HIGH COURT we H. C. or A. Jocal authorities for the purpose of enforcing or securing the provis 1927. of such an Act. —~ Kocaran But I think that the order should be affirmed, and the appe Counc. = dismissed. ROCKDALE Counert. . ap Powers J. concurred in the judgment of Isaacs J. Appeal dismissed with costs. Solicitors for the appellants, Salwey & Primrose. Solicitors for the respondent, Morgan & Morgan. BL. ' [HIGH COURT OF AUSTRALIA] McQUADE Sap DEFENDANT, MORGAN AND OTHERS PLAINTIFFS AND DEFENDANTS, ON APPEAL FROM THE SUPREME COURT OF NEW SOUTH WALES. H.C. or A, Deed of Appointment—Construction—Gift of income after appointor's d 1987. over on appointee charging his interest—Charge given and released before = death—Determination of interest—Forfeiture. SYDNEY, g The di i i 1 ae e donee of a power of appointment appointed, by a deed-poll, 'May '8. trustees should after her death hold the property appointed upon = her four children for their maintenance during their minority and after 1s ine Giauins, respectively attaining twenty-one to pay them the whole of the and Rich JJ. equal shares, It was then declared that "in case any of the said . shall become bankrupt or do or suffer any act or thing whe 39 C.L.R.] OF AUSTRALIA. said income or his or her interest therein or any part thereof shall be charged H.C. or A. or encumbered or become vested in or payable to any other person or persons the said trustees . . . shall during the remainder of the life of such child whose interest shall have so determined apply the share or shares of income to which such child would have been entitled as the same shall from time to time be received for or towards the maintenance of the said child or the maintenance of his or her issue," &e. After the deed of appointment was executed the appellant, one of the children, charged his interest as collateral seeurity for the payment of money advanced to him on mortgage and, before the death of the appointor, the mortgagee released by deed the mortgagor and all his interest, Held, by Knox C.J., Higgins and Rich JJ. (Isaacs J, dissenting), that upon the charge being given the interest appointed to the appellant became forfeited. 'The rule as stated in Jarman on Wills, 6th ed., p. 1499, that no forfeiture is incurred if the charge is got rid of before the interest falls into possession, is too widely stated; the rule is not applicable where no ambiguity can be found in the forfeiture clause. Decision of the Supreme Court of New South Wales (Harvey C.J. in Eq.) affirmed. Appeat from the Supreme Court of New South Wales. By a deed-poll dated 4th April 1901 Emily Carleton McQuade, pursuant to a power of appointment given to her by the will of her father, Charles Carleton Skarratt, over a one-eighth share of his residuary estate (called in the will his "residuary trust funds''), appointed that the trustees of that estate should from and after her death hold that share upon trust for her named children in equal shares, to be used subject to the limitations thereinafter contained at the discretion of the trustees during the minorities of the children for their maintenance, education and advancement in life respectively, and the whole of the income of their respective shares to be paid to the children after they respectively should attain the age of twenty-one years or marry under that age, and if more than one in equal shares. The deed then proceeded :—" It is hereby declared that in case any of the said children of the said Emily Carleton McQuade shall become bankrupt or do or suffer any act or thing whereby the said income or his or her interest therein or any part thereof shall be charged or encumbered or become vested in or payable to any other person or persons the said trustees or trustee shall during the remainder of the life of such child whose interest shall have so determined apply the share or shares of income to which such child would have been entitled 1927. ~ McQuavE v. Morea. H. C. or A. 1927. ~~ MoQuapE v. MorGan. HIGH COURT as the same shall from time to time be received for or towards maintenance of the said child or the maintenance of his or her or to invest the same in manner aforesaid or such portion thereof as may be available for the benefit of such child or for the benefit of such issue in equal shares or if there shall be no issue It is herel declared that the said trustees or trustee shall apply the income to which such child would have been entitled in case his or her income had not determined between such of the said children as shall then be living and entitled to receive the same in equal proportions," &c. On 1st October 1912 Frederick Carleton McQuade, the son of Emily Carleton McQuade, executed a memorandum of agreement under seal whereby he charged all his right, title interest under the will of Charles Carleton Skarratt with the rey and interest under the will of Charles Carleton Skarratt from payn of all principal moneys and interest owing under the agreement Ist October 1912. On 21st June 1923 Emily Carleton McQuade d An originating summons in the Supreme Court of New Wales was taken out by Mary Ellen Morgan and Minnie Long Innes, two of the daughters of Emily Carleton McQuade; defendants being Frederick Carleton McQuade, Emily Carle Holderness (another daughter of Emily Carleton McQuade) and Kelso King, Perey Vernon McCulloch and Charles Henry Skarrat Keigwin, the three trustees of the will of Charles Carleton Ska The only material question asked by the summons was: " Whe upon the true construction of the said deed-poll defendant Frederick Carleton McQuade by the execution of memorandum of agreement dated 1st October 1912 and made betwe him and one Daisy Skarratt has forfeited the whole or any part and, if so, what part of his interest in (a) the said original one-eig share" &e. The originating summons was heard by Harvey C. Eq., who, on 23rd August 1924, made a decretal order declaring Frederick Carleton McQuade had forfeited the whole of his inter in the original one-eighth share of Emily Carleton McQuade in the residuary trust funds. 39 C.L.R.] OF AUSTRALIA. From that decision Frederick Carleton McQuade now appealed H. C. or A. to the High Court. Other material facts are stated in the judgments hereunder. Flannery K.C. (with him S. A. Thompson), for the appellant. A forfeiture was not incurred upon the execution by the appellant of the document of Ist October 1912. The rule stated in Jarman on Wills, 6th ed., p. 1499, applies, namely, that no forfeiture is incurred if the charge is got rid of before the interest falls into possession. If the Court finds general words which are applicable to events which happen before the period of distribution and to events which happen after that period and also finds a general intention to protect the appointee, the Court will follow the cases which limit the operation of the words to the event which happens after the period of distribu- tion. There is an ambiguity as to when the forfeiture is to be made effective so as to divert the interest from the appointee. The Courts have treated a charge such as that in this case in the light of events that have happened, unless there have been words in the instrument which prevent them from doing so. [Counsel referred to White v. Chitty (1); Lloyd v. Lloyd (2); Samuel v. Samuel (3) ; Robertson v. Richardson (4); In re Loftus-Otway ; Otway v. Otway (5); In re Forder ; Forder v. Forder (6); In re Baker: Baker v. Baker (7); In re Mair; Williamson v. French (8).] David Wilson, for the respondents Mary Ellen Morgan and Minnie Thelma Long Innes, and Wickham, for the respondent Emily Carleton Holderness, supported the view put for the appellant. Nicholas, for Dorothy May McQuade, an infant, who, by an order of the Supreme Court, was added as a party during the hearing of the appeal. The declaration made by Harvey C.J. in Kq. is the proper one. The question turns on the construction of the deed of appointment. No rule of construction has been laid down which deals with words such as those in this deed. The rule that where words of futurity are used the Courts, in endeavouring to carry out what they see is (1) (1866) LR, 1 Eq. 372. (5) (1895) 2 C (2) (1866) LR. 2 Bq. 722. (6) (1927) W. (3) (1879) 12 Ch. D, 152, at p. 158. (7) (1904) 1 3 (4) (1885) 30 Ch. D. 623, (8) (1909) 2 Ch, 280. 1927. _ McQuapE v. Morean. H. C. or A. 1927. _~ MeQuabre v. More@an. May 6. HIGH COURT (1997 the intention of the appointor or testator, will give those words 7 past significance, does not apply here. The question of futurity does not arise. The Court should not speculate as to the motives of the appointor (Auger v. Beaudry (1) ; Gutheil v. Ballarat Trus Executors and Agency Co. (2)). This Court is not bound by the decisions by which the Court of Appeal in England has held i to be bound. The appointor has enumerated a series of ey upon the happening of which a defeasance is to take place and those events are alternative. The words of the deed are wider than | any of the cases which are relied on by the appellant, and are capable of two interpretations. [Counsel referred to In re Baker Baker v. Baker (3); Inve Evans; Public Trustee v. Evans (4); In re Mair; Williamson v. French (5); In re Loftus-Otway Otway v. Otway (6); Trappes v- Meredith (7): Robertson Richardson (8).] {Isaacs J. referred to In re Sibbald : Hyman v. Sibbald (9).} a Henry and McDonald, for the respondent trustees, adopted th arguments of Nicholas. Flannery K.C., in reply. [Hicerys J. referred to Rochford v. Hackman (10); Joel Mills (11) Cur. adv. vult. The following written judgments were delivered :— Knox C.J. anp Ricu J. By deed-poll dated 4th April 1901 Emily Carleton McQuade exercised a power of appointment given | her by the will of her father, Charles Carleton Skarratt, in favou of her four children, of whom the appellant is one. The appoint ment was subject to a condition expressed in the following w "It is hereby declared that in case any of the said children of thi said Emily Carleton McQuade shall become bankrupt or do or any act or thing whereby the said income or his or her interest (1) (1920) A.C. 1010, at p. 1013. (6) (1895) 2 Ch. 235. (2) (1922) 30 C.LR, 293, at p. 306. (7) (1871) LR. 7 Ch. 248, at p. 251. (3) (1904) 1 Ch. 157. (8) (1885) 30 Ch. D., at p. 627. (4) (1920) 2 Ch. 304, at p. 321. (9) (1904) 23 N.Z.L.R. 805. (5) (1909) 2 Ch, 280. * (10) (1852) 9 Ha. 475. (11) (1857) 3K, & J, 458. 39 C.L.R.] OF AUSTRALIA. therein or any part thereof shall be charged or encumbered or become 4: C. oF A. vested in or payable to any other person or persons the said trustees or trustee shall during the remainder of the life of such child whose interest shall have so determined apply the share or shares of income to which such child would have been entitled as the same shall from time to time be received for or towards the maintenance of the said child or the maintenance of his or her issue or to invest the same in manner aforesaid or such portion thereof as may be available for the benefit of such child or for the benefit of such issue in equal shares." On Ist October 1912 the appellant by deed charged the interest so appointed with the repayment of a sum owing by him on mortgage, and notice of the charge was in the year 1912 given to the trustees of the will of the said Charles Carleton Skarratt. On 20th July 1916 the charge was released by deed. Emily Carleton McQuade died on 21st June 1923. The question for decision is whether the appellant has incurred a forfeiture of the interest appointed to him by the deed of April 1901. The solution of this question depends on the true construction of the provision set out above. Mr. Flannery admits that, but for the provision for forfeiture, the effect of the deed executed by the appellant on Ist October 1912 would have been to create a charge upon the interest of the appellant in the income which was the subject of the deed of appointment. It would seem to follow that the appellant has done an act whereby his interest in that income has been charged, and has therefore brought himself within the forfeiture clause. But it is said that although the appellant did charge his interest he did not do so within the meaning of the clause in question, because the charge which he gave was released before any income became payable to him under the appoint- ment. This contention is founded on a number of decisions— White v. Chitty (1); Lloyd vy. Lloyd (2); Samuel v. Samuel (3) ; In re Loftus-Otway ; Otway v. Otway (4); Inve Mair; Williamson v. French (5), and In re Forder (6)—the result of which is said to be that it is a canon of construction of forfeiture clauses such as that (1) (1866) LR. 1 Bq. 372. (4) (1895) 2 C1 (2) (1866) L.R. 2 Eq. 722, (5) (1909) 2 (3) (1879) 12 Ch, D, 152. (6) (1927) W.N. H. C. or A. 1927. ~ McQuavE v Morean. Knox C.J. Rich J. HIGH COURT now under consideration that references to charges or encumbrane should be read as applying only to charges or encumbrances operat at the time when income becomes immediately payable to 1 beneficiary. The decisions in all the cases above referred 1 except possibly In re Forder (1), the only available report of wh is a short statement in the Weekly Notes—seem to us to fall shor of laying down any such canon of construction. In all the othe cases the question seems to have been treated as one of the constru tion of the particular instrument under consideration. Constru the forfeiture clause in the present case according to the ordi meaning of the words used, it covers every charge created aft 4th April 1901 by any of the beneficiaries over his or her intere in the income. The words are not ambiguous nor are they, in opinion, reasonably open to more