Scottish Court of Session Decisions

You are here: BAILII >> Databases >> Scottish Court of Session Decisions >> McDonald-Grant v Sutherland & Company [2008] ScotCS CSOH_150 (29 October 2008)
URL: http://www.bailii.org/scot/cases/ScotCS/2008/CSOH_150.html
Cite as: [2008] ScotCS CSOH_150, [2008] CSOH 150

[New search] [Help]

OUTER HOUSE, COURT OF SESSION

[2008] CSOH 150

OPINION OF LORD MATTHEWS

in the cause

MARILYN LOUISE McDONALD-GRANT

Pursuer;

Against

SUTHERLAND & CO

Defenders:

________________

Pursuer: Stewart QC; Lindsays, Aberdeen

Defenders: Moynihan QC; Balfour + Manson

29 October 2008

[1] This is an action for damages arising out of what is said to be professional negligence.

[2] The pursuer, the spelling of whose name varies throughout the documentation, is the widow and executrix nominate of the late William Barclay Grant (variously referred to hereinafter as Mr Grant, Mr Grant Senior or Barclay, to distinguish him from his son William Grant Junior), who formerly lived with his first wife Margaret in a farmhouse at Mains of Garten, Boat of Garten, Inverness-shire. Following her death, he engaged a number of housekeepers to look after himself and his sons William and Alexander. It is said that from 1988 he engaged a number of lady companions, on a live in basis, including the pursuer in April 1992. She and he were married in June 1993 and she lived with and cared for him until his death on 16 July 1998.

[3] On 1 April 1993, Mr Grant signed a Disposition prepared by the defenders, which was recorded on 9 June 1993. In terms thereof he conveyed the fee of the farmhouse to his son William, subject to a liferent in favour of "William Barclay Grant and his assignees." It is averred that the terms of that Disposition arose out of advice given to Mr Grant by the defenders to the effect that such a clause would mitigate inheritance tax, safeguard against care costs and facilitate reduction of the business overdraft. It is averred that such advice was ill-founded in all respects as any competent solicitor should have known and that its effect would be to deprive the pursuer of any right to live in the farmhouse after Mr Grant's death. There was, it is averred, no good reason for him to divest himself gratuitously of his farmhouse when the Disposition was granted in terms devised by the defenders which had this effect. These averments are not denied but are met with an admission that the Disposition was signed and no admission beyond that. There are also averments that Mr Grant was concerned to be in a position to provide security in respect of a right to occupy the farmhouse after his death for any wife or housekeeper living with him at the time and his instructions to the defenders were said to be dependent on that concern being satisfied. It is said that "his instructions to the defenders were to effect a disposal in relation to the farmhouse which preserved an entitlement on his part to secure a right of occupation for his wife or housekeeper after his death. His instructions in relation to the granting of said Disposition at all were conditional on this entitlement being preserved. Had he not been advised and assured by the defenders that this condition was satisfied WBG would not have been prepared to instruct and sign said Disposition.....the defenders advised that the Disposition (which contains a reference to assignees) reserved to WBG the possibility of appointing persons to a lifetime right of occupation after his death." These averments are denied. It is said in Answer, inter alia, that by letter of 25 February 1993 WBG dismissed the pursuer from her post of housekeeper with immediate effect. He gave no instructions to give benefit to any housekeeper, far less to the pursuer. He was happy that he had affected the transfer to William. It is also said in Answer that the defenders' instructions were to draft the Disposition as they did draft it. Other material averments will be referred to in due course. It can be noted at this stage, though, that Barclay Grant never assigned, or attempted to assign, the benefit of the liferent to the pursuer.

[4] A number of preliminary pleas were tabled and they remained extant as at the date of the proof before answer, following a debate before Lord Dawson.

Evidence
[5] The first witness for the pursuer was Mr George Ross Craig Wood, a solicitor with the firm of Craig Wood, Solicitors in Inverness. He was admitted in 1976 and said his specialty was Criminal Law. He had been an assistant with the firm of MacArthur & Co before joining the defenders and becoming a partner long before 1992. He had previously given evidence in an action for reduction of the Disposition, before Lord Reed on 16 June 1999. It was accepted that the firm prepared the Disposition under consideration. The subjects of the Disposition were Mains of Garten farmhouse, which was Mr Grant's home. He denied that his firm had been negligent.

[6] He went to visit Mr Grant in Raigmore Hospital on 23 February 1995 in order to discuss Mr Grant's sons' concerns about his housekeeper. Mr Grant had suffered a stroke. That was the only occasion he spoke with Mr Grant between his going into hospital and his coming out again. He did not take any instructions from him that day. It was suggested that he had discussed with him his whole family and property situation but he denied that. He did not take any instructions which he passed onto the firm. He was not a conveyancer and did not prepare the Disposition. He presumed that it was done either by Mr Iain (sometimes written "Ian" in the papers) Innes or someone else who may have been in the office. If it was not Mr Innes, he did not know who prepared it.

[7] He said that he discussed with Mr Grant the problems perceived by his sons and left him to make up his own mind. He understood later that he had done. A formal letter of dismissal was written up, probably by Mr Innes, but the witness did not take that to hospital for signature. It was a better that even chance that Mr Innes had taken it.

[8] He was referred to 6/3 of process, a collection of notes and memoranda written by him relating to 23 February. He confirmed that he dictated the memos. At the foot of page 2 there was a reference to an evening telephone conversation with young William Grant to the effect, inter alia, that Mr Innes would be asked to draw up a suitable letter of termination of the housekeeper's appointment.

[9] He understood that that in fact happened. He had nothing more to do with Mr Grant thereafter.

[10] In cross-examination he said that he had known Mr Grant since the mid-70's or thereby when he was with MacArthur & Co. When he moved to Sutherland & Co, Mr Grant also moved as a client. His original dealings with him were when Mr Grant took action to purchase his croft. After that he did not have any more dealings as such with him. Mr Grant was a very powerful individual who knew exactly what he wanted. He would take advice from his lawyers and reflect but he liked his own way.

[11] On the occasion when he went to hospital Mr Grant's two sons had come to the office. He thought that they had seen Mr Innes, who appeared to be of the view that the witness knew Mr Grant well and decided to call him in. There was a meeting between Mr Innes, himself and the two boys and the subject matter was the now pursuer, or Mrs McDonald, as she then was. The boys wanted him to speak to Mr Grant about her but he did not know her himself. He could not recall any dealings he may have had with the sons previously, although he knew them.

[12] He had not looked at the transcript of his evidence in the run-up to the proof, but he had looked at Lord Reed's opinion. It was not easy to recall what happened. His impression of Mr Grant in hospital was that he was in effect the same man that he always had been. Mr Wood was aware that Mr Grant was ill but he was not slurring his speech and his brain was not affected. They spoke as they would normally speak on any other occasion. The sons were telling him that Mrs McDonald had been with him as a housekeeper for some months. She was disruptive and causing disputes in the family, and young William Grant's wife was particularly upset. They wanted their father to get rid of her. He went to hospital because he knew him and it was as simple as that. He told Mr Grant that there was a lot of unhappiness at the farm, on the part of his sons and William's wife. He did not know that Mrs McDonald had any status other than that of housekeeper. There had been many other housekeepers and the boys were concerned that she was to be given a working interest in the farm, which they did not want. He saw Mr Grant alone in hospital. He told him that he had something to tell him and thought that he would have told him to take some time to reflect because the choice was his. He was trying to stay fairly neutral.

[13] That same evening, according to the note, there was a telephone call from William Grant junior.

[14] He was referred again to 6/3. The front page consists of certain manuscript notes in his own handwriting. W B Grant's name appears at the top of the note and a reference to "Marlene Macdonald," who was divorced. There was also a reference to Ward 7C and Room 19 where Mr Grant was. It appeared that Mrs McDonald had been there for ten and a half months and had divided the family. William Grant's wife had gone to Elgin. There was a reference to Mrs McDonald pulling out her hair and an indication that there had been seventeen moves, which he interpreted as changes of housekeeper, in the last five years. It was also said that Mrs McDonald was only staying if he, meaning Mr Grant, was fit.

[15] The entries on page 2 would have been dictated partly from memory and partly from the manuscript note.

[16] The note in relation to the hospital is in the following terms:

"Attendance on Barclay Grant at Raigmore Hospital. Advising of problems as we perceived them with his son, William and a lady called Marlene MacDonald who was acting as his housekeeper. He will give due thought to the matter and speak to his son no doubt later tonight."

[17] That note would have been written the following day.

[18] There was also a note of an evening telephone attendance with young William Grant to the following effect:

"Having spoken to his father, it appears that Barclay Grant has now seen the need to dismiss Marlene MacDonald. He will tell her himself tomorrow and will offer her one week's wages in lieu thereof. He will also probably ask young Mr William Grant to have our Mr Innes draw up a suitable letter of termination of Marlene MacDonald's employment."

[19] He understood that it would have been Barclay Grant himself who would have told Mrs McDonald that she was dismissed.

[20] 6/4 was a copy of a letter of termination, but he had not dictated that himself.

[21] He said that the notes at page 2 were detailed, that being his practice at the time. He denied any suggestion that he discussed property issues, the partnership or inheritance tax with Mr Grant. He would not have had the expertise. Similarly, he did not discuss the terms of any liferent.

[22] He was then invited to peruse the transcript of his evidence before Lord Reed, No 6/12 of process. He agreed that that transcript accurately represented his position.

[23] It had been put to him before me that he had received instructions from Mr Grant about his property affairs and that had never been put to him before.

[24] In re-examination he said again that Mr Grant had been single minded and a strong individual. He had no reason to think that he was anything other than honest. He was asked if he could envisage him saying that he was sorry for having caused any bother and that he just wanted things done as before, in other words that he was apologising for creating a mess by consorting with the pursuer. Mr Wood thought that he could have said that but could not recall his saying it to him. He thought that he might have noted if something like that was said but it was possible. He was asked if he was the kind of man who would easily break down in tears and he said that he had only seen him in connection with business matters. He had no idea if there was a sensitive side to his nature although there could have been. He could have had a vulnerable side but he was not vulnerable when he saw him.

[25] Both Alexander and William had come to see him but Alexander's knowledge of the housekeeper could only have been based on hearsay since he lived in Aberdeen. The net effect of what they said was to blacken the pursuer's character and they had an interest to do it, or at least young William did. He did not think that Alexander had anything to do with the farm. He knew that William would inherit his father's property. One way of looking at matters was that there was a strong interest in having the pursuer's character blackened and in having her removed but it was a family matter. The note referred to a divided family and there was at least a potential conflict of interest. As far as giving the pursuer a working interest in the farm was concerned, he thought that that amounted to giving her a job rather than a share in the partnership. He was not aware if the sons knew that their father was on affectionate terms with her. They were telling him that there was a division in the family but that might have been completely untrue. It was suggested that the pursuer had had no chance to refute the allegations made against her but the witness was sure that she would have had a chance to respond if Mr Grant had put the allegations to her. There was a reference in his evidence before Lord Reed to stealing cheques and embezzling money but the witness was keeping an open mind on that. If she had been doing that, it was a distinct possibility that Mr Grant would never want to see her again.

[26] I have to say that I found the witness generally credible.

[27] I have no doubt that his notes were contemporaneous and I have no reason to think that he was doing other than his level best to tell the truth as he saw it.

[28] The next witness was Iain McDonald Innes, who was a solicitor and a partner in Craig Wood's firm. His expertise was now mostly crime and had been since he joined Mr Wood in 1995. Before that he had been involved mostly in conveyancing and executry work, as a partner in Sutherland & Co. He had been admitted as a solicitor in 1976 and was assumed as a partner three years later.

[29] He had given evidence in two or three sets of proceedings in connection with this matter. There was an arbitration to do with settling the accounts of the farming partnership and the action for reduction.

[30] He agreed that an arbiter was appointed in December 1993 and made a final award in April 1997. His evidence in the arbitration was given on 29 April 1996 according to the records. His evidence before Lord Reed was given on 29 and 30 April 1999. He had also given evidence at a commission for recovery of documents on 25 March 1999.

[30] He did not accept that his firm had been negligent.

[31] In 1992/1993 the firm acted for Mr Grant, William Grant Junior and the family partnership of WBGrant & Sons. They farmed 97 acres at Mains of Garten and the farm was a partnership asset. Mr Grant owned two-thirds of the assets, the farmhouse was owned wholly by him and he had a tenancy of 76 acres or thereby at Toum, nearby.

[32] He agreed generally that the farmhouse and the farmlands were seen as a package and that he was involved in discussions about various options concerning it.

[33] He knew that Mr Grant had been a widower since 1988 and that in 1992/93 he was 62 or 63 years of age. William Grant Junior lived with his wife in a house called Beechgrove, adjacent to the farmhouse, while Alexander lived in Aberdeen and had nothing to do with the farm. Mr Grant had employed a number of housekeepers.

[34] Craig Wood had been Mr Grant's lawyer in the past and when he had come to Sutherland & Co he had effectively brought him as a client to the firm. No doubt he would have indicated to him that Mr Innes was a conveyancer.

[35] Mr Grant had a stroke on 13 February 1993 and went to Raigmore Hospital. On 17 March he was transferred to Ian Charles Hospital in Grantown-on-Spey and he was eventually discharged home on 10 May 1993. On 21 May he consulted new lawyers, and in particular George McWilliam of MacArthur & Co in Inverness. That was apparently because he professed himself dissatisfied with Mr Innes' firm. He said that he thought that Sutherland & Co had been acting for his son William and against his own interests.

[36] Sutherland & Co continued to act for William Junior for a time until he then consulted the firm of South Forrest not very long afterwards.

[37] Soon after Mr Grant Senior consulted MacArthur & Co, Mr McWilliam telephoned the witness, which was a natural thing to do. It was put to Mr Innes that he gave Mr McWilliam an account of what had happened between his firm and Mr Grant Senior but he could not recall that.

[38] I understood him to agree that he told Mr McWilliam when and how he obtained instructions for the Disposition of the house. That would have been the first account he had given anyone about it and it was only weeks after the Disposition was signed. The matter would have been clear in his memory.

[39] His position in the Court of Session proof was that he had not visited Mr Grant in hospital, although Mr Wood had done so on one occasion. He knew about that at the time. Mr Stewart said that there was a suggestion that the witness was at the hospital in connection with the signature of the letter of dismissal of the pursuer. The witness did not remember that but he could picture Mr Grant in hospital and it was just possible he might have been there to have that letter signed. He did not go to hospital to obtain Mr Grant's instructions about divesting himself of his assets in favour of his son William.

[40] Between 14 February and 10 May 1993 he saw Mr Grant twice but not in hospital. Those occasions were at Mains of Garten. He thought that he would have been aware that Mr Grant had been taken out of hospital specifically to sign deeds but he could not remember precisely.

[41] He took the farmhouse Disposition to Mains of Garten to have it signed by Mr Grant on 1 April 1993.

[42] The Disposition of the farmlands was taken by him to Mains of Garten on 8 April 1993 along with other documents. The instructions for the Disposition of the house would have to have been given before the document was presented for signature, in other words before 1 April 1993. As far as the other documents were concerned, the instructions would have had to been given before 8 April 1993. On 1 April 1993 he must have been given instructions to prepare the Disposition of the farm and instructions to bring the various deeds which he brought on 8 April for signature. He thought that he had not discussed Mr Grant's resignation from the partnership until he had been given instructions to prepare that deed but it had been discussed with other people, namely the accountant and possibly the bank manager. It had also possibly been discussed with William Junior.

[43] The effect of the Disposition of the farm which was signed on 8 April 1993 was to transfer the farm into the sole ownership of William Junior. Previously it had been owned by William Senior and William Junior as Trustees for the partnership.

[44] On that same occasion he brought a deed by which Mr Grant Senior resigned from the partnership. William Junior carried on as the sole remaining partner. There was also a codicil to the will. The will had provided for a legacy of £20,000 payable to Alexander and the codicil provided that it be paid at £4,000 per annum for five years with no interest. That would benefit William as the ongoing partner. There was also on 8 April a Disposition of a house site to be decrofted.

[45] There was a dispute about what happened on 1 April in relation to Mr Grant Senior's knowledge of what he was signing.

[46] The witness's recollection was that Mr Grant Senior was sitting on a settee, when the witness went over and told him what the deed did and he then read it for himself. He could definitely remember his reading it over. Even if he had read it to him he thought that Mr Grant would have read it. He would have been aware that a liferent was being reserved to himself and his assignees.

[47] The witness did not prepare the deed and could not remember who might have done. Possibly it was a conveyancing colleague although he was sure that it was not John McAdam, the other conveyancing partner.

[48] An application for information as to the identity of the drafter had been opposed on the basis that the defenders had no memory of who it was and no means of finding out.

[49] Any instructions about the Disposition of the house were given after 7 October 1992 when Mr Grant first discussed inheritance tax issues with Mr Innes.

[50] Between October 1992 and February 1993 when he went into hospital, there was at least one one-to-one meeting between the witness and Mr Grant to discuss inheritance tax. Refinancing was also discussed at length as was the possibility of using the farmhouse as security for a loan to repay the overdraft.

[51] It was hoped that as a member of the National Farmers Union Mr Grant might obtain preferential rates from NFU Mutual but in view of his physical condition they would not lend to him. That was quite apart from his stroke.

[52] In the reduction action it was alleged that Mr Grant had signed the Disposition while under the influence of his son William, in the context of his stroke. Before his stroke there was no question of his being under William's influence at all and he was free to dispose of his assets as he wished.

[53] He was then asked how the discussions crystallised into instructions. If clear instructions had been given before his stroke, it was suggested that there would have been no need to get further instructions but the witness said that the position would have been confirmed to see if he still wished to proceed.

[55] The third scenario put by Mr Stewart was that there were no clear instructions before the stroke but his intentions were clarified later and the witness agreed that that was a possibility.

[56] The fourth scenario was that no instructions at all were given by Mr Grant and the witness denied that that was a possibility. He felt that he had clear instructions which were later clarified and there were discussions in December.

[57] He denied that the whole of the estate was to be regarded as a package since parts of it could have been treated differently. Mr Grant had wanted to regulate the succession to his estate. To some extent the assets were interrelated but they could have been broken up. The discussions were wide ranging. He found that farmers would discuss things with him and then go away. Some time would pass before something crystallised. He thought that that was what had happened in this case. Mr Grant had had advice before his stroke but the crystallisation of his instructions took place after that.

[59] In reply Mr Stewart invited me either to repel the objection or admit the evidence under reservation. He accepted that the case was about the farmhouse but evidence had already been given that the various assets were interrelated and they had been explored as a necessary part of the background.

[60] Furthermore these questions had a bearing on credibility and reliability.

[61] I decided to allow the evidence under reservation.

[62] The witness agreed that, contrary to the position advanced by him and the firm, the arbiter had found that there was no concluded agreement about division of the partnership assets.

[63] Indeed the arbiter had placed no reliance on the evidence of the witness.

[64] In the course of the arbitration Mr Grant Senior had expressed himself content for the farmlands to pass to his son, whether or not he had agreed to the Disposition in 1993.

[65] The witness had not prepared the Disposition of the farmlands, which was 6/2 of process.

[67] At the outset of proceedings there had been a discussion about a Joint Minute which would have agreed that various documents including the Dispositions were as the bore to be and there had been no suggestion that there was anything wrong with the date of execution. In any event this related to the farmlands, not the farmhouse.

[68] Once again Mr Stewart submitted that the matter had a clear bearing on credibility and reliability. It had been suggested that the witness had presented this document for the signature of Mr Grant on 8 April and on the face of it that could not have been so.

[69] Again I allowed the evidence to proceed subject to competency and relevancy.

[70] The witness agreed that on page second of the Disposition; reference was made to another Disposition by the partnership in favour of William Barclay Grant, dated 8 April and recorded on 14 May 1993.

[71] That date had obviously not yet come by 8 April 1993 and the witness said that the explanation could simply be that it was an error of some kind.

[72] He did not know if there existed such a deed as was referred to.

[73] It was then suggested that 6/2 had been altered after signature and objection was once again taken to that.

[74] It seemed to me that this was a step too far. There was no Record for any such alteration and I upheld the objection. As it happened, though, it became clear later that the document must have been altered after signature, so my ruling had no practical effect.

[75] Reference was then made to 6/4 of process, certain documents from the defenders' file relating to William B Grant which Mr Stewart did not accept was complete. The witness agreed that there was no reference to any discussions about the codicil before Mr Grant suffered his stroke.

[76] There had, though, been discussions about succession and there was a worry that payment of the legacy of £20,000 in one fell swoop would be a burden on the farm. The witness was involved in that discussion and he insisted that he was telling the truth. He accepted that there was no note but he maintained his position.

[77] He was then referred to sheet 6 in that production, which was a cover sheet for a fax sent by him on 17 February 1993. The subject matter was the will. He said that a copy of the will would have been sent to William Junior.

[78] It was put to him again that there was no note of any discussion about the codicil before the stroke but within a day of it, the witness was sending a copy of the will to someone with an interest in it, namely William. In reply, Mr Innes said that William and his father were very much a unit. He did not appear to demur from the suggestion, though, that sending a copy of the will to William was a gross breach of client confidentiality.

[79] He denied a suggestion made by Mr Stewart that he drafted the codicil on William's instructions.

[80] The draft of the codicil appears at page 35 in 6/4 and is in the terms which I have already indicated. The witness said that he drafted it. It was put to him that instructions for the codicil were received after Mr Grant Senior went into hospital and he agreed that that was the case, although succession had been discussed earlier with the fine tuning being left till later.

[81] Apart from the reference to Inheritance Tax there were no notes in the file discussing succession. When he had given evidence in 1999 he told Lord Reed that he had obtained instructions for the Disposition of the farmhouse by telephone in the week before 1 April 1993. It was suggested that that was untrue and he disagreed. He told the truth then, as he remembered it, but he could not remember the position now. He would have hoped that his memory in 1996 was better than that in 1999. He could not recall the arbiter being at great pains to find out when he had obtained the instructions. It was put to him that he did not tell the arbiter that he had received such a phone call and he simply referred to the terms of the report. It was also put to him that he had not told Mr McWilliam that he had obtained instructions by telephone and he seemed to accept that. He would have had a good recollection of the position when he spoke to Mr McWilliam.

[82] It was correct that there was no note on file about such a telephone call and indeed Mr Grant had not mentioned such a call in his various statements. He agreed that he had been on oath when he had given evidence in the arbitration. It was put to him that he said to the arbiter in 1996 that he had obtained instructions for all of the deeds before Mr Grant went into hospital but he could not be specific. That was still his recollection. Matters were all discussed and left in the air but things crystallised later on when he was summarily ordered to get on with it. It would have been something like "let's do what we discussed before."

[83] He accepted that Mr McWilliam telephoned him on 30 June 1993, if that was in his note. It was put to him that he said that Mr Grant had given clear instructions before his stroke and he agreed with that. It was also put to him that he was saying that there was a discussion before his stroke and by some means the matter crystallised afterwards. He said that in December 1992 they had come to a point when certain things were said and it was left to Mr Grant to go away and come back saying exactly what he wanted. He could not recall Mr McWilliam telephoning him but he accepted that it had happened. He did not remember passing information to Mr McWilliam. He could not remember saying that Mr Grant's truck had been locked in a farmsteading for his protection because he was unfit to drive. Neither could he remember saying that another housekeeper had resigned because of his behaviour. He agreed that he had mentioned having some dealings with Mr Grant about cutting down Inheritance Tax but the discussions did not proceed on that basis. That was what had initially brought Mr Grant to come to him. Various matters were discussed, including the transfer of certain assets to William Junior. He had no memory of a discussion about Mr Grant becoming difficult after the pursuer had used her influence on him. It was suggested that it sounded like Mr Grant had backtracked because of the involvement of a third party but the witness could not remember the context. He had no reason to question Mr McWilliam's notes, however. He had no memory of telling Mr McWilliam that Mr Wood had gone to see him and that he said he was sorry for having caused any bother and wanted everything done as before. He reiterated that everything had been discussed in December.

[84] The farmlands Disposition was not ready on 1 April and he agreed that there was a difference between discussing matters and finalising them. He explained that after the discussions Mr Grant had gone away to consider matters and then he had instructed him to proceed as discussed. It was suggested that he appeared to be saying that the instruction came via Mr Wood but he could not recall that. Mr McWilliam had no reason to lie. He accepted that he explained to him that the house was conveyed to William Grant Junior but a liferent had been reserved as required by Mr Grant Senior. He was asked whether the basis of all this was to save Inheritance Tax and he said that matters had moved on from tax at that stage. There was the potential of Mr Grant's going into a nursing home and having to pay the fees. There was no reason to think that Mr McWilliam was not telling the truth but Inheritance Tax was not the whole basis of his discussions with Mr Grant. For all he knew Mr McWilliam had simply paraphrased the content of the telephone conversation and had not noted everything which he had said. He had not, for example, made any reference to refinancing. He did not know how to answer Mr Stewart when he was asked whether he was telling Mr McWilliam that Mr Grant had backed out of a course of conduct because of the influence of the pursuer. He may have had that perception but he could not remember. His involvement with Mr Grant stopped in April 1993. He agreed that he had been telling Mr McWilliam how the deeds had come to be executed and why.

[85] He accepted that the arrangement would not have mitigated Inheritance Tax. He was asked why he had told Mr McWilliam about discussing such mitigation but he could not remember the conversation. The arrangement was not for the purpose of tax mitigation.

[86] There was no question of Inheritance Tax as far as the land was concerned. At page 20 of 6/4 there was a guide to Inheritance Tax which indicated that agricultural relief was increased to 100% from 10 March 1992. It was clear that the major Inheritance Tax challenge had disappeared but he said that was why they had moved onto discussing refinancing. Inheritance Tax was no longer an issue. He would not have said that the reason for the arrangement was the mitigation of Inheritance Tax.

[87] He was then asked whether Mr Grant was the type of person who could be reduced to tears and he said that anybody could be. He reiterated that he had no recollection of any discussion about the truck. He was asked whether he mentioned that the site on which there was planning permission had been transferred to William and he said that must have been to do with the site proposed to be sold and set against the farm overdraft. Having been asked why that would be transferred to William he said that there may have been funding considerations later on. It was not possible to obtain funding for Mr Grant Senior. One issue in the discussions at the end of 1992 and the beginning of 1993 was the reduction of the overdraft of the partnership. Refinancing was being employed in the sense of obtaining new borrowing for old. It was possible that Mr McWilliam had correctly recorded him as saying on 25 May that the site on which there was planning permission had been transferred to William. That was the route they were going. The site may have been removed from the Security and the bank would have had to grant a Deed of Restriction. The farmland as a whole was subject to a Security and in order to exploit a particular plot a Deed of Restriction would have been required to exclude it. If it were the case that the title to the plot was dubious that would have been corrected by a Disposition ad rem, that is a notional disposal back to the disponer and then a correct Disposition following thereafter. That would be followed by a discharge of any Security on the back of any faulty Disposition. The consent of all parties namely disponer, disponee and lender would be required. There might then be a new Standard Security or a Deed of Restriction thereafter. He did not think that the site being talked about as being transferred to William was anything to do with chalets but he could not remember. His memory was that they would need to try to identify a site on the farm for which planning permission could be obtained. It was suggested that there must have already been planning permission if that was what he said to Mr McWilliam and he agreed with that. The site would have had to be decrofted also.

[88] He was then referred to 6/2 of process, the Disposition of the farmlands and in particular to the exceptions therein. The exceptions are not in the proper order, two coming after three and he was not sure if any of these exceptions was the ground referred to as the site.

[89] He was shown 6/4 of process and, in particular, sheet 18 thereof, a note of a meeting of 7 October 1992. During that meeting he had discussions with Mr Grant and it was noted that he was asset heavy. The witness undertook to have his assets valued and confirmation of that could be found in sheet 17, a letter of 3 November 1992 inviting Mr Grant to settle the valuers' fee directly, the valuers being Souter & Jaffrey.

[90] He thought that the file contained everything, although there should have been draft Dispositions. They were perhaps in a conveyancing file. There was some discussion as to whether they would be in Mr Grant's files since he was the disponer rather than the disponee but he explained that the firm was acting for both parties. He did not know if there were any fee notes, not having access to the firm's records any more. He did not know if any fee notes had in fact been instructed.

[91] There was discussion about the Inheritance Tax implications and about reducing the overdraft. He accepted that it was £52,000 at 25 May 1992 and would have been £69,000 by 5 April 1993 when the partnership terminated.

[92] He was then referred to sheet 12 in 6/4, a letter dated 27 November 1992. That was addressed to Mr Grant Senior and indicated that the firm had made enquiries about the raising of finance to repay the overdraft with the Bank of Scotland. It was said that the most straightforward and least complicated method was to take a domestic mortgage out on the farmhouse at Mains of Garten, being his main residence.

[93] There was no mention in the letter of any liferent or gratuitous alienation of the farmhouse to the son.

[94] He agreed that Mr Grant Senior was jointly and severally liable for the debt. The house was valued at £75,000.

[95] He met Mr Grant on 14 December 1992 and reference was made to sheet 12, a set of notes of that meeting. The first part of it is as follows:

"Noting MIRAS would be lost and he has not the capacity to repay a mortgage.

[96] Commercial Loan -"

[97] He would not be able to obtain a mortgage and if he obtained a loan from the bank it would have had to be as a commercial loan on which only interest was paid. He would not obtain mortgage interest relief on a commercial loan. He was asked whether the idea was then beginning to form that the assets might be transferred at least nominally to William so that he would take over the borrowing and he said that the NFU, Mr Grant Senior's preferred lender, had, indicated that they would not lend to him because of his physical health. He agreed, though that it might have been his ability to repay it rather than his health which was in issue. Other methods of refinancing had to be looked at. Mr Grant himself would need a relatively short period of repayment at his age. The idea was beginning to form that assets could be transferred to William and that he would undertake the mortgages. Farmers wanted to preserve their farms.

[98] The note continued:-

"Possibility of term assurance...potentially exempt transfer - interest only mortgage."

[99] The thinking was that if there was a transfer to William it might attract Inheritance Tax to some extent on a tapering basis if Mr Grant Senior died within seven years and life assurance could be taken out to insure against that risk.

[100] The note then goes on as follows:

"Possibility of transferring two chalet sites to William, plus revising wills entirely".

[101] He could not remember to whom the chalets actually belonged and although he could not remember why there was a discussion about revising wills he agreed that it would be sensible if that were done to cover the position if the younger man predeceased.

[102] The note then had four particular bullet points noted, the second of which was as follows:

"Potential 2 or 3 chalets (£20,000 each)."

That would have been the amount which was hoped to be raised from the chalets to repay the overdraft.

[103] It was suggested that if William Junior had to obtain finance then his own current borrowings would have to be known and the witness said that that was not necessarily the case for a commercial loan although he would need to know about that for a domestic loan. That might explain bullet point three which was as follows:

"Check what is secured - (1) what is Willie's position"

[104] He explained that the note amounted to a prospectus with a number of possibilities being kicked around.

[105] The fourth bullet point was as follows:

"Ensure that site for new houses decrofted - A Murdoch, Architect to submit plan."

[106] He said that the land would have to be decrofted, crofts being a conveyancer's nightmare. The architect would submit a plan, planning permission would have to be applied for and an application for de-crofting would have to be made, although they would try to do everything at the same time.

[107] Bullet point 1 was as follows:

"Phone Peter Munro, (Kingussie)."

He was the firm's accountant.

[108] It was suggested that the same thinking applied to the various sites within the overall farmland and the chalets, namely that there was to be a transfer for the purpose of arranging new borrowing, and he agreed with that suggestion.

[109] He was asked whether there was a hope that there would be an agricultural grant to place a house on the new house site and he said that he was told that there was a possibility of that through a Rural Enterprise Scheme. He was asked whether Mr Grant was too old to take advantage of that and said that the Grants discussed that themselves and any grant would need to have been in the name of William Junior.

[110] This all depended on the consent of the bank. A deed or deeds of restriction would be required. He did not know whether in this particular case the bank manager had come back to say that no deeds of restriction would be granted for refinancing. He had no knowledge of what happened in terms of a Deed of Restriction. The bank did not tell him that they were unwilling to co-operate.

[111] Sheet 5 was then referred to, a letter of 26 February 1993. That was from the manager of the appropriate branch, a Mr G Cullen, and indicated that it would be a matter of a few weeks before the bank was in a position to provide the answer requested in a letter of 10 February namely whether a Deed of Restriction would be granted over a house site at Mains of Garten.

[112] It was the witness's impression that the bank was intending to restrict the Security at the times when the Dispositions were granted but he had no firm knowledge of the matter.

[113] If the title deeds bore this out, he agreed that the Dispositions of Mr Grant's assets granted absolute warrandice.

[114] He remembered having some discussions with the accountant and if the latter said that this took place on 15 December 1992 he would not argue with that. He would not argue with a suggestion that an integral matter of the discussion was the transfer of the chalets. He did not remember the accountant suggesting that one potential avenue was to transfer two chalets to William Grant with the proviso that the income should be reserved to Mr Grant Senior for his lifetime by way of a liferent. This sounded likely though. It further sounded likely that William Grant Junior would pay the premiums on the life assurance for the exempt transfer period of seven years.

[115] Reference was then made to sheet 10, a letter to Barclay Grant on 22 December 1992. That confirmed that the firm had discussed with the accountant the possibility of transferring two of the chalets into his son's name and asking him to forward the plan of the chalets to be transferred.

[116] Transfers were not to be gratuitous as such but were to repay the overdraft. He had no recollection of the firm's being instructed by the Grants to market the other house sites on the farm, these being other steps taken to reduce the overdraft.

[117] It was suggested that until 22 December 1992 there was no recovered documentation about the transfer of the farmhouse to William Grant gratuitously and subject to the reservation of a liferent. The witness accepted that but said that these matters had been discussed.

[118] A note was written on sheet 9, which was another copy of the letter of 22 December. He thought that the letter had not gone out. The matter of the liferent of the house had been discussed before, though.

[119] Sheet 15 contained a reference to selling the house for £75,000 and the witness said that that was one of the proposals when the farmhouse was the focus but the focus thereafter shifted to the chalets and the sites.

[120] Bullet point 3 on sheet 15 referred to a gift to William, with the word "what" thereafter and that was simply an indication that they were wondering what could be transferred to him.

[121] As far as the letter of 22 December was concerned, he was not sure if it had not been sent or if the client had brought it in with him and the witness had made certain notes on it. It was clear that some time between 22 December 1992 and the date when Mr Grant went into hospital there was a discussion about transferring the farmhouse, subject to a reservation. There was, however, no formal record of such a meeting. All of the previous meetings had been recorded in the file. There were five of them and in all but one case the time the meeting took was recorded. There were no fee notes and he suspected that the work was not charged for.

[122] If Mr Grant Senior said that there was a meeting discussing the transfer of the farmhouse at the end of 1992 or the beginning of 1993 then it was likely to be a meeting of which the witness had taken cryptic notes on sheet 9.

[123] Sheet 8 was an aide-memoir which appears to have been on the reverse of the original of sheet 9.

[124] He was asked whether if there was a reference to a Deed of Restriction and if that referred to the new house site that would tie in with sheet 7, the letter of 10 February 1993. The witness presumed that that would be the case. It was possible that the Deed of Restriction referred to on sheet 8 related to that new house site.

[125] That letter invited the bank to consider granting a Deed of Restriction over the house site at Mains of Garten. It was proposed that thereafter, once the house site had been decrofted, a Deed of Restriction would be granted by the bank over the house site and Mr Grant would then take a business loan over the site in favour of a lender. Thus any outstanding sums due by the Messrs Grants to the bank would be considerably reduced. On both sheet 8 and sheet 9, the reference to the Deed of Restriction appeared to be coupled with a reference to a Disposition by Mr Grant Senior in favour of William Grant, with a liferent. It was suggested that the inference to be taken from that was that they both related to the same property. That was not an inference which the witness drew. As I understood him he said that the Deed of Restriction related to whatever house site was earmarked for the financing. The Disposition simply related to the farmhouse. He was asked why there was a reference on the left hand side of sheet 9 to a "liferent of house" and underneath that a reference to a mortgage of £60,000 to pay off the bank. He said that things had moved on again. Mr Grant Senior was concerned that the farmhouse would be lost if he had to go into full time care and that was one of the reasons why the transfer to William was considered. It was not a particularly good reason but that question troubled Mr Grant Senior.

[126] The reference on sheet 8 to a Disposition ad rem, a discharge, a Standard Security and a fresh Disposition may have related to some title which was causing difficulties but he could not remember.

[127] What happened after a Deed of Restriction would depend on what they intended to do with the property. It had nothing to do with disponing the property to William, with a liferent in favour of his father.

[128] It should be noted that the reference to the Disposition on sheet 9 is as follows:

"Disposition by WBG in F (in favour of ) WG with liferent reserved for WBG"

[129] He was asked in terms which area of ground was to be freed of its security and he said that that would be whatever area of ground was identified. They were trying to see if they could get a Deed of Restriction on anywhere and if so they would have been delighted.

[130] It was suggested that his recollection of what he was writing was wrong and he said that a letter was written to the bank. He had asked the Grants to prepare a plan, which they did, and he wrote to the bank and asked about the Deed of Restriction. He was asked if that was a new house site and he said that he would need to see a copy of the plan.

[131] Mr Grant Senior was too old to obtain a grant for the new house site and the title would have had to be in William's name. However, that would only have been the case if they were proceeding along that line. Title would not require to have been transferred if the plot was simply going to be sold.

[132] It was suggested that the area referred to was that excepted under exception 3 in 6/2. He said that if that was the case the bank would have had to grant a Deed of Restriction over it. If Mr Grant had title to that land he would have required to dispone it to his son so that he could get the grant. He thought however that the grants were available only to farmers of a certain age and he was not sure what the grant position was. Nonetheless it was suggested again that the note about the Deed of Restriction and the Disposition related to the new house site and that was followed up on 10 February 1993.

[133] Objection was taken to this line on the basis that Mr Moynihan anticipated Mr Stewart's referring the witness to a file containing more than three hundred pages which had been obtained from MacArthur & Co, which the witness had not had the opportunity to see. The suggestion appeared to be that the note at page 8 related to a liferent over a property other than the farmhouse. There was no Record for this suggestion and the matter was collateral.

[134] Mr Stewart replied that the question was whether the note on the letter of 22 December referred to the liferent of the farmhouse or not. He intended to put to the witness that the reference to the farmhouse was the reference on the left hand side of the page and that the reference to a liferent on the right of the page was to a different property. That went to the nub of the case.

[135] Once again I allowed matters to proceed under reservation.

[136] As it happens the witness was then referred to a new production 6/12 which consisted of extracts from 6/5. In particular he was asked to look at sheets 21 & 22, which contained plans. It was put to him that when he spoke to Mr McWilliam on 25 May 1993 he indicated that the house site had been transferred to William, which he agreed with, but he was unable to point it out on the sheets. It was also put to him that the site transferred to William was the site under discussion in the period after 22 December 1992 as referred to in the notes but the witness did not understand the question.

[137] He was again referred to sheet 9 of 6/4. He was prepared to accept that a house site was transferred to William. It was difficult for him at this juncture to remember what site was transferred although it was put to him that the site which was transferred was the site under discussion in the notes at 6/4. He conceded that that might be possible.

[138] It was suggested that a transaction would have followed from this note by way of a Disposition to William and he said that he was not sure if it was the same site. Why would there be a transfer to William if the site was just being sold? It was suggested to him that they were not considering selling it and he said that they had to keep their options open. If it was being transferred to William they would have wanted to know what they were going to do. It was suggested that the plan was to transfer it to William with a liferent in favour of Mr Grant and he expressed some incredulity at the question of a liferent over a site.

[139] It was put to him that the only record of a Disposition of anything other than the farmhouse was the record of a transfer of a chalet and he said that it was difficult to remember conveyancing transactions over 15 years ago.

[140] He accepted that the possibility of transferring chalets to William was discussed with the accountant. He also accepted that the accountant might have advised that that transfer be under reservation of a liferent in favour of Mr Grant Senior. There was a security over that property in favour of the bank and it was suggested that the proposal was that Mr Grant, who was thought to own that site, would dispone it to William under reservation of the liferent. He said that that was not the case. Mr Grant would only need to dispone a site if there were some proposals to develop or sell it. It was suggested that the note on the left hand side of sheet 9 was a reference to a chalet site and he said that that was not the case. It was a reference to the farmhouse.

[141] There was a reference to "liferent of house" on the left hand side of sheet 9 and the right hand side indicated a reference to what was to be done, namely a Deed of Restriction and a Disposition by WBG in favour of WG with liferent reserved for WBG. All of this referred to the farmhouse. He could not recall if there was a transfer of the chalet site. Even if there was, it was not possible that the note in sheet 9 referred to such a transaction. The witness wrote it and knew what transaction it referred to. The Grants must have decided not to proceed with the accountant's advice. It was put him that there was a Disposition to William Grant of the chalet site and if things had gone to plan in December it would have been under reservation of the income to Barclay Grant. He said that that was not what he was instructed to prepare.

[142] Sheet 9 was the only place where "liferent" and "house" were referred to at the same time. No mortgage was taken out over the farmhouse to pay off the bank as far as he knew and it was not part of the transactions carried out in April 1993.

[143] It was suggested that the state of play at the time Mr Grant went into hospital was that the farmhouse might be transferred and a mortgage taken out over it in order to repay the Bank but he denied that. He said that there had been a discussion with Alexander or Mr Grant Senior and William in connection with succession. Matters had moved on from refinancing. There was no note of this discussion but he had taken part in it himself.

[144] It was then suggested that when Mr Grant went into hospital the agenda changed again and the new agenda was all about succession. Subject to what he had said earlier, I think he accepted that there was a succession agenda when Mr Grant was in hospital but he never discussed succession with him when he was in hospital, although he had probably faxed a copy of the will to William on Mr Grant's instructions. He said that the Grants were very much a family and there was nothing between them, which I understood to mean that there was no friction between them.

[145] It was put to him that the succession agenda was driven by William and he said that Mr Stewart would have to ask William about that. It was suggested that there was a concern that Mr Grant would be permanently incapacitated or die and he said that he was not aware of what the situation was. It was, however, fair to say that the emphasis changed from using assets to borrow money to transferring them to William.

[146] Page 2 of 6/22 was put to him and in particular the second paragraph thereof. This was the note taken by Mr McWilliam of the telephone call of 25 May 1993.

[147] Paragraph 2 is in the following terms:

"Noting that there had been a housekeeper, Marilyn MacDonald, who had influenced Mr Grant in the past and it was only after she had used her influence that he became difficult. This happened a little while ago and Craig Wood went to see him and he said that he was sorry for having caused any bother and he just wanted the whole thing done as before."

[148] It appeared to be a reference to Mr Wood's visit to Mr Grant in hospital and might have been an indication of instructions being given to him which he passed on to a conveyancer. It possibly suggested that the property was to be transferred in the way discussed previously.

[149] He said that he revised the Disposition for Mr Grant's interests. He did not accept that it was inappropriate to grant absolute warrandice in a gratuitous conveyance.

[150] He had arranged for the termination of the partnership but had not given any intimation to the creditors. He agreed that Mr Grant was liable to them for the whole overdraft. However, he said that the resignation was something which was driven more by the accountant than himself. It was put to him that the overdraft increased and he said that that would be in the bank statements. He continued to act for William Grant Junior for a time but he was not involved with the overdraft.

[151] He took no steps to relieve Mr Grant of the partnership liabilities but he had been divested by then of some of his assets. It was put to him that what was happening was that after he went into hospital the firm was not focusing on Mr Grant Senior's interests and he said that he was acting on his behalf only.

[152] It was put to him that in 92/93 when Mr Grant Senior discussed the transfer of the farmhouse to William with a liferent in favour of himself he made it clear that the liferent interest should extend to any new wife or housekeeper and he denied that absolutely. It was not mentioned at all. He was asked whether, if Mr Grant had mentioned it, he was lying and all he was prepared to say that it was not mentioned to him. He also ruled out the possibility of its being mentioned to Mr Wood.

[153] He was asked why it was in Barclay Grant's best interests to engage in such a transaction if there were no Inheritance Tax or refinancing implications, without reserving a liferent for a housekeeper or a wife. He said Mr Grant was concerned about succession. He and William were very close and he wanted to ensure that the farmhouse of Mains of Garten remained in the family and would not be lost. The fee would remain in the family and he would have a liferent.

[154] He firmly denied that there were any instructions from Mr Grant about extending the liferent interest beyond his life to others.

[155] He never advised him about that matter but he had never been asked about it.

[156] If he had been instructed to reserve a liferent for any widow or housekeeper after his death then he would have done it.

[157] It was put to him that when Lord Reed considered the matter his Lordship apparently thought that the liferent in favour of the deceased and his assignees was an important pointer to his intentions. Objection was taken to this in that Lord Reed's opinion on a matter of fact was not a matter which was admissible and I upheld that objection.

[158] The witness was asked what he had said to the arbiter about what was meant by the provision for "assignees" and he said he could not remember. It was suggested that he told him that he did not know but presumed that it was the deceased's intention and, indeed, that is what the note bears out. It was suggested that Mr Grant had explained that the reason for the provision was to help to attract housekeepers lest they be afraid that they might be homeless after he died. That was something which Mr Innes said he had never heard before. If that was his position then it would have been helpful if he had given instructions to that effect. He never said that to him and he had no idea what his intentions were about remarriage.

[159] It was put to him that if Mr Grant did have some intentions about remarrying then the question of what was to happen to a wife or housekeeper after his death would have been in his contemplation but he repeated that he did know what Mr Grant contemplated. He was asked whether he accepted that reserving a liferent for a wife or a housekeeper was commonplace and said that he had never been asked to do that himself.

[160] If he had been instructed to reserve a liferent for Mr Grant and for a wife or housekeeper after his death then it would have been the firm's duty to comply with those instructions. A Trust Disposition with a liferent would have been appropriate.

[161] When he went to see Mr Grant he told him what the Disposition meant.

[162] He was asked if he was reassured by that and said that he was to the extent that he read it over.

[163] He agreed that if the instructions had been as were suggested by Mr Stewart then it would have been his duty, in revising the Disposition, to make sure that they were complied with. No solicitor of ordinary competence exercising due skill and care would have done otherwise. He denied a suggestion that he was not telling the truth about the instructions which he was given.

[164] In cross examination, Mr Moynihan referred him again to sheet 9 in 6/4, the letter of 22 December 1992. Before that letter was written he had been having discussions with Mr Grant Senior and also with Mr Munro, the accountant. By 22 December he understood that the Inheritance Tax problem was no longer live. He had no personal knowledge at that time of there being a housekeeper. Nor was he aware of a companion and no intention to remarry was ever raised. If that matter had been raised then it could have had legal consequences, in particular in relation to succession. Advice would have required to be given on that and he did not in fact give any such advice.

[165] He recognised Mr Wood's handwriting on page 1 of 6/3, the set of memos relating to 23 February 1993. That was the first time he had heard of a housekeeper. The two sons had come into the office wishing to discuss her dismissal. He did not deal with employment law and would have referred them to Mr Wood whose office was next door. He could not remember if he was present when they discussed the matter with Mr Wood. He might simply have taken them through and left him to it. He thought that Marilyn was dismissed but he did not know her at that time and indeed had never met her. He did not remember drafting the letter of dismissal and on the basis that he was not an employment lawyer he probably did not do so. He had no involvement with the housekeeper or her dismissal after 25 February, the date of the dismissal letter.

[166] Sheet 6 of 6/3 was a fax cover sheet from a Mr Merson of Stronachs, dated 1 March 1993, asking him to phone him. He did not in fact phone him. Sheet 7 in 6/3 was a manuscript letter dated 5 March 1993, apparently from the pursuer, addressed to him. He had no recollection of it but sheet 9 indicated that he had passed it to Mr Grant Senior.

[167] As at 9 March 1993 he had had some involvement with or knowledge of a housekeeper but she had been dismissed. That did not in any way alter his thinking as to the consideration of the interests of a housekeeper in the Disposition.

[168] He was referred again to sheet 9 of 6/4. He thought that the original sheet 8 was written on the reverse of the original sheet 9. He had prepared the letter and he knew that the sale of the chalets was no longer going to take place. He did not recollect if the note was written at a meeting or as a result of a telephone call. The reference to "2 chalets to be transferred" had been scored out in the notes and that confirmed that those instructions had been withdrawn. The reference to "liferent of house" was just a note of what he was being asked to do by Mr Grant. He associated that with the reference to the "Disposition by WGB in favour of WG" on the right hand side of the page. The writing on sheet 8 was simply an aide memoir to remind him what he was to do in terms of drafting.

[169] The reference to the Deed of Restriction and the Disposition by WGB were completely separate. There was no loan over the house so a Deed of Restriction was not necessary. The reference to the liferent was one in favour of Mr Grant Senior himself.

[170] He agreed that there was a gap between the date of this letter and the date of granting of the Disposition on 1 April 1993. He said that Mr Grant took a stroke in February and by 10 February he had just received a plan. Perhaps he had been waiting for that plan to be prepared vis-a-vis the Deed of Restriction. He made reference to sheet 7, the letter of that date to the Bank. There would have been a plan sent with that letter.

[171] It would probably have been William who was referred to in that letter as the person who was to take out a business loan.

[172] He was asked if he had any recollection of receiving instructions to proceed with the completion of the Disposition on 1 April 1993. He said that he recalled that there was a phone call. It was unusual for him to go down to see a client and take a Disposition with him. Clients usually came to see him in the office. It would have been a phone call from Barclay Grant. He remembered taking telephone calls from him and it was hard to put it into the time frame. When he telephoned he was usually brusque. On 1 April he just took one Disposition and Barclay asked why he had not brought all the other documents which had been agreed upon. It was possible that the instructions about the farmhouse were not conveyed directly to him but to someone else. The matter had taken place some 15 years previously. Nonetheless a Disposition was drafted by someone in the firm and he revised it. He thought that the reference to "his assignees" came from a style book and he simply took the view that it was the up to date way of creating a liferent and incorporating it in a Disposition. He had no recollection of the style which may have been used but recently he had seen a number. There were style books in the firm which were used by the conveyancing personnel, having been brought by graduates from the University of Edinburgh. 7/9 to 7/14 were then referred to and he confirmed that these were the documents which he had recently been shown. There were three different editions of this University style book and something of the sort was available in the office. 7/10 at paragraph 57 showed a style for creation of a liferent in favour of a housekeeper. 7/12 contained a further style at paragraph 2.2.8.

[173] It might be thought that he had an interest in the current action because professional negligence was being averred but he had had no such interest during the arbitration or the earlier proceedings in the Court of Session. He had no reason to lie then. He was then referred again to the notes by Mr McWilliam in 6/22, at pages 2 and 3.

[174] In particular he had no reason for thinking that the note was inaccurate at page 3 where the following appears:

"Noting that the house at Mains at Garten had been conveyed to William, but that a liferent had been reserved to the property as requested by Mr Barclay Grant. The site on which there was planning permission had been transferred over to William Grant."

[175] Page 4 is a letter to Barclay Grant from Mr McWilliam dated 26 May 1993, which refers amongst other things to the discussion with Mr Innes, and the following sentence appears at the end of paragraph 2:

"He also advised that you have a liferent of the house in which you reside, even although it is now owned by William."

[176] This reflected his own understanding of the liferent.

[177] In re-examination, he was referred to pages 5 to 8 of 6/22, which related amongst other things to a meeting at the Mercury Hotel between Mr McWilliam and Mr Grant. At the top of page 7 the following appears, as a reflection of what Mr McWilliam was told by Mr Grant:

"He was told that if he lived for 7 years after signing over the house there would be no duty. The only way in which he would sign over is to keep the liferent and the liferent for the housekeeper or companion. This is the only way to give someone like that security."

[178] The seven years would have been a reference to the seven year period before death for exemption from Inheritance Tax. He confirmed his understanding that there was no loan over the farmhouse and that a Deed of Restriction was not required. He was then asked what that deed was all about and indicated that it was for whatever area of ground was intended to be used.

[179] He agreed that sheet 8 in 6/4 referred to at least two properties. He did not have the relevant documentation to enable him to say precisely which properties were involved.

[180] As far as sheet 9 was concerned he was asked if the liferent of the house was to be accompanied by the grant of a standard security for £60,000 and he said that he did not know if a security could be obtained over a house with a liferent. He did not think that the two ie the reference to the liferent of the house and the reference to a mortgage were necessarily related. He was asked what the mortgage was to be for and said that 75% was the maximum for commercial mortgages so it must have been a residential one. Mr Stewart suggested that the valuation could have been increased but he said that that could not be done and that he did not recall what the figures 75,000 to 85,000 meant on sheet 15.

[181] On any view there was a gap between the discussion in December and the signing of the Dispositions.

[182] He knew that there was a housekeeper in February but he did not know that there was still to be one after that date. He was aware, however, that there had been a succession of housekeepers, having been told that by the brothers. He was also involved in advertising for a replacement housekeeper, as could be seen from sheet 16 in 6/3, adverts having been placed on 25 March and 1 April 1993.

[183] It was therefore in contemplation that there would or could be a housekeeper. He did not know if the brothers were concerned that their father might be getting too close to the housekeeper with a distinct possibility of marriage. As far as the instructions for the Disposition were concerned, he agreed that he was saying no more than that there was a telephone call from somebody asking him to bring the Disposition or Dispositions to the farm for signature. It was either Mr Grant himself or someone on his behalf. He thought that it must have been set up earlier otherwise Mr Grant would not have come out of the hospital although he did not know what he had been told was the purpose of his day out.

[184] He accepted that he did not shown very much care in revising 6/2 and said that there were a lot of mistakes in Dispositions. There was, for example, an insertion on the front page of 6/1, namely the reference to "Mains of Garten" in line 18. He did not know if that was inserted before or after signature but agreed that the typeset of the testing clause looked similar.

[185] He had had no recollection of the styles until he was shown them recently. If he had had such a recollection they would have been referred to in the original defences.

[186] 7/10 at paragraph 57 referred to a proper or non-trust liferent. He said that if he were setting up a trust he would have had to refer to the books and would not have done it off the top of his head.

[187] The next witness was Colin Watson, who was a solicitor between 1994 and 1998, with Stronachs in Aberdeen. He had acted as clerk to the arbitration relating to the termination of the partnership of W B Grant & Sons. He had noted the evidence in manuscript and he thought that he had drafted the award. Reference was made to 6/6, the arbiter's award dated 23 October 1996. At paragraph 1.3 there appears a consideration of the respondent's evidence ie William Grant's. The witness assumed that that was a correct summary of the evidence prepared from the notes which he himself had taken.

[188] There was then a reference to what the arbiter said about Mr Innes' evidence at paragraph 2.7 and 2.8. Objection was taken to this on the basis that it was not the best evidence. Having heard counsel on the matter I upheld the objection. No reference whatsoever was made to any evidence given by Mr Innes other than to say that it was couched in extremely vague terms and that his memory of specific facts was minimal. That seemed to me to be a conclusion drawn by the arbiter himself, which had no bearing on the decision I had to make.

[189] The witness was then taken to his notes at 6/20. Counsel and agents had helpfully agreed a typed version of this and I allowed that to be lodged as 6/23. Mr Watson then read the evidence of Barclay Grant from these notes. As far as the farmhouse was concerned he appears to have said that that was discussed in connection with Capital Gains Tax. He would get a liferent and any person with him would also get a liferent. It helped him to get housekeepers because they would have a place to stay after his death. He said that this was discussed in October when they were "kicking footballs about." He also indicated that he did not instruct Iain Innes to draft Dispositions.

[190] In cross-examination he agreed that Mr Grant had given evidence on oath.

This witness was patently credible and reliable and I accepted his evidence with no difficulty.

[191] The next witness was Ian Donaldson, a solicitor and partner in MacArthur & Co. He stood in for his partner Mr McWilliam during one day of the arbitration, 29 April 1996, and took manuscript notes which he then typed up. 6/9 contained both his original handwritten notes and the typed transcript, being 6/9(a) and 6/9(b) respectively.

[192] One of the questions which Mr Innes was asked was whether he could remember when, if at all, there had been an agreement about the distribution of assets on the termination of the partnership. Certain further questions put to Mr Innes, and his answers, were then read out as follows:

Q. Who drew up the letter of resignation?

A. Me.

Mr Innes was then taken through the Dispositions

Q. Were these Dispositions instructed by the partners?

A. Yes.

Q. Was it in accordance with an Agreement?

A. Yes.

Q. Did you receive instructions to draw up any other Agreements?

A. (Not recorded).

Q. Did WBG resign while these Dispositions were being done?

A. Yes

Q. Did you know of the financial circumstances of the partnership?

A. I was not intimate with the financial circumstances.

Q. Were these three Dispositions granted as part of the "Agreement"?

A. Yes

Q. Were you aware of any money changing hands?

A. No

Q. Did you have these Dispositions signed?

A. Yes I travelled down to Boat of Garten. I put them in front of him and allowed him to read them over. I asked if he had any questions. I then asked him to sign them.

Q. Were the Dispositions for no consideration?

A. Yes.

[193] Cross-examination

Q. When did you get instructions to draw these deeds? Can you recollect if they were drawn by you personally?

A. I cannot recollect.

Q. What does the term "certain good and onerous causes" mean to you?

A. That there was some form of ancillary agreement. Some form of agreement by the partnership to deal with its financial problems. My intention was to get the partnership out of its financial difficulties.

Q. Is the term "love, favour and affection" different?

A. Yes, it indicates some sort of family "arrangement".

Q. At the time of the preparation of the Dispositions did you know the partnership was being dissolved?

A. Yes.

Q. Who gave instructions for the preparation of the Dispositions?

A. Both.

Q. How were these instructions given?

A. Directly.

Q. In what circumstances were the instructions given?

A. They were communicated to me. The partners called up at the office. I can't say if they always came together.

Q. When did they come in?

A. Between October 1992 and April 1993.

Q. What took so long?

A. I had asked them to explore all possible avenues.

Q. When did the decision harden and the course become certain?

A. In April 1993 approximately. I paid two visits to WBG's house on 1 April and 8 April. I am not sure when I got instructions for the Disposition of 1 April.

Q. In the farmhouse Disposition what is meant by "assignees of liferent"?

A. I am not sure. It must have been WBG's instructions. If I put a deed in front of someone and they read it and ask if they have any questions, if they don't and then sign it I assume these are their instructions."

[194] Reference was then made to part of Mr Grant's evidence as follows:-

Q. Who was the owner of the plots until sold?

A. I thought they were owned by the partnership.

Q. Why was the house conveyed subject to the liferent?

A. For CGT purposes.

Q. Why were the words "and assignee" included?

A. This was to help attract the housekeeper as otherwise the potential housekeepers were always afraid that they would be left homeless.

The last answer was expanded somewhat from the manuscript note but the sense was the same.

[195] The witness said that Mr Grant's evidence was clear and lucid. He was answering the questions without undue hesitation.

[196] At the end of his evidence the arbiter sought to clarify something with Mr Innes and that was reflected on page 10 of the manuscript notes.

[197] That reads as follows:

"Re Disp. - stamp duty.

Prior to signing, fully explained documents to him.

But when were instructions actually given by WBG for details of Disp.

- (very evasive answer.)"

[198] That appears in the typed version at page 8 as follows:

"The Arbiter raised points regarding the Disposition and Stamp Duty. The Arbiter asked specifically when the instructions were actually given by WBG for the details of the Disposition. Mr Innes failed to give a definite answer."

[199] In cross-examination, he said that he stepped in for one day and had had no time to read into what the case was all about.

[200] At page 2 of the manuscript there was a reference in brackets to WBG and he said that that was likely to have been Mr Grant's giving him information as he was taking the evidence from Mr Munro.

[201] He thought that Mr Grant's wife, the pursuer, was present.

[202] At page 12 of the manuscript and page 10 of the typed version, there appeared a reference to Mr Grant's being taken through the evidence of other witnesses. He had tried to recreate questions and answers until then.

[203] He thought that he prepared the typed version perhaps that same evening or the following day. The typed version at page 10 says the following:

"Mr Grant was then taken through the evidence of the other witnesses. He denied that he had ever said that he was retiring or that he went into details with anyone or gave Ian Innes instructions. He agreed that he signed the house over but said that it was never properly discussed. Mr Grant stated categorically that he gave no instructions to arrange the transfer of the house to WG."

[204] In the manuscript version at page 13 the following appears:

"You gave no instruction to arrange transfer of house to WG."

[205] He could not remember precisely why that appeared but it looked as if he must have emphasised that he had given no such instructions. His denial of this was categorical.

[206] The material in capitals in the bottom right hand corner of page 6 of the manuscript version reflected what he was being told by Mr Grant during the evidence of Alexander.

[207] He could not remember if Mr Grant had been sworn in.

This witness was also plainly credible and reliable and I accepted his evidence.

[208] The next witness was George McWilliam, to whom reference has already been made. He acted for Barclay Grant between 1993 and 1994. Mr Grant first contacted his senior partner Christine Fraser on 21 May 1993 shortly after he had been discharged from hospital. He was looking for advice because Sutherland & Co had been advising his son and they also acted for him. He was looking for independent advice rather than making a complaint. The witness telephoned Sutherland & Co and spoke to Iain Innes whom he knew quite well. He made a note of that telephone call and then Mr Grant became a client. He told Mr McWilliam at an early meeting that he was hoping to marry the pursuer, which he did in June 1993.

[209] 6/5 was the correspondence file from May until October 1993. There were subsequent correspondence files but they could not be found.

[210] 6/22 contained a number of excerpts from the files and sheets 2 and subsequent sheets contained a memorandum of the telephone call between him and Mr Innes. He made a handwritten note and then dictated it on tape.

[211] He was referred to sheet 9 in 6/4, Mr Innes' notes. He could not contradict the evidence that the farmhouse was owned by Mr Grant and was not subject to any security. He did not recall any security over the house. The farmlands were held in trust and the caravan site had been sold off previously.

[212] Three house plots with planning permission were in place before he became involved. These were advertised for sale from October 1992 and the sales were ongoing during his initial contact with Mr Grant.

[213] There was also a chalet development. He recalled chalets owned by Mr Grant and also chalets belonging to his son.

[214] He was referred to sheet 83 in 6/22, a letter of June 1992 from both father and son about the five chalets and the financing thereof. Effectively it guaranteed the borrowing for the development of the chalets by the security over the farmlands.

[215] He could not comment on the suggestion that four chalet plots had been earmarked for Mr Grant Senior and a fifth had been transferred to William in June 1992. Sheet 21 in 6/22 was a plan of the farmhouse sites and the three housing plots could be seen on the bottom right. Four chalet blocks were at the top.

[216] The three housing plots were for development and were marketed in October 1992. He was asked about the house site to be decrofted with the aid of a grant. Mr Grant's mentioned that to him at the time of his initial contact and reference was made to sheet 23, a large scale plan. The proposed house on the left was what was being referred to.

[217] The chalets appeared to have been developed on that plan beyond the four shown on the previous plan so that they now numbered five.

[218] Sheet 34 was a letter by the witness to Mr Grant Senior dated 16 July 1993. By that time the witness had obtained quick copies of the deeds, having been sent the prior titles, or at least some of them, by Mr Innes. Paragraph 4 of that letter contained the following comments:

"4. Disposition by you in favour of William Grant. This relates to the sale to William of his Chalet Site. I am not clear why the title to this land was granted by you alone as only part of it formed part of the area which you originally owned for the chalets. The remainder belonged to the partnership. The plan attached to that deed also shows the house plots. They again would appear to belong to the partnership, rather than to you personally."

[219] He thought that there was a title mix up and that something had not been done correctly.

[220] That deed which he was referring to was also referred to in an interim report from Millar & Bryce Limited at page 111 of 6/5. It was recorded on 15 June 1992 and was a Disposition by William Barclay Grant to William Grant of 0.671 acres at Boat of Garten, part of subjects Mains of Garten Croft.

[221] Sutherland & Co had done that conveyance and had also started the conveyancing for the house plots.

[222] Sheet 60 in 6/22 was a copy letter from Sutherland & Co to third parties giving a qualified acceptance of an offer to purchase one of the plots, the letter being dated 27 November 1992 and the offer having been made on 16 October 1992.

[223] The letter indicated that Sutherland & Co were instructed by William Barclay Grant. It ought to have been by both the Grants, although, in fairness, the parties might have earmarked the plots as between themselves. He was not aware if plot three was on or was part of the area conveyed to William Grant in 1992. If not, then it would still have been partnership property and the partners ought to have been selling it rather than Barclay Grant as an individual.

[224] Sheet 7 of 6/22 was part of a note taken by him when he spoke to Mr Grant on 27 May 1993 at the Mercury Hotel. Part of that reads as follows:

"There was also a house plot which was being retained by Mr Grant - it was one which he had qualified for because of a grant due to him as crofting tenant of Toum. 2 plots had been transferred to William in the past and the 1 plot had been kept by him. As well as the putting up of a fence between the gardens, he also wished to know the boundary."

[225] The house plot kept by him was on the site of a former garage and that was on the left hand side of the plan as indicated. The three other house plots referred to were at the bottom of that plan.

[226] He was asked whether the ground conveyed in 1992 was one of the five chalet sites under development with financing coming from the Bank. He recalled that the 0.617 acres represented all five of the chalet plots, not just one of them. In any event the Disposition of June 1992 to William was of a chalet site, at least to some extent.

[227] Reference was then made to certain proposals contained in defence production 7/3 at page 103. These were in the following terms:

"15/12/92 - Telephone conversation with I Innes. After a meeting yesterday it was proposed that two of Barclay's four chalets be transferred to William to avoid IHT. I said this could be okay but the agreement must state that Barclay enjoys all income from the four chalets until death. Term insurance policy being effected by William for seven years to cover IHT implications".

[228] This appeared to be a note made by the accountant.

[229] The witness was not an IHT expert but he had some misgivings as to whether such a transaction would be effective to deal with Inheritance Tax where the granter retained a benefit. Furthermore, if there was to be a transfer of title a Deed of Restriction would be required. The proposal was therefore bad from the Inheritance Tax point of view as well as requiring a Deed of Restriction.

[230] The chalet site disponed to William in June 1992 was partnership property and was subject to a security.

[231] He was referred to 6/4 and in particular to sheets 8 and 9 thereof and was asked whether at some stage there would have required to have been a conveyance to rectify the title mix up and he agreed with that. A Disposition ad rem would be employed. Sheet 8 referred to a transaction including a Disposition ad rem and a further Disposition. He was asked whether that in fact happened in connection with the site which was transferred in 1992. He did not recall being involved in that but he understood that it did happen later. He was asked whether at least one of the deeds would require to have been signed by William Barclay Grant and he indicated that that depended on whether or not he was still a partner and still a Trustee of the firm. If he had resigned from the partnership it might be that he did not require to sign the deed.

[232] He was then referred to his memo of 25 May 1993 and in particular to sheet 3 thereof. This was the information he was given by Mr Innes. It indicated amongst other things that the site on which there was planning permission had been transferred over to William Grant. He said that that could have been the site on which the three plots were located. Mr Stewart questioned how that could be and he indicated that it depended on when the transfer took place.

[233] He was asked whether it was possible that the 0.617 acres were what was being discussed and he said that that was not his recollection. He was not involved in the corrective Disposition and if he could see the deed he would know if he was.

[234] He was then asked about the plot which would be developed with agricultural grant assistance. That could be seen on sheet 42 of 6/5, which was an enlarged view of the proposed house on the left hand side of the plan to which reference had already been made. That required to be decrofted and a Deed of Restriction was needed. He was asked whether the bank had refused to grant it and he thought that that was the case. A letter dated 5 August 1993 from Sutherland & Co was referred to. It is to be found at sheet 37 pg 6/22 and is in the following terms:

"We enclose herewith a copy of the Disposition by W B Grant & Sons in favour of William Grant relative to the plot of land. Please note that in view of the present developments we are unable to negotiate the appropriate Deed of Restriction with the Bank of Scotland so the property remains burdened in favour of the Bank."

Along with that letter was a copy Disposition (dated 8 April and registered on 14 May 1993) of the land referred to as exception 3 in 6/2.

[235] That letter itself did not confirm that the Bank were unwilling to grant the Deed of Restriction but nonetheless that was the position. They were unwilling to grant it unless they were fully paid off.

[236] It was noted that 6/2 of process was recorded on 19 November 1993 but that deed, which was executed on 8 April 1993, mentioned the copy Disposition referred to in the letter and which was recorded on 14 May. It was strange that a deed referred to matters in the future.

[237] Both deeds were witnessed by Mr Innes.

[238] He described the financial situation of the partnership from May till October 1993 as fraught. The Bank was concerned that the partnership appeared to have broken up and there was a dispute. The Bank wanted the overdraft reduced as soon as possible and cattle were sold quite quickly after Mr McWilliam became involved in order to try to reduce it. Reference was made to 6/22 at sheets 31 to 32, a letter from the Bank of Scotland to him dated 1 July 1993. Amongst other things that letter said the following:

"Following on the intimation of the dissolution of the partnership by Sutherland & Co, we have now stopped all transactions on this account. The balance of the overdraft at the time of the intimation was £84,585DR. As requested we would advise you that the balance of the account at the 5^th. April 1993, when you deemed that Mr Grant Snr. had resigned, was £69,931DR and for your further information the overdraft at the 28^th. May 1993 was £18,398DR. The present overdrawn balance is £59,504.27, following the receipt of the sale proceeds of the cattle."

The letter went on:

"We are extremely vexed that this situation should ever have arisen and we can assure you that it is our intention to try and have this debt repaid as quickly and amicably as we can, given the circumstances."

[239] Reference was then made to sheets 67 and 68, a letter from the Bank to Mr Grant Senior, dated 15 September 1993.

[240] That sought proposals for repayment of the partnership overdraft and reminded Mr Grant and indeed his son of the letter signed in June relating to the financing of the chalets. A PS was in the following terms:

"In view of the fact that there has been no money paid into your chalet account since the 10 August 1993, I have decided to suspend the direct debit payments to Vodac Ltd and the National Farmers Union."

[241] Sheets 81 and 82 consisted of a copy letter from the Bank to Mr McWilliam, dated 5 October 1993. Amongst other things it said the following:

"Thank you for your letter of the 29 September 1993. As requested, please find enclosed a copy of the letter signed by William Grant and his father in June 1992.

The reasoning behind this letter was due in the main to the fact that although we did have reservations about the building of the 5 chalets, the income levels of the farm were such that it was necessary for them (to) diversify into other areas. Mr Grant Snr's chalets have been doing fairly well for a number of years and it was felt that using this as a base, the additional chalets would provide much needed extra income for the family".

[242] It went on:

"If it was the case that there was no compromise solution forthcoming to deal with the question of the present partnership indebtedness, then in time it would be necessary for us to call up the security we hold over the farmland at Mains of Garten."

[243] The intervening paragraph was in the following terms:

"You are quite correct in assuming that we have at no time released our security over the ground on which the new chalets are located. However, as this area of ground was to be registered in the sole name of William Grant, it was deemed sensible to have a letter acknowledging that the security over the farm could also be regarded as security for this borrowing as well."

The letter went on:

"It would then be the intention for us to proceed to sell off the sites or areas of land sufficient to clear the partnership indebtedness to the Bank."

[244] That was in fact what happened. The Bank called up their securities so that the three plots for which planning permission had been obtained could be sold off by them and they were ultimately sold. These were the three plots with the road serving them. One of them was the area referred to in the letter from Sutherland & Co to Messrs Duncan & Duncan, the subject of the qualified acceptance.

[245] Mr Innes continued to act for William Grant. The witness had no reason to expect that he was not aware of the partnership's precarious financial state.

[246] He was then asked about the effect of the transactions on Mr Grant Senior. The new house site to be developed was transferred to him by Disposition dated 8 April 1993 without a Deed of Restriction having been granted by the Bank. That was the Disposition of which a copy was attached to the letter of 5 August 1993. Furthermore, there was no provision for a wayleave for electricity services.

[247] Reference was made to sheet 43 which was a memo written by the witness dated 13 August 1993. The second last paragraph thereof was in the following terms:

"Advising re. the plot for the new house boundary by reference to the Disposition of the plot. Noting that Mr Grant had not wanted any gap between the chalet site and the house site, but advising that there was very little we could do at this stage. Discussing wayleaves etc and, in particular, the concern that there was nothing in the deed which gave them a right to connect into the electricity supply cable. Advising that there would be a need for a wayleave and that the electricity cable was across the ditch from the house site, nearer the public road."

[248] All in all this was not a very useful transaction from Mr Grant's point of view. The witness discovered that no intimation had been made by Sutherland & Co to the Bank about the termination of the partnership. The Bank were not formally notified until 3 June 1993 and reference was made to sheet 31 again, the letter of 1 July 1993. [249] The first full paragraph thereof starts as follows:

"We note from your first letter that Mr Grant Snr. resigned from the partnership on the 5 April 1993. We were not however aware of this until the end of May and did not receive official confirmation of this until the 3 June, from Mr Grant Junior's solicitors."

[250] Sheets 69 and 70 consisted of a copy letter from the witness to Mr Innes dated 22 September 1993 raising a number of points. The first and eighth of these were as follows:

"1. Did your firm instruct the insertion of a notice in the Edinburgh Gazette at the time of our client's resignation giving public intimation of the termination of the partnership?

.....

8. We refer to the 3rd paragraph of our letter of 12 July in which we asked for your comments on the position regarding the partnership Bank account. Is the Bank Manager correct when he states that the dissolution of the partnership was not intimated by you to the Bank until 3 June?"

[251] The answers to these questions were contained in a letter dated 24 September 1993 at sheets 71 and 72. Answer 1 was "no" and answer 8 was in the following terms: "We understood that both Messrs Grant consulted with the bank prior to the dissolution of partnership and that the bank were aware of this matter."

[252] The witness's reaction to that would have been that the fact, if it were true, that the clients had had consultations with the Bank before the dissolution did not necessarily mean that the Bank had been given notice when the dissolution had taken place. He had no recollection of being told one way or another that the accountant was supposed to be dealing with the notification.

[253] Mr Grant would have remained 100% liable for the overdraft even though he had parted with the partnership assets. He had granted a letter resigning from the partnership and had received a plot of ground in exchange without a wayleave, which meant that it was impossible to develop, and subject to a security which had not been discharged.

[254] He could not see any Inheritance Tax benefits from these transactions but he acknowledged that he was not an expert.

[255] Sheet 2 of 6/22 was then read. The first paragraph was as follows:

"25 May 1993 - Attendance on telephone with Ian Innes at Sutherland & Co, and discussing matters with him. Noting that Mr Innes had had various meetings and discussions with Mr Barclay Grant over the last 6 months with a view to his cutting down his potential Inheritance Tax liability. These matters were instigated at the request of Mr Barclay Grant. Various things were decided and it was agreed that certain assets would be transferred over to Mr Grant's son, William."

He was being told that the reason for the transfer was Inheritance Tax mitigation.

The next paragraph was as follows:

"Noting that there had been a housekeeper, Marilyn MacDonald, who had influenced Mr Grant in the past and it was only after she had used her influence that he became difficult. This happened a little while ago and Craig Wood went to see him and he said he was sorry for having caused any bother and he just wanted the whole thing done as before."

[256] He understood that matters had been difficult and had apparently been resolved and the upshot was that Mr Grant was going to reside at home and Mrs McDonald would move out. He was asked whether "the whole thing done as before" had anything to do with the transactions and indicated that the note was dictated at an early stage before he knew what transactions had taken place. His reading of the note was to the effect that the "things" being referred to were emotional issues rather than legal ones.

[257] The next paragraph was in the following terms:

"Noting that Ian Innes thereafter went down to Boat of Garten with the various documents and they were signed before him and an independent witness."

[258] The note went on as follows:

"Noting that now this problem has arisen again, Mr Innes has advised the sons to do nothing. Noting that there is nothing apparently medically wrong with Mr Grant, but the stroke may have had some effect on him.

Mr Grant has resigned from the Farming Partnership, although he is still the tenant of Toum. The chalets are still his. The truck has been locked in a farmsteading for Mr Grant's own protection as he is unfit to drive."

[259] He explained that the question of the truck featured in correspondence for quite a while thereafter. Mr Grant Senior believed that the truck was his but William's position changed and he said that it was a partnership asset and that his father was not getting the use of it.

The next paragraph was in the following terms:

"A further housekeeper had been employed, but the latest one had just recently resigned because of his behaviour."

[260] The memo went on as follows:

"Noting that there was another son, Alexander, who has come back and dealt with matters in the past but, apparently, he was there last weekend and has indicated that he is no longer prepared to deal with his father.

Noting that the house at Mains of Garten had been conveyed to William, but that a liferent had been reserved to the property as requested by Mr Barclay Grant. The site on which there was planning permission had been transferred over to William Grant.

The basis for doing things in this way for Inheritance Tax purposes at the request of Mr Barclay Grant.(sic)"

That was a repetition of the reason given at the outset.

[261] The memo went on:

"If we wished further information, Ian Innes would be prepared to provide it on a written request being made.

The former housekeeper may be on the scene again and stirring up problems. When Mr Grant previously went into hospital she had been put out of the house by the sons with Barclay Grant's agreement."

[262] Barclay Grant in due course confirmed that the reference to Inheritance Tax mitigation was the reason why he was being asked to enter the transactions. He also confirmed that the truck had been taken away and locked up.

[263] He confirmed also that he had requested a liferent reservation. On being asked whether this was a pre-occupation, he said that Mr Grant mentioned it during several further meetings with him. He wanted the liferent to be for himself and any housekeeper who was going to be looking after him so the housekeeper could have the security of remaining in the property, having moved there to look after him. On being asked whether he had said this once or more than once he said that the matter was discussed at many of their meetings but not all of them. It seemed important to him. The witness then wrote to Mr Grant following the telephone conversation and that letter could be found at sheet 4.

[264] At paragraph 2 thereof, he finishes on the following terms:

"He also advised that you have a liferent of the house in which you reside, even although it is now owned by William."

[265] He met Mr Grant the following day and sheet 5 and subsequent sheets contained a note of that meeting. The liferent was referred to at page 7 in the following terms:

[266] Mr Grant said that Mr Innes had been telling him about the seven years.

[267] The witness had been unable to advise on the reservation of the liferent without seeing the relevant deeds. They took some time to arrive. Sheet 34, a letter dated 16 July 1983 to Mr Grant, made reference to copies of various deeds which had arrived from Millar & Bryce. He had received certain deeds from Mr Innes before that, which enabled him to order up quick copies.

[268] The farmlands Disposition was not recorded until 19 November but that might simply reflect the fact that it had been rejected for some reason or another. He would only have been able to obtain a copy of it from Mr Innes if the latter had retained a copy.

[269] Paragraph 6 of the letter of 16 July is in the following terms:

"Disposition by you in favour of your son recorded 9 June 1993. This was signed by you on 1 April, one week before you signed the other deeds. It conveys the farmhouse to your son, whilst reserving a liferent to you and your assignees. I shall consider the effect of this provision further on my return from holiday."

[270] Sheet 43 was a note of an attendance on 13 August 1993. Sheet 44 contains the following notes at paragraph 4:

"Discussing the Disposition transferring the house and granting a liferent and agreeing the following problems with it. He was under pressure when signing it. There is an unauthenticated alteration on the front page. The size of the type face on the first page differs from that on the 2^nd. The last line does not go up to the end of the line. The reference to assignee is not effective as it does not allow for assignation by mortis causa deed. It only means that Mr Grant can assign it to Mrs Grant during his lifetime, but that that would mean that he was giving up the liferent."

[271] On sheet 45, there appears a note of a meeting on 18 August 1993. That contains the following entry:

"Noting that Mr Grant wished to assign the liferent to Mrs Grant inter vivos. He also wished to keep his own right to stay in the house vis-a-vis Mrs Grant. Confirming that we would look into this matter."

[272] In the result there was no formal assignation to Mrs Grant. Mr Grant was not able to do that without giving up his own liferent, which would have been a problem had there been a parting of the ways.

