KEITH LOGIE INCH AND ANOTHER AGAINST MARGARET MARY TOTTEN

Factual and Procedural Background

The pursuers each sought payment of £125,000 plus interest from the defender, asserting that these sums were owed under a loan agreement executed by the parties on 9 May 2018. The agreement stipulated repayment could be demanded after one year with seven days' written notice. The pursuers demanded repayment by solicitors' letter dated 19 April 2023. The defender contended she believed the £250,000 sum was a gift related to a shortfall in the sale price of shares in a company where she and the pursuers were shareholders. She also claimed that the pursuers later indicated she need not repay the money, which led her to agree to the sale of another company and transfer shares in a further company to the pursuers, actions she said were to her detriment and formed the basis of a personal bar defence. The matter proceeded to a two-day proof before the court, during which the defender was unrepresented.

Legal Issues Presented

1. What exactly was said to the defender by the pursuers regarding the loan in the run-up to the sale of Akari Group?
2. Did those statements form a proper basis for a reasonable person to conclude that the pursuers intended to forgive the loan?
3. Did the defender rely on any such conclusion to her detriment in agreeing to the sale of Akari Group and transferring her shares?

Arguments of the Parties

Defender's Arguments

• The £250,000 was understood by her to be a gift compensating for a reduced share sale price.
• She was not specifically aware of having signed a loan agreement and believed the money was gifted.
• The pursuers later told her not to worry about repayment and that the matter would be sorted out.
• Based on these assurances, she agreed to the sale of Akari Group and transferred shares in VKY to the pursuers, to her detriment.
• She pleaded personal bar, asserting the pursuers were barred from enforcing repayment due to their representations.

Pursuers' Arguments

• The defender executed a formal, clear loan agreement on 9 May 2018, receiving £250,000 on 10 May 2018.
• The loan was interest-free for one year, thereafter accruing interest and repayable on demand with notice.
• The defender made no repayments and admitted receipt of the loan and demand for repayment.
• The only defence was personal bar, which was not established on the evidence.
• The defender's claim she believed the sum was a gift was incredible and unsupported by evidence.
• The pursuers denied ever representing that the loan would be waived or forgiven.
• The shares in VKY were valueless and the loan was unrelated to their transfer.

Table of Precedents Cited

Court's Reasoning and Analysis

The court first identified the key factual questions: what was said by the pursuers about the loan, whether a reasonable person would interpret those statements as loan forgiveness, and whether the defender relied on such an interpretation to her detriment. The defender claimed the pursuers told her "Don't worry, we can sort that" regarding the loan, implying forgiveness. The pursuers denied making such unequivocal representations, asserting any statements were aimed at deferring detailed loan discussions until after the Akari Group sale.

The court found that the defender's belief the £250,000 was a gift was unsupported by evidence; no proof was provided that the sale price reduction justified such a gift, and the contemporaneous documentation clearly indicated a loan. The defender's inconsistent evidence and failure to recall signing the loan agreement undermined her credibility. The court accepted the evidence that the pursuers encouraged the defender to focus on completing the sale with loan issues to be addressed later, but this did not amount to a representation that the loan would be forgiven.

Regarding the personal bar defence, the court applied the authoritative test from Ben Cleuch Estates Ltd v Scottish Enterprise, requiring a clear representation intended to be relied upon, a justified belief by the defender, and detrimental reliance. The court found no unequivocal representation of loan waiver, no reasonable basis for the defender to conclude forgiveness, and no evidence she acted on such a belief to her detriment. The transfer of shares in VKY was compelled by the sale conditions and not linked to any loan forgiveness.

Consequently, the court rejected the plea of personal bar and found that the pursuers were entitled to enforce the loan agreement as written.

Holding and Implications

The court sustained the pursuers' second plea-in-law, repelled the defender's plea, and granted decree as craved for payment of the principal and interest under the loan agreement.

The direct effect is that the defender is ordered to repay the loan sum and accrued interest to the pursuers. No broader legal precedent was established beyond the application of established principles regarding personal bar and contract enforcement in the context of loan agreements and shareholder dealings.