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You are here: BAILII >> Databases >> Scottish Court of Session Decisions >> Armstrong v. Forbes & Anor [2008] ScotCS CSOH_174 (16 December 2008)
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Cite as: [2008] ScotCS CSOH_174, [2008] CSOH 174

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OUTER HOUSE, COURT OF SESSION

 

[2008] CSOH 174

 

 

 

 

 

 

 

 

 

 

 

 

OPINION OF LORD MATTHEWS

 

in the cause

 

MARY VANCE ARMSTRONG

 

Pursuer;

 

against

 

ROBERT LINDSAY FORBES, Chartered Accountant, as judicial factor on the Sequestrated Estates of G. DUNLOP & SON

 

First Defender;

 

and

 

MICHAEL CAMERON DUNLOP

Second Defender:

 

 

­­­­­­­­­­­­­­­­­________________

 

 

 

Pursuer: Party

First Defender: Govier; Morison Bishop

Second Defender: MacPherson; Simpson and Marwick

 

 

16 December 2008

 


[1] In this case, the pursuer appeared as a party litigant. Mr Govier (advocate) appeared for the first defender and Mr Macpherson (solicitor advocate) for the second.


[2]
At the outset, on the second defender's unopposed motion, I granted decree of dismissal in his favour and found no expenses due to or by either him or the pursuer. I continued the cause until the following day for the hearing of evidence.


[3]
When the case commenced Miss Armstrong embarked on a discussion about the background. I was prepared to allow her some leeway in that regard but it became apparent that she was straying into matters which might be contentious and I indicated to her that if she wished to proceed with her proof she would require to adduce evidence in the normal way. This she duly did.


[4]
Before discussing the evidence I should indicate that the background to the proof is set out in a number of decisions. See for example G Dunlop & Sons' Judicial Factor v Armstrong 1994 SLT 199 (Lord Kirkwood); G. Dunlop & Sons' Judicial Factor v Armstrong 1995 SLT 605 (Lord Penrose), an Opinion of Lord Cameron of Lochbroom in the petition of the second named defender dated 25 October 2000; an Opinion of Lord Drummond Young in this very action at an earlier stage of proceedings dated 10 January 2003; and the Opinion of the Court delivered by Lord Marnoch chairing an Extra Division on 26 September 2003. In these circumstances I do not need to go into the background in any great depth.


[5] The pursuer seeks declarator that she is entitled to ownership and occupation of property at Clachan of Penninghame Farmhouse, Newton Stewart, free of any claims by the first defender as judicial factor in virtue of a joint minute, of which more later. She also seeks declarator that the first defender is bound to effect a disposition of said property in her favour. In addition she seeks production and reduction of a pretended decree granted by the sheriff at Stranraer on 19 December 2001 for recovery of possession of the property and the final decree of ejection which was pronounced on 14 June 2002 and extracted on 1 July 2002. Reference to that final decree was added by amendment. She also seeks suspension of said decree, suspension ad interim having been granted by Lord Drummond Young. In the fourth place she seeks interdict against the first defender or anyone acting on his behalf from taking any steps, except in this process, to evict or eject her from the farmhouse. Lastly, she seeks the expenses of the action.


[6] After she was sworn as a witness she told me that her full name was Mary Vance Armstrong. She lived at Clachan of Penninghame, by Baltersan, Newton Stewart. She was 61 years of age, divorced and had three daughters. She and her ex-husband, the second defender, had been equal partners in the firm of G. Dunlop & Son, Farmers. She and he married in 1970 and lived at Baltersan. This was a farm of some 650 acres which was shown on No. 6/28 of process, a map.


[7]
The partnership, which was initially on an equal basis, was entered into in 1972 and her father, the late Hugh Graham Armstrong had gifted funds to it. In 1972 £70,000 was borrowed from the Clydesdale Bank and was secured over Baltersan by way of a standard security. In 1975 £25,000 was borrowed to procure Clachan of Penninghame Farm. That loan was secured in the same way. Clachan of Penninghame Farm extended to some 90 acres.


[8]
The three children were born in 1976, 1979 and 1982. Things started to deteriorate in the marriage and in 1983 her ex-husband was already considering divorce. By some means he altered the partnership ratio from 50/50 to 95/5 in his favour. I queried how this was done and she indicated that it was by fraudulently siphoning off the assets. Without her knowledge or consent he advertised the Clachan of Penninghame Farm for sale on this 95/5 basis and that was when his machinations came to light. From 1983 to 1986 she was working on the farm and bringing up her children.


[9]
Her husband sold off the farm and dairy cattle and things deteriorated to such an extent that she went for legal advice in about 1985. She was concerned, amongst other things, about the new partnership ratio but hoped to go to arbitration. There was an arbitration clause in the partnership agreement but, for some reason, they never went down that route. She said that there were 31 acres of land on the east side of the map where Moss 90 is marked. This apparently became an issue later on. The land had been conveyed to a brick or tile company either Whistleberry Brick Company or Carty Tile Company, so that clay could be extracted. The land was to be re-conveyed to the partnership but her ex-husband had it conveyed to a Limited Company of his by the name of Noltan. There was no security over that land in favour of the Clydesdale Bank and to that date it had not been sold on the open market. All these events led up to the dissolution of the marriage. The Clydesdale Bank had been concerned about the overdraft. The farm should have been doing well, with a busy dairy herd, beef cows and sheep. Her ex-husband was away a lot, however, and the partnership was getting into debt. Her father offered a further £10,000 every year but the ex-husband was so bad that he took money out of the children's bank accounts. Then her father offered £100,000 to get the farm up and running again. Negotiations with the bank continued through the Spring of 1986 but her ex-husband would not accept any offers of help from her father. He wanted the property sold. There was sufficient property to enable a division to have taken place. There were two farms, each of which could have been split into around 350 acres, give or take a few acres. Her father offered either half to her ex-husband, the main consideration being to keep farming, but the latter determined that the bank would have to call up the standard securities. The commitment to the bank of £70,000 in 1972 had quadrupled.


[10]
Calling-up notices were served on 3 July 1986. The pursuer said that they had three months to find the money but her ex-husband waived his rights so that the bank could go on with the sale and the partnership became debtors in default. The bank raised an action in Stranraer Sheriff Court in October 1986 so that they could enter into possession and sell the property. The pursuer wanted to defend it and it was sisted. It would have given the bank rights and powers to enter into possession and the property would have been left void and redd, according to her. It was her position that the partnership had lost the right to redeem the debt, although this was a matter which had been discussed by Lord Kirkwood.


[11]
She then referred me to No. 6/27 of process, which was an assignation by the Clydesdale Bank of the standard securities in favour of her father. The consideration for the assignation was the payment of £316,053.75 paid to the bank by her and the assignation was to take effect from 3 November 1986. Her father then became the heritable creditor. The bank had not wanted to evict them because it might have given them bad publicity so they assigned the securities to her father. No. 6/26 of process was a letter from her father confirming that he had handed over the money. A reparation programme was needed on the farm because it had ceased trading. Her ex-husband moved off to Tenerife in November, having purchased a farm with a house and 90 acres. There were issues over the children. She had to ask her brother and her father to assist in running the farm and matters were building up again.


[12]
In December 1986 her husband went to the Court of Session and petitioned for the appointment of a judicial factor. He was not happy that the farm had not been sold. An appointment was made on 23 February 1987, an interim appointment having been made on 8 December 1986. Before this there had been a "spurious" interdict taken against her father to try to prevent him from entering into possession. There was also an attempt to prevent the Clydesdale Bank from transferring their rights to him. Neither she nor her father was a party to the hearing when the appointment was made. The arbitration clause in the partnership agreement was never mentioned. Her father was still trying to organise a division of the property rather than a sale but she said that she was prevented from going to see the Accountant of Court by the judicial factor. He said that he would "mark hours against her" and it was not easy to get access to any accounts. I did not fully understand this. Her family and she wished to carry on farming but the judicial factor put in a farm manager and they were not allowed into the buildings. Her father had wanted to preserve the farm but the factor had taken the opposite position. The factor also interfered in the payment of aliment to the children. He paid £7,500 to her ex-husband, although he was in full-time employment. The pursuer was not allowed to look after the lambing or the animals generally. She was not allowed to feed the cows. The farm was a rich resource and could easily have been divided.


[13] In 1987 there were a number of proposals for settlement which continued throughout the year. Her ex-husband, however, wanted the judicial factor to sell the property. In 1987 there were a number of orders made in the Court of Session. The judicial factor claimed the power to sell and her father claimed certain powers. According to her, her father held the title. In 1988 the standard security was assigned to her brother Gordon Graham Armstrong due to her father's illness. The judicial factor was hell bent on pursuing eviction and that took place. She and the children were evicted from their own house in July 1988. At that time there was no alternative accommodation available, although at one point there had been nine houses on the farm. They were homeless. The judicial factor paid her ex-husband a greater allowance than he paid to her since the latter had to pay aliment.


[14] Her lawyers persuaded her that she had to seek a divorce. It was hoped that a settlement would entail the division of the property rather than its sale. That was what led to the joint minute which lies at the heart of the current action. She had been begging for accommodation. The judicial factor had boarded up the house. She obtained a part-time job, having been on State benefits and was able to work 17 hours. The girls' schooling had to be taken care of and there were court appearances and things were all over the place. She rented a cottage where she could get a lambing job but it was far from schools and the like. She and the children were not even allowed to recover their possessions from the house, not even toys. This all led to the divorce. Proceedings were raised in 1987 and there were a number of attempts by Counsel to persuade her ex-husband to agree to a division. She said that there were 15 pages of evidence which she might seek to lodge in process later on. The parties spent days in Parliament House trying to sort matters out and 20 witnesses were in attendance. No. 16/28 was a document containing proposals for settlement, apparently drafted by Counsel. The judicial factor had to be called back to give evidence, and that was what was contained in the 15 pages which she had mentioned. The hope was still that Clachan of Penninghame would be ceded from the farm. Her father and brother were going to leave money in the farm without interest but it was not to be. Her ex-husband's Counsel resigned.


[15] Her father died in September 1989 but there had been a Commission at his bedside in the summer of that year. He reiterated that he had tried his best for all the partners. She said, however, that this was not pertinent since things had moved on. She could not get the keys of the house which was awarded to her. The defender had arranged for the locks to be changed and did not want to give them keys. There had been some 14 different proposals put forward culminating in the divorce proceedings. The judicial factor was part of the divorce proceedings in the sense that he had been a witness. According to him the division of the property had been a matter for the parties to agree between them and it was not for him to stand between them.


[16] The proof had been held between 8 and 15 November 1988. Lord Morison had granted decree on the basis of the joint minute, which was No. 6/25 of process. That dealt with matters relating to the children and aliment and it was agreed that there would be no award of periodical allowance. It provided for the transfer to her of her ex-husband's whole right, title and interest in Clachan of Penninghame Farmhouse and relative garden ground, and the moveables contained therein and also, inter alia, that the conclusion for a capital sum would be refused. After the divorce the pursuer and her children carried on living in the caravan and went up and down to court from time to time.


[17]
In 1992 matters came to a head with the decision by Lord Kirkwood. The farm at Baltersan was being depleted by the judicial factor and it became insolvent. The moveables and the dairy herd and fixed equipment were sold and the farm ceased to be a going concern. Its value would not then have met the outstanding debts. The judicial factor wrote a letter to the Accountant of Court asking for directions since he had no funds. It was therefore insolvent in 1992 and the judicial factor claimed that it was still insolvent today, as he had done in the course of the hearing before Lord Drummond Young in 2003. Lord Kirkwood had decided that the heritable creditor had a "pre-emptive" right to sell. The heritable creditor was by then her brother, Gordon Graham Armstrong, and he sisted himself into the court action which had been raised by the Clydesdale Bank in 1986. Decree in his favour was granted by the Sheriff Principal on 8 January 1993 and he entered into possession with concomitant rights to evict the occupiers etc. No. 6/30 of process was an extract of the decree in his favour.


[18] He then started restoring the farm. There had been grazing tenants in it but they had to remove. He started a reparation programme to cure the various depletions, being a farmer himself. Four years of court action followed as to who had the right to sell. He wanted the property to be divided rather than sold as that would have been the most equitable thing to do. A declarator was sought by the judicial factor in 1989 but that action was abandoned. While the judicial factor was insolvent he had been solvent the year before. The property had been built up again and lots of offers were made to the judicial factor to divide it. One of these came from her brother. That was contained in 6/33 of process. It was dated 1 October 1994 and his proposals were that the judicial factory should immediately stop with all outstanding accounts being brought up to date and audited. Payments of £200,000, or that value in land, would be made to the pursuer and her ex-husband or nominees by her brother. He would transfer the 1972 and 1975 standard securities to the judicial factor. (The actual proposal is the other way round but that does not make sense). Lastly, he would have no further claim against the judicial factory. However, her ex-husband was not in favour of that agreement and she did not have access to the Accountant of Court.


[19] In 1994 there was a massive turn around with the judgment of Lord Penrose. Her brother was in the process and the judicial factor's position was that he would consider nothing other than a sale on the open market. On the other hand the 31 acres had apparently been sold but not on the open market. The judicial factor would not countenance public roup but he insisted that Baltersan had to be sold after Lord Penrose's judgment in September 1994. The judgment had not gone in favour of her family.


[20] In 1994 the property was advertised for sale and she was interdicted from tying to prevent the sale, with the exception of the property at Clachan of Penninghame. She referred me to No. 6/34 of process, a copy interlocutor in terms of which Lord Clyde, on 9 September 1994, granted interim interdict against her in the terms she indicated. That interim interdict the covers "the heritable property" of the sequestrated estates of the firm (and does not in terms restrict those estates). She referred me, however, to Articles 3 and 4 of the Condescendence attached to that production.


[21]
Condescendence 3 opens as follows:

"The pursuer having regard to the duties imposed upon him by said interlocutor, is desirous of selling the greater part of said subjects under the exception of the farmhouse at Clachan of Penninghame which is currently occupied by the defender, and certain other lands ... ".


[22]
The following words appear in Condescendence 5:

"The pursuer has assured the defender that the house which she occupies, and which forms part of the security subjects will not be exposed for sale. Said house and the land immediately around it have been specifically excluded from the subjects exposed for sale."

There is a map attached to that production and I was told that the excluded part referred to therein is the house and land with which this action is concerned.


[23]
No. 6/29 consisted of extracts from correspondence between agents for her brother, as heritable creditor, and agents for the judicial factor dated 27 November and 7 December 1992. Her brother's agents suggested that Clachan of Penninghame should be excluded from the sale and for standard security accounting purposes its value should be nil. The judicial factor's agents disagreed. They said that the house was clearly part of the security. They saw no reason why it should not also be sold at the same time as the remaining security subjects.


[24] No. 6/48 was a document written by her brother, as heritable creditor, on 9 May 2001. This gave permission to the pursuer and her three children to remain on the lands. The pursuer said that the sale with which she was prevented from interfering took place in the autumn of 1994 and realised £1,350,000. She referred me to No. 6/36 of process, a letter from agents for the judicial factor, dated 18 November 1994. The second paragraph of that is in the following terms:

"The Judicial Factor has no intention of selling the farmhouse and when we indicated that the Clachan would be sold we should have said that the sale would be under exception of the farmhouse. As far as we are aware, provided the sale of the farm goes through at the agreed price, the Judicial Factor will be able to convey that farmhouse to you, although at this point in time we are not sure how the value of the farmhouse will be calculated when the Judicial Factor accounts to you for your share of the surplus of any estate."


[25] There was a grey area from about 1993 when her brother and the judicial factor were arguing over their powers. During that period her brother put a great deal of time and money into the farm, which was in a dilapidated condition, to such an extent that it doubled, if not trebled, in value.


[26] I was referred to No. 6/35 of process, a letter from her then agents to the Accountant of Court setting out concerns which she shared. The principal ones were as follows:

1. Was the judicial factor justified in rejecting the Armstrong family offers in 1987? and

2. In light of the ongoing costs, was he justified in his continued insistence that

the heritage should only be sold on the open market?

She wondered whether there was another agenda with this insistence on selling.


[27] In December 1994, there was an action raised in the Court of Session about the Noltan land. That action cost a lot of money. At this time the judicial factor was citing insolvency as the reason for not transferring the title to her but there was a great deal of money flying around. The judicial factor could have sold the 31 acres from day one. In the accounts for a year which she thought was around 1999 there was a sum of money from her ex-husband put into the account, but it was not a sale on the open market. She did not know the details of the sale. Her brother had offered £1.45m for Baltersan. Another brother, on her behalf, made an offer for the Clachan area, the area on the map. She could not remember exactly how much he was offering but she thought that it was about £320,000 or so. She said that she was not allowed to see the offers but the offer which was accepted by the judicial factor for Baltersan was lower than her brother had offered. No. 6/11 shows the sale as realising £1,350,000.


[28] In September 1995, following her late brother Roger's ejection from the Clachan of Penninghame lands, the judicial factor put them on the market too. Meanwhile she was pleading to have the title transferred to her and had an assurance that it would not be sold. The judicial factor and her husband were wanting everything sold. The defender was determined to prevent division.


[29] The balance of funds in March 1997 was around £400,000 and there was nothing to prevent the house being transferred. The 31 acres and the road up to High Baltersan Farm, where her ex-husband lives, were two pieces of property which were transferred without being sold on the open market. At the same time the judicial factor was not accepting her brother's offer or indeed an offer from any member of her family representing her. Her children had even offered to pay their father half of the top price for the Clachan. She pointed out that no special powers were sought by the judicial factor for the sale of these properties. That concluded, she said, her exposition about the background. It can be seen, I think, that her evidence was quite difficult to follow.


[30] She then turned again to 6/25 of process, the joint minute. According to her, since she and her ex-husband were the only claimants on the estate she was entitled to be granted a disposition. She said that clause 6 related to property other than matrimonial property. I tried to explore this. She said that she had been wrongfully excluded from the matrimonial home prior to the divorce proceedings. Baltersan was considered the matrimonial home and she had been evicted from it before the divorce was granted. The date of separation was November 1996, two years prior to the divorce, and the judicial factor was appointed in February 1997. Her home then was the farmhouse in Baltersan. There had been nine houses at one time. She had lived for 18 years in Baltersan and was evicted from there in July 1988. Vegetables were grown at Clachan of Penninghame and it was boarded up by the judicial factor in 1997 before she moved in there in 1998. She said that it was recognised that the transfer of property in the joint minute was in lieu of a transfer of matrimonial property. In any event, her ex-husband clearly renounced his one-half share of Clachan of Penninghame in her favour. Thereafter the judicial factor proceeded "in reliance and in implement thereof". In 1989 correspondence was entered into about drawing up a plan for the purposes of her getting a disposition in terms of the joint minute. By letter dated 2 February 1989 solicitors for the judicial factor wrote to her agents asking them to draft a disposition. Thereafter the judicial factor did nothing to alter his position and made no claim. Her solicitor did not draft a disposition because the judicial factor did not have the title.


[31] I was referred to Nos. 6/39 and 6/40 of process. This was simply correspondence on 15 February 1999 which confirmed that she wished to obtain a clear title to the property. She said that her right to receive a disposition clearly existed and she wanted a declarator to that effect. However, by raising issues of solvency the judicial factor was claiming, in effect, that he was incapable of giving effect to the agreement. How did that affect her basic right? Her right existed irrespective of his financial position. He had got himself into a state of insolvency and was ignoring her rights and those of her daughters. That could not be supported in law. The family law principles in the divorce had been ignored because of the involvement of the judicial factor. She had raised a divorce action seeking a financial provision and in lieu of that the joint minute had been entered into and decree granted. She referred me to 6/28 of process again, a set of proposals for settlement of the proof. She said that these had the consent of her brother, the heritable creditor, but were thwarted by the second defender. In due course the joint minute was entered into so that the divorce could be granted, conditional on implementation of its terms by an outside party, who was a witness at the proof. A transfer of title ought to have been straightforward at the relevant time as a fair and equal division to the partners. Her brother, the heritable creditor, was agreeable. Under the Family Law (Scotland) Act 1985 the court would have been precluded from granting decree based on the joint minute if it could not have made an order for the transfer of the property if the consent of a third party, other than the heritable creditor, was required. He had expressed his consent. There was no other party from whom the court required to seek consent.


[32] She referred me to 6/48 of process again.


[33]
The second defender had previously reported to the first defender that he did not want to be held bound by clause 6, but this formed no part of his defence to the action when he was still in it and therefore he presumably still held himself bound. The first defender sought to claim the property for the factory, despite her entitlement to a disposition, but he was not a party to the divorce, only being a witness. Without Clachan of Penninghame being transferred there had been no settlement whatsoever on divorce. There was no financial provision for her and no fair and equal division of the farm, despite the necessary consent of the heritable creditor having been obtained.


[34]
She referred to section 15 of the 1985 Act. The joint minute had not been implemented due to the intervention of the first defender, who was an outside party to it. The agreement had been ratified by the court. Since, in the absence of agreement, no provision had been made for her there had been a failure to adhere to the principles of family law as set out in the 1985 Act. After failing to evict his daughters and the pursuer her ex-husband had petitioned for the appointment of a judicial factor to hound her for the next 20 or indeed 22 years and ensure that she would not obtain an equitable settlement. Her three daughters were also affected by this. Her ex-husband had used the first defender to come in by the back door to question the validity of the order of the court in granting divorce and in order to render his irrevocable consent to the transfer of the property unenforceable. I asked her in terms if she was saying that her ex-husband was manipulating the judicial factor and pulling the strings and her answer, after some hesitation, was in the affirmative. He was trying to achieve their eviction from the property yet again. I posed the question whether the property was outwith the partnership estate and she said that that was a grey area but the 31 acres to which she had referred was the only property with which the judicial factor could intromit. The present action covered property which, in 1988, had "fallen outwith" the partnership estate. With effect from 3 November 1988 it formed no part of the sequestrated estate. She and her husband had been spouses and partners and were the disponees of the property which included Clachan of Penninghame.


[35] I was referred to 7/11 of process. This was the disposition by Christopher Robin Grieves in favour of the pursuer and her ex-husband and it showed that the property was disponed to them as Trustees for the firm. The disposition was granted on 8 September 1975 and apparently registered on 13 October 1975. She said that 11 years later, in breach of the contract between the firm and the then heritable creditors (the Clydesdale Bank), the firm, on expiry of the Calling-up notices in 1986, became debtors in default. I was told that both standard securities were called up. She repeated that they became debtors in default, losing their right to redeem the debt. Their default was under section 9(1)(a) of the 1970 Act. She said that on failure to honour the contract, under clearly defined rules, title was relinquished by the firm to allow the property to be vacated. I questioned what she meant by that and she indicated, as I understood it, that the title deeds were handed over. I then pointed out that I would have expected the bank to have had the deeds in any event, since they were the creditors and she told me that she was quoting the decree which had been granted in favour of her brother. As I have indicated, that was 6/30 of process which granted the usual warrants and powers to a heritable creditor in possession. Eventually she conceded that she could not answer my question. She said that her brother had a "decree of possession" which was "pre-emptive" to the claims of the judicial factor. Her ex-husband had bought another farm in 1986. Her daughters and she remained in the house. The judicial factor could not assume more powers than those held by the partnership to which he was novated. At that time, the partnership only held powers as debtors in default, who had lost their right to redeem. With effect from 3 November 1988 the farm had "fallen out of the hands of the partnership", with the exception of 31 acres of land. That had never been subject to the standard security and was the land which, as I understood it, had been transferred to Noltan. She said that not until nearly 4 months after 3 November 1986 could it be claimed that the firm, as a debtor in default, was represented by a judicial factor. The only property of the sequestrated estate thereafter with which the judicial factor had power to intromit was the 31 acres, which was not yet sold at that time and was never sold on the open market. The first defender was an appointee of the second defender to "fraudulently defeat" the pursuer's interests as a partner, trustee and partner in marriage. The partnership was to be dissolved with the sole purpose of realising its assets instead of promoting a fair and equal division. However, she repeated that the property did not form part of the sequestrated estate. The judicial factor was a witness to the divorce but not a party to it and the joint minute was agreed between her and her ex-husband, not the judicial factor.


[36] While the heritable creditor wanted to protect her interests and those of her family, the first defender had been appointed by the second defender to promote the latter's interests in order to defeat hers and those of her children. The first defender was not entitled to prejudice her right of relief against the partnership and/or the second defender upon repayment by her of the figure of £300,000 to the bank in 1986. I asked about this in some detail as best I could. She told me that it was her father who had repaid the money on her behalf. I asked her if her father had done this out of the goodness of his heart and she said that he had. I also asked if he expected anything in return and was told that he was protecting the interests of her family and her. She never asked him why. There were no conditions attached to his payment. He was protecting their interests.


[37]
She told me that her understanding from Counsel was that the judicial factor could not assume more powers than the partnership had. There had been many opinions and cases on the matter. However, her concerns were as reported by a letter dated 28 October 1986 to her agents after a consultation with Counsel.


[38] After the divorce action the first defender, in February 1989, brought an action of declarator and seeking reduction of the Clydesdale Bank's assignation in favour of her father. He also sought declarator that he was entitled to sell the farms free of encumbrances. In other words he wanted confirmation about his rights, recognising that the securities and assignation in favour of the heritable creditor pre-empted any rights he claimed. Yet, at the same time, a draft disposition of the property was to be prepared in favour of her. She understood that a disposition could not be drafted by the judicial factor and that it was more appropriate to have come from the heritable creditor. I asked why a disposition had not been granted if the judicial factor was willing to grant it, she was willing to receive it and the heritable creditor was willing to consent. She had no real answer to that.


[39] Discussions and negotiations were ongoing about settling the partnership. If an agreement had been reached about those matters then Clachan of Penninghame could have been transferred without splitting the title. By that she meant that there had been negotiations about division involving splitting the farm into two halves. While the joint minute had agreed for the transfer of the house the issue of the land, which was part of the western half, had not been dealt with. That land was all held on the same title as Clachan of Penninghame. Her comments on this, however, were made with the benefit of hindsight. There was a grey area about who held powers over the lands, the judicial factor or the heritable creditor, and as far as she was concerned this was still a grey area in law. She understood that when the divorce settlement was being negotiated the issue whether Clachan of Penninghame was or was not part of the sequestrated estate was not a relevant one. The law did not necessarily provide for the situation where a heritable creditor paid off the debt for personal and family reasons, rather than for financial ones. However, she could only speak to the position as she understood it to be at the time of the divorce.


[40] The joint minute was not a relevant issue before Lord Penrose. The key point in that dispute had been which of the judicial factor and the heritable creditor had power to sell. She said that she and her daughters stayed in the house throughout by virtue of the rights of ownership and occupation granted by the joint minute. That was property over which the judicial factor had been appointed. The factor had full knowledge of the joint minute. While giving evidence he had stated that he would not stand in its way. She said that costs had been meted against her because of needless budgeting, while regular interim distributions had been made to her ex-husband. There had been no fair or equal division of the partnership assets. She referred to No. 6/36 of process, a letter of 18 November 1994 written by agents for the defender, to which I have already referred. She explained that her intention was always to accept heritage rather than a financial distribution.


[41] Objection was taken to her embarking on an examination of the accounts. She had, however, flagged this up in her pleadings and I allowed the evidence to be led subject to questions of competency and relevancy. After I had done that she referred to Lord Drummond Young's Opinion. She said that the second defender had used the process of seeking interim distributions from the factory estate in order to make the joint minute unenforceable through placing the focus on the insolvency of the first defender. The joint minute did not make transfer of the property conditional on the solvency of the judicial factory. She again referred to Lord Drummond Young's Opinion to the effect that it was not obvious why she should be prejudiced by distributions made to the other party. The accounts submitted for the year ending 28 February 2004, after Lord Drummond Young's Opinion was issued, showed the value of the factory to be £22,779.60. There was, therefore, nothing to stop the property being transferred to her and her daughters. There had never been a fair distribution of assets in the past. Large sums had been paid to her ex-husband but there had been no distribution to her at all. The factor, on the other hand, claimed that the insolvency of the judicial factory, as a result of making these distributions, had prevented him from granting the disposition. That insolvency was also a result of incurring legal fees and expenses against her.


[42] She referred to No. 7/15 or process, a statement of affairs of the judicial factory as at 11 February 2008. That showed that miscellaneous legal fees had been paid out, to the tune of some £34,000. She said that these were expenses against her. In the past expenses had been allocated to her account by the judicial factor. She said that small payments were made during the early years but later significant payments were made to her ex-husband after a period when the judicial factor had claimed to be insolvent (1992). As a result he should have been even more aware of the requirement to budget properly according to his responsibilities. Instead of that he made a number of distributions to her ex-husband without making any payments to her. She referred in the first place to No. 6/10 of process, the 1996 accounts. There was a payment of £11,500 to her ex-husband. Underneath that on the accounts it says that £11,500 was paid to her but she said that she never saw that money. A cheque came through for some £17,000, which she thought was in 1997, but it was dishonoured. No. 6/9 of process were the accounts to 28 February 1997. £23,500 was paid to her ex-husband but nothing to her. No. 6/8 of process, the accounts to 28 February 1998 showed £50,000 being paid to her ex-husband. She said that the court had refused a motion by him for an interim distribution but nonetheless it had been paid. Those accounts also showed that a payment of £24,288.09 was to be paid to her but it was arrested and paid to the Bank of Scotland.


[43] No. 6/57 was a letter of 10 April 2006 which she had written to the judicial factor's solicitor. In particular she referred to the last paragraph on the second page, which was in the following terms:

"Any cash deficit arising out of further costs incurred since February 2003 as well as any future costs should also be met by Mr Dunlop. In addition to the two above mentioned payments (£15,000 made in 2001 and £10,000 made in 1998) which were made to Mr Dunlop, £11,500 was paid out in January 1996 and a further £50,000 in December 1997, totalling £61,500. An equal distribution of £61,500 should also have been made to myself at this time. However, of this amount £24,288.03 was arrested and paid out to the Bank of Scotland. £20,000 was also arrested by Gillespie, Gifford and Brown, although this arrestment was not enforced. A total of £37,211.97 should therefore have been made out to myself at this stage. Whilst I received a cheque for the amount of £17,211.97, as part payment of the above £37,211.97, the cheque was never honoured by the judicial factor. Yet again, an unequal distribution was therefore made by the judicial factor to the amount of £37,211.97. The above illustrations made here are but a sample of the gross irregularities which have occurred in distributions made from this judicial factory estate."

