Michael v Callil [1945] HCA 39

Michael v Callil [1945] HCA 39

By majority, the sums received from Assid Michael's estate in respect of the assigned life interest are income of the residuary trust estate within the meaning of clause 12 of the will of Martha Michael. The trust for conversion coupled with a discretionary power to postpone conversion and retain investments is sufficient indication that actual income from both converted and unconverted residuary assets is to be treated as income for the maintenance, benefit and welfare of the named persons during Wadya's lifetime. The sums are properly applied as income subject to the will, and the rule in Howe v. Lord Dartmouth or apportioning of the moneys does not apply. Latham C.J. in dissent...

Parties
Appellant: Alec Michael; Respondent Trustee: F. A. L. Callil; Respondent Trustee: G. Callil; Respondent: Roma Dowling; Respondent: Myrtle Michael; Respondent: Alec Michael; Respondent: Wadya Michael; Respondent (representing Others): Salem Fakhry
Jurisdiction
Australia
Procedural Posture
Appeal / On Appeal From the Supreme Court of Victoria
Outcome
Appeal allowed (by majority, Latham C.J. dissenting); order of Supreme Court varied.
Legal Topics
Trusts, Will Construction, Trust Administration, Income Vs. Capital, Howe V. Dartmouth Rule, Discretionary Power, Accumulation, Conversion of Assets
Equity Succession Trusts Will Construction Trust Administration Income Vs. Capital Howe V. Dartmouth Rule Discretionary Power +2 more

Case Brief

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Parties

Alec Michael

Appellant

F. A. L. Callil

Respondent Trustee

G. Callil

Respondent Trustee

Roma Dowling

Respondent

Myrtle Michael

Respondent

Alec Michael

Respondent

Wadya Michael

Respondent

Salem Fakhry

Respondent (representing Others)

Procedural Posture

Appeal / On Appeal From the Supreme Court of Victoria

Legal Issues

  1. 1 Whether payments received by the trustees from the estate of Assid Michael following an assignment of Wadya's life interest constitute 'income' of the residuary estate under the will of Martha Michael
  2. 2 Whether those payments form part of the corpus (capital) of the estate
  3. 3 Whether the sums are to be apportioned between capital and income, and if so upon what principle

Ratio Decidendi

By majority, the sums received from Assid Michael's estate in respect of the assigned life interest are income of the residuary trust estate within the meaning of clause 12 of the will of Martha Michael. The trust for conversion coupled with a discretionary power to postpone conversion and retain investments is sufficient indication that actual income from both converted and unconverted residuary assets is to be treated as income for the maintenance, benefit and welfare of the named persons during Wadya's lifetime. The sums are properly applied as income subject to the will, and the rule in Howe v. Lord Dartmouth or apportioning of the moneys does not apply. Latham C.J. in dissent...

Court Disposition

Appeal allowed (by majority, Latham C.J. dissenting); order of Supreme Court varied.

Orders

  • Order of Supreme Court of Victoria striking out the original answers to questions 1, 2, 3(a), and 3(b), substituting: 1. Yes. 2. No. 3. (a) No.
  • Costs of all parties of appeal to be paid out of the corpus of the estate, trustees' costs as between solicitor and client.