Re Litt’s Will Trusts, Parry v Cooper

 

Re Litt’s Will Trusts, Parry v Cooper

SUCCESSION; Wills: TRUSTS

COURT OF APPEAL

LORD GREENE MR, MORTON AND BUCKNILL LJJ

23 JANUARY 1946

Wills – Construction – Rule in Lassence v Tierney – Life interests with remainder to issue and accruer clause on failure of issue – Last survivor dying without

issue – Rule in Lassence v Tierney applied to accrued shares – Last survivor absolutely entitled.

A testator gave his residuary estate as to one share to a son absolutely and as to four other shares to his other four children. In the latter case, the gift to each

child was absolute in the first instance but was settled by a subsequent clause on the child in question and that child’s children, with a provision for a surviving

spouse. There followed this accruer clause: “And I declare that in case any child of mine shall not have any child who under the trust in default of

appointment hereinbefore contained attains a vested interest in the share of such child of mine and in the case of any daughter of mine not leaving any husband

her surviving who shall be living at the time of such failure of such daughter’s issue then subject to the trusts powers and provisions herein declared and

contained concerning the same share and to every or any exercise of any such powers such child’s share and any additional share or shares in the trust fund or

otherwise which may accrue or be added thereto by virtue of this present proviso and the income thereof shall go and accrue to such of my children as shall be

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living at the death of such child of mine and to the children or child then living of any then deceased child of mine and if more than one in equal shares but so

that the children of any then deceased child of mine shall take equally between them under this clause the share only which their parent would have taken if he

or she had been then living and so that the share which shall accrue to any child of mine other than [the child whose share was given absolutely and not

settled] shall be held upon the trusts and subject to the powers and provisions herein declared and contained concerning his or her original share or as near

thereto as circumstances will admit.” In the events which happened, one share vested in a surviving spouse absolutely and the other three shares were finally

vested in the testator’s last surviving child who died a widow without having had a child. The question was whether the accrued shares vested in her

absolutely or whether they passed on her death to the personal representatives of the deceased children from whom they had accrued:—

Held – Upon the true construction of the accruer clause, the accruing shares were given, in the first instance, absolutely to the child to whom they accrued

with a subsequent engrafting of trusts in favour of that child’s children. The rule in Lassence v Tierney therefore applied and, the trusts in favour of that

child’s children having failed, the accrued shares vested absolutely in the last survivor.

Notes

It has apparently never been decided whether the rule in Lassence v Tierney applies to an accruer clause, but Lord Greene MR, holds that there is no logical

reason why a trust engrafted upon an absolute interest should not, among such trusts, include a further absolute interest, which in its turn is subject to

settlement. The court holds, therefore, on a consideration of all the provisions of the will, that the rule does apply to such a clause.

As to the Rule in Lassence v Tierney, see Halsbury, Hailsham Edn, Vol 34, p 214, para 270; and for Cases, see Digest, Vol 44, pp 554–556, Nos

3714–3724, and Vol 43, pp 643–645, Nos 790–799.

Cases referred to in judgments

Lassence v Tierney (1849), 1 Mac & G 551, 43 Digest 643, 790, 2 H & Tw 115, 15 LTOS 557.

Hancock v Watson [1902] AC 14, 43 Digest 644, 792, 71 LJCh 149, 85 LT 729.

Appeal

Appeal by the defendant Reginald West Fovergue from an order of Sir John Bennett, Vice-Chancellor of the County Palatine Court of Lancaster, dated 15

October 1945. The facts and the relevant clauses of the testator’s will are fully set out in the judgment of Lord Greene MR.

D L Jenkins KC and W Lyon Blease for the appellant.

􀂭 314􀀉

J Neville Gray KC and G Maddocks for the respondent Percy Singleton Cooper.

Edward Ackroyd for the respondent William Henry Parry.

