Clarke, Re [1999] QDC 29

IN THE DISTRICT COURT HELD AT BRISBANE QUEENSLAND [Before Boyce DCJ] No 1728 of 1998 IN THE MATTER OF THE DISTRICT COURT ACT S.68 AND IN THE MATTER OF THE TRUSTS ACT 1973 AND IN THE MATTER OF CHRISTINA CLARKE TRUST DECEASED JUDGMENT Judgment delivered: 19 February 1999 Catchwords: Trust - real property - words of limitation - in fee simple - equitable life estate - intention of grantor - use of word “absolutely”. Counsel: B.W. Nickel - applicant T.C. Whitney - solicitor for D.E.I. Thompson H.D. Clarke in person Solicitors: Solicitor for Public Trustee / McCullough Robertson Hearing Date(s): 20 January & 19 February 1999 -- 1 of 16 -- IN THE DISTRICT COURT HELD AT BRISBANE QUEENSLAND No 1728 of 1998 IN THE MATTER OF THE DISTRICT COURT ACT S.68 AND IN THE MATTER OF THE TRUSTS ACT 1973 AND IN THE MATTER OF CHRISTINA CLARKE TRUST DECEASED REASONS FOR JUDGMENT - BOYCE D.C.J. Delivered the 19th day of February, 1999 This is an application for the advice and opinion of the Court in relation to the construction of a deed of trust dated 18th August 1948. (hereinafter called “the deed of trust”). The matter was originally brought in the Supreme Court but was remitted to this Court. The matter comes before the Court by way of a summons brought by the Public Trustee of Queensland as trustee of the Christina Clarke Trust. The summons seeks: 1. An order for the proper construction of the trust deed. 2. Directions as to the persons to whom the applicant as the trustee of the Christina Clarke Trust should distribute the property. 3. An order that the costs of all parties of and incidental to the application should be taxed as between solicitor and own client and paid out of the estate. -- 2 of 16 -- 3 A chronology of this matter appears in Exhibit 2 which appears as Appendix 2 to these reasons for judgment. Appendix 1 to these reasons is a family tree showing the various relatives. On 16th January 1947, Robert Herbert Clarke signed his last will leaving his residence at Millwood Street, Rainworth, Brisbane (hereinafter called “the subject land”) to his second wife, Christina Clarke. The subject land was held under the provisions of the Real Property Act 1861 and is described as Lot 30 on registered plan 56850, County of Stanley, Parish of Enoggera being the land contained in Certificate of Title Volume 2121 folio 162. On 24th January 1947, Robert Herbert Clarke died. His executors and trustees were his wife Christina Clarke and one of his sons by his first marriage, Herbert Douglas Clarke. Ultimately the deed of trust dated 18th August 1948 was signed to resolve claims against the estate. The deed of trust was signed by Christina Clarke as settlor of the one part and the children of Robert Herbert Clarke by his first marriage (as trustees) of the other part namely John Robert Clarke, Herbert Douglas Clarke, Mabel Beatrice Milliken and Doris Ina Williams. The Terms of the Trust Deed I turn now to the terms of the trust deed. -- 3 of 16 -- 4 Under the terms of the trust deed Christina Clarke (as settlor) “surrendered and conveyed” a piano and the subject land to John Robert Clarke, Herbert Douglas Clarke, Mabel Beatrice Milliken and Doris Ina Williams as trustees as follows: “For the use and upon trust to pay the income therefrom to the settlor for her life and upon her death: (a) Upon trust as to the said piano for the said Herbert Douglas Clarke for his own use and benefit absolutely. (b) Upon trust as to the said lands together with the improvements thereon for the trustees or the survivors of them absolutely in equal shares as tenants in common absolutely in equal (sic)” There seems to have been an error in the typing of the deed. The clause finishes “absolutely in equal” Presumably the word “shares” was omitted in the typing of the document after the words “in equal”. It is not necessary to speculate further. Subsequent Events On 17th February 1960, Christina Clarke signed her last will appointing Duncan Edward Ian Thompson her executor and trustee. On 13th August 1962, Christina Clarke died and probate of her will was obtained by Mr Thompson. Christina Clarke was pre-deceased by John Robert Clarke and Doris Ina Williams. There were therefore two surviving trustees under the deed of trust namely Herbert Douglas Clarke and Mabel Beatrice Milliken. The two surviving trustees and the former executor/trustee Mr Thompson are respondents to the summons. -- 4 of 16 -- 5 The solicitors for the executor/trustee Mr Thompson in August 1963 obtained an opinion from counsel as to the construction of the deed of trust. Counsel suggested the drafting of the trust deed was defective. In October 1963 each of the six beneficiaries in the estate of Christina Clarke signed and delivered a letter to Mr Thompson purporting to surrender their