Report No. 17

28. Section 18.- No change.

29. Section 19.-

It was suggested that a section on the lines of Article 49 in Underhill's Trusts1 providing rules for the apportionment of the charges on the corpus and the income should be included with suitable modifications. The principles embodied in Article 49 of Underhill's Trusts are based on decided cases. It is generally understood that all capital charges should be paid out of the capital, and interest and local rates, etc., should be paid out of the income. These are established rules and have to be applied subject to any contrary rules in the deed of trust. No necessity has been felt for including them in a statute thereby making them inflexible. Liberty should be left to courts to apply them according to the facts of each case.

Sometimes the income may not be sufficient and recourse to the corpus may be necessitated. Again, if the current income is insufficient to discharge the interest, it may be a good rule of economics to postpone the payment till the income accrues in the subsequent year; but it is doubtful whether the person who is entitled to payment would stay his hanus without enforcing payment by resorting to court. If the principles embodied in them are petrified by giving them statutory force and if the trustee does not carry out the duties in accordance with the rule, he may be guilty of breach of trust. Third parties entitled to payment may not be bound by such rules. We think that it is a needless complication to enact any rigid rules regarding apportionment.

1. Underhill's Law relating to Trusts and Trustees, (10th Edn.), p. 295.