Scottish Sheriff Court Decisions

2015SCGLA48

SHERIFFDOM OF GLASGOW AND STRATHKELVIN AT GLASGOW

A827/14

JUDGMENT

by

SHERIFF S. REID, Esq.,

in the cause

MACALLANS, SHEENA DIANE ADAM and IAIN GRANT

Pursuers and Real Raisers

against

W BURRELL HOMES LIMITED

First Defender

and

BRIAN ANTHONY McCARDLE

Second Defender

and

DOMINIC MARTIN SWEENEY

Third Defender

______________________________

Act: Mr Allan, bto, Glasgow

Alt: 1st defender: No appearance

2^nd defender: Mr Smith, Complete Clarity Solutions, Glasgow

3^rd defender: Mr Stevenson, Claphams, Glasgow

 

GLASGOW, 22^ND June 2015

The sheriff having resumed consideration of the cause, Repels the first and second pleas-in-law for the second defender due to want of insistence; Repels the first, second, third, fourth and fifth pleas-in-law for the third defender; Sustains the first and second pleas-in-law for the pursuers and real raisers; Approves the condescendence of the fund in medio  (item 3 of process) and Holds the fund in medio to be correctly stated in the sum of TWO HUNDRED AND FORTY THREE THOUSAND SIX HUNDRED AND EIGHTY ONE POUNDS AND THREE PENCE (£243,681.03) STERLING, together with any interest that may have accrued thereon since the date of warranting of the action whilst in the hands of the solicitors for the pursuers and real raisers; Finds the pursuers and real raisers liable only in one single payment thereof; Ordains the pursuers and real raisers forthwith to consign the fund in medio in the hands of the sheriff clerk at Glasgow; upon consignation of the same, Exoners and Discharges the pursuers and real raisers of the fund in medio and of their whole actings and intromissions therein; Finds the pursuers and real raisers entitled to the expenses of the action to date, as taxed, payable out of the fund in medio;  Allows an account thereof to be given in and Remits the same, when lodged, to the auditor of court to tax and to report; Allows such expenses (as taxed or as otherwise agreed with the second and third defenders) to be a first charge on the fund in medio; Authorises and Directs the sheriff clerk to make payment to the solicitors for the pursuers and real raisers of such expenses (as taxed or as otherwise agreed with the second and third defenders) out of the consigned fund in medio; thereafter, Appoints parties to be heard at a case management conference, on a date and at a time to be hereafter assigned, to determine further procedure in the commercial action, to proceed by way of telephone conference call before Sheriff Reid.

 

SHERIFF

NOTE:

Summary

[1]        The first-named pursuer and real raiser is a firm of solicitors (of which the second and third-named pursuers are the partners).  The firm acted for the first defender, W. Burrell Homes Limited (“the company”), in the sale of heritable property owned by the company.  That sale generated net free proceeds of £229,000.

[2]        The second and third defenders are the two directors of, and equal shareholders in, the company.  The co-directors have fallen out.  The first-named pursuer avers that, as a result, it has no joint and unequivocal instruction from the second and third defenders (as agents of the first defender) regarding disbursement of the sale proceeds.

[3]        In these circumstances, the pursuer commenced an action of multiplepoinding seeking inter alia judicial authority for the consignation of the sale proceeds in the hands of the sheriff clerk.

[4]        The preliminary issue in dispute is whether the action is competent. The third defender submits that the action is incompetent because, in short, (i) there are no competing claims to the sale proceeds, in that the admitted rightful recipient of the money is the company itself; (ii) the first-named pursuer merely holds the sale proceeds as agent for the company; and (iii) the first-named pursuer and real raiser is, therefore, not exposed to double distress. 

[5]        After sundry procedure on the ordinary cause roll, the action was remitted to the commercial roll, to proceed as a commercial action in terms of Chapter 40 of the Ordinary Cause Rules 1993.  Having heard parties’ submissions at a diet of debate on the third defender’s preliminary pleas, I reserved judgment.

