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Scottish Court of Session Decisions |
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You are here: BAILII >> Databases >> Scottish Court of Session Decisions >> Adams v. Messrs. Thorntons, W.S. & Ors [2003] ScotCS 230 (19 August 2003) URL: http://www.bailii.org/scot/cases/ScotCS/2003/230.html Cite as: [2003] ScotCS 230 |
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OUTER HOUSE, COURT OF SESSION |
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CA190/01
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OPINION OF LORD MACFADYEN in the cause JOHN DON ADAMS Pursuer; against MESSRS THORNTONS, W.S. and OTHERS Defenders:
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Pursuer: Logan; Campbell Smith, W.S.
Defenders: D.E.L. Johnston; Balfour & Manson
19 August 2003
Introduction
[1] In this action of damages for professional negligence the pursuer sues the defenders, a firm of solicitors who formerly acted on his behalf, in respect of loss which he alleges he suffered as a result of failure on their part to exercise the proper degree of care in connection with a series of related property transactions which took place in 1990 and 1991. Since the pursuer admits that he first suffered loss as a result of the alleged negligence in December 1990, and the action was raised on 26 October 2001, the defenders plead that any obligations that they may have incurred to make reparation to the pursuer have been extinguished by prescription in terms of section 6 of the Prescription and Limitation (Scotland) Act 1973 ("the 1973 Act"). In response to that plea, the pursuer seeks to rely on sections 6(4) and 11(3) of the 1973 Act in arguing that the defenders' obligations have not prescribed. [2] The defenders plead that the pursuer's averments seeking to rely on sections 6(4) and 11(3) are irrelevant. That issue was appointed to debate, and on 26 April 2002 I held that those averments were sufficient to justify the allowance of a proof before answer on the issue of prescription. Having heard the parties further on the issue of the scope of the proof before answer that should be allowed, I determined that it should not be in respect of the parties' pleadings as a whole, but should be confined to the issue of prescription. I subsequently heard proof before answer on that restricted issue.The property transactions
[3] It is convenient to begin with a simplified outline of the nature of the sequence of property transactions in connection with which the allegations of negligence arose. The property in question was known as Airlie Lodge, Broughty Ferry. Airlie Lodge had originally been a substantial villa with garden ground. It had, however, before the pursuer became interested in it, been divided into three parts. The south-east part was owned by Mrs Lydia Robb. The north-east part and the west part were both owned by Mr and Mrs David Brand. All three parts were on the market in the autumn of 1990. [4] The pursuer became interested in acquiring the whole of Airlie Lodge and the ground attached to it for redevelopment. He entered into a joint venture with Ian Sigurd Henderson Barclay ("Mr Barclay") for that purpose. No formal joint venture contract was executed. The basic scheme, however, was that Airlie Lodge and the ground attached to it should be acquired, and that redevelopment should take place involving (1) the sub-division of the existing villa into a number of flats (not corresponding to the parts into which it had already been sub-divided) and (2) the erection of further houses on part of the garden ground. [5] In pursuance of that broad aim, a number of transactions were entered into. It is convenient for the purpose of describing them to adhere to the terminology which I adopted in the Opinion dated 26 April 2002 which I wrote after the debate. In that Opinion, I identified three sets of missives which I called the first level missives, one set of missives which I called the second level missives, and two sets of missives which I called the third level missives. [6] As I have said, the first level missives comprised three separate sets of missives. Each of these three sets comprised missives dated 19 and 24 October 1990. In each of them an offer to sell was made to, and accepted by, a company called Ballinard (Property and Investments) Limited ("Ballinard"). Ballinard was owned by the pursuer, and was intended to operate as the vehicle by means of which the joint venture acquired Airlie Lodge. One of the three sets of missives related to the south-east part of Airlie Lodge. In those missives the seller was Mrs Robb, and the price was £112,000. Another set of missives related to the north-east part of Airlie Lodge. In that set, the sellers were Mr and Mrs Brand, and the price was £183,000. The third set of missives related to the west part of Airlie Lodge. Again the sellers were Mr and Mrs Brand, and in this case the price was £90,000. The aggregate of the prices payable under the three sets of missives forming the first level missives was thus £385,000. The date of entry was to be 14 December 1990 in each transaction. Each set of missives provided that in exchange for the purchase price there would be delivered a valid disposition in favour of Ballinard or its nominees. [7] The acquisition of Airlie Lodge was to be funded partly by borrowing from the Clydesdale Bank plc ("the Bank"). It was originally contemplated that the borrower would be Ballinard but, for reasons relating to Ballinard's unacceptability to the Bank as a borrower, the loan was ultimately made to the pursuer and Mr Barclay jointly and severally as individuals. There appears to have been no formal record of any understanding of what the consequences of the change in the identity of the borrowers was to be. It appears to have been understood that the pursuer and Mr Barclay were to use the funds which they borrowed from the Bank to meet pro tanto Ballinard's obligations under the first level missives, and were to become the disponees under those missives, as nominees of Ballinard. The loan was to be secured over Airlie Lodge or part of it. I shall return to the question of what the security subjects were to be in due course. The sum to be borrowed in connection with the purchase of Airlie Lodge was £248,000. [8] The second level missives formed the other part of the means of funding the transactions provided for in the first level missives. In addition to the sum to be lent by the Bank, funds were to be raised by a sub-sale of part of Airlie Lodge. The sub-sale was effected by the second level missives. In the second level missives, the sellers were Ballinard, and the purchaser was a company then called Aberdeen Property Leasing Company Limited, which later changed its name to Apple Limited ("Apple"). Apple was owned by Mr Barclay. The second level missives were dated 7 and 14 December 1990. The date of entry was to be 14 December 1990 (i.e. the same date as the date of entry under the three sets of first level missives, and the date on which the second level missives were concluded). The broad intention seems to have been that Airlie Lodge should be sold to Apple and that Ballinard (or rather the pursuer and Mr Barclay as the nominees of Ballinard) should retain the bulk of the attached ground. Unfortunately, the copy of the second level missives referred to in evidence (No. 6/48/12 of process) did not include the plan by reference to which the subjects of that transaction were identified. (Another copy of the offer (No. 7/1/118-120 of process) was not referred to in evidence, but has the merit of including a copy (albeit uncoloured) of the plan.) The price was to be £222,000. [9] The third level missives involved the sale by Apple of two flats in the redevelopment to be carried out within Airlie Lodge, one to the pursuer and the other to Mr Barclay. Both sets of third level missives comprised an offer dated 30 January 1991, a qualified acceptance dated 31 January 1991, and an acceptance thereof dated 7 February 1991. The price to be paid by the pursuer for the flat which he purchased (flat 1) was £95,000, and the price to be paid by Mr Barclay for the flat which he purchased (flat 5) was £65,000. The date of entry under each set of third level missives was 1 February 1991, notwithstanding the later conclusion of the missives. [10] A remarkable feature of the transactions forming the three levels of missives just described was the multiplicity of parties for whom the defenders acted.The only parties for whom the defenders did not act in the whole series of transactions were the pursuer and Mr Barclay as purchasers in terms of the third level missives. In those transactions, the pursuer and Mr Barclay were represented by James and George Collie, solicitors, Aberdeen ("Collies"). The partner in the defenders who dealt with the pursuer at the time of the property transactions was Mr A. Ritchie Robertson ("ARR").
The statutory provisions
[11] The alleged obligations on the part of the defenders on which the pursuer founds this action are each "obligations arising from liability ... to make reparation", and are therefore obligations to which section 6 of the 1973 Act applies (Schedule1, paragraph 1(d)). Each of them is therefore an obligation of the sort which, if it has subsisted for a continuous period of five years after the appropriate date (a) without a relevant claim having been made in relation to it, and (b) without its subsistence having been relevantly acknowledged, is extinguished as from the expiration of that period (section 6(1)). The "appropriate date" from which the period of five years must be counted is the date on which the obligation became enforceable (section 6(3)), and an obligation to make reparation is regarded as having become enforceable on the date when loss, injury or damage caused by an act, neglect or default occurred (section 11(1). The pursuer does not dispute that in the circumstances of this case, if the matter were regulated only by sections 6(1) and (3) and 11(1), the obligations on which he seeks to found would have been extinguished. As I have said, however, he seeks to rely on sections 6(4) and 11(3) to avoid that result. [12] Section 11(3) provides inter alia that:"In relation to a case where on the date referred to in subsection (1) above [i.e. the date on which loss, injury or damage occurred] ... the creditor was not aware, and could not with reasonable diligence have been aware, that loss, injury or damage caused as aforesaid [i.e. by an act, neglect or default] had occurred, the said subsection (1) shall have effect as if for the reference therein to that date there were substituted a reference to the date when the creditor first became, or could with reasonable diligence have become, so aware."
The appropriate date, for the purposes of section 6(1), is thus postponed, in a case to which section 11(3) applies, to the earlier to occur of (i) the date on which the pursuer actually became aware that he had suffered loss, injury or damage caused by an act, neglect or default, or (ii) the date on which he could, with reasonable diligence, have become so aware.
[13] Section 6(4) provides inter alia as follows:|
"In the computation of a prescriptive period in relation to any obligation for the purpose of this section ― |
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(a) |
any period during which by reason of ― |
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(ii) |
error induced by words or conduct of the debtor or any person acting on his behalf, |
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the creditor was induced to refrain from making a relevant claim in relation to the obligation, ... |
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shall not be reckoned as, or as part of, the prescriptive period: |
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Provided that any period such as is mentioned in paragraph (a) of this subsection shall not include any time occurring after the creditor could with reasonable diligence have discovered the ... error ... referred to in that paragraph." |
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For section 6(4) to apply to the effect of postponing the date on which the prescriptive period of five years from the appropriate date expires, therefore, there must be shown to have been, first, an error on the part of the pursuer which was induced by words or conduct on the part of the defenders or someone acting on their behalf, and secondly, a period of time during which the pursuer was induced by that error to refrain from making a relevant claim. If those two related factors are established, the period during which the pursuer so refrained must be left out of account in computing the prescriptive period.
