R] OF AUSTRALIA. 47 (HIGH COURT OF AUSTRALIA.) "YARTHA EVELYN GILBERT, LAVINIA KILMARTIN, ROSE ANN PALMER, ayp ALMA ELEANOR LOUISA STAN- TON, PLAINTIFFS, j . APPELLANTS ; AND - SARAH ANN STANTON, RHEUBEN STANTON, ALFRED STANTON, JOSEPH ROBERT STANTON, SUSAN ISABEL NICHOLLS, ROBERT HAR- VEY, ARTHUR DAVIES, THE TAS-| MANIAN LOAN GUARANTEE AND ) . Respoxpenrs. FINANCE COMPANY LIMITED, THE/ PERPETUAL TRUSTEES EXECUTORS AND AGENCY COMPANY OF TAS- MANIA LIMITED, ayp HECTOR ROSS (CURATOR OF INTESTATE ESTATES), | Drrenpanrs. ' ON APPEAL AND CROSS-APPEAL FROM THE SUPREME COURT OF TASMANIA. Pover of appointment —Good faith— Fraud on power—Benefit to appointor. H. ©. oF A. Notwithstanding the rule that the appointor under a power must at the time 1905. 'ithe exercise of that power, and for any purpose for which itis used, act with | —— '00d faith and sincerity, and with an entire and single view to the real purpose HBARt, aud object of the power, and not for the purpose of accomplishing or carrying M0" 1, 23, into effect any object beyond the purpose and interest of the power, when an Grigith C.J. Arrangement, in pursuance of which the appointment of a reversionary estate Sarton a1) ismade, is such that in substance the appointee gets the full value of the rever- it, the fact that the appointor derives a benefit corresponding to the value this life estate is not sufficient to invalidate the appointment. Gumeer axp 'Oriens Sraxtox axp Orns. HIGH COURT By indenture of settlement, property consisting of about 247 y unimproved land was settled on S. A. S., a married woman, for lie restraint on anticipation, and with remainder to such of her children a, should appoint, and in default of appointment to her children abso § A, S. had four cons and six daughters In exercise of the pony, appointed at various times three several portions of the land to three of hs sons, leaving a portion of 35 acres unappointed, but her intention to this portion to her fourth son John William was well known to her By deed of Ist December, 1891, 8. A. 8. purported to mortgage the ren the whole of the property comprised in the settlement to one Harveyto an advance by him of £450, £135 of which was applied for the purpae paying off her debts, £280 for the purpose of erecting a now dwelling and further sums in improving, the 35 acres. In March, 1898, Harvey wi debt then amounted to about £440 asked for payment. At this time the acre block was under lease for a term of four years to John William and another at a rental of £120 per annum, but the rent was then in area the extent of about £130. On 16th April, 1898, S. A. S, exeouted a ded d appointment of the 35 acres in favour of her son J. W. An order of the Supreme Court was obtained on 28th April, 1898, removing the restraint anticipation, and on 3rd May, 1898, she and J. W. executed a mortgage infee to the defendants The Tasmanian Loan Guarantee and Finance Co, to sce £500 the receipt of which was acknowledged by both mortgagors, In a it to impeach the appointment as a fraud on her power, the Supreme Court of 'Tasmania held on the evidence that it was not proved that the appointmest was executed with a view to the giving of the mortgage. Held, reversing on this point the finding of the Supreme Court of Tasmats, 'that, on the written and uncontradicted evidence, the appointment and mortgage formed parts of one transaction ; but Held, affirming the decision of the Supreme Court of Tasmania, but en different grounds, that having regard to all the facts, including the age of the tenant for life, the debt due by the appointee, and the fact that «large sum had been expended by the appointor since the date of the settlement ia improving the settled property which might have been charged upon the land in the hands of the appointee in favour of other objects of the power, the Plaintiffs had failed to establish affirmatively that the mortgage money Wat not distributed between the mortgagors with due regard to the respettive interests of the appointor and appointe: Held, farther, reversing the decision of the Supreme Court of Taxman that, the appointment to J. W. being a valid exercise of the power, he als {good title to the estate in remainder, and that his mortgage to the Fone Co. could not be impeached on grounds not raised by the Bill. Appear and Cross-appeal from an order of the Supreme Court of Tasmania dated 6th May, 1904, in a suit to set aside an appoint ment under a power as made in fraud of the power, and @ conse R] OF AUSTRALIA. fhe mortgagee with notice of the facts establishing the fraud. the appointee, but to raise money for Mrs. Stanton. 'The ntment should therefore be set aside and also the two mort- made thereunder. Therule is that which was applied in Topham v. Duke of Portland (1) in which it was laid down by Romilly MR., that jere the donee of the power and the appointee agree that if 'the appointment be made, the appointee will deal with the fund ypointed in a manner foreign to the purpose for which the r was intended, the appointment is void. It is not necessary pprovea direct bargain, Tt is sufficient to show such a bargain in cireumstantial evidence: Humphrey v. Olver(2). 'The deed af appointment, the application for release from restraint on ticipation, the subsequent mortgage and the lease were all one tion, and one of the immediate objects is to benefit the tor. 'This is sufficient to invalidate the deed of appoint- Duggan v. Duggan (3); In re Huish's Charity (4). In voft v. Sutcliffe (5) it was found as a fact that the appointor ived no benefit from the appointment. But here the appointor tained a benefit. She obtained by means of it an accommoda- enabling her to pay a subsisting debt, which had been refused tron the security of her life interest alone. There isa distine- tion between the exercise of a power of appointment by deed and Iymill. In the case of a power exercised by will mere proximity 'point of time of one or more transactions to the appointment not form a ground for invalidating such transactions: Pares i Pares (6), But where the exereise of such power by will is wed by a subsequent appointment by which a fraud was mpted, the will being an ambulatory instrument, would be acy" OLR Tin, io3, mortgage made by the appointee and alleged to be taken H.C. or A. 1905. "tj facts of the case are fully set forth in the judgment of the Gnomes axp Orners Srayton aN Ommens, 450 HIGH COURT H.C. orA. invalidated by the subsequent fraudulent transaction: . Kirwan's Prust (1). To render an appointment fraudulent Gnaer axp Which the appointor stipulates for his own benetit, it j Ommxs necessary that it should be wholly for the benefit of the appon . wxrox ase Jackson v. Jackson (2). Where an appointor stipulates for —— contingent benefit for himself, but added to the sum by hima sum greater than the contingent benefit, the (; upheld the appointment: Cooper v. Cooper (3). Before the Cour ean uphold such an appointment as this, it must be shown th the fraudulent part is severable from the rest. Here no sever ance is possible. Where a donee of a power appointed the fund to one of the objects of the power on an understanding that the latter was to lend the fund to the former, although on good seeurit the appointment was held bad: Arnold y. Hardwick (4) the event. The Finance Co. should pay the eosts of the C [He cited In re Marsden's Trust (5). Lodge, for respondents other than the Curator of Intesta Estates. The question is—would the appointment have been mile whether the appointor's debts had been paid off or not: Coop v. Cooper (6). The evidence of settled intention on the part the appointor to make this appointment is important. had been made for all the other sons and two daughters leavil only one son and three daughters unprovided for. i not dealt with, out of which provision could be made, was the: 5 acres, There was evidence that it was the appointor's intention since 1886 to appoint the property to John William; and it an understood thing also that the three daughters were to provided for out of this property. 'There is also evidence thats the time of the appointment John William promised his moth to make provision for his sisters, What was actually done w () 250, (4) 7 Sim., 343. 2) Dr., 4 977. (5) 28 Lad, Ch, 906. {5} U's Gh. (6) Lek 5h, 28. R] OF AUSTRALIA. be her intention. snd must not be drawn except on very strong evidence. Mrs. gg. At that time she had rent reserved under the lease amotint- jing to £80 per annum, which was to go to payment of interest reduetion of the debt. Before the mortgage her life estate 'yas not charged in any way, nor could she at that time bind it. ATillof sale had been exeented by her in favour of one Harvey, Int the appointee was also under a substantial obligation to Harvey, being his lessee and at the time in arrears with his rent, 'The loan on mortgage of the appointed property settled the debt ty Harvey, £280 of which was incurred in building a house on the property. By the mortgage the appointor charged her life interest up to the hilt. The real intention of the appointor was tobenefit the appointee. The appointment was made-at a time when it was of great benefit to the appointee and also incidentally of some benefit to the appointor. This cannot invalidate the exercise of the power: In re Huish's Charity (1). In In re Kirwan's Trusts (2) the bargain was read as containing a term that, if the appointee did not perform her undertaking, the will would be revoked. In Humphrey v. Olver (3), the appointor was rluetant to made the appointment, and was only induced to do 90 condition of herself receiving a large benefit. That case 'sinno way like the present one. A bond fide appointment is good where made to an object of the power with a view to the 'mediate settlement of the appointed property with the appro- tation of the appointee: Pryor v. Pryor (4). Palmer v. Wheeler (and Wellesley v. Mornington (6) are both distinguishable from the present case in the interests reserved to the appointor. 'The that under the provisions of an appointment some persons tho are not objects of the power may take interests in the 'ppointed fund is not sufficient of itself to invalidate the appoint- ment. Nor does the fact that the donee of the power may derive aa (9) 2 Ball & B. ' DeG. JS. (8) 28L5.,Ch., 406, W)3209,, Ch. 731. os 29; and on appeal, 2 iraysintended by the appointor, and understood by alll concerned H.C. oA. 1905, "The evidence of a bargain is inconclusive, An inference of gusmn axp "Ores Stanton brought a very substantial contribution into the mort- Staxtox axp Ommrs. 452 HIGH COURT H.C.or A. a benefit under the appointment necessarily render the app 1905. ment invalid: Roach v. Trood (1). Guexr ayo As to the cross appeal, the Court below held the Appointment Om" good, and the mortgage bad so far as it puxported to bind a Seaxtox 4S? thing more than the life interest of Mrs. Stanton. If the appoin —— ment is good, the mortgage is good. A deed cannot be set as of £100 each decreed to be paid to the two plaintiffs and defendant Susan Isabel Nicholls should be redueed to £50 ea by reason of the codicil of Sarah Ann Stanton. 'This coi should be referred to by the Court, although not put in evidenge in the Supreme Court. . [Per Curium.—We do not think, even if the codicil ould looked at, it would affect the matter.] Waterhouse in reply. The test suggested in Cooper y. lh (2) must be applied. Would the appointment have been ea out whether there was a bargain for the benefit of the appointor or not? If not, then the appointment is bad. On the authority of Zn re Turner's Settled Estates (3), although the terms of the bargain are reasonable, yet if the appointor gets something mo than hes entitled to, the appointment is bad. Whatthe appoi gave was her life estate; what she got was £450, The values she was in very bad health. It cannot be said that what she gave was equivalent to what she got. 