Judgments - Earl of Balfour (Appellant) v Keeper of The Registers of Scotland and Others (Respondents) (Scotland)

(back to preceding text)

    30. Although the point was not mentioned by the reporter in Earl of Moray in his report to the Lord Ordinary as one of the difficulties in the case which required attention, the testamentary writings in that case consisted of a trust disposition and five codicils. The petitioner was born after the date of the first codicil, but before the date of the fifth and final codicil. The argument was directed to the question whether the relevant date was the date of the first codicil. But an examination of the terms of the fifth codicil, which is in the Session Papers, has shown that it dealt only with the distribution of various pictures and other items of moveable property and that it did not alter or affect in any way the provisions by virtue of which the petitioner was in possession of the lands of which he was seeking to be the fee simple proprietor.

    31. The question whether it is necessary to take into account a codicil which does not alter or affect the relevant provisions in the original trust disposition and settlement was raised and answered in Miller's Trustees v Miller, 1958 SC 125. The issue in that case was whether the conditio si institutus sine liberis decesserit operated and, if so, whether two nephews who predeceased the date of a codicil which the testator made to his trust disposition and settlement were to be regarded as institutes instead of the persons whom he had instituted by his original settlement. The answer depended on which date was to be taken as the critical date - the date of the trust disposition and settlement which he executed in 1936, or the date of the codicil which he made in 1946. All that the testator did by his codicil was to vary the administrative provisions of the settlement by appointing new trustees and executors, as all but one of the persons named in the settlement had died. The codicil ended with the words "and with these alterations I confirm my said trust disposition and settlement." Rejecting the argument that the effect of these words was that 1946 was the crucial date for the purposes of the conditio, Lord Justice-Clerk Thomson said at p 129 that it seemed to him to be a highly technical and unrealistic argument, as the effect of the codicil was that the original beneficial provisions remained intact. Lord Patrick said at p 131 that it was a question of the intention of the testator. As the testamentary provisions were not innovated upon in any way by the codicil but referred to in it only in order to confirm them, he was not persuaded that the testator had any intention of telling his trustees that they were to treat his testamentary provisions as if they were made for the first time in 1946.

    32. The same reasoning as that which was applied in Miller's Trustees can be applied in the present case to the first codicil. The only alteration which it made to the provisions of the trust disposition and settlement was spent as soon as the Third Earl succeeded to the residue in place of the Second Earl, whose nomination as the person first entitled to succeed had been cancelled by it. The provisions of Purpose in the Seventh Place which conferred a right of liferent in succession to the heirs male of the body of the Second Earl as a class were not altered or innovated upon in any other way, but were referred to only to confirm them. So the date of the deed by virtue of which the appellant became entitled to his interest in possession of the residue was the date of the trust disposition and not that of the first codicil.

Conclusion

    33. For these reasons, and for those given by my noble and learned friends Lord Clyde and Lord Rodger of Earlsferry, I would allow the appeal. I would recall the interlocutor of the Extra Division and direct the Court of Session to pronounce an act and decree in terms of section 47 of the Entail Amendment (Scotland) Act 1848 declaring the appellant to be the fee simple proprietor of the lands and the barony of Whittingehame and others, all as more fully described in the prayer of the petition, unaffected by any of the conditions, provisions, restrictions or limitations contained in Purpose in the Seventh Place of the trust disposition and settlement of Arthur James Balfour, the First Earl of Balfour.

    34. The appellant and the sixth respondent are agreed that their expenses in the Court of Session and their costs in this House, taxed as between agent and client, client paying, should be paid out of the heritable part of the trust estate. The second to fifth respondents are the trustees acting under the trust disposition and settlement. They submit that expenses should follow success as between the appellant and the sixth respondent and that that trust should bear the costs and expenses of the trustees. As the appellant has agreed that his costs and expenses and those of the sixth respondent should be paid out of the heritable property of which he has been held to be the fee simple proprietor, I would make an order to that effect and I would include in that order the agreed terms as to the mode of taxation. I consider that the expenses of the trustees in the Court of Session and their costs in this House should be borne by the estate remaining in their hands as trustees.

