Notesale: Turn your study into money

Document Preview

Extracts from the notes are below, to see the PDF you'll receive please use the links above

---

Succession Law Revision Notes
Succession determines how a person’s property is dealt with and distributed after death
...

Disappearance
Common law presumption was that if someone disappeared the legal presumption was that
they would live til the age of 80 (Stair) and 100 (Bankton) Courts could grant a decree of
death
...
Only the person entitled to inherit the estate may
raise the action and estate must be in Scotland
...
She needed to
establish that her husband was dead
...
Married, four
children, partner in building firm- prosperous and happy
...

Partnership dissolved, assaulted wife, and left Edinburgh and disappeared, went to England
and his family did not know where he was
...
The lord ordinary did not grant the declarator of death although he
had been missing for 25 years
...

Sec of State for Scot v Sutherland 1944 SC 79- Tried to establish that she was entitled to an
old age pension from the insurance from John Sutherland
...
Lived with him until he died
...
Had to prove that her husband was dead, because she
hadn’t divorced
...
No evidence to prove he was dead
...

Presumption that he could live until 80 or 100 years old
...

S2(1) proof on balance of probabilities- civil standard
S2(2) court can determine domicile; any question relating to property; appoint a judicial
factor( person to run estate) ;determine any incidental question
If someone has been killed in plane crash or ship sunk- no evidence of body- do not have to
wait 7 years
...
Decree given with date of death 7
years after the person was last known to be alive
...

Anyone with an interest can apply to have the decree recalled
...


Common calamity
Occurs when two or more people die together
...
At common
law, there is no legal presumption as to who survived who
...
Mr and
Mrs Drummond and two sons all killed
...
Neither left a will
...
Could not establish order of
death
...
Must prove a claim
...
Intestate succession
...

Mitchell’s Exec v Gordon 1953 SC 176- four people
...
No evidence of order of death
...
10
year old grandson has to claim money
...
Could not do this
...

Ross’s JF v Martin 1955 SC (HL) 56- Two elderly women died of gas poisoning
...
Charity tried to claim, but because of the wording
of the will, they had to establish who died first
...

Succession (Scot) Act 1964 s31(1)(b)- sets up legal presumption that the younger of the
deceased survived their elder, with the exception of married couples (where neither
survived the other) and where elder person has left a testamentary disposition with
provision in favour of a younger person, whom failing to a 3rd person (destination over)
...


Right to inherit- Children
Post humous children- Children born after the death of the testator (Person who makes a
will) Based on roman law principle
...
Have to be
the beneficiary, not a third party
...
Will says that the residue
(Main part of estate) was to be paid equally among his descendants of his brothers and

sisters alive at the time of his death
...
Could the four children inherit if they were not born
at the time of his death
...

Adopted Children- Succession (Scotland) Act 1964 provides that an adopted child is
considered a child of the adopter and can inherit on their estate, but cannot inherit on the
estate of their natural family
...
This applies to both testate
and intestate succession, but if a deed was signed before the 10 th September 1964, the child
cannot succeed
...
Illegitimacy has been
abolished
...


The Unworthy Heir
Under the Parricide Act 1594 if father, mother, grandfather or grandmother is killed, you
cannot inherit on their estate, provided you have been convicted
...
There is no
mention of movable property anywhere in the act
...

Inherited from English law
...

Don’t need criminal conviction- prove killing to a civil standard to a civil court
...

Applies to killer and anyone claiming through him
...
Under law of intestate succession he would have
inherited her estate
...
Prior to his execution he made a will giving
everything to his mistress
...

Burns v Sec of State for Scot 1985 SLT 351- Claiming widows pension but she killed her
husband
...
Pleaded guilty to culpable homicide and he had
abused her
...
Did not get the pension
...
Two families living beside each other and become friends
...
Barrs had dinner and Mrs Barr disappeared
...
Saw mr
Gray at top of stairs, fought, fired shotgun on accident and killed Mr Gray
...
Found not guilty
...
Mr Barr admitted liability but claims he was entitled to
be compensated by a policy he had with insurance
...
English court of appeal
...
Not entitled to
recover against the policy
...

Re Giles 1972 Ch 544- Wife killed husband with a blow to the head with a chamberpot- had
previously killed her husband's 16 year old son and was institutionalised
...
Deceased’s other child raised action asking
if she could inherit
...

Forfeiture Act 1982
S1 court can modify forfeiture rule
...

Court discretion in how to act
...
Raise action in court of session in
Edinburgh
...

S2(2) Court can look at conduct of offender; conduct of deceased; other material
circumstances and the justice of the case
...

S2(2) 3 months after conviction ,time limit to apply to court
Applies in all types of succession
In Scotland cannot exclude rule altogether
Paterson Petr 1986 SLT 121- convicted of culpable homicide of her husband and had
stabbed him- didn't intend to but tried to get help before he died
...
Court held that the decision would be left to the
trustees
...
Raised action to allow him to inherit on his fathers intestate estate
...
Allowed him to inherit 100% of
the heritable property and 99% of movable property
...
Stabbed him twice in the stomach
...
Did not leave a will
...


Art and part liability: Tannock v Tannock 2011 GWD 33-692 (Greenock Sheriff Court)
...

Her son took the knife from the deceased's neck and hid it, reporting that he had found the
body
...
Mr
Tannock had left a will saying his wife would get everything or failing that his stepson
...
Held that for him to be
disqualified, he must have been involved in the killing either in the planning or in the
carrying out of the action
...

Can be void or voidableVoid- no rights can ever be attached
Voidable- deed will stand until challenged
...

In every other case the will is voidable and will have to have an action of reduction raised in
the Court of Session in order to have it reduced
...
If the testator is 12 of over, it cannot be challenged as a prejudicial transaction
...


Insanity:
In the law of succession, there is no legal definition for insanity
...
It all depends on whether at the time the will was created if the testator
understood the nature and effect of it
...
If the will
itself is rational, then it may be allowed to stand
...
If a person is insane, the Will will still
stand if it was made when the testator was lucid
...
He left nothing to
his family
...
Held that

the will may be irrational but it does not mean that he was insane, despite that he had not
left anything to his family
...

