Estate Kemp and Others v McDonald's Trustee

• Jurisdiction: South Africa
• Judge: Innes CJ, Solomon JA and CG Maasdorp JA
• Judgment Date: 19 August 1915
• Citation: 1915 AD 491
• Hearing Date: 06 May 1915
• Court: Appellate Division

Innes, C.J.:

The main issue in this litigation is whether Susannah McDonald acquired under the will of her grandfather any vested rights claimable after her death by the trustee of her insolvent estate. The late Joshua Williamson Kemp, who died in 1868, left a widow, three sons and one daughter him surviving. His testamentary provision for his family proceeded upon the following lines: -After the deduction of certain small prelegacies he bequeathed all the "rest, residue and remainder" of his estate to trustees upon trusts thereinafter specifically set forth. The trustees were directed to convert all the estate (with the exception of three enumerated properties, the sale of which was postponed) into money, and to pay the annual proceeds of what was styled the "residuary estate" to the widow for her life. After her decease they were to stand possessed of such estate upon trusts which the testator proceeded to declare. A sum of £5,000 was set apart for the children of his daughter, Mrs. Paterson, and their issue. The excepted properties which were not to be realised during the life-time of the widow were ear-marked for the benefit of the testators three sons and their families. These properties consisted of three sets of stores in Main and Kemp Streets, Port Elizabeth, and they

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were to devolve upon the issue of Matthew Ebenezer, James Lyon and Joshua Williamson Kemp (the testator's three sons) respectively. In each case the store (or its proceeds when realised) was bequeathed upon trust for the children of the particular son who, being males, should attain the age of 21 years or being female should attain that age or marry previously. And in two instances (those of the testator's sons last-named) it was specially directed that the shares of the female grandchildren should be held in trust for their issue who should attain majority, such grand-daughters receiving the rents and profits of their respective shares during their lives. As to all the "rest, residue and remainder" of the estate after the death of the widow the will directed that the trustees should stand possessed of it in three equal portions upon trusts which corresponded respectively to those upon which the three stores or their proceeds were held,-special provision being made in case of failure of issue in any instance.

Such was the general scheme of this somewhat complicated will. No question arises here as to the dispositions in favour of the Paterson grandchildren, or in favour of the children of Matthew Ebenezer Kemp. The dispute is concerned exclusively with the clauses dealing with the properties assigned to the issue of the other two brothers, and with the residuary estate. They are sections 10, 11 and 12, and it will be necessary to set out their provisions in some detail. Clause 10 refers to certain leasehold stores in Main Street, of which the trustees were to stand possessed in trust to pay £100 per annum out of the rents to James. Lyon Kemp for life, and half the nett revenue to his wife for her life. Subject to these annuities they were to hold the stores and their rents in trust for the children of James and his wife, who should attain majority or (being daughters) should marry before that age. As to the shares of such daughters the trustees were to stand possessed of them, in trust to pay the rents and profits to the daughters during their lives, and after their decease, in trust for their children who should attain majority or marry. If there were no children of James Lyon Kemp and his wife, who lived to the appointed time then such children of Matthew as might become of age were to be substituted for them. And it was expressly directed that the property was not to be sold till after the death of both James and his wife. The stores disposed of by the 11th section

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were situated in Main and Kemp Streets. The trustees were to pay the nett revenue therefrom to Joshua Williamson Kemp until his decease or bankruptcy, and thereafter to his wife for life. Upon the death of the survivor the revenue was to be divided equally among their children. But after the majority or (in case of a daughter) the prior marriage of the youngest child the trustees were to sell the stores and to stand possessed of the purchase money in trust for the testator's grand-daughter Susannah (daughter of James) and for the children of Joshua, who attained majority, in equal shares. Failing such children then upon trust as to one-half of the proceeds for Susannah, "subject as after-mentioned," and as to the other half for such children of Matthew as shall attain majority-provided, however, that the trustees should stand possessed of the share of Susannah upon trust to pay the rents to her for life, and after her decease upon trust for all her children who should attain majority in equal shares. The 12th clause dealt with the residue of the estate. It was divided into three portions and the trustees were to hold these subject to the trusts already declared in regard to the properties bequeathed for the benefit of the children of Matthew, James and Joshua respectively. And in case no children of any particular son lived to attain a vested interest in "the residuary estate" the shares which would have gone to them were to be held in trust for such children of the sons as should live to attain a vested interest in their own shares.

