Scottish Court of Session Decisions

Mrs Elizabeth Clark or Neill died on 26th November 1900, and was survived by her husband William James Neill and three children, James Clark Neill, who attained majority in August 1900, Norman Clark Neill, aged seventeen, and Kenneth Mackenzie Clark Neill, aged ten.

At the time of her death Mrs Neill was in the enjoyment of a liferent of the sum of £150,868, being part of the trust-estate of her father the late James Clark, and also of other property, heritable and moveable.

Mr Clark by his settlement, which was dated 17th August 1880, had conveyed the whole of his estate to trustees for certain trust purposes, and, inter alia, directed as follows:—“( Lastly) And with regard to the residue of my means and estate … I direct my trustees to hold and apply, pay and convey the same to and for behoof of all my children equally, and their respective issue, as follows, viz.—One-half of the shares falling to sons to be paid and conveyed on my death to such of them as shall then be twenty-five years of age, and to such of them as shall not then have attained that age on their respectively attaining the age of twenty-five years, and the other half of the shares falling to sons and the whole of the shares falling to daughters to be held and applied, paid, and conveyed to and for their behoof in liferent for their respective alimentary uses only, and to and for behoof of their respective children per stirpes in fee, payable and divisible the said fee in such shares or proportions, under such conditions and restrictions, and otherwise in such way and manner as my said sons and daughters may respectively appoint by any writing under their respective hands, which failing, then to and among such children equally, and that upon their respectively attaining the age of twenty-one years, and on the death of their said respective parents: Declaring with regard to the shares of residue before directed to be paid to my sons absolutely, that in the event of any of my sons predeceasing the said term of payment and conveyance leaving issue, such issue shall, on their respectively attaining the age of twenty-one years, be entitled to the share (whether original or as augmented by accretion) which their parent would have taken on survivance: And farther, that in the event of any of them predeceasing the said term without leaving issue, then the share which such predeceaser would have taken on survivance shall fall and accresce to his surviving brothers and sisters along with the issue of any brother or sister who may have deceased leaving issue, such issue always taking the share which their parent would have taken on survivance: But subject always, such accretion, in as far as in favour of sons, to the extent of one-half thereof, and in as far as in favour of daughters to the whole extent thereof, to the same liferent, and also to the same destination, declarations, and conditions in all respects as are herein contained with regard to the original shares of residue provided to them respectively in liferent and their respective issue in fee: And farther declaring, with regard to the shares of residue before directed to be held for behoof of my sons and daughters respectively in liferent and their respective issue in fee, that in the event of any of my said children dying without leaving issue, or in the event of any of them dying leaving issue, but of such issue not surviving to take in terms of the destination hereinbefore contained, then the share of residue (whether original or as augmented by accretion) which may have been liferented by such child shall devolve upon his or her surviving brothers and sisters along with the issue of any brother or sister who may have deceased leaving issue, such issue always taking the share which their parent would have taken on survivance: But subject always such accretion, in as far as in favour of sons, to the extent of one-half thereof, and in as far as in favour of daughters to the whole extent thereof, to the same liferent, and also to the same destination, declarations, and conditions in all respects as are herein contained with regard to the original shares of residue provided to them respectively in liferent and their respective issue in fee: And farther, I provide that between the date of my death and the term of payment and conveyance of the shares of residue before directed to be paid to my sons absolutely, my trustees shall be entitled to apply the whole or such portion as they may think proper of the annual income of each son's entire share, and even a part of the fee itself, towards his suitable maintenance, education, and upbringing: And also that between the expiration of the liferents in favour of sons and daughters and the period of payment and conveyance to their respective issue, my trustees shall be entitled to apply the whole or such portion as they may think proper of the income effeiring to each beneficiary's share, and even a part of the fee itself, towards his or her suitable maintenance, education, and upbringing: And farther, and notwithstanding anything hereinbefore contained, I provide and declare … ( Secondly) that in the event of any of my sons or daughters dying without leaving issue, or of any of them dying leaving issue, but of such issue not surviving to take in terms of the destination hereinbefore contained, it shall be competent to him or her to test upon the share of residue (whether original or as augmented by accretion) that may have been liferented by him or her, and that in favour of such person or persons, or for such uses and purposes and in such way and manner all as he or she may think proper.”

Mrs Neill by a trust-disposition and settlement dated 8th March 1900 disponed to trustees, for the trust purposes therein mentioned, all property and estate belonging to her at the time of her death, “or in regard to which I may have the power of disposal, and without prejudice to said generality, the share of residue, original or accrescing, of the trust-estate of my late father James Clark, in regard to which I am by his will given a power of disposal or

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of testing in the respective events therein mentioned.” … After making various provisions (including a provision for an annuity of £1000 to her husband out of the revenue of her personal estate) she directed her trustees, in the fifth place—“Whereas by the said will of my late father James Clark I am empowered to divide the fee of my share of his estate among my children in such shares or proportions, under such conditions and restrictions, and otherwise in such way and manner as I may appoint by any writing under my hand: And whereas it is my wish that no division among my said sons, either of my personal estate or of my share of my father's trust estate, shall take place, nor shall any right or interest thereto vest in them until the youngest attains the age of twenty-five years complete, and thereafter that one-half of the share to which each of them may be entitled either from my personal estate or from the trust-estate of my deceased father shall be invested for them in liferent and their children in fee, while the other half shall be paid over to them absolutely: … Therefore … in the sixth place—On the youngest of my said sons attaining said age of twenty-five years complete I direct my said trustees, subject always to due provision being made for payment to my said husband of said annuity, to divide the residue and remainder of my said personal estate—one-half to my eldest son, the said James Clark Neill, and the other half equally between my two youngest sons, the said Norman Clark Neill and Kenneth Mackenzie Clark Neill, and to divide my said share, original or accrescing, of my said father's trust estate equally to and among my said three sons and the survivors and survivor of them: And I direct my said trustees to pay over one-half of the respective shares, whether from my personal estate or my said share of my said father's trust-estate, to my said sons and the survivors and survivor of them, and with respect to the remaining half of said respective shares, I direct my said trustees to hold the same for behoof of my said sons and the survivors and survivor of them in liferent for their or his liferent alimentary use only, and to and for behoof of their respective issue per stirpes in fee, payable and divisible the said fee in such shares and proportions, under such conditions and restrictions (including right to limit the right of any such issue to a liferent or liferent alimentary), and with such terms of payment and vesting, and in such way and manner as each such son may appoint by any writing under his hand, and failing such appointment, then equally to and among such issue, but only on their respectively attaining the age of twenty-one years complete, and on the death of their respective parents, until which events no right shall vest in them: Declaring with regard to the one-half of their respective shares directed to be paid to my said sons absolutely, that in the event of any of them predeceasing the said term of payment and vesting leaving issue, such issue shall on their respectively attaining the age of twenty-one years be entitled to such one-half, whether original or accrescing, as their parent would have taken on survivance; and further, that in the event of any of them predeceasing the said term without leaving issue, then such one-half as such predeceaser would have taken on survivance shall fall and accresce to his surviving brothers or brother equally along with the issue of any brother who may have deceased leaving issue, such issue always taking the share which their parent would have taken on survivance, but subject always such accretion, to the extent of one-half thereof, to the same liferent, and also to the same destination, declarations, and conditions in all respects as are hereinbefore contained with regard to the one-half of their shares before directed to be held for behoof of my sons in liferent and their issue in fee; and further declaring with regard to the one-half of their shares before directed to be held for behoof of my sons in liferent and their issue in fee, that in the event of any of my said sons dying without leaving issue, or in the event of any of my said sons dying leaving issue, but of such issue not surviving to take in terms of the destination hereinbefore contained, then such one-half, whether original or accrescing, shall devolve upon such son's surviving brothers or brother along with the issue of any brother who may have deceased leaving issue, such issue always taking the share which their parent would have taken on survivance, but subject always such accretion, to the extent of one-half thereof, to the same liferent, and also to the same destination, declarations, and conditions, in all respects as are herein contained with regard to the original one-half of their shares before directed to be held for my said sons in liferent and their issue in fee: In the seventh place, should it from any cause be found that I am not entitled to limit the right of my said sons in my share of my said father's trust estate to a liferent, I direct my said trustees to hold the whole of the residue of my personal estate for behoof of my said sons, James Clark Neill, Norman Clark Neill, and Kenneth Mackenzie Clark Neill in liferent, for their respective alimentary liferent use only, and for their respective issue in fee, but always in the following proportions:—One-half thereof for the said James Clark Neill and his issue, and the other half thereof for the said Norman Clark Neill and Kenneth Mackenzie Clark Neill equally between them and their respective issue, and that all in terms of the destination, and under the declarations and conditions herein contained with reference to the original one-half share of both estates directed to be held for behoof of my said sons in liferent and their issue in fee: And I declare it to be my intention that the said residue of my personal estate shall in that event come in room and place of and be substituted for the one-half of both estates hereinbefore settled on my said sons in liferent and their said issue in fee.” …

Questions having arisen as to the import of Mrs Neill's testamentary directions, a

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special case was presented for the opinion and judgment of the Court.

The parties to the special case were (1) Mrs Neill's trustees, (2) James Clark Neill (Mrs Neill's eldest son), (3) Norman Clark Neill and Kenneth Mackenzie Clark Neill (Mrs Neill's two younger sons), and (4) Mr Clark's trustees.

The following were the contentions of the parties as set out in the case—“(1) The second, third, and fourth parties contend that Mrs Neill had no power under Mr Clark's trust-disposition and settlement to restrict the right of the second and third parties in any part of the share of Mr Clark's estate which was liferented by her to a liferent; that the appointment made by her is wholly inept, and that therefore the fee of the said share falls to be paid to the second and third parties in terms of Mr Clark's trust-disposition and settlement on their respectively attaining the age of twenty-one years. Otherwise they contend that the said appointment is invalid in so far as purporting to restrict to a liferent the right of the second and third parties to one-half of the said share, and that the second and third parties are entitled to payment of the fee of the said one-half on their respectively attaining majority, or otherwise that they are entitled to payment of the fee of the whole of the said share on the youngest of them attaining twenty-five years of age. Further, the second and third parties contend that the fee of the said share or at least one-half thereof vested in them on the death of their grandfather the said James Clark. The fourth parties contend, however, that no part of the said fee will vest in the second and third parties until they respectively attain majority. The first parties maintain that the appointment is valid, and that in any event the fee of said share does not vest and is not payable in terms of Mrs Neill's trust-disposition and settlement until the youngest of her three sons attains the age of twenty-five. (2) The second and third parties maintain that until they respectively attain majority, or until the youngest of them attains the age of twenty-five years, as it may be held, they and the survivors or survivor of them are entitled to payment of the income of said share, or otherwise that the fourth parties are entitled to make advances to them, or any of them, out of the income or the capital of their presumptive parts of said share for their maintenance, education, and upbringing. The first parties, however, maintain that the fourth parties are bound to hold the share of Mr Clark's estate, of which Mrs Neill enjoyed the liferent, until the period of distribution thereof prescribed by Mrs Neill in her trust-disposition and settlement, and that the fourth parties are precluded by the terms of Mrs Neill's trust-disposition and settlement from paying over the income thereof to the second and third parties, and from making any advances to the second and third parties out of the interest or capital of said share.”

The questions of law submitted for the judgment of the Court were as follows:—“1. ( a) Is the appointment by Mrs Neill in her trust-disposition and settlement of her share in her father's estate wholly invalid, and is the fee of the whole of the said share payable to the second and third parties on their respectively attaining the age of twenty-one years, or is the said appointment effectual to any, and if so, to what extent? or ( b) Did the fee of said share in whole or in part vest in the second and third parties on the death of the said James Clark? if not, at what period will the same vest in them? 2. ( a) Are the second and third parties now entitled until the date or dates of payment of the fee of the share of Mr Clark's estate which was liferented by Mrs Neill to payment of the income of such share? or ( b) Are the fourth parties now entitled to make advances of interest or of capital to the second and third parties out of their respective presumptive parts of said share towards their maintenance, education, and upbringing?”

Argued for the second party—The power conferred on Mrs Neill did not entitle her to restrict her children's right to a liferent. They were given an absolute gift in fee by their grandfather, and what followed was merely the manner of administration. She had no power even of delaying payment. The exercise by her of the power was bad in three respects—(1) She had postponed the date of vesting, which was a serious inroad on the rights of the beneficiaries, by excluding them from benefitting in any way in the fund which Mr Clark said was to be payable to them at twenty-one. (2) The class which he intended to benefit consisted of those grandchildren who attained to that age, and her power was limited to that class, but by this postponement she was altering the constitution of the class. Moreover, she was attempting to restrict the right of her children to a liferent, which was incompetent. There had never been a case where the giving of a mere liferent such as this without any power of disposal had been held a good exercise of the power of division of the fee, though a liferent together with a testamentary power of disposal had been held good— Lennock's Trustees v. Lennock, October 18, 1880, 8 R. 14, 18 S.L.R. 36; Wallace's Trustees v. Wallace, June 12, 1891, 18 R. 921, 28 S.L.R. 709; Wright's Trustees v. Wright, February 20, 1894, 21 R. 568, 31 S. L. R. 450; Matthews Duncan's Trustees, February 20, 1901, 3 F. 533, 38 S.L.R. 401; Warrand's Trustees v. Warrand, January 22, 1901, 3 F. 369, 38 S.L.R. 273. (3) It could not be said here that “children” was equivalent to “issue,” and accordingly Mrs Neill had introduced a class of beneficiaries whom her father did not intend to benefit, and the power was invalidly exercised in this respect. The whole exercise of the power was so complicated, as Mrs Neill herself recognised in the seventh purpose of her will, that it must stand or fall together.

The third parties adopted the argument of the second party, and further argued that the fee in their share vested in them on the death of their grandfather— Hick-ling's Trustees v. Garland's Trustees, August 1, 1898, 1 F. (H.L.) 7, 35 S.L.R. 975.

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Argued for the first parties—It was not maintained that this case fell precisely within the decision in Lennock's Trustees v. Lennock, supra, or that it was competent to introduce grandchildren who were not objects of the power. But the real question was whether they were not really included within it, and in fact they were, for “children” was equivalent to “issue.” Otherwise the expression “children per stirpes” would have no meaning— Harley v. Mitford, 1855, 21 Beavan 280. But even if this was a bad exercise of the power to that extent, it did not invalidate the whole of the appointment, nor was there anything to prevent Mrs Neill from fixing the period of payment to be when her youngest child attained the age of twenty-five. By doing so she introduced no strangers to the power. Accordingly, even if the liferent restriction was invalid there was no reason why this direction should fall.

The fourth parties argued that vesting was postponed till the children respectively attained majority, and founded upon the case of Wilson's Trustees v. Wilson, 3 F. 967, 38 S.L.R. 706.

At advising—