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Cite as: [2004] ScotSC 29

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SHERIFFDOM OF TAYSIDE CENTRAL AND FIFE

A224/02

JUDGMENT OF SHERIFF PRINCIPAL

R A DUNLOP QC

in the cause

NIGEL LOWE HOLDINGS LIMITED

Pursuers and Respondents

against

INTERCON CONSTRUCTION (PTY) LIMITED and JOHN GLENDINNING

Defenders and Appellants

__________________

Act: Mr Forsyth, Counsel instructed by Condies, Solicitors, Perth

Alt: Mr Woods, Masons, Solicitors, Glasgow

PERTH, 22 April 2004. The Sheriff Principal, having resumed consideration of the cause, Varies the sheriff's interlocutor of 14 July 2003 by deleting from the second line thereof the words "title to sue" and by substituting therefor the words "whether the alleged contract between Nigel Lowe and Associates and the first defenders referred to on record was one of the contracts the benefit of which was transferred to Nigel Lowe Management Services Limited and from them to the pursuers"; quoad ultra refuses the appeal and adheres to the sheriff's said interlocutor; certifies the appeal as suitable for the employment of junior counsel; reserves meantime the question of expenses and appoints parties to be heard thereon on Monday 10 May 2004 at 10 am within the Sheriff Court House, Tay Street, Perth.

NOTE:

[1] This is an appeal against the sheriff's interlocutor of 14 July 2003 pronounced following a debate. The issue at that debate was the pursuers' title to sue. The sheriff allowed a proof on that question and the defenders have now appealed, renewing their submission that the action should be dismissed.

[2] The factual background to the defenders' plea of no title to sue is not entirely straightforward and the narrative of that background in the pursuers' pleadings is in certain respects less than clearly expressed. The pursuers are a company, Nigel Lowe Holdings Limited. They seek payment in terms of an alleged contract between the partnership of Nigel Lowe and Associates (hereinafter referred to as "Associates") on the one hand and the first defenders on the other. At the material time the first defenders were engaged in a construction project for the government of Swaziland and, according to the pursuers, Associates were contracted to provide consultancy services in relation to a dispute about additional payments which the first defenders were claiming in respect of that project. The pursuers aver that the agreed remuneration for the consultancy services was a lump sum of £4,000 together with a fee of 20% of all amounts which were certified or otherwise became due to the first defenders. It is not apparently in dispute that the first defenders received additional payments by 31 May 2001 at latest and the sum sued for represents 20% of those payments at the rate of exchange allegedly agreed.

[3] When the action was first raised the pursuers made the following averments:-

"Nigel Lowe and Associates was dissolved as a partnership on or around 31 October 2000. The assets of the partnership of Nigel Lowe and Associates were acquired by Nigel Lowe Holdings Limited. Those assets included the sum due to Nigel Lowe and Associates ..."

[4] While these averments are not strictly speaking inaccurate they do not tell the whole story and in particular do not give a full account of how it is said that the pursuers come to be entitled to recover the debt which is the subject matter of this action. In the closed record that was before the sheriff (No 23 of process) it is averred that the assets of the partnership of Associates were first transferred to Nigel Lowe Management Services Limited (hereinafter referred to as "Management") by virtue of an asset transfer agreement dated 2 October 2001 and subsequently transferred from Management to the pursuers by virtue of an asset transfer agreement dated 22 January 2002. These agreements are Nos 5/13 and 5/11 of process respectively. In both cases the agreements bear to record in writing the terms and conditions of a transfer that, by the respective dates of their execution, had already taken place. Thus in terms of the 2001 agreement the transfer date is stated to have been 31 October 2000 and in terms of the 2002 agreement the transfer date was 1 November 2000. The terms of each agreement were incorporated brevitatis causa in the pleadings.

[5] For the purposes of both the debate and the appeal attention was focused primarily on the terms of the 2001 agreement in which Associates was the vendor and Management the purchaser.

[6] Clause 2.1 of that agreement provides:-

"Notwithstanding the date(s) hereof, as at and with effect from the close of business on the transfer date the vendor transferred the business and assets to the purchaser as a going concern including, without prejudice to the foregoing generality, the following:-

.....

the benefit (subject to the burden) of the Contracts;

....."

