Pellick's Gonzales v Transfer Re Claridades

Pellick's Gonzales v Transfer Re Claridades - [1921] HCA 55 - HCA 1921 case summary — Zoe

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on the evidence before him, the whole of which is not available to us, he was right in making the order. The sole question for us on i point is whether the learned Judge had jurisdiction to entertai the particular matter brought before him. Whether the application be regarded as asking for a direction to the trustees to carry out the provisional contract or as asking for the approval of the transaction, it is, in my opinion, clear that the learned Judge had authority to entertain it; and, if that be so, his decision or order, even if it wi not warranted by the evidence adduced before him, as to which express no opinion, cannot be regarded as made without jurisdiction or be treated as a nullity. In Suffolk v. Lawrence (1) and In re Robinson; Pickard v. Wheater (2), Pearson J. appears to have decided that an application of this kind could not properly be made by originating summons, but in In re New (3) an order authorizing trustees to carry out a transaction which was not within the powers conferred on them by the trust instrument was made by the Court of Appeal on originating summons. Having regard to this fact, 1 do not think the earlier decisions can be treated as authoritative on the question of procedure. In this view of the matter it becomes unnecessary to consider the precise bearing of the decision on the facts in In re New, on the authority of which the learned Judge is said to have relied. 1 desire to reserve my opinion on the question whether and to what extent the decision in that case is to be treated as justifying a departure from the rule stated by Farwell L.J. in In re Hazeldine's Trusts (4), in the following words, viz. : - * If the | trustees cannot do it, neither can the Court, for, as Lord Chancellor Law says in Fitzpatrick v. Waring (5) : ' Inthe exercise of its jurisdic tion for the administration of trusts this Court, I apprehend, has no power to make or authorize any leases or other dispositions of the trust property which the trustee could not have made himself. The Court, in such a case, whether it assumes the position of the trustee, or guides him in the discharge of his duties, is still confined within the limits of the trust as constituted by its author, and has no authority to go beyond those limits. Its business is to eaecute the trusts, not to alter them.' " (1) (1884) 32 W.R., 899.

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Order LV., r. 3, by the trustees of the will for the determination of a question under clauses (e), (f) or (g) of that rule. By Order LV., r. 5, it is provided that in such case the persons to be served with the summons shall be the persons or one of the persons whose interests are sought to be affected. By r. 6 the Court or Judge may direct any other person to be served with the summons. The respondent relies on the provisions of Order XVI., r. 9, which provides that "where there are numerous persons having the same interest in one cause or matter, one or more of such persons may sue or be sued, or may be authorized by the Court or a Judge to defend in such cause or matter on behalf of or for the benefit of all persons so interested." It contends that, as the originating summons described the six children of the testator who were defendants as being sued on behalf of themselves and all other children of the testator, the absent beneficiaries were bound by the order by virtue of this rule. In my opinion this argument fails. The general rule is that a Court has no jurisdiction, inherent or otherwise, over any person other than those properly brought before it as parties or those treated as if they were parties under statutory jurisdiction (e.g., persons served with notice of an administration decree or in the same interest with a defendant appointed to represent them), or persons coming in and submitting to the jurisdiction (Brydges v. Brydges (1)). Rule 9 of Order XVI., on which the respondent relies, does not in terms provide as do rr. 9a, 32 (a) and 32 (b) that the order of the Court when made shall be binding on the persons not made parties or served as if they were parties to the proceedings ; and the decisions in May v. Newton (2) and Bennett v. Morris (3) in my opinion establish that persons whose rights or interests might be affected by an order of the Court are not bound unless (a) they are brought before the Court as parties to the proceedings, or (b) in cases provided for by the rules a representative order is made or notice of the order