Ballantine v Evans (1886) 13R 652- Severe depression and committed suicide
...
Held as valid
...
Will upheld
...
He suffered personality change after wife's death
...
He tried to commit suicide three times
...
He thought his wife was with him
...
Will
was upheld as valid
...
Father was
wealthy man who owned Richmond building
...
Disinherited all his children
...
Only had one
witness- professional- who did think he suffered from delusions and psychosis
...
Children had to show some type of mental disorder
...


Medical condition:
Lack of capacity due to drugs/mental illness
...

Barbara Graham v Margaret Robertson unreported 1995- Lady made will in hospital and
died the next day
...
Was brain damaged by stroke
...


Facility and Circumvention:
Where someone weak-minded or mentally fragile are taken advantage of resulting in a loss
...
Open to be persuaded to do something by
a third party
...

Lesion- Loss to someone
...
Challenge raised by his only child
to reduce the will which comprised of two separate deeds
...
He
was completely under the woman's control
...
She ignored this and got him to sign a will giving everything to her
...
Had asked the
witnesses to the will if they would sign the will before it was made
...
Court believed that she had dictated the will to him or
he had copied it out
...
There was
ample evidence to show he was facile- silly, senile and illiterate man
...
Lesion was the disinheritance of the son
...
On the same day she made a will, she gifted her house to her son with whom she
lived
...
Thought his mother lacked capacity because she
was not of sound mind
...
It was the daughter in law who instigated the
disposition
...

Pascoe-Watson v Brocks Exec 1998 SLT 40- Miss Brock died in 1994, her will was dated
1993
...
Another cousin, Pascoe Watson challenged the
will under facility and circumvention
...
Background- she began drinking and by 1991 se was alcohol
dependant- consuming a bottle every day
...
Started behaving irrationally and was hostile towards her family
...
Instead of helping her sober,
she supplied her more and more alcohol, and kept her away from the rest of the family
...
Pascoe Watson was successful in
having the will reduced
...

Smyth v Rafferty 2014 CSOH 150- Deirdre Romanos died in 2010
...
She was extremely wealthy and was managing
woman of a Dunfermline newspaper
...
Less than two weeks
before she died, she changed her will leaving most of her estate in a trust to be used by the
newspaper
...
Woman died of cancer and was incredibly ill,
taking lots of medication
...
Nothing much on undue influence
...
The sister was not
successful
...

Undue influence:
Requires a fiduciary or quasi fiduciary relationship- one of trust such as solicitor/client or
Parent/child and this relationship must be proven
...
Onus is on challenger to prove their case
...
3 years later she
changes her mind and leaves everything from one nephew, who was also her solicitor and
business advisor
...
He did not

know about it until 16 years later when she died
...
He did this so she would reduce the amount
she left to his brother
...
She was facile and weak minded
...

Boyle v Boyle’s Exec 1999 SC 479- 86 year old lady was living in Broughtyferry
...
Original will left everything to her
two sons
...
One son lived in England, the other in Australia
...
They found cheques made
out to him
...
She makes another will leaving everything to
Dundas, in a will prepared by him and signed by her
...
She did not use her normal signature
...
A month after she signed the new will she was admitted to hospital and was told
she had dementia and was of an unsound mind
...
Will was successfully reduced
...

Categories of position of trust are never closed
...
She became friendly with an art dealer- Mr Sharp
...
After she died, it was discovered that she was giving the art dealer a gift of four
famous paintings
...

Sharp argued art dealer and client was not position of trust
...

Adults with incapacity (Scotland) Act 2000:














If someone loses capacity, the act allows decisions for that person to be made on
their behalf
...

Part 2 attorneys
Part 3 accounts and funds
Part 4 management of residents funds
Part 5 medical issues
Part 6 Intervention and Guardianship orders
The act applies to anyone over the age of 16
...

The intervener must choose the least restrictive option
...

Must consider past and present feelings and wishes of the adult
...


Guiding principles






S1(4)(b)views of nearest relative and primary carer
S1(4)(c) guardian; continuing attorney
S1(4)(d)views of other person having an interest in welfare of the adult
S1(5)all encourage adults to exercise his skills and develop new skills

S1(6)” acting or making decisions or communicating decisions or understanding decisions or
retaining the memory of decisions by reason of mental disorder or of inability to
communicate because of physical disability” If someone is incapable under the act then you
can intervene in their life providing you stick to the principles
...
Act does not lay out guidelines as to how capacity is assessed- medical
evidence will be crucial though
...

Consult with Mental Welfare Commission

Mental Welfare commission:







S9 investigates complaints relating to personal welfare of adult
...

Courts final supervisory role
...


Continuing power of attorney:









S15
Useful for forward planning
...
But if you are bankrupt you
can only be a welfare attorney, cannot interfere with financial affairs
...

Deed set up when someone loses capacity
...

Must be in writing; signed by granter and needs to contain a certificate in prescribed
form
...
Continuing power of
attorney is set up whilst someone has capacity for use once someone has lost capacity
...
Must be in writing
...

Signed by a solicitor
...
Legally you are
protected if you can show you acted reasonably in good faith and in accordance with the
act
...
Must keep records of what you do
...
Anyone with an interest can go
to court and raise the issue
...

Duties:
Act within provisions of act
In position of trust
Protected if can show acted reasonably; in good faith and in accordance with act
Complaints to public guardian
MvM- gave power of attorney to son and brother
...
Court ordered son to state what he
had done with the money
...
Revoked power of attorney
allowing him to invest money
...
If Sheriff is satisfied adult incapable, he can make an order
...

S53(6) buying heritage – consent of PG needed
S53(7) security required
Can be varied / recalled
S56 Transaction of land needs to be identified as such in Land Register or Register of Sasines
T Applicant 2005 SLT (Sh Ct) 97- Widow (81) with alzeimers
...
One sons raised
the court action
...
The old lady's
house was lying empty as she was lying in a hospital unit
...
Will
left her home to her son and the daughter in law got the rest of the estate
...
If he sold
the house, the money would fall into residue of the estate, the daughter in law would get

everything
...
It has to benefit
the mother
...
Son was successful
...
Scot law
commission believe codicils should not be allowed to be made on some one's behalf
...
Received several state benefits
...
Family wanted intervention order to set up a trust so her
inheritance could be paid into trust and the money could be used on a month to month
basis for day trips
...


Guardianship Order
If you need contuing management of the persons affairs you need a guardianship order
...

S57
Application by adult; anyone claiming an interest in property; financial affairs or personal
welfare of adult
...

Property/financial affairs report lodged 30 days
Interim GO possible (s57(5) )for 3 months
3 year period
...

Interim order can be issued for 3 months
...
Ultimately sheriff can decide
...
87 and in a care home- no capacity
...
She has a will and left the house to someone
...
They wanted to draft codicil
to leave 70% of estate to beneficiary and 30% to two charities
...
When she made the will, a file
note was included only for the beneficiary to get the house, not the money if the house was
sold
...


Revocation of wills
Generally a will can be revoked up until the death of the testator as it is not activated until
death
...
This cannot be
revoked
...
The son gave his mother a loan of money and paid her rent on the strength of
the agreement
...
She went
back on the agreement
...
Under challenge by
the son, the will was set aside by the court
...

Hutchison v Graham’s Exec 2006 SCLR 587- Agreement between grandmother and
granddaughter
...
Both signed an agreement that the GM would only dispose of her property to her
GD
...
Later the GM made a new will, revoking the old
will and leaving everything to her daughter
...
Held that the GM was entitled to make a new will
...
The
remedy was that GD was entitled to be paid back the loan with interest
...

The agreement has to be in the correct form or it will not stand otherwise
...
She agreed to provide funds for the house, and he would leave
her the house in his will
...
After his death it transpired that he had revoked
the earlier will and had made a new will leaving the house to her sister
...
The problem was the agreement was not in writing
...
On appeal it was held that anything to do with heritage must be in writing
...

Destruction of the will is also classed as express revocation
...
If you destroy a will without capacity it will not be revoked
...

You can revoke wills wholly or partly by tearing out bits and scoring stuff out
...
All alterations and
deletions must be authenticated
...

Thomson’s Tees v Bowhill Baptist Church 1956 SLT 302- Thomson died in 1954
...
Residue clause (biggest
part of estate) was to be split between two charities
...
She is sent a copy
...
In the right hand margin, were two
signatures in ink in her hand writing
...
In different ink at foot of the page she writes "As I don't have money to cover anymore i
thought it better to cut it out, Margaret Thomson" Has she revoked the residue clause?
Court held she did intend to revoke the residue of the clause even though it was a copy
...

Allan’s Exec v A 1920 SC 732- Testator Allan left a will
...
It was in an envelope which was opened at both ends and marked John
Allan private
...
There was a lot of deletions
in the will
...
Not signed or dated
...

Milne’s Exec v Waugh 1913 SC 203- Spinster lady in Brechin (Milne) left a will in a closed
envelope in a locked desk drawer
...
She lived alone for 20 years in the same house
...
No date or signature
...
Presumption they were made by Milne herself
...
Would need to raise an
action in Court of Session
...
Draft
documents preferred but oral evidence will be accepted must be adequate
...
Must be raised in Court of Session
...
Were in partnership together
...
The uncle made a will in 1936 by
his solicitor
...
After he died, they could not find the
principle will
...
Nephew argued they were on good terms
and the uncle would not destroy it
...
Held that Clyde could not
override the presumption of destruction of the will
...
Applies to all children born after the date the
will was signed
...
Only
child can bring an action to reduce the will
...
Can be rebutted if you can show the
testator meant to disinherit the child
...

If the executive can prove that the testator meant to exclude the child then conditio can be
rebutted, however this is not easy
...
He left a trust dated 1896
...
Two years after the trust, he had a daughter in
1898
...
She successfully used
conditio to revoke trust and settlement
...

The court held that the fact he had lived for ten years and did not change his mind and the
provisions of the trust was not enough to rebut the presumption
...
She gave
birth to a daughter
...
She deliberately left her daughter nothing
...
When the daughter tried to
reduce the will, she was not successful because the mother wanted to exclude the child
...
He divorced 1st wife, married another and had two more
children
...
Will made no provision for children apart from courtney
...
The challenge was brought
by second wife on behalf of her two children
...
His estate became intestate
...
If someone
makes a will and then later makes another, the earlier will is revoked
...

Bruce’s JF v LA 1969SC 296- 1945 Testator signs a will
...
New will revoked earlier will
...
After his death the 1st will was with his solicitors and the
second could not be found
...
Court held that
earlier will did govern his estate as the other option was intestate succession
...
She made the 1st will in
1963
...
2
...
After she died she
left a handwritten note, stating that she revoked the later will of 1964
...
Court held yes, 1st will applies
...

Partial revocation by a later will
A later will may not fully revoke an earlier will and both wills may be read together
...
In 1939 he made a will giving
everything to University in Edinburgh, revoked all previous wills
...

Duthie’s Tees v Taylor 1986 SLT 142- Spinster lady in Aberdeen made a will 1977
...
Did not dispose of residue of estate and did not revoke
previous wills in new will
...

Separation
A separation agreement may not revoke a will
...
He died
...
Family
wanted declaration he died intestate so they could inherit instead of wife
...
The will
was not covered
...

Definitions

Testament- any deed giving effect to intentions after someone has died
...

Codicil- document attached to will if you change a little bit
...
They will consider the
circumstances in which the will is found, who made it as well as other factors
...
Instructing a
solicitor to draft a will is not classed as an intention to testate
...

Draper v Thomason 1954 SC 136- Mrs Tupper died in 1952
...
She signs a letter Conny
...
Rest of letter is
normal gossip
...
Did she make a will or intend to? Held that it was a will
...
Year
later she writes a letter to her daughter, telling her daughter that she was to inherit the
house, the contents and her jewellery
...
Is it a will?
Lord Hunter held it was
...

Jollie v Lennie 2014 CSOH 45- Mother had married twice
...
Year later daughter went to go on holiday and pops past her
mum
...
Takes out her
handbag and gives document to daughter
...
It was
an a5 piece of paper folded into quarter and undamaged
...
Kept in bag for two years
...
Mother dies in
2010
...

She eventually finds it
...
The daughter had to raise Court of Session action to prove tenor of document
...
One friend had witnessed the will
...
She and her brother's children got the mother's estate
...
After
death they found a notebook, and one entry was a handwritten will saying everything was
to go to one sister
...
Held it was a will as it showed testamentary
effect
...
Under s1(2) (c) all wills, trusts and codicils must be in writing- cannot
be done verbally
...
The last
page must be signed to indicate completeness
...
Any signatures by rubber
stamps are not valid
...