than one meaning. We ' with the learned Chief Judge in Equity in thinking that the | as stated in Jarman on Wills, 6th ed., p. 1499, that no forfeitu incurred if the charge is got rid of before the interest falls i possession, is too widely stated, and that there is no room for application of that rule where, as in the present case, no amb can be found in the words of the forfeiture clause. In 4 Beaudry (2) Lord Buckmaster said:—" The gift over, therefc only too often does not carry out what, if speculation were pe mitt it would be reasonably certain that the testator wished, and iti these considerations that have sometimes led the Courts to attempt so to read the words as to make the will conform to what i confidently believed must have been the testator's intention. the words are so ambiguous as to leave room for such construct or if there are other words to help the meaning, it is one which doubt the Courts would readily adopt. But, whatever wa from the strict rule of construction may have taken place in the pas it is now recognized that the only safe method of determining V was the real intention of a testator is to give the fair and meaning to the actual language of the will. Human motives am too uncertain to render it wise or safe to leave the firm guide of words used for the uncertain direction of what it must be ass that a reasonable man would mean." Applying these observal on (1) (1927) W.N. 12. (2) (1920) A.C., at pp. 1013, 101 39 C.L.R.] OF AUSTRALIA. to the case now under discussion, we can find no reason for adopting H- ©. oF A. such a construction of the forfeiture clause as would create a forfeiture only in case income actually payable to the beneficiary became liable to be intercepted, because we agree with the learned Chief Judge in Equity in thinking that the language in the present clause is not open to such a limited construction. For these reasons we are of opinion that the appeal should be dismissed. Isaacs J. The learned Judge from whom this appeal comes, after referring to the accepted rule of construction in connection with clauses forfeiting reversionary property, thought the language of the clause in this case was not open to the limited construction reached by that rule. He said: "It is not well drawn, but it clearly indicates that if the interest of any child is charged or encumbered, his interest is to determine." With respect, I cannot agree. The rule of construction referred to is, as stated, that, even although an interest is actually charged or encumbered—that is, by an act purporting to charge it—yet if the charge is got rid of before the interest falls into possession, no forfeiture takes place. That is to say, although according to the literal signification of the words, forfeiture would by the mere act of charging take place, yet according to the rule it has that effect only prima facie (per Wood V.C. in Lloyd y. Lloyd (1)). If, notwithstanding the event literally occurs and notwithstanding its prima facie effect, it is got rid of before, at the earliest, the interest falls into possession, that is, as the Vice-Chancellor said in the same case, "in time to intercept the property before it passed into other hands than those of the legatee," the rule says that the prima facie effect is destroyed, and the forfeiture avoided. It is, therefore, quite insufficient to say that merely because the reversionary interest is charged or encumbered the matter is concluded. I think it only fair to the learned Judge from whom this appeal comes to say that he has in another case stated the rule as I under- stand it. In Permanent Trustee Co. v. Cormack (2) his Honor said: " Forfeiture clauses are always construed with reference to (1) (1866) LR. 2 Eq., at p. 724. (2) (1920) 21 S.R. (N.S.W.) L, at p. 6 1927. McQuapE ca Morean. Knox 0.5. Rich J. MeQuapr v. Morean. Isaacs J. - the known object of the clauses, the object being to preserve the HIGH COURT life or other interests." It is impossible to state the matter mo clearly than it appears in the judgment of Fry J. in Hurst v. Hi (1), namely: "The true principle established by the cases | which I have referred, so far as they are applicable to the pre case, appears to me to be this, that if a charge or a bankruptey, any other impediment to the personal reception of the i has been created, but has been validly extinguished before the period distribution or the period at which the right to receive any portior of the money has accrued, there is no forfeiture." The learned Ju applied that principle, and found a forfeiture as appears at p. of the report, because the instrument was, even by the concession argument "inforce . . . a fortnight or three weeks during whi Mrs. Hurst had an actual right to the reception of the rents profits." That, of course, is the imperative distinction betw that case and this. It is, therefore, quite insufficient to say, mere because a reversionary interest is charged or encumbered—assuming it to be so—that the matter is concluded by the express words of the clause. Metcalfe v. Metcalfe (2) is, in its general groundw a direct authority to the contrary. The words of the corresponding clause were, to say the least, as precise and minute as in this ¢ The "interests " forbidden to be " charged" were, in my opini wider than in this case. Yet the Court (Lindley, Bowen and L.JJ.), though holding with reluctance that the " event " as literally described took place, did not hold that as decisive. Lindley L. said (3): " That being so, the next question is whether there such a state of circumstances that the gift over took effect." is the precise question that, in my opinion, arises here. How it should be answered depends, of course, on the circumstances o! each case. In Metcalfe's Case it was answered in the affirmati The test put by Fry L.J. in that case is thus stated (4): " time, therefore, at which we must regard the rights of the parties | the time at which it first becomes the duty of the trustees of the? l to make a payment." That the Lord Justice calls "the time." So that the nature of the event does not complete 1 (1) (1882) 21 Ch. D. 278, at p, 288. (3) (1891) 3 Ch, at p. 5. (2) (1891) 3. Ch. 1. (4) (891) 3 Ch., at p. 7. 39 C.L.R.] OF AUSTRALIA. inquiry : it needs to be seen at what 'ime it operated so as to defeat H.C. 