Club Los Claveles v First National Trustee Company Ltd
| Jurisdiction | Scotland |
| Judge | Lord Armstrong |
| Judgment Date | 16 June 2020 |
| Neutral Citation | [2020] CSIH 33 |
| Date | 16 June 2020 |
| Docket Number | No 31 |
| Court | Court of Session (Inner House) |
[2020] CSIH 33
First Division
Lord Armstrong
Mackenzie's Exr v Thomson's Trs 1965 SC 154; 1965 SLT 410
Moness Country Club v First National Trustee Co Ltd [2013] CSOH 188; 2014 GWD 15283
Sharp v Thomson 1997 SC (HL) 66; 1997 SLT 636; 1997 SCLR 328; [1998] BCC 115; [1997] 1 BCLC 603
Ted Jacob Engineering Group Inc v Robert Matthew, Johnson-Marshall & Partners [2014] CSIH 18; 2014 SC 579; 2014 SCLR 454; 2014 GWD 29–570
Gloag, WM, and Henderson, RC, The Law of Scotland (14th ed, W Green, Edinburgh, 2017), para 41.08
Gretton, GL, ‘Trusts’ in A History of Private Law in Scotland (Reid and Zimmerman ed, Oxford University Press, Oxford, 2000), vol I, pp 488, 489, 506
Wilson, WA, and Duncan, AGM, Trusts, Trustees and Executors (2nd ed, W Green/Scottish Universities Law Institute, Edinburgh, 1995), paras 22.17, 22.37
Trust — Administration of trust — Trustee appointed by pursuers to hold heritable property on behalf of timeshare holders — Pursuers seeking to terminate appointment of trustee by giving notice — Whether, in absence of appointment of new trustee, defenders continued as trustee
Process — Pleadings — Relevancy — Whether pursuers entitled to remedies against defenders
Club Los Claveles and members of its management committee raised an action in the Court of Session against First National Trustee Co Ltd for declarator, accounting and implement. The cause called before the Lord Ordinary (Armstrong) for debate on the procedure roll. On 30 September 2019, the Lord Ordinary refused the defenders' motion for dismissal, sustained in part both parties' pleas to relevancy and specification and allowed a proof before answer ([2019] CSOH 66). The defenders reclaimed.
The Trusts (Scotland) Act 1921 (11 & 12 Geo 5 cap 58), sec 3(1), provides that a sole trustee cannot resign without assuming a new trustee.
The pursuers, an unincorporated association represented by their management committee, were established by constitution and trust deed. The defenders were appointed by the pursuers to hold, as trustee, heritable property in Spain on behalf of timeshare holders. By letter dated 23 May 2012, the pursuers intimated their intention to terminate the defenders' appointment as at 1 December 2012. The pursuers drafted a deed of retirement. The defenders contended that they were entitled to indemnities and a discharge. The pursuers' deed of retirement was not executed. No other entity was assumed as trustee.
The pursuers raised an action: for declarator that the defenders' appointment as trustee had terminated as at 1 December 2012; for an accounting from the defenders; for specific implement ordaining the defenders to execute a deed of retirement, assumption and conveyance; and for declarator that a register of members formed part of the pursuers' property. The Lord Ordinary held that certain averments should be excluded from probation and allowed a proof before answer. The defenders reclaimed.
The defenders argued that the Lord Ordinary erred in failing to dismiss the action as irrelevant because the defenders' appointment as trustee had not terminated in the absence of an assumption of a new trustee.
The pursuers contended that the defenders' mandate had terminated, and termination of the defenders' mandate did not obviate the requirement for the defenders to execute a deed of retirement.
