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SHERIFFDOM OF GLASGOW AND STRATHKELVIN AT GLASGOW
[2025] SC GLA 7
GLW-CA66-23
JUDGMENT OF SHERIFF S REID
in the cause
SAGIR SARWAR
Pursuer
against
CLEARWATER INVESTMENTS SCOTLAND LIMITED
First Defender
and
LIAQUAT ALI
Second Defender
Act: Mr K Lang, Mellicks; Glasgow
Alt: Mr I Burke, Burke Legal, Galashiels (Second Defender)
Glasgow, 10 February 2025
The sheriff, having resumed consideration of the cause Makes the following FINDINGS-IN-
FACT:
(1)
Prior to 14 March 2017, the pursuer owned the heritable subjects forming
134/134A Fleming Way, Hamilton ("the Property").
(2)
The Property was subject to a standard security in favour of a third party.
(3)
In the period leading up to 14 March 2017, the pursuer was suffering significant
financial difficulties
(4)
He was also facing the threat of repossession of the Property by the third party
secured creditor.
2
(5)
As a result, the pursuer entered into a transaction with the defenders whereby he
agreed to sell the Property to the first defender but with a separate collateral personal
agreement allowing the pursuer to repurchase the Property within an agreed
timescale, and on certain conditions, thereafter.
(6)
In order to purchase the Property, the first defender obtained a loan in the sum of
£221,000 from a lender called Assetz SME Capital Limited (as agent for various
lending syndicate members) ("Assetz"); the loan was secured by a first-ranking
standard security over the Property, a floating charge over the assets of the first
defender, and a personal guarantee granted by the second defender; and the loan was
to be repaid within 5 years of being drawn down.
(7)
On 14 March 2017 the pursuer sold the Property to the first defender.
(8)
On the same day, the parties executed a separate written agreement, collateral to the
sale, entitled "Buy Back Agreement", of which item 5/1 of process (item 1, pursuer's
first inventory of productions) is a true copy.
(9)
In terms of clauses 2, 3 & 5 of the Buy Back Agreement, the parties agreed that (i) the
pursuer had a right to repurchase the Property within the first 4 years of the 5 year
term of the Assetz Loan ("the buy-back period"), provided that the Assetz Loan,
"personal debts" owed to the defenders, and "expenses" of the buy-back were thereby
discharged; (ii) in the event that the pursuer failed to exercise his right to purchase, the
defenders would be entitled to sell the Property to clear any outstanding loans on the
Property and personal debts owed to them by the pursuer; (iii) in that latter event, the
pursuer was entitled to receive from the defenders "any surplus monies" from the
sale, less expenses "and other borrowing personal or business".
(10) The buy-back period expired, at latest, on 14 March 2021.
3
(11) On various occasions between November 2020 and August 2021, the pursuer advised
the second defender orally of his desire to buy back the Property.
(12) Throughout the buy-back period, the pursuer was unable to obtain funding to
purchase the Property.
(13) Throughout the buy-back period, the pursuer made no specific offer to the defenders,
written or oral, to purchase the Property.
(14) In the event, the pursuer failed to purchase the Property within the buy-back period.
(15) By letters dated 9 March 2022 from the pursuer's solicitors to the first and second
defenders, the pursuer intimated to the defenders in writing his purported intention to
purchase the Property but, again, no specific price was offered by the pursuer.
(16) By 14 March 2022, the 5 year term of the Assetz Loan had expired, and the full balance
thereof was due and payable by the first defender.
(17) By July 2022, the defenders were under increasing pressure from Assetz to repay the
outstanding balance of the Assetz Loan, which was by then overdue.
(18) On or about 20 July 2022, absent a formal offer from the pursuer to purchase the
Property, or proof of funding to vouch his ability to do so, the second defender
arranged for the first defender to sell the Property to third parties (Aisha Ali and Saqid
Deen) in exchange payment of a price of £300,000.
(19) The sale of the Property to the third parties was effected by private bargain, without
prior marketing or advertisement of the Property on the open market.
(20) As a result of the sale to the third parties, the first defender was able to discharge the
Assetz Loan and the second defender was able to free himself of personal liability
under the personal guarantee granted by him to Assetz.
4
(21) The net free proceeds of the sale to the third parties, after deduction of the expenses of
the sale, was £87,347.31, as shown in the document entitled "Cash Statement" forming
item 3 in the second defender's third inventory of productions.
Makes the following FINDINGS-IN-FACT AND IN-LAW:
(1)
The pursuer failed timeously to exercise his right to purchase the Property, in terms of
clause 2 of the Buy Back Agreement.
(2)
By July 2022, the defenders were entitled to sell the Property in order to clear the then
outstanding balance of the Assetz Loan, together with any expenses of the sale and
any debts due by the pursuer to the defenders.
(3)
Upon the sale of the Property in July 2022, the pursuer was entitled to receive, and the
defenders were obliged to pay to the pursuer, any surplus monies from the sale of the
Property, less the expenses of the sale and any debts due by the pursuer to the
defenders.