'The £280 spent by the life tenant was for the purpose of providing a comfortable home for herself and John William for the rest of their lives, and nd merely to benetit the estate. (1) 3 Ch. D., 429, at p. 440, (4) (1897) 2 Ch., 8. (2) LR., 5 Ch., 303. (5) LR. 12 Eq., 169. (3) 28 Ch.'D., 205, OF AUSTRALIA. "The judgment of the Court w: Bunton J. This is an appeal from the judgment of the sme Court of 'Tasmania in a suit to set aside a deed of appoint- g, it on the ground that it was executed for the benefit of the ypointor in pursuance of an arrangement between the appointor Sz 'dthe appointee, and that the appointment was therefore in wd of the power. 'The suit was, in accordance with the practice that State, heard by the Full Court on oral evidence, and the Court held, upon the facts, that the alleged arrangement was not yoved. They regarded the case as resting on the evidence of one rritness, who, in their opinion, was unreliable. They, however, 'directed that the deed impeached should be varied in several urtieulars to the prejudice of some of the respondents. From this decree there were cross appeals. By an indenture of settlement dated 5th October, 1872, two of land, containing respectively 212 acres and 35 acres, were eyed to trustees upon trust to pay the rents and profits to Sarah Ann Stanton for life for her separate use without power of anticipation, and after her death upon trust for "the child or such one or more exclusively of the others or other of her children if more than one in such shares and with such future and executory orother trusts for the benefit of the said children or some one or 'more of them with such provisions for their maintenance, education and benefit, and upon such conditions and with such restrictions" ssshe should by deed or will appoint, and in default of appointment intrustfor all her children who being sons should attain 21 or being duughters should attain that age or marry. Sarah Ann Stanton mis then the wife of John Stanton, and had four sons, Rheuben, Alfred, Joseph, and John William, and six daughters. All the children attained 21. One of the daughters died in Mareh, 1891, withoutissue. By deed poll dated 28th October, 1887, Sarah Stan- ton appointed 72 acres, part of the 212 acres, to her son Joseph in {ee subject to her own life interest. By an indenture dated 26th November, 1894, she appointed two pieces of land containing Tapectively 39 acres and 31 acres, being other portions of the 22 acres, to her son Rheuben in fee subject to a term of years Nserved to herself. By another indenture dated 12th January, MM, she appointed the remainder of the 212 acres to her son rr read by H.C. or A. 1905. ae LDERT AND Onirens 'ANTON AND Onners. Syne Ape 19 H.C. oF A. Gueeet AND 'Ornens StaxTos AND 'Orners. HIGH COURT Alfred, also subject to a term of years reserved to herself, Atth date of the settlement of 1872 the whole of the land comprised iy was bush land, uncultivated, and of little value, although it h since acquired considerable value for the cultivation of { Sarah Stanton and her husband resided on the block of 35 acres which is the subject-matter of this suit, and John William, yho yy their youngest son, resided with them. In 1891 she and husband were indebted to one Cane in the sum of £135 which secured, as was supposed, by a deposit of the settlement and acres, which he agreed to do upon receiving proper s Accordingly, a deed dated Ist December, 1891, and made hetn comprised in the settlement together with all the furniture, farm ing stock, implements and other personal property of which was expended on the erection of a new dwelling house the 35 aeres, other portions of the money advanced by Harvey expended upon it in improvements. 'There was abundanteviden that it had for many years been the fixed intention of Sam Stanton that the land should go after her death toJohn William 'The other sons had been already provided for as above satel She had, indeed, in a will executed by her in September, 188) appointed the 212 acres to her three eldest sons in equal share and had appointed the 35 acres to John William subject to & charge of £50 in favour of each of her six daughters. intention was well known to al the members of her family. March, 1898, Harvey, whose debt then amounted to about asked for payment. At this time the 35 acre block was ¥ lease for a term of four years to John William and one (ita, 2 OF AUSTRALIA. 455 worin-law, at a rent of £120 or £125 per annum, which was H. ©. oF 4 o bepaid to Harvey in reduction of his debt, but the rent was Sissy, jnarrear to the extent of about £130. Sarah Stanton was enaean asp jaious of paying off the debt, and on 8th March she went with OT#™ John William to Hobart to make arrangements for raising the barat esary loan, She there saw the manager of the defendants, "ie Tasmanian Loan, Guarantee and Finance Co,, and received 'one encouragement, but having consulted a medical adviser and. ing advised by him to return home, she did so, leaving John Vlliam to continue the negotiations for the Joan. In the result jv executed a deed of appointment of the 35 acres, dated 16th "4p in favour of John William in fee subject to her own life "glate,and they joined in executing a deed of mortgage, dated rd May, to the defendants the Finance Co. to secure £500, tspresed to be paid to them, and the receipt of which they thereby 'wkuowledged. 'The mortgage debt was made repayable by two instalments of £50 each, payable respectively on 31st March, 1899, 'snd 3ist, March 1900, the balance being payable on 31st March, "1001 Interest at 8%, reducible to 7% on punctual payment, was tobe payable half-yearly on the balance due from time to time, ut the total liability on the mortgage was not to exceed £600. 