Scottish Court of Session Decisions

You are here: BAILII >> Databases >> Scottish Court of Session Decisions >> KEITH LOGIE INCH AND ANOTHER AGAINST MARGARET MARY TOTTEN [2024] ScotCS CSOH_25 (06 March 2024)
URL: http://www.bailii.org/scot/cases/ScotCS/2024/2024_CSOH_25.html
Cite as: [2024] CSOH 25, [2024] ScotCS CSOH_25

[New search] [Printable PDF version] [Help]

OUTER HOUSE, COURT OF SESSION

[2024] CSOH 25

CA64/23

OPINION OF LORD SANDISON

In the cause

(FIRST) KEITH LOGIE INCH; (SECOND) RODERICK ANGUS ERSKINE STUART

Pursuers

against

MARGARET MARY TOTTEN

Defender

Pursuers: Brown; DAC Beachcroft Scotland LLP (for Levy & McRae, Glasgow)

Defender: Party

6 March 2024

Introduction

[1]

In this action the pursuers each seek payment of £125,000 plus interest from the

defender, claiming to be owed those amounts in terms of a loan agreement executed by the

parties. The matter came before the court for a proof of two days' duration, in which the

defender was, by consent, ordained to lead. Although she had previously had the benefit of

legal representation, by the time of the proof she was unrepresented.

Background

[2]

The pursuers rely on a loan agreement executed by the parties on 9 May 2018 setting

out the terms on which the pursuers agreed to lend and the defender agreed to borrow the

sum of £250,000. Those terms included a stipulation that repayment could be demanded

after one year by the giving of seven days' written notice. The pursuers demanded

repayment of the loan in writing by letter from their solicitors to the defender dated 19 April

2023. The defender maintains that she understood that the £250,000 had been gifted to her

as a result of an unexpected reduction in the price obtained for shares in a company in

which she and the pursuers were shareholders and which was sold, that she was not

specifically aware of having signed a loan agreement, and that subsequently the pursuers

told her not to worry about the matter, which would be sorted out. The defender maintains

that, on the faith of an understanding generated by what had been said to her that there was

no need for the sum in question to be repaid, she agreed to the sale of another company of

which she was a member and transferred shares in a further company to the pursuers, all to

her detriment, and that they are now personally barred from demanding repayment of the

loan.

The Evidence

Defender's Case

[3]

Margaret Mary Totten (46) adopted a witness statement in which she stated that she

and the pursuers had been business partners in IA3 (pronounced IA Cubed) Limited

("IA3"), with the pursuers holding the majority stake. In 2018, negotiations were entered

into to sell all the shares in that company. As the negotiations continued, it had become

apparent that she was in line to receive £250,000 less than originally expected from the sale.

She was not happy about that, and did not want to proceed with it. The pursuers did want

the sale to proceed, and told her that they would make up the £250,000 which she

considered was value that she was going to lose. On that basis she agreed to proceed with

the sale. All of the minority shareholders had received less than they expected and the

pursuers made pay-outs to them too. None of them had been asked to repay that money.

She was asked to sign documentation, and believed that that was all in relation to the sale of

the company, although she had no specific recollection of what documents she had signed,

or when.

[4]

She had no need of the money at the time to purchase a new house. She and her

husband had been looking at purchasing a new house, but had not committed to purchasing

one at the point of the sale of the company. Her husband had purchased a new house

for £500,000 some months later, and that would not have happened had she not received

the £250,000 pay-out from the pursuers. That sum, along with other monies, was used in

connection with that purchase.

[5]

Following the sale of IA3, she continued to have a business relationship with the

pursuers, and together they started another company, Akari Solutions Limited, at the end

of 2018. All of the shares in Akari Solutions Limited were held by Akari Solutions Group

Limited ("Akari Group"). The parties worked together to build the company. In early 2020,

the second pursuer approached her and asked when she was going to start repaying the

money she had been lent. She had said that she did not realise that the money had to be

paid back. He had suggested that she take out a mortgage to pay it back. The subject was

then dropped.

[6]

The pursuers had then acquired other businesses, namely CXP Limited and VKY

Intelligent Automation Limited ("VKY"). She was made a director of VKY, and was given a

10% shareholding in the company. The pursuers concentrated on their other businesses and

left her to do most of the work at Akari Solutions Limited. The first pursuer became

seriously unwell, as did another Akari Group shareholder, Lesley Clarkson. The pursuers

and Ms Clarkson made it known that they wanted to exit Akari Group as shareholders and

needed to sell the business. Sale negotiations and conversations started to take place with a

Stuart Fenton, managing director of Woolf Partners Limited, in 2022. She knew Mr Fenton

and was asked to assist with those negotiations. During the negotiations, the pursuers each

mentioned the money that she was supposed to owe them, but she had replied that she did

not know what they meant, in order to avoid confrontation, which she disliked. She

mentioned her concerns to Mr Fenton about the supposed loan, in the context of informing

him that it would not be financially viable for her to sell her shares in Akari Group for a low

value. Mr Fenton had suggested that he might pay the outstanding loan sum as part of the

acquisition of the company, and provision to that effect was made in the first letter of intent

issued by Woolf Partners in relation to the proposed acquisition. She did not accept that she

owed any money to the pursuers, but wanted the matter sorted out. The negotiations for the

sale of the company faltered and the pursuers asked her to bring Mr Fenton back to the

table. He had come back to negotiate further, but after further financial analysis dropped

the original price being discussed and decided in November 2022 that he would not include

payment of the loan amount in the deal. During the due diligence process, a spreadsheet

showing the interest due on the supposed loan had been in circulation and was drawn to her

attention by Mike Lazenby, a director of Woolf Partners.

[7]

She approached the second pursuer and said that she was worried about the loan

that was supposedly due by her to the pursuers. He said to her "Don't worry Mags, we can

sort that". She said that she did not want to agree to the terms being proposed for the sale of

Akari Group, as she would be making a loss. The second pursuer re-iterated that she did

not need to worry. He told her "Let's focus on the deal". She was still worried about the

matter and met again with the second pursuer to discuss it. He told her "It's sorted, Mags,

don't worry". She understood that to mean that the pursuers were no longer going to ask

her to repay any money. When she separately met the first pursuer, he said that if she had

spoken to the second pursuer about it, "then it'll be okay, and we'll work it out". These

conversations took place days before the deal for the sale of Akari Group was due to close.

[8]

The second pursuer then approached her and said that as part of that deal, she

would have to resign as a director of VKY and hand back her 10% shareholding in the

company for nothing. She was unsure about this, but trusted the second pursuer when he

said he was helping her. She mentioned to her colleagues Kimberley Totten and

Lindsay Climson that she would be making a loss of around £200,000 if she went ahead with

the sale on those terms. It would have made no sense to transfer all her shares in VKY for

nothing, get less than she wanted for the sale of her shares in Akari Group, and still be

due £250,000 plus interest to the pursuers. She would never have signed over her shares in

VKY to the pursuers had she known that she would still supposedly owe them that sum.

