SHERIFFDOM OF GRAMPIAN, HIGHLAND and ISLANDS AT LOCHMADDY

A3/12                                                                                                     2015SCLOCH18

JUDGMENT

by

SHERIFF PRINCIPAL DEREK C W PYLE

in causa

WENDY ANN JONES and CLIFFORD WALTER JONES, both residing at Flat 56, Homehall House, 82 Upper Holland Road, Sutton Coldfield B72 1RD

Pursuers and Appellants

against

STEVEN MUIR and SAMANTHA MUIR, both residing at 9 Leanish, Isle of Barra HS9 5PJ

Defenders and Respondents

Lochmaddy,     March 2015

The Sheriff Principal, having resumed consideration of the cause, Refuses the appeal; Adheres to the interlocutor of the sheriff; Finds the appellants as assisted persons liable to the respondents in the expenses of the appeal; Remits an account thereof to the auditor of court to tax and to report; Certifies the appeal as suitable for the employment of junior counsel.

Introduction

[1] This unfortunate litigation involves a dispute between parents on the one part and their daughter and son-in-law on the other. It concerns an agreement reached among them for long term accommodation for the parents, doubtless in anticipation of their coming old age. In that spirit, the arrangements made did not have the legal clarity one would expect between parties unconnected to each other. The result was that in order to do justice among the parties the sheriff had to grapple with the sometimes difficult legal concept of unjustified enrichment.

The Sheriff’s Findings in Fact

[2] The sheriff made 70 findings in fact, but for present purposes they can be distilled into the following:

(a) The defenders live in a bungalow on Barra. The house stands on an acre of croft land;

(b) In late 2010 the defenders offered the pursuers the opportunity to build a bungalow on the croft land, but on the understanding that the title to it would not be conveyed to them. The parties did not consider at that time whether or not the bungalow when built would be the property of the pursuers or the defenders. It was envisaged that the pursuers would live in it for the remainder of their lifetimes. The defenders had no personal need or use for another house on their land. The first defender, in particular, adhered to his family’s general view that having lived on croft land for generations any houses should be occupied only by family members and accordingly should not be sold to or otherwise occupied by those who do not fall into that category;

(c) The bungalow was duly built, at the pursuer’s expense and with the first defender acting as project manager during the construction;

(d) Shortly before its completion, the pursuers fell out with the defenders. The pursuers moved into the bungalow. They stayed there for only about three months before they moved to England. They have not returned since. The defenders did not compel them to leave and have not prevented them from returning to live there;

(e) The cost of construction was over £60,000 net of VAT. That sum represented a substantial proportion of the pursuers’ total funds and life savings;

(f) During the course of construction the first defender took legal advice which was to the effect that the bungalow would as a matter of law belong to the defenders. He conveyed that advice to the pursuers who, despite it, continued with the construction;

(g) Despite expert evidence led at the proof, the sheriff concluded that it was impossible to identify the monetary value of the bungalow without marketing it for sale.

The Sheriff’s Finding in Law

[3] The pursuers seek in this action the open market value of the bungalow on the basis that the defenders have been unjustifiably enriched. The sheriff held that on the evidence he was not satisfied that there was no legal basis for the retention of the enrichment by the defenders and therefore that the enrichment should be regarded as unjustified and that it would be equitable to require the defenders to redress it. In reaching that conclusion, he considered that the pursuers’ reasons for leaving were critical. They had done so of their own free will. The defenders were willing to see the pursuers return on condition that they behaved in a conciliatory and reasonable manner towards them. The defenders had not prevented the pursuers from occupying the bungalow.

The Pursuers’ Submissions

[4] Counsel submitted that in order to obtain the remedy of unjustified enrichment, the pursuers required to prove (a) that there was enrichment at the expense of the pursuers and (b) that the enrichment was unjustified. The enrichment occurred at the point of completion of the bungalow. The enrichment was its value. The enrichment was at the expense of the pursuers. There was no legal justification for the enrichment. Reference was made to Gloag and Henderson, The Law of Scotland, 13^th edition, para 24.01; Dollar Land v CIN Properties Limited 1998 SC (HL) 90; Virdee v Stewart 2011 CSOH 50. The sheriff erred in finding that the pursuers left of their own free will. On the contrary, the defenders forced them to leave. The sheriff was wrong to conclude that the pursuers were free to return. In any event, the sheriff erred in his treatment of the evidence of the expert witness on the value of the bungalow after construction. He should have found that the minimum value was £55,000, which was the true value of the defenders’ enrichment. Decree should have been awarded in that sum. The sheriff also erred in not weighing up the equitable considerations apart from the reasons why the pursuers left. He should have taken into account that the pursuers have been deprived of a substantial proportion of their life savings. It is an irrelevant consideration that the first defender’s family seek to avoid the sale of houses on croft land occupied by them to non-family members. Even if it was relevant it was offset by the extent of the defenders’ enrichment.

The Defenders’ Submissions

[5] Counsel agreed that the pursuers required to prove that the enrichment was unjustified at the date the bungalow was completed. On that date the pursuers moved into it. They therefore got what they had agreed. They were not forced out by the defenders or otherwise prevented from remaining there. Their departure simply meant that the defenders have now received an incidental benefit, in so far as they regard it as a benefit at all, from expenditure and work which the pursuers have made or carried out for their own purpose. (Shilliday v Smith, 1998 SC 725, Lord President (Rodger) at p 730; Rankin v Wither 1886 13R 903) The sheriff’s conclusion that the defenders were not forced out of the bungalow and are not prevented from returning was a matter for him on the evidence. There was no basis in law for an appellate court to interfere with that finding. Again, the assessment of the expert evidence on the open market value was a matter for the sheriff. Just because there was only an uncontradicted expert witness did not mean that the sheriff was bound to accept his evidence. There was no error in law such as would entitle an appellate court to interfere.