[273] Sheet 46 contained a note of a meeting on 27 August 1993. Inter alia, the following is noted:

"Discussing the defects in the deed for the farmhouse and agreeing that we should obtain an opinion from Professor Cusine at not more than £150. We would ask for his comments regarding the infirmity and whether or not the liferent was capable of assignation."

[274] Sheet 48 was a letter sending a Memorial to Professor Cusine, which Memorial was contained at sheets 49 to 52. The following statement of facts, amongst others, appears in the Memorial:

"At the time of the granting of this Disposition, Messrs Sutherland & Co, Solicitors, Inverness, acted for both Mr Grant and his son. Mr Grant consulted the Memorialists in May of this year and advised that he objected to the terms of the deed; he indicated that he wished the Disposition to be challenged on the basis that he was infirm at the time due to illness, and was under undue influence from his son at the time of granting of the deed. Mr Grant was indeed in hospital having suffered from a stroke in about February. The deed was signed whilst he was on a day trip home from hospital.

Mr Grant also advised the Memorialists that his instructions to Messrs Sutherland & Co were that any liferent reserved to him would be for the benefit of not only himself but also any wife or housekeeper whom he had at the time of his death so that they would have the security of the house after his death."

[275] This reflected what Mr Grant had told him. Mr Grant was quite categorical about it and said that he would not have signed the document unless the scope of the reservation was as recorded in the Memorial.

[276] The meeting on 27 May 1993, recorded in sheet 5 etc was a meeting with him alone. At page 6 there is recorded that the witness received information from Mr Grant about the circumstances of the execution of the deed. It is in the following terms:

"When Mr Grant was transferred to Grantown Hospital, his son came in to see him. He always complained that it was a nuisance coming in. He got him to sign over the house and chalets because the Government would take it all to keep payment of the fees for Mr Grant being in the hospital. Noting that Mr Grant had spoken to Ian Innes about signing over the house at an earlier date - perhaps in January or February of this year. The farm had been signed over previously. William and his wife had said that they would look after him, but this is not what happened."

[277] As it happened the farm had not been signed over previously and the witness thought that perhaps Mr Grant had been referring to his resignation from the partnership. The difficulty with that theory is that the resignation was executed on the same day as the Disposition of the farmlands but he could comment no further on the discrepancy.

[278] The note went on:

"William had told him that he must do it. That is what the Solicitor said. Ian Innes was taken up to see him on one Thursday and he gave instructions to Ian, as told by William. William was with him at the time and there was no suggestion that William left. Mr Grant accepted that, even if William had left, it would probably have made no difference to what he had told Mr Innes."

[279] There then followed the reference to the liferent which I have already mentioned.

[280] Mr Grant had mentioned January and February as a time when there were discussions about the house. Reference was made to sheet 10, a note of an attendance on 27 May 1993. The first paragraph is in the following terms:

"Attendance on telephone with Mr Grant. Advising that we had sent a letter out to him. Noting that when he had been brought home from hospital he had signed the letter under duress. William had told him to sign it because if the property did not go to him it would go to the Government."

He took the reference to the letter to mean the letter of resignation.

[281] Sheet 11 referred to meetings on 28 May and 1 June 1993. The note for 1 June was in the following terms:

"Attendance on telephone with Mr Grant and agreeing an appointment with him, namely, Thursday, 3 June at 2pm. Marilyn was concerned as to her safety if she returned to the house because of William's threats. He was concerned that merely bequeathing it to her would be open to challenge."

[282] The reference to the challenge was intended to convey the possibility that a transfer to Marilyn might be regarded as having been brought about by undue influence on her part. Mr Grant apparently still thought that he had some power to assign the liferent by mortis causa deed. At that time the witness had not yet seen the deed.

[283] An opinion was in due course obtained from Professor Cusine, starting at sheet 55. Reference was made to some of the questions and comments which were put to him, as follows:

[284] At page 50 the fourth comment was in the following terms:

"The liferent being in favour of his assignees would perhaps allow Mr Grant to assign the liferent by inter vivos deed. We do not believe that the liferent can be assigned by mortis causa deed."

Paragraph 4 on page 51 asked the following question:

"Does the liferent provision give effect to Mr Grant's instructions? If the liferent interest is capable of being assigned, can this be done by both inter vivos and mortis causa deeds? If he assigns by an inter vivos deed and intimates same, would his own liferent cease?"

At page 56 paragraph 4, Professor Cusine's opinion runs as follows:

"Accordingly, if what William Barclay Grant intended to do was to reserve a genuine liferent in favour of his wife or any housekeeper, then that could not be done by the use of the words 'his assignees' in the Disposition. There would have had to be a specific reference to these individuals in order to make them genuine liferenters on his death. It follows from the statement in Dobie that a liferent interest can be assigned inter vivos but not mortis causa since the purported assignation would fall on the death of William Barclay Grant. It would follow also that if the assignation was duly intimated, William Barclay Grant's heritable estate of liferent would remain and that the assignee would not be vested in that but would merely be vested in a right of occupancy during the life of William Barclay Grant."

[285] That opinion was discussed with Mr Grant and he was very unhappy about it.

[286] Reference was made to sheets 63 to 65, a letter from the witness to Mr Grant. On page 2 of that letter the following appears:

"Professor Cusine also advised on the liferent provision. He was of the view that the liferent in your favour was effective. However, he took the view that it could not be assigned and that there would have had to have been a specific reference to any successor to you in the Disposition in order to make your wife or any housekeeper a genuine liferenter on your death. If the liferent was assigned and intimated to your son, the assignee, ie Mrs Grant, would be entitled to stay on in the house during your life, but would not have any rights thereafter. I appreciate that this is not what you had instructed Mr Innes to do. I am writing to him for details of the instructions which you gave to him concerning this transaction."

[287] In effect he was looking for the file from Mr Innes but he never received it.

[288] It was decided to seek Counsel's opinion about an action of reduction. A Memorial was sent which is contained at sheets 76 to 79. On sheet 77 the following appears:

"Mr Grant accepts that the transfer of the house was discussed at an earlier stage before he became ill. He was told that the transfer of the house would reduce his liability to Inheritance Tax. This was the major reason for his decision. Matters were not completed before he became ill and when the Disposition was signed on 1 April Mr Grant had been brought out of hospital for the day. He was also told that it was necessary for him to transfer over the house so that his money would not go on paying fees to a Nursing Home as the son at that stage thought that the father was incapable of returning to his own home.

Mr Grant was also brought out of the hospital the following week to sign other documents".

[289] That was what Mr Grant had told him.

[290] The Memorial went on as follows:-

"Mr Grant's own evidence is that he did not really know what he was signing on either occasion and that he signed because he was told to do so. He had been in hospital for about 2 months having suffered a stroke. He felt disorientated and confused. His former Solicitor's position is likely to be that the Deed was in implementation of Mr Grant's wishes before he came ill. We have asked the other Solicitors to let us have the correspondence file at the time that they acted for Mr Grant in connection with the transfer but they have refused to deliver same.

It is understood that the liferent provision does not protect any person living with Mr Grant at the time of his death. Mr Grant had instructed the transfer provided that a satisfactory liferent provision was put in. This was discussed with his former housekeeper (now his wife) before he was ill. At that time he was wishing to protect her from being put out of the house after his death. His position is that if a liferent to this effect was not included in the Disposition he would not have signed same. He has no extraneous evidence for this save that the liferent provision refers to 'or assignees.' Given that this is not effective, there is support in its terms for Mr Grant's evidence that he wished more than just a normal liferent."

[291] There were then a number of questions for Counsel's opinion on the prospects of success of an action of reduction.

[292] 6/19 of process was a letter dated 9 May 1994 to Messrs Biggart Baillie & Gifford WS in Edinburgh instructing them to pass papers to Counsel to proceed with an action of reduction of the Dispositions of the house and farmlands.

[293] A precognition of Mr Grant, No 6/18 of Process, was also sent with the letter.

[294] The witness could not recall if he had taken the statement face to face with Mr Grant. There may have been such a meeting but he thought that he would have based the statement on his notes in the file. He would then have sent the document to him as a draft and invited him to make any amendments which he wished. In other words, he would have given him the opportunity to revise it. That was his invariable practice and there was no reason to think he had done anything different in this case.

[295] 6/13 appeared to be the draft, on which a number of revisals were made.

[296] Mr Stewart took the witness through both 6/13 and 6/18 to show a number of areas where revisals appeared to have been made and incorporated in the later document but I need not refer to these to any extent.

[297] Mr McWilliam reminded the court of the passage of time since these events but still thought that there had been no special meeting. He said that in conversations with him Mr Grant had been clear and he was noting down what he said at the time.

[298] The salient parts of the precognition were as follows:

"The areas of land which were not conveyed to the partnership by myself and my late wife comprised the farmhouse and garden ground, the Caravan Park and an area set aside for 4 chalets (Mains of Garten Chalets) which were built by me in 1977 and 1979. The chalets comprising Mains of Garten Chalets remain in my ownership and have been operated by me over the years. The Caravan Park was sold by me in January 1992. The house in which my son resides was also conveyed from the partnership to my son and his first wife in about 1984 and was released from the Bank's Standard Security at the time.

The Bank of Scotland have a Standard Security over the farm. I have been unable to dispose of certain building plots and the Bank have called up their standard security and are proceeding to sell the plots under their power of sale. ... During 1992 I discussed with Mr Innes (a partner at Sutherland & Co), my son and the Manager of the Bank of Scotland in Grantown-on-Spey matters relating to my son taking over the farming business and my retiring. These were individual meetings. We did not meet all together. These were the primary options, although different matters were considered. I was advised my Mr Innes that my capital assets were too high and that I would be best to divest myself of these assets in favour of my son to avoid Inheritance Tax being payable on my death. I do not recall being advised of any agricultural or other business relief.

The Bank of Scotland were concerned at the extent of the overdraft and wished steps to be taken to reduce the overdraft. The Manager suggesting selling the cattle, but I disagreed. Another option involved the sale of 3 house plots. Whilst some roadworks were required before planning permission could be obtained and the house plots sold, I thought that the sale of these plots would enable the Bank overdraft to be largely cleared.

When I was in meetings with Mr Innes, my son and Mr Cullen of the Bank of Scotland I recalled various discussions regarding a scheme by which the farm land owned by the partnership would be transferred to my son. Nothing was ever finalised. Those areas excluded from the definition of farm land would be the 3 building plots which would remain in our joint names, a plot of Mains of Garten across the farm access track from the farmhouse on which I proposed to build a house and an area between the farmhouse and the intended new house plot on part of which had been built a raised stone ring within which was planted shrubs. This was to be an attractive feature at the entrance to the chalets and there was also to be parking for vehicles for the farmhouse. The strip of land between my new house plot and my chalets was also to be conveyed to me and this was discussed and agreed with William. It was also part of the arrangement that I received the benefit of a Rural Enterprise Grant and thereafter let out the new house for 5 years. In due course, I would be able to retire to that house. If the farm land had been conveyed to my son, he would have been responsible for the debts of the partnership and, in particular, the debt due to the Bank of Scotland. He would also have taken over the stock at valuation. He would also have had the benefit of the capital which I had put into the business previously as, up to the accounts drawn up to date of dissolution of the partnership, the Capital Account was treated as a joint matter and was not divided between myself and my son. ... I was unable to claim the Rural Enterprise Grant and the new house has never been built. Nothing was ever put into writing regarding my retirement and no documents were ever signed prior to my illness.

In February 1993 I suffered a stroke and was taken to Raigmore Hospital. ... Within a few days of my going into hospital my son had arranged for my housekeeper (now my wife) to be put out of the house.

When I was only a few days in the hospital, Craig Wood of Sutherland & Co came to see me and advised that William wanted me to dismiss Marilynn as the housekeeper. Apparently, my son had been in touch with Sutherland & Co to get them to prepare a document for me to sign. I told Mr Wood that I was unwilling to sign it and Mr Wood advised that if I didn't sign, then William would no longer remain at the farm. I knew that, in view of my illness, I could not stay at the farm on my own. Mr Innes came the next day with my son and I signed under pressure that William would otherwise leave. This was the only time I spoke to Iain Innes in hospital. After Marilynn had been put out of the house, I wanted to make my peace with her, but I was told by my son that I could not go and see her and, again, William threatened to leave the farm if I did.

The main times when I left hospital were on 1 and 8 April, although my son called to see me on various occasions when I was in hospital. I may have been taken out on one or two other occasions before 1 April. All he could discuss with me when he came was his concern regarding the finances of the business and the risk of the DSS forcing the sale of the farmhouse if I had to go into a Home (as he seemed to assume I would) on my release from hospital. He was concerned that all my assets would be used up paying the fees for the Home. He kept telling me what I had to do and said the Solicitor recommended this.

On the first occasion I was brought out of hospital for a specific reason, ie. on 1 April, I signed a deed in favour of my son for the farmhouse. This had been discussed with Iain Innes, in 1992, or early 1993, when it was suggested that I transfer over the farmhouse for Inheritance Tax reasons. However, a liferent in my favour was still to be reserved so that I could stay there. I had indicated that, as well as a liferent for myself, I wished one for any new wife whom I might have, or any housekeeper. I thought that it would be difficult to get a housekeeper if she didn't have some security after my death and I knew there was a possibility that I might remarry. In fact, I had already asked my former housekeeper to marry me, but she had not made a decision on my proposal prior to my illness. The fact that other housekeepers had been put out of the house so easily by my son in the past was one of the reasons why I wished protection for any wife or housekeeper in the future. I was told that if I lived for 7 years after signing over the house, there would be no Inheritance Tax payable on it. My son, William, said that he would see to it that he made a Will in my favour regarding the farmhouse in case he died. I was definitely under pressure from William, but I never discussed this with anybody at the time.

My son told me that I must sign this document. My son was always present when I met with Mr Innes. William said that he and his wife would look after me, but this is not what happened. There was never any suggestion that I'd be separately advised by another Solicitor and I never received anything in writing from Mr Innes at the time.

When the document was placed in front of me on 1 April I did not read it. I do not recall if I was told to read it or not, but I just signed it. I do not even recall signing the Disposition that day. I was only told I was going home to amend my Will.

One week later I was again brought out of hospital and I signed other deeds with Jeanette MacKenzie acting as the witness. On this occasion I signed a codicil to my Will. My son, William, instigated this. This was done at the request of my son and provided that the request to my other son, Alexander, which was £20,000 could be paid by instalments. Mrs MacKenzie took me out of hospital that day. Again, I do not recall reading these documents or being told what they were. I just know that I was expected to sign them and I did. I did not agree to the farm being handed over to my son. I had only explored the options. No instructions to prepare documents were given by me to Mr Innes.

I also signed a Disposition transferring the plot for my new house at Mains of Garten to myself. This should have included the land between the proposed new house and the chalets. It was only in July 1993 that I saw a copy of this deed. I spoke to the architect (Mr Murdoch of Ashley Bartlam) about it in July 1993 and told him that this was not what had been intended.

I came out of hospital in the middle of May. My son and his daughter failed to look after me. My son was aggressive to people who came to visit me. In particular my son made threats against my wife and threatened damage to her car. She required to pick me up at a neighbour's house out of concern as to my son's conduct if she called at the farmhouse prior to our marriage. As a result of all these problems and in order that I should know my true position, I took independent legal advice.

Any transfer of the farm land to my son was to have been on the basis that I would not be liable for any past or present debts of the former partnership to the Bank, in particular the Bank overdraft.

I had had a very good relationship in the past with my son, although he has always had a temper."

[299] Reference is thereafter made to the right to fish for trout in the river which was adjacent to the farm. The precognition indicates that Mr Grant would not have transferred over the farmland without protecting his right to the trout fishings as this could made a big difference to his chalet business.

[300] It goes on:

"The Disposition of the farm to my son refers to a plan attached for an excepted area. That plan shows the Caravan Site which I sold in 1992. Messrs Sutherland & Co acted for me at the time of the sale. The Caravan Site was owned by me alone and was not a partnership asset. It could not have been excepted from the Disposition by the partners in favour of my son. Any excluded area would have comprised the building plots which were to have remained in our joint names. This is confirmed by the fact that Sutherland & Co in December 1993 settled the sale of one of the plots by a Disposition in favour of the purchasers granted by myself and my son as partners and trustees. The Disposition for the farm in favour of my son defers on page 2 to a recording date which post dates my signing of the deed. That page must have been altered following my signing of same.

The Disposition in favour of my son as recorded does not reflect the proposals discussed between me and my son.

In relation to the Disposition dated 1 April 1993, of the farmhouse in favour of my son, I would not have signed this if I thought that the liferent could not have been left to any wife or housekeeper on my death and that their position would have been protected. The fact that one page of that Disposition is in a different size of typeface from the others suggests that the deed has been altered after I signed it. However, I cannot confirm whether or not the pages of the recorded Disposition were in their recorded form when I signed it.

I do not recall on which day the letter of resignation from the partnership was signed by me. Again, this was put before me. I was under pressure from my son and I signed it. I was trying to keep the peace at the time and not fall out with him."

[301] In cross-examination Mr McWilliam said that the precognition was drawn up from his own notes. There were certain references to legal matters in it which might be his words but he had sent it for revisal and it was then returned to him. There would have been a discussion with the client thereafter.

[302] It was apparent from the notes that on some occasions he spoke to Mrs Grant rather than Mr Grant and indeed Mrs Grant would have had an interest in the liferent as a potential beneficiary. On some occasions both of them attended meetings and there were records of telephone calls with her when Mr Grant had been somewhere in the background. He said that he imagined that the precognition would have been considered by both of them. She was generally present when he took instructions from him and they were a couple.

[303] He confirmed that Mr Grant was clear when he spoke to him although it was suggested that there was a paradox in that he was supposed to have been confused and befuddled when he signed the documents.

[304] His initial contact had been with Miss Fraser and following that the witness had spoken to Iain Innes. At that time he did not know much about the matters and he wrote a letter the following day to Mr Grant. He then met him the day after that, 27 May.

[305] It was suggested that one possible reading of the letter of 26 May was that there was an impression that Mr Grant had signed some documents but he did not know what he had signed. He knew that Mr Innes was involved and he was asking Mr Innes what had happened, thereafter reporting to Mr Grant what he understood the position to be. The witness agreed with that.

[306] He understood that Mr Grant did not know what he had signed but he was not particularly clear about that.

[307] He agreed, from all the discussions he had had with Mr Grant, that at some point round the turn of the year there had been a meeting of sorts with Mr Innes and Mr Grant at which properties were discussed. Reference was made to the letter dated 22 December with notations on it and the memorandum of the meeting of 27 May had referred to discussions in January or February.

[308] He agreed that it was common ground that if Mr Grant gave instructions to anyone to dispose of property it was to Iain Innes.

[309] Amongst the documents executed at the beginning of April 1993 was a codicil to the will. Mr Grant had said that he thought he was coming from hospital the first time to sign it. It was suggested that that did not feature long as a point of contention between the parties because one of the first things which the witness was involved in was changing the will and Mr McWilliam agreed to this.

[400] He could not recall that it was the pursuer who became the sole beneficiary but he agreed that there had been changes. As well as remarrying he had by that time fallen out with his sons to some extent.

[401] A note of 10 June 1993 at page 44 of 6/5 referred to a meeting at the Mercury Hotel, where both Mr Grant and the pursuer were present and where the will was discussed.

[402] As far as the partnership dissolution was concerned the witness agreed that it had possibly terminated on 5 April 1993. He was not sure that, as was suggested to him, Mr Grant was saying that he had not intended to resign. It was suggested that Mr Grant had given evidence at the arbitration that the first time he was aware of the letter of resignation was when he contacted MacArthur & Co, in May. The witness agreed that that would have been after he had spoken to Mr Innes. Reference was made to the letter of 26 May at page 4 of 6/5. That referred to Mr Innes "confirming" that he had resigned and that suggested to the witness that Mr Grant knew that beforehand.

[403] Reference was then made to 6/9, the typed sheets of Mr Grant's evidence at the arbitration. Page 9 contained the following:

"Regarding the Notice of Resignation, he didn't know about this until Mr MacWilliam (sic) told him. He thought he would be a partner until he died and then everything would go to WG. There were never any discussions with Ian Innes regarding what would happen if the partnership was wound up. Mr Grant states that the documents were definitely not prepared on his instructions."

[404] Mr McWilliam did not believe that he ever knew about that. He was interested in the award of the arbiter but he was not so much concerned with the evidence which had been given. He had instructed Counsel for the arbitration.

[405] It was suggested that given that that was Mr Grant's evidence on oath, i.e. that he did not know, till Mr McWilliam told him, that he had resigned, it suggested that the letter of resignation was yet another document placed under his nose that he was compelled to sign. Mr McWilliam agreed that that was a reasonable comment to make but he referred back to the suggestion in his earlier letter that Mr Innes had confirmed the resignation.

[406] He agreed that he either misunderstood his client's position or that Mr Grant had lied under oath.

[407] The arbitration in fact proceeded on an agreed basis that the partnership had been dissolved, the issue being how the assets and liabilities should be divided.

[408] He agreed that it could only have been terminated with his letter of resignation so that it appeared that he in fact stood by that letter in due course. If he had given instructions that he had not resigned then matters would have taken a different course.

[409] Mr Moynihan then turned to the question of the titles to various pieces of property. He suggested that the issue was simple. Mr Grant was able to ask for a winding up of the partnership's affairs on the basis of its holdings as at the date of dissolution. The witness agreed with that. That dissolution pre-dated the Disposition of the farmlands, which was executed on 8 April. It was suggested then that in calculating the rights or liabilities of Mr Grant, the farmlands still fell to be regarded as a partnership asset and he received two thirds of the value of it in the dissolution.

[410] The witness was not sure what the fractions were but he agreed with the general proposition.

[411] It was suggested that the import of that was that when it came to the action of reduction, the farmlands Disposition dropped out of the action. The Closed Record in that action was referred to (No 7/8 of process) but the witness was not involved with the action directly. (As a matter of fact, Lord Reed's Opinion in the action of reduction confirms that only reduction of the farmhouse Disposition was eventually sought.)

[412] In summary, the witness agreed that the codicil took care of itself because of the revised will and that the partnership arbitration proceeded on the basis that it was agreed that it had dissolved on the execution of the letter of resignation, 5 April 1993 being the agreed dissolution date. It was suggested that that left the issue of the farmhouse and that that was not partnership property but belonged to Mr Grant in a personal capacity. The witness thought that that was indeed the case.

[413] He agreed that if Mr Grant instructed anyone at Sutherland & Co it was Mr Innes. It was suggested by Mr Moynihan that the best source of evidence for the notion that Mr Grant gave the instructions for the Disposition of the farmhouse was the Memorial to Professor Cusine and the Memorial to counsel. The witness said that the better note would be the file notes. The Memorial to Professor Cusine, number 6/22 at page 49 etc was referred to again, the third and fourth paragraphs having been read already. Mr Moynihan was primarily interested in the fourth. That was to the effect that Mr Grant's instructions to Sutherland & Co were that any liferent reserved to him would be for the benefit of not only himself but also any wife or housekeeper whom he had at the time of his death so that they would have the security of the house after his death. The source of that statement was the original meeting which he had with Mr Grant noted at page 5 and subsequent pages of 6/22.

[414] I have already referred to what was contained in that. The witness agreed that Mr Grant was saying that his son got him to sign over the house and chalets. The discrepancy about the timing of the "signing over" of the farm was also referred to.

[415] The 4^th. full paragraph on page 6 started "William had told him that he must do it". He did not know whether Mr Innes was said to have been taken up to see him at Raigmore or Boat of Garten. The words used in the paragraph were "Ian Innes was taken up to see him on one Thursday and he gave instructions to Ian, as told by William."

[416] Assuming that Mr Innes was there on 1 April 1993 with the Disposition of the farmhouse ready to be signed, it was suggested that someone must have given Mr Innes instructions about that before he arrived at the farmhouse. Mr McWilliam suggested that one explanation might be that he came up with one Disposition and while he was there he took further instructions about the preparation of other deeds.

[417] Mr Moynihan put Mr Innes' evidence about that to him and he agreed that if Mr Innes was there on 1 April with a deed ready for signing someone must have told him about it beforehand. It was not likely that a solicitor would prepare a deed at random and travel 30 miles to get someone to sign it.

[418] The witness would assume then that the instructions were probably given before 1 April.

[419] Mr Grant did not say in terms that he had given instructions to prepare a Disposition which Mr Innes then brought to him on 1 April. What he said was "William had told him that he must do it" and "him" must be Mr Grant."

[420] The previous paragraph indicated that William came up to see him in hospital and complained that it was a nuisance. He got him to sign over the house and chalets because the government would take it all to meet the fees for the hospital.

[421] It was suggested that the inference to be taken from that was that William was directing the father and the impression given was that William must have instructed Mr Innes to prepare a Disposition. I understood the witness to agree that that seemed to be an inference which could be drawn. It was suggested by Mr Moynihan that the words "he gave instructions to Ian, as told by William", indicated that it was William who had passed on the instructions although another inference to be drawn from that might be that it was William who told his father what instructions to give. Mr Moynihan queried where in the papers there appeared an instruction that if a Disposition was to be prepared it should be in the terms which Mr Grant wanted to see. The witness said that one had to go over the page to see the discussion of the transfer of the house but there was nothing in it to indicate specifically what instructions Mr Grant gave to Mr Innes.

[422] It was suggested by Mr Moynihan that there was an ambiguity in what was written. Mr Grant might have been saying that he did not give any instructions for the transfer and that, even if he had, the instructions would have been to secure a liferent after his death for any wife or housekeeper. The witness said that he could just be saying that he would not have signed it because it did not contain the liferent provisions which he wanted. He was probably saying, though, that he did not wish to grant a deed at all. Mr Moynihan persisted in this line but the witness said that he was not really sure that the suggestions he was making were correct.

[423] He agreed with the suggestion that the note was the source of the issue which had to be resolved in this case. He did then agree that the note could be read in the manner suggested by Mr Moynihan.

[424] He also agreed that one way to resolve the ambiguity, if such there was, was to put the witness on oath and ask him about it. He was then referred to 6/9, 6/20 and 6/23. In particular he was asked to look at page 10 of the typed version of 6/9, Mr Donaldson's notes of Mr Grant's evidence, as follows:

[425] The manuscript notes at page 13 were also referred to and in particular the line:

"You gave no instructions to arrange transfer of house to WG."

That indicated the categorical nature of Mr Grant's answer.

[426] Mr Moynihan suggested that if he gave no instructions then the interpretation which he had suggested for the earlier note was reinforced. The witness agreed that that was possible but said that there were other interpretations.

[427] He was then referred to the Closed Record, number 7/8 of process and in particular to the Answers starting at page 9 in the following terms:

"On 1 April 1993 the defender had the deceased brought home from hospital for the day. The defender's purpose was to have the deceased sign a Disposition in his favour of the farmhouse. The defender had instructed said Iain Innes to prepare said Disposition. The Disposition was placed in front of the deceased. The defender told the deceased to sign. The defender told the deceased that he would be looked after thereafter by the defender and his wife. On 8 April 1993 the defender again had the deceased brought from hospital for the day. The defender's purpose was to have the deceased sign a Disposition of the farm as a partner in the firm of W B Grant & Son in favour of the defender. The defender had instructed said Iain Innes to prepare said Disposition. The defender told the deceased to sign. The deceased was not told what the document was. On each occasion on 1 April 1993 and 8 April 1993 the deceased signed said deeds as a result of pressure exerted by the defender. The deceased felt that the defender required him to sign. The deceased was not able to say no. Following his stroke he was emotionally labile. He could not walk without support. His speech was impaired. He could not concentrate to read. He could not and did not read said deeds. He did not understand the content. The content was not explained to him. He understood the requirement for his signature to relate to a codicil to his will altering a bequest of £20,000 to one payable by instalments to his son Alexander."

The defender was William Grant and the deceased was Barclay Grant.

[428] The witness said that he was not acting at that stage and this was after Mr Grant's death. If there were no instructions then his note was at least ambiguous and consistent with the suggestion that William instructed the Disposition, not Barclay.

[429] Mr Moynihan then turned to the nature of the liferent. The dispute was whether the liferent was to be extended, as it were, to the life of others after Mr Grant's death. He was referred again to page 3 of 6/22, the note of the telephone conversation with Mr Innes to which I have already referred. That indicated that a liferent had been reserved to the property as requested by Mr Barclay Grant. That did not record the nature of the liferent however. Reference was then made to page 4, the letter to Mr Grant dated the following day and in particular to the last sentence of paragraph 2 thereof to the following effect:

"He also advised that you have a liferent of the house in which you reside, even although it is now owned by William."

That information must have come from Iain Innes and seemed to indicate a liferent for Mr Grant.

[430] He was then referred to sheet 9 of 6/4 and to the reference to a Disposition by WBG in favour of WG with a liferent reserved for WBG. He confirmed that at face value that appeared to be a reference to a liferent for William Barclay Grant alone.

[431] He was then asked to look at Mr Munro's file 7/3 at page 103. He had never seen this file before, although Mr Stewart had referred to it in questioning him in chief.

[432] Mr Moynihan referred to the top of the page which on the left hand side had the words "phone Gavin Cullen" and underneath that the words "Ian Innes". That tended to indicate that Mr Munro was to telephone these two gentlemen. The subject of the telephone conversation appeared to be on the right hand side at the top of the page and it read as follows: "The transfer of farm/farmhouse to William with liferent to WBGrant." It was suggested that that indicated again a liferent to Mr Grant alone and the witness confirmed that that was what was written.

[433] He was then referred to the Memorial to Counsel and in particular to the bottom of page 77 starting "Mr Grant's own evidence" and ending with the words "just a normal liferent" in the middle of page 78.

[434] He was not familiar with the use of the words "or assignees" as a suitable style when drafting a liferent for a single beneficiary.

[435] He was then referred to the styles contained in numbers 7/9 to 7/14 and in particular to that at 7/12. He saw the point which was being made when that was compared to the style in 6/1 and agreed that the styles were the same.

[436] He was then asked whether he knew that if Mr Grant's position had been that the instructions which he had given had not been followed by the solicitor that he could have sought rectification of the deed. He agreed with that. Rectification was introduced in 1985. He could not give any explanation as to why that was never considered as an option. He agreed that if the position was that no instructions had been given at all then the appropriate route was reduction rather than rectification.

[437] The latter would be appropriate where the instructions were followed defectively.

[438] He was then asked about prescription. He agreed that the concern appeared to be from the beginning that William might put the pursuer out of the property if he had the chance. Given the opportunity to do so, even without Mr Grant Senior's death, he might try to eject her if his father stayed in hospital for an extended period.

[439] He agreed that that was a problem from the earliest stages. On 18 August 1993 Mr Grant conveyed the instruction that all he wanted was to give the pursuer an inter vivos liferent but following the advice of Professor Cusine that was not followed up. He agreed that from that period on she would have known that her occupation of the house was precarious.

[440] In re-examination he was referred again to page 103 of 7/3 of process. Underneath the reference to which I have previously made there appeared a figure of £30,000, a reference to a personal loan, and the words "one site sold" with a figure beside it which looks like £24,500 and the words "two further sites to be sold circa £22,000.

[441] In the middle of the page under the date 14 December 1992 there appeared the following words

"telephoned Gavin Cullen - he doesn't see the refinancing of farm etc as being a significant improvement to the interest charged. More interested in bringing the farm property back into the partnership and therefore being owned 50/50 by William and Barclay."

Gavin Cullen was the Bank Manager and Mr Stewart suggested that the Bank were not supporting the idea proposed in the first paragraph. The witness said that the Bank did not support the refinancing of the farm but he was not entirely sure what part of the words above was to do with the refinancing of the farm.

[442] He agreed, though, that if Mr Stewart's interpretation was correct, then the idea was a non-starter since the Bank's support would be required. I pause to observe that of course the Bank held no security over the farmhouse as such so the point may have less validity than it appears to.

[443] The witness agreed that there was a reference to a proposal which might go ahead and that was confirmed by 6/4/9 of process, the letter from Iain Innes, dated 22 December 1992 about the possible transfer of the chalets.

[444] He referred again to the notes written in manuscript on that page. "Liferent of house" was written on the left and on the right there was a reference to a Disposition by WBG but the witness said that that could equally be a Disposition of the chalets. There was no security on the house. The witness volunteered that if the Disposition and the Deed of Restriction referred to the same property then that must have been the chalets since there was no security over the house. He agreed that it was in relation to one of these chalet sites that there would have to be a corrective Disposition.

[445] He was then asked about the alleged ambiguity in his file note. He agreed that if it were the position that Mr Grant was talking about instructions being given on the Thursday in connection with the farmlands Disposition then there was no ambiguity.

[446] There was a reference to the farmlands having been signed over previously and he agreed that the reference to William's telling him that he must "do it" followed the reference to the farm being signed over. It has to be said, though, that the references are in different paragraphs and the second one does not immediately follow the first.

[447] It had been suggested that, whatever else Mr Grant appeared to be saying, he did not instruct the Disposition of the farmhouse. The witness agreed with that. He was saying that it had appeared on the day and that he had not wanted it. Whatever his position was it, was suggested that the issue might be not whether he wanted the Disposition but the terms in which he wanted it. The witness was satisfied that what Mr Grant was telling him was as rehearsed in the Memorial and in the precognition, namely about the terms in which he told Mr Innes a liferent was to be granted if there were to be such a transaction. Mr Grant always claimed to be overborne by the pressure on him but he was clear in his account about that. On the medical evidence he was emotionally labile.

[448] As at 8 April 1993 one would not have known that the codicil would have been superseded by a later will. Equally, at the time Mr Grant was signing himself out of the partnership, the solicitors who were acting for him took a certain view of what he was doing in connection with the assets and the liabilities. That view was maintained in the arbitration. The witness said that the view that was taken was that there had been a distribution of assets agreed but that never addressed the issue of liabilities as well. In the arbitration for the first few months, William Grant was represented by Iain Innes. His firm had represented both partners at the time of the dissolution. The effect of the dissolution and the various transactions was to divest Mr Grant of his assets leaving him with a two-thirds share of the liabilities. Mr McWilliam tentatively agreed with the foregoing but said that these events were some time ago and he did not have access to the papers.

[449] Reference was then made to the suggestion that if Mr Grant gave instructions to anyone it must have been to Iain Innes. The witness said he never heard any other name than that mentioned. He was then referred to 6/22 and in particular to page 2 thereof which noted Mr Wood's attendance at hospital. He could not really answer the question which had been put previously namely what the reference to "he just wanted the whole thing done as before" was all about.

[450] He had no idea whether the person who had written the styles intended them to cover a liferent commencing after the life of the grantee.

[451] This witness was patently doing his best to tell the truth. He did not appear in any way dogmatic about what was contained in his notes and was prepared to accede to suggestions where they seemed reasonable.

[452] Between his examination-in-chief and cross-examination, another witness was interposed, with consent. This was Mrs Karen Pass who was the daughter of the pursuer. In May 1993 she received a telephone call from someone who said he was Barclay Grant. She had not known him before. He told her that he had contacted her grandmother in an effort to contact her mother and the grandmother had passed on the witness's number. He was very upset. He was taking breaths as if he was sobbing and indeed sounded as if he was sobbing and trying to prevent himself. He was embarrassed and upset. He did not go into details about what he wanted but said that he needed to contact her mother desperately. He explained that he understood that since she did not know him, she might not be willing to pass on her mother's telephone number but he asked her to pass on a message since he needed to speak to her desperately. She did indeed pass on the message the next day when she called her mother and this was along the following lines "Marilyn, please call me - I really need to talk to you."

[453] There was no cross-examination of this lady and her evidence was plainly credible and reliable.

[454] The next witness was Mr Ronald Stuart Wadsworth. Mr Wadsworth was a 60 year old solicitor who qualified in 1970 and was experienced especially in conveyancing, wills, trusts, and executries. He had been a tutor at Aberdeen University for ten years in the Diploma in legal practice and was a partner in Stronachs. He had been asked to give an independent opinion on conveyancing matters in this case, had read the pleadings and the productions and had also heard the evidence thus far. Moreover, he had checked the search sheets.

[455] He was referred to 6/2 of process, the Disposition of the farmlands and noted that there were three exceptions in it although these were out of order. The first exception was a plot of ground consisting of 0.47 acres which was shown on a plan attached to the Disposition and also on a location plan therein.

[456] He turned to sheet 22 of 6/22 of process and indicated that that showed that the first exception was the caravan site. That was consistent with Mr Barclay Grant saying that the caravan site excepted from the Disposition was not part of the farmlands.

[457] Mr Grant's position, according to his precognition, was that what should have been excepted were the three house plots at the bottom of sheet 22.

[458] The witness was then referred to sheet 112 in 6/5. The Feu Disposition of 16 July 1979 conveyed the lands to Mr Grant and his then wife Margaret. The lands in question were the subjects of search which could be seen, according to page 113, a letter from the Searchers, to be two areas of ground at Mains of Garten. On 4 April 1980, amongst other deeds, there was a Disposition to Mr Grant of 0.78 of an acre of ground known as the Mains of Garten Chalet Site.

[459] On that date also there was a Disposition of farmlands to Trustees for the firm under certain exceptions.

[460] Sheet 133, was Mr McWilliam's letter to Barclay Grant dated 16 July 1993. Paragraph 2 thereof was in the following terms:

"Disposition by you and your late wife in favour of yourself and your son as Partners. This is also as expected. The areas which were not transferred to the farm are the chalets which you own, the farmhouse and the Caravan Park."

That was a reference to the Disposition to which I have just referred.

[461] On the basis of the information in the letter the witness agreed that it appeared that Mr Grant was correct in stating that the caravan site should not have been exempted from the farmlands in 1993 because it was not part of them.

[462] On 15 June 1992, according to page 111 of 6/5, there was registered a Disposition by William Barclay Grant to William Grant of 0.671 acres. That was referred to in paragraph 4 of page 133 in the following terms:

"Disposition by you in favour of William Grant. This relates to the sale to William of his Chalet Site. I am not clear why the title to this land was granted by you alone as only part of it formed part of the area which you originally owned for the chalets. The remainder belonged to the partnership. The plan attached to that deed also shows the house plots. They again would appear to belong to the partnership, rather than to you personally."

[463] This appeared to indicate that the Disposition was granted by the wrong party. That could be rectified by the grantee's reconveying the lands to the granter and then the correct party granting a new Disposition. This was known loosely as a Disposition ad rem, although strictly speaking this referred to defective feudal Dispositions where title was transferred back to the superior before being reconveyed. It could, however, be applied loosely to this case.

[464] The witness was asked if he had checked the search sheets to see if this had happened in this case. Objection was taken to this on the basis that the search sheets were not available so the best evidence rule was infringed. Secondly this was not put to any witness or commented on by other witnesses. Thirdly, the question related to matters not in issue in the case because of the way the partnership had been dealt with on dissolution. I allowed the evidence under reservation.

[465] The witness said that he had checked the search sheets and there was a corrective Disposition in relation to the 0.617 acres. There was a Disposition back by William Grant to his father and then a Disposition by the Trustees to William Grant.

[466] Sheet 3 of 6/22 was referred to. In particular reference was made to the comment that "The site on which there was planning permission had been transferred over to William Grant." The witness thought that that was a reference to a chalet site or a house plot.

[467] He was satisfied on the evidence that the whole farmlands were burdened by a security in favour of the Bank. If the intention was to make an unencumbered conveyance of any part thereof, the security holder would have had to release the ground by way of a Deed of Restriction. If the 0.671 acres was part of the farmlands, it was burdened and if it was to be conveyed to William Grant it would have needed a Deed of Restriction to give him an unencumbered title. If what was being done was correcting a faulty conveyance on the back of which there was a security, the witness was asked whether a discharge should have been granted followed by a fresh security. He said in reply that if the Bank wished to maintain their security then the way to release the site would have been by way of Deed of Restriction.

[468] He was referred to the file note of Mr Munro dated 15 December 1992 to which I have already referred. If the income of the chalet sites were to be reserved to Mr Grant then a liferent would have been the way to do it.

[469] In respect that the 0.671 acres was part of the farmlands it was encumbered.

[470] The witness was referred to 6/4 and in particular to sheet 9 thereof. He said that a Deed of Restriction was not a transaction in itself but would normally be followed by a Disposition. He could not see any particular reason for a Deed of Restriction other than as a preamble to another conveyance. On the evidence there was no need for a Deed of Restriction in relation to the farmhouse because it was not burdened.

