EXTRA DIVISION, INNER HOUSE, COURT OF SESSION
Lord Osborne Lord Reed Lord Hardie	[2009] CSIH 19. XA180/07 OPINION OF THE COURT delivered by LORD OSBORNE in Stated Case under Section 3 of the Administration of Justice (Scotland) Act 1972 for the opinion of the Court of Session in the appeal by by DAVID LONGMUIR Appellant; against (FIRST) MRS MARGARET MOFFAT, (SECOND) MRS JANET MCLEAN, AND (THIRD) MRS ELIZABETH McLAREN Respondents: _______

Act: J. Campbell QC; Drummond Miller

Alt: J Brown, advocate; McClure Naismith

6 March 2009

The background circumstances

[1] By a contract of partnership between David Longmuir, now deceased, Mrs Margaret Longmuir, also now deceased, and the appellant, dated 24 June 1976, the contracting parties entered into partnership for the purpose of conducting the business of farmers at Netherfield Farm, Coalburn, Lanarkshire. It was agreed that the business was to be carried on under the firm name of David Longmuir and Son. Netherfield Farm had been farmed by the now deceased David Longmuir and Mrs Margaret Longmuir, in an informal partnership, from 1961 onwards. The title to Netherfield Farm, from the date of its acquisition, stood in the name of the now deceased David Longmuir. After his death, it came to stand in the name of the late Mrs Margaret Longmuir, by virtue of a confirmation issued in her favour and relative docquet. The farm of Merchanthall, abutting Netherfield Farm, was bought on 30 September 1982, by the use of funds from an overdrawn bank account held with the Bank of Scotland in the name of the partnership. The offer made for that farm was submitted in the name of the appellant. Missives were thereafter concluded in his name as purchaser. Subsequently the title to the farm was also taken in his name and was recorded in the appropriate Division of the General Register of Sasines. The partnership was ultimately dissolved by the death of Mrs Margaret Longmuir on 2 April 1994. The respondents in this appeal are the three sisters of the appellant and executors dative of the now deceased Mrs Margaret Longmuir, in terms of a decree of the Sheriff of South Strathclyde, Dumfries and Galloway, at Lanark, dated 26 July 1994, and confirmation following thereon, dated 21 June 1995.

[2] Unhappily, a series of matters have come to be in dispute between the appellant and the respondents, as a result of which arbitration proceedings have been commenced between them. The respondents in the present appeal have sought a declarator that the farm and lands of Merchanthall and the related assets, including the milk quota relative thereto, are assets of the partnership. That claim was resisted by the appellant in the present appeal. The matter came before the arbiter, James George Grahame Lees, Esquire, solicitor, 51/53 High Street, Dunblane, as arbiter, appointed by the Sheriff at Lanark on 17 January 1997. He held a proof at Dunblane on 16 and 17 October 2006 and a hearing on his Draft Final Award on 11 December 2006, in accordance with agreed procedure. Thereafter the appellant required him to state a case for the opinion of this court.

[3] The arbiter found the following facts admitted or proved:

"1. A partnership was established by a Contract of Partnership between David Longmuir, Mrs Margaret Longmuir, and David Longmuir, junior, then farmers at Netherfield Farm, Coalburn dated 24 June 1976 - Admitted.

2. The heritable subjects known as and comprising Merchanthall Farm, Coalburn, Lanarkshire were purchased in 1982 - Admitted.

3. The offer for the farm was submitted in the name of David Longmuir, and legal missives were thereafter negotiated and concluded in his name, and subsequently the title to the farm was taken in the name of David Longmuir and was recorded as such in the appropriate Division of the General Register of Sasines - Admitted.

4. A subsequent Standard Security over the said subjects in favour of the Bank of Scotland was granted by David Longmuir to secure, inter alia, the obligation of the partnership to the Bank - Admitted.

5. The price due and payable for the said farm was paid by a cheque drawn on the Partnership's Bank account - Admitted.

6. The said subjects subsequently appeared in the Balance Sheet in the annual Partnership Accounts - Admitted.

7. Section 21 of the Partnership Act 1890 states that "Unless the contrary intention appears, property bought with money belonging to the firm is deemed to have been bought on account of the firm." - Admitted.

