Scottish Sheriff Court Decisions

 

SHERIFFDOM OF LOTHIAN AND BORDERS AT EDINBURGH   A490/10
	JUDGMENT BY   SHERIFF FIONA LENNOX REITH, QC   in the cause   McCLURE NAISMITH LLP,   Pursuers   against   MR RUARI STEPHEN,   Defender ­­­­­­­­­­­­­­­­­________________

 

Act: McGrath, Messrs McClure Naismith, Solicitors, Glasgow

Alt: Lyons, lay representative

 

 

EDINBURGH 31^st October 2011

 

The sheriff, having resumed consideration of the cause, finds that the defender's averments are irrelevant and lacking in specification; sustains the pursuers' 8^th and 9^th pleas-in-law; grants decree for payment by the defender to the pursuers (1) of the sum of seventeen thousand three hundred and eighty pounds and eighteen pence (£17,380.18) sterling with interest thereon at the rate of eight per centum per annum from 1^st July 2010 until payment; (2) of the sum of twenty three thousand pounds (£23,000) sterling with interest thereon at the rate of eight per centum per annum from 1^st July 2010 until payment; (3) of the sum of Eleven thousand five hundred pounds (£11,500) sterling with interest thereon at the rate of eight per centum per annum from 1^st July 2010 until payment; (4) of the sum of four thousand three hundred and twelve pounds and fifty pence (£4,312.50) sterling with interest thereon at the rate of eight per centum per annum from 1^st July 2010 until payment; (5) of the sum of four thousand two hundred and sixty two pounds and eighty two pence (£4,262.82) sterling with interest thereon at the rate of eight per centum per annum from 1^st July 2010 until payment; (6) of the sum of three thousand five hundred and fifty five pounds and sixty three pence (£3,555.63) sterling with interest thereon at the rate of eight per centum per annum from 1^st July 2010 until payment; and (7) of the sum of one thousand six hundred and ten pounds (£1,610) sterling with interest thereon at the rate of eight per centum per annum from 1^st July 2010 until payment; finds the defender liable to the pursuers in the expenses of the action; appoints an account thereof to be given in and remits the same when lodged to the auditor of court to tax and to report.

 

 

NOTE

 

Introduction

 

[1] This is an ordinary action in which the pursuers are a firm of solicitors who seek payment of fees. The case came before me for debate on 13^th October 2011 on the 8^th and 9^th pleas-in-law for the pursuers. The pursuers' 8^th plea-in-law is that the defender's averments being irrelevant et separatim lacking specification, decree should be granted as craved. The pursuers' 9^th plea-in-law is that the defender's averments being irrelevant et separatim lacking in specification, they ought not to be remitted to probation. Mr McGrath on behalf of the pursuers invited the court to find that the defender's averments were both irrelevant and lacking in specification and accordingly to sustain both pleas-in-law for the pursuers and to grant decree de plano in favour of the pursuers against the defender.

 

[2] At the outset of the debate the defender invited the court to allow him to be represented by Mr Colm Lyons to speak on his behalf as a "lay representative". I was told that Mr Lyons was a barrister called to the English Bar. The application by the defender had been foreshadowed by his father, Mr John Stephen, who had appeared on the defender's behalf on 15^th September 2011 when the case had previously been set down for a debate before me. On that date, Mr John Stephen had appeared on behalf of the defender in the defender's absence in order to seek a discharge of the debate on the basis that there had been a "mix up about flights" as a result of which he had not returned from abroad. In the event, the debate was discharged due to lack of court time. Mr John Stephens raised the possibility of Mr Lyons appearing as a lay representative for the defender at a future date. I confirmed to him that it would be possible for the defender to invite the court to allow Mr Lyons to appear in such a capacity provided that certain prerequisites were complied with, one of which was that anyone appearing as a lay representative is prohibited from receiving remuneration, directly or indirectly, from the litigant he is representing. I was assured that this would be the case as Mr Lyons was a friend. Having heard the defender personally on 13^th October I allowed him to be represented at the debate by Mr Lyons as a lay representative.

