Scottish Court of Session Decisions

OUTER HOUSE, COURT OF SESSION [2009] CSOH 153
	OPINION OF MORAG WISE, Q.C., Sitting as a Temporary Judge in the cause MRS JOAN PENTLAND-CLARK as Judicial Factor on the executry estate of the late James Clark Pursuer; against MRS ANNE MELDRUM ALISON MACLEHOSE (OR CLARK, NEE KENNEDY) AND OTHERS Defenders: ­­­­­­­­­­­­­­­­­________________

Pursuer: Party

First Defender: Connal, Q.C., Solicitor Advocate; McGrigors

Second, Third and Fourth Defenders: Clark, Q.C., Barne; Balfour + Manson LLP

Fifth and Sixth Defenders: R Dunlop; Brodies

19 November 2009

Introduction

[1] In this action for declarator, count reckoning and payment and reduction, the pursuer is the judicial factor on the executry estate of the late James Clark. She was appointed by interlocutor of 13 March 2007 to replace the late John Hamilton Macfie who had been appointed judicial factor ad interim on the same estate in 1999 and permanently on 8 November 2000. Mr Macfie died in 2006. Prior to her appointment as judicial factor, the pursuer, who was the first wife of the late James Clark had raised proceedings in this Court qua creditor of his estate. There was to some extent an overlap in the subject matter of those proceedings and this action which came before me for discussion on the procedure roll. However, quite apart from the important distinction that in those proceedings Mrs Pentland-Clark sued as an individual, the conclusions in that case did not include a number of the conclusions for reduction that are a feature of the Closed Record in this case. In any event, Mrs Pentland-Clark's action as a creditor was dismissed after procedure roll, a decision that she, as an individual, unsuccessfully reclaimed. (Pentland-Clark v Wilson and Others [2009] CSIH 48).

Submissions for the first defender

[2] Mr Connal, Q.C., invited me to dismiss the present action insofar as directed against the first defender, which failing to delete all irrelevant averments insofar as directed against that party. He maintained that the first defender, the second wife of the late James Clark and married to him when he died on 5 December 1985 is in a different position to the other defenders in the case and thus entitled to separate consideration. Mr Connal offered the following background to the various litigations that have arisen from the late James Clark's executry estate.

[3] When the late James Clark died in 1985 he had obligations in terms of a Minute of Agreement he had entered into with his first wife, Mrs Joan Pentland-Clark. That agreement (No. 6/19/27 of process) was dated 7 October 1977 and provided inter alia as follows:

"(Second) The husband and his executors shall pay to the wife for her maintenance until her remarriage or death but in any event, if the wife shall remain in life, for a minimum period of 5 years commencing with the date upon which decree of divorce is pronounced that sum which will, under deduction of the standard rate of tax then prevailing, produce TWO THOUSAND FOUR HUNDRED POUNDS (£2,400) STERLING net per annum. The husband will account to the Inland Revenue for the tax which falls to be deducted.....

(FOURTH) The sums payable by the husband to the wife as maintenance for herself and aliment for the said children shall be paid monthly in advance by bankers order, the first payment falling due on the date of divorce. The gross sum payable by the husband, being the sum before deduction of tax and calculated in terms of Clauses Second and Third hereof, shall be increased on each anniversary of the decree by such proportion as the retail price index shall have increased compared to the retail price index at the date of decree of divorce".

[4] It was not in dispute that the late James Clark's obligations under this agreement continued after his death. They were not obligations that the executors could seek to vary or have terminated. Payments had been made under the Minute of Agreement up until October 2005, although there were periods of non-payment, arrears having accrued during the first few years of the judicial factory. Those arrears were ultimately settled with interest by 2 March 2004 (see Pentland-Clark v Macfie & Innes A1642/03, Opinion of Lord Hardie, 21 May 2004).

[5] Mr Connal explained that since November 2005 arrears of about £67,000 have accrued to date. It was not disputed that the obligation of the estate to pay Mrs Pentland-Clark qua creditor was ongoing, albeit that the nature and extent of future payments was not known.

[6] On 20 November 1985, shortly before his death, James Clark executed a Will bequeathing his whole means and estate equally among his wife Anne Clark and his three surviving children. He appointed a Jack Wilson of Messrs J & G Wilson, Solicitors and his said wife Anne Clark to be his executors. A few hours before his death James Clark also executed certain other documents. These were - (1) a partnership agreement with Anne Clark and (2) an agricultural lease of the farmlands relative to that partnership. The lease in question had a clause confirming that Mrs Anne Clark would become the sole tenant on the death of James Clark. These documents are produced at 6/10/1, 6/10/10 and 6/10/11 of process respectively.

[7] Mr Connal explained that the first defender, Anne Clark, resigned as an executor on 25 August 1986. She has not been in a fiduciary position in the estate since then and her role has been restricted to pursuing her interests as a beneficiary. During the years that followed James Clark's death, a series of litigations ensued. Three main camps were identified - the first was the three children of James Clark's first marriage, the second comprised the executors which initially included Mrs Anne Clark, but from 25 August 1986 were Jack Wilson (until his death in May 1991), Patrick Wilson, who remained an executor until he was removed by interlocutor of this Court on 27 May 1999 and Charles William Pagan who was an executor between June 1991 and 27 May 1999 when he was also so removed. The third camp in the dispute was the first defender qua beneficiary. Two of the litigations resulted in reported decisions to which Mr Connal referred. The first, Clark v Clark's Executors 1989 SLT 665 concerned the proposed sale of Leckiebank Farm, part of the lands initially owned by the late James Clark. In essence, the then executors, including the first defender, entered into missives to sell Leckiebank Farm to third parties. Those third parties subsequently granted an assignation of their whole rights in the property to the first defender as an individual. The three children of the first marriage successfully obtained reduction of that pretended assignation on the basis that Mrs Anne Clark had been acting auctor in rem suam. Mr Connal asserted that while the first defender had been found to be auctor in rem suam in that particular context she could not be regarded as such at any time after her resignation as an executor on 25 August 1986 as the concept can only be applied to a trustee or executor.

[8] The second reported decision emanating from this troubled estate was Sarris v Clark 1995 SLT 44, a decision of the Second Division of the Inner House. In that case the three children sought to reduce an agreement whereby Mrs Anne Clark was entitled to compensation for renouncing the said agricultural lease so that the farms could be sold. The children sought declarator that Anne Clark had again been auctor in rem suam and repayment of the compensation payable to the outgoing tenant to the trust estate. At procedure roll the Lord Ordinary had allowed a proof before answer on the application of the doctrine of auctor in rem suam because the situation where the second wife was both executor and beneficiary had been created by the testator, James Clark. The children's reclaiming motion was refused, as Mrs Anne Clark's pleadings contained sufficient to leave it open to the Court after proof to hold that the doctrine of auctor in rem suam did not apply if the late James Clark had, as testator, foreseen a conflict of interest and nevertheless saw fit to appoint his wife as executor. It was also noted that restitutio in integrum was not possible in light of the sale of the farm to third parties and accordingly the remedy of reduction of the agreement in compensation was not open to the children of the deceased. Ultimately the Sarris v Clark case settled as part of a global settlement between some of the parties involved in this dispute and no proof before answer was ever held.

[9] Mr Connal took me to the report of James Macfie, the original judicial factor appointed in 1999 and 2000. That report is lodged at 6/10/14 of process. The cover of the report sets out in full the interlocutor of Lord Dawson of 27 May 1999 which sets out the scope of the judicial factor's remit. After removing Mr Pagan and Mr Patrick Wilson from office as executors the interlocutor provides as follows:

"... directs the interim judicial factor to receive representations from the petitioner and any other interested party and to investigate transactions effected in respect of the executry estate and to report on possible action to restore the estate to solvency".

[10] Mr Connal noted that Mr Macfie's report and appendices are incorporated into Mrs Pentland-Clark's pleadings. It was suggested that it would be difficult for her to argue anything contrary to the terms of that report. Mr Connal contended that as there was only one creditor left by the time of the appointment of Mr Macfie, all other beneficiaries having settled following mediation in 1997, Mrs Pentland-Clark as the current judicial factor had no locus to open up previous transactions such as the letter of waygoing (the agreement whereby Mrs Anne Clark received compensation as outgoing tenant of the farms) or the Minute of Agreement reached in 1997 after mediation. My attention was directed to paragraph 10 of Mr Macfie's report (pages 11-12 thereof) dealing with the administration of the executry. Mr Macfie concluded -

"at the outset the conduct of the administration of the estate was unsatisfactory. The executors failed to act in a proper and equitable manner".

There follows a list of six ways in which the executors' conduct was lacking. The various disputes between the children, the executors and Mrs Anne Clark are summarised at paragraph 11 (pages 11-19 of the report) and the terms of the mediation settlement are also noted.

[11] The conclusion of Mr Macfie as judicial factor was that a payment should be sought from the executors, Mr Pagan and Mr Patrick Wilson, as individuals, jointly and severally of such sum as was necessary to restore the estate to solvency, in light of their failure, when executors, to fulfil their duty not to distribute the estate without settling with all creditors. Mr Macfie further concluded that Mr Pagan and Mr Patrick Wilson knew from about October 1997 that the funds in the estate would be insufficient to meet the claim by Mrs Pentland-Clark qua creditor and that they had failed to take steps to recover payments made to the beneficiaries in 1990. Further, criticism was made of the terms of the mediation agreement which provided that no further sums would be due to the executry estate by any beneficiaries for any reason whatever (including any sum due by Anne Clark in respect of rent for the fruits of occupation of the farms of Pitlochie and Leckiebank). The executors had accordingly deprived themselves in the 1997 agreement of the right to recover payments already made to the beneficiaries.

[12] In these circumstances, Mr Connal argued that the appropriate remedy of the current judicial factor was, as suggested by Mr Macfie, against the former executors who depleted the estate such that it became insolvent and unable to pay the remaining creditors. He argued that the first defender was not liable in that respect because any insolvency arose long after she had resigned as executor. This Court action was raised by Mr Macfie as judicial factor albeit subsequently and radically amended by Mrs Pentland-Clark after her appointment in 2007. When the action was raised it was sisted but in its original form it focused only on restoring the estate to solvency to deal with the remaining creditor's claim. The first defender, Mrs Anne Clark, was not brought into these proceedings until 2008. Any legitimate criticism the pursuer has can only be made against the third and fourth defenders, Messrs Pagan and Wilson. Reference was made to the decision of the Inner House in the previous proceedings by Mrs Pentland-Clark qua creditor already referred to at paragraph [1] above.

[13] Mr Connal made certain remarks about the pursuer's title and interest to sue. He argued that she proceeds on an assertion that she is under an obligation as judicial factor to embark upon challenges in this action as if the mere fact of her appointment inevitably obliged her to do so. He contended that was wrong because (1) there is no such general obligation on judicial factors per se. Judicial factors are used in a variety of circumstances and their obligations take their colour from the circumstances of the appointment and (2) this particular judicial factory cannot exist in a vacuum. Its only obligation is to the pursuer as creditor. An attempt to recover money to meet the claim of that creditor may be relevant but nothing else was. The obligation to investigate, initially imposed on Mr Macfie in 1999 had to be read in the context of the only relevant outstanding claim. Lord Glennie's interlocutor of 13 March 2007, appointing Mrs Pentland-Clark as the new judicial factor, adds nothing to the scope of the duties of the current judicial factor which derive from the original interlocutor of 27 May 1999. It should not be assumed that Mrs Pentland-Clark has any powers other than those given to Mr Macfie.

[14] Under reference to the Closed Record (as amended) Mr Connal identified the events of 1997 as those creating the problem. Those averments commence at page 65-67. There are further averments at page 79. It is there averred that Messrs Pagan and Wilson agreed in 1997 that no sums would be due from the beneficiaries to the estate and specifically that no sums were due from the first defender for her occupation of the farms and that in doing so the former executors breached their duties to the lawful creditors and rendered the estate apparently insolvent, leading to sequestration. Thus the claim for payment lies against those who were executors at that time, if that is the event that creates the insolvency. The first defender's role at mediation was to protect her interests qua beneficiary and she could not be criticised for doing so.

[15] Under reference to Neilson's Executors, Petitioners 2002 SLT 1100 Mr Connal also pointed out that this Court made no decision about what executors should do in relation to the potential liabilities of estates for Lloyds' debts until after the period in question. In that case, the executors of a former underwriting member of Lloyds of London raised a petition for directions. They sought the Court's approval to distribute that deceased's estate without making any retention or further provision for the potential claims in respect of any insurance or re-insurance contracts underwritten by the deceased as a member of Lloyds. The petition was granted on 25 June 2002. In the Opinion of the Court, reference was made to the liability of trustees or executors to replace what they have paid away to the prejudice of creditors (page 1102K-L). It was said that in the action she took qua creditor Mrs Pentland-Clark had been criticised for her "scatter gun" approach. Mr Connal contended that she was taking a similar approach in these proceedings. She has a total of nine conclusions including one for a large capital sum. Mr Connal submitted that as she has identified a point at which there was enough money in the estate which was wrongly paid by the former executors to beneficiaries, any claim should be restricted to that chapter.

[16] The pursuer has a number of conclusions for declarator, production and reduction. These are the first, third, fourth, fifth, sixth, seventh, eighth and ninth conclusions. Mr Connal attacked the relevancy of all of these.

