the Estate of Betty Jean Lee; Perpetual Trustee Company (Canberra) Limited v Rodney George Rasker; Vikki Rasker and North Rocks Deaf and Blind Society of Children [1986] ACTSC 97 (9 October 1986)

SUPREME COURT OF THE ACT

THE ESTATE OF BETTY JEAN LEE;PERPETUAL TRUSTEE COMPANY (CANBERRA) LIMITED v.
RODNEY GEORGE RASKER; VIKKI RASKER AND NORTH ROCKS DEAF AND BLIND SOCIETY FOR
CHILDREN
S.C. No. 1318 of 1986
Wills

COURT

IN THE SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
Miles C.J.(1)

CATCHWORDS

Wills - construction - rule in Saunders v. Vautier - whether rule avoided by provision for gift over - meaning of gift over.

Australian Capital Territory Supreme Court Act 1933 s.11(a)

Halsbury's Laws of England Vol. 48 para 919

Supreme Court Rules Order 58 Rule 1

Saunders v. Vautier (1841) 4 Beav 115; 49 ER 282

Gosling v. Gosling (1859) John 265 at 272; 70 ER 423 at 426

Jacobs' Law of Trusts in Australia (5th ed) at para.955

The Conveyancer Vol. 34 p.29

Williams on Wills 4th ed. p.281

Re Johnston, Mills v. Johnston (1894) 3 Ch 204

Re Couturier, Couturier v. Shea (1907) 1 Ch 470

Re Park Q.W.N. 80

HEARING

CANBERRA
9:10:1986

ORDER

The questions posed in the originating summons be answered respectively (a) yes, (b) no, and (c) no.

Costs.

DECISION

This is an application to the Court for the expression of an opinion on certain questions relating to the will of the late Betty Jean Lee (the testator). The testator died in the Australian Capital Territory on 19 December 1985. Probate of her last will and testament dated 26 January 1984 was granted by this Court on 13 February 1986. The questions upon which the opinion of this Court are sought are as follows:

(a) whether the terms of the will, including

the proviso first appearing in clause 6 of
the said will that "At the expiration of
the period of ten (10) years my residence
shall pass to my said son absolutely
provided he is living at that date", impose
a limitation which prevents the immediate
vesting of the deceased's residence known
as "Rosehill" and the residue in the first
defendant;

(b) whether the trustee is authorised to
transfer to the first defendant the
deceased's property known as "Rosehill";

(c) whether the first defendant is presently
entitled to the residue of the estate of
the deceased, other than the property known
as "Rosehill".

2. The plaintiff, a trustee company specified in the Trustee Companies Ordinance 1947, is the trustee appointed by the testator. The first defendant is the son of the testator and the second defendant is his wife. The jurisdiction of the Court to answer the questions posed appears to be that jurisdiction inherited from the Supreme Court of New South Wales as at 1 January 1911: see Australian Capital Territory Supreme Court Act 1933 s.11(a); see Halsbury's Laws of England Vol. 48 para. 919; Supreme Court Rules Order 58 Rule 1.

3. The relevant provisions of the will of the testator are as follows:

"4. I DIRECT that my residence "Rosehill" be
retained for a period of ten (10) years from my
death and is to remain unencumbered for that
period and provided my son (and only child) RODNEY
GEORGE RASKER survives me for thirty (30) days he
is to have the right use and occupation thereof
for ten (10) years he being responsible for all
outgoings in respect thereof and in the event of
him not wishing to occupy such residence he shall
be entitled to the net rents and profit therefrom
during such ten (10) year period with power to "my
Trustee" at its absolute discretion to provide out
of the residue of my estate such amount as it
deems appropriate to provide for extension and or
renovations to such property up to a maximum of
twenty thousand dollars ($20,000) it being my
direction that such expenditure be applied only in
the event of my son and his wife VIKKI RASKER
choosing to reside in such property.

5. IN THE EVENT OF MY SON FAILING TO SURVIVE
THE THIRTY (30) DAY PERIOD or so survives but
fails to survive the ten (10) year period the
benefit and provisions contained in clause 4
hereof shall vest in VIKKI RASKER on the same
terms and conditions provided always during such
ten (10) year period she shall be the legal wife
of my said son BUT IN THE EVENT OF HER REMARRIAGE
within such period such benefit shall cease and
fall into residue.