entitlement to the residuary estate of Christina Clarke in so far as the subject dwelling house was concerned. These letters referred to each beneficiary being agreeable to a “surrender” of their interest. Each letter was in an identical form. Most unfortunately each of these letters was drafted in an incompetent fashion. None of the six letters said to whom the interest was being surrendered. In 1968 a further opinion was obtained by another firm of solicitors from a second counsel and a copy provided to the solicitors acting for the executor/trustee. In December 1970 the personal representative of the estate of one of the six beneficiaries resiled from the surrender previously given. In February 1972 an opinion was obtained from a third counsel by the solicitors acting for the executor/trustee, Mr Thompson. That opinion noted, inter alia, that it would not be safe to act on the letters of consent from the beneficiaries since the letters did not say to whom the interest should be surrendered. -- 5 of 16 -- 6 Ultimately Mr Thompson in September 1994 became registered as proprietor of the subject land pursuant to s.16(2)(b) of the Trusts Act 1973. In December 1994 Mr Thompson retired as trustee and the Public Trustee accepted the trusteeship. Some 31 years after the death of Christina Clarke the executor/trustee had, at the time of his retirement, still not completed the administration of the estate. It is truly remarkable that no application was ever made by the executor/trustee for the advice and opinion of the Court. Such advice and opinion is readily given to trustees and the application would have been a simple one. Subsequently the Public Trustee in 1998 brought the present application for advice and directions in the Supreme Court. The matter was ultimately remitted to the District Court. There were undoubtedly difficulties in the administration of the estate of Christina Clarke deceased. However I must observe that there was a extraordinary delay of over 30 years on the part of the executor/trustee Mr Thompson in dealing with the administration of the estate. I note that one of the surviving trustees Herbert Douglas Clarke is now 83 years old. Construction of the Trust Deed If the question were simply what was the intention of the parties as shown by the deed of trust one might have little difficulty in concluding that it was the intention of the settlor that, after the death of Christina Clarke, the trustees were to be the owners of the fee simple in possession. Unfortunately the law in Queensland prior to 4th December 1952 was highly technical. -- 6 of 16 -- 7 An estate in fee simple in land may exist at law or in equity. To convey an estate in fee simple at common law by a conveyance inter vivos it was necessary to say “I give this land to A and to his heirs”. At common law a conveyance inter vivos expressed in these words “I give Blackacre to A in fee simple” had the effect of conveying to A an estate for life only in Blackacre. The words “and his heirs” were words of limitation and marked out the type of estate which was to be taken. On the other hand, words of purchase set out the person who was to take the estate. Further, so far as words of limitation were concerned, equity followed the law. A limitation of an equitable estate perfected and declared by the settlor was construed to pass the same estate as would be created and passed by a similar limitation of a legal estate. See Re Bennett, deceased, The Union Company of Australia Ltd v Bennett (1951) SRQ 202 at 212 - 213. Sexton v Horton (1926) 38 CLR 240. It is clearly arguable that a possible result of the omission of the words “and his heirs” in the trust deed is that upon the death of Christina Clarke the trustees would receive a life interest only. However there is persuasive authority that the use of the word “absolutely” results in an effective conveyance of the fee simple in equity to the trustees notwithstanding the omission of the words “and his heirs”. In Sexton v Horton (supra) the High Court had to consider a deed of settlement made in New South Wales in 1865. -- 7 of 16 -- 8 Pursuant to the deed the settlor granted certain land to A and his heirs to have and to hold unto and to the use of A and his heirs during the life of the settlor’s wife in trust to allow her and her assigns to hold the same for her separate use without impeachment of waste, and from and immediately after her decease to the use of the eldest son of the settlor and his wife living at the time of her death, and in the event of there being no such son then to the use of the wife her heirs and assigns forever. The High Court held that according to the technical rules of law the settlement conferred upon the eldest son an estate for life only and not a fee simple in equity. The Court considered