Bank of Scotland v Brunswick Developments Ltd (1987)
| Jurisdiction | Scotland |
| Judgment Date | 26 January 1995 |
| Date | 26 January 1995 |
| Docket Number | No 31 |
| Court | Court of Session (Inner House - First Division) |
FIRST DIVISION
Lord Coulsfield
Practice—Evidence—Writ—Rectification—Signatories executing writ in name of wrong company with no explanation as to why error made—Whether proof of intention of signatories be allowed—Instruction to bank to transfer funds between accounts with bank purporting to effect transfer before necessary authorisation received—Whether authorisation ex post facto ratification or assignation—Whether rectification competent—Law Reform (Miscellaneous Provisions) (Scotland) Act 1985 (cap 23), sec 8(1)1
Words and phrases—"Grantor of the document"—Law Reform (Miscellaneous Provisions) (Scotland) Act 1985 (cap 23), sec 8(1)1
Two companies, G and B, held accounts with a bank with operations on the accounts over a certain limit requiring signatures of authorised signatories of B. In July 1989 the treasurer of G telephoned the bank to transfer a sum from B's account to G's account as being a loan from B to G. The transfer was effected on that date. On the same day two authorised signatories of B, who were also authorised signatories of G, executed a letter purporting to be an instruction to the bank to transfer the sum into G's account. The letter was written on the headed notepaper of G and purported to be signed on its behalf. The bank then petitioned the Court of Session under sec 8(1) of the Law Reform (Miscellaneous Provisions) (Scotland) Act 1985 to rectify the letter by substituting the name of B for that of G. B and its liquidator argued that the letter could only be regarded as an ex post factoratification of a transfer of funds which had already taken place and was not a document intended to create, transfer, vary or renounce a right within the statutory terms. They also contended that the letter was executed on behalf of G and not of B and that sec 8(1)(b) had been intended to cover errors in expression only, not mistakes as to the identity of the grantor of the document. Nor did the bank seek to explain how the signatories came to sign the letter on behalf of G when they were intending to sign it on behalf of B. The Lord Ordinary (Coulsfield) allowed a proof before answer. B and its liquidator thereafter reclaimed.
Held (aff judgment of Lord Coulsfield) (1) that the letter had been a document to which sec 8(1)(b) could apply for, as rectified, it would have been effective to transfer the jus crediti in the sum in the bank account; (2) that it was the intention of the signatories at the time of execution which had to be considered in an application under sec 8(1)(b) as it was they who were to be treated as grantors of the document, so that the error in the case was one which could be corrected under the statutory provision; and (3) that the bank had to be allowed an opportunity to lead evidence about the actions and intention of the
signatories, as the existence or otherwise of a given intention was a question of fact; and reclaiming motion refused.Observations (per the Lord President (Hope)) on the phrase “the grantor of the document” in sec 8(1)(b) of the Act.
The Governor And Company Of The Bank Of Scotland presented a petition under sec 8(1) of the Law Reform (Miscellaneous Provisions) (Scotland) Act 1985 in which they sought rectification by the court of a letter dated 31 July 1989 to them on headed notepaper of “A Goldberg & Sons plc” purporting to be signed “for A Goldberg & Sons plc” by substituting “Brunswick Developments (1987) Ltd” for “A Goldberg& Sons plc”.
Brunswick Developments (1987) Ltd and its liquidator were called in the petition as respondents.
The averments of parties are sufficiently set forth in the opinions of their Lordships in the Inner House.
The cause called before the Lord Ordinary (Coulsfield) on the respondents' pleas to the competency and relevancy of the action.
At advising, on 28 October 1993, the Lord Ordinary repelled the respondents' plea to the competency and allowed a proof before answer [seeBank of Scotland v Brunswick Developments (1987) Ltd 1994 SLT 623].
The respondents reclaimed.
Cases referred to:
Bank of Scotland v Graham's TrusteeSC 1992 SC 79
Carter v McIntosh (1862) 24D 925
Elwick Bay Shipping Co Ltd v Royal Bank of Scotland Ltd 1982 SLT 62
The reclaiming motion called before the First Division, comprising the Lord President (Hope), Lord McCluskey and Lord Weir for a hearing.
At advising, on 26 January 1995—
LORD PRESIDENT (Hope)—This is a reclaiming motion by the respondents in a petition for rectification of a document in terms of sec 8 of the Law Reform (Miscellaneous Provisions) (Scotland) Act 1985. When the case came before the Lord Ordinary on the procedure roll the respondents moved him to sustain their pleas to the relevancy and to the competency of the petition and to dismiss the application. The Lord Ordinary rejected the respondents' submission that the case did not fall within sec 8(1)(b) of the Act and he repelled the respondents' plea to the competency. He decided that the argument on relevancy raised a question of fact about which the petitioners must be allowed to lead evidence, so he allowed a proof before answer. When the reclaiming motion came before us the respondents' counsel did not insist on their pleas to the competency. But they submitted that the Lord Ordinary erred in law in allowing a proof before answer, and they invited us to sustain their second plea in law, which is their plea to the relevancy, and to dismiss the petition.
The petition has been presented under sec 8(1)(b) of the 1985 Act. That subsection is in these terms: [his Lordship quoted sec 8(1) as set outsupra and continued:]
The document which is sought to be rectified is a letter of instruction for the transfer of funds by the petitioners, not an agreement, so the relevant provision for present purposes is para (b). The question is whether the nature of the defect which the petitioners have identified in this case is such that the court has power under that paragraph to order it to be rectified in order that it may have the effect contended for by the petitioners. The letter, which was dated 31 July 1989, was written on paper which bore the heading “A Goldberg & Sons plc” and the registered number of that company at the foot. It was addressed to the petitioners, and it contained an instruction for the transfer of the sum of £1,500,000 from the account of Brunswick Developments Ltd to the account of A Goldberg & Sons plc. It bore to be signed on behalf of A Goldberg & Sons plc by a director of that company named Ian W Steven and by its company secretary, Anna Leon. The petitioners maintain that this was an error because the letter ought to have disclosed that it had been signed on behalf of Brunswick Developments Ltd and not Goldberg. They aver that the signatories intended to sign the letter on behalf of Brunswick, and that the letter failed to express accurately the intention of Brunswick acting through its authorised signatories at the date when it was executed. The order which they seek is the deletion of the words “A Goldberg & Sons plc” from the letter heading and from the conclusion of the letter, and the substitution in both places of the words “Brunswick Developments (1987) Ltd”. The defect which is sought to be rectified is that the letter stated that it was an...
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