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HUGH KENNEDY AGAINST (FIRST) THE RIGHT REVEREND PAUL BONNICI, (SECOND) THE RIGHT REVEREND JAMES WARREN CUTHBERT MADDEN AND (THIRD) DENIS ALEXANDER [2021] ScotCS CSOH_106 (20 October 2021)
URL: http://www.bailii.org/scot/cases/ScotCS/2021/2021_CSOH_106.html
Cite as:
2021 GWD 36-477,
2022 SLT 63,
2022 SLT 6,
[2021] ScotCS CSOH_106,
[2021] CSOH 106
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OUTER HOUSE, COURT OF SESSION
[2021] CSOH 106
A121/20
OPINION OF LADY WOLFFE
In the cause
HUGH KENNEDY
Pursuer
against
(FIRST) THE RIGHT REVEREND PAUL BONNICI
(SECOND) THE RIGHT REVEREND JAMES WARREN CUTHBERT MADDEN
(THIRD) DENIS ALEXANDER
Defenders
Pursuer: E Mackenzie QC, Gardiner; Digby Brown LLP
Defenders: N Mackenzie QC, MacLeod; Keoghs LLP
20 October 2021
Introduction
The issues at debate
[1]
The pursuer brings this action for personal injury as a consequence of alleged sexual
and physical abuse said to have been perpetrated against him while he was a boarder in the
mid-1970s at the Fort Augustus Boarding School ("the School") run by a Benedictine
Community ("the Community"). The School was closed nearly 30 years ago; the trust
associated with the Community's Abbey was (on the defender's averments) wound up
2
around a decade ago, and the then trustees may have been discharged. The trustees at the
material time are all dead. However, the pursuer avers that there was insurance taken out
and which, if a claim were made under it, would respond by indemnifying the trustees in
respect of the pursuer's claim. He has therefore raised this action, calling two surviving
trustees for the purposes of meeting his claim from the trust estate comprised of the
(presumed) right of indemnity under that insurance.
The background
The pursuer
[2]
The pursuer in this action seeks damages of £5,000,000 for alleged physical and
sexual abuse while he was a boarder from about 1975, a year after he joined the School, and
which continued for a time after he left the School in around 1977. On the pursuer's
averments the principal abuser was the third defender, a monk and teacher at the School,
but he alleges that two lay teachers, Taff Owen and the pursuer's PE and maths teacher,
Hamish McDonald, also subjected him to abuse. The first and second defenders aver that
Mr Owen and Mr McDonald are both dead.
The Abbey, the Trust Deed, the Trust and the Trustees
[3]
A Benedictine community was established at Fort Augustus Abbey ("the
Community" and "the Abbey", respectively) in about the 1920s. Initially the Community
was an unincorporated association but a trust deed relating to the Abbey and the
Community was registered in the Books of Council and Session in about May 1936
establishing a trust ("the Trust Deed" and "the Trust", respectively). It was explained in
submissions that the Community was autonomous, in the sense that, while it was a member
3
of the Congregation of the Benedictines in England ("the English Congregation"), the
English Congregation was not responsible for the Community, albeit it may be a repository
for some papers relating to the School or the Community. The Community ran the School,
which was fee-paying, as a business. The pursuer avers that members of the Community
were appointed as trustees under the Trust Deed; that, consistent with the broad purposes of
the Trust Deed, they employed teachers at the School; and that the trustees "exercised
control over" the running of the School such as to render them vicariously liable for the
delictual or tortious acts of the teachers, including the third defender and the lay teachers.
(It is disputed that the express terms of the Trust Deed govern the operation of the School.)
The pursuer identifies the four individuals who were the trustees under the Trust Deed in
post at the time he was at the School ("the Serving Trustees"). All of these individuals are
dead and are unlikely to have issue. Successor trustees were appointed from time to time,
including the first and second defenders.
The defenders: the trustee defenders and the third defender
[4]
The first defender and the second defender were assumed as trustees under the Trust
Deed. They are both called as defenders in their capacity as trustees ("the trustee
defenders"), not in their individual capacities. The second defender is averred to be the last
known surviving trustee whose whereabouts are known. On the trustee defenders'
averments, the School was closed in around 1993; the Abbey closed in 1999 and the Trust
was wound up in around 2010 or 2011. The pursuer does not admit that the Trust has been
wound up and it calls upon the trustee defenders to lodge the relative deed. On the first
defender's averments, he was born in 1970 and was a trustee under the Trust Deed for only
one year, from late 1999 to late 2000. The second defender was assumed as a trustee in late
4
2006 but (on his averments) ceased to have any involvement in the affairs of the Trust, after
it was wound up. The pursuer does not admit these averments. The third defender, a
former monk and teacher, did not enter appearance. At the time of the debate, he had been
on remand awaiting trial on charges of sexual offences against the pursuer and against other
boys who were at the School at the same time as the pursuer. By the time of the continued
debate, the third defender had been convicted inter alia of lewd and libidinous conduct
against the pursuer.
Debate
[5]
While this action was not a commercial action, it was allocated to me shortly before
the diet of debate. In light of the novelty and potential importance of some of the issues, I
requested parties to produce reading lists in advance of the debate of the cases and
productions to be referred to. Parties had also produced notes of arguments and one party
took up the opportunity the court offered and provided an updated note of argument,
responding to the other party's first note of argument. I am grateful to senior counsel for
their careful and well-presented oral and written submissions, no doubt produced with the
assistance of their juniors. I have had regard to all of these materials, together with the
authorities produced in advance of the debate and the additional authorities provided for
the continued diet of debate.
The parties' motions
[6]
The trustee defenders assert that the pursuer's case is lacking in specification and
irrelevant on a variety of grounds, and they seek dismissal of the pursuer's action (their first
plea-in-law). In respect of the merits, the trustee defenders' position is that even if the
5
pursuer's averments were proved, it would not result in a finding of vicarious liability
against the trustee defenders and that any insurance policy is neither a trust asset nor for the
pursuer's benefit. Separately, they seek dismissal on the basis that a fair hearing is not
possible for the purposes of section 17D(2) of the Prescription and Limitation (Scotland) Act
1973 (as amended) ("the 1973 Act" and "the fair hearing ground"), or that the substantial
prejudice to the trustee defenders outweighs the interests of the pursuer for the purposes of
section 17D(3) of the 1973 Act ("the substantial prejudice ground" and which, together with
"the fair hearing ground" are referred to as "the limitation grounds"). The limitation
grounds are the subject-matter of the second plea-in-law. Mr Neil Mackenzie QC, who
appeared for the trustee defenders together with Mr MacLeod, confirmed that he was not
instructed by the putative insurers and he had not seen any policy of insurance. He could
not say if there was an extant policy. While separate answers had been lodged by the trustee
defenders, he represented both of them at the debate. Mr Neil Mackenzie QC led at debate.
[7]
The pursuer, represented by Mr Euan Mackenzie QC and Mr Gardiner, sought a
proof or a proof before answer.
The core issues at debate
[8]
The parties focused their submissions on the following issues:
1)
The trust patrimony issue: Whether a trustee's (assumed) right to be
indemnified under the insurance policy forms part of the Trust patrimony,
and whether that patrimony subsists notwithstanding the winding up of the
Trust (assuming it has been wound up);
6
2)
The insurance issue: whether the pursuer has sufficiently specific or relevant
averments of insurance or whether, in any event, any policy of insurance
taken out by trustees in the past is res inter alios acta;
3)
The vicarious liability issue: Whether the pursuer has relevant averments
that the trustees at the material time (the Serving Trustees) were vicariously
liable for the acts of the third defender and Mr Owen, or whether a term of
the trust deed, of any discharge or of any other rule of law precludes liability
of one trustee for another;
4)
The limitation grounds: Even assuming the pursuer's case was otherwise
relevant and specific, whether, nonetheless, his action is precluded by virtue
of either subsections 17D(2) or 17D(3) of the 1973 Act.
The Trust Deed
The scope of activities covered by the Trust Deed
[9]
At the beginning of his submissions, the trustee defenders' senior counsel appeared
to put in issue whether the terms of the Trust Deed were habile to include the provision of
education, the running of a school or to permit the employment of teachers by the trustees
(he noted that there was no express power, for example, for the trustees to do so). In his
submission, the objects of the Trust Deed were not expressly educational. There was
nothing specific about running the School or the appointment of a head master. The Trust
Deed was principally concerned with the management of the heritable assets of the Abbey
and the Community, and he took the court through a number of the provisions of this
character. In response to a question from the court, he confirmed that he was not inviting
the court to consider whether the running of the School or the employment of teachers was
7
ultra vires the powers of the trustees (which appeared to be the implication of this
submission, but from which Mr Neil Mackenzie QC drew back). He explained that for
present purposes it sufficed to note the trustee defenders' position, because they relied on
other defences.