'The mortgagors jointly covenanted to pay in the manner above The £500 thus raised was applied, after payment of the mort- igee's costs, in discharge of the debt due to Harvey, and the talance, £15, was paid to John William by way of loan from his other. On 3rd May John William and Gilbert surrendered their vasisting lease, By a lease dated 4th May Sarah Stanton demised theland to John William for a term of seven years at a rent of 480 per annum, and he appears to have promised verbally to pay beta further sum of £20 per annum. By a deed of the same tte the Finance Co. confirmed the lease, and Sarah Stanton 'ppointed them her attorneys to receive the rent, which was in fuct collected by them and applied in reduction of the mortgage ek. In December, 1903, the debt had been reduced to about 240, At John William's death in 1901 his rent was in arrear to the extent of £135, For the Purpose of enabling Sarah Stanton to give an effectual H.C.orA. security an order was obtained from a Judge in Ch 1905, ae Guarer avo testraint on anticipation, John William died on 16th Mj 'Orners, Stayton ap defendants the Perpetual Trustees Co. Ltd. 'OTHERS. HIGH COURT empowering her to bind her separate estate notwiths ay, 100 intestate, and administration of his estate was granted to { On 7th March, 1902, they executed a second mortgage of Joh William's estate in the land to the defendants the Finance (Go, tp secure a sum of £250 which was borrowed by the 'Trustees (h. under an order of the Court for the purpose of dischanging Joy William's debts, including the £15 due to his motherand the £135 arrears of rent. On 3rd November, 1903, the plaintiffs, who four of the surviving daughters of Saran Ann Stanton, filed the bill of complaint against Sarah Ann, Rheuben, Alfred, Joseph Susan Nicholls the fifth surviv: Intestate Estates as representing the estate of the daughter, the trustees of the settlement, the Finance Co. and th Perpetual Trustees Co. By their bill the plaintiffs, after s out the facts, charged that the appointment was not executed for the sole purpose of benefiting John William as the object of th power, but was executed for the purpose of enabling the debis of Sarah Ann and her husband to be paid out of the moneys tobe raised by a mortgage of the 35 acres, that John William did no receive any benefit from the mortgage or the moneys raise thereby, and that the appointment should be set aside; and by the prayer of the bill they claimed a declaration that the deed of appointment was a fraudulent and invalid exercise of the power of appointment and that it might be set aside, with consequent relief against the defendants the Finance Co., who were chargél with notice of the trusts of the settlement and of the fraud. The bill did not make any case or claim for rectification of the appoint ment or mortgage. By the decree, dated 6th May, 1904, which is prefaced by a recital that "the Court doth not think fit to make any order as to the specific relief sought by the bill," it m declared that at the time of the execution of the deed of appoint ment Sarah Ann Stanton intended that it should be subject to provision for raising a portion or sum of £100 for each of t of the plaintiffs and the defendant Susan Nicholls, and it LR] OF AUSTRALIA. 457 Id be raised by the defendants the Perpetual Trustees Co. out H. C. ora. 'ithe land, and paid to the beneficiaries with interest at 5% per 1% xm, which was to be charged upon the land in priority toany Gnaser axp otgige thereon and might be raised by mortgage. The OTm#=s deere further ordered that the land should stand discharged Sraxros aso 'fom the Finance Co's first mortgage except as to Sarah Ann 7 Sianton's life estate. From this decree both the plaintiffs and the defendant companies have appealed, but the defendants the 'frustees Co. do not press their appeal. The reasons for the judg- ment were fully stated in Court by Olark J. at a later date, 'The jumed Judges, while agreeing that the allegations contained in the bill, if conclusively established, would support a decree in secordance with the power of the bill, thought that the proof of those allegations was very largely dependent upon the evidence ciGilbert, who is the husband of one of the plaintiffs, and who wied with John William in the negotiations which led to the preparation and execution of the deed of appointment and subse- qunt mortgage. The Court thought that the evidence of the defendant Sarah Ann, on which the plaintifis also relied, and lich was taken de bene esse in consequence of her age and infirmity, was inconsistent with the evidence of Gilbert, and t the evidence of both was contradicted on material points ly the evidence of witnesses for the defendants. They thén pro- 'weied to examine the evidence of the witness Gilbert in detail, 'omparing it with the other evidence in the case, and arrived at the conclusion that his testimony was unreliable. They were table to find any other evidence of the alleged bargain between William and his mother. They therefore thought that the intiffs had failed to establish their case on this point. We will 'tal later with the reasons for their adverse judgment against the ee Co. This Court is very reluctant to differ from the conclusions 'rived at by learned Judges upon a question of fact which depends. lyon the eredibility of witnesses examined orally before the Court. therefore, there were no more in the case, we should be content: forest our judgment on this part of the case on this ground. Wat the appellants maintain that the documentary evidence and aa facts establish conclusively that the execution of the ML. M1, 31 458 HIGH COURT H.C. or A. deed of appointment and the subsequent mortgage to raise 'ga to be applied in payment of the debt of Sarah Ann Stauton Gmenr avo her husband were parts of the same transaction, and show 'On the appointment would not have been executed if John Willig Staxtos aso had not, concurrently with his mother's agreement to exeeute OBES agreed to execute the mortgage of his estate in remainder fye benefit. Tt is necessary, therefore, to examine the undisputed fads more fully. It appears from them that a day or two after March, John William signed and left with the Finance Oo application for a loan upon a printed form which began thus: J, W. Stanton of Port Cygnet offer the property which Ty ab £1500 described in accompanying proposal as seeurity fora loan of £500 to be advanced to me from the funds of the Tasmanian Loan Guarantee and Finance Co. Ltd. for three yearsat 7," followed a statement to the effect that the applicant depo fee of £2 2s. for a valuation fee, and an undertaking to exettea mortgage, with other usual stipulations. At the foot opposite the "Farmer." It was signed "John Win, Stanton." 