SHERIFFDOM OF TAYSIDE CENTRAL AND FIFE at DUNDEE

 

REF: A/794/08

Note by SHERIFF GEORGE ALEXANDER WAY

in the cause

MARK NICOL JOHN ESPOSITO

Residing at 2 Windsor Terrace,

Perth Road Dundee DD2 1EL Pursuer

 

against

 

MISS NICOLA BARILE

Residing at 153 Dunholm Road

Dundee DD2 4SE Defender

 

 

 

Act : Murray Alt : McKeown

 

Interlocutor

 

NOTE

 

1.      This is an action to reverse unjustified enrichment, which called before me as a debate upon preliminary pleas. The present Note is a consolidation of two previous Notes which I have prepared as I was advised by agents that the subject matter of the case may be of interest to the wider profession and, for ease of reference one unified Note would assist.

2.      The solicitors for the parties confirmed, at the outset, that the essential facts were agreed and that the issues that separated them were matters of law or at least legal interpretation and that a Proof, as such, would not be necessary in the circumstances. I was, therefore, invited to dispose of this case on the basis of submissions. The parties' agents had entered into a Joint Minute of Admissions regarding productions so that they could be referred to without challenge. This was helpful. I should also record, at this stage, that the parties solicitors had made significant efforts to resolve this case and the need for a formal decision of the court is not the result of any want of commitment by them to proportionate and appropriate dispute resolution. The case raises two discrete but interrelated issues of law, which the parties are simply unable to resolve. Firstly, the division of the proceeds of sale of heritable property that the parties jointly owned in Monifieth and secondly, a question arising from liability for the loan secured over the property.

The parties referred to the following:

The Family Law (Scotland) Act 2006

Stair, Institutes I. viii. 9

The Law of Contract MacBryde 3^rd Edition Chapter 11

Scottish Land Law Gordon 2^nd Edition 15-17

Sheriff Court Practice MacPhail 3rd Edition 23-41

 

Agnew v Ferguson (1903) 11 SLT 79

Moss v Penman 1993 Sc 300

Ralston v Jackson 1994 SLT 771

Johnston v Robson 1995 SLT (Sh.Ct) 26

Morgan Guaranty Trust Co v Lothian Regional Council 1995 SC 151

Christie's Executrix v Armstrong 1996 SC 295

Dollar Land v CIN Properties 1996 SC 331

Dollar Land v CIN Properties 1998 (HL) 90

Shilliday v Smith 1998 SC 725

 

The Facts

 

1. The Pursuer and the defender were once in a relationship and they agreed to purchase a home together at 33 Solway Gardens, Monifieth (hereinafter "the property". The purchase price was £153.000.00. The parties agreed that the Pursuer, from his own funds, would contribute £35,000 of the purchase price and they would borrow the balance of £118,000.00 from the Halifax PLC. The loan would be secured over the property. The parties instructed Bowmans, Solicitors, Dundee, to carry out the necessary conveyancing to complete the purchase. Halifax plc further instructed Bowmans to act on their behalf in constituting a valid Standard Security by the parties in favour of Halifax plc over the property. The parties also agreed that in order to reflect the Pursuer's contribution to the purchase price, the title to the property would be taken in proportionate shares. The disposition was accordingly framed to infeft the pursuer in 94/153rds of the pro-indiviso shares and the remaining 59/153rds to the defender. This could, according to my calculations, also have been expressed as 61.43% to the pursuer and 38.57% to the defender. The parties took entry to the property on 15^th August 2005. In time the parties' relationship broke down and they separated.
2. The parties were unable to reach agreement on the sale of the property, for reasons, which are irrelevant to the present case, and the defender raised an action for Division or Sale in the Sheriff Court at Arbroath. The action was not defended and decree was pronounced on 28^th December 2007 inter alia in the following terms:

" and Declared that the subjects should be sold and the proceeds divided between the pursuer and the defender in accordance with their respective pro-indiviso share therein; Granted Warrant to sell accordingly; Declared that allocation of the expenses of sale and the process between the pursuer and defender; Found no expenses due to or by either party in respect of Crave 2......"

