Application by Elizabeth Marie Robinson

The late Alida Elzabe Haskins (“the testatrix”) died on 5 December 2012. Probate of her will dated 1 November 2012 was granted on 2 May 2013.

By her will the testatrix left a number of bequests. One of those bequests, and the gift of residue, were in the following terms:

Konrad Haskins (“Konrad”) and Ludwig Haskins (“Ludwig”) are the sons of the testatrix. Amelia Haskins (“Amelia”) is the daughter of Konrad by his first wife and Konrad was married a second time to Sandra Vandahl (“Sandy”) with whom he had no children.

Konrad died on 23 March 2014.

Amelia, for whom Mr L. Ellison SC appears, contends that Konrad died “before attaining a vested interest”. Sandy, for whom Mr A. Hill of Counsel appears, contends that Konrad attained a vested interest before he died. The executors, for whom Mr J. Mitchell of Counsel appears, support Amelia’s claim. Ludwig, who has been joined to the executors proceedings, does not regard this issue as of any concern to him and makes no submissions. There have been a number of disputes between the executors and Ludwig. Also Konrad brought a claim under s 59 of the Succession Act 2006 (NSW) which proceedings were terminated after his death. The dispute with Ludwig and Konrad’s Family Provision claim have prevented or delayed the calling in of assets and distribution and the matter was listed to deal with issues arising from the dispute with Ludwig as well as the dispute between Amelia and Sandy. The disputes between Ludwig and the estate have now been resolved.

The critical question is what is the meaning of the phrase “dies before attaining a vested interest”.

Mr Hill characterised the question as being whether the phrase means “vested in interest” or “vested in possession”.

There was no dispute concerning the Court’s approach to construction. Mr Ellison made reference to the second principle referred to by Isaacs J in Fell v Fell (1922) 31 CLR 268 from Leader v Duffey & Ray (1888) 13 App Cas 294 at page 301:

The undesirability of focusing on the determination of what particular words mean in other wills has been referred to: see Perpetual Trustee Co Ltd v Wright Re Will of James Paul Gee Cox Junior deceased (1987) 9 NSWLR 18 per Bryson J (as his Honour then was) cited by myself in Reilly v Gengos [2006] NSWSC 139. However where a rule law has affixed a certain determinate meaning to technical expressions

I will endeavour to summarise Mr Hill’s extensive submissions as:

Mr Mitchell and Mr Ellison pointed out that:

A number of cases to which Mr Hill referred such as Gibb-Maitland v Perpetual Executors Trustees and Agency Co (WA) Ltd (1947) 74 CLR 579, Browne v Moody [1936] AC 635 and Girardot & Anor v Perpetual Trustees Australia Ltd & Ors (BC 9802611) 12 June 1998 whilst being examples where the Court has found that a devise had vested (and may be treated as examples of the principle that the Courts lean towards the vesting of interests: see Hume v Perpetual Trustee (1939) 62 CLR 242 at 256 and Re Wrightson Battie – Wrightson v Thomas (1904) 2 Ch 95) are not cases dealing with the construction of the words “vest”, “vested” or “vesting”.

Cases referred to by Mr Hill in which the word “vest” or “vested” have been held to mean “vested in interest” are Marks v Trustees Executors and Agency Co Ltd (1948) 77 CLR 497, Re Richard Arnold's Estate (1863) 55 ER 329, Hume, Re Faulwasser (decd) [1967] VR 182, Austin v Wells and In Re Edmondson's Estate (1868) LR 5 Eq 389.

Cases referred to by Mr Mitchell and Mr Ellison in which the word “vest” or “vested” has been held to mean “vested in possession” are Greenhalgh v Bates [1870] 2 LR 47 at 50 per Lord Penzance LJ, In re Morris 688 at 690 and obiter in Arnott v Kiss [2014] NSWSC 1385. Reid v Wishart (1898) 16 NZLR 218 was also cited but it I do not think that it falls into this category or assists. However reference can be made to Young v Robertson (1862) 4 Macq. 314, King v Cullen (1848) 2 De G. & S. 252, Sillick v Booth (1842) 1 Y. & C.C. 121 at 126 and Re Morris (1857) 5 W.R 423 all cited in ‘Theobald on Wills’ (2010, 17th ed, Thomson Reuters) paragraph18-006, which passage is in the following terms:

In Marks the High Court considered the use of the word “vest” in the words of a testamentary trust which provided that if all of the children of any of the testator’s four children “shall die (1) before the part shall have become vested in him or her and (2) without leaving lawful issue” the trustees were to hold the share for the children and the issue of any deceased child or others of the testator's four children in equal shares. Williams J, with whom Latham CJ, Dixon and McTiernan JJ agreed (and Starke J as to result), said that:

There were reasons of congruity which led the Court in Marks to accept the construction advanced by the estate of Colin, the deceased grandson of the testator, that Colin’s interest had vested in Colin’s lifetime because Colin had reached the age of 21 and that it was not divested because Colin had died without lawful issue.

