Scottish Sheriff Court Decisions

SHERIFFDOM OF GRAMPIAN HIGHLAND AND ISLANDS AT PETERHEAD

 

Judgement

 

of

 

Sheriff Philip Mann

 

In causa

 

Lorimer Homes Pittodrie Limited, a Company incorporated under the Companies Acts (Company Number SC242074) and having its Registered Office at 2 Woodside Place, Glasgow

Pursuers

Against

 

Mr Alistair Greig, residing at Invercairn House, 16 Rathen Road, Cairnbulg, Fraserburgh, AB43 8TB

Defender

Act: Sanders, Advocate

 

Alt: Bowen, Advocate

 

Peterhead 28 September 2011

 

The Sheriff, having resumed consideration of the cause;

 

Finds/

 

 

 

Finds the following facts admitted or proved:-

 

1. The Pursuers are Lorimer Homes Pittodrie Limited, a Company incorporated under the Companies Acts (Company number SC242074). They have their Registered Office at 2 Woodside Place, Glasgow

 

2. The Defender is Alistair Greig who resides at Invercairn House, 16 Rathen Road, Cairnbulg, Fraserburgh, AB43 8TB

 

3. The Pursuers were heritable proprietors of the entire development known as The Park Development, Pittodrie, Aberdeen ("The Park") and remain heritable proprietors of The Park insofar as not already disponed to other parties.

 

4. The Park was divided into various plots, including plots 174, 181 and 182.

 

5. On 19 March 2008 Gavin Bain & Company, Solicitors, Aberdeen ("Gavin Bain") on behalf of the Pursuer issued three letters ("the offers") to KWAD, Solicitors, Aberdeen ("KWAD") formally offering to sell plots 174, 181 and 182 to the Defender.

 

6. The offers were sent under cover of a letter addressed to Ian Wilson who, at that time, was a partner of KWAD.

 

7. Ian Wilson received the offers and passed them to Keith Ingram who, at that time, was a business development consultant with KWAD.

 

8. On 26 March 2008 Keith Ingram prepared three letters addressed to Gavin Bain accepting the offers to sell plots 174, 181 and 182 subject to the deletion of condition 25 of the offers which related to the time limit for acceptance of the offers.

 

9. On 27 March 2008, during a telephone conversation initiated by Keith Ingram, the Defender instructed Keith Ingram to proceed with the missives for the Defender's purchase of plots 174, 181 and 182. The Defender thereby instructed KWAD to accept the offers on his behalf.

 

10. On or after 27 March 2008 KWAD issued the three letters of acceptance which had been prepared by Keith Ingram. These letters were signed on behalf of KWAD by Ian Wilson. They bore to be issued on behalf of and as instructed by the Defender. They were, in fact, issued on behalf of and as instructed by the Defender.

 

11. On 1 April 2008 Gavin Bain on behalf of the Pursuers issued three letters to KWAD formally accepting the terms of their qualified acceptances and concluding the contracts for the sale of plots 174, 181 and 182 to the Defender.

 

12. On 12 December 2008 Gavin Bain sent three separate letters on behalf of the Pursuers to KWAD advising that plots 174, 181 and 182 were fit for occupation and accordingly the date of entry in respect of each plot was to be 19 December 2008.

 

13. The Defender failed to complete the purchases of plots 174, 181 and 182 in terms of the relevant missives.

 

14. Gavin Bain, on behalf of the Pursuers, rescinded the missives for plot 174 in a letter to KWAD Solicitors dated 20 August 2009.

 

15. Gavin Bain, on behalf of the Pursuers, rescinded the missives for plot 181 in a letter to KWAD Solicitors dated 23 March 2010.

 

16. Gavin Bain, on behalf of the Pursuers, rescinded the missives for plot 182 in a letter to KWAD Solicitors dated 5 November 2009.

 

Finds in Law:-

 

1. The Defender was contractually bound by the missives entered into by Gavin Bain and KWAD relative to Plot 174.

 

2. The Defender was in breach of contract by failing to complete the Purchase of Plot 174 in implement of said missives.

 

3. The Pursuers were entitled to rescind said missives and to resell Plot 174.

 

4. The Defender is liable to the Pursuers for any losses incurred by them attributable to the Defender's breach of contract in relation to Plot 174.

