WELLINGTON TRUST CASE.

Otago Witness, Issue 2978, 12 April 1911, Page 88

WELLINGTON TRUST CASE.

MACDONALD v. ROSE AND OTHERS. HISTORY OF THE PROCEEDINGS. THE AFFIDAVITS. WELLINGTON, April 4. In a case before the Appeal Court today Thomas Kennedy Maodonald, M.L.C., appellant, Mary Rose and others respondents, the action arose out of the administration by the appellant of the estate of Robert Mackay Greenfield, whose children are the respondents. The statement of clauar. in the Supreme Court set forth that appellant was appointed executor and trustee under the will of Robert Mackay Greenfield, who died in 1895, and undertook the performance and execution of the duty of trustee of the will, also of a certain settlement made in 1883 by which a life estate was given to Ellen Greenfield, wife of Robert M. Greenfield, with power of appointment. In default of appointment the estate was to go to the children. The statement then went on to allege that during the time he acted as trustee of the trust property under the will and settlement, appellant had failed to render accounts of his administration, though repeatedly applied to by respondents. The respondents prayed that accounts should be taken and appellant 'removed from his office as trustee. An order was subsequently made by consent to have accounts taken. In December, 1910, an order was made for the payment into court of the sum of £3647 3s 3d, agreed to be due by appellant. The next step was a motion for leave to issue a writ of attachment against appellant failure to comply with t he order for payment. This motion wrs heard in February, 1911. The ground for the applicaton was that £3504 5s 9d, the amount ordered to be paid, less £142 17s €d, interest, was the sum in possession or control of appellant as trustee within the meaning of "The Imprisonment for Debt Limitation Act, 1908.". The motion was heard before Mir Justice ■ Chapman, and an order was duly made for the issue of the writ. The order provided, however, that if appellant deposited in the Supreme Court before the 20th of February, 1911, the sum of £SOO, he should have the right to have the matter further argued before the Full Court, and in such case the order for the issue of the writ should lie in the court office until 3rd April, 1911. The next motion was one by appellant to set aside the writ. Mr Justice Cooper and Mr Justice Chapman made an order for the hearing of this motion, and it was on the day fixed (19th March) heard by the Chief Justice. His Honor pointed out that the proper re medy was an appeal to the Court of Appeal, and dismissed the motion. Subsequently On 21st March his Honor giantcda stay of execution pending the appeal to the Court of Appeal, upon the following conditions : —Tint appellant pay into court before the 22nd of March the sum of £IOO by way of security for the costs of the appeal from the order for the issue of a writ of attachment. It was also ordered that the appeal be beard at ttio present sittings. The ground of the appeal is that the judgment or order of the 10th February, 1911, is bad in law for the following reasons : —(1) That the court had no jurisdiction to make any judgment or order for the issue of a writ of attachment in this action, inasmuch as the sum of money directed to be paid ' into court by defendant was for money recovered in an action for debt or damages; (2) that the said court had no jurisdiction to give or make the said judgment, inasmuch as the sum of money cc-deied to be paid into court by the said order comprised a sum of money for interest, which interest was not a sum of money which was Or ever had been in the possession or control of defendant within the meaning of "The Imprisonment for Debt Limitation Act, 1908." Macdonald's claim for commission was supported by an affidavit sworn by him on June 22, 19i0, in which he stated that at the commencement of the trust the estate cf; the late R. M. Greenfield was embarrassed for want of cash. No income for the purposes of the estate was being received from the Well : ngtom tramways nor from the Waipaoa estats (in each cf which properties the testator had one-fourth interest), and there were considerable liabilities. With the exception of certain small mortgages and rentals there was no income for the maintenance of the children, and he had recourse to his own moneys to maintain them and pay liabili- j ties. He held the properties, as he felt' oertain that under his administration there would be an advance in valius which would probably place the family in an independent position. 'lhe tramways were run for about five years by deponent and the late Dr M. S. Grice, \ and the sale of the tramways to the City Corporation in 1900 for £19,382, lets certain discounts, was largely due to de- ' ponent's own personal exertions. In accordance with the will he purchased out of the proceeds a farm for John Greenfield. The Waipaoa estate comprised 33,946 acres, much of which at the death of the testator was under bush and fern, i At that time the property was tsubject . to charges amounting to about £25,000. j Deponent found it necersairy to arrange : an advance of £30,000 with the Public Trustee, whereby the existing mortgages were called in and the liabilities paid off. In 1908 he agreed with the others in selling the property to John Clarke, of Te Arai, for £i35,000, and this after paying off mortgages, etc., left the Gireenfield estate a clear profit of £33,237 8s Id. The share of the family was subsequently increased by further adjustments. The result of holding the property, fyfi he insisted should be done, was that as/against a valuation of £4823 at the de,,th of R, M. Greenfield, the favnilyV interest was at the time of the sale to Clarke £33,237 8s Id. " I say,"

