OUTER HOUSE, COURT OF SESSION   [2006] CSOH NUMBER93
A589/04	OPINION OF LORD BRACADALE   in the cause   WILLIAM MITCHELL DODD   Pursuer;   against   SOUTHERN PACIFIC PERSONAL LOANS LIMITED & OTHERS   Defenders:     ­­­­­­­­­­­­­­­­­________________

 

 

INFOPursuer: Clive; Campbell Smith, W.S.

Defender: McShane; Morton Fraser

Second Defender: Hayhow; A . & W.M. Urquhart

6 June 2007

 

Background

 

[1] The second defender ("Mrs Dodd") is the estranged wife of the pursuer. After meeting in 1998 they lived together for a period before getting married in May 2001. They had one child, a son named Caleb, born 4 April 2000. The parties separated on 22 February 2004.

[2] The pursuer served in the RAF for 9 years from 1989. He specialised in electronics and left the service with good reports. After the pursuer left the RAF the couple lived in Telford, Shropshire, before moving to Scotland. Initially, they rented a house in Fauldhouse, West Lothian and in 2000 they bought a house in Bo'ness. In 2002 they moved to an address at 6 Boundaries, Jedburgh. Title to the house in Jedburgh was in the name of the pursuer.

[3] After the move to Scotland the pursuer worked in Edinburgh for a company called Orbital Software from which he was made redundant in 2002. Thereafter, he set up his own IT consultancy, servicing IT systems for customers. The business was originally called "One Zero IT" but the name was later changed to "Upstream". In addition, in 2003 the pursuer and Mrs Dodd opened a computer shop and internet café in Jedburgh. Mrs Dodd worked in the shop.

 

The disputed loan from the first defenders

[4] In April 2003 an application for a loan of £33,500 was made to the first defenders. I shall refer to this loan as "the Southern Pacific loan". The application form (production 7/3) is in the names of the pursuer and Mrs Dodd. It bears to be signed by each of them and is dated 30 April 2003. The loan was to be secured over the house at 6 Boundaries, Jedburgh. The associated documents were as follows. There was an unregulated credit agreement ("the credit agreement") with the first defenders bearing to be signed by the pursuer and Mrs Dodd (production 7/4). There was a direct debit instruction to the Bank of Scotland for repayments to be made out of account number 06003778 in the name of the pursuer (production 7/5). Productions 7/6, 7/7 and 7/8 comprise various ancillary documents. Productions 7/12/6 and 6/4 are copies of a standard security in favour of the first defenders which bears to be signed by the pursuer and Mrs Dodd as consentorconsenter on 30 April 2003. The witness to the pursuer's signature bears to be Jacqueline Woods and the witness to Mrs Dodd's signature bears to be Zoe Harris. On 6 June 2003 the sum of £28,091.20 was paid into a Bank of Scotland account number 06003794 in the name of the pursuer. This was the free proceeds of the loan after another loan was settled.

[5] The pursuer's position is that he did not apply for the Southern Pacific loan. The first he was aware of its existence was after the parties separated. On 26 February 2004 Morisons, solicitors, wrote to the pursuer demanding payment to the first defenders of the sum of £43,787.90. The pursuer said that his response to receiving that letter was one of shock. The figures did not relate to anything he had any knowledge of and he had never heard of the first defenders. All the signatures associated with the loan, in particular those on the standard security and the credit loan agreement, were forged. Against that background he seeks declarator that the standard security and the credit agreement do not contain his genuine signature and are null and void. He seeks reduction of the credit agreement, the standard security and a calling up notice issued by Messrs Morisons, solicitors, on 26 February 2004. In addition, he seeks rectification of the Land Register to delete reference to the standard security.

 

Issues of credibility and reliability

[6] I did not find either the pursuer or Mrs Dodd to be entirely credible or reliable witnesses. While I consider that both told the truth in certain parts of their evidence, I did not believe other parts of the evidence of each of them. I was able to be selective in the evidence which I accepted from each of them. In doing so I derived assistance from testing their evidence in the light of other evidence in the case which I did accept and from the application of common sense to their accounts. I have been influenced in my approach by that adopted by Sedley LJ in Karankaran v Secretary of State for the Home Department [2000] 3 All ER 449 and followed by Lord Glennie in Morton v West Lothian Council [2005] CSOH 142 and Lord Brodie in Gibson v Whyte [2007] CSOH 17. In Karankaran Sedley LJ said this at page 477:

"...a civil judge will not make a discrete assessment of the probable veracity of each item in the evidence; he or she will reach a conclusion on the probable factuality of an alleged event by evaluating all the evidence about it for what it is worth. Some will be so unreliable as to be worthless; some will amount to no more than straws in the wind; some will be indicative but not, by itself, probative; some may be compelling but contra-indicated by other evidence. It is only at the end point that, for want of a better yardstick, a probabilistic test is applied. ... it is fallacious to think of probability (or certainty) as a uniform criterion of fact-finding in our courts; it is no more than the final touchstone, appropriate to the nature of the issue, for testing a body of evidence of often diverse cogency."

I should mention that the pursuer led a number of character witnesses who spoke to his integrity. In the event I did not derive any assistance from this evidence. These witnesses knew the pursuer from professional dealings with him in 2000 and 2001. They were unable to cast any light on his domestic or personal financial situation.

 

Introduction to analysis of evidence

[7] In order to place the whole question of the Southern Pacific loan in context it is necessary to explore a number of controversial issues which were canvassed in the evidence. They are, of course, inter-related. I propose to examine the following chapters of evidence: the developing financial situation of the couple in 2002 - 2003; the bank accounts; the management of the finances; the evidence relating to the obtaining of the Southern Pacific loan; and the evidence relating to signatures including those on the documentation relating to the Welcome and Southern Pacific loans and various other disputed signatures. I should say that I have not taken into consideration the evidence relating to signatures on certain cheques (productions 7/28ff). These were lodged late, there were no averments on record in relation to them and objection was taken to leading evidence in relation to these cheques.

