Loxton v Moir

18 CLR 360

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(Judgment by: Griffith CJ)

Between: Loxton
And: Moir

Court:

Judges:
Griffith CJIsaacs J
Gavan 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

Hearing date: SYDNEY 18 May 1914; 19 May 1914; 20 May 1914; 6 August 1914
Judgment date: 6 August 1914

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Judgment by:
Griffith CJ

This is an action brought by the respondent against the appellant upon a deed of guarantee dated 30th June 1894, and made between the appellant of the one part and the respondent and one Maddrell of the other part, whereby the appellant guaranteed the payment of interest upon a mortgage of even date of land under the Real Property Act made by the appellant's mother in favour of Moir and Maddrell. The memorandum of mortgage set forth that, in consideration of the sum of PD7,000, lent to the mortgagor by the mortgagees out of moneys belonging to them on a joint account both at law and in equity and held by them as trustees upon trusts not material to be mentioned, the mortgagor appointed the lands to them, and covenanted to repay the principal on 1st July 1899 and to pay interest at the rate of PD6 10s. per cent. (reducible to PD5 10s. on punctual payment) quarterly until repayment. The declaration, after setting out these facts, goes on to state the death of Robert Maddrell and the appointment of R. J. C. Maddrell as trustee of the mortgage money in his place, the transfer of the mortgage to the new trustees and registration of the transfer, the retirement of the respondent from the office of trustee and the appointment of Percy Douglas in his place, the transfer of the mortgage to the new trustees and registration of the transfer, and two several assignments of the guarantee and the benefit of it, first, from the respondent to himself and R. J. C. Maddrell, and, second, from himself and Maddrell to the latter and Douglas, by which the assignees were appointed attorneys for the plaintiff, and for the plaintiff and Maddrell, respectively, to sue for the money due and to become due under the guarantee.

The appellant demurred to the declaration on the ground that in the events which have happened the right to sue on the guarantee is no longer vested in the respondent but in the new trustees. It is common ground that the right of action is part of the trust estate.

The question depends entirely upon the construction of s. 6, par. 2, of the Trustee Act 1898, which provides that "So often as any new trustee is so appointed as aforesaid all the property (if any) which for the time being is vested in the surviving or continuing trustee, or in the heir, executors, or administrators of any trustee, or in the Chief Justice or senior Puisne Judge for the time being by virtue of the Probate Act of 1890 or any Act amending or consolidating the same, or in the trustee so desiring to be discharged, or refusing, or becoming unfit or incapable to act as aforesaid, and is subject to the trust in respect of which the new trustee is appointed, shall, by virtue of such instrument and without other assurance in the law, become and be conveyed, assigned, and transferred so that the same shall thereupon become and be legally and effectually vested in such new trustee, either solely or jointly with the surviving or continuing trustee as the case may require."

The general law of New South Wales still recognizes the distinction between legal and equitable choses in action, and will not allow a legal chose in action to be assigned by any instrument inter vivos, or otherwise than by operation of law. The learned Judges of the Supreme Court were of opinion that s. 6 (2) only operates upon such kinds of property as by the law of New South Wales are capable of being conveyed, assigned, or transferred by instrument inter vivos, and that as a legal chose in action cannot be so assigned the right of suit still remains in the respondent as the survivor of the original covenantees. The appellant contends that the section effects a transfer by operation of law consequent upon the appointment of new trustees.

The learned Judges based their conclusion upon a comparison of previous legislation in the United Kingdom and New South Wales.

The Trustee Act 1898 is a consolidating Act. Section 6 is in the main a transcript of s. 63 of an Act of 1862, the Trust Property Act, which in itself was an adaptation, but with material changes, of s. 27 of the Act 23 & 24 Vict. c. 145, known as Lord Cranworth's Act, which directed that, in the cases to which it was applicable, upon the appointment of new trustees all the trust property "shall with all convenient speed be conveyed assigned and transferred so that the same may be legally and effectually vested in such new trustee or trustees either solely or jointly with the surviving or continuing trustee or trustees as the case may require," that is to say, that the transfer was to be effected by the ordinary appropriate instruments of assurance to be executed by the persons in whom the property was vested. The words "so that the same may be legally and equitably vested" were therefore, in that context, directory, and meant "in such manner that." It might well follow, and probably did follow, that any trust property which by the law of England could not be assigned by instrument inter vivos was not within the provisions of the enactment.

But the New South Wales legislature in 1862 did not follow the language of the English Act. Instead of directing that "the property shall be conveyed," i.e., by the legal owners, they said that all trust property "shall by virtue of such instrument and without other assurance in the law become and be conveyed assigned and transferred so that the same shall thereupon become and be legally and effectually vested in such new trustee or trustees." The learned Judges thought that the only effect of the change in language was to effectuate by a single instrument what had previously required two, that is to say, that the instrument of appointment of new trustees was to operate also as a conveyance or assignment or transfer executed by the legal owners, and could only operate upon property capable of being so dealt with, which construction, they thought, was emphasized by the words "without other assurance in the law." With all respect, I do not think that this view gives any effect to the important word "become," twice repeated, or to the change of the word "may" into "shall" in the second limb of the sentence.

