Scottish Court of Session Decisions

In November 1894 a petition was presented to the Junior Lord Ordinary (Low) by the present heir of entail in possession of the entailed estates of Wishaw, under section 7 of the Aberdeen Act, to have the widow's and children's provisions granted by his

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predecessor in the entail voided to the extent to which they exceeded the amount authorised by the Aberdeen Act. Answers were lodged to the petition by the Dowager Lady Belhaven and the children of the late Lord Belhaven.

The Lord Ordinary reported the petition and answers to the First Division of the Court.

His Lordship's opinion was as follows:—

Opinion—“The late Lord Belhaven, as heir of entail in possession of the entailed estates of Wishaw, granted a bond of annuity and provision, under the powers conferred by the Aberdeen Act, whereby he provided to his widow an annuity of £6000, or such other sum as should not exceed one-third part of the yearly rental of the estates; and to his children, if three or more, a sum not exceeding three years' free rent or value of the estates.

Lord Belhaven died upon 6th September 1893, survived by his wife and seven daughters.

The petitioner, who has succeeded as heir of entail to the Wishaw estates, has brought this petition under section 7 of the Aberdeen Act to have the provisions voided to the extent to which they exceed the amount authorised by the statute.

The petitioner states in the petition that the free rental of the estate is £4424. The widow and children have put in answers, in which they aver that in addition to the rental of the lands given in the petition there are mineral rents and lordships, amounting to between £8000 and £9000 a-year, which fall to be taken in computo in fixing the amount of the provisions.

The petitioner does not dispute that coal has in the past been, and was, when Lord Belhaven died, being worked to a large amount, but he avers that all the coal will, at no distant date, be entirely exhausted, and that to calculate the free rental upon the rents and lordships paid for the coal, either for the year during which Lord Belhaven died, or upon an average of years preceding, would in all probability result, before very long, in no part of the rental of the estates being available to the heir of entail in possession.

The petitioner has, accordingly, put in a minute in which the position of the different collieries is stated as follows:—

1. Green Colliery—The last lease of this colliery expired at Whitsunday 1893, and the tenant is now sitting from year to year. There is no fixed rent, only lordships. The minerals will be exhausted in the present year. The amount of the lordships paid for the year during which the late heir died was £666. If an average of years prior to that was taken, the amount would be considerably larger.

2. Clydesdale Colliery—There is a lease of this colliery which does not expire until 1911, but there is a break every third year after 1892. The fixed rent is £500, and the lordships 7d. per ton. It is estimated that only 370,000 tons of coal remain in this colliery, which, at the average rate of working during the last four years, will be exhausted in seven years. The return for the year 1893–94 is stated at £2225, but in previous years the amount was less, in 1890-91 being only £247.

3. Glenclelland and Knownoble.—It is stated that a lease of these collieries and also of part of the adjoining mineral field of Ravenscraig, was executed in 1893 for a period of twenty-one years from Whitsunday 1892, with a break every third year in the tenant's favour. There is a fixed rent and also lordships. The rent is to be £1000 for the first two years of the lease, and then £750 until the Knownoble coal and the main and splint coal in Glenclelland are exhausted, when the rent is to be reduced to £500. It is estimated that the Knownoble coal will be exhausted about 1897, and as the main and splint coal in Glenclellend are said to consist only of pillars containing some 48,000 tons of coal, it cannot be long before they also are worked out. It is also estimated that the whole coal in Glenclelland will be exhausted in seven years.

4. Over Johnston, Nether Johnston, Meadowhead, and Ravenscraig.—There seems to have been difficulties in regard to these collieries. They were let to a Mr Cameron in 1892 upon a lease of nineteen years, with half-yearly breaks. The lease was terminated at Whitsunday 1893, when the collieries were again let upon a lease of nineteen years to the Messrs Watson. There was, however, a break at Martinmas of the same year, which was taken advantage of. Since that date the collieries have been in the petitioner's own hands.

It is stated that Over Johnston contains coal sufficient to last for sixteen years at the same rate of output as in the years 1890–92, and that Nether Johnston and Ravenscraig will be exhausted in thirteen years at the average rate of working for the last five years. No information is given in regard to the amount of coal in Meadow-head, but probably that colliery has been worked along with some of the others which I have mentioned.