 

Developing financial situation of the pursuer and Mrs Dodd

[8] After the couple were married they opened a joint bank account with the Halifax ("the Halifax joint account"). When the pursuer started his business he applied to the Bank of Scotland for a business account. He said that he wanted a business current account. In the event, two accounts were opened: a business current account Nno. 06003778 ("the business current account") and a business bonus account Nno. 06003794 ("the bonus account"). The pursuer denied any knowledge of the bonus account. In addition, he denied any knowledge of a facility for internet operation of these accounts. I shall return to the subject of the bank accounts in more detail later.

[9] As noted above, the circumstances of the couple in the second half of 2002 and into 2003 were that they had moved house to Jedburgh. The pursuer had been made redundant from his job and had started his own business based in Edinburgh. They were developing a computer shop and internet café in Jedburgh, due to open in 2003. The premises were rented. According to the pursuer the shop opened in May 2003 and remained open for about six months before closing down. They had a two year old child. The pursuer and Mrs Dodd gave very different pictures of their financial circumstances in the face of these developments.

[10] The pursuer said that after he started his own consultancy business it took a couple of weeks for work to come in. He thought that after a month his income was similar to his income in his previous job, particularly when his redundancy money was taken into account. The pursuer said that both the consultancy and the shop made a profit.

[11] According to the pursuer the extent of renovation required to the house amounted to plastering, sanding parquet flooring and the like. He gave the impression that relatively little work had been required and that he had completed most of it himself. He claimed that the initial set-up cost of the shop was approximately £3,000 which he borrowed from his father, Terrance Dodds.

[12] A very different picture was painted by Mrs Dodd. According to her there was extensive renovation done on the house. A new backdoor was required; there were gaps in the wall requiring plastering; the floors required attention; the central heating had broken down;. tThey required to buy a new boiler and . aA new bathroom was installed. Although the pursuer did some of the work, materials were expensive and tradesmen were required for plastering and plumbing.

[13] Mrs Dodd described the shop as a massive project. The small loan from the pursuer's father did no more than cover installation of the BT lines. She said that there were many expenses associated with getting the shop open. There was a monthly lease to be paid. Flooring was required. The shop required to be decorated. Items including furniture, cooking facilities, tills, fire extinguishers and stock required to be purchased. Insurance cover was required. As they got closer to opening, the expenditure escalated.

[14] According to Mrs Dodd, by the end of 2002 they did not have enough money to meet their ongoing commitments. The Halifax joint account was getting into overdraft. At the end of November 2002 a charge of £418 was applied. They had cash flow problems. She said that in November 2002, they decided to do something about the situation and obtained a loan from Welcome Finance ("the Welcome loan"). The pursuer denied all knowledge of the Welcome loan.

[15] Mrs Dodd said that after obtaining the Welcome loan, their finances continued to deteriorate; the overdraft was increasing. In the Spring of 2003 the financial situation deteriorated to the extent that another source of money was required. This, she explained, led to the application for the Southern Pacific loan.

[16] Mrs Dodd further explained that, in addition to these loans they had received financial assistance from her father. On one occasion the pursuer had telephoned her from his work to say that someone had come to repossess their BMW car. He told her to sort it out or phone her father. She did phone her father who made the necessary payments. Later, there was further involvement of the father of Mrs Dodd in the financial affairs of the couple.

[17] It It is convenient at this point to examine the evidence of Derek Burns, the father of Mrs Dodd. He was aged 54 years and was the sales director for Scotland for Ideal Boilers. I found him an impressive witness. I considered him to be entirely truthful in his evidence. He was careful and moderate in giving his evidence; where he could not recall things, he said so. He refused to speculate. He showed no signs of bias. Perhaps most importantly, he had kept a record of his dealings with the couple's finances in the form of a spreadsheet (Production 6/24). Mr Burns was a witness on whose evidence I felt that I could rely.

[18] Mr Burns recalled that while the couple were still living at Bo'ness Mrs Dodd had contacted him saying that they were under stress because their outgoings were far too much in relation to their incomings. She had tried to speak to the pursuer but he had turned a deaf ear and she wondered if her father would come and have a chat with the pursuer. Mr Burns formed the impression that Mrs Dodd showed deference to the pursuer when there was discussion of finances.

[19] Mr Burns said that at the end of 2002 or early 2003 he saw the couple in the house in Jedburgh when there was a general discussion about finances. They were struggling and both admitted it. Mr Burns felt that they did not budget properly, they spent money and then had to pay for utilities etc. They also talked about their idea of opening a shop which he thought was ill advised because he did not think that they would get the income to cover the expenditure. There was no discussion on debts on this occasion.

[20] Mr Burns thought that about the time of the move to Jedburgh the couple got a 5 Series BMW car. In February 2003 he got a telephone call from Mrs Dodd. She was tearful and told him that the car was going to be repossessed. She said that there were people at the pursuer's work to repossess the car. She thought that there were two payments in arrears but in the event there were three payments in arrears. Mr Burns, who was driving his own car at the time, stopped and got details of the loan company, TMV. He telephoned TVM, and paid the arrears using his credit card. He then telephoned back to Mrs Dodd and made it clear that he was not happy with the situation. The next evening the pursuer telephoned him and thanked him and said something about the problem being an invoice that had not been cleared.

[21] Mr Burns' spreadsheet (production 6/24) demonstrated that, in addition to the car payments, he had assisted the couple with the purchase of various items in relation to the shop. By June 2003 they owed him a sum of about £3,000. Mr Burns described a meeting in Jedburgh around April 2003 when both the pursuer and Mrs Mrs Dodd were present. There was a discussion about repaying him. He said that as he had six months or so interest free credit on his card there was no great rush. The pursuer said that he would be in a position to pay Mr Burns back. The pursuer, in the presence of Mrs Dodd, told him that they were actively sourcing loans in order to consolidate their debts, although there was no discussion with him about the names of the companies they were looking at.

