Wigley v Crozier [1909] HCA 86

Wigley v Crozier [1909] HCA 86 - HCA 1909 case summary — Zoe

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vertible into money. It is plain, therefore, that the chance o Mrs. Crozier being able to derive any benefit from the will depended to a great extent upon the time and manner in which : the trustees might exercise the trust for conversion. If they : exercised it at such a time that the total proceeds of conyer- sion would not be more than the fund required to provide the annuity of £300 a year for Mrs. Richardson, Mrs. Crozier would get nothing. They were, therefore, especially bound to have regard to her interests in the exercise of their discretion, for she was, although postponed to Mrs. Richardson, equally an object of* the testator's bounty. For three years after the testator's death both annuities were paid in full. In 1891 nothing was paid. In 1892 Mrs. Richardson received £125 and Mrs. Crozier £83 6s. 8d. Then nothing was paid to either for five years. In 1897 the appellant Wigley, who - is a son-in-law of Mrs. Richardson, became a trustee of the will with Edwin Crozier, and in and from that year £200 a year was paid to Mrs. Richardson on account of her annuity until June 1903, when full payments to her were resumed. Mrs. Crozier has received nothing since 1892. : These fluctuations are accounted for by the well known dis- astrous disturbance which occurred in the commercial affairs of Australia during the last decade' of the nineteenth century, But the dividends upon the shares held by the trustees steadily increased from 1898, in which year they amounted to £279 18s. In 1899 they were £342 15s. 7d.; in 1900, £396 3s. 7d; in 1901, 1902 and 1903, £389 12s. 8d., more than sufficient to pay Mrs. Richardson's annuity of £300 a year. In 1903 the unpaid arrears - of her annuity amounted to £2,450, but the trustees had in hand in cash and liquid securities enough to pay that sum if it had - been demanded and to leave « surplus of £1,400. 'The assets other than shares were bringing in interest which amounted in 1900 to £90 11s. in 1901 to £104 6s. 3d., in 1902 to £74 1s. 6d., and in 1903 to £114 2s. As things then stood, therefore, Mrs. Crozier was primd facie entitled to receive something on account of her annuity, subject to a right on the part of Mrs. Richardson to which I will directly refer. Under these circumstances what were Mrs. Richardson's rights? -

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But for the purpose of the rule just stated the notion of a sale connotes (1) that the state of facts is such that the trustees can sell without breach of trust, and (2) that the purchaser is a person entitled to demand immediate payment or appropriation of a sum equal to the purchase money. In my opinion neither of these conditions existed in November 1903. The recital in the inden- ture that "all the parties hereto believe that it would be more beneficial for the estate and for the interests of the persons inter- ested therein or entitled thereto that the conversion of the unconverted estate should be further postponed and such estate continued in its present condition for such time as the said trustees may think fit," is in my judgment conclusive to show that to the knowledge of all parties to the deed the first condition was not fulfilled. Mr. Nesbit suggested that by "the persons interested" in the estate Mrs. Richardson and her children only are meant. If so, so much the worse for his clients, for the trustees were bound to consider the interests of all the persons interested. But I cannot so construe the words. An attempt was made to get over the effect of this recital by a statement made by the appellant Wigley in his affidavit as follows: - "In 1903 the said Elizabeth Richardson applied to the said then trustees for pay- ment of the arrears of her annuity and interest thereon at 4 per cent. amounting to the said sum of £3,098 and the said trustees made inquiries as to the value of the shares and ascertained that if the said shares were then sold and the proceeds thereof added to the converted portion of the said estate the said estate would not amount in the whole to more than the sum of £9,500. The said trustees at the same time considered what amount would in their opinion be sufficient to set aside to provide by investments authorized for trust moneys an annuity of £300 per annum for the said Elizabeth Richardson and they considered it would be unsafe to set aside a less sum than £10,000 for that purpose. The said trustees decided that they would realize the said shares unless the said Elizabeth Richardson would agree to the trustees setting aside the estate as it then stood for the purpose of pro- viding as far as possible for the future payments of her annuity

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O'Connor J. 'The rights claimed by the appellants in this - litigation depend upon whether the appropriation of assets which - the indenture of November 1903 purported to effect was under - the circumstances of the case a valid exercise of the powers which John Crozier by his will conferred on his trustees. Con- curring as I do in the judgment of the learned Chief Justice, - which I have had the advantage of reading, I do not propose to deal with any of the questions raised, except the question of the validity of the indenture as an appropriation, the determination of which necessarily involves some important principles. John ' Crozier made his will in the year in which he died. His - estate was then worth £13,471. Of that, £5,750 was repre- sented by shares in the Bank of Adelaide, in the Port Dock Co. in Elder, Smith & Co. Ltd. and in the Portland Co., assets likely to be of fluctuating value and which would need to be handled with watchful care in time of commercial de- pression. Under these circumstances it was natural that he should confer on the trustees, as he did in express terms, the power generally to effect the sale and conversion of his estate in such terms and in such manner as they should deem most advantageous, and with full power to suspend for such period as they should judge expedient the conversion and sale of his estate or any part of it with full powers of management in the mean- time. Of the beneficiaries who are subjects of the testato's bounty, Mrs. Richardson and her children stand under the will in ' the most advantageous position, then come Mrs. Crozier and her - children, and then his sons who took the residue. Having regard _ to the nature of the estate and its value at the time of the testator's death, it is obvious that the likelihood of pecuniary - advantage from the estate to any beneficiary other than Mrs. Richardson and her children depended upon the careful exercise" by the trustees of their discretion to convert or suspend con- version in accordance with the interests of all concerned. It is unnecessary for me to follow the history of the estate and its: yearly fluctuating value from the testator's death until the date

