Loxton v Moir
18 CLR 360(Judgment by: Isaacs J)
Between: Loxton
And: Moir
Judges:
Griffith CJ
Isaacs JGavan Duffy J
Rich J
Subject References:
Trusts
Appointment of new trustee
Right of action on guarantee
Practice and procedure
Action brought by wrong plaintiff
Legislative References:
Trustee Act 1898 (NSW) (No 4) - the Act
Common Law Procedure Act 1899 (NSW) (No 21) - the Act
Judgment date: 6 August 1914
Judgment by:
Isaacs J
1.-The Trustee Act 1898.-
The first question is whether, on the appointment of A. as a new trustee in the place of B. who prior to the appointment was or had been the trustee, the right of action in respect of a guarantee still resides in B. if alive, or, if dead, in his personal representatives.
I emphasize this way of stating the question, because unless Moir has that right the action must fail. It may be that in respect to some classes of choses in action certain preliminary steps required by any special Statute, such as registration under the Real Property Act or the Companies Acts, may be formal evidentiary requirements to the complete right to sue. But in respect of a guarantee debt no such formality is necessary, and so the question is simply whether the appointment works, by virtue of the Statute itself, a complete divestiture of the debt.
The question turns on the effect of s. 6 of the Act of 1898. The Supreme Court considered that the construction of Lord Cranworth's Act, perhaps with the addition of the English Act of 1881, necessarily determined that of s. 6 of the Act of 1898.
Lord Cranworth's Act followed upon earlier legislation (6 Geo. IV. c. 74, and 11 Geo. IV. & 1 Wm. IV. c. 60), which simplified curial procedure, but left matters in the hands of the Court.
The Act of 1850, however, still further simplified the appointment of new trustees and the vesting of property by enabling certain persons to effect these results in certain cases without curial intervention at all. But at this point we must notice a vital difference between Lord Cranworth's Act and the local Statute. It is this: Lord Cranworth's Act, by s. 27, directs that after the due appointment of the new trustee certain persons being persons in whom the trust property is then vested, and no others, shall execute actual instruments of conveyance, assignment and transfer, so that the trust property vested in them "may be legally and effectually vested in such new trustee," that is, so that all that can be done by such instruments as are described and known to the law by name and effect shall be done in the future. It is like a decree to execute a transfer. The decree does not pass the title; the transfer does, and only to the extent to which such a document by law extraneous to the section gives title.
It is important to notice that almost the very words of the operative portion of Lord Cranworth's provisions were in use in trust deeds. For instance, in In re Roche, [F1] at p. 288, decided in 1842, we find these words: "conveyed, assigned, transferred, and assured respectively, according to the nature and tenure thereof, in such manner that the same might be legally and effectually vested in the newly appointed trustee," etc
But though a private individual might use the words large enough to embrace all trust property, including rights of action, in his authority, the law itself did not permit choses in action to be so transferred. And as Lord Cranworth's Act did not profess to do more than enable individuals to execute such common law instruments as the law itself permitted, it is fair to assume that the precise efficacy attributable to those instruments by the law was still to continue: See Price v Dewhurst, [F2] , at p. 619.
Sec. 34 of the English Act of 1881 (see now s. 12 of the Act of 1893) stands in contrast with the Act of 1850 in this respect. It strikes out a new line. If the deed of appointment of a new trustee itself contains a declaration that any trust land, or any chattel subject to the trust, or the right to recover and receive any debt or other thing in action so subject, shall vest in the trustees, then that declaration shall, "without any conveyance or assignment, operate to vest in those persons, as joint tenants, and for the purposes of the trust, that estate, interest or right."
The departure is significant: common law documents of title and their recognized effect are abandoned; instead, a new statutory result that could not be reached by the former method is created, and by this means no interference with the established force of old methods takes place.
This course had been adopted in New South Wales in the Act of 1862, s. 63. That section took up the instrument of appointment, and for the purpose of dealing effectively and without any necessity for curial process with the case of a trustee who had died, or desired to be entirely discharged, or refused or became unfit or incapable to act, the enactment bestowed upon that instrument a force and efficacy theretofore novel and unheard of in relation to such an instrument. It says that "by virtue of such instrument and without other assurance in the law" the whole of the trust property "shall become and be conveyed assigned and transferred so that the same shall thereupon become and be legally and effectually vested in such new trustee."
It is contended, and so the Supreme Court has held, that that provision went no further than Lord Cranworth's Act. It is not an accurate method of interpretation, first to assume the intention of Parliament being to go no further than the English Parliament went, and then to proceed upon the interpretation of the English Act.
The two Acts are not identical; they are so far from identical that, as already explained, a totally different principle has been adopted.
The legislature having declared that the trust property, which undoubtedly and admittedly includes the chose in action here, shall by virtue of the instrument of appointment "become and be" assigned and transferred so as to be legally and effectually vested in the new trustee, the necessary result, in my opinion, is that the vesting takes place. The language, though the same as was customarily used by private individuals, has a force that private dispositions could not have. The reason for refusing that force to private dispositions does not exist when Parliament itself speaks.
I cannot see how the natural meaning of the words used by the commanding authority of the legislature can be cut down by any hypothesis of limited effect. That limitation can only be reached by introducing by implication words that are not expressed, such as "to the same extent only as if the instrument of appointment were a deed of assignment executed by the retiring trustee." There are no such words, and a Court has no warrant to insert them. Such words would materially affect the matter. See, for instance, Re Boyce, [F3] at p. 210.
