Scottish Court of Session Decisions

At advising on 11th March 1966,—

LORD STRACHAN .—Both parties agree that there should be a proof and that the defender should lead in that proof. The Sheriff-substitute, after repelling certain pleas, allowed to parties an unrestricted proof of their respective averments. The Sheriff, on appeal and after an amendment of the pleadings, allowed a proof before answer, proof of the agreement to sell the leasehold property referred to on record being restricted to writ or oath. It is against that restriction that the defender now appeals.

The main issue in the case is whether the defender purchased the leasehold property from the pursuer. The defender maintains that he did so. He has made detailed averments of negotiations which took place between him and Mr Donald Royan, solicitor, who, he says, was acting for the pursuer in these negotiations. The defender avers that at a meeting between him and Mr Royan, at which the defender's wife was also present, Mr Royan told the defender that the pursuer would accept the price of £260 for the property, provided that the defender took out a life policy for that amount and assigned it in security to the pursuer and also granted a bond in favour of the pursuer for the full price. The defender further avers that he agreed to those conditions, and that Mr Royan thereupon drew up an offer by the defender to purchase the property on those terms, and that the defender then signed the offer and delivered it to Mr Royan. The defender's offer to purchase is dated 3rd April 1959 and bears to have been adopted by the defender as holograph.

The defender admits that he never received an acceptance in writing of his offer to purchase but he founds on actings which followed upon that offer. He avers that he took occupation of the property on 4th April 1959, the keys having been handed over to him by the pursuer's wife on the instructions of Mr Royan's firm, on the sudden illness of the pursuer. The defender has further averred, inter alia, that he has made payments to account of the price to Mr Royan's firm as agents for the pursuer, that he has taken out a life insurance policy in terms of his offer, that he carried out improvements on the property which are provisionally estimated at £739 in value, and that he is still in sole bona fide possession of the leasehold quapurchaser.

The pursuer contends that the defender is in occupation of the property without right or title and without the pursuer's authority or consent. He has called upon the defender to remove, and raised this action of removing on 11th October 1962.

Counsel for the defender maintained that the actings which have been averred by the defender amounted to rei interventus and were directly referable to the defender's offer to purchase, and his main argument was that the offer and the rei interventus together constituted a binding contract of sale. In other words he maintained that the offer plus the actings of the offeror known to and permitted by the offeree, in not unimportant matters, constituted a binding contract. That argument went the length of saying that even if the document was nothing more than an offer, and even if there was no completed contract of any kind before the rei interventus, not even an informal or a verbal contract, a binding contract was completed by the rei interventus.

In maintaining that argument, counsel for the defender had to surmount two main difficulties. The first of these is that rei interventus normally follows on a contract which has been completed, although informally, and its effect is to prevent a party from resiling during the locus pœnitentiœ which is consequent upon the informality of the contract. In this case the argument is that the rei interventus completed the contract where no previous contract existed. The second difficulty confronting the defender arises from the very well established rule that in cases of this type the constitution of the informal contract can be proved only by the writ or oath of the party who disputes the contract. It is necessary to consider the law relating to those two matters.

In regard to the first difficulty which I have mentioned, the Sheriff has stated in his note that both parties appeared to agree that, before the effects of rei interventus upon an informal contract relating to heritage are considered, the alleged informal contract must first be proved according to the requirements of law. The Sheriff has apparently adopted that view himself. In this Court, however, counsel for the defender strongly disputed the proposition that the alleged informal contract must first be proved before the effects of rei interventus are considered and a number of authorities were cited in support of the defender's argument. Those authorities do not appear to have been cited to the Sheriff, and the questions now raised in the case are thus substantially different from the questions which the Sheriff considered.

The Sheriff's view as to the scope of rei interventus, and as to the necessity of first proving that a contract had been entered into seems to agree with some observations by Lord Macmillan in Mitchell v. The Stornoway Trustees . At page 63 Lord Macmillan, referring to the pleas of homologation and rei interventus, said:

"… they are invoked not to create an agreement, for that can only be done by writing, but to exclude the right to resile from an informal agreement already in existence."

At page 66 with reference to the case of Colquhoun v. Wilson's Trustees, he said:

"…I do not think that either homologation or rei interventus can properly be invoked to give efficacy to informal writings in which any of the essentials of a contract are lacking. There must, in my opinion, be consensus in idem as to the essentials of a contract before either of these doctrines can come into play."

Those dicta were criticised by counsel for the defender as being too wide and as having insufficient warrant in previous authorities. They were unnecessary for the decision of the case of Mitchell, and at first sight it would appear to be difficult to reconcile them completely with at least some of the authorities cited for the defender in this case. Lord Macmillan's dicta no doubt describe the normal application of the plea of rei interventus, but it may be that he did not have in mind another type of case which is referred to by Professor Gloag in his book on contract in the following terms:

"… the term rei interventus is also applied, though not so frequently, to the case where parties have been in negotiation for a contract, and one of them has acted, and been known and allowed to act, on the mistaken assumption that the negotiations had reached the point of a completed contract."

Professor Gloag went on to distinguish such cases from the case of an agreement which is not binding because not entered into in writing and proceeded:

"But when rei interventus is relied upon in cases where parties have not arrived at any agreement, verbal or written, the rule that actings may bind them to a contract is not an exception to the general rule that contract requires agreement. What is really meant is that the actings in question are evidence that agreement has been actually reached, though it has not been indicated in words or in other way than by the actings. … they prove that an agreement was reached."

As I see it there must in any event be consensus in idem as to the essentials of the contract. That is not disputed in the present case. The difficulty is as to the means by which the existence of consensus is to be demonstrated. Lord Macmillan I think went too far in saying that an agreement (regarding heritage) can only be "created" by writing, for there are cases in which agreements which were partly or wholly verbal have been held to be binding through rei interventus. Professor Gloag's statement that actings may be evidence that agreement has been reached is a very important point for the defender in this case. On that view the position would appear to be that while the actings of the defender could never by themselves be evidence of the pursuer's consent yet that consent may be implied from actings by or on behalf of the pursuer, and from his having known of and permitted actings by the defender. The question is whether Professor Gloag's statement is adequately supported by authority.

With regard to the rule that a contract relating to heritage can be proved only by writ or oath it is sufficient to refer to Walker v. Flint; Allan v. Gilchrist; and Dickson on Evidence. The rule is perfectly well settled. An informal obligation concerning heritage may be constituted verbally and may be binding if followed by rei interventus, but although such a contract may be constituted verbally it can be proved only by writ or oath. There are, however, some decisions where it would seem that the rule has not been enforced for reasons which are not apparent. A point of some importance in this case, however, is that proof of rei interventus has never been so restricted. It is recognised that rei interventusmay be proved by parole evidence. In the present case there is a probative writing by the defender, and the contention is that the contract was completed by rei interventus, that the actings of the parties are evidence that agreement has been reached. If that be sound in law, it seems to follow that proof of rei interventuswill be proof of the completion of the contract, and in that event there would, in my opinion, be no reason to restrict the normal method by which rei interventus can competently be proved. Apart from that possible ground I see no warrant for relaxing the rule requiring proof by writ or oath of a contract relating to heritage.

I pass now to the authorities cited for the defender in support of his main argument. It is necessary to consider the bearing of those authorities on the two difficulties to which I have referred and to consider whether any of them provide sufficient warrant for allowing an unrestricted proof in this case.

Colquhoun v. Wilson's Trustees dealt with an agreement to feu certain land. It is referred to by Professor Gloag in his book on contract as an illustration of "circumstances in which it may be held that proof of actings which involve the assumption of a contract may render other proof that the contract was made unnecessary",—in other words as an example of the category of case where actings amounting to rei interventus may bind parties to a contract even where they had not previously arrived at any agreement. He summarises the ground of decision as follows:

"The conclusion arrived at was that the alterations made by A, and permitted by B, amounted to rei interventus; that thereby the contract, previously incomplete, was made binding …"

I agree with Professor Gloag's analysis of this case and in my opinion it supports the argument for the defender in the present case. It is to be noted also that proof of the contract was not restricted to proof by writ or oath. In Mitchell v. The Stornoway Trustees Lord Macmillan (at p. 66) sought to distinguish Colquhoun and reserved his opinion as to the soundness of the decision if Professor Gloag's analysis of the case was correct. I do not think that it can be distinguished in principle from what is averred in the present case and in my opinion there is insufficient ground for taking steps to have it reviewed by a larger Court. I am content to take the law on this matter as stated by Professor Gloag.