(4)
The surplus monies from the sale of the Property (after settlement of the secured loan
thereon and the expenses of sale) comprises the sum of £87,347.31, in terms of clause 5
of the Buy Back Agreement.
(5)
The defenders are obliged to account to the pursuer for the said sum of £87,347.31,
being the surplus monies due to the pursuer from the sale of the Property, in terms of
clause 5 of the Buy Back Agreement.
(6)
The second defender has failed to prove the existence or extent of any "other
borrowing personal or business" owed by the pursuer to the defenders (or either of
them) to be deducted from the said surplus monies, in terms of clause 5 of the Buy
Back Agreement.
5
(7)
A sum of £79,000 (being a deposit of the purchase price originally due to be paid by
the defenders to the pursuer) was paid to the pursuer on or about 3 October 2016; on
or about 27 October 2016, the pursuer confirmed to his then solicitor (Alan
Macpherson of Macpherson Maguire Cook) that he had indeed received this deposit in
full; and, to the pursuer's knowledge and with his instructions, by email dated 27
October 2016 the pursuer's said solicitor confirmed to the defenders' then solicitor that
the pursuer had indeed received payment of this deposit in full;
Makes the following FINDINGS-IN-LAW:
(1)
The defenders being obliged to account to the pursuer for the sum of £87,347.31,
decree for payment thereof should be granted as first craved;
ACCORDINGLY, Repels the pursuer's objections to the second defender's account (item 3,
second defender's third inventory of productions); Sustains the fourth plea-in-law for the
pursuer, whereby, quoad crave 1, Grants decree against the defenders jointly and severally
for payment to the pursuer of the sum of EIGHTY SEVEN THOUSAND THREE HUNDRED
AND FORTY SEVEN POUNDS AND THIRTY ONE PENCE (£87,347.31) STERLING with
interest thereon at the rate of eight per cent (8%) per annum from 27 April 2023 until
payment; meantime, Reserves the issue of expenses.
SHERIFF
6
NOTE
[1]
In around 2017, the pursuer was in financial difficulty. A secured creditor was
threatening to repossess commercial premises owned by him at 134/134A Fleming Way,
Hamilton. So he entered into an arrangement to sell the premises to the defenders, in order
to clear his liability to the secured creditor.
[2]
The arrangement was this. He agreed to sell the premises to the first defender (a
company, of which the second defender was the sole director) for the sum of £300,000. The
parties were aware that the first defender would itself require to take out a 5 year secured
loan to fund the purchase. A critical part of the arrangement was that the pursuer would
have the option to buy back the premises within 4 years of the sale (or, more correctly,
within four years of the loan being drawn down by the first defender). If the premises were
not bought back by the pursuer within the 4 year deadline, it was agreed that the defenders
would be entitled to sell the premises to clear the outstanding secured loan (and any
personal debts owed to them by the pursuer). However, in that latter event, "any surplus
monies" from the sale were to be paid to the pursuer, less expenses and any other
"borrowings" due by the pursuer to the defenders. The agreement is set out in a "Buy Back
Agreement" dated 14 March 2017 (item 5/1 of process). It is a peculiar document, badly
drafted (without legal assistance, apparently), but tolerably intelligible.
[3]
In this action, the pursuer seeks an accounting and payment from the defenders of
the "surplus monies" due to him from the sale. Only the second defender has entered
appearance.
[4]
The existence of an obligation to account has already been determined in favour of
the pursuer. An account has been lodged by the second defender (item 3, second defender's
7
third inventory of productions), together with Objections and Answers thereto. The action
called before me at a proof on the disputed elements of the account.
[5]
For the reasons set out below, I have concluded that the defenders are obliged to pay
to the pursuer the sum of £87,347.31, being the surplus monies due to the pursuer from the
sale of the premises less the secured loan thereon and the expenses of sale, all in terms of
clause 5 of the Buy Back Agreement. The second defender has failed to prove the existence
or extent of any other indebtedness owed by the pursuer to the defenders (or either of them)
to be deducted from these surplus monies.
The evidence
[6]
I heard evidence from four witnesses: the pursuer, the second defender, Police
Constable Robert Bryers, and Nadeem Tahir. The testimony of all but Mr Tahir comprised
notarised affidavits supplemented by oral testimony in court. Mr Tahir's testimony was
parole only. By agreement, an affidavit of John McKissock dated 30 May 2024 was also
received in evidence without the necessity of being spoken to by the deponent.
Sagir Sarwar
[7]
The pursuer (55) adopted the terms of his affidavit dated 28 May 2024. In his written
testimony, he explained that he had been "struggling financially", he had defaulted on a
bridging loan, so he approached the second defender, whom he knew, and agreed to sell the
premises to the first defender (of which the second defender was the sole director) for
£300,000, funded by borrowing of £221,000 from Assetz. This was subject to an agreement
that the pursuer would repurchase the premises once a separate project (in Broomhouse)
was complete. After the sale, the pursuer became "preoccupied" with caring for his mother.
