Blocksidge, Re [1996] QSC 139 [1997] 1 Qd R 234

IN THE SUPREME COURT OF QUEENSLAND O.S. No. 5741 of 1996 Brisbane Before the Hon. Justice Williams IN THE MATTER OF the Rules of the Supreme Court - and - IN THE MATTER OF the Trusts Act 1973 - and - IN THE MATTER OF the Succession Act 1981 - and - IN THE MATTER OF the Trusts of the Will of Pauline Jennifer Luard Blocksidge, deceased, late of 49 Alma Street, Paddington, Brisbane in the State of Queensland - and - IN THE MATTER OF an application by Edward James Singleton, as sole executor and trustee of the said Will REASONS FOR JUDGMENT - WILLIAMS J Judgment delivered 15/08/1996 CATCHWORDS: TRUSTS - variation - s.95 Trusts Act 1973 - problem created by increase in class of grandchildren by births in future - variation approved giving certainty to trust - benefit to living and yet to be born grandchildren considered. -- 1 of 11 -- Counsel: DG Mullins for applicant TC Whitney (solicitor) for respondents the living grandchildren P Wilson (solicitor) for respondents the yet to be born grandchildren Solicitors: Reidy & Tonkin for applicant McCullough Robertson for respondents the living grandchildren Thynne & Macartney for respondents the yet to be born grandchildren Hearing Date: 8 August 1996 -- 2 of 11 -- IN THE SUPREME COURT OF QUEENSLAND O.S. No. 5741 of 1996 Brisbane IN THE MATTER OF the Rules of the Supreme Court - and - IN THE MATTER OF the Trusts Act 1973 - and - IN THE MATTER OF the Succession Act 1981 - and - IN THE MATTER OF the Trusts of the Will of Pauline Jennifer Luard Blocksidge, deceased, late of 49 Alma Street, Paddington, Brisbane in the State of Queensland - and - IN THE MATTER OF an application by Edward James Singleton, as sole executor and trustee of the said Will REASONS FOR JUDGMENT - WILLIAMS J Judgment delivered 15/08/1996 Edward James Singleton, who is sole executor and trustee of the Will of the deceased, Pauline Jennifer Luard Blocksidge, seeks an order varying a trust created by the will of the deceased pursuant to s.95 of the Trust Act 1973 and associated declarations as to the proper construction of provisions of -- 3 of 11 -- 2 that will. The deceased's last will and testament dated 2 November 1995 has been admitted to probate. This application is concerned with cl. 4 thereof which is in these terms: "I Give the sum of One Hundred Thousand Dollars ($100,000) to my Trustees Upon Trust to be paid as to Twenty Thousand Dollars ($20,000) plus interest per child to such of the children of my children as may be born prior to the 31st day of December, 2015 and I direct that my Trustees shall hold the share of each such child until he or she attains the age of 18 years and the balance sum plus interest remaining after payment of the legacies created by this clause shall be divided equally among such of my children as survive my death." As at the date of her death the deceased was survived by three children: Anna (age 35 years), Vanessa (age 32 years), and Jonathan (age 37 years). Her only grandchildren as at the date of her death were three children of Jonathan: Georgia (age 7 years), Lydia (age 5 years), and Thea (age 3 years). From statements made by the deceased to SM Tonkin, the solicitor who drafted the will, it seems clear that she believed in October-November 1995 that her daughter Vanessa was unlikely to have any children but that Anna may well have children in the future. It should be noted that in fact Jonathan has had a vasectomy but it is not clear whether his mother knew of that at the time of giving instructions for the will. The deceased clearly contemplated the possibility of further grandchildren being born because the year 2015 was selected as the year beyond which it would be virtually impossible for either of her daughters to bear children. The deceased first gave instructions relating to a legacy -- 4 of 11 -- 3 for grandchildren when giving instructions with respect to a will executed on 30 October 1995. In that will the relevant clause was numbered 7 and was in these terms: "I Give the sum of One Hundred Thousand Dollars ($100,000) to my Trustees Upon Trust for such of the children of my children as may be born prior to the 31st day of December 2015 and who are still living as at that date and I direct that my Trustees shall hold the share of each such child until he or she attains the age of 18 years in the case of those who have as at 31st December, 2015 not yet attained the age of 18 years and if more than one in equal shares among them." That will was executed, but the deceased was unhappy with the order in which bequests were dealt with. It was to overcome that problem that the later will was prepared. When the solicitor drafted the will dated 2 November 1995 it contained, as cl. 4, a provision in identical terms to cl. 7 in the will of 30 October. When the deceased read the will before executing it she stated that the clause as drafted did not reflect her intentions with respect to her grandchildren. She was adamant that each grandchild was to receive only $20,000 plus interest with any balance of the $100,000 