Solicitors for respondent: Murdoch Clarke Cosgrove and Drake

Question contained in Part 2 of the cross application answered in the negative.

ZEEMAN J Sir James Plimsoll died at Hobart on 8 May 1987 leaving a last will and testament dated 20 June 1984 wherein he named his brother John Arthur Plimsoll and the respondent as executors and trustees. Probate of that will was granted by the Court to the executors named therein on 13 January 1988. The respondent is the sole surviving executor. By his will the testator made a number of specific bequests and then gave, devised and bequeathed the rest and residue of his estate unto his trustees upon trust for sale and to pay one quarter of the net proceeds of sale to each of four named beneficiaries. The applicants are three of those residual beneficiaries. The fourth residual beneficiary is the Trustees of the Tasmanian Museum and Art Gallery, a body corporate created by the Tasmanian Museum Act, 1950, s4. Counsel appeared on its behalf and informed me that his client did not wish to be heard in these proceedings.

2. The applicants seek orders in the following terms:

"1 The Perpetual Trustees Tasmania Limited ACN No 009 475

6910, whose registered office is situate at 29 Murray Street

Hobart in Tasmania, be appointed the personal representative

of the estate of the abovementioned James Plimsoll deceased

in the place of the Respondent Kenneth Murdoch Drake to

complete the administration of the Testator's estate and to

execute the trusts of the said Will.

2 In the alternative to the orders sought in paragraph 1

hereof, that the Respondent complete the administration of

Testator's estate and execute the trusts of the said Will.

3 That the Court give all necessary or proper consequential

directions.

4 Such further or other orders as the Court deems fit.

5 That the Respondent pay the Applicants' costs of and

incidental to this application."

3. By a cross application the respondent seeks various orders and also asks that the Court answer the following question:

"(2) Whether the Respondent is entitled to insist that the

Residuary Beneficiaries sign a Deed of Release upon

distribution of the residuary estate releasing the Respondent

from all actions, claims, demands whatsoever for and in

respect of the administration of the estate;".

4. I am satisfied that the Rules of the Supreme Court 1965, O65, r1 authorises the respondent to seek an answer to this question. The parties were agreed that at this stage I should not do more than answer this question. Having regard to the material contained in the affidavits, it is likely that once the question is answered all remaining issues between the parties will resolve themselves. The respondent has insisted that the applicants agree to execute a deed of release under seal before he makes a final distribution under the terms of the will. The applicants have refused to agree to this and have maintained that they are entitled to an immediate final distribution. As a result an impasse has been created.

5. The respondent is a legal practitioner. At the time that he proved the will and for some time thereafter he was a partner in a firm of solicitors. That firm has acted in the estate. The evidence indicates that after the will was proved the respondent ceased to be a member of the firm, but that he has continued to be associated with it in the capacity of consultant. The will of the testator does not contain a charging clause, so that prima facie neither the respondent nor his firm is entitled to charge any professional fees, at least in relation to the work done whilst the respondent was a member of the firm. Nevertheless, it was open to the respondent to seek remuneration by way of commission (eg, Dobson v The Salvation Army A15/1983). The respondent and the residual beneficiaries have agreed that, notwithstanding the absence of a charging clause, the respondent's firm is entitled to charge normal professional fees in consideration of which the respondent has foregone any entitlement to commission.

6. By the clause of the will which deals with the residuary estate the deceased gave, devised and bequeathed the rest and residue of his estate to his trustees "UPON TRUST to sell call in and convert the same into money and out of the proceeds thereof to pay my debts funeral and testamentary expenses and the duties (if any) payable by reason of my death and thereafter" and then directed that his trustees divide the balance into four equal parts and pay one of such parts to each of the four residual beneficiaries. The residuary estate included several paintings of relatively little value. The applicants purchased those paintings and two other minor items of personalty from the respondent for the sum of $1,000 and have paid him that amount.

7. The respondent has completed the administration of the estate in the sense of getting in the assets and paying debts and the like, save and except that small amounts in respect of legal and accounting fees remain to be paid. The estate has been distributed save for about $80,000 which represents the undistributed portion of the residuary estate. Initially the respondent refused to complete the administration and distribution unless and until the residuary beneficiaries executed a deed of release, the operative part whereof was in the following terms:

"1 In consideration of these premises the Residuary

Beneficiaries do and each of them does hereby release and

discharge the Trustee from the trusts created by the Will by

which the Testator's Residuary Estate was to be held for the

Residuary Beneficiaries as therein referred to and from all

actions, proceedings, costs, accounts, claims and demands in

respect of the administration and distribution of the

residuary estate of the Testator or in respect of the trusts

of the Will or for or in respect of any act, matter or thing

made, done, executed or omitted or neglected by the Trustee

in relation to the administration of the Estate."

