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You are here: BAILII >> Databases >> Scottish Sheriff Court Decisions >> Millar v. Maguire & Anor [2005] ScotSC 73 (10 August 2005)
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Cite as: [2005] ScotSC 73
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Millar v. Maguire & Anor [2005] ScotSC 73 (10 August 2005)
A322/04
SHERIFF C A L SCOTT, Advocate
JOSEPH MILLAR v DAVID MAGUIRE and ANOTHER
(COMMERCIAL ACTION)
GLASGOW, 10 August, 2005. The Sheriff, having resumed consideration of the cause, sustains the second and third pleas-in-law for the defenders and repels the pursuer's plea-in-law; assoilzies the defenders from the first crave of the Initial Writ; and allows a hearing on expenses to take place on a date to be hereafter assigned; reserving to pronounce further.
Sheriff
NOTE:
In 2002/2003, the pursuer and the defenders entered into missives whereby the pursuer was to purchase heritable subjects at Unit 5, Old Mill Park, Glasgow Road, Kirkintilloch. The purchase price was agreed at £27,000. In many ways, the usual conveyancing procedures followed the conclusion of the bargain in that various letters passed between the solicitors on either side of the transaction. Harper Macleod (hereinafter referred to as "HM") acted for the pursuer, while Levy & McRae (hereinafter referred to as "LM") acted for the defenders. At all odds, the first indication of a difficulty regarding settlement of the transaction arose on or about 1 December 2003.
For the purposes of the proof, a single volume of documentary productions had been compiled with the co-operation of either side. Number 25 of that volume is a copy of a letter sent (by fax) by HM to LM on that date. Its second paragraph is in the following terms:
"We are advised by our client that there may be a delay in the processing of his funding for the transaction of up to one month. Accordingly, he has instructed us to request a variation of the missives to provide for settlement as at 6 January 2004 or earlier."
LM acknowledged the letter under cover dated 2 December 2003. They indicated that they were taking their clients' instructions on "the proposal for the delay in settlement" (No. 32 refers).
By letter dated 11 December 2003, LM wrote to HM stating, inter alia, that the defenders were "not prepared to agree to a variation of the missives". The final paragraph in the same letter was in the following terms:
"Given your client's failure to pay the price on the date of entry specified in the missives, namely 6 December, 2003 our clients reserve the right to charge interest on the price and to exercise the other rights competent to them in terms of the missives." (No. 35 refers).
The letter also made reference to the enclosure of a Form 13A report "certified as correct to 3 December, 2003", together with the Land Certificate relating to the larger subjects of which the subjects of sale formed part.
Accordingly, the date of entry, which, on the evidence, remained unchanged, viz. 6 December 2003, came and went without the purchase price being tendered. Indeed, as at 18 December, 2003, the pursuer's solicitors (HM) had still to be put in funds. (No. 37 refers).
An engrossment of the disposition was sent to LM along with this letter. Nothing was said about the absence of a plan. Only on 22 December 2003 did the pursuer's solicitors make mention of the perceived need for a plan. (No. 39 refers).
LM's letter of 21 November 2002 (No. 8) suggests that a plan showing the location of Unit 5 was sent to HM at that time. Moreover, LM's letter of 24 February 2003 anticipated receipt of "the engrossment of the Disposition and Plan for execution" by the defenders, "with the draft for comparison purposes".
Thereafter, there seems to have been a timelapse in the conveyancing procedures although it is clear that by 7 November 2003 at least, correspondence between the two agents had resumed. Under reference to LM's letter of 21 November 2003 (No. 23) and the evidence of Mr Tony Caplan, who was handling the conveyancing on behalf of the defenders, I am satisfied that the defenders had fulfilled their side of the bargain and that they were well intent on proceeding to settlement of the transaction on the appointed date. I found Mr Caplan's testimony to be generally sound and reliable. I preferred his evidence to that of the witnesses to fact called on behalf of the pursuer.