'the testator's manifest and dominant intention. Applying that test here, the question is admittedly in the negative. What is McQvape v necessary in order to overcome the rule is some language of the Moncaw. instrument indicating that, even if the charge is got rid of before the interest falls into possession, the forfeiture shall take effect. That is what is meant by absence of ambiguity in the sense relevant to this case. In Durran vy. Durran (1) Vaughan Williams and Romer L.JJ. make perfectly clear what is the relevant sense of " ambigui Neville J., in In re Mair; Williamson v. French (2), in a few lines enunciates both the rule of construction and what is needed to override it. As to the first, he says:—' The Court must look at the object of these forfeiture clauses. It cannot help knowing that the object is to preserve the life interest and nothing else." As to the second, he says :—' It may be that in some cases words are used which compel the Court to hold that a forfeiture has been incurred though the life interest has been preserved. There are no such words here." No such indication was or could be suggested in this case. Every word in the clause is consistent with the full application of the rule. To refuse to apply the rule in this case is virtually to abolish it. The effect of so doing must be carried into many instruments of this nature because they are framed in reliance on the rule. Even so recent a work as Key and Elphinstone (1923), 11th ed., vol. 2, p. 898, recognizes it. After about sixty years of recognition, many titles must rest upon the rule. No one, of course, would deny the force of the general proposition that instruments must be interpreted by their own words. But rules of law and construction must have their force also. The general proposition does not annihilate the rule in Shelley's Case (3), nor in my opinion does it exclude the rule of construction referred to in the absence of clear words to the contrary. Here there is not a single syllable to exclude it, and so this case, if determined in favour of the respondent, cannot but be a precedent of a very disturbing kind. A very close analogy is found in the judgment of the Privy Council in Towns v. Wentworth (4). There it is said: " In order to (1) (1904) 91 LT. 819, at pp. 820, (3) (1581) 1 Rep. 93b. 821. (4) (1858) 11 Moo. P.C.C. (2) (1909) 2 Ch., at p. 282. 543, Isaacs J H. C. or A. 1927. ww McQuaDE v. MorGan. Isaacs J. HIGH COURT determine the meaning of a will, the Court must read the lan of the testator in the sense which it appears he himself a to the expressions which he has used, with this qualification, th when a rule of law has affixed a certain determinate mea technical expressions, that meaning must be given to them, the testator has by his will excluded, beyond all doubt, construction." It is true we are not now concerned with a rule of law or a technic be regarded as a technical clause. Sometimes what I have arule of construction is referred to as a " doctrine" or a " principle in Metcalfe's Case (3), and in the various cases collected in Otway's Case (4). Lord Hatherley himself, in Lloyd's Case calls it "the true principle of construction." In Metcalfe's Ca (6) Bowen L.J. calls it "this construction of forfeiture lau But whatever other term may be used, it is true, as Lord Blanesbur (then Younger L.J.), speaking of the doctrine of Trappes v. Men (7), said in In re Evans; Public Trustee v. Evans (8): "Its a definite rule of construction." His Lordship, referring to tl forfeiture clause then before the Court, said: "' This clause is ¢ of a class in which the Courts by a series of decisions acce sound by the House of Lords, and in order to give effect to wha conceived to be a testator's manifest intention, have felt themselves liberty to reject, at least in one very important respect, the h construction of his words," &c. "The manifest intention testator" is also a phrase used by the Privy Council in Gibbo Gibbons (9). In Re Spearman ; Spearman v. Lowndes (10), Kekewi J., after referring to White v. Chitty (11), bears testimony to the p1 (1) (1878) 10 Ch. D, 157, at p. 161, per Hall V.C. (2) (1882) 21 Ch. D., at p. 288, per Fry J (3) (1891) 3 Ch., at pp. 5, 6, per Tinsley Teleaceltncea Ua a (4) (1895) 2 Ch., at pp. 242-243, (5) (1866) L.R. 2 Eq., at p. 723. (6) (1891) 3 Ch., at p. 6 (7) (1871) L.R. 7 Ch, 248. '8) (1920) 2 Ch., at p. 322. (9) (1881) 6 App. Cas. 471, at p. 48 (10) (1900) 82 L.T. 302, at p. 303. (11) (1866) E.R. 1 Eq. 372. 39 C.L.R.] OF AUSTRALIA. many cases construed the meaning of the parties in this way: Not that there should be simply some event happen which would entitle a trustee in bankruptcy or other assignee in law to receive the property, but that really it should be diverted from its original channel—diverted from the beneficiaries under the will or settlement— and come to the hands of some person, a stranger, who is to use it, not in their favour, but adversely to them by applying it to entirely different purposes. That, I repeat, is the construction which has been put on those clauses again and again." If the learned Judge meant, as I understood he did mean, by "coming to the hands of some person, a stranger," to include the coming within reach of his hands if he chose to take, then I think that exposition is in perfect accordance with, and strongly confirmatory of, the view I have taken of the reported cases referred to. So that it is clear to demonstration that the "series of cases' referred to are regarded, not as simple instances of ordinary literal construction, but as instances of the application of a rule of construction—or, what is the same thing, a recognized judicial doctrine or principle—to a well recognized class of clauses. Testators and settlors and their legal advisers are naturally guided by what the Courts have laid down on the subject. Where it is so easy to follow the course pointed out by judicial utterances, namely, to negative the application of the rule, it is, in my opinion, the proper course, by analogy to Towns v. Wentworth (1), to follow what is there said, namely, to require unambiguous negation before abandoning the general rule. More particularly is that so when the rule ascertains prima facie what in the case cited, and in a passage immediately following the one quoted, is called, "the main purpose and intention" of the testator or settlor, which governs particular expressions insufficiently unambiguous to control it. No such expression is found here. I am tempted to stop at that point, because what I have said appears to me decisive. But respect for the contrary opinion and anxiety to maintain so far as I can the force of a rule devised and accepted to carry out to the full a testator's manifest intention prompt me to deal further with the position. It is law, both ancient and modern, that a forfeiture clause is to be read strictly in favour (1) (1858) 11 Moo, P.C.C. 526. 