[471] There was no reference to a Deed of Restriction in the left hand side of the sheet where the reference to a liferent of a house appeared. Underneath the reference to the liferent there was a reference to a mortgage of £60,000 to pay off the Bank. There was evidence of discussions about a mortgage over the house. The liferent referred to was not qualified or related in any way to Barclay Grant, although the reference on the other side of the sheet was very specific.

[472] He agreed that the liferent reservation in the deed was not apt to secure a liferent for the benefit of anyone after Barclay Grant's death. In determining the appropriate way to create such a liferent the identity of the proposed beneficiaries was an important matter. Liferents involved an element of delectus personae and care would have to be taken as to who was going to be the beneficiary. It all depended on the circumstances. If the identity was known then the result could be achieved by a proper liferent, for example, if a husband wished his wife to benefit after his death then he could reserve a liferent to himself and his wife or the survivor thereof. He was referred to style 57 in 7/10. The style therein would be apt, leaving aside the reference to assignees, to secure for a housekeeper a liferent after the disponer's death where the disponer was not disponing the title until his death.

[473] One difficulty was that we did not know in what context the style was proposed to be used. If the intention was to create a liferent after the granter's death for a member of a clear class, which member still had to be identified, then the way to do it would be by creating a trust whereby trustees would be given powers to select the parties entitled to benefit. The discretion could be made very narrow in the trust. Beneficiaries could, for example be said to be "my wife or my housekeeper living with me at the date of my death." The trust liferent could be subject to powers of revocation which could be executed either before or after death if desired. A liferent could be for a specific period of time, which would not be a true liferent, or trustees could have discretion to revoke the provision given certain sets of circumstances. If a housekeeper were given a liferent to run after the granter's death then there might be circumstances where, if she decided that she wanted to live elsewhere, the trustees could be given power to revoke it. He said that trust liferents were not rare. He had some experience of them although he admittedly practised in that area. There was no reason why Mr Grant could not have executed such a deed if there was a general concern with the occupation of the property after his death.

[474] He was referred to 6/21 of process, Mr Grant's will. Trustees were appointed therein, which tended to negate the suggestion that Mr Grant was not the type of man for a trust. If the liferent was meant to extend beyond the death of the granter, any competent conveyancer would know that that would be accomplished only by a trust liferent.

[475] The reference to "and his assignees" was not a competent way of accomplishing that. Any competent conveyancer preparing, revising or passing the document for signature would have known that these words were ineffectual to secure that intention. No solicitor of ordinary competence acting with due skill and care would have failed to advise Mr Grant of the way to achieve his intention, if that indeed was his intention. No such solicitor would have failed to appreciate that without a trust liferent the proposed beneficiary would be left without benefit after the deceased's death. He died on 16 July 1998.

[476] Apart from using a trust liferent the same object could have been achieved by reserving a liferent to himself and any wife of his or housekeeper of his living with him at the time of his death but that was a high risk strategy. The most practical way of proceeding would be by way of a trust liferent with the possibility of revocation.

[477] He was then referred to 7/10. He said that he did not personally approve of the style containing the words "her assignees". Styles were only that and they should only be given to students with a health warning. The use of the words "and her assignees" could be dangerous if they were put in without consideration of what was intended to be achieved. It might be different if the liferent was of income since conceivably a liferenter might wish to assign that for financial reasons. It was different when a house was involved. In this particular case, because of the proximity of the farmhouse to the main businesses including the chalets and the shared access, trouble might arise between the parties. He said that in Dobie on Liferent and Fee, 18 styles were produced, none of which used the term "and assignees".

[478] It seemed to me that no loss arose from that term as such, the issue being whether it was indicative of an intention to extend the liferent after the granter's death.

[479] The witness said that if a deed was altered before signature then the proper thing to do would be to initial the alteration and refer to it in the testing clause. There was no reference to any alteration in 6/1.

[480] He thought that the third exception in 6/2 was the house site to be developed with the aid of a rural grant. The second exception appeared to be a reference to the Disposition in favour of William Grant and his fiancée in 1985. That was the document registered on 19 August 1985 referred to in sheet 112 of 6/5 of process. He did not know why there was a break in 6/1 when reference was made to that document. He thought at first it might be an indication that the document was executed and registered on the same day but that would be virtually impossible. It was not good conveyancing practice to leave blanks like that.

[481] The witness had seen the opinion of Mr Donald Reid in 7/5 of process. Page 4 thereof contained the following remarks:

"Criticism has also been made or implied of the inclusion within the Disposition of a reference to the 'assignees' of WBG. For my part I see no particular significance in this. In my experience most Dispositions are granted in favour of the grantee and 'his executors and assignees whomsoever'.

Strictly I would regard such reference to 'the executors and assignees' as being otiose. Nevertheless it is included more often than not as a matter of style. In the case of this deed I would regard the inclusion of a reference to WBG's 'assignees', in the Disposition in question as replicating that sort of style subject to the exclusion of any reference to 'executors' which would clearly not be appropriate in relation to a liferent provision. There may be an inferred criticism of Mr Innes that by including reference to assignees he was assuming, wrongly, that WBG might thereby invoke the assignation provision to pass on the liferent to another person for the continued duration of that person's life and not simply WBG's only. It is averred against the defenders at condescendence 4 that they advised (to whom or when is not stated) that the Disposition reserved to WBG the possibility of appointing persons to a lifetime right of occupation after his death. This averment is denied and my opinion here is expressed upon the assumption that the averment will not be proved. What I would say is that, absent proof of such averment, there is no basis for criticising the reference to assignees as inferring any mistake as to its legal effect on the part of the defenders. An explanation relating to style and otiosity suffices."

[482] Mr Reid appeared to be saying that the reference to assignees was superfluous.

[483] In cross-examination, he said that he was first instructed about a month previously. A colleague of his had prepared a written report which he had perused. He only saw Mr Reid's opinion during the course of the previous week. He had had the opportunity to look at the documents whilst in Edinburgh and had had one particular meeting with Counsel to discuss matters in detail. The pursuer had not been present at that meeting. He was referred to the plan at page 22 of 6/22. He agreed that the various properties shown therein had different stories attached. On the bottom right were house plots 1, 2 and 3. It was apparent from the evidence that attempts were being made in late 1992 and early 1993 to sell these.

[484] On the right hand side was the caravan site and to the left of that was the farmhouse. To the left of the farmhouse was a proposed house and he understood that to be a house for which planning permission might have existed in 1992/1993. That was the site to which a grant may have applied.

[485] Above that were a number of chalets and he had seen in the search sheet reference to a Disposition of a chalet site. That was the subject of the Disposition ad rem. In other words the 0.671 acres was a chalet site. He did not know if that was the totality of the chalet site on the plan and given its size it might be capable of taking more than one chalet.

[486] Something separate was occurring in relation to the proposed house site. There had been planning permission granted and a house was possibly going to be built. That site was part of the farmlands and was covered by a standard security. If the farm was a croft then decrofting would have to be undertaken before it could be sold. A Deed of Restriction would also be needed.

[487] He was then referred to sheet 9 and agreed that there was a possibility of that covering at least three items namely chalets, the proposed building plot for a house and the farmhouse. On the left hand column there was a reference to two chalets which had been scored out. On the right hand side there was a reference to a house site in the process of decrofting. That could be a reference to the proposed house site on the left hand side of the plan. The reference to the Deed of Restriction could apply to that same site.

[488] On the left hand side there was a reference to the liferent of a house and on the right there was a reference to a Disposition by WGB in favour of WG reserving a liferent to WBG.

[489] His attention was then directed to sheet 8. The reference to a Disposition ad rem, Discharge, Standard Security and fresh Disposition, could apply to the 0.671 acres (the chalet site). The Deed of Restriction could refer to the housing plot. The Disposition by WBG etc merely repeated the words which appeared at the bottom right hand corner of sheet 9.

[490] It was possible therefore that in sheet 8 Mr Innes was dealing with three properties with different things to happen in respect of each.

[491] A new production 6/24 was lodged of consent. That consisted of further search sheets. It appeared from those that there was a Disposition of the 0.671 acres, dated 16 March 1993 and recorded 24 November 1994, from William Grant to Barclay Grant. Dated and recorded the same day was a Disposition (by the Farm Trustees to William Grant) of the same property. These were the Disposition ad rem and the corrective Disposition. He was referred to sheet 7 in 6/4. That was a letter dated 10 February 1993 from Mr Innes to the Bank of Scotland, the lenders. It related to the proposed new house site and asked the Bank to consider granting a Deed of Restriction over it. It was proposed that once the house site had been decrofted a Deed of Restriction would be granted and Mr Grant would then take a business loan over the site. Thus any outstanding sums due by the Messrs. Grant to the Bank would be considerably reduced.

[492] It was possible that Mr Innes had followed up the need for a Deed of Restriction in connection with the proposed house site. It was possible that the reference to the mortgage of £60,000 might have been a reference to the loan in that same letter.

[493] As far as the liferent was concerned, he was aware that from the Memorial to Counsel it was being suggested that the use of the word "or assignees" was indicative of the fact that a liferent beyond the date of Mr Grant's life was being contemplated. The witness agreed that even a simple liferent, in other words one which would expire on Mr Grant's death, could still have been expressed in terms which included the words "or assignees". It was something to be done with care but it could be done.

[494] He explained that the Diploma in legal practice commenced in 1980 and he had been a tutor for ten years between 1980 and 1990. The style book was produced by the Universities. Originally there was a committee but latterly individual Universities prepared or revised their own. He would expect graduates to have style books rather than to purchase a copy of Dobie on Liferent and Fee. 7/10 in its context appeared to refer to a clause in a Disposition because it came immediately after references to Insurance Companies and Local Authorities. The clause would, however, be equally apposite in a will.

[495] He was referred to style 2.2.8 in 7/12. That appeared to be the same as was used in the Disposition in 6/1. He agreed with a suggestion that if a granter was reserving a liferent to himself he might say "and my assignees". That might indicate that the drafter had simply copied a style since he had used the words "his assignees".

[496] He repeated, though, that a style was just a style but he seemed to accept that, although Mr Reid had referred to the words as superfluous, a graduate might be able to point him to the style book and say that these were the words approved by the Universities.

[497] It was put to him that the use of the words "and his assignees" was simply following a style and did not give any inference that the drafter had anything in mind other than a simple liferent. He agreed that that was the impression. He remembered the evidence from Mr Innes that if there was any question of a wife, matters would have taken a different turn. If there was a wife then a liferent could have been created for himself and that wife without the necessity of creating a trust. It might be that if a beneficiary was young enough she was in effect getting the benefit of the house for all practical purposes and if the granter did not want that then the liferent could be for her life or until her remarriage. If the granter was contemplating the rights of his wife he could simply have dealt with the matter in his will rather than conveying the property under reservation. As soon as any question of a wife was on the horizon then matters could have taken a different course.

[498] He was then asked about prescription. He suggested that had matters been addressed in the manner which the pursuer desiderated then it would have been possible to have created a liferent in favour of the pursuer to extend beyond the granter's lifetime. Reference was made to page 45 of 6/22 which was a note of an attendance with Mrs Grant during which it was noted that Mr Grant wished to assign the liferent to Mrs Grant inter vivos but he also wished to keep his own right to stay in the house vis-à-vis Mrs Grant.

[499] It would have been possible to have done that in April 1993. If there was a concern that someone might come and put her out then there could have been a trust without any conveyance of the property. I understood him to agree with that observation. Objection was taken to this line but the question had already been answered.

[500] In re-examination, he agreed that there was on the evidence a time when Mr Grant raised the issue of assigning the liferent inter vivos. That was referred to in the note of 18 August. He could not see any reference to his being advised not to do it. Mr Stewart suggested that it would have been impossible for him to assign the liferent to his wife and yet retain it himself although the witness thought that it might have been possible for him to assign the liferent to both of them.

[501] Reference was made to sheet 27 in 6/22, a letter of 23 June 1993 from Mr McWilliam to Mr Grant, in the following terms:

"I refer to my recent meeting with yourself and Mrs Grant in the above. As instructed by you, I enclose in duplicate a letter to be signed by you confirming that your wife is your next of kin and is entitled to the use and enjoyment of your furniture and personal effects during your lifetime and is entitled to remain in the house whilst you are absent from it. I believe that this letter would have the necessary effect in any discussions between your wife and your son whilst you were alive. However, on your death this document would cease to have effect so far as giving your wife any right to remain in the house. Any such right would be determined solely by the terms of any liferent reserved to you at the time that you conveyed the house to your son."

A document was attached thereto which ran in Mr Grant's name. It confirmed, amongst other things, that his wife was entitled to the use and enjoyment of all his furniture and personal effects during his lifetime and had his full authority to remain at Mains of Garten during any time when he might be in hospital or otherwise unable to stay at the house. That was not, however, an assignation of the liferent.

[502] It would be extremely dangerous to advise a person to create a liferent of his own house in favour of a housekeeper when they wished to continue living in the house themselves. At the time of the creation of the desiderated liferent, Mr Grant did not in fact have a wife nor did he had a housekeeper. If he harboured the hope that he would have a housekeeper and/or a wife a liferent in favour of that individual could be created by reservation of it in favour of the husband and the wife or the husband and the housekeeper eg. by referring to "any wife living with me at the time of my death" or "any housekeeper living with me at the time of my death". That, however, could be dangerous, and a trust liferent would be the preferred route.

[503] He was referred to sheet 22 in 6/22. There were three house plots referred to therein but the plot on the left was not referred to as a house plot as such. A Deed of Restriction could have applied to any part of the farmlands.

[504] As far as the search sheets in 6/24 was concerned, the first Disposition was signed by William Grant and the second was signed by the Trustees for the farm, that is Mr Grant himself and his son. The date was 16 March and if that was accurate then he might have been in hospital at that time. That was yet another deed which he had had to sign. There was some discussion whether a Deed of Restriction or a new security would have been required but that did not advance the case. It had been suggested that if Mr Innes wanted to extend the benefit of the liferent beyond the death of Mr Grant he would not have allowed the deed to go out as it did. That however presupposed that he knew what the words "and his assignees" meant. Something might turn on whether Mr Grant was told what the words "and his assignees" meant and whether they complied with his instructions.

[505] If the fee had been retained and a Trust Deed granted that would have had no Inheritance Tax implications and would have been ineffectual to mitigate it.

[506] Mr Moynihan re-crossed on that point. A trust reserving a liferent for Barclay Grant would equally have been ineffectual because he retained a benefit.

[507] On yet further questioning the witness agreed with Mr Stewart that the vehicle in fact adopted did not have any Inheritance Tax benefits. If that was what the purpose behind it all was then it did not work.

[508] This witness was plainly credible and I was extremely grateful to him for his expertise.

[509] The next witness was Barbara Wilson. She was a former care assistant and was now retired. She had given evidence in 1999 in the reduction action. She knew Barclay Grant because she answered an advertisement in the newspaper for a companion/housekeeper. This was about 1990 or thereby. She had her own job at the time. He wanted her to join him and she needed to give the matter some thought because it would involve giving up her own home. In the result she did not take the job up. He kept in touch to see if she would take it on but she could not decide to do so. He telephoned her saying that he was in hospital some time later after they had lost contact and that would have been in the early 90's. That was the Ian Charles Hospital. The purpose of the call was to see if she would consider coming to him. He said that he had been recovering from a stroke and that was the last time she spoke to him. Early on he had said that anybody that went to work for him as a housekeeper would have a liferent of the house after he died. He did not explain why that was the position and said that it was for the purposes of giving security maybe. He wanted somebody to look after him after his illness.

[510] She was never in touch with him again.

[511] There was no issue about this lady's credibility or reliability.

[512] The pursuer then gave evidence. She preferred to be addressed by her maiden name of McDonald. She was 59 years of age and now worked as a flying instructor on sea planes. She moved to Boat of Garten in 1991, taking up rented accommodation at Mains of Garten in January 1992. She was employed there as a shepherdess and worked part-time during the lambing season. During that time she was asked by Barclay Grant to become his housekeeper. She eventually took that up and moved to the farmhouse to live from April 1992. They developed an intimate relationship thereafter and he proposed marriage at the end of May 1992. She did not answer him right away but in any event could not have married at that time because she had not yet been divorced. She told him that she would consider it but he continued to wish to marry her. She was asked whether he referred to the future if she became his wife or his housekeeper after his death. She said that there was a prospect of security but that was not her concern at the time. The suggestion appeared to be that she would be able to live in the house if he was not there or if he died. He told her this at the end of 1992. He did not give her intimate details of his discussion with Sutherland & Co before his stroke but told her that he was going to see them. On 13 February 1993 he became unwell suddenly. He had been diabetic before that but was otherwise healthy. She gave details of what happened to him and indicated that she called an ambulance, which took him to Raigmore. She had tried to raise William Grant but he had not answered his door. He came when he heard the sound of the ambulance and after it took Barclay away he told her that she would not be there for his father. She said that she would be home for him when he came back from the hospital. That was the first time that she had felt any animosity from him. She saw Mr Grant in hospital and he was a different man. He could not talk properly, his left side was gone and his speech was slurred. He could not walk at that stage although those were early days. She last saw him in the hospital some ten days after his stroke and she was told by him to stay put in the house. He had heard about the problems she had been having in the house, namely threats by William to get rid of her. She did not want to stress Mr Grant with this information but eventually it came out and she told him. He had heard from Alexander and William about her and she wanted to give her side. The next day he dismissed her. He was apologetic and said that if she did not leave his sons would. Accordingly she left. She was locked out before that and needed a police escort to pick up some property. On 2 March she got a container to remove more property. She was asked about suggestions that she might have been taking cheques. She said that when she went to see Mr Grant on 27 March she came back and found that William had broken in through the front door although he had a back door key. He had taken the reservation book for Mr Grant's chalets and the personal phone number book. He had also left the door wide open and people on the road could see into the house. As far as the cheques themselves were concerned she was helping Mr Grant to run the chalet business. He would sign blank cheques and leave her to fill them in. That had gone on for a few months. She did not take any cheques or embezzle any money.

[513] When she last saw Mr Grant he was very emotional and tearful. He said that he was under pressure from William. After he came out of the hospital on 10 May she was contacted by her daughter on 18 May. She told him that he had been in touch and desperately wanted to see her again. Her daughter said that he was crying. She telephoned him and he did not want her to come near the farmhouse. By that time he had employed another housekeeper called Morag McMillan and he arranged for her to take him into Boat of Garten to meet her. They met there on 19 May and he asked her to move in with him. She had to think about that. Amongst other things she was frightened of William. Eventually she agreed when she heard that Morag McMillan had been sacked by William two days after driving his father to see her. The truck which they had used was then locked up in a shed. She was not sure that it was a good idea to go back to the farm and discussed it at length with her daughter. She decided eventually to become the housekeeper. Barclay asked her again if she would be his wife and she did not answer, agreeing, though, to be his housekeeper. They became engaged on 10 June 1993 and married one week later.

[514] When they got married he needed looking after. He needed to be driven about and required help with his walking. She was asked whether he had discussed by that time the fact that he had apparently signed away a considerable part of his assets. She said that he told her that he had signed something but did not know what. She was asked whether he thought that he was still in the partnership and she said that he was. He had signed certain documents but did not know what they were. She knew all this before she married him.

[515] She did not know what he had signed and independent lawyers were consulted in the shape of Mr McWilliam. That took place in May. She moved back to the farmhouse shortly after the marriage, on an assurance being given by Mr Grant's lawyer Iain Innes that she had a right to live in the farmhouse. After Maureen McMillan had left, Mr Grant had lived in the farmhouse alone, with no one to look after him. She did not live there until 18 June, the day after the marriage. Before that, however, she had taken him out every day in a car but had to stop at the end of the road and let him walk to the house with his zimmer. At this point she appeared to be very emotional.

[516] There were protracted discussions thereafter between Mr Grant and his lawyer, which culminated in papers being sent to Edinburgh for proceedings in the Court of Session. She indicated that she had no recollection of a precognition but when 6/13 was shown to her she said that she recognised it. She was "lost" when answering the previous question.

[517] The annotations on that document were hers. Thereafter she gave very confused and confusing evidence about when amendments were made to the precognition and I am afraid that I was unable to make sense of it. Eventually she was asked whether she was satisfied that 6/18 accurately reflected the document as Barclay had approved it and I understood her to agree with that. Barclay was satisfied that the document correctly represented the evidence he would have given. Apart from what was contained in 6/18 she was asked whether Barclay told her at any time after resumption of contact with him and the sending of papers to Edinburgh in 1994 about his dealings with his former lawyer. She said that that was so and that he was not happy. He told her that it was his intention to reserve a liferent for his wife or housekeeper. He told her that on several occasions and was very clear about it. He did not say when he had given these instructions to his lawyers but he had told them that those were his intentions. In particular he had told Iain Innes.

[518] When he died in 1998 he left a will which was 6/10 of process. She was the sole beneficiary. At the time of his death there was an ongoing action in the Court of Session to reduce the Dispositions and if those had succeeded she would have benefited in due course.

[519] She was his wife at the date of his death. Before he died he came to appreciate that the liferent could not be assigned by him so as to give her a right to live in the property after he died. He knew this in 93/94, as indeed did she. He was very concerned about her having accommodation after he died. There was not a lot that he could do, what with inhibitions and the inability to find documents. The worst aspect was the lack of funds. The only thing which could be done was the action of reduction. She continued to live in the farmhouse after his death until she was ejected by virtue of a court order at William's instigation. She was also ejected from the tenancy of a chalet by William. After that she had to pay for accommodation and move around from place to place "like a gypsy," as she put it. The truck to which she had referred earlier was a four wheel drive Daihatsu pickup and Barclay was unable to drive it after the stroke.

[520] In cross-examination, she said that until Barclay went into hospital in February 1993 there was no trouble with William. The relationship between father and son was good up until then. Shortly afterwards it became extremely poor. It was fair to say that some of that was raked over in the action of reduction.

[521] By that time there had been an arbitration between father and son and an action of reduction raised against the son by the father. Lord Reed decided the action of reduction in October 1999, Barclay having died the previous year. She knew that there was no effective liferent but stayed in the cottage after he died. A court action was raised after Lord Reed issued his opinion and she agreed that even after the opinion was issued she still did not move out.

[522] She agreed that after Barclay Grant came out of hospital, he telephoned her daughter and she met him shortly after. MacArthur & Co were instructed by around 25 May which was about two weeks after the discharge from hospital. She met him some time in the week before the new lawyers were contacted. She was asked what Barclay had first told her about what he knew had happened and she said that he knew that he had signed some documents but he wanted to find out through independent advice what he had signed because he was not happy with Sutherland & Co, and in particular with Iain Innes, when he was in hospital.

[523] She had given evidence to Lord Reed but could not remember it precisely. She was then referred to Lord Reed's opinion, 7/1 of process, and in particular to a passage starting "the next time" when he dealt with her evidence. It appears from page 6 of 58 on the copy with which I was working. This passage was read to her and it runs as follows:

"The next time she was in contact with the deceased was on 18 May 1993. He had been discharged from hospital on 10 May and had returned home. On 18 May she received a telephone call from her daughter, Karen Pass, who said that the deceased had telephoned her and was desperate to contact the first pursuer. The first pursuer then telephoned the deceased. He was very emotional and was crying. His speech was slurred and very slow. He wanted to resume contact with her. She arranged to meet him the following day in a car park in Grantown-On-Spey. That location was chosen as being neutral ground for both of them. He told her that a new housekeeper had been appointed by the defender, and that she would drive him to the car park. The following day, 19 May, the first pursuer met the deceased as arranged. The new housekeeper, Morag McMillan, left them to talk together. The deceased broke down in her arms. He explained that he had had to sign the letter of dismissal because the defender was otherwise going to leave the farm. The deceased could not allow that to happen, having built the farm up over all the years. She met the deceased again on 20 May. He asked her to marry him. She did not give him an answer. That evening she telephoned the deceased and was told that there had been an incident. The defender had come into the house and had tried to assault a Mr Kelman, who was the deceased's best friend. The deceased had stood up and protected Mr Kelman, and the defender had then assaulted his father. That led to Morag McMillan being sacked by the defender. The first pursuer spoke to Morag McWilliam the following day on the telephone, and Morag McWilliam volunteered the information that she had been sacked.

[524] At this time the first pursuer was unaware of the Dispositions which had been executed in April. The deceased told her about the Disposition of the farm, but he himself did not know of the Disposition of the farmhouse. He knew that lawyers had come into the hospital, and he told her that documents were shoved under his nose and he signed them without reading them. His lawyers at that time were Sutherland & Co."

[525] I understood her to accept that that was an accurate account of her evidence but she could not have given it in these terms today. Her broad recollection was that he did not know what he had signed. He did, however, tell her that documents had been shoved under his nose in hospital.

[526] She was then asked about the precognition. Mr Grant was satisfied subject to a few amendments that it reflected his position. It was clear, though, that when the document was revisited in 1997 further amendments were made. Reference was made to the amendment on the first page to the side of paragraph 3 about when he found out that he had resigned from the partnership. She agreed that by February 1997 he was telling her that in fact the letter of resignation was one of the documents which was shoved under his nose in hospital and which he signed without reading. He did not know what was in it. She said that he was a very confused man.

[527] She agreed that the arbitration had proceeded on the basis that the partnership had in fact terminated by that letter of resignation. It was put to her that if that was accepted and correct then it was in Mr Grant's interests because the partnership property would be included in the assets available on dissolution since the resignation preceded the date of execution of the Disposition of the farmlands. She did not appear to understand this question and Mr Moynihan moved on.

[528] As far as the farmlands were concerned however, his position was that he was forced by William to sign the Disposition and there would have been just as much reason to question that Disposition as there was to question the house one. She was referred to the Closed Record, 7/8 of process. In particular she was asked about the pleadings on page 9 and onwards, to which I have already referred. The particular parts to which her attention was drawn were the averments that William had instructed Iain Innes to draw up the Dispositions of the farmhouse and the farmlands. She said that Barclay's belief was that he was being taken out of hospital to amend his will and sign a codicil.

[529] She also said, however, that Barclay's position was that it was William who had instructed the lawyer to draw up the documents. Barclay himself had issued no instructions in that regard.

[530] His understanding was that he had been brought out of hospital twice, the first time being in relation to an amendment to his will and the second time in relation to a codicil. Instructions were given to raise an action of reduction in 1999. It was begun by her husband and then she and Frank Lefevre, Solicitor, continued it as executors after his death. At some point before his death he heard that he had signed a Disposition of the farmhouse and the farmlands. He found that out when he took independent legal advice from Mr McWilliam. She was asked whether the Answers reflected his considered opinion and she said that he never gave instructions to Iain Innes to draw up either the farmhouse Disposition or the farmlands one. If instructions were given to draw up either of these documents then his position was that it must have been William who did it.

[531] She and Mr Lefevre maintained that position in the action.

[532] The averments from 9D from the words "the defender told the deceased" until the word "Alexander" at 10B properly reflected his position.

[533] She was then asked to look at the averments on page 15, which were in the following terms:

"Following his release from hospital the deceased consulted independent solicitors, Messrs MacArthur & Co, Inverness. On his instructions said agents initiated the raising of the present action. As the defender had, along with the signature of said Dispositions, also obtained the deceased's signature on a letter of resignation (by the deceased) from the partnership of W B Grant & Son and had proceeded to treat said firm as dissolved, the deceased instructed said agent to initiate arbitration proceedings to obtain a winding up of the affairs and estate of said firm. A reference to arbitration was made in which Ian Dunbar Fraser, Chartered Accountant, acted as Arbiter and Colin Watson, Solicitor, then of Messrs Stronachs, Solicitors, Aberdeen, acted as clerk. The defender, as respondent in the Arbitration, as a defence to the claim by the deceased, advanced an identical contention to that now added by Amendment to Answer 3, namely that the deceased and the defender had agreed that the deceased would transfer the farmhouse and farm to the defender as a gift against a like narrative of background concerns regarding overdraft and Inheritance Tax. A proof was heard by the Arbiter with his clerk on 13 November 1995 and 29 April 1996 at which the deceased, among others, gave evidence and was cross-examined on behalf of the defender. Subsequently the Arbiter pronounced a decree arbitral together with his finding in fact and Note, all dated 23 October 1996. Within the scheme of division contemplated by the Arbiter, the deceased was prepared to accept the de facto situation of the farm transferred to the defender, and value having been given, to withdraw his claim for reduction of the Disposition of 8 April 1993. Accordingly the pursuers seek decree of production and reduction restricted to the Disposition of 1 April 1993 in terms of the first Conclusion".

[534] She did not quite understand the reference to "identical contention" but otherwise the pleadings accurately reflected the position. The farmlands were dealt with as part of the arbitration and the deceased received around £70,000 as his share. He did not therefore challenge the validity of the farmlands Disposition.

[535] She was then referred to sheet 34 of 6/22. This was the letter from Mr McWilliam of 16 July 1993 explaining his understanding of the titles to the various properties. She said that there were 9 chalets, 4 belonging to Barclay Grant and 5 belonging to his son. Paragraph 2 in the letter is a reference to the Disposition by Barclay Grant and his first wife in favour of himself and William Grant as partners. The areas which were not transferred to the farm were the chalets which he owned, the farmhouse and the caravan park. Paragraph 4, which I have already mentioned, referred to the Disposition by Barclay Grant in favour of his son on 1 June 1992. The subjects were the chalet site. That was the ground on which 5 chalets were built.

[536] Barclay continued to own 4 chalets after April 1993.

[537] 6/24 sheet 5, bore to be the result of a search sheet name search and referred to a Disposition by William Barclay Grant to an electrical company of chalet No 1. It was dated 8 July 1998 and the consideration was £45,000.

[538] That was the chalet to which the pursuer moved for a short period after having been evicted from the farmhouse. In the end the Electrical Company conveyed it to William Grant and she was evicted again.

[539] On that page there was also reference to a Disposition by the executors of William Barclay Grant, in favour of the Royal Society for The Protection of Birds of chalets 2, 3 and 4 dated 29 October 1998 for a consideration of £110,000.

[540] As far as the building plot was concerned, reference was made to page 42 of 6/22 which showed the proposed house on the left hand side. As it happens, Barclay Grant's four chalets are shown at the top of that page. The deal between father and son was that Barclay Grant had a Rural Enterprise Grant for Toum to build his retirement home and William also obtained funding for his mountain lodges. They were all to be built at the same time and the proposed house was therefore to be Barclay Grant's retirement home. In terms of the grant, Barclay would not be allowed to live in the house for five years and was going to let it out for that period along with the chalets. In the end the house was never built.

[541] At page 34 paragraph 5, reference was made to a Disposition of the building plot by the partnership in Barclay Grant's favour recorded 14 May 1993.

[542] There was therefore transferred to Barclay Grant title to the land on which the proposed house was to have been built.

[543] Mr Munro was the accountant for the partnership and Barclay Grant's personal accountant as well. The witness said that she eventually met him but did not know him initially. She had no recollection of meeting him in 1992. If he came to the farmhouse, she would not have been present at any meetings with Barclay and William at that time. She was not involved in Barclay's business affairs as such at that time.

[544] It was suggested that Barclay was looking to the possibility of retirement and she agreed that that was what he was looking at eventually but he was still retaining an interest in the farm, especially Toum. Nothing happened to take Toum away from him and he retained it.

[545] He was looking for a source of income on retirement and also for a place to live. The source of income was to have been the 4 chalets and the plan was to live in the farmhouse before moving into the new house and then letting the farmhouse out.

[546] In short Barclay retained his 4 chalets, he still had the income from them and he had the liferent use of the farmhouse after the events in April.

[547] She was then asked about prescription. On her dismissal in February 1993 William had put her out of the farmhouse. She was asked whether, even after she met Barclay in late May 1993, she was reluctant to move in in case she was put out again. Her position was that violence was more concerning. It was put to her that she was concerned about having no right to stay in the property and she said that at that time she did not know she had no such right. In June 1993 there was a discussion with Mr McWilliam about what would happen to her if anything happened to Barclay. Mr McWilliam suggested that Barclay sign a document in her favour. Reference was made to page 67 of 6/5, a note dated 21 June 1993. That related to an attendance with the pursuer and Barclay Grant. Amongst other things it was noted that dogs had been removed on Saturday 19 June. The police were contacted in connection with that. In particular Mr Moynihan drew her attention to the following:

"Noting your concern that any authority which you have passes to Marilynn (sic), particularly now that you are married. You are concerned as to what would happen if Barclay goes into hospital. Advising that we would need to see the title deeds to ascertain the position regarding the liferent. Noting that Mr Grant wishes to have the deed transferring the house recalled. It was granted by him whilst he was under pressure. He was told that it would have to be signed to save death duties and DSS dues".

[548] She confirmed that that was an accurate representation of the position.

[549] Page 73 consisted of a letter from Mr McWilliam to Mr Grant dated 23 June enclosing a document (on page 72, to which I have already referred) and which purported to give certain rights to the pursuer. She said that Barclay Grant signed that.

[550] Despite signing it, it was suggested that Barclay continued to take an interest in giving her a liferent in the farm. She said that at the end of 1993 they were still investigating how they could do that and funds came into the equation. They were still very concerned about the absence of the liferent. Reference was made to page 43 of 6/22, the note of the meeting of 13 August 1993. There was a discussion about the ground which was liferented to Mr Grant and on page 44 the following paragraph appears:

"Discussing the Disposition, transferring the house and granting a liferent and agreeing the following problems with it. He was under pressure when signing it. There is an unauthenticated alteration on the front page. The size of the typeface on the first page differs from that on the 2^nd. The last line does not go up to the end of the line. The reference to assignee is not effective as it does not allow for assignation by mortis causa deed. It only means that Mr Grant can assign it to Mrs Grant during his lifetime, but that that would mean that he was giving up the liferent."

[551] She recollected that advice.

[552] At page 45 there is a note of an attendance on 18 August 1993 where it was noted that Mr Grant wished to assign the liferent to Mrs Grant inter vivos but also wished to keep his own right to stay in the house vis-a-vis Mrs Grant. It was confirmed that the agents would look into that matter. She was asked why he wanted to transfer it to her during her lifetime and she said that it was for security. There was no security there for his wife and he also wanted security for himself.

[553] Following that request Professor Cusine was consulted and he gave advice to the effect that the liferent could not be transferred after Mr Grant's death. Some rights could, however, be transferred during his life. As it happened nothing further was done other than to pursue an action of reduction.

[554] She was then referred again to 6/13 and 6/18.

[555] She was referred to the handwritten notes in the margin of 6/13 and in particular to the first page thereof and the reference to Mr Grant's only realising about the letter of resignation when a new lawyer was taken on. She was asked when that was written and said that it would not have been 1994. It would have been written after Mr McWilliam was appointed. She then said that she was not clear about it.

[556] At the foot of page 7 on 6/18 the following appears:

"I do not recall on which day the letter of resignation from the partnership was signed by me. Again, this was put before me. I was under pressure from my son and I signed it. I was trying to keep the peace at the time and not fall out with him."

[557] It appeared therefore that as some point between the drafting of 6/13 and 6/18 that reference was inserted. She said that so far as either document was concerned, they were looked at by Mr Grant although they were in fact written up by Mr McWilliam. She was asked whether all that Barclay was saying was that the documents were roughly correct and she agreed with that.

[558] In re-examination, she confirmed that she had already discussed three particular alterations in examination-in-chief and she could not say when the change about the resignation from the partnership was made. She then said she thought that the four changes were made in 1994. In 1994 Barclay Grant was accepting that he knew that he had signed himself out of the partnership but he was doing it to keep the peace.

[559] She was again asked whether she understood that in 1994 he knew he had signed out of the partnership and she said that he was not sure. When he contacted Mr McWilliam he believed that he had signed himself out but he did not know definitely.

[560] She was asked whether, when she first got to know of Mr Grant's consultation with Mr McWilliam, his position was that he believed he had signed himself out of the partnership and she answered in the affirmative. He knew that he had signed documents but he did not know what for. It was to amend his will and the codicil to his will. It was put to her that that seemed to contradict her earlier evidence and she said that once he contacted Mr McWilliam he believed he had signed himself out of the partnership but not before that. She could not say whether he believed that he had signed himself out on certain terms and conditions. As far as the documents were concerned what was contained in them was approved by Mr Grant as his evidence when he revised the documents on each occasion in her presence, in 1994 and 1997.

[561] It was correct to say that Mr Grant did not challenge the termination of the partnership. He accepted that it had been terminated but he took issue with the scheme of division. He did not challenge the Disposition of the farmlands ultimately but he had the benefit of legal advice.

[562] She was asked whether she had the opportunity of approving of the terms of the pleadings in 7/8, the Closed Record in the reduction action. She said that she had seen it before. The solicitor would have shown it to her but she could not remember what was in it. It was suggested to her that Mr Moynihan had been trying to find out if she accepted responsibility for that document and I understood her to say that she did. She did not say when she had seen it but she had gone over it. She had gone over it with Mr Lefevre and went with his advice. She would also have seen the documents on which the pleadings were based.

[563] Her understanding was that Barclay Grant never gave instructions for the Disposition of the farmhouse or the farmlands. On the other hand she had said in evidence that his evidence was that he had given instructions and expressed what his intention was in connection with liferents. She said that that was in discussions before he came ill. Discussions took place long before she was involved in late 1992 or early 1993. His intention, if he was to sign over the house, was for a liferent for himself, and his wife or housekeeper. As it happens, he said he gave no instructions for the drafting of the Disposition of the land or the house.

[564] She could not say whether the £70,000 which he received was after deduction of liabilities but she was referred to 6/8 of process, a scheme of division, which showed, at page 4, that he received £70,060 which took account of assets and liabilities.

[565] She was then referred to sheets 5 and 6 of 6/22, the note of 27 May 1993. In particular her attention was drawn to the last paragraph on page 6 as follows:

"William had told him that he must do it. That is what the solicitor said. Ian Innes was taken up to see him on one Thursday and he gave instructions to Ian, as told by William. William was with him at the time and there was no suggestion that William left. Mr Grant accepted that, even if William had left, it would probably have made no difference to what he had told Mr Innes."

[566] On the assumption that that was to do with the farmhouse, she was asked what her understanding was in relation to the suggestion that he did not know what was happening. She said that there was confusion. Barclay was told by his son that he had to sign these things or that he would leave the farm. In order to keep the peace he signed them. He was very confused.

[567] It should be noted, I think, that the last sentence of that note suggests that it was Mr Grant himself who did the talking to Mr Innes rather than William. The words "even if William had left" would make no sense otherwise.

[568] She was then referred to page 19 in 6/22, a note of a meeting between Mr McWilliam, Mr Grant and the pursuer on 10 June 1993 at the Mercury Hotel. The second last paragraph on that page is in the following terms "Discussing the letter and details from Mr Munro, the accountant. Noting that all the cattle were being sold by Mr Grant's son in Mr Grant's son's own name". She remembered that happening. That was after Barclay had come out of hospital and had left the partnership. Mr Grant was very upset and emotional. The farmland and the cattle were his life times work. It came as a shock to him that the cattle were being sold. The note goes on as follows:

"Mr Grant confirmed that the farm was handed over of his own free will. This included the stock. The only conditions which he made were that it was subject to William Grant being liable for any debts of the partnership and Mr Barclay Grant being relieved of any obligation and the truck, and tools and personal items being Mr Barclay Grant's own personal property. Noting that he had done this to put his son's own mind at ease in case he married Marilyn MacDonald."

[569] She was asked what her understanding of that was.

[570] She knew that there was some discussion of that but she could not remember that particular comment. She was again asked what it was about. She said it was early days with Mr McWilliam and the latter was not sure what Barclay had signed. The comment related to the farm and the stock. She said she could not remember on what day the stock was sold but she did not understand the statement that it was handed over of his own free will. That was not how it was done. She simply did not understand that comment which ran counter to her understanding of the matter. I understood her to say that there was a discussion that if any of these things were done he would not wish to be liable for any debts. She was asked whether Mr Grant made it clear that he had discussed the intention of signing over his share of the business and she said that he had discussed it. She thought that it was with Iain Innes and perhaps with Peter Munro. That was before he went into hospital. She was asked what conditions would be attached to such a transaction if it happened and she said that if he agreed to it he was not to be liable for any debts and he also wanted a liferent over the house for his wife or housekeeper. The dogs had been in the kitchen in Mr Grant's custody before they were removed and he had been looking after them.

