Scottish Court of Session Decisions

This was an action at the instance of David M'Farlane, boilermaker, Dundee, against the testamentary trustees of his late father, concluding for reduction of a discharge dated 1st October 1895, whereby the pursuer had discharged the trustees of their actings and intromissions in

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connection with his father's estate, and further, and whether decree of reduction should be pronounced or not, for an account of their intromissions, and for payment of £100 or such other sum as should appear to be the balance of their intromissions, or failing production of an account, for payment of £100.

The question at this stage of the case was whether the pursuer, upon an allegation that since signing the discharge he had discovered that the trustees' law agent's account was grossly overcharged, and had not been taxed, was entitled to have an order for production of the trustees' accounts without first reducing the discharge.

The pursuer averred that as one of the children of the late George Macfarlane, Coupar-Angus, he was entitled to one-eighth of his father's estate. He further averred—“(Cond. 2) In or about the end of September 1895 Mr George Haggart, solicitor, Dundee, who acted as solicitor and law-agent to the trust, on the instructions of the defenders wrote to the pursuer requesting a meeting the following day. The pursuer accordingly called on Mr Haggart, who said he desired him to sign a document for his share of his father's estate. The trust law-agent read over a deed purporting to be a discharge in favour of the trustees by the pursuer of his share in his father's estate, and having appended thereto an abstract of the trustees' intromissions and scheme of division of the pursuer's share of the said estate. (Cond. 3) The said discharge was hurriedly read over to the pursuer, but no explanations were given as to its contents. The appended abstract of accounts was not read over or in any way explained to him, and no opportunity was given him of examining it. The pursuer expressed surprise at the small balance which he was informed was due to him, but the law-agent assured him that the accounts had been correctly made out and that everything was in order, and that by no possibility could the pursuer get any more out of the trust. The pursuer thereupon, relying upon the statement of the law-agent, and relying upon the defenders having done their duty as trustees in their examination and auditing of the accounts incurred to the said law-agent in the management of the trust-estate, signed the discharge. (Cond. 4) In January 1896 the pursuer's brother George, after considerable difficulty, obtained from Mr Haggart a copy of the account of intromissions and showed it to the pursuer, who then ascertained that there were items unwarrantably debited to the funds of the said trust-estate. In particular, a commission fee of £300 has been charged by the said defenders' law-agent for realisation of the said trust-estate, in addition to business accounts amounting to about £150. These sums are grossly excessive, and out of all proportion to the work done by the said law-agent. (Cond. 5) When the pursuer observed the said charges he consulted a law-agent, who at once wrote to the trustees to ascertain whether the accounts and commission had been taxed. On finding out that this had not been done, the pursuer, through his law-agent, wrote to the trustees calling upon them to have the said accounts and commission taxed by the Auditor, or if they declined to do so, to allow him the use of their instance for that purpose, and at the same time he offered to free and relieve them of all expenses incurred by them. The trustees have declined to agree to either course, and accordingly the present action has been rendered necessary. The defenders failed in their duty to the beneficiaries in not having the said accounts and commission audited and taxed, and are liable to them for payment of said accounts and commission so far as overcharged. The pursuer avers that there will be taxed off the said accounts and commission at least the sum of £250.”

The defenders averred—“Denied that the charges were in any way excessive. The trustees had examined and approved of the accounts, and there was no duty on them to have these audited, in view of the fact that the pursuer made no objection to them, and did not demand that they should be audited, and in view of the fact that all the other beneficiaries were satisfied and are satisfied with the same. The pursuer alone of the beneficiaries has raised the present action. Admitted that the defenders decline to open up the matter now. The trust has been wound up.”

The pursuer pleaded—“(1) The pursuer having signed the said pretended discharge, relying upon the defenders having examined and audited the accounts of the law-agent, which they failed to do, is entitled to decree of reduction as concluded for. (2) The pursuer, as a beneficiary under the said trust, is entitled to call upon the defenders to have the said accounts and commission taxed, and for a count and reckoning as concluded for. (3) The defenders having made payment of said accounts and commission, without taxation thereof, are liable to the beneficiaries so far as the same are excessively charged.”

The defenders pleaded, inter alia—“(1) The pursuer's averments are irrelevant and insufficient to support the conclusions of the summons. (2) The pursuer having granted the said discharge in full knowledge of the facts, and after having had the trustees' accounts under his notice, with time and opportunity to consider the same, the defenders ought to be assoilzied, with expenses. (4) The accounts of defenders' intromissions, and the charges therein, being regular and proper, the defenders are entitled to absolvitor, with expenses.”

The Lord Ordinary (Low), by interlocutor dated 16th July 1896, appointed the defenders to satisfy the production. This was done, and by interlocutor dated 22nd October the Lord Ordinary held the production as satisfied, and held the defences as defences on the merits.

