KOLTA THOLASINGAM CHETTY Vs. GVEDACHALLA AIYAH

JUDGEMENT

(1.) In this case a trustee was ordered to be removed by Mr. Justice Bakewell and an account was directed to be taken against him. That decision was confirmed on appeal and the case went to the learned Official Referee. But the learned Official Referee was of opinion that certain questions of fact involved should be decided by the Court itself: and the case, therefore, came before Mr. Justice Coutts Trotter sitting on the original side and we have now to deal with an appeal from his decision.

(2.) The question argued before us on appeal relates to item No. 11, certain house property to which the trust became entitled in the time of the former trustee, some ten years before the accession to the office of trustee of the defendant in this suit, so that the defendant had two years in which he could have taken steps for recovery of the property. It is stated by the learned Judge, and the case proceeds upon that basis, that neither the present defendant nor his predecessor did anything to recover the property and, therefore, it became lost to the trust by reason of the law of limitation. There is not much said about limitation in the judgment under appeal, but the learned Judge said at the close of the judgment that it would be open to the defendant, when the case went back to the Official Referee, to show, if he could, that he was not accountable for the income but only for the corpus.

(3.) Before us it has been argued that on the facts stated and under the present law of limitation the remedy against the trustee is barred both as to the corpus and income, the suit having been instituted some nine years after the property was finally lost to the trust by the operation of the Statute of Limitation. The question of the interpretation of Section 10 as amended in the Act of 1908 is one of considerable importance and we have had it fully argued before us. As is well known, the Statutes of Limitation were not applied to claims against trustees. There was a provision in the Judicature Act which specially excepted from their operation suits for following trust property, and that section of the Judicature Act was very closely reproduced as Section 10 of the Limitation Act of 1877. It provides: " No suit against a person in whom property has become vested in trust for any specific purpose or against his legal representatives or assigns (not being assigns for valuable consideration) for the purpose of following in his or their hands such property shall be barred by any length, of time." There was some variance of opinion as to the scope of this section, and there were some cases which held that a claim for an account of property which had actually come into the hands of the trustee was not saved from the bar of limitation unless the property still continued in the hands of the trustee, in one case it was said in specie. whereas a more liberal view was taken in some other cases that the section saved from the bar of limitation claims to property which had come into the hands of the trustee and for which he had become accountable. But we have not- been referred to any case, and I am not aware of any, in which it was held that the bar of limitation under the old section was saved as regards cases where it was sought to render a trustee accountable not for property which had come into his hands but for property which but for his willful default or neglect would have come into his hands. Mr. Justice Scott in New Fleming Spinning and Weaving Company Limited v. Kessowji Naik 9 B. 373 at p, 899: 6.1nd, Dec, (N,S ) 248, expressly ruled that such claims were within the operation of the ordinary law of limitation. The next thing we observe is that the English Legislature in 1888 departed from the policy hitherto pursued as regards trustees and afforded them the benefit of the operation of the Statutes of Limitation except in two specific cases, that is to say, except where a claim was founded on fraud or a fraudulent breach of trust, or---these are the important words--- was "to recover trust property or the proceeds thereof still retained by the trustee or previously received by the trustee and converted to his use." So that, unless the claim is to recover trust property or the proceeds thereof still retained by the trustee or previously received by the trustee and converted to his use, the ordinary provisions of the Limitation Act are to apply in England. It is important to observe that the policy of the English Legislature as shown in that provision clearly was to introduce a fresh protection for trustees by relieving them from an indefinite liability to account, except in cases of fraud or fraudulent breach of trust property or the proceeds thereof still retained by the trustees or previously received by them and converted to their own use.