Macdonald Estates Plc V. Regenesis (2005) Dunferline Limited
| Jurisdiction | Scotland |
| Judge | Lord Reed |
| Neutral Citation | [2007] CSOH 123 |
| Court | Court of Session |
| Docket Number | CA25/06 |
| Published date | 11 July 2007 |
| Date | 11 July 2007 |
| Year | 2007 |
| OUTER HOUSE, COURT OF SESSION [2007] CSOH 123 | |
| CA25/06 | OPINION OF LORD REED in the cause MACDONALD ESTATES PLC Pursuers; against REGENESIS (2005) DUNFERMLINE LTD Defenders: ________________ |
Pursuers: Sandison; Brodies LLP
Defenders: Connal, Q.C., Solicitor Advocate; McGrigors
11 July 2007
Introduction
[1] This is the latest in a series of cases before the Commercial Court in recent times concerned with the question where the costs incurred with a view to undertaking the development of land (including, in particular, the costs involved in applying for planning permission) should lie in the event that the development does not proceed. In the present case, the pursuers maintain that they are entitled, under their contract with the defenders, to be reimbursed for professional fees and other outlays which they incurred, amounting altogether to more than £500,000. The defenders on the other hand maintain that that is not the effect of the parties' contract. Alternatively, in the event that that is the effect of the contract, the defenders maintain, by way of a counterclaim to the principal action, that the contract fails to reflect the agreement between the parties and should therefore be rectified.
[2] The case has come before the court for proof before answer on the question of liability, under the principal action, and on the question of rectification, under the counterclaim. The quantification of the pursuers' claim has been left over to be dealt with, if necessary, at a later stage.
The witnesses
[3] Before turning to the facts, it may be useful to note at the outset my assessment of the witnesses. Evidence was given on behalf of the pursuers by their chief executive, Mr Dan MacDonald, their managing director, Mr Kevin Robertson, and their finance director, Mr Gordon Lawson; by Ms Brenda Scott and Mr Nick Scott, both partners in Brodies, who are the pursuers' solicitors; and by Mr Ken Ross, the chairman of the Elphinstone Group, who gave evidence of commercial practice in the property development industry. Mr MacDonald and Mr Robertson were involved only in the initial stages of the dealings with which the proof was concerned. Mr MacDonald did not appear to have a clear recollection of the events, which occurred several years ago, and Mr Robertson's recollection also appeared to be unreliable in the light of the contemporaneous documents. Mr Lawson appeared to me to be an unconvincing witness: he had a tendency to avoid giving direct answers to questions, and his evidence was at times inconsistent. The evidence of Ms Scott, Mr Scott and Mr Ross was relatively straightforward.
[4] Evidence was given on behalf of the defenders by Mr Peter Lawson (unrelated to Gordon Lawson), a partner in Burness, who were at the material time the defenders' solicitors; by his assistant, Mr Nick Williamson; by Mr Alfred Stewart, the principal of the defenders; by Ms Michelle MacDonald, née Forrest, who was at the material time Mr Stewart's employee, but who is now married to the pursuers' Mr MacDonald; and by Mr William McVicar and Mr Roano Pierotti, chartered surveyors who gave evidence relating to practice in the property development industry. Mr Lawson and Mr Williamson were impressive witnesses. Subject to some minor points on which their recollection may have been at fault, I accept their evidence in its entirety. Mr Stewart was an elderly man whose recollection of events was often vague or at odds with the contemporaneous records, and I did not consider him an entirely reliable witness. Ms MacDonald was a reluctant witness, who gave the impression of wishing to distance herself from the events in question. Her evidence was difficult to reconcile with the contemporaneous documents and with the evidence of other witnesses, and I do not regard it as reliable. The evidence of Mr McVicar and Mr Pierotti was relatively straightforward.
The factual background
[5] In 1999 Mr Stewart was on the verge of retiring, after a long career as the managing director of a housebuilding company, Alfred Stewart Properties Ltd ("ASP"), which carried on business in the Dunfermline area. He decided to acquire a large area of land in the centre of Dunfermline, which had been unoccupied for a number of years. Some of the buildings were in a dilapidated condition. Mr Stewart had it in mind also to secure control of some adjoining areas of land so as to form, with the land which he had already acquired, a site which would be capable of comprehensive re-development, in partnership with a developer, so as to provide Dunfermline with a major new shopping centre. Mr Stewart envisaged that this would be the final project of his career. ASP by this stage had only one employee besides himself: Ms Forrest, a former personal assistant who ran the office, and had the job title of project co-ordinator. Mr Stewart also formed another company, Regenesis (Dunfermline) Ltd ("RDL"), as a vehicle for the project.
[6] Mr Stewart instructed architects and other professional advisers, and plans for the proposed development were prepared. A number of developers were approached, but they showed little interest in the project. During 2002, the architects approached the pursuers, who are a property development company specialising in the development of shopping centres and other large retail developments. They have a small number of staff, and instruct external consultants, such as architects, traffic engineers and retailing consultants, as necessary.
