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Scottish Court of Session Decisions |
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You are here: BAILII >> Databases >> Scottish Court of Session Decisions >> Burnett v. Menzies Dougal (a firm) & Ors [2004] ScotCS 40 (24 February 2004) URL: http://www.bailii.org/scot/cases/ScotCS/2004/40.html Cite as: [2004] ScotCS 40, 2005 SCLR 133 |
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OUTER HOUSE, COURT OF SESSION |
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OPINION OF R F MACDONALD QC (Sitting as a Temporary Judge) in the cause VERONA BURNETT (AP) Pursuer; against MENZIES DOUGAL, a firm, and PETER D AITKEN, GORDON S LOCKERBIE and ALEXANDER D BURNETT, three of the partners thereof, as such partners and as individuals Defenders:
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Pursuers: J A Brown; Henderson Boyd Jackson
Defenders: E W Robertson; Shepherd & Wedderburn
24 February 2004
Introduction
[1] The pursuer in this action sues a firm of solicitors and its three partners for breach of contract and negligence arising out of a conveyancing transaction in 1997 for the purchase of the house at 46 Swanston Avenue, Edinburgh ("the property"). She avers that a failure by them to have executed a Minute of Agreement regulating the liabilities of herself and her co-purchaser to repay the loan secured over the property has resulted in a loss to her of £20,315.00. When the case called before me on Procedure Roll the defenders argued that their first plea-in-law should be sustained and the action dismissed on the ground that the pursuer's averments were irrelevant and lacking in specification.The Pleadings
[2] The background, as averred in Condescendence 2, is that prior to 1997 the pursuer formed a relationship with Mr Alistair Burnett and they agreed to be married. Prior to their marriage they decided to purchase the property and in or around February 1997 they instructed the defenders to act on their behalf in the purchase thereof. The defenders accepted the instructions and the transaction was dealt with by their partner, Mr Gordon Lockerbie. The pursuer had very few direct dealings with Mr Lockerbie. Matters upon which Mr Lockerbie required instructions were discussed between the pursuer and Mr Burnett, who then issued instructions to Mr Lockerbie, usually by telephone. On 6 February 1997 Mr Lockerbie submitted an offer for the purchase of the property on behalf of the pursuer and Mr Burnett. The offer was accepted subject to certain qualifications and a price of £90,000.00 was agreed. [3] Condescendence 3 is in the following terms:-"After the offer was accepted but before the transaction was settled, the pursuer and Mr Burnett had certain discussions about the funding of the purchase. It was agreed that the bulk of the purchase price would be contributed by the pursuer. Mr Burnett was to contribute a small proportion of the price, and the balance was to come from a secured loan which Mr Burnett was to service. The pursuer was concerned to protect the investment which she was to make in the purchase of the house in the event that she and Mr Burnett subsequently separated. It was accordingly agreed between the pursuer and Mr Burnett that instructions would be given to Mr Lockerbie that certain arrangements should be made to protect the pursuer's investment. Those instructions were set out in a handwritten note of instructions prepared by Mr Burnett. A copy of the handwritten note of instructions is produced and referred to for its terms which are held to be repeated herein brevitatis causa. In terms of the handwritten note of instructions, title was to be taken in the proportions four fifths to the pursuer and one fifth to Mr Burnett. There was to be a 'side agreement' providing that in the event of the parties separating and the house being sold, the pursuer was to be entitled to four fifths of the proceeds of sale after deduction of the expenses of sale but before repayment of any secured loan. Mr Burnett was to be entitled to the remaining one fifth of the proceeds of sale. Mr Burnett was to be responsible for repayment of the loan from his one fifth share. He was to be responsible for any shortfall between his one fifth share and the amount required to repay the loan, and entitled to any surplus after repayment. The handwritten note of instructions was given by Mr Burnett to Mr Lockerbie on or around 18th February 1997. Prior to delivery of the handwritten note Mr Burnett told the pursuer that he would issue instructions to Mr Lockerbie that the transaction should be structured as set out in the handwritten note. At no stage did Mr Burnett advise the pursuer that he had done anything other than issue such instructions. The