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1 of 10 DOCUMENTS: Unreported Judgments Federal Court of Australia

26 Paragraphs

AUSTRALIAN SECURITIES & INVESTMENTS COMMISSION, RE

MONEY FOR LIVING (AUST) PTY LTD (admins apptd) v MONEY

FOR LIVING (AUST) PTY LTD (admins apptd) (No 2) - BC200607768

Federal Court of Australia -- Victoria District RegistryFinkelstein J

VID 1304 of 2005

22 May 2006

Australian Securities and Investments Commission, in the matter of Money for Living(Aust) Pty Ltd (Administrators Appointed) v Money for Living (Aust) Pty Ltd(Administrators Appointed) (No 2) [2006] FCA 1285

CORPORATIONS -- financial investment -- meaning of -- misrepresentations in relation to.

TORRENS -- tenant in possession -- whether includes life tenant.

(CTH) Australian Securities and Investments Commission Act 2001 ss 12BAA, 12BAA(4), 12BAB(1),12BAB(5), 12DA, 12DB, 12DC

(CTH) Corporations Act 2001 1014 s H

(VIC) Transfer of Land Act 1958 s 42(2)(e)

Australian Softwood Forests Pty Ltd v Attorney-General (NSW) (1981) 148 CLR 121;Burke v Dawes(1938) 59 CLR 1;Downie v Lockwood[1965] VR 257, applied

Futuretronics International Pty Ltd v Gadzhis [1992] 2 VR 217, followed

McMahon v Swan [1924] VLR 397;Robertson v Keith (1870) 1 VLR(E) 11; The Commercial Bank ofAustralia Ltd v McCaskill(1897) 23 VLR 10, cited

Finkelstein J.

[1] The corporate defendants, Money for Living (Aust) Pty Ltd (admin apptd) and MFL Property HoldingsPty Ltd (admin apptd), by their directors, the third, fourth and fifth defendants -- Stephen O'Neill, GaryO'Neill and Jolanta Olszewski -- promoted a scheme that enticed home-owners, typically retirees orpensioners, to sell their homes in return for what the promoters described as a "guaranteed" income and a"guaranteed" right to live in their former home for life. Many people were induced to participate in the


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scheme. The idea was that the home-owners could free up and live off the equity that would otherwise betied up in their family home. To the great misfortune of those people the scheme collapsed. The companiesthat purchased their homes (the purchaser was either MFL or MFLP) are insolvent and have hadadministrators appointed. The "guaranteed income" is not being paid. For some, their life tenancy may be at

risk.[2] In this state of affairs, Australian Securities and Investment Commission stepped in. In this action italleges that, in promoting the scheme, the corporate defendants breached s 1041H of the Corporations Act2001 (Cth) (misleading or deceptive conduct in relation to a financial product or a financial service) as wellas ss 12DA (misleading or deceptive conduct in relation to financial services), 12DB (false or misleadingrepresentations in relation to the supply or promotion of financial services) and 12DC (false representationsin relation to financial products that include an interest in land) of the Australian Securities and InvestmentsCommission Act 2001 (Cth). ASIC also alleges that the directors were knowingly involved in thosecontraventions. It seeks declarations that there have been contraventions and injunctions restraining futurecontraventions. The individual defendants consent to the orders that are sought, one of which is that theaction against the fifth defendant, Jolanta Olszewski, be dropped. The corporate defendants do not opposeany of the orders. Having regard to the nature of the proceeding, I would not make any of the orders byconsent. They should only be made if justified by the facts, and some are not.

[3] The essential facts are as follows. The scheme was set up by two brothers, Stephen O'Neill and GaryO'Neill. Stephen has a criminal history. In 2001 he was convicted of having improperly used his position asa director, using false documents and theft. He was sentenced to four years imprisonment. His involvementwith the scheme commenced immediately upon his release from prison. He was one of the principalsbehind MFL and MFLP. That he was disqualified from taking part in the management of a company (see s206B of the Corporations Act) seems to have been of no concern. He did, however, attempt to conceal hismanagement role. Stephen's brother, Gary, an electrical mechanic with no experience in real estate, andStephen's de facto, Jolanta Olszewski, whose experience was no greater than Gary's, were the onlyappointed directors of the two companies.

[4] The corporate defendants -- at the instigation of their directors -- marketed the scheme byadvertisements on radio and television, in newspapers and on an internet website. The target audience waspeople over 55 who owned their own home and were in receipt of a small income or a pension. Anyone

who showed interest in participating in the scheme was given a brochure entitled "Making Life Easier forRetirees and Pensioners". The brochure was also available on the corporate defendants' internet website.Two well-known Australians, Paul Cronin and Dawn Fraser, allowed their photographs to be used in thebrochure. Both were of a similar age to the target group. These celebrities were chosen because, as StephenO'Neill put it: "They are very well-known and trusted Australians".

[5] Several statements in the brochure attributed to the two celebrities recommended the scheme. Forinstance, they are recorded as saying that the scheme is: "Like the superannuation you never knew youhad!" They explained that they "were initially worried about how secure it all was, but can now say that weare very happy with the Money for Living system, and would recommend it to anyone". The brochurecontained a centre spread which featured the celebrities sitting down in front of a warm fire with a cup oftea. This is what they had to say: "This is a system that could benefit so many older Australians and that iswhy we're both here to tell you about it."

[6] In addition to extolling its virtues, the brochure made the following statement about the scheme: "Thefounders of Money for Living have spent 15 years developing a unique system that allows people(generally over 55) to access the equity in their home." More information was provided in the form ofanswers to questions. They included the following:

Q: Who is Money for Living?

A: Our founder has been trialling this system successfully for 15 years ...

Q: How secure is my tenancy?


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A: You are guaranteed tenancy in the property for the rest of your life. This guarantee is legally documented givingyou piece of mind that your tenancy is secure.

Q: How does the system work?

A: Money for Living customers have exclusive access to a system that relieves the burdens of home ownership,

whilst allowing access to equity, and guaranteed lifetime tenancy.

As well, there was a testimonial from a satisfied client to whom was attributed the following statement:

We are going to receive a payment into our account each month without fail and will do so for 30 years ... It hasbeen a godsend to us and truly believe it has added years to our lives ...

[7] Interested persons were met by a representative from MFL or MFLP. The meeting took place at eitherthe person's home or MFL's office. If he or she did not already have it, the person was given a copy of thebrochure along with other information about the scheme, which explained the benefits of entering into thescheme.

[8] If a person (I will refer to them as the client) wished to participate (in all there were 117 transactions),his or her property was then valued and several agreements were entered into. The agreements with eachclient followed a similar format, albeit there were some differences for example in the price for which theproperty was sold and in the terms of payment. For present purposes the differences are not material.

[9] The principal agreement was a contract of sale by which the client sold his or her home. The purchaserwas either MFL or MFLP. The purchase price was based on a valuation that had been arranged by thepurchaser. Under each contract, apart from 4 contracts that were cash sales, the price was payable by adeposit (which was often more than 10% of the purchase price) with the balance to be paid by monthlyinstalments over many years, usually between 15 and 30 years. The actual period was determined byreference to the life expectancy of the client which, in turn, was based on actuarial life tables. Interest waspayable on the outstanding purchase price only in the event of default. Importantly, the contract of salecontained a condition that the parties (vendor and purchaser) "enter into an irrevocable lease agreementprior to the settlement date".

[10] The second agreement was a deed between the client and the purchasing company. The deed containedrecitals that explained the intentions of the contracting parties. Three are important:

1. [The purchaser] has agreed to lease the Property to the Vendor at a rental of one dollar ($1.00)per annum until the Vendor's demise.

1. [The purchaser] has disclosed to the Vendor that it may sell the property to an investor.1. In the event that [the purchaser] sells the property to an investor, [the purchaser] acknowledges

that it does so subject to the lease and this agreement.

By cl 1.1, the vendor (the client) agreed to forgo a specific portion of the price payable under the contract

of sale "in consideration for [the purchaser] entering into the lease at the request of the vendor". It is notclear how the amount was arrived at but it appears to be substantially less than the sum of the annualmarket rent for the property over the life of the lease. By cl 1.4 the vendor acknowledged that the purchasermight sell the property to an investor. By cl 1.6 the purchaser undertook that, in the event that it sold theproperty to an investor or third party and anything happened to that party that affected the vendor's right tooccupy the property for the term of the lease, it (the purchaser) had a "positive obligation and must do allthings necessary to ensure the vendor's rights are maintained pursuant to the terms and conditions of thelease". By cl 6.1 the investor agreed that, in the event the company sold the property to the investor, theinvestor would assume the obligations and liabilities owing to the vendor by the purchaser under thecontract of sale.


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[11] Annexed to the deed was a Deed of Acknowledgement to be signed by the investor. By this deed theinvestor undertook that, upon purchasing the property, it would assume all of the purchaser's obligationsunder the deed and all of the landlord's obligations under the lease. It is not necessary to decide whether theassumption of those responsibilities was enforceable at the suit of the vendor.