It is an interesting, though perhaps not a material, fact that the Attorney-General and leader of the Legislative Council of New South Wales of that day was a distinguished equity lawyer and an accomplished Parliamentary draftsman, who afterwards became Mr. Justice Hargrave. Whoever framed the new provision, it is not likely that the word "become" was introduced and the word "shall" substituted for "may" without purpose. In my opinion the changed language was apt to express a change of idea. The words "so that" followed by the word "may" in Lord Cranworth's Act were directory words referring to the manner in which the act directed to be done was to be done, but the same words followed by the words "shall become" are in form words of enactment denoting an effect which is to follow by operation of law from the event on which they are to depend. The words "all trust property" are not in form limited to property capable of passing by conveyance or assignment, and it is not easy to find any ground for implying such a limitation. It is notorious that in those days, as now, settlements were often made of sums of money secured merely by covenant, as for instance moneys payable under policies of life assurance.

It may be, however, that if the question had been then raised in New South Wales, where the notion of a legal assignment of a chose in action was abhorrent to the mind of every common law student, this construction would not have been adopted.

But the Act which we are now called upon to construe is the consolidating Act of 1898. Our duty is to construe that Act as we find it. Between 1862 and 1898 other Acts had been passed which are also incorporated in the consolidation.

The Act 56 Vict. No. 27 (passed in 1893) by s. 1 supplied an apparently accidental omission in s. 63 of the Act of 1862, but s. 2 contained a general provision that when a new trustee is appointed "all the right title and interest" of the old trustee in the trust property "shall be deemed to pass" to the new one. I do not see any reason for cutting down the word "all" in this enactment, the apparent object of which was to remove doubts whether legal choses in action were included.

By the Probate Act of 1890, amended by an Act of 1892, it was provided that on the death of any person, whether dying testate or intestate, all his real and personal estate should be deemed to be vested in the Chief Justice in the same manner as personal estate vested in the Ordinary in England. These provisions now stand as s. 61 of the (Consolidating) Wills, Probate and Administration Act 1898.

In 1897 an Act was passed (No. 38) providing that when a new trustee is appointed, either by act of parties or under Statute, all the property vested in the Chief Justice by virtue of the Probate Act of 1890 and subject to the trust should, by virtue of the order or instrument appointing the new trustees and without other assurance in the law, become and be legally and effectually vested in the new trustee solely or jointly as the case may require.

It is impossible to doubt that under the Act of 1890 choses in action which were trust property and which vested in the Chief Justice upon the death of the trustee vested in him as fully and completely as in the administrator when appointed. It is equally impossible to doubt that under the Act of 1897 the vesting in the new trustee was coextensive, as to both subject matter and legal effect, with the divesting from the Chief Justice. Otherwise the Chief Justice would in such cases have remained the only person in whose name the right to get in a legal chose in action could be asserted in an action at law.

Sec. 6 of the Trustee Act 1898, which re-enacts the provisions of s. 63 of the Act of 1862, also extends them so as expressly to include the case of trust property vested in the Chief Justice, and prescribes the same consequences with regard to such property as with regard to other trust property.

The provisions of s. 2 of the Act of 1893 were not explicitly repeated in the Act of 1898, it being apparently thought that the words of s. 6 were sufficient to express the same idea. It is highly improbable that the legislature intended to revert to the supposed rule which, if it existed, had been abrogated by the Act of 1893.

It is again, in my opinion, impossible to doubt that the words "shall become and be conveyed," etc, "so that the same shall thereupon become and be legally and effectually vested" have an identical meaning as applied to the various subjects of which they are the common predicate. With respect to trust property vested in the Chief Justice, we know their meaning so far as it can be gathered from the words themselves and from the previous law. It follows that, whatever meaning might have been given to these words in the Act of 1862, their effect in the Act of 1898 is to vest all the trust property, whether legal or equitable, in the new trustee.

For some reason (possibly inadvertence) the provisions of the Act of 1897 are also expressly repeated in the Act of 1898 (s. 67). The words as to vesting in the new trustee are identical with those used in s. 6 (2). It is again impossible to suppose that they bear one meaning in s. 67 (which is free from doubt) and another in s. 6.

In my judgment, therefore, whatever may have been the proper construction of s. 63 of the Act of 1862 when passed, the words, repeated in the Act of 1898, are to be construed in their new context, and, so construed, are effectual to vest a legal chose in action, being trust property, in new trustees upon their appointment.

It follows that the plaintiff is not entitled to maintain this action, and that the demurrer to the declaration should be allowed. I express no opinion upon the demurrers to the pleas.