handwritten note was received by Mr Lockerbie and placed by him in his file. By letter dated 21st February 1997 and addressed to the pursuer and Mr Burnett he acknowledged receipt of the handwritten note. A copy of the letter of 21st February 1997 is produced and referred to for its terms which are held as repeated herein brevitatis causa. The pursuer does not know precisely what discussions took place between Mr Burnett and Mr Lockerbie in connection with the handwritten note of instructions. Having regard to the surrounding circumstances hereinbefore condescended upon it is believed and averred that Mr Burnett instructed Mr Lockerbie to implement the handwritten note of instructions. The defenders are called upon to specifically aver (a) whether they accept that the handwritten note was given to Mr Lockerbie; (b) if so, when they maintain it was given; and (c) what instructions they maintain were given to Mr Lockerbie anent the handwritten note. Implementation of the handwritten note would have required title to the property to be taken in the proportions four fifths to the pursuer and one fifth to Mr Burnett. It would also have required preparation of a Minute of Agreement between the pursuer and Mr Burnett regulating their respective positions in the event of separation or of the property being sold. Such a Minute of Agreement would have obliged Mr Burnett to repay the entire balance due to the Halifax Building Society from the proceeds of his one fifth interest in the property, and thus to relieve the pursuer of any obligation to repay the Halifax loan. Such an agreement would also have conferred upon the pursuer an option to purchase Mr Burnett's one fifth share of the property at an independently determined price, with Mr Burnett being obliged to use the proceeds of any such sale to repay the Halifax loan. On 25th April 1997 Mr Lockerbie duly settled the transaction on behalf of the pursuer and Mr Burnett. Title to the house was taken in the proportions four fifths to the pursuer and one fifth to Mr Burnett, as instructed in the handwritten note of instructions. A loan of £20,000 was obtained from the Halifax Building Society. A Standard Security over the house was granted to the Halifax Building Society. No 'side agreement' was prepared regulating the respective rights of the pursuer and Mr Burnett in the event of them subsequently separating. Mr Lockerbie did not seek to receive any instruction from the pursuer to the effect that such an agreement was no longer required. He did not seek or receive any instruction from the pursuer to the effect that her instructions had changed from those set out in the handwritten note of instructions. He did not give the pursuer any advice about the consequences of not entering into a formal Minute of Agreement with Mr Burnett in order to regulate their respective rights in the event of subsequent separation. He did not advise the pursuer that a Minute of Agreement incorporating the terms hereinbefore condescended upon was required to effectively bind Mr Burnett to relieve the pursuer of her obligation to repay the Halifax loan. He did not advise her that in the absence of such a Minute of Agreement Mr Burnett was not bound so to relieve her. He did not advise her that her position would be adversely affected to a material extent by the absence of such a Minute of Agreement. Had Mr Lockerbie sought specific instructions from the pursuer and advised her of the import of not having a Minute of Agreement prepared, she would have insisted that the transaction be structured as set out in the handwritten note. Having regard to the fact that Mr Burnett prepared the handwritten note and gave it to Mr Lockerbie, and having regard to the fact that he discussed the matter with the pursuer and agreed to issue the handwritten note it is likely that he would have been prepared to structure the transaction as set out therein. It is likely that he would have agreed to execute a Minute of Agreement incorporating the terms hereinbefore condescended upon. The pursuer and Mr Burnett were married on 7th January 1998. They separated in April 1999."
"SIDE AGREEMENT BETWEEN A & V STATING THAT IN THE EVENT OF THEM SPLITTING-UP OR HOUSE BEING SOLD V'S SHARE OF NET PROCEEDS WILL BE 4/5 AND A'S SHARE WILL BE 1/5 LESS TOTAL BALANCE OF MORTGAGE THEN OUTSTANDING. PLUS OPTION TO V TO BUY A'S 1/5 SHARE AT INDEPENDENT VALUATION, PRICE BEING USED TO REDUCE/REPAY MORTGAGE, ANY SHORTFALL OR SURPLUS BEING FOR A'S ACCOUNT. AGREEMENT REQUIRED BECAUSE V IS SCARED OF MORTGAGES & AFRAID THAT SOMEHOW I MIGHT DO SOMETHING TO REDUCE THE VALUE OF HER SHARE OR EVEN BANKRUPT HER!
UNDER THE ABOVE ARRANGEMENTS, A & V ARE BOTH TAKING THE RISK THAT IF THE MARRIAGE BREAKS UP THE HOUSE MAY HAVE TO BE SOLD."