No. 6/7, the 1999 accounts, showed a payment of £10,000 to her ex-husband. There was a reference in it to £6,151.98 attributable to maintaining the pursuer's property (Schedule 2). This related, amongst other things, to the keeping of ponies and the like. No. 6/4, the 2002 accounts, showed £15,000 paid to her ex-husband but they also showed funds of £12,527.24 arrested by her creditors. She said she did not know what that was about. She also said that there were a number of other payments made. These are set out in Article 6 of Condescendence and amount to £133,700.


[44] I was then referred to 6/52 of process, a letter from her solicitor to the judicial factor's solicitor. That set out a number of concerns, principally about payments made to her ex-husband as compared to payments made to her.


[45] No. 6/56 was a letter, dated 3 March 2006, from the judicial factor's agents seeking to negotiate an extrajudicial settlement. It appeared that the judicial factor was content to transfer the title, provided the pursuer paid sufficient funds to allow the factory to be wound up. Her ex-husband was content with the proposals. That document referred to an increase in value of the estate, but that was nothing to do with the agreement. 6/57 was her response and 6/59 was a further letter from her dated 14 July 2006 looking for a reply. No. 6/60 was a letter she wrote to Mr Cavers, the judicial factor's solicitor, on 15 January 2007 and was effectively a repetition of what had gone on before. 6/62 was a letter to the judicial factor dated 20 August 2007 to the effect, inter alia, that the judicial factory was solvent and saying that there was nothing to prevent the title being transferred. 6/63 was another letter in similar terms dated 14 September 2007. 6/64 was the judicial factor's reply, dated 21 September 2007, which stated that the estate was not solvent. It explained that the accounts for the year merely stated the receipts and payment transactions and there were several thousand pounds of outstanding tax and legal fees due to be met by him as judicial factor. He reiterated that title could be transferred to her provided she was prepared to inject sufficient funds to enable the outstanding expenses to be met, including those of his discharge.


[46] She was concerned about the expenses of litigation conducted against her over the years. She had not taken the actions which she had just for the sake of it but in order to secure her title and obtain a fair and equitable division of the assets. She could not reasonably be expected to sit back and take the next blow. In trying to defend her position and that of her daughters she had been labelled obstructive by the judicial factor.


[47] He had engaged in unwise conduct and litigation causing expense to the factory. This was referred to in Article 4 of Condescendence. In particular he had failed to consign the sum of £333,826.07 in September 1987, incurring substantial liability for interest and wasting a great deal of time and expense. Secondly, he had brought an action of declarator in February 1989 which he abandoned in about December 1990. Thirdly, on 20 November 1992 the first defender in an action raised by the judicial factor, was assoilzied and found entitled to half his expenses (1994 SLT 201). Lastly, he had sought and failed to recover the costs of looking after property belonging to the pursuer, which the court held were not to be recovered in the method chosen (Opinion of Lord Cameron of Lochbroom 25 October 2000). He should not be allowed to recover costs from her for his failures to go through the proper processes. Most recently, despite advice and requests, he had reclaimed against the decision of Lord Drummond Young in 2003. She referred again to No. 6/52, and the last paragraph thereof.


[48] She then turned to her case in as much as it was based on medical evidence. She said that she suffered a mental breakdown and chronic depression after a very serious road traffic accident on 24 October 2000. In 2001/2002 when the Sheriff Court action, the subject of this action, was live, she was suffering from this illness and was unable to give instructions to her solicitors. The Sheriff Court summons is at No. 7/1 of process and appears to have been served by post on 26 September 2000. As I understood her position, that whole period of time was a blur. It appears that decree was granted and appealed. The progress of the action thereafter is set out in the Stated Case No. 7/9 of process. She said that in the initial stages of the action her daughter appeared on 10 November and asked for a sist in light of her medical condition. The case appears to have been continued until 8 December when the sheriff granted decree, since it appeared to him that there was no intention to defend. There was then an appeal. The pursuer was not present at any of these hearings and cannot, she says, recollect much of the procedure. I asked her about the solicitors who appeared to have been involved, according to the Stated Case. She said that Mr Pumphrey had been her solicitor before that. She did not remember the sist. She had not met Mr Laburn, a solicitor whose name appears, and she did not know Mr Anderson, who also appeared. She recalled speaking to Mr McVicar, another solicitor, on the telephone. He apparently raised a defence to the effect that there were other proceedings pending in the Court of Session. She was not in a position to challenge the account of events set out by the Sheriff in the Stated Case.


[49]
She then referred me to a number of medical reports, 6/15 to 6/22 of process and 6/71 to 6/73 of process. The first of these, 6/15 was a report dated 16 January 2002 by a Mr Gavin Anthony Nimon. He narrated the injuries she received in the road accident and said that

"throughout 2001, Mrs. Armstrong became quite depressed with her general condition. She was seen on 16 February 2001 where her general practitioner noted weepiness, difficulty sleeping, flashbacks and general symptoms of depression ... "

He had noted that her case was reviewed by a Miss Costigan on 2 October 2001 and her depression was noted. Miss Costigan noted that she was having suicidal thoughts and felt that she should be referred to a psychiatrist. His opinion dealt with the physical symptoms but he went on to say that she suffered from depression with associated anxiety and panic attacks made worse by memories of her mother's death at the age of 19 in a motor vehicle accident as well. He recommended that she would benefit from psychiatric involvement, amongst other things.


[50]
No. 6/16 was a letter from her general practitioner, Dr David Baird, dated 23 November 2001. That certified that she was not fit to attend court by reason of severe anxiety and depression with symptoms of low mood, impaired concentration, inability to sleep without sedation and frequent episodes of tearfulness. These symptoms had deteriorated since her recent road accident and were very markedly worsened by having to appear in court. This was having a serious and significant detrimental effect on her mental health and wellbeing. She continued to consult a clinical psychologist and counsellor and he recommended that further legal proceedings should be delayed for a period of 3 to 4 months. He wrote again on 13 February 2002 (6/17 of process). Because of her depression she was not currently fit to attend to legal matters. The proceedings were having a detrimental effect on her health and were making her depression worse. He sought a delay of 6 months.


[51]
No. 6/18 was another letter from Dr. Baird, dated 14 May 2002, certifying that she remained on treatment for depression and anxiety.


[52]
No. 6/19 was a letter from Dr. John R.K. Neil dated 6 November 2001. He certified that she had been attending him since April 2001 for post-traumatic stress disorder, which had manifested itself in panic attacks, flashbacks, insomnia, bouts of uncontrollable sobbing, poor concentration and symptoms suggestive of a depressive illness. In view of these symptoms she had, in his opinion, been unable to attend to court matters over the past year since her accident. He urged the court to discharge the eviction proof against the pursuer in order to relieve her of the ongoing stress of attending to court matters, which were preventing her full recovery.


[53]
No. 6/20 was another letter from Dr. Neil dated 13 February 2002. He said that, in his opinion, her symptoms rendered her unable to attend to court matters for the greater part of 2001. Since the latter part of that year her symptoms had evolved into those of a significant depressive illness and she was now receiving treatment with antidepressants. Her symptoms had included poor motivation and difficulty in concentration as well as profound mood swings and difficulty in sleeping. The onset of clinical depression had rendered her totally unfit to attend to court matters and to arrange representation on her behalf. He certified that she was neither medically fit to attend court nor to instruct legal representation at present and in the near future.


[54]
No. 6/21 of process was a further certificate from Dr. Neil, dated 14 May 2002. It certified that she remained medically unfit to attend to court matters and to arrange or instruct legal representation and that to attempt to do so could have a detrimental effect on her mental health and wellbeing.


[55]
No. 6/22 was a letter, dated 20 February 2002, from an Alan Richards, who described himself as a counsellor. The letter was addressed to the sheriff clerk. Mr Richards requested the postponement of the hearing on the following Friday. He said that as a result of the car accident the pursuer had suffered considerable traumatic mental distress affecting her concentration and emotional stability. Her psychological and physiological condition had been severely affected, requiring considerable support from himself and others. He was particularly concerned that following a previous letter to the court about the potential effect of this on her mental health he had received no response and the court action had not only continued but "increased" (sic). He had passed information about this to the Sheriff Principal in Airdrie but had received no response. The fact that the proceedings had been further pursued in her absence had significantly inhibited her physiological and psychological recovery, threatening her long-term wellbeing. Due to this distress she was suffering attendant symptoms of depression, emotional instability, poor concentration and panic attacks. No solicitor had been capable of delivering her case. She had not been strong enough to sufficiently brief a solicitor nor to present her own case.


[56]
There were further letters, Nos. 6/71, 6/72 and 6/73 from Dr. Baird, dated 10 November 2006, 27 April 2007 and 8 February 2008 confirming that she continued to suffer from depression.

REVISED

[57]
The pursuer was then cross-examined by Mr Govier. He pointed out to her that in the pleadings she averred that she did not know, and did not admit, whether the farmhouse was part of the sequestrated estate. She said that that was irrelevant at the time the joint minute was entered into. There was no consideration of that matter. She was asked what her position was now and she said that Clachan of Penninghame belonged to the partnership. It formed part of the assets of the farm when the judicial factor was appointed. Mr Govier suggested that it was an asset of the judicial factor but she made no answer. She understood that the duty of a judicial factor was to preserve and protect the property. On being asked what were the assets with which he started out, she said they were the farms of Baltersan and Clachan of Penninghame and the 31 acres. It was put to her that she had said previously that the 31 acres was the only property the judicial factor could deal with and she accepted that she had misinterpreted the meaning of asset and estate and sequestration. On being asked again if she accepted whether Clachan of Penninghame was part of the partnership assets she said she did not know. She was referred to 6/25, the joint minute which was signed prior to the granting of divorce on 15 February 1988. She had signed it, as had her ex-husband. Clause 6 indicated that the disposition was to be granted by the judicial factor. She agreed that her case was based on the joint minute. In those circumstances she was asked what the relevance was of her evidence about Calling-up notices, the heritable creditor and the interventions of her late father and late brother. She said that she afforded it no relevance. At the time of the joint minute that was not an issue but it became so later on because there was so much division of opinion culminating in the decisions of Lords Penrose and Kirkwood.


[58] The judicial factor had been in post since February 1987 and the divorce was granted in November 1988. He was not a signatory to the joint minute. Furthermore, the court had not interponed authority to clause 6 of the joint minute which was the basis of the pursuer's claim. No extract of the decree was available. She was asked whether the judicial factor had expressed the hope that he would be able to transfer title to her. Reference was made to No. 6/36 of process, which has already been referred to. Eventually, she appeared to agree that as early as 1989 the judicial factor perhaps hoped to give her a title. She said that she had no reassurance because of the ongoing negotiations with the agents for the judicial factor. She was again asked whether it was made clear that the judicial factor hoped to give her a title to Clachan of Penninghame and she said that she did not know. I have to say that I found that answer surprising.


[59] She was then referred to Article 4 of the Condescendence. The first few sentences are in the following terms:

"Thereafter the parties to said Joint Minute and the first defender proceeded in reliance and in implement thereof. In particular in 1989 the parties hereto entered into correspondence to agree a plan of the property at Clachan of Penninghame Farmhouse for the purpose of the first defender granting a Disposition in favour of the pursuer of said property in implement of her entitlement in terms of said Joint Minute."

By letter dated 2 February 1989 Hewats, Solicitors, Kirkcudbright wrote on behalf of their client, the first defender, inviting the pursuer's agents to draft a disposition. It was again put to her that the judicial factor wished to transfer title to her at that time. She queried why his side had not drafted the disposition. She accepted, however, that titles had been sent to her solicitor for a disposition to be drafted in 1989. She said that she did not know why her solicitors did not wish to draft the disposition. It was put to her that in answer to a question by me she had said that the disposition could not be granted by the judicial factor but had to be granted by the heritable creditor. It was suggested that she had said she wanted title from the heritable creditor. She denied this and said she could not remember what she had said earlier. The difficulty might have been something to do with separating the land from the house. Her position was as set out in the first sentence of Condescendence 4. She was asked how the first defender could implement an agreement to which he was not a party. It was suggested that the judicial factor knew that she wanted to stay in the property and thought that it was possible, subject to the consent of the Accountant of Court, though this was nothing to do with the joint minute. She said that she could not speak of the intentions of others. She had been asking for the transfer and there was nothing complicated about it. She signed the joint minute in good faith believing that title would be transferred to her. Twenty years later it had still not happened.


[60] She was then referred to No. 6/29 of process, extracts from a letter from the solicitors for her late brother to the judicial factor's agents and the reply thereto, dated 27 November 1992 and 7 December 1992 respectively. I have already referred to these. The extract from the first letter is as follows:

" You have already corresponded with us in the past about giving Mrs Dunlop a title but Mrs Dunlop felt she could not accept a title from the Judicial Factor. Events have proved that she was absolutely right in this. We believe the Clachan of Penninghame should be excluded from the sale under the Standard Security & for Standard Security accounting purposes its value should be nil. Do you agree?"

She said it was not her position that she would not accept a title from the judicial factor. To that extent the letter from her brother's agents, who were also her own agents, was not correct. She could only obtain a title from the judicial factor but the letter was encouraging her brother to sell. I have to say I could not quite follow that answer. She confirmed that she had accepted that Clachan of Penninghame formed part of the sequestrated estate. She did not regard the permission to stay on the property granted by her brother, as heritable creditor, as some form of transfer of title or ownership. The judicial factor was the only one who could grant a disposition. She did not know what was meant by "excluding the property from the sale", as the extract from the letter narrated. The second extract, from the judicial factor's solicitor, indicated that they could not agree with the other solicitor's contention about Clachan of Penninghame. The pursuer said that the judicial factor's solicitors were saying it should be sold. She agreed that her solicitor was a Mr Pumphrey. He was the person to whom Hewats had written about the title. It was put to her that Mr Pumphrey had, in the early 90s, told the judicial factor's solicitor that she had refused to take title and that she did not recognise his appointment. On being asked whether she told Mr Pumphrey that, she said "Certainly not". She said that the writer of the first letter in 6/29 could have been Mr Pumphrey.


[61] She was then referred to No. 6/39 and 6/40. 6/39 was addressed to David Reid of Alex Morison & Co., Solicitors who were the agents for the judicial factor. It was dated 15 February 1999 and appears to be a fax. The document is partly written and partly typed. The handwritten portion reads

"Dear Mr Reid,

Our position is clear; I trust that the undernoted instructions have been made clear to the judicial factor, his agents and the court."

It goes on:

"On behalf of myself, Justine, Josephine and Rowan, consistent with our home being at Clachan of Penninghame, we unequivocally reiterate our acceptance of a clear and proper title to our home at Clachan of Penninghame. For the avoidance of doubt, our position has never altered, in that we as a family reiterate our wish to remain here and the right to retain a clear and proper title to Clachan of Penninghame. Our constructive position remains that we have long awaited and expected a clear title to be rightfully transferred to us. Regrettably, as long as those empowered have withheld a clear and proper title from us, and to date not transferred title to us, title is not yet in our name."

She confirmed that she wanted a clear and proper title. No. 6/40 was a letter from Primrose & Gordon, her own solicitors. Mr Pumphrey is named as one of the partners and his reference appears on the letter. It is also addressed to Alex Morison & Co. and starts off:

"We have received a fax from our client dated 15 February stating that we have apparently misrepresented her position and the position of her three daughters to you. In this fax Miss Armstrong states as follows."

There then follows a reiteration of the material contained in the document to which I have just referred. Part of the second paragraph of 6/39 is contained within this. It runs as follows:

"It has been unfortunate on your part to misrepresent me as seemingly refusing to take title to Clachan of Penninghame. Please take immediate steps to remedy the misconceived statements within correspondence falsely stated as coming from ourselves and erroneously reinforced between yourselves and agents for the Judicial Factor in recent communications between yourself and them specifically against my instructions of 2 and 4 February 1999."

The letter goes on:

"There are other aspects of the facts which bear on other issues but it would appear that Miss Armstrong's position now is that she would be prepared to take title to the Clachan of Penninghame. We say 'appears' because we cannot be absolutely certain that she is prepared to take title from the Judicial Factor, although if it is the case that the Judicial Factor will have to be involved in some way in transferring title then it would appear to be the only way she is going to get a title. That is what her fax says she wants.

It is of course unfortunate when agents misunderstand the instructions of their clients and we can only apologise if any misunderstandings have arisen as a result of our misunderstanding our client's position."

She would not accept that this meant that her position had changed. When asked how she interpreted the letter from Mr Pumphrey she said that she did not write it. That was not her position, although Mr Pumphrey might have thought it was. She said that he had been her solicitor on and off between 1989 and 1999. She did not accept that he was comparing her position in 1999 with her previous position when he used the word "now". I asked her who she was complaining about when she mentioned being misrepresented. She said that it must have been Mr Pumphrey. She said that this was all in the context of the farm being sold and her being under pressure.


[62] She was referred to No. 6/9 of process, the accounts to February 1997 which indicated that the farm was sold between 1996 and 1997. The letter therefore was some 2 years later. She said that there was still pressure and the matter was still concerning. Mr Govier returned to No. 6/40. It was suggested that the letter showed that Mr Pumphrey was not absolutely certain what her position was but she denied that. She had to agree that that was what appeared on the printed page. She then said that he was not present at the divorce hearing, but the relevance of that escaped me. Mr Govier put it to her formally that her original position was that she was not prepared to take a title from the judicial factor and she decided in 1999 that she had no option but to do that. She denied this.


[63] She was then taken to the events around the action in Stranraer Sheriff Court. Her pleadings relating to that can be found in Article 11. That Article is fairly brief. It starts off as follows:

"In the foregoing circumstances, the decree of 19 December 2001 sanctions the unlawful et separatim ultra vires conduct of the first defender, and falls to be reduced accordingly."

It then goes on to indicate that at the material times in 2001 and 2002 she was suffering from a mental breakdown and unable to give instructions. She referred to the medical reports which I have already mentioned. Mr Govier did not dispute that she had suffered a serious road accident on 24 October 2000. She said that she was unable to give instructions to lawyers. She could not remember if she had said previously that she was unable to instruct lawyers in December 2001. If she had been able to she would have told them about the erroneous basis upon which the action was proceeding, along the lines set out in the Closed Record. The action was served on 26 September 2000 and called on Friday 10 November 2000 but she said she could not remember that. No. 7/1 of process was a copy of the summons which showed that calling date. She said that at that date she was still in intensive care but a perusal of 6/15 of process showed that that was not the case. She had been discharged on 6 November 2000. She hoped that she would not be regarded as an incredible witness because she had mixed up a date. Her daughter Josephine appeared on the calling day or 8 December, or both, as she could not recall. The matter was of no particular significance. In any event, on 8 December the sheriff granted decree. That was appealed to the sheriff principal. She did not know who had filled in the papers for that appeal to go ahead. It was suggested that a diet in the appeal was fixed for 20 March 2001 and she was prepared to accept that. She did not know that it had been continued till 10 May. She said that Josephine should be asked about that because she could not say. It was suggested that Mr Pumphrey appeared on her behalf on that date and her reply was "Did he?" It was suggested that solicitors and counsel do not turn up without getting instructions and she said she did not recall instructing Mr Pumphrey. Perhaps Josephine had done so. She was asked on what basis she would have done that and said that she would have been evicted as well. She did not recall Mr Pumphrey stating a defence on 10 May and had not given him instructions about that. He won the appeal and the case went back to the sheriff.


[64]
She was then referred to No. 7/9 of process, a stated case by Sheriff J.R. Smith at Stranraer. She said she had never seen that document before. Mr Govier went through it with her to some extent. It appeared from the document that Mr Pumphrey appeared on 8 June 2001. She had not instructed him, but perhaps Josephine had. She had not told Mr Pumphrey that there was any line to take about an alleged connection between the sheriff and her ex-husband. She was aware of one though. After some questioning it appeared she was aware that her ex-husband had bought part of a farm from the learned sheriff. She said that the sheriff was biased against the family and Mr Pumphrey would have known all this. She did not recall being told about the sist for legal aid or filling in papers. She could not remember a proof being assigned for 13 November 2001. She said she would have been in Glasgow then. An incidental application to discharge the proof was refused on 9 November 2001. She did not recognise the name of the solicitor Mr Laburn, who appeared on that occasion. She had not met him. On 13 November 2001 a Mr Anderson appeared. She said at first that she did not know who he was but then remembered that there was a trainee called Anderson. She did not give him any instructions. Mr Anderson withdrew and a peremptory diet was fixed under Rule 28 for 14 December 2001. She did not remember receiving personal intimation of that. She did remember telephoning Mr McVicar, solicitor advocate, who appeared on 14 December 2001. She said that she asked him to move for the hearing to be deferred so that she could give him instructions. It appears that on 14 December 2001 Mr McVicar and Mr Cavers agreed a Joint Minute of Admissions so that the proof could proceed without her being present. She did not give him any instructions in that regard. All she did was beg him to move for the case to be sisted so that she could give proper instructions. She did not give instructions to proceed with the case. While Mr McVicar had signed the Minute of Admissions he had not done so with her instructions. Mr McVicar then withdrew on 19 December but she was not aware he was going to do that. While an appeal was marked against the decree she did not remember that. She agreed that she had been represented by four lawyers but she said that they were not representing her instructions. She agreed that it was expected of a solicitor that he should have instructions and she said that her instructions were for them to ask for the case to be sisted so that she could give clear instructions. She did not give information to Mr Pumphrey which enabled him to ask the sheriff to recuse himself and she said, that as far as a sist for legal aid was concerned, her solicitor would be accustomed to making such motions. Page 4 of the stated case indicates that on withdrawing Mr McVicar gave a lengthy explanation to the effect that he had given Miss Armstrong certain advice which she had declined to accept. He reiterated that she had never given him any instructions for the Joint Minute and said that she had never even met him. Any conversations would have been on the telephone. It was suggested that she was able to give instructions to seek interim orders before Lord Drummond Young. She thought that that was in 2003 but from paragraph [8] on page 7 of his Lordship's Opinion (production 6/51) it appears that the case called before him on 17 July 2002 in the Vacation Court. The summons was signetted on 12 December 2001. She said that that was before the sheriff's decision and she was in Glasgow at the time. Her daughter was sent the summons by Mr Pumphrey. She said "We had been talking about a declarator for a while" and by that she meant Mr Pumphrey and, I presume, herself. She would have been told they were going to be evicted by one of her family. It was suggested that she was able to give instructions to her lawyers as to the erroneous basis upon which they were going to be evicted before 12 December 2001, which was in contradistinction to the position she was adopting that she was not able to instruct solicitors for the action in Stranraer.


[65]
With the consent of Mr Govier I allowed the pursuer to lodge late two productions, a copy letter from Primrose & Gordon, Solicitors dated 12 December 2001 and 15 pages of transcript from the divorce action. These were allocated Nos. 6/75 and 6/76 of process, respectively. The letter bore to be from Mr Pumphrey. It stated the following:

"Dear Justine,

As explained to you on the telephone a summons has now been prepared and will be served upon Lindsay Forbes on Friday. It may possibly be tomorrow but more likely to be Friday."

The summons was the one in this case. Although she did not know it had been prepared she agreed that it looked as if it had been prepared shortly before 12 December 2001. The second paragraph read as follows:

"Having looked at the Summary Cause Rules the letter from the sheriff clerk is correct and therefore there would be no point in trying to state otherwise. It is not the practice of Dumfries Sheriff Court to issue such a letter - at least not with the final paragraph in it - but technically what the sheriff clerk has said in his letter is unobjectionable and in accordance with the Rules."

The letter from the sheriff clerk was not a production and she had never seen it. She was referred again to No. 7/9 of process. The first paragraph at page 3 read as follows:

"At the diet of 13 November 2001 the respondent was represented by Miss A.C. McGavin, Advocate and the appellant by yet another solicitor a Mr Anderson, solicitor, Dumfries. Upon the cause calling Mr Anderson then stated that he was withdrawing from acting for the appellant. He gave no reasons. In these circumstances the procedure set out in Rule 28 was followed. A diet in terms of that Rule was assigned for 14 December 2001 and intimation of it in terms of the Rule was made by the sheriff clerk upon the appellant personally."

Paragraph 3 of the letter read:

"I have sent a copy of the summons to Mr Cavers in Kirkcudbright and so you need not bother to intimate anything to him. I however am precluded from saying anything to the Sheriff Court directly as we are no longer involved in this action having resigned from the agency."

Paragraph 4 read:

"It is absolutely essential that somebody appears on Friday in Stranraer to (a) explain that a summons has been served which relates to the same subject-matter and (b) explains why it was not possible for Mary to attend on 13 November."

It appeared likely that the Friday would be the Friday of that week, which was probably 14 December 2001. Paragraph 2 of page 3 in 7/9 read as follows:

"At the diet of 14 December 2001 the appellant was now represented by a Mr W. McVicar, solicitor, Dumfries and the respondent again by Mr Cavers, solicitor, Kirkcudbright. Mr McVicar made a submission in terms of Rule 20(2)(b)(ii) to the effect that the appellant could show good cause why she had failed to appear or be represented at the diet of 13 November 2001. Mr Cavers in turn moved for decree by default. In the event, however, I was persuaded on a narrow balance that cause had been shown which could be categorised as good for the failure to appear and refused the motion for decree by default."

It would seem therefore that Mr Pumphrey had been suggesting that someone should appear and Mr McVicar had been that somebody. The last paragraph of the letter read:

"I enclose a copy of the summons herewith. It will not be to your mother's liking. However, for the moment I do not wish to hear her comments on it. I will, however, be more than happy to discuss its contents with either her or you during the course of next week."


[66]
The pursuer was then referred to the original summons in this action and, in particular, to Article 1 of the Condescendence. It reads as follows:

"The parties are as designed in the instance. The defender is domiciled in Scotland. There are no other proceedings in relation to the subject-matter of this action and there is no agreement to prorogate jurisdiction. This court accordingly has jurisdiction."

She was asked about the contradiction between the averment that there were no other proceedings relating to the same subject-matter and the contents of the letter, to the effect that someone had to appear to explain that a summons had been served which related to the same subject matter. She had no useful comment on that and said that Justine, her daughter, was dealing with it. She wondered whether the subject matter was in fact the same and she did not know if Mr Pumphrey was dealing with the matter. She said that she had never met Mr McVicar and never gave him instructions. He appeared twice, on 14 and 19 December 2001 and then withdrew. She accepted that he appeared and purported to represent her. He did not have the case sisted. She said that she spoke to him on the telephone telling him that she was unable to give instructions but then she indicated that perhaps it was one of her daughters who did that. She could not recall. She did not give him the instructions which led to his drafting a Minute of Admissions. He could have got the information which lay behind it from someone else. She was living in Glasgow at the time, being looked after by her daughters. Perhaps one of her daughters had instructed Mr Pumphrey or him. Perhaps Mr Pumphrey acted on his own behalf.


[67]
She was referred to No. 6/76, the extract of evidence from the divorce proceedings, and this was read out. She agreed that, according to what was said, the judicial factor appeared to be willing to dispone the farmhouse to her provided that it be purchased at present day valuation, that the standard security should be discharged and that the consent of her ex-husband should be obtained. It appeared also from that that the judicial factor said that it was a matter for the parties to agree between themselves and it was not for him to disagree.


[68] The sheriff granted decree against her on 19 December 2001, a Court of Session action having been signetted on 12 December 2001. She said that an appeal would have been marked on her behalf to the sheriff principal. She did not lodge any Note of Appeal, because she was not well enough. Neither did she see any draft stated case. She knew nothing about any diet being fixed for 2 May 2002. She seemed to agree that on that date the appeal was dismissed with expenses. She did not remember a diet of taxation on 17 May 2002 or a hearing on expenses on 14 June, which was when she failed to appear. She was very ill. Medical reports should have been before the sheriff and were obviously ignored. Decree was granted for ejection and for expenses. No. 7/10 of process was an extract of the decree, extracted on 1 July 2002 with ejection not to occur any sooner than 12 July 2002. Page 2 of that production was an execution of a final notice for ejection dated 4 July 2002 and her motion for interim suspension came before Lord Drummond Young on 17 July 2002. The expenses of the Sheriff Court action amounted to £3,806.66, according to the extract decree. She said that one of her daughters offered to pay those to the sheriff clerk. She was not aware of any offer ever having been made to the judicial factor and could not say that the expenses had been paid. She agreed again that the judicial factor confirmed during the passage of evidence in the divorce action, to which I have referred, that he would have agreed to transfer the title if certain conditions were satisfied. She agreed that in 1989 agents for the judicial factor and her agents entered into correspondence to agree a plan in implement of the joint minute. She was somewhat evasive about this though, mentioning negotiations which were going on so that the property would not be split. She was asked in terms whether she did agree that there was correspondence going on about a plan and she said "There may well have been". She did not recall being asked for instructions by Mr Pumphrey about this correspondence. In 1989 she was looking after her father, who died that year. She was also looking after her children and there were lots of interdicts flying around. No draft disposition was returned by her solicitors to Hewats. She said though that she could not vouch for Mr Pumphrey. The house could not be separated from the land because of the water issue. It was put to her that in fact it had now been separated and she said that they were still having problems.


