The Most Honourable Alexander George Gordon, Marquess Of Aberdeen And Temair V. Messrs Turcan Connell
| Jurisdiction | Scotland |
| Judge | Lady Smith |
| Neutral Citation | [2008] 183 |
| Date | 23 December 2008 |
| Court | Court of Session |
| Published date | 23 December 2008 |
| OUTER HOUSE, COURT OF SESSION [2008] 183 | |
| OPINION OF LADY SMITH in the cause THE MOST HONOURABLE ALEXANDER GEORGE GORDON, MARQUESS OF ABERDEEN AND TEMAIR Petitioner; against MESSRS TURCAN CONNELL Defenders; |
Petitioners: McLean, Advocate and Howie QC; Maclay Murray & Spens LLP
Respondents: Dunlop, Advocate and Jones QC; Simpson & Marwick
23 December 2008
Introduction
[1] In this action the pursuer's claim is for damages in the sum of £700,000 against a firm of solicitors in respect of their alleged negligence. The claim is advanced both as one for breach of contract and as a delictual one. The failure alleged is an omission to give advice.
[2] The advice in question related to the landholdings comprised in one of two family estates.
[3] The action came before me on the procedure roll in respect of the defenders' two preliminary pleas: a plea of no title to sue and a plea to the relevancy of the action. The defenders sought dismissal.
The Facts Averred
[4] The 'Aberdeen Gordons' have held landed estates in East Aberdeenshire for many generations. Their ownership of lands there dates back over 500 years. As at 1965, the main holdings were Haddo Estate and Tarves Estate and they were held by the Fourth Marquess of Aberdeen and Temair, the pursuer's uncle. He created a trust ("the 1965 Trust') into which the Tarves Estate was conveyed. It was the largest asset in the 1965 Trust.
[5] Haddo Estate passed to the pursuer when a separate trust into which it had been conveyed was wound up in 1983. He continues to hold Haddo Estate.
[6] The pursuer's uncle died and his aunt, June, Lady Aberdeen, has enjoyed a liferent of the 1965 Trust assets since her husband's death, as provided for by the1965 Trust deed.
[7] The terms of clause 'LASTLY' of the 1965 Trust deed include:
"...my trustees shall on the death of my said wife or on my own death if she shall not survive me pay, convey and make over the residue of my means and estate and any accumulations of income thereon as aftermentioned to my nephew Alexander George Gordon whom failing to the person who shall then hold the title of the Marquess of Aberdeen and Temair...But I specially provide and declare that no heir called under the foregoing destination shall acquire a vested right in the said residue until he shall have survived my said wife and me and shall also have attained the age of twenty one years complete...I hereby give my Trustees power in their sole discretion at any time and from time to time (but only with the consent of my said wife during her lifetime and while she remains capax) to make advances to or for the benefit of the prospective heir at the time of any part or even the whole of the capital of the said residue...and any advances so made by my Trustees shall vest at the date of such advance in the person to whom or on whose account the same shall be made;"
[8] The pursuer's first son ('Lord Haddo') was born on 4 May 1983. In 1984, at which time Lord Haddo was still the pursuer's only child, he consulted his solicitor, Mr David McLellan of Dundas & Wilson CS as to how matters might best be arranged so as to enable his children to benefit from Tarves Estate whilst minimising any liability to tax. Dundas & Wilson acted for the pursuer in a broad range of matters and also for the Haddo and Tarves Estates.
[9] On or about 6 December 1984 a meeting took place involving the pursuer, his accountant and Mr McLellan to discuss Inheritance Tax Planning. One of the pursuer's wishes was to look into ways of passing the Tarves Estate to his children without a tax charge arising on his death. At about that time, Mr McLellan proposed setting up a new accumulation and maintenance trust to which the pursuer's reversionary interest in the Tarves Estate, arising from the terms of the 1965 Trust, would be assigned. The effect of doing so would be that that reversionary interest would not then form part of his estate on death. The beneficiaries of that trust would be the pursuer's children. In the light of the small size of the pursuer's direct family at that time, Mr McLellan advised that the class of beneficiaries ought to include other more distantly related children of the same generation, so as to minimise the risk of the trust purposes failing.
[10] Another tax advantage in the proposed arrangements would be that on the death of Lady Aberdeen, the assets in the 1965 Trust including the Tarves Estate would enjoy a 'free revaluation' for Capital Gains Tax purposes.
