Edinburgh sheriff rules that trustee for Tenerife time share club did not agree to resign on video call

About this case:

• Citation:
  [2025] SC EDIN 60
• Judgment:
  External link
• Court:
  Sheriff Court
• Judge:
  Sheriff Julius Komorowski

Club Los Claveles and five individual members of the club committee raised a claim against Hutchinson Trustees Ltd, a company incorporated in England, after differences arose between them as to the management of the companies that owned the time share property at the Los Claveles resort. The defender denied that any legally enforceable agreement had been entered into.

The case was heard by Sheriff Julius Komorowski at Edinburgh Sheriff Court, with R McIllvride KC appearing for the pursuers and F Whyte, advocate, for the defender.

Willingness to resign

The real right to the resort accommodation was held by five limited companies incorporated under Scots law, the shares of which were held exclusively by a trustee for the benefit of the club membership. Following a court order compelling its predecessor to demit office, the defender became sole trustee in 2022. The second to sixth pursuers considered that the replacement of the defender with a different trustee would be in the best interests of the club.

On 11 October 2023, the second and sixth pursuers represented the club in a video call with the managing director and another director of the defender. While no agenda for the meeting was circulated and no arrangements were made to record the proceedings, in the call it was agreed that the defender ought to cease its role as trustee, with the expectation that a firm of solicitors, BTO, would replace it.

Following the video call, a director of the defender emailed the second pursuer to state that the defender did not consider the proposals for a new trustee to be suitable, indicating that it would not accept termination as trustee without notice. Counsel for the pursuer submitted that while the deed of trust provided that termination must be given in writing, this could not affect the objective meaning of what had been agreed.

For the defender it was submitted that the actions of its directors at the video call only indicated a willingness to resign, subject to someone suitable taking on its duties as trustee, That was a statement of future intention and perhaps even a mutual understanding of a future course of events, but did not constitute resignation as trustee at that moment.

Especially unlikely

In his decision, Sheriff Komorowski said of the conduct of the parties in the call: “The consensus at the video-call was that the defender’s role as trustee should end. Given that either party could bring about an end to that appointment on the requisite notice, the consensus must have been that that the defender’s role as trustee should be brought to an end before the required notice expired. But the termination was not immediate. It was to terminate the appointment as trustee (future tense), it was not that the appointment is terminated (present tense). The agreement to terminate did not in itself terminate the trusteeship.”

He continued: “The objective meaning of what was said on the defender’s behalf at the video-call was that the directors expressed an unqualified willingness for the defender to resign, that this expression of willingness was a statement of future intention, and together with the Club constituted a mutual understanding of the future course of events. The defender’s directors’ subjective intention was not to enter a legally binding undertaking to resign, without notice, upon being called upon to do so. Crucially, that was not the objective meaning of what they said; a disinterested but appropriately informed bystander would not have taken them to mean that.”

Considering whether the agreement was intended to be legally binding, Sheriff Komorowski said: “When oral contracts occur there is often a formal context leading up to an occasion where such an exchange is to be expected, with steps shortly after to confirm what is agreed. For example, many a valuable agreement settling litigation has been reached between two counsel whilst pacing together up and down Parliament Hall. But that does not arise out of nowhere, it follows the formal recording of parties’ different positions in the written pleadings, it occurs in propitious circumstances such as the imminence of the proof, and the agreement is invariably confirmed immediately after in some way.”

He concluded: “The agreement concerned the termination of a relationship brought about by a detailed deed of trust, with a Club governed by a written constitution, concerning the ownership of companies set up to hold the registered title of land. That a legally binding agreement on such a matter would be reached, even if the Club and the resort had been running harmoniously, on an exchange of spoken words alone is implausible. It is especially unlikely that the trustee’s directors would be content to give such a legally enforceable undertaking, and the Club’s leadership would be content to accept it, except in writing, given the significant long-standing differences that have arisen with the Club and the resort.”

The sheriff therefore held that what was said by the parties at the video call did not signify an intention to be legally bound, and absolved the defender from the pursuers’ main craves.