Scottish Court of Session Decisions

OUTER HOUSE, COURT OF SESSION [2011] CSOH 188

CA132/08

OPINION OF LORD HODGE in the cause JAMES STEVENSON GILLESPIE Pursuer; against (1) THOMAS GRAHAM GILLESPIE, (2) ALLAN WILKINSON STANFIELD GILLESPIE, (3) THOMAS GILLESPIE, (4) THE PARTNERSHIP OF THOMAS GRAHAM GILLESPIE, ALAN WILKINSON STANFIELD GILLESPIE, JAMES STEVENSON GILLESPIE, GARY STANFIELD GILLESPIE AND THOMAS GILLESPIE AND (5) PIULA HOLDING INCORPORATED Defenders: ­­­­­­­­­­­­­­­­­________________

Pursuer: Iain W. F. Ferguson QC, Simpson; Semple Fraser LLP

Defender: McIlvride; Anderson Fyfe LLP

18 November 2011

[1] This is one of four actions in which I heard a conjoined proof. The four actions are part of a wider battle in which the Gillespie brothers and others have become embroiled. The pursuer ("Mr Steven Gillespie") pursues the four actions, in each of which he asserts that he and his brothers or he and his brothers and his cousin, Mr Thomas Gillespie, had entered into a partnership to acquire, exploit and develop land. This action relates to a site which is part of Ballochney Farm, Plains, Airdrie ("Ballochney West"). But I record in this opinion my findings on the background to the relevant transactions in the four actions and I have incorporated those findings into my opinions in the other actions. Thus I deal first with general matters which are relevant to all four actions before turning to the specific circumstances of the Ballochney West transaction.

[2] The first defender ("Mr Graham Gillespie") is Mr Steven Gillespie's elder brother. The second defender ("Mr Alan Gillespie") is the youngest of the four brothers. The other brother, Mr Gary Gillespie, was initially a pursuer with Mr Steven Gillespie in each of the four actions, but after suffering from ill health he withdrew from all of the actions in which he was a party, including the four actions with which I am now concerned. The third defender ("Mr Thomas Gillespie") is a first cousin of the Gillespie brothers and is a businessman and an investment banker based in Vienna. The fourth defender is an alleged partnership, the existence of which Mr Steven Gillespie asserts and the defenders deny. The fifth defender ("Puila") is a company which Mr Thomas Gillespie had incorporated; it has its registered office in Tortola, British Virgin Islands.

[3] By Joint Minute in each of the actions the parties have agreed that evidence in any action is, so far as relevant, evidence in the other three actions. The findings in my opinions in the other three actions are not directly relevant to this action but are, so far as relevant, part of the picture which has influenced me in reaching the determinations which I have made.

Factual background to the dispute

[4] The late Mr James Gillespie, who was the father of the four brothers, developed a successful business in opencast coal mining, principally through J W Soils Suppliers Limited ("JWS"). After the death of Mr James Gillespie in 1982, each of the four brothers held 25 per cent of the issued share capital of Gillespie Group (Scotland) Limited ("GGSL"), which held all of the shares in JWS.

[5] The Gillespie brothers operated their businesses very informally and, in particular, did not maintain detailed records of their agreements in relation to (i) the ownership of assets used in those businesses or (ii) the purposes for which those assets were acquired. Their failure to record their agreements in documents has been one of the principal causes of the many legal actions which have been raised since the brothers became divided by serious disagreements. While some of the brothers fell out with others from time to time, they appear to have been reconciled and the businesses were operated as a family-wide enterprise. Thus presentations were made to banks and other institutions of "Gillespie Investments" businesses in which numerous assets and companies were represented to be part of a larger Gillespie family business.

[6] In about July 2000 Mr Graham Gillespie was involved in a serious fight with Mr Steven Gillespie. It is not necessary for me to express any views on who was responsible for the fight as the evidence which was led in that regard was incomplete and, in any event, it has no bearing on the matters currently in dispute. It is sufficient to record that Mr Steven Gillespie suffered a serious fracture of his skull and that the bad feeling, which the incident generated, caused the splitting up of certain of the family business interests. The negotiations which followed the fight provide most of the very few relatively contemporaneous documents which record what the parties' understanding had been in the 1990s and before each party adopted entrenched positions following the further disagreements which arose in 2007 and 2008. I discuss those documents in some detail in paragraphs [20] to [35] below. In summary, the negotiations led to the transfer to Mr Steven Gillespie from his brothers of some of the family's business interests and assets. In particular, his brothers relinquished their interests in Eastercroft House Limited and Mr Steven Gillespie transferred his interest in First Choice Stallions Limited. The horses which the brothers had held were shared out and Mr Steven Gillespie was paid his share of the value of a property in Majorca and of his late mother's house. Thereafter, Mr Graham Gillespie undertook certain property developments with his other brothers, Gary and Alan, and Mr Steven Gillespie had no interest in those businesses. In 2002 the four brothers collaborated again in the purchase of premises at Ingram Street, Glasgow by Gillespie Investments Limited ("GIL"), a company in which each of the four brothers held a 25 per cent stake. In May 2006 Mr Steven Gillespie bought out his brothers' interests in GIL when Eastercroft House Limited, which he controlled, bought the entire share capital of that company.

[7] The current disputes arose from about 2008 when Mr Graham Gillespie successfully asserted that properties which were held in the name of Mr Gary Gillespie were partnership property in which other members of the family had an interest. In one action he, his son, Mr Scott Gillespie, and his brother, Mr Alan Gillespie, sued for a declarator that a property known as "Firrhill", Muirton, Auchterarder, which had been acquired in 2006, was the property of a partnership comprising them and Mr Gary Gillespie. In that action the pursuers averred:

"The Gillespie Family have a range of business interests. The businesses carried on by members of the Gillespie Family in common include the acquisition and development of commercial and residential properties. For the purposes of the property development businesses members of the Gillespie Family have incorporated or formed limited companies ("the family companies"), partnerships, and joint ventures for specific projects. ...

Commonly title to properties purchased on behalf of one of the family companies, or for the purposes of a joint venture between the parties, has been taken in the name of one of the individual family members. ..."

In the other action, G Street Properties Limited ("GSPL"), a company of which Mr Graham Gillespie held the whole issued share capital, sought declarator that Mr Gary Gillespie held a property known as 103 Greengairs Road, Greengairs, Airdrie in trust for it. In that action, which also related to a property acquired in 2006, GSPL made similar averments as to the family's business practices in relation to the holding of property. In each case Mr Gary Gillespie conceded the claim after the action had proceeded to a Closed Record.

[8] Thereafter, Mr Gary Gillespie raised a series of actions against Messrs Graham, Scott and Alan Gillespie, in which he alleged that other properties were held in trust for partnerships of which he and they were the partners. In one of those actions which related to Kirkton Park Farm, Castleton Road, Auchterarder, which was acquired in 2005 in the name of Mr Scott Gillespie, the defenders initially asserted that there was no partnership for its development but later conceded that there had been a partnership which had later been dissolved. Mr Gary Gillespie also raised other actions by himself or with Mr Steven Gillespie claiming an interest in properties which he or they asserted were held in partnership. He was also a pursuer with Mr Steven Gillespie in this and the other three actions with which I am currently concerned. After a serious illness he withdrew from all of the actions and provided evidence by affidavit to Mr Graham Gillespie. He was not able to give oral evidence in the proof as a result of his ill health. I have therefore not had regard to his affidavits. Mr Alan Gillespie also gave affidavits but was not called as a witness. I have similarly disregarded his affidavits.

The Gillespies' approach to business ventures
[9] It was common ground between the parties that the Gillespie brothers had had a practice of sharing the profits obtained from property development and other business ventures, regardless of the person in whose name title to the property was recorded. This practice of sharing businesses applied in the 1980s and 1990s to the mineral extraction businesses and also the businesses of purchasing, selling and breeding horses in which the family were then engaged. Thus in 1980, before Mr Alan Gillespie came of age, Messrs Graham, Steven and Gary Gillespie entered into a partnership called G.S.G.A. (Scotland) to undertake such businesses and agreed to an equal share of profits. Mr Alan Gillespie became a partner of that partnership in about 1986 after he came of age.

[10] Mr Graham Gillespie gave evidence that he and Mr Steven Gillespie took the lead in the family businesses in the 1990s. I have no reason to doubt that that was the case. Mr Gary Gillespie at that time was pursuing a distinguished career in equestrian events and the youngest of the brothers, Mr Alan Gillespie, appears to have been content at that time to leave the leadership role to his elder brothers. Mr Frank Paterson of PFK, who has acted as the family's accountant since 1995, gave evidence that he had the impression that it was generally the case that properties were held on behalf of all four brothers, whoever took title to them.

[11] The parties dispute the nature of their collaboration. Mr Steven Gillespie in the four actions asserted that the relevant properties were held as partnership assets from the outset and that that had been the parties' understanding throughout. By contrast, Mr Graham Gillespie as the oldest brother saw himself as the person who initiated the developments and provided for the family generally. He considered that he had a discretion whether or not to give one or more of his brothers a share in the business opportunities which he created. He suggested that Mr Steven Gillespie was seeking to claim a share of something which he, Mr Graham Gillespie, had created. His evidence that this was his understanding is supported by correspondence which he wrote in about 2006 which I discuss in paragraphs [36]-[39] below. He also gave evidence that he suffered from dyslexia and that he had to get others to write his letters for him. I bear that in mind when I consider the personal letters which he signed.

The insolvency of J W Soils Suppliers Limited

[12] An important area of disagreement between the evidence of Mr Steven Gillespie and that of Mr Graham Gillespie was over the financial state of JWS in 1995 and 1996. That forms the backdrop to the transactions which are the subject matter of the four actions. Mr Steven Gillespie asserted that at that time JWS was not in any significant financial difficulty, that it has over £2 million in Clydesdale Bank plc, that the bank was content to give it restoration bonds, and that it was only in 1998/1999 that the company ran into difficulties which led to its insolvency. I am not persuaded that his recollection is correct. Mr Graham Gillespie gave evidence that by 1995 and 1996 the company was in financial difficulty and that the bank was pressing it to reduce its overdraft. While the bank had provided restoration bonds, it had also demanded that the brothers provide personal guarantees for significant sums. Mr Thomas Gillespie also gave evidence, which I accept, that he understood at the time that the bank was concerned about JWS's liquidity.

[13] Mr Frank Paterson confirmed the pressure that the bank was exerting on JWS to reduce its borrowings. The bank would not allow the Gillespies to take on new business ventures until they had reduced its exposure. In April 1996 all four brothers granted a guarantee to the bank for £550,000 on behalf of GGSL, which, as I have said, owned 100 per cent of the shares in JWS. In 1998 the four brothers signed another guarantee to the bank for a further £300,000 to support the indebtedness of GGSL, JWS and other Gillespie companies. While it is true that the consolidated balance sheet of the group of which GGSL was the parent company, showed that there was slightly over £2.3 million in cash in the bank at the year end of 30 June 2006, the bank overdraft was then £4.64 million. Thus the bank were net lenders to the group to the extent of £2.3 million, which was its informal overdraft limit. It appears that in the late 1990s JWS incurred substantial expense in reinstating the coal site at New Brannock with a view to its development. Its exposure to Clydesdale Bank plc increased until on 8 April 1999 the bank demanded repayment of £2,865,893.20 and thereafter put JWS into receivership.

[14] In my opinion it is reasonably clear that when Mr Graham Gillespie purchased Ballochney East in 1995 and Mr Thomas Gillespie took title to Ballochney West and Easter Balbeggie through companies in his ownership in 1995-1996, the brothers wanted to take the assets out of JWS. Indeed Mr Steven Gillespie acknowledged as much in his evidence in chief. I infer from the evidence of the financial position of JWS and the group companies that some at least of the brothers were motivated by concerns about the solvency of JWS as well as the need to obtain further outside funding to develop the properties. JWS also needed access to sites to carry on opencast mining in order to utilise its resources and fund its borrowings. In my view, these concerns and needs form an important part of the context of the transactions which are the subject matter of the four actions.

Comments on the principal witnesses
[15] The principal witnesses in the four actions were Mr Steven Gillespie and Mr Graham Gillespie. While I formed the view that, generally, neither was deliberately telling untruths in this action, I have doubts about the care which they took in presenting parts of their evidence and serious doubts about the reliability of the recollection of both in several important matters. They both had a tendency to recount events in a self-justifying way; they expressed their views of what had occurred with the benefit of hindsight and informed by the positions which they had taken in their now long-running dispute. Both, and particularly Mr Graham Gillespie, attempted, consciously or otherwise, to make the facts fit their positions. Thus I do not accept Mr Steven Gillespie's evidence that JWS was not under financial pressure in 1995-1996 or his attempt to give the impression that it had over £2 million to spend at that time. On cross-examination he conceded, as he had to, that JWS was at its overdraft limit when the sums in credit and debit at the bank were netted off. I also do not accept the evidence of Mr Graham Gillespie that (a) he did not instruct lawyers when negotiating a split of the family businesses with Mr Steven Gillespie in 2000 or that they and Mr Frank Paterson had misunderstood his position in those negotiations, (b) Mr Steven Gillespie agreed to waive his claims in respect of the properties in 2002, or (c) Mr Donald Wilson knew that the Gillespie interest in the New Brannock joint venture was that of Mr Graham Gillespie alone. In relation to (a), he corrected his assertion later in his evidence when he was shown documents which contradicted his recollection. But I do not accept his rationalisation that his solicitor was mistaken in his understanding of his instructions at the time. In relation to (b), the defence of waiver was first pleaded in May 2011 and was wholly unsubstantiated. I discuss it further in paragraphs [74] - [76] below. His assertion in (c) above was inconsistent with the contemporary documents which Mr Wilson created and which I discuss in my opinion in the New Brannock action (CA 128/08).

[16] As I have said, I did not hear the evidence of Mr Gary Gillespie and Mr Alan Gillespie who were alleged to be partners in the alleged partnership in each of the four actions. They might have been able to cast some light on the nature of the transactions which are the subject of dispute in each of the four actions. As I have reservations about the reliability of the recollection of both Mr Steven Gillespie and Mr Graham Gillespie, and as the Gillespie brothers did not generally keep satisfactory documentary records of their business arrangements, I attach considerable weight to the surrounding circumstances in 1995 and the documents produced between then and 2000, which point their understanding at the time. It is to those documents that I now turn.

The contemporary documentation

(a) the draft agreement about Easter Balbeggie 1998

[17] In about November 1998 Mr Steven Gillespie instructed Mr Walker of Keegan Walker & Co, Solicitors to prepare a draft minute of agreement between the four brothers on the one hand and Mr Thomas Gillespie on the other. A letter from Mr Walker to Mr Steven Gillespie dated 10 November 1998 and the draft agreement which accompanied it were recovered from the solicitors' file.

[18] The draft agreement sought to provide that in the event of the death of Mr Thomas Gillespie his 100 per cent shareholding in Laggan Investments Limited, which held the title to the site at Easter Balbeggie, would be transferred as to 80 per cent to the four brothers and their survivors and as to 20 per cent to Beate Gillespie, who is Mr Thomas Gillespie's wife. The draft also provided that Mr Thomas Gillespie would not transfer any shares in the company without first offering them to the four brothers for £1 and he would not pledge or grant any security over the shares.

