Macnaughton v Macnaughton's Trustees
| Jurisdiction | Scotland |
| Judgment Date | 25 May 1954 |
| Docket Number | No. 46.,No. 35. |
| Date | 25 May 1954 |
| Court | Court of Session (Inner House - Second Division) |
2ND DIVISION.
Lord Walker.
SuccessionElectionClause of forfeitureLiferent of residue to testator's children with fee to issue of children and predeceasing childrenAny child claiming legitim to forfeit provisions in favour of himself and issueDestination-over to remaining children and issueEffect of all children's claiming legitimTestacy or intestacy.
By his trust disposition and settlement a testator, who was survived by all his children, one of whom had issue, directed his trustees to hold the residue of his estate for his children in liferent in certain proportions, the fee being destined in corresponding proportions to the children's issue, with sundry provisions as to survivorship and vesting. The settlement contained a declaration that the provisions in favour of his children should be accepted by them as in full satisfaction of their legal rights and that any of them who claimed their legal rights should forfeit all rights under the settlement not only for themselves but for their issue, with a destination-over of the forfeited rights to make compensation in the first place to the beneficiaries accepting the settlement, the balance to accresce for the benefit, in the proportions specified, of the children accepting the settlement and of the issue of any predeceasing children.
In an action brought by the children for declarator that, in the event of their all electing to claim legitim, the testator's residue would fall to be divided as if he had died intestate,
Held (rev. judgment of Lord Walker) that, there being no beneficiaries in whose favour the forfeiture clause could operate if all the children claimed legitim, the foifeiture clause would not in that event take effect; and consequently that the residue remaining after payment of the legitim would fall to be held by the trustees for the benefit of the children's issue in terms of the settlement and would not fall into intestacy; and the action dismissed.
Gillies v. Gillies's TrusteesUNK, (1881) 8 R. 505, andHannah's Trustees v. Hannah, 1924 S. C. 494,commented on and applied.
(Sequel to case reported 1953 S. C. 387.)
Blair Alan Macnaughton (hereinafter called "the testator")died on 1st March 1951, survived by his four children. His marriage had been dissolved by divorce on 30th May 1947 and his wife had discharged her legal rights. He left a trust disposition and settlement, dated 17th December 1948, whereby he assigned and disponed his whole estate to trustees, and provided, by the third purpose, as follows:"(Third) I direct my trustees to hold the residue of my means and estate for the liferent use only and in the proportions aftermentioned to such of my children as shall respectively survive me and attain the age of twenty-one years, namely:Blair Charles Macnaughton, a liferent of one-sixth, Patricia Jean Macnaughton, a liferent of one-sixth, Margaret Anne Macnaughton, a liferent of one-third, and Eileen Mary Macnaughton, a liferent of one-third: Declaring that in the event of any of my said children either failing to survive me or to reach the age of twenty-one years but leaving issue, then such issue shall succeed in fee to their parent's share original and accrescing equally among them per stirpes if more than one, but no rights shall vest in any child or issue unless he or she survives me and attains the age of twenty-one years; and further Declaring that in the event of any of my said children predeceasing me, or surviving me, but dying before they attain a vested interest in their respective liferents without leaving issue, then the share which would have been liferented by such predeceasing child had he or she survived me or attained the age of twenty-one years shall be divisible in liferent among my remaining surviving children, and in fee to their issue, if any, and the issue of any predeceasing child in such proportions as shall result in my daughters Margaret Anne and Eileen Mary, or the survivor or their issue should they or either of them or their respective issue survive the respective dates of vesting, receiving a share in liferent or fee respectively equal to twice that received by either Blair Charles or Patricia Jean in liferent or their respective issue in fee: Declaring also that in the event of the decease of any of my children after they have become vested in their respective liferents, then the share of the residue of my estate liferented by such deceased child shall be payable to his or her issue and in such proportions as he or she may appoint by any writing under his or her hand, and, failing appointment, then equally among his or her children in fee: Declaring that the shares of residue of my estate falling to the children of my son or daughters shall not vest in them until the termination of the liferent thereof, upon which event the same shall then become vested: In the event of my son or any of my