SHERIFFDOM OF GRAMPIAN HIGHLAND AND ISLANDS
AT WICK
A31/07
JUDGEMENT
of
SHERIFF
PRINCIPAL SIR STEPHEN S T YOUNG Bt QC
in the cause
MARGARET FRANCIS GARDNER
Pursuer and Respondent
against
JOHN JOSEPH CURRAN
Defender and Appellant
|
Act:
Mr I F Maclean, advocate, instructed by Ewan, Harris & Co, Dornoch
Alt:
Mr P G Davies, advocate, instructed by Harper Macleod LLP, Glasgow
Wick: 15th
July 2008
The
sheriff principal, having resumed consideration of the cause, refuses the
appeal and adheres to the interlocutor of the sheriff dated 11 December 2007
under deletion of the words "Meantime appoints parties to be heard on the
matter of the expenses of the debate on a date to be fixed"; finds the
defender and appellant liable to the pursuer and respondent in the expenses of
the appeal and also of the debate before the sheriff on 25 October 2007 and
allows an account thereof to be given in and remits the same, when lodged, to
the auditor of court to tax and to report; certifies both the debate and the
appeal as suitable for the employment by the pursuer and respondent of junior
counsel; quoad ultra remits the cause
to the sheriff to proceed as accords.
Note
[1] In this case the pursuer and respondent is the widow of
the late Alan Edward James Gardner who died on 29
May 2000 and who at the time of his death was the tenant of Croft 8, Borgue, Caithness. At that time the landlord
of the croft was Mrs Margaret Gunn Patterson and the defender and appellant is
her executor nominate.
[2] Mr Gardner left a will dated 20
September 1999, the material parts of which read as follows:
I, Alan Edward James Gardner ........ hereby make
the following provisions regarding the distribution of my whole estate on my
death:-
1. I
revoke all my wills and previous testamentary writings.
2. I
appoint as my executor my friend (A) whom failing my wife Margaret Francis Kerr
or Gardner .........
3. I
direct my executor to give effect to any future writings signed by me, however
informal they may be, provided that in the opinion of my executor they clearly
express my intentions.
4. For
payment of my debts and funeral expenses.
5 . The
residue of my estate to my wife, Margaret Francis Gardner.
6. In
the event that my wife failing to survive me by thirty clear days, then I leave
the residue of my estate to my children (B ,C and D) equally among or between
them or wholly to the survivor of them.
In terms of clause 7 Mr
Gardner made provision for the possibility that a beneficiary might be under age
and conferred various powers upon his executor, the details of which are of no
significance in this context.
[3] So far as material, sections 10 and 11
of the Crofters (Scotland)
Act ("the Act") provide as follows:
10(1) A crofter may, by will or other
testamentary writing, bequeath the tenancy of his croft to any one person; but
where the power conferred by this subsection is exercised in favour of a person
not being a member of the crofter's family, the bequest shall be null and void
unless the Commission, on application made to them by the legatee, otherwise
determine.
(2) A person to whom the tenancy of a croft
is bequeathed as aforesaid (in this section referred to as "the legatee")
shall, if he accepts the bequest, give notice of the bequest to the landlord
within 2 months after the death of the crofter, unless he is prevented by some
unavoidable cause from giving such notice within that time, and in that event
he shall give such notice within a further period of 4 months. If no such
notice is given in accordance with the provisions of this subsection the
bequest shall become null and void.
The giving of such
notice shall import acceptance of the bequest and, unless the landlord
intimates objection to the Commission under subsection (3) below, the legatee
shall come into the place of the deceased crofter in the croft as from the date
of death of the deceased crofter, and the landlord shall notify the Commission
accordingly.
(3) Where notice has been given as aforesaid
to the landlord he may within one month after the giving of the notice intimate
to the legatee and to the Commission that he objects to receiving the legatee
as tenant of the croft and shall state the grounds of his objection.
(4) If, after affording to the legatee and to
the landlord an opportunity of making representations to them, the Commission
are-
(a) satisfied that the objection is
reasonable, they shall declare the bequest to be null and void, and shall
notify the landlord and the legatee accordingly;
(b) not so satisfied, they shall notify the
landlord and the legatee to that effect, and the legatee shall thereupon come
into the place of the deceased crofter in the croft as from the date of the
death of the deceased crofter.
(5) If the bequest becomes null and void
under this section, the right to the croft shall be treated as intestate estate
of the deceased crofter in accordance with Part I of the 1964 Act.
(6) Subject to the foregoing provisions of
this section, any question arising with respect to the validity or effect of
the bequest shall be determined by any court having jurisdiction to determine
the validity and effect of the whole testamentary writings of the deceased
crofter.
