Caraher v Lloyd (Official Assignee) [1905] HCA 18

Caraher v Lloyd (Official Assignee) [1905] HCA 18

John Edwin Caraher’s contingent remainder was effectually released to Michael by the 1882 settlement, either as tenant for life in remainder expectant upon the widow’s decease, or as joint tenant in remainder under the residuary devise. This release operated as an enlargement of Michael’s estate, which was then held upon the trusts of the settlement. The interest in the residue was a vested and not a contingent interest and also passed under the settlement; therefore, the appellants became entitled to the relevant funds and the order below was varied accordingly.

Parties
Appellants: Caraher and another; Respondent: Lloyd (Official Assignee)
Jurisdiction
Australia
Judgment Date
13 June 1905
Procedural Posture
Appeal / Judgment on Appeal From Supreme Court of New South Wales, Equity Division
Outcome
Appeal allowed
Legal Topics
Contingent Remainders, Assignment of Interests, Release to Tenant for Life, Effect of Settlement on Bankruptcy, Residuary Devisee—vested or Contingent Interest
Property Law Equity Bankruptcy Contingent Remainders Assignment of Interests Release to Tenant for Life Effect of Settlement on Bankruptcy Residuary Devisee—vested or Contingent Interest

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Parties

Caraher and another

Appellants

Lloyd (Official Assignee)

Respondent

Procedural Posture

Appeal / Judgment on Appeal From Supreme Court of New South Wales, Equity Division

Legal Issues

  1. 1 Whether a contingent remainder may be released to the tenant for life, and if so, whether this operates as an enlargement of the latter’s estate or a mere extinguishment;
  2. 2 Whether a voluntary post-nuptial settlement made by a beneficiary of a contingent remainder validly released or assigned that interest to a trustee;
  3. 3 Whether the interest of the settlor in the residuary estate was vested or contingent at the relevant time, and thus capable of assignment by the settlement.

Ratio Decidendi

John Edwin Caraher’s contingent remainder was effectually released to Michael by the 1882 settlement, either as tenant for life in remainder expectant upon the widow’s decease, or as joint tenant in remainder under the residuary devise. This release operated as an enlargement of Michael’s estate, which was then held upon the trusts of the settlement. The interest in the residue was a vested and not a contingent interest and also passed under the settlement; therefore, the appellants became entitled to the relevant funds and the order below was varied accordingly.

Court Disposition

Appeal allowed

Orders

  • Declaration that the fund first in question belongs to the appellants, with direction for payment out to them, without prejudice to third-party rights.
  • Declaration that the funds representing part of the residuary estate are divisible between Michael's representatives and the appellants, subject to prior payments.