088-NLR-NLR-V-20-HOLSINGER-v.-NICHOLAS.pdf
( 417 )
Present: Bertram C.J. and De Sampayo J.
In re the Estate of P. H. Nicholas.
HOLSINGER v. NICHOLAS.
71—D. 0. (Inty.) Negombo, 1,601.
Judicial settlement—Right of Court to inquire into charges of waste andnegligence againstan executor—Isseparate actionnecessary,i—
Is executor entitled to charge more for proctor's fees than whatthe Civil Procedure Code ' provides?—Notary's fees—Executor'sremuneration—Costs.
Where a complaint is made against an executor of negligence orwaste, it is competent to the Court to inquire into the matter in ajudicial . settlement. The objectofa judicialsettlement is thatall
matters that may arise in the course of the administration of theestate between the accounting party and the beneficiary should bedealt with promptly and inanexpeditiousmanner,so . thatthe
wholequestion mightbe finally wound upin those proceedings.
If the Judge thinks that the matter is. of such complication andimportance that it can only be inquired into by a regular action,hemight suspend thesettlement untilthat matter isdetermined
bya regular action,or conclude thesettlement .subject to the
determination of that matter.
Where an executor paid to the proctor, Whom he employed for • thepurpose of the legal business of administration, a sum of Bs. 5,000,which was agreed upon in advance,—
Held, that it was open to. the .Court to require the amount tobe submitted to taxation ' before passing the item in the judicialsettlement.
Under Ordinance Bo. 1 of 1907 a notary is not entitled to chargeahigher fee than thatprescribed in theOrdinance, andan executor
cannot debit the estate with a higher fee for notarial charges.
The remuneration of an executor should not be a lump sum, butby a rate.
'T’HE facts are set out in the order of the District Judge, M- S'.
. Sreshta, Esq.:.—
This inquiry has been held upon an application made by the heirsfor a judicial settlement of the- accounts of the executor. I have alreadydecided that this account can be judicially settled upon ' the petitionpresented by the heirs. The other two issues which, of consent, wereframed are:—
Cananyofthe itemsreferred toin the petition of theheirs be
judicially settled?
If they can be, are any of such items, or any part of them, notchargeable against the estate?
Mostoftheitems intheaccountwhich are questionedrelate to
moneypaidtocreditorsandlegateesfor alleged necessaryexpenses
and for the services of the executor. Two of the items refer to amountsallegedtobeirrecoverable,and, therefore, ' not recovered,namely,
1918.
14—XX.
( 418 ’,)
1018.
Botsmger v*
'Nicholas
The executor expressed his willingness to assign the note in questiorto the heirs, as he has a hold on the interest payable to the first anqsecond petitioners to secure himself against any personal loss by reason ofmaking such assignment. I therefore -make an order that the executordo assign to the threepetitioners thenotesinquestion,ontheir giving
security to the Court that any money' recovered on the notes would be* deposited by them in Court to the credit of * the estate. Although I ammaking this order, it is desirable that I should record my opinion thatthe executor has not – exercised due diligence in regard to these two notes.One of them was granted by Mrs. I)., whose husband is alive. Theexecutor made no effort to recover the money due on this note. Thislady’s husband is a well-known doctor, and yet in practice at Negombo.In fact, he was one of the doctors who attended on the testatrix duringher illness, and who was paid the large sum of Bs. 852.50 (vide Be. 24attached to the final account).
The executor admits thathehadno . reason tosuppose thatthe
money would not be paid, It is. incomprehensible why he did not speakto I^r. L. and ask him for the' payment of this debt. There is- nothingto show that Mrs. L.obtained moneyon .thisnotewithouthis consent,
and he might have regarded the debt as. one of honour. .Before paymentwas,made toDr.'L. onaccount of medicalattendance, an effort might*
have been made to deduct the money due on the note..
As regards the promissory note- granted by M. B. P., proper inquiryshould have been made as to vrho he was. The. heirs should have beenquestioned. There is nothing' to 'showthat he hasno property,and
thatit wouldbewasteofmoney tosuehim. No letter ofdemand
was sent either to Mrs. Leembruggen or to Mr. Perera.