11(1) Where,
owing to the failure of a crofter to bequeath the tenancy of his croft or of
such a bequest to receive effect, the right to the tenancy of the croft falls
to be treated as intestate estate of the deceased crofter in accordance with
Part I of the 1964 Act, and the tenancy is transferred in pursuance of section
16(2) of that Act, the executor of the deceased crofter shall as soon as may be
furnish particulars of the transferee to the landlord, who shall accept the
transferee as tenant; and the landlord shall notify the Commission accordingly.
The Act has recently been
amended in certain respects by the provisions of the Crofting Reform etc Act
2007. But it is common ground that the issue in this case falls to be
determined in accordance with the provisions set out above.
[4] The 1964 Act referred to here is the Succession (Scotland) Act 1964. In their
application to this case subsections 16(1) and (2) of this Act provide:
16(1) This section applies to any interest,
being the interest of a tenant under a lease, which is comprised in the estate
of a deceased person and has accordingly vested in the deceased's executor by
virtue of section 14 of this Act; and in the following provisions of this
section "interest" means an interest to which this section applies.
(2)Where an interest-
(a) is not the subject of a valid bequest by the deceased, or
(b) is the subject of such a bequest, but the bequest is not accepted by
the legatee, or
(c) being an interest under an agricultural lease, is the subject of such a
bequest, but the bequest is declared null and void in pursuance of section 16
of the Act of 1886 or section 11 of the 1991 Act or becomes null and void under
section 10 of the Act of 1955,
and there is among the conditions of the lease (whether expressly or by
implication) a condition prohibiting assignation of the interest, the executor
shall be entitled, notwithstanding that condition, to transfer the interest to
any one of the persons entitled to succeed to the deceased's intestate estate,
or to claim legal rights or the prior rights of a surviving spouse out of the
estate, in or towards satisfaction of that person's entitlement or claim; but
shall not be entitled to transfer the interest to any other person without the
consent
(i) in the case of an interest under an agricultural lease, being a lease
of a croft within the meaning of section 3(1) of the Act of 1955, of the
Crofters Commission;
(ii) in any other case, of the landlord.
(In terms of subsection
16(9) "the Act of 1886" means the Crofters Holdings (Scotland) Act 1886, "the
1991 Act" means the Agricultural Holdings (Scotland) Act 1991 and "the Act of
1955" means the Crofters (Scotland) Act 1955).
[5] In terms of crave 1 the pursuer seeks a declarator that the
tenancy of the croft passed to her under the terms of the will as part of the
residue of Mr Gardner's estate and in accordance with section 10(1) and (2) of
the Act. In terms of section 61(2) any reference in the Act to a member of a
crofter's family includes a reference to his wife, and the pursuer contends
that, on a proper construction of the will, clause 5 was effective to carry the
tenancy of the croft to her for the purposes of section 10(1) of the Act.
[6] The defender on the other hand maintains that the will did
not carry the tenancy of the croft to the pursuer since it did not contain a specific
bequest of the croft to her. To this end the defender tabled a preliminary plea
in law directed to the relevancy and specification of the pursuer's averments
and a second plea in law (which it was agreed at the debate should be treated
as a preliminary plea) to the effect that, there having been no valid bequest
of the croft, the pursuer was not entitled to declarator as craved and the
defender should be assoilzied with expenses.
By interlocutor dated 11 December 2007 the sheriff repelled these
two pleas (and also one of the pursuer's pleas which is no longer the subject
of contention) and allowed parties a proof of their respective averments. It is this interlocutor which is the subject
of the present appeal.
[7] Opening the appeal, counsel for the defender began by examining
the statutory scheme set out in sections 10 and 11 of the Act read with section
16(2) of the 1964 Act and submitted in short that it was clear from this scheme
that what was required in terms of section 10(1) was a specific bequest of the
tenancy of the croft in question to one specific person and that, in the
absence of such a specific bequest, the tenancy fell into intestacy - see
sections 10(5) and 11(1) of the Act.
