The Application of the NSW Trustee and Guardian; The Estate of Alice Maude Critchley

By its Summons dated 22 January 2020, the plaintiff, the NSW Trustee and Guardian, seeks the determination of questions arising under the will of the late Alice Maude Critchley. In support of the relief sought, the plaintiff relies upon the affidavit of Sevil Ozaras sworn 20 January 2020.

Alice Maude Critchley (the testator) died on 30 December 1967. She was survived by her eleven children. Probate of the testator’s will of 1 October 1964 (“the Will”) was granted to Leslie Reginald Critchley and David Dransfield on 9 May 1968. The plaintiff was appointed as trustee of the trusts created under the Will by deed dated 15 April 1992.

In the Will, the testator gave a right of residence in her property at Kirrawee (“the Kirrawee property”) and the income from her estate to two of her daughters, Dulcie Jean Critchley and Leonie Merle Turner (now referred to as Leonie Merle Brooks) during their lives. The Will consisted of only four clauses, which provided:

The Will does not gift over the residue of the estate following the deaths of Dulcie Jean Critchley and Leonie Merle Brooks, in the event that there were then no other surviving children of the testator.

Leonie Merle Brooks, remarried before 2002. From the date of her remarriage, in conformity with clause 3 of the Will, she in fact relinquished the use and enjoyment of the Kirrawee property and the income from the residue of the testator's estate.

In 2002, the plaintiff sold the Kirrawee property, in exercise of the power conferred in clause 1 of the Will. The proceeds of sale of the Kirrawee property were used to purchase a property at Clear Island Waters in Queensland (“the Queensland property”). The plaintiff placed excess funds from the sale of the Kirrawee property into a fund administered by the plaintiff. Dulcie Jean Critchley received the income from this fund and resided at the Queensland property until her death in 2017.

On 7 August 2003, seven of the testator's then surviving children and 12 of the testator’s grandchildren entered into a Deed of Family Arrangement (“the Deed”). The 12 grandchildren who became parties to the Deed were the children of three of the testator’s children who had survived the testator but had died before August 2003, namely Rhoda Alice Cameron, Barbara Esme Todd and Milbar Winifred Smith. These 12 grandchildren are not beneficiaries under the Will. The age of the grandchildren at the time of the Deed is unknown.

One child of the testator, Edward Peter Critchley, renounced his entitlement to the estate before the Deed was executed but he became a party to the Deed. Dulcie Jean Critchley was not a party to the Deed. The plaintiff was acting as trustee of the testator’s estate at the time of the Deed but was also not a party to it. The Deed appears to have been an initiative among the children and grandchildren of the testator.

The Deed recites that “the residuary beneficiaries have agreed to a distribution of the estate assets, which in their considered opinion creates a fair and equitable distribution of the estate”: Recital J. The operative part of the Deed made clear: that the Deed was dealing with the balance of the estate after any entitlement of Dulcie Jean Critchley; that the scheme of the Deed was that the children of any deceased children of the testator would take instead of their deceased parent; and, the Deed would be binding upon and enforceable by the executors of the parties to it. The Deed relevantly provided as follows:

Clauses 1.7, 1.8 and 1.9 of the Deed make similar provision to clauses 1.1 to 1.6 as to the distribution of a one ninth share but to each of the three groups of grandchildren of the testator, who at the time of the Deed were children of a deceased child of the testator. Then the Deed proceeded:

Dulcie Jean Critchley died on 19 December 2017. After the execution of the Deed and before the death of Dulcie Jean Critchley, five more children of the testator had died, namely Edward Peter Critchley, Leslie Reginald Critchley, Enid Daisy Anderson, Margaret Lola Spencer and Frederick Linley Critchley.

Thus in summary, of the testator’s 11 children, three had died before the Deed, another five died before the death of Dulcie Jean Critchley. When she died in December 2017, the last two surviving children of the testator were Leonie Merle Brooks and Ann Marie Dransfield.