However, such an intention to settle as at the date of entry cannot, in my view, be attributed to the pursuer. The fact that neither he nor, more significantly, his solicitors, were in funds to enable the purchase price to be paid on 6 December 2003 is established beyond any doubt. Furthermore, HM had failed to send the engrossed Disposition to LM. Mr Caplan's evidence was to the effect that he had done everything required of him, apart from having the Disposition signed and ready for delivery at settlement. This was something, which through the failure of the pursuer's solicitors, could not be done.
One of the issues for determination by the Court was whether the pursuer was in breach of contract in failing to pay the purchase price on 6 December 2003. In that regard, counsel for the pursuer submitted that he was not. He founded upon the principle of mutuality of contract. He pointed to Clause 3.1 in the offer dated 10 September 2002 (No. 4). He submitted that the defenders were thereby contractually obliged to deliver, at settlement, such "taxative plan as the keeper may require" to enable the pursuer's interest to be registered in the Land Register. Whilst the pursuer had failed to pay the purchase price, counsel maintained that the defenders' failure to produce an acceptable plan meant that the pursuer's failure could not be characterised as breach of contract, there being valid justification in law for the pursuer's withholding of the purchase price.
In my opinion, that submission is flawed, principally because it does not accord with the facts. As at 6 December, 2005, the pursuer did not withhold payment of the purchase price because of any failure by the defenders to deliver a deed plan. On the contrary, he was, in fact, bereft of the funding which he required to meet his contractual obligation. That being so, HM wrote to LM, not pointing to the unavailability of a plan and their clients' related rights in law to withhold payment, but seeking to defer the date of settlement. They sought a variation of the missives. Apart from HM's letter of 1 July, 2003, some five days before settlement was due to take place, the correspondence and the evidence disclose silence on the part of HM subsequent to LM's letter of 21 November, 2003.
As Mr McEntegart contended in the course of his closing submission, I consider that the context is, indeed, of material importance here. At paragraph 8 - 06 of his work on Contract (Second Edn), Professor McBryde suggests that:
"A contract is construed by considering the whole express terms of the contract and any admissible surrounding circumstances. The issue is, what do the words used mean? The suggested meaning of the words must be considered in the context of the other words in the contract, and the circumstances in which the contract was made."
In the context of a commercial conveyancing transaction, with requisite formalities and registration of title, it is, indeed, to be anticipated that certain steps will be undertaken to give effect to the contract. It is reasonable, in my view, in construing the contract, to proceed upon the basis that certain professional obligations require to be fulfilled having regard to the conveyancing procedures involved. I agree with Mr McEntegart's submission that any contractual obligation to deliver a Disposition and plan as at the date of entry cannot be construed without a recognition that the purchaser, and more particularly his solicitor, has an integral part to play in the conveyancing process. The contract under consideration must be distinguished from a straightforward, "over the counter" purchase and sale transaction. The obligation to deliver a Disposition and plan, for instance, cannot be performed by a seller in isolation from the active involvement of the purchaser, through his solicitor. This general proposition is well evidenced by the familiar circumstances in which the purchaser's title deed, the Disposition, is drafted by his own solicitor; revised, if necessary, by both sides; engrossed by the purchaser's solicitor; and thereafter sent for execution to the seller's solicitor.
Accordingly, in the particular circumstances of this case, I am satisfied that any failure to deliver a plan, as at 6 December 2003, cannot be attributed to the defenders (or their agents) and, consequently, should not be characterised as a breach of contract on their part.
Conveyancing procedures in this transaction had been taking place over a period of many months prior to 6 December 2003. Had there truly been any difficulty with the plan to be associated with the Disposition, one would have expected HM to raise the point well in advance of the anticipated settlement date. One would not have expected a conveyancing solicitor to acquiesce in the revisal of a draft disposition which explicitly referred to the subjects being outlined in red on a plan, in circumstances where the plan concerned was deemed (by that solicitor) to be contractually deficient.
