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OUTER HOUSE, COURT OF SESSION
[2006] CSOH 171
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A1309/03
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OPINION OF LORD DAWSON
in the cause
MARILYN LOUISE
McDONALD-GRANT
Pursuer;
against
SUTHERLAND & CO
&C
Defenders:
ннннннннннннннннн________________
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Pursuer:
Stewart QC et Nicoll; Lindsays
W.S. (for Quantum Compensation Specialists)
Defenders: S Kennedy, Solicitor-Advocate; Balfour & Manson
7 November
2006
[1] In
this case the pursuer seeks reparation from the defenders, a firm of solicitors
now dissolved, in respect of their alleged professional negligence. The matter came before me on procedure roll
in respect of a number of criticisms of the pursuer's pleadings.
[2] For
present purposes, the pursuer avers that (Cond 1) she is the widow and Executor
Nominate of the late William Barclay Grant (W.B.G.). W.B.G. originally lived with his first wife
Margaret in the farmhouse at Mains of Garten, Boat of Garten, Inverness-shire. Following her death, W.B.G. engaged a number
of housekeepers to look after himself and his sons William and Alexander. From 1988 W.B.G. engaged a number of lady
companions on a live-in basis at the farmhouse, including in April 1992 the pursuer. The pursuer and W.B.G. were married in June
1993. She lived with and cared for him
until his death on 16 July 1998.
[3] On
1 April 1993, W.B.G.
signed a disposition prepared by the defenders.
That document was recorded on 9 June
1993. In terms thereof,
W.B.G. conveyed the fee of the farmhouse to his son William, subject to a
liferent in favour of "W.B.G. and his assignees". It is averred that the terms of that
disposition arose out of advice given to W.B.G. by the defenders to the effect
that such a clause would mitigate Inheritance Tax, safeguard against care costs
and facilitate reduction of the business overdraft. The pursuer alleges that such "advice was
ill-founded in all respects as any competent solicitor should have known". Its effect would be to deprive the pursuer of
any right to live in the farmhouse after his death. The pursuer further avers that W.B.G. was in
fact concerned in relation to the disposal of his estate to be in a position to
provide security in respect of a right to occupy the farmhouse after his death
for any wife or housekeeper living with him at the time. His instructions to the defenders were
dependant on that concern being satisfied.
W.B.G. did not in fact effect any assignation in favour of the pursuer.
[4] Mr
Kennedy, solicitor advocate, for the defenders invited me to sustain the
defenders' preliminary pleas numbers one to six. He did not insist on the seventh plea. He dealt first with the question of
prescription raised in his first and sixth pleas.
1. Prescription
[5] He
submitted that the pursuer had no relevant averments to exclude the operation
of Section 6 of the Prescription and Limitation (Scotland)
Act 1973 (the Act). The Act provides,
shortly:-
6-(1) If, after the appropriate date, an obligation to which this
section applies has
subsisted for a
continuous period of five years -
(a) without any relevant claim having been
made in relation to the
obligation, and
(b) Without the subsistence of the obligation
having been relevantly
acknowledged,
then as from the
expiration of that period the obligation shall be extinguished.
11-(1) ... any obligation ... shall be regarded for the purposes of section 6
of this
Act as having
become enforceable on the date when the loss, injury or damage occurred.
(3) In relation to a case where on the date referred to in subsection
(1) above ... the creditor was not aware, and could not with reasonable diligence
have been aware, that loss, injury or damage caused as aforesaid had occurred,
the said subsection (1) shall have effect as if for the reference therein to
that date there were substituted a reference to the date when the creditor
first became, or could with reasonable diligence have become, so aware.
Mr Kennedy submitted that the fault
occurred when the disposition was granted by W.B.G. That was in 1993. The present action was not raised until
2003. The only relevant intervening
event was W.B.G.'s death in July 1998.
If that were the appropriate date then the action would be just within
five years of the death. However, he
submitted that the loss arose also in 1993 because the disposition put it
beyond the power of the deceased to give any benefit to the pursuer. He could have chosen to assign the liferent
interest to the pursuer until his death, not until her death. She could not benefit at all after his
death as that right had been removed by the 1993 disposition. The pursuer seeks compensation for the period
after his death. Therefore the
disposition created that loss in 1993, if at all. The solicitors were at fault in 1993 and the
loss occurred then.