 

The pleadings

 

[3] The pursuers seek payment of sums totalling £64,628.13 in respect of what are said to be seven unpaid invoices which were rendered by them to the defender for professional legal services which the pursuers aver were instructed by the defender.

 

[4] In article 2 of condescendence the pursuers aver:

 

"On or around 20^th February 2009 the defender met with the pursuers. The defender instructed the pursuers in relation to the possible acquisition of various properties in Edinburgh. The pursuers issued a formal letter of engagement to the defender dated 2^nd March 2009. The letter of engagement was addressed to the defender as an individual. The defender signed the letter of engagement in his individual capacity on 22^nd March 2009 and returned it to the pursuers. A copy of the letter of engagement is lodged in process and referred to for its terms which are held to be repeated herein brevitatis causa. Paragraph 2 of the letter of engagement provides that the pursuers are entitled to accept instructions only from the defender unless he advises them to the contrary in writing and that the pursuers are treating the defender as their client for the purposes of the engagement. Paragraph 7 of the letter of engagement provides that if the defender instructs the pursuers to act on behalf of a limited company it is accepted that it is appropriate that he should guarantee payment of the pursuers' fees and outlays. The defender is a director and company secretary of Caledonian Property Limited. The pursuers on the instructions of the defender supplied legal services to the defender in respect of Advocate's Close. The pursuers thereafter issued invoice number 1621090 and dated 31^st March 2009 (hereinafter referred to as the "first invoice") to the defender, a copy of which is lodged in process and referred to for its terms which are held to be repeated herein brevitatis causa. The defender's averments in answer are denied except in so far as coinciding herewith."

 

Answer 2 for the defender is in the following terms:

 

"The defender denies liability for all invoices submitted to him as they relate to services rendered to Caledonian Property Limited and on the latter's behalf."

 

In article 3 of condescendence the pursuers aver:

 

"The defender's liability in terms of the first invoice is £17,380.18 which is the sum first craved. The defender has failed to make payment of the sums due in terms of the first invoice. The defender's averments in answer are denied except insofar as coinciding herewith. The pursuers' averments in article 2 of condescendence are referred to for their terms which are held to be repeated herein brevitatis causa."

 

Answer 3 for the defender is in the same terms as answer 2.

 

In article 4 of condescendence the pursuers' aver:

 

"The pursuers on the instructions of the defender supplied legal services to the defender in respect of Advocate's Close. The pursuers thereafter issued invoice number 1622151 and dated 30^th April 2009 (hereinafter referred to as the "second invoice") to the defender, a copy of which is lodged in process and referred to for its terms which are held to be repeated herein brevitatis causa. The defender's averments in answer are denied are denied except insofar as coinciding herewith..."

 

Answer 4 for the defender is in the same terms as answer 2.

 

Articles 5, 6, 7, 8, 9, 10, 11, 12, 13, 14 and 15 of condescendence are in similar terms relating to the remaining invoices said to have been rendered by the pursuers to the defender. The answers on behalf of the defender are all in the same terms as answer 2.

 

[5] Mr Lyons confirmed that the defender accepted that he had signed the letter of engagement, number 5/1/1 of process, and that the invoices in the pursuers' inventory, number 5/1 of process, had been sent to him. The terms of the letter of engagement (and the invoices) were not disputed. The issue was the interpretation of those terms.

 

[6] The relevant parts of the letter of engagement are as follows. On the first page the letter bore to have been sent by the pursuers to the defender. It was dated 2^nd March 2009. It then proceeded as follows:

 

"Dear Ruari,

 

Property at Cockburn Street/Market Street, Edinburgh

 

Further to our recent meeting on Friday 20^th February 2009 we are writing to confirm our agreement to act on your behalf in the above matter and to set out our understanding of your instructions. This letter together with our Terms of Business set out in the attached appendix form the basis of our engagement to act on your behalf. Please sign and return the duplicate of this letter to confirm your agreement to this basis.

 

1.      Description of the work

 

You have asked us to act for you in the acquisition of several buildings located on and around Cockburn Street, which you are hoping to convert and fit out as two separate city centre hotels. If we have understood this incorrectly, please let us know. Our engagement is limited to this work and other work as may be further agreed with us in the course of this engagement...

 

2.      Reliance on instructions

 

Unless we hear from you in writing to the contrary, we shall be entitled to accept instructions only from you.

 

In this engagement, we are treating you as our client.

 

No other party may rely on any advice we provide to you without our prior written consent which may limit the extent of such reliance or our liability to such other party...

 

7.      Responsibility for fees

 

Where you instruct us to act on behalf of a limited company or limited liability partnership (LLP) or other vehicle controlled by you, you accept that it is appropriate that you personally guarantee payment of our fees and outlays in accordance with our Terms of Business, even where for your convenience we may agree to bill such company, LLP or other vehicle...

 

Thank you for your instructions in this matter.

 

Yours faithfully

 

John G Blackwood

Partner

McClure Naismith LLP

 

 

I/We agree to the terms of the foregoing letter and your Terms of Business and instruct McClure Naismith LLP on the basis of the foregoing letter and such Terms of Business a copy of which has been retained by me/us.

 

"Ruari Stephen" (sgd) 23/03/09 (date)"

 

Submissions on behalf of the pursuers

 

[7] Mr McGrath submitted that the pursuers' position on record was that they had, on the instructions of the defender, supplied legal services to the defender in respect of Advocate's Close. He submitted that the sole basis of the defence advanced was that the defender denied liability for all invoices submitted to him because he averred that they related to services rendered to Caledonian Property Limited and on their behalf. He submitted that in terms of the letter of engagement Caledonian Property Limited was not the pursuers' client; the "client" was the defender and the defender was responsible for the pursuers' fees. I was reminded that there was no general denial of the pursuers' averments. The only denial of liability stated by the defender was that the invoices related to services rendered to Caledonian Property Limited. However, the letter of engagement had specifically addressed, in paragraph 7, the issue of "responsibility" for the pursuers' fees in such circumstances. If the defender had instructed the pursuers to carry out work on behalf of Caledonian Property Limited, the defender was responsible for payment of the pursuers' fees.

 

[8] I was referred to Macphail, Sheriff Court Practice (3^rd edition) at paragraphs 9.27 and 9.32 on the question of relevancy and the need for specification in defences. On the question of relevancy, Mr McGrath submitted that paragraph 7 of the letter of engagement imposed a direct obligation on the defender to pay the pursuers' fees even where he was instructing the pursuers on behalf of one of his limited companies, such as Caledonian Property Limited. In this connection, I was referred to Blackwood v Forbes (1848) 10 D 920. That was a case in which the Inner House held that, under the terms of a letter in that case, there was a direct obligation by the defender to pay an account for goods supplied to a third party. The terms of the letter in that case including the following: "I hereby guarantee you payment of the price of such goods as the Countess of Buchan may get from you... this obligation and guarantee to continue until withdrawn by letter addressed by me to your firm." Mr McGrath submitted that, although Blackwood was concerned with the supply of goods for the benefit of a third party, the principle was equally applicable in relation to the supply of services for the benefit of a third party in the present case.

 

[9] As to the issue of lack of specification in the defences, Mr McGrath submitted that the defences essentially consisted of one sentence. There was no specification beyond that bare sentence and no documents had been incorporated into the defender's pleadings to support his position. By contrast, the pursuers had set out their position fully. The defender remained liable notwithstanding that any services were rendered to the limited company. In the absence of any further specification, the pursuers had been given no fair notice of any detailed or other basis of defence. The pursuers should therefore not be put to probation on the basis of the defender's averments.

