Scottish Court of Session Decisions

OUTER HOUSE, COURT OF SESSION

[2016] CSOH 30

A663/14

OPINION OF LORD BURNS

In the cause

ALEXANDER DOUGLAS MILLER

Pursuer;

against

WILLIAM GEORGE POLLOCK

Defender:

Pursuer:  Logan, Advocate;  Campbell Smith WS LLP

Defender:  Turner, Advocate;  Ennova Law (for the defender qua executor)

Blane, Solicitor Advocate;  Urquharts (for the defender qua individual)

18 February 2016

Introduction
[1]        The pursuer is the son of Alexander Miller (the deceased) who died on 2 October 2009.  He raised the present action against the defender, the executor nominate of the deceased, in November 2014.  The pursuer, the deceased and the pursuer’s brother Charles Miller farmed various farms in a partnership.  The first conclusion is for a declarator of the true value of the deceased’s moveable estate as at date of death at a specified sum and that the pursuer has legal rights of a specified sum.  The second conclusion is for an order against the defender as executor nominate and as an individual to pay to the pursuer an amount of money with interest representing his legal rights.  The pursuer enrolled for summary decree against the defender and on 30 September 2015 summary decree was granted in the sum of £92,367.27 with interest at 8% per annum from the date of citation until payment. 

[2]        The pursuer avers that certain assets were not taken into account in the calculation of legal rights and, in particular, it is averred on page 6 of the record that the sum of £10,855.50, representing the deceased’s share of partnership funds ingathered, have not been taken into account.  Secondly, it is averred that the partnership had a right to a Single Farm Payment (“SFP”) in relation to the farms operated by the partnership.  The share of that SFP due to the deceased’s estate is said to be £94,376.37, calculated by reference to a multiplier of 2.8 being applied to the annual SFP payable as at the date of death.  The joint minute agrees that no capital value was attributed to that in the confirmation to the estate or in the closing accounts of the partnership.

[3]        The pursuer contends that, if these items are taken into account, the net moveable estate for the purposes of calculating legal rights amounts to £1,044,170.01.  The fund available for legal rights (50% thereof) therefore amounts to £522,085 of which the pursuer’s share is £130,521.25.  Having regard to the payment to account of £25,000 and the summary decree amount of £92,367.27, the balance due by the executory, exclusive of interest, is £13,153.98.  In addition, the pursuer seeks interest at the rate of 8% per annum on the sum of £130,521.25 until 26 April 2013 when the payment to account of £25,000 was made and thereafter at the same rate on the balance due. 

The History of the Estate
[4]        The following matters were not a matter of dispute and are derived from the evidence given at the proof and from the documents spoken to and agreed. 

[5]        The business of the partnership was carried on at Strathavon and Strathmill, Bridgehouse, Muckraw, Avonbank and Bridgend Farms.  The contract of partnership (6/4 of process) stated that the partnership had commenced on 29 August 1992 and was to continue in force from year to year, subject to the provisions of clause 9.  The partnership appears to have held the titles to Bridgehouse and Muckraw.  Title to Bridgend, Avonbank and Strathaven and Strathmill was divided with the deceased holding 50% and the pursuer and Charles Miller holding 25% each. 

[6]        In his will dated 2 April 2001, the deceased appointed the defender to be one of his executors.  He was a longstanding family friend.  In addition he appointed an accountant. By codicil dated 2 April 2001, that appointment was recalled and the deceased’s brother, Robert Lawson Miller, was appointed.   He resigned in October 2011.  The will directed his trustees to: 

“transfer all interest in all agricultural and business assets including without prejudice to the forgoing generality, all heritable property, interest in firm of Alexander Miller and quotas to my son Charles Miller”. 

 

The residue was left to his wife who predeceased him.  In that event, the residue went to the deceased’s two daughters. 

[7]        The pursuer, as one of the surviving children of the deceased, claimed legal rights, the full amount of which has not been paid to date.  He received £25,000 to account on 26 April 2013.  The two daughters also claimed legal rights and were paid that sum to account but subsequently withdrew their claim. 

[8]        Various disputes emerged between the purser and Charles Miller (the brothers).  Charles Miller raised an action of division and sale of the farms held by the deceased and the brothers.  The partnership agreement required the books to be brought to a balance as at the date of dissolution on the death of the deceased and the sum at credit to be ascertained.  However, the brothers could not agree on the value of the partnership assets until a Minute of Agreement was entered into on 26 May 2014 (6/1 of process).  In terms thereof, Bridgehouse farm was conveyed to the pursuer and Muckraw, Stathavon and Strathmill, Avonbank and Bridgend farms were conveyed to Charles Miller.  They also agreed to sign the partnership accounts for the period up to the date of the deceased’s death which are 7/3 of process.  The defender as executor did not sign those accounts.  He was advised by his solicitors in a letter 7/3 of process that “having not been a partner in the Firm during the period of the accounts, he has no locus to sign off the accounts”.  He accepted the figures determining the closing balances on each of the partners’ capital accounts as at the date of death.  Although the second page of the accounts bears a date of 14 May 2012 it appeared that they were not signed until after the Minute of Agreement was entered into. 

