Nissen v Grunden [1912] HCA 35

Nissen v Grunden [1912] HCA 35 - HCA 1912 case summary — Zoe

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not been taken out, and he allowed a prospective commission at the same rate to the trustees for the time being. He refused to remove the trustees. As to the other breaches of trust he held that they had not been committed, except that in one case, that of the tombstone, he reduced the amount to be charged against the estate, and made the trustees pay a considerable por- tion of the price of it out of their own pockets. He further made an order for costs, in which very careful regard was paid to the extent to which the plaintiffs and the defendants had respectively failed and succeeded. I venture, with very great respect, to say that in my opinion the decree was an eminently just and fair order, except as to one small point in which the learned Judge fell into error and which was afterwards corrected by the Full Court. If he made any other error it was, I think, in being perhaps a little hard on the defendants, for instance, as to the £10, Nissen's supposed profits, and as to the £267 paid as wages to Pallin. As to the £10 reference was made during argument to the case of Smith v. Langford (1), decided by Lord Langdale M.R., a very eminent Judge, in 1844. In that case the testator, who was a victualler, had authorized his executors to carry on his business for the benefit of his family with full powers - exactly as in this case. One of the trustees was a brewer and the other a spirit merchant who had been in the habit of supply- ing the testator during his lifetime. After the testator's death they carried on his business and continued to furnish supplies of beer and spirits. The point was taken that it was not per- missible for a trustee or executor to make any profit out of the estate. The Master of the Rolls was asked to make a direction that the executors should only be allowed the cost price of the goods, but he refused todoso. He said (2) : - * That all he could do would be to direct the Master in taking the accounts to see that the supplies were proper and furnished at the ordinary market prices. That he could not suppose that the testator, who had himself directed his business to be conducted by these defendants, expected they would be deprived of the usual fair profit." That to the ordinary person seems to be eminently

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of his time that he would not have undertaken them except on the assurance that an application would be made to the Court to authorize the allowance to him of a reasonable compensation for his labour and pains. 'Then the decree continued (1) : - * It is ordered, that it be referred to the Master to settle a reasonable allowance to be made to the said Faithful Croft out of the said testator's estate, for his time, pains, and trouble, in the execution of the said trusts, for the time past." It was further ordered "that the said Master do inquire whether it will be for the benefit of the said testator's estate that the said Faithful Croft should continue to be a trustee under the said will, and to receive a com- pensation for the future employment of his time and trouble ; and in case the Master shal] be of opinion that it will be for the benefit of the said testator's estate that the said Faithful Croft should be continued a trustee, then the said Master is to settle a reasonable allowance to be made to the said Faithful Croft therein." It was said by Lord Kenyon in one case that the best way of ascertaining the jurisdiction of the Court is to see what orders the Court has made in time past. That case, at any rate, affords some evidence of what the jurisdiction of the Court was. Then there is a later case of Forster v. Ridley (2), decided in 1864 by Knight Bruce and Turner LJJ. Knight Bruce LJ. said (2): - *" Then comes the question whether the executors should have any allowance for their trouble and loss of time in managing the testator's leaseholds and carrying on his business for the space of time - two years, I think - during which they did so, and the circumstances are such and so peculiar, and so much took place on the subject, that I think there should in this " Then he went on to say that enough money had already been spent in litigation, and that the Court would not direct an inquiry, but would themselves fix an amount, as dBeckett J. did in this case. Turner LJ. said (3): - "The position of the case in respect of the question of allow- ance to the executors and trustees is, that the parties entitled to three-fourths of the property desired the executors and trustees to carry on the business; and I do not see what could have been