 

Submissions on behalf of the defender

 

[10] Mr Lyons for the defender submitted that the defender had set out a relevant defence albeit he accepted that it had been set out "inexpertly" as the defender had been representing himself. Mr Lyons then criticised the pursuers' averments. He referred to Macphail supra at paragraph 9.32 where a passage from an article by RW Miller entitled "Civil Pleading in Scotland" is quoted. This passage includes the following: "What the opposite party says may be true, or it may not, but even if it be assumed that it is all true, nevertheless he cannot prevail against me, either because an essential fact is unrepresented in his averments, or because the facts he avers would not, even if proved, justify the application of the legal principle to which he appeals." Mr Lyons placed particular emphasis on the words in italics. He submitted that the pursuers were not entitled to the remedy they sought because the facts averred by them would not, even if proved, justify the application of the legal principle to which they appealed. Mr Lyons sought to advance this argument even although the defender did not have a plea to the relevancy of the pursuers' averments. He submitted that the pursuers appeared to be relying upon two legal principles. The first was that the pursuer was the instructing client and the second was that the terms of paragraph 7 of the letter of engagement made the defender liable for the pursuers' fees where instructions were for the company, Caledonian Property Limited.

 

[11] Mr Lyons submitted that, as a matter of construction in the law of contract, where there was an ambiguity it should be construed against the party seeking to rely on the provision concerned. He submitted that the defender had made it clear that he considered himself not to be acting in person but at all times to be acting solely and only as a representative and director of Caledonian Property Limited. He submitted that at no point was the defender personally involved. It was only Caledonian Property Limited. In support of this submission, he drew my attention to the letter of engagement where on all pages other than page 1 there was a reference in the top left hand corner to "Caledonian Property Limited".

 

[12] Mr Lyons then turned to the specific terms of the letter of engagement. Despite the fact that there were no averments or a plea-in-law to this effect, he initially submitted that there was no enforceable contract as between the pursuers and the defender. He sought to argue initially that an essential element of any contract was that there required to be "consideration" or "benefit" to the party against whom it was sought to enforce the contract. The pursuers were therefore not entitled to the remedy they sought. This was on the view that the defender had derived no benefit. After some discussion, I drew to Mr Lyons' attention paragraph 5.01 of Gloag and Henderson, The Law of Scotland (12^th edition) where it is stated that "consideration" is not part of the law of contract in Scots law. In the light of this, Mr Lyons withdrew his submission on this point and confirmed that he no longer sought to maintain that the letter of engagement was unenforceable due to the absence of any "consideration".

 

[13] Mr Lyons next submitted that the pursuers were seeking to "lift the corporate veil". He submitted that the defender and Caledonian Property Limited were two entirely different entities as a matter of law even although the defender is a director of Caledonian Property Limited.

 

[14] Mr Lyons further submitted that the defender was entitled also to look at the "performance" of the contract in order to "understand" its terms, in particular the terms of paragraph 7 of the letter of engagement. He submitted that this was a principle of the interpretation of any contractual clause. In this connection, he submitted that the pursuers had at no stage "adduced any evidence" that Caledonian Property Limited was "controlled by" the defender. He submitted that the terms of paragraph 7 were such that the pursuers required to "adduce evidence" that this was the case. Being a director and company secretary of the company, as averred by the pursuers in article 2 of condescendence, was not equivalent to "controlling" the company. He submitted that this was an essential fact and that the pursuers' pleadings were silent on this. The pursuers would require to produce evidence on this to entitle them to the application of the legal principle to which they appealed.

 

[15] Turning to paragraph 2 of the letter of engagement, Mr Lyons submitted that the defender was entitled to look at the "performance" of the contract to "clarify" the meaning and effect of the terms of this clause also. In support of this contention, Mr Lyons submitted that at no stage had the pursuers provided any prior written confirmation that Caledonian Property Limited were relying on the advice given. He submitted that the pursuers' productions "represented that Caledonian Property Limited was the client and not Mr Stephen". Nevertheless the pursuers had not produced any "prior written consent", which Mr Lyons submitted they required to do. The pursuers had conducted business on the basis that only Caledonian Property Limited was the client.

 

[16] Mr Lyons told the court that he accepted that the defender's pleadings were inexpert. He also told me that the defender had not lodged some of the relevant paperwork. However, he told me that there was no disagreement with the pursuers' productions themselves. The defender accepted that he had signed the letter of engagement. There was therefore no dispute that the defender had entered into the letter of engagement and that the invoices had been rendered to him. It was a matter of construction of the contract, namely the letter of engagement. He submitted that the defences should not be repelled without any assessment of the merits of the case. As a matter of justice, the pursuers knew full well what the burden of the defence was. The pursuers' pleadings did not justify the application of the principle the pursuers sought to apply.

 

[17] In relation to Blackwood v Forbes, Mr Lyon submitted that the case did not mean that paragraph 7 of the letter of engagement imposed a direct obligation on the defender. He reiterated that the pursuers would have to show not only that the instructions came from Mr Stephen, the defender, but also that the company was controlled by him. The pursuers had not done that. They had not demonstrated that the defender had personally instructed the pursuers or demonstrated that he had control of Caledonian Property Limited. Mr Lyons therefore invited the court to allow a proof.

 

Response for the pursuers

 

[18] Mr McGrath submitted that there had been no averments or pleas-in-law to support the arguments advanced on behalf of the defender other than that the services were rendered to Caledonian Property Limited and on their behalf. It was on this sole point that the defender offered to prove that there was a defence to the action. Mr McGrath submitted that he understood Mr Lyons to be suggesting that there was an ambiguity in the contract and that he had been referring to matters beyond the terms of the contract. Mr McGrath submitted that the defender had no averments, pleas-in-law or productions to allow Mr Lyons to refer to matters beyond the terms of the contract and that, in any event, there was no ambiguity. This case rested on the terms of the letter of engagement. Mr McGrath submitted that insofar as Mr Lyons had suggested that there was an ambiguity in the terms of the letter of engagement, the letter had been addressed to the defender personally and that it was clear that the pursuers had been acting on his instructions. The letter of engagement formed the basis of the pursuers' engagement to act on his behalf. The defender agreed to its terms by signing it and returning it to the pursuers. Paragraph 2 provided that the pursuers were treating him as their client. Insofar as Mr Lyons had suggested that it was the pursuers' intention to seek to lift the corporate veil, the basis on which the letter of engagement was set out was clearly to avoid any need to attempt to do so. The pursuers' averred in article 2 of condescendence that the defender instructed the pursuers. Likewise, in article 4 of condescendence, the pursuers' averred that "on the instructions of the defender" they supplied legal services to him. The defender then denied liability on the sole ground set out in the answer, namely that the invoices related to services rendered to Caledonian Property Limited and on their behalf. There was no general, or specific, denial of the pursuers' averments, including the averment that the defender had instructed the pursuers to carry out legal services. I was reminded of the terms of Ordinary Cause Rule 9.7 which provides as follows: "Every statement of fact made by a party shall be answered by every other party, and if such a statement by one party within the knowledge of another party is not denied by that other party, that other party shall be deemed to have admitted that statement of fact". The pursuers had set out that the defender was the client. They averred that they were instructed by the defender to provide legal services and they averred that the defender was liable to pay for those legal services. The only basis on which the defender proposed to submit in the evidence that he was not liable to pay was that the services were rendered to Caledonian Property Limited and on their behalf. If the defender instructed the pursuers to carry out legal services on behalf of Caledonian Property Limited, paragraph 7 of the letter of engagement stipulated that in those circumstances the defender remained liable to pay for the pursuers' fees and outlays.

