 723

Court:NZHC

Judges: Master Gambrill


Catchwords & Digest

Real property -- Caveats -- Caveatable interests -- Whether beneficiary's right under will capable of

supporting caveat

Trustee directed to offer land for sale to four beneficiaries after death oflife tenants.Offers to purchase land made by the applicant and another beneficiary.Trustee entered into contract of sale with the other beneficiary.Two caveats lodged by the applicant on the basis of her entitlements as purchaser of a one-half interest inthe land and as beneficiary by virtue of an express trust.Whether the relevant clause of the will created a right of pre-emption or an option to purchase.Whether, if the clause created an option, the applicant's resultant caveatable interest was defeated by theexecution of the sale and purchase agreement.Whether, if there was a mere right of pre-emption, it matured into an option.Where trustee's obligation under the will was at an end when it became clear that the group of fourbeneficiaries were not interested in the property.Where the effect of the applicant's approach was to make a counter-offer.

Held: Applicant did not have a caveatable interest.




FollowedAttorney-General v MethodistChurch of New Zealand

[1996] 1 NZLR 230 NZHC 25/9/1995

FollowedMalpass (decd), In re; LloydsBank plc v Malpass

[1985] Ch 42; [1984] 2All ER 313; [1984] 3WLR 372

- 14/2/1984

FollowedMorland v Hales &

Somerville

(1910) 13 GLR 147;

(1910) 30 NZLR 201

NZCA 11/10/1910



Land Transfer Act 1952 (NZ) s 137(a), s 145


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4 of 10 DOCUMENTS: Unreported Judgments NSW

16 Pages

HORE v PERPETUAL TRUSTEE CO LTD AND ORS SUPREME

COURT NEW SOUTH WALES - BC9504786

Supreme Court of New South Wales Equity DivisionWINDEYER J

1053 of 1994

11 May and 8 June 1995, 8 June 1995

BC9504786 at 1

WILLS, PROBATE AND ADMINISTRATION -- family provision -- claim by widow -- deed of

settlement -- application for approval by court -- very large estate -- jurisdiction -- s7 and s9(2)

Family Provision Act 1982 must be satisfied before court has jurisdiction -- parties cannot confer

jurisdiction by consent -- provision for widow adequate for proper maintenance and advancement in

life -- no jurisdiction to make orders sought. Trusts -- trustees -- advancements of capital -- power to

advance given in will -- advancement would deplete income oflife tenant/widow -- consent of life

tenant required -- proposal to advance capital to contingent remaindermen part of settlement of FPA

proceedings -- trustees given judicial advice that it was proper to execute consent orders and deed of

settlement -- whether full facts before Master -- advancements must be for proper purpose.

Cases: Re Harris' Settlement (1940) 56 TLR 429 Re Bainbridge [1948] 1 Ch 767 Re Grant [1933] VLR 263Re Angas [1969] SASR 160 Singer v Berghouse (1994) 181 CLR 201 White v Barron (1980) 144 CLR 431Thomson Aust Holdings Pty Ltd v TPC (1981) 148 CLR 150 Luciano v Rosenblum (1985) 2 NSWLR 65Gufroi (1907) The Law Relating to Trusts and Trustees, 3rd Ed Williams (1974) Law Relating to Wills, 4thEd

1 Family Provision Act, 1982, s7, s9

Windeyer J

(RE ESTATE OF WALLACE MAXWELL HORE) EXTEMPORE JUDGMENT This is an applicationmade by motion previously before the court, but formalised by Notice of Motion filed in court today, toapprove certain orders which have been agreed by the parties in an application brought by the plaintiff forprovision for her maintenance and advancement out of the estate of her husband Wallace Maxwell Hore,who died on 3 November, 1991.

This is a difficult matter, and so that there is no unnecessary suspense, I think that I should say at the outset,because the parties will be disappointed by it, that I am not prepared to make the orders sought. As this isan unusual matter of considerable significance to the parties, I think that it is necessary that I give somereasonably detailed reasons as to why I have come to that conclusion.


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The deceased left a will dated 21 August 1980, probate of which was granted to Perpetual Trustee Co Ltdon 18 December 1991. Under that will the deceased left the whole of his estate to his trustee upon trust forsale and thereafter upon trust to pay the income arising therefrom to his widow for her life with theremainder of such of his niece and nephew, now the second and third defendants, who should survive the

life tenant and attain the age of 31 years, with a proviso that if a contingent remainderman failed to take avested interest and left a child or children, who survived the life tenant and attained the age of 21 years,then that child, or those children, should take in substitution for the deceased parent.

BC9504786 at 2

The will included a power to postpone sale and in respect of the matrimonial home, provided that thewidow should have the use and occupation of it free of all outgoings and repairs, with a power to purchasea substituted dwelling at the request of the widow.

CL8 of the will gave power to the trustee to apply capital of the residuary estate for the benefit of thewidow if the trustee considered her means insufficient to maintain her in reasonable comfort, or should shebe faced with heavy medical, surgical and or nursing, or other onerous expense, or expenditure.

