Scottish Court of Session Decisions

Lord Justice-Clerk (Scott Dickson).—This petition raises a question or questions which are certainly not free from difficulty. The petitioners desire the Court to authorise them, as trustees, to purchase heritable property, and, that being done, to borrow on the security of it for the purpose of enabling them to carry through the purchase. There are two branches of the prayer, viz.—(1) to authorise the purchase to be made, and (2) to authorise the money to be borrowed, so far as necessary, to provide the required funds. The reporter quite properly suggests as a difficulty the combination of these two craves in one petition presented in the Inner House. The former is an application to the nobile officium; the latter is an application competent before a Lord Ordinary under the Trusts Acts. That might have occasioned considerable difficulty, but this case is so near the case of the Prime Gilt Box that the difficulty as to procedure may, I think, be held to be removed. I think the views expressed in that case by the Lord President, whose judgment was concurred in by the other members of the First Division, result in this—that, where a composite petition of this sort is before one of the Divisions properly so far as one branch of it is concerned, it is not necessary for the Division, having disposed of the part of the prayer which is competently and properly before it, to remit the balance of the prayer to be disposed of by the Lord Ordinary, not because of any doubts as to the propriety of granting it, but simply because that is the Court appropriate for the granting of such a power. I think it would be rather pedantic to hold that it was necessary for the Division to confine itself to granting the prayer only in so far as it was properly before it, i.e., in so far as the nobile officium was invoked, and should, merely that a rule of process might be observed, remit the balance to the Lord Ordinary to deal with as appropriate to the jurisdiction which is conferred upon him. The Lord President, in the Prime Gilt Box case, says this (at p. 536): “But where the circumstances make it impossible, as they do in this case, that the application should be presented with any reasonable convenience in the Outer House as regards one part of the bargain, and in the Inner House as regards another part, it seems to me that that is not a case of a petition presented solely under the authority of the Trusts Act in the sense of section 16. On the contrary, the petitioners must appeal, and in this case they do appeal, to other authority than the Act— for the Act alone would not enable the Court to authorise them to do that which they ask power to do. Accordingly, in such a case as this I think it is competent, as a matter of procedure, to bring a petition dealing with the whole matter directly before the Inner House, and that it is competent for the Inner House to grant it.” That judgment seems to me precisely to cover this present case. In a matter of procedure it would certainly be out of the question that a different rule should be adopted in this Division from what has been evidently adopted in the other Division. Apart from questions of procedure, there is no substance in the suggested difficulty, which was quite properly brought before us by the reporter and explained by Mr Chree. Therefore, so far as the point of procedure is concerned, I think we are clearly bound to follow the course which the First Division adopted in the Prime Gilt Box case.

On the merits of the case, while I recognise that there are difficulties in regard to the exercise of our equitable jurisdiction, yet I think that there are circumstances which render this case so exceptional that the duty of exercising the nobile officium in the manner which the petitioners ask us to do here is one that we should undertake. It is quite plain from the terms of the trust-deed that the main purpose of the truster really was to secure that his residuary legatee, viz., his nephew, should, when he attained the age of 21, be left in a position to carry on the farm which had so long been associated with his uncle and with his predecessors. The whole scheme of the deed points to that as being the truster's paramount object. The farm has attained a certain amount of renown as a pedigree cattle stock-raising farm. The nephew is now a young man of seventeen, and is preparing himself for the business of an agriculturist which he wishes to practise by conducting this farm. The truster and the truster's mother were joint tenants of the farm under a lease in favour of them and the survivor. The mother having died, the truster continued in possession of the farm under the lease, and, after its expiry, has continued to stay on by tacit relocation. The truster's family and himself, on the one hand, and the landlord and his predecessors, on the other, have always been on excellent terms, and they were content to let the matter go on from year to year by tacit relocation. The truster quite plainly contemplated that that condition of things would continue. Unfortunately he had not taken into consideration the possibility, which has now become fact, that there might be a change in the ownership of the farm. The estate has been sold to a new owner; and the new owner in turn desires to sell certain portions of the estate, and has intimated to the petitioners that, failing their purchasing the farm, they will have to leave, and the farm will be exposed, along with other portions of the estate, to public sale, and probably will be sold to some outside party. If that occurred, it would be impossible to carry out the beneficial scheme of the trust-deed, so far as the residue is concerned. In these circumstances the petitioners have applied for authority to purchase the farm, and, the trust funds available not being sufficient to meet the whole purchase price, to borrow on the security of the farm what is necessary to make up the difference. The figures are considerable, although not excessive in the present circumstances. The total price asked for the farm is £5640. The farm extends to 250 acres, of which 239 are arable. The rent is £235, which seems small for an arable farm, but it is explained that the small rent is due (firstly) to the friendly relations existing between the former owner and the tenant, and (secondly, and perhaps incidentally to the former), to the fact that the present high condition of the farm is largely due to the large amounts of money spent by the tenant in improving the farm and raising it to a condition which, probably, was very different from its condition at the time when the rent was originally fixed. The petitioners have some £4000 available in cash to meet the price, and they ask leave to borrow an additional sum of £2000 in order to provide the £1640 and the necessary expenses in connexion with the purchase.

