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SHERIFFDOM OF TAYSIDE CENTRAL AND FIFE AT DUNDEE
Case
Number: A23/11
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Judgement
by
JOHN
K MUNDY, Esq., Advocate
Sheriff
of Tayside Central and Fife
in
the cause
MRS
PATRICIA ANN SIMPSON or
MORRIS
Pursuer
against
JAMES
GAVIN MORRIS
Defender
ннннннннннннннннн
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Act: Miss Wilson
Alt: Forsyth, Advocate.
DUNDEE, 11 January
2012
The Sheriff,
having resumed consideration of the cause, grants decree de plano in
terms of the first crave for the pursuer and sustains the fourth plea-in-law
for the pursuer in the principal action to that extent; and accordingly grants
decree ordaining the defender to implement clause 3 of the Minute of Agreement
between the parties dated 25 and 31 August 2010 and registered in the Books of
Council and Session on 2 September 2010, and that by: (a) the defender
executing and delivering to the pursuer a declaration of the defender's present
solvency within a period of 28 days from this date; and (b) the defender paying
to Lloyds TSB plc (formerly Cheltenham & Gloucester) the full sum required
to redeem the secured loan owed by the parties in terms of mortgage account
number 50000084209484 (including without prejudice to the foregoing generality
any early redemption charges or penalties due on the date of settlement) and
that within a period of 28 days from this date; repels the first, second and
third pleas-in-law for the defender in the principal action; appoints the cause
to hearing on a date to be afterwards fixed, such date being after the expiry
of 28 days from this date; finds the expenses relative to the diet of debate
set down for 9 September 2011 to be expenses in the cause; finds the pursuer
liable to the defender in the expenses relative to the Minute of Amendment and
Answers Numbers 15 and 16 of process and allows an account thereof to be given
in and remits same, when lodged, to the auditor of court to tax and report;
finds the defender liable to the pursuer in the expenses of the debate on 26
October 2011 and allows an account thereof to be given in and remits the same,
when lodged, to the auditor of court to tax and report.
NOTE:
Background
- This is an action in which the pursuer seeks a
decree ordaining the defender to implement the terms of a clause in a Minute
of Agreement between the parties dated 25 and 31 August 2010 ("the agreement"). She seeks damages in
the alternative. The agreement was entered into in order to regulate
financial and other matters in contemplation of divorce. The parties were
subsequently divorced in this court on 19 October 2010.
- The terms of the agreement are incorporated in
the pleadings. In terms of Clause 3, the parties agreed that the defender
would transfer the matrimonial home at 6 Jedburgh Road, Dundee to the
pursuer and in furtherance thereof the defender agreed inter alia to
"(a)...execute and deliver a disposition conveying his whole right title
and interest in the house and a declaration of solvency" to the
pursuer on the "date of settlement" and further that he would "(b)...pay
the full sum required to redeem the secured loan in favour of Lloyds TSB
plc (formerly Cheltenham & Gloucester ) including without prejudice to
the foregoing generality any early redemption charges or penalties due on
the date of settlement." In terms of the clause, the "date of
settlement" was defined as "(i)...7thOctober 2010 or such
other date as the parties may mutually agree." For her part the
pursuer agreed inter alia to "(c)...register a discharge of the
security granted by the parties in favour of Cheltenham & Gloucester
within 28 days of the date of settlement; and will exhibit within 6 months
of the date of settlement the charge certificate confirming registration
thereof."
- Settlement did not occur on 7 October 2010. Correspondence passed between the parties'
respective solicitors, some of which is incorporated in the pleadings. By
letter of 20 October 2010, the defender's solicitors sent to
the pursuer's solicitors a Disposition of the house executed by the
defender but to be held as undelivered pending settlement. However, it
appears that inter alia the declaration of solvency and repayment
by the defender of the mortgage remained outstanding. On 25 October 2010, the defender's solicitors wrote again proposing
2 November 2010 as the new date of settlement. That
appears to have been accepted by letter from the pursuer's solicitors of 27 October 2010. The pleadings of the pursuer are a little
ambiguous on this point, referring to the new settlement date in terms of
a proposal and the averments on behalf of the defender in Answer 2 suggest
that no alternative date was agreed although the consequence of that
stance is not articulated. I find that position difficult to reconcile
with the terms of the letter which is incorporated in the pleadings. In
any event, settlement did not take place on 2 November 2010 and has not subsequently taken place.
- In this action, the pursuer seeks the implement
of Clause 3 of the agreement and in terms of her first crave (a) an order
ordaining the defender execute and deliver a declaration of present
solvency within a period of 28 days and (b) an order requiring the
defender to pay the full sum required to redeem the secured loan. In the
alternative she seeks payment of г134,142.91 representing, on her
averments, the amount outstanding to the lenders in respect of that loan
as at 31 August 2011 with interest at the rate of 2% above
the rate charged by the lenders from time to time until payment. The
rationale is that, failing implement by the defender of his obligation to pay
off the mortgage, the house will continue to be burdened and the pursuer
will remain liable to make repayment. To that extent it is contended that
the pursuer will have sustained a loss as a result of the defender's
breach of contract. There is also a counterclaim for the defender for
delivery of personal possessions.
- This action was warranted on 27 January 2011 and after sundry procedure a debate appointed on
the parties' preliminary pleas. The case called before me on 9 September 2011 when the debate fixed for that day was
discharged with the pursuer being given leave to amend. A timetable for
amendment and answer procedure was fixed. The subsequent minute of
amendment for the pursuer primarily concerned reformulation of the craves
(which was to be intimated to the lenders) for implement and payment with
associated averments. The Answers on behalf of the defender were of a
formal nature. The case called before me again on 26 October 2011 for debate. Miss Wilson appeared on behalf of
the pursuer and Mr Forsyth, Advocate appeared for the defender.
The Debate
- At the outset of the debate, Mr Forsyth sought
leave to adjust his Answers at the bar in order to raise a new issue. He
sought to introduce fairly detailed averments to the effect that the
defender was unable to implement the agreement through lack of funds or
assets. Such a proposed adjustment had not been intimated to the
pursuer's solicitors. It was not in typed form, but handwritten. Miss
Wilson opposed the adjustment to the Answers on the morning of the Debate
as coming too late. I agreed. This was new material of which the pursuer
had no prior notice as forming part of the defence to the action. It
appeared to be quite clear that the defender's alleged impecuniosity was
not something which was said just to have occurred or had only very
recently come to light. On the contrary, it was said that this is
something the pursuer was aware of all along. Indeed, there is an
indication in the pursuer's own pleadings in Art. 4 of Condescendence that
the defender may be unable to implement the agreement for this reason, so
laying the foundation for the alternative of damages. However, the
argument had not hitherto been taken by the defender. No reason was given
as to why it was only now being advanced in defence. In the exercise of my
discretion, I refused to allow late adjustment of the Answers as being
unfair and prejudicial to the pursuer at that stage. Having said that, the
issue of impecuniosity resurfaced in the course of submissions. I will
return to that. In the meantime, the Record was amended in terms of the
Minute of Amendment for the pursuer, No. 15 of process and the Answers for
the defender, No. 16 of process.
- Both parties tabled preliminary pleas. The
defender's first plea-in-law is a general plea to the relevancy and
specification of the pursuer's averments and Mr Forsyth presented his
substantive submissions under that plea. The pursuer's fourth plea-in-law
is a general plea to the relevancy and specification of the defender's
averments and seeks decree de plano. Miss Wilson presented her submissions under that plea.
Submissions on behalf of defender
- Mr Forsyth opened his submissions by indicating
that his client did not have the money or assets to implement the
agreement and made reference to the pursuer's averment in Art. 4 of
Condescendence to which I have already alluded. The averment is: "The
Defender may be unable to implement the contract by reason of his
impecuniosity." This occurs in the averments in Art. 4 in support of
the alternative crave for payment of damages. Art. 4 begins: "In the
event that the Court considers that implement is not the appropriate
remedy or alternatively, in the event that the Defender fails to implement
the Minute of Agreement, the pursuer will have suffered loss as a result
of the defender's breach of clause 3 of the Minute of Agreement." Mr
Forsyth submitted that I had a discretion in the matter of implement and
that I might refuse to order implement where it would be of no practical
utility. He also submitted that the court should have regard to the
seriousness of the implications in granting such an order where the
sanctions for failure to comply were serious - potentially imprisonment.
He submitted that specific implement should not be ordered where it is not
possible to comply with the decree and referred in this respect to McBryde
on Contract (3rd Ed.) at paragraph 23-18. He submitted that
it may be necessary to enquire into the facts to ascertain whether or not
implement was possible and referred to the case of Beardmore & Co v
Barry 1928 SC 101. He also referred to the Stair Memorial
Encyclopaedia Vol. 13, paragraphs 8 and 9 as to the seriousness of
such a decree and circumstances, such as hardship, which may provide
exceptions to the general rule that a party will be required by the court
specifically to perform his contractual obligations. His position in
essence was that in order to be able to properly exercise my discretion a
proof would be required. It became clear that Mr Forsyth's submissions up to
this point were in reality a response to submissions he anticipated from
Miss Wilson.
- Mr Forsyth then challenged the pursuer's
averments as to damages in support of the second crave. He submitted that
the averments of loss were irrelevant. The basis for damages on record was
the liability for the mortgage. He submitted that in giving damages for
breach of contract a pursuer should be placed in the same position as he
would have been if the contract had been performed. In support of that
general proposition, he referred to Wertheim v Chicoutimi Pulp Company [1911] AC 301 and in particular the speech of Lord Atkinson at page 307. Mr
Forsyth submitted that basis for damages as laid offended against that
principle as the averments took no account of the continued payments made
by the defender to the lenders. He referred to the defender's averments in
Answer 4 as to payments made by the defender since December 2010. While
there was a joint and several obligation to pay, the defender was de
facto making the payments. Pausing there, Mr Forsyth indicated that he
was making no submission under reference to the Contracts (Rights of Third
Parties) Act 1999 mentioned in Answer 4 and also in the defender's Rule 22
Note, the provisions of the Act having no application to Scotland. He also
made reference to Walker on Civil Remedies pages 400 and 401 to the effect
that the measure of damages is ascertained by the application of the
principle restitution in integrum and that quantum is very much a
question of fact in the circumstances of each case. I took Mr Forsyth to
suggest at this point that it may be necessary in this case to have a
proof on quantum of damages, but his primary position appeared ultimately
to be that the averments as to loss should be excluded from probation and
the proof be restricted to the issue of the exercise of discretion in
relation to implement. He conceded the underlying obligations of his
client in terms of the contract. Mr Forsyth also made a motion for leave
to amend to introduce the averments he had sought to adjust in at the
outset.
Submissions on behalf of the pursuer
- Miss Wilson moved for decree de plano in terms of her fourth plea-in-law. She
explained the background to the present action under reference to the
correspondence incorporated in the pleadings. She explained that she was
asking for implement at this stage, not payment in terms of the
alternative crave. She referred to McBryde on Contract (3rd
Ed.) from paragraphs 23-05 et seq. on the question of specific
implement and in particular the general right to that remedy, failing
which damages in appropriate cases.
- In relation to the defender's argument suggesting
that it would not be possible to implement the agreement, Miss Wilson
submitted that he had had ten months to advance that argument. There were
no averments on behalf of the defender to the effect that the he was
unable to implement the agreement. There was no vouching or proof of the
defender's alleged difficulty. The pursuer, she submitted, should not be
prejudiced by the raising of such a consideration now. The pursuer's
averment in Art. 4 of Condescendence to the effect that the defender may
be unable to implement the contract by reason of his impecuniosity was
based on the possibility of such being the case. This was not known by the
pursuer as a matter of fact. She accepted that there were averments in
Art. 5 of Condescendence indicating that the defender was in financial
difficulty and at risk of insolvency. In the pleadings, reference is made
to a charge being served in the name of company of which the defender is
said to be a director and shareholder. Reference is also made to the
defender having granted personal guarantees. Those averments were made in
support of an application for a warrant to arrest on the dependence. The
defender's averments in Answer 5 are to the effect there is no reasonable basis
for such a warrant. He also avers that the personal guarantees have been
discharged. I pause to note that a warrant to arrest on the dependence was
granted on 27 January
2011 and on 6 April was
recalled on the motion of the defender to the extent of allowing payment
to the defender of drawings of г2,500 per month. The arrestment appears to
have been executed in the hands of a legal firm of which the defender is a
partner. Miss Wilson said that the defender had for the purposes of the
motion for recall produced documents suggesting that he was not in
financial difficulty. This raised the issue of whether the defender was
being candid.
- Miss Wilson referred to Stewart v Kennedy (1890)
17 R (HL) 1 and in particular the speech of Lord Watson where he referred
to the legal right of a person to sue for implement where there is breach
of contract and went on "...although he may elect to do so, he cannot be
compelled to resort to the alternative of damages unless implement is
shewn to be impossible...Even where implement is possible, I do not doubt
that the Court of Session has inherent power to refuse the legal remedy
upon equitable grounds, although I know of no instance in which it has
done so." Miss Wilson referred to Grahame v Magistrates of
Kirkcaldy (1882) 9 R (HL) 91 where Lord Watson referred to the
discretion of a Superior Court having equitable jurisdiction in "certain
exceptional circumstances to withhold from parties applying for it to that
remedy to which, in ordinary circumstances, they would be entitled to as a
matter of course." He indicated that there must be "some very
cogent reason for depriving litigants of the ordinary means of enforcing
there legal rights" and that "the power has been very rarely
exercised". I was also referred to McBryde at para. 23-05 where
the author refers to impossibility of compliance as being a ground of
refusal to order implement. Miss Wilson submitted that that was not the
situation here on the averments and that no exceptional circumstances had
been averred. She accordingly submitted that no relevant defence was
averred to the claim for implement and that it would be appropriate to
grant decree de plano in terms of the first crave. The defender
had had ample time to put such a matter in issue in terms of the pleadings
and he should not be given leave to amend.
- As regards the competency of the alternative
crave for damages, Miss Wilson indicated that the claim would of course
reduce to take account of payments made by the defender towards the
mortgage and that there was no question of double counting. At present,
the pursuer was not free of liability - which was joint and several - and
that the averments in Answer 4 that she is kept free from liability by the
defender making payments were irrelevant.
- Finally in renewing her motion for decree de
plano in terms of the first crave, Miss Wilson referred to Matthews
v SLAB 1995 SCLR 184 and MacPhail, Sheriff Court
Practice (3rd Edition) at 14.78. However, those were
references to summary decree and no such motion was before me.
- In brief reply, Mr Forsyth made reference to Lord
Watson's speech in Stewart v Kennedy at pages 102/3 to the effect
that even where implement is possible then it could still be refused in
the exercise of the court's discretion. Mr Forsyth's position was that
implement was not possible in this case, but that there needed to be an
enquiry into that issue. He reiterated his primary position that there
should be a proof on the issue of discretion only and that if I was not
with him on the exclusion from probation of the pursuer's averments on
damages, then there should be a proof on that issue also.
Discussion
- The principle issue is whether there is a
relevant defence stated in the averments to specific implement as sought
in the pursuer's first crave. The argument centred around the issue of the
court's discretion in ordering implement having regard to the defender's
alleged impecuniosity. It is quite apparent from the pleadings, as
amended, that such an issue has not been raised by the defender on record.
