Private client section
  


Back to e-updates     
                                                                     

Issue 41 – October 2009  

News
Cases

Journals


Articles

Events

Discounts
Cases

Moderator of the General Assembly of the Free Church of Scotland and another v Morrison and others

Trust and trustee – Trust property. Court of Session: In an action by the Moderator and Principal Clerk of the Free Church of Scotland (FC) relating to the entitlement, as between the FC and another body, the Free Church of Scotland (Continuing) (FCC), to the use and occupation of the church and manse at Broadford in Skye, the court held that the FCC had no claim to the use of property held in trust for the FC.

Citation: 2009 Scot (D) 2/9
Alternative citations: [2009] CSOH 113
Hearing date: 31 July 2009
Court: Outer House, Court of Session
Judge: Lord Uist
Representation: Currie QC and Charteris (instructed by Simpson & Marwick) for the pursuer. McNeill QC and Dawson (instructed by Drummond Miller LLP) for the defenders.
Keywords: Trust and trustee – Trust property – Certain ministers and members leaving Free Church of Scotland (FC) and forming Free Church of Scotland (Continuing) (FCC) – Moderator and Principal Clerk of FC bringing action relating to entitlement, as between FC and FCC, to use and occupation of church and manse at Broadford in Skye – Whether pursuers having title to sue – Whether all parties not called – Relevancy of averments.

Summary: In 2000 the Free Church of Scotland (Continuing) (FCC) was formed when some ministers and members left the Free Church of Scotland (FC) and claimed to reconstitute the denomination, claiming to be the true continuation of the FC. The FCC then unsuccessfully sought a declarator that it was entitled to the central funds and properties of the FC (see 2005 SC 396, 2005 Scot (D) 41/3). The instant action was a sequel to that one. It related to entitlement to the church and manse at Broadford in the parish of Strath on Skye (the subjects). It was brought by the Moderator and Principal Clerk of the General Assembly of the FC held at Edinburgh in May 2006.
The first defender was the Interim Moderator of the congregation of Strath FCC. The second defender was an elder of that congregation. The third and fourth defenders were members of the FCC.

The pursuers averred and sought declarator that the subjects were held in trust for the FC congregation of Strath FC, now known as Sleat and Strath FC following the uniting of the two congregations in April 2001, and that that congregation were entitled to the beneficial interest in the subjects. They also sought interdict against the defenders, or anyone on their behalf, unlawfully making use of the subjects. Interim interdict was granted in March 2007. The factual background was that about six people, including the minister, his wife and the second defender left the Strath FC congregation to form a congregation of the FCC but continued to occupy the church and manse. The minister was suspended sine die from his position in the FC. The trustees of Strath FC were unwilling to raise proceedings against him because he was elderly. He retired in January 2007, since when the manse had been unoccupied.

In February 2007 three trustees attempted to regain possession of the manse but the third and fourth defenders prevented them. The defenders claimed that they had not forfeited their rights to enjoy the benefit of the manse. The trustees of the FC wished to resume possession of it on behalf of the congregation. The title to the subjects was vested in trustees under an 1869 feu charter by Lord Macdonald. They were obliged to hold the property for the purposes and upon the trusts and under the conditions set out in the feu charter. The case called before the court on the procedure roll to debate the defenders' first three pleas-in-law--(1) that the pursers having no title to sue, the action should be dismissed; (2) all parties were not called; (3) the pursuers' averments being irrelevant and lacking in specification, the action should be dismissed--and the pursuers' fourth plea-in-law, that the defenders' averments in answer being irrelevant and lacking in specification ought to be repelled and decree de plano granted.

As regards title to sue the defenders submitted, first, that in a declaratory action of this nature the pursuers who had raised the action were not the entire parties who required to raise it for the court to pronounce the order sought, and, secondly, that the title the pursuers asserted, and their interest in the matter, were derived from the provisions of the trust deed, which accorded them limited powers which did not extend to giving them title and interest to raise an action of this nature. The court did not know what the position of the parties whose rights and duties were to be adjudicated upon under the trust was: the purported trustees and beneficiaries were not the pursuers and the pursuers did not sue in a representative capacity on behalf of the purported trustees and beneficiaries.

As to the terms of the feu charter, the power of the Moderator and Clerk was limited to situations where the trustees were doing or omitting to do something in breach of the trust. The pursuers did not have power under the trust to prosecute the instant action for declarator and interdict. The pursuers' submission in response was that they relied on the terms of the feu charter for their title and interest to sue. That conferred a very wide power on the Moderator and Principal Clerk in their capacity as representatives of the national church, to vindicate the purposes of the trust. There was nothing to suggest that their power was limited to situations of breach of trust: if they had the power to defend the property against the trustees then they must have the power to defend it against third parties. It was suggested that the words in the feu charter 'the Moderator and Clerk of the said General Assembly . . . shall at all times have full power and sufficient status and right or interest to pursue or defend any action or actions. . . for the enforcement maintenance or protection of the purposes and trusts' simply allowed the Moderator and Clerk to police the trustees.

The action had been brought to stop people who were not entitled to do so from using the manse. If a person used the trust property without entitlement the purposes of the trust would be subverted. The action therefore fell squarely within the above provision of the trust. So far as possible prejudice to the defenders was concerned, the difficulty postulated (that of the trustees and congregation bringing another action) was fallacious, as the benefits of the trustees and congregation derived entirely from the feu charter, which precluded them from bringing such an action. As regards the plea of all parties not called, the defenders submitted that the parties against whom the action had been raised were not the parties against whom it required to be raised for the court to be able to grant the declarator sought. The court should not entertain a declaratory action in which all interested parties had not been called: if it were to do so, its determination of the matter would not be res judicata against those parties. It was not sufficient that the action had been raised against four individuals who had asserted rights associated with the trust.

The deficiencies in the identity of the defenders were that the purported trustees and beneficiaries of the FCC were neither called nor represented. The FCC congregation at Broadford had not been sued and any members of the congregation sued had been sued only as individuals and not in any representative capacity. The pursuers submitted in response that the plea of all parties not called was all about prejudice to the parties who had been called. At no stage had the defenders pointed to any prejudice, nor could they do so. There were ample averments that the position of the purported trustees and congregation was being represented in the action. The alleged entitlement of the defenders rested entirely on the same basis as that of the purported trustees and congregation.
The four defenders were all office-bearers in the congregation and the second defender was also a trustee. The defenders' submission on the relevancy of the pursuers' case consisted of two propositions. The first was that their case about the appointment of the purported FC trustees 'appointed at a meeting of the Congregation on 28 February 2007' was irrelevant because they did not aver that the congregation which appointed the trustees was 'in use and occupation of the said place of worship' as required by the feu charter. The pursuers' case in so far as it sought to have the people named in conclusion 1 declared to be trustees was irrelevant.

The congregation could not elect new trustees while dispossessed of the subjects. The second proposition was that as the pursuers sought declarator that the subjects were 'held in trust for the congregation of the body of Christians called the Free Church of Scotland at Broadford in the Parish of Strath, Skye, formerly known as Strath Free Church of Scotland and now known as Sleat and Strath Free Church of Scotland' those purported beneficiaries could never, in terms of the trust, be beneficiaries. The truster had chosen the congregation on the basis that it was of the Free Church of Scotland and worshipped at Broadford in the Parish of Strath in Skye. The Strath FC congregation no longer existed as it had united with Sleat FC congregation. The old body had ceased to exist and a new body covering a larger area had come into being. The new body had its own place of worship and had built a new manse. The pursuers had been content that the FCC should be in the manse at Broadford till 2007, by which time the congregation for Sleat and Strath had been in existence for six years and its place of worship was not at Broadford. They were therefore not in the position posited in the trust deed to enable them to appoint trustees. The pursuers' response to the defenders' first proposition was that 'use, occupation or enjoyment' in the feu charter must mean having the right to the use and occupation of the subjects.

The pursuers averred that they were unlawfully excluded from occupation and were lawfully entitled to occupation. Their answer to the second proposition (about the united congregation) was that all that had happened was that the congregation of Sleat and Strath had become bigger. The united congregation had maintained its presence at Broadford, albeit it had to meet in the Church of Scotland building there. The united congregation was a congregation of the FC at Broadford in Strath now known as Sleat and Strath congregation and the only reason it had not been meeting more regularly was because the defenders had not permitted it to do so. Where congregations of different denominations united there was no breach of trust if there was continuing adherence to fundamental principles and the trust property was held for the new body.

The same principle applied where congregations of the same denomination united. The property and funds formerly held by each congregation were then held by the united congregation. The pursuers' submission in support of their fourth plea-in-law was summarised in four points: (1) The authorities did not support the defenders' contention that adherence to fundamental principles was sufficient in itself to entitle them to the use of the subjects. (2) The authorities insisted that the leavers had to show that those who had stayed had departed from fundamental principles. (3) In practical terms, how could adherence to fundamental principles be the sole basis of entitlement to use of the subjects? What would happen if there were a further split? (4) If adherence to fundamental principles was the sole test, there being no averments that the FC congregation did not adhere to fundamental principles, why was it not entitled to the use and occupation of the subjects? The defenders' submission was that one essential part of the pursuers' contention, sought to be inferred from an admission, was not made out. They sought to characterise the FCC as the leaving body and the FC as the original body or staying section.

For the defences to be irrelevant and decree to be pronounced without proof that characterisation of the two competing bodies had to proceed from something in the pleadings. The defenders at no point averred or admitted that the ministers or elders of the FCC either seceded or withdrew from the original body. On the contrary, they offered to prove that the body of Christians known for administrative purposes only as the FCC was the FC. It was not even correct to say that the defenders simply admitted a division. The heart of the issue to be examined at a proof was the defenders' contention that the ministers and elders who walked away from their brethren in January 2000 did not walk away from the FC. As the court had to determine a fundamental issue between the parties the pursuers could not succeed in their attempt to obtain decree without a proof. What the pursuers were saying was 'we are and always have been the FC and those who separated in 2000 cannot ipso facto be the FC'. There was no basis for that approach in any of the cases. The courts would not investigate the reason for the split, except in relation to property rights, when they would decide who had or had not departed from fundamental principles. The courts did not simply look at who was in occupation or who was the majority or minority. If both parties adhered to fundamental principles the courts would not interfere.

The court ruled:

(1) It was clear from their averments that the pursuers relied solely upon the terms of the feu charter for their title and interest to sue. Giving the relevant terms their ordinary and natural meaning the pursuers did have the necessary title and interest to bring the action. The deed conferred on them 'full power and sufficient status and right or interest to pursue or defend any action or actions . . . for the enforcement maintenance and protection of the purposes and trusts'. The words 'full' and 'sufficient' indicated that the Moderator and Clerk did not require the consent of any other party (which would include the trustees and congregation) to bring an action. In the context of the organisation of a voluntary church such a provision was consistent with common sense, for it conferred on the central organisation of the national church the necessary title and interest to litigate in relation to specific church properties. As for the point that the power conferred on the pursuers by the feu charter did not entitle them to pursue an action of the nature of the instant action, the action fell clearly within the provision in the feu charter and the point was without merit. So also, for the reason given in the pursuers' submission, was the defenders' point about possible prejudice.

(2) Consideration of the plea of all parties not called must be approached from the viewpoint of possible prejudice to the defenders. The defenders made no averments that prejudice would result to them because another party had not been convened as defender and nothing said in submissions persuaded the court that there were other persons who had not been called and whose absence would prejudice the defenders who had been called, either in their defence or in their position after their defence had been repelled. The plea was wholly without merit.

(3) The defenders' two propositions on the relevancy of the pursuers' case were unsound in law. The use and occupation referred to in the feu charter must mean lawful use and occupation, as otherwise a body which seized possession of the subjects by force would have rights over those lawfully entitled to use and occupation. It was clear from the pursuers' averments that they had never abandoned use and occupation of the subjects in the sense of giving up their lawful entitlement. All that had happened was that they had not been permitted to exercise their lawful right by the actions of the defenders and FCC. The second proposition was pedantic and wrong. All that had happened was that the new united congregation of Sleat and Strath had replaced the former congregation of Strath and now had the entitlement to the lawful use and occupation of the subjects formerly enjoyed by the congregation of Strath. The united congregation fulfilled the requirements set out in the feu charter.

(4) It was plain from the pleadings that the split in January 2000 had nothing to do with either the FC or the FCC departing from fundamental principles and practice of the FC. The FC as it existed before January 2000 had split into two groups. The FC which existed before January 2000 was the same FC which had continued to exist since then. The defenders did not dispute that the FCC was a new body with a separate and distinct organisation and structure from the FC. Against that background the question was, upon what legal basis, if any, could the FCC claim to be entitled to the use and occupation of the subjects? The only ground the defenders proffered was that the FCC adhered to the laws and practice of the FC and its ministers, elders and adherents had therefore not forfeited any rights they enjoyed prior to the division in so far as those rights were vested in the body of Christians called the FC or any united body composed of Christians adhering to the body called the FC prior to that division.

The specific question then was whether that fact alone, in the absence of any averment that the FC had ceased to adhere to its fundamental principles and practice, was sufficient in law to entitle them to the beneficial use and occupation of the subjects. The authorities showed that adherence to fundamental principles and practice was not sufficient to entitle the FCC to the use and occupation of the subjects in the absence of any averment that the FC itself no longer adhered to fundamental principles and practice. The FCC had entirely separated themselves from the FC and had no right under the trust to the use and occupation of property intended for the benefit of the FC. The authorities supported that view. If the defenders were correct the result would lead to chaos. The process of groups leaving the FC could go on ad infinitum and, where that process did not involve departure from fundamental principles, the court would be powerless to intervene to regulate property rights. The court therefore concluded that there was nothing to go to proof and that the defences were irrelevant.

Decree would be granted in terms of the first and second conclusions of the summons.

Craigdallie v Aikman [1820] 2 Bligh 529, Smith v Galbraith (1843) 5D 665, Craigie v Marshall (1850) 12D 523, Couper v Burn (1859) 22D 120, Bannatyne v Overtoun [1904] AC 515 and MacKay v MacLeod (10 January 1952, unreported) followed.
For related proceedings, see 2005 SC 396, 2005 Scot (D) 41/3.

Gordon McBain MA, solicitor
Published date: 28/08/2009

Knight v Edonya and others

Will – Execution. Chancery Division: On the evidence in the instant case, the court had been satisfied that the will in issue truly represented the testator's testamentary intentions and that he knew and approved its contents. The court would pronounced for the force and validity of the will in solemn form of law.

Citation: [2009] All ER (D) 207 (Aug)
Alternative citations: [2009] EWHC 2181 (Ch)
Hearing date: 27 August 2009
Court: Chancery Division
Judge: William Trower QC sitting as a deputy judge of the High Court
Representation: Constance McDonnell (instructed by H Montlake & Co) for the claimant. Bridget Williamson (instructed by Ronald Fletcher & Co) for the first and second defendants.
Keywords: Will – Execution – Testator knowing and approving contents of will – Testator drawing up will shortly before death – Claimant seeking order that court pronounce for will in solemn form of law – Defendants putting claimant to proof – Whether order sought should be granted.

Summary: The judgment is available at: [2009] EWHC 2181 (Ch)
The testator was born in Nigeria and moved to the United Kingdom. The first and second defendants were his children from his first marriage. The claimant was a child of the testator's second wife. The third defendant was a child of the defendant's second marriage. Two days prior to the testator passing away he executed a will. At the time of its execution he had been informed that he did not have long to live. By clause 2 of the will the testator appointed the claimant and the first defendant to be his executors and trustees. The testator made no specific bequests and, by 6 of the will, he gave his residuary estate to the claimant and defendants in equal shares. The claimant sought an order that the court pronounce for the will in solemn form of law.

The first and second defendants did not assert a positive case but relied on an insistence that the will be proved in solemn form. The third defendant gave evidence in support of the claimant's case.
The claim would be allowed.

A party that put forward a document as being the last will of a deceased had to establish that the testator knew and approved its contents at the time when he executed it. In ordinary circumstances that was established by proof of testamentary capacity and due execution. However, when the circumstances attending the execution of a will were such as to 'excite the suspicion of the court', the court would pronounce against the will unless the suspicion was removed. Where the suspicion arose it had to be clearly shown, on the balance of probabilities and in light of all the circumstances, that the deceased had known and approved of the contents of the will (see [10] and [11] of the judgment).

On the evidence, although the claimant initiated the process of drawing up the will she was present neither during the giving of instructions by the testator as to the contents of the will nor during its actual execution. None of the circumstances relied on by the defendants were such as to excite the suspicion and concern of the court as to whether the testator knew and approved of the contents of the will. Further the court had been satisfied that the will truly represented the testator's testamentary intentions and that he knew and approved its contents (see [101] and [113] of the judgment).

The court would pronounce for the force and validity of the will in solemn form of law (see [114] of the judgment).

Fuller v Strum [2002] 2 All ER 87 considered; Sherrington v Sherrington [2005] 3 FCR 538 considered.

Gareth Williams, barrister

Journals

Repairing the damage

Pensions World, September 2009: Trustees may be exposed to liability for investment decisions

LNB News 08/09/2009 59
Published date: 8 September 2009
Author: Sean McNulty
Journal name: Pensions World
Journal date: 1 September 2009
Journal citation: Pensions World, September 2009, 26
Jurisdiction: England; Wales

Summary: Assesses the impact on trustees of deposits in collapsed banks. Some schemes made substantial deposits in banks which collapsed. Most trustees are not eligible for compensation from the FSCS.

In training

Pensions World, September 2009: Trustees need help to keep up to speed as the going gets tougher
LNB News 08/09/2009 60

Published date: 8 September 2009
Author: Tim Cooper
Journal name: Pensions World
Journal date: 1 September 2009
Journal citation: Pensions World, September 2009, 29
Jurisdiction: England; Wales

Summary: Reports on increased interest in training from trustees. It is important for trustees to find courses that match their specific needs. In the light of TKU requirements, it is a good idea for the board of trustees to construct a training plan outlining their objectives and timescales.

It pays to advertise

Pensions World, September 2009: Trustees need to protect themselves against claims by unknown beneficiaries

LNB News 08/09/2009 67
Published date: 8 September 2009
Author: Peter Esam and Nick White
Journal name: Pensions World
Journal date: 1 September 2009
Journal citation: Pensions World, September 2009, 44
Jurisdiction: England; Wales
Summary: Looks at limiting trustees' exposure to claims brought after a wind up by overlooked beneficiaries. They can protect themselves by placing advertisements and purchasing run off insurance. If there are missing beneficiaries, it is better to hear from them while the scheme still has assets.
 
A cautionary tale of self-investment and personal liability

In-House Lawyer, June 2009: What can be learnt from recent Pension Ombudsman cases that have imposed personal liability on trustees?

LNB News 04/09/2009 107
Published date: 4 September 2009
Author: Terry Saeedi
Journal name: In-House Lawyer
Journal date: 1 June 2009
Journal citation: In-House Lawyer, June 2009, 54
Jurisdiction: England; Wales
Related legislation: SI 2005/3378

Summary: Looks at two Pension Ombudsman cases that have imposed personal liability on trustees for inappropriate scheme investments. Even though employers will be interested in the trustees' investment decision, scheme investments are a matter for the trustees. This was reinforced by the Occupational Pensions (Investment) Regulations 2005.
 
Constructive trusts and improvements to property

Family Law, 1 August 2009: How does the court view constructive trusts and improvements to property that is either singularly or jointly owned?

LNB News 25/08/2009 32
Published date: 25 August 2009
Author: Mark Pawlowski
Journal name: Family Law
Journal date: 1 August 2009
Journal citation: [2009] Fam Law 680
Jurisdiction: England; Wales

Summary: Looks at the case law relating to constructive trusts and improvements to property that is either singularly or jointly owned. Although much of the recent case law has focused on the issue of assessment of the parties' beneficial ownership, there is still remarkably little guidance on what detriment is required to support a constructive trust at the initial (or threshold) stage of the court's inquiry into the claimant's claim. This is particularly so when it comes to improvements carried out to the property by either or both of the parties subsequent to acquisition.
 
A question of trusts

The Lawyer, 27 July 2009: Offshore purpose trusts have come into their own as a flexible legal vehicle, with most centres now embracing them in one form or another

LNB News 23/08/2009 21
Published date: 23 August 2009
Author: Samantha Morgan and Philip Munro
Journal name: Lawyer
Journal date: 27 July 2009
Journal citation: The Lawyer, 27 July 2009, 23
Jurisdiction: Bermuda; Cayman Islands; Jersey; Guernsey; British Virgin Islands

Summary: Reports on offshore non-charitable purpose trusts. Purpose trusts can be created as flexible, long-term vehicles. There are key points of difference between the offshore jurisdictions allowing for purpose trusts, but among them a suitable form of purpose trust is likely to exist in most situations.
 
 
Firm foundations

The Lawyer, 27 July 2009: Jersey's new law relating to the creation of foundations as an alternative to trusts confers many benefits on clients more familiar with operating under civil law

LNB News 23/08/2009 30
Published date: 23 August 2009
Author: Alex Ruffel and Philip Howarth
Journal name: Lawyer
Journal date: 27 July 2009
Journal citation: The Lawyer, 27 July 2009, 40
Jurisdiction: England; Scotland; Northern Ireland; Wales; Jersey

Summary: Describes Jersey's new foundation law. Jersey can now provide foundations to clients from civil las countries, which are less familiar with the concept of giving away one's assets without retaining any control or legal interest, and so perhaps have been put off having a trust. There is an element of uncertainty as to the UK's tax treatment of Jersey foundations.

Articles

Will leaving entire estate to son of carer is overturned

LNB News 03/09/2009 26
Spelling mistakes were one of many suspicious features of a home-made will that left everything to an 83 year-old book collector’s carer’s son, who she may have met only a couple of times. Lucinda Rowley, solicitor, Hewitsons, who acted for the family of Catherine Devas, tells Elizabeth Davidson about the case

Published date: 3 September 2009
Jurisdiction: UK
Related cases: Devas v Mackay [2009] EWHC 1951 (Ch), [2009] All ER (D) 09 (Aug)
Summary: Catherine Devas, who died in 2006 aged 83, left her estate to her family in a will drawn up in 2002, but a home-made will dated November 2005 named Marcus Mackay, the son of her carer, as sole beneficiary.

In Devas v Mackay, the issue before the court was whether Mrs Devas had testamentary capacity at the time the 2005 will was drawn up. The judge, Sarah Asplin QC, ruled that Mrs Devas did not.
Lucinda Rowley, solicitor, Hewitsons, who acted for Mrs Devas’ family, said: “Catherine Devas was a philanthropist, based in Cambridge, who died in 2006. She received 24-hour care from a private care team and she had suffered strokes since 2005.

“All her previous wills were professionally drawn, and benefited her family. She had three daughters, a son, and a daughter-in-law. Her 2005 will bequeathed her whole estate to Marcus Mackay, the son of one of her carers. She appeared to have signed it and it was witnessed by two other carers.
“Her family doubted she had testamentary capacity when the 2005 will was drawn up. We instructed an independent expert to do a retrospective diagnosis using witness statements and medical evidence. Our doctor found it ‘highly improbable’ that she had capacity in 2005, but more likely than not that she had capacity in 2002.

“The family pursued the case on the grounds of testamentary capacity; want of knowledge and approval; and undue influence. Not only did the care team ‘gatekeep’ her and isolate her from her family, but they spent £400,000 of her money.”

Crucially, the judge ruled that the burden of proof must be on Mr Mackay to prove that Mrs Devas has testamentary capacity.

“Normally, the burden of proof is on those seeking to propound a will, but when circumstances arouse the suspicion of the court, the judge must shift the burden onto the defendant,” said Rowley. “The defendant did very little to shift the burden of proof. The judge overturned the will on the grounds of testamentary capacity and want of knowledge and approval, but we dropped the undue influence ground because it would have taken too long to argue.

“The grounds of suspicion were that the will was home-made unlike the others; the beneficiary was the son of one of the carers; the care team was able to take advantage of her; they didn’t alert the family that she was dying and didn’t contact the family until two days after her death; Mrs Devas was pedantic about grammar and spelling and the language in the 2005 will wasn’t the sort she would use, and there were spelling mistakes; and the will sought to defame one of her daughters, which she wouldn’t have been expected to do.”