LUTHERAN CHURCH OF AUSTRALIA SOUTH AUSTRALIA DISTRICT INCORPORATED v FARMERS' CO-OPERATIVE EXECUTORS AND TRUSTEES LTD

121 CLR 628

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(Judgment by: McTIERNAN J, MENZIES J)

Between: LUTHERAN CHURCH OF AUSTRALIA SOUTH AUSTRALIA DISTRICT INCORPORATED
And: FARMERS' CO-OPERATIVE EXECUTORS AND TRUSTEES LTD

Court:

Judges: Barwick CJ

McTiernan J
Menzies JWindeyer J

Subject References:
Succession
Wills
Gift of 'Commonwealth bonds'
Delegation of testamentary power
Transfer of property to named charity
Validity

Judgment date: 1 May 1970

SYDNEY

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Judgment by:
McTIERNAN J
MENZIES J

Phillipa Stapleton left a holograph will in the following terms:

"This is my Last Will and Testament of me

Phillipa Stapleton,

of No. 316 South Terrace. Adelaide. S.A.

I revoke all other Will made by me and I appoint Farmers Co-Operative Executors and Trustee Adelaide S.A. whose registered office is situated at No. 11-13 Bentham St. Adelaide.

1.

I desire that my remains be cremated and laid to rest in the Soldiers Cemetery Springbank.

2.

I bequeath a pecuniary legacy of Two Thousand Dollars (2,000) to my Niece Margaret Evelyn Marsh of No. 10 Bentley St Surrey Hills, Victoria.

3.

I bequeath a pecuniary legacy of $600 to my brother Walter Roland Marsh of Mary St (No. 64) Unley.

3.

I bequeath a pecuniary legacy to Catherine Doreen Marsh (my Sister) of $600.

4.

I bequeath All my Commonwealth Bonds to Frank John Stapleton of 590 Cross Rd, Plymton S.A.

5.

I bequeath a pecuniary legacy of Six Hundred Dollars each to David Bryce Stapleton and Richard Leigh Stapleton.

6.

My Trustees have discretionary power to transfer any morgages, and property, and Shares in Companies invested in my name to the Lutheran Mission 20 Marborough St. St. Peters, S.A. for building Homes for Aged Blind Pensioners after All expenses paid, and I desire that there shall be no subsequent adjustment or appointment therefore between any of the beneficiaries under my Will.

I Witness thereof I have to this my last Will & Testament set my hand this 28th day of January 1968.

P. Stapleton

L. A. Dowd

Stella M. Dowd

Signed 1967. January 28th

P. Stapleton."

Upon an originating summons, Bray C.J. made the following declarations with regard to this will:

"(a)

Commonwealth Inscribed Stock to the face value of $12,500 was bequeathed to the defendant Frank John Stapleton by the said will;

(b)

the provisions of cl. 6 of the said will do not create a valid disposition;

(c)

the testatrix died intestate as to the whole of her estate excepting only that portion of the said estate comprising the specific legacies and bequests contained in cll. 2 to 5 inclusive of the said will;

(d)

there is in cl. 6 of the said will a `specific direction ... to the contrary' within the meaning of s. 46 (1) of the Succession Duties Act 1929-1967; there is in cl. 6 of the said will `any different disposition' within the meaning of s. 35 of the Estate Duty Assessment Act 1914-1963."

The questions for us are whether declarations (a) (b) and (c) are correct. As (c) derives from (b) there are really two questions, one relating to cl. 4 of the will and the other relating to cl. 6.

We agree with the Chief Justice of South Australia that the description, in cl. 4, "All my Commonwealth Bonds" does include the Commonwealth inscribed stock which the testatrix had at the date of the making of her will and at the date of her death. His Honour has dealt fully with the authorities and all we wish to do, apart from expressing our agreement with his judgment on the point of construction, is to emphasize that this is not a case where the construction adopted departs from the strict meaning of technical words. "Commonwealth bonds" can in ordinary speech mean Commonwealth inscribed stock as well as bonds which are technically described as "treasury bonds" or "Australian consolidated treasury bonds" notwithstanding the distinction that there is between "stock" and "bonds" which many of the community do not recognize. It is hardly to be thought that this testatrix appreciated the technical difference between the two. The difference between "stock" and "shares" in a company is another difference of a like kind which ordinarily people disregard. It is difficult to imagine that the testatrix, knowing that she had investments in Commonwealth loans, wrote cl. 4 intending to distinguish between her treasury bonds and her Commonwealth inscribed stock. To her, no doubt, they were one and the same. We do not think it necessary to consider whether extrinsic evidence, which would go to support this conclusion, was admissible.

