F.C. In re JONES. HOCKINGS v. these shares; but the new shares paid up to £2 15s. were, at the date of their issue, saleable for £6 per share. The income from the estate of the testator proved insufficient to meet the annuity of £500 bequeathed to the widow of the testator; and the real estate of the testator was all unimproved land, producing no income, but being a continual source of expense in the way of rates and taxes. The personal estate of the testator on 29th March, 1911, consisted of shares in various companies. Succession duty had been assessed in respect of the succession of the life tenants accruing on the death of the annuitant, Annie Jones, and was paid by the defendants, there being no moneys in the estate available for that purpose. The Commissioners also required duty on the death of one of the testator's daughters, who died in 1912, to be assessed in respect of the succession of the remaining life tenants to the share of that daughter. The questions upon which the opinion, advice, or direction of the Court was sought were :— 1. Have the defendants power to realise or convert the personal estate of the testator and vary any investments thereof ? 2. (a) Is the bonus or dividend received by the defendants from the Brisbane Gas Company in 1912 income or capital of the testator's estate? (b) Is the bonus or dividend received by the defendants from the Brisbane Gas Company in 1915 income or capital of the testator's estate? 3. Did the share or interest in the said estate held by any Ichild of the testator who died after his death survive to and devolve upon the surviving children of the testator? If not, upon what person or persons did such share or interest devolve? 4. Are the rates and taxes paid and payable in respect of the testator's real estate chargeable to capital or income? 5. Is the interest on moneys advanced to acquire the said shares in the Brisbane Gas Company chargeable to capital or income? 6. Are the succession duties paid on the death of the widow, Annie Jones, and payable on the death of the daughter, Alice Ruth Miller, chargeable to capital or income? 7. Are any and what persons tenants for life under the Settled Land Act of 1886 of the real estate of the testator? 8. Who are the persons entitled to the estate of the testator from and after the death of the last surviving child of the testator? 9. By whom ought the costs of this action and special case to be paid? : Stumm K.C. and Graham, for the plaintiff First question should be answered in the affirmative. The Trustees and Executors Act of 1897, ss. 4-7; In re Burke, Burke v. Burke (1), In re Dick Lopes v. Hume Dick (2), In re Maire (3). Second question. Mitchell v. Hart (4), Bouch v. Sproule (5), Re Malam, Malam v. Hitchens (6), Re Evans, Jones v. Evans (7), In re Hassall, Ballarat Trustees, Executors and Agency Co. Ltd. v. Haslem (8). Third question should be answered-Yes. Armstrong v. Eldridge (9), Pearce v. Edmeades (10), Bac. Abr., F. 681; In re Tate, Williamson v. Gilpin (11). Fourth question-We concede that interest must be charged to income. Underhill on Trusts, 7th Ed., p. 246. Land Tax Act, 1910, ss. 14, 25; Land Tax Act, 1915, ss. 3, 21; Local Authorities Act of 1912, ss. 7 and 26; Water and Sewerage Act of 1901. Fifth question-neither to capital nor income. Sixth question-on successors. The Succession and Probate Duties Act of 1892, ss. 20, 21, 43, and 46; Fountaine v. Pellet (12). Eighth question. In re Hassell (13). They also referred to Re Northage, Ellis v. Barfield (14), Re Tindal (15), Underhill on Trusts, 7th Ed., p. 223. Macgregor, for the defendants: Howe v. Earl of Dartmouth (16), White and Tudor Leading Cases on Equity, p. 68; Daniel v. Warren (17), Alcock v. Sloper (18), Skirving v. Williams (19), Lewin on Trusts, 12th Ed., p. 334; In re Game, Game v. Young (20), Rowe v. Rowe (21), Halsbury, Laws of England, Vol. XXVIII., p. 31. The judgment of the Court was read by C.A.V. SHAND J This is a special case stated by the consent of the parties in a friendly action brought by one of the beneficiaries (1) [1908] 2 Ch. 248. (2) [1891] 1 Ch. 423; [1892] A.C. 112. (3) 1905, 49 Sol. J. 383. (4) 1914, 19 C.L.R. 33. (5) 1887, 12 A. C. 385, at pp. 392 and 398. (6) [1894] 3 Ch. 578. (7) [1913] 1 Ch. 23. (8) 1916, 22 A.L.R. 1; 1916, V.L.R. 29. (9) 1791, 3 Bro. Ch. Ca. 214. (10) 1838, 3 Y. & C., Ex. 246, at (11) [1914] 2 Ch. 182. (17) 1843, 2 Y. and C. Ch. A. 290. F.C. In re JONES. LIMITED. Shand J. F.C. In re JONES. HOCKINGS v. Shand J. under the will of the late Alfred Raymond Jones against the trustees of that will, for the purpose of obtaining the opinion, advice, or direction of the Court upon certain questions relating to the administration of the trusts of the will. The facts are sufficiently set out in the special case, and need not be recapitulated. As to the first question, we are of opinion that the defendants (in whom the whole of the testator's real and personal estate is, we are told, now vested, as trustees thereof, pursuant to an order of Chubb J. appointing them sole trustees of the will), have power to realise or convert into money the testator's personal estate described in par. 23 of the special case, and to re-invest such money in any of the investments specified in s. 4 of The Trustees and Executors Act of 1897, and have power from time to time to vary such investments for others of a like nature. See The Trustees and Executors Act of 1897, ss. 4 and 7; and Re Dick (1) and Re Burke (2). As to the second question: We are unable to distinguish the facts stated in the special case with reference to the acquisition by the defendants of the new shares issued by the Brisbane Gas Company in 1912 and 1915 respectively, from the facts existing in the case of