Scottish Court of Session Decisions

Mrs M. R. Moon or Anderson, widow of the late Dr Alexander Anderson, brought an action against Donald Anderson, marine engineer, Birkenhead, sole remaining trustee acting under the trust-disposition and settlement of the said Dr Anderson.

The conclusions of the action, in so far as it is necessary to refer to them for the purposes of the present report, were for declarator (1) that certain specified stocks or shares vested in the name of the late Dr Anderson were held by him in trust for the pursuer; (2) that the defender, as trustee foresaid, should be ordained to deliver these stocks to the pursuer, and failing his doing so should make payment to her of the sum of £4500; and (3) that the defender should be ordained to produce a full account of his intromissions with the trust funds in order that the amount due to the pursuer as jus relictæ might be ascertained, or failing such an account to pay the sum of £2500.

There was also a conclusion for expenses against the defender “as trustee and executor foresaid.”

The circumstances underwhich this action was raised may be summarised as follows:—

Dr Anderson and the pursuer were married in 1886. There were no children of the marriage. At the date of the marriage the pursuer was possessed of separate estate, and during the marriage at various times she handed over certain sums of money to her husband, including two sums of £526 and £1247. These sums were invested by him in certain securities which at the time of his death had greatly increased in value. Dr Anderson died in 1896, while still vested in these securities. He left a trust-disposition and settlement by which, subject to certain legacies and provisions, including certain provisions in favour of the pursuer and of his brothers and the survivor of them, he directed his trustees to pay two-thirds of his estate to the children of the defender and one-third to the children of a niece. The pursuer repudiated the provisions made for her and claimed her legal rights. The estate left by Dr Anderson, including the shares claimed by Mrs Anderson, was estimated to be worth about £4500,

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On 16th June 1899 the Lord Ordinary ( Low) pronounced an interlocutor by which, after certain findings in fact, he made the following finding:—“In these circumstances finds that the pursuer is entitled to claim against Dr Anderson's estate—(1) the said sum of £526; (2) the said sum of £1247; and (3) the profits realised upon the Simner and Jack shares purchased with the last-mentioned sum” “Appoints the defender to lodge in process a statement giving effect to the foregoing findings: Reserves all questions in regard to interest and expenses of process: Quoad ultra continues the cause, and grants leave to reclaim.”

Against this interlocutor the defender reclaimed, and on 23rd February 1900 the following interlocutor was pronounced:—“The Lords having considered the reclaiming note for the defender against the interlocutor of Lord Low, dated 16th June 1899, and heard counsel for the parties, Recal the said interlocutor … in so far as it ‘appoints the defender to lodge in process a statement giving effect to the foregoing findings: “ Quoad ultra, adhere to the said interlocutor, and decern: Find the defender liable to the pursuer in expenses since the date of the interlocutor reclaimed against, and remit the account thereof to the Auditor to tax and to report to the Lord Ordinary; and remit to his Lordship to proceed, with power to decern for the taxed amount of said expenses.”

In pursuance of the remit to him, the Lord Ordinary on 2nd March 1901 pronounced the following interlocutor:—“Decerns and ordains the defender to make payment to the pursuer of £3458, 3s. 9d., with interest thereon at the rate of 5 per centum per annum from 29th February 1896 till payment, but that under deduction of the sum of £2000 paid by the defender to account on 2nd August 1900, with interest on said last-mentioned sum from said 2nd August 1900 at the foresaid rate: Finds the pursuer entitled to expenses, reserving, however, the question whether the amount ought not to be modified to be considered when the report of the Auditor is received: Allows an account of said expenses to be given in, and remits the same when lodged to the Auditor to tax and to report: Finds that in a question with the pursuer as a widow claiming jus relictæ the defender is entitled to deduct the expenses which he has incurred in this action (including those in which he has been found liable to the pursuer) from the amount of the estate remaining in his hands after payment to the pursuer of the balance of the foresaid sum of £3458, 3s. 9d., with interest as aforesaid: Finds that it is conceded that the said expenses incurred by the defender will exhaust the estate remaining in his hands after said payments, and that there is therefore no fund out of which payment of jus relictæ can be made to the pursuer: Therefore dismisses the conclusions of the summons in so far as not already disposed of, and decerns.”

