Scottish Court of Session Decisions

[1] On 11 February 1987 the Lord Ordinary dissolved the farming partnership which carried on business under the name of G Dunlop & Son, Baltersan Farm, Newton Stewart. The present Noter was appointed to be judicial factor, with the usual powers, on the estates of that firm, which estates had previously been sequestrated ad interim upon the appointment of the Noter as judicial factor ad interim as 4 December 1986. The Noter as judicial factor having found caution, entered upon the duties of his office.

[2] It is unnecessary to set out in detail the problems which have arisen in the administration of the judicial factory since that time. These in part concern arrangements for the sale of heritable property which forms part of the sequestrated estates of the firm. The respondent to the present Note, Miss Mary Armstrong, was one of the partners of the farming partnership.

[3] The issue which gives rise to the present Note is related to the terms of an interlocutor granted on 13 February 1996. This interlocutor was pronounced in an action brought by the Noter separate from the Petition process. In this action the Noter sought interdict against the respondent from obstructing his attempts to market and sell the heritable property, interim interdict being pronounced on 9 September 1994. In terms of the interlocutor of 13 February 1996 the Lord Ordinary ordained the respondent to remove from the heritable property of the sequestrated estates of the firm by certain specified dates, first of all, all sheep belonging to her or in her charge, and secondly, all other livestock and animals and all other property belonging to her or any of her children or in her charge all at the defender's own expense. The Lord Ordinary by that same interlocutor, in the event of the respondent failing to carry out the orders of the Court, granted warrant to the Noter or anyone instructed on his behalf, firstly, to remove from the land the livestock, animals and other property, secondly, to deliver the livestock and animals to other grazing land and to enter into any agreement or contract for the immediate grazing, veterinary and watering needs of the animals, and thirdly, in relation to all other property, to store such at the defender's own expense. It remains only to notice that the respondent failed to obtemper the orders of the Court. In due course the matter of her breach of the orders of Court was dealt with by way of contempt of Court proceedings.

[4] The Noter, in accordance with the warrant granted by the court, removed the livestock and other moveable property referred to in the interlocutor of 13 February 1996 from the heritable property and entered into contracts for the care of the animals and for the storage of the property.

[5] The present Note was lodged in July 2000. It makes reference to circumstances which have arisen since the Noter acted in accordance with the warrant granted to him in terms of the interlocutor of 13 February 1996. These circumstances are set out in the body of a report by the Noter dated 30 November 1999 serving as an application for the opinion of the Accountant of Court. In that report the Noter states that the judicial factory is now nearing completion and that he requires to complete his task of ingathering and distributing the estate under his charge. In particular, he sets out that he seeks certain special powers because, in order to finalise the judicial factory and in what he claims to be the continuing absence of co-operation from the respondent, he requires to sell the property and to retain the proceeds of sale in order to set the proceeds against the accrued charges for the care for certain livestock and for the storage of the property. These are charges which, he states, have accrued as a result of his obtempering the interlocutor dated 13 February 1996. The particular powers which the Noter now seeks in terms of the prayer of the present Note are as follows:

Upon receipt of the report the matter was considered by the Accountant of Court. The Accountant of Court, in a report to the Court dated 8 February 2000, stated that he recognised the need to bring the factory to a close in a case which has been running for 14 years. He noted that the judicial factor was prevented from completing his distribution of the estate in this case due to the lack of co-operation of the respondent in refusing to accept the return of her property. He expressed some difficulty with the application for special powers because inter alia power to sell the personal property of the respondent which is not part of the partnership estate was being sought. The report continues as follows:- "Having identified the difficulty, it is true to say that a Factor might proceed in a particular way which might otherwise attract criticism provided he had obtained a Direction from the Court to justify the course concerned (Brownings Factor 1905 7F. 1036). Accordingly, the Court may wish to consider that the action put forward by the judicial factor is a realistic course of action. There is a duty on the judicial factor to obtain a fair price for items sold."

[6] The present Note was presented in July 2000. On 31 July 2000 the respondent was ordained to lodge answers to the Note if so advised. Subsequently on 4 September 2000 the Note proceedings were again before the Court when the respondent's answers were allowed to be received late. The answers as lodged contained four pleas-in-law. However, the third and fourth pleas-in-law for the respondent were then repelled. A hearing was set down for 29 September 2000. This hearing was fixed in order to consider the matters of the relevancy of the answers and at the same time the appropriateness of the special powers sought on behalf of the Noter. At the outset of the hearing on 29 September 2000 counsel for the respondent intimated that he was not arguing the second plea-in-law for the respondent directed to all parties not called. This plea was repelled.

