Scottish Court of Session Decisions

Dunalastair Investments Ltd for Recall of Inhibition [2002] ScotCS 25 (25th January, 2002)

OUTER HOUSE, COURT OF SESSION
	OPINION OF LORD MACKAY OF DRUMADOON in the Petition of DUNALASTAIR INVESTMENTS LTD Petitioners; for Recall of Inhibition   ________________

 

 

Act: Keen, QC; Bennett Robertson

Alt: Simpson ; Drummond Miller

25 January 2002

1. The petitioners, Dunalastair Investments Limited, own heritable property at 8 Forres Street, Edinburgh. By missives dated 22 September, 29 September and 9 October 2000, the petitioners and the respondent, Ian David McKenzie Young, concluded missives for the sale of that property to the respondent. Although copies of those missives are not lodged as productions in the present proceedings, it is a matter of agreement between the parties that the missives provided for 27 October 2000 to be the date of entry upon which the transaction would settle.
2. In the event, settlement of the transaction did not take place on 27 October 2000. Indeed it has never taken place. It appears that the initial reason why settlement was delayed was the non-availability of a building warrant and completion certificate in respect of refurbishment works, that had been carried out to the property, sometime before the missives were concluded. There may be some dispute between the parties as to which of them was responsible for applying for that building warrant and completion certificate. What is not in dispute, however, is that in the absence of those documents, the transaction could not settle.
3. Various items of correspondence are lodged as productions in these petition proceedings. They include a letter dated 6 April 2001 in which the respondent's solicitors advised the petitioners' solicitors that they ought to be able to settle the transaction seven days after sight of the building warrant and the completion certificate. By fax dated 18 June 2001, the petitioners' solicitors informed the respondents' solicitors that they were now in possession of the building warrant and completion certificate and that they were accordingly in position to settle the transaction. In that fax the petitioners' solicitors also called upon the respondent to settle the transaction on 25 June 2001. The respondent did not so. On 27 June 2001 the respondent's solicitors wrote a further letter to the petitioners' solicitors, seeking sight of the planning permissions and listed building consents relating to the property. That prompted a reply from the petitioners' solicitors, dated 29 June 2001, to the effect that the petitioners were under no contractual obligation to produce such statutory consents. The letter of 29 June 2001 also stated that the petitioners' solicitors considered that the respondent was in breach of contract, by reason of his failure to settle the transaction by 25 June 2001. The letter continued "Unless settlement is achieved by Friday 6 July 2001, we have instructions to formally resile from the bargain, reserving our position in respect of any claims that we have against your client". In a subsequent letter, dated 4 July 2001, the respondent's solicitors advised the petitioners' solicitors that the respondent was not prepared to settle to the transaction until such time as the damages claimed by the respondent, in a sheriff action, had been dealt with. 5 days later, on 9 July 2001, the petitioner's solicitors wrote to the respondent's solicitors intimating that they had instructions to rescind the missives, which in that letter they purported to do.
4. The respondent's action for damages has been raised against the petitioners in Edinburgh Sheriff Court. The action was raised on 15 June 2001 and the Initial Writ served on the petitioners that day. The Initial Writ contains three craves. The respondent seeks (1) declarator that there is a concluded contract between the parties, in terms of the missives, (2) decree ordaining the petitioners to implement that contract by delivering a valid disposition of the property and also to pay the respondent £78,000 by way of damages, in respect of losses alleged to have incurred by the respondent, by reason of the petitioners' delay in producing the building warrant and the completion certificate, and (3) failing implement of the missives, decree for payment of £231,150 by way of damages for loss allegedly incurred by the respondent on account of breach of contract on the part of the petitioners. In that sheriff court action, a Record (as adjusted) has been prepared. It is one of the productions in this petition. The sheriff court action is scheduled to proceed to proof on 28 January 2002.
5. By Letters of Inhibition the respondent applied for warrant to inhibit the petitioners on the dependence of the sheriff court action. Such warrant was granted on 26 July 2001. Senior counsel sought to argue that as the Letters of Inhibition only referred to the pecuniary craves in the Initial Writ, the warrant for inhibition granted was similarly restricted. However, as a copy of the whole of Initial Writ was before the Court when the warrant to inhibit was granted and as the warrant itself does not bear to be restricted to only two of the three craves, I am not disposed to decide this motion for recall on the basis that the inhibition only has legal effect as far as the pecuniary claims in the sheriff court action are concerned. Apart from any other considerations, the three craves are interdependent. If the first crave was to be refused, the others would also automatically fall.