Bouch v. Sproule (3). See also Re Malam (4) and Re Evans (5). In Mitchell v. Hart (6), the majority of the High Court (Griffith C.J. dissenting), seem to have distinguished that case from Bouch v. Sproule (3), on the ground that in Mitchell v. Hart (6), a shareholder, whether he accepted or declined to accept new shares, obtained the same benefit, because if he accepted, he got shares of which the market value exceeded the face value, and if he refused to accept, the company sold the shares at their market value, and handed the proceeds to the shareholder who had refused to accept them. The majority of the Court (Isaacs and Gavan Duffy JJ.) therefore appear to have held that as the shareholders who declined to accept shares were not "penalised or forced by "the ordinary instincts of human self-interest " to accept shares, the case was different from the case decided by the House of Lords. But whatever the ground for the decision in Mitchell v. Hart (6) may have been, the majority of the Court in (1) [1891] 1 Ch. 423; [1892] A.C. 112. (2) [1908] 2 Ch. 248. (3) 1887, 12 A.C. 385. (4) [1894] 3 Ch. 578. (5) [1913] 1 Ch. 23. that case did not express any dissatisfaction with the decision of the House of Lords in Bouch v. Sproule (1), or purport to be deciding anything in conflict with it. And as the facts in the present case are, in our opinion, quite undistinguishable from the facts in the case of Bouch V. Sproule (1), we think we are more than justified in following it. Mr. Stumm suggested that it was a breach of trust on the part of the defendants to acquire the new shares in the company on behalf of their estate. But the defendants, like any other shareholder, were compelled to accept or refuse these shares; and we see no reason to think that they did not fully do their duty as trustees by adopting the alternative, which, according to the views expressed by Lord Watson in Bouch v. Sproule (1), no sane shareholder" would have failed to adopt. As regards the 1912 issue, Mr. Stumm also suggested that at all events it was a breach of trust on the part of the defendant to take up shares upon which the amount immediately called up exceeded the amount of the moneys divided and appropriated to their purchase by £1 per share, because the trust estate possessed no funds out of which the payment of £1 per share could be made. But the payment was made by the defendants out of their own moneys, and we fail to understand how the defendants can be blamed for expending moneys of their own for the purpose of securing an obvious advantage to the trust estate. In our opinion, then, the bonus or dividend received by the defendants from the Brisbane Gas Company in 1912 and 1915 respectively, must be regarded as capital of the testator's estate. As to the third question: We are of opinion that the will must be construed as if it created cross remainders between the life tenants of the testator's estate. In our opinion, therefore, the share or interest in the testator's residuary real and personal estate to which any child of his, who died after his death, was entitled, survived to and devolved upon his surviving children for life. See In re Tate, Williamson v. Gilpin (2) and cases there cited. As to the fourth question: We are of opinion that the rates and taxes paid and payable in respect of the testator's real estate are chargeable to income. Fountaine v. Pellett (3). As to the fifth question: We are of opinion that the interest on money furnished by the defendant for the acquisition of shares (1) 1887, 12 A.C. 385. (2) [1914] 2 Ch. 182. (3) 1791, 1 Vesey, junr., 337, at p. 342. F.C. In re JONES. TRUSTEES LIMITED. Shand J. E F.C. In re JONES. HOCKINGS v. TRUSTEES Shand J. in the Brisbane Gas Company is not chargeable to the income out of his trust. We think it right, however, to say that our answer to this question must not be construed as a decision that the defendants are necessarily precluded from obtaining from the Court, in a proper proceeding for that purpose, some form of relief against the trust estate in respect of moneys expended by them for the benefit of that estate. But at present we have no such question before us, and can only answer the questions raised in the special case according to our view of the law upon the facts there stated. As to the sixth question: The succession duty paid on the death of the testator's widow is, in our opinion, primarily chargeable against the persons who, by reason of her death, benefited by the cesser of the annuity bequeathed to her, and similarly the succession duty payable on the death of the testator's daughter is primarily chargeable against the persons upon whom, at her death, her interest in the testator's estate devolved. The identity of these persons is determined by our answer to the third question. As to the seventh question: The persons for the time being beneficially entitled to the receipt of the whole of the rents and profits of the testator's real estate are, in our opinion, tenants for life under The Settled Land Act of 1886 of the real estate of the testator. See In re Johnson, Johnson v. Johnson (1). The identity of these persons is also determined by our answer to the third question. To the eighth question: We do not think it desirable to give any answer. Theoretically, at all events, the question may never arise for decision; and if it ever does arise, those most interested in its determination, possibly including persons as yet unborn, may think the question too clear for argument. As to the ninth question: We think the costs of both parties, as between solicitor and client, should be paid out of the testator's estate. And we so order. Solicitors for the plaintiff Nicol Robinson, Fox & Edwards. (1) [1914] 2 Ch. 134. |