British
and Irish Legal Information Institute
Freely Available British and Irish Public Legal Information
[Home] [Databases] [World Law] [Multidatabase Search] [Help] [Feedback]
Scottish Court of Session Decisions
You are here: BAILII >> Databases >> Scottish Court of Session Decisions >> Tolley v. Abbey Life Assurance Company Ltd & Ors [2004] ScotCS 111 (07 May 2004)
URL: http://www.bailii.org/scot/cases/ScotCS/2004/111.html
Cite as: [2004] ScotCS 111
[New search] [Help]
Tolley v. Abbey Life Assurance Company Ltd & Ors [2004] ScotCS 111 (07 May 2004)
|
OUTER HOUSE, COURT OF SESSION |
|
|
|
OPINION OF LORD MACKAY OF DRUMADOON in the cause ADRIENNE TOLLEY Pursuer; against ABBEY LIFE ASSURANCE COMPANY LIMITED First Defenders; and ABBEY UNIT TRUST MANAGERS LIMITED Second Defenders; and PAUL TOLLEY Third Party: ________________ |
Pursuer: Thomson; Burness
Defenders: Jones, Solicitor Advocate; Brechin Tindal Oatts
7 May 2004
[1] The pursuer in this action was formerly married to the third party, Paul Tolley. The first and second defenders operate in the financial services industry and market various financial products, which can be used as investment vehicles by members of the public.[2] The action is one for payment, in which the pursuer concludes against the first defenders for payment of the sums of £13,538, £12,650.87 and £25,312.73. The pursuer also concludes against the second defenders for payment of the sum of £22,692.50. In relation to each of the sums concluded for, the pursuer seeks interest from the date of citation until payment.
[3] In relation to the first conclusion, the pursuer avers that, on 27 September 1996, she and the third party agreed with the first defenders to commence contributing to a Guaranteed Equity Bond ("Bond 1877387W"). Such a Bond was one of the financial products of the first defenders. Bond 1877387W was issued in the joint names of the pursuer and the third party. They made contributions into Bond 1877387W, which totalled £20,000. It is averred that Bond 1877387W provided that "The Policyholder may request surrender and termination of the Policy prior to the Maturity Date but the amount of the Surrender Value payable is not guaranteed".
[4] The pursuer avers that on or about 5 May 1999 the third party made a request to the first defenders for surrender of Bond 1877387W. It is averred that request was made without the knowledge or authority of the pursuer. The request submitted was in the names of the pursuer and the third party and bore to have been signed by both of them. It is averred that it was not signed by the pursuer herself. The pursuer also avers that the signatures on the request bore to have been witnessed by an agent of the first defenders, Andrew Mackenzie, who, it is averred, knew the pursuer. It is averred that the first defenders met the request and paid £27,076 to the third party. The pursuer avers that she has not received any of those monies.
[5] In their defences, the first defenders admit most of those averments, subject to the qualification that the defenders checked that the signatures on the request matched the example signatures of the pursuer and third party, which the first defenders held on file. The first defenders also aver that at the relevant time Andrew Mackenzie was a self-employed financial adviser, who was an agent of both defenders. Similar admissions are made in the defences lodged on behalf of the second defenders.
[6] The pursuer makes similar averments in relation to the sum second concluded for. The Guaranteed Equity Bond in this case was dated 18 October 1996 and had the number 1877386P. The total contributions made by the pursuer and the third party were £20,000. The signatures on the request for surrender again bore to have been witnessed by Andrew Mackenzie. The pursuer avers that, in response to the request for surrender of Bond 1877386P, which they received, the first defenders paid the third party the sum of £25,301.75.
[7] The first defenders' response to those averments is in similar terms to those relating to the sum first concluded for. Similar admissions are made in the defences lodged on behalf of the second defenders.
[8] In relation to the sum third concluded for, the pursuer avers that on about 15 October 1996 she and the third party agreed with the first defenders to commence contributing to a Personal Investment Portfolio ("Portfolio 1567138K"), which was another financial product of the first defenders. Portfolio 1567138K was in joint names of the pursuer and the third party. It is averred that the terms of Portfolio 1567138K provide: "The Policyholder may request termination of the Policy .... Alternatively, the Policyholder may request partial surrender....". It is averred by the pursuer that she and the third party made contributions totalling £42,000, in respect of Portfolio 1567138K. She also avers that on 25 November 1999, 4 May 2000 and 26 May 2000 the third party submitted requests to the first defenders for the surrender of Portfolio 1567138K. Those requests were made without the knowledge or authority of the pursuer. The pursuer avers that she did not sign those requests and that the signatures on the requests bore to have been witnessed by an employee of the first defenders, Beverley Taylor. It is averred that the first defenders met those requests and paid the third party a total of £55,688.86. The pursuer avers that she has not received from the defenders any monies due to her in respect of the surrender of Portfolio 1567138K. She admits receipt of a cheque for £5,063.69 from Lloyds TSB, which sum has been taken into account in calculating the sum third concluded for.
[9] In response to those averments the first defenders admit that the pursuer and the third party entered into Portfolio 1567138K, to which they contributed £42,000. The first defenders aver that in response to a request for partial surrender, dated 25 November 1999, they paid the third party a cheque for £22,000. They aver that in response to a second request for partial surrender, dated 28 January 2000, they sent the third party a further cheque for £13,293.68. They aver that in response to a third request for partial surrender, dated 6 April 2000, they sent the third party a further cheque for £10,268.40. They also aver that in response to a final request for surrender, dated 26 May 2000, they issued two cheques for £5,063.39. One cheque was drawn in favour of the pursuer and the other cheque was drawn in favour of the third party. They aver that both cheques were sent to the third party at 106 North Road, Bellshill, Lanarkshire. The first defenders aver that each of the requests for partial surrender, which they received, bore to have been signed by the pursuer and the third party and that the signatures on the requests were checked against the example signatures of the pursuer and the third party, which they held on file. The first defenders also aver that the cheque drawn in favour of the pursuer was paid into a Lloyds TSB bank account in the sole name of the third party. They aver that subsequently the pursuer received a cheque for £5,063.69 from Lloyds TSB, together with a further cheque in the sum of £449.69, representing compound interest due to her in respect of the sum of £5,063.69. Similar admissions are made in the defences lodged on behalf of the second defenders.
[10] In relation to the sum fourth concluded for, the pursuer avers that on 22 August 1996 she and the third party agreed with the second defenders to commence contributing to a Unit Trust Personal Equity Plan ("Unit Trust H39828"). Unit Trust H39828 was held in the joint names of the pursuer and the third party. The pursuer avers that on 5 September 2000 the third party wrote to the first defenders applying for repayment of the monies paid into Unit Trust H39828. The application bore to be in the names of the pursuer and the third party. The application bore to have been signed by the pursuer, but it is averred that signature was not that of the pursuer. It is averred that shortly thereafter the first defenders paid the third party a total of £45,385.
[11] In response to those averments it is admitted by both defenders that Unit Trust H39828 was taken out by the pursuer and the third party, that on 5 September 2000 the second defenders received a letter, which bore to have been signed by the pursuer and the third party, that the second defenders checked that the signatures on the letter matched the example signatures they held on file for the pursuer and the third party and that a cheque for £46,118.85 was then issued to a Clydesdale Bank account, in the name of the third party.
[12] The factual basis of the pursuer's claims is accordingly quite clear. The pursuer and the third party, who at that stage were husband and wife, jointly invested funds in four financial products of the defenders, which for the sake of simplicity I will refer to as 'policies'. In each case the 'Policyholder' was the pursuer and the third party. The pursuer avers that the defenders received a number of applications relating to the surrender of all four policies. Those applications bore to be in the joint names of the pursuer and the third party and to have been signed by both of them. The pursuer avers that she was unaware of any of those applications and that she did not sign any of them. The pursuer avers that all of the applications were met by the defenders and that the pursuer received none of the proceeds of the four policies, with the exception of part of the proceeds of Portfolio 1567138K. The sums concluded for represent 50% of the sums received by the third party, subject to the qualification that the sum third concluded for takes account of the sum of £5,063.39, which the pursuer received from Lloyds TSB.