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deeree goes that rule was applied by dBeckett J. He carefully weighed the difficulties and conduct of the defendants and awarded costs accordingly. I think, as I have already said, that his order for costs was most just. From that time the action became a mere administration action, and the next friend of the unfortunate plaintiffs thought fit to appeal, taking a step in the administration action in which he failed. The question then is whether the defendants are entitled to rely on the general rule. I was at first disposed to think that there might be some way of relieving the estate from the burden, but that can only be done by doing injustice to the trustees who so far as these proceedings are concerned are entirely blameless. In the case of In re Jones; Christmas v. Jones (1) the matter litigated was whether the executors were entitled to charge against the estate a sum of £710. Nearly the whole of the claim was disallowed, but Kekewich J, thought that that was not sufficient under the cir- cumstances to deprive them of their right to be indemnified out of the estate. A case before the House of Lords of Lord Mus- kerry v. Skeffington (2) is a very strong case on the subject. In that case the appellants had been appointed trustees of a settle- ment and a petition was presented to the Lord Chancellor of Ireland representing that they had declined to act in the trust, and praying that they might be removed and that other persons might be appointed in their stead. An order to that effect was made, but the trustees appealed to the House of Lords and the appeal was allowed. Lord Cuirns L.C. referring to the question of costs said (8) : - " I think that, as trustees, they are entitled to be indemnified for the costs they have thus incurred. If those to whom the irregularity is chargeable in Ireland had been the persons whose names occur as the petitioners in the cause petition, namely, the minor children of the late Lord Massereene, if they had been personally chargeable with the irregularity, and had been persons of age to answer for it, your Lordships might have been disposed to order the costs which have been incurred to be paid by them. But, of course, the irregularity is not chargeable to them; and I regret that I cannot offer to your Lordships any

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Molesworth J. the well-known case of In re Pender (1). His Honor said : - "Since then the Act No. 427 was passed, mixing up real and personal estate in a common fund, and sec. 25 of it enacted that it shall be lawful for the Court to allow a com- mission to executors and administrators for their trouble. He thought the language of the Act left it discretionary in the Court to grant or withhold the commission on consideration of all the circumstances. The legislature must be taken, however, to mean that for the future the allowance of commission was to be the rule, and the disallowance the exception." In In re Rolfe (2), Molesworth J. said: - "But the Act, especially as to trustees being mentioned, indicates a policy to pay executors, adminis- trators and trustees. I am inclined in this case to draw a line at the time of the Act coming into operation, 1st January 1873, as to pains and trouble taken after it, not to exclude the applicants because they undertook the office before, but not to remunerate for pains and trouble for which they had no reason to expect payment when the pains and trouble were bestowed, and without more minute distinction, to take the trouble at the date of the receipt." He made the order retrospective to the date of the coming into operation of the Act. Then he says: - * Since the passing of the Act, I had to deal with a case of In re Pender (3), in which the codicil appointing the trustees and executors was executed after January 1873, and the testator had expressly promised them remuneration, and they stated that they accepted the office expecting to get it. I therefore allowed commission." In 1881 Holroyd J. had in In re Swan (4) to consider the matter. He quoted the following passage from the decision of Molesworth J. in Chadwick v. Bennett (5): - "The Act here authorizes the Court at its discretion to grant a commission to executors. It contemplates only the proceeding of accounting in the matter of the executorship in the ecclesiastical jurisdiction of the Court, as that in which directly such an allowance should be made. Ido not think that the Court, in its different jurisdictions, should act upon different principles, and I think that in all its

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ciples of a void exercise of a power. Two or three cases, to which I will refer, I think will establish that. In Rouch v. Trood (1), Buggallay J.A., in delivering the judgment of the Court of Appeal, after referring to Lopham v. Duke of Portland (2) said : - " As was observed by Lord Hatherley in the course of his judgment, a former appointment had been set aside on the ground that the appointee was a mere instrument for effecting the pur- pose of the donee of the power, which was foreign to that which was the true purpose of the power, and that while he gave implicit credence to the statements of both the appointor and appointee that the absolute appointment in favour of the latter had been made without any agreement between them, he inferred from all the evidence before him, and particularly irom that of the appointee herself, that she was still under the same influence, and would still be a passive instrument to effect the purposes of the appointor." It has been found here by @Beckett J. and con- firmed by Madden C.J. and Hodges J. that these people were honest - that there was no design of a corrupt or morally bad nature, and there is no suggestion in the evidence, and I am not sure that there is any suggestion at the bar, that Sheldon was going to be a passive instrument. But it was said that some benetit was to be given to Pallin. I would refer for some very valuable observations to Pulmer vy. Locke (3), where Brett LJ. pointed out that a bare promise by the donee of a power to fetter himself is no fetter at all. It is void. It must be remembered, I should say in passing, that the purpose of the appointment of the trustee here was not to appoint Pallin manager. It did not appoint him manager and Pallin acquired nothing by the appoint- ment itself. It is not like the appointment of property the effect of which is to give the property. Cotton L.Jj. in the case to which I have just referred said (4): - *" How can you say that a man is properly a trustee of a power? As I understand it, it means this, in the words of Lord S¢. Leonards, that it must be fairly and honestly executed. A donee of such a power cannot carry into execution any indirect object or acquire any benefit for himself directly ov indirectly. That is, it is something given

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