Re Armstrong, Deceased [1960] VicRp 34; [1960] VR 202 (19 December 1958)

Transcription

1 Re Armstrong, Deceased [1960] VicRp 34; [1960] VR 202 (19 December 1958) Re ARMSTRONG, deceased SUPREME COURT OF VICTORIA HERRING, CJ 4, 19 December 1958 Herring, CJ, delivered the following written judgment: This is an originating summons taken out by the Equity Trustees Executors and Agency Co. Ltd. as executor of the will of George Armstrong (hereinafter referred to as the testator). The summons seeks the determination of certain questions relating to two sums of 1500 pounds deposited by the testator with the National Bank of Australasia Ltd. at Alexandra on fixed deposit for twenty-four months on 3 August These sums were collected by the plaintiff as executor of the testator on 8 August 1957, along with interest in the sum of 120 pounds. The testator had died on 12 August 1956 and the said deposits had matured on 3 August The first question enquires whether these sums of 1500 pounds so deposited form part of the residuary estate of the testator or whether they belong to the first named defendants, William John Armstrong and Bernard Armstrong, who were sons of the testator. Bernard Armstrong is an infant and he appeared by his guardian ad litem, one Anne McCarthy. The testator also left a widow, the defendant Margaret Armstrong, who did not appear in these proceedings. She was served with the summons but informed the solicitors for the plaintiff that she did not desire to take any part in the proceedings. Testator left him surviving five daughters, viz. the defendants Florence Isabel Redding, Norma Rose Hill, Blanche Tilley, Louisa Margaret Hitchcock and Dora Chisholm. He also left him surviving a third son, the defendant Cliff Armstrong. All his children are of age with the exception of the defendant Bernard Armstrong. The defendants William John Armstrong and Bernard Armstrong were represented by Mr. Bradshaw, who contended on their behalf that the said sums of 1500 pounds belonged to them, the testator having constituted himself a trustee of such sums for them at the time when he deposited them with the bank. The facts as established make it clear that the testator was concerned to provide 1500 pounds each for the defendants, William John Armstrong and Bernard Armstrong, to enable them to purchase stock after his death, so that they could carry on a dairy farm on the Seaford property, which he had left to them by his will subject to a life interest in the widow. The testator at the age of seventy-nine in the year 1952 suffered a stroke which paralyzed the right side of his body. His mental condition, however, did not appear to be affected, though after suffering the stroke he was unable to sign documents and could only make a mark with his left hand. About a week before he deposited the two sums at the bank the testator apparently read an article in the "Age" newspaper regarding an impending loan that was being floated by the State Electricity Commission. He then told his son the

2 defendant Cliff Armstrong that he wished to invest a certain sum in this loan for the defendants William John Armstrong and Bernard Armstrong. On 3 August 1955 the defendant Cliff Armstrong drove the testator to the National Bank in Alexandra to arrange the investment which he wished to make. He there consulted the bank manager, Francis Laidlaw Stewart, who gives this account in his affidavit of what took place:-- "The deceased told me that he wanted to make an arrangement whereby he might invest the sum of 1500 pounds for each of his two sons on condition that he would be entitled to receive the income from such investment. "He suggested that two amounts each of 1500 pounds be invested for the benefit of each son in the State Electricity Commission loan being floated at that time and that the principal sums be paid to each of the sons on maturity after his death, but that he receive the interest therefrom during his life. He suggested that the investments in the loan should be in the name of each of the two sons respectively although he was to receive the income from such investment. "I discussed with him the desirability of making investments in such manner and informed him that I considered the Commission would only pay the interest on the loans to the persons in whose name the investments were made. "As an alternative scheme I suggested that he could invest the money on fixed deposit with the National Bank of Australasia Limited in such manner that on maturity of the investment following his death the principal sum would go to the two sons, and meanwhile he could receive the interest payable during his life. "The deceased followed the suggestion and two amounts were lodged on fixed deposit. The deposits were lodged by the deceased and accepted by me on behalf of the said bank. The receipts issued by me on behalf of the bank acknowledged the payments as 'George Armstrong in re William John Armstrong' and 'George Armstrong in re Bernard Armstrong' respectively. "That at the time of lodging the abovementioned funds the deceased stated clearly that his intention was to create a fund for the benefit of each of his two abovenamed sons. He informed me that he did not wish to make gifts to the two sons but that he wanted to receive the income from the investment during the term of the investment, and that the sons were to be absolutely entitled to the principal amounts on maturity of the investments following his death. He stated that the investment was for his sons and that at any time all that he was to receive from the investments was the income." It was on this state of facts that Mr. Bradshaw argued that the father had constituted himself a trustee of the choses in action represented by the two deposit receipts, one for the benefit of the defendant William John Armstrong, and the other for the defendant Bernard Armstrong. Before proceeding to consider the legal position, it is desirable to point out that the question here is not one between an executor and a legatee as such, and so it is not properly before the Court on an originating summons, where the jurisdiction of the Court is limited to matters that could have been decided in an administration suit. It is however, convenient to dispose of this matter on originating summons and, as the two sons who claim the benefit of the two sums are represented here and raise no objection to the jurisdiction, I propose to deal with the matter in the proceeding now before me. In so doing, I am following the course that was followed by the Court of Appeal in the case of Re Royle; Royle v Hayes (1889) 43 Ch D 18, and by Hudson, J, in In the Will of Selby (22 August 1956, unreported). The legal position, I think, is clear. In the first edition of Professor Maitland's Equity the learned author states, at p. 71, that to make himself a trustee a man "must intend to make himself a trustee, to retain the property in question but to hold it henceforth upon the