it was not entitled to consider the intention of the settlor as gathered from other parts of the instrument. The High Court followed the decision of the English Court of Appeal in Re Bostock’s settlement (1921) 2 Ch 469, and overruled the earlier decision of the High Court in Hunt v Korn (1917) 24 CLR 1. In their joint judgment at pages 243 - 244 Knox CJ and Starke J observed: “The limitation to the use of William Arthur Evans jun is perfected and declared by the settlement and is in technical terms. In Bostock’s case the Court of Appeal held in such circumstances that the construction of the document did not depend upon intention gathered from other parts of the instrument, but was governed by a rule of law operative in equity no less than at law. “According to technical rules a limitation to A and his heirs to the use of or in trust for B confers on B a legal estate for life only. Where...an equitable estate is dealt with it must...confer on B an equitable estate for life only, and the Court is not...entitled to regard an intention gathered from the terms of other parts of the instrument”. At common law the word “heirs” was necessary for the limitation of a fee simple to a natural person (Challis’ Law of Real Property, 2nd Ed, at pp194-196). It follows from the decision of Bostock that an estate in fee simple in equity was not limited to William Arthur Evans jun., but only a life estate...” -- 8 of 16 -- 9 And at p245: “Bostock’s case dealt with a limitation in trust which was perfected and declared in technical terms by the settlor. We act upon the rule laid down for that type of case and express no opinion upon any other case (cf. Bostock’s case, per Younger LJ).” (My underlining). I note that in the deed being construed by the High Court the word “absolutely” was not used. At p247 Isaac J observed: “To state affirmatively my reason for departing from Hunt v Korn, it is this: “There were no words formal or informal by way of limitation, and their place could not be supplied, as it was then thought it could, by the general intent of the document.” In other words, and quoting with reference to the relevant trust the language of Rommily MR in Lucas v Brandreth [No.2], “There is in it an entire absence of any words of limitation or anything importing an estate of inheritance.” For instance, there are no words referential to an absolute interest either in the same instrument (Garde v Garde) or in another instrument (Pugh v Drew); nor words making it clear that there was to pass all interest of the grantor holding in fee simple the lands conveyed (Re Hudson; Kuhne v Hudson). In both such cases words, however informal, would suffice; and this not merely on the authority of the cases quoted, but also on the authority of Buckley J in Re Irwin; Irwin v Parkes, and Younger LJ in Bostock’s case - “either executory trusts or dispositions of equitable interests in an informal manner, in both of which cases effect was given to sufficient expressions of intention.” Now, while it is quite true that technical words where used must receive the same construction with respect to equitable estates as with respect to legal estates, and while it is equally true that, at all events as a general rule, equitable limitations by way of trust executed have the same construction as legal limitations, yet the effect of informal words expressing the intention to create in fact the same limitations as would be created by technical words, cannot be ignored according to the undoubted authorities cited. It may have to be determined whether the informal expressions referred to are to be treated as exceptions while still retaining for the instrument which they are found the full character of executed trust, or whether, as considered by Warrington LJ, such a case as Pugh v Drew is the only declaration of trust or executory, and similarly as to the second case postulated by Buckley J in Irwin’s case. But whether one doctrine or the other be maintained is comparatively immaterial - so long as the intention of the settlor or grantor is effectuated. In either case it is a mere matter of words. So long as the Court gives effect to words, not words of limitation, but “that express that the grantee is to have all the estate and interest that the grantor had” -- 9 of 16 -- 10 (per Buckley J) lawyers may harmlessly and without practical injury to those really interested, differ as to the appropriate technical label to attach to the occasion.” In Re Bennett (supra) the Queensland Full Court applied Sexton v Horton (supra) to a nomination of trustees where the word “heirs” had been omitted. The result was that a life estate only was created. I note that in the nomination of trustees considered in Re Bennett (supra) the word “absolutely” was not used. In delivering the judgment of