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You are here: BAILII >> Databases >> Scottish Court of Session Decisions >> Kenmore Homes (UK) Ltd v Cumming [2006] ScotCS CSOH_72 (09 May 2006)
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Cite as: [2006] ScotCS CSOH_72, [2006] CSOH 72

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OUTER HOUSE, COURT OF SESSION

[2006] CSOH 72

OPINION OF LORD KINCLAVEN

in the cause

KENMORE HOMES (UK) LIMITED

Pursuers;

against

CHARLES EDWARD CUMMING

Defender:

________________

Pursuers: Munro, Advocate; Ledingham Chalmers, Solicitors

Defender: Party

9 May 2006

Introduction

[1] This is action for damages for breach of contract. It arises out of missives dated March and June 2004 whereby the defender contracted to purchase from the pursuers heritable property known as Plot 1 Meadow Park Crookston. It is a matter of agreement that the defender did not settle the purchase. The sum sued for is £35,305.65 with interest thereon.

[2 ] On 22 February 2006, the case came before me on the pursuers' opposed motion for summary decree.

[3 ] Ms Munro appeared for the pursuers. Mr Cumming, the defender, represented himself.

[4 ] For the reasons outlined below, I am satisfied that there is no defence to part of the action to which the motion relates.

[5 ] I shall grant the motion for summary decree but only in part.

[6 ] In the circumstances, the summary decree will be for £22,751.25 with interest thereon as detailed below.

[7 ] In relation to the remaining parts of the pursuers' claim, for the balance of the sum sued for, I shall appoint the case to be heard "By Order" to determine further procedure.

The Merits

[8 ] The parties' pleadings are contained in the Closed Record No 18 of Process.

[9 ] In relation to the merits, the pursuers' averments in Article 2 of Condescendence are as follows:

"By missives dated 25 March and 31 March 2004 and 03 and 04 June 2004, the Defender contracted to purchase from the Pursuers heritable property known as Plot 1 Meadow Park, Crookston, Glasgow, to become known as 83 Langhaul Road, Crookston, G53 7SE. The Defender did not settle the purchase. By letter dated 09 September 2004, and in light of the Defenders failure to settle the said transaction, the Pursuers agents issued the Defenders agents with a formal letter in which the Pursuers resiled from the bargain and confirmed that the said property would be re-sold. The re-sale occurred on 21^st June 2005."

[10 ] Answer 2 for the defender is a candid admission, namely "Agreed".

Averments of Loss

[11 ] The pursuers' averments of loss, in Article 3 of Condescendence, are as follows:-

"The Defenders said failure to settle the purchase of the said subject was a material breach of contract. The said breach has caused to the Pursuers loss and damage as follows:

(a) Contractual Penalty Interest from 31 August 2004 to 21 June 2005 (294 days at £67.45 per day) total £19,830.30;

(b) Shortfall in price between the contracted price and the re-sale price £14,000;

(c) Cost of incentives given in the re-sale in order to achieve same £2,564.10;

(d) Solicitors fee for the abortive sale inclusive of VAT

£411.25;

(e) less the reservation fee and deposits paid by the Defender

£1,500.

The total of the Pursuers losses arising from the Defenders said breach of contract is therefore £35,305.65 which is the sum sued for. The Pursuers seek judicial interest on the said sum from 21 June 2005 being the date upon which the said property was re-sold. The Defenders averments in answer are denied except insofar as coinciding with those of the Pursuers. Explained and averred that the Defender was provided with copies of all documents relative to the said averments of the Pursuers claim by letter dated 14 October 2005. A copy of the said letter is produced and its terms held as repeated herein as if set out in full for the sake of brevity. The Defender has failed to reply to the said letter."

[12 ] The defender's averments, in Answer 3, are as follows:-

"Denied. Notwithstanding, the Pursuers are called upon to produce:-

3(b) Copy of full Missives and Disposition of re-sale;

3(c) Evidence of pecuniary incentives, and the format thereof (e.g. cashback, paid stamp duty, free carpets etc);

3(d) Detailed fee note for abortive sale and certificate of advertising.

Denied the Pursuers' losses as averred amount to £35,305.65. Denied that Pursuers are due judicial interest from 21 June 2005.