The disposal of her shares in VKY was a "redline" in the contract, and the sale of Akari

Group would not proceed if she did not agree to do that. The second pursuer again told her

that she should not worry about the loan money, it would be sorted, and she should focus

on the deal. She was fairly sure that Lindsay Climson and Kimberley Totten were present

during that discussion.

[9]

Her shares in VKY were not valued. The second pursuer did not want the shares

valued, as he did not want to incur an unnecessary cost, only to be told what he already

believed, which was that they had no value. He had emailed her on 21 January 2023 to say

that the company was loss-making, would continue to be so, and had substantial debt. He

had said that they could have a valuation done if she wanted, but he did not think the cost

was worthwhile. She had asked to see the company accounts, but was never provided with

a copy of them. She had never seen any financial information in respect of the company.

She did not believe that her shares in VKY were worth nothing. However, when the second

pursuer asked her to confirm to the first that she was ready to proceed with signing over her

shares, she agreed and did so.

[10]

After the sale of Akari Group, the money due to her from the sale had not appeared

in her bank account and she sent an enquiry to the second pursuer about that. He said that

the parties' solicitor in the sale had suggested that that the money due to her should be

divided into thirds, with one third going to the defender and one third each to the pursuers,

to account of the sums due by her to them. She was taken aback and said that she thought

that the matter had been sorted out. The second pursuer started hounding her about the

loan. She did not like confrontation and got upset, telling him that she could not believe he

was doing this to her. The first pursuer denied that any arrangement to write off the

supposed loan had been made. She explained that she could not pay back such a sum, but

both pursuers told her that she needed to come up with a repayment plan. A few days later,

perhaps in March 2023, the first pursuer told her "This needs dealt with" and both pursuers

mentioned her home and property owned by her husband. She repeatedly said "you told

me it was sorted", stated her position that she had always believed that the money was a

gift, and again got upset.

[11]

She then received a solicitors' letter in April 2023 demanding repayment of

the £250,000 plus interest. She did not recall previously having received any interest

schedules.

[12]

In cross-examination, the defender accepted that the written loan agreement she had

signed in 2018 was not difficult to understand, that she had been advised by the solicitors

acting for the shareholders of IA3 (who drew it up) that she might wish to take independent

legal advice about it, and that she understood that it was a document which she had to sign

in order to receive the £250,000 that she had discussed with the pursuers. Nonetheless, she

had understood that the money was a gift to her by the pursuers and that the loan

agreement was just one element of a whole suite of documentation that she had had to sign

in connection with the sale of IA3. She had not understood that the solicitors for the

shareholders were not acting for her in relation to this aspect of things, and tended to sign

documents that she was asked to sign without reading them. She could not remember

whether she had read the loan agreement or not. She did not believe that the £250,000 was a

loan, but could not remember exactly what had been discussed with the pursuers in 2018.

She did not remember reading email correspondence from the solicitors dealing with the

loan paperwork; she had received 60 to 70 emails in total from them concerning the sale of

IA3. She must simply have had someone scan the draft document sent to her, signed it and

sent it back to the solicitors. She had no particular recollection about it. When she was told

that money had been transferred to her bank account, she thought it was something to do

with the proceeds of the IA3 share sale. The second pursuer had started speaking to her

about repaying the £250,000 at some point after Akari Group had been set up in

December 2018. That was when she first found out that the pursuers regarded the

arrangement as one of loan, rather than as a gift associated with the sale of IA3. There had

been multiple conversations about it once she realised that the pursuers wanted to be repaid.

She was not good in confrontational situations and did not remember what she had said

when asked to repay. The second pursuer had said he needed the money repaid as he

wanted to lend it to another mutual friend. The matter was not pressed further. She had not

received any interest statements, and IT staff could find no emails relating to that matter in

her email account.

[13]

She had received a letter from the pursuers' solicitors dated 19 April 2023

demanding repayment. She had contacted her own solicitors and, in two Teams calls, had

told them all about what had happened. They had replied to the pursuers' solicitors, saying

that the money had been a gift, but she accepted now that she had been wrong about that.

The reply had also said that she had not signed the loan agreement, but that was wrong.

She had been asked whether the signature on it was her usual signature, and had said

correctly that it was not, but did not deny having signed it. After she saw the letter written

by her solicitors, she had told them that it was wrong to say that her position was that she

had never signed it, but that was after the letter had been sent.

[14]

In relation to the sale of Akari Group, she was a major shareholder and the only

person with significant influence or control. She had a team working with her, but she was

the primary contact with Microsoft and thus the source of many client leads. Akari Group

would not have been sold without her in place. Stuart Fenton wanted her to stay with Akari

Solutions Limited, and she wanted to do so, but the sale would involve her losing any equity

stake and accepting a lower salary with no bonus entitlement. The pursuers planned to exit

the business altogether. She had explained the situation about the loan to Mr Fenton and

explained that she would still be in debt if she had to repay it. She had asked him to have

Woolf Partners repay it as part of the purchase of Akari Group. He had put repayment of

the loan in the first letter of intent issued by Woolf Partners, and had been sent (without

asking for it) a statement of the interest due on the loan by the pursuers or someone

associated with them. By about November 2022, however, the relationship between the first

pursuer and Mr Fenton had become strained and the negotiations stalled. When they

eventually restarted, repayment of the loan was not part of the offer, leaving it as her

responsibility.

[15]

She owned 10% of VKY and Woolf Partners had insisted that she give up that

holding as a perceived source of a conflict of interest with her work for Akari Solutions

Limited. There were no external buyers for that shareholding and she was unaware of what

the company's Articles said about its transfer. She had no idea what she was doing and had

trusted the people with whom she was working. She had asked the second pursuer to show

her VKY's bank statements, but none had been provided. She had asked to see its accounts,

but was told that she was slowing things down. The second pursuer had told her that her

VKY shares had no value, because the company had a negative value. She had had no time

to consult a lawyer, and did not in any event know what she would have asked one. She

wanted a valuation of VKY, but was told there was no time for that, and that it would be too

expensive. The company's accountants were unwilling to provide an informal valuation

and she was told that a formal one would cost £6,500, which the shareholders in Akari

Group would be unwilling to pay. She did not know what had been said by the pursuers to

the other shareholders in Akari Group, and she did not herself approach those shareholders.

