HovuriGan v 'TRUSTEES

HovuriGan v 'TRUSTEES - [1934] HCA 25 - HCA 1934 case summary — Zoe

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submitted this conveyance to the executor for execution the plaintiff's Truss ees Was father's intention in his will that those properties should belong g to me and my brother; that was his intention. I said to him: 'That may have been father's intention but you did not so express itin the will.' He said: ' Your mother knew well that those properties were to be yours and your brother's.''' "TI thought," said the plaintiff," on reading the will that may have been father's intention but that Archdeacon Slattery when he wrote out the will did not express it properly." The plaintiff, in answer to the question, "Were you satisfied then, once and for all, that no claim could be made on your behalf under the will 2," answered : " I was, at the time Thad that conversation, and before it too. Everything was devised to my mother subject to certain payments to my sisters. That was how I read the will." Upon this testimony the then state of the plaintiff's mind as to the question which he now seeks to raise can admit of no doubt. Although acting as a clerk (conveyancer) he was a fully qualified solicitor. He had his father's will in his possession

a document brief enough to attract his study. His mother had given it a construction in which others had concurred, the executor, an educated man, had given it another. The terms of the document. are susceptible of each construction although I reject them both. It was the plaintiff's duty as a conveyancer, and this duty he did not omit, to consider the meaning of the will for the purposes of the conveyance. The terms in which he recited the will show that he adopted his mother's construction - a construction which he stated to the executor. No one could have supposed the effect of the will to be beyond dispute. Having the problem it raised distinctly put before him, at a time when the distribution of the estate fell to be made in terms of the will, he resolved to raise no question and to concede without dispute the correctness of his mother's position. By so doing he encouraged her to conduct her affairs, including the making of her testamentary dispositions, on the footing that the property was hers. Without the slightest doubt or misgiving as to her ownership she derived and spent the income and treated the property itself as the subject of the specific devises by which she

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intended to provide for two of her daughters and their families. There can be no doubt that if she had had reason to suspect that these devises would be ineffectual she would have made in her will some other provision for these beneficiaries. During her life she furnished the plaintiff with sums of money the amount of which, however, he disputes. If he had asserted the rights he now sets up, it may be doubted whether her attitude to him in this respect would have been the same. After her death her executors administered her estate on the footing that the property was hers, and upon this footing the life-tenants mortgaged one of the properties to raise the means for its restoration and repair. The subject matter of the disputed provision is not specific property alleged to have been specifically devised or bequeathed. It is a residue. To ascertain its extent accounts would have been necessary. In these accounts the mother would have been entitled to charge all sums of money expended upon the plaintiff for his maintenance, education, support and provision in life. What she so spent is now impossible of ascertainment. In her will, which is not admissible evidence to prove the fact, she says it amounted to £7,000. Further, the net residue as at testator's death would consist of the balance after deducting legacies, and the expenditure on the deceased son is chargeable against that balance. At this date an account is hopeless, The transaction might be considered past and closed when the conveyance was made. Upon that footing his mother proceeded in arranging her affairs. After 37 years have elapsed from his decision to concede that the property was his mother's he now seeks to subvert all these arrangements. To do this he resorts to a Court of equity. This inequitable claim he supports upon the ground that no laches and acquiescence can answer an express trust and although he did not so think himself, he says he has now discovered that his mother is an express trustee. His contention overlooks some important qualifications of the generality upon which he relies. If a party in a position to claim an equitable right which is not undisputed lies by and acts in such a way as to lead to the belief that he has no such claim, or will not set it up, and thus encourages the party in possession to so deal with his own affairs that it would be unfair to him and to others claiming under him to tear up the