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Now, it is clearly laid down that the Court cannot authorize a trustee to do that which the trustee could not do himself. In Jn re Hazeldine's Trusts (1) Farwell L.J. cites with approval these words of Law L.C. of Ireland (2) : - " In the exercise of its jurisdiction for the administration of trusts this Court, I apprehend, has no power to make or authorize any leases or other dispositions of trust property which the trustee could not have made himself. The Court, in such a case, whether it assumes the place of the trustee, or guides him in the discharge of his duties, is still confined within the limits of the trust as constituted by its author, and has no authority to go beyond those limits. Its business is to execute the trusts, not to alter them." The Court has jurisdiction to execute the trusts or to guide the trustee in the execution ; but it has no jurisdiction to transgress the trusts or to authorize the trustee to transgress them. Order LV., r. 3 (e) and (f), is cited as enabling the learned Judge to make this order on originating summons, but the effect of r. 3 is misapprehended. It provides that trustees may take out as of course an originating summons returnable in Judge's Chambers for relief of a certain kind - that is to say, the determination without an administration of the estate or trust of any of the following questions or matters : "(e) Directing the . . . trustees to do or abstain from doing any particular act in their character as such . . . trustees; (f) the approval of any sale, purchase, compromise, or other transac- tion." Under the old practice, if the trustees came face to face with some one difficulty, the Court would have had to order that the trusts of the will be carried out by (or under the direction of) the Court ; and after such a decree the trustees had to get the sanction of the Court for (practically) every step. To save such useless expense and delay, these rules enable the trustees to ask the guidance of the Court as to the specific difficulty without throwing the whole administration into Chancery. But, as has been shown in Suffolk y. Lawrence (3), the rule " only authorizes a direction to trustees

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under any statutory or other jurisdiction shall not as against a purchaser be invalidated on the ground of want of jurisdiction or of want of any concurrence consent notice or service whether the purchaser has notice of any such want or not." This section differs from the English section from which it is taken (sec. 70 of 44 & 45 Vict. c. 41) in an important particular, the effect of which was probably not sufficiently considered by the draughtsman ; for the Victorian Act applies not merely to an order made under any statu- tory or other jurisdiction, but to an order " purporting " to be so made; and the consequences may be very unexpected. But, what- ever the effect of the section, it does not, in my opinion, apply to the impugned transaction here - the second mortgage from the company to the trustees. The order is not to be invalidated "as against a purchaser"; and " 'purchaser,' unless a contrary inten- tion appears, includes a lessee or mortgagee or an intending purchaser lessee or mortgagee or other person who for valuable consideration takes or deals for property " (sec. 3). The section, in short, is meant to secure the title of the person who takes property or an interest therein - land, lease, mortgage, &c.. - not to exonerate the person who gives title, where the transaction involves a breach of trust or improper dealing. There is much to be said, too, for the view that the order referred to in the section is to be treated as valid so far as regards the parties to the action only (see Jones v. Barnett (1) ), but the provision that the order is not to be invalidated for " want of any concurrence consent notice or service" is puzzling. It is doubtful also, whether this order in Chambers can be treated as an order of the Supreme Court for the purpose of sec. 76 - see sec. 3 ("Court"), secs. 6, 12, 21, 22, 25, 75, &c. The distinction between Court and Judge in Chambers seems to be recognized throughout the Act. But I prefer to rest my judgment on the ground that sec. 76 does not apply to a complex of transactions such as we find in the con- ditional contract. (1) (1899) 1 Ch., 611; (1900) 1 Ch., 370.

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might sue on behalf of all so as to bind the class," but " it seems proper, in order to bind absent parties, to obtain the direction " of the Court (1). As to cases coming under Order LV., the law is not, I think, settled by anything that was said in May v. Newton. Order LV., however, deals, in my opinion, with the frame of the proceedings and not with the question of the persons bound by an order made under its provisions. Thus, r. 5 only directs that the persons to be served in the first instance with the summons (under tr. 3 and 4) shall be certain persons, and r. 6 empowers the Court to direct such other persons to be served as it shall think fit. But if the Judge does not in fact direct any further parties to be added, there is nothing in the rule which provides that these other parties are bound. An appeal must then be made to the practice of the Court in dealing with the representation of absent parties, or to other rules (if any) for that purpose. In order to bind absent parties, it would be wise, as Kay J. suggested in May v. Newton, to obtain a proper order of the Court for that purpose. But the propriety of this course does not dispose of the argument put forward in the present case, that the absent parties are properly represented in the proceedings. The argument fails, however, in my opinion, because the case is not one in which the doctrine acted upon by the Court of Chancery and embodied in Order XVI., r. 9, can rightly be applied. The parties were not so numerous that you could "never come at justice " unless the principle of representation were applied (Duke of Bedford v. Ellis (2); Commissioners of Sewers v. Gellatly (3); Calvert on Parties to Suits in Equity, pp. 39 et seqq. ; Story on Pleadings, 6th ed., sec. 15 (a), pp. 153-154) ). Neither in the originating summons, though it purports to be a repre- sentative proceeding, nor in the order of Cussen J., is there any suggestion that the persons interested are too numerous for all to be joined. And if we look to the affidavit we find that the children of the testator him surviving numbered nine, including one of the trustees, and the grandchildren seven.

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Judgment (270 paragraphs)

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