[19] Mr Steven Gillespie did not send the draft to Mr Thomas Gillespie or any of the brothers. I was given no explanation why he did not pursue his interest in clarifying the entitlement to the company shares. There was no evidence that anyone considered and revised the document. But the draft supports the view that he thought at the time that he and his brothers had or might have an interest in the Easter Balbeggie development, although his cousin controlled the company which owned the site. His explanation for seeking a declaration of trust or an agreement from his cousin was that he had suffered a bout of ill health and had wished to protect his wife's interests in the event of his death. I observe that the draft agreement would not have given that protection if his cousin survived him and then died as it provided for the transfer of his shares to the four brothers and their survivors. That is likely to have been a drafting error as there was no suggestion that the brothers held any share for each other to the exclusion of their own families. In any event, it is contemporaneous evidence that at the time Mr Steven Gillespie had an understanding that he had, or might have, an interest in the site and that it was to be developed not solely for the benefit of his cousin through Laggan Investments Limited.

(b) the settlement negotiations in 2000

[20] The most illuminating documents are derived from the file of Golds, solicitors, which acted for Mr Steven Gillespie in his attempt to negotiate a separation of his interests in the family businesses after he was seriously injured by Mr Graham Gillespie in 2000. Their value lies in their status as documents passing between solicitors who had instructions from their respective clients in the preparation of an agreement. Mr Michael Graham and Alastair McIntyre of Golds acted for Mr Steven Gillespie and Mr Frank Cannon acted for Mr Graham Gillespie, The documents also vouch the work of Mr Frank Paterson who sought to act as a mediator between the brothers to resolve their differences and to preserve, so far as possible, the value of the family businesses. The documents, together with the evidence which Mr Paterson and the solicitors, Mr McIntyre and Mr Cannon, were able to give, show the understanding which Mr Steven Gillespie and Mr Graham Gillespie had at that time as to who had interests in the sites which are the subject matter of the four actions. Mr Cannon had only a very limited recollection of the events but I was impressed by Mr McIntyre's careful testimony about his firm's involvement, which I accept as the best evidence supplementing the documents.

[21] On 27 July 2000 Mr Steven Gillespie had an introductory meeting with Mr Michael Graham of Golds, which Mr Graham recorded in a file note. That note recorded among other things Mr Steven Gillespie's instructions that the four brothers shared a 42 per cent interest in G M Mining Limited and a 50 per cent interest in First Choice Stallions Limited. It also recorded that GM Mining Ltd was about to mine in Fife and that there were various transactions which involved monies going offshore which needed to be investigated. Mr Steven Gillespie expressed a wish to take control of the nursing home business, which was Eastercroft House Limited, and to take horses while diluting his interest in First Choice Stallions Limited.

[22] Mr Frank Paterson agreed to act as an intermediary between the brothers in an attempt to achieve an amicable settlement. He wrote a series of letters which he copied to Mr Michael Graham. He wrote to Mr Steven Gillespie on 15 August 2000 setting out the terms which Mr Graham Gillespie and the other two brothers were prepared to offer. He stated

"Further to our recent discussions in connection with your proposal to withdraw from the family's business interests, I have, as you know, met with the other directors to discuss in detail your request. From previous discussions, Graham and your other brothers are aware of your desired outcome in terms of asset and liability split.

Having discussed the subject in detail it was agreed that it would be generally beneficial if agreement could be obtained on the framework of a possible solution. I therefore take the opportunity to record the views of your other brothers many of which concur with how you would like an exit package structured. The obvious lack of available cash does not make an allocation of assets any easier.

Your brothers' proposals are as follows:-

1. Graham, Gary and Alan will relinquish their interest in Eastercroft House Limited in favour of yourself.

2. In exchange for the above, you will relinquish your interest in First Choice Stallions Limited.

3. Yourself and your brothers will agree a suitable allocation of the other horses owned by the Gillespie brothers.

4. The Flat in Spain will be sold and you will receive 25% thereof.

5. You will receive your share of Rangers shares.

6. Your share of any royalties arising from Bogley will be paid separately to yourself, as will your interest in Ballochney Farm when realised.

7. You will receive £25,000 in respect of your interest in Shangri-la.

8. You will be required to resign as a director from the trading companies, including G M Mining. Your brothers will tender their resignations in respect of Eastercroft House Limited."

The letter also set out proposals in relation to Mr Steven Gillespie's salary from Mineral Resource Handling Limited ("MRH") and the transfer of certain Celtic shares. It continued with the following important statement:

"Your interest in all the other business assets currently owned by the Gillespie brothers will be maintained at the same 25% rate. At the point such assets are realised you will receive your due share on exactly the same basis as enjoyed by your brothers."

Mr Paterson concluded the letter with a request that Mr Steven Gillespie inform him whether he could agree the framework so that he could meet the other brothers to iron out the details.

[23] On 19 August 2000 Mr Paterson wrote to Mr Graham Gillespie to respond with his views on those proposals. He recorded that Mr Steven Gillespie agreed items 1-4 and 8 and that he was looking for a full share of the value of Shangri-la. In relation to item 6 he stated:

"Agreed. For the avoidance of doubt, this will also include Easter Balbeggie royalties and land sales."

After commenting on the MRH issue and the Celtic shares, Mr Paterson recorded Mr Steven Gillespie's agreement to maintaining a 25% stake in the other interests as follows:

"All Other Interests

Agreed."

[24] On 29 August Mr Paterson wrote to Mr Steven Gillespie enclosing the letter which he had written to Mr Graham Gillespie and recording the brothers' response. The material entry in that response related to item 6 and stated:

"Point 6 Always understood to be the case. Amounts payable will of course be net of legitimate expenses."

Mr Michael Graham wrote to Mr Steven Gillespie on 4 September 2000 to inform him that Mr Paterson had reported that negotiations were going well and that he hoped that his assistant could prepare a composite agreement while he was on holiday.

[25] Mr Graham, Mr Paterson and Mr Steven Gillespie met on 29 September 2000 to discuss the terms of such an agreement. Mr Graham recorded their discussions in a manuscript note. So far as material to these cases the note recorded the following in relation to royalties on commercial sites:

"Royalties on commercial sites

Land not owned by the brothers

G M Mining are paying royalties to these offshore (Austrian) companies under licence agreements

Has been agreed that SG will receive 20% of income from these offshore companies

(May need to be a Memorandum of Understanding)"

[26] On 4 October 2000 Mr Graham Gillespie wrote directly to Mr Steven Gillespie to tell him that the deal was "off the table". Among other things he stated:

"The facts are as follows, you only have a 25% shareholding in family business and a lesser shareholding in joint venture companies and you do not have a controlling interest.

With that in mind the following has been agreed:-

(1) You will be removed as a director of the following companies:-

Eastercroft House Limited

G M Mining Limited

MRH Limited

First Choice Stallions Limited

New Brannock Limited ....

(2) You will retain your current interests in all existing business ventures and receive your full share of any dividends. ....

I have decided on this course of action because I am tired of all this nonsense and require to focus on more important business matters."

[27] Notwithstanding that letter, discussions continued among the professional advisers. On 9 October 2000 Mr Paterson faxed Mr Graham details of certain assets to assist in the preparation of the proposed written agreement. Among other things he stated:

"The shares in New Brannock Limited, which is a joint venture between the Gillespie brothers and David Murray, have not as yet been allocated to the respective shareholders. They are currently in the name of David Murray himself. I would suggest that we should simply refer to Stevie's shares as being a quarter of the amount allocated to the Gillespie brothers."

