Scottish Sheriff Court Decisions

Sheriffdom of Grampian Highland and Islands at Banff

Judgement

of

Sheriff Philip Mann

In causa

William John Auchnie

Residing at East Logie Aulton, Rothienorman

First Pursuer

And

Henry Auchnie

Residing at Wester Corryhoul, Corgarff, Strathdon

Second Pursuer

Against

Duncan Henry James Auchnie

Residing at Upper Crannabog, Aberchirder, Banffshire

First defender

And

George Allan Auchnie

Residing at Littlemill, Rothienorman

Second Defender

Act:/

Act: Parratt, Advocate

Alt: McCallum, Solicitor

Banff

The Sheriff, having resumed consideration of the objections and answers thereto number 24 of process, Repels the pursuers' first plea in law, the same not being insisted upon; of consent Sustains the pursuers' second plea in law and upholds their objection 2; Repels the pursuers' third, fourth, fifth sixth and seventh pleas in law; Continues the cause to a hearing on 26 February 2013 at 10:00am within the Sheriff Court House, Low Street, Banff to determine the question of expenses of the debate on 14 January 2013 and to determine further procedure in the cause.

 

 

Sheriff Philip Mann

 

Note/

Note

1. Introduction

1.1 This is an action of count reckoning and payment in respect of the estate of the late William Duncan Auchnie ("the deceased"), who died on Twenty third July 2003. The parties are four out of his five surviving children. The defenders are his trustees and executors appointed by his Trust Disposition and Settlement (hereafter "Will") dated Twenty fourth June 2002. They are confirmed as his executors by Confirmation issued in this court on Third November 2006.

1.2 On 14 January 2013 I heard a debate on number 24 of process which is a record of objections and answers in relation to the accounts and proposed division of assets lodged by the defenders. The pursuers were represented by Mr Parratt, advocate. The defenders were represented by Mr McCallum, solicitor.

1.3 At the outset of the debate Mr Parratt intimated that of their six objections the Pursuers were insisting only on their objections 3, 4, 5 and 6. Their objection 2 had already been conceded in the defenders' answers. Accordingly, the matters remaining in dispute and to be debated by the parties related to:-

(three) the sums received from the Scottish Executive by way of subsidies under the single farm payment entitlements scheme (hereafter "SFP") and whether or not these fall to be regarded as income of the estate.

(four) whether or not the defenders are obliged to account to the beneficiaries for the increase in value of the farms since the date of death of the deceased.

(five) whether or not payments under an options agreement in respect of a wind turbine development at Upper Crannabog Farm entered into after the date of death of the deceased fall to be paid to the estate.

(six) the fact that the accounts do not reflect any income from the farms from and after December 2005.

1.4 For present purposes the relevant part of the Will is clause (Second) which provides:-

"I leave and bequeath the whole rest residue and remainder of my Estate to the following persons in the following shares videlicet:-

To my son Duncan H J Auchnie I leave fifteen per cent;

To my son William John Auchnie I leave fifteen per cent;

To my son George Auchnie residing at Little Mill, Rothienorman, in recognition of his long service on the farm I leave thirty per cent;

To my son Henry Auchnie residing at Corryhoul, Corgarff, I leave fifteen per cent;

To my daughter Mary Diane Jeannie Willox residing at Par View, Little Mill, Rothienorman, I leave twenty five per cent.

Where possible I direct my Trustees that the value of the share to be received by George, Duncan and William is to be made up of the dwelling house, steading and farmland on the farm on which they reside with the legatee either receiving monies or other assets to make up the value of the share or where the value of the farm to be taken is greater than the value of the legacy by the legatee paying money into my estate in respect of the difference between the value of the asset and the value of the legacy. In the event of a dispute as to the value of any particular farm the decision of a valuer from Aberdeen and Northern Marts is to be final. In valuing the properties at Upper Crannabog and East Logie Aulton regard is to be had to any alterations or improvements made to the dwelling houses or steadings by the occupant of the particular dwelling house such that the person who paid for the said alterations, extensions or improvements is not unfairly prejudiced. In particular, I accept that the new steading at Upper Crannabog was paid for by George and Duncan and that all improvements to the dwellinghouse at Upper Crannabog have been paid for by Duncan. If George and Mary elect to continue farming at Little Mill in partnership and wish to combine their legacies to do so and to form a viable unit George and Mary will have the first option of taking the farmland at East Logie Aulton up to the value of their combined legacies. On no account is William to be left with less than the dwelling house, the steading, farmyard and ten acres. In the event that the value of the aforementioned dwelling house, steading etc. acquired by William is less than the value of his legacy, then it is intended that he should receive a balancing payment from my estate.

It shall always be open to Duncan and George to decline to take the legacy as a dwelling house, steading and farmland with or without a balancing payment in which case the farm on which the individual resides is to be sold. For the avoidance of doubt no legatee shall be allowed to pick and choose a mixture of dwelling house, steading and farmland where the effect of that choice would be detrimental to the value of my overall estate"

1.5 The defenders, as individuals, and their sister Mary Willox have been occupying and farming the farms of Littlemill, East Logie Aulton and Upper Crannabog.

2./

2. The Pursuers' Submissions

2.1 Mr Parratt helpfully lodged written submissions for which I am grateful. He advised me at the outset that he would be content to follow any one of three possible courses in relation to his written submissions. He could take me through the submissions in detail; he could simply rest on his written submissions; or he could rest on his written submissions with such clarification on any point as might be required by me. Having read the written submissions in advance I elected to proceed on the basis of the last of these suggestions and merely sought further clarification on Mr Parratt's understanding of the relationship of SFP to land.

2.2 Mr Parratt's point in relation to the subsidies received under the SFP scheme was that, properly understood, it is the farm itself which attracts the payments under the scheme by calculations relating to the number of hectares. The farmer is required to do certain things, by way of complying with cross compliance requirements, to qualify for the payments but the payments are linked to the farm and not to him. Mr Parratt took me through the history of the introduction of the single farm payment entitlements scheme and relied heavily on the case of Morrison-Low v Paterson 2012 SC 373, [2012] CSIH 10 and, in particular, the judgement therein of Lord Justice-Clerk Gill (as he then was). He also referred to the case of Simpson v Simpson 2007 Fam. LR 134 to demonstrate that single farm payment entitlements are an asset which can be considered in divorce proceedings. He also referred to the Northern Irish case of Crossey v Armour [2008] NICh 4; 2008 WL 6626804 where it was held that SFP, which came into existence after the date of death of the deceased in that case, were to be regarded as comprehended within a specific bequest of "my farmlands, stock, machinery, buildings and dwelling-house".

2.3 In relation to the valuation of the farm assets Mr Parratt maintained that since the title to the farms remained vested in the executors, the delay in completing the administration of the estate meant that the executors required to account in some way to all of the beneficiaries for the true present day market value of the assets. As he put it, "What the executors cannot do is proceed to distribute on the basis of the 2004 or older figures without any accounting for the increase in valuation of the estate". He advised me that there is no case law on the point but that there are authorities relative to the duties of a trustee or executor in regard to the expeditious administration of the estate. In this regard he referred to the textbook Wilson and Duncan Trusts, Trustees and Executors (second edition) paragraph 28-06 where the point is made, under reference to Clarke v Clarke's Trustees 1925 SC 693, that inordinate delay may give rise to a breach of trust - although he acknowledged that this point was not the focus of the debate. Mr Parratt pointed out that the executors' duty is a factorial one to ingather and distribute the estate. Although trite law, this was reinforced by Lord Carloway in Pentland Clark v Maclehose [2012] CSIH 12. Mr Parratt referred to the duty of executors not to sell or distribute the estate to themselves if they will acquire a personal benefit from such a sale or distribution at under value. An executor, he said, should be careful to obtain full value for the assets of the estate before final distribution of the estate. This was so where there has been delay in the ingathering of the assets where the value of the assets has increased in the meantime. In addition, this was so where he intended to distribute the assets in accordance with the wishes of the testator to himself or another related to him and where there would be an actual or perceived benefit to that person from a distribution at historic values and not at present market value. This was a point that was made by Lord Hamilton (as he then was) in the unreported case of Smart v Smart's Executors (unreported) 9 June 1995. The issue in that case was whether an executor-dative had shown due diligence in selling an asset to the parents-in-law of his co-executor. Lord Hamilton expressed the opinion that it was incumbent on the executor to ensure that any bargain was truly at arm's length and at full value.

2.4 Looking to the defenders' list of authorities, Mr Parratt anticipated the defenders' position on the question of the valuation of the farms as being that one could draw an analogy with an estate where there were claims to legal rights. He suggested that it was unsafe to draw such an analogy. For example and as the defenders' authorities demonstrated, the spouse's legal right to ius relictae was a debt payable out of the value of the net moveable estate as at the date of death. The claim was payable as soon as practicable after the date of death and it was not affected by fluctuation in the value of that estate, although in the event of delay in payment it attracted interest. It was classified as a debt payable out of the estate before it was distributed in accordance with the deceased's Will. Such was not the position in the present case where the dispute was about the valuation of heritage at the point of distribution after all debts had been paid. The present case involved distribution of assets in settlement of legacies and thus any increase in value was not reflected in interest accumulation but in a revaluation at the point of distribution.

2.5 Mr Parratt dealt with the pursuers' objections 5 and 6 together. The defenders, in their answers to the pursuers' objections, referred to "beneficiary in possession", a concept not known to Scots law. In Scots law, he said, it was permissible for executors to permit a potential beneficiary to use the fruits of the estate or to occupy the heritage or to consume or use the assets of the estate without formal conveyance of the executors' formal title (at that point), but the executors were required to account to the estate for the value of that or enter into a formal lease or licence or deed or arrangement to formalise the occupation or use for a value. That value formed part of the estate for distribution. In a case such as the present, where the executors had allowed potential beneficiaries to occupy the farms and to continue farming thereon, the executors were obliged to account to the whole beneficiaries for the rent that had been paid or account to the beneficiaries for the reasons why rent was not sought and would therefore be accountable to the estate for any shortfall or diminution of the estate as a result. Mr Parratt conceded that the pursuers' objection relating to the wind turbine grassum was probably premature because no payment yet fell due under the relevant contracts. I took his position to be that any such payments would be payable to and would belong to the person who was formally vested in the property on which the wind turbine was to be sited at the time when the payments became due.

3. The Defenders' Submissions

3.1 In relation to the pursuers' objection 3 Mr McCallum pointed to the terms of the now repealed European Council Regulation (EC) 1782/2003. Article 33(1) thereof provided:

"Farmers shall have access to the single payment scheme if:

(a) they have been granted a payment in the reference period referred to in Article 38......

(b) they have received the holding or part of the holding, by way of actual or anticipated inheritance, by a farmer who met the conditions referred to in point (a)"

Article 38 provided:

"The reference period shall comprise the calendar years 2000, 2001 and 2002"

Article 34(2) provided:

"Farmers shall apply to the single payment scheme by a date, to be fixed by Member States, but not later than 15 May"

Mr McCallum maintained that it was the person who occupied the land who was entitled to receive the subsidies payable by virtue of the SFP entitlements. He asserted that the deceased had never had the SFP entitlements and that they had been originally allocated to the beneficiaries.

3.2 In relation to the pursuers' objections 4, 5 and 6 Mr McCallum maintained that in providing as he did in clause (Second) of the Will the deceased was seeking to preserve the status quo. His desire was that the beneficiaries in question be allowed to remain where they were if they so chose. The only thing that had not happened in terms of clause (Second) was the actual transfer of title. He maintained that the fact that clause (Second) of the Will required that account be taken of improvements was a clear indication that the deceased had in mind that the farms be transferred to the beneficiaries concerned at date of death value. A valuation had been carried out as at January 2004, which was as close to date of death as was necessary. The scheme of division of the deceased's estate had been prepared on the basis of those valuations.

3.3 Mr McCallum compared the position of the beneficiaries under clause (Second) of the Will to that of persons entitled to claim legal rights from the estate and referred to various authorities in that regard.

3.4 Mr McCallum accepted that all of the deceased's children were residuary beneficiaries entitled to fixed proportions of the residue of the estate. But the heritable property could be ascertained. In response to a comment from the bench Mr McCallum maintained that the effect of clause (Second) was as if the deceased had made a specific bequest of the farms in question. He maintained that it was clear that the deceased had intended that no rent should be payable by those occupying the farms pending transfer of title. He suggested that if it were the case that rent ought to have been paid or notionally calculated then that might have an effect on the valuation of the farms.

3.5 Mr McCallum urged me to repel the pursuers' objections, which failing to order that the defenders carry out valuations at certain dates.

4. The Pursuers' Response

4.1 In a brief reply, Mr Parratt took no issue with Mr McCallum's submissions on the terms of European Council Regulation (EC) 1782/2003 but suggested that the defenders were putting a gloss on matters when they suggested that the SFP subsidies were paid to the individuals as farmers. This was because the executry agents' ledger cards which were lodged as productions and which were relied upon by the defenders showed that SFP subsidies were paid to those agents.

4.2 Mr Parratt suggested that the deceased had in contemplation that all of his children should benefit from the fruits of the estate and that that must include the SFP subsidies. On the question of valuation he maintained that if the deceased had known that it would take 9 years to administer his estate he would not have intended to deprive some of his children by using an inequitable historic valuation. He said that esto the executors were entitled to use historic valuations then they were obliged to account for any increase in value.

5. Discussion and Decision

5.1 It is convenient to deal first with the Pursuers' objections 4, 5 and 6 in turn and then return to their objection 3 in relation to SFP. I should say at the outset that I did not find Mr McCallum's analogy with legal rights or the authorities cited in support of it to be helpful. I will make no further reference thereto.

5.2 As regards the pursuers' objection 4, as indeed as regards their objections 5 and 6, my first task must be to interpret clause (Second) of the Will. I believe that that is where the answer to the dispute on these points lies. Mr Parratt's submissions appeared to proceed on the basis that the Will simply provided that the various residuary beneficiaries would each be entitled to a specified percentage of the value of the estate and as if the assets in the estate fell to be realised or sold in order to provide the funds from which the percentage shares could be paid out. That is not what the deceased had in mind on my interpretation of the Will. Properly construed, the Will indicates that the deceased desired that certain beneficiaries would be entitled to take certain assets, the value of which would be set against their percentage shares of the residual value of the estate. That the beneficiaries were to have the assets, if so desired, is emphasised by the provision that they are to make a balancing payment to the estate in the event that the value of the assets exceeds their percentage shares. It was never intended that the assets in question be sold except in the event that the beneficiaries in question declined to take the legacies in that form. The Will speaks from the moment of death and in the absence of any provision to contrary effect it follows that the deceased intended that the beneficiaries be entitled to the assets as from that moment in time. If the beneficiaries have made the election available to them, as appears to have happened, then the value of the assets to be employed to calculate whether or not the beneficiaries require to pay money into the estate is the value of the assets as at the date of death.

5.3 Mr Parratt relied heavily on the fact that the assets even yet remain vested in the executors. I consider that to be neither here nor there in regard to the matter in dispute. What we are dealing with here is a trust disposition and settlement which assigns, dispones and conveys the deceased's estate to his trustees and executors "in trust only for the following purposes". One of those purposes is expressed in clause (Second). It is to enable certain beneficiaries to take certain assets. If those beneficiaries have made that election the trustees and executors then hold the assets in trust not for the estate in general but for those beneficiaries in particular. The transfer of title to those assets is a pure administrative function which can only be performed after certain formalities, such as the obtaining of confirmation, have been observed. It is certainly the case that trustees and executors have a duty to act diligently and expeditiously but it is only those beneficiaries who are adversely affected by the lack of diligence and expedition who have both title and interest to complain.

5.4 I believe that the matter can be tested by looking at the position of the deceased's daughter Mary Willox. She stands to the trustees and executors in exactly the same relationship as the pursuers. I do not think that it could be seriously maintained by the trustees and executors in a question with her that she is to be denied the benefit conferred upon her by the terms of the Will because they have delayed in the performance of their duties. Her claim is to take the asset earmarked for her at the date of death or at the earliest possible time thereafter. Of necessity, there will always be a lapse of time before the executors are in receipt of confirmation and thus in a position to effect a conveyance. In my view, neither that nor any other delay in effecting the transfer of title could defeat Mrs Willox's claim to take the asset at date of death value. If that is the case for her then it must be the case also for the trustees and executors, the defenders, as individuals.

5.5 I think that the matter can also be tested in a different way. Suppose that the assets had fallen in value since the date of death. I hardly think that the pursuers would argue that the defenders, as individuals, and Mary Willox would be entitled to take the assets in question at their current value because the effect of that would be that the value of the pursuers' own legacies would be reduced. The pursuers would undoubtedly seek to hold these beneficiaries to their election. The true position, in my view, is that the beneficiaries, having made their election in terms of the Will, are entitled to the benefit of any future increase in value of the assets but must also bear any loss resulting from any decrease in value. As to Mr Parratt's reference to auctor in rem suam I cannot see that conveyance of the farms to the defenders, as individuals, can be attacked on that basis. The trustees and executors will be doing that which is specifically authorised by the deceased. Provided that the conveyance is implemented on the basis of a proper valuation as at the appropriate time they cannot be challenged. It follows from all of the foregoing that the pursuers' objection 4 must be repelled.

5.6 As regards the pursuers' objection 5 and for the reasons that I have given in relation to their objection 4, clause (Second) of the Will confers beneficial ownership of the farms on the beneficiaries in question as at the date of death. It follows that the beneficiaries are entitled to the fruits of the assets as from that date. Any formal intervention by the trustees in transactions designed to produce fruit from the assets, such as the options agreement for the purposes of a wind turbine development, is not required because the trustees and executors have a right to claim the benefit of that for the estate. It is required because they are compelled to intervene on behalf of the beneficiaries who are entitled to the assets, and to the fruits thereof, on account of the delay in effecting the transfer of title. Accordingly, the pursuers' objection 5 must also be repelled.

5.7 As regards the pursuers' objection 6, again clause (Second) of the Will confers beneficial ownership of the farms on the beneficiaries in question as at the date of death. It follows that the beneficiaries should be entitled to occupy and farm these farms from the earliest possible time after the date of death. The position with regard to occupation of the farms by the defenders and Mary Willox as stated in the pleadings is confused. In the main record number 20 of process the pursuers aver, in article 3 of condescendence at page 4, line 20 et seq, that it is believed and averred that the defenders and Mary Willox have been occupying and farming the farms of Littlemill, East Logie Aulton and Upper Crannabog since the date of death (23 July 2003) and enjoying the fruits thereof. This averment is admitted by the defenders. But the defenders also aver, on page 6 lines 23 and 24 of the record, that the executors ran the deceased's business for a period of two years following upon the death of the deceased; and, in answer 3 in the objections and answers number 24 of process, they aver that Mary Willox and George Auchnie farmed from Littlemill on their own account from 5 April 2005; and in answer 6 in the objections and answers they aver that the farms have been occupied and farmed by the beneficiaries in question since about December 2005. I mention these matters lest it be thought that I have come to my conclusions not having noticed them. I think that it matters not when the beneficiaries actually took occupation of the assets because although they are entitled as beneficial owners to occupy the farms from the earliest possible moment after the date of death they are not obliged to do so. The point is that neither the estate nor any of the beneficiaries is entitled to demand that the defenders, as individuals, and Mary Willox should hand over any income which they have made on their own account from their occupation and farming of the farms at any time since the date of death. Likewise, there can be no valid claim for rent or the like. Accordingly, the pursuers' objection 5 must also be repelled.

5.8 I now turn to the pursuers' objection 3. If Mr Parratt's submission, that SFP is tied to the land, is well founded then it should follow that objection 3 falls to be repelled on that ground, standing my decision in relation to the pursuers' objection 4. I have a problem with that because I do not consider Mr Parratt's submission to be well founded. He relied heavily on the judgement of Lord Justice Clerk Gill (as he then was) in the case of Morrison-Low as authority for the proposition that he advanced. Lord Gill's judgement helpfully explains the nature of SFP as a subsidy which is unlocked by the occupation of land. But, nowhere in his judgement does Lord Gill suggest that SFP is tied to the land in the way contended for by Mr Parratt. At paragraph 73 of his judgement Lord Gill rejects the Land Court's whole approach to the effect that SFP has on the valuation of farm rentals. That approach included the assertion that SFP is not tied to land but it is important to note that it is the approach, not the assertion, which is rejected by Lord Gill. It would be surprising if Lord Gill had come to the conclusion that SFP is tied to the land because Article 46(2) of European Council Regulation (EC) 1782/2003, quoted by Lord Gill, provides that SFP entitlements - that is, the capital asset which entitles the farmer to claim the subsidies - may be transferred by sale or any other definitive transfer with or without land. It is within judicial knowledge, I think, that SFP entitlements are widely and regularly traded on the open market without land.

5.9 The court in Morrison-Low remitted the case back to the Land Court to reconsider the matter of rental valuation. This was on the basis that their decision did not sit easily with their finding in fact that in most rental valuations the availability of SFP was a factor taken into account. As Lord Gill said at paragraphs 85 and 86 of his judgement:

"There was no evidence at all that SFP was excluded as a consideration in negotiations between landlord and sitting tenant in the real world. In all of the sitting tenant agreements of which there was evidence, SFP entitlement was taken into account. .......... In the face of that evidence the Court should, I think, have considered whether the presence of SFP as a material factor in such cases was a significant pointer to the open market. ....... These findings indicate, in my view, that the payment of SFP may go to the heart of the hypothetical bidder's assessment of rent."

Nowhere is it suggested that the case be remitted back to the Land Court because the assertion that SFP is not tied to land was wrong. The plain fact of the matter is that occupation of any appropriate piece of land for the required period of ten months in terms of Article 44 of European Council Regulation (EC) 1782/2003 unlocks the subsidy payments under SFP. The point in Morrison-Low was that on the basis of the facts held established by the Land Court a tenant bidding for the tenancy of a farm would be likely to factor into his rental offer the fact that occupation of that farm under the tenancy would unlock the SFP subsidies. I can see nothing in that that detracts from the ability of a tenant, under the relevant regulations, to use his occupation of any other suitable land, not part of the lease in question, to unlock the payments if he so chooses.

5.10 SFP came into existence after the death of the deceased. It is exactly the situation which occurred in Crossey v Armour. That case is not authority for the proposition that SFP is tied to the land and so it is not supportive of the submission advanced by Mr Parratt. The case explains, by reference to Article 33 of European Council Regulation (EC) 1782/2003 and Article 13(1) of European Council Regulation (EC) 795/2004, both now repealed, the right of the beneficiary who had inherited the land in respect of which the SFP entitlements had been calculated to claim ownership of the SFP entitlements - that is, the capital asset which entitles the farmer to claim the subsidies - upon introduction of the scheme in 2005. I have already quoted the terms of Article 33(1). Article 13(1) provided:

"In cases referred to in Article 33(1)(b) of Regulation (EC) No 1782/2003, the farmer who has received the holding or part of the holding shall claim, in his name, the payment entitlements to be calculated for the holding or part of the holding received.

The number and value of the payment entitlements shall be established on the basis of the reference amount and number of hectares relating to the production units inherited."

In other words, the beneficiaries who had received the farms by inheritance were entitled to receive, and to become owners of, the SFP entitlements. Articles 33(1) and 13(1) merely regulated how initial ownership of the capital asset was to be allocated in the circumstance of inheritance. They had no application beyond that limited purpose. They did not and do not in any way negative the general principle of the SFP scheme that SFP entitlements, once allocated, were and are separable from, and thus not tied to, land. This was acknowledged in paragraph 7 of the judgement in Crossey v Armour where it is stated:

"Counsel for the plaintiffs does not dispute that unlike milk quotas which are attached to the land it is accepted that the single payments are tradable and are in fact being traded. They are separable from the land. But that is after the scheme has come into operation in 2005"

5.11 However, there are other grounds upon which the pursuers' objection 3 founders. Mr McCallum's submission that the SFP entitlements had been originally allocated to the beneficiaries is simply a reflection of the European Council Regulations referred to in paragraph 5.10 hereof. Neither the deceased nor his trustees and executors were ever entitled to be vested in ownership of the SFP entitlements. That being the case, the estate of the deceased could have no claim upon the SFP entitlements either in respect of their capital value or as respects the subsidy payments which have been made in respect of them. These subsidies rightfully belong to the beneficiaries who were the beneficial owners and occupiers of the farms. I note that whilst Mr Parratt questioned the fact that subsidy payments received by virtue of the SFP entitlements had been routed through the executry agents he did not question Mr McCallum's assertion that the deceased had never had the SFP entitlements and that they had originally been allocated to the beneficiaries who had taken the farms. To the extent that the subsidies were routed through the agents that can only have been the result of error or of arrangement with the beneficiaries. I do not see how that can affect the question of entitlement to the subsidies.

5.12 I note that the occupation of the farms by the second defender, as an individual, and Mary Willox, who have received the benefit of the subsidies, at the least more or less coincides with the introduction of the SFP scheme. There can be no question of the trustees and executors having occupied the farms for the purposes of SFP for the benefit of the estate. In so far as the trustees and executors did occupy the farms in that capacity after the date of death that can only have been for the purpose of winding up the deceased's business, which would have included receipt of subsidies due to the estate under the pre-SFP arrangements.

5.13 Nor is Mr Parratt assisted by the case of Simpson v Simpson. It held that SFP entitlements - that is, the capital assets entitling the farmer to claim the subsidies - are an asset to be taken into the calculation of matrimonial assets. That seems to me to be simply a proper reflection of the fact that SFP entitlements are separable from land and are tradable separately therefrom.

5.14 For all of the foregoing reason the pursuers' objection 3 must also be repelled.

6. Further Procedure and Expenses

6.1 I was asked to continue the cause to a hearing to determine further procedure in the action generally and I have done so. I heard no submissions as to the expenses of this debate and I have reserved that question also to be dealt with at the same hearing.