CASSEGRAIN v CASSEGRAIN & ORS [2003] NSWSC 402

New South Wales Supreme Court

CITATION : CASSEGRAIN v CASSEGRAIN & ORS [2003] NSWSC 402 HEARING DATE(S) : 12/05/03 JUDGMENT DATE : 16 May 2003 JURISDICTION: Equity JUDGMENT OF : Bryson J at 1 DECISION : Control imposed by FPA orders applies to executors in capacity of executors as well as trustees: see [38]

CATCHWORDS : FAMILY PROVISION ACT - orders - interpretation of order in [1999] NSWSC 1165 Family Provision Act 1982 LEGISLATION CITED : Corporations Act 2001 s.1072F Trustee Act 1925 Conveyancing Act 1919 s 153 Ex parte Herman re Mathison (No. 2) [1961] NSWR 1145 Currabubula & Payla v State Bank of New South Wales [2000] NSWSC 232 CASES CITED : Mees v Road Corporation [2003] FCA 410 Union Bank of Australia v Harrison, Jones and Devlin Ltd. (1910) 11 CLR 492, Colytons Investments Pty Ltd. v McSorley (1962) 107 CLR 177 PARTIES : Claude George Rene Cassegrain & Anne-Marie Cameron; Executors of the Estate of Francoise Genevieve Andree Cassegrain Late of Wauchope v Denis Cassegrain, John Baptiste Cassegrain, Catherine Dunn & Patrick Anthony Cassegrain FILE NUMBER(S) : SC 1737/02 B.W. Rayment QC & Ms P. Gormly - Plaintiff COUNSEL : M. Cashion - 1st Dft B. Coles QC & G. McNally - 2nd, 3rd & 4th Dfts. SOLICITORS : Priest McCarron - Plaintiff McCabe Terrill Lawyers - Dfts

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

BRYSON J.