Must make sure that the will if challenged will prove itself in Court
...
Blind,
those of unsound mind and those who are incapable of writing cannot act as witnesses
...
The
witness signs on the last page only
...
The testing clause is
attached after the will is signed, and there is a presumption under the 1995 act that this is
correct
...
Very minor mistakes can be rectified in the testing clause
...
A relevant person is a
solicitor, advocate, JP or Sheriff Clerk- only people who can exercise the notarial execution
...

Testing clause different- will state details of the relevant person
...

Certification
Under S4 the Court can certify the deed is good if necessary
...
Court will endorse
certificate with the effect that it is a good will
...
- written statementsno hearing
...
It is governed by the
Succession (Scotland) Act 1964
...

Pre 1964:





Moveables passed to executor to pass on to family
...

If there was no family, the crown would inherit it
...


The entire estate can be intestate, or there can be partial intestate if there is a will but part
of it has not been given effect to or there is a mistake
...
If there is a will and it is challenged on the
grounds of undue influence or facility and circumvention, then it becomes artificial
intestacy
...
- falls into intestate succession
...
They may claim more on
intestate estate
...
Was survived by wife and daughter by a
previous marriage
...
£25,000
...
You can never disinherit children
...
Kerr renounced the will and estate fell into intestate
...

The order of intestacy payouts:
1)
2)
3)
4)
5)
6)

Payment of debts
Prior rights- Spouse’s right to dwellinghouse, also applies to civil partner
Prior rights- Spouse’s right to furniture and plenishings
Prior rights- surviving spouse’s monetary right
Legal rights- Movable property only
Free estate

Right to dwellinghouse s8- includes garden
...
Must show the spouse had relevant interest- ownership
...
Minus any debt secured over house (such as mortgage)
...

There is a 6 month election period- if there are more than one house, spouse has 6 months
to choose which one they want
...
- Rules out holiday homes and rented out properties
...
If its part of tenancy or lease, or used as profession which will
reduce value, then the spouse may not get house but will get cash sum
Right to furniture and plenishings s8(3)
...

Surviving spouse needs to be ordinarily resident in the house s8(4)
...
If there are more than one house you can pick which one you want the
furniture from, even if you choose to claim another house
...
Spouses presumed to own furniture equally
...
Under s8(5) an arbiter
can be used
...
Paid out of heritage
and movables in proportion to the respective amounts of those parts s9(3) pro rata
...
Legacy is defined in s9 (6) (b)
...
Jus relicti- male share to
spouse, jus relictae- female
...
If there is no will then it
follows the laws of intestate succession
...

Children and spouses can always claim legal rights
...
If there are no children the
spouse gets half and if there are only children left, they get half
...
Legitim can be paid in two separate ways:
Per capita s11(2)(a)- per person- if there are a few claimants and all are related to
deceased by the same degree, then the fund is divided equally between them
...

You can discharge legal rights- you need to choose whether you will claim under the will or
legal rights
...
Must be in writing
...
Independent legal advice is required before
discharging legal rights
...

Collation inter liberos s11(3)
Gifts from parents while alive, what you can claim after death might be reduced
...
It must be established that the deceased meant for it to be inheritance
gifted whilst they were still alive
...
An advance goes
beyond a normal gift
...
g if parent gives child money to start business, is it part of
inheritance? Money for house, but money for education is not seen as collation
...
To disinherit children and destroy legal rights you get
rid of movable property
...
If
you die intestate and leave a certain amount, then the spouse gets everything up to certain
amounts
...

Parents (1/2) Brother/sisters (1/2)
Brothers and sisters
Parents
Spouse/civil partner
Uncles/aunts
Grandparents
Sisters/brothers of grandparents

Under section 7 Crown gets anything left
...
Can apply for sum of money from deceased partner’s intestate
estate
...
Deceased must have died intestate
...
Under 29(2) they can get a capital sum or transfer of property
...

Court must consider criteria in s29(3):
a)
b)
c)
d)

Size and nature of deceased’s net intestate estate
Any benefit received as a result of the death
Nature and extent of rights and claims on net intestate estate
Any other matter the court sees as appropriate

They cannot get more than a spouse or civil partner would have got
...
This can be varied or it can
be paid in instalments
...
Deceased was not habitually resident nor domiciled in
Scotland
...
Case unsuccessful
...
Pursuer (Savage) lived with male partner
(yoysey) in Falkirk
...
Only beneficiary was sister, Mrs Purches
...
S had already received half of pension from Y's
employer
...
Also got annual pension of
over £9000
...
Y died and savage
submits claim seeking capital sum or transfer of property
...

Deceased man made no will for Mr savage- no evidence he wanted leave anything to him
...

Windram Applicant 2009 FLR 157- woman and man living as if they were married- 25 years
with two teenage children
...
Woman was content with this
...

They intended to get married but he was so ill they couldn't
...
She was penniless because he owned all the assets
...
Sheriff held they were co
habitants
...

Kerr v Mangan 2013 SLT (Sh Ct) 102- Lived together for 22 years
...
Raised an action but her partner's assets were in southern
ireland, not UK
...

She appealed
...

Fulwood v O’Halloran 2014, Glasgow Sh Ct- debate over pursuer not giving enough details
of financial affairs
...

“ A trust may properly be defined as an interest created by the transfer of property to a
trustee, in order that he may carry out the truster’s directions respecting its management
and disposal
...
viz
...
”
Elements of a trust
Parties



Truster- person who draws up the trust
...

Beneficiary- benefit under the trust
...
There can be any number of people in each of the three
categories listed above
...
The trustee must end up with a real right which can be enforced
against anyone
...
If it is
movable property, it must be physically handed over to the trustees
...

Heritage- disposition recorded in trustees names
...
She should have handed it over to the trustee
but she did not, and kept possession of it herself
...

Trust purposes- Truster must set out trust purposes
...
A trust does not
have to be in writing- but it should really be
...


Features of a trust






Benefit is separate from ownership of property- beneficiaries benefit whilst the
trustees are the owners
...


Functions of a trust





Protection of persons who are not competent or under age
Charitable or public uses (public parks, historic houses, disaster schemes etc
...











