Scottish Court of Session Decisions

OUTER HOUSE, COURT OF SESSION

[2016] CSOH 31

 

CA71/15

OPINION OF LORD TYRE

In the cause

LESLIE SCOTT DALGARNO AND OTHERS

Pursuers;

against

ANGUS MACINTOSH SINCLAIR

Defender:

Pursuers:  Gillies (Solicitor Advocate); Pinsent Masons LLP

Defender:  Logan; Balfour + Manson LLP

 

18 February 2016

Introduction
[1]        The four pursuers, the defender and others are members of the System International Syndicate, formed in 2006 to purchase a building (“the Property”) in a technology park at Hamilton.  The principal purpose of acquiring the Property was to enable the syndicate members to obtain the personal tax benefits of the capital allowances available in respect of expenditure on a commercial building in an enterprise zone.  It was acquired by the members of the syndicate for a price in excess of £20,550,000 with the assistance of a secured loan of £15,830,000 from the Dunfermline Building Society (“DBS”). 

[2]        In the present action the pursuers sue in the capacity of trustees appointed by the members of the syndicate in terms of a Deed of Agreement and Trust dated 8 December 2006.  They seek payment from the defender of sums said to be due by him in pursuance of three “cash calls” and amounting in total to £204,998.  The defender contends that the pursuers have no authority to sue a fellow syndicate member, and that in any event he is under no obligation to make payment of the sums claimed from him.  The action came before me for debate, in the course of which both parties submitted that I should grant decree in their favour.

 

Power of Attorney granted by the defender

[3]        On 7 November 2006, the defender executed a document entitled “Limited Power of Attorney” which provided inter alia as follows:

“I, ANGUS MACINTOSH SINCLAIR, residing at [address] (the “Principal”) HEREBY APPOINT AND AUTHORISE Tim Hegarty of [address] Norman Smith of [address] to be my Attorney (my “Attorney”) or either of them acting alone, to the effect aftermentioned with full power to act for me in my name or in his name as my Attorney and I confer on my Attorney the following powers which are to be given the fullest and widest interpretations, viz:-

 

(1)        to enter into and make such amendments to the deed of agreement (the “Deed of Agreement”) to be entered into among the members of The System International Syndicate (the “Syndicate”) intending to acquire an investment property comprising an office pavilion at Hamilton International Park, Hamilton (the “Property”), provided that the costs of the Property exclusive of Value Added Tax shall not exceed approximately £20,739,000 and provided that such amendments are as reasonably judged by my Attorney, in his professional capacity and acting [in] accordance with his professional duties, to be in my best interests;  …”

 

The document went on to confer specific powers on the Attorney:

• to complete the Development Agreement to be made between a developer (Hamilton Park Developments (Plot 7C) Limited) and the members of the syndicate to procure the development of the Property and its acquisition by the syndicate;
• to join with other syndicate members in arrangements to obtain a secured loan to finance the acquisition;
• to grant leases of the Property to the developer or to other tenants;
• to execute any document required to give effect to a direction of the members of the syndicate in accordance with the Deed of Agreement; and
• generally to sign any document or do anything which the Attorney should consider necessary or expedient for carrying out the authorised purposes or acts.

The defender undertook to ratify all acts lawfully done by the Attorney and to keep the Attorney indemnified against all liabilities and expenses incurred.  The authority conferred by the deed was declared to be irrevocable for a period of 48 months from the date of execution and delivery, and the deed was to be governed by and construed in accordance with Scots law.  It appears that each of the members of the syndicate executed a Power of Attorney in the same terms in favour of the same Attorney.