[17] In relation to the "letter of waygoing", which was the agreement of 12 September 1989 in terms of which the first defender received compensation as outgoing tenant, it was argued that the auctor in rem suam rule could not apply because the late James Clark had put Mrs Anne Clark in the role of both executor and beneficiary in a way that would conflict. In any event Mr Connal argued insofar as reduction was sought that it was not possible where restitutio in integrum is not possible. It was not now possible he said to reduce the letter of waygoing in terms of conclusion 6 and because farms had been sold and beneficiaries paid out. In any event, even if it was possible to effect restitutio in integrum reduction is an equitable remedy and the long period of time that had passed without reduction being sought should be taken into account. The case of Boyd & Forrest v Glasgow & South Western Railway Company 1915 SC (HL) 20 was also referred to in support of the proposition that reduction was not available as a remedy where restitutio in integrum was impossible. While there may be other remedies available to the pursuer in the form of damages all of her claims for reduction were irrelevant.

[18] Mr Connal then turned to what he referred to on a number of occasions as the "first year law student point". This was the question of whether any attack could be made on the lease signed by the late James Clark within hours of his death. The argument on Record for the pursuer was that the lease was void ab initio because title to the farmlands over which the late James Clark purported to grant an agricultural lease were in the name of The Clydesdale Bank. The averments in question are at article 2.1(a)(i) of condescendence entitled "The Heritable Estate" running from page 17 through to 20 of the Closed Record (as amended). Those averments set out part of the terms of the two dispositions in question (nos.6/10/6 and 6/10/7 of process) which on their face dispose both the farm of Leckiebank and the lands of Upper Pitlochie respectively to The Clydesdale Bank. Mr Connal asserted that these dispositions were clearly dispositions ex facio absolute but truly in security for debts due by the late James Clark to The Clydesdale Bank. As The Clydesdale Bank had a security interest only that did not make any act of a proprietor null and void. Reference was made in this connection to Ritchie v Scott (1899) 1F 728 at 736 and Edinburgh Entertainments v Stevenson 1926 SC 363 at 375. These authorities supported the contention that a disposition ex facie absolute but truly in security did not render a lease invalid. If it had been possible to attack the lease that would have had to have been pursued in an action of reduction which is not now possible. Any objection taken to any of the earlier transactions should have been so taken by the beneficiaries who had raised certain litigation which had already been dealt with. There was no basis according to Mr Connal for the pursuer now seeking to overturn any of those disposals. He described this as "almost a res judicata point". He pointed out that the plea of res judicata was to avoid more than one litigation on the same point between the same parties. In support of the eighth plea in law for the first defender he said that he did wish to insist that a final disposal of claims by the beneficiaries to this estate was res judicata in a question between the pursuer and the first defender and that the action could also be dismissed on that basis. He said that only the beneficiaries could challenge the allocation of the moveable estate and that in 1997 the pursuer was not a creditor and was owed nothing. He argued that the pursuer as the current judicial factor simply could not go beyond the previous judicial factor's investigation and challenge matters of new. The global agreement reached at mediation in 1997 had been implemented by disposal of the various proceedings. In relation to conclusion 7 which seeks to reduce that agreement, Mr Connal argued that all parties had not been called because these proceedings had not been intimated to the three children of the first marriage. In any event it could not be reduced because it too has been implemented by the making of payments and the disposal of actions.

[19] Certain arguments were made on behalf of the first defender in relation to prescription. It was said that the one notable difference between the first defender and the other defenders is that the first defender was not introduced into this action until more than 20 years after she had resigned in 1986. The only matters in this context that would not prescribe after 20 years would be (1) the production of accounts and (2) a fraudulent breach of trust. The complaint against the first defender is that she became a tenant at the hand of her late husband. Any negotiations since his death were not a breach of anything because the situation had been created by the testator (Sarris v Clark cited supra). The question was what if anything was said to have been done by Mrs Anne Clark in 1986. Reference was made to the Prescription and Limitation (Scotland) Act 1973, Schedule 3(e)(i). That provision is included in a list of imprescribable rights and obligations for the purposes of section 7(2) and 8(2) of and paragraph 2(h) of Schedule 1 of the 1973 Act. Schedule 3(e)(i) provides that any obligation of a trustee to provide accounts of the trustee's intromissions with any property of the trust is imprescribable. However, that obligation is simply to produce accounts and not to provide an accounting in the manner sought by the pursuer in this action. So far as Schedule 3(e)(ii) was concerned, only fraudulent breaches of trust to which the trustee was a party or was privy are imprescribable and it could not be said on the pursuer's averments that there was anything approaching that here. So far as (e)(iii) was concerned, an obligation of a trustee to make forthcoming to any person entitled thereto any trust property or the proceeds of any such property in the possession of the trustee had no relevance to the current case. In short, there was nothing that had not prescribed that the first defender could be brought in to answer. While Mr Connal accepted that prescription is often a matter of fact, he submitted that in this case the prescription argument could be dealt with under this plea to the relevancy.

[20] Reference was also made to averments at article 2.1(a)(i) of condescendence at page 20-21 of the Closed Record (as amended). These averments appear to raise a question of "undue influence" in relation to the documents signed shortly before James Clark's death, namely the lease and the partnership agreement. On their face those averments were said to do no more than raise a question of such undue influence (by the first defender). They were insufficient to make a case that the documentation had been signed as a result. Mr Connal referred to other passages in the Closed Record where attacks were made on the division of the moveable estate, the letter of waygoing, the alleged gratuitous alienations and the contentions that the first defender was acting as auctor in rem suam in relation to the sale of Leckiebank, a matter which he said was clearly res judicata in terms of the decision in Clark v Clark's Executors 1989 SLT 665..

[21] In summary Mr Connal invited me to sustain his third plea-in-law and dismiss the action insofar as directed against the first defender.

Submissions for the second, third and fourth defenders

[22] Mr Clark Q.C. made a motion for dismissal in terms of the first plea-in-law for each of the second, third and fourth defenders, which failing for deletion of the irrelevant averments and claims. At the outset of his submissions Mr Clark indicated that he was adopting in large measure Mr Connal Q.C.'s submissions subject to three caveats:-

1. He accepted that on the issue of what the real point to be litigated between the parties was, there was a potentially relevant case in relation to whether or not the former executors have personal liability for rendering the estate insolvent. His argument was that such a potentially relevant case was not relevantly pled and that in any event all other claims could be shown to be irrelevant.

2. To the extent that Mr Connal argued that it was not open to the pursuer's judicial factor to bring an action of this sort, Mr Clark Q.C. clarified that he could not go as far as Mr Connal's submissions on that, given that the Court had appointed Mrs Pentland-Clark as judicial factor with all the usual powers.

3. So far as res judicata was concerned, Mr Clark Q.C. also conceded that he could not go so far as to say that the claims being made by Mrs Pentland-Clark in her new capacity as judicial factor were res judicata.

[23] Mr Clark sought to make a number of general observations. He said that the approach being taken by the present pursuer was not to seek to recover anything from the children beneficiaries of the late James Clark's estate notwithstanding that the payments to beneficiaries criticised by Mr Macfie included significant sums paid to them. As a further comment, he noted that while the lease and partnership sought to be reduced were referred to as "death bed documents" the late James Clark had also signed a trust deed in favour of his son James at around the same time which the pursuer chose not to challenge (see judicial factors report 6/10/14 p.3). Attention was also drawn to the mediation settlement which had resulted in not just the minute of agreement that the pursuer seeks to challenge by way of her conclusion for reduction but also a separate minute of agreement between the children and the first defender in terms of which the children received sums of money. He invited me to take into account that this process is not an attempt by a judicial factor to recover from the executry estate but that it is primarily an attempt to recover sums from the first defender. I was also asked as a general point to take into account that the pursuer appears to have no compunction about making serious allegations of fraud against officers of Court. He submitted that her pleadings should be approached as those of any pleader in this court would be scrutinised and no allowances should be made for her lack of legal representation.

[24] Thereafter Mr Clark presented his submissions in four chapters:-

a. The factual and legal basis upon which the pursuer challenges the various transactions.

b. Gratuitous alienation.

c Undue influence.

d Pleadings and personal liability of former executors.

Factual and Legal Basis for the Pursuer's claims

[25] The attacks made by the pursuer in her pleadings related to a number of payments made from the executry estate. First there was the making of payments to the first defender for giving up the agricultural tenancy. Secondly the £185,000 representing the partnership moveables was said to be wrongly transferred to her and thirdly the £100,000 attributed to her in terms of the mediation agreement was said to have been wrongly paid. The last payment of £100,000 in terms of that mediation agreement was important in that, if it was that payment that caused the insolvency of the estate, it was difficult to see how anything prior to that time could have caused the insolvency.

[26] It was argued that the principal point advanced by the pursuer in the pleadings seemed to be that the lands that were the subject of the lease of 3 December 1985 were the property of the bank. The former judicial factor Mr McPhee Macfie whose report is incorporated into the pleadings makes clear at page 4 of his report that the dispositions granted by the late James Clark in favour of the Clydesdale Bank were in security. Reference was also made to 6/10/9 of Process which contains "back letters" in the form typical of the time, signed by the proprietor and confirming that while he has delivered dispositions in favour of the bank, that those dispositions, while ex facie absolute were actually granted in security. The production 6/10/9 of Process contains such explanatory letters in relation to both Leckie bank and upper Pitlochie. Mr Clark agreed with Mr Connal's submissions that there was no doubt that a proprietor in such a situation could competently grant a lease (Ritchie v Scott). However there was also reference to a written undertaking granted by the late James Clark on 22 October 1954 (6/10/8 of Process) in terms of which Mr Clark appeared to have undertaken to the Clydesdale Bank that he would not grant "leases or other rights of occupancy or possession of the said subjects or parts thereof" without having first obtained the consent of the bank in writing. It was argued that if the lease had been granted in breach of that undertaking it would make no difference other than in a question between the bank and the proprietor. The lease might be voidable at the instance of the bank but it was otherwise valid. Mr Clark submitted that most of the pursuer's conclusions were based upon the erroneous assertion that the late James Clark had no title to grant the lease in question. In any event, he submitted, the real question arose about whether any of the pursuer's conclusions for reduction could now be granted given that restitutio in intergrum may be impossible. So far as the 1997 agreement reached after mediation was concerned, decrees of absolvitor had been granted in the various processes. In relation to the other documents, matters were even further removed, the farms had been sold, the payments in respect of outgoing tenant made and the Court must take a practical approach to the matter. Mr Clark did accept in the course of discussion that resitutio would perhaps not be impossible but he maintained that it would certainly be difficult and impractical. He also pointed out that the pursuers'pursuer's pleas-in-law suggest that matters such as the disposals of litigations by the children and the first defender could be set aside ope exceptionis which would not be the appropriate way of unravelling decrees of absolvitor. There would require to be ancillary conclusions for the reduction of those decrees. So far as the attack on the £185,529 having been given to the first defender as the deceased's share of the partnership business, the ultimate result of the mediation agreement was that it was recognised that the first defender should only have had to repay half of that to the estate in light of the fact that she too had been a partner in the business at the time of death. She had been "deprived" of the money since 1989. Accordingly an amount of interest was added to the one half share that she had been so deprived of and the sum of money of £100,000 was paid to her not as a creditor but as a beneficiary in the estate. It was not for the pursuer to seek to go beyond the object of her appointment by attacking such transactions. Reference was made to Browning's Judicial Factor Petitioner (1905) 7 F 1037 at 1040.

[27] Mr Clark reiterated Mr Connal's contention that the only outstanding claim on this estate is that of Mrs Pentland-Clark as a creditor. He submitted that the clear theory behind Mr McPhee's Macfie's report was that the only problem he could identify was that payments to beneficiaries were made where creditors were outstanding. On that basis, he had no difficulty with the principle that those former executors could now be sued as individuals. It was however inappropriate but, albeit not incompetent, that the present judicial factor should be going way beyond the route chosen by her predecessor.

Gratuitous Alienations

[28] Mr Clark noted that gratuitous alienations were a repeated theme in the pursuer's pleadings. Reference was made to the text McBride, Bankruptcy (2^nd Edition, W. Green 1995). In that text at chapter 12 paragraph 29 the detailed requirements for fraudulent alienations in this context are set out. Under the common law those requirements are in summary (1)  there must be prejudice to creditors, (2)  at the time of the transaction the debtor must be insolvent or about to become insolvent, (3)  it is not necessary that the transferee should be aware of the debtor's insolvency although that may be a method of proving fraud, (4)  if the transferee colludes with the insolvent that is one element in fraud, (5)  the debtor must be conscious of his insolvency, (6)  the debtors actions must be voluntary, (7)  the debtor can carry on ordinary acts of administration of affairs until the debtor has decided to take steps or hand over the administration of affairs to the benefit of creditors and (8) in general the transaction challenged must be fraudulent.