I shall now deal with the objections regarding the payment . of certainitems. The- objection tothe charges ofEs.50andBs.125in schedule
A 5 were practically withdrawn. As regards the charge of Bs. 105.50,thatwas incurredon accountof visitspaidto lands mortgagedto the
estate; the executor admitted that itwasnothisdutyasexecutor to
consider thepropriety ofthe investment madeby the testatrix, and
thathe visitedthese landsasthey hadto beassigned by him asexecutor
to himself as trustee. The will made him trustee of the cash bequestto the first petitioner. This chargemust, therefore,be disallowedin
the present account.x,
As regards the charge of Bs. 72.70 appearing in schedule A 4, it iscomposed of Bs. 62,beingthe hire of motor caremployed bythe executor
on the dayof thefuneral of the testatrix, and Bs. 1Q.70,the amount
of the bill of the Negomboresthouse-keeper forresthouse charges,
dinner, drinks, &c., on the same day. The only work .connected withthe funeral that was done by the executor on this day was the orderingof a hearseand acoffinfor the deceased fromthe firm ofWalles. The
debts due on promissory notes by Mrs. Leembruggen and M. B. Perera.These are items 1and 2 contained inschedule A. 2 annexed tothe
account. ……
It is clear fromsection – 739 oftheCivilProcedure Code thatthe
District Court is empowered to enter a decree under chapter LV. of theCivil Procedure Code, adjudicating'uponthefacts referred. to . inthe
section. It follows, .therefore, thatinaninquiry held underthis
chapter the Courthas power toholdthenecessary inquiry forthe
purpose of making such adjudication
( 419 )
order lor themcouldhavebeen given bytelephone. At the most the
executor couldhave gonein-a rickshawto the firm’splace of. business.
It wasabsolutely unnecessary to engage amotorcarlorthe purpose
of going tothis place,or to gotoNegombofoxthefuneral.The
executor had noneedto goto the funeralin hie capacity asexecutor.
He .attendedthe funeral,being aclose relationof’thedeceased.He
could have easily gone to Negombo by the same afternoon train whichtook the coffin.As regardsthe resthousecharges,. they wereincurred
at Negombo, notonlyfor the executor, butfor some others. AsI have
said, the. visit paid by theexecutortoNegombowasnotmade inhis
capacityas executor. The entirety of thischargeofBs. 72.70 is,
therefore, disallowed.
1918.
Bolainger
Nicholas
Charges of Hs. 283in Schedule A6.—Mr. Martin wassued in the
District Court of Colombo on a mortgage bond (see P 8). The defend-ant was served with summons, but made no appearance in Court. Thecase was* fixed for ex parte trial on June 16. The testatrix died beforethat date. Subsequently the defendant deposited the amount ofprincipal and 'interest.*Later on theexecutor took stepstowithdraw
the money in . deposit.The chargenow under scrutinyis-made on
account of the legal expenses incurred by the executor to draw themoney in deposit. The defendant not havingtendered the money
due by him, even on the date on which he had to appear in Court onsummons, could not have pleaded that no' . demand of the debt hadbeen made from him before the institution of the action. The expensesin question were necessarily incurred by the executor, and should havebeen recovered from the defendant." It hasnotbeen shownthat it
would have been waste of money to endeavour to recover . this sumfrom the defendant. The executor’sexplanation, throughhiscounsel,
was that these expenses could not have been charged against thedefendant. However* in view of the SupremeCourtdecisionalready
referred to, I cannot make any order against the executor regardingth non-recovery of costs from Mr. Martin.I would,however,suggest
that as it appears from the journal entries onP 8that as no decree has
-been entered as yet against Mr. Martin, steps be .taken to recover fromhim the amount of costs charged against the estate. Of course, theexecutor should satisfy himself that this money is recoverable.
– Es. 960 paid as Legacies to Misses – Ella and Jessie Nicholas.—Accordingto .the will, these legacies were payable by the heirs. There is no residuein the estate; and the result of the payment of these legacies havingbeen made by the executor is that the cash bequest made in trust forthe first petitionerandher childrenhasbeen diminished.The heirs of
the first petitioner are, therefore, prejudiced. The executor committedan error of judgment, which neither he nor his counsel appears to . haveappreciated. I • direct the heirs to refund in equal shares ' this sum ofBs. 960 to be credited to the estate. I may add that the heirs couldhave easily refunded this money totheexecutor to beadded to the
trust fund, if they had the interests of the fiduciary heirs at heart.
The Non-paymentofMortgage ontheNegombo Housebequeathed to
"the First Petitioner.—The first petitioner was given the Negombo Houseand View HouseatKandy. The thirdpetitioner was *given Dawford
House at Nuwara Eliya. All these houses were subject to mortgage.The executor paidoffthe mortgagesonLawford Houseand on- View
House. Now, the petitioners ■ want that the mortgage on the Negombo
( 420 )
1918.
Holsinger v.