8
She died in 2020. He attempted to contact the second defender to exercise the buy-back
option, but to no avail. By this stage, the Broomhouse project had collapsed and the pursuer
was "left with nothing" (affidavit, paragraph 14). The pursuer then discovered a bank
statement in his solicitor's file bearing to record that the pursuer had allegedly received a
payment from the second defender of £71,000, supposedly paid into the pursuer's account
with Bank of Scotland. The pursuer insisted this bank statement was a forgery. He denied
ever having received from the defenders the original £79,000 deposit for the purchase of the
premises (being the difference between the agreed purchase price of £300,000 and the loan
obtained by the first defender from Assetz). He denied ever having received the (lesser)
sum of £71,000 from the defenders, being the sum recorded on the bank statement recovered
from the pursuer's solicitor's file. He disputed a transfer of £30,000 to a third party called
Allied Contracts UK Ltd from the proceeds of sale of the premises. He also asserted that the
defenders' subsequent sale of the premises in 2022 to third parties (Aisha Ali and Saqib
Deen) was at an under-value. The price paid (of £300,000) did not represent an "open
market price". In August 2016, the premises had been valued (for Assetz) at £340,000; when
he had tried to buy back the premises in March 2022, he was told by the second defender
that he required to pay £330,000; the defenders then sold the premises to the third parties in
July 2022 purportedly for only £300,000; but the pursuer claimed that a separate payment
had allegedly been made to a "middle man" (Tahir Nadeem) and that the true purchase
price for the 2022 sale was £380,000..
[8]
In his supplementary oral testimony, the pursuer testified that he was merely
"entrusting" the premises to the defenders in 2017. He insisted he never received any
money from the defenders for the 2017 sale. After the sale, he received rent from one part of
the premises (then occupied by R.S. McColl) until 2021, but payments ceased thereafter. He
9
had "tried" to buy back the premises but had been thwarted from doing so because the
second defender would not deal with him. He denied ever having received the balance of
the purchase price (of £79,000) or the lesser sum of £71,000 referred to in the forged bank
statement, in cash or otherwise, though he testified that he "never intended" to receive it
anyway because he would have had to pay it back to the defenders when he re-purchased
the premises from them. With reference to an email between the parties' solicitors (item 6/3
of process, defenders' first inventory, page 46), the pursuer denied telling his solicitor that
the £79,000 balance of the purchase price had been received by him. Instead, the pursuer
testified that he would have told his solicitor that that sum had not been received, but that
the sale to the first defender could "go through" in any event. He criticised the defenders'
subsequent sale of the premises for £300,000. He considered it was worth "a lot more than
that". He said the fixtures and fittings in the takeaway shop alone (forming part of the
premises) were worth £100,000.
[9]
In cross-examination, the pursuer acknowledged that he had met the second
defender when they were both serving prison sentences: Mr Sarwar was serving a sentence
for the supply of cocaine; Mr Ali was serving a sentence for assault. He also testified that he
knew of the second defender through family connections. In 2015, he had travelled with
Mr Ali on a business trip to Gambia. He denied that Mr Ali had funded the pursuer's travel
expenses for that trip. He had "tried" to buy back the premises sooner but was unable to do
so because the second defender "wouldn't give it me back". The March 2022 letter from his
solicitor was the first "official" written intimation of the pursuer's wish to buy back the
premises. He claimed he had been trying to buy the premises back for over a year prior to
then but that "Covid was going around". He insisted that the earliest date he had sought to
exercise the buy-back option was in January 2021; this was "the beginning of the
10
conversation to buy [the premises] back"; but, on further cross-examination, he testified that
his first conversation with the second defender to buy back the premises was in 2020, not
2021. He conceded he "didn't know how to go about" submitting an offer to the second
defender. He said his family was "going to put the funds together" to allow him to re-
purchase the premises. He had no documentary evidence to vouch the open market value
of the premises other than the 2016 survey from Allied Scotland. He said that his former
solicitor had sent the email (item 6/3 of process) to the defenders' agents against the
pursuer's instructions and knowing it to be false. In re-examination, he claimed that the sale
of the premises to the defenders in 2017 was "only a paper exercise".
Robert Bryers
[10]
Constable Roberts Bryers (44), a police constable of six years' experience with Police
Scotland, adopted the terms of his witness statement. He had investigated a complaint by
the pursuer of an alleged fraud involving the forgery of a Bank of Scotland statement in his
name. He claimed to be the victim. He had reported to Constable Bryers that he had been
"hoodwinked" into handing over his business premises and that fraudulent bank statements
had been used to procure a loan to achieve this. Constable Bryers had concluded that a bank
statement (recovered from Assetz) (item 5/4 of process) was "not genuine" and that a
statement covering the same period (recovered from Bank of Scotland) (item 5/3 of process)
was "genuine". The discrepancy comprised an alleged credit of £71,000 in the pursuer's
account, as shown in the statement (item 5/4) recovered from Assetz Capital; no such credit
appeared in the statement (item 5/3) recovered from Bank of Scotland. The police had been
unable to establish who had submitted the "non-genuine" bank statement to Assetz with
"the false entry of £71,000". The investigation is now complete.
