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Scottish Court of Session Decisions |
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You are here: BAILII >> Databases >> Scottish Court of Session Decisions >> Malik v. Ali [2004] ScotCS 205 (17 August 2004) URL: http://www.bailii.org/scot/cases/ScotCS/2004/205.html Cite as: [2004] ScotCS 205 |
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FIRST DIVISION, INNER HOUSE, COURT OF SESSION |
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Lord President Lady Cosgrove Lord Wheatley
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XA147/03 OPINION OF THE COURT delivered by LORD WHEATLEY in APPEAL From the Sheriffdom of Glasgow and Strathkelvin at Glasgow in the cause ROBINA MALIK Pursuer and Respondent; against NIAMAT ALI Defender and Appellant: _______
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Act: Skinner: Russels Gibson McCaffrey (for Pursuer and Respondent)
Alt: Skinner: Allan McDougall (for Atuahene Sim & Co., Solicitors, Glasgow)
(for Defender and appellant)
17 August 2004
[1] In this case the pursuer and respondent ("the respondent") seeks to recover possession of heritable subjects at 95 Minard Road, Shawlands, Glasgow. The defender and appellant ("the appellant"), on the other hand, wishes to have the respondent ordained to implement an agreement which he claims to exist between the parties by delivering to him a disposition of the same subjects. The appellant has a second crave which appears to seek declarator that the respondent has no entitlement to retain title to the subjects, and that accordingly the court should grant decree for the transfer of the title of the heritable property in question to him. It is accepted by both sides that the terms of the second crave are entirely unclear, and, so far as they can be understood, probably incompetent.[2] The background to the respondent's position in the action is as follows. The respondent is the heritable proprietor of the subjects under and in terms of Land Certificate No. GLA147199. Title was taken to the property in 2000. The respondent avers that she allowed the appellant to occupy the subjects on a temporary basis and that such occupancy was therefore precarious. She has now required the appellant to remove from the premises, but he refuses to do so. By way of further explanation, the respondent avers that her brother had been negotiating for the sale of the property prior to her obtaining title and had agreed a price of £48,000 with the previous owner. In the meantime, the appellant had sold another property and had realised a significant amount of capital. The respondent avers that it was determined (although it is not said by whom) that the title to the property would be taken in the respondent's name, as she was engaged to be married to a Pakistani, and if she was a property holder, this would assist in obtaining a visa for her fiancé. Thereafter it was agreed (according to the respondent's pleadings) that the appellant would supply the sum of £48,000 to fund the purchase of the property, and that this sum would be repaid to him in Pakistan by the equivalent sum of Pakistani rupees. Prior to the repayment of this sum, a disposition of the property was in fact executed by the respondent in favour of the appellant, but never delivered. The respondent then avers that in effect the purchase price was repaid to the appellant. It appears to be accepted by the respondent that if this money had not been repaid, then the respondent would require to deliver the signed disposition which she had prepared to the appellant. The respondent also maintains that the exclusive purpose of taking title to the subject in the respondent's name was to facilitate the obtaining of a visa for her fiancé, and she further argues that in the event that such an agreement had been entered into, it would be an illegal contract and therefore unenforceable.
[3] The position of the appellant was, of course, different. He avers that he was requested by the respondent's father to purchase the subjects in the name of the respondent. The respondent did not contribute to the purchase price. The request from the respondent's father resulted from representations made that it would assist the respondent's future husband in getting a visa from the British Consulate in Pakistan and thus allow him to join the respondent in Glasgow, if the respondent was able to demonstrate that she had accommodation in Glasgow. That the availability of such accommodation is of significance in an application for a visa to enter the United Kingdom may be seen on an examination of the terms of the relevant immigration regulations. Accordingly, the respondent was simply holding the property on behalf of the appellant; the appellant did not agree to the purchase price being paid to his nominee in Pakistan, and had not in fact received such payment. The appellant has accordingly asked the respondent to deliver to him the disposition of the subjects which she has already executed, but she now refuses to do this.
[4] Originally the case came before the Sheriff at Glasgow who, after hearing parties, allowed a proof before answer on 3 June 2003. However, the case was substantially amended and came out on appeal before the Sheriff Principal. The main argument before the Sheriff Principal, which was not argued before the Sheriff, was that the contract by which the property had been purchased, in the circumstances as described in the pleadings by the appellant, was a pactum illicitum, and therefore any obligation which flowed from that agreement was invalid and unenforceable. The Sheriff Principal was inclined to accede to this submission, but concluded that he did not have to decide the appeal on that issue. He concentrated rather on the appellant's averments that the property was held in trust on his behalf by the respondent, and concluded that that claim was unsupported by any relevant averment in support of the constitution of such a trust had been constituted. We take no issue with the reasoning of the Sheriff Principal in this matter. However, the Sheriff Principal also came to the view that the position was covered by section 1(2) of the Requirements of Writing (Scotland) Act 1995. The Sheriff Principal's opinion was that for any agreement such as contended for by the appellant to be regarded as having been successfully completed (namely that the title to the property would be transferred to him once the purpose of the scheme to assist the respondent's future husband to obtain a visa from the British Consulate in Pakistan was achieved), such an agreement required in terms of the statute to be constituted in writing. Section 1(2)(b) of the Act requires that a written document is required for "the creation, transfer, variation or extinction of an interest in land other than by operation of a court decree, enactment or rule of law". There was, in the Sheriff Principal's view, no relevant writing on which the appellant could base his case. The Sheriff Principal noted in particular that there were no specific averments describing any kind of agreement between the respondent herself and the appellant; rather the agreement as described in the pleadings was between the appellant and the respondent's father. For these reasons, the Sheriff Principal repelled the defences and the counterclaim (which appear now to be integrated into one statement in the pleadings) and pronounced decree de plano. The Sheriff Principal therefore did not specifically rely on any argument that might have been presented to him along the lines that because the contract was illegal, no contractual rights could validly flow from it. It is against the Sheriff Principal's decision that the appellant now appeals.
[5] At the appeal counsel for the appellant submitted that the reasoning on which the Sheriff Principal had based his decision was flawed. The disposition which the respondent had executed would satisfy any requirements for formality imposed by the 1995 Act for the purposes of transferring the property from the respondent to the appellant. No other writing would be necessary. He also maintained that it was not necessary for him to demonstrate that there was a further independent document setting up a trust, should that be necessary. The respondent accepted in her pleadings that she had signed the disposition. The appellant had offered in his pleadings to prove that the respondent and her father had verbally agreed to transfer the title in the property to the appellant when the respondent's future husband had successfully obtained a visa to join her in Glasgow, which was what had now happened. The respondent required to show that the appellant's occupation of the property was precarious, and in order to do this it was necessary to have a proof of all the averments surrounding that claim.
[6] Counsel for the appellant further submitted that the Sheriff Principal had not fully considered the position and the nature of the agreement between the parties, which he had characterised as an illegal arrangement. The Sheriff Principal suggested that this agreement between the appellant and the respondent was unenforceable and that accordingly no contractual rights could accrue from such a contract. Although this argument had not been central to the Sheriff Principal's judgement, it was nonetheless significant in the present appeal. Counsel for the appellant maintained, with reference to the case of Dowling & Rutter v Abacus Frozen Food Limited 2002 SLT 491, that it would be necessary to have a proof on the nature of any supposed unlawful or illegal conduct on the part of the appellant before it could be concluded that there was such an illegal arrangement. In particular, the nature and character of the supposed illegality would require to be established before the nature of any remedies that were available to either party could be properly identified. The case of Dowling & Rutter was authority for the view that illegality in contract could arise either at the stage of formation of the contract or at the stage of execution. There had been nothing illegal, counsel maintained, in the way in which the contract had been formed; the illegality complained of arose only in the way in which the contract was performed. There was no suggestion in the pleadings that the appellant himself was involved in obtaining the visa for the respondent's future husband. The agreement to purchase the property had been concluded between the seller and the respondent's brother before the appellant or respondent was involved. It was therefore necessary for evidence to be heard before the nature of any illegality in the performance of the contract could be established, and consequently, before the nature of any remedies that might be available to either party as a result of that illegality could be assessed.
