Bradley, Re [1994] QSC 22 [1994] 2 Qd R 233

State Reporting Bureau ""J/~d'1/! ______________________________________ _ TRANSCRIPT OF PROCEEDINGS (Copyright in this transcript is vested in the Crown. Copies thereof must not be made or sold without the written authority of the Director, State Reporting Bureau.) SUPREME COURT CIVIL JURISDICTION DERRINGTON J Application No 705 of 1993 IN THE MATTER OF THE SUCCESSION ACT 1981 and IN THE MATTER OF THE TRUSTS ACT 1973 and REViS~:: C'Jr:ic.0 l2SUED StaiJ .1e:Jcr:::~CJ EiJrG···u '3 '" - Date ~/ 1 9?£ IN THE MATTER OF THE RULES OF THIS HONOURABLE COURT and IN THE MATTER OF THE TRUSTS OF THE WILL OF WILLIAM FRANCISBRADLEY LATE OF DAYBORO IN THE STATE OF QUEENSLAND BRISBANE .. DATE 23/02/94 JUDGMENT 1 4th Floor, The Law Courts, Georee Street. Bri!>h9nP.~ n di)IW Ti>l<>nhnnn• 11171 ~~7 H.~." >:'.~ •. :_ •• .• ·"' _, --- .• -- 1 of 11 -- 230294 T 2/MJR M/T 4245/93 (Derrington J) HIS HONOUR: As to the part of the application argued before me, it is declared that the condition contained in the will of the abovenamed testator requiring that his sons surviving upon the death or remarriage of his widow should enter into a deed of partnership as a condition of their enjoyment of the remainder of his property therein referred to, is void and of no effect and that the said gift takes effect free of such condition. The cost of all parties to the application in respect of this part of the application are to be paid on a solicitor and client basis from the estate of the deceased. As to the remaining parts of the application, orders are made in terms of the draft order provided to the Court by the parties and initialled by me. I publish my reasons. 2 JUDGMENT 10 20 30 40 50 -- 2 of 11 -- IN THE SUPREME COURT OF QUEENSLAND HELD AT BRISBANE Application No. 705 of 1993 IN THE MATTER of the Succession Act 1981 -and- IN THE MATTER of the Trusts Act 1973 -and- IN THE MATTER of the Rules of this Honourable Court -and- IN THE MATTER of the Trusts of the Will of WILLIAM FRANCIS BRADLEY late of Dayboro in the State of Queensland REASONS FOR JUDGMENT - DERRINGTON J. Delivered the 23rd day of February, 1994 CATCHWORDS: Will. Condition. Contingent remainder after life tenancy. Condition that surviving named persons enter into deed of partnership in respect of property devised. No time set for entry. Condition precedent or subsequent. Whether void for uncertainty. Effect of voidness of condition on devise. COUNSEL: Mr Stevens for Applicant Mr Newton for Respondent Ms Coulin (a Solicitor) for Applicant SOLICITORS: Trilby Misso & Company for Applicant Greg Casey for Respondent HEARING DATE: 28 January, 1994 -- 3 of 11 -- IN THE SUPREME COURT OF QUEENSLAND HELD AT BRISBANE Application No. 705 of 1993 IN THE MATTER of the Succession Act 1981 -and- IN THE MATTER of the Trusts Act 1973 -and- IN THE MATTER of the Rules of this Honourable Court -and- IN THE MATTER of the Trusts of the Will ofWILLIAM FRANCIS BRADLEY late of Dayboro in the State of Queensland JUDGMENT - DERRINGTON I. Delivered the 23rd day of February, 1994 This is an application for a declaration that a condition in a term of the trust set up under the will of the above-named testator is void for uncertainty and of no effect, with the result that the trust operates as provided for in the will except for that condition. The relevant term of the will is expressed as follows: "UPON the death or remarriage of my said wife I DIRECT my trustees TO STAND POSSESSED of the said real estate farm property together with the livestock plant and other equipment and movable chattels used in connection therewith and the furniture and household effects UPON -- 4 of 11 -- 2 TRUST for such of my aforesaid sons GARRY WAYNE BRADLEY JOSEPH HENRY BRADLEY AND WILLIAM FRANCIS BRADLEY as shall then be living in equal shares as tenants in common SUBJECT to the provision hereinafter contained. The aforesaid devise in favour of my aforesaid sons shall be subject to them or the survivors of them entering into a deed of partnership in respect of my real estate farm property on terms and conditions usual and common to deeds of partnership of this kind but containing specific provisions that in the event of any one of them desiring to retire from the partnership that he accepts as his share of the real estate belonging to the partnership the lands described in the schedule to this will plus the costs to him of the erection on any other lands of the partnership of a dwelling house which he may have erected for his occupation apart altogether from his entitlement in relation to his share of the livestock plant and other equipment and movable chattels used in connection with the business. If the sons are unable to agree as to the terms of the deed of partnership then such terms shall be determined by a person appointed by the President for the time being of the Queensland Law Society Incorporated and his decision shall be final and binding on my aforesaid sons. If any one or more of my sons refuses or is unwilling to execute such deed of partnership then this devise shall lapse so far as he or they are concerned and such devise shall be in favour of those of them who are willing to execute such.deed of partnership." It is argued that the condition of entry into a deed of partnership which is imposed upon the entitlement of the three sons is a condition subsequent rather than a condition precedent and that it is uncertain insofar as it specifies no time within which they must enter into the deed. The difference in the form of condition is important because the