SHERIFFDOM OF GRAMPIAN HIGHLAND AND ISLANDS AT ABERDEEN

 

A146/11

		INTERLOCUTOR   in causa   JOHN DAVID McIRVINE, residing at Briar Cottage, Strachan, Banchory, Kincardineshire.
		Pursuer
		against
		JOHN ALEXANDER McIRVINE, residing at Culdrain Lodge, Gartly, by Huntly, Aberdeenshire, AB54 4PY.
		Defender   ___________________________

 

 

Act: Artis, Counsel

Alt: Ipsi

 

 

 

 

ABERDEEN, 12 September 2012.

 

The Sheriff, having resumed consideration of the cause, Finds the following facts admitted or proved.

 

(1) The pursuer is John David McIrvine. He resides at Briar Cottage, Strachan, Banchory, Kincardineshire.

 

(2) The defender is John Alexander McIrvine. He resides at Culdrain Lodge, Gartly, by Huntly, Aberdeenshire, AB54 4PY.

 

(3) The parties are each farmers and are related, the defender being the father of the pursuer.

 

(4) The present action relates to the intromissions of the defender in respect of the business of farming, Culdrain Farm, Gartly, by Huntly, Aberdeenshire. That farm, and the defender's residence, both lie within the court district of Aberdeen. The Sheriffdom of Grampian Highland and Islands at Aberdeen accordingly has jurisdiction.

 

(5) The pursuer is heritable proprietor of Culdrain Farm, Gartly, by Huntly, Aberdeenshire. His title thereto flows from a disposition dated 11 November 1988 granted by the defender in favour of a firm, J D and D McIrvine, which firm has now dissolved following the death of the other partner thereof, Mrs Doris Catherine McIrvine on 1 July 1989. Mrs McIrvine was the pursuer's mother and defender's wife. The pursuer is the sole surviving partner in, and trustee for, the said dissolved firm.

 

(6) The defender was sequestrated in 1989. He was discharged from that sequestration in 1999. Prior to his sequestration, the defender farmed and operated the business of Culdrain Farm.

 

(7) Following upon transfer of ownership of the farm the defender continued to operate the farm and to run it as if he were still owner.

 

(8) The defender did not seek the pursuer's instructions with regard to his conduct of the farming business. He took major decisions without reference to the pursuer. He did not, at any point account to the pursuer for his business decisions.

 

(9) The relationship between the parties deteriorated to the point that the defender ceased to operate the business of Culdrain Farm in or about May 2006. Prior to that point the pursuer was fully aware that the defender was running the business and allowed him to do so without challenge.

 

(10) The defender continued to hold certain stock on the farm until October 2010 when interim interdict was granted against him at the Court of Session, Edinburgh inter alia preventing his encroachment upon the farm.

 

(11) Bank of Scotland account number 00126517 in the name of John D McIrvine was the

sole bank account utilised during the course of the business. Document production 6/2 is a schedule setting out the transactions on that bank account for the period 28 March 2002 to 22 June 2006. Number 16 of process contains a schedule of transactions for the period 9 April 1999 to 25 January 2002. The defender's last intromission on that account was on 5 May 2006. Both parties had throughout the period to 5 May 2006, access to the said account and an unfettered right to make payments and draw funds therefrom.

 

(12) The defender instructed and obtained annual accounts for the business up to 5 April 2004. Said accounts were presented for Income Tax purposes. Document productions numbered 6/1/1 to 6/1/4 are copies of said accounts for the four years to April 2001 to 2004 respectively. Said accounts show a rising net profit to a figure of £ 22,000 in 2004. No accounts are available for the subsequent period.

(13) At the point of the defender's withdrawal from the business, said bank account had a debit balance of approximately £ 157,000. At certain points throughout the relevant period said account had credit balances in excess of £ 100,000. At April 2004 the account had a credit balance of £ 74,000.

 

 

 

Finds in fact and in law

 

1) The defender has failed to obtemper the Interlocutor of Court dated 9 November 2011. He has failed to lodge, as ordered, an Account of his intromissions in terms of Crave One of the Initial Writ.

 

2) The pursuer is entitled to decree for payment as alternatively craved.

 

3) The sum of £ 300,000 is an appropriate sum in the whole circumstances of the case.

