SUPREME COURT OF QUEENSLAND
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1 SUPREME COURT OF QUEENSLAND CITATION: Yeomans v Yeomans and Ors [2005] QSC 085 PARTIES: FILE NO/S: BS9603 of 2004 DIVISION: PROCEEDING: ORIGINATING COURT: QUAN YEOMANS (applicant) DAVID NEVILLE YEOMANS (first respondent) LINDA CLARE YEOMANS, ROBERT PAUL YEOMANS and ROSLYN RITA YEOMANS (second respondents) PHILLIP McGOWAN being the litigation guardian for RICKMAN YEOMANS, MITCHELL YEOMANS, KLARISSA YEOMANS, PERI WATKINSON, BRADY WATKINSON, TAYLA WATKINSON, MILO WATKINSON and DANIELLA YEOMANS (third respondent) TIMOTHY CLIFTON WHITNEY being the litigation guardian for KYRA VICTORIA YEOMANS (fourth respondent) Trial Application Brisbane DELIVERED ON: 19 April 2005 DELIVERED AT: Brisbane HEARING DATE: 15 December 2004 JUDGE: ORDERS: McMurdo J 1. The fourth respondent will be appointed to represent the unborn grandchildren of the testator 2. It will be declared that upon the true construction of the will that clause 5 is valid and that the word grandchildren includes grandchildren born after the death of the testator 3. It will be further declared that the class constituted by my grandchildren as referred to in clause 5 is not confined by reference to the age of any grandchild 4. It will be further ordered that the costs of all parties of and incidental to this application be taxed on an indemnity basis and paid out of the estate
2 2 CATCHWORDS: SUCCESSION WILLS, PROBATE AND ADMINISTRATION CONSTRUCTION AND EFFECT OF TESTAMENTARY DISPOSITIONS UNCERTAINTY AND FAILURE TO DISPOSE IN RESPECT OF OBJECT OF GIFT where testamentary disposition to establish a trust for the indigenous and intercultural education of the testator s grandchildren whether the trust was void as a trust for a non-charitable purpose without a beneficiary to enforce it COUNSEL: SOLICITORS: SUCCESSION WILLS, PROBATE AND ADMINISTRATION CONSTRUCTION AND EFFECT OF TESTAMENTARY DISPOSITIONS UNCERTAINTY AND FAILURE TO DISPOSE OTHER CASES where testamentary disposition established a discretionary trust required the children of the testator to agree upon the suitability of a particular expenditure whether the relevant discretion defined in terms that are sufficiently certain SUCCESSION WILLS, PROBATE AND ADMINISTRATION CONSTRUCTION AND EFFECT OF TESTAMENTARY DISPOSITIONS GIFTS TO A CLASS WHEN CLASS IS ASCERTAINED GIFTS TO CHILDREN AND GRANDCHILDREN where disposition to establish a trust for the benefit of my grandchildren where entitlement to payment from the trust at the discretion of trustees whether class closing rules apply to limit grandchildren to those alive at the death of testator EQUITY PERPETUITIES AND ACCUMULATIONS RULE AGAINST REMOTENESS OF VESTING CONSTRUCTION OF INSTRUMENTS PARTICULAR CASES WILLS where will created discretionary trust with no express perpetuity period where general law perpetuity period applied whether the trust void for vesting outside the relevant perpetuity period Property Law Act 1974 (Qld), s 209(1), s 210 Leahy v Attorney-General for New South Wales [1959] AC 457, referred to Picken v Matthews (1878) 10 Ch 264, cited Re Denley s Trust Deed [1969] 1 Ch 373, applied Gartside v Inland Revenue Commissioners [1968] AC 553, cited Re Bradley [1994] 2 Qd R 233, cited Re Bellville [1941] 1 Ch 414, followed B Nickel for the applicant The first respondent appeared on his own behalf DR Murphy for the second respondents R Peterson for the third respondent R Treston for the fourth respondent Alex MacKay & Co for the applicant
3 3 The first respondent appeared on his own behalf Bruce Thomas Lawyers for the second respondents de Groots Wills & Estate Lawyers for the third respondent McCullough Robertson for the fourth respondent [1] McMURDO J: The applicant is the executor of the will of his late father, Neville Thomas Yeomans, who died on 30 May The will was dated 19 April 2000 and probate was granted on 6 October The applicant seeks a declaration as to the effect, if any, of clause 5 of this will. [2] There were two substantial gifts and the residue of the estate was left to the testator s surviving children in equal shares. He was survived by five children including the applicant. The first of those gifts was by clause 4, under which the testator gave $300,000 with the direction that his executor use it for: (i) the formation of an indigenous and intercultural communitycontrolled wellbeing organisation; (ii) such organisation to include a Committee of suitably qualified persons as is determined by QUAN YEOMANS, to oversee the organisation and its projects; (iii) the organisation to be located in Cairns or its environs; and (iv) the objects of such organisation shall be on healing in the socioemotional-cultural and self expressive aesthetics of