She felt that she had to dispose of her shares in VKY in order to get the Akari Group deal

over the line; she had no choice but to transfer them to the pursuers for no consideration,

despite not wanting to do so. Woolf Partners did not care to whom she might sell the

shares. After she raised her concerns about being left out of pocket if the Akari Group deal

proceeded without the loan being repaid with the second pursuer, he had told her that the

loan would be "sorted" after the deal had been completed. He had said "Don't worry, we'll

sort it, just focus on the deal". She accepted that that could mean a variety of things; he had

not said in so many words that the loan would be written off. She had got nothing in

writing; that was not how things were done between her and the pursuers. However, she

would not have agreed to the Akari Group deal had she not believed that the loan would be

written off, because in that situation she would be losing money. The majority of the

purchase price would go to paying off debt owed by Akari Group to the pursuers, who

would also receive a sum to cover arrears of salary with interest. It would have been better

for her in such circumstances just to continue with the existing situation at Akari, rather than

agreeing to sell it. The first pursuer had said that carrying on for the long run as matters

stood was a live option, and the staff generally had agreed to take salary cuts and carry on if

necessary. She had worked hard to get the deal done and would not have done so had she

thought that she was going to be worse off in consequence. The transaction for the sale of

Akari Group had completed on 10 February 2023. A few days afterwards, and while the

purchase price was still in the hands of the sellers' solicitors, the second pursuer had

approached her and had asked her to split her share of the proceeds three ways, one third to

each of the pursuers towards repayment of the loan, and one third to herself. There had

been a few conversations about that, in the office and elsewhere. The first pursuer had

suggested that she could start repaying the loan once her son left school and she was no

longer paying fees in that connection. Again, being bad at confrontation, she had deflected

the requests to repay, and had received all of the money due to her from the Akari share

sale.

[16]

Matters had escalated after the pursuers' solicitors had demanded repayment in

April 2023. Someone at her own firm of solicitors had suggested that the facts she had told

them might amount to a defence of personal bar. She had left them to correspond with the

pursuers' solicitors and state her defence as they saw fit. She had not been asked by them to

choose between denying that what had happened amounted to a loan at all, or else stating a

personal bar defence. She honestly believed that there had been an agreement to write the

loan off.

[17]

Kimberley Ann Devlin Totten (28) gave a witness statement in which she noted that

until August 2023, she was the director of services for Akari Solutions Limited, having

previously been its director of operations and before that having worked for IA3. At that

company, she had reported directly to the defender but also worked alongside the pursuers,

Lindsay Climson and Thomas Hind. At Akari Solutions Limited, her role was to oversee the

day-to-day running of the business and the structuring of departments, all with the aim of

delivering service to clients. During her time at Akari Solutions Limited, she worked

alongside the same people, as well as with Lesley Clarkson and Natalie Bell. She remained

with the company after the pursuers had ceased to be involved with it.

[18]

Akari Solutions Limited was incorporated at the end of 2018. She was involved with

the start-up of the business and was a shareholder in Akari Group. That company was

acquired by Woolf Partners Limited at the beginning of 2023. There were many meetings

amongst the shareholders in the lead up to the sale of the company. She could not be

specific about dates, or who was at each individual meeting. The pursuers were driving the

sale forward. The rest of the shareholders, especially the defender, were on the fence about

the sale. They were not sure that it was the right thing to do. She was concerned that the

investors were perhaps not right for the business, the deal was changing daily, and the value

being offered for the business was decreasing. However, the pursuers had decided that the

sale was going ahead, so the rest just had to go along with that. There was a lot of pressure

on her from the pursuers during the sale to get it pushed through; they were making a lot of

effort to convince the other shareholders that the deal on offer was the best they were going

to get.

[19]

She was aware that the defender had previously been gifted a sum of money by the

pursuers, but not how much. She was not aware of any of the detail about that matter. She

was also gifted a sum of money by the pursuers, to cover the capital gains tax due to be paid

on the funds she had received from the sale of IA3. She did not know who else might have

received such money, preferring not to get involved in other people's business. She was

aware that IA3 was undersold, but was not party to the conversations taking place

regarding that sale. Overall, in terms of the money given to the defender, she did not know

the details.

[20]

In further examination-in-chief, Ms Totten stated that she had been given a monetary

gift by the second pursuer upon the sale of IA3. Every minority shareholder in the company

had received a gift.

[21]

During the period leading up to the sale of the shares in Akari Group, the first

pursuer had been unwell and the second pursuer very stressed. They both wanted out of

the business altogether. There had been some discussion about getting more clients if the

proposed sale did not go through, but she personally did not believe that the business could

continue if it was not sold. She remembered a conversation with the second pursuer in

which he had said that the sale was best for everyone. The due diligence process which

formed part of the sale had been very time-consuming and stressful. She had been

concerned about restrictive covenants which she was being asked to accept.

[22]

In cross-examination, Ms Totten stated that she had received about £20,000 as the

sale price of her shares in IA3, and the monetary gift she had received was in an amount

calculated to pay off the capital gains tax due on that sum. The proposed share sale price

had gone down during the negotiations for the sale of IA3, and there had been open

conversations amongst those concerned about the situation, although she could not recall

who had said what to whom. She did not conceive that the gift she received had anything to

do with the fall in the proposed sale price. She understood that the defender had received a

gift too, but could not recall who had told her that it might have been the defender herself.

She had asked no questions and was given no detail. The defender had not mentioned

anything about having signed a loan agreement.

[23]

Lindsay Mair Climson (32) gave a witness statement in which she indicated that

until June 2023, she was director of operations for Akari Solutions Limited, had previously

been commercial director there, and before that was a client services manager at IA3.

During her time at those companies, she had reported to the defender and worked with the

pursuers.

[24]

The pursuers provided the funds needed for Akari Solutions Limited, but did not

participate in its day-to-day management. Akari Group was acquired by Woolf Partners

Limited at the beginning of 2023. The sale of the company so soon had not been planned,

but the first pursuer and Ms Clarkson had health troubles and wanted to leave. Some of the

other shareholders wanted to continue to be involved in the business. Negotiations for the

sale began in August 2022.

[25]

She was aware that the defender had been given money from the pursuers in 2018,

but was not aware of the specific sum. She was also given a sum of money from the

pursuers when IA3 was sold, as she understood was the case in respect of all the other

minority shareholders. The money she was given was to cover the tax on the sum she was

to receive from the sale of the company. She believed that this money was given because the

price paid for the company was less than anticipated and was to soften that blow. She was

aware that the defender had received more than her.

[26]

During the sale of Akari Group, the defender told her that the pursuers had asked

for the money they had given her back. The defender was in shock. Ms Climson came to

understand that the repayment of the money was an issue in the sale of Akari Group. She

recalled the second pursuer saying to the defender in the run-up to the sale something along

the lines of "just push it through, and we'll figure it out". The defender kept her up to date

on her discussions with the pursuers. There were also discussions surrounding the defender

giving up her 10% shareholding in VKY. The pursuers would often say one thing to the staff

of Akari Solutions Limited, and then the defender would say that they had taken her aside

and said something else. Decisions would be collectively made, and then the pursuers

would change their mind. They would often blame the defender for problems with the

company. They were generally out for themselves, and had deliberately held up the

division of the sale proceeds from the sale of Akari Group until the solicitors for all the

shareholders had had to step in.