8. The asset comprising Merchanthall Farm, Coalburn, aforesaid was bought on account of the firm - Admitted.

9. Having heard and seen the evidence led by parties, the presumption contained within Section 21 of the Partnership Act 1890 has not been overturned in respect of Merchanthall Farm, Coalburn, Lanarkshire - Proved: see, in particular, Paragraph W of the Draft Final Part Award annexed hereto. 10. Merchanthall Farm appeared in the said Balance Sheet of the said Annual Partnership Accounts as an asset of the Partnership - Proved: see said Paragraph W.

11. Merchanthall Farm, Coalburn, aforesaid was an asset of the firm from the date of its purchase and remains so - Proved: see said Paragraph W.

12. With reference to the matter of expenses, I am presently minded, and have so advised the Parties, that I would find no expenses due to or by either Party in the conduct of the Arbitration to date, apart only from the expenses of the Preliminary Procedural Meeting held on 6 July 2006 which I would award against the Respondent, [the present appellant] as taxed by the Auditor of Court at Lanark Sheriff Court. I include this as part of the Case for the Opinion of your Lordships as objection has been taken to this proposal by the Claimants, arguing that such a proposal is contrary to the legal principles governing the award of expenses. They have made reference to

(a) Macfadyen et al, Court of Session Practice, at paragraphs L - 101 to L - 103.

(b) Shepherd v Elliot (1896) 23 R 695 at page 696, per the Lord President (Robertson).

(c) Howitt v Alexander and Sons 1948 S.C. 154, at page 157 per the Lord President (Cooper) quoting from McLaren on Expenses at page 21.

Notwithstanding the foregoing I consider that I do have a discretion in awarding expenses and I would therefore propose to exercise that discretion in this arbitration for the following reasons, viz:

(a) In the issues which are the subject of the present part of this Arbitration, and are covered in the said draft Final Part Award, there is an accepted paucity of authority. The facts found admitted or proved in the present Arbitration Process are not unusual, and it is therefore important that clarity and certainty are secured for the understanding and interpretation of similar circumstances in the future.

(b) The same circumstances apply to the issues raised in the Hearings in this Arbitration which took place in 1999, and in respect of which your Lordships considered and issued a decision upon a Case stated by me for your Opinion, your Lordships decision being issued on 4 August 2000 under reference XI/7/99, and reported at Moffat v Longmuir 2001 S.L.T. 108.

(c) The apparent lack of authority, the age of the relevant Statute and the importance for the Parties involved, and the legal significance of the issues raised, required, or at the very least benefited from, the debate, argument, and consideration of these issues in the context of a legal or quasi legal tribunal.

For all of these reasons therefore I consider that it is reasonable for me to exercise my discretion in the award of expenses as I have proposed."

[4] The arbiter has attached a Note to his stated case, in which he states:

"I would respectfully invite the court to have regard to the terms of the Draft Final Part Award annexed hereto to which reference has already been made, and which generally contains my understanding of the evidence led, issues raised, and my final decision upon the matters which include inter alia those matters which are the subject of this case."

Thereafter, he stated the questions for the opinion of the court in the following terms:

1. Whether a properly registered heritable title which is not otherwise impugned or subject ex facie to any qualification as to the real right of ownership, may nevertheless be successfully contradicted by a body of extrinsic or circumstantial evidence (including the inclusion thereof in the balance sheet of a Farming Partnership's Accounts), some of which evidence has been construed or found to have somewhat contrary effect?

2. Whether in the whole circumstances of the Arbitration, the deeming provision contained in the Partnership Act 1890 Section 21 falls to be rebutted?

3. Whether, in the whole circumstances of the Arbitration, I am correct in exercising a discretion as to Expenses, and exercising that discretion in the way proposed by me?