11
Liaquat Ali
[11]
Mr Ali (55) adopted the terms of his (undated) affidavit. In his written testimony he
stated that he first met the pursuer in 2005 when they were both prisoners in
HMP Saughton. Their next contact was in 2009 when the pursuer proposed a business deal
to him. They did no business together until a further approach by the pursuer in around
2015 with a business opportunity in Gambia involving the importation of rice. Both men
travelled to Gambia to explore the deal, at a cost of £11,000 funded by Mr Ali. In 2016, the
pursuer contacted Mr Ali again because the pursuer was "suffering financial difficulties";
his family had refused to help him; his personal trainer had refused to help him; so Mr Ali
agreed to buy the premises through the vehicle of the first defender, of which he was the
shareholder and director at the time. The purchase was to be funded partly by cash and
partly by way of a 5 year loan from Assetz. Mr Ali paid £71,000 in cash directly to the
pursuer so that the pursuer could settle various personal debts; £8,000 was paid by Mr Ali
to his then solicitors (Inksters); and the first defender expended further miscellaneous sums
for the pursuer's benefit (a survey fee of £1,200 to Assetz; further legal costs of £3,300 to
Inksters). Reference was made to an email dated 27 October 2016 from the pursuer's
solicitor to the defenders' solicitor (item 6/3 of process) which records that the pursuer had
indeed received the full "deposit" of £79,000. The parties' intention was that the pursuer
would buy the premises back after the pursuer had "sorted out his financial position".
Mr Ali did not want his company "burdened" with the secured Assetz Loan. This was the
rationale for the four year buy-back period. If the pursuer had failed to buy back the
premises within that deadline, Mr Ali would have to sell the premises himself to clear the
debt. From 2017 onwards, he repeatedly chased the pursuer to buy back the premises, but
to no avail. By March 2021, the pursuer had still not re-purchased the premises. Various
12
excuses were given by Mr Sarwar (including, on one occasion, that he was going to Pakistan
to sell land and, on another, that he had been arrested for the alleged abduction of one of his
tenants). By March 2022, Mr Ali was "very concerned" because the Assetz Loan was due to
expire. He concluded that the pursuer "simply wasn't able to meet his financial obligations
to buy it back". Neither "proof of funds" nor a formal offer was ever forthcoming. With
Assetz "continually" pressurising him to redeem the loan, the defenders sold the premises
for £300,000 to arms-length third parties. The purchasers had obtained a survey of the
premises; this disclosed a value of £340,000; but the valuation assumed full occupancy,
whereas, in fact, one of the units was vacant, there was "considerable uncertainty" as to the
financial viability of the other (R.S. McColl) (which had gone into administration), and
market conditions were volatile. The sale price was the best obtainable to clear the secured
loan and debts.
[12]
In supplementary oral testimony, Mr Ali testified that the pursuer had explicitly
requested that the deposit (of £71,000) be paid to him in cash because, if it was paid into his
bank account, it would have been "swallowed up by [the pursuer's] overdraft". The point
of the buy-back arrangement was "to keep [the pursuer's] creditors from his door". He
spoke to the settlement statement from his solicitors following the 2022 sale (item 3, second
defender's third inventory): this disclosed a sale price of £299,006.45 (being just short of
£300,000 due to a mid-month apportionment of rent); £208,857.34 was paid to Assetz to
discharge the secured debt; various sale expenses were then deducted, resulting in a net
"balance" to the defenders of £87,347.31. He also spoke to the settlement statement
prepared by his solicitors (Inksters) following the 2017 sale (item 2 second defender's third
inventory of productions).
13
[13]
In cross-examination, Mr Ali was questioned on the discrepancy between his
averments on record (of the payment of a cash deposit of £79,000), and his written and oral
testimony that he had paid only £71,000 to the pursuer, with an additional £8,000 being paid
to solicitors. He explained he had only discovered the discrepancy when recently checking
his bank statements. He adhered to his written testimony. He denied having exhibited a
false bank statement (item 5/4 of process) to Assetz. He explained that he had sold the
premises in 2022 to third parties for less than the sum sought from the pursuer because the
third parties did not owe any other debts to Mr Ali.
Nadeem Tahir
[14]
Mr Tahir (37) is a delivery drive and spouse of Aisha Ali. He had found out about
the premises from discussions at the Mosque; he had approached Mr Ali and asked to view
the premises for his wife. Neither he nor his wife had had any prior dealings with, or
knowledge of, Mr Ali. On viewing the premises, the take-away business was closed though
there was a chip fryer inside; and the adjoining RS McColl shop was closed. His wife then
bought the premises for £300,000. He denied that his wife's brother had been involved in
the transaction. He denied that an extra £80,000 had been paid for the premises. Mr Tahir's
role was limited to showing his wife the premises.
John McKissock
[15]
In his affidavit dated 30 May 2024, Mr McKissock (55), a practicing solicitor since
1998, stated that, during 2017, he had acted as solicitor for the first defender in the purchase
of the premises from the pursuer. (At that time, he was a consultant for Inksters.) He
14
considered himself bound by client confidentiality in respect of the transaction. He had
subsequently acquired the practice of Macpherson Maguire Cook (which had acted for the
pursuer in the 2017 transaction). During 2022, he received a mandate from agents seeking
delivery of the pursuer's file in relation to the 2017 transaction. The mandate was fully
implemented.
