Commentary on Sections Part 1 – Trusts Miscellaneous powers
131.Section 72 of the Act allows trustees, or anyone with an interest in the trust, to apply to the Court of Session for authorisation for the trustees to make payments from the trust property on the assumption that particular events in the past or future have, or have not occurred (or will, or will not occur). The effect of such an order, which is known as a “Benjamin order” in English and Welsh law, protects the trustees from liability if it turns out that the assumptions in question were not in fact correct. An example of a past event might be the question of whether a particular person predeceased the testator without leaving issue. If, after reasonable enquiries, the trustees cannot trace any issue, they may apply to the court for authority to distribute the deceased’s estate on that basis. In relation to uncertainties about future liability, one example in recent times has been over whether the reinsurance arranged in respect of a deceased’s liabilities as a Lloyd’s Name (that is, an insurance underwriter) will prove sufficient; doubts over such matters can delay the distribution of the estate for lengthy periods. The effect of an order under this section only relieves the trustees of personal liability (unless the grounds in subsection (3) are established), but it does not affect the rights of any person if it later turns out that the assumptions on which the order is granted were in fact incorrect.
132.Subsections (1) and (2) implement recommendation 73(1). They allow the court (which, under section 81(1) means the Court of Session) to grant authority for the trustees to proceed with the distribution of trust property. By subsection (3), which implements recommendation 73(2), the effect of a court order under subsection (1) is to remove personal liability from a trustee who acts in accordance with it; if, however, the trustee was involved in concealing relevant facts from the court or in fraudulent actings then there is no protection against personal liability.
133.Subsection (4) states that the position of the beneficiaries is not affected. Thus, if events turn out other than as expected when making the court order, the entitlements which actually turn out to arise will be enforceable. But if the trust property has already been distributed by that time, the entitlements will require to be enforced against those to whom distributions were made, rather than against the trustees for breach of trust.
134.Section 73 of the Act provides a mechanism by which a beneficiary (or, by subsection (4), any person deriving a right from a beneficiary) may apply to the court – i.e. the Court of Session or the appropriate sheriff court (under section 81(1) and (3)) – to obtain title to heritable property (such as a house) or incorporeal moveable property (such as shares) to which the beneficiary is absolutely entitled but which is in the name of a trustee who has died or become incapable (within the meaning of section 83) of acting. The court may grant warrant for completing title to the property (subsection (2)) and any warrant is effective as a conveyance or, for example, in the case of leases, an assignation of the property in favour of the beneficiary (subsection (3)). This provision applies irrespective of when the trust was created (subsection (5)).
135.Section 74 of the Act deals with the vesting of corporeal moveable property which remains vested in a trustee who has either died or become incapable (within the meaning of section 83). Where a beneficiary is absolutely entitled to corporeal moveable property which remains vested in a trustee who has died or become incapable of acting and for which delivery or possession would be required for re-vesting, the beneficiary may apply to the Court of Session for a warrant for the property to vest in the beneficiary. For example, title to equipment – like computers – vested in the deceased trustee might be required to be delivered to the beneficiary in order to allow them to continue to operate a business. Subsection (3) provides that the effect of the warrant is to vest the property in the beneficiary as at the date of the warrant as if the beneficiary had taken delivery or possession on that date. Subsection (4) provides the same right for any person deriving a right from a beneficiary. This provision applies irrespective of when the trust was created (subsection (5)).
136.Section 75 of the Act essentially restates section 17 of the 1921 Act. Subsection (1) permits trustees (as a body or any one or more of them) to apply to the Court of Session for an order by which the accountant of court will supervise their administration of the trust in relation to the investment of trust property or the distribution of property to creditors and beneficiaries. Such applications are relatively rare but they are occasionally made. Subsection (2) requires the accountant to examine and audit the trustees’ accounts annually; in addition, the accountant has power to seek court directions in respect of the exercise of the superintendence. This provision applies irrespective of when the trust was created (subsection (3)).