Counsel submitted that the bequest of residue such as that in the
present case was not sufficient to carry the tenancy of the croft to the
residuary legatee, and he drew attention to Agnew: Crofting Law at page 72,
note 2, and MacCuish and Flyn: Crofting Law at paragraph 7.02. Counsel then proceeded to examine the terms
of the earlier Crofting Acts and the Agricultural Holdings (Scotland) Acts
which contained similar provisions to that found in section 10(1) and he submitted
that these too supported the proposition that what was required was a specific
bequest of the tenancy failing which it fell to be treated as intestate estate
of the deceased tenant. Reference was
made here in particular to Kennedy v
Johnstone 1956 SC 39, Reid's Trustees
v Macpherson 1975 SLT 101 and Gill: Agricultural Holdings (3rd Edn) at
paragraph 33.02. Counsel then examined
the nature of a bequest of residue and submitted under reference to Macdonald
on Succession (3rd Edn) at paragraphs 10.70 to 10.74, Hiram on Succession (2nd
Edn) at paragraphs 8.4 and 8.7 and Cochrane's
Executors v Inland Revenue 1974 SC 158 that a general or residuary legatee
was only entitled to receive out of the deceased's estate what was left after
the prior purposes of the will had been satisfied including payment of debts,
taxes and specific legacies. Thus a
residuary legacy could not give rise to a right in the residuary legatee to
receive any particular item of property out of the deceased's estate with the
result that, once again, what was required for the purposes of section 10(1)
was a specific bequest of the tenancy of the croft in question. In the fourth place counsel referred to a
number of authorities which had been canvassed before the sheriff at the
debate, namely Lindsay's Trustees v Welsh
(1890) 34 Journal of Jurisprudence 165, Budge
v Gunn 1925 SLCR 74, Kennedy v
Breadalbane's Trustees 1933 SLCR 3, Mackay
v Macgregor 1941 SLCR 67, Macdonald v
Cathcart's Trustees 1943 SLCR 24 and Purdie
v Colquhoun 1946 SLCR 26. Counsel
submitted that, with one exception, none of these cases provided any
satisfactory support for the proposition that a residuary bequest in a will
would operate to carry the tenancy of a croft.
The one exception was Macdonald v
Cathcart's Trustees and that case, said counsel, had been wrongly decided
in that the decision flew in the face of the relevant legislative scheme. Finally counsel drew attention to the note
appended to the sheriff's interlocutor and submitted in short that he had
reached the wrong conclusion with the result that the appeal should be allowed,
his interlocutor recalled and the action dismissed.
[8] In response, counsel for the pursuer submitted that the
appeal should be refused and the interlocutor of the sheriff upheld. The issue in the present case was, said
counsel, purely one of construction of the testator's will in light of the relevant
statutory provision, namely section 10(1) of the Act. The correct approach was firstly to ascertain
what had been the testator's intention so far as this could be discerned from
within the four corners of the will and secondly, if the court was satisfied
that the testator had intended to dispose of the tenancy of his croft, to
determine whether or not he had succeeded in doing so. There was nothing in section 10(1) of the Act
which either expressly or impliedly required a specific bequest in the technical
sense of that term, in other words a legacy which made express mention of the
croft, to carry the tenancy. To
interpret the section as requiring a specific bequest would be to impose an
additional technical restriction on the tenant's ability to bequeath his
tenancy which Parliament had not seen fit to impose. A will which bequeathed the entirety of a
crofter's estate by way of a residuary bequest to one person who was a member
of the crofter's family, as that expression was defined in section 61(2) of the
Act, satisfied the requirements of section 10(1). This section was the statutory successor of
legislation in essentially the same terms stretching as far back as the
Crofters Holdings (Scotland) Act 1886. The researches of counsel before the diet of
debate had unearthed no case in which the court had held that the tenancy of a
croft could not be transferred by way of a bequest of residue to one person
being a member of the crofter's family and had declined to recognise a bequest
in that form. Such authorities as there
were on the issue pointed the other way.
The authorities upon which the defender relied were derived from the
different statutory and common law regime which applied to agricultural
tenancies and had no relevance to the determination of the present appeal. The question here was one of the proper
construction to be applied to the will against a statutory and common law
background made up of, on the one hand, the requirements of section 10(1) of
the Act and, on the other hand, the strong presumption which existed in the law
of Scotland against intestacy - see Auld's
Trustees v Auld's Trustees 1933 SC 176 and Forsyth v National Kidney
Research Fund [2006] CSIH 35. There
was not disclosed either in the terms of the relevant legislation or in the
case law any compelling reason of principle or practice for denying effect to a
bequest in the form of a bequest of residue in favour of one person, being a
member of the crofter's family. If the
residue was bequeathed to one person, being a member of the crofter's family,
and the residue included the tenancy of a croft, there could be no dispute as
to the identity of the person entitled to accept the bequest. In the present case on a proper construction
of the will Mr Gardner had left the entirety of his estate to his wife, the
present pursuer, who was a member of his family within the meaning of section
61(2). It followed that the bequest of
the residue in favour of the pursuer contained in clause 5 of the will was
effective to carry the tenancy of the croft.
[9] In my opinion the submissions for the pursuer are to be
preferred. In the context of this case section 10(1) of the Act poses the
question whether in his will Mr Gardner bequeathed the tenancy of his croft to
one person, namely his wife. Try as I
may, I cannot see how this question can be answered otherwise than in the
affirmative. In the opening section of
the will Mr Gardner made it clear that his purpose in making the will was to
provide for the distribution on his death of his whole estate. There is no dispute that the tenancy of the
croft was part of his estate so it seems to me that this opening section of the
will admits of no other interpretation than that Mr Gardner intended to provide
for the disposal of the tenancy on his death.
