- Bookmark
- Share
- CaseIQ
Alice Rice v. S.N. Cama
Judgment Summary — Kania, J.
Factual and Procedural Background
The suit was brought by three children (two daughters and a son) of Hormusji Edulji Cama (who converted to Christianity and adopted the name William Edward Rice) against the present trustees of a trust deed executed by Hormusji Muncherji Cama on 23 January 1872. The plaintiffs sought maintenance and other allowances under the first declaration of clause 2 of the trust deed, alleging that they are descendants of the settlor, are in poverty and indigent circumstances, and are properly the recipients of the support directed by the trust. They alleged that their father (a former customs preventive officer) died on 7 July 1929 without substantial assets and that they were receiving education at Barnes High School, Deolali, without necessary means. The plaint further alleged that applications to the trustees for allowances were refused and asserted that the trustees' decision declining assistance was "unfair and unreasonable and is not bona fide."
Legal Issues Presented
- Whether the plaintiffs, under the circumstances set out in the plaint, are entitled to challenge the decision of the trustees of the trust deed upon a true and proper construction of the trust deed.
- Whether, upon a true and proper construction of the trust deed, the plaintiffs are beneficiaries thereunder at all.
Arguments of the Parties
Plaintiffs' Arguments
- The plaintiffs alleged they are members (descendants) of Hormusji Muncherji Cama's family and are in poverty, distress and indigent circumstances, qualifying them under the first declaration of clause 2 for support, maintenance or relief.
- They alleged they have not received any allowance from the trustees despite applications, and therefore challenged the trustees' refusal.
- In paragraph 14 of the plaint they asserted that the trustees' decision declining assistance was "unfair and unreasonable and is not bona fide."
Defendants' Arguments
- The defendants denied that the plaintiffs are proper persons to receive allowances under the trust and stated they had made proper inquiries and concluded the plaintiffs were not entitled to any distribution.
- They contended that having been given a discretion by the trust deed, the trustees' exercise of that discretion could not be questioned by the Court.
- In the alternative, they argued that because the plaintiffs' father had converted to Christianity, the plaintiffs were not members of the settlor's family "within the meaning of the first declaration of the second clause" of the trust deed (i.e., that the trust was intended to benefit persons of the Zoroastrian faith only).
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Reven, In re. Spencer v. National Association for the Prevention of Consumption, and other forms of Tuberculosis | That a direction in a trust purporting to oust the jurisdiction of the Court (making trustees' decision final) would be void as repugnant and contrary to public policy. | The Court relied on this authority to state the general principle that a clause attempting to oust judicial review is void and inoperative; however, that does not preclude the Court from refusing to interfere where trustees have bona fide exercised their discretion. |
| Re Burrage; Burningham v. Burrage | Illustration of the principle that Courts will not interfere with trustees' discretion where it has been bona fide exercised. | The Court cited this case as an example of judicial reluctance to disturb trustees' bona fide decisions, supporting the holding that interference requires a strong case of improper exercise. |
Court's Reasoning and Analysis
The Court began by acknowledging the general principles governing judicial supervision of trustees' discretion: while a purported exclusion of judicial review in a trust instrument would be void (repugnant and against public policy), courts nonetheless generally will not interfere with the trustees' bona fide exercise of discretion. The Court emphasised two related propositions drawn from the authorities cited: (a) a clause attempting to make a trustee's decision final or to oust the Court's jurisdiction is ineffective; and (b) where trustees have acted within their power and bona fide, courts will be slow to interfere and will require a strong case to do so.
Applying those principles to the pleadings, the Court observed that the plaintiffs' material allegations were that they were members of the settlor's family, in indigent circumstances, had applied for allowances which were refused, and then broadly alleged in paragraph 14 that the trustees' decision was "unfair and unreasonable and is not bona fide." The Court analysed paragraph 14 and held that the allegations of unfairness or unreasonableness were not available grounds for relief in view of the wide discretion granted the trustees. The mere assertion of want of bona fides was insufficient: such an allegation is an inferential conclusion and required particulars showing what specific facts or conduct demonstrate lack of bona fides.
Because the plaint contained only the generalized assertion that the plaintiffs (according to them) were proper objects and had not been paid anything, without particulars alleging how the trustees' conduct was not bona fide, the Court held that the plaintiffs had not established the kind of factual foundation necessary to invoke judicial scrutiny of the trustees' discretionary decision. The Court noted the common reality of multiple claimants and that so long as trustees have not misapplied funds to their own use but have paid those they judged proper, a bare allegation of bad faith will not suffice to engage the Court's jurisdiction.