23 January 1946. The following judgments were delivered.

LORD GREENE MR. This appeal raises a short question of construction on the will of George Litt, who died on 23 December 1907. The question relates to

the rule which is often inaccurately called the rule in Lassence v Tierney, and the question raised by the appeal relates to the application of that rule to an

accruer clause. I must confess that I am surprised to find that a question of this kind has not appeared anywhere in the books, because accruer clauses are very

common, and one would have thought that similar questions would have arisen on other wills. However, we have no assistance from earlier cases in this

respect.

The testator by his will devised and bequeathed his residuary estate to his trustees with the usual administration directions upon trust to divide it into

thirty-five equal shares, and to hold eight of such equal shares in trust for his son John Graves Litt, as to another eight thirty-fifths in trust for his son Henry

Villiers Litt, another eight thirty-fifths in trust for his daughter Mrs Harding, another three thirty-fifths in trust for his daughter Mrs St George, and as to the

remaining eight thirty-fifths in trust for his daughter Nina Litt, afterwards Mrs Nina Hedley. He then made provision for substituting for any child of his who

was dead at his death the issue of such child. Cl 10 provided that the share of the trust fund thereinbefore expressed to be given to each of his children other

than Henry Villiers should not vest absolutely in such child, but should be retained upon the following trusts. Then inc cl 11 he set out the trusts. There are

trusts for investment, and then trusts during the life of each child to pay the income of his or her share to him or her. By cl 12, after the death of the child the

share and the future income was to be held on trust for the children of such child as the child should appoint, and, in default of and subject to appointment, in

trust for all the children of such child attaining 21 or, in the case of daughters, marrying. Then there is a hotchpot clause, and a declaration that the share of a

daughter not having a child but leaving a surviving husband should go to the husband.

Pausing there, it is quite clear—and nobody suggests the contrary—that there is an original absolute gift to each child with trusts engrafted upon it in the

case of all of them except Henry Villiers Litt, who takes his share absolutely without any provisions for settlement of it. The rule, so called, in Lassence v

Tierney applies, therefore, to each of the shares of those other children in this sense, that, if the engrafted trusts fail or come to an end without the share being

finally disposed of under them, the original gift in favour of the child would prevail, and that child’s estate would take absolutely. The rule in its most modern

statement is to be found in Hancock v Watson, in the speech of Lord Davey. It is to the following effect ([1902] AC 14, at p 22):

‘… if you find an absolute gift to a legatee in the first instance, and trusts are engrafted or imposed on that absolute interest which fail, either from

lapse or invalidity or any other reason, then the absolute gift takes effect so far as the trusts have failed to the exclusion of the residuary legatee or next

of kin as the case may be.’

I have summarised the provisions of these engrafted trusts down to and including cl 15 of the will, but they do not end there because there is a provision

in cl 16 which has given rise to the present question. It is a provision of accruer in relation to the share of any child who does not have a child attaining a

vested interest. These directions for accruer are just as much part of the trusts engrafted on the original gift of the share as are the trusts in favour of the

children of the child. Cl 16 is as follows:

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‘And I declare that in case any child of mine shall not have any child who under the trust in default of appointment hereinbefore contained attains a

vested interest in the share of such child of mine and in the case of any daughter of mine not leaving any husband her surviving who shall be living at

the time of such failure of such daughter’s issue then subject to the trusts powers and provisions herein declared and contained concerning the same

share and to every or any exercise of any such powers such child’s share and any additional share or shares in the trust fund or otherwise which may

accrue or be added thereto by virtue of this present proviso and the income thereof shall go and accrue to such of my children as shall be living at the

death of such child of mine and to the children or child then living of any then deceased child of mine 􀂭 315􀀉 and if more than one in equal shares but

so that the children of any then deceased child of mine shall take equally between them under this clause the share only which their parent would have

taken if he or she had been then living and so that the share which shall accrue to any child of mine other than the said Henry Villiers Litt shall be held

upon the trusts and subject to the powers and provisions herein declared and contained concerning his or her original share or as near thereto as

circumstances will admit.’

