Verona Burnett (ap) V. Menzies Dougal Ws And Others
| Jurisdiction | Scotland |
| Judge | Lord Macfadyen,Lord Abernethy,Lord Kingarth |
| Date | 24 August 2005 |
| Docket Number | A3725/01 |
| Court | Court of Session |
| Published date | 24 August 2005 |
| EXTRA DIVISION, INNER HOUSE, COURT OF SESSION | |
| Lord Macfadyen Lord Abernethy Lord Kingarth
| A3725/01 OPINION OF THE COURT delivered by LORD MACFADYEN in RECLAIMING MOTION in the cause VERONA BURNETT (A.P.) Pursuer and Reclaimer; against MENZIES DOUGAL, W.S. and OTHERS Defenders and Respondents: _______ |
Act: J.A. Brown; Henderson Boyd Jackson, W.S.
Alt: E.W. Robertson; Shepherd & Wedderburn, W.S.
24 August 2005
Introduction
[1]This is an action of damages for professional negligence against a firm of solicitors. The defenders' first plea-in-law is to the effect that the pursuer's averments are irrelevant and lacking in specification. After a hearing on the procedure roll, the Lord Ordinary, by interlocutor dated 24 February 2004, sustained that plea and dismissed the action. The pursuer has reclaimed against that interlocutor.
The pursuer's averments
[2]It is common ground that in about February 1997 the pursuer and one Alistair Burnett, who had agreed to be married, decided to purchase a house at 46 Swanston Avenue, Edinburgh. They instructed the defenders to act on their behalf in the purchase. The defenders accepted their instructions. The partner in the defenders with whom they dealt was Mr Gordon Lockerbie, who is now deceased. On 6 February 1997 Mr Lockerbie submitted an offer for the house. The offer was accepted. The purchase price was £90,000.
[3]In Article 3 of the condescendence, the pursuer avers that after the offer was accepted but before the transaction was settled she and Mr Burnett had certain discussions about the funding of the purchase. She avers (at page 6E of the reclaiming print):
"It was agreed that the bulk of the purchase price would be contributed by the pursuer. Mr Burnett was to contribute a small proportion of the price, and the balance was to come from a secured loan which Mr Burnett was to service. The pursuer was concerned to protect the investment which she was to make in the purchase of the house in the event that she and Mr Burnett subsequently separated. It was accordingly agreed between the pursuer and Mr Burnett that instructions would be given to Mr Lockerbie that certain arrangements should be made to protect the pursuer's investment. Those instructions were set out in a handwritten note of instructions prepared by Mr Burnett. ... In terms of the handwritten note of instructions, title was to be taken in the proportions four fifths to the pursuer and one fifth to Mr Burnett. There was to be a "side agreement" providing that in the event of the parties separating and the house being sold, the pursuer was to be entitled to four fifths of the proceeds of sale after deduction of the expenses of sale but before repayment of any secured loan. Mr Burnett was to be entitled to the remaining one fifth of the proceeds of sale. Mr Burnett was to be responsible for repayment of the loan from his one fifth share. He was to be responsible for any shortfall between his one fifth share and the amount required to repay the loan, and entitled to any surplus after repayment. The handwritten note of instructions was given by Mr Burnett to Mr Lockerbie on or around 18th February 1997. Prior to delivery of the handwritten note Mr Burnett told the pursuer that he would issue instructions to Mr Lockerbie that the transaction should be structured as set out in the handwritten note. At no stage did Mr Burnett advise the pursuer that he had done anything other than issue such instructions. The handwritten note was received by Mr Lockerbie and placed by him in his file. By letter dated 21 February 1997 and addressed to the pursuer and Mr Burnett he acknowledged receipt of the handwritten note. ... The pursuer does not know precisely what discussions took place between Mr Burnett and Mr Lockerbie in connection with the handwritten note of instructions. Having regard to the surrounding circumstances hereinbefore condescended upon it is believed and averred that Mr Burnett instructed Mr Lockerbie to implement the handwritten note of instructions."
Both the handwritten note and the letter of 21 February are incorporated in the pursuer's pleadings.