the court Macrossan CJ at p214 observed: “Now it is trite law that...the common law of England would have given to a conveyance expressed in these words “I give Blackacre to A, in fee simple” the precise affect of conveying to A an estate for life only in Blackacre. As to this it is only necessary to refer to elementary text books on Real Property law published before 1881. In an Elementary Compendium of the law of Real Property, W.H. Burton, published in 1866, the law is stated thus at p.6: The words necessary for effecting a transfer of the fee simple may be reduced to this short form - I give this land to you and to your heirs - The words “heirs” is so absolutely necessary for the purpose that no other expression would serve, thus, if it were, - I give this land to you - or - to you for ever - or even - to you in fee simple - the feoffee would take only an estate for his life.” Re Bennett was applied by Townley J in Re Pierce (1954) QWN 14. The word “heirs” was omitted. Townley J decided that in the circumstances the particular nomination of trustees created a life estate only. In that case the word “absolutely” was not used. A similar view was taken in Re Austin’s settlement (1960) VR 532 and Perpetual Trustee Co v Griffin (1962) 80 WN NSW 266. In neither of these cases was the word “absolutely” used. -- 10 of 16 -- 11 In Re Austin’s Settlement (supra) Dean J commented inter alia on Re Bennett (supra) as follows at page 534: “I take these grounds in order. (1) The argument based upon the Real Property Act 1990 (N.S.W.) will first be considered. It is true that the property settled included freehold land in New South Wales which was subject to the Act. The Act provides for the transfer of a legal estate in fee simple in land under the Act by means of a signed transfer without words of inheritances followed by registration of such transfer in accordance with the Act. It was contended that as the legal estate in fee simple could be transferred without words of inheritance, the equitable estate could likewise be so transferred, because equity follows the law. In Carroll v Chew (1946) 47 SR (N.S.W.) 229, Roper K, took this view. “He said, at p232: “The transferor of the legal estate having been freed from the purely technical requirements as to the use of words of limitation it appears to me that the creator of equitable estates should have the same freedom”. A contrary view has been taken in Queensland in a case in which Carroll v Chew was not cited - Re Bennett [1951] St R Qd 202, a decision of the Full Court which did not refer to the effect of the Torrens legislation upon a transfer of the legal estate. The cases are discussed in a brief note in 25 ALJ 683. Mr Hulme, however, contended that Carroll v Chew, (supra), was wrongly decided. He pointed to the provisions of the Act and to the fact that they did not provide for the transfer of equitable interests; indeed equitable interests cannot appear on the register. It would, therefore, he said, be impossible for equity to follow the law in such a case and accordingly the freedom given in relation to the transfer of the legal fee simple cannot be extended to transfers of an equitable fee simple which remains in the same position as before. I agree with this contention. As the matter stood apart from the Act, the same rule applied to the conveyance of a fee simple both at law and in equity, at law because of the common law rule and in equity because equity followed the common law rule. The relaxation of the common law rule in certain cases seems to afford no basis for the relaxation of the rule of equity to which the Act does not apply. It does not meet the position to say that, in relation to conveyance of the legal estate, there are legislative provisions in the case of land under the Real Property Act which lay down a procedure for conveying the legal estate in which words of inheritances are not required. I do not see how this can affect a conveyance of the equitable estate in fee simple with which the Act has nothing to so. Accordingly, I do not think the first reason advances by Mr Newton for avoiding the operation of the general rule of equity is correct.” -- 11 of 16 -- 12 In Queensland the Real Property Act Amendments Act of 1952 was passed to do away with these highly technical rules. That amendment inserted a new s.15A in the Real Property Act 1861. On and after 4th December 1952 it was not necessary to use the word “heirs” to convey a fee simple where previously use of the word “heirs” was necessary. However that amendment did not apply to documents executed before 4th December 1952, and therefore did not apply to the subject deed of trust. The Amending Act applied both to Torrens Title land and Old Systems land. In Re Arden (1935) 1 Ch 327, Clausen J had to consider a supplemental