High Court

In Re the Succession Act 1965 and in Re the Estate of Kenny, Deceased; Roberts and Others v Kenny 

1997/487 Sp 

10 March 1998 

GEOGHEGAN J: 

This is an application brought by one of two co-Executors of Ann Kenny, deceased, and by certain beneficiaries under her Will against the other co-Executor and major beneficiary under her Will for the determination of certain questions of construction arising from the Will and for certain other directions. Let me state at the outset that in my view the Will is well nigh impossible to construe with any degree of certainty and it seems to me almost inconceivable that the Testatrix, no matter how well advised she was by the Solicitor, could ever have properly understood its implications. However, the Will has been admitted to probate and no question of its validity arises. I must therefore do the best I can in construing it. 

The Will was drafted for the deceased by her Solicitor. I cannot imagine that any Solicitor would have drawn up such a Will unless, as I believe to be the case here, that he thought that there would be no problem in reaching agreement between all the relevant parties as to how the estate was to be administered in accordance with the Will. But by the same token the Solicitor for the deceased must have realised or certainly if he did not do so, ought to have realised upon a moment's reflection that if in the event there was any dispute as between the Executors or indeed between the beneficiaries, the Will was inevitably going to have to end up being construed by the High Court with consequent unnecessary cost to a relatively small estate. The Plaintiff Executor who is the First named Plaintiff in the proceedings is quite properly in my view not prepared to allow the estate be administered in the manner desired by the Defendant Executor and his Solicitor who is also the Solicitor who acted for the Testatrix without getting the protection of a Court. The necessity for this clearly arises from a defectively drawn Will. 

It is only fair to say at this stage that the justification put forward by the deceased's Solicitor for drafting the Will in the way he did was to achieve tax avoidance but it is clear from correspondence which he himself has entered into that he is none too confident himself as to how the Will would be interpreted or as to the legal effect of it. 

The estate of the deceased comprised for the most part of a house, the contents of the house, a car and some superannuation monies. The Testatrix, after making a charitable request of #200, gave the following direction:- 

"All the rest of my property of every kind and description which I die possessed of including my house and any other assets which I may have, I direct my Executors to invest same in my brother Francis for the duration of his life and thereafter the residue to be divided equally between my following cousins:- 

(a) Flannan Roberts, Junior, Ennis. 

(b) Catherine Roberts, Junior, Ennis. 

(c) Eamonn Roberts, Junior, Ennis. 

(d) Joseph Hernon, Ballinasloe. 

For the purpose of clarification I hereby declare that my said brother Francis shall be entitled to buy, sell, convert any or all of the said assets in any manner in which he sees fit and to sign any document regarding same in his own singular name without regard to the restrictions on sale or reinvestment contained in either Settled Land Acts or the Trustee Acts and further the said Francis Kenny shall be entitled to perform any act or sign any document in his own name disposing or effecting any such re-conversion without the necessity of acting through or with any other Trustees as provided for in the Settled Land Acts, and further that the said Francis Kenny shall not during his life be accountable in any way for any breaches of the said trust or misappropriation of any of the said assets." 

The house of the deceased has been sold and effectively all, or certainly almost all o the assets of the deceased are now in money form. The Special Summons seeks the determination by the Court of the following questions:- 

A (i) Is the Defendant entitled to an absolute estate in the Estate of the deceased? 

(ii) Is the Defendant entitled only to a life estate in the Estate of the deceased? 

(iii) If he is entitled only to a life estate, is he then, as the tenant for life, entitled to have any monies, assets or proceeds of sale of assets of the said estate vested in his sole name? 

(iv) Are the Second, Third and Fourth named Plaintiffs with Joseph Hernon entitled to a remainder interest in the Estate of the deceased? 

A further set of questions are asked in the Special Summons and which read as follows: 

B. (a) Are the expressed terms of the Will sufficient to exempt the Defendant from various provisions of the Settled Land Acts and Trustee Acts? 

(b) Is the Defendant bound by the restrictions of sale and/or reinvestment contained in the Settled Land Acts and Trustee Acts? 

(c) If the answer to question A(ii) is the affirmative, is the Defendant, as tenant for life of the estate, accountable for any breaches of trust or misappropriation of assets notwithstanding the expressed terms of the Will? 

(d) May the Defendant sign documents in his own singular name? 

The Court is then requested to make such further Order or directions as might seem fit and also to compel the Defendant to furnish a statement of account of the estate monies. 