[22] On 23 June 2003 Mr Burns received a deposit into his bank account of £9,000 from the pursuer's account. Of that sum approximately £3,000 was to pay him back what the couple owed him at that time and the £6,000 additional was intended to be used by Mr Burns to purchase equipment for one of the pursuer's customers. Mr Burns sometimes assisted the pursuer by going to a supplier and purchasing stock on behalf of the pursuer. In the event, that particular deal fell through. The spreadsheet shows that in the period between July 2003 and December 2003 the £6,000 was spent of on various items, some of which appeared to be in connection with the shop.

[23] Mr Burns understood that the £9000 paid into his account was part of the proceeds of the loan which the pursuer had indicated they were intending to get. Mr Burns understood that that sum was part of the whole loan, the remainder of which was designed to consolidate debts and clear the couple's feet. Mr Burns said that the pursuer was definitely aware of the £9,000 deposit into Mr Burns' account. He had given the pursuer the details of his bank account in order that the pursuer could make the transfer. In addition, later, the pursuer asked Mr Burns to make certain payments from the money which had been transferred. These included the entry in the spreadsheet at entry D of the sum of £1,500. This entry arose from a telephone call made by the pursuer to Mr Burns asking to transfer that sum back. The payment at entry J in the spreadsheet was a payment made by Mr Burns into the account of Terry Dodd, the father of the pursuer. This was repayment of the loan earlier made by the pursuer's father. The pursuer had fallen out with his father who was demanding repayment. The pursuer wanted to embarrass Mr Dodd senior by making it look as if Mr Burns had paid the money back. These payments were additional indications that the pursuer was aware of the transfer into Mr Burns account of the £9000 in June 2003.

[24] In her evidence Mrs Dodd said that in addition to paying the arrears of the payments towards the car her father had also purchased items for the shop. The transfer of money to her father was to repay what was owed and for purchases to be made by Mr Burns on the pursuer's behalf. The money was also partly to pay the pursuer's father the money owed to him The pursuer wanted the money to come from Mrs Dodd's father to pay his own father off in order to embarrass him. The pursuer did not want his father to think that he had enough money himself to pay him back.

[25] In his evidence the pursuer said that he knew nothing of this transfer. It was only when he examined the bank statements after the separation that he saw that there were large sums transferred which he did not recognise. These included a transfer of £9000 on 23 June 2003 to a bank account which he later discovered was that of Mrs Dodd's father.

[26] The bank statements of the Halifax joint account and the business current account indicate a deteriorating financial situation. By November 2002 the Halifax joint account was in overdraft. It was not used much in 2003. From April 2003 the business current account was in overdraft. The pursuer's evidence was that he never looked at the bank statements, leaving that to Mrs Dodd.

[27] In 2002 - 2003 the couple experienced the redundancy of the pursuer, the purchase of the house in Jedburgh, the setting up the pursuer's computer business and the setting up of the shop. Common sense and ordinary experience would suggest that such a combination of events in the life of a couple would not only be stressful but would make for a very demanding time financially. I preferred the evidence of Mrs Dodd on these matters. It reflected a much more realistic account.

[28] From the evidence of the bank statements, the evidence of Mrs Dodd and the evidence of Mr Burns I am satisfied that the financial circumstances of the couple did deteriorate in 2002 - 2003. The evidence of Mr Burns, which I accept for the reasons stated above, makes it clear that in the first part of 2003 the pursuer was exploring the possibility of getting a loan to consolidate debts. Mr Burns' evidence as to the circumstances of the transfer and the subsequent requests to transfer money back to the pursuer's account and to transfer money to the account of Terry Burns satisfies me that the pursuer was aware of the transfer of £9000 to Mr Burns' account. This evidence fatally undermines the assertion of the pursuer that he was not aware of the transfer of £9000 to Mr Burns' account until after the separation.

Bank accounts

[29] As noted above, when the pursuer started his computer business two business accounts were opened with the Bank of Scotland: a business current account Nno. 06003778 ("the business current account") and a business bonus account nNo. 06003794 ("the bonus account"). The pursuer claimed that he had no knowledge of the existence of the bonus account. He said that he was not aware at the time that he was applying to open two accounts. He said that when he opened the business account he needed to open a business account quickly and had no interest in any other account. He gave the impression that he had simply visited the bank and opened an account there and then.

[30] The evidence of the pursuer as to the circumstances in which the bank accounts were opened requires to be examined in the light of the evidence of Alan Coates who was called as a witness for the first defenders. Mr Coates was the new business operations manager with Bank of Scotland Business Banking. He had worked in business banking in various roles since 1990. He was familiar with the procedures in 2002 and 2003. He had checked the records and spoken to colleagues. He had familiarised himself with the files relating to the pursuer's accounts.

[31] He explained the procedures involved in opening a new account. If a customer came into a branch of the bank and indicated that he wished to open a business account he would be put on to a sales adviser who would go through in depth the different types of account available and endeavour to meet the needs of the customer. There was a range of accounts available including a business current account which was a transactional business account. A bonus account was a separate account which could operate as a savings vehicle but allow for transfer into the current account. It was not necessarily automatic that a bonus account would be opened. A bonus account might be recommended by the sales adviser. It would be a customer's decision as to which accounts would be opened.

[32] If a customer wished to go ahead to open one or more accounts relevant searches would be carried out through Expedia to assess the credit worthiness of the customer. The sales adviser would then produce an application pack which would be sent out by post, either to the customer at home, or to the branch, to which the customer would return to sign the application. If the latter course was taken then the application documents would be reviewed with a member of staff in the branch and the customer would sign the relevant sections. This review, which was standard practice, would involve running through all the sections ensuring that they were correct. The new customer would then sign the application and the application would be posted to a processing team in Chester.

[33] Mr Coates explained that from first contact to completion would take about 2-3 weeks. Although it could be done more quickly if necessary, it could not be completed over a lunchtime or within half an hour.