[7] The pursuers' chief executive, Mr MacDonald, and their managing director, Mr Robertson, met Mr Stewart and Ms Forrest on a number of occasions during May and June 2002, to discuss the site and its possible development. Mr MacDonald concluded that the site offered an attractive opportunity for his company. He and Mr Robertson agreed to outline to Mr Stewart the type of joint venture which they would regard as feasible.
[8] Following these meetings, on 25 June 2002 Mr Robertson sent RDL a joint venture proposal [No. 31/3 of process]. The proposal was not intended to have contractual effect, and stated:
"Please note that the terms of this heads of terms document are an outline of our proposal and any contract will only be entered into by means of an exchange of Missives between Solicitors".
The proposal was that the pursuers would enter into a 50:50 joint venture with RDL to undertake the development of the site. The joint venture would be subject to three pre-conditions:
"a. Satisfactory planning permission being received for the proposed development.
b. Legal agreements being entered into with such third party landowners as is required to enable the development to proceed.
c. Pre-let agreements being entered into with anchor stores within the development."
In relation to costs, paragraph 2 of the proposal stated:
"The project costs and profits would be shared on an equal basis between R(D)L and ME [the pursuers] subject to 3b below."
Paragraph 3 stated:
"a. The R(D)L existing property holdings will be acquired by the JV [joint venture] at an agreed value.
b. ME will fund the costs of the planning and all professional fees and other associated costs in progressing the project from a date to be agreed up until detailed planning permission is obtained.
c. After detailed planning permission is obtained, ME will obtain the required funding for the development on a basis to be agreed with R(D)L."
[9] In relation to paragraph 3b, Mr MacDonald and Mr Robertson said in evidence that by "funding" the costs they had meant merely paying for the costs in the first instance: they had envisaged that, if the project proceeded, the costs would ultimately be borne by the joint venture; and they had not considered what would happen in relation to the costs if the joint venture did not proceed. Mr Stewart and Peter Lawson, on the other hand, said in evidence that they understood the pursuers' proposal as meaning that the pursuers would bear the costs involved in progressing the project from a date to be agreed until planning permission was obtained, and that the other costs of the project would be shared equally. I accept their evidence that that was how they understood the proposal.
[10] At a further meeting with Mr Robertson on 28 June, Mr Stewart and Ms Forrest indicated that they would instruct Burness, solicitors, to take the matter forward. Mr Robertson then passed the matter on to Gordon Lawson to deal with legal matters.
[11] On 11 July Peter Lawson, the partner in Burness who acted for Mr Stewart and the companies associated with him, wrote to Mr Scott, the "relationship partner" in Brodies who acted for the pursuers, enclosing draft heads of terms [No. 31/4 of process] for the proposed joint venture. The draft heads of terms envisaged a joint venture agreement ("JVA") between the pursuers and RDL, under which they would subscribe for equal numbers of shares in a joint venture company ("JVC"), which would acquire the properties owned by RDL or its parent company and undertake the development. The completion of the JVA would be subject to the satisfaction of three conditions precedent, covering the obtaining of planning permission, site assembly and pre-letting. The draft heads of terms also stated, at paragraph 12:
"ME will fund the costs of the planning and professional fees and other associated costs incurred in furthering the Development from [1 June 2002] until detailed planning permission, such as to allow the Development to proceed, is obtained [the Costs]. For the avoidance of doubt, the Costs shall include, but shall not be restricted to, the costs and expenses listed in Annex 1. All costs, expenses or charges in connection with the Development which are incurred after the grant of detailed planning permission shall be borne by the JVC".
That clause was intended to provide a framework for agreeing the nature of the costs to be borne by the pursuers, the date from which they would bear the...
To continue reading
Request your trial
-
Paterson v Angelline (Scotland) Ltd
...Lava Ignite Ltd v Mama Group plc [2010] CSIH 1; 2010 SC 310; 2010 SLT 147 Macdonald Estates plc v Regenesis (2005) Dunfermline Ltd [2007] CSOH 123; 2007 SLT 791 Marks and Spencer plc v BNP Paribas Securities Services Trust Co (Jersey) Ltd [2015] UKSC 72; [2016] AC 742; [2015] 3 WLR 1843; [2......
-
John Nicholas Andrew Lubbock+robert Cheyne Turcan As Trustees Of The Elliot Of Harwood Trust V. Robin Feakins+the Keeper Of The Registers Of Scotland
...This decision was cited with approval by Lord Reed in Macdonald Estates Plc v. Regenesis (2005) Dunfermline Ltd (unreported (sic) [2007] CSOH 123) at para. [130]-[131]. The clause precludes reliance upon statements, representations, etc, "other than as expressly set out in this agreement as......
-
BSA International SA v Irvine
...a search." This decision was cited with approval by Lord Reed in Macdonald Estates Plc v. Regenesis (2005) Dunfermline Ltd (unreported [2007] CSOH 123) at para.[130]-[131]. The clause precludes reliance upon statements, representations, etc, "other than as expressly set out in this agreemen......
-
Keiron Paterson Against Angeline (scotland) Limited
...Outer House) provisionally favoured the latter but reserved his opinion (see Macdonald Estates Plc v Regenesis (2005) Dunfermline Ltd [2007] CSOH 123, 2007 SLT 791 (“Macdonald”) at paragraph 176). That issue does not arise in the present case. While there was a superficial similarity on the......