 

Submissions for the third defender

[6]        In an attractive argument for the third defender, it was submitted that the present action was incompetent because there were no competing claims to the fund in medio, double distress being a necessary prerequisite of an action of mutiplepoinding.  It was submitted that ownership of the fund in medio was not in issue; the fund clearly belonged only to the first defender (the company); and neither the second nor the third defender had asked for the funds to be paid to him. Instead, the disputed issue was said to concern the proper distribution of the fund by the company, once the first-named pursuer had accounted to the company.  It was submitted that a dispute concerning the distribution of the fund, once it was paid to the true owner, could not competently be determined in an action of multiplepoinding.

[7]        Reference was made to correspondence in the pursuers’ inventory of productions (specifically items 5/1-5/4, 5/15 & 5/19).  It was submitted that the import of this correspondence was to disclose that the fund was acknowledged to belong to the company (the first defender); that the pursuers were not exposed to competing claims on the fund; and that such dispute as existed related only to a dispute between the first and second defenders as to the distribution of the fund after it had been received by the company. 

[8]        The third defender’s agent submitted that the appropriate legal remedy was for the first or second defender to apply to the court for an order to wind up the company; the liquidator would take charge of the fund in medio; and the distribution of the fund would then be determined by the usual rules applicable upon winding-up.  The third defender’s solicitor acknowledged the possibility that a multiplepoinding may yet be required at a later stage at the instance of a liquidator.

[9]        It was submitted that the pursuers were not prejudiced by the continued retention of the fund.

[10]      Further, it was submitted that the pursuers are not trustees.  Rather, they are depositories.  They may have a current practical difficulty in obtaining a discharge, but there was no dispute as to the identity of the party to whom payment should be made.

[11]      Although the point was not addressed in oral submissions, the third defender’s written note of arguments also advances the argument that the pleadings are irrelevant because the first-named pursuer’s possession of the fund in medio was attributable solely to its capacity as agent for the first defender. As a result, the first-named pursuer was not a “truly neutral person”; the pursuers and the first defender had no conflict of interest over, or separate interest in, the fund; and, accordingly, the action should be dismissed.

[12]      Reference was made to Stair, Institutions of the Law of Scotland, Book IV, Title 16; Walker, Civil Remedies, Chapter 72; Winchester v Blakey (1890) 17 R 1046; and Law Society of Scotland Practice Rules 2011, Rules 6.11.01 & 6.11.2.

[13]      I was invited to sustain the third defender’s pleas-in-law numbers 1 to 5. 

 

Submissions for the pursuers and real raisers

[14]      For the pursuers and real raisers, I was invited to repel the third defender’s preliminary pleas; ordain the pursuers to lodge the fund in medio in the hands of the sheriff clerk (a condescendence of the fund having already been lodged); and to find the pursuers entitled to expenses out of the fund in medio.

[15]      The pursuers’ agent narrated the factual background to the creation of the fund.  Reference was made to the correspondence lodged in process and incorporated in the pleadings for the sake of brevity (notably items 5/1-2, 5/4-5, 5/7-8, 5/12, 5/16, 5/20 & 5/24). Particular reliance was placed upon item 5/4 of process, being a letter dated 14 February 2014 from the third defender’s agents to the pursuers’ agents recording the third defender’s refusal to consent to the release or transfer of any part of the fund in medio to any party; and instructing the pursuers’ agents to continue to hold the funds until further written notice.  Item 5/4 of process was said to prevent the pursuers from paying the fund to the company (as the rightful owner), without creating the risk of a challenge by the third defender. Item 5/16 of process (a document bearing to be signed by the third defender only) was also presented as constituting, or indicative of, a claim by the third defender on the fund in medio.  Each of the foregoing circumstances, individually or in combination, was said to establish “double distress” in respect of the fund.

[16]      Reference was made to Winchester, supra; The Commercial Bank of Scotland Ltd v James Muir (1897) 25 R 219; The Commercial Union Assurance Co Ltd v The Globe Co Ltd 1916 1 SLT 343; and Adam Cochran & Co v Conn 1989 SLT (Sh Ct) 27.

[17]      In summary, the pursuers acknowledged that the funds should be paid to the first defender, but that only the second and third defenders, acting jointly, could facilitate that payment; and a deadlock situation was said to have arisen because the third defender had instructed that no payment was to be made to the first defender.

[18]      In a brief alternative submission, the pursuers’ agent also submitted that the funds were held in trust by the pursuers.

 

Submissions for the second defender

[19]      The second defender’s agent adopted the submissions for the pursuers and real raisers.  He submitted that there was double distress and that a multiplepoinding was competent.

[20]      It should be noted that the second defender’s agent initially suggested that the first defender had no outstanding creditors but he subsequently clarified that a modest indebtedness was owed by the first defender to its accountant.

 

Supplementary submissions for the third defender

[21]      By way of supplementary submission, the third defender’s agent submitted that item 5/16 of process did not constitute a claim by the third defender upon the fund.  It was merely an incomplete draft of a multi-party agreement that had been signed by only one party.  On a plain reading, it did not disclose any intention on the part of the third defender to make a claim against the pursuers.

[22]      Reference was made to Dobie, Sheriff Court Practice, page 514 to the effect that a dispute regarding the ultimate distribution of the fund was not sufficient to justify a multiplepoinding if there were no competing claims against the holder of the fund in medio itself.  In the present case, any dispute between the second and third defenders fell to be determined after payment of the funds to the first defenders.  This action had been raised prematurely, in contemplation of a future dispute between the second and third defenders.

 

Discussion

[23]      The primary purpose of an action of multiplepoinding is to enable the holder of property (“the fund in medio”), faced with two or more competing claims, to cite in a single process all persons having an interest in the fund, so that the holder may obtain judicial authority to consign the fund into court (or otherwise deal with the fund as directed by the court) and to be exonered and discharged of his liability for holding the fund and from all future claims. 

[24]      In its original form, multiplepoinding (or “double poinding” as it was described in Stair, IV.XVI.1) required “double distress”, in the technical sense of double diligence.  In other words, the holder of a fund required to be subject to multiple arrestments or poindings (from which the name of the action is presumably derived) (Stair, IV.XVI.7).  This pre-requisite for double diligence appears to have been modified over the years, and the action is now competent wherever there is a double claim, that is competing claims, to one fund on separate and hostile grounds (Walker, Civil Remedies, page 1234). 

[25]      Thus, in Russel v Johnston (1859) 21 D 886, Lord Kinloch stated (at 887):-

“It is still however necessary to the validity of the action that there should be a true case of double claim to one fund or property on separate and hostile grounds, not a mere ostensible case got up in order to try a question of debt or obligation between two individuals, the proper mode of determining which is a direct action”.

 

Likewise, in Winchester v Blakey (1890) 17R 1046, the Lord President (Inglis) stated (at 1048):-

“It is not necessary that there should be double diligence to constitute double distress, if there are competing claims”.

 

 

[26]      However, a practice has developed whereby, when considering the competency of a multiplepoinding (specifically, whether there is double distress), “a much greater latitude” (Winchester, supra, per Lord McLaren at page 1050) is afforded to the holder of a fund who initiates the action (a “pursuer and real raiser”) and who asserts no claim on the fund itself, than is afforded to a pursuer who does not hold the fund and is a mere claimant thereon (a “pursuer and nominal raiser”).  The underlying rationale for that more liberal approach towards the neutral custodian appears to be that the holder of a fund, who does not otherwise have a claim thereon, cannot raise a direct action against the competing claimants (or otherwise convene all other persons who may be interested in the fund); and, it is said, such a party should not be bound to remain a depository until the day of his death or, at least, until the disputing parties settle their competing claims.  Instead, the holder of a fund (as pursuer and real raiser), with no claim thereon, is entitled after a reasonable time to be relieved of the property by means of an action of multiplepoinding; and:-

“…accordingly, it is a sufficient justification of the institution of the action that the claims intimated make it impossible for the holder to pay to one of the parties without running the risk of an action at the instance of the other (Winchester, supra, per Lord McLaren at 1050).