I pause here to observe that there seems to have been a typographical error or lacuna in the Extract Decree as the sub-clause relating to expenses of sale makes no sense as it stands but I was advised by the parties agents, that it was agreed that the expenses of sale and process would be divided equally and that was not a matter of dispute. The parties seem to have, thereafter, co-operated to a degree and the sale was entrusted by them both to the well known firm of Messrs. Blackadders Solicitors rather than follow the somewhat time consuming process of court appointed agents reporting to the Sheriff etc. I was, however, informed by agents that it was not disputed that what the parties agreed or certainly what they mutually intended, was that Messrs. Blackadders would proceed to implement the decree as if the court had appointed them. The significance of this will become apparent later. The property was sold at the price of £173,000.00. Blackadders, perhaps with some presentment of things to come, sent both parties a draft Scheme of Division prior to conclusion of missives with the rider that they were merely interpreting the court decree. No one, at that stage demurred, and the remaining conveyancing formalities were undertaken and the price was due to be paid on 6^th June 2008. All seemed well until this point. There had been uplift in value and so no one would walk away empty handed.

 

3.      The pursuer, however, reflected upon the figures and informed Blackadders that he expected to receive more money. Messrs Blackadders were adamant that their Scheme of Division did reflect the terms of the decree. They, however, sought advice from the Law Society of Scotland who were of the opinion that the terms of the parties instructions obliged Blackadders to interpret the decree and that neither party could, at that stage, countermand instructions. Blackadders, accordingly, settled the usual disbursements associated with a conveyancing transaction, such as Land Register fees and the like, and prepared a cash statement which also set out the proposed distribution of funds to the parties. They had redeemed the Halifax loan in the sum of £105,279.82 and their own fees and disbursements amounted to £3,194.45 leaving a balance for distribution of £64,525.73. They then applied the fractions used in the disposition, which originally vested the parties in the property and brought out a balance due to the pursuer of £39,639.29 and £24,886.44 to the defender. The pursuer continued to argue that he was not receiving his proper share based upon the title to the property. He was expecting a larger sum. Blackadders took the stance that the distribution they proposed was as ordered in the Extract Decree and the pursuer accepted payment under protest

4.      Crave 2 relates to the Halifax loan and the facts can be set out quite briefly. The parties agreed that they had borrowed from the Halifax on a joint and several basis and that during the time they owned the property, each contributed equally towards household expenditure, including the mortgage payments. The parties consulted Solicitors following their separation. Negotiations took place with a view to the Pursuer purchasing the Defender's share of the property. To enable him to do so, the Halifax Standard Security needed to be varied into his sole name. The Halifax PLC would not accept that the pursuer had sufficient income to service the loan without the covenant of the defender as co-obligant. They indicated that if the outstanding mortgage were reduced by £11,500.00 this would bring the loan within their internal guidelines for prudential borrowing. The pursuer's father Mr Nicol Esposito agreed to assist his son and paid £11,500 for him directly into the parties' Halifax mortgage account on or about 7^th December 2006. The defender does not dispute this. The reduction of the mortgage balance was, however, fruitless as the parties did not reach a final agreement on transfer of the subjects into the sole name of the pursuer and the property was sold. The pursuer seeks payment of the sum of £5750.00 from the defender being the amount by which he says she has been enriched unjustly by the capital payment made to reduce the mortgage. The defender does not dispute that she did benefit from the payment but has offered to repay only £4,434.64. She has proffered this sum by applying, to the total capital sum advanced of £11,500.00, the same fraction which determined her share of the heritable title to the property i.e. 59/153ths. The pursuer rejected this offer and seeks recompense of one half of the capital payment.