[7] "The Contracts" were defined as "the whole right, title and interest of the vendor in and to and the full benefit and burden of the contracts relating to the business including, without prejudice to that generality, those identified in part 2 of the schedule ... ".

[8] "The Schedule" was defined as "the schedule of five parts annexed to and forming part of this agreement." The word "five" is a manuscript alteration of the original typed word "three." In fact part 2 of the schedule relates to employees and part 3 to contracts, though the figure "3" is a manuscript alteration to the figure "2" which had apparently been the figure as originally typed. It was no doubt with these factors in mind that, by the time of the appeal, it was accepted on both sides that the reference to part 2 in the definition of "the contracts" was a patent error.

[9] Part 1 of the schedule apparently sets out the clients of the business of Associates and the contracts set out in part 3 are identified by reference to these clients. Page 9 of the agreement is apparently a front piece to part 1. It bears the words "This is the schedule referred to in the foregoing business transfer agreement between Nigel Lowe and Associates and Nigel Lowe Management Services Limited" and below that the words "Part 1" and "Clients". The immediately following page has what bears to be a client list, but it also has at the head the words "This is the schedule referred to in the foregoing business transfer agreement between Nigel Lowe and Associates and Nigel Lowe (Scotland) Limited".

[10] In the proceedings before the sheriff this latter heading and other similar headings formed the basis of a submission that the pursuers had failed to show a clear and unambiguous title to sue, since the 2001 agreement bore to relate to a transfer of clients to Nigel Lowe (Scotland) Limited (hereinafter referred to as "Scotland") and that that deficiency could not be cured simply by saying, as the pursuers did, that it was an error. The sheriff took the view that there should be a proof on that matter, but in his note he says that in retrospect he was wrong in that view and that the heading referred to could be ignored under reference to clause 1.5 of the agreement. That clause provides that the headings are "for ease of reference only and shall not affect the construction or interpretation of this agreement". He nevertheless took the view that a simple proof on the preliminary question of whether the contract between Associates and the first defenders formed part of the assets transferred to Management was necessary, since the defenders did not admit that.

[11] That was the limited extent of the debate before the sheriff. By contrast, the arguments deployed in the appeal have been much more wide ranging. The grounds of appeal were amended without objection, but it is noteworthy that these grounds have given rise to arguments which extend well beyond those addressed to the sheriff.

Scope of the appeal

[12] Counsel for the defenders and appellants set out his submission in four stages, which can be summarised as follows:-

The 2001 agreement is inept to transfer the subject matter of the action.

In any event on a proper construction of the 2001 agreement it did not amount to an actual transfer of the subject matter of the action but only an agreement to transfer.

Even if the agreement can be construed as an actual transfer, it only served to regulate the position between the parties to it and did not operate to create a real right in the transferee against the defenders.

There was in any event no intimation to the defenders of any transfer prior to the raising of the action and while intimation can be effected by the raising of the action it was not so effected in this case.

[13] The first of these grounds can be considered in isolation, but it seems to me that the arguments advanced in relation to the other grounds overlap and accordingly I have not approached them in precisely the same order in which they were advanced.

Ground 1 - No transfer of subject matter of the action

[14] The submissions of counsel for the appellants under this head were threefold. Firstly, he contended that the schedule to the 2001 agreement was not incorporated into the agreement. Secondly, in the heading to two parts of the schedule reference is made to Scotland and he submitted that they were not headings to which clause 1.5 could be applied. Thirdly, under reference to Hunter v Fox 1964 SC (HL) 1995, he submitted that it was not appropriate in construing the agreement to take into account the pursuers' averments to the effect that the heading appears as a result of an error in drafting and on the strength of that explanation to treat the heading as if it had not been written. While a patent defect would be treated pro non scripto a latent defect required to be corrected by a process of rectification.

[15] In response the solicitor for the pursuers and respondents accepted the distinction between patent and latent mistakes. He contended that both the reference to Scotland and the reference in the definition of "the Contracts" to part 2 of the schedule instead of part 3 were patent mistakes and should be treated pro non scripto. He also drew attention to the fact that the sheriff had apparently come to the same view, albeit in retrospect.