[69] She agreed that in 1992 Mr Pumphrey returned the titles. She denied though that she had told him that she would not take a title from the judicial factor, whose appointment she did not recognise. She went back to Mr Pumphrey in 1999 and asked him to write to Hewats saying that she wished to take a title from the judicial factor because he had sold all the lands and that was all that was left. She said that the judicial factor's agents would have told her that there were insufficient funds in the factory to enable the farmhouse to be transferred. That, however, was not a condition of the joint minute. She was sure that she was given an explanation for there being insufficient funds. It was because too much money was being spent on legal expenses and fees over many years. It could all have been sorted out at the time of the divorce but she agreed that her husband's agreement was not forthcoming. It was suggested to her that there was nothing the judicial factor could have done since he had duties to the court and she said that they now had a joint minute. The representatives of the second defender had said that it was the judicial factor who did not want to give her a title. There was a concern that the judicial factor wanted her to pay his expenses. It was suggested that the expenditure was incurred because of her delay and obstruction and she denied that. She was asked if she agreed that in 1989 she refused to remove from Baltersan Farmhouse and that the factor required to raise an action in the Sheriff Court. She denied that he required to do it. She was asked if in 1989 she refused to remove from the farmhouse at Baltersan and she said that she was evicted but I understood her to say that that was in 1988. Some time after that she moved into a mobile home on the Clachan of Penninghame Farm. She was asked if in 1988 the defender required to raise an action prohibiting her from squatting on the farm and again she said he did not require to do it. When asked if he raised proceedings she said "He hounded us further". She appealed that to the sheriff principal and the appeal was refused. An appeal was marked to the Court of Session, but did not proceed. In May 1994 she tried to have the judicial factor removed by a motion in the Court of Session which was held incompetent. In September 1994 the judicial factor interdicted her from obstructing or attempting to obstruct him in selling the heritable property. This, however, was, according to her, with the exception of the Clachan of Penninghame Farmhouse. Reference was made again to No. 6/34, the copy interlocutor of Lord Clyde and the attached summons. Article 3 of the Condescendence in that summons said that the judicial factor was not desirous of selling the farmhouse. She was asked if that was consistent with the earlier attempts to give her title and she denied that. For some reason she referred to being evicted from Baltersan and everything in it being locked up. He was hounding her and the family.


[70] On 13 December 1994 she obtained an interim interdict in the Court of Session prohibiting the judicial factor from selling the lands of Clachan of Penninghame. It was suggested that this was recalled when the true circumstances were made known and she denied that the circumstances were true. I understood her to agree that it was recalled when the court was told about the earlier interdict against her. She reclaimed against that recall but her motion was refused on 13 March 1996.


[71] She was asked if in February 1996 she was ordered by the Court of Session to remove livestock she had put on part of the heritage which the judicial factor was trying to sell. She said that she had not put it there - it had been there for 20 years. She agreed, however, that she had been asked to remove it. It was suggested that she had failed to do so and appeared at a hearing for breach of interdict on 5 March 1996 as a result of which she was sentenced to 60 days imprisonment for contempt of court. She agreed with that. On 12 March 1996 the judicial factor obtained a further interim interdict against her and her family from obstructing his attempts to remove livestock. It was suggested that there were then a number of proceedings taken against her over her attempts to recover possessions from land from which she was interdicted.


[72] Clachan of Penninghame Farm was sold in 1996. No. 6/9 of process refers. She was asked to look at 6/36, a letter from David Reid, dated 18 November 1994. That has been referred to already and confirmed that the judicial factor had no intention of selling the farmhouse. No. 6/44 was another letter from Mr Reid, dated 7 February 2000. The second paragraph of that read as follows:

"For the avoidance of doubt the house was valued for the purposes of preparing a draft scheme of division. The judicial factor has no intention or need to sell the farmhouse at the moment and hopes that it may be possible for him to give your client title to the farmhouse at its valuation."

That was a letter addressed to Mr Pumphrey. No. 6/46 was a letter from Mr Reid to the pursuer dated 24 May 2000. Inter alia it said the following:

"The judicial factor is now in a position to finalise the affairs of the judicial factory.

I enclose herewith a copy of a draft schedule setting out the possible final position.

The judicial factor has been advised by counsel that the joint minute in your divorce action is not binding upon the judicial factor. Accordingly, if you wish to retain the farmhouse then the valuation thereof will require to be taken into consideration in the final division of the surplus estate between you and your ex-husband. As at 29 February, in addition to the house you were to receive cash of £6,436. This will vary quite a bit depending on what further expense the judicial factor has to incur."

No. 7/5 was a letter dated 5 July 2000 from Mr Reid to the pursuer. Inter alia it pointed out that the writer's understanding was that the pursuer had had Velux windows installed in the farmhouse without the judicial factor's permission and sought an undertaking that she would not carry out any further structural alterations. Paragraph 3 went on:

"We also need to know what your intentions are in respect of the future occupancy of the farmhouse. Having regard to the ongoing increase in legal expenses you are due the Judicial Factor, there is a real possibility now that the amount of your entitlement to the residue of the estate will not be enough to meet the valuation of the farmhouse. We will not be taking any increase in value due to the installation of the velux windows into account, even if their installation has increased the value of the farmhouse. The Judicial Factor may have some work to do to obtain retrospective Planning Permission and Building Warrants and could even be required to remove the velux

windows.

Accordingly, we would be grateful if you would let us know by Thursday 13th. July whether you are prepared to meet such a shortfall if it occurs."

Mr Govier asked the pursuer to compare the financial position as set out there with the one in the earlier letter. He then turned to paragraph 4 of 7/5. That was in the following terms:

"We also need to know whether you accept that you have to account for the value of the farmhouse in a final accounting of the residue of the Judicial Factory estate between you and your ex-husband.

If you are not prepared to

(a) Give us an undertaking that you will not carry out any further structural work without the Judicial Factor's permission, and

(b) Confirm you will meet any shortfall between what you are entitled to

and the valuation, and

(c) Accept that the value of the farmhouse has to be taken into account in

the final scheme of division between you and your ex-husband

all by Thursday 13th. July, we would want you to vacate the farmhouse by 31st. July so it can be put on the market.

I first wrote to you about this on 31st. May and have had no response at all. Obviously, I am aware that the cottage is your home and the home of your three daughters but we have to make progress to the final winding up of the Judicial Factory and I would prefer to work it out with you and your agents rather than application to the Court, which I am obliged to attempt to make you pay for."

No. 6/47 was a letter dated 14 July 2000 from Mr Reid dated to the pursuer. Amongst other things it said the following:

"In the meantime I note that I have not heard back from you or Messrs Primrose & Gordon in respect of the other outstanding matters of my letter of 5th. July. I know that you still consult Messrs Primrose & Gordon on some matters but you intend to act on your own behalf on other matters. To be on the safe side, I therefore write to both you and Primrose & Gordon.

Since I have not heard back from you or Primrose & Gordon in respect to the matters raised in paragraph 4(a) to 4(c) the Judicial Factor now requires you and your family to vacate the farmhouse at Clachan of Penninghame by 31st. July 2000 so it can be put on the market.

If you continue to occupy the farmhouse beyond that date, we consider that such occupation would be in breach of the Interim Interdict pronounced by Lord Clyde on 9 September 1994, a copy of which is annexed hereto. We would require to present a Minute of Amendment updating our pleadings to state what the current situation is and at the same time present a Minute of Breach of Interim Interdict.

I would much prefer if this matter was resolved by negotiations with you or your agents, but if we hear nothing from you or them then we have to proceed without your co-operation."

In fact they did not hear from her and that gave rise to the Sheriff Court action. No. 7/1 was the summons in that action. Paragraph 3 of the statement of claim runs as follows:

"The Pursuer requires possession of said Clachan of Penninghame Farmhouse and the garden ground pertaining thereto for the purposes of selling the same and completing his duties as Judicial Factor foresaid. By letter dated 5 July 2000 from Messrs Morison Bishop, Solicitors, 68 Queen Street, Edinburgh, acting on behalf of the Pursuer certain proposals were put to the Defender. It was indicated to the Defender in said letter that if she did not accept certain conditions she would be required to vacate said property by 31 July 2000. A copy of said letter is produced. The Defender did not agree to said conditions and has not vacated the said property. The Defender has no right of abode in said property. In all the circumstances this action is necessary."


[73] It was suggested that, starting out with correspondence in 1989, through representations in the summons in 1994, and in the correspondence of 2000 the judicial factor had been quite prepared to grant title to the Clachan of Penninghame Farmhouse. In response to that suggestion the pursuer simply made reference to the land.


[74] Mr Govier then turned to the question of uneven distributions made by the judicial factor. In particular he turned firstly to the averments in Article 6 relating to known payments amounting to £133,700. The first of these was said to be £23,703 paid out in the 80s. The accounts for the 80s were not in process. The information about this was contained in the letter from Scott Martin, No. 6/52 of process. Paragraphs 6 and 7 thereof contained the figures which amounted to the £23,703. She agreed that payments to her in that time were £2,400.60, £4,401.10 and £1,175. She did not know why there was a discrepancy. It was put to her that part of the reason was that she refused to provide receipts for certain payments and on the advice of the Accountant of Court, who told the judicial factor not to send her any money until she came to her senses, the payments were stopped. She said that she had had no notice of that. Eventually she agreed that the judicial factor was making payments through her ex-husband by way of payments to account so that he could pay money to her to fulfil his obligation to aliment the children. I understood her to accept that that was the position but she was of the view that this meant that she was paying for the aliment as well, because it was coming out of the judicial factory. It was suggested to her that this was simply an advance of the money due to her ex-husband and she did not appear to accept that.


[75] The next payments referred to in Article 6 were £11,500 and £23,500 paid in 1996. She said that she did not get £11,500 herself in 1996. No. 6/10, the accounts for 1995/1996 were put to her. On the second page thereof there appears an entry showing that each of the former partners, her ex-husband and herself was paid £11,500. She said that she was not aware that she got a cheque for £11,500. It was possible that it was arrested by other creditors of hers. No. 6/9 of process was an account of charge and discharge for 1996/97. It showed a payment to her ex-husband of £23,500. It was suggested that this was paid because he had applied to the court for it and it was sanctioned, despite opposition by the judicial factor. She agreed with that at first and then said that she did not recall the proceedings. It was put to her that if an advance payment was made to one beneficiary then that would have to be accounted for in the final payments. She said that she was just learning that and said that she was confused.


[76] The next payment referred to in Article 6 was £50,000 in 1997. No. 6/8, the accounts for 1997/1998 showed that payment to her ex-husband. At the same time there is an entry for her showing that a payment to her of £24,288.03 was made in the sense that funds to that amount were arrested. She was asked if she was aware that the payment of £50,000 was the result of a petition to the court and at first she said yes. She said though that she was not aware that the judicial factor had the consent of the Accountant of Court to make the payment. She was asked if she was aware that a lot of expense was allotted to her because she had refused to take back certain items of property in the form of furniture, animals and the like and the judicial factor had retained money in respect thereof. She said that it was not necessary to remove her animals.


[77] Schedules 2 and 3 of those accounts were examined. Schedule 2 shows fees incurred by the judicial factor relating to Mrs. Mary Armstrong amounting to £5,095.37. Schedule 3 shows payments made in respect of her property (furniture, ponies, caravans and farm sundries) amounting to £8,725.29.


[78] As far as the payments of £10,000 and £15,000 in 1998 and 2001 respectively were concerned she was not aware that they were ordered by the court. If motions had been enrolled in connection with those payments she could not remember if she had opposed them. In 2001 she was very ill.


[79]
With that the cross-examination was closed.


[80]
She took the opportunity then to indicate that she was still very seriously ill when the summons was served in 2001. Mr Pumphrey had acted on and off for her for a long period of time and certainly for some time prior to her car accident. The preparation of the summons had been discussed before the car accident. Indeed, at the time of her accident her legal aid application was outstanding. Her only instructions before the sheriff and the sheriff principal had been to have the action sisted until she was well enough to deal with it herself. The letter to Justine (6/75) showed that the summons was served without her knowledge and not on her instructions. She presumed that, given the urgency, Mr Pumphrey had prepared it on the basis of the earlier discussions.


[81]
As far as the extract from the divorce action was concerned (6/76) she said that this showed that although the judicial factor was not a party to the agreement, he had been a witness and had said that he would not stand in the way of the agreement. As far as the three conditions were concerned the condition as to her ex-husband's divorce was purified by his giving his irrevocable consent in the joint minute. Thereafter, the judicial factor claimed until 2003 that he could not transfer title to the house because he required her ex-husband's consent. That, however, had been given back in 1988.


[82] She then called, as her only witness, George Frank Moore, a chartered accountant. He had acted for the Armstrong family since he became a partner in his firm in 1975. He had acted both for the father, H.G. Armstrong, and his son, Gordon, when he became heritable creditor by assignation. He had also acted for Roger Armstrong and for Gordon Armstrong in his own business. He was aware that the pursuer's father had assigned his interest in the standard security to his son Gordon. He was aware of the family's involvement with Baltersan. When Gordon took possession of it, as heritable creditor, his firm prepared a report on the state of the farm at the time. They also prepared the annual accounts of his intromissions with the farm. He had a fair knowledge of the farm's activities from 1993 to 1995. Before that he had been advising her late father and acted as his accountant in 1985 and 1986. He was asked whether he was consulted by her late father about the accounts in the years before the appointment of the judicial factor and in particular whether he was aware of the change in the profit sharing ratio. Objection was taken to this, but I allowed the evidence, subject to competency and relevancy. His position was that there was a change from an equal partnership to a 95%/5% share in favour of Mr Dunlop as against the pursuer. This was a matter which should have been agreed between both parties. The matter was changed in the accounts by another firm. If Clachan of Penninghame had been sold then the allocation of profit would have been different. Her father made efforts to try to keep the farm business running when the overdraft was increasing. He had discussed with him the methods he would use to keep the business running and pay off the Clydesdale Bank. He was not aware that her father had put in £100,000 to keep the business going. Her father was interested in raising the funds required to pay off the bank. He was very concerned to keep the land and the farm in the hands of the family and did not want to see it sold. If that had happened she would have been evicted. When he paid the money to the bank and the standard security was assigned to him with effect from 3 December 1986, he was aware of what he was doing. He was also aware of the divorce proceedings. Her father paid off the borrowings and then took possession of the farm. The farm was trading then and he put money into it to keep it doing so. He understood that the farm was in good condition then, but was unprofitable. Her father saw it as his duty to get things put right. The witness remained involved with Gordon after her father became ill and assigned the standard security to him. He was aware of certain offers made to the judicial factor to keep the farm going. There had been many of them. The Armstrong family was always concerned to keep possession of the farm rather than have it sold and there had been discussions as to how the farm could be split. He believed it could have been done easily. The expenses of litigation were, in his view, absolutely enormous. That was why they favoured trying to find a solution while the judicial factor favoured selling the property. He understood that Mr Dunlop also wanted it sold but he did not speak to him directly. Later on he received a letter from Mr Dunlop's solicitor containing certain proposals. That was shortly after her brother discharged the standard security. His debt was paid and the farm was returned to the judicial factor.


[83] A proposal had been made in 1993 when her brother was in possession. Her brother had obtained a decree in his favour, which was 6/30 of process. Following that decree he was able to obtain possession of the farm and enjoy it peaceably. He took over the farm when it was in a run down condition and tried to get it together again. He made a very substantial difference and was left in peace to do that. He thought it prudent to make a complete record of the farm and he went round it with Gordon Armstrong and his brother Roger and made a detailed report on the state of it. A copy of that was sent to the Accountant of Court. There was some doubt as to whether, had the farm been sold, it would have covered the debt.


[84]
He was then referred to 6/31 of process. This was a letter from the judicial factor to the Accountant of Court dated 29 March 1993. This was shortly after Gordon Armstrong was granted his decree. The letter criticised what he was trying to do in retaining the farm. It suggested that no effort was being made to put Baltersan and Clachan of Penninghame onto the market for sale. Indeed, Mr Armstrong was said to have been more intent on farming and attending to miscellaneous minor matters than addressing the real issue of marketing his security as heritable creditor. The witness did not agree with that criticism. He said that Gordon Armstrong was working to retain the farm and find a solution so that it could be divided up, or otherwise dealt with. He was concerned to avoid a sale. The witness did not think that it would have been in anyone's interest to sell the farm at that time. The letter made reference to there being no cash left in the account. He was asked how that could be. He said that the farm was not managed well and it carried the burden of a lot of administrative expenses. A lot of equipment had been sold. He referred to No. 6/13 of process, the accounts to March 1993. This showed the sale of cattle at £120,341, the sale of equipment and implements amounting to £21,380 and the sale of other equipment amounting to £2,500. That was not even enough to pay off the overdraft which, at the end of that account, stood at £2,016.56. The original overdraft had been paid off by her father, he thought, but the management of the farm till 1993 was such that it ran up more expense than income. He was asked why it was necessary to sell the moveables and said that the function of the judicial factor was to realise the assets and that was what he was doing. He could not say why the milk quota on the unsecured Moss of Cree was not sold. From 1993 to 1994 the farm was functioning through letting the grazing and the leasing of the milk quota. All of the stock had been sold. Gordon Armstrong worked hard to put right the neglect of the previous years.


[85] There were still a number of negotiations and proposals put on the table with a view to settling matters. No. 6/33 was a set of proposals prepared by Gordon Armstrong. I have already dealt with these. The witness suggested these proposals to Mr Dunlop. Initially he made no comment but shortly afterwards his solicitor wrote to say that he was offended that the witness had contacted him directly and it was suggested that he might be guilty of contempt of court. He was not surprised that the proposal lay on the table for about a year. In his letter to the Accountant of Court the judicial factor said that all of this was to the detriment of Mr Dunlop and his ex-wife but the witness did not agree that the actings of Gordon Armstong were to their detriment. The work that was done to the farm was hugely beneficial in terms of its value. The witness had seen the accounts prepared by the judicial factor since the date of his appointment. That included the statement of affairs prepared up to February 2007. Not all these accounts were in process but, of consent, Mr Govier lodged the earlier accounts for years ending 1988/1990. These were allocated the process numbers 7/18 to 7/20. No. 6/11, the accounts for year ending 28 February 1995, showed the sale of Baltersan Farm for £1,350,000 and the sale of the roadway at High Baltersan for £1,000. They also showed the sale of silage, realising £18,564 and the sale of hay at £970.94. No. 6/10, the accounts for the year to 28 February 1996 showed the sale of the milk quota at £260,00. No. 6/9, the accounts for the year to 28 February 1997, showed the sale of Clachan of Penninghame Farm, which realised £130,600 and there was also a sale of land at Moss of Cree (the 31 acres previously referred to) which realised just over £36,037. That gave a total raised from the sale of assets of £1,941,000. There was a discussion about capital gains tax but that was irrelevant.


[86] Of the sums realised £135,673 had been paid to Mr Dunlop and £22,311 had been paid to the pursuer; £24,288 was allocated to her as arrested funds and of that £12,703 was returned to the factory. Therefore the total paid to her or arrested on her account was £33,890. The beneficiaries had received £168,000 between them. He was asked whether, in light of the ongoing costs, the judicial factor was justified in his insistence that the heritage should be sold and he answered in the negative. It would have been better to have reached a settlement for division. He was not aware of the offer made by the heritable creditor for the farm. After the farm was sold £530,000 was paid to Gordon Armstrong to account. This could be seen in 6/11. £29,018.23 was paid to Roger Armstrong at the same time. Expenses of £253,544.58 were paid in 1997 and could be seen in 6/9. That was described as interest due following a decision in Court of Session as to the basis of the calculation of interest due on his debt. He thought that that sum included legal expenses, which were quite considerable. He was asked whether Clachan of Penninghame could have been allocated to the Pursuer at the time of the divorce and what the balance of funds in the hands of the judicial factor was then. He said that in 1988 the judicial factor had no funds but had considerable assets. He could see no reason why title could not have been transferred then.


[87] He was then asked about interim distributions to Mr Dunlop. According to 6/10 of process, the accounts to 1996, a payment of £11,000 was made to each partner. In 1997 £23,500 was paid to Mr Dunlop and nothing to her. In 1998 £50,000 was paid to Mr Dunlop and £24,288 allocated to her as arrested funds. As he had indicated before, £12,703 was subsequently returned to the factory. In 1999 £10,000 was allocated to her ex-husband and nothing to her and in 2002 £15,000 was allocated to her ex-husband and nothing to her. All of these distributions were made following the sale of Baltersan and Clachan of Penninghame Farms.


[88]
There was quite a substantial balance in the bank then and nothing was standing in the way of transferring title to Clachan of Penninghame Farmhouse to her. He thought that there were sufficient assets to clear the liabilities at that time. He thought that the failure to divide up the assets when there were sufficient funds had operated to the disadvantage of the beneficiaries. The judicial factor had spoken to him and suggested that title could be transferred if she was prepared to meet the liabilities of the estate, but he thought that that was inappropriate. Expenses should be divided equally amongst the beneficiaries and should not be her responsibility.


[89] In cross-examination he agreed that the judicial factory accounts were prepared on a non-accrual or prepayment basis. It was therefore not possible to say from a perusal of any particular account whether there were other liabilities which were not included in that account. He said, however, that if subsequent accounts were looked at one could see whether the factory was solvent at a particular time. One could not see that on looking at any particular account. He agreed that these were proper accounts for a judicial factory.


[90] He was then referred to 6/11. The discharge showed payments to the heritable creditor Gordon Armstrong of £530,000 to account and a payment to Roger Armstrong of £29,018.23. There were funds held on joint deposit with Hewats for the judicial factory and Primrose & Gordon for Gordon Armstrong amounting to £470,000, funds held on joint deposit with Hewats and solicitors for Messrs Service (the purchasers of Baltersan Farm) amounting to £260,000 in connection with the value of the milk quota to be transferred.


[91] The cash in bank was shown to be just under £40,000. Quite probably the accounts did not show what liabilities the judicial factor had as at 28 February 1995. He understood that the judicial factor was to divide the balance of funds between the two parties in equal shares. He spoke again about the payments already made per the accounts. He did not know why there had been unequal payments made. He understood, though, that there was a feeling that the pursuer had incurred expenses to the judicial factory and these had been set against what she was due to be paid. He had no specific knowledge of that, however. He said that he would have thought that payments nonetheless should always be equal. It was put to him that if one of the beneficiaries had caused the factory greater expense for one reason or another, then it would be appropriate to distinguish between the beneficiaries to that extent and he disagreed. He had two reasons for this. In the first place it would be difficult to allocate to what extent each party had caused the expense and secondly, it was the duty of the factor to deal with the factory fairly and equitably and allocate expenses equally. If he were told that the payments had been sanctioned by the Accountant of Court then that would no doubt give some strength to the judicial factor's argument but he thought that it would be very important for this to be explained carefully to the beneficiaries. His position, quite straightforwardly, was that it was wrong. One was dealing with two people who were irreconcilable and it was the judicial factor's duty to reconcile them. He agreed that there had to be a final account showing all the intromissions when the judicial factory came to an end. The sums paid out to beneficiaries ad interim would have to be shown and it also had to be approved by the Accountant of Court before a discharge would be granted by the court itself. Any inequity would have to be put right in the final accounting. It would also have to take account of funds which had been allocated to one beneficiary but arrested. He would not necessarily agree that it would have to take account of any additional expenses caused by the actings of one of the beneficiaries. Expenses were costs of the factory and it was not equitable to allocate them. I asked him what the position would be if one of the beneficiaries had indulged in needless court actions either as pursuer or defender and he said that the expenses of that would just be a cost of the factory. He understood the argument that it should be allocated to one party but, in his opinion, it was a cost of the factory. He understood the argument of the Accountant of Court if he had approached it that way.


[92] He was then asked to look at the accounts for the year ended 1999, No. 6/7 of process. He was aware that, at that time, the pursuer and her family were living in the farmhouse at Clachan of Penninghame and that there was a dispute about certain property of hers which the judicial factor had to store and look after. Reference was made to Schedule 2, showing certain payments made by the judicial factor in connection with ponies, vet fees and the like amounting to £6,151.98. There was a payment to account to Michael Dunlop that year in the sum of £10,000 and he was asked how he suggested that the payments for the pursuer should be accounted for. His opinion was that they were simply part of the judicial factory. There had, over the years, been a number of costs incurred by the judicial factor in operating the farm and he had accrued income as well. That was what judicial factors did. It was up to them to protect and preserve the estate. He was aware that it was possible for a prospective beneficiary to petition the court for an advance payment. In answer to a question from me he said that he had never acted as a judicial factor himself. He accepted that where one party petitioned the court for a payment the court might or might not order a payment to be made and might or might not order an equal payment to be made to an equal beneficiary. He accepted that if there was evidence that one or more of the payments was the result of a petition to the court then that might provide a partial explanation for apparently unequal payments.


[93] He was asked about negotiations and proposals and in particular about 6/33 of process, the proposal dated 1 October 1994. He was instrumental in putting this proposal to Michael Dunlop. It did not find favour with him and lay on the table for around a year. In fact it was a bit later than October 1994 that he met Mr Dunlop to see if the proposal could be accepted. He was asked if there had been any negotiations with the judicial factor and said that he did not know. He did not put it to the judicial factor himself, but he would be surprised if he was not consulted about it. The proposal would have required Mr Dunlop's consent before getting off the ground, as well as that of the judicial factor.


[94] Before Gordon Armstrong had taken possession of the farm in virtue of his heritable security the judicial factor had placed a manager on it. The judicial factor himself was not a manager and neither was the witness. He agreed that sometimes farmers, for one reason or another, did a good job and sometimes they did not. When Gordon Armstrong took over, the farm was in a fairly run down state. He went with Gordon and Roger Armstrong and made a report. Although he had a number of farming clients he had no particular farming expertise. He was, however, accompanied by two farmers. Gordon Armstrong did not believe at that time that if the farm had been sold it would have been in anyone's interests. There was some speculation that it might not realise very much in excess of the debt. That was a consideration which the judicial factor would have had to have in mind when deciding how to deal with the asset. He thought that it would be incumbent on a judicial factor to be prudent, to make sure that assets were preserved and not to spend more money than he had. This particular judicial factor had been acutely aware of that over the years. If he took advice from experts then that was what he should have done. The advice might have been erroneous but it was up to him to act in good faith.


[95] In re-examination he agreed that Gordon Armstrong had obtained advice from others, such as GM Thompson & Company about the state of the farm.


[96]
Reference was made to 6/37 of process and objection was taken to this. I allowed the witness to read part of this, subject to competency and relevancy. This was a letter from Gordon Armstrong to the Accountant of Court dated 28 November 1995. The part which was read out was as follows:

"In January 1993 the HC (Heritable Creditor) took possession of a very different farm from that in December 1986. The JF had vacated taking everything that could be taken or sold. The farm was completely empty, no farm machines, moveables or livestock. Further to that it was left in a deplorable state of repair, broken down buildings, fences and gates almost non-existent, buildings littered with rubbish and dung, slatted shed stocked with solidified slurry the effluent running from the buildings and silage pits, fields barren after crop failures etc. On the whole a very depressed site! I enclose a copy of the report dated 4th. February 1993. It will be unlikely you have seen this. Photographs can support this if necessary. Geo. Gourlay of GM Thompson, Estate Agents, Dumfries also inspected the property at this time and I am sure he could verify the report.

The HC set about effecting all such repairs and making good such defects as was necessary to maintain the Security Subjects in good and sufficient repair, and effecting such reconstruction, alteration and improvement on the subjects as would be expected of a prudent proprietor to maintain the market value of the subjects. This was done within the severe financial constraint of the Baltersan Farm Account set up by the HC to account for all the intromissions of the HC. During this period under the management by the HC the Security Subjects made a profit, and that profit became available for the Judicial Factory."

In the opinion of the witness the intromissions of the heritable creditor had a beneficial effect on the property. It sold for a very good price in due course. The efforts of the heritable creditor contributed to its nearly doubling in price.


[97] With that the pursuer's case was closed.

(It should be noted that the sale of the 31 acres is included in 6/6 of process, the accounts to 28 February 2000 under "Estate received from NC Dunlop re Noltan Limited". It amounts to £36,037.81).


[98]
The defender then gave evidence. He was 64 years of age and a Chartered Accountant. He had started as a Chartered Accountant in 1968 and had held an insolvency permit since 1985. He was a member of his Institutes' Disciplinary Tribunal and had been for approaching 15 years. He had three judicial factories ongoing and had completed a number of others.


[99] Production 7/8 was a certified copy interlocutor appointing him judicial factor in this case. Before that he had been appointed ad interim in November 1986. The first duty of an interim appointee was to take an inventory and valuation of the estate, report that to the Accountant of Court who thereafter fixed caution. Once caution was found and intimated, confirmation of the appointment could be made. That was what happened in this case. The principal assets when he investigated them were the farms of Baltersan and Clachan of Penninghame, the livestock and the moveable equipment. He was appointed because of the apparent actings of one party towards the other. No agreement could be reached between them. The Clydesdale Bank as the heritable creditors intended to sell the property and a date for offers was set but Michael Dunlop petitioned for his appointment when his solicitors heard that the standard securities had been paid off and assigned to Miss Armstrong's father. Eventually the judicial factor appointed a farm manager.


[100] No. 7/18 were the accounts for 1986/88 and the discharge showed the management expenses of the farm. The appointment of a farm manager was normal practice for a factory like that. He ran the farm on that basis until Gordon Armstrong took possession as heritable creditor. No. 6/30 was a decree in his favour dated 8 January 1993. Mr Armstrong took over the running of the two farms at that stage. The witness was aware of negotiations after he was appointed between the two original partners to divide the farm between them but they did not involve him. There were a number of things flying around and he could not recollect specific negotiations. There were many court actions and discussions with counsel and the Accountant of Court. There was an agreement in the divorce action, which was 6/12 of process. Paragraph 6 thereof related to the farmhouse. He could not recollect when he was first aware of its terms but it would have been after it was signed. He was not a signatory to it himself and was not involved in the negotiations. Part 6 related to Mr Dunlop's right, title and interest in the farmhouse. At the time of the agreement, assuming it was in 1988, Mr Dunlop had no rights in the farmhouse because the estate had been sequestrated. All that he had was a right to demand an accounting once the judicial factory was wound up.


