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[HOLROYD, J. The learned Judge's calling it a salvage operation certainly makes it look as if he thought they could do nothing else.]

[Cussen-His Honor thought they could not do anything that was not worse for their cestuis que trustent.]

It was a deliberate deposit by the trustee company of the trust funds, and was a fresh breach of trust.

[WILLIAMS, J. It was the company's duty then to get as much as they could out of the wreck, and invest it in proper securities. If the company could get nothing or not sufficient it should replace the rest.

rest.

HOLROYD, J. Yes-get as much as they can, and replace the

MADDEN, C.J.

Really it comes to this: the trustee has by his own wrong act got himself into Scylla, and if he wants to get out of it by going into Charybdis it is his own look-out.]

There was nothing to give the trustee a right to take the deposit receipts at that time. The learned primary Judge exercised his discretion as to costs, and he had a discretion under the Judicature Act.

[MADDEN, C.J. Not that an unsuccessful plaintiff's costs should be paid by a successful defendant. You will find the cases show that the Court can do almost anything except that.]

There can be no appeal as to costs only.

Cussen in reply-An order such as was made by A'Beckett, J., would repeal the express provisions of sec. 29 of the Trusts Act 1896. What order then should be made? If the adult plaintiff is to be entitled to the income of the old deposit receipts, and the trustee company has to restore the whole fund, it would mean that the company would have to keep two funds on foot, and having paid 20s. in the pound, might eventually lose the value (128. in the pound) of the deposit receipts. If there is anything in values, then the fair method would be to limit the tenant for life to the interest earned by the authorized investment of so much of the restored fund as represented the

F.C.

1898

MATTHEWS

V.

THE TRUSTEES EXECUTORS

AND AGENCY COMPANY LIMITED.

F.C.

1898

MATTHEWS

v. THE TRUSTEES EXECUTORS

AND AGENCY COMPANY LIMITED.

market value of the deposit receipts, and allow the company to retain the interest earned by the authorized investment of the balance of the restored fund. It is submitted that this would be in accordance with the authorities: Bate v. Hooper (k); Underhill's Law of Trusts (4th ed.), 557. The Court would have ordered the trustee company to sell out the improper investment and invest the proceeds upon authorized securities: Patten v. Guardians of Edmonton (l); Harrison v. Thexton (m); and the trustee company would be protected by the Court in so doing when it found out it was a breach of trust: Howe v. Earl of Dartmouth (n). It cannot be properly urged that the tenantfor life is entitled to have the old investment remain on foot so as to get a larger interest. The Court would order her to refund any interest received more than should have been received by her: Mills v. Mills (o); Hood v. Clapham (p). My client is willing to accept the evidence given for the plaintiffs that the market value of the deposit receipts in the new bank is 128. in the pound, or to have an inquiry as to what their value is.

[MADDEN, C.J. The point we most desire to hear you on is the question of the last breach of trust in 1892.]

That, it is submitted, was not a breach of trust. It was an endeavour by the trustee company to do the best it could for the beneficiaries. That was admitted in the Court below to be the case when the defendant was about to adduce evidence to show the circumstances under which the new deposit receipts were applied for and accepted. The trustee had to save for the beneficiaries all it could. It was, as the learned primary Judge found, a salvage operation.

[HOLROYD, J. It is all very well to call it a salvage operation, but there is no proof that anything was saved by it or that the trustee company had any reasonable ground for saying that anything would be saved by it. It is a case of a person who knows the security is unauthorized going on again and again and merely saying it was for the best.]

(k) [1855] 5 De G. M. & G. 338.
(2) [1883] 31 W.R. 75.

(m) [1858] 4 Jur. N.S. 550.

(n) [1802] 7 Ves., p. 150.
(0) [1835] 7 Sim., p. 509.
(p) [1854] 19 Beav. 90.

It was better than taking preference shares or waiting ten years to see if the money would be paid back.

[HOLROYD, J. There was a fourth thing that the trustee company could have done. It could have put the whole money back and placed it upon an authorized investment.]

Its not then doing so was not then a breach of trust. It ought to have done that in 1890. The breach of trust was committed then.

[HOLROYD, J. There was either a continuous breach of trust or there was a new breach of trust in 1892.]

There was a continuous cause of action from 1890, when the cause of action first arose.

[HOLROYD, J. I do not like the term cause of action-it comes from the common law, and we are now dealing with equitable rights.]

It is the term used in the cases. The defence of the Statute of Limitations is to be treated as if it were a plea of the statute pleaded at common law to an action for money had and received: Per A. L. Smith, L.J., in Re Somerset (q). trustee company did in 1892 increased the loss. minimized the loss, and the learned primary Judge so held.

