Gordon Turner V. John Turner
| Jurisdiction | Scotland |
| Judge | Lord Tyre |
| Neutral Citation | [2012] CSOH 41 |
| Court | Court of Session |
| Published date | 07 March 2012 |
| Year | 2012 |
| Date | 07 March 2012 |
| Docket Number | A201/11 |
| OUTER HOUSE, COURT OF SESSION [2012] CSOH 41 | |
| A201/11 | OPINION OF LORD TYRE in the cause GORDON WRIGHT TURNER, Executor nominate of the late ISABELLA COUTTS GORDON Pursuer; against (FIRST) JOHN SUTHERLAND GORDON TURNER; (SECOND) ISABELLA POVEY; (THIRD) ANNIE COBB; (FOURTH) AILEEN ODAM; (FIFTH) ISOBEL GORDON; (SIXTH) HUGH GORDON Junior; (SEVENTH) PETER GORDON; and (EIGHTH) DORIS GAULD Defenders: ________________ |
Pursuer: Francis; Brodies LLP
Defenders: Ross; Morton Fraser LLP
7 March 2012
Introduction
[1] This case, which came before me for summary trial by agreement of the parties, raises an important question which has not previously been the subject of decision by a Scottish court. Where an attorney, acting prudently in accordance with the terms of a continuing power of attorney, disposes of an item of property from the granter's estate after the granter has become incapable of managing his or her own affairs, is a bequest in the granter's will of that property thereby adeemed?
Factual background
[2] The facts of this case were not in dispute and were set out in a joint minute agreed by the parties. So far as material to my opinion, they may be summarised as follows. The late Miss Isabella Coutts Gordon ("the testatrix") was born on 26 April 1915. She was formerly the proprietrix and occupier of a house at 33 Dunnottar Avenue, Stonehaven. On 17 April 1996, she granted a power of attorney in favour of a solicitor, Mr Alan Bisset. In this document she conferred upon the attorney "power to do all things which can lawfully be done by an attorney" and, in particular, the powers detailed in a schedule to the deed which included power to sell any part of her means and estate, heritable or moveable. The power of attorney included a declaration that
"all acts done or granted by my Attorney in virtue of the powers hereby conferred shall be as valid and binding as if done or granted by myself".
The deed concluded:
"And I hereby ratify and confirm all that my Attorney shall do or cause to be done in virtue of the powers hereby conferred".
[3] On 2 July 1997, the testatrix executed a will, appointing the pursuer and the first defender as her trustees and executors. In her will she directed her executors to make over the heritable property at 33 Dunnottar Avenue to the first defender, and to realise and make over the residue of the estate equally among the pursuer and the first to eighth defenders, with destinations over in the event of any of them predeceasing her leaving issue.
[4] In 2001, the testatrix's mental capacity diminished. She became incapable of managing her own affairs and moved into a nursing home. In September 2001, the attorney sold the house at 33 Dunnottar Avenue for £71, 250. As regards this sale, the parties are agreed as follows:
"The sale of the house by Mr Bisset was a prudent act of administration, having regard to the disadvantage in leaving the house empty with attendant maintenance costs. It was not a necessary act, not having been an act which [the testatrix] as principal, had she been sui juris, would have been constrained to effect, there being sufficient other funds available to meet the costs of [her] care."
[5] The testatrix died on 27 January 2008. The pursuer and the first defender were confirmed as her executors on 27 March 2008. The total estate for confirmation was £220,217. As at 5 April 2011, the value of the estate was £173,455.
Power of attorney: statutory provisions
[6] The law regarding power of attorney (or, to use the traditional Scots term, factory and commission) was the subject of a significant amendment by section 71 of the Law Reform (Miscellaneous Provisions) (Scotland) Act 1990. Before this amendment, the authority of an attorney or factor acting under a power of attorney - or factory and commission - terminated in the event of the mental incapacity of the granter. With effect from 1 January 1991 that rule of law ceased to apply. For the sake of completeness, it should be noted that the current law is contained in section 15 of the Adults with Incapacity (Scotland) Act 2000, subsection (1) of which provides as follows in relation to what is now referred to as a continuing power of attorney:
" Where an individual grants a power of attorney relating to his property or financial affairs in accordance with the following provisions of this section that power of attorney shall, notwithstanding any rule of law, continue to have effect in the event of the granter's becoming incapable in relation to decisions about the matter to which the power of attorney relates."