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certain questions and matters which had arisen in the administration of her estate. One of these questions related to the properties in Moorabool Street, Geelong, and, as finally amended, was: "15. On the proper construction of the will of Denis Hourigan the husband of the testatrix, did the testatrix take the residue of the testator's property under the said will beneficially or as a trustee and if as a trustee on what trusts?" Mann J. determined the question as follows: "15. On the proper construction of the will of Denis Hourigan, the husband of the testatrix, the testatrix took the residue of his property as a trustee upon trust to use the same at her discretion in educating and providing for the two sons named in the will." Following upon this decision, Richard Hourigan, the son of Denis Hourigan, commenced an action against the executors and trustees of her will: the Trustees, Executors and Agency Co. Ltd., James E. Piper, and Sir John Grice. One of the daughters of Denis and Honora Hourigan, Mary Teresa Forbes, was added as a party defendant at the trial to represent the next of kin of Patrick the deceased son of Denis, No claim was made in the action against the executors and trustees of the will of Honora Hourigan personally. The plaintiff claimed : - 1. Administration of the trusts of the estate of Denis Hourigan deceased. 2. An account of the said estate. 3. A declaration that the plaintiff was beneficially entitled to various properties including those known as No. 170 and No. 188 Moorabool Street, Geelong. 4. Transfer of the properties to the plaintiff. 5. Such further relief as to the Court seemed proper. Macfarlan J., who heard the action, declared that Honora Hourigan held the properties known as No. 170 and No. 188 Moorabool Street, Geelong, upon trust for her sons, the plaintiff and Patrick Hourigan deceased, as tenants in common in equal shares in fee simple. A conveyance was directed upon the adjustment of certain accounts relating to a mortgage over the property known as No. 170 Moorabool Street, and to rents received by the defendants in respect of the

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unfettered gift to his widow, or is it a power, in the nature of a trust for the benefit of his sons? And what is the duty, if any, imposed upon the widow? Learned counsel referred us to numerous cases, and to classifications and discussions of the cases. But they do not assist one much, for in the end the Court must gather the meaning of the testator from the words he has used (In re Adams and the Kensington Vestry (1) ). The family of the testator living at the date of his will were all comparatively young children. There were six daughters and two sons. His wife had apparently been provided for, or else had separate estate of her own. All his property is given to his wife. The obligation imposed on the wife to pay each of his daughters £500 is clear and explicit - in other words, a trust was created in their favour, and it has been duly executed by the widow. The residue of the property was vested in his wife, to be used by her, at discretion, in educating and providing for the two sons. The purpose of the gift is co-extensive with the gift itself and the discretion is not general but only in connection with the purpose for which the gift is made. The property is not to be applied generally for the benefit of testator's wife and sons, but in educating and providing for his sons. No beneficial interest is given to her. There was nothing easier than to give his wife the property absolutely, and leave it to her to attend to the education and upbringing of his children, but that he did not see fit to do. In my opinion, a power or duty was imposed by the testator upon his widow in the nature of a trust for the benefit of his sons. If one must cite authorities, Blakeney v. Blakeney (2); Wetherell v. Wilson (3); In re Roper's Trusts (4); In re Haly's Trusts (5); In re Delahunty ; O'Connor v. Butler (6), are apposite to the case in hand. A discretion is certainly reposed in the widow as to the manner and method of using the residue of the testator's property for the education and provision of the two sons, but it does not confer upon her any beneficial interest, or entitle her to use the property or any part of it for her own benefit. The discretion reposed in her is not an arbitrary and uncontrolled discretion, but one, I apprehend, that a Court of equity might control if it were not exercised in a bona fide and proper

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cases in which the claim is " to recover trust property or the proceeds Tru: thereof still retained by the trustee or previously received by the arte trustee and converted to his use." The properties known as No. ®- L». 170 and No. 188 Moorabool Street, Geelong, were subject to the trust Starke J. in favour of the sons already mentioned. They were vested in, and therefore still retained by, Honora Hourigan, at the time of her death. She purported to deal with them by her will as if she owned the property beneficially, but the trust in favour of the sons was not thereby defeated or in any way affected. The properties passed to Honora's executors for all her estate therein. But she held the properties upon trust, and the executors took them subject to that trust, and still retain them. In my opinion, the provisions of the Trustee Act do not, therefore, operate in bar of the plaintifi's tight to recover the properties, which are impressed with a trust in his favour. The question of delay and laches, apart from the statute of limitations, must now be considered. Richard Hourigan attained the age of twenty-one years about the year 1890. He was aware of the terms of his father's will as early as 1895. A conveyance of the Moorabool Street properties from Archdeacon Slattery to Honora was prepared by him about that year, when he was a clerk in a solicitor's office. He took it for execution to the Archdeacon, who at first refused to sign it, because, he said, Denis Hourigan, the father, intended those properties for his two sons. But the plaintiff answered that that. may have been his father's intention, but he did not so express it in his will. In 1917 his mother Honora died. But the plaintiff did nothing, though he was then a qualified solicitor. His mother's executors collected the rents of the properties and applied them as if the properties had been beneficially owned by her. About 1930, a sum of £1,650 was raised upon mortgage of No. 170 Moorabool Street. It was raised