It is specifically denied that the Defender is due the sum of £14,000 at pursuers Section 3(b). Averred that the Pursuer sold the property to a third party at well below market value. Averred that the Pursuer should have achieved more than £254,000. It is therefore denied that the sum sued for in Section 3(b) can be sustained or justified. The defender is in the process of obtaining a professional opinion from the largest firm of Chartered Surveyors in Scotland as to the true value of the property during six months following resiling of Defender's missives. This will be backed up by comparable property prices actually achieved in this area as extracted from Scottish Registers and Sasines. This will be lodged in process. As items 3(a), 3(c) and 3(d) flow from the sum claimed at 3(b) the sums there claimed are denied in their entirety."

[13 ] The remaining averments for the parties are significant but not directly relevant for present purposes. They need not be set out in detail.

The Rules of Court

[14 ] The Rules of Court relating to Summary Decrees are contained in Chapter 21.

[15 ] Rule 21.2 relates to "Applications for summary decree" and it provides inter alia as follows:-

"(1) Subject to paragraphs (2) to (5) of this rule, a pursuer may, ... apply by motion for summary decree against that defender on the ground that there is no defence to the action, or a part of it, disclosed in the defences.

(2) In applying for summary decree, the pursuer may move the court-

(a) to grant decree in terms of all or any of the conclusions of the summons;

(b) to pronounce an interlocutor sustaining or repelling a plea-in-law; or

(c) to dispose of the whole or a part of the subject-matter of the action. ...

(4) On a motion under paragraph (1), the court may-

(a) if satisfied that there is no defence to the action disclosed or to any part of it to which the motion relates, grant the motion for summary decree in whole or in part, as the case may be ..." .

The Background

[16 ] The pursuers sought summary decree in terms of the first and second conclusion of the summons. The first conclusion was for payment of £35,305.65 with interest thereon at the rate of eight per cent a year from 21 June 2005 (the date of re-sale) until payment. The second conclusion was for the expenses of the action.

[17 ] The defender accepted that he had contracted to purchase the subjects referred to on Record, that he was in material breach of contract and that the pursuers were in principle entitled to damages.

[18 ] The third plea-in-law for the pursuers, which related to liability, was sustained on 11 January 2006.

[19 ] The pursuers' motion for summary decree was continued on several occasions to enable to enable parties to lodge and to consider productions and to adjust their respective pleadings. Lord Hodge dealt with the matter on 25 January and 8 February 2006. The case called before me on 15 and 22 February 2006.

[20 ] The Closed Record No 18 of Process is dated 21 February 2006.

Productions

[21 ] Both parties lodged and referred to various productions.

[22 ] The pursuers' productions comprise Nos 6/1 to 6/59 of Process.

[23 ] The defender's productions comprise Nos 7/1 to 7/3 of Process.

[24 ] The defender also wrote several letters to the court including letters dated 2 February and 22 February 2006 outlining opposition to the motion.

[25 ] I was also referred to a copy invoice from Classique Flooring Limited addressed to the pursuers in respect of supplying and fitting of floor coverings.

[26 ] As parties are familiar with the various documents concerned I need not rehearse them in detail.

The Submissions for the Pursuers

[27] Counsel for the pursuer invited me to grant decree in terms of the first and second conclusions of the summons. She submitted that the various heads of claims outlined in Article 3 of Condescendence were clear and adequately vouched. The pursuers' productions supported the claims. The re-sale price was in fact £240,000. The period of time taken to sell was in fact 294 days. Details of steps taken to advertise and sell the property had been produced. The defender's arguments based on failure to minimise loss should be rejected. There was no proper basis for asserting that the property should have been sold for more and/or that it should have been sold sooner. The two are inconsistent. In any event, market value covers a range of figures. It is not a question of average figures. Nothing turns another potential purchaser expressing interest which fell away. The re-sale price and the time taken to re-sell were reasonable. The pursuers' claims, it was said, were unanswerable. It was said that the defender is putting forward a dilatory defence which does not raise genuine issues. In any event, parts of the action were not disputed by the defender.

[28] Counsel for the pursuers referred me to Rankin v Reid 1987 SLT 352 (particularly at page 354B-C and page 354L to 355C), P. & M. Sinclair v The Bamber Gray Partnership 1987 SC 203 (at pages 204 and 206), Frimokar (UK) Ltd v Mobile Technical Plant (International) Ltd 1990 SLT 180 (at page 181K to 182C), Spink & Son Ltd v McColl 1992 SLT 470 (at page 472J-K and 473F-H), King v Moore 1993 SLT 1117 (at page 1117I to 1118B), Keppie v The Marshall Food Group Ltd 1997 SLT 305 (at page 308G-H and 309B-C), Matthew Purdon Henderson v 3052775 Nova Scotia Limited [2005] CSIH 20 (at paragraphs [4], [5] and [17]) and Wyman-Gordon Limited v Proclad International Limited [2005] CSOH 177 (at paragraphs [11], [12] and [18]).

