Practitioners construing wills containing the word 'vested' should look primarily to the context of the particular will rather than applying any rigid presumption, and should consider whether preceding trusts prescribing contingencies for vesting illuminate the intended meaning.
Later decisions that cite Marks v Trustees Executors & Agency Co Ltd
MARKS v. TRUSTEES EXECUTORS AND AGENCY CO. LTD. [1948] HCA 38; (1948) 77 CLR 497
Will
High Court of Australia
Latham C.J.(1), Starke(2), Dixon(3), McTiernan(4) and Williams(5) JJ.
CATCHWORDS
Will - Construction - "Vested" - Vested in interest - Vested in possession.
HEARING
Melbourne, 1948, October 20, 21;DECISION
December 6.STARKE J. Since the order made by Fullagar J. on the originating summons in this case the survivor of "the said four persons" mentioned in the will - Elizabeth Leveson, a daughter of the testator - has died. And there is some confusion in the reasons for judgment between "the said four persons" - the children of the testator and the children of those persons - the grandchildren of the testator. But the reasons are just as effective if the appropriate substitutions are made. (at p504)
2. In my opinion the learned judge rightly construed the terms of the will in question here. I agree with his reasoning and can add nothing useful to what he has said. (at p504)
3. The appeal should be dismissed. (at p504)
DIXON J. I have had the advantage of reading the reasons of Williams J. and I agree in them. (at p504)
McTIERNAN J. In this case I agree that Fullagar J. correctly interpreted the word "vested" in the clause, the subject of controversy, to mean "vested in interest." I have read the reasons of my brother Williams for interpreting the word "vested" in this way. I agree with them and think it is not necessary to add anything. (at p504)
2. The appeal should be dismissed. (at p504)
WILLIAMS J. The question that arises for decision on this appeal is whether the learned judge below was right in declaring that the one-fifth part or share in the Property Trust Fund referred to in the will of Lawrence Benjamin, deceased, and therein directed to be held upon trust for the children of Lawrence Abraham Benjamin vested absolutely and indefeasibly in Colin Bentley. Colin Bentley, who died on 14th December 1945 over the age of twenty-one years without having had issue, was the only child of L. A. Benjamin the son of the testator who died on 26th December 1932, having changed his surname from Benjamin to Bentley. Under the trusts of the will of the testator L. A. Bentley had a special power of appointment over the corpus of this one-fifth part amongst one or more of his children by deed or will which he purported to exercise by his will. But it was not an effective exercise, so that we are solely concerned with the trusts in default of appointment. These trusts operate from the date of an event which has happened pending the appeal, namely the death of the last survivor of the four of the children of the testator (including L. A. Bentley) who were interested in the income of the fund. (at p505)
2. The first trust is a trust of the corpus of the one-fifth part for the child or children of L. A. Bentley who being sons or a son shall attain the age of twenty-one years or being daughters or a daughter shall attain that age or marry and if more than one as tenants in common in equal shares. This is a contingent gift to a child or class of children which vests in interest in the child or children who being a son or sons attain twenty-one or being a daughter or daughters attain that age or marry. Under this trust Colin Bentley, as the sole child of L. A. Bentley, acquired a vested interest in default of appointment in the whole of the one-fifth part of the fund in question when he attained twenty-one. (at p505)
3. There are three subsequent trusts of the corpus of the fund relating to all the settled parts which I shall call the second, third and fourth trusts. The second trust relates to the death of a child of a child of the testator under the age of twenty-one leaving lawful issue. It appears to be directed to providing for the children of a grandchild who married and died under twenty-one on the assumption that such a grandchild would not have acquired a vested interest under the first trust. This assumption would be correct in the case of a grandson, but would not be correct in the case of a granddaughter. It is therefore an independent gift to the children of a grandson, but would divest and be substituted for the interest of a granddaughter under the first trust who had married but died under twenty-one leaving children. But this circumstance does not throw any light upon the meaning of the third trust, which is the trust with which we are mainly concerned on this appeal. (at p505)
4. The third trust takes effect if all the children of a child of the testator interested in a settled part of the fund shall die (1) before the part shall have become vested in him or her and (2) without leaving lawful issue. It was submitted for the appellant that the words "vested in him or her" mean vested in possession or in other words payable to him or her. It was therefore contended that the trust operated although a child or children of a child of the testator attained twenty-one if male or attained twenty-one or married if female, if that grandchild or all those grandchildren subsequently died prior to the death of the last survivor of the four children of the testator, that is prior to the period of the distribution of the corpus, without leaving lawful issue. (at p505)