[9]        The accounts state that the net assets of the partnership amounted to £1,398,606.  The capital account of the deceased was £746,261 or 53.8% of the assets with the balance being divided in unequal proportions between the brothers. 

[10]      The farming assets of the partnership, including the deceased’s share thereof, were taken over by Charles Miller on the farms which he continued to farm after the death of the deceased.  By disposition recorded on 22 March 2012, the defender, as sole executor, conveyed to Charles Miller the deceased’s one half share of Strathavon and Strathmill farms “in part implement” of the deceased’s will.  Although there was no direct evidence on the matter, it appears from the letter to defender from his then solicitors dated 9 February 2012 (7/4 of process) that Bridgend and Avonbank were also conveyed to Charles Miller at or about this time. 

[11]      Reference is made in the pleadings to an action raised by the executor against Charles Miller “in relation to sums apparently paid by the defender as executor to him” in August 2013 in which inhibition on the dependence was obtained in August 2013.  That inhibition was lifted in June 2014 by agreement.  There was no evidence as to the nature of that action, the sum concluded for, or its basis.  A joint minute agrees only the date it was raised and called. 

The evidence
[12]      The pursuer and an accountant, David Walker of Thomson Cooper, Accountants, Dunfermline, gave evidence. 

[13]      David Walker had been a partner of Thomson Cooper for 30 years and had made calculations of the value of the SFP.  The payment itself in 2008 had been £63,196.88 according to the valuation by Caledonian Mart Stirling Limited (6/9 of process).  The multiplicand, commonly applied to that figure, is 2.8.  That resulted in a capital value of £176,951.26.  The deceased’s share of that, calculated by reference to the proportion of capital attributed to the deceased in the final financial statement of the partnership for the period ended as at date of death, was 53.36%.  Accordingly, the additional sum attributable to the legitim fund is £94,403.50 of which the pursuer is due one eighth, namely £11,800.43. 

[14]      According to Mr Walker, the SFP did not appear as an asset of the firm in the balance sheet dated 2 October 2009.  However, it could be bought and sold and was an asset in its own right.  To omit it from the deceased’s share of the partnership would be to undervalue the deceased’s share in the partnership assets.  He stated in cross-examination that it was not unusual for the SFP not to appear in farm accounts. 

[15]      The pursuer gave evidence to the effect that his brother Charles and he disagreed over the value of the estate and the legal rights in particular.  An agreement was reached between them and signed on 26 May 2014.  The minute of agreement is 6/1 of process.  The executor was not a party to it.  The pursuer renounced any rights to the deceased’s estate but reserved his entitlement to legal rights.  It was also agreed that he would be entitled to future SFP’s only insofar as they related to Bridgehouse Farm which was to be conveyed to him.  Charles Miller would be entitled to all other SFPs.  He stated that he got no assets from the former partnership except the farmhouse.  His brother took them over and used them.  He was not consulted about the conveyance of Strathavon and Strathmill farms. 

[16]      A statement of account of the executory estate was produced by Lindsays, Solicitors from the date of death to 21 July 2015 when those solicitors ceased acting and is 7/1 of process.  This showed that over £1 million of the deceased’s estate was “transferred” to Charles Miller.  The partnership funds held by the executor are set out in part XII.  They were divided between the deceased and the brothers in the same proportions as shown in the capital accounts of the partnership as at date of death.

[17]      Although six years had passed since the death of the deceased, the pursuer had not been paid his full legal rights and required to borrow money in order to remain in business.  He had borrowed in order to buy sheep (6/8 of process) at a rate of 8%.  He required to buy a vehicle on hire purchase at 7.9% (6/7 of process).  The lack of capital had prevented him from buying cattle. 

[18]      In cross-examination he accepted that he was aware that the partnership accounts were to be used in calculating the legal rights claims.  He and his brother were in dispute about the value of the farms and thus the value of the partnership assets and their respective shares.  These matters were only settled when the Minute of Agreement was signed. 

[19]      Although the accounts are dated October 2012 they were not signed until 2014 due to lack of agreement.  In an attempt to reach agreement, he had offered to accept land in lieu of legal rights.  He considered his brother to be intimidating and a bully.  It was therefore difficult to reach any agreement. 