[27]      Indeed, a neutral holder of a fund may be entitled to bring a multiplepoinding, even where a competing claim on the fund was obviously bad, because otherwise the holder would be liable to have to defend an unfounded action by that claimant (Greenshields Trs v Greenshields 1915 2 SLT 189).

[28]      That said, it must be acknowledged that the case reports are strewn with decisions that are difficult to reconcile. Each case is likely to be peculiarly fact-sensitive. In Commercial Bank of Scotland Ltd v James Muir (1897) 25 R 219, Lord McLaren (at 221) notes:

“There must, at least, be a fund in neutral custody, a dispute as to the persons entitled to the fund and competing claims made to it, and in general a demand on the holder by one or more of the disputants.  But as to the degree of strictness with which these requisites have to be complied with, that depends, as the decisions show, on the nature of the fund and the circumstances of the case, and the decision on one question of competency is not of very much value in determining other questions arising in different circumstances.”

 

[29]      Significantly, though, the requirement that there be conflicting claims is not insisted upon at all in the case of trustees or the like, who may raise an action of multiplepoinding even where there are no claimants, in order to enable them to obtain a judicial discharge, provided those in whose power it is to grant such a discharge are unable or unwilling to do so (Davidson v Ewen (1895) 3 SLT 162; McClement’s Trs v Lord Advocate 1949 SLT (N) 60). 

[30]      Conversely, trustees, executors, and those who hold property on behalf of others should not resort to multiplepoinding in order to obtain exoneration and discharge, where there is no difficulty in obtaining this extra-judicially (Mackenzie’s Trs v Gray (1895) 2 SLT 422.

[31]      Against that legal background, in my judgment, in the circumstances of the present case, the pursuers are entitled to raise an action of multiplepoinding.  I reach that conclusion for two reasons. 

[32]      Firstly, the first-named pursuer, having obtained the money as solicitor on behalf of the first defender, as its client, holds the fund in medio in trust for the first defender; it is obliged to account to the first defender for the fund; but those in whose power it is to permit the first defender both to receive the fund and to grant a discharge in favour of the first-named pursuer are unable or unwilling to do so. There is no necessity for such a party, who holds a fund qua trustee and who is prevented from obtaining a discharge extra-judicially, to establish double distress arising from competing claims on the fund (Davidson, supra; McClement’s Trs, supra).

[33]      By way of clarification of the factual position, it is not in dispute that the second defender and third defender, as directors of the first defender, have failed to reach agreement upon the release and disbursement of the fund in medio. The company cannot act other than through the agency of its directors. The direct consequence of their admitted failure to agree (whatever the underlying reason for that lack of consensus) is that the normal conduct of the company’s affairs (at least in relation to the management of this asset) is paralysed. The first defender is unable to instruct its former solicitors to release the fund, it is unable to receive the fund, and it is unable to grant a discharge in favour of the first-named pursuer.  

[34]      As for the first-pursuer’s capacity, the relationship of solicitor and client is recognised as a contract for services rooted in the law agency (Bell v Ogilvie (1863) 2M 336; Paterson & Ritchie, Law, Practice and Conduct for Solicitors, para.4.01). However, it is well-settled that a solicitor is also in a fiduciary relationship with his client (Brown v Inland Revenue 1964 SC (HL) 180 at 189-190 & 191 per Lord Reid; at 194 per Lord Evershed; at 197 per Lord Upjohn). He is subject, at common law, to an array of exacting fiduciary duties to his client and, under statute, to an intricate web of accounting requirements designed to ensure the strict separation of clients’ and solicitors’ funds. In that context, a solicitor who receives his client’s money, being bound to keep it separate from his own; being bound to ensure that his personal interests do not conflict with those of his client; and being bound to account for the money to his client, together with any profit, benefit or advantage he may have derived from it, may fairly be considered to hold the money as a trustee for his client (Cordery on Solicitors, 8^th ed., page 96).  