6. AT THE EXPIRATION OF THE PERIOD OF TEN (10)
YEARS my residence shall pass to my said son
absolutely provided he is living at that date or
in the event of him not surviving such period as
to one half share to his wife VIKKI RASKER
provided again she at that date is the legal wife
of my said son and the other one half share to the
children of the marriage of RODNEY GEORGE RASKER
and VIKKI RASKER living at that date in equal
shares as tenants in common and if there are no
children of the said marriage such one half share
shall pass to VIKKI RASKER provided again she is
at that date the legal wife of my said son.

7. AS TO THE REST AND RESIDUE OF MY ESTATE my
son provided he survives me for thirty (30) days
shall be entitled to the net income therefrom for
a period of ten (10) years at which time the
capital shall pass to him and in the event of him
failing to survive either period the provisions
as to the beneficiaries contained in clause 6
hereof (in the event of the death of my said son)
shall apply.

8. IN THE EVENT OF THE FAILURE OF ANY OF THE
FOREGOING PROVISIONS of my said Will as to
beneficiaries that part of my estate which so
fails shall pass to the North Rocks Deaf & Blind
Society for Children for the general purpose of
such organisation and the receipt of the
Treasurer thereof shall be sufficient
acknowledgement to my Trustee."

4. On behalf of the first and second defendants it was submitted that the testator's estate vests absolutely in the first defendant because of the operation of the rule in Saunders v. Vautier (1841) 4 Beav 115; 49 ER 282. (This is not the judgment which was cited in argument and reported in the All England Law Reports reprint 1935-1942 at p 58.) The rule is stated by Lord Langdale M.R. in the following terms:

"Where a legacy is directed to accumulate for a
certain period, or where the payment is postponed,
the legatee, if he has an absolute indefeasible
interest in the legacy, is not bound to wait until
the expiration of that period, but may require
payment the moment he is competent to give a valid
discharge."

5. The same principle was stated again but in different terms by Wood V.C. in Gosling v. Gosling (1859) John 265 at 272; 70 ER 423 at 426:

"The principle of this court has always been to
recognize the right of all persons who attain the
age of 21 to enter upon the absolute use and
enjoyment of the property given to them by a will,
notwithstanding any directions by a testator to
the effect that they are not to enjoy until a
later age - unless, during the interval, the
property is given for the benefit of another. If
the property is once theirs, it is useless for the
testator to attempt to impose any fetter upon
their enjoyment of it in full so soon as they
attain 21. And upon that principle, unless there
is in the will or in some codicil to it a clear
indication of an intention on the part of the
testator not only that his devisees are not to
have the enjoyment of the property he has devised
to them until they attain 25, but that some other
person is to have that enjoyment - or unless the
property is so clearly taken away from the
devisees up to the time of their attaining 25 as
to induce the court to hold that, as to the
previous rents and profits, there has been an
intestacy - the court does not hesitate to strike
out of the will any direction that the devisees
shall not enjoy it in full until they attain the
age of 25 years."

6. In Jacobs' Law of Trusts in Australia (fifth edition) at para. 955 the learned authors express the principle as follows:

"Where there is an absolute vested gift with a
direction to accumulate the income for a certain
time and then to pay the original sum with the
accumulations, the beneficiary, if of full age and
capable of giving a valid discharge, may require
payment without waiting until the lapse of the
appointed time. If the direction is to accumulate
the income for a period exceeding that allowed by
the statute, the beneficiary will benefit, as the
rule makes the direction to accumulate ineffective
immediately the beneficiary is capable of giving a
valid discharge and claims payment, whereas apart
from the rule the excessive accumulations would
pass to others."

7. The learned authors go on to set out the limitations to the application of the rule. At paragraph 2312 they state that the rule has no operation unless all the persons who have any present or contingent (my emphasis) interest in the property are ascertained, sui juris and consent. The basis of the rule is stated at para. 2314 as follows:

"It has been said that the principle upon which
the rule is based is that any restriction on the
enjoyment by a beneficiary who is sui juris of a
vested interest is inconsistent with the nature of
that interest and must be disregarded; Weatherall
v. Thornburgh (1878) 8 ChD 261 at 270; (1874-80)
All Er Rep 382 at 386 per Cotton LJ. Thus
understood,
the principle often will involve the denial
of the intentions of the settlor or testator, and
in the United States the rule in Saunders v.
Vautier has met with a mixed reception and in many
States has been rejected; Scott on Trusts 3rd ed,
Vol 4, p 2667."