5.      Submissions

The Pursuer:

Mr Murray, for the pursuer, submitted that, in relation to the pursuers first crave, the distribution of the funds held by Messrs Blackadders proceeded upon a misinterpretation of the decree of sale and that, accordingly, the defender had been unjustly enriched at his client's expense. She had, in short, been paid too much by Blackadders and as a concomitant, the pursuer had been paid too little. He argued that the pursuer was entitled to have the enrichment redressed by the defender making a payment back in recompense. In support of this submission Mr Murray referred me to the well trodden line of authority listed above and in particular to Shilliday v Smith 1998 SC 725 and Dollar Land (Cumbernauld) Ltd v CIN Properties Limited 1998 SC (HL) 90 These cases, he submitted, set out modern statements of the structure of the law of unjustified enrichment. Mr. Murray conceded that he had to address this issue in two stages. Firstly, he had to persuade the court that there was an error in the distribution made by Blackadders who were, he conceded, acting as joint agents for the parties in the sale. Secondly, even if there were such an error had the defender been unjustly enriched so as to compel her to make recompense? [I would note that, at this stage, the parties agents accepted, in discussion with me, that we lacked one essential element of the factual matrix of the case: did Blackadders themselves have an explanation, in law, for the distribution which might shed light upon the matter? The parties agreed to seek clarification from Blackadders and the debate was continued to a later date. On resuming argument it was clear that Blackadders could not assist here. They believed that they had correctly interpreted the interlocutor but offered no clarification of this save that they were following the "usual practice" of solicitors in such cases and had taken advice from the Law Society. This was, with respect, a somewhat circular argument as the Law Society correspondence to which I was referred, fairly read, said no more than "the court order must prevail and neither of the parties can give instructions which contradict". The party's agents agreed that nothing could be taken from this that would assist the court.] He referred me to additional authority. In the case of Agnew v Ferguson the Inner House held that a tenant of a colliery who had paid rent without deducting Income Tax (as permitted by the Income Tax Act 1853) could recover the income tax element paid to the landlord in error. In Christie's Executor v Armstrong the Inner House held that where a Building Society had applied the whole proceeds of an assigned life policy to redeem a heritable security on death the executrix could recover the policy proceeds which ought to passed to the deceased's estate from a joint proprietor who had had her half share of the joint mortgage cleared as well. The right of relief, which exists between co-obligants under a heritable security, was the basis of the opinion of the Division in Moss v Penman. The court held that where one co-obligant had paid the whole sum outstanding: [per Lord President Hope at page 22]

" The creditor could in reliance upon this document, have proceeded against either the pursuer or the defender for repayment of the whole debt at anytime. So there is no question here of the pursuer anticipating the date of payment or putting the defender in some way into a worse position than he was before. This seems to me, therefore, to be a clear case for the operation of the principle of recompense, since the defender would otherwise escape entirely from liability for any part of the debt. For these reasons I consider that the defender has no relevant answer to the pursuer's claim for relief, except in regard to the amounts paid by the pursuer, which are not admitted.

6.      Mr. Murray then addressed the error in the calculation made by Messrs. Blackadders. He argued that their patent error was to have interpreted the interlocutor by inserting the word "net" before " proceeds". He did not dispute that in order to sell the property Blackadders had to redeem the heritable security in favour of the Halifax. Blackadders had, however, fallen into the error of conflating the mechanics of a conveyancing transaction, as physically reflected in their sales client ledger, with the proper allocation or perhaps more accurately, legal distribution of the funds between the parties. Mr Murray proposed an analogy, to test his basic proposition, might be a disbursement for, say, gardening services to keep a vacant property up to standard for presentation to the market. The agents would pay this from the sales proceeds. What, however, if there were an express agreement that only one of the parties would meet this charge? The selling solicitors would require to re-allocate the whole gardening bill to only one client and make the appropriate cross entries in their book keeping ledgers. This demonstrates the principle that re-allocation of funds, initially credited to a single sales ledger, can and frequently does take place when joint owners sell a property. In this case Mr Murray submitted that once the price for the Monifieth property had been received it should have been notionally allocated between the individual client ledgers of the pursuer and the defender, according to their respective pro-indiviso shares. The arithmetic should have been as follows: the sale price of £173,000.00 should have been notionally divided as £ 106, 287.57 to the pursuer and £66712.43 to the defender; Blackadders should then have deducted one half of the legal expenses and the secured debt to the Halifax PLC from each party (£108,474.27 -:- 2 = £54,237.13) so that the pursuer would receive £52,050.44 and the defender £12,475.30. The defender, in fact, received £24,886.44 and she was thus enriched by £ 12,411.14. The parties had not intended this result when they determined to take the heritable title in proportional shares nor had the pursuer any intention of donating this sum from his rightful share of the sale proceeds to the defender. The interlocutor of the Sheriff at Arbroath reflected the fact that the heritable title was expressed in fractions. The learned Sheriff had ordered that the sale proceeds be divided according to those fractions and not the "net" sale proceeds.