[12] The final agreement was a residential tenancy agreement relating to the property. The purchaser wasthe landlord and the vendor was the tenant. The lease was for a fixed term. A sample lease which is inevidence has an expiry date of 31 December 2052. It is unlikely that the tenant under this lease (andpresumably the tenants under the other leases) would still be alive at the expiry date. This was anticipatedby a clause which provided that: "The parties agree that the intention of this lease is to allow the tenants toremain in the property until their demise or until they vacate the property for a period of greater than sixmonths. The tenants agree that should they die or vacate the property for six months the lease shall come toan end despite that the fixed term may not have ended." As required by the contract of sale, the rent for thepremises was fixed at $1.00 per annum. Rates and taxes were to be borne by the landlord, which was alsoresponsible for the maintenance of the property.

[13] This suite of agreements was intended to bring about the situation where, in exchange for his home,the client obtained a life tenancy and received a lump sum payment (the deposit) as well as a periodic taxfree payment for the remainder of his life. The financial security which the client had been promiseddepended, for the most part, upon the financial wherewithal of the purchaser, MFL or MFLP. Yet, at no timedid those companies have the necessary funds to meet their obligations. Their start-up capital was $50,000,which had been put up by one of the brothers. This was far from sufficient to fund the scheme. The sale ofthe homes to investors did not overcome the lack of funds. That the scheme collapsed can be of no surprise.For the promoters it was a get rich quick scheme that had almost no hope of success.

[14] Following the purchase of the homes by MFL or MFLP many (around 67) were on-sold to an"investor". The contract with the investor provided that possession was to be given on settlement. This didnot mean that the investor was entitled to physical possession on settlement; rather, he became entitled tothe rents and profits at that point. It was also on settlement that the investor assumed (or purported toassume) responsibility for the payment of the balance of the purchase price due to the original vendor.However, few if any payments were made. More often than not the investor was impecunious; onepurchaser of several homes was a company run by a former bankrupt.

[15] On these facts there can be no doubt that the corporate respondents, at the instigation of their directors,misled the clients. The clients were misled into believing that the scheme had been set up by experts withmany years' experience in real estate when, in truth, it had been established by people with little or noknowledge of the industry. The clients were misled into believing that the payments due to them weresecure in the sense that the payments would be made on time for the remainder of their lives. The realitywas very different. There was no certainty that any of the payments would be made, as history would latershow.

[16] Given the way in which the scheme was marketed, the provisions in the agreements by which moneywas promised to be paid to the clients also involved misleading or deceptive conduct. By promising tomake the payments, the purchaser company was implicitly stating that it had the capacity to meet thatobligation:Futuretronics International Pty Ltd v Gadzhis [1992] 2 VR 217. In truth the company had nosuch capacity.

[17] These conclusions do not, however, establish contraventions of the relevant sections. Those sectionsproscribe misleading and deceptive conduct "in relation to financial services" (s 12DA), or in connectionwith the supply or possible supply of "financial services" (s 12DB), or in connection with the sale or grantor the possible sale or grant of a "financial product" that involves an interest in land (s 12DC), or in relationto a "financial product" or a "financial service" (s 1041H). It is therefore necessary to consider whether theconduct which I have found to be misleading concerned a "financial service" or a "financial product".

[18] As we shall see the two concepts, both of which are defined in the statutes, are interrelated. Therelevant provisions in the Corporations Act and the ASIC Act are almost the same. For convenience I willrefer to the ASIC Act. Section 12BAB(1) of the ASIC Act provides that a person provides a "financial


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service" if they, among other things, provide "financial product advice" or deal in a "financial product".Section 12BAB(5) defines "financial product advice" to mean a recommendation or statement of opinion orreport that is intended to influence a person in making a decision in relation to a particular "financialproduct" or class of "financial products".

[19] This takes us to the definition of "financial product". The definition is to be found in s 12BAA. Thatsection provides that a "financial product" is a facility through which, or through the acquisition of which, aperson makes a "financial investment". For present purposes this is the central part of the legislativescheme. "Financial investment" is defined in s 12BAA(4). By that section a person (the investor) makes afinancial investment if:

1a) the investor gives money or money's worth (the contribution) to another person and any of thefollowing apply:

1. the other person uses the contribution to generate a

financial return, or other benefit, for the investor;

1. the investor intends that the other person will use the contribution to generate afinancial return, or other benefit, for the investor (even if no return or benefit is in factgenerated);

1. the other person intends that the contribution will be used to generate a financial return,or other benefit, for the investor; and

11b) the investor has no day-to-day control over the use of the contribution to generate the return or

benefit.

[20] The key elements of the first limb of this definition are: (1) handing over (the statutory word is"gives") an asset (money or money's worth) to another person; and (2) applying or intending to apply theasset to produce an advantage for the investor (the advantage being a "financial return" or some other"benefit"). At a superficial level it is clear what is intended; a financial investment is when a person lays outmoney or capital for the purpose of getting a return. This is what a businessperson would understand as a"financial investment". On this view, the mere sale or purchase of a home for its exchange value is notcovered. This is because the simple conversion of an asset of one kind (for example land) into an equivalentasset of a different kind (for example cash) has no element of putting the asset to use to gain a return, atleast not in a business sense.

[21] On what basis, then, can it be said, as ASIC contends, that the sale and lease-back arrangements inquestion involve the client making a "financial investment"? This is not an easy question to answer. Theproper approach in arriving at the answer must be based on the principle that the relevant provisions shouldbe construed broadly:Australian Softwood Forests Pty Ltd v Attorney-General (NSW) (1981) 148 CLR121. Adopting a broad view, it can be said that the investors (the clients) have contributed their homes forthem to be used to generate benefits for themselves. The first benefit was the periodic tax free paymentsextending over many years. The homes were to generate this benefit as they were to be on-sold to investorswho would provide the necessary funds. Also, there were benefits, or potential benefits, arising out of the

leases. It will be remembered that each lease was for the client's life at what appears to be less than themarket rent. This gave rise to two benefits; one actual the other potential. First, there was the low rentwhich was an immediate benefit. Second, there was the potential benefit that would arise if the client wereto live longer than expected according to the life tables. Previously I noted that the consideration for the lifetenancy (the amount deducted from the purchase price for the property) was based on life tables. If theclient outlived the age prescribed in those tables he would receive a benefit; effectively the right to occupythe home for the additional period at no cost.

[22] Assuming these to be relevant benefits for the purpose of the definition of "financial investment" it isstill necessary to decide whether the word "gives" in the phrase "gives money or money's worth" includes a


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sale with a lease-back. Ordinarily the word "gives" would not carry that meaning. I observe, however, thatin the note to s 12BAA there are examples of what acts constitute making a financial investment. Oneexample is the subscription of money for shares in a company. In substance this is the acquisition of anasset for its exchange value in the hope of making either a capital profit or receiving income. If "gives"

includes the purchase of an asset there is no reason why it should not also include a sale.[23] To this point I have not dealt with whether the statements about the client having a "guaranteedtenancy" or a "guaranteed lifetime tenancy" are misleading. In my view they are not for the reason that thelifetime tenancy which had been granted to the client was in fact "guaranteed" in the only relevant sense,namely that it could not be defeated by MFL, MFLP or any person claiming through them.

[24] I base this conclusion on s 42(2)(e) of the Transfer of Land Act 1958 (Vic) and the equivalentprovision in the Torrens legislation in other States. The effect of s 42(2)(e) is that the estate of a registeredproprietor of land (including the proprietor of a mortgage) is subject to the rights of a tenant in possession.In this area the relevant principles are clearly established. The first is that the possession of a tenant isnotice of any right of the tenant affecting the land:McMahon v Swan [1924] VLR 397 at 406. The second isthat, as Dixon J confirmed inBurke v Dawes (1938) 59 CLR 1 at 17-18, s 72 of the Transfer of Land Act1928 (Vic) (which is the forerunner of s 42) was not intended to apply merely to a tenancy as commonlyunderstood. See also

Downie v Lockwood[1965] VR 257 at 259 where Smith J said "As appears from the

cases the exception in s 42 (2) (e) is to be widely construed; and it is to be treated as producing the resultthat "any person in actual occupation of the land obtains as against any inconsistent registered dealingprotection and priority for any equitable interest to which his occupation is incident, provided that at lawhis occupation is referable to a tenancy of sort, whether at will or for years". Thus, for the purposes of thesection a purchaser under a contract, who is given possession by the vendor and is only a tenant at will, isprotected in respect of his equitable ownership:Robertson v Keith (1870) 1 VLR(E) 11. So, too, is a vendorwho remains in possession until the purchase price is paid: he is a tenant "whatever might be the legaldenomination of the tenancy": The Commercial Bank of Australia Ltd v McCaskill(1897) 23 VLR 10 at 12.It has also been held that an equitable life estate will prevail over a subsequent registered interest:Black v

Poole (1895) 16 ALT 155.

[25] These principles will protect the tenancies granted to the clients (who it must be assumed were alwaysin possession of their homes) over subsequent dealings with the land. Put another way, the clients' life

tenancies are secure, that is their tenancies are "guaranteed" to survive any adverse claims made bysubsequent registered proprietors and mortgagees, provided they (the clients) continue to pay $1.00 perannum by way of rent and do not vacate their home.

