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SHERIFFDOM OF SOUTH STRATHCLYDE, DUMFRIES AND GALLOWAY
AT AIRDRIE
[2025] SC AIR 14
AIR-A24-24
JUDGMENT OF SHERIFF DEREK LIVINGSTON
in the cause
ANDREW ROBERT LANG and FRANCINE MONTGOMERY LANG
Pursuers
against
JAMIE ROWATT
First Defender
LAURA ROWATT
Second Defender
Pursuers: Mitchell, Advocate; Miller Samuel
Defenders: Carlin; Friels
AIRDRIE, 3 March 2025
The sheriff, having resumed consideration of the cause, finds the following facts to be
admitted or proved:
1.
The first pursuer is Andrew Robert Lang. The second pursuer is
Francine Montgomery Lang. They are husband and wife. They reside together
in Lancashire.
2.
The first defender is Jamie Rowatt. The second defender is Laura Rowatt. They
are husband and wife. They presently reside sometimes in Airdrie and, from
time to time, in Spain.
2
3.
The defenders resided at the address in Airdrie and did so for a period of
3 months immediately preceding the raising of the court action.
4.
There is no agreement to prorogate the jurisdiction of any other court in respect
of the subject matter of the action. There are no proceedings pending or taking
place or elsewhere in respect of the matters raised in this action.
5.
The actings of the first named pursuer in respect of the matters raised in this
case were throughout on behalf of the second named pursuer as well as himself
and were carried out with her authority. Similarly, the first defender acted on
behalf of the second defender as well himself in respect of the matters raised in
this action and with her authority.
6.
The first pursuer and the first defender first met in 2014 when both worked in
the energy sector. They became friendly as well as developing a business
relationship. Both pursuers were invited to the defenders' engagement party at
which few nonfamily members were present. The first pursuer and his son
were hosted by the first defender at various sporting events. The pursuers sent
gifts to the defenders when the defenders' children were born and received
gifts from the defenders when the pursuers' grandchildren were born.
7.
In July 2016 the first defender approached the pursuers regarding
lending/investing £160,000 to fund a building project of eight houses at
Earlston Crescent Carnbroe. He indicated the houses were in some cases to be
purchased by family and friends. The monies would be secured and securities
granted by both defenders. The pursuers entirely trusted the defenders and
agreed in principle to do this.
3
8.
The defenders, at various points in time, were the directors of the company
Kingston Residential Investments Limited ("Kingston"). The second defender
was a director as of 13 July 2016 and the first defender became a director in
May 2018.
9.
On Monday 11 July 2016 (production 5/3/22) the first named defender, by
email, instructed the Glasgow Law Practice ("GLP") regarding the provision
of £160,000 of finance to come from the pursuers to fund the Earlston Crescent
project in return for which 2 payments of £105,000 each would be made to the
pursuers from the sales of the final two plots and asking for agreement to be in
place as soon as possible since "we are looking to conclude on Friday". His
email instructing his solicitor was in part copied and pasted from an email
from the first pursuer. The instruction stated the £160,000 was to be paid to the
account of Kingston and that the "arrangement will be satisfied by two
payments of £105,000 respectively, paid directly by yourselves from the sales of
each of the two final plots completed". The first defender designed himself as
"Director Optimize UK" and used an email address containing "optimize".
10.
The "yourselves" had been copied from the first pursuer's previous email. He
was unaware until provided with a copy of 5/3/22 at the time of the
involvement of Kingston. The word "yourselves" referred to the defenders.
11.
On 13 July 2016 GLP, on the instructions of the defenders, sent a letter to the
First and Second Named pursuers, Andrew Robert Lang and Francine Lang on
the defenders' and Kingston's behalf (5/1/4)
12.
The first defender was not a director of Kingston in 2016, but the second
defender held that office at the time of the letter.
4
13.
The letter of 13 July 2016 related to the pursuers being prepared to advance to
the defenders the sum of £160,000 in connection with a building project.
14.
It had in the heading "Our clients: Kingston Residential Investments Limited
and Jamie and Laura Rowatt".
15.
The terms of the letter provided for "our clients", ie the defenders and
Kingston, receiving funding of £160,000 which would be repaid following upon
the erection of houses at the Earlston Crescent development in Carnbroe with
the pursuers receiving a payment of £105,000 from the proceeds of each of the
two final plots making a total of £210,000 to be "repaid". It further stated that
upon payment of these sums the pursuers were to grant discharges and any
other letter reasonably required that "no further sums are due to you by our
clients".
16.
The terms of that letter were accepted by the pursuers in email correspondence
dated 14 July 2016 (5/3/23) from the pursuers and Mr Rowatt's response of the
same date. Both emails were headed "Investment partnership Earlston
17.
Although not specifically providing as to who would make the payments the
letter and its acceptance constituted a binding agreement by the defenders and
Kingston that payment would be made of £210,000 upon completion of the
project.
18.
The defenders also undertook to provide securities. Mrs Rowatt was to
provide one over 8 Chattan Walk Carnbroe and Mr Rowatt over 2H Kenilworth
Court Airdrie being properties respectively owned by them.
19.
These securities were granted a short time later.
5
20.
The first defender and first pursuer had preliminary discussions before 5/1/4
was issued. At no time was Kingston specifically mentioned prior to 5/1/4
being issued.
21.
The £160,000 was paid as instructed by the defenders on 15 July 2016 into a
Santander Account in the name of Kingston.
22.
The first named pursuer's email of 7 August 2016 (6/2/1) post-dated both the
advance of the monies and the correspondence of 13 and 14 July 2016
constituting the contract. It related to circumstances in which the securities
would be redeemed and not liability for payment. It had the words "Kingston
Residential" in the subject matter. The first pursuer bore to sign it on behalf of
Aned Service Ltd.
23.
Following upon the completion of the original project the first defender and the
first pursuer discussed the sums outstanding. No sums had been paid. They
met in October 2017 and April 2018. The first defender (on behalf of the joint
obligants) asked to roll over the money to another project at Moffat Manor
Airdrie. The pursuers would have preferred to receive payment but agreed to
this. Correspondence regarding rolling over the sums due took place by emails
dated 4 January 2018 and 22 January 2018 (5/1/6 and 5/1/5).
24.
The parties agreed at the meeting in April 2018 that the overall sums rolled
over were £210,000 to which a further £50,000 should be added bringing out a
total of £260,000 due as set out by emails dated 14 June 2018 and 22 June 2018
from the pursuers to Mr Rowatt (5/1/7).
25.
The second development was one of more than twenty houses. It was due to
be concluded in July 2019 and payment made of £260,000 made then. The
6
defenders (and Kingston) failed to make this payment upon completion of the
site.
26.
The pursuers needed money to pay a buy to let mortgage in October 2019. The
first defender undertook to pay the interest for that mortgage of £548.98, in
return for the pursuers extending that mortgage, and he did so for a while
paying sixteen payments before these stopped.
27.
The pursuers continually pressed the defenders for the overdue payments and
the first defender undertook to pay £50,000 before Christmas 2020 towards the
£260,000 now owing. He regularly had failed to return emails and calls from
July 2019. The only sum paid was £10,000 in January 2021 other than the
mortgage payments mentioned.
28.
In February 2021 the first defender suggested that the defenders transfer a flat
in a block of eight in Portpatrick to the pursuer plus £40,000 in settlement of
what was owed. The property was to be Flat 7, Fairways Court, Fairways Road
Portpatrick.
29.
The proposed agreement was further clarified in writing by emails from the
first defender dated 30 June and 27 July 2021(5/1/9 and 5/1/10) Flat 7 would be
transferred, and the defenders would continue making mortgage payments
ending in July 21. The property was stated by the defenders to be valued at
£240,000 but it would be credited in the sum of £220,000 with a further £40,000,
payable within 12 months, comprising the overall total due of £260,000. The
pursuers agreed to this. Settlement would essentially comprise transfer of
Flat 7 and a payment of £40,000 in addition to the sums previously paid. The
security over 2H Kenilworth Drive would be released upon this agreement
7
being concluded and that over Chatton Walk on settlement ie the transfer of the
flat and payment of £40,000. It was stated by the first defender that the
pursuers should be able to move into the property in August 2021. The first
defender referred in 5/1/10 to "the heads of terms for the agreement to repay
your investment to Kingston Residential".
