LAND-OWNERS' LITIGATION.

Press, Volume LXI, Issue 18367, 28 April 1925, Page 9

LAND-OWNERS' LITIGATION.

THE SURREY HILLS ESTATE.

APPEAL COURT ARGUMENT

{riBSS ASSOCIATION TELBOJiM.)

WELLTXGTOX, April 27.

The Court of Appeal today commenced the hearing of an appeal from the decision of Mr Justice l?oed in the Wright and Xosworthy case. Appellants, who were plaintiffs in the. Court below, are Florence Jenny Myra Morgan, wife of William Arthur Morgan, of Evandale, Mount Somers, a farmer, and her infant children appearing by their guardian, Percy Xornian Quartermain, of Christchurch, accountant. Respondents, who were defendants in the Court below, are Douglas George Wright, of Windermere, Winslow, a farmer, Harriet Myra Wright, of Ashburton, widow, and the Hon. William Xosworthy, of Mesopotamia Station, Ashburton, farmer. Counsel for appellants arc Messrs F. S. Wilding, K.C., A. T. Donnelly, and A. C. Brassington. Sir John Fiudlay, K.C., is appearing for tho Hon, W. Xosworthy, and solicitors for the other respondents are Messrs Uphani and Gresson. The facts of the case before tho Appeal Court nro that Edward Georgo Wright died on August 12th, 1902, and by his will divided his estate into eight parts, bequeathing one to his wife, two to his son Harry Herbert, one to each of his other sons Edward and Douglas George, and a life interest in the remaining three parts to his three daughters, with tho remainder to their children. The plaintiff, Florence Jenny Morgan, is one of the daughters. The executors named in the will wero the widow and the son Harry Herbert, and by codicil, testator added as an executor, Douglas George. On selling his interest Harry Herbert retired from his trusteeship and the respondent, William Nosworthy, who married one of the daughters, was appointed in his placo. Subsequently, by agreement of salo and purchase, Doug\as George bought the right to purchase the freehold estate of the testator at valuation conferred on Harry Herbert by will. The properties consisted of two farms, kuown as Surrey Hills and Windermere. Tho Court found that tho fact of tho sales and prices paid was well known to all the beneficiarios, including Mrs Morgan, and no question was ever raised or the proceedings challenged, until recently, when litigation between hor and Douglas Georgo caused bad feeling between the various parties. Tho proceedings in the Court below attacked tho Bales of both properties and sought to have them set aside. It was claimed that the trustees had been guilty of a breach of trust, and it was sought to luivo them removed from office. In the general breaches of trust complained of were allegations that the trustees hnd treated Douglas George too favourably in the matter of financial assistance, and to tho peril of the trust funds. Tho first question considered by the Court was whether t!he pre-emptive right conferred by will was assignable. It was held it was clear that testator dosired to confer the benefit upon tho sou to whom ho had given twice as much as any of the other children. The predominating motivo of the gift was to confer the benefit upon Harry Herbert, and the opinion of the Court was that tho right of. purchase was assignable, Tho socond,and moro serious question, was whether Douglaß Georgo was legally entitled to purchaso any option. It was held that tho fact that the assignee was a trustee did not alter the legal position for tho reason that in exercising his right to purchaso any option, his position as trusteo gave liin no unfair advantage over tho beneficiaries. Tho price he had to pay was ascertained by proper valuation, and the Court held that Douglas George was legally entitled to purchase both Surrey Hills and Windermere. The stock on the Surrey Hills estate, however, was not mentioned in the gift of option, and the Judge decided that had the testator intended it to be included he would havo so stated. The purchaso of stock by Douglas Goorge was a transaction, therefore, that could not stand. • lii the case of Windermere, the following circumstances were found: (1) Douglas George, after retirement as trustee, continued to hold an option over Windcrmero, and thoro was no evidence that he did not all along intend to exercise an option, which ho eventually did. (2) He never ceased to manago the two estates, which were worked in conjunction, the 'stock being transferred from time to time from one to the other. (3) There was irresistible inference, unrebutted by ovidenco, that hiß retirement from trusteeship was in view of possible technical <ttnv culties i'n the purchase of the trust properties. (4) Ho had knowledge of the value of the stock at Windermere, superior to that possessed by either trustees or other beneficiaries. (5) The ovidenco as to who the valuers were, and the amount of the valuation of the stock was unsatisfactory. For these reasons the sale of stock on Windermere could not stand.

