Scottish Court of Session Decisions

Alexander Kirkwood Brown and others, testamentary trustees of the late Robert M'Connell, bleacher, Glasgow, presented a petition for authority to resign the office of

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trustee, and for the appointment of a judicial factor on the trust-estate.

By the fourth purpose of his trust-disposition and settlement the testator, who died on 7th April 1897, recommended and empowered the trustees to carry on his bleach-works, with full discretion, if they saw fit, to wind it up or dispose of it as a going concern. By the sixth purpose he directed his trustees to erect tenements of dwelling-houses on certain specified steadings of ground. He lastly directed them to hold the residue of his estate for his children equally among them in liferent and their issue in fee, it being declared that the shares of grandchildren should vest at twenty-one in the case of males, and at twenty-one or marriage in that of females, and “that such vesting shall take place subject to the life interest of their parent if then alive, and the right given to such parent as after mentioned to confer a similar life interest on his or her surviving spouse.” The truster at the same time conferred on the trustees “the full power in their own absolute discretion to pay even before the said period of vesting, to or for behoof of any grandchild, such portion as they may think fit, not exceeding one-half thereof, of the capital of its prospective or presumptive share, and that for any purpose, and under any conditions they may consider proper, declaring that, notwithstanding what is hereinbefore written, each of my sons shall have full power to confer upon his surviving wife … and each of my daughters upon their surviving husbands … a liferent of the whole or any portion of the share of residue hereby directed to be held in liferent for such son or daughter.”

The petitioners set forth that they desired to sell the buildings and steadings which formed one block of ground, and to dispose of the business as a going concern; but that they were advised that they could not safely disregard the imperative direction of the truster in the sixth purpose to build tenements. Yet, to carry out this direction, they averred, would necessitate their embarking the whole of the trustestate in a hazardous building speculation, and borrowing money for at least an equal amount; and thus the trust had become unworkable, all the fiars being in minority, and it being therefore impossible to arrive at an agreement authorising the petitioners to take any particular course.

The application was presented under the Trusts (Scotland) Act 1861, and the Trusts (Scotland) Act 1867. The former (24 and 25 Vict. cap. 84), section 1, empowers all gratuitous trustees under any deed to resign; the latter (30 and 31 Vict. cap. 97), section 10, makes provision for the appointment of new trustees or a judicial factor by the Court, if any trustee entitled to resign, and desirous of so doing, is at the time sole trustee.

Mr Blackburn, advocate, who was appointed curator ad litem, to the fiars, lodged a minute in which, while expressing his belief that the trust-estate would be more efficiently administered by a judicial factor than by trustees, he called the attention of the Court to the clause of the settlement with respect to advances to the fiar quoted above, and proceeded thus—“This is a very peculiar power, and very different from the power frequently met with where trustees are authorised to make an advance of capital to an individual who is enjoying the liferent of that capital. Here the trustees are actually empowered to deprive the liferenters of a portion of their beneficiary interest in the estate, and to bestow that portion on an individual who has no present beneficiary interest in the estate, and may even not have any vested interest in the estate.

“The trust-deed contains a power to assume new trustees, so the truster must be held to have indicated no delectus personœ as to the carrying out of this power, and in such cases the Court has, on an application by a judicial factor, frequently extended to him the special powers contained in the original trust-deed. But the special power above referred to is of such a peculiar nature, and implies such a power of selection as to the individuals on whom the beneficiary interest of the estate is to be conferred, that the curator has grave doubts as to whether the Court would allow a judicial factor to exercise the power. If this doubt is justified, then the interests of his ward would be adversely affected by the granting of the prayer of the petition in its present form, and he considers it right to draw the attention of the Court to this fact at the present stage of the proceedings.”

The Lord Ordinary ( Stormonth Darling) reported the petition to the First Division.

The petitioners argued that under the statutes they had an absolute right to resign, pointed out that the discretion conferred on the trustees could only be exercised after the death of the liferenter, and referred to Maxwell's Trustees v. Maxwell, November 4, 1874, 2 R. 71; Simson, &c., January 27, 1883, 10 R. 540; Robbie's Judicial Factor v. Macrae, February 4, 1893, 20 R. 358; Howden v. Simson, November 16, 1895, 23 R. 113,