Thus the question arises whether he effectively did so by bequeathing
the tenancy to his wife. In terms of
clauses 1 and 2 of the will he revoked all his wills and previous testamentary
writings and appointed his friend (A) whom failing his wife as his
executor. Then in clause 3 he directed
his executor, in short, to give effect to any future informal writings signed
by himself, and there is no suggestion in this case that he in fact left any
such writings. Clause 4 then provides
for payment of his debts and funeral expenses and immediately thereafter there
is in clause 5 a bequest of the residue of his estate to his wife. Clause 6 provides for a destination-over, in
the event of his wife not surviving him by thirty clear days, to his three children,
and it was accepted by counsel for the pursuer that, had this destination-over taken
effect, it would not have been habile to carry the tenancy of the croft for the
purposes of section 10(1) since in that event there would have been a bequest
in favour of more than one person (with the result that the tenancy would have
fallen to be treated as intestate estate of Mr Gardner). But of course in this case the pursuer did
survive her husband for thirty clear days and accordingly clause 5 in the will
took effect with the result that Mr Gardner bequeathed the residue of his
estate (in other words, his whole estate including the tenancy of the croft) to
his wife subject only to payment of his debts and funeral expenses.
[10] It is perhaps a nice question to what extent, if Mr Gardner had
died leaving substantial debts, his executor could have realised the value of
his tenancy of the croft in order to pay these debts. There is no suggestion in this case that Mr
Gardner did leave substantial debts but, if he had done so, it is possible that
the bequest to his wife of the residue of his estate would have been defeated
to the extent that it included the tenancy of the croft if it had proved
necessary to realise its value in order to pay the debts. But it is one thing to say that a valid
bequest has been defeated in order to satisfy an antecedent purpose in a will
and quite another to say, as the defender does in this case, that there has
been no valid bequest in the first place.
Besides, as counsel for the pursuer pointed out, exactly the same
situation could have arisen even if there had been a specific bequest of the
tenancy as opposed to a residuary bequest which included the tenancy.
[11] Counsel for the defender submitted that the purpose of section
10 of the Act and section 16 of the 1964 Act (and also of the equivalent
provisions in the Agricultural Holdings (Scotland) Acts) was to provide a
mechanism whereby it would be possible following the death of a crofter to
identify quickly who was to succeed him as tenant of the croft in question, and
he drew attention to the tight time limits to be found, for example, in subsections
10(2) and (3) and 11(1) and (2) of the
Act. He pointed out too the difficulties
that might arise in practice for a residuary beneficiary if he had to await the
outcome of the administration of the deceased crofter's estate in order to
ascertain whether the bequest in his favour had failed or not. This, as I understood counsel, pointed in
favour of the conclusion that, to be effective for the purposes of section 10(1)
and in order to avoid any uncertainty in identifying who was to succeed to the
tenancy, it was necessary that there should be a specific bequest of the
tenancy in the crofter's will or other testamentary writing.
[12] In response, counsel for the pursuer acknowledged the
difficulties that could arise in practice in light of the time limits found in
the legislation and he acknowledged to that it might be preferable that there
should be a specific bequest of the tenancy of a croft as counsel for the
defender had proposed. But it is one
thing to say that such a specific bequest would be preferable, and quite another
to say that it is required by the terms of section 10 of the Act. And as for the difficulties over time limits,
counsel for the pursuer pointed out, rightly in my opinion, that once again
these same difficulties could arise whether there had been a specific bequest
of the tenancy or it had been bequeathed as part of the residue of the deceased
crofter's estate.
[13] It was a recurring theme in the submissions of counsel for the
defender that section 10(1) demanded that there should be a specific bequest of
the tenancy of the croft in question in favour of one specified person. But it seemed to me that he looked in vain in
the provisions of sections 10 and 11 of the Act and section 16 of the 1964 Act
for any clear confirmation of this proposition.
He pointed out, for example, that section 10 referred throughout to
"the bequest" of the tenancy, and he suggested that section 11(1) of
the Act and section 16(2) of the 1964 Act imported the idea that there had to
be an active bequest of the tenancy. All
this may be true, but it still begs the question what form the bequest should
take in order to satisfy section 10(1).
[14] Counsel for the pursuer drew attention to Rankine on Leases
(3rd Edn) at pages 162/3, and specifically a passage at page 162 which reads:
"The tenant's right in and to a lease may be conveyed by him in a will or mortis causa disposition either expressly,
or by general words sufficient to indicate or include the right. And now heritable estate - including leases -
is in the same position as movable estate so far as regards the mode in which
it may be settled mortis causa. So that the only difficulty now lies in the
ascertainment of the settler's intention".