30.
The security at 2H was discharged following upon discharge documentation
being sent to the pursuers (5/1/11).
31.
The Portpatrick property was not owned by the defenders nor Kingston
notwithstanding the agreement to transfer. The owners were KRPP Ltd.
32.
The first defender now kept in contact with the pursuers stating the property
would be ready for them by September 2021. It was not and was still not ready
in January 2022.
33.
The property in Portpatrick was never transferred. It has been repossessed by a
secured lender. The payment of £40000 has not been made either.
34.
The company Kingston Residential Investments is now in administration that
having commenced on 12 December 2023. There are no funds or assets to
transfer to ordinary creditors based upon the Administrators' report (5/2/15.7)
paragraph 13.
35.
Much of the email correspondence from the first defender contained at the
signature part, after the first defender's name, designs him with the words
"Director Kingston Residential Investments Ltd" eg 5/1/4, 5/1/5.5/1/9, 5/1/10,
5/2/13.1, 5/2/13.3, 5/2/13/4. All of these were sent some time after the original
agreement.
8
36.
Prior to the original agreement the first defender's emails eg 5/3/22, 5/3/23,
5/3/24 contained as designation, after the first defender's name, the words
"Director Optimize UK".
37.
The liability incurred by the defenders to the pursuers was at no time
discharged but instead varied by agreeing to increase the sum due and the
sources from which payment would be made in return for an extension of time
for payment.
38.
The liability by Kingston continued to subsist throughout from the completion
of the contract in 2016 until now and is joint and several with the defenders.
Finds in fact and law:
1.
The defenders along with Kingston have breached their contract with the
pursuers entered into on 13 and 14 July 2016 and varied in April 2018 and
confirmed by emails dated 14 and 22 June 2018 and subsequently further
varied on 27 July 2021.
2.
The final terms of the contract were that the defenders undertook that the
pursuers would receive the property at Flat 7, Fairways Court, Fairways Road,
Portpatrick and £40,000 by September 2021. That contract was never fulfilled in
whole or in part.
Finds in law:
1.
The defenders being in breach of contact with the pursuers the pursuers are
entitled to reparation therefor.
9
2.
The sum of £270,000 being a reasonable and moderate estimate of the pursuers'
loss and damage decree should be granted therefor together with interest as
craved.
Therefore:
1.
Finds the defenders jointly and severally liable to the pursuers in the sum
of £270,000 with interest thereon at eight per centum per annum from the
date of citation until payment.
2.
Finds the defenders liable to the pursuers in the expenses of the action as
taxed other than where liability has previously been determined, allows
an account to be remitted to the auditor of court to tax and report.
3.
Sanctions the cause as suitable for the employment of counsel
And Decerns
The background
[1]
Much of what took place here was not in dispute. The four parties had a friendly
relationship arising out of the first pursuer and first defender becoming acquainted during
both working in the energy sector in 2014. The business acquaintanceship developed into a
friendship involving their respective immediate families with invitations to social events
and gifts being sent upon major life events as well as attending sporting events.
[2]
In July 2016 the first defender approached the first pursuer regarding assisting with
the financing of a building project at Earlston Crescent, Carnbroe in Lanarkshire. In doing
so he at all times acted with the authority of the second defender and on her behalf. The first
and second defender ultimately agreed to advance the sum of £160,000 in return for £210,000
being paid in two instalments of £105,000 each following completion of the project.
10
[3]
On 13 July 2016 (5/1/4 of process) the solicitors for the defenders sent the following to
the pursuers:
"Mr Andrew Lang and Francine Lang
Dear Mr & Mrs Lang
Our Clients: Kingston Residential Investments Limited and Jamie and Laura
Rowatt
Andrew Lang and Francine Lang
Proposed Investment Earlston Crescent, Carnbroe
We act on behalf of the above named Mr and Mrs Rowatt and the company
Kingston Residential Investments Limited. We understand that you and our
clients have been in discussion regarding the proposal that you would provide our
clients with funding the above project.
We are told that the nature of the proposal which is being discussed is broadly as
follows:-
1. You would provide our clients with one hundred and sixty thousand pounds
(£160,000.00) of funding in relation to the project.
2. You would be repaid following the erection of houses on the development to be
constructed on the land by receiving a payment of One Hundred and Five
Thousand Pounds (£105,000.00) from each of the two final plots which would be
completed at the development in that a total of Two Hundred and Ten Thousand
Pounds (£210,000.00) shall thereby have been paid to you in full and final
satisfaction of all sums due to you in respect of the funding provided by you in
terms of condition 1 hereof.
3. Our clients would offer you security over their two properties namely; 8 Chattan
Walk, Carnbroe, ML5 4FH which property is owned by Mrs Rowatt, and
2H Kenilworth Court, Airdrie, ML6 7EY owned by Mr Rowatt.
4. In the event that the sums due and payable in terms of Condition 2 hereof have
been paid, then you shall grant discharges, letters of satisfaction and indeed any
other documentation reasonably required to confirm that no further sums are due
to you by our clients.
We shall be obliged by you confirming your understanding of the position and
look forward to hearing from you or any solicitors instructed by you in early
course. We understand there is an urgency to have the funds released and it may
be that either you or your solicitors might wish to confirm acceptance of this
correspondence and treat such an acceptance as an agreement between you and our
clients to regulate matters whilst documentation such as security, paperwork etc.is
prepared and put in place as required by you.
We are sure you will appreciate that for our own clients and do not act for you. It
would be necessary for you to consider appointing your own solicitors to represent
11
you going forward and we will offer any assistance we can to you and to any
solicitors who you appoint.
We look forward to hearing from you.
Yours faithfully
Glp"
[4]
On 14 July 2016 the pursuers confirmed in writing their acceptance (subject to the
defenders confirming security documentation would be put in place within 30 days). That
was confirmed that day by the defenders, and there was no dispute between the parties that
there was a binding agreement.
[5]
Payment was made of the £160,000 on 15 July 2016 into Kingston's bank account in
terms of the bank details provided by the first defender in email 5/3/24.
[6]
By October 2017, notwithstanding the completion of the Earlston building project,
the pursuers had not received the £210,000 agreed. It was agreed that the £210,000 should be
"rolled over" to another project at Moffat Manor with a further £50,000 being payable
bringing out a total due of £260,000. This would be paid in May 2019.
[7]
The agreement to do this followed a meeting in October 2017 between the first
pursuer and first defender, email correspondence (5/1/5 and 5/1/6) in January 2018, a further
meeting in April 2018 and emails dated 14 and 22 June 2018 (5/1/7) from the first pursuer.
Payment of the £260,000 was not however made and still had not been made by June 2021.
[8]
In 30 June 2021 or shortly thereafter there was agreement that the property at Flat 7
Fairways Court would be transferred to the pursuers. This constituted a further variation of
the original contract. Number 7 was stated by the first defender to have a valuation
of £240,000 although its value was to be "discounted" to £220,000. Additionally, a
further £40,000 would be paid. One security was to be lifted, being that over 2H Kenilworth
12
Court , once the terms of the agreement had been concluded, whilst the other would be
lifted on payment of the sums due (5/1/9).
[9]
There was essentially no dispute that the original payment due was £210,000, which
then became £260,000 in return for allowing further time for payment whilst another
development was completed, and ultimately the sums due were to be discharged by way of
a property transfer of a property valued at £240,000 and a further payment of £40,000.
