Scottish Court of Session Decisions

Pursuer: Thompson; Brodies LLP

Defender: Gill; Anderson Strathern LLP

11 April 2014

[1] The action before me seeks production and reduction of a will and confirmation following thereon and on an esto basis a pro tanto reduction. The defender has a general plea to the relevancy and also one against admitting certain averments to probation. Both parties are agreed that some form of proof will be required, on the averments relating to an alleged forged signature on the will. The first defender seeks to exclude article 5 and parts of article 6 all as more fully set out in the revised note of argument. In essence what he wants excluded is anything asserting that the testamentary grant to him is in breach of a prior obligation.

[2] Let me briefly summarise the closed record. It proceeds at the instance of the executor nominate of a deceased James Wheeldon ("James") against the executrix-nominate of the late Doris Spence ("Doris") and others. The second defender ("George") is the son of Doris.

[3] What has happened is this. There is a property Powfoot Hall. James resided there for 43 years till his death in 2007. He had a business relationship with Doris, and in fulfilment of certain informal agreements between them he conveyed the property to her in 1987. In 1994 James and Doris made a further informal written agreement. It contained the following clause.

"... As affairs between ... Doris ... and ... James ... are now agreed by both parties concerned and fully settled, and the title deeds to the Powfoot Hall are hereby returned to ... James .... who now assumes full legal title to Powfoot Hall on 20/12/1993 and becomes owner of said property ..."

[4] Doris died in 2003 without having conveyed back to James. By her will of 2002 she left the property to her son George. In the action, as I have said, the pursuer seeks production and reduction of the will and the confirmation that followed thereon. Founding on the above clause the pursuer avers that Doris was obliged to convey to James.

[5] I was referred to the following authorities viz Rodger (Builders) Ltd v Fawdry 1950 SC 483; Gibson & Hunter Home Designs 1976 SC 23; Paterson v Paterson (1893) 20 R 484; Jamieson v Jamieson 1952 SC (HL) 44. Reference was also made to DM Walker: Civil Remedies (1974); Stair Society Encyclopaedia vol 18; Gloag & Henderson, Law of Scotland (13^th edn); Succession (Scotland) Act 1964. In the debate the following other cases were referred to in passing: McLachlan v Seton's Trs 1937 SC 206; Gibson v Royal Bank 2009 SLT 444.

[6] The first defender lodged a note of argument (paragraph 7 was excluded) and a series of propositions (number 4 was not argued). In supplement of these Mr Gill argued in these terms. I should sustain the second plea for the first defender and repel the 5^th and 6^th pleas of the pursuer. The "esto" case was not relevantly averred and the words set out in paragraph 3 of the note of argument should be excluded from probation. Aliunde he accepted there should be a proof before answer. Having introduced the parties he took me to the record which I refer to elsewhere.

[7] Counsel then referred me to his propositions. He argued that no real right was conferred in 1994 (Gibson was cited) only a personal right. Secondly, he referred to Rodger (pages 498/501) for the proposition that in the present case there was only a pre-existing personal right. Thirdly, there was no authority for the "offside rule" to be applied to a bequest. Rodger should not be extended to the facts of this case. The beneficiary in a will should not be equated to a subsequent buyer. He merely took his bequest in a passive way and was not trying "to score a goal". Fifthly, even if Rodger did apply there were no relevant averments of bad faith. It would be necessary to aver knowledge and none was present. The bequest was gratuitous and that did not amount to knowledge. Every bequest was gratuitous. The 1994 obligation was not "not to make a will leaving the home to her son".

[8] In his reply speech he added under reference to Paterson that there the previous settlement was irrevocable.

[9] Counsel for the pursuer invited me to refuse the motion and to allow before answer a proof. He made a minor corrective amendment to article 5 of the condescendence. As a matter of relevancy it could not be said that the pursuer was "bound to fail" (Jamieson) what was important was to consider the meaning of "gratuitous", against the background of "knowledge". Doris had undertaken a prior obligation to make a grant to James. Counsel referred me to Paterson, Walker at page 150 and Stair vol 18, para 690/95. Gloag & Henderson 39.10 Here there was a prior obligation. Reference was also made to Gibson v Royal Bank and McLachlan the latter case said not be in point.

[10] I now want to look at the cases cited and other authorities.

[11] In Gibson the first party (Gibson) by missives bought land and a home in Dunfermline from the second party a company (Hunter etc). He paid a deposit, then the balance and took entry. Before the disposition and the security holder's consent could be delivered a liquidator to Hunter was appointed. The issue was whether property had passed to Gibson. In answering the special case the First Division held that the property remained with the company. The buyer only had a jus crediti. Payment and entry did not instruct a trust.

[12] Next is Rodger v Fawdry. Fawdry agreed to sell an estate to Rodger. The buyer failed to pay the balance of the price at entry. Two weeks later the seller's agent gave the buyer three more days of grace. The seller got in touch with one, Bell, and when the price was not paid sold to him the title being taken by his wife. Bell knew the estate had been sold to Rodger but accepted Fawdry's statement that the contract was at an end. After proof the Lord Ordinary granted reduction of the second sale. The First Division adhered holding that the second buyer had failed to make sufficient inquiry into the nature and result of the first contract and was not a bona fide purchaser. They also agreed with the Lord Ordinary's view that the failure to pay by a stipulated date was not a ground for rescission.

