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Cite as: [2021] ScotCS CSIH_70, [2021] CSIH 70

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FIRST DIVISION, INNER HOUSE, COURT OF SESSION

[2021] CSIH 70

P659/20

Lord President

Lord Malcolm

Lord Turnbull

OPINION OF THE COURT

delivered by LORD CARLOWAY, the LORD PRESIDENT

in the petition by

UK AGRICULTURAL LENDING LIMITED

Petitioners

against

(First) HAMILTON ORR LIMITED; (Second) ORRDONE FARMS LIMITED (in

administration); (Third) MARTIN FROST; and (Fourth) JANET FROST

Respondents

for Rectification of Documents in terms of section 8 of the Law Reform (Miscellaneous

Provisions) (Scotland) Act 1985

______________

Petitioners and Respondents: J Brown; Shepherd & Wedderburn LLP

First Respondents and Reclaimers: Paul Newsham (lay representative)

Second Respondent: No appearance

Third respondent and Reclaimer: No appearance

Fourth Respondent and Reclaimer: Party

17 December 2021

[1]

Hamilton Orr owned Harcarse Hill and Sunwick Farms. They were in debt to Ilona

Rose Investments to the extent of about £2.380m. The Lord Ordinary, who determined this

petition for rectification of standard securities, found that, in terms of certain documents

which had been produced, it had been arranged for the petitioners to lend Orrdone Farms

(formerly Avocet Agriculture) £3.25m. This was to be used to pay off the debt owed to Ilona

Rose and otherwise for working capital and to pay interest. Security over the farms was to

be given by Hamilton Orr. That was duly done and a loan facility for Orrdone Farms was

created. Unfortunately, and as was admitted by the drafter, namely Russell Spinks, a

solicitor, in an affidavit lodged with the court, the standard securities were in error framed

in respect of the indebtedness of Hamilton Orr and not Orrdone Farms.

[2]

Holding that the circumstances fell within section 8(1)(a) of the Law Reform

(Miscellaneous Provisions) (Scotland) Act 1985, the Lord Ordinary ordered rectification.

Hamilton Orr and the third and fourth respondents, who are personal guarantors of the

debtor, reclaimed (appealed) the Lord Ordinary's decision. They contended that the

standard securities reflected the true picture; viz. that the loan was to be made to Hamilton

Orr, not Orrdone Farms.

[3]

In the respondents' joint grounds of appeal, joint note of argument, and in written

submissions for Hamilton Orr and the fourth respondent, which were presented at the

hearing, it was argued that the Lord Ordinary erred in failing to draw various conclusions

from the productions which were before him, and generally in failing to prefer the

respondents' submissions. The respondents made particular criticisms of the Lord

Ordinary's acceptance of the evidence contained within Mr Spinks's affidavit; alleging that

Mr Spinks had acted unprofessionally. The respondents criticised the Lord Ordinary for

failing to take into account that Orrdone Farms was a wholly owned subsidiary of a parent

company with "no commercial benefit" at the time of the transaction. Criticisms in relation

to the manner of the appointment of administrators to Orrdone Farms were also made. The

fourth respondent's submissions detailed complex family relationships between various

actors involved in the farming business of the group of companies owned by the Orr family

and their associates. She alleged that the present dispute arose as a result of both certain

members of her extended family and the lawyers involved in the transactions telling lies.

Both Hamilton Orr and the fourth respondent moved the court to allow the reclaiming

motion, or to allow a proof. The third respondent did not appear at the hearing on grounds

of ill health.

[4]

There is no merit in any of the respondents' arguments. In order to grant their

rectification, the Lord Ordinary required to be satisfied that the standard securities did not

accurately reflect the intention of the parties at the date when they were executed. He was

asked to assess that matter without resort to a proof, as he was entitled to do in a petition

process. The weight of evidence contained in the productions and the affidavit of the

principal solicitor involved in the transactions overwhelmingly pointed to the conclusion

that the identification of the debtor in the securities did not reflect the parties' intentions. It

demonstrated that the parties' intention at the time was that the loan relative to the

securities would be made by the petitioners to Orrdone Farms and not Hamilton Orr. That

loan was to be secured by a number of means, including standard securities over the farms

owned by Hamilton Orr. The court has not been provided with the commercial reasons for

that arrangement, but it is not unusual for related companies to provide security for debts

owed by one another.

[5]

The court is not persuaded that it would be contrary to business common sense for it

to find in the petitioners' favour. The allegations made against the lawyers involved in the

transaction and the fourth respondent's various family members are unsubstantiated and

largely irrelevant. There is no reference to a loan by the petitioners to Hamilton Orr in any

of the productions, with the exception of the standard securities themselves. The court

therefore accepts, for the reasons given by the Lord Ordinary, that the securities were

drafted erroneously in that regard. No substantial basis for interfering with the Lord

Ordinary's findings in fact on the central issue have been presented.

[6]

Had the respondents considered that a proof was necessary in advance of a final

determination of the case, they ought to have moved the Lord Ordinary to allow such a

proof. They did not do so.

[7]

The third and fourth respondents do not have title and interest to resist this petition.

Their only interest is in their capacity as guarantors of the debtor. The basis of that liability

is contained in the terms of personal guarantees and a facility letter. The rectification of the

standard securities will have no bearing on their personal obligations to the petitioners. The

standard securities do not require to be rectified in order to enforce the guarantees. The

arguments regarding the appointment of administrators to Orrdone Farms do not add

anything to this. The appointment, as highlighted by the Lord Ordinary, has not been

challenged.

[8]

The reclaiming motion is accordingly refused.