Nicholas
House should alsobedischarged by the executor.So far as Ican see,
theexecutor was inerrorindischarging mortgages ' on the Nnwara Eliya
and the Kandyhouses. The pointoflawinvolvedhasnot been argued;
butreading the opinionofcounsel obtainedby the executor himself
(see P 1), it appears to me that the mortgages should have been left to.be discharged bytheheirs themselves. Theresultofthepaymentof
these mortgageshasbeenthat the pecuniary legacy to the first petitioner
and her childrenhasbeen diminished.Boththe' heirsarebenefitedby
this errormadebytheexecutor. The thirdpetitioner hasobtained
Bs.5,000 (?) morethanheshould have got;and the first petitioner,
who was onlyentitled tothe interest onBs. 5,000(?), has obtained
the capitalitself.As boththe heirs, throughtheir counsel,accepted
the opinion given in PI to be* correct, I direct them to refund to thecreditof theestate the amountspaidby the executorto dischargethe
' mortgages in question.
ChargeofRs. 750forLawyer'sFees inSchedule A3.—Although
this charge wasobjected to by thepetitionersintheirpetition• as
excessive, and ontheground that nodetails weregiven ofthe charge,
no details haveyet beengiven,andnoevidencehasbeen adduced to
show thevariousitems ofwork which weredone. Accordingto the
executor,thelawyers simply appeartohave conductedsomecorre-spondence.' He' says:“ These chargesareonly forcorrespondence.
The other items were forcorrespondencewithMessrs. F.J.& G*. de
Saram in connection with”Thechargemade appears, primA
facie, to- beexcessive.Theexecutor’sexcuseis that he*wasdealing
with an. establishedfirm, whose charges he had no reasonto dispute
or question. Astheexecutor actually paid this amount, andas it may
be that thechargeswould not have been questionedbythe testatrix if
she werealive. 1 shallpassthis item,butIshall take itintoaccount
when fixing the commission payable to the executor.
The charges madeforexecuting the variousdeeds (see E 2) appear
tobemostexorbitant. The chargesare greatly inexcessofthose
allowed by the NotariesOrdinance. Althoughon the firstday the
learned counselforthepetitioners made a statement tothat effect,
andalthough theexecutorundertook tofile a statementshowingthe
amounts ' paid for stampsand for feesand particulars astohow they
were arrivedat, theexecutor’s lawyer,' who was alsothenotary employed
by him, has studiously avoided showing the charges made for the variousitemsof workdone. Itwas obviousthat thestatement was wanted>
inorder toenable theCourt toseewhether .there wasanyover-charge
obnoxious to the Notaries Ordinance. The notary apparently wantsto take cover under certain items which do not appear to have beenprovided for in the Notaries Ordinance ; but what those items are. itisnotquiteclear, andhad suchitems and the chargesmadeforthem
beenstated clearly, Ihavenodoubt that . it would havebeen obvious*
that a breach of the Notaries Ordinance had been committed. Section34 of theNotaries Ordinance makes a demandorinsistence upon
receiving- ahigherfee than authorized punishablewith a fine. The
■testatrix was a wealthy lady, and the estate belonged originally to herhusband, who acquired it by dint of industry and hard work (see execu-tor’sevidence).The titleto all thepropertiesappears to have been
quitegood. Thesamefirm oflawyersemployed by theexecutorhad *
beenemployed bythetestatrix,and theymust have knowna gooddeal
( 421 .)
about the estate.Moreover, •the executorhasnot got to warrantand
defend title. I cannot understand why such exorbitant charges shouldhave been made for executing the transfers in question. These transferswere entirely of a formal character, and it has been held by the SupremeCourt that – theyare notnecessary. Itwas,however, saidthatthe
Loan Board does not lend money in the absence of conveyances executedbyexecutors. Even if so, there was no need to wastemoneyinexecut-ing deeds not required bylaw, unless the.heirs insisteduponthe
execution of suchdeeds forthe purposeof borrowing moneyfromthe
Loan Board. The Loan Board apparently follows the practice prevail-ingbefore the Supreme* Court decision referred to, andI think itwould
besatisfied with a copy of the decree of Court on ajudicialsettlement
ofthe estate, showing the distribution of . the estafeamongtheheirs.
I do not, however, disallow the charges altogether, as the petitioners'counsel did not ask for such an order.
^1918.
Holeinger v.Nicholas
To test the reasonableness of the charges, I have looked into * deedP 9, which is one of the deeds for which the charges in question have beenmade. A rough calculation shows that this deed contains about 8 to 9folios of 120 words. The charge for drawing, engrossing, and attestingthisdeed would, therefore,be- Bs. 22.50. As I have .already said,
examination of title was not necessary. There is nothing to thow thattheexecutor requested thenotary to examinethe title.A chargeis
payable only for examining titleatthe requestof anyparty.But
even ifa chargeforexamining title can beallowed, only Be. 1 can be
charged for thefirstdeed examined, and 50cents for each additional
deedexamined. The chargeforregistering anydeed isonly. Bs.5.-
The charge for sending a duplicate to the Begistrar of Lands is half thecharge for drawing the deed, namely, Bs. 11.25. There are some othersmall items of work mentioned inthestatement E Bs.50 forthis
deed would appear to be quite ample for the work ■ done in connectionwith thisdeed.Thechances are that eventhis amount is more – than
what ispayable.Ifin reality this amountis less than what can be
charged,thefault isentirelythe executor'sand the notary’s forthey
failto frankly and dearlystatethe . details oftheir charges; theyare
clearlyafraidthatthe charges, ifgiven in detail, cannot bearscrutiny.