The Trust purposes
[10]
In respect of the Trust's purposes, the pursuer avers that:
"The purposes of the Trust included to provide Roman Catholic schools, to maintain
feeding, clothing and housing for children attending said schools and in doing and
performing or causing to be done or performed any other act of an educational,
religious or charitable nature benefitting or tending to benefit the Roman Catholic
religion or the Order of Saint Benedict and the members thereof."
He also avers that the trustees held the assets in trust for the Community. The pursuer does
not sue as a beneficiary under the Trust. In submissions, the pursuer's senior counsel took
the court to the provisions he founds on (and of which the averments just quoted are a
paraphrase). After defining the Trust estate, the Trust Deed contained an enabling provision
to the effect that the trustees "hold and possess the right and power to administer as we
consider fit and proper the Trust Estate", and that they do so inter alia for the "purposes and
objects of religion, charity or education" connected with the Abbey "in any manner of way"
(emphasis added). The Trust Deed also conferred specific powers on the trustees (a) for
"maintaining ... and enlarging ... its heritable properties"; (b) for "acquiring, providing,
constructing, furnishing ... additional Roman Catholic schools ..."; (c) for "supplying
books and all other furnishings for the use of Roman Catholic children attending the said
and additional schools and in awarding to them prizes and bursaries" (emphasis added).
8
Consideration of the Trust purposes
[11]
The parties focused their submissions on the issues they identified (set out, above, at
para [8]) and they were not, as I understand it, seeking a definitive ruling on the scope of the
Trust Deed. Had this been a contested issue, I would not have been prepared to dismiss the
pursuer's action on this basis (and which the trustee defenders did not move for). Having
regard to the objects and purposes of the Trust Deed and the breadth of the powers
conferred (see the words highlighted in the preceding paragraph), prima facie the terms of
the Trust Deed were wide enough to encompass the running of the School, the employment
of teachers (whether brother or lay) and the appointment of a headmaster as within powers
incidental to and in furtherance of the objects of the Trust. If this is a live issue, it is one
better resolved at proof and where parties have the opportunity to elicit any evidence
relevant to the context in which the Trust Deed falls to be construed or the approach to be
taken in circumstances where the Trust ostensibly supported the operation of the School for
many decades.
The Trust Deed provision limiting liability of a trustee to his own intromissions
[12]
The trustee defenders relied on a separate provision of the Trust Deed limiting a
trustee's liabilities to his own intromissions with the Trust estate. (The trustee defenders'
reliance on this provision of the Trust Deed may explain why they did not advance a vires
argument: such a clause is unlikely to be effective in respect of a trustee's ultra vires acts.)
The defenders relied on the following provision of the Trust Deed ("the limited liability
provision"):
"... we and our foresaids shall not be liable singuli in solidum nor for one another, but
we declare that the liability of each of us and our foresaids shall be confined to his
own personal intromissions with the Trust Estate or any part thereof committed to his
9
individual charge; and further we declare that we and our foresaids shall be entitled
to the whole other privileges and immunities of trustees according to the law of
Scotland in relation to all questions, differences and disputes affecting and
concerning ourselves and our foresaids and our respective rights privileges and
powers relative to these presents and the Trust assets."
[13]
On the hypothesis that the objects of the Trust and the powers of the trustees
extended to the running of the School and the employment of teachers, the trustee defenders
relied on the limited liability provision, as well as on the following propositions:
1)
That as a matter of generality, a trustee was not normally liable for the acts or
omissions of other trustees (much less were they liable for the acts of persons
employed by other trustees). Reference was made to section 3 of the Trust (Scotland)
Act 1921 ("the 1921 Act"), which implies a provision that "each trustee shall be liable
only for his own acts and omissions and shall not be liable for the acts and
intromissions of co-trustees and shall not be liable for omissions", unless the trust
deed expresses the contrary;
2)
That when new trustees are assumed, all that is conveyed to them are the
assets of the Trust, not its liabilities;
I address this last proposition in my consideration of the Trust patrimony issue and the
remaining matters in my consideration of the vicarious liability issue.
Discussion
Preliminary observations
[14]
The starting point is that this is an action for personal injury arising from alleged
historical abuse many years ago said to have been sustained while the pursuer was a child.
By reason of the amendments to the 1973 Act, the usual limitation period that applied to
such actions is disapplied (see section 17A(1) of the 1973 Act). No limitation period applies
10
to such claims and, indeed, by virtue of section 17D of the 1973 Act, the onus shifts to the
defender to establish one or more of the grounds for withholding such an action from proof:
these are the limitation grounds, discussed below. Assuming the pursuer has pled a
relevant case and taking the pursuer's averments at debate pro veritate, he has suffered a
legal wrong for which he seeks to hold the Serving Trustees vicariously liable, and which
liability is to be satisfied by the Trust estate (if any) following his claim against the last
known trustees.
[15]
In the usual case (just described), the inability of a wrongdoer to satisfy a decree is
irrelevant to the question of the wrongdoer's liability, though a wrongdoer's impecuniosity
might be highly material to the utility of an action if damages are the primary purpose of
bringing it. In this case, by reason of the trustee defenders' averments that the Trust has
been wound up (which is not a matter of admission), the pursuer seeks to overcome that
difficulty by relying on a tract of authority that it is competent for a creditor on an estate to
raise an action against the former testamentary trustees thereof, even if discharged, if it can
be shown that there is a subsisting asset in the estate. If there is, then the estate cannot be
said to have been finally wound up and an action by a third party creditor is competent. In
this case, the pursuer seeks to extend that tract of authority to non-testamentary trustees and
to found on the availability of the trustees' right of indemnity under an indemnity insurance
as constituting the available asset and central to which was his analysis of the nature of the
Trust patrimony (of which the right of indemnity is said to form part). The trustee
defenders challenge the competency of these features of the pursuer's action, under the
Trust patrimony issue. Parties were agreed that there is little authority on the nature of a
trust's patrimony, which I now turn to consider.
11
The Trust patrimony issue
[16]
While parties did not analyse the issues in this way, in my view, the pursuer's case
on the merits is critically predicated upon four factors:
1)
That, on the application of the dual trust patrimony analysis, there was a trust
patrimony apart from the personal patrimonies of the individual trustees;
2)
That the bundle of rights and liabilities of which the Trust patrimony was
comprised included:
(i)
The trustees' contingent right to be indemnified under the insurance
in the event of a claim against them, qua trustee; and
(ii)
The liability of the trustees for the acts and omissions of the teachers
they employed and over whom they exercised control or conferred authority
(giving rise to the vicarious liability issue);
3)
That, given the existence of that contingent right to be indemnified, it could
not be said that the Trust had been wound up and the Trust patrimony, at least to
that extent, subsisted; and
4)
That, the purpose of the pursuer's action, which was directed solely against
the trustee defenders' in their capacity as trustees, was to make a claim in order, in
practical terms, to compel the insurer to respond; and that such a constitutive action
was competent.
The concept of a trust patrimony
The pursuer's submissions
[17]
The pursuer relies on what has come to be known as the "dual patrimony" theory to
argue that, in effect, the Trust's estate or trust patrimony has subsisted through time
12
regardless of the change of trustees and, further, that so long as there is an extant asset of the
Trust, the Trust has not been fully wound up.
The trustee defenders' submissions
[18]
The trustee defenders do not dispute dual patrimony, as a theory, but they contend
that there is not one subsisting trust patrimony, but that there have been as many
patrimonies as there have been trustees of the Trust. Each individual trustee's patrimony
subsists only for the period during which he is a trustee. They also argue that the pursuer's
reliance on the Trust estate or trust patrimony as a continuing entity involves an
impermissible reification of the Trust, which in Scots law has no separate legal personality.
This submission was developed as follows.
[19]
The defender trustees submit that the pursuer's analysis conflates a partnership with
a trust; while a partnership has separate legal personality (which, in some circumstances,
will subsist notwithstanding a change in the partners), a trust does not. The pursuer's
approach falls into the fallacy of reifying the Trust. The Trust patrimony does not subsist or
have a continuing life of its own. Once constituted, a trust was no more than the bilateral
relationship between the trustees and beneficiaries, and which was the essence of the
fiduciary relationship or the fiduciary ownership by the trustees of a trust's assets.
[20]
If the trust patrimony theory fell to be applied, properly understood, it meant that
there were many trust patrimonies; there was not one trust patrimony with a continuing
existence which was the central fallacy of the pursuer's position. There was no scope for
any transmission of any liability of the Serving Trustees to the trustee defenders. Any
liability owed by the Serving Trustees was private to them. It was essential to know if the
trustee concerned was acting in a personal or trust capacity; there was a presumption in
13
favour of the former. As a matter of specification, the pursuer simply asserted that the
Serving Trustees were liable, but he failed to particularise what the individual Serving
Trustees did or why they were liable.
[21]
Even if the pursuer has pled a sufficiently specific case, he had failed to plead any
relevant basis on which the trustee defenders could be liable for the (assumed) acts and
omissions of the Serving Trustees.
