Scottish Court of Session Decisions

On 11th July 1912 H. M. Steele, C.A., Glasgow, judicial factor on the trust estate constituted by minute of agreement between Mrs Jane Lauder or Tosh, widow of Henry Tosh, ironmonger, Glasgow, of the first part, her children of the second part, and others of the third part, presented a note to the Court for authority to grant a lease for ten years of certain heritable property in Buchanan Street, Glasgow, belonging to the trust estate.

The purposes of the trust were to hold the estate for Mrs Tosh in liferent and her children in fee. At the date of the note two of the beneficiaries—the issue of a predeceasing child—were in pupillarity.

On 11th April 1912 the judicial factor lodged with the Accountant of Court a report setting forth the circumstances in which he craved special power to grant the lease in question.

On 8th July 1912 the Accountant issued the following opinion:—“The estate under the factor's management includes, inter alia, the heritable subjects of Nos. 197 to 201 Buchanan Street, Glasgow, having an assessed rental of £380. This property, which is burdened with a bond and disposition in security for £6000, was at the time of the factor's appointment in a bad state of repair, and in consequence for the most part unlet, as is shown by the report dated 18th January 1911 of Messrs Thomas D. Smellie & Fraser, valuators, Glasgow, of which a copy is produced. By applying the proceeds of one of the other properties belonging to the estate, which he sold under powers obtained from the Court, the factor has had the Buchanan Street property put into a lettable condition, and has already secured tenants for various portions of the subjects. The bondholders are pressing for reduction of the amount of their loan, and it is important that the subjects should be fully let when they come to be realised, either to satisfy the claims of the bondholders or

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for division among the beneficiaries after the death of the liferentrix. The factor has now received an offer, which he desires to accept, from the Mission to the Outdoor Blind for Glasgow and the West of Scotland to lease another part of the buildings, viz., the premises comprising the shop, saloon, and basement, No. 197 Buchanan Street, and the whole first flat of the property entering by close No. 201 Buchanan Street, and that for a period of ten years from and after Whitsunday 1913, at a rent for the first five years of £190, rising thereafter to £200, with a break in favour of the tenants at Whitsunday 1819 on their giving six months' previous notice.

“In this connection the factor at a meeting with the Accountant raised once again a question which, although it crops up repeatedly in the course of factorial management, has never been judicially decided. Can a factor as part of his ordinary administration grant a valid lease of urban subjects, or can he not do so without first obtaining powers from the Court? The point was discussed in the case of Carnochan (1894, 2 S.L.T. No. 89), where, on authority being asked to grant a five years' lease of urban premises, the Lord Ordinary ‘suggested that the curator had power to grant the lease without authority from the Court and that the note was unnecessary,’ but after hearing counsel intimated that ‘In view of the doubt which appeared to exist as to the power of the curator bonis to grant the lease without the intervention of the Court he would grant the authority craved.’

The statutory powers of a factor in regard to granting leases would appear to be as follows—( a) By the Act of Sederunt of 1730 he can ‘grant tacks or leases to continue during all the time that the estate set in tack shall remain under the inspection of the said Lords of Session and for one year further.’ ( b) By the Trusts (Scotland) Act 1867, section 2, trustees have power to ‘grant leases of the heritable estate of a duration not exceeding twenty-one years for agricultural lands and thirty-one years for minerals.’ ( c) By the Trusts (Scotland) Amendment Act 1884 ‘trustee’ is defined to include tutor, curator, and judicial factor, ( d) By the Judicial Factors (Scotland) Act 1889, section 19, factors are given power to make abatements or reductions of rent.

By the Trusts (Scotland) Act 1867, section 3, trustees have to petition the Court before they can grant ‘feus or long leases’ and it does seem anomalous that a factor should have extensive powers of granting leases of agricultural and mineral subjects, and yet be unable to let a house or shop for a period of five to ten years without on each occasion putting the estate under his charge to the expense of an application to the Court. But unless he does so, he cannot at present let that class of property to advantage. A tenant is often at considerable expense in fitting up premises to suit the requirements of his business, and naturally he is not willing to enter on a lease which, through no fault of his own, may be brought to an end at any time on comparatively short notice.

Section 2 of the 1867 Act above quoted being somewhat ambiguous in its terms, the Accountant for his future guidance reports the matter to the Court. In the present case, if powers are considered necessary, they may, in his opinion, be granted as craved.”

On 25th July 1912 the Lord Ordinary officiating on the Bills ( Kinnear) reported the note to the First Division.

Opinion—“This case is reported on the motion of the judicial factor. I should have granted the powers craved in accordance with the opinion of the Accountant, but it appears that there are other subjects within the factory with reference to which a similar question may arise, and the factor considers it to be for the interest of the estate that he should have a general power to let urban property subject to the supervision of the Accountant without incurring the expense of an application for special powers in each particular case. It is said to be an open question whether the granting of such leases falls within the general powers of administration conferred upon a judicial factor by his appointment or whether it is a special power to be given or withheld by the Court with reference to the circumstances, and it is desirable that this should be definitely settled by an authoritative judgment.”

Argued for the judicial factor—The question whether a factor could grant a lease of urban subjects without the authority of the Court was still open. In the case of Proctor v. Gordon, January 31, 1824, 2 S. 659 (553), an application for power to do so had been refused as unnecessary. On the other hand.acontrary opinion had been expressed in Smith v. Smith, March 20, 1862, 24 D. 838, per Lord Deas at p. 843, where it was pointed out that a judicial factor did not possess the discretionary powers vested in trustees. A judicial factor was now, however, a “trustee”—Trusts (Scotland) Amendment Act 1884 (47 and 48 Vict. cap. 63), sec. 2—and the petitioner accordingly submitted that he was entitled to grant the lease in question, it being in his opinion expedient to do so— Noble's Trustees, Petitioners, July 10, 1912, 49 S.L.R. 888.

At advising—