Mayne v Jaques

High Court of Australia|1960-05-03|Before: Windeyer JJ, Fullagar J

The application was heard by Clyne J. The official receiver was a party and appeared at the hearing by counsel, as he has before us. He did not then, and does not now, seek to prevent Mr. Mayne's estate receiving from the bankrupt estate a substantial sum - £500 he suggested might be regarded as proper - by way of remuneration for the services rendered by Mr. Mayne. But he did bring to the notice of the learned judge and of us several matters which he submitted appeared to stand in the applicant's way. Clyne J. felt constrained to refuse the application, because, as he put it, "the right given to a Trustee in Bankruptcy to apply to the Court for the fixing of his remuneration is a personal right given by the Bankruptcy Act "; and he said "it is impossible, in my opinion, to hold that this right given to a Trustee is property which passes to or vests in his legal personal representative on his death". From that decision this appeal is brought.

During the argument before us it was suggested from the bench that the official receiver, as trustee of the bankrupt estate, might, either by calling a meeting of the creditors, or, failing that, by approaching the court, have had some remuneration for Mr. Mayne fixed and allowed to his executrix. But counsel for the official receiver pointed out procedural difficulties in various courses suggested. As s. 133 (1) is only applicable where the trustee is a person other than the official receiver, it seems that an application under s. 133 (7) cannot be made by a trustee who is an official receiver remunerated by salary. Mr. Jaques receives a salary; and therefore s. 12 (4) does not apply to him. However, I do not think it is necessary to come to any conclusion whether the suggested difficulties of some course other than that taken are well founded, for the matter comes to this Court on appeal.

The question was presented in two forms: first, what was the nature of whatever right Mr. Mayne had immediately before his death, on the assumption that the creditors had at that date failed to fix his remuneration? Secondly, did he have a right which on his death passed to his executrix and which can be asserted by her by these proceedings? But these seem to be really only two ways of stating the same fundamental question. On the assumption that before Mr. Mayne's death the creditors had failed, within the meaning of s. 133 (7), to fix his remuneration, he clearly had a right to apply to the court pursuant to that sub-section. But to assume that that means that after his death his legal personal representative can apply is to beg the question. "An executor does not act for a dead man or in his name, but for the estate of the dead man" (per Bowen L.J. in Stanhope v. Stanhope [1] ). The question is rather whether Mr. Mayne had a right to remuneration, the amount thereof to be fixed by the court if the creditors did not fix it; or whether, on the other hand, he had merely the right to ask the court to exercise discretionary powers in his favour - to use the phrase Hodson J. used in a different context (Dipple v. Dipple [1] ).

(1886) 11 P.D. 103, at p. 110. 2. (1942) P. 65, at p. 68.

In a general way, the position of a trustee in bankruptcy is not unlike that of a liquidator in the winding up of a company. The remuneration of a voluntary liquidator may be fixed by the company in the case of a members' winding up, and by the creditors in a creditors' winding up; and if the liquidator's remuneration is not so fixed, then it may be fixed by the court (Palmer's Company Precedents, loc. cit; e.g. Re Daily Telegraph Newspaper Co. Ltd. [2] and see also Companies Act 1936 N.S.W. in relation to the remuneration of a receiver and manager). But it seems that there is no case, either in relation to bankruptcy or to companies, directly in point here. At all events counsel were not able to refer us to one; and I have found none. The matter must therefore be approached as one of general principle.

When s. 133 (7) is read in its context and in relation to the scheme of the Act as a whole, it does more than confer a right upon a trustee to ask the court in its discretion to allow him remuneration for his services. The Act, as I read it, recognises that a trustee has a right to remuneration, unless he has agreed to act without remuneration or has for some reason become disqualified to have his remuneration. Section 133, I think, provides for the manner in which the remuneration to which he is so entitled is to be assessed or quantified. Trustees in bankruptcy have to be registered and are in various ways controlled in the performance of their duties by the Bankruptcy Court. The Act contemplates that they will act for reward, as in fact they ordinarily do. Official receivers are remunerated either by salary or by fees and commission; other trustees are remunerated in an amount to be fixed (see ss. 12 (4), 84 (1) (a), 133). It is true that s. 133 (1) refers to the trustees "remuneration (if any)". But this is probably to cover cases in which the trustee has agreed to act without remuneration (s. 133 (10)); or in which, in the result, no amount is brought to credit after the secured creditors and the costs of carrying on the debtor's business have been paid (s. 133 (1)). There may be other circumstances too in which the words "if any" would be applicable. But those words do not mean that a trustee who accepts office on the tacit assumption that he is to be paid for his work has afterwards no greater right than to seek such payment as a petitioner. The Act does not provide that the creditors may allow a remuneration to the trustee; but that they may fix his remuneration. And if they fail to do so - and the word fail itself seems to suggest a default in doing something which ordinarily ought to be done - then the court may, on the application of the trustee, fix the remuneration. To "fix the remuneration" seems to me to assume that there is a right to remuneration and a right to have the amount thereof fixed. The court's power is to fix, not to grant, or allow, remuneration. It is true that the sub-section provides that the court may fix the remuneration. The word "may" confers a power. If the rest of the Act, expressly or by implication, gives or recognises a right to remuneration, then these circumstances compel the court to exercise the power (Julius v. Lord Bishop of Oxford [1] ). The case thus falls within what Jervis C.J., delivering the judgment of the Common Pleas in Macdougall v. Paterson [1] described as "the rule, that, when a statute confers an authority to do a judicial act in a certain case, it is imperative on those so authorised, to exercise the authority when the case arises, and its exercise is duly applied for by a party interested, and having the right to make the application" [1] .