The Act of 1897 (No. 38), s. 1, incorporated in the later Act, I pass by as a separate enactment.
It is incorporated in the Act of 1898 twice: first, as part of s. 6-which otherwise contains s. 63 of the Act of 1862 and ss. 1 and 2 of the Act of 1893; next, in s. 67, where it extends to appointments of new trustees, otherwise than in the manner set out in s. 6. But s. 6 and s. 67 are both open to the same observations as the original s. 63, in respect of the new statutory force to be given to a document otherwise incapable of vesting any property.
The reference to the Chief Justice in both s. 6 and s. 67 seems to make quite conclusive the intention of the legislature that a complete divestiture on the one side and a complete investiture on the other shall take place.
Various sections in the Act were pointed to by the respondent where express reference is made to the power of the Court to vest the power to sue. But that is a power which may be exercised as a single and separate power; and this point must be particularly noticed, for neglect to observe it appears to me to have led to considerable stress being placed upon an unsound argument. Part II. enabling the Court to appoint new trustees does not use any language declaring that the mere order of appointment is to vest the property. That is left for the consideration of the Court to work out in detail as and when it thinks proper (cf. In re Manning's Trusts. [F4] ) On the contrary s. 28 (1) contemplates documents of title being actually executed. Sub-s. 2 confers on the trustee appointed by the Court only the same rights and powers as if appointed by a decree in a suit.
Then comes the Act of 1902 (No. 98). Section 5 applies to the case of one trustee out of three retiring. A deed may be executed discharging him without appointing any new trustee in his place. Again, "by virtue of the execution and registration of the said deed and without other assurance in the law" the retiring trustee is divested, and all the trust property, both real and personal, is "conveyed, assigned, and transferred to" and "legally vested in" the continuing trustees alone. It adds, "who shall be entitled to sue for and recover and to call for a transfer to them of all debts and choses in action subject to the trusts." It is suggested that in that case alone it is the intention of Parliament to permit the new trustee to sue. But I think the insertion of the power to sue was probably to obviate difficulties as to certain technicalities in such cases as company shares, insurance policies and other such cases not excepted by the proviso. The English Act of 1893, s. 11, from which this section was taken with important modifications, provided by sub-s. 2 for common law assurances, and in accordance with the long established principle of the New South Wales legislature the deed of change of trusteeship was given statutory efficacy.
The proviso to that section relating to property under the Mining Acts, Crown Lands Acts, and Real Property Acts, requiring actual transfers to be executed and registered, shows how wide the words of vesting are in previous Acts.
No reason can be suggested for making an exceptional case of the retirement of one trustee out of three. It cannot be denied that the constant effort of the legislature has been towards increasing simplicity in this connection. But the argument of the respondent leads to extraordinary perplexities. Thus it maintains the following results:A., B. and C. are original trustees and the legal owners subject to the trust of land, chattels and debts. A. retires and B. and C. remain, no third trustee being appointed. By force of s. 5 of the Act of 1902 B. and C. are clothed with property and the right to sue, A. being entirely discharged. I leave out the proviso. But if only D. were appointed in place of A., the contention is that s. 5 of the Act of 1902 does not apply, but s. 6 of the Act of 1898 alone, with the result that A. is still invested with the right of action, say, for damages to trust land or for the mortgage debt under the general law, and that D. is not so invested although he is a joint owner of all the trust property, or joint legal owner of the mortgaged property, and A. is not. I am unable to accept this view.
In Brunton v Commissioner of Stamp Duties, [F5] at p. 759 Lord Parker, speaking for the Judicial Committee, said:"Where in a Statute words are used capable of more than one construction the results which would follow the adoption of any particular construction are not without materiality in determining what construction ought to prevail."
The legislature has been steadily emerging from these difficulties, and has used the words not only capable of clearing them away but in their natural signification eminently suitable for the purpose. In my opinion, the "commanding principle" stated by Lord Shaw in Butler v Fife Coal Co, [F6] at p. 178 of giving full effect to the words for their obvious purpose should be applied.
Moir, in my opinion, ceased to have any interest, legal or equitable, in the guarantee on his supersession by the new trustees.
No special formality, as by registration, is required by any Act, and Parliament, having the power so to do, which an individual has not, has declared that independent of any consent of the debtor the debt shall pass to the new trustees.
In no other Australian State could this difficulty have arisen. Elsewhere the merits, and the merits alone, would have been in controversy, but here we have been engaged; as the Supreme Court was engaged, in a long and expensive preliminary argument respecting a mere matter of technicality. That is a heavy price to pay for antique procedure, whichever side wins.
2.-The Real Property Act.
Another point raised by the appellant was based on s. 52 of the Real Property Act 1900 (No. 50). It was urged that upon registration of the new trustees as proprietors of the mortgage, the debt to Moir was extinguished, and a new debt owing to the new trustees arose, and so on the principle of Commercial Bank of Tasmania v Jones [F7] the guarantee was at an end.
But that case, as was indeed pointed out in Perry v National Provincial Bank of England, [F8] rested on this, that as regarded the debtor there was no debt left. Here there is, and always has been, the same debt, so far as the debtor is concerned; the only change that has ever arisen is in the proper person to pay it to.
That point entirely fails; but, as the first one holds, the appeal succeeds. It is therefore unnecessary to determine the objection raised by the respondent on the construction of the guarantee.