Scottish Court of Session Decisions

OUTER HOUSE, COURT OF SESSION [2012] CSOH 23
P1063/10	OPINION OF LORD BRODIE in the petition JOHN DAVID McIRVINE Petitioner; against JOHN ALEXANDER McIRVINE Respondent: ­­­­­­­­­­­­­­­­­________________

Petitioner: Artis; CMS Cameron McKenna (Scotland) LLP

Respondent: Party

7 February 2012

Procedural history

[1] This matter came before me on 19 January 2012 for a hearing on Petition and Answers. The petitioner was represented by Mr Artis, Advocate. The respondent appeared on his own behalf. He was, however, accompanied by a friend, Mr Peter Morrison. I agreed that Mr Morrison should provide the respondent with lay support, as is provided for by Rule of Court 12A. Mr Artis's motion was for permanent interdict in terms of the prayer of the petition. The respondent opposed that motion.

[2] Consideration of the process indicated that the petition had been presented on 4 October 2010. No caveats having been lodged, on the same date Lord Bannatyne granted interim interdict in terms of the prayer of the petition and made an order in terms of section 47 of the Court of Session Act 1988 ordaining the respondents in the terms prayed for to remove from Culdrain Farm, Gartly, Aberdeenshire ("the Subjects") all livestock and other animals, stock and goods placed on or brought to the subjects by or for the respondent, to remove all locks from the gates and to restore to the petitioner possession of the Subjects. Answers, signed by senior counsel, were lodged on behalf of the respondent on 26 October 2010. On 16 November 2010 the court, on the respondent's motion of consent, sisted the petition for a period of three months for the purpose of mediation. By letter of 25 March 2011, those acting for the petitioner intimated that the mediation process was at an end.

[3] On 5 May 2011 the petitioner lodged a Minute alleging breach by the respondent of the interim interdict granted on 4 October 2010. Answers to that Minute were lodged on behalf of the respondent on 26 May 2011. On 30 May 2011 agents acting for the respondent enrolled motions for recall of the interim orders granted on 4 October 2010 and to allow adjustment of the Petition and Answers. On 1 June 2011 at a hearing when the respondent was represented by counsel, Lord Drummond Young refused these motions and found the respondent liable to the petitioner in the expenses of the Minute for breach.

[4] Subsequently the respondent's agents intimated that they no longer acted for him and on 11 October 2011 the court, on the petitioner's motion, ordained the respondent to intimate whether he insisted in his Answers to the Petition. The respondent intimated that he did. He further intimated a motion to discharge the hearing on the Petition and Answers that had been fixed for 28 October 2011. On 26 October 2011, notwithstanding the absence of the respondent, the court discharged the hearing for 28 October 2011 and, of new, assigned 19 January 2012 as the date for the first hearing.

The issue

[5] The dispute between the parties relates to the title to, and consequently the right to occupy and sell, the Subjects. It is the petitioner's position that he is entitled, as the sole surviving former partner and trustee of the dissolved firm of JD & D McIrvine, Farmers, Gartly, to sell and convey the Subjects with vacant possession. The respondent disputes this.

[6] The Subjects were formerly owned by the respondent. On 11 November 1988 he disponed the Subjects together with Culdrain Farmhouse and the 13 acres immediately surrounding the farmhouse to his then wife, Mrs Doris Catherine McIrvine and the petitioner, who is the respondent's son, and the survivor, as trustees of the firm of JD & D McIrvine, Farmers of Culdrain Farm, Gartly. That Disposition was recorded in the General Register of Sasines, Aberdeen on 16 October 1989. No title to the Subjects has since been recorded or registered.

[7] The respondent was sequestrated on 22 May 1989. On 1 July 1989 Mrs Doris Catherine McIrvine died leaving a Trust Disposition and Settlement executed on 10 June 1989. In terms of the Trust Disposition and Settlement the late Mrs McIrvine conveyed her whole means and estate after the payment of debts in trust directing that her trustees give the respondent the liferent use and enjoyment of the whole of the rest, residue and remainder of her means and estate, the life rent being declared to be alimentary.