5. The remaining collieries upon the estate are North and South Netherton, Shieldmuir, Station and Sunnyside. These collieries appear to have been worked together under a lease until 1889. South Netherton, Shieldmuir, and Station are said to be now exhausted. North Netherton and Sunnyside are now being worked by the Glasgow Iron and Steel Company, and it is said that at the average rate of output the former will be exhausted in six years, and the latter in five years.

In these circumstances the petitioner contends that if the method which has hitherto been adopted of ascertaining the free yearly rental or proceeds of an estate in minerals—namely, taking the average returns for a certain number of years prior to the death of the granter of the provisions—was adopted, there would not be secured to the heir of entail in possession the two-thirds of the free rental or proceeds, to which under the Aberdeen Act he is in all circumstances entitled. The petitioner therefore suggests that the amount to be

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brought in computo in fixing the provisions should be arrived at by ascertaining the capital value of the minerals unexhausted at the time of the late Lord Belhaven's death, and allowing interest at a fair rate upon the capital sum.

The respondents, upon the other hand, contend that it is incompetent to inquire what is the life of the coalfield, and that it being admitted that at the date of Lord Belhaveu's death, and previously, rents and lordships were being received from the collieries, the mineral rent must be fixed at the average amount actually received during a reasonable period of years prior to the date of death.

In the well-known case of Wellwood ( 10 D. 1480 and 11 D. 248) it was settled that the produce of a coal mine is for the purposes of the Aberdeen Act a part of rents and proceeds of the entailed lands and estates. It was also held that where lordships are paid—the amount of which varies from year to year, and depends upon the quantity of coal which the tenant chooses to put out in any year—the yearly value may be fixed by taking the average returns over such a period of years as in the circumstances may be reasonable.

The respondents argued that although the judgment in Wellwood's case allowed an average of past years to be taken, it did not authorise any investigation as to what the mineral yield would be in the future. That view apparently was taken by Lord Benholme (in a case to which I shall presently refer), but taking the case of Wellwood alone, I find nothing to sanction the idea that the probability or certainty of the exhaustion of the minerals in the immediate future cannot be taken into consideration. It was there laid down that where the proceeds of an entailed estate varies from year to year as in the case of mineral lordships, the duty of the Court is to ascertain what is the yearly value of these proceeds taking one year with another. Prima facie it is difficulty to see how the yearly value can be fixed upon that basis without considering the future in a case in which it appears that there will soon be no estate from which any proceeds can be derived. And I find that in the earlier report of Wellwood Lord Jeffrey did refer to the possibility of minerals being almost exhausted when the granter of the provisions died. He said—‘The annual value is a mere measure, and in such a case we must reduce it to something like the average production of an ordinary year. If the coal has been almost wrought out when the provision was made, and it was offered to be proved that a year afterwards there was a final cessation of all profit in working it, it would be hard to put upon the Act so rigorous a construction as to hold that we were bound to take it as producing that last rent for all the years that the widow might survive, and, as if we had goggles on, look neither behind nor before, but fix our regards upon the one year alone.’

In the case of Douglas ( 8 M. 360) the method of taking an average of years prior to the date of death was also followed. Various methods of fixing the yearly value, and among others a valuation by a man of skill, appear to have been suggested. The Lord Justice-Clerk (Moncreiff) said that although Wellwood settled that the question might be solved by an estimate, it did not follow that that estimate is necessarily to be calculated by an average. ‘I could imagine,’ his Lordship added, ‘cases in which it would be right to arrive at the result by a valuation conducted on ordinary principles.’ His Lordship, however, did not indicate what kind of case he had in view.

Lord Cowan expressed the opinion that where minerals, extensively worked up to the date of death, were almost or altogether exhausted, they should not be taken in computo in ascertaining the amount of the provisions.

Lord Benholme, on the other hand, said (and this is the opinion to which I have already referred)—‘After some doubt as to the applicability of a valuation by scientific men to a question of this kind, to fix the value of the minerals as at the date of the granter's death, I am unable to see that such a principle of valuation could in any case be applicable. The elements on which the average to be struck depends are, what is, and in time has been, the annual value of the mineral yield, and I do not think that the Court is entitled to give effect to a valuation, for that would be to introduce considerations of what the value of the minerals will be in time to come. There are doubtless questions in the solution of which the element of prospective rent may be taken into account, but I cannot think that such an element can be allowed to influence us in a case like this. To do so would be to supersede a calculation intended by the statute to be founded on events that had happened, by a calculation proceeding on events that were to happen.’

