Primary Healthcare Centres (broadfoot) Limited V. Dr Alan Humphrey+dr Prabhulung Ravangave+dr Sheila Turville
| Jurisdiction | Scotland |
| Judge | Lord Hodge |
| Neutral Citation | [2010] CSOH 129 |
| Court | Court of Session |
| Published date | 16 September 2010 |
| Year | 2010 |
| Date | 16 September 2010 |
| Docket Number | CA21/08 |
| OUTER HOUSE, COURT OF SESSION [2010] CSOH 129 | |
| CA21/08 | OPINION OF LORD HODGE in the cause PRIMARY HEALTHCARE CENTRES (BROADFORD) LIMITED Pursuer; against DR ALAN WILLIAM HUMPHREY Defender: DR PRABHULUNG RAVANGAVE First Third Party: DR SHEILA ANNE TURVILLE Second Third Party: ________________ |
Pursuer: MacNeill QC; Shepherd & Wedderburn LLP
Defender: MacDonald, Solicitor Advocate; Bell & Scott (for Stronachs, Inverness)
First Third Party: D. Thomson; Brodies LLP
Second Third Party: Beynon; Balfour & Manson LLP
16 September 2010
[1] Primary Healthcare Centres (Broadford) Limited ("the landlords") leased a building in Broadford, Isle of Skye, known as the Broadford Medical Centre, to a partnership, which comprised Dr Humphrey, Dr Ravangave and Dr Turville. The lease came to an end on the dissolution of the partnership. The landlords initially raised an action against Dr Ravangave and Dr Turville seeking a declaration that they were jointly and severally liable for the tenants' obligations under the lease.
[2] Unfortunately, the dispute has become protracted. This is the second court action in relation to the dispute and the debate which I heard was the second substantive hearing in this action.
Background:
(i) The first action
[3] I set out the events underlying the proceedings and the procedural history of the first action in my first opinion in this action ([2009] CSOH 46). In summary, the landlords in the first action sued Dr Ravangave and Dr Turville on the basis, which Dr Humphrey then accepted, that the partnership had been dissolved in 2004, after Dr Humphrey had retired from the practice in March 2003 and after they, the landlords, had released him from liability under the lease. Dr Ravangave and Dr Turville disputed that account of events, asserting that the partnership had been dissolved in about October 2002. Dr Turville brought Dr Humphrey into the first action as a third party on the basis (i) that he was jointly and severally liable for the former partnership's obligations under the lease and (ii) that he was bound to indemnify her against any liability under the lease in terms of clause 6.4 of the partnership agreement. The parties agreed to conduct a restricted proof in relation to the landlords' claims against Dr Ravangave and Dr Turville, leaving for later determination Dr Turville's assertions against Dr Humphrey, which the landlords did not adopt. The problems which have emerged stem from that decision.
[4] The landlords went to proof against Dr Turville alone as Dr Ravangave intimated that he no longer opposed the conclusion that he was jointly and severally liable with her for the former partnership's obligations under the lease. Dr Humphrey gave evidence at the proof but did not otherwise take part in the proceedings. Lord Glennie heard the proof and in his opinion ([2008] CSOH 14) found that the partnership had come to an end on 30 September 2002. He held that the landlords were not entitled to found on evidence that the partnership ended in 2002 as that supported a factual case which they had denied. He observed that they had not sought to amend their pleadings and stated that, if they had, he would have been disinclined to allow the amendment. This was principally because the landlords' fall-back case would have been prejudicial to Dr Humphrey as it might have undermined the release which the landlords averred that they had given him. He held that Dr Turville was entitled to decree of absolvitor and put the case out by order. At the by order hearing counsel for the landlords sought to amend their pleadings by introducing a fall-back case that the partnership ended in September 2002 and that all three former partners were liable for the tenants' obligations from that date. Lord Glennie refused to allow the minute of amendment to be received and assoilzied Dr Ravangave and Dr Turville from the conclusions of the summons.
[5] The landlords enrolled a reclaiming motion. I was informed in the earlier hearing in this action that they had consulted senior counsel who had advised that there were no reasonable prospects of overturning Lord Glennie's discretionary decision to refuse to receive the minute of amendment and no reasonable prospect of success in the appeal without that amendment. The landlords then abandoned their reclaiming motion.
(ii) The prior history of this action
[6] The landlords then raised these proceedings against each of the former partners seeking declarator that they were jointly and severally liable for the tenant's obligations under the lease. They averred that the partnership had been dissolved in September 2002 and, contrary to their earlier averment, which had been mistaken, they had not released Dr Humphrey from his liability as a former partner.