Nothing the
What it did

[HOLROYD, J. What was done in 1892 was this :--At a particular stage it was discovered that instead of a proper investment paying interest and yielding a revenue for the tenant for life the trustee company had an investment which became entirely unproductive. An agreement was then made between the creditors of the old bank and the new bank, under which persons whose money became due immediately, in consequence of the inability of the bank to pay it off, were able to reinvest the money with another bank. It is the same thing as if they had sold the debt and reinvested the proceeds on deposit receipt with another company, and that would have been, as it appears to me, another distinct improper investment.

WILLIAMS, J. It seems to me that you must look at this in the same way as if in 1892 the trustee company had taken this money out of the Australian Deposit Bank and invested it in, say, Western Australian mines or something of that sort.]

(q) [1894] 1 Ch., p. 268.

F.C.

1898

MATTHEWS

บ. THE TRUSTEES EXECUTORS

AND AGENCY COMPANY

LIMITED.

F.C.

1898

MATTHEWS

บ.

THE TRUSTEES EXECUTORS

AND AGENCY COMPANY LIMITED.

It did not take the money out. The trust fund did not then exist. It was misinvested.

[HOLROYD, J. It cannot be allowed to take advantage of the Statute of Limitations by taking advantage of its own wrong in deliberately repeating its previous wrong investment. The company exchanged a debt for certain deposit receipts. It does not matter that no money passed. It was in effect getting the money out of one company and putting it upon deposit receipt in another.]

Neither really nor substantially was money taken out of the first company. It could not be got out of it. The trustee company merely abandoned the right it had against the company, which was in liquidation, for a similar but more valuable right against a company which was a going concern.

[HOLROYD, J. I think the trustee company cannot be heard to say that it did not get the money out. It was its duty to have had the money, and to have had it at its disposal.]

I admit it was its duty then to repay the amount, but I say that it was not then for the first time that that duty arose. The cestuis que trustent had a right to have the money repaid then, but they had had that right since 1890.

[HOLROYD, J. Directly it appeared that there would be no income for the tenant for life the trustee company could have sold, and, taking out of its own pocket sufficient to make up the difference, could have invested the whole of the trust fund upon an authorized security; but instead of that the company take a new investment equivalent to the old one.]

Suppose the deposit receipts in the old bank were quite worthless and would not sell, could it be said that the trustee company then committed a fresh breach of trust because it did not then repay the money out of its own pocket? Or could it be said that it was then for the first time the duty of the trustee company to sell the deposit receipts, if they were not both worthless? It is submitted that both these questions ought to be answered in the negative. So far as the Statute of Limitations is concerned, this case is like the case of Ward v. Lewis (r), where a solicitor gave bad advice negligently, and it

(r) [1896] 22 V.L.R. 410.

continued to be acted upon for more than six years, when loss occurred from following it. It was there held that the statute commenced to run as soon as the bad advice was given-not from the time when loss occurred through following it.

MADDEN, C.J. This is an appeal from the judgment of our brother A'Beckett in an action in which the plaintiffs set out that under a settlement certain trust funds were to be invested in a certain way, and the tenant for life was to have the advantage of the income during her life. The male plaintiff was the remainderman. It was alleged that on the 22nd March 1888 the defendant company in breach of trust invested a certain sum by depositing it with the Australian Deposit and Mortgage Bank Limited for two years, and on the 11th November 1889 deposited another sum with the same bank for three years. That on the 22nd March 1890, the original deposit having become due, the defendant company redeposited it with the same bank on fixed deposit for two years. Then it goes on to say "the defendant company on or about the 4th day of October 1892 further in breach of the provisions of the said indenture' (i.e., the marriage settlement) "and of the trusts thereby created applied for and accepted deposit receipts in the said new company" (the old company was in liquidation, the new company bought its assets) "for the amount of 9991. 88. 1d., payable as follows:-4491. 8s. 1d. in 5 years from the first day of April 1892, and 550l. in 5 years from the 11th day of November 1892 in full satisfaction and discharge of the liability of the said first mentioned bank (in liquidation) to the said defendant company in respect of the beforementioned deposits in the said bank, and thereby discharged the said bank from its said liability." Then it goes on to say that the deposit receipts so accepted are of less value than the sums invested would have been if properly invested according to the trusts.

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The restitution of the fund is prayed by both the plaintiffs. So far as the deposits in 1888, 1889, and March 1890 are concerned, the new Statute of Limitations, which has been passed in this colony as an amendment to the Trusts Act, was pleaded as against the plaintiff. It was said that the statute had run

F.C.

1898 MATTHEWS

V.

THE TRUSTEES EXECUTORS

AND AGENCY COMPANY LIMITED.

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