Widow’s legal action against son and daughter-in-law over sale of family home dismissed



Lord Pentland
Lord Pentland

A widow who sued her son and daughter-in-law following a dispute over the sale of the former family home has had her action dismissed. 

Catherine Cox, 82, claimed that her son Peter Cox and his wife Karen Cox were acting as her agents in arranging the sale of the home in Edinburgh and that they “misappropriated” the funds from the sale to purchase another property in their own names.

However, a judge in the Court of Session dismissed the action after ruling that the pursuer “willingly agreed” to the arrangement.

‘Unjustified enrichment’

Lord Pentland heard that the first ground of the pursuer’s action was that the defenders acted in “breach of the fiduciary duty” they allegedly owed to her as her agents by procuring the transfer from her to them of the net free proceeds from the sale of the former family home at Easter Drylaw Bank, which amounted to £122,640. 

The pursuer claimed that the defenders in effect “misappropriated” these funds for their own benefit, in that they used most of the money - £105,000 - to purchase a house at Almondside, Kirkliston, which she moved into but title to which they took in their own names.  

The pursuer also alleged that the defenders wrongfully retained for their own use the balance of the net free proceeds of Easter Drylaw, amounting to £17,640.   

She claimed that she was the “true or beneficial owner” of Almondside and asked to court to pronounce declarator to that effect, and sought decree ordaining the defenders to grant and deliver a disposition of the property to her.

The pursuer’s alternative ground of action was that the defenders had been “unjustifiably enriched” at her expense by the transfer of the net free proceeds of sale to them. 

She claimed that this was done in error and that the defenders were accordingly “obliged” to repay the net free proceeds to her after account had been taken of mortgage payments made by the defenders over the years. 

Mandate

In evidence the pursuer maintained that she had not understood the meaning, effect and consequences of a mandate she signed in the offices of a legal firm authorising the free proceeds from the sale of Easter Drylaw to be transferred to the defenders to enable them to purchase Almondside and to retain the balance after payment of the purchase price, fees and outlays.

However, the defenders’ position in evidence was that the pursuer agreed to sell Easter Drylaw and that the proceeds of sale would be transferred from her to them so that Almondside could be purchased in their names; and that they would be entitled to retain the money left over from the sale. 

The pursuers had agreed with the the defender that she would be entitled to live rent-free in Almondside for the remainder of her life and that everyone in the family had been aware of the proposed arrangements. 

The court was told that after the pursuer moved in to Almondside in August 2015 she received a council tax bill showing that the defenders were the owners and thereafter relations between them deteriorated.

Over the summer of 2016 relations got worse and matters came to a head when an incident took place at Almondside, resulting in Karen Cox being charged with assaulting the pursuer and a sister-in-law, following a disagreement over a suggestion that the pursuer should pay some rent for her occupancy of the property.

The outcome of the criminal proceedings was that she was found not guilty of the charge of assault after trial in the Sheriff Court, but thereafter the couple took legal steps to have the pursuer removed from the property.

The pursuer then raised the present proceedings in October 2016 and moved out of the property three months later.

‘Willingly agreed’

Having heard evidence from the pursuer and her two daughters Catherine Mitchell and Caroline Jones, as well as the defenders and solicitors Robert Fife and Richard Loudon, who handled the estate agency and conveyancing work in the sale and purchase of the two properties, the judge rejected the pursuer’s case.

In a written opinion, Lord Pentland said: “I find that the pursuer, acting on her own behalf, willingly agreed to the free proceeds being transferred to the defenders so that they could use them to purchase Almondside in their names. The evidence of Mr Fife is strongly to that effect; Mr Loudon corroborates it.  

“I conclude that the pursuer trusted the defenders at the time of the sale and purchase transactions and was satisfied that they would allow her to continue to live in Almondside rent-free for the remainder of her life… 

“That cannot be unstitched because the pursuer has had second thoughts or changed her mind in the light of the way in which events ultimately played out. In my judgment, it is also clear that the pursuer willingly agreed that the defenders should be entitled to retain the balance of the free proceeds that would be left over after the defenders’ purchase of Almondside.”

The judge further held that the evidence showed that the defenders were not acting as agents of the pursuer in relation to the sale of Easter Drylaw or in regard to the purchase of Almondside.

He said: “I acknowledge that a relationship of agent and principal is capable of being implied or inferred from facts and circumstances – agency is a question of fact. In the present case, however, the evidence does not yield any such inference. In the present case, however, the evidence does not yield any such inference. 

“Importantly, when it came to the sale of Easter Drylaw there was strong evidence that the pursuer, advised by her solicitors, was acting in her own interests and not through the medium of agents; she was the firm’s client in a direct sense, and it was to her that Mr Fife looked for instructions; and from her that he received them. It is clear from the evidence that the defenders did not play the part of agents in that process.”

The pursuer’s case based on unjustified enrichment was also rejected. 

Lord Pentland added: “For the reasons I have already set out, I find as a fact that the pursuer was fully aware of what she was doing when she signed the mandate and thereby instructed her solicitors to transfer the free proceeds of the sale to the defenders; she was not under any misapprehension as to the meaning, effect, and consequences of the mandate.

“Accordingly, since there was in fact no error on the part of the pursuer in relation to the transfer of the free proceeds of Easter Drylaw to the defenders, there is no basis on which the law of unjustified enrichment can step in to reverse the transfer of the sale proceeds. It follows that on this branch of the case the pursuer’s claim must also fail.” 

© Scottish Legal News Ltd 2021



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