The facts, as stated upon a special case, are that the testator died in 1868 and his wife in 1886. Matthew died in 1882, leaving two sons, one of whom, dying without issue, appointed his brother Harry Mildmay Kemp, a defendant in the action, to be his sole heir. Joshua and his wife both survived the testator, but died without issue; and James died in 1871, leaving a widow (who is still alive) and one daughter Susannah. She married Duncan McDonald without community. Her estate was sequestrated in 1905, and the first liquidation account was confirmed in the following year. In 1913 she died, an unrehabilitated insolvent and without issue.

Under these circumstances the plaintiff, who is the trustee of her insolvent estate, claims the benefit of what he maintains were her vested rights under the will. He contends that upon majority she obtained vested rights in the proceeds of the leasehold property (sec. 10) and in a moiety of the proceeds of the landed property

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(sec. 11) subject in each case to a fidei-commissary substitution in favour of her children; that by reason of the failure of issue that substitution has fallen away and that her estate is entitled to the benefit of the assets thus freed from encumbrance. With regard to the residuary estate the claim is for one-third of it, due to Susannah McDonald as being the only child of James and one-half of another third which accrued to her by reason of the death of Joshua without issue. The defendant's contention is that Susannah McDonald acquired no vested interest either in the leasehold or in the other landed property, and that her interest in any share of the profits ceased at her death. They deny, therefore, that any right to the residuary estate was ever vested in her: and they claim that such residuum belongs to Harry Mildmay Kemp and to the estate of his brother Matthew. The respective contentions of the parties are set out with great elaboration in the special case. The Cape Provincial Division (JUTA, J.P.), decided substantially in favour of the plaintiff, and the matter is before us on appeal from that decision.

This is a will drawn by an English lawyer and expressed in English legal phraseology: but the testator, both at the date of execution and at the date of his death was domiciled in the Cape Colony; and his dispositions must be interpreted in the light of our own law. The outstanding feature of the document and the one which gives rise to the main difficulties surrounding the present enquiry is the direct bequest to persons who are not intended by the testator to have any enjoyment of the subject matter, but are directed to possess and administer it on behalf of successive sets of beneficiaries. Not only is the sole administration, given to the parties, but the bequest carries with it, the legal ownership. And the question arises whether by our law an intermediate beneficiary, whose interest in the property is itself limited, can under such circumstances acquire herein a vested right transmissible to his heirs and, therefore, amenable to the claims of his creditors after his death. If that question admits of an affirmative reply, the ground will be cleared for the further enquiry whether it was the intention of the testator to confer such a right. Now there is nothing notionally impossible about a bequest of the nature suggested; and it would be strange indeed if such a disposition embodied in clear language could find no place in our legal system. The provisions

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of our law with regard to fidei-commissary and other substitutions and to conditional substitutions are so comprehensive and elastic that to quote the words of Burge (vol. 2, p. 166), "under the Civil Law, and the Law of Holland, there are scarcely, any dispositions of property, which even the caprice of its owner could suggest, which might not be affected by substitutions fidei-commissa and conditions." The English law of trusts forms, of course, no portion of our jurisprudence: nor as pointed out by the learned JUDGE PRESIDENT in his able reasons have our Courts adopted it: but it does not follow that testamentary dispositions couched in the form of trusts cannot be given full effect to in terms of our own law.

The trustees, to whom the estate is directly bequeathed, are vested with the legal ownership in the assets. That is clear; but it is also clear that the testator never intended that they should have any beneficial interest; they were instituted not to enjoy but to administer the property. And their...