Scottish Court of Session Decisions

The case as originally presented is reported ante ut supra. The action having been allowed to proceed at the instance of one of the pursuers, and the necessary amendments having been made, now bore to be raised by Miss Janet Smith-Shand and others, the trustees of the late Mrs Anna Stuart or Smith-Shand, owners of the immediate superiority of a portion of the estate of Candacraig, pursuers, against Sir Charles Stewart Forbes of Newe and Edinglassie, Baronet, the vassal of the pursuers in the said portion of the estate of Candacraig, and also against William Macintosh, factor and commissioner for the trustees of the late Most Noble Alexander William George, Duke of Fife, defenders. The summons as amended concluded for declarator that the defender Sir Charles Stewart Forbes as vassal of the pursuers was bound to redeem all the casualties incident to the pursuers' portion of the superiority of the said estate, and for payment by this defender to the pursuers of the sum of £1105, 3s. 9d. for and on account of the said casualties. There were also alternative conclusions for payment of additional feu-duties in the event of Sir Charles deciding to commute the redemption price into annual payments.

From the averments of the parties it appeared that Sir Charles Stewart Forbes was prior to Martinmas 1900 proprietor in fee of the dominium utile of certain lands known as the Estate of Candacraig, one portion of which he held as immediate vassal of Mrs Smith-Shand and the remaining portion as immediate vassal of the Duke of Fife's trustees. On 9th November 1900 Sir Charles Stewart Forbes created a subordinate holding of the estate by granting a feu-disposition, under which in consideration of the sum of £54,000 paid to him as the price of the lands and of a feu-duty of one shilling yearly he disponed to Alexander Falconer Wallace, Esquire, both portions of the estate. Notice of redemption of casualties under the Feudal Casualties (Scotland) Act 1914 was given to Sir Charles Stewart Forbes by Mrs Smith-Shand and by the Duke of Fife's trustees on 1st February 1917 and 11th June 1915 respectively. The state of the Sir Charles Stewart Forbes' title was such that the next casualty payable by him might be relief. The highest casualty was a composition, and the pursuers maintained that it fell to be calculated on the basis of one year's interest at five per cent. on the proportion of the grassum of £54,000 effeiring to the portion of the estate of which the pursuers were superiors. For the purposes of the action and of the determination of their respective rights in the redemption money or additional feu-duties payable under the Feudal Casualties (Scotland) Act 1914 the pursuers and the Duke of Fife's trustees had adjusted between them the boundaries of the two portions of the estate, which were not always easily ascertainable, and agreed that the proportion of the grassum of £54,000 to be held to effeir to the portion of the estate of which the pursuers were superiors was £29,831, 14s. 8d. The pursuers accordingly calculated the redemption money payable to them by Sir Charles on the basis of a composition, ascertained as above, of £1105, 3s. 9d. The rental of the lands held of the pursuers at the date of the feu-disposition was according to their averments £1129, 17s. 7d., and according to the averments of Sir Charles £685, 8s. 5d., both of these sums being less than a composition based on a year's interest at 5 per cent. on the said portion of the grassum.

Sir Charles Stewart Forbes further averred —( Ans. 4)—“Explained further that in the year 1900 there were large quantities of mature growing timber upon the said estate of Candacraig, and that a large proportion of the sum of £54,000 condescended on represented the value of the said timber. This defender reasonably estimates the value of the said timber, as entering into the total sum of £54,000, at £10,300, and he further reasonably estimates that the value of the mature timber standing uncut in the year 1900 on the lands held of the pursuers was £4000. Explained further that the said lands and estate of Candacraig had residential and sporting attractions, which largely enhanced its value to the disponee beyond its value in the market on a commercial basis. The capital value of such estates, and the capital value of the lands and estate of Candacraig, sold as it was to a willing buyer, was very high relatively to annual value, being about thirty-five years' purchase thereof. The rental or annual value accordingly represented much less than 5 per cent. on the capital value. Moreover, the said sum of £54,000 was received by this defender in respect of the lands and estate of Candacraig regarded as a single estate. No sale was made by him of the estate held by him of the pursuers as an estate by itself, and no grassum was received by him therefor; nor could any such sale have been effected at a price comparable to the proportion of the sum of £54,000 founded on by the pursuers. The estate held by this defender of the pursuers has upon it a large mansion-house which has from time to time been extended; but the shootings on the estate are of comparatively little value, and the mansion-house is disproportionate in a marked degree to the available shootings. On the other hand the shootings on neighbouring