[5] Since the arbiter draws attention to paragraph W of his Draft Final Part Award, as an explanation for his reasoning on the matter in dispute, it is appropriate to record the terms of that paragraph:

"W

Parties are agreed upon one thing, that Merchanthall Farm was bought 'on account of the partnership', that is to say, for the benefit of the firm - they have to, because Partnership money funded its purchase, and those are exactly the circumstances covered by Section 21 of the Act. The title to that farm was then recorded in the Sasine Register in the name of an individual, the Respondent [the present appellant] who by that time had been a Partner in the Partnership for six years. That same farm, and its value, also subsequently began to appear in the balance sheet of the accounts of that Partnership, as an asset of the Partnership. It has been argued that the way in which the title was recorded in the Sasine Register is where we should start, and then consider whether the solemnity of Sasines can, or should, be overturned by the circumstances in this case, and as narrated in this Award. I have got to say that I do not accept that that is a correct argument. Apart from anything else, the details contained in a Sasine title do not necessarily disclose who, in fact, in any given set of circumstances, is the beneficial owner, or the person entitled to the beneficial interest, of any particular piece of heritage to which that title relates. In any event recorded titles can be, and are, reducible and reduced by order of a Competent Court. Our starting point is Section 21 of the Partnership Act, 1890. On the evidence Merchanthall Farm was purchased with money belonging to the Partnership and, therefore, in terms of the foregoing section the presumption is that Merchanthall Farm was and is an asset of the Partnership. Can that presumption be rebutted by the evidence before me? In support of the rebuttal there is the following evidence, viz:

(i) The title to the farm was taken in the name of David Longmuir as an individual.

(ii) A Standard Security granted over Merchanthall Farm to the bank contains within its narration no reference to, or acknowledgement of, the Partnership having right to or interest in the title of the farm, compared with the narration within the Standard Security previously granted to the Bank over Netherfield Farm (which has been and is acknowledged to be a Partnership asset).

(iii) The Tax Returns lodged following the purchase of Merchanthall Farm by the Partnership and by David Longmuir respectively, indicate that the ownership of the farm lay with David Longmuir. Now I readily accept that those Returns are formal documents and are not, and should not be, entered into, or signed off, lightly, although, in passing, it be added that in any event the firm, of David Longmuir and Son would never have been responsible, as a firm, for the payment of any Capital Gains Tax, as such tax would always have been assessed as a personal liability upon one or more of the individual Partners of the firm. Ultimately, I have neither heard or seen any evidence that the Respondent's Partner at that time, Mrs Longmuir, Senior, saw those Tax Returns, or approved of them, or even knew about their existence, and in those circumstances I am prepared to hold, evidentially, that they reflect what the Respondent himself believed to be the position with reference to Merchanthall at the time of their being signed by him, but no more.

(iv) David Longmuir's evidence of his agreement with his mother, the other Partner in the Partnership besides himself, that the farm was truly his, and his alone, and that its appearance in the firm's balance sheet was at the request of the Bank, to 'improve the Partnership's financial appearance'.

(v) The evidence of Mr Dunbar, C.A., which, to an extent, corroborated the evidence of Mr Longmuir.

Against the rebuttal and in support of the presumption provided by Section 21 of the Act is the following evidence.

(i) From the date Merchanthall Farm was purchased it appeared in the Partnership's accounts and balance sheet as an asset, annually until Mrs Longmuir, Senior, died.

(ii) The Partnership accounts were accepted by the two Partners year by year.

(iii) The Farm is shown in the Accounts and Balance Sheet as a Partnership Asset, and there is nothing to show, or indicate in the Accounts or the Balance Sheet that it is not.

(iv) All expenditure in relation to Merchanthall Farm was met by the Partnership.