"Dear Verona & Alistair
PROSPECTIVE PURCHASE, 46 SWANSTON AVENUE, EDINBURGH
I refer to our meeting on Tuesday, 18 February with regard to the above matter. I confirm the terms of the instructions given to me.
I would confirm that my firm in general and myself in particular will be happy to act on your behalf.
I would confirm that I shall endeavour to be of the greatest assistance to you throughout the above matter. You should not hesitate to telephone me should you have any queries or points you wish to raise. You will appreciate that I will not always be available being regularly with clients or on other calls. If you are unable to speak to me directly please either leave your number with my Receptionist and I shall call you when free or alternatively leave a message with either my secretary Donna Scanlan (ext. 241) or my assistant Sandra Pollock (269). In addition, should it be most urgent, I would have no objection to you telephoning me at home. My home telephone number is (0131) 662-4485. You will appreciate for obvious reasons that I would hope you would not find it necessary to telephone me at home - however, should it prove really necessary I would have no objection.
I would confirm that I am on course of concluding the contract for a purchase on your behalf. I will in due course let you have copies of the concluded missives but in the meantime would advise that the essential terms of the contract will be:-
1. Purchase price £90,000.00
2. Date of entry 25 April 1997.
I understand that you are arranging a loan through the Halifax Building Society and I have been in contact with them on your behalf. I have specifically queried whether any internal alterations have been carried out and asked them to comment upon the windows. I will keep you fully advised.
I think it would be sensible in due course (if not now!) to look at your personal insurances and pensions relative to this purchase. I can appreciate that might seem a rather tedious suggest but I think it is one worthy of consideration and I can arrange to meet with you and the consultant should you require.
I acknowledge receipt of the notes passed to me by Alistair relating to the purchase and in particular confirming that the title is to be taken in the following proportions:-
A. four fifths to Verona
B. one fifth to Alistair, with no survivorship clause. I confirm that I
shall prepare the title in this manner in due course.
I trust you find this all to be in order - however if you have any query please do not hesitate to contact me.
Best wishes,
Yours sincerely,
Gordon S Lockerbie."
"A solicitor of ordinary skill acting with ordinary care would have carried out the written instructions given by the pursuer and Mr Burnett. A solicitor of ordinary skill acting with ordinary care would have prepared a Minute of Agreement between the pursuer and Mr Burnett incorporating the terms hereinbefore condescended upon, and would have had it executed. A solicitor of ordinary skill acting with ordinary care would have sought specific instructions from the pursuer before departing from the written instructions given to him. A solicitor of ordinary skill acting with ordinary care would have tendered specific written advice to the pursuer about the consequences of failing to have a Minute of Agreement executed. Such written advice would have included specific advice that a Minute of Agreement incorporating the terms hereinbefore condescended upon was required to effectively bind Mr Burnett to relieve the pursuer of any liability for the Halifax loan. Such written advice would have included advice that in the absence of such a Minute of Agreement Mr Burnett was not bound so to relieve the pursuer. Such written advice would have included a clear explanation of the consequences of departing from the arrangement set out in the handwritten note by not having a Minute of Agreement executed. Such an explanation would have made clear that, in the event of the pursuer and Mr Burnett separating, the pursuer's position would be materially better if such a Minute of Agreement was executed than if it was not. Such an explanation would have included specific advice that instructing the transaction without such a Minute of Agreement would materially benefit Mr Burnett at the expense of the pursuer in the event of a subsequent separation when compared to the arrangement specified in the handwritten note of instructions. Such an explanation would have made clear to the pursuer that her position would be worsened when compared to the position which would have obtained had the handwritten note been implemented. Such written advice would have specifically advised the pursuer that the proposed departure from the handwritten note gave rise to a potential conflict of interest between her and Mr Burnett, in respect that his position was being materially improved at her expense. Such written advice would have specifically advised the pursuer to consider seeking independent legal advice on that point. Such written advice would have asked the pursuer for specific instructions as to the proposed departure from the handwritten note, such instructions being given on the basis of a clear understanding of the consequences of that departure. Mr Lockerbie failed to do so."
These averments are adopted mutatis mutandis in the negligence case which is pleaded in Condescendence 5.