[29] Mr Clark accepted that it would be sufficient for the pursuer to say that the estate was reduced to a state of insolvency by the transaction in question (McCowan v Wright (1852) 14 D 968). However, the state of insolvency was not sufficient to make out a case of fraud. Reference was made to Whatmough's Tr v British Linen Bank 1934 SC (HL) 51, referred to in Nordic Travel Limited v Scotprint Limited 1980 SC 1. In Nordic, the Lord President, referring back to Whatmough's Tr, approved the principle that payments in cash of debts due and payable in implement of ordinary business transactions between the debtor and his creditors, implement of which is due and prestable do not constitute illegal preferences and are thus not reducable at common law. On the other hand, a payment made before any debt or performance is due and payable or due and prestable is reducable as an illegal preference if that payment is made by the debtor voluntarily, during insolvency and while he is conscious of his insolvency.

[30] Accordingly, the issue that arose was whether or not the £100,000 payment to the first defender in 1997 fell within the "cash payment for a debt" exception to illegal preferences. So far as the former executors were concerned, the payment of £185,000 that Mrs Anne Clark had repaid to the estate was an error at least to the extent of one half. Accordingly, she had been due that sum for some years prior to the repayment of half of it with a little interest to her in 1997. At page 26 of his report, Mr McPhee Macfie had narrated that this was the basis of the payment of £100,000 to Anne Clark in 1997. In the opinion of the Inner House in the case raised by the present pursuer as a creditor, (Pentland-Clark v Wilson and Others 2009 CSIH 48) it was said that no relevant case relating to a fraudulent preference had been pled on record and reference was made both to the judicial factors' report and the case of Nordic Travel Limited v Scotprint Limited (supra) ( [2009] CSIH 48 at para 46). Of course, in that case the present pursuer had no conclusion for reduction of any transaction described as a fraudulent preference as distinct from the current case.

[31] In any event, Mr Clark argued that the point in time at which there is said to be an insolvency resulted in all attacks on previous transactions being irrelevant. The first time at which insolvency could be said to have been a problem was in 1997. Further, on page 59 of the closed record (as amended), the pursuer pled that the estate was sequestrated in March 1999 "upon discovery of the estate's insolvency", albeit that at page 101 the allegedly gratuitous payment is said to have been made in November 1997. In summary the following five attacks could be made on the case for gratuitous alienation:-

(a) On any view the 1989 payments could not be a gratuitous alienation given the requirements for that referred to above

(b) There are no averments on record to say how the estate was insolvent. There is a reference at page 4 of the judicial factor's report to the sum of £115,000 being included as the debt to Mrs Pentland-Clark as creditor but the pleadings contain no averments of what that debt was worth in 1997 as compared with the value of the estate. It was insufficient, it was submitted, that the executors knew that they could not pay all creditors.

(c) The payment of £100,000 to Mrs Anne Clark on the face of it fell within the "cash payment for a debt" exception referred to above.

(d) The argument could be extended further to question whether the payment to Mrs Anne Clark had truly constituted a debt or whether it was her money that the executors had been holding on to in error and thus required to repay to her.

(e) An examination of what would require now to happen if there had been a gratuitous alienation in 1997 facilitated against the remedy. There would require to be a reduction of the 1997 agreement and the recipient of the money (Mrs Anne Clark) would require to return the money to the estate.

[32] Under reference to McBride on Bankruptcy (at paragraph 12-51) Mr Clark noted that a fraudulent transaction is voidable until challenged. Restoration in this case would be by the recipient, the first defender. A number of passages in the Closed Record (as amended) which sought to attack earlier transactions as gratuitous alienations clearly would require to be deleted - see for example Article 5 at page 68 and Article 8 where the £318,000 is referred to as a gratuitous alienation. Mr Clark also noted that at page 28 of the original judicial factor's report it was recorded that on 5 April 1990 the executors had sufficient income to meet the payments to Mrs Pentland-Clark as and when they fell due. It seemed to be the legal expenses and other payments subsequent to that that caused the problem.

Undue influence

[33] Mr Clark adopted Mr Connell's submissions that the averments at page 20 of the Closed Record did no more than raise questions or cast doubt on the circumstances surrounding the signing of the lease and the partnership agreement. Such averments were wholly inadequate foundation for an undue influence case. Again it was pointed out that the trust in favour of a son of Mrs Pentland-Clark and the late James Clark was not challenged, albeit that it had been signed at the same time. Reference was made to 6/10/10 which was a copy of the contract of co-partnery. It was submitted that the clear purpose of signing that document was to reduce the arrangements of a pre-existing partnership to writing. None of the other documents referred to suggest undue influence. Reference was made to 6/10/12 of process, documents in which suggest that all matters were discussed and agreed with James Clark before he signed them. In short, no case of undue influence appears on record.

Pleadings and personal liability of former executors

[34] Mr Clark referred to various aspects of the pursuer's pleadings and divided them into chapters. He contended that each section of the pursuer's pleadings was irrelevant for the reasons already stated. The chapter on "The Heritable Estate" dealt with the ex facie absolute disposition chapter which he had already submitted was irrelevant. All of the averments relating to documents emanating from a period earlier than 1997 were irrelevant for the reasons given above. So far as the chapter on moveable estate was concerned (2.1(a)(ii)) these were all irrelevant standing the terms of the judicial factor's report. The averments at page 29B-D are relative to the 1997 agreement related to the allegation that it was a gratuitous alienation which again were irrelevant for the reasons stated. The chapter on knowledge of the executors (2.1(b)) referred back to the lease.

[35] In the course of discussion reference was made to page 34 of the Closed Record as amended where the pursuer asserts that she tried to intimate this action to the other beneficiaries, namely the children but that that motion was opposed and ultimately refused. Mr Clark was unable to explain precisely how that had come about, although it was not ultimately disputed that the position averred by the pursuer in that respect was accurate. The other parts of Article 2 of Condescendence were also said to refer to irrelevant matters. The chapter on misdirection by the executors (para. 2.1(c)) related to a number of general points and was not truly directed at any of the conclusions. In Article 2.1(d) "Breach of Trust" again raised the title point in relation to the lease already referred to. Article 2.1(f) headed "Breach of Trust of Executors" raised the gratuitous alienation points which had been answered and Article 2.1(g) was merely a summary of what went before.

[36] Mr Clark submitted that the whole of Article 3 of Condescendence was irrelevant until page 55(iv) where the 1997 agreement is pled. The first part of those averments were said to be irrelevant as they related to the Sarris v Clark argument. However, on an esto basis, Mr Clark accepted that if any passage of Article 3 of Condescendence was found to contain relevant averments of gratuitous alienation then these could remain on record. Then Mr Clark went on to argue that the averments in relation to legal expenses from page 56 were irrelevant.

[37] Turning to Article 4 of Condescendence, this dealt with the Minute of Agreement with Mrs Pentland-Clark in 1977. The pleadings contain an averment that upon James Clark's death Mrs Pentland-Clark's claim became a due and exigible one due to her as creditor. Further, under reference to Costain v SRU plc 1993 SC 650 it was argued that Mrs Pentland-Clark could not at the time of James Clark's death sue for the ongoing aliment payments as a capital debt. Matthew v Matthew's Trustee (1907) 15 SLT 326 was also cited as authority for the contention that aliment cannot rank as a capitalised claim in a sequestration. That apart, the rest of Article 4 was said to be irrelevant.

[38] So far as Article 5 of Condescendence was concerned these focused on the payments made in 1989. Mr Clark accepted that those payments could found a claim against the executors as individuals in respect of the payments they had made to beneficiaries. However as the present pursuer eschews any idea of a claim against the executors as individuals the mere fact that the previous judicial factor did so should not influence matters. The pursuer's present proceedings required to be scrutinised to see whether there was an appropriate conclusion and supporting averments.

[39] Mr Clark conceded that it would have been easy for Mrs Pentland-Clark as judicial factor simply to sue for the loss arising for through the previous executor's payments to beneficiaries. He speculated that she may not have done so because some of the payments were to the children beneficiaries.

[40] So far as Article 6 of Condescendence was concerned the averments there related to an alleged gratuitous alienation in 1989 which was clearly irrelevant. Article 7 of Condescendence purported to introduce a Partnership Act claim. It was submitted that the office of executor is personal - Currie on Confirmation of Executors, paragraph 1.15. It was submitted that in this context the pursuer cannot seek to make a partner of the former executor liable as the obligations lie with that executor as an individual. In this context the second defender was distinct from the third and fourth defenders. Article 8 was again dependent upon the payments to the first defender being gratuitous alienations. Article 9 contained only the proposition that the executor stood in the shoes of the deceased and owed Mrs Pentland-Clark a debt. So far as Article 10 was concerned the second defender required to be excluded from the ambit of those averments for the reasons already stated. Article 11 was said to stand or fall on whether the 1997 agreement could be opened up. Article 12 of Condescendence A-D contained further averments relating to the £100,000. Finally on the pleadings it was said by counsel that the fifth and sixth defenders would deal with Article 13.

[41] Mr Clark concluded his submissions by arguing that the pursuer's set of claims was dependent upon an irrelevant legal and factual basis. He accepted fully that the law gave rise to an articulable and relevant case for a much smaller sum against his clients. Such a claim was not articulated in the current pleadings. He noted that the conclusion for payment in Conclusion 2(b) was made out on a joint and several basis. He said that it was difficult to tease out what could be left in the pleadings and if his primary submissions were accepted. He wished to adopt in advance the submissions to be made by Mr Dunlop.

Submissions for the fifth and sixth defenders

[42] Mr Dunlop first pointed out that the fifth and sixth defenders were in an entirely different position to the others and that with one exception he could not adopt the previous submissions. The one exception related to vicarious liability in which he and the other defenders were at one albeit that he would present the main argument. He submitted that there can be no vicarious liability for the actings of the previous judicial factor and on that basis he invited me to sustain the first, second and third pleas-in-law for the fifth defender and the second plea-in-law for the sixth defender and have the action against them dismissed. It was pointed out that this action was raised in 2003 against the second, third and fourth defenders by Mr Macfie who died in 2006. The present pursuer has convened the Royal & Sun Alliance as Mr Macfie's cautioners, together with the solicitors acting for him when the action was raised. To do so was incompetent and irrelevant on a number of bases. In this connection Mr Dunlop made five over arching submissions as follows:-

1. That the action purports to be an action of accounting where no duty to account exists. The only conclusion concerning the fifth and sixth defenders is conclusion 2 which is effectively for count, reckoning and payment. The obvious and fundamental problem is that neither the fifth nor sixth defenders have ever held the fund in question, being the cautioners and solicitors respectively. Neither of these defenders had intromitted with the estate. Mr Macfie intromitted as judicial factor. The fifth defenders plainly did not do so and the sixth defenders, while they received monies due as payees, did not intromit with the estate funds. Under reference to Hutcheson v Taylor 1931 SC 484, Mr Dunlop submitted that the office of executor is personal and accordingly, neither the fifth nor sixth defenders could be said to have intromitted and thus there is no basis for an accounting. In Huewind Limited v Clydesdale Bank plc 1996 SLT 369 at page 373 the basis a claim for count, reckoning and payment is set out. It is plain from Huewind that a claim cannot be made in a situation where no funds have been held.

2. In any event the pursuer has had an accounting so far as Mr Macfie's actings are concerned. The issue is what Mr Macfie did as judicial factor. Reference was made to the Judicial Factor Acts of 1849 and 1889. The 1889 Act made the 1849 Act applicable to all judicial factors. Section 4 of the Act provides that accounts must be lodged with the Accountant of Court once per year and section 13 confirms that those accounts must be audited. Section 15 of the Act provides that the Accountant of Court's report is conclusive against the judicial factor and the cautioner and there is a provision for objections at the end of section 15. Section 17 makes provision for opening up the accounts. There is no suggestion in this case that accounts have not been produced and audited. A letter to that effect was produced from the Accountant of Court dated 23 April 2007. Thus the only remedy would be under Section 17 of the Act. The case of Cormack v Simpson's Judicial Factor 1960 SLT 197 was authority for the proposition that an action of count reckoning and payment against a judicial factor was incompetent to open up accounts where those accounts have been properly lodged (Cormack, supra at 199).

3. The pursuer makes claims against the defenders on a joint and several liability basis. The pecuniary claim is for £2.57 million. It was noted that that claim was not made against the sixth defenders albeit that the cautioners were so sued. The sum sought must be in damages. In Article 14 of Condescendence it was averred that there was £150,000 in the estate as at May 1999. What the pursuer is effectively pleading is that Mr Macfie is jointly and severally liable with the executors however under reference to Barr v Neilson (1868) 6M 651 at 654 it was contended that it was incompetent to sue jointly and severally for two separate wrongs. In any event a judicial factor is not jointly and severally liable with co-trustees - see Trusts (Scotland) Act 1921, section 3(d). It was accepted that the cautioners are liable to the same extent as the judicial factor albeit limited to the value of the bond which was £124,000 (see Closed Record, as amended page 92F). However, the pursuer has no cause of action against the insurer as the insurer was not the alleged wrongdoer who would be the only party capable of being sued.

4. Mr Dunlop argued that there was an inherent contradiction in the pursuer's claim. She attempts to sue the first four defenders for a number of failures which resulted in a depletion of the creditor's (Mrs Pentland-Clark's) claim. Then she attempted to sue Mr Macfie for failing to raise proceedings but as was apparent from this process he had done so. The question that must be asked is what loss has been occasioned by Mr Macfie's actings? If the claim raised by him is good the present pursuer will succeed. If his claim was bad then no loss arises. In summary, Mr Macfie did what he set out to do. The present pursuer appears to argue that Mr Macfie should have advanced other claims which she now puts forward. She has been allowed to amend the pleadings and insert those claims. They will stand or fall on grounds of relevancy.

5. So far as the argument against vicarious liability for the actings of a judicial factor was concerned, this had been argued in the Inner House in the case of Pentland-Clark v Wilson &c [2009] CSIH 48 but no view had been expressed.

[43] Mr Dunlop argued that the appointment as judicial factor was a personal one and that no vicarious liability to partners of the late Mr Macfie could attach. Reference was made to the Stair Memorial Encyclopaedia section on judicial factors where it is made clear that they are officers of Court. At paragraph 241 of that chapter it is made clear that a judicial factor cannot be a company or partnership only an individual. At paragraph 243 it is noted that a conflict of interest with the ward must be avoided. There is further mention of the judicial factor being precluded from delegating his duties and at paragraph 246 it is said that judicial factor is similar but not identical to a trustee. It is noted that where there is power in the will of the deceased for professional remuneration to be made there was no difficulty with solicitors instructed by judicial factor to be paid. Turning to the bond of caution, it is clear that it covers a breach of duty by the factor alone. The partners of a factor are not covered by the bond of caution. It might be said that professional indemnity insurance covers it but if so the point of the bond of caution would require to be questioned.

[44] So far as the liability of partners is concerned Section 12 of the Partnership Act 1890 makes clear that liability has to be under Section 10 or Section 11. Section 10 refers to a partner acting in the ordinary course of firm business. It was contended that being a judicial factor is clearly quite separate from that. When a judicial factor reports to the Court he does so in his own name without any reference to the partnership in which he happens to be a principal. An analogy was drawn with part time judiciary, in particular part time Sheriffs who may be partners in law firms. When they sit in their judicial capacity, they do so purely as individuals and not as partners of the firm. In the case of Walker &c v Stones and Another [2001] QB 902 the Court of Appeal considered whether vicarious liability attached to the partners of a solicitor trustee. While that case primarily concerned the operation of Section 13 of the 1890 Act and the alleged improper employment of trust property for the benefit of the trustee's firm it was submitted that the reasoning at pages 947-951 was pertinent in support of an argument that any attempt to say that the sixth defender in this case would be liable for the actings of Mr Macfie, his former partner, is irrelevant as a matter of law.

[45] Mr Dunlop referred to Article 13 of the Closed Record (as amended) and argued that the reduction conclusions in the pursuer's case were of no interest to the fifth and sixth defenders. At page 81D, there is an averment that the late judicial factor delayed to act in fulfilment of his proposal to seek payment from the second, third and fourth defenders to restore the estate to solvency. Mr Dunlop pointed out that, notwithstanding that complaint, there were no corresponding averments of loss on record. Further, in relation to averments of a wrongful refusal by Mr Macfie to pay Mrs Pentland-Clark as an individual creditor and her complaining of his actions in petitioning the Court for directions (pages 81D-86E), these appeared to put forward a claim of a wrongful defence by Mr Macfie of Mrs Pentland-Clark's claims as a creditor. Various points were made in relation to that:

[46] It was said that this part of the action is a clear attempt to review accounts lodged by the judicial factor, the remedy for which would lie in Sections 15 and 16 of the 1849 Act. Insofar as Mrs Pentland-Clark complains that monies were withheld from her as a creditor her own pleadings show why Mr Macfie required to do that. There was a need to wait for the Court's decision on the issue of the problem with Lloyds. Further, Mrs Pentland-Clark had, on her own averments, assigned her rights as creditor in 2002, something that was not fully resolved until February 2004, as explained by Lord Hardie in his decision on 21 May 2004 in the case Joan Pentland-Clark v Mackie and Innes (A1642/03). Mrs Pentland-Clark had no title to sue during the currency of the assignation as it had no reservation in relation to maintenance claims. The retrocession of the assignation was effective from 6 February 2004 and the first payment had been made to Mrs Pentland-Clark by Mr Macfie on 12 February 2004. On that basis it was impossible to see that any loss had been occasioned to the factory by holding on to the money. It was argued that Mrs Pentland-Clark was confusing her capacity as an individual with that of her role of judicial factor.

[47] So far as the issue of the expenses of the petition for directions authorised by the Inner House of 10 June 2003 was concerned, Mr Dunlop argued that that issue could not now be reopened. There was no suggestion or averment that Mr Macfie's actings were negligent i.e. that he acted in a way that no ordinarily competent judicial factor acting with ordinary skill and care would have done - Hunter v Hanley 1955 SC 200. In any event, the issue of Mrs Pentland-Clark's claim for damages against the former judicial factor had been raised and decided by the Inner House in Mrs Pentland-Clark's claim as creditor (Pentland-Clark v Wilson &c 2009 CSIH 48). While it had to be accepted that the point was not strictly speaking res judicata, the dicta of the Inner House at paragraph 48 of that Opinion was directly in point. Lady Paton delivering the Opinion of the Court opined as follows:

"The judicial factor was entitled to exercise his professional judgment when deciding whether or not to commence or continue with litigation. He was entitled to take into account inter alia the funds available in the executory estate and the likelihood of success."

[48] Mr Dunlop argued that while a different judicial factor may take a different view, in the absence of clear averments of professional negligence this aspect of the pursuer's claim was clearly irrelevant.

[49] Mr Dunlop then turned to page 86F-G of the Closed Record (as amended) where there were averments of a breach of fiduciary duties on the part of Mr Macfie. The point was made that Mr Macfie was never removed as judicial factor and again that there were no averments of negligence. In any event, if Mr Macfie chose to pursue lesser claims that those now being pursued by the current judicial factor, no loss arises. So far as the sixth defender is concerned the averments from page 86G onwards are all irrelevant said Mr Dunlop because the sixth defender is not being sued for a sum of money. The point was made that previous solicitors and counsel had chosen to pursue certain claims and Mrs Pentland-Clark as judicial factor is pursing others. Under reference to the averments at page 88B-C, it was submitted that a payee such as the sixth defender does not have a duty to account. It had been noted by the Inner House in the previous case referred to above that the judicial factor was entitled to obtain legal assistance and to make appropriate payment therefor. An account of charge and discharge had been submitted for Mr Macfie and the relative fees of his agent had been taxed by the Auditor of Court, the judicial factor accounts having of course been approved by the Accountant of Court. Mr Dunlop then referred to pages 88C-90B of the Closed Record(as amended) where averments are made complaining of various issues in relation to the delivery of files after the pursuer was appointed, a chapter which was described as "utterly irrelevant". No duty was owed by Mr Innes to the judicial factor and the whole tale amounted to nothing more than that an undertaking was given to deliver all of the boxes of papers and that that was ultimately done. In relation to the complaint at pages 90C-92A about the way in which the judicial factor's accounts were prepared, reference is made by the pursuer to Sections 13 and 17 of the 1849 Act. However, Mr Dunlop argued that any such complaint would require to be made in the factory petition and not in this process. A relevant claim could not be made in this process in relation to those accounts.

[50] Mr Dunlop concluded by summarising separately the arguments for dismissal of the claims against the fifth and sixth defenders separately. So far as the fifth defenders were concerned the points were:

1. The cautioner can be sued but not beyond the extent of the bond. In any event an insurer cannot be sued direct other than as provided by statute.

2. While the judicial factor was under a duty to account neither a cautioner nor a payee owes that duty.

3. It has been judicially determined in the related action - [2009] CSIH 48 at paragraph 48 -that Mr Macfie's payment of legal fees was justified.

4. In the absence of any averments of professional negligence there was nothing on record entitling proof on the issue of improper payment of fees.

5. Insofar as a former executor should have been sued they are now so sued.

6. No basis had been made out for joint and several liability of the fifth defenders.

[51] So far as the sixth defenders were concerned the arguments could be summarised as follows:

1. The payee owes no duty to account.

2. In making an averment about the sixth defenders "being the parties operating the client account" the pursuer confuses intromissions with payment and fails to recognise that only the judicial factor intromitted with the executry funds, not his agents. Her suggestion at page 93B-E that it is the present pursuer's duty as judicial factor to grant a discharge to the previous judicial factor is misconceived, only the Court can grant such a discharge

3. The sixth defenders are not vicariously liable for the actings of the late Mr Macfie in terms of the Partnership Act 1890.

4. As conclusion 2(B) is not directed against the sixth defenders there is no pecuniary claim against them.

[52] Mr Dunlop accepted that it would be impossible for the Court to view the series of litigations in this very troubled situation without regret and sympathy for Mrs Pentland-Clark. However, in the absence of a proper pursuit by her of the claim initiated by Mr Macfie the whole matter should be put to an end.

Submissions for the pursuer

[53] In the course of her submissions in response to the arguments of defenders' counsel Mrs Pentland-Clark tendered four sets of written notes or "scripts" which set out her argument in some detail. I have considered these together with the oral submission made. The pursuer began by addressing the claim being pursued against the previous judicial factor. She noted that after this action was raised it was sisted immediately for further investigations. Mr Macfie took over the judicial factory when the estate had at least £150,000 that could have used to meet creditors' claims. As a general point the pursuer submitted that she could not be restricted by her predecessor's judgement and that she must be in a position to exercise her own.

[54] So far as the title and interest point was concerned the pursuer invited me to consider her twenty first plea-in-law which is in the following terms:

"There is shortfall in the estate to which the pursuer has been appointed judicial factor, therefore the pursuer as judicial factor has sufficient interest to pursue a full and proper accounting from her predecessors in the proper exercise of her full fiduciary powers and duties under statute and common law."

In short, the pursuer's argument was that that plea summarises her answer to the title and interest point. Under reference to the case of Leslie 1904 12 SLT 359 and Irons on Judicial Factors (Green & Sons, Edinburgh 1908) the pursuer submitted that as judicial factor she had a duty to call her predecessor to account and to raise actions to reduce illegal acts. She referred to the removal of the previous executors as a significant prior adjudication by this Court giving rise to the need to scrutinise all previous actings or administration of the estate. Reference was also made to the terms of Mr Macfie's own report at 6/10/14 of process and in particular at page 11 where he found that the administration of the executry by the previous executors was unsatisfactory. A list of wrongdoings listed in that report at pages 11 to 13 made clear according to the pursuer that the previous executors were in breach of trust. It was accepted under reference to Town & County Bank v Walker &c 1905 13 SLT 287 that a creditor must sue in the name of the judicial factor but accordingly, the previous action having been dismissed given that Mrs Pentland-Clark had been suing as qua creditor rather than as judicial factor, this action was now the proper method through which to investigate the previous wrongs and put them put right. In particular, Mrs Pentland-Clark submitted that it was her duty as judicial factor to address, inter alia, the question of what actual transactions took place that rendered the estate without the funds to pay its creditors. Mackenzie Stewart The Law of Trusts in Scotland was also referred to for the list of general administrative duties of trustees. So far as the form of action was concerned, the pursuer referred to Laird v Hamilton &c 1911 1 SLT 27 in support of the proposition that count reckoning and payment could be brought by the trustee of an estate against an executor dative who claimed that there was no more money to settle debts due to creditors.

[55] The pursuer went on to submit that the single most important consideration in the action must be that there is extant an unpaid creditor claim (described in paragraph 45 of the decision at [2009] CSIH 48 as "a rightful debt". An enquiry was necessary to ascertain the total deficiency in the estate arising out of the breach of trust of the previous executors and/or the previous judicial factor. It was the pursuer's duty, she argued, to ingather the debts due to the estate, to restore to the estate the sums which ought to be there but which are absent through the said breaches of trust. It was pointed out that all of the relevant pleas-in-law for the pursuer incorporated the claim that the previous executors had gratuitously and in breach of trust alienated part of the trust estate to a person not in right to receive it, a form of plea taken from Hobday v Kirkpatrick's Trustees 1985 SLT 197.

[56] The pursuer made a detailed submission in an attempt to support her averments that the bank had title to the farm lands in question at the time of the granting of the lease and other documentation by the late James Clark prior to his death. Reference was made to Burnett's Trustee v Grainger 2004 SLT (HL) 513 where, at paragraphs 12 to 19 there is a discussion on the passing of ownership and infeftment to heritable property. The letter of undertaking by James Clark and the back letters numbers 6/10/8 and 9 process taken together with a letter from the Bank of Scotland number 6/10/13 illustrated that there was a real question as to whether the lease was a secure lease. Criticism was made of the previous executors who went to some lengths to support the contention that the lease was valid while not asking for rent. It was clear from the last mentioned letter that the bank indicated that it was unlikely that their consent to the lease would be granted. Accordingly it came to the knowledge of the executors that the bank might sell the land in question. The case of Aberdeen Trades Council v Ship Constructors and Shipwrights Association 1949 SC (HL) 45 supported the proposition that a creditor who holds an ex facie absolute disposition of heritable subjects whether a back letter has or has not been recorded may, unless expressly debarred from doing so, sell the subjects without notice to the debtor. Rimmer &c v Thomas Usher & Son Limited 1967 SLT 7 also related to the obligations of creditors holding dispositions in security to obtain full market price on a sale. In summary, Mrs Pentland-Clark's argument was that the bank denuded themselves of their title to the balance of the land through the delivery and registration of a disposition to the deceased's representatives only in March 1987 and that prior to that they held title to it. It was said that Rankin The Law of Leases in Scotland, Chapter 2 under the heading "Limitation of Title" supported the proposition that a debtor's creditor has an ex facie absolute disposition was never infeft the subjects having been bought with the creditor's money and the infeftment taken in the creditor's name. Accordingly, it was said that contrary to the arguments of the defenders, the first defender had no right or title at all to any of the farm lands until March 1987 and that prior to that it had wrongly been held out that she had a secure agricultural tenancy.