[8] It would appear that for a period of some 15 years the petitioner and the respondent conducted their respective farming activities and business affairs with a degree of informality but in co-operation one with the other. No steps were taken to confirm to or ingather the estate of the late Mrs Doris Catherine McIrvine. Although the partnership between the petitioner and the late Mrs McIrvine was dissolved on her death, its affairs were never wound up. The respondent remained sequestrated until his discharge in 1999. The respondent re-married in 1994 and on 25 July 1995 the petitioner, as trustee for the dissolved partnership of JD & D McIrvine disponed Culdrain Farmhouse and the surrounding 13 acres in favour of the respondent and his second wife, Mrs Irene Milne or McIrvine.

[9] In about 2005 the relationship between the pursuer and the respondent broke down by reason, the petitioner avers, of his concern over the extent of the respondent's intermissions with the petitioner's stock and business. On 19 November 2009 the respondent and George McIrvine confirmed to the estate of the late Mrs Doris Catherine McIrvine and raised an action for count reckoning and payment by the petitioner for his intromissions with the late Mrs McIrvine's interest in the former partnership and for interdict of the petitioner from selling or otherwise disponing or dealing with the Subjects, in the Sheriff Court at Stonehaven. That action was dismissed after debate on the basis that the obligation to account had prescribed. The petitioner raised an action against the respondent in the Sheriff Court at Aberdeen for count and reckoning of the respondent's intromissions with the farming of Culdrain Farm from 1989 to the present. On 9 November 2011, in respect that the respondents accepted that there was an obligation on his part to account from the financial year ending 5 April 2000 to date the sheriff ordained the respondent to lodge an account of his intromissions by 11 January 2012.

[10] The present petition was presented by reason of the petitioner's wish to sell the Subjects and the receipt of an offer to purchase from the Forestry Commission which was acceptable to the petitioner. The petitioner avers that the respondent unlawfully interfered with the proposed sale to the Forestry Commission. On or about 28 July 2010 the respondent caused an offer to be made for the subjects at a price of £650,000 by Huntly Farming Ltd. The directors of that company are partners in the firm of R & R Urquhart LLP, Solicitors, who act as agents for the respondent. Although not disclosed at the time of the offer, R & R Urquhart subsequently admitted that the beneficial owner of Huntly Farming Limited was the respondent. The petitioner instructed his agents to ignore the offer from Huntly Farming Limited, it being his view that the respondent did not have funds to pay the offer price and that the offer was a sham. The petitioner accordingly instructed his agents to proceed with the sale to the Forestry Commission. It had been intended to settle that sale on 15 September 2010 with payment by the Forestry Commission of a purchase price of £647,000. However, the respondent caused R & R Urquhart to send to the solicitors acting for the Forestry Commission an e-mail dated 10 September 2010 in the following terms:

"We intimate that we are instructed by John A McIrvine (A) of Culdrain Farm, Gartly, Aberdeenshire, to provide a second opinion.

We are aware that Ledingham Chalmers are also representing him.

We have preliminary reason to believe that A may have an interest in the ownership, which failing the tenancy, which failing a servitude right of pasturage, and if our initial belief, based on information meantime provided turns out to be correct, then A's son, John D McIrvine (D), who may purport to be the owner, may not be in a position to grant vacant possession.

A has made representations to [a local Member of the Scottish Parliament] who we understand will be raising this matter with the Forestry Commission.

May we please request that a moratorium period of say two months is allowed to resolve matters between A and D, prior to the Forestry Commission being dragged into a potential material family dispute with title consequences.

This e-mail is sent entirely without prejudice.

Colin Whittle

Senior Partner

R & R Urquhart LLP".

[11] In these circumstances it came to be Mr Artis's submission that the respondent was guilty of slander of the petitioner's title to the subjects and that the petitioner was accordingly entitled to interdict. As at the date of presentation of the petition the respondent had, as was admitted in the Answers lodged on its behalf, certain stock on the Subjects together with other property. He had padlocked gates. As at the date of the hearing before me on the Petition and Answers, I understood that the stock and property had been removed. The respondent had, however, impugned the petitioner's title and had encroached on the Subjects by grazing stock and using the facilities, as was admitted. On the petitioner's behalf, Mr Artis therefore sought interdict both to prevent any repetition of what he said were the wrongful acts of the respondent and to provide some reassurance to the Forestry Commission which still wished to proceed with the purchase of the subjects.