Order

[26] ASIC should bring in short minutes to give effect to these reasons.

No appearance for the third, fourth & fifth defendants.

Counsel for the plaintiff:Ms F McLeod SCandMr D Star

Solicitors for the plaintiff:Australian Securities & Investments Commission

Solicitors for the first and second defendants:Arnold Bloch Leibler


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2 of 10 DOCUMENTS: Unreported Judgments WA

66 Paragraphs

HAMERSLEY v BRIAN ROSSITER NEWTON (as executor of the

estate of HAMERSLEY (Dec'd)) - BC200507603

Supreme Court of Western Australia -- In CivilEm Heenan J

CIV 2024 of 2004

19 November 2004, 7 October 2005

Hamersley and Ors v Brian Rossiter Newton (as executor of the estate of Robert MalcolmHamersley (Dec)) and Ors [2005] WASC 221

WILLS -- Administration -- Trusts -- Real property -- Life estate -- Rule in Shelleys case -- Surrender

of prior interest -- Acceleration of interest in remainder by surrender by life tenant -- Vested or

contingent interest -- Interest vested subject to divestment -- Possibility of failure of reversionary

interests -- Potential residuary gift or partial intestacy -- Persons entitled -- Class gifts -- Dates for

determining membership of class -- Unborn children -- Role of Attorney General -- Declaratory relief

-- Hypothetical issue or real question of concern over future rights.

(WA) Administration Act 1903(WA) Inheritance (Family and Dependants Provision) Act 1972

(WA) Property Law Act 1969

(WA) Supreme Court Act 1935

(WA) Wills Act 1970

Andrews v Partington (1791) 3 Bro CC 401 ; 29 ER 610;Barns v Barns (2003) 214 CLR 169;Bassettv Bassett(2003) 58 NSWLR 258;Boraston's Case (1587) 3 Co Rep 16a;Byrne v Dunne (1910) 11CLR 637; Campbell v Glasgow (1919) 27 CLR 31; Church Property Trustees, Diocese of Newcastle v

Ebbeck(1960) 104 CLR 394; Collins v Equity Trustees Executors and Agency Co Ltd[1997] 2 VR166; Commonwealth v Sterling Nicholas Duty Free Pty Ltd(1972) 126 CLR 297;Egan v Willis (1998)195 CLR 424;Fell v Fell(1922) 31 CLR 268;Forster v Jododex Aust Pty Ltd(1972) 127 CLR 421;

Green v Dunn (1855) 20 Beav 6;Hickling v Fair[1899] AC 15;Hoysted v Federal Commissioner ofTaxation (1920) 27 CLR 400;Hoysted v Federal Commissioner of Taxation (1921) 29 CLR 537;

Hoysted v Federal Commissioner of Taxation (1925) 37 CLR 290;Re Astor; Astor v Astor[1922] 1 Ch364;Re Crothers' Trust[1915] 1 Ch 53;Re Francis; Francis v Francis [1905] 2 Ch D 295;ReTownsend's Estate; Townsend v Townsend(1886) 34 Ch D 357;Jenkins v Stewart(1906) 3 CLR 799;

Jull v Jacobs (1876) LR 3 Ch D 703;Kotsar v Shattock[1981] VR 13;Lainson v Lainson (1854) De GM & G 754 ; 43 ER 1063;Lieberman v Morris (1944) 69 CLR 69;Maddison v Chapman (1858) 4 K& J 709 ; (1858) 70 ER 294;Marion's Case, Secretary, Department of Health and Community Servicesv JWB and SMB (1992) 175 CLR 281;Minister for Health v AS & Anor [2004] WASC 286 ; (2004)


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WAR 517;M'Kay v M'Kay [1901] 1 IR 109;Phipps v Ackers (1842) 9 CL & Fin 583 ; ; 8 ER 539;ReDuke of Wellington, Glentanar v Wellington [1947] Ch 506 ; [1948] 1 Ch 118;Re Flower's SettlementTrust[1957] 1 All ER 462;Re Harker's Will Trusts [1969] 3 All ER 1;Re Hartigan [1989] 2 Qd R 401;

Re Hodge Deceased, Midland Bank Executor and Trustee Company Ltd v Morrison [1943] 2 All ER

304;Re Howes (deceased); Quinton v Howes [1971] 2 NSWLR 387;Re Kebty -- Fletcher's Will Trust,Public Trustee v Swan and Snowden [1969] 1 Ch 339;Re Mallinson Consolidated Trusts; Mallinson &Ors v Cooley [1974] 2 All ER 530;Re Penton's Settlements [1968] 1 All ER 36;Re Syme Deceased[1980] VR 109;Re Taylor (deceased) Lloyds Bank Ltd v Jones [1957] 3 All ER 56;Re Young'sSettlement Trust[1959] 1 WLR 457; Sanderson Computers Pty Ltd v Urica Liberty Systems BV(1998)44 NSWLR 73; Shelley's Case (1581) 1 Co Rep 93 ; ; 76 ER 206; Tompkins v Simmons (1930) 44 CLR546; Van Grutten v Foxwell[1897] AC 658; Windham v Darby (1896) LR (NSW) 272, referred

Alsop Wilkinson (a firm) v Neary [1995] 1 All ER 431;Bateman's Bay v Aboriginal Fund(1998) 194CLR 247; Chapman v Chapman [1954] AC 429;Doe decd, Hiscocks v Hiscocks (1839) 5 M & W363 ; (1839) 151 ER 154;Hardwick v Hardwick(1873) LR Eq 168;Higgins v Dawson [1902] AC 1;

Hill v Crook(1872) LR 6 HL 265;Re Hatfield's Will Trusts; Hatfield v Hatfield[1958] Ch 469;ReLongman's Settlement Trusts [1962] 1 WLR 455;Lainson v Lainson (1854) De G M & G 754 ; 43 ER

1063;P v P(1994) 181 CLR 583;Re Blocksidge [1997] 1 Qd R 234;Re Christmas' Settlement Trusts[1986] 1 Qd R 372;Re Johnson, Donily v Johnson (1893) 68 LT (NS) 20;Re Legh's ResettlementTrusts, Public Trustee v Legh [1937] 3 All ER 823;Re Scott; (deceased); Widows v Friends of theClergy Corporation & Ors [1975] 2 All ER 1033; Sifton v Sifton [1938] AC 656; Whitby v Von

Luedecke [1906] 1 Ch 783, cases also cited

Em Heenan J.

[1] The major issue of importance, and not a little difficulty, in these proceedings is whether a proposedsurrender by Leonard Colin Hamersley of his life interest in the farming properties at Walkaway nearGeraldton, known as "Fairfield", left to him under his great uncle's will, would produce an acceleration of aconditional entitlement to the estate in fee simple in remainder for his elder son, Daryl Colin Hamersley, or

whether it would produce some other effect which should be declared by the Court.

[2] This originating summons has been amended in material respects several times. Even at the hearingcounsel for the plaintiffs did not press for declarations or orders in respect of all the issues raised by theamended originating summons. He concentrated instead on the question of potential acceleration of theinterest in remainder in the event of a surrender of the life interest in Fairfield submitting that otherquestions could, or should, be left for later attention in light of the possibility that the determination of themajor issue would render it unnecessary to return to them. Because the affidavit evidence relied on by theparties originally addressed questions raised in the first version of the originating summons, much of that isdirected to issues which now have far less significance than before. Accordingly, when considering thebackground and the evidence which has been accepted on all sides in these proceedings the change in theperspective of the proceedings must take these changes into account.

Background[3] Robert Malcolm Hamersley ("Uncle Robert") died at Geraldton on 30 August 1984. He was then in his93rd year and, for much of his life, he had farmed his property at Walkaway known as Fairfield. Fairfieldcomprises about 399 hectares of high quality farming and grazing land in seven adjoining lots on either sideof the Greenough River. In a valuation prepared in August 2003 and not challenged its market value wasestimated to be $1,125,000.

[4] Robert Malcolm Hamersley never married and had no children. He did have a brother and a sister and itwas some of their grandchildren, his great nephews and great nieces who were the only named beneficiariesin his will.


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[5] Uncle Robert made his last will on 7 December 1979. After his death on 30 August 1984 probate of thatwill was granted to Brian Rossiter Newton, an accountant of Geraldton, the executor named in the will. Byprovisions in the will, set out in full below, Uncle Robert left Fairfield to his great-nephew Leonard ColinHamersley for life stating that after the death of Leonard, Fairfield should go to Leonard's then eldest living

son in remainder absolutely. The executor, Mr Newton, entered upon the administration of Uncle Robert'sestate and, in due course, had all the Fairfield land registered in Leonard Hamersley's name as proprietor ofa life interest with himself, as executor, registered as the proprietor of the estate in fee simple in remainder.That is the current state of the registered proprietorship of Fairfield and has been so for many years.