By the discharge in question the pursuer, on the narrative, inter alia, that the

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trustees had made up an account of their intromissions with a scheme of division annexed thereto, which scheme of division showed that the total amount of the residue available for division was £5679, 2s. 11d., and that his one-eighth thereof was £709, 17s. 10d., and farther that he had received advances to account of his share amounting to £208, 10s. 6d., leaving £501, 7s. 4d. still payable, and that the trustees by their law-agent had paid him the said sum of £501, 7s. 4d., and acknowledged receipt of the sum of £709, 17s. 10d. The discharge proceeded—“Therefore I, the said David Macfarlane, do hereby discharge the said [then followed the names of the trustees], as trustees and executors aforesaid, their said agent, and the trust-estate under their charge, of all claims which I had, have, or could competently make under the said trust-disposition and settlement … in any manner of way, and I, the said David Macfarlane, bind and oblige myself, my heirs and successors, to free and relieve the said trustees and executors, the trust-estate under their charge, and all concerned, of and from ail claims which might in future be made against them as trustees and executors aforesaid and the said trust-estate by any person or persons whatsoever, and I warrant this acknowledgment and discharge to be good, valid, and effectual at all hands and against all mortals.”

From an abstract appended to the discharge it appeared that the amount of the charge in the trustees' account was £6407, 12s. 2d., and the amount of the discharge was £728, 9s. 3d., leaving £5679, 2s. 11d. available for division.

The “Table of Fees for Conveyancing and General Business” provides as follows—“XVII. Commissions on purchase or sale of heritable or other subjects, and on money transactions ( d) realising capital of trust or executory estates, and paying or transferring it to the beneficiaries. Charge …—b book debts and miscellaneous property, 2 to 5 per cent., c stocks, notes, and bonds, 1/8 to 1 2 per cent., d money uplifted from bank, 1 4 per cent.”

The Lord Ordinary ( Kincairney), by interlocutor dated 27th January 1897, after hearing parties in the Procedure Roll, before further answer, and under reservation of the defenders' pleas, appointed the defenders to lodge an account of their intromissions, and that within a week; and allowed the pursuer to lodge objections thereto, if so advised, within six days thereafter; and by interlocutor dated 2nd February granted leave to reclaim.

The defenders reclaimed, and argued—The pursuer was not entitled to have an accounting until the discharge had been set aside by reduction—see Macpherson v. Macpherson, July 16, 1841, 3 D. 1242, per L. J. C. Boyle at page 1260. He had not a relevant case for the reduction of the discharge. His averments in article 3 of his condescendence were only relevant upon the assumption that trustees were bound to have their law-agents' account taxed even if no such taxation was demanded by any beneficiary. That assumption was not well founded, trustees being under no such absolute obligation as to taxation. But even assuming that the pursuer's averments, if proved, would entitle him to reduction of the discharge, the proper course was to have a proof of these averments before the trustees were ordained to account. The cases relied on by the pursuer were not in point. In Cockburn v. Clark, March 3, 1885, 12 R. 707, there was no formal discharge as there was here. In no case had it been held that, where there was a formal discharge an accounting could be entered into without first setting the discharge aside by reduction. It was significant here that only one out of eight beneficiaries was taking action.

Argued for the pursuer and respondent—The Lord Ordinary's interlocutor was right. The pursuer was not proposing to go into the whole of the trustees' intromissions. His only objection was to the amount of the law-agent's account, which was grossly overcharged, and had not been taxed. The commission of £300 for realisation of the estate was plainly excessive. [ Lord Young referred to the Table of Fees for Conveyancing and General Business, XVII. ( d), b, c, and d.] The table showed that the pursuer's objection was prima facie well founded. Reduction was not necessary to entitle the pursuer to an accounting as regards the items complained of. The doctrine of settled account did not apply to questions between agent and client where the agent had taken credit for the amount of an untaxed account— Cockburn v. Clark, cit. There was no distinction as regards this question between a settled account and a formal discharge, and this was practically a question between agent and client, for it was the beneficiaries who had ultimately to pay the law-agent. The title of a beneficiary to raise objections to the account of the trustees' law agent when the trustees had failed to have the account taxed, and declined to take any steps to rectify their omission, had been sustained in dyne's Trustees v. Clyne, June 17, 1848, 10 D. 1325, and Macdonald v. Macdonald, February 22, 1856, 18 D. 630. If it were held necessary to reduce the discharge, the pursuer's averments were relevant. It was the duty of the trustees to have the law-agent's account taxed— Clyne's Trustees v. Clyne cit.—and the beneficiary was entitled to rely on their having done their duty. The case of Macpherson v. Macpherson, cit. was not in point, for in that case there had been a long lapse of time before the objections were stated, and also a decree-arbitral and a decree in a multiplepoinding. The pursuer has had the approval of four out of the eight beneficiaries, although he was suing alone.

At advising—