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Scottish Court of Session Decisions |
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You are here: BAILII >> Databases >> Scottish Court of Session Decisions >> Young & Ors [2010] ScotCS CSIH_84 (03 November 2010) URL: http://www.bailii.org/scot/cases/ScotCS/2010/2010CSIH84.html Cite as: [2010] CSIH 84, [2010] ScotCS CSIH_84 |
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EXTRA DIVISION, INNER HOUSE, COURT OF SESSION
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Lord ReedLord CarlowayLady Smith
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[2010] CSIH 84XA185/09
OPINION OF THE COURT
delivered by LORD REED
in
SPECIAL CASE
for
PATRICK CHARLES YOUNG'S TRUSTEES First Party;
and
PATRICK ANDREW YOUNG AND OTHERS Second Party;
and
PATRICK CHARLES YOUNG'S EXECUTORS Third Party:
_______
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Second Party: Small; Archibald Campbell & Harley
Third Party: Agnew of Lochnaw, Q.C.; Simpson & Marwick
3 November 2010
The trust deed
[1] On
27 September
1929 Colonel
Patrick Young CBE executed a trust deed which, in its preamble, narrated that
it was "for behoof of my children". After providing first for the payment of
the expenses of the trust, the deed set out three further trust purposes. The
first of those was the payment of the annual income of the trust fund "to or
for behoof of my said children and the survivors and survivor of them equally
among them....for their alimentary use...and for their maintenance, education and
upbringing". In the event that any of the sons were to die before attaining
majority, leaving lawful issue, such issue were to be entitled to the share of
interest which would otherwise have been payable to their father. The
entitlement of the children to receive such income was to come to an end "as
and when my said children receive their share of capital in terms of the
immediately succeeding purpose hereof".
[2] In terms of the next trust purpose, namely
purpose THIRD, the truster directed his trustees "to pay to each of my
children as and when they attain the age of twenty one years complete in the
case of sons and as and when they marry in the case of daughters the sum of
Four thousand pounds". Provision was again made for the possibility that a son
might die before receiving his share of capital, leaving lawful issue. In that
eventuality, such issue were to be entitled, on attaining majority, to the
capital to which their father would otherwise have been entitled.
Purpose THIRD concluded:
"And in the event of any of my said sons or daughters dying before receiving their respective shares of capital without leaving lawful issue such share or shares shall form part of the balance of the Trust Fund and shall be dealt with in terms of the last purpose hereof".
[3] The final trust purpose provided:
"(LASTLY) On all my surviving children attaining majority in the case of sons or marrying in the case of daughters I direct the said Trustees to pay and make over any balance of the Trust Fund remaining to my said children equally among them share and share alike and the survivors and survivor of them the lawful issue of any of my children who may have predeceased leaving lawful issue taking equally among them the share or shares original and accrescing to which their parent would have been entitled if in life".
[4] At first sight, at least, the truster's
intentions appear to be clear. His children were to receive an alimentary
liferent until, in the case of sons, they came of age, or, in the case of
daughters, they married. At that point they were each to receive capital of
£4,000, a substantial sum in 1929, to support the sons at the outset of their
careers and provide the daughters with a dowry. Once all the surviving
children had received their capital payment, any remaining balance was to be
distributed among the survivors. At each stage, the share of sons who had
predeceased could pass to their lawful issue. At the final stage, a similar
provision was made for the lawful issue of predeceasing daughters.
The relevant events
[5] At the time when he executed the trust
deed, the truster had six children: Patrick, aged 19; Archibald, aged 17;
Charles, aged 16; Elizabeth, aged 7; Norah, aged 4; and Frances, aged 1. No
further children were born. All three sons reached the age of majority.
Patrick died in 1943, leaving lawful issue. Archibald and Charles died in 1944
and 2003 respectively. Neither left any issue. Elizabeth never married. She died in 2007.
Norah and Frances both married, and are both still living. The truster himself
died in 1951.
