Scottish Court of Session Decisions

The ship “Edinburgh” was built in 1885, and was registered at Glasgow, which was the port to which she belonged in the sense of section 33 of the Merchant Shipping Act 1854 (17 and 18 Vict. c. 104).

William Gardiner, an Englishman and resident in England, was the managing owner of the vessel, and owned thirty-five shares of her. The remaining twenty-nine shares were owned by various persons resident in England and Scotland.

In April 1894, while the ship was in a South American port, David Anderson, master mariner, residing in Crosshill, Glasgow, and seven others, the owners of eleven shares of the vessel, brought an action known as an action of set and sale against William Gardiner, Duncan Sillars, and others, the owners of the remaining shares. The conclusions of the action were (1) that as the pursuers were willing to sell their shares for £125 each, being £1375 in all, the defenders “ought to accept thereof,” and that if they did so, they should be ordained to pay to each pursuer the amounts stated; (2) that if the defenders declined to purchase the pursuers' shares, the defenders should be decerned and ordained each of them to sell, set, and give over to the pursuers their respective shares in the said ship at the same price of £125 for each share; and (3) in the event of the defenders being unwilling to adopt either alternative, that it should be declared that the pursuers were entitled to have the ship sold by public roup.

The pursuers averred—“ (Cond. 2) The pursuers have differed with William Gardiner as to the management of the ship, and at the present time their shares are unmarketable in consequence of the ship being under Gardiner's management. … (Cond. 3) The pursuers are willing to become the purchasers of the defenders' shares of the said vessel at the rate of £125 for each 64th share, or to sell and dispose of the shares belonging to them respectively at the same rate. … (Cond. 4) The vessel has not been profitable, and it is in the interest of all parties that the shares should be disposed of, as before stated, or the vessel sold.” …

Of the defenders William Gardiner and Duncan Sillars alone lodged defences.

Gardiner pleaded, inter alia—“No jurisdiction.”

Duncan Sillars, who owned two shares in the vessel, averred, inter alia—“This defender, upon being served with the summons, wrote a letter to the pursuers on 20th April 1894 accepting the pursuers' offer to purchase his shares at the rate of £125 for each of his 2/64th shares. The pursuers, however, have declined to carry out said purchase. It is accordingly necessary for this defender to lodge these defences to obtain the decree of the Court finding that his said shares have been purchased by the pursuers at the price foresaid, and to resist the granting of warrant for the sale of said ship until the said purchase of this defender's share is implemented.”

He pleaded—“(1) This defender having accepted the offer to purchase his shares contained in the summons, decree should be pronounced declaring that the same have been purchased by the pursuers in terms thereof. (2) The pursuers are not entitled to warrant of sale until they have implemented the purchase of this defender's share.”

On 20th July 1894 the Lord Ordinary ( Kincairney) sustained the plea of no jurisdiction stated by the defender William Gardiner, and dismissed the action as against him.

On the same date the Lord Ordinary, in the question with the defender Duncan Sillars, allowed the pursuer to amend the record by adding to condescendence 3—“The pursuers never intended, and they are not bound, and they decline to purchase the shares of the defender Sillars unless all the other defenders will sell their shares as well;” and by adding the following plea-in-law—“The pursuers not being bound to purchase the shares of any one individual defender, the defences for Duncan Sillars ought to be repelled;” and the amendment having been made, the Lord Ordinary repelled the pleas-in-law for the said Duncan Sillars, and found neither party entitled to expenses in respect of the statement or discussion of these pleas.

“ Opinion.—[ After a statement of the facts]—Gardiner pleads no jurisdiction, and I think that plea must be sustained. I have not been able to find any ground on which the jurisdiction of the Court against him can be supported. The only ground of jurisdiction suggested is that the ship is registered in Scotland and belongs to a Scotch port, and it is said that if this action be not entertained the pursuers will be deprived of all remedy, because, if the Scotch courts have no jurisdiction over an English shareholder, the English courts, they say, will have no jurisdiction over the Scotch shareholders.