 

[19] In relation to the question of the words "controlled by you" in paragraph 7, Mr McGrath submitted that the defender's position was inconsistent. He had on the one hand submitted that he had intended to instruct the pursuers in his capacity as a director on behalf of Caledonian Property Limited to engage the pursuers to provide legal services on behalf of the company. However, he was also suggesting that he had no such control and authority to do so. These positions were wholly inconsistent.

 

[20] Mr McGrath submitted that the terms of paragraph 7 of the letter of engagement were not ambiguous. On a plain reading, the terms of this paragraph imposed a direct obligation on the defender to be responsible for the pursuers' fees and outlays. It would not be in the interests of justice to allow one contracting party to assent to the terms of a contract and later try to vary it from those terms, which was what the defender was now asking the court to do. There was no basis upon which the court should be persuaded to look beyond the terms of the contract itself on the pleadings as they stood or the productions incorporated into the pleadings. Taken together, they made it clear that the defender was the client of the pursuers, a point which was at least impliedly admitted, namely that the defender instructed the pursuers to provide legal services, and that in terms of the letter of engagement between the parties the defender was liable for the fees and outlays of the pursuers as a direct obligation.

 

[21] Mr McGrath also submitted that the defender in effect said in his answers that services had been rendered to Caledonian Property Limited. These were instructed by him. I was reminded that, in terms of paragraph 2 of the letter of engagement, the first sentence provided: "Unless we hear from you in writing to the contrary, we shall be entitled to accept instructions only from you." In relation to Mr Lyons' submission in relation to the last sentence of paragraph 2 where it had referred to the pursuers' "prior written consent", Mr McGrath submitted that this was solely in relation to the issue of reliance on any advice provided by the pursuers, namely that no other party might rely on the pursuers' advice unless the pursuers had given their prior written consent which might limit the extent of such reliance on the pursuers' liability to such other party. That was not of any relevance in relation to the question of the pursuers' responsibility for fees in the present case. The defender was now claiming that he was not the client of the pursuers and that he had instructed the pursuers only in the capacity of a director of Caledonian Property Limited. Mr McGrath submitted that, from this, it must surely be inferred that he had sufficient authority and control in relation to that company in order to give such instructions to the pursuers. That being so, he submitted that it was entirely inconsistent with his other submission that he did not control the company. If that were truly his position, Mr McGrath submitted that his defence ought to have been that the company was not controlled by him because, for some reason, although the director and company secretary of the company, he did not have authority to bind the company. In the submissions on behalf of the defender it had been maintained on the defender's behalf that he had been instructing the pursuers only in the capacity as a director of the company and that he had considered himself at all times to be acting not in person but solely and only as a representative and director of Caledonian Property Limited. However, the only basis upon which he could have concluded a contract with the pursuers in the letter of engagement in that capacity would have been if he had been entitled to do so by reason of the fact that he had authority and control of the company. The defender's submissions had not been advanced on any esto basis. Mr McGrath submitted that the defences averred could not be allowed to go to probation standing the inconsistency in the positions advanced on behalf of the defender.

 

Further response on behalf of the defender

 

[22] Mr Lyons submitted that authority and control in relation to a limited company were not the same thing. Someone might have authority to bind a company but may not have control of the company.

Discussion

 

[23] The defence advanced on record is restricted to a denial that the defender is liable for the seven invoices sent to him on the basis that they relate to services rendered to Caledonian Property Ltd ("the company") and on their behalf. The terms of the letter of engagement are not in dispute. The issue is the interpretation of its terms.

 

[24] Mr Lyons submitted that the defender had "made it clear that he considered himself not to be acting in person but at all times to be acting solely and only as a representative and director of Caledonian Property Limited". This submission appeared to me to be wholly inconsistent with the plain terms of the letter of engagement and I do not accept it. The one aspect of the letter upon which he founded in support of his position was the fact that the words "Caledonian Property Limited" appear at the top left hand corner of the second, third and fourth pages of the letter. However, his submission wholly ignored the rest of the letter which included the following factors:

1.      The letter was addressed to the defender personally and then commenced "Dear Ruari";

2.      Throughout the letter there are references to the pursuers acting "on your behalf", "on your instructions", "confirm your agreement to act", "you have asked us to act for you", "Thank you for your instructions...";

3.      Paragraph 2 states: "Unless we hear from you in writing to the contrary, we shall be entitled to accept instructions only from you...In this engagement, we are treating you as the client..."