[7] Each of the former partners defended the action. All parties accepted that the partnership ended on 30 September 2002 and also that the landlords did not grant Dr Humphrey's request to be released from his obligations under the lease. But Dr Ravangave and Dr Turville took a plea of res judicata which I sustained in my earlier opinion ([2009] CSOH 46) and I granted them decree of absolvitor. Thereafter the landlords amended their pleadings to remove their case against the absolved partners and to seek a declaration that Dr Humphrey was liable for all of the tenant's obligations in terms of the lease. Dr Humphrey brought his former partners back into the action as third parties on the basis that, if he were liable for 100% of the tenant's obligations, he would be entitled to pro rata relief from them.
Issues which arise in this debate
[8] Dr Humphrey advanced a battery of preliminary pleas in his defence. They entailed res judicata, waiver, personal bar, and an assertion that the release of his former partners discharged his liability under section 9 of the Mercantile Law Amendment Act (Scotland) 1856 ("the 1856 Act"). The third parties, as well as supporting certain of those defences, also submitted that Dr Humphrey no longer had any right of relief against them and Dr Ravangave challenged the relevancy of Dr Turville's claim to indemnity in terms of the partnership contract.
The submissions of the parties
[9] Mr MacDonald for Dr Humphrey submitted, first, that the landlords had waived their right to pursue him for liabilities arising under the lease. Their abandonment of their right came about either by their adopting the position in their pleadings in the first action that they had discharged Dr Humphrey of his liability under the lease or in any event by not running an esto argument on the basis that Dr Humphrey remained liable in response to the stance taken by Dr Turville. He referred to Millar v Dickson 2002 SC (PC) 30, Armia Ltd v Daejan Developments Ltd 1979 SC (HL) 56 and Moodiesburn House Hotel Ltd v Norwich Union Insurance Ltd 2002 SLT 1069. Secondly, he submitted that the landlords were personally barred from pursuing such a claim as Dr Humphrey had relied on their representation that they would not pursue him in absenting himself from the proof in the first action, except as a witness of fact, and he had suffered detriment in being exposed to the expense of the second action and the claim that he was liable for the whole of the obligations of the former partnership under the lease without having recourse against his former partners for pro rata relief. In this regard he referred to Gatty v MacLaine 1921 SC (HL) 1. In the defences to this action Mr MacDonald also advanced a plea of res judicata but recognised in his Note of Arguments that I would repel the plea in the light of my analysis in my earlier decision. He therefore intimated that he sought to reserve the right to revisit the plea before a higher court.
[10] Mr Thomson for Dr Ravangave sought dismissal of the action on two bases. First, he submitted that Dr Humphrey as a co-cautioner of the liabilities of the dissolved partnership had been discharged from his liability to the landlords by their release of his former partners. This release arose through the landlords' conduct of the first action which resulted in Lord Glennie pronouncing decrees of absolvitor. He referred to section 9 of the 1856 Act, Miller & Brough, "The Law of Partnership in Scotland" (2nd ed. 1994) pp.283-4 and the Stair Memorial Encyclopaedia, Vol.3, "Cautionary Obligations and Representations as to Credit" at paragraph 976. Secondly, and in any event, he submitted that if Dr Humphrey had any continuing liability to the landlords, that liability was restricted to a one-third share of the total liability. This resulted from the landlords' release of his former partners who until that release had been jointly and severally liable with him for the obligations of the former partnership. He referred in this context to Morgan v Smart (1872) 10 M 610. This restriction of the liability of a joint and several obligant to pro rata liability was the response of Scots law to a creditor's release. In English law the general rule was that the release of a joint and several debtor effected the release of all: Nicholson v Revill (1836) 4 Ad. & E. 674, North v Wakefield (1849) 13 QB 536 and Deanplan v Mahmoud [1993] Ch 151.
[11 Mr Thomson also attacked the assertion that Dr Humphrey had a right of relief against his former partners. A right of relief arose only if one party to an obligation in solidum had discharged more than his share of that obligation or procured the liberation of the others: Stair, Institutions, I, 8, 9, Bankton, Institutes I, 9, 45, Bell's Principles (10th ed.) s.62, and Moss v Penman 1993 SC 300. He also referred to the recent decision of the Supreme Court in Farstad Supply AS v Enviroco Ltd [2010] UKSC 18, Lord Mance at paragraphs 52 and 54. In short, as the decree of absolvitor pronounced by Lord Glennie had released Dr Ravangave and Dr Turville from any liability to the landlords, any payment by Dr Humphrey beyond his one-third pro rata...
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