8. In an article in The Conveyancer Vol. 34 p.29, the author, Mr. Alec Samuels, after observing that Saunders v. Vautier is not widely known to the public, puts the rule in the following terms:

"Where there is an absolute vested gift made
payable at a future event, with direction to
accumulate the income in the meantime, and pay it
with the principal, the court will not enforce the
trust for accumulation in which no person has any
interest but the legatee, or (in other words) the
court holds that a legatee may put an end to an
accumulation which is exclusively for his
benefit."

9. The attitude of the plaintiff to the submissions put on behalf of the defendants is neutral. Counsel for the plaintiff has submitted that it is at least arguable that the testator in the present case has made provision for a gift over and has drawn my attention to the authorities. In addition to those already mentioned is Williams on Wills 4th ed, where the learned authors say at p.281:

"A gift may be made contingent on a donee
attaining an age greater than 18 with a gift over
on his dying under that age, and the income till
the attainment of such age can be secured to the
donee with vesting at that age by means of a
dicretionary trust."

10. So stated, it would appear that in order to avoid the rule in Saunders v. Vautier it is necessary that there be both a gift over and a discretionary trust in the meantime. However, the authors' footnote is in the following terms:

"A gift of all the income until a beneficiary
attains a greater age than 18 followed by a gift
of the capital on attaining that age, gives the
beneficiary an absolute interest at latest on
attaining 18: Saunders v. Vautier, but this effect
may be avoided by giving the income to trustees
with a discretion to pay it to the beneficiary or
to others or by a gift over of the capital on the
beneficiary dying under that age." (my emphasis)

11. "Gift over" is not a term that appears in all the standard legal dictionaries and reference works. It is defined in Walker: Oxford Companion to Law (1980) thus:

"A gift to one in succession to a prior gift to
another on a certain contingency, e.g. to A if he
attains 21, whom failing to B."

12. In the United States the term "gift over" may have a somewhat different meaning, as Black's Law Dictionary (fifth edition) defines it as follows:

"A gift to one for life and from and after his
death to another. Broadly, any transfer of
property to take effect after the termination of
an intermediate estate or estates such as a life
estate, e.g. to A for life, remainder to B."

13. From a consideration of the competing policies which give rise to the application of the rule in Saunders v. Vautier (the policy of giving effect to the testator's intention as against the policy of not withholding the vesting of an estate in a person entitled to it) and from a consideration of the authorities it appears to me that the better view is that the rule may be avoided either by the creation of an intervening discretionary trust or by provision for gift over in the event of a contingency taking place. Such contingency may include the death of the donee or legatee. See in Re Johnston, Mills v. Johnston (1894) 3 Ch 204, Re Couturier, Couturier v. Shea (1907) 1 Ch 470.

14. If Clause 4 of the will stood on its own, I should have little hesitation in ruling that the beneficiary was immediately entitled to the whole of the testator's interest in the residence "Rosehill". Similarly, if Clause 7 made no provision for the residue to pass to the surviving spouse and surviving children (as yet unborn) if any, in the event of the son failing to survive the period of ten years, the son would be immediately entitled to the residue. In my view the will has to be read as a whole and it is the intention of the testator to create a gift over in the event of the son failing to survive her for a period of ten years. In that event it is intended that the residence and the residue of the property should pass to the widow of the son and their children (if any) upon the same terms and conditions as attached to the son's interest.

15. Whilst it may be that the provisions of Clause 8 would not provide for a gift over in the absence of Clauses 5, 6 and 7, again I think that the will as a whole confers a contingent interest on the charitable organization named in Clause 8. The organization has been served but has not appeared at the hearing. There is no evidence as to the age of the second defendant but apparently it is uncontested that she is not yet beyond child-bearing age. Whilst there is no power in the Court to appoint someone to represent a class consisting solely of unborn children (Re Park Q.W.N. 80), I do not think that their contingent interests can be disregarded. The interests of the unborn children and of the charitable organization may be remote and there may be good reason why both the first and second defendants wish to have the first defendant's interest in the testator's estate vested absolutely in him. However, it seems to me that as a matter of law the imposition of gifts over avoid a breach of the rule in Saunders v. Vautier and the testator's intention is to be respected and given effect. The questions posed in the originating summons must be answered respectively (a) yes (b) no and (c) no.

16. Although I heard the parties on the question of costs, it was rather assumed then, I think, that the questions would be answered differently. The questions being answered contrary to the submissions of the defendants, I think it appropriate to ask counsel as to whether they want to say anything further on the question of costs.