 

 

 

 

 

 

ACCORDINGLY

 

Allows the Defender to lodge a bank statement schedule, although late, same to be numbered 6 (2) of process; Finds the Defender liable to pay to the Pursuer the sum of Three Hundred Thousand Pounds ( £ 300,000 ) Sterling; with interest thereon at the rate of eight per centum per annum from 28 April 2011 until paid; Finds the Defender liable to the Pursuer in the expenses of the action; Allows an account thereof to be lodged in process and remits same, when lodged, to the Auditor of Court to tax and report; and Certifies the cause as suitable for the employment of junior counsel.

 

 

Sheriff of Grampian Highland and Islands at Aberdeen.

 

 

NOTE:

 

[1] This is an action of count, reckoning and payment raised by the pursuer, the son of the defender, in respect of the defender's intromissions with the farming business of Culdrain Farm, Gartly. The action was raised in this court and served on the defender on 28 April 2011. The Record was closed on 28 September 2011 and a diet of debate set for 9 November 2011. By this point the defender was representing himself. At the diet of debate, the defender accepted his obligation to account for his intromissions from 6 April 1999 to that date "with the farming of Culdrain Farm, Gartly, by Huntly, Aberdeenshire, with the trade in livestock, crops, minerals and other produce of Culdrain Farm". He was appointed to lodge his account of intromissions by 11 January 2012 and the action was continued to 14 March 2012. On that date, there was an issue raised about location of certain documents and the matter was continued further to 21 March 2012. On that date, the case called before me and I heard both from the pursuer's agent and the defender. It was claimed that the defender had not complied with the terms of the interlocutor dated 9 November 2011. That position was not accepted by the defender and I accordingly set the matter out for an evidential hearing to establish that position. The hearing date was later adjourned to 13 June 2012. The defender was ordained to lead at that hearing. On that date the hearing took place before me.

 

[2] The pursuer was represented by Mr Artis, counsel and the defender continued to represent himself. The defender was assisted by David Brown, a Chartered Accountant. At the outset of the hearing there was some discussion about what was required to comply with the court's order. Mr Artis spent some time setting out the various areas and detail required. He submitted that the defender appeared to have a fundamental misconception of what was required. The defender appeared to confuse ownership of the assets at the farm. If he claimed those at the farm currently to be his assets then where were those belonging to his son. He raised particular examples. There was no accounting in respect of the proceeds of the sale of the single farm entitlement. On those accounts which were produced there appeared to be livestock sales approximating to £ 113,000 per annum. Multiplied over the period that came to a very substantial sum but there was no proper accounting. Where had the monies recovered from subsidies, again a considerable sum, gone? What were the details of the seasonal lets and, again, where had the payments gone? There was reference made to a quarrying arrangement permitted by the defender in return for hardcore to use on the ground but there was no explanation of how this arrangement had been made or calculated. There was no proper explanation of the destination or the whereabouts of the full proceeds of sale of the farm at Scotstown. The two bank account entries appear to fall short between £ 20,000 and £ 44,000. The defender had intromitted with the pursuer's bank account but not explained many of his transactions. There was the issue of a £ 50,000 finance deal for a John Deere Tractor which the defender appear to regard as his own but which appeared to have been financed through the pursuer's bank account. The defender now appeared to be trading on his own and had succeeded in building up some level of business. As a bankrupt, discharged only in 1999, it was not clear on what basis he had successfully undertaken this. The pursuer was entitled to a full explanation.

 

[3] With reference to correct legal approach, Mr Artis referred to the case of Smith v Barclay 1962 SC 1 where it was held that in circumstances where a defender had failed to produce an accounting, it then being deemed impossible, he was entitled to an opportunity to give such account as he could of his intromissions before decree in terms of the alternative crave was pronounced against him. In the present case it was clear that the defender had been told what was required of him when the court order was made and had that reinforced to him at subsequent diets. The pursuer had produced all the paperwork that he could to assist the defender. The test of what was produced was whether it amounted to an intelligible account. The defender's documents did not fall within that category. He knew what had been done but had made no attempt to explain his actions. A set of business accounts did not satisfy the requirement. He referred to Govan Old Victualling Society Limited v Wagstaff (1907) 14 SLT 716 where it was held that an employee did not have a duty to account. The circumstances there were not as in the present case. He also referred to the case of Smith Trustees v Cranston 1990 SC 164. That case was again authority for the proposition that in cases such as this it was the onus of the defender to retain appropriate records to enable an accounting to be undertaken. It was further authority for the proposition that where no satisfactory accounting was produced, some effort must be made to assess a sum appropriate to the circumstances of the case. The case referred to decree being granted for a random sum.

 

[4] The defender moved to lodge a lengthy document running to 36 pages headed "Intromissions by John A McIrvine on behalf of John D McIrvine". This was not a document previously seen by the pursuer or his legal representatives. The motion was opposed but in the whole circumstances I considered it appropriate to allow the document to be entered into process. It appeared to be a detailed summary of all credits and debits made to the pursuer's relevant bank account in the period from 28 March 2002 up to 22 June 2006. The document contained, in respect of certain entries, some limited explanation. The other two documents lodged earlier by the defender were No. 16 of process comprising a letter dated 10 January 2012 setting out certain information with a schedule including a similar summary of bank intromissions from 6 April 1999 to 25 January 2002, a period close to the starting point of the most recent document, and a further letter written by the defender's accountant, David Brown, providing some comment and explanation.

 

[5] I explained to the defender that these three documents did not, in my view, constitute a full and proper accounting in terms of his obligation under the court interlocutor. There was certainly some measure of information contained in the documentation but in general terms it was largely not intelligible nor was it close to complete. In discussion, Mr McIrvine accepted that he did have proper stock records relating to the purchasing and sale of stock during the relevant period. He could not explain why he had not chosen to provide information based on those records. His position appeared to be that he had provided everything that he thought he could and that was appropriate. He appeared to accept that his accounting was inadequate but was the best that he could do. I asked him whether he wished to give and lead evidence in respect of the issues of the accounting itself and any sums which might be due and he indicated that he did. He then proceeded to give evidence and also lead evidence from David Brown, Chartered Accountant.

 

Evidence

[6] Mr McIrvine is 77 years of age and lives at Culdrain Lodge. He described himself as a self-employed cattle trader. For the past 20 years he had run the farm for his son, the pursuer. He had traded under his son's name. He had put money into the pursuer's accounts and bought and sold cattle up to 2006. All subsidies had been paid into the pursuer's bank account. It was his position that the pursuer had promised to gift him the farm due to the work which he had been doing for him. The pursuer had changed his mind. During the period of his management, the books were kept by Mr Kenneth Barclay who was an accountant used also by the pursuer. It was his position that the pursuer had taken all of the documents from Mr Barclay and delivered them to a different firm of accountants, Messrs Johnston & Carmichael. The arrangement between the parties had ceased in 2006. One year after that the defender had instructed Mr Brown to undertake accounting services on his behalf. By that time he was trading on his own account.

 

[7] It was his position that the sale of Scotstown Farm had been undertaken by agreement with the pursuer. He had never seen any cheques as the payments had been made directly into the pursuer's bank account by the solicitors. There were two separate payments made, one of £ 108,000 and one of £ 135,000. He referred to money from the bank account being spent on other things. He considered that the pursuer was drawing and spending money in excess of what could be afforded by the business. Having failed to agree with the pursuer that he would spend less money, the defender had approached the bank manager and told him that he wanted nothing more to do with the account. He had his name taken off the account. That was in June 2006. Prior to that time he had paid all sums relevant to the business into the account. Monies were still going into the account up till 2007. He emphasised that the pursuer had an excessive spending habit having purchased three properties only one of which he stayed in. He understood that one had been eventually leased.

 

[8] Under cross-examination from Mr Artis, he confirmed that he had been made bankrupt in 1989 but had been able to sell the farm to a partnership comprising his wife and the pursuer, his son. He confirmed that he had suffered a significant accident in June 2009 which had resulted in deterioration of his memory. He was unable to confirm how many animals were held on the farm in 1999, the start date for the required accounting. He confirmed that in the 1999 to 2006 period there had always been beef cattle, bulls, pigs and some, although not a lot, of sheep on the farm. In 2006, when he had fallen out with the pursuer. He had no alternative but to go into business for himself and did so specialising in pedigree bulls and some beef cattle. He had purchased the farmhouse and thirteen acres with his wife buying a half share for £ 56,000. He had no money when he sold the farm to the partnership of his wife and son. From that point on he received household expenses from his son's account. He was living off the farm. In 2006, he set up his pedigree bull and cattle business. He did not accept this was an expensive business to run. He would buy young stock, breed the bulls and cattle and sell them on. His second wife had put up more money for starting up that business. He could not recall, without reference to the stock book, how many cattle were on the premises in 2006. The pursuer had taken away the sheep and cattle from the farm. Scotstown Farm had been bought in around 1988 and sold in around 2002. It had been used for animals and crops. It was a small general farm. A third farm, Balblyth, had been rented by his son and he took sheep and some cattle there. He could not recall how many. He accepted that his son had left some cattle behind but not many bulls. There were virtually none at 1999. They had been bought up after that. Before he had started up again with his wife's money in 2006, his son had left some cattle and bulls in his charge. He said they were not there now. All animals on the farm now were his animals. He referred again to his son's promise to give him animals and the farm. The majority of cattle on the farm were homebred. He did not accept that his son owned all of the cattle. It was his position that his son had removed everything that he owned. It was pointed out to him that he had said firstly that his son had left cattle at the farm and then that he had not owned anything left. These were different propositions. He then suggested that money for these animals had been deposited in his son's account. He suggested that his son had gifted him the animals on the farm and had then backed out. When pointed out to him that that meant that they remained in the ownership of his son he responded that when he said something he meant it. He could not remember the situation at the point of his sequestration. He did not accept that he had simply carried on as before albeit it was now his son's business. He did recall that the partnership required to pay something additional to his Trustee in Bankruptcy but could not remember that the sum was £ 57,000. He denied that he acted as if he still owned the farm and lived off the farm proceeds. He alleged that his second wife kept their house. She had brought money into the household when they married some 18 years earlier. He was adamant that he had worked for 20 years for his son and received nothing in return. He thought that his services were worth at least £ 300,000. He refuted the suggestion that when they had fallen into dispute the pursuer had taken only some sheep and cattle, leaving the rest with him. He insisted that the pursuer had taken all of the farm machinery. He claimed that at that point he was buying his own cattle. He then claimed that any cattle left by the pursuer were mostly old cows which had ended up going to the knackery. It was suggested to him that he had in evidence given three different versions of the position concerning cattle left at the farm. He did not respond. He was asked why he had not given a proper accounting to the court about the cattle left and he said it was because he had not been asked to do so. He then re-asserted that his son had taken all the cattle that he had owned.

 

[9] He was questioned about the circumstances of the sale of Scotstown Farm. He agreed he had instructed the sale but had done so with the pursuer's agreement. He said he had not seen any final documentation concerning payments. He agreed that there had been two payments of around £ 135,000 and £ 102,000. He did not agree that the price had been £ 257,000. His recollection was vague. Document No. 16 was put to him and he agreed that he had signed it. He could not explain why the figure for the sale of Scotstown Farm was different to his recollection, other than to state that the figure was wrong. He agreed that the single farm subsidy payment had been sold in 2011. Money was required to run the farm and there were bills to be paid. It was put to him that the money had been spent by him on the property in which he resided. He claimed that £ 120,000 had been spent on the property at Keeper's Cottage but could not say how much of that came from the £ 70,000 payment. He had done a lot of work to Keeper's Cottage himself. A mortgage of £ 250,000 had been obtained. He had spent a lot of time and work on that property. The pursuer had spent more than £ 1,000,000. Money from the single farm payment sale had gone to pay off some of the pursuer's debts. He accepted that he had thought that he was doing work on Keeper's Cottage for his own benefit.

 

[10] He claimed to have made an arrangement with a Mr Matthews to rent out certain ground during the period from 1999 to 2003. That stopped when his son had sold the land to Mr Matthews, in his view, at a low price. That sale had been undertaken without his knowledge and on the basis of a spurious claim by Mr Matthews that he had rights to the land. He disputed that the rental payments were £ 12,000 a year stating that they were £ 3,000 a year. He claimed all the income went into the pursuer's bank. There had been no dishonesty.

 

[11] The gravel extraction had been undertaken on the basis of no money changing hands. He had allowed the neighbouring farmer to extract gravel on the basis that he would repair roads and gates and provide hardcore for improvement works. He was unable to say how much gravel had been taken or its true value. The quarry area was quite small. It had been his intention to use it as a sheltering area for cattle. The gravel had been taken over a period of three to four years.

 

[12] He confirmed that a tractor had been purchased from John Deere Finance. It was his position that his son had then taken that tractor away and a second one had to be bought to replace it. It was not shown in the accounts because the arrangement was cancelled. Only two payments were made and they were then refunded when the agreement was cancelled. The payments in the accounts from 2001 to 2004 relating to John Deere Finance were in respect of the earlier vehicle which had been taken by the pursuer. The pursuer had also taken away all of the farm implements. He had taken everything that was there.

 

[13] He agreed that he had instructed the sale of Culdrain Steading, again with his son's agreement. No payment was due until planning permission was granted.

 

[14] On page 4 of his letter to the court, No. 16 of process, he confirmed that he had sought a payment of £ 310,000 in respect of his work for the pursuer. He reiterated his final position on the cattle that only old cows had been left. He denied keeping any plant and machinery claiming only a roller to have been left. The pursuer had nothing to do with the actual running of the farm. After he had become involved it had all gone wrong. It had been agreed that all the assets left on the farm would be his and then the pursuer had changed his mind.

 

[15] Mr McIrvine accepted that he had been in charge of the business, that he had instructed the sale of Scotstown Farm and of Culdrain Steading, and that he had appointed Mr Barclay to undertake accounts until his son had appointed Johnston & Carmichael. He accepted that he could not tell what he had done with the business and in particular details of the cattle, the money and the mineral arrangement. He claimed details could be in the books but as some had gone missing, cheques, stubs, counterfoils and others, it was impossible to constitute a set of accounts. He did not accept that after the split in 2006 he continued to make use of Culdrain Farm itself. He referred again to his stock book with which he could consult for more details about cattle, purchases and sales. He blamed his son for the loss of the necessary records. He accepted that he had drawn money for household and business expenses and latterly run some of his own cattle from the farm. He accepted that it all was intermingled. He claimed the dispute had caused him considerable anxiety. He estimated that he and his wife spent around £ 500 per month whereas the pursuer spent £ 2,000 to £ 3,000 per month. That was the problem. The pursuer was using up the money of the business. He thought of the business as being his business. He confirmed that he ran the business as if it was his own. He felt that he had built up a good business which had been ruined by his son's spending.

 

[16] The second witness was Mr David Brown, a chartered accountant. He confirmed the defender to be a client. He spoke to the document lodged containing details of the bank account for a period of approximately four years which was an addition to the details lodged with the January letter. He understood that what was required was a statement of the defender's intromissions. He and his staff had attempted to gather sufficient information to enable this to be prepared. This had been refused to them. They were told that all paperwork had been sent to Johnston & Carmichael and it had been agreed that Johnston & Carmichael would return that information and he could collect it. He had recovered the box with photocopies of invoices and bank statements. There were some handwritten notes by Mr Barclay. To reconstruct, the transactions required cheque stubs and pay-in books. These were not available. There had been an attempt to provide an accounting on behalf of the defender. They had attempted to explain the major assets. The letter produced was No. 16 of process. He was the author of that letter and apologised for any errors it contained. He confirmed that the price of Scotstown was quoted incorrectly and should be £ 20,000 less. The payments had been identified and put into the account. The relevant mortgage ( £ 63,849 ) had been paid off. In his view, that could easily be determined from the papers available. The pursuer himself had all the relevant information. He now thought the decision to concede any duty to account was wrong in that the pursuer had access to all the necessary information. He submitted that the information contained in the detailed bank schedule fully accounted for the transactions undertaken by Mr McIrvine. There had been no detailed response to the letter dated 11 January setting out what further information was required. On balance, and reviewing the account, it seemed to Mr Brown that much of the defender's expenses were met from his own retirement pension and his wife's wages. He believed that a proper examination showed that the defender had been trying to protect the assets of the business in a responsible manner. He understood there had been no acrimony until 2005. Before that, the pursuer had offered to leave the farm to the defender but had then withdrawn that offer. He had then offered an ownership of Keeper's Cottage but withdrew that also. He accepted that the defender looked on the business as his business and was trying to do his best to run it. He did not think the defender seemed to have benefitted much from the business. He felt that the accounts produced in the defender's first inventory showed what one might expect for that type of farm. It was performing reasonably well for the benefit of the pursuer. The sale of the set aside agreement had been to obtain funds to benefit the farm. That agreement had not been challenged by the pursuer for over two years. It was another example of the pursuer then changing his mind.

 

[17] The vast majority of transactions carried out had been done so through the bank account. He accepted there were a lot of blank explanations in that account. The gaps could not be filled in as the material was missing. That did not appear to be the fault of the defender. He felt they had managed to complete around 75% of the detail for the payments. He did not think more could be done.