The respondent's pleadings

[12] Although unrepresented before me, the respondent had been professionally represented in relation to the petition between at least 26 October 2010 when Answers were lodged on his behalf and 1 June 2011 when counsel appeared on his behalf before Lord Drummond Young. During that period quite detailed pleadings were prepared on his behalf and lodged with the court. The hearing on the Petition and Answers was fixed. Answer 4 of the Answers to the Petition sets out the respondent's position in relation to the title of the subjects and the right to occupy them. It is in the following terms:

"Admitted that the subjects were partnership property of the firm, under explanation that the Petitioner has never wound up the affairs of the partnership and accounted to the executors of the late Mrs McIrvine for her share of the partnership assets which include the said farm. Admitted that the Respondent was never a partner. Admitted that the respondent has grazed the holding and used its facilities, under explanation that this was with the knowledge and agreement of the Petitioner. Explained and averred that the respondent has all along carried out the farming and management of the holding with the knowledge and concurrence of the Petitioner. The Petitioner only ever helped with some lambing work. Quoad ultra denied. Explained and averred that the Respondent has occupied Culdrain Farm house since around 1990 and operated the farming business from there in conjunction with the balance of the farm. The farmhouse and about 19 acres of Culdrain farm were transferred to the Respondent and his second wife by the Petitioner in 1995. Further explained and averred that in terms of Mrs Doris McIrvine's Trust Disposition and Settlement the Respondent was given the alimentary 'use and enjoyment of the whole rest, residue and remainder of my said means and estate whether heritable or moveable, real or personal'. Said property included Mrs McIrvine's rights in the partnership property which included Culdrain Farm and accordingly the Respondent retains a right to use and enjoy the said partnership property, in so far as it belonged to Mrs McIrvine. From the death of Mrs McIrvine to date, the Petitioner has allowed the Respondent to use the farm. In the event that he now wants to terminate the said arrangement, and esto the Respondent is required to remove, the Respondent contends that he should be given reasonable notice of the termination in order that he can remove his stock and goods and gear from the farm. Reasonable notice in respect of an agricultural unit is one year.

[13] By motion on 30 May 2011, those acting for the respondent sought to be allowed to adjust the Answers to the Petition. That motion was refused on 1 June 2011 but it would appear that the substance of what it was proposed to add to the Answers to the Petition appears in the Answers for the respondent to the Minute for breach of interdict. Answer 5 of the Answers to the Minute for breach of interdict includes the following:

"... during the course of the mediation the Respondent's agents became aware that the Petitioner had granted a disposition of the farm to the Respondent which he had signed, but his signature was un-witnessed. In respect that negotiations have now broken down the Respondent is raising a Summary Application in the Sheriff Court at Aberdeen to set up the said disposition under section 4 of the Requirements Writing (Scotland) Act 1995. Accordingly the Petitioner has no right to sell the farm to the Forestry Commission or to let the land as the right of property lies with the Respondent".