(v) In circumstances where, against the background of the title to Merchanthall being recorded in the name of the Respondent as an individual, on the one hand, and Merchanthall appearing in the balance sheet of the Partnership accounts as an asset of the Partnership on the other hand, an explanation is provided by the Respondent that the sole reason for this was the insistence of the Bank that it be so included, but no evidence has been produced from or on behalf of the Bank involved, then I consider that I am entitled to seek the opinion of the Accountant appointed to assist me generally with accountancy matters, by agreement of the Parties. The professional advice tendered to me by James Gunn, Chartered Accountant, based on his 25 years of professional experience and practical experience as a Chartered Accountant in Scotland, indicates, firstly, that as a matter of course Banks do not instruct customers or their Chartered Accountants how the customer's Accounts are to be drawn or prepared, and secondly, it is more probable than not that, if the Bank insisted that Merchanthall Farm be included as an asset of the Partnership, it would be because the Bank considered that Merchanthall Farm was an asset of the Partnership as that was the persona to whom they were in fact making the borrowing facilities available. This advice cannot equate to evidence about the real or actual reasons for Merchanthall appearing in the Partnership accounts in this case but I do consider subject to the foregoing, it to be of assistance to me, evidentially speaking, to explain what a Bank's normal approach to such matters would generally be.

(vi) The riddle of the 'unsigned Will' could tempt us into giving it evidential status of a far greater degree than it deserves. Nevertheless I consider, for the reasons stated above, that it can be accepted as giving us a 'snapshot' of Mrs Longmuir's understanding of what the ownership of both farms, including Merchanthall Farm, was at the time the Will was prepared. That is backed up by Mr Longmuir's own evidence of what his mother remarked to him in the car on the way home from that appointment with her Solicitor. I consider therefore that it can provide us with further, albeit limited, evidence in support of the presumption.

On the evidence therefore and bearing in mind the terms and meaning of the Partnership Act, I am not prepared to agree that the presumption provided by Section 21 of the Act has been rebutted in this case and in these circumstances. I therefore find and declare that the ownership of Merchanthall Farm lies with the Partnership of Messrs David Longmuir and Son."

The submissions of the appellant

[6] At the outset of his submissions, senior counsel drew our attention to a joint minute for the parties containing certain agreed facts. This document contains agreement relating to many of the facts already narrated. It also makes reference to certain other matters. In particular, it is agreed that a Standard Security, securing the obligations of the partnership for a loan of money to cover the cost of drainage works on Merchanthall Farm was subsequently granted by the appellant to the firm's bank, and that that loan was subsequently repaid with funds belonging to the firm. Further, bank interest on the overdraft used for the acquisition of Merchanthall Farm was paid by the firm. The running costs of Merchanthall Farm were paid for by the firm, which conducted its farming operations on both farms together. The farms were treated as a unum quid for farming and book-keeping purposes. The appellant made a tax return to the Inland Revenue disclosing the purchase of Merchanthall Farm in the year ending 5 April 1983, showing it as his property. Further, the partnership never showed the purchase of Merchanthall Farm in its tax return as its property.

[7] Senior counsel explained that the principal issue for the determination of the court was the correct construction and meaning of the expression "deemed to have been bought on account of the firm" as part of the terms of section 21 of the 1890 Act. Two circumstances were relied upon as showing that the presumption enacted by section 21 had been rebutted. First reference was made to the title to Merchanthall Farm. Second, reliance was placed on the fact that the appellant had made a tax return showing the farm as his personal property. The title to Merchanthall Farm had been in the name of the appellant since it had been acquired. That title had never been challenged. The recording of the title in the name of the appellant must have been deliberate. That was prima facie evidence that the farm was not part of the partnership's assets, even though it had been used by the partnership for the generation of revenue during the life of the partnership. It was submitted that it had clearly been the intention of the partners at the time to keep the farm out of the partnership's assets, otherwise, having paid for it, they would have had to have shown it as one of those assets. It could not properly be suggested that, by including it in the firm's accounts, the ownership of the subjects had thus been changed. The farm had been bought "on account" of the firm, but, it was submitted, that did not mean as the property of the firm; it meant simply for the use of the firm. The farm had been an instrument, or mechanism, for earning revenue, but that did not mean that it had become an asset of the partnership. On the evidence, as led at the arbitration, contrary intention did appear, in that the title to Merchanthall Farm had stood in the appellant's name from 1982 until the present time, without challenge. Mrs Margaret Longmuir had died in 1994. If the farm of Merchanthall had been partnership property, it would have been likely that it would have been shown for taxation purposes, as part of her estate. There was no evidence that that had happened. The appellant was the only farmer in the family. His evidence had been that his understanding with his mother was that the title of Merchanthall Farm would stay in his name, and the farm would be his after her death, in exchange for the work he did on it, while the other farm (Netherfield) would devolve as part of her share of the partnership's assets.