CL9(f) of the will is of significance. It provides power to the trustee: "To pay or apply in its absolutediscretion the whole or any part of the income or capital of the expectant presumptive or vested share of

any beneficiary under this my will for his or her maintenance education benefit or advancement eitherdirectly or by paying the same to the guardian of or person with whom any minor beneficiary is residingwithout being responsible to see the application thereof." The inventory of property put forward for probateshowed gross assets of $10957842.

BC9504786 at 3

The plaintiff and the deceased met in 1958. They were married in 1961, so it was a marriage of about 30years. The plaintiff is now 68 years of age. She has been previously married and divorced. There were nochildren of her marriage with the deceased. The deceased was a bookmaker. He became very successful andretired in 1977 aged 53. He began investing in shares very successfully. The plaintiff assisted with that. Thematrimonial home at 35 Dick Street, Henley was purchased in 1973. The deceased continued to invest inshares to some extent through two companies Opal Max Pty Ltd and Zapaz Pty Ltd.

The plaintiff sets out her assets in her affidavit of 6 May 1994. These can be summarised as follows:

A. shares in public companies $67814B. shares in Wilcorp No 41 Pty Ltd This is an investmentcompany, all the shares of which are held by theplaintiff. It invests in company shares having a value ataffidavit date of

1020731

C. Deposits in financial institutions 562851________

Total $1651396

There is now up to date evidence of estate assets in the affidavit of Mr Coyte, Manager, Trust ServicesPerpetual Trustee Co Ltd sworn 6 June 1995 that can be summarised as follows:

Property being real estate andshares or units in property trusts 35Dick Street, Henley

900000

Other 563956______

Total $1463956Equities - local 2601816- international 92485

fixed interest 820000cash and short term deposits 983341Other 5352396

_________


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Page 18

Total $11313994

BC9504786 at 4

Some breakdown of the "other" figure is desirable. It is as follows:

Motor vehicle $15000Opal Max Pty Ltd- interest free loan 3649704- value of 2 shares 801180Zapaz Pty Ltd- interest free loan 886512value of 2 shares nil

________Total $5352396

The estate owns all the shares in both companies which are investment companies. The values as shown inthe affidavits, appear to differ as at 31 March 1995, and 31 May 1995, and in may be that Zapaz assets areabout $300,000 less than the liabilities, in which case the estate value would be reduced by about $300,000.That would be a very significant amount in most estates, but is not very significant in this estate. There are

good reasons put forward for retaining those two companies, but of course if those two reasons did notcontinue to be relevant, then the loans could be called up, giving very substantial funds available for otherinvestment. The widow plaintiff is a director of the company, as is her niece, and the other directors are, itappears, officers of the trustee company. In any event the estate has total control.

BC9504786 at 5

The plaintiff has received income distributions from the estate of $1024596 since the date of death. Hertaxable income for the year ended 30 June 1993 was $517979. To a large extent franking rebates result inrelatively low taxation payments. The plaintiff estimated her outgoings for the year ended 30 June 1994 tobe $83,340. She and the deceased led a very comfortable but not in any way extravagant life.

The plaintiff says that she is concerned: (a) that she did not receive the home absolutely and therefore shehas to have intrusions from others when it requires repairs, or when they come to inspect for otherpurposes, such as the insurance; (b) that she did not receive the motor car although she has the use of it; (c)

that her income is dependent upon regular distributions from Opal Max Pty Ltd controlled by the trustees.It is not necessary to consider the position of the remaindermen in any detail. They are a niece and nephewof the deceased. They are both 31 and Mr Hore has a young daughter. There would be no problem inmaking provision for the widow, if provision is proper to be made.

The settlement and orders which I am asked to approve and therefore make, involve joining the contingentremaindermen as co-defendants which I have already done and then providing that the plaintiff receivefrom the estate: (a) the property 35 Dick Street, Henley; (b) the Mercedes motor vehicle; (c) a legacy of$1m.

BC9504786 at 6

A term of the orders is that the court approve a release by the plaintiff of any right to make any furtherapplication, that release being contained in a deed which is in evidence in the proceedings and the approvalbeing sought pursuant to s31 of the Family Provision Act 1982. In the orders the court is asked to note, "in

consideration of the parties consenting to the making of these orders the parties have entered into the Deedof Agreement", which amongst other things, contains the release. I should say at this page stage, that in myview there would be no difficulty whatever in approving the terms of release.

This is not an ordinary matter. It came before me on 11 May, when I was asked to make the orders. I statedthat I was not prepared to do so, and stood the matter over for today for further evidence if desired andfurther argument, and that has taken place today.