to go to her children. At the time the deceased was in bed at home; she was dying of cancer. The solicitor at the bedside made amendments to cl. 4 in an attempt to give effect to the deceased's then stated intentions, and that is how cl. 4 came to be in the form quoted above. If by 2015 there are more than five grandchildren the trust fund would be insufficient to satisfy the deceased's intention that each grandchild get $20,000 plus interest. Both Anna and Vanessa have indicated in affidavits that it is more -- 5 of 11 -- 4 likely than not that in the future each may have a child or children. Given their respective ages childbearing cannot be excluded. Nor can it absolutely be excluded for Jonathan. It follows that the class of beneficiaries contemplated under the trust settled by cl. 4 will remain open until the vesting date, namely 2015. The deceased appears to have endeavoured to predict the future and concluded that there would be no more than five grandchildren. That is, in fact, likely to be wrong and that would result in grandchildren getting less than what might otherwise have been seen as their entitlement. It is not realistic to close the class off once there are five grandchildren born or five grandchildren who attain the age of 18, though that might be regarded as the testator's intention if one looked at the words of the clause in isolation. The solution proposed by the trustee on this application is to vary cl. 4 so that it provides a fund of $100,000 plus accruals for the benefit of all the grandchildren born prior to 31 December 2015. The variation sought by the application is in these terms: "I Give a pecuniary legacy of $100,000 to my Trustees Upon Trust for such of the children of my children Jonathan, Vanessa and Anna as shall survive me for 30 days, or are born prior to 31 December 2015, if more than one then equally as tenants in common absolutely. For the avoidance of doubt, the entitlement of any beneficiary is not conditional upon them attaining the age of eighteen years nor being living at 31 December 2015 (if one or more fails to survive then the estate of that beneficiary would be so entitled). Section 33 of the Succession Act 1987 shall not apply to the intent that I do not want great grandchildren to take by representation." -- 6 of 11 -- 5 In order to give effect to that variation the children (Jonathan, Vanessa and Anna) would have to forgo their rights to the balance of the $100,000 if there were less than five grandchildren in the class. Each of those three children of the deceased is of full age and has the necessary capacity. Each has filed a formal consent to the proposed variation. The application sought orders appointing guardians ad litem for both the three living grandchildren and the contingent class, the as yet unborn grandchildren. Material was placed before the court establishing the suitability of Timothy Clifton Whitney, a solicitor, to be representative and guardian ad litem for the three living grandchildren, and Peter Wilson, also a solicitor, to be representative and guardian ad litem for the as yet unborn grandchildren. In the circumstances I intimated at the hearing that I was prepared to make orders appointing each of those persons guardian ad litem for the nominated beneficiaries. In that regard I should note that decisions prior to the enactment of the Trust Act 1973 and the Succession Act 1981 suggesting that the court did not have power to make a representative order in respect of unborn children are no longer good law. That conclusion is supported by observations in re Christmas' Settlement Trusts (1986) 1 Qd. R. 372. Mr Wilson, on behalf of the as yet unborn grandchildren, indicated consent to and agreement with the solution proposed by counsel for the applicant-executor. Mr Whitney, correctly, submitted that he could not consent -- 7 of 11 -- 6 to the proposal. It may be that the three living grandchildren will ultimately receive less money under the revised trust than they would under the trust as formulated in the will. For that reason he could not consent to the variation. But he recognised that there was a real problem which had to be addressed. He recognised the reasonableness of the solution proposed by the executor, and in doing so recognised that depending on what happens in the future the three living grandchildren may in fact benefit more under the revised trust than they would under the trust as defined in the will. He also conceded that he could not advance any substantive argument that cl. 4 of the will should be construed so that only the first five grandchildren participated in the distribution of the trust. Section 95 of the Trust Act 1973 so far as is relevant provides: "(1) Where property ... is held on trust ... the court may if it thinks fit by order approve on behalf of - (a) Any person having, directly or indirectly, an interest, whether vested or contingent, under the trusts who by reason of infancy or other incapacity is incapable of assenting; or ... (c) Any person unborn; ... any arrangement (by whomsoever proposed and