Scottish Court of Session Decisions

This was an action brought in the Sheriff Court at Glasgow by George Hamilton, builder, Dumbreck, against Mrs Maria Agnes Murphy or Lochrane, widow, residing at 10 Parkview Gardens, Crosshill.

Originally the pursuer sought decree for the sum of £400 as damages for breach of a contract concluded, as he alleged, between him and the defender for the sale of a villa erected by him, but his claim was ultimately limited to the sum of £150, being the amount expended by him upon the villa in question, as he alleged, in reliance upon the representations and undertakings of the defender, and without any resulting benefit to himself.

By memorandum of agreement entered into between the pursuer of the first part and the defender of the second part, dated 26th and 27th July 1897, the pursuer undertook

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to build, on the site and according to the plans therein referred to, a self-contained villa of the description therein specified. It was stipulated that the plaster work should be finished, and the drainage arrangements completed, not later than the middle of October 1897, and that the pursuer should intimate in writing to the second party when the work had been so far completed. The memorandum thereafter proceeded as follows:—“ Fourth, the second party shall have the option of buying the said villa at the price of Two thousand three hundred pounds sterling, with entry at Whitsunday Eighteen hundred and ninety-eight, her option to be declared before eleventh November next, or within a fortnight after receiving the intimation before mentioned, whichever date shall be later.”

The pursuer set forth the memorandum of agreement, and averred that immediately after the date thereof he proceeded with the erection of the villa.

The pursuer further averred as follows:—“(Cond. 2). … The defender was frequently on the ground inspecting the progress of the buildings, and in the course of a conversation that took place between the parties at the building in or about the second week of August 1897, she informed the pursuer that she had decided to exercise said option, and agreed with him to that effect, and on the faith of her statement pursuer made at her request certain alterations, including a fireplace to heat the hall. (Cond. 3). In or about the last week of August, when the house was about 3 feet above the first flat, the defender called at the building and explained to the pursuer's foreman that she wished an additional storey on the back wing, and to have it rearranged and to include a dressing-room. The foreman explained the difficulty of doing so, owing partly to the stage the building had arrived at, but the defender said that she had decided to have it done, and asked when she could see the pursuer, who was from home. She was informed that the pursuer would probably be at the building two days or so later about a certain hour, and the defender called again at the time indicated. The pursuer explained to the defender the structural difficulties in the way of getting the additional storey put on the wing and rearranged in the form that she desired it, and that part of the walls already erected would have to be taken down, but the defender stated to pursuer that she had made up her mind to have the house in that form. She also undertook to pay for the additional storey and alterations caused by the rearrangement of the wing, according to measurement, and she instructed the pursuer to proceed with the additional storey and rearrangement of the wing at once. On the faith of the said statement, undertaking, and instructions, the pursuer forthwith had part of the back wall taken down so as to allow the addition to the wing, and he proceeded with and duly completed the said villa according to the original specification, with the additions to the wing. The defender was frequently thereafter at the building, and saw what was being done, and approved thereof. (Cond. 4) On or about 25th November 1897 the pursuer was surprised to receive a letter from defender to the effect that she was not to take over the house in the meantime, and the defender has since refused or delayed to take over the said house or pay for the extras. (Cond. 6) … The cost of the additions and alterations specifically ordered by the defender, as stated in Condescendence 3, amounts to not less than £150. The said alterations and additions did not add anything to the value of the house, and will not enable the pursuer to obtain any greater price therefor than he would have obtained if they had not been made.”

The words printed in italics were added or substituted by amendment made upon the record after the case had been partly heard on appeal in the Court of Session.

The pursuer originally claimed the whole damage accruing to him in consequence of the defender's alleged breach of contract to take the villa and pay for it.

The defenders averred, inter alia, as follows:—“Explained that defender was very much dissatisfied with the house as she saw it in course of erection, and that as she believes in consequence of her objections, and in order to induce her to exercise her option in taking the house when the time came, the pursuer made alterations which he led the defender to believe would involve very little additional cost. The pursuer made the alterations entirely at his own risk.”