The other question is troublesome because it is clear enough that the testatrix did wish to use the Lutheran Mission to provide homes for aged blind pensioners out of her property. We have, however, come to the conclusion that the Chief Justice of South Australia was correct in holding that there is no gift in cl. 6. The words "have discretionary power to transfer" do not constitute a gift and there is nothing else from which to extract an intention to give. Indeed, it seems to us that the words "discretionary power" negative a gift. A discretionary power to transfer in specie, by itself, is not a gift. Here there is nothing more. If the trustees were to exercise the discretionary power which the testatrix has sought to confer upon them by deciding not to transfer the mortgages, etc., the Lutheran Mission would have no claim to them or to the proceeds of their realization. This reveals that it is only by depriving the trustees of a discretion to transfer, and treating them as being under an obligation to transfer, that a gift can be inferred. To do this would be to contradict the language of the testatrix. Unfortunately the testatrix had left the fulfilment of her wish to the discretion of her trustees. She did not create a trust for a charitable purpose; she left it to her trustees to decide whether or not her property should go to charity. A case such as Smith v West Australian Trustee Executor & Agency Co Ltd, ^[F24] is clearly distinguishable. There it was held that there was a good charitable bequest because, by the terms of the will, the money had to go to charity. Here the property would not go to charity unless the trustees should so decide. If cl. 6 of the will were to be regarded as a testamentary disposition it would follow that a testator could delegate to his executor the power to decide whether part of his estate should be transferred to a particular person. Nothing can turn upon the unquestionable fact that a gift for the building of homes for aged blind pensioners would be charitable for the simple reason that the testatrix has made no such gift. Here there is no trust for charitable purposes, no general power of appointment, no special power of appointment. The words used simply leave it to the trustees to decide, at some time after the death of the testatrix, whether or not to establish a trust without provision for the period between the date of death and the constitution of such trust.

This case does not require consideration whether or not the decision of Romer J. in In re Weekes' Settlement, ^[F25] correctly departed from the existing current of authority; cf. Perpetual Trustee Company (Ltd ) v Tindal, ^[F26] at pp. 245-246, 257 and 262. His Lordship did not there consider any point relevant to the determination of the question now before us. He was merely concerned with the construction of what was taken to be a valid special power of appointment among a class. Whether the power as construed was valid was not there in question, but, if it were, the cases on special powers are distinguishable from this case. We find support for the view we have expressed in the decision of this Court in Tatham v Huxtable. ^[F27] There what was insisted upon was that the testator should himself make what "amounted to a true testamentary disposition of property". See per Fullagar J.. ^[F28] His Honour said further:

"It is to be remembered that the ultimate basis of the rule lies in the Wills Act, which provides that every person may dispose of all his property by will but that no will shall be valid unless it is in writing and executed by the testator in a particular manner. It is inherent in the very nature of the power so given that it cannot be delegated or exercised by an agent for the testator, and it seems to me necessarily to follow that some powers of appointment, which would be perfectly good in any instrument other than a will, are ineffective in a will for the simple reason that they do not amount to a testamentary `disposition' of property, or indeed to any `disposition' of property at all."

His Honour clearly enough regarded it as a departure from legal principle to treat as valid a special power of appointment in the absence of a trust in default of appointment. If, as Fullagar J. thought, a `latitude' of view might justify treating such appointments as valid, it seems to us to afford no basis on which to treat an authority to dispose of the testator's property to a named person or institution as a true testamentary disposition of property. Such latitude of view would destroy the rule. Kitto J. said: ^[F29]

"It is a `cardinal rule' to which a power of selection among charitable objects is the sole exception, that `a man may not delegate his testamentary power. To him the law gives the right to dispose of his estate in favour of ascertained or ascertainable persons. He does not exercise that right if in effect he empowers his executors to say what persons or objects are to be his beneficiaries': Chichester Diocesan Fund and Board of Finance v Simpson , per Lord Simonds. ^[F30] It is therefore necessary in all cases (other than charity cases) that the persons or objects to benefit under the will shall be, by the will itself, ascertained or made ascertainable. They may be made ascertainable by reference to a specified future event, including an act to be done by another person provided that that act does not amount to the making by one man of another man's will: Stubbs v Sargon, ^[F31] at p. 1024]."

It is no doubt the case that, had the provision in Caleb Diplock's will, under consideration in Chichester Diocesan Fund and Board of Finance v Simpson, ^[F32] been confined to charitable purposes instead of extending to benevolent purposes as well, it would have been sustained on exactly the same principle as Smith v West Australian Trustee Executor & Agency Co Ltd, ^[F33] i.e. that, by virtue of the testator's own disposition, there was a charitable trust. As Lord Porter said: ^[F34]

"The testator must make his own will and not leave his executors to make their choice of the objects of his bounty, subject to this, that a general gift to charity will be upheld."

Here not only is there no gift to a charity; there is no gift to charity. There is simply no gift. Here the testatrix has purported to authorize her trustees, if they should think fit, to constitute a trust in favour of a named charity. As such an authority it must fail.

Accordingly, we would dismiss the appeal.