 

5. The Defender was contractually bound by the missives entered into by Gavin Bain and KWAD relative to Plot 181.

 

6. The Defender was in breach of contract by failing to complete the Purchase of Plot 181 in implement of said missives.

 

7. The Pursuers were entitled to rescind said missives and to resell Plot 181.

 

8. The Defender is liable to the Pursuers for any losses incurred by them attributable to the Defender's breach of contract in relation to Plot 181.

 

9. The Defender was contractually bound by the missives entered into by Gavin Bain and KWAD relative to Plot 182.

 

10. The Defender was in breach of contract by failing to complete the Purchase of Plot 182 in implement of said missives.

 

11. The Pursuers were entitled to rescind said missives and to resell Plot 182.

 

12. The Defender is liable to the Pursuers for any losses incurred by them attributable to the Defender's breach of contract relative to Plot 182.

 

Therefore APPOINTS parties to be heard on the form of the interlocutor to be pronounced to give effect to the foregoing findings in fact and law and fixes 14 October 2011 at 2:15pm within the Sheriff Court House, Queen Street, Peterhead as a diet therefor; Meantime CERTIFIES the cause as suitable for the employment of Junior Counsel and RESERVES the question of expenses.

 

 

 

Sheriff Philip Mann

 

 

Note/

Note

 

1. The Hearing

 

1.1 This is an action for damages arising from failure to implement three separate sets of missives for the sale and purchase of three separate heritable properties. It called before me as a proof before answer on 13 September 2011. I heard evidence on 13 and 14 September 2011 and submissions on 15 September 2011. At the outset of the proof, on joint motion, I restricted the enquiry to the question of liability, leaving the question of quantum to be dealt with, if necessary, at a later date. The parties lodged in process a joint minute of admissions from which most of the findings in fact are derived. I have not recorded in the findings in fact such matters as were agreed in relation to quantum and so the joint minute will require to be referred to again should it prove to be necessary to have a proof on that matter

 

1.2 The Pursuers led evidence from the following witnesses, namely Colin Rhodes and John Walker, two of their directors; Graeme Stephen, a director of the Exchange Bond Company Ltd who issued an exchange bond for each of the transactions provided for by the separate missives; Neil Johnston, a solicitor in the employment of Gavin Bain and Company, Solicitors, Aberdeen ("Gavin Bain") who acted for the Pursuers in the conclusion of the missives; Ian Wilson, at the relevant time a partner in KWAD, Solicitors Aberdeen ("KWAD") who issued the formal acceptances of the Pursuers' offers; Marlene Leiper, a paralegal assistant in the employment of KWAD; Kevin Davidson, a partner of KWAD; and Keith Ingram, at the relevant time a consultant with and former partner of KWAD and also a partner of a Limited Liability Partnership called Purple Sky.com LLP ("Purple Sky"). Apart from the evidence of Marlene Leiper, which added nothing of direct relevance to the question at issue in this proof, I hereafter describe the evidence of each witness so far as necessary.

 

1.3 The Defender elected not to lead any evidence.

 

2. The Background

 

2.1 In 2008 the Pursuers were constructing residential properties on phase four of a development known as The Park Development, Pittodrie, Aberdeen. They were introduced to Purple Sky by the agents who had handled the sale of the properties on the first three phases of the development. Purple Sky had several clients who were interested in buying, in all, sixteen of the properties on phase four.

 

2.2 The Pursuers and Purple Sky entered into an agreement whereby Purple Sky would get commission upon the successful completion of the sales/purchases. The agreement set out in a schedule the properties involved and the individual purchasers. The Defender was included as a purchaser of three of the properties, namely plots 174, 181 and 182.

 

2.3 Following upon this agreement Gavin Bain issued three offers addressed to KWAD, each offering to sell one of the plots to the Defender. KWAD issued an acceptance in respect of each offer. Each acceptance was qualified only to the extent of deleting a time limit for acceptance. The missives in each case were concluded by a final acceptance issued by Gavin Bain to KWAD. The acceptance in each case issued by KWAD was stated to be issued on behalf of and as instructed by the Defender.

