National Trustees Company of Australasia Ltd v General Finance Company of Australasia Ltd
| Jurisdiction | UK Non-devolved |
| Judgment Date | 1905 |
| Date | 1905 |
| Court | Privy Council |
Law of Victoria -
Under the Victorian Trusts Act, 1901, s. 3 (corresponding with the English Act 59 & 60 Vict. c. 35), a trustee may be relieved from liability for breach of trust if he has acted honestly and reasonably, and ought fairly to be excused:—
Held, that, by the true construction of this section, a trustee does not entitle himself to relief by proving that he has acted reasonably and honestly. He must shew that under all the circumstances he ought fairly to be excused for his breach of trust.
J. F., being entitled to the whole of his deceased wife's proportion of a fund of which the appellants became trustees, assigned the same to the respondents. Under the erroneous advice of their solicitors, in accordance with an Act which was not passed till after the wife's death, the appellants paid two-thirds of the fund to the wife's children and one-third into court under the Act for relief of trustees without question by the respondents, who accepted the appellants' statement as to their rights without verification.
In a suit by the respondents to recover the said two-thirds:—
Held, (1.) that the payment thereof to the children was a breach of trust, and that it was no defence that it had been made upon erroneous advice of the solicitors.
(2.) That the respondents having accepted and acted upon the appellants' statement as to their rights was no evidence of acquiescence.
(3.) That although the appellants had acted honestly and reasonably, they had shewn no title to be excused. They had made no attempt to replace the fund in whole or in part nor explained the reason for their abstention. They were not gratuitous trustees, and could not throw upon the respondents, who were not in fault, the loss of a fund which they had misapplied in the course of their business.
APPEAL from a decree of the Full Court (March 4, 1904), affirming a decree of à Beckett J. (Oct. 1, 1903) in favour of the respondents for 689l. and costs.
The respondent company are mortgagees of the interest of one John Fraser under the will of one Roderick McDonell, deceased, and their claim was, under the circumstances stated in the judgment of their Lordships, against the appellant company as the trustees of the estate of the said Roderick McDonell and as the administrators de bonis non of Mary Grace Fraser, the deceased wife of the said John Fraser, to recover 673l. 18s. 10d., being the balance of the fund to which the respondents were entitled. The appellants in their defence stated the circumstances under which they paid over the fund in suit, being two-thirds of the fund the subject of the mortgage to the children of the said Mrs. Fraser in derogation of the rights of her husband's mortgagors, and relied on s. 3 of the Trusts Act, 1901.
à Beckett J. held that although the appellant company had acted honourably they were not entitled to be relieved under the provisions of the Trusts Act, 1901, solely on the ground that they had acted on legal advice. He further held that although the respondent company had not protested against the said payments being made they had not by any act of their own induced the payments now objected to, and that the mere omission to protest ought not to deprive them of their rights. The Full Court concurred in this judgment, and also laid stress on the fact that the appellants had made no attempt to recover any of the moneys which they had wrongfully paid away.
H. Terrell, K.C., and V. Hawkins, for the appellants, contended that the payment to the respondents of an insufficient share of the trust estate and the payment of the residue to the children of Mrs. Fraser were both of them made under a bonâ fide mistake of title in which the respondent company at the time concurred. The appellants had applied to their solicitors specifically to advise them what interest in the fund John Fraser had. The advice was brought to the notice of the respondents, whose advisers took the same view. In the negotiations which took place before the payments were made no question as to the right of the children to the two-thirds was raised. There was dispute as to the one-third which was eventually paid into court, but as to the two-thirds there was none. Both parties proceeded on the mistaken view that the
With regard to breach of trust, the measure of a trustee's liability depends on his duty, and if he pays money honestly and reasonably in the due course of business there is no breach of trust: see Speight v. GauntF1; Boulton v. BeardF2; Doyle v. BlakeF3; Learoyd v. WhiteleyF4; Evans v. BenyonF5; In re HulkesF6; In re StuartF7; In re TurnerF8; Re RobertsF9; In re GrindeyF10; Perrins v....
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