7.      Mr. Murray further invited me to consider the reason the parties elected to record title in differential shares. The defender had invested £35,000.00 of his money as the deposit. The parties agreed to borrow the balance of the price jointly and to share all outgoings ancillary to ownership and occupation of the subjects equally; but the defender did not contribute to the deposit. The only logical reason for taking the title in differential shares was to reflect the significant capital investment made by the pursuer. The pursuer, on the "Blackadder" calculation, received just a little short of £40,000.00. The return on his investment was barely £5000.00 and yet the defender, who had made no capital investment, received almost £25,000.00. The parties clearly intended that the pursuers investment was both acknowledged and protected. The error becomes more obvious, he argued, if the sale price had been lower. The property might have sold for, say, £165,000.00, a price that would still be an overall uplift. The "Blackadder" calculation applied to that price would allocate to the pursuer £34,882.82 thereby making a capital loss and yet the defender would still receive £21,894.54. He therefore submitted that there had been an error in legal interpretation by Messrs. Blackadders. This had resulted in a payment to the defender of a part of the proceeds which was not rightfully hers and indeed contrary to the clear intention of the parties when they purchased the property. The pursuer had no intention of donation. Mr. Murray reiterated that it was the settled intention of both parties, when they instructed that the heritable title be taken in unequal shares, to acknowledge the extent of the pursuers capital investment so that each would benefit proportionately from capital appreciation. The unjust enrichment should be redressed by ordering the defender to pay back the sum sued for in crave 1.

8.      Mr Murray, finally on this crave, addressed the defenders submission of personal bar. He reminded me that there was no plea to that effect but conceded that this could be cured by amendment. He submitted that the defender had no averments to support personal bar. The pursuer had not opposed the action for division or sale because the defender had sought division " as per the title". This was all he wanted. Blackadders had been instructed to sell on the same basis. The pursuer challenged the legal interpretation of Blackadders scheme. They assured him that they had correctly interpreted the decree. The Law Society had confirmed that division must be in terms of the decree. The pursuer had not induced the defender to sell and she had not altered her position or suffered any detriment as a result of any action of his.

9.      Mr. Murray then addressed the basis for his second crave. This was, he argued, a simple point and the facts were not disputed. The pursuer, albeit by a payment made on his behalf by his father, had paid a sum of money to reduce the overall borrowing of the parties with a view to procuring a transfer of the defenders pro-indiviso share of the property. The negotiations broke down and the property was not transferred. The defender had, therefore, been enriched to the extent of one half of the payment, which was only made to secure the Halifax PLC 's agreement to a transaction that did not come to pass. The defender acknowledged that she should make redress but had only offered payment of a sum which reflected the same fractional division of the heritable title as if this applied to the heritable security. This was fundamentally misconceived. The parties borrowed the loan for the balance of the purchase price of the property equally. It was common cause between them that this was so and that all payments to the mortgage and indeed, the other outgoings of the parties were made equally. The fact that the parties' pro-indiviso shares were expressed as unequal fractions was irrelevant to the heritable loan. The defender was due half the mortgage and therefore she was due to repay half of the sum that the defender had paid to reduce the balance to obtain the lenders consent. The defenders offer to repay based on the fractional division was based on a misconception. The correct figure to be repaid was as second craved.

The Defender

10. The defenders' challenge to the pursuers first crave was in three parts. Firstly, it was argued that the defender had not been enriched by Messrs Blackadders distribution. The solicitors had correctly calculated the sums due to each of the parties using the formula derived from their respective pro-indiviso shares of the property. The Court had ordered the property sold. This could only be achieved by delivering up a discharge of the Standard Security following redemption of the loan. The reference in the interlocutor to "proceeds" must properly be read to mean, "net sale proceeds". There was no error and therefore, no redress was necessary. The fact that the division of the heritable title into unequal fractions had resulted in arithmetic which the pursuer found unpalatable was irrelevant. The pursuer had received his full deposit back and made a profit. The fact he believed he should have made a larger return on his investment was irrelevant. The defender was sent a cheque by the solicitors whom the parties had jointly instructed to sell the property. Those solicitors were content that they had correctly divided the proceeds according to usual practice and in terms of the heritable title. The payment represented her share of the proceeds of sale. The defender had therefore received a payment, which she had not induced in any way. Indeed if there were any error then it was one which the pursuer would require to address under contract or delict with Messrs. Blackadder who acted for him as much as for the defender.
11. Secondly, it was submitted that a claim on the ground of unjustified enrichment seeking recompense, as an equitable remedy, should not be available as the pursuer had failed to take up his proper remedy which was to defend the action of Division or Sale at least to the extent of seeking an order from that court as to the sums due to each party. This was competent as demonstrated by cases such as Ralston v Jackson and Johnston v Robson . The pursuer could, equally, have raised proceedings to redress financial disadvantage in terms of the rights of cohabiting couples established by the 2006 amendments to the Family Law (Scotland) Act 1985. She also reiterated her submission that any fault lay with Messrs. Blackadders and the pursuer had a remedy there, which he failed to take up. In short then, the pursuer had failed to exhaust his ordinary remedies and should, therefore, be denied an equitable remedy of last resort.
12. Thirdly, Ms.McKeown submitted that the pursuer was personally barred from challenging the division of the sale proceeds. He had been sent the draft scheme before missives were concluded. He did challenge the scheme at that time and allowed missives to be concluded. He therefore waived his right to challenge the scheme of division having locked the parties into a binding contract of sale with a third party. In addition he had encashed Blackadders cheque which was tendered on the basis of the same scheme of division which reinforced the implied waiver when he allowed missives to conclude.
13. The defenders' fourth submission related to Crave 2. She argued that the pursuer had no title to sue as the sum paid had come from his father and that, in any event, the defender had offered recompense, which the pursuer had rejected. The fractional division of the heritable title to the property must equally govern the heritable security; the sum sought by the defender was, therefore, not correct and excessive.

DISCUSSION

14. The Scots law of unjustified enrichment has been revisited in recent years, principally in three cases: Morgan Guaranty Trust Company of New York v Lothian Regional Council 1995 SC 151; Shilliday v Smith 1998 SC 725 and Dollar Land (Cumbernauld) Limited v CIN Properties 1998 SC (HL) 90. In Shilliday, The Lord President, Lord Rodger, examined the history and development of equitable remedies and made it clear that (despite a persistent juridical myth to the contrary) Scots Law is not based upon Roman Law but rather has borrowed concepts and procedures from Roman juridical sources which, with similar borrowings from other systems, have been woven into our native jurisprudence. I am bound to concur with his Lordship and, indeed to explode the shibboleth that Scots Law carried a legionary's shield to ward off the peculiarities of our larger southern neighbour one need only read Professor Hector Mac Queen's Common Law and Medieval Society in Scotland to see the evidence of the extent to which our forbears were readily inclined to refer to English law and procedures. Lord Rodger made it clear that in Scots Law the remedy was properly for the redress of any unjust enrichment and the use of the various Latin brocards ( Condictio indebiti; Condictio causa data causa non secuta etc ) was merely a convenient lawyers tag to describe the kind of circumstances where an unjust enrichment might arise or the way in which it was to be redressed. This theme was exemplified in the case of Dollar Land (pp. 98H-I and 99D-E), where Lord Hope of Craighead stated:

"The event which gives rise to the granting of the remedy is the enrichment. In general terms it may be said that the remedy is available where the enrichment lacks a legal ground to justify the retention of the benefit. In such circumstances it is held to be unjust... I think that Lord Rodger stated the matter correctly (at page 353D) when he said that the pursuers must show that the defenders have been enriched at their expense, that there is no legal justification for the enrichment and that it would be equitable to compel the defenders to redress the enrichment."