233: H.C. oF A. 1927. McQuapE ' Morean. Isaacs J. H. C. or A. 1927. —7 MeQuapre v. Mor@an. Isaacs J. HIGH COURT of preserving rights (Fraunces's Case (1); In re Clark; Clark Clark (2) ). Wood V.C., in Lloyd's Case (3), said that the Court endeavours " to prevent the property passing into hands other than those which the testator intended should receive it," and "if th circumstances of the case admit, the Court will endeavour to inte the language in favour of the legatee, for whom the testator h intended to make as extended a provision as he can." be read in favour of the appellant. But it may be well to menti what I consider a very important indication outside the clause its The deed in which it occurs recites how and why it came to inserted, and its purpose. There is first a recital of a provision in the will of Charles Carleton Skarratt as to a daughter's share, a giving a daughter a power of appointment " with the like provisi and upon the like ultimate trust in favour of the children of s daughter failing appointment as in the said will declared respect the shares of the testator's sons," &c. Then follows a recital of the " provisions " referentially included in the power as to limitation of the sons' shares. They are lengthy, and I shall content myseli with stating that they provide that the sons' shares do not ves absolutely, but determine upon events which, if the shares absolute, would cause income as to which a beneficiary had an interes in possession to be diverted to, or charged or encumbered in fa' of, some other person, It is obvious that except on the construct contended for by the appellant, the provisions would not be " like, but very different. That is apparent on a very little considerat tion. The rule of construction is not founded on an arbitrary notion. rests on a fundamental consideration representing the very subs of protective trusts such as that before us. It is repeatedly ex by Judges of great eminence. The principle is that in framing s limitations a testator or settlor is concerned only with this, " the property intended for the objects of his bounty shall not p (1) (1609) 8 Rep. 89b, 90b. (3) (1866) L.R, 2 Eq., at p. 724 (2) (1926) Ch. 833. (4) (1866) LR. 1 p. 376. 39 C.L.R.] OF AUSTRALIA. and not payable to any other person, why should you not give effect H.C. ov A. to that object, even supposing the expressions may be capable of some other interpretation? I think the principle laid down by Lord Hatherley is a sound one, and that itis a guiding rule, in deciding these cases, not to construe ambiguous expressions otherwise than for the purpose of securing that which it is obvious, from the expres- sions themselves, it was the intention of the testator to secure, namely, that the bequest should enure to the personal enjoyment and benefit of the legatee " (per Jessel M.R. in Samuel v. Samuel (1). See also Metcalfe v. Metcalfe (2) and In re Mair (3). Nothing could be more precise or comprehensive than "bankruptey." It covers every possible interest. In a sense it causes immediate vesting of every interest the bankrupt has. But then comes the rule of construction which considers time and says it must for forfeiture purposes be a bankruptey which endures until "the critical time " and affects the beneficiary's interest as one in possession, at the earliest. Consequently one cannot, in this case, ride off on the word " interest "' (whatever that means), or the word "charged" or the word "encumbered" (whatever they mean). And the reason you cannot ride off is that there is nothing which says unambiguously that, even if they are got rid of before the interest falls into possession, so that not even for a moment has there been any interception of the right of the beneficiary to personally benefit by the gift, he is still to lose it altogether. What a complete negation of the settlor's intention the opposite view contends for! Because it is said her intention was that as far as she could secure it, her son was to have the personal right to his share of income, and that it should not be enjoyed by anyone else, therefore, even when there is no possible danger of that intention failing, he is still to be deprived of it! To prevent so senseless a result—unless the clause is to be regarded as one of penalization rather than protection—Lord Hatherley not only formulated the fundamental principle, but in White v. Chitty (4) he applied it, as I would express it, both up and down. First, to secure the testator's object that no one else should enjoy his bounty, the Court gave a (1) (1879) 12 Ch, D,, at p. 159. (3) (1909) 2 Ch. at p. (2) (1891) 3 Ch, at pp. 6-7, per Neville J. Bowen and Fry LSJ. (4) (1866) LR. 1 Eq, 372. 32, per 1927. ww McQuape . H. U. or A. 1927. ~ McQuaprE v. Isaacs J. HIGH COURT liberal interpretation to the words "shall be declared bankrupt, making them include a past bankruptcy which was not wholly past, but extended into the necessary period of futurity. Next, in order to secure the testator's object that his named beneficiary should not lose the bounty intended for him personally, the bankruptcy, not having had the effect of even possibly intercepting the income, did not make a forfeiture. The first point of application has not always commanded the complete approbation of Judges. But still it is firmly entrenched as accepted, not merely by the Court of Appeal _ in England (apart from prior references, see per Lord Blanesburgh, then Younger L.J., in In re Evans (1)), but also by the Privy Council (Gibbons v. Gibbons (2)). We were invited to say that it is wrong. I must confess that, however greatly I might admire the courage that would be needed to do so, I should be unable to emulate it. But once concede that the doctrine of Trappes v. Meredith (3) is to stand, what does that connote? It cannot stand without foundation. And so it carries with it a clear consequence, namely, to " give effect," as Lord Blanesburgh says, "to what is conce to be a testator's manifest intention," that is, I apprehend, unk the words of the instrument unambiguously forbid it. For it mus not be overlooked that, as I have said, a bankruptcy is the mos instant and sweeping of all charges, encumbrances, and alienations, and, if voluntary, is the most decisive act that can be done of the nature guarded against. How are White v. Chitty (4) and the series of cases to be discarded when a minor " charge " is effected ? Lord Hatherley's words in Trappes v. Meredith (5) are in point. What, then, is there here to forbid the application of the funda- mental principle stated? I have already shown that the rule of construction referred to is reinforced, if that were necessary, by the previous recitals. These show that the "conceived intention" is the declared intention. But let us take all the possible words for — the opposite view. An "act or thing" whereby the "income of — any part thereof " shall be charged or encumbered, or become vested in or payable to any other person is not unambiguously made to include an act or thing operating beyond the rule of construction. (1) (1920) 2 Ch., at (2) (1881) 6 App. (3) (1871) LR. 7 C) 2-323, (4) (1866) LR. 1 Eq. 372. (5) (1871) LR. 7 Ch., at p. 252, last 8 lines. 