[7] The averments of loss in Condescendence 6 are as follows:-"As a result of the said breach of contract et separatim fault and neglience on the part of the defenders the pursuer has suffered loss. After she and Mr Burnett separated she attempted to reach agreement with him as to the division of their assets. In May 2000 the house was valued by Messrs D M Hall at £115,000. Mr Burnett had by then moved out of the house. The pursuer remained in occupation. Mr Burnett refused to agree to any settlement which provided him with less than one fifth of the gross value of the house as indicated by that valuation. He indicated that he would raise proceedings for division and sale of the house unless the pursuer agreed to pay him a capital sum equivalent to one fifth of the gross value of the house in return for a conveyance of his interest to her. In the absence of a Minute of Agreement Mr Burnett was not obliged to repay the whole balance of the Halifax loan upon sale of his one fifth share and was also not obliged to sell his one fifth share to the pursuer. The pursuer was advised by her solicitors that she would have no defence to an action of division and sale. She was advised that if such an action was raised she would incur significant expense. She was advised that it was unlikely that she could rely upon any agreement between her and Mr Burnett which had not been formally reduced to writing and executed. If the house had to be sold the pursuer would have required to purchase alternative accommodation and move to such accommodation. She would have incurred further significant expense in connection therewith. The pursuer attempted to negotiate a settlement with Mr Burnett which would allow her to acquire his interest in the house and thus avoid the additional expense hereinbefore condescended upon. The pursuer could only reach such a settlement with Mr Burnett by agreeing to pay him £23,000 in return for a conveyance of his interest in the property. Those terms were the best which could reasonably be achieved by negotiation. She was advised by her solicitors to settle the dispute on those terms. If the handwritten note of instructions had been implemented a Minute of Agreement in the terms hereinbefore condescended upon would have been prepared and executed. Had such an agreement been executed the pursuer would have had an option to purchase Mr Burnett's one fifth share at an independently determined valuation, with Mr Burnett being obliged to repay the whole of the Halifax loan from the proceeds of any such sale. An independently determined valuation of Mr Burnett's one fifth share as at the date of the negotiations between him and the pursuer would have been about £23,000. The pursuer and Mr Burnett eventually reached agreement in March 2001. The balance outstanding to Halifax plc in terms of the secured loan as at 30th March 2001 was £20,315.03. The pursuer required to accept liability to repay the whole of the said loan. She required to agree to Mr Burnett being released from his obligation to repay the said loan. Had the pursuer's instructions to the defenders been acted upon, she would not have had to accept liability to repay any of the said loan. Had the pursuer's instructions to the defenders been acted upon, the said loan would have been repaid from Mr Burnett's one fifth share of the house. The pursuer has accordingly had to accept liability to repay the sum of £20,315.03 which she would not have had to do had her instructions to the defenders been acted upon. The sum sued for has been restricted to £20,315".
Submissions and Discussion
[8] The argument for the defenders presented by Mr E W Robertson consisted of two submissions. The first was that the pursuer had not made relevant and specific averments of fact which set out a proper foundation for the allegation of negligence. The second was that the averments of loss contained in Condescendence 6 were irrelevant and lacking in specification in that any act or omission of the defenders did not cause the financial loss averred because (i) the pursuer made a voluntary payment to resolve a situation which had arisen; and (ii) it would appear that the pursuer received further advice from different solicitors, and she had made no relevant and specific averments about that matter. I shall deal separately with each of these submissions and the responses to them by Mr J A Brown on behalf of the defenders.
First submission: Specification of negligence
[9] In making his first submission Mr Robertson attacked the factual averments made by the pursuer in Condescendences 2 and 3. The averment in Condescendence 2 that "the pursuer had very few direct dealings with Mr Lockerbie" (page 5C-D) was wholly inspecific. The defenders had set out in Answer 3 the specific dealings which they had had with Mr Burnett and the pursuer. The pursuer's averments about (1) what was agreed between her and Mr Burnett; and (2) what was imparted to Mr Lockerbie were in general somewhat cryptic. The reference to "matters" in Condescendence 2 was lacking in specification: it did not state what the matters were, or how they were discussed. The pursuer did not suggest that the defenders had done anything wrong in carrying out the purchase of the property or in taking title to it in the joint names of the pursuer and Mr Burnett, with four fifths to the pursuer and one fifth to Mr Burnett. There were no averments by the pursuer about what had happened concerning the loan arrangements or how the price of the property had been assembled. There were no averments about the conveyancing aspect of the loan. The averments in Condescendence 3 characterised the discussions between the pursuer and Mr Burnett or paraphrased the terms of the handwritten note 6/1 of process. The pursuer should be able to aver the precise instructions she had given: as the pleadings stood matters rested on a "believed and averred" basis. The critical averment in Condescendence 3 at page 8B-C was: "Having regard to the surrounding circumstances hereinbefore condescended upon it is believed and averred that Mr Burnett instructed Mr Lockerbie to implement the handwritten note of instructions". There had to be underlying facts to instruct that belief: it was not good enough that the pursuer expected that is what happened. The averments in the first sentence of Condescendence 3 that the pursuer and Mr Burnett had "certain discussions about the funding of the purchase" was meaningless. There were no averments about the terms of any standard security. The averment that it was agreed between the pursuer and Mr Burnett that instructions would be given to Mr Lockerbie that certain arrangements should be made to protect her investment was an averment about her state of mind, not an averment about what was said to Mr Lockerbie. As the handwritten note No.6/1 of process was incorporated into the pleadings, it was permissible to look at its terms and it did not look readily like a written letter of instruction requiring something to be done, which just required to be handed over to the solicitor. There were no averments about how the document was handed over and how any instruction was to be carried out. The averments in Condescendence 3 about the handwritten note constituted a paraphrase of the document. The high point of the averments about the instructions given to Mr Lockerbie was in Condescendence 3 at page 7E, where the pursuer averred that prior to delivery of the handwritten note Mr Burnett told the pursuer that he would issue instructions to Mr Lockerbie that the transaction should be structured as set out in the handwritten note and that at no stage did Mr Burnett advise the pursuer that he had done anything other than issue such instructions. There was nothing in the letter of 21 February 1997 from Mr Lockerbie to suggest that the matter now being founded on by the pursuer was discussed at the meeting of 18 February 1997 between Mr Burnett and Mr Lockerbie. The pursuer did not aver that she herself met Mr Lockerbie on 18 February 1997. So far as the other averments in Condescendence 3 were concerned, it was not said why there was an assumption that certain things would happen. In short, said Mr Robertson, there was a lack of specification about the terms of the agreement between the pursuer and Mr Burnett and that the defenders were instructed to give effect to any such agreement. [10] On behalf of the pursuer Mr Brown responded to the defenders' first submission by stating that one could take an overview of the pursuer's case in three stages: (1) there was a discussion between the pursuer and Mr Burnett, arising from which joint instructions were given to Mr Lockerbie that (a) title to the property was to be taken in the shares of four fifths to the pursuer and one fifth to Mr Burnett; (b) the pursuer would be entitled to buy Mr Burnett's one fifth share at an agreed valuation; and (c) Mr Burnett was obliged to repay the whole of the loan over the property from his one fifth share. The pursuer's case was that these were the instructions which were given to Mr Lockerbie. (2) Without reference to the pursuer, those instructions were departed from by omission and the necessary Minute of Agreement was not drawn up. (3) At the time of the separation the pursuer had no clear Minute of Agreement which could have formed the basis of an action for implement against Mr Burnett. Without that Minute of Agreement it was not impossible for her to raise an action of declarator against Mr Burnett in order to attempt to set up the agreement between them but she was advised by her new solicitors that it was unlikely that she would succeed and she did her best on the advice given. Had there been any Minute of Agreement, there would not have been any disagreement about what would happen. As Mr Brown put it, the downside for her was that she had to take over the whole of the Halifax loan. Had there been a Minute of Agreement she would have had the right to have been relieved of liability for this. The averments which the pursuer had made were sufficiently specific to merit an inquiry. Mr Brown went on to submit that the terms of the handwritten note dealing with title to the property and the "side agreement" were clear. It was averred that the note had been handed over to Mr Lockerbie, placed by him in his file and the receipt of it acknowledged by him. Although the pursuer could not say what Mr Burnett and Mr Lockerbie had discussed, it was legitimate for her to draw the inference that the instructions given were in accordance with the handwritten note. All the circumstances were consistent with such instructions and there was nothing to suggest that the instructions were different. He accepted that the pursuer had to prove what instructions were given to the defenders, but submitted that it could not be said at this stage that she was bound to fail on the issue of what instructions were given. The averment made by the defenders in Answer 3 at page 11E, which is to the effect that the pursuer confirmed that she was happy that her position was protected by the title being taken in the proportion of four fifths to her and one fifth to Mr Burnett, and that in these circumstances the defenders were not instructed simply to carry out points set out in the handwritten note, was denied by the pursuer (see page 10C). [11] In my opinion the first submission for the defenders is well founded. In order to plead a relevant case based on breach of contract and negligence it is, in my view, necessary for the pursuer to aver clearly and specifically the instructions given to Mr Lockerbie which she maintains he failed to carry out. I consider that her averments fail to meet this test. She does not aver that she herself instructed Mr Lockerbie to draw up a Minute of Agreement implementing the "side agreement" between her and Mr Burnett mentioned in the handwritten note. Nor does she aver that Mr Burnett as a matter of fact gave any such instruction to Mr Lockerbie. In my view the crucial averments on this point are to be found in Condescendence 3 at page 8B-C, and are as follows:"The pursuer does not know precisely what discussions took place between Mr Burnett and Mr Lockerbie in connection with the handwritten note of instructions. Having regard to the surrounding circumstances hereinbefore condescended upon it is believed and averred that Mr Burnett instructed Mr Lockerbie to implement the handwritten note of instructions."