No authority, however, has been quoted for such a ground of jurisdiction. The fact that an Englishman is proprietor of

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a ship registered at a Scotch port, or of shares in it, will not create jurisdiction in the Scotch courts against him in any ordinary action, nor would it do so in an action relating to the ship, raising, for example, a question as to the ownership of the ship. I cannot see that it will make any difference that the action is raised by owners of other shares in the ship. If the ‘Edinburgh’ had been registered at an English port, there would have been no imaginable ground of jurisdiction, and there is nothing, so far as I am aware, in the mere registration in a Scotch port which can subject to jurisdiction a shareholder not otherwise subject to it. To hold that there is would be to put the registration of a ship to a use for which it was not intended, and for which no section of the Merchant Shipping Act has been quoted. ‘The existing register,’ says Mr Maclauchlan, ‘is the appointed record of title to property, and except this, and for ascertaining the vessels that are entitled to use the British flag, serves no other purpose.’

It may be different in England because of the provision of the 8th section of the Act 24 Vict. cap. 10, which provides that the Court of Admiralty shall have jurisdiction to direct the sale of any ship ‘registered in any port in England or Wales’ or of any share of it. This enactment certainly suggests that the port of registration may be an important element in the question of jurisdiction, and it might be reasonable that it should be so, but without a statute providing that the Scotch courts shall have jurisdiction in all questions regarding ships registered in Scotch ports, I cannot see how the jurisdiction of a Scotch court over an Englishman can arise.

The pursuers say that if the objection to jurisdiction is entertained they will be deprived of all remedy. That is not so, because they may still sell their shares in the open market, and it is possible— I cannot tell—that they may have some remedy in the High Court of Admiralty in England, the jurisdiction of which is very extensive. They may be deprived of the remedy of an action of set and sale, a remedy exceptional, anomalous, and very rarely resorted to, but if so, they will be in no worse position than the ordinary position of shareholders in a discredited joint stock company.

I think I must sustain Gardiner's objection to the jurisdiction of the Court, and dismiss the action as against him.

Duncan Sillars, owner of two shares, has also lodged defences. He accepts what he calls the pursuers' offer to purchase his shares at the rates specified by them. But the pursuers submitted that their object was to get the ship into their own management, and either to sell all their own shares or to buy the whole of the shares of the defenders, and that it would not serve their purpose at all to buy only the shares of one shareholder, and that their offer really was an offer to buy all the shares of each shareholder.

On the record as closed, however, there was no averment to that effect. It does not disclose any objection to Sillars' proposal. The defender Sillars maintained that on a sound construction of the averments on record a contract was thereby concluded—that is to say, concluded by the pleadings for the sale by Sillars, and purchase by the pursuers of Sillars' shares. I think, however, that it would be dealing too strictly with the contract to hold the pursuers tied down to that interpretation of his offer. I think his offer may mean, as he says it does, an offer to buy the whole of the shares, and not an offer to buy the shares of any one shareholder alone. And I think that, having regard to the nature and object of this action, that was the pursuer's real intention, and is the preferable construction of his offer on record. But further, I think that a party is not to be tied down to the exact words of his pleadings in the same way as he is tied down to the exact words of a formal contract, but that it is competent for him to explain his language if it is misunderstood. The purpose of a record is not to effect a new contract, but to state and plead existing contracts. Accordingly, I have allowed the pursuer to amend his record to the effect of stating what his meaning was in making his offer to purchase, and that explanation being made, it is clear that a concluded contract cannot be deduced from the record as amended.”

The defender Duncan Sillars reclaimed, and argued—When the summons was served and this defender accepted the offer therein made, a contract was completed to be given effect to in this action. The offer was made unconditionally, and was so accepted. The price put on the shares by the pursuers must be taken as what they considered the fair value of the defenders' shares. An action of set and sale gave the pursuers the right of putting up the ship to public auction, and it was a condition of their doing so that they must offer to buy the defenders' shares—Smith's Maritime Practice, p. 48, old style of action. In every such action the pursuer was bound to take the risk of having to buy the shares of such defenders as were willing to sell, although there might be others who were not willing. The offer of the pursuers was not qualified by conditions, and they must be held strictly to their bargain — Dickson v. Cornfoot, December 31, 1888, not reported, opinion of Lord Wellwood. The other side would require to show that it was a condition of the offer to each defender that the offers to the other defenders were accepted. The defender was entitled to decree under the second alternative of the summons finding the defender bound to sell his two shares to the pursuers at a certain price.

Argued for the pursuers—The defender Sillars had two difficulties in his way—(1) he could not obtain an operative decree; (2) even if he could obtain an operative decree, he was unable to show any concluded contract upon which such a decree

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could proceed. The pursuers had offered to purchase all the shares of the ship, but not one or two shares belonging to individual shareholders. The Lord Ordinary's judgment was right.

At advising—