Scottish Court of Session Decisions

Sir John Arbuthnot Fisher, Baron Fisher of Kilverstone, and others, the Hamilton trustees in the sense of the Hamilton Estates

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Act 1918, petitioners, acting under the trust-disposition and settlement and relative codicils of the Duke of Hamilton, Brandon and Chatelherault, presented a petition under the Trusts (Scotland) Act 1867, sec. 3, or alternatively in the exercise of the nobile officium of the Court, wherein they craved the Court “to grant power and authority to the petitioners as trustees foresaid (1) to sell and dispose of the materials of which Hamilton Palace is constructed, or any part or parts thereof; (2) to sell and dispose of the whole fittings, fixtures, furniture, plenishing, panelling, pictures and furnishings, including the said marble staircase within the said Hamilton Palace; and (3) to sell and dispose of the whole silver plate and plated articles which belonged to the testator, and that either by public roup or private bargain, at such price or prices, and upon such terms and conditions, as the petitioners consider to be most beneficial to the trust estate, and to authorise the petitioners as trustees foresaid to enter into all necessary contracts of sale, and to grant all necessary deeds containing all usual and necessary clauses for effecting the said sales.”

The trust-disposition and settlement contained in its sixth purpose this declaration—“Declaring, with reference to Hamilton Palace, which is not now used by me as a place of residence, that it shall be in the power of my said trustees if they, in their sole discretion, shall think it advisable to do so, to entirely displenish and dismantle the palace, and take down and remove the building, or allow the same to fall into disuse, as they shall think fit.…”—and in conferring powers to lease, feu, &c., it spoke of “Hamilton Palace and policies which they” ( i.e., the trustees) “shall be entitled to deal with … as if the said Palace and policies did not exist as a mansion-house and policies on my said estates.”

The petition set forth that the mineral workings under and around Hamilton Palace would damage and might sooner or later destroy the fabric of the edifice, and contained the following further averments:—“7. The last purpose of the said trust-disposition and settlement is in the following terms:—[ Here followed a direction along with the necessary instructions in certain events to execute a new deed of entail] ‘And with reference to any moveable or personal estate in the hands or under the management of my trustees at the time when the said entail or entails fall to be executed and not otherwise disposed of, including the contents of any houses upon the estates to be entailed as aforesaid, and the silver-plate deposited in bank, and any accumulations of income from my heritable and real estate, I hereby direct my trustees to pay and make over the same to the institute or heir of entail, to whom the said entail or entails are granted and delivered, and that for his own absolute use and behoof. …’ … 9. In particular, the testator conferred upon his trustees a power of sale in the following terms:—As also ‘to sell and dispose of any parts of the estate and effects, heritable and moveable, hereby conveyed, or that may be held by my trustees, whenever they in their sole discretion may consider such sales expedient with reference to the purposes of the trust, including specially the payment of the debt affecting my estates or any part thereof in England or Scotland, and particularly without prejudice to the said general power I hereby authorise my trustees to sell at their discretion any outlying and detached portions of my estates in Lanarkshire, Stirlingshire, or Linlithgowshire which they may think it advisable to realise, and I give this power as a recommendation to them with the view of consolidating my estates in these counties, declaring that all such sales of any portions of my estates may be made either by public sale or private bargain, and as to any landed property which may be so sold, the same may be sold either with or without reservation of mines and minerals or of feu-duty or ground annuals, and on such terms and conditions otherwise as my trustees may think fit, and with power to my trustees to enter into and execute all agreements, contracts, articles of roup, and minutes and missives of sale, and upon such sales to grant dispositions or other conveyances containing clauses binding my trust estate and my heirs in absolute warrandice, and all other usual and necessary clauses.…’ 19. In these circumstances the petitioners have had to consider what course should be adopted with reference to the preservation or otherwise of the fabric of the Palace. Mining engineers of standing have been consulted, and in view of the expense of the works which in their opinion would be required to counteract the effect of the working out of the minerals the petitioners have come to the conclusion that the time has arrived when the discretion conferred upon them by the testator with regard to the Palace should be exercised. They have accordingly decided to take no steps for the maintenance of the Palace as a residence, and have resolved to displenish and dismantle it and to take down and remove the building. 20. The Palace contains a large quantity of valuable furniture, pictures, panelling, and other articles which belonged to the testator, and which have been allowed to remain in the Palace during the occupancy of the present duke. It is necessary that the petitioners in pursuance of their said resolution should make arrangements for the removal of such furniture, &c. 21. The decision referred to was communicated to and has the approval of the present Duke, and such furniture and plenishing as he desires to have the liferent use of has been or is about to be taken to his other mansion-houses in Scotland and England. There still remain undisposed of, in addition to the usual fittings and fixtures (1) A valuable marble staircase; (2) decorative panels and panelling in the palace; (3) articles of furniture, pictures, &c., and (4) a quantity of silver-plate at one time deposited in hank. 22. The petitioners have given careful consideration to the question of the disposition of these assets of the trust. They are advised that the cost for storage and insurance of them in some suitable repository where they

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would receive the attention necessary to reduce depreciation to a minimum would amount to a large sum per annum, which in cumulo would in the course of time seriously diminish if not entirely exhaust the value of the articles themselves, even assuming that damage or depreciation would not result from storing. In any event the petitioners have no authority to apply the funds in their hands, either capital or income, in payment of the heavy charges which such storage would involve, and which they apprehend could not be debited against the revenue of the trust payable to the present Duke.”

No answers were lodged.

On 24th May 1919 the Court, after a debate, remitted to James A. Fleming, Esq., K.C., and to Mr Lancelot Hannen, auctioneer, London, to make inquiry into the facts and circumstances set forth in the petition, and to report.

Mr Fleming's report, inter alia, ran as follows:—“The power of sale quoted in the petition is immediately followed by a power to acquire lands as follows:—‘As also with power to my trustees to purchase or to acquire absolutely, or in feu or on lease, from time to time, any lands or heritages which they in their sole discretion may consider it to be for the advantage of my estates to obtain, and that upon such terms as they may deem advisable, and if considered necessary by them, to charge the price or prices of such lands when and if purchased on the fee of the estates, including the fee of the lands so purchased.’

The purposes of the trust are two—First, to hold and apply the income in paying an allowance to the Duke for the time, and with the balance to pay off debts affecting the estate. Second, when the whole debt is paid off, should the present Duke be still alive, to make over to him during his life the whole free income of the estates, and on his death to execute a deed of entail of the lands on the successor to the title when he attains full age, and is in the opinion of the trustees ‘from his circumstances, mentally or otherwise, in a position competently to occupy the position of Duke of Hamilton in possession of the estates.’ At the same time the trustees are directed to hand over to the institute of entail absolutely all the moveable or personal estate which may then be in their hands.

The truster has conferred upon the petitioners a general power of sale of heritage and moveables, but it is a question for your Lordships' decision whether that power is not limited by the words ‘wherever they in their sole discretion may consider such sales expedient with reference to the purposes of the trust, including specially the payment of the debt affecting my estates,’ to sales for the purpose of paying off debts. Your Lordships will compare this clause in the deed with the immediately succeeding clauses giving power to sell outlying portions and acquire other lands so as to consolidate the estates. The whole debts have now been paid off, and the sole remaining purpose of the trust is to hold the estate until the entail can be executed. Should your Lordships decide that the power of sale is not restricted the petition seems needless, and your Lordships will not intervene to grant to the petitioners a power which they already have. Should your Lordships hold that the power of sale is restricted, then it is for your Lordships to consider whether the restriction should be relaxed to the extent craved in the petition. This the Court has power to do under section 3 of the Trusts (Scotland) Act 1867 upon being satisfied that the powers of sale craved are expedient for the execution of the trust and not inconsistent with the intention thereof.

The intention of the truster seems to have been that his estates, once cleared of debt, should be made over to an heir in the dukedom along with the moveable and personal estate, the latter in forma specifica so far as consisting of the contents of his houses and the silver plate deposited in the bank, and it is for your Lordships to dispose of the question whether the proposal to convert specific moveables into cash for the purpose of making a more beneficial investment is one which is either expedient for the execution of the trust or consistent with the truster's intention.

As regards the sale of the materials of the fabric of Hamilton Palace, and the usual and ordinary fittings and fixtures, there can be little question but that this is expedient in the interests of the estate. Specific power is given to the trustees to demolish the building, and it would seem to be only good management to dispose of the materials for what they will bring. This, I venture to think, would also apply to the marble staircase and to the panels and panelling, but more difficult questions arise with regard to the pictures, furniture, and silver plate.

I have seen the report by Mr Hannen of Messrs Christie's. It there appears that there have been already removed from Hamilton Palace a considerable number of family portraits and other pictures, and that there are also in their hands some twenty-five chests of decorative and table plate. I assume this is the plate described in the petition as ‘at one time deposited in bank.’ I have no further information as to the furniture still in Hamilton Palace.

I would venture to submit that such articles may have a value from their family association to the ultimate fiar, who must be a Duke of Hamilton, much in excess of any money value, and that your Lordships will not authorise the scattering abroad of what may be unique family treasures until satisfied that it is the most expedient course for carrying out the wishes of the truster. The case of Galloway v. Campbell's Trustees, 7 F. 931, 42 S.L.R. 712, is interesting as showing that a distinction has been drawn between property with a family interest and property which has no such value.

In regard to this question the proper contradictor would seem to be the next heir—that is, the individual in whose favour the lands are to be entailed after the death of the present Duke.

The heir-apparent is the Marquess of Douglas and Clydesdale, the eldest son of the present Duke. He was sixteen on 3rd February

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last. He has three younger brothers and three younger sisters. The brothers are—Lord George, aged thirteen, Lord Malcolm, aged nine, and Lord David, aged six.

The petition has been served on them and on the present Duke as their curator and tutor-at-law.

The present Duke's health is not good, but without founding on that I must report to your Lordships that I greatly fear the interests of the next heir are not sufficiently represented by the present Duke of Hamilton. The Duke being entitled to the free income of the whole estate has an interest to increase the income-yielding part of the estate. The conversion of these articles into cash automatically increases his income, while it divorces them for ever from the family of whose history they may form part. I venture to submit that the interest of the fiar of the estate, whoever he may be, is adverse to that of the liferenter, and that this interest should be adequately represented. I would suggest that this should be done by the appointment of a curator ad litem to the Marquess of Douglas and Clydesdale.

I am informed that the present Duke has assigned to trustees for the benefit of his younger children his whole income beyond a certain fixed sum for a period of years. The interest of these younger children is thus not adverse to that of the present Duke, but I would suggest for your Lordships' consideration whether another curator ad litem might not be appointed to them.

The case of the silver plate, if my assumption be correct, is slightly different. What is directed by the truster to be handed over to the institute of entail is the whole moveable estate then existing, including specifically ‘the silver plate deposited in bank.’ An inference might be drawn from this against any intention of the truster that this silver plate should be sold except possibly as a last resort in a case of necessity. There is no case of necessity here.

I am unable to appreciate the force of the considerations set out in paragraph 22 of the petition. The second purpose of the trust-disposition provides for maintaining and upholding Hamilton Palace (so long as the trustees think right) and the contents thereof, and that would seem to apply to the contents wherever they are. Further, if Hamilton Palace is demolished and the contents stored there will be no increase of expense in insurance, and I doubt the possibility of warehouse rent exceeding the present cost of maintaining and upholding Hamilton Palace. That cost will be saved to the estate, and the cost of storing elsewhere could fairly be set against that saving. Short of depreciation, which is not very strongly put forward by the petitioners, there seems to be no reason why either these articles of family interest or the estate should suffer. The suggestion of debiting these articles with the annual cost of maintenance would be appropriate in the case of a dealer, but seems out of place in the case of one who keeps them for his own pleasure.

With regard to the appeal for an exercise of your Lordships' nobile officium, I would refer to the cases of Berwick, 2 R. 90, 12 S.L.R. 58; Noble's Trustees, 1912 S.C. 1230, 49 S.L.R. 888; and Scott's Hospital, 1913 S.C. 289, 58 S.L.R. 199.”

Mr Hannen reported that owing to the present high scale of prices the proposed sale would, if authorised, take place at a very opportune time, but that the present prices might not continue.

Argued for the petitioners—No contradictor to the trustees having come forward, the petitioners were unable to proceed by way of an action of declarator or by a special case. The trustees were not bound to avail themselves of the power of sale without making certain that they could safely do so, and they were within their rights in coming to the Court for guidance in the matter. It was all the more expedient to follow this course, as the reporter had made a suggestion to the effect that the power of sale was fettered, and had doubted whether the proposed sale would coincide with the testator's wishes. Counsel referred to Galloway v. Campbell's Trustees, 1905, 7 F. 931, 42 S.L.R. 712.