 

2.4 The Defender did not settle any of the purchases. In due course, the Pursuers rescinded the missives in each case and resold the properties giving rise to the losses for which they now sue in this action. The sole critical issue in dispute, in this proof, was whether or not KWAD had authority from the Defender to issue the qualified acceptances on his behalf and, accordingly, whether or not the Defender was bound by each set of missives.

 

3. Direct Evidence Bearing on the Critical Issue

 

3.1 The only witness who had any direct contact with the Defender as regards the missives was Keith Ingram. His evidence was that he had contacted the Defender after the offers had been received by KWAD and had confirmed with him that he wished to proceed with the purchases. He was adamant that he spoke to the Defender in his role as a partner of Purple Sky and not as a consultant of KWAD. He was adamant that he, as a consultant of KWAD, had received no instruction from the Defender to issue acceptances on his behalf. He, himself, was identified as a purchaser in the schedule to the commission agreement. KWAD had received an offer in respect of the property to be sold to him. This offer had been received at the same time as the offers in respect of the properties to be purchased by the Defender. He had prepared a draft qualified acceptance for his own property. He had likewise prepared draft qualified acceptances for the Defender's properties and had handed these to Ian Wilson on the understanding that Ian Wilson would confirm the Defender's instructions before signing and issuing the acceptances. He had prepared the acceptances in draft to assist Ian Wilson by way of relieving his work load. He could not sign the acceptances himself because, as a consultant, he was not an authorised signatory of KWAD.

 

3.2 Ian Wilson gave evidence that confirmed that the offers had been addressed to him but that he had been told to pass the offers to Keith Ingram who had intimate knowledge of the proposed transactions. He had passed the offers to Keith Ingram. Keith Ingram had passed the offers back to him along with qualified acceptances which he had prepared. His evidence was that Keith Ingram had asked him to sign and issue the qualified acceptances. He had done so without confirming the Defender's instructions directly with him. He had relied on Keith Ingram's assurances that he had taken the Defender's instructions that the acceptances were to be issued.

 

 

4. Counsels' Submissions

 

4.1 Counsel's submissions were short and to the point. There was no dispute between them that missives had been concluded and that the Defender would be bound by them if he had instructed the issue of the acceptances. Counsel were, I think, agreed - under reference to the cases of The Danish Dairy Company Limited v Gillespie 1922 S.L.T. 487 and Hopkinson v Williams 1993 S.L.T.907 - that the terms of the missives themselves could not prove the existence of instructions to the solicitors to act therein on behalf of the parties; and that the Pursuers had to prove that KWAD had specific authority to act on behalf of and as instructed by the Defender in concluding the missives.

 

4.2 Mr Sanders submitted that I should not accept Mr Ingram's evidence. I should, instead, prefer the evidence of Mr Wilson supported by several other adminicles of evidence to find in favour of the Pursuers on the basis that the acceptances issued by KWAD had been issued on behalf of and as instructed by the Defender.

 

4.3 Mr Bowen submitted that I should accept the evidence of Mr Ingram that the Defender had not instructed him, in his capacity as a consultant with KWAD, to issue the acceptances on his behalf. Were I to do so I would have to find in favour of the Defender, given that the evidence was that no one else had taken the Defender's instructions. Mr Bowen maintained that any inference about the Defender's instructions to KWAD that could be drawn from the fact that the acceptances were specifically stated to be issued on his behalf and as instructed by him could be displaced and was, in fact, displaced by the evidence given by Mr Ingram. It was also displaced by the evidence of Neil Johnston of Gavin Bain who must have known that Keith Ingram had a number of conflicts of interest in the whole matter and, so said Counsel, as a consequence was not entitled to rely on the statements within the qualified acceptances that they were issued on behalf of and as instructed by the Defender.