Closing submissions
[16]
Written submissions were lodged for the pursuer and second defender, for which I
am grateful. The pursuer invited me to sustain his objections to the second defender's
account and to decree against the defenders for payment of the sum of £117,347.31, being the
balance said to be due to him, with interest from 20 July 2022. For the second defender, I
was invited to conclude that "no profit" was made from the defenders' sale of the premises.
Reasons for decision
[17]
This ought to be a relatively simple claim. In 2017, the pursuer sold the premises to
the first defender, subject to an option to buy it back within four years (clause 2). If the
pursuer failed timeously to buy back the premises, the defenders were entitled to sell it
(clause 3). If the defenders sold it, any "surplus monies" from the sale were to be paid to the
pursuer less "expenses" and "other borrowing personal or business" (clause 5).
[18]
The existence of an obligation to account was previously determined in favour of the
pursuer, following a debate before the sheriff (Cubie). The sheriff observed that it was
difficult to see on what basis the second defender could properly avoid such an accounting
(paragraph [16], note to interlocutor dated 20 October 2023).
15
[19]
The second defender was ordained to produce an accounting for both the purchase
of the premises in 2017 (by the first defender) and the subsequent sale in 2022 (per
interlocutor dated 6 November 2023). On 14 December 2023, accounts in respect of both
transactions were lodged by the second defender (items 2 & 3, respectively, second
defender's third inventory). Objections to the 2022 sale account, and Answers to the
Objections, were subsequently lodged and adjusted. The matter then called before me for
proof.
[20]
It ought to have been relatively straightforward to identify both the "surplus
monies" due from the 2022 sale and any "expenses" and "other borrowing" to be deducted
therefrom. In the event, the disputed issues took an unexpected turn.
Did the pursuer exercise his option to purchase?
[21]
In averment and evidence, much time was taken up on whether the pursuer had
exercised his option to purchase the premises. In my judgment, this was an irrelevant and
futile distraction. Plainly, he had not done so.
[22]
Clause 2 of the Buy Back Agreement states:
"[The pursuer] has the right to purchase the [premises] within 4 years of its 5
year loan term clearing any loan amounts and personal debts along with any
expenses incurred due to by back" [sic].
On a proper interpretation, read in the context of the known factual matrix of the Assetz
Loan, the pursuer had a right to buy back the premises within the first four years of the
5 year term of the Loan. The option was lost if the premises were not purchased by the
pursuer within that 4 year period. It is not enough for the pursuer, within that 4 year
period, merely to have intimated a desire or intention to purchase them. Therefore, the
evidence of alleged repeated "attempts" to purchase the premises are irrelevant. The
16
incontrovertible truth is that the pursuer failed timeously to buy them back. The various
disputed reasons for that failure none of which are proved in the miasma of competing
counter-allegation are nothing to the point.
[23]
That said, it is correct that a line of authority exists in contract law which, in certain
circumstances, affords a remedy to a contracting party who has been impeded from
purifying a potestative condition, or exercising a contractual right, by the action of the other
contracting party (Gloag, Contract, 276-281). In such cases, in order to do justice between the
parties, the law may imply the purification of the condition, or it may provide a remedy in
damages for breach of an implied obligation not to impede performance. But no such case is
averred by the pursuer or made out in the evidence. The pursuer has done no more than
express a vague "intention" to re-purchase the premises. He has never been able to translate
that intention into anything more concrete, still less a written offer to purchase at a specific
price. Nor was he in a financial position to do so. Earnest expressions of intent to purchase
during the four year buy-back period are of no legal consequence. The first formal written
intimation to purchase the premises appears in the letters dated 9 March 2022 from the
pursuer's agents to the defenders (items 5/5 & 5/6 of process). But these letters were sent
almost one full year after the buy-back option had already lapsed. Besides, they do no more
than formally repeat that the pursuer "intends" to purchase. No price was offered. No
funding was available. There is no evidence of any actual impediment or obstruction by the
defenders. The pursuer has simply failed timeously to exercise the buy-back option.
Did the defenders sell at an under-value?
[24]
The next question raised in the evidence was whether the sale of the premises in July
2022 was at an under-value.
17
[25]
Two discrete issues are conflated here. In the first place, clause 3 of the Buy Back
Agreement states that, if the pursuer fails to exercise his buy-back option, Mr Ali shall have
the right to "advertise the property on the open market". In fact, the premises were not so
advertised. They were sold in a private bargain to the third parties, without general
advertisement. This failure to "advertise" on the "open market" is characterised by the
pursuer as a breach of the Agreement. In the second place, this alleged breach is then
directly linked to the pursuer's more fundamental complaint that the July 2022 sale was at
an "under-value" (pursuer's note of objections, para 1).
