Scottish Court of Session Decisions

George Gillespie, writer, Glasgow, as factor loco tutoris to Wilhelmina Gilligan, only child of William Robert Gilligan, cab and carriage hirer in Glasgow, presented a note to the Court, in which he craved power to sell part of the heritable estate of the ward.

The property in question was situated in a central position in Glasgow surrounded by public works, where little ground was available for building purposes, but the principal frontage was on a considerable gradient. Part of it consisted of two four-storey tenements of one and two roomed houses; the remainder was a large stable with dwelling-house attached. The buildings, which were brick, were both old and very much dilapidated. The class of occupants was such that the wear and tear and the consequent cost of repair was excessive. The nett average annual return from the property was about £108.

The annual income of the factorial estate was £410, which, deducting the cost of the ward's maintenance and education, and allowing for expenses of management, left an annual surplus income of about £245.

By requisition dated 15th April 1897, the Sanitary Inspector of Glasgow, had called upon the factor to provide additional sanitary accommodation involving an outlay of about £200, and had intimated that if this was not done the matter would be reported to the Corporation of Glasgow with a view to proceedings being taken.

The factor, thinking that it was open to grave doubt whether he would be justified in incurring the necessary expenditure, consulted a house factor and property agent in Glasgow, who reported that the property was “hardly worth the outlay,” and that “the ground from its central position and surrounded as it is by public works would be more valuable for many purposes.” The factor thereupon obtained a valuation from Mr W. G. Rowan, architect and valuator, Glasgow, who valued the property, if sold as one subject, at £3082, 10s.

It appeared that the price paid by the ward's father when he acquired the property in 1887 was £5100.

In these circumstances the factor presented a report to the Accountant of Court in which he narrated the facts above set forth, and stated that in his opinion any assumed value of the subjects was somewhat speculative, but that probably as a site, apart from questions of revenue, the ground would increase in value, and reported that in his opinion it would be prudent to realise the properties in question by public roup.

The Accountant of Court upon this report gave an opinion that the factor might be authorised to expose the subjects for sale by public roup at the upset price of £3000.

In these circumstances the present note was presented to the Court.

Answers were lodged by Mrs Margaret Riddell or Fraser, the ward's grandmother, with whom the ward resided, as tutor and guardian duly appointed to the ward, and also as an individual.

Mrs Fraser objected to the property being sold, on the ground that there was no necessity for a sale, and that it would not be prudent to sell it at present, but that the better course would be to retain it for the benefit of the pupil. A report upon the property by Mr Frank Burnet, F.S.I., surveyor and valuator, Glasgow was produced, in which the reporter valued the subjects at £3300, and stated that in his opinion there was no occasion for selling meantime, as the property was yielding a return and would improve in value. He further stated that if the necessary sanitary improvements were made the rental of the tenements would be increased to such an extent as to give a good return for the money expended, and also that the stable property had been allowed to fall into disrepair, and consequently yielded a very low rental for the extent of the premises, but that if a moderate sum was expended upon it the rental might be greatly increased.

By interlocutor dated 22nd December 1897 the Lord Ordinary ( Kinnear) remitted the answers to the Accountant of Court in order that he might inquire and report thereon.

The Accountant of Court remitted to Mr J. M. Monro, architect, Glasgow, to value and report upon the subjects, and he reported that the buildings were in a very bad state of disrepair, that in addition to the sum of £200, which would be required to provide the sanitary accommodation demanded by the authorities, £70 would require to be spent to make the dwelling-house property in a fair state of order, and that to put the stable property into a proper state of repair so as to realise a better rent would involve an outlay of £125. He stated in his report that the ground floor apartments of the dwelling-house property, which were 1 foot 9 inches to 3 feet 5 inches below the level of the street, and only 7 feet from floor to ceiling, were so dark and damp and so infested with rats that they were liable to be shut up at any moment by the authorities as uninhabitable.

The Accountant of Court reported that “in the whole circumstances, looking to the expenditure required to put the buildings into a state of repair, and comply with the requirements of the sanitary authorities, to the class of tenants who would occupy them, and to the large annual expenditure on repairs always necessary, and further, that it is not for the factor to utilise the ground to the full extent by building upon it, the Accountant is of opinion that it is in the interest of the ward that the subjects be sold, as craved in the note for the factor.”

In reply to a subsequent communication from the Accountant of Court, Mr Monro gave it as his opinion—“1st. That the outlay

Page: 692↓

of £400 would not yield a rise in the nett rental equal to 5 per cent. thereon. The outlay on the stable buildings would yield that return, but I fear it will be impossible to raise the rents of the dwelling-houses to yield more than 2 1 2 per cent. 2nd. The value of the property would not be correspondingly increased with the outlay, as the real value is in the ground. 3rd. The site of this property is likely to increase in value, and seeing the judicial factory is able to bear the expense of repairs, it might therefore be advisable to retain the property.”

From the various reports produced it appeared that the buildings were so far through, and the situation so favourable for other purposes, that the property would admit of being reconstructed to advantage. It also appeared that the value of the property was entirely in the site, and that the prevailing opinion was that the site would rise in value.

By interlocutor dated 9th March 1898 the Lord Ordinary ( Pearson) approved of the Accountant's report, and in terms thereof authorised the petitioner to expose the property for sale by public roup in one lot at the upset price of £3000, and if not sold at or above that upset price, to re-expose the same for sale, and sell the same by public roup at such upset price as the Accountant of Court might fix; and also granted warrant to the factor to complete a title in the person of the ward to the whole of the heritable subjects specified in the prayer of the note; and found the petitioner and respondent entitled to their expenses out of the estate.

“ Opinion.—[ After stating the circumstances as above narrated]—The question is, whether in these circumstances a case is presented for granting the power of sale, having regard to the principles which have governed similar cases in the past. There is no doubt that the rule is not quite so stringent as it once was. It is not incumbent on the factor to make out a case of necessity, even in the wider sense of the term, before he can obtain power to alienate a pupil's heritage. But he must make out a case of clear expediency, and the expediency must not be merely the hope of gain but rather the avoidance of loss.

On the other hand, it is clear that the question of expediency must be determined with some regard to the other possible courses which are open. Thus, in the present case, if the owner were sui juris and of ample means, he would probably be advised either (1) to reconstruct the whole premises so as to utilise the ground to its full extent and value, or (2) to keep the subjects as they are for a year or two, even untenanted, so as to avoid useless expenditure on the one hand and a sale in a rising market on the other. But both of these alternatives are ruled out when we are dealing with a factorial estate, for, however prudent such courses might be in the case I have supposed, they involve elements of speculation which are not appropriate to factorial management.

Therefore the question of expediency must be determined with reference to the remaining alternatives. These are (1) to sell by public roup, and (2) to keep an old and much dilapidated property, with the immediate necessity of spending £400, or at least £200, upon it in order to maintain the rental, such expenditure possibly, though not certainly, raising the return from the property, but not adding anything to its market value, which is in the site. The fact that the sale is said to be in a rising market is not of course to be left out of account, but that involves an element of conjecture, and so far as it does not, the estate will get the benefit of it in an enhanced price.

I hold that, upon the case as so stated, the factor has made out a case of expediency so strong as to warrant me in granting the powers craved.”

The respondent reclaimed, and argued— Authority to sell should not be granted. The Court was not in use to grant such applications unless the sale was “urgently necessary,” or at least “highly expedient.” Here there was no necessity, for the factor had funds arising from surplus income to meet the necessary expenditure. Nor could it be said that the sale would be highly expedient, for it was probable that the property would rise in value, and meantime it appeared that if repaired it would yield an annual return upon its present estimated value plus the cost of the repairs, greater than could be obtained for that amount if invested in trust securities.

Argued for the petitioner—The buildings were at present valueless, and therefore not worth repairing. This was not a property which anyone would think of buying with a view to repairing and holding it as an investment. The course which a buyer would take would be to pull down the buildings and utilise the site for some other purpose. It was therefore highly inexpedient to waste money in repairs, and as the tenements could not be let unless repaired, the sale should be allowed. Authorities referred to— Lord Clinton, October 30, 1875, 3 R. 62; Campbell, June 26, 1880, 7 R. 1032; Sinclair-Wemyss, July 18, 1882, 9 R. 1131; Logan, November 9, 1897, 25 R. 51.