Sheriff Appeal Court upholds sheriff’s decision not to order timeshare trustee to resign

About this case:

• Citation:
  [2026] SAC (Civ) 24
• Judgment:
  External link
• Court:
  Sheriff Appeal Court
• Judge:
  Sheriff Principal N A Ross

Club Los Claveles and five of its officers alleged that in a video call on 11 October 2023 they reached an agreement with representatives of Hutchinson Trustees Ltd for them to resign as trustee. The respondent’s position was that agreement had only been reached in principle and they would not enter a binding agreement to resign until a suitable replacement trustee had been identified.

The appeal was heard by Sheriff Principal Nigel Ross, with Appeal Sheriffs Derek O’Caroll and Gregor Murray. The pursuers and appellants were represented by Motion, solicitor advocate, and the defender and respondent by Whyte, advocate.

More consistent than not

On 11 October 2023 the second and sixth appellants, Albert Fletcher and Walter Farquahar, met with Ms Wilkinson and Mr Allan of the respondent to discuss the resignation of the respondent as trustee. The respondent did not dispute that such a conversation had taken place but averred that it was bound to act in the best interests of all beneficiaries and, while it was amenable to resigning, did not agree to do so at that meeting.

Following proof in which he heard evidence from all those present at the meeting and considered contemporary documentary evidence, the sheriff found that no binding contract had been entered into between the Club and the respondent. He considered that it was implausible that the trustee’s directors would be content to reach a legally binding agreement on spoken words alone, especially given the context of long-standing differences that had arisen between the Club and the resort in which the timeshare was located.

On appeal, the appellants submitted that the sheriff had misapplied the objective test for contract formation and failed to give proper weight to certain evidence and to the respondent’s post-meeting conduct, which was more consistent than not with a binding agreement. Oral constitution, lack of formality, gratuitous undertakings or high value were not by themselves a bar to a binding contract. While the sheriff had applied the correct legal test of objectivity, he attached undue weight to these factors, and also to consideration of the respondent’s subjective motivation.

The respondent submitted that there was a considerable history to the running of the Club, set out in the averments and evidence, and that the meeting of 11 October 2023 must be seen in context. The sheriff had properly considered the evidence and explained his view. This was a contract relating to trust, and not a purely commercial contract. The key question was intention to be bound, which the respondent did not have.

Acrimonious trusteeship

Delivering the opinion of the court, Sheriff Principal Ross noted the challenge was purely based on the weight given to the evidence, saying: “The appellants’ submission rested on the propositions that oral contracts were enforceable, that high value was not a barrier to informal contract, and that contracts could be entered gratuitously without commercial gain. In our view, these points are uncontroversial, but do not reflect the exercise the sheriff was carrying out. He was assessing, as a court must, the likely intentions of the parties as objectively viewed.”

He continued: “The identified factors were merely two of the elements which had a bearing, in his estimation, on the parties’ respective intentions. Other pieces of evidence which the sheriff took into account related to the subsequent conduct of the parties; the benefit to the respondent of not being locked into an acrimonious trusteeship; the appellants apparently considering they required subsequently to obtain the members’ consent; the absence of an available replacement trustee and likely consequences; the likelihood of binding or non-binding intention; the subjective intentions of the parties as shown by the evidence; the significant and serious nature of the decision; the absence of prior discussions; the background of acrimony within the Club; the lack of advantage for the respondent in binding itself; and the fact that the Deed of Trust stipulated 6 months’ written notice of termination.”

Considering the weight the sheriff ought to have given to the documentary evidence, Sheriff Principal Ross said: “The email of 26 October 2023 appears to bolster the proposition that no agreement had been reached, in that the membership ‘supported unanimously the view that the contract…should be terminated by joint agreement’, a formulation apparently incompatible with the existence of an agreement. The email of 30 October 2023 stated: ‘we duly note termination by mutual agreement’, but that is opaque as to whether it was a past event or a future intention. We accordingly do not accept that any error was demonstrated.”

He concluded: “The sheriff recognised and took into account the post-contract actings. He explained at length what inferences he drew from certain documents, why he preferred some evidence over other evidence, and in particular why the invoicing and payment of this sum was not inconsistent with his conclusions. As he stated: ‘I do not consider the defender’s charging of a fee for work some months later for bringing its role as trustee to an end [to be] evidentially significant. That need not show anything more than that both parties anticipated that the defender’s role as trustee would be coming to an end.’ We cannot say that this finding is either irrational or incompatible with the sheriff’s overall conclusion.”

The appeal was accordingly refused.