[34] Mr Coates explained that he had reviewed the papers in the application by the pursuer and found that it did not deviate from standard practice. Two accounts were opened and productions 7/25 and 7/26 reflected the need for the bank to have two distinct paper records of the two accounts. One application had been made to open the two accounts. It was clear from section 1 that two accounts had been opened. Section 5 indicated that the pursuer had attended at the bank to sign the application on 19 September 2002. He would have previously attended at the bank to begin the process of making the application. From the documents Mr Coates was able to say that the sale record was created on 6 September 2004. There was a delay because address verification was missing from the original application pack. The accounts were opened on 2 October 2002.

[35] In section 4 of the application the box which offered service of the account via the internet had been ticked. That would have been a matter of specific discussion. That would entitle the customer to register for internet banking, it would not necessarily mean that he would do so. There would be a further step to be taken. The records allocated an internet user number to the pursuer in October 2002. However, the internet banking facility was not used until March 2003. An application for internet banking in relation to these accounts dated 4 March 2003 (production 7/24) was produced. Mr Coates explained that the effect of this application was to add a nominated user, namely, Mrs Dodd. The pursuer denied any knowledge of this application.

[36] Mrs Dodd said that she had nothing to do with the opening of the business accounts. The first she knew about the accounts was when she was handed two account numbers and a pay-in book by the pursuer. She said that this was in October 2002. The pursuer had explained that his wages were getting paid into the business current account and the purpose of the bonus account was to have a separate account for VAT. The pay-in book was for the bonus account. Later, the pay-in book for the bonus account was to be used to pay in money from the shop.

[37] From February 2003 onwards, Mrs Dodd used the card for the business account to withdraw money. This was for payments in connection with the house and the shop. She agreed that between January and June 2003, the business current account was also being used for domestic expenditure. The Halifax joint account had been getting into difficulties with charges and the direct debits were moved to the business account by the pursuer.

[38] Mrs Dodd claimed that she had never seen the application for internet banking (Production 7/24) before giving her evidence. She accepted that the signature in her name looked very similar to hers but she could not say whether it was hers. She was fairly confident that the signature of the pursuer was his genuine signature. She denied having written his signature. She said that she knew nothing about the use of internet banking facility on these accounts. She had never used internet banking on these accounts.

[39] I came to the view that neither the pursuer nor Mrs Dodd told the whole truth in relation to the chapter of evidence on the bank accounts. In the light of the evidence of Mr Coates, and the operation of the Bonus account, I did not find the evidence of the pursuer that he was unaware of the existence of the Bonus account to be credible evidence. On the other hand I did not accept the evidence of Mrs Dodd that she had never before seen the internet banking application which appeared to bear her signature. There was no suggestion that her signature had been forged and her position in relation to the signature was simply untenable.

 

Management of finances

[40] The pursuer's position was that he left the management of both the family and business finances the finances to Mrs Dodd. He himself did not regularly check the bank statements. Mrs Dodd collected the mail each day. The pursuer may have seen bank statements on one or two occasions but it was not a usual thing for him to look at the bank statements. Mrs Dodd would ask the pursuer to tell a particular client to pay money into a particular account.

[41] The business account had a cheque book and a bank card. The bank card was usually in the house and was available for use. He said that he very rarely used it. It was unlikely that he would have made withdrawals from the business account in the course of week days. He said that he was not withdrawing sums on a regular basis as demonstrated in the bank statements. Mrs Dodd had control over the business account. She had use of the ATM card and also the internet banking facility. The card was used with the pursuer's consent but the use of the internet banking facility was not with his consent.

[42] For the joint account there were two cheque books and two cashline cards. He was unable to say whether he had made various withdrawals but did not think that certain of them were his. They were carrying out renovations on the house and a number of entries reflected that.

[43] Mrs Dodd claimed that in terms of managing the finances she simply did what she was told. She described the pursuer as a dictator. She said that after they moved to Jedburgh their finances were in a terrible state. She would get told which bills to pay. When he was working, the pursuer made frequent phone calls to her and gave her instructions in relation to financial matters. He would tell her to obtain money if he required it for something for work and instructed her to make payments to the utilities and suppliers of computer stock from the shop.

[44] She said that she could not move money between the business current account and the bonus account. The pursuer made arrangements for her to go into the bank to take money out and pay it into another account. He would tell her that he had made an arrangement that she was to collect a particular sum of money from the bank and she did that taking her passport with her as her identification. An example was withdrawing money in order to pay for a coffee machine which was delivered to the shop. He would leave messages for her, in the kitchen or on the computer screen in the small office upstairs, instructing her to do certain things.

The Southern Pacific loan

[45] According to Mrs Dodd, by around February/March 2003 it was clear to her that another source of money would be required. The pursuer was locating companies who might be prepared to give a loan. He identified the companies that would be willing to lend to them and asked her to fill in the application form. This was done by leaving a note on the computer in the morning. He had circled the loan for which he wished to apply. He called to make sure that she had done it. Of all the companies which would give them a loan, Southern Pacific was the one with the best rate of interest. The pursuer had heard of Southern Pacific before she had. She went on-line and either completed the form on-line or requested one through the post. She thought that it had been through the post.

[46] After the cheque from Southern Pacific arrived the pursuer gave it to her or left it for her to pay into the bank. She was asked to pay it into the Bonus Account (Production 7/16). It was paid in on 6 June 2003. On the same date on instructions of the pursuer she made a withdrawal of £500. She said that she had no access to the account to make the ten transfers from the bonus account between 9 and 24 June 2003.

[47] The evidence of Mr Burns tends to support the evidence of Mrs Dodd that the pursuer was aware that the proceeds of the Southern Pacific loan had been paid into the pursuer's account.

Signatures

[48] The pursuer claimed that each of the following signatures bearing to be his signature were not made by him: the signatures on the documents relating to the Southern Pacific loan, including the credit agreement and the standard security; the signature on the standard security in favour of Welcome Finance; and the signature on the application for internet banking. His position was that these signatures had been forged by Mrs Dodd without his authority.