 

The Deed of Agreement and Trust
[4]        On 8 December 2006, Mr Tim Hegarty, in the capacity of Attorney for all of the syndicate members, executed a document called a Deed of Agreement and Trust by and between the syndicate members (referred to therein as “the Purchasers”) whose names were set out in a schedule to the deed.  The names in the schedule include those of the four pursuers and the defender.  The deed began with the following recitals:

“WHEREAS:-

(1)        It is intended that by Agreements (“the Agreements”) made or to be made between the Purchasers (1) [sic] Hamilton Park Developments (Plot 7C) Limited (“the Vendors”) (2) in consideration of the total sum of £20,552,169 (exclusive of value added tax) to be paid by the Purchasers to the Vendors in manner and at the time to be set out in the Agreements (“the Consideration”) the Vendors will procure the sale to the Purchasers of the property comprising Building 3 (Plot 7C) Hamilton International Technology Park, Hamilton (“the Property”) with the benefit of a cash backed non-occupational licence.

 

(2)        The Purchasers are fully appraised of the terms and provisions of the Agreements.

 

(3)        It is proposed that £15,830,000 by term loan be lent to the Purchasers by the Dunfermline Building Society (“the Bank”) pursuant to the provisions of a Loan Agreement or Loan Agreements dated on or around the date hereof made between the Bank (1) and the Purchasers (2) to be applied to the Consideration and the Value Added Tax to be incurred on the purchase and provide the Purchasers generally with banking facilities … and that in consideration of the Loan the Purchasers procure the charge of the Property in favour of the Bank by way of first standard security, assignation of rents and other deeds and documents as ancillary thereto to secure the repayment of the Loan and interest thereon …”

 

[5]        The deed then continued:

“NOW THIS DEED made for giving effect to and regulating the respective beneficial interests rights and liabilities of the parties hereto in to and in respect of the money to be contributed by them for the purposes of the acquisition of the Property WITNESSETH as follows:-

 

1.         The Purchasers hereby appoint as trustees those of their number whose names are set out in Part Two of the Schedule hereto (“the Trustees”) and the Trustees each accept appointment as such.

 

2.         The Purchasers shall contribute to the balance of the Consideration the sums set out against the name of each of the Purchasers in the column headed ‘cash call’ in Part One of the Schedule and forthwith upon the execution hereof shall pay such sum to the Trustees.

 

3.         The Trustees shall hold the moneys paid to them pursuant hereto and upon the trusts hereinafter declared as they hereby admit.

 

4.         Upon the Agreement being completed the Purchasers will purchase the Vendor’s interest in the Property from the Vendor with each of the Purchasers holding a pro indiviso share in accordance with the percentage figure set out against the name of each of the Purchasers in the column headed ‘% participation’ in Part One of the Schedule.

 

5.         Subject to each of the Purchasers duly complying with the covenant on his part in Clause 8(1) of this Deed and particularly paragraph (a) and (b) thereof the Trustees shall hold the sums received by them pursuant to clause 3 of this Deed on trust that they will apply the same in terms of this deed.

 

Clause 6 provided for the net proceeds of sale of the Property to be applied in the first instance towards repayment of the secured loan.  Clause 7 then provided for division of the residue of the net proceeds of sale among the Purchasers in the proportions set out in Part One of the Schedule.

[6]        In terms of clause 8(1)(a) and (b), each of the syndicate members “covenanted” with the others and the trustees that he would make the payment required under clause 2 above, and join the standard security and any other charge created by the Purchasers pursuant to clause 10 of the deed.  Clause 8(1)(d) obliged each member to contribute his due proportion of

“(i)       all rent rates taxes premiums of insurance and other outgoings and expenses payable in respect of the Property and the management and maintenance thereof and

 

(ii)        all costs charges and expenses of or incidental to the grant of any lease of the Property and the negotiations and completion of the Mortgage and this deed already incurred and of all costs charges and expenses which may hereafter be incurred by the Trustees and the Purchasers in relation to the same or in the execution of the trusts hereof at the time such rates premiums outgoings costs charges and expenses become due”.

 

Clause 8(2) addressed the situation where one of syndicate members defaulted on his obligations so that one or more of the others contributed towards a liability in excess of his or their due proportion, and provided for the defaulting member’s share of any income or capital received to be applied in the first instance towards such excess.