[27]

In further examination-in-chief, Ms Climson stated that she had remained with Akari

Solutions Limited after the sale of Akari Group. The defender, with whom she shared an

open-plan office, had told her that she had received a gift from the pursuers upon the sale of

IA3, and was aghast about being asked to pay it back. She had said that she would have to

be "nuts" to go ahead with the sale of Akari Group without the loan being dealt with. The

second pursuer had said something along the lines of "Let's get it [the deal to sell Akari

Group] done, we'll figure it [the loan] out." The due diligence process had been draining

and ultimately exhausting. The pursuers and Lesley Clarkson had wanted to exit quickly.

The various shareholders all had different rights, and the Articles had been changed at the

last minute for some reason. She had just gone along with that and done what was expected

of her.

[28]

In cross-examination, Ms Climson stated that the gift she had received on the sale of

IA3 was to pay tax due on the share sale price. It was general knowledge that all the

minority shareholders were gifted money she had assumed that everyone was getting the

same sort of gift as she was getting. She did not know the amount that anyone else was

getting. The defender had spoken to her about being expected to repay a gift from the

pursuers, perhaps shortly before Christmas 2022. The firm impression which she had been

left with was that the defender had not expected to be asked to repay it. She never

mentioned any loan agreement.

[29]

In re-examination, Ms Climson agreed that she had first been told by the defender

about being asked to repay a gift around the start of 2020. Something about a loan had also

been mentioned by her during the run-up to the sale of Akari Group.

Pursuers' case

[30]

Katherine Lesley Ann Clarkson (56) gave a witness statement in which she said that

she had worked for the pursuers in various companies they owned for about 20 years, and

knew them well. She had been financial director of Akari Solutions Limited for about five

years until 2021, and after that had been the finance director of VKY.

[31]

The pursuers had told her that the defender had put money down on a new house

and that they had given her a loan to finance the new house until her existing house had

been sold. No more detail than that had been provided. In 2019 they had shown her a copy

of the loan agreement and asked her to prepare and send to them a statement of interest,

which she did. She was then asked to send such statements to the pursuers and the

defender by email periodically, around every quarter. She did so. She never received any

response from the defender. She had had no discussion with the defender about the loan at

all.

[32]

In further examination-in-chief, Ms Clarkson confirmed her written evidence about

the sending of interest statements to the defender. There was no cross-examination.

[33]

Roderick Angus Erskine Stuart (60), the second pursuer, provided a witness

statement in which he noted that his background was in management consultancy and that

he had started an outsourced contact centre business, in the course of which he met Mr Inch,

with whom he founded a similar business. After selling that business, in 2016 the pursuers

acquired other companies together, one of which was IA3, in which the defender was the

sales director. She was offered shares in the company and acquired 17% of the shares in

issue, the pursuers holding 67%.

[34]

In 2018 IA3 was sold to GCI Limited, which was consolidating smaller businesses in

similar fields and was itself in the process of being sold. GCI eventually offered £2.8 million

for IA3 on a "take it or leave it" basis. That was less than the shareholders in IA3 had hoped

for, but the market consolidation that was taking place did not leave them much choice but

to accept.

[35]

In the last few days before the IA3 deal completed in late April or early May 2018,

the defender came into the pursuers' office in tears. She said she had put a substantial

deposit down on a new house in Newton Mearns. She said that she wanted to buy this

house for cash because her husband did not believe in having a mortgage, and that because

she was going to get less from the sale of IA3 than had been hoped for, she was not going to

be able to buy the house and would also lose the deposit. She said that she did not want to

sell her existing house in Cambuslang immediately because she did not think the market

was advantageous at that point.

[36]

The pursuers discussed the situation and agreed that they would lend the defender

the sum of £250,000 to enable her to buy the new house in Newton Mearns. They expected to

be repaid within a year by means of the sale of the property in Cambuslang. They wanted

the loan formally documented and the second pursuer approached Craig McKerracher of

Harper MacLeod, Solicitors, on 8 May 2018 by email to ask if he would do that.

Mr McKerracher agreed, and emailed the loan agreement to the parties, making it clear that

the defender should take independent legal advice if she wished. She chose not to do so and

the loan agreement was signed at the pursuers' offices on 9 May 2018 before a witness,

Jason Haggarty, who also worked there. The loan was to be interest-free for the first year

given that it was anticipated it would be repaid during that period from the sale of the

Cambuslang property. After that it was to accrue interest at the rate of five per cent over

Bank of Scotland base rate and was to be repayable on demand subject to seven days' notice.

[37]

The defender emailed the signed loan agreement to Craig McKerracher on 10 May

2018 and the pursuers gave their consent for the loan monies to be paid over to the defender,

out of the sums being held by Harper MacLeod from the consideration due to the pursuers

from the sale of the shares in IA3. The transfer took place the same day, and was

acknowledged by the defender by way of email to Mr McKerracher.

[38]

The subject of repayment of the loan had been raised by the pursuers with the

defender regularly, in the context of asking her how she was getting on with selling her

house in Cambuslang and requesting that she produce a repayment plan. The pursuers'

finance director, Lesley Clarkson, had at their request sent the defender statements three or

four times a year showing the interest and total balance due periodically after the end of the

first year. The defender had never commented on the statements. No repayments had been

made. The matter was regarded by the pursuers as a private one between them and the

defender and had not been raised in discussions when other people were present.

[39]

The pursuers had become involved in Akari Solutions Limited at the end of 2018. It

was an IT business which provided technical support to other businesses using Microsoft

software. Akari Group held 100% of Akari Solutions Limited, which was the trading

company. The defender was also involved and made a significant contribution to the

success of the business. Woolf Partners had made an offer to purchase Akari Group in

late 2022. In the early course of negotiations, there had been some suggestion that Woolf

Partners or its owner, Stuart Fenton, might take over the creditor's interest in the loan to the

defender. Neither of the pursuers had brought up the subject of the loan with him, so that

must have been done by the defender. Mr Fenton told the second pursuer that he had had

one of his team, Mike Lazenby, check the interest calculations which had been issued.

However, as negotiations continued, the matter was not further raised. The pursuers came

to consider that the deal was unlikely to proceed and did not take an active part in the

negotiations. The defender, however, was keen for the deal to take place and continued to

drive the negotiations forward. As they appeared to be coming to fruition, in February 2023

Mr Stuart asked the defender to divert some of the proceeds which would be coming in for

the sale of her shares in the company to repaying the loan. She was not willing to do that.

She said that she had discussed the matter with her husband and that she would start

making repayments in June 2023 as her free income would increase when her son left school.

He may have said to her that they should focus on the sale of Akari Group first and then

deal with the loan. There was never any discussion about the pursuers waiving the loan in

exchange for the defender consenting to that sale proceeding.

