O'Byrne v. Davoren [1994] IEHC 3 (13th May, 1994)

The High Court

1992 No. 889 SP

In the matter of the estate of

Mary Davoren deceased

Between

Thomas N. O’Byrne

Plaintiff

And

Michael Davoren and Anne Coughlan

Defendants

[13^th May, 1994]

MURPHY J:

1. This is a claim by the above plaintiff as executor of the will dated the 13th May, 1967, of Mary Davoren deceased who died a spinster on the 8th December, 1990, for the determination of certain questions arising on the construction of the deceased's will.

2. The residuary bequest contained in the said will is expressed in the following terms:-

"I give devise and bequeath all the rest, residue and remainder of my estate both real and personal unto my TRUSTEES UPON TRUST to sell call in and convert the same into money (with power in their discretion to postpone such sale, calling in and conversion as hereinafter set out) and after payment thereout of my debts, funeral and testamentary expenses to hold the residue UPON TRUST for the post-primary education of such of the under mentioned as my trustees as in their discretion shall decide will be likely to benefit most namely:-

The grandchildren and direct descendants 'of James Nagle of Castletown, Carron,

The children and direct descendants of Patrick (Burke) Davoren of Kilcorney and of his brother Austin Davoren, Whitemount, Corofin and also the children and direct descendants of Michael Davoren of Ballyaliban, Ballyvaughan and of his brother Martin Davoren of Cahirconnell and also the children and direct descendants of John Davoren of Ennistymon (born at Ballyconnoe) and of his brother who married Miss Rynne and who resides at Ballyconnoe in the County of Clare.

AND I DECLARE that my said trustees may in their absolute discretion decide which of the aforesaid children may benefit and also decide on the secondary, technological or university colleges or professional institutions where the aforesaid children take their courses AND I DECLARE that it is my intention that the income of the trust should be applied in the first instance for payment of fees and provision of textbooks and secondly for the maintenance while attending such schools colleges or courses AND I DECLARE that my Executors may postpone the sale, calling in or conversion of any part of my real and personal estate for such period as they in their absolute discretion may deem fit notwithstanding that it may be of a wasting, speculative or reversionary nature."

3. The first defendant, Michael Davoren, is sued as representing those persons who are potential beneficiaries under the residuary clause and the second defendant, Anne Coughlan, who is a niece of the deceased, was joined as a defendant to represent those persons who would be entitled to benefit in the event of the residuary estate passing as on an intestacy.

4. In these circumstances three questions were canvassed, namely:-

(1) Whether the residuary bequest aforesaid constituted a valid charitable gift.

(2) Whether the bequest offended the rule against perpetuities.

(3) Whether the bequest failed for uncertainty.

5. Having regard to the decisions in In re McEnery ; O'Connell v. Attorney General [1941] I.R. 323; In re Compton [1945] Ch. 123 and Oppenheim v. Tobacco Securities Trust Co. Ltd. [1951] AC 297 it was conceded by all parties that the gift could not be sustained as a valid charitable bequest as it did not possess the requisite public character.

6. The first question to be addressed is the extent of the class from which the particular beneficiaries may be chosen. Is the class confined to the particular categories of relations of the identified persons living at the date of death of the deceased or could relations of the particular kinship born after that date benefit from the trust? If the class did not close as at the date of death of the deceased then the class would be susceptible of enormous variations either by expansion or contraction and this would raise questions as to whether the gift possessed the requisite degree of certainty either on the basis that it was a beneficial trust or what is described as "a purpose" trust. However, the answer to that question is even more important in the context of the rule against

7. Perpetuities. If the class did not close as of the date of death then there could be no doubt at all but that the rule was breached and the gift void ab initio .

8. The widest and remotest of the degrees of kinship referred to in the bequest are the "descendants". That word was defined in Halsbury's Laws of England (4th Edition) Volume 50 at para. 521 in the following terms:-

"Whatever may have been its meaning in earlier times, 'descendants' now ordinarily refers to children, grandchildren and other issue of every degree of remoteness in descent. Although the word may be confined to mean children by a sufficiently strong context, the Court does not restrict the word to that sense merely because the testator speaks of the descendants taking their parent's share."

