Scottish Court of Session Decisions

Peter Clark died upon September 14th 1882 leaving a trust-disposition and settlement dated August 29th 1878, by which he provided, inter alia, an annuity of £600 per annum to his widow so long as she remained unmarried (restrictable in the event of her marrying again to £100), and further, desired his trustees to pay her an allowance of £100 for each of his daughters living with her, for their maintenance, clothing, and education. He also left an annuity of £100 to his sister. By the last purpose of his settlement the testator directed his trustees, upon the

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second marriage of his wife, should such an event take place, to hold and retain during her subsequent lifetime the remainder of his said means and estate not set aside for securing payment of the foresaid annuities, for behoof of his whole children equally among them, share and share alike, and to pay and apply the free annual proceeds thereof, or such portion of the same as the trustees might consider sufficient, to and amongst the said children equally, share and share alike, and upon the death of the survivor of his said wife and sister he directed his trustees to hold and retain the whole residue and remainder of his means and estate for behoof of his whole surviving children equally among them in liferent for their liferent alimentary use of the free annual proceeds thereof only and their respective lawful issue in fee equally among them, per stirpes, declaring that in case any of his said children should decease leaving lawful issue, such issue should succeed always in room of their respective parents, but that the said shares should not be payable to the beneficiaries entitled to the same until they respectively attained the age of 21 years complete in case of males, or, in case of females, until they attained that age or were married, whichever of these events should first happen. The testator further declared that the whole of the foregoing provisions should vest in the beneficiaries at and upon the arrival of the respective periods of payment thereof. The settlement further provided that the provisions in favour of the testator's wife and children should be accepted by them as in full of terce, jus relictcæ, legitim, and every other claim, legal or conventional, competent to them, or any of them, by or in consequence of his death.

The net value of the estate left by the truster amounted to £97,928, 10s. 5d. The testator was survived by his widow and sister, and by five daughters, of whom two had attained majority.

The widow accepted the provisions in her favour in the settlement, but the two daughters who had attained majority claimed, and were paid legitim, which was found in March 1883 to amount to £5341, 10s. to each daughter. The three remaining daughters also claimed and were paid their shares of legitim as they attained majority.

The testator's second daughter married George Baillie Main in 1883, and his third daughter married Robert Baillie Main in 1885. In 1895 Mrs George Main had five, and Mrs Robert Main six children.

In May 1895 Mr Clark's trustees petitioned the Court, in virtue of its nobile officium and of its powers under the Trusts Acts, for authority to pay and apply out of the funds of the trust-estate of the said Peter Clark, left undisposed of by his trust-disposition and settlement, the sum of £1000 per annum, or such other sum as the Court might consider necessary or proper to and for the maintenance, education, and upbringing of the children of the testator's two married daughters.

The petitioners stated—“When the legitim fund was withdrawn the amount of the estate left under the management of the petitioners was £72,221, 0s. 4d. The annuity provided to the testator's sister having lapsed on her death in 1891, and there being no provision in the settlement for the application (during the widow's survival without having entered into a second marriage) of the income of the trust-estate beyond the annuity of £600, a considerable sum has remained in each year in the hands of the petitioners. By the addition of surplus income and the profits derived from the sale of certain of the securities in which part of the trust funds was invested, the amount of the estate at 31st December last is now increased to £104,574, 15s., being fully £6600 more than its net amount at the testator's death. The income of the trust investments for the current year will slightly exceed £3400, and after deducting widows' annuity and other expenses there will be a surplus income of at least £2700 a-year, for the disposal of which in the events which have occurred the said trust-disposition and settlement makes no provision, and which will fall to be accumulated for the benefit of the truster's grandchildren, who are the fiars under the settlement. … The petitioners have been applied to by Mr Clark's two married daughters on behalf of their respective families, who will ultimately become entitled to shares of the fee of the estate, for a payment to each of them out of the aforesaid surplus income undisposed of by the testator to assist them in maintaining and educating their children in a more liberal way than their present means enable them to do, and in a manner more suitable to the fortune which the children will inherit. … Mr George Baillie Main, who at the time of his marriage was in the employment of Hutcheson & Company, oil merchants in Glasgow, was shortly thereafter assumed as a partner in that business (which is now carried on under the firm of Hutcheson, Main, & Company), and contributed his share of capital therein out of the sum which his wife had received as her share of legitim, the remainder of the sum so received being expended in the building of a residence for his wife and family. Owing to the increased cost of living and education, and to the diminished profits of his business, due to general trade depression, he has been obliged to some extent to encroach on his capital in order to suitably educate the truster's grandchildren for the station in life which they will ultimately occupy. Mr Robert B. Main carries on business as a gas engineer under the firm of R. & A. Main. The greater part of the sum received by his wife as legitim has been expended in the erection of a dwelling-house at Pollok-shields to be occupied as a residence for the family, and the remainder has since been sunk in his business. With the view to the development of the business, and the maintenance and education of the children, a sum of £5500 was borrowed by him and his wife on the security of the said house, and of his business premises, and has partly been sunk in the business and partly expended in the upkeep of the family. In

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the case of both Mr G. B. Main and Mr R. B. Main it is stated by them that the above-mentioned expenditure upon dwelling-houses and other consequent family expenses, present and prospective, would not have been undertaken but for their belief that within a limited number of years, and without reference to the widow's survivance, the trust income, in whole or in part, would become available for family purposes. Unless some allowance is now made for the children's maintenance it will probably be necessary for their parents to sell their houses, which they state could only be done at a sacrifice. At the same time the accommodation in the houses is no more than sufficient for the respective families, and it would be to the disadvantage of the truster's grandchildren if they were now to be less sufficiently housed and provided for than they have been in the past. In these circumstances the petitioners are satisfied of the propriety of making the payments now asked out of the undisposed of income of the estate under their management, and that to an amount not exceeding £500 per annum for each family, but they are unable to do so without the authority of the Court.”

Section 7 of the Trusts (Scotland) Act 1867 provides—“The Court may from time to time, under such conditions as they may see fit, authorise trustees to advance any part of the capital of a fund destined, either absolutely or contingently, to minor descendants of the truster, being beneficiaries having a vested interest in such fund, if it shall appear that the income of the fund is insufficient or not applicable to, and that such advance is necessary for the maintenance or education of such beneficiaries or any of them, and that it is not expressly prohibited by the trust-deed, and that the rights of parties other than the heirs or representatives of such minor beneficiaries shall not be thereby prejudiced.”