Consequently, the Court found the first preliminary issue against the plaintiffs (i.e., that they were not entitled, on the pleadings as they stood, to challenge the trustees' decision). As to the second issue (whether plaintiffs were beneficiaries under the trust), the Court held that it was not necessary to decide in light of the first finding but indicated that, if necessary, it would decide that the first declaration was not restricted to Parsee/Zoroastrian members. The Court reasoned that the first declaration used general language ("members of the family") and that when the settlor intended to indicate Parsee members he used specific language elsewhere (in the second declaration), so the Court would not read the word "Parsee" into the first declaration where it did not appear.
Holding and Implications
Core Ruling: The Court answered the first preliminary issue in the negative — the plaintiffs, on the pleadings as they stood, were not entitled to challenge the trustees' decision. The second issue was unnecessary to decide, but the Court indicated that, if necessary, it would be answered in the affirmative (i.e., the plaintiffs could be beneficiaries under the first declaration).
Implications and consequences:
- Direct effect on the parties: The plaintiffs' pleading was held insufficient to justify judicial interference with the trustees' discretion; on that basis the plaintiffs' challenge to the trustees' refusal to grant allowances failed at the preliminary stage.
- The Court clarified that while clauses purporting to oust judicial review are void, courts will nonetheless decline to interfere where trustees have exercised their discretion bona fide; a plaintiff must plead particulars to support an allegation of bad faith.
- No broader legal innovation was announced: the opinion applied established principles about the scope of judicial supervision of trustees' discretionary acts and the rules of construction of trust instruments, and did not purport to set a novel precedent beyond those principles.
Order accordingly.
Kania, J.:—
This suit is filed by two daughters and a son of one Hormusji Edulji Cama, who became a convert to Christianity and adopted the name of William Edward Rice, to recover from the defendants, who are the present trustees of the trust deed made by Hormusji Muncherji Cama on January 23, 1872, maintenance and other allowance as provided in the first declaration of clause 2 of the trust deed. It is alleged in the plaint that the plaintiffs are the descendants of Hormusji Muncherji Cama. The father of the plaintiffs during his lifetime was working as a preventive officer in the Customs department on a monthly salary of Rs. 600. While he was alive the trustees had paid a sum of Rs. 50 per month to one Mersy Rice, the eldest daughter of Hormusji Edulji Cama. It is alleged in the plaint that Hormusji died on July 7, 1929, without leaving any substantial assets. It is further alleged that the three plaintiffs are being educated at Barnes High School, Deolali, and they have not got the proper or necessary means for their education. In paragraph 11 of the plaint it is alleged that the plaintiffs are the members of the family of the said Hormusji Muncherji Cama and are in poor, distressed and indigent circumstances. It is further alleged that the plaintiffs are the proper persons to be recipients of the support and relief directed to be extended to or conferred upon them by the said declaration in the trust deed. It is further alleged that the defendants are aware of the plaintiffs' circumstances. In paragraphs 12 and 13 of the plaint it is alleged that although applications were made to the trustees for a grant of an allowance to the plaintiffs they have refused to do so. Paragraph 14 of the plaint then runs as follows:—
“The plaintiffs further say that in any event the decision of the defendants declining to render any assistance to the plaintiffs out of the said trust fund, is quite unfair and unreasonable and is not bona fide.”
The defendants have filed a written statement in which they deny that the plaintiffs are proper persons to receive the allowances under the trust deed from them. They further say that they have made all proper inquiries and in their opinion the plaintiffs are not entitled to receive anything from the trust funds. They further contend that they having exercised the discretion which was given to them under the trust deed the Court has no power to question the exercise of their discretion. In the alternative it is contended that the deceased Hormusji Edulji Cama having become a convert to Christianity the plaintiffs are not members of the family of the deceased Hormusji Muncherji Cama within the meaning of the first declaration of the second clause of the trust deed.
On a summons taken out for further and better affidavit of documents the learned Chamber Judge directed the following two issues to be tried, in Court, as preliminary issues:—
1. Whether the plaintiffs, under the circumstances set out in the plaint, are entitled to challenge the decision of the trustees of the trust deed mentioned in the plaint upon a true and proper construction of the trust deed?