[16] In my opinion the sheriff's retrospective view of these submissions is the correct one. There is only one part of the schedule that contains a list of contracts and the definition of "the Contracts" would make no sense unless it referred to that part. Like the sheriff I think it is clear that the reference in that definition to part 2 instead of part 3 is a patent mistake and that view is reinforced by the other manuscript alterations to which I have already referred. As I have already indicated, I understood counsel to accept that position. The schedule is described as "annexed to and forming part of this agreement." The principal agreement is produced and the schedule is plainly annexed to the main body of the agreement. Indeed it forms part of a single bound document. But for the heading containing the reference to Scotland it is clear that the list of contracts was a list of those contracts which were the subject of the agreement.

[17] It seems clear from the sheriff's note that he considers that clause 1.5 of the agreement was a sufficient basis for rejecting the defenders' submissions insofar as founded on the headings in the schedule which refer to Scotland. In my view his conclusion in that regard is well founded and I adopt his reasoning for that conclusion. Counsel submitted that that clause couldn't be used as an instrument for deleting the heading in question. In my view however the proper effect of clause 1.5 is that one ignores the headings when trying to decide what is the meaning of the contract. If one adopts that approach there is no confusion whatever as to the parties to the contract and what is transferred by it.

[18] Had it been necessary to do so however I consider that the headings in question can be read pro non scripto. The agreement bears to be between Associates and Management and is executed by each of these. On no view can that agreement be described as one between Associates and Scotland and the two headings in the schedule which make reference to Scotland have no sense at all, referring as they do to the "foregoing business transfer agreement." In Hunter v Fox supra cit. Lord Reid emphasises the need to look at the words in their context and in my view when that is done there is little doubt that this heading has no sensible meaning and should be read pro non scripto. Accordingly whichever approach one adopts this ground of appeal cannot be sustained.

[19] Before passing from this ground of appeal it should also be pointed out that, in any event, the definition of "the Contracts" permits the identity of the contracts transferred by the agreement without necessary recourse to the schedule, since those contracts identified in the schedule are included without prejudice to the generality of the opening words of the definition. Accordingly even if the schedule were ignored as not forming part of the agreement it would in my view still be open to the pursuers to prove that the contract between Associates and the first defenders was transferred by the agreement.

Grounds 2 and 3 - the nature and legal effect of assignation

[20] As a preface to both the second and third grounds of appeal, counsel examined the nature of assignation under reference to certain excerpts from the institutional writers. He submitted, firstly, that an assignation was not a complete and valid right until intimated to the debtor (Stair's Institutes III.1.6). Intimation was an essential requirement for completing the conveyance (Erskine's Institute III.v.3) and until that time the cedent or assignor was not denuded of the right which is the subject matter of the assignation (Bankton's Institutes III.1.6). He submitted that it was clear from these references that assignation fell within the province of both contract law and property law. A transfer of a real right to the subject matter of the assignation only arose at the point of intimation.

[21] Secondly, under reference to paragraph 12-58 of McBryde on Contract 2^nd edn., he submitted that there was a distinction between an agreement to assign on the one hand and the assignation itself on the other. A mere agreement to assign did not afford a title to sue (Alderwick v Craig 1916 2SLT 161 and Bank of Scotland v Liquidator of Hutchison Main and Co Limited 1914 SC (HL) 1 at page 4).

[22] Thirdly, he submitted that, since the subject matter of the action was, at the time of the alleged transfer from Associates to Management, an unvested contingent right, the 2001 agreement could not competently transfer that right and should be seen as no more than an agreement to assign that right if and when it emerged. Until that time the right was a right in spe and as such was not capable of being owned and if not owned could not be transferred. This argument was advanced under reference to Bedwells and Yates v Tod 2 Dec 1819 FC 50, Pearson Wilson & Co v Brock 1842 4D 1509, Gallemos Ltd (in receivership) v Barratt Falkirk Ltd 1989 SC 239, Reid v Morrison 1893 20R 510, Browne's Trustees v Anderson 1901 4F 305, Bell's Principles p. 572, Gloag and Irvine Law of Rights in Security p.441 and McBryde on Contract para 12.35.

