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You are here: BAILII >> Databases >> Scottish Court of Session Decisions >> Hutchison v. Graham's Executrix [2006] ScotCS CSOH_15 (31 January 2006) URL: https://www.bailii.org/scot/cases/ScotCS/2006/CSOH_15.html Cite as: [2006] CSOH 15, [2006] ScotCS CSOH_15, 2006 SCLR 587 |
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OUTER HOUSE, COURT OF SESSION [2006] CSOH 15 |
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OPINION of LORD CARLOWAY in the cause of JAMES HUGH HUTCHISON and
another Pursuers against MARY GRAHAM'S EXECUTRIX Defender ________________ |
Pursuers: Hayhow;
Russell & Aitken, WS
Defender: IF Maclean; Brodies WS
1.
The Pleadings
[2] The agreement was reduced to writing in a Minute of Agreement executed by the pursuers on 7th, and by Mrs Graham on 9th, December 1998. Since the dispute between the parties centres on the construction of the terms of this document, it is important to record its terms at some length. It commences with a preamble. This notes Mrs Graham's intention to buy the house for £16,000; being the market value less a discount of £24,000. It then records the pursuers' agreement to repay, by monthly instalments, the building society loan. It proceeds to narrate the existence of a standard security in the pursuers' favour, that: "it is proper that the obligations of [Mrs Graham] secured by the Standard Security and conditions applicable thereto should be reduced to writing" and that:
"THEREFORE the parties hereby agree as follows:
FIRST The security constituted by the said Standard Security shall be intended to secure
(One)
repayment to the [pursuers] of the aggregate amount of those monthly payments
made by the [pursuers] to the...
(Two) payment of interest thereon at the rate of Two per centum per annum above the base lending rate of the Royal Bank of Scotland plc applicable from time to time
(Three) repayment of all fees and outlays incurred by the [pursuers]...in connection with the purchase of the said subjects,
(Four) repayment of all premiums paid by the [pursuers] in respect of the insurance of the said subjects...
(Five) repayment of all sums expended by the [pursuers] in connection with the upgrading repair or maintenance of the subjects...
SECOND It is understood that [Mrs Graham] shall have the right to reside in the subjects during the whole of her lifetime without payment of any rent or interest (except in the circumstances above mentioned)
THIRD [Mrs Graham] ...binds and obliges herself not to dispose of the subjects by either inter vivos or mortis causa deed or otherwise to any individual except the [pursuers] or without the agreement of the [pursuers] and [Mrs Graham] hereby confirms that she has made a Will leaving the subjects to the [pursuers] and that she will not make any subsequent Will altering this particular provision; In the event of [Mrs Graham] disposing of the subjects to any individual without the agreement of the [pursuers] or otherwise contravening conditions of this agreement then she binds and obliges herself to instantly repay all sums due to the [pursuers] and the [pursuers] ...bind and oblige themselves not to require payment of any of the sums secured hereunder unless [Mrs Graham] shall dispose of the subjects to any individual as before mentioned without their consent or the [pursuers] are disinherited as before mentioned
...
FIVE [Mrs Graham] as agreed undertakes that as soon as practically possible after the day of Ninth September Two Thousand and One to convey the subjects to the [pursuers] without any consideration being paid but subject to the [pursuers] granting a Right of Occupancy/Licence to Occupy/Liferent in favour of [Mrs Graham]
...
SIXTH In construing these presents [Mrs Graham] shall include her executors and representatives whomsoever; and [the pursuers] shall include their executors and representatives whomsoever...".
The Standard Security was
executed by Mrs Graham on
[3] The terms of the Minute of Agreement began to be implemented,
with the pursuers making the monthly payments and paying the insurance
premiums. The pursuers aver that the second pursuer also looked after Mrs Graham
during this time. However, on
[4] The pursuers seek a declarator that the provision in the original will bequeathing the property to them was irrevocable and that the revocation in the subsequent will did not effect it. Alternatively, they seek reduction of the purported revocation.
