Scottish Court of Session Decisions

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Cite as: [1878] ScotLR 16_197, [1878] SLR 16_197

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SCOTTISH_SLR_Court_of_Session

Page: 197↓

Court of Session Inner House Second Division.

Tuesday, December 3. 1878.

16 SLR 197

Special Case—Mackay's Trustees.

Subject_1Trust
Subject_2Postponed Period of Division
Subject_3Annuity
Subject_4Vesting — Winding-up of Trust where Annuity Secured.
Facts:

A truster directed his trustees to invest his means, and “from the free annual proceeds thereof” to pay a certain annuity; further, upon the death of the annuitant, to “divide my whole means and estate into seven shares,” to be paid to certain beneficiaries, who were named. There was a substitution in the event (which did not happen) of any of the beneficiaries predeceasing the testator. The annuity did not exhaust the income. Held that, as the estate vested a morte testatoris, the sanction of the Court might be given to an arrangement between the beneficiaries and the annuitant under which the estate was to be divided on satisfactory security being given to the annuitant John Mackay died on 18th April 1875 leaving a trust-settlement, in which, after certain other provisions, which had all been implemented, he directed his trustees “to invest the entire balance of my means and estate in such security as they may see best, in their own names, as my trustees, and to pay from the free annual proceeds thereof to my sister Mrs Sinclair, presently residing in Glasgow, the sum of £650 sterling per annum, payable half-yearly and in advance; and on the death of my said sister Ann Sinclair, my said trustees shall divide my whole means and estate into seven shares of equal amount,” and pay these to certain named residuary legatees. There was also a substitution, but it was only to operate in the event of any of the residuary legatees predeceasing the testator, which event did not occur. The residuary legatees proposed that the estate should be divided at once, the annuitant for her interest consenting to this being done “upon the understanding that the trustees provide for the annuity of £50 bequeathed to me by my brother under his settlement either by purchasing an annuity from some responsible assurance company, to be approved of by me, or by retaining a sum in their hands sufficient to meet my annuity.”

Headnote:

The trustees presented a Special Case to the Court, in which they asked an answer to the following question:—“Are the trustees entitled during the lifetime of the said Mrs Ann Mackay or Sinclair, the annuitant, and with her concurrence and consent, on an annuity being provided for her as above mentioned, to divide the remainder of the estate among the beneficiaries entitled to share in it after her death?”

Argued for the second and third parties, who were respectively the annuitant and beneficiaries, — The fund had vested; and the fact that the death of the annuitant was made the period of division was not enough to prevent the Court's anticipating the period if it was not inconsistent with the testator's intentions.

Argued for the trustees—They did not dispute the vesting. There seemed no reason why the truster had postponed the term of payment save that of making the annuity secure. And the direction to divide at that specified postponed time was clear. The case of Jack much resembled this.

Authorities— Jack and Others, November 5, 1874, 12 Scot. Law Rep. 42; White's Trustees v. Whyte, 4 Rettie 786; Kippen v. Kippen's Trustees, November 24, 1871, 10 Macph. 134.; Pretty v. New-bigging, March 1, 1854, 16 D. 667.

At advising—

Judgment:

Lord Justice-Clerk—In this case the parties are substantially agreed, and I do not see why the authority of the Court should not be interponed and sanction given to the proposed arrangement. In general when an annuitant or liferenter is sui juris, and where there is no limitation upon his or her right (as, for example, would be the case where it is made alimentary), the annuitant or liferenter together with the residuary legatee may come to any agreement as to the capital fund. I think therefore that where, as in the present case, the result is to remove an intermediate burden with the consent of the person in whose favour it is created, a division may at once be made. It is, however, quite a different matter where the person in right of the burden or incumbrance is incapable

Page: 198↓

of acting independently or is put under restrictions by the terms of the gift or conveyance.

On the whole, I think this question should be answered in the affirmative.

Lord Ormidale concurred.

Lord Gifford—The question here, I think, really turns upon whether the beneficiary's interest in the residue has vested a morte testatoris, for if that be so the beneficiary is entitled to avail himself of the fund at once, provided all intermediate interests have been duly provided for. I think that the residuary legatees have had a vested right conferred on them in the present instance, and accordingly I agree with your Lordships in the decision arrived at.

The Court therefore answered the question in the affirmative.

Counsel:

Counsel for First Parties— Balfour— Mackintosh. Agent— John Gill, S.S.C.

Counsel for Second and Third Parties— M'Laren— Macfarlane. Agents — Morton, Neilson, & Smart, W.S.
1878