Handwriting evidence

[49] In support of his own assertion that each of these signatures had not been made by his own hand the pursuer led the evidence of a handwriting expert, John McCrae. Although a handwriting expert was included in the list of witnesses for Mrs Dodd that witness was not called to give evidence.

[50] Mr McCrae is a consultant forensic document examiner. He was formerly a member of the Strathclyde Police Identification Bureau and the Forensic Science Laboratory, Glasgow. He retired from the police 12 years ago. He has been carrying out consultancy work since then. He has been engaged for over 29 years in the examination of documents, the identification of handwriting, signatures, typescript and also in the detection of forgery. He was authorised by the Secretary of State for Scotland to report on document examination under the Criminal Justice (Scotland) Act 1980 and has been trained in the responsibilities of a Single Joint Expert (London, 1999). He has significant experience and has lectured on handwriting and document examination at the University of Glasgow and the Scottish Police College.

[51] Mr McCrae produced two reports: Productions 6/6 and 6/25. Production 6/6 was produced on 6 July 2004 and his supplementary report, Production 6/25, was produced on 31 October 2006. He was given a number of signatures which he was told were genuine specimen signatures of the pursuer. He was asked to compare these with a number of questioned documents. These included the following documents relating to the Southern Pacific loan: the standard security (Productions 7/12 and 6/4); the application form dated 30 April 2003 (Q 1; Production 7/3); the credit agreement dated 30 April 2003 (Q 4; Production 7/4); the direct debit dated 30 April 2003 (Q 5; Production 7/5); the authority to first mortgagee dated 30 April 2003 (Q 6; Production 7/6); an undated letter (Production 7/7); a self-certification declaration dated 10 May 2003 (Q 8; Production 7/8,). When Mr McCrae examined the standard security for his first report, he was working with a photocopy but by the stage of the second report he had the opportunity to examine the principal. All the other questioned documents were photocopies. Some of the specimen signatures were principals and some were photocopies.

[52] Mr McCrae also examined a number of other questioned documents bearing the apparent signature of the pursuer. Questioned documents 9 and 10 were signatures from the Bank of Scotland internet banking application form. Questioned document 11 was the standard security relating to the Welcome loan.

[53] Mr McCrae explained that in the examination of handwriting regard is had to aspects of letter construction. These include: spacing, which referred to the spaces between letters or between an initial and a name; slope, which could be to left or right of the vertical; fluency, which related to the apparent speed and lack of hesitation; relationships, which referred to the way in which a letter sits in relation to the next letter or a base line. These features are noted and the examiner determines whether any of the features are the habitual and natural writing habit of a person. Items can vary but there will be a basic similarity.

[54] An examination of the specimen signatures of the pursuer demonstrated a similarity between them in letter formations, legibility, spacing and slopes, fluency and relationships. When he examined the questioned signatures Mr McCrae noted that they displayed some similarity of letter constructions, spacing, slopes, fluency and relationships. He noted a number of features which were consistent within each group within the bounds of natural variation.

[55] He then compared the two sets of signatures and found differences in the pattern of the questioned compared to the specimen signatures. The signatures were in the form "B. Dodd". He noted that in the questioned signatures the "B" had an elongated upper loop usually closed (retrace). He explained that retrace referred to the pen coming down the same track as it had taken on an upstroke. The questioned signatures had a lower curve similar to an "S" form in the "B". The continuation to the lower curve of the "B" rose before continuing downwards and usually overlapping the "D". In the specimen signatures the "B" had a short rounded upper loop with a downward continuation to the lower curve and the "B" did not overlap the "D".

[56] The "D" in the questioned signatures was long and narrow with a curved top. It was usually formed in one complete movement with an initial downstroke continuing into a curve. The "D" in the specimen signatures had long wide flat top before turning downwards. It was usually formed by an initial independent downstroke with a separate curve.

[57] In the questioned signatures the tall stems of the double "d" tended to converge at the top while in the specimen signatures the stems of the double "d" sloped well to the right and the second stem sloped further away from the first. He also noted that in the specimen signatures the spacing was less cramped than in the questioned signatures.

[58] This analysis led Mr McCrae to the opinion that it was highly probable that the questioned signatures "B Dodd" on the questioned documents Q1 to Q13 inclusive were not genuine signatures of William Dodd but were formed by some other person. Thus, he concluded that all of the signatures of "B Dodd" on the documents relating to the Southern Pacific loan were not genuine signatures of William Dodd but were formed by some other person.

[59] In cross-examination Mr McCrae agreed that handwriting can vary over time. He added that although it can appear to change it does not change completely. He explained that in teenage years a person establishes a pattern of writing which might change but not to the extent that it was completely different.

[60] He agreed that a person's handwriting could change depending on the purpose of the writing. Different conditions could affect handwriting. Consumption of drink or drugs can cause writing to be more careless. He agreed that specimens 3a and 3b had been produced on the same day. He said that if he had only been given 3a and 3b he would have indicated that he required further documents because writing on one day would naturally be very similar. However, in the event, he did have other documents.

[61] One of the signatures which had been supplied to Mr McCrae as a specimen signature was on a standard security in favour of the Yorkshire Building Society bearing to be signed by the pursuer. In her evidence Mrs Dodd claimed that she had signed the pursuer's signature on that document. Mr McCrae was not aware that there was any challenge to the genuineness of that signature. However, he said that he had compared the specimen samples with each other and if he had considered that a signature which was presented as a specimen signature was not genuine he would not have used it. He said that the specimens signatures fitted well together as a group and there was nothing about them to suggest that they were not genuine.

[62] I considered Mr McCrae to be a careful expert witness. There was no contradictory evidence before me. Mr McCrae had a great deal of experience in comparison of handwriting and was able to impart his special knowledge in the course of his evidence. He was able to justify his conclusions and made appropriate concessions. In my view he withstood careful and thorough cross-examination. I was prepared to accept his evidence.

[63] Accordingly, on the basis of the evidence of the pursuer and Mr McCrae I find it proved that the pursuer did not sign each of the signatures on the documents associated with the Southern Pacific loan, including the standard security. These signatures were formed by some other person. On the basis of the evidence of Mr McCrae alone it would not be possible to say who that person was.

[64] Further insight into the signing of the Southern Pacific documents may be got from an examination of the evidence of Mrs Dodd and the two witnesses to the signatures. The picture which emerges is far from satisfactory. An appropriate starting point is to note the averments made on behalf of Mrs Dodd on record in answer 4 at page 31B of the closed record:

"Mrs Dodd believes she may have subscribed the loan agreement and standard security in favour of the first defenders on behalf of the pursuer. She does not precisely recall doing so."

When, in the course of her evidence Mrs Dodd was shown the application for the Southern Pacific loan (Production 7/3), she said that she could see no reason why the pursuer's signature was not genuine. Under cross-examination by Mr McShane, she said that it was highly unlikely that she had signed the pursuer's signature on Production 7/3. It was possible that she had done so under instruction, but could not recall there being a need to do that. Mrs Dodd said in evidence that she thought it highly unlikely that she would have subscribed the pursuer's signature on the standard security. She appeared to leave open the possibility that she had done so.

[65] The witness to the pursuer's signature on the standard security in favour of the first defenders bears to be Jacqueline Woods and the witness to Mrs Dodd's signature bears to be Zoe Harris. I did not find the evidence of either of these witnesses to be of much assistance. Neither of them saw the signatures which they claimed to have witnessed actually being subscribed.

[66] Jacqueline Woods said that she was asked by Mrs Dodd if she would witness the document and she agreed to do that. Mrs Dodd had not said what it was and the witness did not look at it. She was not sure if the signature of the pursuer had been there when she signed it. She did not really question what she was witnessing. She assumed that the signature was there but could not be certain. The pursuer was not present when she signed it. Only herself and Mrs Dodd was were present.

[67] Zoe Williams had been asked to witness the document by Mrs Dodd. Earlier she had sent a text message to Mrs Dodd to say that she was in the area and Mrs Dodd had asked her a favour saying to her "will you do something for me when you get here." There was discussion about the loan being renovation to the house and the new premises to the café. She had discussion with both the pursuer and Mrs Dodd about the loan.

[68] In her evidence Mrs Dodd did leave open the possibility that she had written the signature of the pursuer on the documents associated with the Southern Pacific loan. She avers on record that she may have done so. The evidence of the two witnesses do not contradict the evidence of the pursuer supported by the handwriting expert that the pursuer did not subscribe the signatures.

 

The Welcome loan

[69] In November 2002 a loan was obtained from Welcome Finance. A standard security was executed in favour of Welcome Finance (Production 6/7). It bears to have been signed by each of the pursuer and Mrs Dodd and witnessed by Pauline Burns, the mother of Mrs Dodd. Mrs Dodd identified her own signature and said that she did not see why the pursuer's signature would not be genuine. The purpose of this loan was to deal with the financial mess that they were in. The pursuer, who was well aware of the Welcome loan, had instigated applying for it. A direct debit or standing order was set up on the business account. She could not have done that. Payments to Welcome could be identified in February, March and April of 2003.

[70] The pursuer claimed that prior to the separation he was not aware of any debt to Welcome Finance. The pursuer said that the signature on the standard security in favour of Welcome Finance (production 6/7) was not his signature. The pursuer had never agreed to a standard security in favour of Welcome.

[71] Mrs Pauline Burns is the mother of Mrs Dodd. She was aged 52 years and was a personal assistant at the Halifax Bank of Scotland. She frequently visited the house in Jedburgh. She had witnessed the Welcome standard security (Production 6/7). She said that she was asked if she would witness the document as the couple were borrowing money to refurbish the property in Jedburgh. She had expressed her concerns about them taking a loan but partly hoped that it would allow them to complete the house and put them on an even keel. She said that both the pursuer and Mrs Dodd asked her to sign. She could not say which asked her but both were present. She said that she did not see them appending their signatures; the signatures were already there when she signed. When she signed in his presence the pursuer did not object on the basis that it was not his signature or on any other grounds.

[72] I found Mrs Burns to be a credible and reliable witness. Indeed, in cross-examination Mr Clive made it clear that he was not putting her honesty in question but he suggested that she was mistaken.

[73] Questioned document 11 examined by Mr McCrae is the standard security in favour of Welcome Finance. He expressed the opinion that it was highly probable that the questioned signatures "B Dodd" on the questioned document Q11 was not the genuine signature of William Dodd but had been formed by some other person.

 

Whether Mrs Dodd had on other occasions signed documents in the name of the pursuer

[74] There was some further, curious and conflicting evidence of a background of Mrs Dodd signing documents in the name of the pursuer. Mrs Dodd said that when the pursuer went to the Falkland Isles when he was in the RAF, he asked her to attend to certain financial matters on his behalf. He gave her a cheque book in which the first three cheques were signed but the rest were unsigned. The signed cheques were not sufficient for all the payments. The pursuer had authorised her to use the cheques and sign them, which she did. She signed them using his signature.

[75] The pursuer denied giving Mrs Dodd unsigned cheques when he went to the Falklands. He said that he had left signed cheques with a colleague and that the colleague may have given cheques to Mrs Dodd.

[76] Mrs Dodd claimed that subsequently, on occasions, she signed cheques in the pursuer's name and had done so in his presence with his consent. The pursuer denied this.

[77] At the time when they were moving to Jedburgh, the pursuer was unwell and was admitted to hospital for nine days. He was released from hospital only a day or two before the move. In order to buy the house they had taken a loan from the Yorkshire Building Society. Mrs Dodd said that she considered it very likely that she had signed the pursuer's name as his signature on the standard security in favour of the Yorkshire Building Society. The documents had to be hand delivered and the pursuer instructed her to sign them on his behalf. She was almost one hundred per cent certain that this is what happened.

[78] While the pursuer confirmed that he had been in hospital suffering from bruising of the vertebrae, he considered that that was highly unlikely that Mrs Dodd had subscribed on his behalf his signature to that standard security.