whether or not there is any other person beneficially interested who is capable of assenting thereto) varying ... all or any of the trusts ... " Speaking of the English equivalent Lord Evershed MR said -- 8 of 11 -- 7 that the word "arrangement" was "deliberately used in the widest possible sense so as to cover any proposal which any person may put forward for varying or revoking the trust." (Re Steed's Will Trusts (1960) Ch. 407 at 419). The scope of the court's power to vary a trust pursuant to the equivalent English provision was considered by Megarry J in Re Ball's Settlement Trusts (1968) 1 WLR 899 especially as 905. There he said: "If an arrangement changes the whole substratum of the trust, then it may well be that it cannot be regarded merely as varying that trust. But if an arrangement, while leaving the substratum, effectuates the purpose of the original trust by other means, it may still be possible to regard that arrangement as merely varying the original trusts, even though the means employed are wholly different and even though the form is completely changed." In some ways what the applicant is seeking here is to effectuate the testator's purpose with regard to the trusts by other means. The limitation on the court's jurisdiction is found in s.95(1A) which provides that, "the court shall not approve an arrangement on behalf of any person unless the carrying out thereof would be for the benefit of that person". Some guidance can be found as to the application of that qualification in decisions dealing with the equivalent English legislation. The remarks of Stamp J in Re Cohen's Settlement Trusts (1965) 1 WLR 1229 especially at 1236 are relevant: "In my judgment, the court has to be satisfied in the case of each individual infant that on balance the proposed variation is for his benefit. Similarly, in my judgment, the court must be satisfied that the proposed variation is for the benefit of any individual person who may hereafter come into -- 9 of 11 -- 8 existence and become interested under the trusts of the settlement. ... The court does not have to be satisfied that by the effect of a proposed variation each individual infant is bound to be better off than he otherwise would have been, but that the infant is making a bargain which is a reasonable one and one which an adult would be prepared to make. Nevertheless the bargain which the court approves must, in my judgment, be a bargain which appears to be advantageous to each individual infant." Section 95 is not the subject of many reported cases in Queensland. It was considered by McPherson J in Re Christmas' Settlement Trusts and as noted at 380 by myself when that application was brought on again supported by additional material. The judgment of McPherson J clearly shows the importance of ensuring that any variation will be for the benefit of, inter alia, members of the class as yet unborn. The proposed variation here will not alter the class of grandchildren entitled to participate in the distribution of the trust fund. The existing grandchildren benefit from the variation because their entitlement to participate in the distribution is not conditional upon attaining the age of 18 years or being still alive as at 31 December 2015. They may also get more than $20,000 if there are no more grandchildren born, or only one more. That significantly offsets the fact that something less than $20,000 may be received if the class is comprised of more than five grandchildren. The as yet unborn grandchildren also benefit materially. Pursuant to the variation there is no longer a requirement that such a grandchild attain the age of 18 before being entitled to participate in the distribution. Again that offsets the fact that something less than $20,000 may be received. In those -- 10 of 11 -- 9 circumstances I am satisfied that the proposed variation will benefit all grandchildren, born or yet to be born, and that the proposed variation is reasonable and one which an adult would be prepared to accept. The case is an unusual one, but in my view the court is justified in varying the trusts so as to avoid the complications which will arise in the administration of the trust if the terms thereof remained as stated in the will. Brief mention was made in the course of submissions that adopted grandchildren could also participate, and with that in mind the draft order submitted included a reference to "lawfully adopted children of my children". The question was not fully argued and the representative appointed to represent future grandchildren was not specifically appointed with respect to legally adopted grandchildren as distinct from natural grandchildren. In the circumstances it is my view that the variation ought not specifically refer to adopted children. The variation should simply refer to "the children of my children" (the expression used by the deceased) and then it will be a matter of construction, if necessary, whether that expression includes lawfully adopted children. There will be an order as per the amended draft which I have initialled. -- 11 of 11 --