[35]      But a trustee, such as the first-named pursuer, is not obliged to hold the fund in perpetuity or, at least, indefinitely, pending resolution of the disagreement between those empowered to procure the grant of a discharge.  

[36]      Accordingly, the first-named pursuer qua trustee is entitled to raise a multiplepoinding in order to be relieved of its obligation to hold the fund any longer and to obtain a judicial discharge. (The subsidiary interest of the second and third- named pursuers derives directly from their relationship as partners of the first-named pursuer.)

[37]      Secondly, esto the first-named pursuer does not hold the fund as trustee, in my judgment the action remains competent because there are, properly understood, competing claims on the fund.

[38]      This action is raised by a neutral holder of the fund in medio. In those circumstances, in determining whether there is double distress, “a much greater latitude” (Winchester, supra) is afforded to the pursuer and real raiser, than in the case of an action raised by mere competitors on the fund.

[39]      In the context of a multiplepoinding (a fortiori in the liberal context afforded to proceedings at the instance of a neutral holder of the fund) competing claims on the fund need not be confined to disputed assertions of ownership. Competing claims may arise from a conflicting combination of any of the following: the assertion of a right of ownership of the fund or part thereof; or the assertion of a lesser right or interest in, to or over the fund or part thereof (such as a right in security, or a right of possession); or, as in the present case, the assertion of a right to manage, control or direct the distribution of the fund; or so-called “riding claims” in relation to any of the foregoing (whereby a claimant may assert an interest in the fund by virtue of his debtor’s direct claim on the fund). Consistent with that broader approach, both the sheriff court and Court of Session rules require a pursuer in an action of multiplepoinding to call as defenders all persons, so far as known to him, having “an interest in the fund in medio” (Ordinary Cause Rules, Rule 35.3(2)(a); Rules of the Court of Session, Rule 51.2(2)(a)). That phrase is not expressly defined or limited.   

[40]      In the present case, the third defender’s “interest” in, and claim on, the fund comprises his asserted right to manage, control and direct the distribution of the fund. In his capacity as director of the first defender, he has refused to consent to the release of the fund to any party (including the first defender) and has explicitly instructed the pursuers not to relinquish any part of the fund to anyone (item 4/5 of process: letter dated 14 February 2014 from the third defender’s solicitors to the pursuers’ solicitors).  

[41]      For his part, the second defender, also a co-director of the first defender, with a like claim on the fund (in the form of an asserted right to manage and control it), avers that he and the second defender have “failed to reach any agreement whatsoever in regard to the disbursement of the fund in medio” (item 9 of process: Defences for second defender, Answer 1).  The second defender’s primary averred position, in relation to the disbursement of the fund, is a little opaque. However, I take the pleadings to mean that the second defender’s direction in relation to the fund (whatever it may be) is not consistent with the third defender’s direction, even to the extent of the fund being retained by the pursuers (as, otherwise, arguably, there might be said to be consensus). The second defender avers that the disputed monies belong to the first defender (Answer 1, page 1, line 12); he specifically denies that he has instructed the pursuers not to remit the fund to the first defender (Answer 1, page 2, lines 10 & 11); and he avers that the co-directors have failed to reach any agreement “as to the manner in which the pursuer … should account in respect of the fund in medio” (Answer 4, page 2, lines 14-16) and “in regard to the disbursement of the fund in medio” (Answer 1, page 2, line 5).    