[13] The legal basis upon which the pursuer seeks payment from the first and second defenders is two-fold. In the first place it is averred that in agreements entered into between the pursuer and the first and second defenders, namely the four policies, the pursuer agreed to pay money to the first and second defenders. It is also averred that the first and second defenders agreed to pay on request any monies accumulated in respect of the policies. It is averred that the first and second defenders now refuse to pay those monies back to the pursuer, despite the fact that she has made no previous request for surrender of any of the policies.
[14] Secondly, and on an esto basis, it is averred that if the defenders have paid the third party, monies representing the full proceeds or surrender values of the policies, the defenders did so in breach of an implied term of the each of agreements between the pursuer and the first defenders or the pursuer and the second defenders. It is averred that it was an implied term of each of those agreements that the defenders would take reasonable care to check that the person who signed a request for payment, or an application for repayment, was the person entitled to do so. Condescendence 7 includes the following averments:
"As hereinbefore averred Mr Mackenzie knew the (sic) Mrs Tolley. In particular he knew the pursuer by sight and to talk to. In these circumstances the check would have been straightforward. In any event a check could have been done by examination of a passport. Such a check would have been reasonable in the circumstances. The defenders made no such check or at least no proper check."
In Condescendence 8 the pursuer avers that she seeks payment of half the monies which have been paid out to the third party. She explains that she seeks half of the monies, as this represents an equal sharing between herself and the third party.
[15] In denying those averments, both defenders also seek recovery from the third party of any loss and damage that may be held payable by them to the pursuer. The defences include averments, supported by appropriate pleas, that any loss or damage the pursuer has been caused, through the defenders' failure to obtemper their contractual obligations et separatim the defenders' breach of contract, was caused by the fraud of the third party, entitling the defenders to relief against the third party. On an alternative basis the defences contain similar pleas directed against the third party, in terms of the Law Reform (Miscellaneous Provisions) (Scotland) Act 1940, section 3.[16] Both sets of defences also include averments to the effect that the pursuer was aware by 12 April 2001 that the four policies had been surrendered and that she was so aware when she and the third party entered into a Separation Agreement on 15 January 2002, in terms of which the pursuer received certain items of matrimonial property in excess of one half of the total 'matrimonial property' owned the pursuer and the third party.
[17] The case went to debate on the motion of the defenders, who invited me to sustain the first, second and third pleas in law for both of the defenders and to dismiss the action. Those pleas are 'no title to sue', a general plea to the relevancy of the action and a further plea seeking to exclude certain averments from probation. The pursuer, for her part, was content with a proof before answer. The third party, who is representing himself in this action, was not present at the debate. I understand that he is content that the action should proceed to proof before answer.
[18] In support of his motion, the solicitor advocate for the defenders advanced four main arguments. In support of the first plea-in-law, to the effect that the pursuer has no title to sue, the pursuer's pleadings were attacked on the basis that they did not relevantly plead the basis of the pursuer's title to sue the defenders. In her pleadings, the pursuer had failed to take account of the fact that in relation to each of the policies the obligations of the first and second defenders had been to the 'Policyholder' (or Investor), who was defined in the relevant documentation as being the pursuer and the third party. It was contended that the pursuer had not averred that, in respect of each of the policies, she was the 'Policyholder', that the 'Policyholder' had made a relevant request for surrender of the policies and how she, as an individual, had an entitlement to request payment of part of the surrender proceeds of the various policies. The pursuer's pleadings were also criticised on the basis that she had failed to aver that either as an explicit term of the individual policies with the first or second defenders, or as matter of general law, she had a right, at this stage, to seek from the relevant defenders payment of 50% of the surrender values of the individual policies. In developing those arguments the solicitor advocate for the defenders made some reference to certain of the policy documentation, which had been lodged as productions, and, in particular, to parts of the documentation relating to the two Guaranteed Equity Bonds and the Personal Investment Portfolio issued by the first defenders. He argued that the documentation demonstrated that any application to surrender all or part of any of the policies required to be submitted in the name of the 'Policyholder' of the policy in question, not merely in the name of one of the individuals falling with the definition of 'Policyholder' in the relevant policy.
