Pelham Burn and Others, Petitioners
| Jurisdiction | Scotland |
| Judgment Date | 23 October 1963 |
| Date | 23 October 1963 |
| Docket Number | No. 2. |
| Court | Court of Session (Inner House - First Division) |
1ST DIVISION.
TrustVariationPower of appointmentExercise of power by life-rentrix as preliminary to variation of trustLiferentrix taking fee of part of trust fund on variationWhether fraud on powerTrusts (Scotland) Act, 1961 (9 and 10 Eliz. II, cap. 57), sec. 1 (1) and (4).
The Trusts (Scotland) Act, 1961, by sec. 1, enacts, inter alia:"(1) In relation to any trust taking effect, whether before or after the commencement of this Act, under any will, settlement or other disposition, the court may if it thinks fit, on the petition of the trustees or any of the beneficiaries, approve on behalf of(a) any of the beneficiaries who by reason of nonage or other incapacity is incapable of assenting, or (b) any person (whether ascertained or not) who may become one of the beneficiaries as being at a future date or on the happening of a future event a person of any specified description or a member of any specified class of persons, so however that this paragraph shall not include any person who is capable of assenting and would be of that description, or a member of that class, as the case may be, if the said date had fallen or the said event had happened at the date of the presentation of the petition to the court, or (c) any person unborn, any arrangement (by whomsoever proposed, and whether or not there is any other person beneficially interested who is capable of assenting thereto) varying or revoking all or any of the trust purposes or enlarging the powers of the trustees of managing or administering the trust estate: Provided that the court shall not approve an arrangement under this subsection on behalf of any person unless it is of the opinion that the carrying out thereof would not be prejudicial to that person." "(4) Where under any trust such as is mentioned in subsection (1) of this section a trust purpose entitles any of the beneficiaries (in this subsection referred to as the alimentary beneficiary) to an alimentary liferent of, or any alimentary income from, the trust estate or any part thereof, the court may if it thinks fit, on the petition of the trustees or any of the beneficiaries, authorise any arrangement varying or revoking that trust purpose and making new provision in lieu thereof, including, if the court thinks fit, new provision for the disposal of the fee or capital of the trust estate or, as the case may be, of such part thereof as was burdened with the liferent or the payment of the income: Provided that the court shall not authorise an arrangement under this subsection unless(a) it considers that the carrying out of the arrangement would be reasonable, having regard to the income of the alimentary beneficiary from all sources, and to such other factors, if any, as the court considers material, and (b) the arrangement is approved by the alimentary beneficiary"
A testator left, inter alia, certain funds to be held by his trustees for behoof of his daughters in alimentary liferent and for their issue in fee, in such proportions and subject to such conditions and restrictions as each daughter might direct. In 1948 and 1951 one of the daughters appointed certain sums from the share of the trust fund liferented by her in favour of her two children. The appointments were declared to be subject to her liferent and vesting was declared to be at the respective dates of the deeds. By an irrevocable deed of appointment executed in 1963 she appointed the balance of the fund liferented by her to her said children, under declaration that vesting should take place at the date of the deed. The daughter and her two children subsequently presented a petition to the Court for approval and authorisation of an arrangement varying the trust purposes. In terms of the proposed arrangement the share of the trust fund liferented by the daughter was to be divided into two equal parts. Her liferent of one part was to continue without the alimentary restriction. Of the other part, her liferent interest was to be enlarged into a right of fee in a sum actuarially calculated as the equivalent of her liferent, and the balance was to be made over to her two children equally. It was submitted on behalf of the testator's trustees that the execution of the deed of 1963 might be a fraud on the power of appointment in respect that, as a result of the deed and the arrangement, the daughter would obtain the right to a capital sum out of the trust, a benefit which otherwise would not have been available to her.
Held that, where an appointer under a deed of appointment, either directly or indirectly, obtained any exclusive advantage to himself, and the reason or object of the exercise of the power of appointment was to obtain this advantage, then the appointment was vitiated by that fact; but that where, as in the present case, the purpose and intention of the appointer was to benefit the objects of the power, the mere presence of an incidental benefit to himself was not sufficient to constitute a fraud on the power; and the arrangementapproved.
In re Huish's Charity, (1870) L. R. 10 Eq. 5,followed.
Question whether, in any event, the daughter could properly be said to be obtaining a benefit by exchanging her liferent for a capital sum calculated as its equivalent.
Mrs Nora Jane Craig Millar Colville Or Pelham Burn, Charles Hamish Pelham Burn and Mrs Jean Fiona Pelham Burn or Hay presented a petition to the Court under section 1 of the Trusts (Scotland) Act, 1961,1 for variation of the purposes of the testamentary trust of the late Archibald Colville.
The petition set forth:"(1) That the late Archibald Colville, The Moorings, Motherwell (hereinafter referred to as the testator) died on 11th December 1916, domiciled in Scotland, leaving a trust-disposition and settlement, dated 9th August 1915, and codicils thereto, dated 13th September 1915, 29th August 1916 and 7th November 1916, all registered in the Books of Council and Session on 11th April 1918(2) By the said trust-disposition and settlement, after providing for the expenses of administration and for certain specific and pecuniary legacies, the testator disposed of the residue of his estate by purpose In the Last Place. By that purpose (First) as modified by the said codicil of 13th September 1915...
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