Public Curator of Queensland v Union Trustee Company of Australia Ltd [1922] HCA 28; (1922) 31 CLR 66 (21 June 1922)

HIGH COURT OF AUSTRALIA

The Public Curator of Queensland Defendant, Appellant; and The Union Trustee Company of Australia Limited and Others Plaintiff and Defendants, Respondents.

H C of A

On appeal from the Supreme Court of Queensland.

21 June 1922

Knox C.J., Higgins and Gavan Duffy JJ.

E. A. Douglas (with him Salkeld), for the appellant.

Webb S.-G. (with him Macrossan), for the Attorney-General of Queensland.

Stumm K.C. (with him Hart), for the executors of the will.

Henchman, for the Attorney-General for the Commonwealth.

Macgregor, for the respondents the next of kin of the testator.

Douglas, in reply.

The following written judgments were delivered:—

June 21

Knox C.J. and

Gavan Duffy J.

The question raised by this appeal is whether the residuary bequest contained in the will of William Mitchner, made 21st April 1918, is valid. This bequest is in the following words: [The clause above set out was here stated, and the judgment continued:—] This passage is followed by elaborate directions as to the manner in which the fund in question is to be expended or applied by the persons to whom it was to be remitted. It is sufficient for the purpose of this opinion, without repeating these provisions in detail, to point out that the fund is to be applied partly in payments to individuals and partly to objects of a charitable nature in Germany, that directions are given for the expenditure of portions of the fund within limited periods ranging from four to seven years, and that the will contains an expression of the testator's desire that his trustees shall, if possible, complete the administration of his estate within three years from the date of testator's death, and a direction that the receipts of the German consul shall be a sufficient discharge for all moneys paid to him under the will. There is no gift over on failure of payment to the German consul or on failure of the further disposition of the funds in the prescribed manner. By a codicil the testator declared that none of them, the said Ferdinand Tautz, his executors or administrators, or the said parish priest or the said police magistrate, should be in any sense whatsoever considered as executors or trustees of his will. The property comprised in the residuary gift is of considerable value, and represents the greater part of the estate of the testator.

A special case having been stated for the determination by the Supreme Court of numerous questions arising on the will of the testator, that Court decided (inter alia) that the trusts declared by the testator with reference to the remainder of his residuary trust fund were void; and it is against this decision that this appeal is brought.

The Supreme Court was of opinion that according to the literal construction of the will the remainder of the residuary trust funds was not to be paid over by the trustees of the will until a German consul at Brisbane had been duly appointed, and that, as that event might not happen within the time prescribed by the rule against perpetuities, the gift failed. In other words, the gift was held to be dependent on the condition that a German consul at Brisbane should be duly appointed. The appellant contends that the other provisions for the disposition of this fund show that the intention of the testator was to devote it unconditionally to the purposes to which he directed it to be applied, the direction for payment to the German consul amounting, in the circumstances existing when the will was made, to no more than an indication of the method which the testator thought should be adopted in order to transmit the money to the persons in Germany to whom he had entrusted its application. It was urged on his behalf that if the words used were capable of this meaning they should be so construed, both in order to avoid an intestacy and because the disposition in question was mainly in favour of charitable objects.

It is not easy to be certain about the real intention of the testator as evinced by his will, but it is important to remember that the will was made while war conditions existed, and when, though a testator might make bequests to German nationals, money could not legally be transmitted to Germany without the permission of the Crown. On the whole, we think that on a proper construction of the words of the will the testator intended to make an immediate gift of the remainder of his residuary trust funds; that on his death this gift vested in interest though not in possession, and that the directions with respect to the German consul have reference only to the means by which the money should be conveyed to them.

In our opinion the appeal should be allowed.

Higgins J.

The only appeal in this case is from the declaration as to the residuary funds intended for German charities and persons, that the gift is void as infringing the law against perpetuities. The Public Curator of Queensland, as representing the German trustees who are to expend the funds in Germany, and the Attorney-General for the Commonwealth and the Public Trustee for the Commonwealth, concur in so limiting the appeal: and we have no power to consider anything else in the order made by the Supreme Court of Queensland on the special case. We cannot interfere with the order so far as it interprets and applies the Treaty of Peace.

The words of the gift have been stated. It is said that according to the literal construction of the will the funds have to be remitted to the German trustees by the German consul in Brisbane when he is appointed, and not otherwise; and that as the appointment may possibly not happen within the limit of time prescribed by the law against perpetuities—within a life or lives in being and twenty-one years after—the gift to the German trustees is void. In other words, because the particular machinery which the testator prescribed for remitting the funds to the German trustees may not be available within that limit of time, the gift is wholly void.