Unincorporated bodies-clubs, societies and trade unions- office holders keep funds
for trust members
...

Family wealth
Deposit receipt

The trustee owns the trust property
...

The beneficiary’s rights
Bell – personal right of credit against trustee
Gretton need to consider idea of patrimony
...
e
...
G presented a silver shield to a music association for an annual brass
band competition
...
G said the shield belonged to his trust and should be delivered back to him
so he could appoint new trustees
...
if it was a private trust he could appoint new
trustees but not if it was a public trust
...
Lord G was entitled to appoint new trustees
...
Income on property is paid to liferenter
for a certain period of time, usually their lifespan
...
Right
to income is called the liferent
...
Once the person has finished the education the trust reverts back to a normal
trust or comes to an end
...
Trustees have to use their
own judgement and courts don't interfere unless there is a breach of trust
...
e
...

In a public trust the trustee might be told to use the trust for the public good but they might
be allowed to choose how this is done
...

e
...

Charities- Not all run as trusts, some are run as companies
New form of charity - Scottish Charitable Incorporated Organisation
...
Supervision by Office Charity Regulator (OSCR) who maintains
Scottish Charity Register
...
Legal obligations take place from
the time the trust is set up
...
His will
stated that when he died his wife should make a will giving half of her estate to his family
which was named by him in a separate document
...
Question put to COS whether or not B had
left the wife an outright gift or whether it was a trust- held it was a gift, and no trust was
actually set up
...
Goldberg was a large retail company, they set up style as a subsidiary company
to run a credit card system
...
They still
collected payments for Style in their shops and paid them over at a later date
...
Style argued a trust had been set up between them
based on a clause in the agreement
...
" Had a trust been set up?- held no trust was set up because the agreement
was set up on commerce and no trust was set up between the two companies
...

Trusts created involuntarily- created by rules of law
Constructive trusts:- trust is construed by law from the relationship of the parties:
Situation 1-existing trust and then a third party knows about the trust and holds trust
property, then they are accountable to the trust for their situation
...
(e
...
a bank manager
holding money for a trust- constructive trustee)
Huisman v Soepboer 1994 SLT 682- Three dutch men (H,S and K) get together to buy a
farm- they set up a joint venture to buy the farm and share the profits equally
...
The agreement had been that he would take the title in his sole name
...
This was a breach of his
fiduciary position- not good faith
...

Situation 2- where someone in a position of trust gains an advantage by virtue of being in
that position
...

Cherry Trs v Patrick 1911 2SLT 313- (situation 2) Cherry was a wholesale supplier of alcoholbecame a trustee on a trust that comprised of a pub
...
Any profit made in a fiduciary
position you cannot keep- it must be paid over to the trust
...

Anderson v Smoke (1898) 25R 493- Anderson set up trust for son Archibald and he gave
two daughters £2000 to administer the trust
...
The

question arose as to who got the remaining money- held that it fell back to the truster as a
resulting trust
...
The town council attempted to build a bridge and public did not
want a new bridge and wanted to repair the old bridge
...
Held there was not resulting trust, as although it could not be built then, did not
mean it could not be built in the future
...
When trust purposes have never been declared- possible that there is not a trust in the
first place
2
...
No trustees are appointed- truster has forgotten to appoint trustees
4
...
More than one can be
appointed
...
Office holders can become
trustees against their will
...

Capacity
-Natural and inherent limitations on capacity- age and insanity
-Conventional limitations on capacity- law prevents them from being trustee






Insanity
Non-age
Bankruptcy and insolvency- can still be trustee because you are not dealing with
your own property
...

Criminal convictions of dishonest offences cannot be trustees on a charitable trust
...

Difficulties with ex officio appointments- trustee is holder of an office- trustee because they
are the holder of a particular office
...
If the office is removed due to reorganisation of the establishment it
might be asked whether the new person in the new organisation is appropriate as the
trustee
...
he
died in 1869
...
The trustees presented a petition to court of session seeking

declarator that they could continue to be trustees
...

Parish Council of Kilmarnock v Ossington’s Trustees (1896) 23R 833- the Truster said the
trustee was to be the chairman of the Peroquial board of the parish of kilmarnock
...
The question was whether the new council
could continue to act as a trustee- held no they could not because the peroquial board was
different from the Parish council
...
If you
do accept the role your acceptance can be expressed or implied, and you get an immediate
right to the property
...

Implied acceptance- can be personally barred from later claiming you are not a trustee
...
He signed his name with the word trustee after
it
...

Can resign under Trust (Scot) Act 1921 s3(a)
Cannot force someone to be a trustee or use specific implement
...

1
...
Can do that to appoint new
trustees or change existing trustees
...

2
...

Changed by Trust (Scot) Act 1921 s3(b)
Applies also to ex officio trustees Winning Petr 1999 SC 51
Munro’s tees v Young (1887) 14R 574- conflict between trust deed and statute- spouses set
up anti-nuptial trust- only they themselves could appoint new trustees
...

3
...

If the sole trustee has disappeared for at least 6 months or is outwith the UK for at least 6
months
...

Death of trustee- their share is divided between other trustees
...
- section 23
Trusts (Scot) Act 1921 s23
Occurs if they are insane, develop physical or mental disability, disappearance or continually
absent for over 6 months
...
How much
administration is required depends on the trust itself
...
Trustees are given powers in trust deedcheck the trust deed to see how it will be run
...

Firstly the trustee has to ingather the estate- find out what the trust property is, and take
legal possession and ownership of the trust estate
...
If the trustee fails to do this they will be
personally liable to the trust estate
...

Forman v Burns (1853) 15D 362- Foreman was the executor on an estate
...
That was payable in Nov 1842
...
He
asked a few times
...
One debtor had died and two had gone bankrupt
...
Question for the Court of Session was whether the trustee was personally liable
for the £200 outstanding
...
They stated the law to be that the duty to ingather the estate was a strict
duty
...

Duty of care- The same degree of diligence that a man of ordinary prudence would exercise
in management of his own affairs must be demonstrated in dealing with the management
and administration of the trust
...

Mortis Causa- almost always debts because of funeral costs etc
...
If there is not
enough money in the estate to pay, the debts will be paid off rately
...
The trustees
must wait 6 months after death to pay off debts, to give time for debtors to lodge their
claims
...
As long as the trustee sticks to the 6 month rule they will not be personally
liable
...