[20]      For the defenders, Robert Lawson Miller, the brother of the deceased, gave evidence.  He had resigned as an executor in October 2011due to the effect on his health.  He and the pursuer had obtained legal advice throughout his tenure and had followed it.  The brothers were always at loggerheads although he did not know what about.  

[21]      David Reith (64) was a partner with Lindsays, Solicitors who were instructed by the pursuer in 2012 to take over the administration of the estate from the previous solicitors.  The reasons behind the change were not explained.

[22]      He was an experienced executory solicitor.  He started to try to ingather the estate.  However, the main outstanding matter was the completion of the partnership accounts.  The value of the deceased’s interest in the partnership needed to be ascertained and put into the estate.  He could not do that until the accounts had been finalised.  He got the accounts in October or November 2014.  7/3 of process is a letter he wrote to the solicitors acting for Charles Miller.  He had advised the pursuer that, as he had not been a partner, he should not sign the accounts but should accept them for the purposes of the executory.  He had given no advice regarding the accounts and had not been given much information about progress that was being made.  He had seen a draft of them.  It was only when he got the signed accounts that he could complete the computation of legal rights.  The proposed final statement of account was then prepared up to 25 November 2014 (6/3 of process).  A further statement of account was prepared up to 21 July 2015 when he stopped acting (7/1 of process).  

[23]      Under reference to the items listed as “Assets Transferred” to Charles Miller set out below chapter XIV in 7/1 of process, he said that the assets referred to in d) as the “Firm of Alexander Miller & Partners interest in firm” valued at £746,261were never physically in the hands of the executor.  They were the value of the deceased’s interest in the partnership as at the date of death and were never ingathered.  The executor was only entitled to the value of the deceased’s share and not to the physical assets themselves.  Thus the term “transferred” was not the correct description. 

[24]      As at November 2014, legal rights claims were being advanced by the pursuer and his two sisters.  But the sisters did not pursue their claims beyond the interim payment of £25,000.  No further payments were made since the executor had no funds.  The pursuer was disputing the calculation of legal rights and wanted the partnership assets re-valued.  His claim also varied in amount.  Until the executor had reached an agreement with the pursuer as to the value of his legal rights, the claim could not be settled.  In the proposed final statement of account to November 2014 at chapter XI he had calculated legal rights at £117,367 for each of the claimants but, had these sums been paid out, there would have been a shortfall to the estate.  Therefore it was necessary to recover sums from Charles Miller who had the underlying assets in terms of the deceased’s will.  But until the partnership accounts were agreed (and thus the value of the deceased’s interest in the partnership) he did not know the figure which could be demanded from Charles Miller.  An action was raised against Charles Miller for payment in August 2013 although Mr Reith said that this was unnecessary since the sum would have been ascertained eventually in any event and obtained from Charles Miller.  But there was concern that because of the action of division and sale, heritage might be sold.  Therefore inhibition on the dependence of the action was obtained. 

[25]      The proposed final statement of account up to November 2014 on the last page shows that interest on the legitim entitlement was to be paid at the rate of 0.25%.  On the second page there is reference to the capital account of the firm being assessed at Confirmation at £788,140.  That was done by the previous solicitors and was not the correct figure. 

[26]      Mr Reith said that he had long meetings with the defender who was a careful man, even somewhat pedantic.  He followed the advice given to him after careful consideration of it. 

[27]      Mr Blane asked him about an email written on 13 June 2014 (6/5 of process).  He describes therein one aspect of the dispute between the brothers relating to legal rights.  The pursuer is said to be submitting an inflated claim for legal rights and Charles Miller to be “completely rejecting” this.  A short period of time is proposed to be given to them to discuss the matter.  It appears that the pursuer was claiming at this time that 2014 agricultural land values ought to be applied to the heritable element of the assets of the partnership.  Mr Reith’s view appears to have been that 2009 values ought to be use being the date on which the assets were “transferred” to Charles Miller on the death of the deceased. 

[28]      In cross-examination it was suggested that the executor and he had done nothing from the date of his appointment in 2012 until June 2014 despite being aware that the figure at Confirmation for the partnership assets was in the region of £788,000.  It was suggested that he could at the least have ingathered £125,000, which was the approximate sum which Charles Miller would be bound to have paid as the pursuer’s share of the legitim fund.  Mr Reith’s repeated response was that, until the brothers had agreed the partnership accounts, the extent of the pursuer’s claim could not be properly quantified.  He accepted that he was aware that Charles Miller had been “overpaid”.  Mr Reith said that he asked the pursuer’s solicitor about progress on the accounts.  He made the interim payment of £25,000 to the pursuer and his sisters. 