The alleged negligence
[14] In order to address the question of prescription it is necessary to understand what the allegations of negligence which the pursuer makes against the defenders are. The pursuer's pleadings in that regard, the relevancy and specification of which were not discussed at the debate, contain various assertions of duty which I attempted to summarise in paragraph [13], and to paraphrase in paragraph [14], of my Opinion of 26 April 2002. In paragraph [16] of that Opinion, I noted the distinction which requires to be drawn between, on the one hand, a case in which a single act of negligence or breach of contract results in a series of items of loss accruing from time to time thereafter and, on the other hand, a case in which successive separate negligent acts or breaches of contract each cause loss. In the former case, in terms of sections 6(1) and 11(1), time runs from the date on which loss attributable to the act, neglect or default first occurs, and does not commence running afresh when further loss attributable to the same act, neglect or default accrues (Dunlop v McGowans 1980 SC (HL) 73). In the latter case, however, time runs separately in respect of each act, neglect or default from the date on which loss attributable to it first occurs (Cole v Lonie 2001 SLT 608). At the debate, counsel for the parties were agreed that, although in the present case the pursuer relies on a number of separate events each allegedly constituting an act, neglect or default, no practical purpose would be served by addressing the question of prescription separately in respect of each act, neglect or default. At the proof, however, that agreement no longer subsisted. It is therefore more important now than it was at the time of the debate to understand what the separate acts of alleged negligence or breach of contract are on which the pursuer founds his claim for damages. [15] At the time of the debate, it seemed to me that the pursuer's averments of fault and breach of contract could be regarded as containing three broad categories of complaint. As matters were developed in submissions at the close of the proof, in the light of amendment allowed in the course of the proof, a fourth category emerged. [16] In the first place, there are averments criticising the defenders for having acted for a multiplicity of parties whose interests were in actual or potential conflict, and for having failed to recognise that that was so. It seemed to me at the time of the debate that that aspect of the pursuer's pleadings constituted no more than a background to the other averments of negligence or breach of contract. The existence of conflicts of interest may be relevant to determining whether the defenders, in doing or failing to do certain other things, failed to exercise the care which the pursuer was entitled to expect his solicitors to devote to his affairs, or to explaining how it came about that things were done without proper steps being taken to protect the pursuer's interests. As the pursuer's pleadings are framed, however, it is not apparent that any loss was occasioned to the pursuer by the mere fact that the defenders acted for others whose interest conflicted with those of the pursuer. As I understood him, Mr Logan, who appeared for the pursuer, accepted at the proof that that was so, and that it was the other aspects of the averments of negligence and breach of contract that required to be considered for the purpose of the issue of prescription. Mr Johnston, who appeared for the defenders, also treated the question of conflict of interest as being merely a matter of background in the context of the issue of prescription. In these circumstances, I do not consider that it is necessary at this stage to give any more detailed consideration to the question of conflict of interest. [17] The pursuer's second complaint is that, at the date of entry under the first level missives, the whole sum lent by the Bank, namely £248,000, was drawn down by the defenders from the Bank, and paid to Mr Brand on behalf of the sellers, in circumstances in which the pursuer's interests were not properly protected in a variety of ways. I shall return in due course to the respects in which, in the events which happened, the pursuer claims that his interests were not properly protected when the loan funds borrowed by him and Mr Barclay jointly and severally were paid away to the sellers of Airlie Lodge in part payment of the sums due by Ballinard under the first level missives. Although there are various ways in which the defenders are said to have failed to protect the pursuer's interests, and these may, on one view, have resulted in different aspects of loss, the single act, neglect or default of which the pursuer complains in this regard was the utilisation of the loan funds to make the part payment to the sellers under the first level missives without taking the appropriate steps to protect his interests. [18] The third complaint is that title to the part of Airlie Lodge sold to Apple under the second level missives was delivered to Apple without there being received in return the whole price payable by Apple. The shortfall was of the order of £80,000. [19] The fourth complaint is that the defenders failed properly to identify and specify the part of Airlie Lodge that was to be conveyed to Apple under the second level missives. It was contended that that had an impact both on the extent of the security granted to the Bank and on the destination of the price received for certain of the flats created in the course of the redevelopment.The disbursement of the loan funds
[20] The date of entry in respect of both the first and the second level missives was 14 December 1990. As the pursuer put it in evidence, the transactions were intended to be "back to back". Had the matter proceeded in the way that the missives appeared to contemplate, the pursuer and Mr Barclay (and Ballinard) would have had available to them on that date £470,000 (£248,000 borrowed by the pursuer and Mr Barclay from the Bank, plus £222,000 received by Ballinard from Apple in settlement of the second level missives), and would thus have been in a position to pay the prices due under the first level missives in full, with a balance left over to the joint venture to go towards funding the development. In the event, the transaction contained in the second level missives did not settle on that date. Apple did not make available the funds necessary to enable that to happen. On the other hand, the Bank made the loan funds available. The pursuer and Mr Barclay were thus in a position to pay only part of the prices due by Ballinard under the first level missives. In the event, despite the inability to settle in full, the loan funds were drawn down from the Bank by the defenders and paid by them to the sellers. [21] There is in the documents which have been produced no explicit written record of what was received in exchange for the part payment of £248,000. There is produced (as No. 7/1/51-53 of process) a disposition executed on 14 December 1990 by Mr and Mrs Brand and Mrs Robb in favour of the pursuer and Mr Barclay. ARR's evidence was that it was delivered in exchange for the part payment. No reference is made to it, however, in a memorandum passing between Mr Brand and ARR on 20 December 1990, which refers to the failure to settle the first level missives in full, and reserves the sellers' rights in that connection (No. 6/48/20 of process). The disposition was not recorded, and was subsequently superseded by another disposition. The disposition was not of the whole of the properties sold by Mr and Mrs Brand and Mrs Robb under the first level missives, but excepted an area of ground extending to 0.134 hectares with Airlie Lodge erected thereon, which was identifed by reference to a plan said to be annexed to a disposition of the same date in favour of Apple. It appears from the terms of the documents and from the evidence of ARR that the intention was to give effect to the first level missives by two dispositions, one conveying the subjects of the second level missives, namely Airlie Lodge and its solum and perhaps some of the adjoining ground, at the request of Ballinard directly to Apple (thus also implementing the second level missives), and one conveying the balance of the subjects of the first level missives to the pursuer and Mr Barclay as Ballinard's nominees. A corresponding disposition in favour of Apple, executed but undated, and marked "superseded", is produced as No. 7/2/191-197 of process. The two dispositions, according to ARR, reflected the intention of the joint venturers that the part of the property to be re-developed (i.e. the building constituting Airlie Lodge, the solum on which it stood, and perhaps some additional ground) should be held by Apple, while the part to be developed for the first time (i.e. the bulk of the garden ground) should be held by the pursuer and Mr Barclay jointly in their own names. Unfortunately, presumably because the funds which were to come from Apple were not forthcoming on 14 December 1990, no disposition in favour of Apple was delivered at that stage. One consequence of that state of affairs was that the description in the disposition in favour of the pursuer and Mr Barclay was rendered for the time being meaningless. The disposition, assuming it was, as ARR maintained, delivered on 14 December 1990, thus did not confer on the pursuer and Mr Barclay a marketable title. [22] Moreover, the disposition recorded the price as £195,000. ARR was unable to explain in evidence where the figure of £195,000 came from. It appears from No. 7/2/191 of process that the intention was to split the total prices due under the first level missives (£385,000) between the two contemplated dispositions, attributing £195,000 to No. 7/1/51 of process and £190,000 to No. 7/2/191 of process, but no further explanation is available. As Mr Logan put it in his submissions, it appears that to the extent of £53,000, the part payment made by the defenders by means of the funds borrowed by the pursuer and Mr Barclay from the Bank was treated as going towards payment of the part of the price that was to be regarded as funded by Apple and attributed to that part of the aggregate subjects that was to be disponed to Apple. [23] There were consequential difficulties with the security which the pursuer and Mr Barclay were to provide in favour of the Bank. The pursuer and Mr Barclay granted in favour of the bank an "all sums" standard security dated 14 December 1990 (No. 6/48/45 of process). The security subjects were described in the same way as were the subjects disponed in the disposition by the sellers in favour of the pursuer and Mr Barclay, namely by reference to the plan annexed to the intended disposition by the sellers in favour of Apple. Consequently, so long as the latter disposition remained undelivered and therefore unrecordable, the standard security was ineffective to confer on the bank a valid security over the subjects conveyed by the sellers to the pursuer and Mr Barclay. [24] There is, further, an issue as to whether that standard security, even if the description of the security subjects had been made meaningful by the delivery of the disposition in favour of Apple, would have been in accordance with the loan agreement between the Bank on the one hand and the pursuer and Mr Barclay on the other. The pursuer's averments are to the effect that the standard security was to be granted over the whole subjects purchased by Ballinard from Mr and Mrs Brand and Mrs Robb, including the part which was to be sold under the second level missives to Apple. In paragraph [7] of my Opinion of 26 April 2002 I expressed difficulty in understanding how it could have been intended that security should be granted over the whole property when, on the same date as that on which entry was to be given under the first level missives, a substantial part of the subjects was to be disponed to Apple under the second level missives. The evidence which I heard at the proof did nothing to dispel that difficulty. Unfortunately, material which might have cast light on the matter was not made available at the proof. The business plan or scheme for the joint venture which had been drawn up and had been presented to the Bank was not produced. Nor was any witness able to describe its contents in detail. Nor was the Bank's file for that period produced, although its file for a later period had been recovered and was produced. Although the pursuer's evidence was that the sub-sale to Apple was not mentioned in the business plan, he said that that part of the scheme had the approval of the Bank. In the result there was no clear identification of the part which Apple was intended to play in the whole scheme, and in particular whether it was (like Ballinard) to be a mere tool of the joint venture, or was to be treated as a separate party. The pursuer gave evidence, in accordance with his averments, that the intention was that the standard security in favour of the Bank should be over the whole of Airlie Lodge and the entire grounds. He made the point that, assuming the split of the aggregate purchase price of Airlie Lodge and its grounds between the Lodge to be disponed to Apple and the grounds to be retained by the joint venturers (£190,000/£195,000) was realistic, the value of the subjects retained by the joint venturers would be inadequate to afford security for the sum borrowed (£248,000). ARR, however, gave evidence that his understanding was that the standard security was to be granted by the joint venturers only over the land retained by them after the sub-sale to Apple. The Bank's instructions to the defenders (No. 6/48/15 of process), and the Report on Title completed by the defenders (no. 6/48/16 of process) appear to reflect that position. They refer to the property in question, not as Airlie Lodge, but as "Ground at Airlie Lodge ..." (emphasis added). ARR did not query those instructions. He indicated that he took it that in advancing £248,000 on security of the development ground only (to the exclusion of the existing building and its solum) the Bank was relying on the development value of the ground. A further consideration is that, if the standard security in favour of the Bank had been granted over the whole of Airlie Lodge as well as the development ground, it would not have been possible for the pursuer and Mr Barclay to grant the necessary securities in connection with the sums they respectively borrowed from building societies to fund the purchases effected by the third level missives. Standing the relationship between the first and second level missives, the fundamental improbability of the arrangement which the pursuer contended for, the terms of the description of the security subjects in the Bank's instructions to the defenders, ARR's evidence of his understanding of the position, and the borrowing by the pursuer and Mr Barclay in connection with the third level missives, and in the absence of any fuller explanation of the Bank's position, I am unable to accept that the pursuer's evidence on this point was correct. [25] The pursuer's concern over the fact that the standard security was over only the development ground (and the fact that, because of the description of the security subjects which depended on the simultaneous recording of the contemplated disposition in favour of Apple, the standard security was ineffective) was that he was thereby left in a situation in which, having (jointly and severally with Mr Barclay) borrowed £248,000 in the expectation that their personal obligations to the Bank would be covered by heritable security of adequate value, he found himself instead with his personal liability either wholly or partly unprotected by the availability of adequate heritable security. How much force there is in that point depends, it seems to me, not on the price allocated to the subjects retained by the pursuer and Mr Barclay in the superseded disposition in their favour (No. 7/1/51 of process), but on the true value of those subjects at the date of entry, and on whether the Bank was indeed relying on development value. No evidence was led on the value of the retained subjects, or on their potential development value. It also depends on precisely what the intended place of Apple in the implementation of the joint venture was, and in particular whether (just as it appears to have been the original intention that the property bought in name of Ballinard would be held by that company for the joint venture) the intention of the joint venturers was that property to which Apple held title was to be regarded as also forming part of the assets of the joint venture. No clear evidence was led on that subject either. [26] A further effect of the partial settlement effected by the payment of the loan funds to the sellers on 14 December 1990 was that the defenders acted in contravention of their instructions from the Bank. In terms of paragraph 8 of the Bank's letter of instruction to the defenders (No. 6/48/15 of process) the standard security to be granted by the pursuer and Mr Barclay was to be a first security. In the event, a prior ranking standard security granted by Mr and Mrs Brand over part of Airlie Lodge was not discharged until much later, and no letter of obligation in that connection was obtained as at 14 December 1990. The standard security granted by the pursuer and Mr Barclay on that date therefore could not at that stage constitute a first security. In the pursuer's pleadings, that is presented as a breach of a duty owed by the defenders to the pursuer - "Condition 8 of the Clydesdale Bank plc's conditions was therefore breached"; "It was the duty of the defenders to comply with the Clydesdale Bank plc conditions of loan". It does not seem to me, however, that the evidence relied upon relates directly to the conditions of the contract of loan between the Bank and the joint venturers. No formal offer of loan by the Bank to the joint venturers was produced or referred to in evidence. The document relied upon regulated the relationship between the defenders and the Bank, not the relationship between the joint venturers and the Bank. While, therefore, it does appear that the defenders failed to comply with their instructions from the Bank, the basis in that material for holding that in this respect the defenders were also in breach of a duty owed by them to the pursuer is inferential at best. [27] On 14 December 1990 ARR had a meeting with the pursuer, Mr Barclay and a Mr Gray. The prominence of Mr Gray in the affairs of the joint venture was not clearly explained in evidence. He appears to have been a business associate of Mr Barclay. It was apparently contemplated at an early stage that he might become one of the joint venture partners, but that did not come to pass. There was evidence that he had been responsible for negotiating with Mr Brand the prices to be paid under the first level missives. It appears that although ARR had the pursuer's instructions to conclude the first level missives (see file note dated 23 October 1990, No. 6/49/2 of process) he also sought instructions on that matter from Mr Gray (see No. 6/48/4 of process). ARR was unable to explain in evidence precisely why that was so. Later correspondence shows Mr Gray as the recipient of communications meant for Apple. It is not clear whether he was a director of, or held any other formal position in, that company. The pursuer said in evidence that Mr Gray had "financial involvement" in Apple. At all events, Mr Gray was present at the meeting on 14 December 1990. There is a file note generated by ARR relative to that meeting (No. 6/48/13 of process), but it is completely silent as to what actually transpired at the meeting. According to the pursuer much of the time was taken up with a discussion about fees. So far as settlement of the first and second level missives was concerned, the pursuer said that ARR advised him that the £222,000 from Apple was due that day; they were "in the process" (the pursuer's somewhat cryptic phrase). The pursuer said that he was not aware that the second level missives had only been concluded that day. He assumed they had been concluded earlier. According to the pursuer, Mr Barclay and Mr Gray said at the meeting that the Apple funds would be available by 5 p.m. On that basis the pursuer signed the standard security in favour of the Bank. It was not until a few days later (17 December), he maintained, that he was told by ARR that the Apple funds had not been forthcoming, and that the £248,000 borrowed from the bank had been paid over to the sellers as a part payment. The pursuer regarded himself as having got nothing in return for the substantial part payment. What mattered to him was possession of Airlie Lodge so that the redevelopment could begin. The sellers, however, remained in occupation. He was told by ARR that unless he and Mr Barclay came up with the balance of the price, they would be sued by the sellers. He said that ARR did not advise him at the time that since Ballinard was the purchaser in the first level missives, any action by the sellers would require to be against Ballinard. A few days later, according to the pursuer, ARR told him that the disposition (presumably No. 7/1/51 of process) and the standard security had been sent for recording. By letter dated 27 December 1990 (No. 6/48/22 of process) ARR advised the Bank that the Standard Security was to be presented for recording with the disposition which was presently with the Inland Revenue for stamping. That was untrue.[28] Perhaps unsurprisingly, in view of the long lapse of time and the fact that he appears to have kept virtually no contemporaneous records, ARR was able to cast very little light on the events of 14 December 1990 and the following few days. He had no recollection of what transpired at the meeting on that date. He had no recollection of any assurances being given that the Apple funds would be forthcoming. He confirmed that the subsequently superseded disposition was delivered, and the standard security executed. He had no recollection of advising the pursuer on 17 December that the Apple funds had not been forthcoming; his position was that the pursuer was already aware of that fact. He received the note from Mr Brand dated 20 December 1990 (No. 6/48/20 of process) reserving the sellers' position in respect of his clients' breach of contract. He could not explain the origin of the information therein attributed to him that settlement was expected within 7 to 10 days. He said that most of his dealings were with the pursuer, but it seems unlikely that the pursuer was his source on that point when the funds were to come from Apple. Between 17 and 28 December ARR wrote on three occasions to Mr Gray (Nos. 7/2/174, 172 and 171 of process) in terms which seem to me to demonstrate that he was not keeping the interests of his various clients, or at least the formal structure to the first and second level missives, clear in his mind. The letters were addressed to Mr Gray at Apple. The first, on 17 December, headed "Ground at Airlie Lodge", confirmed that he had "now settled the purchase of the ground pertaining to Airlie Lodge and have received a Disposition duly executed for that part of the purchase transaction", and went on to invited "proposals for settlement of the balance of the price in early course". The second (18 December), headed "Airlie Lodge", asked about progress "regarding alternative funding for the balance of the price of Airlie Lodge". The third (28 December), also headed "Airlie Lodge", ask for an up-date "with regard to the funding of the balance of the price of the above property", and indicated that "David Brand is now pushing for an indication as to when I will be in a position to complete the transaction". The impression which that correspondence creates is that ARR regarded the second level missives as no more than machinery employed by the joint venture to generate the funding needed to implement the first level missives. What he was looking for was funding to complete the settlement of the first level missives. He was looking to Apple to provide it. He was unable, in evidence, to explain his false statement to the Bank about the disposition and standard security.
[29] Although the pursuer's position in his pleadings is that he admits that he suffered loss in December 1990 "when he became committed to the purchase of the ground and the associated Bank borrowing" (see article 6 of the condescendence), it seems to me to be important to note the basis on which that concession appears to have proceeded. It is not that he did not ultimately receive all that he (or Ballinard) should have received under the first level missives. Once the balance of the price was paid in February and March 1991 (see paragraph [31] below), dispositions were granted in favour of or with the consent of Ballinard which had the effect (whatever problems there may have been about the division of the subjects amongst the pursuer, Mr Barclay and Apple) of disponing to nominees of Ballinard the whole subjects of the first level missives. The three dispositions which cover the part of the subjects sold to Apple under the second level missives were as mentioned in paragraph [33] below. The disposition of the development ground in favour of the pursuer and Mr Barclay was recorded on 31 October 1991. Nor is the concession that loss was suffered in December 1990 anything to do with the deficiencies of the standard security granted on 14 December. I have already indicated that I do not accept as proved the pursuer's contention that the standard security ought to have been granted over the whole subjects of the first level missives (see paragraph [24] above). The deficiencies in the standard security were (a) that since it described the security subjects by reference to a disposition which had not then been delivered and therefore could not be recorded, it could not confer a valid security, and (b) assuming that it was part of the contract between the Bank on the one hand and the pursuer and Mr Barclay on the other (as well as part of the Bank's instructions to the defenders) that the Bank should have a first ranking security, that had not been complied with because of the subsistence undischarged of the standard security previously granted by Mr and Mrs Brand. These deficiencies were eventually cured. Mr and Mrs Brand's standard security was discharged, and the pursuer and Mr Barclay granted a fresh standard security in favour of the Bank which was recorded on 31 October 1991. Whatever argument may remain about whether the security subjects were correctly identified therein, there is, so far as I am aware, no dispute as to the validity of that standard security. The basis of the concession that loss was suffered in December 1990 is to be found, rather, in the pursuer's contention that, had the loan funds not been paid away on 14 December, the transaction contained in the first level missives would not have occurred at all. The sellers would have been left with a claim against Ballinard which, according to the pursuer's evidence, had no assets, but the pursuer would have avoided the whole losses which he eventually suffered through the joint venture. It would in my view be premature, at the stage of a preliminary proof on prescription, to form a conclusion as to whether the pursuer has established his contention that but for the defenders' alleged negligence in paying away the loan funds borrowed from the Bank the transaction would not have proceeded. It is, however, appropriate in addressing the issue of prescription to bear in mind the nature of the loss that the pursuer attributes to that aspect of the alleged negligence.The under-payment by Apple
[30] As I have already noted, the price of £222,000 payable by Apple under the second level missives was due for settlement on 14 December 1990, but was not paid on that date. In the event, settlement of the price due under the second level missives took place only after, and to such extent as, the pursuer and Mr Brand met their respective obligations to pay the prices due by them to Apple under the third level missives. The date of entry under each of the third level missives was 1 February 1990. The aggregate of the prices due under the third level missives was £160,000 (£95,000 plus £65,000). In the event, only part of the prices due under the third level missives was paid, and that some time after the due date. [31] The pursuer and Mr Barclay each borrowed a substantial proportion of the prices payable under the third level missives from building societies (£90,000 and £60,000 respectively). It is not clear whether the full amounts of those loans were actually drawn down from the lenders. In the event, however, an aggregate of only £141,907.60 (the precise figure is not important) appears to have been paid towards the prices payable under the third level missives. The context in which the payments were made was that Mr Brand was pressing for payment of the balance remaining unpaid under the first level missives, and was threatening to sue (see ARR's letter to the pursuer dated 11 February 1991 (No. 6/48/30 of process)). At the same time, the pursuer, according to his evidence, was becoming increasingly anxious about the delay in obtaining access to Airlie Lodge to proceed with the redevelopment. On 19 February ARR wrote to Collies (No. 6/48/32 of process), in a letter headed with the names of Apple, of the pursuer and Mr Barclay, and of Airlie Lodge, asking for £141,907.60 which he indicated he calculated was "the balance due to settle the above transaction". Although the letter appears to have related to the transactions effected by the third level missives, it is clear that the sum requested was not the sum due under the third level missives, but the balance remaining due under the first level missives. In the event, Collies paid £132,603.70 on 19 February and a further £9303.90 on 13 March. These sums were paid by the defenders not to Apple, but direct to the sellers under the first level missives. [32] The effect of these payments was, in the first place, that the whole aggregate price due under the first level missives was received by the sellers. That procured for the joint venture what the pursuer had all along been anxious to achieve, namely entry to Airlie Lodge so that the development could proceed. In the second place, the payments made by the pursuer and Mr Barclay under the third level missives had the effect of reducing the balance due by Apple to Ballinard under the second level missives from £222,000 to just over £80,000. In the third place, the effect of the payments made was to leave an unpaid balance of approximately £18,000 due under the third level missives (my Opinion of 26 April 2002 is in error in suggesting, at paragraph [10], that the effect was that the prices due under the third level missives were paid in full). For present purposes, however, it is the shortfall of £80,000 under the second level missives that is of importance. No further payment was ever made by Apple under the second level missives. [33] Notwithstanding the unpaid balance of the price due by Apple to Ballinard, the second level missives were in due course settled by various dispositions. A disposition was granted by Mr and Mrs Brand with the consent of Ballinard in favour of Apple. The pursuer signed that disposition on behalf of Ballinard. The disposition was dated 14 and 21 May 1991 and recorded on 4 November 1991 (No. 6/48/46 of process). There were also dispositions by Mr and Mrs Brand with the consent of Ballinard and Apple in favour of the pursuer (conveying the flat which the pursuer bought under the third level missives), and by Mrs Robb with the same consents in favour of Mr Barclay (conveying the flat which he bought under the third level missives). Both of these dispositions were executed on dates in April and May 1991 and recorded on 15 July 1991. The prices narrated in them were £62,000 in the one in favour of Apple, £95,000 in the one in favour of the pursuer and £65,000 in the one in favour of Mr Barclay. In the event, there had been underpayment in respect of the latter two, and a total failure of payment in respect of the first.The alleged error in the disposition to Apple
[34] In the submissions made on behalf of the pursuer at the conclusion of the proof, two separate issues were, it seems to me, intermingled. One related to the extent of the subjects over which the Bank was intended to obtain security. I have already held that the pursuer has failed to prove that it was intended that the Bank should obtain security over the whole subjects of the first level missives (see paragraph [24] above). The other issue related to the extent of the subjects which were to be disponed by Ballinard to Apple under the second level missives. The latter issue remains for consideration. [35] The issue of what subjects were to be conveyed to Apple under the second level missives was elaborated in a minute of amendment which was tendered in the course of the proof. The minute was answered, and ultimately amendment in terms of the minute of amendment and answers was allowed unopposed at the commencement of the hearing on evidence. In the summons as it stood at the commencement of the proof, it was averred in article 4 of the condescendence that the underfunding of the joint venture caused by the shortfall of £80,000 in the sum paid by Apple under the second level missives was"increased when the defenders paid the proceeds of sale from Airlie Lodge to Apple without accounting for the shortfall on the purchase price or for the building work carried out by the pursuer and the joint venture."
In the minute of amendment that was said to have occurred because the disposition by Mr and Mrs Brand in favour of Apple (No. 6/48/46 of process)
"either included or at least was subsequently deemed to include the solum of what became flats 3 and 4 as well as flat 2 when those flats were sold by the defenders in April 1992 and June 1993 respectively."
The position adopted in the minute of amendment was that what became flats 1, 2 and 5 were included in what was sold under the second level missives, but that what became flats 3 and 4 was not. Flat 1 was sold on by Apple to the pursuer, and flat 5 was sold on by Apple to Mr Barclay, both under the third level missives. Flats 3 and 4, which were respectively developed wholly and partly on garden ground, were not intended to be included in the subjects sold to Apple under the second level missives. They were, the pursuer contended, to have been included in the subjects which were to be conveyed under the first level missives by the sellers to the joint venture partners. The proceeds of their ultimate sale should therefore have been paid to the joint venture, not to Apple.
[36] I regret that I have found the evidence, such as it was, on this aspect of the case extremely confusing. First, as I have already noted, the precise terms of the joint venture were not satisfactorily established. In particular, it was not established by satisfactory evidence whether Apple was intended to be a mere tool of the joint venture, or whether, on the other hand, the property conveyed to Apple was thereby taken out of the scope of the joint venture and became the beneficial property of Apple. Secondly, as I have also noted, the precise description of the land to be conveyed by Ballinard to Apple under the second level missives was not established. Thirdly, the extent of the various redeveloped flats within Airlie Lodge was not satisfactorily established. There was created in the course of the proof a plan intended to illustrate that matter (No. 6/48/46/5 of process), but I am not satisfied that it can be relied upon as accurate. Reference was also made to a document designed to trace the subsequent sales of the joint venture property (No. 6/48/63/33 of process). It formed part of a report prepared by Judith Scott, CA, of KPMG in connection with a litigation between the pursuer and Mr Barclay's executors (No. 6/48/63 of process), and bears to be a summary of a search by Miller & Bryce, but the terminology used to differentiate the various subjects is confusing, and no full descriptions are available; as is stated in No. 6/48/63/33 of process, "References to plots A-D are a broad classification only". The net effect is that I am unable to make any findings as to (1) whether the second level missives accurately reflected the intention of the joint venturers as to the subjects to be sold to Apple; or (2) whether the dispositions eventually granted by the sellers under the first level missives correctly divided the subjects among (a) the joint venturers, (b) Apple and (c) the pursuer and Mr Barclay as purchasers under the third level missives; or (3) whether the sales in 1992 and 1993 of the flats constructed in the redevelopment of Airlie Lodge (other than flats 1 and 5 sold under the third level missives to the pursuer and Mr Barclay respectively) were of subjects which were or ought to have been the property of Apple or of the joint venture. It is thus unclear whether, if something went wrong with the sale of the redeveloped flats in Airlie Lodge, the problem lay in an error in the extent of the subjects disponed to Apple or in the erroneous payment of prices, which ought properly to have been due to the joint venture, to Apple instead. For the purposes of the question of prescription, however, it seems to me to be sufficient to note that loss attributable to an alleged act, neglect or default on the part the defenders took place by 1993 at the latest, leaving it to the pursuer to establish if he can either that the appropriate date was postponed by operation of section 11(3) or that the running of the prescriptive period was interrupted in terms of section 6(4).The application of section 11(3)
[37] In order to invoke section 11(3) to the effect of postponing the relevant date, the pursuer must, in my view, prove that until a date after that which would be the appropriate date in terms of section 11(1), he (a) was not actually aware that he had suffered loss, injury and damage caused by act, neglect or default, and (b) could not with reasonable diligence have become so aware. In his submissions, Mr Logan accepted that the onus was on the pursuer to prove that until such later date he did not actually have the requisite knowledge. He suggested, however, that if the pursuer established the date of actual knowledge, the onus passed to the defenders to demonstrate, if they could, that knowledge could, with reasonable diligence, have been acquired at an earlier date. In my view that is not correct. In my opinion, if the pursuer seeks to displace the appropriate date ascertained in accordance with section 11(1), the onus is on him to prove that, until the later date for which he contends, he neither actually knew that he had suffered loss, injury and damage caused by act, neglect or default, nor could with reasonable diligence have acquired that knowledge (Johnston on Prescription and Limitation, paragraph 6.89, and the authorities cited in note 44 there). [38] So far as actual knowledge on the pursuer's part is concerned, the issue is one of pure fact, although a conclusion as to the date on which the pursuer came to be possessed of the requisite knowledge may be based on inference. [39] The question of identifying the date by which the pursuer could, with reasonable diligence, have acquired the relevant knowledge is more complex. The point is illustrated in Glasper v Rodgers 1996 SLT 44. In the Opinion of the Court, Lord President Hope said (at page 47F et seq.):"In our opinion the lack of awareness which requires to be established for the purpose of section 11(3) of the 1973 Act is a lack of awareness that a loss has occurred caused by an act, neglect or default which gives rise to an obligation to make reparation for it. We agree with Lord Clyde's observation in Greater Glasgow Health Board v Baxter Clark & Paul 1992 SLT 35 at p 40D that the subsection looks for an awareness, not only of the fact of loss having occurred, but of the fact that it is a loss caused by negligence. In that case it was clear from about the time of practical completion that the hospital at Yorkhill was suffering from various defects. It was averred that widespread and progressive cracking and detachment of the site fixed mosaic was observed and that there were defects in the windows rendering them difficult and impossible to open and close, resulting in water penetration, extensive air infiltration and timber decay. The pursuers' averments indicated an awareness by them not only of loss but of fault causing it. They averred that they believed that their loss was due to a construction fault rather than a design fault but, as Lord Clyde said at p 41K, this did not prevent the five year period from starting to run against them in relation to the defenders, who were a firm of architects. Furthermore, they had said nothing in their averments to explain why they could not with reasonable diligence have become aware that loss, injury or damage caused as a foresaid had occurred. They had said nothing to explain why this should be so or what steps they took, and on this ground also their averments were held to be irrelevant.
In the present case the pursuers' lack of awareness, according to their averments, relates not to the question of causation but to the fact that they had sustained a loss in the first place. A party who is aware that he has sustained loss, injury or damage may reasonably be expected to take some steps to find out what has caused that loss. Failure to do this will call for an explanation, if the test of reasonable diligence to which section 11(3) refers is to be capable of being satisfied. But a lack of awareness that loss, injury or damage has been sustained at all gives rise to a different question. This is not whether reasonable diligence has been exercised in order to discover whether a loss which the pursuer knew about was 'caused as aforesaid' - that is, by an act, neglect or default giving rise to an obligation ... to make reparation. It is whether, in all the circumstances, the pursuer had any reason to exercise reasonable diligence in order to discover whether a loss had occurred."
"In the context in which I have to apply them, in my judgement, I conclude that reasonable diligence means not the doing of everything possible, nor necessarily the using of any means at the plaintiff's disposal, not even necessarily the doing of anything at all; but that it means the doing of that which an ordinarily prudent buyer and possessor of a valuable work of art would do having regard to all the circumstances, including the circumstances of the purchase".
That language is apt to deal with the circumstances which Webster J had to consider. It seems to me, however, that the point can be put in more general terms by saying that reasonable diligence requires the taking of those steps that a person of ordinary prudence would have taken if placed in the circumstances in which the pursuer found himself.
Section 11(3): the disbursement of the loan funds
[42] As I have noted earlier (see paragraph [29] above) the pursuer accepts that he actually suffered loss caused by this aspect of the negligence which he alleges against the defenders in December 1990. His contention is that his whole loss is attributable to this negligence, because otherwise the acquisition and development of Airlie Lodge would not have proceeded at all. He maintains, however, that he only acquired actual knowledge of the defenders' alleged negligence in early 2001, after the defenders had told him to seek independent advice and he had acquired from them a copy of the relevant file. [43] The pursuer also maintains that, given that he was unaware that he had suffered the loss which he did in December 1990, there was nothing else in the circumstances to put him on inquiry as to whether he had suffered loss caused by negligence: the case on its facts fell into the same category as Glasper. Mr Logan pointed to a number of aspects of the situation which one of the defenders, Mr J. S. Robertson ("JSR"), accepted would not be within the pursuer's knowledge. In particular, he maintained that the pursuer was not aware (i) of the terms of the subsequently superseded disposition granted by the sellers under the first level missives on 14 December 1990, including the facts that it bore to convey only part of the subjects of the first level missives, that it bore to be for a price of only £195,000, and that because of the description which cross-referred to the undelivered disposition in favour of Apple it did not confer a marketable title; (ii) that the standard security which he and Mr Barclay granted in favour of the Bank failed to confer a valid security, because of the same deficiency in the description of the security subjects; and (iii) that in breach of the Bank's requirements the prior security granted by Mr and Mrs Brand had not been discharged. I am prepared to accept that the pursuer was probably unaware of these features of the transaction. [44] There were, however, other aspects of the matter of which the pursuer was aware. The defenders found, as matter of background, on the fact that the pursuer was experienced in property development. To an extent that is true. He had been involved in such enterprises before. He explained his own part as largely site supervision, maintaining that matters of finance were handled by Mr Barclay and Mr Gray. The later Bank file suggests, however, that he was understating his own involvement in the financial affairs of the joint venture. In my view the pursuer should be regarded neither as an expert nor as a complete tyro in property development. More particularly, however, the pursuer was aware of the broad structure of the transactions which were to be undertaken for the purpose of the joint venture. He knew that the first level missives were to settle on 14 December. He knew that the sub-sale to Apple in terms of the second level missives was to be "back to back" with the purchase under the first level missives. He knew that he and Mr Barclay were to have personal joint and several liability to the Bank for the loan of £248,000 which was to form well over half of the initial funding of the joint venture. He knew that £222,000 of further funding for the joint venture was to come from the price payable by Apple under the second level missives. He knew that both those sources of funding required to be available on 14 December if the first level missives were to settle on that date in the manner contemplated. He was keen that settlement should take place on 14 December, because his main concern was to get entry to Airlie Lodge so that the development could proceed. He attended a meeting on the date of entry with ARR, Mr Barclay and Mr Gray. The Apple funds were not to hand. On his own account he signed the standard security on the understanding that the Apple funds would be forthcoming later the same day. Three days later (by his own account) he learned from ARR (a) that the Apple funds had not been forthcoming on 14 December and were still not to hand, and (b) that nevertheless the proceeds of the Bank loan had been paid over to the sellers. His position was that that was done without his instructions. Moreover, he was aware that these events had taken place against the background that the defenders acted not only for him, but for the sellers, for his joint venture partner, Mr Barclay, whose company, Apple, had defaulted in its obligations under the second level missives, for Apple itself and for the Bank. [45] In my opinion it cannot be said that in all these circumstances there was nothing to put the pursuer on inquiry as to whether he had suffered loss caused by negligence. The pursuer had, in my opinion, been placed in a position in which a person of ordinary prudence would have realised that matters were proceeding in a very different way from that which had been intended; in short that something had gone seriously wrong with the implementation of the joint venture. The company controlled by his joint venture partner had defaulted on its obligations under the second level missives. Nevertheless, his solicitors, who also acted for the defaulting company among others, had, without his instructions, used the loan funds for which he bore personal liability to settle the purchase of Airlie Lodge in part. It seems to me that a large number of questions would have occurred to an ordinarily prudent person, placed in the position in which the pursuer found himself, as needing to be asked and answered, with a view to finding out whether his position had been adversely affected by what had been done, and whether his interests had been properly protected by his solicitors. The pursuer's position in evidence was that he trusted the defenders to do what was necessary to protect his interests. Mr Logan suggested that in Glasper the court had endorsed the proposition that a client is entitled to assume that his solicitor has done what he should have done. In my view the Court did not go as far as that. What the Court said (at 48H-I) was this:"The question what the pursuers were entitled to expect the defenders to do in giving effect to their instructions in these circumstances, what they were entitled to assume, and to what extent they were entitled to rely on the solicitors to bring any defects in the instructions to their attention cannot be answered without an inquiry into the facts."
The extent to which reliance on solicitor defenders may entitle a client pursuer to regard himself as having no cause for inquiry into whether he has suffered a loss caused by negligence is a matter of fact and degree. There are present in this case circumstances which, in my view, render it unreasonable for the pursuer to make no inquiry. In particular, three facts are in my view of particular importance in combining to yield that result. They are (i) the extent to which partial settlement using only the loan funds and without the agreed contribution from Apple differed from the transaction which ought to have taken place, (ii) the fact that, according to the pursuer, the partial settlement was effected without his instructions, and (iii) the background that the solicitors were also acting for various other parties with interests conflicting with those of the pursuer. I take the view that in these circumstances the present case is readily distinguishable from Glasper. This is not a case in which the pursuer had no cause to think that he had occasion to use reasonable diligence to ascertain whether he had suffered loss through negligence. On the contrary, the combination of circumstances was such as to put him on inquiry. On the evidence, it appears that he did nothing to find out what had gone wrong. He appears, astonishingly, not to have asked Mr Barclay or Mr Gray why Apple had not settled the second level missives timeously. He appears not to have asked ARR to explain to him in detail what had happened, what the implications were for him, and whether his interests were adversely affected.
[46] In the result, so far as this aspect of the case is concerned, I am of opinion that by 17 December1990 the pursuer was aware of circumstances which put him on inquiry as to whether he had suffered loss due to negligence on the defenders' part in connection with the partial settlement of the first level missives on 14 December. His contention that he could not, with due diligence, have become aware of having suffered loss caused by such negligence before the date of actual knowledge in early 2001 depends on the contention (which I have rejected) that he had not been put on inquiry. He did not address in evidence or submission the question which arises in the light of my finding that he was in the circumstances put on inquiry, namely whether reasonable diligence exercised in the light of the partial knowledge that I have held that he did have would have resulted in his acquiring knowledge that he had suffered loss through negligence. In the result, therefore, I am of opinion that in respect of this branch of the case the pursuer has failed to discharge the onus incumbent on him, and his case under section 11(3) therefore fails.Section 11(3): the underpayment by Apple
[47] So far as this aspect of the case is concerned, the date on which loss caused by the alleged negligence of the defenders can be said to have occurred was when the dispositions conveying the subjects of the second level missives in part to Apple, and in part to the pursuer and Mr Barclay with the consent of Apple, were delivered without the price due by Apple having been paid in full. The precise dates of delivery were not established in evidence, but can have been no earlier than the last dates of execution, which were in late May 1991, and no later than the dates of recording, which were in July and November 1991 (see paragraph [33] above). [48] I find it very hard to make sense of the pursuer's evidence about when it was that he became aware that the shortfall of approximately £80,000 in the price due under the second level missives remained after the dispositions had been delivered. In his own pleadings the pursuer avers that as at March 1991 he was aware that Apple had not paid £222,000 in full, and that the moneys it had paid were the moneys which he and Mr Barclay had paid under the third level missives. In evidence he appeared to adhere to that position. He said that he discussed the non-payment by Apple with ARR in February and March 1991, but that was, I think, in connection with the funds being generated by the third level missives. He said that he thought that, once the funds raised on security of the subjects of the third level missives were paid over to the sellers under the first level missives, "we had ownership of the ground" (i.e. Airlie Lodge). That passage in the pursuer's evidence discloses, in my view, his own concentration on the practical aim of obtaining access to the development site. ARR claimed in evidence to have been led into thinking that the joint venturers were content with the part payments that had been made, and were not expecting Apple to pay the balance of £80,000. It is not clear what foundation he had for that view. There was certainly no evidence of formal instructions to that effect. Nor is there any evidence that he raised the matter with the joint venturers, or sought their instructions on it. He said, "No one told me not to collect the [whole] £222,000, but no one asked me why it had not been collected." No state for settlement was ever prepared. The pursuer said that his concern about getting in sufficient money to settle with the sellers under the first level missives "did not mean that I was not concerned to get the shortfall from Apple", but in the light of other aspects of his evidence it seems to me that that declaration may have been coloured by hindsight. [49] Despite his apparent acceptance that he had earlier been aware that Apple had underpaid by £80,000, the pursuer's evidence was that by the time he executed the various dispositions (mentioned in paragraph [33] above), which he did on behalf of Ballinard as consenter, he "understood" that Apple had paid in full. He said that he would not have signed them if he had understood that the shortfall remained. The basis for his understanding that full payment had been made is, however, obscure. He said that at the time of execution of the dispositions nothing was said about part of the price remaining unpaid. He said that he "never asked [ARR] whether Apple had paid"; he "took it for granted" that they had; he "never thought [ARR] would pass title without getting the money in". He did not say that he was misled by the terms of the dispositions which acknowledged receipt of sums totalling £222,000. In cross-examination, he said that he assumed that the £80,000 had been paid "because I did not believe [ARR] would be so stupid. ... I cannot accept that [ARR] parted with title without getting full payment". He then went on, apparently inconsistently, to say that he asked ARR at the end of March if the £80,000 had been paid, and that ARR said that all moneys had been collected. In March or April ARR said that everything was in order. ARR's evidence was that he had no recollection of saying that, but conceded that he might have done. Given his evidence that he thought that the parties were content that the £80,000 should remain unpaid, it seems that if he did say anything to the effect that everything was in order, he was probably referring to the funds generated by the sales under the third level missives, and not to the £80,000. Given the inconsistencies in the pursuer's evidence, I am not able to accept that he specifically asked ARR about the £80,000 or that, as an answer to such a question, he received from ARR an assurance either that all moneys had been collected or that everything was in order. With some hesitation, I am persuaded that there is acceptable evidence that, at the time, the pursuer inferred from the fact of settlement of the second level missives that the whole price due thereunder had been paid. I think the realistic explanation for what happened, so far as the pursuer is concerned, is that his concentration on getting entry to the property to proceed with the development was such that he paid very little attention to the question of whether the price due under the second level missives had been paid in full. I do not consider, however, that he was alive to the fact that it had not. [50] When asked in cross-examination where he thought the £80,000 had gone, the pursuer said he thought it had gone into the joint venture bank account. It appears that the cash records of the joint venture were kept in Aberdeen by Mr Gray, and that in that connection the statements relating to the bank account were sent to him. The Bank's file (No. 7/14 of process) shows considerable involvement on the pursuer's part with the Bank during 1991 and 1992. Mr Logan submitted that there was no evidence that the pursuer had ever discussed the make up of the joint venture borrowing with any manager of the Bank, but No. 7/14/2-5 of process is a file note of a meeting with the pursuer on 3 December 1991 which touches (at page 3) on the then current make up of the borrowing, although not in terms which are very detailed or capable of being understood without further explanation. Thereafter the Bank exercised some control over the payments made from the joint venture account, and the pursuer was involved in discussing these with the Bank. It seems to me that there would have been no obstacle to the pursuer's obtaining sight of the joint venture bank statements, and that if he had done so, it would have been readily discoverable that the £80,000 had not been paid. [51] The pursuer said in evidence that in about 1993 or 1994 he "realised that Apple had not paid". He called his accountant, David J. T. McKenzie, CA, and told him something was wrong. He asked him to investigate. On 26 January 1994 Mr McKenzie wrote to the defenders asking for their assistance (No. 6/48/48 of process). The letter, which was addressed to JSR, not ARR, and headed with the names of "Airlie Hall" (sic), Apple and the joint venturers, was in inter alia the following terms:"Currently we are attempting to draw up accounts recording all transactions for the above property development's purchases and sales to be incorporated in the books of [Apple]. At present we are short of information regarding purchase and sale transactions of the property and of any legal expenses incurred in connection therewith. It would be appreciated if you could supply a copy of your client account transactions so that we can identify for accounting purposes any transactions for which we presently have no details."
The reference to incorporating purchases and sales in the books of Apple is obscure, but was explained in evidence by Mr McKenzie as relating to an arrangement (of doubtful regularity) which Mr Gray had made whereby the joint venture accounted for VAT in name of Apple. Nor is it evident why the request for assistance was as limited as it appears to have been. According to Mr McKenzie he was at this stage unaware of the sub-sale of part of Airlie Lodge to Apple. If that is so, the pursuer cannot have conveyed very clearly to Mr McKenzie the nature of his concern that "Apple had not paid". The terms of the summary of initial capital contributions set out in tabular form in Judith Scott's report (No. 6/48/63 of process) at paragraph 3.2.1., the content of which is attributed to Mr McKenzie, appears to bear that out, since it contains no mention of Apple as a source of funding. At all events, Mr McKenzie got no reply from the defenders to his letter of 26 January 1994. JSR said in evidence that the letter was not on the defenders' file. He pointed out that the copy produced was incorrectly addressed. He had no recollection of receiving it. Normally he would have given such a letter to an assistant to deal with. Mr McKenzie got some information from other sources, but the accounts which he eventually produced in 1995 were a considerable over-simplification of the position. They brought out a loss for the joint venture on the development of £359,875. That figure took into account an arrangement made with the Bank, at a meeting in March 1995, when it threatened to call up its loan to the joint venture. In terms of that arrangement Mr Barclay (through Apple) and the pursuer (through his company, Tay Hotels Ltd) each bought one of the outstanding plots for £100,000, a sum dictated by the amount of the debt due to the Bank rather than the values of the flats in question.