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from rents and profits derived therefrom. Macfarlan J. was not satisfied that the allegation was proved, nor am I. The evidence is weak, and the bank accounts lend little if any support to the allega- tion. The plaintiff has claimed, too, the rents and profits received by Honora and by her executors and trustees from the properties known as Nos. 170 and 188 Moorabool Street. Macfarlan J. has made the executors and trustees accountable for those rents and profits since 24th March 1926, less certain expenditure. No account should be directed of the amounts received by Honora from the rents and profits of these premises or of how she applied them; it is not established that she dealt with them contrary to the direction contained in the will of Denis. The executors and trustees of Honora applied the rents and profits received by them from these properties since her death until about 26th July 1932 - the date of the order of Mann J. - in the upkeep of the properties, and the balance was paid over to the plaintiff's sisters Cecilia and Mary under the terms of his mother's will. The Trustee Act 1928, sec. 67 (1) (b), operates as a bar, I think, to the plaintiff recovering or having an account of these tents and profits for more than six years. But apart from the statu- tory bar the Court, owing to the long delay and the difficulty of adjusting the accounts equitably and justly, should refuse the plaintiff any relief or remedy in respect of any rents and profits received before 26th July 1932. An account should be directed of the rents and profits of the properties known as Nos. 170 and 188 Moorabool Street, Geelong, in the hands of the executors and trustees of Honora Hourigan on 26th July 1932, or since received by them or by any other person by their order or for their use, and of all sums of money paid in respect of rates, taxes and insurance or laid out by such executors and trustees in necessary repairs, or expenditure upon or in connection with the said properties. And a declaration should follow that the plaintiff is entitled to the balance of any rents and profits appearing upon such accounts to be in the hands of the executors or of any other persons, by their order or for their use. Another question arises in connection with the moneys raised by the plaintiff's sisters Cecilia and Mary on mortgage of the property known as No. 170 Moorabool Street. The premises had been condemned by local government authorities as unfit for habitation.

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H.C. or A. The executors and trustees of Honora's will had no authority under Hany her will or otherwise to recondition or restore the premises. So the Hovriwan sisters, about August 1930, believing themselves entitled to the a property under Honora's will and the beneficial owners thereof for . the purposes of the Settled Land Act, raised, with the approval and consent of the executors and trustees of the will, the sum of £1,650 by means of a mortgage of the property. The money was handed to the executors and trustees, who expended it on the property. Macfarlan J. treated the expenditure as by way of salvage (Godefroi on Trusts and Trustees, 5th ed. (1927), p. 240; 4th ed. (1915), p. 253) and conditioned the conveyance of the properties known as No. 170 and No. 188 Moorabool Street to the plaintiff and the legal representa- tives of the deceased brother, Patrick, upon payment of the principal, interest, and other moneys due or payable under or by reason of such mortgage. It is an extreme application of the doctrine of salvage, and has some technical difficulties of its own arising from the position of the executors and trustees of Honora's will and the fact that the sisters and not the executors and trustees raised the money. But I think it within the authority and discretion of the Court to refuse the plaintiff relief unless he does what the Court considers just and right in relation to the mortgage and to moneys reasonably expended in restoring and reconditioning the premises. The mistake of all parties as to the rights of the plaintiff and the Jong delay and inaction of the plaintiff himself created a position which warrants the Court imposing terms as a condition of relief. It is not as if the plaintiff is improved out of his property ; some expenditure was necessary, if the premises were to be preserved in a tenantable state. An inquiry should be directed whether the sum of £1,650 mentioned in the mortgage of the premises dated 25th August 1930 was in fact raised, and whether that sum or any and what part thereof was expended in putting the premises in such a state as to be tenantable or saleable. And it should be declared that the mortgagors named in the mortgage, and the executors and trustees of Honora's will, are entitled to be indemnified by the plaintiff out of the property in respect of moneys raised by the said mortgage and found to have been expended in putting the premises in such state, and interest thereon as provided by the said mortgage,

