BAILII is celebrating 24 years of free online access to the law! Would you consider making a contribution?
No donation is too small. If every visitor before 31 December gives just £1, it will have a significant impact on BAILII's ability to continue providing free access to the law.
Thank you very much for your support!
 |
[Home] [Databases] [World Law] [Multidatabase Search] [Help] [Feedback] | |
Scottish Sheriff Court Decisions |
||
|
You are here: BAILII >> Databases >> Scottish Sheriff Court Decisions >> Nigel Lowe Holdings Ltd v. Intercon Construction (Pty) Ltd & Anor [2004] ScotSC 29 (22 April 2004) URL: http://www.bailii.org/scot/cases/ScotSC/2004/29.html Cite as: [2004] ScotSC 29 |
||
[New search] [Help]
SHERIFFDOM OF TAYSIDE CENTRAL AND FIFE
A224/02
JUDGMENT OF SHERIFF PRINCIPAL
R A DUNLOP QC
in the cause
NIGEL LOWE HOLDINGS LIMITED
Pursuers and Respondents
against
INTERCON CONSTRUCTION (PTY) LIMITED and JOHN GLENDINNING
Defenders and Appellants
__________________
Act: Mr Forsyth, Counsel instructed by Condies, Solicitors, Perth
Alt: Mr Woods, Masons, Solicitors, Glasgow
PERTH, 22 April 2004. The Sheriff Principal, having resumed consideration of the cause, Varies the sheriff's interlocutor of 14 July 2003 by deleting from the second line thereof the words "title to sue" and by substituting therefor the words "whether the alleged contract between Nigel Lowe and Associates and the first defenders referred to on record was one of the contracts the benefit of which was transferred to Nigel Lowe Management Services Limited and from them to the pursuers"; quoad ultra refuses the appeal and adheres to the sheriff's said interlocutor; certifies the appeal as suitable for the employment of junior counsel; reserves meantime the question of expenses and appoints parties to be heard thereon on Monday 10 May 2004 at 10 am within the Sheriff Court House, Tay Street, Perth.
NOTE:
[1] This is an appeal against the sheriff's interlocutor of 14 July 2003 pronounced following a debate. The issue at that debate was the pursuers' title to sue. The sheriff allowed a proof on that question and the defenders have now appealed, renewing their submission that the action should be dismissed. [2] The factual background to the defenders' plea of no title to sue is not entirely straightforward and the narrative of that background in the pursuers' pleadings is in certain respects less than clearly expressed. The pursuers are a company, Nigel Lowe Holdings Limited. They seek payment in terms of an alleged contract between the partnership of Nigel Lowe and Associates (hereinafter referred to as "Associates") on the one hand and the first defenders on the other. At the material time the first defenders were engaged in a construction project for the government of Swaziland and, according to the pursuers, Associates were contracted to provide consultancy services in relation to a dispute about additional payments which the first defenders were claiming in respect of that project. The pursuers aver that the agreed remuneration for the consultancy services was a lump sum of £4,000 together with a fee of 20% of all amounts which were certified or otherwise became due to the first defenders. It is not apparently in dispute that the first defenders received additional payments by 31 May 2001 at latest and the sum sued for represents 20% of those payments at the rate of exchange allegedly agreed. [3] When the action was first raised the pursuers made the following averments:-"Nigel Lowe and Associates was dissolved as a partnership on or around 31 October 2000. The assets of the partnership of Nigel Lowe and Associates were acquired by Nigel Lowe Holdings Limited. Those assets included the sum due to Nigel Lowe and Associates ..."
"Notwithstanding the date(s) hereof, as at and with effect from the close of business on the transfer date the vendor transferred the business and assets to the purchaser as a going concern including, without prejudice to the foregoing generality, the following:-
.....
....."