[23] Particular reliance was placed on Bedwells and Yates v Tod which, it was submitted, vouched the proposition that an assignation is invalid as a conveyance if there is nothing in existence to be assigned, as with "a mere spes or expectancy." Reliance was also placed on the opinion of Lord Rutherfurd Clark in Reid v Morrison and in particular the passage at p.514, which is in these terms:

"I do not think that an expectancy is a right or power or interest in property. There is nothing in the expectant beyond a mere chance. He hopes to succeed to property and by his succession to make it his own. ........ An expectant cannot sell the property to which he hopes to succeed, or any interest in it, nor can he exercise any power over it. He can sell no more than a chance - his chance of becoming proprietor. He may grant a conveyance; but it conveys nothing, inasmuch as he has nothing to convey. It becomes effectual by accretion alone. Till then it is nothing but a mere agreement to convey the subject of the expectancy when it shall vest."

[24] On this approach counsel submitted that, while one can legitimately enter into an agreement to convey a mere chance when it emerges, one cannot put an assignee in a position of being able to demand payment of the debt to which the chance relates until it emerges and unless intimated to the debtor. It followed, it was submitted, that intimation could only be made once the debt had emerged.

[25] In responding to these submissions, the solicitor for the respondents took no issue with the statements of the institutional writers regarding the nature of assignation and how the right assigned became effectual against the debtor. However he did take issue with the appellants' third submission and founded on a passage in Gloag and Irvine p.441 in the following terms:

"While a debt which has been paid, or a right which has been extinguished, before the date of assignation cannot be effectually assigned, it is quite settled, both in Scotland and England, that a future right, which is neither vested nor exigible at the date of assignation, is none the less capable of being legally alienated, to the effect of giving a good title to the assignee when the right comes to be vested. An expectant, who grants a conveyance of a right which he hopes to acquire, actually conveys at the time no more than a mere chance - his chance of becoming proprietor of the subject in question. "The conveyance becomes effectual by accretion alone. Till then it is nothing but a mere agreement to convey the subject of the expectancy when it shall vest." (quoting Lord Rutherfurd Clark). At the same time, express assignations of expectancies, or rights which at the date of assignation were still in spe, are recognised as effectual, when duly intimated, to put the assignee in the place of the cedent, and give him a claim to payment when the period of payment arrives."

[26] The last sentence of this quotation is supported in the footnote by reference to Carter v McIntosh 1862 20R 510 at 514 and Kirkland v Kirkland's Trustee 1886 13 R 798. It was also submitted that it was consistent with the short judgment of Denman J in Percy v Clements 43 LJCP 155 and with the statement at para 38.01 of Gloag & Henderson The Law of Scotland 11^th edn., which relied on the authority of Bedwells and Kirkland. Reference was also made to Gloag and Irvine p.442, which contains the following statement:

"Not only may an expectancy be expressly assigned, but it may be included in and carried by a general conveyance of the cedent's whole estate, if the words of the conveyance show that such was the intention of the party."

[27] The solicitor for the respondents submitted that in this case the 2001 agreement transferred the benefit of the contract between Associates and the first defenders and had the effect of putting Management in the same position in relation to that contract as Associates. In terms of that contract Associates had a right of payment subject to a contingency and that was a right which was capable of being assigned, the assignation becoming effectual against the first defenders once intimated to them.

[28] In considering these arguments I take as my starting point the statements of principle found in the cited excerpts from the institutional writers. It is clear from these excerpts that intimation of the assignation is essential to complete the right of the assignee in a question with the debtor and in my view it follows that the title of the assignee to sue the debtor is only complete once such intimation is made. This does not however detract from the binding effect of the assignation as between assignor and assignee. Thus far there seems to be common ground between the parties.

[29] It is the appellants' third submission that gives rise to the greatest controversy. However that submission proceeds on what I consider to be the mistaken view that the right that has allegedly been assigned is an unvested contingent right, whereas in my opinion it was an existing and vested contractual right, though its content at that time remained to be determined and indeed might conceivably have had no valuable content. The first defenders had from the outset an obligation to account and what was assigned was Associate's right to enforce performance of that obligation. This seems to me to be an important point of distinction and in my view is a sufficient basis upon which I can reject counsel's submissions on this part of the appeal.