[26]
The first issue to consider is the proper interpretation of clause 3. The Agreement is
oddly written. It does not bear the hallmarks of professional draftsmanship. I take that into
account when approaching its construction. That may explain why, strangely, clause 3
makes no reference to "sale" at all. Instead, it purports to confer merely a right to
"advertise" the premises. Construed literally, that would achieve very little for the
defenders when faced with the imminent expiry of the 5 year secured Assetz Loan: they
could "advertise", but not sell, which would be absurd in the context of this particular
transaction. Instead, the natural and commercially sensible construction is that, in clause 3,
the phrase "to advertise the property on the open market" means no more than "to sell the
property". I do not read the words "advertise... on the open market" as being prescriptive of
a mechanism of sale. It is simply a non-legalistic description of a general power of sale. If
anything, it underscores the breadth of the defenders' authority to sell. On the logic that the
greater includes the lesser, the conferral of a right to "advertise the property on the open
market" implicitly empowers the defenders to sell by other means (including by private
bargain, auction, or the like).
18
[27]
Secondly, I am fortified in this conclusion by the textual and contextual matrix in
which the right to sell exists. Clause 3 records the specific purpose for which the defenders
are entitled to sell the premises, namely "in order to clear any outstanding loans and
personal debts". That is their only interest. At this latter stage of the parties' transaction, the
pursuer having failed to buy back the premises, the object is not to maximise a return for the
pursuer; the object is to clear the indebtedness due by (and to) the defenders. It might well
happen that a sale to a private purchaser, of good covenant, with minimum delay and
expense, would allow the defenders to achieve that objective more quickly, more cheaply,
and with greater assurance than by entrusting a sale to advertisement to all and sundry on
the open market. There is no cogent reason, at this stage, to restrict the mechanism of sale.
[28]
Thirdly, the Agreement contains no express obligation on the defenders to attain
"best market value", or "best price obtainable", or any such qualitative standard. It would
therefore be necessary to imply a term to that effect. However, the pursuer has neither
averred nor proved the component elements necessary for the implication of such a term
(Marks & Spencer plc v BNP Paribas Securities Services Trust Co (Jersey) Ltd 2016 AC 742). The
defenders' express permitted purpose in selling the premises is to clear their own liabilities
and recoup their indebtedness. To imply a more onerous obligation on the defenders (such
as to achieve "best price obtainable" or "best open market price" or the like) sits uneasily
with that express limited purpose. Besides, if clause 3 were to be interpreted as imposing
some such more onerous obligation, there would be little incentive for the pursuer to
exercise the buy-back option at all. He could simply sit back, do nothing, leave it to the
defenders to carry all the risk (including of market fluctuation) during the 5 year term of the
Assetz Loan, comfortable in the knowledge that the defenders are obliged to maximise the
return on sale, and to account to him for all the profits. In the context of this transaction,
19
where the defenders were in effect merely holding the title temporarily and at some
considerable risk to themselves, it seems unlikely (and certainly not obvious) they would
have agreed to assume this further obligation on disposal. In any event, the Agreement is
perfectly workable without the implication of a duty to obtain "best price", or "best open
market value", or other maximised return from the sale. It is sufficient that "any surplus
monies" (per clause 5) are to be disgorged to the pursuer, after clearance of the secured
Assetz Loan and indebtedness owed to the defenders. Lastly, the precise scope of this
higher duty is uncertain. Is the duty to obtain the best price obtainable; or a fair open
market price; or a reasonable price; or to take reasonable steps, or all practicable steps, or to
use reasonable or best endeavours to achieve the desired result? There are many possible
formulations. Which is it to be? The necessary implied term for this particular contract is
neither obvious nor definable with sufficient precision.
[29]
Esto a term is to be implied that the defenders are obliged to sell the premises to
some prescribed standard, the pursuer has singularly failed to prove that it was sold at an
"under-value". His evidence is threadbare. In August 2016, the premises were valued by
Allied Surveyors at £340,000 for a commercial lender (Assetz), the valuation being
predicated upon certain assumptions; in March 2017, the premises were sold for £300,000;
five years later (in March 2022), the second defender asked the pursuer to pay £330,000 for
the premises; and in July 2022, the premises were sold by the defenders for £300,000. All of
this is proved, but none of it is sufficient to establish a sale at an under-value in July 2022.
The Allied Surveyors valuation (of £340,000) in August 2016 is wholly out of date. Besides,
that valuation was predicated upon various assumptions, notably that the premises enjoyed
the benefit of two sitting tenants, each of good covenant, paying market rent. By July 2022, at
least one of the units (the take-away) within the premises was vacant and there was
20
considerable uncertainty as to the security of tenure of the other tenant (R S McColl), which
had gone into administration. That apart, it is within judicial knowledge that, in the
intervening period, the pandemic had introduced a degree of economic uncertainty to the
local commercial property market. Further, the price at which the pursuer agreed to sell to
the first defender (in 2017) and the price demanded by the first defender from the pursuer
(in 2022) are not reliable indicators of the true value of the premises. The pursuer adduces
no qualified, independent expert evidence on which to reliably conclude that the July 2022
price was anything other than a reasonable price in the circumstances.