39 C.L.R.) OF AUSTRALIA. If you discard the rule and take the literal terms, you can easily say, no limit of time being fixed, the " act or thing" is referable to any future act or thing. But the point is, you are not at liberty to discard the rule as to time unless the words are intractably inconsis- tent with it. For instance, if you discard the rule, a charge already given and operating at first as a simple personal contract in respect of a mere expectancy, and remaining uncancelled until the expectancy is realized and becomes a reversionary interest or an interest in possession, would have the very effect sought to be avoided by the testator, an effect which Lord Hatherley avoided. But that only shows one danger of the respondent's argument. Further, if you discard the rule, you might read the word " charged " and the word "encumbered " as extending to the personal equity of the parties. But, as I understood Mr. Flannery to urge, with the rule, you do not so read them. You read them in their strict sense as affecting the property itself; for it is his own property that the testator wishes to protect from the hands of strangers, and not what is still only an interest expectant awaiting the determination of the precedent estate. In Samuel v. Samuel (1) Jessel M.R., speaking of a clause which for this purpose is the same, says: " Now there can be no doubt whatever that a charge created in the lifetime of the tenant for life, paid off in the lifetime of the tenant for life, does not come within those words." Of course, a reversionary interest may be charged or encumbered in the sense that if and when the interest falls into possession the bargain can be enforced against the property. But that present possible effect is not the danger the settlor aims to avert. He aims to avert the actual danger of his own property, or what represents his own property, being diverted. And it is only by an extension of meaning that " charge " includes anything more than an act binding that property. In Jn re Potts; Ex parte Taylor (2), Lord Esher M.R. says :—' A charge is a well known thing. If one man owes a debt to another, a creditor of the latter can, by bringing in the debtor, charge the debt in his hands so as to prevent him from paying it to his own creditor, and oblige him to pay it to the creditor who obtains the charge. Why is that a charge? Because it charges the debt in the hands of the man (1) (1879) 12 Ch, D., at p. 156. (2) (1893) 1 Q.B, 648, at p. 658, VoL. XXXIX. 7 H. C. or A. 1927. ES McQuapE v. Morea. Isaacs J. H.C. oF A. 1927. Hw McQuapDE vw. Morean. Isaacs J. HIGH COURT who has to pay it." Lord Wrenbury (when Buckley J.) said In re Baker; Baker v. Baker (1): "' What I have to ascertain whether there was a moment of time at which he " (the beneficiar "gave some one a right to receive part of his share." The lea Judge meant, as his judgment shows, that the mortgagees h right to the money itself. A charge may require for its effecti protection some further step in order, as Buckley J. said in In re Dalla (2), to " give him a right in rem against the fund as distingui: from a right against the conscience of the assignor of the But where the assignor has not, and may never have, the fund; where it is only an expectant fund; where the only interest th assignor has is a right to have a trust performed, so that his expe interest, if it falls into possession, may have its proper value : idle to talk of a right in rem, or of a charge on any property ¥ ever. In Illingworth v. Houldsworth (3) Lord Macnaghten said: ~ specific charge, I think, is one that without more fastens or ascertained and definite property or property capable of being ascert and defined." A charge, then, is strictly a charge that binds property said to be charged. It is true that a personal obliga to charge is sometimes spoken of as a charge. But that is true. to the extent that it can be enforced against the property. while a life interest is reversionary only, there cannot be su charge on property, the interest may never fall into possession, property is still that of another, and may never belong to the perso agreeing to charge it when it becomes, if ever, his property. a bargain is outside the testator's object, as already stated. Equ impossible is to encumber it, or vest it, or pay it. The expressi " charged," " encumbered," " vested in" and " payable to " are al gradations in alienation—but all referable to the testator's pro when within the ownership, in fact or law, of the beneficiary. I have so far not added anything as to the phrase " int therein." Taken by itself, it would include the e reversionary interest in the "said income," which means the income of the settled share. Read with the context, I do not thi (1) (1904) 1 Ch., at p. 160, (2) (1904) 2 Ch. 385, at p. 396, (3) (1904) A.C. 355, at p. 358, . 39 C.L.R.] OF AUSTRALIA. it does. In my opinion, coming as it does between " income" and H. C. or A. part thereof, it means " share of the said income," that is, the interest in possession in the income; and " part thereof" means part of the income or part of the beneficiary's share of that income. But assuming that " interest therein " includes the reversionary interest, and that is the highest it can be put, then, besides the rule as to time, it is always present in bankruptcy, and it is here controlled in its effect by the graduated scale of alienation " charged," " encumbered," "vested in" or "* payable to" and by the terms of the subsequent directions. Her subsequent directions are that on the determination "the trustees . . . shall during the remainder of the life of such child whose interest shall have so determined apply the share or shares of income to which such child would have been entitled as the same shall from time to time be received for or towards the maintenance of the said child," &c. That shows (1) that the consequence is to commence immediately ; (2) that the consequence is to be the immediate application of income to the maintenance of the child ; (3) that the income so applicable is at once receivable, and so from time to time thenceforth. When we add to those considerations the powerful effect of the recited power under which the appoint- ment is made, and remember the utter absence of a single word affecting the time effect of the rule of construction, it appears to me a very clear case against forfeiture. I would add that the judicial reasoning in two other cases are in accord with the views I have expressed—namely, a decision of Clauson J.in In re Forder (1) and a decision of the late Sir Joshua Williams in In re Sibbald ; Hyman v. Sibbald (2). The appeal should, in my opinion, be allowed. Hicetns J. The learned primary Judge has, on this originating summons, given two decisions—one on 2nd April, the other on 23rd May 1924. The only appeal is from the second decision—the answer to question 4 of the summons, with the consequences of that answer ; and the only argument addressed to us is on the question whether the appellant Frederick Carleton McQuade, son of Mrs. McQuade, and grandson of the testator Charles Carleton Skarratt, (1) (1927) W.N, 12. (2) (1904) 23 N.Z.L.R. 805. 