There is next the case of Christie ( 6 R. 301) which is a most important decision as regards the present question.

In that case a lease was current, at the death of the granter of an annuity to his widow under the Aberdeen Act, of the freestone in the lands, at a yearly rent of £200. The lease continued, and the rent was paid for five years after the granter's death, and during that period the heir in possession paid to the widow an annuity equal to one-third of the rental including the mineral rent. He subsequently, however, presented a petition to have the annuity restricted, on the ground that the lease had come to an end; that as matter of fact no stone had ever been worked under it, as it was found that it could not be worked to a profit; and that there were not then, and never had been, stone or minerals in the estate capable of being worked to a profit. He therefore asked that the old mineral rent should be struck out in fixing the amount of the widow's annuity.

The Lord Ordinary (Adam) took the view that, assuming the petitioner's averments to be true, to take the mineral rent in computo would be to give to the widow, and to deprive the heir in possession of more than one third of the free yearly rent

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or proceeds. His Lordship therefore reported the case to the First Division, with the opinion that there should be inquiry in regard to the alleged impossibility of working the minerals to a profit.

The learned Judges of the First Division, however, took an opposite view, and held that as the lease continued and rent was paid under it for five years after the granter's death, the mineral rent had at that date such a reasonable permanence, that inquiry was excluded, and the rent fell to be taken in computo in fixing the amount of the widow's annuity.

If it was the case that the minerals were not workable to a profit, the rental of the estate was only £700 a-year, and yet the result of the judgment was that the heir in possession was compelled to pay the widow £300 a-year during life.

I may observe that Lord Shand in his opinion expressly saved the case of minerals which had been worked, being exhausted at the time of the granter's death.

I do not think that there is any difference in principle between a case in which there are no minerals which can be made available, and one in which all the minerals have been taken out. It therefore seems to me that the case of Christie is an authority for saying that the question whether the annual proceeds of the collieries which were being worked, or capable of being worked, when Lord Belhaven died, should or should not not be brought in computo, depends upon the degree of permanency of the proceeds. In such a case as the Green Colliery, which the petitioner avers had only a life of two years at the date of the death, it may be clear enough that the necessary degree of permanency is not present, while the reverse may be equally clear in the case of Over Johnston which has admittedly sixteen years to run. But between the two there are a variety of cases in which it is very difficult to find any principle upon which to determine what is a reasonably permanent source of annual proceeds and what is not so.

I am unable to assent altogether to the view pressed either by the respondents or the petitioner. The respondents argued that, as there was admittedly a large return from minerals when Lord Belhaven died, and as upon the petitioner's own showing, the minerals in the estate will continue to be of an annual value for many years to come, it is incompetent to inquire as to the state of the mineral field, and that all that can be done is to take the average of the proceeds for a suitable number of years prior to Lord Belhaven's death.

Now, if that course was adopted, and the petitioner's averments are true (as at this stage they must be assumed to be), the result would be that almost immediately the widow's annuity would become, by reason of the exhaustion of coal, more than one-third of the free rental, and would be increasingly greater than one-third of the free rental as years went on, until at last it might absorb the whole free rental. I do not think that a course which would probably lead to that result can be within the statute.

On the other hand, the petitioner's proposal that the annual value should be taken to be the interest upon the capitalised value of the coal remaining, is one for which there is no authority. Further, I doubt if it would be within the provisions of the statute, because the result would probably be that at first the widow would get much less than one-third of the actual annual proceeds, while as time went on she would get a great deal more.

The case appears to me to be one of great difficulty. It is also a case of importance, not only to the parties, but as a question of law and practice which is not unlikely to occur again, seeing the extent to which the minerals have been worked out in many parts of Scotland. Further, if the view taken by the respondents is sound, nothing more will be necessary than to take an average of the lordships for a suitable number of years, while if the petitioner's averments are relevant, a wide and expensive inquiry will be necessitated.

In these circumstances I have thought it right to follow the course adopted by Lord Adam in the case of Christie, and to report the matter to the Inner House.”

The Court ordered the case to be heard before Seven Judges.