[30]
For all these reasons I repel the pursuer's objection to the sale price as being allegedly
"under value".
Did the defenders ever pay the balance of the purchase price?
[31]
A further objection to the second defender's account is that, of the original £300,000
purchase price in 2017, a balance (or "deposit") of £79,000 was never paid.
[32]
In his pleadings, the second defender disputes this. He avers that £79,000 was paid
in cash to the pursuer. However, in his written and oral testimony, his position changed to
an extent. He testified that £71,000 was paid in cash direct to the pursuer and the balance of
£8,000 was allegedly paid to Inksters (the first defender's solicitors) to meet certain expenses
of the purchase.
[33]
Into this confusion, the pursuer then lobbed a grenade in the form of a forged or
falsified bank statement. He produced what bears to be a copy of his Bank of Scotland
statement for the period from 1 October 2016 to 7 October 2016 purportedly to verify that no
payments (of £79,000 or £71,000) were ever paid into that account by the defenders (item 5/3
of process). In contrast, he also produced a document bearing to be a copy statement for the
21
same account, covering the same period, but disclosing a credit of £71,000 on 3 October 2016
from the second defender (item 5/4 of process). One of the documents is plainly false. On
the simple logic that item 5/3 was obtained direct from the Bank itself, I am satisfied that
item 5/4 (which was recovered from Assetz) is indeed the false document. This was also
Constable Bryers' conclusion.
[34]
There was much speculation as how this false document came to be in the possession
of Assetz, and who was the most likely culprit to have supplied it to them. But there is no
need to resolve that puzzle.
[35]
Instead, on the issue of the payment (or non-payment) of the £79,000 deposit, I prefer
the contemporaneous written evidence emanating from the file of the pursuer's own
solicitor, Mr Alan Macpherson of Macpherson Maguire Cook, Glasgow. In an email dated
27 October 2016 from Mr Macpherson (now deceased) to the defenders' former solicitor
(John McKissock), Mr McPherson stated:
"I have now received instructions from my client Sagir Sarwar that payment of
the deposit in relation to the sale of 134 Fleming Way, Hamilton to your clients
Clearwater Investments Scotland Limited was received. The deposit was paid
directly to Mr Sarwar on 3 October 2016. The payment made was £79,000, the
purchase price being £300,000 and the amount of loan from Assetz was
£221,000. Can you advise the lenders accordingly?..."
Faced with this contemporaneous communication from his own solicitor, the pursuer
testified that he had never given any such "instructions" to Mr McPherson; he insisted that
Mr McPherson had deliberately misrepresented the position to the defenders' agent; and he
testified that he would have told Mr McPherson that, notwithstanding the non-receipt of the
deposit, he was happy for the transaction to proceed. On this issue, I reject the pursuer's
testimony as neither credible nor reliable. His denial appeared opportunistic and contrived.
It was also implausible and illogical. It makes no sense for the pursuer to have allowed the
22
transaction to proceed without payment of the deposit. It is also inherently unlikely that his
solicitor would have deliberately misrepresented the factual position to his counterpart, in
direct defiance of the pursuer's instructions, all for no apparent reason. Instead, the
contemporaneous email from the pursuer's own solicitor verifying receipt of the £79,000
deposit is the best reliable evidence available to me. The pursuer cannot now deny receipt
of the deposit, standing the unqualified admission to the contrary made on his behalf by his
solicitor.
[36]
Besides, the reliability of this contemporaneous written acknowledgement is itself
fortified by the conspicuous failure of the pursuer, over a period in excess of five years, to
make any mention of the alleged non-payment of the balance of the purchase price. His
silence on the issue speaks volumes. He was plainly in a dire financial pickle at the time. It
is fatuous to suggest that he would not have complained or objected about a missing £79,000
deposit due to him from the sale, if he had not already received the benefit of it in one form
or another.
[37]
The drama of the forged bank statement is a side-show. If the deposit was indeed
received in cash by Mr Sarwar, it may well never have been deposited in his bank account,
so the absence of a credit entry on item 5/3 of process proves nothing. As for the forged
statement (item 5/4), I observe that both Mr Sarwar and Mr Ali were directly (perhaps
equally) interested in ensuring the draw-down of the loan from Assetz in 2017. Beyond that,
nothing more can be said.
[38]
Lastly, I attach no material significance to the inconsistency in the second defender's
averment and testimony as to the breakdown of the deposit payment. From his perspective,
the deposit was paid. That is also consistent with Mr McPherson's contemporaneous email.
The clarification in testimony as to the precise breakdown and mechanism of the payment is
23
of less importance. It does not detract from my conclusion, verified by the contemporaneous
communication from the purser's own solicitor, and fortified by the pursuer's prolonged
silence on the issue, that the deposit was indeed paid. Accordingly, this objection to the
second defender's account is repelled.
What are the "surplus monies" from the sale?
[39]
In terms of clause 5 of the Agreement, the pursuer is entitled to "any surplus
monies" from the sale of the premises "less expenses and other borrowing personal or
business".
