086-NLR-NLR-V-74-P.-A.-SILVA-and-2-others-Appellants-and-R.-J.-DE-MEL-Respondent.pdf
G. P- A. SILVA, S.P.J.—Silva v. de Mcl
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1971Present :G. P. A. SHva, S.P.J., and Wljayatilake, J.
P. A. SILVA and 2 others, Appellants, and R. J. G. DE MEL, Respondent
S. G. 7JIGS {Inly.)—D. G. Panadura, 453jT
Administration of estates—Will—Clause purporting to deal with residuary estate—Construction when such clause contains also provisions jor certain specialbequests—Judicial settlement of accounts—Residuary estate—Jts liability tobe utilised firstly for payment of the debts and liabilities of the estate—Rule ofabatement.
Where a clause of a Will purports to deal with tho rest ond residue of themovable and immovable properly of tho testator but in fact makes a numberof specific bequests (in addition to certain specific bequests already mode intho earlier clauses of tho Will), tho residue would bo the property remainingalter the specific bequests mentioned in tho clause aro eliminated.
Where a Will is silent as to tho proper destination of certain liquid asseteof the testator’s estate, such residue should bo utilised in tho first instance fortho payment of testamentary expenses, debts, funeral expenses and estateduty. Where there are outstanding debts and other liabilities of tho estateto bo met, it would bo wrong to distribute such residue among tho heirs oeon intestacy with a direction that tho debts and liabilities of the ostato shouldbe met pro rata by the heirs in proportion to tho valuo of the interest of eachOf them in tho estate. “ Such a procedure will necessarily have tho effect ofabating specific or even general legacies before the abatement of tho residueof liquid assets and will conflict with tho legal principles bearing on thequestion.”
A.PPEAL from an order of the District Court, Panadura.
O.Rangannlhan, Q.G., with S. Sharvananda, S. Ambalavanar,T. Thuraiappa and K. Kanagaratnam, for tho 1st and 2nd respondents-appe Hants.
S. Nadesan, Q.C., with J. V. M. Fernando and V. Jegasothy, for the2nd respondent-respondent.
Cur. adv. tmU.
February 12, 1971. G. P. A. Silva, S.P.J.—
When tho 1st and 2nd respondents-appellants, being two of theexecutors of the Last Will of the deceased, submitted their accountsfor a judicial settlement of accounts in this case, the 2nd respondent-respondent to this appeal filed certain objections to tho statement of
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accounts. On the date of inquiry into these objections, however, therespondent accepted the statement of accounts subject to certainmodifications. The acceptance of this statement resulted in the inquirybeing confined to a contest as to the proper destination of certain liquidassets aggregating to Es. 611.43S/- regarding which the Last Will wassilent. The learned District Judge held that the said sum should devolvein equal shares on all the four heirs as on intestacy and that the debtsand liabilities of the estate should be met pro rata by the four beneficiariesin proportion to the value of the interest of each in the said estate. Hoheld further that the computation of tho value of each share wouldbe on the basis of the division of the said sum of Rs. 611,43S/- equallyamong the four heirs. The present appeal is against this order of theDistrict Judge.
The limited question which has to be decided in this appeal thereforeis whether the said liquid assets of the estate of the testator amountingto Rs. G11,43S/- should be distributed among the heirs as on intestacy orwhether they should be utilised for the payment of testamentary expenses,debts, funeral expenses and estate duty. The contention of the appellants that they should be utilised in the first instance to meet the testamentaryexpenses and debts, etc., while the contention of the respondents is thatthey should be distributed among the heirs as on intestacy. The answerto this question depends on the further question as to what forms thereal and substantial residuary estate in terms of the Last Will left by thetestator in this case. The ascertainment of tho actual residue thereforeassumes considerable importance.
On a perusal of the Last Will it would appear that, after the usualpreliminary clauses, the testator has by clauses 4, 5, 6, 7 and S madecertain specific bequests to some of his children either directly or onthe happening of certain events. By clause 9 he purported to bequeathto his trustees named in clause 2 of the Will what may’’ be described brieflyas all the rest and residue of his movable and immovable property,enjoining them however to administer and dispose of them in the mannerindicated later on. Although it would appear ex facie that the specificbequests of the testator are contained in clauses 4 to S and all the restof the testator’s properties formed the residue, a closer examination ofclause 9 shows that a number of specific bequests has been made in thatclause. The directions given in this clause have elevated the bequestsembodied therein to the category of specific bequests. This fact becomesapparent if one poses the question whether the trustees, to whom whatis referred to as the residue was devised by this clause, could have refrainedfrom carrying out either the directions to convey the properties mentionedtherein to the respective legatees or any' of the other directions. Onthi3 construction of the Will, which wc feel convinced is the reasonableconstruction, what is described in the Will as the rest and residue of
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the estate ceases to form the actual residue for the purpose of decidingthe question which was in issue at the inquiry which resulted in thisappeal. The residue for this purpose would be the amount which wasadmittedly not dealt with by the testator, namely, the sum of Rs. 611.43S.