Submissions of parties

Petitioner

[14] Having explained the factual and procedural background, Mr Artis sought to demonstrate that the petitioner had a title to the subjects as trustee to the dissolved partnership unencumbered by any interest held by the respondent. He pointed to the disposition in favour of the petitioner, a copy of which had been lodged in process, and which had been referred to for its terms in Answer 2 to the Answers to the Petition. Although Answer 2 made no further admission in relation to the disposition there was an averment, at Answer 8, that "the farm is partnership property and the petitioner is under an obligation to wind up the partnership and account to the respondent as life-renter of Mrs McIrvine's share of the partnership property, including the farm". There was therefore no issue but that the petitioner was proprietor of the subjects, as trustee for the dissolved partnership. The question therefore was whether the respondent had any countervailing right. The reference in Answer 4 of the Answers to the Petition to the petitioner having "allowed the respondent to use the farm" would indicate that the respondent had no right, as would the following averment that "in the event that [the petitioner] now wants to terminate the said arrangement, and esto the respondent is required to remove, the respondent contends that he should be given reasonable notice of the termination in order that he can remove his stock and goods and gear from the farm". The respondent goes on to aver that reasonable notice in respect of an agricultural unit is one year. That averment, Mr Artis reminded me, had been made some 15 months ago. The reference to "an agricultural unit" raised what Mr Artis described as the "spectre of the Agricultural Holdings Acts" but there is no further reference to an agricultural holding in the pleadings. As appeared from 6/41 of process the respondent had admitted that the petitioner was heritable proprietor of the subjects in his pleadings in the action at the instance of the petitioner against the respondent for account and reckoning in the Sheriff Court at Aberdeen. As appeared from Answer 4 in the Closed Record in that action, the respondent there did not claim any interest in the subjects but rather that the petitioner had agreed to his use of the grazing and facilities in recognition of prior services and the assumption of trade debts. A different explanation of the basis of the respondent's occupation of the subjects had been put forward by the solicitors acting for the respondent by letter of 5 May 2006 where it was stated that a farming business had been carried on as a partnership between the petitioner and respondent. In the action for account and reckoning in Aberdeen Sheriff Court, the respondent lodged on 4 November 2011 invoices in respect of alleged services relating to the subjects totalling £492,250. While pointing to the productions, including the e-mail from Mr Whittle dated 10 September 2010, as indicating the respondent's various and contradictory claims in respect of the Subjects, it was Mr Artis's submission that in determining whether the petitioner was entitled to the remedy he sought, regard should only be had to the terms of the Answers to the Petition. These, he submitted were irrelevant. What Mr Artis described to as the "pretended disposition" referred to in the Answers to the Minute for breach of interdict had not been pled by way of answer to the petition but were it to be, it did not confer title on the respondent where, while it bore what appeared to be the signature of the petitioner, each page was printed on paper marked "Draft", there was no testing clause, the signature had not been witnessed and there were no averments on behalf of the respondent that it had been delivered by the petitioner. The wrong in respect of which the petitioner sought interdict, explained Mr Artis, was slander of his title to the Subjects and encroachment on them. Reference was made to Burn-Murdoch On Interdict at para. 338; Philp v Morton 18 January 1816, Hume Dictionary of Decisions; Bruce v J M Smith Ltd (1898) 1 F 327 and MacLeod v Davidson 1886 14 R 92. The only defence pled to the petition was irrelevant. The interest relied on by the respondent was his alimentary liferent of the residue of his late wife's estate. At the date of her death she was a partner in the now dissolved firm of JD & McIrvine and therefore had a claim to a share in the surplus of assets over liabilities on its liquidation but a life-rent of that share did not confer any interest in what had been the partnership property. The respondent had no more than a personal right as against his late wife's trustees. Reference was made to Inland Revenue v Clerke's Trustees 1939 SC 11; and Parker v Lord Advocate 1960 SC (HL) 29.

Respondent

[15] The respondent made a brief reply to Mr Artis' submissions. He drew attention to what Mr Artis had described as the pretended disposition. The draft deed had been prepared on his instructions by CMS Cameron McKenna LLP, then acting for both him and the petitioner, and sent to him by letter of 21 March 2005. The petitioner had signed it. The respondent had then returned it to CMS Cameron McKenna LLP. While recognising that it was printed on paper marked "Draft" he could not understand why CMS Cameron McKenna had put it in that form if it was not supposed to be legal. The petitioner had made a few promises to him that had never transpired. The respondent and his second wife had spent two or three years doing up the Keeper's Cottage (part of the Subjects). He had run the farm for 17 years putting all monies into the "John D McIrvine Junior" bank account. He understood the Disposition by him in favour of his late wife and the petitioner not to have been properly executed and that therefore the Subjects should revert to him.