[19] By the date of the debate, not all of the relevant policy documentation had been lodged. Even although some further documentation was lodged following the debate, it is not clear, and in any event not agreed, that the productions contain all of the relevant documentation relating to the four policies and to the payments made by the first and second defenders, in response to the applications to surrender the policy proceeds, which they received.
[20] The pursuer's averments were also criticised on the basis that she had failed to make clear whether the policies were 'common property', owned by herself and the third party. If the pursuer was contending that they were common property, then she required to aver that fact and the legal basis upon which she claimed to be entitled, at this stage, to payment of or from the surrender proceeds of each policy.
[21] It was submitted that, in her written pleadings, all that the pursuer had done had been to state that she had a contractual right to payment from the pursuers. She had not averred that she was an innocent party, who had been the victim of fraud, and that, as such, she was entitled to payment from the defenders in terms of the various contracts. If the pursuer was contending that she had a right to payment as an innocent victim of frauds, committed by the third party, she should say so in her pleadings. The general rule was that error induced by fraud of a third party does not constitute a ground for avoidance of a contract by one of the contracting parties (see Universal Import Export GmbH v Bank of Scotland 1995 SLT 1318, per Lord Justice Clerk Ross at p.1321).
[22] The second branch of the defenders' argument was founded on the weaker alternative rule of pleading. It was argued that the pursuer's pleadings, in her alternative case against the defenders, were irrelevant. That alternative case relates to the alleged breach by the defenders of an implied term in each of the agreements constituted by the policies. It was submitted that all that the pursuer had averred was the existence of a general duty on the defenders to take reasonable care to check that the person, who signed an application or request for repayment of the proceeds of a policy, was the person entitled to do so. Under reference to Eadie Cairns v Programmed Maintenance Painting Limited 1987 SLT 777, it was argued that the defenders were entitled to fuller notice of the particular steps, which it was said that they should have taken, and of any evidence that the pursuer intends to lead as to what the defenders could or should have done. The pursuer's pleadings did not attack the defenders' internal procedures. It was argued that the references in the pleadings to Mr Mackenzie were lacking in specification as to whether any alleged omission on his part had occurred during the course of his employment with the first defenders. Similar criticism was made of the reference to Beverley Taylor. It was argued that the pursuer's averments in relation to this implied term were irrelevant, particularly so in relation to the claim against the second defenders, where the pursuer had no averments regarding any witnesses to the signing of the applications for payment of the surrender proceeds of Unit Trust H39828. It was unclear what the pursuer meant by the averment 'The defenders made no such check or at least no proper check'. The pursuer required to make the subject of specific averment what checks she contends that the defenders ought to have been carried out.
[23] The solicitor advocate for the defenders very properly made clear that he was not arguing that the existence of an implied term could not have been relevantly averred. What he was arguing was that the pursuer's pleadings, as presently drafted, did not contain such averments.
[24] Still dealing with his submissions based upon the weaker alternative rule, the solicitor advocate for the defenders argued that even if the pursuer was able to establish that the defenders had acted in breach of an implied obligation owed to her, payment was not the appropriate remedy. If loss had been suffered by her, as a consequence of the breach of an implied term of the contracts, then the appropriate remedy was one of damages.