[79] As noted above, one of the signatures which had been supplied to Mr McCrae as a specimen signature was on the standard security in favour of the Yorkshire Building Society. Mr McCrae said that he had compared the specimen samples with each other and if he had considered that a signature which was presented as a specimen signature was not genuine he would not have used it. He said that the specimens signatures fitted well together as a group and there was nothing about them to suggest that they were not genuine.

[80] In addition, I noted that the witness to the signature of the pursuer on this standard security was a solicitor. It seems unlikely that a solicitor would have signed as a witness without having seen the grantor of a standard security signing it.

[81] In his evidence the pursuer said he discovered that Mrs Dodd had been signing cheques in his name without his consent. He thought that the first occasion on which this happened was in mid-2002. He confronted her and asked why she had done this. She said that she assumed that it would be alright and did not think that he would mind. He told her that he did mind and the trust was broken. As it happened, the pursuer's mother was staying at the time and overheard the conversation from an adjoining room.

[82] Jacqueline Henderson is the mother of the pursuer. She had been a ward sister and at the time of the proof was the matron manager of a residential and and nursing home. She said that she was present in the house at Bo'ness when the couple had an argument. This was in mid to late summer of 2002. She was in the livingroom at the time and the pursuer and Mrs Dodd were in the kitchen. She heard the pursuer say that he had just opened a letter which referred to a signature that somebody was not willing to accept. The pursuer confronted Mrs Dodd and suggested that she must have signed it. She denied it and he persisted. There was a lot of shouting. Then Mrs Dodd said that she had done it on the spur of the moment. The pursuer said that he did not want her to do that sort of thing again. Mrs Dodd said "Well, you don't need to go on about it." She went up stairs and they did not speak for the rest of the day. Mrs Henderson said that on the day after the incident the pursuer told her what had happened and explained the reason for the argument.

[83] Mrs Dodd denied that any argument as described by the pursuer and his mother had happened. She said that the pursuer's mother had never visited them in Bo'ness. She suggested that the description of the house given by Mrs Henderson was guesswork.

[84] I considered Mrs Henderson to be a credible witnesses; it seems to me that it would be unlikely that she would have made up such a story. Her reaction to the suggestion that she was telling lies seemed to me to be genuine. In general I felt that I could rely on her account of what happened.

[85] The second incident was in 2003. The pursuer discovered the result of a document which came through the post indicating that a payment had been made using a cheque on the pursuer's business account.

[86] Another chapter of evidence on the question of signatures of the pursuer is that relating to the application for internet banking. As noted above, Mrs Dodd claimed that she had never seen the application for internet banking (Production 7/24) before giving her evidence. She accepted that the signature in her name looked very similar to hers but she could not say whether it was hers. She was fairly confident that the signature of the pursuer was his genuine signature. She denied having forged his signature. She said that she knew nothing about the use of internet banking facility on these accounts. She had never used internet banking on these accounts. As I have already stated, I find the position of Mrs Dodd on the question of the completion of the internet banking application to be untenable.

[87] It seems to me that neither the pursuer nor Mrs Dodd were telling the whole truth in their evidence about the signing of documents in the name of the pursuer. I did not find either of them to be trustworthy on this issue. What I can say, by looking at the evidence as a whole, is that I am satisfied that from time to time Mrs Dodd did subscribe the pursuer's signature, sometimes with, and sometimes without, his authority.

 

Submissions and discussion

[88] Both Mr McShane and Mr Hayhow presented as their primary submissions that I should reject the evidence of the pursuer, supported by Mr McCrae, to the effect that the pursuer had not signed the various documents associated with the Southern Pacific and Welcome loans. Mr Clive invited me to find that the pursuer did not sign the standard security or credit agreement for the Southern Pacific loan and the other questioned documents. As stated above I have found it proved that the pursuer did not make the questioned signatures. Looking at the evidence as a whole I infer that they were made by Mrs Dodd.

[89] The next issue raised in submissions was whether, if I was satisfied on the evidence that the signatures of the pursuer on the credit agreement and the standard security in favour the first defenders had been written by Mrs Dodd, they had been authorised by the pursuer. Mr Clive submitted that there was no evidence to support that conclusion. Both Mr McShane and Mr Hayhow submitted that if I accepted that the pursuer had not signed the documents the evidence pointed to his having authorised Mrs Dodd to do so. If I concluded that Mrs Dodd had signed the pursuer's name having been authorised by him to do so there was no forgery. As was observed by Lord Blackburn in McKenzie v British Linen Bank (1881) 8 R (HL) 8 at page 14:

"If McKenzie authorised Fraser to write his name for him he gave him a mandate to sign, and is, of course, liable, and there was no forgery on the part of Fraser. This is a question of fact depending on the evidence. If I thought it was satisfactorily proved that McKenzie, before Fraser uttered the bills with his name on them, knew that Fraser was going to do so, and took no steps to hinder him, I should not have much hesitation in drawing the inference that he did authorise him."

[90] Alternatively, Mr McShane and Mr Hayhow submitted that the pursuer had adopted the signature (McKenzie v British Linen Bank (supra); Brown v British Linen Bank (1863) 1 McP 793; Frost v North of Scotland Banking Company (1858) 20 D 1135; Boyd v Robertson (1854) 17 D 159; Findlay v Currie (1850) 13 D 278). They submitted that the critical date for adoption of the signatures was 6 June 2003 when the money was deposited in the bank. The pursuer had directed the deposit and thereafter the money had been used to his advantage. The whole circumstances pointed to adoption if not actual authorisation.

[91] A form of obligation created by a forged signature is void. Gloag on Contract deals with adoption of such an obligation in the following passage at page 546:

"The term homologation is not properly applicable to the case where it is sought to infer liability on a form of obligation admittedly originally void, on the ground that by his words or conduct the party ostensibly liable has recognised it as binding. There is then nothing to homologate. But a man may adopt an obligation on which he had originally no liability, and in certain cases adoption may be inferred without any express contract to that effect."

