[equity – trusts]

Moffatt v. Stacey

Supreme Court of New South Wales

Willis J., 17 January 1840

Source: Sydney Herald, 22 January 1840[1]

Moffatt v. Stacy and others. – His Honor pronounced judgment in this case, as follows:- I see nothing in this case as now presented to me to call for the interference of a Court of Equity, with regard to Stacy; should he in any manner have violated his agreement, the plaintiff has his remedy in a Court of Law.  The bill must, therefore, be dismissed, as against the defendant, Stacy, with costs.  With regard to the defendants, Edwards and Hunter, they as acting trustees, under the indenture of the 12th day of December, 1836, were bound to do all in their powers to carry into effect the primary trust in favour of the plaintiff – after mentioning a payment of £200 to the plaintiff on account of the trust these defendants state by their answer.  “That they made several advances of money to the Messrs. Campbell, upon the faith and understanding that the terms of the deed of 12th December, 1836, would be carried into full execution, and that such advances would be repaid out of such part of the proceeds of the trust estate, as Mr. C. might receive, or be eventually entitled to under the said deed, and that there is now due to them in respect of such advances to the said Messrs. C., the sum of £76.”  But they do not say, nor can I find any evidence to shew that these advances were made with the knowledge or assent of the plaintiff, or even by way of equitable mortgage on the express security of the trust deed deposited with them by the Messrs. Campbell, or in fact that the deed had thus been deposited.  With the assent of the plaintiff, however, any security of this nature in favour of a trustee, could not, I think, have prevailed in opposition to the prior trust.  Bearing in mind that the established principle, that no act of the trustee can prejudice the cestuique trusts (except sales on mortgages for a valuble consideration without notice of the trust) and the jealousy which a Court of Equity ever regards all cases where trustees deal with trust property on their private account, more especially when such dealings as in this case tends to prolong the trust for the sole benefit of the trustees, and adverting to the fact, that the plaintiff appears to have obtained the interest of the Campbells under this trust deed for a valuable consideration without any notice of these advances (even supposing them to have been made under such circumstances, as notice of them could effect him).  I feel bound to refer it to the master, to take an account of what is due from defendants, Edwards and Hunter, to plaintiff, and hereafter to direct them to re-assign all such legal interest as passed to them from the plaintiff under the trust indenture of 12th December, 1836 – I say all such interest for the original agreement of the plaintiff with Stacy, and the delivery of the sheep under that agreement, may perhaps give Stacy a prior legal right of possession during the term to which the agreement extends.  If the reference be waved, then the question of costs will alone remain a question, in which I think the fact whether Edwards & Hunter can be shewn to have had notice of the release by the Campbells of their interest to the plaintiff previously to the filing of the bill, will form an important feature -–but I shall be glad to hear counsel on this matter.  The fact of £103 being due from Captain Moffatt, coupled with the prior advances of £200 for interest, only tends to shew that the security under the primary trust, was not available.  It certainly might afford reason for calling on the trustee for an account, in order that the true state of the trust property might be ascertained?  I think the admission of the indenture of the 6th March, 1839, coupled with the other circumstances of the case, shews that the defendants acted on what they conceived to be their prior equities under the original trust deed, notwithstanding the release of Campbells of their interest.  It certainly does appear to me that the defendants, in ignorance, no doubt, of their legal responsibilities, have, as trustees, endeavoured to deal with the trust property, and to continue the trust for their own benefit and security.  If I were not to give the plaintiff the costs of this suit, I should be holding out a temptation to trustees to deviate from their trusts – and however much, therefore, I may regret the misapprehension under which Edwards and Hunter may have laboured, I must direct them to pay the costs.

            In the course of an argument which took place with respect to the costs, His Honor said that he wished it to be particularly understood, that he by no means meant to impute to the trustees any improper conduct, or any thing in any way derogatory to their character as men of honour, on the contrary, he thought that any gentlemen might have acted as they did under a misapprehension, but still as they prolonged the trust, and that was for their own benefit, they must pay the costs.

Notes