Seymour v Reed

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.