The provisions of section 15 do not, of course, apply to the power of attorney in the present case, which was granted in 1997, but by virtue of paragraph 4 of Schedule 4 to the 2000 Act, the attorney became a continuing attorney on the entry into force of the Act.
[7] It will be appreciated that the issue which comes before the court for decision in the present case could not have arisen with regard to any person who became incapable before 1 January 1991, as the attorney's powers (including any power of sale) would have lapsed on the granter's incapacity.
Submissions for the parties
[8] Both parties provided me with detailed and carefully researched written and oral submissions. I shall set these out in summary before addressing them in greater depth in the discussion below.
Submission for the pursuer
[9] Counsel for the pursuer, one of the residuary beneficiaries, contended that the legacy of the house was adeemed. There was a short and a long answer to the special legatee's claim. The short answer was that the sole question to ask was: was the subject of the legacy in the testatrix's estate at death? If not, the legacy was adeemed. The long answer depended upon the development of the law of both ademption and conversion, which were distinct doctrines, with certain points of contact, derived to a large extent from English law. Conversion is dependent upon the presumed intention of the testatrix. In the present case, the attorney's act was equivalent to the testatrix's act. Because the disposal of the house was authorised (and prospectively ratified) by the testatrix, it effected conversion of the heritable property consisting of the house to moveable property consisting of the proceeds of sale. Intention is not, however, relevant to ademption. Where, as here, property had been converted by an appropriately authorised transaction, it was simply gone from the estate and the legacy of it was accordingly adeemed.
Submission for the first defender
[10] Counsel for the first defender submitted that a transaction carried out by an attorney should be regarded as analogous to a transaction carried out, under pre-2000 law, by a curator bonis. A sale by a curator bonis effected neither conversion of the property nor ademption of a legacy thereof, unless it could be shown that it would have been a necessary and unavoidable act on the part of the ward if sui juris. By agreement, that was not the position here. The legacy was not therefore adeemed and the first defender was entitled to the proceeds of sale as a surrogatum for the house.
Analysis: transaction carried out by an attorney
[11] The term "attorney" appears to have originated in English law: the Scots equivalent, as already noted, was a factor acting under a factory and commission. Erskine (Institute III.III.31) appears to treat the word attorney as an alternative to factor or mandatory, "according to the different nature of the mandate". Bell (Principles, para 217-9) distinguishes mandate, which is performed gratuitously, from agency or factory, which is performed for reward, but does not seek to distinguish a general agent from a factor. By the time of publication of Green's Encyclopaedia of the Laws of Scotland in 1929, the law could be summarised thus (Vol 7, paras 180-181):
"180. A factory is a deed by which one authorises another to exercise a right or rights in his place. The word commission used to be applied to such a deed when the powers conferred were of higher importance than usual, but now factory and commission are practically synonymous. The corresponding English term, power of attorney, is now frequently used in Scotland where the powers granted by the deed are not intended to be confined to Scotland.
181. A factory may be (1) general, conferring none but the most ordinary powers of administration; or (2) special, authorising the performance of a particular act or acts; or (3) general and special, in which the general powers are limited by special restrictions, or, as is more usual, the special powers extend the factor's general authority. The factory is not a divestiture, and even during its subsistence the constituent may act for himself."
[12] Save for the fact that the term "power of attorney" appears to have almost entirely superseded "factory and commission" in Scottish practice, this description appears to me to remain apposite today. Most attorneys are now appointed (as was the attorney in the present case) by a deed conferring upon them a general power to do everything that the granter could do for himself or herself, supplemented by a list of specific powers granted without prejudice to the generality. The attorney is thus, in essence, a factor or general and special agent appointed and authorised by the granter to manage his affairs and, in the course of so doing, to bind him in legal relationships with third parties. There is, in my opinion, no legal fiction which treats the attorney as the same person in law as the granter, or which treats the attorney's acts as those of the granter. Rather, the attorney's acts are as valid and binding on the granter as if they had been carried out by him, and the attorney is accountable, as is any factor, agent or mandatory, to the granter for his intromissions. The fact that the power of attorney in the present case includes a clause that prospectively ratifies and...
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