Scope of the appeal
[12] Counsel for the defenders and appellants set out his submission in four stages, which can be summarised as follows:-Ground 1 - No transfer of subject matter of the action
[14] The submissions of counsel for the appellants under this head were threefold. Firstly, he contended that the schedule to the 2001 agreement was not incorporated into the agreement. Secondly, in the heading to two parts of the schedule reference is made to Scotland and he submitted that they were not headings to which clause 1.5 could be applied. Thirdly, under reference to Hunter v Fox 1964 SC (HL) 1995, he submitted that it was not appropriate in construing the agreement to take into account the pursuers' averments to the effect that the heading appears as a result of an error in drafting and on the strength of that explanation to treat the heading as if it had not been written. While a patent defect would be treated pro non scripto a latent defect required to be corrected by a process of rectification. [15] In response the solicitor for the pursuers and respondents accepted the distinction between patent and latent mistakes. He contended that both the reference to Scotland and the reference in the definition of "the Contracts" to part 2 of the schedule instead of part 3 were patent mistakes and should be treated pro non scripto. He also drew attention to the fact that the sheriff had apparently come to the same view, albeit in retrospect. [16] In my opinion the sheriff's retrospective view of these submissions is the correct one. There is only one part of the schedule that contains a list of contracts and the definition of "the Contracts" would make no sense unless it referred to that part. Like the sheriff I think it is clear that the reference in that definition to part 2 instead of part 3 is a patent mistake and that view is reinforced by the other manuscript alterations to which I have already referred. As I have already indicated, I understood counsel to accept that position. The schedule is described as "annexed to and forming part of this agreement." The principal agreement is produced and the schedule is plainly annexed to the main body of the agreement. Indeed it forms part of a single bound document. But for the heading containing the reference to Scotland it is clear that the list of contracts was a list of those contracts which were the subject of the agreement. [17] It seems clear from the sheriff's note that he considers that clause 1.5 of the agreement was a sufficient basis for rejecting the defenders' submissions insofar as founded on the headings in the schedule which refer to Scotland. In my view his conclusion in that regard is well founded and I adopt his reasoning for that conclusion. Counsel submitted that that clause couldn't be used as an instrument for deleting the heading in question. In my view however the proper effect of clause 1.5 is that one ignores the headings when trying to decide what is the meaning of the contract. If one adopts that approach there is no confusion whatever as to the parties to the contract and what is transferred by it. [18] Had it been necessary to do so however I consider that the headings in question can be read pro non scripto. The agreement bears to be between Associates and Management and is executed by each of these. On no view can that agreement be described as one between Associates and Scotland and the two headings in the schedule which make reference to Scotland have no sense at all, referring as they do to the "foregoing business transfer agreement." In Hunter v Fox supra cit. Lord Reid emphasises the need to look at the words in their context and in my view when that is done there is little doubt that this heading has no sensible meaning and should be read pro non scripto. Accordingly whichever approach one adopts this ground of appeal cannot be sustained. [19] Before passing from this ground of appeal it should also be pointed out that, in any event, the definition of "the Contracts" permits the identity of the contracts transferred by the agreement without necessary recourse to the schedule, since those contracts identified in the schedule are included without prejudice to the generality of the opening words of the definition. Accordingly even if the schedule were ignored as not forming part of the agreement it would in my view still be open to the pursuers to prove that the contract between Associates and the first defenders was transferred by the agreement.
Grounds 2 and 3 - the nature and legal effect of assignation
[20] As a preface to both the second and third grounds of appeal, counsel examined the nature of assignation under reference to certain excerpts from the institutional writers. He submitted, firstly, that an assignation was not a complete and valid right until intimated to the debtor (Stair's Institutes III.1.6). Intimation was an essential requirement for completing the conveyance (Erskine's Institute III.v.3) and until that time the cedent or assignor was not denuded of the right which is the subject matter of the assignation (Bankton's Institutes III.1.6). He submitted that it was clear from these references that assignation fell within the province of both contract law and property law. A transfer of a real right to the subject matter of the assignation only arose at the point of intimation. [21] Secondly, under reference to paragraph 12-58 of McBryde on Contract 2nd edn., he submitted that there was a distinction between an agreement to assign on the one hand and the assignation itself on the other. A mere agreement to assign did not afford a title to sue (Alderwick v Craig 1916 2SLT 161 and Bank of Scotland v Liquidator of Hutchison Main and Co Limited 1914 SC (HL) 1 at page 4). [22] Thirdly, he submitted that, since the subject matter of the action was, at the time of the alleged transfer from Associates to Management, an unvested contingent right, the 2001 agreement could not competently transfer that right and should be seen as no more than an agreement to assign that right if and when it emerged. Until that time the right was a right in spe and as such was not capable of being owned and if not owned could not be transferred. This argument was advanced under reference to Bedwells and Yates v Tod 2 Dec 1819 FC 50, Pearson Wilson & Co v Brock 1842 4D 1509, Gallemos Ltd (in receivership) v Barratt Falkirk Ltd 1989 SC 239, Reid v Morrison 1893 20R 510, Browne's Trustees v Anderson 1901 4F 305, Bell's Principles p. 572, Gloag and Irvine Law of Rights in Security p.441 and McBryde on Contract para 12.35. [23] Particular reliance was placed on Bedwells and Yates v Tod which, it was submitted, vouched the proposition that an assignation is invalid as a conveyance if there is nothing in existence to be assigned, as with "a mere spes or expectancy." Reliance was also placed on the opinion of Lord Rutherfurd Clark in Reid v Morrison and in particular the passage at p.514, which is in these terms:"I do not think that an expectancy is a right or power or interest in property. There is nothing in the expectant beyond a mere chance. He hopes to succeed to property and by his succession to make it his own. ........ An expectant cannot sell the property to which he hopes to succeed, or any interest in it, nor can he exercise any power over it. He can sell no more than a chance - his chance of becoming proprietor. He may grant a conveyance; but it conveys nothing, inasmuch as he has nothing to convey. It becomes effectual by accretion alone. Till then it is nothing but a mere agreement to convey the subject of the expectancy when it shall vest."