In McKenzie v British Linen Bank (supra) at page 14, immediately after the passage quoted above, Lord Blackburn continued:

"But, even though it was not made out that the signatures were authorised originally, it would still be enough to make McKenzie liable if, knowing that his name had been signed without his authority, he ratified the unauthorised act...He makes himself civilly responsible just as if he had originally authorised."

[92] While many of the cases on adoption of forged signatures involve bills of exchange the principles of adoption of forged signatures are not restricted to such documents. In Muir's Executors v Craig's Trustees 1913 SC 349 the document on which the forged signature at issue was written was a bond and disposition in security.

[93] There seems to me to be no reason in principle why the principles of adoption could not apply to signature on the credit agreement in this case.

[94] In relation to the standard security in favour of the first defenders Mr Clive advanced a submission that if it was accepted that the pursuer did not sign or authorise his signature to be placed on the standard security, it was simply a nullity. He submitted that having regard to the provisions of the Requirements of Writing (Scotland) Act 1995 sections 1(2)(b) and 2 the standard security was not valid. The Act provided that if the standard security was not signed by the grantor it was not valid. Mr Clive further submitted that adoption had no application in the case of a standard security which created a real right.

[95] In reply to Mr Clive's submissions based on the provisions of the Requirements of Writing (Scotland) Act 1995 Mr McShane and Mr Hayhow submitted that the purpose of that Act was to address questions of formal validity, not questions of authority or capacity. Mr McShane pointed out that section 2(3) provided that nothing in section 2 relating to formalities of execution prevents a document which has not been subscribed by the granter of it from being used as evidence in relation to any right or obligation to which the document relates.

 

Conclusions on the evidence as a whole

[96] Looking at all the evidence I feel able to draw the inference that Mrs Dodd subscribed the signature of the pursuer on each of the documents associated with the Southern Pacific loan, including the credit agreement and the standard security. If the pursuer did not sign his name, then the only other person who could have done so is Mrs Dodd.

[97] From the evidence which I have reviewed I am able to infer that the pursuer was more aware of the deteriorating financial situation than he was prepared to admit in his evidence. I found his expressed view of optimism not to be well founded in fact and I concluded that he was not telling the whole truth about his knowledge of the financial situation. Further, I find it proved that in the Spring of 2003 the pursuer was actively looking for a consolidating loan. I infer that the Southern Pacific loan was that consolidating loan. I find it proved from the evidence of Mr Burns and the contents of the bank statements that the transfer made to the account of Mr Burns was part of that consolidating loan, in other words was part of the proceeds of the Southern Pacific loan. I find it proved that the pursuer was aware of that transfer. I find it proved that the pursuer was aware of the making of the application for the loan, and of the payment into his account of the proceeds of it. I find that he was aware that at least part of the proceeds of the loan were expended on items to his advantage.

[98] I am quite prepared to accept that Mrs Dodd was an extravagant spender. Further, the notes of the telephone conversations between a woman who must have been Mrs Dodd and representatives of Direct Line Financial Services (production 6/18) demonstrate that Mrs Dodd did conduct financial transactions behind the back of the pursuer. I am, however, not prepared to accept that she did so in the case of either the Welcome or the Southern Pacific loans.

[99] I am unable on the basis of the evidence before me to come to any confident conclusion as to the precise circumstances in which Mrs Dodd signed the signature of the pursuer on the Southern Pacific loan documents. To attempt to do so would be to engage in speculation. I do not consider that it is necessary for me to identify the precise circumstances in which she signed in the pursuer's name.

[100] I do require to address the question as to whether the pursuer authorised Mrs Dodd to sign his name on his behalf, or, alternatively, adopted the signature. Looking at the evidence as a whole I am driven to infer that when Mrs Dodd appended the signature of the pursuer to the documents associated with the Southern Pacific loan and the Welcome loan she did so with his authorisation. Once that inference is drawn the inevitable conclusion is that there was no forgery and the pursuer must fail. I understood Mr Clive to accept that, if the evidence demonstrated that the pursuer authorised the signatures in his name written by Mrs Dodd, the difficulty which he raised in relation to the provisions of the Requirements of Writing (Scotland) Act 1995 did not arise.

[101] That is sufficient for disposal of the case but I should say that had I been unable to draw the inference that the pursuer had authorised that writing of his signature by Mrs Dodd I would none the less have been able to draw the inference that he did adopt the signature on the credit agreement. In relation to the standard security in favour of the first defenders there is the question of validity raised by Mr Clive. Section 1(2)(b) of the Requirements of Writing (Scotland) Act 1995 provides:

"Subject to subsection (3) below, a written document complying with section 2 of this Act shall be required for -

(b) the creation, transfer, variation or extinction of a real right in land otherwise than by the operation of the court decree, enactment of Rule of Law."

Section 2 provides: "Section 2, so far as material, provides:"

 

"(1) No document required by section 1(2) of this Act shall be valid in respect of the formalities of execution unless it is subscribed by the granter of it or, if there is more than one granter, by each granter, but nothing apart from such subscription shall be required for the document to be valid as aforesaid.

(3) Nothing in this section shall prevent a document which has not been subscribed by the granter or granters of it from being used as evidence in relation to any right or obligation to which the document relates."

The discussion before me on the interpretation of sections 2(1)(b) and 2 of the Requirements of Writing (Scotland) Act 1995 was rather limited. It seemed to me that there may be some force in the submissions of Mr Clive in relation to the creation of a real right. Had it been necessary for me to reach a concluded view on that matter I would have put the case out by order and invited fuller submissions from counsel.

 

Decision

[103] For the reasons set out above I shall repel the first, second, fourth and fifth pleas-in-law for the pursuer. I shall sustain the fifth plea-in-law for the first defenders and the second plea-in-law for Mrs Dodd. I shall assoilzie the first defenders and Mrs Mrs Dodd from the conclusions of the Summons and reserve the question of expenses meantime.