Scottish Court of Session Decisions

Three of the younger children declined to take under this deed, and elected to take the portions to which they were entitled by the marriage-contract. The Court held that in so doing they reprobated the bond of provision and forfeited the life interest provided to them in the sums therein contained, but that their forfeiture did not apply to their children. The result was, just as here, that the liferents provided to the younger children by the bond of provision were set free, while a portion of the capital sum provided to their children was carried away. The question was, how the forfeited liferents were to be applied. The Court pronounced this interlocutor:—“Find that according to the true meaning of the bond of provision of 1839 and the codicils, and according to the implied will of Colonel and Mrs Harvie, the granters thereof, the said liferent interests of the children forfeiting as aforesaid do not fall into the residue of the estate of Colonel and Mrs Harvie … but fall to the trustees under the said bond of 1839, to be administered by them for the purposes of the said bond of provision, and particularly for behoof of the parties whose interests were injuriously affected by the act of election and repudiation which occasioned the forfeiture, viz., the children existing or who may exist of the said younger children of Colonel and Mrs Harvie so forfeiting respectively, and for behoof of the parties substituted by the said bond of provision to the said younger children and their issue.”

This case appears to me to be directly in point, the only difference being that the provisions which the younger children elected to take were due to them ex contractu, while here the widow was entitled ex lege to her jus relictœ, but I do not think that makes any difference in principle. I think this case is a direct authority to the effect that the annuity surrendered or forfeited in the sense in which it was in this case does not fall into residue, but is to be administered for behoof of the parties whose interests are injuriously affected by the act of election.

If, then, the parties whose interests are injuriously affected are to be compensated, the question is, how is this to be most equitably done? I think in this matter regard must be had to the pecuniary losses sustained respectively by the liferenters and fiars.

Both liferenters and fiars have suffered loss, and I see no equity in applying the whole of the forfeited or surrendered provision in compensating the fiars only, as they propose.

I agree with the Lord Ordinary in thinking that it should be apportioned between the life-renters and the fiars in proportion to the losses sustained by them respectively, the widow having carried off her jus relictœ. That there may be some difficulty or nicety in estimating their respective losses is no reason why it should not be done as accurately as may be, and I approve of the Lord Ordinary's proposed inquiry for that purpose.

Lord Mure—I am entirely of the same opinion. Assuming that the doctrine of equitable compensation ought to be applied, then I think the rules upon the subject are well laid down by the Lord Ordinary in his interlocutor, and I agree with what Lord Adam proposes, and think the qualifications which he suggested are sound, and ought to be given effect to. A good deal of argument was addressed to us on the case of M'Farlane v. Oliver, but it does not appear to me that much assistance is derived from it. I think the case referred to by Lord Adam is more in point, and I see the same rule which is sought to be applied here was applied in the case of Davidson.

I concur in thinking that the sum set free by Mrs Russell claiming her jus relictœ should be devoted to compensating the interests of those prejudicially affected by the election Mrs Russell has made.

Lord Shand—I am of the same opinion. I think that the question raised in the present case is not affected by the case either of Annandale on the one hand, or M'Farlane on the other. As to the first of these cases, when there is a postponement of the payment of provisions in order to protect a liferent, and that postponement comes to an end by renunciation, then a payment of the fund set aside for the purposes of the provision is made at once by the trustees, and the doctrine upon which such a payment is made is that the truster desired to confer a benefit upon certain persons, but subject to the existence of this liferent, and as that obstacle has been removed no reason exists for delaying the carrying out of his intention. If, however, more than the liferent had to be protected, the question would then be more difficult.

In M'Farlane v. Oliver, which was the case of a universal settlement, the condition was implied that if Mrs Oliver claimed her legal rights she would require to surrender the special provision bequeathed to her by the settlement.

In the present case there is no question of forfeiture but of election, and when as here a widow or children elect to take her or their legal rights, and thereby take away a bequest from some individual or class whom it was the intention of the testator to benefit, then the doctrine of equitable compensation ought no doubt to come in, and the fund set free by the renunciation ought to be distributed among those whose bequest has been carried off, in the proportion that each has thereby suffered.

Lord President—Lord Adam has so distinctly expressed my opinion in this case that I have nothing to add.

The Court pronounced this interlocutor:—

“Vary the interlocutor of Lord M'Laren of 19th December 1885 by deleting from it the following words, viz.—‘And moveable effects also therein provided’ on the tenth line thereof; the word ‘Find’ on the eighteenth line, and all the words following the said word to the word ‘thereof’ on the twenty-seventh line; as also the words ‘and moveable effects’ on the twenty-ninth line thereof: Quoad ultra adhere to the said interlocutor, refuse the reclaiming-note, and decern.”