Scottish Court of Session Decisions

Mrs Catherine Paterson or Bett and others, the trustees acting under the trust-disposition and settlement of Alexander Easson Bett, hotelkeeper, Milnathort, petitioners, presented a petition to the Court for authority to make advances at their discretion to the said Mrs Catherine Paterson or Bett out of the capital of the trust estate of an amount not exceeding £150 per annum for the maintenance and education of such children as were living in family with her and unable in whole to support themselves.

The petition set forth, inter alia—“By the second purpose of the said trust-disposition and settlement the testator, inter alia, directed his trustees to make payment to his wife the said Mrs Catherine Paterson or Bett, in the event of her surviving him, of an annuity of £156, but under this burden—‘Out of said annuity she shall maintain, educate, and clothe my children suitable to their ranks until they are of an age to provide for themselves.’ Said annuity was to cease in the event of her entering into a second marriage, and in that event she was to be entitled to her legal rights or a restricted annuity of £100. And the trustees were instructed in that case to pay to the truster's wife or some other suitable party an allowance for the maintenance, education, and clothing of his children.

By the fourth purpose of the said trust-disposition and settlement it was provided as follows:—‘I hereby empower my trustees, if they shall think proper and of which they shall be the sole judges, to advance to each of my children before the residue is divided, a sum not exceeding one-third of the share falling to such child, for the purpose of enabling such child to attend college or to equip them in following up some industry in which they may be interested, or to purchase a business, or in any way so as to make such child in a likely position to earn a livelihood, or in the case of daughters to make provision for their marriage outfit.’ “By the fifth purpose of said trust-disposition and settlement the trustees were directed on any one of the children attaining the age of twenty-five years to advance to him or her his or her share in the surplus income of the testator's estate and also to advance his or her share of any surplus capital that was not in the opinion of the trustees required to meet the said annuity.

By the sixth purpose of said trust-disposition and settlement it was provided that on the death of the survivor of the testator and his said wife the trustees should divide his estate equally, share and share alike, amongst his children, and his trustees were directed to realise his estate and to make up a scheme of division thereof, and include therein all advances to his child or children, and to charge interest at 4 per cent, per annum on any advances that might have been made to any of his children, and to deduct such advance and interest from the sum falling to such child so as to make them all alike.

By the seventh purpose of the trust-disposition and settlement it was provided, inter alia, that on the death of the survivor of the testator and his said wife the trustees should invest the share falling to his children who were under the age of twenty-five years and pay the same to them on arriving at that age, and it was declared that if any child should die either before or after the testator leaving lawful issue such issue shonld be entitled to the share their parents would have taken by survivance, and the share of any child dying without issue before the payment of his or her share should be divided among the surviving children and the lawful issue of such children as might have died leaving such issue, in equal shares per stirpes.

The testator died on 26th April 1914 leaving a widow the said Mrs Catherine Paterson or Bett and six children, who are all still surviving, viz.—William, born 4th October 1899 (twenty-one years of age), a consenter to this petition, who is self-supporting and does not live at home; James, born 8th November 1902 (eighteen), who resides at home, but is nearly self-supporting; Jane, born 1st July 1905 (sixteen), residing at home with her mother, who is anxious, however, that she may be trained to enable her to earn a living; Alexander, born 20th April 1907 (fourteen); Robert, born 8th October 1909 (eleven), and Helen, born 11th March 1914 (seven), all of whom live with their mother and are at school.…

The trust estate now consists of (1) heritable property of the value of about £3600, the income from which is at present low and variable, according to the amount which has to be spent on necessary repairs; (2) stocks and shares, &c., to the value of about £1900. The present year's income from the trust estate, after allowing for outgoings, but not for Mrs Bett's annuity, is estimated to be about £147.

The trustees, who are also tutors and curators to the five pupil and minor children, consider that Mrs Bett cannot be expected in the present circumstances to bring up and educate the children in a suitable manner on the said annuity of £156, and desire to make advances from capital to assist this purpose. The trustees have

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no express power under the said settlement to make such an advance. They do not consider that they would be in safety in making an advance for ordinary maintenance in the method contained in the fourth purpose thereof, and even if said purpose gave them power such a course would be open to grave objections. After the lapse of several years it would be found that a considerable amount of the younger children's shares had been expended in their ordinary maintenance, while the elder children's shares would have escaped this deduction. For example, the eldest son's share would have suffered no diminution for ordinary maintenance, while that of the youngest child, who is at present only seven years old, would have been diminished by yearly deductions. A further objection would be that the one-third share of residue which the trustees are authorised to advance, under said fourth purpose would in the case of a younger child be, to the extent of advances already made, unavailable for the special purposes contemplated by the testator.

The intention of the testator, as it seems to the petitioners, was that those children who might be of an age and condition to live in family with their mother should do so free of charge against their ultimate shares, and that all his children should so far as possible receive equal benefit from his estate. Accordingly they submit respectfully that if the capital of the estate is to be made partially available for the children's maintenance, this should be done so as to make the estate and not the individual shares of particular children bear the burden. They desire authority therefore to make advances to the said Mrs Catherine Paterson or Bett for the maintenance of a family home. The effect of this would be the same as an increase in the said annuity.

There are at present five children living in family with Mrs Bett, and the petitioners consider that in addition to said annuity an annual sum of £150 might well be required, and they desire authority to make advances up to that sum in their discretion. The income from the heritable property is liable to fall to a very low figure any year. It has already shown a deficit for one year.

The additional sum required would tend to diminish with continued deflation of currency, successive for is familiation of the children, and improvement in the returns from the heritable property. It is to the ultimate interest of all concerned to keep such advances as small as possible, and the trustees have fully in view the necessity of conserving the estate. If your Lordships think proper the authority desired might be given for a limited number of years.

There are no parties interested in the residue of the estate under the will of the testator other than the petitioner Mrs Bett and her children.

The Trusts (Scotland) Act 1867 (30 and 31 Vict. cap. 97), sec. 7, enacts—‘The Court may from time to time, under such conditions as they see fit, authorise trustees to advance any part of the capital of a fund destined, either absolutely or contingently, to minor descendants of the truster, being beneficiaries having a vested interest in such fund, if it shall appear that the income of the fund is insufficient or not applicable to, and that such advance is necessary for, the maintenance or education of such beneficiaries or any of them, and that it is not expressly prohibited by the trust deed, and that the rights of the parties other than the heirs or representatives of such minor beneficiaries shall not be thereby prejudiced.’

It is not clear to the petitioners, nor does it seem to have been the subject of decision, whether the above enactment authorises advances to be made otherwise than to particular beneficiaries chargeable against their shares, and accordingly the petitioners make this application alternatively under the said section and in virtue of the nobile officium of your Lordships' Court.”

Argued for the petitioners—The minor children were entitled at common law to aliment out of the trust estate. Advances for that purpose which were repayable out of the children's shares would result in an unfair division. This would be the effect of applying the Trusts Act 1867, sec. 7. The advances should therefore be authorised by the Court in the exercise of its nobile officium.