In order to see how the present question arises, it is necessary to say a word about the testator’s children. He left five children surviving him. The first to

die was Henry Villiers Litt, who died on 20 November 1921, without having had a child. He, under the will, took an absolute share in any event because no

trusts were engrafted upon the gift in his favour. The next to die was John Graves Litt, who died on 5 June 1931, without ever having been married.

Accordingly, in his case, the engrafted trusts in favour of his children never took effect, and the accruer clause, cl 16, operated upon his share. One-third of his

share accordingly accrued to each of the other three surviving children. The next to die was Mrs Harding. She died on 16 June 1931, without having had a

child, but leaving a surviving husband, who accordingly, under cl 15, took her original share, and under cl 16 took her accruing share. The next to die was Mrs

St George, who died on 1 November 1932, a widow, having had only one child, who died in infancy. Accordingly the original three thirty-fifths which she

had, and the one-third of John Graves Litt’s eight thirty-fifths went to the sole surviving child, Mrs Hedley. Mrs Hedley, therefore, at the time of her death

was enjoying, not merely her own original eight thirty-fifths, but one-third of John Graves Litt’s eight thirty-fifths which she took directly by accruer when he

died, and also Mrs St George’s three thirty-fifths, and that share of John Graves Litt’s eight thirty-fifths which Mrs St George had taken by accruer.

The question raised in this appeal relates to those accruing interests which Mrs Hedley enjoyed. There is no question that with regard to her original

share, she having left no children and there being nobody to take under the accruer clause, it remained vested in her under the rule in Lassence v Tierney.

What is said is that these accruing shares, accruing directly or indirectly to her, do not vest in her legal personal representative, but remain subject to the

original absolute gift contained in the earlier part of the will in favour of the child whose original share they represent; in other words, that those accruing

shares go back, as to part to the estate of John Graves Litt, whose legal personal representative is before us, and in part to the estate of Mrs St George, whose

legal personal representative is also before us. It is argued, on the other hand, that the Vice-Chancellor, who accepted the argument I have just mentioned, was

wrong, and that under cl 16 itself the Lassence v Tierney rule falls to be applied, by reason of the fact that the gift of accruing shares is a gift which is itself, in

the first instance, an absolute gift to the child to whom those accruing shares accrue, and that that absolute gift, in its turn, has engrafted upon it a trust in

favour of the children of the child which has failed, and, therefore, the absolute gift remains. In other words, it is said that, when the trusts engrafted on the

original shares of the child are examined, it is found that one of the trusts consists of a direction for accruer, and that the direction for accruer itself creates an

absolute interest, in the first instance, in favour of the person to whom the share accrues, and that on that absolute interest trusts are engrafted which have

failed, and, accordingly, that absolute interest remains.

It is pointed out that the case is rather an unusual one, in that in two different places in the will, if the appellants are right, there will be found expressed in

different language what I may call two Lassence v Tierney clauses, ie, clauses which, on their true construction, amount to absolute gifts in favour of a

beneficiary with trusts engrafted upon them. It is suggested that to find such a thing is unusual, and, therefore, we should not construe the language so as to

produce that result. I do not myself feel that difficulty. I can see no logical reason whatsoever why a trust engrafted upon an absolute interest should not,

among the trusts which are so engrafted, include a further absolute interest, which in its turn is subject to settlement. If that be the true construction, the rule in

Lassence v Tierney, in my opinion, will apply at that stage. The whole controversy here, as always in these cases, turns on the question 􀂭 316􀀉 whether, on

the true construction of cl 16, the accruing shares are to be read as given, in the first instance, absolutely to the child to whom they accrue with a subsequent

engrafting of trusts in favour of that child’s children, or whether the only gift in favour of the child to whom a share accrues is to be found in the trusts by

which the accruing share is settled. In my opinion, the rule in Lassence v Tierney does apply to cl 16. Nobody can pretend that the case is free from difficulty,

but I have formed a clear conclusion as to the way in which it should be decided.