Decision

[6] It seems to me that the real issue in this appeal is the effect in law on the pursuers’ claim of that part of the rule of unjustified enrichment which requires the pursuers to prove not only that the defenders have been enriched but that they were unjustly enriched. (Dollar Land, op cit, Lord Jauncey of Tullichettle at p 91.) In that case, the difficulty for the claimants was that the enrichment arose solely by reason of the termination of the contract in accordance with the specific provisions thereof and that the enrichment arose directly from the terms of the irritancy clause (ibid). In my opinion, the facts of this case produce the same result. The parties entered into a contract, the effect of which, whether they realised it or not, was that the bungalow would become the property of the defenders. The extent of the pursuers’ rights under the contract was to occupy it for the remainder of their lives. If they decide to walk away from the contract (I use that term advisedly) then the position in law does not change – the property continues to belong to the defenders. In my opinion, a confusion has arisen about the effect of what the pursuers have done. They have not rescinded the contract as a result of repudiatory breach by the defenders, although it might be thought so given that they have intimated an intention never to return and, more critically, have raised an action for payment. Instead, all that they truly have done is to indicate that they no longer wish to exercise their right of occupation. There is no breach of contract by the defenders. Even if it were accepted that on the facts the sheriff has misinterpreted the actings of the defenders, specifically the first defender, and ought to have concluded that the defenders both required the pursuers to leave and are preventing them from returning, the pursuers’ remedy ought to have been to seek to enforce the contract by declarator of their right to occupy and for interdict preventing the defenders from obstructing them in their exercise of that right. If the pursuers regarded the actings of the defenders as repudiation of the contract, the pursuers had the other option of intimating that the contract had come to an end and then suing for damages. But those damages would arise from the pursuers’ rights under the contract. Invoking the principle of unjustified enrichment would not arise. As Lord Jauncey pointed out (ibid), a claim for recompense quantum lucratus est normally arises where one party provides goods and services disconform to contract which are nevertheless accepted by the other. The claim arises as a matter of general law because the party who provided the services departed from the contract and is thereby disabled from suing on the contract. That is, for obvious reasons, not the situation here. If the pursuers had on the facts been prevented from exercising their rights under the contract their remedy was to sue on the contract. In other words, the principle of unjustified enrichment has no place in the circumstances of this case.

[7] In my opinion, that is the short answer to the question posed in this appeal, but in deference to the submissions of counsel I would make the following further points:

1. Another impediment to the pursuers invoking the rule of unjustified enrichment is that as a matter of law it does not apply where all that the pursuers have done is to expend money in their own interest but which incidentally benefits someone else, namely the defenders. (Shilliday v Smith, Lord President (Rodger) at p 730) The pursuers built the bungalow because they wanted to live in it. That was an expression of their own interests.
2. Counsel for the pursuers rightly identified the considerable hurdle he faced in light of the rules which apply to an appellate court in overturning a decision of the judge of fact. Neither in his written submissions nor in his oral ones before me could he identify where the sheriff had taken into account irrelevant considerations, failed to take into account relevant ones or been plainly wrong. Whatever interpretation counsel put on the events which led to the pursuers deciding to leave the island, he was unable to fault the decision of the sheriff to accept the clear evidence of both defenders that they were willing for the pursuers to return to occupy the bungalow (paras [101] and [134] of the sheriff’s judgment). The sheriff concluded in his finding in fact and law (no. 6) that it remains open to the pursuers to attempt to return to live in the bungalow should they wish to do so. A fair reading of the sheriff’s judgment as a whole is that the defenders’ view is qualified to the extent that they would expect the pursuers to behave reasonably if they did return. Counsel did not suggest that by adopting that position the defenders were unilaterally adding another term to the contract. He was plainly right to do so, particularly in the context of a family dispute where emotions were – and probably still are – running high. Indeed, the need for all parties to act reasonably in the implementation of the contract is an implied term anyway.
3. Counsel’s criticism of the sheriff’s approach to the evidence of the expert witness on the open market value of the bungalow is, in my opinion, without foundation. It seemed to be predicated on the belief that the sheriff was bound to accept that evidence when no contrary expert evidence had been adduced. I do not accept that as a general principle; even uncontradicted expert evidence still has to be of sufficient quality to satisfy the court. The sheriff sets out in some detail his concerns about the quality of the valuer’s evidence. I find no fault in his reasoning.
4. The issue of equitable considerations and the extent to which the sheriff applied them would arise only if I was satisfied that the principle of unjustified enrichment applied. The sheriff has reached the same conclusion as I on the latter issue. I therefore need say no more about it. I would however add that it is by no means clear to me, looking at the sheriff’s judgment as a whole, that the defenders truly regard themselves as having – or indeed objectively have – benefited from the pursuers’ departure. Putting aside any potential economic benefit, which on the evidence the sheriff accepted remains in doubt, there is an obvious emotional loss to the defenders, particularly the second defender, in being estranged from the pursuers. It is not for me to speculate, but it would come as no surprise to discover that the estrangement is a good deal more important to the defenders – and probably the pursuers as well – than the economic effects of the circumstances which led to the present impasse.

[8] For the foregoing reasons, the appeal falls to be refused. It was agreed that expenses should follow success and that the appeal should be certified as suitable for the employment of junior counsel. As the pursuers are in receipt of legal aid, I have, as also agreed, found them liable in the expenses as assisted persons.