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lands held by this defender of the Duke of Fife's trustees are of much value, but there is no mansion-house on any of the three lots in which this defender holds the said lands of the Duke of Fife's trustees. The price of £54,000 was obtained by this defender only because he was personally in a position to combine the estate held by him of the pursuers with the three estates held by him of the Duke of Fife's trustees, and so to set up a single estate possessed of a valuable mansion-house appropriate to the valuable shootings thus attached to it. It is not possible to say what price or grassum would have been received by this defender in respect of the estate held by him of the pursuers (assuming that it could have been sold as a separate estate) if he had sold the said estate by itself, or had received (as in fact he has not received) any grassum therefor. It is, however, certain that if the estates which were combined by this defender and disposed of as a single estate, had been disposed of by him (assuming that purchasers could have been found) as separate estates, each at their own individual value, the cumulo price or grassum received would have been very much less than £54,000. The difficulty of finding purchasers would have been so great that the proper view to take is that the separate estates, and in particular the estate held by this defender of the pursuers could not have been disposed of at all on any practicable terms. Even if purchasers could have been found, this defender estimates that the cumulo price of the estates could not have been expected to exceed £40,000 (including the value of mature timber), and that the price or grassum for the lands held of the pursuers (including the value of mature timber) could not have been expected to exceed £18,000.” To these averments the pursuers answered—(Cond. 4)—“Admitted that there is growing timber on said estate, and that it has residential and sporting attractions. Not known to what extent said residential and sporting attractions affected said price of £54,000. In any event these formed ordinary elements in the value of the estate as a heritable subject. Denied that the value of the timber, if it entered into the sum of £54,000, is reasonably estimated at £10,300. Explained that in 1900 the value of the timber on the pursuers' portion of said estate did not exceed £2400. Denied that the said mansion—house is disproportionate to the estate held by the defender Sir Charles Stewart Forbes, of the pursuers. Denied further that the said defender has received no grassum for the estate held by him of the pursuers, or that the four estates composing the estate of Candacraig could not have been disposed of separately on practicable terms. Explained that the defender Sir Charles Stewart Forbes could in 1900 have granted separate feu-dispositions of the four parts of the said estate to the said Alexander Falconer Wallace for separate grassums, in which case the cumulo grassum received by him would have been the said sum of £54,000.”

The compensation payable to the Duke of Fife's trustees, calculated on the same basis as that adopted by pursuers, was £901, 4s., and the Duke of Fife's trustees were willing, on receipt of that sum, to grant a discharge in favour of Sir Charles Stewart Forbes of all casualties incident to the estate of superiority of the portion of the estate of Candacraig of which they were superiors or, if Sir Charles desired, to give a joint discharge with the pursuers of all casualties incident to the superiorities of the estate of Candacraig.

