Scottish Court of Session Decisions

James Heriot Balfour-Melville, W.S., Edinburgh, heir of entail in possession of the estate of Strathkinness, presented a petition for authority to restrict younger children's provisions and widow's annuity, and to disentail.

The deed of entail under which Strathkinness was held was dated 22nd April, and recorded in the Register of Tailzies 7th July 1808. It contained the following clauses relating to provisions for younger children:—“Moreover, reserving always to the said heirs of entail who shall succeed to the said lands, teinds, and others, full power and liberty to provide their lawful children (other than the heir succeeding to the said lands, teinds, and others) in such portions and provisions as they shall think fit, not exceeding, in case there shall be one child other than the heir succeeding to the said lands, teinds and others, two years' free rent of the same; in case there shall be two children other than such heir, three years' free rent of the same; and in case there shall be three or more children other than such heir, four years' free rent of the same, after deducting always feu-duties, and all other legal and annual burdens, excepting liferents to widows or widowers, and any debts contracted for improvements and buildings under the Act of Parliament Tenth, George the Third, cap. 51:… And further declaring that any bond or other security to be granted by the said heirs of entail for children's provisions shall bear a special clause, and they are hereby declared to be so qualified that no apprising, adjudication, or other legal diligence shall be led or deduced thereupon against the fee or property of the said lands, teinds, and others, or any part thereof, for payment of such children's provisions, interest thereon, or penalties corresponding thereto, nor shall it be in the power of the said heirs of entail to sell any part of the said lands for payment thereof, but the current rents of the said lands, teinds, and others, so far only as free and unaffected at the time shall be subjected and liable to legal execution for payment of the said children's provisions, and shall be appropriated by the next heir of entail succeeding thereto accordingly, who shall be and is hereby prohibited and debarred from applying or appropriating the said free rents to any other purpose until such provisions shall be satisfied and paid, reserving only to him or herself such a proportion of the said free rents in the meantime as shall be necessary for his or her subsistence, not exceeding one-half of the said free rents for the time while the said provisions or any part thereof remain unpaid.” Power was also reserved to the heirs of entail to grant annuities to their wives and husbands, and the wives and husbands of their presumptive and apparent heirs, not exceeding one-fifth of the free yearly rent, after deducting “feu-duties and all legal public burdens,” declaring that if more than one such annuity subsisted at the same time, the second, third, and the fourth and all subsequent annuities, should be reduced to one-tenth, one-twentieth, and one-fortieth respectively of the free rent. There was also a declaration in this part of the deed to the effect that at least one-half of the yearly rental should always remain to the heir of entail in possession, which is quoted in the opinion of the Lord Ordinary, infra.

There was no provision in the deed of entail authorising any heir to burden the fee of the estate for any purposes whatever. The children's provisions which it was sought to restrict were contained in a bond of provision dated 9th January 1895, whereby the late James Balfour-Melville, the petitioner's father, at that time heir of entail in possession of Strathkinness, bound himself and the heirs of entail succeeding, to provide a sum of £10,000 for his younger children, six in number, in certain specified proportions.

The entailed estate was burdened with, inter alia, three bonds and dispositions in security for £12,204, £200, and £700, granted respectively in 1885, 1885, and 1888 by John M. Balfour-Melville, a former heir of entail in possession, under authority obtained by applications to the Court under the Rutherfurd Act. The estate was also burdened with certain rent-charges and bonds of annual-rent, the amount payable under which was £813 per annum, the former consisting of absolute orders issued by the Scottish Drainage and Improvement Company under statutory authority, and the latter of bonds granted under powers obtained by application to the Court.

The petitioner proposed to deduct from the rental, in estimating the amount available for the younger children's provisions,

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the sum of £427, 12s. 10d., being interest on the bonds and dispositions in security mentioned above, and the sum of £813, the amount of the rent-charges and bonds of annual-rent. On this footing the amount available, being four years' free rental of the estate, was £3672, 3s. 4d., while if the above deductions were not allowed it was £8635, 5s. 9d.

Answers were lodged for James Mylne, W.S., judicial factor on the estate of the late James Balfour-Melville, and for two of the younger children, objecting to the deductions from the rental proposed by the petitioner.

Answers were also lodged for Mrs Duncan, widow of a former heir of entail, whose annuity, amounting to £500, it was proposed to restrict. On the question raised by her parties ultimately came to an agreement.

On 26th October 1899 the Lord Ordinary ( Pearson) remitted to Mr William D. Lowe, W.S., to inquire into the facts set forth in the petition, and whether the procedure had been regular and proper, and in conformity with the provisions of the statutes and relative Acts of Sederunt, and to report.

Mr Lowe lodged a report, in which he narrated the foregoing facts, and reserved for the Lord Ordinary's consideration the question whether the interest on the bonds, and the rent-charges, &c., as stated above, should be deducted from the rental. With regard to the rent-charges he reported as follows:—“The question thus raised affects also the claim made by the petitioner for deduction of rent-charges amounting to £813, 2s. 9d., and regarding this deduction the reporter begs to inform your Lordship that the same question was raised with reference to this same estate in an application dated 5th July 1884, presented by the late proprietor (Mr John M. Balfour Melville) for authority to charge the estate with the children's provisions granted by the previous proprietor (Mr John Whyte Melville). In that petition the only deducuons claimed from the rental (apart from ‘public’ burdens) were certain rent-charges amounting to £493. The reporter is informed that no formal answers were lodged to the petition, but it appears from the report of the man of business (the late Mr John Galletly) that representations were made to him on behalf of the younger children, to the effect, inter alia, that the rent-charges were not a good deduction. An excerpt from Mr Galletly's report is lodged in process. Mr Galletly reported that the rent-charges then sought to be deducted did not represent improvements made under the Montgomery Act (although the improvements themselves were, in his opinion, of the nature of improvements which would have been allowed under that Act), and that, as they were not charged under it upon the estate, they were not excluded as deductions by the deed of entail, and he indicated his opinion that the correct course to follow would be to allow the deduction of interest upon the value of the rent-charges as at the date of the previous proprietors’ death. The report was disposed of on 13th March 1885 by Lord Kinnear, who after hearing counsel for the then petitioner, decided ‘that the rent-charges do not fall to be deducted.’ A copy of the interlocutor, which was acquiesced in by the then petitioner, and by the three next heirs (of whom the present petitioner was one), is produced. The rent-charges now sought to be deducted are expenditure on Montgomery improvements of the same nature as those which were the subject of Lord Kinnear's judgment in 1885, and indeed are partly composed of the same charges.”…

On 13th December 1900 the Lord Ordinary pronounced an interlocutor, whereby he found, inter alia, that no part of the said sums of £427, 12s. 10d. and £813, 2s. 9d. fell to be deducted from the rental of the estate in ascertaining the amount of the children's provisions.

Opinion.—“In this petition for disentail it is necessary to ascertain the amount to be charged on the estate in respect of certain family provisions.

The petition was remitted in ordinary course to Mr Lowe, W.S., and in an interim report he now asks for direction on two matters.

The first question raised is, what deductions are to be made in ascertaining the free rental upon which certain provisions to the younger children of the preceding heir are to be calculated.

These provisions were not granted under the powers of the Entail Acts, but under powers contained in the deed of entail executed in 1808. By that deed it is provided that the rental for ascertaining the amount of younger children's provisions is to be ‘the free rent, after deducting always feu-duties and all other legal and annual burdens excepting life-rents to widows or widowers, and any debts contracted for improvements and buildings under the Act 10 George III. cap. 51.’ The rental for calculating widows’ annuities is to be the free yearly rent ‘after deducting feu-duties and all legal public burdens.’

Now the sums in dispute, which the petitioner maintains to be proper deductions from the rental in ascertaining the children's provisions, are (1) a sum of £427, 12s. l0d. of interest on debts charged upon the estate, and (2) a sum of £813, 2s. 9d., being the amount payable under certain rent-charges.

I proceed to deal with these in order, premising that, whatever light may be thrown upon the matters in dispute by subsequent legislation as interpreted by decisions, the questions here are primarily questions of construction of the deed of entail of 1808.

The debts whose interest is sought to be deducted are three in number. The first is a bond and disposition in security for £12,204, 9s. 3d., which was charged on the estate by the late John M. Balfour-Melville under the authority of the Court in 1885, being the sum required for paying off the younger children's provisions granted by Mr John Whvte-Melville, his predecessor. The other two debts are

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bonds and dispositions in security for £700 and £200 respectively.

The petitioner contends that the yearly interest of these debts falls within the expression ‘feu-duties and all other legal and annual burdens’ which are to be deducted in ascertaining the free rent, and that these words ought to receive a wide construction because of the exceptions which immediately follow, namely, ‘Excepting liferents to widows or widowers.’ It is urged that this shows that but for these words excepting them, such liferents would have been included within the expression ‘All other legal and annual burdens,’ and that the expression is therefore not used in its ordinary restricted sense.

I think that the case of Paterson, 1849, 11 D. 1420, is a guide in construing clauses of this nature. I do not say that the decision on one clause will rule the construction of a different clause. But the clauses are near enough to make that decision illustrative of the present question. It was there held that upon a clause for ascertaining the free rent, ‘after deducting feu-duties and other legal annual burdens,’ annuities granted by the entailer, and the interest of entailers’ debts which were charged on the fee, were not deductable in calculating a younger child's provision. I would specially refer to the opinions of Lord Mackenzie and Lord Fullerton as to the principles on which such a clause should be construed. These seem to me entirely to favour the respondents’ view.

The rent-charges sought to be deducted consist partly of absolute orders issued by the Scottish Drainage and Improvement Company under the Improvement Acts and partly of bonds of annual-rent. Of the latter, one (amounting to £307, 1s. 8d.) is stated to have been laid on under section 21 of the Rutherfurd Act in respect of Montgomery improvements.