[7]        Clause 10(1) conferred various powers on the trustees in addition to power conferred by statute and to any directions given to them by the syndicate members.  These powers included:

“(b)     the power from time to time of entering into and altering any facility letter or standard security or assignation of rents entered into by the Purchasers with the Bank on such terms as the Trustees in the circumstances consider satisfactory or appropriate.

…

 

(d)       the powers from time to time to enter into such other agreements dispositions charges assignments or assignations or other documents with the Vendor and/or the Bank and /or the Tenant or the prospective Tenant of the Property and other parties upon such terms as the Trustees in the circumstances consider satisfactory or appropriate for any purposes of securing the acquisition development and management of the Property pursuant to the Agreement and securing the loan.”

 

By proviso (i) to clause 10(1), the trustees were given power in familiar terms to appoint and remunerate advisers and managers in relation to the exercise of their powers.  By proviso (iii), they were given an entitlement to be reimbursed expenses incurred by them ”in respect of the administration of the trusts hereof and in the management of the Property”.

[8]        Clause 16(1) stated as follows:

“It is hereby agreed and declared by the Trustees and the Purchasers that the Consideration is being paid and the Property is being acquired so that the Purchasers may claim Initial Allowances under Chapter I of the Capital Allowances Act 2001 in respect of their respective liabilities for the Consideration and that subject as in this Clause hereinafter provided the exercise of any right to sell the Property shall be postponed until one year has elapsed from the date hereof and thereafter until an offer to purchase the Property has been made in terms acceptable to the holders of the majority in value of the beneficial interests in the Property as set out in Part One of the Schedule in circumstances where the initial allowances obtained are not to be prejudiced and as the law then obtains no balancing charge will arise under section 4 of the said Act.  It is further agreed by the Purchasers and the Trustees that for a period of 25 years after the last date of execution of this Deed they will not seek to exercise or exercise any right of division and sale in respect of the Property.”

 

The pursuers’ disputed “cash calls”
[9]        Whatever may be the situation regarding the tax benefits obtained by syndicate members, the acquisition of the Property has not proved to be a profitable investment.  On 30 March 2009, DBS was placed in building society special administration.  Thereafter, the trustees entered into negotiations with the administrators to prevent enforcement action leading to a sale or other disposal of the Property that would result in loss of members’ tax reliefs.  Agreement was reached in 2012 that in exchange for a payment of £750,000 (of which £250,000 was to be treated as a fee to DBS), the lender would waive its right to call up the loan and sell the Property during the period of seven years from acquisition, and that any sale thereafter would be of a lesser interest in the Property, thereby protecting the syndicate members’ capital allowances.  By letters dated 13 September 2012 to all syndicate members including the defender, the pursuers intimated that, in terms of the powers conferred on them by clause 10(1)(b) of the Deed of Agreement and Trust, they intended to alter the terms of the facility letter with DBS in the manner just described.  The trustees made a “cash call” in a total sum of £900,000 to enable them to pay £750,000 to DBS and to pay professional fees and other attendant costs.  They confirmed that they would account to syndicate members for all sums expended, and any balance would be returned pro rata.  The defender’s share of the cash call was said to be £141,930.  He did not make any payment to the pursuers.

[10]      On 11 April 2013, the pursuers wrote to all syndicate members to advise that the transaction they had been negotiating with the administrators of DBS had completed, with funds of £727,370 received from syndicate members having been paid over.  The pursuers stated that because the whole funds received from members to date had been used to pay DBS, there was a need to raise further funds to pay professional fees and to meet future running costs on the Property, including rates, insurance and service charges.  They therefore made a further “cash call” of a total of £200,000.  The defender’s share was stated to be £31,540.  He did not make any payment to the pursuers.