The pursuers pleaded,—“1. The pursuers, the trustees of the said Mrs Anna Stuart or Smith-Shand, being the immediate lawful superiors of the defender Sir Charles Stewart Forbes in the lands libelled, and due notice of redemption in terms of the Feudal Casualties (Scotland) Act 1914 having been given, the casualties incident to the feu fall to be redeemed by the defender Sir Charles Stewart Forbes in terms of said Act. 2. The defender Sir Charles Stewart Forbes having sub-fued the lands libelled along with other lands in consideration of an elusory feu-duty and a grassum, the composition payable in respect of the lands libelled falls to be calculated on the basis of the proportion effeiring to the lands libelled of a year's sub-feu-duty, together with a year's interest at 5 per cent. on the proportion effeiring to the lands libelled of the said grassum, under deduction of a year's feu-duty payable to the pursuers. 3. The principal sum sued for being the just and true redemption price of the casualties incident to said feu, decree should be pronounced in terms of the petitory conclusions of the summons. 4. The defender Sir Charles Stewart Forbes having no title or interest to dispute the apportionment of the sum of £54,000 made in condescendence 5, the explanations in answer 5 for said defender ought not to be remitted to probation. 5. The defences for the defender Sir Charles Stewart Forbes being irrelevant should be repelled.”

The defender, Sir Charles Stewart Forbes pleaded, inter alia—“1. The pursuer's averments being irrelevant, the action should be dismissed. 2. The pursuers are not entitled for the purposes of the present action to found upon the feu disposition granted by the defender in 1900 and grassum paid thereunder in respect ( a) that the said fen transaction does not constitute a set of the lands in respect of which the present claim arises, and ( b) that the year's mail of the said lands cannot be deduced therefrom. 3. Separation, the sum of £29,831, 14s. 8d. not having been obtained by this defender as a grassum in respect of the lands held by him of the pursuer, cannot be founded on by the pursuers for the purpose of calculating the composition payable to them. 4. In any case the pursuers are not entitled to found upon the grassum paid under the said feu transaction in so far as it represents the price of mature timber. 5. In any event the pursuers are not entitled to calculate the redemption price of the casualties by computing interest at 5 per cent. on the said grassum.… 7. The principal sum sued for not being the just and true redemption price of the casualties incident to said lands, this defender should be assoilzied.”

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The defender William Macintosh pleaded, inter alia—“3 The pursuers and the said trustees being the sole interested parties, and having adjusted their respective rights in the casualties due by the defender Sir Charles Stewart Forbes, and the said defender being liable to the pursuers and to this defender in the whole redemption money applicable to the whole estate, and having no title or interest to quarrel said adjustment, the pursuers are entitled to decree upon the basis of the said apportionment. 4. The defences for Sir Charles Stewart Forbes being irrelevant, should be repelled.”

In the action as originally laid, the Lord Ordinary ( Hunter) on 29th July 1920, after repelling the defender's preliminary pleas, found that the composition payable by the defender (Sir Charles Stewart Forbes) in respect of the estate of Candacraig fell to be calculated on the basis of a year's sub-feu-duty, together with a year's interest at 5 per centum on the grassum paid.

Opinion.—[ After the narrative appearing in the previous report]—“According to the pursuers' averments, which are admitted by the defender, the feu-duty of one shilling yearly was elusory and did not represent the true avail of the lands at the time nor bear any relation thereto.

The next casualties payable by the defender are in terms of the Feudal Casualties Act to be taken as payable at the expiry of twenty-five years from 1st February 1917 and 11th June 1915. The highest casualty is a composition. The question on the merits of this case is as to the basis on which this casualty falls to be calculated. The pursuers contend that the calculation should be made by adding to the elusory feu-duty one year's interest on the grassum of £54,000 at 5 per cent. The defender maintains that the proper basis is annual rental, and he explains that he has all along offered and still offers to redeem (or commute) future casualties on this basis but his offer has been declined. In his answer to the fourth article of the condescendence he states that the rental of the lands at the date of the sale did not exceed £1240, 14s. 6d. yearly, that in the year 1900 there were large quantities of mature growing timber upon the estate, and that a large portion of the price of £54,000 represented the value of the said timber. He also alleges that the said estate had residential and sporting attractions which largely enhanced its value to the disponee beyond its value in the market on a commercial basis. The capital value of such estates, and the capital value of the estate of Candacraig, sold as it was to a willing buyer, was very high relatively to annual value, being about thirty-five years' purchase thereof. The rental or annual value accordingly represented much less than 5 per cent on the capital value …