9. It would appear from the same textbook that such misgivings as may have existed about the meaning of the word "descendants" in earlier times concerned whether or not collaterals were included within its meaning. It does not ever appear to have been doubted that descendants included issue of every degree of remoteness in descent. That being so a gift to descendants if not otherwise qualified expressly or by implication would appear to include all children of children indefinitely and without limit. It was argued by counsel representing the potential beneficiaries under the will that the class should be treated as having closed at the date of death of the deceased on the basis of the rule in Andrews v. Partington (1791) 3 Bro. C.C. 401. It cannot be doubted that the law favours an early as opposed to a later vesting of interests in property. Whilst this rule has been criticised many times it has endured for over two hundred years. Under the rule it is presumed that where there is an immediate gift to a class without any provision as to the time of this vesting then if any members of the class are born at the time of the testator's death they take to the exclusion of after born members. It is, however, accepted by counsel on behalf of the potential beneficiaries under the trust that this rule could not be applied directly to the facts of the present case as there is no gift to the members of the class but merely an obligation on the trustees to employ the trust funds for a purpose which would be of benefit to some members of that class. In the circumstances the argument under this heading can be put no further than saying that the rule in Andrews v. Partington might be applied by analogy.

10. In any event the identification of the class or more correctly the date as of which it is to be ascertained is essentially a matter for the construction of the will itself with the aid of the appropriate principles governing such construction.

11. Unlike the wills in In re Compton [1945] Ch.123 and Kilroy v. Parker [1966] I.R. 309, the residuary bequest in the present case gives no specific guidance as to when the relevant class is to be ascertained. In In re Comtpon there was a trust for education of descendants of three named persons and it was expressly provided that the trust was to be "forever". In Kilroy v. Parker where income from a fund was to be paid amongst the testator's necessitous nieces and nephews and their children, it was expressly provided that the nephews and nieces who might benefit were those "alive at the date of my death".

12. The researches carried out by the executors have established that the number of persons who would constitute the class of potential beneficiaries if it were to be established as of the date of death of the deceased would be in the order of sixty. Moreover, it would be possible to estimate with reasonable accuracy the capital and likely income of the trust fund. However, these are not factors which are of much assistance in ascertaining the wishes of the deceased. It seems to me that the only guidance to be obtained from the will of the late Mary Davoren is the express trust for the sale and conversion of her residuary estate and the payment thereout of her debts funeral and testamentary expenses and the additional and express declaration that the trustees might "postpone the sale calling in or conversion of any part of my real and personal estate for such period as they in their absolute discretion may deem fit, notwithstanding that it may be of a wasting speculative or reversionary nature". Whilst those provisions have some significance it is obvious that they represent standard machinery to facilitate the administration of the estate and the trust fund to be created thereout. In particular the express power to postpone the realisation of the estate- even estate of "a wasting speculative or reversionary nature"- is clearly a protection for the trustees who might otherwise be liable for a breach of their duty rather than an indication of some particular policy or intention on the part of the deceased. Apart from the purpose of the trust and the selection of the beneficiaries the only special if somewhat ambiguous provision of the residuary bequest is expressed in the following terms:-

"And I declare that it is my intention that the income of the trust should be applied in the first instance for payment of fees and provision of text books and secondly for maintenance while attending such schools, colleges or courses."

