Malcolm's Trustees v Malcolm
| Jurisdiction | England & Wales |
| Judge | Lord Porter,Lord Normand,Lord Morton of Henryton,Lord MacDermott,Lord Reid |
| Judgment Date | 01 December 1949 |
| Judgment citation (vLex) | [1949] UKHL J1201-1 |
| Date | 01 December 1949 |
| Court | House of Lords |
| Docket Number | No. 2. |
[1949] UKHL J1201-1
House of Lords
Lord Porter
Lord Normand
Lord Morton of Henryton
Lord MacDermott
Lord Reid
Upon Report from the Appellate Committee, to whom was referred the Cause Malcolm and others against Maxwell and others, that the Committee had heard Counsel as well on Thursday the 13th, as on Friday the 14th days of October last, upon the Petition and Appeal of Robin Neill Lochnell Malcolm and Bridget Mary Malcolm, both residing at White Lodge, Addlestone, Surrey; and Timothy David Malcolm and Christopher Neill Malcolm, both residing at Ladywood, Seal Chart, Sevenoaks, Kent; and Caroline Jeanne Malcolm, residing at the British Embassy, Mexico City, DF., Mexico, praying, That the matter of the Interlocutor set forth in the Schedule thereto, namely, an Interlocutor of the Lords of Session in Scotland, of the Second Division of the 15th of July, 1948, so far as therein stated to be appealed against, might be reviewed before His Majesty the King, in His Court of Parliament, and that the said Interlocutor, so far as aforesaid, might be reversed, varied or altered, or that the Petitioners might have such other relief in the premises as to His Majesty the King, in His Court of Parliament, might seem meet (which said Appeal was, by an Order of this House of the 30th day of July last, heard ex parte as to Sir John Maxwell Stirling Maxwell, Baronet, of Pollok, K.T., Ronald Malcolm, Kenneth Murray, W.S., and Colonel George Ian Malcolm (Trustees at present acting under a Trust Disposition and Conveyance and Supplementary Trust Disposition and Conveyance by the late Colonel Edward Donald Malcolm of Poltalloch); Victor Neill Malcolm and Angus Christian Edward Malcolm, they not having lodged a printed Case in answer to the said Appeal though ordered so to do); as also upon the printed Case of Colonel George Ian Malcolm, lodged in answer to the said Appeal; and due consideration had this day of what was offered on either side in this Cause:
It is Ordered and Adjudged, by the Lords Spiritual and Temporal, in the Court of Parliament of His Majesty the King assembled, That the said Interlocutor of the 15th day of July 1948, in part complained of in the said Appeal, be and the same is hereby, Affirmed, and that the said Petition and Appeal be, and the same is hereby, dismissed this House: And it is further Ordered, That the said Cause be, and the same is hereby, remitted back to the Court of Session in Scotland to do therein as shall be just and consistent with this Judgment: And it is further Ordered, That the Costs of all parties incurred by them in respect of the said Appeal to this House, be taxed as between Solicitor and Client, and be paid out of the Trust funds, the amount of such Costs to be certified by the Clerk of the Parliaments: And it is also further Ordered, That unless the Costs, certified as aforesaid, shall be paid to the parties entitled to the same within one calendar month from the date of the certificate thereof, the Court of Session in Scotland, or the Judge acting as Vacation Judge, shall issue such summary process or diligence for the recovery of such Costs as shall be lawful and necessary.
My Lords,
The question submitted to your Lordships' consideration demands a determination of the legal effect upon certain provisions contained in the trust disposition and conveyance of Colonel Edward Donald Malcolm of Poltalloch as truster, dated the 3rd and 6th February, 1903, of a subsequent deed of alteration executed by the same truster on the 28th July of the same year.
The former document after granting a life rent to the truster followed by a liferent to his son Ian Zachary Malcolm, provided that after the death of the survivor the trustees should hold the trust funds conveyed to them for the purpose of the trust in fee or liferent as the case might be for behoof of the heir to whom the Poltalloch estates were destined in fee or liferent in the order specified in the deed and that the trustees should pay assign and transfer the capital of the trust funds to the heir entitled to a conveyance of the fee of those estates.
By a later provision the truster resumed to himself power in the event of male issue of his son coming into existence in his life and to his son during his life to alter the settlement by deed to the effect of limiting and restricting the right of such issue to a liferent.