[8] A draft will of Mrs Margaret Longmuir, drawn in 1986 by the partnership's solicitor, a Mr Hall, had never been signed. It was submitted that it was irrelevant, but nevertheless it had apparently been relied upon by the arbiter to give him some insight into the thinking of Mrs Longmuir at that time. He had not explained why that might be important, but had gone on to conclude that it supported the presumption created by section 21 of the 1890 Act. That reasoning was unsound.

[9] As regards the reliance placed by the arbiter on the opinion of Mr Gunn, chartered accountant, it was acknowledged that the parties to the arbitration had agreed that the arbiter should obtain accountancy advice from that source, where necessary. Mr Gunn had attended the proof hearing before the arbiter. The essential criticism of the arbiter's decision was that he had looked behind the terms of the title to Merchanthall Farm. The first question posed by the arbiter should be answered in the negative; the second question should be answered in the affirmative. As regards the third question, which raised the matter of expenses, the court should not interfere with the arbiter's decision. On being questioned by the court, senior counsel for the appellant accepted that, while a title recorded in the Register of Sasines was conclusive as regards real right while unreduced, it was not necessarily conclusive as regards the beneficial interest in the property concerned.

The submissions of the respondents

[10] Counsel for the respondents began by observing that the first question posed by the arbiter might not require to be answered, since it was, in a sense, an academic question. Senior counsel for the appellant had seemed to accept that a recorded title was not conclusive as regards the beneficial interest in the property in question. In that sense question one was not controversial and should be answered in the affirmative. Counsel agreed that the effect of section 21 of the 1890 Act might be to create an implied trust, which would not appear on the record, but which would affect the matter of beneficial interest. He observed that it had to be recalled that section 21 reflected the existing common law.

[11] Turning to the issue of the second question posed by the arbiter, counsel submitted that it fell to be answered in the negative. There was some doubt as to whether that question could properly be seen as a question of law. Nevertheless it might be that there was a real issue of law raised by it. However, it was for the arbiter to resolve the issues of fact that were in controversy before him. In that situation there was a real issue, which was a question of law, whether the arbiter was entitled to reach the conclusion that he did on a controversial issue of fact. The court could address that question. Counsel submitted that the conclusion reached by the arbiter, which was to the effect that the presumption created by section 21 of the 1890 Act had not been rebutted, was one which he was quite entitled to have reached. As regards the third question posed by the arbiter, the position of the respondents was that the arbiter had erred in reaching the conclusion that he had as regards the matter of expenses. He had found that no expenses were to be due to or by either of the parties. Having regard to the conclusion which the arbiter had reached on the facts, that decision was perverse; there was no reason stated by him to justify a departure from the ordinary principle that expenses should follow success. The arbiter had given reasons for his decision on expenses, which were narrated in his stated case. As regards those, they were plainly erroneous. If the arbiter was saying that, for some reason, the present proceedings could be seen as a test case, in which each party should bear their own expenses, there was no justification for such a view. In connection with this submission counsel referred to the Stair Memorial Encyclopaedia on the Laws of Scotland, dealing with the powers and the duties of an arbiter in relation to expenses, where it was stated that the general rule was that the same general principles should be followed in an arbitration as applied to litigation in court. He also referred to Court of Session Practice, Macfadyen and others at L-50.

[12] Turning to substantive matters, there were several particular points counsel desired to make. First, as regards Mrs Longmuir's unsigned will, it was plain from its terms, which could be seen from production B1, that her understanding had been at the time when the draft will had been prepared that Merchanthall Farm was a partnership asset; it was narrated so to be. That document demonstrated no more than Mrs Longmuir's understanding of the position. The arbiter had not attributed any illegitimate significance to that document.

[13] There had been some criticism of the arbiter's reliance upon the assistance of Mr Gunn, chartered accountant. However, the fact of the matter was that the parties had agreed that he should provide accountancy assistance to the arbiter. All that he had done was to give to the arbiter information about normal accountancy practice. There was nothing objectionable about that.