FRIDAY 16 MAY 2003

1737/02 Claude George Rene Cassegrain and Ann Marie Cameron v. Denis Cassegrain & Ors JUDGMENT 1 HIS HONOUR: The plaintiffs seek a declaration establishing the meaning and effect of orders under the Family Provision Act 1982 which I made on 1 December 1999. The plaintiffs and the defendants are the adult sons and daughters of the late Françoise Genevieve Andree Cassegrain, who died on 18 May 1998, and was the widow and executrix of Gerard Rene Francois Cassegrain who died on 29 October 1993. Each had been given benefits of various kinds by their late father and in some instances by their late mother, and the provisions of the testatrix' will and of my order interact with those provisions. 2 The testatrix' last will dated 23 April 1998 appointed the plaintiffs to be her executors and trustees and they were granted probate of that will by this court on 2 July 1998. While the whole terms of the will are relevant I will set out its effect shortly and give some of its terms. Clause 1 is a revocation clause. Clause 2 is: I APPOINT my children CLAUDE GEORGE RENE CASSEGRAIN and ANNE MARIE CAMERON as my Executors and Trustees (hereinafter referred to as my Trustees). 3 There are few later references in the will to the plaintiffs as executors; at most points they are referred to as trustees. 4 In clauses 3 to 11 of the will the testatrix made a number of gifts of property; most of these dispositions are specific dispositions of identifiable items of property. When referring to these gifts the Will speaks in terms of direct gifts by the testatrix to a particular beneficiary rather than in terms of directions to executors or trustees to transfer particular items of property: e.g. in clause 6 "…I give to my said daughter… and my daughter in law… all of my jewellery to be shared between them as they may choose." In these clauses there are no references to executors and there are a few references to trustees when speaking of functions incidental to carrying out the gifts. If language were being used strictly these references to trustees would not be appropriate, as no trusts of the assets so bequeathed were created and distributing assets to persons to whom they are specifically bequeathed is an executorial function. However there is no room for doubt about who are referred to as trustees, in view of the context, the usage of language throughout the Will, and the last six words of cl.2. 5 Clause 12 of the will is in these words: I GIVE the rest and residue of my Estate to my Trustee as named in this clause as follows: (i) To set up a fund ("the fund") in the name of my Trustees (provided that if either of my Trustees are unable or unwilling to act as my Trustees then his or her spouse shall act as my Trustee together with the other Trustee appointed) as Trustees of the fund which shall consist of: (a) the residue of my estate; and (b) any income added to the fund from time to time; (ii) to invest the fund as authorised by law or any clause in this my Will; (iii) to use income of the fund for the maintenance, education (including travel to broaden the mind), advancement or benefit of any one or more of my beneficiaries as defined in (vi) hereof and hereinafter called "class one (1) beneficiaries" as my Trustees think fit without any obligation to make payments for all of my class one (1) beneficiaries or to ensure equality among those to whom payments are made; (iv) my Trustees may exercise any power given by law or this Will, (including the powers given to my Executors and Trustees in Clause 14 hereof), to apply assets for the maintenance, education, advancement or benefit and are not restricted to income, and in addition my executors may do one or more of: (a) pay all or part of any income and capital of the fund to any one or more of my class one (1) beneficiaries in the shares at the times my Trustees think fit; (b) for up to the period permitted by law, accumulate income to the fund so that it becomes part of the fund; (c) determine (in the event of my Trustees disposing of or being deemed to have disposed of an asset) from which part or parts of the capital or income of the fund they will pay any income tax liability flowing from the disposal or deemed disposal; and (d) identify, segregate into separate income accounts and allocate separately different sources and types of income, and record this in the books of account; (v) (a) subject to subparagraph (v) (b) on the winding up of the trust to divide the balance of the fund equally between those of my class one (1) beneficiaries who reach the age of twenty one (21) years with regard to payments already made to those class one (1) beneficiaries PROVIDED THAT final distribution of the Trust must take place by December, 2015; (b) if any grandchild of mine living at my death dies before attaining a vested interest in the balance of the fund, leaving children who reach their minority, then those children on reaching their respective majorities take equally the share which their parent would otherwise have taken; (vi) The beneficiaries of the Trust shall be my children living at the date of my death and my grandchildren (herein called class one (1) beneficiaries) 6 The reference to "my Trustee" in the singular in the first line of clause 12 is an obvious error calling for correction to the plural in any reasonable reading. It will be seen that sub clause 12(iv) refers to " powers given to my Executors and Trustees in clause 14" but elsewhere clause 12 speaks only in terms of the Trustees. The Trustees are given " the rest and residue of my estate" and clause 12 creates a trust of that residue in terms which do not apply to any other gift or to any other part of the functions of the persons referred to as "my Trustees," although other provisions of the will and more general considerations make it obvious that those persons will have functions in addition to functions under clause 12. 7 Clause 13 provides for the interests of grandchildren where a child or children of the testatrix predeceased her; no such event happened and clause 13 does not mention trustees or executors. 8 Clause 14, which is very lengthy, confers many powers on the executors and trustees. To illustrate its provisions I set out its opening lines: 14. MY EXECUTORS AND TRUSTEES may in their discretion: (a) exercise any powers given to them by law; (b) exercise the powers of a trustee for sale in respect of any assets in my estate and my executors may: (i) without being liable for any loss (including liability for taxation on capital gain) caused by so doing postpone sale; (ii) without being liable for any loss (including liability for taxation on capital gain) caused by so doing retain in its form of investment at my death any part of my estate, even though it is wasting, hazardous or reversionary; (iii) sell, by public auction or private sale, and for that purpose they may extend credit; Thereafter there is no reference in the lengthy provisions of clause 14 to executors or trustees except in subclauses (e) and (l): (e) for the purposes of paragraph (d) make a payment or payments to a minor beneficiary's parent or guardian or a person with whom the minor beneficiary resides (and the receipt of that payee shall be an absolute discharge of my executors;) (l) lease any part of my estate (i) for the periods and upon and subject to the covenants and conditions which my executors think fit; and (ii) either with or without provisions for renewal; and accepts surrenders of leases or tenancies of my estate or any part of it; 9 It will be seen that subcll.(e) and (l) do not refer to trustees. Subclause (b) gives executors and trustees the powers of a trustee for sale: then when in its second line subcl.(b) extends those powers it speaks only of "my Executors". Whether for purposes of executorship or for purposes of trusteeship they have the powers of a trustee for sale, and they have those powers in respect of any asset, and no regard is given to whether or not the asset sold is subject to a trust. Subclause (d) relates to income, all specific legatees were adults or companies, so in subcl.(e) there is no occasion which could arise in which executors would, in exercise of executorial functions, make a payment of income for the benefit of a minor beneficiary: that could only happen with income of a trust under cl.12 and cl.13. If language were being used strictly the reference in subcl.(e) would be to trustees and not to executors. 10 Each of the defendants brought proceedings under the Family Provision Act 1982 in the estate of the testatrix; I heard these proceedings 3609/98, 3610/98, 3612/98 and 3613/98 together and made orders on 1 December 1999 for reasons which I then published. These orders were entered later in December 1999. The orders were in generally similar form; the orders made in proceedings 3609/98 in which Patrick Anthony Cassegrain was the plaintiff were: (1) Order pursuant to s.7 of the Family Provision Act 1982 by way of provision out of the estate of the testatrix that the exercise of the powers conferred on the trustees by cl.12(iii) and 12(iv) of the last will of the testatrix, the transfer, disposition or encumbrance of shares in Expressway Spares Pty Ltd forming part of the estate of the testatrix, casting any vote in respect of those shares and any act of the trustees relating to new issue of shares shall be controlled as follows:- the trustees must act in accordance with a written direction of the majority of the children of the testatrix surviving at the time the trustees act; and must not act unless they act in accordance with a written direction of that kind. (2) This order is made on terms that the plaintiff is to contribute to liability of the defendants under any guarantee to a bank for credit extended to Expressway Spares Pty Ltd at the date of this order on the basis of the contribution which would be appropriate if all six of the testatrix' children had incurred common liability in respect of the guarantee. 11 In two other cases the orders were in exactly the same terms while in 3610/98 in which Catherine Dunn was the plaintiff the order differed slightly, but not in a respect now important. 12 The declaration claimed in the amended summons is: 1 A declaration that:- (a) in the orders made by Justice Bryson in proceedings No. 3609/98, 3610/98, 3612/98 and 3613/98 that any reference to "trustees" refers to the trustees of the discretionary trust to be established pursuant to Clause 12 of the Will of Francoise Genevieve Andree Cassegrain (hereafter referred to as the deceased) and in no way affects the powers of the Executors of the Estate. 13 On the face of the Will and of the Orders of 1 December 1999, when those documents are read literally, the acts which are controlled by the need for the trustees to act in accordance with a majority direction are these: