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You are here: BAILII >> Databases >> Scottish Court of Session Decisions >> Connolly & Anor v. Brown [2004] ScotCS 126 (27 May 2004)
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Cite as: [2004] ScotCS 126
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Connolly & Anor v. Brown [2004] ScotCS 126 (27 May 2004)
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OUTER HOUSE, COURT OF SESSION |
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OPINION OF LORD JOHNSTON in the cause GORDON CONNOLLY and MRS ANN TERESA CONNOLLY Pursuers; against NEVILLE STUART BROWN Defender:
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Pursuers: Robertson; Turcan Connell, W.S.
Defender: Kinnear; Semple Fraser, W.S.
27 May 2004
[1] In this action the pursuers seek account reckoning and payment from the defender in respect of profits allegedly made by him in relation to a property transaction between him and a third party, the property in question having originally having been owned by the pursuers and sold by them to the defender. [2] The background to the matter is that, on the averments, the pursuers decided to develop the property that they owned in West Lothian and to that end employed the defender, said to be a property consultant, to act for them as their agent in respect of the seeking out, obtaining, and ultimately effecting a sale to a buyer. [3] The defender undertook this assignment in 1995 and during the course of the latter part of that year and 1996 endeavoured to achieve a satisfactory result. It appears that a party known as Tulloch Homes made a conditional offer for the land in question subject to a number of suspensive conditions. Eventually this particular exercise came to nothing. [4] In December 1997 it is averred that the defender indicated to the pursuers he might be interested in purchasing the land for development by him in a joint venture with another party and it is said that the pursuers agreed to this. Both parties employed independent solicitors thereafter. On about 22 May 1998 a draft offer for the purchase of the land was submitted to the pursuer's solicitors, the offeror being a company, Hermitage Ardnaree Limited, in which the defender had a substantial interest. In July 1998 the defender applied for planning permission for the erection of houses on the land and by letter dated 2 September 1998, made a formal offer to the pursuers' solicitors to purchase. Missives were concluded between the pursuers and the defender's company by a qualified acceptance dated 7 October 1998 and a subsequent letter by the defender's solicitors dated 18 December 1998. At that date there was accordingly a concluded bargain between the pursuers' and the defender's company in relation to the land. [5] The critical fact in this case however is that on 7 December 1998 a formal offer was made on behalf of a third party, Bryant Homes Limited to the defender, to purchase the land from his company at a very much enhanced price to that agreed in missives eventually concluded between the pursuers and the defender's company. At the time that the missives were concluded between the pursuers and the defender's company, the pursuers were not aware that this offer existed. The offer by Bryant to the defender's company was subsequently formalised and converted into a contract in about June 1999. The pursuers' claim relates to the substantial profit made by the defender's company and thus the defender himself in relation to this subsequent transaction. [6] The essential facts are not materially in dispute and the pursuer's case reduced to its bare bones was firstly that at the time of the conclusion of the contract between the pursuers and the defender's company in December 1998, the defender was still acting for the pursuers in relation to the purchase of the sale of the land. Secondly, on an alternative basis, assuming that the agency had come to an end prior to that date, or in any event at the date that the missives were concluded, it is alleged that the defender still owed certain fiduciary duties to the pursuer in relation to the transaction which in essence required him to reveal to the pursuers before they concluded the missives with his company that there was in existence an offer from a third party in respect of a much enhanced price. As I see it, despite the narrative in the pleadings, these are the essential elements of the case. [7] The case called before me on procedure roll in respect of the defender's general plea to the relevancy in respect of which counsel seeks dismissal of the action. [8] His attack was two-fold. [9] Firstly he submitted that on any view of the matter by the time the missives were concluded between the pursuer and the defender's company, the defender could not any longer be regarded as the agent of the pursuers and indeed properly understood said agency had been terminated by mutual arrangement when the defender first indicated to the pursuers that he was interested in buying the property and they agreed. Reference was made to Chitty on Contract, 29th Ed., para. 22.25; Stone on the Law of Agency at p. 153; Storrie on Agency at p. 587; Halsbury's Laws of England, Vol. 1(2) at para. 105 and certain case authorities, namely, Nordisk, Insulin-Laboratorium v Gorgate Products Limited, 1983 Ch. 430 and Rose & Frank Company v J R Crompton Brothers Limited, 1925 AC 445. [10] Thereafter counsel attacked the alternative case made by the pursuers to the effect that even if the agency had terminated prior to the conclusion of the relative missives, certain duties were still owed by the defender to the pursuers in the context of