There are difficulties, of course, with regard to our granting these powers; but, unless these powers are granted, the main purpose of the trust-deed will be completely frustrated. It seems to me that the facts are so special that, again, it would be almost pedantic if we were to throw difficulties in the way of enabling the petitioners to carry out what was clearly the main purpose of the truster when he executed this trust-deed. The most helpful case in this matter to which we were referred was the case of Hall's Trustees v. M'Arthur, especially what was said by Lord Johnston and Lord Skerrington in reference to the previous case of Coats. Lord Johnston said (at p. 650): “In the matter of trusts, which are an important branch of its exercise”—he is speaking of the nobile officium—“resort to it has been practically confined to cases where something administrative or executive is wanting in the constituting document to enable the trust purposes to be effectually carried out, and such cases are now largely met by the provisions of the modern Trusts Acts. But, where no such executive or administrative provisions are wanting in the trust deed, the Court will not interfere, for the Court in Scotland does not undertake, as does the Court of Chancery in England, the administration of trusts. In the present case no such executive or administrative provisions are wanting; on the contrary they exist in exceptionally full and carefully thought out measure,” Lord Skerrington referring to Coats's case, said (at p. 653): “It was, I think, a typical illustration of the nobile officium that, when objection was taken to the machinery devised by the testator as not being the best in the circumstances, something better should be substituted. That, I say, is a typical illustration of the exercise of the nobile officium, where something is to be done which is right and necessary, and the machinery for doing it is either wanting or defective.” In that case, both Lord Johnston and Lord Skerrington referred to the fact that the machinery, or, as Lord Johnston put it, “the administrative or executive provisions” was or were awanting. That is exactly what we have got here. There is no difficulty in understanding what the truster intended and desired to do. The only difficulty is caused by the occurrence of circumstances which he had not taken into account, and which have produced a state of facts the effect of which is that, unless the Court interferes, or unless, at any rate, the trustees do what they desire to obtain the authority of the Court to do, the whole purposes of the trust, apart from some minor purposes, will be frustrated. In these circumstances, I think we may grant the powers that the petitioners ask for, on the ground that it is only by so doing that the main purpose of the trust can be carried out, and that there could really be no doubt that, if the truster had foreseen the position of things which has now come about, he would have made provision for it. I think that, if one may say so, this case will be, like that of Coats, an exceptional one, which cannot be, and certainly was not intended to be, treated as a precedent. But, however that may be, it seems to me that the petitioners have shown a case in which it would be unfortunate if, through adhering to what may be regarded as the strict letter of the law, we were to prevent them—for no good reason as far as I can see—from carrying out what was clearly and distinctly stated by the truster as the purpose which he most of all desired to have carried out.

Accordingly, while I quite recognise the delicacy of the position, I think, on the whole matter, the circumstances are such that we should be well advised in granting, and have power to grant, the prayer of this petition.

Lord Dundas.—I agree. I think this petition is one which the Court would be disposed, and indeed anxious, to grant, if it can properly and competently do so. The whole circumstances stated in the excellent report by Mr Whitelaw seem all to point in one direction. It was plainly the wish, and indeed the leading wish, of the testator that this nephew of his should have the farm and the special shorthorn stock upon it. The young man is desirous of owning the farm. He is in minority, and his curators also desire it. The skilled reporter tells us that the price proposed is a reasonable and proper one.

I think that we may grant the prayer of the petition without trenching, in any way, upon previous authority. The petition is not one where trustees come to ask the advice of the Court as to the precise extent of their powers in regard to some contemplated act of administration or management. It is one where the trustees desire powers to carry out what was plainly the wish of the testator in the way best calculated to reach that end, though not strictly in accordance with his directions owing to the absence of an express power to buy. I agree with your lordship that this seems to be a case in which we can properly supply the want of machinery, and I think that the observations of Lord Johnston and Lord Skerrington in Hall's case point in that direction.

If we may grant the power to purchase, I think there is no difficulty in our also granting the ancillary power to facilitate that end by borrowing. Whatever difficulty there might have been seems to have been removed, as regards the procedure in that matter, by the very recent case in the First Division of the Prime Gilt Box. Upon the whole, therefore, I am for granting the prayer.

Lord Ormidale.—The leading purpose of the truster's settlement here is clear, that the farm with the shorthorn stock should be preserved for his nephew. The nephew is still in minority. The truster made anxious provision for due effect being given to his settlement in the circumstances which existed when he himself was alive, and which he assumed would continue to endure after his decease. As a matter of fact a casus improvisus has happened, to wit, the purchase of the farm by a new proprietor who proposes to sell it. In these circumstances, it is obvious that the very clearly expressed object of the truster will be defeated unless the power sought is granted, because the trustees are not provided under the settlement with machinery which will enable them to give effect to the truster's desires. The circumstances appear to me, as your Lordship has stated, exceptional; but I think that the Court is warranted, in the exercise of its nobile officium, in granting the trustees the power that they crave.

On the other point as to the power to borrow, I think we are warranted in granting that power by the case of the Prime Gilt Box.