[11] Following that advice, the Tarves Estate Trust ('the TET') was set up. The pursuer's accountant, Beverley Michael Covell, and the factor on the Haddo and Tarves Estates, Captain Colin Andrew Farquharson, were appointed as its trustees. The TET provided for a class of potential beneficiaries comprising the pursuer's children, the children of his sister, Lady Emma Cecile Foale, and the children of his adopted cousin, Andrew David Gordon. In terms of clause '(Fifth)' of the TET, the Trustees had a discretion to determine which of that class should be entitled to take a share of its capital (subject to a provision that each child was entitled to at least a 1/100th part of the share of the assets to which he would have become entitled if he lived to age seventy) but that discretion required to be exercised before certain specified dates. The TET provided further that if the Trustees did not exercise that discretion then each qualifying child would obtain a vested right to an equal share of the assets upon reaching seventy years of age and , in the meantime, would have a liferent interest in that prospective share.
[12] By 1993, the pursuer had four children. He had, by then, made it clear to Mr McLellan that he wanted Lord Haddo to take Haddo Estate and that he wanted Tarves Estate to pass to one or more of his other children. Further, he had made it plain that it should only be if none of his immediate family survived him that any of his sister's children should receive the Tarves Estate and, furthermore, on no account should any of his adopted cousin's children receive it. Those wishes were repeated in notes provided to Mr McLellan in 1996.
[13] In 1997, Turcan Connell took over from Mr McLellan as the pursuer's solicitors. He was, in particular, advised by Mr Robert Turcan. Mr Turcan was made aware of the pursuer's wishes regarding the Tarves Estate. He was instructed by the pursuer by letter of 8 May 1998, to review the TET to ensure that there were no problems. Mr Turcan duly advised but did not draw the pursuer's attention to the need for the Trustees to exercise their discretion by a particular date. The pursuer provided Mr Turcan with notes which repeated the same wishes in respect of Tarves Estate as he had previously made known to Mr McLellan.
[14] By March 2006, Mr Turcan realised that the date by which the Trustees of the TET required to make an election had passed. In Article 5 of Condescendence, the pursuer avers:
"On about 28 March 2006, Mr Turcan contacted the pursuer. Mr Turcan advised that an urgent meeting was necessary because there was a problem with the Tarves Estate Trust. He indicated thereby that he was fully aware that the defender's remit as law agents advising the pursuer on his inheritance planning included oversight of the Tarves Estate Trust arrangements and providing advice to the pursuer thereanent. The meeting was held on 31 March 2006 at Haddo...Mr Turcan explained that he had made a mistake and he apologised for it. It was explained to the meeting by Mr Clark that because no appointments had been made in terms of Clause (Fifth) of the Tarves Estate Trust Deed, it was now the case that each of the qualified children had or shortly would have an interest in an equal share in the assets of the Tarves Estate Trust and hence in the reversionary interest in the fee under the 1965 Trust, insofar as the pursuer's interest therein had been assigned to the Tarves Estate Trust."
[15] The averments in Article 5 then go on to explain the result of the date for election by the trustees of TET having been missed:
"The intentions of the pursuer in his dealings with his reversionary interest in the fee of the 1965 Trust were thereby at risk of being substantially subverted, in that on the death of June, Lady Aberdeen, the Tarves Estate and associated assets would, instead of being held for the benefit of the pursuer's children or any of them, be likely to be held equally for at least nine beneficiaries, who (or whose issue) would ultimately take the capital of the trust at age 70. This would result in the break-up of a substantial part of the ancestral landholding associated with the Gordon family for hundreds of years...in direct contradiction to the explicitly - expressed wishes of the pursuer known to the defenders and their predecessors, Messrs Dundas & Wilson,C.S., for many years."
[16] The pursuer avers, in Article 6 of Condescendence that had the defenders advised him of the need for the TET trustees to exercise their discretion prior to the qualified children reaching their specified ages which failing that break-up of the estate would be the likely result, then the trustees of the TET would have exercised their discretion in favour of one or more the pursuer's children whilst it was still possible for them to do so thus saving the pursuer from becoming liable to:
"...make payment of a sum equivalent to said significant sum of Capital Gains Tax."
[17] The defenders, through their Mr Clark, suggested two possible solutions to the problem. Neither solution was such as to achieve the pursuer's plan that Tarves Estate pass to one or more of his children other than Lord Haddo but the defenders' recommended solution was at least such as to ensure that Tarves was retained within the pursuer's immediate family. That recommended solution was that (a) the 1965 Trust trustees buy an annuity for June, Lady Aberdeen to provide her with an income broadly...
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