"The use of the formula 'believed and averred' is frequent and convenient in our pleadings, but its appropriate function is to aver an inference which the user seeks to draw from certain facts; and they are generally facts which are not and cannot be fully known to him. A familiar instance is the narration in a divorce summons for adultery that the parties are averred to have been in loco suspecto as a matter of known fact, and thereafter 'it is believed and averred' that they committed adultery. Where a definite averment of facts which a party must establish is necessary, the formula is quite inappropriate. Here it is an expression of hope rather than of fact; and I can read it only as an attempt to salve the conscience of the pleader."
It seems to me that those words can be applied to the averments at page 8B-C quoted above. In this case a definite averment of the instructions given to Mr Lockerbie in connection with the execution of a Minute of Agreement is necessary and, that being so, the use of the formula "believed and averred" is quite inappropriate. That formula is in this case, as it was in the case of Brown, an expression of hope rather than of fact. It follows that the essential substratum of fact in the pursuer's case is absent and the action is bound to fail at proof. Accordingly, in my opinion, the action is irrelevant for want of specification of the necessary facts.
Second Submission: Causation
[13] Mr Robertson submitted that the pursuer had failed to aver a relevant case of a causal link between the acts and omissions characterised as negligence on the part of Mr Lockerbie and the payment which she had made to redeem the loan over the property. Her averments in Condescendence 6 amounted to stating that what she did was to buy off a litigated dispute. If, as she maintained, there was an agreement between her and Mr Burnett that he was solely liable to repay the loan she could have relied on and sought to enforce that agreement. There was no necessity for any such agreement to be formally constituted, as in a probative document. It was simply wrong to state that he was discharged from liability to clear off the whole loan because there was no Minute of Agreement. It was perfectly possible for the pursuer at any time after March 1999 to have had the underlying situation set out in the handwritten note reflected in an order of the Court. So far as concerned the averments in Condescendence 6 at page 15C-D that Mr Burnett indicated that he would raise proceedings for division and sale of the house unless the pursuer agreed to pay him a capital sum equivalent to one fifth of the gross value of the house in return for a conveyance of his interest to her, Mr Burnett still had the right to seek division and sale of the property whether or not there was any side agreement: Upper Crathes Fishings Ltd v Bailey's Executors 1991 S.C.30 per Lord President Hope at page 36 et seq; Berry v Berry (No.2) 1988 S.L.T.292; Scrimgeour v Scrimgeour 1988 S.L.T.590; Ralston v Jackson 1994 S.L.T.771 and Johnston v Robson 1995 S.L.T.(Sh.Ct.) 26. [14] In reply Mr Brown for the pursuer argued that this second submission for the defenders was really a point concerning mitigation of loss. The pursuer's case was that she would not have lost the sum of £20,315 if a Minute of Agreement had been drawn up. He accepted that if the pursuer had an enforceable agreement which she just decided not to enforce she could not saddle the defenders with her loss. She did not require to aver as a matter of absolute certainty that she could not have enforced the agreement in the handwritten document. It was a substantive defence open to the defenders to plead that she could have enforced the terms of the handwritten document. The averments of the pursuer as they stood were sufficient to instruct a case that the agreement in the handwritten document was not enforceable. He was happy to propose an amendment to aver that the terms of the document would not have been enforceable. He proposed to insert the following averment at page 15D after the words "conveyance of his interest to her": "In the absence of a Minute of Agreement Mr Burnett was not obliged to repay the whole balance of the Halifax loan upon sale of his one fifth share and was also not obliged to sell his one fifth share to the pursuer". Mr Robertson opposed the proposed amendment on the ground that it did not satisfactorily set out a clear position when the pleadings as a whole were considered. He submitted that the pursuer's case had hitherto been that there was an agreement between her and Mr Burnett and that it was enforceable, but it was unlikely that the pursuer could rely