5. If this submission is correct, the interest which vested in Colin Bentley on his attaining twenty-one would have been divested when he died without leaving lawful issue on 14th December 1945. Then the capricious result would ensue that interests which vested in the child or children of a child of the testator at twenty-one or on marriage under the first trust in a part of the fund would be divested if that grandchild or all those grandchildren died before the period of distribution without leaving issue, whereas the interests which vested in a great grandchild or great grandchildren under the second trust would not be divested although that great grandchild or all those great grandchildren died before such period. The further capricious result would ensue that where more than one grandchild attained a vested interest in a part of the fund, the share of each grandchild would be divested if all those grandchildren died before such period without leaving lawful issue, but if one of those grandchildren died after such period without leaving lawful issue or before such period but leaving lawful issue, then there would be no divesting of the interests of any of the grandchildren although the others died before the last survivor of the children of the testator without leaving lawful issue. (at p506)
6. When the three trusts are read as a whole, it appears to me to be clear that the words "vested in him or her" are intended to refer to the failure of the first trust because a particular part of the fund had not vested in interest in one or more of the children of a child of the testator for the reason that no son of that child had attained twenty-one or daughter of that child had attained twenty-one or married. It appears to me to be equally clear that the words "and without leaving lawful issue" are intended to refer to the failure of the second trust in consequence of the death of all the children of a child of the testator under the age of twenty-one without any of these grandchildren leaving lawful issue, it being overlooked that granddaughters would attain a vested interest on marriage under twenty-one. The third trust would then only operate upon the complete failure of the two preceding trusts because no beneficiary had acquired a vested interest thereunder. (at p506)
7. This is, I think, the true meaning of the third trust. The learned judge below and counsel for the appellant on this appeal construed the second and third trusts as gifts over, that is as divesting gifts which had previously vested in interest. But, in my opinion, except to the limited extent in the case of the second trust already mentioned, neither of these trusts operates to divest a previously vested interest. The third trust is not a gift over. It is an independent gift intended to operate and fill the complete hiatus in a particular part which is left where no interest vests under the two preceding trusts and provide for the destination of the particular part in that event and prevent it lapsing and falling into residue. (at p507)
8. Several authorities were cited on the question whether vested means prima facie vested in interest or vested in possession. In particular the case of Young v. Robertson (1862) 4 Macq 314 , was relied upon by the appellant. There a testator gave the residue of his estate subject to a life interest vested in his wife to his six grandnephews and grandnieces in equal shares and to their respective heirs and assigns declaring that "if any of said residuary legatees shall die without leaving lawful issue before his or her share vest in the party or parties so deceasing, the same shall belong to, and be divided equally, or share and share alike, among the survivors of my said grandnephews and grandnieces equally" (1862) 4 Macq, at p 315 . The House of Lords applied the rule of construction that words of survivorship in a will should prima facie be referred to the period appointed by the will for the payment or distribution of the subject matter of the gift and held that in the context of that will "vested" meant "vested in possession," so that only those grandnephews and grandnieces who survived the widow acquired indefeasibly vested interests in the residue. But there was no provision in that will, as there is in the present will, making the vesting of the affected interests contingent on the happening of any prescribed event, and the House of Lords was faced with the choice between holding that the testator intended that the gift over should operate only to divest the interests of those grandnephews and grandnieces who predeceased the testator, which was unlikely, or that he intended that the gift over should operate to divest the interests of those grandnephews and grandnieces who died before the period of distribution which was most probable. (at p507)
9. The weight of authority would appear to favour the view that in English law vesting means prima facie vesting in interest. But it is unnecessary to examine the authorities because the answer must in every case depend primarily on the context of the particular will. In the present will the word first appears in the third trust which follows two trusts prescribing contingencies upon the happening of which interests are to vest. The context of the will itself therefore gives a meaning to the word and indicates that it is intended to mean vested in interest. If the word is given this meaning the three trusts fit into each other, and operate as a consistent whole. (at p507)