[10]
The main issue between the parties ultimately came down to whether the defenders
were bound by the agreement and any variations or subsequent agreements to make
payment to the pursuers or whether this was solely the liability of Kingston. As a secondary
point the defenders argued there were three separate contracts the first being regarding the
project at Earlston Crescent, the second being Moffat Manor and the third relating to
Fairways Court with Kingston being the only party liable in relation to the latter two even if
the court found the defenders were bound by the original agreement.
[11]
Kingston had gone into administration on 12 December 2023, about 10 months prior
to the proof commencing. The administrators anticipated no funds would be forthcoming
for ordinary creditors into which category, and again there was no dispute, the pursuers fell.
The evidence
[12]
I heard evidence in this proof before answer on 22 October and 24 October 2024.
I also had the benefit of lengthy written submissions prior to a short hearing on evidence on
13 January 2025 when I made avizandum.
[13]
The parties led evidence both by affidavit/adopted statement and orally. Each
witness gave their evidence utilising both. I heard evidence from the first and second
pursuer and the first and second defender and from Mr Robert Fitzpatrick. Mr Fitzpatrick's
13
evidence was objected to by the pursuers as being inadmissible, and I will deal with that
later.
[14]
I shall narrate briefly the salient parts of each witness's evidence but, as I said earlier,
I do not consider that much of what is material to my decision was in dispute.
Andrew Lang
[15]
Mr Lang is the first pursuer. He adopted his signed statement. He is a retired police
officer who subsequently became a management consultant. He dealt with the first defender
when a contract was awarded to a company owned by Mr Rowatt. The two men continued
to be involved in business transactions with Mr Rowatt's company receiving several
contracts through a government eco project for which Mr Lang worked. They and their
partners (the second pursuer and the second defender) became friendly. The pursuers were
two of the few non family members to be invited to the defenders' engagement party and
the first defender hosted the first pursuer and the pursuers' son at sporting events. Gifts
were exchanged upon the births of children and grandchildren.
[16]
In July 2016 Mr Rowatt sought a loan from the pursuers to help fund a building
project at Earlston Crescent, Carnbroe Coatbridge consisting of eight houses. Calls and
email exchanges took place, and the pursuers visited the site. Mr Rowatt gave projections
and said several buyers were known to him.
[17]
Mr Rowatt sought a loan of £160,000. In return the sum of £210,000 would be
payable upon the completion of the building project. The pursuers sought security against
properties in respect of the loan and the two defenders granted securities over two separate
properties owned by them.
14
[18]
As far as Mr Lang was concerned repayment was to be made by the defenders. He
had believed and continued to believe the loan was with them and until lending the money
he had never heard of Kingston although theirs was the bank account into which Mr Rowatt
directed payment to be made.
[19]
The letter from Glasgow Law Practice (5/1/4), narrated in full above, provided for the
defenders to be parties to the deal which was always his understanding. He had not heard
of Kingston prior to this. This letter followed an instruction at 5/3/22 to GLP.
[20]
5/3/22 is an email dated 11 July 2016 from Mr Rowatt to Robert Fitzpatrick and his
assistant Daniel at Glasgow Law Practice in which he requested a letter to be sent to the
pursuers. In that email he set out that £160,000 was to be invested by the pursuers which
would realise a return of £210,000 payable in two tranches of £105,000 after sales of the final
two plots. Payment was to be made to Kingston's account. The £105,000 was to be "paid
directly by yourselves". This was a quote from Mr Lang's email addressed to the defenders.
Reference was also made to the two properties to be granted as securities being
2H Kenilworth Court Airdrie and 8 Chatton Walk Carnbroe in Mr and Mrs Rowatt's names
respectively. Mr Rowatt sent a copy of that email to the pursuers.
[21]
Following upon completion of the houses at Earlston Crescent in January 2018 the
pursuers had not received their £210,000 and Mr Rowatt asked Mr Lang if he could "roll
forward" the money to another project in Airdrie. No mention was made of the previous
agreement being terminated or of any change in liability. The securities required to be
amended to take account of the change of project. The pursuers would have preferred
payment, but the defenders appeared to have cash flow issues.
[22]
It was suggested by the first defender that £50,000 would be paid in January 2018
with £210,000 paid upon the project completion in July 2019. Mr Lang's emails 5/1/6
15
and 5/1/7 set this out these terms but no payment was received in January. . The project was
due to be finished by July 2019, but payment was not made of the £260,000 then or at all.
£10,000 was eventually paid in 2021.
[23]
By October 2020 the pursuers were desperate for payment. Mr Rowatt eventually
suggested in about June 2021 that instead of making this payment he would have a property
in Portpatrick signed over to the pursuers which was valued at £240,000 and additionally
would pay a further £40,000. The pursuers accepted this, anticipating payment quickly since
the project at Portpatrick seemed almost finished. They were taken to Portpatrick by
Mr Rowatt and viewed the site. The property was Flat 7, Fairways Court, Fairways Road.
He felt everything was very personal in the sense he was dealing with a friend he trusted.
[24]
Mr Rowatt also persuaded the pursuers to discharge the security over his flat to
allow him to raise capital saying it could be reinstated once he had done that. The pursuers
pressed him regarding reconstituting the security, but nothing happened despite Mr Rowatt
saying his lawyer would email the paperwork. The paperwork to discharge was sent and
completed in July 2021.
[25]
Payment was never made although there were numerous conversations between
Mr Lang and Mr Rowatt.
[26]
Throughout the transactions the pursuers were not legally represented.
[27]
In cross-examination Mr Lang accepted that the GLP letter 5/1/4 started with mention
of Kingston. The monies had been transferred to Kingston as per Mr Rowatt's direction.
The GLP letter set out the terms of the agreement. His view was that the £160,000 was a loan
to Jamie and not an investment. The arrangement in relation to the Portpatrick property was
made since the first defender had already bought the property. The email of 22 January 2018
16
(5/1/5) did design Jamie Rowatt as "Director Kingston Residential Investments Ltd" but was
written by the first defender.
[28]
He was referred to 6/2/1 being an email from him dated 7 August 2016 which was
headed up "Kingston Residential". He explained that in he was simply trying to have as
much security as possible when he asked for the security to be redeemable in the event of
the property development failing to complete successfully or Kingston ceasing to trade or
the death of directors within Kingston. It also stated in the letter this was so the beneficiaries
to Mr Rowatt's estate would be aware of the agreement. He did not take legal advice
because he trusted the first defender. He accepted that correspondence of then contained
the Kingston logo but it was always Mr Rowatt who dealt with it.
Francine Lang
[29]
The second and final witness to give evidence for the pursuers was the second
named pursuer, Francine Lang. Mrs Lang adopted her statement.
[30]
She and Andrew Lang are husband and wife. She knew Jamie Rowatt slightly before
he asked for funds to assist with a building project in Coatbridge. She discussed with her
husband and although she had concerns about how rushed the whole thing seemed to be
Andy had great faith in Jamie Rowatt and Jamie and Laura would be providing securities
over properties. Andy very much trusted Jamie and Laura Rowatt and she had confidence
in her husband's judgment. As far as she was concerned, they were lending the money to
Jamie and Laura. Payment was due to be made upon sale of the last two properties. She did
not particularly recall the GLP letter since most calls were between her husband and Jamie.
Andy was acting on her behalf and with her authority.
17
[31]
Payment was not however made following upon the completion of the original
project and the pursuers went to Scotland and met Jamie and there was then a fait acompli
with Jamie telling them that the money had been rolled over into another project despite
there having been no change to the agreement to make payment upon the sale of the final
two properties. Jamie said the money due to them "would just rollover into this project."
She and Andy had felt they had no choice to agree since Jamie basically had their money
and control lay with him. He did refer to paying £50,000 towards what he owed but this
never materialised. The new site was called Moffat Manor. Jamie did however talk about
what he owed them on a regular basis.