In my opinion a further example of a case where proof of rei interventus was held to bind parties to a contract even although there had previously been no completed contract is Ballantine v. Stevenson . A lease which had been signed by the tenant was sent to the agents of the landlord for signature by him. It was retained by the agents, was never signed by the landlord, and was repudiated by him two years later, the tenant meantime having been in possession. It was held that the actings of parties showed that the landlord had impliedly accepted the lease.

Another case which seems to support the defender's argument that rei interventus may itself complete a contract and that in such circumstances proof of an informal contract by writ or oath is unnecessary is Keir v. Duke of Atholl . It was there argued by tenants that an offer by a tenant when followed by possession and payment of rent is as obligatory as acceptance in writing, and that argument seems to have been upheld by the House of Lords. The report of the case, however, does not contain any opinions of the judges and I have not found it easy to be certain of the grounds upon which the decision was reached.

None of the other cases cited appears to me to give adequate support to the defender's contention. In deference, however, to the able argument submitted I propose to refer to them briefly.

The case upon which counsel for the defender chiefly founded was Forbes v. Wilson . I do not narrate the facts of that case in detail. It is sufficient to say that in some respects they were very similar to the facts of the present case. Lord Justice-Clerk Moncreiff (at p. 465) said:

"In these circumstances, I am of opinion … that the reading of the [defender's] letter … and its retention by the landlord, followed as it was by rei interventus, are sufficient to constitute a binding lease …"

That appears to favour the present defender's argument, but on the particular facts Forbes v. Wilson was really an instance of the normal application of the rei interventus rule, because the parties had already come to a completed agreement, the defender's offer having been accepted verbally. There had been a meeting of the agents of the parties before the date of the defender's offer when it was verbally "arranged" that a lease would be obtained for the defender and the offer itself was later accepted verbally by the landlord's agent. The interlocutor of the Court (at p. 467) expressly found that the parties had agreed that the defender should have a lease. I do not, however, understand why the Court allowed the verbal agreement to be proved by parole evidence, especially as there was a specific plea stated for the pursuer that proof should be restricted to writ or oath, and that plea appears to have been argued in the debate. In an earlier appeal the First Division had allowed a proof before answer (at p. 457), and reference to the session papers shows that that allowance of proof was by consent of parties. The fact that an unrestricted proof was allowed of consent may perhaps go some way towards explaining why the plea for a limited proof was ignored in the final judgments.

Ross v. Ross is another case in which the facts at first sight would appear to be somewhat similar to the facts of the present case. Tenants founded on a letter which they signed and in which they agreed to take a nine years lease of the farm in question and which was followed by rei interventus. That case differed from the present one, however, in that the tenants maintained that their letter was more than an offer and amounted to a minute of agreement. The Court upheld that contention and thought (at p. 776) that the document was a minute of agreement bearing the essential articles of a tack, and that, though informal, it was effectual because it had been followed by possession. This case clearly does not support the defender's major argument, as the decision proceeded on the view that there was a completed informal agreement. It is also, in my opinion, of no assistance on the question of proof by writ or oath. The report shows that there was before the Court a deposition by the factor's clerk and a "paper of instructions" to the factor's procurator, but it would appear that questions of evidence were not involved. The proceedings took the form of a bill of suspension and the Court remitted to the Lord Ordinary to pass the bill and the report bears (at p. 776) that "the case did not undergo any further discussion" thereafter.

In Stewart v. Countess of Moray, Bathie v. Lord Wharncliffe and Wares v. Duff-Dunbar's Trustees a written lease or a copy or draft had been prepared. In my opinion these cases do not give any support to the defender's main argument because in each of them the Court proceeded upon the view that there was a completed informal agreement upon which the rei interventus followed. The necessity of proof by writ or oath was not referred to by the Court but, at least in Bathie, the Court seems to have taken the written draft lease and not the actings of parties as proof of the informal agreement.

The conclusion which I have reached upon a review of all the cases is that the decisions in Colquhoun v. Wilson's Trustees, Ballantine v. Stevenson and Keir v. Duke of Atholl, are authority for allowing an unrestricted proof in the present case. In view of those three decisions and the statement of the law by Professor Gloag, it is in my opinion necessary that the full facts averred should be investigated by parole evidence so that the law may thereafter be correctly applied.

