An Inner House decision by the Lord Justice Clerk, Lord Malcolm and Lord Tyre, published shortly before Christmas (Currie v Blair [2022] CSIH 58) has held that it is competent for a beneficiary to ask for an executor to account for alleged debts to an estate, in relation to that executor's dealings as power of attorney.

The action

This action was raised by one sister (the reclaimer) against another (the defender/respondent), where the defender/respondent had been executor nominate of their father. Their father died in January 2015 appointing the respondent as his executor, leaving his estate equally to his two daughters. During his lifetime, both daughters had been appointed his continuing and welfare attorneys, but only the respondent acted under this appointment. The reclaimer raised an action seeking the following conclusions (1) production of their father's will (which was complied with), (2) a full account of the respondent's dealings (known as intromissions) as attorney with their father's assets (or a payment of more than £70,000), and (3) the same accounting when acting as executor and seeking payment of a further sum of nearly £70,000.

The respondent did not dispute that she required to account to the reclaimer in relation to actings after his death but argued that her sister had no title to sue in respect of the respondent's intromissions as attorney during his life (the second conclusion). After a debate, the Lord Ordinary sustained the respondent's plea to relevancy and dismissed the second conclusion. The reclaimer appealed against the decision that she had not pled a relevant case in relation to her claim that she was entitled to an order requiring the respondent, in her capacity as executor, to obtain a full accounting as attorney (or an equivalent sum, as noted below).

The background

After their father's death, the reclaimer was suspicious about the seemingly low value of his estate, having only received some small payments from her father's estate. She obtained bank records for April 2013 to April 2015 which showed payments of more than £70,000 including transfers for flights, toy shop orders and other large purchases. The reclaimer argued that their father was "generous but fair" and therefore it was unlikely he would have authorised this expenditure which would favour one sister and their family over the other. The respondent countered that she was his carer until he moved into a nursing home in July 2014 and had only intromitted with his bank accounts with his knowledge and authority. She noted that their father was grateful to the respondent for caring for him and therefore made gifts to her and her family (and had previously also made gifts to the reclaimer).

The decision at first instance

The Lord Ordinary had found that the reclaimer's case was irrelevant in relation to the intromissions as attorney because the beneficiaries of a deceased's estate have no title to sue for a debt alleged to be owed to the estate and that the attorney was not required to account for her intromissions to beneficiaries (only to the granter of the power of attorney document i.e., their father and after his death his executor). There was another remedy available: a beneficiary can insist that a trustee assigns their right of action to them (with an indemnity for expenses).

The reclaimer argued that she was not suing a debtor but rather suing the executor for her failure to ingather an asset of the estate (from the attorney) despite being alerted to its existence, and that her case was therefore both competent and relevant. She argued that it did not matter that the attorney was also the executor.

The respondent argued that the Lord Ordinary had not erred – a beneficiary of a deceased's estate has no right to an accounting from the deceased’s former attorney. The power of attorney granted by their father expressly provided that the attorney bound herself to account to the grantor, and on his death the right to an accounting passed to his executor. A beneficiary is not entitled to sue for a debt due to the estate.

Decision in the reclaiming motion

The court held that the issue raised here was very important, given the widespread use of continuing and welfare powers of attorney since the Adults with Incapacity (Scotland) Act 2000 came into force. The court noted that it is not uncommon for the same individual to be appointed as a person’s attorney and as executor so it is important for the law to be clear whether (and how) a beneficiary to the estate can challenge the intromissions of an attorney.

It noted that it is a well settled general rule that a beneficiary has no title to sue a debtor to an estate directly. However, an executor is accountable to the beneficiaries for the proper ingathering and distributing of an estate. The court was satisfied that a beneficiary is entitled to raise an action against an executor to realise and account for an asset the beneficiary says has not been dealt with, which includes a debt. The reclaimer argued that the debt was for intromissions by the attorney in breach of her fiduciary duties and the court held she was therefore entitled to seek an accounting from the respondent as executor in relation to this asset – it was not the same as pursuing the debtor directly, merely an accounting from the executor (who happens to also be the alleged debtor). A different form of action, notably one of count, reckoning and payment, might have been appropriate but this did not preclude the course taken by the reclaimer.

It was held that the reclaimer's case was relevant, and the Inner House recalled the dismissal of the second conclusion.

Interestingly, the court found that the element of the second conclusion which sought payment for the alleged debt was less convincing, as a beneficiary does not have title to demand payment, however it decided not to dismiss the second part of the conclusion at this stage. We are now waiting to see how the case develops now it is to be remitted back to the Lord Ordinary and whether further procedure may yet be required.

If you would like to discuss powers of attorney, executries or anything within this blog, further, please do not hesitate to get in touch with your usual Brodies contact.