First the trustees need to ingather the estate and then pay off debts and taxes
...
The executor paid out in
January 2000
...
Question for the court was who was liable
...

Murray’s tees v Murray (1905 ) 13 SLT 274- Trustees handed over piano under provisions of
will- estate was insolvent and the trustees were personally liable for the cost of the piano
...
If not, they will be liable to the
beneficiaries for any losses incurred
...
They can only incur expenditure which is necessary and will be liable to the
beneficiaries for any excess expenditure of trust property under the strict law of
accountancy
...
If they fail to do so, beneficiaries can raise an action of Count, Reckoning and
Payment
...
In Scotland there is no statutory
provision to have an accountant audit the books but in good practice it is always done
...
The public have no right to see the accounts even if
it is a public trust
...
In
1900 the mother got a farm from her father-in-law to run on behalf of herself and her
family
...
The daughter was not
impressed and challenged the mother and raised the action of accounting against her
...
Court of Session dismissed the
action saying that the idea that the mother should take accounts was "fantastic"
...
Generally they do need to keep
accounts
...

The truster can exclude the trustee from having to keep accounts in the trust deed if they
wish to do so
...
Every trustee should be involved
...
All trustees need to be consulted
...

Malcolm v Goldie 1895 22R 968- 1 of 5 trustees went to live in Australia
...
Later the validity of their actions was questioned
...

Quorum of trusteesIf all trustees cannot be present, decisions can be made on a quorum basis
...
A majority
of trustees and accepting is a quorum-quorum is minimum number of trustees needed in
decision to make it valid- signing contracts and deed, banking etc
...

Decisions are made by majority of trustees
...
It would
only be if the majority act in bad faith or there is a maladministration that the minority can
stop them from acting- raise an interdict
...
Majority
can sign deeds
...
Section to protect beneficiaries and third parties, not the trustees
...
They
gave a loan of money to Colonel Kinloch
...
Later as
the other trustees had all died he had to form a quorum of three trustees to uplift the
money and pay it back into the trust
...
The other two trustees raised
action of specific implement to force him to act
...


Duty to take adviceMay need to take professional advice
...

Martin v City of Edin District Council 1988 SLT 329- Edinburgh council ran 58 trusts
...
Their actions
were challenged by councillor- claimed council had breach duty of trustee since they had
not taken professional advice before withdrawing the investments
...

There is a duty not to delegate the trust to anyone else- you cannot get anyone else to do
the role of the trustee
...

Duty to pay correct beneficiary- If they fail they be personally liable
...

Armour v GRI 1909 SC 916- The beneficiaries asked for £2000 to be repaid because the
trustees had paid out £2000 to GRI
...
Hospital had spent the money on a new
bed
...
If there is mistake of fact or law made
...
Court will not order money to be repaid if it is not equitable- they
will consider how reasonable the mistake was
...

Cross v Cross Trs 1919 1SLT 167- Grandson of truster was entitled to his share of the trust
fund when he reached the age of 21
...
Trustees were
liable to him as beneficiary under the trust
...
Trustees had
to pay some of the money from their own funds as the trust estate had gone down
...
- long list of powers implied into
every trust deed
...
Only entitled to
do things in s4 if they are not in variance with trust- in disagreement with the trust
...
Under S5 the Court can authorise
acts at variance with the trust if the act is expedient (necessary or advantageous) for
the execution of the trust
...
Used mansion house to run home to give rest
to official people who could use it for a holiday
...
The house fell into decline and became dilapidated
before being closed
...

Cunningham’s Tutrix 1949 SC 275- Trustees petitioned the court asking for permission to
sell two tenement properties that had fallen into disrepair
...

Inverclyde Council v Dunlop 2005 SLT 967- Public park- main trust asset
...
It was impossible to repair because the cost would be
over £1
...
Had idea to build gym and lease it to
company under a 30 year lease
...
Had to apply to
court for authority
...
Wanted to keep it as a public
park
...

The cost of the court action comes out of the trust estate
...
You can petition nobile officium of the Court of
session- if trustees want to do something not covered under section 4
...
After Mr Anderson died the owner
of the farm decided to sell it
...
Trust deed did not
enable trustees to buy the property, nor could they borrow funds
...
Court of Session granted both requests for the trustees
because if it was not granted then the purpose of the trust would be frustrated
...
More likely to intervene if trustees have
personal interest or discretionary position
...

Had to get higher rate of interest
...

Before 2005 the law was strict on giving power of investment to trustees
...

S4(1)(ea) 1921 Trustee (Scot) Act allows trustees to make any type of investment for
the Trust estate
...

Trustee needs to get proper advice before they invest or renew current investments
...

s4B of 1921 Act allows trustees to appoint nominees but only for investment
purposes
...

S4B(4) Their appointment must be made in writing
...
Trustees must set guidelines to nominees
...

Equalisation appropriation- trustees can appropriate particular investments to set legaciesthis is allowed, a set investment will go to a specific beneficiary- loss or benefit goes to that
beneficiary- must be express or implied consent to do that
...
Cannot claim on the rest of the trust
estate if they have a loss
...


Variation of trusts
After a period time it may be desirable to vary the trust purposes
...

E
...
change on tax law would mean a trust would be better managed by variation of trust
purposes
Money might have been left to institution which no longer exists or it may be impossible to
give effect to the trust purposes
...

Private trusts
Varied under common lawCan be varied if all beneficiaries give their consent
...
Otherwise the Court of Session can get involved but this
jurisdiction is very limited
...


Varied by statuteTrusts (Scotland) Act 1961 s1(1)
Allows the court to sanction a variation of trust purposes if any of the beneficiaries
are of non-age; mental incapacity ; unascertained (may become beneficiary in the future)
or unborn
...

Consent from court is binding on all parties the same way as if the beneficiary had given
consent themselves
...
Section 4 and 5 of 1921 act
only concerns running the trust, not varying it
...

Prejudicial means financial prejudice normally
...

Pollock-Morris Petr
...
Lawful issue was his mother and two sisters that he named
...
Trustees asked the court to vary the trust to include adopted children as beneficiaries
...
To increase the number of people who could benefit from the trust
was prejudicial to the existing beneficiaries
...

Risk of prejudice is enough
...

