Trusts

Question 1

The Buckhurst Peerage (1876)

Answer 1

A right to a peerage cannot be subject to a trust

Question 2

Brown’s Trs v Gregson

Answer 2

a trust of foreign land will be invalid if the legal system of the place in which the land is situated does not give effect to trusts

Question 3

Heritable Reversionary Co Ltd v Millar

Answer 3

Trust property is not available for the satisfaction of the trustee’s personal debts

Question 4

Craig v Pearson’s Trs

Answer 4

If an alimentary liferent is assigned the court will fix a reasonable alimentary allowance so that any excess can be paid by the trustees to the assignee.

Question 5

Tod’s Trs v Wilson

Answer 5

To complete the assignee’s rights the assignation must be intimated to the trustees. If this is not done, in the case of the beneficiary’s sequestration, the trustee will be preferred to the assignee.

Question 6

Hardie v Morrison

Answer 6

vagueness and ambiguity will only render a trust purpose void if it is to such a degree that the trust purposes cannot be determined from the words used

Question 7

Angus Executors v Batchan’s Trs

Answer 7

‘charitable’ or ‘educational’ trust purposes are valid trust purposes in and of themselves.

Question 8

Rintoul’s Trs v Rintoul

Answer 8

‘religious’ trust purposes are not valid trust purposes in and of themselves

Question 9

Blair v Duncan

Answer 9

‘public’ trust purposes are not valid trust purposes in and of themselves

Question 10

Bowman v Secular Society Ltd

Answer 10

trust purposes be void if they are immoral, illegal or otherwise contra bonos mores

Question 11

Fraser v Roe

Answer 11

Trust purpose held invalid because it related to the beneficiaries living situation

Question 12

Sturrock v Rankin’s Trs

Answer 12

A trust purpose which conveyed a benefit on the truster’s children only for as long as they lived at home was held to be valid

Question 13

Sutherland’s Trustees v Verschoyle & Ors

Answer 13

trust purposes may also be void if they are contrary to public policy. In this case the trust purpose was void because it was extravagant and wasteful.

Question 14

Main’s Trs v Main

Answer 14

Any beneficiary without legal disability may assign or surrender his interest to a third party or another trust. This is limited in relation to an alimentary right even if the truster consents.

Question 15

Earl of Lindsay v Shaw

Answer 15

A variation of trust purposes is possible if all the possible beneficiaries consent.

Question 16

Anderson’s Trs v Scott

Answer 16

The cy pres doctrine is not restricted to charitable trusts

Question 17

Scotstown Moor Children’s Camp

Answer 17

For the cy pres doctrine to apply there must be a failure of a public trust purpose. This means it must be impossible to carry out the trust purposes or at least wholly inappropriate to carry them out in their current form

Question 18

Jay’s Judicial Factor v Hay’s Trs

Answer 18

Where there is initial but not supervening impossibility, the court will only grant a cy pres scheme if the terms of the trust deed shows that the truster and the general intent of benefiting the public.

Question 19

Glasgow Royal Infirmary v Mags of Glasgow

Answer 19

Were their is a failure of trust purposes, a cy pres scheme will require that the proposed replacement purposes are approximate to the original purposes

Question 20

The Mining Institute of Scotland Benevolent Fund Trs, Petitioners

Answer 20

Despite the new statutory provisions in the Law Reform (Misc. Provisions) Act 1990, there may still be cases in which the proposed variation of a trust falls out with the statutory grounds and the cy pres doctrine is still relevant.

Question 21

Auctor in Rem Suam

Answer 21

No fiduciary may place himself in a position where his interests and his duty may possibly conflict. This is known as the rule precluding auctor in rem suam (actor in his own cause)

Question 22

Johnstone v MacFarlane

Answer 22

a beneficiary who has title and interest may challenge an action on the basis that it is in breach of the rule of auctor in rem suam. A conflict of interest cannot be sanctioned by implication.

Question 23

Cherry’s Trs v Patrick

Answer 23

A co-trustee may challenge an action on the basis that it is breach of the rule of auctor in rem suam. A trustee will be in breach if they sell to the trust

Question 24

Henderson v Watson

Answer 24

A judicial factor may challenge an action on the basis that it is in breach of the rule of auctor in rem suam.

Question 25

University of Aberdeen v Town Council of Aberdeen

Answer 25

The obligation of accounting for trust funds is imprescriptible. In this case an invalid sale of land by a trustee was reduced over 70 years after it occurred. The Town Council of Aberdeen acted as trustees in a trust for the benefit of the professors of the University of Aberdeen. The trust property consisted of the lands of Torry. The Town Council secretly sold these lands to themselves and then obtained a lease from the Crown Estate for the salmon fishings on the lands of Torry. The salmon fishings were sublet by the Council and a rent was received by the Council. When the University found out about the sale they brought an action against the Town Council for breach of trust. It was held that a breach of trust had occurred and the Council were obliged to return not only the lands of Torry but also the income from the fishings.

