%20by%20Matthew%20Burgess.png "View Legal blog - 'The Vibe' and ruling from the grave: nothing breaks (like a heart)** by Matthew Burgess")
Arguably however it essentially captures the concept of courts making decisions driven by 'public policy' or what they believe to be 'in the public interest'.
One aspect of estate planning and asset protection that brings these concepts into sharp focus is a willmaker imposing conditions on provisions under their will about the personal relationships of a beneficiary.
One of the leading cases in this area dates from the mid 1800s and confirms that a trust (such as a life interest) for a surviving spouse can be structured to end automatically if the surviving spouse ceases to be 'single ... and living a chaste life' (see - Lloyd v Lloyd (1852) 2 Sim (NS) 255).
Similarly in Ramsay v Trustee Executors and Agency Co Ltd (1949) 77 CLR 321, a will gifted proceeds in trust “... to pay the income ... to my son ... for such period ... as he shall remain married to his present wife ... and on the termination of such period in trust for my ... son absolutely provided however that should my ... son predecease his said wife during such period ... my estate shall go to my ... nephew ... and my sister ... in equal shares.”
The court confirmed that:
- This provision contained nothing which offended against public policy as having, or tending to have, an adverse effect on the son’s marriage and it was wholly valid.
- The will was drafted to secure an income to the son during the marriage, and to prevent his wife obtaining any interest, either directly under the will, or indirectly through her husband’s will, in the corpus assets and there is nothing illegal in such an intention—it is simply a case of a willmaker choosing their beneficiaries.
- By way of an analogy, it would be contrary to all experience to say that a remainderman of a life interest under a will, under which a person is entitled to property on the death of the life tenant, is exposed to a temptation to hasten the death of the life tenant.
- Most people in a civilised community respect the sanctity of marriage as well as of life, and would not be induced by pecuniary gain to destroy one or the other. It is not reasonable to suppose that the terms of the will here create any practical conflict between the son’s duty as a husband and his interest as a beneficiary – future illegal or immoral activity (that is deliberately ending the marriage) is not to be presumed.
More recently decisions have upheld partial restraints on marriage, such as preventing marriage to a person with particular characteristics (including race and religion). For example, in Seidler v Schallhofer [1982] 2 NSWLR 80, there was an agreement which contemplated the continuation of a de facto relationship for a specified period but then required that the parties either marry or end the relationship. It was held that the agreement simply formalised the financial aspects of the relationship and was appropriate given current public policy notions.
More recently again is the decision of Ellaway v Lawson & Anor [2006] QSC 170. This case involved a will where the entitlements of one daughter were conditional on her divorce from her then current husband, or his death (assumedly due to natural causes), whichever occurred first.
Arguably applying The Vibe it was held the reason for the approach was the mother's desire to protect the daughter's finances - and not a wish to see the daughter get divorced or the son in law die. On this basis the provisions in the will were held to be valid.
Similarly, the decision in Jones v Krawczyk [2011] NSWSC 139 also involved a will where a daughter was prohibited from being a potential beneficiary of a testamentary trust so long as she was married to, or living with, her husband (his death was not specifically mentioned). The decision based on public policy, was that the restriction was valid as a being motivated by a desire to protect the daughter, rather than trying to force the daughter to get a divorce.
In contrast however, there remain situations where the courts will strike down agreements that will offend the public interest, perhaps the highest profile example being the claim bought by a form of 'defacto spouse' against married businessman Richard Pratt (see Ashton v Pratt (No 2) [2012] NSWSC 3).
In this case, Ashton sought to enforce a contract for 'mistress services' in return for Pratt establishing a trust for her and her children with $5 million and an ongoing income stream.
In rejecting the claim the court held that the extent of the relationship was simply for ‘meretricious sexual services’. The court's view was that such arrangements were contrary to public policy and thus illegal and unenforceable.
As usual, please make contact if you would like access to any of the content mentioned in this post.
** For the trainspotters, the title of today's post is riffed from the Mark Ronson (featuring Miley Cyrus) song ‘Nothing breaks like a heart’.
View here:
More recently again is the decision of Ellaway v Lawson & Anor [2006] QSC 170. This case involved a will where the entitlements of one daughter were conditional on her divorce from her then current husband, or his death (assumedly due to natural causes), whichever occurred first.
Arguably applying The Vibe it was held the reason for the approach was the mother's desire to protect the daughter's finances - and not a wish to see the daughter get divorced or the son in law die. On this basis the provisions in the will were held to be valid.
Similarly, the decision in Jones v Krawczyk [2011] NSWSC 139 also involved a will where a daughter was prohibited from being a potential beneficiary of a testamentary trust so long as she was married to, or living with, her husband (his death was not specifically mentioned). The decision based on public policy, was that the restriction was valid as a being motivated by a desire to protect the daughter, rather than trying to force the daughter to get a divorce.
In contrast however, there remain situations where the courts will strike down agreements that will offend the public interest, perhaps the highest profile example being the claim bought by a form of 'defacto spouse' against married businessman Richard Pratt (see Ashton v Pratt (No 2) [2012] NSWSC 3).
In this case, Ashton sought to enforce a contract for 'mistress services' in return for Pratt establishing a trust for her and her children with $5 million and an ongoing income stream.
In rejecting the claim the court held that the extent of the relationship was simply for ‘meretricious sexual services’. The court's view was that such arrangements were contrary to public policy and thus illegal and unenforceable.
As usual, please make contact if you would like access to any of the content mentioned in this post.
** For the trainspotters, the title of today's post is riffed from the Mark Ronson (featuring Miley Cyrus) song ‘Nothing breaks like a heart’.
View here: