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	Scottish Court of Session Decisions
You are here: BAILII >> Databases >> Scottish Court of Session Decisions >> Ilona & Ors v. RH Colin Robert Vaughan & Ors [2005] ScotCS CSOH_152 (15 November 2005) URL: http://www.bailii.org/scot/cases/ScotCS/2005/2005CSOH152.html Cite as: [2005] ScotCS CSOH_152, [2005] CSOH 152

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[1] These two actions come before the Court on the Procedure Roll. In both of them, the defenders are sued as the Trustees of the Cawdor Estates Pension Scheme ("the Scheme"). Both actions proceed upon the basis of arrangements made in April 1993 whereby the then Trustees of the Scheme, at the request of the Sixth Earl of Cawdor and the Countess of Cawdor, agreed to make certain transfers to the Cawdor Estates No. 2 Pension Scheme ("the No. 2 Scheme"), a money purchase Small Self Administered Scheme administered as an exempt approved occupational pension scheme in terms of the Income and Corporation Taxes Act 1988. In the first action (A59) the pursuers are the (now) Dowager Countess Cawdor and a trustee company, suing as trustees of the No. 2 Scheme to enforce the obligation to transfer. In the second action (A60) the Dowager Countess Cawdor sues in her own right and as executrix of the late Sixth Earl, for count and reckoning for the defenders' intromissions with the Scheme and for payment of such sum as may be found due to her of the share of the assets of the Scheme as represents the transfer value of her entitlement under the arrangement to which I have referred.

[2] In both actions the defenders have a plea-in-law of lis pendens. On behalf of the pursuers in each action it is accepted that that plea was properly taken, since the two actions are, in effect, different ways of seeking an equivalent remedy. It was agreed, however, that that plea be held over for the time being on the understanding that if both actions were to survive this debate the pursuer would abandon one of them.

[3] In the event, the debate before me focused on the defenders' pleas-in-law concerning (a) title to sue and (b) prescription; and (c) the pursuers' plea-in-law to the relevancy of certain averments in the answers concerning what was referred to as "conditionality".

[4] The arrangements upon which these actions proceed are to be found in the decision taken by the then Trustees of the Scheme at a meeting of 7 April 1993 in response to transfer requests by the Sixth Earl and the then Countess Cawdor. Those transfer requests are in letters in substantially identical terms, sent on 7 April 1993 by Lord and Lady Cawdor, requesting the Trustees to transfer an equitable share of the Scheme's assets, representing their respective entitlements, to the Trustees of the No. 2 Scheme, "so that rights can be acquired for [me] thereunder." The letters continued by setting out the agreement of the writers thereof that the receipt of the Trustees of the No. 2 Scheme for the share of the assets transferred to them would discharge the Trustees of the Scheme from all liabilities to provide benefits under the Scheme for Lord and Lady Cawdor except in relation to benefits under Rules 7A and 8C (essentially death in service). Other letters written by Lord and Lady Cawdor of the same date requested the Trustees of the Scheme, and employers participating in the Scheme, to exercise their powers thereunder to alter the eligibility conditions in such a way that retirement benefits would cease to accrue in respect of Lord and Lady Cawdor with effect from 12 March 1993. At the time, both Lord and Lady Cawdor were members of the Scheme. Lady Cawdor was, but is no longer, a Trustee of the Scheme.

[5] The Minutes of a meeting of the Trustees of the Scheme held at Cawdor Castle on 7 April 1993 set out in paragraph 2 the circumstances in which the decisions were made. I quote this paragraph in full:

[6] It is important to note, in order to understand some of the discussions that took place thereafter, the reference to underfunding in the Scheme. The underfunding had been shown by an actuarial valuation as at 1 May 1992 and was part of the background against which Lord and Lady Cawdor wished their pension provision to be altered by the transfer of their benefit entitlement (excluding death in service benefits) from the Scheme to the new No. 2 Scheme.

[7] The Minutes continue in paragraphs 6, 7 and 8 to record the decision taken by the Trustees: (a) to amend the pension scheme as requested; (b) to comply with Lord and Lady Cawdor's request for transfer payments in respect of their total pensionable service, calculated in accordance with advice from Anthony Gibbs Consulting Group, the Scheme's actuaries; and (c) to make the transfer payments in the form of the Scheme's real property together with sufficient other investments or cash to satisfy the amounts which should be transferred. The reference to the advice from the actuaries was a reference to a letter from Mr Paul of the Anthony Gibbs Consulting Group to the Trustees of the Scheme setting out the value of the Scheme as at 1 May 1992 and, taking account of the under funding which their earlier report had noted, calculating Lord and Lady Cawdor's "share of the fund" as it is described in the letter, as being 48.5% of the total assets. The actuarial calculation was later revised in March 1994 so that the percentage of the Scheme's assets attributable to Lord and Lady Cawdor's share was reduced to 43.6%. Taking into account the value of properties transferred by that date, this left a balance of £190,675 still to be transferred to the No.2 Scheme, the equivalent of 7,257.23 units in the Scottish Widows Stock Exchange fund at the price ruling on 29 April 1993.

[8] The Trustees decided to make the transfer under Rule 14E of the Rules of the Scheme. Rule 14 deals with "Discretions of Trustees". Rule 14E, headed "Trustees' Discretion to Transfer-Out", provides as follows:

[9] It is to be noted that the power to transfer out of the Scheme is a power to transfer only to another occupational or personal pension scheme of a type specified in Rule 10C (b).

[10] The request by Lord and Lady Cawdor and the Trustees' decision are matters of admission on Record. It is also averred and admitted that pursuant to this exercise of their discretionary powers, the then Trustees of the Scheme transferred to the No. 2 Scheme certain heritable properties. The actions proceed upon the basis that the transfer of those properties was, in effect, a part payment of the full amount agreed to be transferred as contemplated by the actuaries in their letter appended to the minutes. The pursuers in these two actions seek to enforce, by different routes, what they contend to be the remainder of the obligation agreed by the Trustees on 7 April 1993.

[11] On behalf of the defenders, Mr McNeill, QC, reminded me of the approach set out in the speech of Lord Dunedin in D & J Nicholl v The Trustees of the Harbour of Dundee 1915 SC (HL) 7 at page 12.

[12] Under reference to this authority Mr McNeill submitted that, unless there were a speciality, the only person who could request a transfer of benefits was the person who for the time being was entitled to them. He referred me in this context to the last paragraph of Rule 14E, to which I have referred, and also to the statement in the letter from Lord and Lady Cawdor that the purpose of the arrangements which they proposed was "so that rights can be acquired for me" under the No. 2 Scheme. He submitted that the requests by Lord and Lady Cawdor in those letters had to be viewed separately. Once a request had been made by Lord Cawdor, his spouse, the present Dowager Countess, could not interfere. It followed that the Dowager Countess as an individual had no title and interest so far as concerned the arrangements made at the request of the late Lord Cawdor. She had no legal relationship with the Trustees of the Scheme with regard to his share of the benefits.

[13] The position of the Dowager Countess as executrix raised different issues. Mr McNeill referred me to passages from Wilson & Duncan, Trusts, Trustees and Executors, 2^nd Edition, at Chapter 33, and to the second part of the Appendix to Menzies on Trustees at page 852. The pursuer as executrix could only sue in respect of a specific right of action. The questions always arose: what rights were enjoyed by the deceased? and are they transmissible? Here, he submitted, the determination of the Trustees under Rule 14E did not give rise to anything transmissible as part of the estate of the late Lord Cawdor. The arrangements were simply a means of providing the late Lord Cawdor, as a member of the Scheme, alternative benefits under the No. 2 Scheme. Upon his death, the late Lord Cawdor had no pension rights under the Scheme (save for death in service benefits, which are not in issue here) and would benefit nothing from any entitlement under the No. 2 Scheme. The arrangements under Rule 14E, therefore, created nothing which the late Lord Cawdor could call his property; and nothing to which his executrix could confirm.

[14] Accordingly, in action A60, which was brought by the Dowager Countess both in her own name and as executrix of the late Lord Cawdor, the averments relating to the arrangements between the late Lord Cawdor and the Trustees of the Scheme should not be remitted to probation. It was accepted that in so far as the Dowager Countess sued in respect of her own entitlement, she had title and interest. In the event that I accepted his arguments in this action, Mr McNeill invited me to put the case out By Order so that the action could be brought into line with my determination.

[15] So far as action A59 was concerned, in which the pursuers are the Dowager Duchess and another company suing as trustees of the No. 2 Scheme, Mr McNeill submitted that the position was a fortiori. He submitted that since the agreement to transfer was made at the behest of two individuals, Lord and Lady Cawdor, each of whom had a value entitlement under the Rules of the Scheme, esto there was an enforceable obligation, the title to enforce it lay with Lord and Lady Cawdor, as Scheme members, or, since the late Lord Cawdor's death, with his executors, and not with the trustees of the No. 2 Scheme. Mr McNeill, in this context, repeated his submission that the Dowager Countess, as executrix of the late Lord Cawdor, had no entitlement to enforce the arrangement in respect of his interest. Accordingly, since the trustees of the No. 2 Scheme had no title or interest, the action should be dismissed.

[16] For the pursuers, Mr Johnston QC dealt first with the title of the trustees of the No. 2 Scheme in action A59. He submitted that the claim put forward in that action was to the transfer of units pursuant to a decision by the Trustees of the Scheme. It was a straightforward case of Trustees of one Scheme having agreed in April 1993 to transfer assets out of that Scheme into a trust. If the transfer went ahead, the trustees of the No. 2 Scheme would get title. Certain properties had already been conveyed. The trustees of the No. 2 Scheme were the persons entitled to enforce the arrangement in their favour. Under reference to McKenzie Stewart, The Law of Trusts, at pages 200-203, Mr Johnston submitted that the trustees of the No. 2 Scheme had both the right and the duty to ingather the estate. That included the right and duty to claim payment of debts due to the estate. That gave them both title and interest, since they were potentially liable in damages for failure to ingather the estate. Although the obligation was entered into by the Trustees of the Scheme at the request of Lord and Lady Cawdor, this made no difference; the Trustees of the No. 2 Scheme had a jus quaesitum tertio. Indeed the Rules of the Scheme made it clear that any transfer had to be to another scheme such as the No. 2 Scheme.

[17] So far as concerns action A60, in which the Dowager Countess sued both in her own right and as executrix, Mr Johnston's submissions were equally brief. He dealt briefly with the position of Lady Cawdor's own interest but acknowledged that her title in respect of this part of the claim was not in issue. So far as concerned her claim as executrix of the late Lord Cawdor, he submitted that the obligation of the Trustees of the Scheme so far as it related to Lord Cawdor's interests crystallised when it was undertaken on 7 April 1993. Lord Cawdor died on 20 June 1993. There was no term in the arrangement entered into that the obligation would cease to exist or cease to be enforceable upon the death of Lord Cawdor. This could easily have been provided for had it been intended. It was known at the time that the late Lord Cawdor was in ill-health. Further, in so far as it was relevant to look at later actings involving relevant parties, subsequent correspondence referred to on Record showed that the Trustees had continued, after Lord Cawdor's death, to proceed upon the basis that the outstanding balance to be transferred was the full balance, i.e. including that attributable to the entitlement of Lord Cawdor on 7 April 1993.

[18] I prefer the submissions of Mr Johnston on these issues. So far as concerns action A59, it seems to me plain that the arrangements made by the Trustees of the Scheme were that transfers were to be made to the newly established No. 2 Scheme. Certain properties were transferred. They were transferred to the trustees of the No. 2 Scheme who acquired title thereto. It seems to me clear that the trustees of the No. 2 Scheme are the persons with the title and interest to enforce the obligation entered into by the Trustees of the Scheme to transfer further assets into the No. 2 Scheme. They have a jus quaesitum tertio. So far as concerns action A60, it was not disputed that the Dowager Countess had title and interest to sue in respect of her own share of the entitlement. I think Mr Johnston is right in his argument that, as executrix, the Dowager Countess is entitled to take similar action against the Trustees of the Scheme in respect of failure to transfer the balance of the sums agreed on 7 April 1993. The obligation to transfer crystallised as at that date and was given a value. I cannot accept the argument that the obligation was altered or became in part unenforceable upon Lord Cawdor's death two and half months later.

[19] The decision by the Trustees was taken on 7 April 1993. The actions were raised on January 2003. In light of these facts, the argument on prescription fell into two parts. First, are the obligations in respect of which the actions were raised ones that can prescribe? Secondly, if so, has there been relevant acknowledgement interrupting prescription.

[20] For the defenders, Mr McNeill referred me to the Prescription and Limitation (Scotland) Act 1973, section 6 of which lays down a prescriptive five year period for obligations as defined in Schedule 1 thereto. Schedule 1 identifies a number of obligations but provides in paragraph 2 thereof that section 6 of the Act does not apply "(h) to any obligation specified in Schedule 3 to this Act as an imprescriptible obligation." Sections 7 and 8 of the Act provide for prescriptive periods of 20 years but in each case make it clear that the sections do not apply to rights specified in Schedule 3 to the Act as imprescriptible rights. Schedule 3 lists the imprescriptible rights and obligations for the purpose of those sections. That list includes the following:

The question in issue on the first part of the argument is whether the obligations asserted against the defenders in the two actions fall within Schedule 3(e)(iii) quoted above.

[21] Mr McNeill argued that in neither action was the claim, properly understood, a claim falling within paragraph (e)(iii) of Schedule 3 to the Act. Although that sub-paragraph was very wide in its terms, it had to be read as referring only to claims made against trustees in a fiduciary capacity. In support of that submission he referred me to Johnston, Prescription and Limitation at paragraphs 3.40 and 3.41.

Mr McNeill said that although the claim in action A60 was pled as a claim for count reckoning and payment, the essence of that claim was to seek implementation of the obligations entered into by the Trustees of the Scheme on 7 April 1993. It therefore fell to be viewed in the same light as the claim by the trustees of the No. 2 Scheme in action A59. In both actions, the claim was to enforce the obligation. Properly so characterised, the claims were not claims by beneficiaries to have property held in trust made forthcoming. They were claims based on a separate and distinct relationship which came to pass by reason of the requests by Lord and Lady Cawdor, and the Trustees' agreement to the those requests. The Trustees' exercise of their discretionary power under Rule 14E led to a new obligation on the part of the Trustees to transfer assets to a third party, namely the trustees of the No. 2 Scheme. Thus characterised, the claims should be seen not as being based on some fiduciary relationship or directed at the Trustees of the Scheme in a fiduciary capacity, but simply as a claim to enforce an obligation freely entered into by them. The arrangement on 7 April 1993 changed the question from one of trustee and beneficiary under a trust to one of creditor and debtor under an obligation. On that basis, the claims were subject to the five year prescriptive period.

[22] Mr Johnston accepted the correctness of Mr McNeill's approach to the construction of paragraph (e)(iii) of the Schedule 3 to the Act. He also accepted that there was no fiduciary relationship between the two sets of trustees. Nonetheless, he submitted, the obligation which the trustees of the No. 2 Scheme sought to enforce was an imprescriptable obligation. The obligation related to trust property in the possession of the Trustees of the Scheme. The issue was whether the trustees of the No. 2 Scheme should be in a position to claim that trust property without the 1973 Act standing in their way. He submitted that they were. The policy of the 1973 Act so far as concerned imprescriptible obligations was to prevent trustees standing on prescription as against the beneficiaries under the trust. He submitted that the No. 2 trustees were essentially claiming on behalf of the beneficiaries to enforce their entitlement. He referred me to Rule 14E which, in conjunction with Rule 10C, showed that while the beneficial interest lay with the employees, which definition in 1993 included Lord and Lady Cawdor, they were not enabled to receive the funds directly. The transfers had to be made to another Scheme, in the present circumstances the No. 2 Scheme, from which they would benefit. If the Rules of the Scheme had allowed the Trustees of the Scheme to make a transfer direct to Lady Cawdor, clearly Lady Cawdor's claim to enforce that obligation would fall within paragraph (e)(iii) of Schedule 3. But because the Rules of the Scheme did not allow such a direct transfer, the transfer had to be the No. 2 Scheme. It was entirely artificial to say that, because of those detailed provisions of the Rules, the obligation, which was not prescriptable in the hands of Lady Cawdor, became prescriptable in the hands of the Trustees of the No. 2 Scheme. On a proper construction of the transactions in the present case, the No.2 trustees were essentially claiming on behalf the beneficiaries; and although strictly there was no fiduciary relationship between the No. 2 trustees and the Trustees of the Scheme, the claim by the No. 2 trustees fell full square within the intent of the Act. As to the claim in action A60, Mr Johnston submitted that the claim by the Dowager Countess in her own capacity, as well as in her capacity as executrix, fell full square within the wording and the intent of paragraph (e)(iii) of Schedule 3. Her claim, as well as that of her late husband, arose directly out of the fiduciary relationship between the Trustees of the Scheme and themselves as beneficiaries. However, he submitted that even if he was wrong about this, the obligation to account, which was the subject of action A60, was not subject to a five year prescriptive period but to a 20 year prescriptive period. In this context he referred me to paragraph 1(f) of Schedule 1 to the Act, which excludes from the five year prescriptive period an obligation of "accounting for trust funds".