Under common law, once an alimentary liferent has begun to run it cannot assigned or
renounced
...

S1(4) allows the court to authorise the variation or revocation of an alimentary
provision
...

2) Court also asks for consent of the fiars in practice
This is often done for tax purposes
...
But he did not
produce a report from an actuary
...
) The court had
to check if it was reasonable in terms of the act
...

In terms of trust vesting would not take place until his daughter was 25
...
The trustees wanted to change the substance of the trust- when the fee was
to be paid
...
The girl was still in
minority
...


Cy pres doctrine
The nobile officium of the court of session can be petitioned if the trust is a public trust- the
Court can be asked to exercise the Cy Pres doctrine, where they will sanction the variation
of a public trust if the trust purposes become impossible to fulfil
...
This is used in situations
such as if there is a disaster fund with excess money, the trust could be changed to give to
another cause, or if there are insufficient funds to carry out the trust purposes they could be
changed to a less ambitious project to fit with the budget
...
The trust itself may provide for the
failure of trust purposes through the use of a destination over clause
...
It also cannot be used in
situations where the actions of the trustees are beyond their powers, the trust purposes are
void because they are uncertain or illegal or where the original trust purposes are so unique
a replacement purpose cannot be found
...
Initial failure is when the trust is
impossible to fulfil from the very start and the trust never gets off the ground
...
Must ascertain if truster
intends to benefit the public- the trust must be widely worded
...
There needs to
be charitable intention for Cy pres to apply
...
There is no single test, but
there is a fair amount of case law
...
Surgical hospital or convalescent hospital
...
Had to show general charitable intent
...

McRobert’s Trs v Cameron 1961 SLT (notes) 66- to erect and furnish private ward in specific
hospital named after truster
...
No general
charitable intent
...
Could not be
carried out because of practical issues
...


Cummings Exec v Cumming 1967 SLT 68- portion to aged peoples home in Glasgow and a
quarter to school for blind children in Glasgow
...
Held there was
a general charitable intention because she clearly intended aged people to benefit and blind
children needing schooling
...

Supervening impossibilityOccurs when the trust is set up and then it becomes impossible to operate
...
You raise petition in the Court of Session for
the cy pres doctrine
...

Scotstown Moor Children’s Camp, Petr 1948 SC 630- Camp set up to give poor children a
holiday in Aberdeen
...
The camp could not get enough food due to rationing and sponsors
were difficult to find
...
Issue of whether it had failed
...
And could also try harder to get income to keep the trust afloat
...
Trust purposes had not completely failed
...
Women stopped going o these institutions
...

ApproximationNew scheme has to be similar to the old one and both must be in the same area of interest
...
The local authority also set up a fever hospital
...
What to do with trust money? Two competing claims- should go to
fever patients in Glasgow in the fever hospital to provide them with warm clothing when
they left the hospital, and the other claim related to another hospital within Glasgow
...

Going outwith Glasgow was not permitted as it was not in the intentions of the truster
...
If the local or central
government have the duty to provide services the Court will not use the trust to provide an
identical purpose
...
The Court can increase the class of beneficiaries to
include more people
...
Set up by
Mr M in 1978
...
When trust was set
up there was £50,000
...
Trustees petitioned to

vary the trust as they wanted a restatement of the objects of the trust and secondly they
wanted to expand the beneficiaries
...
Court would sanction a scheme where the change to the
trust purpose was expedient provided the expediency was sufficiently compelling
...

Statutory variation of public trustsLaw reform (Miscellaneous provisions) (Scotland) Act 1990Sections 9-10 allow Courts to authorise variation or reorganisation of public trusts
...
Impossibility must be proved
and the decision must be intimated to the Lord Advocate
...

4 grounds:
(a) the purposes of the trust have been fulfilled so far as is possible or can no
longer be given effect to;
(b) that the purposes of the trust provide a use for only part of the trust property;
or
(c) That the purposes of the trust were expressed by reference to an area which has
ceased to have effect for these purposes or by reference to a class of persons or
area which has ceased to be suitable or appropriate for the trust (Geographical area
has changed); or
(d) that the purposes of the trust have been adequately provided for by other
means, or have ceased to be entitled to charitable status for revenue matters or
have otherwise ceased to provide a suitable and effective method of using trust
property, having regard to the spirit of the deed
Beneficiaries can be changed
...

Section 10 deals with the variation of small public trusts with an annual income of less than
£5000
...
They can also transfer
property to another trust, wind up the trust or amalgamate it with another trust
...

There are certain conditions and considerations-









Need to consider locality of the trust
Has both trusts got the same charitable status?
Is it economical to amalgamate?
All trustees from both trusts must consent to amalgamation
Actions become effective 2 months after resolution has been advertised
Lord Advocate as the power to intervene in all public trusts
Anyone with an interest can challenge the resolution

Variation of charitable trusts
Charities and Trustee Investment (Scotland) Act 2005 set up a new regime only for charities
...
Not all public trusts
are charitable
...
OSCR can approve the scheme or apply to go to Court
under s40
...
The third party should be
able to assume the trustee has sufficient money to meet the demands of the contract
...

Liability is joint and several and personal liability ends on the death of the trustee
...
Douglas Pearson 1996 SLT (Sh Ct) 50- Sale of Heritage by tees to
third parties – Warrandice at least fact and deed probably even absolute warrandice- if fact
and deed warrandice is granted they have no personal liability
...
Cost of Appeal – need consent of all
beneficiaries
...
If court action has to be raised to rectify mistake made by trustee, they cannot
claim the cost of court action from trust estate
...
Signing documents as a trustee could be
sufficient
...
If there is a clear agreement on this point then only the trust
estate will be liable
...


Protection of third partiesIf the buyer is in good faith and paid value, they get the title to the property
...

S2(1) 1961 Trust (S) Act- If trustee enters contract to do any activities in s 4 (1) (a ) – (ee) of
1921 act, the 3rd party is protected
...
- will always
get good title
...
They must act in good faith at all times and always act in the
interests of the beneficiaries
...
Trustees are prohibited from making a profit
from the trust directly or indirectly
...
It is to enter into any transaction in which they have a personal interest
...
Any transaction can be challenged by a
beneficiary, another trustee, the truster and the creditors of the truster
...
If a trustee makes any profit from a transaction, it
is a constructive trust and must be paid over to the trust itself
...