Both Leonie Merle Brooks and Ann Marie Dransfield were parties to the Deed. They have requested of the plaintiff that the estate be administered in accordance with the terms of the Will, not the Deed.

As can be seen above, the Deed releases the plaintiff from claims that might be brought under the Family Provision Act 1982. But the plaintiff is not a party to the Deed, so the efficacy of such a release is doubtful. No evidence before the Court indicates that any party to the Deed sought to have it approved by the Court under the provisions of the Family Provision Act to attempt to make the releases, such as they were, binding.

Ann Marie Dransfield and Leonie Merle Brooks, the two surviving daughters of the testator, have been notified of these proceedings and this hearing and have expressed their wishes to the plaintiff. No other interested person has sought to be represented at the hearing. But the plaintiff has taken elaborate steps to notify all potentially interested persons of the present application and to make available to them the Summons, the supporting evidence and the plaintiff’s submissions. That being said, it may not yet be obvious to parties to the Deed or the legal personal representatives of the testator's children who died after execution of the Deed, that there may be an issue as to whether the Deed is enforceable against Ann Marie Dransfield and Leonie Merle Brooks. This issue is discussed later in these reasons.

In proceedings relating to an estate, all persons having a beneficial interest in or claim against the estate need not be parties but the plaintiff may make parties of such of those persons as the plaintiff thinks fit: Uniform Civil Procedure Rules 2005 (“UCPR”), r 7.12. Proceedings commenced by executors/administrators, like these proceedings, are properly constituted, notwithstanding all potentially interested persons not being joined. But to the extent that the beneficiary (and in this case also a party to the Deed) may wish to propound a contrary view, it is desirable for such persons to be served with initiating process, evidence and submissions to give them an opportunity to appear in the proceedings.

Where a person or class of persons may be interested in or affected by the proceedings, the Court may appoint one or more of those persons to represent one or more of them: UCPR, r 7.6. And once an order has been made in proceedings for representation of a class under UCPR, r 7.6, any judgment or order in the proceedings will bind all members of the class as if they had been parties to the proceedings. But whether or not a representative order is made under UCPR, r 7.6, UCPR, r 7.9 applies such that the judgment in these proceedings will bind the beneficiaries unless the Court determines that the representative does "not in fact represent some or all of the persons having a beneficial interest". UCPR, r 7.9 provides:

In this case all the children of the testator are deceased except for Ann Marie Dransfield and Leonie Merle Brooks, who are both likely to benefit from the construction of the Will that is propounded by the plaintiff.

But there are other persons who might have had an interest in propounding an alternative construction, or indeed seeking to enforce the Deed. As will be seen later, these proceedings do not concern enforcement of the Deed and the Court will later make directions to reveal whether that is a contentious issue.

But in relation to the construction of the Will, the plaintiff has served everyone who might reasonably be thought to have an interest in propounding a construction of the Will different to that of the plaintiff. But no one has sought to appear. The service on these persons that was effected by the plaintiff satisfied the Court that it should proceed to determine the matter on the basis the plaintiff represents all the beneficiaries who will be bound under the judgment under UCPR, r 7.9.

A brief summary of the extent of service upon these other potentially affected persons may be briefly stated. The Summons was filed on 22 January 2020. On 13 March 2020, Lindsay J made orders for the giving of written notice of the proceedings to Ann Marie Dransfield, Leonie Merle Brooks and these surviving parties to the Deed and any children of any deceased party to the Deed. On 9 April 2020, letters were sent to all those persons in conformity with Lindsay J's orders. The letters which were sent to all those persons included the following statement:

Correspondence was received from a number of persons in the class described in Lindsay J's orders. But none of them sought to appear or to oppose the construction proposed by the plaintiff.

On 24 August 2020, further directions were made by the Court to notify beneficiaries or persons who may be affected by the construction of the Will propounded by the plaintiff. Letters were sent out in compliance with those directions on 1 September 2020. The letters warned the parties that the matter would next be listed on 14 September 2020 and that they could attend by telephone link using the virtual courtroom because of restrictions associated with the COVID 19 pandemic.