Returning to the residuary devise and bequest in the Will, I would say that I would have no difficulty in construing it if it had come to an end after the word "Ballinasloe". I would have been puzzled by the use of the unorthodox word "invest" but I could not have come to any conclusion other than that it was intended to mean the same thing as the word "vest". I would not have had any difficulty either with construing the word "residue". That is a word which normally has a very definite meaning in the context of a Will. If the residuary clause in this Will had ended at the point which I have indicated there would be no good reason to give the word "residue" any different meaning from its normal meaning. In other words it would have to be construed as being shorthand for the expression used further up, ie, "the rest of my property of every kind and description which I die possessed of". However, the addendum in the clause which ironically commences with the words "for the purpose of clarification" in fact totally confuses the meaning of the residuary gift. Having regard to that so-called "clarification", the residuary clause as a whole is undoubtedly open to the construction that the Testatrix intended to permit that the Settled Land Acts and Trustee Acts could be wholly disregarded and furthermore that the Defendant, in relation to his life interest in the property, would be entitled with impunity to dissipate the assets leaving nothing at all for the four named cousins who were to benefit after his death. This latter part of the residuary gift not only raises difficult questions of construction but raises questions also as to the extent to which, if at all, the Settled Land Acts can be ignored. Indeed there may even be a more fundamental question involved here as to whether a settlor setting up a trust can direct the Trustees to commit any breach of trust which they like including dissipation of the assets without being accountable to the beneficiaries. 

As the law relating to successive gifts of realty is quite different from the law relating to successive gifts of personalty, I think that in construing this Will I should in the first instance deal with the house only which was freehold registered land. In this connection it is immaterial in my view that the house has in fact now been sold. Whatever the trusts were attaching to the house, all the same trusts now apply to the net proceeds of sale. This would seem to me to be so irrespective of whether the capital monies arising from the sale are technically capital monies arising under the Settled Land Acts or not. If they can be said to have arisen under the Acts then by virtue of Section 22(5) of the Settled Land Act, 1882, the capital money is held in the same manner and for the same estates and interests as if it was the land. There may be a doubt here as to whether the monies are capital monies under the Act in view of the fact that the sale was in a sense an executor's sale but it would seem to me that at any rate under general equitable principles, the trusts and/or rights attaching to the monies can be no different from those attaching to the house which those monies are the proceeds of. By Section 53 of the Settled Land Act, 1882, the tenant for life is a trustee for the remainder man. That trust arises by operation of statute and I do not think that it can be removed by Will. It is of course true that in general, powers of a tenant for life under the Settled Land Acts can be extended by the settlor but cannot be cut down. This does not mean, however, that the testator can effectively direct that the Acts are not to apply at all. In relation to the house and therefore the proceeds thereof, I must interpret this Will as conferring a life interest only on Francis Kenny, the Defendant. As such he will be a Trustee of the monies, the proceeds of the sale of the house and of any property into which those proceeds are applied for the four named cousins of the Testatrix but provided that he acts bona fide and with due regard for the protection of the assets, he will not be liable to restrictions under the Acts such as investment restrictions etc. It is clear that the Will intends to confer on the Defendant as liberal a set of powers as possible. The question of his possible accountability for breach of trust having regard to the clause in the Will relating to this matter cannot be answered now as a moot. It may well be that having regard to the Will, he would be exempt from liability for say negligent misappropriation of assets but I could not construe the Will as exempting him from liability for deliberate dissipation. However, this whole question can only be decided if and when it arises as a problem in any ultimate claim brought by the beneficiaries after the death of Francis Kenny. 

I now turn to the personalty. In correspondence, the Solicitor for the Defendant who was also Solicitor for the Testatrix has argued that as there cannot be successive estates in personalty, the residuary gift of the personalty to Francis Kenny is absolute and not just for life. This does not seem to me to be a correct statement of the law and I am sure that it would have bewildered the late Ann Kenny had it been said to her. It is quite true that there cannot be a vested remainder interest in personalty which is not for any purpose deemed to be realty but there can be successive interests if they have either been created in the form of a trust or if irrespective of whether a trust is created or not they are created by Will. The difference however is that the person entitled after the death of the owner for life has merely an executory interest which becomes simply a chose in action after the death and is not in any sense in the meantime a vested remainder interest. The legal position is neatly summarised in Volume 22 of the 1st Edition of Hallsbury (which pre-dated the 1925 English property legislation) at p 413 as follows:- 

"Successive interest in personal chattels may be created by Will without the interposition of Trustees. In such case, however, the ulterior donee, during the life of the first holder, does not take a present or vested interest, and, if he predeceases the first holder, the executory limitation does not take effect." 

It follows therefore that in the case of the personalty, the gift to any one of the cousins lapses if that particular cousin predeceases Francis Kenny. But that would not be so in the case of the house or the proceeds of sale of the house. It is true to say that in the case of what are called "consumables" there cannot be successive interests even by Will and the person given them for life is effectively given an absolute interest. I can find no authority as to whether money would be regarded as a "consumable" but it would seem to me that it clearly would not. What is meant by "consumable" is something like a crop or food. In the light of these principles how do I construe the residuary gift insofar as it relates to the personalty? The Will itself is far from clear and therefore I was entitled in my view to entertain parol evidence to assist me in the construction of the Will. In this connection, two Affidavits have been sworn by Mr Richard O'Hanrahan, Solicitor for the Testatrix and for the Defendant. In the first Affidavit Mr O'Hanrahan states as follows:- 