6. The Letters of Inhibition were registered in the Register of Inhibitions and Adjudications on 10 October 2001. Initially they had the effect of inhibiting four heritable properties owned by the petitioners. The present petition seeking recall of the inhibition was lodged on 3 December 2001. Article 4 of the petition narrates that the petitioner seeks recall of the inhibition on the grounds of nimiety and oppression. On 14 December 2001, of consent of the parties, Lord Emslie recalled the inhibition to the extent of excluding therefrom three of the properties owned by the petitioners. The motion currently before me seeks recall of the inhibition against the fourth property, namely 8 Forres Street, Edinburgh.
7. In moving that motion, senior counsel indicated that there were two general lines of arguments that he wished to advance. The first line of argument is that the procedure by which the warrant for inhibition was granted was, and the inhibition itself remains, incompatible with the petitioners' convention rights under the Human Rights Act 1998. I need not elaborate on this line of argument, for this reason. Having outlined it to me, senior counsel indicated that he wished to reserve his position in respect of it and, if necessary, argue it more fully once Lord Drummond Young has issued his opinion in Carl Construction v Pallisade. That is a very recent case in which Lord Drummond Young has recalled an inhibition on the ground that the party inhibited has suffered infringement of their convention rights. I was informed that a reclaiming motion might be marked against Lord Drummond Young's decision. But whether or not that occurs, senior counsel indicated that he did not intend to advance his convention rights argument, unless and until I had considered and rejected the other line of argument upon which he founded. Even then he would wish to await the issue of Lord Drummond Young's Opinion or the outcome of any reclaiming motion taken against Lord Drummond Young's decision.
8. The second general line of argument can be put shortly. It is to the effect that inhibition against the petitioners is nimious, because the respondent is bound to fail in the sheriff court action he has raised. Adopting an approach illustrated by the decision of Lord Weir in West Cumberland Farmers Ltd. v Ellon Hinengo Ltd 1988 SLT 294, when he was dealing with a motion for the recall of the arrestment of a ship on the dependence of the action, senior counsel for the petitioners argued that the respondent did not have a "colourable case" to advance in the sheriff court action. A "colourable case" he defined as being one which was arguable, albeit one that might not yet have been relevantly pled in a pursuer's written pleadings. A colourable case could be identified by the Court after a consideration of the written pleadings, any productions lodged and any oral submissions made on the behalf of a party seeking to justify the grant of an inhibition or oppose its recall. It was submitted that as far as the present respondent is concerned, not only does he not have a colourable case, his sheriff court action is bound to fail. No relevant case is pled the Record. Nor could such a case be pled, having regard to the indisputable facts that emerge from a reading of the terms of the Record and the correspondence to which I have referred. Senior counsel pointed out that it is admitted by the respondent that the petitioners have now produced the building warrant and completion certificate, which required to be available before the transaction could settle. It is admitted by the respondent that since those documents came to hand, he has been called upon to settle the transaction and has failed to do so. Indeed some other correspondence lodged suggests that currently the respondent does not have the funds to settle. In any event, the respondent admits that, by the letter of 29 June 2001, he was given a further opportunity to settle the transaction, an opportunity that he failed to take. It is also accepted by the respondent that in the letter of 29 June 2001 he had been given notice of the petitioners' intention to resile, in the event that he failed to settle the transaction. Senior counsel submitted that in the absence of any contention in the pleadings that the period of notice of seven days laid down in the letter of 29 June 2001 had been unreasonable, the petitioners had been perfectly entitled to resile from the contract and had done so by the letter of 9 July 2001. That meant that the respondent had not pled, nor would he ever be able to plead, a relevant case against the petitioners in the sheriff court action that is to go to proof on 28 January 2002. In these circumstances, so it was argued, the respondent was not in a position to satisfy me that he had a colourable case in his sheriff court action.