Held that: (1) the correct interpretation of the trust deed was to distinguish between termination of the trustee's appointment and termination of the trust (para 35); (2) the Lord Ordinary erred in holding that the effect of the pursuers' notice was to terminate the defenders' appointment as trustee in the circumstances where no other party had been assumed as trustee (para 36); (3) declarator that the defenders' appointment had terminated as at 1 December 2012 was not appropriate, but that did not justify dismissal of the action; (para 37); (4) the trust deed contained no obligation on the pursuers to provide additional indemnities to the defenders beyond those provided for under the trust deed (para 38); (5) the register of members was part of the pursuers' property and, thus, the pursuers' pleadings in support of the conclusion of declarator were not irrelevant (para 39); (6) while it was not a competent remedy for the pursuers' second and third conclusions to have been excluded from probation, the Lord Ordinary had been correct to decline to dismiss the action in its entirety and his subsidiary decisions on relevancy had been sound (para 40); and reclaiming motion refused.
Moness Country Club v First National Trustee Co Ltd 2014 GWD 15–283 approved.
The cause called before the First Division, comprising the Lord President (Carloway), Lord Woolman and Lord Doherty, for a hearing on the summar roll, on 24 April 2020.
At advising, on 16 June 2020, the opinion of the Court was delivered by the Lord President (Carloway)—
Opinion of the Court—
[1] In this reclaiming motion (appeal) the defenders seek the recall of an interlocutor of the Lord Ordinary dated 30 September 2019 ([2019] CSOH 66). The Lord Ordinary sustained in part both parties' pleas to the relevancy and specification and determined that certain averments (and curiously two conclusions) should be excluded from probation. He refused the defenders' motion to dismiss the action and allowed a proof before answer.
[2] In general terms, the action concerns the efforts of a time share organisation to terminate the appointment of the trustee of the property which is held on behalf of the time share holders. The Lord Ordinary rejected the pursuers' case, in so far as it related to the second and third conclusions for count, reckoning and payment. The pursuers do not seek to revisit that part of the decision. The remaining conclusions are: (first) for declarator that the defenders' appointment as trustee terminated on 1 December 2012; (fourth) for specific implement in terms of a deed of trust (infra) by ordaining the defenders: (a) to execute a deed of retirement, assumption and conveyance which transfers the property, including shares in five companies, to a new trustee; and (b) to deliver all lists of members to the pursuers; and (fifth) for a declarator that all copies of the register of members, or lists of members and their contact details, are ‘Property’ in terms of the deed. The defenders have declared a willingness to resign and transfer what might be said to constitute property, but only if they are provided with certain indemnities.
[3] Both parties produced draft deeds of retirement etc. The pursuers' version states, inter alia, that:
‘(4) The Committee on behalf of each and all of the members of the [pursuers] HEREBY DISCHARGES the [defenders] from the trusts of the Deed of Trust subject to the transfer of title to the Property to the New Trustee and the indemnities contained herein’.
There are no indemnities in the pursuers' draft. The reference to them in cl (4) is a relic from an earlier draft prepared by the defenders.
[4] The defenders' draft contains a discharge but includes an indemnity of the defenders by the founder members, the pursuers and the new trustee:
‘(10) … against all claims actions proceedings charges (including … charges to tax and breaches of Spanish and/or United Kingdom legislation …) fees costs liabilities and expenses to which it may be entitled or which may result from or be incurred in connection with the performance by the [defenders of their] duties under the Deed of Trust and transfer of Property to the New Trustee and to keep the [defenders] fully indemnified against all losses, claims, demands, taxes, actions, damages, costs and expenses made or incurred in connection with the [pursuers] and/or in connection with the Property or in any other way in connection with the Deed of Trust’.
There was an additional requirement to secure a direct indemnity in similar terms from the new trustee.
[5] The pursuers are an unincorporated association which was established by a constitution dated 5 April 1990 and amended in July 2014. The object of the pursuers is to secure for their members rights of occupation, on a timeshare basis, of some 105 villas and apartments at the Los Claveles resort in Los Cristianos, Tenerife. The original timeshare holders or their successors have real rights in the properties under the Spanish escritura system. They amount to some 15 per cent of the total. They are members of the development owners' association (‘DOA’) which controls the common parts to the resort and authorises relevant expenditure. Later timeshare holders have no real rights. They are members of the pursuers but ownership of the properties which they occupy, ie 85 per cent, vests in five limited companies who...
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