[7] In response counsel for the respondent submitted that the appeal should be refused and that the interlocutor of the Sheriff Principal should be adhered to. The sole defence tabled by the defender was that the pursuer and her father verbally agreed to transfer the title in the property into the appellant's name when the respondent's future husband successfully obtained a visa to join her in Glasgow. Accordingly there was a scheme whereby the appellant was to allow title to pass in the respondent's name on a temporary basis, in order to demonstrate to the British Consulate in Pakistan that the respondent had accommodation in Glasgow where her future husband could join her. This was plainly a fraudulent scheme. The respondent was never to stay at the address; the title was to be returned to the appellant when the visa was obtained. The defence as described in the pleadings could not succeed and the Sheriff Principal was correct in repelling the defences and the counterclaim and granting decree de plano. Assuming that there was a legal arrangement as suggested by the respondent, any such contract writing for its constitution (see Requirements of Writing Act (Scotland) 1995, Section 1(2)(b)). Counsel therefore agreed that before the right to get delivery of a disposition arose, there must be an underlying agreement in the shape of a written contract. The disposition itself in the present case was not sufficient. There was only a verbal agreement to deliver the disposition; any contractual right to delivery had to be in writing. The appellant wished to innovate on the position which appeared on the face of the title deeds. This requires a formal written document to overturn the present documentary position. Even if the disposition could be regarded as a deed of trust, and on the assumption that a trust existed, there was still a transfer of land which required to take place. Finally counsel argued that the appellant's case must fail because it was plainly and admittedly a pactum illicitum. Reference was made to Gloag on Contract, (2nd Ed) p.561 and Laughland v Miller Laughland & Co (1904) 6 F 413 at pp.416-417.
[8] Counsel for the respondent also submitted that if an illegal contract was in part implemented, the court should not interfere and the estate should lie where it fell. Reference was made to Singh v Ali [1960] AC 167. In that case the defendant registered a lorry in his own name and so obtained a haulage permit for it in terms of the prevalent legislation, but at the same he illegally sold it to the plaintiff, who then owned and operated the lorry in his own name. Had the defendant not behaved in this way, the necessary permit would not have been issued to the plaintiff. The defendant then removed the lorry from the plaintiff and refused to return it. The plaintiff was held entitled to recover it because although the original contract was illegal, the property in the lorry had passed to the plaintiff and he had actual possession of it when the defendant seized it. On that basis, counsel argued, the court should not intervene in the present contractual arrangements between the parties. In Henderson v Caldwell (1890) 28 SLR 16, an action for the sum of £200 (which was the unpaid balance of the purchase price of a business), it was averred by the seller that while the price set forth in the offer and acceptance was £1,200, the real price agreed on was £1,400, and that the sum of £1,200 had been put into the offer and acceptance in order that the purchaser might obtain the assistance of a third party, who had agreed to assist him on condition that he obtained the business for the price of £1,200. In those circumstances it was held that the contract averred involved the intent to defraud, and could not be admitted to probation. At page 18, Lord Kincairney said:
"If the principle given effect to in that case be sound - and I think that it is sound in accordance with recognised principles in our law, - it appears to establish the defence in this case. I think it plainly implied that Messrs Aitchison were induced to make advances on account of the misstatement of the price to which the pursuer was confessedly a party, and in any view I do not think it would make a difference whether the fraud intended was carried out successfully or not. It is enough that the contract now alleged and sought to be enforced involved the intention and attempt to defraud.
No case in our books was referred to which come so close to the present as the case of Jackson v Duchair, but the principle affirmed, I think, is undoubtedly recognised in our law, and is thus stated by Professor Bell -
'The general rule of law is that no right of action can spring out of an illegal contract, and no court will lend its aid ... to a claim founded on an immoral or illegal act'. - Bells Comm. ii. 317."
