Scottish Court of Session Decisions

On July 17th 1896 William Fox and another, testamentary trustees of the late Archibald Carruthers, solicitor, London, presented an application to the Court, under section 3 of the Trusts Act 1867, for authority to sell certain heritage in Scotland forming part of the trust-estate.

Page: 167↓

The testator was domiciled in England, and the petitioners, who were also domiciled in England, obtained probate in their favour on 23rd November 1895.

The petition set forth that the portion of the trust-estate situated in England was insufficient to meet the testator's liabilities by £1953.

The statement of the testator's property situated in Scotland showed a free surplus of £19. The petition proceeded—“It is apparent, in view of the smallness of the above margin of free rental, that it is impossible to borrow any further sum on the security of the property, and it is therefore necessary that the estate should be sold in order that the balance of the price may be applied in paying, as far as possible, the personal debts due by the deceased. The truster has not conferred on the petitioners a power of sale; such power, however, is not in the circumstances inconsistent with the purposes of the trust, and is necessary for the execution thereof.”

The petitioners accordingly craved the Court to grant power and authority to them as trustees to sell and dispose of the said heritable estate.

The Lord Ordinary ( Stormonth Darling) refused the petition.

Note.—“The petitioners are English trustees under the will of an English solicitor, and the estate is situated wholly in England, with the exception of a small landed property in Scotland. The beneficiaries are the pupil children of the testator, but the estate is said to be insolvent. If so, the property in Scotland could be attached under bankruptcy proceedings in England. No such proceedings, however, have been taken, and the petitioners apply to this Court to exercise the discretionary powers conferred by section 3 of the Trusts Act of 1867 by authorising them to sell the Scottish property for the benefit of the creditors.

It seems to me that the Act is inapplicable. Before I could grant the powers craved I should have to inquire whether these were consistent with the purposes of the trust and expedient for its execution. I should also have to be satisfied that the petitioners themselves had no power of sale. All this would require the construction of an English will, and possibly an inquiry into English law. That is not the duty of a Scottish judge under an Act the purpose of which is to ‘facilitate the administration of trusts in Scotland.’ The exercise of such a discretionary power is for the Court to which the trust itself is subject. If that Court were to grant the desired authority, and any difficulty were to arise in carrying out the sale, then it would be time enough to apply to this Court for its aid.”

A similar application was presented to the Court on 24th September 1896 by Henry Sydney and another, the marriage-contract trustees of James Allan and his wife, residing in London.

In this case, too, the trusters and the trustees were domiciled in England, and the bulk of the trust-estate was situated in England. The heritage in Scotland, which the trustees sought power to sell, consisted of certain houses in Penicuik, and the grounds upon which the application was made were that the marriage settlement did not confer a power of sale, and that the property in Scotland required more attention than the trustees were able to give to it.

The Lord Ordinary ( Pearson) reported the case to the Inner House.

Note.—… “The Act itself empowers the Court to grant power of sale ‘on being satisfied that the same is expedient for the execution of the trust, and not inconsistent with the intention thereof.’ The petition does not suggest any method by which the Court is to ascertain whether the statutory conditions exist in the case of an English trust. Nor do I find any sufficient ground for deciding, or rather for assuming, that these English trustees have not already a power of sale either under the trust-deed or at common law.

It appears from documents produced that in April last year the spouses applied to Mr Justice Stirling in London, under the Settled Land Act 1882, to have the trustees of the marriage settlement appointed trustees under that Act with full power to sell and dispose of the Penicuik subjects, and they lodged an affidavit in that application to the effect that it would cost £150 to put the property in sanitary condition and tenantable repair, and that neither they nor the trustees had the money required; that there were no children of the marriage, and that the settled property was absolutely vested in the survivor of the spouses; that there was no power of sale under the settlement, and that they and the trustees concurred in desiring a sale. On 17th June the English proceedings were stayed by consent, the husband undertaking forthwith to proceed to sell the property, and to account to the trustees for the price. I waS informed that this course was adopted because the Judge was of opinion that he could not grant the power, seeing that section 1 (3) of the Settled Land Act provides—‘This Act does not extend to Scotland.’

The petitioners say truly that unless the Scottish Court aids them the trust will be greatly disadvantaged; and they refer to the English proceedings as instructing sufficiently (1) that they have not power to sell the subjects, and cannot obtain it in England; and (2) that a sale is expedient for the execution of the trust, and not inconsistent with the intention thereof. I doubt whether the English proceedings fully make out either proposition, but assuming that they do, or that these conditions can be otherwise established, the larger question remains, namely, whether it is competent for the Court to empower English trustees to sell Scottish heritage belonging to the trust. It was suggested that it was not necessary to decide this question, and that a decree of Court professing to confer the power would be sufficient to satisfy a Scottish purchaser. But I do not think that a

Page: 168↓

doubt as to the competency of a statutory proceeding can be thus slurred over.

I am disposed to hold the petition incompetent under the statute, on the ground that the statute does not apply to a purely English trust. The fact that part of the trust assets is heritable property in Scotland may give the Court jurisdiction over the trustees to certain effects, and may enable them to invoke the law of Scotland in matters relating to that property. But the petition, while it relates indirectly to that property, has for its primary purpose, and indeed its only purpose, to ask the Court to confer certain powers upon English trustees. Now, a trustee's powers are measured by the law of what is sometimes called the domicile of the trust, and it is antecedently improbable that the Courts of one country would be authorised, even by a common legislature, to enlarge the powers of trustees who are answerable to the courts of another country. At all events, I should expect it to be done in express terms, and not to be left to inference and construction. But further, I think that, on a sound construction of the statute, this petition by English trustees is not within its scope.

The decisions which have been pronounced on petitions under the 12th section of the statute ( Hall and Others, 1869, 7 Macph. 667; Brockie, 1875, 2 R. 923) go far to support this conclusion.

I nave, however, assented to the suggestion that I should report the petition on the ground that the general question of competency under the third section has not been authoritatively decided, and that I am informed that a similar petition is now depending in the Inner House.”

The petitioners in the first case reclaimed, and the reclaiming-note and Lord Pearson's report were taken together in the Inner House.

The Trusts (Scotland) Act 1867 (30 and 31 Vict. cap. 97), section 3, enacts—“It shall be competent to the Court of Session, on the petition of the trustees under any trustdeed, to grant authority to the trustees to do any of the following acts on being satisfied that the same is expedient for the execution of the trust and not inconsistent with the intention thereof … (1) To sell the trust-estate or any part of it.”

The full title of the said Act is “An Act to Facilitate the Administration of Trusts in Scotland.” The preamble affirms that “it is expedient that greater facilities should be given for the administration of trust-estates in Scotland.” Sec. 20 enacts—“This Act may be cited for all purposes as ‘The Trusts (Scotland) Act 1867.’”

Argued for the petitioners—The Court had jurisdiction to deal with all matters affecting heritage situated in Scotland. The present cases were precisely the converse of Hewit's Trustees v. Lawson, March 20, 1891, 18 R. 793, where the Scottish Courts had sisted process to enable the English Courts to determine the extent of their jurisdiction over English heritage belonging to a Scottish testator and forming part of a Scottish trust.

At advising—