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point it appears that there was then owing to Mrs. Richardson £2,450 arrears of annuity. She claims to be entitled to interest on that sum. I entirely concur in Mr. Justice Gordon's view that the arrears of annuity do not carry interest. 'Taking the amount of arrears payable as at that figure, there was then in the estate sufficient to pay the amount out of liquid assets and yet leave £1,400 worth of that class of assets to the good. The share investments were then producing an income of £363 10s. 6d. free of charges, thus leaving £300 for Mrs. Richardson's annuity and £63 odd towards Mrs. Crozier's annuity. In other words, the estate was in a position while it remained thus invested to pay Mrs. Richardson all she could at that time claim and to give Mrs. Crozier a portion of her rights. It was in that condition of affairs that the trustees deter- mined to make the appropriation which is now challenged. I need not discuss in detail the reasons put forward in support of this course. But they may be summed up in a few words. Mrs. Richardson's valid claims under the will amounted to more than the value of the whole estate. If the estate were converted by sale in the ordinary way they would be bound to hand over to her the whole of the proceeds. They were therefore entitled by the process adopted in the indenture to appropriate the whole estate for her benefit. In taking this view the trustees were in error in assuming that Mrs. Richardson was entitled under the terms of the will to have the proceeds of conversion by sale of the whole estate in the ordinary way handed over to her for the benefit of herself and children, though it may be conceded that, assuming a valid sale, she could have demanded that the proceeds be set apart and held by the trustees for the benefit of herself and her children. But between such a conversion and the transaction which actually took place there is a vast difference. Conversion cannot take place until the conditions which authorize the trustees to convert have arisen. Appropriation can only be supported as a substitute for conversion. To adopt the phrase used by Mr. Isbister in his very able argument, "a valid appro- priation is the substitute for a valid sale." In all the eases cited the conditions which justified a sale existed at the time of appro-

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trustee and representing the assets in the estate of the testator, - or whether Mrs. Crozier, subject to a proper provision for Mrs, - Richardson's annuity, is also entitled to look to those moneys for - her annuity. ; 'The contention on the part of the appellant is, in effect, that the arrangement effected by the deed of November 1903 was equiva- - lent to a conversion, and therefore answers the requirement of the special trust for conversion and appropriation contained in the will; and that the will having made Mrs. Richardson's annuity a tirst charge on the whole estate, subject to payment of debts and other outgoings, it was open to the trustee to appropriate when he did, although actual conversion in the ordinary sense had not taken place. On the other hand, the view presented for the respondent was that, pending actual conversion, the trustee was not entitled to set apart any of the estate, either finally or by way of security. The will gives all the testator's property, real and personal, to trustees upon trust to sell and convert into money such part as did not consist of money and to get in and collect the rest. He gave full power to suspend the sale, conversion, and getting in of the estate or any part thereof, and gave the trustees during the suspense certain powers of management. For the moment I pass by certain provisions, and for conveni- ence of construction come to the dispositions of the money the proceeds of conversion and collection. 'There is a trust in the first place to set aside and retain a sum of money to provide an annuity of £300 for Mrs. Richardson during her life. The terms in which this trust is framed have greatly determined my opinion on the case. The sum to be set : aside is not a sum which as invested at the time of the testator's death produces, or which invested in the most remunerative securities will produce the annuity. It is such a sum as in the opinion of the trustees will be sufficient to provide the annuity by investments in such manner as the trustees think fit. The amount to be set aside is therefore to be regulated by the exercise of discretion as to the investments in which the money is to be placed. That includes a discretion as to the nature of the

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trustees as still under the will - and I agree with Mr. Isbister': view that the powers of postponement of sale and conversi contained in the deed referred to the sale and conversion as authorized by the will. That Mr. Wigley so understood the deed is evident from his affidavit of 14th October 1908. What the parties intended to do, and what they did, are two very different things. The trust had lasted 16 years, and at the - date of the deed the value of the assets were less than, if invested on authorized securities, would have given Mrs. Richardson her annuity. Had the trustees gone through the form of realization - they could have set aside the whole of the proceeds, and the Richardsons (mother and daughters) could have unitedly claimed the whole fund; they could have immediately re-invested the 4 money in the same securities, and would now retain them or their proceeds. Be Or, possibly, without going through the form of sale, if the trustees had given their opinion that the assets should be sold, E and so declared, they could have transferred them by way of satisfaction complete, or pro tanto on the principle of cases cited. But honest as the parties were, and as I think without any intention to overreach Mrs. Crozier, that is not what they did Their intention is determined by their acts, and the deed is in - substance nothing but a declaration of trust, by which the trustees _ continue to hold unconverted, and still under the provisions of - the will, but henceforth in favour only of Mrs. Richardson and | her daughters, the assets with certain superadded trusts as bez* tween mother and daughters. It is not a sale or anything in - the nature of a sale, The cases such as In re Lepine; Dowsett vy. Culver (1), ave thus inapplicable, because here there was neither intention to 7 convert directly or indirectly, nor an opinion of the trustees that * conversion would be proper. To say that the arrangement actu- ally arrived at and recorded by the deed was equivalent to a conversion would be to flatly contradict its express declara- tions. Can then any arrangement be supported otherwise than by - reference to the special trust ? ; (1) (1892) 1 Ch., 210.

At a glance

Court

Decision date

Before

Source

Judgment (131 paragraphs)

Cited By (2)