Scottish Court of Session Decisions

This was a petition for disentail presented by Alexander Pringle, heir of entail in possession of the estates of Whytbank and Yair under an entail dated in 1820, for authority to disentail these estates. The petitioner was born in 1837. The three heirs next entitled to succeed to the entailed estates were (1) Robert Pringle, who consented to the disentail; (2) Robert Keith Pringle; and (3) Alexander Pringle, Captain in the Bombay Native Infantry.

A remit having been made to Mr M'Lauchlan, actuary, to ascertain the value in money of the expectancies of the second and third substitute heirs of entail, he reported, inter alia, as follows:—“In fixing the sum to be taken as the value of the estate at the time when the above-mentioned Robert Keith Pringle and Alexander Pringle may be expected to come into possession of it, the actuary has deducted a sum of £1673, 16s. 3d. in respect of the drainage rent charges, being three-fourths of the amount originally advanced. He finds that by the year 1898 one-fourth of all the sums borrowed in consideration of these rent charges will have been repaid, and assumes that the heir in possession will thereafter (in terms of section 6 (4) of the Entail (Scotland) Act 1882) substitute for the rent charges a bond and disposition in security over the estate for the sum mentioned above…. The actuary has made an allowance in his calculations for the fact that in consequence of the third heir's occupation and residence, his life is exposed to more than the average risk, the effect of such allowance being to reduce the value of his interest by £305. This is based on the assumption that this heir will be ten years more in India, and that the extra risk of death to which he will be subject during the whole remainder of his life is correctly represented by an extra premium at the rate of 1 per cent. per annum payable during these ten years. It may be stated that the practice of the Life Assurance Society, with which the actuary is himself connected, is to charge an additional premium for military service in India in time of peace at the rate of 30s. per cent. per annum, and this of course includes a margin for expenses and contingencies. The rate of 1 per cent. has been confirmed by a comparison with the mortality experienced by the Standard Life Assurance Company among this class of lives between the years 1870 and 1885. The actuary has also taken into account that the third heir will have to pay succession duty on coming into possession of the estate, a deduction of £17 being made from the value of his interest in respect of such duty.”

It was objected for the petitioner that in fixing the value of the estate the actuary ought to have deducted the whole amount of the improvement expenditure charged under the bond of annual rent in so far as not repaid at the date of valuation.

Robert Keith Pringle and Alexander Pringle made the following objections to the report of the actuary—(1) In respect the actuary had estimated the value of their expectancies as at the date of the petition, viz., 29th July 1890. They submitted that the value of their interests should have been ascertained as at the present date, or otherwise, that interest should be added to the ascertained value

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from 29th July 1890 until the money was consigned in bank. (2) In respect the actuary had deducted £305 from the value of the interest of the third heir, on the assumption that he would be ten more years in India. (3) In respect the actuary had deducted £17 in name of succession duty.

On 13th April 1892 the Lord Ordinary ( Low) pronounced this interlocutor:—“Finds that in estimating the value in money of the expectancies or interests of the second and third heirs of entail, there falls to be deducted from the valuation of the estate the capital sum of improvement expenditure charged upon the estate by way of annual rent, in so far as the said capital sum had not been repaid by the heir of entail in possession at the date when the valuation of the estate fell to be made, and the value of the expectancies or interests of the next heirs ascertained: Allows the third heir, the respondent Alexander Pringle, to lodge in process a statement of any circumstances which he considers to be material, in view of the deduction which the reporter has made from the value in money of his expectancy or interest, in respect of his residence in India: To the above extent and effect sustains the objections stated at the bar to said report, and quoad ultra approves of the report, except in so far as regards the said deduction from the value of the expectancy or interest of the said Alexander Pringle, and reserves the question whether the said deduction falls to be made in whole or in part, and continues the cause.”

The following statement was thereafter lodged for the third heir—“He has held his commission in India for twenty years. He is about to return home on furlough, and he may then marry and remain in this country. He will be entitled to the rank of major in December next. His father served thirty years in India, and is now in the ninety-first year of his age. Captain Pringle is in good health, and it is submitted that no deduction ought to be made, either on the ground of residence in India or assumed further residence of ten years there, in the absence of proof of actual bad health and an injured constitution. In any view, it is submitted that it should be assumed that he may soon be in this country on furlough, and may remain thereafter at home. It would not be fair to Captain Pringle to assume that his life has undergone an average shortening of the lives of Europeans in India, which would put upon him a share of the injured and shattered constitutions due to original weakness, disagreeing with the climate, or indiscretions and bad habits on the part of some who go from this country to India. It should be assumed that the expected duration of his life is at least equal to the average of those whose constitutions are good and agree with the climate of India, and have not suffered from any indiscretions or bad habits.”

