Scottish Court of Session Decisions

At advising, on 8 July 1994, the opinion of the court was delivered by Lord McCluskey.

OPINION OF THE COURT—This case was appointed to the summar roll on the motion of the defender and reclaimer who desired to bring under review interlocutors of the Lord Ordinary dated 26 May 1993. By the first interlocutor of that date the Lord Ordinary, on the pursuer's motion, allowed the instance of the summons to be amended and granted summary decree against the defender under Rule of Court 89B. In his opinion of the same date the Lord Ordinary explained why he had concluded that there was no defence to the action. He reached his conclusion on this matter on the basis of the pleadings as contained in the closed record (closed on 28 April 1993).

At the commencement of the summar roll hearing counsel for the reclaimer moved the court to allow the record to be amended in terms of the minute of amendment (in the form allowed to be received on 28 April 1994), as adjusted, and the answers thereto. This motion was not opposed and was granted.

Counsel for the reclaimer then moved the court to recall the Lord Ordinary's interlocutors and to remit the case to him to proceed as accords in the light of the amended record. Counsel for the pursuer and respondent opposed the motion to remit, arguing that the issue was whether or not the pleadings disclosed any defence to the action: they did not disclose any defence, and the amendments allowed since the Lord Ordinary had considered this issue made no material difference. It was, he maintained, still plain that no defence was disclosed and it was unnecessary to remit to the Lord Ordinary.

We considered that, before deciding whether or not to remit, we should allow counsel for both parties to present their arguments fully; we did so because we judged that without such full argument we were not in a position to come to a soundly based conclusion on the issue as to the materiality and effect of the amendments allowed since the Lord Ordinary's consideration of the case. We therefore heard full argument from both parties.

Counsel for the reclaimer submitted that the pleadings as now amended did disclose a defence. He did not seek to argue that the Lord Ordinary had reached the wrong conclusion in relation to the issue which was placed before him on the basis of the pleadings as they were in May 1993. He submitted that the question of whether or not liability is incurred in a case such as the present is a question of fact and circumstances. The reclaimer had never had any personal liability in respect of taxes or duties unpaid by his deceased father; what the respondent maintained was that the reclaimer's liability derived solely from his sending a letter dated 14 May 1991 to the Commissioners of Inland Revenue containing an offer to pay £20,000, and the acceptance of that offer on 27 June 1991 by HM Inspector of Taxes on their behalf. The first of the two letters was in these terms:

'In consideration of no proceeding being taken against me in respect of the duties set out in the statement below which I acknowledge and agree to be unpaid by reason, wholly or in part of the default of Shek Chung (deceased), and in respect of the penalties and interest to which he may thereby have become liable under the Taxes Acts, I Tat Nin Chung personal representative of Shek Chung (deceased), formerly of 39 Aytoun Road, Pollokshiels, Glasgow, hereby offer in respect of said duties, contributions, penalties and interest the sum of £20,000, the said sum to be paid within 180 days of the date of the letter notifying the acceptance of this offer by you.

The letter of acceptance dated 27th June 1991 was in the following terms:

‘Dear Sir

‘With reference to your client's letter of 14 May 1991 in which he offered to pay the sum of £20,000 on the basis set out therein, I am to inform you that your client's offer has been accepted. The amount of £20,000 should be remitted in accordance with the enclosed Pay slip.

‘Yours faithfully

R Mason

HM Inspector of Taxes

Encl

iw/R.’

It was not in dispute that letters in these terms had been exchanged; but it was submitted that the reclaimer was entitled to attempt to establish that the letter of 14th May 1991 which he signed had been prepared by the Inland Revenue in circumstances such that, if it contained any ambiguity, the document fell to be construed contra proferentem, that is to say that the defender should have the benefit of the construction most favourable to him. There was, it was submitted, ambiguity in that letter; for the reclaimer had signed the document beneath the words, ‘I Tat Nin Chung personal representative of Shek Chung (deceased) … hereby offer’. Thus he was expressly signing not as an individual accepting individual or personal liability but in a representative capacity only; accordingly his liability was not personal but, as counsel phrased it, ‘on a representative basis’. In these circumstances, he was entitled to have an opportunity to establish by evidence the whole background to the matter. That background could include the discussions that led to the preparation and signing of the offer of 14 May 1991, the reclaimer's understanding of the capacity in which he was signing, and the fact that the only liability existing prior to the exchange of letters was that of the deceased's estate. From a fuller examination of the background it could well emerge that he was acting in a representative capacity on behalf of the family, or of the deceased or of the estate itself. The nature and the character of the capacity in which he signed was a matter for proof; indeed it would be for the respondent to demonstrate that the reclaimer's liability was that of an individual. It was not submitted that ‘personal representative’ in this context had any defined meaning in law; but reference was made to McLaren's Wills and Succession (3rd edn), ii, 1396, 2463 (nt 10) and 2484. The nature of the contract which the ‘personal representative’ had entered into was also relevant to the issue of personal liability, and reference was made to Lumsden v Buchanan at p 93, for support for this submission. Counsel acknowledged that the reclaimer could not claim to have signed as a trustee and, for this reason, he did not consider it necessary to discuss the other cases referred to by the Lord Ordinary in his opinion. The correct course was to remit the case to the Lord Ordinary to proceed as accords in the light of the amended record.

In reply, counsel for the respondent submitted that nothing said by counsel for the reclaimer demonstrated that a proof was needed or would assist in the resolution of the issue. The amendments had made no material difference. The submission for the defender and reclaimer was that he had contracted as a representative and that he was entitled to establish that by proof of the new averments. However it was important to notice what the amended pleadings stated. In ans 1 he was denying that he was ‘the personal representative’ of the deceased Shek Chung, while explaining and averring that he was the son of the deceased and that he was not and had never been executor of the deceased's estate; he did not claim to be a trustee; he did not aver some representative capacity or status on behalf of the family; he did not aver or now submit that ‘personal representative’ was a term of art indicating some legal capacity or status. In these circumstances, he was not maintaining that he was an agent for any principal. The deceased could not be his principal, nor could ‘the estate’, nor ‘the family’ of which no mention was made in the pleadings or in the letters referred to. It was trite law that where there was no principal there could be no agent: Tinnevelley Sugar Refining Co Ltd v Mirrlees, Watson & Yaryan Co Ltd, per Lord President Robertson at p 1014. As to the meaning of the letters, and, in particular, of the offer of 14th May 1991, the law was again clear; it was best expressed in Norton on Deeds (1906), p 43, as quoted by Lord Simon of Glaisdale in Wickman Machine Tool Sales v L Schuler AG, at p 263: ‘the question to be answered always is, ‘What is the meaning of what the parties have said?" not, "What did the parties mean to say?" … it being a presumption juris et de jure … that the parties intended to say that which they have said’.

Accordingly the thoughts or understandings that might have been in the mind of the defender and reclaimer when he signed the letter of 14th May 1991 were not a relevant subject for inquiry. As to the nature of the contract, that was to be ascertained by reference to its terms. This was a contract whereby the commissioners were undertaking to refrain from taking proceedings in return for a promise by the reclaimer to make payment of £20,000 within 180 days. If the reclaimer had wished to limit his liability he would have had to do so expressly on the face of the document itself: Brown v Sutherland perLord Gifford at p 621: ‘Whenever a man means to bind another and not himself he should take care to say so. I think this is never to be implied. Even if a trust character is mentioned it will be held in general that this is merely descriptive of the obligant, but does not exempt him from personal liability.’

There was no such limitation in the written contract and none could be added by having a proof of some unspecified circumstances which might have given rise to his description as ‘personal representative’ of the deceased. There was no ambiguity in the document and accordingly the contra proferentem canon of construction had no application in this case.

In our opinion, in the light of the full submissions for the parties, the alterations to the pleadings since the Lord Ordinary considered the matter before him have effected no material difference in relation to the issue before the court, namely whether or not the pleadings disclose any defence to the action.

We consider that the submissions of counsel for the respondent are sound and are correct. The claim of the pursuer and respondent in this action rests upon a contract constituted by the offer and acceptance contained in the exchange of letters referred to. Neither the exchanging of the letters nor their terms are in dispute. Nor is it contended by the reclaimer that the contract was not apt to create liability. On the contrary, he expressly avers, ‘The liability of the defender is on a representative basis’. The defence which is sought to be put forward is that the description of the reclaimer in the letter of 14th May 1991 as ‘personal representative of Shek Chung (deceased)’ is sufficient, given that the deceased was the reclaimer's father and that the tax liability was incurred by the deceased during his lifetime, to lead to the inference that the reclaimer himself had incurred no personal liability. Clearly it is possible, and indeed common for one person to contract in such a way as to impose liability on another person and to avoid any personal liability; the commonest case is where a person contracts as agent expressly on behalf of the disclosed principal. Even in the absence of express agency, circumstances may obtain in which the person bound is not the person who signs the contract creating the obligation. But the only circumstances founded upon here are (1) that the reclaimer was the son of the deceased, (2) that the liability to tax arose during the deceased's lifetime and was the result of the deceased's activities, not of any activities of the reclaimer, and (3) that the reclaimer expressly signed as ‘personal representative’ of the deceased. But the relationship of father and son, even if both are still alive, does not per se give rise to a contract of agency whereby the son can undertake liability for his father; a fortiori when the father has died before the liability has been undertaken by the son. In this case, it must be noted that the liability created by the exchange of letters was to supersede whatever liability the deceased may have incurred in life and which might have given rise to unspecified claims against his estate. Accordingly it is not the original liability to tax with which this claim is concerned; it is concerned with a liability created in 1991 after the deceased's death. In accepting that newly created liability the reclaimer could not have been acting as agent for a deceased principal. Agency is terminated by death and obviously a relationship of agent and principal cannot be created after the death of the putative principal. The reclaimer disavows any capacity as a trustee or as executor. In our opinion, the use of the term ‘personal representative’ of a deceased person in circumstances such as the present cannot signify the existence of a legal capacity derived from a relationship of or akin to that of agency. In our view, the term ‘personal representative’ in this contract is purely descriptive. It is not capable of being read as indicating agency on behalf of the deceased. There is nothing either in the documents or in the pleadings to indicate that the reclaimer, in signing the offer to accept liability, did so in terms such as to indicate that he was creating liability in another or others and restricting his own liability accordingly. In our view, there is no ambiguity introduced into the contract by the use of the words ‘personal representative of Shek Chung (deceased)’. These words contain nothing that would restrict the liability of the reclaimer and create liability in another. We therefore also agree with counsel for the respondent's submission that there is in this case no ambiguity so as to create any opportunity for the application of the contra proferentem rule.

Nothing which the reclaimer now offers to prove could advance matters or alter the plain character of the obligation created by the exchange of letters. In these circumstances the reclaiming motion is refused.