Malcolm's Trustees v Malcolm
| Jurisdiction | Scotland |
| Judgment Date | 15 July 1948 |
| Date | 15 July 1948 |
| Docket Number | No. 60. |
| Court | Court of Session (Inner House - Second Division) |
2ND DIVISION.
Succession—Trust—Fee and Liferent—Faculties and Powers—Validity of exercise—Power of restriction—Truster's reservation of power to limit to Liferent—Power exercised—Liferenter in life at date power exercised but not at date of trust deed—Date when liferent "constituted"—Whether liferent constituted by original deed or by deed of alteration—Supplementary funds—Entail Amendment (Scotland) Act, 1868 (31 and 32 Vict. cap. 84), sec 17—Trusts (Scotland) Act, 1921 (11 and 12 Geo. V, cap. 58), sec. 9.
The Trusts (Scotland) Act, 1921, by sec. 9 (substantially reenacting sec. 17 of the Entail Amendment (Scotland) Act, 1868), enacts that "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 1868 (the date of any testamentary or mortis causa deed being taken to be the date of the death of the granter…) 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.…"
By trust-disposition and conveyance a truster conveyed to himself for his liferent use allenarly, whom failing to his eldest son in liferent for his liferent use allenarly, and to the trustees therein named in fee certain funds. He directed his trustees to hold these funds (subject to the liferents of himself and his eldest son) for behoof of the nearest heir-male of the body of his eldest son who should survive the longest liver of himself and his eldest son and attain majority and, failing such heir-male, he directed his trustees to hold the funds for behoof of his younger sons in similar terms. He also reserved to himself power, in the event of male issue of his eldest son coming into existence during his (the truster's) life, to alter the settlement by deed to the effect of limiting the right of any male heir or heirs of the body of his eldest son in existence at the time, who would or might become entitled to succeed to the fee, to a liferent or to successive liferents in the order of priority of such male heirs. Shortly after the date of execution of the trust-disposition and conveyance a son was born to the truster's eldest son. Immediately following thereon the truster exercised the reserved power by deed of alteration, in which he limited the right of his grandson, in the event of his surviving the longest liver of himself and his eldest son and attaining majority, to a liferent of the funds. After the birth of second and third sons to his eldest son, the truster executed further deeds of alteration in similar terms. Subsequently by a supplementary trust-disposition and conveyance the truster transferred to the same trustees further moveable securities to be held by them for the same purposes and subject to the same powers as those contained in the original trust-disposition and conveyance and deeds of alteration, as if they had formed part of the original trust funds.
In a question whether on reaching majority the truster's eldest grandson was entitled to the fee of the original and supplementary trust funds in virtue of the provisions of sec. 9 of the Act of 1921,—
Held (1) (diss. Lord Mackay) that, as regarded the original trust funds, the deed constituting the grandson's liferent was the original trust-disposition, the deed of alteration although made by the truster being merely a modification of that deed, and accordingly that, as the grandson was not in life at the date of the original deed, he was entitled under sec. 9 to the fee; (2) that, as regarded the supplementary funds, the deed constituting the grandson's liferent was the supplementary deed, and accordingly that, as the grandson was in life at its date, sec. 9 was inapplicable, and that he was entitled only to a liferent.
Muir's Trustees v. Williams, 1943 S. C. (H. L.) 47,[1943] A. C. 468, followed.
Colonel Edward Donald Malcolm of Poltalloch in February 1903 granted a trust-disposition and conveyance by which he conveyed to himself for his liferent use allenarly, whom failing to his eldest son, Ian (afterwards Sir Ian) Zachary Malcolm, in liferent for his liferent use allenarly, and to the trustees therein named certain funds in fee. He directed his trustees to hold these funds (subject to the liferents of himself and his eldest son) for behoof of the nearest heir-male of the body of his eldest son who should survive the longest liver of himself and his eldest son and attain majority and, failing such heir-male, he directed his trustees to hold the funds for behoof of his younger sons in similar terms. In his trust-disposition and conveyance, Colonel Malcolm reserved power to himself in the event of male issue of Sir Ian Zachary Malcolm coming into existence during the truster's life to alter the settlement by deed to the effect of limiting and restricting the right of any male heir or heirs of the body of Sir Ian in existence at the time, who would or might become entitled to succeed to the fee, to a liferent or to successive liferents in the order of the priority of such male heirs.
At the date of the execution of the trust-disposition and conveyance, Sir Ian was married but had no issue, but he subsequently had male issue as follows:—George Ian Malcolm, born April 1903, Victor Neill Malcolm, born March 1905, and Angus Christian Edward Malcolm, born October 1908. By deed of alteration, in July 1903, Colonel Malcolm exercised the reserved power and limited the right of George Ian Malcolm, in the event of his surviving the longest liver of himself and Sir Ian and attaining the age of 21 years, to a liferent of the funds. Subject to the liferent of George Ian Malcolm, Colonel Malcolm by the same deed destined the fee of the funds to the heirs-male of the body of George Ian Malcolm in the order of their priority. After the births of Victor Neill Malcolm and Angus Christian Edward Malcolm, Colonel Malcolm, in July 1905 and December 1908, executed further deeds of alteration in similar terms.
By a supplementary trust-disposition and conveyance in April 1910, Colonel Malcolm transferred to the trustees acting under the original settlement further moveable securities to be held by them for the same purposes and subject to the same powers as those contained in the original trust-disposition and conveyance and deeds of alteration as if they had formed part of the original trust funds.
By conveyance and assignation in 1922, Colonel Malcolm divested himself of his liferent of the original and supplementary trust funds and conveyed to Sir Ian during the joint lives of himself and Sir Ian his whole rights and interests in the funds. Colonel Malcolm had enjoyed the liferent of the funds until the conveyance and assignation was executed and delivered, and he died on 20th March 1930. He was survived by Sir Ian who enjoyed the liferent of the funds until his death on 28th December 1944. Sir Ian was survived by his eldest son, George Ian Malcolm, now in receipt of the liferent of the original and supplementary funds, and his two younger sons, Victor Neill Malcolm and Angus Christian Edward Malcolm.
Questions having arisen as to whether George Ian Malcolm was in the circumstances entitled to the fee of (a) the original trust funds and (b) the supplementary funds in virtue of the provisions of section 9 of the Trusts (Scotland) Act, 1921,1 a special case was presented for the opinion and judgment of the Court. The first parties were the trustees acting under the trust-disposition and conveyance; the second party was George Ian Malcolm, the truster's eldest grandson; the third partieswere Robin Neill Lochnell Malcolm and Bridget Mary Malcolm, the children of the second party; and the fourth parties were Victor Neill Malcolm and Angus Christian Edward Malcolm, the younger brothers of the second party, and their issue.
The contentions of the parties were stated as follows:—"The first parties offer no contention. The second party contends that the liferent of (a) the original trust funds and (b) the supplementary trust funds in his favour was constituted, within the meaning of section 9 of the Trusts (Scotland) Act, 1921, by the truster's said trust-disposition and conveyance and that, as he was born after the date of the said trust-disposition and conveyance, and was of full age at the date of Sir Ian Zachary Malcolm's death, the said funds became his absolute property as at that date; and that the first parties are now bound to convey and make over to him as his absolute property the original and supplementary trust funds. The third and fourth parties contend that in the circumstances of this case the provisions of section 9 of the Trusts (Scotland) Act, 1921, do not apply either to the original or supplementary trust funds, and that the second party's rights therein...
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