063-NLR-NLR-V-07-ALWIS-v.-JUANIS-APPUHAMI.pdf
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1908.July 14.
ALWIS v. JUANIS APPUHAMI.
D. C., Colombo, 16,798.
Trustee—Ordinance No. 7 of 1871, ss. 4, 5—Trustee appointed under a post-nuptial settlement deed—Death of trustee without appointing a successor—Successor nominated by District Court—Power of such trustee to substituteanother person in his place.
Where a postnuptial settlement deed creating a trust contained a powerto appoint a new trustee, and, in the event of the District Courtappointing such trustee, that he should have the. power to appoint a newtrustee,—
Held; that the trustee appointed by the Court can lawfully exercisethat power, and appoint a new trustee in his stead.
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N this case the plaintiff, claiming to be the trustee of the post-nuptial settlement of one James Perera and Alice Perera, sued
the defendants on a bond, thereby it was alleged the first defendantbecame bound and indebted in a sum of Bs. 1,500 to one DonBastian Perera Abeyasekere as trustee for the time being of thesaid postnuptial settlement.'
The plaint also alleged that the > said Don Bastian PereraAbeyesekere died without appointing a successor, and that Jjhe^District Court of Colombo nominated Benedict Oliver Dias trustee
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of the said postnuptial settlement, and that -the said BenedictOliver Dias appointed the plaintiff trustee in his stead.
A preliminary issue was framed, whether it was competent forBenedict Oliver Dias to appoint the plaintiff as trustee in his stead,and the learned District Judge (Mr. Joseph Grenier), by orderdated 5th May, 1903, held as follows: —
“ The preliminary issue was framed by me in this case with theconsent of both parties, and upon its determination would dependwhether or not the plaintiff is entitled to maintain this action.The facts relating to this issue are admitted, and the only questionis whether it was competent for Benedict Oliver Dias to ajvj>qinta trustee in his place of the postnuptial settlement pleaded in theplaint. It was submitted for the defendant that, although Diashad in point of fact exercised the power of substitution byindenture dated the 11th July, 1900, whereby he substitutedthe present plaintiff as trustee, yet that he had not the power todo this, but that reference should have been made to the Court-under the provisions of Ordinance No. 7 of 1871, and that the Courtshould have appointed a trustee. It is necessary, therefore, toexamine the appointment of B. 0. Dias by the Court to ascertainthat powers of substitution were vested in him. By order datedthe 6th May, 1897, in special case No. 128, it was ordered anddecreed that Mr. B. 0. Dias of Panadure be and is herebyappointed trustee under the indenture dated the 28rd -and 27thdays of January, 1885, in the room and place of the late DonBastian Perera Abeysekara Tillekeratna, Mudaliyar, the deceasedtrustee, with as full anid similar powers as the said Don BastianPerers Abeysekara Tillekeratna, the deceased trustee, had underthe said indenture of the 25th and 27th day of January, 1885.
“ Now it is plain that the appointment by the Court placed Diason the same footing with the deceased trustee in regard to theexercise of certain powers. Were these powers limited only to theadministration of the trust property, or did they embrace thepower of substitution? Turning to the indenture itself we findthe following words:—‘It shall be lawful for the trustees herebyappointed, or for the continuing trustee or trustees for the timebeing, or if there shall be no continuing trustee, then for theretiring or refusing trustee or trustees, or for the District /Courtof Colombo in pursuance of the powers and provisions containedin section 4 of the Ordinance No. 7 of 1871,• to app'oint any otherperson or persons to be a trustee or trustees,’ die. Further on theindenture says:‘ And every such new trustee shall have all the
pgwers and authorities of the trustee in whose place he shall beappointed or substituted,-’ It seeigs to me, looking to the terms of21.
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.1903. section 5 of Ordinance No. 7 of 1871, under which Dias’s appoint-JiAy 14. ment. was made, and to the terms of Dias’s appointment by theCourt, as also to the terms of the original indenture, that Dias’spowers were co-extensive with those of the trustees appointedunder the indenture; and if those trustees had the power of substitu-tion, it necessarily follows that Dias also had the same power. 1apprehend that the Court in appointing Dias and in giving himas full and similar powers as his predecessor neither intended normade, any reservation as regards the power of substitution.
“ The words in section 5 are as follows:— ‘ And such newly-nominated trustee or trustees shall thenceforth possess and enjoyall <ihe powers of a trustee or trustees in the same manner as if heor they had been nominated in and by the original deed orinstrument creating the trust, and as well in respect of propertyin the Colony situated out of as in respect of property within thejurisdiction of the Court making the nomination. ’ The words arevery large, and I cannot but construe them as giving the trusteeappointed by the Court the same power of substitution as thatpossessed by the trustee or trustees under the original deed orinstrument creating the trust.