LORD CLYDE

My Lords,

    35. The appellant seeks a declaration under section 47 or 48 of the Entail Amendment (Scotland) Act 1848, the Rutherfurd Act, that he is the fee simple proprietor of the lands and barony of Whittingehame, all as presently held by the testamentary trustees of the late the Right Honourable Arthur James, first earl of Balfour. The first earl died on 19 March 1930 leaving a Trust Disposition and Settlement executed on 1 January 1923 and two codicils executed respectively on 20 December 1927 and 20 September 1929. The appellant, who is the fourth earl of Balfour, being the grandson of the truster's younger brother Gerald, is presently in possession of a liferent of the lands and barony of Whittingehame. The sixth respondent, who claims to be the person next entitled to succeed to the lands and barony, challenges the appellant's entitlement to seek the declaration. The second to fifth respondents, the trustees presently acting under the trust disposition and settlement, appeared in the hearing before the Court of Session but were not represented at the hearing before this House. They have adopted a neutral position on the point in dispute.

    36. The great object of the Rutherfurd Act was, in the words of the Lord President in Black v Auld (1873) 1 R 133, 144, "to prevent persons making entails for the future from affecting with fetters persons not born or in existence at the date of the entail". The Act dealt primarily with entails, but, to quote again from the Lord President in Black v Auld (p 145), it also sought, in sections 47, 48 and 49:

    "to prevent an evasion of the leading provisions of the statute, either by the creation of trusts, or by the creation of successive liferents, or by the creation of leasehold rights in succession."

The parties appearing before this House did not seek to make any relevant point of difference for the purposes of the present dispute between sections 47 and 48, and the argument was presented as appropriate to both section 47 and section 48. But it may well be that, as Lord Jamieson suggested in Harvey's Trustees v Harvey [1942] SC 582 at p 589, that section 48 applies to cases of proper liferents as distinct from liferents created under trust, and it seems to me preferable to deal with the present case under reference to section 47.

    37. The relevant provisions of section 47 are as follows:

    "Where any land or estate in Scotland shall, by virtue of any trust disposition or settlement or other deed of trust whatsoever, dated on or after the first day of August one thousand eight hundred and forty eight, be in the lawful possession, either directly or through any trustees for his behoof, of a party of full age born after the date of such trust disposition or settlement or other deed of trust, such party shall not be in any way affected by any prohibitions, conditions, restrictions, or limitations which may be contained in such trust disposition or settlement or other deed of trust, or by which the same or the interest of such party therein may bear to be qualified, such prohibitions, conditions, restrictions, or limitations being of the nature of prohibitions, conditions, restrictions or limitations of entail, or intended to regulate the succession of such party, or to limit, restrict, or abridge his possession or enjoyment of such land or estate in favour of any future heir; and such party shall be deemed and taken to be the fee simple proprietor of such land or estate, and it shall be lawful to such party to make application by way of summary petition to the Court of Session, setting forth the facts, and referring to this Act, and craving the court to pronounce an act and decree declaring him fee simple proprietor of such land or estate, and unaffected by any such conditions, provisions , restrictions, or limitations; and the court shall proceed in such petition as may be just, and shall have power to pronounce an act and decree declaring such party to be fee simple proprietor of such land or estate, and unaffected as aforesaid; and such act and decree may be recorded in the register of sasines, and being so recorded shall have the operation and effect of the most formal and valid disposition to such party and his heirs and assignees whomsoever, of such lands or estate, with infeftment thereon in favour of such party duly recorded……"

    38. By the seventh purpose of his trust disposition and settlement the truster directed his trustees to pay or apply the whole net revenue or income of the residue of his estate, which included the lands and barony of Whittinghame:

    "…for behoof of the following series of heirs in their order successively each for his or her liferent use allenarly, videlicet:- My brother, the said Gerald William Balfour in liferent, whom failing, the heir male of the body of the said Gerald William Balfour in liferent, whom failing, the heir male of the body of my brother Eustace James Anthony Balfour (now deceased) in liferent, whom failing the heir female of the bodies of each of my said brothers Gerald and Eustace in the order of their seniority, in liferent, excluding heirs portioners…."