On 12 October 2000 Mr McIntyre of Golds sent Mr Steven Gillespie a first draft of the agreement and he met his solicitors on 19 October to discuss it. A manuscript note of that meeting records an understanding that GM Mining Limited were paying royalties to Laggan Investments Limited from Easter Balbeggie and that Mr Steven Gillespie claimed 20% of what Laggan received. It also recorded that Mr Steven Gillespie claimed 20% of profits from the sale or development of land at Ballochney Farm, noting that he was to get a share of the development "with the other three". Mr McIntyre stated in his oral evidence that he had understood that Ballochney Farm was to be split equally among the brothers and that he did not remember any discussion of a distinction between Ballochney West and Ballochney East.

[28] On 20 October 2000 Mr McIntyre of Golds wrote to Mr Paterson. He attached the second draft of the agreement and suggested that they could discuss it further with Mr Steven Gillespie at a forthcoming meeting. He continued:

"The most uncertain area is in relation to the farms and in view of the offshore element we may want to take this out of the Agreement altogether and have a separate side letter dealing with those."

Mr McIntyre also sent a letter on the same day to Mr Steven Gillespie with which he enclosed the second draft of the agreement. They met on 24 October 2000 and discussed the draft. On the following day Mr McIntyre wrote to Mr Paterson enclosing an updated draft of the agreement to allow him to discuss it with Mr Graham Gillespie. After a discussion of the Celtic and Rangers shares he made a telling comment:

"There are a number of other areas, particularly in relation to the minerals which become less clear, and therefore less enforceable, with every draft but given the nature of things this may be something we have to live with."

[29] On 8 November 2000 Mr Paterson faxed Mr McIntyre suggested amendments of the draft agreement and on the following day Mr McIntyre sent Mr Steven Gillespie revised agreements, having split the agreement into two, and emailed the drafts to Mr Paterson to allow him to discuss them with Mr Steven Gillespie.

[29] Some time thereafter, the three brothers instructed Mr Frank Cannon of Cannons, solicitors to act for them. He wrote to Mr Graham of Golds on 23 November 2000 intimating that he had been so instructed and sending copies of the two agreements which he had revised on the brothers' instructions. He stated that the brothers wished the agreements to be signed as soon as possible and invited a prompt approval of his revisals so that copies could be made for signature. In his oral evidence Mr Cannon stated that he had obtained detailed instructions and had revised the agreements in the light of those instructions. Mr Mcintyre sent the revised agreements to Mr Steven Gillespie and separately to Mr Paterson on 27 November, and commented to both that the great majority of the revisals did not alter the terms of the agreement but were designed to make the wording more explicit and precise. Mr McIntyre replied by letter dated 5 December 2000 in which he accepted Mr Cannon's revisals and suggested that a plan of the development at Ballochney Farm which Mr Steven Gillespie had passed to them be annexed to the second agreement. I discuss the evidence in relation to the provenance of that plan in more detail in my opinion in the Ballochney East action (CA 126/08) at paragraphs [21] and [22]. With that letter Golds enclosed revised versions of the two agreements.

[30] Golds' file also contained various drafts of the agreements. The latest, which I infer from their terms are the drafts after Mr Cannon's revisals and Mr McIntyre's response had been added, were indexed at the bottom of each document as "GillespieAgt 1 Rev.doc" and "GillespieAgt 2 Rev.doc" respectively. The first narrated as follows:

"Whereas

1. The parties are directors of and the shareholders in the Companies (as hereinafter defined) in the proportions set out in the Schedule;

2. The parties as partners have joint interests in certain other assets;

3. The parties have agreed terms for the partial division of such assets among them and wish to record such terms in this Agreement;".

The definition of the "the Companies" included New Brannock Limited, in which, as the Schedule revealed, each brother had a share which was "25% of Gillespie holding", and "the Partnership" was defined as "the partnership of Gillespie Brothers carried on by Steven, Graham, Gary and Alan." After setting out the transfers of shares in Eastercroft House Limited and First Choice Stallions Limited, the disposal of the house in Majorca and the late Mrs Gillespie's house, "Shangri-la", the transfer of Rangers shares and dealing with resignations as directors and future employment, the draft continued:

"8. Other Assets

8.1 The interest and assets of the parties in the Companies and the partnership and any other property and assets owned by the parties jointly or in common not specifically agreed to be divided or otherwise dealt with in terms of this Agreement shall be retained by the parties in their present proportions."

On the front of this draft Mr McIntyre wrote in manuscript the words "slightly more legit".

[31] This contrasted with the second draft agreement whose cover page bore, in the same handwriting, the words "Slightly less legit". Mr McIntyre did not recall clearly why he had made the distinction but suggested that it was because he had thought that Mr Steven Gillespie had stronger claims under the first draft agreement or that it was more readily enforceable.

[32] The second draft agreement narrated that the parties had joint interests in certain assets and that they had agreed terms for the partial division of such assets among them and to record such terms in this agreement. The definition clause contained the following definitions:

" 'Ballochney Farm' Ballochney Farm, Learigg Road, Plains, by

Airdrie ....

'Easter Balbeggie Farm' Easter Balbeggie Farm, Thornton Road, Thornton ...

'the Partnership' the partnership at will of Gillespie Brothers carried on by Steven, Graham, Gary and Alan"

The draft agreement allocated the horses between Steven and the three brothers and arranged for the selection by the brothers of paintings which had belonged to their parents. Clause 4 was in the following terms

"4. The Farms

4.1 Graham, Gary and Alan shall procure that Steven receives a share equal to those individually received by Graham, Gary and Alan from mineral extraction at Bogleys Farm.

4.2 Graham, Gary and Alan shall procure that Steven receives a share equal to those individually received by Graham, Gary and Alan of profits from mineral extraction and/or the sale or development of land at Easter Balbeggie Farm.

4.3 Graham, Gary and Alan shall procure that Steven receives a share equal to those individually received by Graham, Gary and Alan of profits from the sale or development of the "brownfield" site at Ballochney Farm shown cross-hatched and shaded brown on the plan annexed and signed as relative hereto."

The plan, which was prepared in accordance with clause 4.3, showed the Ballochney West site.

[33] While it appeared that agreement had been reached at about 5 December 2000 and the solicitors expected the agreements to be signed shortly thereafter, they were not signed. Sometime in early December 2000 there was a confrontation between Mr Steven Gillespie and Mr Alan Gillespie in a public house in Bothwell. Following that, Mr Cannon wrote to Golds on 13 December stating that because of "the nasty incident which occurred last week" the proposed deal no longer found favour with his clients.

[34] Notwithstanding that and the failure of the parties to execute the agreements, several of the important provisions of the agreements were implemented, including the transfers of shares in Eastercroft House Limited and First Choice Stallions Limited, the division of the sale proceeds on the Majorca property and payment in respect of Shangri-la and the allocation of the horses.

[35] In my view, having regard to the unreliable nature of the recollection of the two brothers who gave evidence in the proof, these documents, which show the parties' negotiations and the draft agreements which the professionals advising them had finalised, cast a clear light on the parties' understanding in 2000. They provide the best evidence of what the four brothers then understood their respective rights to be. That in turn assists me to reach a view on what was agreed in 1995. In this context I accept Mr Steven Gillespie's evidence that it was never suggested in the negotiations that he was not entitled to his proportionate share in the sites which are in dispute. But it is also telling that in relation to some of the disputed sites there appears to have been uncertainty among the brothers as to what precisely their rights were. See Mr McIntyre's comment recorded in paragraph [28] above and to his manuscript comments on the cover pages of the draft agreements. This is significant particularly when I turn to consider the sites in which Mr Thomas Gillespie acquired an interest through companies within his control, namely Ballochney West and Easter Balbeggie.

(c) Mr Graham Gillespie's letter to Mr Gary Gillespie 2006

[36] A further insight into Mr Graham Gillespie's understanding can be obtained from considering the letter which he dictated and sent to Mr Gary Gillespie on 22 March 2006 after they had had a serious row. The letter is not so close in time as the negotiations in 2000 to the events in the mid 1990s with which the four actions are concerned. But it is an indicator of Mr Graham Gillespie's view of the nature of the family's business arrangements which predates the disputes that have resulted in the multiplicity of actions with which this court has been concerned.

[37] The letter contained references to various properties. Counsel agreed that the references to "Torrance Park" were to the New Brannock site and the references to "Thornton" were to the site at Easter Balbeggie. In the letter Mr Graham Gillespie referred to the insolvency of JWS and continued:

"From this point I have created GM, Drumshangie, Kingdom Park, Torrance Park and Thornton. ... All the businesses that have been set up since JW Soils could have been held 100% by me, however I had a feeling of responsibility and gave shares to my family, not through birth right but through my choice. I know of no other person who would have done this, in fact people that know the true situation always ask me why.

...

We are no longer a trading business and generating a monthly income. This means that we have to look at our personal contribution to the business. With this in mind coupled with the closure of GM Mining, I feel the time has come for us to dispose of all our assets that we are jointly involved in. These being:

Ingram House

Telfer House

Kirkton Park

The Beeches

Largs

....

With regard to the GM situation, Cammy will be kept on by GM to run the future development opportunities with support from me and PPG. The other land holdings on this side of the business being Torrance Park, Drumshangie and Kingdom Park, after the bank being repaid my share will be paid out to me and I will split the proceeds with the family.

The site at Wattston will be split as per our previous discussions. Thornton will be driven forward by Scott and Alex with assistance from Cammy, and you will receive your share from any future profit.

In summary the key factor is to sell all our current assets as quickly as possible, to generate cash income for everyone to do with as they please, but remember there will be no monthly salary. All future land assets as highlighted above may take longer to evolve but you will receive your share as and when this happens, and after the bank debt has been repaid. ..."

[38] I recognise that Mr Graham Gillespie addressed this letter to his brother, Gary, and that it was written several years after the separation of Eastercroft House Limited from the other family businesses to enable Mr Steven Gillespie to operate the nursing home business on his own. It nevertheless suggests that Mr Graham Gillespie at the time thought that he had agreed that the listed assets were ones in which his brothers had an interest, at least in relation to residual profits after the repayment of bank loans. As the transfer or acquisition of the assets, which are the subject of the four actions, took place in the mid 1990s and predated the fight between Mr Graham Gillespie and Mr Steven Gillespie in 2000, the references in the letter to giving shares to the family would have included Mr Steven Gillespie among the beneficiaries at that time.

[39] Mr Graham Gillespie's expression of his views in this letter is consistent with his evidence that he had carried his brothers in the family business and that he created the business opportunities for them. But it is not consistent with his assertion in evidence that in relation to the disputed sites he had not exercised a discretion to give them a share. When taken with the documentary evidence of the negotiations in 2000, it supports the conclusion that the four brothers believed in 2000 and thereafter that each had an equal interest in at least three of the sites. Whether that understanding was correct in relation to the sites in which their cousin, Thomas Gillespie, took an interest is another matter. There are also special considerations in relation to the Ballochney East site which I discuss in my opinion in the action relating to that site. I turn then to the Ballochney West transaction.

The acquisition and subsequent disposal of Ballochney West

[40] Missives for the sale of Ballochney West by JWS to Piula were entered into on 8 and 10 August 1995 and by disposition dated 10 November 1995 JWS conveyed the subjects to Piula for a price stated to be £300,000. The date of entry in the disposition was 8 November 2000. On 10 and 13 November 1995 JWS entered into a licence agreement with Piula which allowed JWS to mine the site and provided for the payment by JWS of royalties. Thereafter, JWS extracted coal from the subjects between 1996 and 1998 under an opencast operating licence which the Coal Authority granted on 18 July 1996. But it appears that JWS did not pay Piula the stipulated royalties. JWS then restored the site in a way which prepared it for its envisaged residential development.

[41] By disposition dated 27 March 2003 and registered on 24 November 2003 Piula conveyed the subjects to Toondale Limited and was paid £2.2 million therefor. The date of entry specified in the disposition was 17 April 2003. Mr Graham Gillespie organised the sale to Toondale Limited which was owned by a friend of his. Mr Thomas Gillespie arranged for Piula to pay Mr Graham Gillespie an introduction fee for doing so in July 2003 when £43,999 (about 2% of the purchase price) was transferred into his private bank account.

[42] On 23 September 2003 Piula instructed UBS AG to transfer £220,000 to the client account of Keegan Walker, solicitors with Clydesdale Bank plc for the benefit of Mr Steven Gillespie. On 26 September £219,996 was paid into Keegan Walker's client account. In accordance with the requirements of Swiss law, the instruction had to give a "Zahlungsgrund" (reason for the payment) and it stated the reason as "Property Steve Gillespie". As I shall discuss below, Mr Steven Gillespie saw this as a payment of his share in the proceeds of sale of the Ballochney West site.

[43] The terms upon which Piula acquired title to the Ballochney West site and the reason why Mr Thomas Gillespie instructed the transfer by Piula of £220,000 to Mr Steven Gillespie are disputed. Before addressing these matters and the transaction in more detail, I should comment first on the credibility and reliability of the other family member who gave evidence, Mr Thomas Gillespie. His evidence is directly relevant to this action and also the action concerning Easter Balbeggie (CA 94/08).

Comments on Mr Thomas Gillespie's evidence
[44] Mr Thomas Gillespie is a fifty nine year old businessman and investment banker. He grew up and studied in Vienna. In the mid-1990s he was general manager of the trade finance division of the Bank Austria Creditanstalt AG ("Bank Austrie") and managing director of LB International Trade Services Limited ("LBITS"), which was a subsidiary of that bank. In September 1997 he left the bank's employment to set up his own business, Gillespie & Partners GmbH, as a management consultant and project manager in Vienna where he continues to reside. He is clearly an experienced banker and businessman who had at the relevant times been involved in financing deals which were much larger than the transactions with which these actions are concerned.

[45] Mr Ferguson QC, counsel for Mr Steven Gillespie, mounted a forceful attack on Mr Thomas Gillespie's credibility and reliability in relation to specific parts of his evidence. It is not necessary for me to discuss those challenges in detail. There are parts of his evidence, such as his assertion that he did not know the planning status of the Ballochney West site at the time he purchased it through Piula, which I do not accept. Some of the unsatisfactory parts of his evidence can be explained by the passage of time giving rise to an incorrect recollection, and some by the very informal way in which his cousins carried on their business activities.

[46] In my view he is also open to criticism for the rather casual way in which he prepared or failed to prepare to give evidence. He was clearly irritated that he had been dragged into a dispute between his cousins. He produced no company documents relating to Piula, asserting that the company was under no legal obligation to keep financial accounts. Whether or not that is correct, he chose not to reveal any financial records in relation to that company. The annual financial accounts of Laggan Investments Limited, an Isle of Man company which he used as a vehicle to invest in the Easter Balbeggie site, appeared to have been prepared in a slipshod manner with clear inconsistencies in the recording of the company's financial position and activities between succeeding years. He did not recollect his role as a director of Macploy Limited, which was another Gillespie family company nor was he clear on the extent of the power of attorney which he had granted to Mr Ian Macdonald, an accountant who worked for the Gillespie brothers. In my view he could easily have made a greater effort to explain his position than he did. But that does not render his evidence incredible or, in relation to the fundamentals, unreliable.

[47] As I set out more fully below, I have formed the view that he entered into transactions with his cousins not at arm's length but in the context of a family business arrangement. He was willing to provide them with financial assistance with their business ventures at a time when their bankers were concerned at the levels of their borrowing but he sought to ensure that he would make a profit or at least would not expose himself to significant losses as a result. By obtaining title to Ballochney West in the name of Piula, he secured his investment of funds in its prospective development. He was an experienced businessman and I believe his evidence that he did not like partnership as a business vehicle. Critically, I also accept as both credible and reliable his evidence that he did not agree to enter into any partnership with his cousins in relation to the Ballochney West site or the Easter Balbeggie site. In the context of his cousins' financial difficulties at that time, it would have been most unwise of him to have exposed himself to joint and several liability for business activities in Scotland, which his cousins and not he controlled. I accept that he did not believe that he was entering into a partnership in relation to either site. It is nevertheless clear from the documentation, which I have discussed, that his cousins thought they had a right to share in some form in profits from the development of the sites. Whether as a matter of law Mr Thomas Gillespie did enter into a partnership with them depends on an objective assessment of his actions and those of his cousins. It is to those matters that I now turn.

The development of Ballochney West and Piula's largesse
[48] The Gillespie family controlled land at Ballochney farm and did not initially distinguish between different parts of that land. JWS carried out opencast coal mining on the Northern part of the farm ("Ballochney North") in the 1970s and restored that land. There were also coal deposits in the Southern part of that land, close to housing at Plains, Airdrie. The coal deposits lay beneath a substantial layer of peat which had to be moved to enable the exploitation of the deposits. An opportunity to provide continuity of work for JWS and also potentially profitable property development arose when the part of the site which has come to be called Ballochney West was zoned for housing in the local plan in about 1994.

[49] Mr Graham Gillespie pursued an application for outline planning permission for a housing development comprising three hundred houses on the Ballochney West site in the summer of 1995 at the same time as he negotiated the sale of the site to Piula. On 21 July 1995 Mr Keegan of Keegan Walker wrote to him informing him that a planning meeting was to be held on 10 August and that he expected that planning consent in principle would be granted. In that letter he made clear his understanding that the sale of the site was conditional upon the obtaining of the planning consent. On 4 August, D M Hall, chartered surveyors, wrote to Mr Graham Gillespie at "Gillespie Mining Limited" to give a valuation of the site. They advised that the open market value of the site on the assumption that it would be restored after the opencast mining works was £330,000. This was ten per cent more than the figure used in the missives of 8 and 10 August between JWS and Piula, to which I referred in paragraph [40] above.

[50] I was surprised at this valuation of a development site and doubted whether it was an accurate open market valuation. A note within PKF's audit papers for JWS in the year ended 30 June 1996 gave some support for my doubts. The note stated:

"41.78 acres of Ballochney Farm was sold to Piula Holdings Inc. - This area was used during the year as an open cast coal site, operated by J W Soils Suppliers Limited under lease from Piula Holding Inc.

Following consolidation the land will be sold by Piula to a UK property company as a residential development.

Given that the site currently has outline planning permission for the development, the land has been sold at a discounted rate to reflect the fact that Piula will be responsible for an element of the professional mining/geotechnical fees required to consolidate the site. In addition Piula will waive the leasing royalty."

It is possible that that referred to the ten per cent differential but I am not persuaded that that was all that was involved. In its valuation report mentioned above D M Hall observed that Ballochney West was a thirty three acre site, that smaller residential development sites in the area were changing hands for £60,000 per acre and upwards, and that, after restoration of the site and over time, smaller parts of the site could achieve prices at that level. In the circumstances I am satisfied that the price for the Ballochney West site was discounted and that it was not an arm's length transaction.

[51] Mr Thomas Gillespie said that JWS had liquidity problems and that Mr Graham Gillespie discussed with him whether he could assist. The figure, which they discussed, was an investment of £300,000 and Clydesdale Bank plc was willing to release the land from its floating charge for that sum. He did not investigate the value of the site but was satisfied that the price was appropriate because it had coal reserves and could be developed as it was close to Airdrie. He said he incorporated Piula to allow the exploitation of the minerals on the site and thereafter to sell it on. I accept this evidence subject to the qualification that I do not accept as reliable his assertion that, when entering into the missives, he was unaware of the grant or imminent grant of outline planning permission for the residential development of the site. The solicitors' correspondence which discussed the progress of the planning application in the context of the missives and the prompt advance of £750,000 by the Bank of Scotland to Piula shortly after the completion of the transaction suggest that Mr Thomas Gillespie's recollection is incorrect in this regard.

[52] The subsequent behaviour of Mr Thomas Gillespie supports the view that the transaction was not at arm's length but was of the nature of a family business arrangement. Piula acquired the site and shortly thereafter it borrowed a substantial sum from the Bank of Scotland. It granted a standard security in favour of the Bank dated 13 November 1995. It was not clear from the evidence whether Mr Thomas Gillespie was correct in his recollection that Piula provided the purchase price from funds which he had in Switzerland or whether the funds were obtained from the bank from the outset. But nothing turns on that. Whatever is the case, Piula obtained funds from the bank which were more than sufficient to cover its purchase of the site. It used its facility with the bank to lend £750,000 to Capewell Limited, which later became First Choice Stallions Limited, to enable it to purchase horses. At that time all four Gillespie brothers had an interest in Capewell Limited. Mr Thomas Gillespie explained that, over time, Piula's overdraft grew to about £1.68 million as it paid interest on its borrowings and funded various business ventures by Capewell Limited. It would be strange in my opinion for the bank to advance so much money to an overseas shell company on the security of a development site which had an open market value of about £330,000 in 1995.

[53] Mr Thomas Gillespie has never demanded repayment of these advances from First Choice Stallions Limited. His position in evidence was that he had written off the loans. He also gave evidence that he had arranged for Piula to advance the sum of £220,000 to Mr Steven Gillespie in September 2003, in the transaction to which I referred in paragraph [42] above, as a loan to assist him in acquiring a farmhouse at Buchlyvie. Again, he gave evidence that he had not demanded repayment of this sum from Mr Steven Gillespie, although Mr Graham Gillespie had encouraged him to do so. I accept that, nonetheless, Mr Steven Gillespie believed that he was entitled to a share in the profits of the sale of the site and his request for funds may have been made in that belief. I derive some support for that view from the evidence of Ms Carol Reid, a solicitor in Keegan Walker, who did not recall the precise words which Mr Steven Gillespie had used about the transfer of £220,000 in September 2003 but stated that her understanding at the time had been that it was a payment of his share from Piula. But I do not accept Mr Steven Gillespie's evidence that he had been told that the purchase price of the site was £1.1 million and that the £220,000 was his one-fifth share. No explanation was given as to why he should have been paid twenty per cent of the stated gross sale price rather than that proportion of the profits after reimbursement of Piula's expenses. I am satisfied that his evidence on the purchase price of £1.1 million is his rationalisation of the payment of £220,000 and is an unreliable recollection.

[54] There is, however, further support for Mr Steven Gillespie's belief of an entitlement to a share in the profits of the site in a letter which Mr Frank Paterson wrote to him on 6 April 2001 in which he recorded a discussion which he had had with Mr Graham Gillespie on an agreement between the brothers. Among the matters discussed was Ballochney Farm and Mr Paterson recorded that

"A deal seems to be in the making and it may be that this will generate funds with Thomas."

Mr Paterson was not able to recall accurately what he had meant in stating this. It seems to me to support the view that both Mr Steven Gillespie and Mr Graham Gillespie believed that the brothers would gain from their cousin's disposal of the site. But the letter by itself does not suggest the way in which that benefit might come about. In the event they did gain by Mr Thomas Gillespie's decisions to write off Piula's loans.

Other matters: third party understandings

[55] One of the documents on which Mr Ferguson founded in support of his contention that the parties had entered into partnerships in relation to the four contested sites was a document entitled "Gillespie Investments Portfolio" which one of the brothers had prepared or instructed to be prepared in either late 2005 or early 2006. No evidence was led as to the purpose of the document but it must have been a presentation to prospective lenders of the land assets and projects of the Gillespie family. Mr Nigel Walker, a manager with the Bank of Scotland, spoke of receiving the document from "Gillespie Investments" some time before March 2006. The document listed among the assets or projects both Easter Balbeggie and Ballochney (excluding Ballochney West which by then had been sold to Toondale Limited). The former was incorrectly stated as being held by Piula and the latter was stated as held by Mr Graham Gillespie.

[56] I am not able to derive much assistance from the document in this case or in relation to the Easter Balbeggie case. The document included assets such as "The Beeches", Langside Drive, Glasgow and Kirkton Park, Auchterarder, which were acquired after 2000 and in which it was common ground that Mr Steven Gillespie had no interest. It was incorrect in stating that Piula had an interest in Easter Balbeggie. It appears to me to be a not wholly accurate representation of a property portfolio in which one or more members of the Gillespie family had an interest. At most it might be a representation that there were wider family interests in the properties than that of the title holder but it did not disclose what those interests were. Nor do I know who compiled the document and thus made the representation.

[57] Mr Ferguson also led the evidence of several people who had business dealings with one or other of the Gillespie brothers. Generally, that evidence was to the effect that those people understood that the Gillespie brothers collectively had business interests in the land under discussion. Thus Mr Neil Watson, who farms Ford Farm, which borders on Ballochney East, spoke of discussions with Mr Gary Gillespie and Mr Graham Gillespie to acquire parts of his land and of his understanding that he was dealing with "the Gillespies". He also had dealings with Mr Scott Gillespie and Mr Cammy Duncan on behalf of a family concern which was spoken of as "the Gillespies". Mr James Mulholland, who is now employed by Eastercroft House Limited as a property manager, formerly worked as a site manager of various coal sites including Easter Balbeggie and Ballochney (both West and East) and New Brannock. He had the impression that the sites were owned equally by the four brothers, that they were to have a continuing involvement in the sites which were sold to Mr Thomas Gillespie, and that they all had an interest in the joint venture with Sir David Murray at New Brannock.

[58] Ms Anna Thomas, a director of Savills (L&P) Limited, spoke of receiving instructions from GIL to carry out a valuation of a house, stables and about 45 acres of land at Ballochney East in 2005. She had assumed that the land was owned by GIL or an associated individual. Mr John Evans, a chartered mineral surveyor with Minerals and Resource Management Limited, spoke of working with Mr Steven Gillespie on the opencast sites at Ballochney and Easter Balbeggie and his awareness of proposals to develop Ballochney West and Easter Balbeggie. He spoke of the way in which the two sites at Ballochney were mined. I discuss this in more detail in paragraph [5] of my opinion in the action involving Ballochney East site (CA 126/08). He knew that Mr Thomas Gillespie had some interest in the Ballochney West site and had heard of Piula and Laggan Investments Limited in relation to Easter Balbeggie but had no direct knowledge of the ownership of the sites.

[59] Mr John McDonald, an associate director of JMP Consultants Limited ("JMP"), spoke of having given advice on strategic planning and the local plan process to GSPL or GIL, "as part of the wider Gillespie Investments Group," in relation to the site at Easter Balbeggie in 2007. JMP advised on transportation issues in relation to a possible residential and business development on the site. His primary contact had been Mr Gary Gillespie but he had also spoken to Mr Scott Gillespie and Mr Cammy Duncan. He attended a presentation which Mr Gary Gillespie and a planning team, including JMP, made to local councillors and an assistant of Mr Gordon Brown MP about proposals to develop the site. He had no knowledge as to the ownership of the site but had assumed that it was within the control of "the Gillespie Investment Group." Mr Alan Seath, who had been a town planner with Fife Council until 2006, spoke of his involvement in discussions over the Easter Balbeggie site from the late 1990s and of a planning inquiry into the handling of permissions for coal extraction from the site at the time of JWS's insolvency. He left Fife Council in July 2006 to become a director of Lomond Group Limited and in that capacity was involved in discussions with "the Gillespies" in 2007 on a possible partnership to develop the site and in the presentation to local politicians. He had had contact with Mr Alan Gillespie and Mr Gary Gillespie but his principal contacts were with Mr Steven Gillespie and Mr Graham Gillespie. He could cast no light on the ownership of the site and had had no dealings with Mr Thomas Gillespie.

[60] In my opinion these witnesses can contribute little to the resolution of these disputes as their understanding of the persons with whom they were contracting was often based on the correspondence they received or on impressions which they formed. It is uncontested that the Gillespie brothers issued instructions to professionals using GIL letterheads or those of other family companies without regard to the precise economic interests which they were representing in particular transactions. I discussed this in more detail in my opinions in the actions by GIL against Mr Graham Gillespie and Mr Scott Gillespie. See CSOH 2010/113 and CSOH 2010/114. What the evidence of these witnesses shows however is the continued involvement of various members of the Gillespie family in furthering the potential development of both of the sites at Ballochney Farm and also the site at Easter Balbeggie. That, other things being equal, suggests that they believed that they stood to benefit in some way from bringing about those developments.

[61] I discuss the evidence of Mr Donald Wilson in my opinion in the action relating to the New Brannock site (CA 128/08). Suffice it to say here that the documents which he produced at the time were consistent with an understanding that the counterparty in the joint venture in New Brannock Limited was the Gillespie family rather than Mr Graham Gillespie alone.

The nature of the arrangement between Piula and the Gillespie brothers
(i) An offshore tax arrangement?

[62] Mr Steven Gillespie's case was that from the outset there had been a partnership between the four brothers and Mr Thomas Gillespie to acquire, develop and sell the site. He thought that there had been an oral agreement to that effect sometime in 1995. He gave evidence that the family wanted to have an offshore company for tax reasons and that Piula was incorporated to enable the profits from the development of the site to be sent offshore. He spoke of a meeting in London with a tax specialist, Mr Seymour Gorman, in August or September 1995. It was not clear what were the tax advantages which Mr Graham Gillespie and Mr Steven Gillespie sought and Mr Ferguson in his submissions was not able to cast any light on this matter. There was some contemporary documentary evidence on Keegan Walker's file to support the view that there were discussions of offshore arrangements which involved Piula. Thus on 3 August 1995 Mr Keegan wrote to Mr Graham Gillespie at JWS a letter under the title "Off Shore Arrangements with Piula Ltd" in the following terms:

"I had a long conversation with Mr Seymour Gorman in London who advises that the constitution of the Trust Deed for the purposes envisaged by you would under our tax laws at present possibly be unlawful. He has a number of other suggestions which he believes would not tend to contravene any of the tax laws and regulations of this country but which would at the same time protect your interests.

He suggests that towards the end of August we have a meeting in London for the purposes of discussing the contents of these documents. I think that it is imperative that this meeting be attended by representatives of the Gillespie Group.

Perhaps you could be in touch with Moira with a view to giving me some suitable dates."

[63] While there was thus evidence of the involvement of Mr Gorman in relation to certain tax planning, no evidence was led by either party as to the precise nature of the tax planning scheme. Mr Graham Gillespie gave evidence that Mr Steven Gillespie took the initiative to obtain the tax advice from Mr Gorman and thought that it related to a joint venture which the Gillespie family undertook with Russian partners to mine coal in Siberia. I think that that cannot be correct as Piula had no involvement in the Russian venture. Mr Graham Gillespie also gave evidence, which I accept, that Mr Thomas Gillespie never asked him to obtain tax advice in relation to Piula and there was no suggestion in other evidence that Mr Thomas Gillespie knew of the approach to Mr Seymour Gorman. It is likely therefore that the meeting related to an attempt by Mr Steven Gillespie to secure what he understood as his share in the intended Ballochney West development. But, in the absence of more definitive evidence, I cannot attach much weight to that impression.