obtained solely because of my own personal knowledge of the land, and my determination to bold on to the station at all casts until a satisfactory price was obtained." The iarm which be purchased for John Greenfield out of the money received for the sale of the Wellington tramways was at Blenheim, and a contract was made for any necessary adjustment between the shares of John Greenfield and his sisters. He had sold and disposed of real estate subject to the. trusts of the will at.prices shown in bis accounts as filed, and on the court appointing new trustees he conveyed toi them the balance of the real estate. He submitted that he was entitled to commission (1) on all income received by him faom the estate of the late R. M. Greenheld, but not to further commission in respect of receipt of rents, profits, of r-:al property subject to the trusts of the will in addition to the usual commission of 5 pe*- cent, on such rents and profits which had been (received by the firm of Macdonald, Wilson, and Co.; (2) on the amount realised by the sale of the Wellington, tramways; (3) on the sale of the Waipaoa estate; (4) on his purchase of the interest of James (5) on his purchase of the farm for John Greenfield.

In reply to the affidavits of defendant a joint affidavit was sworn by William Henry Rose (merchant) and John Garencieres Rose (accountant), both of Wellington, trustees of the estatj appointed by the court. Firstly, as to the affidavit of Thomas Kennedy Maidonald, they said f —" Robert Mackay Greenfield, deceased, died possessed of considerable properties, his will providing for the sale and conversion of the whole estate, and after payment of the debts and a small pecuniary legacy amounting to £IOO, the balance of the estate was to be disposed of by the investment of the sum of.£iUuJ for a daughter, the remainder of the estate to be divided into four equal portions, one portion for the eon, to be utilised in the purchase of a farm for him, and the other three portions for the daughters to be invested, a,nd the income thereof to be paid to the daughters for life, and the remainder to their children. Two of the properties belonging to the deceased were respectively a quarter interest in the Waipaoa estate, Gisborne, and a quarter interest in the Wellington city tramways. The sale of the interest in the tramways property realised approximately £io,ooo, which was paid to the son as his share, on an arrangement being entered into for an adjustment of the proportions in the event of the share not being the son's proper share. * Subsequent to Greenfield's death one of the lour partners in the Waipaoa estate sold his interest to the remaining three. At or about the time of the commencement of this action the Waipaoa estate was sold, and the moneys arising from such sale were at the instance of the plaintiffs herein paid to Stafford and 'Treadweil,' and ino portion thereof, with the exception of the sum of £13„0, ever reached the defendants' hands. It was subsequently ascertained, however, that the sum of of such moneys had been received by the defendant, and this sum is part of the moneys unaccounted for, as explained in the affidavit of Archibald Wiliam Blair, filed herein. The only properties which have reached our hands as trustees of the late Greenfield's estate are the proceeds of the sale of Waipaoa estate, which were received through Messrs Stafford and Treadweil, the leasehold property known as " Co mo, situated in 'Clifton terrace, Wellington, and some unsold country sections of small value. " Como " property was leasehold purchased by defendant, as we are advked, in breach of the trusts of the will, and the same was an onerous property costing the estate about £SO per annum. We have never received, and so far as ws know will never receive, from Macdonald the proceeds of any other properties realised by Maodonald unless we obtain payment of an amount of £9BO 8e 4d, ordered to be repaid by him in this estate. The result of defendant's administration of the estate of Greenfield is that with the exception of the tramway property and the Waipaoa estate practically the whole of the corpus of the late Robert Mackay Greenfield's estate has disappeared. Defendant never kept any accounts, nor did he in any way regard the trusts of the will so far as conserving the capita] of the estate was concerned, and the whole increase in the value of the estate as administered by defendant has been due to the fact that the Waipaoa estate gradually increased in value owing to the rise of laaid values in the Gishorne district, and the tramway property realised more than it was valued a.t as for duty purposes. With reference to the estate of the late Mrs Ellen Greenfield, the result of defendant's administration has been that one property in Willis street, which had remained unsold, was taken over by us when we were appointed trustees, but the whole of the proceeds of the sale of all the other properties, amounting to £2716 16s sd, have not been accounted for. Deponents had been advised that owing to defendant's maladministration of the tirust 'estate, his neglect to keep proper accounts, the great expense he had put upon the estate in attempting to recover from him the trust funds belonging to the estate, and the fact also that there was at present in his hands a large sum of trust moneys unaccounted for, disentitled him to any commission. They were further advised that Mas Ellen Greenfield's estate, being a settlement by deed, was not subject to any claims for executor's commission. At the time when they concurred in Skerret's intimation to Treadwell that they were willing to compromise on payment of £2OCO, they had not then analysed the supplementary accounts, Upon analysis it was clear to them that defendant had received since the commencement of the action and not accounted for £1623 17s lCd, and if they concurred in the compromise of the action for £2OOO they would be doing little more than obtaining from defendant" rejaayment of the trust moneys which he