Consideration of the dual patrimony theory
[22]
The dual patrimony theory is a useful organising concept to explain the nature of a
trust. Foremost in developing that concept were Professors emeriti GL Gretton and
KGC Reid. Prof Gretton first explored the utility of the concept of "patrimony" to describe
the bundle of rights and obligations comprising a trust's estate (the word "estate" itself
being unhelpfully imprecise in meaning), as propounded by the French jurist Pierre
Lepaulle in the early 20th century (see "Trust and Patrimony", in Scots Law in the 21
st
Century:
Essays in Honour of W A Wilson (1996, Edinburgh) at pp 188 to 190). In a typically thought-
provoking and incisive discussion, Prof Gretton considered the terminological advantages of
"patrimony" (over, for example, the more common term of "estate"):
"A more intelligent use of terminology would help us in many a tight stop. When
we acquire rights, we tend to say they come into our ownership, then we end up in a
muddle when we consider that many of these rights are not rights of ownership. A
failure to distinguish patrimony from ownership underlies many of the muddles
about trust, and indeed other matters.
Patrimony (patrimonium, patrimoine, Vermögen) has in fact two senses. `Estate' indeed
shares this quality. In one sense it is the totality of assets, but in a wider sense it
means the totality of assets and liabilities... The broader sense is especially
valuable for trusts, because in a trust there is a segregation not only of assets but also
(albeit subject to certain qualifications) of liabilities. So when we say that a trustee
has two estates (or better, two patrimonies), we are using a rather effective concept."
(Emphasis added.)
14
The concept was further developed, most notably in two articles by the same individuals,
one by Prof Gretton "Trusts Without Equity' (2009) 49 (3) ICLQ 599 and the other by Prof
Reid, 'Patrimony not Equity: The Trust in Scotland' (2008) 8 (3) ERPL 427; and their analysis
was commended in the Scottish Law Commission's Discussion Paper on the Nature and
Constitution of Trusts (Scot Law Com, DP no 133) 2006 ("The SLC DP") (paras 2.16ff). The
dual patrimony concept was given the judicial imprimatur of approval in O'Boyle's Trustee v
the opinion of the court, observed: (at para 31):
".... The dual patrimony theory was put forward to explain the fact that the Trust
estate is not liable for the trustee's own private debts, but is a distinct patrimony,
with its own assets, rights and liabilities. This explains the fundamental principle,
laid down in particular in Heritable Reversionary Co Ltd v Millar, that if a trustee is
sequestrated or made subject to corporate insolvency procedures, the Trust property
is not affected, but remains held for the purposes of the Trust." (Emphasis added.)
In the present context, several features of this analysis are worth emphasising: (i) that a trust
is not a juristic person, but the trust estate or patrimony impressed with the Trust purposes
exists as an autonomous or distinct fund; (ii) that a trust does not fail for want of any
trustees; (iii) that the personal creditors of an individual trustee have no claim on the trust's
patrimony held by that trustee and, conversely, a creditor of a trust (generally) has only a
claim against the trust's patrimony and not against the personal patrimony of a trustee; and
(iv) that the trust estate or patrimony is a fund whose constituent elements may change but
without affecting the existence of the trust patrimony. What is uncertain, and sharply at
issue in this case, is the nature of the trust patrimony (one patrimony or many patrimonies?),
and of what it is said to be comprised (assets only, or assets and liabilities?).
15
One trust patrimony or many trust patrimonies?
[23]
I first address the trustee defender's submission that the pursuer's approach involves
an impermissible reification of a trust and that there are many trust patrimonies, the
implication being that these were specific to each trustee and subsisted only for so long as an
individual trustee remained in post. In relation to the first point, it is trite that, in contrast to
a partnership or an incorporated company, a trust has no separate legal personality in Scots
law. However, it has long been recognised (and it is implicit in section 22 of the 1921 Act),
that the trust estate or patrimony will subsist even if at a given point in time there are no
trustees in office. See Lord Drummond Young's comments to that effect in Aitkenhead v
may fail, through death or resignation or because a corporate trustee is struck off. In such a
case the trust continues in existence and the trust property remains impressed with the
Trust purposes..." (emphasis added). A trust without any trustees in post does not mean a
trust or its estate ceases to exist; it simply means that there is no one in whom the trust estate
is presently vested and able validly to intromit with it or be held liable in respect of claims
against it. While in those circumstances no one holds the trust estate as owner, the trust
estate does not become bona vacantia. Upon the appointment of new trustees, the trust estate
vests in them by operation of law. Accordingly, the fact that a trust estate subsists
(notwithstanding the absence of trustees) may resemble the attributes of a juristic person,
but it remains the case that the trust has no separate legal personality in Scots law. Contrary
to the trustee defenders' submission, the trust patrimony analysis does not impermissibly
reify the Trust or constitute incorporation by the back door.
[24]
In relation to the trustee defenders' submission that there are as many trust
patrimonies as there have been trustees, this appears to proceed on the misapprehension
16
that a trust's patrimony exists only when it is held by one or more trustee, and then only as
discrete or divisible funds in the hands of each trustee. In my view, this is incorrect.
Viewed from the perspective of an individual trustee, such a person is vested with his or her
own patrimony and, separately, with a joint share of the trust's patrimony hence the dual
patrimony (trust and personal) in the hands of that individual. Each patrimony in the hands
of an individual trustee trust and personal is insulated against the liabilities of the other.
Their individual shares of the trust patrimony are separate from their individual personal
patrimonies. If there is more than one trustee, each will have a joint share of the whole trust
patrimony (ie his or her share of the trust patrimony) as well as hold his or her individual
patrimony. It is trite that where there is more than one trustee, they own the trust property
jointly and not as common property. That distinction is important because when a trustee
ceases to be a trustee, his or her share reverts back to the remaining trustees; it does not
subsist as a distinct asset or pass to the trustee's personal representative. If there are
multiple trustees, each has a joint share in the trust estate. However, that is not the same as
saying that the trust estate has many patrimonies either because there is more than one
trustee at any one time, or because there are successor trustees over time.
[25]
Moreover, the divisibility of the joint ownership of the trust patrimony among
several trustees (when there is more than one) does not mean that there are multiple trust
patrimonies of the trust concerned. Rather, viewed from the perspective of the trust (as
opposed to the individual trustee's interest in or joint ownership of the property it
comprises), the trust patrimony continues in existence as a distinct unitary patrimony
impressed with the trust purposes. If there are multiple trustees, having joint shares in the
trust patrimony, this does not mean the trust patrimony becomes separate patrimonies in
the hands of each trustee. By contrast, if there are no surviving trustees, the trust patrimony
17
nonetheless subsists (it does not disappear) even though for a time it is not vested in any
person with powers to intromit with it. This is a crucial difference of a trust's patrimony
from a juristic person. A wound up company must be restored, before a constitutive action
against it may be made (as is now commonly done by individuals claiming against former
corporate employers who have been wound up, seeking to hold them liable for alleged
exposure to asbestos with a view to triggering indemnification under the corporate
employer's liability insurance). As a trust has no separate legal personality, it cannot be
revived. The pursuer's target in this case is not the Trust, but the asset it says exists in the
form of the contingent right of indemnification under the insurance policy. Accordingly, I
reject the contention that there are multiple trust patrimonies. In my view, the analysis that
better accords with the features of a trust in Scots law, is that which recognises the
subsistence and continuity of a unitary trust patrimony (even if owned by more than one
trustee at a time, or over time). I next consider what comprises a trust's patrimony.
The nature of the trust patrimony: is it comprised of assets only, or assets and liabilities?
[26]
In submissions, the pursuer referred to the Serving Trustees' right to be indemnified
as an asset forming part of the Trust patrimony. (I use "assets" in this context in the broader
sense of all physical and intangible assets or all real and personal rights.) While I consider
the nature of a right of indemnification below, the prospect of indemnification does not
generally arise until a claim is made or established against the trustee. Hence it is necessary
first to consider whether the Trust patrimony includes liabilities. As is clear from the
passages quoted above (in para [22]) from Prof Gretton's analysis, and adopted by
Lord Drummond Young in O'Boyle, the wider definition of "trust patrimony" is accepted as
being the position in Scots law, and it includes liabilities as well as the bundle of personal
18
and real rights. That case is binding on me but, in any event, the inclusion of liabilities as
part of the trust patrimony (or, perhaps more precisely, that the trustees hold the trust assets
subject to any liabilities established) is consistent with the nature of a trust and trustee's
powers and duties as understood in Scots law. While in their analysis of this issue, the
trustee defenders focused on the mechanics for the transfer of a joint share of the assets to an
incoming trustee as the defining feature of a trust patrimony, in my view that is an
incomplete analysis. It would be an extraordinary outcome if the effect of a change of
trustees resulted in a form of "debt-washing", freeing the trust estate from any liabilities
incurred by or during the tenure of the outgoing trustees while they were in office. (This is,
of course, entirely separate from any individual liability incurred by trustees.) In my view,
the trust patrimony that vests in a new trustee vests tantum et tale, in similar fashion to the
vesting of the estate of a sequestrated debtor in his or her trustee in sequestration.