[29]      In re-examination he said that he did not advance the action against Charles Miller because he was told that the brothers were negotiating.  The pursuer was making inflated claims in respect of legitim and they thought they needed to retain funds in the executory to cover the costs of administration. 

[30]      Douglas Miller (57) was a litigation solicitor with Lindsays and was consulted in the summer of 2013 about the estate.  He was informed that there were three children claiming legitim and there were insufficient funds to pay those claims.  It was therefore decided to raise the action against Charles Miller in August 2013 and to obtain an inhibition over the heritable property in his name.  Because attempts to resolve the disputes between the brothers were proceeding, it was considered that they should be given time to do that.  The inhibition was recalled in the summer of 2014 in order to allow implementation of the Minute of Agreement between the brothers.  An undertaking was given to the court on behalf of Charles Miller that he would not dispose of or raise security over heritage otherwise than was necessary for the implementation of the agreement. 

[31]      In cross-examination he accepted that he was aware that the pursuer was owed funds in respect of legal rights and that those would have to be obtained from Charles Miller as the estate did not hold sufficient funds.  He also accepted that the executor applied unsuccessfully for the sequestration of the estate of the deceased in 2015 and expended £11,568 in doing so and that the expenses of administration were £138,154.07 as shown in the Statement of Account to 21 July (7/1 of process).  He did not accept that the position of the solicitors to the estate was that the pursuer would have “to wait for his money”.  It was only once the final accounts of the partnership were agreed that it was possible to say how much was due to the pursuer. 

[32]      Steven Bell (48) is a Chartered Accountant with IA Stewart.  He has been qualified for 24 years.  He was responsible for preparation of the partnership accounts (7/3 of process).  These were prepared in terms of clause 9 of the contract of partnership.  The “sum at credit” which fell to be repaid to representatives of the deceased partner in terms of clause 9 was, in his view, the sum shown in the capital accounts of the partners on page 5 and 6 of the partnership accounts. 

[33]      Charles Miller (47) also gave evidence for the defender.  When first asked about the disputes between him and his brother, he responded by asking “what disputes?”  He then said that his brother was a hard person to deal with and whatever he was offered he always wanted more.  The four year delay between the death of the deceased and the agreement between the brothers was caused, at least partially, by the fact that he offered his brother a deal to which he agreed but later walked away from.  Six months or a year went by with no communication.  He got no co-operation from his brother.  The action of division and sale eventually prompted agreement. 

[34]      Under objection from Mr Logan, he said that the delay in signing the accounts was due to his brother’s refusal to agree them.  This was due to the dispute over their respective shares in the partnership. 

[35]      They eventually reached agreement in May 2014 after which the accounts were signed.  The pursuer’s claim for legal rights was treated separately from the partnership issues.  He paid his sisters out. 

[36]      In cross-examination he did not accept that he took control of all of the partnership assets after the death of the deceased.  He referred to an agreement which was under discussion in 2010 which he got checked by his solicitors but which he did not sign. 

[37]      The defender gave evidence as the final witness.  He was 76 years of age and a retired hotelier.  He was a longstanding friend of the deceased.  He instructed a total of three firms of solicitors over the course of the executory.  He always followed their advice after getting explanations about it. He would have preferred a judicial factor to be appointed but was told that such a course would be very expensive. 

[38]      He was advised by his first solicitors, McSherry Halliday to dispone the farms to Charles Miller.  The delay between the death of the deceased and the signing of the partnership accounts was solely due to the brothers’ disputes.  He played no part in the discussions between them. 

[39]      In cross-examination he did not accept that Charles Miller had made any offers to him.  He was aware that Charles Miller had sent cheques to the executory solicitors which were not accepted since they were for insufficient amounts and offered in full and final settlement.  He was aware that the pursuer was owed about £100,000 in legal rights from an early stage.  He thought that the pursuer had claimed legal rights later than his sisters.  If necessary he would claim indemnity from his solicitors.

The pursuer’s submissions
[40]      Mr Logan pointed out that the proposed final statement of account (6/3 of process) stated that the pursuer was entitled to be paid legal rights amounting to £92,367.27.  This was not disputed by the defender.  In addition to that, there were 2 elements of claim.

[41]      First, there were additional partnership assets amounting to £10,885.50 which fell to be added to the legitim fund.   Secondly, the capital value of the SFP fell to be added.  The capital value of that asset was not a matter of dispute and was £94,403.50.  Accordingly the moveable estate for the purposes of legitim was as follows:  

Total moveable estate as per the legal rights computation £970,670.99

Add additional partnership assets	£ 10,855.37
Add SFP	£ 94,403.50
	£1,075,929.99
Deduct legal expenses	£ 31,732.85
Net Estate for legal rights	£1,044,197.14
Of which 50% legitim fund	£ 522,098.57
Douglas Miller’s share (25%)	£ 130,524.64
Less payment to account	£ 25,000
Balance payable	£ 105,524.64
Less sum of summary decree (granted 30.9.15)	£ 92,367.27
Balance due by executory (exclusive of interest)	£ 13,157.98

 

[42]      Mr Logan asked me to pronounce a decree against the defender as executor for £13,157.98 and against him as an individual for £105,524.64.  He also asked for interest on those sums and it was the question of interest which was the main item of dispute.  He sought interest at 8% per annum from 31 December 2009 to 26 April 2013 (the date of the payment to account) and on the balance from 27 April 2013 at that rate until payment.  The basis of his claim for interest at the judicial rate from the end of 2009 was that legal rights were a debt on the estate and the duty on the executor was to ingather the estate and pay its debts.  According to the proposed final account the estate had realised £255,974.59 in the course of the executory but it was not clear what had happened to that sum.  In addition, the capital account of the deceased amounted to £746,261 and he contended that the defender had transferred his entire interest in the assets constituting that sum to Charles Miller no later than 31 December 2009 but no steps to recover that sum were taken until he raised the action against Charles Miller in 2013.  When raised it was not pursued with any vigour. 

[43]      Further the deceased’s share in the farms not owned by the partnership were given over to Charles Miller in February 2012 without any payment into the estate from Charles Miller in order to allow the debts of the estate to be paid. 

[44]      The pursuer’s claim for legal rights was a debt on the estate on which interest is payable once that debt is due (Neilson v Stewart 1991 SC(HL) 22).  Mclaren on Wills and Succession paragraph 2255 states that if a trustee delays unreasonably in accounting to a beneficiary he will be charged with interest from the date the beneficiary ought to have been paid, allowing a reasonable period for the collection and realisation of debts (Arbuthnott v Arbuthnott 1758 Mor 539 and Graham v McNab’s Trustees 1822 2S 22).  In Tibbert v McColl 1994 SC 178 the court had stated that interest should be payable from the date of citation or earlier in some circumstances if money is wrongfully withheld. 

[45]      Here, assets valued at about £1,055,530.51 had been transferred out of the estate without the legal rights claims being satisfied.  That dispersal, the failure to pursue Charles Miller for the funds which the defender knew he had and to which the pursuer was entitled and the failure to retain sufficient funds to pay the debt owed to the pursuer amounted to a breach of trust which rendered the defender liable to the pursuer not only as executor but as an individual. 

The Defenders’ Submissions
[46]      Mr Turner accepted that the pursuer was entitled to 1/8^th of the moveable estate as his legal rights.  There was no dispute that the pursuer was entitled to a share of the additional assets identified by him amounting in total to £10,855.50. 

[47]      As to the SFP, while there was no dispute as to the valuation thereof, he submitted that the terms of the contract of partnership dictated how this asset fell to be treated.  Clause 9 provided for the full extent of the departing partner’s interest to be calculated by reference to the sum at credit in the final accounts of the partnership.  No further entitlement existed.  The provision in clause 9 relating to revaluation did not assist the pursuer since that only related to determining the sum at credit.

[48]      The pursuer’s claim for interest was derived from the alleged breaches of duty.  However, the evidence was to the effect that the pursuer had been advised by his solicitors and had taken their advice.  In doing so he fulfilled his duties (Learoyd v Whiteley 1887 12 App Cas 727 at page 731).  The matters on which the pursuer founded to prove a breach of duty were matters with legal consequences on which legal advice was appropriate. 

[49]      However it was accepted that the pursuer was entitled to interest on his legal rights claim from the date of death (Kearon v Thomson’s Trs 1949 SC 287). The question of interest remained a discretionary one (Waddell’s Trs v Crawford 1926 654 at 664).  The pursuer claims interest at 8% which Mr Turner described as a penal rate which was not appropriate in this case.  Any delay has been at least contributed to by the pursuer in failing to reach agreement of the final partnership accounts.  Charles Miller was making offers to the pursuer and attempting to negotiate a settlement.  It was reasonable for the executor to avoid expending funds to recover funds which it was reasonably anticipated would be paid as a matter of agreement.  Mr Reith’s evidence was that the rates of interest paid in the client account was 0.25%.  Interest should accrue at that rate from the date of death.  The rates which the pursuer said he had paid on the purchase of assets of around 8% related to short periods of time and amounted to no more that £1432. 

[50]      Mr Blane pointed out that very general averments were made by the pursuer as to what the defender ought to have done in the circumstances with which he was presented.  Nor was any evidence provided as to what would have been reasonable in those circumstances.  The grounds of personal liability required to be clearly established (Wilson Trusts Trustees and Executors 1975 Edition page 382).  The test was the exercise of the same degree of care that a man of ordinary prudence would exercise in the management of his own affairs (Raes v Meek 1896 16R (HL) 31 at 33-34).  The pursuer had not addressed that test.  The defender had instructed solicitors to advise him and had taken that advice. 

[51]      In any event, the pursuer has not suffered any loss.  There was no evidence that Charles Miller cannot or will not pay the executor the money which is due to the estate in respect of legal rights.  If the court found against him, Mr Blane asked for relief under section 32 of the Trusts (Scotland) Act 1921. 

Discussion and Decision
[52]      There was no dispute that the pursuer is entitled to legal rights and that the value of that claim was at least the sum granted in terms of the summary decree.  The dispute as to the extent of that entitlement was focussed on whether the capital value of the SFP fell to be treated as an additional element of the legitim fund or whether it was encompassed in the valuation of the assets of the partnership and reflected in the capital accounts.

[53]      The other item of contention was the rate of interest which ought to be applied to the value of the legal rights which the pursuer is found to be due.  Even that matter has, to some extent, been overtaken by the interlocutor of 30 September 2015 which awarded interest on £92,367.27 at 8% from the date of citation till payment. 

[54]      It was the defender’s basic position, upon advice from his solicitors, that he could not calculate an accurate sum in respect of legal rights until the brothers had agreed the partnership accounts as at date of death in terms of the contract of partnership.  In terms of Clause 8, signed accounts and a balance sheet were to be prepared and signed within 30 days of receipt.  The balance sheet was to be final and to fix conclusively the sums at credit of each partner at the date of that balance.   Clause 9 states that

“the representatives of the deceased partner are entitled to be repaid the sum at credit of his or her current and Capital accounts within a period of not more than five years following the date of such dissolution by equal instalments commencing on the first anniversary together with interest at the Royal Bank of Scotland minimum lending rate per centum per annum from the date of dissolution until payment”. 

 

It also provided that:

 

“In ascertaining the sum at credit of a partner’s account any appreciation or depreciation arising as a result of revaluation or sale of partnership assets shall be allocated among the partners in proportion to the sums at credit of their respective Capital Accounts as shown in the balance sheet immediately preceding such revaluation or sale”.

 

[55]      I consider that the actions of the defender in conducting the executory must be judged in the context of the way in which the contract of partnership stipulated the deceased’s share should be dealt with.  Setting aside for the moment the disputes between the brothers, the estate was only entitled to the sum at credit of the deceased’s capital account in the partnership accounts prepared at dissolution and not the assets of the partnership themselves.  That sum was to be conclusively fixed by the balance sheet.  The estate was not entitled to immediate payment of that sum but in 5 equal instalments, the first of which was to be paid on the first anniversary of the death (October 2010).  The final payment was due in October 2014.  Furthermore, any revaluation of the partnership assets had to be taken into account and allocated in proportion to the sums at credit of the partners.   In the final accounts there was agreed to be significant increases in the fixed assets of the partnership.  At page 5, the balance sheet shows that the fixed assets were valued at £535,067 as at 28 November 2008 and at £1,287,659 at the date of death.  There was a substantial rise in the value of current assets also.   That resulted in the capital account of the deceased increasing from £323,448 to £746,261.  Accordingly, the remaining partners would have been obliged to pay into the estate about £150,000 per year from October 2010.    There was no evidence led before me as to how the valuation of the “freehold property” of £1,145,000, shown in Note 1 of the Partnership Accounts (7/3 of process), was reached.  However, it appears that the value as at 29 November 2008 was £443,090 and that a substantial revaluation was made. 

[56]      Until some stage, which on the evidence was not clear but which must have been after November 2015 (the date of the proposed Final Account), the executor was faced with legal rights claims from the pursuer and from his 2 sisters.  The total value of those was over £350,000.  

[57]      The relevant actions of the executor are these.  He transferred the defender’s share of the heritage to Charles Miller in terms of the deceased’s will in around March 2012.  He paid £75,000 to account of the 3 legal rights claims in April 2013.  He raised an action against Charles Miller in 2013 to ensure that funds would be available to pay off the debts of the estate in the form of legal rights.  He allowed the inhibition on the dependence to be lifted to allow the agreement between the brothers to be implemented upon Charles Miller giving undertakings to the court in respect of other property. 