[40]

The parties also had an interest in VKY, which delivered AI and automation services

for contact centres. As the defender was to remain as a key employee of Akari Solutions

Limited after the sale of Akari Group, the purchasers insisted that she give up her

shareholding and directorship in VKY because they considered that to be a competing

interest and that there was a potential for conflict of interest. The pursuers discussed the

value of the defender's 10% shareholding in VKY with her and the consensus was that the

shares were not worth anything because of the level of debt in that company. The defender

was asked if she wanted to have her shares independently valued and estimates of the cost

of that exercise which had been obtained were provided to her. She declined to have the

valuation carried out and did not ask to see the company accounts. She determined simply

to give up her shares in VKY, as did Lesley Clarkson, who wanted to sever her association

with VKY for health-related reasons. Both knew that those shares were worth nothing.

[41]

During the discussions about the sale of Akari Group there was no suggestion that

the loan was to be waived. There was no question of the pursuers giving up £125k each,

plus interest, in return for the VKY shares that were worthless.

[42]

After the sale of Akari Group the pursuers tried to speak to the defender about

repayment of the loan but she never committed to anything. The pursuers came to the

conclusion that they were being strung along, particularly given that there had been no

apparent attempt to sell the house in Cambuslang, a relative of her husband was apparently

staying there and the house had been put into the name of a company of which the husband

was the director, and charged to a mortgage provider. The house in Newton Mearns was in

her husband's name only and was also mortgaged. None of that tallied with what the

pursuers had been told at the time of making the loan. The pursuers had instructed

solicitors to issue a formal demand for repayment of the loan, which they did on 19 April

2023. The defender's response had been that she had never seen the loan agreement before

and that no monies were due to be paid by her.

[43]

In further examination-in-chief, Mr Stuart stated that no assurances had ever been

given to the defender that the loan would not be repayable. No impression to that effect had

ever been given to her by him. He had no recollection of ever saying, in connection with the

loan, that it would be "sorted". He might well have said that he wanted the deal to sell

Akari Group done, but nothing to give the impression that the loan would not have to be

repaid. As far as he was concerned, the sale of Akari Group and the loan were two different

things. Either shortly before or shortly after settlement of the share sale, he had suggested to

the defender that she might like to use some of the proceeds due to her towards repayment

of the loan. She had replied that she did not want to do that, as she wanted her husband to

see that she was getting money out of her work for Akari. She said that she had discussed

the loan repayment with her husband, and that when their son finished school, as he was

due to do shortly, she would have more income available to repay it.

[44]

As to the gifts made on the occasion of the sale of IA3, Ms Climson, Ms Totten and

another person had each held 1% of the shares in that company, and as a gesture of goodwill

he and Mr Inch had decided to pay the tax which those individuals would have to pay on

the sale price they would be receiving. That price was around £20,000, meaning that the

gifts amounted to about £2,000 each. There was no connection between those gifts and the

loan to the defender, who had held 17% of IA3.

[45]

In cross-examination, Mr Stuart stated that he had no recollection of saying to the

defender "Don't worry Mags, we'll sort it out" or words to that effect. He had been in

constant conversation with the defender during the period leading up to the sale of Akari

Group, and would have been trying to focus her on getting the deal done. Stuart Fenton had

stopped talking to him in November 2022, and he had been convinced from that point that

there would be no deal. However, Mr Fenton had subsequently started to communicate

with the defender alone, through whom all information had then flowed. He denied having

been himself in contact with Mr Fenton after November 2022. He and the first pursuer had

been amazed by how hard the defender had worked to get the deal done. His own view

was that the defender saw a better future under Mr Fenton's leadership than under that of

the pursuers. The sale of Akari Group would not have been done had the defender not

agreed to it.

[46]

After the sale of Akari Group had concluded, he had started to research the

properties held by the defender and her husband, and was shocked to discover that the

husband had a company which owned the house in Cambuslang, with a mortgage. He

considered that the money lent to the defender had been used to assist her husband to buy

property. That is what had led to the present litigation. He denied having previously been

aware of the company in question, stating that he had assumed that the Cambuslang

property had been held in common between the defender and her husband.

[47]

He had brought up the loan in conversation with the defender fairly regularly from

about 12 to 18 months after it had been made. He had not anticipated the problems which

had been encountered. He had thought that partial repayment would be made out of the

defender's proceeds from the sale of Akari Group, and that a payment plan would then be

set up. He had never thought that the defender would be unwilling to repay the loan.

[48]

Keith Inch (69), the first pursuer, gave a witness statement in which he noted that he

had a professional background in telecoms and IT, and had been involved in businesses

with the second pursuer for around 15 years. One such business was IA3, which provided

bespoke IT services to Microsoft customers. The defender was a key employee of that

company, with particular expertise in sales and customer relations. The pursuers

acquired 34% and 33% respectively of the shares in the company in 2016. The defender

had 17%, and there were other minor shareholders. The company had a longstanding

business relationship with another business called GCI, which in 2018 was buying up

smaller businesses in the same or related sectors, and was itself for sale. Negotiations were

entered into for the sale of IA3 to GCI, with the price payable dependent on the price which

was in turn to be paid for GCI. When a firm offer was eventually put forward for the

purchase of IA3, it was less than had been hoped for, but all of the shareholders felt that in a

consolidating market it was one that should be accepted. The purchaser considered that the

defender should stay with the company after the transaction, and so one of the conditions of

the sale was that £500,000 of the purchase price would be retained and released in two equal

tranches, after three and six months, so long as the defender remained with the company.

[49]

As the sale and purchase deal was nearing completion, about the beginning of

May 2018, the defender had come to see the pursuers in their office in Glasgow and

appeared very upset. She said that she had put down a large deposit on a new home in

Newton Mearns and was not going to be able to complete its purchase because she was

going to be receiving less than anticipated from the sale of IA3. She did not feel able to sell

her existing house in Cambuslang as the market was such that she did not think she would

get back what she had paid for it. In these circumstances the pursuers agreed to lend

her £250,000 to enable her to buy the house in Newton Mearns and avoid losing the deposit.

The loan was to be interest-free for a year and to be repayable thereafter, to give the

defender time to sell her Cambuslang house advantageously. The parties decided to have

their agreement set out in writing before the loan was advanced.

[50]

On 8 May 2018 the pursuers instructed Craig McKerracher of Harper MacLeod to act

on their behalf to draw up a formal loan agreement. Mr McKerracher was also then acting

for the shareholders of IA3 in its sale. The instructions to Mr McKerracher were that the

pursuers were each lending the defender £125,000, and that the loan was to be repayable on

demand after the passage of one year, subject to seven days' notice, with interest then to

accrue at 5% over the Bank of Scotland base rate. Mr McKerracher drafted a loan agreement

to be signed by all parties, emailed it to all of them, and made it clear that the defender

could, if she wished, take independent legal advice about it. She had chosen not to do so

and the agreement was signed at the pursuers' office on 9 May 2018 before a witness, who

worked there and was the first available person when the agreement needed to be signed

and witnessed. The defender had emailed the signed agreement to Mr McKerracher on

10 May 2018 and the loan amount was paid to her by him out of monies he held for the

pursuers, receipt being acknowledged on the same day.

