Hogg v. The Toronto General Trust Corp., [1934] SCR 1

Supreme Court of Canada

Hogg v. The Toronto General Trust Corp., [1934] S.C.R. 1

Date: 1933-06-16

William D. Hogg (Defendant) Appellant;

and

The Toronto General Trusts Corporation, Administrator of the Estate of Lady Elizabeth Mary Howland (Plaintiff) Respondent.

1933: June 16.

Present: Duff C.J. and Lamont, Smith, Crocket and Hughes JJ.

ON APPEAL FROM THE COURT OF APPEAL FOR ONTARIO.

Trustee—Liability for interest on uninvested balances in his hands—Passing accounts—Res judicata—Surrogate Courts Act, R.S.O., 1927, c. 94, s. 65 (1), (3).

The judgment of the Court of Appeal for Ontario, [1932] O.R. 641, holding, that the defendant was liable to pay interest on certain uninvested balances of trust funds held by him for the late Lady H., and directing a reference to take an account of the sum properly chargeable for interest, was affirmed. It was held that the plaintiff’s claim for interest had not become res judicata by the judgment of the Judicial Committee of the Privy Council in Campbell v. Hogg, [1930] 3 D.L.R. 673 (on an appeal in former proceedings which began by petition filed by the present defendant in the proper Surrogate Court in Ontario for the passing of his accounts), as that judgment (as interpreted in the present judgment) did not dispose of the matter of interest now in question except to hold that in the proceedings then before the court there was no jurisdiction to charge interest on uninvested balances in the hands of such a trustee as was the defendant. (In this connection, s. 65 (1), (3), of the Surrogate Courts Act, R.S.O., 1927, c. 94, considered).

APPEAL by the defendant from the judgment of the Court of Appeal for Ontario[1].

The action was tried before Jeffrey J[2] who held that the plaintiff (administrator of the estate of the late Lady

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Howland) should recover from the defendant the sum of $17,520.40, as being interest, computed at the statutory rate, half yearly, with rests, on the sum of $7,027.34, this latter sum being the amount found by the Judicial Committee of the Privy Council[3] to be then remaining in the defendant’s hands as trustee for the late Lady Howland (which finding of the Judicial Committee was made on an appeal in former proceedings which began by petition filed by the present defendant in the proper Surrogate Court in Ontario for the passing of his accounts).

The Court of Appeal[4] vacated and set aside the judgment of Jeffrey J., but (by a majority) ordered and adjudged that it be referred to the Master of the Court at Toronto to take an account of such sum as the Master might properly find the defendant chargeable with in respect of interest or compound interest on the moneys amounting to the said sum of $7,027.34, and that the plaintiff recover from the defendant the amount found due by the Master forthwith after the confirmation of his report.

The defendant appealed to the Supreme Court of Canada. The question for determination by this Court was whether or not the defendant’s plea of res judicata (by reason of the said former proceedings and the said judgment of the Judicial Committee of the Privy Council therein) was a good answer to the claim for interest made by the plaintiff in the present action.

R.V. Sinclair K.C. for the appellant.

W.J. Elliott K.C. for the respondent.

The judgment of the court was delivered by

HUGHES J.—The facts and circumstances preceding the bringing of this action are set forth fully in the report of the judgment of the Court of Appeal for Ontario⁴. The learned trial judge, Mr. Justice Jeffrey, had given judgment in favour of the respondent for $17,520.40 as interest on various funds of the late Lady Elizabeth Mary Howland remaining during certain years in the hands of the appellant, who had formerly, during her lifetime, acted for her in connection with investments.

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The defendant appealed to the Court of Appeal for Ontario, which Court⁴ vacated the judgment of the learned trial judge and ordered a reference to the Master of the Supreme Court of Ontario to take an account of such sum as the Master might properly find the appellant chargeable with in respect of interest or compound interest on the money, amounting to $7,027.34, mentioned in the pleadings; as having been found in the hands of the appellant by the judgment of the Judicial Committee of the Privy Council (Campbell v. Hogg[5]).

From the judgment of the Court of Appeal the defendant appealed to this Court.

The appellant contended before us that, by the judgment of the Judicial Committee of the Privy Council, it was found that sums aggregating $7,027.34 remained in the hands of the appellant and a claim for interest on the respective sums aggregating that amount was res judicata.

Section 65, subsection 1, of the Surrogate Courts Act, R.S.O., 1927, chapter 94, is as follows:

65. (1) Where an executor, administrator, trustee, under a will of which he is an executor, or a guardian, has filed in the proper surrogate court an account of his dealings with the estate, and the judge has approved thereof, in whole or in part, if he is subsequently required to pass his accounts in the Supreme Court such approval, except so far as mistake or fraud is shown, shall be binding upon any person who was notified of the proceedings taken before the surrogate judge, or who was present or represented thereat, and upon every one claiming under any such person.

Section 65, subsection 3, of the same Act is as follows:

(3) The judge, on passing the accounts of an executor, administrator or such a trustee, shall have jurisdiction to enter into and make full enquiry and accounting of and concerning the whole property which the deceased was possessed of or entitled to, and the administration and disbursement thereof in as full and ample a manner as may be done in the Master’s office under an administration order, and, for such purpose, may take evidence and decide all disputed matters arising in such accounting subject to appeal.

There is no doubt that a Master has in Ontario frequently charged interest on uninvested balances against an executor under an administration order. Inglis v. Beaty[6]; In re Honsberger[7].

But the appellant has not made clear to us how he, in the capacity in which he acted, comes within the wording

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of section 65, subsection 1, “trustee, under a will of which he is an executor,” or of subsection 3, “such a trustee.”

The judgment of the Judicial Committee of the Privy Council, in Campbell v. Hogg[8], supra, held, in our opinion, that the surrogate judge had no jurisdiction to charge interest on uninvested balances in the hands of such a trustee as was the appellant.

The following passages occur in the judgment of the Judicial Committee:

At page 683:

But having said so much, their Lordships, while expressing no opinion upon the extent of the jurisdiction or range of topics that may be included in s. 65 (3) of the Surrogate Courts Act, are clear that in the present proceedings no sums ought to be charged against Mr. Hogg beyond those which it was admitted or proved that he had received. Except upon admission he may not, for instance, in these proceedings be charged with interest on uninvested balances or with any sum in the nature of damages.

At page 692:

* * * Interest on uninvested balances is not chargeable in these proceedings. Mr. Hogg will in the result remain accountable for the net amount of principal and that only.

(3) The Dumas, Vaillancourt and Campbell mortgage moneys. These have already been referred to. As uninvested balances they are all three brought into charge in the account. No claim for interest upon them as such, is, as has been observed, competent in these proceedings.

And at page 701:

Their Lordships have now dealt with all the points raised by the appellant which were not abandoned or disposed of during the hearing. They say now nothing of her charge that on the capital which, it is said, appears on his account to have been in his hands, Mr. Hogg is short on an average of $700 a year in his interest. This remains a mere allegation, not worked out by reference to the account. Even however if to any extent a prima facie case with reference to that interest or to any part of it could be made, no relief in these proceedings could on the evidence be given for the reason explained in an earlier part of this judgment.

We are of opinion that the above language, notably that on page 692, goes to the question of jurisdiction and that therefore the claim for interest is not res judicata.

The appeal must be dismissed with costs.

Appeal dismissed with costs.

Solicitor for the appellant: R.V. Sinclair.

Solicitors for the respondent: Elliott, Hume, McKague & Anger.