[58]      The pursuer’s case is based on specific breaches of the defender’s duty as executor.  He is said at condescendence 3, firstly to have given the farming assets of the deceased to Charles Miller and secondly to have transferred the deceased’s interest in Strathavon farm to Charles Miller without getting funds from Charles Miller to meet the debts of the estate.  Thirdly, he is said to have sought recovery of funds from Charles Miller in an action in the Court of Session, obtained an inhibition on the dependence and then consented to its recall without getting any funds.  He made no effort to progress that action.  All this is said to have been grossly negligent and in breach of his duties as executor thus exposing him to personal liability.  In cross-examination of Mr Reith, Mr Logan suggested that he should have ingathered sums in order to pay legal rights claims.  He suggested that the executor knew that the moveable estate at confirmation included the sum of £788,140 in respect of the deceased’s capital account in the partnership (as shown in the Statement of Account 7/1 of process) and about £250,000 of stocks and shares.  Legal rights claims would fall to be paid from this moveable estate and the executor ought to have ingathered funds from Charles Miller in order to meet those claims.  Mr Reith’s repeated response was that he could not recover the correct amount from Charles Miller until he knew what that figure was and that depended on the dissolution accounts being agreed. 

[59]      Dealing with each of these propositions in order, it is not correct that the defender transferred the deceased’s interest in the partnership assets to Charles Miller.  From the evidence of Mr Reith, which I accept, those assets were never in the hands of the executor but remained with Charles Miller who took over the farms.  In any event, the executor was not entitled to those assets but only to a capital sum represented by the sum at credit in the dissolution accounts.  That sum was only ascertained when the accounts were agreed.  Mr Reith’s position as solicitor to the executory was that he could not arrive at any accurate figure for the value of legal rights until the brothers had agreed the dissolution accounts and thus could make no final payment until those accounts had been signed off.  I consider he was correct in that.  Nor do I consider that the executor could have insisted on the return of the partnership assets from Charles Miller, assuming that they were capable of division and then sale.  That is not what the contract of partnership provided for.  The executor was in no better position than the deceased and was only entitled to payment by instalments of the sum at credit on the dissolution accounts.  There was no evidence as to what efforts the defender had made to attempt to get the brothers to agree the accounts but it is not the pursuer’s case against him that he ought to have taken any particular steps to get the brothers to agree.   Nor is the defender said to have had any duty to participate in the process of completing the accounts. 

[60]      Secondly, the conveyance of the deceased’s interest in the farms of Strathavon and Strathmill, Avonbank and Bridgend to Charles Miller in March 2012 was in terms of the will and, in any event, constituted heritable property part owned by the deceased.  They were not farms owned by the partnership and thus not assets which could form part of the legitim fund.  I do not consider that the executor was under a duty to refuse to convey the estate’s interest in them until some payment was made by Charles Miller to the estate.  The debt owed to the estate by the partnership is stipulated to be the sum at credit of the deceased’s capital account in the dissolution accounts.  It was that sum which formed part of the moveable estate of the executory and not an unascertained sum based on the value at confirmation of the deceased’s share of the partnership and it was that sum which the executor was entitled to be paid in instalments over a five year period.

[61]      Thirdly, the action against Charles Miller was raised in 2013 and, according to Mr Millar, solicitor, its principal purpose was to ensure that the assets held by Charles Miller would not be dissipated.  While there was delay in raising that action, it is not contended that any assets were disposed of before it was raised or that the pursuer’s claim for legal rights has been adversely affected by that delay.  There is no suggestion that the assets caught first by the inhibition and later by the undertaking would be insufficient to satisfy the pursuer’s claim.  I consider that the executor’s consent to the lifting of the inhibition was reasonable in the light of the undertaking which was given by Charles Miller. 

[62]      I also consider that the failure to pursue that action pending the agreement between the brothers was, in the circumstances, reasonable.  To insist on the action progressing to proof would only have increased the expense to all parties at a time when, pending the agreement of the final accounts, the executor could not conclude for or make averments substantiating an accurate sum representing the present pursuer’s claim for legal rights.  To sist the action while the brothers continued to try to reach agreement cannot be said to be in any way unreasonable far less to constitute the sort of gross negligence which could attract personal liability on the part of an executor. 

[63]      As Mr Logan argued, the executor had a figure on confirmation of the value of the deceased’s capital account in the partnership in the sum of £788,140 and he could have paid out sum in respect of legal rights from other assets which were ingathered.  There was no evidence as to how that figure was arrived at.  Standing the scale of the revaluation of assets which appears in the final accounts, it is somewhat surprising that the value at confirmation was so high. 