It is contended that this question as to deducting rent-charges has already been decided adversely to the petitioner in a previous petition, namely, the petition which was presented in 1884 to charge the sum of £12,204, 9s. 3d. of younger children's provisions already mentioned; and that it was so decided in reference to several of the very rent-charges now in question, which were current at the date of that petition. This appears to be so, for by interlocutor of 13th March 1885 in that petition, Lord Kinnear, on a report from Mr Galletly, S.S.C., found that the rent-charges mentioned in the report did not fall to be deducted from the gross rental in ascertaining the free rent available for children's provisions. The younger children had not lodged answers to the petition, but their agents had brought this with other matters before the reporter, and it is fully dealt with in the report.

If the question be still open, I may say that I arrive at the same conclusion, though the question is not free from difficulty. On the clause itself the petitioner argued that the words of exception only extend to the liferents of widows or widowers, and do not cover the ‘debts contracted for improvements,’ which accordingly are to be deducted. There is something to be said for this view, particularly having regard to the fact that such improvements are presumed to enhance the rental, and that if the charge is not deducted, the younger children obtain a double advantage. But, on the whole, I think the true reading of the clause is that the words of exception cover all that follows.

Then on the general question of deducting rent-charges, the petitioner appeals to the cases of Lord Saltoun ( 1887, 24 S.L.R. 352) and Lord Queensberry (reported in a note to Lord Saltoun's case). But the former case turned on the construction of the Aberdeen Act, which contains a much more ample deduction clause; while the latter case involved the construction of a clause in the deed of entail which was in different terms from the present one, and which was construed as including every burden which diminished the yearly rent to the heir of entail in possession. That may be highly equitable, but I do not see my way to reach that conclusion on the construction of this entail.

It was argued with some force that this construction ought to be adopted, seeing that by the entail the heir in possession is secured in one half of the free rental in all events; and figures were submitted to show that if my view receives effect the petitioner will be left with no free rent at all, or at most, with greatly less than half. I was impressed by this argument, and would gladly adopt it, so as to make the burdens which really diminish the free rental fall rateably on those interested, but I do not find sufficient ground for it in the deed of entail. The heir's interest in the rents is alluded to twice in the deed. The first mention of it is contained in the clause giving power to grant liferent annuities, which declares that in case the annuities allowed, and the yearly interest that may he payable on provisions to younger children, should together exceed the half of the yearly rent, ‘each of the three higher annuities above mentioned shall suffer a deduction proportional to their several amounts, so as that one half of the free yearly rents of the said lands, teinds, and others shall always remain to the heir of entail in possession for the time.’ The clause as to interest on children's provisions is to the effect that they ‘are to bear interest only after the granter's death.’ It will be observed that it is not the children's provisions, nor even the interest thereof, but the annuities which are to abate in order to secure the heir in his rights. The second allusion to the heir's interest in the rental occurs in the clause as to the payment of children's provisions, and is to the effect that the current rents, so far as free and unaffected at the time shall be appropriated by the next heir accordingly, ‘who shall be and is hereby debarred from applying or appropriating the said free rents to any other purpose until such provisions shall be satisfied and paid, reserving only to him or

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herself such a proportion of the said free rents in the meantime as shall be necessary for his or her subsistence, not exceeding one half of the said free rents for the time.’ This does not lead to the conclusion that the heir was to be assured in the enjoyment of one half of the free rents in a question as to younger children's provisions.

On the question of how annual burdens should be treated, which could not have been imposed by the powers of the entail, but have been authorised by subsequent legislation, the petitioner founds on the case of Brodie (1868, 6 Macph. 92). But the question did not turn upon the construction of the entail, but upon the terms of the Aberdeen Act. The decision was, that where an Aberdeen provision was charged on the fee, it lost its character as a provision and became a debt, and that not the capital but only the annual interest was to be taken into account in calculating the free rental. It does not appear to me that a decision upon the Aberdeen Act has any bearing on the present dispute.

On these grounds I hold that neither the rent charges nor the interest of debt are to be deducted in ascertaining the free rental for fixing children's provisions.”

The petitioner reclaimed, and argued—Admitting that the deductions claimed arose from charges which could not have existed under the deed of entail, that did not decide the question, because the deed must be read in the light of subsequent statutes, under which these charges were “legal and annual burdens” on the estate— Brodie v. Brodie, December 6, 1867, 6 Macph. 92. Such charges would form deductions in estimating children's provisions under the Aberdeen Act— Lord Sultoun, Petitioner, January 18, 1887, 24 S.L.R. 312; Marquis of Queensberry, Petitioner, August 12, 1873, reported as a note to Lord Saltoun; Grierson, Petitioner, June 16, 1887, 25 S.L.R. 549. The case of Paterson v. Paterson, July 17, 1849, 11 D. 1420, on which the Lord Ordinary largely relied, was distinguishable. The phrase used there, “legal annual burdens,” prima facie meant burdens arising ex lege; in the present case “legal and annual burdens” meant burdens arising ex lege, and other annual burdens affecting the estate.

Argued for the respondents—Neither deduction should be allowed. Cases on the Aberdeen Act had really no bearing on a case which must turn on the construction of a particular clause. Paterson v. Paterson, ut supra, was a direct authority on a clause practically identical with the present. The ratio of that decision—that the entailer could not have contemplated deductions which would never arise under the provisions of the deed of entail, and were only possible under supervenient legislation, was applicable to the present case.

At advising—