2. Whether upon a true and proper construction of the trust deed the plaintiffs are beneficiaries thereunder at all?
The trust deed Exhibit A mentions the property which is settled on trust and then in the first clause provides for the creation of the “Hormusji Muncherji Cama Charity Fund” and the collection of the interest on the Government Paper settled on trust.
Clauses 2 and 16 of the said trust deed, which are material for the purpose of determination of the issues, run as under:—
“2. And it is hereby agreed and declared that, the said Trustees or Trustee shall divide the same dividends into five equal portions, four of which equal parts shall yearly be paid, applied or expended, in the discretion of the said Trustees or Trustee, in and upon the four charitable purposes next hereinafter set forth, it being hereby distinctly provided and declared that, in such yearly payment, application and expenditure, the said Trustees or Trustee, for the time being, shall give a preference to the objects of charity coming within the first of the four declarations of charitable purposes hereinafter set forth, to those coming within the second, third and fourth of such declarations, and in like manner shall give preference to the objects coming within the second of such declarations to those coming within the third and fourth of such declarations and in like manner shall give a preference to the objects corning within the third of such declarations to those coming within the fourth of such declarations.
First declaration.—The support, maintenance, assistance or relief of such members of the family of the said Hormusji Muncherji Cama as may be in poverty, distress or indigent circumstances; due enquiries as to the circumstances and deserts of the respective recipients being made by the said Trustees or Trustee who shall Rice satisfy themselves or himself that the intended recipients respectively are members of such family and proper persons to be recipients of the support or relief hereby Cama directed to be extended to or conferred upon them, with power for the said Trustees or Trustee, at their discretion to discontinue any allowance which shall have been made by them or him, under or by virtue of the terms of these presents, to any person or persons whomsoever, whenever it shall appear to the Trustees or Trustee, fit and proper so to do.
Second declaration.—The support, maintenance, assistance or relief of such Parsee members of the family, commonly known in India as “Camajee Coverjee's Family,” as may happen to be in poverty, distress or indigent circumstances; such enquiries being previously made by such Trustees or Trustee, as is hereinbefore directed with references to the members of the said family of Hormusjee Muncherjee Cama.
Third declaration.—The support, maintenance and assistance or relief of such followers of the Zoroastrian creed as may be in poverty, in distress or in indigent-circumstances, after making due enquiries as aforesaid.
Fourth declaration.—The furtherance and support of religious charitable or benevolent schemes, objects or purposes, in the discretion of the Trustees or Trustee, for the time being, preference being given, in the exercise of such discretion, to the maintenance of the three Dhurumshalas, situate respectively at Nowsaree, Big Damaun, and Small Damaun, established and dedicated to charitable purposes by Ruttonbai, the late widow of the late Hormusjee Muncherjee Cama and the mother of the said Pestonjee Hormusjee Cama and Dossabhoy Hormusjee Cama, parties hereto, in the Christian year one thousand eight hundred and forty-five.
16. And lastly, in order that fit and eligible persons may, at all times hereafter, be found willing to take upon themselves the burden of the execution of the trusts hereby created and declared, and that, in so doing, the minds of all such persons may be fully satisfied and assured, it is hereby declared that the acts and deeds of all trustees of these presents in the execution of the trusts hereby in them reposed, shall be favourably and liberally regarded and construed by all Courts, judges, functionaries, and persons whatsoever and whomsoever, it being the wish and desire of the said parties hereto of the first part, and the true intent and meaning of these presents, that the said trustee, shall only be bound and required to act, in the execution of the aforesaid trusts, in such manner as may appear to them, to the best of their judgment, calculated to carry out and perform the said trusts, and in conformity therewith, effectually to promote the several schemes, objects and purposes, hereinbefore specified or referred to …”
It is contended that although the trustees have the power to decide whether particular persons are entitled to the benefit of the trust income or not that discretion of the trustees is liable to be supervised and, if necessary, altered by the Court. As a general proposition I do not think this statement can be disputed. I do not think that if the clause in the trust deed is worded as recited above or if it is recited rice in stronger language which makes the decision of the trustee final or even if words are used in the trust deed which would expressly oust the jurisdiction of the Court to question the discretion of the trustees, the Court's jurisdiction can be ousted. According to the decision in Reven, In re. Spencer v. National Association for the Prevention of Consumption, and other forms of Tuberculosis such a direction would be void and inoperative on the ground of repugnancy and as being