[52] Following the meeting with the Bank, the pursuer consulted JSR. I shall return in more detail to what came of that in the context of the case which the pursuer seeks to make under section 6(4). For present purposes, however, it is sufficient to note what the pursuer said in connection with that consultation. He began, referring to March 1995, by saying that when he spoke to JSR he was concerned about what had become of the sale proceeds of certain of the redeveloped flats, since they did not seem to have gone to reduce the borrowing. That related to the question of the extent of the subjects conveyed to Apple. He went on, however, to say that he expressed concern to JSR about whether Apple had paid over the whole of the original £222,000. He wanted a complete check. Somewhat contradictorily, he then said that he had no reason at that stage to think that it had not been paid. He gave the date at which he raised that issue with JSR as May 1995. [53] Given that Mr Logan submitted that the evidence showed that the pursuer did not acquire actual knowledge of the underpayment by Apple until late 2000 or early 2001, the critical question is how far, if at all, the pursuer has discharged the onus of proving that, until a date later than that on which the dispositions implementing the second level missives were delivered, he could not with reasonable diligence have ascertained that he had in this respect suffered loss caused by negligence. I have already (see paragraph [45] above) rejected Mr Logan's submission, which he made principally in connection with this aspect of the case, that in making a case under section 11(3) a pursuer is entitled to rely on his solicitor having done what he was supposed to do. Whether he is entitled to do so is a matter of circumstance. Mr Logan further submitted that in judging what the pursuer could, with reasonable diligence, have ascertained, it was legitimate to bear in mind what the defenders ought to have told him, but did not tell him. He referred, as an example, to the failure to prepare a state for settlement. If that conventional step had been undertaken, the underpayment would have been clear for the pursuer to see. The defenders' failure to provide a state for settlement could thus be seen as contributing to the pursuer's lack of knowledge of the underpayment. Mr Logan further submitted, under reference to Richardson v Quercus Ltd 1999 SC 278, per Lord Johnston at 290, that if the evidence was equivocal, any ambiguity should be resolved in favour of the pursuer, especially where the defenders chose to lead no evidence on the particular part of the case. In this case, Mr Logan submitted, the defenders' failure to lead evidence was significant. They had not led several witness, including the bank manager, Mr Low, and Mr Gray. The witness summaries lodged in respect of those witnesses bore to indicate that they could give evidence relating to aspects of the pursuer's knowledge. The pursuer's account should therefore be accepted. [54] In my view those submissions go a little too far. I accept that in judging what the pursuer could with reasonable diligence have ascertained, it is legitimate to take into account as part of the relevant circumstances any failure on the part of the defenders to act in the way in which they might reasonably be expected to act, if that can be seen to have influenced the way in which the pursuer acted. I note that Lord Johnston's observations in Richardson were made in the context of section 10(1), not section 11(3) of the 1973 Act, but it seems to me that the point which he was making was the general one that a defender who chooses not to give evidence cannot complain if a generous interpretation is placed on the evidence led for the pursuer. That point is, it seems to me, available to the pursuer in this aspect of the present case. I do not consider, however, that it is legitimate to bolster the strength of that argument by specific reference to the terms of the summaries of witnesses' evidence lodged under Rule of Court 47.12(1)(b). The purpose of such summaries is no more than to give fair notice of the subjects on which a witness will give evidence. [55] It is in my view clear that there was a stage in February or March 1991 when the pursuer was aware that Apple had still not paid the price due under the second level missives. I find it much less clear whether, after the part payments made by the pursuer and Mr Barclay under the third level missives had been passed directly to the sellers under the first level missives, and could therefore be treated as having been paid by Apple to Ballinard, the pursuer registered that £80,000 remained unpaid. In parts at least of his evidence, however, he appears to have accepted that he was aware that that shortfall remained. That seems to me to be mere background to the issue of what his state of mind was at the stage of settlement. The more difficult issue to resolve is whether at the date of settlement he (a) assumed that the balance had been paid because he assumed that ARR would not deliver the dispositions in the absence of payment of the price in full, or (b) had asked ARR for reassurance that the outstanding balance had been paid and had received such assurance. On balance, I prefer the former view. Although I regard the fact that the pursuer's evidence vacillated between those two approaches as unsatisfactory, I do not consider that I can on that account hold that he was in fact aware that the balance had not been paid. While the background knowledge that there had, two months or so earlier, been a shortfall of £80,000 might well have led many prudent people in such a situation to ask their solicitor expressly to confirm that the balance had been paid before signing the dispositions, I do not consider that in the circumstances of this case, the pursuer was put on inquiry to the extent of requiring to ask that question. He was, I think, in the circumstances entitled to assume that his solicitor would not ask him to sign the dispositions if the full price had not been paid. [56] In my opinion the date on which the pursuer was put on his inquiry as to whether he had in respect of the Apple underpayment suffered loss caused by negligence was in late 1993 or early 1994 when he asked Mr McKenzie to look into the apparent deficiency of funds in the joint venture. In his evidence in chief he said that at that stage he realised that "Apple had not paid". Whether that was intended as a reference to the shortfall of £80,000 (as I think it was) or not, it seems to me that the concern which the pursuer felt about the underfunding of the joint venture at that stage was sufficient to put him on inquiry as to whether he had suffered loss caused by negligence. That tends to be confirmed by the fact that at that stage he instructed Mr McKenzie to commence such inquiry. The question therefore arises whether the pursuer has proved that at that stage he could not, with reasonable diligence, have ascertained that he had suffered loss caused by negligence. The pursuer led evidence of the inquiries which were conducted on his behalf by Mr McKenzie, but I am not prepared to hold that these amounted to the exercise of reasonable diligence. If, as the pursuer said was the case, he thought the Apple money had gone into the joint venture bank account, it would have been a simple matter to check that. It matters not, in my view, that the bank statements went routinely to Mr Gray. The pursuer as a joint venture partner was entitled to see them. Sight of them would quickly have revealed that the Apple money had not gone into the bank account. That would have led to inquiry of ARR, and the discovery of his understanding, whether well-founded or not, that the parties had been content to settle the transaction without payment of the shortfall. The fact that Mr McKenzie wrote to the defenders for information but did not pursue the matter when he received no reply is hardly in my view illustrative of the exercise of reasonable diligence. In my opinion, on the evidence before me, the proper conclusion is that as at early 1994 the pursuer was in a position in which, with the exercise of reasonable diligence, he could have discovered the fact of the Apple shortfall, and could have ascertained that he had thereby suffered loss caused in the way which he seeks in this action to attribute to fault on the part of the defenders. [57] If I am wrong in regarding the pursuer as having been put on inquiry about the Apple shortfall by early 1994, he had certainly been put on inquiry in that connection by March 1995 after the settlement with the Bank. He did not make any distinction between Mr Barclay and Apple, but was by then aware that he had suffered loss through some form of inadequacy of financial contribution to the funds of the joint venture by Mr Barclay or Apple. He has not in my view established that he could not with reasonable diligence have discovered the precise nature of the loss or that it was attributable to negligence. The lines of reasonable inquiry to which I have referred in paragraph [56] above remained available in early 1995. [58] In the result, therefore, I am of opinion that, while the pursuer can rely on section 11(3) to postpone the relevant date in respect of this aspect of the action until early 1994 or possibly March 1995, neither of these dates is sufficiently late to defeat the defenders' plea of prescription. To achieve that result in respect of this aspect of the case the pursuer requires to rely in addition on section 6(4). I shall return to that issue after dealing with the application of section 11(3) to the third aspect of the case.Section 11(3): the alleged error in the disposition to Apple
[59] I have already explained the difficulties I have had in coming to any clear conclusion as to the circumstances founded on in this aspect of the case (see paragraph [36] above). For the purposes of section 11(3) it is, however, sufficient to identify the date on which, if the case is well founded on the merits, the pursuer suffered loss caused by an act, neglect or default, then to examine the evidence to see whether the pursuer has made out a case under the sub-section for postponing the relevant date. As I have indicated in paragraph [36] above, the date of loss appears to have been in 1993. The fact that proceeds of sale of a flat, which the pursuer contends ought to have belonged to the joint venture partners, were paid to Apple was uncovered by Mr McKenzie in the course of his work to prepare accounts. On his evidence that was in 1995 after he recovered files from Apple's accountants, Ernst & Young. The pursuer's evidence was that he did not in fact form the view that the payment of those proceeds of sale to Apple was the result of an error on the part of the defenders until after he had seen Judith Scott's report (see file notes prepared by Scott Milne of the defenders on 8 and 23 November 2000 (Nos. 6/48/58 and 59 of process), particularly the latter). I am prepared to accept that, until Mr McKenzie made the discovery of the misdirected sale proceeds, there was no occasion for the pursuer to be on his inquiry in relation to this aspect of the case. Although inquiry into the Apple £80,000 shortfall, if it had been undertaken more vigorously, might have thrown up information on this issue incidentally, I do not consider that there is any evidence to suggest that the pursuer had occasion, before 1995, to inquire into the destination of the proceeds of sale as a discrete issue. Once Mr McKenzie had discovered what he did, however, I am of opinion that the pursuer was on his inquiry on this issue. Although it took some further time for him to work out what he considers had gone wrong, I am not persuaded that he has established that he could not, with reasonable diligence, have ascertained that he had suffered loss caused by negligence in early 1995. Mr Logan did not argue strongly otherwise. His principal argument in respect of this aspect of the case was founded on section 6(4). I shall return to that issue in due course, because on the view which I have taken of the application of section 11(3) to this aspect of the case, it is insufficient to defeat the plea of prescription. So far as section 11(3) is concerned I take the view that the pursuer has succeeded in establishing that he could not, with reasonable diligence, have become aware that he had in respect of this aspect of the case suffered loss caused by negligence before early 1995, but could have done so then. The appropriate date is accordingly, in my view, postponed to early 1995.Section 6(4)
[60] The pursuer's pleadings contain only a vestigial basis for a case under section 6(4). The only averment which appears to relate to that issue is in the following terms:"Separatim, the error of the pursuer was induced by the words and conduct of the defenders and in particular, Mr Milne."
There is no specification, either of the nature of the error, or of the particular words or conduct which are said to have induced it. In Mr Logan's submissions the proposition was that the pursuer was led into error not only by Mr Milne, but also, earlier, by JSR. Before examining the evidence which the pursuer relied on in support of his case under section 6(4), however, it is convenient to analyse what the section requires to be established before a period can be excluded from the computation of the prescriptive period.
[61] Mr Johnston for the defenders submitted that it was important to note, as I have already noted in paragraph [13] above, that the word "induced" is used twice in section 6(4)(a)(ii). If a period is to be excluded from the computation, the pursuer must prove, first, that he was labouring under error induced by words or conduct of the debtor or any person acting on his behalf, and secondly, that he (the pursuer) was induced by reason of that error to refrain from making a relevant claim. Both of these points require to be the subject of evidence, and both require to be considered in determining whether by virtue of section 6(4) a period requires to be left out of account in computing the prescriptive period [62] As Lord Clyde pointed out in BP Exploration Operating Company Ltd v Chevron Transport Corporation 2002 SC (HL) 19 at 40B, paragraph [65]:"... the word 'induced' [in the phrase 'induced by words or conduct'] does not necessarily carry with it any sinister overtone. The debtor may have been acting entirely innocently and in good faith, but nevertheless has led the creditor to believe something different from the truth. In my view what is meant is that the debtor has led the creditor into error by his ... words or conduct and because of the error the creditor has been brought into the position of refraining from making a claim."