[23] In a short reply, Mr McNeill accepted that in so far as Lady Cawdor's claim in action A60 could properly be characterised as one for count and reckoning, both in her own right and, subject to the question of title and interest, as executrix for the late Lord Cawdor, the relevant prescription period was indeed 20 years by reason of that paragraph of Schedule 1.

[24] I consider that the actions both proceed upon the basis of obligations which are imprescriptable. The case of action A60, brought by the Dowager Duchess personally and as executrix for her late husband, appears to me to be plain. She is suing for count and reckoning of intromissions by the Trustees of the Scheme of which she is a member. She remains a member so far as the relevant benefits are concerned until the trustees of the No.2 Scheme are able to give a discharge in respect thereof. This they have not yet done. She is entitled, therefore, and subject to the question of title and interest in respect of her claim as executrix, to present her claim as one in which she seeks to enforce an obligation on the part of the Trustees to make furthcoming trust property. In doing so do as a member of the Scheme, she seeks to enforce a fiduciary obligation. The fact that the Trustees in 1993 crystallised their obligation in terms which may, subject to limitation and title, be enforceable in its own right does not, to my mind, have the effect of making prescriptable what is otherwise an imprescriptible obligation. Were it otherwise, it would mean that an obligation on the part of trustees to make futhcoming trust property could in every case be taken out of paragraph (e)(iii) of Schedule 3 to the Act and made prescriptible where the Trustees, by decision or acknowledgement, crystallised their general duty into a particular obligation. I do not think this is the proper construction of those provisions.

[25] The position of the trustees of the No.2 Scheme in action A 59 is, on the face of it, more problematic standing the gloss on the wording of that sub-paragraph which both counsel were prepared to accept as correct. It is, however, the wording of the sub-paragraph itself which must govern the situation; and while I accept the gloss put upon it as correct for the reasons put to me in argument and as explained by Mr Johnston in his book on prescription and limitation, that gloss must not itself be treated as though part of the Act. Clearly paragraph (e)(iii) is to be read as encompassing claims based upon or arising out of a fiduciary relationship; but it does not follow that, to fall within this category, the pursuer must in all cases be the beneficiary. To my mind Mr Johnston is correct in saying that No. 2 trustees, in the particular circumstances arising from the Rules of the Scheme, are effectively acting on behalf of the Dowager Countess and her late husband or, to put it another way, the obligation which they seek to enforce by their action is an obligation arising out of the fiduciary relationship between the Trustees and the beneficiaries of the Scheme.

[26] In case I am wrong about this, I need to turn to consider the question whether, if the claim is subject to a five year prescriptive period, there has been a relevant interruption for the purpose of sections 6 and 10 of the 1973 Act. This point only arises in the case of action A59, brought by the trustees of the No. 2 Scheme, since there is a concession that, subject to title and interest, the claim in action A60, being one for accounting (on the assumption that it is not a claim for making trust property forthcoming), is subject to a 20year prescriptive period and has not, in any event, prescribed. But in any event the arguments in respect of interruption of the prescriptive period were common to both actions.

[27] Section 6(1) of the 1973 Act provides as follows:

Section 10 of the Act defines what is required by way of relevant acknowledgement. It provides as follows:

It is accepted that there is no relevant performance here which would interrupt the prescriptive period sufficiently to enable the pursuers to say that the actions have not prescribed. The pursuers do, however, rely upon what they contend are clear written acknowledgements that the obligation still subsists.

[28] The communications relied upon by the pursuers on Record are as follows:

[29] Mr McNeill pointed out that section 10(1)(b) of the 1973 Act required any acknowledgement to be made in writing (i) on behalf of the debtor, (ii) to the creditor and (iii) in unequivocal terms acknowledging that the obligation still subsisted. Although he made some points about the capacity in which the documents may have been sent or copied to the Dowager Countess and equally observed that it was not always clear that Mr Paul was writing in his capacity of actuary to, and on behalf of, the Trustees of the Scheme, nonetheless he recognised that there were averments on Record which instructed a case which, for the purposes of this procedure roll discussion, required to be taken pro veritate. Were these points to be decisive, there would require to be a proof on such matters. However, the main thrust of his submission was that the terms of the written communications, which were all incorporated brevitatis causa, did not either individually or collectively amount to an unequivocal admission of the subsisting obligation. He pointed out that the actions were raised on 13 January 2003. It was necessary, therefore, for the pursuers in each action to identify a written acknowledgement on or after 14 January 1998. Whilst the previous correspondence might be instructive and provide a context, only the writings identified at sub-paragraphs (5), (6) and (7) above could ultimately assist the pursuers.