13. As it is clear that both the capital and income of the residuary estate are subject to the trusts declared by the deceased the question must be asked, why did the deceased focus attention in this very specific way upon the manner and order in which the income of the trust fund should be applied. It seems to me that at the very least the deceased intended that the capital of the fund should be conserved if not actually preserved. It would be meaningless to prescribe an order in which resort was to be had to income if the trustees had an unfettered discretion to resort to capital for any of the purposes identified in the foregoing declaration. Such an action would appear to frustrate the wishes of the testatrix without expressly defying them. By this special declaration it seems to me that the testatrix revealed an expectation and intention that recourse would be had primarily to the income of the fund with a view to conserving the capital as a fund for indefinite duration. Moreover, this has a certain logic. The testatrix would not wish her trustees to deplete excessively the trust fund at anyone time when their task would involve a review of their duties and an exercise of their discretions over a long period of time. When one accepts the concept of preserving the capital of the trust fund over a lifetime or even the infancy of the youngest members of the class living at the date of death of the deceased, the question would then arise as to how or why the trust should be wound up and the balance of the capital and income distributed amongst a diminishing class. It seems to me that the logic of the situation as best it may be inferred from the very limited evidence available, is that the testatrix intended to create a fund which would be available indefinitely for the children, grandchildren and descendants whenever born of the persons named in her will, and such a gift is unfortunately invalid as contravening the ancient but still respected rule against perpetuities.

14. Whilst that conclusion disposes of the issue as to the validity of the bequest I think it may be helpful having regard to the arguments which were addressed to the court (and to the state of the law on the topic) to express my views on the other issues raised.

15. Prior to the decision of the House of Lords in In re Baden's Deed Trusts [1971] AC 424, it was generally accepted that the objects of a trust must be certain, that is to say, that the language employed must be certain and that the trustees must at any time be able to ascertain definitely the persons who would have a vested interest in the capital and income of the trust property. On the other hand where the trustees were not bound by a trust but merely a power or discretion whether to confer or withhold a benefit then the requirement of certainty was recognised as being far less stringent. These rules appeared clearly from the decisions in Inland Revenue Commissioners v. Broadway Cottages Trust [1955] Ch 20 and In re Gulbenkian's Settlements [1970] AC 508. As Lord Upjohn pointed out in the latter case (at p. 521) the then recent authorities were to the effect that:-

". ..the rule is, that provided there is a valid gift over or trust in default of appointment...a mere or bare power of appointment among a class is valid if you can with certainty say whether any given individual is or is not a member of the class; you do not have to be able to ascertain every member of the class."

16. In the comprehensive judgment of Budd J. in Kilroy v. Parker [1966] I.R. 309 he accepted and applied that principle (at p. 318) in the following terms:-

"From a perusal of this case and those referred to therein, I am satisfied they establish in cases of the type under review, on the one hand, that in cases where the trustees have a duty to distribute the income in question it is essential that they should know, before they perform their duty, who are the potential beneficiaries among whom they have the right of selection, and, on the other hand, in the case of a power with a gift over that there is no reason why trustees, before exercising the power, should have to be able to survey the whole field of objects. The practical result is that a mere power to apply income for the benefit of the members of a class, all of whom cannot be ascertained, with a gift over in default, is valid, and an appointment can validly be made to a person who can properly be said to be a member of the class. But an imperative trust for the division of income between such members of the class as the trustees may select is invalid unless the whole class of potential beneficiaries can be ascertained. It was not suggested, nor do I think that it could be, that there is any distinction in principle between English and Irish law on these matters."

17. The statement contained in the final sentence quoted above ceased to be true as and from the decision of the House of Lords in In re Baden 's Deed Trusts [1971] AC 424. In that case the House of Lords by a majority of three to two overruled the decision in Inland Revenue Commissioners v. Broadway Cottages Trust [1955] Ch 20 and held that the test to be applied in determining the validity of imperative trusts was substantially the same as that applicable to discretionary trusts. That is to say, the trust was valid if it could be said with certainty that any given individual was or was not a member of the class designated as potential beneficiaries.

18. Not only is the judgment of the late Budd J. a precedent of greater authority for me than a judgment (particularly a majority judgment) of the House of Lords but I confess that I find the reasoning of the Irish judgment ( and indeed the earlier English judgments) more convincing than that contained in what was admittedly a conscious effort at law reform made in the McPhail case.