[51]

After a year had passed, the pursuers had asked their finance director

Lesley Clarkson to issue statements to the defender by email showing the interest that had

become due from time to time. No comment on those statements was received from the

defender. The pursuers also themselves occasionally asked the defender how she was

getting on with the sale of her house in Cambuslang and asked her about making a

repayment plan. She never made such a plan, nor made any repayments, but equally never

suggested that the loan was not in fact repayable. Because the pursuers regarded the loan as

a personal and private matter, they never discussed it in front of anyone else.

[52]

The defender had left IA3 after a falling-out and £250,000 of the retention monies

from its sale had been lost. Nonetheless, the pursuers joined with the defender in a new

company, Akari Group, which held 100% of the shares in Akari Solutions Limited, which

traded in the provision of technical support to other businesses using Microsoft software,

training and individual bespoke solutions. Again, the company was significantly dependent

on the defender's ongoing relationships within Microsoft, which were the primary source of

the sales leads. Akari Group had eight separate classes of shares, with preferential rights

attaching to the 24 shares (out of 100 in issue) held by each of the pursuers. The defender

held 25 shares.

[53]

The business had been reasonably successful and in late 2022 an offer to purchase

Akari Group was made by Woolf Partners. The pursuers were keen to accept the offer, as

was the defender, who again was being asked to stay on after the sale. The loan had been

discussed at that stage and indeed there had been brief talk as to whether the creditor's

interest in it might be taken over by Woolf Partners or its owner Stuart Fenton. Mr Fenton

told the first pursuer in November 2022 that he had had one of his team, Mike Lazenby,

check the interest calculation which the defender had forwarded to him.

[54]

However, the suggestion that the creditor's interest in the loan might be transferred

came to nothing and in around February 2023 the pursuers asked the defender to agree that

the loan would be repaid out of the sale proceeds due to her from the sale of the company.

She was insistent that she should receive the full sale proceeds that were due to her and that

she would deal with the loan monies separately. She said that she and her husband had

worked out a repayment plan and that she would begin making repayments of the loan in

June 2023, when her son was due to leave school and she would no longer be paying school

fees. The pursuers acceded to the defender's suggestion that they should focus on getting

the deal for the sale of the company done and to talk about the loan afterwards, but there

was no discussion about waiving the loan.

[55]

The parties each also had an interest in VKY, which traded in the automation of

routine tasks such as data entry. The pursuers each held 37.5% of the shareholding in that

company and the defender held 10%. The purchasers of Akari Group intended to retain the

defender as an employee of Akari Solutions Limited after the purchase. They insisted as part

of the deal that she should not be allowed to remain as a director of. or retain her shares in,

VKY because that was considered by them to be a competing business. The pursuers did

not think that the shares in VKY were worth anything because of the level of debt in that

company, amounting to a net liability of more than £65,000. The company had never made a

profit and was dependent on support from the pursuers. The Articles of Association of the

company had provisions on the transfer of shares and also contained a relative valuation

mechanism. The pursuers asked the defender if she wanted to have her shares valued, but

the cost of that exercise was going to be about £4,500 plus VAT and she indicated that she

did not see any point in spending that money because she was satisfied that the shares were

valueless. She did not ask to see the company accounts, although they would have been

made available to her had she done so. The pursuers had no particular interest in acquiring

the defender's shares in VKY; they already controlled the company. The defender never

suggested that she should be allowed to keep those shares or that the sale of Akari Group

should not take place because of the purchaser's requirement that she should dispose of

them. At no point did the pursuers link the loan to the sale of Akari Group or the disposal

of the defender's shares in VKY. It remained outstanding and repayable in full. They would

never have agreed to accept anything less than full repayment.

[56]

After the sale of Akari Group the pursuers continued to try to get the defender to

commit to a repayment plan for the loan, without success. They discovered that her house

in Cambuslang was in the name of a limited company in which she had no apparent

interest, and that her new house was in the name of her husband alone. They became

concerned that she had no intention of repaying the loan voluntarily, and had their solicitors

issue a formal demand for repayment on 19 April 2023. The defender's solicitors maintained

that she had never seen the loan agreement before, had not agreed to borrow money, and

owed nothing, which was very different from the position which she had until that point

adopted.

[57]

Mr Inch was briefly cross-examined about the circumstances in which an element of

the retention monies from the sale of IA3 had been forfeited due to the defender and others

becoming involved in Akari Group, along with the pursuers, before that was permitted in

terms of the sale of IA3, but he did not recall the details of that episode, which in any event

seemed at best of tangential relevance to the matters in dispute in the present case.

Defender's Submissions

[58]

In understandably brief submissions on her own behalf, the defender stated that it

was well-known amongst those concerned that the sale price of the shares in IA3 had

dropped during the course of the negotiations for the sale and purchase transaction, and

that the £250,000 provided by the pursuers to her was intended to reflect that situation. She

had always believed that it was a gift. She had most unfortunately, as she now

appreciated been in the habit at the time of signing documents without reading them.

[59]

She had explained to the first pursuer in November 2022 that there was no point in

her going ahead with the sale of Akari Group if the loan was not going to be repaid, and he

had told her that that would be "sorted". There was no ambiguity about that. It meant that

things would be put in motion to resolve the outstanding loan. The matter had not then

been brought up again until after the sale transaction had concluded, when the first pursuer

told her that things were not going to be sorted. She had questioned that position, but her

views had been dismissed. She had been dishonestly led into agreeing to the sale of Akari

and the transfer of her VKY shares to the pursuers. She had not wanted the sale of Akari

Group to proceed, but had accepted that it should, and then the goalposts had been

changed. That was the same pattern of behaviour as had been adopted by the pursuers in

relation to the sale of IA3; letting her believe that the £250,000 was a gift, then saying

afterwards that it had been a loan all along.

