Moss v Penman
| Jurisdiction | Scotland |
| Judgment Date | 18 June 1993 |
| Docket Number | No. 30.,No 5 |
| Date | 18 June 1993 |
| Court | Court of Session (Inner House - First Division) |
FIRST DIVISION.
Contract—Unjustified enrichment—Recompense—Construction—Loan—Joint and several obligations—Payment of whole sums due by one obligant without compulsion—Whether compulsion necessary—Whether right of relief against co-obligant existed—Sums due to be "ascertained and constituted" by certificate of creditor—Whether necessary for loan to be constituted by certificate prior to repayment
Words and phrases—"Ascertained and constituted"
The parties borrowed money from a company and executed a bond in which they undertook jointly and severally to pay back the loan with interest. The bond also stated that the amount of balance of principal and interest due to the company at any particular time "shall be ascertained and constituted by a certificate" signed on behalf of the company. The respondent voluntarily paid back the whole amount outstanding and sought pro rata relief from the appellant. The respondent had been under no compulsion to repay the amount and no certificate had been executed. The cause called for debate before the sheriff who allowed a proof before answer. On appeal to the Court of Session, the appellant contended that a co-debtor who chose to pay off more than his own pro rata share of the debt voluntarily was not entitled to relief from the other co-debtor. It was also argued that, as no certificate had been executed, the debt had not been constituted.
Held (1) that the obligation of relief was based on the principle of recompense; (2) that, as it was likely that a co-debtor would have to pay the whole debt in order to obtain the creditor's discharge if the other co-debtor would not contribute his share of the debt, it was not inequitable that, having done so, he should then be entitled to relief from the other co-debtor of the amount which, on apro rata basis, he had paid on his behalf; (3) that compulsion by the creditor was not a necessary prerequisite to obtaining relief; and (4) that the bond fell into two parts, the first containing an acknowledgment of indebtedness, the second being concerned only with how payments might be enforced and that the provision in the bond that the sums due be "ascertained and constituted" by a certificate was concerned only with enforcing repayment by summary diligence and had nothing to do with the constitution of the debt in the sense necessary for the right of relief between the co-obligants; and appealrefused.
Alexander Ashley Moss brought an action in the sheriffdom of South Strathclyde, Dumfries and Galloway at Ayr against Ian Findlay Penman in which he sought payment of a one-half share of the repayment of a debt which he had made voluntarily to the creditor and for which he and the defender had been jointly and severally liable in terms of a personal bond.
The terms of the bond were as follows: "We, Alexander Ashley Moss, formerly residing at Peatland, by Dundonald, Ayrshire, and now at Forty Fullarton Crescent, Troon, and Ian Findlay Penman, residing at Twelve Golf Crescent, Troon, Ayrshire (hereinafter referred to as "the debtor"), jointly and severally hereby undertake to pay to Prestwick Investment Trust pic, incorporated under the Companies Act and having its registered office at One hundred and fifty Main Street, Prestwick (hereinafter referred to as "the creditor"), all sums of principal and interest which are now or which may at any time hereafter be due to the creditor in any manner of way by the debtor (the initial amount advanced being Fifteen Thousand Pounds) with interest on such sums becoming due until payment at such rate of interest as shall from time to time be charged by the creditor on secured loan (the creditor being entitled to vary such interest rate from time to time without notice to the debtor) and which interest shall be computed in accordance with the practice for the time being of the creditor and that by regular payments to the creditor of such sums as the creditor may from time to time require; And the debtor agrees that the rate or rates of interest applicable for any particular period or periods and the amount of balance of principal and interest due to the creditor by the debtor at any particular time shall be ascertained and constituted by a certificate signed by a director or authorised signing official of the creditor and that such certificate shall be final and binding on the debtor with regard to the matters dealt with therein; And the debtor consents to registration hereof and of any certificate as aforesaid for execution."
The cause called for debate on parties' preliminary pleas before the sheriff who allowed a proof before answer. The defender thereafter appealed to the Inner House of the Court of Session.
The cause called before the First Division, comprising the Lord President (Hope), Lord Cowie and Lord Milligan, for a hearing on 19th January 1993. Eo die, their Lordships made avizandum.
At advising, on 5th February 1993:
LORD PRESIDENT (Hope)—This is an action of payment in which the pursuer is one of two persons who were liable jointly and severally for the same debt. He made payment of the whole of that debt to the creditor and now seeks to recover a one half share of it from his co-obligant. His claim for relief has been resisted by the co-obligant, on the ground that the pursuer was not forced to pay the debt but did so voluntarily. The defender's argument is that, in these circumstances, the pursuer is not entitled to relief for any sum which he paid in excess of his own one half share of the debt. Both parties have pleas to the relevancy, and the defender also has a preliminary plea that the action is premature. The sheriff was satisfied that the pursuer was entitled in principle to repay the whole debt and to recover a one half share of it from the defender. He refused the defender's motion for dismissal of the action and allowed a proof before answer, since no admission is made that the debt has in fact been repaid. The pursuer accepts that a proof is necessary to establish this fact and the amount which he has paid, including interest, to the creditor. But the defender has now appealed on the ground that the sheriff erred in not dismissing the pursuer's action as irrelevant.
The debt arose from a transaction which the parties entered into with Prestwick Investment Trust plc, from whom they borrowed the sum of £15,000. On 31 st August 1989 they executed a personal bond in favour of the trust, by which they jointly and severally undertook to repay all sums of principal and interest which were then or might at any time thereafter be due to the creditor, and acknowledged that the initial amount advanced was £15,000. The personal bond was in these terms: [his Lordship quoted its terms as set out, supraand continued:]
The pursuer was the heritable proprietor of subjects in Hawick, Roxburghshire, and by a standard security dated 31st August 1989 and [recorded] in the Register of Sasines on 6th September 1989 he granted a security over them in favour of the trust for all sums due to it in terms of the personal bond. On 2nd February 1990, the pursuer requested the defender by a letter from his solicitors to make payment to him of the sum of £7,500 so that he could discharge the whole indebtedness of both parties to the trust. The defender returned this letter with the comment that its contents were totally inappropriate. By doing so he made it clear to the pursuer that he was not willing to contribute his share of the...
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