In someof theotherdeeds a little more workmay have been don* and
in someless.Ontheaveragea sum of Bs.50 may be allowed -lcreach
cf the eight deeds first mentioned. The deed for the assignment ;fSilva’sbondwasa comparativelyunimportant one, involvingonly a
sum. ofBs.750.• Iwouldallow the charges as below for stampsand
work done: —
Stamps Work done. Total.DocumentRs.. Rs.Rs.
View House ….26..50..76
Negombo House ….28..50…78
Welihena….31..5081
Lawford House ….26..50..76
Mortgage bond of J. L.Rodrigo..26..50..76
Mortgage bond of B. V.Rodrigo'..26..50..76
Bond of Fernando….26:.50…‘76
Bond of Samafaweera..25..50..75
Bond of Simon Silva (inclusivecharge for stamps and work)..—..30..30
Total ..214430644
( 422 )
1918.
Holsinger v.
Nicholas
tion for paying this heavy charge is that he entered into an agreementwith his proctorthathe wouldpay thisamount asthefee for the work
to be done in this case. X shall, first jpf, all, deal with the question whetherthe executor wasjustified inentering intoa specialagreementwith his
proctor to pay asum whichmight be inexcess ofthe taxedcosts. I
understood fromthepetitioners* counsolthat intheColombo District
Court the costs are always taxed when there is a dispute between theexecutor and theheirs. It hasbeen heldin Johnson' v.Telford1 that an
executor isnot entitled to be allowed without questiontheamount of
bills ofcostswhichhe has paid to , hissolicitor,although suchpayment
was madebona fide.No doubtan agreement enteredinto with his
proctorwillbindthe executor.- Butit cannot bind the -heirs. I
understood that the learned counsel for the executor to accept' this proposi-tion, but to~ contendthat thecharge ofBs. 5,000wasa reasonable one
in thiscase.But I am not quite surewhetherthat was hisposition.
It is however, clear from the decision of the case just quoted that theheirs can questionthe chargefor costs andclaim thatitbe taxed. There
is no provision in our law for, as was done in .that case, moderatinga billof costs—asummary method oftaxingbills, which apparently
canbe adopted inEnglish Courtsinlieu of regular taxationatthe
discretion of the Court.
The next question is whether the charge of Bs. 5,000 made is reason-able. If the executor agreed to pay such alarge sumofmoneyas costs,
he acted recklessly. He says he agreed to pay this amount whethertheworkwas muchor little. HewaBin a position of trust.Itwas
hisdutyto" safeguard the interestsofthe ' heirs as carefully asifthey
were his own interests. Did he so safeguard them by agreeing to giveaway onaccount ofcosts such a largesum . of money, equal tohisown
salary fora whole year,, withouttrying to ascertain whatthetaxed costs
would be,or what theusual costswould be? Would itnothave struck
any layman that Bs. 5,000 for proctor’s costs was something enormous?It is surprising that the proctor, knowing that the costs would have .to betaxed if disputed by the heirs, did not ask the executor to get the consentof. the heirs also. It is also surprising that a writing was not obtained fromthe executor that he consented to pay Bs. 5,000 on account of the costs
1(1827) 3 Russ. 477.
It- is dear fromsab-section (3) of section '4 of Ordinance
No. 1 of 1907, to which I have already referred, that a notary cannotenter into any – agreement for recovering higher charges than ere pre-scribed in the- Notaries OrdinanceThenotary cannot,therefore
under any circumstances, make any higher charge than is prescribedin the Notaries Ordinance; as I have said before, the notary, perhaps,takes refugeundercertain items whichare not provided forin the
Notaries Ordinance; if so, he has not stated what those items are, andwhat charges are made for thoseitems. Iamnotsatisfied thatthere
are any suchitems;if there be any, thecharges for them mustbe most
unreasonable to increase the charges from the amount that I haveallowed, namely, . Bs. 430, to Bs. 1,825
Now T come to the costs or administration, which include a sum ofBs. 5,000 on account of proctor’sfees fortheworkdone inthiscase.
