1906. Administration bond-Sureties-Deed of indemnity by beneficiaries-Concealment H. C. OF A. from Court-Public policy-Solicitor and client-Confidential relation-Benefit conferred by client on solicitor-Duty of solicitor-Independent advice-Administration and Probate Act 1890 (Vict.) (No. 1060), secs. 15-17. MELBOURNE, June 18, 19, In an action against sureties on an administration bond which has been 20, 21, 22, 25. assigned under sec. 17* of the Administration and Probate Act 1890 (Vict.), September 17. any defence which would be open to the administrator in an action for administration in which breaches of trust or devastavits are charged, is open to the Sec. 17 of the Administration and Probate Act 1890 provides that the person to whom an administration bond is assigned, his executors or administrators, "shall thereupon be entitled to sue upon the said bond in his or their own name or names as if the same had VOL. IV. been originally given to him, and shall 1 Griffith C. J., Barton and O'Connor JJ. H. C. OF A. 1906. BAYNE BLAKE. sureties, and any facts which would establish that, as between the beneficiaries and the sureties, the former are not entitled to claim indemnity from the latter, may be set up as a defence. Where, as a condition to becoming sureties to an administration bond, the sureties, prior to the execution of the bond, demand and obtain from the beneficiaries an indemnity against any liability under the bond, such indemnity is not ipso facto illegal. Per Griffith C.J. and Barton J.-If the circumstances are such that, if the indemnity were disclosed to the Court, the grant of administration might be refused, and that a stipulation that the indemnity should be concealed from the Court ought to be inferred, such a stipulation will vitiate the indemnity. In order to establish the fiduciary relationship of solicitor and client which is necessary to exist in order that the principles governing the validity of benefits conferred by a client on his solicitor shall apply, it is not necessary that the formal relation of debtor and creditor should exist, but it is sufficient that, in the particular matter in question, the client should have relied upon the advice of the solicitor and that the solicitor should have known that the client so relied upon his advice. Two members of a firm of solicitors became sureties to an administration bond, receiving as consideration £75, and, before executing the bond, they required the administratrix and her two sisters, who were the only other beneficiaries, to execute a deed of indemnity against any liability under the bond, and charging all their interests in the estate as security. The sisters had no independent advice. In an action on the bond by the two sisters of the administratrix to whom it had been assigned : Held, that in the absence of independent advice the sureties could not rely on the deed of indemnity, because, on the facts, the relationship of solicitor and client existed between the sureties and the three sisters. Held, also, by Griffith C.J. and Barton J., that the deed was invalid on the further ground that, even if that relationship did not exist between them, (1) it existed between the sureties and the administratrix through whom the bargain, which could not be supported as against her, was made with her two sisters; and (2) the bargain was one made between solicitors and the cestuis que trustent of their client without independent advice for a charge on the trust estate. Held, further, that the administration bond and the deed of indemnity were independent contracts, and that the impossibility of discharging the defendants from the bond was no answer to a claim to set aside the deed. Judgment of Supreme Court (Holroyd J.) pursuant to answer to question referred by him to the Full Court (Bayne v. Blake, (1906) V.L.R., 112; 27 A.L.T., 143) reversed. APPEAL from the Supreme Court of Victoria. 1906. BAYNE BLAKE. Grace Bayne the elder died intestate in Melbourne on 10th H. C. OF A. June 1885, leaving her surviving three daughters, Grace Bayne, Lila Elizabeth Bayne and Mary Bayne, the two first mentioned being twin sisters. Her estate was valued at about £17,400, and there were unsecured debts to a small amount as well as some secured debts, so that the net value of the estate was about £10,000. On the 23rd July 1885 letters of administration were granted by the Court to Grace Bayne, and were subsequently issued to her. On the 11th June 1886 an administration bond in the ordinary form was executed by Grace Bayne, and by Arthur Palmer Blake and William Riggall as sureties, in compliance with the provisions of the Administration Act 1872 whereby they became jointly and severally liable to the then Chief Justice, Sir William Foster Stawell, Knight, his successors and assigns, in the sum of £5,000. On the 24th March 1904 by order of Hood J. the bond was assigned to Lila Elizabeth Bayne and Mary Bayne in order that it might be put in suit, and they thereupon commenced an action against Messrs. Blake and Riggall alleging certain breaches of trust by the administratrix, Grace Bayne, which may be shortly stated as follows:-(1) Failure to distribute within the time allowed by law or at all; (2) payment of a sum of £75 out of the estate to the defendants as a consideration to them for executing the administration bond as sureties; (3) borrowing