10. If the third trust comes into operation in respect of a particular part, the class which benefits is "the children and the issue of any deceased child of the other or others of the four children in equal shares, but so that such issue shall only take the share which his, her or their parent would have taken and if more than one in equal shares." It is not necessary to express a final opinion on the meaning of this provision. But counsel for the appellant submitted that it was a gift to the grandchildren alive at the period of distribution and the issue of those who were then dead and that it was therefore equivalent to a gift to survivors. The words "would have taken" probably mean "would have taken if then living", and this indicates that it is a gift to the children of the other three children of the testator who outlive the period of distribution either in person or by their stirps, but the fact that the composition of this class is contingent on its members stirpitally surviving the period of distribution does not appear to throw any light on the question whether the testator intended that the grandchildren who were intended primarily to share in the part should have to survive the double contingency of attaining twenty-one if male or attaining twenty-one or marrying if female and outliving the period of distribution or leaving lawful issue. (at p508)
11. Counsel for the appellant even attempted to make the exercise of the power of appointment by a child of the testator over a part in favour of his children subject to the operation of the second and third trusts. But the power is clearly a power to appoint the whole part among one or more of his or her children - that is to say to create a new set of trusts in favour of these grandchildren which are completely to replace the trusts in default of appointment. The donee of the power could appoint the whole share to one child absolutely and indefeasibly at birth and none of the trusts in default of appointment could then have any operation. The will does not therefore, as it was contended, exhibit any general intention that the whole fund should be kept in the family in the sense that only those grandchildren and remoter issue who were alive at the period of distribution could acquire indefeasibly vested interests. But it does exhibit an intention that the children of each of the four children of the testator and their issue should in the first instance enjoy the part appropriated to them, their parent being given a power to appoint the whole of that part to one or more of such grandchildren exclusively, and that in default of appointment or so far as the appointment if made should not extend these grandchildren and their issue should take the whole of the part in accordance with the first and second trusts. (at p508)
12. It is only if there are no children of a child of the testator, or if there is a child or children he or she or they all die if male under twenty-one without leaving lawful issue or if female under twenty-one and unmarried, that the particular share becomes divisible among the children and issue of the other children of the testator. (at p509)
13. The fourth trust operates in the event of none of the four children "leaving children or upon the total failure of the said trusts," and provides that the fund is then to sink into and form part of the residuary personal estate. It is again unnecessary to express a final opinion on the meaning of this trust. On a literal construction residue benefits if either none of the four children of the testator leaves children that is has children who survive him or her or upon the total failure of the trusts of the fund. But there can only be a total failure of the trusts of the fund if none of the four children has a child who if male attains twenty-one or dies under twenty-one leaving lawful issue or if female attains twenty-one or marries. The words "upon the total failure of the said trusts" would therefore appear to be explanatory of the preceding expression and should perhaps be introduced by the words "or in other words", and to indicate that the reference to the event of none of the four children of the testator leaving children is a compendious way of describing a complete failure by each stirps to acquire a vested interest under the preceding trusts. But it could not be said that the first trust failed if a grandchild attained a vested interest thereunder. (at p509)
14. For these reasons I am of opinion that his Honour's declaration was right and that the one-fifth part of the Property Trust Fund directed to be held upon trust for the children of Lawrence Abraham Benjamin vested absolutely and indefeasibly in Colin Bentley deceased. His Honour ordered that the costs of all parties as between solicitor and client should be paid out of the Property Trust Fund. It was contended that his Honour should have ordered the costs to be paid out of residue or alternatively out of the one-fifth part of the fund in dispute. The residue of the estate still remains in the hands of the trustees of the will, and it is usual, in the absence of a special statutory provision like that which appears in the Trustee Act 1925-1942 (N.S.W.), s. 93 (3), although the only question which arises for determination is the interpretation of the trusts affecting some part of the estate other than residue, to order that the costs be paid out of residue. His Honour's order was therefore unusual. But an order for costs is in the discretion of the primary judge. The questions at issue were questions in which no one but the beneficiaries under the trusts of the fund were interested. All these beneficiaries were interested, so that there was ample justification for his Honour ordering the costs to come out of the fund as a whole, if it was proper that the fund and not residue should bear the costs. In the particular circumstances of the case, I think that the order relieving residue was justified and should not be upset. (at p510)
15. For these reasons I would dismiss the appeal. The appellant should pay the cost of the respondents of the appeal. (at p510)
ORDER
Appeal dismissed. Appellant to pay respondents' costs of appeal.