[11]      On 10 June 2014, the pursuers wrote again to all syndicate members to advise that there had been some interest from purchasers in acquiring the Property.  The letter continued:

“At the date of this letter, syndicate funds amount to approx. £12,000 and based on current estimates the costs of the building in the period to 31 December 2014 will be £160,000.

 

A summary of cash raised and spent by the syndicate is set out below:

 

1.         The Tranche 1 cash call was for £900,000 which was to be used to pay £750,000 to the administrators of [DBS] in administration to protect the syndicate’s tax position and to raise £150,000 for costs.  Approx £727,000 was raised from this cash call with 2 members failing to pay any funds and one member paying part of the funds due.  All of the cash was used to reach a settlement with DBS in April 2013.

 

2.         The Tranche 2 cash call was for £200,000 and was requested after reaching settlement with DBS.  The trustees agreed to pay Pinsent Masons and Deloitte £50,000 + VAT each for their professional advice in negotiations with DBS.  The second cash call was to provide a fund to pay the existing and some of the future costs of the syndicate.  Approx £110,000 has been raised from the second cash call.

 

At the meeting on 19 May, it was agreed that a third cash call for £200,000 would be made.  £160,000 of this would be used for the building costs in the period to 31 December 2014 and up to £40,000 would be set aside to instruct lawyers to pursue non payers of all 3 tranches of cash calls.  It was felt that it was right for all syndicate members to pay their share of costs and not allow some syndicate members to be subsidised by other members.”

 

The defender’s share was stated to be £31,540.  He did not make any payment to the pursuers.

[12]      According to correspondence lodged by the pursuers, an offer of £1,025,000 for the Property has now been accepted by DBS, with the costs of sale being deducted from the price.  It is stated by the pursuers (though this is not a matter of admission by the defender) that DBS’s entitlement to recover from syndicate members is limited to the realisation proceeds of the Property and that a shortfall of some £10,000,000 in the secured debt will be borne by DBS.

 

Argument for the defender
[13]      The defender’s argument had two main strands.  Firstly, it was submitted that the powers granted by the defender in terms of the “Limited Power of Attorney” did not include power to create a trust nor, a fortiori, power to the pursuers in the capacity of trustees to sue one of the syndicate members.  It was not averred by the pursuers that the defender had knowledge of the existence and terms of the Deed of Agreement and Trust at the time when he granted the Power of Attorney.  Without such averments, no more could be said than that the defender authorised the Attorney to enter into an agreement to buy the property at a maximum cost of £20,739,000.  There was nothing in any of the other clauses that authorised the Attorney to sign a deed of trust, creating a “legal entity” with power to expend over £1 million and then sue the defender for a share of it.  The Attorney could not competently delegate to the trustees a power that he himself had not been given.  In any event there was a general principle that an agent could not, without authorisation, delegate to another a discretion afforded to him.

[14]      The defender further submitted that even if the Deed of Agreement and Trust was effectively constituted and conferred powers on the pursuers, those powers did not include any power to make cash calls on syndicate members.   The only reference to a cash call in the deed was clearly to the members’ initial contributions, as listed in part one of the Schedule (albeit that only percentages were in fact listed).  None of the sub-clauses of clause 8 authorised the demands for contributions that had been made by the pursuers.  In particular, clause 8(1)(d)(ii) covered only legal costs in connection with negotiating leases or completing security documentation.  No power was given to the trustees to impose sanctions on any member who failed to pay a sum due under clause 8(1).  The express powers conferred by clause 8(2) excluded the implication of other powers such as a power to sue: cf Attorney General of Belize v Belize Telecom Ltd [2009] 1 WLR 1988, Lord Hoffmann at para 21.  Trustees had no statutory power to sue a truster for additional funds.  In essence, the trustees had been given management powers and duties, and the management powers in clause 10 did not include a power to sue syndicate members for contributions.  It was accepted that there would require to be a final accounting among syndicate members once the Property had been sold, but any arrangement requiring contributions to be made by members prior to such final accounting could only have proceeded by consensus.  The defender had not been asked to consent; he had simply been told to pay up.