[32]
Jamie continued to make various promises, but nothing materialised despite them
having been told payment would be made upon completion of the Moffat Manor site a year
later. They did obtain some money towards the mortgage on a buy to let property they
owned with Jamie telling them to extend the mortgage which was due for redemption, and
he would pay the interest on the extended loan. He did make the payments over a 12 month
period and these then stopped.
[33]
Jamie had purchased other property in Portpatrick using capital which Mrs Lang
considered could have been utilised to pay them. He told Andy about this. They were not
interested but the property was almost completed and simply needed refurbishment. He
had offered to transfer one of the units and promised to get the legal documentation sorted
but then failed to do saying a lender, Golden Tree had to be paid out first. They also were
contacted by a marketing agent on Jamie's behalf regarding the fact that the Kenilworth
Court property was being sold with the sale due to complete the following week. They had
security over this, and the security needed released. They both felt unhappy that Jamie had
not made direct contact. They were desperate for funds for pioneering treatment for their
18
terminally ill daughter-in-law. They spoke to Jamie and told him this, but he was adamant
that he needed the cash released to finish the Portpatrick properties and settle with them.
Mrs Lang was very reluctant, but Andy still had hope that Jamie would honour his promise
of payment, and they agreed.
[34]
There were then attempts made by a solicitor on Andy's behalf to have them agree to
release the security over Laura's property. They refused to do so, and Jamie later told them
that in any event the property was fully mortgaged, and their security was worth nothing.
[35]
In cross-examination she accepted that 6/1/2 showed payment of the £160,000 was
made to Kingston's bank account.
[36]
The pursuers' proof concluded following upon her evidence.
Jamie Rowatt
[37]
The first witness to give evidence for the defenders was Jamie Rowatt. He adopted
the terms of his affidavit, and this constituted his evidence in chief.
[38]
He gave evidence regarding being a director of Kingston and his wife previously
having been one. The company had been formed in 2014.
[39]
His confirmed he knew Andrew Lang through previous business dealings and stated
that Mr Lang had said he wanted to invest to obtain a profit from "our" projects. Mr Lang
had approached him in about July 2016 wanting to invest in the Earlston Crescent project at
Carnbroe. It was agreed he would provide a loan of £160,000 to Kingston and would
receive £105,000 from the sales of each of the last plots. It had further been agreed that the
defenders would grant securities over properties at 2H Kenilworth Court and 8 Chatton
Walk respectively to be discharged once payment had been made. He accepted the letter
from GLP of 13 July 2016 to the pursuers was written on his behalf. He asserted there was
19
no personal liability by him or his wife. The company was to receive the funds and he and
Laura to provide securities. He referred to productions 6/1/1, 6/1/2 and 6/1/3 being an email
from Robert Fitzpatrick dated 10 June 2024 containing advice from Robert Fitzpatrick given
without his file but saying he can see no sign of personal liability and referring to
Andrew Lang's email of 7 August 2016 (6/3) and the bank statement showing the funds paid
to Kingston.
[40]
He then referred to the Carnbroe project using the heading "Second Contract". He
said he had had a discussion with Mr Lang in October 2017. This was about the Moffat
Manor project. Mr Lang had suggested that the £210,000 should be invested in this new
development and this was agreed with £260,000 being payable in May 2019 after 12 months
and, as he put it "The securities that were granted in respect of the first contract would be
granted for the second contract".
[41]
Under the heading "Third contract" Mr Rowatt stated in January 2021 he had a
discussion with Mr Lang regarding the fact the company had a further development and if
agreed the outstanding £260,000 would be paid to him that was due from the second
development which related to a block of flats in Portpatrick. He stated, "I agreed with him
that the company pay a further £40000 on top of the £260000." He went on to say "The
contract was therefore that:
I.
He would receive a flatted dwellinghouse at Fairways Court, Fairways Road,
Portpatrick DG9 8HT which should company be transferred to him (sic)"
II.
The additional £40,000 would be repaid by the company over the following
12 months
III.
Security over 2H Kenilworth Court was to be lifted and the security over
8 Chatton Walk was to be lifted and the final payment of £40,000
20
He stated that Andrew accepted these terms but during this period "we" experienced cash
flow problems. He said that the security was discharged "as agreed". His position was that
his email as director of Kingston 5/1/5 he outlined the terms "of the contract...for the
Portpatrick development." He also referred to 5/1/9 and 5/1/10 confirming the contract and
that it was between the company and Andrew Lang.
[42]
In cross-examination Mr Rowatt said he lived both at the address shown in the
instance and also in Spain. He had been appointed a director of Kingston on 1 May 2018
and the company had gone into administration on 15 December 2023.
[43]
He was referred to the administrators' report at 5/2/14. He said Lowry Capital Ltd
had provided funding and the pursuers were a second investor. He had not provided a
statement of affairs since being asked in January 2024. He explained he had difficulties in
accessing the company's records. He also confirmed that the report showed that the only
distribution would be to secured creditors and the company would be dissolved.
[44]
He said he was experienced in operating limited companies. It was put to him that
17 out of 25 limited companies operated by him had been dissolved. He explained these had
been special purpose vehicles (SPVs) which had been created for one project and when the
project was at an end the SPV was dissolved.
[45]
He was taken to paragraph 4 of his affidavit and said that Andy had been aware that
"we" were carrying out work and building houses. He had taken Andy to view the site and
to his offices in Glasgow. Andy had been interested in investing, and it was not he and
Laura who were due to repay. Previous emails specifically referred to Kingston.
[46]
Following upon the case being adjourned for about 2 days cross-examination
resumed. He admitted several of his companies had been placed in administration or
liquidation. He accepted provisional liquidators had been appointed to three companies.
21
[47]
He was asked about his email to Robert Fitzpatrick (5/3/22) and the reference there to
payment by "yourselves". He stated no reference was made there to Kingston or himself.
[48]
He was then referred to the GLP letter of 13 July 2016. He was authorised to act on
behalf of Laura. He dealt with everything. The company had been set up in Laura's name
because he was in other businesses. He had set things up in her name with her permission.
He said he did not know his job title. He had not done anything behind Laura's back. She
would sign things off and was happy he was doing things on her behalf. The letter reflected
what had been agreed. He thought there had been other subsequent agreements but could
not locate these. He accepted that Kingston and the defenders were defined as "our clients".
He said that Kingston were the clients for the loan and he and Laura were for the securities.
He pointed fact that number 2 of the letter did not say who would make repayment.
Clause 1 refers to "clients" and he did not accept "clients" meant more than Kingston. He
did not see it as Kingston and the defenders all being liable.
[49]
Mr Rowatt accepted payment had not been made following the completion of the
first project. The money had not been used to buy the land for the second project. They had
spoken of the company's growth and Andy had said he wanted to be part of that and to put
the funds into the next site.
[50]
He was referred to the email exchange at 5/1/6. He explained the fact that this
appeared to show Jamie was not the instigator of the roll over into Moffat Manor by saying
that he would have explained they had another property and the words "we are hoping"
referring to the Airdrie project showed there had been a previous discussion because
otherwise Andy would not have known about it.
[51]
The response from Mr Lang of 4 January 2018 showed the debt being moved from
one site to another. He could not remember telling Mr Lang he would repay £50,000.
22
[52]
He was referred to 5/1/9 and accepted that set out how the money was to be repaid at
that stage and that since a marketing survey showed the flat valued at £240,000 that meant
with the payment of £40,000 essentially £280,000 was due. He accepted nothing was said
regarding the termination of previous agreements. The "us" as in "owed by us" referred to
Kingston.
[53]
He stated that the new project and the transfer was by KRPP Ltd and not Kingston
and was referred to the title sheet showing it as owners (5/2/16). Kingston Residential was
however the parent company. He could not say if the pursuers are shown in the balance
sheet as creditors.
[54]
He accepted that the administrators' report (5.2.14.9) shows amounts due but there
was no mention of the pursuers. He did state the debt would show on the balance sheet
although not be specified.
