The Royal Bank Of Scotland V. Mrs. Iris Malcolm
| Jurisdiction | Scotland |
| Judge | Lord MacLean |
| Date | 16 April 1999 |
| Docket Number | 0170/17 |
| Court | Court of Session |
| Published date | 16 April 1999 |
| Lord Justice Clerk Lord MacLean Lord Allanbridge | 0170/17/97 OPINION OF THE COURT delivered by LORD MacLEAN in APPEAL BY DEFENDER From the Sheriffdom of Grampian, Highland and Islands at Wick in the cause ROYAL BANK OF SCOTLAND plc Pursuers and Respondents; against MRS. IRIS MALCOLM Defender and Appellant: _______ |
Act: McIlvride; Bennett & Robertson, W.S. (Pursuers and Respondents)
Alt: Holroyd; Proven & Co. (for Beaumont & Co., Pitlochry) (Defender and Appellant)
16 April 1999
In 1990 the pursuers, the Royal Bank of Scotland, who are the respondents in this appeal, made certain banking facilities available to the defender and her husband at their Thurso branch. These facilities related to two bank accounts. The first was a personal current account (No. 00204723) in their joint names which was opened on 21 May 1990. The second was what was entitled an equity release loan account (No. 00204731), also in joint names which was opened on 23 October 1990. In or about September 1994, about one year before the coming into force of the Requirements of Writing (Scotland) Act 1995, the pursuers raised an action against the defender and appellant in Wick Sheriff Court in which they craved payment of three sums. The first of these was averred to be the balance due by the defender and her husband jointly and severally to the pursuers on the overdrawn current account (00204723). The sheriff, after proof, found that that sum was not due and resting owing by the defender to the pursuers, for reasons he gave in his judgment which we need not relate since that finding has not been made the subject of appeal either before the sheriff principal or us. The second sum, namely £35,113.98, was averred to represent the debit balance as at 16 June 1994 on the equity release loan account for which the defender and her husband were also said to be jointly and severally liable. The third sum, namely £731.31, was averred to represent accrued but unapplied interest on these two accounts to 16 June 1994. Of this sum the sheriff found that £514.57 was attributable to the equity release loan account. The balance, since it related to the personal current account, was not due and resting owing by the defender and her husband. After proof, the sheriff granted decrees for the sums of £35,113.98 and £514.57 with interest thereon at the rate of eight per centum per annum from 23 November 1995 until payment. On appeal, the sheriff principal adhered and refused the defender's appeal. Before us it was argued principally that, since there was no writ of the defender to constitute or establish the loan which the pursuers averred had been incurred on the equity release loan account, the sheriff and the sheriff principal erred in holding that the sums of £35,113.98 and £514.57 were payable by the defender.
According to the interlocutor sheet, on 22 June 1995 the defender was allowed to amend her preliminary plea No. 2 at the Bar on an unopposed motion. On the defender's motion the sheriff at Wick allowed parties a proof habili modo. Such a proof took place on 11 September 1995 and 23 October 1995, and on 23 November 1995 the sheriff gave judgment. The defender's second plea-in-law, as amended, was in these terms: "The pursuers' averments anent loan to the defender should be restricted to the defender's writ or oath". In her fifth and sixth pleas-in-law the defender also pleaded:
"5.Any equity release application form et separatim carbon copy loan agreement having been signed by the defender under essential error, any such agreement falls to be reduced ope exceptionis and the defender assoilzied from the crave in respect thereof.
6.Separatim any equity release application form et separatim carbon copy loan agreement having been signed by the defender as a result of, and relying upon, negligent et separatim fraudulent representation by the pursuers' manager et separatim her husband, any such agreement falls to be reduced ope exceptionis and the defender assoilzied from the crave in respect thereof".