In response to this correspondence, emails were received from a number of persons including Ms Fiona Dransfield, the daughter of Ann Marie Dransfield, and Ms Maureen Henbury. A number of persons who corresponded were informed of the hearing before myself on 16 November 2020.

The correspondence received from Ms Maureen Henbury indicated that she would not be attending the hearing or participating via video or audio-link but she said the following:

Ms Henbury's correspondence, the other correspondence, and the Court’s analysis of the issues has enabled the Court to reach the conclusion that it can proceed now to deal with the issues of the construction of the Will but that the Court should act on the basis that some interested persons may yet wish to put argument to the Court about the enforcement of the Deed. Later in these reasons the Court has made provision for that possibility.

The plaintiff submits that the Will does not expressly deal with whether or not the Queensland property may form part of the testator’s residuary estate before the death of Leonie Merle Brooks.

The plaintiff submits that the death of Dulcie Jean Critchley on 19 December 2017 arguably triggered the operation of clause 4 of the Will, in that by that point in time each of the testator’s two daughters who had been given a life interest had either died or remarried. But the plaintiff submits, on a literal reading of the Will, that the residue of the testator's estate described in clause 4 of the Will does not now include the Queensland property, because under clause 1 of the Will the Queensland property would only fall into residue upon “the death of both my daughters [named in clauses 1 and 2]”, which has not yet occurred.

The plaintiff elaborated its submission about proper construction of the Will:

The plaintiff’s submissions then refer to some caselaw in relation to the construction of class gifts: Austin & Anor v Wells & Ors [2008] NSWSC 1266, at [12] – [13]; Marks v Trustees Executors and Agency Co Ltd; (1948) 77 CLR 497, at 507; (1948) 22 ALJR 539; and In re Blackwell [1926] Ch 223, at 233-234; (1926) 95 LJ Ch 172.

Drawing upon those authorities, the plaintiff continued its submissions as follows:

The plaintiff submitted in conclusion that it follows from this reasoning that on the true construction of the Will and the events which have happened:

The Court’s analysis differs somewhat from the plaintiffs. But the Court comes to a similar conclusion to that propounded by the plaintiff.

Clauses 1 and 2 of the testator’s Will divide her estate into two parts to be held by her trustees. Clause 1 deals with the Kirrawee property, or another property that may be acquired with the proceeds of sale of the Kirrawee property. Clause 2 deals with “all the rest and residue of my estate”, that is, everything other than the Kirrawee property. Each of the trusts created by clauses 1 and 2 is governed by slightly different rules.

Clause 1 directs that the “house and land situated at Kirawee” is to be held in trust “to permit my daughters DULCIE JEAN CRITCHLEY and LEONIE MERLE TURNER to use and enjoy the same during their lifetimes” (emphasis added). The object of the trust so created is for either of the testators’s two named daughters with a life interest to use and enjoy the Kirrawee property during her lifetime. Clause 1 does not itself deprive either named daughter of the use of the Kirrawee property upon her remarriage.

Clause 2 directs that the estate other than the Kirrawee property be held on trust “to pay the income therefrom to my daughters, [with life interests under clause 1]”. Clause 2 places no limit on the duration of the payment of income to the daughters named in clause 1. So properly construed, the Will contemplates such payment would be made during their lives. Clause 2 does not itself deprive either such daughter of the clause 2 income upon her remarriage.

But clause 3 modifies the trust structure created by both clauses 1 and 2. Its introductory words, “NOTWITHSTANDING the foregoing”, signal that it operates to vary what might otherwise be the effect of clauses 1 and 2. And it does so by providing for the consequences of the remarriage of the daughters named in clauses 1 and 2. In the event of the remarriage of either such daughter, “the other daughter shall be entitled” to (a) “the exclusive use of the property at Kirrawee or such other property as may be acquired” and (b) “the income from the residue of my estate”. But this entitlement of the other daughter will only exist “until her death or remarriage.”