“ Opinion.—The pursuer has been entirely successful as regards the leading claim which she made in this action, and therefore I think that she is entitled to an award of expenses. It may, however, be necessary to modify the amount to some extent in view of certain procedure which took place in the later stages of the case, but that is a matter which I shall reserve until the Auditor's report is before me.

The next question is, whether the defender should be found personally liable in expenses. It was argued for the pursuer that the defender defended the action in his own interests and in the interests of his family, and must therefore be dealt with as having done so at his own risk and expense.

By his settlement Dr Anderson provided an annuity of £70 to his brother John Anderson, who, I understand, is not able to do anything for his own support. The pursuer was given a liferent of the whole remaining income of the trust-estate, and upon her death the income liferented by her (except in so far as it was reduced by payment of legacies) was to be divided among the truster's three brothers, John Anderson, Dr Robert Anderson, and the defender, and the survivors. Upon the death of the survivor of his brothers, Dr Anderson directed his trustees to realise the estate and to pay two-thirds thereof to the children of the defender and one-third to the children of a niece, Mrs Matthewson. Dr Anderson also left legacies payable upon the death of the pursuer to the amount of £650.

Now the pursuer's claim was that the great bulk of the means invested in Dr Anderson's name at his death, and prima facie falling under his trust-disposition and settlement, did not belong and never had belonged to him but was her property. The result of conceding the pursuer's claim would have been that practically no estate would have been left to be dealt with under the settlement. The papers left by Dr Anderson gave no support to the pursuer's claim. There was indeed a letter by her to him in which she made a gift to him of £2000, and if her claim had only been that she was entitled to revoke the gift and reclaim the £2000 there would, I take it, have been no litigation. But the pursuer's claim went far beyond that. Her case was that she had entrusted Dr Anderson with the £2000 for the purpose of investing that sum for her, and that therefore she was entitled not only to the capital sum but to the large profits which had accrued upon the investments. That claim was not made until a very considerable time after Dr Anderson's death, and the pursuer had previously put forward different and inconsistent claims.

In these circumstances I am of opinion that the defender was, as trustee, justified in defending the action in the interests of all those having right under Dr Anderson's settlement, and I do not think that the fact that he and his children had a considerable interest in the result is sufficient to justify me in dealing with him in the matter of expenses otherwise than as a trustee who has defended the trust estate

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upon probable grounds against a claim which, if successful, would have carried off practically the whole estate. I may also observe that the position of matters which existed at Dr Anderson's death was due to the pursuer's own actings, because she handed over her money to Dr Anderson and allowed him to deal with it as he liked, and she allowed herself to be persuaded to grant the letter of gift which has caused so much difficulty. I therefore cannot find the defender liable personally in expenses.

The next question with which I must deal is one of difficulty, and upon which the authorities, so far as I am aware, throw but little light. The pursuer claims jus relictæ, and if the expenses of this litigation were left out of view there would be a few hundred pounds due to her under that head. If, however, the defender is entitled to claim relief of the expenses which he has incurred against the trust estate it is conceded that no fund will remain out of which jus relictæ could be paid.

I have upon a previous occasion stated my reasons for coming to the conclusion that in a question with the pursuer the expenses incurred by the defender must be regarded as expenses of administration, which fall to be deducted before ascertaining the amount of jus relictæ. That amount could not be ascertained until the pursuer's leading claim was disposed of, because until then it was impossible to say what Dr Anderson's estate consisted of. Further, I do not think that anything can be founded upon the fact that the claimant was the widow. If a claim had been made by a third party to the bulk of the estate on the ground that it belonged to him, and that Dr Anderson had truly held it in trust for him, I think that expenses incurred by the defender in opposing the claim, if such opposition had been reasonable and in accordance with the defender's duty as trustee, would have fallen to be regarded as expenses of administration, to be deducted from what was truly the trust estate before ascertaining the amount of jus relictæ. But that appears to me to be just the case with which I am dealing, unless the fact that the claimant was the widow makes a difference, which in my opinion it does not. The difficulty in giving effect to that view in this case is that it involves dealing with the question of the defender's right of relief against the trust estate in the absence of the beneficiaries. The pursuer's interest in the trust estate, however, is confined to her claim for jus relictæ, and I think that it is competent to determine now that in a question with her nothing has occurred to deprive the defender of his right of relief against the trust estate, and that that right of relief extends (again in a question with her) to the whole trust estate. I accordingly propose to make a finding to that effect, and further, to find that that being so it is conceded that there is no fund available for payment of jus relictæ.

There was one argument submitted for the defender which I must notice. He contended that in the event of the estate remaining in his hands after deducting the sums to which the pursuer has been found entitled, with interest, not being sufficient to relieve him of the expenses which he has incurred (which I imagine will very probably be the case) he is entitled to encroach upon the sum which has been found to belong to the pursuer to the effect of completely relieving himself of expenses. In support of that view the defender founded upon the case of Drummond, 8 R. 449. The circumstances of that case were very peculiar, and I do not think that any principle of general application can be deduced from it. The pursuer here has succeeded in establishing that the greater part of the funds invested in Dr Anderson's name never belonged to him but was her property. It therefore seems to me that the defender has no claim of relief against what is and was the pursuer's estate, but only against estate which truly belonged to Dr Anderson, because that alone can be regarded as trust estate.”

The pursuer reclaimed, and argued—A trustee was personally liable for expenses found due in an action to which he was a party— Craig v. Hogg, October 17, 1896, 24 R. 6, 34 S.L.R. 22. The principle was, that if a trustee chose to litigate he was liable in expenses to the opposite party just as much as if he were litigating in his own interest. It was for him to see that the beneficiaries were prepared to indemnify him— Cowie v. Muirden (1893), A. C. 674, per Lord Watson, p. 690. It was of course open to the Court to limit the finding of expenses, and make it a finding against the trustee solely in his representative capacity— Craig v. Hogg, supra; but here there was no such limitation. There was no hardship in the personal liability of a trustee, because he had always the option of raising a multiplepoinding. (2) In the circumstances of this case the trustee was not entitled to charge either the expenses which he had been found liable for or the expenses he had himself incurred against the estate before calculating the jus relictce. He might or might not have relief against the beneficiaries in the trust, but the widow in this case was not a beneficiary but a successful adversary of the trust. She had been found entitled to expenses, but that decree would be nugatory if the trustee were entitled to exhaust the trust funds in paying these expenses. It was a general rule that when a claimant was successful in an action with a trustee the latter could not charge his expenses against the claimant's share of the trust estate— Buttercase and Geddie's Trustees v. Geddie, July 16, 1897, 24 R. 1128, 34 S.L.R. 844; Easson's Trustees v. Mailer, May 14, 1901, 3 F. 778, 38 S.L.R. 700.

Argued for the defender and respondent—(1) the respondent was not personally liable under the interlocutor of 23rd February 1900. No doubt the finding of expenses was there a general finding against the defender, but in construing a finding of that nature it must be read in the light of the conclusions of the summons. The only conclusion for expenses in the summons was for decree against the defender “as

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trustee and executor foresaid.” Any decree following on these conclusions, and expressed in general terms, was a decree against the defender qua trustee. (2) The whole expenses incurred were expenses of administration, and ought to be deducted from the estate before jus relictæ could be estimated. The circumstances made it perfectly proper in the trustee to defend the action; if so, the expenses were expenses of administering the estate, and were the first charge upon it— Drummond v. Carse's Executor, January 27, 1881, 8 R. 449, 18 S.L.R. 272. In defending the action he was saving the estate not only for the beneficiaries but for the widow herself, because the claim originally made by her would have swallowed up the whole estate and left nothing for jus relictæ. The defender therefore had saved the jus relictæ, and accordingly that fund ought to bear its share of the expenses.