[7] Counsel for the Noter in opening this submission drew attention to the circumstances giving rise to the present Note. These are set out in the report dated 30 November 1999. He indicated that there was no longer any livestock left to deal with. The only question which remained related to moveable property. The application for special powers was only made since every other attempt to deal with the matter had failed. In particular, the respondent had given no proper instructions for disposal of the property which had been removed in accordance with the Court's warrant. The Accountant of Court did not suggest any other course of action than that set out in the Note. Accordingly, the Noter having taken into possession the property of the respondent or her children or in her charge by order of the Court and dealt with it as charged by that order, was, in his capacity as an officer of the Court seeking the Court's direction as to how he should now deal with that property. It was appropriate that, where there was doubt as to his proper course of action, the Noter should seek directions from the Court as to the course of action to be adopted. Indeed he had a duty to do so. The respondent's answers gave no intelligible response as to how matters might be resolved. Counsel intimated that the Noter had in the course of August 2000 written to each of the respondent's daughters for instruction about the disposal of any property to which each might claim right, but had received no reply from any of them. Counsel then referred to the answers in detail. He submitted that there was nothing in them that was of relevance to the issue with which the Court was now concerned. The only remaining plea-in-law outstanding was to the effect that the special powers sought were unnecessary, unreasonable and inappropriate in the circumstances condescended upon, was unfounded. That plea should be repelled. It was appropriate for the judicial factor to seek the Court's approval to the course proposed. Reference was made to Browning's Judicial Factor 7 F. 1087 and to Hunter v Hunter 1998 S.L.T. 1152.

[8] In reply, Mr Bartos who appeared for the respondent for the first part of the debate, before seeking and being granted leave to withdraw, pointed out that the interlocutor which gave rise to the problem, had been pronounced in a process separate from that of the petition proceedings. He referred to the terms of the powers sought by the Noter. Their effect was to permit the Noter to execute the equivalent of diligence on property which was admittedly not that held as part of the factory estate but was the property of a third party, that is to say, an act similar to a poinding for debt. The powers sought to be applied to the proceeds of any sale of the property would allow the judicial factor to recover the charges incurred for the storage without any reference to whether they were properly incurred and properly formed a debt which was resting owing by the respondent to the judicial factor. The mere grant of the warrant in terms of the interlocutor of 13 February 1996 which had empowered the judicial factor to remove livestock and other property from the heritable property forming part of the factory estates, did not amount to judicial warrant to execute upon a debt due and resting owing by the respondent. Indeed the warrant, so far as it related to the livestock, was only to make arrangements for the immediate grazing, veterinary services and watering for the animals. Nor could it be said that the requirement for storage of moveable property at the respondent's expense allowed for the indefinite storage of that property. At best the purpose of the original warrant had been to allow the property to be protected for a short period pending delivery or abandonment. Mr Bartos also drew attention to a passage in Irons on Judicial Factors page 535. There it is stated that the Court will not grant special powers "without being satisfied of the existence of necessity, where that alone justifies the granting of the application, or of expediency, where statute or practice has rendered this all that is requisite to substantiate". He also drew attention to the terms of Section 7 of the Judicial Factors Act 1849. At best, he said, the factory estate contained no more than a debt owed by the respondent to the estate. That was not sufficient to entitle the Noter to recover his costs by way of deduction from the proceeds of any sale of the property belonging to the respondent without further enquiry. Reference was also made to Irons supra p.63 and to the cases of Milne 15 S. 1104 and Vere v Dale (1804) Morison 16,389. These cases supported the proposition that by granting special powers, the Court cannot grant power to a factor to do something which the general law does not allow the factor to do. Reference was also made to Tosh's Judicial Factor 1913 S.C. 242, in which Lord President Dunedin said:

[9] At this point in his submissions Mr Bartos sought leave to withdraw. The respondent then continued as a party litigant. She placed before the Court a file of some 30 letters relating to what had passed between her and the judicial factor from March 1996 to date. Items had been requested by her but not returned. She suggested that the schedule of property stated to be held by the Noter which was appended to the report to the Accountant of Court was inaccurate. In particular she identified in it certain items, namel, an ATV 4-wheeled bike (Honda) and trailer, two caravans and a chainsaw, which had already been returned to her. She asserted that until December 1999 certain livestock had been withheld from her despite release having been authorised at an earlier date. However, when invited by the Court to indicate what was her attitude to or instructions for disposal of the remaining property presently under the Noter's charge, she refused or was, at the very least, unwilling since, she stated, she was not aware of the full extent or whereabouts of that part which the Noter now claimed to hold of the property removed in accordance with the Court's warrant.