Leaving aside the operation of clause 4, clause 3 operates upon her remarriage to disentitle a daughter named in clauses 1 and 2 from a right of occupation of the Kirrawee property, and from the income of the residue of the estate. Assume that both the daughters with a life interest were to remarry, one before the other, when the second daughter remarried, clause 3 directs that “the other daughter shall be entitled” to the Kirrawee property and to the clause 2 income “until her death or remarriage”. But on the assumption that the first daughter had previously remarried, clause 3 had already caused her to lose any entitlements under both clause 1 and clause 2. In those circumstances, clause 3 would confer no entitlement to a clause 1 right of occupation or clause 2 income on either daughter. So upon the second daughter’s remarriage, clause 3 would itself operate to bring to an end the life interests created for both daughters under clauses 1 and 2.

The same result would follow, as has indeed now occurred, where the remarriage of one named daughter is followed by the death of the other. The operation of clause 3 means that when Leonie Merle Brooks remarried, she was disentitled from participating in future benefits under clauses 1 and 2. When Dulcie Jean Critchley died, clause 3 had already removed any entitlement of the “other daughter”, Leonie Merle Brooks, from any clause 1 or clause 2 benefits. Properly construed, clause 3 could not operate to revive or permit any clause 1 or clause 2 benefits for Leonie Merle Brooks.

But clause 3’s collapsing of the life interests conferred by clauses 1 and 2 meant that the Will needed to make provision for the immediate distribution of the residue of the estate. Clause 4 of the Will does this. It operates in the event of “the death or remarriage of both my said daughters”. It operates consistently with clause 3, modifying clauses 1 and 2. And its proper construction reinforces the Court’s analysis of the construction of clause 3. Once each daughter with a life interest under clauses 1 and 2 was either dead or remarried, the Will authorised the trustee “to divide the residue of my estate among my surviving children equally”.

That equal distribution is to be made “among my surviving children”. The “surviving children” are stated to be the objects of the clause 4 distribution; the strong inference is that those objects are the children who survive at the moment of distribution. The Will contains no indication that survivorship is to be determined at any date other than the date of distribution under clause 4. A number of other dates of survival, before the date of distribution, can be postulated. But if any of these earlier dates were intended, it is to be expected that the Will would include a provision which would indicate to whom the estate should be distributed in the event of the death of those children who earlier qualified as “surviving children” before the required time for distribution. No such provision exists in the Will, further strengthening the Court’s analysis that “surviving children” in clause 4 speaks at the moment of distribution under clause 4.

This construction is not in tension with clause 1 of the Will, which defers the Queensland property falling into residue until the death of both daughters given a life interest. The Queensland property is part of the residue for clause 4 distribution, because clause 3 and 4 modify the operation of clause 1.

The Court’s analysis means that in the events which have happened the Queensland property is no longer held on the trust created by clause 1 of the Will and the other monies held by the trustee are no longer held on the trust created by clause 2 of the Will. They have now all fallen into residue. The plaintiff can sell the Queensland property and distribute its proceeds, together with the other residue of the estate under clause 4 of the Will, to Leonie Merle Brooks and Ann Marie Dransfield.

There is reason to pause before the estate is distributed. Questions potentially raised by the Deed, which may alter the ultimate distribution of the estate, have not yet been the subject of any contest among the beneficiaries. The Court is satisfied that the plaintiff has notified all the parties to the Deed of these proceedings, and none has yet sought to intervene. But the Court can foresee that there may yet be a contest as to whether Ann Marie Dransfield and Leonie Merle Brooks may be required to distribute the estate in accordance with the Deed rather than under the Will. Because the Court foresees that this is at least a possibility, it is better that the Court provide for such a potential contest in an orderly way rather than the issue emerging without prior warning shortly before the distribution of the estate.

If the testator’s estate is administered in accordance with the Will, these reasons indicate the plaintiff should distribute half of the estate to each of Ann Marie Dransfield and Leonie Merle Brooks. But if the Deed is successfully enforced by other parties to the Deed against Ann Marie Drensfield and Leonie Merle Brooks, then the half share of the distributable estate of each of Ann Marie Dransfield and Leonie Merle Brooks could be reduced to one ninth of the distributable estate.