 

[18] The Scotstown Farm sale had been undertaken with the proceeds going into the bank. The Culdrain Farm Steading sale had been steered by the defender through the planning process. The payment was received outside the 2006 breakpoint so the defender could not say what had happened to the proceeds. Keeper's Cottage was still there. Thirty-eight acres had been sold to Mr Matthews. He understood that money had to be paid to the pursuer. At the point of the split between the parties there were a number of creditors due money from the farm business. These debts had been caused by the pursuer. The defender had felt obliged to settle the debts as he was not confident that his son would do so. He considered he was entitled to be reimbursed for these payments.

 

[19] Under cross-examination, Mr Brown confirmed that he had acted as accountant for the defender since 2008. He accepted that what he had said about the position between 1999 and 2006 was based on what the defender had told him together with such paperwork as he had seen. He confirmed that 5 May 2006 was the date of the last cheque issued on the business account by the defender. Bank references starting with 12 related to the defender's chequebook and 11 to the pursuer's. He accepted that where anything had required an explanation this had come from the defender and not from his own knowledge. The information contained in the schedule, such as it was, had come from Mr McIrvine. He could not quantify the number of cattle or bulls involved in any entry marked against livestock. He could not say what had happened to any livestock. He had not seen the stock book at any time. He could not say how many animals had been at the farm at any one time. He did not know how many were there at present. He could not comment on anything to do with crops, minerals or produce of the farm. He accepted that had he had sight of the stock book he might have been able to provide further information concerning cattle movements and payment. He confirmed his letter dated 28 February 2012 was a continuation of the earlier letter prepared by him but signed by the defender (No. 16 of process). He had endeavoured to give as full an explanation as possible from the information provided to him.

 

[20] Mr McIrvine led no further evidence and there was no evidence led on behalf of the pursuer.

 

Submissions

[21] On submission, Mr McIrvine claimed that he had done everything that was possible. It was not he who had caused the problem but his son's spending had spoiled a good family business. He had not used his son's money. Given that the cheque stubs and other documents were no longer available there was nothing more that could be provided. He did, however, concede that he could produce documentation and information concerning the movement of cattle and he could have produced more detail concerning the use and whereabouts of farm machinery. He offered, if given a further chance, to produce such additional information.

 

[22] Mr Artis, on submission, initially confirmed his opposition to the new document being lodged in process. He submitted it should be set to one side as it took the case nowhere. It was no more than Mr Brown's best attempt to list what could be gleaned from the information available to him. The question for the court was whether the defender had produced an account, reckoning and payment. It was entirely clear that he had not. To continue the matter further would carry the risk of prejudice of further paper tables being produced and of there being no proper count or reckoning. There could be no confidence that any further order would be obtempered by the defender. He submitted that the court should find that the defender had failed to comply with the order. As a result of that failure, he should be found liable in the alternative sum craved. Alternatively, he should be found liable in such sum as the court considered to be appropriate and should be found liable in expenses. Accordingly, the main issue on the case was what sum should be found due.

 

[23] There had been continual references to amounts removed by the pursuer but the defender's evidence and documentation was in such disarray that it was difficult to know what could be relied upon. There could be no confidence in the accuracy of any accounting document produced by or on behalf of the defender. There could be no confidence that these were reflective of the truth. It was not known if they had been properly prepared from books of account and there did not appear to be anything approaching a final statement. In evidence, Mr McIrvine, senior had been very vague and unreliable about substantial matters. There was little help from his evidence and explanations. His own evidence showed that he had not produced a proper account and reckoning. Despite his having such items as a stock book available together with the farm accounts and books which had been referred to he had not produced a proper accounting. It was entirely clear from his evidence that he had run the farm in the full expectation that he would ultimately acquire it back. The position was that he was a farmer who had been sequestrated and had arranged with his wife and son to transfer the farm to them in the expectation of recovering it from them at a point in the future. The farm had been paid for by the wife and son. Difficulties had arisen when the parties fell out as a result of the defender objecting to, what he considered to be, his son taking too much from the partnership property. He submitted that the terms of the alternative crave were entirely appropriate.

 

[24] He accepted that a broad brush approach would be required if the court were to consider a different sum to be due. If money had been spent in improvements to Keeper's Cottage, still in ownership of the pursuer, that had not necessarily increased the value of that property to the pursuer. It may have deteriorated somewhat. That was a factor which required to be taken into the mix. Any decree should be one for payment of a substantial sum. There had been suggestions that the pursuer had benefitted substantially from the accounts. There did not appear to be regular payments to support that assertion. There was no sign of his having removed £ 1,000,000 from the business as suggested. Large sums of money appeared to have been paid to a Gary Fowlie. There were the issues of the payments in respect of the sale of Scotstown Farm. It was not possible for the pursuer to object in detail to an accounting which was not there. The defender was using the assets of the pursuer. He had continued to use assets after the parties fell into dispute. The defender had benefitted from the farm personally and decree should therefore be granted for a substantial payment.