Counsel submitted that it was always a matter of construction of a will
to determine whether a particular bequest was intended to carry a lease or
not. He suggested that in a case such as
this the clause bequeathing the residue of the testator's estate to his widow
would have been sufficient to carry other heritable property such as a flat in
Edinburgh or a landed estate in Dumfriesshire and he posed the question why
then it should be prevented by the terms of section 10 of the Act from also
carrying the tenancy of a croft. He
submitted, rightly in my opinion, that, if it had been the intention of
Parliament that only a specific bequest of the tenancy of a croft would suffice
for the purposes of section 10, then this would have been spelled out
explicitly in the section. And in the
absence of such an explicit provision, said counsel, there was no warrant for
this court to impose a further statutory limit on the freedom of a crofter to
bequeath the tenancy of his croft beyond that already to be found in section 10(1)
(namely that the bequest must be in favour of one person only).
[15] Counsel for the defender founded strongly on the decisions of
the Inner House in Kennedy v Johnstone
and Lord Grieve in Reid's Trustees v
Macpherson. But in my opinion these cases are readily distinguishable from
the present case, and neither affords any support at all for the position taken
up by the defender in this case.
[16] When Kennedy v Johnstone was
decided section 20(1) of the Agricultural Holdings (Scotland) Act 1949
provided: "Subject to the provisions of this section, the tenant of an
agricultural holding may, by will or other testamentary writing, bequeath his
lease of the holding to any person".
Section 20(2) provided for the service on the landlord by the legatee of
a notice of acceptance of the lease, and section 20(3) provided for the service
on the legatee by the landlord of a counter notice intimating that he objected
to receiving him as tenant under the lease.
In that case the lease of an agricultural holding expressly excluded
assignees, legal or conventional, subtenants and legatees under the
Agricultural Holdings (Scotland) Acts. The tenant died, survived by his widow and
son, leaving a will whereby he conveyed to trustees his whole estate and
directed them to hold the residue, which included his interest under the lease,
in liferent for his widow and, on her death, to divide it among his sons. The sons gave timeous notice of the bequest
to the landlord who served a counter notice under section 20(3). The widow had meantime renounced her liferent.
Subsequently the sons applied to the Land Court for an order finding them
to be tenants of the farm, and the Land Court granted the order. On appeal to the Inner House it was held that
the Land Court had not been entitled to
grant the order and section 20 could not be invoked when there was an express
exclusion of the tenant's legatee in the lease.
[17] The first question debated before the First Division was
whether it was competent to contract out of the provisions of section 20 of the
1949 Act by a clause in the lease excluding legatees under the Agricultural
Holdings (Scotland) Acts. It was held that this was competent - see in
particular Lord President Clyde at pages 45/6 and Lord Sorn at page 49.
[18] Lord President Clyde went on at page 46 to consider whether, on
the assumption that section 20 could be invoked notwithstanding the express
exclusion of legatees in the lease, the applicants were legatees within the
meaning of section 20. In a passage at
the end of the judgment to which counsel for the defender drew particular
attention the Lord President said:
In
the present case all that the widow is to get is the liferent of the residue,
of which the testator's interest in the farm forms part, and all that the fiars
get is a share of the residue, including the farm, after all the liabilities
have been met. I am by no means
satisfied that in any sense this amounts to a bequest to any person of the
lease of the holding. It is clearly very
different from a specific bequest of the lease to a definite individual, which
is primarily what the section had in view.
And as Johnston on the Agricultural Holdings (Scotland) Acts, (6th Edn)
says, at page 56: "It may be doubted whether the framers of the statute
had in view anything short of a specific bequest of the lease to an
individual". There is, of course,
no such bequest in the present case, but it is unnecessary to pursue this
matter further, since in the present case I am in any event of opinion that the
section cannot be invoked in the light of the terms of the lease itself.
[19] The first thing to be noticed about this passage is that, as
counsel for the defender acknowledged, it is plainly obiter. Besides, it is
perfectly intelligible that his Lordship should say that a bequest of the
residue of the testator's estate (including the farm) in liferent to his widow
and in fee to his sons did not amount to a bequest to any one person of the lease,
and that this was "clearly very different from a specific bequest of the
lease to a definite individual, which is primarily what the section had in
view". But it is one thing to say
this and quite another to say (and the Lord President did not say) that only a
specific bequest to a specified person would satisfy the section. And it certainly does not follow from what
the Lord President said in that case that he would have held in the present
case that the bequest to the pursuer in terms of clause 5 of Mr Gardner's will
was not apt to carry the tenancy of his croft for the purposes of section 10(1)
of the Act.
[20] For the sake of completeness I should mention here that counsel
for the defender also drew attention to the final part of Lord Sorn's judgment
at page 49 where he said that prima facie
it was not easy to see how trustees could be brought within the description of
a legatee within the meaning of section 20(1) of the 1949 Act. I dare say that no one would quarrel with
this, but it does nothing to advance the argument for the defender in the
present case.