[6] Leonard Colin Hamersley and his wife Maxine Gladys Danielle Hamersley themselves own, and insome other cases lease, additional farming properties near Fairfield. They live on Fairfield and farm thatproperty, and also farm the other nearby properties in partnership all as part of the one extended farmingoperation. They have three adult children, Daryl Colin Hamersley, Kerry Marie Hamersley and RobertMalcolm Hamersley, all of whom, it seems, have been brought up on Fairfield and the nearby familyproperties.

[7] During the 2004 calendar year Leonard Hamersley, his wife and children, on the recommendation oftheir financial and legal advisors turned their attention to making arrangements for future estate planningfor the use and disposition of the family properties near Walkaway. The affidavit evidence shows that inJuly 2004 each of Leonard Colin Hamersley and Maxine Gladys Danielle Hamersley made a mutual willand, together with their three adult children, entered into a deed of family arrangement dated 21 July 2004which, generally speaking, confirmed that the two parents had made the mutual wills on the faith ofreciprocal promises and on undertakings given by the children to agree upon the eventual disposition of thefamily properties in a way which would provide for Fairfield to be left to the elder son Daryl, for othernamed farming properties to be left to the younger son, Robert, and for certain other properties, (togetherwith the implementation of some provisions to effect approximate equalisation in value of portions) to go totheir daughter, Kerry. This deed contains terms which purport to be capable of being pleaded as a defencein the event that, on the death of either of the parents, any other member of the family should instituteproceedings under the Inheritance (Family and Dependants Provision) Act 1972. The deed also contains acovenant by each of the parties not to make any application under that legislation.

[8] One of the uncertainties about the future disposition of the family property which the scheme of mutual

wills and the deed of family arrangement are apparently intended to address is the doubt which the partiesentertain about the ability of Leonard Colin Hamersley, or indeed of others, to effect a binding futuredisposition of the ownership of Fairfield. Despite the prominence of this estate planning scheme, itsconstituent components and the evidence adduced on this originating summons no submissions of any kindwere made by the parties about the effectiveness or validity of the various assumptions upon which thesepurported obligations have been constructed, nor about the effect of covenants in the deed limiting, orpurporting to restrict rights of recourse to, remedies under the Inheritance Act. It is therefore inappropriatehere to embark upon any consideration of the potential effectiveness of that deed or those covenantspurporting to limit or restrict access to relief under the Inheritance Act but, in passing over this evidence, Iwish to make expressly clear that there may well be many questions about the validity of those assumptionsand that established authority demonstrates that neither testators nor members of their family can prevent orcontract out of the entitlement of an eligible applicant to apply for relief under the InheritanceAct:seeBarns v Barns (2003) 214 CLR 169; andLieberman v Morris (1944) 69 CLR 69.

[9] A further reason was identified in the affidavits of Mr Leonard Colin Hamersley, his wife and each oftheir three children for seeking orders and declarations from this Court as originally proposed. According tothe affidavits, these members of the Hamersley family now believe that, although the terms of UncleRobert's will appear to pass the ownership of Fairfield to Daryl Hamersley, on his father's death, the advicewhich the family has received is that the provision in the will regarding the remainder interest in Fairfieldmay be subject to s 27 of the Property Law Act 1969 with the result that the remainder interest in Fairfieldwill be shared among those persons who become entitled to Leonard Hamersley's estate when he dies. Theposition is put by Mr Leonard Hamersley in para 22 of his affidavit where he deposes:


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I have been advised by my solicitors that if s 27 of the Property Law Act [1969] applies to the Deceased's will andif I were to pass away today, the persons who would receive the remainderman interest in Fairfield would beMaxine and my children.

The affidavits go on to explain how this would, if it were to occur, undermine the implementation of theagreed scheme of distribution of family property embodied in the mutual wills made by the parents and inthe deed of family arrangement entered into between the parents and the three children.

[10] Another feature of the evidence which must be noted, although it was not pursued in argument, is thereference by these members of the Hamersley family to the practical need to secure an interest in fee simplein possession in Fairfield in order to secure further advances from the Hamersley family's bankers forfarming operations on Fairfield and the other nearby properties. The evidence, again not challenged, wasthat banks and other similar lending institutions were not disposed to advance money to Mr Leonard ColinHamersley or to other members of the family on the security only of his life interest in Fairfield.

[11] Originally, as the proceedings were formulated, the plaintiffs sought declarations that Daryl Hamersleyis the person entitled to the fee simple in remainder expectant upon the death of Leonard Colin Hamersleyin Fairfield or, alternatively, that Maxine Hamersley, Daryl Hamersley, Kerry Hamersley and Robert

Hamersley are the persons so entitled to the fee simple in remainder expectant upon the death of LeonardColin Hamersley. Further, as originally formulated, the plaintiffs sought an order from this Court that thedefendant executor do transfer the estate in fee simple in remainder expectant upon the death of LeonardColin Hamersley in Fairfield to Leonard Colin Hamersley absolutely. As a result of a series of interlocutoryapplications, to be described in more detail soon, the relief sought was substantially amended, additionalparties were added and directions were given for the representation of other parties and interests actually orpotentially affected by these proceedings.

Relevant Provisions of Uncle Robert's Will

[12] After having appointed Mr Newton as his executor, making provisions entitling the executor to chargefor professional services in the administration of the estate and to receive commission only out of theresiduary estate the testator provided:

I GIVE DEVISE AND BEQUEATH all of my farming lands in the Victoria land district of Western Australia to mygreat nephew LEONARD HAMERSLEY son of COLIN CHARLES HAMERSLEY and JUDITH HAMERSLEYduring his lifetime together with the farming plant furniture and moveable equipment thereon and declare that thesaid LEONARD HAMERSLEY shall be liable to preserve the house and property of 'Fairfield' from waste and afterthe death of the said

LEONARD HAMERSLEY to the then eldest living son of the said LEONARD HAMERSLEY in remainderabsolutely.

THE REST AND RESIDUE of my estate after satisfaction of my just debts testamentary expenses the cost ofhaving my body cremated and having my ashes distributed over my farmland near Walkaway aforesaid known as'Fairfield' and any trustees commission payable to my Executor or Executors I GIVE DEVISE AND BEQUEATHto EDWARD LOCKE BROCKMAN of Walkaway DAVID HAMERSLEY BROCKMAN of 23 McNess RoadKalamunda JUANITA HAMERSLEY HINXMAN of Johnson Street Mt Helena and VERA HAMERSLEYHEINSEN of 92 Gregory Street Geraldton in equal shares as tenants in common.

[13] The reference in the devise of Fairfield contained in this will to the entitlement to the remainderinterest in the property after the death of Leonard Hamersley to "the then eldest living son of the saidLEONARD HAMERSLEY" raises for consideration the proper choice of both the method and the time foridentification of the person so nominated. Fortunately, Mr Leonard Hamersley and his two sons, Daryl andRobert all appear to enjoy good health but there can be no certainty that one son will outlive his father nor,if one does, which son that will be. No doubt the family hopes and expects that deaths, when they occur,will be in age order and that Daryl, as the elder son now living will succeed his father and enjoy the interestin remainder. However, this may not happen. Nor can the possibility, remote and unintended though it maybe, that Mr Leonard Hamersley may yet have another son or sons one of whom may live to be the eldest


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son at the time of his death, be eliminated. Then there is the possibility, one hopes a remote one, that MrLeonard Hamersley may outlive both Daryl and Robert and die without leaving a son surviving him. In thatcase there would be a failure to provide for the disposition of the estate in Fairfield in remainder under thespecific devise in the will. In that eventuality the possibilities seem to be that the undisposed of remainder

interest in Fairfield would form part of the residuary estate divisible equally between persons, yet to beidentified, who are entitled to distribution under the estates of the Brockman, Hinxman and Heinsencousins named in the residuary devise and bequest or, failing that, on a partial intestacy, to the personsentitled to distribution of Uncle Robert's estate under the provisions of the Administration Act 1903.

[14] Following the series of amendments to the originating summons already mentioned, the finalformulation of the relief sought by the plaintiffs is as follows:

1.1 A declaration that Daryl Colin Hamersley, being the third named plaintiff, is the person entitledto the fee simple in remainder expectant upon the death of Leonard Colin Hamersley in the landdescribed in certificate of title volume 507 folio 38A (Fairfield); or

1.2 alternatively, a declaration that Maxine Gladys Danielle Hamersley, Daryl Colin Hamersley,Kerry Marie Hamersley and Robert Malcolm Hamersley, being the second, third, fourth and fifth

named plaintiffs, are the persons entitled to the fee simple in remainder expectant upon the deathof Leonard Colin Hamersley, in the land [known as Fairfield] and

1. an order that the first defendant, Brian Rossiter Newton, as executor of the estate of the lateRobert Malcolm Hamersley transfer the estate in fee simple in remainder expectant upon thedeath of Leonard Colin Hamersley in the land [known as Fairfield] to Leonard Colin Hamersley,

being the first named plaintiff.