the transaction. He also attacked the specification of the averments surrounding this particular allegation but his principal position was that such a duty could not persist beyond the existence of the agency unless what was being used or relied upon by the former agent was material which came to his knowledge during the currency of the agency. He referred to De Bussche v Alt 1878, 8 C.hD. 281; Nordisk supra and Phipps v Bourbon & Co, 1965 Ch. 992. Thus, he submitted the case made by the pursuers was irrelevant on both counts. [11] Counsel for the pursuers submitted in response that the agency was still subsisting at least up to the date of conclusion of the relevant missives between the pursuers and the defender's company although he accepted, if that was not the case, he had not made adequate averments to suggest that it ceased at some earlier stage. He therefore focused rather more strongly on his alternative case.In this respect he referred me to Bowstead on Agency, 17th Ed. at p.193 at the cases cited therein namely Carter v Palmer 1841 8 C.F.. 857; Allison v Clayhill's 1897 97 L.T. at p. 1360 and McMaster v Byrne 1952 1 AER 1362. These cases, he said, supported the proposition that a duty could exist beyond the termination of the agency in certain respects, which required in this case the pursuers to be informed by the defender of the existence of the third party offer from Bryant before the missives were concluded between themselves and the defender's company. He was entitled, he submitted, therefore to a proof before answer.
[12] Before considering this matter it is important to note that no attempt is made by the pursuer to suggest any form of dishonesty, deceit, or fraud on the part of the defender. The pursuer's case is based entirely on the civil law of agency and there is no suggestion of any form of inducement by way of misrepresentation or concealment. [13] It follows that the essential starting point as counsel for the pursuers accepted, is when the agency which undoubtedly came into existence as a mutual contract when the initial proposition to market the land was put to the defender, came to be terminated, which it undoubtedly was at some stage. [14] To my mind, it is impossible to reconcile somebody acting for himself also being the agent to the other party to a contract which is either being executed or contemplated. It is equally recognised as a matter of general law that agency can be rescinded either by word or deed assuming that the act of rescission is accepted by the other party. I therefore have little doubt that in this case as soon as the defender intimated to the pursuers that he was interested in purchasing the property himself, he effectively terminated the agency or at least offered to do so, which was on the averments, accepted by the pursuers. It follows, to my mind, that the agency was not existing at any time thereafter during the currency of the negotiations with the initial potential developer nor thereafter during the negotiations between the parties leading to the conclusion of the missives in December 1998. To my mind, the conclusion of the missives in this respect is wholly irrelevant and cannot in itself be the date of termination of the agency since it is merely the fruition of the arrangements which were being processed between the parties acting independently with independent advice. I cannot understand how it can be contemplated that the defender could act both for himself and the agent for the pursuers in the same transaction at the same time. I therefore conclude that the agency ceased in December 1997. [15] It therefore follows in my opinion that if the pursuers have a case against the defender it must be on the alternative basis averred by them to the effect that despite the termination of the agency, at the time the missives were concluded, certain duties of trust and confidence were still owed by the defender to the pursuers as a legacy of the agency. [16] In this respect the passage referred to me in Bowstead that is of significance is as follows:-"Difficult questions arise if the agent deals with the principal after he has ceased to be an agent. It appears that the duty to disclose can continue, whether it does so, any particular case in fact will depend on all the circumstance of the case. For example, if the confidence created by the agency relationship still exists at the time of the transaction or if the agency has a personal ascendancy over his principal, or he has acquired special knowledge during his employment relating to the subject matter of a transaction duties can arise after cessation of the agency."
"In considering whether in any particular transaction any duty exists such as t bring the ordinary rule into operation, all the circumstances of the individual case must be weighed and examined. Thus, a solicitor may by virtue of his employment acquire a personal ascendancy over a client and this ascendancy may last long after the employment has ceased, and the duty towards the client which arises out of any such ascendancy will last as long as the ascendancy itself can operate. Again, a solicitor may by virtue of his employment acquire special knowledge, and the knowledge so obtained may impose upon him the duty of giving advice or making a full and proper disclosure in any transaction between himself and his client, though such transaction may take place long after the relationship of solicitor and client in its stricter sense had ceased to exist. And there may be other circumstances which may impose a duty on a solicitor, which duty may continue to exist after the relationship of solicitor and client in the strict sense has ceased."