 

Argument for the pursuers
[15]      On behalf of the pursuers, it was submitted that the defender’s challenge to the validity of the Deed of Trust was irrelevant.  The pursuers were entitled to rely upon the legal presumption of omnia praesumuntur rite esse acta, especially after the lapse of such a long period of time and in the absence of any attempt by the defender to reduce the deed.  The procedure of having a deed executed by an attorney for all syndicate members was in accordance with normal commercial practice for collective investment schemes such as this one, and it could be inferred from the circumstances that the defender had intended to be bound by it.  He had received the benefit of it in the form of tax relief and could not now seek to challenge it.

[16]      As regards the defender’s obligation to make payment in response to the three cash calls, it was submitted that this arose (i) from the terms of the Deed of Agreement and Trust; (ii) from exercise of the trustees’ statutory powers; and (iii) by virtue of the defender’s ownership of a pro indiviso share of the Property.  The Deed of Agreement and Trust fell to be construed as a whole, and in accordance with commercial common sense.  In terms of the deed, the waiver payment was agreed and made in accordance with the trustees’ power in clause 10(1) to enter into any facility letter with DBS and to enter into such other agreements as the trustees considered appropriate.  The proviso to clause 10(1) conferred a right to reimbursement from non-contributing members.  Clause  8(1)(c) obliged the defender to pay his due share of monies secured and not just the initial payment.  The sums due in terms of all three cash calls were incurred in execution of the trusts and fell within clause 8(1)(d)(ii).   It was in any event implied, and in accordance with commercial common sense, that the trustees could make cash calls to preserve the syndicate members’ tax reliefs.  In order to enable the Deed of Trust to  operate, the trustees had to have power to recover debts by litigation if necessary.  So far as statutory powers were concerned, the cash calls were debts which the trustees were empowered to recover by the Trusts (Scotland) Act 1921, section 4(1)(h).  Further it was fair and reasonable for each co-owner of property to meet expenditure incurred in proportion to his share; otherwise he would be unjustly enriched.

 

Decision
[17]      I was not addressed in any detail on the question whether the Deed of Agreement and Trust created a continuing trust that is recognised by the law of Scotland.  One of the requirements for the constitution of a trust according to Scots law is that there is in existence an asset, whether corporeal or incorporeal or even a right relating to future acquirenda, which is dedicated to defined trust purposes (see eg Clark Taylor & Co Ltd v Quality Site Development (Edinburgh) Ltd 1981 SC 111, Lord President Emslie at page 118).  So far as I can see, the only provisions in the Deed of Agreement and Trust concerned with the holding of property in trust by the trustees are clauses 2, 3 and 5 (set out above) which relate only to the syndicate members’ initial contributions to the balance (after deduction of the loan from DBS) of the purchase price of the Property.  It may be noted that in clauses 6 and 7, which relate to the eventual sale of the Property, the obligations regarding repayment of the secured loan and distribution of any balance among members are imposed not upon the trustees but upon the “Purchasers”, ie the syndicate members generally.  It was undoubtedly envisaged by the parties to the agreement that events would occur from time to time that resulted in funds passing through the hands of the trustees, such as receipt of rents and disbursement of property expenses.  I am not persuaded without fuller argument that that of itself is sufficient to constitute a trust continuing beyond the time when the initial contributions were received by the trustees and disbursed by them on the purchase of the Property.  Despite the trust terminology employed in the syndicate members’ agreement (which also includes expressions such as “covenant” hinting at English origins), I am inclined to regard it as more accurately described as a management agreement, and I do not consider that it would be safe to proceed on the basis that the statutory powers conferred upon trustees by, for example, section 4 of the 1921 Act were conferred upon the individuals appointed as trustees under this deed.  I prefer to base my decision on powers conferred on the pursuers expressly or by necessary implication in the agreement itself. 