[64]      However, there were three claims for legal rights outstanding, which potentially amounted to over £350,000, and payment would have represented a major outlay and might not have been found, upon agreement of the final partnership accounts, to have been accurate.  Legal rights claims required to be postponed to the claims of onerous creditors.  There was no evidence led as to what creditors there were but I cannot assume there were none.   Further the evidence was that the pursuer’s claim as to the proper level of his entitlement varied and was said by him to be subject to a 2014 valuation of heritable partnership assets as opposed to the value as at the date of death.  These factors must have cast considerable uncertainty as to the proper value of legal rights. 

[65]      Having regard to the terms of the contract of partnership as outlined above, to the steps which the executor took and to the specific criticisms advanced by the pursuer which are made, I am not able to conclude that the executor’s acts or omissions amount to the sort of conduct which can be properly described as a breach of trust and which ought to attract personal liability.  In my view, they do not demonstrate the sort of neglect of duty which was present in Carruthers Trs v Cairns 1870 17R 769.  I consider that his actions were reasonable and proper in the circumstances with which he was faced. 

The SFP
[66]      Mr Turner argued that the capital value of the SFP was not a proper addition to the legitim fund and that the calculation of the “sum at credit” in the final accounts of the partnership represented the whole entitlement of the deceased’s share of the partnership assets.  This begs the question as to whether the SFP was viewed as an asset of the partnership or in any event wholly so.  It appeared from the evidence of Mr Walker that the SFP was divisible between the farms.  The Minute of Agreement between the brothers assigned future SFPs to the pursuer only insofar as they related to the farm conveyed to him so that they plainly considered the payments to be divisible.  The deceased’s will provided that his interests in “all agricultural and business assets including without prejudice to the foregoing generality, all heritable property, interest in Firm of Alexander Miller and Quotas” were to be transferred to Charles Miller.  He thus made some distinction between his interest in the firm and quotas which indicates that not all agricultural assets were regarded as belonging to the partnership.  Having regard to those factors, I do not consider that the accounts made up on dissolution should define the scope of the agricultural assets which constitute the legitim fund.   It is a matter of agreement that no capital value was attributed to the capital value of the SFP in the final accounts.  Neither of the brothers was asked about the basis on which the accounts were prepared and agreed.    Mr Turner did not submit that the capital value of the SFP was not a proper element of the legitim fund.  I consider that it should be given a separate value in addition to the deceased’s share of the partnership assets as calculated in the final accounts.  Since there was no dispute as to the value to be so attributed, I will value it at £94,403.26 and the pursuer’s 1/8^th share at £11,800.43.   

Interest
[67]      In the light of my conclusions on the liability of the executor, I do not consider that interest at 8% per annum ought to be applied, at least beyond that which the Lord Ordinary as already found it to be payable.  While he is entitled to payment of his legal rights from the estate, the delay in receiving his full entitlement has been materially contributed to by the inability of the brothers to agree the final partnership accounts.    In any event, the pursuer’s evidence was that he had paid interest at rates around that level for only short periods of time.  It would not be equitable to give him the benefit of high levels of interest from an early stage.  As a cross check, I note that the contract of partnership itself provides for the outstanding sum at credit on the capital account to be paid at the Royal Bank of Scotland minimum lending rate, the equivalent of which since 2009 has I think been at about 0.5%.  Thus the estate would have been entitled to payment at that rate of the sums outstanding.  I consider that the pursuer is entitled to that rate in the periods (other than those falling within the interlocutor of 30 September 2015) from 2 October 2010 (the date on which the estate was entitled to the first instalment of the capital account) to the date of citation. 

[68]      Accordingly, I find and declare, in terms of the first conclusion, that the true value of the deceased’s moveable estate as at 2 October 2009 was £1,075,929.99 and that the pursuer’s claim for legal rights amounts to the sum of £130,524.64.

[69]      In terms of the second conclusion, I shall pronounce decree against the defender, as executor of the late Alexander Miller and not as an individual, in the sum of £13,157.98 being the whole sum still outstanding in respect of his entitlement to legal rights. 

[70]      I shall award interest on the sum of £130,524.64 at the rate of 0.5% from 2 October 2010 until 26 April 2013 (when the payment of £25,000 was made). 

[71]      I shall award interest on the sum of £105,524.64 at the rate of 0.5% from 27 April 2013 to the date of citation.  

[72]      I shall award interest on the sum of £13,157.98 at the rate of 0.5% from 30 September 2015 until payment. 

[73]      The defender is liable to pay those sums in interest as executor and not as an individual.  I shall reserve meantime all question of expenses.