This sum was strongly objected to on the ground that it was excessive.It was admitted by the executor’scounselthatthischarge isinexcess
of what thecostswould amount to iftaxed. The executor'sexplana-
( 423)
without taxation. Some better evidence than the executor's bare state-ment should havebeenadducedto provethealleged agreement. I am1
notsatisfiedthatthere wasanagreementto pay Es. 5,000 asalleged.
Although, no doubt, this estate was a very large one, the wcrk thathad to bedonebythe executor's proctorwas notdifficult. The ^ estate
was in an excellent condition; there were practically no- cases to' bebrought. Inthetwocasesofpromissory notes in which anaction
might have been brought noactionwas brought. There were no
debts to pay up.Nointricateaccounts'hadto be looked into. The
immovable propertywaslookedafter bytheheirs themselves. There
was, no doubt, an important question of law involved as regards theredemption of the mortgages;but thatwasa pure questionof law,
involving no labour for the proctor; counsel's opinion was necessary,and was obtained.Infact, this was oneof the easiestestates to
administer that I have comeacross. Ishouldhave added that,in the.
case against Mr. Martin, where the costs . could have been recoveredfrom him, they were not recovered.
In these circumstances, there is no reason whatever why the executorshould be allowed,onaccount- of proctor’s fees, anythingin excess
of taxed costs.I therefore directthat the executorbe allowed,not
Rs.5,000 on accountof proctor's costs,but only such costsas ore
:axed by the Secretary of this- Court on a bill of costs being filed bytheexecutorwithintwoweeks fromtoday.As regardscommission,
'he amount chargedisEs. 4,000; it appearsthat the -first and second
petitioners 1 at first consentedto paythisamount. They,however,
lonot wish to pay this amount now. It is clear that it is for theCourt to fix the rate of- commission, though, no doubt, it would takeintoaccountthefactthatthepersonsinterested have agreedto a
certain rate ofcommission. WhatI -stated alreadyas regardsthis
estate beingan easyoneto administer,and asto thelackof diligence
axercised, apply with greater force to the executor. He practically lefteverything in the hands of ^his lawyers; for visits paid to see the mort-gaged lands, heis not entitled tocharge anything asexecutor; hehas
been paidallhisout-of-pocket expenses,includingtravelling expenses.
His alleged scrutinyofbills dwindled undercross-examinationto practi-callynothing.His office isin the Fort;he juststeppedintoCargills, <£c.
and asked them to give a * detailed account; he went home, end theaccounts were sent to him. Without question, he paid a large sum forlegalservicesrenderedtothe testatrix.He, similarly,paidup a large
billfor deedsexecutedin favourof the heirs,&c. Taking all these
facts into consideration, I think asum of Es. 1,000is sufficientand
reasonable on account of commission. It is to be noted ibat theexecutor should haveapplied to the Court tofix the rate ofcommission
before filing the final account.
%
Except as modified or reduced as stated above, and subject to theremarks made above, the items in the final' account are. passed. Asthepetitionershave inthe mainsucceeded, thecosts of this inquiry
should be paidby the exebutor personally, that is to.say, these costs
should not be paid from the estate. The executor's own costs of thisinquiry should also be borne personally, and not from the estate.
Bawdy K.G. (with him Samarawickreme and Canakaratne), forthe appellant.
Drieberg (with him Barthplomeusz) for the respondents.'
1918.
HoUingerv.
Nicholas
( 424 )
1018. October 2, 1918. Bertram C.J.—
This is a case which raises important questions of principle withregard to judicial settlement of estates, and with regard to charges-of proctors and notaries* in connection with the administration ofestates. A considerable number of items have been challengedin this particular judicial settlement. The learned District Judgehas given his decision in regard to them, and with respect to someof his decisions1 there is an appeal to this Court.
Some of the items are comparatively of small importance. Othersinvolve matters of principle. Speaking generally with regard tothe scope– of judicial settlements. Mr. Bawa, appearing here for theexecutor, strove to limit that scope by a reference to a decision ofthis Court In re the Estate of Nukkuttiar,1 and, in particular, by areference to an obiter dictum of Middleton J. All that was necessaryto decide in that case was whether an administrator had a discretionto abandon a debt due to the estate, which, in the exercise of hiscommon sense and judgment, he considered to be irrecoverable, andnot worth the powder and shot. There were similar questions withregard to the recovery of costs. The Court held that he had sucha discretion, and had further held that it was not right in a judicialsettlement to charge an administrator with costs which had not infact reached his hands, even though the Court might be of opinion•that those costs might be recoverable. Those were the pointswhich the Court actually decided, and it may be considered as anauthority oh those points. But towards the close of his judgmentMiddleton J., speaking with regard to section 736 of the CivilProcedure Code,J which ■ relates to contests between the accountingparty,, namely, the executor or administrator, and the partiesinterested in the estate, and which says that such contests must bereferred to the process of an ordinary trial, expressed the opinionthat where negligence or fraud or some act as founding a claim indevastavit against an administrator is alleged', that should' also bemade the subject of separate proceedings. I do not think that thatdictum should be pressed too far. It may very well be that in thecourse of a judicial settlement a matter may come up as to whichthe Judge may think that it is a matter of such complication andimportance that it can only be inquired into by a regular actioij.