rules relating to uncertainty differ in their effect upon conditions precedent and conditions subsequent. "In the case of a condition subsequent the condition must be such that the Court or the persons affected can see from the beginning, precisely and distinctly, upon the happening of what event the preceding vested interest is to determine. In the case of a condition precedent no such general or academic test is called for. All that the beneficiary claiming the gift has to do is to establish that he satisfies the conditional qualification whatever -- 5 of 11 -- 3 be the appropriate test: re Lowry's Will Trusts, Barclays Bank Ltd v. United Newcastle-upon-Tynne Hospitals Board of Governors (1967) Ch. 638; re Gulbenkian's Settlement Trusts, Hacobian v. Maun (1968) 1 Ch. 126 at p.l32, 133" Williams on Wills 4th Ed. p.283. See also Jarman on Wills 8th ed. 1453; Theobold on Wills 13th ed. para. 1570. This flows from the necessary division of conditions into those which are precedent or subsequent to the vesting of the interests of the beneficiary, and this is always a question of construction of the grant. If it is intended that no interest should be vested until the condition is fulfilled, then it is a condition precedent. If for example the gift is contingent upon an event or upon the performance of some act by the beneficiary, and if meanwhile there is no vesting of the property, then usually the condition is precedent. But if the gift is already vested and the effect of the condition is to divest the beneficiary of the property if it is not fulfilled, then it is a condition subsequent: Reynish v. Martin (1746) 3 Atk. 330 at 332; Egerton v. Brownlow (Earl) (1853) 4 H.L. Cas. 1 at 74; Alice v. Alice (1802) 1 S.Ch. & Lef. 1; re Gulbenkian's Settlement Trusts, Hacobian v. Maun (supra) at 133; re Boulter, Capital and Counties Bank v. Boulter (1922) 1 Ch. 75; Sifton v. Sifton (1938) A.C. 656. Doubtful cases will usually be regarded as conditions subsequent because there is a preference for early vesting: Egerton v. Brownlow (Earl) (supra) at 182; Woodhouse v. Herrick (1855) 1 K & J 352; Langdale (Lady) v. Briggs (1856) 8 De G.M. & G. 391; re Greenwood (1903) 1 Ch. 749 at 755; re Blackwell (1926) Ch. 223; Bickersteth v. Shanu (1936) A.C. 290; Sifton v. Sifton (supra). However this requires a true lack of clarity. -- 6 of 11 -- 4 In the present case, the interest given to the sons of the testator is clearly a contingent remainder, for the gift is limited to such of them as shall be living at the death or remarriage of his widow. This means that the interest will not vest until the contingency occurs, and, as a matter of construction, it is reasonably clear that the provision in the will requires that the entry into the partnership deed by the surviving sons will at that time become a relevant condition though as a matter of practical necessity there must then be some lapse of time between the death or remarriage of the widow and the acts of entry into the partnership by the surviving sons. This hiatus must necessarily be filled by a beneficial interest, which, on the construction of the will, must vest in those sons during that period. That being so, on its true construction the term provides for a vesting at that time in the sons in the first instance, subject to divesting should the condition not be fulfilled, that is, a condition subsequent. It is not necessary to resolve this issue, for if it were doubtful it would permit of the presumption described above in favour of its classification as a condition subsequent. But even this point is academic. As the condition is attached to an interest which is contingent in a way that would put an end to it, then it is a condition subsequent, even if the event to which the condition refers were not subsequent to the contingent event, so that the condition would prevent the gift from taking effect: Egerton v. Brownlow (Earl) (supra). This, in brief, is because a contingent interest has a real existence of its own, and so, within the scope of the subject matter of this discussion, because of the relevant principles it is appropriate to regard a condition which would produce the loss of the interest, as distinct from the contingency itself, as a condition subsequent. -- 7 of 11 -- 5 This is both logical and reasonable having regard to the point of the distinction in a case such as this, namely, that where there is a reasonable expectation of entitlement to the interest upon the happening of the contingency, then the beneficiary should be left free of any doubt as to the precise and distinct nature of any event that might result in the divestment of his interest. In this case the element of uncertainty is said to reside in the requirements concerning the entry into a partnership between the sons. One line of argument suggested uncertainty because two of the sons might refuse to enter into the partnership deed, so that it would be impossible for the third son to do so because there cannot be a partnership of one person alone. However the simple answer to this is that in such a case the condition would not be fulfilled and, if it is not otherwise uncertain, there would then be a failure of the condition with the result that the trust would not operate and the property would fall into the rest and residue of the estate. There is nothing uncertain about this. A second point was raised that there are no "usual terms and conditions" of a partnership such as this, but there was no evidence on the matter and this point was abandoned. A third ground of uncertainty was