At the time when this settlement was created Ian Zachary Malcolm had no issue, but before any deed of alteration was executed his eldest son, who is the present Respondent, was born.
Acting upon the provisions of the earlier deed, the truster thereupon executed a deed of alteration by which he purported to limit and restrict the right of the Respondent in the event of his surviving the longest liver of the truster and Ian Zachary Malcolm and attaining 21 years (in which event he would become entitled in virtue of the trust disposition and conveyance to the capital of the trust funds) to a liferent in the trust funds similar to the liferent reserved to his father.
A further provision conferred the capital of the trust funds upon the Respondent's heirs in succession.
Various further alterations were executed by the truster as successive children were born to Sir Ian and under a power contained in the original deed the truster divested himself of his liferent in favour of his son, but none of these circumstances are, as I think, relevant to the question now before your Lordships.
The truster died in 1930 and Sir Ian in 1944, when he was succeeded by the Respondent, and it has now to be determined whether he is entitled to the funds comprised in the settlement in fee or whether, as a result of the deed of alteration, he enjoys a liferent only.
There is no Common Law rule against perpetuities in moveables in Scotland but the subject was dealt with by Statute in 1868, and is now governed by section 9 of the Trusts (Scotland) Act, 1921, which runs as follows:—
"9. It shall be competent to constitute or reserve by means of a trust or otherwise a liferent interest in moveable and personal estate in Scotland in favour only of a person in life at the date of the deed constituting or reserving such liferent, and, where any moveable or personal estate in Scotland shall, by virtue of any deed dated after the thirty-first day of July, eighteen hundred and sixty-eight, … be held in liferent by or for behoof of a person of full age born after the date of such deed, such moveable or personal estate shall belong absolutely to such person, and, where such estate stands invested in the name of any trustees, such trustees shall be bound to deliver, make over, or convey such estate to such person: …"
As a result of the provisions of this section if the truster had attempted to restrict the settlement in favour of his unborn grandchildren to a liferent that restriction would have been void and the person whose interests the truster had so attempted to limit would have taken a fee as soon as he became entitled to the fund and reached the age of 21, because he would not have been a person in life at the date of the deed constituting or reserving the liferent.
But say the Appellants in the present case the original settlement is not the deed constituting or reserving the liferent. It is reserved by the deed of alteration and when that was executed the Respondent was in life.
The question then is which deed is to be considered as that constituting the liferent? Upon this topic your Lordships are not without authority. In Muir's Trustees v. Williams, 1943, S.C. H.L. 47, a similar question arose. The facts were indeed identical save that the power of alteration was not reserved to the truster as well as to his son, but was given to the son only.
It was urged that this fact differentiated that case from the one under consideration: that the grounds of the decision were (to use words to be found in Lord Thankerton's speech) that the truster could not do by the hand of another what he could not do himself, but where, as here, he could himself make the restriction at the time when he made it, the Act was not in point.
My Lords, the argument has its force, but perhaps does not give enough effect to the consideration that the truster had already parted with the whole of the settled fund to his trustees and reserved to himself only a power to direct and restrict it.
However that may be, in my view the reasoning on which the decision in Muir's Trustees ( sup) rests is fatal to such a contention. Two matters formed the basis of the decision in that case.
Three of their Lordships took the view that the truster had by his settlement conveyed to his trustees the whole estate for his grandson in fee, and his successor could not, therefore, be said to have constituted or reserved the liferent by the subsequent deed of appointment: the subsequent deed was not the constitution of a liferent but the limitation or restriction of a fee which the truster had assigned and had no power to withdraw.
"The fund," said Lord Thankerton, "is held by the testator's trustees for behoof of the liferenters by virtue of the testator's trust disposition … the exercise of the power of appointment being a mere direction to the trustees on the testator's behalf as authorised by the testator as to the beneficiaries … the apportionment … and the restriction of the interest to be taken."
To the same effect are the words of Lord Macmillan, "What the testator did by his trust disposition and settlement was, in effect, to confer on his grandchildren an interest in a share of his estate, leaving it to his son to say, if he chose, that this interest should be restricted to a liferent."
This view was expressly assented to by Lord Wright and not dissented from by Lords Romer and Clauson.
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