8. Subsequently the respondent resiled from this position and indicated a willingness to complete the administration and distribution if the residuary beneficiaries were to execute a modified form of deed, incorporating the estate accounts, containing the following operative provisions:

"1 That the Residuary Beneficiaries and each of them does

hereby acknowledge and confirm that they accept the accounts

as correct in every particular and that they have released

and discharged the Trustee from the Trusts created by the

Will by which the Testators (sic) residuary estate was to be

held for the Residuary Beneficiaries as therein referred to

and from all action, proceedings, costs, accounts, claims and

demands in respect of the administration and distribution of

the residuary estate of the Testator as shown in the accounts

or in respect of the trusts of the Will or for or in respect

of any act, matter or thing, executed or omitted or neglected

by the Trustee in relation to the administration of the

Estate PROVIDED HOWEVER that the release and discharge

acknowledged and confirmed by this Deed does not extend to

any property which is not included or referred to in the

accounts, or that may later be found to be part of the

residuary estate of the Testator."

9. The respondent has submitted that he is entitled to insist on a release under seal in one or other of these forms because there has been a variation in the trusts of the will. There is some authority for the proposition that where a trustee is asked by the beneficiaries to act in breach of trust he may insist on a release under seal. Jacobs' Law of Trusts in Australia, 5 ed, contains the following passage (par2130):

"When a trustee has completed his trusteeship and has caused

the trust estate to be vested in beneficiaries absolutely

entitled ... he is entitled to have his accounts examined and

settled by the beneficiaries, if all sui juris, and a formal

discharge on settled account given to him, or, if the

beneficiaries are not all sui juris or if they will not give

him a formal discharge on settled account signed by them,

then he is entitled to have his account taken by the court

(Chadwick v Heatley (1845) 2 Coll 137; 63 ER 671).

However, a trustee cannot usually require a release under

seal, (Tiger v Barclays Bank Ltd (1951) 2 KB 556; (1951) 2

All ER 262; affd (1952) 1 All ER 85. See also Warter v

Anderson [1853] EngR 821; (1853) 11 Hare 301; 68 ER 1289; King v Mullins

[1852] EngR 1117; (1852) 1 Drew 308; 61 ER 469; Chadwick v Heatley (supra); Re

Wright's Trusts (1857) 3 K and J 419; [1857] EngR 632; 69 ER 1173) although he

apparently may do so under particular circumstances, as where

the trust funds have been re-settled and the original

trustees are entitled to a release under seal from their

original beneficiaries, (Re Cater's Trusts (No 2) (1858) 25

Beav 366; [1858] EngR 943; 53 ER 676) and, it seems, where the trustees had

previously committed breaches of trust at the instigation of

the beneficiaries (King v Mullins (supra)) and possibly where

the trust instrument itself was under seal (Re Wright's

Trusts (supra))."

10. I accept that generally speaking a trustee may not insist that he be given a release under seal. The respondent did not contend otherwise. There are numerous authorities to this effect. It is difficult to reconcile with principle the suggestion, made in Re Wright's Trusts (supra) at K and J 422, ER 1174, that a trustee under a trust created by an instrument under seal is entitled to such a release. That suggestion was entirely obiter and does not seem to have been adopted in any other reported case. Its correctness was doubted during the course of argument in Re Ruddock; Newberry v Mansfield (1910) 102 LT 89 at 90. I do not consider it to be good law. With respect to the learned authors of Jacobs I can see nothing in Re Cater's Trusts (No 2) (supra) which supports the proposition for which it is cited.

11. King v Mullins (supra) is relevant. That case concerned a trust created by parole for A for life and to provide for her funeral expenses with the remainder to her two children. The tenant for life and the remaindermen called for payment. Whether the trustee insisted on a release under seal after having complied with that demand or declined to comply with it except in exchange for a release under seal is not entirely clear from the report. I tend to think that the latter was the case. The judgment of Kindersley VC (Drew at 310-311; ER at 471) is quite brief and I reproduce it in full:

"On the question whether it is the strict right of a trustee

to demand a formal release; I am of opinion that in the case

of a declared trust; where the trust is apparent on the face

of a deed; the fund clear; the trust clearly defined: and the

trustee is paying either the income or the capital or the

fund; if he is paying it in strict accordance with the

trusts, he has no right to require a release under seal. It

is true that in the common case of executors, when the

executorship is being wound up, it is the practice to give

executors a release. An executor has a right to be clearly

discharged, and not to be left in a position in which he may

be exposed to further litigation; therefore he fairly says,

unless you give me a discharge on the face of it protecting

me, I cannot safely hand over the fund; and therefore it is

usual to give a release; but such a claim on the part of a

trustee would in strictness be improper, if he is paying in

accordance with the letter of the trust. In such a case he

would have no right to a release. That, however, is not this

case; here there is no deed at all, no writing declaring the

trust; there is a small sum of money in the hands of the

Plaintiff, with nothing but a verbal expression of the

trusts. The evidence shewing what the trusts were indicates

that, upon the very tenor of those trusts, they could not be

completely carried out until the death of the tenant for

life. Considering that, in the first place, there was no

writing to indicate either what the trusts were or the amount

of the trust fund; and, in the second place, that what the

trustee has been asked to do is not in accordance with the

tenor of the trusts, I am of opinion that in this case it was

not illegal in the trustee to demand a release by deed."