[10] In reply to the legal submissions made on the respondent's behalf, counsel for the Noter submitted that the case of Vere v Dale was not in point. In particular he made reference to a passage in Walker on Judicial Factors at page 80-81. He accepted that the Court should be reluctant to grant any power affecting the rights of others. The present application was made on the grounds of necessity. He also accepted that where expense had been incurred as a judicial factor, then the judicial factor may be entitled to set off those expenses when he comes to the distribution of the estate insofar as those expenses were incurred in respect of one only of the parties interested in the distribution. The real problem in the present case was as to what the judicial factor was to do in relation to the property in the absence of any proper directions from the respondent as to what is to be done to that property.

[11] In my opinion, it is important to have at the forefront the problem which the Noter seeks to have resolved in this application. It is simply this: what is the Noter, as judicial factor, to do with what remains of the property for which he took responsibility following the interlocutor pronounced on 13 February 1996. It is clear that there is no dispute that the Noter remains in nominal charge of certain items of moveable property which do not form part of the factory estate but are derived from the warrant granted to him by that interlocutor and his actions consequent to the grant of that warrant. It is plain, too, that the resolution of that matter must take place before the judicial factory can be wound up. I am satisfied that from what appears in the report by the Accountant of Court that it is now time for the judicial factory to be wound up. That will require a scheme of division to be prepared. One of the matters which will have to be dealt with is to what extent the costs and charges associated with putting into effect the Court's order in terms of the interlocutor of 13 February 1996, constitute a debt for which the judicial factor is entitled to look to the respondent for payment and, if so constituted, can be recovered from the share to which she is entitled in the division of the judicial factory. It is clear from what is set out in the Note and answers that the Noter and the respondent are not at one as to the circumstances giving rise to the present Note. That is not a matter with which I can deal in this process. Nonetheless the question arises as to how the judicial factor is to be released from what he perceives to be an obligation in terms of the interlocutor of 13 February 1996.

[12] I do no consider that it is appropriate for this Court to give the judicial factor powers of the character sought. He held the property removed from the heritable property which formed part of the factory estate for the owner or owners of such property but was, and remains, obliged to look to the respondent for instructions as to its disposal, not being part of the factory estate. It follows that he must account for his stewardship of that property separately from the factory estates. It appears that the schedule attached to the report by the Noter to the Accountant of Court is inaccurate. It is obviously essential that the respondent should be informed of what items are in fact presently held by the Noter, being the remaining part of the respondent's property or that of her children or in her charge which was removed by him from the heritable property in March 1996. At the same time she also ought to be informed as to the whereabouts of such property. The Noter is not, however, obliged to continue holding that property to the order of the respondent in the face of a refusal to give any reasonable instructions so long as reasonable notice is given of the steps that he proposes to take in the absence of reasonable instructions. These must be matters for the Noter to determine and cannot be the subject of directions by the Court In particular, I am not disposed to grant the powers sought in relation to offsetting any proceeds obtained from any sales that may take place against the present share of the respondent in the factory estate. The question of the respondent's liability for the costs and charges incurred for the storage and otherwise of the property removed from the heritable estate at the order of the Court, will require to be determined as a debt said to be due and resting owing by the respondent to the judicial factor in the ordinary way. The question of set-off against the share of the respondent in the judicial factory of any debt agreed to be or found to be due and resting owing to the Noter cannot be determined otherwise than by way of either agreement or an appropriate decree of Court in relation to that liability. For these reasons I am not disposed to grant any of the special powers for which authority is sought in the Note.

[13] I take this view in part because I do not consider I am in the position at this stage to form any judgement as to whether the costs and charges incurred to date have been properly incurred. This is so not least because of the factual dispute between the respondent and the Noter as to the directions or absence of directions on the part of the respondent in relation to the property which was removed by the Noter in obedience to the interlocutor of 13 February 1996. Furthermore at this stage I am not able to determine whether the respondent has full knowledge of what items remain as such that she is in a position to decide whether or not to receive them back or allow them to be sold on her behalf by the Noter so that the proceeds can be held against any debt owed by her in relation to past storage charges and costs. The conclusion I have reached is that when consideration is given to the problem which the Noter seeks to have resolved here, it is one essentially which falls within the power and responsibility of the judicial factor to deal with and does not require the interposition of any special directions from the Court. The extent to which the respondent must bear responsibility for any such intransigence as is alleged by the Noter is a matter which, as I have observed above, cannot be determined by this Court in a process such as this. For these reasons I shall refuse the prayer of the Note.