I was told by counsel on the last occasion, that in view of the nature of the orders, the trustee had obtainedadvice under s63 of the Trustee Act 1925 that it would be justified in settling the action by executing theDeed of Agreement and consenting to the proposed orders. That advice was given in proceedings No 1657


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Page 19

of 1995, the file being before the court today and which I have considered.BC9504786 at 7

The deed in question recites the facts of the will, grant of probate, this application under the FamilyProvision Act, and the agreement of the parties to the compromise, the parties being the parties now to

these proceedings, and states that it is conditional upon court orders being made as set out. It also recitesthat the 2nd and 3rd defendants, being the contingent remaindermen, have made application to the trusteefor advancements from residue in the amount of $1m each, and that the widow has consented to thoseadvancements being made. It then provides that conditional upon the orders being made as proposed, thetrustee will in exercise of its powers under CL9(f) of the will, pay to each of the contingent remaindermen,the sum of $1m by way of advancement, that the plaintiff will consent to such payments, and that theremaindermen will seek no further advancement during the lifetime of the widow.

It would seem from the statement of facts that Mr Boyd Hore had previously requested an advancement of$690,000, which had been approved by the trustee although on the statement of facts its purpose was notexplained, but the widow had objected, and the advancement was not made. It is said in the statement offacts that after this event negotiations for the settlement of the present action took place.

When this matter was first before me, I expressed concern about the trustee's power to make an

advancement which could possibly reduce the entitlement of an unclosed class of possible beneficiaries ifthe contingent remainders failed. On further consideration, I have come to the conclusion that that in itselfis no reason to prevent the advancements being made.

BC9504786 at 8

That however is not an end of my concerns about the advice that it was in order to enter into the agreement.It is I think clear, contrary to some arguments which were put on the last occasion this matter was beforethe court, but not I think, put today, that the trustee has no power under CL9(f) of the will, to make theadvancements without the consent of the widow. I do note that the Master may have given the advice whichhe gave, without being told the purpose of the advancements. That is I think a problem, because although Iam satisfied that the Master had before him the affidavits of the contingent remaindermen which have beenfiled in the proceeding before me under the Family Provision Act, it would be difficult to understand howthose facts set out in those affidavits could possibly justify an advancement of $1m. An advancement of$1m would be extremely rare, two advancements each of the same amount would be rarer still.Advancements are not payments to beneficiaries as such, but payments for a purpose for the benefit ofthose beneficiaries.

I find it difficult to see that the facts before the Master would have been sufficient to justify theadvancements, but of course, if the widow consented then if there were a proper basis for theadvancements, they could be made.

BC9504786 at 9

I should say that if there is any remaining doubt about it I think it is clear that the widow's consent isnecessary before any advancements can be made. This view is supported in Gufroi's The Law Relating toTrusts and Trustees 3rd Ed 1907 at 668 and Williams Law Relating to Wills 4th Ed 1974 at 1269. Thestatements in those texts are based on cases such as Re Harris' Settlement (1940) 56 TLR 429, In ReBainbridge [1948] 1 Ch 767. Re Grant [1933] VLR 263 is to the same effect. The matter was considered inconsiderable detail by Bright J in Re Angas [1969] SASR 160. In that case he said that the first thing to do

was to consider what was the proper construction of the instrument, nevertheless he went on to say in acase where there was no fetter on the power of advancement: "It is argued that the wording of the expresspower is unqualified. There is no express fetter put on it, and therefore it is said that there should be norequirement to obtain the consent of any person to the exercise of the power. But a power to advance oughtto be regarded as conferred in aid of the testator's intentions as disclosed in the will and not so to defeatthem. It would be strange to find a gift of a life estate coupled with a grant of a power to a trustee to defeatthe life estate by making an advancement which could put an end to it unless the life tenant consented tothat course. And so Sir Leo Cussen held In Re Grant; and in Re Aldridge Cotton LJ was of the same view,for he did not allow a general power to advance to be construed so as to enable the trustee to advance


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corpus to children who were given a life interest under the will.

Quite apart from the authority it seems to me inherently unlikely that the testator would have wished toconfer upon his trustee a power to take away a life estate given to one of the testator's children without theconsent of that child, in circumstances other than those in which he terminated the life estate."

BC9504786 at 10

On a proper construction of the will in question in this action, I have no doubt that: (a) the advancementmust be for a proper purpose; (b) that the consent of the life tenant is required to any advancement beingmade.

While it was not expressly stated, I think the clear implication in the agreement and as set out in theStatement of Facts and the application for judicial advice is that: (a) the trustee would not have agreed tothe proposed settlement without the consent of the remaindermen; (b) the remaindermen would not haveconsented to the proposed orders had the trustee not agreed to make the advancements and the widowconsented to them; (c) the widow would not have consented to the advancements had the remaindermen notconsented to the orders in her favour, and had the trustees not consented to those orders.

BC9504786 at 11

I do not wish it to be thought that there is anything improper in those implications. The parties haveobviously negotiated and come to a settlement which they considered to be reasonable. They have obtainedjudicial advice on the settlement although I would have preferred to see the question of the advancementsand the facts supporting the proposed advancements to be more clearly stated as possible rights of otherscould be affected.