Proof habili modo simply means proof by the kind of evidence appropriate to each part of the case. (See Walkers on Evidence page 5). In Clark's Executrix v. Brown 1935 S.C. 110 Lord Murray said, at page 119, that in a case such as the one before the court, the proper course was to allow the parties a proof habili modo of their averments and to the pursuer a conjunct probation. He went on:
"This form of allowance of proof in no way derogates from the rule that proof of loan must be by writ or oath, for it will be the duty of the trial judge to reject parole testimony in so far as directed merely to proof of the constitution of the debt - Lord Kinnear in Dunn's Trustees v. Hardy 23 R. 621".
The present case, it is clear to us, did involve a number of extrinsic circumstances which could be established by parole evidence, not least the defender's case that she was induced to sign the equity release loan agreement under essential error or as the result of negligent or fraudulent misrepresentation by the pursuers' bank manager et separatim her husband. It is also clear to us that the allowance of proof habili modo was the direct consequence of the defender's second plea-in-law which was thereby reserved until after proof. In their commentary upon Clark's Executrix v. Brown the authors of Walkers on Evidence at page 336 say:
"The majority held that the appropriate interlocutor sanctioned by practice is to allow a proof habili modo. This leaves all questions of admissibility to be settled at proof or, more usually, to be reserved".
The pursuers' counsel, at the commencement of the proof, ought therefore to have appreciated that in order to establish the loans which the pursuers maintained they had made to the defender and her husband, the pursuers had either to produce and found on relevant writs of the defender or her husband, or to rely on judicial admission, or have the defender and her husband referred to their oaths on the matter. (See Patterson v. Patterson 1897 25 R. 144 per Lord Young at p. 150). That he failed to understand this is apparent from his unsuccessful submissions both to the sheriff and the sheriff principal on appeal that the interlocutor of 22 June 1995 meant that the defender's second plea-in-law must be deemed to have been repelled for want of insistence. It was submitted for the pursuers that the defender's solicitor did not make timeous objection in support of the defender's second plea-in-law during the re-examination of the pursuers' bank manager, Mr. Leonard. (See the transcript of evidence at pages 77 to 78). We do not think the objection raised by the solicitor focuses properly upon the plea, and we are satisfied that an appropriate objection to the competency of parole evidence was not taken at the proof. We would
observe that had it been taken properly at the first opportunity, it would have caused considerable dismay to the pursuers' counsel who conducted the proof in the belief that the second plea-in-law was deemed to have been repelled. Having regard to what is said by the sheriff in paragraph 3.3 of his note on page 20 of the print it is apparent to us that in his first submissions to the sheriff, the pursuers' counsel had no regard to the defender's second plea-in-law, because the sheriff records that it was only when turning in due course to deal with the submission of the defender's solicitor to the effect that the pursuers had failed to prove by competent evidence that the balance claimed on either account had been borrowed and was due and resting owing, that counsel for the pursuers made any submission on this at all. In any event, it is far from evident that any writ of the defender or her husband could, if necessary, have been produced.
It does, however, appear that the proper course in a proof habili modo is to object to the competency of parole evidence whenever it is adduced to constitute the fact and nature of the loan and the fact also that it is due and resting owing. The presiding judge then has the choice of ruling upon the objection at that point or, more commonly, of reserving consideration of the objection until after the proof has been concluded. In Jackson v. Ogilvie's Executor 1935 S.C. 154 Lord Moncrieff, who was the Lord Ordinary, said (at page 159) in a similar case: "Proof was allowed habili modo, and, in the course of the taking of the proof, evidence other than written evidence was repeatedly admitted under reservation of all questions of competency". (See also Gill v. Gill 1907 S.C. 532 per the Lord Justice Clerk Macdonald at page 535 and especially per Lord Stormonth-Darling at page 536).
The question is whether, as the sheriff principal expressed it, by failing to take timeous objection, the defender's solicitor lost the right to invoke the defender's second plea-in-law, as the sheriff held he had. The sheriff principal agreed with the sheriff on this question. Before us the solicitor for the pursuers relied on two of the three authorities founded on in the courts below, namely McGl...
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