(1880) 5 A.C. 214. 2. (1851) 11 C.B. 755 [138 E.R. 672]. 3. (1851) 11 C.B., at p. 773 [138 E.R., at p. 679].

General doctrines of equity concerning the remuneration of express trustees have little bearing upon the question. Nevertheless, it is worthwhile noticing some of the exceptions to the rule that trustees must derive no profit from their trust, and therefore, generally speaking, are not entitled to remuneration for performing the duties of the trust. The rule itself is clear; and it makes no difference that a trustee's exertions in the duties of his office have produced great advantages for the cestui que trust (Barrett v. Hartley [1] ). But a trustee who, before assuming office, stipulates with the beneficiaries, being sui juris, that he shall be paid for his services is entitled to the agreed remuneration. And courts of equity have an inherent jurisdiction to make an allowance out of the trust property to a trustee for his services (see Marshall v. Holloway [2] and other cases referred to in Nissen v. Grunden [3] ); and this may be either for past services or for services to be rendered. In In re Bignell; Bignell v. Chapman [4] , the Court of Appeal approved of remuneration for a trustee of a will who, by a judgment in an administration suit, had been appointed by the court as receiver and manager of the testator's business. There are two matters in that case which are noteworthy for present purposes. One is that the receiver had died before the question of her remuneration was raised, and the application was made by her executors. The other is that Lindley L.J., as he then was (Bowen and Fry L.JJ. concurring), observing that the judgment said nothing about remuneration, said, "the object of this silence, it appears to me, was to reserve the question of remuneration" [5] . Here the evidence is meagre. But we must, I think, assume that Mr. Mayne did not forego his rights, whatever they were, to remuneration; that the creditors did not expect him to work for nothing; and that the reason why they failed to fix the remuneration was probably because they chose to reserve the question. They have had the benefit of his exertions. They cannot justly expect to profit by his untimely death.

(1866) L.R. 2 Eq. 789. 2. (1820) 2 Swans 432 [36 E.R. 681]. 3. (1912) 14 C.L.R. 297. 4. (1892) 1 Ch. 59. 5. (1892) 1 Ch., at p. 63.

During the argument reference was made by way of analogy to the right of an executor in New South Wales to apply for commission on passing his accounts. This it has been held creates a mere expectancy (Moss v. Barnett [1] ; Re Browne: Ex parte Official Assignee, Browne and Browne Respondents [1] ). Whether or not those decisions be correct, there is no real similarity between s. 86 of the Wills, Probate and Administration Act 1898 N.S.W. and s. 133 of the Bankruptcy Act. In one case "the Court may allow such commission as is just and reasonable" (s. 86) to someone who otherwise would have to act gratuitously. In the other case "the Court may fix the remuneration" (s. 133) of a person who holds an office which is the creature of statute and whom the statute contemplates will be remunerated.

(1862) 1 S.C.R. (N.S.W.) 313. 2. (1895) 16 N.S.W. L.R. (B. & P.) 62.

Although an agreement by the creditors as to the amount of the remuneration of the trustee in bankruptcy has been said to be in the nature of a contract (In re Marsden; Ex parte The Board of Trade [2] ), counsel for the appellant was, in my view, mistaken in his description of the right which he was seeking to establish as a chose in action or a debt. The creditors of the bankrupt estate were not the trustee's debtors. He had no common law right which could give rise to a claim for a quantum meruit. His claim to remuneration could be satisfied only out of the bankrupt estate in due course of administration. Nevertheless, if what he had was - as I think it was - a right against that fund, as distinct from a mere expectancy, then it passed to and became vested in his executrix on grant of probate (Wills, Probate and Administration Act 1898 N.S.W., s. 44, and definition of personal estate in s. 3). There seems to be no reason why the trustee could not during his lifetime have assigned in equity whatever amount he might receive by way of remuneration. But, in any event, assignability is not an essential element of a right of property (see National Trustees Executors and Agency Co. of Australasia Ltd. v. Federal Commissioner of Taxation [3] ).

(1892) 9 Mor. 70. 2. (1954) 91 C.L.R. 540, at pp. 557, 583.

Some purely procedural difficulties may, I think, be disregarded, because both the executrix and the official receiver are parties to these proceedings; and, as a final distribution has not yet been made, there is a res, the bankrupt estate, or part of it, in the hands of the trustee and thus within the reach of the Bankruptcy Court. If the official receiver, as the present trustee, formally refused to recognise the claim of Mr. Mayne's executrix, she could, as a person aggrieved by that decision, apply to the court under s. 148; and the court could then make such order in the matter as it thought just. In my view therefore the Bankruptcy Court has jurisdiction to fix the amount to which Mr. Mayne's estate is entitled as his remuneration for his work as a trustee. This - on the analogy of In re Allison Johnson & Foster Ltd.; Ex parte Birkenshaw [1] - should be a just and proper remuneration for work done by him of which the official receiver has had the benefit for the purposes of the administration of the bankrupt estate.

I would therefore allow the appeal and remit the matter to the learned Judge in Bankruptcy to fix the remuneration.

High Court of Australia Fullagar, Kitto, Taylor, Menzies and Windeyer JJ. Mayne v Jaques [1960] HCA 23

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