SUPREME COURT JUDGMENT.

Otago Witness, Issue 2849, 21 October 1908, Page 34

SUPREME COURT JUDGMENT.

OF BEVERLY BEQUEST. The following judgment in the Supreme Court case, the Trustees, Executors, and Agency Company of New Zealand (Ltd.) v. Margaret ilary Bush and another, heard in Dunedin en June 9, has been delivered by Mr Justice Denndston, and forwarded to Mr Hawkins, registrar, at Dunedin: — Th-3 parties to this originating summons arc the Executors and Agency Company of New Zealand, Ltd. (the executor of the \rili of Arthur Beverly, deceased), and Margaret -Mary Bush and the University cf Otago. The testator, after sun<3?v legacies and dispositions, gave the residue of his real and personal estate to the University of Otago, "to form a trust fund to bo kept separate from other endowments, and to h2 called the ' Beverly Trust,' and to be devoted to the advancement of education in Otago, siibjecfc to, and in accordance with, the conditions hereinafter set forth." Except as to a question between the executor and the defendant, Margaret Mary Bush, which was not contested, the executor had no interest in the points raised by Ihe summons. It is the council of the University of Otago which asksr for an interpretation of the will and an answer to the questions 6tated. I therefore thought it advisable, in the case of a public body, that a copy of the originating summons, and of my opinion on this point, should be supplied to the Attorney-general, in order that he might intervene, should he think it necessary in the puHic interest to do co- I have been informed that he does not see any cause to intervene in the proceedings, and I have therefore to give judgment on the points undisposed of on tie argument. Although the bequest to the University is general in its terms, it is expressed to bo subject to the conditions in the will afterwards set forth. These conditions show clearly that the authority of the council as to the expenditure of the beqi:est ie limited to the annual income. The bequest is therefore a bequest of the residue to a public educational body upen trust to apply the annual income to the advancement of education in Olago, subject to tlw conditions declared in the will. The first question as between the executors and the University which is raised by the case 16 as to the interpretation of. clause 10 of the will, "I direct the council, in the first place, in each year to add to the corpus cf the said trust fund one-tenth' part of the income." As to this the court is asked if the direction given fails to any and to ■what extent by reason cf the same infringing- the rule against perpetuities or accumulations or otherwise. At the hearing it was contended by counsel for the University that the whole direction is void, not o"n the ground_ of its violating tlie rules as to perpetuities, but as inconsistent -with the principle established by Saunders v. Vautier, 4- Beav. 115, and discussed in Harbin v. Masterman (1895). A.C. 186. That princinle is succinctly stated by liord .Justice Cotton in Weat-herall t. Thornburgh. 8 Ch. D., 261 (at p. 269). "That casa simply decided that if property is given to a person of ' full age _ any restoriction of his enjoyment of it is inconsistent with his absolute interest." The later- case cited 'adds nothing really to Saunders v. Vautier, except that it establishes that the principle of that case applies to charities— a point which seems to have been considered- doubtful by Vice-ohan-cellor Wickens, in a cas© on the same subject matter— Harbin v. Masterman, L.R., Eg. 559. But in the present case the legatee does not take an " absolute indefeasible interest " in the bequest. Its interest is indefeasible and immediate. The executor has nothing to do but to hand the bequest over to the University.- But ita interests is not absolute. It takes as a trustee and subject to the trusts declared. It haa no power to spend the corpus of the trust — it can deal only with the annual income. If the testator can postpone the expenditure of the income for the extreme period permitted by law, he has power to limit it within the permitted term to an expenditure of nine-tenths of the income. A trust for accumulation exceeding the limits prescribed by the " Accumulations Act, 1800" (39 and 40, Geo., 3 C. 98, commonly called the Thellusson Act), but not exceeding the limits allowed by the common law. will be established to the extent permitted by the act, and will be void for the excess only. But the trust for accumulation in the present case is unlimited, and of course is, therefore, in excess of tfte period allowed at common law by the rule against perpetuities, and is, like every other such limitation, voil in toto. The rule against perpetuities docs not prevent the creation of a charitable trust in perpetuity. But where there is a trust for charitable purposes and a. direction to accumulate the income or any portion of it indefinitely or fox any period in excess of that allowed by the rule against perpetuh ics, such direction is not a trust in favour of the charity, but is a fetter on tho charitable trust, and prevents the use of the property for charitable purposes during the period for which the accumulation is directed. See Martin i v. Maughan (14 Sim. 346. 60 Eng. Rep. 346). The trust for accumulation is there- , fore altogether void. ! A further queetion, or, rather, 6ubiect, matter is submitted to the court. (4) What is " the true construction of the 6aid will, and the rights of the parties interested I thereunder, and in particular, the University of Otago." This, as appeared in the argument, was directed mainly to the question as to the effect of paragraphs 12. 13. and 14, of the will. Paragraphs 12 and 13 are as follow: (12) "Without fettering the discretion of the said council. I desire that, in the disposal of the said income, a preference sfiall bo given to Mhe teaching of mathematical and physical sciences and , subjects akin thereto, and that natural science, in its various branches, be next considered." (13) "As to the mode in which such incomes shall be expended, I desire, without fettering the discretion of the said council, that preference bs given j to the founding of scholarships, my object in making this bequest being chiefly to encourage and aesist these young persona ! cf both sexee of good moral character, being students of the University of Otago, or intending to become such, who have talent and industry, but have not wealth." In paragraph 14 the testator, " without fettering the discretion of the 6aid coun- j cil," expresses a desire that in the die- j posal of the income the council shall guide itself by a rule as nearly as conveniently may be in accordance \i ith a certain rule ; f-ot out in the paragraph. The point argued ■was as to the construction of these paragraphs — as to whether they were confhrions to which, under paragraph 8, the , trust fund v»as made subject. In. my

opinion the testator h*s indicated in the plainest poeeible language that they are not conditions. Each is premised by the words "without fettering the discret.on of the said council," and each proceeds thereafter to express a desire cf the testator as to the details of the administration of the income. But all mandatory language is carefully avoided. The testator has obviously realised that conditions and circumstances may arise, in a trust without limit as to time, which he could not anticipate or adequately nrovide for; and he 1-a* wisely left the council, to use, his own words, unfettered. He has advised those who are administering the affairs of the education institution- to whese administration he has entrusted this great bequest his desire as to its application. He has told them in whose interests, and in what manner, he would himeelf have applied it had he dealt with the fund in his lifetima. In doing 6 0, he fias no doubt relied on their, as far as possible, subject to the changed conditions iir the future, respecting and furthering his expressed wishes. In that osnse his suggestions may b3 called a trust ; but he has, as I have said, carefrlly avoided giving to them anything of the character of a trust or condii/on enforceable by law. There are conditions in the will, such as the ineffectual direction to accumulate, and tho direction to Dublish annually an account and balance sheet which sufficiently satisfy ( the reference to subsequent conditions in the bequest. These considerations dispose of all questions raised by the summons. The costs of the' executor and of 4 the ; University, as between solicitor and client, j will be paid out oNjtfee estate. ;