 

5. Discussion, Assessment of Evidence and Decision

 

5.1 I preferred Mr Sanders' submissions. On Mr Bowen's last point I do not think that it is correct to say that Mr Johnston was not entitled to rely on the statements within the qualified acceptances that they were issued on behalf of and as instructed by the Defender. It seems to me that one solicitor must be entitled to rely upon an assertion made by another solicitor if he so wishes, always accepting that the trust involved in that reliance may turn out to be misplaced if the issue of authority is challenged and cannot be proved. As it turns out, on the view that I have taken of the evidence Mr Johnston was correct to rely on the statements in question.

 

5.2 I regret to say that I did not find Keith Ingram to be an entirely credible and reliable witness. He was very guarded in his answers when it came to his involvement with the Defender. He was evasive when asked if he continued to see clients on behalf of KWAD after he resigned as a partner and assumed the role of consultant and had to be pressed to admit that that was the case. When he was asked if the Defender was an existing client of KWAD at the time that he spoke to the Defender about the offers his reply was "yes, so far as I am aware". I am satisfied, on the basis of his own evidence that the Defender was someone that he knew quite well, that Mr Ingram would have known for sure whether or not the Defender was or was not an existing client of KWAD at the relevant time. If he was being entirely candid there was no need for any hesitancy on this point. I simply did not accept Mr Ingram's assertion that the dialogue between him and the Defender as recorded in his file note number 5/9.9 of process was not to be ascribed to his taking instruction from the Defender in his role as a consultant of KWAD. I did not believe his evidence that on the occasion in question he was, in his capacity as a partner in Purple Sky, merely noting the Defender's desire to proceed to missives and that there was an expectation that the Defender's instructions would have to be confirmed by Ian Wilson before the offers could be accepted on the Defender's behalf. I did not believe his assertion that Ian Wilson had acknowledged that he would have to take the Defender's instruction before signing and issuing the qualified acceptances.

 

5.3 Mr Ingram's evidence was directly contradicted by Ian Wilson, whose evidence I preferred. It was clear that Mr Wilson had come to court reluctantly. It was also clear that Mr Wilson had been concerned to establish, before giving evidence, whether or not KWAD's professional indemnity insurers were involved. This was undoubtedly a factor to be considered when assessing Mr Wilson's credibility and reliability in asserting that he was entitled to issue the acceptances on behalf of and as instructed by the Defender but, in the end of the day, I was satisfied that he was telling the truth and that he was honestly trying to assist the court. His acceptance of Mr Ingram's assurances that he had taken the Defender's instructions had the ring of truth about it, given the relative positions within the firm of Mr Ingram as a consultant and past partner and of Mr Wilson as a junior partner. I accepted his evidence that he had been instructed to pass the offers to Mr Ingram upon receipt and that he did so. According to Mr Wilson he had little, if any, knowledge of Mr Ingram's involvement with Purple Sky. Accordingly, he could only have passed the offers to Mr Ingram in the context of Mr Ingram being a consultant with KWAD. I infer that one of the purposes of Mr Ingram having the offers to hand was to enable him to take the Defender's instructions thereon.

 

5.4 Of course, the fact that I disbelieved Mr Ingram in regard to the issue of taking the Defender's instruction does not mean that the opposite is true. Nor does Mr Wilson's evidence on its own establish to my satisfaction that he was, in fact, acting on the Defender's instructions when issuing the acceptances. But there are other pieces of evidence that, taken together and on the balance of probabilities, persuade me that the Defender instructed KWAD to issue the acceptances on his behalf and that he should be bound by the concluded missives.

 

5,5 There is Mr Ingram's file note, itself (5/9.9 of process), relative to his discussion with the Defender following upon receipt of the offers. The file note reads "TC. Alistair Greig - confirmed instructions to proceed with missives for Plots 174, 181 and 182. He will provide cheque for £15,000". If Mr Ingram was truly wearing only his Purple Sky hat I do not think that he would have used the word "instructions". He would have used some other turn of phrase to signify that the Defender was simply confirming a general willingness to proceed to the missive stage. The file note speaks of proceeding with the missives. When he spoke to the Defender on that occasion, Mr Ingram already had possession of the offers and had already prepared what were, to all intents and purposes, de plano acceptances. The inference that I draw from that is that the file note refers to proceeding with, in the sense of furthering, the missives by issuing the acceptances. It is to be remarked that the note does not contain any indication that Ian Wilson was to confirm the Defender's instructions. If that was truly the case one might have expected there to be such an indication.