 

[25] Mr Artis sought the expenses of the action and sought sanction for his employment as junior counsel. He accepted that the case did not involve any great difficulty in law but that it was an unusual case involving much research for relevant authority although little by way of analogous authority had been discovered. It was a case which required a certain distance and independence of view prior to advising and preparation and he submitted the employment of counsel was accordingly fully justified.

 

[26] Mr McIrvine responded simply by indicating his upset at the proceedings. He claimed that the farm had been sold by his son for more than £ 1,000,000. He claimed that he was now on a pension and virtually penniless. He would be unable to meet the terms of any order against him for payment.

 

My decision

[27] This is certainly an unfortunate case involving a family dispute. It is entirely clear from the circumstances and evidence of the defender that he has chosen to ignore the true legal position and has, from the point of his sequestration, tried to carry on as if nothing untoward had occurred. He has transferred his family farm into the names of his wife and son and sought to continue to operate the farm as if it remained in his ownership. He claims, perhaps with some element of validity, that his son had promised to transfer the farm back to him and that he had acted in that belief but that his son had gone back on his word. Be that as it may, the legal position is entirely clear. The pursuer was, following upon the death of his mother, the sole heritable proprietor of the farm and in these circumstances the defender has, as he quite properly accepted, a duty to account to him for all of his intromissions with the farm property and business.

 

[28] I did not find the defender to be a credible and reliable witness. He presented with the demeanour of a man who considered that he had been fully entitled to behave as he did and should not be called to account, notwithstanding his acceptance of his liability to account. When pressed on particular points his evidence was inconsistent and he was evasive repeatedly blaming the pursuer for all problems rather than concentrating on his duty to account. This was particularly noticeable during his evidence on the disposal of stock and equipment. It was his position that he could not remember many of the details, principally due to his accident, but this did not enhance the reliability of his evidence and was a good reason why he should have kept proper records.

 

[29] I did not find the evidence of Mr Brown to be of much assistance. He was a credible and professional witness but clearly viewed his role as being to support the defender's position. There was no element of impartiality. Until the hearing he had not addressed the true issue and had adopted an approach that all that was required was the production of a set of accounts. Most of his factual evidence was based on what the defender had told him and accordingly added little to the defender's own evidence.

 

[30] The first question for the court is whether or not the defender has complied with the order of this court requiring him to account. The defender has pursued a view that his obligation was to provide a set of accounts for the farm for the required period and explains that he has been unable to do that because of missing paperwork. This is set against a background of a detailed crave which sets out what is required of him, a detailed interlocutor which indicates clearly that he must provide an account of intromissions with inter alia trade in livestock, crops, minerals and other produce of Culdrain Farm and advice and instruction which he has been given previously from the bench about what is required. He has chosen to confuse the concept of accounting with accounts. The documents which he has produced, including the detailed document produced on the morning of the proof hearing, whilst providing a significant amount of information are in a broadly unintelligible form and do not set out, in any reasonable or appropriate way, details of what he has done with the property and finances of the farm and farming business. It is not for this court to engage in an exercise in speculation as to what these might mean. The fundamental problem is that the defender, having run the farm and business as if it were his own has not , throughout the entire period, approached matters properly with a view to accounting for his actions because he considered that he would never require to do so. He has not kept appropriate records. He has not chosen to properly analyse such records as he has with a view to providing the best available accounting. Accordingly, I have no difficulty whatsoever in coming to the view that the defender has failed to obtemper the court order dated 9 November 2011, which I note was an order made of consent, and that accordingly he falls liable for payment of an alternative sum.

[31] Although it may be possible for the defender to provide further information it is my view that he will not be in a position to provide a proper accounting of his intromissions and I frankly doubt whether he has the inclination to do so. He has been given more than one opportunity. I do not think it appropriate to continue this case to give him a further opportunity to comply.

 

[32] The second issue for the court is, adopting the approach set out in Smith v Barclay and Smith's Trustees v Cranston, to assess the issue of the level of payment which is appropriate in terms of the alternative crave. It is not, in my view, appropriate, for the court to embark upon an exercise of detailed assessment of an appropriate sum. That would not be possible in this case on the basis of the information which is available to the Court. I agree with Mr Artis that this can only be done on a broad brush basis with decree being granted for what has been described as a random sum. I do not take that to mean a truly random figure but that some effort must be made to assess a sum appropriate to the case. (Smith's Trustees v Cranston.) I am entirely satisfied that in the whole circumstances there is a sum due by the defender to the pursuer but there is no proper accounting to show the correct level of the payment due.