[27]
In the present context, the fact that a trust's patrimony encompasses liabilities is
relevant, because the pursuer's avowed purpose of the action is constitutive; that is, to
establish a liability against the trustee qua trustees in order to have (it is hoped) the benefit of
any indemnity provided by insurance to any trustee found vicariously liable. It must be
stressed that, consistent with the trust patrimony concept, if one or more of the trustee
defenders is found vicariously liable, the creditor of the trust patrimony (in this case, the
pursuer, if successful), has recourse only against the trustee defenders' trust patrimony not
their personal patrimonies. The personal patrimonies of the trustee defenders are not at
risk, even if the pursuer's action is successful. It is important to stress this, as one of the
trustee defenders' criticisms of the pursuer's case is that there are no allegations of personal
wrongdoing on their part. This is correct, but misses the point. The pursuer emphasises
that the trustee defenders are not called as individuals. The trustee defenders are also
19
critical that the pursuer does not explain how the trustee defenders appointed years after
the events the pursuer complains of can be liable for the acts and omissions of their
predecessor trustees. This may reflect the trustee defenders' misunderstanding of the
pursuer's reliance on the continuity of the trust patrimony (assuming there is a relevant
right of indemnity within the scope of an insurance policy). The pursuer is not, if I
understand his case correctly, seeking to hold them personally liable for any default of the
Serving Trustees. He is seeking to hold the last known trustees answerable in their status as
trustees for a subsisting liability incurred by predecessor trustees and to be met from the
trust patrimony.
[28]
I return to the defender trustees' criticism. In my view, what the pursuer proposes
does not involve the reification of a trust, nor does it lead to "incorporation by the back
door", as the defender's senior counsel put it. The pursuer's case is not predicated on the
Trust having separate legal personality. It is based on the prospect of:
(i)
establishing that the Serving Trustees were vicariously liable for the acts of
their employees, including the third defender and the lay teachers (I consider this
below), and
(ii)
holding the trustee defenders' liable as the last known trustees, on the
hypothesis that the Trust patrimony subsists (giving rise to the insurance issue).
I next consider the trustee defenders' challenge to the competency of pursuer's action.
The trustee defenders' challenge to the competency of the pursuer's action
[29]
The trustee defenders challenge the competency of the pursuer's action. In support
of his submission, senior counsel for the trustee defenders referred to the case of Dunn v
Britannic Assurance Co Trust Deed 1932 SLT 244 ("Dunn"), in which the Lord Ordinary
20
declined to appoint a judicial factor to the estate of a deceased person where the purpose of
that application was to seek transfer of the benefit of the deceased's policy of insurance to
the pursuer. The principal deficiency the court identified was the absence of any claim
establishing the deceased's liability to the pursuer and the improper use of the power to
appoint a judicial factor to elide that omission. As the trustee defenders' senior counsel put
it, the court in that case would not allow the presence of insurance to "overcome radical
defects".
The pursuer's position
[30]
In defending the competency of his action, the pursuer founds strongly on
("Forbes"). In Forbes Lord Clark held that an action by a family member of a man who died
as a result of alleged exposure to mesothelioma raised against the executor on the estate of a
former partner in the partnership which employed the deceased was competent. In coming
to that view, Lord Clark undertook a careful review of the authorities, including The Assets
Co Ltd v Falla's Trustee (1894) 22 R 178 ("Falla's Trustee") and the later Assets Company Ltd
cases. (Two cases brought by The Asset Company Limited against separate defenders were
heard together on the merits, but advised separately: see The Assets Company Ltd v Bain's
Trustees (1904) 6 F 692, advised by the First Division, and The Assets Company Ltd v Phillips'
Trustees (1904) 6 F 754, advised by the Second Division. Those reports were preceded by the
report on certain preliminary matters in those cases, advised by the Second Division: see
The Assets Company Ltd v Bain's Trustees and The Assets Company Ltd v Phillips' Trustees (1904)
6 F 676.) Lord Clark relied in particular on Falla's Trustee and the first of the The Assets
Company Ltd cases, and he regarded these authorities as conclusive of the competency of
21
raising an action against testamentary trustees (even if they had been discharged and the
trust estate distributed), and he saw no reason why that tract of authority could not be
extended to executors. The textbooks he was referred to, namely Wilson and Duncan,
Trusts, Trustees and Executors at p 49 and the Stair Memorial Encyclopaedia of Scots Law
(reissue) on "Trusts, Trustees and Judicial Factors" at paragraph 2.16, supported the
competency of a creditor suing a trustee for the purpose of constituting a claim,
notwithstanding the trustee's discharge by the beneficiaries. In passing, Lord Clark made
the following observation (at paragraph 17), concluding with a rhetorical question:
"The present case focuses on the discrete legal point as to the relevancy of the claim
made against an executor, who avers that he has been discharged, for the purposes of
constituting a claim against the estate of the deceased. That is the point of law at
issue. There is, however, a wider practical and policy question, which was adverted
briefly in submissions, the answer to which flows from the decision on the legal issue
in dispute. It is this: where an employee claims to have suffered personal injury at
the time of his employment and the employer was either a partner in a partnership
or a sole trader, who has died, can the former employee (or his family members if
he is also now deceased) sue the executor of the former partner as a sole trader,
perhaps long after the executor has ingathered and distributed the estate, as a
means of seeking to cause the insurers under the employers' liability insurance
policy to meet the claim?". (Emphasis added.)
In Forbes, Lord Clark held that it was competent for such an individual to raise an action
with a view to taking a decree to constitute a valid claim against the estate. Such an action
was referred to as a decree cognitionis causa tantum in the older authorities Lord Clark
canvassed (eg see Lord President Kinross in The Assets Co Limited v Bain's Trustees (1904) 6 F
692 at p 704 ("Bain's Trustees")). The pursuer founds strongly on the passage just quoted,
and on Lord Clark's later answer (at paragraph 33 in Forbes) to his rhetorical question:
"Although this was not the subject of submissions, the short point of principle might
simply be that where the right to claim on an insurance policy formed part of the
estate when the executor was appointed, and a subsequent claim by a creditor of
the estate would allow such an insurance claim to be made, the estate has not been
the subject of a final distribution and a case such as the present can be brought to
assist in accessing the rights under the policy".
22
In reply, the trustee defenders submitted that the facts in Forbes are very different from the
instant case and, in any event, that Forbes was wrongly decided and should not be followed.
The presence of fraud was a significant factor in the cases Lord Clark analysed and any rule
of law derived from those cases should be confined to cases involving fraud.
Consideration of the trustee defenders' competency challenge
[31]
Dealing first with the case of Dunn relied on by the trustee defenders, in my view,
Dunn is readily distinguishable from the present case. First, the ratio of the decision in Dunn
was that what the pursuer contemplated in that case was not competently within the
statutory power for appointment of a judicial factor. The pursuer here is not seeking the
appointment of a judicial factor. Secondly, the purpose of the pursuer's action in this case,
seeking to constitute a liability against the Trust estate, is to overcome the very deficiency
identified by the court in Dunn, namely the absence of a claim in that case establishing the
liability of the deceased. Furthermore, unlike the pursuer in Dunn, the pursuer in this case is
not seeking the direct "transfer" to him of the benefit of any insurance policy.
[32]
Turning to the case of Forbes, I am not persuaded that Lord Clark's decision is
incorrect, as the trustee defenders submitted, or that his conclusion as to the competency of
the kind of action contemplated, which he derived from the authorities he considered,
should be confined to fraud. No rationale was offered for such a restricted reading, and
which is not supported by a consideration of those authorities. It cannot be right that a
discharge by beneficiaries can preclude a claim brought by a creditor of the estate with a
view to constituting a claim against it: that was the rationale provided by the Lord President
in Bain's Trustees in upholding the competency of the claim made in the case before him.
23
Separately, there is ample authority that a creditor may obtain a decree cognitionis causa
tantum, being a decree against the estate (and not the person), made for the purpose of
ascertaining the amount of a debt owed by the estate. Conventionally, such an action is
declaratory. That is not what the pursuer seeks here, but the pursuer's action is sufficiently
analogous in seeking a finding against the trustee defenders qua trustees for the purpose of
ultimately having the benefit of any indemnity provided to them under any policy of
insurance. The critical point is that the trustee defenders are sued solely in their capacities
as trustees, and not as individuals, and as the last known trustees having right to intromit
with any residual trust patrimony comprised of the contingent right of indemnity.
[33]
I accept as competent in principle that, where an estate has not been the subject of a
final distribution, it is competent for a third party creditor to bring a claim with a view to it
being satisfied from the available (or new-found) estate. (One of the specialities of this case
is that the asset relied on is a contingent right of indemnity.) The mechanics of how that
may be done may be less than straightforward where the estate is or was in the hands of
executors or trustees (as the case may be), as is illustrated by the The Asset Company Ltd cases
and Forbes. There may be additional specialities where the claim sought to be constituted
involves a trust as the debtor (cf Lord Drummond Young's comments on the proper form of
indictment of trustees, in Aitkenhead, at paras [7] to [9]). Any mechanical or procedural
questions arising can be addressed going forward.
