Trustees Of The Inter-vivos Trust Of The Late William Strathdee Gordon Against Campbell Riddle Breeze Paterson Llp
| Jurisdiction | Scotland |
| Judge | Lord Jones |
| Neutral Citation | [2015] CSOH 31 |
| Published date | 25 March 2015 |
| Docket Number | A240/12 |
| Court | Court of Session |
| Year | 2015 |
| Date | 25 March 2015 |
OUTER HOUSE, COURT OF SESSION
[2015] CSOH 31
A240/12
OPINION OF LORD JONES
In the cause
TRUSTEES OF THE INTER-VIVOS TRUST OF THE LATE WILLIAM STRATHDEE GORDON
Pursuers;
against
CAMPBELL RIDDLE BREEZE PATERSON LLP
Defenders:
Pursuer: Sutherland; Drummond Miller LLP
Defender: Johnston QC, Barne; Brodies LLP
25 March 2015
Background
[1] The pursuers in this case are the owners of three areas of ground located in the Killearn area. These areas are referred to in the pleadings as “the main grazing field”, “the 40 acre field”, and “the 50 acre field”. It is averred on behalf of the pursuers that, in 2003, the defenders advised the pursuers to bring to an end the then existing agricultural holdings tenancies over the three fields, in light of the prospect of changes being introduced to the agricultural holdings legislation, which might be prejudicial to the pursuers’ interests. That advice was accepted, and the pursuers instructed the defenders to serve notices to quit on the tenant, in order that they could recover possession of the subjects. That was done. Each notice bore the date 8 November 2004, and was to take effect on 10 November 2005. In each notice, the tenant was designed as “the Firm of Messrs A & J C Craig and John C Craig, sole proprietor of and trustee for said Firm”. The tenant did not comply with the notices, and remained in occupation of the subjects. Under cover of letter dated 9 February 2006, Anderson Strathern, solicitors, acting on the instructions of the pursuers, sent three applications to the Scottish Land Court, seeking removal of the tenant from each of the fields.
[2] On 24 July 2008, following a hearing on evidence, the Land Court issued its decision on the applications. The applications in respect of the 40 and 50 acre fields were refused, on the ground that, in each case, “there was a fatal flaw in the Notice to Quit.” (Joint bundle of authorities (“JB”) 290, paragraph 60). The court held that there had been a lease between the pursuers and the partnership referred to in the notice, but that it had come to an end on the termination of the partnership, which had occurred on the death of one of the partners, sometime before 10 November 1992. On that date, the pursuers entered into a new agreement with John Craig, a sole trader. The Land Court found that, for the purposes of the notice to quit, “the relevant lease was constituted by the Agreement between the Trust and Mr John Campbell Craig in 1992.” (JB 290, paragraph 68).
[3] The pursuers raised the present action on 17 May 2012. They aver that, by serving defective notices, the defenders were in breach of an implied term of their contract with the pursuers, namely to exercise the degree of knowledge, skill and care expected of a reasonably competent solicitor. (Closed record, page 26C-D). In consequence of that breach, it is said, the pursuers have suffered loss, injury and damage. The action is defended on the merits. Further, the defenders’ fifth plea-in-law is to the effect that, if there was an obligation incumbent on them to make reparation to the pursuers, any such obligation has prescribed in terms of section 6 of the Prescription and Limitation (Scotland) Act 1973, and decree of absolvitor should be pronounced. That is the issue in this case.
The Prescription and Limitation (Scotland) Act 1973
[4] Section 6 of the Prescription and Limitation (Scotland) Act 1973 (“the Act”) provides, among other things, that if, after the appropriate date, an obligation to which that section applies has subsisted for a continuous period of five years (a) without any relevant claim having been made in relation to the obligation and (b) without the subsistence of the obligation having been relevantly acknowledged, the obligation is extinguished from the expiration of that period. “The appropriate date” is the date on which the obligation became enforceable. In terms of schedule 1, paragraph 1 of the Act, section 6 applies to, among other things, any obligation arising from liability to make reparation and to any obligation arising from any breach of a contract. It is not disputed that, in this case, any obligation owed the defenders to make reparation to the pursuers is subject to the provisions of section 6.
[5] So far as is relevant to this action, section 11(1) of the Act provides that any obligation:
“to make reparation for loss, injury or damage caused by an act, neglect or default shall be regarded for the purposes of section 6 of this Act as having become enforceable on the date when the loss, injury or damage occurred.”