"I say that the deceased attended at my former offices at EBS House, 7 Lower William Street in the city of Limerick in or around the month of March 1984. I say that I was fully instructed by the deceased to prepare and draft her Will. The deceased was a spinster and made it clear to me that it was her wish that upon her death that her only living brother, one Francis Kenny, the Defendant herein, being her only surviving next of kin should take all her property of every kind and description. The deceased also made it known to me that she had a second cousin by the name of Mary Roberts who had three children, namely Flannan Roberts, Catherine Roberts and Eamonn Roberts. The deceased also told me that she had another cousin with one child by the name of Joseph Hernon. The deceased was desirous of giving these four children of her cousins something small in her Will. The only other instruction received from the deceased was that a sum be devised and bequeathed for the celebration of masses for herself and her friends and relations. 

I say that I then set about drafting the Will so as to reflect the specific instructions issued to me by the deceased. I say that I advised the deceased about the taxation implications of inheritances and was specifically instructed to ensure that the Defendant was to take the maximum benefit under the Will while at the same time limiting the tax liability on her estate to the absolute minimum. 

I say that this Will was prepared and drafted with all due regard to all normal formalities. I say that under the Will it was purported to create a life estate in chattels in the said Francis Kenny. In addition, the said Francis Kenny was given all the powers and incidents that an absolute owner would enjoy. I say that these incidents were as follows, the power to buy, to sell and to convert any or all of the assets of the estate in any manner in which he saw fit and to sign any document regarding any transaction in his own name without regard to the restrictions on sale or reinvestment contained in either the Settled Land Acts or the Trustee Acts. In addition, Francis Kenny was given an entitlement to perform any act or sign any document in his own name disposing or effecting any re-conversion of assets without the necessity of acting through or with any other Trustee as provided for in the Settled Land Acts. To cap all the powers hereinbefore created and granted to Francis Kenny under the Will, it was specifically recorded in the Will that the said Francis Kenny was not to be accountable in any way for breaches of the trust created up to and including misappropriation of the assets of the deceased's estate. 

I say that the Will, as drafted, was in response to the deceased's instructions and was advantageous from the tax liability point of view in that four additional allowances could be claimed off the estate totalling #40,000 thereby increasing the net value of the estate after taxes by the amount of #19,720 approximately. (The gross estate was #85,393.24 and the net taxable estate after allowances was #43,531.67 thereby creating a capital acquisitions tax gains liability of #5,699.50 which was paid in full). (In March 1984 on the making of the Will there was no law in place forbidding the creation of a document whose prime or ancillary purpose was the avoidance and the minimisation of tax)." 

The tax avoidance arose out of there being a real value attached to the cousins' remainder or future interests and this seems to me to be inconsistent with an intention that the Defendant be the absolute owner of the personalty. At most, the Will exempts him in my view from liability for negligent dissipation or reduction of assets but it does not exempt him from liability for deliberate dissipation of any part of the assets even the personalty. 

The specific answers which should be given therefore to the first set of questions contained in paragraph A of the prayer in the Special Endorsement of Claim on the Special Summons are as follows:- 

(i) No 

(ii) Yes 

(iii) The proceeds of the realty will be held by Trustees for the Defendant for life as monies arising under the Settled Land Acts. The assets in the estate which were from the beginning personalty ought to be vested in the Defendant in his sole name as no specific trust in relation to the personalty appears to have been created. Following on the Defendant's death his personal representative will have to account for the monies to the four cousins if they have survived him and will be liable to them. In the event of any of the cousins predeceasing the Defendant, the Defendant will become the absolute owner in respect of that share in the personalty. 

(iv) The Second, Third and Fourth named Plaintiffs along with Joseph Hernon are entitled to vested remainder interests in the proceeds of the realty and they are entitled to future executory interests in the deceased's personalty if they survive the Defendant. 

The specific answers to the second set of questions set out in paragraph B of the prayer are as follows:- 

(a) No, but restrictions in relation to the powers of a tenant for life such as restrictions as to investments etc are removed. In other words the powers of the tenant for life are extended. 

(b) Not as to reinvestment but sale should be at arms length. 

(c) It is inappropriate to answer this question as a moot. The question of liability for breach of trust or misappropriation of assets can only be considered in the context of proceedings if and when breach of trust or misappropriation is alleged to have happened. But deliberate dissipation of assets would certainly give rise to liability. 

(d) In relation to the sale of any land or buildings into which the proceeds of sale of the house may come to be invested, the ordinary provisions of the Settled Land Acts will apply and the purchase money will be received by the Trustees for the purposes of the Acts. 

To avoid all the imponderables which may arise out of the carrying out of this impossible Will, it would be in the interests of all parties that there be a buy-out of the remainder interests as has already been attempted but this Court has no power to force such an arrangement. Given that in the case of the personalty, benefit to any one cousin in the future cannot pass to his estate if he predeceases the Defendant, it would seem to me to be in his interest to receive his money now.