Pursuers' Submissions

[60]

On behalf of the pursuers, counsel moved the court to grant decree for payment to

each of the pursuers of a principal sum of £125,000 with the pactional interest due thereon in

terms of the loan agreement. The defender admitted that on 9 May 2018 she and the

pursuers had each executed a formal written loan agreement. It provided for the defender

to receive a loan of £250,000 from the pursuers, interest free for a year, then carrying interest

at 5% over the Bank of Scotland base rate from time to time, compounding quarterly. The

defender further admitted that on 10 May 2018 she had received payment of the principal

sum of £250,000, so that interest began to run on 10 May 2019. Following expiry of the one-

year interest-free period the loan was to be repayable on demand subject to seven days'

written notice. Repayment of the principal sum and interest was to be made equally

between the two pursuers. The defender admitted that she had made no repayment of the

loan or accrued interest. Repayment of the loan, with interest, was demanded by letter to

the defender from the pursuer's solicitors dated 19 April 2023, as the defender further

admitted. The defender therefore admitted execution and delivery of the loan agreement,

receipt of the funds and receipt of the demand for repayment. She did not contend that she

had made any repayment. She did not suggest that the remedy sought was other than that

for which the agreement provided. The only defence asserted was that the pursuers were

personally barred from enforcing their right to insist on repayment. Personal bar was the

defender's only plea-in-law. Unless that plea was made out the admissions were sufficient

to entitle the pursuers to the decree they sought.

[61]

The defender's claim that she understood that the £250,000 to have been a gift was

incredible. There was no reason for her to be given anything by the pursuers; she had not

been in a position to stop the sale of IA3. The loan agreement was not a complex document

and there was no basis to think that any person of ordinary intelligence could be left in any

doubt as to its import. The contemporaneous email correspondence likewise made it

abundantly clear that the transaction was one of loan. In any event, it was irrelevant

whether the defender was in this respect now dishonestly asserting a belief she never

genuinely held, or whether she had in fact held a genuine but erroneous belief. The whole

chapter of evidence was irrelevant to the resolution of the issue before the court.

[62]

The requirements of the plea of personal bar were authoritatively stated by the Inner

House in Ben Cleuch Estates Ltd v Scottish Enterprise [2008] CSIH 1, 2008 SC 252 at

paragraphs 85 and 87:

"[85] The circumstances in which a plea of personal bar will be sustained were

formulated by Lord Birkenhead LC in Gatty v Maclaine (p7), in the following familiar

terms:

`Where A has by his words or conduct justified B in believing that a certain

state of facts exists, and B has acted upon such belief to his prejudice, A is not

permitted to affirm against B that a different state of facts existed at the same

time.'

It seems to us that the most important word in that dictum is `justified'. There must

be a representation made by A, whether by words or by conduct, as to the existence

of a certain state of fact. B must believe the representation, and must act in reliance

upon it to his prejudice. But that is not sufficient. The belief in that state of fact must

be justified by the representation.

...

[87]

... [T]o found a plea of personal bar, the representation must be such that a

reasonable man would regard it as intended to be believed and relied upon. In other

words, the representation must be interpreted objectively. If it conveys to the

reasonable man that it was seriously intended, and that the person to whom it was

made was being invited to believe it and act upon it, it matters not that the party

making the representation may not in fact have intended that it be relied upon, either

generally or for a particular purpose. If, judged objectively in that way, the

representation is to be treated as one which its maker intended should be relied

upon, the person to whom the representation was made is then, to revert to

Lord Birkenhead's language, `justified' in believing it, and if he is justified in

believing it, he is entitled, in a question with the representor to rely on it.

Entitlement to rely on the representation is a consequence of justified belief in the

represented state of facts. As expressed in the authorities, where the representation

has produced a justified belief in a state of facts, the representor is personally barred

from maintaining that the facts were other than as represented. ..."

[63]

When those criteria were applied to the evidence, it was clear that the defender could

not succeed. She gave no clear account of any relevant representation. None of what she

claimed to have been said came close to an unequivocal statement that the pursuers had

agreed to waive their rights to repayment of the loan. On the contrary, the asserted

comments were most obviously indicative of a wish to postpone for future discussion the

precise terms on which repayment was to be made, and in the meantime to proceed with the

sale of Akari Group. The defender had decided to go along with that. There was no basis to

think that a reasonable person in the position of the defender would regard what she

maintained had been said as a representation that the debt had been waived at all, far less

one that was intended to be believed and relied upon. The transaction for the sale of Akari

Group had been fully and formally documented, just as the loan itself had been. The

defender's reaction to the demand for payment being made had not been to assert furiously

that it was improper because the pursuers had only a few months previously indicated that

it was to be written off. That is what might have been expected of her had the account she

now gave been the truth. Rather, she chose through her solicitors to deny that she had ever

agreed to borrow money, claimed never to have seen the loan agreement and asserted that

there was something untoward about the signature. The court should conclude that these

letters were the result of her having given deliberately dishonest instructions to her

solicitors.

[64]

In relation to the shares in VKY, the defender did not ask for those shares to be

valued and did not offer to prove that they had any value at the date she divested herself of

them. Again, no link was drawn between the VKY shares and the loan in the

contemporaneous correspondence, as was to be expected if such a link truly existed. The

court should repel the plea of personal bar and pronounce decree as concluded for.

Decision

[65]

Up to three questions may require to be addressed in order to determine the proper

resolution of this action. Firstly, what exactly was said to the defender by the pursuers (and

in particular the second pursuer) about the loan in the run-up to the sale of Akari Group?

Secondly, did what was said form a proper basis upon which a reasonable person might

conclude that the pursuers were representing that they intended the loan to be forgiven?

Thirdly, did the defender in fact reach that conclusion and act in reliance on it to her

detriment in agreeing to the sale of Akari Group (which involved the gratuitous transfer of

her shares in VKY)?

[66]

In relation to the first question, the defender's position is that the second pursuer

told her, in the context of conversations in which she had expressed concern about her own

position should the loan remain payable after the sale of Akari Group, "Don't worry Mags,

we can sort that" or "It's sorted Mags, don't worry". After being informed by her of these

conversations, the first pursuer had told her "we'll work it out". Neither pursuer had any

specific recollection of any conversation along the lines claimed. The second pursuer was

prepared to accept that he might well have told the defender to concentrate on getting the

sale of Akari Group done and that the loan would be dealt with thereafter, but denied

having ever said to her that her issue with the loan would be "sorted" or having given that

impression by other words to like effect. Lindsay Climson stated that she had a recollection

of a conversation in which the second pursuer had said to the defender that she should just

push on with the Akari Group sale and that they would then "figure out" the issue of the

loan. That is evidently much closer to the second pursuer's version of events than it is to

that of the defender.

[67]

The pursuers attacked the general credibility of the defender, for a variety of reasons.

I did not find that all of the criticisms made of her in that regard were well-founded, but the

content of some of her evidence seemed odd to say the least. Firstly, her suggestion that she

had considered (albeit, she now accepted, wrongly) that the £250,000 transferred to her by

the pursuers had been a gift rather than a loan depended, at least to a large extent, on the

proposition that the anticipated share price in the sale of IA3 had slumped during the

negotiations for its sale by an amount which resulted in her receiving a lesser sum than she

had originally expected, with the diminution being, if not exactly £250,000, at least

something of that order. No evidence at all was adduced in support of that proposition.