[34]
In this case, the pursuer contends that the Trust has not been subject to a final
distribution and it is for this purpose that he relies on the insurance policy said to be in place
and capable of responding, in the form of an indemnity of the trustees. I have determined
that such an action is competent. In my view, the trustee defenders' challenge to the
relevancy of the pursuer's case, based on a continuing trust patrimony, fails.
24
[35]
At the end of paragraph 32 in Forbes, Lord Clark noted a number of matters that were
uncertain (eg the question of how, when and in respect of whom any insurance claim might
become an asset of the estate), which would have required proof. Many of those
uncertainties are present in this case and, subject to the trustee defenders' remaining
relevancy challenges, will also require proof. In addition, whether the trustees have been
discharged or whether the Trust in this case has been subject to a final distribution are also
matters which requires evidence. As noted, the pursuer calls on the trustee defenders to
lodge any discharge or deed of winding up of the Trust. If there has been no winding up of
the Trust, the circumstance I described above (in paragraph [15]) would not arise and the
pursuer's case becomes a more straightforward one that would fall within the terms of the
kind described in paragraph [14].
[36]
Had I not upheld the relevancy and competency of the pursuer's action as, in effect, a
constitutive one against the last known trustees, I would not have been prepared to dismiss
it on this ground without evidence that the Trust has, in fact, been wound up. Although this
was a matter touched on only lightly in submissions, whether the Trust has been wound up
may be a significant issue, and which may not admit of an obvious answer. Prima facie the
Trust was a charitable or public one, given its objects and purposes. That may give rise to an
important distinction. The role of trustees of private trusts, or of executory or testamentary
trustees on the estates of a deceased testator, is to ingather the estate and (after satisfaction
of the liabilities) to distribute the estate to the beneficiaries in accordance with the
testamentary provisions. Once the trust estate has been distributed and the testamentary
purposes fulfilled, the trustees and executors are discharged. However, even in such a case,
as is clear from Falla's Trustee and from the observations of Lord President Kinross in The
Assets Company Ltd v Bain's Trustees (1904) 6 F 692 at p 704 to 705, such an action is
25
competent and the beneficiary's discharge of the trustees or executors cannot be to the
prejudice to a claim of a third party creditor. The pursuer in this case is such a third party
creditor. The difficulty, however, is that the winding up of a public or charitable trust
generally requires different and more formal procedures usually involving the court. So, for
example, if the objects of the Trust have failed (following the closure of the School and the
Abbey), the trust estate could be transferred to a different trust pursuing similar purposes
under a cy près scheme. Absent that, or some formal court oversight, it would not have been
open to the last trustees of the Trust simply to realise the assets of the trust which remain
impressed with the trust purposes- and apply these for purposes outwith those of the Trust.
It is by reason of these potential issues that, even had I been with the trustee defenders on
the competency issue they raise, I would not have been prepared to uphold such a challenge
without a proof of the critical fact on which the competency challenge is founded, that is,
whether the Trust has in fact been wound up.
The insurance issue
The pursuer's averments
[37]
The pursuer does not seek to hold the trustee defenders personally liable. He calls
them only in their capacity as trustees of the Trust. He explained, under reference to Forbes,
that the purpose in so doing was to constitute a claim against the last known trustees with a
view to triggering the insurer's obligation to indemnify them. The pursuer avers the steps
he took, prior to the raising of this action, to contact the Royal Sun Alliance (whom he was
given to understand were the insurers), and he placed various calls on it and on the trustee
defenders in relation to the terms of any policy of insurance. In relation to the policy of
insurance, the pursuer avers:
26
"The trustees of said Trust took out insurance in relation to the running of the Abbey
and the school. There is a policy of insurance in force in relation to the events that
form the subject matter of the present proceedings. Said policy was issued by Royal
and Sun Alliance. Said policy remains in force in relation to the events that form
the subject matter of the present proceedings. Said policy forms part of the trust's
property. The first and second defenders are entitled to claim, and seek
indemnity, under said policy in relation to their liability as trustees arising from
the subject matter of the present proceedings. In these circumstances, the trust
estate has not been subject to a final distribution." (Emphasis added.)
The pursuer also calls upon the trustee defenders to aver what steps they have taken to
investigate the pursuer's claim or to trace contemporaneous witnesses. They are also called
upon to lodge in process all papers relating to the Abbey and the School, as well as the deed
winding up the Trust.
The trustee defenders' challenge to the relevancy and competency of the pursuer's reliance on any
insurance that was or is available to the trustee defenders or the Serving Trustees
[38]
The trustee defenders' position is that the insurance is neither an asset of the Trust
nor for the benefit of the pursuer. Moreover, they submitted that if there were any
insurance policy, it was res inter alios acta. It was not competent for a third party to attempt
to proceed directly against the insurance company, which appeared to the trustee defenders
to be the pursuer's stated intention. The trustee defenders also criticise the pursuer's
averments for want of adequate specification. The trustee defenders' final challenge was
that, even if the pursuer could competently engage any obligation of indemnification on the
part of the insurers, whether there was any obligation to indemnify necessarily turned on
the particular policy wording, as was evident from the case of Burnett v International
trustee defenders' senior counsel was not clear why any insurance the Serving Trustees may
have had (or may have), would be of any relevance to the trustee defenders.
27
The pursuer's reply on the insurance issue and the constitutive nature of his action
[39]
In reply to the specification point, the pursuer's Senior Counsel, Mr Mackenzie QC,
explained that the pursuer's averments were based on the information the trustee defenders'
agents had themselves provided in pre-litigation correspondence. He also explained that, as
at the date of the debate, there was an outstanding specification for the recovery of
documents, which included the terms of the insurance cover. The pursuer's position was
that, if there were any force in the trustee defenders' criticism of a lack of specification, the
court should afford him an opportunity to amend. In relation to res inter alia actos, the
pursuer was not seeking to enforce the insurance policy directly.
Consideration of the insurance issue: does the pursuer have relevant and sufficiently specific
averments?
[40]
On the question of the availability or scope of any insurance, in my view those are
matters that cannot be determined without proof. The availability of insurance is not
generally a threshold or legal requirement for a competent or relevant action of personal
injury, and the absence of cover as between the insurer and the trustees, is not a valid reason
to bar a claim by a third party against the trustee, if that claim is otherwise well-founded. In
this case, however, the pursuer relies on the existence of an insurance policy whose terms
are habile to respond to the pursuer's claim against the trustees, and therefore as
constituting a contingent right of indemnity in favour of the trustees (and hence an asset of
the trust patrimony), in order to bring himself within the tract of authority (considered
above) permitting a constitutive action against an executor or trustee of a wound up estate
on the basis that the estate formerly under their control has not been the subject of a final
28
distribution. I have already rejected the trustee defenders' competency challenge and
indicated that, even had I been with the trustee defenders on this issue, proof would still be
required to establish whether the Trust has in fact been wound up.
[41]
In relation to the trustee defenders' reference to Burnett, it is of course correct that the
terms of any insurance will necessarily determine whether any particular claim is covered.
The trustee defender's principal criticism is their challenge to the pursuer's specification of
the insurance policy. The pursuer is necessarily a stranger to any liability insurance that
may exist and may yet respond. By contrast, the trustee defenders potentially have the
benefit of that cover as the insured. I bear those features in mind when assessing the trustee
defenders' criticisms of the adequacy of the pursuer's averments or their assertions of any
prejudice flowing from a lack of specification. There is also the important consideration that
there is an outstanding specification of documents. The trustee defenders do not aver that
there is no such policy. The tenor of the information their agents provided to the pursuer's
agents, and which formed the basis of the pursuer's averments (quoted above), would
strongly suggest otherwise. I am not persuaded that the pursuer's averments are so lacking
in specification as to be irrelevant or prejudicial to the trustee defenders. Had I considered
otherwise, I would have acceded to the pursuer's request to allow him to consider an
amendment. On balance, if I hold other elements of the pursuer's case to be relevant, the
existence and scope of the insurance policy may be one of the matters to be determined at
any proof or, more likely, at a preliminary proof.