At best for the pursuer, the earliest point at which his solicitors, HM, appear to have placed in focus the appropriateness of the plan was 22 December 2003 and, then, specifically, in relation to any right of access to the subjects of sale. This was, of course, some 2 - 3 weeks after the due settlement date. The pursuer was already in breach of contract. Against that background, any breach of contract on the part of the defenders in failing to meet their contractual obligation as at 6 December 2003 (ie. through the absence of a plan) has not been established. Indeed, I have concluded that the sudden introduction of the requirement for "an appropriate Deed plan" was merely an attempt by the pursuer (not by his agents, I stress) to deflect his own failure to meet his side of the bargain by introducing a feature (albeit unfounded in fact) which might serve his purpose as some sort of bargaining tool. In his evidence on this aspect of the case, the pursuer was, in my view, being disingenuous.
In my opinion, therefore, the principle of mutuality of contract does not avail the pursuer. As at 6 December 2003, he was in breach of contract due to his failure to tender/make payment of the purchase price.
However, counsel for the pursuer maintained that a mere breach of contract on the part of the pursuer was insufficient to enable the defenders to rescind. The defenders' qualified acceptance, No. 10 in the bundle, contained a specific provision regarding non-payment of the purchase price "within fourteen days of the date of entry". In that event, the defenders were entitled to treat the pursuer as being in material breach of contract and to rescind the missives "on giving prior written notice to that effect to" the pursuer.
Whilst counsel's primary position was that the defenders had no right to rescind because there had been no breach of contract by the pursuer in the first place, he maintained that, esto such a right existed, there had been no valid rescission of the contract owing to the absence of the "prior written notice" desiderated by the provision in the qualified acceptance. Between the date of entry and LM's formal letter of 23 December 2003 (No. 43) all that passed, by way of correspondence, from LM to HM, was the letter of 11 December 2003 (No. 35). The final paragraph of that letter was in the terms already rehearsed above.
Counsel for the pursuer contended that the terms of that paragraph did not equate with the "prior written notice" referred to in the qualified acceptance, whereas Mr McEntegart, for the defenders, submitted that they did constitute the requisite notice.
In my view, the letter of 11 December 2003 made it plain to the pursuer, through his agents, that, whatever else, the source of the defenders' concern was the pursuer's failure to pay the purchase price on 6 December, 2003. The letter then placed the pursuer on notice that interest on the price might be charged, all in terms of paragraph 1 of the qualified acceptance. Finally, the right "to exercise the other rights competent to" the defenders "in terms of the missives" was specifically reserved.
In submitting that the final paragraph in the letter of 11 December 2003 had no real meaning, counsel argued, firstly, that, as at 11 December 2003, there was no right capable of being reserved and, secondly, that a specific reservation of a right was only required where silence might imply waiver of that right.
The first of these two lines of argument is somewhat difficult to understand. In terms of the missives, the defenders were vested in the right to rescind (the missives) in the event that the purchase price had not been paid within 14 days of the date of entry, on giving prior written notice. The contractual right existed (as at the conclusion of missives) albeit that full implementation of that right could not take place without the foregoing contractual provisos being satisfied. In plain terms, it was contended for the pursuer that because the 14 day period had yet to expire at the time when the defenders purported to give notice, (viz. 11 December 2003), of their right to rescind, the notice had no effect. That contention proceeded upon the proposition that the period of 14 days had to elapse before the defenders could give notice of their entitlement to rescind the contract.
I do not consider this line of argument to be sound. In my opinion, the defenders were legally and factually entitled to give notice to the pursuer as to the consequences of his breach of contract, viz. his failure to pay the purchase price, should payment remain outstanding for the 14 day period after the date of entry.
Counsel for the pursuer also criticised the formulation of words used in the final paragraph of the letter of 11 December 2003. He submitted that the formulation adopted did not equate with intimation of a decision to exercise an option to rescind. It was no more than intimation to the effect that the defenders "may or may not" rescind the bargain.
It is, in my view, important to identify just what is meant by one party to a contract giving notice to the other. There is no great difficulty or complexity in arriving at that meaning. The purpose of giving notice is to alert the recipient or to draw his attention to a particular eventuality, consequence or potential occurrence which may affect his rights and interests.