[10] We have come to the view that the Sheriff Principal may not have been fully and properly addressed on the issues which appear to us to be at the centre of this dispute, and as a result he has not reached the correct decision. Firstly, we do not consider that the first significant issue in the case, as the Sheriff Principal has found, was that there required to be sufficient averments on record to establish that the appellant held the property in some form of trust for the respondent, and that the absence of such averments demonstrated that the appellant had not pled a relevant case. Before us it was accepted by both counsel that the question of whether there were sufficient averments to constitute a trust in the circumstances of the present case was something of a red herring; the more pressing question was whether the appellant had sufficiently averred that there was an appropriate and relevant written contract on which he could base his case that the respondent was not entitled to the remedy which she seeks. In particular we agree that the first question to be determined in the present case is whether the disposition of the subjects, which the respondent accepts that she had drawn up and signed in favour of the appellant, is sufficient in the circumstances to convey the property to the appellant. In terms of section 1(2)(b) of the Requirements of Writing (Scotland) Act, formal writing requires to be in place if there is to be a transfer of an interest in land otherwise than by way of a court decree, enactment or rule of law. Unlike the Sheriff Principal, we think that it is arguable that the disposition drawn up and signed by the respondent in the appellant's favour is in the circumstances of the present case capable of achieving that end. The disposition is a writing which the respondent herself prepared, and in respect of which she accepted, for whatever reason, that if she had not paid the purchase price for the property to the appellant, she would have required to deliver to him. It therefore follows that if she has not in fact paid the purchase price, then she has agreed on record that she must transfer the property to the appellant. In these circumstances we are satisfied that, depending on what is established after enquiry concerning the nature of the contractual arrangements between the parties, the disposition drawn up by the respondent, although not at this stage delivered, is capable of satisfying the formal statutory requirements of writing necessary to achieve the transfer of the subjects as contended for by the appellant. In terms of the submissions of counsel for the parties on this matter therefore, we are satisfied that the case should go to enquiry.
[11] While the question of whether the disposition drawn up by the respondent is sufficient to satisfy the statutory requirements for writing in the circumstances of the present case is important, we consider that the more significant question in the present action is whether the contractual arrangements between the parties can properly be regarded on the basis of the pleadings alone as a pactum illicitum, and, if so, whether that necessarily means that the appellant is therefore precluded from claiming the remedy which he seeks. We again consider that it is inappropriate to reach a conclusion on these questions before inquiry into the whole facts and circumstances. Firstly, we note that there are significant differences in the averments by the respondent on the one hand, and by the appellant on the other, about how the contract came to be constituted. As a result the nature of the contract as described by each party is fundamentally different. The respondent avers that the original contract to acquire the property was between her brother and the original seller. The appellant claims that he was the true purchaser. The separate accounts of how title to the property came to be in the respondent's name are also different. It is therefore not possible at this stage to determine the scope and nature of the supposed illegal arrangement, or indeed who are the true principals in the contract. It may therefore be possible to argue, as the appellant contends, that any fraudulent element in the bargain was ancillary, and should not affect the rights of the parties under the contract. More generally, in cases such as this where the nature and significance of the supposed illegal arrangements are unclear or in dispute, it would appear that the true position requires to be established by evidence (Dowling & Rutter v Abacus Frozen Foods Ltd 2002 SLT 491). It may be that when the nature of the illegality in the formation or execution of a contract is clear or agreed, and central to the parties' arrangements, the court will not interfere, and the estate would be left to lie where it falls as the respondents' counsel submitted. However, that is not necessarily the position here. Further there may be questions of equity which require to be taken into account (Dowling & Rutter v Abacus Frozen Foods Ltd and Singh v Ali at p.178). The significance of the principles of equity in the present case may lie in the fact that if the appellant's defences and counterclaim are dismissed on the basis of a contract which was unenforceable because it was based on some form of illegality, the respondent would then obtain decree de plano on the basis of the same defective averments. Further, if the respondent's position is sustained, she will obtain decree for recovery of a heritable property, for which, on the basis of her own averments, she has paid nothing, and in respect of which, again in terms of her own averments, she accepts that, if she has not paid the purchase price, she is under an obligation (for reasons which are not wholly clear) to deliver a signed disposition of the subjects to the appellant. Such a situation is quite unsatisfactory and could in the event prove to be fundamentally inequitable. In all the circumstances we are in no doubt that the rights and responsibilities of parties to this unfortunate dispute require to be resolved by evidence before any sound conclusions can be drawn.
[12] We shall therefore allow the appeal and remit the case back to the Sheriff for a proof before answer, with all pleas standing.