[42]
I should briefly address the proper characterisation of any claim under the insurance
policy. In my view, the trustee defenders' prospective claim under the insurance policy is
properly characterised as a contingent liability, as that concept is understood in Scots law,
namely, as "an obligation whose enforceability is dependent on the occurrence of a future
29
event that may or may not occur": per Lord Drummond Young in Liquidators of the Ben Line
(The facts of that case are instructive as to just how contingent a contingent obligation may
be.) For present purposes, it suffices to note that Lord Drummond Young referred to an
insurance policy as the classic example of a contingent obligation (ibid, at paragraph 25) and
he held that it was sufficient for there to be a subsisting contingent liability, if there were
"some sort of obligation, normally either contractual or statutory" (ibid at paragraph 25). (In
that case, Lord Drummond Young rejected the noter's argument that the claim of the
pension fund trustees was not in existence prior to the winding up of the company,
notwithstanding that their claim depended on two amendments to the trust deed which
post-dated the commencement of the company's liquidation. He held it was a relevant
contingent liability, and so habile to found the pension trustees' claim in the company's
liquidation.) In this case, the contractual obligation is that embodied in the indemnity
insurance on which the pursuer relies (and whose averments I have held to be relevant) and
"the future event that may or may not occur" is the claim by the pursuer against a trustee
insured under the insurance. In other words, a relevant contingent obligation incumbent on
the insurers (and a correlative right of indemnification in favour of the trustees) subsisted at
the date of any (presumed) winding up of the Trust and which, for the reasons already
explained, may competently found the kind of constitutive action the pursuer wishes to
establish against the trustee defenders.
[43]
In relation to the other ground of challenge, I am persuaded that the maxim res inter
alios acta has no application in this case, for the simple reason that the pursuer is not making
a direct claim against the insurers. The pursuer is seeking to establish the vicarious liability
of the Serving Trustees for the alleged abuse by several of the lay teachers at the School, and
30
to call the last known trustees in these proceedings as the vehicle for satisfying any claim, if
established after proof, with a view to triggering their right to be indemnified against such
claims under any insurance policy.
[44]
That gives rise to the personal and vicarious liability issues, to which I next turn.
The question of the trustee defenders' personal liability and their reliance on section 3 of the
1921 Act and on the limited liability provision in the Trust Deed
[45]
Before turning to the vicarious liability issue, I should address the incidental
question of any personal or primary liability on the part of the trustees. As noted above, the
trustee defenders rely on section 3 of the 1921 Act and on the limited liability provision in
the Trust Deed as protecting them from the pursuer's claim, whether advanced against them
directly or via any vicarious liability on their part for the Serving Trustees. On this matter, I
accept as well-founded the submission of the pursuer's senior counsel that those provisions
exclude the trustee defenders' personal liability, and that they cannot exclude a liability
arising as a matter of law. Accordingly, those provisions have no application in a case
where, as here, the pursuer expressly does not sue the trustee defenders in their personal
capacities. This does not deprive section 3 or the limited liability provision of effect; those
provisions may be the natural counterbalance to the presumption that when trustees
contract, they do so in a personal capacity. (While the trustee defenders relied on that
presumption, as I understood it, in relation to the Serving Trustees' conduct, whether or not
they acted in their personal capacities in respect of the running of the School or the
employment of teachers is necessarily a matter for proof.) The trustee defenders' reading of
these provisions, if upheld, would lead to a remarkable result. Given that, generally, a claim
against a trust is made by calling all of the trustees in office (see Aitkenhead, ibid), the logic of
31
the trustee defenders' submission would mean that, if there were any change in the
composition of the body of trustees, an action would founder (if it necessarily had to be
advanced against the specific individual trustees). The same difficulty would arise in
respect of any contract entered into by the trustees qua trustees. Strictly, there is no legal
person in the form of a trust to be bound by the acts of the trustees, acting as individual
trustees or corporately, but there is no doubt that any liability established, eg in contract or
delict, would be met from the trust estate they administer. Although made in relation to a
finding of expenses (rather than of contractual or delictual liability), Lord President
Dunedin's observation in Merilees v Leckie's Trustees 1908 SC 576 at 579, that "a finding for
expenses against the trustees would carry liability against the trust-estate", is apposite.
[46]
As noted, the trustee defenders found on the proposition that, in the absence of
express stipulation to the contrary, trustees are personally liable to parties with whom they
transact (A Mackenzie Stuart, The Law of Trusts (1932), p358). If they were, then no question
of vicarious liability could arise. As I have indicated, this is not a matter that can be
determined at debate and the question of whether the Serving Trustees were acting in a
personal capacity would be an ancillary matter for any proof.
The vicarious liability issue
The pursuer's factual averments
[47]
The pursuer makes detailed averments of the circumstances in which he was
physically abused, thereafter groomed and then regularly sexually abused by the third
defender. He avers that he reported the abuse to the then headmaster, Father Davidson, but
he was told not to worry. Nothing was done. The pursuer also makes detailed averments
about the places where the abuse was said to have occurred (in the dormitory and in areas
32
where the third defender arranged to be alone with the pursuer). The pursuer also avers
that others reported abuse at the School at the time to the same headmaster:
"There were other allegations made against the third defender, and other monks at
Fort Augustus Abbey, of sexually abusing pupils at the school. In particular, another
pupil was sexually assaulted by the third defender in 1976. That other pupil told his
parents of the abuse when he returned home for the summer holidays that year.
That pupil's parents met with Father Davidson around September 1976 to discuss the
third defender's abuse of their son. Around that time the third defender returned to
Australia."
Notwithstanding the third defender's departure, Mr Owen then began to subject the pursuer
to abuse, as well as another pupil (whom he names in the pleadings). This included the
pursuer being taken off campus to an isolated cottage Mr Owen owned. This abuse
continued after the pursuer left the School, when Mr Owen would prevail upon him to stay
with him at a hotel in Inverness.
The pursuer's averments of fault
[48]
The pursuer's principal averments of fault are as follows:
"The pursuer's claim is based on common law. The sexual and physical abuse by the
third defender, the sexual abuse by Mr Owen, and the physical abuse by
Mr McDonald, all constituted assaults and intentional delictual wrongs. The first
and second defenders are vicariously liable for the sexual and physical abuse
perpetrated by monks and lay teaching staff, including the third defender and
Mr Owen, while the pursuer was a pupil at Fort Augustus. The perpetrators were
the employees of the trustees. They were appointed by the trustees. They were
put in a position of control over the pursuer by the trustees. The abuse by
Mr Owen after the pursuer had left Fort Augustus was a continuation of the abuse
that commenced while and because Mr Owen was a teacher at the school. The
conduct of Mr Owen after the pursuer left the school is indivisible from that which
occurred while the pursuer was a pupil at the school. The first and second
defenders are vicariously liable for Mr Owen's abuse of the pursuer after he left
the school. But for the earlier abuse, Mr Owen would not have been in a position to
continue it." (Emphasis added.)
33
I did not understand the trustee defenders to take issue per se with these averments of duty.
Their challenge is to the basis on which the pursuer purports to direct a case against the
Serving Trustees or against them, based on vicarious liability. The pursuer's averments of
primary duty directed against the Serving Trustees are in the following terms:
"Separatim the trustees, and their employee, Father Davidson (for whose acts and
omissions they are responsible), had a duty to take reasonable care for the health and
safety of pupils at the school and to avoid causing them unnecessary injury. They
had a duty to take steps to minimise the risk of pupils at the school suffering abuse.
They had a duty to devise, implement and enforce a system of supervision to ensure
that monks and teachers at the school were not able to spend time alone with pupils
at the school in circumstances where abuse could occur. They had a duty to put
procedures in place whereby pupils and others at the school could report concerns
about inappropriate behaviour. They had a duty to properly investigate any such
concerns. In each and all of these duties the trustees and Father Davidson failed and
by their failure caused loss to the pursuer. They failed to take any steps to minimise
the risk of pupils at the school suffering abuse. They failed to put any procedures in
place whereby pupils and others at the school could report concerns about
inappropriate behaviour. They did not take reasonable care to ensure that staff
employed at Fort Augustus were properly supervised when they worked with
children. They did not properly respond to allegations of sexual abuse by the third
defender that had been made by the pursuer and others, namely, the parents of the
other pupil hereinbefore condescended upon. They failed to take steps to properly
investigate the extent of abuse at the school after the allegations against the third
defender were made and whether any procedures to prevent or minimise the risk of
staff abusing pupils were effective. Any reasonable and prudent persons involved
in running a boarding school would have taken such steps, because such steps were
obvious, in particular, after allegations of sexual abuse of pupils had been made."
The pursuer's averments of vicarious liability and the trustee defenders' calls
[49]
The pursuer's averments of vicarious liability of the trustees are as follows:
"The trustees were involved in the running of the school. They exercised control over
the running of the school. They had power under the trust deed to enter into any
contract or agreement, or to do any other act relative or incidental to or necessary
for the performance or attainment of any purpose and object of the trust, including
the running of the school. They appointed the head master of the school. The
trustees employed teachers at the school. The school was a fee-paying school. It was
run as a business."
[50]
The defenders make the following calls on the pursuer to aver and vouch:
34
"(i) the basis upon which it is asserted that the trustees of the St Benedict's Abbey
Trust exercised control over the running of the school;
(ii) the basis upon which the said trustees appointed the headmaster of the school;
(iii) the basis upon which trustees employed teachers at the school."