I turn to the final matter namely, the proposed orders. S7 of the Family Provision Act 1982 gives power tothe court, subject to s9, to make orders in favour of eligible persons out of the estate of a deceased person,for such provision as it considers ought, having regard to the circumstances at the time the order is made, tobe made for the maintenance, education and advancement in life of the eligible person. In this case MrsHore is an eligible person.

S9 so far as is relevant, provides in subs2 that the court shall not make a order under s7 unless it is satisfiedthat the provision made in favour of the eligible person by the deceased person either during his lifetime, orout of his estate, is at the time of determination, inadequate for the proper maintenance, education andadvancement in life of the eligible person. Those provisions give the basis for exercise of jurisdiction by thecourt. Parties are absolutely entitled of course to make any rearrangement of the terms of a will they wish,if all beneficiaries are of age and absolutely entitled. That has nothing whatever to do with the jurisdictionunder the under the relevant Act. S7 and s9(2) raise jurisdictional questions. This has been described invarious ways, sometimes making it appear discretionary, but there is no doubt now that for the court toassume jurisdiction, the provisions of s9(2) must be satisfied. See Singer v Berghouse (1994) 181 CLR 201and White v Barron (1980) 144 CLR 431.

BC9504786 at 12

As the power to make orders is governed by s9(2) and s7, the court cannot by consent, assume a widerjurisdiction. Parties cannot by consent, confer power upon the court to make orders which the court lackspower to make. See Thomson Australian Holdings Pty Ltd v The Trade Practices Commission (1981) 148CLR 150 at 163.

Settlements of claims under the Family Provision Act are of course, very common. It is obviously in theinterests of the parties and the court, to encourage settlement and in any week the Masters in the EquityDivision may be asked to make a number of orders agreed between the parties in such actions. It suchmatters in my experience, the court looks quickly at the evidence, and is informed of the relevant facts bycounsel or solicitor, and if the matter appears to be reasonable makes the orders. No detailed considerationof jurisdiction takes place as long as the plaintiff appears to have a proper basis for his or her claim. Incases where the interests of infants or unascertained classes of persons may be affected by the orders, thenthe proposed orders are considered in more detail, not usually on the jurisdictional question, but more oftenon relevant terms of the orders themselves, and the extent of the benefit provided by them. On occasions


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the court refuses to make the orders proposed, but this is unusual. At one stage it used to be thought that thereason why the court considered the proposed orders was to see whether or not they were being madepurely for the purpose of the avoiding stamp duty on a conveyance pursuant to a deed of familyarrangement, but really the question is one as to whether or not the court has jurisdiction.

BC9504786 at 13

In the three years during which I was a Master, I would have approved well over 100 such settlements, andI remember only two cases in which I refused to approve the proposed orders. The first of those was when awidower stated in his only affidavit, that he was quite comfortable and had everything that he couldpossibly need; he subsequently discontinued his proceedings. The second was a claim by two children of atestator, the testator having left the bulk of his estate to the grandchildren. There the benefits which it wasproposed should go to those children applicants, were very much greater than those which I considered theycould possibly have achieved in the proceedings. That therefore was not a jurisdictional question, but aquestion as to what was proper provision paying proper regard to the interests of the infant grandchildrenbeneficiaries. That refusal went on appeal which was dismissed and the proceedings went ahead whenorders were made in favour of the plaintiff children for considerably less than had been proposed by way ofsettlement. But as I should say these occasions are very rare. In general the profession is quite aware ofwhat is reasonable and appropriate, and I have said settlement of these family matters is to be encouraged.

BC9504786 at 14

The plaintiff in these proceedings has assets of her own of over $1.6m. She has the right to live in thematrimonial home, and in effect, subject to the consent of her trustees, the ability to exchange that home foranother. The trustees have power to make advances of capital for her benefit if the need should arise,although it is obviously quite unlikely that it would arise. She has the income from estate income producingassets of over $10m. So far as the car is concerned, there is no reason whatever why she could not purchasethat from the estate at any time she wished. She is likely to have an income of a minimum of $400000 ayear and even more. The investments appear to be well balanced and the only real problem of the plaintiffwith Opal Max Pty Ltd is that she does not control it. Even after tax is taken into account, the plaintiff'sexpenses are very small compared with her income, and it is relevant to note that she is prepared, inconsideration of the orders she seeks to have made, to have her income reduced by reducing the capitalvalue of the residuary estate by $2m. I am not suggesting that there is any anything wrong in her agreeingto those advancements but if the capital amount were returning 58 the plaintiff is prepared to forego income

of $100,000 before tax, and even that figure is more than her annual expenses.BC9504786 at 15

I take into account the fact that the plaintiff is 68 years of age. She may live a further 20 years, or evenmore; she might not. She may have some ill health, but the will provides for that. I bear in mind thestatements often made in these matters, that widows or widowers of reasonably long-term marriages shouldbe free to choose the type of home or accommodation they need, or wish to have. But here to all intents andpurposes other than having the home in her own name, the widow is in that position. She wishes to remainin that home, and she can remain in it.