[30] Lest I am wrong on that matter however I consider that in any event counsel has carried his submission further than is warranted by the authorities to which reference has been made. In both Kirkland v Kirkland's Trustee and Reid v Morrison reference was made to Trappes v Meredith 1871 10M 38. This case was unusual in that it had been remitted by the Court of Chancery in England for the opinion of the Court of Session on a number of distinct questions. In its response the Inner House made this reply:-

"By the law of Scotland a right or estate in expectancy or spes successionis may be sold and assigned so as to give the purchaser a good title in a question with the seller to the right, estate, or succession when it comes to be vested in the seller. But such right or estate in expectancy or spes successionis is not attachable by the diligence of creditors of the person in expectancy or entitled to succeed, and would not be carried to the trustee in his sequestration if he should be discharged before such right, estate, or expectancy vested in him."

[31] In both Kirkland and Reid the dispute involved the proper interpretation of the provisions of section 81 of the Bankruptcy (Scotland) Act 1856. Although the majority of the court in Reid reached a different conclusion on that matter to the conclusion reached by the court in Kirkland, nevertheless in both cases there does not appear to have been any suggestion that the opinion of the court in Trappes to which I have referred was not a sound statement of the law. In Kirkland the decision of the court proceeded on the basis that an expectancy or spes successionis was capable of alienation. In Reid Lord Rutherfurd Clark, with whom all but one of the other judges concurred, took the view that in Kirkland the court had not addressed their minds to the true question that arose in the interpretation of section 81 of the 1856 Act. He pointed out that that court appeared to have held that the interpretation clause in the 1856 Act covered expectancies, because they are capable of legal alienation. In disagreeing with that view, he does not however suggest that expectancies were not capable of legal alienation.

[32] In Browne's Trustees v Anderson it seems to have been taken as read that a spes successionis could be assigned, the issue in that case being related to the question of intimation. It seems plain however that, were counsel's submissions on this matter in the present case to be well founded, the court in Browne's Trustees could not have reached the conclusion that it did. It can be seen from the opinion of Lord Moncrieff that the cases of Trappes and Reid were before the court and it would be strange that the court should have reached the view that it did if it was not possible to assign an expectancy or spes successionis.

[33] The ratio of Bedwells and Yates v Tod is not altogether clear and the report lacks any detailed explanation of the court's reasoning. On one view the court appears to be expressing the opinion that a mere spes or expectancy cannot be the subject of an assignation. On the other hand it seems reasonably clear that the court would have reached a different view had intimation been given to the executor after the vesting of the expectancy even though the assignation of the expectancy had been executed prior to vesting. It is perhaps of some significance that the successful parties accepted in their pleadings that an unvested contingent interest could be assigned, the true issue being the validity and effect of the intimation of that assignation. It seems to me that the opinion of the court should be read in that light.

[34] Looking at the matter generally therefore, there is in my view no difficulty with the proposition that rights under a contract may be assigned even though such rights are contingent and not immediately exigible. If there is any difficulty it lies in the manner of completing the transfer so as to defeat the assignor's creditors or the claims of other assignees. In that regard the opinion of Lord Trayner in Browne's Trustees v Anderson (at page 311) is useful:-

"From what I have said it is plain that at the date of his sequestration Robert had only an expectancy in regard to Isabella's share. Such a right, it is now well settled, does not pass by sequestration to the bankrupt's trustee or creditors. But when the expectancy became a vested right of property in Robert by Isabella's death in December 1897 it would pass to the trustee as an asset of the bankrupt if there was no preferable right existing to exclude the trustee's claim. It cannot be doubted that the assignation in favour of Mr Anderson forms such a preferable right if that assignation was perfected by intimation. And the question before us really turns on this, was that assignation duly intimated? If it was, Mr Anderson must prevail in the competition. Now, the assignation (so far as it need here be considered) was an assignation of a spes successionis to a fund in the hands of Mr James Browne's Trustees, and to them accordingly intimation of the assignation had to be made. In point of fact, intimation of the assignation was made about a week after the date of its execution to the law agents for Mr James Brown's Trustees, who were advising the trustees in the administration of the trust affairs."