 

5.6 There is Mr Ingram's evidence that the various purchasers mentioned in the schedule to the commission agreement were aware of its terms because they were all people that he knew quite well. That coupled with his reluctant evidence that the Defender was an existing client of KWAD leads me to conclude that the Defender would have known that Mr Ingram was a consultant with KWAD at the time of the telephone discussion giving rise to the note 5/9.9 of process.

 

5.7 The fact that the Defender was an existing client of KWAD was confirmed by Kevin Davidson. I took care in the assessment of Mr Davidson's evidence given that it was clearly in his interests that it be established that his firm, KWAD, acted on the Defender's instructions. He was, curiously, unsure about Mr Ingram's exact employment status within KWAD after his retiral as a partner but it would have been quite simple for him to have made a bold and unequivocal assertion that he was an employee. I think that he was honestly trying to convey the truth and in the result I accepted his evidence as being credible and reliable. I accepted Mr Davidson's evidence to the effect that at the critical time Mr Ingram was a consultant with KWAD. I accepted his evidence that Mr Ingram had authority to accept instructions from clients. I accepted his evidence that Mr Ingram had, at least, the same status as a paralegal assistant upon whose assertion that instructions had been taken from a client KWAD would have acted with the intention and effect of binding the client.

 

5.8 On the evidence of Colin Rhodes the Defender was a Financial Adviser and I do not entertain the notion that the Defender would have been so naïve as to think that when he was instructing Mr Ingram, as recorded in the file note, he was not thereby instructing KWAD to conclude the missives on his behalf.

 

5.9 There is the evidence about the exchange bonds required in terms of clause 24 of Gavin Bain's offers. Mr Ingram's file note records that the Defender would make available a cheque for £15,000. The evidence was not entirely clear as to what the requirement was for such a cheque at that stage but I think that it is a reasonable inference to make that it was for settlement of the premiums for the exchange bonds. These, according to Mr Ingram's evidence, were paid through Purple Sky. Parties agreed in their joint minute of admissions that the exchange bond premiums were paid by Purple Sky. Standing Mr Ingram's evidence, that must mean merely that Purple Sky were the means by which the funds were conveyed to the Exchange Bond Company.

 

5.10 Graeme Stephen, a director of the Exchange Bond Company, gave evidence that the process of arranging an exchange bond involved the ingathering of a substantial amount of personal information about the Defender and completion and signature by him of an agreement. His evidence was entirely credible and reliable. I consider it to be inconceivable that the Defender, as a man of business, would have gone through that process if he had not known about and felt bound by the terms of clause 24 in each of Gavin Bain's offers.

 

5.11 There is the evidence of Colin Rhodes and John Walker, two of the directors of the Pursuers. They were both entirely credible and reliable in my view. They deponed about a meeting that took place within the offices of Clydesdale Bank at Carden Place in Aberdeen which was attended by themselves, Steven Glennie of Gavin Bain and Keith Ingram. The Defender had not been present. The meeting had taken place in September 2008 just after the collapse of Lehman brothers which heralded the start of what has generally become known as "the credit crunch". Keith Ingram had advised the meeting that there were going to be problems with settlement of the various transactions, including those involving the Defender. The problems had arisen because of the fact that mortgage lenders had generally reduced the loan to value ratio to 70% from about 90% and that the Council of Mortgage Lenders had introduced an incentives disclosure form requiring sellers to disclose any inducements offered to purchasers. I simply do not accept that Mr Ingram would have revealed these difficulties to the Pursuers without having spoken to, inter alia, the Defender. If he had spoken to the Defender, which I infer he must have, then if the Defender had not felt bound by the missives because of lack of instruction he would have said so to Mr Ingram and it would have been quite simple for Mr Ingram to have so advised the Pursuers. Mr Ingram had made no such assertion at that meeting despite the fact that the Defender had been specifically mentioned. There had been a further meeting in October 2008 involving the same parties and covering much the same ground. Again, Mr Ingram had made no assertion that KWAD had been acting without the Defender's authority.