[30] Although I was taken to the individual writings relied upon, I do not need to set them out in detail here. The letter to OPRA of 14 January 1997 brought to the attention of OPRA certain breaches of the Pensions Act which had occurred because the Scheme had not been wound up as quickly as envisaged. As part of the background, the letter, which was signed by both Mr Paul and by the present Lord Cawdor as Trustee, explained the situation in respect of the transfer to the No. 2 Scheme in the following way:

Mr McNeill submitted that that was simply an historical account of the background to the present problems. I agree. However, the context in which that account is given is also relevant. The letter to OPRA continues by referring to what is to happen in the future. I refer to two paragraphs of what is a very lengthy letter. The first reads as follows:

The second passage is at the end of the letter under the heading "The Way Forward" and is in the following terms:

[31] Mr McNeill submitted that in those passages one did not find any unequivocal admission by the Trustees that there was still an obligation to make payment of the amounts agreed to be transferred in April 1993. In his submission those passages merely identified, correctly, that there had been discussion about the employers putting money into the Scheme or Schemes to deal with the shortfall. The employers would do one of two things: either make good the shortfall by immediate payment to the Scheme, or spread payments over a period of time. But it was not an indication that the Trustees accepted that there was still a legally binding obligation on them to make the payment.

[32] I disagree. I seems to me that against the historical background set out earlier in the letter, those paragraphs unequivocally reflect an understanding by the Trustees that the obligation to make the balance of the transfer payment to the No. 2 Scheme is a subsisting obligation which they will try to deal with in one or other of a number of ways.

[33] The letter of 26 August 1998 from Mr Paul to the present Lord Cawdor and, it is averred, copied to the pursuer, bears to deal with action which should be taken by the Cawdor Estates, as employers, to rectify breaches of the Pensions Act. On the first page of the letter Mr Paul says that he agreed to prepare qualified actuarial statements for inclusion in the account for the year 1992 which highlights that the Scheme is solvent "based on the assets currently remaining in the Scheme." He continues:

[34] On the next page under the heading "Balance of Transfer Payment to the [No. 2 Scheme] Mr Paul says this:

On the following page Mr Paul calculates two options: option one being that no further monies are transferred to the No. 2 Scheme; and option two being that the balance of transfer value is immediately paid across. He continues:

Leaving aside the question of the capacity in which the letter was written, Mr McNeill submitted that this letter could not constitute an unequivocal acknowledgement since it simply sets out proposals as to how payment is to be made if it is to be made. The third page showed that serious consideration was being given to the possibility that no further payment would be made. As a matter of literal interpretation paragraph by paragraph I accept that submission. However, it seems to me that the questions raised in the letter about if and how the balance of the transfer is to be made proceed upon a clear recognition that there is a present obligation on the Trustees of the Scheme to make the payment.

[35] A similar point can be made of the memorandum of 8 October 1998 sent by Mr Robertson, the Factor of the Cawdor Estates, to the Trustees of the Scheme, including the Dowager Countess, and copied to Mr Paul. Again, the contents of that letter are in terms of envisaging the state of affairs which will exist "if" rather than "when" a further transfer is made to the No. 2 Scheme, but in my view this memorandum also is indicative of a clear acceptance that the obligation on the Trustees of the Scheme arising from the decision made on 7 April 1993 has not in some way disappeared.

[36] In the course of argument I was referred by Mr Johnston to Richardson v Quercus Ltd 1999 SC 278. That case concerned the question of what communications were effective to interrupt the five year prescriptive period. It was held that when considering issues raised by section 10(1)(a) and (b) of the Act, it was not appropriate to look at individual letters or individual events in isolation but that if, overall, the substance of the letter, taken with the substance of prior events or writings, could be seen as satisfying the conditions set out in that section, it would be wrong to deny that effect. That was a case where the owner of a building sued in respect of building work carried out in 1987. The defenders had written a without prejudice letter admitting responsibility for the damage. They had then instructed a firm of loss adjusters to inspect restoration work done to the pursuers' property and to ensure that it was done at a reasonable price. In 1992 the loss adjusters confirmed to the pursuer that they did not object to the pursuer instructing the necessary remedial works. The action was not brought until 1995. It was held that it had not prescribed. The letter of 2 June 1992, amongst other letters, was held to have interrupted the prescription period. The reason for this is that, read in context, those letters, although they did not expressly contain acknowledgement of the subsistence of the obligation, were written in terms which were intelligible only upon the basis that the obligation subsisted. At page 289D, describing the defenders' submissions that each letter should be looked at in isolation from the others as plainly having some force, Lord Prosser said this:

[37] Lord Johnston took the view that even if the evidence was to some extent equivocal, any ambiguity should be resolved in favour of the creditor. He concluded:

Mr Johnston said that he did not need to go as far as the very wide remarks of Lord Johnston in that case in order to succeed in the present action.

[38] Taken overall, in the context of the various writings founded upon, I am satisfied that the three documents written on or after 14 January 1998 were all written on the unequivocal assumption that the obligation entered to by the Trustees in April 1993 was still subsisting. The question to be addressed in each of those writings was whether and if so how that obligation could be given effect in light of the deficit in the Scheme. But the fact that there is discussion about whether the obligation can be departed from does not in any way carry with it a denial of the continuing subsistence of the obligation. Accordingly, if these writings were made by or on behalf of the Trustees of the Scheme and were made to the Dowager Countess, in her capacity as Trustee of the No. 2 Scheme or otherwise, then their terms satisfy me that they fall within section 10(1)(b) of the 1973 Act and that the obligation upon which the actions proceed has not prescribed.

[39] I turn now to the pursuers' attack on averments made by the defenders in both actions that any obligation still incumbent upon them as a result of the determination and undertaking on 7 April 1993 to make a transfer to the No. 2 Scheme was conditional upon the matter of the deficit in the funds of the Scheme being resolved. Mr Johnston submitted that the obligation founded upon is to be found in the decision of the Trustees on 7 April 1993. Due consideration was given and the requests by Lord and Lady Cawdor were approved. Furthermore, the question of deficit had already been addressed in the value ascribed to Lord and Lady Cawdor's share of the entitlement under the Scheme; and the calculation put forward by the actuary, Mr Paul, to arrive at a figure has fully taken account of this. There was therefore no basis for regarding the obligation undertaken by the then Trustees of the Scheme as otherwise than unconditional. The subsequent correspondence certainly raised the question of how the deficit was to be addressed and whether there might be changes made either to the amount of the transfer or the manner in which the transfer was to be effected. But there was nothing in that correspondence which could amount to a variation of the obligation. Nor he pointed out, is there any averment that there was any further meeting of the Trustees of the Scheme at which the obligation could have been varied. Accordingly, he submitted, the averments by the defenders on Record instructing such a case were irrelevant.

[40] Mr McNeill accepted that the original computation took account of the deficit as it stood in March and April 1993. But, he said, with the death of the late Lord Cawdor, there were changes which were highlighted in correspondence. Whilst, so far as the Inland Revenue were concerned, a transfer was possible, so far as the advisors to the Scheme were concerned and Lady Cawdor accepted, something had happened which had to be dealt with. The correspondence proceeded upon the assumption that something must be done about the deficit. Either the employers must put further funds into the Scheme before the transfer was affected; or the amount of the transfer must be reduced, with the shortfall being made up directly to the No. 2 Scheme by the employers; or there might be no further payment made by the Scheme to No. 2 Scheme. No one at any of the meetings or in correspondence suggested that the problem did not have to be addressed.

[41] In my opinion the obligation undertaken by the then Trustees of the Scheme was unconditional. Nothing in the averments made by the defenders is sufficient to instruct a case that that obligation was varied by agreement. The discussion took place about various ways in which the deficit would be addressed. But I do not find in any correspondence which I have been referred any hint of an agreement that, if none of those suggestions was finally acted upon, the pursuers would be unable to insist upon the obligation as it originally stood. In those circumstances I accept Mr Johnston's submissions that the defenders' averments as to the conditionality of the obligation are irrelevant.

[42] Accordingly, I am minded to repel the defenders' pleas-in-law anent title and interest and prescription. I am also minded to uphold the second plea-in-law for the pursuers in each action going to the relevancy of the defenders' conditionality averments. In those circumstances Mr Johnston invited me to consider granting decree to the pursuer, since my decision has, in effect, he submitted, removed all outstanding arguments. However it was agreed that if I arrive at this position I should put the case out By Order so that the appropriate course can be considered, and I do so.