[35] In my view this seems to offer clear support for the proposition not only that it is competent to assign a spes successionis but that intimation of such an assignation can be made prior to the vesting of the subject of that expectancy, at least insofar as there is a person holding funds and having an obligation to account in the event of the contingency being fulfilled. In that event, when the subject of the expectancy ultimately vests the right of property to that vested subject will lie with the assignee without any need for further action either on his part or that of the assignor. Whether intimation prior to vesting of the subject of the expectancy will be effective in all circumstances is not an issue with which I need be concerned in this case, since by the time any alleged intimation was made to the first defenders the contingency upon which payment under the contract depended had been fulfilled and there was accordingly (on the pursuers' averments) a present obligation on the first defenders to pay the amount now claimed.

[36] The only remaining issue on this chapter therefore is the distinction relied upon by the appellants between an agreement to assign and an assignation. Counsel has prayed in aid the statement of Lord Rutherfurd Clark in Reid v Morrison that a conveyance of an expectancy is "nothing but a mere agreement to convey the subject of the expectancy when it shall vest."

[37] In considering this statement it is in my view necessary to bear in mind the context in which this statement was made. That context was an argument regarding the interpretation clause of the Bankruptcy (Scotland) Act 1856 which provided that the words "property" and "estate" included "all rights, powers and interests therein capable of legal alienation." Lord Rutherfurd Clark was therefore addressing himself to the issue of whether an expectancy was a right, power or interest in property. In concluding that it was not, I do not think that he was saying anything about what further steps if any required to be taken by the assignor and/or assignee once the subject of the expectancy vested. His reference to the conveyance becoming effectual by "accretion" alone seems to suggest that nothing further is required, at least from the assignor, although the use of that word would perhaps not accord with its strict meaning.

[38] In the various other authorities which I have discussed it seems to me that, in the context of an expectancy, "assignation" has been used to describe the deed by which the relationship of the assignor and assignee has been regulated. The proper effect of any such deed will no doubt depend upon its particular terms, but whether or not, in a question between the parties to it, it is more than a mere agreement to assign may perhaps be judged by whether the assignee can complete his right without further recourse to the assignor.

[39] With these considerations in mind, and recognising that the timing of intimation may be material, it seems to me that the statement in Gloag and Irvine at page 441 that "express assignations of expectancies, or rights which at the date of assignation were still in spe, are recognised as effectual, when duly intimated, to put the assignee in the place of the cedent, and give him a claim to payment when the period of payment arrives" is a correct statement of law.

[40] Accordingly, even had I accepted the essential foundation of counsel's argument, I would have rejected the conclusion advocated by him..

Ground 2 - effect of the 2001 agreement
[41] That nevertheless leaves for consideration the appellants' second ground of appeal, which essentially depended upon the proper construction of the 2001 agreement. Counsel carried out a detailed examination of the clauses of the 2001 agreement in support of his submission that there was a mere agreement to assign rather than an actual transfer of the subject matter of the action. In particular he drew attention to the language of clause 5 of the 2001 agreement, which provides:

"Completion of the transfer of the business and assets hereunder took place on the transfer date when:

5.1 ownership of and property in the business and assets passed to the purchaser and they were and shall be deemed to be assigned, delivered and transferred to and placed in the possession and custody of the purchaser; ...."

[42] He emphasised the language of ownership and property and then referred to clause 5.3 in which, in broad terms, the vendor agreed to execute whatever deed was necessary to secure effective vesting of the business and assets in the purchaser. He submitted that this suggested that there were at least some parts of the business and assets which had not been transferred on the transfer date and that accordingly clause 5.3 should be read as merely an agreement to transfer. This was reinforced by the terms of clause 6 in relation to the contracts, which applied to those contracts not already transferred in terms of clause 5.1, and was generally supported by the provisions of clauses 11, 12, 13 and 15 of the agreement.

