046-NLR-NLR-V-43-CHINNIAH-v.-FERNANDO.pdf
I IE ARNE J.—Chinniah v. Fernando.
185
1942Present: Howard C.J. and Hearne J.
CHINNIAH v. FERNANDO.64—D. C. Colombo, 2,390.
Trust—Power given by wife to husband to invest or reinvest proceeds of saleof property for the benefit of children—And to distribute or redistributemoneys in terms of last will—Conveyance of property and money incourt to children subject to conditions—Right of children to draw themoney.
Mrs. Chinniah in anticipation of the sale of certain property she hadinherited appointed her husband Chinniah trustee over the proceeds ofsale for the benefit of her children. The powers given to the trusteeby the document (PI) included (a) to receive all the proceeds of thesale of the property and to hold the same in trust for the children,
to invest or re-invest the said moneys in any manner he thinks proper,
to distribute or redistribute the said moneys in terms of the last willand testament already executed, among the said children. By (P 2)Chinniah conveyed three allotments of land to three children and also themoney lying in the District Court of Jaffna.
The habendum clause states that the premises conveyed or intendedto be are to be held, subject to three conditions (1) that the propertiesare subject to a life-interest in the author of the trust, (2) that the moneylying in the District Court of Jaffna should after meeting certain claimsof R (one of the children) be used in completing the buildings on theimmovable property or redeeming the mortgage of an estate purchasedwith moneys belonging to the trust fund, (3) that the author of the trustfund shall have the power to redistribute the property.
Held, that there had been no distribution of the money in the DistrictCourt of Jaffna among the three children absolutely or for their ex-clusive benefit by P 2 nor was such a distribution intended at the timeit was executed.
^^PPEAL from an order of the District Judge of Colombo.
H. V. Perera, K.C. (with him M. M. K. Subramaniam), for respondent,appellant.
M.T. de S. Amarasekere, K.C. (with him N. Nadarajah and F. C. W.VanGeyzel), for applicant, respondent.
Cur. adv. vult.
January 26, 1942. Hearne J.—
This appeal involves the interpretation of certain documents.
Mrs. Chinniah, acting in anticipation of the sale by her of propertyshe had inherited, appointed her husband, Dr. Chinniah, trustee over theproceeds of sale for the benefit of her children of whom there were, atthat time, five. (P 1 dated February 15, 1920).
186HEARNE J.—Chinniah v. Fernando.
Immovable properly at Greenpath was purchased out of the trustfunds and a mortgage was taken of another property. The money dueunder the latter was paid, by the legal representative of the mortgagorwho died, to the credit of D. C. Testamentary, Jaffna No. 5,426.
In July, 1927, by deed P 2, after reciting that two of the children hadbeen adequately provided for, Dr. Chinniah •* conveyed ” to the remain-ing three children the Greenpath property which had been divided intolots. With that conveyance this appeal is not concerned. In the samedeed he also dealt with the money “ lying in the District Court ofJaffna in testamentary case 5,426 ”. He “ gave, conveyed and transferredthe money to the three children but elsewhere in the deed earmarkedit for certain specific purposes including the redemption of the mortgageof another estate purchased out of the trust funds ”.
In 1930 Dr. Chinniah on an application made to the District Court ofColombo was appointed curator of the property of the three minorchildren. In 1935 he applied to the court for permission to purchaseimmovable property with the money on deposit in the Jaffna testa-mentary case but on June 28 of that year, when his application was beforethe court, it was found that the three minors had attained theirmajority.
On July 13, 1935, Dr. Chinniah, after reciting that he had overlookeda child, Kumarasamy, who had been born after the execution of P 1,“ revoked ” the • onveyance of the Greenpath properties. In referringto the money deposit in the Court at Jaffna he stated that no dis-tribution had in fact taken place and that there was pending before theCourt an application to buy another property with it. This documentis marked R 2.
Thereafter Dr. Chinniah had himself appointed curator over the minorKumarasamy, and in May, 1938, renewed his application for the invest-ment of the money on deposit in immovable property. That applicationwas withdrawn and, as soon as it was, Mrs. Fernando, one of the threechildren referred to in P 2, moved for an order for payment to her ofone-third of the money on deposit which had now been transferred fromJaffna to the credit of the curator proceedings. The court made an earparte order that the money was subject to a trust and could not be paidout. Mrs. Fernando then made an application for a notice on the trusteeto show cause why the application (which had been refused) should notbe allowed. This application met with the same fate as the earlier one.Undeterred by her failures she came into Court again on June 18, 1940,renewing her original application, this time supported by a consent inwriting from her mother, the author of the trust, authorising the paymentto her of a half share of the money in Court. On this application an orderwas made directing the payment to her of one-third of the money.Dr. Chinniah, the respondent to the application, has appealed.