A remit having been made to the actuary to report on the above statement, he reported as follows—“In obedience to the prefixed interlocutor, the actuary has carefully considered the statement for the respondent Alexander Pringle, referred to hereafter as D. If what is stated on behalf of D is correct, it follows that before we can say what deduction (if any) ought to be made from the value of his interest on account of his being an officer in the Indian Army, a variety of facts personal to himself must be inquired into, such as his family and personal history, the present condition of his health and constitution, and his habits and mode of life, also his prospects of being employed on dangerous service, or, on the other hand, of retiring and coming home. The actuary is of opinion that such a course would be contrary to the practice invariably followed in the usual case of the valuation of the expectancy or interest of an heir resident in this country, and engaged in an ordinary civil occupation. In that case, in the absence of any allegation that the life is a damaged one, the practice of actuaries is, he believes, to calculate the value on the footing that the heir is an average life of his age: the probabilities of life used being taken from a table which represents the mortality in a body of mixed lives, containing persons in all varieties of condition as regards health. It is probable that if all the persons on whose lives any particular interest or expectancy in an entailed estate depended for its value could be got to submit to medical examination, and to furnish any other information and evidence that might be required in regard to their prospects of longevity, the value of such interest might be ascertained with greater exactness than is done by assuming, according to the usual practice, that each of these lives is an average life of his age. There is, however, no means of compelling all the parties concerned to submit to medical examination, or to furnish the other information mentioned above; and the introduction of the principle of a separate investigation into the prospects of each of the parties concerned would very greatly increase the labour and difficulty of valuing the interests in an entailed estate, and introduce a considerable element of uncertainty into the results. The fact which probably more than any other would effect in D's individual case the amount of extra risk to which his life will in future be subject is the chance of his early retirement. This is a matter as to which it would probably be very difficult to get evidence, as it presumably depends, in the main, on his own wishes and intentions. These, again, might be affected by the circumstance that he is about to receive the considerable sum of money representing the compensation payable to him in connection with the present disentail; and this last circumstance is, in the judgment of the actuary, not one that ought to be allowed to affect the value of D's interest. Having regard to what is stated above, the actuary is of opinion that the course followed by him in making his calculations is the proper one—namely, to assume (1) that D is an average life of his age; (2) that

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his health and constitution have suffered and will continue to suffer the average amount of deterioration from the effect of residence in India; (3) that he will, while he remains on the active list of the Indian Army, be subject to the average risks of military service; and (4) that he will retire at the average age of retirement for officers of his age and rank.”

On 13th May 1892 the Lord Ordinary approved of the actuary's report: Found that the value in money of the expectancy of Robert Keith Pringle, the second heir, was £68 sterling, and that the value in money of the expectancy or interest of Alexander Pringle, the third heir, was £5781 sterling.

“ Opinion.—In my opinion the fact that the respondent Captain Pringle is and has for many years been resident in India cannot be left out of view in estimating the value of his interest in the entailed estate. I do not think that it can be disputed that the probability of life of a person residing in India is less than that of a person resident in the United Kingdom. Insurance companies certainly act upon the assumption that that is the case, and protect themselves against the risk of persons insured going to a tropical climate.

In dealing with Captain Pringle's case the actuary has assumed that he has the average prospects of life for a man of his age; that his prospects of life have been diminished to the average extent by his residence in India, and that he will retire from the army and cease to reside in India at the usual time for officers in his position. Unless there are special circumstances taking Captain Pringle's case out of the ordinary rule, it appears to me that the principle adopted by the actuary is sound.

When the case was last before me I allowed Captain Pringle an opportunity of stating any special circumstances which would necessitate his case being dealt with as an exceptional case. He has lodged a statement, but I do not think that it contains any averment of fact which necessitates further inquiry. He admits that he has been for twenty years in the Indian army, and although he says that he may retire at an early date, he does not dispute that in the ordinary course of his profession he may serve for other ten years. The case therefore, upon Captain Pringle's own showing, appears to me to be the ordinary case of an officer serving in the Indian army, which can, I think, only be dealt with as an average case.

I was also asked to delay the case in order that further communication might be had with Captain Pringle. I do not think that any further delay can be granted. The petition was brought in July 1890, and therefore there has been ample time to obtain from Captain Pringle all necessary information.