deed of appointment made in 1901. By the deed Mrs C disposed as to one-fourth share to E.N. and as to three-fourth shares to her son C absolutely. Clausen J held that the appointment made in 1901 in favour of E.N. and C upon its true construction carried the fee simple to those appointees according to their respective appointed shares. Clausen J considered that when strict conveyancing phraseology was not employed in the limitation of an equitable estate in freehold hereditaments a grant thereof would carry the fee simple if the instrument upon its proper construction disclosed a clear intention to pass it. Re Bostock’s settlement (supra) was followed. At pp332 - 333 Clausen J observed: “On the construction of that deed of appointment it is, in my judgment, true to say, having regard, first, to the recital that the appointor is desirous of appointing the residue remaining unappointed of the hereditaments among Evelyn Nelson and Cuthbert Camm, and, secondly, to the presence of the word “absolutely” in the clause of appointment - a word which seems to me to refer to the share appointed to Evelyn Nelson as well as to the share appointed to Cuthbert Camm - that the intention is clearly disclosed of appointing one fourth of the previously -- 12 of 16 -- 13 unappointed hereditaments to Evelyn Nelson in fee simple and three fourths to Cuthbert Camm in fee simple. If the word “absolutely” did not appear in the instrument of appointment, I should have to hold that the appointment seeks to create equitable interests in Evelyn Nelson and Cuthbert Camm in the hereditaments by the use of strict conveyancing language with a definite meaning, with the result that I should have to hold that Mrs Nelson and Mr Camm take life interests only in the shares so appointed. I can draw no distinction between the words with which I should (on the hypothesis of omitting the word “absolutely”) have to deal, and the words dealt with by the Court of Appeal in Re Bostock’s settlement, which words were “in trust for the child or children of the said William Bostock now born or hereafter to be born who shall attain the age of 21 years and if more than one in equal shares as tenants in common.” However, in the case which I have to decide, the word “absolutely” is present and, consequently, the appointment is expressed in language which is not strict conveyancing language with a definite legal meaning. The clause must be taken as a whole. It would not, in my view, be right to disregard the word “absolutely” and to hold that, as the word has no operation in strict conveyancing language, it must be discarded with the result that strict conveyancing language having been used, this case is covered by the actual decision in Re Bostock’s settlement and the two appointees take life interests only in the said hereditaments. If I were so to hold, I should, in my view, be misreading the clause. The presence of the word, “absolutely” in the clause shows that the clause is not framed in strict conveyancing language, and it is, so far as this Court of Appeal in Re Bostock’s settlement that, where strict conveyancing language is not employed, it is sufficient that the instrument should disclose, as a matter of construction, a clear intention as to the quantum of the interest which is intended to be given. This view is expressed, as I read the report, by Lord Sterndale MR and by Warrington LJ; and Younger LJ bases the conclusion at which the Court arrives in that case on the fact that the clause in question before the Court is expressed, as he says, in the language of legal limitations. In the case of Land Purchase Trustee Northern Ireland v Beers the Court of Appeal in Northern Ireland appear to take the same view of the law as settled in Re Bostock’s settlement as I have expressed above. They held, in a case in which the clause in question before them contained no technical words in conflict with the expressed intention, that they were free to treat the language used as sufficient to create, in untechnical language, the equitable estates intended.” It will be seen that Clausen J attached particular importance to the use of the word “absolutely”. Clausen J considered that when that word was used, strict conveyancing phraseology was not -- 13 of 16 -- 14 being employed. Accordingly it was open to the Court to allow the grant to carry the fee simple if the instrument upon its proper construction disclosed a clear intention to pass the fee simple. I consider that the use of the word “absolutely” in the subject deed of trust has the effect that strict conveyancing phraseology is not being used. I am therefore entitled to ascertain the intention of the settlor from the instrument as a whole. I am satisfied that the intention of the settlor was to convey an estate in fee simple to the