In Kilroy v. Parker [1966] I.R. 309 the court had to consider whether a trust to distribute the income of a fund amongst the necessitous nieces and nephews of the deceased and such of their children as the executors might think fit. As I have already remarked the category of nieces and nephews were expressly identified in the will as those being alive at the date of the death of the testatrix. It was, however, an imperative trust though confined to the income of the fund accruing over a period of ten years from the date of death of the testator. In those circumstances no question arose with regard to the rule against perpetuities nor in the identification of the class of potential beneficiaries insofar as it consisted of nephews and nieces of the testator, living at his death and their children. The major problem related to identifying and perhaps re-identifying the "inner" class of "necessitous" nephews and nieces. What degree of poverty or hardship is involved in that adjective? Was the standard to be an objective one or in some way related to the standard of living of the testator? What was to happen if during the ten years during which the income of the trust fund was to be distributed the financial circumstances of particular nephews or nieces altered significantly? To my mind a significant feature of the judgment is the dedication and determination with which Budd J. addressed and resolved those and other difficult problems.

19. Having accepted the need for certainty in the creation of the trust Budd J. considered the principles upon which a court approaches the problem of having to decide whether or not a gift is to be held void for uncertainty. He pointed out (at p. 320) that:-

"The difficulties in interpreting a disposition which is ambiguously expressed are not enough to render the disposition void for uncertainty. To be void for this reason it must be utterly impossible to put a meaning on it."

20. He went on (at p. 321) to quote a passage previously cited with approval by Murnaghan J. in the following terms:-

"Another principle is equally clear: we ought not, without absolute necessity, to let ourselves embrace the alternative of holding a devise void for uncertainty. Where it is possible to give a meaning, we should give it, that the will of the testator may be operative; and where two or more meanings are presented for consideration, we must be well assured that there is no sort of argument in favour of one view rather than another, before we reject the whole."

21. He accepted, as all of the parties would, that the presumption is that "when a man makes his will he does not intend to die intestate as to any part of his property".

22. It was those principles which imposed on the learned judge the duty to seek a construction of the will and an approach to the problems canvassed in relation to the administration of the trust which would resolve ambiguities and uncertainties where this was compatible with the expressed or implied wishes of the testator. Whilst the particular facts of Kilroy v. Parker [1966] I.R. 309 are unique, the significance of the judgment of Budd J. thereon, as I see it, is the determination with which he sought to salvage the validity of the particular testamentary trust notwithstanding the difficulties created by the manner in which the testatrix had expressed her intentions. Again I could respectfully agree that the learned judge was entirely correct in that course and as far as possible I believe that a similar approach should be taken in the present matter. It is noticeable that Budd J. recognised that the class of potential beneficiaries might fluctuate from year to year as would happen in the present case depending upon the educational requirements of the relatives of the persons designated by the testatrix. It was of that problem that the learned judge said (at page 334):-

"The fact that the class in the present case may fluctuate does undoubtedly increase the difficulty of ascertaining the class, but difficulties and impracticabilities should not be allowed to stand in the way if by any possibility the trust can be executed."

23. It seems to me that the helpful decision of Budd J. in Kilroy v. Parker [1966] I.R. 309 would be of decisive importance in upholding the validity of the residuary bequest in the present case if, but only if, the class of relatives out of whom the beneficiaries were to be selected was limited to those living at the date of death of the deceased and as I have held that the contrary is- regretably- the true construction of the will, my conclusion in this regard can be of no comfort to the designated class of beneficiaries.

24. In the circumstances it seems to me that the questions raised in the statement of claim herein should be answered as follows:-

(a) The trust purported to be created by the residuary clause does not constitute a trust of a charitable nature.

(b) The words creating the trust are sufficiently certain for that purpose.

25. However, I will hear the parties in relation to any matter of detail as to how the questions raised should be dealt with.

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You are here: BAILII >> Databases >> High Court of Ireland Decisions >> O'Byrne v. Davoren [1994] IEHC 3 (13th May, 1994) URL: http://www.bailii.org/ie/cases/IEHC/1994/3.html Cite as: [1994] IEHC 3