[13] A closer look at the evidence shows a mix up, a misunderstanding between solicitors and a letter delayed in the post for ten days. The solicitors did not disclose the second sale. The description about the visit to the property, the reaction of the grieve, the reuse of the original missives (490) and what happened later in the solicitors office in Selkirk on 28 November 1947 (491 and see in the Inner House 499) make it very clear why there was mala fides and the "offside goal" rule applied. Bell was clearly in bad faith. Fawdry was not and it seems to me he was poorly advised. He lived in London and I suspect panicked into reselling because of the agricultural nature of part of the estate. The case of Paterson was not cited either to Lord Sorn or to the Division.

[14] Professor Reid's article in the encyclopaedia deals with transfer of ownership. Normally a granter's power is unimpaired by personal obligations (para 689) but under reference to Rodger where the grantee was in bad faith the power of the granter remained affected by his prior personal obligation. The author deals with what the Lord Justice-Clerk described as the offside goal rule (called by the writer an "arresting metaphor"). The author also writes that the same rule applies if the grant was made without consideration. This is developed in para 695 and 699. The rule does not just apply to double sales but according to the writer to a failure to take for value. The example of pure donation is referred to.

[15] Walker: Civil Remedies p150 is to the same effect as is Gloag & Henderson 39.10. The case of Paterson is cited and I refer to this elsewhere.

[16] Having looked at McLachlan v Seton's Trs I do not think it is in point since it deals with cumulative or substitutional legacies. Gibson v Royal Bank of Scotland also is not precisely in point. It is, however, a decision by a strong judge and I cannot let it pass without noticing some of his comments with which I agree. Having analysed the position in double grant cases (para 43), he held there was no difficulty in applying the "bad faith" exception. The bank knew of the option to purchase yet took its security just before the date of entry. Lord Emslie would well understand how the "offside rule" would apply (as would have his father before him). I agree with him when he commented that it is very difficult to devise a universal rule.

[17] Let me finally look at Paterson. One John Paterson lent money to his father in his lifetime in connection with property in Linlithgow. His mother, then a widow, made an agreement binding herself to execute a trust disposition and settlement entitling her son John to her whole property, he undertaking certain other obligations at the same time. The mother duly executed the settlement and John performed his obligations. Two years later the mother died having revoked the former deed and leaving the property to her three sons. John sought reduction of the latter deed. The Lord Ordinary (Kincairney) granted reduction.

[18] He attached no significance to the declaration that the prior settlement was irrevocable as a mortis causa deed is always revocable. The agreement, however, he held was irrevocable stating:

"... I must hold that the deed is what it purports to be, a bilateral agreement, and as such a delivered deed, or, as binding without delivery, equivalent to a delivered deed. I see no reason why it should not be held to be, as it purports to be, irrevocable ..." (486).

He regarded the matter as beyond doubt referring to Stair and Erskine and earlier cases. He went on to find that it was of some importance that John had advanced money on the properties more than their worth and concluded:

"... (487) it is of no importance in this question whether a deed is binding or is revocable to consider whether the deed is gratuitous or onerous. The one is just as irrevocable as the other if meant to be so, and containing nothing to the contrary ...".

[19] The Division adhered. To the judges it was clear that the agreement was onerous (£800 in these days was a fortune!). The mother treated her son as her creditor and he was content to let the bond lie during her lifetime and take no interest. Having given value his mother was bound to honour the counter obligation, even though this could only be done after her death.

[20] In my view the case of Paterson is decisive of the point before me. The case is binding on me and I consider the remarks of the judges as conclusive. In my view Doris in her lifetime bound herself to leave the heritage to James and the fact that the son George may have taken it in good faith is nothing to the point. I am confirmed in that view by the three academic writers which I have already referred to. Rodger is, of course, also binding, but in my opinion falls to be distinguished and for this reason. The case really dealt with bad faith and a second sale. That is not this case. It also had the benefit of a proof. Much was made of the "offside goal rule" in the very good natured debate before me where metaphors were freely mixed and, I suspect, both counsel knew more of soccer than I.

[21] If I can continue in the same vein, I think the "offside goal rule" was intended to strike at bad faith; the player knowing he is out of position yet trying to secure a benefit from the offside place on the field of play. This is what Rodger is about. It does not deal with the player who takes an advantage gratuitously and who may not be offside. The problem is that the player (Doris) who passes the ball to him (George) has broken the rules and the pass is invalid.

[22] Whether Lord Kincairney in 1893 was an aficionado of the beautiful game I know not. Even by then the game had rules. It was not called offside in those days but since the rules of football were formulated by the gentleman players of the English public schools in 1863 there was a prohibition against playing the ball if you were "out of play" (Rule 6) (See Melvyn Bragg: "Twelve books that changed the world" p102).

[23] In my opinion this case does not depend on the doctrine in Rodger but on the principles set out in Paterson, dealing as it does with succession and not property and titles.

[24] The pursuer's counsel did not seriously suggest that George was in bad faith. The averments about it are sparse and nowhere approach was happened in Rodger. I do not think there is any issue here of bad faith in the sense of moral turpitude, and on that I agree with Mr Gill. The proper point is that the taking was gratuitous. I think it would complicate any proof to leave in the issue of bad faith, and so I do not propose to admit to probation the words "....in bad faith and...." on line 10 of article 5 of the condescendence. To that limited extent, I will in part sustain the defender's second plea-in-law and quoad ultra before answer send the whole record for proof. I will reserve expenses meantime.