1. Alternatively, a declaration as to whether in the event that Leonard Colin Hamersley renounceshis life interest in Fairfield the effect would be to pass an immediate interest in fee simple inFairfield to Leonard Colin Hamersley's eldest son then living or whether instead the effect would

be to pass the interest in Fairfield for the life of Leonard Colin Hamersley to Leonard ColinHamersley's eldest living son, subject to the remainder taking effect as provided in the will.

1. Further and alternatively, a declaration as to whether in the event that Leonard Colin Hamersleywere to die without leaving a son surviving, the interest in Fairfield in remainder would pass tothe residuary beneficiaries named in the will who survive the testator or their successors, orwhether instead the effect would be to pass the interest in Fairfield in remainder to the persons

entitled to distribution of the estate of the late Robert Malcolm Hamersley upon an intestacy.

1. Such further orders as this honourable court deems fit.

Interlocutory Orders and Directions

[15] In view of the possibility, already mentioned, that the interest in remainder to Fairfield, after the deathof Leonard Colin Hamersley, might devolve upon a son as yet unborn I considered that it was necessary togive directions for such a potential interest to be represented in the proceedings. Similarly, because of thepossibility that the successors to the estates of the Brockman, Hinxman and Heinsen cousins might, in oneeventuality, succeed as residuary beneficiaries to an undistributed interest in remainder to Fairfield, Iconsidered that it was also necessary to take steps to have those interests represented.

[16] Accordingly, after directing that the originating summons be amended as sought I ordered, on 13

September 2004, that the Attorney General of Western Australia be joined as a second defendant in theproceedings and that the plaintiff should pay the costs of the Attorney General in the proceedings in anyevent. The role of the Attorney General in this respect is to represent, in the exercise of his parens patriaejurisdiction, the interests of any future unbornsons of Leonard Colin Hamersley in events which mighthappen -- seeMarion's Case, Secretary, Department of Health and Community Services v JWB and SMB(1992) 175 CLR 281 andMinister for Health v AS & Anor [2004] WASC 286 ; (2004) WAR 517. Igratefully acknowledge the subsequent appearance of the Attorney General in this role and the assistancewhich he has provided by counsel in making submissions generally in this respect.

[17] Further interlocutory directions were sought by the first defendant with regard to the potential need for


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representation of the interests of the Brockman, Hinxman and Heinsen cousins who are the namedresiduary beneficiaries and devisees. The evidence discloses that each of the named residuary beneficiarieshas died and that great difficulty has been experienced in identifying the persons who are entitled indistribution under their several estates or, indeed, who are the descendants or representatives of those

deceased residuary beneficiaries. In the result I ordered that, in the event that he signified his willingness toact in this capacity, Geoffrey John Brockman be joined as a party in these proceedings as a representativeof those entitled to the residue of the estate of the late Robert Malcolm Hamersley. This appointment wasmade pursuant to RSC O18 r 13 and was accompanied by a direction that Mr Newton, as first defendantand executor, should give notice of these proceedings in a form to be approved by the Court to so many ofthe following affected persons ("affected persons") as could be identified and located within the timeavailable namely:

1 the personal representatives of the estates of Edward Locke Brockman, David HamersleyBrockman, Juanita Hamersley Hinxman and Vera Hamersley Heinsen (the residuary

beneficiaries); and

2 the beneficiaries of any will of any of the residuary beneficiaries of which probate or

administration has been granted.3 But if probate or administration has not been granted of the will of any of the residuary

beneficiaries then, in each such case, notice be given to:

4 any surviving spouse of that residuary beneficiary.5 any adult children of that residuary beneficiary.

I directed that such notice should inform the affected persons of:

1. the relief being sought by the plaintiffs in this action.1. the nature of the possible contingent interest.1. the fact that Geoffrey John Brockman had agreed to act as the representative of those entitled to

the residue of the estate of the late Robert Malcolm Hamersley and had been duly joined as aparty in that capacity and

1. notwithstanding his agreement and the joinder of Mr Geoffrey John Brockman, that any suchaffected person is entitled to seek to be heard personally or to be made a party to the action uponapplication to the court on his or her own behalf.

Other incidental orders and directions in relation to the mode of service and responses to such notices werecontained in my order of 9 November.

[18]Notwithstanding these steps it was not practicable to make, nor did I consider that the occasionwarranted, efforts to identify and give notice of the proceedings to all or any of the persons who may beentitled to distribution of the estate of the deceased Robert Malcolm Hamersley in the event of a partialintestacy arising from a failure to make effective distribution of the estate in remainder expectant upon thetermination of the life interest to Fairfield. Not only did the probability appear to be, from what was knownof the family of Robert Malcolm Hamersley, that those entitled, or most of them, in the event of a partialintestacy would be persons already parties to these proceedings or be represented by the recent joinder of

Mr Brockman, but it also appeared, at that stage, that it was unlikely that there would turn out to be apartial intestacy which would require the tracing of such parties. For reasons which I shall set out in detaillater, the submissions at the hearing satisfied me that no such partial intestacy will occur. Therefore, thelack of formal identification and representation of parties entitled in the event of such a partial intestacywhich has been made unavoidable because of the exigencies of this litigation cannot have any actual orpotential adverse consequences.

[19] I am pleased to record that Mr Geoffrey Brockman, at short notice, willingly accepted the role ofrepresenting the interests of the successors of the named residuary beneficiaries. He appeared by counsel inthese proceedings whose submissions I acknowledge and so, by these means, I have been further assisted in


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addressing the issues which have arisen for decision.

Section 27 -- Property Law Act 1969

[20] The last preliminary matter which needs to be mentioned before turning to the issues is theapprehension by the plaintiffs on advice that the life interest of Fairfield in favour of Leonard ColinHamersley with the remainder to his eldest son living at the time of his death, might, because of theprovisions of s 27 of the Property Law Act, result in the disposition of the remainder taking effect in favourof the life tenant's widow and surviving children.

[21] Section 27 of the Property Law Act provides as follows:

1. Where in an instrument that comes into operation after the coming into operation of this Act aremainder is limited mediately or immediately to the heir or heirs of the body of a person towhom an estate for any life in the same property is expressly given, the estate of that person shall

be an estate for that life with remainder to the persons who on the death of that person intestatewould be beneficially entitled to his property and in the same shares.

[22] The marginal note to this section is "Rule in Shelley's Case abolished". No counsel advanced anysubmission at the hearing that s 27 of the Property Law Act applied to or affected the devise in UncleRobert's will of Fairfield whether in respect of the life estate granted to Leonard Hamersley or theremainder to one of his sons. In this respect counsel were plainly correct because the devise of Fairfield,including the devise of the remainder interest, is not limited in any way to the heir or to the heirs of thebody of the life tenant or otherwise.

[23] Had the grant to Leonard Hamersley been made to him and to his heirs or to him and to the heirs of hisbody whether in fee simple or fee tail (before estates tail were abolished in this State by s 23 of the PropertyLaw Act 1969) then, by the operation of the rule in Shelley's Case (1581) 1 Co Rep 93b; 76 ER 206 thewords "to the heirs" would have been treated as words of limitation and not of purchase so resulting in theancestor taking a fee simple and with no interest been granted to the heirs. The learning on the rule inShelley's Case is vastindeed: see Butt "Land Law" Law Book Co, 4th ed at [813]-[816]; Van Grutten v

Foxwell[1897] AC 658 per Lord Macnaghten at 667 and per Lord Davey at 684; and Campbell v Glasgow(1919) 27 CLR 31 at 44-47. The abolition of the rule in this State by s 27 of the Property Law Act meansthat where there is now a limitation in a grant to a life tenant to his heirs or to the heirs of his body, theestate granted will be to the tenant for life with the remainder to the persons who, on his death, would bebeneficially entitled had the immediate grantee died intestate.

[24] The devise in Fairfield in the will of the deceased is expressly to Leonard Colin Hamersley for his lifewith the remainder to his eldest son then living. As there is no grant of a remainder to the heirs or to theheirs of the body of Leonard Hamersley there is simply no occasion for the rule in Shelley's Case to haveapplied (had it not been abolished) or for s 27 to apply since its repeal. It also follows that there is no basisto apprehend that the effect of the devise of Fairfield by the will of the deceased will be for the remainder,expectant upon the death of Leonard Hamersley, to pass to the persons who would be entitled to participatein the distribution of his estate in the event of an intestacy -- that is to his widow and children.

The Interest to an Estate in Fee Simple in Remainder in Fairfield

[25] Having discarded the apprehension entertained by Leonard Hamersley and his family about thepossible application of s 27 of the Property Law Act to this devise it is now possible to proceed to the moreimportant and substantial question, namely the identification of the remainderman who will receive the feesimple to Fairfield upon the determination of the present life estate.

[26] Plainly enough, Daryl Hamersley, as the elder son now living of Leonard Hamersley is regarded by thefamily as being the person expected to succeed to an estate in fee simple of Fairfield in the event that he


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survives his father. Equally, however, if Daryl should predecease his father but Robert should survive thelife tenant then Robert would succeed to the remainder interest and obtain the fee simple. If neither sonsurvives his father but, unexpectedly, the father leaves another son (a son as yet unborn) him surviving thenthe eldest of any unborn sons would then be the remainderman succeeding to the fee simple. And, further, if

Leonard is not survived by any sons the question which arises is whether or not the interest in theremainder falls into residue for distribution of the fee simple interest between the successors to theBrockman, Hinxman and Heinsen's cousins' personal representatives or beneficiaries or whether the resultis a partial intestacy so that the remainder interest in Fairfield is distributable among the persons, or theirsuccessors, entitled to distribution to the estate of Uncle Robert in the event of an intestacy.