[571] She was then asked about Professor Cusine's advice. She could not remember what mortis causa meant. She understood that she could not have the liferent after Mr Grant's death. She understood that that was Professor Cusine's advice. It was made clear to her by Mr McWilliam shortly after Professor Cusine's opinion was given. Barclay's reaction was one of shock and sadness. She was asked what she meant by other rights being transferred to her and she was asked what those were. She said that there was some suggestion of the house being put into her name with Barclay retaining a liferent for himself. That was not done. She was referred to Professor Cusine's opinion in 6/22 and in particular to paragraph 4 on sheet 56. She said that there was a problem with putting the house into her name and Barclay's retaining a liferent. However, they always thought that they would win the reduction action. If that happened Barclay would get the house back.

[572] His intention was, whatever wife or housekeeper he had, that the house would fall to his son or sons.

[573] She said that there were nine chalets, four original ones and a later group of five. The five were built during 1992 and she was there at the time.

[574] She was referred to a letter from the Bank dated 5 October 1993, sheet 81 of 6/22. Paragraph 4 was in the following terms:

[575] Along with that letter, at page 83, was a copy of the letter of June 1992 giving the undertaking by both partners to which I have already referred.

[576] Part of the ground on which Barclay's number four chalet was built extended into the ground on which the new chalets were to be built. It was therefore partly partnership property and partly Barclay's own property, as matters were understood at the time.

This witness was, I think, doing her best to tell the truth but her memory of events was somewhat vague. She was not present at any discussions with Mr Innes and I did not think that her evidence substantially advanced her case.

[577] Mr Stewart then tendered a new production, number 6/25 of process which was a witness statement by Morag McMillan. I was told that parties had agreed that this would constitute her evidence and I was grateful to them for that. I was told also that a Joint Minute had been prepared and I was also very grateful for that document, which set out a number of matters which had been agreed, viz. Barclay's dates of birth and death, 10 March 1930 and 16 July 1998, respectively, the fact that his first wife Margaret died in 1998 and the fact that he suffered a stroke and was admitted to Raigmore on 13 February 1993, before being transferred to Ian Charles Hospital on 17 March 1993 and discharged home on 10 May 1993. Quantum of damages was agreed as £202, 620, being £66,620 exclusive of interest for the past and £136,000 for the future. The farmhouse and farmlands Dispositions were agreed as were the interlocutor and Note of the Arbiter, the Provisional and Final Schemes of Division in the Arbitration, Mr Grant's will dated 19 May 1998, the report of a Commission for Recovery of Documents, transcripts of the evidence of Iain Innes and Craig Wood before Lord Reed, part of Mr Grant's will extant as at 17 February 1993, the Disposition of the site of a proposed house by the partners in favour of Mr Grant, dated 8 April 1993 and Morag McMillan's statement.

[578] With that Mr Stewart closed his case.

[579] The first witness for the defenders was Peter Munro.

[580] He was a certified accountant, having qualified in 1981 and having been a sole practitioner since 1983. He had known Barclay Grant as a client since that time and he also knew William. He had given evidence in the arbitration proceedings and also in the reduction action. He said that William Barclay Grant, whom he knew as Barclay, was a sound man, easy to deal with and aware of all aspects of business. He knew what he was doing with the farm, the chalets and the caravan park. The business was run with the family and William. He understood all business aspects but listened to what one was saying.

[581] He saw no problems in the relationship between father and son in late 1992/early 1993. They ran the business together and any meetings he had were with both of them when it came to discussing the farm and the chalets, although at that time the chalets belonged to Barclay. Barclay had been the main partner in the early years but by the time under discussion they were equally involved. The farm was not doing well by then. The results for May 1991 were poor and those for the year to May 1992 were not much better. Significant decisions had to be made under pressure from the Bank. The farm was run as a partnership but the chalets were Barclay's own business. He thought that he had four in his name.

[582] The background to the meetings at the end of 1992 was that a way forward had to be found for the farm in view of the poor results. A lifeline had been secured the year before with the sale of a bit of the caravan site but the overdraft was increasing again and was causing problems. Both partners realised that and accepted that something had to be done. The Bank's concern was that the overdraft was slightly unsecured and they were anxious to have the farmhouse put into the partnership. It was still in Barclay's name. The chalets were profitable and helped to fund the farm. Until the early 1990's, the two together constituted a viable prospect.

[583] Barclay was around 62 or so at this time. He was asked whether there was any discussion about his retiring and he said that the meetings about the farm brought this to a head as well. How could the business fund the life styles of two families, Barclay's own and that of William and his family? Barclay was not doing so much work on the farm now. He took bookings for the chalets and William tended to run the farm. Obviously one way forward was for William to work the farm and for Barclay to come out of it.

[584] This was all discussed with the father and the son. There were plots of ground which were about to be sold for housing and which might inject money but unless the business was stabilised those funds would disappear too, so all aspects had to be looked at. One of the suggestions was for William to run the farm and for Barclay to live off the chalet income.

[585] Barclay had lived in the farmhouse all the time that the witness knew him and William had an adjacent house. It was a new bungalow. The proposal which was discussed was that Barclay would have the benefit of the farmhouse for his life and William would stay in his own house next door so that Barclay would have accommodation and his own income.

[586] One of the bank's concerns was that the farmhouse was not owned by the partnership and that limited their security. They reckoned that they were at risk. The meeting was to try to work out a way forward and he agreed that the best way forward was to transfer the farm to William and for Barclay to continue to live in the farmhouse for the rest of his life. He was asked whether he regarded these things as having been agreed. He said that at the end of the meeting as far as he was concerned the principle of transferring the farm to William and Barclay's having a liferent of the house was agreed and he had to contact the Bank Manager and the solicitor, Gavin Cullen and Iain Innes respectively.

[587] He was asked whether he recollected if in the course of the conversation the word "liferent" was used and he was sure that it was. It would have been introduced by him because he understood its meaning. He would have to clarify it to some extent with the solicitor but he was sure that he brought the concept into the discussion.

[588] There was no suggestion of anyone other than Barclay benefiting from the liferent. He knew that Barclay had had a number of housekeepers and he had no recollection of any mention of making provision for a housekeeper. If that had been mentioned he would have recorded it in his notes. If someone else had a liferent then the liferent would have been of a different duration and would have had a different impact on the family.

[589] The possibility of Barclay's remarriage was never considered at the meetings. There had been a meeting in November with Barclay and William to finalise the accounts to May 1992 and there had been a previous meeting in April to finalise the accounts to May 1991. I understood that there had been two or three meetings in the interim highlighting the need to do something, which prompted the meeting in December.

[590] He was referred to page 103 of 7/3, which was his file. Page 103 contained a number of matters. The top few lines was a note of the initial meeting between Barclay, William and himself. It took place on 11 December 1992. He was aware of that because there was an entry in the file dealing with his expenses for the journey to the farmhouse where the meeting took place.

[591] The plan was to try to keep the Bank happy and arrange an accommodation between the partners for the future. He agreed that he would get in touch with Mr Cullen and Mr Innes about the transfer of the farm/farmhouse to William with a liferent to Barclay. The liferent was only for Barclay himself and there was no mention of anyone else. He was quite sure about that. From his limited knowledge of law he knew that if other people were to be involved they would have had to be mentioned to the solicitor.

[592] There was a reference to the sale of a plot for £22,500, and an indication that two others could be sold for around the same price. This might have raised money to alleviate the overdraft. There were basic discussions about how to get more money to put the business on a level footing.

[593] Between these notations there was a reference to £30,000 and "balance of house on loan." He was not quite sure what that meant but there was a site on which a house could be built and that might have been an option as well. The reference to the loan of £30,000 might have been because more money was needed to complete the project.

[594] The house plots to be sold could be seen as plots 1, 2 and 3 at the bottom of page 22, a plan in 6/22. The proposed house was the property on the left.

[595] He telephoned Gavin Cullen on 14 December 1992 and the entry thereto, to which I have already referred, was read. Mr Cullen wanted the transfer of the farmhouse into the partnership to give the Bank more security because of the increasing indebtedness.

[596] He was not sure if he reverted to the Grants after that.

[597] The entry for 15 December 1992 was then read. This related to a telephone conversation with Iain Innes. He thought that Mr Innes had had a meeting with the Grants the day before.

[598] The note read as follows:

"Telephone conversation with I Innes. After a meeting yesterday it was proposed that two of Barclay's four chalets be transferred to William to avoid IHT. I said this could be okay but the agreement must state that Barclay enjoys all income from the four chalets until death. Term insurance policy being effected by William for seven years to cover IHT implications. Also suggested to I Innes that William may now be over IHT threshold and his position would have to be reviewed."

[599] He did not recall discussing Inheritance Tax himself but that was an issue. He was not looking to split the chalets. By that time William had his own chalets which produced income and there was no need to do it. The idea was that Barclay would have income from his four chalets for the rest of his life and William could receive the income from his chalets as a means of supplementing the farm income. The reference to Barclay's enjoying the income from the four chalets until death was to ensure that Barclay was looked after. Everything was very amicable. The reference to term insurance was simply to cover any Inheritance Tax problems. I asked him if there would be any Inheritance Tax implications if Barclay had retained an interest in the chalets and he thought there possibly would. He was not aware of the value of the whole estate. He would have had to take advice on the matter.

[600] As it happened he never got round to doing that.

[601] The idea of two chalets going to William had not been discussed with him. In issue were the farmhouse and the liferent.

[602] Sheet 104 was a letter dated 24 November 1992 re. the partnership income tax return for the year to 1993. Sheet 105 was a letter to Mr Grant of 26 November 1992 enclosing copies of the accounts for that year and for the caravan park. At that time the witness was familiar with the financial position of the partnership. Sheet 93 was the receipt to which he had referred by which he could fix the date of the meeting.

[603] He knew that some deeds were prepared in April 1993 but he was not involved in that. He had a meeting with William about disposal of assets, sheep, etc because the farm was not trading well but that had nothing to do with the transfer of property. Sheet 101 was a letter to W Cameron of Sutherland & Co sending copies of the financial accounts for the years to 1990/91 and 1992 and indicating that the profits for the two coming years were expected to be in the region of £12,000 to £13,000. That was to do with a mortgage application which Sutherland & Co were dealing with in order to build the house. That may have related to the note about the £30,000 and loans. Sheet 100 was a letter dated 24 March 1993 to the Bank Manager sending him the accounts. Sheet 99 was a letter from Mr Cullen to the witness dated 25 March 1993 and expressing some misgivings about the financial situation. Amongst other things it said the following:

"I know that William is going to speak to you on this matter as well but it seems to me that either they will have to sell all the cattle or all the sheep to try and get down to a stocking level that the farm can afford without the substantial inputs of feed stuffs and fertilisers."

[604] The problem was that the net profit of the two businesses could not cover the partner's drawings.

[605] Sheet 97 was a letter the witness wrote to Mr Cullen on 31 March 1993. He had a meeting with William to discuss the remedies for the farm, amongst which were the sale of cattle and a few ewes to make an immediate capital injection. There would be other savings also from various initiatives.

[606] Sheet 98 was a summary of a discussion with William before he wrote that letter. The sale of 28 cattle was hoped to raise £19,600. It was thought that hay could be grown and sold at £2,400 per annum. There were other savings to be had in connection with seeds, fertilisers, vets' bills etc.

[607] He was not sure when he was made aware that Mr Grant was in hospital but he thought that he would have been told at some point. He did not see him shortly after he came out of hospital.

[608] In cross-examination, he confirmed that the sale of cattle took place after 5 April 1993 at a point in time when William was the sole partner.

[609] At the end of March 1993 William was speaking to him on the issue of the partnership. At no stage did he mention to him that the partnership was to be dissolved. The reference to "his cattle" in the letter at sheet 97 might have been the witness's own mistake although perhaps William was jumping the gun and anticipating the dissolution of the partnership.

[610] He acted for both parties until the end of the arbitration and still acted for William to date. He had not spoken to William about the issue in the present case. There was a meeting on 11 December 1992 at which the liferent and other matters were discussed. A fee note was issued for that and sheet 91, a time sheet, showed that the meeting took place between 7 and 13 December 1992. The receipt, sheet 93, showed the precise date. He wrote up the top section of sheet 103 at the meeting on the same day. He did that when he was sitting talking to them. It was possible that there was a question mark at the top of the paper and one underneath the writing at the top so that this could have been a "query to do list". It was suggested that that would have been noted at the end of the meeting or after it and he said that it was noted during the meeting.

[611] He telephoned Iain Innes on 15 December but he had no note of telling him about the proposal to transfer the farm and the farmhouse. It was put to him that one inference was that he did not, at the end of the day, talk to him about that. He said that he would say he did, although he had no note of it. He hoped that Mr Innes would keep a note of it. It was suggested that the only reference to the call from Mr Innes' file was that he discussed the chalets and he agreed that that would strengthen the inference that the farmhouse and the liferent had not been discussed.

[612] If it were agreed that the farm and farmhouse were not discussed then why should that be? He could not think of any answer to that. The suggestion was made to him that the telephone conversation with the Bank Manager was one possible explanation but he did not agree with that. The conversation with Mr Cullen would not have stopped him from discussing the matter with Iain Innes but it might be that Iain Innes himself had pre-empted matters by discussing the chalets. Mr Cullen wanted the farmhouse to be transferred into the partnership but that would not have stopped him discussing the farmhouse with Mr Innes. He was asked whether he had been talking about transfer of the farmhouse into the partnership or to William. He thought it was the partnership. It would have been looked at as a potential security for the existing borrowing. He agreed that the farmhouse was being discussed in connection with its potential transfer into the partnership. He presumed that the property was to go to William but he was a bit confused over the issue. The reference to the liferent would suggest that his intention was for William to get the property but Mr Cullen wanted it to go into the partnership because he did not have enough security from his point of view. He was asked whether if the property was to go to William's name that would have been rejected by Mr Cullen. He said that Mr Cullen wanted it to go into the partnership. He could not confirm that the Bank Manager was negative about William getting title. He repeated that he did not think that was why he did not discuss the matter with Mr Innes, if that was the case.

[613] He was not sure what point there would have been in a transfer to William if the Bank had not approved of it. It was suggested that the original idea was for Barclay to secure a loan on the farmhouse but he could not get a mortgage. The witness agreed that that tied in with the reference to the loan. They were trying to look at a number of ways of raising finance to build the new house on a plot of land and he thought that that was the reason for sending the other accounts to the solicitor. That money would be raised on the strength of the farm profits rather than on the security of a property. It was suggested that the intention was that Barclay would raise money on the security of the farmhouse because that did not need the Bank of Scotland's consent and the witness agreed that that sounded plausible.

[614] 6/4, sheet 13, was a letter dated 27 November 1992 from Mr Innes to Mr Grant. Paragraph 2 thereof indicated that the more straightforward and least complicated method (to repay the overdraft) was to take a domestic mortgage out on the farmhouse. The witness said that he was getting confused with the question of repaying the Bank and raising money to build the other house. He was referred to sheet 15 which appeared to contain discussions with Mr Grant and referred to the existing farmhouse being transferred to William for £75,000 with a 100% mortgage. He agreed that they would want to know what William's financial position was and sheet 12 contained a note of a discussion between Mr Innes and Mr Grant which must have been shortly before the telephone call. The third thing to do on that was to check what was secured and what was "Willie's" position. It could be inferred from that that William was not present at the meeting and that the reason for discussing his position was to see if he could obtain a mortgage if the house was transferred to him. In other words they were looking at the prospects of transferring the house to William and obtaining a mortgage thereon.

[615] The reference to the loss of MIRAS at the top seemed to the witness to be a reference to William's position. Barclay would not be losing MIRAS because he did not have a mortgage over the farmhouse. William would have had a mortgage on his own house next to the farmhouse. There was a reference to the possibility of term assurance under potentially exempt transfer and an interest only mortgage. He was asked whether that was a reference to raising money on the farmhouse. He said that William would not get a commercial loan on his own house. It would have to be raised on the farmhouse, the business.

[616] He was then referred to sheet 9, Mr Innes' notes. He was asked whether the mortgage of £60,000 to pay off the Bank related to the farmhouse. He said that that depended on whether losing MIRAS was still part of the equation, which might be a reference to William. It might be a reference to a loan over William's own house or the farmhouse. A commercial loan could only be over the farmhouse.

[617] He was then referred to sheet 12 again and to the first item to be done which was to phone Peter Munro. Just above that there was a reference to the possibility of transferring two chalet sites to William. There was no mention of transferring the farmhouse.

[618] He said that it looked as if Mr Innes had in fact telephoned him. He was interested in Inheritance Tax mitigation by transferring the chalets. The witness wanted Barclay to have access to the property and income to keep him happy for the rest of his life.

[619] It was put to him that in fact at the meeting on 11 December 1992 the partners were faced with certain difficulties in raising money on the farmhouse, the only unencumbered asset. He said that he had meetings to solve the problems with the Bank. It was suggested there was a discussion to transfer the farmhouse to William so that he could raise money on it since he was in a better position. He said there was correspondence somewhere involving an application to the Dunfermline Building Society. That was to be found on sheet 83. As it happens that entry was a bill which was sent to William but he complained that that was nothing to do with him and he was not going to pay it. A new fee note was issued (sheet 79) with that entry deleted. William said that that matter was done on behalf of his father.

[610] The controversy over who should pay what was of course after the dissolution of the partnership.

[611] It was put to him in terms that, as far as the witness was concerned, on behalf of both parties on 17 February 1993, he was seeking a mortgage to be raised on the strength of the farmhouse. He said that he possibly was. He accepted that it was valued at £75,000. If there was a reference in Iain Innes' notes to a mortgage of £60,000 then it might refer to the farmhouse so he agreed with a suggestion that as at 17 February 1993 efforts were still being made to raise money on the farmhouse to reduce the overdraft.

[612] He agreed that the proposal for the liferent was his suggestion. He was asked if everyone had agreed to it. He said that everybody seemed happy about the decision to go forward following the meeting. That would have been the first time that Barclay had heard about the liferent. He would have wanted to think about it. It was put to him that there was no suggestion that what happened was that Barclay agreed to transfer the farmhouse to his son. He said that that was the discussion at that moment. That was a possible outcome but the matter was not cast in stone. They would take the matter up with Ian Innes. Gavin Cullen was saying that the farmhouse should go into the partnership and that was as far as his discussions about a liferent went.

[613] He was not aware of the dissolution until after it happened. He was not told about it by William. The suggestion that it was his responsibility to give notice to the Bank surprised him. He would have expected the solicitor to deal with it, not the accountant.

[614] He agreed with a suggestion that William Grant's intention was that all the assets were to be vested in him. It was suggested to him that Sutherland & Co supported that in the arbitration and he also agreed. It was put to him that the liabilities were to be borne by Barclay and William according to their respective shares but William was to get all the assets. He said that he understood that the business would go to William with all the assets and liabilities, in other words he would take over the net capital assets. He thought that that was the position which was put forward by Sutherland & Co. William would have the farm and the liabilities and Barclay was happy with that as long as he had the liferent of the farmhouse. He was asked who told him that and he said that was the feeling of the meeting which they had in December.

[615] It was suggested to him that he had said that he was never at a meeting when assets and liabilities were discussed but nonetheless that, he said, was his understanding of the December meeting.

[616] Generally the Bank would not release funds except in return for the proceeds of sale. The partnership was in a difficult financial position. He presumed that the solicitors would have been aware of that as well.

[617] Barclay Grant did not come across as dishonest. He was honest as far as he could see. He did not see him during his hospitalization. It was suggested to the witness that he should have addressed the issue of remarriage if things had got to the stage of transferring the property with a liferent but he said that did not cross his mind.

[618] In re-examination, he said that he had never seen Mr Innes' file before. He had no idea what Mr Innes' evidence was in the arbitration or before Lord Reed. His best recollection was based on his own notes and his memory. He was asked what was discussed on 11 December 1992 and he said it was reflected in the comments at the top of page 103. It was the transfer of the farm and the farmhouse to William and the liferent to Barclay on his own. He was asked why that was in the interests of the parties. His position was that the discussion was to try and get the best practical answer to remove the overdraft and protect Barclay. The meeting of 11 December had been amicable. The parties were happy to proceed with the transfer of the farm and the house, with a liferent, and proceed in some way to benefit the farm and themselves.

[619] There were no letters on file sending documents to the Dunfermline Building Society.

I found that this witness was doing his best to tell the truth.

[620] The last witness was Donald Bremner Reid, a solicitor. He qualified in 1975 and dealt mainly in property and commercial activities, as well as general practice. He had been asked for his opinion a number of times.

[621] 7/5 was a report dated 24 April 2000 which he had written at the request of the defenders' solicitors. He was concerned about the reference to "his assignees" in the Disposition because a liferent was in favour of a single individual and was not necessarily or ordinarily a right which could be assigned or assignable. The words were not necessary on the assumption that they intended to give a liferent solely to Barclay Grant. On the assumption that they were to convey a liferent which would benefit other parties after Barclay Grant's death then they were inadequate, therefore incorrect. He was asked whether, when he wrote his opinion, he was aware of any styles using the words "assignees". When he wrote the report he did not call to mind any particular style nor did he go to look for one. He was fairly sure that he had come across style deeds for a proper liferent but that was not in the front of his brain.

[622] He knew Mr Wadsworth. After preparing his report there was further correspondence from Balfour & Manson and he himself searched for a style which he found. He was directed to the documentation for the Diploma in legal practice, containing one of the styles which he found himself. That was 7/12.

[623] He compared the style at 2.2.8 in 7/12 with 6/1 and said that in all material respects the words were identical. He regarded 2.2.8 as a style for a liferent in favour of a single individual and he regarded the use of the words "and assignees" as otiose. He was then referred to page 4 of his report, to which I have already referred in dealing with Mr Wadsworth's evidence. If he had been aware of the style which he saw later, it might have assisted him in underpinning and developing what he said in his report. His conclusion would have been fortified.

[624] He had taught in the diploma for 19 to 20 years from 1980 to 1999. Styles were important for a number of reasons. In the first place, they saved time and in the second place, if there was in use a recognised style then it would be more likely to be correct.

[625] He used to tell his students, however, that they should be careful about following styles in particular cases.

[626] In cross-examination, he said that he had not heard the evidence in the case although he had seen precognitions of Iain Innes and William Grant. He had not been provided with a copy of the evidence given in Court. Furthermore, he had only seen the farmhouse Disposition, not the farmlands one.

[627] He was referred to 6/24 and asked about the various entries therein. He confirmed that they showed a Disposition ad rem of the 0.671 acres and eventually a reconveyance of that property by the partnership. The inference would be, if that Disposition were correct, that the 0.671 acres were part of the farmlands.

[628] It was put to him that there was evidence to the effect that the reference to assignees could be thought by some to be an indication that the liferent would benefit someone after the death of the original liferenter. He could see how a lay person might so read it. It was also put to him that there was evidence to the effect that when the Disposition was presented for signature, Mr Grant was told that it gave effect to his instructions. It was suggested by Mr Stewart that in these circumstances it would have been appropriate for a person going over the deed with him to tell Mr Grant that the conveyance did not extend the liferent beyond his life. He said that that could have been done. He was questioned as to whether any competent conveyancer would have done this and objection was taken on the basis that this hypothesis was not raised with Mr Innes, therefore there was no foundation in the evidence. Furthermore, there was no Record for it.

[629] In reply Mr Stewart referred to Answer 6 at page 11 and I allowed the evidence subject to the usual reservation.

[630] When the witness turned to that question he said the answer to it would depend on what the client's express instructions were. At the end of the day the position seemed to be that if a conveyancer had prepared a deed which did not correctly reflect the granter's instructions then the conveyancer would already have been negligent and would be hardly likely to draw the attention of the granter to that when going over the deed with him.

[631] It was noted that the reservation in 6/1 was in the third person. Mr Grant could have reserved a liferent by using the words "myself" and suitable other words, but the witness could not say that that meant that the drafter was not really applying his mind to what he was doing.

[632] He proceeded to write his report on the basis that the conveyancer was asked to reserve a liferent to Mr Grant with the fee to William Grant. As a matter of fact he did not know who drafted the deed or on what instructions. He had not been given any information to the effect that the drafter of the deed had followed a style.

[633] In referring to the words "executors and assignees" in his own report, he had drawn an analogy with normal conveyances of a fee. It was put to him that when writing his report he had had no reason to think that the drafter was using a style but he said that he had every reason to think that. The drafting of deeds reserving a proper liferent was rare and if he had been instructed to draft one he would have looked up a style.

[634] He was then asked about the advantages of trust liferents and agreed that they could be used when the identities of particular people who would draw benefit were not ascertained at the date of the deed. It could be used when the benefit was to go to a person in a particular post. Trust liferents were also flexible and could for example have provisions allowing the Trustees to revoke the liferent on the occurrence of a specified event such as the marriage of the liferenter or liferentrix.

[635] It was suggested to him that in proper liferent the fee vested immediately in the fiar but in trust liferents it was held by the trustees and not in the fiar but he said that it could be either.

[636] There was no re-examination.

Once again, no issue of credibility or reliability arose in relation to this witness, for whose expertise I was also grateful.

Submissions for the Pursuer
[637] Mr Stewart moved me to sustain the pursuer's pleas, to repel the defenders' pleas, to grant decree for payment by the defenders to the pursuer in the sum of £202,620 with interest from the date of decree, to certify Ronald Stuart Wadsworth, LLB, solicitor of Messrs Stronachs, 34 Albyn Place, Aberdeen and H G Stewart, RICS, Messrs Ryden LLP, 25 Albyn Place, Aberdeen as skilled witnesses for the pursuer and to find the defender liable to the pursuer in expenses except in so far as already dealt with.

[638] He explained that Mr Stewart was involved in advising the pursuer about quantum and that resulted in the joint minute.

[639] His submissions were that on the evidence the defenders had failed to implement the deceased's instructions to reserve an extended liferent in the farmhouse Disposition, for the benefit of any wife or housekeeper living with him on the date of his death. That failure was negligent and caused loss to the pursuer in the agreed sum of £202,260. The pursuer was a person to whom the defenders owed a duty of care and had title and interest to sue. Lastly the claim had not prescribed.

[640] Certain pleas had been reserved for answer after proof. Mr Stewart indicated that he would not deal at this stage with certain aspects, for example the quality of the pursuer's evidence. There might be an argument on rectification which he would deal with in due course, having heard Mr Moynihan. He would also seek to give a reply to any argument on prescription and to any objections which were advanced.

[641] He had seven propositions of fact and law, or mixed fact and law, to advance.

[642] These were as follows:-

(1) Lord Reed's conclusion that the deceased gave instructions for the farmhouse Disposition in the terms subscribed by him was negatived on the evidence led in the present case. There had been a number of differences in the evidence.

(2) In dealing with the deceased's affairs, most notably from 14 February 1993 until 25 May 1993 the defenders acted negligently quoad the deceased or at least failed to act in his best interests and subordinated his interests to those of William Grant junior and disregarded his autonomy as a client.

(3) There was no agreement between the deceased and William Grant or instructions given by the deceased to the defenders for the preparation of the gratuitous farmhouse Disposition reserving a liferent purely to the deceased.

(4) The deceased's evidence had to be preferred to that of Iain Innes on the question "what instructions were given relative to the reservation of any liferent."

(5) The defenders failed to implement Barclay's instructions to make an effective reservation of a liferent so as to benefit any wife or housekeeper residing with him at his death. Their failure was negligent and the pursuer thereby suffered loss.

(6) The pursuer is within the class of persons to whom the defenders owed a duty of skill and care and, having suffered loss by virtue of their failures in duty, had title to sue.

(7) The pursuer's claim had not prescribed.

[643] As a preliminary matter Mr Stewart invited me to keep a distinction between instructions for the Disposition as a whole and the instructions for the liferent. Barclay was willing to say that he had given instructions relative to the liferent, were there to be a transfer, but he did not actually instruct the Disposition. In other words, his broad position was that even if he had got round to instructing a Disposition he would have wanted it in particular terms.

[644] Mr Stewart then turned to his first proposition. He said that Lord Reed was dealing with the instructions for a Disposition. His conclusion that Barclay gave evidence for the Disposition in the terms in which it was subscribed was negatived by the evidence in this case.

[645] The matter was not res judicata.

[646] His conclusions were based on direct evidence and inferences from evidence which was not available in the current case.

[647] He referred to 7/1 of process, Lord Reed's opinion and started at page 31 thereof reading from lines 3 to 16 as follows:

"Mr Innes could not recollect when the deceased had confirmed his instructions, but was adamant that the deceased must have done so: in particular, he was in no doubt that he had been instructed by the deceased to proceed with the Dispositions. He had initially received instructions to draft the Disposition of the farmhouse (reserving a liferent) from the deceased; and it was on 1 April 1993, when he saw the deceased in connection with the execution of that Disposition, that he received instructions from the deceased to prepare the other documents (ie the Disposition of the farmhouse, the letter of resignation and the codicil)."

Mr Stewart suggested that the last reference to the farmhouse must have been an error since the particular Disposition concerned was that for the farmlands, although this might simply have been a typographical error.

[648] Lord Reed's Opinion went on as follows:

"The initial instructions had been given in a telephone call which he received from the deceased within the week prior to 1 April. He had no note of that call on file, but it was apparent that his file was not a comprehensive record (there was, for example, no record in the file of his attendance at the farmhouse on 1 and 8 April, although there is no doubt that he was there on those dates). He was certain that he had received such a call."

[649] Mr Innes had no file notes and this was not related to Mr McWilliam on 25 May 1993. All that was related was that Craig Wood had been to hospital and had been told that certain things were to be done as before. The matter was not referred to in the evidence given at the arbitration. Reference was made to page 6 of the typed version of 6/9, Mr Donaldson's note. He was asked "when did you get instructions to draw these deeds? Can you recollect if they were drawn by you personally?" and his answer was "I cannot recollect".

[650] He was also asked "when did the decision harden and the course become certain?" His answer was, "in April 1993 approximately. I paid two visits to WBG's house, on 1 April and 8 April. I am not sure when I got instructions for the Disposition of 1 April". Reference was then made to page 44 of Lord Reed's Opinion, dealing with William Grant's evidence. The only part to which my attention was drawn was the following:

"Some day before 1 April the deceased told the defender that he wanted to be taken out of the hospital that day, as he had instructed Mr Innes to prepare a Disposition for him to sign".

That was the evidence in the present case. The only evidence of what William Grant might have said in evidence was contained in the arbitration proceedings as noted by Colin Watson and spoken to him under reference to 6/6 at pages 6 and 7, to which I have already referred.

[651] At page 33 his Lordship said the following:

"I also regard as important the evidence of George McWilliam, which I will come to later, that he had been told by the deceased that he had given instructions to Mr Innes (admittedly under pressure from the defender, according to the deceased)."

[652] At pages 38 and 39 his Lordship quoted the file note referred to in 6/22 pages 6 etc commencing "When Mr Grant was transferred" and finishing "to what he had told Mr Innes" but the reference to the farm at the end of the first paragraph was omitted. At the top of page 39 he noted the following:

"This passage is notable in recording the deceased's acceptance that he had given instructions to Mr Innes in relation to the Disposition of the house, albeit (according to the deceased) as the result of the defender's telling him that the legal advice was that he must follow that course of action."

There was some evidence from Mr Innes and Mr McWilliam that the reference in the passage about the instructions was about the instructions given on 1 April for the Disposition of the farmlands signed on the 8^th.

[653] It was suggested earlier that Lord Reed might have made a mistake when he referred to the farmhouse and this passage fortified that view.

[654] Lord Reed had also made a number of inferential findings. Reference was made to page 14 lines 11 to 19 in the context of evidence given by Barbara Wilson, which was more or less the same evidence she gave in the current proceedings. The quotation is as follows:

"He told her that she would be able to have his home for her life after he died. Miss Wilson appeared to me to be a reliable witness, and I accept her evidence. It supports Miss McMillan's account of the deceased's demeanour in the Ian Charles Hospital, and it is also indicated that he could take the initiative in organising his own affairs. It is also significant that he envisaged granting or assigning a liferent of the farmhouse, given that the Disposition of 1 April 1993 reserved a liferent which could be assigned by him. That may be a pointer towards his involvement in the preparation of the Disposition and his awareness of its terms."

[655] Mr Stewart submitted that Lord Reed was putting the lay, or non-specialist interpretation on the words "his assignees" as discussed with Mr Reid. His Lordship found the assignation provision persuasive while both parties in the current case agreed that it did not operate mortis causa.

[656] Reference was then made to page 21, lines 13 to 15 as follows:

"Mr Cullen's evidence also provides an explanation, at least in part, for the deceased's retirement at that time, namely to obtain tax relief on the proceeds of the cattle sale. It is also another piece of evidence indicating that the deceased and the defender had a good relationship while the deceased was in hospital."

[657] The evidence in this case, on the contrary, included evidence at the arbitration that the deceased did not wish to sell the cattle. Reference was made to Colin Watson's evidence about the end of Barclay's cross-examination. Reference was also made to Ian Donaldson's notes at the end of that cross. Mr Watson's evidence in manuscript form was at 6/20 and in typed form at 6/23. Mr Donaldson noted the following exchange in 6/9 at page 10 as follows:

"Question: Did you agree the livestock should be sold?

Answer: - this was not agreed by me but it was done after things were out of my control."

[658] Peter Munro confirmed that the cattle were sold after the partnership had been dissolved and the pursuer in re-examination said that the deceased was shocked by the sale.

[659] Mr Stewart submitted then that the proposition that the conclusion reached by Lord Reed that the deceased gave instructions for the Disposition as subscribed was negatived by the evidence in this case. He submitted that his proposition was well founded and that that cleared the ground in this case.

[660] While I was grateful to Mr Stewart for this, it did not seem to me to take the case very much further. With the greatest of respect to Lord Reed, his Opinion on the evidence led before him is one thing but I of course have to decide the case on the evidence led before me.

[661] Mr Stewart then turned to his second proposition, namely that in dealing with the deceased's affairs from 14 February till 25 May 1993 the defenders acted negligently quoad Barclay or at least failed to act in his best interests and subordinated his interests to those of William et separatim disrespected his autonomy as a client. He said that the way the business was conducted was such that it was highly probable that anything Barclay wanted to be done vis-à-vis the liferent would be overlooked. The defenders seemed to be giving attention to William's interests but not to those of Barclay and there were a number of instances of this.

[662] In the first place, within three days of his stroke the defenders, in breach of their obligations of client confidentiality, faxed a copy of his will to William, a potentially interested party. The reference by Mr Innes to this having been done on Barclay's instructions was a glib afterthought. Mr Innes did, on the other hand, say that it was at the request of William that this had been done.

[663] This matter progressed to the point where a codicil was prepared to qualify a legacy for Alexander and that benefited William. The draft of the codicil was at 6/4, sheet 35, and it was one of the documents presented for signature on 8 April 1993.

[664] In the second place, it was averred by the pursuer and not denied by the defenders that the defenders advised that the farmhouse Disposition was apt to mitigate Inheritance Tax, to safeguard against care costs and to facilitate reduction of the partnership overdraft. These averments were at condescendence 3, page 8. It was also averred that this advice was not well founded in all respects as any competent solicitor should have known, in other words that it was negligent. It was also averred that there was no good reason in Barclay's interests for him to grant the Disposition in the terms in which he did grant it.

[665] These matters were within the knowledge of the defenders and were not denied so they had to be taken as admitted.

[666] When the matter was touched upon with Iain Innes, he appeared fairly to concede the points.

[667] In the third place, the farmhouse Disposition, number 6/1 of process, as presented on 1 April 1997, was blank as to the subjects to be disponed, namely Mains of Garten. Mr Innes admitted that the description of the subjects had been inserted in a blank and although he claimed to have revised it he could not say if it was filled in before or after subscription. Either was possible. The alteration was not authenticated or referred to in the testing clause and at common law an alteration not referred to in the testing clause was presumed, in the absence of contrary evidence, to have been made after subscription.

[668] Reference is of course made in the Disposition to the dwelling house erected thereon but that might not take us very far.

[669] It was enough, said Mr Stewart, for him to say that the Disposition showed a disregard for the client's autonomy and helped us to understand why Barclay might not know what he had signed.

[670] There was, after all, evidence that there was a discussion about two liferents in connection with the chalets and the house so this might be important.

[671] The farmlands Disposition, 6/2 of process, was defective in a number of ways. It was presented to the deceased in an unknown form which was different from that in which it is now recorded.

[672] The farmlands were created as a conveyancing unit in 1979 when Mr & Mrs Grant, the first wife, disponed to the firm 97 acres or thereby from their personal ownership. In 6/2 these 97 acres were conveyed under three exceptions.

[673] The first exception was 0.47 acres which, on Mr McWilliam's evidence, under reference to his notes on title at 6/22/34 and the search sheets 6/5/133, was the caravan site. It was never conveyed to the partnership in the first place and should never have been excepted.

[674] That was also confirmed in the scheme of division after the arbitration, number 6/8 at page 10.

[675] The third exception looked as if it had been interposed between the first and the second. In gremio there was a reference to a deed recorded five weeks after the date of subscription. This exception referred to the plot of ground to be developed with the aid of the Rural Enterprise Grant. A copy of it appeared at 6/22 at sheets 38 to 42 and was spoken to by Mr McWilliam and the pursuer. It is the piece of ground shown on the left of the plan in sheet 42.

[676] The second exception contained a blank which was about half a line long. According to Mr Wadsworth that was not proper practice. Whatever happened thereafter, the deed which was presented for signature was not the same deed as was now presented.

[677] There was also a missing exception which ought to have been there, namely the 0.671 acres disponed by corrective Disposition as spoken to by Mr Wadsworth under reference to 6/24, namely the Disposition of the chalet sites.

[678] That corrective Disposition was dated 16 March 1993 and recorded in November 1994.

[679] This farmland Disposition was drafted with complete disregard for the client's interests. (It has to be said though that it was hardly in William's interests to be the grantee of a defective Disposition.)

[680] Mr Stewart also submitted that it was inappropriate for these gratuitous Dispositions granted by Barclay to have been granted with absolute warrandice, particularly given that the deeds were partly blank.

[681] Mr Stewart then turned to the question of the dissolution of the partnership from 5 April 1993. The evidence showed that the dissolution and the farmhouse Disposition were intended by the defenders and were implemented by them to serve the interests of William to the prejudice of Barclay. They apparently intended the dissolution and the farmlands Disposition to divest Barclay of his share of the assets in favour of William leaving Barclay still liable for his share of the partnership debts. The defenders continued to act for William in the arbitration and maintained that there had been a prior agreement to transfer ownership of the assets to William. That evidence came from Mr Innes, Colin Watson and Peter Munro. Mr Stewart submitted that in continuing to act for one of two partners in dispute, the defenders were in breach of their obligations to Barclay in a conflict of interest situation. In addition the defenders, those supposedly acting for the partnership and both partners, failed to give notice of the dissolution and failed to intimate to the Bank of Scotland that the deceased had resigned. The upshot of that was to expose Barclay to liability for debts subsequently accrued, including the increase in the overdraft. Mr Innes accepted that. Mr McWilliam spoke to the correspondence in 6/22 and in particular to sheets 69 to 72 thereof where he asked Sutherland & Co by letter of 22 September 1993, what they had done about these matters. He asked whether Sutherland & Co instructed the insertion of a notice in the Edinburgh Gazette at the time of Barclay's resignation, giving public intimation of the termination of the partnership, and the answer to that was "no" (letter of 24 September 1993 at sheet 71).

[682] Mr McWilliam also asked whether dissolution of the partnership was not intimated by Sutherland & Co to the Bank until 3 June and the answer to that was as follows "we understood that both Messrs Grant consulted with the Bank prior to the dissolution of the partnership and that the Bank were aware of this matter."

[683] The letter from Sutherland & Co bore the reference IMI and Mr Stewart submitted that that was the sort of glib, self-serving response which had been seen in the witness box.