The trustee defenders' challenges to the relevancy of the pursuer's averments of vicarious liability
[51]
The trustee defenders submit that the pursuer's averments of vicarious liability are
also irrelevant and lacking in specification. They note the observations of Lord Phillips of
Worth Matravers in Various Claimants v Catholic Child Welfare Society [2012] UKSC 56,
[2013] 2 AC 1 ("Catholic Child Welfare Society") (at paragraph 19) that "[t]he law of vicarious liability
is on the move". They trace how far it has moved under reference to two recent cases of the
UK Supreme Court in Various Claimants v Wm Morrison Supermarkets plc [2020] UKSC 12,
[2020] 2 WLR 941 ("Wm Morrison Supermarkets plc") and Various Claimants v Barclays Bank plc
following observations of Baroness Hale of Richmond in (paragraph 1 of) Barclays Bank plc:
"Two elements have to be shown before one person can be made vicariously liable
for the torts committed by another. The first is a relationship between the two
persons which makes it proper for the law to make the one pay for the fault of the
other. Historically, and leaving aside relationships such as agency and partnership,
that was limited to the relationship between employer and employee, but that has
now been somewhat broadened. That is the subject matter of this case. The second
is the connection between that relationship and the tortfeasor's wrongdoing.
Historically, the tort had to be committed in the course or within the scope of the
tortfeasor's employment, but that too has now been somewhat broadened. That is
the subject matter of the Wm Morrison case."
Subsequent cases apply the two-stage test descried in this passage.
[52]
The trustee defenders submit that there has never been any relationship between the
pursuer and the trustee defenders, who cannot be liable for the acts and omissions of the
third defender, or of the lay teachers. They submit that, in any event, even assuming that
35
the trustee defenders are liable for the acts and omissions of their predecessor trustees, and
that the predecessor trustees employed the third defender, Mr Owens and Father Davidson
qua trustees (but about which they submit the pursuer does not give fair notice), the pursuer
does not give fair notice of a sufficiently close connection between the Serving Trustees and
the third defender, Mr Owens and Father Davidson to found vicarious liability. Reference
was made to Wm Morrison Supermarkets plc at paragraphs 24, 25, 31, 35 and 36 and BXB v
WLR 42 ("BXB"), though not to any particular passage in the latter case.
The pursuer's reply
[53]
The pursuer accepts that there never has been any relationship between the pursuer
and the trustee defenders in their personal capacity. But he submits it is incorrect with
regard to the trustee defenders qua trustees. As the pursuer submits is clear from his
pleadings (especially article 2 of condescendence), he offers to prove amongst other things
that:
1)
The Serving Trustees had powers, duties and responsibilities in respect of the
management of the Abbey and the School;
2)
They were involved in the running of the School and they exercised control
over the running of the School;
3)
They appointed the headmaster of the School; and
4)
They employed teachers at the School.
The pursuer submits that these averments are capable of meeting the test for vicarious
liability set out in The Catholic Child Welfare Society and others, and more recently in
36
Wm Morrison Supermarkets and Barclays Bank plc [2020] 2 WLR 960. Whether the test is
actually met will of course be a matter for the court after hearing evidence.
Consideration of the vicarious liability issue
[54]
In this case, the pursuer relies on two different sets of relationships in which he
wishes to hold one party "responsible" (putting that in the most general sense) for another.
1)
The first of those relationships is as between the trustee defenders and the
predecessor trustees, particularly the Serving Trustees. The pursuer's
case is that the trustee defenders may be accountable as the last known
surviving trustees for the liabilities incurred by their predecessors by a
combination of (i) the trust patrimony analysis and (ii) the obligation of
the trustee defenders qua trustees to meet any liability incurred by the
predecessor trustees out of any trust estate available to them (including a
right to be indemnified under any insurance policy). While the trustee
defenders treat that as a question of vicarious liability, it respectfully
seems to me that the better analysis is that this is a liability arising from
the trustee defenders' status as trustees and is more in the nature of a
representative liability incurred by that status, not a vicarious one judged
in relation to the alleged abusers; and
2)
The second relationship, of the liability of the Serving Trustees for the acts
and omissions of the headmaster and of the pursuer's alleged abusers, is
properly one involving vicarious liability, in the sense discussed in the
several Supreme Court cases referred to.
37
The parties did not refer the court to any cases involving attribution of vicarious liability to
trustees, or any Scottish case in which the dicta in the recent Supreme Court cases on
vicarious liability have been applied. It is not surprising, therefore, that in submissions there
was at times some conflation of these different relationships, which is why I have
endeavoured to distinguish them. In my view, the vicarious liability issue only properly
arises in the second scenario. To the extent that the pursuer may have relied on the concept
of vicarious liability in the first type of relationship, this would, in my view be erroneous in
law. However, I understood the pursuer's senior counsel to rely on the kind of
representative liability to which the first relationship gives rise. As he submitted, the trustee
defenders' liability "arises ex officio". I accept that submission as well-founded in law.
[55]
In considering the vicarious liability issue and the trustee defenders' challenge to the
relevancy of the pursuer's case, I have had regard to the recent cases in the Supreme Court.
As is clear from the passage the trustee defenders cited from Barclays Bank, the attribution of
vicarious liability is approached in two stages: stage 1 examines the relationship between
the two persons which make it proper for the law to make one liable for the fault of the other
("the tortfeasor"). Conventionally, an employer will be vicariously liable for the acts of his
or her employee (assuming stage 2 is also met), whereas generally no vicarious liability of an
employer will arise for the tortious acts of an independent contractor. In expanding the
scope of relationships that may fall within stage 1, the courts have looked for a relationship
"sufficiently akin to employment" (the approach used, for example, in E's case [2013] QB 722
to hold the trust (in place of a bishop) liable for alleged abuse of a priest). Stage 2 focuses on
the connection between that relationship and the tortfeasor's wrongdoing. Classically, that
has been approached by asking whether the tortfeasor's conduct was within the scope of his
or her employment.
38
[56]
While the trustee defenders rely on the passage from Barclays Bank plc (quoted
above), that case concerned whether the defendant Barclays Bank was vicariously liable for a
GP who undertook medical assessments and examinations of employees or prospective
employees of Barclays Bank and whom the various claimants alleged sexually assaulted
them during such examinations. It was not a case of vicarious liability arising in the
paradigmatic case of employer and employee: the issue was whether the circumstances were
such that the GP was within the "somewhat broadened" scope of the employer-employee
relationship for the purposes of stage 1. (The Supreme Court held that the GP did not fall
within the ambit of such a relationship and Barclays Bank was, accordingly, not vicariously
liable for his assaults.)
[57]
On the same day that the Supreme Court issued Barclays Bank it also issued William
Morrison Supermarkets plc. Lord Reed PSC, giving the judgment of the Court in the latter,
summarised the formulation of the stage 2 test (at the beginning of paragraph 23) and
observed:
"As Lord Philips noted in Catholic Child Welfare Society [2013] 2 AC 1, paras 83 and 85,
the close connection test has been applied differently in cases concerned with the
sexual abuse of children, which cannot be regarded as something done by the
employee while acting in the ordinary course of his employment. Instead, the courts
have emphasised the importance of criteria that are particularly relevant to that
form of wrongdoing, such as the employer's conferral of authority on the
employee over the victims, which he abused." (Emphasis added.)
A little further on in that case (at paragraph 36), Lord Reed emphasised the difference
between the stage 2 test in its application to sexual abuse cases, where "a more tailored
version of the close connection text is applied" (emphasis added).
[58]
That more tailored test was applied by Chamberlain J in BXB (reported at first
39
concerned the rape of an adult victim (who was a member of a congregation of Jehovah's
Witnesses) by an elder of that church. After proof, Chamberlain J found that both stages for
vicarious liability were met. The Court of Appeal upheld that decision, describing his
analysis of the role of elder within the Jehovah's witnesses' organisation as "searching" and
his findings "compelling". In doing so, it referred to and applied Lord Reed's observations
in Wm Morrison Supermarket plc (see paragraphs 83 and 92, per Nicola Davies and Males LJ,
respectively) of the tailored test to be applied in sexual abuse cases. As Nicola Davies LJ
stated (at paragraph 84), "[c]ontained within the tailored test in cases of sexual abuse is the
concept of conferral of authority upon the tortfeasor by the defendant" (emphasis added).
Nicola Davies LJ regarded the rationale underpinning that tailored test to be the same,
whether the victim was a child or an adult, because the issue "is the connection between the
abuse and the relationship between the tortfeasor and the defendant. It is not the particular
characteristics of the victim".
[59]
In my view, the pursuer has pled a sufficient case of vicarious liability of the Serving
Trustees for the alleged assaults by the third defender and the lay teachers to go to inquiry.