[57] In any event, it was argued that the estate's interest was to maximise the sum realised for heritable estate to the benefit of the estate. The previous executors breached their duty of care to the estate by maximising the tenant's interest which was in conflict with the estate's interest. The payment of compensation at a level of about 40% of the gross value of the heritable estate was a "bad deal" for the estate causing a loss of 40% of the value of the heritage unnecessarily. A number of documents were then referred to support the contention that the previous executors, including the first defender prior to her resignation, took active steps to try to benefit only one beneficiary namely the first defender to the prejudice of others. In particular at number 6/10/15 of process was a minute of the first meeting of the executors on 7 December 1985 where with reference to the children beneficiaries it was noted "better to confuse them with main facts". Number 6/10/18 of process was a letter by the third defender to the chairman of the Clydesdale Bank seeking to prevent the bank from acting to eject the first defender as tenant. Number 6/10/16 of process was a file note by the late Mr J. S. Wilson in which he sets out the potential difficulties with the lease and considers the best way of seeking to avoid a challenge to it. A letter of undertaking drafted by Mr Wilson on 14 January 1986 - number 6/10/17 of process was also referred to in this context, together with an holograph undertaking of the first defender dated 3 February 1986 in terms of which she obliged herself to give vacant possession in the event of a sale of the security subjects. All of these documents are referred to and narrated in part in the Closed Record (as amended) at pages 31-33 in Article 2.1(b) of the pursuer's case.

[58] In addressing the challenge to the "undue influence case", the pursuer referred to 6/10/12 of process which document she said made clear that it was the first defender who instructed the lease and partnership agreement. The first defender collected those documents from the solicitor, the late James Clark being bedridden and close to death.

[59] Reverting to the primary contention that all of the previous executors were improperly motivated, reference was made to the inventory and confirmation of the late James Clark's estate (number 6/19/7 and 8 of process) in which it is recorded that the value of the heritable estate is inserted at a figure that was 33% less than the estimated market value as a result of the said tenancy in favour of Mrs Anne Clark. But, when the sale price received for Leckiebank was £20,000 higher than the £330,000 (prior to deduction for the lease) estimated in the inventory, all of the £20,000 increase was credited to the first defender with nothing being credited to the estate. There was no professional valuation advice to support all of these actions. What the executors did was to retrospectively seek confirmation of their agreement to credit what was now 40% of the gross value to the first defender in order to secure a sale with vacant possession.

[60] All of these actions evidenced dishonesty and an improperly motivated breach of trust that was apparent right up until the resignation of the first defender qua executor in August 1986. Duncan v Newlands (1882) 20 SLR 8 was cited in support of the argument that a representative of a predeceasing trustee was liable for the loss to an estate by an illegal investment notwithstanding that it had been retained by the surviving trustee during that period. In that case it was said that the failure of one trustee to rectify the error of another should not relieve that other of responsibility.

[61] The third chapter of the pursuer's submissions related to the arguments relating to the fifth and sixth defenders. As a general point it was submitted that a judicial factor must settle with his or her predecessors and if necessary take action against them and no special powers are required to do so. The first duty of a judicial factor was to call her predecessor to account - Leslie 1904 12 SLT 359. In relation to payment of outlays, it was argued that a factor cannot appoint himself or any other partner to any office of profit under the factory, such as past agency, and if he does so, the charges of such parties will not be allowed against the estate - Irons Judicial Factors, page 78. Accordingly, if it could be shown that the litigation or other work undertaken by Mr Macfie was improperly undertaken then the expense of that would not be allowed against the estate. When he was made judicial factor permanently in 2000, Mr Macfie should, according to the pursuer, have raised these proceedings immediately. Instead, he had incurred fees of over £50,000 and an accounting was sought to see how those fees were incurred. In 2004 the judicial factor suddenly paid out a lump sum to Mrs Pentland-Clark as creditor. A mention was made at the time of tax and there is no reference to that in the accounts. It was noted that Mr Macfie had instructed an actuary in 2000 who valued the debt due to Mrs Pentland-Clark qua creditor at £205,400. Mr Macfie's failure to pursue matters thereafter required investigation and his death made no difference to that. Irons on Judicial Factors at page 683 confirmed that where judicial factor died a new factor will be appointed to whom the representatives of the deceased factor will fall to account. Reference was also made to Section 10 of the Judicial Factors Act 1889 confirming that a new factor required to investigate the accounts of a former factor and to receive any balance due from his representatives or his cautioners. Again citing Irons Judicial Factors, Chapter 4, the death of the judicial factor was said to be a lapse of the particular officer but not of the office itself. At that point Mr Dunlop interjected and clarified that Mr Macfie has never been discharged as judicial factor. Although the Accountant of Court in a letter number 49 of process has stated that all is in order for his discharge, that has not been done pending the outcome of litigation.

[62] The pursuer argued that the authorities referred to by Mr Dunlop in his arguments for the fifth defenders were not in point. In particular Huewind Limited v Clydesdale Bank and Hutchinson v Taylor (both cited supra) were distinguishable and in any event the fifth defenders as cautioners were in the action under the terms of the bond of caution specifically provided in respect of the liability for intromissions of the late Mr Macfie as judicial factor on the estate. That judicial factor had, by his actions, delayed or breaches in duty should be liable for the losses due to his delay. The loss, according to the pursuer, was interest on the debts not recovered by the previous judicial factor.

[63] So far as the sixth defender was concerned, the main claim related to books and papers of the judicial factory which have allegedly been retained by the sixth defender. The pursuer argued that she was entitled as judicial factor to recover all papers held by the sixth defender in his capacity as law agent to do the factory and litigation work. In answering the point made by counsel for the sixth defender that the Court had approved previous court actions and that accounts approved by the Accountant of Court cannot be opened up (Cormack v Simpsons Judicial Factor 1960 SLT 197), the pursuer contended that the case of Cormack was distinguishable as it related to a judicial factor who remained in office and that it is authority only for the proposition that an action for count, reckoning and payment cannot be competently brought against a factor in office. The pursuer went on to claim that she was not bound by the Accountant of Court's view in relation to the previous judicial factors accounting as there may be issues which would not arise during the course of an ordinary audit. Conclusion 2(A)(b) had been included as a result of the six defender's failure to produce accounts and papers which would show whether or not the work carried out was in the interests of the estate.

[64] In her fourth script, the pursuer summarised her arguments against the first defender's submissions. She reiterated that as judicial factor she had all the usual powers that might be required to restore the estate to solvency. She argued that the 1997 agreement which she sought to reduce was inextricably linked with the 1986 "gratuitous agreement" attributing (at best) a gross overvaluation to the tenancy "rights" and the subsequent "offset" regarding the £185,000 of moveable assets appropriated. Her main complaint about the tenancy was that in light of the fact that it was not a secure tenancy an excessive value had been attributed to it by the then executors which included the first defender herself. The pursuer went on to note that the £100,000 payment to Mrs Anne Clark in 1997 was reported in the executor's account as a "payment in respect of the mediation settlement". Notwithstanding that record, Mr Macfie had reported that what he was informed by the executors namely that the payment had been for Mrs Anne Clark's share in the partnership assets. She referred to 6/19/31 of process at page 187 which showed the balance sheet of the estate after the mediation settlement. The value of the estate had reduced from £1,495,540 as a credit balance to a deficit of (£31,492.06). In addressing the comments made about why she sought to reduce only the minute of agreement 6/19/22 of process and not the minute of agreement 6/19/23 of process which also related to the mediation settlement, the pursuer said that the latter was an agreement between the children beneficiaries and Anne Clark and that the executors were not party, to it thus she, as judicial factor, would have no locus to reduce it.

[65] In relation to the prescription argument, the pursuer argued that a claim for breach of trust of the nature pled was imprescribable and that she had power to undo all illegal acts. Any references to the previous action in which she had sued qua creditor were irrelevant according to the pursuer on the basis that her title in these proceedings was entirely distinct from the role in which she had previously sued.

[66] In relation to the first defender's liability to account for a period when she was an executor, reference was made to Mackenzie Stewart, The Law of Trusts, at page 371 where it is noted -

"It has been held that the retention by later trustees of an improper investment which had been made by trustees who had resigned, did not free the earlier trustees from the consequences of having been in breach of trust".

The authority cited in support of that proposition was Duncan v Newlands Executrix 1882 20 S.L.R. 8.

[67] So far as the second, third and fourth defenders were concerned the pursuer argued that the case against the third and fourth defenders were that they were in breach of trust in a number of respects. The second defender was responsible because her late partner Jack Wilson had misapplied funds in his care. She argued that Mr Wilson having been appointed as executor and authorised to charge the usual fees, this amounted to an appointment of the firm itself. These defenders were, it was contended, all responsible for the history relating to the tenancy not being a secure tenancy, the loss of 40% of the gross heritable estate arising from the excessive value attributed to the tenancy, the failure to ingather the £185,000, the payment of £100,000 in 1997 and the failure to ingather rents from the tenant. All of these failures arose through breaches of trust on the part of the executors.

[68] So far as the mediation settlement was concerned it was the third and fourth defenders who were responsible for paying the £100,000 to the first defender under the 1997 agreement. They failed to ingather sums due to the states and are accordingly liable for the losses they caused by that failure. On the issue of the previous judicial factor's decision not to seek to reduce the 1997 agreement following mediation, the pursuer noted that Mr Macfie in his report made no comment on the outcome of mediation, he simply recorded what he understood the settlement contained.

[69] The pursuer put forward an esto position if the defenders were successful in having the conclusions for count reckoning and payment and reduction dismissed. She argued that Article 14 and Conclusion 2B could stand alone together with at least Articles 9 and 11 of Condescendence. This would leave extant the claim against the former executors who would be personally liable where they failed to invest funds to meet creditors' claims - see Clarke v Clark's Trustees 1925 SC 693.

[70] Reverting to the issue of the vicarious liability of her partner trustees, the pursuer argued that where a firm held estate money in their client account Section 11 of the Partnership Act 1890 made clear that this would render the firm liable. Reference was also made to Mackenzie Stewart The Law of Trusts at page 167 where the following is noted -

"The appointment of a member of a firm of law agents implies, in the absence of contrary stipulation, the appointment of his firm".

The pursuer argued that monies received by Mr Jack Wilson qua executor were received by his law firm in the course of its business.

Reply on behalf of the first defender

[71] In reply, Mr Connal drew attention to page 17 of Mr Macfie's report on the issue of the mediation settlement which contained two minutes of agreement and the question of whether these were severable for the purposes of reduction. While he accepted that it was the pursuer's pleadings that required to be scrutinised for the purposes of testing relevancy, the answers to Condescendence do indicate that there was a clear relationship between the two agreements.

[72] On the issue of prescription, Mr Connal noted that the case of Hobday v Kirkpatrick's Trustees 1985 SLT 197 proceeded on an understanding recorded in the decision that the twenty year prescription would operate to negate a claim thereafter. He also pointed out various discrepancies between the written scripts upon which the pursuer had relied in her submissions and the case as pled on record. In particular, the case on record related to the alleged nullity of the lease in question and not the issue of value attributed to it which is not pled. Further, there is no proper specification of averments in the averments of the fraud and dishonesty claimed by the pursuer.

[73] Finally, Mr Connal appreciated that a range of possible outcomes in relation to deletion of various parts of the pleadings while leaving other parts standing were possible in this case and invited me to bring the case out By Order if the action were to proceed in any form.

Reply for the second, third and fourth defenders

[74] Mr Clark responded to the pursuer's submissions by agreeing with Mr Connal that the shift attempted by the pursuer between her pleadings on the tenancy case would require specific and detailed pleadings which were not at this stage on record. He reiterated that he took no title and interest point in this case, accepting that this action by the current judicial factor against, inter alia, the former executors was the correct vehicle for a claim in respect of the actings that resulting in an inability to pay the remaining creditor. He maintained, however that the case was not properly pled. He accepted that a successor judicial factor can come into an action and look at matter of new. However, he invited me to consider the original summons in the case which characterised the action as "single issue case" involving a claim relating to the prejudice to Mrs Pentland-Clark as creditor. The only outstanding obligation of the estate by 2003 was to meet its obligations to creditors. If there had been a failure in that respect, a limited action might relevantly be stated in relation to that. The object and purpose of the exercise had not changed. All of the material the pursuer had referred to in argument had been considered by the judicial factor before he had taken the decision he did to litigate on a limited basis.

[75] On the arguments about how the estate came to be insolvent, Mr Clark accepted he had to take the pursuer's pleadings pro veritate in order to test relevancy but he wished to make clear that no concession of fact was being made in relation to them. He commented again that the payments to the children as beneficiaries in 1989 are never mentioned as having been wrongly made and that all arguments seemed to involve the first defender. I should take into account that not all of the payments to beneficiaries were being challenged. In relation to the second minute of agreement not sought to be reduced, Mr Clark confirmed that he didn't seek to argue that the agreements were a unum quid and that the pursuer could not set one aside without the other. He noted however that the executors had signed the second agreement involving the children and Mrs Anne Clark. The second minute of agreement was relevant in considering the restitutio in integrum issue. It could not be said that the court would be restoring the parties to their previous positions if the second minute of agreement was left untouched.

[76] It was also sought to distinguish the case of Clarke v Clark's Trustees 1925 SC 693 in that that action was not about a creditor having a claim but related to a will providing for an annuity and could be distinguished.

[77] Finally, in relation to the arguments about the vicarious liability of partners, in addition to adopting Mr Dunlop's submissions it should be noted that even if the monies referred to by the pursuer did go into the second defender's firm's client account, she would require to have proper averments about any Partnership Act claim.

Reply for the fifth and sixth defenders

[78] Mr Dunlop made four short points in reply as follows:

1. The pursuer had already argued unsuccessfully in the Inner House that that criticism could be made of the formal judicial factor when he exercised his professional judgement in relation to decisions about litigation.

In particular, paragraph 48 of the Inner House decision [2009] CSIH 48 again was referred to as a binding decision on this point.

2. In relation to the claim for paperwork it was noted that this is not a Section 1 petition for recovery of documents and further that if the pursuers averments are scrutinised she has received all of the relevant factory paperwork. She is not entitled to separate accounting from the law agent.

3. It was clear from Cormack v Simpsons Judicial Factor 1960 SLT 197 that before a countreckoning and payment action in respect of a judicial factory was possible the judicial factor must either have been removed or no longer in office and there required to be an absence of proper accounts. That was not the situation in this case.

4. Finally, in relation to the vicarious liability point and the quote from Mackenzie Stewart in The Law of Trusts at page 167, Mr Dunlop commented that the appointment of a judicial factor was always personal and was not an appointment of his firm where he happened to be a partner in one.

Discussion

[79] The very long and troubled history of the executry estate of the late James Clark and the various litigations to which it has given rise are summarised in the opinion of the Inner House delivered by Lady Paton in the cause Pentland‑Clark v Patrick Wilson and Others [2009] CSIH 48. In particular paragraphs 5 to 9 of that opinion set out the factual background, much of which was reiterated by Mr Connal in his submissions as recorded at paragraphs 2 to 9 inclusive of this opinion. I do not intend to rehearse that historical background. The important starting point for this case is the removal of Mr Pagan and Mr Patrick Wilson from office as executors by this Court in an interlocutor 27 May 1999 which then appointed a judicial factor (Mr Macfie) with a direction to receive representations from Mrs Pentland-Clark as creditor and from any other interested party and to investigate transactions effected in respect of the executry estate and to report on possible action to restore the estate to solvency. Mr Macfie appears to have carried out his duties in terms of that interlocutor and issued a detailed report dated 11 October 2000. That report is incorporated into the present pursuer's pleadings in Article 2 of Condescendence (page 23-G of the closed record as amended). In his report, Mr Macfie noted a number of aspects of the administration of the executry which had in his view been unsatisfactory. The relevant factors have again been recorded in the Inner House decision quoting from the report as follows:

"10. Administration of the Executry

At the outset the conduct of the administration of the Executry was unsatisfactory. The Executors failed to act in a proper and equitable manner. In brief:-

1. There was a deliberate refusal and delay in providing detailed information to those advising the children until about September 1986 when an Undertaking was given before the Court by the Executors to keep the children fully informed. (see paragraph 11.1 (i) hereof)

2. By letter dated 10 January 1986 Patrick Wilson wrote to the Chairman of the Clydesdale Bank requesting that the Bank accept the partnership and lease which was voidable at the instance of the Bank. In the letter Patrick Wilson makes reference to the fact that the partnership was formed first, the lease second and the Will third. This was incorrect, when in fact the Will was made first. The Executors should not have taken any steps to attempt to alter the status quo following the death of James Clark as any alteration in favour of Mrs Anne Clark as tenant would prejudice the children as residuary beneficiaries.

3. On 11 March 1986 the Executors (one of whom was Mrs Anne Clark) agreed to pay Mrs Anne Clark as an individual, 40% of the net proceeds of sale of Leckiebank without professional advice and without, it is alleged, proper regard to the circumstances.

4. Mrs Anne Clark continued as an Executor until August 1986 whilst she had a material conflict of interest between her position as a Tenant and under the Lease as a residuary beneficiary.

5. The Executors (one of whom was Mrs Anne Clark) assigned the missives of Leckiebank to Mrs Clark, which Assignation was subsequently reduced by the Court.

6. The Executors entered into a letter of waygoing with Mrs Anne Clark on 5 September 1989 without making some positive arrangement for payment for occupation of the farms.

The Judicial Factor considers that the foregoing examples led to mistrust between the children and the Executors as a result of which a number of court actions were raised...........

19. Claim by Mrs Pentland-Clark

[The Judicial Factor outlined certain details relating to the pursuer's claim and continued:]

If an Executor, in the knowledge that there are outstanding debts, chooses to distribute the estate to the beneficiaries, he may be made personally liable to an unsatisfied creditor unless such creditor has consented to the payment or by his own conduct is personally barred from objecting to the Executors' actings. Heritable Securities Investment Association Limited v Miller Trustees (1893) 20R 675......

20. Funds in Hand as at 9 October 2000

......Deficit (£80,345.52)

The Judicial Factor has written to Mrs Anne Clark and the children enquiring if they are willing to repay to the estate such sum as may be necessary to enable a suitable payment to be made to Mrs Joan Pentland-Clark in settlement of her claim. Mrs Anne Clark has made no substantive reply. The solicitors for the children have intimated that the children are not willing to make any payment.

21. The Judicial Factor has been instructed by the Interlocutor of 27 May 1999 to report on possible action to restore the estate to solvency. The Factor proposes to your Lordships that a payment be sought from the Executors, Charles William Pagan and Patrick Collinge Gravatt Wilson, as individuals, jointly and severally of such sum as is necessary to restore the estate to solvency.

The reasons for this are:-

1. The Executors have a duty not to distribute the estate without settling with all the creditors of the state. The Executors were well aware of this duty. They have lodged a Petition for directions seeking the authority of the Court to distribute the estate without retention to meet any possible claim from Lloyds (which is also a contingent claim).

2. The actuarial value of Mrs Joan Pentland-Clark's claim as at the date of death of the deceased was included as a debt in the Inventory of his estate and was accepted as such by the Capital Taxes Office. A sum for the capital value of Mrs Pentland-Clark's claim was included as a liability in Messrs Pagan Osborne's Accounts from 5 April 1995 onwards.

3. The Executors, although they knew from about October 1997 that the funds in the estate would be insufficient to meet the claim by Mrs Pentland-Clark they failed to take steps to recover payments totalling £204,000 made to the residuary legatees in 1990, although a court action was drafted for this purpose.

4. In the settlement of the court action by mediation referred to in Paragraph 11(7), on the explanation given to the Judicial Factor, the Executors permitted £145,000 to be paid directly to the children rather than to the estate. In addition, the Executors also acknowledged in the Agreement "that no further sums are due to the executry estate by any beneficiaries for any reason whatever (including without prejudice to the foregoing generality, any sum due by Anne Clark in respect of rent for or their fruits of occupation of the farms of Pitlochie and Leckiebank)", thereby depriving themselves of the right to recover payments already made to the beneficiaries. It should be noted that there was no exception made in the Agreement for such payments.

Your Reporter is not able to advise on the precise sum which will be required to restore the estate to solvency as a number of outstanding claims cannot be quantified at present."

[80] Following that report, this action was raised by the previous Judicial Factor in December 2003 and was originally raised only against the current second, third and fourth defenders for declarator and payment of £175,000 on the basis that payments made by the former executors had disabled the estate from meeting its obligations to Mrs Pentland-Clark qua creditor. The action remained sisted for some time but Mr Macfie had indicated as early as 11 March 2004 that he did not intend to proceed with it due to a lack of funding. When Mrs Pentland-Clark in her capacity as creditor had received intimation of that from Mr Macfie she raised the separate proceedings in her role as creditor which are the subject of the Inner House decision already referred to. The decision of the Inner House to refuse the reclaiming motion against the decision of the Lord Ordinary dismissing Mrs Pentland-Clark's action as irrelevant put an end to those proceedings.

[81] So far as the current action is concerned, it now proceeds on the basis that by interlocutor of 13 March 2007 Lord Glennie appointed Mrs Pentland-Clark as Judicial Factor for the James Clark executry estate. That interlocutor was pronounced in the petition for the appointment of a Judicial Factor. Having been so appointed, Mrs Pentland-Clark took a decision to pursue these proceedings raised and sisted by the late Mr Macfie and to introduce additional defenders, including the first defender Mrs Anne Clark or Maclehose and to make a number of claims in particular for count and reckoning and for reduction which had not previously been contemplated by Mr Macfie. It is noteworthy at this stage that on 19 March 2008 the Lord Ordinary (Lord Kinclaven) allowed very significant amendments proposed by the pursuer to be incorporated into the record having heard opposition from the first, second, third and fourth defenders. On that date, having heard those parties in opposition the Lord Ordinary refused that part of the pursuer's motion which sought to intimate the amended pleadings on the children beneficiaries, a matter to which I will return in the course of discussion.

[82] It seems to me that the detailed arguments made during the course of the procedure roll discussion could usefully be summarised under the following headings:

1. Title and interest and res judicata points.

2. The heritable estate of the late James Clark and treatment of it by the former executors, including the issue of prescription raised by the first defender, and any question of undue influence.

3. The mediation settlement of 1997 and the conclusions for reduction.

4. Claims against the fifth and sixth defenders and the question of vicarious liability.

5. The nature and extent of the pursuer's relevant claims.

I propose dealing with each of these in turn.

Title and Interest and res judicata points

[83] The primary attack on the pursuer's title and interest to sue was raised by Mr Connal for the first defender as summarised in paragraph 13 above. The argument related to the scope of the powers of Mrs Pentland-Clark as Judicial Factor. The contention was that the scope of the current Judicial Factor's powers was severely restricted given that the only remaining obligation of the estate is to pay the outstanding creditor.

[84] It seems to me that this Court having appointed Mrs Pentland-Clark as successor Judicial Factor with all the usual powers, it cannot be said that she lacks title and interest to make any claims that might reasonably be required to restore this estate to solvency, to use the wording of the original remit of 27 May 1999 to the previous Judicial Factor. In my view, it cannot properly be suggested that a successor Judicial Factor is restricted to pursuing a litigation in identical terms to those instructed by her predecessor. In the absence of challenge to her remaining in office as Judicial Factor, it can be no more than a matter of comment that she has chosen to pursue claims that go beyond those identified by Mr Macfie. Accordingly, as a general point, I reject any suggestion that Mrs Pentland-Clark as Judicial Factor lacks title and interest to pursue the remedies that she was allowed to introduce to this case by way of amendment. So far as res judicata is concerned, again this point was only pursued by Mr Connal who insisted in his eighth plea in law. The answer to a claim of res judicata in a question between the pursuer and the first defender is in my view quite straightforward. Mrs Pentland-Clark raised an action against, inter alios, the current first defender, as an individual. She does not pursue these proceedings as Mrs Pentland-Clark. She pursues them as Judicial Factor on the executry estate of the late James Clark. Accordingly, the parties to the action do not have the same interest in the way that is required to found a plea of res judicata (see Macphail "Sheriff Court Practice" 3^rd Edition, at para 2.104 to 2.109). In any event, the decision of the Inner House already referred to was to the effect that the Lord Ordinary had been correct to dismiss Mrs Pentland-Clark's action as a creditor to seek to recover from a number of parties including former executors. One of the arguments presented in that action was that there was already an action before the Court at the instance of the Judicial Factor who was the party who could properly seek to have restored to an executry estate payments wrongfully made from it - see [2009] CSIH 48 at paragraph 48(b). In the circumstances, it seems to me that while much of the subject matter of the current action is similar to that raised by Mrs Pentland-Clark as an individual, it cannot be said that the final disposal of claims by beneficiaries of the estate is res judicata in a question between the Judicial Factor and the first defender. In any event, a number of the claims for reduction in this action were never pursued in Mrs Pentland-Clark's action as creditor as a proposed Minute of Amendment to introduce them was refused. Accordingly I propose to repel the eighth plea in law for the first defender.