1927. —~ McQuavEe H.C. or A. has " forfeited " the whole of his interest in his mother's one 1927. ey McQuapr v. Monaan. Higgins J. HIGH COURT share appointed to him by her deed-poll of 4th April 1901. The word " forfeited" is not used in the deed-poll; but I tak the meaning of the order to be that Mr. Frederick Carl McQuade's life interest has determined. Now, if I confine my attention to the deed-poll only, and effect of its words as a matter of construction, I have come to the conclusion that the decision is right. This is purely a question construction, of the meaning of the words: and it appears to m to be best to consider first what is the natural meaning, to an unsophisticated mind, of the words used before considering the case which have been cited for or against the appellant. Mrs. McQuade, the donee of the power, appoints that the truste shall, after her death, hold her one-eighth share under her fathe will upon trust for her four children named—three daughters and one son—for their maintenance, &c., during minority, and after they respectively attain twenty-one, &c., to pay them (or the survi the whole of the income in equal shares. But Mrs. McQuade qualifie this gift as follows: "It is hereby declared that in case any of said children . . . shall become bankrupt or do or suffer an act or thing whereby the said income or his or her interest th or any part thereof shall be charged or encumbered or become v in or payable to any other person or persons the said trustees . shall during the remainder of the life of such child whose int shall have so determned apply the share or shares of income to such child would have been entitled as the same shall from tim time be received for or towards the maintenance of the said or the maintenance of his or her issue," &e. I need not, forthe present purpose, consider the destination of th son's income during the remainder of his life ; or the destination 0 the capital on his death. It has to be remembered, however, wht they come to be considered, that so far as the trusts declared b the deed-poll are found to be invalid, Mrs. McQuade, by her Wi of 6th January 1920, has, as in pursuance of her powers, § mented the deed-poll. It will be noticed that in the words which I have quoted from th deed-poll, there is no direct provision for the termination 39 C.L.R.] OF AUSTRALIA. determination) of the interest of a child whose interest is charged, &c. ; but it is obvious that after the words " person or persons" there is implied some such phrase as " his or her interest during the remainder of the child's life shall be determined and the trustees," &c. All the arguments have been conducted on this assumption. What has occurred is as follows: During Mrs. McQuade's life she enjoyed the whole income of her one-eighth share in Mr. Skarratt's residuary trust funds; and during her life, on Ist October 1912, her son "charged" all his interest under his grandfather's will in favour of his aunt, then Miss Daisy Skarratt, as collateral security for the payment to her of money advanced by her under a mortgage of his farm in New York State. Then,by a deed dated 20th July 1916, Miss Skarratt released from the mortgage the mortgagor and all his said interest as in consideration of all sums of money owing under the security having been (as the release stated) repaid. Mrs. McQuade, the first life tenant of the one-eighth share, died on 21st June 1923. The position, therefore, is that the charge was not only given, but was released, during the life tenancy of Mrs. McQuade ;_ so that both events happened before Mr. Frederick Carleton McQuade, or his sisters, became entitled to receive any of the income of the share. Mr. Frederick Carleton McQuade's proportion of the income did not become payable to him till after the charge was released, and therefore could not even become payable to any chargee or person claiming under him. So that if the case for forfeiture rested on the words "shall become payable to any other person or persons," it would apparently fail. But the case rests on other words. There are four alternatives stated, any one of which operates to determine Mr. McQuade's interest in the income, and one alternative is if he do any act or thing whereby his interest shall be " charged": why should we refuse to give effect to this alternative ? The interest of the beneficiary in the income was to end if and when he charged the interest, whether any money was paid, or payable, under the charge or not. It is trite law that although a power of alienation is incident to life interests as well as to absolute interests, yet a life interest may be made determinable on voluntary alienation, either by being limited until alienation or by an express gift over on alienation. H. C. or A, 1927. McQuape . Morean. H. 0. of A. 1927. — MeQuave HIGH COURT It is also clear that the charging or other alienation on which the interest is to cease may be an event which takes place during a preceding life interest (Sharp v. Cosserat (1); Re Muggeridge's Trusts (2)); and there is nothing in this deed-poll to limit the time of fatal charge or other alienation to the time when the income payable to the beneficiary. ; The case of Hurst v. Hurst (3) appears to me to be directly in point in all circumstances other than the fact that there was in that case no intervening prior life interest. In Hurst v. Hurst there was a trust to permit rents to be received by H. for life, and then to convey to his children on attaining twenty-one; but with a proviso that if H. charged or encumbered the property the gift to him should be absolutely forfeited, and the gift to his children sho at once take effect. In 1869 H. charged his life interest in favour of W. W. accepted the charge ; but on learning shortly after of th clause of forfeiture repudiated the security, and H. gave him othe security. Fry J., whose decision was affirmed by the Court of Appeal, held that the clause of forfeiture took effect on the ne execution of the charge ; and that the disclaimer by W. could only operate ab initio where there had been no assent to the inst en As Jessel M.R. said during the argument, if a mortgagee accepts mortgage, no subsequent disclaimer has any effect. "That giv up the charge does not make it any the less a charge " (4). It was contended that as there were no children in esse at the time of the charge the forfeiture did not take effect ; but even if the gift ov were void ab initio that did not prevent the property from pas from H. (Rockford v. Hackman (5) ). Lindley L.J. said that " proviso prohibiting the charging of a life estate means in fact to prohibit anything purporting to charge it"; and all the Ju repudiated the argument-in-a-circle, that as the estate was determin by the charge, the provision for forfeiture could never operate. But the case of Samuel v. Samuel (6) must be considered. actual decision in that case turned on the construction of the parti will, but does not in the least clash with Hurst v. Hurst (3): (1) (1855) 20 Beav. 470. (4) (1882) 21 Ch, D., at p. 292, per (2) (1860) John. 625. Jessel MR. (3) (1882) 21 Ch, D, 278, (5) (1852) 9 Ha., at pp. 481-483. (6) (1879) 12 Ch. D, 152. 