Scottish Court of Session Decisions

In 1860 the Kilmarnock Gas Light Company let to Robert Smith, for a period of ten years, at a fixed annual rent of £130, a piece of ground adjoining their works at Kilmarnock, with right to the whole of the ammoniacal liquor and the tar produced and arising from the Company's works in their operations of making gas, which should flow into the tenant's cistern, and with the stipulation that the tar, after being distilled by the tenant, should be returned by him to the Company, and that the tenant should thereafter receive back again what the Company did not require for the heating of their retorts, or otherwise connected with their works. Robert Smith accordingly entered on possession of the premises, and continued to pay his rent until 1868. At Martinmas in that year, however, he refused to pay the rent for the preceding half-year, and in consequence of this the Gas Light Company presented a petition to the Sheriff, in January 1869, praying for sequestration of all the effects of the respondent Smith which were subject to the petitioners' hypothec, for payment and in security of the rent.

The respondent's defence was, that while in terms of the lease he was entitled to the whole of the ammoniacal liquor and tar produced in the operation of making gas, the Company had diverted, for purposes of their own, large quantities of the said ammoniacal liquor and tar. The respondent therefore pleaded that, not having received the ammoniacal liquor and tar to which he was entitled under the lease, he was not bound to pay the rent sued for.

The petitioners denied that under the terms of the lease the defender had right to the whole of the ammoniacal liquor and tar produced from the pursuers' works; and further, pleaded that the averments of the defender were not sufficient or relevant grounds for his refusing to pay the rent, and that the defender was not entitled to resist implement of his liquid and unambiguous obligation to pay the rent claimed from him on any of the grounds stated in defence, even though an action were raised by him for the purpose of constituting his alleged counter-claim.

The Sheriff-Substitute repelled the pursuers' plea that the allegations of the defender did not set forth any relevant ground for refusing to pay the rent, and allowed a proof. On appeal, the Sheriff recalled hoc statu this interlocutor, opened up the record, and remitted to the Sheriff-Substitute to amend and to readjust. The Sheriff-Substitute therefore adjusted and closed the record, and thereafter the defender's procurator consigned £65 sterling. The Sheriff-Substitute then allowed the parties a proof, before answer, and, upon consideration of the evidence, decerned against the respondent, in terms of the prayer of the petition. This interlocutor was sustained by the Sheriff, and the respondent appealed to the Court of Session.

The only question of law before the Court was as to the relevancy of the respondent's defence.

It was argued for the appellant that he had not received the subject leased, in respect that the pursuers had withheld part of the secondary products to which he was entitled, as a material part of the subject leased to him, and that therefore he had a right to retain the rent, and that without prejudice to his claim for damages, as the same might be ascertained by investigation; Johnston v. Robertson, March 1, 1861, 23 D. 646; Young v. Mann, 19 D. 785.

It was argued for the pursuers that this was not a case in which the tenant was entitled to withhold his rent. In order to entitle a tenant to relief of rent, there must be direct loss; but in this case, upon the defender's own showing, there was no proper damnum, but rather a lessening of the profits— lucrum cessans. In such a case the tenant is bound by the clearest evidence to prove wilful withholding of the subjects, in order even to substantiate a claim of damages. Further, the tenant's claim is not cut off by payment of rent; but having given, by his acceptance of the lease, a registrable decree for the rent, he has no claim unless he can also bring a decree or a document liquidating the debt. An illiquid claim cannot be pleaded to resist implement of a liquid obligation to pay rent, unless it be capable of immediate liquidation. Finally, want of beneficial possession may be pleaded as a set-off against a claim for rent; but in this case there was really and truly beneficial possession, and all that was complained of was, that on account of the want of something, the tenant had not made quite so much as he otherwise would have done. It was therefore argued that the defence should be repelled, the prayer of the petition granted, and the proof which had been led before the Sheriff held pro non scripto; Catterns v. Tenant, March 1, 1861, 23 D. 646.

At advising—