[4]The description of the handwritten note as a "note of instructions" is tendentious, since the note does not, in its terms, bear to constitute instructions, and it is disputed by the defenders that they were instructed to put in place the arrangements outlined in it. It is preferable to refer to it neutrally as the "handwritten note". In the handwritten note Mr Burnett and the pursuer are referred to respectively as "A" and "V". The relevant part of the note (No. 6/1 of process), which is written in block capitals, is in the following terms:
"Side agreement between A & V stating that in the event of them splitting-up or house being sold V's share of net proceeds will be 4/5 and A's share will be 1/5 less total balance of mortgage then outstanding. Plus option to V to buy A's share at independent valuation, price being used to reduce/repay mortgage, any shortfall or surplus being for A's account. Agreement required because V is scared of mortgages & afraid that somehow I might do something to reduce the value of her share or even bankrupt her!
Under the above arrangements, A & V are both taking the risk that if the marriage breaks up the house may have to be sold."
[5]It is unnecessary to quote the letter of 21 February 1997 (No. 6/2 of process) in full. It was addressed to the pursuer (Ms V Yates) and Mr Burnett at the pursuer's address. It referred to "our" meeting on Tuesday, 18 February and stated: "I confirm the terms of the instructions given to me". After confirming that he was in course of concluding a contract for purchase of the house for £90,000 with entry at 25 April 1997, Mr Lockerbie continued:
"I understand that you are arranging a loan through the Halifax Building Society ... I acknowledge receipt of the notes passed to me by Alistair relating to the purchase and in particular confirming that the title is to be taken in the following proportions:
- Four fifths to Verona.
- One fifth to Alistair, with no survivorship clause. I confirm that I shall prepare the title in this manner in due course. ..."
[6]The pursuer goes on to set out in averment her contentions as to what would have been required to implement the handwritten note. She avers (at page 8C of the reclaiming print):
"Implementation of the handwritten note would have required title to the property to be taken in the proportions of four fifths to the pursuer and one fifth to Mr Burnett. It would also have required preparation of a Minute of Agreement between the pursuer and Mr Burnett regulating their respective positions in the event of separation or of the property being sold. Such a Minute of Agreement would have obliged Mr Burnett to repay the entire balance due to the Halifax Building Society from the proceeds of his one fifth interest in the property, and thus to relieve the pursuer of any obligation to repay the Halifax loan. Such an agreement would also have conferred upon the pursuer an option to purchase Mr Burnett's one fifth share of the property at an independently determined price, with Mr Burnett being obliged to use the proceeds of any such sale to repay the Halifax loan."
[7]The pursuer then sets out her account of what actually happened. She avers (at page 9A of the reclaiming print) that on 25 April 1997 Mr Lockerbie settled the transaction, title being taken, as instructed, in the proportions already mentioned. A loan of £20,000 was obtained from, and a standard security granted in favour of, the Halifax Building Society. However, no "side agreement" was prepared regulating the respective rights of the pursuer and Mr Burnett in the event of their subsequently separating. Mr Lockerbie, it is averred, did not seek or receive from the pursuer any instructions to the effect that such an agreement was no longer required, or that her instructions had changed from those in the handwritten note. It is further averred that he did not advise her about the consequences of not entering into a formal Minute of Agreement to regulate her rights and those of Mr Burnett inter se, or advise her that such a Minute of Agreement was required to bind Mr Burnett effectively to relieve her of any obligation to repay the Halifax loan, or advise her that her position would be adversely affected to a material extent by the absence of such a Minute of Agreement. The pursuer further avers that if Mr Lockerbie had sought such instructions and given such advice, she would have insisted that the transaction be structured as set out in the handwritten note. Mr Burnett would have agreed to enter into the appropriate Minute of Agreement.
[8]The pursuer and Mr Burnett were married on 7 January 1998. They separated in April 1999.
[9]The pursuer's cases of fault against the defenders are advanced both as matters of breach of an implied term of the contract between her and the defenders, and as matters of negligence. The primary case of fault (page 12D of the reclaiming print) is that the defenders failed in their duty to carry out her instructions as conveyed to them by means of the handwritten note. It is averred that a solicitor of ordinary skill acting with ordinary care would have prepared a Minute of Agreement containing the provisions for which she contends, and would have had it executed.
[10]As the pursuer's pleadings stood at the commencement of the hearing of the reclaiming motion, her secondary ground of fault was introduced in the following sentence (at page 13A of the reclaiming print):
"A solicitor of ordinary skill acting with ordinary care would have sought specific instructions from the pursuer before departing from the written instructions given to him."
There then followed detailed, and somewhat repetitive, averments about advice which such a solicitor would have tendered to the pursuer about the consequences of failing to have a Minute...
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