[27] These possibilities that the succession of Daryl Hamersley to the fee simple in Fairfield expectantupon the determination of the current life estate may not eventuate, and that the ultimate beneficiary of thefee simple expectant upon the remainder may go to one or some others has led to the submission that thereis no presently vested interest in remainder created by the testamentary devise and that such an interest willnot vest until the death of Leonard Hamersley and that his death will also be the earliest and only occasionwhen the class of persons who may be contingently entitled to the fee simple becomes identifiable. Thesubmissions following this line then proceed to contend that, in such circumstances the present life tenant,Leonard Hamersley, has nothing but a life interest to dispose of and that if he were to renounce or surrender

in favour of Daryl or any other person, the person so nominated could take nothing more than the unexpiredportion of the life interest presently enjoyed by Leonard Hamersley which would last only for the durationof Leonard Hamersley's life at which point the identification of the remainderman would have to be madeon the basis already described.

[28] Of course, the passage of time will eventually ascertain whether or not Leonard Hamersley is survivedby one or more sons and, if so, who is the eldest son at the date of death, so identifying the remaindermanwho would then become entitled to the estate in fee simple in Fairfield. Similarly, time will eventuallyreveal whether or not Leonard Hamersley may die without leaving any son. Should that happen the estatein fee simple in remainder would accrue and devolve, on one view, upon the residuary beneficiaries ofUncle Robert's will or upon their successors or, on the other view, on the persons entitled to distribution inthe event of an intestacy of Uncle Robert.

[29] The submissions for the second and third defendants stress the possibility that because the present

expectancy which Daryl Hamersley has to succeed to the fee simple in Fairfield upon his father's death,could be defeated by any of the eventualities described, it would be to the potential detriment of any of theother persons who might succeed to the estate in fee simple in Fairfield expectant upon LeonardHamersley's death, if by renunciation or surrender by Leonard Hamersley, as the present life tenant, or byany other means, the life estate was to be terminated before Leonard's death. This would cause thesuccession of the estate in fee simple for Daryl to be accelerated and the possibility of those othereventualities would be eliminated.

[30] To ascertain the true nature of the interest conferred by the will requires a proper construction of thedevise of Fairfield in the context of the will as a whole. By this process it becomes necessary to ascertainwhether this is one of those occasions where, by disclaimer, renunciation or surrender by a life tenant theremay be an acceleration of the remainder in favour of the eldest son living at the date of the surrender,renunciation or disclaimer.

Relief Claimed -- Certain Assumptions

[31] The originating summons seeks, first, a declaration to determine who is the person entitled to the estatein fee simple in remainder of Fairfield expectant upon the death of Leonard Colin Hamersley. In effect thisdeclaration requires a determination of the issue arising from the plaintiff's apprehensions that s 27 of theProperty Law Act may, in the circumstances, result in the remainder interest passing to the persons entitledto participate in distribution in the case of any intestacy by Leonard Colin Hamersley. It will not, however,resolve the more contentious issue of whether or not the remainder interest has vested or remainscontingent or whether it may be accelerated by renunciation or surrender by the present life tenant.


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[32] Second, the originating summons seeks an order requiring the defendant executor to transfer an estatein fee simple to Fairfield to the existing life tenant Leonard Colin Hamersley. No basis was suggested forthe existence of any power enabling the court to vary, by such an order for transfer, existing property rightswhatever they may in fact be. I am satisfied that this simple claim for relief simply misconceives the power

and role of the court. No counsel pressed for any such order to be made.[33] The third and fourth claims for relief, introduced in the originating summons by amendment, soughtdeclarations concerning the future entitlement to interests in Fairfield in the light of future events.

[34] The most immediate and presently relevant future postulation is that Leonard Colin Hamersley wouldsoon renounce his life interest in Fairfield giving rise to the issue of whether or not an immediate interest infee simple would pass to his eldest son living at the time of the renunciation or whether the effect wouldonly be to pass to the eldest son living at the date of the renunciation the unexpired portion of the lifeinterest still terminable at the death of Leonard Colin Hamersley. In the latter case the new life tenantwould take the fee simple in remainder as provided in the will only in the event that he were still the eldestson of Leonard Colin Hamersley living at the date of the latter's eventual death.

[35] The second postulated future event, for the declarations sought by para 4 of the originating summons,is the situation which might exist if Leonard Colin Hamersley were to die without leaving any surviving

son. The question posed, is whether, in that eventuality, the remainder interest in Fairfield would pass to theresiduary beneficiaries named in the will (the Brockman, Hinxman and Heinsen cousins) who survived thetestator or their successors or whether, instead, the effect would be to pass the interest in Fairfield inremainder to the persons entitled to distribution in the estate of Uncle Robert upon an intestacy.

[36] The statutory powers invoked to support the relief claimed by the plaintiffs are identified in theheading to the proceedings. The first reference is to s 19 of the Administration Act 1903 which confers onthe court the power to effect partition of any real estate of a deceased person if advantageous to the partiesinterested. This power was not relied upon by any of the submissions of counsel and no party sought anyorder for partition. I should therefore simply pass over this reference without observing anything more thanit is possible that, at one stage, it was mistakenly thought capable of supporting an order, as sought in para2 of the originating summons, to require the executor to transfer, other than in accordance with the terms ofthe will, an interest in Fairfield to one or other of the parties.

[37] The plaintiffs also invoked the powers conferred on the court by s 78, s 89 and s 90 of the Trustees Act1962. Section 78 of that Act enables the Court, in certain circumstances, to make a vesting order in respectof property held on trust but again no counsel submitted that any such order could or should be made in thepresent circumstances and it is unnecessary to consider that further. Section 89 of the Trustees Actempowers the court, in certain circumstances, to confer additional powers on a trustee but again no suchrelief was sought by any party. Section 90 of the Act confers on the court the power to vary or revokecertain trusts and, while it is possible that this power would enable the court to entertain an application tovary the terms of the will trusts of the estate of Uncle Robert in respect to the terms upon which Fairfield ispresently held, again no party sought any such variation of existing interests. Rather the claims of theparties have been to ascertain precisely the nature of the existing interests and the entitlements under themin the event of the future eventualities particularly mentioned, namely a purported surrender of his existinglife estate in Fairfield by Leonard Hamersley, and, secondly, the future possibility that Leonard Hamersleymight die without leaving any surviving sons.

[38] The plaintiffs also invoked the power of the court underRSCO 58 r 2 as persons actually orpotentially interested under the will of the deceased for the determination of questions affecting the rightsor interests of their claims and other questions arising in the administration of the estate. There is no doubtthat the court has power under this rule which reflects the more general power of the court available under s25(6) of the Supreme Court Act 1935. The amplitude, availability and efficacy of this power has been muchdiscussed and more frequently employed;Forster v Jododex Aust Pty Ltd(1972) 127 CLR 421;Commonwealth v Sterling Nicholas Duty Free Pty Ltd(1972) 126 CLR 297 per Barwick CJ at 305 -- seegenerally Meagher Gummow and Lehane's "Equity Doctrines and Remedies" 4th ed, [19-060]-[19-100].

[39]Nevertheless declaratory relief remains discretionary and one of the factors which may incline a court,


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in the exercise of its discretion, to withhold relief sometimes is that the supposed issue in respect of whichthe declaration is sought is hypothetical or only theoretical --Egan v Willis (1998) 195 CLR 424, or putanother way, that there is no present justiciable controversy in existence which requires adjudication by thecourt or that the supposed facts giving rise to the question have not happened and may never happen --

Sanderson Computers Pty Ltd v Urica Liberty Systems BV(1998) 44 NSWLR 73. Nevertheless, theseconsiderations do not preclude the court from making declarations of right even in respect of theoretical orfuture potential disputes if there is a genuine matter of concern which requires resolution for persons toconsider and determine their present or potential rights in a real and pressing sense. In Church PropertyTrustees, Diocese of Newcastle v Ebbeck(1960) 104 CLR 394 Dixon CJ said, at 400-401:

In any case it is still the general prima facie rule that questions about future interests that will arise in events thathave not yet happened and need not necessarily occur are not decided unless beneficiaries are hampered in their

practical affairs in some significant respect by the uncertainty or some other positive ground exists for ananticipatory decree or order.