15.  In the realignment of our law effected by these three cases, equitable causes of action such as recompense are now to be treated as remedies which apply to all the various situations where redress of unjustified enrichment is sought. We are no longer required to shoehorn the facts into a particular style of Roman sandal before the remedy could be made to fit. I accept these cases are high and binding authority but I also consider it to be good and sound law. The pursuer argues that he and the defender entered into the, sometimes turbulent, realm of joint property ownership with their eyes open. They, sadly unlike many other couples, were aware that if they were to separate at some time in the future the fact that the pursuer had invested his savings could become a source of dispute. They sought to avoid this by taking the heritable title in unequal fractions. The pursuer should have always received the proportionate benefit that the fraction in his favour provided. The actions of Blackadders had subverted this good intention and the defender had received an unjust proportion of the proceeds. This should be put right by the mechanism of an order for recompense. The defender denied that she has been unjustly enriched. The pursuer had received all the parties intended. He had his deposit back and both parties had shared in the uplift. He had profited and so had the defender so where was the injustice?

16.  In support of his second crave the pursuer argues that he only paid the sum of £11,500.00 to reduce the balance of the joint mortgage because, at the relevant time, it was contemplated that he would take over the whole mortgage upon purchasing the defender's pro-indiviso share of the property. The proposed transfer failed and therefore, the interim reduction of the mortgage was a payment of which one half must be attributed to the defender. The fractional share of the heritable title was irrelevant. The fractions were to govern the division of the proceeds of sale. The secured loan was for the balance of the price that the parties had borrowed in full from the Halifax PLC. They were jointly and severally liable for the whole sum borrowed. The defenders position was that she still challenged title to sue. The pursuer's father made the payment. She also maintained her position that the fractional shares of the heritable title also governed the heritable security. The security may have been joint and several but it could only be secured over the property in the proportions, which vested in each party. The defender had accordingly tendered full and proper recompense for this element of the pursuers claim and that sum was lodged on deposit receipt.

CONCLUSION AND OPINION

17.  I am grateful to the agents for their detailed and careful submissions. I feel, however, that with all due respect, I can dispose of this matter quite briefly. I have no hesitation in finding that I prefer the pursuer's submissions on both points. In respect of the first crave I am satisfied that the intention of the parties in taking the heritable title as they did and the subsequent import of the Interlocutor of the 28^th December 2007 was clear. The parties purchased the property using only the pursuer's capital for the deposit. The use of those funds was thus lost to the pursuer until the property was sold. The parties equally through a mortgage loan from the Halifax PLC funded the balance of the price. They agreed to service this loan and the other regular outgoing relating to the property equally. The heritable title to the property was taken in fractions that represented the proportion of investment made by the parties. The pursuer contributed his capital for the deposit, which is the basis for his larger fraction. Indeed, in the same way as Mr Murray sought to test the logic of his submission by reference to what would happen if the price achieved had been lower, I would venture to suggest that the position becomes very clear if, instead of lowering the price, one truncates the time frame. In that event, say the parties had realised within days of purchasing the property that the relationship had failed and that the property had to be sold. They are lucky enough to find that the under-bidder on their purchase is still interested and will match the price of £153,000.00. The defender would then have it that the correct way to distribute the price is to deduct the £118,000.00 mortgage (in this example we will ignore costs) leaving a balance of £35,000.00. She would then expect her share based on the title of 59/153ths that is £ 13,496.73. This sum would have come entirely from the pursuers deposit. The pursuer had no intention of donation and such a windfall to the defender is not reasonable or equitable. The parties divided the heritable title in unequal fractions not the heritable security. The parties borrowed the balance of the price from the Halifax PLC equally. The mortgage over time would have reduced to nil. In my opinion the mortgage should have been, at best, neutral in the parties' arrangements to secure their respective interests. The defender has, accordingly, in my opinion been allocated a substantial sum of money from the pursuers share of the proceeds. The parties were agreed that the pursuer had no intention on his part to donate funds to the defender. There is accordingly an enrichment to be redressed.