    39. By the first codicil to the trust disposition and settlement, executed on 20 December 1927, the truster provided as follows:

    "Having consulted my brother Gerald William Balfour and the other members of my family interested, and with his and their full approval, I hereby cancel the nomination of my said brother Gerald as the first liferenter or heir ceded to the succession of the rest and residue of my whole means and estate as provided for 'In the Seventh Place' in said Trust Disposition and Settlement, and I now instruct that in his place the heir male of his body shall be the person first entitled to succeed thereunder, and I wish to say that I have made this alteration to save my heirs as much Estate Duty as possible: And in all other respects I confirm the foregoing Trust Disposition and Settlement."

By the second codicil, executed on 20 September 1929, the truster appointed a further person to be one of his literary executors under his trust disposition and settlement.

    40. After the truster's death the trustees held the lands and barony for the third earl, being the heir male of the truster's brother Gerald, the second earl. The third earl died on 27 December 1968 and the lands and barony were then held for the appellant, the fourth earl, being the son of the third earl and the next heir male of the body of the second earl.

    41. The appellant was born on 23 December 1925, after the date when the trust disposition and settlement was executed, but before the date of the first earl's death and before either of the dates on which the two codicils were executed. It is accepted by the parties to the appeal that he is of full age and that he is in lawful possession of the lands and barony of Whittingehame. The question in the appeal, to use the language of section 47, is whether he was born after the date of the deed of trust by virtue of which he is in lawful possession of the lands and barony.

    42. It is agreed that in relation to a mortis causa trust section 47 looks to the date of the execution of the trust deed and not to the date of the truster's death. That view is in line with the decision in Lord Binning, Petitioner 1984 SLT 18. It is also not disputed that section 47 may apply to a plurality of deeds of trust. Indeed section 52 recognises that in providing expressly that unless the nature of the provision is repugnant to such a construction "all words used in the singular number shall be held to include several persons or things". But the question remains whether the appellant is correct in his submission that it is by virtue of the trust disposition and settlement alone that he is in lawful possession of the lands, so that he was born after the date of the relevant deed, and that no account need be taken of, in particular, the codicil of 20 December 1927 which was executed after he was born. The extra division of the Court of Session has held that this submission is unsound.

    43. The question is one of the construction of section 47 and of the application of that section to the facts of the present case. The critical words in section 47 seem to me to lie in the phrase "by virtue of". The appellant argues for a strict construction of those words, confining the scope of the inquiry to the particular deed or deeds by which the truster imposed the particular fetters on the particular person who is presently in possession of the liferent and who is making the application to the court for release from those fetters. On his approach the only relevant deed is the original trust disposition and settlement. That was executed before he was born and so he qualifies under section 47. The respondent argues for a more liberal construction, extending the identification of the deed or deeds to those which created the "entail", or even to all the deeds which constituted the final expression of the truster's intentions. On that approach at least the first codicil becomes relevant and, since that was executed after the appellant was born, the appellant must fail.

    44. It may be noticed at once that there is an unattractive uncertainty in the respondent's approach. To include all the testator's testamentary writings is in accordance with the well-established rule that all such writings "are to be read so far as possible as forming one deed" (Henderson on Vesting 2nd ed. p 17). But while that rule is applicable particularly to problems of interpretation of wills and problems such as those of approbate and reprobate or implied revocation, it does not seem to me to assist in resolving the problem of the construction of section 47 and in particular the identification of the deed or deeds whose dates are critical for the application of that section. Applying the rule in the present case involves including the second codicil in the deed or deeds to which the section refers. But the second codicil has nothing to do with the appellant's liferent and it is not easy to see why it should have any relevance to the application of section 47.

    45. On the respondent's alternative approach, that one should look at the trust disposition and settlement and the first codicil, and not the second codicil, the sharper question arises whether any deed which has had or might have had a bearing on the successive liferents has to be treated as relevant for the purposes of section 47. The point can be focussed by considering the position which would have arisen on the hypothesis that the third earl had predeceased the first earl. If that had happened the liferent would have opened to the appellant on the death of the first earl, the second earl being excluded by the codicil. It would then be difficult to resist the view that the appellant was in possession of his liferent by virtue of both the trust disposition and settlement and the codicil (although of course the appellant would at that time have been far from being of full age). But on the appellant's approach one should not ask what might be the case if events had turned out otherwise. Such a hypothetical scenario as I have figured should be regarded as entirely irrelevant. One should look simply to the position of the present liferenter making his application to the court under the section at the present time. In that situation the codicil is matter of past history. Its effect was spent when the liferent opened to third earl and it now plays no part in the source or basis of the appellant's liferent. It is not enough to be able to say that the first codicil had something to do with the succession of liferents and so broaden the inquiry beyond the particular position of the present liferenter.