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the widow the management and enjoyment of the deceased's property. She continued the grocer's business and maintained the family and sent the two boys to boarding school. The younger, Patrick James, died at the age of sixteen, but the elder, Richard Edward, survived. He is the plaintiff in the action. After leaving school, he was articled to a solicitor in Adelaide, and, in December 1893, he was admitted in South Australia to practise as a solicitor. He appears to have returned to Geelong and entered the employment of a solicitor there practising. In 1895, while so employed, he prepared a conveyance of the two houses included in his father's estate from Archdeacon Slattery to his mother. The final payment in respect of his sisters' legacies had been made by his mother in 1893. She had sold the testator's hotel a few years earlier and she had bought another shop or house, but whether out of the proceeds of the hotel, or not, does not appear. The plaintiff evidently considered that the time had come when his mother should assume complete beneficial ownership of what was comprised in the residue of his father's estate and accordingly should obtain the legal estate in the land. He had read his father's will and indeed must have had it before him when he prepared the conveyance. He said, in the course of his evidence, that his mother had told him that his father had left nothing to his brother and himself, but had expressed a sort of pious wish that she should give them a good education and had left everything to her. He accepted this view of the meaning of the will, and, according to himself, until it was questioned in 1932, he thought that as the will was drawn up it gave him no interest notwithstanding that Archdeacon Slattery demurred to the request to convey on the ground that he and his brother were meant to have the land. The conveyance from Archdeacon Slattery to Honora Hourigan was executed as on 10th June 1895, ° It contained a recital that by the will of Denis Hourigan the whole of his real and personal estate was devised to his wife, subject to the payment of certain legacies to each of his six daughters, and that she had paid to each of the legatees the amount bequeathed to them, and it witnessed that Archdeacon Slattery, in consideration of the devise, conveyed to her the two parcels of land. The widow retained these premises and also the hotel and the shop she had bought until her

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death, which occurred on 31st October 1917. She appears to have supplied the plaintiff with sums of money from time to time, but, at this date, how much cannot be ascertained. About 1906 he incurred her displeasure by marrying against her wishes. He practised his profession in Western Australia for some years, but, in 1913, he was there made bankrupt. His mother's will, which was made in 1916, contained the following passage: "In regard to my son Richard Edward Hourigan I wish it to be understood that as he disobeyed me in his marriage I have not made such provision for him in this my will as I would otherwise have made but at the same time as I have disbursed in and about his scholastic and professional education and career and in the payment of his debts upwards of seven thousand pounds I consider he is not entitled to share in my estate." By this will and a codicil to it, she appointed the defendant company and two individuals executors and trustees and she made dispositions of her property in favour of children and grandchildren. The trustees administered her estate for many years and distributed, according to the terms of her will, the income of the estate, including that obtained from the two shops conveyed to her in 1895 by her husband's executor. One of these shops fell into an objectionable condition, and, in 1930, it was condemned by the municipal council as unfit for habitation. As a result the tenants for life under the widow's will raised £1,650 on mortgage of the premises, which the trustees expended in rebuilding and the like. In 1932, the trustees of Honora Hourigan's will found it necessary to issue an originating summons to have a number of questions determined arising in the administration of her estate. Eventually, there was included in this summons the question whether, upon the proper construction of her husband's will, she took the residue of his property under that will beneficially or as a trustee, and, if as a trustee, on what trusts. The summons came before Mann J., who, on 26th July 1932, declared in answer to the question that she took the residue of his property as a trustee upon trust to use the same at her discretion in educating and providing for the two sons named in Denis Hourigan's will. Unfortunately neither the estate of Denis Hourigan nor that of the deceased son Patrick James was represented upon this proceeding and one of the executors of Honora Hourigan

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she took it beneficially. That it was a conveyance to her beneficially appears from the conveyance itself, not only because it contains nothing to impose a trust upon the grantee, but because it recites a devise to her subject to payment of legacies and the payment of such legacies and then conveys in consideration of the devise. When he prepared this conveyance, the plaintiff knew the terms of the will, and for the purpose of drawing it he must have considered that instrument. He knew, according to his evidence, that his mother claimed that she was entitled absolutely to the residue and that the provision in favour of himself and his brother imposed upon her no trust. He knew that the executor took the contrary view. In preparing and procuring the execution of such a conveyance in her favour, he may have been actuated by a belief, as I understand him now to say, that there could be no doubt of the correctness of his mother's view, or by a belief that his mother had expended enough upon him and his brother to discharge herself to the full value of the residue, or he may have wished, in any case, that she should own the land. It is difficult to believe that a solicitor should have regarded it as beyond question that the language of the will imposed no obligation upon the mother in favour of her sons. But whatever his reason, the plaintiff appears definitely to have decided that his mother should then obtain the beneficial ownership of the property and should continue to enjoy it. Upon this footing she proceeded in her dealings with the plaintiff and in the arrangement of her testamentary dispositions. She kept no account of her expenditure upon or dealings with the plaintiff, at any rate none which her executors were able to produce. The statement in her will that she had disbursed on his account £7,000 he denies. One of the pieces of land forming part of her husband's residue she devised to one daughter for life with remainder to her children. Another piece she devised, subject to a trust to accumulate a specified sum of income for a charitable purpose, to two other daughters for life with remainder to their children. As the plaintiff takes nothing under the will, these devises raise no case of election. But it is apparent that, but for his mother's belief that she was beneficially entitled to these pieces of land, some other provision would have been