[6] Mr
Kennedy then referred me to the pleadings, particularly the part of Cond 8 and the absence of averments of non-awareness of loss having
occurred. However the pursuer says she
did not know that she would survive and be W.B.G.'s wife or housekeeper at the
date of his death. But, said
Mr Kennedy, she did know that the deceased had put it beyond his power in
1993 by reserving the liferent interest for himself and conveying the fee to
his son. He submitted that there were no
sufficient averments of non-awareness during the period 1993-1998. It could not be said that the loss had been
postponed until 1998. The loss arose as
soon as the deceased put it beyond his power to benefit the pursuer. In this connection he referred to the case of
Britannia Building Society v Clark 2001 SLT 1355 in which it was held that it was insufficient simply to rehearse a
statement; facts to show lack of
awareness were required. Accordingly, said
Mr Kennedy a single sentence regarding lack of awareness did not avail the
pursuer if the loss occurred in 1993. In
this context the averments in Ans. 8 were met by the pursuer's bold
denial. The real question therefore was
when did the loss occur? Reference was
made to Johnson: Prescription and
Limitation para 4.46 where the learned author set out a number of possibilities
in this context. Mr Kennedy
submitted that what terminology was there used had no general application to
every case. In the present circumstances
the "transaction" consisted of the defenders' instructions, the execution and
the recording of the disposition in 1993.
The marriage occurred in June 1993 by which time the pursuer had
suffered loss of a future liferent. Such
a loss was likely to occur as the pursuer was likely to outlive W.B.G., he
being ill and she being younger. Mention
was also made of Osborne & Hunter Ltd
v Hardie Caldwell 1999 SLT 153 as
an example of theInner house saying that the time can run even if the loss was
not certain. In this case the loss
occurred as soon as the deceased could not confer the benefit desiderated by
the pursuer. In summary, it was
submitted that the fault occurred in 1993 and the loss occurred in 1993. The time-bar started to run from that date unless
its operation could be said to have been postponed in terms of S11(3) of the
Act. The single averment in Cond 8 was
insufficient to lead evidence under S11(3) of lack of awareness. Accordingly the defenders' first and sixth
pleas-in-law should be sustained.
2. Title to sue
[7] Mr
Kennedy submitted that the defenders owed no duty of care to the pursuer
as she was not their client. The pursuer
had to bring herself within the narrow number of cases to whom the defenders
owed a duty. He accepted that there was
such a concept as "disappointed beneficiaries" but suggested that that concept
referred to wills and to cases where after the death of the testator the court
transferred the duty from the testator to a beneficiary. However, the present circumstances were very
different. In his submission, the decision
of the House of Lords in Robertson v Fleming
(1861) 7 M 167 was binding and that
the narrow category of disappointed beneficiary should not be extended. That case was not followed in the case of Holmes v Bank of Scotland 2002 SLT 545 which Mr Kennedy sought to
distinguish largely on the ground that in the present case the matter at issue
was not a will but an inter vivos disposition, a matter not
discussed in Holmes. Further, in the present case the facts were
different from the "botched will" situation.
The disposition was signed on negligent advice. The defenders owed a duty to the
deceased. The deceased was unhappy with
the disposition during his lifetime. The
defenders should not have advised the deceased to execute the disposition. It prejudiced the deceased to the extent that
it left him with a liferent rather than ownership. The deceased could have pursued a remedy
against the defenders during his lifetime but did not do so. This was all quite different from the
"botched will" where the testator does not know the effect of the
misdoing. For these reasons I should
sustain the second and third pleas-in-law for the defenders and dismiss the
action.
3. Relevancy
[8] This matter was dealt with
shortly. It was contended that if there
were a title to sue and a duty of care, the pursuer required to say more than
is said. Conds 3 and 4 dealt with the
facts. Cond 3 related to the disposition
and was critical of the defenders' advice regarding the granting of the
disposition at all. Cond 4 related to
the deceased's concern to provide security for his wife or housekeeper. At the time the pursuer was not his
housekeeper. It was therefore crucial to
say at what time the deceased had such concerns or gave such instructions; bearing in mind that the parties were not
married either until shortly after the disposition was executed. If he did not have either he could not
preserve a non-existent right. There was
no averment that such concern was passed to the defenders. Cond 5 was nothing to the point. There were insufficient averments as to the
deceased's instructions and the defenders' advice. Therefore the fourth plea-in-law should be sustained.