The other justification advanced for the defender's original claimed belief that the £250,000

was a gift was the claim that other shareholders in IA3 had also received gifts at the time of

its sale. That proposition, though specious enough in itself, fails further scrutiny. The other

shareholders in IA3 who received gifts from the pursuers upon its sale received pecuniary

amounts apt to enable them to pay off the Capital Gains Tax due on the receipts of sale.

Thus, Kimberley Totten and Lindsay Climson, each 1% shareholders in IA3, received

around £20,000 as the sale price for their shares, and each received around £2,000 by way of

gift from the pursuers. Had any gift to the defender proceeded along the same principles,

she would have received around £34,000 from the pursuers in respect of the tax on the price

obtained for her 17% share in IA3, not £250,000. The defender also maintained that she

could not recall quite what had been said between her and the pursuers in 2018 about the

reasons for the advance of the £250,000, which contrasts starkly with the pursuers' clear and

comprehensible account (backed to some extent, at least, by the evidence of Lesley Clarkson

about what she had been told by them about those reasons) of what she told them about her

house purchase problem at the time and how that was reflected in the terms of the loan

which was agreed.

[68]

In short, nothing has been established about the circumstances of the sale of IA3

which would have justified the defender in thinking that the £250,000 was somehow to be

regarded as a gift in that connection. Further, the documentation which she was asked to

made it perfectly plain that it was being advanced as a loan. The defender's position in

relation to that matter was not to assert positively that she had not read the documentation,

but rather to say that she could not remember anything about it. That is difficult to reconcile

with the subsequent position adopted on her behalf by her solicitors in correspondence after

the demand for repayment of the loan was made in April 2023, which was positively to

assert that she had not signed the loan agreement and had not even seen it before that point.

[69]

None of these matters supports the conclusion that, in instances where the defender's

evidence on points of importance contrasts with those of others, it should be preferred. I do

not overlook the fact that the defender had various explanations for the infelicities in her

evidence (for example, her suggestion that she had been in the habit of signing documents

without reading them, and that her solicitors must have picked up wrongly what she said to

them about the loan agreement), but the very fact that one party has to attempt to explain

more than one apparent difficulty in her own evidence while those telling a different story

have no discrepancies to explain away is in itself unhelpful to the suggestion that her

evidence should be preferred where accounts differ.

[70]

Drawing these strands together, I hold that, as set out in the evidence of Ms Climson,

from which in its essentials the second pursuer did not demur, he told the defender in the

run-up to the conclusion of the Akari Group sale that she should concentrate on getting that

deal done and that attention would then be turned to address the issues which she was

raising with the loan. I do not consider that the first pursuer said anything different to the

defender.

[71]

That answer to the question of what exactly was said to the defender supplies a clear

answer to the second question which arises, namely whether what was said formed a proper

basis upon which a reasonable person might conclude that the loan was to be forgiven. All

that was said was that there would be a discussion about the loan after the Akari Group deal

was done. No reasonable person in the position of the defender could have concluded that

that meant that the loan was to be forgiven. All that such a person could have taken from

what was said to the defender was that the pursuers intended to have a discussion about the

defender's difficulties with the loan after the Akari Group deal was done. That discussion

might have resulted in capital forgiveness in whole or in part, the remission of interest in

whole or in part, or simply in a repayment schedule being agreed. It would not have been

reasonable for a person in the position of the defender to conclude that any one of those

outcomes was more probable than any other, when all that had been said was that a

discussion would be had.

[72]

If I had accepted that the defender was told that her issue with the loan would be

"sorted", then a degree of ambiguity would have remained, but in the context of her

expressing concerns about her ability to repay the monies outstanding on the loan if the

Akari Group deal settled at the price ultimately being offered, I would have held in all the

circumstances that a reasonable person could have concluded that that meant that the

pursuers intended to afford the defender at least some meaningful element of capital

forgiveness or interest remission. The defender's claimed repayment difficulties could not

sensibly be regarded as "sorted" unless something of that kind was to be put forward. That

might have raised difficult questions about the extent to which the pursuers were entitled to

seek, as they do, repayment of capital and payment of pactional interest in full. However, in

the event those questions do not arise. Had they arisen, they would given my answer to

the third question identified above not ultimately have resulted in a different answer to the

ultimate question of the viability of the defender's plea of personal bar as a whole.

[73]

That third question is not one which requires to be answered, given the way in which

the first two have been resolved. However, had it been necessary to do so, I would have

concluded that the defender did not in fact act on the faith of what was said to her (either on

her own version of events or that which I have preferred) in agreeing to the sale of Akari

Group and the concomitant divestiture of her shares in VKY. It should be borne in mind

that by the time that potential sale was bruited, the first pursuer and Ms Clarkson had both

suffered serious illness and, like many in that position, had re-evaluated their life choices

and very clearly wished to exit the Akari business. The second pursuer, who had had in the

circumstances to take on a far greater operational role in the business of Akari than he had

anticipated or wished for, was almost, if not equally, keen to sell up and depart. Both

pursuers were more than happy to take the deal ultimately put forward by Woolf Partners,

even if it was not as generous as might have been anticipated, because it provided a

reasonable route to the exit which both wished for, and was indeed the only such route

which was then available. In these circumstances, the defender (along with the other more

minor shareholders in Akari Group) came under considerable pressure to agree to the sale.

Kimberley Totten spoke to having felt compelled to proceed with the deal, despite

entertaining serious misgivings, and did not believe that Akari's business could continue if

it was not sold. Although there had been some talk of continuing the business during the

period when it appeared that Woolf Partners were not going to proceed with their offer,

once it became apparent that a deal was again on the table, it was practically inevitable in

the circumstances that that deal was going to be done, come what may. Although the

defender may have had her qualms, she was going to receive a reasonable sum for her

shareholding and was seen by Woolf Partners as a key employee of the business going

forward, with all of the future opportunities that that might bring. Although the matter was

never tested by valuation, there was no evidence before the court that the defender's shares

in VKY were worth anything and I do not consider that she thought otherwise. She had

previously been able effectively to shrug off the pursuers' enquiries as to when she was

going to repay the loan and there was nothing at that stage to suggest that that situation

could not be indefinitely continued (the litigation only having ensued once the pursuers

subsequently discovered that the loan monies had not been applied for the purchase of

property by the defender as they had thought). The defender had tried and failed to get

Woolf Partners to pay off the loan as part of their purchase of Akari Group. In these

circumstances, I conclude that she would have regarded a bird in the hand as better than

two in the bush and was prepared to agree to the sale of Akari Group on the offered terms

regardless of anything having been said to her about how the loan was going to be

addressed in future. It follows that her plea of personal bar would have foundered at this

stage even had it surmounted the previous obstacles in its way.

Conclusion

[74]

I shall sustain the pursuers' second plea-in-law, repel the defender's plea, and grant

decree as first and second concluded for.