[101] Baltersan Farm was sold in around 1994/95 and the assistance of the court was required before that. All attempts to repay the standard security had failed. He could not get the heritable creditor to quantify the debt due to enable it to be repaid.


[102]
No. 6/34 was an interlocutor of Lord Clyde, to which I have already made reference. It interdicted the pursuer ad interim from taking certain steps to interfere with the proposed sale. He recalled that litigation. Article 4 and 5 of the Condescendence were read. As far as the witness recalled, that related to the sale of Clachan of Penninghame, although 6/9 would tend to indicate that that was sold in 1996/97. No. 6/11 of process indicated that Baltersan was sold between April 1994 and February 1995. In any event, the present pursuer had attempted to interfere with the sale by, amongst other things, distributing leaflets which had the potential to deter prospective purchasers. Article 5 of the Condescendence in that action contained an averment that he, as pursuer, had assured the defender that he had no intention of selling the farmhouse and that was his position. When Clachan of Penninghame was sold the farmhouse was not included. He had always hoped to be able to transfer the title of the farmhouse to the pursuer with the consent of Mr Dunlop. It could go to her at valuation. He was aware that that was the pursuer's wish, although he qualified that by saying that it probably was not her wish that it be transferred at valuation. There was an error in his accounts. When Clachan of Penninghame was sold, as reflected in 6/9 (the accounts for the year ending 1997), it realised £130,600. The valuation till then had been £93,000. Unfortunately, he omitted to include the value of the farmhouse in his accounts, the farmhouse having been excluded from the sale. That omission was not noticed by the Accountant of Court either. It was eventually put right in the account for the year ending February 2003 (7/14 of process). It was included at a valuation of £60,000 as valued by GM Thompson & Company, Chartered Surveyors in April 1999. That had caused no prejudice to the pursuer. Throughout that entire period she had been living in the farmhouse on no real basis at all. He did not charge her rent, but he insured the property. There had been difficulties over the terms of repayment of the standard securities which had been assigned to the pursuer's father and then to her brother. That was the subject of substantial litigation which was eventually resolved with the decision of Lord Kirkwood, to which I have already referred. Eventually, repayment was made to the brother. No. 6/9 (the accounts for year ending 1997) showed a payment of interest etc. of £253,444.58 to him. No. 6/11 (accounts for year ending 1995) showed the principal sum of £530,000 paid to him to account of his debt. No. 6/8 of process (the accounts for the year ending 1998) showed a final payment of £50,000 being paid to him in settlement of all claims. That was the negotiated figure to reach a final settlement. With that payment the standard securities were discharged.


[103]
He thought that the sale of stock, crops and implements was in respect of both farms. After the sales all that was left was the farmhouse.


[104]
No. 7/14 was the accounts to February 2007. That was the most recent set of accounts prepared and submitted. It did not disclose accruals and repayments, so did not reflect ongoing liabilities.


[105]
Clachan of Penninghame Farmhouse was still valued in the account at £60,000, the historical valuation. No. 7/15 was a statement of affairs as at 11 February 2008. It set out assets and liabilities and was in a different form from the accounts of charge and discharge. The farmhouse was valued in that as at July 2005, the figure being £130,000. There was £5,218.64 in the bank and the liabilities amounted to £33,930.22. According to the notes, Messrs Morison, Solicitors, had £2,056.25 due on their client account in respect of further outlays not reflected in the taxed accounts and the statement of affairs did not reflect ongoing fees and expenses. A conservative estimate was that these could exceed £10,000. In order to pay outstanding legal fees and expenses and to conclude the judicial factory then either the farmhouse would have to be sold or funds injected into the estate. In cash terms the factory was insolvent to the tune of around £28,000, even without taking account of the other expenses which I have just mentioned. The expenses did not include the account for the Sheriff Court action from the solicitors involved. No. 7/15 was the most up to date financial statement.


[106] He was then referred to No. 6/76, the transcript of evidence from the divorce proof. He was reminded of the terms of this and of the fact that Lord Morison referred to three objections to the transfer of title. The first of these was the discharge of the security and that objection had now been met. The second one related to the existence of a lease. That would require to be resolved by payment by the judicial factor to Mr Armstrong rather than a payment to the judicial factor of £20,000. That payment had been made as was reflected in the accounts. The judicial factor found it difficult to recall what precisely was in his mind when he was answering Lord Morison's questions. He was saying that any agreement was a matter for the parties and it was not for him to interfere. It was difficult, though, to remember the context of all that. He presumed that he would have been indicating that any agreement by them was not binding on him. He was aware that Miss Armstrong could get the farmhouse provided there was no interference with his duties as judicial factor. His solicitors wrote to hers asking them to draft a disposition. That was shortly after the divorce and on his instructions. At that time she might have been living in Baltersan farmhouse and he raised eviction proceedings against her.


[107] He agreed that in 1994 per article 5 of the condescendence to which I have referred it was not his intention to sell the farmhouse. 6/44 was a letter dated 7 February 2000 from Morison Bishop to the pursuer's solicitor, to which reference has already been made. The second paragraph indicated that he had no intention or need to sell the farmhouse and hoped that it might be possible for him to give the pursuer title to the farmhouse at its valuation. That was an accurate reflection of his position then. His position had not changed from the time of the divorce through 1994 until 2000. 6/46 was a letter of 24 May from Morison Bishop to the pursuer. Again his position remained the same. As at 29 February in addition to the house she would have received cash of £6,436, assuming the figures were correct, and subject to other expenses. Five months, therefore, before an action was raised for her ejection she would have got the house and some cash. Paragraph 7/5 was a copy letter to the pursuer dated 5 July 2000 from Mr Reid. It related to certain matters on the motion roll and certain alterations to the house. Paragraphs 3 and 4 were read out. I have already referred to these. She was asked to consent to the transfer at the valuation and meet any shortfall. Failing that she would require to vacate the farmhouse by 31 July so that it could be put on the market.


[108]
6/47 was another letter from Mr Reid 9 days later telling her to vacate by 31 July.


[109]
She did not and had not vacated the farmhouse and Mr Cavers was instructed to raise the proceedings in Stranraer Sheriff Court about which we had heard.


[110]
7/6 was a letter to Anderson Strathern, who acted for her, dated 3 March 2006. It contained a number of proposals for settlement. The judicial factor was happy to transfer the property to the pursuer or the girls if sufficient funds were made available to restore the factory to a liquid position A statement of affairs was enclosed with that letter as at 11 January 2006.


[111] The farmhouse had increased in value and the factory had a cash deficit of just under £28,000. The statement did not reflect costs which had been incurred from February 2003. The judicial factor was looking for the pursuer to provide funds of around £46,000 on the understanding that any surplus following taxation would be refunded to her. Mr Dunlop had agreed to the settlement proposal. The judicial factor would have been happy to settle the matter on this basis. Indeed that had been his position all along. It had not happened because Miss Armstrong refused to accept his appointment as judicial factor or to appreciate what he was required to do. That had been her position from the outset.


[112] 7/17 was a valuation of the farmhouse dated 12 February 2008, in the sum of £180,000. There were a lot of caveats. The valuation was an estimate, the property not having recently been inspected. The surveyor was acquainted with the property, it having been inspected at some point during the course of the judicial factory. The judicial factor's solicitors told him that he would probably be refused access and get no co-operation from the pursuer but it was felt that the surveyors had sufficient knowledge. Access had been gained at one time in the past but he could not recollect the circumstances.


[113] He was asked what had caused the state of liquid insolvency. He said that the cause was the costs he was forced to make in trying to progress the factory. There were costs of litigation, costs of maintaining and looking after personal belongings of Miss Armstrong during and following the sale of Clachan of Penninghame Farm and costs incurred in Stranraer Sheriff Court.


[114]
The distributions to account did not help either. The more that was paid out, the less money there was in the bank. When he first became involved in the factory the pursuer was living in Baltersan farmhouse. He had to raise proceedings to have her evicted and that was successful but he thought that there was an appeal. That was in the late 1980's. There were also proceedings to have him removed raised by the pursuer in the Court of Session. He could not remember when but they were held to be incompetent. He had raised an interdict action in which interim interdict was granted by Lord Clyde in September 1994. There was also a move by the pursuer to interdict him from carrying out his duties. That was granted ad interim but recalled when the Court was made aware of the interdict granted by Lord Clyde.


[115]
After she was evicted from Baltersan farm she moved into a caravan on Clachan of Penninghame Farm and then into the farmhouse itself. There was some livestock on the farm belonging to her and her daughters. The sheds were also full of her personal belongings including various items of furniture. When he sold the farm she was asked to remove the belongings and she refused. Missives had been concluded for the sale and he took what steps he could to try to remove the belongings but to no avail. He had to take action in Court to try to obtain guidance or orders. He sought an order in connection with the livestock and various decisions were made but eventually he obtained an order. She did not comply. He could not remember the precise nature of the action but there was a hearing before Lord Milligan in connection with the livestock. The livestock consisted of sheep and ponies but no cattle. He thought that he obtained some sort of order for the removal of the livestock. She was repeatedly asked to co-operate. He eventually had it removed and every time he asked her where he was to deliver it she told him to return it to the farm. Eventually she was held to be in contempt of Court and imprisoned for 60 days. She had been asked by Lord Milligan if she would co-operate with his reasonable requests, acknowledge his appointment and let him carry out his duties but she point blank refused in Court. He arranged for her personal belongings to be stored at various locations and for the livestock to be looked after by his former farm manager. Expenditure was incurred as a result.


[116]
The Stranraer Sheriff Court proceedings were commenced in 2000. He had already looked at the correspondence relating to that and at further proposals put to the pursuer by his agents in 2006 (contained in number 7/6 of process). Before that letter was sent and since at least 1989 when Mr Cavers sent the titles to her agents he hoped it would be possible to convey the farmhouse to her as a part of her share. 7/6 was to some extent a change in his position in respect that he was no longer going to be selling the farmhouse but was going to transfer it to her at a valuation assuming she paid in money to clear the debts. Something had to happen to bring the matter to a conclusion and this was a suggestion. In effect a house valued at £130,000 then would be transferred, with the consent of Mr Dunlop and the Accountant of Court, to the pursuer in exchange for a figure to enable the judicial factory to be wound up.


[117] He was then asked about distributions. He said that at the commencement of the judicial factory he approached his bank and was able to obtain overdraft facilities. He arranged with both partners that they would get certain monies. Part of the monies payable to Mr Dunlop were to enable him to meet his liabilities to aliment the children. He paid him by Standing Order although he did not know whether Mr Dunlop handed the money over.


[118] He initially asked both parties to give him receipts so that he could confirm to the Accountant of Court that payments were made. Mr Dunlop complied with that but Miss Armstrong refused. Ultimately he told her that if she would not give receipts then he would cease making payments and that is what he did. He was also concerned about the level of the bank borrowings and took advice from his solicitor. The latter confirmed his views and he stopped making payments to both.


[119]
He referred to number 6/52 of process, the letter from Anderson Strathern setting out various concerns about payments made. He said that the references in paragraph 6 to payments of around £2,800 and £2,400 were in fact the wrong way round. The pursuer had received the greater payment and the difficulty was that the bank had failed to implement his orders timeously.


[120]
He also said that a full reply had been made to that letter.


[121]
If there was any difference between the two partners in respect of advance payments then that would be brought out in the final account and the final split would be 50 - 50.


[122]
As far as the averments in condescendence 6 were concerned he was referred to 6/10 which showed not only a payment of £11,500 to Mr Dunlop but also one to the pursuer. She had indicated that she had not received it and a perusal of schedule 3 in 6/7 of process showed that the sums had in fact been arrested. Therefore it had not been paid to her.


[123]
His initial explanation about distribution related to the £23,703 in the 1980's. The third figure mentioned was £23, 500 paid in 1996. That appears in the account number 6/9 of process. He recalled that there had been a hearing in front of Lord Dawson. Mr Dunlop was seeking an interim distribution which he opposed. Lord Dawson found in his favour but indicated that it appeared that according to the figures the possibility of a distribution was a live one and that the judicial factor should consider it. He told the Accountant of Court about this and the latter confirmed that the distribution should be made.


[124] He did not recall the format in which Mr Dunlop sought the payment to account and said that Miss Armstrong at that time did not seek a similar or, indeed, any sum.


[125]
As far as the payment of £50,000 in 1997 was concerned, reference was made to 6/8 of process. £20,000 was shown as a payment to Mr Dunlop and £24,288.03 was allocated to the pursuer as arrested funds. Again there had been an action by Mr Dunlop for a distribution. Number 6/7 showed the arrested sums of £24,288.03.


[126]
Certain creditors of the pursuers had arrested funds in his hands including the Bank of Scotland and a previous firm of solicitors. The Bank of Scotland had raised an action of furthcoming and the Accountant of Court was kept informed. The debt was paid by him and other funds were retained by him. Mr Dunlop obtained £50,000 and as he recalled it the pursuer should have received the same amount but because of the arrestments she did not. There was a balance remaining in her favour of approximately £17,000 and he wrote her a cheque for that amount. Having taken legal advice he cancelled the cheque because of various expenses which had been incurred in storing her livestock and dealing with court actions and the like. Schedules 2 and 3 of 6/8 of process showed some of these expenses amounting to £5,095.47 and £8,725.29.


[127]
In any event the Accountant of Court had seen the accounts and approved them and any discrepancies would be made good in the final accounting.


[128]
6/7 related to the payment of £10,000 in 1998. He did not recall the circumstances of that. Schedule 2 in 6/7 dealt with certain payments in connection with the pursuer's property. They amounted to 6,151.98. There was no reference to sheep in that schedule but as far as he recalled it when the Clachan farm was sold he came to an agreement with the purchasers that the sheep could remain on part of the farm until they were removed. Eventually they were removed by the pursuer's brother Gordon.


[129]
He then referred to Number 6/6 on which appeared no payments to account. There was a heading "Other Expenses" containing a figure of £3,361.87 attributable to the pursuer for storage and legal fees.


[130]
6/5 was yet another example of this type of thing.


[131]
6/4 showed the payment of £15,000 to Mr Dunlop in 2001. He thought that that was a matter which was dealt with by Temporary Judge Coutts QC. The factor opposed the payment but was required to make it. No motion was made by the pursuer for a payment to her at that time and he did not offer to make her one. Again the account was approved by the Accountant of Court.


[132]
In cross-examination he said that he did not require to obtain an insolvency practitioner's permit because he was practising in that field before the changes in 1985. There was some discussion about the 1985 Act and he said that he was not appointed under that Act. He was not a Trustee in Bankruptcy. Such a trustee did not necessarily discharge his duties merely by realising all the assets and selling them. It depended on the circumstances of each case. He was asked if Trustees in Bankruptcy had to investigate the reasons for the sequestration and he said that he would take a statement from the debtor as to what caused it. In principle a judicial factor and a Trustee in Bankruptcy could be regarded as fairly similar, although there were limitations imposed on a Trustee in Bankruptcy in relation, for example, to the sale of a matrimonial home.


[133] The letter of 29 September 2003, number 6/52 of process was referred to. He apologised for the fact that it took a year to reply to it but said that he had required to seek out certain information from his records. He criticised the pursuer in equal measure and said that she and her agents had not always replied to correspondence that had been sent to them.


[134]
He was asked about the different types of relationship between a judicial factor and the estate and people involved with it and a Trustee in Bankruptcy and the debtor. A Trustee in Bankruptcy acted for the benefit of the creditors. In a judicial factory he might be realising assets with a view to paying out the beneficiaries of the business to which he had been appointed. He would not always concentrate on selling assets. He recalled one sequestration where he managed to pay the creditors in full leaving the debtor in possession of the heritage.


[135] He was asked whether in this particular judicial factory he was acting in the interests of the family and said effectively that he was carrying out his duties in terms of the interlocutor. There was then a discussion about the existence of a heritable creditor in the judicial factory and he said that ultimately the right of a heritable creditor was to be repaid. The judicial factor should be a neutral person and was ultimately accountable to the Court. He was not responsible for the people involved. He objected to a suggestion that he was anxious to sell assets and said that he tried to provide financial means for the pursuer at the commencement of the judicial factory but ultimately because of the reliance of it on bank borrowings he had to stop. She suggested that she had asked him to pay her for the work she had been doing and was doing on the farm and he said that he had decided not to employ her as a farm manageress. He was prepared to make allowances to her and to her ex-partner. He regretted his error in leaving out of certain accounts the residual value of the farmhouse.


[136] It was suggested that he had failed to budget prior to distributions and that that had led to insolvency. He said that he was not required to budget as was indicated. He was not responsible for the costs which had been accrued. He had not sought special powers to sell heritage. Neither had he sold Noltan. The 31 acres to which some reference had been made was held by Noltan Limited, over which he had no authority. When it was sold he had persuaded Mr Dunlop to remit the proceeds to the judicial factory. He was asked why he had done that and said that if he had not done so he would have been criticised. He did not think that the 31 acres had been in the inventory of the sequestrated estate which was prepared when he first took up office. The sale of the land was referred to in 6/6 of process. It was suggested that he had incurred legal fees and obtained counsel's opinion as well as raising an action in the Court of Session about the 31 acres and he said that if so that would be correct but it was for the benefit of the sequestrated estate. There was a discussion about the question whether a judicial factor insisted upon open market valuations when he was selling property but I am afraid that it was rather difficult to follow. What it came to, I think, was that the suggestion was that the 31 acres were not sold on the open market so the question was why was the judicial factor insisting on selling the rest of it on the open market.


[137] He agreed that the pursuer had intimated that her intention was to take heritage rather than its price, which presumably meant its value. She said that there was no point in her taking money on the sale of the property just so she could buy it back again. She claimed that she had made that point before Lord Kirkwood and the defender agreed that she may have done. He had a vague recollection of her seeking a court order on 3 December 1991 to regulate the transfer of a clear title to the house with some farming land going to her.


[138]
He was asked if he agreed that an undertaking given by him was an undertaking in effect given by the court and he said he was not certain about that. It was then suggested that he had given some undertaking which appeared, as I understood it, to be based on the proposals set out in 6/33 of process. He said that he had given no undertaking. The suggestion appeared to be that there had been some document in writing but there had been no evidence about that given in the pursuer's case and nothing was produced. In any event he denied giving any such undertaking. He accepted giving evidence in the divorce action before the agreement was reached by the parties thereto. He also agreed telling the court that he would not stand in the way of any agreement reached by the parties. He denied, though, that that was an undertaking given by him in the terms suggested by the pursuer. He reiterated that the agreement was not binding on him. His agents wrote to the pursuer about the house but he did not recall doing so himself. It was put to him that he did write to her to the effect that he was going to withdraw the insurance but he did not remember that, although he accepted that there was some correspondence about insurance. He remembered that water was a big issue for her. His solicitors wrote offering to transfer the title because there was a hope that he could let her have that for value. There was an undertaking in the Joint Minute that neither party would impede the judicial factor in carrying out his duties and that never happened.


[139] 6/36 was a letter from the judicial factor's Edinburgh solicitor to the pursuer dated 18 November 1994 indicating that he had no intention of selling the farmhouse. He reiterated that his hope was that he could convey the farmhouse to her at the value in the accounts. She suggested that there was no mention of a valuation in the Joint Minute and he repeated that he was not bound by that. He was asked why he had not sold the house along with the rest and said that in hindsight he should have done. The agreed price referred to in that letter was £130,000 which was more than the valuation. He had not known what the sale of Clachan farm would raise. He had not conveyed the farmhouse to her on sale of the land because she was impeding everything he was trying to do in selling the farm.


[140] 6/39 and 6/40 were letters dated 15 February 1999 to which I have already referred. She made it plain that she wished a clear title to the farmhouse. The letters did not mention that she did not recognise his appointment.


[141]
7/5 was a letter of 5 July 2000 containing another offer with a number of conditions. She suggested that there had been no conditions in the settlement on divorce.


[142]
6/56 was a letter of 3 March 2006. It made reference to the consent of Mr Dunlop being required. She asked why that was required since he had given his consent in the Joint Minute. He reiterated that there was a failure to observe the condition not to impede the judicial factor in his duties. He could not give an asset at less than its value if the other party was not agreeable. He had never offered it to her simply on the basis that it was hers because he had to account for it in the factory. There had been no change in his position on that. This question and the answer were repeated on a number of occasions.


[143] It was suggested that even when the three conditions mentioned by Lord Morison were satisfied he still followed the wishes of Mr Dunlop. He said that the position of the judicial factory had changed over the course of it because he had had no co-operation. The transfer would have been at valuation if all things had been equal and he had not been forced to cover all the expenses he was forced to incur. He was asked in what way the removal of the animals was in the interests of the factory and the family and he said that his duty was to realise the assets as judicial factor. He required vacant possession to sell the land. He did not have any duties to the family as such. It had been necessary to sell the farm for the benefit of the factory. It was not done for his own benefit. It appeared that she was seeking to attribute some moral and social responsibility to him but he had a duty to realise the assets to the best of his ability. At the beginning of the factory Clachan of Penninghame Farm was valued at around £93,000. The house was later valued at £60,000 after the sale of the farm. He was asked what persuaded him to put the house into the factory accounts. He said that counsel had mentioned something and he realised it was not in the accounts. It was suggested that it was not in the accounts for the next 14 years but he denied that since it was included in the land. He apologised for his error in forgetting to put it into the accounts separately following the sale of the land. He was asked if the omission of the house could create a reasonable expectation in her mind that the house was not part of the factory estate and he answered in the negative. He could not comment on what her expectations might be. The house was an asset in the judicial factory from day one. It was suggested that he refused to transfer the title to the pursuer in order to bail himself out financially because of his inability to budget and he repeated that he had not been required to budget. Throughout the history of the factory he had been impeded by her in his efforts to realise the assets. She had caused the factory a vast amount of expense in litigation and looking after belongings and the expenses had accumulated. He had to meet these expenses and the only asset left was the farmhouse. He either had to sell it and make a full account to the partners or funds had to be injected. It was suggested that when he removed the possessions he had no consideration of whether it was partnership property or not and he said that the property was not partnership property. It was suggested that he should accept responsibility for his failures and make a claim on his insurer but he retorted that this showed a lack of knowledge on her part as to what a bond of caution was for.


[144] He then turned to the question of unequal distributions as she put it. He had had to pay a number of these by order of the court even when he had opposed distribution.


[145]
The payment of £50,000 to Mr Dunlop referred to in 6/8 of process was one which he made having consulted the Accountant of Court. He could not remember if he had been ordered to do it but he had taken the Accountant of Court's advice. In 1998, when the £50,000 was paid, she was effectively paid as well, in that her creditors were paid. The cheque for £17,000 which she was sent was stopped because of the reasons he had already explained, i.e. legal expenses and expenses he was incurring through looking after her personal property. She complained that he had himself incurred expense by raising an action of declarator and abandoning it and he said that he may have done but he could not remember. The action that he raised in the Court of Session about the security was raised for good and valid reasons.


[146]
6/10 showed the payment of £11,500 to each partner. These payments might not have been with the consent of the Court. The amount allocated to her was arrested.


[147]
6/7 showed a payment of £10,000 to Mr Dunlop and 6/4 showed a payment of £15,000. He thought that that one was because of an order made by Temporary Judge Coutts QC. She asked why the funds which were arrested were not returned to her when they became available to the factory and he said it was because he received advice that they should be offset against the expenses incurred in looking after her animals.


[148]
It was suggested that Mr Dunlop had received £135,674 and she had been allocated £33,811, most of which was arrested. She wanted to know how that was equitable. She did not agree with the figures about funds allocated to her but he said that matters would be adjusted in the final account. He was asked again why he had not budgeted wisely and he said that he could not budget for the costs of these court actions. He had sought directions in 1993 when there were no cash funds available but he still had the farm at that time. He was asked why he did not run the farm and he said that that was because her brother had taken possession of it. The payments had possibly been made following the sale of the farm and at a time when the factory had plenty of money.


[149]
In the 1998 accounts the sum of £86,185.63 was said to be in the bank. In 1999 it was £58,146.47. In 2000 it was £79,948.26. In 2001 it was £58,267.35. In 2002 it was £40,031.29. In 2003 it was £28,494.01 and in 2004 it was £22,779.60. According to the accounts, whether statements of affairs or accounts of charge and discharge, for 2005, 2006, 2007 and 2008 the figures were £5,964, £6,000, £5,265 and £5,218 respectively. He was asked why he was not able to transfer the farmhouse when there appeared to be money in the bank and his answer was that there were a number of ongoing expenses that were being incurred and he required funds to carry out his duties and wind up the factory. It was put to him that out of an estate sold for around £1,941,000 payments of £182,000 had been made to the beneficiaries and the pursuer wanted to know how this could be regarded as a competent judicial factory. He referred to the costs of litigation, the costs of maintaining property and the costs of the Sheriff Court action in Stranraer.


[150] He agreed that the costs of maintaining property were incurred some time ago during the 1990's. Lord Cameron had been asked to give him certain powers in that regard, his opinion being number 6/3 of process. He had not in fact granted the powers sought. It was suggested that he had said the expenses could not be set off but as I read his judgment he had simply decided that that was not a matter to be decided in that particular process. The factor had set off these costs having taken advice.


[151]
He was asked if he had done anything to recover these expenses in the proper way such as by raising an action and he said that he could do that. He did not believe that he had in fact raised an action in Stranraer Sheriff Court to do just that. It was suggested that there was an action for expenses against her but he was not sure what that was about. The only action he was aware of was the action for recovery of possession. He did not know whether Mr Dunlop had been brought into the current action as a result of a plea of "all parties not called". He agreed that he might have written to him to try to sort the matter out. He was not familiar with 6/57 of process, a letter dated 10 April 2006 sent to his Edinburgh solicitors. That letter suggested that the agreement of Mr Dunlop was not required because of the terms of the Joint Minute and inter alia suggested that there was nothing in the way of title to the farmhouse being transferred to the pursuer or her daughters, that the passage of time and incurring of further expenses had enabled him to claim insolvency and that the transfer should have been straight forward at the time of the divorce. It also complained about unequal distributions.


[152]
He had not replied to that letter but his agents might have. Reference was also made to 6/60 of process, a letter of 15 January 2007 to Mr Cavers along similar lines. He was asked why the matter had taken so long to settle, particularly after the reclaiming motion in 2003, and he said that he still required to settle the fees and expenses which were outstanding. 6/60 included a paragraph asking Mr Cavers to advise the pursuer what the current position was regarding "the Sheriff Court action A18/03 (including my counter claim), which was sisted while you were abroad and thereafter was to be remitted to the Court of Session. The process had been docketed on 3 December 2004 ready for you to lodge in Extracts Department in proper form before 17 December 2004. I refer to your letter of 20 December 2005 in which you advised that you would discuss this with Mr Forbes and revert. We have heard nothing to date. What is the current position?" He did not know what litigation that was and suggested that Mr Cavers could be asked about it. He said that the proposals were not acceptable to Mr Dunlop and he was asked if he always followed his wishes. He denied that and said that he had opposed him. He did not know what Mr Dunlop's position was now. It was suggested that the latter had produced a revised Joint Minute and while the witness agreed with that he said that he was not bound by what Mr Dunlop was suggesting.


[153]
It was suggested that Mr Dunlop had given up his half share and Mr Forbes said that he may have done but that was not his (the witness') position. It seemed to be suggested that the witness was using Mr Dunlop's lack of consent as an excuse not to transfer the property and he said that he needed his consent only in the sense that if it was not to be sold on the open market then the property would have to go at a valuation.


[154]
In re-examination he said that the omission in the account of the farmhouse was not the subject of any correspondence from the pursuer or any agent on her behalf. He thought perhaps that he had become aware of it because of something that had been said in Court by counsel. It should have entered the accounts after he sold the Clachan of Penninghame Farm but as soon as he became aware of it he reported the matter to the Accountant of Court and included it in the next year's accounts.


[155]
The next witness was Neil Cavers, 59, a solicitor. He had acted for the judicial factor throughout the period of the factory. At the commencement of the factory the assets consisted of two farms, Baltersan and Clachan of Penninghame, along with stock and machinery. He acted in the sale of Baltersan and also the sale of Clachan of Penninghame Farm. The only remaining asset apart from cash was the farmhouse. When he was first involved the pursuer was living in Baltersan farmhouse and he thought that she stayed there for about a year. An action was raised against her for recovery of possession of the property and decree was granted. He could not recall if that was appealed.


[156] She then moved to another property and then to a mobile home on Clachan of Penninghame Farm. He did not know how long she stayed there but eventually she moved into the farmhouse.


[157]
He was not involved in any way in the divorce negotiations.


[158]
The farmhouse, when she moved in was, as it was still, an asset of the judicial factory. He understood that after the divorce she had been permitted to take possession by the judicial factor. There was no lease and no payment of rent. He was told by the judicial factor to communicate with her solicitor Mr Pumphrey of Primrose and Gordon in connection with a transfer of the title of the farmhouse to the pursuer. That was in 1989. He wrote to Mr Pumphrey. The proposed transaction would have involved a disposition by the judicial factor to Miss Armstrong but he did not know what the consideration was. He expected that there would be some balancing exercise in the accounts to account for its value. She was not getting it for nothing. There was a brief exchange of correspondence and he instructed a plan which he sent to Mr Pumphrey for approval. That was duly forthcoming but nothing happened after that. Two or three years later he required the titles back and was sent them. That was in 1992. Baltersan was sold in around 1992 and Clachan of Penninghame in around 1995.


[159] He was asked why no progress was made and said that Mr Pumphrey told him that the pursuer would not accept the title from the judicial factor. Something was said to the effect that she did not recognise his appointment.


[160] He could not recall if he had mentioned, when corresponding with Mr Pumphrey, that the transfer would have to be for value. His letter would just have been a simple one sending the titles. He was not aware of the pursuer's position changing and he did not recall Mr Pumphrey reverting to him later about the arrangements for the transfer of the title.