39 C.L.R.] OF AUSTRALIA. there were certain remarks made obiter by Jessel M.R. as to a H.C. or A. principle which had been laid down by a Lord Chancellor (Hatherley) in relation to forfeiture by bankruptey, and which " binds me," as the Master of the Rolls said, "'to come to the same conclusion, even if the words were more difficult to deal with than they are" (1). The testator gave his residue to his wife for life, and after her death to his son "if at the decease of my wife he shall not . . . have been declared bankrupt . . . or have . . . done any other act, matter or thing which would make such ultimate surplus payable . . . to or vested in or chargeable for the benefit of any other person or persons in case such surplus had been given to him absolutely and without any condition or contingency." The Master of the Rolls held, on the construction of the will, that the condition on which forfeiture of the residue was to occur must exist at the death of the wife, the life tenant ; and that a charge created during her life but paid off before she died, did not satisfy the condition. As he said " He" (the son) "' did not do anything by which at the death of the wife the moneys were charged or payable to anybody else." The Master of the Rolls also considered that the son had never charged the property at all—a reason quite sufficient in itself for holding that there was no forfeiture. But the Master of the Rolls went on to consider a series of cases bearing on forfeiture for bankruptcy. There was no bankruptey in the case before him, and his observations, however weighty, must be treated as obiter. In these cases words such as "in case the legatee shall become bankrupt'? were held to include the words "in case he should be bankrupt " (at the period of distribu- tion, &c.); so that words of futurity relating to bankruptey were held to include a pending, or existing, bankruptcy. This straining of the meaning of plain words led, as usual, to the straining of other words ; and the Courts had ultimately to hold that if the bankruptey were annulled before the first receipt of money under the gift, no forfeiture had occurred (Manning v. Chambers (2); Seymour v. Lucas (3); White v. Chitty (4); Trappes v. Meredith (5); Ancona v. Waddell (6) ). The Master of the Rolls was sitting as a single p. 251. (1) (1879) 12 Ch. D., at p. 158. (4) (1866) L.R. 1 Es (2) (1847) 1 DeG, & 8, 282. (5) (1871) L.R. 7 (3) (1860) 1 Dr. & Sm, 177, (6) (1878) 10 Ch. D, 15 1927. McQuapE v. Moran. Higgins J. H.C. or A. 1927, Ww McQuavE v Morean. Biggins J. HIGH COURT Judge, and not in the Court of Appeal; and he was obliged to find room for these decisions in a survey of the relevant law (see In re Parnham's Trusts (1) ); but in Metcalfe v. Metcalfe (2) the Court of Appeal, though all its members disapproved of Trappes v. Meredith (3), followed that case unwillingly, being bound by it. In In re Chapman; Perkins v. Chapman (4), the Court of Appeal refused to apply the cases relating to bankruptcy to other grounds for forfeiture (e.g., marriage to a cousin between the will of the testator _ and his death); and their decision was affirmed by the House of Lords (5). Such are the usual premonitions of a falling structure. — At all events, under the circumstances, I think it my duty to decline to apply the cases as to bankruptcy to the case of a voluntary charge. — Indeed, this Court is not bound to follow even the decisions of the English Court of Appeal. As for the passage in the 6th edition of Jarman on Wills, p. 1499, 1 _ concur with Harvey C.J. in Eq. that the proposition there laid down is too broadly stated ; and that all depends on the construction of the particular instrument. The case of In re Forder (6) was a case of bankruptcy ; and the report of the will is too condensed for me to draw any confident inference. : The provisions which have been discussed relate only to the time of — Mr. Frederick Carleton McQuade's life. Since the order of Harvey C.J. in Eq., a child has been born to Mr. McQuade (1st March 1927). The learned Judge said: "In the event of his having issue the question would arise whether the discretionary trust is not wholly void as it would permit the trustees to apply the whole income to non- | objects of the power of appointment." Moreover, the supplementary provisions of appointment contained in Mrs. McQuade's will of 1920. will probably have to be considered. Under the deed-poll the trustees are directed to pay the capital after Mr. Frederick Carleton McQuade's death to his issue in equal shares on attaining the age of twenty-one years, &c. At present, the best course seems to be to confine our attention to the conditions determining the life interest, leaving all further questions open for future decision at the proper time. (1) (1876) 46 LJ, Ch, 80, (4) (1904) 1 Ch. 431. (2) (1891) 3 Ch. 1. (5) (1905) A.C. 106, (3) (1871) L.R. 7 Ch, 248, (6) (1927) WN 12. 39 C.L.R.] OF AUSTRALIA. 245 J am of opinion that the decision as to forfeiture is right, and that H- ©. or A. the appeal should be dismissed. 1 M Appeal dismissed with costs. ee Mora@an. Solicitors for the appellant, Marsland & Co. "Ha Solicitors for the respondents, McHlhone & McElhone. B. L. [HIGH COURT OF AUSTRALIA.] WALL. ' r - E a tee n . APPELLANT ; AND 'THE KING; Ex parte KI at WONG . ' . ResPoNDENTS AND 'THE KING; Ex parre WAH ON . Respondents. (No. 1.] ON APPEAL FROM THE SUPREME COURT OF THE NORTHERN TERRITORY. High Court—Jurisdiction—Appeal from Supreme Court of Northern Territory— Habeas Oorpus—Competent Court—Issue of writ discharging prisoner from custody—Prohibited immigrant—Prisoner held on warrant of commitment—The Constitution (63 & 64 Vict. c. 12), sec. 73—Supreme Court Ordinance 1911-1922 (W.7.) (No. 9 of 1911—No. 10 of 1922), secs, 4, 21—Supreme Court Act 1856 (S.A.) (No. 31 of 1855-1856), s Immigration Act 1901-1925 (No. 17 of 1901—-No. 7 of 1925), secs. 3, 5. tata a Held, by Knox C.5., Gavan Duffy, Powers, Rich and Starke JJ. (Isaacs and payeas Rey Higgins JJ. dissenting), that sec. 21 of the Supreme Court Ordinance 1911- *"4 Starke JJ 1922 (N.T.) does not confer upon the High Court jurisdiction to entertain an appeal from an order made by the Supreme Court of the Northern Territory for the issue of a writ of habeas corpus discharging a prisoner from custody. H.C. or A. 1927. MELBOURNE, Mar. 7, 18.