4. Specification
[9] It was said that the defenders
would have a difficulty in investigating the proper relationship at the
material times between the pursuer and the deceased. There was a very recent amendment to the effect that the
pursuer was not his housekeeper but his wife.
If there was to be a proof on this point the defenders would require to
investigate the surrounding circumstances some twelve years after the
events. The averments were insufficient
to allow them to do so.
5. Quantum
[10] The
defenders are asked to pay г350,000, being the loss to the pursuer in not being
able to live rent-free in the farmhouse from the deceased's death to the end of
her life. That is equivalent to 32 years
at г9,000 per annum. It was submitted
that there was no correct way of measuring the loss of a liferent
interest. Here the amount claimed
exceeded the value of the house itself.
Therefore the damages were greater through loss of a liferent than they
would have been through not securing actual ownership. If there was no proper method, then the
question of quantum should not be admitted to proof. The case was irrelevant until a correct test
was averred.
[11] In the whole matter, I was invited to uphold the defenders'
preliminary pleas and dismiss the action.
[12] Counsel for the pursuer invited me to repel the first seven
pleas-in-law for the defenders and allow a proof.
1. Prescription
[13] Counsel submitted that the
period as regards the pursuer's claims started to run when the loss to the
pursuer occurred which was 16 July 1998 the date of death. The claims had not therefore prescribed in
terms of S6 of the Act. There was thus a
conflict on a key question, which was one of mixed fact and law, as to when the purser did actually suffer
loss. She was not suing as
executrix. The pursuer had averred that
there was no loss until the date of death.
That was the date of loss because only then could it be determined that
the pursuer had survived the deceased in the capacity of wife or
housekeeper which was when the liferent
was intended to be conferred. The error
made by the defenders was that the pursuer suffered loss at the date of the
disposition which contained the ineffectual clause. The defenders' position was periled on
that. The pursuer, however, does not
aver that she was in the position of housekeeper in June 1993, the date of
recording, or at the time of execution. She
was not in a position to take any benefit then.
As she had no legal interest in any such provision she could not suffer
loss. Only a trust liferent could give
effect to a liferent interest after the death of the granter. The pursuer claims that the type of liferent
clause was ineffectual to attain the intended object. It was submitted that one cannot reserve the
power to assign to the life of the assignee for the life of the first
liferenter. Accordingly no loss was sustained. The defect in the deed did not create a loss
unless and until the necessary conditions such as survival and capacity were
purified. Reference was again made to Johnston and to
Osborne. On balance, matters were weighted in favour
of the view that the obligation to make reparation only arose not at the date
of the negligent transaction but at the date when the loss arising from that
occurred. Accordingly, the plea of
prescription should be repelled.
2. Title to sue
[14] A number of recent cases culminating
in Holmes did extend the narrow class
of cases referred to in Robertson v Fleming.
The question was how to define that extension. It was submitted that privity of contract was
not a pre-requisite of a claim for professional negligence against the
solicitors who effected the transaction.
That was the true ratio decidendi
of Holmes. That being so, the pursuer had at the very
least a right to demonstrate a title and interest to sue.
3-4. Relevancy and
Specification
[15] The defenders criticised a
lack of fair notice in order to make proper investigation. It was submitted that such specification was
not necessary here as it was not in dispute that the assignation clause was
inserted at a particular date in particular circumstances. Furthermore, there had been earlier
litigation between the parties during and prior to which exhaustive
investigation had been made. It was
therefore unrealistic to say that any such amendment as was referred to
required to be expended upon.
5. Quantum
[16] It was not self-evident that
the method of quantification used was irrelevant. It may have been overstated but that, it was
submitted, was a matter for proof. In
any event there may not be a single appropriate measure - that by itself was
enough to allow proof. The pursuer may peril
her claim on this quantification in the vagaries of the market but that does
not affect the claim in general.
[17] Mr Stewart, QC, for the pursuer then renewed his motion to
repel.
Decision
[18] I have considerable sympathy with a number of the points made
by Mr Kennedy on behalf of the defenders, particularly as regards
prescription and title to sue. However,
I am not satisfied that the pursuer would necessarily fail on any of these
points even if she were to prove all her averments. I do not think it would assist the Proof
Judge if I were to go into matters any further.
I therefore allow a proof before answer leaving all pleas standing.