contrary to public policy. It is, however, equally clear that once the trustees have exercised the discretion and the exercise is within their power, unless it is shown that the exercise of the discretion was not bona fide or was perverse, the Court would not interfere with the exercise of that discretion. Indeed the Court would be slow to interfere with the discretion of the trustees, when the settlor has given them absolute discretion, unless a very strong case is made out. As an illustration of the Court not being inclined to interfere with the discretion, when bona fide exercised, the case of Re Burrage; Burningham v. Burrage is an authority. In the present case the effect of the plaint is that according to the plaintiffs they are members of the family of the deceased Hormusjee Muncherjee Cama and they are in poor, distressed and indigent circumstances-According to them they are proper objects of maintenance and support within the meaning of the first declaration of clause 2. They further allege that they have not been paid any allowance under the trust deed. These are the only allegations contained in the plaint on which the contention contained in paragraph 14 of the plaint can be based. In that paragraph it is alleged that the decision of the trustees is unfair, unreasonable a ad not bona fide. The first two grounds are not available to the plaintiffs because once the trustees have decided the matter after making such inquiries as they consider proper, it is not for the. Court to decide whether the decision was unfair or unreasonable, having regard to the wide powers given to the trustees. The mere allegation in paragraph 14 of the plaint that the decision was not bona fide does not, in my opinion, help the plaintiffs. The allegation that a certain act is not bona fide is an inference to be deduced from the facts alleged by the plaintiffs. For the inference that the act in question is not bona fide the plaintiffs have to give particulars as to what actions and for what reasons they say that the trustees' act is not bona fide. On looking at the previous paragraphs it is found that the averments only show that they being proper objects, according to the plaintiffs, have not been paid any allowance and that is the only ground for alleging that the decision of the trustees was not bona fide. I do not think that having regard to the powers given to the trustees to satisfy themselves that the intended recipients were members of such family and proper persons to be recipients of the support or relief by the trust deed directed to be extended to or conferred upon them, the mere allegation that the decision of the trustees is not bona fide is sufficient to give the Court jurisdiction to inquire into the decision of the trustees. It was the duty of the plaintiffs, in a case like this, to put before the Court the various facts on which they rely for showing how the act of the trustees was not bona fide. By merely alleging that although they are the proper objects of the bounty of the settlor the trustees have not paid them anything, the plaintiffs do not establish the case of want of bona fides. It is common ground that in cases of this kind there may be various claimants to the trust income which is available for distribution by the trustees. So long as the trustees have not utilised the money for their own personal use but have paid the same to persons whom they consider in their judgment to be proper persons to receive the bounty, it is not on a mere general allegation of want of bona fides open to Court to assume jurisdiction to inquire into the action of the trustees. I, therefore, think that having regard to the allegations in this plaint the first issue should be found in the negative.
The second issue, which, having regard to my finding on the first issue, it is not necessary for me to decide, may, if necessary, be decided in favour of the plaintiffs. In my opinion the wording of the first declaration of clause 2 is not restricted to the Parsee members of the settlor's family. The words used in declaration (2) of the same clause clearly indicate that when the settlor wanted to indicate the Parsee members of his family he used the proper expression to indicate that. It is contended on behalf of the defendants that the whole scheme of the trust deed is to benefit persons belonging to the Zoroastrian faith and to no others. Looking to the whole trust deed I feel that there is considerable force in that contention. At the same time it must be remembered that even if the parties wanted to make provision for a certain thing, it is the duty of the Court only to see whether in fact the words used show that intention has been carried out. The first declaration is perfectly general in its terms and allows the trustees to pay money to members of the settlor's family. In that clause there is no suggestion whatsoever which can lead me to infer that the benefit was to be restricted to the members professing the Zoroastrian faith. In the absence of any words in the first declaration to that effect I am not able to accept the contention of the defendants in this respect because if I accept that contention it would mean that I should be reading the word “Parsee” before the words “members of the family” in that declaration. I do not think any authority justifies any such addition. The second issue should, if necessary, be found in the affirmative.
Attorneys for plaintiffs: Messrs Ferreira & Vallabhdas.
Attorneys for defendants: Messrs Mulla & Mulla.
Order accordingly.
B.K.D
Alert