3 designated trusts." He then goes on at p. 73: "If he plainly declares that he holds himself to be a trustee for certain purposes of certain rights legal, or it may be merely equitable, which are vested in him--this is enough. If the rights in question are rights in lands or hereditaments then--because of the Statute of Frauds--the declaration must be proved by signed writing. In other cases word of mouth will be enough." After pointing out that an imperfect gift will not be construed as a declaration of trust, the learned author proceeds, at p. 74: "The two intentions", viz. to make a gift and declare a trust, "are very different-- the giver means to get rid of his rights, the man who is intending to make himself a trustee intends to retain his rights but to come under an onerous obligation. The latter intention is far rarer than the former. Men often mean to give things to their kinsfolk, they do not often mean to constitute themselves trustees. An imperfect gift is no declaration of trust." To constitute himself a trustee it is not necessary that a person should use precise words. For, as Jessel, MR, pointed out in Richards v Delbridge (1874) LR 18 Eq 11, at p. 14: "It is true he need not use the words, 'I declare myself a trustee', but he must do something which is equivalent to it, and use expressions which have that meaning; for, however anxious the court may be to carry out a man's intentions, it is not at liberty to construe words otherwise than according to their proper meaning." In Heartley v Nicholson (1873) LR 19 Eq 233, Bacon, V-C, had to consider whether a testator had so dealt with certain shares in his lifetime as to constitute himself a trustee of them for the plaintiffs. Bacon, V-C, issued, on p. 239, this warning: "All such questions are, from their very nature, of difficulty, and sometimes of very great nicety. The difficulty is occasioned by the desire which the court must feel to give full effect to the intention of the party or parties to the transaction, and by the duty which the court is under of preserving unimpaired those rules which have been established and which form the law, even though they should frustrate the plain intention. The nicety often arises from the attending circumstances, because they require the closest consideration in order to arrive at a satisfactory conclusion as to what was the true intention, and as to the propriety of carrying that intention into effect." The present case too is one of some nicety. Here too the closest consideration is required in order to arrive at a satisfactory conclusion as to the true intention of the testator and as to the propriety of carrying that intention into effect. What then is the effect of the evidence that I have set forth, which is not contested, as representing what really took place, so far as the question of the testator's true intention is concerned? First, it is clear that he did not intend to make a gift of the choses in action represented by the deposit receipts to his two sons, the two first named defendants. It would appear that he had arrived at the bank intending to make a gift to each of his said two sons of 1500 pounds worth of State Electricity Commission loan, but had been dissuaded by the bank manager from doing so. Instead, on the advice of the bank manager, he had deposited in his own name two sums of 1500 pounds each with the bank on fixed deposit for twentyfour months, so that the principal moneys were not due and repayable until the twenty-four months had elapsed. The deposit receipts, which testator received in respect of these two sums, show the due date as 3 August 1957 and state that the terms on which they are issued include one to the effect that "payment will only be made to the depositor". It is clear, therefore, that the testator intended to retain the choses in action represented by those receipts and did not mean to get rid of them by way of gift. Mr. Bradshaw for the two