[684] The Bank was never involved in discussions about the dissolution and neither was the accountant, Mr Munro.

[685] Mr Stewart then turned to the question of consideration for the transfer of the partnership assets. He said that the consideration was supposed to be the site which was to be developed with the aid of the Rural Enterprise Grant. The deceased got this property without a Deed of Restriction of the Bank's security. Sheet 37 of 6/22 was a letter of 5 August 1993 from Sutherland & Co enclosing a copy of the Disposition by the firm to Mr Grant of that plot of land and indicating that in view of the present developments they were unable to negotiate the appropriate Deed of Restriction with the Bank. Whether the developments being referred to were the breakdown in relationships between Mr Grant and Sutherland & Co or something else, there was plenty of evidence that the Bank were not willing to grant deeds of restriction unless they obtained full value.

[686] In connection with personal relationships, Mr Stewart drew my attention to the briefing from Mr Innes to Mr McWilliam noted in 6/22 at sheet 2, the note of the telephone conversation of 25 May.

[687] He referred in particular to the following note:

"Mr Grant has resigned from the farming partnership, although he is still the tenant of Toum. The chalets are still his. The truck has been locked in a farmsteading for Mr Grant's own protection as he is unfit to drive. A further housekeeper had been employed, but the latest one had just recently resigned because of his behaviour."

[688] In that connection he referred to the evidence of Morag McMillan at 6/25, which had been agreed as her evidence in the joint minute. He drew my attention in particular to the following parts of that statement at pages 2, 4 and 5:

"My duties included cleaning, cooking, going shopping and driving Barclay about. I didn't have my own car. There was a 4x4 jeep at the farmhouse that I initially assumed was Barclay's. I used it to drive Barclay about and to go shopping...It was obvious to me that Barclay wanted Marilyn back. I told him that it might be best if he spoke to William about it. That evening William came to the house with the coal and sticks. I excused myself and went to my room. William later knocked on my bedroom door and asked me to come through. In the presence of Barclay, William said that he was washing his hands of the situation now that his father was seeing Marilyn again. He said that he was having nothing more to do with his father. It was obvious that William was annoyed that his father had taken up with her again. William then left. The following day I found that the jeep had been taken away from outside the farmhouse. I went to William's house and asked him what was happening. He said that he wasn't coming near his father again and that he had taken the jeep away. I have no idea who actually owned the jeep. I went back to see Barclay. He was quite annoyed that the jeep had gone but didn't go to see William about it. That night William did not deliver the coal and sticks. The next day I saw William and asked him where the coal and sticks were kept and he showed me the shed. At that point I realised that I was not happy with the situation between Barclay and William and I didn't want to become involved in what appeared to be developing into quite a serious family fall out. I also realised that I would be stuck for transport now that the jeep had gone. I didn't want to work under these conditions so I told Barclay that I was leaving. I gave him a week's verbal notice. I also told William who was quite upset about it but he didn't try to persuade me not to leave."

[689] Mr Stewart submitted that Mr Innes, who had been acting for Barclay until then, was inappropriately ready to take a stance about Barclay and what he said was untrue and adverse to his interests.

[690] In fairness, this may be simply a recounting by Mr Innes of what he was told by others, such as William.

[691] The next point made by Mr Stewart was in relation to the management by the defenders of Barclay's affairs.

[692] He said that even now there was no plausible account of how it came to be that a proposal to mortgage the farmhouse to reduce the partnership debt turned into a gratuitous alienation justified by them at the time on specious grounds namely mitigation of Inheritance Tax, avoidance of care costs and reduction of the overdraft.

[693] Mr Stewart then turned to his third proposition, i.e. that there was no agreement between Barclay and William or instructions to the defenders from Barclay to prepare the gratuitous Disposition of the farmhouse.

[694] He said that, looking at what remained of Mr Innes' file and his comments thereon, there was enough evidence to show that there was a proposal to transfer the farmhouse originally in an attempt to raise funds to reduce the overdraft. There was a discussion about assets and Inheritance Tax. That resulted in a valuation of the farmhouse by Souter & Jaffrey in October or November of 1992 and a valuation of £75,000 being put on it. That property was not encumbered by security. On 27 November 1992 Iain Innes said, under reference to 6/4/13 that he wrote to Barclay to say, under reference to repaying the overdraft, that the most straightforward way to do it would be to raise funds on the security of his farmhouse, his main residence. The sums which could be raised would be 75% of the value, namely £56,250. There was an undated note at sheet 15 headed W B Grant. Mr Innes explained that the idea developed, because of difficulties with Barclay obtaining a mortgage, that the farmhouse would be transferred to William for full consideration (£75,000) and William would obtain a 100% mortgage. There was a cryptic suggestion that the property might be revalued up to £85,000 for a £75,000 mortgage.

[695] The reference to a "gift" to William - what" did not refer to the farmhouse.

[696] Sheet 12 in that production referred to MIRAS being lost and to the two chalet sites and was a reference to phoning Peter Munro and to checking what was secured, in other words what was William's position. Mr Innes' evidence was that this was shortly before 15 December because it referred to phoning Peter Munro and a possible transfer of two chalet sites. Sheet 9 contained a discussion of a mortgage to pay off the Bank in physical proximity to the reference to the liferent. The farmhouse was the only unencumbered property and the only property which would qualify for a £60,000 loan or thereby. It had already been discussed as collateral for paying off the Bank. Mr Munro came up with the proposal for qualifying the transfer with a liferent. That idea originated with him in order to preserve Barclay's interests and he proposed it at a meeting on 11 December 1992, as set out in sheet 103 of 7/3 of process.

[697] Mr Munro said that the proposal was not supported by the Bank and there was no future in it. The Bank would support a transfer to the partnership which they understood to be a 50/50 business as opposed to the factual situation which was a two-thirds to one-thirds split in favour of Barclay.

[698] Whatever happened, whether as a result of the comments by the Bank or because Mr Innes pre-empted the matter as Mr Munro said, Mr Munro was not aware that the parties were going ahead with the transaction with the liferent provision. Mr Stewart thought that he said that he would not have been expected to have been told that.

[699] He went on to say that Mr Innes was unable to give a coherent account about when agreement was reached and when instructions were given to prepare the Disposition. Mr Munro said that he had seen William at a meeting a few days before the transfer took place and there was no mention of it then. (See the letter at page 7/3/97 from Mr Munro to the Bank which referred to various initiatives, the transfer of the farmhouse not being one of them).

[700] It could be inferred that the Bank were not aware of the proposed transfers.

[701] The Dispositions, said Mr Stewart, were put in front of Barclay and he was told to sign them.

[702] He then turned to look at Mr Innes' evidence about the source of his instructions.

[703] The record of the telephone conversation of 25 May 1993 at 6/22/2 indicated that matters were instigated at the request of Barclay Grant. It was said that various things were decided and it was agreed that certain assets would be transferred over to Mr Grant's son William. Craig Wood went to see him and he said that he just wanted the whole thing done as before.

[704] Mr Innes accepted that that could mean that Mr Wood had received instructions from Mr Grant.

[705] Reference was then made to 6/22 sheet 30, a note of a telephone conversation between Mr Innes and Mr McWilliam. That contained the following remarks "Noting from Mr Innes that Mr Grant Senior had instigated the transfer of the properties to William and had given clear instructions prior to his stroke."

[706] According to the communications between Mr Munro and the Bank a few days before the transactions took place, nothing was relayed to the latter about them.

[707] On 29 April 1996 at the arbitration, Mr Innes was unable to give a clear account of when the farmhouse Disposition had been instructed and who instructed it. Reference was made to pages 6-8 of 6/9(b) of process, the typed notes of evidence.

[708] On 29 April 1998, Mr Innes told Lord Reed that instructions had been given to him over the telephone from hospital. Reference was made to 6/12/38 of process, a transcript of his evidence. In evidence before this court he said that that probably did not happen although I think he did say that there was a telephone call.

[709] In any event I was invited to regard his explanations, given what he had said previously, and the opportunities he had had nearer the time to say what really happened, with caution. The file was obviously incomplete. There was no record of attendances, fee notes, instructions or even a draft Disposition.

[710] The deceased stated that he did not give instructions for any documents. There might be a debate about whether he gave instructions for the farmlands Disposition when he was directed by William or whether he was acquiescent when it was put in front of him for signature.

[711] Reference was made to 6/18, page 6 line 5 as follows "No instructions to prepare documents were given by me to Mr Innes."

[712] I asked him about the Record and in particular the averments at condescendence 4 as follows:

"WBG was concerned in relation to the disposal of his estate to be in a position to provide security in terms of a right to occupy the farmhouse after his death for any wife or housekeeper living with him at the time. This was a particular concern to him in relation to the pursuer living with him as his housekeeper at the time. His instructions to the defenders were dependent on that concern being satisfied. His instructions to the defenders were to effect a disposal in relation to the farmhouse which preserved an entitlement on his part to secure a right of occupation for his wife or housekeeper after his death. His instructions in relation to the granting of said Disposition at all were conditional on this entitlement being preserved. Had he not been advised and assured by the defenders that this condition was satisfied WBG would not have been prepared to instruct and sign said Disposition."

[714] The only evidence we had from William Grant was that spoken to by Colin Watson. That indicated that he told the deceased that all he had to do was sign the documents and that was consistent with Barclay Grant's statement.

[715] Mr Stewart then turned to his fourth proposition, namely that the deceased's evidence was to be preferred to that of Iain Innes on the question of what instructions were given about the reservation of the liferent. It was his submission that Mr Innes did not create a good impression in the witness box. He was glib and made off the cuff self serving explanations. He was guilty of at least wishful thinking in connection with the timing, source and nature of his instructions for the liferent and other things as well.

[716] It was extraordinary that he had no recollection of salient facts such as the financial problems faced by the partnership in 1993 vis-à-vis the Bank. Nor was there any recollection of the 4x4 truck.

[717] He was unable to give a coherent account of the other conveyancing transactions and failed to mention that the Disposition ad rem and corrective Disposition had been executed by the deceased while he was still at Raigmore Hospital on 16 March 1993.

[718] The only matter on which he purported to have any recollection was the matter at issue in this case, namely the instructions about the liferent. That was not a matter he had to address until long after the event and his recollection was very surprising.

[719] His responses were glib. He claimed to have revised the deeds and accepted that they were not done very well but when saying he revised them in the interests of Mr Grant he made a gesture of writing in the air which Mr Stewart recalled but I am afraid I did not. Where were the revisals and what was the effect of them? When he was asked about the deed with the reference to the later date in it he said that it was a mistake. Clearly it was a mistake but something must have been inserted later since the later deed in fact existed. Mr Stewart must be correct in this last point.

[720] Mr Innes claimed that the Bank were aware of the dissolution of the partnership in his letter at sheet 71 of 6/22 but on what basis did he think that? He claimed that it was the accountant's job to notify the Bank about the dissolution of the partnership but the accountant knew nothing about that. For the first time, and prompted by 7/9 to 7/14, the styles, he claimed that he had seen such styles about the office. There had been nothing in the defences about this originally. At the arbitration, according to Ian Donaldson's note, he was asked what was meant by "assignees of liferent" and he said "I am not sure. It must have been WBG's instructions. If I put a deed in front of someone and they read it and ask if they have any questions, if they don't and then sign it I assume that these are their instructions." That was at page 7 of the typed version of 6/9.

[721] In his own notes, 6/4 at sheet 9, there were deeply ambiguous references to liferents. One was on the left and the other in the bottom right hand corner, relating to a liferent to WBG. We knew now that there were two possible liferents discussed (of the chalets and the farmhouse).

[722] The reference on the left was not inconsistent with the deceased's version of events. Nor was the reference to a mortgage of £60,000.

[723] Mr Innes' testimony was not a coherent narrative. Until that point in the story the reason for the transactions was being explained as raising funds and Inheritance Tax mitigation. In fact the transactions did not have any mitigatory effect nor assisted in raising funds and the advice was negligent. There was a transfer mentioned in connection with raising money to pay off the overdraft and it was not easy to see how matters developed. There was no suggestion that Inheritance Tax insurance was taken out. It might be legitimate to infer that that was because the ultimate plan was formulated not by Barclay Grant but elsewhere at a time when he had had a stroke and could not get insurance because he would not have been expected to survive for seven years.

[724] There was a discussion about whether Inheritance Tax mitigation could apply if there was a retained benefit. It was Mr Stewart's submission that when conflict was emerging between the parties and the defenders were administering to the affairs of Barclay Grant it was intelligible, without imputing a sinister motive, that the defenders would overlook matters and fail to take appropriate steps to implement instructions given by him to protect his interests and effect his wishes.

[725] As far as Barclay Grant's evidence was concerned, before his stroke there was no reason for him to feel reticent about discussing his reasons for reserving a liferent and Mr Innes accepted that. At the time when he stated that the liferent issue was discussed with Mr Innes, he had already proposed to the pursuer and was awaiting a response.

[726] Mr Grant had a pre-occupation with ensuring security for any housekeeper or wife. We knew that from Barbara Wilson and we knew that he was concerned that the pursuer should have the security of that benefit. Barclay told the pursuer in late 1992 that that was what he wanted to do and she was not crossed on that. Barclay stated that he had instructed Iain Innes that any liferent should be not only for himself but for any wife or housekeeper. That was the information conveyed by Mr McWilliam to Professor Cusine in the Memorial of 30 August 1993 (6/22 sheets 49 to 52) and in the Memorial to Counsel dated 5 October 1993 (6/22 pages 76 to 80). Mr McWilliam said that the information therein was based on statements from the deceased taken shortly before compiling the Memorials. He was not challenged on that. I am not sure how he could have been.

[727] Reference was made to 6/13 and 6/18.

[728] Barclay told the pursuer that that was what he wanted Mr Innes to do. The evidence was equivocal about what happened when he signed the Disposition. Mr Innes said that he either read it or it was read over to him. Barclay said that he did not read it and it was just put under his nose. He said at the arbitration that he thought the purpose of it was to provide security for his housekeeper. Lord Reed appeared to have taken the same view of what the words "his assignees" meant. The deceased was adamant that he would not have signed the document had he known that it did not reserve an extended liferent. See 6/22/7, the note of 17 May 1993.

[729] Reference was also made to sheet 11 of 28 May 1993 when he apparently still thought that he might have a power to assign the document. That note contained the following: "Marilyn was concerned as to her safety if she returned to the house because of William's threats. He was concerned that merely bequeathing it to her would be open to challenge."

[730] This indicated that Mr Grant seemed to think that he could bequeath the liferent.

[731] He was upset when he obtained the advice from Professor Cusine.

[732] There was no plausible reason as to why the deceased should have fabricated his evidence. There was a degree of uncertainty about what the deceased, in his own mind, was signing, but his account became persuasive when it was understood that he had signed more than one document in hospital. Reference was made to the corrective Disposition and the blanks in the deeds which he signed.

[733] Mr Stewart's fifth proposition was that the defenders failed to implement Barclay Grant's instructions to make effective reservation of a liferent so as to benefit any wife or housekeeper residing with him at his death. That failure was negligent and the pursuer had suffered loss therefrom.

[734] Mr Stewart had no particular submissions to make on this. It was accepted that the deed in question did not conform to these instructions, the issue being whether or not they were given.

[735] Mr Stewart's sixth proposition related to whether the pursuer was within the class of persons to whom the defenders owed a duty of skill and care and whether, having suffered loss by reason of their failure in duty, she had title to sue.

[736] This was covered by the defenders' pleas in law 2 and 3.

[737] Mr Stewart submitted first of all that privity of contract was not a prerequisite for founding a claim for professional negligence by a third party beneficiary.

[738] As a starting point, he referred to the case of Robertson v Fleming (1861) 4 Macq 167, (H.L.)(Sc.). I need not go into the details of that case at this stage but in essence it decided that there was no remedy for third parties against law agents where the third parties were not employers of the law agents.

[739] He submitted that the modern authorities started with the case of White v Jones [1995] 2 AC 207.

[740] The rubric in that case read as follows:

"In March 1986, in consequence of a family quarrel, a testator executed a Will disinheriting the plaintiffs, his two daughters. After reconciliation he resolved to make a new Will which was to include legacies of £9,000 to each daughter and on 17 July 1986 the second defendants, his solicitors, received a letter signed by him instructing them to prepare a Will to that effect. The first defendant, a legal executive employed by the second defendants, did nothing to implement those instructions until 16 August, when he dictated an internal office memorandum on the matter. Thereafter, little progress was made with preparation of the Will and on 14 September the testator died without the new Will having been executed. The March 1986 Will thus remained unrevoked. The judge dismissed a claim in negligence by the plaintiffs, holding that, although the defendants were in breach of their professional duty to the testator, they owed no duty of care to the plaintiffs, and that the damage was in any event too speculative and uncertain in extent to be recoverable. On appeal by the plaintiffs, the Court of Appeal allowed the appeal and gave judgment for each plaintiff for £9,000, holding that the defendants owed a duty of care to the plaintiffs, and were in breach of that duty."

[741] The defendants' appeal to the House of Lords was dismissed, it being held that the assumption of responsibility by a solicitor to his client, who had given instructions for the drawing up of a Will for execution, extended to an intended beneficiary under the proposed Will in circumstances where the solicitor could reasonably foresee that a consequence of his negligence might result in the loss of the intended legacy without either the testator or his estate having a remedy against him; and that, accordingly, in the circumstances the plaintiffs were entitled to the relief sought.

[742] Mr Stewart read in particular from the speech of Lord Goff of Chievely at pages 268C to 269D as follows:

"In the Lenesta Sludge [1994] 1 AC 85, as I have said, the House made available a remedy as a matter of law to solve the problem of transferred loss in the case before them. The present case is, if anything, a fortiori, since the nature of the transaction was such that, if the solicitors were negligent and their negligence did not come to light until after the death of the testator, there would be no remedy for the ensuing loss unless the intended beneficiary could claim. In my opinion, therefore, your Lordships' House should in cases such as these extend to the intended beneficiary a remedy under the Hedley Byrne principle by holding that the assumption of responsibility by the solicitor towards his client should be held in law to extend to the intended beneficiary who (as the solicitor can reasonably foresee) may, as a result of the solicitor's negligence, be deprived of his intended legacy in circumstances in which neither the testator nor his estate will have a remedy against the solicitor. Such liability will not of course arise in cases in which the defect in the Will comes to light before the death of the testator, and the testator either leaves the Will as it is or otherwise continues to exclude the previously intended beneficiary from the relevant benefit. I only wish to add that, with the benefit of experience during the 15 years in which Ross v Caunters has been regularly applied, we can say with some confidence that a direct remedy by the intended beneficiary against the solicitor appears to create no problems in practice. That is therefore the solution that I would recommend to your Lordships.

As I see it, not only does this conclusion produce practical justice as far as all parties are concerned, but it also has the following beneficial consequences.

(1) There is no unacceptable circumvention of established principles of the law of contract.

(2) No problem arises by reason of the loss being of a purely economic character.

(3) Such assumption of responsibility will of course be subject to any term of the contract between the solicitor and testator which may exclude or restrict the solicitor's liability to the testator under the principle in Hedley Byrne. It is true that such a term would be most unlikely to exist in practice; but as a matter of principle it is right that this largely theoretical question should be addressed.

(4) Since the Hedley Byrne principle is founded upon an assumption of responsibility, the solicitor may be liable for negligent omissions as well as negligent acts of commission ...

(5) I do not consider that damages for loss of an expectation are excluded in cases of negligence arising under the principle in the Hedley Byrne case ... simply because the cause of action is classified as tortious. Such damages may in principle be recoverable in cases of contractual negligence; and I cannot see that for present purposes, any relevant distinction can be drawn between the two forms of action. In particular, an expectation loss may well occur in cases where a professional man, such as a solicitor, has assumed responsibility for the affairs of another; and I for my part can see no reason in principle why the professional man should not, in an appropriate case, be liable for such loss under the Hedley Byrne principle.

In the result, all the conceptual problems, including those which so troubled Lush and Murphy J.J. in Seale v Perry [1982] V.R. 193, can be seen to fade innocuously away. Let me emphasise that I can see no injustice in imposing liability upon a negligent solicitor in a case such as the present where, in the absence of a remedy in this form, neither the testator's estate nor the disappointed beneficiary will have a claim for the loss caused by his negligence. This is the injustice which, in my opinion, the judges of this country should address by recognising that cases such as these call for an appropriate remedy, and that the common law is not so sterile as to be incapable of supplying that remedy when it is required."

[743] Mr Stewart submitted that the House of Lords more or less disregarded Robertson v Fleming as being of antiquarian value only.

[744] Lord Goff indicated that liability would not arise in cases in which a defect in a will came to light before the death of the testator and Mr Stewart indicated that the defenders might make something of that in connection with the suggestion that the remedy of rectification was available but he reserved his position on that meantime.

[745] He submitted that there was a loss as far as the pursuer was concerned. The legal question was whether she was a person who was owed a duty of care by the defenders.

[746] He turned then to the speech of Lord Browne-Wilkinson at page 270A to C as follows:

"My Lords, I have read the speech of my noble and learned friend, Lord Goff of Chievely, and agree with him that this appeal must be dismissed. In particular, I agree that your Lordships should hold that the defendant solicitors were under a duty of care to the plaintiffs arising from an extension of the principle of assumption of responsibility explored in Hedley Byrne ... In my view, although present case is not directly covered by the decided cases, it is legitimate to extend the law to the limited extent proposed using the incremental approach by way of analogy advocated in Caparo Industries plc v Dickman [1990] 2 AC 605. To explain my reasons requires me to attempt an analysis of what is meant by 'assumption of responsibility' in the law of negligence. To avoid misunderstanding I must emphasise that I am considering whether some duty of care exists, not with the extent of that duty which will vary according to the circumstances."

[747] In his concurring speech at page 295C Lord Nolan said the following:

"It was argued that the failure by the appellants in the present case was a failure of omission, and that omission is not as a rule a ground upon which liability in negligence can be based. That argument cannot, to my mind, have any force where the omission occurs after the duty of care has been assumed by the defendant. Once the duty exists, it can make no difference whether its breach occurs by way of omission or of positive act."

[748] In the present case, said Mr Stewart, the negligence could be attributed to either omission or commission.

[749] He submitted that the law of Scotland had received White v Jones at least so far as the Outer House was concerned and arguably also in the Inner House. Reference was made in this connection to the case of Holmes v Bank of Scotland 2002 SLT 544 per Lord Kingarth. In that case a niece and nephew sought damages from a Bank for losses allegedly caused by the defenders' failure to arrange timeously for the execution of their aunt's will for which instructions had been given shortly before her death. The defenders sought dismissal, arguing inter alia that no duty of care was owed to intended beneficiaries. It was held that there was an authoritative indication in Robertson v Watt & Co, Second Division, 4 July 1995, unreported, that a Court in Scotland would not now regard itself as being bound by Robertson v Fleming and that the principle in White v Jones would be followed in Scotland. A proof before answer was allowed. It was opined that the opinions in Robertson v Fleming on the point in issue in the present case were obiter and that if the Court had misinterpreted Robertson v Watt & Co as authoritatively indicating that White should be followed, the pursuers would still have averred enough for proof before answer as there was no obvious reason why Scots law would not extend the principle of Hedley Byrne in the same way as White.

[750] At page 548B to 549B, under reference to the case of Robertson v Watt & Co, 4 July 1995, unreported, Lord Kingarth said the following:

"In the Division, the Lord Justice Clerk delivered the opinion of the court in which inter alia the pursuer's appeal was allowed and a proof before answer allowed on the pursuer's whole averments.

[9] It is perhaps appropriate to rehearse in its entirety what was said on the relevant question;

'The pursuer also raised the question of whether the sheriff had been well founded in holding that the pursuer had not pled a relevant case of breach of duty to her as an individual in relation to matters prior to her husband's death. It is clear from the sheriff's note that he sustained the defenders' second plea-in-law in so far as it related to the defenders' alleged breach of duty to the pursuer prior to her husband's death because he felt bound by the decision in Robertson v Fleming. Here again the sheriff's decision has been overtaken by events and in particular by a subsequent decision by the House of Lords. In White v Jones, the majority in the House of Lords held that the law had moved on from the time of Robertson v Fleming and that the Court was free to depart from the views expressed in Robertson v Fleming. In Robertson v Fleming at p 177, the Lord Chancellor had said:

'If this were the law a disappointed legatee might sue the solicitor employed by a testator to make a Will in favour of a stranger, whom the solicitor never saw or before heard of, if the Will were void for not being signed and attested. I am clearly of opinion that this is not the law of Scotland nor of England, and it can hardly be the law of any country where jurisprudence has been cultivated as a science.'

In White v Jones it was observed that the dictum was obiter and did not form part of the ratio decidendi.

Before this Court counsel for the defenders subjected the speeches of the majority in White v Jones to a careful analysis. At this stage, however, it does not appear to us to be necessary to pursue such a course. Suffice it to say that the majority in White v Jones expressed the view that the Court could 'extend to the intended beneficiary a remedy under the Hedley Byrne principal by holding that the assumption of responsibility by the solicitor towards his client should be held in law to extend to the intended beneficiary who (as the solicitor can reasonably foresee) may, as a result of the solicitor's negligence, be deprived of his intended legacy in circumstances in which neither the testator nor his estate will have a remedy against the solicitor' (per Lord Goff of Chieveley at pages 206-207.

Having regard to these views expressed in White v Jones, we have come to the conclusion that the sheriff was not well-founded in maintaining the defenders' second plea-in-law to this extent. Whether or not the pursuer is entitled to a remedy in terms of the principle enunciated by the majority of the House of Lords in White v Jones will depend upon the circumstances, and until the circumstances have been established in evidence, it is not possible to say whether the pursuer will be held to be entitled to a remedy against the defenders. We are, however, satisfied that the pursuer has averred sufficient regarding the circumstances to entitle her to an enquiry on this branch of the case. Moreover since there is to be an enquiry, it is preferable that we should say no more about the submissions made to us in relation to White v Jones.'

[10] In my view, although the expressed reasons are short, this decision can properly be read, in the first place, as authority that a court in Scotland would not now regard itself as being bound by Robertson v Fleming. Whether this was because the Court considered that the law had moved on from the time of that decision or on the basis that the Court agreed that anything they had said about the absence of a duty owed by a solicitor to a disappointed beneficiary was obiter (or both) is perhaps not clear, but if the Court had considered itself bound by Robertson v Fleming (as the sheriff had) they would not, it seems, have allowed a proof before answer. ...

[11] Further, although it is perhaps less clear, I have come to the view that the opinion can also be regarded as an authoritative indication that the 'principle enunciated by the majority in White v Jones' would be followed in Scotland. Although the Court does not expressly say so, nevertheless having specifically acknowledged the views of the majority that the Court could extend to the intended beneficiary a remedy under the Hedley Byrne principle ... they concluded:

'Whether or not the pursuer is entitled to a remedy in terms of the principle enunciated by the majority of the House of Lords in White v Jones will depend upon the circumstances, and until the circumstances have been established in evidence, it is not possible to say whether the pursuer would be held to be entitled to a remedy against the defenders'.

That last observation is, in my view, only reasonably consistent with an understanding that at the end of the proof the question would be whether White v Jones could be said to apply to the facts of the case and not whether White v Jones could be said to be apply at all. ... It can, I think, at the very least be inferred from the way the Opinion of the Court is expressed that the Court saw no reason to suppose that White v Jones would not be followed in Scotland.

[12] In the light of Robertson v Watt & Co, I do not regard myself as bound by Robertson v Fleming."

[751] Mr Stewart also referred me to paragraph 19 which was in the following terms:

"[19] Had it been necessary, I would therefore have come to the view - notwithstanding the conceptual difficulties trenchantly set out in the speeches of Lord Keith and Lord Mustill in White v Jones - that there was no obvious reason why Scots law would not extend the principle of Hedley Byrne in the same way. As indicated above, it seems the Court in Robertson v Watt & Co at least saw no reason to suppose the contrary. By contrast, as counsel for the pursuer stressed, the views expressed in Robertson v Fleming predate the whole development of the law of negligence from Donoghue v Stevenson onwards. ..."

[752] Mr Stewart submitted shortly that White v Jones was the law of Scotland.

[753] He submitted also that the rule extends in favour of beneficiaries in a defined class in respect of a specified benefit within the contemplation of the donor at the material time. The pursuer in this case said that the benefit was clearly defined, namely the right to live in a particular house. She was a member of a very narrow class, namely any wife or housekeeper living with Mr Grant and there would only be one member of that class at any one time.

[754] In attempting to answer the question whether the benefit could extend to a member of such a class, he referred again to White v Jones and in particular to Lord Goff's opinion at page 269E to H as follows:

"I come finally to the objection that, if liability is recognised in a case such as the present, it will be impossible to place any sensible limits to cases in which recovery is allowed. Before your Lordships, as before the Court of Appeal, Mr Matheson conjured up the spectre of solicitors being liable to an indeterminate class, including persons unborn at the date of the testator's death. I must confess that my reaction to this kind of argument was very similar to that of Cooke J. in Gartside v Sheffield, Young & Ellis [1983] N.Z.L.R. 37, 44, when he said that he was not 'persuaded that we should decide a fairly straightforward case against the dictates of justice because of foreseeable troubles in more difficult cases'. We are concerned here with a liability which is imposed by law to do practical justice in a particular type of case. There must be boundaries to the availability of a remedy in such cases; but these will have to be worked out in the future, as practical problems come before the Courts. In the present case Sir Donald Nicholls V.-C. observed that, in cases of his kind, liability is not to an indeterminate class, but to the particular beneficiary or beneficiaries whom the client intended to benefit through the particular will. I respectfully agree, and I also agree with him that the ordinary cases is one in which the intended beneficiaries are a small number of identified people. If by any chance a more complicated case should arise to test the precise boundaries of the principle in cases of this kind, that problem can await solution when such a case comes forward for decision."

[755] Reference was then made to the case of Gibbons v Nelsons CH 1997 G No. 2368, a decision of Blackburne J on 5 April 2000. The facts of that case do not particularly matter but reference was made by Mr Stewart to pages 25 and 26 of the judgment as follows:

"There is, to my mind, a very real difficulty here. As I have mentioned White v Jones has established that a solicitor retained to prepare or execute a Will (or both) may owe a duty of care to a disappointed beneficiary if, as a result of the solicitor's negligence, the Will is not drawn up or is drawn up in a way which fails to give effect to the testator's intentions, with the result that the beneficiary does not take the benefit which the testator intended. Yet, the cases in which liability has been established are all ones where the identity of the intended beneficiary, to whom the assumption of responsibility by the solicitor towards his client is held by law to extent, was clearly known to the solicitor defendant. What distinguishes this case from these others is that Mr Moffat was unaware, as regards Alice's half-share in the trust fund, that Elsie was the intended beneficiary (which, for the purposes of considering this point, I shall assume that she was). His breach of duty to Alice was in failing to ascertain from her to whom she intended to give it.

Given the approach of the House of Lords in White v Jones, how can the solicitor be held to be in breach of duty to a person (the intended recipient of a particular benefit) of whom the solicitor is unaware? In the passage from Lord Goff's speech in White v Jones which states the principle (and which I set out earlier) there is a reference to the assumption of responsibility 'to the intended beneficiary who (as the solicitor can reasonably foresee) may as a result of the solicitor's negligence, be deprived of his intended legacy'. While acknowledging that it may not be necessary for the solicitor to be aware of the precise identity of the intended beneficiary (he may, for example, be aware that the testator intends to make a gift to someone identified only as 'my son' or to a defined class eg. 'my children and grandchildren') I am of the view that the law requires, at the very least, that the solicitor should know (1) what the benefit is that the testator-client wishes to confer and (2) who the person or persons or class of persons are (in each case ascertainable if not actually named) on whom the client-testator wishes to confer the benefit. I have seen nothing in any of the authorities which justifies an extension of the assumption of responsibility to cases where these two elements are not present.

The fact that Mr Moffat was (1) aware of the trust fund, (2) aware of Elsie's existence and (3) aware, if he had thought about the matter, that Alice might possibly wish to appoint some or all of her half-share in the trust fund to Elsie, does not seem to be to be enough to justify extending to Elsie Mr Moffat's assumption of responsibility towards Alice. I would not therefore have felt able to accept Mr Laughton's submission that I should.

If therefore I had found that Alice had the requisite intention, I consider that Elsie's claim would have failed at this hurdle."

[756] The plaintiff failed on the facts in that case. The suggestion had been that had her sister been advised about a power of appointment then she would have exercised that power of appointment in favour of the plaintiff who would then have been able to acquire the deceased's sister's share in a trust fund. It was plain that that would have been difficult to prove. The class effectively covered anybody who could have been appointed by the liferentrix and was well beyond the scope of what the law would envisage.

[757] My attention was then drawn to the case of Carr-Glynn v Frearsons [1999] 2 WLR, 1046.

[758] In that case a testatrix executed a will drawn up by the defendant solicitors in which she left the plaintiff, her niece, her share in a property which she owned jointly with her nephew. The testatrix died without having severed the joint tenancy. On her death her share in the property automatically vested in her nephew as a surviving tenant and the gift to the plaintiff was ineffective. The plaintiff sued the defendants, claiming damages for breach of a duty of care owed to her to ensure that the testatrix was properly advised of the need to sever the joint tenancy in order for the gift in her will to take effect. The judge dismissed the claim, holding that the defendants had not been negligent and that in any event when a solicitor's breach of the duty of care to a testator in preparing a will resulted in a loss to the estate the solicitor owed no duty of care to an intended beneficiary under the will whose gift was thereby rendered ineffective. It was held on appeal that the solicitor's duty to a testator to take care to ensure that effect was given to his intentions included a duty to an intended beneficiary to ensure that the beneficiary received what the testator intended him to receive; that a beneficiary's cause of action against a solicitor existed independently of and was complementary to any cause of action which the estate might have; that a competent solicitor acting reasonably would have advised the testatrix of the need to serve a notice of severance in conjunction with the execution of the will; and that the defendants' failure to do so constituted a breach of duty giving rise to a cause of action entitling the plaintiff to such damages as would put her in the position she would have been in had effect been given to the testatrix's intentions.

[759] Reference was then made to the case of Gorham & Others v British Telecommunications PLC & Others [2000] 3 All ER 867, a case involving, broadly speaking, negligent pension advice. G, a married man with two young children, was an employee of BT but was not a member of its occupational pension scheme. On seeking advice from a representative of the defendant insurance company, Standard Life, he was not told that an occupational pension scheme might be superior to a personal pension and he joined one of Standard Life's personal pension schemes. He eventually joined the occupational scheme, having been advised by SL that he would be better off, but died within two years of receiving the correct advice so that he did not qualify for the full benefits.

[760] I need not go into the whole of the facts, or the ultimate disposal, which depended on those facts

[761] My attention was drawn to the opinion of Pill LJ at page 878E to H as follows:

"It is fundamental to the giving and receiving of advice upon a scheme for pension provision and life assurance that the interests of the customer's dependants will arise for consideration. In my judgement, practical justice requires that disappointed beneficiaries should have a remedy against an insurance company in circumstances such as the present. On the facts, Mr Cornwell can have been in no doubt about his customer's concern for Mrs Gorham and the two children. First amongst Mr Gorham's list of priorities was 'provision for family'. Mrs Gorham, as spouse, was expected to sign a form confirming the information she and her husband had made available and confirming that Mr Cornwell's recommendations had been received and understood. Advice was expected and was directed not only to the interests of Mr Gorham but to the interests of his dependants should he predecease them. The advice was given on the assumption that their interests were involved. Moreover, the provision for them was not merely a windfall in the sense that a legacy may be a windfall; it was central to the purpose of the venture into insurance."

[762] Mr Stewart also referred to the Opinion of Shiemann LJ at page 881 as follows:

"The position of an investor who goes to a financial adviser seeking investment or pensions advice in relation to making provision for his family after his death is analogous to that of a person who goes to a solicitor seeking advice in relation to making provision by will for his family after his death".

[763] He submitted that Mr Grant was in an analogous position.

[764] Mr Stewart then turned to the Opinion of Sir Murray Stuart-Smith at page 883A to B as follows:

"Unless Mrs Gorham has a claim for her loss of pension rights and the children's loss of benefit, there is no remedy. The class of beneficiaries is small and it is obvious that Mr Cornwell had them in contemplation at the time of the transaction of selling the Standard Life policy. In a sense the case is even stronger that White v Jones because Mrs Gorham suffered a real loss; the premiums are paid out of what might be regarded as the family income, and her loss is a reduced pension. The beneficiary in White v Jones merely lost a windfall."

[765] Mr Stewart submitted that that might be important because in the instant case the pursuer provided her services as a wife and a housekeeper and Mr Grant wished to give her security.

[766] Sir Murray was plainly thinking of a class rather than named individuals.

[767] Reference was then made to the case of Dean v Allin & Watts [2001] 2 Lloyds Law Reports 249.

[768] The facts of this case are not particularly relevant but it involved an issue whether a solicitor owed a duty of care to an individual not to make a misrepresentation to him as to the efficacy of a security. The claimant was not a client of the solicitors. It was held at first instance that no duty was owed by the solicitor but in the Court of Appeal the claimant succeeded.

[769] Reference was made to the judgment of Lightman J at page 261, paragraph 37 to page 262, paragraph 40 as follows:

"37. The approach adopted by the House of Lords in White v Jones, was that the assumption of responsibility by an adviser (if that case a solicitor) may extend beyond the client to those whom the client intended to benefit. In the case in question the client was a prospective testator and the assumption of responsibility was to the beneficiaries under the proposed will. Later authority has established that this approach is not confined to such situations but is applicable in analogous situations. The law in this regard is most clearly stated in the decision of this Court in Gorham ...

38. In that case an insurance company gave negligent advice to a customer who sought its advice as to the best method of making provision on his death for his dependants. After the customer's death his dependants sued the insurance company for negligence in respect of the loss to them of the benefits which the negligence occasioned. The Court of Appeal held that, since it was fundamental to the giving and receiving of such advice that the interests of the client's dependants should be taken into account, practical justice required that in those circumstances the disappointed beneficiaries should have a remedy against the insurance company. The advice had been given in a context in which the interests of the dependants were to the knowledge of the insurance company fundamental to the transaction and the duty of care was owed to the intended beneficiaries as well as to the client.

39. Lord Justice Schiemann said (at page 881):

The position of an investor who goes to a financial adviser seeking investment or pensions advice in relation to making provision for his family after his death is analogous to that of a person who goes to a solicitor seeking advice in relation to making provision by will for his family after his death. I agree with my Lords that in each of these cases, following the phraseology of Lord Goff of Chievely in White v Jones ..., the adviser's assumption of responsibility towards the investor extends to the intended beneficiaries who (as the financial adviser can reasonably foresee) may, as a result of the adviser's negligence, be deprived of an intended benefit and who, in a very real sense, are dependent upon the dealings between the adviser and the person seeking advice to safeguard their position. ... the assumption of responsibility to beneficiaries in cases such as the present does not operate to widen the scope of the duty but merely to widen the number of those who can sue in respect of any breach. That was, I believe, the approach of Lord Goff, who in White v Jones ... states that the assumption of responsibility will of course be subject to the terms of the contract between the solicitor and the testator.

40. In my judgment by parity of reasoning and in the analogous situation which arose in this case, the law can and should impose a like duty of care on A & W towards Mr Dean in respect of the provision of an effective security, the benefit of which to his knowledge the borrowers wished to confer on Mr Dean and which was fundamental to the loan transactions. There is the necessary foreseeability of damage and the necessary relationship of proximity for the law to impose such a duty of care and it is fair, just and reasonable that such a duty should be imposed. There are no policy reasons inhibiting recognition of the duty. The learned Judge took a different view on the question of fairness, justice and the reasonableness, but she did not have the benefit of the guidance provided by the decision of this Court in Gorham v British Telecommunications. If she had had that guidance her conclusion might well have been different."

[770] Mr Stewart referred in particular to paragraph 38 where it was said that the advice had been given in a context in which the interests of the dependants were to the knowledge of the insurance company fundamental to the transaction and a duty of care was owed to the intended beneficiaries as well as to the client. That was a reference to Gorham. He said that the same could be said of the current case.