 

5.12 In February 2009 Mr Rhodes and Mr Walker had had a meeting with the Defender and two of the other purchasers who had been introduced by Purple Sky. According to Mr Walker, Mr Ingram refused to attend that meeting. All three purchasers had clearly asserted that they had not instructed KWAD and that they thought they had been dealing exclusively with Purple Sky. All three indicated that on that basis they would not settle the transactions. I think that it is a reasonable inference to make that Mr Ingram would have been in some difficulty addressing the question of instruction at that meeting and that that was the reason for his refusal to attend.

 

5.13 Immediately following the meeting referred to in paragraph 5.12 Mr Rhodes and Mr Walker had had a further meeting with the Defender on his own. The Defender had tried to negotiate a settlement involving a piece of land owned by him at Cruden Bay. Mr Rhodes said that the Defender had intimated that he was going to have a meeting with KWAD to discuss the issue of authority. If the Defender's position truly was that he had not instructed KWAD then I cannot see why he would think it necessary or appropriate to check the position with them. Mr Walker said that the Defender had remarked at this further meeting that he was in a financial position to complete the purchases but that he did not want to. He said he felt that he had been dealing with Purple Sky and that there was "enough there for him to say No". This seemed to me to point to the Defender deliberately creating confusion about the role of Mr Ingram and manipulating that in an attempt to give credence to his claim that he was not bound to the missives due to his not having instructed KWAD.

 

5.14 On the whole evidence I have had no difficulty in concluding that the Defender instructed KWAD to issue the qualified acceptances on his behalf and that he must be bound by the terms of the missives. In any event and although it plays no part in my decision, I think it worthy of note that the Defender has not attempted to reduce the missives ope exceptionis.

 

5.15 For the sake of completeness, I mention a matter that I considered in relation to the credibility and reliability of those witnesses who were involved with the creation of the agreement between the Pursuers and Purple Sky. This relates to the astonishing level of commission provided for in the agreement. There was evidence that Purple Sky acted as some sort of buyers' club, one of whose aims was to secure discounted prices for its clients. It not being necessary for my decision in this case, I do not draw any inferences about the true intended destination of the commission payments and their relevance to the price considerations upon which mortgage funds would have been calculated and made available. Suffice to say that I observed a general air of discomfort on the part of those witnesses who gave evidence about the creation of the agreement. In my view, rightly so but in the end of the day this did not alter my assessments of credibility and reliability hereinbefore expressed.

 

6. Final Matters and Further Procedure

 

6.1 Given that the question of quantum has still to be resolved I have put the cause out for a hearing on the precise terms of the interlocutor required to give effect to this judgement. It seems to me that the Defender's pleas in law 3 to 14, inclusive, should be repelled at this stage but I would prefer that parties address me further on this before I make a final decision. Counsel indicated that they were not insisting on the parties' respective preliminary pleas but I am unclear as to whether that applies generally or if there may still be a live issue in relation to quantum. Accordingly, I think it unsafe to repel any preliminary pleas at this stage and would, again, prefer to be further addressed on the matter. Counsel need attend the hearing only if so advised.

 

6.2 Counsel were agreed that the cause is suitable for the employment of Junior Counsel. I agree with them and have provided accordingly.

 

6.3 Counsel were also agreed that the expenses of the restricted proof should follow success. However, there will be further expenses occasioned by the hearing for which I have provided and the whole question of expenses may well be affected by the outcome as regards quantum. I think it preferable to reserve the question of expenses meantime. I would suggest, however, that parties should be in a position to address me fully on the question of expenses up to this point at the forthcoming hearing if they are not in a position to present an agreed position. I say this because I do not think that there is any particular requirement for me to preside over a proof on the question of quantum should that be necessary and, given the present economic constraints which have impacted on the use of part time sheriffs, there is no guarantee that I will be assigned to deal further with this case. Of course, if parties can identify good and sufficient cause why I should be so assigned they can canvass that with me at the forthcoming hearing.

 

6.4 As indicated at the end of submissions I am grateful to Counsel for the very efficient, courteous and restrained way in which the proof was conducted. That was of great assistance to me.