received, and had not accounted for since the commencement of the action. The offer was not in any way based upon any consideration of a possible claim for commission, or that the plaintiffs should bear their own costs of the action. They had been repeatedly advised by Skerrett that the defendant could have no possible claim for commission, and that the plaintiffs were entitled to costs against the defendant.

Counsel for the appellant (Mir C. H. Tread well), in opening argraneait stated that the action was an appeal from a decision of the Chief Justice and Mr Justice Chapman granting leave to issue a writ of attachment in respect of noncompliance by the defendant with an order for the payment of certain moneys into court. The grounds of the motion resolved themselves into three questions. The action was for. an account and for payment in the ordinary form, and the usual preliminary order for accounts was made by Mir Justice Cooper on April 19, 1907. The court would sea that under the terms of the order there were three trusts with the performance of which the appellant was charged. The firct of these was a series of trusts arising out of the will of E. Mackay Greenfield, the second and third trusts arising cut of two settlements referred to as the estate, of Elen Greenfield. Accounts we e taken, and on December 22 an order was made for payment into court by the defendant of the'sums of £2626 14s lid and £950. The calculation put before his Honor showed that one of these, sums included a. sum of £142 17s 6d for interest. This would become material at a later stage of the argument, while the amount of £IBB3 5s lid included £240 referred to in the third ground of the motion. Mr Treadwell went on to say that a definite offer was made to accept a certain sum from the defendant in settlement of the transaction. That offer upon being accepted was withdrawn by the plaintiffs. Perhaps that was an Irish way of putting it, but-it was denied th.it it was accepted. When the solicitor engaged in the matter went to the office for the puirpose of accepting the offer he was tola t*iat a letter had been written the previous day withdrawing it. Mr Blair : The solicitor went for the purpose of getting the offer confirmed in writing. Mr Treadweil referred to the appellant's affidavit showing that the Greenfield's estate was worth £15,000 when it came into the defendant's hands, and that as a result of the administration for 12 years he was able to hand it over worth £45,000. He submitted that at the time of the order being made this money was not under appellant's control. The principal objection to the issue of the writ was that it contained reference to. am amount which included interest and half commission without being distinguished from moneys which might come within the description of being in the possesrsion and control of the defendant; therefore the court had no jurisdiction to make an order for the issue of the writ of attachment. A motion was made to set the writ aside.. Objection was raised that the ofiief Justice (before whom the matter came) had no jurisdiction. His Honor ruled in accord with this, but proceeded to hear the application. Dealing with the first ground of the appeal, counsel submitted that an action for accounts and payment was an action for recovery of a debt. ' This action was an action for ; debt or damages. Until recent years the only method by which the Court of Chancery could enforce its decrees was by writ of attachment. A great deal of care had been taken in England to specify the cases in which this form of action could be taken, and these were sought to be incorporated in rule 392 of the English practice, which did not cover this case, inasmuch as the effect of this action was that it was an action for recovery of a debt. Mr Justice Williams : Is not an action' to replace a sum of money taken out of its proper place so that that .sum may be put back whence it came, an action for debt ? Mr Treadweil: I will submit on the authorities that this exactly covers the relationship of debtor and creditor. The defendant has admitted a breach of trust by appropriating these moneys in a method not authorised by the trust. The effect of the action is to obtain from him an account of his appropriations, and it must come within the definition of an action for debt, and thus come within thej exception of rule 392. He submitted that the court must look to the substance of the action, which was to recover the money. If it was for fraudulent action by a trustee, there was an absolute remedy in the Criminal Court. Mr . Justice Cooper: Is not the writ issued because of disobedience of an order of the court?