[14] Counsel drew our attention to first the Joint Consultation Paper of the Law Commission and the Scottish Law Commission on Partnership Law, tab 6, and their subsequent Report on Partnership Law, tab 7. Particular reference was made to the latter document, paragraph 2.21. It was there made clear that section 20 of the 1890 Act was of importance in relation to an issue of the kind which had arisen here. Section 20 had to be read along with section 21. If that were done, it was quite plain that the words "deemed to have been bought on account of the firm" in that latter section ought to be read as meaning bought as the property of the firm. In connection with the apparent reliance of the appellant on the title to Merchanthall Farm, counsel relied upon Keith v Penn or Johnston (1840) 2D 633. It was made quite clear in that case that the terms of the title to heritable property were not conclusive as to beneficial interest. Reference was also made to the Law Commissions Joint Report of the Law Commission and the Scottish Law Commission, paragraph 9.78, in which it was stated that, in relation to the issue of whether property was or was not partnership property, entries in a partnership's accounts would carry great weight in most circumstances, avoiding the need for a presumption that it was partnership property. Counsel also relied upon Marshall v Marshall [2007] CSOH 16, in which it was stated by the court that sections 20 and 21 of the 1890 Act clearly envisaged the court looking behind the terms of heritable title where it was alleged that land was partnership property.

The decision

[15] We turn first to deal with the issue raised in the first question posed by the arbiter. We must observe that the terms of this question, as formulated, contain certain unsatisfactory features. However, we take it to be a question of law as to whether a properly recorded heritable title which is not impugned or subject to any ex facie qualification as to the right of ownership may nevertheless not be conclusive as regards the beneficial ownership of the property in question. In the end, we understood senior counsel for the appellant to accept that a recorded title such as that held to Merchanthall Farm by the appellant, while being conclusive as to real right, was not conclusive as regards beneficial ownership. We regard that concession as inevitable. There are numerous cases in which the court has been prepared to examine the issue of beneficial ownership in the face of a contention that the title to heritable property did not reflect the true position regarding such ownership. Such a case is Keith v Penn or Johnston. At page 637, the Lord Ordinary, Lord Jeffrey, is narrated to have observed as follows:

"He supposes it will not be disputed, that if an heritable subject be really made part of the stock of a trading company, and be used by them as such, it will be liable to the claims of the company creditors, in preference to those of the mere personal creditors of the individual partners, and that in whomsoever the feudal title to such subject may happen to be vested."

The same view was expressed in a more modern context in Marshall v Marshall, at page 6 by Lord Hardie where, after examining the provisions of sections 20 and 21 of the 1890 Act said:

"These provisions seem to me to indicate that in the context of a partnership the court must ascertain what is partnership property. Even where the heritable property of a partnership is held in the name of individual partners ostensibly as individuals the heritable property is held in trust for the partnership."

His Lordship then considered the terms of section 20(3) of the 1890 Act and continued:

"That section clearly envisages the court looking behind the terms of the heritable title where it is alleged that there was an agreement to the contrary and that the additional land is partnership property. Moreover section 21 assumes that property purchased with money belonging to the partnership was bought on account of the firm unless the contrary intention appears. Thus where an individual partner uses partnership money to purchase heritable property and the title to that is taken in his name alone, the heritable property is deemed to have been bought on account of the firm unless a contrary intention can be established. These different situations will involve the court in enquiring into the nature of a transaction involving heritable property despite the terms of the feudal title."

[16] It is worth observing that, if the position were not as described above and the court was, in some way, disabled from enquiring into the true position as regards beneficial ownership, the provisions of section 21 of the 1890 Act, in relation to heritable property, would be unworkable. The terms of that section contemplate that property acquired with money belonging to a partnership is deemed to have been bought on account of the firm, unless the contrary intention appears, no doubt from other evidence that may be available. We should make clear that we reject the interpretation that senior counsel sought, somewhat faintly, to attribute to section 21, when he said that the words "bought on account of the firm" did not signify beneficial ownership. In our opinion, plainly they do. In all these circumstances we shall answer question one in the affirmative.