[29] In the circumstances, and in light of those authorities, Ms Munro invited me to grant the summary decree sought.

The Submissions for the Defender

[30 ] The defender opposed the pursuers' motion. He denied that the pursuers' claims were unanswerable. He denied that he was being dilatory. He very fairly acknowledged that certain parts of the pursuers' claim were not disputed. There were, however, other parts of the pursuers' case which required to go to proof. He submitted that the pursuers' motion for summary decree should not be granted.

[31 ] In relation to Head (a), the defender accepted that the pursuers were in principle entitled to some Contractual Penalty Interest from 31 August 2004. He agreed that the appropriate rate was £67.45 per day. However, he did not accept that he was liable for the whole amount claimed by the pursuer. The pursuers claimed 294 days at £67.45 per day (from 31 August 2004 to 21 June 2005) namely £19,830.30. The defender contended that a shorter period was appropriate. In his letter dated 2 February 2006 the defender maintained that the period should be restricted to about 122 days (to 31 December 2004). On that basis he said that the pursuers' claim in Head (a) should be about £8,229.

[32 ] In relation to Head (b), the defender did not accept that he was liable for the whole amount claimed by the pursuers in respect of the shortfall in price between the contracted price and the re-sale price. The pursuers claimed £14,000. The defender accepted that the contracted price was £254,000 but he did not accept that the figure representing the re-sale price was properly stated by the pursuers at £240,000. The defender maintained that a higher figure was appropriate. In his letter dated 2 February the defender contended that the plot was sold £10,000 below what he describes as an "average" figure of £250,000 for four other plots. On that basis the loss claimed by the pursuers in Head (b) should be £4,000 not £14,000. He also pointed out that Plot 32 was sold for £252,000 the day after Plot 1 was re-sold.

[33 ] In relation to Head (c), the defender accepted that the pursuers' claim was properly stated at £2,546.10 in respect of the cost of incentives given in the re-sale.

[34 ] In relation to Head (d), the defender accepted that the solicitors' fee for the abortive sale inclusive of VAT amounted to £411.25. He accepted that those fees had been paid by 22 July 2005.

[35 ] It was also a matter of agreement that the pursuers required to deduct the reservation fee and deposits paid by the defender, namely, £1,500. That has been referred to as Head (e).

[36 ] The defender has sought professional advice from surveyors in relation to the pursuers' claims.

[37 ] Production No 7/2 of Process is a letter to the defender from Messrs Shepherd, Chartered Surveyors, dated 20 January 2006. It states inter alia that, "recorded sales evidence reveals that there were two previous sales of the 'Rowan' house type on this estate" and that "these two previous sales would appear to support a Market Value of £250,000 for the subject property".

[38 ] Production No 7/3 of Process is a letter to the defender from Allied Surveyors dated 20 February 2006. It states inter alia that,

"We are of the opinion that the market value as at the 21^st of June 2005 could fairly be stated at £245,000 .... We are surprised that if the property was completed in the 31^st of August 2004 that the property did not sell within a period of six months at this time particularly given sales prices of other 'Rowan' types achieved after the sale was completed."

[39 ] In essence, the defender's position was that he had a bona fide defence and that the action should be allowed to continue to a proof in relation to the disputed items.

Discussion

[40] I have taken into the account the competing submissions from the pursuers' counsel and from the defender.

[41] It is clear that in order to obtain summary decree the pursuers require to meet the fairly exacting standard referred to in the cases cited including Matthew Purdon Henderson v 3052775 Nova Scotia Limited [2005] CSIH 20 and Wyman-Gordon Limited v Proclad International Limited [2005] CSOH 177.

[42] The court requires to proceed with caution.