The heritable estate of the late James Clark and treatment of it by the former executors, including the issue of prescription effaced by the first defender and undue influence

[85] The current Judicial Factor has a number of conclusions for reduction of documents and agreements entered into prior to 1990. In particular she seeks the reduction of the lease signed by the late James Clark on 4 December 1985 (conclusion 8), a reduction of the "letter of waygoing" of 12 September 1989 (conclusion 6), reduction of correspondence of 22, 25, 26 August 1986 in relation to an agreement to credit the first defender with 38% of the proceeds of sale of the Pittlochie Group (conclusion 5), reduction of the agreement reached on 11 March 1986 to credit the first defender with 40% of the proceeds of sale of the Leckiebank Group (conclusion 4), together with relative declarators (conclusions 1 and 3). The starting point for the arguments relating to all of those transactions and agreements was the first mentioned lease signed by the late James Clark. On record the pursuer has detailed averments in terms of which she challenges the deceased's ability to grant a valid lease over the subjects given that on the face of it Clydesdale Bank had a recorded title to the properly. It is specifically averred that such right as the deceased had to the lands of both Leckiebank and Upper Pittlochie was "...no more than jus crediti until delivery of the disposition for which he had contracted had been made to him by the bank as the registered holder of all real rights in the subjects.". (Article 2 of Condescendence page 19 B‑C). Having considered the various submissions made to me in relation to this, together with the documents referred to, particularly by the pursuer, it seems clear that the lands of Leckiebank and Upper Pittlochie were owned by the late James Clark but were subject to secured borrowings from the Clydesdale Bank as lender. In keeping with the forms of security used prior to the passing of the Conveyancing and Feudal Reform (Scotland) Act 1970, the deceased had granted an ex facie absolute disposition of both lands referred to, to the Clydesdale Bank with back letters confirming that the delivered dispositions in the favour of the bank, while ex facie absolute were actually granted in Security - see 6/10/9 of process. There is authority for the proposition that a proprietor in such a situation can competently grant a lease - Ritchie v Scott (1899) 1 F 728 at 736 and Edinburgh Entertainments v Stevenson (1926) SC 363 at 375. It does appear to be the case that the lease was granted in breach of a written undertaking granted by the deceased (6/10/8 of process) in terms of which he appeared to have undertaken not to grant leases over the security subjects without having first obtained the consent of the bank in writing. However, while that might make it voidable at the instance of the bank it did not render the lease null and void. The fact that the Clydesdale Bank had the ability to challenge the validity of the lease was something known to the executors and recorded by them at the time. Ultimately, no challenge to its validity was ever taken and the properties concerned were sold by the estate with vacant possession, the tenant having agreed to that on certain conditions. While there are passing references in the pursuer's pleadings to the percentage of the heritable estate attributed to the first defender (see for example Article 2 of Condescendence at page 19E and 23A-B) there is no specific case on record relating to the issue of the value attributed to the lease. The case as currently pled focuses on the alleged nullity of the lease and subsequent agreements that were themselves dependent upon its existence. All of the conclusions referred to relate to that issue. Accordingly, I consider the criticisms of counsel for the first to fourth defenders in their reply to the pursuer's submissions as being well founded in this respect. The case on record is that the lease (and all the transactions that flowed from it) were effectively void ab initio and should be reduced. That is patently not the case on the basis of the documents relating to the form of security referred to above. Of course, various criticisms have been made of the way in which the former executors (including the first defender) took steps to see to it that the first defender received the benefit whenever possible of the steps taken shortly prior to the late James Clark's death to protect her position. Nothing in the record or in the arguments made by the pursuer in my view justifies elevating those criticisms into relevant claims for reduction of the various documents.

[86] In any event, at least so far as the first defender is concerned, the plea of prescription in relation to these early transactions seems soundly based. It is not disputed that the first defender was introduced into this action more than twenty years after she had resigned as executor in 1986. The pursuer's complaints in these proceedings against the first defender in relation to her having been a tenant at the hand of her late husband would only be imprescribable if those actings represented a fraudulent breach of trust. While the duty to produce accounts is also imprescribable that has been done, a matter quite separate from providing an accounting in the manner sought by the pursuer. While there are various references in Article 2 of Condescendence to acts of the executors pursuant to the lease being entered into "voluntarily, gratuitously and illegally in breach of trust" it is in my view not sufficient to make out a case of a fraudulent breach of trust to use that terminology. In my view, there being no relevant case that the lease itself was void, there would require to be detailed and specific averments before it, or any of the documents or transactions flowing from it, could be reduced on the basis of a fraudulent breach of trust. Accordingly, I do not consider there is any relevant case pled that the documents and transactions referred to in the various conclusions mentioned at the outset of this passage can be reduced and, insofar as the first defender is concerned, any such claim would in any event have prescribed. I can deal briefly with the argument about whether any case of undue influence is properly pled. In essence, the averments at pages 20 -21 of the Closed Record (as amended) raise what might be described as concerns in relation to the circumstances in which the late James Clark signed the Lease and Partnership Agreement referred to above. Issues about the deceased's failing health and the timing of the documents being signed are raised, but no case of undue influence is pled, other than that a single averment that states it terms that this "... raises a question of whether undue influence was brought to bear...". In my view that is clearly insufficient to challenge the validity of these documents on the basis that the deceased signed them as a result of undue influence and I will not allow a proof of those averments.

[87] So far as the second, third and fourth defenders are concerned, in the absence of any averment that these earlier transactions had resulted in the estate's insolvency or that the estate was already insolvent by the time they were entered into, it is difficult to see how an action to reduce them could properly be brought by the judicial factor. Alleging that they were entered into voluntarily, gratuitously and in breach of trust would be insufficient without reference to the consequences of that. It is in this context that the actions taken in 1997 become those which merit greater scrutiny and it is those to which I now turn.

Mediation Settlement 1997

[88] The first defender, the children beneficiaries and the former executors (the third and fourth defenders) all attended mediation in 1997 and the various beneficiary claims were settled in that process. There were two separate agreements reached at mediation and copies of the agreements reached are produced at 6/19/22 and 6/19/23 of process. It is the former that that pursuer seeks to reduce. That was the agreement to pay £100,000 from the estate to Mrs Anne Clark and to waive any sums due by her to the executry estate for any reason whatsoever. The second agreement related to a payment by Mrs Anne Clark direct to the children beneficiaries of £145,000. While the executors had signed that agreement it did not involve a transaction whereby monies were paid from the executry, albeit that the former executors were clearly involved in the whole mediation process and on one view the two agreements might require to be read together to ascertain the whole terms of the arrangements reached between the beneficiaries of the estate. In any event, the pleadings, taken together with the report by the late John Macfie disclose on the face of it a number of concerns about the former executors' failure to take into account the estate's obligations to creditors (specifically Mrs Pentland-Clark but there was also a contingent debt due to Lloyds) when they approved the mediation settlement. The primary attack on the 1997 agreement is that it amounted to a gratuitous alienation or fraudulent preference, the former executors being aware at the time that the payment of £100,000 to be made to the first defender was made in the knowledge that the estate was unlikely to be in a position to pay its creditors.

[89] In this context, the requirements in Scots law for a transaction to be characterised as fraudulent preference are relevant. As submitted by Mr Clark, these are summarised succinctly in the text McBryde Bankruptcy (2^nd Edition W. Green 1995), chapter 12 at paragraph 29. These requirements are:-

1. There must be prejudice to creditors.

2. At the time of the transaction the debtor must be insolvent or about to become insolvent.

3. It is not necessary that the transferee should be aware of the debtors insolvency although that may be a method of proving fraud.

4. If the transferee colludes with the insolvent that is one element in fraud.

5. The debtor must be conscious of his insolvency.

6. The debtor's actions must be voluntary.

7. The debtor can carry on ordinary acts of administration of affairs until the debtor has decided to take steps to hand over the administration of affairs for the benefit of creditors.

8. In general the transaction challenged must be fraudulent.

[90] It was effectively not disputed that some of those requirements were clearly made out in the pleadings. There was on the face of it clear prejudice to creditors and the actions were voluntary. However, issues arose about whether at the time of the transaction the estate was insolvent or about to become insolvent. Further, the main thrust of Mr Clark's argument was that if the payment of £100,000 to Mrs Anne Clark fell within the exception of a cash payment for a due and prestable debt it would not be reducible at common law being an ordinary act of administration.

[91] So far as the contention made by Mr Clark in relation to the lack of averments as to when and how the estate was insolvent, there are certainly no averments on record to suggest that the estate was insolvent or about to become insolvent prior to 1997. On that basis, as previously indicated I accept the contention made that no transactions prior to 1997 could be said to be fraudulent preferences or gratuitous alienations in this context.

[92] However, there are averments for the pursuer that indicate serious financial difficulties in the estate in 1997. It is averred that in October 1997, one month before the mediation settlement, a letter was written indicating that the executors could not state categorically that they would be in a position to pay all creditors (Article 12 of Condescendence page 78A-B.) The payment of £100,000 in November 2007 to the first defender is clearly identified in the pursuer's case as a payment said to be a fraudulent preference - Article 4 of Condescendence page 59E-G. Further, there is a specific averment that it was the 1997 Agreement that rendered the estate apparently insolvent - page 79 B. While it is correct that there is also an averment (at page 59) that might suggest that the insolvency was not discovered until much later there is also reference to the fourth defender's own accounts for the period ending 5 April 1998 (page 59 F-G of the Closed Record as amended) which illustrate a deficit by that date (Appendix to 6/19 at p181).

[93] In my view the combination of the averments about the concern that the estate knew there was a problem meeting all creditors claims by October 1997 and the very specific averment that the agreement complained of was the act that rendered the estate insolvent are sufficient, if proved, to fulfil the requirement that the estate was either insolvent or about to become insolvent in November 1997. There is sufficient on record to suggest that the former executors were conscious of that impending insolvency. In addition, there are ample averments of their previous alleged failures to be even handed in their treatment of the various beneficiaries and creditors some of which were noted by Mr Macfie in his report. Further, it was specifically conceded by Mr Clark that it would be sufficient in this context for the pursuer to show that the estate had been reduced to a state of insolvency by the transaction in question - McCowan v Wright (1852) 14D 968. As I have noted, there is a specific averment to that effect.

[94] I am not convinced by the argument that the payment of £100,000 to Mrs Anne Clark can be determined at this stage as falling within the "cash payment for a debt" exception discussed in Nordic Travel Limited v Scot Print Limited 1980 SC1. As the pursuer correctly pointed out, the executors recorded the payment to Mrs Anne Clark in the executry accounts as a payment made in terms of the mediation settlement. There were at the time of the mediation negotiations live issues about the nature of Mrs Anne Clark's occupancy of the farm and land, her status as tenant, the fact that no rent had been sought from her or paid by her and the level of compensation made in terms of the letter of waygoing. Those factors, together with the issue of whether one half of the £185,000 Mrs Anne Clark had repaid to the estate had been an error (given that she had been a partner at the date of death) were all resolved as part of a compromise settlement. It is difficult to characterise it as payment of a due and prestable debt, albeit that was the justification subsequently stated for the particular sum paid. In any event, the exception discussed in Nordic Travel Limited is payment of debts due in implement of "ordinary business transactions". On the face of it, repayment by the estate to a beneficiary of a sum arguably wrongly paid by her to the estate some years previously does not easily fall within the definition of an ordinary business transaction. While I can see that this argument may remain live after proof, the characterisation of the payment is not clear cut at this stage.

[95] It seems to me that the pertinent facts relative to the proposed attack on the 1997 Minute of Agreement as a gratuitous alienation or fraudulent preference are closely related to the separate allegations of maladministration and wrongful disregard for the legitimate interests of a creditor made by Mr Macfie. An allegation that the executors knew from about October 1997 that the funds in the executry estate would be insufficient to meet the claim by Mrs Pentland Clark as creditor and that notwithstanding that they made a payment to a beneficiary and compromised certain claims may be a wrong giving rise to their personal liability (Heritable Securities Investment Association Limited v Miller Trustees (1893) 20R 6675. It may also be a fraudulent preference if the pursuer can establish that the payment to the first defender rendered the estate insolvent, that the former executors knew that it would and that they deliberately acted in a manner designed to benefit the first defender knowing that by their actions they would be defeating the interests of a creditor. These are all matters for proof, at which the defenders involved will of course be able to maintain the detailed defence they have stated on record to the merits of this particular application for reduction. In summary, it seems to me that there are sufficient averments to support a case for reduction of the 1997 agreement at proof before answer

[95] So far as questions of restitutio in integrum are concerned, while Mr Connal for the first defender effectively argued that restitutio would be impossible, Mr Clark conceded that while not impossible it would be difficult and impracticable. Certainly, the effect of reducing the Minute of Agreement of 1997 would be to negate the agreement that all previous litigations between the children and Mrs Anne Clark be disposed of. A reduction of the decrees disposing of those actions would be required. The passage of time since disposal of the various actions by the beneficiaries through agreement is undoubtedly a factor that would make restitutio difficult in this case. However, that is not a basis in itself for refusing to allow the claim for reduction of the 1997 agreement to proceed. It is well established that the concept of restitution must not be applied too literally, given that the passage of time between the contract and its proposed reduction inevitably cannot be restored - Gloag, Contract, p 540, Spence v Crawford 1939 SC (HL) 52. In this case it seems to me that it is not an insuperable barrier, if the case for reduction succeeds after proof.

[96] In all the circumstances, I consider that, on balance, the pursuer's pleadings in this respect are just sufficient to state a relevant claim for reduction on the basis of fraudulent preference. The essential ingredients of tying the transaction to insolvency and the allegation of deliberate prejudice to one creditor in favour of another are present. The transaction complained of is one that clearly falls within the remit to the Judicial Factor to investigate. In all the circumstances and in the absence of any suggestion that the Minute of Agreement 6/19/22 of process cannot be separated for the purposes of reduction from 6/19/23 which represents the other part of the Mediation settlement, I consider that the conclusion and relative averments relating to this aspect of the case should proceed to proof before answer. In this context I noted earlier that the pursuer's motion to intimate her new conclusions to the children beneficiaries was refused after opposition by the first to fourth defenders. She can hardly be criticised for a failure to do something that she attempted but was prevented from doing. It seems to me that intimation to those beneficiaries will be required.