"While a debt which has been paid, or a right which has been extinguished, before the date of assignation cannot be effectually assigned, it is quite settled, both in Scotland and England, that a future right, which is neither vested nor exigible at the date of assignation, is none the less capable of being legally alienated, to the effect of giving a good title to the assignee when the right comes to be vested. An expectant, who grants a conveyance of a right which he hopes to acquire, actually conveys at the time no more than a mere chance - his chance of becoming proprietor of the subject in question. "The conveyance becomes effectual by accretion alone. Till then it is nothing but a mere agreement to convey the subject of the expectancy when it shall vest." (quoting Lord Rutherfurd Clark). At the same time, express assignations of expectancies, or rights which at the date of assignation were still in spe, are recognised as effectual, when duly intimated, to put the assignee in the place of the cedent, and give him a claim to payment when the period of payment arrives."
"Not only may an expectancy be expressly assigned, but it may be included in and carried by a general conveyance of the cedent's whole estate, if the words of the conveyance show that such was the intention of the party."
"By the law of Scotland a right or estate in expectancy or spes successionis may be sold and assigned so as to give the purchaser a good title in a question with the seller to the right, estate, or succession when it comes to be vested in the seller. But such right or estate in expectancy or spes successionis is not attachable by the diligence of creditors of the person in expectancy or entitled to succeed, and would not be carried to the trustee in his sequestration if he should be discharged before such right, estate, or expectancy vested in him."
"From what I have said it is plain that at the date of his sequestration Robert had only an expectancy in regard to Isabella's share. Such a right, it is now well settled, does not pass by sequestration to the bankrupt's trustee or creditors. But when the expectancy became a vested right of property in Robert by Isabella's death in December 1897 it would pass to the trustee as an asset of the bankrupt if there was no preferable right existing to exclude the trustee's claim. It cannot be doubted that the assignation in favour of Mr Anderson forms such a preferable right if that assignation was perfected by intimation. And the question before us really turns on this, was that assignation duly intimated? If it was, Mr Anderson must prevail in the competition. Now, the assignation (so far as it need here be considered) was an assignation of a spes successionis to a fund in the hands of Mr James Browne's Trustees, and to them accordingly intimation of the assignation had to be made. In point of fact, intimation of the assignation was made about a week after the date of its execution to the law agents for Mr James Brown's Trustees, who were advising the trustees in the administration of the trust affairs."
Ground 2 - effect of the 2001 agreement
[41] That nevertheless leaves for consideration the appellants' second ground of appeal, which essentially depended upon the proper construction of the 2001 agreement. Counsel carried out a detailed examination of the clauses of the 2001 agreement in support of his submission that there was a mere agreement to assign rather than an actual transfer of the subject matter of the action. In particular he drew attention to the language of clause 5 of the 2001 agreement, which provides:"Completion of the transfer of the business and assets hereunder took place on the transfer date when:
5.1 ownership of and property in the business and assets passed to the purchaser and they were and shall be deemed to be assigned, delivered and transferred to and placed in the possession and custody of the purchaser; ...."