As regards the basis on which composition falls to be calculated I think that the decision in the case of Campbell v. Westenra (( 1832) 10 S. 734) is adverse to the defender's contention. In that case a vassal had granted a sub-feu for an elusory feu-duty and the payment of a grassum. The superior claimed that the sub-feu had to be disregarded in fixing the amount of composition and that a year's rent of the lands was due. The vassal tendered payment of the elusory feu-duty and 5 per cent. on the grassum, and contended that he was not liable for any further payment. The Court gave effect to this contention. That case has been taken by text writers as determining that where a sub-feu has been granted for a price as well as a feu-duty the superior will draw a year's sub-feu-duty, and also the interest on the price as amounting to a ‘year's maill as the land is set for the time’ in terms of the Act 1469, cap. 36, which regulates the amount of composition payable to a superior for entering a vassal—Bell's Principles, 721; Bell's Lectures, 1148; Menzies, 1900 Ed. 487; Wood's Lectures, 145; Duff on Feudal Conveyancing, 218. Lord Dunedin in his opinion in Heriot's Trustees v. Paton, 1912 S.C. 1123, goes fully into the effect of the decision in Campbell and the extent to which it has regulated practice since it was pronounced.

The defender, however, maintained that this case was distinguishable from Campbell's case as he was offering a year's rent of the lands, which was what the superior claimed in that case. This circumstance does not appear to me to make any difference on the principle applicable. Centuries ago it was determined that where property had been lawfully and bona fide sub-feued the superior could only claim the feu-duty actually payable to his vassal— Monktoun, M. 15,020; Cowan v. Elphinstoun, M. 202 and 15, 055; Cockburn Ross, 6th June 1815, F.C., 6 Pat. Ap. 640. As Lord Davey said in the case of the Earl of Home v. Lord Belhaven ( 5 F. (H.L.) 13)—‘The importance of these cases is, first, that they affirm that a feu is within the expression “as the lands are set,” and, secondly, they affirm that what the superior is to get for this composition are only the fruits for the year which the vassal himself would be entitled to, notwithstanding that the lands may have been covered with buildings producing a vastly higher rent to the sub-feuar; or, in other words, that the superior stands in the place of the vassal as regards the maills or rent for the year, for better or for worse.’ When an estate is given out in feu with the possibility of development, with the prospect of getting minerals, or with large forests of mature timber, the feu-duty may be much greater than the agricultural rents payable for the lands at the date of the feu. But the actual feu-duty is as much ‘the year's maill of the lands as they are set’ in the first years after the feu is granted as after the estate has become fully developed. It is equivalent, as Lord Dunedin said in Paton's case, to an ‘escheat of the vassal's property for a year,’ paid as ‘an acknowledgment to the superior for his trouble in granting an entry to a vassal who is a stranger to the standing investiture.’

If a vassal has sub-feued for an elusory feu-duty and the payment of a grassum you cannot arrive at a year's value of the midsuperiority created unless you add a year's interest of the price paid to the elusory feu. In most cases where lands have been feued

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by vassals the method of calculation will be much more favourable to them than valuing compositions on the basis of rents which the vassals do not receive, and which in many cases exceed the capital value of the estates of mid-superiority to which entries are being granted by the superiors. Lord Davey in Belhaven's case said—‘The superior is entitled to the year's fruits which the vassal himself receives or is entitled to receive in the year of entry. The superior is confined to this when it is to his disadvantage, as in the case of a sub-feu, and he is entitled to the benefit of the principle when it is in his favour.’ This statement is equally applicable if the words ‘as in the case of a sub-feu’ are omitted.