A subsidiary argument was submitted for the defender to the effect that in any event the defender's offer was a document which couldset out the terms of an agreement and he was entitled to prove the circumstances in which it was written in order to demonstrate that the document and those circumstances together show that there was a completed argument.

I would recall the interlocutor appealed against and before answer allow parties a proof of their respective averments, the defender to lead in the proof.

LORD WALKER .—In this action it is sought to have the defender removed from certain leasehold property in Burghead. His defence is that the pursuer agreed to sell him the property. In support of that defence he alleges, inter alia, that the pursuer's solicitor, Mr Royan, had drawn up an offer to purchase, which he signed and delivered to Mr Royan; that the offer is still in the possession of the now deceased Mr Royan's firm; that he never received an acceptance in writing; but that he was put in possession of the property and he paid to the late Mr Royan's firm instalments to account of the price in terms of the offer. The Sheriff-substitute allowed a proof and ordered the defender to lead. On appeal to the Sheriff the pursuer amended by adding a plea to the effect that an alleged oral agreement to sell heritage could only be proved by writ or oath. The Sheriff sustained that plea and allowed a proof before answer, "proof of the agreement to sell the leasehold property referred to on record being limited to writ or oath."

Against that interlocutor the defender has appealed with leave of the Sheriff. As both parties desire a proof the only question open for consideration at this stage relates to the mode in which it should be allowed. The learned Sheriff has restricted the mode of proof in the somewhat unusual terms which I have quoted. In his note however he explains that, as there was no suggestion of a written acceptance, any acceptance of the written offer must have been a verbal one, and he took the view that such a verbal acceptance could only be proved by writ or oath. Had the appellant averred a verbal acceptance I should have agreed with the Sheriff. But I do not find such an averment on record. What is averred is the actings I have already noticed, being the delivery of the written offer to the respondent (or his agent) and giving of entry to the subjects and the payment of instalments of the price. These are all averments which in my opinion may competently be proved prout de jure. The question then comes to be whether these averments if proved would infer acceptance of the written offer. On that question there is some authority.

Erskine says, "If, after a verbal agreement about the purchase of lands, part of the price should be paid by the purchaser, the interventus rei, the actual payment of money, creates a valid obligation, and gives a beginning to the contract of sale, which leaves no room for resiling." There can I think be no doubt that the law has developed to some extent since Erskine wrote. It must now for example be accepted that where a party founds on a verbal agreement he must prove it by writ or oath. When a verbal agreement has been proved in that way the function of rei interventus is to bar the right to resile from the "incomplete engagement" on the theory mainly developed by Bell. But that is not the only way in which rei interventus can operate. Gloag says:

"… when rei interventus is relied upon in cases where parties have not arrived at any agreement, verbal or written, the rule that actings may bind them to a contract is not an exception to the general rule that contract requires agreement. What is really meant is that the actings in question are evidence that agreement has actually been reached, though it has not been indicated in words or in any other way than by the actings."

As an illustration he refers to Colquhoun v. Wilson's Trustees . Before I come to consider that case I think it necessary to refer to two earlier cases decided in the House of Lords.

These cases are Stewart v. Countess of Moray and Keir v. Duke of Atholl . No opinions are reported, but I think the facts speak for themselves. In Stewart's case the tenants had been in possession and had paid rent under a lease for nineteen years duly executed by themselves, but the Earl had died without signing it. The Court of Session held (at p. 320) that not having been regularly executed by the Earl it was not effectual against the Countess, but the House of Lords reversed and declared (at p. 322) that in the circumstances of the case the lease was as effectual and binding as if it had been signed by the Earl. In my opinion that was clearly a case in which circumstances created the obligations of a duly executed lease. In Keir's case the tenants had verbally agreed with the Duke's factor "S" for a renewal of their leases for fifteen years. The factor reduced the agreement to the form of a written offer which remained with the Duke and was neither accepted nor rejected. After the tenants had possessed their lands for nine years a new factor "P" took proceedings for their removal. When the case reached the House of Lords it was held that the leases were good for fifteen years. There is no trace of any endeavour to set up the verbal agreement with the former factor "S", and therefore I regard the decision as being that rei interventus established the Duke's acceptance of the written offer.

