Scottish Court of Session Decisions

Handyside's Trustees brought an action of multiplepoinding, calling, among other parties interested in the fund in medio, William Scott, residing in Australia. On 24th May 1856 an interlocutor was pronounced in absence of Scott, approving of the fund in medio. Thereafter William Scott appeared, and lodged a note of objections to an accountant's report on the fund, but it was held that these objections were excluded by the interlocutor approving of the condescendence of the fund. He then brought an action to reduce that and another interlocutor. In this reduction he stated various objections, the principal of which were (1) that various sums of money had been paid to Mr Andrew Scott, one of the trustees, as law agent of the trust; and (2) that there had been a general mismanagement of the trust, causing loss to the beneficiaries.

The Lord Ordinary ( Barcaple) sustained the first of these objections, holding that Mr Andrew Scott, being a trustee, was not entitled to charge for remuneration for business done by him as law agent of the trust, but only for outlay. In the note to his interlocutor the Lord Ordinary, referring to this objection, said—“The pursuer also objects to the sum of £177 or thereby, for business accounts incurred by the trusees to Mr A. Scott, as law-agent of the trust.

Page: 196↓

“The deed does not contain a power to appoint one of the trustees as law agent. The defenders justify the charge mainly upon the ground that the beneficiaries acquiesced in Mr Scott's acting as law agent for the trust. It is clear, from the correspondence of the truster's widow with Mr Scott, that she was aware he acted in that capacity, and neither she nor Mr H. G. Dickson, the agent whom she ultimately employed to act for her, ever objected to his doing so. The agents for the pursuer, on his getting an assignation to £300 of the arrears of the widow's annuity, also transacted with Mr Scott, as agent, without objection. The question is, Whether these facts constitute such acquiescence by the pursuer or his author as should exclude him from now taking the objection?

If the Lord Ordinary could hold that the judgment in the case of Ommaney v. Smith, 16 D. 721, was to the effect that beneficiaries are barred from taking the objection where they have corresponded with the trustee on the understanding that he was acting as law agent for the trust in his professional capacity, he would consider it to apply to the present case. But though some parts of the report tend to such a construction, he is disposed to think that that is not the true import of the judgment. The party there taking the objection was, in the person of his wife, not only a special legatee, but also sole residuary legatee. It rather appears to the Lord Ordinary that the ground of judgment was that, in the special circumstances of that case, the residuary legatee, who had the sole interest in the matter, gave his virtual concurrence to the employment of the defender as law agent. The defender was sole executor of the testator. The husband of the residuary legatee appears to have intervened actively in the administration of the executry estate, and it was held that in doing so he gave his consent to the defender acting as agent. The Lord Ordinary thinks that this is different from the case of a beneficiary who does not interfere with the management of the trust, and against whom it can only be alleged that he has objected to one of the trustees acting as agent, when he may have had no reason to suppose that he would ever have an interest to take the objection. If mere non repugnantia is a bar to a beneficiary stating the objection, the rule against trustees making charges for agency will seldom receive effect.

On these grounds the Lord Ordinary is of opinion that the objection must still receive effect. But Mr Scott is, of course, entitled to his outlay charged in the business accounts.

On the second objection the Lord Ordinary thought inquiry was necessary. “If it is to be held that at any time prior to 31st December 1854, the close of the period under consideration in this reduction, the trustees were acting contrary to their duty in continuing to hold the heritable property, other than the house in Montague Street, and to carry on the trust as they did, charging it with the expenses of management, and borrowing money from their factor at five per cent to pay Mrs Handyside's annuity, that is a course of procedure which may have caused loss to the estate. If that shall prove to have been the case, the pursuer may have a good objection to the charges for expenses of management and interest on advances, which would otherwise have been unobjectionable. But at present there are not materials for determining that question. It must first be ascertained whether the course taken by the trustees has caused loss, and to what extent. The questions whether the trustees acted in violation of their duty by retaining the property unsold, and whether loss has ensued in consequence, are so intimately related that it does not seem proper to decide any point in regard to either of them until further investigation shall have taken place, if that is to be insisted on.”

The trustees, defenders in the reduction, reclaimed.