Grounds of Appeal. Tho presont appeal is lodged against: (1) The wholo of the judgment, except such part as declares (a) that defendant Douglas George Wright was not entitled to purchase the stock on Surrey Hills and Windermere; (b) that the purchase of stock of, tho said estates had not been condoned by the beneficiaries, nor had they acquiesced in the sale; and (c) excepting such part of the judgment as orders that enquiries should be made and accounts taken before the Bcgistrar and an accountant as to whether tho rate of interest payable between 1908 and 1924 by Douglas Georg* to tho trustees was the proper rate of interest; and (d) whether the securities now held by the trustees are in order, and whether they are good and sufficient securities as required by the Trustees Act, 1908. Sir John Tindlay, K.C (for the responded Nob worthy), said that there were certain preliminary questions ho wished to dißcuss before the appellants began. Mr Donnelly had treated the observations in the judgment of Mr Justice Reed as final. He submitted that there was no final decision on the question of the removal of trustees. No mention was made in the notice of appeal of the . removal of trustees. He was surprisod to learn that appellant's counsel were relying on those observations.

Sir Robert Stout: What do the appellants wantf Sir John Findlay: The removal of two trustees (Harriet Myra Wright and William Nosworthy). We want these preliminary questions (as to enquiries being made and accounts takon before registrar) determined, because thoy bear greatly on the question of removal. When accounts have been taken and enquiries made, and it is found, as I think it will be found, that there has been no loss' of capital and no mala fides or fraud of the trustees, Mr Nosworthy is prepared to retire. I am sure the other trustee, being an elderly woman, will follow his example. Mr Xosworthy naturally wishes to re-

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main a trustee until such enquiries have been made, and accounts taken. Why haven't these things been done? Are the appellants afraid of them} We arc entitled to have these enquiries made before tho appeal proceeds, beeauso Mr Xosworthy's honour is involved, or defence depends on it. This •whole litigation is based on bad feeling, all one-sided. It has been brought about by certain litigation in the Lower Court concerning a judgment for £24,000. Mr Justice Reed, ia hi* judgment, expressly said that tho case was to be adjourned for further consideration. His observations, therefore, cannot be treated as a final judgment for refusal to remove the trustees.

The Option to Purchase. Mr Wilding: No imputation has been made on the personal rcputatiou oi tho trustees.

Mr Donnelly: Sir John Findlay :.:is said that tho* trustees will resign at once, when the enquiries are made unJ the accounts taken. This undertaking eliminates the question of the removal of the trustees. Nevertheless, I submit that breaches of trust have been eommittod. The learned Judge found that the trustees had given the real management of tho estate to J>. C. Wright for 16 years, and that he had handled tho trust funds. lam willing to defer the hearing of the appeal until ' the next sitting of the Court, enquiries to be made in the meantime. One question is left, aud that concerns the assignability of tho option to purchase. I submit that that option was not assignable. If it waß assignable, it could not 1)0 assigned to D. G. Wright. Sir Robert Stout: This is a family quarrel, and I cannot understand why it was brought into Court. Mr Gresson: The interest of tho infants under assignment arc vitally eonccrnod, which makes settlement all the more difficult, because It is a family quarrel. Sir John Findlay: If the appellants had accepted the judgment of th« Lower Court the trustees would have n> , tired. They went to the Court of Appeal expressly to remove the trustee* If they aro removed by this Court before enquiries are made and accounts taken, in conformance with Mr Justice . Reed's judgment, there will be a stigma .upon them. With regard to the question of assignability of tho option, there is no reason why it should not be determined now, and the question of en- . quiries allowed to stand over. Mr Gresson: There is nothing appeal- , able on tho question of the removal of the trustees. In viow of Sir John Findlay's undertaking that they will retire, tho question as to their removal will never come before this Court. Now. the only question is the assignability of the option. lam prepared to go on today, as my clients arc deeply concerned. , , Mr Justico Sim: Would you of prejudiced by an adjournment? There are two months to wait. Mr Gresson: All the counsel are here from C'hristchurch. It w©uW be a'hardship on the parties to adjourn tho matter because at present I am unable to deal with the estate. Mr Justice Sim: But you are protected. There was a caveat lodged a year ago, aud you have already waited that long. Two months more would not make much difference. Mr Donnelly: The greatest difficulty in this case has been somewhat reduced.

Mr Justice Sim: Even if you do continue to-day, you wilt probably not g«t a judgment until next sitting of this Court.

Mr Grcsson:,lf that is the ease, I do uot wish to appear obstinate. As to tlio adjournment, I would aak that the question of costs be reserved, and that we bo given the first fixture next sittings. I also ask for some form of undertaking that plaintiff will proceed with the enquiries forthwith. The case was adjourned on the above conditions.