Section 11(3) provides that, in a case where:
“the creditor was not aware, and could not with reasonable diligence have been aware, that loss, injury or damage caused as aforesaid had occurred, the said subsection (1) shall have effect as if for the reference therein to that date there were substituted a reference to the date when the creditor first became, or could with reasonable diligence have become, so aware.”
The preliminary proof
[6] By interlocutor of 14 October 2014, the Lord Ordinary allowed parties a preliminary proof, restricted solely to the defenders’ fifth plea-in-law. The case came before the court for such proof on 10 March 2015, and the three following days. Fiona Stephen and Alasdair Fox of Anderson Strathern LLP, and William Gordon, the second-named pursuer, were called by counsel for the pursuers to give evidence. No witness was called on behalf of the defenders. The parties lodged a joint bundle of productions, and a lengthy joint minute, number [] of process. Mrs Stephen and Mr Fox were questioned about their dealings with the trustees and the progress of the proceedings in the Land Court between the end of 2005 and the conclusion of the action in 2008. Mr Gordon was asked about his dealings with the defenders from about the middle of 2003 until the end of 2005 and about the Land Court case from its commencement until its conclusion. Both parties lodged written submissions, which are appendices 1 and 2 to this opinion.
[7] There was no material dispute between the parties about the evidence. Ultimately, it had little bearing on the determination of the issues in the case. That is largely because, in terms of the joint minute and for the purposes of the diet of preliminary proof only, the parties agreed: “the averments in articles 6 and 7 are held to have been proven.” (Joint minute, paragraph 47) I shall say more about these averments in the discussion section of this opinion.
Submissions on behalf of the pursuers
[8] Counsel referred me to the terms of section 11 of the Act, and to Dunlop v McGowan's, 1980 SC (HL) 73 (“Dunlop”) and David T Morrison & Co Ltd (t/a Gael Home Interiors) v ICL Plastics Ltd & Ors (Scotland), 2014 SC (UKSC) 222 (“Morrison”). He submitted that, following Dunlop, for the purposes of section 11(1), the relevant date in this case was 10 November 2005. He contended, however, that the pursuers were not aware, and could not with reasonable diligence have been aware, that they had suffered a loss through breach by the defenders of an implied term of contract. The tenant’s failure to remove does not, of itself, mean that the pursuers should have been aware as at 10 November 2005 that they had incurred a loss for the purposes of the Act. He argued that it is:
“an understood fact of life that there will always be cases where a tenant of property decides not to remove and legal action will be required to enforce the landlord’s right to recover possession.”
The tenant may refuse to leave in the hope of gaining some advantage by, for example, negotiating some benefit for himself in exchange for giving up possession. In this case, under reference to JB 67 and 73, the evidence disclosed that this tenant was so motivated. Regardless of the tenant’s motivation, argued counsel, the only “loss” that the pursuers could anticipate as at November 2005 was “the inevitable irrecoverable expense incurred in future proceedings to recover possession of the land.” He submitted that such irrecoverable expense was not a “loss” for the purposes of section 11. He argued that:
“The loss which did arise in relation to these proceedings was that portion of the expenses of the process which would otherwise have been recovered. Those anticipated recoverable expenses did not become loss, and the pursuers would not have been aware of having suffered that loss, until the Scottish Land Court issued its decision on 24 July 2008.”
[9] The evidence had demonstrated that, both before and during the Land Court action, the tenant had mounted a number of challenges to the notices to quit. From time to time, by way of adjustment to the pleadings, some were departed from, and others were added. Counsel submitted that, simply because the defender in an action raises a number of issues on which it is asserted that the pursuer’s action ought to fail for a number of reasons, it does not mean that the pursuer is in a position to know that there has been a loss. He contended that none of the criticisms might have any validity, in which case the action will succeed and there never was and never will be a “loss”. What counsel referred to as “the alternative” would mean that, in order to avoid extinction of a right of action in a long running litigation:
“either party in that litigation might have to raise speculative actions against their current professional advisers founding on a point being argued against them, but without any knowledge as to whether the point might succeed or fail.”
[10] It was submitted on behalf of the pursuers that it was clear from the evidence that the trustees personally did not have any reason to consider that the 8 November 2004 notices to quit were invalid or were likely to be found invalid. Mr Fox had advised them that, as far as he could see, the notices were perfectly valid. (JB 98, page 2). Further, although Mr Gordon had complained to Mrs Stephen and Mr Fox...
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