In Luciano v Rosenblum (1985) 2 NSWLR 65, it was said in cases such as this of widows, or widowers,that they should be secure in their home; that they should have an adequate income for their purposes, andthat they should have a capital fund to protect them from unseen events and to spend for their own purposesas they see fit. The plaintiff in this case it seems to me, has all those requirements, and more, met for her. In

addition, although I am not suggesting for a minute that she should do this, she has sufficient assets of herown to enable her to purchase almost any home that she is likely to require. No doubt it would have beennice for her to have received the home absolutely, but that is not the point. The question is whether theprovision made for the plaintiff is adequate for her proper maintenance and advancement in life.

In my view it is not possible to say that a widow with the financial resources of this plaintiff, and with theincome of this plaintiff has had inadequate provision made for her. It follows that I can see no possiblebasis for the court to assume jurisdiction to make the orders sought. In some ways that might seem a pitybut contingent remainders must result in a fetter upon rearrangement by consent. That fetter cannot beunfastened without power and that power must be found under the provisions of the Family Provision Act


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1982. I consider that on the evidence before me there is no such power here, and thus the application beforethe court to approve and make the orders which have been agreed to by the parties, must be dismissed.

BC9504786 at 16

In the circumstance of this matter, as all persons who have a present interest in the estate supported the

application and the making of the orders, and particularly in view of the advice given by the Master, I thinkit reasonable that all parties should have their costs out of the estate on an indemnity basis.

Order

The orders will be then that the Notice of Motion be dismissed. Order that the costs of all parties be paidout of the estate of the deceased on an indemnity basis. As requested by the parties I direct the matter beplaced in the next Master's callover on 14 June 1995.

Counsel for the Plaintiff: D Davies

Instructed by: Harris and Co

Counsel for 1st Defendant: P Hallen

Instructed by: Fox and Stanilend

Solicitor for 2nd and 3rd Defendants: Tzannes of Pryor Tzannes and Wallis (8.6.95only)


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5 Pages

PERRY v FULLERTON - BC9504724

SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISIONJUDGE

1442 of 1995

15 May 1995, 15 May 1995

BC9504724 at 1

WILLS, PROBATE AND Administration -- Will -- construction -- income divided between 2 life

tenants -- children of each life tenant remaindermen as to a one half share -- Whether upon death of

one life tenant the entitlement in remainder vests in possession or postponed until death of 2nd life

tenant -- entitlement not delayed.

TRUSTS -- Beneficiaries rights -- distribution -- whether life tenant and remaindermen entitled to

one half of interest can call upon trustee to distribute half of residuary estate -- other beneficiaries

not consenting -- held aliquot share of trust can be distributed unless special circumstances -- no such

circumstances present- remaindermen entitled to call.

Cases: Saunders v Vautier (1841) 4 Beav 115; 49 ER 282 -- applied. Re White [1901] 1 Ch 570 --applied. Whakatane Paper Mills Ltd v Public Trustee (1939) 39 SR (NSW) 426 -- applied. Marshall v

Marshall [1914] 1 Ch 192 -- referred to. Stephenson (Inspector of Taxes) v Barclays Bank Trust Co

Ltd (1975) 1 All ER 625- referred to.

JUDGE

In this matter, by a further amended summons, the plaintiffs seek a determination by the Court, first as tothe proper construction of one clause of the Will of Frederick Perry, deceased; and second, whether or notthose persons who are entitled to a life estate, and an interest in remainder, to a one half share of the estate,are entitled to call for that share to be paid to them now, the other life estate not having determined.

CL6 of the Will of the deceased, who died on 23 February 1994 is as follows: "The balance to be invested,

the income from which is to be shared 50% Janice Jean Fullerton and 50% Frederick John Perry and ontheir demise the capital to which they are entitled shall be distributed half to Debra Lee Fullerton and halfto Sharon Anne Fullerton in the case of Janice Fullerton's share and the capital to which Frederick JohnPerry is entitled shall be distributed half to Richard John Perry and half to Joanne Robin Breen."

That clause, on its face, is hardly clear but nevertheless for the purposes of this action, it has not really beencontested the proper construction of the Will is that upon the death of one of the life tenants, one half of thecapital is to be distributed to those persons named as remainderman, taking in consequence of the death oftheir parent.

BC9504724 at 2


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Thus, upon the death of Mrs Fullerton, her children, Debra and Sharon, would be entitled to one half of thecapital of the residuary estate; and on the death of Mr Perry, his children Richard John Perry and JoanneRobin Breen would be entitled to one half of the capital of the residuary estate. In other words, theentitlement to remainder vests in possession in so far as the one half share is concerned upon the death of

the first life tenant to die, and is not postponed until the death of the second life tenant.The questions raised by para1 of the summons should therefore be answered by determining that theconstruction in terms set out in para1C is the correct construction.