[21] Counsel for the defender relied even more strongly on Reid's Trustees v Macpherson. By the time that case was decided the provisions of
section 20 of the 1949 Act had been amended by paragraphs 19, 20 and 21 of
schedule 2 to the 1964 Act. In
particular section 20(1) provided: "Subject to the provisions of this
section, the tenant of an agricultural holding may, by will or other
testamentary writing, bequeath his lease of the holding to his son-in-law or
daughter-in-law or any one of the persons who would be, or would in any
circumstances have been, entitled to succeed to the estate on intestacy by
virtue of the Succession (Scotland) Act 1964".
[22] In that case an agricultural holding was let to A and B and
their respective heirs, excluding assignees and subtenants. The survivor, B, died on 25 February 1970
leaving a trust disposition and settlement in terms of which he assigned,
disponed and conveyed to his executors "my whole means and estate
heritable and movable ...... over which I may have the power of control or disposal
at the time of my death". He then
provided for the payment of certain pecuniary legacies and, by purpose third,
provided: "I direct my executors to make over the whole residue and
remainder of my estate to my said wife as an individual, whom failing, to my
said son (C)". The first question
debated in the case was whether B could by
mortis causa deed assign the remaining interest in the tenancy of the
holding to his widow, provided the landlord acquiesced in him doing so. Lord Grieve decided that he could and, after
rejecting an argument that the destination in the lease to the heir of B was a
special destination, he went on to consider whether the terms of B's will were
habile to carry the remaining rights in the lease of the holding to his wife,
provided of course that the landlord consented.
After quoting the relevant terms of the will, Lord Grieve continued at
page 109:
Do
these words of assignation and disposition of the testator's whole means and
estate to his executors, and the residue thereof to his wife, evince an
intention to assign the lease of the holding to his wife? Counsel for the pursuer says they do; counsel
for the defenders says they do not.
What the
testator (B) assigned and disponed to his executors was his whole means and
estate over which he had power of control and disposal at the time of his
death. The disposition was in general
terms and no mention was made in it of the lease of the holding. The question as to whether such a disposition
could be habile to embrace a lease destined to the heir and excluding assignees
has never, so far as counsels' researches could discover, been one for express
decision ........ In my opinion, it is well settled that an agricultural lease of
ordinary duration, excluding assignees, is something over which the tenant has
no power of disposal "at his own motion" ......... Accordingly, the lease
of the holding could not be embraced by the words "estate over which I may
have the power of control or disposal at the time of my death". In my opinion, these words of themselves do
not evince an intention on the testator's part to assign the remainder of the
lease to the executors for ultimate transmission as residue to the wife. The remainder
of the lease was not (B's) to dispose of ........ and, "of his own
motion" he had no control over it.
In the circumstances I cannot find in the words used an intention to
assign it .......
It
follows that, in my judgment, the testator in this case did not succeed by his
will in effecting the requisite initial move for effective assignation of the
lease to his wife, and effect must be given to the destination in the lease
which carried the tenancy to (B's heir).
[23] In my opinion this decision does not lend any support to the
defender's argument in the present case. The reason the bequest by B to his
widow of the residue of his estate did not carry his interest in the lease was
to be found, not in the provisions of section 20 of the 1949 Act (which as Lord
Grieve pointed out at page 110 did not apply in that case), but in the terms of
B's will which conveyed to his executors only "my whole means and estate
heritable and movable ....... over which I may have the power of control or
disposal at the time of my death".
In other words, as counsel for the pursuer pointed out, the decision
turned simply upon the proper construction of B's will.
[24] It is true that at page 110, after pointing out that the
provisions of section 20 of the 1949 Act did not apply in that case, Lord Grieve
went on to say: "In any event, I agree with the opinion expressed in Kennedy that the provisions of section
20 could only apply to a direct bequest of a lease to a specific
person". This comment is plainly obiter, and in any event it begs the
question what exactly is meant by the expression "a direct bequest of a
lease to a specific person".
[25] As already indicated, counsel for the defender also drew
attention to the comments by Sir Crispin Agnew and Messrs MacCuish and Flyn in
their respective books on Crofting Law.
The former deals with the point at issue at page 72, note 2, of his book
where he comments on section 10(1) of the Act and writes: "The bequest
should be a specific bequest of the croft or croft lease, because a bequest of
the residue of the estate without further specification probably does not carry
the lease to the residue beneficiary: Reid's
Trustees v Macpherson 1975 SLT 100 at 109 (see Macdonald v Cathcart's
Trustees 1943 SLCR 24, (now doubtful authority) where the Land Court held
that a residue clause would carry the tenancy of the croft)". The comment here
that Macdonald v Cathcart's Trustees is of doubtful authority is perhaps
understandable. For the rest, I do not
consider that Sir Crispin, relying as he does only on Reid's Trustees v Macpherson, lends any additional weight to the
argument for the defender in this case.
