William John Auchnie+henry Auchnie V. Duncan Henry James Auchnie+george Allan Auchnie
| Jurisdiction | Scotland |
| Judge | Sheriff P. Mann |
| Court | Sheriff Court |
| Date | 05 February 2013 |
| Published date | 07 February 2013 |
Sheriffdom of Grampian Highland and Islands at Banff
Judgement
of
Sheriff Philip Mann
In causa
William John Auchnie
Residing at East Logie Aulton, Rothienorman
First Pursuer
And
Henry Auchnie
Residing at Wester Corryhoul, Corgarff, Strathdon
Second Pursuer
Against
Duncan Henry James Auchnie
Residing at Upper Crannabog, Aberchirder, Banffshire
First defender
And
George Allan Auchnie
Residing at Littlemill, Rothienorman
Second Defender
Act:/
Act: Parratt, Advocate
Alt: McCallum, Solicitor
Banff
The Sheriff, having resumed consideration of the objections and answers thereto number 24 of process, Repels the pursuers' first plea in law, the same not being insisted upon; of consent Sustains the pursuers' second plea in law and upholds their objection 2; Repels the pursuers' third, fourth, fifth sixth and seventh pleas in law; Continues the cause to a hearing on 26 February 2013 at 10:00am within the Sheriff Court House, Low Street, Banff to determine the question of expenses of the debate on 14 January 2013 and to determine further procedure in the cause.
Sheriff Philip Mann
Note/
Note
1. Introduction
1.1 This is an action of count reckoning and payment in respect of the estate of the late William Duncan Auchnie ("the deceased"), who died on Twenty third July 2003. The parties are four out of his five surviving children. The defenders are his trustees and executors appointed by his Trust Disposition and Settlement (hereafter "Will") dated Twenty fourth June 2002. They are confirmed as his executors by Confirmation issued in this court on Third November 2006.
1.2 On 14 January 2013 I heard a debate on number 24 of process which is a record of objections and answers in relation to the accounts and proposed division of assets lodged by the defenders. The pursuers were represented by Mr Parratt, advocate. The defenders were represented by Mr McCallum, solicitor.
1.3 At the outset of the debate Mr Parratt intimated that of their six objections the Pursuers were insisting only on their objections 3, 4, 5 and 6. Their objection 2 had already been conceded in the defenders' answers. Accordingly, the matters remaining in dispute and to be debated by the parties related to:-
(three) the sums received from the Scottish Executive by way of subsidies under the single farm payment entitlements scheme (hereafter "SFP") and whether or not these fall to be regarded as income of the estate.
(four) whether or not the defenders are obliged to account to the beneficiaries for the increase in value of the farms since the date of death of the deceased.
(five) whether or not payments under an options agreement in respect of a wind turbine development at Upper Crannabog Farm entered into after the date of death of the deceased fall to be paid to the estate.
(six) the fact that the accounts do not reflect any income from the farms from and after December 2005.
1.4 For present purposes the relevant part of the Will is clause (Second) which provides:-
"I leave and bequeath the whole rest residue and remainder of my Estate to the following persons in the following shares videlicet:-
To my son Duncan H J Auchnie I leave fifteen per cent;
To my son William John Auchnie I leave fifteen per cent;
To my son George Auchnie residing at Little Mill, Rothienorman, in recognition of his long service on the farm I leave thirty per cent;
To my son Henry Auchnie residing at Corryhoul, Corgarff, I leave fifteen per cent;
To my daughter Mary Diane Jeannie Willox residing at Par View, Little Mill, Rothienorman, I leave twenty five per cent.
Where possible I direct my Trustees that the value of the share to be received by George, Duncan and William is to be made up of the dwelling house, steading and farmland on the farm on which they reside with the legatee either receiving monies or other assets to make up the value of the share or where the value of the farm to be taken is greater than the value of the legacy by the legatee paying money into my estate in respect of the difference between the value of the asset and the value of the legacy. In the event of a dispute as to the value of any particular farm the decision of a valuer from Aberdeen and Northern Marts is to be final. In valuing the properties at Upper Crannabog and East Logie Aulton regard is to be had to any alterations or improvements made to the dwelling houses or steadings by the occupant of the particular dwelling house such that the person who paid for the said alterations, extensions or improvements is not unfairly prejudiced. In particular, I accept that the new steading at Upper Crannabog was paid for by George and Duncan and that all improvements to the dwellinghouse at Upper Crannabog have been paid for by Duncan. If George and Mary elect to continue farming at Little Mill in partnership and wish to combine their legacies to do so and to form a viable unit George and Mary will have the first option of taking the farmland at East Logie Aulton up to the value of their combined legacies. On no account is William to be left with less than the dwelling house, the steading, farmyard and ten acres. In the event that the value of the aforementioned dwelling house, steading etc. acquired by William is less than the value of his legacy, then it is intended that he should receive a balancing payment from my estate.
It shall always be open to Duncan and George to decline to take the legacy as a dwelling house, steading and farmland with or without a balancing payment in which case the farm on which the individual resides is to be sold. For the avoidance of doubt no legatee shall be allowed to pick and choose a mixture of dwelling house, steading and farmland where the effect of that choice would be detrimental to the value of my overall estate"
1.5 The defenders, as individuals, and their sister Mary Willox have been occupying and farming the farms of Littlemill, East Logie Aulton and Upper Crannabog.
2./
2. The Pursuers' Submissions
2.1 Mr Parratt helpfully lodged written submissions for which I am grateful. He advised me at the outset that he would be content to follow any one of three possible courses in relation to his written submissions. He could take me through the submissions in detail; he could simply rest on his written submissions; or he could rest on his written submissions with such clarification on any point as might be required by me. Having read the written submissions in advance I elected to proceed on the basis of the last of these suggestions and merely sought further clarification on Mr Parratt's understanding of the relationship of SFP to land.
2.2 Mr Parratt's point in relation to the subsidies received under the SFP scheme was that, properly understood, it is the farm itself which attracts the payments under the scheme by calculations relating to the number of hectares. The farmer is required to do certain things, by way of complying with cross compliance requirements, to qualify for the payments but the payments are linked to the farm and not to him. Mr Parratt took me through the history of the introduction of the single farm payment entitlements scheme and relied heavily on the case of Morrison-Low v Paterson 2012 S.C. 373, [2012] CSIH 10 and, in particular, the judgement therein of Lord Justice-Clerk Gill (as he then was). He also referred to the case of Simpson v Simpson 2007 Fam. LR 134 to demonstrate that single farm payment entitlements are an asset which can be considered in divorce proceedings. He also referred to the Northern Irish case of Crossey v Armour [2008] NICh 4; 2008 WL 6626804 where it was held that SFP, which came into existence after the date of death of the deceased in that case, were to be regarded as comprehended within a specific bequest of "my farmlands, stock, machinery, buildings and dwelling-house".
2.3 In relation to the valuation of the farm assets Mr Parratt maintained that since the title to the farms remained vested in the executors, the delay in completing the administration of the estate meant that the executors required to account in some way to all of the beneficiaries for the true present day market value of the assets. As he put it, "What the executors cannot do is proceed to distribute on the basis of the 2004 or older figures without any accounting for the increase in valuation of the estate". He advised me that there is no case law on the point but that there are authorities relative to the duties of a trustee or executor in regard to the expeditious administration of the estate. In this regard he referred to the textbook Wilson and Duncan Trusts, Trustees and Executors (second edition) paragraph 28-06 where the point is made, under reference to Clarke v Clarke's Trustees 1925 S.C. 693, that inordinate delay may give rise to a breach of trust - although he acknowledged that this point was not the focus of the debate. Mr Parratt pointed out that the executors' duty is a factorial one to ingather and distribute the estate. Although trite law, this was reinforced by Lord Carloway in Pentland Clark v Maclehose [2012] CSIH 12. Mr Parratt referred to the duty of executors not to sell or distribute the estate to themselves if they will acquire a personal benefit from such a sale or distribution at under value. An executor, he said, should be careful to obtain full value for the assets of the estate before final distribution of the estate. This was so where there has been delay in the ingathering of the assets where the value of the assets has increased in the meantime. In addition, this was so where he intended to distribute the assets in accordance with the wishes of the testator to himself or another related to him and where there would be an actual or perceived benefit to that person from a distribution at historic values and not at present market value. This was a point that was made by Lord Hamilton (as he then was) in the unreported case of Smart v Smart's Executors (unreported) 9 June 1995. The issue in...
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