The trustee defenders' submission that the pursuer fails to aver a "close connection" fails to
take into account the more tailored test (as explained by Lord Reed in Wm Morrison
Supermarkets Ltd Plc) to be applied in this kind of case. The pursuer's averments about the
Serving Trustees' appointment of the headmaster and of the lay teachers is sufficient to
instruct a case that, in so doing, they "conferred authority" on those individuals with the
consequence that, if those individuals abused their position, the Serving Trustees might be
held vicariously liable for their actions. The appointment of teachers and, above them a
headmaster, is almost self-evidently the conferral of authority on those individuals,
understood in the context of a boarding school run in the 1970s by a religious order
40
belonging to a church which valued hierarchy as a hallmark of authority. In any event, in
his averments the pursuer describes being a boarder, the arrangement for sleeping in dorms
and the fairly regimented life of the School. This included the lay teachers' powers to favour
boys (eg by being made an altar boy or being added to the "social list" enabling those listed
to enjoy the privilege of teas in the third defender's offices) or arbitrarily to punish them.
The latter included canings, humiliating punishments in front of the other pupils and
beatings. These features the pursuer describes are capable of reinforcing the authority
conferred on the teachers to control these aspects of their pupils' lives. Applying the more
tailored test described by Lord Reed, which is the correct test to be applied in a case such as
this, I hold that the pursuer's averments of vicarious liability on the part of the Serving
Trustees for the lay teachers and the headmaster are sufficiently specific and relevant to go
to proof.
The limitation issues
Preliminary observations
[60]
In addressing this matter I bear in mind the observations of Lady Carmichael in B v
Sailors' Society [2021] CSOH 62 ("B v Sailors' Society") (at paras [209]ff), that the effect of the
amendment to the 1973 Act to introduce section 17D (part of a suite of provisions to
accommodate claims for historic sex abuse) was to effect a significant change in the law and
that the policy considerations that arose under section 19A of the 1973 Act fall away. Those
observations are undoubtedly correct. The parties recognised this and shortly before the
debate they deleted averments which reflected the limitation provisions prior to their
amendment and they removed the cases decided under the unamended provisions of the
1973 Act from the bundles of authorities. I also gratefully adopt the analysis of features of
41
the new limitation provisions undertaken by Chamberlain J in JXJ (at paragraph 101), read
subject to the refinements Lady Carmichael made to that analysis (at para [240] of B v Sailors'
Society). Those refinements were, in short, to place little reliance on the cases under
section 19A as offering any assistance on the issue of whether a fair trial is possible or on the
formulation of the nature of prejudice in the pre-amendment case law. I do note that the
judgements in JXJ, BXB and B v Sailors' Society all followed an evidential hearing.
The trustee defenders' submissions
[61]
The trustee defenders aver that the pursuer's case is time-barred. They invoke both
section 17D(2) and 17D(3) of the 1973 Act and contend, as free-standing lines of defence,
that it is not possible for a fair hearing to take place (for the purposes of section 17D(2)) or
that, having regard to all of the relevant circumstances; and in any event, the court should be
satisfied that the defender is prejudiced and that prejudice is such that the pursuer's action
should not proceed (on the application of both elements of subsection 17D(3)).
[62]
The trustee defenders rely on a variety of factors, namely: that, due to the passage of
time, records have been lost or destroyed (more than 40 years having passed since the
pursuer left the School), the closure of the School and the Community decades ago, and the
winding up of the Trust. They aver that they have been unable to find contemporaneous
records relating to the running of the School. Such contemporaneous documentation
recovered is ambiguous. Their researches have been exhausted. Even if more
documentation were recovered, this could only represent part of the total picture.
Moreover, potentially material witnesses have died. The memories of any surviving
witnesses are likely materially to have deteriorated. By the time the first defender was a
trustee, which was only for a year (from late 1999 to late 2000), the School had been closed
42
and the Trust was being wound up. The second defender, who was a medical doctor before
he was a monk, avers that likewise he was not a trustee at the material time or when the
Trust was wound up and that he ceased to have any involvement in the affairs of the Trust
after it was wound up in 2010 or 2011. All of those accused, apart from the third defender,
are dead. The trustee defenders cannot investigate the pursuer's claim; they cannot prepare
for proof. They cannot speak to the dead to see what the arrangements were. They are
radically compromised. The Serving Trustees might say that they were not involved and
that this was dealt with by the Board of Governors. Senior counsel accepted that a balance
had to be struck but this should still result in dismissal against the trustee defenders. The
pursuer has an alternative remedy in the form of an action against the third defender. In
any event, they cannot get a fair hearing. The trustee defenders also made extensive calls
upon the pursuer inter alia about the chronology of the allegations, the dates on which he
sought advice or otherwise claimed compensation.
The pursuer's position
[63]
The pursuer avers the name of Scottish agents who had formerly acted for the
trustees and the Community at Fort Augustus. He also avers that when the School and
Abbey closed records relating to the School, the Trust and the Community were transferred
to the Scottish Catholic Archives, to the English Congregation in Bath and the Scottish
solicitors in Edinburgh. In any event, the pursuer resists the trustee defenders' motion for
dismissal at this stage contending, under reference to Transco Plc v HMA 2005 1 JC 44, that a
very high degree of certainty (an "inevitability") much be reached if a court is to determine
in advance that a proof or trial will breach fair trial rights under Article 6 of the ECHR.
43
Consideration of the limitation issues
[64]
I prefer the pursuer's submission on the limitation issues. It is enough to say at this
stage that I am not persuaded that the court could conclude on the basis of submissions at
debate, that any proof in this case will necessarily or (to apply the formulation in Transco)
`inevitably' breach the trustee defenders' right to a fair trial, or that the trustees have
discharged the onus they bear on this issue. It is not possible at this stage to come to any
concluded view on these matters. As noted above, there is an outstanding specification.
There appear to be repositories of papers which exist but which appear not to have been
examined. Furthermore, in this case, there was a very recent indictment and conviction of
the third defender. It may be that those cited as witnesses in the criminal proceedings, or
who contributed to the TV programme of 2013 mentioned in the pursuer's pleadings, might
be identified and (if willing) be precognosed. There may as yet be unexhausted avenues of
enquiry.
[65]
Even if the trustee defenders' plea under section 17D(2) were not upheld after a
preliminary proof, for the reasons explained by Lady Carmichael in B v Sailors' Society, the
court remains under an obligation throughout the determination of the case to ensure that
the trustee defenders' fair trial rights are respected. That continuing obligation can be seen
as further militating against making a determination for the purposes of section 17D(2) of
the 1973 Act at debate or in advance of any preliminary proof.
[66]
Given the balancing exercise inherent in the assessment of whether the trustee
defenders are prejudiced, and whether any prejudice is such that the pursuer's action should
not proceed (for the purposes of Section 17D(3)), it is also not possible to form a concluded
view on this second limitation issue in the absence of evidence. As noted above, the
upholding of the defendant's or defenders' limitation defences under section 17D of the 1973
44
Act in JXJ, BXB and B v Sailors' Society followed a full evidential hearing (in JXJ and BXB) or
a preliminary proof (in B v Sailors' Society). I did not understand the trustee defenders to
resist some form of evidential hearing, if the pursuer's case were otherwise relevant.
Accordingly, in relation to the limitation issues, those cannot be resolved without an
evidential hearing and the trustee defenders' relative pleas-in-law are reserved.
Decision and further procedure
Decision
[67]
I have held that the trustee defenders' relevancy challenges are ill-founded and that
critical matters affecting some of the legal foundations of the pursuer's case require proof
(eg the questions of whether the trustee defenders have been discharged or whether the
Trust has been wound up).
Further procedure
[68]
As noted above, the pursuer moved for proof. However, I note that B v Sailors'
Society followed a preliminary proof. I was also referred to the decision of the Sheriff
Appeal Court ("the SAC") in M v DG's Executor [2021] SAC (Civ) 3, 2021 SLT (Sh Ct) 87 ("M
v DG's Exectutor"), in which the SAC recalled the sheriff's allowance of a proof and ordered
a proof before answer. While it is likely to be expedient for limitation issues to be resolved
at a preliminary proof, rather than held over (as the sheriff in M v DG's Executor sought to
do), I am not persuaded that it is correct that the issue of a fair hearing "cannot be held over
until the end of a proof" (per the SAC in M v DG's Exectutor at para 15). Insofar as a
defender invokes section 17D(3), it respectfully seems to me that, having regard to the
statutory language, that kind of limitation issue must be determined in limine. However, for
45
the reasons set out in Lady Carmichael's opinion in B v Sailors' Society, whether or not a
defender's fair trial rights (for purposes of section 17D(2)) are respected may remain a live
issue throughout a proof. (Of course, a proof would not follow if a court were able to
conclude in advance that fair trial rights would necessarily be breached by any trial.) In this
case, it is likely that a preliminary proof is the appropriate next step. It may also be
appropriate to include in a preliminary proof critical issues of fact, including the issue of
whether trustees were acting in a personal capacity, whether the Trust was wound up and,
possibly, the mechanics of how an action such as this might proceed against trustees (a
matter on which the court was not addressed). However, as parties made no submissions
on these matters, it is right that I allow parties an opportunity to address the court on the
scope of the preliminary proof to follow.
[69]
I reserve all question of expenses meantime. It remains for me to thank Counsel for
well-presented and careful submissions on certain novel points which may be of some
practical importance.