The issue
[6] A question has arisen as to what is to
happen to the balance of the trust fund following the death of Elizabeth. On one view, the
trustees should distribute the balance of the trust fund in accordance with
purpose LASTLY. On that view, the balance is payable in equal shares to
Patrick's issue, Norah and Frances. An alternative view is that
purpose LASTLY has no application, since the truster's surviving children
did not all attain majority in the case of sons or marry in the case of
daughters. That view is based on the premise that Elizabeth falls within the class of "my
surviving children". On that view, the balance of the trust fund is payable to
the truster's executors, to be distributed as part of his estate in accordance
with his will.
[7] In those circumstances, the trustees, the
potential beneficiaries under purpose LASTLY and the executors have
presented this special case to the court, requesting answers to the following
questions:
1. Whether upon the proper construction of the Lifetime Trust, one of Colonel Young's daughters having died without having married, the remaining capital is disposed of by purpose LASTLY?
2. If the answer to Question 1 is in the negative, whether the said capital reverts to Colonel Young and falls to be disposed of under and in terms of his testamentary instructions?
Discussion
[8] As we have explained, the basic purposes of
the trust are apparent from its terms. The truster intended his children to
enjoy an income until they came of age, in the case of sons, or married, in the
case of daughters. At that point they would lose the income but would receive
a lump sum of capital. Once the surviving children were all of age, or all
married, the trust would be wound up and any balance of the fund distributed.
That is because the earlier trust purposes would be exhausted once there was no
surviving child who might yet satisfy the conditions for entitlement to a share
of capital. That situation came about upon Elizabeth's death. So long as she was alive,
she was entitled to income until her marriage; and she might yet marry and
become entitled to capital. Once she had died, all the surviving children -
Norah and Frances - were daughters who had married, and purpose LASTLY
therefore applied. That reading of the deed is supported by the final clause
of purpose THIRD, which applied "in the event of any of my said sons or
daughters dying before receiving their respective shares of capital without
leaving lawful issue": an event which occurred when Elizabeth died without ever having married.
In that event, the share of the child in question was to form part of the
balance of the trust fund and be dealt with in terms of purpose LASTLY.
That provision is inconsistent with the view that, in the event in question,
purpose LASTLY could not apply.
[9] In support of the alternative
interpretation of the trust deed, counsel for the executors submitted that the
words "all my surviving children", in purpose LASTLY, referred to the six
children in life at the time when the deed was executed. They were also the
children referred to as "my children" in the preamble to the deed. If any of
the three sons living in 1929 died before attaining majority, or any of the
three daughters then living died without marrying, it followed that
purpose LASTLY failed, and those children who had attained majority or
married could not benefit under it. Equally, any children who might have been
born after 1929 could not benefit under the trust deed. The final clause in
purpose THIRD did not apply to Elizabeth: it was concerned only with daughters who had
married, since only married daughters were capable of having lawful issue. That
clause must therefore be concerned with daughters who had married but had then
died prior to payment of their share of capital. So ran the argument.
[10] We are unable to accept this
interpretation. Fundamentally, it is inconsistent with any rational intention
which might be attributed to the truster. It also requires a strained and
implausible construction of a number of specific clauses and expressions used
in the deed. The words "my children", as used in the preamble to the deed,
would ordinarily and naturally be taken to be capable of extending to any child
who was alive at the time of the deed or who might be born subsequently. The
words "my surviving children" would ordinarily be taken to refer to a sub-group
from within that broader category. A daughter who died without ever having
married would ordinarily and naturally be taken to fall within the scope of the
words "daughters dying...without leaving lawful issue". In the context of
purpose THIRD, the words "without leaving lawful issue" are in any event
referable only to sons, since it is only the lawful issue of sons who can
become entitled to a share of capital under that provision. Moreover, the
construction of purpose THIRD proposed on behalf of the executors is
inconsistent with the view that a daughter's share of capital vests on her
marriage, contrary to the apparent implication of the direction that the
capital is to be paid "as and when" a daughter marries. In short, for a number
of reasons, some fundamental and others of a more technical character, we
cannot accept the interpretation put forward on behalf of the executors.
Conclusions
[11] We accordingly answer Question 1 in the affirmative.
Question 2 is superseded.