'The accompanying "proposal" gave as the name of the applicant "John Willi "Cradoc Road, Port Cygnet." 'The schedule of property atthe of the proposal described the land in question as situated at Road and containing an area of 35 acres 3 roods 12 perches, wood, with an apple house and two sheds. 'The spaces for gi other particulars were left blank. 'The proposal contained m» statement of the title of the applicant to the land, and it by no means clear that in making this application he intend to make it for himself. 'The circumstances seem rather to March the valuator of the company made his report upon the application, in which he valued the property at £1000, and certified that the buildings and improvements ought to be insurel for £280. The application and valuation came in due coun before the directors of the company, and on 18th March LR] OF AUSTRALLA. 459 icitor, Mr. Simmons, was instructed to prepare a mortgage H.C. or A, etherenpon procured the title deeds, and on examination found 1005 feourse that John William, the nominal applicant, had no title. Gupen ax {gibert, and John Stanton, the father, apparently on the same day, OT™=8S alld on him, when according to the contemporaneous entry in Sraxmox axp tisdinry he explained to them the difficulty in the way of title, °™™** winting ont that Sarah Ann had only a life estate with power of intment to one or more of her children, and advised them jally how the difficulty could be met. He did not say what adviee te gave, but it is suggested that he must have advised that it was nwessary either to execute an appointment in favour of one or 'nore of the children or to obtain the concurrence of all. He denied that he suggested an appointment to John William. On 2th Mareh John William and Gilbert came to Mr, Simmons's offie and gave him instructions to prepare a deed of appointment from Mrs. Stanton to John William, The deed was prepared on the same day, and was executed on 16th April, the delay having been occasioned by the restraint on anticipation of the life estate. 0n 30th March Mr. Simmons sent a clerk to Port Cygnet to see Jom William and explain to him that his mother could not give 'enrity over her life estate without an order of the Court. On the following day he received a telegram from Mrs. Stanton instructing him to obtain the necessary order, The application mas made on 28th April and granted. In support of it Mrs. Stanton made an affidavit, in which, after stating the settlement 'md the appointment, she said that she was desirous of mortgaging 'ler life interest in the land, and that her son John William was 'willing to join with her in mortgaging the land in order to raise 4500 to enable her to discharge her debt to Harvey and the costs incidental to the proposed loan. In the meantime Mr. Simmons fad seen John William and conferred with him "as to carrying 'nt the mortgage to the Finance Co.," and had handed him the '"?pointment "and fully instructed him as to getting the same 'mpleted," and he also conferred with him as to the lease for "ven years before mentioned. On 2nd May he attended the mortgagors at Port Cygnet, read over the mortgages to them, and titested their execution. John William being dead, his version tthe transaction cannot be obtained, but upon these facts, and 460 HIGH COURT Gummer axv oF to suppose that the promise of John William to give the mon Oras save was not, in part at least, the inducement which led his moth Sx ANTOX AND to execute the appointment in his favour: or, to put it in oth words, to suppose that the power of appointment would have be exercised at that time but for the desire to discharge Harvey supposed security and John William's promise to join in a mot gage for that purpose. 'The learned Judges, dealing with another part of the ease, which it will be necessary to diseuss more fill in considering the cross-appeal of the Finance Co., were of opinion that John William did not intend when he executed the mortg to bind his interest in the land, but executed it merely as a matta of form to enable his mother to give a good security upon herlife interest. At present it is sufficient to say that we are unable concur in this view. 'The general rule relied on by the appellants, and as to whit there is no doubt, is, as expressed by Lord Westhury LC. in Duke of Portland v. Topham (1), " that the donee, the appointor under the power, shall, at the time of the exercise of that power, and fo any purpose for which it is used, act with good faith and sineeity and with an entire and single view to the real purpose and object of the power, and not for the purpose of accomplishing or carrying into effect any bye or sinister object (I mean sinister in the sen of its being beyond the purpose and interest of the power)" the same case Lord St. Leonards said: "A party having a pow like this must fairly and honestly execute it without having any ulterior object to be accomplished. He cannot carry into e tion any indirect object, or acquire any benefit for him directly or indirectly." Does then the fact that the appointment in this case was so intimately associated with the mortgage necessarily bring the case within the prohibition? Or may the prima facie inference of invalidity be rebutted by the elreuue stances of the case? It must be remembered that the appointor was tenant for life in possession of the estate, and, although she was not just then in good health, her life estate may have been 0 considerable value. Moreover, since the date of the settl () 1 ELL.., 32, at p. 54 LR) OF AUSTRALIA. In MQueen v. erst (1), the case was this: By a int. By deed of 15th July, 171, < appointed the land to eldest son Robert (apparently the only son of age) subject to sie estates. By indentures of lease and release dated 30th a 3ist August in the same year, reciting the settlement and vointment, the father, the