* In such a case the Judge might reasonably either suspend thesettlement until that matter had been determined by a regularaction, or conclude the settlement subject to the determination ofthat matter. But it would be a most serious limitation of a most,salutary procedure to declare that, where a complaint is madeagainst an executor of negligence or waste, the Court cannot inquireinto the matter in a judicial settlement. The object of a judicialsettlement is that all matters that may arise in the course of theadministration of the estate between the accounting party and the
1 (1909) 1 Cur L. R. 53.
( 425 )
"beneficiary should be dealt with promptly and in an expeditiousmanner, so that the whole estate might be finally wound up in thoseproceedings. I do not think, therefore, that the objection of Mr.Bawa to the learned Judge considering at all certain of those itemscan be considered a sound one.
1918.
Bkbtbam
C.J.
HoUinger t>.Nicholas
With regard to the items under consideration, as I say, some ofthese items are of a trifling character. The executor incurred anexpenditure of Es. 50 in hiring a motor car for making certainarrangements for the funeral at Negombo. He was acting incircumstances of considerable pressure, and I think it is an expen-diture that may very well be considered to have been legitimatelyincurred. The estate was a large one; the deceased lady was aperson of some position; it was desirable that all arrangementsshould be properly made, and, in the circumstances, I do not thinkthat he is much to be criticised for incurring the expenditure. That,I think, should be passed. The same observation does not applyto the resthouse bill, and here I agree with the learned DistrictJudge. Further, there is an item with regard to the expenditureincurred in visiting the properties which were comprised in the estate.I think, in view of the responsibility of the executor and the valueof these properties, that was an expenditure he may be consideredproperly to have incurred.
The more important items, however, were a sum of Rs. 5,000 paidto the proctors whom he employed for the purpose of the legalbusiness of the administration; certain notarial charges paid tothe proctors- in their capacity as. notaries; and the sum chargedfor his commission in the case. The question of the remunerationof the proctors is orie of very great importance. It is a matterwhich is not regulated in this country either by Ordinance of byjudicial decisions.. The facts of the case are that the executor, ,having to deal with a very considerable estate, not unnaturallywent at once to the proctors of the deceased testatrix and suggestedthat they should undertake the legal business connected with theadministration. The proctors appear to have stipulated for a lumpsum of considerable magnitude. It may very well be that theydid not think it worth their while, except for substantial remuner-ation, to supervise the administration of an estate in Xegombo. As Isay, the principles" governing the matter have never beenauthoritatively discussed, and it is perhaps not surprising that theproctors should have stipulated for this sum. Similarly, it is notaltogether surprising that the executor should in this matter haveleft himself in the hands -of the proctors. But when the mattercomes before this Court, we cannot regard it from- this point of view.When a Judge is supervising a judicial settlement, he must bear inmind, not only the position of the executor and those whom heemploys, but also that of the beneficiaries, and the effect of anyprinciple that may be laid down upon other cases. It is most
( 426 )
1918.
Bbkcbam
C.J.
Holsing&r V.
Nicholas
necessary that in these settlements a Judge should exercise a strictcontrol over the practitioners employed, who, it must be rememberedare officers of the Courts. That principle* has always b^en recognizedin England. It has been made the subject of not only judicialdecisions, but of statutory legislation, and it is quite reasonable that,in determining what course should be adopted in a judicial settle-,naent in our own Colony, we should examine the principles that arein force in England on the subject.
In England the matter is dealt with mainly by statute. But,apart from statute, it appears that the Courts in England always,regarded special agreements between solicitors and their clients withvery great jealousy. In the case of Glare v. Joseph, 1 the commonlaw on the subject was very fully discussed, and was declaredthat agreements as to costs made before the Act of 1870 were notnecessarily enforceable, but were viewed with very great jealousy.The Courts were slow to-enforce such agreements where they were-favourable to the solicitor, unless they were satisfied they were madein circumstances such as to preclude suspicion. The same principlesare enunciated in Grundy v. Qainsbury2 by Fletcher Moulton L. J.He describes these agreements as agreements of imperfect-validity.In the year 1870 those agreements were'by the Solicitors Act of thatyear submitted' to statutory regulation. Solicitors were expresslyempowered to make such agreements, but subject to important safe-guards. It is interesting to note the view of the English statute withregard to agreements made between solicitors and clients, who are inthe position of guardians or trustees. In such a case so importantwas it considered to protect the interests of wards and cestui quetrusts that by section 10 of^ that statute it is declared that in suchcases the agreement shall, before payment, be laid before the taxingofficer of the Court haying jurisdiction to enforce the agreement,and that such officer shall examine the same, and may disallow anypart thereof, or may require the direction of the Court or a Judgeto be taken thereon by motion or petition'; and if in any such casethe client pay the whole or any part of the amount payable underthe agreement without the previous allowance of such officer orCourt or Judge, he shall be liable at any time to account to theperson whose estate or property is charged with the amount paid.That section indicates the very serious care which the Legislatureexercised with regard to agreements of this character.