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made by the testatrix for these families. Her executors and trustees administered her estate in the same belief. The sum of £1,650 was raised and expended upon repairs by life tenants, who, upon the same assumption, incurred a personal responsibility in that amount to mort- gagees who believed that they obtained an unimpeachable security. Finally, the writ was not issued by the plaintiff until fifteen years all but a month after his mother's death, thirty-seven years after the conveyance of the land to his mother and forty-two years after he reached full age. If his writ had been issued a month later, the plaintiff's action would have been open to the defence that his right to bring it against the present defendants had accrued more than fifteen years ago within the meaning of sec. 296 of the Property Law Act 1928, and that whatever may have been the position of his mother, her executors are not express trustees for him within the meaning of sec. 297. But perhaps her executors could not rely upon lapse of time under these provisions if she could not. (See Black v. Cox (1).) It was contended that even if the will of Denis Hourigan did intend that his wife should be a trustee, so that under a proper conveyance she would have been an express trustee, yet, inasmuch as the executor conveyed to her beneficially and she intended to take the land as beneficial owner, her trust was not in fact express but constructive. This contention was supported on the ground that in the inception her title was given and received adversely to the alleged beneficiary ; that she did not obtain the property on his behalf, or by assuming a fiduciary character. (Cp. Taylor v. Davies (2).) But, however this may be, I think the principles of equity operate to preclude the plaintiff from asserting his claim at this date. '" The doctrine, that where there is an express trust delay in seeking relief in respect of a breach of it is not material, does not apply to a case in which there has been acquiescence or gross laches on the part of the cestwi que trust" (per Baggallay L.J., In re Cross; Harston v. Tenison (3) ). Although the pieces of land which formed part of the estate of Denis Hourigan remain in specie in the hands of his widow's executors, the case is not one in which it is sought to bar an ascertained equitable interest

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in specific property, The question whether the plaintiff, assuming H.C. or A. a construction of the will in his favour, possessed or retained an tes _ interest in these pieces of land rested in account. First, an account Hovrica was needed to define the residue; second, an account was needed to discover whether his mother was entitled to throw against it ™ more than would extinguish his prima facie interest. "Calling for i accounts is always much discouraged after the death of the accounting Dixon J. party, if he lived long enough to have accounted in his lifetime " (per Plumer M.R., Chalmer v. Bradley (1) ). The transaction may be said to have been closed by the plaintiff himself in 1895 when he procured the conveyance to his mother. What the plaintiff did in accepting and confirming her belief that she was beneficial owner and in allowing her to proceed in all her affairs upon that belief may "fairly be regarded as equivalent to a waiver" of his remedy and his right (Lindsay Petroleum Co. v. Hurd (2) ). It is true that he did not " know " his rights in the sense that he knew what interpre- tation would be judicially given to the will. But " generally, when the facts are known from which a right arises, the right is presumed to be known " (per Knight Bruce L.J., Stafford v. Stafford (3) ). He 'new as much as was required in order to form a decision as to what he should do. The subsequent lapse of time and delay have materially affected the situation both by making a just ascertain- ment of the rights which would have arisen between himself and his mother almost impossible and by inducing testamentary dispositions which it would be most inequitable to disturb. The encumbering of one piece of land has rendered it still more inequitable to over- throw them. For these reasons I think the cross-appeal should be allowed. The judgment of the Supreme Court should be discharged and the action dismissed. In view of the course taken in granting special leave to appeal from the declaration made by Mann J., the plaintiff and all other parties should receive their costs out of the estate of Honora Hourigan the trustees and representative parties, as between solicitor and client.

At a glance

Court

Decision date

Before

Source

Judgment (133 paragraphs)

Parties