In re Hilton; Gibbes v Hale-Hinton
[1909] 2 Ch 548(Judgment by: Neville J)
In re Hilton; Gibbes v Hale-Hinton
Court:
Judge:
Neville J
Judgment date: 8 July 1909
London
Judgment by:
Neville J
NEVILLE J.
ADJOURNED SUMMONS.
The testator, James Hilton, died on September 19, 1907, having by his will dated September 19, 1902, appointed the two plaintiffs and the first two defendants (one of whom was his daughter) to be the executors and trustees of his will, and thereby bequeathed to them the residue of his personal estate upon trust to call in, sell, and convert into money such parts thereof as should not consist of money, with power to postpone such sale and conversion for such period as the trustees or trustee might think proper, and also with power to retain as permanent investments any shares or stocks in any public company, whether incorporated or not, or any bonds or debentures of any such company or of any public body whatsoever, or any colonial or foreign bonds or any securities or investments whatsoever, of or to which he might be possessed or entitled at the time of his death, but nothing therein contained should authorize the trustees or trustee to invest any money in any other mode than thereinafter specially authorized; and the testator directed the trustees or trustee out 549of the money to arise from the sale and conversion of his said personal estate and out of his ready money to pay his funeral and testamentary expenses and debts and the legacies therein-before bequeathed or by any codicil thereto, and to stand possessed of the residue of the said money upon trust to invest the same "in their or his names or name in any of the public stocks or funds or Government securities or bonds (not being payable to bearer) of the United Kingdom or India or the United States of America or any colony or dependency of the United Kingdom .... or in or upon the stocks funds shares bonds (not being payable to bearer) debentures mortgages or securities of any corporation company (except banking and insurance companies) or public body municipal commercial or otherwise in the United Kingdom or India or any other colony or dependency of the United Kingdom (but not in any other mode of investment) with power for the trustees or trustee with the consent of his said daughter to change such investments for others of a like nature." And the testator declared that the trustees or trustee should stand possessed of the said investments thereinbefore directed to be made or authorized to be retained (thereinafter called the trust fund) and the annual income thereof upon trusts under which his said daughter was tenant for life, with a gift over in certain events to pay certain charitable legacies, with an ultimate trust of the corpus of the residue for his said daughter absolutely.
The testator died possessed of considerable personal estate, and the residue (after payment of his debts, testamentary and funeral expenses and immediate legacies) comprised (inter alia) investments made by the testator, which had not been called in and converted by his executors but were still standing in his name, of stocks and shares of companies and railways in Canada and South America and in the colonies, some of which were of a nature contemplated by the investment clause, and some of which were of a nature not contemplated by the investment clause. Amongst the latter category were stocks and shares of the Buenos Ayres Great Southern Railway.
Questions arose between the trustees as to the retention of some of these investments. The plaintiffs were of opinion that 550they should be converted, but the first two defendants desired that they should be retained, especially the first defendant, as the conversion of the investments in question would materially reduce her income as the tenant for life of the testator's residuary personal estate. This summons was therefore taken out to obtain the direction of the Court whether, if one or more of the trustees wished that any investment made in the testator's lifetime should be sold, the other trustees or trustee were bound to concur in the sale thereof. Another question was, what was meant by a company "in the United Kingdom or India or any other colony or dependency of the United Kingdom"? There was evidence that many of the investments in question were stock and shares of limited companies whose registered offices were in the United Kingdom, which were their head offices, where their board of directors met, and that, although the property of the companies was situated in a foreign State or the Colonies where their operations were conducted, their control and management was altogether directed from the United Kingdom, and that the stocks and shares of the said companies formed the most stable and well invested part of the testator's estate.
Percy Wheeler, for the plaintiffs. There is an absolute trust for conversion, and there is a power to retain investments made by the testator, but the trust for sale is an overriding trust. Trustees must be unanimous in the exercise of their discretion, and if they cannot agree on the retention of any investment it must be sold: In re Roth.[1] The plaintiffs do not ask the Court to decide whether or not the investments in question should be retained, and they do not say that the investments are not within the investment clause. But they think that these investments are a little hazardous and that they should be sold, and it is submitted that the Court will not interfere with their discretion: Tempest v. Lord Camoys.[2] On the second point there is no direct authority. The companies in question are registered in England. Their directors meet here, although in some cases there are local committees abroad who manage the 551companies' business out there; the meetings of their shareholders are held here and their dividends are paid here, and the question is whether companies so constituted are "companies in the United Kingdom" within the meaning of the investment clause. It is submitted that the decisions under the Income Tax Acts, in cases where companies registered here are held assessable to the duty, afford an analogy: San Paulo (Brazilian) Ry. Co. v. Carter.[3]
H. E. Wright, for the first two defendants. The principle of Tempest v. Lord Camoys [4] is not disputed, but the facts here are different. The plaintiffs seek to read the trust for conversion and the power to retain investments separately, whereas they should be read together. It is a trust modified by a power, and not an original power, as in Tempest v. Lord Camoys.[4] The trust for sale does not necessarily control the power. In the case of In re Roth[5] the Court was dealing with securities to bearer, which were not authorized by the investment clause. The question here turns mainly on the South American securities, which were investments made by the testator and are some of the best investments of the estate, and are within the investment clause in the will. Their conversion will materially affect the income of the tenant for life. The testator, in the exercise of his discretion, thought well of these investments, and his trustees have the same discretion.
[On the second point he was stopped.]
C. Garnett, for the charities, was satisfied with the existing investments and did not desire a change.
NEVILLE J. I think that, where in a will there is a trust for the conversion of the personal estate with a power to retain investments existing at the date of the will, in the absence of unanimity between the trustees as to the retention of investments, the trust for sale operates and must be carried into effect. With regard to the second point, it seems to me that limited companies registered in the United Kingdom and having their head office in the United Kingdom, where their board of directors 552meet to manage and control the affairs of the companies, are "companies in the United Kingdom" within the meaning of the investment clause, although the property of the companies is situated abroad and their operations are carried on abroad.