Case analysis of Russell's Executors v Russell's Executrix [2025] SC GLA 1

Macdonald-Mulvihill, Susanna

English

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     Edinburgh Research Explorer                                      A twenty-first century prodigal sonDonation between family membersCitation for published version:Macdonald-Mulvihill, S 2025, 'A twenty-first century prodigal son: Donation between family members',Edinburgh Law Review, vol. 29, no. 3, pp. 476-482. https://doi.org/10.3366/elr.2025.0987Digital Object Identifier (DOI):10.3366/elr.2025.0987Link:Link to publication record in Edinburgh Research ExplorerDocument Version:Peer reviewed versionPublished In:Edinburgh Law ReviewGeneral rightsCopyright for the publications made accessible via the Edinburgh Research Explorer is retained by the author(s)and / or other copyright owners and it is a condition of accessing these publications that users recognise andabide by the legal requirements associated with these rights.Take down policyThe University of Edinburgh has made every reasonable effort to ensure that Edinburgh Research Explorercontent complies with UK legislation. If you believe that the public display of this file breaches copyright pleasecontact openaccess@ed.ac.uk providing details, and we will remove access to the work immediately andinvestigate your claim.Download date: 24. Nov. 2025Russell’s Executor v Russell’s Executrix– A 21st Century Prodigal Son   A. INTRODUCTION In Russell’s Executors v Russell’s Executrix1 it is no surprise that Sheriff Reid referred to the parable of the prodigal son.2 As in the biblical story, there were two sons, the younger of which appeared to have been favoured by their father, receiving significant monetary transfers and gifts during his lifetime, while the elder son was given nothing. After the death of the father, the elder son (as executor) and his mother brought an action against the estate of his now deceased brother, for repayment of certain sums.   B. FACTS William “Stuart” Russell and Irene Russell had two sons: Jonathan and Simon. Simon, the younger son, died in April 2023, while Stuart died just under a year later in March 2024. The action was brought by Jonathan (as executor of Stuart’s estate) and Irene against Rachel Russell, widow and executrix of Simon’s estate.  The history of the Russell family is not one of harmonious relations. There had frequently been tensions between the members. For about six years prior to 2009, Stuart and Irene were estranged from Jonathan but close to Simon. At that time, Jonathan harboured ill-will towards his brother stemming from the breakdown of Simon’s first marriage, with the court opining that Jonathan’s animosity arose from a perception that Simon abandoned his wife and children. The brothers never reconciled. However, towards the end of Stuart’s life, Jonathan and his parents rebuilt their relationship. Jonathan relocated to Edinburgh to help with his aging parents’day-to-day care. Concurrently, Simon became estranged from Stuart and Irene, in what was described by the Sheriff as a “bitter rift”.3 While enjoying this renewed closeness with his parents, in 2021  1 [2025] SC GLA 19, 2025 GWD 18-173.  2 Gospel of Luke 15:11:32, referred to in para 49 of the judgement.  3 Russell’s Executors v Russell’s Executrix [2025] SC GLA 19 at para 2. Jonathan (a chartered accountant) reviewed his father’s financial records, tracing back over fifteen years.   Among other payments to family members, between 2005 and 2009, Stuart had made a series of payments to Simon totalling £155,000.  The final (and largest) payment of £70,000, made on 30 January 2009, was the subject of the dispute. There was no documentary evidence detailing the nature of the transaction, either in a contract or other deed, nor in any other written communications between the parties. Indeed, the only information about the nature of the payments was contained in handwritten notes on bank statements, and these were vague at best.4  At proof, both Jonathan and Irene testified that Stuart had intended the payment as an interest-bearing loan to help Simon with the start-up of an e-commerce business, iAuctionshop, of which Stuart was for a time a Chairman. In exchange Stuart received a 25% share of the business.  The pursuers argued that the disputed payment could be demonstrated to be a loan for two principal reasons. First that Stuart in conversation with Jonathan and Irene had claimed that the payment was a loan to be repaid when Simon was able, with Irene claiming that in 2009 they could not have afforded to give such a large gift. Secondly,  subsequent to the initial payment of £70,000 nine monthly payments of £350 were made from iAuctionshop to Stuart, which Jonathan claimed corresponded to interest payments at 6% per annum. However, after nine months these payments ceased. There was no record of either the reason for the transfers of £350 nor any indication that Stuart had ever demanded “interest” payments or requested repayment of the putative loan from Simon between January 2009 and his death in 2024.5  Discovery of the payments appears to have infuriated Jonathan and in July of 2021 he wrote to Simon to express his displeasure.  His letter was the first time that Jonathan alleged that the 2009 payment, alongside various other identified transfers from Stuart to Simon from the same time period, was a hitherto unpaid interest-bearing loan. This allegation was repeated in  4 Russell’s Executor v Russell’s Executrix [2025] SC GLA 19 at paras 33-34. 5 Ibid at para 35. September 2023 when Jonathan, acting under Stuart’s power of attorney, wrote to the defender in her capacity as Simon’s executrix demanding repayment of “various interest-bearing loans and investments”. Pursuant to this, the claim was raised for repayment of the 2009 payment and for the interest due thereon.   C. DECISION The Sheriff dismissed the claim. The reasons were succinct. Firstly, the pursuers had failed to prove that the disputed payment was intended as a loan. Secondly, the pursuers had failed to prove that there was any agreement between Stuart and Simon that monthly interest was due on the 2009 payment. Thirdly, that in cases where a payment is made between parties in a close relationship, such as between a father and son, in contrast to the ordinary presumption against donation such a payment is presumed to be a donation made ex pietate and the onus is on the pursuers to prove otherwise. The pursuers had failed to displace the presumption in favour of donation. Finally, even if a loan had been proved, the facts indicated that it was an express condition that the loan only became repayable should Simon become financially able to do so. The pursuers had also failed to prove that this condition had been purified.6  D. ANALYSIS One of the difficulties that plagues the law of donation is that it is governed by private law, and, as Hyland notes:  …private law concepts evolved to regulate exchange in the marketplace […] whereas gift giving takes place outside of the marketplace. […] The use of concepts from the private law guarantees distortion.7  There is no better illustration of this than gifts given within a family context. Moreover, when a question arises as to whether a transaction is a gift or a loan within a family, the answer can be fiendishly difficult to identify, as loans in these circumstances are often made through  6 Russell’s Executors v Russell’s Executrix at paras 46-47. 7 R Hyland Gifts: a Study in Comparative Law (2009), para 212. informal arrangements, without documentation regarding interest or payment schedules. As noted in Kerrigan v Kerrigan: “arrangements are so informal and elastic that it is not always clear what was really intended or constituted”.8 It is therefore of little surprise that Sheriff Reid in this case decided to employ the rebuttable “special presumption” in favour of donation where the donor and donee are parent and child.9 Indeed, it resolves many of the issues that may arise from trying to ascertain if a transaction is a loan, and if so, what the possible terms of such a loan might be. Furthermore, the obvious animosity and disdain Jonathan felt towards his brother’s character, and bitterness at unequal treatment by their parents, appeared to be the primary motivation behind the action, a factor highlighted by Sheriff Reid. However, there are other elements that were not considered in this case that are worthy of discussion: first, the operation of the “special presumption” where a parent has more than one child; and second, that if the “special presumption” is not applicable, whether the facts support a characterisation of donation rather than loan.   1) The “special presumption” in favour of donation ex pietate The sheriff relied heavily on the “special presumption” in favour of donation, discussing some of the most pertinent case law,10 including numerous modern cases.11 Yet, there has, in recent times, been some criticism of the presumption in favour of donation in close familial relationships. At a speech given at the University of Dundee in 2015, Lord Reed queried the continued relevance of the “special presumption”, given that it appeared to have originated at a time when “the attitudes and assumptions underlying the decisions, belong (…) to the society depicted by Jane Austen” and that “relying on them now, without taking account of their historical context and the way society has changed, would be (…) equating triremes and  8 Kerrigan v Kerrigan 1988 SCLR 603, at 604 per Sheriff Evans. 9 Macalister’s Trustees v Macalister (1827) 5S 219; Nisbet’s Trustees v Nisbet (1868) 6M 567; Forbes v Forbes (1869) 8M 85; Malcolm v Campbell (1889) 17R 255; McGraddie v McGraddie [2009] CSOH 142, 2009 GWD 38-633; and Mailer v Mailer & Quinn [2019] SC PER 101, 2020 GWD 4-68. 10 Macalister’s Trustees v Macalister (1827) 5S 219; Nisbet’s Trustees v Nisbet (1868) 6M 567; Forbes v Forbes (1869) 8M 85; and Malcolm v Campbell (1889) 17R 255. 11 McGraddie v McGraddie [2009] CSOH 142, 2009 GWD 38-633; and Mailer’s Executrix v Mailer [2019] SC PER 101, 2020 GWD 4-68. steamships”.12 Thus, there is a question as to whether it is still appropriate to make assumptions based on presumed family affections, despite recent judicial approval. Leaving aside the contemporary social appropriateness of the presumption in favour of donations made ex pietate, the law is not quite as binary as a) there is a very strong presumption against donation13 unless b) there is a relationship between the parties that gives rise to a natural obligation on one to support or provide for the other,14 in which case the very strong presumption against donation is inverted. There is a third factor that the court did not consider: where there is a natural obligation to support or provide for more than one person, the law will presume that the supporter will not favour one to the prejudice of the other(s). In other words, where a parent has more than one child, it is presumed that they will all be treated equally in the giving of gifts.15 As such, if a parent makes a large transfer to one child and not to any others, a loan will be presumed rather than gift.  Thus, in the law of donation there is a quagmire of overlapping presumptions. Foremost, there is a strong presumption against donation,16 based on the premise that a person is not presumed to do something that will bring pecuniary loss rather than profit.17 Nonetheless, the presumption against donation is inverted when the transaction is between a parent and a child (or similar close relationship),18 in which case donation will be presumed – the so-called “special presumption” relied upon in Russell’s Executors. However, the “special presumption” will be displaced when a parent has more than one child and the transaction is significant enough to be prejudicial against any other children. In this instance either a loan will be presumed or it will be considered an advance on future rights to legitim.19   12 Lord Reed “Triremes and Steamships: Scholars, Judges, and the Use of the Past” The Scrymgeor Lecture, University of Dundee (30 October 2015), text available at: https://www.supremecourt.uk/docs/speech-151030.pdf.   13 Ross v Mellis (1871) 10 M 197, at 200 per Lord President Glencourse; Bank of North Scotland v Cumming 1939 SC 448. 14 This can also apply between other family members, for instance brothers, particularly where one has regularly offered support to the other: Stair Inst I.8.2; Anderson v Anderson (1679) Mor 11509. However, the inversion of the presumption has not been held to apply where the alleged donation has been given by a younger brother to his elder sibling: Forbes v Forbes [1869] 7 Scot LR 49; (1869) 8 M 85. 15 Kerrigan v Kerrigan 1988 SCLR 603. 16 Stair Inst I.8.2. 17 Erskine Inst III.3.92. 18 Macalister’s Trustees v Macalister (1827) 5S 219. 19 Malcolm v Campbell (1889) 17 R 255, at 258 per Lord Kyllachy. The interaction between the latter two presumptions is nuanced. The third presumption does not occupy a hierarchical place above the second. When there is conflict between the “special presumption” and the presumption of loan where there is more than one child, it has previously been suggested that the correct approach is “to treat these competing presumptions (…) as cancelling each other out and deciding the matter on all the evidence treated as having an equal footing”.20 Therefore, while the Sheriff in Russell’s Executors may well have come to the most appropriate conclusion in this case, the reliance on the “special presumption” in favour of donation ex pietate is misplaced. None of the cases cited by the sheriff dealt with competing claims of siblings and, arguably, more consideration of the circumstances without the imposition of any presumptions should have been made.  2) “Special presumption” v presumption of loan in the family context  What then if, instead of relying on the “special presumption”, the sheriff had given all the circumstances equal weight. While it was held that a loan had not been proved, without deploying the “special presumption” the facts of the case did not necessarily infer donation. The evidence available was scant. Even looking to transfers made by Stuart to Simon prior to the disputed 2009 payment to attempt to identify a pattern does not bear much fruit. Although some of the earlier payments were admitted to be gifts, perhaps indicating a tendency on Stuart’s part to make gratuitous transfers to Simon, the disputed payment was significantly larger than any other payment made.21 Moreover, two earlier transfers were admitted by Jonathan to be investments in iAuctionshop and another business.22 Thus, although Simon received a great deal of financial support from his father, the nature of each payment varied and it is therefore difficult to draw any definitive conclusion as to the characterisation of one based on the legal ground of another. This makes it difficult to conclusively determine that the disputed payment was a gift in the absence of the “special presumption”. It should also be highlighted that without the “special presumption” the ordinary law of donation should apply. Key to any donation is proof of donative intent, or “animus donandi”.23 This can be difficult to prove. While the donative intent may, in some circumstances, be  20 Kerrigan v Kerrigan 1988 SCLR 603 at 605. 21 Russell’s Executors v Russell’s Executrix at para 10. 22 Ibid. According to the annual returns for iAuctionshop Ltd (company number 05323126) available through Companies House, from 2007 onwards Stuart Russell was listed as a 25% shareholder, which would seem to support that these payments were made as investments.  23 Crosbie’s Trustees (1880) 7 R 823. inferred from transfer of possession, possession alone is not always sufficient.24 However, the animus donandi can be legitimately formed after an initial transfer of possession on another basis. For instance, I lend my friend £20. Two months later, my friend tries to repay me but I refuse the money, indicating that I intend to gratuitously waive the debt.25 At this point, the loan is converted into a donation. In Russell’s Executors, it is entirely possible that Stuart originally intended the initial transfer to be a loan but later could be considered to have forgiven it, whereupon the disputed payment would have been transformed into a donation.  While the sheriff noted that there was no correspondence which indicated that in 2009 Stuart and Simon  had agreed a loan nor was there any documentation that would suggest that there was at any point donative intent,26 which is essential if applying the ordinary law of donation. However, it could be argued that Stuart’s lack of attempt to recover the disputed payment from Simon between 2009 and Stuart losing capacity in 2021 could be a strong indicator that it had been transformed at some point into a gift. Additionally, once the animus donandi is formed,27 unless a right to revoke has been explicitly reserved the donation is complete,28  so even if Stuart had later become frustrated with Simon and regretted the gift he would not have been able to reclaim it.29 Yet, it is difficult to ascertain when the conversion from loan to gift might have been, particularly as Irene and Jonathan both testified that Stuart stated in 2020 that the payment was a loan.30 Nonetheless, it appears that the clear acrimony Jonathan felt for his brother and Irene’s lack of precision in her recall of the timing of events convinced the Sheriff that these statements were not persuasive enough to displace the “special presumption”.31 It is submitted that lack of a clear expression of donative intent, coupled with the reports of Stuart’s insistence that the disputed payment was a loan should have been given more weight in this situation.  In addition, when considering the circumstances as a whole, the court may have considered the series of monthly payments of £350 made to Stuart throughout 2009 from the  24 Cawdor v Cawdor [2007] CSIH 3, 2007 SC 285, at para 15 per Lord President Hamilton. 25 Which would discharge the obligation: E Reid and J Blackie Personal Bar (2006) para 3-09. 26 Russell’s Executors v Russell’s Executrix at para 34. 27 When the act has reached the irrevocable “engagement” stage according to Stair’s tripartite division of the will: Stair Inst I.10.2. 28 W Gordon “Donation” in the Laws of Scotland: Stair Memorial Encyclopaedia, Reissue (2011) para 45; Pickard v Pickard 1963 SC 604.  29 As Sheriff Reid suspected might have been the case: Russell’s Executors v Russell’s Executrix at para 43. 30 Russell’s Executors v Russell’s Executrix at para 42. 31 Ibid. iAuctionshop account in a different light. Jonathan asserted, albeit without any supporting authority, that these reflected interest payments.  Although the Sheriff dismissed this claim,32 no alternative interpretation of these transfers was provided in the judgement. This is a relevant point of fact that could have been considered more fully, albeit the payments might have been made for other reasons, such as payment of a dividend given Stuart’s shareholding in the business.       Russell’s Executors is an unfortunate case of sibling rivalry, parental partiality, and family feuds. Yet it also provides a good example of the difficulties of applying the law of donation in Scotland, particularly in a familial context.          Susanna Macdonald-Mulvihill        University of Edinburgh  32 Russell’s Executors v Russell’s Executrix at para 44. 

A twenty-first century prodigal son:Donation between family members

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A twenty-first century prodigal son:Donation between family members

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