ON APPEAL FROM THE SUPREME COURT OF Trustees-Executors-Commission-Jurisdictio to allow past and future-Removal H. C.
of trustee - Retirement of trustee and appointment of new rustee-Employment of retired trustee at a salary-Breach of trust-Profit made by trustee out of trust-Appeal in administration action-Costs of truslee-Right to indemnity MELBOURNE, out of estate-Supreme Court Act 1890 (Vict.) (No. 1142), sec. 21 - Adminis- May 24, 27, tration and Probate Act 1890 (Vict.) (No. 1060), sec. 26.
The Supreme Court of Victoria has, under sec. 21 of the Supreme Court Act 1890 (sec. 16 of 15 Vict. No. 10) jurisdiction to grant commission both past and future to executors, administrators and trustees for their pains and trouble, and this jurisdiction is not limited in its exercise by the provisions of sec. 26
of the Administration and Probate Act 1890 empowering the Court to grant commission in a summary way to executors administrators and trustees on passing their accounts: an order granting such commission may be made
Two trustees, N. and P., who were carrying on their testator's business under a direction contained in the will, with power to appoint a salaried manager, employed one of themselves, P., as manager, and paid him a salary for SO acting. On objection being taken on behalf of beneficiaries that this was wrong, P. retired from his trusteeship and appointed S. to act as trustee in his place, and thereafter continued to act as manager, and received a salary
Held, that the appointment of S. was not improper, and that he should not
A testator appointed as one of two trustees, who were given power to carry on his business, a person who had been in the habit of supplying meals to the employés in the business at a profit to himself, and that person, while he and his co-trustee were carrying on the business, continued to supply such meals and charged the estate such a price for them as gave him a reason- able profit.
Semble, that such charge might properly be allowed. Trustees who have been guilty of breaches of trust in respect of which an order has been made in an administration action by a Court of first instance, but who, in respect of the matters in question upon an appeal from that order, are blameless, are entitled to be indemnified out of the estate for their costs of such appeal.
Decision of the Supreme Court Grunden v. Nissen, (1911) V.L.R., 267; 33 A.L.T., 11, reversed.
APPEAL from the Supreme Court of Victoria.
An action was brought in the Supreme Court by the four infant children of Knut Adolph Grunden, deceased, appearing by their next friend Lawrence Magnus Gillberg, against Carl Johan Hjalmar Nissen and Wilhelm Pallin, who were appointed execu- tors and trustees of the estate of Knut Adolph Grunden, and August Sheldon, who was appointed by Pallin to act as trustee in his place, alleging certain breaches…
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.
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AGLC
Nissen v Grunden [1912] HCA 35
Case
[1912] HCA 35
Decision Date
CaseChat Overview and Summary
This case concerned an appeal to the High Court of Australia from a decision of the Supreme Court of Victoria. The original action was brought by infant beneficiaries against the trustees of their deceased father's estate, alleging various breaches of trust. The primary dispute revolved around the trustees' actions in carrying on the testator's business, including the payment of a salary to one of the trustees for managing the business, the appointment of a new trustee to facilitate this arrangement, and the charging of profits for goods supplied to the estate.
The legal issues before the High Court included whether the Supreme Court of Victoria had jurisdiction to grant commission to trustees for their services, both past and future, in an administration action. The Court was also required to determine the propriety of a trustee appointing a co-trustee to replace himself to enable the former trustee to continue receiving a salary for managing the trust business, and whether a trustee could make a profit from supplying goods to the trust estate. Finally, the Court considered the entitlement of trustees to be indemnified for their costs of an appeal out of the trust estate.
The High Court held that the Supreme Court of Victoria possessed jurisdiction under section 21 of the Supreme Court Act 1890 to grant commission to trustees for their pains and trouble, and this jurisdiction was not limited by the summary procedure available under the Administration and Probate Act 1890. The Court found that the appointment of a new trustee was not improper, as the retiring trustee had ceased to hold a fiduciary position and the appointment was made in good faith for the benefit of the estate. Regarding the profit made by a trustee for supplying goods, the Court indicated that such charges might be allowed if reasonable market prices were charged, referencing historical precedent. The Court also affirmed the general principle that trustees who are blameless in appeal proceedings are entitled to be indemnified for their costs out of the trust estate.
Consequently, the High Court allowed the appeal, reversing the decision of the Full Court of Victoria. The Court ordered that the judgment of the Supreme Court of Victoria be discharged, except insofar as it granted further relief to the defendants. The beneficiaries' appeal to the Full Court was deemed to have failed entirely and should have been dismissed with costs. The trustees were entitled to be indemnified out of the estate for their costs of the appeal.