[25] It was argued that the pursuer's case based upon breach of an implied term being irrelevant, the weaker alternative rule applied, and the action should be dismissed. Reference was made to Finnie v Logie &c (1859) 2 D. 825 per Lord President Hope at p.829, Hope v Hope's Trustees (1898) 1 F. (H.L.) 1, Haigh & Ringrose Ltd v Barrhead Builders Ltd 1981 SLT 157, Stewart's Executors v Stewart 1994 SLT 466 and McPhail, Sheriff Court Practice (2nd Edition) paras.9.36-9.39.
[26] The third branch of the submissions on behalf of the defenders related to the quantum of the pursuer's claims against the two defenders, insofar as those claims are based on a contractual entitlement to payment. The pursuer was seeking payment of one-half of the sums allegedly paid to the third party. It was pointed out that, on her own admission, the pursuer had made no request to surrender the policies, prior to the raising of the present action. It was argued that if the pursuer is due payment, in respect of the proceeds of those policies, it must be what she was due in terms of the relevant documentation. What may or may not have been paid to the third party, some time ago, was irrelevant to any entitlement that the pursuer may now have to receive payment from the defenders.
[27] Furthermore, as previously noted, the general rule is that error induced by the fraudulent misrepresentation of a third party leaves a contractual relationship unaffected (see Universal Import Export GmbH v Bank of Scotland). In all the circumstances, if the contracts between the pursuer and the defenders were unaffected by any error induced by the fraudulent misrepresentations of the third party, any claims against the defenders must be for the value of any entitlement now due to the pursuer under the terms of the policies and the sums that were invested in them.
[28] Under a fourth chapter of his submissions, entitled "Inherent Inconsistency", the solicitor advocate for the defenders advanced certain submissions relating to two factual matters which had been raised in the defences. The first relates to the cheque for £5,063.39, drawn in favour of the pursuer, which was issued by the first defenders, sent to the third party and then paid into a Lloyds TSB account relating to the third party. The sum of £5,063.39 had formed 50% of the payments made in response to the application for the surrender of the final proceeds of the Personal Investment Portfolio 156738K. The point argued by the solicitor advocate for the defenders was that when the action was initially raised, the pursuer's pleadings had not revealed that she had recovered such a sum from Lloyds TSB. On the contrary she had averred that she had not requested any payment under the Portfolio 1567138K. Her receipt of the cheque from Lloyds TSB had only been admitted by her after defences had been lodged and her receipt of the sum of £5,063.39 had been made the subject of averment by the defenders. It was submitted that illustrated how the pursuer had been, and continued to be, less than candid in her written pleadings. It was submitted that in the absence of any proper explanation for what had happened, the pursuer's action against the defenders was "irreconcilably inconsistent" with her having claimed and received payment from Lloyds TSB.
[29] A separate branch of this chapter of the submissions on behalf of the defenders related to the averments the defenders had made concerning the funds and property received by the pursuer from the third party, in terms of the Separation Agreement they had entered into. It was pointed out that the pursuer made no general denial of the defenders' averments relating to the Separation Agreement. It was contended that having regard to the pursuer's own averments relating to the Separation Agreement, that "it is apparent that prior to entering into the Separation Agreement the pursuer knew that the third party had received payment of the policy proceeds". It was argued that the facts (i) that all of the policies had been surrendered prior to 15 January 2002, when the Separation Agreement was signed, (ii) that the third party had received the surrender proceeds of the policies and (iii) that, in terms of the Separation Agreement, the pursuer had obtained well in excess of one-half of the 'matrimonial property', all gave rise to an "irresistible inference" that the pursuer had received some benefit from the monies paid out by the defenders to the third party. It was argued that in the absence of specific and candid averments offering to prove that the pursuer had not received any benefit from those monies and explaining why she entered into the Separation Agreement, without attempting to make any recovery of part of those monies from the alleged wrongdoer, namely the third party, the pursuers' pleadings were so "irreconcilably inconsistent" that the action should be dismissed.
[30] In responding to those submissions, counsel for the pursuer began by stressing that as this was a commercial action and that the approach the Court should follow was seeking to identify whether the pleadings made sufficiently clear what the factual and legal issues between the parties are.