“I have not been referred to any direct authority on thecorresponding section of the English Act, but Mr. Pereira citedthe case of Cooper v. McDonald reported in 35 Beavan, whereit was held that the surviving trustees having been appointedby the Court, and not under the power, had no authority tonominate new trustees. That case, however, seems to me to haveturned upon the wording of the will containing the trust, and uponthe .terms of the power itself, and I cannot look upon it thereforeas an authority in point.
“ For the reasons I have given I hold that it is competent forthe plaintiff to maintain his present action. Let the case be fixedfor trial for an early date.
The defendants appealed. The case came on for argument onthe 8th July, 1903.
Walter Pereira (with him Samarawikrama), for appellant.—
0. Dias, appointed by the Court under the Trustees’ Ordinance,had no power to substitute a trustee in his stead. The successorof a trustee appointed by the Court must be also appointed by theCourt. The Court could not delegate its responsibility to someone else. The‘words “*all the powers of a trustee,” occurring insection 5 of Ordinance No. 7 of 1871, do not include the power ofnaming a substitute. So long as he is trustee, he can exercise allthe powers of the original trustee. But if he is unwilling to actor dies, it is the Court who has ty appoint a new trustee. Cooper
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v. McDonald, 35 Beavan, 504 (1856), resting on section 27 of 23and 24 Viet. cap. 145. [.Layard, C.J.—Modem legislation tends togive the Court’s trustee the power to name a substitute.] InLewin On Trusts, p. 721, it is said the Court should not authorizenew trustees to appoint trustees; that would be a delegation of itsown powers. The principle laid down is that a nominee of theCourt could not appoint a new trustee, because the original powercame to an end when the necessity arose for the Court to interveneand appoint a man. (Godfrey On Trusts, p. 603.) The power toappoint a successor given in the»®deed does not extend to thenominee of the Court, because he gets his power not from the deedgiving the power, but from 'the Court, which has no pow'5l» toinvest its nominee with the right of appointing a successor. Sec-tion 5 of the Trustees’ Ordinance refers to the powers necessary toadminister the estate and no more. The power to name a substi-tute is an extraordinary power, and cannot be taken unless given.Cecil v. Langdon (28 Chan. Division, 1).
H. A. Jayawardene, for respondent.—When the trustee underthe deed dies, the Court appoints another. to succeed him andinvests him with all the powers that the deceased trustee enjoyedunder the deed. Here the original trustee under the deed hadthe power of naming a substitute. Section 5 enacts that the newtrustee may exercise all those powers. Why should all mean allbut one? The Court does not create a new trust, but continuesan old trust created by the deed. White v. White (5 Beavan, 221).Even if there had been no statute, the Court had the power toauthorize its nominee to appoint a successor. In Holder v.Durbin (11 Beavan, 594) the Judges, while not denying that theCourt had the power to authorize its nominee to appoint a suc-cessor, thought that the Court should not exercise the power.[Layard, C.J.—Is there any difference between our section andthe provision under the English Act of I860?] No. The decision-in 35 Beavan is a continuation of the ruling in 11 Beavan. [Layard,.
J.—The will in the present case, I see, gives to the trustee-appointed by the Court the power of nominating a successor.]
Walter Pereira, for appellant.—But a private person cannotran counter to the law and invest »an officer of the Court with,more power than the law gives him. [Layard, C.J.—How dods-he run counter to the law?] If the provision an the will isconsistent with section 5, it is useless; if inconsistent, then itcannot be good; so that, in either case the provision in the willdoes not enhance the powers of* the Courf’s nominee. [Layard,C.J.—The will does not limit the statutory powers of the Court’snominee, it simply adds to them.] The will cannot do that, as the-
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new trustee is the creature of the Court. The nominee of theCourt can only exercise such powers as he derives from theCourt. A private person cannot expand the powers of the trusteeunder the Ordinance.
Cur. adv. vtdt.
14th July, 1903. Layakd, C.J.—
The only question argued in this case was whether the trusteenominated by the District Court under the Ordinance No. 7 of1871 had power to appoint another in his stead.
TSr settlement in the case contained a power of appointing anew trustee, and expressly provides that, in the event of a trusteebeing appointed by the District Court in pursuance of the Ordi-nance No. 7 of 1871, such trustee shall have power to appoint anew trustee. The settlor having expressly authorized the trusteenominated by the Court to exercise the power of appointment, it isobvious that such trustee can lawfully exercise that power. Theappeal must be dismissed with costs.