I must now look at cl 16 and analyse some of its language. With regard to the direction for accruer, after providing for the case of default by reason of

which the accruer is to take effect, the testator says:

‘… such child’s share and any additional share or shares in the trust fund or otherwise which may accrue or be added thereto by virtue of this

present proviso and the income thereof shall go and accrue to such of my children as shall be living at the death of such child of mine… ’

Pausing there for a moment, the language used appears to me to be perfectly apt to express an absolute gift. The direction is not that the accruing share is to

accrue to the original share, but that it is to accrue to the then living children. It is in terms the share and the income thereof. The testator, therefore, is

disposing, not merely of income in favour of the surviving children, but also of capital.

The next clause is a substitutional clause. It says:

‘… and to the children or child then living of any then deceased child of mine and if more than one in equal shares … ’

That really is analogous to or corresponds with, although not in terms the same as, the original substitutional clause in respect of the original gift under cl 10.

It goes on as follows:

‘… but so that the children of any then deceased child of mine shall take equally between them under this clause the share only which their parent

would have taken if he or she had been then living …’

In those words I find a strong indication that the accruing share is intended to be given, in the first instance, absolutely to the child to whom it accrues, for this

reason: the interest to which the children of a then deceased child are substituted is expressed to be the share which their parent would have taken if then

living. If, on the true construction of this clause, the provisions for accruer are to be read as merely a trust for the surviving children for their respective lives

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with a remainder to their children, ie, if it is to be read as though there is no gift to a child to whom a share accrues other than is to be found in the trusts

relating to the share and settling it, then all that the child would take would be the income of a share. It would never have any interest in the capital of a share.

Nevertheless, the testator in this substitutional clause speaks of the share which the parent would have taken. If the rule in Lassence v Tierney does not apply,

the accurate language to have used would have been, I think, not the share which the parent would have taken, but the share, the income of which the parent

would have taken, because ex hypothesi the parent never would have taken any share in the capital.

The clause then goes on:

‘… and so that the share which shall accrue to any child of mine other than the said Henry Villiers Litt shall be held upon the trusts and subject to

the powers and provisions herein declared and contained concerning his or her original share or near thereto as circumstances will admit.’

It is to be observed that if the Lassence v Tierney rule applies, those are the trusts engrafted on the accrued share. If the rule does not apply, then those are the

trusts which affect the share in such a way as not to cut down an original absolute interest, but to make it clear that no such interest was intended, and that the

child to whom the share was accruing was only intended to have the life interest. In point of position in the clause, these trusts come after the paragraph which

I have just been discussing, the substitutional clause which refers to the share which the parent would have taken. In this very provision itself there is another

indication, I think, that the view which I am expressing is the right one. It is this: Henry Villiers Litt took his original share absolutely; it was not settled

under the original gift. Therefore he had naturally to be 􀂭 317􀀉 excluded from these directions for settlement. But it is to be observed that his share is

referred to, and the share of the other children is referred to, by precisely the same phrase, viz, “the share which shall accrue to any child of mine.” In the case

of Henry Villiers Litt, the accruing share was unquestionably a share in capital which he took absolutely, and exactly the same language is used to describe the

share which goes to other children, which it is said is not an absolute gift at all.

Taking all those matters into consideration, and giving the best construction that I can to this clause, I am of opinion that the decision of the

Vice-Chancellor was wrong, and that the rule in Lassence v Tierney applies to the accrued shares which, accordingly, go to the estate of Mrs Hedley, and not

to the estates of her brother and sister.