All that being so, upon receipt of LM's letter of 11 December 2003, the pursuer, through his agents, must have been perfectly clear as to the potential consequences, should payment of the purchase price not be made timeously. The de quo of the situation as it prevailed, was the pursuer's failure to pay the purchase price. An intimation to the effect that the defenders reserved "the right to...exercise the other rights competent to them in terms of the missives", in my opinion, amounted to sufficient and competent notice under paragraph 1 of the qualified acceptance. In terms of the missives, that could only mean rescission and the pursuer, together with his agents, could have been under no illusions about that.
For completeness, I did not consider there to be any substance attaching to counsel's argument to the effect that reservation of a right is only apt where silence might imply waiver.
In any event, even if my conclusion as to the effect of No. 35 in the bundle is incorrect, it seems to me that No. 43 (viz. the letter dated 23 December 2003) from LM to HM) was sufficient to meet the requirement of "prior written notice".
In this regard, it must be noted that the relevant passage within paragraph 1 of the qualified acceptance actually provided for material breach, and rescission by the defenders, once the 14 day period had elapsed without payment of the price being made. In order to rescind the missives, the defenders required to give "prior written notice" to the pursuer, "to that effect", viz. to the effect that they were rescinding the contract.
In my view, on a proper construction of paragraph 1, all that the defenders required to do was to allow the 14 days "period of grace" to elapse, and thereafter, to give the pursuer prior written notice of the fact that they were treating him as being in material breach of contract and that they were, accordingly, rescinding the missives. That was precisely the effect of No. 43 in the bundle. With regard to rescission in this context, the missives (unsurprisingly) provided that the defenders could not simply "walk away" from the bargain without formal notification of that course. They required to give notice and did so by way of their solicitor's letter of 23 December 2003.
Accordingly, in summary for present purposes, the pursuer was in breach of contract when he failed to make payment of the purchase price on the date of entry, viz. 6 December 2003. A period of 14 days having elapsed thereafter, the defenders were contractually entitled to treat the breach as material and to rescind the missives on giving prior written notice. On any view of the evidence that is what they did, with the result that they were and are no longer bound to implement the contract. As a consequence, the present action must, in my opinion, fail.
Mr McEntegart's alternative submission was to the effect that, the pursuer, being in material breach of contract, and having failed to remedy that breach, was not entitled to the remedy of specific implement. No particular authority was put forward in support of that proposition, indeed, it was presented to the court as if it were a matter of trite law. Certainly, little was said by way of response on behalf of the pursuer.
Given the decision arrived at above, it is unnecessary to express a concluded view on this subsidiary line of argument. However, I am inclined to think that it flows, in any event, from the concept of mutuality and is merely tantamount to the contention that a "party who is in breach cannot enforce performance by the other party" (see McBryde at paragraphs 20-47 and 20-48). If that be so, then I agree with Mr McEntegart's submission. The court having found that the pursuer was in breach of contract, it follows that he cannot seek specific implement as against the defenders.
Finally, counsel for the pursuer, rightly in my opinion, submitted that the court did not require to consider what would or would not have been an acceptable disposition or plan, since, in the event, nothing was, in fact, delivered to the pursuer's solicitors. However, a significant amount of the proof was devoted to establishing the existence or otherwise of a plan or plans in the context of the conveyancing transaction and it is only right that I express a conclusion in that regard.
Having considered the evidence as a whole, I am satisfied that a deed plan of some sort had been exchanged as between Mr Caplan and Miss Sutherland as the conveyancing was progressed, indeed, there may very well have been more than one. In particular, however, I have accepted Mr Caplan's evidence to the effect that the plan numbered 62, was, indeed, attached to the qualified acceptance and that it was, most probably, the plan which would have formed the basis for attachment to the engrossed deed, were it not for the pursuer's breach of contract. Equally, I conclude that, at no stage, was Mr Caplan ever asked to produce a plan with lineal measurements.
At all odds, as I have already observed, the evidence regarding a plan or plans is, strictly speaking, peripheral to the dispute between the parties and cannot, in any material way, impact upon my determination of that dispute. Whatever the outcome of the proof, I was asked to assign a hearing on expenses and the above interlocutor makes due allowance for that.
SHCALS.AH.Millar.04.08