[42]      In any event, the second defender further avers:-

“Esto the second defender as a director of the first defender has no claim on the funds in medio (which is denied) the second defender as a private individual is owed funds by way of loans to the first defender (directors’ loans) and accordingly has a claim on the funds in medio”. (Defences of second defender, Answer 1, inserted by note of adjustments: item 11 of process) 

 

[43]      Accordingly, on the face of the second defender’s own pleadings, his primary position is that he has a claim on the fund in medio, as a director of the company, comprising a right to manage and control the fund; he does not specify, in precise terms, how he seeks to exercise that managerial right, but, by plain inference, his direction is not consistent with the third defender’s asserted exercise of the same right because, according to the second defender, the co-directors have “failed to reach any agreement whatsoever”; and, in any event, the second defender has intimated, in his adjusted Defences, a claim on the fund in medio by way of repayment of loans allegedly due by the company to the second defender, which ex facie conflicts with the third defender’s asserted claim (in the form of an explicit direction to withhold the entire fund from all parties).  

[44]      The second defender’s position in relation to the fund in medio also requires to be viewed in context.  It is not disputed that, back in August 2013, the second defender had given instructions to the first-named pursuer to pay the sale proceeds to the second defender’s “own personal account” (Answer 3, Defences for second defender); that the sale proceeds were indeed paid to the second defender’s personal account by the pursuers; that a court action was subsequently raised by the pursuers against the second defender in Glasgow Sheriff Court (case number A869/13) to recover the monies; that a court decree was obtained against the second defender in that action requiring him to repay the monies to the pursuers; and that the monies were ultimately repaid to the pursuers with interest (and now comprise the fund in medio).

[45]      Viewed in context, therefore, this quagmire of dissent, inconsistency and conflict between the persons with power of management over the fund satisfies the criterion for competing claims upon the fund (a fortiori in the liberal sense afforded to a neutral pursuer and real raiser); and provides a sufficient justification for the pursuers to submit the adjudication of claims to the court by an action of multiplepoinding and to be discharged.  The claims are such as “make it impossible for the depository [the first-named pursuer] to pay to one of the parties without running the risk of an action at the instance of the other” (Winchester, supra, at 1050 per Lord McLaren). 

[46]      Two authorities were said to point to a contrary conclusion.

[47]      In Commercial Union Assurance Co Ltd v The Globe Co Ltd 1916 1 SLT 343, a property owned by The Globe Co Ltd was insured by a heritable creditor against damage by fire. Part of the property having been destroyed by fire, the heritable creditor claimed under the insurance policy. The insurers agreed the claim and were willing to pay it to the heritable creditor; but the owner of the property objected, arguing that the money ought to be applied in rebuilding the property and not in extinguishing the secured debt.  The owner raised an action of multiplepoinding.  The insurers and the heritable creditor pleaded that there was no double distress and that the action was incompetent.  The Lord Ordinary (Dewar) agreed.  Noting that there was no dispute that the money fell to be paid to the heritable creditor in terms of the insurance policy, he concluded that the only question in dispute was as to the manner in which the heritable creditor should then apply the payment after it had been received by them.  That question did not create double distress because “it falls to be determined after and not before the money is paid”.

[48]      A similar argument was advanced in the present case, namely, that it was not disputed that the first defender was entitled to payment of the sale proceeds and that the real dispute concerned the distribution of the funds thereafter.

[49]      In my judgment, the Commercial Union Assurance decision is distinguishable on two grounds.  First, the action was raised by a claimant on the fund in medio, not by a neutral holder of the fund. Therefore, the greater latitude afforded to a neutral stakeholder was not applicable.  Double distress, in the strict sense, required to exist.  Second, the Lord Ordinary’s decision is predicated upon the conclusion that the issue in dispute could readily have been determined by means of a direct action (between the owner and the heritable creditor), without involving the holder of the fund (the insurers); and that the holder of the fund in medio could readily obtain a discharge from the heritable creditor.  The Lord Ordinary noted:

“One of the advantages of a multiplepoinding is to save inconvenience and expense by deciding all claims in one process.  But when it is clear, as I think it is here, to whom the money should be paid and there is no difficulty about granting a valid discharge, it really creates unnecessary inconvenience and expense to call the holder of the fund into court to await the determination of a question with which he has no concern, and which can be more appropriately decided in a direct action” (my emphasis).