[31] On the question of title to sue, counsel submitted that a number of facts were not capable of dispute. First of all, the funds in all of the policies had been deposited by the pursuer and the third party. Secondly the proceeds of all four policies had been paid out. Thirdly, those proceeds had been paid out to the third party, whereas the pursuer and the third party were the 'Policyholder' in relation to each policy. That was clear from such documentation as had been lodged in process. Fourthly, it was clear that payment had been made to the third party by virtue of false signatures of the pursuer having been appended to each of the applications for surrender of the proceeds of the various policies. As far as the last of these "facts" is concerned, counsel for the pursuer conceded that technically speaking that was still denied by the defenders. For the purposes of his submissions, however, that did not matter, because the pursuer was content that the action should proceed to a proof before answer, with all pleas being reserved.
[32] Counsel submitted that as a matter of law the funds committed to and held within each of the four policies were common property, owned by the pursuer and the third party. Under reference to certain passages in The Law of Property in Scotland, by Professor Reid, at paras.17, 19, 22 and 29 and Gloag on Contract, (2nd Edition.) at p.203, counsel stressed the rights of a pro indiviso owner of common property include the right of such an owner to alienate or burden their share of the common property and their absolute right to terminate the community at will. He founded in particular on a passage at p. 203 of Gloag on Contract, "If the action is for the constitution of an alleged obligation for the payment of money (or any other obligation equally divisible), it is probably established that each obligant has a title to sue for his share without the concurrence of the other". Counsel for the pursuer contended that the common law did not require both of the individuals who constituted the "Policyholder" to surrender or request the surrender of the proceeds of policy at the same time.
[33] Counsel for the pursuer also argued that ex facie of the available documentation the conditions in the policy documents did not require both the pursuer and the third party to request surrender of the policy proceeds at the same time. It was argued that in the present action what the pursuer was seeking was her share of common property, which she had not sought before. The terms of the documentation and the law gave the pursuer a clear title and interest to pursue the remedies she was seeking in the present action.
[34] On the issue of the measure of the pursuer's share of the policies, counsel for the pursuer argued that she was entitled to 50% of the policy proceeds that had been paid to the third party, on the assumption that the policies had effectively been brought to an end, when, as a consequence of fraud by the third party, the whole proceeds of each policy (subject to the one payment of £5,063.39) had been paid out to the third party. What had been paid out to the third party was twice what the pursuer was now seeking, less an adjustment for the payment of £5, 063.39, which the pursuer had received from Lloyds TSB. There was no averment on behalf of the defenders to the effect that they had paid out the wrong sum in respect of any of the four policies. On the assumption that the policies continued to survive, the values of the policies may be higher or lower than twice the sums sued for by the pursuer, but if so, it was for the defenders to plead that the policies were still in existence and whether their values were higher or lower than twice the sums the pursuer now sues for. It was noted is passing, however, that there was a dispute between the parties as to whether the various policies had remained in existence after the defenders had made the payments that they had to the third party. If, as was argued on behalf of the defenders, fraud on the part of the third party had not brought the policies to an end, what did they say was left? The defenders' position on that question was described as being "at best Delphic and at worst opaque".
[35] In this regard it was stressed that the pursuer's claims were not based on fraud. The initial basis on which they were founded was that (a) the pursuer is a person who has a contractual entitlement to a share of the proceeds of each policy, (b) that her share of the proceeds in each instance is 50%, (c) that the defenders paid 100% of the proceeds to the third party and (d) that, notwithstanding (c), the pursuer remains entitled to payment of 50% of the proceeds of each policy. In other words, payment to the third party, whether achieved by fraudulent means or otherwise, does not mean that the pursuer does not have valid claims for payment, based on contract, which she can pursue in the present action.
[36] On the issue of the weaker alternative rule of pleading, under reference to passages in various reported authorities, including Hope v Hope's Trustees, Finnie v Logie, Haigh and Ringrose Ltd v Barrhead Builders Ltd and Stewart Executors v Stewart, counsel pointed out that for the weaker alternative rule to apply, alternative averments of fact require to have been pled. Counsel for the pursuer argued that in the present case there were no alternative averments as to fact. The alternatives were in relation to the legal grounds upon which the pursuer sought payment from the defenders.