indigenous individuals including those healers involved in the healing process. Clause 4(c) provided that if that gift failed then the sum of $300,000 would be paid to the Wu Chopperen Medical Service Limited. No issue arises as to this clause. The sum has been paid according to clause 4(c). [3] The other substantial gift was the one in question. Clause 5 of the will is as follows: The issues I GIVE AND BEQUEATH the sum of FIVE HUNDRED THOUSAND DOLLARS ($500,000.00) to my trustee the said QUAN YEOMANS to establish a fund for the indigenous and intercultural education of my grandchildren within the Asia-Pacific and Indian Sub-Continent region AND I DECLARE that the fund so created shall be utilised towards the costs of travel and accommodation within that region and the costs of the educational process, which process shall include the learning of languages of the said region AND I FURTHER DECLARE that the suitability of such expenditure shall be determined by a majority of my children. [4] The first and second respondents are the testator s surviving children (apart from the applicant). They argue that the purported gift by clause 5 is void for two reasons. The first is that it is contrary to the beneficiary principle. They say that it a gift for a non-charitable purpose rather than to any beneficiary who is able to enforce the trust
4 4 purportedly created, with the consequence that the trust is invalid. Alternatively, they argue that the terms of the trust are uncertain. [5] The third respondent is the litigation guardian for the eight grandchildren of the testator who were alive at the time of his death. The oldest of them was born on 1 February 1991 and the youngest on 12 August On their behalf, it is argued that clause 5 creates a valid discretionary trust, of which they are the only beneficiaries. Their argument anticipates a suggestion that the gift is void also by the rule against perpetuities, and they submit that it is nevertheless valid. [6] The fourth respondent is the litigation guardian for a grandchild who was born after the testator s death. On the third respondent s case, she is not a potential beneficiary under clause 5. The contrary is submitted on her behalf. The executor also applies to have the fourth respondent appointed to represent any further grandchildren. There is no potential for conflict between them and this grandchild, and the executor s application in that respect is not opposed. There will be an order to that effect in accordance with paragraph 1 of the originating application. [7] The net value of the estate is approximately $1.77 million, most of which is invested upon a cash deposit. There are few liabilities and there will be more than sufficient funds to establish a trust according to clause 5 if it is valid. The no beneficiary argument [8] With some exceptions, any trust must have a beneficiary, and a purported trust which has no beneficiary is void. 1 The reason is that there must be some person who can call for the enforcement of the trust. The principal exception to this requirement is a charitable trust, because it can be enforced on the application of the Attorney-General. Where the trust is for a non-charitable purpose and does not have a beneficiary, it fails [f]or a purpose or object cannot sue to enforce it : Leahy v Attorney-General for New South Wales [1959] AC 457 at 478. [9] But a trust which is constituted for a non-charitable purpose is not void by that alone. If a trust, though expressed as a purpose, is directly or indirectly for the benefit of an individual or individuals, it is valid provided that the individuals for whose benefit it is designed are ascertained or ascertainable, and the beneficiary principle is confined to purpose or object trusts which are abstract or impersonal : Theobald on Wills [16 th Ed] at citing Re Denley s Trust Deed [1969] 1 Ch 373. In that case, trustees were to maintain land for use as a sports ground primarily for the benefit of the employees of the company and secondarily for the benefit of such other person or persons (if any) as the trustees may allow to use the same. It was held that the trust was valid and in particular that it did not offend the beneficiary principle. At Goff J said: I think there may be a purpose or object trust, the carrying out of which would benefit an individual or individuals, where that benefit is so indirect or intangible or which is otherwise so framed as not to give those persons any locus standi to apply to the court to enforce the trust, in which case the beneficiary principle would, as it seems to me, apply to invalidate the trust, quite apart from any question of uncertainty or perpetuity. Such cases can be considered if and when 1 Jacobs Law of Trust in Australia 6 th Ed at [108].
