Dundee Hospitals Board v Walker [1952] UKHL 1

House of Lords
Between
Dundee Hospitals BoardAppellantWalkerRespondent
It is Ordered and Adjudged, by the Lords Spiritual and Temporal in the Court of Parliament of Her Majesty the Queen assembled, That the said Interlocutor of the 26th day of May 1950, complained of in the said Appeal, be, and the same is hereby, Affirmed, and that the said Petition and Appeal be, and the same is hereby, dis- missed this House: And it is further Ordered, That the Appellants do pay, or cause to be paid, to the said Respondents the Costs incurred by them in respect of the said Appeal, the amount thereof to be certified by the Clerk of the Parliaments: And it is also further Ordered, That unless the Costs, certified as aforesaid, shall be paid to the parties entitled to the same within one calendar month from the date of the certificate thereof, the Cause shall be, and the same is hereby, remitted back to the Court of Session in Scotland, or to the Judge acting as Vacation Judge, to issue such Summary Process or Diligence for the recovery of such Costs as shall be lawful and necessary.Board of Management for the Dundee General Hospitals v. Walker and another.

HOUSE OF LORDS

BOARD OF MANAGEMENT FOR THE DUNDEE GENERAL HOSPITALS

v.

WALKER AND ANOTHER

Lord Normand Lord Morton of Henryton Lord Reid Lord Tucker Lord Cohen

26th March, 1952. Lord NormandMy Lords,In this appeal the question to be decided is whether the Appellants, who have been sisted as Pursuers in place of the original Pursuers, the now dis- solved Corporation of the Dundee Royal Infirmary, are entitled to payment of a legacy conditionally bequeathed to the Corporation by the late Mr. Bell. The First Division of the Court of Session, Lord Keith dissenting, have held, reversing the interlocutor of the Lord Ordinary pronounced after proof, that the Appellants' claim failed, and they have sustained the Respondents' plea to relevance and dismissed the action.The Testator appointed three trustees of whom one predeceased him. The Respondents are the surviving and acting trustees. One of them is a chartered accountant in Dundee and a member of the firm which acted as treasurers of the Dundee Royal Infirmary for about forty years down to 5th July, 1948, the appointed day under the National Health Service (Scotland) Act, 1947, when the Royal Infirmary was taken over by the present Appellants; the other is a nephew of the Testator. By the sixth purpose of his Will the Testator directed his trustees as soon after his death " as may be convenient " for them . . . to pay the following legacies, videlicet :-" ( c ) Ten thousand pounds to the Dundee Royal Infirmary, whereof " one thousand and fifty pounds shall be appropriated for endowing a bed " in the said Infirmary, and the balance shall be available for the general " purposes of the Infirmary ; provided always, however, that the said ten " thousand pounds shall be payable as aforesaid only if my trustees shall " in their sole and absolute discretion be satisfied that at my death the " said Infirmary has not been taken over wholly or partly by or other- " wise placed under the control of the State or of a Local Authority or " of a body directly or indirectly responsible to the State and/or a local " authority." The Will is dated 11th March, 1946, and the Testator died on 16th April, 1947.In 1946 the project of nationalizing, to use a convenient term, the volun- tary hospitals (and the Dundee Royal Infirmary was a " voluntary hospital " both in the popular sense and as defined in the National Health Service (Scot- land) Act. 1947) was a topic prominently before the public notice. On 21st March, 1946, the National Health Service Bill for England received its first reading, and on 6th November, 1946, it received the Royal Assent. It was understood that the general pattern of the legislation would be the same for Scotland as for England, and the publication of the Scottish Bill confirmed this understanding. The Scottish Bill received its first reading on 26th November, 1946, and the Royal Assent on 21st May, 1947, just five weeks after the Testator's death. It is now admitted by the Appellants that, though the Respondents, as early as 22nd April, 1947, at their first meeting after the Testator's death, came to a tentative view adverse to the payment of the legacy, they did not come to a final decision till a meeting held on 1st March, 1948, after the Scottish Act had received the Royal Assent and after taking the opinion of Counsel upon their duty as Trustees.The Trustees' solicitors, on 24th April, 1947, intimated their tentative decision and, as they were instructed, put it on the ground that the Trustees " are not satisfied that the Infirmary can now be considered as free from State " control." Counsel, in his opinion of 26th February, 1948, referred to2Section 9 (8) of the National Health Service (Scotland) Act, 1947, which enacts:
" Where any property was, at any time between the twenty-first day " of March, nineteen hundred and forty-six and the appointed day, held or " used by such persons and for such purposes as would result, but for anything " done after the said date, in the transfer of the property to the Secretary of "
State or to a Board of Management under the foregoing provisions of this " Part of the Act, and that property ceases to be so held or used before the " appointed day, it shall nevertheless be treated for the purposes of those " provisions as if it had continued to be so held or used until the appointed " day, unless it is proved by a person whose interest in that property would " be transferred to the Secretary of State or to a Board of Management under " those provisions, that the fact that it was not so held or used immediately " before the appointed day was due to something done or occurring in the " ordinary course of business, or was in no way connected with the said " provisions ". Counsel observed that this provision came into operation on 21st March, 1948, but in effect applied a government nexus retrospectively from 21st March, 1946, onwards on all property belonging to the Royal Infirmary. He concluded by advising the Respondents that they were " entitled formally to resolve that as they are satisfied that the " proviso" (i.e. the proviso qualifying the bequest) " is applicable the " bequest to the Infirmary can not take effect". As has been said, it was after considering this opinion that the Respondents came to a final determination to refuse to pay the legacy. They intimated their deci- sion by a letter of their solicitors dated 1st March, 1948, and the ground given is that " they are satisfied that the proviso contained in Clause 6 ( c ) of Mr. " Bell's Will is applicable ". Those words are somewhat cryptic, but I think that they were intended to convey, and did convey, that the Respondents were not satisfied that at the Testator's death the Infirmary had not been placed under the control of the State. It would be a mistake, however, to suppose that the Respondents had not before taking Counsel's opinion been alive to the possible effect on their duty as trustees of Clause 9 (8) of the Bill, afterwards Section 9 (8) of the Act. Mr. Thomas, one of the Respon- dents, depones that that Clause was present in 'his mind at his first considera- tion of the bequest and that he was fully aware of it before Counsel drew attention to it. When the Respondents reached their final decision he depones that Section 9 (8) was one of the things which caused him to have doubt whether the Royal Infirmary had been placed under the control of the State at the Testator's death. His co-trustee was influenced more by Counsel's opinion than by anything else, and in the Respondents' pleadings Counsel's opinion takes the first place among several grounds for the decision to refuse to pay the legacy.My Lords,it is necessary to notice the unusual and, so far as my experi- ence goes, the unique terms of the condition by which the bequest is qualified. This is not a case in which the Trustees were given a discretionary power to pay or not to pay a legacy. The bequest was payable only if the Trustees should in their sole and absolute discretion be satisfied that at the Testator's death the Infirmary had not been (to read short) taken over by or otherwise placed under the control of the State.The Trustees, as a condition of refusing payment, had not to be satisfied positively that the Infirmary had been taken over by or placed under the control of the State. They were under no duty to come to a decision, whether of fact or of law, that the Infirmary had been taken over or placed under control or that it had not. The right to receive the legacy was contingent on the Trustees' state of mind, the absence of a state of doubt. Now, it is not alleged that the Trustees were untruthful or guilty of any mala fides, and so the Appellants have to accept that the Trustees were unquestionably in a state of doubt, not about the taking over but about the control of the Infirmary. The Appellants must therefore show good reasons in law for ignoring the Trustees' actual state of doubt. But the peculiar terms of the proviso have another effect. If a state of doubt was brought about by one circumstance which cannot successfully be assailed, it does not matter that the doubt was increased or confirmed by other circumstances which the Trustees might not be entitled, under the terms of the proviso, to take into3account. That is a consideration of importance in the case, because besides relying on Section 9 (8) and its retrospective effect as justifying a doubt whether the Infirmary had not been " placed under the control of the State ", the Respondents put forward in evidence certain other matters which also had influenced them. Of some of these notice had been given on record but of others no notice had been given. There has consequently been a difference of opinion in the Courts below whether some of these matters were competently before the Court and whether, since the Trustees had no duty to disclose any reasons for their decision, they might, if it suited them, bring forward in evidence reasons of which no previous notice had been given. I think myself that it would be misleading to give some reasons on record and to reserve others for disclosure only in the witness box. It is not, however, necessary to pursue this question or to go into any reason but that connected with Section 9 (8), because all the other reasons argued to us are weaker, and if the Appellants succeed in their attack on the reason based on Section 9 (8), the other reasons also will fall before their assault. On the other hand, if the Appellants fail on Section 9 (8), it will be unnecessary to consider any of the other reasons. At this stage one other comment naturally arises. It was said for the Appellants that the Courts have greater liberty to examine and correct a decision committed by a testator to his trustees, if they choose to give reasons, than if they do not. In my opinion that is erroneous. The principles upon which the Courts must proceed are the same whether the reasons for the Trustees" decision are disclosed or not, but, of course, it becomes easier to examine a decision if the reasons for it have been disclosed. Lord Truro's judgment in Beloved Wilkes's Charity [1851] 3 McN. and G. 440, ought not to be construed as going beyond that.On what grounds, then, do the Appellants attack the decision of the Trustees to refuse payment and ask that the doubt which the trustees felt should be disregarded, and the legacy paid as if the condition attached to it had been purified? First, it was said that the trustees had exceeded the limit of the powers committed to them. This was the ground on which the Lord Ordinary proceeded. The Trustees failed, he said, to consider the situation as it was at the Testator's death. This view did not commend itself to any of the learned judges of the First Division, and I think that it is a misunderstanding of the evidence which makes it clear that the Testator's death was the date to which the Respondents addressed themselves. Then it was also said that it was not committed to the Trustees to give a meaning to the words " placed under the control of " and that by misunderstanding these words they had gone beyond the limits of what had been committed to them. Ft was submitted that the words " or otherwise placed under the " control '' were only exegetical of the prior words " taken over by ", and that by interpreting them in a much looser sense the Trustees had given them- selves a latitude beyond that assigned to them by the Testator. I cannot agree. It appears to me clear that a taking over, which is an event which could result only from a particular operation of statute or from specific agreement, is con- trasted with a much less definite condition of things, assumption of control, which may begin at a period difficult to fix and which may progress imperceptibly before becoming so complete as to divest the existing governing body of all control. And it is precisely because the Testator appreciated that there might be an infiltration of control of this kind, difficult to define, and perhaps difficult to prove by evidence, that he committed to his Trustees the duty of withholding the bequest unless they were satisfied that no such infiltration had occurred. He used the words "sole and " absolute discretion " because he wished to make manifest his intention that the Trustees' failure to be satisfied should be final and conclusive and not subject to correction by a court of law which might take a different view from the Trustees either on the meaning of " control " or on the assessment of the surrounding circumstances as evidence of control. It is material here to remember that one of the Trustees by his association with the Infirmary was in full possession of the facts, if any, which would be indicative of control. It was objected that on this view the Testator had committed to his Trustees the construction both of his Will and incidentally of the meaning and effect of the Statute. I would not deny that; but no case was cited to us nor do I know of any which would compel me to treat as invalid the4condition as I have construed it. The only relevant authority cited was Low's Trustees. 8 S.L.R., 638, when Lord President Inglis, giving the leading judgment in the First Division, refused to entertain a question of law presented to the Court in a Special Case, because it was a question which the Testator had lawfully committed to his Trustees. I see no reason to doubt the Lord President's judgment. If these two matters of law were committed to the Trustees, it cannot be urged against their decision that it is invalid because it is founded on a misunderstanding or an error of law in respect of them. If it was committed to the Trustees to construe the word " control " or incidentally the terms of the Act, it was necessarily committed to them to construe wrongly as well as to construe correctly.But then it was said that there is a limit of error which, if exceeded, will be corrected by a court of law. Mr. Morison submitted that the test was whether any reasonable man fairly considering the matter could have' arrived at the result at which the Trustees arrived. He then argued that the Trustees had committed two errors, each of which was in this sense excessive. First, he said, it was an error to treat the Infirmary as affected at the Testator's death by the nexus over its property created by a statute which had not then been passed ; and, secondly, it was an error to entertain a doubt whether the effect of the nexus over the Infirmary property had not placed the Infirmary under the control of the State. I will assume that the Trustees com- mitted these two errors (for in truth, as I shall explain later, I doubt if it is within my province to consider whether or how far they were wrong in their doubts or decisions). But the question then is whether these errors were so extravagant that no reasonable man could have fallen into them. On this I have no doubt whatever. It cannot be said that it was extravagantly unreason- able to apply a retrospective provision in considering the position of the Infirmary at any time within the retrospective period, for the effect of making a provision retrospective is the same as a statutory declaration that at any time within the retrospective period the provision should be deemed to have been in force. Nor do I think it extravagantly unreasonable to doubt whether a nexus affecting the entire properly of the infirmary and intended pro tanto to prevent the evasion of the expropriation sections of the Act, might not have placed the Infirmary to some extent under the control of the State.These considerations suffice to dispose of the appeal. On the last issue discussed I have assumed that the Appellants' major premise is well founded and that such an error committed by the Trustees in arriving at their deci- sion as a court of law would hold to be extravagant would in itself suffice to invalidate the decision. I think that the premise is open to doubt. Error, either of fact or of law, is no more than evidence of unreasonableness or of bad faith. Here, bad faith is not in issue. We are concerned only with unreasonableness, but there is other evidence in the case that the Trustees addressed themselves to their duty carefully, seriously and impartially, and with a real desire to perform their duty to the best of their ability. One most important fact is that they took the advice of counsel and were guided by it and acted upon it. That is itself powerful evidence against unreason- ableness. I am not prepared to accept the view that the supposed unreasonableness of their decision or of the ground on which they reached it must outweigh more direct and satisfying evidence that they behaved as reasonable men would.My second doubt is more fundamental. I desire to reserve the question whether the Trustees' decision to withhold payment because they were in doubt whether the Infirmary had not been placed under the control of the State was under the terms of this bequest open to question on any ground save that it was dishonest, or that it involved a trespass beyond the limits of what was committed to them by the Testator. What we have to ascertain is, after all, what did the Testator intend? His intention must be inferred from the language of his Will, and not guessed at. But it is one thing to say that the Trustees must honestly discharge their trust and keep within the bounds of the powers and duties entrusted to them, and quite another to say that they must not fall into errors which other persons, including a court of law, might consider unreasonable. One may usefully reflect that reasonable5people often differ about what is reasonable, and it may be that the Testator inserted the words " in their sole and absolute discretion " in order to exclude from the purview of the Courts the kind of questions which have occupied so large a part of the time given to this appeal. The analogy which the Lord President found helpful, between the duty of the Trustees under this Will and the duty of a Scottish arbiter acting under a contract, may not be complete, but I am not satisfied that it is misleading. Lord Keith's criticism that the Trustees' duty was fiduciary, with the implication that an arbiter's duty is not, does not appeal to me. A fiduciary duty is one which must be discharged with a good conscience and, regardless of personal interests and prejudices, for the benefit of another, and the arbiter's duty is no less fiduciary than that of trustees.Before parting with the case there are two points of procedure with which I must deal. Lord Carmont was of opinion that the action was incompetent because it did not conclude for reduction of the Trustees' Minute in which their final decision was recorded. The Dean of Faculty declined to support this opinion. I think that it is not necessary for beneficiaries suing for payment of a legacy to reduce the Minute in which the decision of the Trustees to withhold payment is recorded, and I do not know of any advan- tage which a reductive conclusion would secure. Then the Lord President took the view that, though a proof had been taken in which the whole facts had been investigated, the Respondents were not entitled to a decree of absolvitor, and accordingly the defenders' plea to relevance was sustained and the action was dismissed. Mr. Morison was not able to explain the reasons for this, and I think that the Respondents were entitled to be assoilzied. In the fullest sense the decision between the parties is res judicata and I cannot conceive that the Appellants ought to be entitled to raise another action on the same grounds and concluding for payment of the legacy. The case of Cunningham v. Skinner, 4 F. 1124, shows the confusion and injustice that may result from dismissing an action when the defender is entitled to a decree of absolvitor. But no motion has been made on behalf of the Respondents except to dismiss the appeal.I would therefore dismiss the appeal with costs.

Lord Morton of Henryton

My Lords,I concur in the Motion proposed by my noble and learned friend on the Woolsack, but as there has been a considerable difference of opinion in the Court of Session I shall state my reasons briefly in my own words.By Clause 6 ( c ) of his Will the Testator, Thomas Norman Jarvis Bell, directed his trustees, as soon after his death as might be convenient for them and free of all government duties, but without interest, to pay (inter alia) a legacy of £10,000 '' to Dundee Royal Infirmary . . . provided always, " however, that the said £10,000 shall be payable as aforesaid only if my " trustees shall in their sole and absolute discretion be satisfied that at my " death the said Infirmary has not been taken over wholly or partly by or " otherwise placed under the control of the State or of a Local Authority " or of a Body directly or indirectly responsible to the State and/or a Local " Authority ".My Lords,I read this bequest as a gift of a legacy upon a condition. If, but only if, the trustees are in their sole and absolute discretion satisfied as to the existence of a particular state of facts at the death of the Testator, the legacy is payable; if the trustees are not so satisfied, the legacy is not payable. It is, I think, plain that the trustees were entitled to consider the matter for a reasonable time, but when they came to give it their final consideration it would be their duty to cast their minds back to the state of affairs at the death of the Testator. The trustees gave this matter their final consideration on the 1st March, 1948, and it is not suggested that they delayed their decision to an unreasonable extent. On that date the trustees,6through their solicitors, said, in effect, " We are not satisfied that at the " Testator's death the Infirmary had not been taken over wholly or partly " by or otherwise placed under the control of the State or of a Local " Authority or of a Body directly or indirectly responsible to the State and/or " a Local Authority ". Thus the only event upon which, according to the terms of the Will, the legacy was payable has not happened.Notwithstanding the words " in their sole and absolute discretion ", I do not regard the trustees as having a discretionary power under this Will, in the ordinary sense of that phrase. The case differs from one in which, for instance, trustees are given a discretion to pay or not to pay certain sums by way of maintenance of a particular beneficiary. The duty of the trustees was simply to apply their minds honestly to a consideration of the question whether a certain event had or had not happened at the date of the Testator's death. If they were satisfied that this event had happened, or if they were not satisfied that it had not happened, they were bound to withhold the legacy. On the other hand, if they were satisfied that this event had not happened, they were bound to pay the legacy. In neither case did it lie within their discretion to pay or to withhold the legacy. In my view the effect of the words " in their sole and absolute discretion " was simply to emphasise the Testator's wish that the matter should rest entirely upon the satisfaction or non-satisfaction of the trustees, and that the trustees, and not the Court, were to decide as to the existence or non-existence of the given state of facts. The trustees named by the Testator, two of whom survived him, were(1) his brother-in-law,(2) a close friend who was also the Treasurer of the Infirmary, and(3) his nephew, and I think the Will shows that he relied upon their judgment and good sense.My Lords,if this is the true construction of the clause, it is necessary to consider on what grounds the Appellants can claim this legacy. They do not allege that the trustees acted dishonestly, and I can see no evidence that the trustees did not apply their minds to the proper question. Counsel for the Appellants submits that the Appellants can succeed if they prove that no reasonable man, fairly considering the facts, could have taken the view which the trustees took. I am prepared to assume that the burden of proof resting on the Appellants is no heavier than this, though I think that it may well be heavier, having regard to the wording of this very unusual clause. On that assumption. I think it is impossible to say that the Appellants have discharged this burden. The trustees have given their reasons, whether or not they were bound to do so, and I only find it necessary to refer to one of them. They took the view that Section 9 (8) of the National Health Service (Scotland) Act, 1947, which came into operation on the 21st May, 1947, in effect applied a "government nexus" retrospectively, from 21st March, 1946, onwards, on all property belonging to the Royal Infirmary and that for this reason the Infirmary had, at the death of the Testator, been placed under the control of the State. I am not sure if I should have taken the same view, but I am quite unable to say that it is a view which could not be taken by any reasonable man, and it was confirmed by learned counsel whose opinion was sought by the trustees For these reasons I agree that the Appellants' claim to this legacy must fail.

Lord Reid

My Lords,The Testator's legacy of £10,000 to the Dundee Royal Infirmary was bequeathed subject to the condition that it was only to be payable if his trustees, the Respondents, " shall in their sole and absolute discretion be " satisfied that at my death the said Infirmary has not been taken over wholly " or partly by or otherwise placed under the control of the State or of a " Local Authority or of a Body directly or indirectly responsible to the " State and/or a Local Authority." It is for the Court to determine the meaning of this condition. If the Respondents are right its meaning is7simple: the Testator directed his trustees to consider the whole matter and to decide whether or not they were satisfied that none of the events referred to had occurred before the Testator's death. The determination of every question which the trustees might find it necessary to determine before deciding whether or not they were so satisfied as well as this final decision were to be in the sole and absolute discretion of the trustees: that is to say, they and they alone were to be the judges of all these matters.I find it more difficult to state in simple form the contention of the Appellants, but I think that it comes to this. The Testator intended that his trustees should be judges of fact but not judges of law ; before reaching their final decision the trustees would not only have to find out the facts; they would also have to consider what the Testator meant by " taken over " or " placed under the control ", and. if they did not come to a final conclusion until some time after the Testator's death, they might also have to consider whether or how far it was proper for them to have regard to things that had happened after the date of death. These are questions of law, and if it could be shown that the trustees took a wrong view on any of these questions and so misdirected themselves in law then it is said that their decision cannot stand.It was argued that the Testator entrusted a power to his trustees and that it must always be for the Court to determine the limits of any power. If the trustees, on a mistaken view of the limits of the power, acted beyond its limits, then their action is of no effect. It was said that in this case, the power was to decide whether the Infirmary had been placed under the control of the State or any other authority mentioned ; to decide anything else would be to go beyond the limits of the power ; and if the trustees took a wrong view of the meaning of control in this context they did decide something beyond the limits of the power entrusted to them. I do not think that the duty which the Testator placed upon his trustees in this matter can properly be described as a power: but, apart from that, this argument appears to me to beg the question, because it assumes that the Testator did not confer a " power " on his trustees to determine what the Testator meant by control. The argument could only have any validity if it were beyond the power of a testator under Scots law to make his trustees the judges of such a question. I can see no reason in principle why a testator should not be entitled to do this, and I know of no authority against it. The only authority at all near the present case which was cited is Low's Trustees 8 S.L.R., 638. There a special case was presented to have it determined whether certain sums realised from working a quarry and from the sale of thinnings of plantations belonged to the liferenter of the residue of the testator's estate or should be retained by the trustees and accumulated for the benefit of the fiar. The Testator had made his trustees the sole and only competent judges of what was to be included in the residue and what formed part of the annual profits. By reason of this provision the First Division held that they could not entertain the case. Lord President Inglis said:
" We must satisfy ourselves that it was the intention of the testator " here to prevent any such legal proceedings being taken by his trustees " or the beneficiaries. As to the competency of a testator making such a " provision, I really cannot entertain much doubt. If a testator were to lay " down in his will that there was to be no litigation about his succession " whatever, I should have great doubt about the validity of such a provision. "
But where a testator merely provides that there shall be no going to law " upon certain special points, and arranges so clearly for their determination " as here, the case is very different, and the provisions must receive effect." I am content to accept that statement of the law, and therefore the question is one of construction : has the Testator so provided in this case?In my opinion, the only reasonable interpretation of the words used by the testator is that he intended his trustees to be the sole judges of all the matters which they had to consider in carrying out the duty which he put upon them. That is the natural meaning of the clause and, even if it is capable of being otherwise construed, I can see nothing either in the context8or in any other relevant circumstances to make one think that he had any other intention. If it were for the Court to determine the meaning of control in this context then very little would be left for the trustees to determine, and the words " in their sole and absolute discretion " would not be at all appropriate. I am satisfied that these words show that the Testator did not intend that there should be anything in the nature of an appeal from the decision of his trustees.But by making his trustees the sole judges of a question a testator does not entirely exclude recourse to the Court by persons aggrieved by the trustees' decision. If it can be shown that the trustees considered the wrong question, or that, although they purported to consider the right question, they did not really apply their minds to it or perversely shut their eyes to the facts or that they did not act honestly or in good faith, then there was no true decision and the Court will intervene: but nothing of that kind is alleged in this case. The Appellants' case here is that, although the Respondents acted with deliberation and in good faith, their decision was unreasonable in the sense that no reasonable man could have failed to be satisfied that the Infirmary had not been placed under the control of the State before the Testator's death. In this case the Respondents have not objected to that being taken as a proper test, and I shall consider the facts on that view, but I wish to reserve my opinion whether that is the proper test in cases of this kind.The Testator died on 16th April, 1947. The Respondents first considered the condition attached to the legacy on 22nd April, when they came to the provisional decision that, having regard to the provisions of the National Health Service (Scotland) Bill, they were not satisfied that the Infirmary could then be considered as free from State control. This was intimated to the Infirmary and correspondence followed. Then, in February, 1948, the Respondents took the opinion of Counsel. In their memorial they put the whole matter before Counsel and staled that, notwithstanding what had been said on the other side, they were still not satisfied: they asked whether they should resist the demand made to pay over the legacy. Counsel advised that the decision to refuse to pay the bequest was in his opinion justified on the terms of the National Health Service (Scotland) Act, 1947, and in particular he referred to section 9 (8) of the Act as in effect applying a Government nexus retrospectively from 21st March, 1946, onwards on all property belonging to the Infirmary. He stated with regard to the words " placed under the control of the State " that they appeared to him apt to cover just such a situation as was created by section 9 (8). The Respondents accepted this advice and intimated their final decision on 1st March, 1948.Section 9 (8) of the Act is in the following terms:
" Where any property " was, at any time between the twenty-first day of March, nineteen hundred " and forty-six and the appointed day, held or used by such persons and " for such purposes as would result, but for anything done after the said " date, in the transfer of the property to the Secretary of State or to a "
Board of Management under the foregoing provisions of this Part of this " Act, and that property ceases to be so held or used before the appointed " day. it shall nevertheless be treated for the purposes of those provisions " as if it had continued to be so held or used until the appointed day, unless " it is proved by a person whose interest in that property would be trans- " ferred to the Secretary of State or to a Board of Management under those " provisions, that the fact that it was not so held or used immediately before " the appointed day was due to something done or occurring in the ordinary " course of business, or was in no way connected with the said provisions." The reason why the subsection is retrospective to 21st March, 1946, is that the Bill for England was published on that day. Apparently it contained a similar provision and it still contained that provision when it became law in November, 1946. The Scottish Bill containing that provision was pub- lished on 26th November, 1946. In those circumstances at the date of the Testator's death no prudent governing body of a voluntary hospital in Scotland could neglect this retrospective provision in the Scottish Bill in dealing with their property: they could not safely alienate it unless they9were satisfied that, if any question were raised later, they would be able to prove affirmatively that the alienation had been in the ordinary course of business or was in no way connected with the provisions of the Bill.What the Respondents had to consider was whether they were satisfied that this did not amount to placing the Infirmary under the control of the State. They were advised by Counsel that in his opinion it did. So if the Appellants are to succeed they must be able to say that any reasonable man in the position of the Respondents would have been satisfied that Counsel was wrong. That appears to me to be a hopeless contention. The Respondents also relied on other grounds, but if they had one ground on which they could reasonably not be satisfied that is sufficient, and I need not consider those other grounds.I have had an opportunity of reading the speech of my noble and learned friend, Lord Normand, and I agree with it. I agree that this appeal should be dismissed.

Lord Tucker

My Lords,The Testator by his Will dated 11th March, 1946, left a legacy of £10,000 to the Dundee Royal Infirmary, but added a proviso in these words :- " provided always, however, that the said ten thousand pounds shall be pay- " able as aforesaid only if my Trustees shall in their sole and absolute dis- " cretion be satisfied that at my death the said Infirmary has not been taken " over wholly or partly by or otherwise placed under the control of the State " or of a Local Authority or of a Body directly or indirectly responsible to " the State and/or a Local Authority ".It is important to notice that before the legacy could be paid the Trustees had to be satisfied of a negative, i.e. that certain results had not been brought about. In other words, if they were left in doubt whether or not any one of these results had occurred the legacy would not be payable.The contingency upon which the payment depended was the state of mind of the Trustees, not the existence in fact or in law of some objective state of control.Although the word " discretion " is used this is not a case of the exercise of a discretion in the true sense of the word, as, for instance, when Trustees are given a discretion to pay or not to pay money to a beneficiary or a discretion as to the amount of any such payment. I do not, therefore, derive much assistance from authorities dealing with the exercise by Trustees of dis- cretionary powers such as these.The proviso in this case is, in my view, designed to put the Trustees in much the same position as an Arbitrator under an arbitration clause in a contract. The words " in their sole and absolute discretion " in their present context mean, I think, that the Trustees are to be the sole judges of matters which, in the present instance, may involve mixed questions of fact and law and that their decision both as to the relevance of the matters to be considered and as to the resulting conclusion is to be final. It is, I feel, to be regretted that a provision so clearly intended to avoid expensive litigation should have resulted in a journey to your Lordships' House.No case has been cited in argument to show that the Courts in Scotland will not give effect to such a Clause as this. On the contrary, the case of Low's Trustees 8 S.L.R., 638 tends to support its validity.It is no doubt true that the Court has power in a case like this if the Trustees have perversely failed or refused to consider the question committed to them or have determined a matter which was never left to them or have acted in bad faith, but no such considerations exist in the present case.10The Testator died on 16th April, 1947. On that date the National Health Service (Scotland) Bill was before Parliament and had received its first read- ins. It received the Royal Assent on 21st May, 1947, and came into force on the appointed day, 5th July, 1948. The Trustees' final decision as to non-payment of the legacy was not reached until 1st March, 1948. On that date the Trustees had to consider the position as it had been on 16th April, 1947, but they were entitled to take into consideration any matters which had come to their knowledge in the interval in so far as they affected the position as at 16th April, 1947. One of these matters—and in my view on the evidence clearly the decisive factor—was Section 9 (8) of the Act which had by then become law with retrospective effect to 21st March, 1946, with the result that upon that date the funds and property of the Infirmary were to a certain extent " frozen ". They had taken Counsel's opinion on this sub-section and had been advised that it had resulted in " control " within the meaning of the Will.My Lords,I hold the view that nothing short of dishonesty on the part of the Trustees in arriving at their decision would avail the Appellants in this case, but I will assume that unreasonableness would suffice. Even so, I find it quite impossible to say that there was not material which could reasonably raise a doubt in the minds of the Trustees as to whether or not the Infirmary had as at 16th April, 1947, been placed under some degree of State control by the retrospective operation of this sub-section. On this view of the case I find it unnecessary to consider any of the other matters relied upon by the Trustees. As I consider the doubts arising from this section would alone justify the non-payment of the legacy it is not material to investigate whether that which had already been made doubtful had become more doubtful in the minds of the Trustees by the consideration of matters which might appear to me—as distinct from the Trustees—to be irrelevant.I would accordingly dismiss the appeal.

Lord Cohen

My Lords,Mr. Morison urged, and the Dean of Faculty did not dispute, that it was for the Court to construe the language of the Testator's Will in order to ascertain the ambit of the discretion or duty conferred or imposed on the Trustees of the Will.Applying this principle. Mr. Morison argued that it was for the Court to determine what was meant by the words " otherwise placed in control " and that the Trustees' discretion or duty, whichever it might be. played no part in this field at all.The Dean of Faculty contended that this was giving inadequate effect to the words " in their sole and absolute discretion ", and that the duty of the Trustees was to ascertain the relevant facts as at the date of the Testator's death and then decide as a matter in their discretion whether those facts established to their satisfaction that the Infirmary was not under the control of the State or of a local authority or of a Body directly or indirectly responsible to the State and/or a local authority.I agree with the Dean of Faculty. The expression " under the control of " is not a technical expression and I do not think it is limited to legal control. It would cover de facto control; for instance, to adopt the language of section 200 (9) ( a ) of the Companies Act, 1948, if the governors of the Infirmary were " accustomed to act " in accordance with the " directions or instruc- " tions " of the Minister of Health, the Trustees would, I think plainly be entitled not to be satisfied that the Infirmary was free from what may loosely be called " public control ". The question whether or not de facto control exists seems to me to be essentially a question which the Testator might wish11to leave to the unfettered discretion of his Trustees, especially as one of them was the Treasurer of the Hospital and, in ray opinion, he has used language apt for this purpose.Mr. Morison argued that the Court would invalidate the decision of Trustees on a matter in their discretion if(1) they acted in bad faith, or(2) they exceeded the bounds of their discretion, or(3) if the discretion has been exercised unreasonably.The Dean of Faculty did not dispute that the Court might interfere on the first or second grounds. He argued that the third ground should be stated as follows: —" if Trustees in purported exercise of their discretion " acted in a manner that no reasonable trustee acting within the bounds of " the duty laid upon him by the Testator could possibly act." There is much to be said for this statement of the principle, but I do not find it necessary to decide whether Mr. Morison or the Dean of Faculty is right, since I am satisfied that on either statement of the principle the appeal must fail.Mr. Morison did not suggest that the Trustees had acted in bad faith. He did, however, argue that they had exceeded the bounds of their discretion by not confining themselves to the position as at the date of the Testator's death. If by that he meant that the point of time to which they directed their attention in deciding whether the Infirmary was under public control was not the date of the Testator's death, I agree with my noble and learned friend, Lord Normand, that upon a true reading of the evidence it makes it clear that the date of the Testator's death was the date to which the Trustees addressed themselves. I think, however, Mr. Morison's real complaint was that in reaching their conclusion the Trustees had taken into account events which occurred after the Testator's death, viz.(1) an arrangement reached in May, 1946, with the Department of Health for advances which contained conditions restrictive of the freedom of action of the governors of the Infirmary and retroactive to a date antecedent to the death of the Testator;(2) discussions subsequent to the Testator's death with regard to the realloca- tion of patients among hospitals in the area after the National Health Service should come into operation ;(3) correspondence as to the Nurses Home which led to the Department referring back to the Infirmary plans for alterations in order that alterations required by the Department involving an additional expenditure of over £3,000 might be made therein.I will assume without deciding that all these were irrelevant matters, but I do not think this helps Mr. Morison. The legacy was only to be payable if the Trustees entertained no doubts on the control question. Even if all the above matters are excluded, I am unable to say that there was no evidence on which the Trustees might reasonably entertain doubts thereon. At the Testator's death the Scottish Bill had been before Parliament for over five months. It contained a clause (clause 9 (8)) with retroactive effect which has already been read to your Lordships and which might well raise doubts in the Trustees' minds as to whether at the date of the Testator's death the Infirmary was free from the control of the Department of Health. These doubts would be reinforced by the fact that a similar clause had been included in the English Act which had already been passed by Parliament.Having regard to the nature of the discretion conferred on the Trustees it seems to me impossible to hold that they had exceeded the bounds placed by the Testator on the exercise of that discretion.It seems to me still more impossible to say that they acted unreasonably. As I have already said, I think the provisions of clause 9 (8) might give rise to reasonable doubts, but the Trustees did not act on their own unaided judgment. They consulted counsel and their final decision was in accordance with his advice. Reading the evidence as a whole. I think their conduct throughout was eminently reasonable.For these reasons I agree that the appeal should be dismissed.

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