In Colquhoun v. Wilson's Trustees, Wilson had made a written offer to feu certain subjects and Colquhoun's factor had written accepting, subject to certain conditions not mentioned in the offer. A correspondence followed in which the conditions were neither expressly accepted nor repudiated. But Wilson had obtained entry and had exercised the rights of a feuar. After his death Colquhoun raised action in the form of a declarator to the effect that a concluded agreement had been reached including the conditions. After a proof habili modo the Court held that Wilson's trustees were bound to enter into a feu contract including the conditions. The Lord Ordinary (Neaves) at p. 1046 expressed himself as having no doubt that Wilson's acceptance of the conditions as part of the bargain could be expressed not only in writing but rebus et factis, and could be proved prout de jure. The Lord Justice-Clerk arrived at the conclusion adopted by the Lord Ordinary, though he did not concur in all his findings. At p. 1048 after pointing out that there was no written assent to the conditions the Lord Justice-Clerk said:

"But then it is a well-known principle of our law, that such a conditional acceptance may be made pure, and the contract, incomplete in itself, may be made effectually binding upon both parties rei interventu…"

I do not think it is open to doubt that the well-known principle there referred to is just the doctrine enunciated by Erskine that rei interventus may create a valid obligation, and which as I think was applied in the two House of Lords cases already mentioned. Gloag states the same principle in more modern, and perhaps less confusing language, when he says in the passage I have referred to that "actings" are evidence that agreement has been actually reached.

Viewing the case therefore as being one in which it is sought to prove acceptance of a written offer by actings I think it wrong to limit the mode of proof to writ or oath. I accordingly agree with Lord Strachan that the interlocutor under appeal should be recalled and that before answer parties should be allowed a proof of their averments. I understand that it is agreed that the appellant should lead in the proof as appointed by the Sheriff-substitute.

LORD JUSTICE-CLERK (Grant).—It appears to have been agreed by parties in the debate before the learned Sheriff that, before the effects of rei interventus upon an informal contract relating to heritage are considered, the alleged informal contract must first be proved according to the requirements of law. Whatever these requirements may be, it seems to me that there is an initial difficulty here, inasmuch as the defender nowhere specifies how that informal contract was constituted. In particular, although the defender avers that Mr Royan (who, he says, was the pursuer's agent) said that the pursuer would accept an offer in the terms of the offer produced, it is nowhere specifically stated that the pursuer did in fact do so. It seems to have been assumed that any acceptance must have been verbal, although no such acceptance is averred. As, however, this point was not taken in the Court below, and as all that the pursuer had sought there was a limitation of the mode of proof, Mr Coutts felt himself precluded from taking the point at this stage. Accordingly the appeal was argued on the basis of such a contract as defender's counsel could spell out of, or deduce from, such averments as appear on record.

This deductive process and, possibly, a fuller examination of the authorities, led counsel for the defender to adopt, in their major argument, a rather different line from that taken before the Sheriff. Put simply and briefly, the proposition on which their main argument is based is that, if a written offer is made to purchase heritage and is followed by rei interventus, a binding contract is thereby constituted and rei interventus can be proved prout de jure. The argument was put alternatively on the basis that the same result would follow if the offer were followed by the giving of possession and then by "actings." I think that this is a better way of putting it, as the giving of possession may be treated as an implied acceptance and one then has a completed (though informal) contract to which the "actings" may be unequivocally referable and to which they may give binding force. In the absence of any attack on the relevancy of the defender's averments, I would be prepared to accept his averments in regard to possession as covering implied acceptance.

In support of his argument Mr Maxwell placed considerable reliance on a paragraph in Gloag on Contract, where the learned author is dealing with the two ways in which rei interventus can operate. The first (and more usual) is where it operates to render binding an informal agreement which by some rule of law would otherwise be unenforceable. The second is "where parties have been in negotiation for a contract, and one of them has acted, and been known and allowed to act, on the mistaken assumption that the negotiations had reached the point of a completed contract." The learned author goes on to state (at p. 47), "In the former case the actings render an agreement binding; in the latter they prove that an agreement was reached," or, as he puts it in the passage immediately preceding, in the latter case, "the actings in question are evidence that agreement has been actually reached, though it has not been indicated in words or in other way than by the actings."