[37] In relation to the defenders' criticism of the case based upon the implied term relating to the checking of signatures, counsel for the pursuer submitted that the averments that the defenders were under a duty to take reasonable care to check that the person who signs a request for a repayment on an application for a payment is the person entitled to do so, were not as to the existence of a general duty, as suggested by the defenders, but as to the existence of a precise duty on the defenders, particular to the circumstances of this case. References to what Mr Mackenzie could have done, in relation to the applications for surrender of the funds held under the two Guaranteed Equity Bonds, and to checking signatures with a passport, were merely illustrations of what the defenders could have done by way of a check. It was not part of the case for the pursuer that the defenders ought to have engaged the services of a handwriting expert.
[38] As far as the quantum of the pursuers' claims was concerned, that was identical whether or not the claims proceeded upon a contractual right to payment or arose out of breach of an implied term. In the circumstances there was no need for separate averments relating to quantum, in respect of the alterative grounds on which the pursuer's claims proceed, because the sums claimed are identical, whichever ground is being considered.
[39] Finally, in dealing with the submissions that had been advanced under the general heading of "Inherent Inconsistency", counsel for the pursuer explained that the initial failure to mention the payment from Lloyds TSB had been the fault of the drafter and that error had now been cleared up. As far as the Separation Agreement was concerned, the positions of the pursuer, the defenders and the third party were quite clear in the pleadings. The factual issues between them were matters for proof. In the whole circumstances, counsel for the pursuer sought a proof before answer.
[40] In my opinion, this action requires to proceed to proof, before the issues between the parties can be determined. I do not consider that the central issues between the pursuer and the defenders can be resolved on the basis of the legal submissions that I have heard. Furthermore the parties are agreed that there remain certain factual issues between them. There is also the position of the defenders' claims against the third party. In the event that the pursuer is successful against the defenders, the claims against the third party could not be resolved without hearing evidence.
[41] I have reached the view that I should allow a proof before answer for a number of reasons. In the first place the terms of all the policies have neither been proved nor admitted. During the debate I was referred to a number of the documents that have been lodged as productions, including some which appear to contain details of the conditions of certain of the policies and others that are copies of the various applications for payment of the surrender values of the policies that the defenders received. However the full facts of the dispute between the pursuer and the defenders have neither been admitted nor established, in respect of (i) the policy documentation, (ii) the documentation and circumstances relating to the submission to the defenders of applications for surrender of the proceeds of the policies, (iii) how the first and second defenders dealt with those applications and (iv) the relevance, if any, between the negotiations and conclusion of a Separation Agreement, on the one hand, and the payment of the proceeds of the four policies to the third party, on the other hand.
[42] It is quite clear from the submissions that I have heard that quite complex questions of law arise in this case as to the rights of the pursuer under the various policies, the duties on the defenders when they received applications for surrender of the policy proceeds and, if it is proved to be the case that those applications bore forged signatures of the pursuer, the rights and obligations of the pursuer and the defenders in such circumstances. Questions of the onus of proof may also arise in relation to some of the issues between the pursuer and the defenders.
[43] In considering the pursuer's pleadings, it is important to bear in mind that this is a commercial action to which the provisions of Rule of Court 47.3.(2). Provided that parties receive fair notice of the case against them, the requirement to make detailed averments, on issues of fact and law, which applies in ordinary actions, can be dispensed. In particular, there is no requirement that each factual allegation made by one party should be admitted or denied by other parties, provided that the nature and extent of the dispute between the parties can be identified. Fair notice of the parties' contentions on the issues between them can be given in a variety of ways, including correspondence exchanged between the parties and the lodging of witness summaries (cf. Rule of Court 47.12.(1)(b)). In my opinion, nothing said by Lord Hamilton in either Kaur v Singh 1998 SC 233 or Johnston v W.H. Brown Construction (Dundee) Ltd 2000 SLT 223 is inconsistent with such an approach.