The next question is, at what time is the value of the interest of Captain Pringle to be ascertained? That seems to me to be settled by the case of Macdonald in the House of Lords. The date fixed in that case was the execution of the instrument of disentail, and I do not find that that date was taken on account of any special circumstances in the case. I think that the learned Lords intended to lay down a general rule, and this was the view of the decision taken by Lord Kinnear in the case of Sprot, 19 S.L.R. p. 738. It was contended, however, for Captain Pringle that if the value of his interest is fixed as at the date of the instrument of disentail he is entitled to interest upon the amount until it is consigned or secured. Prima facie the request is not an unreasonable one, but I find no warrant for it in the statute. The statute directs the Court to ascertain the value in money of the interest of the heir whose consent is required, and on that being done, to direct ‘the sum so ascertained’ to be paid into bank or secured. Thus Macdonald's case settles that the value of the interest is to be ascertained at the date of the instrument of disentail, and the statute directs the Court to order the sum so ascertained, and no greater sum, to be consigned or secured. I am therefore of opinion that I have no power to allow interest.”

The respondent heirs reclaimed, and argued—1. The Lord Ordinary was wrong in holding that the whole capital sum charged on the estate by way of annual rent should be deducted from the valuation of the estate, as the petitioner was only entitled to charge three-fourths of that sum permanently on the estate—Entail (Scotland) Act 1882, sec. 6, sub-sec. 4. The extent of the burden, so far as it affected the interests of the next heirs, was therefore only three-fourths of its total amount. 2. Facts bearing on the value of the life of a substitute heir should be taken into account in ascertaining the value of his expectancy— Macdonald v. Macdonalds, March 12, 1880, 7 R. (H. of L.) 41. In that case it was held by the House of Lords that circumstances which affected the value of a substitute heir's life unfavourably should be taken into account, and it followed that circumstances which raised the value of such heir's life above the average should also be taken into account— Macdonald v. Macdonalds, January 16, 1879, per Lord Gifford, 6 R. 536. The tables of insurance companies were not true guides in such matters, as they did not give the full value of the lives with which they dealt, but only such value as it was safe for insurance companies to allow. 3. The proper date at which to estimate the value of expectancies was not the date of the execution of the instrument of disentail, but the date of its being recorded. Otherwise, where the proceedings were protracted, the value of the expectancy might have changed materially before the consent of the heir was dispensed with. The statute was silent on the point, and though no doubt there were dicta by Lord Hatherley in Macdonald's case to the effect that the expectancy should be valued as at the date of the execution of the instrument of disentail, this point did not form part of the decision of the House of Lords, as the date of the instrument was there taken as the date of valuation by consent of parties. In Sprot's case Lord Kinnear

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decided no more than that the opinion expressed by Lord Hatherley applied to that case. At all events, if the expectancy was to be valued as at the date of the execution of the instrument of disentail, then it was necessary, to prevent injustice being done, that interest should be paid on the ascertained sum from the date of the instrument of disentail until consignation. There was nothing in the statute to forbid this being done, and it was usual for interest to run on sums fixed by the Court where time elapsed before payment. In Macdonald's case a sum was consigned to await the result of the litigation. The amount of succession-duty was not a proper deduction from the value of the expectancy. The result of such a deduction was to transfer to the heir of entail in possession a sum to which he had no claim, but would ultimately have been payable to the Crown.

Argued for the petitioner—1. The whole amount secured under the bond of annual rent at the date of the application should be deducted from the value of the estate as the present value of the land was so far reduced—Entail Amendment Act 1875, sec. 5 (2) ( a); Baird v. Baird, July 15, 1891, 18 R. 1184. Section 23 and the following sections of the Act of 1882 seemed to favour this view, and the contrary view would make it necessary to value the rental at a future period, which would introduce an element of uncertainty into the valuation. To deduct only part of the burden would be unfair to the heir in possession, as the subsequent heirs got the benefit of the expenditure in the improved value of the estate. The whole of a sum of improvement expenditure was deducted in Macdonald v. Macdonalds, July 16, 1879, 6 R. 521, 526. 2. The statement lodged for the third heir was irrelevant. It set forth no facts which could be taken into account as definitely affecting the value of the third heir's expectancy. 3. As regards the date at which an heir's expectancy should be valued, it was settled by authority that the proper date was the date of the execution of the instrument of disentail— Macdonald v. Macdonalds, March 12, 1880, 7 R. (H. of L.) 41, especially per Lord Hatherley, p. 47; Sprot, June 27, 1882, 19 S.L.R. 738. Further, there was no warrant in the statute for allowing interest on the ascertained value of the expectancy. 4. Succession-duty was properly deducted from the value of the heir's interest, as he would have had to pay that duty on coming into possession of the estate.

At advising—