4.      Paragraph 7 states: "Where you instruct us to act on behalf of a limited company...you accept that it is appropriate that you personally guarantee payment of our fees and outlays..."

5.      The defender accepts that he personally signed and dated the acceptance of terms at the end of the letter in the following terms: "I/we agree to the terms of the foregoing letter..."

In my opinion, it is perfectly clear from the plain terms of the letter that the defender personally is the client. There is no ambiguity whatsoever about that in the letter.

 

[25] I pause to note that, consistent with the possible eventuality envisaged in paragraph 7, that paragraph appears on one of the pages of the letter which includes a reference to "Caledonian Property Limited" at the top left hand corner of the page. In article 2 of condescendence the pursuers aver that the defender "is a director and the company secretary of Caledonian Property Limited." This was not denied on record. In view of the emphasis placed by Mr Lyons at the debate on the need for the defender to be shown to "control" the company, it is in my view notable that it was nowhere averred by the defender that, despite the terms of paragraph 7 and the reference to "Caledonian Property Limited" on that same page of the letter, this company would not in fact fall within the ambit of paragraph 7 as regards his responsibility for fees because it was not "controlled" by him.

 

 

[26] In relation the question of implied admissions, I have already quoted the terms of Ordinary Cause Rule 9.7 in paragraph [18] above. In view of the limited nature of the pleadings by the defender, I am satisfied that the following averments in article of condescendence should be deemed to have been admitted:

1 "On or around 20^th February 2009 the defender met with the pursuers."

1.      "The defender instructed the pursuers in relation to the possible acquisition of various properties in Edinburgh."

2.      "The pursuers issued a formal letter of engagement to the defender dated 2^nd March 2009."

3.      "The letter of engagement was addressed to the defender as an individual."

4.      "The defender signed the letter of engagement in his individual capacity on 22^nd March 2009 and returned it to the pursuers."

5.      "Paragraph 2 of the letter of engagement provides that the pursuers are entitled to accept instructions only from the defender unless he advises them to the contrary in writing and that the pursuers are treating the defender as their client for the purposes of the engagement."

6.      "Paragraph 7 of the letter of engagement provides that if the defender instructs the pursuers to act on behalf of a limited company it is accepted that it is appropriate that he should guarantee payment of the pursuers' fees and outlays."

7.      "The defender is a director and company secretary of Caledonian Property Limited."

8.      "The pursuers thereafter issued invoice number 1621090 and dated 31^st March 2009 to the defender."

9.      "The pursuers thereafter issued invoice number 1622151 and dated 30^th April 2009 to the defender."

10.  "The pursuers thereafter issued invoice number 1623317 and dated 28^th May 2009 to the defender."

11.  "The pursuers thereafter issued invoice number 1624810 and dated 28^th July 2009 to the defender."

12.  "The pursuers thereafter issued invoice number 1624851 and dated 29^th July 2009 to the defender."

13.  "The pursuers thereafter issued invoice number 1624830 and dated 29^th July 2009 to the defender."

14.  "The pursuers thereafter issued invoice number 1624852 and dated 29^th July 2009 to the defender."