[161]
He did not recall being in correspondence with Mr Pumphrey in February 1999. He had been involved in a significant number of litigations on behalf of the judicial factor both in Stranraer Sheriff Court and in the Court of Session. The Edinburgh agent was David Reid who worked with various firms including Alex Morrison & Co, Morison Bishop and Garden Haig. 6/40 was a letter from Mr Pumphrey to Alex Morrison & Co dated 15 February 1999. The terms of this have already been referred to. It indicated that the pursuer wished to accept a clear and proper title to the farmhouse and that her solicitor had been misrepresenting her. The reference to what her position "now" was suggested that her attitude had changed. There was still an indication, though, that the fact that the title would have to come from the judicial factor was still an issue. He could not recall receiving any correspondence direct from Mr Pumphrey about this time in connection with transferring the title. If he had done he would have taken instructions from the judicial factor but the financial position was such that there was a real question whether he could risk transferring the title because of the lack of funds.


[162] He acted in the sale of Clachan of Penninghame farm and had no problems in satisfying the purchaser of the judicial factors title. This was based on the disposition to the partners as partners and trustees of the firm in about 1975 and his appointment by the Court of Session in February 1987.


[163] In 2000 he was instructed by the judicial factor to proceed with an action for recovery of possession of the farmhouse. 7/1 was a copy of the summons.


[164] 7/11 was the disposition in favour of the trustees for the firm J Dunlop & Son and 7/12 was a disposition by the judicial factor, to a number of people called Ferguson, of part of the lands. The farmhouse was specifically excepted from that disposition and was shown on a plan attached to it. Paragraphs 2 and 3 of the statement of claim in 7/1 were in the following terms:_

"2. The pursuer is the judicial factor on the sequestrated estates of J Dunlop & Sons, Farmers, Baltersan and Clachan of Penninghame, Newton Stewart, conform to interlocutors of the Court of Session dated 11 February 1987. The defender resides at Clachan of Penninghame Farmhouse, Newton Stewart, which forms part of the sequestrated estate.

3. The pursuer requires possession of said Clachan of Penninghame farmhouse and the garden ground pertaining thereto for the purposes of selling the same and completing his duties as judicial factor foresaid. By letter dated 5 July 2000 from Messrs Morison Bishop, Solicitors, 68 Queen Street, Edinburgh, acting on behalf of the pursuer certain proposals were put to the defender. It was indicated to the defender in said letter that if she did not accept the said conditions she would be required to vacate said property by 31 July 2000. A copy of said letter is produced. The defender did not agree to said conditions and has not vacated the said property. The defender has no right of abode in said property. In all the circumstances this action is necessary."

The letter of 5 July was number 7/5 of process.


[165] The first calling of the action was 10 November 2000. Mr Cavers appeared and there was a letter from Miss Armstrong tendering certain medical reports and indicating that she had been in a car accident in October and asking for a sist or continuation. The Sheriff continued the matter until 8 December. Mr Cavers wrote to the pursuer advising her of that date and strongly recommending that she obtain legal advice. He thought that the sheriff clerk would probably have intimated the date as well. On 8 December one of her daughters appeared with a letter signed by Miss Armstrong authorising the former to state that she intended to defend the action. Mr Cavers moved for decree because no defence was stated at that point and the Sheriff gave the daughter a chance to consult a solicitor in Court, which she declined. She said that her mother wished to defend the action herself but no defence was stated and on Mr Cavers' motion decree was granted.


[166]
That was appealed to the Sheriff Principal and a diet was fixed for March 2001. The daughter appeared again and another lay representative. They addressed the Sheriff Principal and he continued the appeal till May, telling the daughter that she would have to state a defence at that point. In May the pursuer was represented by Mr Pumphrey. The appeal was upheld, a defence was stated and the case was remitted to the Sheriff. 7/2 was the defence which Mr Pumphrey stated. The case called before the Sheriff in June 2001 and Mr Cavers was again present as he had been for all the diets. Mr Pumphrey again represented the pursuer. He moved for a sist for legal aid which was opposed but granted. At some stage Mr Pumphrey moved the Sheriff to disqualify himself but that was refused. The application for legal aid was intimated shortly afterwards to the judicial factor but Mr Cavers saw the intimation and opposed it. In or around August he heard from the Scottish Legal Aid Board that the application was being treated as abandoned but a few weeks later there was an intimation that it had been resuscitated. He was made aware that it was granted after September. He was in Court when the sist was recalled and a Proof was set for November 2001. 7/9 was the stated case. He had received a draft to which he had the opportunity to make adjustments and this was the final copy signed by the Sheriff. He did not know if the defender in that case had had any adjustments. A diet of Proof was assigned for 13 November 2001. An incidental application called on 9 November to discharge the Proof and he thought that he had instructed a local agent. A Mr Laburn, another local agent, appeared for Mr Pumphrey and the application was refused.


[167] Mr Pumphrey's assistant, Mr Anderson, appeared at the diet of Proof and said that his firm was withdrawing from acting. Mr Cavers was present with Miss McGavin, Advocate. The Sheriff fixed a peremptory diet for 14 December 2001 which was intimated to the pursuer by the Sheriff clerk. Mr McVicar appeared on that date and proffered a reason why Miss Armstrong had not appeared at the earlier date. The Sheriff accepted that it was a good reason. He indicated, though, that he wished parties to try to adjust a Joint Minute and proceed to Proof. The case was continued till later that day by which time a Joint Minute was adjusted. It can be seen on page 4 of 7/9. The Sheriff considered that the Proof was really a debate issue but Mr Cavers considered that he had to give evidence about the title to the land. The case was continued for a few days until 19 December. Mr McVicar attended then and said that he was withdrawing from acting. He had given certain advice to his client which she had refused to accept. Mr Anderson had not indicated why he had withdrawn. Mr Cavers gave his evidence and decree was duly granted with expenses.


[168]
In answer to a question from me he said that Mr McVicar had seemed to be in possession of the relevant facts enabling him to draft the Joint Minute without taking further instructions.


[169]
Mr Cavers wrote to Miss Armstrong that day and advised her of the position. He advised her to consult another solicitor and expressed the hope that matters could be negotiated to a solution. There was then an assessment of expenses and a hearing to approve them. When they were approved, final decree was granted and when that happened the case was appealed again to the Sheriff Principal. He did not know who organised that.


[170]
A diet was set down for May 2002, when he attended, but there was no appearance by or on behalf of Miss Armstrong. The appeal was dismissed with expenses and following assessment and approval of the expenses an extract decree was issued. 7/10 was a copy of it dated 1 July 2002. He was told to instruct Sheriff officers to carry out an eviction and that was fixed for 18 July. Before that, he was given intimation of the interim suspension and interim interdict granted in the current action. Mr Pumphrey had written to him at an early stage in 2000. He thought that the intention was to raise an action of declarator in the Court of Session. This was before the first calling of the summary cause action. He requested that the eviction action be sisted pending the Court of Session proceedings. Mr Cavers was not sure when he became aware that the action had actually been commenced. As a result of the interim orders in the current action the eviction was cancelled and as far as he was aware the expenses of the action in Stranraer Sheriff Court had not been paid.


[171]
In cross-examination he indicated that he could not recall any suggestion in the correspondence in 1989 that the transfer of title was to be at value. He was aware of the divorce action. He was asked whether one could understand that the pursuer was being offered the title to the farmhouse as a result of the Joint Minute and he said that that would clearly be the reason he wrote to her solicitor. She had been permitted to take possession after the divorce by the judicial factor. He was asked whether it was explained to her on what basis she was being permitted to take possession and he said that as far as he recalled the only correspondence he had was with Mr Pumphrey when he asked him to prepare a disposition. The Joint Minute would be the basis of her being permitted to take possession. He was asked why she was evicted from the matrimonial home when she was now being offered the title to the farmhouse and he said that he did not evict her. He had been instructed to evict her from Baltersan farm. She again asked why she was permitted to take possession of the farmhouse as a result of the Joint Minute and he said that he had not permitted her. He had had nothing to do with it.


[172] He agreed that in 1999 the judicial factory was not in a financial position to transfer the title without taking a risk. He was asked about an injection of £36,037.81 from Noltan Limited, which appeared in the accounts for the year to 20 February 2000, number 6/6 of process. He said that Mr Dunlop was the owner of Noltan and he had agreed that the proceeds from the sale of the 31 acres belonging to them should come back to the partnership, since it had been purchased out of partnership funds. He was asked why title to Clachan of Penninghame Farmhouse had not been transferred before that. He reiterated that he had written to her solicitors in 1989 asking them to draft a disposition and nothing had happened for about 3 years following which he had requested and had received the titles back. In discussion with the judicial factor there was a concern that the expenses were continually rising and he should not find himself with no assets and debts to pay or with a house transferred to her and no value in return. He had not studied the accounts in very great detail, however. The judicial factor had had no legal capacity to deal with Noltan Limited.


[173] As far as the letter 6/40 from Mr Pumphrey was concerned, the pursuer said that a lot of focus had been placed on the word "now". She asked whether from the use of the word "appears" that Mr Pumphrey was not entirely sure what the position was and Mr Cavers agreed. He also agreed that there was a reference to her solicitors apparently misrepresenting her previously.


[174]
She said that she was not in a position to cross-examine about the Sheriff Court action because she had been unwell at the time. She nonetheless asked about the expenses of £3,806.66 and referred to number 6/4 of process. It was explained that these may have been expenses relating to another action and were expenses as between solicitor and client rather than the expenses of the action itself. He had not taken any steps to recover the expenses from her.


[175]
Finally it was put to Mr Cavers that the current action had been in preparation for some time and he agreed with that. It was suggested that it was in contemplation before her road accident in October 2000 and he said that he was aware of a letter at the beginning of November 2000 from Mr Pumphrey about a proposal to raise an action of declarator.


[176]
In re-examination Mr Govier took it from the witness that he did not know when he had first become aware of the Joint Minute and with that the evidence was concluded.


[177]
Mr Govier then tendered a Minute of Amendment seeking to amend certain of the averments in answer 1 to take account of the fact that there had been an appeal to the Sheriff Principal following Sheriff Smith's decision in Stranraer. This was opposed by Miss Armstrong and I indicated that I would deal with the matter when I dealt with the general submissions on the evidence.


[178]
When the case next called before me Miss Armstrong was unwell and produced medical certificates to that effect. In the circumstances I adjourned the hearing on evidence until a later date on the understanding that she would provide written submissions with the help of her daughter. Mr Govier also undertook to prepare written submissions in support of his motion to allow the pleadings to be amended.


[179]
When the case next called the pursuer also had a Minute of Amendment which consisted, in effect, of answers to Mr Govier's Minute.


[180]
Of consent, I allowed both Minutes to be received and the Record to be amended accordingly. Miss Armstrong very helpfully provided a copy of the Closed Record in its amended form.

 

Submissions for the pursuer

[181]
At this stage Miss Armstrong did not wish to make any oral submissions and contented herself with the written submissions which had been lodged. These consisted of 48 numbered paragraphs and much of the material consisted in either assertions of fact which were repetitions of the evidence led or which had not been the subject of evidence. Accordingly I do not intend to rehearse the submissions in full.


[182]
As far as I understand them the salient parts are as follows.


[183]
The pursuer stressed that Clachan of Penninghame was her home and that of her daughters. The position was that upon divorce she became entitled, by virtue of the joint minute, to a disposition. No other financial provision was made for her in the divorce action. She made a number of detailed criticisms of some of the conduct of the judicial factor which had not been the subject of evidence and I do not propose to mention those.


[184] She was concerned that the humanitarian aspects of the case had been subordinated to the judicial factors insistence on selling the property. If the assets had been dissipated this meant that there was no fair and equitable division of the property following the divorce. A number of offers had been made and rejected over the years. Had they been accepted by the judicial factor the matter could have been settled years previously. No account had been taken of the principles of family law.


[185] Her entitlement to ownership and occupation of the house stemmed particularly from clause 6 of the joint minute and as a result of that agreement she and her family had resided in the house and had been solely responsible for its upkeep and maintenance since 1988.


[186]
The judicial factor was not a signatory to the joint minute but the extract of evidence from the divorce proof which was lodged as a production showed that he had stated during the proceedings that he would not stand in the way of any agreement reached between the parties.


[187] The Court had not been asked to grant decree of divorce in terms of clause 6 (meaning I think that the Court did not interpone authority to it) but the joint minute was nevertheless an agreement between the parties and she reiterated that the initial factor had indicated that he would not stand in the way of any agreement reached between them.


[188]
From the outset the judicial factor never acted as a pro-active mediator nor arbiter. "He failed as a factor pending dispute, to give recognition to the legal encumbrances and limitations to his initial appointment in 1987 over a partnership with diminished rights" (sic). He had preferred to engage in battles for 20 years. Her family wished to preserve the farm but he was bent on selling it. She questioned what title he acquired in terms of the interlocutor of February 1987.


[189] Immediately after divorce was granted he offered the pursuer title to the house and she could only presume that such an offer was made as a result of the joint minute having been entered into. Mr Cavers stated in cross-examination that following the divorce action she was permitted to take possession by the judicial factor and he confirmed that the joint minute was the reason he wrote to her solicitors and also confirmed that that would have been the basis upon which he was instructed to give the pursuer title to the house. It was clear that she was being offered the title to the house as a result of a joint minute. The judicial factor clearly felt bound to implement its terms although he was not a signatory to it. It was reasonable to expect that immediately following the divorce she was being offered the title to the house as a result of the joint minute.


[190] Gordon Armstrong's efforts to restore the farm and lands were met with obstruction by the judicial factor and Michael Dunlop.


[191] In 1994 after the "spurious" interdicts against Gordon Armstrong and the pursuer which solicitors "feared to recall", a letter from the judicial factor's agents (no 6/36), indicated that the factor had no intention of selling the farmhouse. Until then the farmlands and house had remained intact under the protection of Gordon Armstrong. The letter from the judicial factor's agents was a false reassurance.


[192] The events of 1994 to 1996 were reminiscent of the 19th century clearances. The family was interdicted from entering upon or trespassing on the lands of Clachan and Penninghame and this was having a dire effect on them.


[193]
It was only in 2003 before Lord Drummond Young that the question of solvency became an issue yet the factory was insolvent in 1992. Following the sale of Clachan of Penninghame lands, the house was not listed in the factory accounts. The judicial factor gave evidence that this was simply an oversight but the representations made to the pursuer since 1988 that the house would not be sold and the time which had passed during which she and her daughters continued to live in it only served to reinforce the pursuer's understanding of the position that she and her daughters had the right to remain in the home and that it would at no stage from any part of the judicial factor's accounting.


[194] During 1999 requests were made of the judicial factor to transfer title (no 6/39 and 6/40 of process) but by that stage the reason given for not being able to transfer the title was not anything to do with the pursuer not having a right to receive it but that there might not be sufficient funds in the factory.


[195] I have to say that that observation does not seem to square up with the submission that it was only in 2003 that solvency became an issue.


[196]
In any event the pursuer went on to submit that a reasonable expectation had been created that she would receive title to the house.


[197]
She submitted that it was not until 2000 in terms of correspondence received from the judicial factor's agents (nos 6/46 and 6/47 of process) that it was made clear to her that there might be some dispute as to her right to receive title to the house and that it would only be transferred at value. Her submissions go on as follows:

"Again the question must be asked what "title" did the First Defender "acquire" in terms of the Interlocutor of February 1987? What title did he retain or lose on 6 January 1993 to "re-acquire" at later date? From the deficiencies of that "title acquired" does the First Defender claim no change in the intervening years to qualify for his entitlement to withhold transfer of title to her home at Clachan of Penninghame now?" (sic).

I confess that I do not quite understand that submission.


[198] She submitted that the previous offer to grant a disposition had not become a conditional one. A number of conditions were attached over the years not least that the agreement of Michael Dunlop be sought but that agreement was already expressed in the joint minute. That consent was irrevocable so any change in his position should not have affected the judicial factor. Nonetheless it did. He adopted Michael Dunlop's tactic of using alleged non compliance with another clause of the joint minute as a reason to render the whole agreement ineffectual. He claimed that there had been a breach of clause 10. The Court had not interponed authority to clause 10 either, nor for that matter to clause 9. The factor stated that he could only transfer the title at value because the conditions in the clause regarding the requirement not to intervene had not been met. Yet no mention had ever been made in the joint minute of transferring the house at a valuation and any valuation of the house was irrelevant. In any event where a valuation was required it should be at the time of the separation.


[199] The judicial factor's position had resulted in inordinate delay and made it necessary to bring this action.


[200] Before the judicial factor was appointed the standard securities over the farms and lands had been called up by the bank by the service of calling up notices. The partnership had relinquished its rights and title to the bank including the right to redeem as early as September 1986. Rather than evict the family the bank assigned all its extended rights and powers to the pursuer's late father. The heritage of the partnership over which the judicial factor purportedly claimed to have powers was ceded to the Clydesdale Bank before he appeared on the scene. He did not receive any appointment to "administer" any area subject to the "prestatutory, pre-eminent rights of a Bank in their contract with a partnership-in-default". Nevertheless as judicial factor he still "purportedly claims to have held rights and powers not held by the partnership to which he was novated".


[201] Having lost the matrimonial home in 1988 Clachan of Penninghame farmhouse became and has remained the family home. The estate sold for £1,941,000, yet out of the £33,811, said to have been paid out to the pursuer as arrestments, only nominal amounts ever reached her. She had to borrow money for survival. She was humiliated by the arrestments, having never borrowed before and after £300,000, had been paid on behalf of her family to avert eviction at the hands of Michael Dunlop by the Bank, to suffer unlawful eviction at his hands again through the judicial factor was unjust and inequitable.


[202] A great deal of evidence had been led about the inequality of payments made. The payment of £50,000 to Michael Dunlop for which the authority of the Court was not sought, ran counter to the judicial factor's position that all payments made were on an equitable basis or on the instructions of the Court.


[203] There had been sufficient funds in the factory to allow the title to be transferred and many years had passed in which further fees and expenses had been incurred. There had been twenty years of unreasonable delay on the part of the judicial factor.


[204] Substantial payments of money had been made to Michael Dunlop and not to the pursuer with the exception of arrested funds. The judicial factor had stated that if payments were made to one of the eventual perspective beneficiaries those payments would be set against the final payment due. This would suggest that she should get credit as some stage where Michael Dunlop had received payments and she had not. However there was no means by which such credit could be given when there was no money left in the factory. No explanation had been provided as to how unequal payments were to be set off against final payments due in those circumstances.


[205] While reference had been made to what had been termed her obstructive litigations, the pursuer could not have been expected simply to take no action in the face of the factor's continuing determination to prevent division of the assets by selling them off.


[206]
The judicial factor himself had raised a number of actions which had incurred considerable time and expense. The action of declarator raised by him incurred fees of £0.5 million pounds. There were others listed in the pleadings and which had been referred to in evidence. "However, the task of allocating responsibility for each respective action which has been brought during the course of this judicial factor would be a huge task and not one for the confines of this current action".


[207] By that submission I take it that the pursuer does not seek to rely on this matter.


[208]
At various stages of the factory there have been sufficient funds. For example, in March 1997 the balance of funds was £400,040. Title therefore could have been transferred to her.


[209]
At the time of the divorce the question of whether Clachan of Penninghame formed part of the estate of J Dunlop & Son was irrelevant. The issue had nothing to do with the powers and duties of a judicial factor. "However, due to the failure to transfer title to the property following the agreement between myself and my ex-husband, it thereafter did become an issue".


[210] The agreement had been cast to one side through the actings of the judicial factor. He had failed for the last 20 years to give effect to it.


[211] There was no legislation or case law which showed that the powers of a judicial factor in the circumstances should defeat the terms of the agreement reached between herself and her ex-husband.


[212] Thereafter she referred to Miller's Trustees v Miller (1890) 18 R 301 and Yuill's Trustees v Miller (1902) 4 F815. I will refer to these submissions in more detail later.


[213]
In relation to the question of reduction she submitted that it was necessary for her to show that exceptional circumstances existed. She referred to the medical evidence which she had produced. It had been claimed by the judicial factor that the service of the summons which commenced this action was evidence of the fact that she was capable of instructing solicitors at the relevant time but that was not the case. The letter from Mr Pumphrey to her daughter Justine (no. 6/75) was prepared without her instructions and lodged in Court without her having had sight of it. It had been in the pipeline for many months beforehand, before the time of her accident. Mr Cavers had in his evidence referred to Matthew Pumphrey's having stated his intention to raise the declarator action as early as 2000, before the Stranraer action. He had also referred to a letter of November 2000 from Mr Pumphrey to the judicial factor proposing to raise this action. She had no input whatsoever into the preparation of this action during the period in which she was unable to instruct or attend to Court matters in the action before the Sheriff at Stranraer. In connection with the plea of lis alibi pendens she submitted that the judicial factor had led evidence to show that the case before Stranraer Sheriff Court was still in existence in that the expenses had not been paid. There was an argument that if the decree was reduced, the entire process in Stranraer would not be reduced but only the decree itself and the matter would have to go back to Stranraer. There was no clear authority for that proposition.


[214] As far as res judicata was concerned, in common with the question of lis alibi pendens, it was relevant to consider whether the action for declarator covered the same issues as the action for recovery of possession previously raised in the Sheriff Court. She referred to the case of James M Sutherland & Sons v Pottinger 1989 SLT 679, to which I will turn later. She submitted that it was held there that success in the Sheriff Court in that case would not afford the pursuers the remedies sought in the Court of Session action and that they were entitled to proceed. In the present case, success in the Sheriff Court action would only have put a stop to the action for recovery of possession and would not have confirmed her rights to the ownership and occupation of the house as was sought in the Court of Session.


[215]
She made further submissions on the question of reduction, which were slightly out of order in her written document. In reference to the case of Adair v Colville, to which I will refer later, she said that the remedy of reduction may be competent to set aside a judgement when other means of review are not. It was generally speaking not competent when other means of review were prescribed and these means had either been utilized or the parties had failed to take advantage of them. She submitted that whilst means of review were available which were not utilized for the reasons explained in her medical reports this was during the same period of ill health as was covered by the medical certificates. Her ill health covered all stages of the proceedings before the Sheriff and also the Sheriff Principal. She was therefore unable to defend the initial action and was unable to prosecute her right of appeal. Without the remedy of reduction justice could not be done.


[216] She submitted that in the case of Bain v Hugh L S McConnell Ltd it was held that, whilst in general where other means of review were provided and those means had either been utilized or the parties had failed to take advantage of them, reduction was incompetent, a decree might be reduced in exceptional circumstances in order to produce substantial justice or where there had been a miscarriage of justice.


[217] In conclusion she submitted that the crux of the matter was the concentration on assets instead of the human resource. That obsession had destroyed the very resource itself. Division of the assets could easily have been made and there was never any need for sale. The judicial factor had acted in the sole interests of the previous second defender, Michael Dunlop. As the result of that there had been unnecessary dissipation and diminution of the residual value of the assets. The pursuer should not be held financially responsible for that and therefore transfer of title should be made forthwith. At worst, if the Court was of the opinion that funds were required to be put forward in order to give effect to the joint minute, those funds should be sought from those who were responsible for the loss of the last 20 years who refused to come to any agreement to solve the problem. The judicial factor's delay in transferring title at the behest of the previous second defender Michael Dunlop, should not be allowed to extinguish a right in this way simply through the lapse of time and the fact that costs were incurred during this period.

 

Submissions for the defender

[218] Mr Govier submitted that the Sheriff Court decree of 19 December 2001 had effectively been superseded by the decree pronounced on 14 June 2002 and extracted on 1 July 2002.


[219]
He submitted that if the pursuer's plea-in-law 3 was sustained and that decree was reduced then the effect of that would be that the action would require to be returned to the Sheriff Court in Stranraer. The jurisdiction of this Court was not an appellate one in this process. He imagined that the case would be returned to the Sheriff Court at some point before the appeal was heard by the Sheriff Principal.


[220]
To that extent the plea of lis alibi pendens should be upheld in relation to the declarator which was sought in the current process.


[221]
If reduction was not granted, then he submitted that since the same parties were discussing the same issues and the same subject matter in Stranraer then the decree of the Sheriff Principal was res judicata as far as the current action was concerned.


[222]
Either the plea of lis alibi pendens or the plea of res judicata would come into play depending on my decision on the question of reduction. That was why that question had to be considered first.


[223]
If both the defender's pleas of lis alibi pendens and res judicata were repelled then I required to address the pursuer's conclusions.


[224]
Mr Govier divided the submissions into a number of segments as follows.

 

Credibility and reliability

[225]
He submitted that the pursuer displayed at various times a casual attitude to the truth when giving her evidence. For example, on 13 March early in the afternoon in cross-examination he asked her about her medical condition after the road accident which had occurred on 24 October 2000. Reference was made to the Sheriff Court summons which was served on 26 September or thereby and which called in court on 10 November. That was 7/1 of process. He said that she could not remember the calling date and indicated quite gratuitously that she would still be in intensive care at that time. He referred her then to No 6/15 of process, a report by Gavin Nimon, and pointed out to her that he stated that she was discharged home on 6 November 2000. She accepted that she was wrong and that indicated her attitude, said Mr Govier.


[226]
There was also a question mark over her evidence about Mr McVicar. In the morning of 13 March at the end of her evidence in chief there was a reference to Mr McVicar's representing her at the diet of proof and she said that on 4 December he was on the telephone to her and raised the defence that there were other proceedings. Later on in the afternoon of 13 March in cross-examination she said that she remembered telephoning Mr McVicar asking him to have the case put off. However, early on in the afternoon of the following day she said that she had no recollection of any telephone call. That was perhaps a small point but it was indicative of her being prepared to say one thing one minute and another the next. These were simple examples that she was prepared to say things that were not true if it might assist her case.


[227]
I had to consider her evidence very carefully on two principal issues, namely her medical condition at the material times in 2001 and 2002 and her attitude to the judicial factor in general and to the fact that title to the farmhouse was vested in him.


[228] There were also important issues to be raised in connection with personal bar.


[229]
It was raised at least once in the evidence with her whether she accepted that the farmhouse was vested in the judicial factor and the impression in the evidence was that there may have been a blank refusal on her part to accept that that was the position.


[230] Her only other witness was Mr Moore, who was an experienced accountant and assisted the family for many years. Mr Govier accepted that he came across as a credible witness but reminded me that he was not an expert in farming and had no expertise in the law and practice of judicial factors.


[231] Mr Forbes, the defender, was also an experienced chartered accountant who specialised in insolvency work and in judicial factories. Indeed he had a number of factories ongoing. He gave evidence cautiously and maintained his position in cross-examination. His position was consistent with the Record and with what he had said in chief. He repeatedly stressed that he had been in a position of having to proceed with his duties as an officer of court in dealing with this judicial factory and with the realisation of assets and distributions to creditors and former partners in circumstances where there was no agreement between those parties. He was pressed on his responsibilities and he said that he a responsibility to the court. He was not sure if he had any responsibility to the people involved but that comment was in response to pressure to the effect that he had some duties almost as an arbiter or mediator or family advisor. He undoubtedly had problems recalling some matters but that was hardly surprising given the fact that the judicial factory was over 21 years old. It had involved a number of court actions and some of the questions, for example about water supplies and insurance premiums were not flagged up on Record and related to events a long time ago. He did however recall, under pressure in cross-examination, that he hoped that he could have let the pursuer have the house for value but he did not see how he could give it to her without exposing it on the market if the other party was not agreeable. That effectively was his fundamental position and it was difficult for the pursuer to get round that.


[232] The defender also stated that he had a duty to realise the assets and did so to the best of his ability. He was perfectly credible and reliable subject to the parameters set out in connection with the passage of time.


[233]
Mr Cavers was an experienced professional. He had acted for the judicial factor since February 1987. He was measured, thoughtful and careful and made no assumptions. He did not agree with the propositions put to him until he had considered them and was sure that his answers would be correct. He spoke to the titles to the property and indicated that he title to the farmhouse was an asset of the judicial factory. He attempted in 1989 to deal with Mr Pumphrey in transferring the house to the pursuer and he spoke to Mr Pumphrey later telling him that the pursuer would not accept title from the judicial factor. He spoke to attempts to affect the transfer and the various court actions and correspondence leading up to the action in Stranraer.


[234] He had some problems in recollecting details of events long ago but overall he was credible and reliable.

 

Relevancy and specification

[235]
Mr Govier had a general plea-in-law 4 to the relevancy and specification of the pursuer's averments and plea-in-law 5 related to the relevancy and specification of the averments on personal bar.


[236]
He drew my attention to the terms of the first conclusion which were as follows:

"To find and declare that the Pursuer is entitled to ownership and occupation of the property at Clachan of Penninghame Farmhouse, Newton Stewart free of any claims by the First Defender as Judicial Factor in virtue of the Joint Minute entered into by the Pursuer and the Second Defender in respect of which decree of divorce was granted by the Court of Session in the action between them on 15 November 1988; and that the First Defender is bound to effect a Disposition of said property in favour of the Pursuer in implement of said entitlement."

It was clear that the pursuer's claim was based on the Joint Minute and indeed she had said as much in evidence. It followed from the fact that she was basing her claim on that Joint Minute that any averments that any other circumstances gave her the rights she sought were irrelevant, even if proved. There were, for example, averments that the farmhouse did not form part of the sequestrated estates. Presumably they were there to support the claim that it should belong to her but she was not insisting on Mr Dunlop's granting her a disposition.


[200] In the Joint Minute it was specifically narrated that there would be a disposition granted by Mr Forbes. She was seeking to occupy the farmhouse etc in virtue of the Joint Minute and any averments that the farmhouse did not form part of the sequestrated estate were irrelevant to those claims.


[237]
Mr Govier understood part of the pursuer's argument to be inter alia that because of the involvement of the heritable creditors the defender did not have any title to the farmhouse. The true position was that he did have title but subject to the rights of the heritable creditors and that was a matter which had been worked out over the years in the course of a number of actions. The farmhouse was not held on a different title. It was difficult to see how it could be suggested that the factor who had sold off the other parts of the farm did not have title to it but the main difficulty was that if the farmhouse was not part of the sequestrated estates then on what basis could the judicial factor grant her a disposition of it?