2. Submissions
[5] The cause was debated on the Procedure Roll on the defender's plea to the relevancy of the pursuers' averments. The defender sought dismissal of the action on the basis of that plea. She accepted that it was competent for a testator to bind himself to bequeath subjects in a particular way. The question was whether Mrs Graham had done that in the circumstances here. The answer to that depended upon the proper construction of clause THIRD of the Minute of Agreement. The pursuers contended that this clause rendered the original request irrevocable. The defender contended that it did not. As a generality, a testator is entitled to revoke any bequest, even if it has been declared irrevocable (Meston et al : Wills and Succession, Stair Memorial Encyclopaedia Vol 25 para 735; Mackenzie Stuart : The Law of Trusts p 133; Lord Ross et al : Trusts, Stair Memorial Encyclopaedia Vol 24 paras 35-36). That entitlement could be lost where the testator has contracted with another person not to revoke the bequest (Meston et al, (supra) para 736; Mackenzie Stuart pp 133-134). Whether a testator has so contracted depends upon the intention of the parties as revealed by the terms of their agreement construed as a whole. Clause THIRD commenced by providing that Mrs Graham bound herself not to dispose of the property without the pursuers' consent. If the clause had said nothing else, the pursuers' position may have been irresistible. But the clause did not end there. It did not stipulate irrevocability but provided for and anticipated what was to happen if Mrs Graham did dispose of the property either inter vivos or mortis causa. In the event of her contravening the terms of the Agreement, including the provisions not to dispose of the property or to alter her will, the pursuers would be entitled to repayment of all the sums that they had expended in relation to the property. The Agreement allowed disposal other than to the pursuers and provided an equitable remedy in that event, protected by the standard security. The pursuers had not sought to enforce that remedy. If the Court considered that each party's construction were potentially valid, a proof before answer might be held to examine the "matrix" in which the agreement had been made. However, in that respect, the actings of the parties after the making of the agreement (i.e. the payments made in pursuance of the agreement and the assistance offered by the second pursuer as carer) were irrelevant to the task of construction (Cameron (Scotland) v Melville Dundas 2001 SCLR 691 (note), Lord Hamilton at para 30). There were no other averments of a "matrix" in the pursuers' pleadings which might be established by a proof.
[6] The pursuers accepted that the defender's outline of the
general law was accurate. However, they
argued, the central obligation of the Minute of Agreement was to transfer title
in terms of clause FIFTH. It was against
that background that clause THIRD had to be construed. It could be broken down into three
parts. The first was the undertaking not
to transfer the property to anyone other than the pursuers without
consent. It also provided expressly that
the bequest in the will already executed could not be altered. That was, then, a contractual provision. Taken along with the provision in clause
FIFTH, the obligation at the start of clause THIRD covered the period from the
date of the Agreement until the date at which a transfer was to be made, after
the expiry of the discount period. The
second part of clause THIRD provided a remedy to the pursuers in the event of a
contravention of any of the terms of the Agreement. The third part stipulated that there was to
be no repayment unless there was a transfer or disinheritance. It restricted
the circumstances in which repayment could be sought. However, it did not restrict the general
remedies of enforcement otherwise open to a party for breach of contract. The repayment provisions were simply one
option open to the pursuers in the event of default. If the Court had difficulty in resolving the
issue, a proof before answer could be held to examine the factual "matrix". In that regard, as Professor McBryde had said in his commentary to Cameron (
3.
Decision
[7] Mrs Graham was entitled, in her second will, to revoke the terms of the first will unless she had contractually bound herself not to do so. The contract is reduced to writing in the Minute of Agreement and the issue of whether she did so bind herself must turn upon a construction of clause THIRD of that Minute. There are no averments of any disputed surrounding circumstances, which could assist in that construction and which might require proof. The "matrix" around the Agreement is not in dispute. It is important to observe at the outset that clause THIRD is phrased on the assumption that Mrs Graham might decide not to convey the property to the pursuers either mortis causa or inter vivos. Should she implement that decision then, the Agreement recognises, she would be acting in breach of its terms. Should that occur, the Agreement provides that the pursuers are entitled to a specific remedy. In some cases, contractually stipulated remedies can be seen as supplementing those at common law. In others, they can be seen as a substitute for them. Which situation applies will depend upon ascertaining the intention of the parties at the time of contracting by looking at the meaning of the words they employed in the context of the contract as a whole. Where a particular breach averred is anticipated by an Agreement and a specific remedy is provided in that event, the contractual remedy must be seen as being intended as a substitute for, and not as a supplement to, those at common law. Thus, in the situation here, where there has been disinheritance as particularly provided for in the Agreement, the pursuers are entitled, but only entitled, to repayment of the sums expended by them on the property, together with interest at what might be regarded as a reasonable commercial rate of two per centum per annum above a clearing bank base level. The pursuers ought therefore to recover all the money that they have expended as a result of Mrs Graham's anticipated revocation of her will. They will obtain a reasonable return on that money in the form of the interest. The pursuers have security for the relevant sums over the house and the executrix will therefore require to make the appropriate payments in order to release that security. It follows from this interpretation of clause THIRD that the Agreement was not intended to render, and did not render, the provision in the first will irrevocable. Rather, it anticipated revocability and provided for what would happen in that event. The pursuers will not gain what they thought they might have as a result of the Agreement, but they should not lose any money either. It follows also that, even if the pursuers had attempted to enforce it, Mrs Graham could have declined to transfer the property in terms of clause FIFTH, electing instead to terminate the Agreement and to suffer the stipulated consequences for doing so.
[8] In these circumstances, the defender's first plea-in-law must be sustained and the action dismissed.
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