Transacting with the trust estate- cannot transact with the trust estate
...


Mags of Aberdeen v University of Aberdeen (1877)4R(HL)48 1613- Aberdeen council was
given money to hold on trust to fund two professorships at Aberdeen university
...
1797 the council's master sells the
land to the treasurer of the borough of Aberdeen
...
1876- Aberdeen
University bring action of declarator that the land was held in trust for their benefit
...
The sale that had taken place in 1797 was sale to themselves and so it was
an illegal sale
...
They had kept all the money for
themselves
...
Mr Patrick and Mr cherry were partners and worked closely together
...
Mr C died in 1906 and set up a trust
and Mr P was a trustee
...
The other trustees asked that he be removed from office
...

The second challenge regarded charging part of a manager's expenses to the trust estate
...
The profit made was constructive trust and had to be paid over
...
Father
had been tenant on farm at Galashiels
...
They
transferred the tenancy of the farm to George
...
Claim he was auctor in rem suam
...

Fairness is irrelevant as shown in the case of Railway v Blaikie Bros (1854) 1Macq 461Judgement was that you cannot look to the fairness or unfairness of a contract entered into
...

Whether or not any loss has occurred is also irrelevant as seen in Wilsons v Wilson (1789)
Mor
...
The children's father had
died and he had a large farm
...
When the children were grown up they raised an action against
him for the profits for the entire length of the leases
...
He argued he only had to pay over surplus
rents but this was not the case
...

Indirect transactionsFor example if the trustee makes transactions with the beneficiary
...

Clark v Clark’s Exec 1989 SLT 120- Trustees agreed to sell a house to Mr and Mrs Millar
...
The millars didn't pay the
purchase price
...
Beneficiaries in the trust raised an action
of reduction to have the assignation reduced
...
Held Mrs Clark was auctor in rem suam as there was a conflict of
interest
...
Court cannot sanction payment of trustee
...
If director in company may be
entitled to keep salary
...
Authorisation in trust deed- trustees getting paid for their services
...

Johnston v MacFarlane 1987 SLT 593- family farm in Angus
...
His son was a trustee
...
Were they entitled to sell the land to the son? He was a trustee and
beneficiary
...
No power in trust deed to sell to
someone who was beneficiary and trustee
...

Significant difference between transaction with beneficiary and beneficiary/trustee- auctor
in rem suam- not authorised in trust deed
...
Implied
authority is not enough
...
Father made will in November 1985 for wife and
three children (stepmother of the children) he entered into contract of co-partnership with
his wife to run the farm and at the same time he granted the leases of three farms to
himself and his wife as the partner (and to the survivor of them) Wife ended up with
tenancy of the three farms
...
Three years
later she agrees to give up the three farms to executors for almost £500,000
...
She to a personal benefit from the trust,
and was also an executor under her late husband's estate- question as to whether he was
authorised to act in this way in the trust deed
...

2
...
Onus is on
trustee to prove that the beneficiaries gave their consent
...

Corsar v Mathers (1886)- beneficiaries could not object to the trustee gettng paid because
he had acquiesced in the transaction and proved the accounts for the work
...

3
...

If prior transactions has taken place then court will look at these suspiciously
...
No authorisation from the court- Trusts (Scot) Act 1921 s32

Trustees liability to beneficiaries
Breach of trust- auctor in rem suam, failure to take advice, make a loan, invest, secure trust
property, pay out to beneficiaries etc
...

Standard of care- Must show the same prudence that an ordinary man would exercise when
managing his own affairs
...

Beneficiaries, truster and other trustees can raise actions, but third parties cannot
...
Only if for same transaction- can
profits and losses from breaches of trust be set off against each other?- no because profits
belong to trust estate and losses are debts to be paid into trust estate
...

Millar’s Trs v Polson (1897) 24R 1038- action raised against Poulson a trustee as he knew his
fellow trustee had kept £150,000 for his own use instead of paying it over to the trust and
did nothing about it
...

Henderson v Henderson’s Trs (1900) 2F 1295- entitled to set off the profit of £80 to loss of
£1205
Remedies for a breach of trust




Interdict
Damages – trustees personally liable
Count, reckoning and payment- cannot be time barred
Removal of trusteesWishart and others Petr
...

MacGilchrist Trs v MacGilchrist 1930 SC 635- Ian MacGilchrist failed to carry out
trustee duties- failed to sign documents, reply to letters etc
...

Gilchrist v Dick (1883)11R22- acted in good faith- no removal
Stewart v Chalmers (1904) 7F 163- Trustee sent out letter saying he wanted half fees
for all business done on the trust- removed

Other options available to beneficiaries




Criminal- get police involved
Insider dealing- contact Department of trading industry (DTI)
Charitable trust- report matter to Scottish Charities Office or the Office of Scottish
Charity Regulator
Public trust- Lord Advocate has investigative function

Defences of trustees-

Immunity clause in trust deed- might have a clause limiting trustee's liability to the
beneficiaries- different from authorising auctor in rem suam
...

Lutea Tees v Orbis Tees 1997 SCLR 725- set up in 1990
...
In exchange for the loan, the
trustees got shares in his hotels
...
The hotel went bust
...
The trustees resigned
and the new trustees raised an action against them
...
There
was an immunity clause in the trust deed, limiting the liability
...
Trustees acted with gross breach of duty
...
The fact the truster requested it, makes no differencethey had a duty to the beneficiaries and they acted with gross negligence
...

An immunity clause may afford little protection in a case
...
if they fail to prevent a fellow
trustee committing a breach of trust, they themselves are guilty of a breach of trust; s30 a
trustee can lend money on the security of a heritable property but he must get a valuation
from a surveyor first of all- Loan must not exceed more than 2/3 of the value of the
property
...
; s31
if a trustee comits a breach of trust with the consent of the beneficiary the court can
indemnify the trustee if they see fit
...

Court can reduce payments the trustee has to make to the beneficiary (s31) - b must
understand nature of the breach
Henderson v Henderson’s Trs 19002F 1295- B stated he wanted trust estate invested in
Canada
...

Clarke v Clark’s Tees 1925 SC 693 8- honestly left money on deposit receipt for two years
when it should be invested in annuity, held he was honest but not reasonable- refused relief
by court

---