5 5 they arise. The present is not, in my judgment, of that character, and it will be seen that cl 2(d) of the trust deed expressly states that, subject to any rules and regulations made by the trustees, the employees of the company shall be entitled to the use and enjoyment of the land. The objection is not that the trust is for a purpose or object per se, but that there is no beneficiary or cestui que trust. Where, then, the trust, though expressed as a purpose, is directly or indirectly for the benefit of an individual or individuals, it seems to me that it is in general outside the mischief of the beneficiary principle. [10] There is an evident purpose in clause 5 but the trust is not merely abstract or impersonal. It identifies my grandchildren as the persons for whose benefit, directly or indirectly, the trust is to be executed. It purports to constitute a discretionary trust under which the testator s grandchildren are the potential beneficiaries. Trust funds are to be applied for the benefit of a grandchild or grandchildren according to what a majority of the testator s children determine from time to time. If the trust is otherwise valid, a person who is within the description of my grandchildren has a right to call for the enforcement of the trust, by requiring the trustee to consider from time to time whether or not to apply any of the trust fund for his or her indigenous and intercultural education within the Asia- Pacific and Indian Sub-Continent region. 2 The challenge to the gift on the basis that it is simply a trust for a non-charitable purpose therefore fails. Uncertainty [11] On behalf of the respondents who are children of the testator, it is submitted in the alternative that clause 5 should be understood as a gift to the grandchildren which is subject to a condition subsequent, being that a majority of the testator s children determine the relevant sum to be a suitable expenditure. It was submitted that a condition subsequent will fail for uncertainty in operation if it employs a formula which makes it impossible to ascertain its operation on any view of the facts for an indefinite period, for which was cited Re Denley s Trust Deed at 389. The submission also relied upon Re Bradley [1994] 2 Qd R 233, in which it was held that a condition which obliged the beneficiaries of a farm property to enter into a deed of partnership in respect of it was void for uncertainty because the material time as to when it is to take effect is not capable of reasonably precise ascertainment. 3 [12] This is a discretionary trust, so that unless and until the discretion is exercised for the benefit of a grandchild, he or she receives nothing under it. In my view it is inappropriate to consider the certainty of clause 5 as if it operated to vest an estate subject to a condition subsequent. The true question is whether the relevant discretion is defined in the terms which are sufficiently certain. The discretion is a broad one but the criterion for its exercise is the holding of an opinion by a majority of the testator s children, acting in good faith and by reference to the evident 2 3 Gartside v Inland Revenue Commissioners [1968] AC 553. At 236.
6 6 purpose of the trust. That criterion is certain enough. For the first and second respondents it was submitted that on the evidence of the diverse ages, characteristics and whereabouts of the grandchildren, and their parents, it is impossible to ascertain how such a trust would operate for an indefinite period. That diversity could make it difficult for a majority to agree on the suitability of a particular expenditure. Clearly there is a potential for the achievement of the purpose of the trust to be affected by discord or at least the practical difficulty of reaching a decision. However, that is not to say that the trust fails for uncertainly. As to the trust being for an indefinite period, that is affected by the perpetuity rule and the statutory modification of it. Any payment for the benefit of a grandchild must be within the perpetuity period, which is discussed below. The fact that it is unknown whether the trust fund will be wholly expended within that period does not make the terms of the trust uncertain and the trust void on that ground. In my conclusion the trust does not fail for uncertainty. My grandchildren [13] The executor submits that absent a contrary intention being expressed, a gift to a class not preceded by any life estate is a gift to such of the class as are living at the death of the testator, citing Picken v Matthews (1878) 10 Ch D 264, 267. The submission acknowledges an exception to that rule where the time of distribution is after the testator s death [in which case] those living at the time of distribution take, even though they are born after the will or after the death of the testator. 4 The executor then argues that in this case there is no possibility of the time of distribution occurring after the testator s death because Clause 5 does not contain a contrary intention and thus the exception will never arise with the result that grandchildren does not include grandchildren born after the testator s death. [14] For the third respondent, on behalf of the grandchildren living at the testator s death, a similar argument was advanced. It was said that the class of grandchildren was prima facie composed of those members who are capable of taking at the death of the testator. Their submissions acknowledged that there were exceptions, including where the testator directs a fund of a specified amount to be set aside out of which alone sums may be payable, or where the testator shows an intention to exclude the rule: see Theobald on Wills 16 th ed at 425. However an argument was not developed to explain why those exceptions were irrelevant to the present case. [15] The resolution of this issue again depends upon the characterisation of the gift within clause 5. It is not a gift to a class of persons; it is a gift for the constitution of a discretionary trust, the potential beneficiaries of which are a class. The purpose of the class closing rules is to attribute to the testator an intention which is consistent with the convenience of an early vesting with classes closed, so that the beneficiaries may know the minimum size of each share and the personal representative or trustee may begin to distribute the fund. 5 That convenience is not provided by applying the class closing rules to a gift such as this, at least because it constitutes a discretionary trust and no property is vested in a member of the class as at the testator s death. In Re Bellville [1941] 1 Ch 414 at , the Court of Appeal identified the reason for the relevant class closing rule as one of convenience, and in particular of avoiding the inconvenient postponement of the 4 5 citing Dvisme v Mello (1782) 1 Bro CC 537; 27 ER 1285; Viner v Francis (1789) 2 Cox 191; 30 ER 88; Dimond v Bostock (1875) LR 10 Ch App 358. Theobald on Wills at 403.
