Isaacs' Judicial Factor v Isaacs
| Jurisdiction | Scotland |
| Judgment Date | 18 January 1935 |
| Docket Number | No. 25. |
| Date | 18 January 1935 |
| Court | Court of Session (Inner House - First Division) |
1ST DIVISION.
SuccessionLegaciesAbatementAbatement of annuitiesWhether annuitants entitled to receive payment of capitalised value of annuities as abated, or termly payments out of such capitalised value.
A testator left a number of legacies and certain annuities. The annuities were directed to be paid monthly, and were not declared to be alimentary. His estate proved to be insufficient to meet all these provisions in full, and it was necessary for them to suffer proportional abatement. In order to effect this in the case of the annuities, the capitalised value of each, as at the date of the testator's death, was ascertained, and an abatement was made upon this sum proportionate to the abatement suffered by the legacies.
The judicial factor who was administering the estate proposed to retain the sum represented by the capitalised value of each annuity as abated, and to make therefrom to each annuitant monthly payments at the rate of the full annuity until the sums were exhausted.
Held that the annuitants were entitled to receive immediate payment of the whole sums representing the capitalised value of their annuities as abated.
John Alexander Scott, C.A., Edinburgh, judicial factor upon the trust-estate of the deceased Harry Isaacs, presented a petition under the Administration of Justice (Scotland) Act, 1933 (23 and 24 Geo. V. cap. 41), section 17 (vi), and the Rules of Court, 1934, Chap. IV. Rule 41, craving the Court "to give such directions to the petitioner on the questions stated in the petition, relating to the distribution and management of the trust-estate, as to your Lordships shall seem proper."
The petition set forth, inter alia, that the late Harry Isaacs, who died on 16th March 1932, had, by his trust-disposition and settlement, bequeathed a large number of legacies, and had also left to each of his sisters, Miss Catherine Isaacs and Miss Rosie Clara Isaacs, an annuity (not declared to be alimentary) of 500 free of estate and legacy duties and of income tax, the annuities being payable in monthly instalments. The settlement also contained a bequest of the residue. The total amount of the legacies and of the capitalised value of the annuities amounted to about 64,000. The estimated free residue of the estate, after paying debts and Government duties, was 29,000. It was accordingly necessary for the bequests to be abated.
The petitioner referred to certain difficulties which had arisen in the course of ingathering the estate, and stated that the amount ingathered as at 31st May 1934 was sufficient to provide for an interim payment to the beneficiaries of the sum of 5071, 8s. 10d., being equivalent to a distribution at the rate of 1s. 7d. per on their claims. This sum included legacy duty on the bequests, and income tax. He stated that an interim scheme of division had been prepared and approved by the Accountant of Court.
After referring to objections to the scheme of division on the part of another beneficiary, the petition further set forth: "12. As regards the Misses Catherine and Rosie Clara Isaacs the petitioner adopted, for the purpose of said scheme of division, the figures of 8385, 16s. 8d. and 9195, 11s. 1d., which had previously been suggested to him on the Misses Isaacs' behalf as the respective capital values of their annuities. After adding interest, income tax, and legacy duty, the gross capital sums applicable to the Misses Isaacs' annuities for the purpose of ranking are brought out in said scheme of division at 9981, 16s. 11d. and 10,946, 15s. 2d. respectively, the gross pro rata shares in the proposed interim distribution at 790, 4s. 7d. and 866, 12s. 4d. respectively, and the net pro rata shares applicable to said annuities at 495, 19s. 6d. and 552, 4s. 5d. respectively. The petitioner is advised that the pro ratashares of the estate attributable, on the occasion of each interim distribution, to the Misses Isaacs' annuities should, having regard to the terms of the bequests in their favour, be held by him, and that there should be paid therefrom (a) to each of them until her death or until her said pro rata shares are exhausted the sum of 41, 13s. 4d. per month, commencing as at one month after the truster's death, plus interest on the arrears of said monthly payments at the rate of 5 per cent, and (b) to the Inland Revenue the appropriate income tax on said monthly payments and interest on arrears. As said net shares in the proposed interim distribution attributable to the Misses Isaacs' annuities respectively amount to less than the total amount of the arrears of said annuities (with interest on arrears) to the date of said scheme of division, said net shares would be payable to the Misses Isaacs in full. While certain general criticisms of the scheme of division have been made on behalf of the Misses Isaacs, the petitioner has not been informed of what exactly the Misses Isaacs' objections are. They have, however, contended that they are entitled to receive immediate capital sums as opposed to periodical annuity payments, and this the petitioner believes to be their main objection. The petitioner is advised that the Misses Isaacs cannot require the appropriation to them of the capital values of the annuities, since they would thereby obtain a preference over the general legatees and affect the contingent rights of the residuary legatee. The petitioner has offered to meet the Misses Isaacs' advisers to discuss the scheme of division and any questions of difficulty arising thereon, but advantage has not been taken of this offer. It has, since said scheme of division was issued, been suggested to the petitioner on behalf of [one of the legatees] and the said Misses Isaacs that interim payments should be made to them without prejudice, but this the petitioner has, with the approval of the Accountant of Court, refused to do, as he considers that it would be improper for him to proceed with any...
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