Discussion and decision

[16] I am satisfied on the basis of everything that has been put before me that the petitioner has title to the Subjects as sole surviving former partner and trustee of the dissolved firm of JD & D McIrvine, in terms of the Disposition by the respondent in favour of the late Mrs Doris Catherine McIrvine and the petitioner dated 11 November 1988 and recorded in the General Register of Sasines, Aberdeen on 16 October 1989. A copy of that disposition is lodged in process. It is ex facie entirely regular and I can see no basis for the respondent's suggestion, made by the respondent in his submission to the court but nowhere else, that it was not properly executed. That the petitioner has title as trustee of the dissolved firm is effectively admitted by the respondent in his Answers to the Petition. It is expressly admitted by the respondent in the Closed Record in the action for count and reckoning against him at the instance of the petitioner and currently depending in Aberdeen Sheriff Court. The petitioner's title is not affected by the existence, where and in whose hands I do not know, of the document described by Mr Artis as the "pretended disposition". I have seen a photocopy of the pretended disposition. It was prepared by CMS Cameron McKenna (Scotland) LLP and printed on paper with the word "Draft" prominently displayed on each sheet. It was apparently sent to the respondent by CMS Cameron McKenna, which firm then acted for both the petitioner and the respondent, under cover of a letter dated 21 March 2005. It bears what Mr Artis accepted "looks like" the petitioner's signature but, Mr Artis went on "[the petitioner) did not subscribe any disposition of land". While Mr Artis did not elaborate on that remark, there is therefore no acceptance by the petitioner that by subscribing the pretended disposition (if that is what he did) he intended to convey the Subjects to the respondent. There is no presumption in terms of section 3 of the Requirements of Writing (Scotland) Act 1995 that what looks like the petitioner's signature is indeed the petitioner's signature because it is un-witnessed and the pretended disposition has no testing clause. No application has been made in terms of section 4 of the 1995 Act. There are no averments about the pretended disposition in the Answers to the Petition and in the Answers to the Minute for breach of interdict the averments go no further than that the respondent's agents "became aware that the petitioner had granted a disposition of the farm". There are no averments of circumstances from which it could be inferred that the petitioner has ever delivered the pretended disposition to the respondent with the intention of conveying the Subjects to the respondent.

[17] In his reply to Mr Artis' submission I understood the respondent to say that the petitioner signed the pretended disposition and he, the respondent, sent it back to CMS Cameron McKenna. That begs the question for whom CMS Cameron McKenna thereafter held it and for what purpose. However the short point is that the pretended disposition is irrelevant to the question of who owns the subjects. In terms of section 4 of the Abolition of Feudal Tenure etc (Scotland) Act 2000, ownership of land shall pass on registration or recording. The pretended disposition has neither been registered nor recorded.

[18] If then the petitioner is owner of the Subjects, albeit in a trustee capacity, the question arises as to whether it appears from the Petition and Answers that the respondent has committed a wrong against the petitioner, repetition of which the petitioner is entitled to interdict.

[19] What the petitioner founds on is slander of his title to the Subjects and the physical encroachment on them by the respondent.

[20] As far as slander of title was concerned, Mr Artis founded principally on Mr Whittle's e-mail sent on 10 September 2011 to the solicitors acting for the Forestry Commission where Mr Whittle expresses the belief that the respondent "may have an interest in the ownership, which failing a tenancy, which failing a servitude right of pasturage". The e-mail goes on to state that the petitioner "who may purport to be the owner, may not be in a position to grant vacant possession". The petitioner avers that the e-mail has had a chilling effect on the proposed transaction to the extent of delaying it, as no doubt it was Mr Whittle's intention that it should. Did causing his agent to send the e-mail amount to an actionable wrong on the part of the respondent? In Mr Artis' submission it did. I agree.

[21] Mr Artis had first invited consideration as to whether what was averred on behalf of the petitioner amounted to actionable wrongs on the part of the respondent and then had invited consideration as to whether the respondent had relevantly averred a defence. Reversing that order, I shall look first at the respondent's averments. I have quoted all of Answer 4 to the Petition but the critical sentences are these:

"... in terms of Mrs Doris Catherine McIrvine's Trust Disposition and Settlement, the respondent was given an elementary 'life rent use and enjoyment of the whole rest, residue and remainder of my said means and estate, whether heritable or moveable, real or personal'. The same property included Mrs McIrvine's rights in the partnership property which included Culdrain Farm and accordingly the respondent retains a life rent right to use and enjoy the said partnership property, insofar as it belonged to Mrs McIrvine".