mother, and Robert in consideration 'a sum of £8000 expressed to be paid to all of them conveyed the land to one 'T. It appeared from the abstract of title 'ist A. had before the execution of the appointment entered jntoa contract with 'T. for the sale of the estate to him, and had ifage. The appointment was then made. successor in title iaving contracted to sell the land, it was objected by the purchaser ttt upon these facts the appointment by A. to his son Robert ypeared to have been made under a previous agreement between and that if the father derived any benefit from that agree- ueat, which seemed probable, or even made a previous stipulation ithisson should join him in the sale, which there was the reason to apprehend, it would have been a fraudulent avention of the power. Lord Eldon said (2), "It is clear, ifuothing appeared, but, that the father and mother, seised lie their lives, with such a power, appointed in favour of leit son in fee, and afterwards by a transaction, separate from, or connected with, the transaction of the power, suppos- 'ig their intention had been to give the entire benefit of the nvsion to their eldest son, after such appointment, either by $evious or subsequent contract, to which the son was a party, yhad sold the estate for £8000, the full value, and upon the ofthe instruments that money appeared to have been paid tothe three, in aw and equity that would have been a payment 'tothem according to the interests they had in the estate." He "ded to point out that mere suspicion of fraud was insufficient, MU Ves, 467. (2) 11 Ves, 467, at p. 479. Jolad expended over £300 upon the land in permanent improve- H.C. or A. 1905. H.C. oF A. 1905. — Gument AND 'Orwxns: SratoN AND 'Orners. HIGH COURT saying (@): «The Court would go regard to the intervening nares as sucha transla place parties, who might take improper advantages in their ings upon the estate, they must prove, that they did not" 4 after referring to the facts in detail, he added : " It does not: that the estate sold for less than its value; that the son got | than the value of his reversionary interest. But the estate ing his absolutely by the appointment, he by an instrament, by nothing but the contents of it, as the owner of the revers accedes to the purchase; conveys with his father and mother, consideration of £8000; and the parties, taking the conveyance, rights in the lan to substitute money for the estate, there was nothing to show, the son was not to receive a due proportion of the money, W the contract was afterwards executed by the deed; in he joins; and with his father and mother receives all the money This case appears to establish three principles: (1.) Thatit objection to an appointment of a reversionary estate by theta for life that he has entered into an agreement with the intend appointee that the estate shall afterwards be sold and the pu money divided betwen them in proportion to the value of th respective interests ; (11.) That, when upon a conveyance of lan by the owners of the life estate and the estate in remainder th purchase money is expressed to be paid to them jointly the pr sumption is that it is paid to them in proportion to their respetit ; and (111.) That the burden of 'proof in sutl interests in the lan a case lies on those who set up the case of fraud. Cockeroft v. Suteli with a power of appointment among his children appointed tot of them, and then joined with them in a mortgage, 'the mom being expressed to be paid to all of them. It appeared that it been arranged that the father should enter into partnership 7 the two appointees in a business on equal shares, to be cart (1) 11 Ves., 467, at p. 480. (2) 25 LJ. Ch., 13. the money to the father, the mother, and the son; to be dealt with ¢ (2) was a case in which a tenant for ie bad OF AUSTRALIA. the purpose of carrying on the business a sum of £800 should gy rtised on the security of the father's bond, a mortgage of the in the estate in settlement. In order to facilitate this ment the father appointed the estate to the two sons ject to his life interest, and they executed a mortgage of their sionary interest accordingly. Wood V.C., after stating the of law and referring to M'Queen v. Farquhar (1), from which Je quoted Lord Eldon's words, " There was nothing to show that sm was not to receive a due proportion of the money, when tie contract was afterwards executed by the deed," proceeded (2): "Ithink, seeing that the father does throw into this matter, clearly aid manifestly for the sons' benefit, for starting them in life, lerable property of his own, I am entitled to look upon it as Eldon looked upon it in WQueen v. Farquhur as if the pmey was raised according to the respective rights of all the prtes interested in the property." Finally he said on this part ithe case: "As to the substance of the case, all the authorities aifly me in holding it to be a bond fide appointment. In the « which have been cited as to the possibility of the father nga benefit in the manner suggested, through this mortgage, isnothing to prevent my upholding the appointment." 'This tseis authority for the further principle that, when the arrange- matin pursuance of which the appointment of a reversionary Me is made is such that in substance the appointee gets the full ne of the reversion, the fact that the appointor derives a benefit meponding to the value of his life estate is not sufficient to mug the ease within the rule. It further establishes that regard tobe had to the substance rather than to the form of the Transaction, Gooper x. Cooper (8), James V.C., after remarking that {se was "an illustration of a class of cases in which rules down by the Court of Chancery for the prevention of fraud nleavoured to be strained, upon technical grounds, so as to bluce fraud in such a way that one sometimes cannot help Mex, 467, at p, 481 5 Ld. Ch. 813, at p. 315. (3) LR. 8 E 463, 1905, — LBERT AND Omens sed in the business, and a mortgage by the sons of their Stavros AND TERS. 464 HIGH COURT H.