The next question is whether or not the person who is entitled to one half of the income, together with thosepersons entitled to one half of the capital on the death of that life tenant are entitled to call at this stageupon the trustee to distribute that one share in the estate to them. That is the real question which hasbrought about these proceedings as those persons who could be described as the "Fullerton interest" haverequested the trustees to distribute to them one half of the residuary estate. It is the trustees' contention thatthere is no entitlement in those persons to do this, and that until one of the life tenants dies, theremainderman in respect of that share are not entitled to call. This argument is being put forward on thebasis that there is an entire fund and not a split fund and that therefore there is no entitlement to call fordistribution.

BC9504724 at 3

The entitlement of the Fullerton interest depends upon whether or not the principle laid down in Saunders vVautier (1841) 4 Beav 115; 49 ER 282 applies here, namely that a beneficiary of legal age and absolutelyentitled can call upon the trustee to transfer the property and thus terminate the trust. The question iswhether or not that principle applies in the instant case.

It is, I think, clearly the law that where life tenant and remainderman are entitled to the whole of the estate,they are entitled to call upon the trustee for immediate distribution, their interests being vested and coveringthe whole of the estate. That is established by the case of Re White [1901] 1 Ch 570.

The question is, however, whether a beneficiary or beneficiaries can request a distribution, a conveyance oftheir share of the trust property, where other beneficiaries have not agreed to terminate the trust. Theanswer is, I think, that they can in appropriate circumstances. Those circumstances arise where persons areabsolutely and indefeasibly entitled to an aliquot of a trust fund and wish and request the trustee to

distribute that part of the fund to them; they are entitled, except in special circumstances, to a transfer ofthat part. That proposition is set out in the judgment of Long Innes J in the case of Whakatane Paper MillsLtd v Public Trustee (1939) 39 SR (NSW) 426. There are other cases to the same effect, including Marshallv Marshall [1914] 1 Ch 192, and more recently StePhenson Inspector of Taxes) v Barclays Bank Trust CoLtd (1975) 1 All ER 625 at 647. The special circumstances which would prevent entitlement to distributionare those which concern the form of investment in which the fund is. In other words, if the fund is partly inreal estate, then the beneficiaries are not entitled to have transfered to them an aliquot part of that estate,and in the case of mortgages that is usually thought to be the position.

BC9504724 at 4

Special circumstances can also arise in the case of some company holdings, but there is no suggestion inany case, as far as I know, that this bar to the right to call arises where the shares are held in publiccompanies, as is the case with shares which are held in this estate.

The assets in the residuary estate are either monies invested with St George Bank in the sum ofapproximately $376,000, some of which may be accrued income; and in public company shares valued atapproximately $1.3 million.

It is not suggested that there would be any difficulty in splitting those shares into two equal parts and thusenabling the call made by the life tenant and remainderman entitled to one half of the estate to have theirshare transfered to them either in cash or in specie.

In those circumstances, although there can be no doubt that the principles which are applicable quite oftengive rise to a result which is contrary to the intentions of the testator, it seems to me to be clear that theFullerton interests are entitled to call for transfer to them of their share.


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BC9504724 at 5

Order

The question in para3 of the further amended summons should be answered in the affirmative. I make adeclaration in terms of para1C of the further amended summons.

I declare that upon the true construction of the said Will and in the events which have happened, the lifetenant and remainderman entitled to a one half share of the residuary estate of the said deceased are entitledto call upon the trustees to pay or transfer that part to them. I order the plaintiff's costs of these proceedingson a trustee basis, and the defendant's costs of the proceedings be paid out of the residuary estate of theestate.

REPRESENTATION

Counsel for the plaintiff: AG Todd

Solicitors for the plaintiff: CE Cranney and Co

Counsel for the first and fourth defendants: S Baker

Solicitors for the first and fourth defendants: Janice Williams

Solicitors for the second defendant: O'Kane, Elliot and Harvey


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Smith v Aylwin

BC9405716

Court: VSC

Judges: Beach J


Catchwords & Digest

Trusts -- Trustees -- Removal of trustee -- Circumstances in which trustee to be removed

To be removed where it can be demonstrated trustee placed self in a position antagonistic to trustee's dutyas trustee.Trustee life tenant of property left by will.Remaindermen seeking removal.Whether defendant properly characterised as a life tenant or a trustee.




Followed Miller v Cameron

(1936) 54 CLR 572;[1936] ALR 301;

(1936) 10 ALJR 35a;[1936] HCA 13;BC3600025

HCA 29/4/1936


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Flanner v Flanner

10/05/1991 VSC Unreported

Court: VSC

Judges: Marks J


Catchwords & Digest

Equity -- Injunctions -- Application for interlocutory injunction to prevent sale of land by remainder

persons -- Life tenant the defendant, also trustee

Sentimental reasons.Land to be sold to owners of neighbouring land making viable farm.Sale beneficial..Held: dismissing the application:(i) The sale would financially benefit those persons with an interest in theland as the settled land was likely to realise a higher price if sold together with the neighbouring land.