[55]
It was not true he knew he was liable.
[56]
In re-examination he was referred to the use of the word "us" in 5/1/9 and referred to
the email from himself of 27 July 2021 (5/1/10) in which he stated on the first line "As
discussed, please see the heads of terms for the agreement to repay your investment to
Kingston Residential."
[57]
The second witness for the defenders was the second defender, Laura Rowatt. She
adopted her affidavit. It added nothing of assistance.
[58]
In cross-examination she accepted that Jamie Rowatt's actions were on her behalf.
She is an interior designer and had taken little part in the active running of Kingston other
than to sign what Jamie gave her. He otherwise dealt with everything and did so with her
approval and authority. She was aware of 5/1/4 being the letter from GLP which was hers,
her husband's and the company's solicitors at the time. Her husband was the manager. She
23
knew the pursuers were lending money. She accepted the letter referred to lending to "our
clients" and they were defined as Jamie, herself and Kingston. The letter did not say who
was to repay and conceded that the letter made it clear when something was to be done by
only one of the parties eg grant a security. She and her husband were Kingston. She had
not been involved in the bookkeeping.
[59]
In re-examination she confirmed she had not received any money from the pursuers.
[60]
The final witness for the defenders was Robert Fitzpatrick. I heard all his evidence
under reservation, objection having been lodged and made orally to the admissibility of
same by the pursuers.
[61]
Mr Fitzpatrick is a consultant with GLP. He adopted his affidavit. He is a retired
solicitor and continues to have "a limited association" with GLP. He confirmed that in 2016
and 2017 his practice acted for the two defenders and for Kingston. He only had limited
access to the documentation since his former office, from where he worked, is now closed
and there would only be a paper file. He had seen some emails including confirmation that
from Mr Lang to his assistant in February 2017 that he had paid the money to Kingston by
two separate payments. He had also had sight of Andrew Lang's email of 7 August 2016
regarding the terms of the security to be granted. He was unaware of any documentation
provided by the Rowatts making them liable for the debt. He opined that there would be no
personal liability by the defenders unless the securities said otherwise unless there were
personal guarantees. He could see nothing in the correspondence which would suggest
personal liability upon the defenders. His main work was latterly in conveyancing and
chambers work and he knew about obligations and personal guarantees.
[62]
Under cross-examination he agreed he could only represent one party. He was
referred to 5/3/22 being an email from Jamie to him dated 11 July 2016 to him which formed
24
the basis of 5/1/4 being the offer letter. The offer letter was drafted by Daniel, his assistant,
but he would have signed it. He accepted that the part of the letter dealing with the
securities made it clear where only one individual was involved. Clause 2 did not say who
would be making payment. He did not agree the letter left the defenders liable.
[63]
He reiterated in re-examination that he would expect a personal guarantee if
someone was entering into a personal guarantee.
Submissions
[64]
Both parties lodged lengthy written submissions. I mean no disrespect to those who
presented the case if I attempt to briefly summarise the salient parts. A large number of
authorities were referred to by parties.
[65]
The parties cited a number of authorities including:
Antios Cia Naviera SA v Salen Rederiema AB AC191
Bank of Credit and Commerce International SA (in liquidation) v Ali [2002] 1 AC 251
Grunwalkd v Hughes and Others 1965 S.L.T. 209 (page 155)
Lagan Construction Group v Scotts Roads Partnership Project 2024 SC 12.
MacGregor on Damages (22nd edition) at [3- 009]
McBryde, The Law of Contract in Scotland, 3rd edition at [5-87]
25
Merthyr (South Wales) Ltd v Merthyr Tydfil County Borough Council
Nigel Lowe & Associates v John Mowlem Construction Plc, 1999 SLT 1298
Prenn v Simmonds [1971] 1 WLR 1381
Reardon Smith Line Ltd v Hansen-Tangen (The "Diana Prosperity") [1976] 1 WLR 989
at [996]
Ward v Coltness & Co 1944 SC318 at 322
Watson Laidlaw & Co v Pott Cassels and Williamson 1914 SC (HL) 18, at [29]-[30]
The pursuers
[66]
Counsel for the pursuers sought a joint and several decree in the sum of £280,000
with interest at 8% from the date of citation together with expenses and to sanction the cause
as suitable for the employment of counsel.
[67]
He argued that a contract for loan was entered into between the pursuers, the
defenders and Kingston. It was varied regarding the date of payment on two occasions and
with different levels of payment. The failure to repay was a breach and the sum of £280,000
was a reasonable assessment of the pursuers' loss.
26
[68]
I was asked to find the evidence of the pursuers credible and reliable whilst the
evidence of the first defender was neither. It was inconsistent with documentation and he
downplayed his record as a director of limited companies which had had insolvency events.
No weight should be placed on Mr Fitzpatrick's evidence on interpretation of the contract.
The court is capable of forming its own interpretation. He referred me to Lord Sandison's
view in Cockburn.
[69]
The identification of parties to the contract was a matter of objective interpretation
having regard to the relevant factual background known to the court. In support of this he
referred to McBryde and the statement:
"A problem can arise in deciding who the parties to the contract are. The problem is
at its most acute when one of the parties acts in a way which makes it obscure
whether the party is contracting with an individual, or as an agent or principal, or on
behalf of a partnership or a company or on behalf of which of several companies.
The concept of legal personal is not generally understood. The problem is largely
one of fact and can be illustrated by the cases cited"
[70]
The case of Nigel Lowe & Associates v John Mowlem Construction Plc was stated to be an
illustration of the point. Equally the case of Derek Hodd Limited v Climate Change Capital
Limited was stated to be authority for the fact that the court is entitled to have regard to the
relevant background facts as part of the exercise in interpretation.
[71]
He cited Prenn v Simmonds as authority for the proposition that although
pre-contractual negotiations cannot aid the interpretation of a particular term evidence as to
the "genesis" or "aim" of the contract is admissible. He went on to refer to
Lord Wilberforce's statement in Reardon Smith Line Ltd v Hansen-Tangen (The "Diana
Prosperity"):
"when one is speaking of aim, or object, or commercial purpose, one is speaking
objectively of what reasonable persons would have in mind in the situation of the
parties"
27
[72]
Based on these authorities he submitted:
a.
The question of who the parties to a contract are is a question of fact.
b.
The exercise for the court is to seek to ascertain the nature intention of the
parties, objectively, in light of the background known to both parties.
c.
Subsequent events, (while relevant in considering matters such as the
credibility of witnesses and generally how this particular contract was varied),
cannot be used to ascertain the intention of parties as at the date the contract
was entered into.
d.
Notwithstanding that, the court is entitled to have regard to pre-contractual
information to the narrow extent that sets out the aim of the contract, as it
forms part of the background information the court should consider in
determining what a reasonable person would have had in mind in the situation
of the parties.
[73]
He asked me to accept the first pursuer's evidence on which he was not
cross-examined that he had telephone calls in which it was stated the monies were being
loaned to the first defender and that it would be the first defender who would repay. There
was no discussion at that stage about Kingston. He referred me to TUI UK Ltd v Griffiths
regarding failure to cross-examine preventing party disputing evidence.
[74]
He founded upon 5/3/22 and the reference to two payments of £105,000 "paid
directly by yourselves". That letter could only have been written by the first pursuer and
"yourselves" cannot have related to Kingston standing the first pursuer being unaware of
the company at the time.
[75]
All of this assisted in determining the aims or genesis of the contract
notwithstanding what he described as "the clear and ordinary meaning of the GLP letter".
28
[76]
Counsel then turned to the GLP letter of 13 July 2016 which all parties accepted was
the agreement between them. He submitted Mr Fitzpatrick's view about the meaning was a
subjective one rather than the objective exercise the court requires to undertake. It was
irrelevant and inadmissible.