[40] It is not difficult to see that real questions of concern have arisen in the present case among membersof the Hamersley families concerning the future ownership of Fairfield. If the position remains as it is at

present there is the possibility, however remote it may be, that neither Daryl nor Robert may outlive theirfather and that Leonard Hamersley may die leaving no surviving son so that the entitlement to the feesimple interest in Fairfield expectant upon the remainder of the present life interest would pass out of thisline of the family, notwithstanding that Daryl and his wife presently have children who, according tofarming tradition, might be hoped to succeed eventually to Fairfield. Clearly, therefore, if confirmation thatsurrender of the existing life estate by Leonard Hamersley would be efficacious in accelerating theremainderman in securing an estate in fee simple could be obtained that would naturally bring certainty forLeonard and his family and would accord with the wishes of the life tenant. On a practical level, also,acceleration of the present life estate in Fairfield to an estate in fee simple would be of considerableadvantage because it would allow, that land to be offered as security to lending institutions by mortgagebecause at present this cannot be done due to the disinclination of lenders to advance moneys on theuncertain security of a life estate in Fairfield.

[41] This potentiality for Fairfield to pass out of the line of Leonard Hamersley's family, provides a verypotent incentive for the life tenant to surrender or terminate the existing life estate if, by doing so, thatwould secure certainty for the future and produce an immediate estate in fee simple in favour of his sonDaryl Hamersley. Inescapably, if such a surrender or determination of the existing life estate were to proveeffective to secure this end the future possibility that Fairfield might pass out of the line of the family ifLeonard Hamersley should die without sons, would disappear and the chance of succeeding to Fairfield,small though it may be for the residuary beneficiaries or their successors, would also go. While it might besaid these eventualities will be determined by the passage of time, it may take many years for that to occur,years during which much work and investment on Fairfield would be required, and the limited span ofyears when the vigour and efforts of Leonard, and the youth of his sons can be deployed to farmingactivities. Naturally enough investments of large scale and choices concerning the destinies of individualmembers of the family are all involved in these questions and important practical decisions about howFairfield is to be run and by whom will have to be made. I have no doubt, therefore, that this is an occasionin which it is both right and necessary that the court should determine the issues which have been raised

and make declarations of right accordingly which will enable the members of the families concerned tohave as much certainty about their existing and future rights as can be possible and, as a consequence, beable to make important decisions about the use of the property and their own future actions.

[42] For examples of such declarations being made in respect of a future question in analogouscircumstances -- seeRe Syme Deceased[1980] VR 109;Re Hartigan [1989] 2 Qd R 401 at 411 andCollins v Equity Trustees Executors and Agency Co Ltd[1997] 2 VR 166 at 169.

Residuary Devise of Fairfield or Partial Intestacy?


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[43] This is a convenient point to address the issue of whether or not, in the event of Leonard Hamersleydying during the continuation of his life estate in Fairfield, but without any son surviving him, the interestin fee simple which would then arise would devolve upon the residuary beneficiaries named in the will, ortheir successors, or would result in a partial intestacy and distribution in accordance with the provisions of

the Administration Act 1903. Not only does the resolution of this issue have a bearing upon theidentification of the person or persons potentially interested in the ultimate estate in fee simple in Fairfieldbut it will also assist in determining other issues in the proceedings by revealing, if only to some extent, thedispositive intentions of the testator. These may have a bearing upon the major issue of whether or notsurrender by Leonard of his life estate might result in an acceleration of the succession by Daryl to theestate in fee simple.

[44] The will of the testator does not make any express provision for the disposition of Fairfield in theevent that Leonard Hamersley should die without leaving any surviving son. Two questions therefore arise.The first is whether the absence of any express gift over of Fairfield in this eventuality is indicative of atestamentary intention that the eldest living son of Leonard should, from the date of the testator's death,take a vested interest in the remainder notwithstanding that it is subject to later defeasance, rather thanmerely a contingent interest which would not vest, if at all, until the date of the life tenant's death. Thesecond, but separate question is whether the residuary devise and bequest in favour of the Brockman,

Hinxman and Heinsen interests is effective to pass the fee simple in remainder to Fairfield to that line of thefamily should Leonard Hamersley die without leaving any surviving son or whether that residuary deviseand bequest should be treated as being confined to that property owned by the deceased other than Fairfieldand the farming plant furniture and moveable equipment thereon at the date of the testator's death.

[45] While it might be possible to construe the residuary devise and bequest as dealing with all the testator'sproperty excluding Fairfield and the farming plant, furniture and equipment that is not a construction whichI consider should be adopted. There is nothing to suggest that when making his will the testator had in mindthe disposition of any real property other than Fairfield yet the language of the residuary dispositionexpressly employs the word "devise" indicating an intention that the residuary disposition would, or could,pass an interest to any real property held by the testator at his death which did not pass under the earlierspecific devise of Fairfield. The use of this language is a definite indication that the residuary dispositionwas intended to be capable of disposing of real property, not otherwise disposed of, and, therefore, to havethe effect of passing to the residuary beneficiaries any interest in Fairfield which was not, or not wholly,

disposed of by the earlier specific devise of that property.

[46] In addition there is the well established rule that in the case of rival constructions of a will betweenone which would lead to an intestacy and the other which would not, the court will favour the constructionwhich will avoid an intestacy:Fell v Fell(1922) 31 CLR 268;Jenkins v Stewart(1906) 3 CLR 799. Whilethe strength of this presumption will vary according to the circumstances the presumption tends to bestronger in relation to any residuary gift, such as is under consideration in this case --Byrne v Dunne(1910) 11 CLR 637 at 664. This is a manifestation of the old presumption that when a testator makes a willhe or she should be presumed to have intended to dispose of the whole estate. This is in accordance withthe general principle, that unless otherwise provided, any specific gift or devise which lapses or fails willfall into the general residue. This is given statutory force in this State by s 26(b) of the Wills Act 1970. As aconsequence a residuary devise and bequest which provides for a gift of land "not hereinbefore devised"--Green v Dunn (1855) 20 Beav 6, or of property "not -- disposed of"Re Duke of Wellington, Glentanar v

Wellington [1947] Ch 506 at 522-523 (affirmed[1948] 1 Ch 118), will carry the land or propertyineffectively disposed of. This residuary disposition expressly refers to "the rest and residue of my estate"which must be taken to embrace property not otherwise disposed of.

[47] Accordingly, I conclude that in the event that there is no son of Leonard Colin Hamersley surviving atthe time of the determination of the life interest in Fairfield granted by the will, that the interest inremainder would then fall into residue and be distributable among the residuary beneficiaries who survivethe testator or their present successors. As previously noted this conclusion resolves the earlier concern,raised at pre-trial interlocutory hearings, that there may be a need for the appointment of some person torepresent the interests of those entitled to distribution under the estate of the deceased in the event of an


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intestacy.

The Doctrine of Acceleration

[48] Where under an instrument a gift is made which limits the nature or duration of the interest of therecipient and provides for subsequent interests to pass to another or other recipients it may becomenecessary to determine the nature of both the initial or any subsequent interests, that is to say to determinewhether either is vested or contingent. The resolution of that inquiry will usually also determine whether ornot a subsequent interest may be accelerated. The cause of the potential acceleration of the subsequentinterest may be due to one of several factors but it is clear that in certain instances a subsequent interestmay be accelerated. A description of the nature and operation of this doctrine is to be found in HalsburysLaws of England 4th Ed Reissue Vol 50 [419] which, omitting numerous references, provides:

Acceleration of subsequent interests

The effect of failure of a prior life interest or other particular interest through the donee of that interest being deador prevented by law from taking the gift, for example owing to the attestation of the will by him or his spouse, orthrough revocation by codicil, disclaimer, forfeiture or lapse is ordinarily to accelerate the subsequent interestswhich are limited to take effect on the regular determination of that prior interest, but the will may expressly orimpliedly indicate a contrary intention. Acceleration may take place even though the effect may be to alter the classof persons designated to take by accelerating the time for ascertaining the class. This will, however, be so onlywhere the terms of the will are consistent with an intention to distribute at a moment which may be anterior to the

birth of all the members of the class. Where the trusts following the prior interest are not absolutely vestedremainders but are vested subject to being divested, the court will not misconstrue the will in order to give effect tothe doctrine of acceleration; and the effect of a disclaimer is that the residuary estate is held on trust for theremaindermen subject to the defeasance clause. The court construes gifts of subsequent interests as intended to takeeffect on the failure or determination of the prior interest in any manner. A failure of a prior gift does not, however,accelerate a subsequent executory limitation not taking effect merely on the determination of a prior interest; andsubsequent gifts cannot be accelerated where the persons who are to take under them are not in existence or theirinterests are contingent.