[40]
The "surplus monies" are easily ascertained. According to the account lodged by the
second defender (item 3, second defender's third inventory), the sale price in July 2022 was
£299,006.45, from which the secured Assetz Loan of £208,857.34 was deducted, together with
twenty undisputed expenses of sale. This produced a net "balance" due to the first defender
of £87,347.31. This sum represents the "surplus monies" from the sale. The position could
not be simpler.
[41]
The only remaining question, therefore, is whether, on the evidence, any "expenses
and other borrowing personal or business" (per clause 5) fall to be deducted from those
"surplus monies". Logically, the onus must fall on the second defender to aver and prove
such a deduction. The pleadings are silent on the issue. In any event, no credible or reliable
evidence was adduced by the second defender to establish any such deduction from the
"surplus monies". The second defender's testimony was sprinkled with suggestions of
indebtedness due to him by the pursuer, but it was all rather vague and unvouched. There
were references to a business trip to Gambia in 2015. Both parties claimed to have funded
the trip. But neither produced any vouching. The second defender referred to an alleged
24
indebtedness of around £15,000 owed to him by the pursuer. No explanation was given as
to its nature, when it arose, how it was constituted. Again, no vouching was produced.
[42]
One issue caused me to ponder. This was the issue of the "facilitating fee" referred
to in the Agreement. In clause 6, the parties agreed that if, at the time of the buy-back or sale
of the premises (whichever came first) there were no other business activities between the
parties, then a sum of £50,000 (referred to as a "facilitating fee") was to be paid by the
pursuer to the second defender. This would appear to be the essential monetary
consideration (and motivation) for the second defender to have entered into this transaction
in the first place. On one interpretation, this facilitating fee might not fall within the
meaning of an "expense" or "borrowing" at all, for the purposes of clause 5. However, that
technical issue apart, the more significant difficulty for the second defender is that there is
no foundation on record for any such claim within in this process. There is also no mention
of the "facilitating fee" in the second defender's account (item 3, second defender's third
inventory). An oblique reference is made to a potential indebtedness of some sort in
paragraph 3 of the second defender's witness statement, but it is plainly inadequate to give
fair notice to the pursuer of that claim. The statements reads:
"I should also note in passing that Mr Sarwar was also supposed to pay me
various sums in relation to the agreement and he hasn't paid any of those. To
be frank I haven't so far considered pursuing them because I don't believe that
he has any money..."
For these reasons, it came as no surprise when the pursuer's agent objected to an attempt by
the second defenders' agent to elicit evidence at proof from the second defender, in the
course of his supplementary oral testimony, regarding the "facilitating fee" under clause 6.
The objection was made timeously; quite properly, the line was not pursued by the second
defender's agent; and nothing of substance emerged from it. As a result, there are no
25
pleadings to support the deduction of any such fee from the surplus monies, and there is no
evidence to support it.
[43]
That said, it is unfortunate that it did not feature in the action. At first blush, it
would appear to be due to the second defender. If it had featured as a contra-claim and
deduction in the second defender's account of the "surplus monies", it might perhaps have
allowed a final line to be drawn under the parties' mutual claims so far as deriving from the
Buy Back Agreement.
[44]
In summary, the second defender has failed to prove the existence or extent of any
"expenses" or "other borrowing personal or business" to be deducted from the surplus
monies, in terms of clause 5 of the Agreement.
The payment of £25,000 by Allied Contracts
[45]
The final objection taken by the pursuer relates to an apparent payment to the
defenders of £25,000 from "Allied Contracts" in March 2017.
[46]
To be clear, this objection (in paragraph 3 of the pursuer's note of objections) relates
to the (separate) account of the purchase of the premises from the pursuer in March 2017
(item 2, second defender's third inventory). The logic of the objection seems to be that,
according to this account, £25,000 bears to have been contributed to the £300,000 purchase
price by a third party called Allied Contracts. Mr Sarwar says no such contribution to the
purchase price was made by Allied Contracts.
[47]
I confess I am perplexed by the objection. The purpose of this action of accounting is
to compel the defenders to account for the "surplus monies" allegedly received from the
(later) sale of the premises by the first defender in July 2022. The source of the funds for the
first defender's (preceding) purchase of the premises back in March 2017 is irrelevant. The
26
pursuer received the benefit of his £300,000 purchase price by March 2017, made up of
various component elements. How, and from whom, the defenders ingathered that
purchase price is irrelevant. Accordingly, the objection, being misconceived in principle, is
repelled.
Conclusion
[48]
All of the pursuer's objections to the second defender's account are repelled. The
account itself discloses the "surplus monies" from the sale of the premises, namely
£87,347.31. There is no reliable and credible evidence to support the conclusion that any
further sums fall to be deducted from those "surplus monies". The true balance due to the
pursuer by the defenders under clause 5 of the Buy Back Agreement is £87,347.31.
[49]
There are no pleas-in-law for the second defender. Accordingly, I shall sustain the
pursuer's fourth plea in law (inserted by amendment at proof) and grant decree against the
defenders for payment to the pursuer of the sum of £87,347.31 with judicial interest from the
date of citation. Expenses are reserved meantime.
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