Wendt, J.—
This is an action by the plaintiff, as trustee of a certainsettlement, to realize the money secured by a mortgage. The firstdefendant is the mortgagor, and the second defendant (the wife ofthe third defendant) is a transferee from him of the mortgagedproperty. The mortgage was expressed to be in favour of oneBastian Perera, the then trustee of the' settlement. He died in1896, and the District Court of Colombo, in May, 1897, actingunder the Property and Trustees’ Ordinance, 1871, section 4,appointed B. 0. Dias to be trustee of the settlement. Dias beingdesirous of retiring from the office of trustee, by indenture datedJuly, 1900, appointed the plaintiff to be trustee and assigned to himthe property of the trust.
A preliminary question was tried in the District Court as to thevalidity of plaintiff’s appointment, thd second and third defendantscontending that once the Court had appointed a trustee, every
subsequent appointment must* be made by the Court, irrespective(as I understand the argument) of any provision in the instrumentof settlement. * The District Judge held that plaintiff’s appoint-
ment was regular, and the° *
appealed against this ruling.
held
second and
third defendants have
It appears to me that the question between the narties can besolved by a reference to the instrument of settlement itself, ft
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is of course open to a settlor to appoint trustees himself or tonominate some other person to do so, and he may confer uponthe trustees such powers 03 he pleases. The commonest of thesepowers is a power to nominate a successor in the trusteeship. Ifa sole trustee should die without having exercised this power,and it should therefore become necessary to apply to the Courtto appoint under the Ordinance, I see no reason why thesettlor should not empower the Court’s nominee in his turn toappoint his successor in the trusteeship.
The present settlement provides as follows:—
‘ ‘ It shall be lawful for the trustees hereby appointed, forthe continuing trustee or trustees for the time being, or if thereshall be no continuing trustee, then for the retiring or refusingtrustee or trustees, or for the District Court of Colombo inpursuance of the powers and provisions contained in section 4 ofthe Ordinance No. 7 of 1871, to appoint any other person or
persons to be a trustee or trustees and every such new
trustee shall have all the powers and authorities of the trusteein whose place he shall be appointed or substituted.
1903.
July 14.
Wsndt, J.
■The express reference to the appointment of trustees by theCourt and the effect of the words in the sentence following thisreference distinguish this case from those cited to us by theappellants’ counsel. The power to appoint is given to the con-tinuing trustee or trustees for the time being, and this from thecontext must include a trustee appointed by the Court. Evenmore clearly is this the effect of the words “ every such newtrustee ’’ which come after the words relating to appointmentsby the Court. Every such new trustee is given all the powers _and authorities of his immediate predecessor, and that includesthe power of appointing a new trustee. I see no distinctionbetween such power of appointment and the powers directlyrelating to the administration of the trust property, where thewords of the settlement apply equally to both. In the case ofBartley v. Bartley (3 Drewry, 384), all the trustees appointed >under t^ie instrument having*died, the Court appointed three newtrustees. The deed contained a power to the continuing orsurviving trustees to appoint a new trustee or trustees and directedthat the “ trustee or trustees for the time being ” should receivethe income of certain property and apply,the same at “ their orhis entire discretion ” for the benefit of certain persons. It wasargued that the discretionary power could bfc exercised by anytrustees for 'the time being, hqwever appointed, provided onlythat they were lawfully appointed, and Kindersley, V. C., heldaccordingly.
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1903. The provisions of our Ordinance of 1871 appear to be based onJuly 14. those of section 27 of Lord Cranworth’s Act (23 and 24 Vic. c. 145),Wundt, J. and we were pressed with the authority of Cooper v. McDonald*,(35 Beavan, 504), which was decided some six years after the passingof the Act. That case, it was said, had, in spite of the wide termsof section 27, decided that a trustee appointed by the Court couldnot exercise the power of appointment under the instrument.But I find that that case was not decided under Lord Cranworth’sAct, because by section 34 its provisions were limited to instru-ments executed after the passing of the Act, and to wills or codicilsconfirmed or revived by a codicil executed after that date, andthe^ggll there before the Court was dated long anterior to theAct. We have not been referred to any case decided upon LordCranworth’s Act, which would entitle us to hold that the provisionin section 5 of our Ordinance, “ such newly nominated trustee ortrustees shall thenceforth possess and enjoy all the powers of atrustee or trustees in the same manner as if he or they had beennominated or appointed in and by the original deed or instrumentcreating the trust, ” do not include the power of appointing anew trustee. Apart from authority the words themselves, in myopinion, include that power.
I think that the District Judge’s order was right, and that itshould be affirmed with costs and the case sent back for thecompletion of the trial.
I would call the District Judge’s attention to the incompleteway in which the record has been'made up for this Court. Thereis no copy of the order of Court appointing Dias or of theinstrument by which Dias appointed, plaintiff, and even for thevery terms of the instrument creating the trust we had to dependupon the brief of one of the counsel engaged in the case. TheCourt should have called upon the plaintiff • to supply thesedocuments, and should not have proceeded further until theywere produced.