 

[33] Although I have little sympathy for the defender's approach in this matter, I consider that, in general terms, the pursuer's approach is also flawed. It would seem that the pursuer was well aware that the defender was running the business effectively on his own behalf, making decisions, contractual commitments and dealing with the business bank account. Although in his pleading the pursuer claims to have given no instruction, I find it improbable that all matters undertaken by the defender were so undertaken without instruction from the pursuer. For example, the sale of heritable properties could not have been undertaken without the pursuer's input as he was the heritable proprietor. The pursuer's suggestion that the defender received no payment as he provided services which were not demanded or required also seems improbable. Had he not provided his services, the farm would not have operated. It appears to me from the evidence I have heard that although the defender insisted on acting as if he did own the farm, the pursuer was at least complicit in this approach up to the point when parties fell out and it is accordingly somewhat unfair for him then to require a detailed accounting from his father when there had been no previous suggestion of any such requirement and where he appeared to have been satisfied by the accounts which had been produced up to 2004.

 

[34] In assessing his claim the pursuer takes account of a number of factors including excessive expenses taken on behalf of the defender and his second wife, a suspicion that the defender was building up his own business by utilising the assets of the pursuer's farming business, a failure to account for rent paid by A & J Matthews, a failure to account for payments received in respect of material quarried from the farm, an alleged shortfall in funds from the sale of Scotstown Farm and a failure to account for the small farm payment sale. He also refers to the retention of a tractor worth £ 42,000, the retention of cattle passports, the retention of cattle, feed, stock and machinery estimated at in excess of £ 150,000, and the use by the defender of supplies of fuel, feed and other things purchased through the farming business but used for his own personal business. He further complains of the continued use of grazing at Culdrain Farm after authority for that was withdrawn,but that does not seem to be an issue which can properly be raised in an action of accounting. There is also an issue, which arose during the hearing, of payments made to a builder in respect of improvements to the property, Keeper's Cottage but this does not appear to be referred to in the pleadings. Given that ownership of that property lies with the pursuer he may well have been the principal beneficiary of such payments although not necessarily to their full value.

 

[35] The pursuer has not offered a detailed calculation of the sum he claims due. I accept that this, in absence of information from the defender, would be extremely difficult but there is no quantification available for the court to use as a test. As I have indicated I consider that he can be criticized for allowing the situation to continue unchallenged for such a lengthy period, giving the impression that he was content to allow the farm to operate on this basis. Nevertheless it is the defender who has not taken the chances given to him to properly justify his management of the business and account for his actions.

 

[36] I have elected to take as a starting point the last set of accounts, prepared in the name of the pursuer and presumably used by him for tax purposes. At that point the bank account was in credit of approximately £ 74,000. The profit on the farm, as taken from the four sets of accounts, was building up to a figure between £ 20,000 and £ 25,000. Accordingly for the two years to the cessation of the defender's running of the business a figure of around £ 50,000 could reasonably have been added to that balance making approximately £ 125,000. The actual balance at that point was a debit balance of £ 157,000 so the difference is £ 282,000. This forms one general basis for assessment. There are, of course, numerous other factors. Amongst these are the pursuer's own drawings from the account and his ownership of the arguably improved property and the defender's accounting failures particularly with regard to the sale of the farm subsidy and complete failure to account for the cattle ownership and sales. I am inclined, very much on a broad brush basis, to take the view that many of the factors balance many others, and to utilise the above figure as a base, it having some foundation in reality. Given that this exercise is required by the defender's failure to account it is appropriate that it be rounded upward. I have accordingly awarded a figure of £ 300,000 and granted decree for that sum. Interest will run from the date of citation as craved.

 

[37] The pursuer has largely succeeded in this action. It was necessary for him to raise proceedings to effect a resolution to the dispute. In absence of any sound reason to the contrary he is entitled to an award of expenses. I accept that notwithstanding that the defender represented himself this is an unusual case involving the requirement for careful and thorough preparation to an extent that the employment of junior counsel was justified. I have certified it accordingly.

 

 

Sheriff of Grampian Highland and Islands at Aberdeen

12 September 2012.