©.oF A. wishing that there was a Court of Equity for the pu 1805, correcting the dealings of the Court of Chancery in these ma Gunenr asp Went on to say that in that ease, fortunately, he was able tod Ons not with any technical rule, but with the substance and truth of Staxtox xv the ease, which he proposed to do, and eame to the eoneluson the facts that, although the appointor in form obtained a contingent benefit for himself from the appointed property, thn was no corrupt fraudulent or sinister purpose whatever on part of the appointor, that the appointment was made by i benefit of his daughter the appointee. On appeal (1), the decisin affirmed, but on different grounds. Lord Hatherley did not "see his way to break in upon the rule that the don of a power cannot stipulate for any benefit for himself reference to the exercise of the power; and that if he does », the whole appointment is vitiated by the consideration that h children." He put the question, " Would the appointment been made but for the condition ?" and found himself upon facts able to answer the question affirmatively. 'This ease the fore does not help the respondents. On the other hand, not bi case of an appointment of a reversionary interest, it doesnot and Cockroft v. Sutcliffe (3.) In Re Huish's Charity (4), Romilly, after referring to these two cases, said: reason of its being made, then that the appointment is bad; but tha if the whole of the transaction taken together shows no such objec but only shows an intention to improve the whole subject-matterat the appointment for the benefit of all the objects of the then the exereise of the power is not fraudulent or void, alth by the force of circumstances such' an improvement om bestowed on the property which is the subject of the appoint without the appointor to some extent participating therein. We proceed to apply these principles to the present case: © () LR 5 (3) 25 Ld. Cha, 313. 2) 11 Ves, (4) LR' 10 Bg,, 5, at p. 9 OF AUSTRALIA. 465 sch, 1898, the value of the life estate was uncertain. The H.C. or A. "yalue of the land was taken at £80. The tenant for 195. fen fact lived for six years longer. She was indebted to Guan axv extent of £440, of which sum more than £300 had been O7#™RS ed in permanent improvements which would enure to the Sravtox ax Jit of the person who ultimately became entitled to the —_" inder, She had not, of course, as tenant for life any lien gon the land for the value of the improvements, but there can jeno doubt that she had power, on appointing the land to any "ler children, to charge it with a corresponding sum to be siributed amongst the other children, so as in effect to recoup te amount by which her personal estate would have been ininished if the debt remained unpaid at her death. On the ivr hand, about £130 of the debt consisted of rent which John 'William ought to have paid to Harvey. Substantially, therefore, 'hembole of the debt consisted either of moneys which Jobn William was bound to pay or moneys with which she could ually charge the reversionary interest. In the absence of ibuted between the tenant for life and the remainderman in sition to their respective interests. We know, however, how 'it was actually disposed of. £130 of it went in paymentof John iliam's debt, and practically the whole of the residue in pay- at of Sarah Stanton's debt. If her expectation of life were led at six years (as it turned out), the value of her life estate, 'lasing regard to the lease of 4th May at £80 per annum, would we Deen apparently more than £300. Let us suppose for a 'Toment that it was valued at £320, and that she desired to apply tie whole value in payment of her debt, and that John William, on other hand, desired to raise and pay the £130 for which he was ible, (and which in the event turned out to be approximately 'heactual burden cast on the reversion) these two sums making up listoal iability to Harvey. And suppose, further, that it was that the necessary amount to defray the costs of a mort- Should be included in the sum to be borrowed and borne Mportionally. Could it be affirmed under these circumstances 'Tatthe mortgage money was not divided between the mortgagors "proper regard to the value of their respective interests ? Youn, a2 466 HIGH COURT H.C. or A. Or suppose that the mother had called John William's at 1005. to the fact that if she carried out her known intention to Giger aso the land in his favour he would be getting the advantage ol Onwtens moneys expended on improvements to the exelusion of his ae and had insisted that he should undertake to make the sum y expended a charge upon the land as a condition of making appointment, and he had accepted the position, and had sugg that the same purpose would be better served by his joining i mortgage to raise the money and pay the debt in his mo lifetime; in this view could it be contended that the money w not properly distributed? Or again, suppose that John Will had accepted, as an honourable obligation incumbent upon hin would have been regarded as his debt as between himself ani his mother. In this view Sarah Stanton would have received not more, but much less, than her proportional share of the mortgage money. In our opinion, if any of these states of fue had existed, or any state of facts analogous to them, the presump purchase money to both the mortgagors, would not be rebu And the circumstance that the parties may have taken erroneous view of the value of their respective interests not, even if proved, affect this result. Both parties were of fill age, no case of undue pressure is set up, and there can be nore respective values of the life estate and the reversion, or as to amounts which they recognized as being fairly due by each of in respect of the debt, or as to the amounts which should be reg as charged upon their respective interests. It has been pointed out that, John William being dead, his version of th negotiations between himself and his mother cannot be obiai And it may be said that there is no evidence to support either the hypotheses above suggested. There is some evidence which indeed