No favour to Currie?

The recent Scottish appeal case of Currie v Currie’s Executor deals with the increasingly common scenario of alleged financial misconduct by an attorney during the life of the individual who has granted the power of attorney (PoA, the Grantor).[1] It clarifies the options available to disappointed beneficiaries following the Grantor’s death where the beneficiaries suspect that the attorney has wrongfully intromitted with the Grantor’s estate during their lifetime and where the former attorney and executor are the same person.

Scope of the OPG’s investigatory powers

Currently, the Office of the Public Guardian in Scotland (the OPG) only has authority to investigate allegations of current and future attorney misconduct; they do not have a remit to investigate historical matters. It is possible that this may be reviewed and representations have been made to the Scottish government recommending extending the OPG’s remit in this respect.

A PoA automatically terminates on the Grantor’s death and a former attorney does not owe any obligations to the beneficiaries of the Grantor’s estate. Following the Grantor’s death, the duties owed by an attorney to the Grantor can only be enforced by the Grantor’s executor/s. Where the attorney and the executor are the same person, there is an obvious practical difficulty in having that person investigate their own alleged misconduct. Consequently, the options open to disappointed beneficiaries to challenge alleged attorney misconduct following the death of the Grantor were, until Currie, thought to be extremely limited where the attorney and executor were the same person.

Currie v Currie’s Executor: the facts

John Currie’s daughters, Susan and Lesley, were appointed as his joint continuing and welfare attorneys, but Susan was the only one to exercise the powers.

John died in January 2015. He left a will that appointed Susan as sole executor. The residue was to be divided equally between Lesley and Susan. Lesley brought an action against Susan (as executor). Among other things, Lesley sought an order requiring Susan (as executor) to seek accounting from herself (as attorney) of her intromissions with their father’s assets and property during his lifetime, failing which an order for payment to the estate of approximately GBP70,000 was sought.

At first instance,[2] the case relating to the order for an accounting from the attorney was dismissed after debate. The judge relied on the Inner House of the Court of Session of Scotland decision in Anderson v Wilson as authority for the proposition that beneficiaries had no right to determine the extent of composition of an estate and,[3] therefore, had no title to sue in the circumstances.

Counsel for Lesley had argued that where a beneficiary contended that an executor had failed to realise an asset of the estate that their remedy was to raise an action to require the executor to do so. They therefore sought to distinguish Anderson on the basis that what Lesley was seeking was an order requiring the executor to obtain an accounting (effectively, establishing a debt owed to the estate) rather than seeking an accounting from the attorney as such directly. However, the distinction was held by the judge at first instance to be ‘artificial’ and an attempt to ‘permit an otherwise incompetent action to succeed through the back door’.

The appeal

On appeal, the Second Division acknowledged that it would be incompetent for a beneficiary to raise an action against a former attorney seeking payment of a share of the sum alleged to be due on the executry estate.[4] However, the Second Division distinguished the circumstances of this case from those of Anderson and disagreed with Lord Ordinary’s assessment that to hold otherwise would be to let the action in ‘through the back door’.

Lord Tyre, delivering the opinion of the court, commented that:

‘an executor is, however, accountable to beneficiaries for the proper performance of his or her fiduciary duty to ingather the deceased’s estate in order to pay the deceased’s debts and distribute the balance among the persons entitled to it’.

The Second Division held that where it was averred that an attorney owed a debt to the Grantor at the time of their death, in the form of the proceeds of their wrongful intromissions with the Grantor’s estate during life, it was competent for a beneficiary to seek an order that the executor realise that debt. As such, it was competent for Lesley to require Susan (as executor) to realise that asset in the form of an accounting from herself (as attorney). In reaching this decision, Lord Tyre observed that:

‘it is irrelevant that the executor is the same individual as the attorney alleged to be the debtor; the executor is sued in the capacity of being the same person in law as the deceased, and not the former attorney as an individual’.

End of the road?

However, that may not be the end of the matter. Although the Inner House held that a beneficiary could obtain an order requiring an executor to obtain an accounting from themselves as attorney, it reserved its position on whether the beneficiary could demand payment following, or in lieu of, an accounting. There was a heavy hint that further separate action might be required in the form of an action for removal of the executor or an action for payment taken by the beneficiary in the name of the executor.

Key points for Scottish practitioners

Although it has always been accepted that an executor can pursue the deceased’s former attorney for an accounting of their intromissions during the deceased’s lifetime, Currie confirms that a beneficiary is also entitled to an order requiring the executor to obtain an accounting for a debt claimed to be owed by the former attorney to the estate. This applies even if the former attorney and the executor are the same person: the order is directed against that person as executor. This point had not previously been judicially determined and will be of interest to those advising disappointed beneficiaries. The decision, however, confirms that the beneficiary does not have a right of action directly against the former attorney.

There is an acknowledgement in Currie, however, that this will not be the end of the matter if there is a sum due and the attorney does not pay. A further action may be separately required to remove the executor or obtain a decree for payment.

The case of Currie also raises interesting questions about whether the executor in these circumstances would now be conflicted from acting as such. It is difficult to see how an executor who resists an order for an accounting of lifetime intromissions as attorney, in circumstances where the Inner House has held such an action to be competent, would not find their own personal interests in conflict with those of the estate. Again, an action for removal of the executor would be required to cure this if the executor was unwilling to resign voluntarily.

Conclusion

The case of Currie is an important development that could provide disappointed beneficiaries with recourse in the increasingly common scenario where there are allegations of financial misconduct or irregularity by attorneys. However, the practical benefit that the decision gives to beneficiaries might not be as great as might be seen on first blush. The possible requirement for a second court action following the provision on an accounting and the costs of pursuing claims to a conclusion will likely be off-putting except in cases of larger estates. In actions of accounting, an alternative claim for payment is usually made in case the defender refuses to produce an account. That provides some comfort for the pursuer: either they will obtain an accounting that can then go through a process of objections and answers or they will receive a decree for payment.

The court’s observation that the alternative claim may not be competent at all in Currie, whether or not an accounting is provided, must raise a question over the practical effectiveness of the Second Division’s decision. It is suggested that a more effective and cost-efficient solution would be for the OPG’s supervisory role and investigatory powers to be extended so that investigations can be made after the death of the Grantor. It remains to be seen whether this will happen.