[44] In my opinion, the pursuer has given adequate notice of her title to sue the defenders in the present action. It is, of course, open to the defenders to challenge the factual and legal grounds on which pursuer seeks to recover the sums sued for. But the defenders do not dispute that the pursuer and the third party agreed to become party to the various policies to which this action relates. Taking pro veritate the pursuer's averments about (i) how the four policies were entered into, (ii) the general nature and terns of the policies, (iii) that the whole proceeds of the four policies (with the exception of £5063.39 in respect of the third policy) were paid out to the third party, in response to applications for payment that falsely bore to have been signed by the pursuer and (iv) that the pursuer herself has not received any share of the proceeds of the policies from the defenders, it cannot, in my opinion, be disputed that the pursuer has a title to pursue such remedies she may have against the defenders. Whether or not she succeeds in vindicating those remedies is another matter.
[45] As far as the pursuer's contractual claim for payment is concerned, I am satisfied that the pursuer has given the defenders adequate notice of the factual and legal basis for this claim. It is not a claim based on the fraud of the defenders or indeed on the fraud of the third party, although it could not be suggested that the pursuer has not given clear notice of her allegation that false signatures of her were included on all of the applications for payment that the defenders received and paid out on. What the pursuer contends is that she has the right to payment of one-half of the proceeds of the policies and that there is nothing in the common law or the provisions of the policies that would deprive of such entitlement. The defenders deny that she has any such contractual entitlement, despite the fact that it appears to be a matter of agreement between the pursuer and the defenders that the policies were common property in which the pursuer and the third party held pro indiviso shares. In my opinion, once the full terms of the policies are agreed or proved, and once it has been established whether the policies remain in existence, the legal issues between the pursuer and the defenders relating to any contractual right to payment can be resolved.
[46] Turning to the pursuer's alternative basis for claiming payment from the defenders, namely that the defenders acted in breach of an implied term of the policies, the defenders have, in my opinion, received fair notice of the case against them. That case is that they were under a duty to take reasonable care to carry out a proper check that the person who signs a request or application for payment is the person entitled to do so and that they failed to carry out such a check. In my opinion, the need for the pursuer to lodge witness summaries of any evidence she wishes to lodge at the proof provides a further safeguard for the defenders that they will have adequate notice of the case they require to meet.
[47] No doubt the pursuers' averments as to the alternative grounds on which they seek to establish liability against the defenders could have been more extensive than they are. In my opinion, however, they are sufficient to provide fair notice to the defenders of the case that they require to meet. As far as the application of the weaker alternative rule is concerned, in my opinion there is force in the submissions made on behalf the pursuer that the rule is directed to situations is which there are alternative averments of fact. In the circumstances of the present case, the rule does not, in my opinion, prevent the action proceeding to proof.
[48] On the issue of the quantum of the pursuer's claims, the position is complicated by the fact that there is an issue between the parties as to whether the policies came to an end, once the defenders paid out the policy proceeds to the third party. In my opinion, the possibility that the pursuer may be seeking less than she might be entitled to, were she to succeed against the defenders on the issue of liability, does not mean that, as a matter of relevancy, her averments as to quantum cannot be admitted to probation. Nor does such a possibility render the whole action irrelevant. In my opinion, the pursuer has given perfectly clear notice as to how she quantifies her claims against the defenders.
[49] Dealing finally with the points raised under the heading of "Inherent Inconsistency", it is clear, in my opinion, that those points involve, in the first instance, questions of fact, on which it would be wrong to express any opinion until evidence has been heard. Likewise it would be wrong for me to express any views as to how the legal issues raised under this heading might fall to be resolved, until after the factual issues have been resolved.
[50] In the whole circumstances, therefore, I am minded to allow all parties a proof before answer. The case will accordingly be put out By Order for a discussion as to further procedure.