- In August 2014 the Scottish Law Commission published a report on its review of trust law. The report included a draft Trusts (Scotland) Bill to update Scots trust law. Regrettably, nearly seven years later, the Scottish Law Commission’s Bill is nowhere near becoming an Act. So much of trust law is still based on the out of date Trusts (Scotland) Act 1921.
- Although the report focused on trust law executors – those entrusted with administering the estate of a deceased person – are to all intents and purposes “trustees”. So, in many respects, the draft Bill proposed would – if enacted – also affect the position of executors.
How would the Bill (if enacted) help with removal of an executor?
- One particular way in which the Bill (if enacted) would affect executors is when it comes to removing them from office. Occasionally, executors do not do a good job and the other executors or beneficiaries may well think that things would get along much better if they were removed.
- Under the 1921 Act and the common law the grounds for removing an executor are decidedly limited. That was highlighted in a recent case on which some comment is made below. First, however, it is worth looking at what the rules would be if the Bill proposed by the Scottish Law Commission were to be enacted.
Section 6 of the Bill says:
“(1) Where a trustee [or executor]—
(a) is unfitted to carry out the duties of a trustee [or executor],
(b) purports to carry out those duties but does so in a way which is inconsistent with … [their duties as trustee/executor]
(c) has neglected the trustee’s [executor’s] duties as trustee,
(d) is incapable, or
(e) is untraceable,
the court may, on the application of one or more of the other trustees [or executors], of a beneficiary or of any other person with an interest in the trust property, remove the trustee [or executor] from office.”
- The power conferred on the court is deliberately framed in general terms and confers a degree of flexibility and discretion. But for now we are stuck with the current rules which are not at all flexible and allow little in the way of discretion.
The current rules
Currently there are two ways in which an executor can be removed.
(1) Under the Trusts (Scotland) Act 1921 the court may remove an executor on the grounds of: (i) insanity; (ii) incapacity; (iii) absence from the UK for six months or more; or (iv) “disappearance” for six months or more. We refer to these grounds of removal as “the statutory grounds”. The statutory grounds won’t be much help if a dispute arises based on the conduct of an executor who is acting.
(2) Under the common law one can apply to the Court of Session to remove an executor on the basis that the court has a discretionary power allowing it to provide a legal remedy where otherwise there would be none. We refer to those grounds of removal as “common law grounds”. The court is wary of exercising its discretion to remove an executor from office on common law grounds as is starkly illustrated in the recent case of Campbell v Campbell to which we now turn.
Campbell v Campbell  CSOH 3 (20th January 2021)
In commenting on the case we focus on some of the judge’s general remarks rather than going into the facts of the case itself. In reviewing the state of the law on the matter the judge surveyed court cases over the years (from 1883 onwards) and noted as follows (in what follows references to “trustees” include “executors”):
- The courts have often been cautious about removing trustees such as executors at common law. In Gilchrist’s Trustees v Dick (1883) the court refused to remove the trustees and said: “The remedy suggested is that the trustee should be removed … but in order to justify us in adopting so extreme a measure as removal of a trustee, there must be something more than mere irregularity or illegality. We are not in the habit of removing trustees unless there has been a decided malversation of office, and there is nothing of that kind here. There is no suggestion that the trustees did not act in perfectly good faith”.
- In a 1930 case the court found that mere lack of co-operation or disharmony between trustees, or mere negligence on the part of a trustee even if it results in some loss to the trust, may not afford sufficient grounds for the removal of a trustee.
- In a case in 2000, the test applied by the court in refusing to remove trustees was whether on the facts there was something equivalent to, or as bad as, malversation of office when a trustee obstinately refuses to acknowledge his legal duty and to discharge his legal responsibility, with the result of bringing the affairs of the trust into confusion.
- The courts have intervened to remove executors where they have obstructed the administration of an estate by ignoring correspondence and refusing to sign documents resulting in administrative deadlock.
- A situation which may lead to removal is where there is unacceptable conflict between an executor’s personal interests and their duties as trustees/executors. But, in general, “It is not a ground for displacing executors that they have personal interests conflicting with their duty as executors. The law supposes that they are able to reconcile their interest and their duty until the contrary is proved.”
As things stand it is clear enough that a court will not remove an executor simply based on poor performance, or disharmony between executors and beneficiaries of an estate. If however the Scottish Law Commission’s proposed Trusts (Scotland) Bill were to be enacted the grounds for removal would be more extensive and the tests to be applied a good deal more flexible.
Note: This material is for information purposes only and does not constitute any form of advice or recommendation by us. You should not rely upon it in making any decisions or taking or refraining from taking any action. If you would like us to advise you on any of the matters covered in this material, please contact Peter McEwan: email firstname.lastname@example.org