The pursuer pleaded—“(1) The defender having exercised her option to take over the house and having ordered the additions referred to and undertaken to pay for them, and rei interventus having followed, was bound to pay to pursuer the agreed-on price, together with the cost of the said additions ordered by her, and having failed to do so is liable to the pursuer in the amount sued for as the loss sustained by pursuer through defender's failure and actings as aforesaid. (2) The pursuer having been induced to expend money on the house in question, which he would otherwise not have done, without any benefit to the pursuer, on the footing that the defender had declared her option to buy the house, as the defender intimated to the pursuer that she had done, the pursuer is entitled to decree for the amount of money so expended. (3) The additional building and alterations having been done by the pursuer on the instructions of the defender, and on the footing that she was to pay therefor as she agreed to do, the pursuer is entitled to decree for the cost thereof.” The second and third pleas for the pursuer were added to the record after the case had been partly heard on appeal in the Court of Session.

The defender pleaded—“(1) The pursuer's statements are irrelevant. (3) The alleged agreement by the defender to take the house can only be proved by writ or oath.”

On 23rd August 1898 the Sheriff-Substitute

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( Balfour) issued the following interlocutor:—“Finds that the agreement founded on by the pursuer is only provable by the writ or oath of the defender: Allows a proof by the writ or oath of the defender accordingly.”

Note.—… “It is quite clear that if there had been no written agreement it would have been incompetent to prove by parole a sale of heritage by a verbal bargain even though followed by rei interventus. This is made clear in Dickson on Evidence, sec. 832, and the cases there cited. The law is stated as follows:—‘The equitable principle which excludes locus penitentiœ from an informal written contract dispenses with the necessity for writing in an obligation which could not have been contracted verbally if matters had been entire, such an obligation being effectual when it has been followed by rei interventus. But while the obligation may be constituted verbally it can be proved only by writ or oath.’ The case of Gowan's Trustees v. Carstairs, 24 D. 1382, is referred to by Mr Dickson, and it shows that a verbal agreement for the sale of a house, if proved by oath of party, is binding if followed by rei interventus, but the agreement cannot be proved by witnesses. The case of Allan v. Gilchrist, 2 R. 587, is also referred to by Mr Dickson, and it also instructs that a verbal bargain regarding heritage can only be proved by oath of party, although when so proved there may be proof by parole of rei interventus. See also Walker v. Flint, 1 Macph. 417

It was maintained by the pursuer's agent (and at first I was disposed to agree with him) that these cases differ from the present one, in respect that there was no writing forming the basis of the contract in these cases, but that here we have a formal agreement containing the whole essentials of the bargain, and the present case was likened to the case of Colquhoun v. Wilson's Trustees, 22 D. 1035, where informal missives of feu were held to be binding by the vassal having proceeded to make alterations on the subjects, and the vassal was held bound to enter into a feu-contract containing conditions which were not mentioned in the vassal's offer. That is not a case on all fours with the present, neither were the other cases that were cited by the parties.

The question appears to me to turn upon the consideration whether the exercise by the defender of the option to purchase really amounted to a purchase of the house. There was no purchase until the defender exercised her option, and it follows that the exercise of the option was the purchase of the house. The law already cited would therefore appear to apply to this case, viz., that the exercise of the option must be in writing, or be proved by the oath of the purchaser.

It was contended by the defender's agent that the rei interventus alleged was not unequivocally referable to the bargain of the parties, but I do not think there is anything in that contention.

The other cases referred to were Hamilton v. Buchanan, 4 R. 854 (H.L.) 69; Westren v. Miller 7 R. 173; Malcolm v. Campbell, 19 R. 278; and Mowat v. Caledonian Banking Company, 23 R. 271.”

The pursuer appealed to the Sheriff ( Berry), who by interlocutor dated 28th October 1898 adhered to the interlocutor appealed against, adding the following note:—

Note.—“It is an established rule of law that an agreement for the sale or purchase of heritage cannot be proved by parole. Where it is averred that there has been an agreement of that kind, and that rei interventus has followed, the agreement itself cannot be proved except by writ or oath of party, although the acts said to amount to rei interventus may be proved by parole.

The law on this subject has been explained in various cases, as by Lord Deas in Gowan's Trustees v. A. D. Carstairs, 24 D. 1382; and again in Allan v. Gilchrist, 2 R. 587. Here the option to purchase, as it is called, which under the contract between the parties was given to the defender, was, if exercised, to all intents and purposes an agreement to purchase the property, and in my opinion it falls under the general rule I have stated.