suggested to lie in the requirement that the partnership deed contain a term relating to retirement from it by a son. The question was raised as to what should happen if more than one wished to retire, but the answer is that in each case the retirement has the specified effect in respect of thos~ parties retiring and the remaining son who does not retire is left with the balance free of the partnership. More effective is the argument that the condition is uncertain as to time because the material time as to when it is to take effect is not capable of -- 8 of 11 -- 6 reasonably precise ascertainment: cf. re Viscount Exmouth (1883) 23 Ch. D. 158. At p.l64, Fry J. said: "One of those rules I understand to be this, that the condition must be clear and certain. That, in my opinion, includes, not only certainty of expression in the creation of the limitation, but also certainty in its operation. It must be such a limitation that, at any given moment of time, it is ascertainable whether the limitation has or has not taken effect. But as to this contingent limitation it cannot always be ascertained whether it has or has not taken effect, and therefore I hold it void." That is the problem in the present case. If any son wished for some good reason to delay his decision as to whether he would enter into the partnership deed, he and his advisers might have grave difficulties at some stage in knowing whether he would be entitled to delay further or risk forfeiting his interest. Learned counsel opposing this view submitted that just as in the case of a similar contractual obligation, there would be an implied term requiring each son to enter into the partnership within a reasonable time in order to retain his interest. This is certainly appropriate in the case of contracts: Perri · v. Coolangatta Investments Pty Ltd (1982) 149 C.L.R. 537. However he was unable to provide any authority for such a term to be implied in a condition in a will such as this. This is not surprising for the position is not strictly analogous. The point is probably academic because even if this be assumed to be an implied term it would not save the provision, for it would still not meet the criterion that it provide the beneficiary with the capacity to ascertain his position with reasonable precision at any given time. Whereas a reasonable time is a practical enough standard in the case of contract where if necessary the Court may at the end determine whether the relevant act was performed within a reasonable time, -- 9 of 11 -- 7 however in respect of a condition subsequent the emphasis of the controlling principle demands is that such a result should be known beforehand. It is easy in the circumstances of this case to recognise factors which may make it difficult for a beneficiary, even with the assistance of legal advice, to know when such a limitation of time would expire. Apart from the need to enquire into the circumstances of his proposed partners at that time, to consider the consequences on his own affairs of entry into the partnership, and other such matters, it would also be necessary to ascertain the validity of any terms of the deed which are finally proposed as answering the condition. For example, it may be necessary to have extensive enquiries as to whether what is proposed are in fact the usual terms of such an arrangement; or it may be necessary to enquire into and even contest whether terms which are claimed to be determined in accordance with the condition have properly and effectively been determined in that way. These circumstances show that it must be implied in the condition, if that were necessary, that the beneficiaries would not be required to enter into the deed immediately upon its presentation to them, that is, after some time will already have necessarily elapsed for its preparation. The uncertainty lies in the length of time available to a beneficiary before he would forfeit his interest. Because of this, it is usual in provisions of this nature to specify a particular date or one related to specifically ascertainable events as a limitation period for the beneficiaries' respective compliance. Because this condition is wanting in this respect it is void for uncertainty. Apart from the different standards which are applied to the issue of uncertainty in respect of conditions precedent and conditions subsequent -- 10 of 11 -- 8 respectively, the consequences of any voidness for uncertainty also differ. The result in the case of a condition subsequent is that the condition itself fails. The interests of the parties remain as though the condition had never been imposed and the gift takes effect free from it: Egerton v. Brownlow (Earl) (supra); re Gassiot, Fladgate v. Vintners' Co (1901) 70 L.J.Ch. 242; Webb v. Grace (1848) 2 Ph. 701; Alien v. Jackson (1876) 1 Ch.D. 399. Accordingly as to this part of the application it is declared that the condition contained in the will of the above-named testator requiring that his sons surviving upon the death or remarriage of his widow should enter into a deed of partnership as a condition of their enjoyment of the remainder in the property therein referred to is void and of no effect and that the said gift takes effect free of such condition. The costs of all parties to the application in respect of this part of this application are to be paid on a solicitor and client basis from the estate of the deceased. As to the remaining parts of the application orders are made in terms of the draft order provided to the Court by the parties and initialled by me. -- 11 of 11 --