Mr Artis, I thought charitably, described this passage as containing a non sequitur. I would have been less kind. In my view these averments display fundamental misconceptions as to the nature of both partnership and trust property. Where heritable estate is part of partnership property it is held by the partners in trust; in the first place for the creditors of the firm and secondly for the partners according to their rights under the partnership agreement: Partnership Act 1890 section 20; Miller Partnership (2^nd edition) p.401. The heritage belongs to the partnership. As between the partners, the partnership property is moveable: section 22 of the 1990 Act, and in respect of that property the partners have a jus crediti or personal claim only. It was that personal claim that devolved on the late Mrs McIrvine's trustees and executors in terms of her Trust Disposition and Settlement. The trustees thereafter held that claim as part of the residue of the late Mrs McIrvine's estate, of which the respondent had a liferent. That liferent is a beneficiary liferent and not a proper liferent. The respondent's interest is that of beneficiary with a jus crediti in respect of what is held by the testamentary trustees. The respondent has no real right in respect of the Subjects. As Lord President Normand put it in Inland Revenue v Clarke's Trustees 1939 SC 11 at 24:

"... 'what this lady enjoys is not the stocks, shares and rents or other property constituting the trust fund under the will; what she has is the right to call upon the trustees, and, if necessary, to compel the trustees, to administer this property during her life so as to give her the income arising therefrom according to the provisions of the trust. Her interest is merely an equitable one, and it is not an interest in the specific stocks and shares constituting the trust fund.' In my opinion that is a very accurate description of the rights of a beneficiary enjoying a liferent under a Scottish Trust Deed ...".

[22] Thus on the basis of everything that has been put forward in the pleadings (and indeed such of the productions to which my attention has been drawn) the petitioner's title, as trustee, is unencumbered by any right of the respondent which would prevent the petitioner from granting vacant possession of the Subjects. The respondent instructed his solicitor to assert otherwise, and not simply to the petitioner or those acting for him, but to the party to which the petitioner intended to sell.

[23] Slander of title is a recognised form of verbal injury and therefore a wrong: Cooper On Defamation and Verbal Injury p.86, Burn-Murdoch On Interdict pp.388-390 and Walker Delict (2^nd edition) pp.903-904. Put shortly, it is constituted by an assertion that a party has no right to an item of property or no right to dispose of it. It is for the party claiming that his title has been slandered to prove that the assertion is false. Beyond that, whether it is also necessary for him to prove that the assertion was made maliciously or in bad faith (and what "maliciously" and "bad faith" mean in this context) may be debateable. The leading but admittedly rather elderly case of Philp v Morton supra would suggest that mala fides are not necessary but Burn-Murdoch is to somewhat different effect. These questions may need to be explored on some future occasion but not in the present case. While I would incline to the view that it is not necessary to show malice, in the sense of intention to harm, or bad faith, in order to obtain interdict of false assertions as to a party's title, for present purposes I am content to assume that it is in that here, in my opinion, malice and mala fides are sufficiently demonstrated. Mr Whittle's e-mail was clearly intended to cause the Forestry Commission to doubt whether the petitioner had title to convey the Subjects with vacant possession and thus to harm the petitioner's interests by preventing or delaying a sale. The tentative terms in which the e-mail was expressed are consistent with the writer having no real basis for impugning the petitioner's title and nothing has been put forward subsequently to suggest otherwise, but, in any event an honest but erroneous view of the legal position does not of itself entitle a party to act wrongfully: Macleod v Davidson (1886) 14R 92. To communicate directly with a potential purchaser's solicitors as Mr Whittle did on the respondent's instructions is hardly commensurate with acting in good faith. At best for the respondent, Mr Whittle's expression of opinion has the look of being reckless and, as I have already indicated, it was clearly intended to harm the petitioner's prospects of selling the subjects. I regard that as sufficient to amount to slander of title and in the whole circumstances I would see the petitioner as being entitled to interdict of any repetition. As far as encroachment on the Subjects is concerned, I am again of the opinion that the petitioner is entitled to interdict. I accordingly propose to grant interdict in terms of the prayer of the petition. I shall reserve all questions of expenses.