Counsel for the appellant submitted that the applicant’s proper coursewas to institute a regular action against her father. He conceded thatin such action the ex parte dismissal of her application would not operateas res judicata of the subject-matter of the application but in his sub-mission finality having been reached in the curator proceedings by the
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HE ARNE J.—Chinniah v. Fernando.
disposal of the application, it could not be reopened in the same proceed-ings. 1 have no comment to make on this, as I propose to allow theappeal on another ground.
On the merits of the appeal Counsel argued that if one read P 2 as a,whole and noted, in particular, the limitations contained in the habendum,.it is clear that “ no distribution ” had taken place. It was furtherargued that even if there had been a distribution the appellant wasentitled to revoke it and make a “ redistribution ”.
The powers given to the trustee were very wide indeed. He wasgiven the power (a) to receive all the proceeds of the sale of “ Hopewell ”(the property Mrs. Chinniah had inherited) and hold the same in trustfor our children (the names of five children are'mentioned) collectivelyand for their common use with the right of survivorship unto them;if any of them should predecease the other without any child or children ;(51 to invest or reinvest the said moneys in any manner he thinksproper …. ;(c) to distribute or redistribute the said moneys
in terms of the last will and testament already executed by me amongthe said children whenever the same may be found necessary or todistribute in any other proportion when dowry has to be given to any;one or more of our daughters.
The last will referred to in (c) is R 1. Its main clauses are these : —
” I do hereby nominate constitute and appoint our children andany child or children which shall or may be begotten by me and myhusband the said Arunasalam Chinniah during our marriage to bethe sole heirs of all the estate and effects which shall be left by meafter my death, whether movable or immovable and of what natureor kindsoever and wheresoever situate or whether the same be inpossession reversion remainder or expectancy nothing excepted. ”
I do hereby nominate and appoint my husband the said Aruna-salam Chinniah to be the executor of this my last will and testamenthereby giving and granting unto him all such power and authorityas are required or allowed in law.”
“ I do hereby also nominate and appoint my said husband the saidArunasalam Chinniah to be the trustee for and on behalf of my childor children hereby giving and granting unto him full power and authorityto sell or mortgage all my landed and other properties and invest theproceeds in any manner he thinks fit and proper and thereafter toconvert the same in any manner he thinks fit and proper and in shortwith full power to deal with my properties in any manner he thinks fitand proper, for the benefit of our said child or children.”
The arguments addressed to us by Counsel for the respondent to thisappeal were (1) that the appellant had transferred or “ distributed ”the money referred to in P 2, that the restriction he had imposed on theuse of the money so distributed was an arrogation to himself of a powerthat P 1 did not confer upon him and was therefore bad and (2) that asP 2 was, on the face of it, an outright distribution of money with noreservation in the deed of a power to revoke such distribution, it wasfinal and no redistribution could thereafter take place.
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HEARNE J.—Chinniah r. Fernando.
The learned trial Judge upheld both these arguments. He held thatthe condition imposed was “ no condition at all ” and concluded thatthe “ £und in Court had been transferred to the three children On thesecond point he said " Counsel for the applicant granted that the powersof redistribution would have also included the right of the trustee to re-distribute even if he had distributed the assets among the beneficiariesin a particuiar way had he reserved to himself the power to redistributeby deed “ I am of opinion that distribution was made by the trusteeby virtue of the powers vested in him by clause (c) of P 1 by means of theinstrument P 2 of July 15, 1927, without reserving to himself any powerof redistribution and that the rights of the applicant that became vestedin her under the said deed of distribution cannot be subsequently alteredor varied so as to take away or diminish those rights
Assuming there was a valid and effective distribution, it is certainlyin accordance .with English law that '' a power once executed, cannot berevoked unless a power of revocation is reserved by the instrumentexecuting the power, although the instrument creating the powerauthorises revocation expressly ”. Counsel for the appellant did notargue that the principle that a deed once executed cannot be revokedunless it reserves a power of revocation is foreign to Roman-Dutch law*,as I would have expected Mr. Perera to do if this were the case. Hisargument was that the deed confers powers of “ distribution ” and of“ redistribution ” and that even if the powers of distribution had beenexhausted, the powers of redistribution remained in the trustee andcould, therefore, be exercised by him. There can be no doubt, and it wasvirtually conceded in the argument, that a redistribution can follow adistribution. But the point is whether the trustee had put it beyond hispower to redistribute what he had already distributed. I think he had.Redistribution implies, and is also conditioned by, a power to revoke.If in making a distribution the power to revoke is reserved, a redistributioncan take place ; but if such power is not reserved, the conveyance isirrevocable and the powers of redistribution which could otherwisehave been exercised cannot be exercised. The Judge’s view of thismatter appears to be right.