of money upon the security of mortgages of the real estate resulting in default and foreclosure of the mortgages with consequent loss of the whole to the estate; (4) the continuance of funds upon unauthorized investments in a building society whereby the greater part of the funds were lost to the estate. The plaintiffs claimed as trustees for all persons interested £5,000. The nature of the defence and of the subsequent pleadings as well as the other material facts are sufficiently set out in the judgment of Griffith C.J. hereunder. It is only necessary to mention here that the defendants chiefly relied on a deed of indemnity executed on 20th May 1886. The action was heard before Holroyd J. who found certain facts and referred to the Full Court the question whether the deed of indemnity of 20th May 1886 was void on the ground of 1906. H. C. OF A. public policy or not. The Full Court having answered the question in the negative (Bayne v. Blake (1) ), judgment was entered for the defendants with costs. BAYNE v. BLAKE. From this judgment the plaintiffs appealed to the High Court. H. Barrett and Arthur, for the appellants. The deed of indemnity is void as being contrary to public policy. It is opposed to the spirit of the Administration and Probate Acts. The object of requiring a bond with sureties is the public benefit. The Court has always retained the control of administrations in its own hands; that control it has as the delegate of the King, who originally held the goods of intestates and distributed them: Williams on Executors, 10th ed., pp. 312, 420; Court of Probate Act 1857 (England) (20 & 21 Vict. c. 77), secs. 81, 83; Hensloe's Case (2); In re Kinderlin (3); In re Chevalier (4); In re Harver (5); In re Lucus; Parr v. Blair (6); In re Rainer (7); In re Carpenter (8); Dodd and Brooks's Probate Practice, p. 481. An agreement to indemnify a surety to a bail bond is void. as against public policy: Martyn v. Blithman (9). The spirit of an Act will be considered. Thus in Taylor v. Taylor (10), it was held that an agreement by a candidate for a parliamentary election to withdraw on being paid the expenses he had incurred was contrary to the spirit of the Electoral Act 1881 (N.S. W.), and therefore void as against public policy. Sureties will not be dispensed with by the Court on the mere consent of the beneficiaries: In re Story (11). That case shows that the Court will not allow the beneficiaries to give up the protection afforded by the Act without knowing what they are giving up. The agreement itself must be looked at to see whether there is any vice in it which lends itself to fraud. In Redmond v. W ynne (12), an agreement that an architect's certificate was to be final notwithstanding there might be collusion or fraud was held to be contra bonos mores and therefore void. This particular indemnity (1) (1906) V.L.R., 112; 27 A. L.T., 143. (2) 9 Rep., 38b. (3) 1 W. & W. (I. E. & M.), 11, at p. (4) 29 V.L.R., 326; 25 A. L.T., 78. (6) (1900) 1 I.R., 292. (7) Deane Ecc. Cas., 317. (8) 20 V.L.R., 159. (9) Yelv., 197. (10) 11 N.S. W. L.R., 323. (11) 28 V.L.R., 336; 24 A.L.T., 80. (12) 13 N.S. W. L. R., 39, at p. 44. 1906. BAYNE v. BLAKE. is so wide that it covers fraudulent maladministration by the H. C. or A. administratrix. It is a fraud on the Act and on the Court, and was entered into behind the back of the Court. The fact that the assignee of the bond is allowed to sue makes no difference to the nature of the bond: Dodd and Brooks's Probate Practice, p. 13; Sandrey v. Michell (1). It is just as if the Chief Justice were suing. A creditor cannot recover his own debt by having the bond assigned to him, but he recovers for all the creditors. So the appellants cannot enforce their own private rights in this action, and no defence can be raised which would only be an answer to their private claim. This being a penalty, the full amount of the bond can be recovered: Archbishop of Canterbury v. Robertson (2); Dobbs v. Brain (3); In re Wyld (4). The object of the Act being the protection of a particular class of persons, any common agreement by them to give up that protection is void: Devey v. Edwards (5); Lee v. Read (6); Barclay v. Pearson (7). The duty imposed is an absolute duty and does not correlate any right in the parties protected to give up their right. [O'CONNOR J. referred to Equitable Life Assurance of the United States v. Bogie (8).] A member of the class can recover although the contract is illegal: Kaye v. Bolton (9); Nerot v. Wallace (10); Kearley v. Thomson (11); Collins v. Blantern (12). This is not a new head of public policy. It is a new case which comes under the old head of public policy: Egerton v. Earl Brownlow (13). The administratrix being an officer of the Court, the surety is also an officer of the Court, and there is an analogy between his accepting an indemnity and a sale of an office. See Brown v. Brine (14); Gipps v. Hume (15); Blachford v. Preston (16); Parsons v. Thompson (17); Garforth v. Fearon (18). Where monetary considerations (1) 3 B. & S., 405. (3) (1892) 2 Q. B., 207. (4) 6 V.L.R. (I. P. & M.), 83. (5) 3 Addams., 68. (6) 5 Beav., 381. (7) (1893) 2 Ch., 154, at p. 166. (8) 3 C. L.R., 878. (9) 6 T.R., 134. (10) 3 T.R., 17. (11) 24 Q.B.D., 742. (12) Sm. L.C., 11th ed., vol. 1., p. 369. (15) 31 L.J., Ch., 37. (16) 8 T.R., 89. (17) 1 H. Bl., 322. (18) 1 H. Bl., 328. |