I propose to pronounce an interlocutor repelling the first three pleas-in-law for the defender, finding that the composition payable by the defender in respect of the estate of Candacraig falls to be calculated on the basis of a year's sub-feu-duty together with a year's interest at five per cent. on the grassum paid in terms of the second plea-in-law for the pursuers, and grant leave to reclaim, reserving meantime the question of expenses.”

On 1st March 1922 the case as amended was heard in the First Division.

Argued for the defender and reclaimer Sir Charles Stewart Forbes—(1) The grassum in this case. could not be the basis for calculating the composition. The sub-feu was not of a single estate as in Campbell v. Westenra, 1832, 10 S. 734, nor was it a set of the pursuers' holding within the meaning of the Act 1469, cap. 36. The decision in Campbell v. Westenra which was followed by the Lord Ordinary did not therefore apply. Further, the rule of that decision was only to be applied where the result would be equitable. Here it would not. The superior was not entitled to take advantage of the exceptional situation in which this vassal was placed of being able to combine the estate with another and thus obtain, as he had done here, a grassum which was greater than what could have been got by sub-feuing the estates separately. The equitable way was to take the actual rent as the basis— Aitcheson v. Hopkirk, 1775, M. 15, 060. It was contrary to the principle of the Acts that the superior should get more than the annual value, as he would do if the apportioned grassum was taken as the basis of calculating the composition— Heriot's Trust v. Paton's Trustees, 1912 S.C. 1123, per Lord Dunedin at pp. 1130 and 1134, and Lord Dundas at p. 1141, 49 S.L.R. 852. (2) If the composition was to be estimated on the basis of the grassum, then the value of the timber fell to be deducted in fixing the amount effeiring to the pursuers' holding. This was necessary to an equitable application of the rule of Campbell v. Westenra. At common law the timber was not part of the annual rent. It did not belong to a liferenter. Further, (3) the rate of interest should be determined with regard to the circumstances of the transaction and the nature of the subjects. The rate of five per cent. allowed in Campbell v. Westenra was too high. Here the high price compared with the rental and the nature of the estate established a clear case for modification without inquiry— Hill v. Caledonian Railway Company, 1877, 5 R. 386; Heritable Securities Investment Association v. Miller's Trustees, 1893, 20 R. 675, 30 S.L.R. 354; Greenock Harbour Trustees v. Glasgow and South-Western Railway Company, 1909 S.C. (H.L.) 49, 46 S.L.R. 1014; Schulze v. Dun, 1912 S.C. 50, 49 S.L.R. 50; Sivright v. Straiton Estate Company, 1879, 6 R. 1208, 26 S.L.R. 718; Heriot's Trust v. Paton's Trustees, supra.

Argued for the pursuers and respondents—The superior was entitled to take a year's feu-duty as the year's maill. In this case the amount which the vassal was receiving as feu-duty was a percentage of the grassum. A sub-feu of different feus in combination was just as much a set within the meaning of the Act of 1469 as a lease would be. The composition must therefore be taken as a percentage of the grassum as apportioned. The rule in Campbell v. Westenra, approved in Heriot's Trust v. Paton's Trustees, was a general rule— Mason v. Ritchie's Trustees, 1918 S.C. 466, 55 S.L.R. 454. The contention that there were other considerations included in the grassum was irrelevant— Pollockshaws Co-operative Society v. Stirling Maxwell, 1906, 8 F. 638, 43 S.L.R. 375; City of Aberdeen Land Association v. Magistrates of Aberdeen, 1904, 6 F. 1067, per Lord Low, p. 1078, 41 S.L.R. 647. (2) The averments as to the value of the timber were irrelevant. The estate was sold with the timber which happened to be on it. There was no separate sale of the timber. (3) The proper interest on the grassum was five per cent. That was the legal interest— Campbell v. Westenra, supra—to which the superior was entitled, where as here there was a grassum—Duff, Feudal Conveyancing, pp. 217, 218; Menzies, Lectures on Conveyancing, p. 487.

Counsel for William Macintosh did not offer any argument on the merits.