Argued for petitioner—If mineral rents were to be included in the “free yearly rent,” they should be computed as the interest of the capitalised value, and not on the average rental in former years. The Court had in previous cases departed from the hard and fast rule laid down by the statute as to computing the rent as that actually received in the year of the death of the granter— Wellwood v. Wellwood, July 12, 1845, 10 D. 1480, 11 D. 248; Douglas v. Scott & Yorke, December 17, 1869, 8 Macph. 360. In Christie v. Christie, December 10, 1878, 6 R. 301, the refusal of the Court to allow an average of years to be taken was based on the special facts of that case. Though mineral as well as agricultural rents might be included under the Aberdeen Act, they were essentially different in character, and must accordingly be computed differently— Campbell v. Wardlaw, July 6, 1883, 10 R. (H. of L.) 65, opinion of Lord Blackburn; Stair ii. 3, 74. There were two classes of cases analogous to the present one, which supported the petitioner's contention—(1) Those in which a testator bequeathed the whole annual produce of his estate. In Strain's Trustees v. Strain, July 19, 1893 20 R. 1025, it was held that the “free annual interest and produce” included the nett proceeds of collieries, but in Ferguson v. Ferguson's Trustees, February 23, 1887, 4 R, 532, it was held that rents realised from collieries formed part of the capital. There was an analogous decision in Campbell v. Wardlaw. (2) In cases concerned with the calculation of rental for the purpose of paying composition the petitioner's contention was supported— Allan's Trustees v. Duke of Hamilton, January 12, 1878, 5 R. 511, where the terminable nature of minerals was taken into account. In Sivright v. Straiton Estate Company, July 8, 1879, 6 R. 1205,

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this point was considered, and the method of computation desired by the petitioner was adopted. In Sturrock v. Carruthers' Trustees, May 21, 1880, 7 R. 799, the method was not adopted only because there was a fixed rent for the colliery and a degree of permanency. Lord Ormidale, at p. 801, supported the view contended for by the petitioner. In this class of cases the statute (1469) under which the questions arose was analogous to the Aberdeen Act. Accordingly if this course were followed, the Court would not be overruling the spirit of the Act, but would really be equitably applying the rule by which minerals were included. By this method the true value per year of the collieries to the heir in possession would be ascertained, and that was the true criterion, not the royalties obtained in a given year, which might hereafter cease to be paid in the case of each field which became exhausted.

The petitioner reserved his right to argue in the House of Lords that mineral lordships were not to be calculated at all in estimating the free yearly rent for the purposes of the Aberdeen Act.

Argued for the respondents—(1) Section 1 of the statute limited the mode of computation absolutely to the rent paid in the year of the death of the granter, and it was inadmissible to go behind that rule and to introduce equitable considerations such as those contended for by the petitioner. The 13th section of the statute was intended to give the heir in possession a remedy should the 1st section press hardly upon him, and this relief must not be extended further. The fact that the rents might fluctuate from year to year was not taken into account by the statute, which laid down as a standard the amount actually obtained during a given year without any consideration as to the permanency or exhaustion of the subjects. Such a method of calculation might be rough-and-ready, but it was preferable to the large field of inquiry which would be opened by the petitioner's proposal. (2) Accepting the authority of Wellwood and Douglas as showing that the Court had in some cases allowed a computation on the basis of an average of past years, these cases were no authority for the proposition of the petitioner that future years were to be taken into account, as would be done by his proposal of taking the interest of the capitalised value. Certainly the concession allowed in those cases must not be extended further. In Wellwood the ground for granting it was a special one, viz., “the hopeless impoverishment of the heir” which would have been produced if the Court had construed the Act too strictly. The cases of wills quoted by the petitioner had no analogy to the present, being questions of the intention of the testator, while this was one of the interpretation of a statute. The case of Ferguson was the only one which helped the petitioner, and it had been criticised and reviewed in the more recent case of Strain. The petitioner was endeavouring to introduce for the first time into Scotch law the rules of the English cases quoted in Ferguson, which even in England applied merely to subjects such as terminable annuities, where there was no corpus, and which could not have any analogy to the fruits of an estate. Nor did the composition cases help the petitioner, being based not upon the construction of a particular statute, but on “use and wont.” In estimating casualties it was the custom always to rate as low as possible, while in cases such as this there was no occasion to do so.

At advising—