 

(i)         Power to appoint trustees
[18]      I address firstly the defender’s argument that the Power of Attorney granted by him contained no power that would have enabled the Attorney to execute a deed appointing trustees with management and decision-making powers.  In my opinion this argument proceeds upon a misunderstanding of the effect of paragraph (1) of the Power of Attorney, set out above.  This paragraph conferred a power to enter into “the deed of agreement to be entered into among the members of … the syndicate”.  I regard the use of the definite article in the phrase “the deed of agreement” as significant: it necessarily implies that the granter of the Power of Attorney was aware that a deed of agreement was to be entered into and further implies that a particular deed of agreement was in contemplation.  Only one restriction was imposed on the Attorney’s power to enter into the deed of agreement, namely that the VAT-exclusive cost of the Property should not exceed approximately £20,739,000.  Subject to that restriction (which was not infringed), the Attorney was empowered to enter into the deed which met the description in paragraph 1.  The Deed of Agreement and Trust executed by the Attorney on 8 December 2006 is that deed; it was not suggested by the defender that there is any other candidate.  That being so, it is not open to the defender to quibble with some of the terms of the agreement which he authorised the Attorney to enter into on his behalf.  Paragraphs 2, 3 and 4 of the Power of Attorney are not of direct relevance being concerned with entering into contractual and other relationships with the seller of the property, the lender of finance and prospective tenants respectively.  Paragraph 5 is ancillary to paragraph 1 and confirms the defender’s understanding as granter of the Power of Attorney that the deed of agreement would contain provision for directions being given by syndicate members.

[19]      It follows, in my opinion, that there is no arguable basis upon which the defender can object to trustees being appointed in accordance with the deed which he authorised the Attorney to execute on his behalf, nor to those trustees carrying out the duties and exercising the powers conferred upon them by that deed.  The maxim delegatus non potest delegare has no application to the present situation because the Attorney did not delegate a power conferred on him; the trustees’ powers were conferred upon them directly by the parties to the Deed of Agreement and Trust, ie by the syndicate members including the defender.  Whether the defender was in fact aware of the full terms of the agreement that he authorised the Attorney to bind him to is of no relevance.

 

(ii)        Power to incur liabilities for the waiver payment and professional and other expenses
[20]      The next question is whether the trustees were empowered by the Deed of Agreement and Trust to incur expenditure on behalf of the syndicate members on the waiver payment, professional fees and the other costs detailed in their letters of 11 April 2013 and 10 June 2014.  Dealing firstly with the waiver payment, it was submitted on behalf of the pursuers that it was agreed in a facility letter entered into with DBS; however, such a letter was not produced and it would not be appropriate to decide an issue of relevancy on the basis of a document not before the court.  In any event, it is unnecessary to do so.  I consider that entering into the agreement with DBS regarding the waiver payment falls clearly within clause 10(1)(d), set out above, as being an agreement “… with the Bank … upon such terms as the Trustees in the circumstances consider satisfactory or appropriate for any purposes of … securing the Loan”.  The discretion conferred upon the trustees is a broad one, and is to be read in the context of the purpose of the acquisition of the Property as stated in clause 16, namely the obtaining of capital allowances by syndicate members.  Entering into an agreement with DBS for the purpose of ensuring (“securing” not being used here in the technical sense of granting a security) that the loan was not called up resulting in a sale of the Property and loss of members’ tax reliefs was clearly something that the trustees were entitled to consider satisfactory or appropriate.

[21]      As regards the incurring of expenses on professional fees, express authority is conferred upon the trustees by proviso (i) to clause 10(1) to appoint advisers in relation to the exercise of powers and duties of management and in relation to the administration of the trust, on such terms as to remuneration and commission as the trustees shall from time to time consider reasonable.  The remainder of the expenses for which the cash calls were said to be required (rates, insurance and service charge) consist of running costs of the Property, ie of obligations incumbent upon the syndicate members as owners, which by virtue of clause 10(1)(a) the trustees have power to perform.