Nor I think do Messrs MacCuish and Flyn when they say at paragraph 7.02
of their book: "Where the bequest is ineffective, the right to the tenancy
of the croft falls to be dealt with as intestate estate. It would appear therefore that
notwithstanding a will purporting to deal with the whole estate, where there is
no valid bequest of the tenancy or that bequest fails, persons who would be entitled
to share in intestate estate of the deceased are entitled to share the value of
the tenancy no matter how the testator intended the tenancy to be dealt
with". Once again the question is
begged here what is meant by the expression "valid bequest of the
tenancy".
[26] The passage in Lord Gill's book on Agricultural Holdings (3rd
Edn) at page 327, paragraph 33.02, upon which counsel for the defender relied
reads as follows:
The
question arose in Kennedy v Johnstone whether
for the purposes of the section a specific bequest to a single individual is
essential, and although the Inner House founded unnecessary to decide the
point, the judgments suggest that it is. In Reid's
Trustees v Macpherson the Lord Ordinary held that a general bequest of
residue did not carry the lease and that the latter must be specifically
bequeathed. In that case, as in Kennedy v Johnstone, there was an
express exclusion of assignees in the lease itself, and by his trust
disposition and settlement the deceased conveyed to his executors "my
whole means and estate heritable and movable over which I may have the power of
control or disposal at the time of my death". If there is no such exclusion, it appears to
be a matter of construction of the will whether a general bequest or a bequest
of residue carries the lease.
[27] Counsel for the pursuer pointed out that in this passage Lord
Gill does not explicitly endorse the obiter
dicta of the Inner House and Lord Grieve respectively in Kennedy v Johnstone and Reid's Trustees v Macpherson. But he does make the important point that in
both those cases there was an express exclusion of assignees in the lease
itself which there is not in the present case - and could not be without the
approval of the Land Court in view of section 5(3) of the Act which provides:
"Any contract or agreement made by a crofter by virtue of which he is
deprived of any right conferred on him by any provision of this Act (other than
sections 12 to 19, 21 and 37) shall to that extent be void unless the contract or
agreement is approved by the Land Court". Finally Lord Gill makes the
point that, if there is no such exclusion, it appears to be a matter of
construction of the will whether a general bequest or a bequest of residue
carries the lease, and this in my respectful opinion is entirely correct and,
as counsel for the pursuer suggested, this is precisely the position that
obtains in the present case.
[28] I turn now to Cochrane's
Executors v Inland Revenue upon which counsel for the defender also relied.
The question in that case was whether a residuary legatee had been
absolutely entitled (within the meaning of paragraph 9 of schedule 19 to the
Finance Act 1969) as against the testator's executors to certain stocks and
shares which had been sold by the executors to obtain funds necessary to carry
out the antecedent purposes of the testator's will. In the result it was held that he had not
been so entitled since the assets in question, having been sold by the
executors, had never formed part of the residue of the testator's estate. The opinion of the court was delivered by the
Lord President (Emslie) and counsel for the defender drew attention to a
lengthy passage in the opinion at pages 164/5 of the report. This begins by summarising the argument for
the appellants (namely that the residuary legatee had been absolutely entitled
as against the executors to the assets which had been sold by them) and
continues:
In our opinion this argument rests upon a fundamental
misconception of the nature of the right which vested in the residuary legatee
in the context of this trust disposition and settlement. What vested in the
residuary legatee was a right to the "residue" and no more.
A bequest of residue vesting a morte testatoris
is not a bequest of the whole estate. It comprises no more and no less than, as
it is explained in Henderson on Vesting, (2nd ed.) p. 346, "the entirety of the estate not
required for the antecedent purposes of the will." "Residue,"
said Lord Watson in the case of the Duchess of Montrose v Stuart (15R (H.L.) 19 at p. 21),
"is simply so much of his personal means as may remain after the whole
antecedent purposes of the deed have been effected-after debts and legacies
have been paid ..." If, of course, the antecedent
purposes fail, that portion of the estate which would otherwise have been
required to fulfil them will form part of the residue vesting in the residuary
legatee. Similarly, where the antecedent purposes consist of contingent or
conditional bequests which may fail subsequent to the date of vesting in the
residuary legatee, the subject-matter of these conditional bequests is in
theory deemed to have vested in the residuary legatee under burden of these
bequests in certain events ( Storie's Trustees v Gray 1R 953 ). Putting the
matter in another way, Lord Sands in Aitken's Trustees v Aitken (1927 SC 374, 1927 SLT 308)
said this (at p. 313 of the SLT report): "Law attributes to a residue
clause an intention to sweep in everything not effectually disposed of ..." In a case such as this, accordingly, where
there are antecedent purposes for immediate satisfaction which have not failed,
the right which vests in the residuary legatee is not that of a universal
legatary under burdens, but a right merely to what may be found to remain of
the entire estate after the antecedent purposes have been implemented. It
follows, in the particular circumstances of this case, that the particular
stocks and shares sold to enable the appellants to fulfil the antecedent
purposes of the settlement never formed part of the residue of the estate. The
residuary legatee had at no time any right to these assets and no right or
title whatsoever to give any directions to the appellants with regard to them.