18.  I am concerned that Messrs. Blackadders (and from this I deduce other solicitors) consider that the calculation they carried out to achieve a proper distribution of the funds in this case was in accordance with usual practice. Agents informed me that, despite extensive research, they could find no authority to guide the profession on this specific issue. Parties are, of course, free to enter into any agreement they wish to facilitate the division of their property. Good professional practice would suggest that such an agreement would be be reduced to writing and bind the parties. I also accept that the physical mechanics of conveyancing dictate that the transaction will follow a predetermined path. The seller's solicitor must, in practical terms, redeem any heritable security over the subjects of sale as soon as funds come into their hands. They have issued a binding letter of obligation to the purchaser's agents to deliver up the discharge of the security. I also accept that where heritable title is taken equally then proper division of funds between the parties is not affected by the method of ascription. The mechanics of conveyancing procedures do not however dictate how funds should be ascribed between the parties. This is a separate accounting exercise. I would, therefore, wish to make it clear that in my opinion in all cases of division between joint owners, who have not agreed otherwise, funds should be ascribed as follows. The whole purchase price should be allocated between the joint owners as per the title deeds. The sum required to redeem any heritable security should be re-charged to each owner's client ledger in whatever the correct proportion may be. The expenses and other costs of realisation should be re-charged to each owner's client ledger in whatever the correct proportion may be. In this way loans and other costs cannot subvert the terms of the heritable title.

19.  The pursuers agent, however, accepted that the test for recompense was in two parts: there must be actual enrichment but also a lack of any legal basis for allowing the party so enriched to keep the benefit. The defenders agent submitted that the distribution of funds by Messrs. Blackadders, who were the parties' joint agents, was perfectly proper. She had received her share of the proceeds, as had the pursuer. The pursuer had received his deposit back and made a profit. The defender had not induced any error. Moreover the pursuer had other remedies and equity should always be a port of last resort. I regret that I did not find these submissions persuasive. The error made by Messrs. Blackadders was patent. Blackadders could, of course, have made their interpretation binding by insisting that the parties enter into a fresh agreement confirming their instructions to their joint agents. The parties' solicitors concurred in stating that this did not happen. The pursuer was, therefore, entitled to expect that the division of the sale price would be in accordance with the title deeds and the subsequent interlocutor in the action of Division or Sale. Blackadders were of the opinion that this is what they had achieved. I reject that and in my opinion their actions were in error, which triggers the potential right to recompense. I take the same view on the defenders submission that the pursuer has failed to exhaust his remedies. He did not defend the action of Division or Sale because he had no obvious need to do so. The defender, in that action, sought division of the sale proceeds in accordance with the parties' respective shares under the title deeds. The pursuer had no reason to oppose that. He was entitled to the reasonable belief that he would receive his due share of the proceeds on sale. I, equally, see no merit in the submission that in order to pursue a claim for recompense a claimant must take any possible action that might result in a payment to him. I do not accept that any of the authorities, to which I was referred, require a potential claimant to embark upon the uncertain waters of actions for breach of contract or duty by solicitors or yet in the almost uncharted depths of estranged cohabitant claims under the family legislation, before he or she can have recourse to equity. I am satisfied that the defender was enriched and that there is no just legal reason why she should keep that benefit. She has been unjustly enriched by the sum of £ 12,411.16. and the pursuer is entitled to redress by way of an order for recompense.

20. The defenders final submission, in relation to Crave 1 related to personal bar. The basic principles of personal bar in Scotland are well established. They are canvassed in cases from Gatty v Maclaine 1921 SC (HL) 51 to more recent authorities such as ARMIA LTD. v DAEJAN DEVELOPMENTS LTD 1979 SLT 147. The party asserting bar must demonstrate that the other party made an assertion that a certain state of affairs existed or that he was waiving a right (which some authorities assert is really a species of mora or acquiescence) and that in reliance upon that assertion or waiver they have acted to their foreseeable material detriment. Lord Diplock in Armia ( quoting from a decision of Lord Denning MR: W. J. Alan & Co. Ltd v. El Nasr Export & Import Co) addresses what he calls waiver in these terms -

 

"The principle of waiver is simply this: if one party, by his conduct, leads another to believe that the strict rights arising under the contract will not be insisted on, intending that the other should act on that belief, and he does act on it, then the first party will not afterwards be allowed to insist on the strict legal rights when it would be inequitable for him to do so..."