MORTON LJ. The decision of this appeal turns upon the construction of cl 16 of the testator’s will, although, of course, that clause must be read having

regard to the will as a whole. It seems to me that the opening words of cl 16 which refer to “such child’s share and any additional share or shares in the trust

fund or otherwise which may accrue or be added thereto by virtue of this present proviso and the income thereof” were clearly dealing with capital as well as

income. That could not be disputed. Then the clause continues:

‘… shall go and accrue to such of my children as shall be living at the death of such child of mine and to the children or child then living of any

then deceased child of mine and if more than one in equal shares … ’

Pausing at that point, there could not be, I apprehend, the slightest doubt that that is an absolute gift to the children living at the death of the child in question,

and to the children or child then living of a deceased child of the testator, both children and grandchildren taking absolutely. If the clause had stopped there, I

apprehend that the division would probably have been per capita. Then comes what I may call the first qualifying clause, which is in the following terms:

‘… but so that the children of any then deceased child of mine shall take equally between them under this clause the share only which their parent

would have taken if he or she had been then living …’

That has the effect of making the division clearly a stirpital division, and, as my Lord has said, the reference to the share which their parents would have taken

fortifies the conclusion (which one would have come to, I think at first sight without these words) that the gift so far is an absolute one. Then the clause

proceeds:

‘… and so that the share which shall accrue to any child of mine other than the said Henry Villiers Litt shall be held upon the trusts and subject to

the powers and provisions herein declared and contained concerning his or her original share or as near thereto as circumstances will admit.’

There again that second qualifying clause supports the view that there is an absolute original gift. Henry Villiers Litt takes absolutely not because of anything

which follows subsequently, but because he is excluded from the engrafted trusts which are put upon the shares of the other children.

Regarding this clause by itself, I should not have felt any doubt that it is precisely the sort of clause which is referred to in Hancock v Watson. There is,

as I see it, an absolute gift to a legatee in the first instance, and trusts are engrafted or imposed upon that absolute gift. The words “but so that,” and the words

“and so that” seem to me quite indistinguishable from such words as “provided always that” and “and provided further that.” They are suitable words to

introduce the engrafting of trusts upon a gift which is in terms absolute. The only reason of any force which I think could be advanced for giving them some

other meaning in this particular will is that cl 16 is part of the trusts engrafted upon the original gift to the testator’s five children. That is quite true, but, for

my part, I can see no reason why the engrafted trusts should not contain another trust of the kind which is generally referred to as a Lassence v Tierney trust,

and I think that the engrafted trusts in the present case do contain such a trust.

If I may take, for example, the share of John Graves Litt and trace it through shortly, when John Graves Litt died one-third of his eight thirty-fifths of the

residue went to Mrs Harding for life, and I need not say more about that 􀂭 318􀀉 because, as Mrs Harding left a husband, her surviving share passed to him.

Then in the case of Mrs St George, there was, as I read cl 16, an absolute gift to her, in the first instance, but the gift of accrued shares from John Graves Litt

was cut down by the words which follow. It was undoubtedly cut down, and the one-third of John Graves Litt’s eight thirty-fifths which passed to Mrs St

George passed on to Mrs Hedley. In my view, that fraction, whose career I have been tracing, came to rest finally at the point to which it was taken by these

trusts. It came to Mrs Hedley absolutely under cl 16. Trusts were engrafted upon that absolute interest which failed, because Mrs Hedley died a widow

without ever having had a child, and that fraction of the estate of the testator remained at home in Mrs Hedley’s estate.

It is certainly strange that no case appears to have been reported of a similar kind to the present case, but I can arrive at no other conclusion but that cl 16

is a Lassence v Tierney clause, just as much as is the clause containing the original gift with the engrafted trusts set out in cl 10. The result must be, in my

view, that this appeal must succeed and an appropriate declaration must be made.

BUCKNILL LJ. I agree.

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Appeal allowed.

Solicitors: Simpson, North, Harley & Co agents for Raper & Fovargue, Battle (for the appellant); Layton & Co and Duncan, Oakshott, Morris-Jones &

Holden, Liverpool (for the respondents).

F Guttman Esq Barrister.

[1946] 1 All ER 319