Claims against the fifth and sixth defenders and the question of vicarious liability
[97] As Mr Dunlop for the fifth and sixth defenders pointed out, the only conclusion concerning these defenders is conclusion two which is effectively for count, reckoning and payment, albeit that there is no pecuniary claim against the sixth defender. The primary attack on the pursuer's said claim was that it was clear from Huewind Limited v Clydesdale Bank Plc 1996 SLT 369 at page 373 that no claim for count, reckoning and payment can be made in a situation where no funds have been held. The pursuer argued that the case of Huewind was distinguishable and that in any event the bond of caution of the fifth defenders specifically provided in respect of the liability for intromissions of the late Mr Macfie as Judicial Factor on the estate.

[98] It seems to be that the submissions for the fifth and sixth defenders are well founded in this respect. Neither the fifth nor the sixth defender intromitted with the estate. Mr Macfie intromitted as Judicial Factor and held the fund but that does not result in a duty to account on the part of his agents or cautioner.

[99] In any event, I accept the contention that the case of Cormack v Simpson's Judicial Factor 1960 SLT 197 is good authority for the proposition that an action of count, reckoning and payment against a Judicial Factor is incompetent to open up accounts where those accounts have been properly lodged. The letter from the Accountant of Court of 23 April 2007 (number 49 of process), makes clear that the accounts of intromissions and management of the Judicial Factor have been audited and reported upon by the accountant who has found them correctly stated and vouched. Accordingly, there seems to me to be no basis for any suggestion that an accounting is still required even had I found that a duty on the part of the fifth and sixth defenders in that respect had existed.

[100] The question of vicarious liability is one that affects both the fifth and sixth defenders and also the second defender as the surviving partner of the former firm of Messrs J &G Wilson Solicitors in which the late Mr J Wilson was a partner. Mr Dunlop argued that the appointment of Judicial Factor was a personal one and that no vicarious liability to partners of the late Mr Macfie could attach. Mr Clark adopted those submissions and argued that no vicarious liability could attach to the former partners of a deceased executor.

[101] Dealing first with the nature of the appointment of a Judicial Factor, there was no dispute that a Judicial Factor is an officer of court and acts as such. The real question is whether he or a partner appointed as an executor/trustee (where he is also a partner in a law firm), can be said to be acting in the ordinary course of firm business when undertaking the duties of Judicial Factor or as an executor. The relevant sections of the Partnership Act 1890 in this respect provide as follows:

"10. Liability of the firm for wrongs.

Where, by any wrongful act or omission of any partner acting in the ordinary course of the business of the firm, or with the authority of his co-partners, loss or injury is caused to any person not being a partner in the firm, or any penalty is incurred, the firm is liable therefor to the same extent as the partner so acting or omitting to act.

11. Misapplication of money or property received for or in custody of the firm

In the following cases; namely -

(a) Where one partner acting within the scope of his apparent authority receives the money or property of a third person and misapplies it; and

(b) Where a firm in the course of its business receives money or property of a third person, and the money or property so received is misapplied by one or more of the partners while it is in the custody of the firm;

the firm is liable to make good the loss.

12. Liability for wrongs joint and several.

Every partner is liable jointly with his co-partners and also severally for everything for which the firm while he is a partner therein becomes liable under either of the two last preceding sections."

It is clear from the terms of section 12 that any joint and several liability of co-partners can only arise under sections 10 or 11 of the Act. Section 10 accordingly provides for joint and several liability where any wrongful act or omission is committed by a partner "acting in the ordinary course of the business of the firm". Section 11 give rise to such joint and several liability where there is a misapplication of money or property received either by an individual partner acting within the scope of his authority or by a firm in the course of its business.

[102] Mr Dunlop argued that the role of a Judicial Factor was analogous with a partner in a solicitor's firm who sat in a part-time judicial capacity. Such part-time judicial appointments were individual appointments and when acting as such a solicitor would not be acting in the ordinary business of the firm. That seems to me to be correct. There are other examples known to the court in which solicitors who are partners in law firms may be appointed in an individual capacity, for example as a commissioner in a process for the recovery of documents or to take evidence, usually in Sheriff Court proceedings. Partners in legal firms are also routinely appointed as reporters in child related matters, again normally in the Sheriff Court. All of these appointments seem to me to be appointments arising from the ability and qualifications of the particular appointee and when they act they have duties to the court as individuals which have no relationship to the ordinary business that they otherwise carry on as partners in a firm. Further, the decision of the Court of Appeal in Walker and Others v Stones and another [2001] QB 902 is important in this context. Having reviewed the relevant authorities, Sir Christopher Slade there opines ( at p 950) as follows:

"The assumption that individual trusteeships which a partner may undertake are not something undertaken in the ordinary course of the business of a firm might nowadays appear somewhat outdated, at least in the case of solicitors' partnerships. However, it is important to note that sections 10 to 13 apply to all partnerships not merely solicitors' partnerships. Furthermore, it appears that, at least in the mid-19^th century, even a solicitor was not regarded as having the implied authority of his co-partners to accept office as a trustee and so make his co-partners liable for a misapplication of the trust property: see In re Fryer (1857) 2K & J 317, where it was held that the partner of a solicitor who received money as a trustee which was lost was not liable for his default, the monies having been received by him as a trustee and not as a solicitor.

I would accordingly accept the argument advanced on behalf of Wiggin & Co that the legislature, in enacting section 10 of the 1890 Act, treated breaches of trust committed by a trustee partner as falling outside the ordinary business of any partnership and correspondingly incapable of giving rise to vicarious liability under that section."

[103] While the case of Walker and another v Stones primarily concerned the use of trust property in the business or an account of the partnership in terms of section 13, the above dicta is highly persuasive on the question of vicarious liability of trustee partners where acting outside the ordinary course of business. It is noteworthy also that it is a relatively recent authority on a now elderly piece of legislation. In the absence of any amendment to the legislation introducing vicarious liability where partners are acting as trustees other than in the ordinary course of business, it seems to me that those who accept office as trustees can incur personal liability only and that their partners or former partners cannot be held to account for the actings of that individual.

[104] In this context the pursuer had pointed to a quote from Mackenzie "The Law of Trust" (p 167) to the effect that the appointment of a member of a firm of law agents implies in the absence of contrary stipulation the appointment of his firm. However, there is neither reference in that text to the Partnership 1890 nor any analysis of whether an individual solicitor trustee could be said to be acting in the course of business such that his co-partners become vicariously liable for his actings. In any event, the authority cited by Mackenzie Stuart in support of the proposition made (Millar, Walker & Millar & Ors v Brodies Trustees 1902 4F 846) primarily involved the question of whether a minute of a trustees meeting that recorded the appointment of a law-agent to a trust constituted a written obligation in a question of prescription. It occurs to me that it may be possible in a suitable case to argue that the particular nature of the business of a certain firm was such that individual solicitor trustees in that firm were simply carrying out its ordinary business, for example where the whole business of the firm related exclusively to the administration of executry estates. No such suggestion is made on record in this case. Accordingly, I accept the general proposition that both Mr Macfie and indeed the other former executors were acting under an individual appointment and not in the ordinary business of their respective firms.

[105] The Record contains a number of averments criticising the late Mr Macfie in relation to the actions that he took or did not take to attempt to restore the estate to solvency and in relation to his payment of legal fees. It is important in this context to reiterate that in the previous action by Mrs Pentland Clark as creditor, the Inner House stated in terms that the Judicial Factor was entitled to exercise his professional judgment when deciding whether or not to commence or continue with litigation and that he was entitled to obtain legal assistance and to make appropriate payment therefore (2009 CSIH 48 at paragraph 48). Clearly, I accept that conclusion as binding upon me. In any event, any alleged inactivity on the part of Mr Macfie has created no difficulty for the present pursuer as she has been allowed to amend in all the conclusions she wished to pursue, subject always to the arguments in relation to their relevancy that were the subject matter of the discussion before me. Further, there are no averments that suggest that Mr Macfie was professionally negligent in accordance with the Hunter v Hanley test. It is insufficient in my view for the pursuer to contend that her first duty as Judicial Factor is to call her predecessors to account. So far as Mr Macfie is concerned, she would require to make relevant averments of a breach of duty or professional negligence giving rise to loss. She does neither.

[106] In all the circumstances, no relevant case is made out against either the fifth or sixth defenders and it would in any event be incompetent to sue the fifth defenders jointly and severally for any separate wrongs of the former executors - Barr v Neilson 1868 6M 651. As far as the second defender is concerned in light of the decision I have reached in relation to vicarious liability the case against her cannot stand.

The nature and extent of the pursuer's relevant claims
107] Of the ten conclusions on record for the pursuer, it follows from the views I have reached above that the first third, fourth, fifth, sixth, eighth and ninth of those, together with the associated averments and pleas-in-law in support of them fall to be deleted, Conclusion 2 is in two separate parts. Part A seeks the "... exhibition and production of a full and particular account and reckoning" by the first through to fifth defenders for their acts and intromissions with the executry estate. Conclusion 2B has an alternative pecuniary claim. It seems to me that conclusion 2A and its associated averments is based on a misunderstanding by the pursuer of the extent to which the production of accounts (in the Judicial Factor's case audited accounts) leave open any ability to seek further details of intromissions through count and reckoning. The former executors accounts are lodged in the Appendix to the Judicial Factor's Report. The accounts relating to the period of the Judicial Factory prior to the death of Mr Macfie, as indicated have been approved by the Accountant of Court. Accordingly, there is no proper basis for what is sought in conclusion 2A. However, conclusion 2B for payment of a sum of money could stand alone if there are sufficient relevant averments and pleas-in-law to support it. In my view, there are sufficient averments to make out a case against the former executors of this executry estate for liability as individuals for the loss to the estate caused by alleged maladministration and breaches of duty. In particular, the averments of the payments made to Mrs Anne Clark under the Minute of Agreement of October 1997 are relevant in this context given the knowledge at that time about the inability to meet all claims due by creditors, together with the alleged failures of the former executors to seek to recover sums from all of the beneficiaries of sums paid to them between 5 April 1987 and 8 April 1990. The supporting plea-in-law for those averments would appear to be plea-in-law 14.

[108] The fact that the sum in the conclusion for payment might grossly overstate any sum that might be due by the former executors as individuals is not a basis for refusing to allow it to proceed to proof before answer at this stage. Further, while the relevant Articles of Condescendence (parts of 2.1 (b) and 2.1 (c), 3, 4, 5, 8, 9, 11 and 12 all contain some averments relevant to the claims I will allow to proceed, Article 13 of Condescendence, which is directed at the fifth and sixth defenders falls to be deleted in its entirety.

[109] Considerable criticism was levelled at the pursuer during the course of the procedure roll discussion for her consistent refusal, at least in the previous proceedings in which she litigated as creditor for a failure to pursue the one remedy that she might have, namely to pursue the former executors as individuals for the loss to the estate caused by their maladministration. However, Mrs Pentland-Clark was clear in her submission to me that, albeit as an esto case, she would wish to pursue conclusion 2B with at least articles 9 and 11 of condescendence which would leave extant that claim (see paragraph 69 above). In the event, the pleadings that relate to that case, together with those relating to reduction of the 1997 Agreement, go beyond that esto position.

[110] While the pleadings for the claims that I have accepted as relevant may be inelegant and are to some extent obscured by the large tracts of the Closed Record that relate to claims I have decided are irrelevant, I do consider that there is just sufficient to allow these claims to go to proof before answer. The incorporation of the late Mr Macfie's report into the pleadings, which states very clearly the basis for the claim against the former executors as individuals, together with the averments relating to their actings narrated above, including in relation to the 1997 Agreement, are all relevant to those claims. The facts involved in the two claims are almost identical. In my view, if the averments relating to them are proved, it cannot be said that the claim for payment will necessarily fail.

Decision

[111] In light of the conclusions I have reached, I will dispose of the cases against the various defenders as follows:

1. So far as the first defender is concerned I will repel her first, second, sixth, seventh and eighth pleas-in-law, as discussed above. I shall sustain her fifth plea-in-law.

2. So far as the second, third and fourth defenders pleas are concerned I will sustain the first plea-in-law but only in so far as pled by the second defenders.

3. So far as the fifth defenders are concerned I will sustain the second and third pleas-in-law for the fifth defenders and dismiss the action in so far as directed against them.

4. In relation to the sixth defender, I shall sustain his second plea-in-law and dismiss the action in so far as directed against him.

[112] Quoad ultra I shall allow the action to proceed to a proof before answer against the first, third and fourth defenders under deletion of the irrelevant claims as discussed above.

[113] While I have tried to identify those parts of the Record that will remain for the purposes of the more limited proof before answer that I inferred to allow I shall as suggested to me have the case brought out By Order before pronouncing an interlocutor identifying the nature and extent of the deletions to be made from the Record and to deal with the question of expenses.