upon it: see the averments in Condescendence 6 at page 15E. The proposed amendment, said Mr Robertson, sat very uncomfortably with that averment. It solved nothing and introduced averments which conflicted with the existing averments by the pursuer. In my opinion Mr Robertson was correct in all that he said when opposing the pursuer's motion to amend made at the Bar. The averment at page 15E refers to "any agreement between her and Mr Burnett" and it is clear from the averments in Condescendence 3 that what the pursuer is saying is that she and Mr Burnett had agreed that he was to be responsible for repayment of the loan from his one fifth share and for any shortfall between his one fifth share and the amount required to repay the loan, and was to be entitled to any surplus after repayment. I shall therefore refuse the pursuer's motion to amend made at the Bar. So far as a possible action of division and sale of the property was concerned, Mr Brown accepted that there could be a counterclaim in such an action, but submitted that a counterclaim presupposed an underlying legal obligation. It could not be said that the pursuer could have compelled Mr Burnett to sell his share to her. She required a Minute of Agreement for two purposes: first, to give her the right to purchase his one fifth share, and, secondly, to give her the right to enforce repayment of the loan by him. [15] In my opinion the pursuer, in order to plead a relevant case that she sustained loss as a result of the failure of Mr Lockerbie to carry out the instruction to have a Minute of Agreement executed, must aver that, without the Minute of Agreement, she would not have sustained the loss in question. Having examined her averments of loss, I have reached the conclusion that she has not made such an averment. Her position is (as is evident from the averments in Condescendence 3) that the handwritten note No.6/1 of process represented an agreement between her and Mr Burnett. That note is, according to her, the writ of Mr Burnett: see the averment in Condescendence 3 at page 6B which refers to "a handwritten note of instructions prepared by Mr Burnett". In any event there must have been an agreement between the pursuer and Mr Burnett because, as Mr Robertson put it in the course of the debate, "you cannot have joint instructions from people who are not in agreement". There is not to be found anywhere in Condescendence 6 an averment that the agreement between the pursuer and Mr Burnett on liability to repay the loan was legally unenforceable. In my opinion Mr Robertson was entirely correct in his submission that the pursuer's averments in Condescendence 6 effectively amount to her saying that what she did was to buy off a litigated dispute by paying the sum of £20,315 to Mr Burnett. She does not aver that she took any steps to seek to enforce the agreement between her and Mr Burnett about repayment of the loan, as evidenced by his writ, namely, the handwritten note No.6/1 of process; nor does she aver that it was not possible to take any such steps. In my judgement the fatal flaw in the pursuer's averments of loss are correctly identified in the defenders' Note of Argument, wherein it is stated that there was a pre-existing agreement between the pursuer and Mr Burnett which the pursuer alleges the defenders were instructed to formalise, that that agreement did not require to be constituted in a formal deed and was in the handwriting of Mr Burnett, that if he failed to comply with that pre-existing agreement the pursuer would be entitled to rely on it without the formality of any document prepared by Mr Lockerbie and that there is therefore no relevant case that failure by the defenders caused the pursuer loss. Further, I am of the opinion that the defenders have correctly stated in their Note of Argument that the exercise by the pursuer of an option to buy out Mr Burnett's share at independent valuation existed by virtue of the pre-existing agreement between her and Mr Burnett and that, even if there had been a further formal agreement confirming this and Mr Burnett had refused or delayed to obtemper it, the pursuer would have required to raise an action for division and sale, something she could have done without the need for any "side agreement", and that the defenders were not liable to reimburse the pursuer for any sum which she had voluntarily paid in preference to raising proceedings to obtain her legal entitlement.Decision
[16] For the reasons given above, I am of the opinion that both submissions advanced on behalf of the defenders are well-founded. I shall therefore sustain the first plea-in-law for the defenders and dismiss the action.