[43] In Matthew Purdon Henderson v 3052775 Nova Scotia Limited the Opinion of the Court (Extras Division) was delivered by Lord Hardie on 18 February 2005. Lord Hardie said in paragraph [5]:-

"We recognise that in determining applications for summary decree in terms of R.C. 21.2 the court must proceed with caution and must achieve 'the near certainty as to an absence of a defence which would justify granting summary decree' mentioned by Lord Prosser in P. & M. Sinclair v Bamber Gray 1987 SC 203 at page 206. We agree with the observations of Lord Hamilton in Keppie v The Marshall Food Group Ltd 1997 SLT 305 at page 308 that in such applications the 'court requires to consider the state of the action as it stands' and that the 'court is not concerned with forecasting the outcome of a proof'. We also agree with Lord Hamilton's observation that 'the court is entitled to look to material beyond any pleading and is concerned with the authenticity of the defence.'"

[44] In Wyman-Gordon Limited v Proclad International Limited [2005] CSOH 177 Lord Drummond Young said in paragraph [11] of his Opinion dated 29 December 2005:-

"The legal principles that govern motions for summary decree are well established. In Mackays Stores Ltd v City Wall (Holdings) Ltd, 1989 SLT 835, Lord McCluskey stated (at 836)

'The test I have to apply at this stage must be to ask myself if the question of law which is raised (the only question being one of law) admits of a clear and obvious answer in the pursuers' favour'.

In P. & M. Sinclair v The Bamber Gray Partnership, 1987 SC 23, the defenders contended that they had entered into a contract as agents for an undisclosed but unidentified principal, and indicated that they were willing to make a case that the pursuers were aware of the principal's identity. Lord Prosser stated (at 206)

'Even with a closed record, I have come to the conclusion that neither side's pleadings clearly focus what the position was as to the pursuers' or the defenders' views as to who would be the parties to the contract. It appears to me that where that is so I cannot achieve the near certainty as to an absence of a defence which would justify granting summary decree. Indeed it appears to me quite probable that the circumstances when more fully pled, or when taken to proof, would reveal that there is a genuine issue as to whether the pursuers had an identifiable or identified principal in their minds'.

It is clear from those statements of the law that the test that must be satisfied in a motion for summary decree sets a high standard. Any question of law must admit of 'a clear and obvious answer', and when questions of fact are involved there must be 'near certainty' as to the absence of a defence."

[45] In the circumstances of the present case, and applying the test outlined above, I am satisfied that the pursuers have reached that required standard - but only in relation to certain parts of their claim.

[46] In my opinion, and in the exercise of my discretion, the pursuers are entitled to summary decree for a principal sum of £22,751.25 for the following reasons.

[47 ] In relation to Head (a), in my view, there is a near certainty as to the absence of a defence in relation to a contractual penalty running at the agreed rate of £67.45 for a period of six months (182 days) rather than the period claimed by the pursuers (294 days). The defender has instructed Allied Surveyors and they have provided the letter dated 20 February 2006 which forms Production No. 7/3 of Process. That letter suggests, albeit somewhat obliquely, that a period of six months is the appropriate one for present purposes. A contractual penalty at the agreed rate of £67.45 per day for 182 days produces a total figure of £12,275.90. Accordingly, having regard to the views of Allied Surveyors, I shall grant summary decree for that figure of £12,275.90 rather the full figure of £19,830.30 being claimed by the pursuers or the lower figure of £8,229 suggested by the defender himself.

[48 ] In relation to Head (b), in my view, there is a near certainty as to the absence of a defence in relation to a shortfall in price (between the contracted price and the re-sale price) of £9,000. The contacted price is agreed to be £254,000. Although the defender had previously suggested that a higher re-sale figure was appropriate he very fairly indicated that the firm of surveyors which he had originally instructed in this matter, Messrs Shepherds, had been unable to reach consensus within their office and had therefore declined to give an opinion. The defender's current experts, Allied Surveyors, are of the opinion that the market value as at the 21 June 2005 could be fairly stated at £245,000. For present purposes, and having regard to the views of Allied Surveyors, I am satisfied that there is a near certainty of a shortfall of £9,000 (£254,000 less £245,000). Accordingly I shall grant summary decree for that figure rather than for the full shortfall of £14,000 being claimed by the pursuers or the lower figure of £4,000 which had been suggested by the defender himself.

[49 ] In relation to Head (c), as the defender accepted the pursuers' claim, I shall grant summary decree for £2,564.10.

[50 ] In relation to Head (d), as the defender accepted the pursuers claim, I shall grant summary decree for that sum £411.25.

[51 ] In summary, I am satisfied that I should grant summary decree for the following amounts:-

Head (a) £ 12,275.90

Head (b) 9,000.00

Head (c) 2,564.10

________

23,840.00