9. In reply, counsel for the respondent accepted that if the inhibition is to remain in place, it was for the respondent to demonstrate that in his sheriff court action he has a colourable case against the petitioners. Counsel submitted that such a case does exist. He stressed that the petitioners accept that the missives had created a binding contract. He submitted that the question as to whether the petitioners had a right to resile from the missives is a mixed question of fact and law, which he urged should not be decided in the Court of Session, purely on the basis of submissions, but should be left to the Sheriff to decide, after hearing both evidence and submissions. Counsel accepted that in his written pleadings in the Record, the respondent had admitted that he had not settled the transaction when he had called upon to do so, by the letters of 18 June 2001 and 29 June 2001. He submitted, however, that those admissions should not be looked at in isolation and that the whole history of events since the conclusion of the missives should be taken into account. He acknowledged that no issue as to the reasonableness of the seven day period of notice has yet been raised in the respondent's pleadings in the sheriff court action. He indicated, however, that this issue would be raised by the respondent, based on an argument that seven days was inadequate having regard to the history of the transaction and the facts that (i) when the seven days' notice was given, the original offer of loan to the respondent had expired and (ii) new loan facilities could not have been arranged, within the seven days time limit that had been set by the petitioners.
10. Having considered the submissions I received and the productions that are before me, including the Record (as amended) in the sheriff court action, I am not prepared to recall the inhibition on the ground that it is nimious. In the Record in the sheriff court action, the petitioners make no mention of the letter of 9 July 2001 in which their solicitors purported to rescind the contract. On the contrary the pleadings proceed along the lines that the missives constitute a binding contract, that the respondent does not currently have the funds to settle the transaction to which those missives relates, that the sheriff court action has been raised in an attempt to avoid the respondent having to pay funds that he currently does not have access to, that the respondent does not have the necessary statutory consents that would permit him to operate the bed and breakfast business, and thus earn the sums he claims by way of damages, and that in these circumstances all three craves of the Initial Writ should be refused. Nowhere in their written pleadings do petitioners aver that they rescinded the contract on 9 July 2001. On the contrary their fourth and fifth pleas in law are in these terms:
1. "The defenders having accepted since 17 March 2001 that a valid contract exists between the parties, as condescended on, decree of declarator is unnecessary and should not be pronounced as craved.
2. The defenders having been prepared, since 17 March 2001, to implement their part of the bargain in accordance with the agreement reached between the parties' solicitors and the pursuer having had reasonable opportunity to pay the purchase price and having failed to make payment, as condescended upon, decree of implement should not be pronounced as craved".
11. If, notwithstanding the present terms of their pleadings, the petitioners do intend to argue in the sheriff court action that on 9 July 2001 they validly rescinded the binding contract constituted by the missives, there is every reason to anticipate that the Sheriff would allow the respondent to raise the issue as to adequacy and reasonableness of the seven days notice laid down in the letter of 29 June 2001. If those related questions of rescission and the reasonableness of the seven days notice are to be raised in the sheriff court action, I do not consider that it can be said, at this stage, that the Sheriff would have no alternative but to hold that a period of seven days notice was reasonable and thus reject in their entirety all the remedies sought by the respondent. It my opinion, having regard to the whole history of the transaction, in so far as that history is before me, the respondent has a colourable argument that the purported rescission was not valid and that he is entitled to at least some of the remedies he seeks. Likewise, if the petitioners stick with their current pleadings in the Record (as amended) and do not seek to argue that the contract has come to an end, the respondent has a colourable argument that he is entitled to at least certain of the remedies set out in the three craves. In these circumstances, as no further arguments were advanced as to why the inhibition is nimious, I am not prepared to recall it on the ground that it is.
12. The motion for recall will accordingly require to be put out By Order, on a date to be afterwards fixed, for further submissions on the alleged incompatibility between the inhibition and the petitioners' convention rights.