The word "refrain" is given a broad meaning. Lord Hope of Craighead in BP Exploration at 30F-H, paragraph [33] said:
"I would hold ... that the period of time covered by the word 'refrain' in section 6(4) includes time when the creditor does nothing to enforce the obligation, whether or not this is the result of a conscious decision on his part not to press the claim. ... [It] is not necessary for the creditor to identify the date when he would have made the claim but for the error. But the prescriptive period will only be interrupted if he can show that the reason why he did nothing to enforce the claim against the debtor was because he was misled by ... error induced by the debtor's words or conduct. And, under the proviso to section 6(4), the period of the interruption will not include any time after he could with reasonable diligence have discovered the ... error. In this way proper effect can be given to section 6(4) to avoid injustice on either side."
(See also per Lord Clyde at 40C-H, paragraphs [66] and [67].) Where the proviso to section 6(4) does not come into play, the period of interruption comes to an end when the creditor actually discovers the error (per Lord Millett at 58B, paragraph [109]).
[63] The pursuer sought to establish a background relationship of trust between him and the defenders which predisposed him to accept and rely on their advice. In particular, he claimed a close relationship with JSR. Having heard the evidence of both the pursuer and JSR on the point, I am inclined to the view that the pursuer exaggerated the closeness of his friendship with JSR, but I accept that JSR had for a number of years been the pursuer's principal solicitor, although he had delegated aspects of the pursuer's business to others within the defenders' firm (as, for example, when he put the pursuer in touch with ARR in connection with the Airlie Lodge project, and with Mr Milne in connection with the litigation against Mr Barclay (and later his executors)). [64] As I have already mentioned, the pursuer consulted JSR in about March 1995 following the settlement with the Bank. In his evidence the pursuer sought to convey the impression that he asked JSR to look into the whole question of what had gone wrong with the Airlie Lodge project, and to advise him generally as to the remedies that might be available to him. He said that JSR advised him that he should raise an action of count, reckoning and payment against Mr Barclay. He understood that JSR gave that as considered advice on the basis of a review of the files, which occupied four to six weeks. JSR's evidence was somewhat different. He said that at about the time of the Bank meeting the pursuer made him aware that Mr Barclay owed him money in connection with the joint venture. Joint venture accounts had been prepared (i.e. the accounts prepared by Mr McKenzie), and as a result of these the pursuer was of the view that Mr Barclay had not made his proper contribution to the funds of the joint venture. JSR also said that, without looking at the papers, he advised the pursuer that, if he could show that Mr Barclay had under-contributed to the joint venture, he would have a right of action against him. He added that the defenders were never asked to undertake any investigative work for the pursuer in connection with the joint venture, and at that stage were not instructed to proceed with an action against Mr Barclay. JSR said that he had no recollection of further meetings with the pursuer in May and August 1995. In cross-examination, JSR rejected the suggestion that the pursuer had been looking for his help in understanding what had gone wrong with the Airlie Lodge project. He reiterated that the pursuer, relying on the joint venture accounts, had told him that Mr Barclay owed him money. If it had not simply been a matter of pursuing Mr Barclay for the shortfall in his contribution to the joint venture, he would have had to ask the pursuer what he thought the cause of the problem in the joint venture had been. He was never asked to investigate the conveyancing aspects of the Airlie Lodge project. I prefer the evidence of JSR to that of the pursuer on the question of the extent of the advice which the pursuer sought and was given by JSR. Having regard to the view which the pursuer accepted he had himself formed on the basis of Mr McKenzie's accounts, namely that Mr Barclay owed him money, it seems to me much more likely that he sought confirmation of that and advice on how to proceed with such a claim, than that he asked JSR to conduct an in-depth investigation of the sources of the problems in the joint venture. This is not the only aspect of the case on which I obtained the impression that the pursuer's evidence had been coloured by hindsight. I do not find it at all plausible that JSR accepted instructions to carry out a full-scale investigation, then either advised the pursuer to proceed against Mr Barclay without doing so or conducted such an investigation but failed to identify the nature of the problem. I accept that the question which the pursuer asked JSR was, in effect, "I think Mr Barclay has not made the proper contribution to the joint venture; if that is right can I sue him?" [65] Whether these matters all took place in March 1995 (as JSR maintained) or were spread over meetings then and possibly in May and August 1995 (as the pursuer ultimately suggested), it is clear that the pursuer did not instruct the defenders to proceed with an action on his behalf against Mr Barclay. The reason was the pursuer's impecuniosity. He already owed the defenders a considerable sum in fees, and they would not have undertaken further work for him without being put in funds in advance. [66] The pursuer returned to the defenders in late 1997 or early 1998. At that stage he was put in touch with Scott Milne. Mr Milne is a court practitioner, not a conveyancer. His involvement was in connection with the resuscitated proposal of an action against Mr Barclay based on Mr McKenzie's joint venture accounts (see his file note dated 25 March 1998, No. 6/48/52 of process, paragraph 7). He was presented with Mr McKenzie's accounts and thought it necessary to review whether Mr Barclay was the appropriate defender. Some time was spent investigating whether Apple had been a joint venture partner. There was periods when Mr Milne was said to have "fallen sleep" on the matter. An action was eventually raised; Mr Barclay died and the action had to be redirected against his executors. The defenders in that action, i.e. the executors, obtained the Judith Scott report dated August 2000, of which the pursuer obtained a copy, and from a reading of which he claims to have become aware that he had a claim against the defenders. The action against the executors was eventually settled. [67] The pursuer's pleadings contain a number of complaints that the defenders did not "disclose" certain matters to him. In particular, article 6 of the condescendence contains the following averments:"[JSR] did not disclose to the pursuer or to Mr McKenzie that the defenders had never received approximately £85,000 (sic) of the purchase price for Airlie Lodge to (sic) Apple. ... He did not disclose that ARR had encashed the [Bank's] cheque for the loan in contravention of their lending instructions. He did not disclose that the security granted to the [Bank] only covered the ground at Airlie Lodge and did not cover the house. He did not disclose that Mr Brand's standard security had remained in place over the ground. ... The pursuer was not aware that Apple had never paid the full purchase price ... Mr Milne never disclosed to the pursuer that part of the shortfall had arisen in this way."
It is not a matter of dispute that JSR and Mr Milne respectively did not inform the pursuer of those matters. The use of the word "disclose" in the averments seems to me to imply that JSR and Mr Milne were aware of the matters listed, but withheld them from the pursuer. The evidence, however, did not establish that any of the matters listed were within the actual knowledge of the person said not to have disclosed them. There was no evidence that JSR was aware of the contents of the conveyancing files. There was no evidence that Mr Milne was aware of the £80,000 Apple shortfall. It does not seem to me that to fail to convey to another person information which one does not in fact possess can be said to constitute words or conduct within the meaning of section 6(4). The position might well be different if a person did not pass on information which he had, i.e. if there was active concealment. If, for example, a solicitor withheld from his client information of which he (the solicitor) was aware and which would have alerted the client to the possibility of a claim against the solicitor, that might well be held to constitute conduct within the meaning of section 6(4)(a)(ii). Since the point does not arise in the present case, however, I prefer to reserve my opinion on it. In the absence of evidence that JSR and Mr Milne were aware of the facts which they did not "disclose" to the pursuer, I am of opinion that the fact that they did not disclose them does not assist the pursuer in establishing his case under section 6(4).
[68] It seems to me that the pursuer's case under section 6(4)(a)(ii) comes to this: that JSR in March 1995 and Mr Milne in 1998 led him to believe erroneously that the appropriate remedy by means of which to recover the loss which he had suffered was an action of count, reckoning and payment against Mr Barclay; that labouring under that error he did nothing to investigate or pursue a claim against the defenders; and that consequently the period from March 1995, when he was first misled, to late 2000, when he realised that he had a claim against the defenders, should be excluded in the computation of the prescriptive period. Mr Logan submitted that the case was analogous to Robertson v Watt & Co, 7 April 1995, Second Division, unreported. In that case, the pursuer's case under section 6(4)(a)(ii) was recorded in the Opinion of the Court as being:"that the error which induced her to refrain from making a claim against the defenders as an individual was that she was led by the defenders to believe that she had a claim against Messrs Carnegie & Smith, and no one else" (emphasis added).
A proof before answer was allowed. In my view that case is readily distinguishable. The core of the error in that case was the mistaken belief that the pursuer did not have a claim against the defenders. In the present case, I do not consider that it can be held to have been proved that the defenders, by words or conduct, led the pursuer into the erroneous belief that he had no claim against them. They did reinforce his belief that he had a claim against Mr Barclay (and subsequently his executors). That does not seems to have been an erroneous belief, because the executors ultimately settled the claim. But advice that he had a good claim against Mr Barclay does not amount to advice that he had no claim against the defenders.
[69] In the result, I am not satisfied that the pursuer has proved that an erroneous belief that he had no claim against the defenders was induced in him by any words or conduct of JSR or Mr Milne in March 1995 or at any time thereafter. I am not satisfied that the pursuer has proved that his reason for not pursuing a claim against the defenders between 1995 and 2000 was such induced error. I am therefore of opinion that there is no period which falls to be left out of account under section 6(4) in computing the prescriptive period.Result
[70] For the reasons which I have given, I am of opinion that the pursuer has failed in his attempt to rely on sections 11(3) and 6(4) of the 1973 Act as ground for holding that the obligations on which the action is founded have not prescribed. I shall accordingly sustain the defenders' first plea-in-law and grant decree of absolvitor in their favour. I shall reserve the question of expenses.