I think that the fact that the claim is one of damages for alleged non-fulfilment of the defender's intimated option does not affect the question as to the mode of proof, nor do I think that the fact that the pursuer proceeded to erect a villa under the contract which gave an option of purchase to the defender, has any bearing on the nature of the evidence competent to prove the exercise of the option.”

The pursuer appealed to the Second Division of the Court of Session, who by interlocutor dated 22nd November 1898 dismissed the appeal as incompetent.

By minute dated 24th November 1898 the agent for the pursuer stated that he had no other writ than the memorandum of agreement referred to supra, and that meantime he declined to refer the case to the defender's oath.

By interlocutor dated 29th November 1898, in respect of the statements in the minute for the pursuer, the Sheriff-Substitute assoilzied the defender from the conclusions of the action, and decerned, and found the pursuer liable in expenses.

The pursuer appealed to the Court of Session.

Counsel for the pursuer and appellant at first maintained that he was entitled to a proof prout de jure of his averment that the defender had exercised her option to purchase. He argued that the agreement was a completed contract for the sale of heritage subject only to a suspensive condition, and that he was entitled to prove by parole that this suspensive condition had been purified, or at least was entitled to such a proof in view of the rei interventus which had followed upon the defender's verbal intimation of her decision to exercise the option. Authorities referred to—Dickson on Evidence (Grierson's edition), vol. ii., sec. 1036; Taylor on Evidence (9th ed.) secs. 1132–1135; Colquhoun v. Wilson's Trustees,

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March 20, 1860, 22 D. 1035; Ballantine v. Stevenson, July 15, 1881, 8 R. 959.

This contention was, however, ultimately abandoned, and the record having been amended as narrated supra, the pursuer and appellant argued—It might be that it was incompetent to prove a contract relating to heritage by parole, whether with a view to obtaining implement of such contract or damages for the breach of it, but what was now sought in the present action was merely reimbursement for substantial loss occasioned and induced by the representations and undertakings of the defender, and proof prout de jure was allowable in support of such a claim— Walker v. Milne, June 10, 1823, 2 S. 338, and June 11, 1824, 3 S. 123; Allan v. Gilchrist, March 10, 1875, 2 R. 587, where, although the pursuer was not allowed to prove a contract relating to heritage by parole with a view to obtaining damages for breach of it, it was recognised that he would have been entitled to a proof prout de jure in support of such a claim as the present—see per Lord Deas at page 590; Heddle v. Baikie, January 14, 1846, 8 D. 376; Bell v. Bell, July 9, 1841, 3 D. 1201. What the pursuer was now asking was not damages generally for breach of contract, but repayment of a sum expended by him in the belief induced by the defender that she would take over the house. In Walker v. Milne, cit., no decision was given as to the relevancy of any claim there actually made, but it was decided that such a claim as the present might be relevantly made, which was sufficient for the decision of the present question. It was not necessary that there should have been fraud on the part of the defender, or that she should have been lucrata—see per Lord Fullerton in Bell v. Bell, cit., at page 1204, where in his statement of the elements requisite to found a claim of this kind neither fraud nor gain were mentioned as essential.

Argued for the defender—Except when the person against whom the claim was made had been guilty of fraud, or was himself lucratus, no action had ever been sustained for disbursements made upon expectations induced by representations or undertakings not amounting to a binding obligation—see Maddison v. Alderson (1883), 8 App Cas 467; Pollock on Contract (6th ed.) 503. See also Young v Dougans, February 23, 1887, 14 R. 490. Here fraud was not averred, and the defender was not alleged to have been lucratus by what the pursuer had done. In Bell v. Bell, cit., the defender was accused of fraud, and he was also lucratus. In Heddle v. Baikie, cit., the pursuer had made improvements upon the farm. In Walker v. Milne, cit., the case was remitted to the Lord Ordinary to consider any claim of damages not based on breach of contract relating to heritage, but there was no judgment in that case finding any such claim of damages relevant. See per Lord Deas in Allan v. Gilchrist, cit., at page 590. In Dobie v. Lauder's Trustees, June 24, 1873, 11 Macph. 749, there was breach of a contract which could be proved by parole. In this case the pursuer's claim could only be made out if it were proved that the defender had exercised her option to take the house. That could not be proved by parole, and the pursuer ought not therefore to be allowed a proof prout de jure. In this view the case of Allan v. Gilchrist, cit., was directly in point and should be followed.

At advising—