[77]
The nub of counsel's argument was that letter. He submitted that the only
reasonable construction was that the pursuers, the defenders and Kingston were parties to
the loan agreement. When the letter had to distinguish between the parties it did so its
reference to the obligation by the first defender and the second defender respectively to
grant securities.
[78]
Counsel turned to subsequent events which he stated could not aid interpretation as
to who the parties to the contract were but could assist in issues of credibility. He pointed
out there was no evidence of the loan having been recorded as a liability of Kingston nor
was there any evidence that joint liquidators [I think administrators] were aware of it.
[79]
He referred to 5/1/9 of process in which Mr Rowatt stated, "paid out of money owed
by us to you", the fact that nowhere is there "clear" mention that the sums are to be repaid
by Kingston and Kingston was never in a position to transfer the Portpatrick property since
it was owned by another company albeit one apparently controlled by the first defender.
[80]
As far as quantum is concerned counsel founded upon Watson Laidlaw & Co v Pott
Cassels and to Lord Dunedin's dicta in that case:
"In the case of damages, in general, there is one principle which does underlie the
assessment. It is what may be called that of restoration. The idea is to restore the
person who has sustained injury and loss to the condition in which he would have
been had he not so sustained it...The restoration by way of compensation is therefore
accomplished to a large extent by the exercise of a sound imagination and the
practice of a broad axe".
29
[81]
In summary he submitted the pursuers should be placed in the same position that
they ought to have been but for the breach of contract. In essence this should be the value of
the property the pursuers were due to receive which, based upon the first defender's
evidence was £240,000 plus the additional £40,000.
[82]
Liability should be, following the case of Grunwalkd, joint and several. It was one
contract here with variations and the two defenders were obliged to make payment but did
not do so.
[83]
Mr Mitchell then turned to his objections to the evidence of Robert Fitzpatrick and
Jamie Rowatt.
[84]
In the case of Mr Fitzpatrick, he had stated he was unaware of anything which would
make the defenders personally liable. That was simply speculation and in any event the
interpretation of the documentation is for the court. He had also stated the only way
available to the pursuers to recover sums from the defenders was to call up the standard
securities. That was a legal opinion and Mr Fitzpatrick's evidence was not admissible since
he is not an independent expert. His view on the party to whom the money was lent again
was a matter for the court. Similarly, his opinion on personal liability.
[85]
In the case of Jamie Rowatt the objection made was to paragraph 4 of his evidence in
which he stated:
"The contract, as far as I was concerned, was that the [sic] Andrew Robert Lang
would provide the company Kingston Residential Investments Limited with a loan
of £160,000 to fund the project at Earlston Crescent Cambroe [sic] "
Mr Mitchell submitted that the parties to a contract is an objective one and the subjective
views are inadmissible. He founded on Derek Hodd Ltd.
30
[86]
In a relatively brief supplementary submission counsel referred to Arnold which was
followed in Lagan in which the Lord President stated:
"The case falls to be determined according to the well-established rules on the
interpretation of contracts, recently repeated in Paterson v Angelline (Scotland) 2022
SC 240 (LP (Carloway), delivering the opinion of the court, at para [32]) citing, inter
alia, Arnold v Brittan [2015] AC 1619 (Lord Neuberger at para 15). Parties' intention
is most obviously gleaned from the language which they have chosen to use. The
court should not normally search for drafting infelicities in order to justify a
departure from the natural meaning of that language. It should identify what the
parties agreed, not what it thinks that common sense may otherwise have dictated.
Contracts are made by what people say, not what they think in their inmost minds
(Muirhead & Turnbull v Dickson (1905) 7 F 686 (LP (Dunedin) at 694 cited in Paterson
at para [37]). Where a contract is a complex and sophisticated one prepared and
negotiated by skilled professionals, as is the case here, it may be successfully
interpreted principally by textual analysis (Wood v Capita Insurance Services
[87]
In short, the language used is primarily the criterion used to interpret. Commercial
common sense is very much a subsidiary aspect and is one the court should be very slow to
consider where the ordinary meaning is clear. He disputed the defenders' argument that the
court must consider the commercial sensibility. He referred again to Arnold v Brittan at
paragraph 20 in which it was stated by Lord Neuberger:
"Fourthly, while commercial common sense is a very important factor to take into
account when interpreting a contract, a court should be very slow to reject the
natural meaning of a provision as correct simply because it appears to be a very
imprudent term for one of the parties to have agreed, even ignoring the benefit of
wisdom of hindsight".
[88]
Counsel submitted that the issue of to whom the monies were paid is of little
relevance as was any awareness by the first pursuer as to who was carrying out the
development. The pursuers did not accept that repayment was solely due by Kingston. The
GLP letter with its reference to "our clients" which was defined as including the two
defenders was clear. He said that the reference by the first pursuer that the loan was to
Jamie for his business does not in any way undermine this.
31
[89]
He reiterated his objections to Mr Fitzpatrick's evidence referring to Kennedy v Cordia
as authority for the fact that the court cannot delegate its decision making function to an
expert and the opinion of an expert is unnecessary if the matter is one in which the court can
form its own view. He separately pointed out that Mr Fitzpatrick was not independent and
referred me to Rowley v Dunlop as authority for the inadmissibility of his evidence due to
that factor. Referring again to Kennedy at paragraph 51 he pointed to the Supreme Court's
view that the requirement of independence and impartiality is one of admissibility rather
than weight.
[90]
He disputed the defenders' assertion of three separate contracts each would require
separate performance, the performance for the first two would remain extant and further the
subject matter remained the same ie the repayment of the original sums advanced plus
interest.
[91]
The defenders' position regarding an incomplete third contact was without merit.
Quite apart from the appointment of the administrators to Kingston, the first defender's
evidence made it clear that the company which owned the Portpatrick property was in
financial difficulties and the Portpatrick property had been repossessed. The pursuers had
no contractual relationship with that company. He also submitted that the "liquidation" of
Kingston was a material breach of contract. Further payment of the £40,000 was due by
July 2021 and neither the defenders nor Kingston were able to transfer the Portpatrick
property.
[92]
The evidence was sufficient to sustain the pursuers' fourth plea-in-law. He
submitted too that the specification argument advanced by the first defender was irrelevant
now that the court had heard evidence, and none was heard under reservation.
32
Defence submissions
[93]
I have summarised the two defenders' submissions cumulatively.
[94]
The defenders' position was that the court requires to identify the parties' intention.
It was accepted the language used is at the forefront although, if unclear, the court may look
at other factors. Commercial common sense is not retrospective and should only be used to
interpret what parties have agreed as opposed to what they should have agreed. A fact or
circumstance known to only one party should not be taken into consideration. That said a
subsequent unintended and not contemplated event can result in the court giving effect to
the original intention.
[95]
The first defender was clear in his evidence that the contract was with Kingston. The
letter from GLP referred to the two defenders and Kingston as "our clients" and to "our
clients "obtaining funding for a project". The email from the first defender to GLP clearly
stated that the money was to be paid to Kingston. The defenders stated the first pursuer's
denial of knowledge of Kingston at the time of the GLP letter was not reconcilable with his
email of 7 August which he had headed Kingston Residential. The two read together
formed the contract since he was aware the first defender was not a builder and that along
with Robert Fitzpatrick's evidence about it being necessary to obtain personal guarantees
assists the court. The first pursuer gave evidence he knew the monies were being advanced
"for Jamie's company". Payment was to come from the sale of the two plots.
[96]
Several of the emails were from Kingston and one of 27 July 21 referred to "to repay
your investment in Kingston Residential Investments Ltd". "The defenders said...this was
never challenged ie that the money was to be repaid from Kingston Residential Investments
Ltd".
33
[97]
There was a second contract re Moffat Manor with the rollover agreed and a different
return and different subject matter. Similarly, the Portpatrick one. Each of these were
between the first pursuer and Kingston. The third contract remains extant and there has
been no "ultimatum letter" served on the administrator or attempt to seek the transfer. The
defenders insist on their preliminary pleas. There were no averments justifying damages
and therefore no damages were payable.