[64] There was also conflicting evidence about a meeting in Vienna in the autumn of 1996 at which Mr Steven Gillespie, Mr Graham Gillespie and Mr Frank Paterson met Mr Thomas Gillespie. Mr Steven Gillespie stated that it concerned tax arrangements involving offshore companies to send offshore the profits from the exploitation of sites in Scotland. Mr Graham Gillespie, Mr Thomas Gillespie and Mr Frank Paterson gave evidence that the meeting in Vienna related to the Russian venture. I am inclined to accept the latter corroborated evidence as more accurate.

(ii) Another type of family arrangement

[65] The precise nature of the arrangement between the Gillespie brothers and Mr Thomas Gillespie is not clear, perhaps because the parties themselves never defined their relationship accurately and, as in their other business dealings, the Gillespie brothers did not keep records of their transactions. But I consider that the following seven points can be derived from the evidence.

[66] First, the decision to transfer the land at Ballochney West from the ownership of JWS occurred at a time when the company was unable to borrow further sums and when its future appeared to be in some jeopardy. The involvement of Mr Thomas Gillespie provided JWS with needed funds and allowed it to mine both sites at Ballochney Farm. It also enabled the Gillespie brothers and Mr Thomas Gillespie to benefit from the sale of Ballochney West for development after its restoration.

[67] Secondly, Mr Thomas Gillespie agreed to assist his cousins, with whom he was on good terms. The business deal was of the nature of a family arrangement. Mr Thomas Gillespie's subsequent acts showed that it was not an arm's length transaction. While his evidence was not in all respects satisfactory, as I have stated, there is no reliable evidence from any party that Mr Thomas Gillespie ever saw Piula as a joint venture company in which he and his four cousins had equal shares. He was an experienced banker and businessman and was careful not to enter into a partnership with his cousins. He took the property at a discounted value but intended some of the benefit from its development potential to be available to his cousins. That benefit materialised very shortly after Piula acquired the site when Piula advanced £750,000, which it had borrowed from the bank, to Capewell Limited. His interest-free loans to Capewell Limited, in which all four brothers had an interest at that time, and later to Mr Steven Gillespie personally and his willingness to write off the loans after the sale of the site to Toondale Limited are consistent with that intention. Piula made a profit of between £200,000 and £500,000 through the sale of the site to Toondale Limited, depending on whether it funded the purchase of the site from its overdraft, and his cousins also benefited by the writing off of the loans.

[68] Thirdly, I accept that Mr Steven Gillespie believed in the later 1990s and when he negotiated the draft agreement in 2000 that he had an equal share in the development profits from the site and of the site at Easter Balbeggie. His attempt to clarify the status of Laggan Investments Limited in the draft minute of agreement to which I referred in paragraphs [17] - [19] above and the discussions leading to the draft agreement in 2000 support his oral testimony on this matter.

[69] I attach considerable weight to the contemporary correspondence by Mr Frank Paterson and the lawyers' drafts of the agreements in 2000 which were prepared on the instructions of their respective clients and which were intended to implement the informal agreement which Mr Frank Paterson had brokered. Thus, fourthly, I conclude that Mr Steven Gillespie's brothers also thought at that time that they had an interest in the development of Ballochney West and Easter Balbeggie.

[70] But, fifthly, the draft agreements showed that there was uncertainty among the brothers as to the precise nature of their interest. Thus in the second draft agreement Mr Steven Gillespie was to receive, in relation to both Ballochney West and Easter Balbeggie, a share equal to those which his brothers individually received. What those shares were was not clarified. If it had been the understanding of the brothers that there was a partnership in existence with Mr Thomas Gillespie they could easily have said so in the draft agreement. The lawyer's manuscript comment on the draft that it was "slightly less legit" is consistent with a concern about the uncertainty of the nature of this claim of an interest in those sites as well as about the arrangements for payments for mineral extraction.

[71] Indeed, sixthly, if it had been the intention of the parties in 1995 that there was to be a joint venture or partnership in relation to the site, they gave no explanation as to why the shares in Piula had not been issued to each of the parties. Even if there had been a reason, such as a tax consideration, why the Gillespie brothers did not wish to be registered as shareholders in Piula, there is no explanation for the uncertainty which they, and their professional advisers, appear to have shared as to the nature of their interest, if any, in relation to the profits from the sale or development of Ballochney West and Easter Balbeggie when they negotiated the settlement agreements in 2000.

[72] Finally, I am satisfied that Mr Thomas Gillespie would not have wished in the circumstances to have entered into partnership which was being carried on in Scotland when he could assist his cousins and obtain profit himself from a looser form of business arrangement which limited his financial exposure. See paragraph [47] above.

[73] Accordingly, I conclude that Mr Steven Gillespie has not proved that there was an agreement between the parties in around 1995 that a partnership be established to acquire, develop and sell the site at Ballochney West.

Waiver

[74] I am satisfied that there is no substance in the defence of a contractual waiver which the defenders asserted for the first time in May 2011 shortly before the first tranche of the proof in this case. The essence of the defence was as follows: in mid 2002, on the initiative of Mr Graham Gillespie and his son, Scott, the brothers were discussing the possible venture of acquiring Ingram House in Glasgow as a family investment through GIL. Mr Graham Gillespie made it clear that he would only allow Mr Steven Gillespie to participate in the venture if (as he averred)

"he accepted that he had no right or interest in any other family business ventures in which the first defender [Mr Graham Gillespie] was involved. In the course of those discussions in or around July 2002 it was agreed orally among the four Gillespie brothers that the acquisition of Ingram House should proceed on that basis."

[75] Mr Graham Gillespie spoke of this agreement in his affidavit in very general terms. He stated:

"It was agreed between all four of us that is me, Alan, Gary and Steven that Steven would be given a 25% stake in Gillespie Investments Limited even though he was contributing nothing towards the cost of acquiring the property but this was on the understanding he would be given those shares in settlement of all outstanding claims he may have had following the break up of our relationship in July 2000. He agreed to that."

In his evidence in chief he was not confident about the date of the discussion which led to the alleged agreement but confirmed that all four brothers were present. On cross-examination he suggested that he had informed his legal team of the waiver at the outset of the action but could give no explanation why it was not raised in pre-litigation correspondence or in the defences or why it was pleaded only on the eve of the proof. Although Mr Gary Gillespie and Mr Alan Gillespie were said to have been present when this waiver was agreed, neither was called to give evidence.

[76] In the context of the long history of the many court actions which are in substance between Mr Steven Gillespie and Mr Graham Gillespie, this unexplained failure to plead the waiver until the eleventh hour and the failure to call witnesses who were said to have been parties to the agreement deprives the defence of any credibility. While Mr Gary Gillespie was unwell and could not give evidence, there was nothing to prevent Mr Alan Gillespie from giving evidence if he recalled the event. Mr Steven Gillespie robustly and angrily denied that there had been any such agreement. I accept his evidence in that regard. Accordingly the waiver defence fails in each of the four actions.

Conclusion

[77] I have concluded that Mr Steven Gillespie has not proved the existence of the partnership of which he has sought a declarator. I therefore repel the sixth and seventh pleas in law for the first and second defenders (waiver and personal bar) and the sixth plea in law for the third defender (waiver), repel the first, second and third pleas in law for the pursuer, sustain the fourth plea in law for each of the defenders and grant decree of absolvitor. I reserve all questions of expenses and will have the case put out by order to deal with those matters.