[17] Turning to the second question posed by the arbiter, we have considerable doubt as to whether this is indeed a question of law, which is, of course, the only kind of question that may be posed for our opinion under Section 3 of the Administration of Justice (Scotland) Act 1972. However, we are prepared to read this question as raising an issue of law in relation to the arbiter's factual determination, as to whether the arbiter was entitled in the circumstances disclosed to hold that the presumption created by section 21 of the 1890 Act had not been rebutted, which was what he held. In this connection, standing the presumption created by section 21, it is difficult to envisage circumstances in which an arbiter would not be entitled to hold that the presumption had not been rebutted, where there was evidence before him, some of which supported the presumption and other parts of which tended to point towards its rebuttal. It might only be where all of the evidence available to the arbiter pointed to the rebuttal of the presumption that a court might determine that he was not entitled to hold that the presumption had not been rebutted. However, that is not the situation in this case. There was evidence from a variety of sources some of which might be thought to point towards rebuttal, but other parts of which supported the presumption of the section. Prominent among the latter type of evidence is the circumstance of the inclusion of Merchanthall Farm as a partnership asset in the balance sheets of the partnership, following its acquisition. As is observed in the Joint Report of the Law Commission and the Scottish Law Commission, in a footnote to paragraph 2.21:

"The partnership accounts are often a good guide as to whether an asset is partnership property. If every partner has agreed to the inclusion of an asset in the balance sheet, this will normally be sufficient agreement."

Standing that and other evidence supporting the position that would be consistent with the statutory presumption, we conclude that the arbiter was entitled to hold as he did. Reading question two in the manner in which we have described, we answer the question in the negative.

[18] There was some argument advanced by way of criticism of the arbiter's approach based upon the advice which he accepted that he had received from Mr James Gunn, chartered accountant, authorised by the parties to assist the arbiter by providing accountancy advice. The matter concerned is described in paragraph W (v)(second) of the arbiter's Draft Part Final Award. Looking at what the arbiter says in that part of his draft award, we do not consider that he has transgressed the boundaries of propriety in any way. What he did was to receive general advice from Mr Gunn as to the practice reflected in his experience in relation to the preparation of bank customer's accounts. No doubt the effect of that material was to undermine, to some extent, the evidence of the appellant, but we do not consider that the arbiter's reliance on Mr Gunn's advice as to accountancy practice was illegitimate.

[19] There was also some criticism of the arbiter in relation to the late Mrs Longmuir's unsigned but engrossed will. This matter is dealt with in some detail in paragraph V of the arbiter's Draft Final Part Award. It may well be that the contents of this document were of little significance. However, it is quite clear that the arbiter did not treat them as of any greater significance than that. The arbiter simply treats the document as giving what might be called a "snapshot" of Mrs Longmuir's understanding of the position concerning Merchanthall Farm in 1986. In our opinion, there is nothing in the Draft Final Part Award to indicate that the arbiter has accorded to that material any significance beyond what it properly possessed. In all these circumstances we reject the criticisms advanced of the arbiter's approach.

[20] Turning to question three, which relates to the matter of expenses, we find ourselves forced to conclude that the arbiter's decision on this matter is perverse and one which no reasonable arbiter could have reached in the circumstances. In so far as we understand the reasons which he states in paragraphs (a), (b), and (c), as part of his finding in fact 12, it appears that, for some reason the arbiter considers that the issues raised in this case had the effect of transforming the case into what might be called a test case. We cannot agree with that view. The issues raised in this case were, in our view, of a kind which could be raised in many other cases. However, the resolution of the main issue in this case must depend upon a consideration of the general presumption created by section 21 of the 1890 Act, which is not ambiguous, in the context of the particular evidential position in this case. In our view, nothing decided in the course of the arbitration could be seen as constituting a precedent for other cases. That being so, it appears to us that the arbiter's reasons, as we understand them, for departing from the ordinary rule in the disposal of expenses that expenses should follow success disappear. In these circumstances we would answer question three in the negative. The expenses in question should, in our view, have been awarded in favour of the respondents in this appeal.