[238] The second proposition that followed from her claim being in virtue of the Joint Minute was that, because that conclusion was put forward as a matter of right and did not refer to any financial consideration in exchange for which the disposition should be granted, it appeared that she was claiming that she had a right to receive a disposition and the defender had a duty to grant it and that issues about the effect on the transfer of the farmhouse on the solvency of the factory were irrelevant to the case.


[239]
Mr Govier undertook to return to the general question of relevancy and specification in due course.

 

Personal bar

[240]
Mr Govier submitted that personal bar was a shield not a sword. It was a response to the defenders' position as opposed to being the basis of an assertion of right by a pursuer. The plea-in-law was itself in irrelevant terms. Personal bar did not create a right but prevented a party from maintaining that a position was different from that which he had previously maintained.


[241]
He drew my attention to the averments in support of the plea which he said could be found in Articles 4, 5 and 6 of Condescendence as follows:

"Cond. 4. Thereafter the parties to said Joint Minute and the first defender proceeded in reliance and in implement thereof. In particular in 1989 the parties hereto entered into correspondence to agree a plan of the property at Clachan of Penninghame Farmhouse for the purpose of the first defender granting a Disposition in favour of the pursuer of said property in implement of her entitlement in terms of said Joint Minute. By letter dated 2 February 1989 Hewats, Solicitors, Kirkcudbright wrote on behalf of their client, the first defender, inviting the pursuer's agents to draft a Disposition. ....

Cond. 5. Thereafter the first defender did nothing to displace his representations and the pursuer's understanding of his position that the Judicial Factory estate made no claim to said property and made no dispute with the pursuer's entitlement to receive a Disposition in her favour. ...

Cond. 6 In reliance on said position the pursuer occupied said property which was dilapidated and carried out improvement works at her expense. The property was over time substantially renovated and its value increased significantly."

Answer 6 contained the following averments:

"Not known and not admitted what works the pursuer carried out, at whose expense and why. Not known and not admitted on what basis the pursuer considered that she was occupying said property. Quoad ultra denied. Explained and averred that the pursuer was allowed to occupy the property whilst the Judicial Factory was proceeding and only until the Judicial Factor was either able to give her title to the property or until he required to sell the property. Further explained and averred that the defender discovered that the pursuer had installed velux windows in Clachan Farmhouse without his permission. Accordingly, his solicitors wrote to the pursuer on 5 July 2000, asking about this and seeking her written confirmation that she would carry out no further structural alterations to the farmhouse without seeking the defender's permission. The pursuer did not reply to that letter. That letter is produced herewith and referred to for its terms which are held to be incorporated herein brevitatis causa."

[242 That letter was 7/5 of process.


[243] What representations were being relied on by the pursuer? When were they made? It could only be the correspondence about drafting a disposition and that was quite insufficient.

[244 There had been no evidence about any improvement works or any increase in value. It was impossible to see how the pursuer could claim that her occupation of the property rent free had been in some way to her detriment.


[245]
There was no evidence that in reliance on the defender's representations, whatever they were, she had carried out improvements.


[246]
The classic statement on personal bar was to be found in the well-known case of Gatty v Maclaine 1921 SC (HL) 1, in the speech of Lord Birkenhead, the Lord Chancellor, at page 7, as follows:

"Where A has by his words of conduct justified B in believing that a certain state of facts exists, and B has acted upon such believe to his prejudice, A is not permitted to affirm against B that a different state of facts existed at the same time."


[247]
In the current context A would be Mr Forbes and if he had by words or conduct justified B (the pursuer) into thinking that a state of facts existed and she had acted on it to her prejudice then so be it.


[248]
But where were the words or conduct of the defender which were being relied on? Where was any evidence that she had acted upon any relevant belief to her prejudice?


[249]
I raised with him the following point. If the judicial factor was not in a position to grant the pursuer a disposition anyway how could he be ordered to do so even if he was personally barred from denying that he had a duty to do so? If he made representations upon which the pursuer relied to her prejudice, by, for example, spending money on improvements, then that would not avail her in receiving a title to the property if the judicial factor were not in a position to grant one in the first place.


[250] Mr Govier submitted that, given the definition in Gatty v Maclaine and the lack of specification as to the words or conduct relied on by the pursuer and as to what she did to her prejudice, the plea of personal bar was irrelevant.


[251]
Mr Govier had further arguments on this point and referred to the case of Grant v Glen Catrine 2001 SC 901. He referred in the first place to the rubric where the following appears:

"Held (1) that it was essential to the doctrine of personal bar that the defender should have been induced to act and change his position by his reasonable belief that the pursuer was consenting, and in the present case the defenders accepted that they had used the name 'Grant' because they believed they were entitled to do so, not in reliance on a belief induced by the pursuers."


[252]
He submitted that there was more than a taste of that in the current proceedings. Miss Armstrong believed she had a right but there was no reasonable basis for that belief.


[253]
Mr Govier then turned to the Opinion of the Lord President at paragraph 47 as follows:

"But there is another, equally important, reason for repelling the defenders' plea. As I highlighted in paras 27 and 28, the defenders invoke the plea of acquiescence, not to bar an action of damages by the pursuers for loss suffered due to the defenders' completed acts of passing off, but in order to bar the pursuers' conclusions for interdict against acts of passing off which the defenders will commit in the future. In Earl of Kintore v Pirie & Sons Ltd at pp. 838-839, Lord Kyllachy went so far as to say that acquiescence could never have this effect: 'Now, I am not aware that the doctrine of acquiescence - taken at its widest - has ever been applied to a case of this kind. Acquiescence may bar objection to what is past - to what has been done. But it can never, so far as I know, establish directly or indirectly a continuing and perpetual right. I may have allowed my neighbour, it may be for years, to draw and to use, say, my share as well as his own of a certain stream or of a water supply; but I may resume my own share at my pleasure. Nor will it, I suppose, be a bar to my doing so, that my neighbour has, relying on my continued consent, spent money, say, in enlarging his mill or in taking water into his house. And similar illustrations may be readily figured. The truth is that, to serve the defenders' purpose, what they call acquiescence would require to be something of the nature of an agreement."


[254]
There was nothing supporting the nature of an agreement in this case. The plea-in-law might be a defence to the position taken by the defender but it did not provide the basis for any positive right on the part of the pursuer.


[255]
That, in effect, was what the pursuer was trying to achieve by that plea. One could not be personally barred to effect a disposition.


[256]
I raised the issue of whether, in effect, in an old-fashioned rei interventus or homologation case one might indeed find oneself personally barred from denying that missives had been concluded and therefore be required to effect a disposition but Mr Govier said that the difficulty with the current plea-in-law was that it was irrelevant as it stood. It stood by itself. There had to be something from which one was personally barred and there was nothing averred or indicated in the plea-in-law.


[257]
Finally on this point Mr Govier referred to the recent case of The Advice Centre for Mortgages v McNicoll 2006 SLT 591 and in particular to paragraph 17 thereof where Lord Drummond Young, in dealing with sub-sections (3) and (4) of section 1 of the Requirements of Writing (Scotland) Act 1995 said the following:

"The fact that the provisions of sub-ss (3) and (4) set up a form of personal bar has two important consequences. In the first place, where those provisions apply they operate as a defence available to the first person; they prevent withdrawal from the contract, obligation or trust in question, and the contract, obligation or trust is not to be regarded as invalid. Those sub-sections do not, however, make any claim or positive right available to the first person. According to the classic metaphor, they operate as a shield rather than a sword."


[258]
The averments were irrelevant and lacking in specification as was the plea-in-law. In any event there was no evidence to support them.


[259]
If I were with him on the evidential point then the preliminary pleas could be regarded as superseded.


[260]
At this point he turned to look at what Miss Armstrong had said about personal bar herself in her written submissions and in particular in paragraphs 18 and 20 thereof. These were in the following terms:

"18. It was only in 2003 after the action by the Defender against me, before Lord Drummond Young and the Appeal Court, that solvency became an issue, yet the Defender was insolvent in 1992. Following the sale of Clachan of Penninghame lands, the house was not listed in the factory accounts. Although we have heard the evidence from the First Defender to the effect that this was simply an accounting error and an oversight on his part, in light of the terms of the Joint Minute, the representations made to the Pursuer since 1988 that the house would not be sold, and the time period that had passed during which she and her daughters continued to live in the house at Clachan of Penninghame, the absence of any reference to the house at Clachan of Penninghame in the annual factory accounts only served to reinforce the Pursuer's understanding of the position, that she and her daughters had the right to remain in their home, to live there and occupy the house at Clachan of Penninghame, and that this would at no stage form any part of the Judicial Factor's purported accounting, past, present, or future. ...

20. Throughout this whole period, from 1988 to 1999, it is reasonable to say that in legitimate expectation, that the Pursuer would receive title to the house at Clachan of Penninghame as a result of having entered into the Joint Minute, a legitimate expectation had been created by the First Defender. As a result of the Joint Minute entered into divorce and the position adopted by the First Defender immediately following this, a position which in terms of representations made to the Pursuer over the course of the next 9 years, never changed, there was nothing to suggest anything other than that the Pursuer would receive title to the house." (sic)


[261] It was accepted as a matter of fact that the house was not listed in the factory accounts for a time but there was a good deal of difference between the house not being listed and the house being hers. She had no justification in law or in rationality to say that she thought that the house was hers.


[262]
As far as the words "in light of the terms of the Joint Minute" were concerned, it was true to say that it had been agreed between Mr and Mrs Dunlop that certain things would happen but that was not agreed to by the defender. How did that amount to personal bar by words or conduct on his part?


[263]
The words "representations made to the Pursuer since 1988 that the house would not be sold" might be a reference to a particular letter 6/36 of process from Garden Haig, relating to the sale of the farm. The letter was written on 18 November 1994 and indicated that there was no intention to sell the house. And indeed it was also the position set out in the action for interdict. The letter indicated that, as far as the judicial factor was concerned, provided the sale of the farm went ahead at the agreed price then he would be able to convey the farmhouse to the pursuer, although at that point in time it was not clear how the value of the farmhouse would be calculated when the judicial factor accounted to her for her share of the estate. It was clear that the letter was written in connection with the sale of the rest of the farm, that the house was not included in that sale but subject to the proviso that the judicial factor would not give the farmhouse to the pursuer but convey it to her subject to arrangements about the value.


[264] As far as the words "and the time period that had passed during which she and her daughters continued to live in the house at Clachan of Penninghame" were concerned, it was quite impossible to consider that the time spent in the house could either in law or in rationality be held (1) to give rise a right on her part to the farmhouse or (2) to amount to an action or conduct by the defender to her prejudice. She had lived in the property rent free.


[265]
Paragraph 20 did not add very much to paragraph 18 or what he had said about it. It referred however to legitimate expectations. That was a concept of public law and had no relevance in relation to personal bar.

 

Reduction

[266]
The pursuer sought reduction of two decrees in terms of plea-in-law 3. Mr Govier accepted that it was competent for the Court of Session to reduce decrees granted in the Sheriff Court and invited me to have regard first of all to the case of Adair v Colville 1926 SC (HL) 5. In particular he referred to the speech of Viscount Dunedin at pages 55-56 as follows:

"That the remedy of reduction may be competent to set aside a judgment, when other means of review are not, is true. Instances can be found where it has been so utilised, but it is a remedy which does not exist of right, and must be most carefully applied. I shall not attempt, for I think such attempt would end in failure, to define categorically the cases in which reduction is competent. One obvious instance would be where a judgment had been obtained by reason of some fraud practised on the court; but, generally speaking, it is certainly not competent when other means of review are prescribed, and these means have either been utilised or the parties have failed to take advantage of them".

He also referred to the speech of Lord Carson at page 67 as follows:

"The appellants have already, prior to the appeal to this house, appealed against the judgment of the Sheriff to the Court of Session, and that appeal failed, because, in accordance with the rules of procedure which have the force of statute, no shorthand notes of the proceedings had been taken - a course which was adopted in accordance with the wishes of the pursuers and the defenders. It is evident, therefore, that the appellants can only succeed if they are able to establish that there was such a miscarriage of justice as renders the whole proceedings fundamentally null."


[267] Mr Govier submitted that reduction of a decree was generally incompetent when other means of review were prescribed and had either been utilised or the parties had failed to take advantage of them. He submitted also that it would be competent to reduce a decree if the pursuer had established such a miscarriage of justice in the process in which decree was granted as rendered the whole proceedings fundamentally null.


[268] He then referred to Bain v Hugh L S McConnell Ltd 1991 SLT 691 and in particular to the Opinion of the Court delivered by Lord Justice Clerk Ross at pages 695-696 where he said the following:

"So far as reduction of the sheriff's decree under conclusion 2 is concerned, counsel for the defenders submitted that reduction of the decree was not competent since other means of review had been provided and had either been initiated or parties had failed to take advantage of them. He referred to Adair v Colville & Sons. In that case Viscount Dunedin said (at 1926 SLT p.592): 'but, generally speaking, it is certainly not competent when other means of review are prescribed, and these means have either been utilised or the parties have failed to take advantage of them'. Counsel submitted here that since appeal against the sheriff's interlocutor had been competent and the pursuer had utilised the appeal procedure, it was thus not competent for him now to seek reduction. In our opinion however, it is important to observe that in the passage which we have quoted from Viscount Dunedin, he prefaced his remarks with the words 'generally speaking'. The use of these words must mean that there are exceptions to the rule which he was propounding. Indeed in his speech Viscount Dunedin was at pains to point out that it was not possible to define categorically the cases in which reduction was competent. He also stressed the importance of there being a miscarriage of justice if reduction was to be justified: 'But of this I am certain that, unless a miscarriage of justice is affirmatively and clearly shewn, there is no room for reduction'. (p.593). Likewise in the same case Lord Carson makes it plain that reduction will be competent if the pursuer can 'establish that there was such a miscarriage of justice as renders the whole proceedings fundamentally null'. (p.599). In our opinion that is just the sort of case which the pursuer in the present case is seeking to make. He has averred that in pronouncing the interlocutor of 9 October 1985 which is sought to be reduced, the sheriff acted ultra vires of his powers. Those averments of the pursuer are admitted by the defenders. Accordingly by admission of the parties this is a case where the pronouncing by the sheriff of the interlocutor in question was ultra vires; it must therefore have constituted a miscarriage of justice which rendered the whole proceedings fundamentally null. In our opinion, it is incorrect to read the dictum of Viscount Dunedin as meaning that reduction will never be competent where other means of review have been prescribed, and these means have either been utilised or parties have failed to take advantage of them. It is, in our opinion, well established that a decree may be reduced in exceptional circumstances if reduction is necessary to produce substantial justice."


[269] In the current case there was no relevant admission and no evidence that the pursuer had a substantial case to plead in the sheriff court if reduction were granted.


[270]
Reference was then made to the case of Zannetos v Glenford Investment Holdings Ltd 1982 SLT 453. That was a decision of Lord Ross sitting in the Outer House. In that case the pursuer was seeking to reduce a decree of the Sheriff of Glasgow and North Strathclyde dated 22 November 1977 in proceedings between the present defenders as pursuers in said action and the present pursuer as defender in said action. The alleged difficulty was that decree was granted against the pursuer of consent, that consent having been intimated by a solicitor who was acting for him. The pursuer never gave authority to his solicitor to consent to decree in that way. At pages 455-456 his Lordship said the following "A number of authorities were cited on the question of how the court should approach an application like the present for reduction of a decree. In Adair v David Colville & Sons, Viscount Dunedin explained that one could not define categorically the cases in which reduction is competent, but he did appear to accept that reduction might be justified if a miscarriage of justice had occurred. This is in keeping with the dictum of Lord Justice-Clerk Moncrieff in Forrest v Dunlop where he stated:

"It is also open to the party to bring a reduction of the decree on the ground that it was obtained through inadvertence, in which case the Court, although it will require a strong statement of facts to support such an application, has the power to award substantial justice."

It is, of course, recognised that the remedy of reduction will not be allowed if the pursuer has failed to utilize other means of redress open to him... In the present case there is no question of the pursuer having failed to appeal timeously against the decree of 22 November 1977 because it is clear that the pursuer was wholly unaware of the decree until the sheriff officers called in July or August 1978. At the same time, when considering whether or not reduction is competent, it is necessary to consider whether the pursuer had a substantial defence to the action in which decree has been pronounced (J & C Black (Haulage) Limited v Alltransport International Group Ltd). There would be no point in reducing the decree and so allow the original action to proceed, if the pursuer (as defender in that action) had no substantial defence to the claim made that action. From the foregoing authorities, it appears to me to be clear that in a case like the present one where a solicitor has consented to decree without the authority of his client, it is a matter of discretion whether or not the decree should be reduced. In exercising that discretion, the aim is to produce substantial justice; if allowing the decree to stand would produce a miscarriage of justice then the decree should be reduced, whereas the decree should be allowed to stand if it would be contrary to justice to reduce it. Moreover when considering whether or not to exercise its discretion so as to reduce the decree a very important consideration for the court must be whether the pursuer had a substantial defence to the original claim. On that issue, I did not understand it to be disputed that the pleadings in the sheriff court action revealed no statable defence. Counsel for the pursuer, however, maintained that the real defence to the claim was that the action had been settled extra-judicially by agreement between the pursuer and Mr Charles Patttison. Normally, a defence on that ground would require to be put forward in the sheriff court and determine there... Counsel argued strongly that whether or not the defence that the claim had been settled by agreement of the parties could be established could only be determined in the sheriff court action. In the present case, however, the pursuer attempted to establish before me that there had been an agreement to settle extra- judicially, and as already indicated he failed to establish any such agreement. That being so, it appears to me that the pursuer has failed to establish that he has a statable defence. Where reduction is being sought in similar circumstances, it will normally be enough for the pursuer to aver that he has a statable defence. In the present case, however, the matter does not stand merely upon averment. Evidence has been adduced before me regarding this alleged defence of settlement, and it has been demonstrated that the defence which it is proposed should be put forward in the sheriff court is one which the pursuer would be unable to establish. In that situation, I did not see that justice requires but the pursuer should be given a second chance to establish this defence in the sheriff court."


[271]
That case was referred to in argument in vain and it was not suggested that it was bad law. In any event it represented pure common sense. There was no point in sending the case back to the sheriff court if there was no merit in the pursuer's defence.


[272]
One had to consider whether the tests in Adair and Bain had been satisfied. The first part of the test was whether there were other means of review which were available and which had not been utilised. An appeal would lie from the sheriff's original decision and indeed that was taken. Following upon the Sheriff Principal's decision it was open to the parties in terms of Rule 84 of the 1976 Summary Cause Rules, to attempt to apply to the Court of Session. There had been no evidence at all about any attempts to utilise that avenue of appeal.


[273] The second test which had to be overcome was to show that the circumstances were exceptional and it was necessary to reduce the decree in order to produce substantial justice. Where were such exceptional circumstances rendering the proceedings fundamentally null or indicating a miscarriage of justice?


[274]
The circumstances which were relied on by the pursuer were set out in Article 11 and proceeded upon the basis of chronic depression. Mr Govier submitted that the medical evidence was insufficient to support the pursuer's contentions.


[275]
He looked first of all at 6/15, Mr Nimon's report dated 16 January 2002. At page 6 thereof it was indicated that Miss Armstrong became quite depressed with her general condition throughout 2001. She was seen on 16 February 2001 where her general practitioner noted weepiness, difficulty sleeping, flashbacks and general symptoms of depression. She was already noted to be seeing a counsellor privately and wanted to be seen by a homeopathic physician. Consequently, she was referred to Dr Neil for further intervention. Throughout July and August her depression became the main feature affecting Miss Armstrong.


[276]
At the bottom of that page, he also referred to her depression occurring throughout the year 2001. Over the page he indicated that she required to be on an anti-depressant.


[277]
Mr Nimon was a consultant orthopaedic surgeon and there was no indication that he had any psychological or psychiatric qualifications. The reference to the pursuer's having depression throughout 2001 did not square with the references at pages 4 and 5 to her being reviewed by a Miss Costigan and a Mr Saad. The account of their review did not contain any reference to depression until the final review in October 2001 where Miss Costigan was said to have noted the history and also noted her "new symptom of depression". That was somewhat anomalous, although it might be a small point.


[278] 6/16 was a report from Dr David Baird dated 23 November 2001 indicating that the pursuer had severe anxiety and depression with symptoms of low mood, impaired concentration, inability to sleep without sedation and frequent episodes of tearfulness. She indicated that she was not "fit to attend court at the time of her recent scheduled appearance". That letter was shortly before the proof diets of 14 and
19 December 2001 and shortly after the diet of 13 November at which she failed to appear but at which Mr Anderson had appeared and withdrawn. The diets of 14 & 19 December were those at which Mr McVicar had appeared. A joint minute had been agreed on the 14th and evidence had been led from Mr Cavers on the 19th.


[279]
6/16 did not indicate that the pursuer was unable to give instructions to lawyers.


[280]
6/17 was a letter from Dr Baird dated 13 February 2002 and indicated that she still had depression and anxiety and was not currently fit to attend to legal matters with respect to her ongoing "case". A delay of six months was requested. 6/18 was a certificate from Dr Baird dated 14 May 2002 indicating that the pursuer remained on treatment for depression and anxiety as previously outlined in the other letters. That was after the date of the appeal to the Sheriff Principal which took place on 2 May 2002. The decree was in fact pronounced on 14 June 2002, presumably after assessment of expenses, and extracted on 1 July 2002. She would have had 14 days from 14 June to mark an appeal under rule 84 and Mr Govier accepted that 6/18 was possibly relevant to the question of such an appeal.


[281]
6/19 was a letter from Dr J R K Neil dated 6 November 2001. He was her GP and referred amongst other things to post traumatic stress manifesting itself in panic attacks, flash backs, insomnia, bouts of uncontrollable sobbing, poor concentration and symptoms suggestive of a depressive illness. He said that in view of these symptoms the pursuer had, in his opinion, been unable to attend to court matters over the past year since her accident. That admittedly went further than Dr Baird's certificate of about the same time.


[282]
6/20 was another letter from Dr Neil dated 13 February 2002 indicating that the pursuer was neither medically fit to attend court nor to instruct legal representation on her behalf regarding court matters at present and in the near future. It requested that a meeting on Friday 15 February 2002 in the Sheriff Clerk's Office be postponed and that might have been a hearing on the expenses of the December proof.


[283]
6/21 was another report from Dr Neil dated 14 May 2002 certifying that the pursuer continued to suffer from a depressive illness and remained medically unfit both to attend to court matters and to arrange or instruct legal representation on her own behalf.


[284]
6/22 was a letter dated 20 February 2002 from a Mr Alan Richards of an organisation called Scintilla. This referred to severe distress suffered by the pursuer, whose counsellor he was. There was no suggestion that he had any medical qualifications.


[285]
Mr Govier submitted that none of the reports had been prepared by an expert in the field of psychology or psychiatry. He accepted that to an extent Miss Armstrong had spoken to the reports herself but he had not had the benefit of being able to examine any of the authors of them or cross-examine them on any issues such as the anomalies in Mr Nimon's report or the distinctions between attending court and instructing solicitors. There was no chance to put to them the fact that notwithstanding everything they wrote there had been a succession of agents appearing for the pursuer. Mr Pumphrey was her solicitor on and off for many years and at least as far back as 1989. Mr McVicar, an experienced solicitor, was on the telephone to her and took sufficient instructions to allow him to feel able to represent her in court and was able to persuade Sheriff Smith in Stranrar that there was good cause why she had not appeared at the proof diet in November. He was also able to explain at some length in December why he was withdrawing from acting.


[286]
The medical evidence therefore was not sufficient to support the pursuer's case.


[287]
The pursuer claimed in Article 11 that if she had been in a position to do so, she would have instructed her lawyers as to the erroneous basis on which the action was proceeding.


[288]
He had noted Mr Cavers to say that she herself wrote to the court in connection with the calling date of 10 November 2000 and the case was continued. Josephine, her daughter, appeared at the continued diet on 8 December. Later an appeal was lodged against the decree granted on 8 December 2000. Mr Pumphrey appeared at the second appeal diet and lodged defences on her behalf. He was successful and the appeal was granted. The case was remitted back to the sheriff and Mr Pumphrey appeared in June 2001 looking for a sist for legal aid and moving the sheriff to rescue himself. Legal aid had been applied for presumably implying some involvement by Miss Armstrong. Mr Laburn appeared for Mr Pumphrey at the hearing of an incidental application on 9 November, and Mr Anderson appeared for Mr Pumphrey at the proof diet after the first appeal when he intimated Mr Pumphrey's withdrawal. Mr McVicar appeared at the diet on 14 December as has been indicated and again on 19 December where he withdrew after a lengthy explanation. That included the explanation that he had given the pursuer certain advice which she had declined to accept. A decree was granted on 19 December and an appeal was lodged. Miss Armstrong accepted that that had been done but did not know who had done it. There was no appearance before the Sheriff Principal in May.


[289]
Given that litany of members of the local bar who had appeared it was difficult to understand how it could be said that she was not able to instruct lawyers as to the erroneous basis of the action.


[290]
Furthermore, Mr Govier referred to the letter of 12 December written by Mr Pumphrey, which was 6/75 of process. That related to the raising and signetting of the present action. Miss Armstrong said that at the time of the proof diet of 14 December and 19 December 2001 her condition was at its worst and she was being nursed by a doctor in Glasgow. Mr Pumphrey's letter referred to "a summons that has now been prepared". On that date, that is 12 December 2001, the present action was signetted.


[291]
For obvious reasons the pursuer had failed to prove that she was unable to give adequate instructions for the defence of the summary cause action.


[292]
If so then there were no exceptional circumstances and no miscarriage of justice rendering the proceedings fundamentally flawed.


[293]
If I were against him, and found that there were such circumstances then reduction should still not be granted on the basis of Zannetos.


[294]
Zannetos was not binding on me although Bain was. It did, however, conform to common sense. There was no point in going back to Stranraer. I had heard the evidence and I should refuse to grant the declarator.

 

Lis Alibi Pendens and Res Judicata

[295]
Mr Govier submitted again that if reduction was granted lis alibi pendens came into play in connection with the declarator and consequently the interdicts sought. If a conclusion for reduction was not granted then res judicata applied.


[296]
He referred to Maclaren on Court of Session Practice at page 383 where it is said that lis alibi pendens "consists in the averment that the same question is depending in a prior suit before another Court of competent jurisdiction". If the decree were reduced then the matter would go back to the sheriff court and the action would plainly be in dependence. After some discussion Mr Govier argued that if I were to reduce anything I should reduce both decrees and restore the case to the position it was in before the proof diet in December.


[297]
There was no doubt that the Sheriff Court in Stranraer was a court of competent jurisdiction.


[298]
Mr Govier submitted that the same parties were involved, the issues were the same as they were in this court and the same questions were raised as were before the court in Stranraer.


[299]
Paragraph 4 of the defences submitted in Stranraer Sheriff Court (7/2 of process) was in the following terms:

"It has always been recognised by the Judicial Factor that the property in question is owned by the Defender. The Pursuer has no title to recover it for that reason."


[300] That was the same issue as was before the court in this action.


[301]
At page 385 of Maclaren it was said that the same question must be raised in the prior action, otherwise the plea of lis alibi pendens in the second action would not be sustained.


[302]
If reduction was granted then the plea of lis alibi pendens operated and struck at the other conclusions of this action.


[303]
If the decrees were not reduced then res judicata would apply.


[304]
There had been a final decree in foro. Defences had been lodged and a proof heard.


[304]
It did not matter that there appeared to have been no evidence led before the sheriff about the joint minute on which the pursuer was relying in the current case and no other evidence to support what she was claiming now. Battle lines had been drawn on the basis of the defences which were submitted in the summary cause action and it had been open to Mr McVicar to lead such evidence. There could be a decree in foro even if no evidence had been led in a case. A decree by default after defences were lodged was an example.


[306]
In these circumstances the lack of evidence on the point which was in issue before me did not matter since that was an issue raised in the sheriff court.

 

Res Judicata
[307] Mr Govier submitted that this would be relevant if I refused to grant decree of reduction. If so, the decision in foro in the sheriff court would stand and given the terms of that decision and the terms of the declarator which was sought the plea would come into play.


[308]
He submitted that there had been a proper judicial determination of the cause in Stranraer in an action where the parties were identical, as were the subject matter and the grounds.


[309] He referred again to Maclaren at page 396 and subsequent pages where the circumstances giving rise to the plea were set out. In the first place, there had to be a proper judicial determination of the subject in question. He submitted that the decree in foro in the sheriff court fulfilled that requirement. In the second place, the parties had to be identical and there was no dispute about that.


[310] In the third place, there had to be an identity of the subject matter. It was not sufficient that the same point had previously been determined in formal proceedings between the same parties but it was necessary that the same subject matter should have been disposed of by the judgment. Mr Govier submitted that there was such identity between the proceedings in the sheriff court and the declarator sought. He referred me paragraphs 2 and 3 of the Statement of Claim in the summons No. 7/1 of process which are in the following terms:

"2. The Pursuer is the Judicial Factor on the sequestrated estates of G Dunlop & Son, Farmers, Baltersan and Clachan of Penninghame, Newton Stewart, conform to interlocutor of the Court of Session dated 11 February 1987. The Defender resides at Clachan of Penninghame Farmhouse, Newton Stewart, which forms part of the sequestrated estate.

3. The Pursuer requires possession of said Clachan of Penninghame Farmhouse and the garden ground pertaining thereto for the purposes of selling the same and completing his duties as Judicial Factor foresaid.... The Defender has no right of abode in said property..."