 

(iii)       Power to demand reimbursement
[22]      The next question is whether the trustees were empowered by the Deed of Agreement and Trust to make the cash calls on syndicate members, including the defender, that they have made to fund the waiver payment and professional and property-related expenses.   It is perhaps unfortunate that the  trustees’ requests for payment have been described in correspondence as “cash calls”, when that expression was used in clause 2 of the Deed of Agreement and Trust to refer only to the syndicate members’ initial contributions.  Put more simply, the question is whether the trustees have an entitlement, in terms of the Deed of Agreement and Trust or otherwise, to demand reimbursement by syndicate members of the expenditure that they have incurred.  In my opinion they do.  The property-related expenses are expressly covered by clause 8(1)(d)(i), set out above.  The waiver payment and the professional fees are in my opinion covered by clause 8(1)(d)(ii) which, read short, obliges each syndicate member to pay his due proportion of all costs, charges and expenses which may be incurred by the trustees in relation to the execution of the trusts contained in the deed.  “Execution” in this context means the carrying out of the purposes of the trust.  I have already explained why I am satisfied that the costs and charges, including the waiver payment, in respect of which the trustees seek reimbursement were incurred in carrying out the purposes of the trust. 

[23]      I accept the pursuers’ submission that it is not in accordance with commercial common sense to construe the deed as requiring that the outlays be actually incurred by the trustees before any request for reimbursement can be made.  As the facts of this case have demonstrated, and as must reasonably have been in the contemplation of parties to the agreement at the time when it was entered into, the costs and charges potentially payable by the trustees on behalf of the syndicate members as co-proprietors were substantial and possibly in excess of any cash funds held by them from time to time.  The phrase “at the time such rates premiums outgoings costs charges and expenses becomes due” at the end of clause 8(1)(d)(ii) indicates that actual payment by the trustees having taken place is not a condition of their entitlement to demand contributions from syndicate members.

 

(iv)       Power to raise proceedings against a non-paying syndicate member
[24]      Finally there is the question whether the pursuers have power to raise proceedings for payment against a syndicate member, as opposed to being obliged to wait until a final accounting takes place among members following the sale of the Property.  No express power is conferred (a power to take legal action in paragraph 3 of part three of the Schedule being specific to enforcing the agreement for the purchase of the Property or any lease to which the Property is subject).  In my opinion, however, no express power is needed in order to enable the pursuers to enforce rights conferred upon them by the agreement of all of the signatories to the Deed of Agreement and Trust against a syndicate member in breach of his obligations.  Whether the relationship between the pursuers and the syndicate members as a whole is properly to be characterised as one of trust or of management, it is common ground that the pursuers are accountable to the syndicate members for their actings as well as for their intromissions with members’ funds.  Part of that accountability consists of fulfilling the duties imposed by agreement upon them.  If there were no means of enforcing the rights conferred upon them against persons, including syndicate members, in breach of their own obligations, those duties would be impossible to fulfil.  There is no rule of law that prohibits one pro indiviso proprietor from suing another; in the present case the proprietors as a whole have conferred rights on a specific sub-group to be exercised on behalf of all.  In these circumstances I consider that there is no reason to withhold from the pursuers the right to resort to litigation which is available generally to a person whose rights are infringed by the breach of another person’s obligations.

 

Disposal
[25]      For these reasons I consider that the pursuers are entitled to succeed in these proceedings.  As regards quantum, there is a minor discrepancy between the principal sum sued for (£204,998) and the sum of the three cash calls (£205,010).  No explanation was provided for this, but the difference (£12) is de minimis.  No defence specific to quantification is pled.  I shall accordingly repel the defender’s pleas-in-law, sustain the pursuers’ pleas-in-law and grant decree for payment in terms of the first conclusion.