' Further the matter was dealt with in a previous Act, the Act of1848, which is concerned with the taxation of costs. That Act did nottake into consideration special agreements. It was dealing, in thesections to which I shall refer, purely with ordinary bills of costs,and here, too, the position of the beneficiaries and cestui que trustsreceived marked consideration.^ By section 39 it was speciallyprovided that such persons may require any bill, which is presented
1 (1907) 2 K. S. 369-'2 (1910) 1 K. B. 645.
( 42 7 )
to their executors or trustees, or which may even have been pudby them, to be submitted for taxation; and further, by section 41it is provided that (with reference to this and other matters) thepayment of any such bill. shall in no case preclude the Court orJudge to whom application shall be made- from referring such billfor taxation, if the “ special circumstances ” of the case shall,, inthe opinion of such Court or Judge, appear to require the same.The Legislature, therefore, has very clearly laid down that, whorethere are “ special circumstances,’* even though a bill may havealready been paid, that will not prevent the Court from- interferingto protect persons of the description of beneficiaries under this wilLNow, it is perfectly true that these words “ special circumstances,9Pwhich occur in several places in the Act, have received judicialinterpretation. On this, however, I would draw attention to theobservations of Bowen L.J. In re Boycott,1 where he says that,although in practice "special circumstances ” were generallyunderstood to mean circumstances in the nature of overcharge orpressure, he saw no reason why they should be limited tothose customary heads. Cotton L.J. appears to have disagreed withthat expression of opinion. Ery L.J., on the whole, endorsed it.That principle is now accepted in the text books. (See in particularthe article on Solicitors in Lord Halsbury’s Laws of Englandpparagraph 1271.)
But we are not considering here the interpretation of a statute.We are considering general principles. The general principles laiddown in England are that any special agreement 'as to costs isregarded with jealousy. A special agreement between, a solicitorand a person in the position of a trustee, where the burden of the:agreement falls, not upon the trustee, but upon the cestui que trust,is regarded with special jealousy. The fact that the bill has ,alreadybeen paid does not preclude the Court from exercising its .^powersof protection. The fact that the agreement is made with a. personwho is in the position of an executor or trustee is itself a-fact.,, of aspecial nature, and one which makes it incumbent on the Court to.exercise special vigilance.
There were two authorities mentioned, which indicate the strict-ness with which the English Courts proceed in enforcing theirpower of protection of beneficiaries- and cestui que trusts. One isthe case* of Johnson v. Te&ford,2 where the Court said: ** It cannotbe contended that an executor is to be allowed, without question,whatever-sum he thinks fit to pay to his solicitor,” and there theCourt enforced that principle, even though the sum had beenalready paid. The other case was the case of In re, Drake,*where the remuneration had been agreed to in advance, and wherea mortgage had been given as Security. The Court observed-
1 (1885) 29 Oh. D. 571..* (1827) 3 Buss. 47
9 (1844) 8 Beav. 123.
tins.
Bhbtbay
C.J.
HoMngerv.
Nicholas
( 428 )
1918.
Bertram
C.J.
Soleingerv.
NteboUu
“ The trustees may have to pay the over-charge, if any, out of theirpocket. I express no opinion on that.”
When, therefore, in the course of this judicial settlement thelearned District Judge said that he could not pass the item of afixed sum of a substantial character agreed upon in advance betweenthe executor and the proctor, and required, the amount to besubmitted to taxation, he was laying down a very salutary principle.If we did not fully endorse a pronouncement of this character,we should be opening the door to very serious abuses. We should,in fact, be saying that we would not, in the exercise of our ownjurisdiction, observe the principles which have been evolved withsuch beneficial effect in England:
The proctors, no doubt, made this charge purely as a matter ofbusiness. Had their attention been drawn to the principles which•are enforced in England, I think they would have brought themto the notice of their clients. At any rate, now that the questionhas arisen, I do not think it is possible to decide the case in anyother way than that adopted by the District Judge.
