Loxton v Moir

James Moir (the respondent) brought an action against Edward James Loxton (the appellant) concerning a deed of guarantee. The dispute arose from the appellant's guarantee of interest payments on a mortgage originally made to the respondent and one Robert Maddrell. Following the death of Robert Maddrell and subsequent appointments of new trustees and transfers of the mortgage, the respondent, who had retired from the trust, continued to be the sole plaintiff in the action. The appellant demurred to the declaration, arguing that the respondent was no longer the proper party to sue on the guarantee. The Supreme Court of New South Wales found in favour of the respondent, allowing the demurrer to be overruled. The appellant then appealed to the High Court of Australia.

The central legal issue before the High Court was the interpretation of section 6(2) of the *Trustee Act 1898* (N.S.W.). Specifically, the court had to determine whether this provision operated to vest a legal chose in action, such as the right of action on the guarantee, in newly appointed trustees by operation of law, or if it merely facilitated the transfer of property that was already capable of being assigned by ordinary legal instruments. The court also considered the effect of subsequent legislative amendments and consolidations on this provision.

The High Court, by a majority, held that section 6(2) of the *Trustee Act 1898* was intended to and did effect a vesting of all trust property, including legal choses in action, in new trustees by operation of law. The majority reasoned that the language of the section, particularly the words "shall become and be conveyed, assigned, and transferred so that the same shall thereupon become and be legally and effectually vested," indicated a statutory divestment and vesting that was not limited to property capable of ordinary assignment. This interpretation was supported by the legislative history and the context of subsequent amendments, which demonstrated an intention to simplify the transfer of trust property and remove doubts about the inclusion of legal choses in action. Consequently, the right of action on the guarantee had vested in the new trustees, and the respondent, as a retired trustee, was not entitled to sue.

The High Court allowed the appeal, setting aside the judgment of the Supreme Court and ordering that the demurrer to the declaration be allowed. The court did not express an opinion on subsequent pleadings.