Analysis
This case concerned whether a Florida attorney who had not obtained a grant in the UK had capacity to receive the proceeds of certain life insurance policies. The proceeds of two life assurance policies were held in trusts established by Mr Pinder and his then wife (Mr Pinder’s trust and Mrs Pinder’s trust respectively). Both trusters are now deceased and the sums assured under the policies became payable on the second death on 17 November 2010. On Mr Pinder’s death he was the sole remaining trustee of his trust and on his death the trust became a lapsed trust. On 2 March 2011 letters of administration were granted by the Florida courts, appointing Catherine Pinder, Mr Pinder’s second wife, as personal representative together with Mr Schwartz, a Florida attorney. Catherine Pinder subsequently died in June 2011. The defenders made payment under both polices to Mr Schwartz.
The pursuers, who were assumed as the trustees of Mr Pinder’s trust, claimed that Mr Schwartz had no title to receive the proceeds of sale and sought payment from the defenders. Historically there had been some confusion as to the trustees of Mrs Pinder’s trust, and the true situation only came to light in February 2015, after the present action had been raised. Therefore in March 2015, the second pursuer was assumed as a trustee. The pursuers were then permitted to amend the summons to make clear that they now sued as trustees of Mrs Pinder’s trust. However, it was argued on behalf of the defenders that the pursuers did not have title at the commencement of the action to sue for the proceeds of the policy in Mrs Pinder’s trust and an action commenced without title to sue is a nullity.
This raised the issues of (i) whether Mr Schwartz had title to receive the proceeds of Mr Pinder’s policy and (ii) whether the pursuers have title to sue in the present action for the proceeds of Mrs Pinder’s policy.
It was not in dispute that the life policy is properly characterised as incorporeal moveable property in Scotland. It was also not in dispute that although Mr Pinder appears to have died domiciled in Florida, any estate in Scotland owned by him at death is governed by Scots law as the lex fori.
Procedure was regulated by the Revenue Act 1884, s11 which provided that ‘where a policy of life assurance has been effected with any insurance company by a person who shall die domiciled elsewhere than in the United Kingdom, the production of a grant of representation from a court in the United Kingdom shall not be necessary to establish the right to receive the money payable in respect of such policy’.
Held:
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- 1) Mr Schwartz did not have title in any capacity to receive the proceeds of the policy settled in Mr Pinder’s trust. The applicable law was Scots Law as lex situs. The general rule is that in order to obtain an active title to intromit with estate in Scotland, the claimant must be confirmed as executor by decree of a Scottish Court. Section 11 of the Revenue Act has no application to trust property. The reference to the ‘personal estate and effects of any deceased person’ in s11 must be read as referring to personal property owned by the deceased in his own right and not to property which he held title in a fiduciary capacity.
- 2) Mr Schwartz did not have title in any capacity to receive the proceeds of the policy settled in Mrs Pinder’s trust, as it was now apparent that Mrs Pinder’s trust had two surviving trustees in whom the trust property vested by survivorship.
3) When the present action was raised, no competent claim was made in respect of Mrs Pinder’s trust. However, this defect was not incurable, and no question of time bar arose on the facts. By the time of the amendment of the pleadings the first and second pursuers were the trustees of Mrs Pinder’s trust and as such had title to sue. In these circumstances they were granted leave to amend. These claims were closely linked and it was convenient and in the interests of justice for them to proceed in a single action.
Introduction [1] This action concerns entitlement to receive the proceeds of two life assurance policies issued in 1985 and held in trusts created by Mr Arthur Gerald Pinder and his then wife Mrs Betty Myra Pinder. Both trusters are now deceased and the sums assured under the policies became payable on the second death, being …Continue reading "Shenken v Phoenix [2015] CSOH 96"