[771] Mr Stewart then returned to the facts of the current case. Ex hypothesi the defenders knew that Barclay intended the benefit to extend to a very small class of persons, a class of one in effect. Clearly the benefit was highly specific. Iain Innes was in attendance when both William Grant and Alexander Grant said that their father had previously had twelve housekeepers. Reference was made also to Mr Wood's evidence.

[772] Mr Innes had organised the advertisements for new housekeepers on 25 March and 1 April (6/3 sheet 6). He also knew that Barclay was a widower and either knew or ought to have known that remarriage was a possibility. Mr Stewart went beyond the evidence to some extent and speculated that perhaps the possibility of remarriage was what was troubling William.

[773] We had not heard from the drafter of the deed and did not know what he or she had in mind when drafting it. For all we knew the deed, whether it followed styles or not (these having come late in the day) was intended to effect an extended liferent.

[774] Mr Stewart's final submission was that the claim had not prescribed. It was not in dispute that a claim would prescribe within five years in terms of Sections 6 and 11 of the Prescription & Limitation (Scotland) Act 1973 but the pursuer's position was that the time would not start running until iniuria and damnum co-existed. Until Barclay died on 16 July 1998 it was not possible to say that there was a loss.

[775] The action was raised just ahead of the five year period from the date of death so it had not prescribed.

[776] He preferred to reserve further submissions on that until he had heard what Mr Moynihan had to say.

Submissions for the Defenders
[777] Mr Moynihan indicated that he had no difficulty with the certification of the two experts whom Mr Stewart had mentioned but he invited me in due course to put the case out By Order because there were a number of matters which would have to be discussed in relation to expenses. He invited me to sustain the defenders' pleas to the relevancy of the pursuer's averments. The general plea to the relevancy is the fourth one which can, for present purposes, be taken to encompass the scope of pleas 2 and 3.

[778] I was also invited to sustain plea in law number 9 which went to the merits of the action and alternatively to sustain plea in law number 6 which went to prescription.

[779] As it happens pleas in law numbers 1, 6 and 7 all go to prescription and plea in law number 8 goes to the merits.

[780] No issue of quantum now arose if the pursuer succeeded.

[781] Mr Moynihan's submissions started out with a hypothetical scenario of a bank, without instructions, transferring money out of a person's account to a stranger. On discovery of that it was complained that the transfer was not instructed and that if there had been instructions to make a transfer the transferee would have been the person's wife. The question was whether the wife could sue the bank and Mr Moynihan suggested that the answer would be in the negative. That would be because it would be wrong to characterise the wife as having even a contingent right to receive the cash. At best any entitlement on her part was hypothetical and in fact the hypothesis was false, that is if the person had been instructing the transfer to anyone (which he did not) it would have been to the wife. The remedy would lie with the person either recovering the money from the stranger if he could or suing the bank for having made an unauthorised transfer out of the account. The person's wife would presumably benefit from his recovery of the cash and there was no need (even if there were any justification) for her to contemplate separate proceedings.

[782] Mr Moynihan submitted that the pursuer was that "disappointed" wife, now suing in respect of what was no more than an hypothetical entitlement to an extended liferent, that hypothesis being false because he said that Mr Grant never instructed the transfer of the house which would have occasioned the reservation of the liferent. If instructions were given as a result of which a Disposition was negligently drafted and Mr Grant divested himself of the farmhouse without the reservation of the liferent which he wanted, then he himself could raise a claim against the solicitors. If no instructions were ever given, then the action might be one of reduction, although there would have to be some averments to overcome the fact of his signature.

[783] If there were instructions but the Disposition did not properly reflect them then the remedy would be rectification.

[784] Mr Moynihan submitted that there was a paradox inherent in Mr Stewart's submissions. This was the second action which had been raised in relation to the farmhouse. Until Mr Stewart began his closing submission it was thought that she was relying on the same evidence for two diametrically opposed propositions. In the reduction action the position of the pursuer was that the farmhouse Disposition was prepared by Mr Innes on the instructions of William Grant with the Disposition being placed before Barclay Grant for signature with his merely being told to sign it and given no opportunity to read it. He signed it under pressure from William not even knowing what he was signing.

[785] In the present action the Disposition proceeded on the basis of instructions from Barclay Grant to transfer the farmhouse to William but reserving an extended liferent. Moreover, he had been advised by the defenders that the Disposition reserved to him the possibility of appointing persons to a lifetime right of occupation after his death.

[786] On the first hypothesis it was not difficult to see why the Disposition did not reflect Barclay's wishes, assuming that it did not. It was to be assumed that William would have instructed the Disposition on his own terms. However it was understood that this action proceeded on the second hypothesis and the negligence relied upon was very simple. It having been Barclay who instructed the Disposition, it followed that the Disposition which the defenders had to prepare was one which reflected his intention and incorporated the extended liferent. The defenders proceeded on the basis that there were two indivisible parts to the pursuer's case namely that it was Barclay who had instructed the preparation of the Disposition and that the instructions given by him had included the reservation of an extended liferent.

[787] The line taken by the defenders in cross-examination of the pursuer, Mr Donaldson, Mr Watson and Mr McWilliam was that Barclay's categorical denial that he had instructed the preparation of the Disposition was inconsistent with the foundation of the present action, which was understood to be that he had instructed it but on different terms.

[788] Mr Moynihan referred to the evidence which Barclay gave on oath during the arbitration in which he indicated that he gave no instructions to Mr Innes to transfer the house to William. Messrs Donaldson and Watson coincided precisely on that point and the conclusion was irresistible that that was the evidence given under oath by Barclay Grant. The pursuer's own evidence twice in the examination was that it was her understanding that Barclay did not give instructions for the house or farm to be signed over. The height of it was, apparently, that an extended liferent formed part of his intention in late 1992/early 1993 if he were to sign it over but he did not give instructions. In other words, his thinking never progressed beyond this being one of the footballs he was kicking about.

[789] That readily explained the averments in the reduction action on page 9 of the Closed Record that the farmhouse Disposition was instructed by William and not by Barclay and the pursuer accepted in cross-examination in the current case that those averments reflected Barclay's own rationalisation of what had occurred. The pursuer stated that Barclay did not instruct either the farm or the farmhouse Disposition therefore it must have been William who did so.

[790] The defenders accordingly were puzzled as to how the pursuer could maintain the averments in the present action which were understood to mean that the transaction had proceeded on the instructions of Barclay Grant and that those instructions had been qualified by the need to create an extended liferent. Condescendence 4 in the present action included the following words:

"His instructions to the defenders were to effect a disposal in relation to the farmhouse which preserved an entitlement on his part to secure a right of occupation for his wife or housekeeper after his death. His instructions in relation to the granting of said Disposition at all were conditional on this entitlement being preserved. Had he not been advised and assured by the defenders that this condition was satisfied, WBG would not have been prepared to instruct and sign said Disposition. ... Explained and averred that the defenders advised that the Disposition (which contains a reference to assignees) reserved to WBG the possibility of appointing persons to a lifetime right of occupation after his death."

Mr Stewart's closing submissions proceeded, surprisingly, on a fine distinction between the Disposition as a whole and the liferent. His position was that Mr Grant had not instructed the preparation of the Disposition but had nonetheless 'instructed' that if a Disposition were to be granted it should include an extended liferent. Mr Stewart, said Mr Moynihan, was trying to reconcile the irreconcilable. Either the transfer of the farmhouse to William proceeded on Barclay's instructions or it did not. There was no middle ground involving a subtle distinction between instructing the preparation of the Disposition (done presumably by William) and the terms of the liferent, because the two were indivisible. The proposition appeared to be that Barclay had not yet reached a final decision to transfer the farmhouse but he was of the view that if a Disposition were to be instructed by someone it had to contain the reservation of an extended liferent. That was an absurdity because only the owner of a property could properly instruct its disposal. It would be absurd to suggest that the client as owner gave 'instructions' that in the event that his property was disponed on the instructions of a third party nonetheless a liferent should be reserved in certain terms. If the property were to be transferred without his having instructed or authorised the transfer his objection would be to the fact of an unauthorised transfer. He would hardly be taking his stand on the collateral point that the liferent was not in the most advantageous terms. The collateral point only came to the fore on the alternative hypothesis that Barclay had indeed instructed the Disposition but was to maintain that in implementing his instructions to draft a Disposition with an extended liferent the defenders had negligently included only a liferent for his own benefit.

[791] Barclay Grant and latterly the pursuer and her co-executor challenged the validity of the farmhouse Disposition precisely because they maintained that it was not prepared on Barclay's instructions and was not granted by him of his own free will. That action failed but that did not open up the intermediate case now advanced by Mr Stewart because it made no sense in law to split the instruction of the transfer of the property to William from the terms of the reserved liferent. There was no need to reserve a liferent unless there was a properly instructed transfer of the farmhouse. That meant a transfer instructed by Barclay because no other transfer would be valid in law. Thus far Mr Moynihan said that he had only argued in terms of two variables, namely instructing the preparation of the Disposition and incorporating a suitable liferent. There were other variables which Mr Stewart had not attempted to grapple with. How did it come to be that Barclay executed the farmhouse Disposition? Indeed what did he think that he was signing? According to the pursuer Barclay was a confused man and she said that she had a clear recollection of what he said. According to her he told her that he knew he had signed documents but did not know what for. He believed that they were to amend his Will and add a codicil.

[792] This was not a case where the client said that he instructed a deed in certain terms and having read it, wrongly inferred that he had indeed implemented his instructions. There was no evidence from the pursuer that he read the Disposition and understood 'assignees' as inferring that the Disposition reserved the extended liferent that he claimed he wished. On the contrary, his position was that he did not read it and its contents were not explained to him as appeared in the Closed Record in the reduction action. As far as he was concerned he was there to sign an amendment to his Will or a codicil.

[793] In short the essence of his position was that this was not a transaction which was implemented by him of his own free will. It made no sense to turn a blind eye to that as Mr Stewart had done and to confine attention to the terms in which the liferent was framed.

[794] Mr Moynihan submitted that in the present case the actual position was that Mr Innes was quite correct. He did obtain instructions from Mr Grant for a simple liferent and if that was accepted then that was an end of the case on the merits. Even if he was rejected then the pursuer's case still foundered as a matter of law. In the scenario which was now being presented no duty of care was owed to the pursuer. The remedy lay in an action of reduction or an action based on professional negligence at the instance of Barclay Grant, perhaps carried on after his demise by his executors. He went on to expand on this in due course but he went back to his bank analogy and suggested that if money were transferred to a stranger without any instructions, the money would disappear and the customer's estate would be short of whatever it was. The customer, and then his estate if he died, could recover from the bank. If a testator wanted to leave a legacy of £50 to each of his two sons but through negligence the solicitors drafted the Will so that one son received £100 and the other received nothing then in those circumstances the estate had not lost out. The disappointed beneficiary could, though, sue the solicitor on the principle of White v Jones. That, of course, would have the somewhat odd result that the disappointed beneficiary would receive £50 from the bank and the other son would receive £100, which would be something of a windfall. (Questions of unjustified enrichment were not pursued). If, as a result of negligence a house, which ought to have been transferred to a widow, was lost to the estate then the estate could sue and the widow might ultimately benefit thereafter. If there was a means of restoring the house to the estate then there was no separate right of action by the widow and there was no lacuna as was identified in White v Jones. The negligent solicitors would have no duty of care towards her in those circumstances.

[795] Mr Moynihan went on to expand on this, as I have indicated. Before going on to that, though, he said that Mr Stewart's new approach raised two relevancy points. In the first place was there any Record for it? In the second place did it provide a suitable foundation in law for a duty of care being owed by the defenders to the pursuer? He suggested that the pleadings, particularly in condescendence 4, were disingenuous and Delphic. They were at best ambiguous. They implied that Mr Grant had indeed instructed the Disposition. That was the basis upon which the defenders conducted the proof. There was no specific case of the alternative that Mr Stewart had made the basis of his submissions, namely that Barclay did not give instructions for the preparation of the Disposition but he had nonetheless given instructions that if a Disposition were to be granted it would have to contain the requisite extended liferent. Lord Reed had found that Mr Grant had instructed the Disposition and Mr Stewart's submissions appeared to proceed on an esto basis. Mr Stewart's primary position was that Mr Grant never instructed the Disposition, the esto case being that if he had instructed one it would have been in the terms desiderated. There was no specific case on Record for this alternative basis. The pleadings said in terms that his instructions to the defenders were "to effect a disposal in relation to the farmhouse which preserved an entitlement on his part to secure a right of occupation for his wife or housekeeper after his death". Mr Stewart's position now proceeded on the basis that Barclay's thinking never progressed beyond kicking a lot of footballs about (see 6/23, sheets 3 and 7 and his evidence in the arbitration), the farmhouse Disposition came to be instructed by another, presumably William, and the defenders knew that it contained a liferent in terms different from those intended by Barclay but nonetheless he had put it before him for signature and allowed him to sign it without any word of warning or advice. When one took in what the pursuer said in evidence then the defenders allowed Barclay to sign the farmhouse Disposition when he wrongly believed that he was signing a codicil. That was light years away from any proposition on Record. Mr Stewart now appeared to be disavowing any instruction by Mr Grant to prepare a Disposition and simply indicated that if he had instructed one, which he did not, it would have been on different terms. That was contrary to article 4 and Mr Stewart could not have it both ways. He suggested that Mr Stewart's proposition was a late arrival. He had questioned Mr Wood on the hypothesis that the note 6/22, sheet 2, was correct and that Mr Wood was the recipient of instructions not in relation to terms of the liferent in the event that a Disposition were to be granted (which was the proposition now advanced) but in fact the recipient of the instructions to proceed with the transaction. Mr Stewart's interpretation of the phrase "he just wanted the whole thing done as before" was that it conveyed instructions to proceed with the property transaction as had been discussed at the turn of the year. It was rejected by Mr Wood but in fact Mr Stewart pursued the same line with Mr Innes. Mr Stewart suggested that Innes had told Mr McWilliam that Mr Wood had gone to see Barclay in hospital. There then followed a reference to Barclay's just wanting the whole thing to be done as before. Mr Moynihan submitted that Mr Stewart had a measure of success with Mr Innes in the way one might expect after fifteen years because the latter effectively conceded that if Mr McWilliam were to say what he said then he must have said it. Mr Moynihan's note of Mr Stewart's question was that that "would be an explanation of how instructions came" and was indicative of a line that Barclay did instruct the Disposition of the farmhouse amongst other deeds. It was totally at odds with the case now advanced. Mr Moynihan submitted that the explanation for the different case now being advanced was the evidence of Mr McWilliam. Despite Mr Stewart's attempts to lead Mr McWilliam to support the interpretation placed on his note by Mr Stewart, Mr McWilliam disagreed. The latter thought that references to wanting the whole thing done as before referred to emotional issues rather than legal ones. That should have been the end of that, said Mr Moynihan. For the avoidance of doubt in the cross-examination of both Mr McWilliam and the pursuer he took it that there was consensus that if instructions were given to anyone they were given to Mr Innes. There was no basis to implicate Mr Wood and that might explain why Mr Stewart had swung to the opposite extreme that no instructions were given by Mr Grant to anyone in relation to the preparation of the Disposition. It was a paradigm of irrelevance that the pleadings were so vague that counsel for the pursuer could with equal facility present two inconsistent propositions on the basis of them that is that instructions were given to Mr Wood when he visited the hospital on 23 February 1993, which failing to no one at all.

[796] The identity of the individual to whom instructions were given and the date on which those instructions were given were of the essence of the case. Did Mr Grant ever progress beyond kicking footballs about to the point of making a specific decision about the disposal of his property and did he convey that final decision to the defenders? If there was no plain answer to those questions on Record the pleadings were irrelevant and the action fell to be dismissed.

[797] That of course would be superseded of I were with him on the merits.

[798] Nonetheless he went on to make a secondary point. Mr Stewart had indicated that the lack of specification of the averments relating to the instructions in condescendence 4 was a point raised in argument at procedure roll. Paragraph 6 of the note of argument was referred to. At paragraph 15 of his Opinion Lord Dawson recorded Mr Stewart's reply that there had been fair notice in part because the matter had been fully investigated in the earlier litigation. It necessarily implied that the pursuer's case was to some extent foreshadowed in the reduction action. However Mr Stewart's first proposition was to exactly the opposite effect. He observed that Lord Reed proceeded on the basis that Barclay had instructed the preparation of the farmhouse Disposition but Mr Stewart submitted that that was negatived on the evidence led before me. However, there was no notice on Record that the pursuer was to proceed on a different basis. Mr Moynihan submitted that it was quite unfair for the pursuer to turn round in closing submissions and present a case on such a radically different basis. Mr Moynihan then submitted that in order to succeed the pursuer must have a relevant case in law that, in the circumstances, a duty of care was owed to her by the defenders. On the factual basis upon which Mr Stewart's submission rested no such duty was owed to her. Mr Grant had never formed an intention to benefit her and accordingly no such intention could have been frustrated. She had at most a hypothetical benefit. Furthermore, the farmhouse would have been disponed in a negligent manner and the estate would have been entitled to try to recover it by reducing the Disposition or at least obtain damages from the solicitors for their negligence. The pursuer could then indirectly benefit from the estate's recovery and she was not left without a remedy. White v Jones, therefore did not apply. In Customs & Excise v Barclays Bank [2006] 3 WLR 1 the House of Lords had recently surveyed the law on duty of care including White v Jones and had concluded that there was no single common denominator by which liability could be determined and that the Court should focus on the detailed circumstances of the case and in particular the relationship between the parties in the context of their legal and factual situation taken as a whole. In other words one had to look at the facts of the case and on those facts ask whether the law supported a duty of care of the scope relied upon by the pursuer. He referred particularly to the speeches of Lord Bingham from paragraphs 4 to 8, Lord Rodger at paragraph 51 and Lord Hoffman at paragraph 35.

[799] Mr Moynihan submitted that it was immediately apparent that Mr Stewart's submission was found wanting. What was the factual situation on which he had relied? His third proposition was negatively expressed, viz there was no agreement between Barclay and William or instructions to the defenders from Barclay to prepare the gratuitous farmhouse Disposition reserving a purely personal liferent to Barclay. How did it come about then that a Disposition in those terms came to be executed by him? A number of supplementary questions turned on that. Was it the case, as Barclay's evidence and statements seemed to infer, that he remained at the stage where he had not yet reached a decision in relation to the transfer of his property but that the Disposition was instructed by William, that Barclay was told that he was signing a codicil and that the deed was put under his nose and he was forced to sign it without reading it? If that was the case then no duty of care was owed to the pursuer. The pleadings did not disclose what reply Mr Stewart could make to that submission.

[800] It was not in dispute, under reference to Holmes v Bank of Scotland, that Scots law had moved on and embraced White v Jones. That, however, was not authority for the proposition that every disappointed beneficiary had a cause of action. The duty of care and hence the cause of action were fashioned to the circumstances of the case, paramount amongst which was whether there would otherwise be a loss suffered with no remedy. It was not as simple of asking whether someone might have a right to damages, for example the estate, in the case of a defective Will. Even where the estate itself might have a ground of action a disappointed beneficiary might also have a ground of action if he or she was so far excluded as to have no benefit from the recovery made by the estate. See Car-Glynn v Frearsons. There was, however, no duty owed to a disappointed beneficiary if the estate had its own cause of action and the beneficiary had rights, for example as residuary legatee in the estate. Mr Moynihan referred to the case of Worby v Rosser [2000] P.N.L.R. 140 and in particular to the Opinion of Chadwick L.J. at page 149 where he said the following:

"The remedy fashioned on White v Jones was needed to fill a lacuna. The remedy is provided in circumstances in which it can be seen that there is a breach of duty by the solicitor to the testator in circumstances in which the persons who have suffered loss from that breach will have no recourse unless they can sue in their own right. In a case like White v Jones the disappointed beneficiary suffers loss but the estate does not because nothing that the solicitor has done or failed to do causes any diminution in the estate. In a case like Carr-Glynn v Frearsons - where the breach of duty lay in failing to advise the testator to take the necessary steps to sever a joint tenancy in property in which he was invested, so that her half share could devolve to the intended beneficiary - the estate does suffer loss because it is deprived of the half share. But to allow the estate to recover for that loss would have had the effect that the recovery accrued to the benefit of the residuary legatees (whom the testatrix never intended to benefit from that property); the specific legatee (who was intended to benefit) would have no remedy. In both those cases the lacuna was identified and the Court fashioned a remedy to fill it.

In the present case there is no lacuna to be filled. If the solicitor's breach of duty under his retainer has given rise to the need for expensive probate proceedings, resulting in unrecovered costs, then, prima facie, those costs fall to be borne by the estate for the reasons which I have already sought to explain. If the estate bears the costs thereby and suffers loss then, if there is to be a remedy against the solicitor, it should be the estate's remedy for the loss to the estate. There is no need to fashion an independent remedy for a beneficiary who has been engaged in the probate proceedings. His or her costs, if properly incurred in obtaining probate of the true will, can be provided for out of the estate. If there has been a breach of duty by the solicitor, the estate can recover from the solicitor the additional costs (including the costs to which the beneficiary was entitled out of the estate). The practical difficulties which would be likely to arise if solicitors were held to owe duties directly to beneficiaries under earlier wills provide powerful support for the view that it would not be appropriate to provide a remedy in circumstances in which it is not needed."

[801] In that case the plaintiffs were beneficiaries under a 1983 Will. In 1989 the testator executed a later Will which was prepared by the defendant, who was named as an executor. One of the effects of the later Will was to reduce the share of the estate passing to the plaintiffs. After executing the later Will the testator died. The plaintiffs contested the grant of probate in respect of the later Will and sought probate in respect of the 1983 Will. In 1994 the judge found in their favour holding inter alia that the testator lacked testamentary capacity in 1989 and that the execution of the Will was obtained by the undue influence of another named beneficiary. Despite orders for costs being made in their favour the plaintiffs were unable to recover the very substantial costs of the probate action. In 1995 they began the current action seeking to recover those costs from the defendant on the grounds that he had owed then a duty to take reasonable care to ensure that the testator in 1989 had testamentary capacity etc. Holland J. found against the plaintiffs, who appealed to the Court of Appeal. It was held that no duty was owed on the basis, as I have indicated, that there was no lacuna in the present case where if the costs of the probate action fell upon the estate (as they did) the estate could maintain an action against the defendant.

[802] Mr Moynihan also directed me to Lord Goff's speech in White v Jones starting at page 267H as follows:

"I therefore return to the law of tort for a solution to the problem. For the reasons I have already given, an ordinary action in tortuous negligence on the lines proposed by Sir Robert Megarry V.C. in Ross v Caunters [1980] Ch. 297 must, with the greatest respect, be regarded as inappropriate, because it does not meet any of the conceptual problems which have been raised. Furthermore, for the reasons I have previously given, the Hedley Byrne [1964] AC 465 principle cannot, in the absence of special circumstances, give rise on ordinary principles to an assumption of responsibility by the testator's solicitor towards an intended beneficiary. Even so it seems to me that it is open to your Lordships' House, as in the Lenesta Sludge case [1994] 1 AC 85 to fashion a remedy to fill a lacuna in the law and so prevent the injustice which would otherwise occur on the facts of cases such as the present."

Thereafter the Court went on as Mr Stewart had indicated.

[803] The pursuer was Barclay Grant's "heir" under his last Will and therefore any recovery by the estate would have accrued to her. If the estate itself had a cause of action, that negated a duty of care being due to her because there was no lacuna requiring to be filled.

[804] Mr Moynihan submitted that there was a simpler answer to all of this. On what basis did the action proceed? It seemed that it proceeded on Mr Grant's evidence that he had not decided how to dispose of his property and was still kicking footballs around. On that view the pursuer was not de facto his intended beneficiary so far as the liferent was concerned because he had not progressed as far as deciding in favour of transferring the farmhouse to William with or without that liferent. The expectation that the pursuer had at that stage was at best hypothetical or dependent upon a decision by Barclay to transfer the farm to William. In the case of a will the normal situation was that of a testator who decided to benefit an individual but the solicitor failed property to implement the instructions. There was no authority for the proposition that the putative beneficiary would have a case in law against the solicitor before the testator had reached a decision on the terms of his Will, which was in effect the proposition on which this case proceeded. If Barclay had not given positive instructions then he in his lifetime, and his estate after his death, would have had a right to recover the farmhouse because the property would have been invalidly transferred. There would have been the remedy of reduction and ultimately, as the sole or principal beneficiary, the pursuer would have benefited from that had it succeeded. There was simply no lacuna requiring the recognition of a duty of care owed to her.

[805] The action of reduction which was raised failed. One was however entitled to ask, since a duty of care arose where it was reasonable and just to impose one, that action having failed because the Court held that Barclay had not given a true account of the circumstances in which the Disposition came to be executed, what basis in justice was there that on the same evidence from the same person a cause of action could be held to a rise in negligence? That would seem an affront to justice.

[806] The pursuer's argument had to proceed on the basis that if four assumptions were satisfied she could fall back on a duty of care owed to her as a beneficiary who would be disappointed. These assumptions were as follows.

(a) Barclay gave the hypothetical instructions suggested at a time when he had yet to decide whether or not he would transfer the farmhouse;

(b) Someone else instructed the Disposition, presumably William;

(c) Barclay nonetheless signed the Disposition not knowing what he did and therefore not appreciating that the terms of the liferent were different from his wishes (which are said to be contrary to the averments in article 4) and

(d) An action of reduction was raised by Barclay and continued by the pursuer but failed and hence the farmhouse was lost to the estate because Barclay was held to have lied about the circumstances in which the Disposition came to be executed.

[807] Assumption (d) had to be present because otherwise the "loss" was made good through the action of reduction and it was readily seen from (a) to (c) that the factual foundations of both the action of reduction and the pursuer's present claim were the same. What possible justification could there be for the pursuer's being given a personal cause of action in delict in precisely the same circumstances in which an action, pursued by her as executrix on behalf of the estate, had failed? The proposition needed only to be stated for the answer "none" to leap out. Since both cases proceeded on the same assumptions then if one failed both should fail. Alternatively, in terms of White, the remedy of reduction having existed there was no reason to fashion a remedy in delict for the pursuer since there was no lacuna. Reference was made to the speech of Lord Browne-Wilkinson at page 276 from A-D in White v Jones. There he said inter alia:

"To my mind it would be unacceptable if, because of some technical rules of law, the wishes and expectations of testators and beneficiaries generally could be defeated by the negligent actions of solicitors without there being any redress."

[808] Mr Moynihan submitted that he had addressed the action as a secondary one but it was open to argument that the present case was a tertiary cause. The first alternative to the pursuer's present case was an action of reduction on the ground of facility and circumvention. The second was an action at the instance of Barclay against his solicitors for negligence in failing to implement his instructions and securing his execution of a Disposition in terms of which they knew he did not approve. In short, he had disponed his house apparently against his own free will. If that were true that would provide a readily understandable case against the defenders, the measure of the loss being the value of the house if it could not be recovered or, if it could be recovered, the trouble and inconvenience caused during its temporary transfer and the irrecoverable (ie. extra judicial) legal costs in pursuing an action of reduction.

[809] That second case underlay and was included in Mr Stewart's second proposition. Objection had been taken when Mr Innes was giving evidence-in-chief about the extent to which other properties were being explored in evidence. For present purposes the more pertinent point was that the possible existence of breaches of duty owed by the defenders to Barclay necessarily implied a cause of action by him against the defenders and that was inconsistent with a duty of care also being owed to the pursuer because as his beneficiary she would ultimately have benefited from the success of such an action.

[810] The same applied mutatis mutandis to the primary right of action of reduction and the fact that that failed on its merits did not advance the pursuer's case. There was no warrant in the circumstances for inferring a duty of care of the scope relied upon owed to the pursuer and if that submission was accepted then the case would fall on the merits because the duty of care relied upon did not arise in the circumstances.

[811] Mr Moynihan then turned to the merits of the case and the credibility and reliability of the evidence. It appeared that the pursuer was maintaining that Barclay still had an open mind on the future disposal of his property. When one allowed for the fact that it could not properly be transferred without his active consent it was difficult to understand why he was doing anything as formal as giving instructions which only covered one possible variant, namely the preservation of the liferent. The pursuer in chief made the bold assertion that what he told her of his conversation with the solicitors was that it was his instruction to reserve a liferent for his housekeeper or wife. She went on to say that he did not say when and she used the formulaic expression "he told the lawyers that was his wishes". The use of words such as instructions and wishes might indicate a process of rationalisation as opposed to a clear explanation of the terms of the conversation or conversations which he said he had with his solicitors. The issue in the case was not whether he used these terms when discussing the matter with the pursuer and Mr McWilliam and on any view he was attempting to rationalise what might have taken place. Rather the question was what the terms of his discussions were with Mr Innes. The last sentence of condescendence 4 asserted that the defenders advised that the Disposition (which contains a reference to assignees) reserved to Barclay the possibility of appointing persons to a lifetime right of occupation after his death. There had been no evidence in support of that averment. It was not put as a proposition to Mr Wood or Mr Innes and there was never any basis for it. Nonetheless it reinforced the overall impression that the pursuer set out to prove that there was an active exchange between Barclay and the defenders relative to the framing of the Disposition and not just some contingent expression of wish in the event that a Disposition came to be required. In what other context would it have been relevant to mention advice being given by the defenders to Barclay in relation to the precise terms in which the Disposition came to framed? That primary case was torpedoed by Mr McWilliam's interpretation of 6/22, sheet 2 which took Mr Wood out of the loop and the pursuer's insistence that Barclay had told her that he had not instructed the Disposition. One was now left with the last permutation available, which formed the submissions for the pursuer.

[812] The onus of proof was on the pursuer and that was not altered by the fact that the defenders' witnesses were called by her.

[813] Mr Moynihan suggested that the evidence had to be capable of withstanding the most careful scrutiny before the pursuer could succeed.

[814] The case depended on hearsay evidence from Barclay and the defenders had not had an opportunity to test his credibility and reliability by cross-examining him. Historically such evidence had to be received cum nota and if ambiguous construed contra proferentem. See Walker's Trustee v McKinlay (1880) 7 R. (H.L.) 85 at page 98 per Lord Watson. With the advent of the Civil Evidence Act one had to be wary of old common law authorities but they nonetheless encapsulated common sense. The weight of the evidence was bound to be adversely affected by the absence of cross-examination and, the onus being on the pursuer, she was unlikely to succeed on an ambiguity. The case arose fifteen years after the event and with the passage of time the quality of justice declined. Allowance had to be made for that. Barclay's evidence was frozen in time to some extent because it was traceable to documents written during his lifetime but it was clear, in particular from Mr McWilliam's evidence, that the live question may be what interpretation was to be placed on what he said and that depended on how witnesses such as Mr McWilliam recollected and construed his evidence. That was bound to be a process undermined caused by the passage of time.

[815] This was not the first time that associated issues had been explored in evidence. Barclay gave evidence under oath in the arbitration, having consulted Mr McWilliam and having faced a choice of routes. He chose to pursue an action of reduction which failed. His evidence was rejected as being untrue in that case but that was not binding on me.

[816] The pursuer was adamant that, in the days preceding the first contact with Mr McWilliam, Barclay was confused and she said that she had a clear recollection of what he said. The issue was that he knew he had signed documents but did not know what for and, as he indicated previously thought that he was amending his Will and his codicil. On any view what he said later, beginning with his first conversation with Mr McWilliam on 27 May 1993, had to have been an attempt at reconstruction. In the arbitration he showed himself capable of making tactical judgements, on advice or otherwise, adopting part of what had occurred such as his resignation from the partnership as at 5 April and in due course dropping his conclusion for reduction of the farmland Disposition after the arbitration proceedings had been finalised. That was despite the fact that if any one of the documents was open to challenge on the grounds of facility and circumvention they all were. In a time of critically deteriorating finances he was happy to force a dissolution on terms favourable to him. That flowed from the contention that there had been a valid resignation as at 5 April that at once would free him from the subsequent (gratuitous) Disposition of the farmlands and getting two thirds of the value of that land. Mr Moynihan referred me to the case of Hamilton v Allied Domecq 2006 SC 221 and 2007 S.C. (H.L.) 142 a case concerning a disputed misrepresentation contest between live witnesses. The case was relevant because the pursuer changed his evidence about where the critical meeting was held and that led Lord Hamilton (as he then was) in the Inner House to indicate at paragraph 88 that the vagueness of a witness's evidence about the place and date of the critical meeting called for a particularly careful scrutiny and reasoned analysis of his testimony about the content of what was said at it.

[817] The pursuer failed in that action because his evidence did not withstand that scrutiny and that conclusion was upheld by the House of Lords. See the speech of Lord Rodger, in particular, at paragraphs 33 and 46. That was germane because the pursuer gave evidence that although Barclay said that he had given instructions to the defenders he did not say when. It was worthy of comment that for all that Mr Stewart was prepared to castigate Mr Innes for vagueness as to date, he was prepared to overlook the fact that Barclay did not venture any date at all above and in general terms.

[818] The evidence led for the pursuer did not stand up to scrutiny.

[819] The first source was the pursuer herself who recounted what Barclay told her. At its highest that was the passage just commented on but that was undermined by her quotation from the pursuer that he was initially unsure what he had signed and was generally confused.

[820] The second source was Mr McWilliam. For all that he thought that Barclay was clear when he spoke to him, that too must be undermined by the pursuer's evidence of the general confusion and lack of knowledge of what documents he had signed, presumably before he saw Mr McWilliam's letter of 26 May 1993.

[821] Mr Moynihan eschewed any intention to object to the "precognitions" on the basis that they were inadmissible but they were in any event neutral. They did not add to what the pursuer herself said and Mr McWilliam gave evidence in cross-examination that the source document was the note of his first meeting with the pursuer on 27 May, namely 6/22, sheets 5-7. He had compiled much of the precognitions from his notes and it followed that the ultimate source of the relevant part of the precognition in relation to instructions must have been that original note.

[822] The first thing to observe about that original note was that it contained a crucial error to the effect that the farm had been signed over earlier. Mr McWilliam's best guess was that Barclay had confused the effect of the resignation but even that was hard to understand if the resignation was itself signed as part of the events of 1 to 8 April 1993 and most probably on the latter of those dates. Be that as it may, there was an inherent unreliability in trying to interpret a note more than fifteen years after the event, particularly when it was based on the statements of a person who was said to have been confused at the time.

[823] Secondly Mr McWilliam conceded in cross-examination that the note was at least ambiguous on the critical point whether Barclay gave any instructions. He accepted that instructions to prepare the farmhouse Disposition must have been given earlier than 1 April because Mr Innes appeared on that day with an engrossed deed for signature. There is no note as to when those instructions were given although on an actual reading Barclay was speaking of the instructions that he gave then and there as forced to do by William. In cross-examination and re-examination Mr McWilliam conjectured that the reference to the giving of instructions could have related to the farmland Disposition on 8 April but that is difficult to square with the earlier unambiguous, but incorrect, statement that the farm had been signed over earlier. Looking at what preceded the paragraph at the foot of sheet 6 and what followed it on sheet 7 it was submitted that Barclay was only talking about the circumstances in which the farmhouse Disposition came to be executed but a positive answer might not be required on that point. The critical point was that the earliest recorded note from Barclay relevant to this case was wrong about the farmlands and at best ambiguous in relation to the farmhouse.

[824] At worst for the defenders the note was ambiguous and was open to interpretation as saying no more than that Barclay gave no instructions of his own free will because they were dictated by William, but had he done so they would have included the reservation of an extended liferent. As was put to Mr McWilliam in cross, the best way to resolve an ambiguity in the statement of a witness was to put him on oath and ask him directly and when he was put on oath he said that he did not instruct the preparation of any documents. It appeared that on a true construction of 6/22, pages 6-7 the deceased was talking about the farmhouse Disposition. He had apparently given certain instructions in connection with it according to this note. It was noted in it that:

"Mr Grant had spoken to Ian Innes about signing over the house at an earlier date - perhaps in January or February of this year. The farm had been signed over previously. William and his wife had said that they would look after him, but this is not what happened.

William had told him that he must do it. That is what the Solicitor said. Ian Innes was taken up to see him on one Thursday and he gave instructions to Ian, as told by William. William was with him at the time and there was no suggestion that William left. Mr Grant accepted that, even if William had left, it would probably have made no difference to what he had told Mr Innes.

He was told that if he lived for 7 years after signing over the house there would be no duty. The only way in which he would sign over is to keep the liferent and the liferent for the housekeeper or companion. This is the only way to give someone like that security."

[825] How did this square with the contention that he had not given any instructions in connection with the preparation of any document? Even if one construed the giving of the instructions as relating to the farmlands Disposition that was still inconsistent.

[826] This was a wholly insufficient base on which to find against the defenders.

[827] Mr Moynihan submitted that Mr Innes had given evidence as best he could fifteen years after the event. Mr Stewart criticised him for having a clear recollection of only one thing, namely the instructions given in relation to the liferent. That was totally unfair because there was no other issue on Record. Mr Stewart had explored detailed questions about the title to other lands with him in chief without any Record and no forewarning. It only became clear as the week progressed what these other properties were and we learned from Mr Wadsworth that he had been piecing the matter together over a week. There was no merit in the criticism of Mr Innes.

[828] Mr Innes was candid and prepared to admit that the general conveyancing in early April 1993 was not his finest moment. Despite initial resistance to the contents of the note of the initial telephone call with him, which was not shown to him until later, he was prepared to concede, against his interests, that if Mr McWilliam said what Mr Stewart was saying that the note meant then that is what he, Mr Innes, must have said, namely that Craig Wood got the instructions. That was a concession which was honestly made but in the event the hypothesis on which the question was asked proved to be false because Mr McWilliam did not support the interpretation.

[829] Mr Innes agreed that his evidence to Lord Reed had been that he got his instructions from Barclay by telephone a week before. He denied that that was untrue and, although he had given other possible dates, there was no merit in the contention that Barclay was unlikely to have telephoned from hospital. The evidence of Barbara Wilson had to be recollected. Barclay phoned her from hospital to see if she would be his housekeeper. He was therefore able to make telephone calls from hospital and quite capable of attending to his affairs from there. There was no reason to suppose that he would not have made the call to having had some months to reflect on the discussions from late 1992 continuing into January/February 1993.

[830] Mr Moynihan then turned to the financial logic of the various transactions. What were Barclay and William seeking to achieve? It was clear from the evidence of Mr Munro that they were trying to resolve the financial troubles of the farming business while giving Barclay a place to live (hence the liferent of the farmhouse) and an income from his chalets. There was mention of the possible transfer of two of his four chalets to William, which led to the observation on 15 December 1993 by Mr Munro that by some means Barclay had to retain the income of all four. That led Mr Stewart to infer that when he wrote 6/4/9 Mr Innes contemplated a liferent of the chalets. Mr Innes denied that and said that the liferent contemplated was that of the farmhouse. Was it merely a coincidence that both Mr Munro and Mr Innes referred to a liferent of the farmhouse?

[831] Six points supported Mr Innes. Firstly, Mr Munro was the one who introduced the concept of a liferent and that was specifically in the context of achieving the end result that Barclay would have a roof over his head, that is it applied to the farmhouse.

[832] Secondly, the possible transfer of two chalets did come under consideration later, probably by 15 December, but by the time Mr Innes came to write on his letter of 22 December (6/4/9) that was off the agenda so he scored out the reference to the two chalets.

[833] Thirdly, that Mr Innes was telling the truth was clear from the pursuer's evidence in cross. Barclay retained his own four chalets. There was no transfer of any of the chalets and hence no need to reserve his right to the income from them. He retained the chalets and hence their income.

[834] Fourthly, the simple plan envisaged by Mr Munro on 11 December that the Grants were left to consider came to pass. William got the farm and the farmhouse and his father got a liferent of the farmhouse in his favour while retaining the chalets to give himself an income.

[835] Fifthly, this was not an ungenerous outcome bearing in mind that, even leaving the building plot out of account because we did not know what happened to it, Barclay got his liferent plus assets that were subsequently realised for £250,000. There was £70,000 as his capital distribution from the partnership (a balance net of partnership liabilities), £45,000 in respect of chalet 1 and £110,000 in respect of chalets 2 to 4. In fact the figure was £325,000.