 

21. In this case the defender asserts that the pursuer is barred from challenging the legal interpretation of the decree of sale placed upon it by Messrs Blackadders because he did not object to the conclusion of missives and he then encashed a cheque sent to him for a sum calculated upon that interpretation. The questions which fall to be answered then are: what waiver of rights did the pursuer allegedly make and what material detriment did the defender suffer in consequence? I cannot see what waiver of rights the pursuer is said to have made. The defender held a decree which ordered sale and division of the proceeds in accordance with the title. The defender concedes that there were no negotiations with the pursuer in relation to division of the proceeds and that Blackadders were engaged to sell "in accordance with the title". Blackadders confirmed that they were dividing the proceeds in accordance with the title. The Law Society said nothing more than the title must prevail. The pursuer, accordingly, appears to have conceded nothing when he allowed missives to be concluded. He was being reassured that his rights were being advanced as all was in accordance with the decree and the heritable title. Equally, by the time he accepted the cheque although he had placed his dispute squarely in issue, he was still being assured by Blackadders that their interpretation was sound in law. The defender did not alter her stance on this point one jot. Far from suggesting that the pursuer had waived any rights she argued that he had been satisfied in full. She maintained that position at debate as a matter of legal interpretation.

 

22. The question of detriment is equally opaque. The defender has, at present, to my eye no averments that suggest any detriment. One way to test the proposition would be to examine what the defender would have done had the pursuer refused to allow Blackadders to conclude missives as joint agents. The defender wished the property sold. She would have been forced to revert to her rights under the decree and the sale could proceed, albeit perhaps to another purchaser, at a later date. The proceeds would still have to be divided "according to the title". The pursuer would have little direct interaction until asked to sign the disposition to implement the sale and if he refused the agents would invite the court to order the Sheriff Clerk to do so. The proceeds would, ultimately, be ingathered. In the event that the pursuer challenged the proposed division of the proceeds (assuming the selling agents took the same stance as Blackadders) then those agents might require to seek directions from the court. The defender would then challenge the division before the Sheriff. The proceeds would likely languish on deposit at a miserable rate of interest. At this stage it is difficult to see what detriment the defender suffered by having the share of the proceeds she received ( which she says have been correctly divided) available for investment as she saw fit (albeit with the risk that she might lose a subsequent court case and be asked for some of the funds back) rather than place them on deposit?

 

23.  The pursuers second crave rests upon somewhat different but, in my opinion, even surer foundations. The parties borrowed from the Halifax one single sum for which they were equally liable to repay on demand and on a joint and several basis. There is no doubt in my mind that this is factually accurate and the parties' agents did not demur. The right of co-obligants to relief inter se for payments made which was truly the liability of the others is beyond dispute. The cases referred to by Mr. Murray make this clear and I accept them as fully applicable in this case. There can be questions of prescription but no such issue arose here. The action was timely. I reject the defender's submission that the pursuer lacked title to sue. The fact that the source of the payment made to reduce the mortgage balance came from his father is irrelevant. The pursuer is the co-obligant and he is entitled to pursue the overpayment against the defender. This is made clear by the case of Christie's Executrix v Armstrong where the actual payment to redeem the joint mortgage came from an insurance company but the executor was found entitled to pursue the deceased's co-obligant. The pursuer is entitled to recompense on this ground alone but in this case there is an additional factor in his favour. The payment made was to achieve an objective as a result of negotiations between the parties that, if successful, would have seen the defender's share of the property transferred to the pursuer. The property would not have been sold and the entire mortgage would have been varied into the sole name of the pursuer. The pursuer had no other reason to reduce the balance of the mortgage at that time (with a patent enrichment of the defender) save to meet the lenders criteria for prudential borrowing. In the event that the court had to analyse the pursuers alleged right to recompense in pre Shilladay terms, by reference to the Roman condictiones, then this would have been a classic case of the Condictio causa data causa non secuta. The pursuer made a payment to achieve an objective that did not come to pass. The defender has had her indebtedness to the Halifax reduced without the pursuer achieving the objective of a transfer of title. The pursuer has, accordingly, satisfied me that he has a claim for recompense in the sum of one half of the amount paid of £ 11,500.00 which is £5750.00 as second craved.

24.  I have accordingly determined that the pursuer is entitled to decree as craved with expenses as taxed.

Sheriff of Tayside Central and Fife