[49] In Tompkins v Simmons (1930) 44 CLR 546 the issue for determination was whether or not therevocation, by a subsequent codicil, of a life interest in a share of a particular fund granted to the testator's

daughter, with a remainder to the children of that daughter who attained the age of 21 years or, being adaughter married before that age, effected an acceleration of the remainder interest in favour of thegrandchildren, or left that interest postponed for the duration of the life of the daughter whose gift had beenrevoked producing a partial intestacy in respect of the income of that part of the fund for the duration of herlife. The decision at first instance by Crisp J, unchallenged on the appeal, was that the revocation by thecodicil of the life estate in favour of the mother (one of the children of the deceased) while revoking the giftof the life interest did not revoke the gift in remainder of that interest to her children. This left as the issuefor determination on the appeal whether or not the determination of the life interest in favour of the motheraccelerated the interest of the children and grandchildren to the income of the fund or left that postponedfor the duration of the mother's life resulting in an intestacy. The court decided that the remainder interest infavour of the testator's grandchildren had become accelerated (Gavan Duffy CJ, Dixon Evatt andMcTiernan JJ; Starke J dissenting). Dixon J, with whom the other Justices in the majority agreed, said, at558-559:

But the destruction of such an interest for life does not cause an intestacy in respect of the interest, unless it is clearthat the interest limited in succession to the life interest was to take effect only upon the specified event of the deathof the life tenant and was not to fall into possession on the sooner determination of the life interest. In a limitationto a donee for life and after his death upon trust for his children, or some other donee, the reference to his deathwhether expressed by the words 'upon', or 'after his death,' or 'from and after his decease,' or otherwise, may haveone of two imports. It may mean that the second donee shall take nothing until the death of the first, or it maymerely show the order of the limitations through which the estate or interest is to pass. It is well established that,

prima facie, these words are to be understood as denoting the order of succession of limitations. (See per P R TurnerL J,Lainson v Lainson (1854) 5 De G M & G , at 756 ; 43 E R at 1064).

In this case the limitation of the corpus of the trust fund is introduced by the words 'and immediately after the


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deceased if any one of my sons or daughters'. There is nothing to rebut the prima facie rule that these words simplymark out the order of succession, and create an interest expectant upon the determination of the prior interest bywhatever means that determination may be brought about.

[50] The principle is also described inJull v Jacobs (1876) LR 3 Ch D 703 and inRe Young's SettlementTrust[1959] 1 WLR 457 per Harman J at 462. InRe Hodge Deceased, Midland Bank Executor and TrusteeCo Ltd v Morrison [1943] 2 All ER 304 at 305 Simonds J said of a case involving a disclaimer of a lifeestate to certain annuities:

The principle of acceleration was first established in regard to remainders in real estate, and probably the origin isto be found in the technicalities of real property law. However that may be, the principle became extended tointerests in personalty -- I see no reason why, once it has been extended from real to personal estate, it should not beapplied in the case of any interest whether a partial interest such as an annuity or a residuary interest. The principleis exactly the same. You find that the postponement of a particular interest is merely in order that a prior interestmay be enjoyed. That prior interest is determined, whether by the death of a prior beneficiary or for any otherreason, the reason for postponement goes and there is no reason, therefore, why there should not be acceleration.

Re Syme Deceased(supra) is a case with some close similarities to the present in that it involved thedetermination of whether or not a gift in remainder could be accelerated by simultaneous surrenders ofantecedent interests by living life tenants. The answer given by Lush J was that certain of the deferredinterests could be accelerated by surrender of the antecedent life interests but that others could not becauseof a contrary intention in respect of them displayed by the will that they should not be enjoyed before theoccurrence of the specified event. In describing the operation of the principle Lush J said, at 116:

The cases show that acceleration is not excluded by words defining the time of distribution by reference to thenatural ending of a particular state, for instance, a direction for distribution upon the death of the life tenant (see

Lainson v Lainson (1954) 5 De G M&G 754 ; 43 ER 1063 and Jull v Jacobs (1876) 3 Ch D 703) or by a directionthat distribution is to be made among persons then living (see Re Johnson (1893) 68 LT (NS) 20 andRe Crothers'Trusts [1915] 1 IR 53). As to the latter point, I have not overlookedRe Townsend(1886) 34 Ch D 357 orRe Taylor[1957] 1 WLR 1043, nor the indications in them that a contingent gift cannot be accelerated. To extend that

proposition so as to make acceleration impossible if there is a contingency of survivorship would, I think, becontrary to the weight of authority and to the very concept of acceleration (see Re Harker's Wool Trusts [1969] 1WLR 1124 at 1128). However, in Wyndham v Darby (1896) 17 NSWR 272 (E) at 277-8 and inRe Harker(supra)at 1128 a distinction is drawn between gifts on the death of a life tenant to the children of the life tenant and gifts insimilar circumstances to the children of another. The quotation from Jull v Jacobs [per Malins VC at (1876) 3 Ch D709], suggests that Malins VC may not have regarded the distinction as significant. It is said that in the former casethe testator must have intended all possible members of the class to take. In the example given, this may be so, butas soon as a contingency of survivorship is introduced the testator can have intended no more than that everymember should have a chance to take; some may be omitted if they died too soon, and it is not a far cry from this toomitting some because they are born too late. It is probably safest to ask whether the individual will or otherinstrument discloses that it was an essential part of the testator's intention that all possible members of the classshould have this chance.

Another case, similar to the present is Collins v Equity Trustees Executors and Agency Co Ltd (supra). Italso shows that acceleration, where it occurs because of voluntary surrender of a prior interest by a livinglife tenant, does not postpone the remainder until the death of the life tenant but terminates the prior

interest, entirely leaving the remainder to take effect immediately in possession. In Collins (supra), as in thepresent case, the life tenant had been in enjoyment of her life interest for some time before the question oftermination of the life interest with a view to accelerating the remainder interest arose. Batt J explained thatthis was not a material distinction when coming to deal with the possibility of acceleration of the remainderinterest. At 168 and 169 his Honour said:

As the first plaintiff has entered upon the enjoyment of her life interest a surrender rather than a disclaimer is, as isapparent from what I have stated already, proposed ...

Whilst the relevant statements of principle speak in terms of disclaimer, the cases show that acceleration may be


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brought about by surrender:Re Penton's Settlements, Humphreys v Birch-Reynardson [1968] 1 WLR 248 andReHarker's will Trusts, Keen v Harker[1969] 1 WLR 1124 and 1127 (a release, surrender and assignment untotrustees to the intent that the interests cease merge and be extinguished in the reversionary or appointed interests);

Re Syme [1980] VR 109 ('if the proposed surrenders are made in proper form', counsel at 114 having relied onsurrenders or releases 'provided they are not drafted as assignments of those interests'); and Re Hartigan [1989] 2Qd R 401 (surrender);cfRe Young's Settlement Trusts, Royal Exchange Assurance v Taylor-Young[1959] 1 WLR457 at 463.

This point is of some significance in the present case because no draft deed of surrender of his life interestby Leonard Colin Hamersley has been prepared or proffered and the question in the originating summons(question 3) simply poses the question "whether in the event that Leonard Colin Hamersley renounces hislife interest in Fairfield" without specifying the mode or form of renunciation. As the authorities cited byBatt J demonstrate the proposed renunciation would need to be by deed of surrender and not by a deed ofassignment. A mere assignment would, obviously, simply assign the existing life interest from the assignorto the assignee without terminating it leaving the assignee the recipient of an estate in the land limited tothe duration of the assignor's life. I shall proceed on the footing that what is proposed is a formal surrenderin effective form but, without evidence of the nature or form of such a surrender, nothing in these reasonsor in the declarations to be made by the Court should be regarded as an endorsement or approval of the

particular terms of any deed of surrender or other instrument which might eventually be executed if theplaintiffs proceed as they evidently propose.

[51] It is sufficient only to mention a few more of the many cases which have recognised and endorsed theprinciple of acceleration of remainder or subsequent interests in the event of early termination of apreceding interest such as the life estate in favour of the first plaintiff in the present case. The principle andits application were recognised inRe Hodge Deceased(supra) at 305;Jull v Jacobs (supra); InRe Young'sSettlement Trust(supra) at 462;Re Flower's Settlement Trust[1957] 1 All ER 462 at 465;Re Crothers'Trust[1915] 1 Ch 53 at 57;Re Syme Deceased(supra) at 116; andRe Penton's Settlements [1968] 1 All ER36 at 47.

[52] Most formulations of the rule relating to the circumstances in which a subsequent estate may beaccelerated emphasise that this cannot occur if the subsequent estate is merely contingent because of thepossibility that the contingency upon which it depends may not eventuate. In the present case this principle

is relied upon by counsel for the third defendants, and it is also raised by counsel for the Attorney General.This is because of the possibility that Daryl Hamersley might not survive his father, and would not,therefore, answer the description of being the father's "then eldest son living -- after the death of the saidLeonard Hamersley" and that acceleration of the life interest by surrender in favour of Daryl now wouldavoid the need to satisfy the contingency that one of the life tenant's two sons, or some other as yet unbornson, would be living at the date of his death. Avoidance of that "requirement" would, in the submissions ofthe third defendant, mean that the possibility that Fairfield might fall into residue and thus eventuallydevolve upon the Brockman, Hinxman and Heinsen interests would be defeated. It must, of course, beacknowledged that an acceleration such as proposed would have this effect. The question remains whetheror not the possibility that, by not surviving his father, Daryl Hamersley may not succeed to a fee simpleinterest in Fairfield means that the gift in his favour is contingent, as submitted on behalf of the thirddefendant or whether it is, as the plaintiffs submit it has been since the death of Uncle Robert, vested ininterest (but not in possession) remaining subject to divestment if Daryl should die before the terminationof the life interest (eithe

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