Partridge v Equity Trustees Executors and Agency Company Limited [1947] HCA 42

Partridge v Equity Trustees Executors and Agency Company Limited [1947] HCA 42 - HCA 1947 case summary — Zoe

[61]

Coppel K.C. The special clause of the will had no application to the circumstances existing at the material times, and it affords no defence to the appellant's claim. Unless it was justified by that clause, the failure of the defendant to get in the money in question when the debtor company was in a position to pay it was clearly culpable neglect. It is submitted that the clause has no appli- cation to the money lost ; it was a debt due to the defendant under the compromise of May 1930 and was not a debt owing to the testator within the meaning of the clause. Lowe J. appears to have treated the clause as intended for the benefit of the debtor company, as justifying the defendant in refraining indefinitely from taking steps to enforce payment and in disregarding the interests of the bene- ficiaries. This was a wrong construction of the clause, which should be read as merely conferring a discretion to be exercised with due regard to the interests of the beneficiaries. However that may be, the clause itself prescribes conditions which, so far as the evidence goes, do not appear to have been complied with, and it was for the defendant to show such compliance. The clause called for an actual request by the debtor that time be granted and an actual decision by the defendant to grant time, subject to the condition that the time granted should be reasonable. There is no evidence that it ever considered the debtor's requirements or made any such decision as the clause required. It simply allowed the matter to drift, apparently assuming, without obtaining any advice, that it was empowered to do so. If, as is submitted, the clause did not give such a power, s. 15 (e) of the Trustee Act 1928 (Vict.) did not give it either. That section has no application to a case of neglect, such as the present ; it relates only to a positive exercise of a discretion. (Re Greenwood ; Greenwood v, Firth (1)). The respondent's claim to the protection of s. 61 in effect concedes that the appellants'

[72]

provided their construction is reasonable ; that is to say, the court has jurisdiction to excuse them in a proper case. If the will is obscure, the question is whether the view of its meaning taken by the trustees is one which might reasonably be taken (In re Grindey (1); In re Mackay (2)). A trustee company is entitled to the benefit of the section (National Trustees Executors and Agency Co. Ltd. v. Dwyer (3), per Starke J.). National Trustees Co. of Australasia v. General Finance Co. of Australasia (4) is not an authority to the contrary. The fact that a company is paid is relevant, but most trustees are now paid ; the case of the gratuitous trustee, which the Privy Council stressed by way of contrast, is now the exception rather than the rule. The respondent could be excused in part ; that is, as to income only. The life tenants were well aware of what was going on; it would work no hardship to excuse the respondent as against them. As to the limitation of time, s. 67 of the Trustee Act is the relevant provision. It must be conceded that the section does not bar the claim of the grandchildren, because their interests were not vested in possession ; but it bars the life tenants in respect of their vested life interests, with the result, under s. 67 (2), that, if the respondent has to make good the fund, the life tenants have no claim on the income, past or future, and the future income must go back to the respondent. The action is not one for a devastavit (which, as an action on the case, would be within 8. 82 (1) (©) (viii) of the Supreme Court Act 1928 (Vict.) ), nor is it an action to recover a legacy within s, 304 of the Property Law Act 1928 (Vict.). The respondent's power to allow time was conferred on it as trustee, not as executor, and any abuse of the power was com- mitted by it as trustee (Commissioners of Inland Revenue v. Smith (5) ; In re Swain (6); In re Barker (7); In re Oliver (8); Hourigan v. Trustees Executors and Agency Co. Ltd. (9); Equity Trustees Executors

[108]

bank reported that there was a deficiency of assets to pay the unsecured creditors unless the shareholders who were loan creditors agreed to convert their debts into six per cent preference shares. The management was changed, the bank then continued to finance 4 the business, and the shareholders converted their loans into pre~ ference shares. 3 We are prepared to infer from the evidence that as part of these transactions the defendant on 29th January 1936 agreed to allow - the £2,150 to remain outstanding for five years. We are also prepared to hold that, having regard to the then financial position. of the company, the only hope of getting in the debt was that the - company would recover under the new management. But the - defendant would not have been placed in this position if it had not allowed the matter to drift in the preceding period. We are of ; opinion that the failure of the defendant to take active measures - during this period to get in the debt was culpable and would make it liable to make good any loss flowing therefrom in an account taken - upon the footing of wilful default. His Honour has found affir- - matively, and we agree with him, that if the defendant had insisted on payment in 1932 or soon afterwards the company would have been - able to pay the debt. But it would be enough to say that the onus rested on the defendant to show that, even if there had been no_ default in its duty, the debt could not have been recovered and the loss avoided (Re Brogden (1) ). : It is therefore necessary to examine the other defences relied on by the defendant. The defendant has pleaded s. 15 of the Trustee Act 1928 (Vict.). This section provides, so far as material, that a - personal representative may, if he thinks fit, allow any time for payment of any debt without being responsible for any loss occasioned - by his doing so if done in good faith. We are of opinion that the words "allow time for payment of any debt" are wide enough to _ include an allowance of time whether made the subject of a bindin; agreement or not. But the section +e "involves the exercise of an

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