In expressing the views which I have just quoted Professor Gloag was proceeding (at p. 46) on the basis of "the definition of rei interventus given in Bell's Principles (sec. 26) [which] has so often been judicially approved that it would be absurd to attempt any other." (Cf. Mitchell v. The Stornoway Trustees, per Lord Macmillan at p. 63.-Under that definition the "proceedings" founded upon must be proceedings) "known to and permitted by the obligor to take place on the faith of the contract as if it were perfect; provided they are unequivocally referable to the agreement…" It would appear therefore that rei interventus can operate only where there is a preexisting (though informal) contract or agreement to which it is referable. Hence the need for some acceptance (even if only implied) of the offer. That, I think, is why Professor Gloag in dealing with this (less usual) aspect of rei interventus explains that "What is really meant is that the actings are evidence that agreement has been actually reached." Erskine, in dealing with rei interventus, also proceeds on the same basis of a pre-existing "bargain."

As illustrations of the propositions which I have quoted from Professor Gloag's work, the learned author cites and summarises the cases of Colquhoun v. Wilson's Trustees and Wight v. Newton . Neither of these cases seems to me to assist the defender here. In Wight the tenant founded on a draft lease (which was the "writ" of the landlord) with revisals therein which were his own "writ." Rei interventus having followed, it was held that he was entitled to a lease in terms of the landlord's "writ"—but not embodying the conditions attached in his own "writ."Colquhoun is a somewhat dubious case. If it decided what Mr Maxwell suggests it did, it comes under the shadow of Lord Macmillan's adverse dicta in Mitchell at p. 66. I think, however, that it decided no more than this—and I quote from Professor Montgomerie Bell's Lectures on Conveyancing published a few years after Colquhoun was decided—"The extent of the subject feued, the rate of feu-duty and other essentials to a bargain, had been set forth in correspondence and other documents, and only some minor conditions remained unadjusted; the Court therefore held that locus poenitentiae was gone, and that there was a concluded bargain …" There is little resemblance between that state of affairs and the present where the defender seeks to establish "the essentials to a bargain," not from correspondence passing between the parties, but from his own writ coupled with parole proof.

On the other hand the present case differs from Walker v. Flint inasmuch as there was no written offer in Walker and all that was averred was a verbal contract followed by rei interventus. The case which is nearest to the present is, in my opinion, Keir v. Duke of Atholl . Although no opinions were given in the case it appears that the tenants succeeded in establishing a lease for fifteen years on the basis of (a) a written offer made by them, (b) the granting of possession by the landlord, and (c) rei interventus, (b) and (c)being established prout de jure. On the averments, I find myself unable to distinguish the present case from Keir. Again in the case of Ross v. Ross there are dicta which support the defender here, particularly Lord Dunsinnan's statement (at p. 776) that an offer by a prospective tenant may be accepted by the landlord admitting him to possession. It is to be noted, however, that the document there was not an offer, but was a letter agreeing to take the farm on lease, and that there was a letter from the landlord's factor stating that he had agreed to the terms of the lease. On its facts, therefore, Ross is clearly distinguishable from the present case.

I come now to Forbes v. Wilson upon which the defender most strongly, I think, relied. In Forbesthere are again dicta upon which the defender here can found; as in Bathie v. Lord Wharncliffe, the proof appears to have ranged widely on a prout de jurebasis—though this appears to have been by consent of parties. The report in Forbes shows that there was a writ of the landlord's agent and there were also entries in the landlord's books of rent received. It seems, however, that the Court's decision proceeded, not on the basis of these writings, but of the written offer, an implied acceptance and rei interventus. That was also the situation in Ballantine v. Stevenson, where there was a lease signed by the tenant, implied acceptance by the landlord and rei interventus—and the proof was conducted on a prout de jure basis. The Lord Justice-Clerk (Moncreiff), with whom Lord Young concurred, seems to indicate (at p. 971) that, in the particular circumstances, rei interventus was not needed to validate the implied acceptance. That, however, is immaterial in the present case.

I have not found this an easy case and I have found the authorities at times both confused and confusing. However, in the result and in view of the authorities to which I have referred I have reached the same conclusion as your Lordships.