Bruce And Company V. William And Elizabeth Ferguson
| Jurisdiction | Scotland |
| Judge | Sheriff Principal Mhairi M. Stephen |
| Court | Sheriff Court |
| Date | 28 May 2013 |
| Docket Number | A885/11 |
| Published date | 23 September 2013 |
| SHERIFFDOM OF LOTHIAN AND BORDERS Case Number: A885/11 | |
| Judgment by SHERIFF PRINCIPAL MHAIRI M STEPHEN in appeal in the cause Bruce and Company Pursuers and Appellants against William and Elizabeth Ferguson Defenders and Respondents ___________________________ |
Act: Winter, Advocate instructed by Messrs Brodies, WS
Alt: Reid, Advocate instructed by Messrs Anderson Strathern, Solicitors
EDINBURGH, 28 May 2013
The Sheriff Principal, having resumed consideration of the cause, refuses the appeal; adheres to the sheriff's interlocutors of 17 July 2012 and 6 September 2012; finds the appellants liable to the respondents in the expenses of the appeal and allows an account thereof to be given in and remitted to the Auditor of Court to report and tax; certifies the cause as suitable for the employment of junior counsel.
(signed) Mhairi M Stephen
NOTE:
NOTE:
1. The appellants and original pursuers Messrs Bruce and Company appeal the sheriff's interlocutor of 6 September 2012 assoilzing the defenders and respondents. The note of appeal is no 13 of process. The sheriff's judgment follows proof and is dated 17 July 2012. The sheriff gives full reasons for finding that the appellants were not entitled to any remuneration under the sole selling agreement entered into between the parties in October 2010. The sheriff found that the existence of missives of let between the respondents and an existing tenant Michael Ward was not an event which gave rise to the appellants being entitled to remuneration in terms of the contract between the parties.
Background
2. The appellants, who are commercial estate agents, were engaged by the respondents to sell licensed premises known as "The Lounge" in Bathgate. The respondents are a married couple who own a number of licensed premises in West Lothian and who wish to organise their business interests and realise assets as they approach retirement. They wish to sell the licensed premises known as The Lounge which comprised a downstairs bar and an upstairs music venue. In 2010 the respondents received rent from tenants in their public houses including "the Lounge".
3. In October 2010 the parties entered into an agreement, a sole selling agreement (5/1/1 of process). The appellants were instructed to market the premises for sale at offers over £300,000 with a sitting tenant. The registration fee of £2,000 plus VAT was paid by the respondents to the appellants. This payment was intended to cover the marketing costs such as the preparation and distribution of sales particulars and advertising etc. The sales particulars (5/2 of process) emphasized the rental income generated by the sitting tenant (£30,000 per annum).
4. The agreement (5/1 of process) is a pre-printed document headed up with the appellants' name and business address. After the sellers' details and the property details are filled in the document proceeds to set out the terms and conditions on which the appellants will agree to act as sole agents in connection with the marketing of the property. The heading specifically records in bold type "Asking Price" and in handwriting it is filled in with the answer "OFFERS £300k". Other headline topics in bold are "Sellers Solicitors" and "The Commencement Date". Neither have been completed. Instead the agreement records "T.B.A." and "T.B.C." respectively. Clause 3 sets out what is meant by "sole selling rights" as required by statute. (The Estate Agents Act 1997 and The Estate Agents (Provision of Information) Regs 1991). Clause 4 sets out how the agreement may be terminated and Clause 10 the withdrawal fee in the event of termination. Importantly, Clause 6 sets out the remuneration payable to the appellants in the event of four separate events and in the fifth place a minimum fee of £5,000 in any event. In two events (6.1 and 6.3) the remuneration is reduced from the pre-printed sum of 3.5% to 2% (sale or sale of shareholding). The remuneration due in the event of disposal by lease remains unaltered (6.2). Clause 8 sets out when that remuneration falls due as follows:
"8. Payment
Bruce & Co shall become entitled to payment of its remuneration upon conclusion of a contract for the sale of or other disposal of the business and premises or any part thereof, share, shares or other interests therein, however informally constituted, and that notwithstanding and suspensive or other condition."