Mr Treadweil submitted that the only jurisdiction the Supreme Court had was to issue a writ under rule 392.

Mr Justice Cooper: The gist of your argument is that you cannot get at the defaulting trustee except by criminal process ?

Mr Treadweil: Possibly so. Why should it not be?

Mr Justice Edwards : You say he could not be got at by attachment unless he has got money in his pocket or bank account.

Mr Treadweil: Is that position not reasonable, because the criminal law is open to any person who chooses to use it?

Mr Justice Edwards: Do you suggest that this debt would be extinguished by the statute of limitations? Mr Treadweil: Yes. Mr Justice Cooper: The Trustees Act does not relieve a trustee in that way. Mr Justice Edwards: Does that not show that it is not an action for debt? Their Honors having consulted the Trustees Act, Mr Justice Cooper said it was plain that the statute of limitations did not apply to the case. Mr Treadweil was proceeding to quote English cases showing the tendency of

decisions with references to actions for debt, when he was interrupted by Mr Justice Williams, who remarked that the bench was agreed that it was a debt, in that it was a sum ascertained to have been paid. Mr Justice Cooper added that the question was whether the wider meaning was to be attached or whether it was to be the narrower interpretation, which would exclude an action such as the present.

Mr Justice Denniston remarked that/ there might be conduct which fell short of being a crime yet was conduct which was clearly not the proper duty of ;i trustee.

Mr Treadwell asked why the onus of denying criminality should be thrown on the trustee.

Mr Justice Ccoper: Supposing the application is dismissed the defendant, before he is actually taken to gaol, has to be brought before the court to show cause.

At this stage the court adjourned until next dav.

DECISION RESERVED. WELLINGTON, April 5. Mr Treadwell, continuing his argument in the case of Macdonald v. Rose and others this morning, contended that the order for payment of money into courtw?.s not a judgment, and therefore was not enforceable by attachment under rule 302. Judge Williams remarked that if that argument were sound there was no means of enforcing any order of the court, as a similar contention would be made under rules 391 and 393. Mr Treadwell submitted that as the order for payment included sums for interest and which were net distinguished in the older, and were not money in the possession and under control of the appellant within the meaning of the act, the court could not issue an attachment on the order.

Mr Jj&lair, in reply to the bench, said that not one penny of interest was included in the £3504 for which the writ of attachment was issued, but that the commission was included as part of the capital.

The Court intimated that it did n:t wish to hear Mr Blair on the jurisdiction of the court to issue a writ of attachment, but wished to hear him on the question of interest and commission being included in the cider. Mr Blair said the writ of attachment had never been issued, nor had the order authorising its issue been sealed. The court could therefore amend the order if any sum had been wrongfully included* Mr Justice Williams pointed out that there never was an order to pay £Z534, for the payment of which the attachment was issued. •

Mr Blair contended that the authorities allowed attachment to go for non-payment of part of »the order. He suggested that '' The Judicature Act Amendment Act, 1910," was passed to meet Ncdine's caee and the present case. Mr Treadwell briefly replied to Mr Blair's argument, and the court reserved its decision, granting a stay of execution of the writ of attachment until it delivered its judgment.