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Whitchurch, Re

[1990] VR 719

Court: VSC

Judges: Young CJ


Catchwords & Digest

Succession -- Probate -- Executors -- Removal

Advertisement and searches revealed no trace of a woman who in 1966 had become executrix bydevolution of the estate of a testator who died in 1963.

Held: It had not been shown that the executrix by devolution was unfit to act and hence there was no powerunder s 34 of the (VIC) Administration and Probate Act 1958 to remove her from the office of executrix,but the relationship between the executrix by devolution and the beneficiaries entitled to property of thetestator on the death of a life tenant was one of trust and the court had power under s 48(1) of the (VIC)Trustee Act 1958 to appoint a new trustee in place of the executrix by devolution.

Cases referring to this case

Annotations: All CasesSort by: Judgment Date (Latest First)


Cited Reid v Brett [2005] VSC 18;BC200500189

VSC 8/2/2005

Applied Telford v Telford[2003] VSC 8;BC200300187

VSC3/2/2003




Applied Dunn (decd), In the Estate of [1963] VR 165 VSC 24/5/1962

AppliedCockburn's Will Trusts, Re;Cockburn v Lewis

[1957] Ch 438EWHCCh

4/6/1957

Applied Ponder, Re [1921] 2 Ch 59 -



Administration and Probate Rules 1958 (Vic) s 34(1)

Trustee Act 1958 (Vic) s 48(1)


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5 Pages

GORDON v GORDON - BC8801590

SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISIONYOUNG J

2710 of 1988

10 August 1988, 19 August 1988

BC8801590 at 1

PRACTICE [80]- Will construction- No beneficiary willing to argue case- How approached.

WILLS [302]- Next of kin- Whether widow included- Effect of some life tenants dying before and someafter 1977 amendments to Conveyancing Act- Conveyancing Act, 1919, s33.

Young J

This is a summons to construe the will of the late John Gordon who died on 7 February, 1964. Although theplaintiff executors named all possible defendants to the summons, they have all filed a submitting

appearance by the one firm of solicitors and have declined to argue the matter, being quite willing to leaveit to the Court assisted by the plaintiffs' counsel to come to a just solution. Whilst this is understandable inthe interests of economy, it does mean that the Court has not been assisted by argument from a series ofindependent counsel urging the strongest propositions for each point of view. There does not seem to me tobe any purpose in trying to find someone who will present arguments and I will follow what I have done inprevious cases of this nature, that is, to give advice to the trustees under s63 of the Trustee Act, 1925. Thiswill mean that by virtue of s63(8), the beneficiaries will have one further opportunity to present argumentsif they or any of them consider this decision flawed.

BC8801590 at 2

The deceased's will dated 3 August, 1963, provided that until the death of the last of six named nephewsand nieces, the annual income of the estate should be distributed equally amongst those six nephews andnieces with "the share of income to which any of them who shall have died would if living have beenentitled" to "pass to the next of kin of such deceased nephew or niece determined in accordance with the

laws of distributions on intestacy". After the death of the last of the six to die, the capital was to be dividedinto six equal parts and those parts to be given "equally between the next of kin of each of them my saidnephews and nieces such next of kin being determined in accordance with the laws of distribution onintestacy."

Four nephews and nieces are still alive, but two have died. The first to die was Oliver on 8 October, 1976.No question arises with respect to his share because that has been dealt with, so I am informed by counsel,by way of family arrangement. The second to die was Albert who died on 12 March, 1987 leaving himsurviving a widow, a son and three daughters.


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The problem which concerns the Court is the meaning to be given in both the gifts of income and capital tothe phrase "next of kin... determined in accordance with the laws of distributions on intestacy."

Without recourse to s33 of the Conveyancing Act, the phrase "next of kin" denotes a person's bloodrelatives and does not include his spouse, see eg Re Morgan [1920] 1 Ch 196. It is also clear that if there is

a reference to a statute of distribution, that that normally refers to the ancient English Acts of 1670 and1685 rather than to the Wills etc Act 1898, see eg Perpetual Trustee Co Ltd v Johnson (1977) 1 BPR 9345.Neither of those propositions, however, appear to me to assist with the construction of the phrase used inthe current will. S33 of the Conveyancing Act was enacted to link such expressions in the will unless acontrary intention appeared to distribution on intestacy under the Wills Probate & Administration Act,1898. S33 was materially amended in 1954 to align it with the amendments made to the Wills etc Act inthat year and by Act No 118 of 1977 it was substituted again to bring distributions into line with the latestscheme brought into the Wills Act by amendments to the law made in that year.

BC8801590 at 3

The solution to the present problem is to be found by considering whether s33 in any of its forms applies tothe present wording and if it does, which version of s33 is applicable.