The main reason why the testator chose to vest what he described asthe residue in the trustees in clause 9 seems to be to protect the interestsof the substantial beneficiaries under this clause, namely, the two minorchildren, to whom the trustees were directed to convey a number oflarge and valuable properties. Had these children attained the age ofdiscretion the properties given to them would no doubt have been devisedin the same way as those enumerated in clauses 4 to S as specific legacies.I am fortified in this view by the wording used by the testator in clause3 of Part Four of the Will where he expressly takes away the power ofthe trustees to deal with the property called “ Kusum Sri ”, Panadura,devised to his son.Ranjit or to diminish the legacy of Rs. 100,000/-given to his minor daughter. These words would appear, if at all, toraise the stature of these bequests even beyond that of the specific legaciesenumerated in clauses 4 to 8 of the Will. There would therefore beno justification to treat what is vested in the trustees by clause 9 as theresiduary estate of the deceased for the purpose of deciding the questionbefore us.
Counsel for the appellant cited before us in support of his argumentthe case of Malliya v. Ariyaralne 1 reported in 65 N. L. R. 145. In acharacteristically erudite and exhaustive judgment in this case BasnayakeC.J. has covered a very vide field of la%v relating to executors andadministrators applicable to Ceylon, their powers and duties in regardto the payment of the testator’s debts, the sale by executors ofproperty in which minors arc interested and such other allied matters.In his most illuminating judgment, in which the present Chief Justicehas concurred, he has traced the history and the scope of the applicabilityof the English law of executors in this country and has set out for ourguidance a number of judicial pronouncements which show the processof judicial evolution of the law of executors. From this judgment withwhich we are in respectful agreement, even though the questions atissue were not the same as in the instant case, it is possible to extractsome principles which assist us to decide the question before us.
The law applicable to us in this field being the English law, we havenaturally to consider the position of the residuary estate, vis-a-vis thespecific or general legacies under English Law in regard to the paymentof any liabilities of the estate. As we have pointed out earlier, some ofthe legacies given by clause 9 of the Will are in the nature of specificlegacies while some others can be considered as general legacies. Eventhough the executors appointed by the Last Will have been directed to-J (1962) 65 N. L. B. US.
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distribute) the properties in a certain way, the properties in questionwould be vested in the legatees upon the death of the testator subjectof course to any restrictions which arise by operation of law or in termsof the Will.
The principle of English law on the subject of Abatement as expressedby Mustoo (Executors and Administrators—1th Edition, page 116) isthat, if the assets arc sufficient to answer the debt3 and the specificlegacies, but arc insufficient to meet the general legacies, the latter must,be reduced. This process of reduction, which is termed abatement,follows a certain order. “ The residue must always be used for thopurpose of making up any deficiency in the amount available for debtsand prior legacies. Next follow the general legacies ; and then thespecific legacies. The rule of abatement is that all property notspecifically bequeathed must be exhausted before recourse is had toproperty which is so bequeathed ”. A similar view has been expressedin Williams on Executors and Administrators in the passages cited to usby counsel for the appellant. This view of the matter which we feelinclined to follow compels us to the conclusion that tho learned DistrictJudge was in error in holding that the liquid assets must be distributedas on intestacy and that it would devolve on the four cliilclren in equalshares. If of course there was a residue of undevised liquid assetswhich remained after payment of all the liabilities of the estate, thegeneral principle that it would devolve on the heirs as on intestacy wouldbe unexceptionable. Put when there were outstanding debts and otherInabilities of the estate to he met, it would in our opinion bo wrongto distribute such residue among the heirs as on intestacy so that theentire estate will be chargeable with debts and other liabilities. Sucha procedure will necessarily have the ell'cet of abating specific or evengeneral legacies before the abatement of the residue of liquid assetsand will conflict with the legal principles bearing on the question. Intho instant case, it will also militate against tho general principle thatproperties devised to minors should not be diminished or adverselyaffected unless no other funds arc available for the payment ofliabilities.
For the reasons stated above we set aside the order of tho learnedDistrict Judge dated 29th March, 193S, and hold that the executorsacted correctly in applying the sum of Ks. G11.43S/- for the payment-of the debts and testamentary expenses of the deceased and make orderdirecting a judical settlement of accounts on that basis. The case willbe forwarded to the District Court for the purpose of complying withthis direction. The appellants arc entitled to their costs of thisapplication before the District Court as well as the costs of appeal fromthe 2nd respondent-respondent..
WlJAYATrLAKE, J.1 agree.
Appeal allowed.