Reference was made to ‘Williams on Wills’ (2008, 9th ed, LexisNexis Butterworths):

Livingston was a case which concerned the question of whether the estate of a beneficiary of the New South Wales will of Mr Livingston was liable to pay Queensland succession duty on property owned by Mr Livingston in Queensland where the will of Mr Livingston had not been fully administered. The Queensland Commissioner of Stamp Duties claimed that the widow of Mr Livingston had succeeded to the Queensland property within the meaning of the Succession and Probate Duties Act 1892 (QLD). The Privy Council, agreeing with the decision of a majority of the High Court, rejected the appeal of the Commissioner and Viscount Radcliffe said at p 17:

Schultz concerned the question of whether a bequest of a property to a person went to the official receiver if the testatrix died at a time the beneficiary had become a bankrupt. The High Court held that the bankrupt had no legal or equitable interest in the property of the estate but rather a chose in action to have the estate administered which right was vested in the bankrupt and which encompassed not only the chose in action but all of the expected fruits of the chose in action. The Court (Mason CJ, Brennan, Deane, Dawson and Gaudron JJ) at p 312 commented on the nature of a beneficiary’s rights:

It needs to be borne in mind that s 61 of the Probate and Administration Act 1898 (NSW) (“the PAA”) provides that on death of a person and before probate is granted the assets of the deceased “vest” in the NSW Public Trustee. S 44 of the PAA provides that on the grant of probate (or administration) “all real and personal estate” passes to and becomes vested “in the executor to whom probate has been granted” (or the administrator).

I accept that the Courts lean toward finding that a gift or devise has vested rather than not: see ‘Williams’ above and Hume supra [12] but the question is what did the testatrix intend here.

In Beattie v Sainsbury [2003] NSWSC 499 Young CJ in Eq (as his Honour then was) held that the expression “vested interest” in that will was otiose: see [9] and [18].

In Austin v Wells the bequest was for the balance to be held on trust “for my niece… such balance to vest in my said niece upon her attaining the age of thirty (30) years”. White J said:

In Arnott v Kiss at [41]- [43] Hallen J said:

Each of the parties relied on parts of that Judgment. Mr Mitchell and Mr Ellison emphasised [43] since although obiter, Hallen J clearly recognised that the words “before attaining a vested interest” would evince a contrary intention. Mr Hill relied on [41] - [42] because his Honour accepted that there is a presumption that the testator intended the gift to be vested.

Mr Hill contends that “vest” is a technical term, meaning “vested in interest” and that it is not ambiguous but the fact that there are cases in which the word “vest” has been interpreted to mean vested in possession and cases in which it has been held to mean vested in interest demonstrates that the phrase is not a term of art mandating a conclusion favourable to one or other of Amelia or Sandy.

In ‘Williams on Wills’ at [50.16] there is the following statement of a rule of construction supported by authority:

The interpretation which was advanced on behalf of Sandy renders the words “dies before attaining a vested interest” as superfluous- since if they had been omitted Konrad would have obtained an unqualified interest. The words incorporated have a meaning and are not contrary to some intention plainly expressed elsewhere in the will and in my view require that the estate must have been administered to the point that the executors are ready (or ought to be ready) to distribute the relevant amount to Konrad. That was not possible before the time that Konrad died.

In respect of Mr Hill’s argument set out at [10](3) above, if an executor or administrator were to delay administration of the estate in order to avoid a distribution because he or she believed that the named beneficiary might expire before the date of distribution and hoped thereby to benefit the recipient of the interest who would take in such circumstances that would entail a dereliction of duty and could expose the executor to civil claims by the estate of the person who would have benefited had the estate been properly administered. I do not think the possibility of aberrant conduct of an executor can govern the meaning of the phrase.

There is, in the present case, no risk of partial intestacy because there is a gift over to Amelia. Nor is there any incongruity as would have been created by the will under consideration in Marks. This is not a case in which the words used involve a contingency such as “if X attains the age of 30” or “if X has lawful issue”. Rather it is the words “if Konrad dies before he attains a vested interest” that create the contingency.

There is nothing incongruous in a testatrix wishing to bestow upon her granddaughter a bequest that was intended to go to her son if by the time the estate is ready to be distributed the son has died. The practical consequences of that provision, so interpreted, is that the gift or legacy can go directly and immediately to the granddaughter without her having to await the administration of her father’s estate. The provisions of the PAA coupled with explanation of the true interest of a beneficiary assist in the conclusion that the testatrix understood that the interest which she intended to give to Konrad might not vest before his death even if he survived her.

I do not think that there is any scope for the operation of a presumption here because I am of the view the words “dies before attaining a vested interest” in the context of this will evince an intention that the bequests were not to take effect on the death of the testatrix. This is supported by the passage in ‘Theobold’ and the cases there cited to which I have referred in [14] particularly King v Cullen where at p 114 the Vice Chancellor said by the word “vested” in the phrase “before the part or share, so bequeathed to them as aforesaid, shall become a vested interest”:

If the provision had been to Konrad “if he shall survive me” then on the death of the testatrix, Konrad would be regarded as having a vested interest of which his estate would not be deprived on his death. The addition of the words “dies before attaining a vested interest” indicate that merely by surviving the testatrix he would not be treated as having a vested interest and that more was required, and recognise that, in accordance with Australian law a beneficiary does not have any interest in any particular asset or fund or money until the estate has been administered and the executors are ready to distribute.

In my view Konrad had not attained a vested interest within the meaning of the will in the $750,000 legacy or the share of residue as at the date of his death, and a declaration to that effect should be made.

The parties agreed (quite sensibly in my view) that whatever the outcome of the construction point the costs of both Sandy and Amelia should be paid out of the estate.