The next item is a very considerable item for notarial charges.Now, notarial charges are in this country regulated by statute.They are strictly regulated. It is even declared that if anotary demands or insists upon receiving a higher fee than he isauthorized to demand under the Ordinance he is guilty of an offence(section 36 of Ordinance No: 1 of 1907). It is said that it is thepractice for notaries, nevertheless, to charge higher rates, and todemand remuneration for other items than those comprised in theschedule to,that Ordinance. As to that we have no precise information. ■If the fees are too low, that is a question for the Legislature, andI understand it is receiving the attention of ^the Legislature. We,at any rate, so far as the items in the schedule are concerned, cannotgive judicial sanction to a practice which is irregular and unlawful.
With regard to the suggestion that, whether this be so or not,the executor made- an agreement for the payment of those chargesand paid them, and that, therefore, they ought to be allowed,I am by no means sure that there was any special agreement at all..The notaries intimated that they could not work for the ordinaryschedule rates. The executor said that in that case he would becontent to pay any sum that was reasonable. But there appears tohave been no discussion as to what sum was or was not reasonable.I think there is very considerable force in the criticism of the amountscharged in respect of these deeds., They were deeds only of aformal nature, not strictly necessary according to law, and madeout only for purposes of convenience. I am by no means satisfiedthat, even if the notaries had a free hand, the fees , charged werereasonable charges. The question, however, does not arise. Allthat we can declare in this case is that the amount claimed by theexecutor in r.espect of these payments must be reduced to such
amount as the executor shall satisfy the District Judge mighthave been the legal charge under the schedule to the NotariesOrdinance, No. 1 of 1907. I should have been prepared to leavethe amount as fixed by the District Judge. But Mr. Bawa pointsout that, strictly speaking, a lump sum cannot be awarded, andhe prefers that his strict legal rights under the schedule shallbe determined. I think the order of the District Judge should bevaried in the manner I have indicated.
Now we come to the question of commission. The executorclaimed a commission of per cent. The District Judge hasawarded a lump sum of Rs. 1,000. Mr. Bawa* contends that theLegislature intended that executors in this position should be remu-nerated by a rate. That is clearly so from the words of the Ordinance.I think it is quite reasonable that the executor’s remunerationshould bear some relation to the magnitude of the estate. That, Ithink, was the intention of the Legislature, and it is quite reasonablethat, where the estate is a large one, the executor should beremunerated more fully than in the case of a small estate, eventhough the work involved may be much the same in the two cases.Now, this estate was an estate of some magnitude, but it involvedno special trouble. Everything was in a business-like condition.Though a certain responsibility devolved on the executor, thework necessarily involved no very great personal trouble, moreparticularly when he took the course of placing its managementin the hands of an established firm of proctors. But he has beencriticised with regard to certain items, and I am bound to say thatthere was some force in those criticisms. He appears to have leftthe administration of the estate rather too much to his legal advisers,and to have not concerned himself or to have taken any specialcare with regard to the items which have been made the subject ofcomment. He might have taken some trouble with regard to thesum advanced to Mr. Perera. He might have taken some troublewith regard to the promissory note due by the wife of Dr.Leembruggen. Further, I think he would have done well if he hadexercised a certain diligence in the examination of the chargesmade by the proctors other than the sum of Rs. 5,000, eventhough he was dealing with a firm of standing of the proctors inthis case. I make these observations fo indicate that the workactually done was not of a very serious nature. Under all thecircumstances of the case, I think the proper remuneration wouldbe a fee of 1 per cent on the value of the whole estate. It is notnecessary for this purpose to interpret Hie terms of section 551 of theCivil Procedure Code, which, in fact, appear to be. somewhat obscure.
We now come to the question of costs. Certainly executorswould be in a serious position if, when a judicial settlement wascalled for, they were made personally responsible for the costs ofany issue which arose in the course of the settlement, and in which
32
( 430 )
1918.
BKBlUtUI
c^r.
Eolsinger v.Nicholas
they were not successful. It is desirable that these matters shouldbe investigated', and points may arise for determination whichmay involve argument, but if it appears that, as a result of theexamination of the executor's account, he cannot justly be chargedwith any misfeasance or gross negligence, I do not think that thefact that he took a particular line in regard to some transactionswhich the Court did not approve, should be a reason for saddlinghim with costs. In this case the executor was dealing with amatter which had not been made the subject of judicial declaration.He acted without due consideration as to certain matters, and theCourt has thought fit to correct the steps which he took. The stepswere taken in good faith, and I do not think that his action canbe described as gross negligence. Under the circumstances, there-fore, I am of opinion that the costs of both parties in the judicialsettlement in the Court below may be paid out of the estate. Withregard to this appeal, in the circumstances of the case, the mostequitable course would be that there should be no order as to costs.De Sampayo J.—I agree.
Varied.