National Trustees v General Finance

National Trustees Company of Australasia Ltd v General Finance Company of Australasia Ltd [1905] AC 373

The Privy Council was required to consider a case on appeal from the Full Court of Supreme Court of Victoria ,affirming the judgement of a’Beckett J in the Supreme Court, holding the trustee company liable to pay the respondents their share of the trust estate.

A trustee company wrongly paid way moneys in Breach of Trust. It did do after receiving the advice of competent legal advisors. The trustee company sought relief on the grounds that it had acted honestly and reasonably and ought to be fairly excused   {Refer to Section 67 of the Trustee Act 1958 (Vic).

It was held that although the trustee company had acted honestly and reasonably, nonetheless it could not be fairly excused. It was a trustee company authorised to so act by statute, and to take a commission for doing so. Here there was no fair excuse for the Breach of Trust.

a’ Beckett J held in the Victorian Supreme Court that although the trustee company had acted honourably they were not entitled to be relieved under the provisions of the Trust Act 1901, solely on the ground that they had acted on legal advice.

The Privy Council states at pp379:

“The fact that such payment was made through the bad advice of the solicitors of the trust company is no defence.

In Doyle v Blake 2 Sch & Lf. 231 at p 243 Lord Redesdale said: “I have no doubt that they (the executors) meant to act fairly and honestly, but they were misadvised; and the Court must proceed, not upon the improper advice under which an executor may have acted, but upon the acts he has done. If, under the best advice he could procure, he acts wrongly, it is his misfortune; but public policy requires that he should be the person to suffer” and there are many similar decisions in the books”

At pp 381 the Privy Council stated:

“The position of a joint stock company which undertakes to perform for reward services it can only perform through its agents, and which has been misled by those agents to misapply a fund under its charge, is widely different from a private person acting as gratuitous trustee. And without saying that the remedial provisions of the section should never be applied to a trustee on the position of the appellants, their Lordships think it is a circumstance to be taken into account, and they do not find here any fair excuse for the breach of trust…”

“If trustees do unfortunately lose part of a trust fund by breach of trust, the least that can be expected of them is that they should use their best endeavours to recover the fund, or as much thereof as practicable, for their cestui que trusts (ie beneficiaries)”.

 

 

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