Office of trustee and administration of a trust

Question 1

Fegan v Thomson

Answer 1

1. “It is quite settled that a trustee is not entitled to any remuneration for his trouble in the management of a trust, beyond his actual outlay” (per Lord Cowan)

Question 2

Dale v IRC

Answer 2

1. “The rule is the same for all: it is not that reward for services is repugnant to the fiduciary duty, but that he who has the duty shall not take any secret remuneration or any financial benefit not authorised … by the trust deed under which he acts …” (per Lord Normand)

Question 3

Aitken v Hunter

Answer 3

1. “It appears to me that from the first to last the rule of the law of Scotland has been that anyone holding a fiduciary character, whether that of guardian or trustee, cannot lawfully become auctor in rem suam” (per Lord Neaves)

Question 4

Wright v Morgan

Answer 4

1. “It would be profitless to quote the many cases which have arisen to illustrate the doctrine. They may all be referred to the same root idea, that equity will not allow a person, who is in a position of trust, to carry out a transaction where there is a conflict between his duty and his interest” (per Lord Dunedin)

Question 5

Campbell’s Trs v Campbell

Answer 5

1. The trustor had purported to create a mortis causa trust in their testament using the residue of his estate in the following terms of the purposes of the trust “to apply the same (the residue) for behoof of such charitable or other deserving institutions in connexion with the city of Glasgow as my said trustees shall think fit”
2. It was held that this form of words was too vague
3. It was too ‘uncertain’ because the “or” meant that the trust’s purposes essentially amounted to using the residue to do anything in Glasgow
4. “As the trustees shall think fit” means it is a discretionary trust
5. The court held that the rest of the provision was too broad and uncertain

Question 6

Salvesen’s Trs v Wye

Answer 6

1. Another residue case
2. In this case, the trustees were asked to dispose of the money, and the wording used was “shall be disposed of by my trustees among any poor relations, friends or acquaintances of mine”
3. It was held that ‘acquaintances’ was too vague
4. “The field of selection presents so much uncertainty that it would be impossible for the trustees to determine from which individuals their power of selection was to be exercised” (per Lord Russell)

Question 7

Hood v Macdonald’s Tr

Answer 7

1. “The test is whether a trustee, approaching the matter with proper care and properly advised, would be able to carry such an instruction out” (per the Lord Justice-Clerk (Thomson))
2. The question of whether it is certain enough to be an effective trust will essentially depend on whether the trustees can figure out what it is they should be doing
3. “With proper care and properly advised” suggests they should seek legal advice if any issues arise
4. It is not really a water-tight test, but it is a good rule of thumb

Question 8

Wemyss v Wemyss’s Trs

Answer 8

1. The trust contained a condition that the beneficiary must not allow his mother to live on his estate
2. The court held that this was a valid condition
3. There was evidence that the mother had separated from the father (the trustor) a long time ago
4. There was nothing to say the mother could not visit, she just could not permanently live on the estate

Question 9

Fraser v Rose

Answer 9

1. The condition of the trust was that the daughter had to be removed from her mother’s household in order to be a beneficiary
2. The court held that this was completely against public policy
3. It was not a valid condition
4. The court also held that it would be treated pro non scripto: as if the condition wasn’t there (which meant the gift could still take effect)
5. This meant the trust did not fail completely: just the condition that was attached to it
6. “I hold that such a condition as this, whatever equivalent may be held out as its reward, is directly contra bonos mores, and contrary to the best interests of society” (per the Lord President)
7. “He rejects instantly the condition attached to the pursuer’s provision by her father as absurd and indecent, arising solely from bad temper, or groundless prejudice, or distempered fancy. Every man is under a legal and natural obligation to provide for his children, but he is not entitled to attach an improper or immoral condition to the grant; and if he does so, the law ascribes it to error or delusion, and enforces the provision, but rejects the condition, holding it pro non scripto” (per the Lord Ordinary)

Question 10

McCaig v University of Glasgow

Answer 10

1. The deceased left very detailed instructions for the creation of a trust in their will with the following purposes
   i. Erecting monuments of himself and various family members, creating ‘artistic towers’ at prominent parts of his estate
2. The big question was who would benefit from the creation of these monuments and artistic towers
3. There is this rule (in the background perhaps) that states that there needs to be some kind of benefit or beneficiary
4. The court held that this was not a trust that they were going to uphold
5. It was held that no trust was created because “no beneficial interest was conferred upon any class of persons”
6. But other dicta in the case suggested that there might be some public policy reason concerned with wastefulness
7. The money went to the relative that had brought the action
8. When this relative died 7 years later, she created a similar trust in her will
9. The court held, again, that this was not a trust that they were going to uphold