12. A trustee is bound to act in accordance with terms of the trusts upon which he holds trust property. He is not bound to act contrary to those terms. He may act other than in accordance with those terms if all beneficiaries, being sui juris and together absolutely entitled, direct him to do so, but he is not required to obey such direction (Re Brockbank (1948) Ch 206). It must follow that where a trustee is asked to act otherwise than in accordance with the trusts upon which he holds trust property, in circumstances where he may but is not required to accede to the request, the trustee is perfectly entitled to decline to comply with the request except upon by being given a release under seal by all beneficiaries, being sui juris and together absolutely entitled, releasing him from the consequences of doing that which he has been asked to do.

13. That conclusion does not follow from any principle that a trustee is entitled to such a release where he has so acted. Rather it follows from the principle that he is not bound but merely permitted to so act. Not being bound to comply, he may make it a term of compliance that he is given a release under seal discharging him from the consequences of doing something for which he would incur liability were it not for the fact that he acted in accordance with the request of the beneficiaries. The statement in King v Mullins (supra) that in that case "it was not illegal in the trustee to demand a release by deed" accords with the views which I have expressed. It suggests that the court was not concerned with an enforceable right on the part of a trustee to obtain a release under seal but rather with the right of the trustee to decline to comply with the demand of the beneficiaries except upon being provided with such a release. Principle does not support any proposition that a trustee has any right to a release under seal except as to anything done or omitted to be done by him in compliance with the request of the beneficiaries which is in breach of the terms of the trust.

14. It follows from these conclusions that if the respondent is being asked to do something contrary to the terms of the trusts created by the will he is entitled to decline to do so unless released under seal from the consequences thereof. Whether he is entitled to such a release as to things already done by him pursuant to an agreement with the beneficiaries is doubtful, but for the reasons which will become apparent I find it unnecessary to decide that.

15. The respondent submitted that he had been asked by the beneficiaries to depart from the trusts of the will in the following respects:

(a) the agreement by virtue of which the respondent's firm is

entitled to charge and receive professional fees

notwithstanding the absence of a charging clause; and

(b) the sale of some of the property comprised in the

residual estate to the applicants which in effect amounted to

a distribution in specie notwithstanding that the property

was held by the respondent on trust for sale.

16. The conclusions which I have reached as to the relevant principles must result in the respondent not being entitled to a general release of the type to which he has claimed to be entitled. At best he is entitled to be released under seal from the consequences of paying the legal costs and selling the chattels to the applicants. Experience suggests that it is not unusual for executor/trustees to seek a complete release under seal upon the completion of the administration and the performance of the trusts and that that practice may have engendered in the mind of the respondent a belief that he is entitled to such a release. However it has been said from time to time that such a belief, although common, is quite mistaken (eg, Re Roberts Trusts (1869) 38 LJ Ch 708; Warter v Anderson (supra)).

17. In my view, the matters relied upon by the respondent do not constitute variations of, or departures from, the trusts created by the will. The rights of the beneficiaries inter se are not affected thereby. The agreement in relation to costs amounts to an agreement by the respondent whereby he foregoes his right to apply to the court for commission in consideration of payment to his firm of a particular sum of money. It is an agreement which is sufficiently evidenced and merely crystallises a contingent liability to which the estate always has been subject, ie to pay remuneration to the respondent. Those costs are encompassed within the expression "testamentary expenses" which by the clause of the will dealing with the residual estate are to be paid out of residue (see Sharp v Lush (1879) 10 Ch D 468 at 471). They have become testamentary expenses proper to be paid by force of the agreement between the respondent and the residual beneficiaries. By paying or appropriating them, and most of the agreed amount already has been taken, the respondent is not acting in breach of trust but in the execution of the trusts of the will.

18. The sale to the applicants of various items of personalty of little value in no way amounts to an alteration of the trusts nor does it constitute a breach of trust. The property was sold at a price consistent with the valuation obtained by the respondent. The value of the items was such that a sale by public auction could fairly be judged as being inappropriate and as giving rise to a real possibility that the net return to the estate would be less than that which the applicants were prepared to pay. All residuary beneficiaries agreed to the sale to the applicants. In selling these items the respondent was acting as required by the will because he held them upon trust for sale. The identity of the purchasers is irrelevant. The will does not prohibit a sale to a beneficiary and in the particular circumstances it cannot be said that the respondent acted other than properly in disposing of these items in this manner. There was no distribution in specie because the applicants have paid the purchase price of $1,000 to the respondent.

19. For these reasons I have concluded that the respondent has no entitlement to a release under seal from the applicants. A fortiori he has no entitlement to a release of the type the subject of the question to be determined. Accordingly, the question contained in par2 of the cross-application is answered "No". I will hear counsel as to the further disposition of the application and the cross- application.