It is no part of the law of Scotland
that a residuary legatee in the position of Peter Cochrane in this case
acquires a morte testatoris any right to any particular asset forming
part of the entire estate which has passed to the executors for disposal in
accordance with the testator's directions and intention. It is for executors in
the position of the appellants, and for them alone, to determine what
particular assets should be realised to enable them to satisfy prior purposes
and vested rights antecedent to those of the residuary beneficiary; and
although executors may, if they choose, consider the views of the residuary
beneficiary before realising any part of the estate, they are in no way bound
to do so, and they are in no way obliged to accept any "directions"
from the residuary legatee in this connection. Indeed the only directions which
the residuary legatee is entitled to give to trustees or executors are in
relation to the estate remaining in their hands when they have fulfilled all
the prior purposes of the settlement and have otherwise completed the
administration of the estate.
[29] Accepting entirely what his Lordship says in this passage,
again I do not see that it offers any comfort to the defender in this
case. I say this since the question here
is not whether the pursuer became absolutely entitled, or otherwise acquired
right, on her husband's death as against his executor to the tenancy of the croft,
or indeed any other part of his estate.
The question is whether by clause 5 of his will Mr Gardner intended to
bequeath, and did bequeath, the residue of his whole estate, including as it
did the tenancy of his croft, to the pursuer subject to satisfying the
antecedent purposes of this will. For
the reasons already indicated, I am persuaded that he did, and it respectfully
seems to me that there is nothing in what the Lord President said in Cochrane's Executors v Inland Revenue
which gainsays this conclusion. Of
course, if Mr Gardner had left substantial debts, it might have turned out that
the bequest of residue to the pursuer would have been defeated altogether by
the necessity to satisfy these debts (just as might have occurred if Mr Gardner
had made a specific bequest of the tenancy to the pursuer). But this would not detract from the
conclusion that he had bequeathed the residue of his estate, including the
tenancy of his croft, to the pursuer.
Here it may be helpful to be reminded of the remainder of the passage in
the judgment of Lord Sands in Aitken's Trustees
v. Aitken to which the Lord President
referred. The full passage reads:
Law attributes to a
residue clause an intention to sweep in everything not effectually disposed of,
and that altogether irrespective of what items the testator may have
contemplated as possibly falling within this category. This rule has, I think, been expressed somewhat
as follows: When there is a general residue clause operative as from the date
of death, partial intestacy is
impossible, except on failure of a residuary legatee.
The emphasis is mine. Of course the right to a croft may fall to be
treated as the intestate estate of a deceased crofter in terms of section 10(5)
of the Act if a bequest of the tenancy becomes null and void under the section,
and one sees in sections 10(1), (2) and (4)(a) the circumstances in which such
a bequest may become null and void. Significantly,
the fact that the tenancy of a croft has been bequeathed as part of a bequest
of residue rather than by means of a specific bequest is not one of these
circumstances.
[30] I do not think that it is necessary now to consider in detail
the various decisions of the Land Court (all of which predated the
1955 Act) to which I was referred. I am inclined to agree with counsel for the
pursuer that they afford more support for her position than for the position
taken up by the defender. But I do not
attach much weight to them in the context of this case, preferring to base my
decision upon what seems to me to be the plain meaning and intent of Mr
Gardner's will coupled with the fact that, as it appears to me, there is
nothing in section 10 of the Act to suggest that only a specific bequest of the
tenancy of a croft will meet the requirements of the section.
[31] On the whole matter I am persuaded that the sheriff reached the
correct conclusion on the question argued before him at the diet of debate, and
I have therefore refused the appeal.
[32] It was agreed that the expenses of the appeal and of the debate
should be awarded to whichever party was successful in the appeal. It was also agreed that I should sanction the
employment of junior counsel, and I am satisfied that it would be appropriate
to do this.
[33] In addition to the authorities already mentioned I was also
referred to MacDonald v Dalgleish 1894
21R 900, Anderson v Barclay-Harvey
1917 SLCR 65, Campbell v Department of
Agriculture 1936 SCLR 20, Meston: The Succession (Scotland) Act 1964 (5th
Edn) at page 127 and Stair Memorial Encyclopaedia, Volume 1 at paragraph 807.