[43] In responding to this ground of appeal the solicitor for the respondents submitted that the agreement transferred the benefit of the contract between Associates and the first defenders and had the effect of putting Management in the same position in relation to that contract as Associates. In terms of that contract Associates had a right of payment subject to a contingency and that was a right which on a proper construction of the agreement had been assigned.

[44] In my view the submissions on behalf of the respondents are to be preferred. When one looks at the 2001 agreement as a whole it seems clear to me that there was an actual transfer of Associates' right, title and interest in the contracts identified in the schedule. That is the clear meaning of clause 2.1 of the agreement, which, as between Associates and Management, constituted an assignation rather than a mere agreement to assign.

[45] In my view there is nothing in the other clauses of the agreement, and in particular nothing in clause 5, to contradict that provision. In the context of the agreement as a whole I do not attach significance to the words "ownership and property" in clause 5.1 beyond the fact that they reinforce the transfer of the business and assets from one party to the other, so that, at least in a question between them, Management is substituted for Associates in relation to the business and assets transferred. Clause 5.1 provides for a deemed assignation of "the business and the assets" and does so without qualification. Bearing in mind the contractual definition of those words, clause 5.1 does not therefore in itself provide any support for the exclusion of some assets from that deemed assignation. In that context it seems to me that clause 5.3 amounts to no more than a provision requiring Associates to do whatever is necessary to formalise that assignation so as to make it effective, thus making express provision for what would in my view otherwise be implied (Bell's Principles p.572, para.1461). It does not however detract from the fact that there has been an actual transfer rather than a mere agreement to transfer. Clause 3.2 can be viewed in similar terms. So far as clause 6 is concerned it is not altogether easy to discover how this applies in practical terms, since there are a number of different concepts which plainly cannot all apply to each of the two items to which this clause is directed, namely "each Contract" and "the lease of the Property." For the purposes of this action it is in my view sufficient to notice the phrase "so far as not already done so" and to refer back to the provisions of clause 2.1, which, as I have already pointed out, amount to an assignation of Associates' whole right, title and interest in the contracts and not merely an agreement to assign.

[46] As counsel has presented his argument this second ground is essentially one of interpretation of the contract and, for the reasons I have discussed, I am unable to accept that there was no more than an agreement to assign. Accordingly, on this interpretation of the agreement, I cannot sustain the second ground of appeal.

Ground 4 - Intimation

[47] As I have already indicated it is not disputed that the pursuers' right to the subject matter of the action is only completed by intimation to the defenders. They aver that such intimation was made by a letter of 6 August 2001, failing which by the raising of the present action and this alternative basis of intimation was that contended for in the appeal. The letter in question is no. 5/7 of process and emanates from the pursuers.

[48] On behalf of the appellants, counsel pointed out that this letter pre-dates both asset transfer agreements. Furthermore it followed a letter of 31 May 2001 (5/6 of process) which emanated from Scotland and counsel submitted that the pursuers were apparently relying upon this letter as in effect having come from the pursuers, there being an averment that that letter was erroneously sent on paper with the letterhead of Scotland. He also pointed out that there was a similar averment of error in relation to the letter of 6 August and that this was inconsistent with the earlier averment that intimation from the pursuers was given by this letter.

[49] He submitted that effective intimation required a clear expression of the cedent, assignee and the thing assigned. Assuming that the letters of 31 May and 6 August can be construed as intimations, they can only be intimations that the assignee is the company from whom the letter emanates. The confusion was a serious matter because the defenders had to know the party to whom payment should be made.

[50] Counsel then went on to examine the position if neither letter constituted a valid intimation. He accepted that intimation can be effected by the raising of an action but submitted that whether or not such intimation was given was to be judged by the averments in the initial writ at the outset of the action. A party required to have title to sue at the date of the raising of the action and a want of title could not be made good thereafter. Accordingly if effective intimation was only given when the record was amended that would not be sufficient. Reference in this regard was made to Bentley v Macfarlane 1964 SC 76 and Symington v Campbell 1894 21R 434.