The question of the enforceability of the Deed against Ann Marie Dransfield and Leonie Merle Brooks has not been argued before the Court in this application. But it may be helpful to the parties if the Court identifies some of the issues that may have to be considered if a party seeks to enforce the Deed against Ann Marie Dransfield or Leonie Merle Brooks.

Ms Glover has correctly pointed out that the plaintiff is not a party to the Deed. But despite that, there are indications in the Deed that it may be enforceable by or against the plaintiff. By clause 3 of the Deed, “each party hereto releases the trustee from and against all claims over or in relation to the estate”. Clause 5 of the Deed allows its provisions to be pleaded in bar in respect of proceedings commenced in respect of the estate of the testator, “whether under the said Family Provision Act 1982 (NSW) or otherwise”. Any proceeding under the Family Provision Act would be commenced against the plaintiff, so implicitly clause 5 also is for the advantage of the plaintiff.

The doctrine of privity in the law of deeds is clear that a party cannot enforce a deed unless he or she is named as a party to it: Accordent Pty Ltd and Portellos v Bresimark Nominees Pty Ltd (2008) 101 SASR 286; [2008] SASC 196 (“Accordent”) at [66] - [67] (Doyle CJ, Duggan and Anderson JJ concurring). But the plaintiff is not named as a party to the Deed and ordinarily a non-party cannot enforce the deed unless the deed establishes a third party as a beneficiary under a trust: Beswick v Beswick [1968] AC 58 at 102-107; [1967] 2 All ER 1197.

But if the Deed can be construed as a deed poll, it may be able to be enforced by a person who is sufficiently identified as a beneficiary, even though that person is not a named party to the Deed. Whether a deed is a deed poll or not is to be decided as a matter of substance not form, and merely because a deed is for some purposes a deed inter partes, does not mean that it cannot also be for other purposes a deed poll: Accordent; Nicholas Seddon, Seddon on Deeds (2015, The Federation Press) at [6.9]; and see also Moody & Anor v Condor Insurance Ltd & Anor [2006] 1 WLR 1847 at [15].

But the question of whether the plaintiff can enforce the Deed and whether the Deed can be enforced against the plaintiff not only governs the estate when it is in the plaintiff’s hands. An interesting question may arise if the estate is being distributed to Ann Marie Dransfield and Leonie Merle Brooks: can the other parties to the Deed enforce the Deed against these two beneficiaries to require the share of the estate that they each receive to be redistributed to the wider class of beneficiaries under the Deed. It seems at least arguable that Ann Marie Dransfield and Leonie Merle Brooks have agreed with the other parties to the Deed that “the balance of the monies remaining in the estate” will “be divided” in accordance with the detailed provisions of the Deed. Once the balance of the monies of the estate is put in to their hands, they may have to respond to an action attempting to enforce the Deed against them. They may have a number of defences to such a claim.

But for present purposes, the plaintiff should notify the result of these proceedings, through these reasons for decision, to all the parties to the Deed so they have a fair opportunity to take advice before the final distribution to Ann Marie Dransfield and Leonie Merle Brooks takes place. The plaintiff has provided the Court with a full list of the persons who may have an interest in seeking to enforce the Deed, which has become Exhibit A. So the Court will require the plaintiff to serve those persons listed in Exhibit A with a copy of these reasons. And the Court will stay the plaintiff’s distribution of the estate until all those persons have been served and a further period has passed.

To allow this to be dealt with in an orderly way, the Court will not make final orders in these proceedings until it is clear that such notification has taken place and it is clear that the plaintiff has not heard from any parties to the Deed or persons who may be interested in enforcing it. If a party to the Deed indicates that he or she does wish to enforce it, this may be a case where, in the interests of preserving the estate for the benefit of all, the Court should order a mediation.

For these reasons the Court will answer the questions asked and make the following declarations: