Duhaime's Law Dictionary


Rule in Allhusen v. Whittel Definition:

A suggestion of proportionality as between the beneficiary of a life estate and the ultimate beneficiaries as to liability for ongoing estate expenses during the estate.

Related Terms: Cujus Est Commodum Ejus Debet Esse Incommodum

A rule which strongly suggests the application of equity in the apportionment of liability associated with a life estate as between the person who is enjoying the life estate, i.e. a life tenant, and the person who will receive the asset once the life estate has run its course (usually by the death, or abandonment of the estate by, the life tenant).

The Rule in Allhusen v. Whittel, intended as a guide as to the court, was first established by the 1867 English case of Allhusen v. Whittell.

"That case, which was decided almost a hundred years ago, related to a will, by whose terms certain legacies were bequeathed, and which devised and bequeathed the residue of the estate, after payment of debts, funeral and testamentary expenses, to trustees upon trust to sell and convert and to invest the clear moneys, after payment of all incidental expenses, in specified investments. The income was to be paid to a life tenant, and, thereafter, the residue was to be divided among certain relatives of the testator."1

Allhusen v WhittelIn Allhusen v Whittel, the essential words of the court were those of Justice W. Page Wood:

"There appear to be two points well covered by authority. One is, that every tenant for life of residue is entitled to the income of all such part of the residue as is not required for the payment of debts, and which is found to be in a proper state of investment. He is entitled to the income of that property from the death of the testator. There have been numerous decisions on this point.... These authorities clearly shew that, supposing a testator has a large sum, say £50,000 or £60,000, in the funds, and has only £10,000 worth of debts, the executors will be justified, as between themselves and the whole body of persons interested in the estate, in dealing with it as they think best in the administration. But the executors, when they have dealt with the estate, will be taken by the Court as having applied in payment of debts such a portion of the fund as, together with the income of that portion for one year, was necessary for the payment of the debts.

"It is curious that I find none of the authorities pointing out this rule, but probably it has never been thought necessary to make so nice a distinction. It is quite clear that the executors must not be taken to have applied the whole income. Until the debts and legacies were paid, there would have been no interest from the death of the testator which could by possibility have come to the tenant for life.

"What I apprehend to be the true principle is, that, in the bookkeeping which the Court enters upon for the purpose of adjusting the rights between the parties, it is necessary to ascertain what part, together with the income of such part for a year, will be wanted for the payment of debts, legacies, and other charges, during the year; and the proper and necessary fund must be ascertained by including the income for one year which may arise upon the fund which may be so wanted. I have not been able to find a case in which that calculation has been made, but it appears to me to be the principle upon which alone the rights can be adjusted. It is clear that the tenant for life ought not to have the income arising from what is wanted for the payment of debts, because that never becomes residue in any way whatever."

This excerpt was relied upon by Mr. Ronald Justice Martland of Canada's Supreme Court (1907-1997) in Lotzkar v. Southin in adding:

"The case (Allthusen v Whittel) is concerned with the adjustment of rights and liabilities, as between the life tenant and the remainderman of the residue of an estate during the "executor's year". Two matters are covered in this statement. The first is as to the right of the tenant for life to the income of that part of the residue not required for the payment of debts, which is in a proper state of investment. That right is to receive such income as from the date of death. The executors are not entitled during the one-year period from the date of death, as between him and the remainderman to apply that income in the payment of debts.

"The second is that, in determining the portion of the residue required to meet the debts, the executors are to determine that amount which, together with interest on it for the one-year period, would pay the debts. On that portion of the residue the life tenant is not entitled to income, because that portion never becomes residue.

"In essence, in doing the bookkeeping as between life tenant and remainderman the executors are required to set aside out of capital a fund which, applying the principles above stated, will provide for payment of the estate debts. This is done on the assumption that it is the intention of the deceased to do so. However, this must be subject to the specific directions of the testator who might, in his will, himself designate that fund which is to be applied for the payment of debts."

In Re Liberal Petroleums Trust, Justice Egbert of the Alberta Court of Queen's Bench had occasion to consider the Rule in Allhusen v. Whittell and relied on the following words, relying extensively on the trust law book of University of Victoria Law School Professor, Donovan Waters:

"The general rule (in Allhusen v. Whittel) adopted by the Court of Chancery and followed today is that the nature of the burden will determine whether it is borne by life tenant or remainderman. For example, day to day expenditures are naturally associated with income, and major occasional improvements or expenditures are similarly associated with capital. If the trust property includes a house, the discharge of annual municipal and school taxes upon that house and the cost of regular painting, decorating and maintenance falls upon the life tenant. Occasional substantial repairs are the responsibility of the capital, and hence are borne by the remainderman.

"Similarly, the costs and expenses of the trustees in administering the trust have been regarded by the courts as sufficiently fundamental and long-term that capital should bear those items. But this is only a prima facie determination. If it can be shown that the costs in question were exclusively concerned with the administration of the life tenant’s interest, then income must bear those costs.

"The rule has as its foundation the equitable maxim cujus est commodum ejus debet esse incommodum.

"Canadian courts have held that the Rule in Allhusen v. Whittell is a working rule only and not a principle of law2 (and) ... between life tenant and remainderman it is designed to apportion the responsibility for the burdens.

"... the Allhusen rule (is) a mere equitable bookkeeping rule...."3

Some jurisdictions have acted wisely in reducing the opportunities of uncertainty and litigation which is inherent in those areas of the law left to judicial discretion. In this, those jurisdictions have explicitly abolished the rule and replaced it with some such other formula such as, for example, §10 of the Trustee Act of British Columbia, circa 2013.

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