Sheriff upholds prescription plea in dismissing homeowner’s ‘negligence’ claim against former lawyers
A homeowner who sued his former lawyers after they failed to advise him to include a survivorship clause when transferring the title of his property into the joint names of himself and his then fiancée, who later died and left her half-share to her children from a previous relationship, has had his claim dismissed.
Ian Ford raised an action for damages against the firm of W & A Bruce and the partners in the firm, alleging “professional negligence” on the basis that he suffered loss as a result of their failure to advise him to incorporate a survivorship destination in the disposition, but a sheriff assoilzied the defenders after ruling that the claim had prescribed.
Sheriff Alastair Thornton heard that in September 2000 the pursuer instructed the defenders in order to transfer a one-half pro indiviso share of a house owned by him to his soon-to-be spouse for “love, favour and affection” on the basis that he anticipated that in the event of her pre-deceasing him, her share of the property would revert to him.
The transfer of the one-half share of the title to the property was duly completed by the defenders when the disposition was registered with the Registers of Scotland on or around 26 October 2000.
However, a number of years after the defenders completed the legal work and the couple married, Mr Ford’s wife died on 16 July 2013.
Kirkcaldy Sheriff Court was told that, contrary to what the pursuer had anticipated, his wife had not made provision for her one-half share of the property to revert to him from her estate.
Instead, she left him a liferent of the property, with the consequence that her share of the house would ultimately - on his death - become the property of beneficiaries under her will.
The pursuer raised the action against the firm in July 2018, claiming “professional negligence” on the basis that the defenders negligently failed to advise him of the advantages and disadvantages of incorporating a survivorship destination into the disposition putting the title into joint names, which he said was “standard practice” at the time.
He alleged that the defenders’ failure to so advise him was negligent or alternatively in “breach of contract”, as a consequence which he suffered the loss of regaining ownership of the one-half pro indiviso share of the property immediately upon his wife’s death.
The defenders denied that it was their standard practice in September and October 2000 to insert survivorship destinations into title deeds without specific instructions, adding that they received no instructions to include such a destination in the disposition and that they were under no duty to provide such advice.
The firm also averred that, if the pursuer had suffered any loss due to the fault or breach of contract on the part of the defenders, any obligation to make reparation for that loss had prescribed, because the alleged negligence occurred in 2000 and the loss was incurred on 26 October 2000 when the disposition transferring title from his sole name into the joint names of himself and his fiancée was registered with the Registers of Scotland.
However, the present action was not served on the defenders until 6 July 2018, more than five years after any obligation to make reparation had become enforceable, meaning that any claim by the pursuer had prescribed terms of section 6 and 11 of the Prescription and Limitation (Scotland) Act 1973.
The pursuer’s position was that the obligation to make reparation to him for his claimed loss arose as at the date of his wife’s death, and so the claim had not prescribed because it had been raised within five years of that date.
He argued that his loss arising from the alleged negligence by the defenders only “crystallised” at the point of his late wife’s death on 16 July 2013 when her will became operative.
Since he was not aware of the possibility of inclusion of a survivorship destination in the disposition, he did not know that the defenders had been negligent in not so advising him, and that until his wife’s death he had no reason to make enquiries regarding the manner in which the lawyers had advised him in 2000.
But the defenders submitted that at the point in time at which the disposition was registered there was “actual loss” to the pursuer, namely the difference between what he received following the conveyance to his then fiancée of a one-half pro indiviso share of the property, and what he ought to have obtained if the defenders had duly fulfilled the duties which the pursuer claims they should have performed.
Dismissing the action, the sheriff observed that his decision might seem “harsh” but this interpretation of the statutory provision provided “certainty”.
In a written judgment, Sheriff Thornton said: “The essence of the pursuer’s case here is that the defenders ought to have advised him to incorporate a survivorship destination in the disposition in favour of himself and his then fiancée. Had the defenders done so, the pursuer claims that he would have instructed the incorporation of such a provision into the disposition, and he would have regained his wife’s one-half pro indiviso share of the property immediately upon her death.
“In my opinion, on a proper analysis, the pursuer suffered loss immediately he conveyed a one-half pro indiviso share of his property to his fiancée. On the hypothesis that the defenders were indeed in breach of their contractual and delictual responsibilities when the disposition was registered in October 2000 without a survivorship destination, the pursuer sustained an immediate actual loss.
“The rights which he obtained were not as extensive as they would have been had the defenders duly performed their professional duties. That loss was actual, not merely contingent or potential. He was deprived of a right or entitlement which on his averments he ought to have obtained.
“Although it was only upon the death of his wife that he became actually aware that he had suffered a detriment by virtue of there being no survivorship destination, his loss as a matter of law occurred in October 2000 when the entitlement which he says he should have obtained by incorporation of the destination in the disposition was omitted. It was at that point in time that an actual loss occurred, albeit an uncertain one because it could not have been known that his wife would in fact pre-decease him.”
He added: “I fully understand that the effect of my determination in this case may appear to be harsh from the pursuer’s perspective… The issue which I have determined in this case is one of law relating to the correct application of a statutory provision. There is no place here for consideration of issues of equity or reasonableness.”
The Scottish Law Commission’s has published proposals for reform of the 1973 Act, which address the apparent harshness of the law, and which have now resulted in the Prescription (Scotland) Act 2018 which amends the law in relation to the five-year negative prescriptive period.
However at the time of this judgment regulations to bring the relevant provisions of that legislation into force had not yet been enacted by the Scottish Parliament.
© Scottish Legal News Ltd 2020