[311] The pursuer was asserting that he was the judicial factor and that the farmhouse formed part of the sequestrated estates. That showed that the subject matter of the dispute, namely ownership of the property, was in issue. The pursuer wanted to sell the property and there would of course be problems in doing that if he did not own it so his ownership was in issue. The action required possession of the subjects so the question of ownership and possession were put firmly in issue as well as questions of occupation.


[312] Paragraph 4 of the defences showed that the defender asserted a right of ownership. It was suggested that the judicial factor recognised that right and the pursuer was seeking to persuade the court to recognise it also. Questions of title were obviously put in issue.


[313] In the current action, there was sought, inter alia, a declarator that the defender was bound to effect a Disposition of the property but that was merely ancillary and was a necessary adjunct to the first part of the declarator. There was no need for that to have been dealt with in the sheriff court.


[314]
In short, in the sheriff court Mr Forbes was seeking to remove the pursuer and her defence was to the effect that he could not so because she owned the property. That was the nub of the action here.


[315]
The fourth circumstance set out in Maclaren is that there must be identity of media concludendi. As is said in Maclaren at page 400:

"A medium concludendi is a ground of action either in law or in fact. 'The validity of a plea of res judicata must necessarily depend upon the pleadings and decision in the previous action and not upon any rights or equities which may have arisen antecedent to the pleadings or from any extrajudicial communications between the parties. The question always is - what was litigated and what was decided'. The manner in which this question could be solved is 'to read the whole of the record in each case - summons (or note), averments and pleas - and grasp the substance of each, and then compare the two.'"


[316]
Mr Govier said that he found it difficult to distinguish between the question of what was litigated and the previous discussion of the identity of the subject matter. What was decided in Stranraer was that on the basis of the assertion that the pursuer was judicial factor on the property and the defender had no right of occupation a decree for recovery of possession should be granted. In the present case Miss Armstrong, as the pursuer, was claiming on the basis of her asserted ownership that she was entitled to continue in occupation of the property and that a Disposition should be granted to her.


[317] The fourth requirement had been met according to Mr Govier.


[318]
Miss Armstrong had referred in her written submissions to the case of Sutherland & Sons v Pottinger 1989 SLT 679. Her submissions ran as follows in paragraph 47:

"In the case of James M Sutherland & Sons v Pottinger 1989 SLT 679, it was held that success in the sheriff court action in that case would not afford the pursuers the remedies sought in the Court of Session action and that the pursuers must therefore be entitled to proceed with the action at their own instance. In our case, success in the sheriff court action would only have put a stop to the action of recovery of possession. It would not have confirmed our right to the ownership and occupation of the house, as is sought in this action."


[319]
In that case, farmers raised a Court of Session action for interdict and damages in 1988 against a neighbouring farmer. They alleged that his actings in altering the drainage from his land had caused flooding on their land. The defender tabled a plea of lis pendens founded on the existence of an action commencing in the sheriff court in 1986 at his instance and transmitted to the Court of Session in March 1988 in which he sought interdict to prevent the pursuers from blocking or interfering with the drainage arrangements. He argued that the issues in the two actions were the same but it was argued for the pursuers inter alia that the issues were not identical in that the questions of interdict and damages in their favour did not arise in the sheriff court action.


[320]
It was held by Lord Coulsfield that success in the sheriff court action would not afford the pursuers the remedies sought in the Court of Session action and that the pursuers must therefore be entitled to proceed with that action and the plea was repelled. At page 681 his Lordship said the following:

"Counsel for the pursuers submitted, first, that the issues were not identical, and, secondly, that, even if they were, the plea of lis pendens could not succeed unless it was shown that it was equitable to sustain it.... The question in the sheriff court action was not simply whether Pottinger's actions were justifiable but whether Sutherland & Sons were to be interdicted upon various grounds including trespass, the existence of a servitude right, and interference with Pottinger's drainage. The question of nuisance also arose and so did the question of the position of the boundary between Sutherland & Sons' lands and those of Pottinger. In the Court of Session action, the question was whether Pottinger should be interdicted on the ground of nuisance and also on the ground of delict. The question of the existence of a servitude was raised but so also was the question of liability to pay damages. That was not an issue in the sheriff court action. In my opinion, the pursuers' submissions should be upheld. In Wilson v Junor a solicitor raised an action against a client for a sum alleged to be due on a proper accounting. The client had previously raised an action against the solicitor in the sheriff court and this was also an action for an accounting and payment of a sum due. It was held that the plea of lis pendens could not succeed because, even though the solicitor alleged in his defence to the client's action that, on a proper accounting, the sum claimed in the Court of Session action was due to him, he could not obtain decree for that sum in the sheriff court action, and he was therefore entitled to raise an action on his own account in order to have his claim constituted. Similar reasoning applies, in my view, in the present case. Even if Sutherland & Sons defeat Pottinger's claim for an interdict in the sheriff court, that success will not have itself give them the protection of the interdict which they seek in the present action, and they must, in my view, be entitled to proceed with an action at their own instance to obtain interdict to protect themselves. Similarly, they are, in my view, entitled to raise an action to recover the loss claimed by them, this not being an issue raised in any form in the sheriff court action. Further, although many of the legal and factual issues in dispute are common to the two actions, the issue of negligence, which is raised in the Court of Session action, does not figure in the sheriff court action".


[321]
Mr Govier submitted that the issue of negligence presumably referred to the damages claim. There was no equivalent of that in the present case and there was no separate issue from the issue of ownership and occupation.


[322]
Furthermore the pleas of res judicata and lis alibi pendens were not necessarily co-extensive. In the current case the sheriff must have decided the issue of ownership since that was raised in the pleadings and would have been an absolute bar to granting decree for recovery of possession. Had he decided not to grant decree for recovery it could only have been on the basis that the pursuer owned the property and if so she could have pleaded res judicata against the defender if he had resisted a claim by her for a Disposition.


[323]
The topic of res judicata is dealt with in Macphail on Sheriff Court Practice (3rd Ed.) at paragraphs 2.104 and subsequent paragraphs and effectively follows the same sequence as Maclaren. In the first place, the prior determination must have been made by a competent tribunal and that was not in dispute. In the second place, the prior determination must have been pronounced in foro contentioso without fraud or collusion. It was not necessary that the action should have been fully litigated. In this case defences had been lodged and indeed there had been a proof.


[324]
In the third place, the subject matter had to be the same and, in the fourth place, the media concludendi had to be the same.


[325]
Paragraph 2.108 goes on as follows:

"The media concludendi are not the same unless the specific point raised in the second action has been directly raised and decided in the first. An unsuccessful pursuer has a right to raise a further action against the same defenders relating to the same subject matter, provided that the second action is based on different grounds. Whether the media concludendi are the same will appear from a study of the pleadings and decision in the previous action: the court looks at the essence and reality of the matter rather than the technical form and considers the question, what was litigated and what was decided".


[326]
Mr Govier submitted that even looking at the matter technically the issues were the same.


[327]
Lastly the parties had to be identical and there was no difficulty with that.

[328] I asked Mr Govier to address me on the case of Hynds v Hynds 1966 SC 201. In that case a wife raised an action of separation and aliment on the ground of cruelty in the sheriff court and the husband was assoilzied of consent. She then raised an action for divorce averring more or less the same acts of cruelty. The husband pleaded res judicata. Lord Cameron held that as decree in terms of the crave of the first action would have left intact the matrimonial tie, while decree in terms of the conclusion of the second would break it, the subject matter of the actions was not the same and the plea was repelled. Incidentally that case is authority for the view that provided the necessary conditions are fulfilled a competent decree in the sheriff court is res judicata in the Court of Session. At page 203 his Lordship said the following:

"For the defender, Mr Cameron in his careful speech argued that not only were the parties the same, but that both subject matter and media concludendi are identical. If the test laid down by Lord Kinnear in Edinburgh & District Water Trustees v Clippens Oil Co., Limited, (1899) 1F 899, is applied, then the answer to the question of what was litigated and what was decided could only be that it was the question of the defender's cruelty that was litigated, and the decision was that he was absolved from the charge of cruelty, and therefore, counsel maintained, his plea must be sustained. But I think this is to simplify the matter too much, and I do not think it covers the issues to be isolated and determined. There must be identity of subject-matter as well as identity of media concludendi and the two are obviously not the same nor do they refer to the same thing. I think however that defender's counsel was correct in his submission that the grounds of action or media concludendi are the same in both actions, because the ground on which the conclusions of the summons and the crave of the writ were based were the same: in both actions the grounds are cruelty and, as I have already indicated, based upon substantially the same items. The question of subject-matter is very different. What was the subject-matter of the earlier action as opposed to the grounds of action or media concludendi? In my opinion it was the right of the pursuer to obtain protection and support for herself by means of a decree of separation and aliment leaving intact the matrimonial tie, the status of the parties not being in issue. In the present case the subject-matter is the right of the pursuer to break the matrimonial tie and to change her status with consequential rights against the defender's estate. I do not think that it alters the position that the point to be decided in evidence may be the same i.e. has the defender been guilty of cruelty in law towards his wife. This is well illustrated by the case of Leith Dock Commissioners v Miles (1866) 4 Macph. (H.L.) 14. I think that some help may be obtained from a consideration of the case of Wilson v Dunlop, Bremner & Co., Ltd 1921, 1 S.L.T. 35 cited by the defender in support of his argument on the plea of res judicata. In addition to a plea of res judicata the defender in that case pled lis alibi pendens. The Lord Ordinary (Lord Anderson) in refusing to sustain the latter plea said: 'But the point which is fatal to the defender's contention is this, that the two actions do not raise for determination precisely the same question; on the contrary they raise questions which are entirely different. In the Sheriff Court action the legal ground relied on was Bremner's breach of his alleged contract with the pursuer to allot or have allotted to him shares in the new issue. In the present action he is sued on an entirely different ground, to wit, quasi delict. The question for determination in the present case is this: Has Bremner violated his trust? In the Sheriff Court action the question for determination was: Had Bremner broken his contract? New questions raised in this action with which the earlier case was not concerned, are ...' Therefore the lis in the Sheriff Court action was different from that in the Court of Session. In Stewart v Stewart 1906 8 F. 769, it was held competent to bring in the Court of Session simultaneous actions for separation and divorce pending upon the same ground of action and that the plea of lis alibi pendens would not lie. These authorities, and particularly the latter case of Stewart, seem to me to support the view that a difference in the character of the lis or the matter to be litigated, even if the media concludendi are identical, is sufficient to differentiate the subject-matter of the proceedings between the parties and to prevent them being regarded as identical. Another illustration of difference in the character of the lis as between an action of separation and one for divorce is to be found in Stevens v Stevens (1882) 9 R. 730. In that case it was decided that a judgment in an action of divorce for desertion in which a wife was held entitled to live apart from the pursuer because of his cruelty could not be used as proof excluding a relevant defence in a subsequent action for separation on the ground of the husband's cruelty. Lord Fraser's opinion draws particular attention to the difference in effect between a decree of divorce and one of separation as a further reason for rejecting the pursuer's contentions - in effect, pointing to the difference in subject-matter of the two litigations. In MacKenzie v MacKenzie 1930 SLT 439, Lord Mackay refused to accept evidence in a previous undefended action of separation and aliment for adultery as evidence in a subsequent action of divorce between the same parties. These cases however are the converse of the present.... Having regard to the differences in the nature of the rights which are in dispute in the two actions, to which I have already drawn attention, and the marked differences in the remedies sought and their effects if granted, I think there is no identity of subject-matter between the two actions here."


[329]
The media concludendi in the current case, or the grounds of action, were the same as those in the sheriff court action, said Mr Govier. These were that the judicial factor was vested in the property and the pursuer had no right to be there. The question came to be whether the subject matter was the same. In Hynds the subject matter in the sheriff court action was whether the parties should be separated. In the Court of Session action it was whether the pursuer should be divorced. The Lord Ordinary found that the subject matters were different but there was no comparable distinction in the current case said Mr Govier. I suggested to him that one difference might be that in the sheriff court action the issue to be determined was the possession of the subjects. The action was after all one of recovery of possession. In the Court of Session the question at issue was one of heritable title.


[330] Mr Govier submitted that that might be a distinction without a difference.


[331]
He said that the two parties had different starting points. In the sheriff court action the judicial factor was someone who was confident in his ownership of the property and did not require any confirmation of his ownership. The only reason for the issue of ownership arising as part of the subject matter in the present proceedings was the fact that the parties had different starting points.


[332] I did not quite follow that.


[333]
Mr Govier submitted, however, that the difference in the two actions in Hynds was principally the effect of them on the status of the pursuer. In the sheriff court her status would remain the same but in the Court of Session she would be divorced and that was a consideration which weighed heavily with Lord Cameron.


[334]
He repeated that there was nothing comparable in the current proceedings.


[335]
He said that neither in the Stranraer case nor in the current action was there any suggestion by the pursuer that she had any right of occupation based on a lease, licence or tenancy of any description. Her occupation followed directly from the issue of ownership. That was the same issue before each court. The only defence to the action in Stranraer was the issue of ownership and that was what she had raised. Mr Govier accepted that the Stranraer proceedings were in the form of an action for recovery of possession of heritable property and questions of title were not raised directly but the issue was raised in the defences.


[336]
In Hynds and certain of the other cases referred to therein there were distinctions between the two actions concerned but they were of a different category from the distinctions we were dealing with here. In all of these cases there was a difference between the true subject matter of the cases but the true subject matter of both the cases we were dealing with was the issue of ownership.


[337]
The reasons that the actions appeared to involve different subject matters were two in number. Firstly, the form of the action in Stranraer was convenient and relevant to raise the issue of recovery of the property. That was the issue the judicial factor wanted to raise. If, as she did, the pursuer chose to defend that by raising the issue of ownership she was entitled to do that and that was what she did. She had no claim to any tenancy etc, and she raised the current action to establish a right of ownership.


[338] In the second place, Mr Forbes was content to raise the matter of her occupation of the farmhouse in the form of an action for recovery of possession because he was confident in his own ownership. The question of ownership was not an issue as far as he was concerned. Although the two actions had different conclusions that was simply a function of the starting point and the type of action available to the parties.


[339]
I must confess that I still have some difficulty with that submission.


[340]
The case of the Leith Harbour Commissioners, referred to by Lord Cameron, dealt with the payment of poor-rates. In an action for payment of poor-rates assessed on a harbour and for declarator of liability the Court of Session sustained a plea of exemption in regard to certain funds. That was held not to sustain a plea of res judicata in defence to a subsequent claim for poor rates made after the application of the harbour revenues had been changed by statute.


[341]
The differences in Wilson v Dunlop etc. could be seen readily, from a perusal of Lord Cameron's narration of Lord Anderson's opinion. In Stewart v Stewart a status question arose. The differences in character between the two cases arose from the consequences which would follow for status and succession. Stevens was also a matrimonial case. In an earlier action of divorce by the husband against the wife on the ground of desertion a defence that she was justified in not adhering by reason of his cruelty was sustained by the Court. In the later action raised by the wife against her husband for separation and aliment she pleaded that the fact of her husband's cruelty should be taken as res judicata but that plea was repelled. The Second Division adhered to the Lord Ordinary's interlocutor. In his opinion the two actions had totally different effects which he set out in his Note. Amongst other things, he said the following, at page 731:

"The point to be determined in the present action was not determined by the judgment in the divorce action, and the husband is now entitled, when he is put upon the defensive, to vindicate himself by adducing other and additional evidence - if he possesses it - than what he was able to produce in the action of divorce."


[342]
Mr Govier submitted that it was difficult to see how it could be said that the point to be determined in the present action was not determined in the sheriff court action.

The declarators sought

[343]
Mr Govier submitted that I only had to deal with this issue if decree of reduction were granted and the plea of lis alibi pendens were refused or if I refused to grant reduction and refused to hold that the matter was res judicata. He submitted three reasons why the conclusion for declarator should not be granted.


[344]
In the first place, the claim was firmly rooted in the joint minute. That was a document entered into between the pursuer and her then husband in about November 1988, sometime after the partnership property, including the farmhouse, was sequestrated and the estate vested in the defender as judicial factor. The joint minute indeed acknowledged the defender's position to the extent that it was in contemplation that Mr Dunlop would signify his consent to a Disposition to be granted by Mr Forbes. The judicial factor was not a party to the joint minute. He did not sign it. Neither of the two parties to it was the owner of the house at the time and neither had since become the owner. It was a basic principle of law that it was not legally possible in virtue of a document signed by A and B to bind C who was the owner of property to transfer it or grant any deed in connection with it. The document simply could not be binding on the judicial factor.


[345] In the second place, the document was executed shortly before the divorce in 1988. Whatever the terms of the decree of divorce, clause 6 of the joint minute was not incorporated into it and no authority was interponed to it. The document was signed before the Requirements of Writing (Scotland) Act 1995 came into force and in order to be binding on the parties so far as it related to heritage it required for its constitution to be attested, holograph or adopted as holograph. It was an obligatio litteris. It was not attested, holograph or adopted as holograph. It was signed by the

pursuer on the fourth page but not witnessed or adopted as holograph. There was no evidence about any actings by Mr Dunlop which might give rise to any question of rei interventus or homologation. Given that, while the first point was maintained, the document was not even binding on the parties to it.


[346]
In the third place, the conclusion was based on a view of what Lord Drummond Young had said in his Opinion when interim orders were sought and granted and in particular his discussion of the cases of Miller's Trustees v Miller (1890) 18 R 301 and Yuill's Trustees v Thomson (1902) 4 F 815. His Opinion is 6/51 of process and the pursuer's arguments on the matter are contained in her written submissions at paragraphs 38-40 as follows:

"38. There is no precedent for this case, neither legislation nor case law which can be used to show that the powers of a Judicial Factor in the circumstances should defeat the terms of the agreement reached between myself and my ex-husband.

39. The closest analogy that is used is the position under trust law. Regarding the principles of trust and whether the Judicial Factor has a duty to implement an agreement between the former partners, I would say that from what I understand the position under trust law to be, that I have a legal right to a conveyance of the farmhouse at Clachan of Penninghame from the defender on the basis of the principle of trust law set out and explained in Miller's Trustees v Miller... and Yuill's Trustees v Miller... Whilst the judicial factor has tried to argue on previous occasions that the principle expressed in those cases could have no application to a situation where the sequestrated estates of a partnership are held, and are in the process of administration, by a judicial factor, I can see no reason why the principles should not apply. This is not simply a straightforward sequestration case. Instead it is a case in which the principles of family law became overshadowed by the involvement of a Judicial Factor.

40. The right of vesting as set down in Miller's Trustees and supported by Yuill's Trustees, could only be restricted where there are other ulterior trust purposes to be served which necessitate the retention of the estate in the hands of the trustee. While the payment of creditors may be a trust purpose, surely the payment of debts since incurred due to the delay of the trustee in dealing with matters, in this case the delay caused simply by following the objection of the previous Second Defender to the transfer of the property, is not a trust purpose as such? There were numerous occasions when there were no other trust purposes to be met and at which time the Judicial Factor was solvent, therefore there was nothing to restrict title being transferred. The meeting of costs incurred during a period in which the previous Second Defender was allowed to stand in the way of title being transferred, should not be regarded as a true trust purpose, for the purposes of disapplying the principles in Miller's Trustees and Yuill's Trustees. The Judicial Factor has based his refusal to transfer title on his belief that the further consent of Michael Dunlop is required. Whilst Michael Dunlop later confirmed that he is quite happy for title to be transferred, this only came at a stage by which the financial position of the factory was then used as an alternative reason for not giving effect to the Joint Minute. Such a position should not be used to prevent the application of the principles set down in Miller's Trustees and supported by Yuill's Trustees, particularly given the expectation which was created right up until the year 2000, that title was to be transferred on the basis of the agreement entered into between myself and my ex-husband."


[347] Mr Govier referred to paragraphs 11, 12 and 13 of Lord Drummond Young's Opinion. Paragraph 11 indicates that the pursuer had to demonstrate two matters, namely that she had a legal right to a conveyance of the farmhouse and that she was entitled to suspension of the sheriff court decree of 19 December 2001. On the first of those matters she founded on the joint minute. Paragraphs 12 and 13 are to the following effect:

"
[12]
The effect of clause 6 is in my opinion as follows. Prior to the date of the joint minute the pursuer and her then husband owned the farmhouse jointly, but on trust for the firm of G. Dunlop & Son. They were the sole partners in the firm. At that time the firm was understood to be absolutely solvent, in the sense that its assets were thought to be sufficient on realisation to cover its liabilities. In those circumstances the pursuer and her then husband were in my opinion entitled to direct the disposal of the farmhouse, provided that that did not compromise the solvency of the firm. It is a general principle of trust law that beneficiaries of full legal capacity who are entitled to the fee of trust estate may at any time compel trustees to make over the trust property to them: Miller's Trustees v Miller, 1890, 18R 301; Yuill's Trustees v Thomson, 1902, 4 F 815. In my opinion that principle is capable of applying to cases where the trust relates to partnership property; the rationale of the rule, relieving those beneficially entitled to the property of unnecessary trust administration, applies equally to cases involving a partnership. In the present case, the pursuer and Michael Dunlop were jointly entitled to the fee of the farmhouse. Provided that the firm and the judicial factory of its estate were solvent, they were accordingly entitled to direct that the fee of the farmhouse should be disposed of. In clause 6 of the joint minute, I am of opinion that they agreed that it should be made over to the present pursuer, and they directed the defender as judicial factor on the partnership estate to give effect to that agreement. In my view the principle in Miller's Trustees applies in these circumstances, and the defender as judicial factor was obliged to give effect to the wishes of the partners, who were the beneficiaries of the partnership estate. He was thus obliged to grant a disposition of the farmhouse to the present pursuer. Nothing has happened since 1988 to alter the agreement contained in clause 6, or to revoke the direction contained in that clause. Counsel for the defender submitted that the pursuer's former husband had declared that he was no longer bound by the joint minute because the pursuer had been in breach of clause 10 thereof. Clause 10 provided that neither party would take any steps by use of legal process or otherwise to impede or interfere with the implementation of the joint minute or with a sale of the estate of the partnership by the judicial factor. It was not submitted, however, that the pursuer's former husband had rescinded the joint minute, and indeed it might be difficult for him to do so because many of the provisions of the deed had clearly been implemented. In these circumstances, I consider that clause 6 of the joint minute is still binding, and I attach no significance to the attitude of Michael Dunlop to either the joint minute or the subsequent actings of the pursuer. Counsel for the defender further referred to the failure of the present pursuer or her agents to take steps to obtain a disposition of the farmhouse. While that failure might in certain circumstances be relevant to the balance of convenience, it does not appear to have any bearing on the pursuer's right to the subjects. That right could be extinguished by prescription, but the long negative prescription, which applies to obligations relating to land, has not expired. Otherwise, nothing has happened to destroy the pursuer's right.


[13] The agreement and direction contained in clause 6 are, however, dependent for their effectiveness on the partnership's remaining solvent. If the partnership becomes insolvent, it is obvious that the creditors must be paid in full before any partnership property is made over to the partners. Counsel for the defender submitted that the judicial factory was already insolvent. He stated that the balance of funds in the judicial factory estate as at 28 February 2002, excluding the farmhouse at Clachan of Penninghame, was £40,000. The debts due by the estate comprised fees due to Morison Bishop, Solicitors, amounting to £17,806, fees due to Hewats, Solicitors, amounting to £9,847, and fees due to the defender as judicial factor amounting to £4,000. In addition, further fees for work to date were estimated at £10,000. That was a total of £41,647, which excluded fees for work performed in future. Counsel for the pursuer submitted that, if the estate were insolvent, the main reason was that extensive payments had been made by the defender to Michael Dunlop. The pursuer should not be penalised for those payments, standing the clear agreement that she should receive the farmhouse. He further stated that, if the estate were rendered insolvent, the pursuer could obtain capital to ensure the solvency of the judicial factory. I formed the view that the financial position of the judicial factory was not entirely clear, as the debts alleged by counsel for the defender included an estimated figure of £10,000. At worst, the financial position of the factory was one of doubtful solvency. In that event, however, it appeared to me that the pursuer should be given an opportunity to provide the necessary funds to ensure the solvency of the judicial factory. The joint minute involved an instruction to the defender to make over the farmhouse to the pursuer, and I am of opinion that the pursuer should be given a reasonable opportunity to secure the conditions necessary for the implement of that instruction. That includes securing the solvency of the judicial factory. The sum required to achieve that did not appear to be particularly large, and I thought it quite likely that the pursuer could meet the necessary condition. In addition, it appears from the defender's account of charge and discharge for the year ended 28 February 2002 that £15,000 was made over to Michael Dunlop during that year. He was a party to the agreement contained in the joint minute. It is not obvious why the pursuer's right to the farmhouse should be compromised by distributions made to the other partner. For these reasons I formed the view that the state of solvency of the judicial factory was not a bar to the implement of the instruction contained in paragraph 6 of the joint minute, although funds might be required from the pursuer to enable such implement to take place."


[348] Mr Govier submitted that Lord Drummond Young was stressing the importance of the agreement between the parties but of course there now was an issue whether there was such an agreement or at least whether it was valid.


[349]
In the second place, for some reason, as became clear in the evidence, Mr Dunlop did not later agree to the Disposition by the judicial factor of the farmhouse. Mr Govier accepted that in terms of Lord Drummond Young's Opinion that issue was of no moment but the first point remained relevant.


[350] In the third place, as Lord Drummond Young stressed, the whole principle of Miller's Trustees depended on the solvency of the factory. Whatever the position was in 2002 there was evidence now from Mr Forbes that the factory would become insolvent if the farmhouse were disponed out of it.


[351]
Mr Govier referred then in some detail to Miller's Trustees.


[352]
In that case a testator directed his trustees to hold and manage "as absolute proprietors" certain heritable property for behoof of his second son until he attained the age of 25 when they were to denude in his favour, declaring that the property should not vest in him until he attained the age of 25 or married with the consent of the trustees after attaining the age of 21. After attaining the latter age but before attaining the age of 25 he married with the trustees' approval. It was held that, the son's right to the heritage and to his share of the moveable estate having vested in him upon his marriage with the consent of the trustees, he became then entitled to call upon the trustees to denude in his favour. At page 305 the Lord President said the following:

"There is, in my opinion, a general rule, the result of a comparison of a long series of decisions of this Court, that where by the operation of a testamentary instrument the fee of an estate or parts of an estate, whether heritable or moveable, has vested in a beneficiary, the Court will always, if possible, relieve him of any trust management that is cumbrous, unnecessary, or expensive. Where there are trust purposes to be served which cannot be secured without the retention of the vested estate or interest of the beneficiary in the hands of the trustees, the rule cannot be applied, and the right of the beneficiary must be subordinated to the will of the testator. But I am not aware of any case in which the mere maintenance of a trust management without any ulterior object or purpose has been held to be a trust purpose in the sense in which I have used that term."


[353]
Mr Govier submitted that payment of creditors fell into the category of an ulterior object or purpose or a trust purpose to be served.


[354]
It was quite clear from Miller's Trustees that where there were trust purposes to be served which could not be served without retaining the funds then the funds could not be made over to the beneficiaries.


[355]
Mr Govier stressed that Miller's Trustees was a case dealing with testamentary provisions. It was difficult to see an equivalent in the current case to "the will of the testator" and queried what could be said to be "subordinate to the will of the testator" other than perhaps the purposes of the judicial factory itself. If a trust had no purpose other than its own existence then the fees should be made over to the beneficiary. If funds had to be paid out which could not be met if property were to be disposed of in that way then the property had to be retained in the hands of the trustees.


[356] He referred back to paragraph 13 of Lord Drummond Young's Opinion, where he said:

"At worst, the financial position of the factory was one of doubtful solvency. In that event, however, it appeared to me that the pursuer should be given an opportunity to provide the necessary funds to ensure the solvency of the judicial factory."


[357] There was evidence from Mr Forbes and Mr Cavers that the pursuer had been given the opportunity to provide the necessary funds, in other words if she had given the judicial factor sufficient money to cover the expenses etc and to enable him to wind up the judicial factory and obtain his exoneration and discharge, then the house could have been transferred to her.


[358] I asked what the effect would be if it were shown that the factor had in fact paid out too much to Mr Dunlop, for example. The pursuer's position appeared to be that she was entitled to the house by virtue of the joint minute and that the insolvency to the factory, caused by distributions and various payments, was a problem for the judicial factor but was nothing to do with her. Mr Govier submitted that that was not a matter which was raised in the pleadings and in the conclusions. It was for another day and that day would come when the judicial factor applied for his discharge and exoneration and when he produced a final accounting of his intromissions. Reference was made to section 34 of the Judicial Factors Act 1849, section 6 of the Judicial Factors (Scotland) Act 1889 and rule 61.33.


[359] Mr Govier's argument was that Lord Drummond Young clearly suggested that if the judicial factory was or became insolvent that would elide the effect of Miller's Trustees. He suggested that the pursuer could be given an opportunity to secure the factory solvency by obtaining the funds necessary to do so and, if so, the house could be transferred to her.


[360] Whatever the position was in 2002, the factory would become absolutely insolvent if the farmhouse were taken out of the equation by being disponed to the pursuer. That would elide the effect of Miller's Trustees, even if it applied to the current set of circumstances. Lord Drummond Young was dealing with matters at an interim stage but there had been evidence now to show the state of insolvency and of course he was dealing with matters against the background of the balance of convenience.


[361]
Mr Govier moved me to recall the interim orders made, to uphold his pleas-in-law where necessary and to repel the appropriate pleas-in-law for the pursuer. He also submitted that expenses should follow success in the normal way.


[362]
Before he sat down, however, he reiterated an offer which had been referred to in Production 7/6.


[363]
He said that, even if I were with him, the judicial factor would transfer the house to the pursuer if she were to pay for the expenses of winding up the factory and the exoneration and discharge. The factor had the consent of Mr Dunlop to that course of action.

 

Response by the pursuer

[364] Miss Armstrong submitted that even if the sheriff court action had successfully been defended there would have been no change in status. She would have continued in occupation but she would have had no title.