 

In contrast, in the present case there is very real difficulty for the pursuers and real raisers in obtaining a valid discharge because the parties empowered to grant the same have (for whatever reason) refused or failed to agree upon how, and to whom, the fund should be distributed.   

[50]      Separately, reference was made to Adam Cochrane & Co v Conn 1989 SLT (Sh Ct) 27.  In that case, the pursuers and real raisers were solicitors.  They held funds on behalf of their client, a confirmed executor.  The executor claimed that the funds formed part of the executry estate and sought payment of the funds to him for distribution among the deceased’s surviving three children.  One of the children (the second defender) claimed that the whole fund was a gift to her from the deceased and, on that basis, claimed payment of the whole fund. The second defender submitted the action of mutiplepoinding was incompetent on the ground that the solicitors, as mere agents of the executor, were not independent holders of the funds; that their interests, and the interests of their client, were the same; and accordingly, there could be no double distress.  With some reluctance, following debate, the sheriff dismissed the action as incompetent.  He concluded that by paying the funds to their client the pursuers would be doing nothing more than what they, as solicitors to the executry, were obliged to do, namely, paying over to the executor part of the estate to which he had been confirmed. 

[51]      Again, in my judgment, the Conn decision is to be distinguished. First, the solicitors in Conn were faced with no difficulty in accounting for the fund to their client (the confirmed executor) and in obtaining an extra-judicial discharge from him.  In contrast, in the present case the pursuers are disabled from dealing with, and accounting for, the fund in medio, and in obtaining a discharge, absent the agreement of the second and third defenders as directors of the company.  Second, it might be said that there was really no question but that the solicitors in Conn had to account for fund to the confirmed executor in the first instance, absent reduction of the confirmation (which included the fund).  (In the penultimate paragraph of his judgment, the learned sheriff notes that reduction of the confirmation to the extent of the disputed fund may well have been the more appropriate remedy.)  Incontrovertibly, the fund formed part of the estate to which the executor was confirmed. Absent reduction of that confirmation, there was no genuine double distress. Standing the confirmation, the executor’s solicitors in Conn could not persuasively maintain that, in accounting to their client, as executor, for an asset that indubitably fell within the confirmed estate, they ran any material risk of an action at the instance of the second defender. The distribution of the fund by the confirmed executor was genuinely a separate matter, the settlement of which could be resolved by direct action between the confirmed executor and the second defender.  Viewed in that light, the second defender’s claim was against the confirmed executor; her legal remedy lay against the confirmed executor; and the solicitors’ role in the drama was peripheral, as agents for the confirmed executor. No doubt the solicitors held the fund in trust for the executor, but absent reduction of the confirmation they were in safety in accounting to the executor and in obtaining their extra-judicial discharge.

[52]      While there may be a superficial similarity with the present case, in the sense that the first-named pursuer, as solicitor, is prima facie obliged to account to its former client for the fund in medio, the practical result of the competing claims (managerial and otherwise) in the present case is that the holder of the fund is prevented from disbursing the monies without exposing itself to liability, and is certainly prevented from obtaining an extra-judicial discharge.

 

Decision

[53]      For the foregoing reasons, I shall inter alia repel the third defender’s pleas to the competency of the action; sustain the first and second pleas-in-law for the pursuers and real raisers; approve the condescendence of the fund in medio  (item 3 of process); find the pursuers liable only in one single payment thereof; and ordain the pursuers forthwith to consign the fund in medio in the hands of the sheriff clerk with a view, upon such consignation, to obtaining their judicial discharge, reserving to the pursuers a first charge on the fund in medio in respect of their taxed expenses, and authorising the sheriff clerk to make payment to the pursuers’ solicitors of such expenses (as taxed or as otherwise agreed with the second and third defenders) out of the consigned fund. Meantime, I shall appoint parties to be heard at a case management conference, on a date to be confirmed, to determine further procedure in the cause.