Background
Inner House case concerning an alleged contract relating to the purchase of a local authority flat at Partick Bridge Street in Glasgow in 1989.

Mr Khosrowpour claimed that he had loaned £8k to Mrs Mackay for the purchase of her flat and that the parties had entered a contract by which Mrs Mackay would remain in the property for the rest of her life without repaying the loan but that Mrs Mackay would make a will transferring it to Mr Khosrowpour on her death. Mrs Mackay also granted a standard security (securing all sums due and which may become due) in favour of Mr Khosrowpour in 1991.

Although Mr Khosrowpour said that Mrs Mackay had originally granted a will passing the property to him, she later executed a new will directing that her executors pay the sale proceeds of the flat to her children (who included Mr Khosrowpour’s former wife).

Mr Khosrowpour sought damages for breach of contract from Mrs Mackay’s executor

In the Outer House it was found that the contract related to heritage and, as such, required formal writing for its constitution. However, Mr Khosrowpour argued that, because of his payment of the funds and Mrs Mackay’s execution of the first will, Mrs Mackay was personally barred from relying on the lack of formalities to resile from the agreement. As such Lord Turnbull found that Mr Khosrowpour had set out a stateable case regarding personal bar and allowed a proof (an evidential hearing) to consider whether it could be established. The executor appealed to the Inner House.

Arguments
The pursuer argued that the rule of rei interventus (where there are important actings by the party seeking to rely on the agreement which are known to and permitted by the other party and which are unequivocally referable to the purported contract) applied. However, in the Inner House the court observed that the actings of the party who relies upon the invalidity of the bargain to escape from it fall under the rule of homologation, not rei interventus and that was the rule that applied to this case.

The consequence of this is that, unlike the rule of rei interventus, there is authority to the effect that homologation does not apply unless actings (in this case accepting the funds and writing the first will) took place at a time when the alleged homologator (in this case, Mrs Mackay) was aware of the right to resile. As such Mrs Mackay’s executor argued that Mr Khosrowpour had produced no evidence that the first will was executed at a time when the deceased knew that it was within her power to resile from the verbal agreement (meaning she could not be personally barred from changing her will). There then followed some discussion as to whether there is a rebuttable presumption that parties are aware of their rights with the onus of proving the opposite resting on the party contradicting the proposition (i.e. whether it should be presumed that Mrs Mackay was aware that the verbal agreement was not binding). However, in the view of the court, there is no presumption albeit that, in certain cases, depending upon the particular circumstances, the courts will not allow a party to rely upon alleged ignorance in the absence of clear proof.

Decision
The Inner House allowed an appeal. The circumstances in this case did not entitle Mr Khosrowpour to the benefit of any presumption that, when executing the first will, Mrs Mackay was to be taken as having been aware that she knew of her right to withdraw from the arrangement. Moreover, the court was not persuaded that Mrs Mackay should have borne responsibility for any ignorance on her part in that regard.  As to the suggestion that Mrs Mackey could have obtained legal advice, the court found:

“As a proposition no doubt that is true, and in a different context might well be significant.  However, this was a family matter, and when a formal legal document was prepared and executed, it directly contradicted the alleged oral bargain.”

The full judgement is available from Scottish Courts here.