[365]
As far as the medical evidence was concerned she said that she was appalled at the approach taken by Mr Govier. She seemed disappointed at the fact that a professional would criticise other professionals.


[366]
Under reference to 6/15 she said that Mr Nimon and the other professionals referred to therein were concerned with her physical symptoms rather than her depression. Mr Nimon was a new consultant in Dumfries whom she was seeing and he was aware of the whole picture, which was why he was able to describe her symptoms as occurring throughout 2001. Dr Baird was her GP and was perfectly capable of diagnosing depressive illnesses. He did not need to be a psychiatrists do to that. The distinction between her fitness to attend court and her fitness to attend to court matters was a subtle one which was not necessarily relevant to a medical person. The reports showed a continuing problem.


[367]
As far as reduction was concerned, she submitted that if she succeeded then the whole sheriff court process should be rendered null and void. There was no question of going back to the sheriff court to resume half way through.


[368]
In connection with the declarator, she dealt first with the suggestion that since the judicial factor was not a signatory to the agreement then it was not binding on him. She said that he had stated in evidence that he would give effect to it.


[369] 6/28 contained certain proposals for settlement of the divorce action and the ending of the judicial factory. Clause 8C of that indicated that Mr J G Armstrong would grant to the judicial factor any deed necessary to provide a clear title to enable the factor to grant such conveyances as might be necessary upon an agreed division. She submitted that the factor did not hold a clear title at the time of the divorce.


[370] Secondly, for the last 20 years there had been no suggestion that the joint minute was not valid. Mr Dunlop had argued that he was not bound by it on the basis of an alleged breach of another clause to which the Court had not interponed authority. Otherwise he had believed that the joint minute was binding. The provisions about aliment for example had been acted upon, which showed that the agreement as a whole was binding.


[371]
In relation to insolvency and the question of the application of Miller's Trustees she submitted that correspondence showed that the solvency of the factory was always a concern of hers as were the unequal distributions. The offer made to her was on condition that she would put in funds to meet the judicial factor's expenses as well as his exoneration and discharge and that she would not object to the latter. Mr Govier had suggested that she could take advantage of the judicial factor's petition for his discharge to object on the basis of any defects in his administration but that would not be open to her if she accepted the offer.


[372] She then turned to the question whether Clachan of Penninghame was the last remaining asset before the sheriff court proceedings were undergone. She referred to the 31 acres of Noltan land and to the fact that the evidence disclosed that money from the sale of that land went into the factory.


[373]
I confess that I had some difficulty with her submissions on this point given that it is quite clear that the Noltan lands were never part of the sequestrated estate. As I understood her position there was in existence a deed of reconveyance showing that the property was to come back to the partnership but that was in the period when her ex-husband was altering the partnership ratio. There had been no evidence about this deed of reconveyance and I am afraid that I have to disregard it.


[374]
Mr Govier had submitted that the judicial factor would not have been able to sell properties if he was not vested in the title and she said that her brother in fact had the title. She complained that the judicial factor was insisting on selling Clachan of Penninghame Farmhouse on the open market but the 31 acres had not been disposed of on that basis. The claim that Clachan of Penninghame was the last asset was false. Funds from the sale of Noltan amounting to some £36,000 had come into the factory per 6/6 of process and she said that that was about half of its worth. She had had it valued.


[375] She also referred to the fact that the judicial factor had to take action in the Court of Session about the Noltan lands but again I had heard no evidence about that. She submitted that Mr Govier had not said that the judicial factor held title over the lands of Baltersan and Clachan of Penninghame between 1986 and 1994. He thought that it was strange that the judicial factor would have been able to sell the properties if he did not have title and there was no reason given why his title did not also include the farmhouse.


[376] She submitted in terms that the title was not held by the judicial factor but by her brother, although quite clearly she was mistaking his position as heritable creditor with that of a heritable proprietor.


[377] Given the difference between the two actions and the exceptional circumstances brought out in the evidence she asked me to repel the defender's pleas and grant the remedies she sought.


[378]
Then, in a somewhat emotional passage she questioned the "tyrannical" rule of the judicial factor. She questioned to whom he was accountable and described his activities as the "rape of our resources, our life, our land and our home". Why was he insisting on selling the property and why had he hounded her and her family for 20 years?


[379] Lastly, she said that she would have asked for expenses against the judicial factor personally but she had been unsuccessful in that motion in the past and appeared content that if she succeeded then the expenses would come out of the factory.

 

Discussion

[380] In view of the decisions which I have reached I do not think it necessary to deal with the individual objections which were made during the course of the Proof. Mr Govier did not, in any event, refer to them during his closing submissions. I have set out the evidence in this case in some detail. It is a matter which obviously concerns the pursuer and her family greatly and I would not wish it to be thought that I had missed anything out. As a witness she was often emotional and I hope I do her no disservice when I say that at times she appeared obsessional but I do not mean that as any form of criticism. However it seems to me that her understandable lack of detachment has perhaps clouded her understanding of the legal position and in my opinion has to some extent at least skewed her interpretation of events.


[381]
I do not intend to make any particular findings as to the background in the case since, as I indicated at the outset, this has been set out in a number of previous actions and in any event the general picture as painted in the evidence of the various witnesses who gave evidence before me was fairly consistent.


[382]
In particular, it is not for me to comment on the motivation of such as Michael Dunlop or the division of partnership assets in respect of which I have not had the benefit of his evidence. It is plain that the judicial factory encompassed property which was far more extensive than that which is the immediate subject of this action and the pursuer spent some time going into that. Again, however, I do not think that it is necessary for me to embark on a detailed discussion of these matters since the essential issues in the current case can be encapsulated in fairly brief terms. For some reason the purser does not appear to understand what the role of a judicial factor is. She seems to be off the view that he has some sort of pastoral duties but, whilst no doubt many judicial factors will interact with those who are affected by their duties, that is not why they are appointed. The pursuer's evidence was tempered with suggestions that the defender in this case was effectively in the pocket of her ex-husband, Michael Dunlop, or at least danced to his tune but I am afraid that I cannot accept that. I found him to be somewhat world weary when giving his evidence, which is only to be expected given the twenty odd years which have elapsed since his appointment. On the other hand, whilst he was perhaps vague as to certain matters of detail, which is again understandable after all this time, I thought that he was doing his best to tell the truth and I generally preferred his evidence to that of the pursuer's where there was conflict.


[383] He has of course since the start of this factory been under the supervision of the Accountant of Court. While that is no guarantee that he has performed his duties properly, it does at least provide some safeguards for those affected by his administration. It is plain that he has applied to the Court on a number of occasions where he has thought it necessary, albeit not always successfully. This is not a man who has deliberately attempted to do down the pursuer and her family.


[384]
The pursuer's witness, Mr Moore was patently credible. He was a professional man who had acted for the family for a number of years and I had no difficulty in accepting his evidence as to the background. That background however is, in my opinion, only of limited relevance in the current dispute and in so far as he ventured any opinions as to the manner in which the factory should have been conducted, particularly with reference to distributions and the attribution of expenses, I preferred the opinions of the defender. Mr Moore, whilst an experienced accountant, had never acted as a judicial factor. Neither was it clear to me whether he was fully aware of the circumstances and conduct of the pursuer which gave rise to the actions which the judicial factor took against her. This included the conduct which led to her imprisonment for contempt of court.


[385] Mr Cavers was another professional man whose credibility and reliability were not in question in my opinion. His evidence was of more immediate relevance to the current proceedings, bearing as it did, amongst other things, on the action in Stranraer Sheriff Court.


[386]
It is a matter of record that the defender is the judicial factor on the sequestrated estates of the firm of J Dunlop & Sons, conform to interlocutor of this Court dated 11 February 1987. It is also well established that prior to his appointment the bank called up the standard securities over the partnership property which was covered by them. Before any sale was effected the standard securities were assigned to the father of the pursuer on 10 February 1987, in consideration of the payment of £316,653.75 and the pursuer's father assigned the two standard securities to her brother, Gordon, on 14 April 1988. The defender had been appointed judicial factor ad interim on 4 December 1986 but each of the securities had been called up in the preceding July. There was a deal of litigation thereafter but the position as I understand it now is that all of the heritable creditors have been paid. The pursuer's current action proceeds in part (condescendence 2) on the assertion that the partnership became "debtors - in - default" and had lost their rights to redeem the debt and, as I understand it, the position is that the judicial factor had effectively no title to administer the property. The position in condescendence 1 is that "the present action concerns property that at the material time (in 1988) had fallen outwith partnership estate and with effect from 3 November 1986, formed no part of the sequestrated estates".


[387] This is plainly misconceived. The pursuer has confused the title of a proprietor with that of the holder of a heritable security and the suggestion that the judicial factor's appointment did not encompass the secured lands, including the farmhouse at Clachan of Penninghame which is the subject of this action, does not get off the ground. However, the matter can perhaps be looked at in a different light when one considers the position of the ex-partners inter se.


[388] I have a great deal of sympathy with Mr Govier's point that the pursuer appears to be asking the court to ordain the judicial factor to grant a disposition of property with which, according to her, he has never had any concern. As a matter of relevancy, I think his point is a good one but as a matter of fact I find that the farmhouse did form part of the sequestrated estates vested in the first defender as judicial factor on his appointment. The farmhouse was not included in the factory accounts as a separate element after the sale of the surrounding land but I accept that that was an oversight on the part of the factor. It did not affect the inclusion of the farmhouse in the estate under his charge.


[389] There is no dispute that the pursuer and her ex-husband Michael Dunlop were divorced on 15 November 1988 and that prior to the divorce the joint minute (6/25 of process), was entered into by them. The judicial factor was not a party to that joint minute and it seems to me that nothing in the evidence he gave before Lord Morrison can be interpreted as showing that he considered himself bound by it.


[390] I will come in due course to consider in so far as relevant, what happened thereafter but I think I ought immediately to proceed to a consideration of the pursuer's second conclusion, for production and reduction of the decree granted by the Sheriff at Stranraer on 19 December 2001 for recovery of possession of the farmhouse and also the final extract decree of ejection pronounced on 14 June 2002 and extracted on 1 July 2002. It is a matter of record that on 19 December 2001 the Sheriff at Stranraer granted such a decree, together with expenses, in favour of the judicial factor in a summary cause action at his instance against the current pursuer for recovery and possession of the farmhouse and the garden grounds pertaining thereto. A Note of Appeal to the Sheriff Principal was lodged on behalf of the pursuer and the appeal was dismissed on 2 May 2002, there having been no appearance for the pursuer.


[391] It is averred by the defender that the expenses of the said Sheriff Court action remain unpaid but nothing was made of that in submissions on his behalf and I say no more about it, despite the case of Flannigan v British Dyewood Company Limited 1971 SC 110.


[392]
Mr Govier had a number of submissions to make on relevancy but I will deal with these later. Broadly speaking where other means of review are provided and have been utilized, or the parties have failed to take advantage of them, reduction of a decree is incompetent but there are exceptions to this rule. It seems to me that in the current case the pursuer has to satisfy me, firstly, that there was a good reason why she did not follow the established procedures and, secondly, that reduction is necessary in order to produce substantial justice. I do not think that the precise formulation of the second leg is of particular moment for present purposes.


[393] Mr Govier's submissions on relevancy did not impinge on the first aspect of this and the second aspect is intrinsically linked to the merits of the first conclusion, to which I will come in due course. However, before I can turn to the merits of either conclusion it seems to me that I ought to discuss the pleas of lis alibi pendens and res judicata.


[394]
I can deal with the first one, I think, fairly briefly. As I have indicated, the question of payment of expenses or otherwise did not form part of Mr Govier's submissions under this head. The first part of his argument was that if reduction were granted then the process in Stranraer Sheriff Court would somehow be resuscitated at some point prior to the pronouncement of the decrees which were reduced.


[395]
No authority was cited in support of this proposition and in the absence of any authority I reject it. As I understand it, reduction of a Sheriff Court Decree is available as an exceptional mode of review. Leaving aside the issue whether a bare reduction is competent, it has been regarded as at least unsatisfactory if it had the effect of leaving parties' rights and obligations unresolved. Hence it was often accompanied by ancillary conclusions where it was necessary to define those rights and obligations. See, for example, Taylor's Trustees v McGavigan (1896) 23 R 945, 949.


[396] One wonders why those conclusions were thought to be necessary if the process in the Sheriff Court could be given the kiss of life. I appreciate that in Zannetos there was some discussion of the pursuer's being given a second chance but I do not know precisely what was meant by that, what the conclusions were, nor what were the terms of any motions which may have been pending resolution in the case.


[397]
That in itself would dispose of any argument on lis alibi pendens but, while that plea cannot be regarded as co-extensive with the plea of res judicata, the observations which I am about to make on the latter do, I think, have equal force in connection with the former. The essence of Mr Govier's plea is, I think, that if reduction is refused then the issue governed by the first conclusion, (for declarator that the pursuer is the owner of the property and that the judicial factor is bound to effect a disposition of it in her favour) has already been decided in favour of the judicial factor by the Sheriff of Stranraer and, not having been appealed, is res judicata and binding.


[398] This is where the discussion on Hynds v Hynds comes into play. The Sheriff Court at Stranraer is patiently a court of competent jurisdiction and the parties are obviously the same. Following Lord Cameron's analysis, I am of the opinion that the grounds of action or media concludendi are, partially at least, the same, viz the pursuer's entitlement or otherwise to ownership of the farmhouse. However, in my opinion, the subject matter in this action differs from that in the Sheriff Court action. In the latter it was the right of the judicial factor to obtain possession of the farmhouse, the question of her ownership being raised in defence and incidentally to questions of possession. In the present proceedings, the question of ownership or title lies at the heart.


[399] While a very crude analogy, these could be equiperated with the difference between a decree of separation and aliment and a change in status, as in Hynds.


[340]
In the circumstances if I refused to grant decree of reduction in terms of the second conclusion of the summons, I would still have to make a decision on the first conclusion. This would also have been the case if I had decided that the Sheriff Court action was lis pendens since I have decided that it related to a different subject matter.


[341]
I turn now to the merits of the pursuer's contention that she was medically unfit to attend to the Sheriff Court action and the subsequent appeal. I heard her own evidence to that effect and also had the benefit of the various letters to which reference has been made. Having considered these matter and what was said on both sides of the bar I have come to the view that Mr Govier's submissions are to be preferred. I found the pursuer's evidence unconvincing. The production of medical certificates was sufficient when matters were at an interim stage but the onus is on the pursuer to satisfy me on the balance of probabilities that she was medically unfit. In the first place, I would have expected her to call at least some of the signatories of these letters so that they could be examined by her and indeed cross-examined by Mr Govier to established the extent to which she was unfit. I have no reason not to accept the broad description of her symptoms contained in these letters but it is not at all clear to me that the signatories considered whether instructions could be given by her while at home or whether the position was that she could not attend either at her solicitor's office or at court. To what extent did they understand the nature of giving instructions to solicitors? These are only some of the matters which could have been explored in evidence and in my opinion the mere production of the letters is insufficient as a matter of fact to persuade me to the necessary standard. It goes further than that, however. As Mr Govier pointed out, the letters seem to fly in the face of what actually happened. A considerable number of solicitors did in fact turn up at court on behalf of the pursuer and they must have been instructed by her, or at least by someone acting on her behalf. Of particular moment is the evidence about Mr McVicar. Not only did he turn up but he was able to enter into a joint minute which enabled the proof to proceed. It is suggested that he acted without instructions but once again I would have expected the pursuer to adduce Mr McVicar as a witness in order that this matter could be put to him. It seems extraordinary to me that a solicitor acting without instructions would enter into such a joint minute and in the absence of direct evidence about why he entered the joint minute, I am not prepared to hold that he did so without instructions.


[342]
That being so, the pursuer has failed to negotiate the first hurdle standing in the way of reduction of the Sheriff Court decrees and I cannot therefore grant decree in terms of the second conclusion of the summons.


[343]
However, that is not an end of the matter. As I have indicated I require to consider whether there is any merit in the pursuer's case in support of the first conclusion. If I find that there is, then that would indicate that the pursuer would have been able successfully to negotiate the second hurdle standing in the way of reduction, namely that a substantial injustice has occurred. It would have been appropriate in any event for me to consider that matter and to indicate my views thereon notwithstanding my decision as to the pursuer's medical condition.


[344]
As I indicated earlier, I have sympathy with the submissions on relevancy made by Mr Govier in connection with the fact that the pursuer's pleadings on the one hand are to the effect that the farmhouse was not part of the sequestrated estates and on the other hand require the judicial factor to take certain action in respect of it. These appeared to me to be mutually contradictory. I also have certain sympathy with his submission that since the pursuer claims entitlement to the farmhouse with no conditions attached, it is difficult to see what relevance there is in pleadings and evidence about alleged uneven distributions and general maladministration by the judicial factor.


[345] I will have more to say on the latter point in due course but since I heard evidence and have made a decision on the matter which effectively supersedes questions of relevancy, I will not require to say very much.


[346]
There is no doubt that the farmhouse formed and forms part of the sequestrated estates. At the time of the divorce the parties retained power, in my opinion, to agree as to its eventual disposal, although any such agreement could have been frustrated by subsequent events in the administration of the factory, particularly its insolvency. Under reference to Miller's Trustees, Lord Drummond Young opined that the ex-partners were jointly entitled to the fee of the farmhouse and, provided that the firm and the judicial factory were solvent, they were accordingly entitled to direct how the fee of the farmhouse should be disposed of. The case of Hunter v Hunter 1998 SLT 1152 was included in the defender's bundle of authorities but not referred to in argument. I do not think I need to ask for further submissions on it, however. In that case Lord Osborne held that a judicial factor was a trustee and accordingly had power to sell assets but it was his duty to use due diligence to obtain the best price. However, if all those having an interest in the partnership agreed, and if the Accountant of Court approved, it would be open to the judicial factor to sell the assets, at an appropriate valuation, to the ex-partner. I respectfully agree. Furthermore, I see no reason in principle why the assets could not be transferred to an ex-partner for no consideration and without any balancing payment or adjustment to the ledger in favour of the other partner or partners if all concerned are in agreement and provided the solvency of the factory is not compromised. This could be done at the conclusion of the factory or, I dare say, by way of interim distributions, there being no reason why those could not be in the form of property rather than cash. Where there is agreement there is unlikely to be any difficulty and I think it correct to say that the judicial factor, subject to the approval of the Accountant of Court, would be bound to give effect to it. I do not think, however, that it can properly be said to be the duty of a judicial factor to seek to enforce an agreement which is disputed by one of the parties to it, which is, or at least has been, the situation here. I will say something about the joint minute later but I do not intend to make any finding as to its being an obligatio literis. I say this because, while Mr Govier made submissions on the matter, nothing he said was predicated in the pleadings. I would have expected the point to have been raised specifically and if it had been that would have given the pursuer an opportunity to make such reference in the pleadings as she thought appropriate, and as she was able to, in connection with the matter, including such averments amounting to rei interventus or homologation as befitted.


[347] Leaving that particular issue aside, it might me that in other circumstances, had the judicial factory come to an end with sufficient resources to enable property, including the farmhouse, to be distributed to the partners, reliance could have been made on the joint minute by such means as were considered appropriate.


[348] That situation did not, however, come to pass and the factory is now insolvent, or rather it will be if the farmhouse is transferred out of it for no consideration.


[349]
The pursuer's position seems to be that the judicial factor is somehow personally barred from denying that he is bound by the joint minute. Once again, however, I find myself in agreement with Mr Govier. The averments in so far as directed to personal bar are, I think, irrelevant. Leaving aside the question of whether personal bar is a shield or a sword the pursuer says in the pleadings that "Thereafter the parties to said Joint Minute and the First Defender proceeded in reliance and in implement thereof. In particular in 1989 the parties hereto entered into correspondence to agree a plan of the property at Clachan of Penninghame Farmhouse for the purpose of the first defender granting a Disposition in favour of the pursuer of said property in implement of her entitlement in terms of said Joint Minute. By letter dated 2 February 1989 Hewats, Solicitors, Kirkcudbright, wrote on behalf of their client, the first defender, inviting the pursuer's agents to draft a Disposition". In condescendence 5 it is said that "Thereafter the first defender did nothing to displace his representations and the pursuer's understanding of his position that the Judicial factory estate made no claim to said property and made no dispute with the pursuer's entitlement to receive a Disposition in her favour".


[350] In condescendence 6 it is said that "In reliance on said position the pursuer occupied said property which was dilapidated and carried out improvement works at her expense. The property was over time substantially renovated and its value increased significantly".

[351] I cannot see any other averments which should go to personal bar based on representations made by the judicial factor and the pursuer's acting in reliance thereon to her detriment. Such averments as there are are vague and quite insufficient in the circumstances to allow me to entertain such a case.


[352] As it happens however, some evidence was led. I am satisfied that it was the judicial factor's intention initially to transfer the farmhouse to the pursuer. I am also satisfied that the existence of the joint minute had a bearing on that, with the factory estate being in a position to allow the transfer to be made, and since the relevant parties agreed, it would have been appropriate and sensible to effect it. The question of accounting for it at an appropriate valuation was something of a stumbling block but it seems to be that that could have been resolved later.


[353] Initial arrangements for the conveyancing were made and the pursuer's solicitors were asked to draft a disposition. The evidence from the correspondence thereafter is quite clear. I find that the pursuer was unwilling to accept a disposition from the judicial factor at that time - a time when the factory was solvent.


[354] She thereafter remained in the premises for many years but her occupation was precarious. She lived there rent free and the only acting I can find established to her prejudice was the installation of velux windows. There is simply no basis on the pleadings or in the evidence for my making a finding that she acted to her prejudice having been induced into a false belief by any representations, actions or inactions of the judicial factor. There was no basis for her entertaining any expectations at all, far less legitimate ones. Nothing happened thereafter which entitled the pursuer to claim personal bar against the judicial factor, even is she were entitled to use this doctrine as a sword rather than a shield.


[355] As I have indicated there was a great deal of evidence and submissions about distributions made by the judicial factor and previous proceedings in Court either at his instance or against him. There was also a great deal of evidence about the pursuer's obstruction of his administration. I do not think it is necessary for me to go into the latter in any great detail. Suffice it to say that I accepted his evidence about her obstruction and I also accept, pace Mr Moore, that it was appropriate, generally speaking, to balance the costs and expenses of her activities against distributions made to Mr Dunlop.


[356] The evidence, however, was insufficient to enable me to form my own view as to the final accounting and as to whether in fact any balance is due to be paid to either party as against the other. All that has a bearing on what was one of the pursuer's principal submissions, namely that, the principles of Miller's Trustees ought to be applied in this case. I have some difficulty with the application with Miller's Trustees to the current set of circumstances. As I have said, in Lord Drummond Young's opinion, the pursuer and Michael Dunlop were jointly entitled to the fee of the farmhouse and provided the firm and the judicial factory were solvent, they were entitled to direct how the fee of the farmhouse should be disposed of. The defender as judicial factor was obliged to give effect to the wishes of the partners, who were the beneficiaries of the partnership estate.


[357] Whilst I agree with that, I think, with respect, that the analogy with Miller's Trustees is somewhat strained. That case involved a testamentary trust. In the circumstances which arose there was no point or benefit in its continuing and the beneficiaries were effectively entitled to have it brought to an end. In the present case the judicial factor was appointed by the Court to administer the estates, which were sequestrated. The estates were taken out of the control of the partners and their rights to intromit with the estate were suspended.


[358] Subject to what I have said about Hunter, I was not directed to any other authority to the effect that partners on a sequestrated estate under the control of a judicial factor have any right to direct him what to do. He is after all under the supervision of the Accountant of Court and is an officer of the Court. If the parties are in agreement and the factory is in a position to be brought to an end then one would expect that that is what would happen. Thereafter the estate could be distributed according to their wishes and the provisions for the factor's obtaining his exoneration and discharge would come into play at that time.


[359] However, it is not easy to identify anything which could be said to be analogous to a trust purpose.


[360]
There are doubtless certain parallels to be drawn but I am somewhat uneasy about equiparating the two.


[361]
The foregoing brief discussion, though, is really nothing to the point. Even if Miller's Trustees does indeed govern the current situation, I am in full agreement with Lord Drummond Young that it can only apply as long as the estate is solvent.


[362]
That was the position when the pursuer's solicitors were asked to draft a disposition but on the evidence which I accept, it will not be the position now if the farmhouse is taken out of the equation.


[363]
The pursuer's submissions are generally to the effect that that is not her concern. The situation has been brought about by maladministration by the judicial factor, the raising of unnecessary Court actions and uneven distributions made to her ex-husband. The judicial factor on the other hand claims that he has had to lay against her the cost of actions taken in connection with her own obstructive behaviour and that, at least generally, speaking payments made to Mr Dunlop were made with the authority of the Court.


[364] Is all this relevant? Mr Govier's position is, I think, that these are all matters which require to be dealt with when the judicial factor petitions for his exoneration and discharge. On the other hand, can it be right that a if a judicial factor has improperly administered an estate under his charge, making unequal distributions and generally wasting the estate's money, that that cannot be pleaded against him in an action such as this? Does the innocent party have to suffer the loss meantime until the final accounting? No authority was presented to me in argument either way and I do not intend to proffer any comments of my own on the problem as I have not had the benefit of views of the parties on them. A further, and indeed the main, reason for not doing so is that as a matter of fact I am not satisfied that the pursuer has established that the administration of the judicial factor was deficient in the respects about which she complains. As I have indicated, full details of the accounts were not poured over in evidence, the accounts were prepared each year and submitted to the Accountant of Court, the pursuer in her submissions did not seek to elaborate upon the appropriateness or otherwise of the court actions in which the judicial factor engaged and I found the judicial factor's own account of what he had done and the reasons for it to be perfectly acceptable.


[365] At an interim stage Lord Drummond Young said that it was not obvious why the pursuer's right to the farmhouse should be compromised by distributions made to the other partner. I heard evidence on that matter and I am satisfied that the judicial factor has established that the distributions were properly made. No doubt any balance due, if any, to the pursuer can be calculated in the final accounting.


[366] The failure to include the house in the factory accounts for a period was to say the least unfortunate but it was not sufficient in my opinion to give rise to any expectation on the part of the pursuer and did not amount to a misrepresentation on the part of the judicial factor.


[367] For completeness, I should also say that the evidence about the Noltan lands was, in my opinion, irrelevant to the issue before me.


[368]
The most up to date financial statement (as at 11 February 2008) (7/15 of process) indicated that the farmhouse was valued as at July 2005 at £130,000, that there was £5,218.64 in the bank and that there were liabilities amounting to £33,930.22. Messrs Morrison, solicitors, had £2,056.25 due on their client account in respect of further outlays not reflected in the taxed accounts and the statement of affairs did not reflect ongoing fees and expenses. The factor estimated that these could exceed £10,000. I have no reason not to accept these figures, which were not challenged, as I understood matters. I also accepted that in order to conclude the judicial factory either the farmhouse would have to be sold or funds would have to be injected into the estate which was insolvent in cash terms to the tune of around £28,000, without taking account of the other expenses.


[369] A number of offers have been made over the years to settle this longstanding matter and I regret to say that it was largely the pursuer's attitude which led to matters remaining unresolved. However, I do have a degree of sympathy for her in relation to the question of valuation. I do not see how the judicial factor could have transferred the farmhouse to her without accounting somehow for its value. Nonetheless, in a question between the partners, if the joint minute is binding, then there should be no balancing payment or ledger adjustment in favour of Michael Dunlop if the farmhouse is disponed to the pursuer. In other words, it should not be regarded as part of her share in the estate, as between the partners. It may be that what is what lay behind her insistence that the property had fallen outwith the partnership estates. It is a different matter, of course, in a question with creditors. I have said already that I do not consider that it was for the judicial factor to enforce the obligation. However I venture to express an opinion on it. On the basis of the evidence which I heard and those submissions which I was prepared to entertain, I am in agreement with Lord Drummond Young that the agreement was binding and accordingly Michael Dunlop should not be credited with any part of the farmhouse or its value in the adjustment of sums due to the ex-partners. However, I do not see how that conclusion can be binding on Mr Dunlop. The action was dismissed against him. He did not withdraw his defences or consent to decree so it seems to me that it remains open to him to challenge the agreement if he so chooses. For example, I apprehend that he could base an argument on the submission advanced by Mr Govier that the joint minute fell into the category of obligatio literis. That would be a matter for him although the pursuer may well have a good argument that, while the Court did not interpone authority to the joint minute, she proceeded with the divorce action in reliance on it and did not receive any other financial provision by way of capital payment or periodical allowance. In other words, she may be able to establish rei interventus. I only mention these matters tentatively and in the hope that they might assist parties in bringing this matter ultimately to a satisfactory resolution.


[370] As I understand it the judicial factor is now looking for the pursuer to provide funds of around £46,000 on the understanding that any surplus following taxation would be refunded to her. That offer still stands. It may be, I know not, that the pursuer could obtain funds to enable her to make such a payment to the factor and allow the farmhouse to be disponed to her. It may be that Mr Dunlop agrees to this course of action. On the final accounting if it appeared that the distributions were unequal for no good reason or that for any reason she was entitled to a balancing payment hen no doubt she could take appropriate action at that stage to recover what was due to her, if it were not forthcoming.


[371] It is high time that this unhappy matter was brought to a close but in the meantime I am driven to find in favour of the first defender.

 

Decision

[372]
I shall recall the interim orders granted by Lord Drummond Young on 17 July 2002, repel pleas in law 1, 2 and 3 for the pursuer, repel the 1st., 2nd. and 3rd. pleas in law for the first defender and sustain the 6th.,7th. and 8th. pleas in law for the first defender. I regard pleas in law 4 and 5 for the first defender as being superseded.


[373]
Accordingly I refuse to grant decree in terms of the pursuer's 1st., 2nd., 4th. and 5th. conclusions, assoilzie the first defender from the conclusions of the Summons and find the pursuer liable to the first defender in the expenses of process as taxed, except insofar as otherwise dealt with.

 


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