No case has been cited to us in which the law against perpetuities has been applied under similar or analogous circumstances. In In re Lord Stratheden and Campbell[1] there was a clear condition annexed to the substance of the gift. There was a bequest of an annuity to a volunteer corps "on the appointment of the next lieutenant-colonel." There was no gift except on the express condition; and as it was possible that a lieutenant-colonel might never be appointed, or might not be appointed within the allowed limit of time, the gift failed. In the present case the condition—if there is a condition—is not annexed to the gift itself, but to the mode of remitting. Apart from the mode of remitting, the gift to the German trustees, and the trusts on which they are to expend the funds, are unconditioned. The words used are words appropriate only to a gift which is vested in interest in the recipients or objects as from the death of the testator, although the actual expenditure prescribed may be necessarily postponed. The German trustees are to distribute £600 among Tautz and his family; to invest £1,000 for Elizabeth Conrad for life, &c.; to expend £7,000 within four or five years from the testator's death in the erection of an educational institution at Lewin; and so forth. The purchase of lands for a farm, flour-mill and hotel, and the completion thereof for the upkeep of the institution, &c., are to take place within seven years from the death. The trustees of the will are, if possible, to complete the administration of the estate within three years from the death. The gift is a gift of residue, and there is no gift over if the funds are not remitted through the German consul; and there is no gift of the income to other persons or objects until such remission. For the purposes of enjoyment and transmission the actual income of any property until sale or conversion is to go to the same beneficiaries as income of the proceeds of sale and conversion would go. The testator provides that receipts given to the trustees of the will shall be "sufficient" discharges for all moneys paid to the consul; but he does not say that they shall be the only discharges. I cannot feel any doubt that if the German trustees came to Brisbane and demanded from the trustees of the will payment of the funds, saying "There is no need to remit to Germany at all—we shall give you a receipt," the trustees of the will would be compelled by the Court to pay over the funds. Those who are solely and absolutely entitled to receive money from trustees are entitled to ignore the specific mode and time of payment directed by the testator, to "break the trust," as it is called, and to claim immediate payment without the delay and formalities prescribed by the will (Saunders v. Vautier[2]; Harbin v. Masterman[3], and other cases).

At the date of the will and codicils and of the death of the testator (1st June 1918) the War still continued; and the War Precautions Acts and the King's proclamations made it illegal and impossible to send money to Germany. Evidently the testator—with that foresight and calculation of future contingencies so characteristic of men of his country—made his arrangements so as to facilitate the execution of his will; but he did not show in his will any intention to make the particular mode of remitting which he prescribed a condition precedent to the vesting of the gifts in interest. The law as to wills, especially such a will as the present, favours vesting; and the Courts are astute to adopt such an interpretation of the words as will prevent them from treating directions as conditions precedent to the vesting of a gift in interest. It is not every direction in a will that the Courts will enforce as a trust; for instance, the Courts have refused to enforce at the instance of the solicitor a clear direction in a will that a certain solicitor "shall be the solicitor to my estate." So, too, a direction to employ a certain person as agent to collect rents of property given was not enforced at the instance of the agent (Shaw v. Lawless[4]; and see Finden v. Stephens[5]). A trust must be associated with property, and rights to property. As Story said (Contracts, vol. i., sec. 296), "trusts are, therefore, equitable interests in property, based on confidence, over which Courts of equity alone have full jurisdiction." The Wills Act enables every person to devise, bequeath or dispose of "by his will" all his real estate and all his personal estate (Succession Acts Qd., sec. 36); but it does not seem to enable him to create a trust merely to pay his funds to a person who is merely an agent to remit to the true objects of the gift; and in Brown v. Burdett[6] Bacon V.C. treated a trust to block up the rooms of a house for twenty years as invalid, and held that there was an intestacy as to the house for the term. If the funds were handed direct to the German trustees instead of to the German consul, neither the German trustees nor the beneficiaries under the German trusts could show any loss occasioned by the (alleged) breach of trust.

But, whatever may be the proper effect to be given to the words "in trust to pay" the funds to the German consul "when such trustee shall have been duly appointed" (and when the trustees shall have been duly authorized by the Attorneys-General), with written instructions to the German consul to remit to the German trustees, the gifts for Germany are by this will vested in interest as from the testator's death, and the appointment of the German consul is not made a condition precedent to that vesting; it is at most, a condition precedent to the paying of the funds to him for remitting to Germany.

In my opinion, this appeal must be allowed.

Appeal allowed. Judgment of Supreme Court varied by substituting for the word "void" in the declaration in answer to Questions (f) to (x) the word "valid." Case remitted to Supreme Court to make such further order as may be necessary accordingly. Costs of all parties as between solicitor and client to be paid out of the testator's estate.

Solicitor for the appellant, R. J. S. Barnett, official solicitor to appellant.

Solicitors for the respondents, Chambers, McNab & McNab; H. J. H. Henchman, Acting Crown Solicitor for Queensland; W.A. Douglas; R. McCowan.

[1] (1894) 3 Ch., 265.

[2] [1841] EngR 629; (1841) 4 Beav., 115; Cr. & Ph., 240.

[3] (1894) 2 Ch., 184; (1895) A.C. 186.

[4] [1838] EngR 864; (1837-8) 5 Cl. & Fin., 129.

[5] (1846) 2 Ph., 142.

[6] (1882) 21 Ch. D., 667.