7 7 distribution of the personal estate of the testator till it could be ascertained how many legacies of the given quantity would be payable, and observed that the rule does not apply when that inconvenience does not exist. 6 [16] There is a potential inconvenience in not knowing how many members there will be within the class of potential recipients. Conceivably, decisions as to expenditure for the benefit of certain grandchildren could be complicated by the prospect that there will be further grandchildren, whose education is also to be considered. However that is not the kind of inconvenience which the class closing rules were designed to avoid. [17] The question, of course, is one of testamentary intention. It may be accepted that any inconvenience was a material consideration for the testator. However, the confinement of the class to grandchildren living at his death would still result in a trust which would be expected to be administered over many years, and which would require a course of decision making with a consideration of a proposed expenditure against the possible demands upon the trust fund in the future. Having regard to the evident purpose of the trust, the testator must have intended all of his grandchildren to be potential beneficiaries, whether they were born before or after his death. In my view, the rules of construction relied upon by the executor and the third respondents are excluded in this case. The expression my grandchildren includes grandchildren born after the death of the testator, and whether presently alive or not. [18] A further submission on behalf of the fourth respondent was that to be within the class my grandchildren at any time, a person must not be more than 21 years of age. That submission is considered below. Perpetuity rule [19] Those who challenge the validity of clause 5 do not do so on the basis that it offends the rule against perpetuities. Nevertheless the other parties saw fit to address that issue. [20] The executor appeared to submit that the perpetuity period was 80 years from the date of death, citing s 209(1) of the Property Law Act 1974 (Qld). As the trust fund was not bound to be distributed within that period, the clause would be invalid under the general law. He submitted however that the wait and see rule applied under s 210, so that clause 5 was not invalid. The third respondents submitted that the perpetuity period would expire 21 years from the last life in being, which would be the last of the living children of the testator who had produced grandchildren. For the fourth respondent, a similar submission was made as to what constituted the perpetuity period. But it was added that the expression my grandchildren should be construed as persons who have not attained the age of majority, i.e. 21 years or less, because by adopting this construction it would not be possible for any distribution to be made outside the perpetuity period. Alternatively it was submitted that the clause was saved by the wait and see rule. [21] Under s 209, an instrument may stipulate any perpetuity period of a number of years not exceeding 80. But this did not do so and s 209 is not relevant. The perpetuity period is that under the general law, which is a life in being plus 21 years, or if there 6 citing Evans v Harris (1842) 5 Beav 45 as an example.
8 8 is no life in being, simply 21 years from the testator s death. The life or lives in being must be mentioned in the gift either expressly or by implication. The relevant lives are those which in some way or other can govern the time when the gift is to vest. By implication where there is a gift to grandchildren, the lives of the testator s children help to confine the period of time within which the gift can vest, so that the testator s children can be taken as lives in being: Lewin on Trusts 17 th ed at [22] The present application does not ask that the court declare what constitutes the perpetuity period. The application does not seek a declaration on that matter, and the question was not fully argued. The second respondents did not address the matter at all (and need not have done so). And the applicant s submissions did not address what might constitute the life or lives in being, because of a perception that the period was 80 years. Ultimately the perpetuity rule does not affect the validity of clause 5 nor any distribution, at least within a period of 21 years from the testator s death, which is the shortest of the possible perpetuity periods. This is because of the operation of the wait and see rule according to s 210. Until it becomes clear that a distribution must occur after the end of the perpetuity period, the trust is valid as is any distribution made before then. [23] I return to the fourth respondent s submission that the expression my grandchildren should be understood to be a class of persons, born before or after the testator s death, who are less than 21 years of age. It is submitted that this interpretation should be favoured because it ensures that any disposition is made within the perpetuity period, which the fourth respondent says is 21 years from the lives of the testator s children. Upon that construction, of course, no disposition could be made outside that perpetuity period. However, because the operation of the wait and see rule, it is unnecessary to adopt that construction to save the gift. An intention according to that construction is not otherwise indicated by the terms of the will and in particular, the evident purpose of clause 5, and in my view it should not be adopted. Conclusion [24] The fourth respondent will be appointed also to represent the unborn grandchildren of the testator. It will be declared that upon the true construction of the will that clause 5 is valid and that the word grandchildren includes grandchildren born after the death of the testator. It will be further declared that the class constituted by my grandchildren as referred to in clause 5 shall not be confined by reference to the age of any grandchild. [25] It will be further ordered that the costs of all parties of and incidental to this application be taxed on an indemnity basis and paid out of the estate.
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