[51] In responding to these criticisms the solicitor for the respondents recognised the inconsistency in the pleadings with regard to the letter of 6 August 2001 and moved an amendment at the bar to delete the sentence at lines 16, 17 and 18 of Article 4 of Condescendence "The letter dated 6 August 2001 was erroneously sent on paper with the letterhead of Nigel Lowe Holdings Limited." That motion was formally opposed by counsel for the appellants but I allowed it and pronounced an interlocutor accordingly on 26 January 2004.

[52] So far as the other criticisms were concerned the solicitor for the respondents submitted that, although the asset transfer agreements were both dated after 6 August 2001, they related to an assignation that had been granted before that date. It was accordingly an effective intimation that the pursuers were the party now in right of the subject matter of the action. In any event judicial intimation of that fact was made in the initial writ. He accepted the authority of Beveridge and Symington.

[53] I approach the issue on the basis that it was argued, namely that intimation was required at latest by the time of the raising of the action. I make that point specifically because it seems to me that there is at least an argument that the assignation gives the pursuers a substantial interest in the subject matter of the litigation, requiring only formal completion by intimation, such that title to sue can be sustained even though intimation is only made in the course of the process (see Symington v Campbell at p.437 and Bentley v Macfarlane at p.79). For the sake of completeness I should say that Alderwick v Craig and Bank of Scotland v Liquidator of Hutchison Main & Co Ltd can be distinguished as the foundation of the claimed title was merely an agreement to assign (or equivalent) and not, as with this case, an assignation.

[54) Having made these observations I now address the issue raised by the parties. In my opinion the essential information that required to be communicated to the defenders was that the pursuers were now the party in right of Associates' claim to the subject matter of the action. In my view that information was contained within the initial writ and accordingly this ground of appeal cannot be sustained. I accept that the defenders were entitled to call upon the pursuers to vouch these matters and to give greater specification, but I do not consider that that vouching and specification were required contemporaneously with the initial writ. The amended pleadings, narrating the mechanics of the transfer, together with the production of the asset transfer agreements sufficiently set out the pursuers' title in elaboration of the original averment in the initial writ.

[55] In these circumstances it is unnecessary to consider whether the letter of 6 August 2001 constitutes a sufficient intimation, although there is at least a question about that when it is set in the context of the other correspondence at that time. It should be noted however that the pursuers do not rely on the letter of 31 May 2001 as intimation, although the fact that it features in the pleadings at all is apt to cause confusion. In the final analysis however the material questions are who is the true assignee and does the assignation cover the debt in issue. Intimations that do not relate to the true assignee can be ignored, but if there is any doubt about the identity of the true assignee I think the debtor is entitled to put the true assignee to the proof of that identity. As I have already indicated, the title is sufficiently averred and in my view were these matters established in evidence and accepted by the court the result would be the repelling of the defenders' first plea in law of no title to sue.

[56] It follows from what I have said that the appeal must be refused. But for the fact that the defenders do not admit that the contract between Associates and the first defenders (which is the subject of the action) was transferred to Management and then to the pursuers, it is reasonable to infer from the sheriff's note that he would have sustained the pursuers' title to sue and allowed a proof at large. The sheriff's view that there should be a simple proof on that matter seems appropriate given the position adopted by the defenders in the pleadings, although it is not clear whether that accurately reflects their position in fact. In the circumstances I have varied the sheriff's interlocutor to accord more accurately with his retrospective intention. If this is no longer a live issue in light of my decision herein no doubt the parties can ask the court to repel the pleas of no title to sue and send the case to a proof at large.

Expenses and certification

[57] Counsel for the appellants asked me to reserve the question of expenses lest anything turn upon the fact that I had allowed the pursuers' amendment in relation to the letter of
6 August 2001. Both parties were otherwise agreed that expenses should follow success. The appellants have not succeeded to any extent and on the face of it the respondents have grounds for seeking the expenses of the appeal. Having regard to the arguments deployed on behalf of the appellants it must be open to doubt that the amendment has made a crucial difference to the outcome of the appeal. Lest I am wrong about that however I think the safer course is to reserve the question of expenses.

[58] Counsel moved for certification of the appeal as suitable for the employment of junior counsel. This was opposed. Although I am inclined to think that the appeal was made to appear more complex than it was, nevertheless it has raised some difficult issues and accordingly I am satisfied that it is appropriate to make the certification requested.