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Supreme Court 6 December 2006

Egan v O'Brien

[2006] NSWSC 1398

Other
WILLS [201] CONSTRUCTION FORFEITURE UNDER PUBLIC POLICY RULE GIFT OVER JONES V WESTCOMB RULE EVIDENCE OF INTENTION

Citation: Egan v O'Brien [2006] NSWSC 1398
Court: Supreme Court of New South Wales, Equity Division
Date: 6 December 2006
Judge(s): Young CJ in Eq

Background

A testator left his residuary estate (approximately $253,000) to his friend. The will provided that if the friend predeceased the testator, the residue would instead pass to the Salvation Army (NSW) Property Trust for its general purposes. The friend did not predecease the testator. Instead, he was convicted of the testator's manslaughter.

Under the public policy forfeiture rule, a person convicted of murdering or unlawfully killing a testator cannot benefit from that testator's estate. The executor was therefore uncertain how to distribute the residue and commenced proceedings naming the friend, the Salvation Army, and the testator's father (his next of kin) as defendants.

The friend never appeared. Both the Salvation Army and the testator's father filed submitting appearances, leaving counsel for the executor to place all relevant possibilities and authorities before the court.

  • Whether the forfeiture rule prevented the friend from taking the residuary gift
  • Which of four competing distribution outcomes applied once the primary gift failed:
  • The friend holds the property on constructive trust for the next of kin
  • The property passes as on intestacy
  • The estate is distributed as if the killer predeceased the testator (the "lapse" approach)
  • The rule in Jones v Westcomb applies, so that the gift over to the Salvation Army operates as if it covered any event causing the primary gift to fail, not only the friend's predecease
  • Whether anything in the will or surrounding circumstances provided sufficient evidence of the testator's intention to expand the scope of the gift over beyond its literal terms

Decision

The court confirmed that the forfeiture rule applied. Because the friend was convicted of the testator's manslaughter, he could not take the residuary gift. At law he would be entitled to receive the money from the executor, but in equity he would hold whatever he received on trust for the person next entitled.

The central question was whether the gift over to the Salvation Army could be read as taking effect in these circumstances. The rule in Jones v Westcomb permits a court to construe a conditional gift over as applying to any event that prevents the primary gift from taking effect, not merely the specific event named. Young CJ in Eq acknowledged the rule has been applied liberally in some cases, but reaffirmed his own earlier analysis in Public Trustee v Hayles (1993) 33 NSWLR 154: the mere existence of a gift over expressed to operate on predecease is not, by itself, sufficient to invoke Jones v Westcomb. Something more, such as admissible evidence of the testator's wider intention, is required.

No such additional evidence existed here. The court noted that a testator could hardly have contemplated that his friend might kill him, echoing similar reasoning in Re Robertson and Re Lentjes. While His Honour acknowledged some sympathy for the outcome that would have directed the estate to the Salvation Army, he confirmed that a court cannot construe a will simply to reach a result it considers fair.

Accordingly, the residue passed to the friend, who holds it on constructive trust for the testator's father as next of kin. The court also made a vesting declaration in favour of the father directly, given the friend's imprisonment.

Orders Made

  • The residue of the estate is held on trust for the testator's father (the deceased's next of kin and third defendant)
  • Costs of the plaintiff executor on the trustee basis, and costs of the submitting defendants, are to be paid out of the residue

Key Takeaways

  • The forfeiture rule operates to prevent a person convicted of manslaughter of a testator from taking any benefit under that testator's will, regardless of whether the killing constitutes murder.
  • Under the rule in Jones v Westcomb, a gift over expressed to operate only on predecease may be construed as covering other events that defeat the primary gift, but this requires more than the bare existence of the gift over clause itself.
  • The Supreme Court reaffirmed its reasoning in Public Trustee v Hayles: admissible evidence of the testator's broader intention is needed before the court will extend a conditional gift over beyond its express terms.
  • Where the forfeiture rule applies and neither Jones v Westcomb nor the lapse approach assists, the primary beneficiary takes the property at law but holds it on constructive trust for the next of kin as on intestacy.
  • A perceived unfairness in the outcome does not, on its own, justify departing from established principles of will construction.

Legislation and Cases Referenced

Cases:
- Jones v Westcomb (1711) Prec Ch 316; 24 ER 149
- Public Trustee v Hayles (1993) 33 NSWLR 154
- Ekert v Mereider (1993) 32 NSWLR 729
- Re Stone [1989] 1 Qd R 351
- Re Robertson (1963) 107 Sol Jo 318
- Re Lentjes [1990] 3 NZLR 193
- Davis v Worthington [1978] WAR 144
- Re Callaway [1956] Ch 559
- Re Fox [1937] 4 All ER 664
- Re DWS Deceased [2001] Ch 568
- Re Nicholson [2004] QSC 480
- Re Rowney (Cooper J, 19 March 1992, unreported)
- Verrell v Jackson [2006] QSC 309
- Union Trustee Co of Australia Ltd v Church of England Property Trust Diocese of Sydney (1946) 46 SR (NSW) 298

No specific legislation was cited in the decision.