 

[27] These were all statements of fact which would be within the knowledge of the defender. None was denied by him. Mr McGrath submitted that the defender should also be deemed to have admitted the averment in article 2 of condescendence: "The pursuers on the instructions of the defender supplied legal services to the defender in respect of Advocates Close." (There were also similar averments in articles 4, 6, 8, 10, 12 and 14 of condescendence.) However, I note that the pleas-in-law for the defender include the following: "The defender did not instruct these services on his own behalf..." As a matter of fairness to the defender, I do not consider that it would be appropriate to hold that he should be deemed to have admitted the averment to which I have referred in article 2 of condescendence (and the similar averments in the later articles of condescendence) which was to the effect that the defender instructed services on his own behalf when he maintains in his pleas-in-law that he did not do so "on his own behalf".

 

[28] However, in my opinion, it is a matter of some note that the following averment in article 2 of condescendence was not denied by the defender: "Paragraph 7 of the letter of engagement provides that if the defender instructs the pursuers to act on behalf of a limited company it is accepted that it is appropriate that he should guarantee payment of the pursuers' fees and outlays." (my emphasis). I have already commented at paragraph [25] above on the fact that a reference to "Caledonian Property Limited" appeared on the same page of the letter as paragraph 7. On record, it is evident that the defender did not take issue with the pursuers' summary of this paragraph of the letter and, in particular, the defender did not take the position that such a limited company required to be "controlled" by him for the paragraph to be effective in placing responsibility for fees on him, and he did not take the further position that the company was not in fact controlled by him although it is not disputed that he did instruct the services, albeit - as he maintains in his pleas-in-law - not "on his own behalf". Consistent with this, it might also have been argued that the words "controlled by you" in paragraph 7 only related to the words "or other vehicle" in that paragraph. Be that as it may, if "control" was really an issue, I would have expected it to have found its way into the defender's averments. In any event, in so far as Mr Lyons sought to advance an argument to the effect that to entitle the pursuers to the remedy they sought, they required to aver that the company was "controlled" by the defender (in addition to the averments as to the positions held by him in the company), the defender had no plea to the relevancy of the pursuers' averments.

 

[29] I also do not accept that there was an ambiguity in the letter of engagement. I therefore do not accept that it is appropriate to look beyond the terms of the contract in interpreting it. In my opinion, paragraph 7, entitled "Responsibility for fees", plainly imposes a direct obligation on the defender to be responsible for payment of the pursuers' fees where he instructed the pursuers to act for Caledonian Property Ltd. That being so, I am therefore satisfied that the averments and pleas-in-law on behalf of the defender do not set out a relevant defence to the action. As I have already said, I did not accept the submission on behalf of the defender to the effect that "the defender made it clear that he considered himself not to be acting in person but at all times to be acting solely and only as a representative and director of Caledonian Property Limited". That contention is flatly at variance with the plain terms of the letter of engagement. I also agree with Mr McGrath's submissions as to the inconsistency in the positions which appeared to be being adopted by and on behalf of the defender. I also agree with Mr McGrath that the reference in paragraph 2 of the letter to the need for any "prior written consent" was solely in relation to the issue of reliance on any advice provided by the pursuers. In my opinion, it was of no relevance at all to the question of responsibility for the pursuers' fees.

 

[30] I also reject the submission on behalf of the defender to the effect that the pursuers are trying to "lift the corporate veil". In my opinion, Mr McGrath was correct to say that the basis on which the letter of engagement was set out was to avoid any need to do this. By virtue of paragraph 7, responsibility for the pursuers' fees remained with the defender even where he was instructing them to act on behalf of a limited company such a Caledonian Property Limited. That being so, the defence advanced is irrelevant.

 

[31] I take the view that the defences are in any event lacking in specification to the extent that they should not be allowed to go to probation. The defender's position is inconsistent and not specific. I therefore do not consider that the defender has given the pursuers fair notice of his defence in any event.

 

 

Result

 

[32] I therefore sustain pursuers' 8^th and 9^th pleas-in-law and grant decree in favour of the pursuers against the defender in terms of craves 1, 2, 3, 4, 5, 6 and 7.

 

Expenses

 

[33] Parties were agreed that expenses should follow success. I therefore also find the defender liable in the expenses of the action.