The only reason to my mind why s33 might not apply would be if, in the case of the gift of income, it could

be said that that was not "property" within the meaning of the section. This argument, to my mind, has noattraction at all. A gift of income for life has always been considered to be a life estate and property. I seeno reason, especially in view of the definition of "property" in s7 of the Conveyancing Act, why any otherview should be taken with respect to s33.

BC8801590 at 4

Accordingly, the section operates if but for the section there would be a vesting in the next of kin atcommon law (ie blood relatives but not the widow), or the next of kin as determined in accordance with theWills Act but not as Johnson's case makes clear, next of kin under the English Statutes of 1670 and 1685. Iam inclined to the view that on its proper construction the will means that there is to be distribution underthe Wills etc Act (as in force as at the date of death or the date of distribution, a matter I will come toshortly), and so s33(1)(c) of the Conveyancing Act is attracted. If I were wrong on that it would be of noconsequence because s33(1)(b) would be attracted which would give the same result. The result in eachcase would be that the distribution would be as per that Act.

The next question is at what date does one look at s33? The choices must be the Act as it existed as at thedate of death, or the Act as it exists at the date of each nephew or niece to die.

S33(3) which was added in 1977, provides that if a will came into operation before 1 January, 1978 (as thiswill does), and any property would but for s33(3) vest in the next of kin of a person to be determined inaccordance with the Wills etc Act, that property shall vest in the persons in whom it would have vested hads3 of the Conveyancing (Amendment) Act No 118 of 1977 (the Act which substituted a new s33 in theConveyancing Act) not commenced.

It seems to me that subs(3) means that if, despite s33 in the form it existed before 1977, would not haveapplied, then one does not apply the new s33. Furthermore, the reference in s33(3)(c) is to the Wills etc Actas originally enacted and not that Act amended by the Administration of Estates Act 1954.

BC8801590 at 5

It thus seems to me that subs(3) of s33 in its present form does not apply to the instant case; accordinglyone applies subs(1).

So far as the gift of capital is concerned, that matter must await another day because one does not knowwhat will be the corresponding law to s33 of the Conveyancing Act in existence as at the date when the lastof the nephews or nieces to die arrives. It would seem to me, however, that one would apply thecorresponding law as at that date. I make no order as to this, I merely offer this thought for whatever valueit may be in the future.

Order


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Accordingly, I order that the plaintiff trustees be advised that they would be justified in distributing theshare of income that should pass to the next of kin of Albert Andrew Fraser Gordon on the basis that s33 ofthe Conveyancing Act as amended in 1977 applies so as to make such income divisible amongst the widowand children of that person as if he had died intestate. I reserve further consideration and order that the

costs of the plaintiffs on the trustee basis to date be paid out of the estate : reserve further costs.

Counsel for plaintiff: J. B. Whittle

Solicitors: - Beveridge Serisier & Brown (Gilgandra)


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5 Pages

GILLESPIE v ADAMS - BC8701002

SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISIONYOUNG J

3792 of 1987

5 November 1987, 5 November 1987

BC8701002 at 1

WILLS [290] [320] & [342] -- Gift to daughter after life estate if she had then divorced her husband

Jack or was a widow -- Daughter predeceased Jack and life tenant -- Gift contingent on daughter

surviving life tenant -- Will not sufficiently clear for Court to supply words -- Quaere how far public

policy now vititates clauses involving a beneficiary's marriage.

Young J

This is a summons to construe the will of the late Pearl Elizabeth Dyson, who died on 9 August 1948,having first made and published her last will on 30 May 1948.

So far as it is relevant the will provided as follows: "I appoint my said husband Reginald Arthur Dyson...sole executor and trustee of this my will. I Devise my cottage property known as 50 Bath Street Kogarahunto my trustee upon trust for himself for life ... and after the death of my said husband I devise the saidproperty ... unto my daughter Joyce Holly Adams provided that her present husband Jack Adams shall thenbe dead or my said daughter shall be divorced from him And in the event of the said Jack Adams still beingmarried to my daughter then I devise the said property ... unto my grandchildren ... as tenants in common inequal shares." There was then a gift of residue to her husband Reginald.

Probate of that will was granted to Reginald on 28 February 1950. Joyce died on 30 June 1983 intestate.Reginald died on 14 June 1984 and probate of his will was granted to the plaintiff. In the events which havehappened the residue of Reginald's estate passed to the plaintiff as to one third, the plaintiff's sister as toone third and the remaining one third to the plaintiff's children and his sister's children in equal shares.Some of these children are under eighteen years of age, so that it is not possible to solve the problemcaused by the will of Pearl Dyson in the amicable way that the family would obviously like it to have been

solved,BC8701002 at 2

The matter is thus before the court for determination. One other fact may be relevant, and that is that Joycewas not the daughter of Reginald and was only seventeen years younger than Reginald.

There has been some debate as to whether the condition that Joyce should only take if her husband weredead or she had divo

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