5. The registration fee having been paid, the premises are marketed for sale but no offers were forthcoming. Within a few months of marketing the tenant of the downstairs bar required to give up his tenancy for personal reasons. That was a significant event as the respondents decided to close the downstairs bar whilst the tenant running the upstairs music room, Michael Ward, continued to run that enterprise for a short time before a decision was made on the part of the respondents to close both parts of the premises temporarily and refurbish the whole premises. During that period Michael Ward relocated to other premises owned by the respondents in Bathgate. As a result the premises were re-marketed without a sitting tenant at a reduced price. A second set of sale particulars were printed reflecting these material changes. (5/3 of process.) The asking price is stated to be offers over £199,985.
6. The respondents were aware that it was desirable for the premises to be trading as a higher price would be achieved with tenants operating the licensed premises. Discussions to this effect took place between the parties. These discussions may have led to a misapprehension on the part of the appellants that the respondents wished to dispose of the premises by way of lease rather than sale.
7. The appellants' appreciation of the situation may have been further complicated by one Brian McAllister intimating interest in the licensed premises. Apparently, Mr McAllister had been employed as a barman in the premises. The appellants prepared a further (third) set of sales particulars (5/4 of process) indicating that the subjects were available for let at a premium of £15,000. It was not disputed that the defenders did not receive these particulars for approval.
8. The sheriff finds at Finding in Fact 14 in the following terms:
14. In the mistaken belief that Brian McAllister had, or was to, acquire a remunerable interest in the sale subjects, the pursuers ceased marketing the sale subjects in about July 2011. Purportedly in terms of Clause 6.2 of the Agreement, they, on 20 July 2011, invoiced the defenders for payment of £6,000 (inclusive of £1,000 VAT) on the basis of there being a new tenancy giving rise to that minimum payment."
9. Subsequently in August 2011 the respondents entered into missives to lease the licensed premises to their existing tenant, Michael Ward, for a period of five years.
10. Against that background the sheriff found that the expression "disposal" in the agreement (5/1/1 of process) related to the disposal of the sellers' interest in land and that the missives entered into between the respondents and Michael Ward did not constitute a disposal of an interest in land nor was it a long lease and therefore did not trigger any entitlement on the part of the appellants to remuneration in terms of the agreement. The appellants appeal that decision.
Appellants' Submissions
11. Mr Winter, for the appellants asked me to allow the appeal; recall the sheriff's interlocutor of 6 September 2012; sustain the first, third, fourth and fifth pleas-in-law for the pursuers and appellants and to grant decree for the sums in craves 1 and 2 together with expenses. Mr Winter also asked me to certify the cause as suitable for the employment of junior counsel.
12. Mr Winter spoke to the note of appeal (no 13 of process) which contains the outline argument for the appellants. In effect five grounds of appeal are stated at part 2 ground 2.1 is the overarching proposition on appeal and 2.2 specifically considers the legislative framework of the Estate Agents Act 1979 and the Estate Agents (Provision of Information) Regulations 1991 and whether the agreement existed within that framework; whether the agreement between the parties related to "a disposal of an interest in land" and whether the sheriff was entitled to find that as the missives of the lease between the respondents and Mr Ward were only for the duration of five years, there being no long lease, the appellants were not entitled to payment under the agreement. Mr Winter argued that the sheriff erred in respect of these conclusions. In particular the sheriff erred in finding that the respondents' knowledge at the time of negotiating the agreement extended to the legislation referred to there being no evidence and no pleadings to support that proposition. In this context I was referred to the case of Luminar Lava Ignite v Mama Group PLC 2010 SC 310 "facts which are known only to one party are not admissible as part of the surrounding circumstances. For such circumstances to be available to the court in its contract, the circumstances must have been known to both parties or at least such knowledge must have been reasonably available to both of them."
Furthermore, there was no evidence, far less proof, of the technical meaning of a lease and whether that might be "a disposal of the respondents' interest". I was referred to McBryde on the Law of Contract in Scotland Chapter 8 - (8-11)
"the literal meaning of the word is a question of fact. The dictionary will supply a meaning in other words which can in turn be looked up and so on. No question of law is involved. A court may consider dictionary meanings as an aid to construction. The proper construction of a contract is, however, a question of law for the court to determine. This difference is of particular importance when the court is reviewing the decision of a lower court or an arbiter. Contracts are construed in the light of their surrounding circumstances and so, although the...
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