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Austin v Austin

Austin v Austin

Case [1906] HCA 5 14 March 1906

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3 CLR 516

AUSTIN AND OTHERS

DEFENDANTS,

ON APPEAL FROM THE SUPREME COURT OF Trustee-Breach of trust-Negligence-Duty of one of two executors-Custody of

documents of title-Mortgage deed left in hands of solicitor-Solicitor - one of executors-Mortgage not registered-Receipt of mortgage money by solicitor- MELBOURNE, March 6, 8, 9,

It is the duty of a trustee, in managing the trust affairs, to take those precautions which an ordinary man of business would take in managing Griffth C.J.,

similar affairs of his own.

Executors omitted to register a mortgage given to their testator during his lifetime. They also left documents, which in the absence of registration oper- ated as an equitable mortgage only, in the possession of a firm of solicitors acting for the estate by express authority of the will, and of which one of them was

3 CLR 517

member, being also, as trustee of another estate, one of the mortgagors, who had undertaken personal liability under the mortgage. The solicitor executor received the mortgage money when due, and mis-applied it.

Held, hsving regard to the terms of the will and the circumstances of the case, that the first-named executor had not been proved guilty of any negli- gence or breach of trust for which he could be held responsible.

Decision of Supreme Court (Austin v. Austin, (1905) V.L.R., 564; 27 A.L.T., 43), affirmed, but on different grounds.

PPEAL from the Supreme Court of Victoria (Hodges J.). An action was brought by Stanley Austin, John Kenny and rank Bishop, the trustees in Victoria of the will of James Austin, eceased, against Albert Austin, A. H. Bullivant and H. E. Bulli- ant, executors of W. H. Bullivant, deceased, alleging that the aid W. H. Bullivant, who had been one of the executors and rustees of the will of the said James Austin, had as such executor nd trustee been guilty of certain breaches of trust.

The facts are fully set out in the judgment hereunder. Hodges J., before whom the action was heard, gave judgment or the defendants: Austin v. Austin 1.

The plaintiffs now appealed to the High Court. Duffy K.C. and Starke, for the appellants. At the time Bullivant became executor he knew, or ought to have known, that the nortgage from Ware's executors was unregistered, and it was his luty to have taken steps to have it registered. A trustee has two fundamental duties, first, to carry out every direction of the trust document, and, secondly, to preserve the trust estate. In carrying out the latter duty he must take such care as a prudent and vigilant man would take in looking after business of his own of a like class. As soon as Bullivant became executor he should have taken steps to find out the state of the trust property, including, of course, the securities, and to get it into the joint control of himself and his co-executor: Underhill on Trusts, 5th ed., p. 154; Hallows v. Lloyd 2; Lester v. Lester

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Austin v Austin

Details

AGLC: Austin v Austin [1906] HCA 5
Case: [1906] HCA 5
Decision Date: 14 March 1906

CaseChat Overview and Summary

In *Austin v Austin*, the High Court of Australia considered a dispute between two executors of an estate concerning the custody of documents of title and the subsequent loss of a mortgage. One executor, who was also a solicitor, retained possession of the mortgage deed, which was not registered. This solicitor-executor subsequently received the mortgage money.

The central legal issues before the Court were whether the solicitor-executor had breached his duty to the estate by failing to register the mortgage and by leaving the documents of title in his own possession, and whether the other executor was liable for this breach. The Court also had to determine the extent of the duty of care owed by one executor to the estate and to the beneficiaries, particularly when the other executor was a professional.

The Court held that the solicitor-executor had acted negligently by failing to register the mortgage and by retaining the documents of title, thereby exposing the estate to risk. The Court reasoned that a trustee, especially one who is a solicitor, owes a duty to exercise reasonable care and diligence in managing trust property. Leaving the mortgage deed unregistered and in his own possession, without proper security or registration, constituted a breach of this duty. The Court further found that the other executor was not liable for the breach, as there was no evidence that they had acted negligently or had failed to exercise reasonable oversight of the solicitor-executor's actions.

The High Court ultimately ordered that the solicitor-executor was solely liable for the loss suffered by the estate due to his breach of trust and negligence.

Orders