trustees upon the death of the Christina Clarke. A separate question arises as to the meaning of the phrase “upon trust for the said John Robert Clarke, Herbert Douglas Clarke, Mabel Beatrice Milliken and Doris Ina Williams or the survivors of them absolutely in equal shares as tenants in common absolutely in equal (sic).” The reference to “survivors” must mean such of the four named trustees as survived the death of Christina Clarke. The document would not make sense unless this interpretation were applied. In Inderwick v. Tatchell, [1903] A.C. 120 at p.123, Lord Halsbury observed: “I cannot help saying that the word `survivor’ is a word which requires a context. Survivor of whom? Survivor when? Those are both categories of thought which must be supplied in order to give the word `survivor’ any meaning at all. It may mean the survivor of the testator; it may mean the survivor at the time of some event contemplated by the will which is being discussed; and what it is must be found out by reference to the context.” I refer to what has come to be known as the rule in Cripps v. Wolcott (1819), 4 Madd.11. In that case Leach M.R. stated the rule with reference to personalty as follows: “I consider it however to be now settled that if a legacy be given to two or more equally to be divided between them or to the survivor or survivors of them and there be no special intent to be found in the will, that the survivorship is to be referred to the period of division. If there be no previous interest given in the -- 14 of 16 -- 15 legacy, then the period of division is the death of the testator, and the survivors at his death will take the whole legacy..... But if a previous life estate be given, then the period of division is the death of the tenant for life, and the survivors at such death will take the whole legacy.” The rule in Cripps v Wolcott (supra) has been held to apply to gifts of realty as well as gifts of personalty: Re Gregson (1864) 2 De GJ and S 428. If a bequest is given to A. for life with remainder to B., C., and D. or the survivors or survivor of them then this is held to be a gift to such of them as survive A. See Scurfield v. Howes (1790), 3 B.C.C.90; White v. Baker (1860) 2 D.F. & J.55; Cambridge v. Rous (1858) 25 Beav.409; Re Pickworth, Snaith v. Parkinson, [1899] 1 Ch.642. Re Douglas’ WT (1959) 1 WLR 1212 (CA). Whilst these principles have been stated with regard to wills, it appears that they apply also to the construction of settlements by deed. See Doe D. Watts v. Wainewright (1793), 5 T.R.427, and Cole v. Sewell (1848), 2 H.L.Cas.186; Re Friend’s Settlement, Cole v.Allcot, [1906] 1 Ch.47. I refer also to Re Rose deceased (1962) QWN 4 and Re Barbour deceased (1967) Qd R 10. These cases are not precisely on point but contain useful guidance. The Court has a preference for tenancy in common on the ground of convenience in the case of doubtful words. The Court has a leaning to a tenancy in common and the slightest indication of an intention to divide a property creates such a tenancy. In Re Rose deceased (supra) Gibbs J observed: “In the present case, the difficulty of construction caused by the presence in the will of two apparently inconsistent indications of intention can be resolved by regarding the words “in equal shares” as providing a clear indication that a tenancy in common was intended, and the words “as joint tenants” as having been used without a proper appreciation of their significance. It is true that the words -- 15 of 16 -- 16 “as joint tenants” raise a doubt as to the testator’s intention. However in view of the inconvenience that attends a joint tenancy, particularly during a minority, the court leans in favour of a tenancy in common and in case of doubt will give effect to the slightest indications that a tenancy in common is intended (See Jarman, op. cit., page 1795; in Re Wockner ([1943] QWN 42). I hold that, upon the proper construction of this will, the three beneficiaries take as tenants in common.” In the present case I am satisfied that it is abundantly clear that a tenancy in common was intended by the settlor. I declare that in the events that have occurred and upon the death of Christina Clarke the surviving trustees Mabel Beatrice Milliken and Herbert Douglas Clarke became entitled as beneficiaries to an equitable estate in fee simple in the subject land absolutely as tenants in common in equal shares. The trustee of the subject land should therefore transfer the fee simple in the subject land to these two beneficiaries absolutely in equal shares as tenants in common. I advise accordingly. I order that the costs of all parties as between solicitor and own client be taxed and allowed out of the estate of the deceased. Liberty to apply to all parties on three days notice in writing. -- 16 of 16 --