Conditional Gifts in Wills

Tim Winton’s seminal novel Cloudstreet begins with the inheritance of a large house, with a covenant that it cannot be sold for twenty years. So begins a decade’s long saga that never questioned the legality of such a condition that potentially comes close to being invalid. While conditional gifts in Wills are not usually contentious, their impact can be significant. This article provides a summary of the present law surrounding conditional gifting in Wills.

What are Conditional Gifts?

As the name suggests a conditional gift is a gift that has some condition attached to it in a Will. The condition can be framed in one of two ways:

  1. a condition precedent – where an event must occur before the beneficiary can receive the gift; or
  2. a condition subsequent – where a beneficiary loses a gift they have already received if a later event occurs.

The laws surrounding conditional gifting are entirely based on the common law (judge made law). Over the decades, the Courts have attempted to strike a compromise between the freedom of testation and imposing certain restrictions which, if not adhered to, would find the condition void.

The distinction between a condition precedent and a condition subsequent is important if the condition is held to be void:

  • in the case of a condition precedent – If the condition is held to be void then the gift fails entirely;
  • in the case of a condition subsequent – if the condition is held to be void, the gift takes effect as an unconditional gift.

Over the years the Courts have seen conditions placed with respect to marriage, relationships, religion and preservation of property.

In 2014, the case of Carolyn Margaret Hicken v Robyn Patricia Carroll & Ors (No 2) [2014] NSWSC 1059 (“Hicken v Carroll) saw the Supreme Court of New South Wales uphold the validity of conditional gifts that required the children of the deceased to adopt a particular religion prior to becoming entitled to their inheritance. This case presented the New South Wales Supreme Court with the perfect opportunity to lay the groundwork for the common law surrounding condition precedents in Wills.

In this particular case, Patrick Carroll was survived by 4 children when he died. He bequeathed gifts to them in his Will on the following condition:

“subject to and dependent upon them becoming baptised in the Catholic Church within a period of 3 months from the date of my death and such gifts are also subject to and dependent (sic) my children attending my funeral”.

Two conditions were present – (1) the children had to become baptised in a Catholic Church within 3 months of their father’s death and (2) the children were required to attend their father’s funeral.

Each child attended the funeral but was deeply opposed to being baptised in a Catholic Church (they were practicing Jehovah’s Witnesses). After 3 months lapsed, one of the children sought a declaration from the Supreme Court that the conditions were “void and of no effect”.

The Supreme Court of New South Wales set down the following principles:

1. Uncertainty

A condition precedent or condition subsequent can be held to be void if it is uncertain (but not merely because it is not completely clear).

The children in Hicken v Carroll argued that the relevant clause did not specify a particular Catholic denomination and the concept of “baptism” was open to interpretation.

The Court held that a clear interpretation of the words in the Will were required. The term “baptised in the Catholic Church” meant “being ritually initiated into the Roman Catholic Church”.  The Court therefore held that the condition was sufficiently certain.

2. Impossibility

If a condition is impossible to fulfil, it can be held to be void. Impossibility requires more than the condition being simply “difficult” or “improbable”.

In this case, the Court held that it would not be impossible for the children to arrange for a baptism within a 3 month window.

3. Public Policy

A condition against public policy will be held to be void.

This was the strongest argument run by the children – all four children submitted that in modern Australia (2014 as it was then), a clause containing the baptism condition was against public policy.

In what seemed to be a bizarre move, the New South Wales Supreme Court opted for a narrow interpretation of the High Court’s decision in Re Cuming; Nicholls v Public Trustee[1]. The Court in Hicken v Carroll held that a condition with regard to religion would be void for uncertainty if there was an “interference with the parental right to bringing up a child in a particular faith”. To include a condition that required a beneficiary to be baptised was therefore not held to be against public policy.

The Court went on to say:

I am unable to discern from the legislation, treaties and other considerations referred to by the Children a public policy of the kind for which they contend that would overcome the longstanding significance which the law has accorded to freedom of testation.

Insofar as they invoke religious discrimination, the various anti-discrimination statutes to which they referred do not prevent discrimination on the grounds of religion generally…. The conditions, in particular the Baptism Condition, do not impinge upon whatever right to the free exercise of their religion the law now accords the Children. The Gifts do not compel the Children to do anything. If they had chosen to do so, they could have complied with the Baptism Condition. They have maintained their adherence to the Jehovah’s Witness faith. That choice is to be accorded every respect but does not relieve them from the consequences of that choice on their eligibility under the Gifts”

Ultimately the Court held the baptism condition was neither uncertain, impossible nor contrary to public policy. The gifts to the children were valid but failed because the children failed to satisfy the (valid) conditions.

One final principle regarding conditional gifts that was not explored in the above case (it did not need to be) is the principle that conditional gifts cannot prevent future generations from being able to sell or otherwise dispose of property left to them.

With all this being considered perhaps it is best that no one questioned the legality of the covenant in Cloudstreet as a great novel might have been reduced to merely a few pages. If you are considering attaching conditions to gifts in your will or are subject to conditions that appear unfair then you should seek legal advice from our Wills and Estate Planning Team.

Written by Golnar Nekoee and James Connolly.

[1] Re Cuming; Nicholls v Public Trustee (South Australia) [1945] HCA 32