[836] Sixthly, William got the farm and the farmhouse. The former was at the price of the final figure in the arbitration of £70,000 and the farmhouse was subject to the liferent. He retained his own chalets courtesy of the corrective Dispositions in March 1993.

[837] As far as the building plot was concerned, the pursuer said that the plan was for a house to be built on that and for the deceased to live in it after five years and rent out the farmhouse. He had received a title to it but no Deed of Restriction was granted so it remained unencumbered. It was not, though, clear what had happened to it in due course. It had been partnership property.

[838] What was really going on was that Barclay was passing the farm back to the family, and that included the farmhouse. It made no significant difference from Barclay's point of view whether a Disposition of the fee to his son carried with it a reservation of a liferent in favour of him or in favour of him and the housekeeper/wife. That, however, was not entirely the case because if he wanted the housekeeper or wife to benefit after his death then an extended liferent would require to have been achieved. There had been some evidence about proposals for William to take out a mortgage on the farmhouse but that did not happen. Very shortly after the various transactions the balloon went up and the partnership dissolved so that might be why nothing came of it. While Barclay might be thought to be a net loser in terms of the farmhouse he was very happy in December or thereby to face that prospect, provided he had a roof over his head by way of liferent and an income. He did not plan to retain the fee himself until he died. I should not, though, decide this case on a fine balance as to who benefited from the various transactions. There was not very much between Barclay and William in the final analysis but Barclay's main concern had been that assets passed on to the next generation and that is what happened.

[839] Neither to Mr Munro nor to Mr Innes was there any mention of the need to extend the liferent to a housekeeper or future wife. Mr Munro fairly accepted in cross that that complication might not have immediately presented itself when he first put forward the concept of a liferent but it was submitted that it was significant that Mr Innes's notation in 4/4/8 and 4/4/9 remained as simple as Mr Munro's own contemporaneous note, namely a liferent in favour of WGB. Both Mr Munro and Mr Innes said that different issues would have arisen had others been mentioned. In chief Mr Munro said that it would have caused him to reconsider the duration of the liferent. Mr Innes said in chief that the possibility of a second wife would have raised quite different succession planning issues. If a second wife was really such an immediate consideration it is difficult to see why Barclay transferred the house at all to William because the easiest solution would have been to retain it and deal with it in his Will.

[840] The pursuer's case had to be that Mr Innes lied about the absence of any discussion of a housekeeper or possible second wife in the context of the possible liferent and there was no basis for reaching that conclusion. His own contemporaneous notes (6/4/8) and (6/4/9) were unambiguous in supporting a liferent for Barclay alone. What was more, in his first telephone call with Mr McWilliam, he was noted as having said that the house had been conveyed to William "but that a liferent had been reserved to the property as requested by Mr Barclay Grant." See 6/22, sheet 2. That note did not specify the nature of the liferent but he must have done so because Mr McWilliam wrote the following day to Barclay that "you have a liferent". Mr Innes had accordingly been consistent from the earliest date. The liferent was for Barclay Grant and that was in accordance with his request.

[841] Furthermore, Mr Innes's notes 6/4/8 and 6/4/9 fitted with what was actually done. There were not two properties dealt with as Mr Stewart's questioning of Mr Innes seemed to assume, but three. The four lines at the top of page 8 from "Disposition ad rem" plainly related to William's chalet site dealt with in March. The next line (Deed of Restriction) related to the proposed house that was to be built with a grant and that was followed up in February 1993. See 6/4, sheet 7. That left a "Disposition by WBG in favour of WG with liferent" which tied in with the note at the bottom right of sheet 9. That clarified that it was a liferent "reserved for WBG". Given the striking out of the transfer of two chalets, which transfer we know did not occur, that note could only refer to the farmhouse and was consistent with the evidence that Mr Innes gave on oath, not for the first time.

[842] For completeness Mr Moynihan reminded me that Mr Innes gave evidence that Inheritance Tax mitigation was no longer a driver by the time that the December note came to be written. Even the pursuer's alternative, a trust, was ineffectual as a tax planning device because of the reservation of an interest by Barclay.

[843] Care home costs was not a matter to be taken into consideration.

[844] Mr Moynihan then turned to the question of the styles. In the Memorial to Counsel, Mr McWilliam had cited the inclusion of the destination to "assignees" in support of the proposition that there was an intention to benefit someone in addition to Barclay. Mr Reid's report provided the response to that. From his perspective it was simply the use of a style of words that conveyancers were accustomed to using. The words were otiose. As Mr Reid's report stood, it was open to the obvious conjecture by Mr Wadsworth that Mr Reid was desiderating a one-off superfluous use of those words. Mr Reid explained that that was not his intention when writing the report but in any event that was overtaken by the admittedly late identification of the diploma styles book as a relevant source. It was clear that the formulation used in the farmhouse Disposition mirrored the style in 7/12.

[845] The use of the words "or assignees" did not carry any inference that the unknown person who prepared the draft, or Mr Innes in revising it, had any intention to create an extended liferent. On the other hand the words were consistent with Mr Innes's position that he was instructed to reserve a liferent for Barclay's benefit alone.

[846] Rectification could be put out of the equation. It arose where there was an intention to grant a deed but the deed failed properly to give expression to the grantor's intention. On the hypothesis on which the pursuer now proceeded it was out of the question because it was said that Barclay did not intend to grant the farmhouse Disposition. The point had been raised in the Answers to the Minute of Amendment simply to reinforce Barclay's denial on oath that he had instructed the Disposition. In the face of that denial rectification was a non-starter. It had been assumed (wrongly) that the pursuer would have claimed in this action that Barclay did instruct the deed but the defenders failed to give effect to his intention by failing to provide an extended liferent. Rectification might have been relevant to that scenario but it was now unnecessary to pursue that line.

[847] Mr Moynihan turned to Mr Stewart's second proposition in his closing submissions. This related to the defenders' alleged general negligence towards Barclay Grant but it had no relevance beyond confirming that there was no lacuna requiring recognition of a duty of care owed to the pursuer. Apart from that Mr Stewart relied on it for the collateral allegation that if the defenders were negligent in some respects they would have been negligent in others. That required very careful handling. In Mr Innes's examination in chief objection was taken to questions about background matters and that was reserved. At the time Mr Stewart had said that it was necessary to go into related matters and that the material could have a bearing on reliability. There was no notice given then that he was to embark on a collateral enquiry into negligence generally. That objection, which sought to confine attention to the farmhouse, should be upheld and no weight should be placed on the second proposition.

[848] Apart from anything else, that raised yet further thoughts about Barclay's own willingness to cherry-pick his arguments as best to suit his own financial ends. Questions about the propriety in which the partnership was dissolved and the draftsmanship of the farmlands Disposition could have been raised in the arbitration and in the action of reduction but for some reason they were not pursued. The pursuer should not be allowed to introduce them tangentially into this case.

[849] In conclusion on the merits, Mr Moynihan submitted that Mr Innes fairly conceded negligence on the hypothesis that the pursuer was thought to be proceeding upon namely that Barclay had himself instructed the farmhouse Disposition but on the basis of the reservation of an extended liferent. The question was whether he had in fact given that instruction. The evidence from Barclay at the arbitration, confirmed by the pursuer in Court, was that he had not instructed the preparation of any Disposition and it had been thought by the defenders that if that was accepted, which it now was, that would be inconsistent with any liability on their part. It was submitted that, if condescendence 4 made any relevant case, it was that Barclay instructed the farmhouse Disposition on those terms. The case as pled had patently not been proved.

[850] There was no Record for the alternative advanced in closing submissions. Even if there was, the evidence from Barclay was not sufficient to carry it home and Mr Innes's evidence should be preferred.

[851] In any event, no duty of care of the scope implied in this alternative case was owed by the defenders to the pursuer in the whole circumstances.

[852] For all these reasons the case failed as a matter of relevancy or on its merits.

[853] Moynihan then turned to his argument on prescription. He submitted that a liferent was a heritable right and not just a licence to occupy the house. It carried certain ancillary rights, including the right to let out the subjects and that allowed the pursuer to claim a loss based on rental value extending into the future. Mr Stewart had spoken of the liferent as a mortis causa right, in other words a benefit which would have opened to the pursuer only following Barclay's death but it was submitted that that was inaccurate.

[854] She had been granted a personal licence by Barclay to occupy the house but plainly that did not satisfy her desire and it was said to be Barclay's desire to give her sufficient security relative to William who held the fee. The lack of adequate security was what drove them on and by August they contemplated that the pursuer should be given an inter vivos liferent assuming that that could be done without Barclay prejudicing his right relative to the pursuer. The reservation in the farmhouse Disposition did not allow that to be done. That was not how one should approach the possibility of loss and hence prescription. One had to ask what the pursuer had lost and to answer that one turned to what should have been in place. The pursuer's case contemplated as the alternative that what should have been place was a trust. Mr Wadsworth advised that it would have been possible under a trust arrangement for the pursuer and Barclay to have been granted a joint liferent thereby conferring on the pursuer the security desired without prejudice to Barclay's right. By late June through to August 1993 when this was being discussed, the pursuer was the wife of the deceased and therefore among the class of potential beneficiaries. What she lost, as of August 1993, was the right to be granted an inter vivos liferent.

[855] There might be arguments about the proper approach in the context of prescription to the loss of a contingent right. There was some authority that prescription could start to run in advance of the contingency being satisfied if the loss of the right had immediate consequences. See Beard v Beveridge, Herd and Sandilands 1990 S.L.T. 609.

[856] In that case landlords instructed a firm of solicitors to let shop premises on terms which included a provision for rent review. The lease was executed in 1967 but the rent review clause was discovered in 1987 to be inoperable because no mechanism was provided for determining the rent failing agreement between the parties. The tenants refused to agree an increased rent. In an action against the successors to the firm of solicitors the defenders pleaded that any obligation to make reparation had prescribed on the basis that the breach of any duty of care arose on the execution of the lease, the landlords then being bound by a lease which was less valuable than it should have been and that contention was upheld. The precise loss of rental, if any, was contingent on rental levels at the future review date and was perhaps difficult to quantify but there was an immediate loss because the lease was less valuable. The fact that a loss was difficult to quantify in financial terms did not itself delay the commencement of prescription.

[857] Reference was also made to the case of Law Society v Sephton & Co [2006] 2 AC 543 and in particular to the speech of Lord Manse at paragraph 67 and 68. I need not quote those paragraphs.

[858] Mr Moynihan submitted that that authority did not take us very far because it required analysis of the particular rights and liabilities in issue in the circumstances of the case and merely confirmed what was evident from existing Scottish authority, i.e. that time could start to run even in relation to the loss of a future right from the point when it had an impact on the value of the right in question. A fortiori, prescription would run from the point when the pursuer was deprived of the right in question which was in this case an opportunity as at August 1993 to acquire an inter vivos liferent.

[859] None of this was at odds with what was happening on the ground. An action of reduction was not necessary to protect Barclay because he had a valid liferent. The action was necessary as one means of providing security to the pursuer although if it had succeeded it would have led to her ultimately having title to the house. That action was commenced in 1994 and from any practical point of view the commencement of it was indicative of a present loss. The pursuer's loss could readily have been quantified in August 1993 by using rental evidence and actuarial tables. The fact that the action of reduction was initially at the instance of Barclay and latterly by his executors took Mr Moynihan back to the point already covered in relation to the duty of care and that was that it was truly a practical alternative to any action by the pursuer on similar facts. Even if one contemplated that the reply at the time from the defenders to an action at her instance might have been that on the facts alleged, that is namely that the grant by Barclay of the Disposition containing an inadequate liferent provision was the product of undue influence on him or simply that the transfer on those terms had not been instructed by him, there was an alternative remedy available, that is an action of reduction. That reply did not necessarily indicate the absence of any loss. Even the need to resort to successful corrective litigation was a present loss because there was the associated trouble and inconvenience, disturbance and cost. Therefore, that reply would not have been inconsistent with prescription running against the pursuer. The very fact that the reply could be so readily assumed simply reinforced the earlier submission that no duty of care was owed to the pursuer because if the facts alleged were true Barclay, and latterly his estate for the pursuer's benefit, would have had an alternative effective remedy. If the facts were untrue then a separate action by the pursuer, whenever commenced, would have had no greater prospects than an action at the instance of Barclay.

[860] I raised with Mr Moynihan the evidence of Mr Wardsworth that Barclay's alleged instructions could have been carried out by preparing a Disposition which reserved a liferent to Barclay and any wife or housekeeper living with him at the date of his death. Such a formulation could also have been written into any trust. Mr Moynihan agreed that these would have been mortis causa liferents which would not have taken effect until Barclay's death. However he said that the instructions could have been carried out by drafting a deed which would have enabled the pursuer to enjoy a liferent while Mr Grant was still alive as well as after his death. It all depended on what deed was granted.

[861] The difficulty I have with all of this is that it involves interpreting a deed which, ex hypothesi, was not granted. Mr Moynihan's submission was that prescription depended on there being a right that the pursuer would or could have had as at 18 August 1993 if no negligence had occurred. If I was satisfied that, even had the defenders implemented Mr Grant's putative instructions, she would not or could not have had a liferent until his death in 1998 then there was no argument on prescription. He accepted that if the intention was to create a liferent for her after his death then no loss could be said to have arisen until that date. Until then she could not have been said to have been a wife or housekeeper living with him at the date of death because that was a matter yet to be ascertained.

[862] He drew my attention to the evidence that Mr Grant's wife died in 1988 and over the period from then until 1992/93 he had employed some twelve, or on one view, seventeen housekeepers. On the eve of the execution of the Disposition on 1 April he had dismissed the pursuer. Was it likely that he would have been insisting on a liferent in favour of a housekeeper/companion/wife at that time? The answer was plainly no. Secondly, if he had insisted on that, that was a matter which would have had a profound impact on the solicitor. He would have been asked why he was doing it and whether he realised the implications and so on. It would not have slipped below the radar. Those discussions never took place because Mr Innes was telling the truth.

Reply for the Pursuer
[863] Mr Stewart understood that a number of matters were not in dispute as follows:

(1) The averments of negligence in condescendence 3 were impliedly admitted.

(2) The admissibility of the "precognitions" was not challenged.

(3) If an extended liferent was requested, the question of duty of care/title to sue were not an issue, although that might be qualified.

(4) Esto an extended liferent was requested, prescription was not an issue.

(5) Rectification of the document was not an appropriate remedy, since it dealt with defective expression of an agreed intention.

(6) Quantum was not in issue, having been agreed.

[864] This enabled him to focus on what he said was in issue. These matters were:

(1) Whether the accounts of Barclay Grant or Iain Innes were to be preferred and

(2) If Barclay Grant was to be preferred whether a cause of action lay.

[866] There appeared to be consensus that there was some kind of request about a liferent which was made between the end of December 1982 and February 1993. That preceded any transfer.

[867] The second fallacy was that the defenders confused the absence of "instructions", in a strict sense, to make the specific transfer, with the non-existence of a duty relationship. The essence of the duty relationship was that it arose from an assumption of responsibility. In this case the assumption of responsibility for executing the conveyance conform to the client's wishes arose from:

A. The general agent/client relationship which was ongoing and

B. The condition previously stipulated by the client to apply to any transaction of the specified kind, i.e. reservation of an extended liferent.

[868] If the duty relationship was established (that is agent/client) then the only question of fact was whether the reservation postulated by the pursuer was in fact stipulated.

[869] Dean v Allin & Watts was a case where there was no solicitor/client relationship between the agents and the third parties - they were the lenders and had no separate relationship with the solicitors but nontheless the duty of care extended to them. The duty did not arise only if specific instruction for a conveyance were made.

[870] The third fallacy was that the defenders confused the absence of instructions to prepare a specific Disposition with an unauthorised transfer, as in the Bank example.

[871] The easy way to understand this was that in the ordinary case Dispositions were prepared by the grantee's solicitor. The grantor would never instruct it anyway. Mr Innes said that he did not prepare it but revised it in the interests of the grantor and unlike the erroneous bank transfer the grantor in this case signed the instrument of transfer. When signing it he was not facile, nor was he subject to pressure amounting in law to undue influence, nor was there any induced error and for these reasons the law presumed that he authorised the transfer.

[872] Mr Stewart said that the first erroneous submission was that the key issue was whether Barclay instructed the Disposition to be prepared. The second was that the proper complaint was an unauthorised transfer rather than negligence. The third was that the proper remedy lay in reduction rather than damages for negligence. The fourth was that, there having been no concluded intention to transfer, the pursuer did not qualify as an intended beneficiary. The fifth was that the remedy of reduction being available to the estate, et separatim the pursuer not being an intended beneficiary, there was no lacuna to be filled. He said that Mr Moynihan's submissions were flawed because his starting point was flawed.

[873] The proper hypothesis was threefold.

A. The transaction was authorised and could not be set aside.

B. The negligent implementation of his "instructions" had resulted in no loss to the estate because the absence of an extended liferent was not a loss to Barclay after his death and the existence of an extended liferent for a third party beneficiary would not be an asset of the estate.

C. The negligence had deprived the intended beneficiary of a substantial benefit.

[874] If that were correct how did one test the competing submissions? One had to ask the following questions:

1. If the conveyance failed to make an effective reservation of any liferent whatsoever would Barclay have had a remedy in negligence? The answer to that was yes.

2. If the request to reserve an extended liferent were accepted by the defenders and they were taking a stand purely on the duty of care would the pursuer have been able to sue for damage and negligence? The answer was yes on the authority of White v Jones.

3. If the pursuer had had the benefit of the extended liferent would she have had title to sue before the death of Barclay? The answer to that was no. Title to sue and prescription were complementary in this context.

[875] The issue of pure law was whether the evidence was sufficient to support the failure in duties averred in article 6 and Mr Stewart said that the answer was in the affirmative.

[876] He then turned to the relevancy of the pleadings.

[877] There were five reasons why the Court should repel the submissions in this regard. In the first place, the case had been remitted to probation. It would be incompetent after proof to uphold a preliminary plea and decide the case on the basis of lack of specification. That might be appropriate in undefended divorce actions for example but it was not a proper way of dealing with matters when a case went to proof. (This, of course, was a proof before answer). In the second place, it was incompetent to review the previous interlocutor which remitted the case for proof before answer. In the third place, the defenders were barred from seeking dismissal. They had sought to reclaim against the previous interlocutor but had not proceeded. In the fourth place, what was debated at procedure roll was different from the submissions made or listed by Mr Moynihan. Mr Stewart referred in particular to the defenders' note of arguments at paragraph 4 and Lord Dawson's Opinion at page 6, paragraph 3 to 4 and page 9 paragraphs 3 to 4. Before him the issue was about the specification of timing and what the relationship was between Barclay and the pursuer at the material time. In the fifth place, the pursuer was entitled to conduct the proof within the scope of the Record and not on some supposed understanding that the defenders had. He said that the defenders accepted that the pleadings were apt to support a case that Barclay did not instruct a Disposition in terms. I really did not understand the defenders to accept that at all but nonetheless that was Mr Stewart's submission.

[878] The pleadings were not a conveyancing document. Even if the facts proved fell short of the averments, provided they were a sufficient basis to support the averments of duty, then there was a basis for granting the remedy sought. The averment that Barclay did stipulate for an extended liferent, if proved, was enough to make the case. The suggestion that the pleadings were disingenuous was rejected. On the basis of Lord Reed's findings and Mr McWilliam's notes the pleaders were entitled to make a case giving the widest meanings possible to the words and, indeed, a case which was cautiously, provisionally or ambiguously framed. The defenders had been content to go to proof on these averments.

[879] He said that it might be true that there had been failure to prove that instructions came via Mr Wood but that did not make the averments irrelevant.

[880] The pursuer was entitled to proceed on the question, what was the requirement or "instruction".

[881] He asked why the defenders focused on instructions. They wanted to focus on those in the narrow sense because it suited them. Clearly to a degree there was a challenge in construing Barclay Grant's evidence about the extent to which the Dispositions were "his Dispositions" and the evidence about that was difficult. In any event, Mr Stewart said that on a proper analysis the absence of evidence about when specific instructions were given to transfer the house gratuitously with no extended liferent reserved caused difficulty for the defenders rather than the pursuer.

[882] Mr Stewart then turned to the issue in the action of reduction. He said that the issue in that case was not whether there had been instructions. That was a matter which was relevant to the action but the issue was whether consent to the Disposition was vitiated by facility and circumvention and Lord Reed found that that was not established. He found that Barclay signed the Disposition in full awareness of what he was doing and that his accounts to the contrary were untrue. He reached that conclusion on the bases:

A. That his lucid mental state was spoken to.

B. That the Disposition was instructed by him in the previous week and

C. That it gave effect to his intentions to reserve an extended liferent.

B & C could not be supported on the evidence in the present case and A had not been an issue.

[883] I confess that I am not entirely sure that Lord Reed did in fact find that the Disposition gave effect to Barclay's intention to reserve an extended liferent. What he said was "it is also significant that he envisaged granting or assigning a liferent of the farmhouse, given that the Disposition of 1 April 1993 reserved a liferent which could be assigned by him." I presume that that is simply a reference to the words "his assignees" but does not indicate that Lord Reed thought any such assignation could be anything other than inter vivos.

[884] Mr Stewart submitted that leading the defenders, or some of them, as witnesses was the proper practice in an action of professional negligence and I have no difficulty with that submission. I did not understand Mr Moynihan to criticise Mr Stewart for doing so.

[885] As far as the instructions were concerned, Mr Stewart submitted that parties were at one on the critical point. The reservation of a liferent was discussed at a meeting between Iain Innes and Barclay Grant towards the end of 1992 or beginning of 1993. He submitted that it was probably later rather than earlier but I think the evidence shows that it must have been some time between 22 December and January/February. There was a letter on file dated 10 February which was the next entry after the letter of 22 December. Mr Stewart said that if one assumed that the letter of 10 February was prompted by the discussions in the 22 December letter then that took the discussions forward into February.

[886] At the first opportunity to explain himself Mr Innes, when speaking to Mr McWilliam, said that he had reserved a liferent as requested by Barclay Grant. (6/22 sheets 2 and 3). The issue however was what he requested and that was not answered by what Mr Innes said. The first step was to ask Barclay Grant and as soon as he was able to comment (6/22/7) he said that the only way he would sign it (presumably the farmhouse) over was to keep an "extended liferent". It was true to say that if the question of a wife or a housekeeper was discussed with Iain Innes at the beginning of April 1993 it would have made an impact but the discussions happened before his stroke. The evidence showed that he had every reason to wish to reserve an extended liferent if he were giving away the house. He had a pre-occupation with that. He was a man who knew his own mind, he was honest and was not under any pressure inhibiting him from making the request. The defenders impliedly admitted that there was no good reason for him to divest himself of the farmhouse on the terms which he did. I queried whether there was any good reason for him to divest himself of the farmhouse under reservation of an extended liferent and Mr Stewart said that there was.

[887] Mr Grant's statements as reflected in the Memorials were not challenged in the sense that it was not suggested that they were not made shortly before the Memorials were composed. The statements in the precognitions about the liferent were not challenged in cross-examination. I wonder, though, how they could have been.

[888] No reasons had been advanced for disregarding this evidence. Mr Innes said that the Disposition was according to his instructions but he did not draft it, he was not familiar with drafting liferent provisions and, when asked at the arbitration what the reference to assignees meant, he said that he presumed it was the client's instructions. Barclay said it was to preserve a benefit for his housekeepers. These were important adminicles. He submitted that the defenders were at a disadvantage. They could not say when they obtained the instructions to prepare a simple liferent and what happened to the suggestion that the house would be used as security to raise funds. That was a matter which was still on the agenda in the middle of February.

[889] Mr Stewart then turned to the question of collateral matters. These had been the subject of objection by Mr Moynihan and I was invited to repel the objection for a number of reasons.

[890] It might be right to say that the arbiter's opinion was irrelevant but the evidence about other transactions had a material bearing on the understanding of the background to the family/mortgages/liferent and partnership questions. They also had a bearing on credibility and reliability. Essential facts required to be averred but these matters simply went to evidence.

[891] The defenders founded particularly on sheets 8 and 9 in 6/4. In order to understand that note one had to know about the other transactions. The evidence was also relevant in assessing Mr Grant's evidence that he was unclear about what he was signing, given the multiplicity of documents as well as the blanks. The defenders had cross-examined without reservation on the related transactions and they had put in evidence and led evidence about productions on these matters. They had lodged Mr Munro's files and asked him questions about related matters. The search sheets 22/24 had been lodged by the defenders, albeit allocated a number in the pursuer's inventory for convenience.

[892] The defenders had made submissions on the evidence about the related transactions and I should repel the objection.

[893] The significance of the evidence related to Mr Stewart's second original proposition. That concerned the manner in which the defenders handled the pursuer's business over the period to 25 May. He was referring in particular to the impliedly admitted negligence concerning the advice given about Inheritance Tax planning, care costs (although this did not figure largely in the evidence) and reduction of the overdraft. It was not the case that everything done was negligent.

[894] He then turned to the question of advantages and disadvantages accruing to Mr Grant from the transactions. I was invited to look more closely at this issue than Mr Moynihan had sought. It was admitted that no advantages accrued in terms of Inheritance Tax planning, care costs or reducing the overdraft. There was no good reason for Mr Grant to divest himself of the farmhouse or for divesting his wife of security after his death. It was clear on the evidence that the purpose of the transactions was to provide funding and collateral. The reference to William's obtaining collateral on the farmhouse was on the agenda but after the gratuitous alienation was made no standard security was obtained.

[895] I pause to observe that this may be because relations effectively broke down thereafter.

[896] It may be that everything was being done in terms of an overall arrangement which would allow him to pass on the farmlands on the basis that William would assume responsibility for the liabilities. It appeared to be the latter's position, and a position which the defenders maintained on his behalf, that he would obtain the assets and the liabilities would be shared. There was a clear conflict of interest there.

[897] As far as the farmlands Disposition was concerned, it seemed to be suggested that Barclay Grant was cherry-picking in order to maximise his financial advantage. It was clear, in spite of what the pursuer said about the pleadings in the reduction action, that Barclay's position was that though he had not instructed the farmhouse Disposition he accepted that he would have done so in order to keep the peace on certain conditions, namely, sharing the liabilities. See 6/22 sheets 6,12,14 and 19. See also 6/18 at pages 7 and 8 and the two Memorials.

[898] On a careful and objective reading of the pleadings in the reduction action they did not go so far as to say that Barclay did not consent to the dissolution and the farmlands Disposition on certain conditions. It was unfair, though, to blame Barclay for the pleadings. When the papers were sent to Edinburgh they included 6/22 sheet 84, the precognition of a third party.

[899] I observe here that, whatever may be the provenance of the pleadings, the pursuer accepted that they accurately reflected Barclay's position.

[900] As far as prescription was concerned, Mr Stewart submitted that the issue was simply one of fact. The evidence of Barclay as contained in the Memorials was to the effect that he wanted his wife or housekeeper to have a liferent after his death. Until then the pursuer only had a contingent interest and that was dealt with particularly by Lord Hoffman in Law Society v Sephton at paragraph 30.

Further Submissions For The Defenders
[901] I allowed Mr Moynihan to come back briefly.

[902] He said that Mr Stewart appeared to be suggesting that Barclay authorised the Disposition. If he understood it correctly the thrust of that submission was that, unlike the Bank example, the grantor signed the Disposition and was not facile, not subject to pressure amounting in law to undue influence and was not labouring under any induced error so the law presumed that he had authorised the transaction.

[903] Following through, Mr Stewart was saying that the proper hypothesis had three elements, the first of these being that the transaction was authorised and could not be set aside. It had been said that the defenders had focused on instructions because it suited them. It was conceded that there was to a degree a challenge in considering the evidence of Barclay as to the extent to which the Dispositions were "his".

[904] Mr Moynihan submitted, correctly, that Lord Reed's judgement was not res judicata as between the pursuer and the defenders. There was no agreement between the parties to this action as to the decision in that case. If Mr Stewart wanted to lead evidence that Barclay authorised the transaction then he should have done so. That might have been awkward for Barclay because if he gave that evidence then he would have doubtless been crossed on what he said in the arbitration, on oath, and the papers might have been referred to Crown office.

[905] Mr Stewart's suggestion that there was a degree of challenge in considering Barclay's evidence as to whether the Dispositions were "his" was a masterly understatement.

[906] He had suggested that the law presumed that Barclay authorised the transactions. Most presumptions were rebuttable. The entire basis of Barclay's accounts was rebuttal of that presumption and nothing in the evidence in this case suggested that that rebuttal could be ignored. There was no basis on the evidence to suggest that Barclay had authorised the transaction except if the evidence of Iain Innes to that effect was accepted.

[907] Mr Stewart had indicated that there may have been a failure to prove that instructions came via Craig Wood. Even now, at the last minute, one was left wondering whether the pursuer's case was that the authorisation was via Mr Wood or came directly to Mr Innes. In his submission the evidence did not prove the case on Record and, indeed, the pursuer's evidence disproved it. It was not open on the evidence to say that Barclay authorised the transaction, his evidence being inconsistent with that.

[908] For the sake of completeness I should add that Mr Stewart at that point tendered an excerpt from Professor Halliday's "Conveyancing Law & Practice in Scotland" Volume 1 (1985 Edition) pages 88 to 91 in connection with the construction of alterations in probative deeds.

Discussion
[909] It seems to me logically that the first thing I should do is to deal with the objections made by Mr Moynihan in order to delimit the evidence which I am taking into account.

[910] I think that I can do that fairly briefly. The broad thrust of the objections was to the effect that there was no Record for the leading of evidence about collateral matters relating to conveyancing transactions other than the Disposition of the farmhouse. I have decided to repel the objections for the reasons set out in Mr Stewart's submissions. I would be almost impossible, I think, to deal with the farmhouse in isolation and indeed evidence about other transactions was necessary in order to put the contemporaneous notes, particularly those of Mr Innes, Mr Munro and Mr McWilliam into proper context. I do not consider that any prejudice arises to the defenders in my allowing this evidence.

[911] Furthermore the relevant documentation is all produced and in so far as there are errors in Dispositions these can be seen ex facie of the deeds themselves.

[912] All that having been said, the weight to be attached to this evidence is a matter to which I will come in due course.

[913] Despite the very lengthy nature of some of the evidence, which I am afraid is reflected in the length of this Opinion, and the detailed nature of the submissions, the essential dispute between the parties in this action is, on the facts at least, in relatively short compass.

[914] I propose to deal with that first.

[915] There seems no doubt whatsoever that until Barclay Grant's unfortunate admission to hospital in early 1993 there were no substantial problems between him and William, except perhaps in relation to domestic matters. Both of them had to come to terms with the financial position facing the partnership and it is common ground that there were a number of discussions as to how this could best be handled. My impression is that the principal issues were the increasing overdraft and questions of succession.

[916] One of the difficulties with this case is that the discussions took place between fifteen and sixteen years ago so that memories are not as fresh as they might have been. Furthermore, I am satisfied that some of the documentation which might have been of assistance is no longer available.

[917] However, one can see from page 2 of 6/18 that Barclay Grant himself said that he discussed with Mr Innes, his son and the manager of the Bank of Scotland matters relating to his son taking over the farming business and his retiring. That seems to me to be consistent with the evidence of Mr Munro and Mr Innes and I have little difficulty in accepting that that was generally the position.

[918] At this juncture I do not think it possible to decide what exact advice was given in relation to Inheritance Tax mitigation but I accept the evidence of Mr Innes that that was not what drove the various transactions in due course. I accept that if there had been advice that the Disposition in reserving a liferent to Barclay Grant would have mitigated Inheritance Tax then that advice would have been negligent. That is not, though, the basis upon which this case rests and in any event, as I have said, I am not satisfied that that advice was in fact given.

919] There was a great deal of questioning of Mr Innes by Mr Stewart about various transactions and possible avenues for refinancing but I have to say that I did not think that that advanced the case particularly. The main difficulty is that Mr Innes's recollection of the precise details of the various transactions which might have been undertaken was extremely vague. I found this hardly surprising in view of the passage of time and the lack of documentation. In these circumstances there is force in Mr Moynihan's submission that, having come to Court to deal with the farmhouse Disposition, it is hardly surprising that the details of that transaction, for which there is some documentation, were fresher in Mr Innes's mind.

[920] In the circumstances, while much of the conveyancing leaves a lot to be desired, I do not think that it assists me in assessing Mr Innes as a witness. Neither do I think that it advances the pursuer's case. As I have indicated previously, I do not think that flawed Dispositions effeir to the benefit of grantees.

[921] The use of absolute warrandice seems to me to be neutral in a family situation.

[922] It is plain that the farmhouse was owned by Mr Grant and was not subject to any security. The farmlands were held for the partnership and the caravan site had been sold off previously. There were three house plots with planning permission but they do not seem to me to enter particularly into the equation. There were also, of course, the chalet sites. Barclay Grant owned certain chalets as did his son William. The borrowing for the development of the chalets was effectively covered by the security over the farmlands.

[923] It should also be remembered that there was a house site which had to be decrofted. A Deed of Restriction would have been required for that site and assuming a house was built on it I accept that Barclay's plan was to let it out for five years before returning to live in it.

[924] These were doubtless all matters which were discussed in late 1992 and early 1993. I should say that as far as the conveyancing is concerned it is not entirely clear to me that Mr Innes was responsible himself for all of the conveyancing which contained defects. In any event I do not think that it provides any basis for my holding that in relation to the transaction under consideration now he was any more or less likely to have been negligent in implementing Barclay's instructions, assuming there were any instructions. For example the Disposition of the chalet site by Barclay Grant to William Grant should have run in the name of the partnership rather than Barclay. That was recorded on 15 June 1992, long before disputes had arisen, and seems to me to undermine Mr Stewart's submissions.

[925] I am not convinced that Mr Innes's continuing to act for William Grant in the arbitration and his failures to intimate the termination of the partnership were indicative of anything more than a general slackness. I am not prepared to read into them some underlying purpose to benefit William to the exclusion of Barclay. So far I have been looking, albeit briefly, at a number of matters which I regard as being fairly circumstantial. Mr Stewart invited me to draw a number of inferences from these circumstances but it seems to me that they are essentially neutral.

[926] Precisely the same goes for the ultimate financial settlement. Mr Moynihan drew my attention to what he called the financial logic of the situation and to the ultimate settlement in the arbitration. He also drew my attention to the fact that Barclay was content to ratify the letter of resignation and to accept the consequences which flowed from the farmlands Disposition.

[927] However, just because things eventually worked out, at least to some extent, it does not seem to me that that necessarily helps one way or the other. The tempus inspiciendum is the period from late 1992 until 1 April 2993 before the details of any settlement could have been known. The only people who were able to give direct evidence about that are Mr Innes, Mr Munro and the deceased.

[928] Certain reference was made to evidence given by William Grant but I attached no weight to it whatsoever. It is contained in the arbiter's award but lacks any detailed context and I do not find it helpful.

[929] The broad position of the deceased is set out in the precognitions 6/13 and 6/18, in the various memoranda and notes taken by Mr McWilliam, in the evidence of the pursuer and in the notes of his evidence given at the arbitration. He accepts that there were general discussions along the lines I have indicated but his broad position appears to be quite clear. He did not give any instructions for the preparation of any deeds. His position appears to be that in the course of such discussions as he had with Mr Innes he told him that any Disposition of the farmhouse should reserve a liferent for himself and for any wife or housekeeper living with him. In other words if he ever got round to instructing a Disposition then that was what should be in it.

[930] The pursuer's evidence was fairly vague on a number of aspects, again unsurprisingly. She was particularly vague about the amendments to the precognition but in a sense that does not take us very far. She was quite clear that the Closed Record in the reduction action properly set out Barclay's position and it seems to me to be quite clear in any event from the other documentation.

[931] Assuming matters were left at that and no Disposition had ever been granted then I would have little difficulty in understanding Barclay's position. The major difficulty I have in this case is that in fact he signed a Disposition. How did that come to be? Did someone else instruct it? If so, he either ratified it by his signature or was under some misapprehension as to what it was or what it contained.

[932] Ratification can, I think, be ruled out. The position of the pursuer was that he did not know what he had signed. That being so it is difficult to see how it could now be maintained that he thought it did in fact give effect to his wishes. I agree with Mr Moynihan that it is difficult to make sense of sheets 6 and 7 in 6/22. Mr McWilliam, on 27 May 1993, noted Mr Grant as saying that he had spoken to Iain Innes about signing over the house at an earlier date - perhaps in January or February of that year. The note then says:

"The farm had been signed over previously. William and his wife had said that they would look after him, but this is not what happened. William had told him that they must do it. That is what the solicitor said. Ian Innes was taken up to see him on one Thursday and he gave instructions to Ian, as told by William. William was with him at the time and there was no suggestion that William left. Mr Grant accepted that, even if William had left, it would probably have made no difference to what he had told Mr Innes. He was told that if he lived for 7 years after signing over the house there would be no duty. The only way in which he would sign over is to keep the liferent and the liferent for the housekeeper or companion. This is the only way to give someone like that security. ... When the documents were placed in front of him he never read them. He can't remember if he was told to read it. There is a question of whether he was fit to read it."

I find it difficult to read the reference in instructions as being anything other than instructions in relation to the farmhouse. I do not see how they can relate to the farmlands because of the reference (erroneous as it turns out) to those having been signed over previously. The note appears to indicate that it was Barclay himself who gave the instructions to "Ian", having been told what to say by William. That is because of the reference to what would have happened if William had left.

[933] There seems to me to be no room for any suggestion that the instructions related to the letter of resignation.

[934] That being so there is an indication here that in fact instructions were given by Barclay for the farmhouse. That, of course, flies in the face of his primary position.

[935] Mr Innes himself cannot indicate when the instructions were given. His best guess, it seems to me, was that they were given during a telephone call and there is certainly evidence, which I accept, that Barclay was able to make calls from the hospital. I find it inherently unlikely that Mr Innes would simply have turned up with an engrossed Disposition without having been given some instructions to bring it. It could only have been William or Barclay who gave the instructions and there is simply no evidence before me to suggest that it was in fact William.

[936] All this is without considering the other evidence in the case. Mr Innes is quite clear that he was given instructions by Barclay to draft the Disposition reserving a liferent for himself. No mention was made to him of any wife or housekeeper.

[937] I have no doubt that Barclay told other housekeepers that he would look after them to the extent of getting a liferent for them. I accept the evidence of the pursuer to that effect and that of Barbara Wilson. However what he told his housekeepers and prospective housekeepers is not necessarily what he told his solicitors. He was generally regarded as an honest man and I mean no disrespect to him but there are a number of obstacles in the way of accepting that these were the instructions he gave Mr Innes.

[938] There is Mr Innes's direct evidence that the instructions were for a liferent for himself. He might of course be thought to have an interest in the case but I did not consider that Mr Innes was telling lies. Admittedly his evidence was vague in certain respects but he was being asked to cast his mind back over fifteen years without the benefit of all the documentation. It was obvious that there were a number of discussions with Mr Grant and others about the arrangements for refinancing and the like and there seemed to me to be nothing unusual about Mr Grant's conveying the farmhouse to his son and reserving a liferent to himself. There might be no particular benefit to him in that but if that was what he wanted then there was no reason why a solicitor should not prepare such a document. I have no doubt that better notes could and should have been kept but on the crucial question in this case, the instructions he was given, I am satisfied that he was telling the truth, although he was more likely to have had a better memory of it when he gave evidence before Lord Reed. Secondly, there is the evidence of Mr Munro. He was perfectly credible also and furthermore he had no interest, it seems to me, to misrepresent the position. He thought that it was he who introduced the concept of the liferent of a house. He recalled a suggestion for William to run the farm and for Barclay to live off the chalet income. One proposal which was discussed was that Barclay would have the benefit of the farmhouse for his life and William would stay in his own house next door. There were meetings at the end of 1992 and he said that as far as he was concerned the principle of transferring the farm to William and Barclay's having a liferent of the house was agreed. The witness had to contact the bank manager and Iain Innes about these matters. He thought that it was he who introduced the word liferent. It was quite clear that there was no suggestion of anyone other than Barclay benefiting from the liferent. He knew that Barclay had had a number of housekeepers and had there been any mention of making provision for a housekeeper he would have recorded it in his notes. The possibility of remarriage was never considered at the meeting.