Robert & Margaret Greer v Hartley Holiday Parks Ltd & The Royal Bank of Scotland plc ? Hamilton Sheriff Court, 21 April 2009

First Defenders/Appellants appealed against the Sheriff's decision to allow a Proof before Answer following a debate.The Pursuers/Respondents had entered into a share purchase agreement ("the Agreement") for the sale of their business to the First Defenders/Appellants. The Agreement confirmed that the price to be paid for the business was subject to adjustment as the finalised accounts for the business would not be available on the date of the hand over. One of the mechanisms for adjustment of the price was that, after completion, there was to be a conclusive profit and loss statement made up down to the hand over date. A sum was retained and held by the Royal Bank of Scotland, the Second Defenders, and this was to be released in accordance with the balance found due in the profit and loss statement.There were three ways in which the profit and loss statement could become conclusive. One method involved the Pursuers submitting a profit and loss statement verified by their accountants to the first Defenders' accountants. The essence of the dispute between the parties was that the Pursuers claimed that they had invoked this mechanism effectively by intimating their accountants' profit and loss statement to the First Defenders directly. There had been no reply on behalf of the First Defenders and, on that basis, the statement was deemed to be conclusive. The First Defenders' position was that the Pursuers had not effectively invoked the required mechanism as the profit and loss account was not submitted to the First Defenders' accountants as required by the Agreement. Unless the profit and loss statement was regarded as final, none of the remedies sought by the Pursuers in the action would be available. The First Defenders' had argued at the debate that, as the strict terms of Agreement had not been complied with, the Pursuers had no rights against them in terms of the Agreement and the action should be dismissed. The Sheriff had concluded that the pleadings demonstrated that the parties were in dispute as to the interpretation of the relevant clause in the Agreement and that there were disputed issues of fact between them. On appeal, the First Defenders submitted that, where parties have agreed particular formalities in a contract, they are entitled to hold each other to those formalities.The First Defenders referred to a number of cases in support of their contention. The parties had agreed the formalities of how the profit and loss statement should be prepared, reviewed and agreed in the Agreement. The Defenders argued that the relevent clause in the Agreement could properly be catergorised as a notice provision. The issue was whether there had been compliance with the formal requirements imposed by the contract in respect of the service of the notice – in this case intimation of the profit and loss statement. This was a distinct issue from the construction of the notice or intimation after it had been served, in the sense of what the notice of intimation was intended to mean. The Pursuers' position was that intimation to the First Defenders direct was part of the Agreement and could be considered intimation in terms of that Agreement. It was argued that the Sheriff had been correct to rely on the case of City Wall Properties (Scotland) Ltd v Pearl Assurance plc 2007 CSIH 79 in reaching his decision. The First Defenders' preliminary pleas had been reserved, not repelled, and the First Defenders could still rely on these at a PBA. The Sheriff Principal had to decide whether the Sheriff had been correct in deciding that there were grounds for allowing a PBA.