[98]
The pleadings lacked specification regarding the second and third contracts and the
court is entitled to hold it is not satisfied regarding which party is liable for repayment of the
monies advanced for the first contract.
[99]
Objections to the evidence of Robert Fitzpatrick should be repelled.
[100]
There is no record for telephone conversations or indeed any pre-contractual
conversations regarding the second contract and the pursuers are not entitled to prove
anything not averred. No cross-examination took place because it was not pled.
[101]
The pursuers' case must fail, the defenders' preliminary pleas should be sustained as
should their substantive pleas 2 and 3.
Analysis and decision
The evidence generally
[102]
I found the pursuers credible and reliable. They appeared to me to have been
somewhat naïve in relying upon constant promises and discharging a security with nothing
paid at that point in return but that is the main criticism I would make of them. I rather
think, since I found Mrs Lang's evidence straightforward, and without the perhaps
previously rose-tinted glasses of Mr Lang in relation to the Rowatts, that she was not told
everything. It was clear to me that Mr Lang was perfectly prepared to make payment to
34
whatever bank and whoever's name the first defender asked him without having any
awareness of the company at the time of payment or that at a later stage it would be
suggested they were the sole obligants. He did seek some reassurances regarding what
would happen in the event of certain issues arising at Kingston but that did not in any way
modify what had earlier been agreed which is what I have to determine.
[103]
I had no doubt that Mr Fitzpatrick was an honest witness but it clear to me his
evidence really consisted of what he could surmise from the documentation put to him
which was incomplete in any event. I considered he knew little about the transaction from
memory.
[104]
I did not consider Mrs Rowatt added a great although her evidence did make it clear
that Jamie Rowatt was always authorised to act on her behalf.
[105]
Mr Rowatt did not impress me at all. He tended to assert things eg that Mr Lang had
approached him even where the documentation showed otherwise eg the Moffat Manor
project. He was not candid about the fact that some companies which he had run had
suffered insolvency events. I considered he misled the pursuers generally about when
repayment would be made, whether through over optimism or deliberately and again was
not forthcoming when things were going wrong. Having said that I do not consider this
case is in any way dependent upon credibility but instead upon the documentation and the
undisputed facts. He was inclined to try to make factual statements to suit his case when the
evidence pointed otherwise eg referring to first, second and third contracts in headings in
his signed statement when there was otherwise no evidence of separate contracts. It was
clear he regularly made completely inaccurate representations as to when payment would
be made or the Portpatrick property transferred. I did not accept he did not know his job
title with Kingston or that there were other agreements with the pursuers he could not
35
retrieve. There are various ways of achieving the latter, not least a specification of
documents. In his statement under the heading "Third Contract" he said, "I agreed with
him that the company pay a further £40000 on top of the £260000." Yet the agreement did
not say anything about the company unless Mr Rowatt's designation amounts to that.
Equally his assertion that "our clients" simply meant Kingston for the loan purposes
appeared to be one without justification. The documentation in relation to the Moffat Manor
project contradicted his claim that the approach came from Andrew Lang.
Admissibility of evidence of Mr Fitzpatrick and Mr Rowatt
[106]
The first issue I will deal with here is the admissibility of the evidence of
Robert Fitzpatrick. The pursuers argue that his evidence is not admissible since he cannot be
an expert due to his having acted for the defenders in relation to this matter, that some of his
evidence is based on speculation and in any event the interpretation of the contract is a
matter for the court and not something the court should delegate to an expert. The
defenders did not in my view provide an answer to these objections simply baldly stating
the evidence should be admitted and whatever weight the court thinks fit attached.
[107]
Whilst I have no doubt Mr Fitzpatrick was doing his best to assist the court, I do not
consider, due to his firm acting in the matter, he can in any way be regarded as independent
and therefore any of his evidence can be admissible as expert evidence. He is connected
both to the defenders and the subject matter. Further this is a matter in which the court is
capable of forming its own view and it is not one it should delegate. Kennedy v Cordia and
Rowley v Dunlop both provide authority for this.
[108]
In Kennedy at paragraph 51 the Supreme Court stated "... the requirement of
independence and impartiality is in our view one of admissibility rather than merely the
36
weight of the evidence". I do not see any issue with admitting any factual evidence from
Mr Fitzpatrick and regard his evidence as admissible to that extent but opinion evidence
from him is in my view inadmissible both due to his lack of independence and the fact that
interpreting the literal meaning of a contract is for the court and I sustain the objection to
that extent.
[109]
In relation to the objection to Mr Rowatt's evidence this simply related to his view on
whether there is personal liability by the defenders and the point made by the pursuer that
this is simply a matter of contractual interpretation. I did hear a fair bit of evidence from all
the parties about what they thought they were entering into and on balance I will repel that
objection.
Relevance and specification of pursuers' pleadings
[110]
The defenders complain about specification in relation to articles 4 and 5. However
no objection was taken during the proof to evidence led in support of the averments made
there and whilst I would accept that, if there is no case on record, even a lack of objection
might well result in that evidence being disallowed, I do not consider that this is the position
here. In any event telephone conversations as a preliminary to the agreement are simply
background narrative and not in any way material.
[111]
The defenders also argue there is a lack of fair notice about quantum. In my view the
pursuers' pleadings read as a whole give notice to the defenders of a debt of £260,000 and
payment of this was to be made by the transfer of flat 7 and a payment of £40,000. (see lines
1-7 of article 5) There was evidence of the flat being valued at £240,000. There was no
evidence of any change in property values. The non-payment and non-transfer of the house
constitute prima facie a loss of £280,000 which is the sum sued for. I do not consider a
37
specific condescendence is required in respect of a claim for damages although it may be
tidier. Indeed the first defender's own evidence in his signed statement in advance of the
proof was "I agreed with them that the company pay a further £40,000 on top of the
£260,000" indicates a liability of £300,000 so quantum of less than that can hardly constitute a
lack of fair notice. 5/1/9 and 5/1/10 also show the first defender providing a value for flat 7 of
£240, 000 again indicating there should have been no surprise that the failure to transfer
amounted to a loss of that amount.
[112]
The defenders also complain that there are no pleadings regarding the pursuers
having sought transfer of the property from the administrator. Apart from the fact it is for a
debtor to seek out the creditor rather than vice versa the time for transfer and payment is
long past having been promised by September 2021. As pled in any event by the pursuers
both defenders and Kingston are liable and the pursuers are perfectly entitled to seek
payment from any of these parties. The defenders' position on this is further misconceived
in that the property in Portpatrick was never owned by Kingston and therefore it was not in
the administrators' power to transfer it. The fact it has also been repossessed by the lender is
a further insurmountable hurdle.
[113]
In the circumstances I repel all objections to the evidence led made by the defenders
based upon lack of record.
The contract(s)
[114]
Parties agree that the letter of 13 July 2016 (5/1/4) contains the terms of the original
contract. For completeness the correspondence of the following day meant there was a
binding contract.
[115]
The letter contained the heading:
38
"Our Clients: Kingston Residential Investments Limited and Jamie and
Laura Rowatt
Andrew Lang and Francine Lang
Proposed Investment-Earlston Crescent, Carnbroe"
[116]
The letter continues with that the Langs are to provide "our clients" with "funding
the above project". It continues with "You would provide our clients with one hundred and
sixty thousand pounds (£160,000.00) of funding in relation to the above project."
[117]
At this stage it is clear. Whatever the mechanism for doing so the monies being
provided are for "our clients" and not one client. "Our clients" has of course been defined
[118]
The letter then contains an obligation to repay stating:
"You would be repaid following the erection of houses...by receiving a payment of
One Hundred and Five Thousand Pounds (£105,000.00) from each of the two final
plots which would be completed at the development in that a total of Two Hundred
and Ten Thousand Pounds (£210,000.00) shall thereby have been paid to you in full
and final satisfaction of all sums due to you in respect of the funding provided by
you..."
