Seymour v Reed - [1946] HCA 1

72 CLR 549

UNION TRUSTEE COMPANY OF AUSTRALIA

RESPONDENTS.

LIMITED AND OTHERS

PLAINTIFF AND DEFENDANTS,

ON APPEAL FROM THE SUPREME COURT OF ExecutorsTrusteesTrusted company-Commission-" Income " - Proceeds of busi-

ness-Trustee Companies Act 1928 (Nos. 3793-4963) (Vict.), 8. 17.*

The respondent company was a trustee company within the meaning of the Trustee Companies Act 1928 (Vict.) and, therefore, entitled, under S. 17 of the Act, to commission at rates specified in respect of "the capital value of any estate committed to the management" of the company as executor and

income received by such

company as executor." Pursuant to powers conferred by a will of which it was an executor the company carried on a pastoral business on properties forming part of the testator's estate. It kept books of account in respect of annual accounting periods, including live- stock accounts for sheep, eattle and horses, and a working account for each of the accounting periods. The live-stock accounts showed the stock on hand at the beginning of the year of account, the purchases and natural increase, and the sales and deaths, of stock during the year, and stock on hand at the end of the year. The stock on hand respectively at the beginning, and at the end, of the year were brought into account at standard values, and the

HYLERAGE balance was carried to the working account; proceeds of the sale of wool were also credited to the working account. Debited in the working account were various items of expenditure immediately connected with the carrying on of the business, such as salaries, wages and shearing expenses. The provisions of this section are set out in the judgment of Latham C.J., post.

72 CLR 550

Held that the income derived from carrying on the business upon which the plaintiff as executor was entitled to receive commission should be ascertained, over annual accounting periods, upon ordinary accounting principles the amount of profit appearing from the live-stock accounts, the gross amount arising from the sale of wool and any other proceeds of the sale of produce of the business should be credited, and there should be debited the costs and expenses incurred for the working and managing of the station properties, but not such expenses as interest paid on mortgages of land forming part of the estate or other expenses referable to the ownership and general adminis-

Decision of the Supreme Court of Victoria (Full Court): Re de Little; Union Trustee Co. of Australia Ltd. v. de Little, (1945) V.L.R. 198 varied.

APPEAL from the Supreme Court of Victoria.

The Union Trustee Co. of Australia Ltd., which was a trustee company within the meaning of the Trustee Companies Act 1928 (Vic.), was one of three executors of the will of a testator who died on 1st October 1926. Pursuant to a power in the will the executors for some years carried on the testator's business of a grazier and pas- toralist. For the greater part of the period the business produced a profit,…

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 Seymour v Reed

Details

AGLC: Seymour v Reed [1946] HCA 1
Case: [1946] HCA 1
Decision Date: 2 April 1946

CaseChat Overview and Summary

The Union Trustee Co. of Australia Ltd., as one of three executors of a testator's estate, carried on the deceased's pastoral business pursuant to a power in the will. The beneficiaries disputed the basis on which the company claimed commission under section 17 of the Trustee Companies Act 1928 (Vict.) for managing the business. The company sought a determination from the Supreme Court of Victoria, which, by majority, held that the company was entitled to commission on all amounts other than capital receipts, without deducting expenses or outgoings. The defendant beneficiary appealed this decision to the High Court.

The central legal issue before the High Court was the proper interpretation of "income received" within section 17 of the Trustee Companies Act 1928 (Vict.) for the purpose of calculating a trustee company's commission. Specifically, the court had to determine whether "income received" referred to gross receipts, net profits, or some other measure, and whether certain expenses and outgoings should be deducted in its calculation. The court also considered whether the calculation of income should be confined to amounts distributable to beneficiaries or whether it encompassed all receipts not of a capital nature.

The High Court, by majority, allowed the appeal, varying the decision of the Supreme Court. The court reasoned that "income received" for the purpose of commission under section 17 should be ascertained according to ordinary accounting principles over annual accounting periods. This involved crediting the profit appearing from livestock accounts, the gross amount from the sale of wool, and other produce, while debiting the costs and expenses incurred in working and managing the station properties. However, expenses such as interest on mortgages or general administration costs were not to be deducted in calculating the income on which commission was payable. The court clarified that "income received" does not include money received by the executor which represents a realisation of fixed capital or a replacement of circulating capital, and that annual accounting periods are appropriate for this determination.

The High Court ordered that the appeal be allowed and the questions posed in the originating summons be answered in accordance with the judgment. Specifically, it was declared that for the purpose of ascertaining income for commission, the profit from livestock accounts, gross wool sales, and other produce should be credited, and costs and expenses of working and managing the properties should be debited. None of the items listed in question (1)(d) of the originating summons, such as mortgage interest or administration costs, were to be deducted. The matter was remitted to the Supreme Court for further consideration and adjustment of accounts.

Orders