Ground 4 - Intimation
[47] As I have already indicated it is not disputed that the pursuers' right to the subject matter of the action is only completed by intimation to the defenders. They aver that such intimation was made by a letter of 6 August 2001, failing which by the raising of the present action and this alternative basis of intimation was that contended for in the appeal. The letter in question is no. 5/7 of process and emanates from the pursuers. [48] On behalf of the appellants, counsel pointed out that this letter pre-dates both asset transfer agreements. Furthermore it followed a letter of 31 May 2001 (5/6 of process) which emanated from Scotland and counsel submitted that the pursuers were apparently relying upon this letter as in effect having come from the pursuers, there being an averment that that letter was erroneously sent on paper with the letterhead of Scotland. He also pointed out that there was a similar averment of error in relation to the letter of 6 August and that this was inconsistent with the earlier averment that intimation from the pursuers was given by this letter. [49] He submitted that effective intimation required a clear expression of the cedent, assignee and the thing assigned. Assuming that the letters of 31 May and 6 August can be construed as intimations, they can only be intimations that the assignee is the company from whom the letter emanates. The confusion was a serious matter because the defenders had to know the party to whom payment should be made. [50] Counsel then went on to examine the position if neither letter constituted a valid intimation. He accepted that intimation can be effected by the raising of an action but submitted that whether or not such intimation was given was to be judged by the averments in the initial writ at the outset of the action. A party required to have title to sue at the date of the raising of the action and a want of title could not be made good thereafter. Accordingly if effective intimation was only given when the record was amended that would not be sufficient. Reference in this regard was made to Bentley v Macfarlane 1964 SC 76 and Symington v Campbell 1894 21R 434. [51] In responding to these criticisms the solicitor for the respondents recognised the inconsistency in the pleadings with regard to the letter of 6 August 2001 and moved an amendment at the bar to delete the sentence at lines 16, 17 and 18 of Article 4 of Condescendence "The letter dated 6 August 2001 was erroneously sent on paper with the letterhead of Nigel Lowe Holdings Limited." That motion was formally opposed by counsel for the appellants but I allowed it and pronounced an interlocutor accordingly on 26 January 2004. [52] So far as the other criticisms were concerned the solicitor for the respondents submitted that, although the asset transfer agreements were both dated after 6 August 2001, they related to an assignation that had been granted before that date. It was accordingly an effective intimation that the pursuers were the party now in right of the subject matter of the action. In any event judicial intimation of that fact was made in the initial writ. He accepted the authority of Beveridge and Symington. [53] I approach the issue on the basis that it was argued, namely that intimation was required at latest by the time of the raising of the action. I make that point specifically because it seems to me that there is at least an argument that the assignation gives the pursuers a substantial interest in the subject matter of the litigation, requiring only formal completion by intimation, such that title to sue can be sustained even though intimation is only made in the course of the process (see Symington v Campbell at p.437 and Bentley v Macfarlane at p.79). For the sake of completeness I should say that Alderwick v Craig and Bank of Scotland v Liquidator of Hutchison Main & Co Ltd can be distinguished as the foundation of the claimed title was merely an agreement to assign (or equivalent) and not, as with this case, an assignation.[54) Having made these observations I now address the issue raised by the parties. In my opinion the essential information that required to be communicated to the defenders was that the pursuers were now the party in right of Associates' claim to the subject matter of the action. In my view that information was contained within the initial writ and accordingly this ground of appeal cannot be sustained. I accept that the defenders were entitled to call upon the pursuers to vouch these matters and to give greater specification, but I do not consider that that vouching and specification were required contemporaneously with the initial writ. The amended pleadings, narrating the mechanics of the transfer, together with the production of the asset transfer agreements sufficiently set out the pursuers' title in elaboration of the original averment in the initial writ.
[55] In these circumstances it is unnecessary to consider whether the letter of 6 August 2001 constitutes a sufficient intimation, although there is at least a question about that when it is set in the context of the other correspondence at that time. It should be noted however that the pursuers do not rely on the letter of 31 May 2001 as intimation, although the fact that it features in the pleadings at all is apt to cause confusion. In the final analysis however the material questions are who is the true assignee and does the assignation cover the debt in issue. Intimations that do not relate to the true assignee can be ignored, but if there is any doubt about the identity of the true assignee I think the debtor is entitled to put the true assignee to the proof of that identity. As I have already indicated, the title is sufficiently averred and in my view were these matters established in evidence and accepted by the court the result would be the repelling of the defenders' first plea in law of no title to sue. [56] It follows from what I have said that the appeal must be refused. But for the fact that the defenders do not admit that the contract between Associates and the first defenders (which is the subject of the action) was transferred to Management and then to the pursuers, it is reasonable to infer from the sheriff's note that he would have sustained the pursuers' title to sue and allowed a proof at large. The sheriff's view that there should be a simple proof on that matter seems appropriate given the position adopted by the defenders in the pleadings, although it is not clear whether that accurately reflects their position in fact. In the circumstances I have varied the sheriff's interlocutor to accord more accurately with his retrospective intention. If this is no longer a live issue in light of my decision herein no doubt the parties can ask the court to repel the pleas of no title to sue and send the case to a proof at large.Expenses and certification
[57] Counsel for the appellants asked me to reserve the question of expenses lest anything turn upon the fact that I had allowed the pursuers' amendment in relation to the letter of
6 August 2001. Both parties were otherwise agreed that expenses should follow success. The appellants have not succeeded to any extent and on the face of it the respondents have grounds for seeking the expenses of the appeal. Having regard to the arguments deployed on behalf of the appellants it must be open to doubt that the amendment has made a crucial difference to the outcome of the appeal. Lest I am wrong about that however I think the safer course is to reserve the question of expenses.