[119]
The letter contains no attempt to limit liability for payment of the £210,000 due to any
one or two of the clients. It does not even say who will repay although I consider that would
not necessarily the avail the defenders since, dependent upon the phraseology, that could
still be construed as obliging all defenders to ensure payment made. In any event there is no
such qualification or attempted qualification. Significantly the only part of the letter which
obliges one or other party to do something is clause 3 relating to the provision of standard
securities.
[120]
The letter then continued inter alia stating:
"We understand there is an urgency to have the funds released and it may be that
either you or your solicitors might wish to confirm acceptance of this correspondence
and treat such an acceptance as an agreement between you and our clients to
regulate matters whilst documentation such as security, paperwork etc.is prepared
and put in place as required by you."
Accordingly, the correspondence was to be the contract between the parties.
39
[121]
Despite all the background matters about which the court heard at great length this
letter and the acceptance thereof clearly bound the pursuers to provide £160,000 and "our
clients" including the defenders jointly and severally were obliged to pay two sums
of £105,000 each upon the completion of the final two plots at Earlston Crescent.
[122]
There was no dispute that the project there was completed but the pursuers did not
receive their payment. The first pursuer and the first defender engaged in correspondence
and meetings. Again, during the proof there was basically no dispute about what was
involved as far as figures were concerned or indeed the period for payment and it was set
out in 5/1/7. Essentially the loan the initial investment of £160,000 plus the profit of £50,000
were now to be repaid in May 2019 following upon completion of the Moffat Manor project
in Airdrie. The £210,000 currently due would be repaid in the sum of £260,000 at that point.
[123]
There was no mention of any of the original debtors being discharged and in 5/1/5
Mr Rowatt referred to "the investment moving to the Moffat Manor site". Some of his
correspondence, including that email, contained the designation after his name "Kingston
Residential Investments Ltd".
[124]
I do not see this designation as affecting liability for a variety of reasons. From early
on Kingston were a party here. So was Jamie Rowatt and so was Laura Rowatt. A template
email designation in these circumstances does not affect liability. For what it may be worth
at no time was it stated that payment was coming from Kingston or indeed that settlement of
the sums due was their sole responsibility. Furthermore correspondence prior to the
original agreement had Mr Rowatt designed as "Director Optimize Ltd". At no time has it
been suggested by any of the parties that Optimize were involved yet Mr Rowatt used that
template on his emails.
40
[125]
There was also reference made to the fact that Mr Lang had in his email in
August 2016 used "Kingston Residential Investments" in the subject line. I consider a great
more than this is required to show that liability, post the contract, is now being limited to
one party out of the three. The subject matter of an email may aid interpretation where there
is ambiguity but here, I consider there to be no ambiguity and in any event I do not think it
shed any light on anything except perhaps the purpose of that particular email ie some
protection against certain things happening to Kingston or its main personnel.
[126]
In short, I consider the Moffat Manor change simply varied the previous agreement
but did not discharge it, nor was it limited to Kingston and thus left the two defenders and
Kingston liable.
[127]
A further variation then took place following upon non-payment of the
agreed £260,000. 5/1/9 dated 30 June 2021 along with 5/1/10 set out the basic terms which,
again with the exception as to who was to be liable, were not in dispute.
[128]
The agreed terms were that Flat 7 Fairways Court Portpatrick which had a price
of £240,000 would be transferred to the pursuers along with a payment of £40,000 to be paid
within 12 months. The security by Jamie Rowatt would be lifted upon agreement and the
security by Laura Rowatt following upon the property transfer and payment taking place.
Reference was made to monies already paid "Paid out of money owed by us to you" in
5/1/9 by Mr Rowatt which I found to be a slightly strange way of putting matters if he
thought the sums were due simply by Kingston, but nothing turns on that. In 5/1/10 he
refers "to repay your investment to Kingston Residential". The defenders' submitted that
the use of that phrase in the email of 27 July 2021 and that this was never challenged meant
that repayment was to be made by Kingston. I consider this argument misconceived for a
variety of reasons, but the main one is that whoever the investment (or loan) was paid to is
41
not necessarily the sole party liable for repayment and in any event one unilateral statement
cannot change a contract. This phrase in any case simply replicated part of the factual
matrix ie one of the parties in relation to whom an investment had been made was Kingston.
I do not consider that in any way affects liability. It simply reflects the reality of the
situation whereby the £160,000 was paid to Kingston on the defenders' instructions.
[129]
Neither the defenders nor Kingston were in fact the owners of Flat 7 so were
effectively binding themselves that a third party (KRPP Ltd) would do something. No one
suggested, although it might have been logical bearing in mind the defenders' other
submissions, that liability was with KRPP. The security by Mr Rowatt was discharged but
the Portpatrick property was never transferred nor was payment made despite the
representations made in 5/1/9 which indicated entry should be in August 2021. Email 5/1/9
with its reference to "money owed to you" along with the undisputed evidence which I
heard from the parties made it clear that this was a mechanism to pay the monies due.
Both 5/1/9 and 5/1/10 value the property at Flat 7 at £240,000. Flat 7 was repossessed by a
secured lender.
[130]
If I am wrong to reject Mr Fitzpatrick's opinion evidence as inadmissible, I should
also say that I respectfully disagree with the thrust of it. 5/1/4 in my view clearly bound
both defenders as well as Kingston.
[131]
I do not consider the original agreement or what followed are in any way ambiguous
and thus respectfully follow the line of authorities of which Arnold v Brittan is one to the
effect that it is what parties say that will normally determine matters eg "Parties intentions
are gleaned by the language they have chosen to use" Lord Carloway in Paterson v Angelline.
In this case the intention one can derive from the correspondence at 5/1/4 ie the GLP letter
42
and its acceptance is that the pursuers were making a loan/investment and those binding
themselves to make repayment of £210,000 were the defenders and Kingston.
[132]
The defenders also spent some time arguing that the monies advanced by the
pursuers were "an investment" rather "a loan". I consider the labelling is of no
consequence. Either way the defenders obliged themselves to make certain
payments/transfer in lieu of payment. I do not know whether they were hinting that an
investment is creates less of an obligation than a loan but that is inapplicable where the
return on the investment is contractually guaranteed as I have found to be the case here.
Quantum
[133]
The defenders argue I cannot determine a value for the breach of contract, quite apart
from the pleadings issue which I have dealt with above, in respect of Flat 7. I do not accept
this. In 5/1/9 and 5/1/10 Mr Rowatt stated the property was valued at £240,000. In the
absence of anything to indicate otherwise or indeed a substantial increase or fall in the
property market it seems reasonable to accept this as the value. That said I should consider
what is well within judicial knowledge, that selling a property is often expensive due to fees
incurred and I should allow a £10,000 deduction for that. In all of that I am utilising the
"broad axe" referred to by Lord Dunedin in Watson Laidlaw & Co. I am not making
deductions in respect of the mortgage payments nor the £10,000 mentioned earlier since it is
clear the final variation of the agreement did not include provision for crediting these. In
these circumstances I consider the pursuers' loss, because of the defenders' failure to fulfil
the final contractual obligation ie to transfer and pay £40,000, amounts to £270,000 and I
shall grant decree for this amount with interest as craved.
43
[134]
Ultimately my conclusions on the material facts and the law here are straightforward
but I have spent some time on both the evidence and the submissions in case it should be
considered I am in error.
Expenses and counsel
[135]
The pursuers have been successful here and there no reason why they should not be
found entitled to expenses except as previously determined. I consider the case suitable for
the employment of counsel and will grant sanction under section 108 of the Courts Reform
(Scotland) Act. The sum sued for is large and indeed this case could easily have been raised
in the Court of Session. I consider the case did become a complex one mainly because of the
numerous arguments put forward by the defenders. In these circumstances I consider it is
reasonable to sanction the employment of counsel.
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