daughters remaining unmarried or not leaving issue, then on their respective deaths their shares shall accresce for the benefit in the proportions above stated to my surviving children and the issue of any predeceasing children, the issue of any predeceaser, failing appointment as aforesaid, taking equally among them what would have fallen to the parent if alive: Declaring that the provisions hereby made in favour of my children shall be accepted by them as in lieu and in full satisfaction of their legal rights; and in the event of any of them claiming their legal rights they shall forfeit not only for themselves but also for their issue all rights, interests and benefits under this settlement; all which forfeited rights, benefits and interests shall thereupon be first applied to compensate any loss which such claims shall entail upon the beneficiaries accepting these presents, and the balance remaining of such forfeited rights, benefits and interests thereafter shall accresce for the benefit in the proportions above stated to my other surviving children who shall accept the provisions hereby made and the issue of any predeceasing children: "
On 5th August 1952 the testator's four children, of whom the eldest was married and had then two pupil children, and the remaining three were unmarried, the youngest being still in minority, brought an action for declarator "that in the event of all the pursuers electing to claim their legal rights in lieu of the provisions in their favour contained in the trust disposition and settlement of their father, the late Blair Alan Macnaughton , the whole provisions in the said trust disposition and settlement in favour of the pursuers and their issue shall be forfeited and the residue of the said Blair Alan Macnaughton's estate shall fall to be divided as if he had died intestate."
The defenders called were (1) the testator's trustees, and (2) the pupil children of the testator's eldest child. Both the first and the second defenders lodged defences.
The pursuers pleaded:"(1) Since on a proper construction of the trust disposition and settlement the pursuers and their issue would forfeit all rights, interests and benefits thereunder in the event of the pursuers all electing to claim their legal rights, and the residue of the testator's estate would accordingly fall into intestacy, decree should be pronounced in terms of the first conclusion of the summons. (2) The defences being irrelevant and lacking in specification, decree should be pronounced as concluded for."
The first defenders pleaded, inter alia:"(2) The pursuers' averments being irrelevant and insufficient in law to support the conclusions of the summons et separatim being lacking in specification, the action should be dismissed."
The second defenders pleaded, inter alia:"(2)Separatim the pursuers' averments so far as competent being irrelevant and insufficient in law to support the conclusions of the summons, the action should be dismissed."
On 4th March 1954, after a Procedure Roll discussion, the Lord Ordinary (Walker) sustained the pleas in law for the pursuers and granted decree of declarator as concluded for.
At advising on 25th May 1954,
LORD JUSTICE-CLERK (Thomson).The testator left a settlement, the main feature of which was that he gave liferents of varying amounts to his four children and the fee of each child's liferented share to its issue. The problem which confronts us is the construction of a declaration which falls broadly into three parts: (1) that the provisions in favour of children "shall be accepted by them as in lieu and in full satisfaction of their legal rights"; (2) that "in the event of any of them claiming their legal rights they shall forfeit not only for themselves but also for their issue all rights, interests and benefits under this settlement"; and (3) that the forfeited rights are to be first applied "to compensate any loss which such claims shall entail upon the
beneficiaries accepting these presents," while the balance is to "accresee for the benefit in the proportions above stated to my other surviving children who shall accept the provisions hereby made and the issue of any predeceasing children." The testator was survived by his four children, one of whom has issue. The four children have raised this action, in which the trustees and the issue are called as defenders, to have it declared that, in the event of all the pursuers' electing to claim their legal rights, the whole provisions in favour of the pursuers and their issue shall be forfeited and the residue divided on the basis of intestacyThe Lord Ordinary has granted decree, and against his interlocutor this reclaiming motion is brought.
The first part of the declaration occasions no difficulty. Its effect, so far as the immediate children are concerned, is well established. The problem arises from the next two parts, which deal with the forfeiture by the immediate children of the provisions for their issue and the fate of these provisions in that event.
In my opinion...
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