    46. In my view the strict approach adopted by the appellant is correct. In Riddell, Petitioner (1874) 1 R 462 it was a literal meaning of the statutory language which was preferred in deciding whether account should be taken of the date of death or of the date of the execution of the relevant mortis causa deed. That case directly concerned section 3 of the Rutherfurd Act but the general approach there adopted seems to me applicable to section 47, a section of which the Lord President (Inglis) indeed expressly took notice (at p 467). More directly in Earl of Moray, Petitioner 1950 SC 281 at p 284 Lord Mackintosh adopted a literal meaning of the language of section 47. It further seems to me that a strict approach is appropriate to the construction of a statute which aims at securing a limitation on the extent to which restrictions may be imposed by a proprietor of lands upon those who may succeed to them.

    47. The way in which the section operates also seems to me to point to the same result. It first provides that the person who qualifies under the opening provisions of the section is not in any way to be affected by the restrictions imposed by the truster. It then goes to state that the person shall be "deemed and taken to be" the fee simple proprietor. It then provides that it shall be lawful for the person to apply to the court for a declarator that he is fee simple proprietor and provides that the recording of the decree of declarator is to have the effect of a valid disposition of the lands to the person and his heirs and assignees. All of that seems to me to be looking to the particular person presently in possession of the liferent, being the particular person who is applying to the court to have what is deemed to be a fee simple proprietorship confirmed into a full and formal right of property. Thus it is to the particular situation of the applicant at the date of his application to the court that one has to pay attention, not to a more general view of the deeds which have had a bearing on the succession of interests intended by the truster. The matter has to be tested at the time when the liferenter applies to the court. It is at that time that the deed or deeds by virtue of which he is then in possession of the liferent require to be identified. That approach seems to me to have some support from the approach taken by Lord Mackintosh in Earl of Moray 1950 SC 281. One question in that case was whether the words "land or estate" in section 47 could extend to property which was moveable when the trust commenced but which had been converted into heritable property by the time when the application under the section was made to the court. It was held that the words covered any estate which was heritable property at the time when the application was presented to the court.

    48. The appellant's approach to the problem also seems to me to be supported by the language of the section where it frees the liferenter from restrictions contained in any deed of trust "or by which the same or the interest of such party therein may bear to be qualified". This appears to be allowing for the possibility of a deed subsequent to an earlier principle deed, qualifying the earlier deed or the interest of the applicant in the earlier deed. That again points to the need to focus attention on the deed imposing the restrictions on the applicant, and not on all the deeds which may play a part at some time or other in identifying the various successive liferenters or even on all the deeds which comprise a testator's complete testamentary intentions. Although Lord Deas dissented from the majority of the court in Riddell the language which he uses is of interest. His concern was that the view taken by the majority might lead to difficulty where there was more than one deed. He referred to the case where "both may be necessary to give the right claimed", and said in relation to the case before the court "without the second deed the petitioner could not have claimed the position which he holds". Although his preference for the date of death as the solution to the problem was rejected by the majority it seems to me that the language he was using to describe the identity of the deed correctly reflects the kind of deed or deeds with which not only the section there under consideration but also section 47 is concerned. It is the deed or deeds which are necessary for the possession of the applicant's liferent which matter, not those which may bear on the liferents of others. The Extra Division of the Court of Session correctly recognised that it was by virtue of the trust disposition and settlement and the first codicil taken together that the first liferenter came into possession of and thereafter held the liferented estate. But if the matter is to be judged at the time of the application to the court and the standing of the applicant is to be assessed at that time the basis on which his father held the liferent is not of relevance.

    49. When one turns to the first codicil it is plain that, while it did accelerate the liferent of the third earl, in the events which have happened it has not affected the liferent of the appellant. Viewed at the time of his application to the court it was in no way by virtue of the first codicil that the appellant was in lawful possession of the liferent. The first codicil did not create nor qualify his interest. In confirming the provisions of the trust disposition and settlement the truster is not to be taken as restating those provisions so as to create afresh the provision of a liferent for the appellant. He is merely indicating the extent of the changes which he was making, changes which excluded the second earl from the succession and promoted the third earl. These were not added restrictions on the provisions he had made and they left untouched the liferent which the appellant came to possess. The 'confirmation' of the earlier provisions has no greater significance than the corresponding phrase was held to have in Miller's Trustees v Miller 1958 SC 125.

    50. For these reasons, in agreement with the views expressed by my noble and learned friends Lord Hope of Craighead and Lord Rodger of Earlsferry, I consider that the appeal should be allowed. I also agree that the matter of costs be dealt with in the way which my noble and learned friend Lord Hope of Craighead has proposed.

LORD RODGER OF EARLSFERRY

My Lords,

    51. I gratefully adopt the account of the facts and submissions given by my noble and learned friend Lord Hope of Craighead.

    52. The Entail Act 1685, which applies only to land and to estates that can be feudalised, permitted the creation of entails for the first time in Scots law. The Act remains on the statute book but will be repealed when section 76 and Part 1 of Schedule 13 to the Abolition of Feudal Tenure etc (Scotland) Act 2000 come into force. The rigidity which the 1685 Act introduced into the holding of land was eventually seen not only to cause hardship to owners but to prevent developments that would be of potential benefit to the community as a whole. The Entail Amendment Act 1848 ("the 1848 Act") made the first far-reaching reform of the system. Although this was changed by the Entail (Scotland) Act 1914, the 1848 Act distinguished between old entails, dated before 1 August 1848, and new entails constituted by "a deed of tailzie dated on or after" that date. In the case of new entails section 1 provided that it was lawful for any heir of entail

    "born after the date of such tailzie, being of full age, and in possession of such entailed estate by virtue of such tailzie, to acquire such estate, in whole or in part, in fee simple, by applying to the Court of Session for authority to execute, and executing, and recording in the register of tailzies, under the authority of the court, an instrument of disentail…" (emphasis added).

By contrast, an heir of entail born before the date of the tailzie could use the procedure and so acquire the estate in fee simple only with the consent of his heir apparent.

    53. An heir of entail in possession in Scots law is regarded as being vested with the full fee of the land subject only to the fetters in the deed of entail

    "and the sole object of the restrictions, imposed upon him as taillied feuar, is to protect and strengthen the right of inheritance which is created by the deed of entail, and to make the estate descend in succession to those heirs who are called by the terms of the destination": Macfarlane v Lord Advocate (1894) SC (HL) 28, 34 per Lord Watson.

Therefore the heir of entail is, in legal theory, very different from a liferenter in whom the fee does not vest. But in practice the two figures are sufficiently similar that many at least of the effects of an entail might be reproduced by a series of liferents, as Lord Mackenzie noted in Erskine v Wright (1846) 8 D 863, 867. When Parliament came to reform the law of entails by giving the heir of entail the power to acquire the estate in fee simple, it was accordingly conscious that those reforms might be circumvented unless similar changes were introduced into the law relating to liferents. Sections 47 and 48 of the 1848 Act were enacted to introduce those changes and so to bolster the central reform of the law of entails: Black v Auld (1873) 1 R 133, 145 per Lord President Inglis; Riddell, Petitioner (1874) 1 R 462, 467 also per Lord President Inglis. Section 49 made similar provision in relation to leases.

    54. Liferents can be created either by a deed of trust, so-called "improper" liferents, or by direct conveyance of the liferent estate to A and of the fee to B, so-called "proper" liferents. The language used by Parliament in section 47 is (deliberately) very wide and it may well be that it was intended to block off other prohibitions that might be included in trust deeds and might frustrate the reform. Nevertheless, I share the view of my noble and learned friends Lord Hope of Craighead and Lord Clyde that the language of section 47 is apt to cover a case such as the present where successive liferents are created in a trust disposition and settlement. Section 48, on the other hand, seems directed at proper liferents. In particular the reference to the act and decree having the same effect as "in the case of deeds of trust" suggests that section 48 is not intended to deal with a case involving a deed of trust. That being so, I prefer to approach the appeal on the basis of section 47, even though counsel were agreed that the result would be the same whichever section applied. I note in passing that section 48 has been replaced by section 18 of the Law Reform (Miscellaneous Provisions)(Scotland) Act 1968 in the case of deeds executed on or after 25 November 1968.

 
continue previous