Report No. 70
24.6. Section restricted to dependent transfer.-
The second requisite of the section is that it is restricted to dependent transfers. If the gift over is dependent upon the happening of either of two events, of which one is valid as a condition and the other is void, and the former event happens, the succeeding interest will take effect even though the latter event may be void as a condition. If the conditions are divisible, the valid disposition would take effect without reference to the invalid contingency. Thus take a deed in which a gift over of property is made in the event of there never being any child of A or in the event of no child attaining twenty-one.
24.7. One of two events.-
Again, if the gift over is dependent upon the happening of either of two events, one of which is legal and the other void, the succeeding interest will take effect it the former event in fact happens, although the second event may offend against the rule. In such cases, the whole question depends upon whether the clause for carrying the estate over is divisible or not. If it is, the valid disposition would take effect without reference to the invalid contingency.
Thus, take a deed in which a gift over is made of property in the event of there never being any child of A or in the event of no child attaining, etc., twenty-one. Now, here the first contingency is valid, but the second is too remote, but the gift over would nonetheless take effect on the happening of the former event.1 The question in such cases is, whether the gift can be split into two alternatives, in which case, if the alternative, which is within the legal limits, happens, the gift over would take effect2
1. Watson v. Young, 28 Ch D 436 (443); Evers v. Challis, 7 HLC 531.
2. Evers v. Challis, 7 HLC 531 (547).
24.8. English Act of 1964.-
We now turn to the English law. At common law, if a subsequent gift is limited on the same contingency as a void gift, that subsequent gift also fails. At common law, any gift which is dependent or expectant upon a prior void gift is invalid. Under the Act of 1964, section 6, a subsequent gift must be viewed on its own merits, and will not fail merely because of dependency. Section 6 of that Act reads-
"6. A disposition shall not be treated as void for remoteness by reason only that the interest disposed of is ulterior to and dependent upon an interest under a disposition which is so void, and the vesting of an interest shall not be prevented from being accelerated on the failure of a prior interest by reason only that the failure arises because of remoteness."
This provision would seem to place the burden of proving that the subsequent gift is void on the person who so affirms. It reverses the common law rule based on1 the presumed intention of the grantor in favour of the opposite rule based on the policy of the law to validate gifts.
1. Para. 24.2, supra.
24.9. Need for revising section 16.-
We have given some thought to the matter and have come to the conclusion that there is need for revising section 16 on the same lines as section 6 of the English Act of 1964. Although it can be said in favour of the existing section that it is based upon the presumed intention of the transferor, the same argument can be addressed in support of the opposite view, namely, that the transferor intended a benefit for the ultimate beneficiary also, and that he himself would have desired that if the first gift is legally not recognisable, the subsequent gift should take effect.
24.10. Recommendation to revise section 16.-
In the light of the above discussion, we recommend that section 16 should be revised as follows:
"16. Where, by reason of the rule contained in1. Section 14, an interest created for the benefit of a person or of a class of persons fails in regard to such person or the whole of such class, any interest created in the same transaction and intended to take effect after or upon failure of such prior interest shall not fail by reason only of failure of the first mentioned interest."
1. Mention of section 12 has to be ommitted in any case, as that section is being deleted.