the Court acted in another part of the case) Sarah Ann desired that John William should undertakea bu of £300 in favour of his sisters, but this seems to have been in addition to the charge to be imposed upon the land by them OF AUSTRALIA. \ have been specifically formulated. Both parties were inciples it would have been fair, a Court of Justice is not justi- fel in holding the bargain fraudulent on the conjecture that the yurties did not themselves realise how fair it was. For those reasons we are of opinion that the plaintiffs have failed to dis- charge the burden of proof incumbent upon them, In the result 'yeagree with the conclusion of the Supreme Court on this point, "jut not for the same reasons, The plaintiffs' appeal therefore fails We pass now to the cross appeal. The decree as already stated directed that the defendants the Perpetual Trustees Co., the ulninistrators of John William, should after the death of the tenant for life raise out of the 35 acres the sum of £300 with interest at 57% for the benefit of three of the daughters, and that these sums should be charged on the land in priority to any linge thereon. 'The appellants the 'Trustees Co. do not press their appeal from this part of the decree, and it is therefore unecessary to express any opinion with regard to it. It must, 'apparently, be taken to have been made as against them by nsent. But the decree went on to order that the 35 acres ld stand discharged from the Finance Co.'s first mortgage except as to the estate of the tenant for life. Now, as soon as it isestablished that the appointment was good, it follows that John William had a good title to the estate in remainder, and that his tortgage of the estate is valid unless successfully impeached on 'one independent ground. 'The learned Judges, as already stated, were apparently of opinion that he did not intend to mortgage own interest in the land, and did not understand that he was thing so, What they say on this point is that they "cannot find tly reliable evidence outside of the mortgage itself that he did." But, with respect, this is putting the onus on the wrong party. Th the fact could be established, it might, perhaps, in a suit brought for that purpose, be ground for rectifying the mortgage, 'or even for setting it aside as to the estate in remainder. The But it is not necessary that the exact terms of the bargain H. C.or A. 1905, familiar with the facts, and must be taken to have had them in Guppy anv eit minds during the negotiations. And, if the result was Os saeh that if it had been arrived at on arithmetical or actuarial Staxtox anp Ormens, gise 468 HIGH COURT H.C. oF A. difficulties in the way of a successful prosecution of such a 1995 are obvious. 'The plaintifis' bill, however, contained nosy Gnama ayo of such a case. If it had done so, the mortgages would, at Omens have had an opportunity of directing their evidenee to the py Stay' On mE cannot he supported. It is right, however, to say that we unable to discover upon the evidence any proof that justify a Court in setting aside or rectifying the first mort as against the Finance Co. 'There is no evidenee that Join. William did not know that he was executing a mortgage, or fa, the Company had any reason to suppose that he did no fully uriderstand its contents, 'The cross appeal on this point mus therefore be sustained. 'The defendants, the Perpetual Trustee Co, by their answer formally submitted for the decision of the Cout the question whether any and what provision should be made fr the daughters out of John William's estate, but the Finance Ca did not join in the submission. 'The plaintiffs have failel to establish any case against them in respect of either of theirmot- gages, and they now claim the priority to which they are manifestly entitled The bill did not impeach the security upon the life estate, bit related exclusively to the estate in remainder. As against the Finance Co, the plaintiffs have failed to establish any exe entitling them to relief of any sort. 'They were not necessary parties as to the relief given, although not prayed in the bill against the Trustees Co. 'The bill ought therefore to have beet dismissed as against them simplieiter, and the declarations objedtel to should have found no place in the decree. With regard to costs, the Court ordered that the costs of all parties, except the defendants' costs, should be paid by the Trustes Co. out of the estate in remainder, and that the eosts of the defendant Co. should be paid out of John Williams' estate and effects. Fe Mr. Lodge for the trustees offered to agree to an order against them as adiinistrators to pay the plaintiffs costs and those of the defendant Susan Nicholls of the bill and answer and such furthe costs as would have been ineurred by an inquiry as to theamow of provision that should be made under the submission in the OF AUSTRALIA. 469 already mentioned. This is clearly the most to which H: C. or A. fay were entitled. We think, therefore, that the decree should 1906, Tied by dismissing the bill with costs as against the defend- Gsxymuy asp its the Finance Co., by substituting for the declaration that the OTs e of £300 shall have priority over any mortgages or charges Sraxtox xo hereon, a declaration that such charge shall be subject to any valid ©" s or charges, by omitting the declaration that the 35 acres stand discharged from the first mortgage, and the directions asto costs, and by substituting a direction that the costs of the sjintifs and the defendant Susan Nicholls be taxed in accordance with Mr, Lodge's offer and paid by the defendants the 'Trustees Company out of John William Stanton's estate. Plaintiffs' appeal dismissed. Defendants Finance Company's cross-appeal allowed and Bill dismissed with costs as against them. Deeree varied as to plaintiffs costs as against the defendants. " Sulicitors for appellants, Dobson, Mitchell «: Allport. Solicitors for respondents other than Sarah Ann Stanton, Simmons, Orisp & Simmons. Solicitors for respondent Sarah Ann Stanton, Orisp & Crisp. You, 33