As indicated, at the outset of the debate, Mr Forsyth on behalf of the
defender sought to introduce averments by late adjustment to an amendment process
to raise the issue. I refused to allow that and for the reasons given in
relation to that, I am not prepared, in the exercise of my discretion, to
allow the leave to amend which was subsequently sought.
- As already noted, the underlying contractual
obligations were not disputed on behalf of the defenders. That concession
encompasses the obligation to deliver a declaration of solvency and also
the obligation to redeem the loan secured over the house. The only issue
raised in argument in response to implement was the matter of the court's
discretion. It seems clear from the authorities cited above that there
require to be exceptional circumstances put forward or at least a very
cogent reason advanced in order that the court may be persuaded to resist
an application for implement. Impossibility of implement would no doubt be
relevant. It is plain that if a defender considers that there are grounds
on which the court should exercise its discretion to refuse a remedy
sought, and to which a pursuer would otherwise be entitled to as a matter
of contractual right, then it is not for the pursuer to show that there
are no circumstances which might lead the court to decline to enforce that
legal right. It is for the defender to make averments and state a plea to
that effect (Salaried Staff London Loan Co. Ltd v Swears and Wells Ltd 1985 SC 189, per Lord President (Emslie) at page 194; an example of a such a
plea appears in McKay v Campbell 1966 SC 237 at page 243). It seems
to me that the averments on behalf of the defender are entirely lacking in
this respect and are wholly insufficient to warrant an enquiry into the
matter by way of proof or proof before answer.
- As to the alternative remedy of damages, I am not
persuaded that the basis upon which the claim is made by the pursuer
offends against the principle that the pursuer should be put in the same
position as if the contract had been performed. Had the contract been
performed by the defender, then the secured loan would have been redeemed.
In the event of failure to implement this obligation, rather than being
free of the liability for the secured loan, the pursuer would be left with
liability to the lenders on a joint and several basis and the house would
continue to be burdened with the security. Clearly the amount outstanding
will vary depending upon interest and payments. However, that is a matter
of identifying the correct sum at the date of the award of damages under
reference, no doubt, to an updated redemption statement.
Conclusion
- I have accordingly come to the conclusion that
the pursuer is entitled to decree for implement in terms of the
first crave. Further, I have rejected the defender's submissions as to the
relevancy of the pursuer's averments on the issue of damages. The
interlocutor I have pronounced reflects this by giving effect to the
pursuer's fourth plea-in-law in the principal action to the extent of
granting decree of implement and by repelling the defender's first
and second pleas-in-law. In order to allow time for compliance with the
order for implement, I will appoint the cause to a hearing on a date to be
afterwards fixed, being more than 28 days after decree in terms of the
first crave. I have left all pleas relating to damages standing meantime
except the third plea for the defender. That plea in terms challenges the
relevancy of the second crave. While Mr Forsyth's substantive submissions
as to the relevancy of the damages claim were presented under his first
plea, I consider that it would be inappropriate to leave the third plea
standing given my conclusions. That leaves the counterclaim. I understood
from the discussion on 9 September that this was not to be insisted upon
but will leave formal disposal until the next hearing.
Expenses
- There arose the issues of expenses in relation to
(1) the diet of debate set down for 9 September 2011 (2) the amendment procedure that
followed thereon and (3) the debate which went ahead on 26 October 2011. As regards the diet of debate on 9 September,
while the result was that the pursuer ultimately sought leave to amend,
the amendments were of a fairly technical nature and it became clear as
the discussion proceeded that the defender was at that stage offering no substantial
defence on the merits. I consider that awarding the defender the expenses
of the amendment procedure in accordance with the normal rules, but
otherwise finding the expenses of the diet of debate to be the expenses of
the cause is the appropriate disposal. As to the debate which proceeded on
26 October, it is clear that the pursuer has achieved substantial success
and is entitled to her expenses.
Further procedure
- As indicated, the case will be appointed to a
hearing on a date, being more than 28 days after the date of decree.