Question 26

Aberdeen Railway Company v Blaikie Brothers

Answer 26

It is a conflict of interest for trustees to transact with the trust. This extends to contracts for the supply of materials.

Question 27

Inglis v Inglis

Answer 27

Where a trustee has the power to exercise discretion he must not exercise it in his own favour.

Question 28

Lewis Trs v Pirie

Answer 28

The charging of fees by the trustee may be authorised by an express provision in the trust deed.

Question 29

Clark v Clark’s Executor

Answer 29

There will still be a conflict of interest where the trustee transacts indirectly with the trust property.

Question 30

Burrel v Burrel’s Trs

Answer 30

it was held that the purchase of shipping shares belonging to a trust estate by the wife of one of the trustees, on her own initiative, out of her separate estate and for an adequate consideration was valid.

Question 31

Adair’s Factor v Connell’s Trs

Answer 31

the purchase of shares from a trust by a limited company was held to be invalid because the trustee was a director and shareholder of the company.

Question 32

Coat’s Trs, Petitioner.

Answer 32

Opposite view to Johnstone v MacFarlane. It was held that a power to sell to any beneficiary did include a power to sell to a beneficiary who was also a trustee. It may be that the two cases can be distinguished on special facts

Question 33

Sarris v Clarke

Answer 33

a testator appointed his wife as executrix in his will. Shortly before his death he entered into contracts of co-partnery with his wife and granted a lease of the farms to the partnerships. After his death the executors entered into negotiations with the partnerships to renounce the leases and to compensate the partnerships for the renunciation. The wife was obviously on both sides of the negotiations in different capacities but it was held that this was not a breach of trust as it was the truster who had placed the wife in this position.

Question 34

Corsar v Mathers

Answer 34

A beneficiary cannot object to a trustee being paid for his work if he had acquiesced in the employment of the trustee and had approved of accounts containing charges for the work

Question 35

Taylor v Hillhouse’s Trs

Answer 35

In cases where the beneficiaries to a trust have consented to a conflict of interest, the onus is on the trustee to prove that their consent was free and suitably informed.

Question 36

Martin v City of Edinburgh, the Edinburgh District Council

Answer 36

A decision to sell all trust funds invested in South Africa was challenged successfully on the grounds that the council were motivated by their own values (i.e. their moral opposition to apartheid) and not the interest of the beneficiaries.

Question 37

Flint v Glasgow Corporation

Answer 37

Where the trustees are motivated by proper concerns this may assist in having a transaction upheld where the benefit received by the trustee is small and incidental and the principal object of the transaction is to provide some greater substantial advantage to beneficiaries who are not trustees.

Question 38

Anderson v Smoke

Answer 38

A trustees discretion cannot be too broad

Question 39

the Age of Legal Capacity (Scotland) Act 1991, s.1(1) and s.9(5)

Answer 39

A person must be over the age of 12 to create a will or over the age of 16 to be a trustee

Question 40

Sutherland’s Trs v Sutherland

Answer 40

Secret Trusts - i.e. trust purposes that are only known to the trustee- will be invalid

Question 41

Cy pres doctrine

Answer 41

Only applies to public trusts and allows the ourts to reconstitute a trust where the original purpose has become impossible or particularly innapropriate. Only the Inner House of the Court of Session acting through its nobile officium may sanction a cy pres scheme. A cy pres scheme will be inappropriate if the truster has provided in the trust deed what is to occur to the trust funds if they require to be diverted because the trust cannot be continued. This is generally known as a trust deed with a destination-over.

Question 42

Breach of trust

Answer 42

Can be ultra vires when the trustees do something outwith their power. Intra vires where they do something within their power but badly. Breach of fiduciary duty.

Question 43

Gilchrist’s Trs v Dick

Answer 43

A trustee who is in serious breach of trust can be removed by the court on the petition of the beneficiaries or the co-trustees

Question 44

Where a trustee does breach the rule of auctor in rem suam the following consequences occur

Answer 44

1) The trustee will be in breach of trust
2) Where the trustee makes any profit, or derives any property from the breach of trust, a consecutive trust will be created over that profit or property with the beneficiaries in the original trust also being beneficiaries in that consecutive trust
3) Any transaction in which a trustee is auctor in rem suam is capable of reduction and is voidable at the instance of a number of parties

Question 45

Bankruptcy (Scotland) Act 1985, s.24(2)(a) and (c)

Answer 45

the parties excluded from the position of permanent trustee include:

1) The debtor in his own sequestration
2) A person who holds an interest opposed to the general interests of the creditors.

Question 46

Peterson v Peterson

Answer 46

A trustee cannot borrow from the trust

Question 47

McCaig University of Glasgow

Answer 47

Trust purposes which give no human benefit will be void

Question 48

Burgess v Crawford

Answer 48

An example of where a cy pres scheme may be needed is when there is a change in the law

Question 49

Miller’s Trs v Miller

Answer 49

A private trust can be partially or completely terminated at the request of a single beneficiary provided that that beneficiary is the only person with an interest