Scottish Court of Session Decisions

On 16th March 1909 John Scott Tait, C.A., Edinburgh, trustee on the sequestrated estates of James Somervell of Sorn, presented a petition for approval of a scheme of ranking and division of the purchase price of the estate of Sorn, which had previously been disentailed and sold by the trustee. On 10th June 1909 the Second Division pronounced an interlocutor, inter alia, approving of the scheme of ranking and division, and ordaining the petitioner to lodge the sum of £6808, 1s. 3d. on deposit-receipt in his name as trustee to meet the whole outstanding outlays and expenses of the sequestration. The Edinburgh Life Assurance Company, one of the heritable creditors, was ranked, inter alia, on any balance of the said sum of £6808, 1s. 3d. which might remain after meeting the said outlays and expenses.

On 31st May 1911 the Accountant of Court reported that the expenses chargeable against the said sum of £6808, 1s. 3d. amounted to £5154, 4s. 1d., leaving a balance of £1653, 17s. 2d.

The Accountant reported—“The question whether interest is payable on the agents' accounts, i.e., not only on their outlays but also on their professional charges, has been raised. The Accountant found that interest on their accounts had been claimed by Mr More's—a former trustee—agents down to 16th November 1906, and had been included in the claim by Mr More's representatives, which was admitted by the commissioners by minute dated 11th March 1907, their claim for further interest being reserved; also that Mr Duke's (a prior trustee) agents had raised an action for payment of their accounts against Mr More as trustee. That action was interrupted by Mr More's death. A judicial demand for payment had thus been made. Other agents to whom accounts are due also claim interest. For three only of the accounts now being dealt with has decree been obtained, viz., that for Mr More's discharge, the curator ad litem's expenses, and the tutor ad litem's expenses in the disentail of Sorn. The law on the question is not definite. The ruling case is Blair's Trustees v. Payne and Others, 1884, 12 R. 104. Interest was not allowed on the agents' professional charges in that case, the accounts not having been rendered; but it was observed by Lord Craighill that ‘whether from the date of rendering an account’ interest would run is an open question,’ and he further observed that it was ‘a question of circumstances.’ In this case the accounts, some of which date back to 1900, were all rendered, but none of the trustees had sufficient funds to pay them. All the agents might have taken action and obtained decree, but this would have meant further expense. They therefore awaited the sale of the entailed estates. The rents of Sorn were applied in meeting the charges thereon, the balance as regards the rents falling under the Edinburgh Life Office's Security being paid over to that office. The rents of the remainder of Sorn were exhausted by the charges. The question is an important one, as the interest comes to a large sum. On the whole accounts in the sequestration it exceeds £1000. As regards Sorn, it comes to £370, Os. 4d. On the outlays alone it amounts to £118, 5s. 4d. In view of the fact that this is an insolvent estate, the Accountant is doubtful whether interest should be allowed

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on the professional charges, and he reports the matter for the decision of the Court. The interest on the accounts for which decree has been obtained is included in the above sum of £5154, 4s. 1d. To this will have to be added the interest on the outlays, or on the whole accounts, as the Court may decide, to the date of settlement. The latter interest has been calculated as from the dates of taxation of the respective accounts, being the dates when the amounts of the accounts were definitely ascertained. The dates of rendering are not all known.”

When the report came before the Court, counsel appeared for the trustee, for Messrs Dundas & Wilson, C.S., and Messrs Tods, Murray, & Jamieson, W.S., two of the agents to whom accounts had at one time been incurred in the sequestration, and for the Edinburgh Life Assurance Company.

The Edinburgh Life Assurance Company conceded that interest was payable (1) on outlays from the date on which they were made, (2) on the professional charges on those accounts in which a judicial demand had been made for payment, (3) on the professional charges in the account which had been admitted with interest by the commissioners.

With reference to the remaining accounts it was argued for the compearing agents — These were not running accounts. The employment had been terminated—the time when the agent was superseded was the period from which interest was to be calculated. The account was accordingly rendered and taxed. In Blair's Trustees v. Payne, &c., November 12, 1884, 12 R. 104, 22 S.L.R. 54, Lord Craighill stated (at 12 R. 108) that it was a question of circumstances in each case whether interest was payable on professional charges or not. Here the agents had been employed by the trustee in a sequestration. Their employment had come to an end before the close of the sequestration. Accordingly in the circumstances here they would have incurred useless expense if they had taken judicial proceedings and added to the cost of the liquidation. It was unreasonable to suggest that a person should be put to a disadvantage because he did not insist on his extreme rights. Interest on professional charges should therefore be allowed to them.

Argued for Edinburgh Life Assurance Company and for the trustee—The agents had merely rendered their accounts. Rendering was not enough, even with a request for payment. The general rule was that an agent must either make a judicial demand for payment or give intimation in writing that interest was claimed from the date of the demand — Blair's Trustees v. Payne, &c. ( sup. cit.), per Lord Fraser at 12 R. 104, 22 S.L.R. at 58. This rule was followed by Lord Kyllachy in Bunten v. Hart, March 19, 1902, 9 S.L.T. 476, and approved by the House of Lords in Greenock Harbour Trustees v. Glasgow & South-Western Railway Company, June 28, 1909, S.C. (H.L.) 49, 46 S.L.R. 1014. The fact that the accounts were incurred by a trustee in a sequestration made no difference.