There remains the question of whether “ the fund in Court had beentransferred to the three children ”. If so, then the respondent would beentitled to a one-third share.
P 2 is an unusual document. In the premises there is a conveyanceof the three lots into which the Greenpath property had been dividedand also the money lying in the District Court of Jaffna. The habendumclause states that the premises (the Greenpath property) conveyed or“ intended so to be ” are to be had and held subject to three conditions—(1) that the properties are subject to a life-interest in the author of thetrust, (2) that the money lying in the District Court of Jaffna shouldafter meeting certain claims of Rasamany be used in completing thebuildings on the immovable property or redeeming the mortgage ofKanadaluwa estate purchased with monies belonging to the trust fundand (3) that the author of the trust shall have power to redistribute theproperty.
HEARNE J.—Chinniah v. Fernando.139
Is there in that document an unequivocal transfer of the fund to thethree children ? The Judge deals with the matter by holding that therewas a complete execution of the power of transfer and that somethingwas added (he refers to (2) above) which was in excess of the trustee spowers and, therefore, bad.
Whatever may be said in regard to the inoperativeness of (2) as acondition attached to the vesting of the immovable property, it was notin excess of the trustee’s powers in the sense that it was something he couldnot do. It cannot be said that he had no power to make provision forRasamany. one of the children or that he could not improve a propertyor redeem the mortgage of a property purchased with trust money.That being the case the question that arises is what is the effect of a deedwhich, on the one hand, “ conveys ” the fund to the three childrenand, on the other, says that it is not conveyed to them for their exclusivebenefit but for the benefit of Rasamany, for the improvement of trustproperty and for the redemption of a mortgage of part of the trustproperty, all these being matters which the trustee could properly andlegitimately perform in terms of the trust? It is not a question whichinvolves the determination of the estate, as in the case of immovableproperty which passes when the grant in the premises is controlled bywords of limitation in the habendum. Rather it is to which of twomutually repugnant clauses effect is to be given.
In old cases the rule was laid down that “ if there be two clausesin a deed repugnant the one to the other the first part shallbe received and the latter rejected. ” but in Cope v. Cope1 theconstruction turned upon the whole tenor of the deed. This viewof the nature of the rule was followed in Walker v. Giles Atpage 702 Wilde C.J. said “ As the different parts of the deed areinconsistent with each other the question is to which part effect oughtto be given. There is no doubt that, applying the approved rules ofconstruction to this instrument, effect ought to be given to that partwhich is calculated to carry into effect the real intention ….
In that case the first part, for the reason given, was preferred, while inDoran v. Ross3 the latter of two inconsistent clauses was, on the con-struction of the whole settlement, allowed to prevail, though the Lord Chan-cellor thought that to do so was contrary to what the parties had meantto do.
In my opinion on a construction of P 2 it states no more than that themoney in Court shall be placed in the control of the three children for thepurpose of carrying out what was within the competence of the trusteeto carry out himself. I find it impossible to hold that there had been anydistribution amongst the three children absolutely and for their exclusivebenefit or that, at the time P 2 was executed, such a distribution wasintended.
Now, on coming to Court, the applicant asserted that 1/3 of the moneyhad already been distributed to her for her own exclusive benefit and this
position, in the view I take of the matter, cannot be maintained.
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190
HOWARD C.J.—Weerasinghe v. Sarny Chettiar.
For the purpose of determining this appeal, it has not been necessaryto deal with the Judge’s view that the power of distribution conferredon the trustee was a power to distribute the monies in equal sharesamongst only those children who are named in the instrument of trustor “ to distribute in any other proportion whenever a dowry has to begiven to one of the daughters
The appeal is allowed with costs and the application in the lower courtmust be dismissed with costs.
Howard C.J.—I agree.
Appeal alloroed.