4 sons did not contest this. His submission was that what had happened here was that the testator had constituted himself a trustee. It is also clear, I think, from the evidence, that the testator did not intend to part with the income of the property he was dealing with during his life, so that necessarily he contemplated that his sons would not enjoy the principal sums until after his death. Indeed, he did not what them to enjoy such sums until then, for he was providing the money so that they might be in a position to purchase stock to run upon the properties he was leaving them by his will. It is for this reason that Mr. Wright for the residuary legatees contended that what testator had in mind was a testamentary gift to his two sons and that that gift failed for non-compliance with the Wills Act. The mere fact, however, that testator intended that his two sons should not enjoy the property he was dealing with until after his death, does not establish this contention. And in fact it must fail, if the two sons can establish the trust they are contending for. For as stated by Dixon, CJ, and Williams and Fullagar, JJ, in their joint judgment in Kauter v Hilton [1953] HCA 95; (1953) 90 CLR 86, at p. 100: "The mere fact that the donor intends the trust to take effect in possession upon his death does not make the gift testamentary. As it is pointed out in the joint judgment of Dixon, J, and Evatt, J, in Russell v Scott [1936] HCA 34; (1936) 55 CLR 440, at p. 454: 'Law and equity supply many means by which the enjoyment of property may be made to pass on death. Succession post mortem is not the same as testamentary succession. But what can be accomplished only by a will is the voluntary transmission on death of an interest which up to the moment of death belongs absolutely and indefeasibly to the deceased'." It is, of course, for the two sons to establish that testator did intend to constitute himself a trustee, did, that is to say, intend to come under some "onerous obligation", to use Professor Maitland's words, in their favour in respect of the choses in action represented by the deposit receipts. They, of course, rely upon the fact that the name of one of them appears on each deposit receipt. This they say was the best indication the testator could give that his intention was there and then to benefit each of them. In my opinion, there is great force in this submission, for, if he had no such intention, it is difficult to understand why their names should appear as they do on the deposit receipts. See too in this connexion, In the Will of Selby, supra. They also rely upon what the testator said to the bank manager. The testator said to him that his intention was to create a fund for the benefit of each of his two sons and that the investment he was making was for them. True it is that he did not use the words "trust" or "trustee", but what he said does show an intention to hold the investment he was making upon trust. He was using expressions which I think may with propriety be treated as declarations of trust, and proper to be enforced in appropriate circumstances. One thing remains and that is that the two sons must also establish with sufficient certainty the terms of the trust. As to this Mr. Wright for the residuary legatees submitted that on the evidence such terms cannot be ascertained with any degree of certainty at all. He referred to the fact that it is quite uncertain what the testator intended should happen in the event of the deposits maturing before his death. The testator, however, has made clear what he intended should happen if the deposits matured after his death. In this event, the two sons were to take the principal sums payable on maturity absolutely for their own benefit. And this is just what has actually happened, and so there is no doubt that in the circumstances that have arisen the testator intended his two sons to be absolutely entitled. There is no

5 uncertainty about this and so one does not have to concern oneself with the problem as to what the testator intended should happen in the event of the investments maturing before he died. It may be, to put the case at its worst against the two sons, that, on the proper construction of what testator said, the possibility of this event occurring prevented the sons from obtaining anything more than a contingent interest in the first place under the trust that he declared. The interest they took, however, in my opinion, was even on this view an immediate interest and one that in any event became absolute when the testator died, the investment still being on foot. For all these reasons I think the questions should be answered:-- 1. (a) No. (b) Yes. 2. (a) Yes. (b) Unnecessary to answer. 3. (i) The defendants William John Armstrong and Bernard Armstrong. (ii) The residuary estate. Questions answered. Solicitors for the plaintiff: Macpherson and Kelley. Solicitor for the defendants, William John Armstrong and Bernard Armstrong: Thomas Burke. Solicitors for the residuary beneficiaries: Roy Schilling and Co. AustLII: Copyright Policy Disclaimers Privacy Policy Feedback URL: