Scottish Court of Session Decisions

LORD PENROSE'S OPINION—In this action the pursuers seek implement of the defender's part of a contract for the sale of a plot of land situated at Craighall garage, Ellon, constituted by missives dated 24th and 28th October and 3rd November 1975; for damages failing implement; and for interdict against the defender from disposing of the land to their detriment.

The letter dated 24th October 1975 was adopted as holograph. In it solicitors acting for the pursuers, Barratts, set out their understanding of a bargain previously negotiated between the parties by correspondence. They asked the agents for the defender, Mr Keith, to indicate their agreement if the letter was a correct statement of the bargain. The critical terms of the letter for present purposes were the following:

"(1) Our clients will purchase from your client All and Whole that area or piece of ground lying to the east of the public road leading from Aberdeen to Ellon and extending to four acres or thereby, together with the buildings and erections thereon, if any. "

"(2) The price shall be at the rate of £15,000 per acre or part thereof. "

"(3) The price will be payable within seven days of the granting by the local authority of planning permission in detail for the development of the land for private or public housing at a density specified in the planning permission in principle granted to your client, dated 9th November 1972, and our clients undertake to apply for the necessary planning permission in detail within six weeks of the date of your acceptance hereof, and entry to the subjects shall be on such date as the local authority grant the necessary planning permission in principle. "

"(4) In exchange for the purchase price your client will deliver a valid marketable disposition of the subjects of sale and will deliver or exhibit a marketable progress of Titles and Searches in the Property Register for at least twenty years and in the Personal Register for five years, showing clear Records so far as your client is concerned. "

"(5) Your client will contribute up to £500 for the cost of obtaining from the superiors a Minute of Waiver relaxing the feuing restrictions presently imposed on your client in his Title Deeds, and our clients undertake to obtain such Minute of Waiver at the earliest opportunity."

Mr Keith's solicitors replied on 28th October. The letter was again adopted as holograph. They stated inter alia:

"The terms and conditions specified are all in order and we hereby accept your offer subject to the following minor modifications:

"(1) The precise area to be conveyed will be as agreed between our clients. "

"(2) There will be included in the subjects of sale that part of the access road which has already been created and bottomed by our client and this access would be used by your clients. "

"(3) In the event of your clients purchasing the superiority of the ground rather than the Minute of Waiver, the area to be retained by our client will be free of all restrictions."

On 3rd November 1975, Ban-arts' solicitors wrote accepting the modifications contained in the letter of 28th October, and stating that they held the bargain finally concluded. It was agreed by counsel that this letter was not adopted as holograph.

In the course of the debate, counsel made extensive use of material not incorporated in the pleadings. To define a context for their submissions it is necessary to set out some of the history of events following the exchange of letters said to constitute the contract as it emerged in argument.

In October 1975, which Barratts say, without explanation, was following conclusion of the missives, they applied for planning permission for the erection of 20 houses on "the said area of ground" in accordance with plans which showed the precise area involved to be 3.569 acres. On 25th March 1976, the district council granted planning permission. In October 1976 Mr Keith raised an action in Aberdeen sheriff court for implement of the contract, failing which for damages. In the initial writ it was averred on his behalf, inter alia,that he was "prepared and willing to grant a disposition of the said subjects in favour of Barratts. The subjects were defined as the area of 3.569 acres for which planning permission had been granted. In their defences, lodged on 23rd November 1976, and subsequently adjusted, Barratts maintained that the contract was void ab initio in respect that Mr Keith was not proprietor of part of the subjects of sale, and, additionally, that he was in material breach of contract in respect that he was unable to grant a valid title to the ground he had contracted to sell. The action was sisted on 27th April 1977. The whole averments were completed prior to that date. By then, though neither party referred to the fact in their pleadings in the sheriff court action, Barratts had failed in their attempt to obtain the minute of waiver referred to in para. 5 of the letter dated 24th October 1975. Proceedings were raised before the Lands Tribunal at the instance of Mr Keith in April 1976 and resulted in an interlocutor dated 23rd June 1977 varying the feudal obligations to the extent of allowing the building of up to 20 houses at Craighall on the subjects owned by him. The area comprised in Mr Keith's title extended to five acres or thereby according to the findings of the tribunal. In April 1978 Barratts lodged a fresh planning application. It was refused by the district council. There was an appeal and a public inquiry. In April 1978 Mr Keith intimated to Barratts his intention to abandon the sheriff court action and on 9th May a minute of abandonment was lodged along with a notice of motion for recall of the sist and for the minute of abandonment to be received. The minute was in these terms:

"The pursuer offers to abandon the action in terms of rule 81 of the Sheriff Courts [(Scotland)] Act 1907"

(now rule 58). The rules provide that a pursuer may offer to abandon a cause by lodging in process a minute to that effect and thereafter the sheriff may, on payment to the defender of his expenses, dismiss the action. Mr Keith paid Barratts an agreed amount in respect of their expenses in August 1978. It is agreed on record in the present action that per incuriam the relative motion to dismiss never came before the sheriff and that the action remained sisted and has not been disposed of.

Against this background it was argued on behalf of Mr Keith, first, that if there was a binding contract at any stage, Mr Keith's obligation to implement it had been extinguished by prescription in terms of sec. 6 (1) of and para. 1 (g) of Scried. 1 to the Prescription and Limitation (Scotland) Act 1973; that the defender's third plea-in-law should be sustained; and that Mr Keith should be assoilzied at this stage. The appropriate period was the short negative period of five years. The obligation in question was a personal obligation arising under contract. Such obligations could not be brought within the meaning of the expression "obligations relating to land" in para. 6 (2). That expression was no different in meaning from the expression "land obligation" defined in para. 4 of Sched. 1. The breach of contract arising from Mr Keith's alleged refusal or inability to implement the missives, as averred in Art. 5 of the condescendence, was founded on circumstances known to Barratts, at the latest, by 27th April 1977, when the pleadings in the sheriff court action were in their final form. In the absence of a relevant claim or relevant acknowledgment, the obligation was extinguished, at the latest, in April 1983. For the purposes of sec. 10 of the Act, the averments made by Mr Keith that he was prepared and willing to grant a disposition in favour of Barratts, read along with the first plea-in-law in the initial writ, were a relevant acknowledgment. But that was spent when the action was effectively abandoned by the payment and acceptance of Barratts' expenses in August 1978 at the latest, if not on intimation of the minute of abandonment. It was enough to say that the relevant acknowledgment constituted by the pleadings was withdrawn by the minute. The latest date for extinction of the obligations was accordingly August 1983. Barratts' contention that there was no abandonment without a final interlocutor of the sheriff was artificial and unrealistic. Having accepted payment of expenses, which was an incident of abandonment, it was not open to Barratts to argue that the action was still alive. Both parties had for 13 years recognised that the action was abandoned. It would be a nonsense if sec. 6 of the 1973 Act did not so operate. The purpose of the Act was to spur claimants into action. Reference was made to G.A. Hood & Co. v. Dumbarton District Council 1983 S.L.T. 238 and British Railways Board v. Strathclyde Regional Council 1981 S.C. 90.1

Secondly it was contended for Mr Keith that if the obligation had not been extinguished by prescription, Barratts were personally barred from founding on it and the defender's first plea-in-law should be sustained at this stage. Having maintained in the sheriff court action that the contract was void ab initio, they could not be heard to say in the present proceedings that they had a right to enforce it.

Thirdly it was contended that there was no binding contract between the parties. The missives did not define with sufficient precision the area of ground to be conveyed. There was no consensus as to the subjects of sale. This was fatal: Grant v. Peter G. Gauld & Co. 1985 SC 251. Barratts' averments of homologation and rei interventus were irrelevant and insufficient to overcome the lack of consensus in the written exchanges. Reference was made to Law v. Thomson 1978 S.C. 343. None of the factors relied on were unequivocally referable to the definition of the precise area to be conveyed. The application for planning permission referred to condition (3) of the offer letter, that is to payment of the price. Mr Keith in that clause agreed that the application would be made at the appropriate time, not that it would be sought relative to a precise area of ground. The application to the Lands Tribunal referred to condition (5), which provided for the obtaining of a waiver. It referred to an area of five acres, and could not be unequivocally referable to an area of 3.569 acres of land. The act of entering onto the subjects and performing works there was not relevant. Mr Keith had consented to those operations by letter dated 19th March 1981. The terms of that letter excluded the view that it could be unequivocally referable to the contract. Since individually and in cumulo the actings relied upon were not unequivocally referable to the definition of a precise area of ground, there could not be rei interventus nor homologation in this case.

Finally it was argued that the averments of loss in support of the claim for damages were so fundamentally lacking in specification that the claim for damages should be dismissed at this stage.

In response counsel for Barratts argued, first, that the submission based on the Act of 1973 was misconceived. There were two broad lines of approach. The prescriptive period was said to be 20 years, not five. Further, the sheriff court action constituted a continuing "relevant acknowledgment" of the obligations of Mr Keith under the contract. In expanding on the first proposition, counsel contended that para. 2 (e) of Sched. 1 to the 1973 Act applied, in respect that missives for the sale of land gave rise to "obligations relating to land" as envisaged by that provision. Reference was made to the report of the Scottish Law Commission, no. 15 of 1970. On any view of the timetable of events, 20 years had not expired, and the obligations subsisted. In support of this second proposition counsel argued that so long as an action remained alive the averments made in the pleadings subsisted and bound parties to the positions adopted in them. A sist kept the action alive. The sist could be recalled at any time, even after very long periods had expired. Reference was made to Dobie on Sheriff Court Practice at p. 176 and to Barr v. Wallace (1912) 29 Sh. Ct. Rep. 171. Until an abandonment was given effect in a decree of dismissal, the pursuer might withdraw his notice: Dobie, p. 244.

In response to the second contention for Mr Keith, counsel argued that before bar could be relied on, at the very least it had to be averred that there were actings amounting to an overt demonstration of acceptance of waiver, which had to be the character of the bar involved in this case. Reference was made to Armia Ltd. v. Daejan Developments Ltd. 1979 SC (HL) 56. There were no averments in this case which could meet such a test. The plea should be repelled.

Thirdly, it was contended that there were sufficient averments of a concluded contract. As a matter of interpretation, the defenders' argument failed to distinguish between the need to identify an area to be conveyed, and the measurement of an identified area of ground. In this case it was clear that the area had been identified, and the only outstanding issue was the measurement of its extent so as to determine the price. Any lack of definition could be provided by evidence of prior actings and if necessary provided by the conduct of the parties subsequent to a conclusion of the missives. Reference was made to Errol v. Walker 1966 SC 93. Grant v. Peter G. Gauld and Law v. Thomson were both distinguishable. At worst for Barratts, a proof before answer was appropriate on the averments of contract, including the averments of rei interventus and homologation.

The averments on quantum were defended as sufficient and clear notice of the nature of the claims made to entitle Barratts to proof.

The question of construction of the 1973 Act was presented as novel and without authority. The general structure of Sched. 1 offers no difficulty. Paragraph 1 defines the obligations to which sec. 6 applies "subject to paragraph 2". Contractual obligations generally are subject to the short prescriptive period unless they are within one or other of the provisions of subparas. (a) to (f) of para. 1, or fall within para. 2. If one of the heads of para. 2 applies, the prescriptive period is 20 years. Subparagraph (e) of para. 2 excludes from the scope of sec. 6:

"except as provided in paragraph 1 (a) of this Schedule,…any obligation relating to land (including an obligation to recognise a servitude)".

Paragraph 1 (a) applies the short prescriptive period to obligations to make periodical payments under a number of headings. Heading (vii) provides for periodical payments under "a land obligation". That expression is defined in para. 4 by reference to the Conveyancing and Feudal Reform (Scotland) Act 1970. Section 1 (2) of the 1970 Act defines land obligation as "an obligation relating to land which is enforceable by a proprietor of an interest in land, by virtue of his being such proprietor, and which is binding upon a proprietor of another interest in that land, or of an interest in other land by virtue of his being such proprietor". To adopt a biological expression, land obligations are an order of the class "obligations relating to land". This is sufficient to dispose of the argument presented by counsel for Mr Keith that the two expressions are of identical meaning and extent in Sched. 1. "Obligation relating to land" is of necessity a wider expression than "land obligation". However that, of itself, provides little assistance in defining the class.

The "golden rule" of construction, in its modern expression, requires that the words of the statute must, prima facie, be given their natural and ordinary meaning, in their context, and according to the appropriate linguistic register, without addition or subtraction, unless that meaning produces injustice, absurdity, anomaly or contradiction. The expression in para. 2 (e) includes the words "any obligation", without specification of the source of the obligation. This is in marked contrast to most of the provisions of paras. 1 and 2. One must assume that this was intentional, and that the provision should be capable of application whatever the source of the obligation, be it in contract, promise, rule of law or statute. Except that it is clear that an obligation must be owed by a person or persons to another person or persons, there is no restriction on the scope of its application by reference to the parties or their relationships either to each other or to the subjects in question or any other subjects. This can be contrasted with the provisions of the Conveyancing and Feudal Reform (Scotland) Act 1970 mentioned above. Prima facie the expression is wide enough to include a contractual obligation owed by one person to another, unless such an approach is excluded by the remaining words "relating to land". In my opinion it is an ordinary usage of English to describe missives as a contract relating to land. The words "relating to land" define the subject matter to which the obligation relates. They provide no other qualification on its scope. If this view is correct, then the expression cannot be limited to obligations relating to real rights of third parties, but must include personal obligations under contracts dealing with land and interests in land. With the exception of cases in which land is dealt with incidentally only, contractual and other forms of obligation, such as unilateral gratuitous promise, to create rights and interests in land, or to convey land or interests in land, are in my opinion typical "obligations relating to land". The sum of these examples would not adequately define the expression. The specific example, an obligation to recognise a servitude, points to an intention to include servitudes however constituted. That would include servitudes constituted by prescription, implied grant or reservation, or acquiescence in appropriate cases. It is perhaps unnecessary to attempt a comprehensive interpretation of the expression. In my opinion it is wide enough to include the obligations arising from a contract for the purchase and sale of heritable property.

Further I consider that such a construction is consistent with the general structure of para. 2. Contracts for the purchase and sale of heritage are obligationes literis. They may be constituted by probative agreement, however infrequently that may happen in current practice. In such cases, para. 2 (c) would apply. Paragraph 2 (e) would apply typically to contracts constituted by exchanges of correspondence which are holograph or adopted as holograph, or where locus poenitentiae is excluded by homologation or rei interventus. The interests of a consistent application of para. 2 are best served by a construction which includes missives in the scope of para. 2 (e). It is far from clear that this is the result which was in contemplation of the Scottish Law Commission in making its recommendations. The generality of para. 62 of the report taken with the view in para. 65 (3) that rights relating to land, within the contemplation of the commissioners, would "normally" be constituted by attested writs, might indicate a more limited objective. However the discussion in the report adds little to the language of the Act itself. In any event, I have come to the view that there is no justification in this case for looking beyond the terms of the Act for aids in construction of the provisions. I shall repel the third plea-in-law for the defender accordingly and sustain the seventh plea-in-law for the pursuers to that extent.

The second issue on prescription is strictly superseded. However in view of the extensive argument on this point I shall deal with it. There was no dispute that averments and pleadings might constitute a relevant acknowledgment, as defined by sec. 10 of the 1973 Act, and it was conceded that the averments made on behalf of Mr Keith met the requirements there set out. Counsel further accepted that the acknowledgment would subsist so long as, on a proper view, the averments represented the position of the party. In British Railways Board v. Strathclyde Regional Council and G.A. Hood & Co, v. Dumbarton District Council the court had concluded that a statement made in the context of litigation constituted a relevant claim not only at the point of intimation but throughout the period during which the claim was maintained. A similar approach was appropriate in relation to the alternative test of relevant acknowledgment. In my opinion these concessions were properly made by Mr Keith's counsel. Where there is an unequivocal admission on record that an obligation subsists, it is effective to prevent the running of the prescriptive period so long as it is, or can properly be considered to be, a reflection of the obligant's clear acknowledgment of the obligation in a question with his creditor. The issue between the parties in this case was as to the steps necessary to terminate effective acknowledgment. Barratts' counsel presented this as largely a matter of mechanics. The minute of abandonment lodged on behalf of Mr Keith was not of itself effective to dispose of the action. It constituted an offer and no more. The intervention of the court by pronouncing an interlocutor dismissing the action, and nothing short of that, could have the effect of bringing the action to an end. So long as the cause remained sisted it might be wakened, and the averments of Mr Keith would then stand until the final interlocutor dismissing the action. The passages in Dobie and the case of Barr v. Wallace do indicate that the court may waken a cause after a long period, 60 years in the case of Barr. However that demonstrated no more than that the process was not affected by prescription. That was the view of Sheriff Fyfe at p. 172. The issue in this case has to be whether the averments in the cause operated as a relevant acknowledgment after Mr Keith had intimated an offer to abandon, or in any event after Barratts had accepted payment of the expenses due on abandonment. It is, of course, clear, as Barratts' counsel submitted, that a pursuer may abandon a cause for many reasons, some only of which imply a departure from the position in fact and law reflected in the pleadings. However, in my opinion, the question is whether the averments can be considered to constitute a clear and unequivocal written admission by Mr Keith acknowledging that the obligation subsists. A step taken by or on behalf of Mr Keith which indicated that at the time he was no longer insisting on the position reflected in the pleadings or which raised a question whether he was so insisting would be sufficient to prevent a party with a contrary interest from relying on the averments as such a clear and unequivocal written admission. The intervention of the sheriff was required to dispose of the action. But once it had been intimated that Mr Keith did not intend to insist in the action, in my opinion, Barratts were no longer entitled to rely upon his averments as an unequivocal written acknowledgment of the obligation referred to in the case. The payment and acceptance of expenses served to demonstrate the common attitude of the parties that the sheriff court action was for all practical purposes dead and would have been disposed of but for simple oversight. Had sec. 6 applied, I would have accepted the argument that the prescriptive period had expired without a relevant claim or relevant acknowledgment following, at latest, the payment of the expenses of the process.

On the second issue, that of personal bar, the argument on behalf of Mr Keith suffered from the initial defect that it depended on attributing to the sheriff court process a character, in a question with Barratts, which Mr Keith was at pains to avoid in dealing with his own averments. The reality was that apart from using the sheriff court process as a quarry from which to hew the stuff of argument in the present debate, both parties had wholly departed from the positions adopted in that process. I considered that the argument for Mr Keith approached most closely to an argument based on waiver, that Barratts' counsel was correct in his contention that for such a case to succeed there must, at least, be averments of some overt acceptance of the waiver, that there were no relevant averments and that the pursuers' seventh plea should be sustained and the defender's first plea repelled accordingly.

The first issue which arises on the third contention is one of construction of the missives. The offer of 24th October 1975 referred to an area of ground at Craighall Garage, to the east of the Ellon Road, extending to four acres or hereby. The letter makes it clear that there had been prior communications on the same subject. It was known that Mr Keith already had planning permission for residential development of the land, as condition (3) shows. The letter dated 28th October refers to the land at several points. In modification (1) there appears the expression quoted above:

"The precise area to be conveyed will be as agreed between our clients."

Modification (3) refers to "the area to be retained by our client". In my opinion it is open to Barratts to argue on the basis of the letters as a whole that the area of ground had been defined by agreement prior to the exchange of correspondence, and that the outstanding issue was the measurement of the agreed area, on which the calculation of the price would depend. The words "as agreed" may be interpreted as referring to an historical fact rather than to a future event. Mr Keith's counsel argued that these words demonstrated that the land was still to be defined, and that they were to be read as meaning "to be agreed". Modification (3) may support the view that the subdivision of the subjects owned by Mr Keith had already been agreed.

In Grant v. Peter G. Gauld, as appears from the opinion of Lord Justice-Clerk Wheatley at p. 257, the area to be the subject of contract had not been identified at all, but remained to be agreed between the parties. The parties were in dispute as to the interpretation of the contract. But on the approach preferred by the court the area was open ended. In the present case on the pursuers' approach to construction, the boundaries of the area would require to be proved because of lack of definition in the drafting of the missives, rather than because of any lack of consensus as to the land to be conveyed. I consider that Barratts are entitled to proof before answer of their averments. At worst for them, the expression is ambiguous. In any event, I consider that Barratts are entitled to proof before answer of their averments of rei interventus and homologation. It is not possible to subdivide the offer letter into hermetically sealed compartments in the way the argument for Mr Keith requires. Condition (3) did provide the trigger for payment. But there was clearly only one site in contemplation, and it was both the measure of the land for which planning permission was required and the area for which payment was to be made. The argument based on the larger area comprised in the Lands Tribunal application takes no account of the express terms of the letter of 28th October, which explains that the holding was to be divided between the parties. It would have been surprising had the area comprised in the application not been larger than the subjects of sale. The reliance placed on the letter of 19th March 1981 was in my opinion misconceived. Entry to the subjects (which were described as "the subjects of sale") was taken and authorised to enable Barratts to carry out operations sufficient to constitute the commencement of material development with a view to preventing the expiry of the planning permission on 25th March 1981. Mr Keith consented to this "entirely without prejudice to his rights under the missives of sale", no doubt because there were particular provisions about the costs involved and the possible costs of restitution. The letter is at very least open to the construction that it was an assertion of the subsistence of a binding contract for the sale of defined subjects. In my opinion Barratts' averments are sufficient to entitle them to proof before answer (a) in support of the case that any informality of execution in the missives attributable to the failure to adopt the final letter as holograph was cured; (b) in support of the construction for which they contend; and (c) in support of the case that any lack of precision in the definition of the subjects of sale was made good by subsequent actings. It may be that the principle set out in Errol v. Walker, as explained by Lord Maxwell in Law v. Thomson, would provide a basis in law for Barratts' contentions. In the circumstances, since proof will be required, it is not appropriate to express any final views on these matters.

[His Lordship then dealt with the pursuers' averments of loss, with which this report is not concerned, and concluded:]

In the whole circumstances, I shall sustain the pursuer's seventh plea-in-law to the extent of repelling the first and third pleas-in-law for the defender and quoad ultra allow proof before answer, leaving standing the pursuers' seventh plea and the second, fourth and fifth pleas for the defender.

The defender reclaimed, the reclaiming motion calling before the Second Division, comprising the Lord Justice-Clerk (Ross), Lord McCluskey and Lord Kirkwood for a hearing.

At advising, on 10th December 1992:

LORD JUSTICE-CLERK (Ross)—This action contains conclusions for implement, alternatively damages, interdict and expenses. In the principal conclusion the pursuers are seeking implement by the defender of his part of missives of sale entered into between the parties dated 24th and 28th October and 3rd November 1975 in which the pursuers agreed to purchase and the defender agreed to sell subjects situated at Craighall Garage, Ellon.

In his opinion the Lord Ordinary has set out the terms of the missives, and he has also described the history of events following on the conclusion of the missives. In this connection it should be observed that the letters of 24th and 28th October 1975 were adopted as holograph, although the letter of 3rd November 1975 was not adopted as holograph. In the submissions before this court nothing was made of this point.

Among the pleas-in-law for the pursuers is plea-in-law (7) which is in the following terms: [his Lordship quoted its terms as set out supra and then the defender's pleas 1–3 and continued].

After hearing parties on the procedure roll, the Lord Ordinary on 5th December 1991 sustained the pursuers' seventh plea-in-law to the extent of repelling the defender's first and third pleas-in-law, and quoad ultra he allowed parties a proof before answer. Against that interlocutor of the Lord Ordinary the defender has now reclaimed.

Counsel for the defender submitted that the Lord Ordinary ought to have sustained the second and third pleas-in-law for the defender and that he should have granted decree of absolvitor in his favour. Counsel made it plain that in the reclaiming motion he was not challenging the Lord Ordinary's decision to repel the defender's first plea-in-law, but his contention was that the Lord Ordinary ought to have sustained the defender's third plea-in-law and assoilzied the defender. He made it clear that two points were being raised in the reclaiming motion. It was submitted first that the Lord Ordinary had erred in holding that the obligations of the parties in terms of the missives had not prescribed in terms of sec. 6 of the Prescription and Limitation (Scotland) Act 1973. In particular it was contended that the Lord Ordinary's construction of para. 2 (e) of Sched. 1 to the Act of 1973 was erroneous. The second submission was that the Lord Ordinary had also erred in holding that the averments of loss in Art. 6 of the condescendence were sufficiently relevant and specific to go to proof before answer.

Before the Lord Ordinary, the submissions on behalf of the defender had been that if there was a binding contract between the parties at any stage, the defender's obligation to implement it had been extinguished by prescription in terms of sec. 6 (1) of and para. 1 (g) of Sched. 1 to the Prescription and Limitation (Scotland) Act 1973. Counsel submitted that the appropriate period was the short negative prescription of five years; and that the obligation in question was a personal obligation arising under contract, and was not an obligation relating to land in terms of para. 2 (e) of Sched. 1 to the Act of 1973.

On behalf of the pursuers it was submitted to the Lord Ordinary that the contentions of the defender were misconceived. The prescriptive period was 20 years and not five years since the missives for the sale of land gave rise to obligations relating to land as envisaged in para. 2 (e) of Sched. 1 to the Act of 1973.

Before the Lord Ordinary both parties made submissions on the issue of whether any relevant claim had been made in relation to the obligation during the prescriptive period, and also on the question of whether the pursuers were personally barred from founding upon the obligation. No argument on these matters was addressed to this court as the grounds of appeal were confined to the two issues referred to above, namely, whether the Lord Ordinary's construction of an "obligation relating to land" was sound, and whether the averments of loss were sufficiently relevant and specific.

The Lord Ordinary, applying the rule that words in a statute should be given their natural and ordinary meaning, concluded that the expression "obligation relating to land" was wide enough to include the obligations arising from a contract for the purchase and sale of heritable property. He also expressed the view that such a construction was consistent with the general structure of para. 2 of Sched. 1.

Counsel for the defender accepted that in ordinary English usage missives for the purchase and sale of heritable property could be described as a contract relating to land, but he maintained that the question was not whether the missives for sale were a contract relating to land but whether the particular obligation within the missives founded on by the pursuers was an obligation relating to land. He maintained that the obligation in the missives which the pursuers were seeking to enforce, namely, the obligation to deliver a valid marketable disposition, was a purely personal obligation albeit that the contract constituted by the missives had as its ultimate object the conveying of land. He submitted that an obligation which was a purely personal obligation did not relate to land. By way of example he contended that if an occupier of land contracted with a third party to dig a ditch on the land, that could hardly be described as an obligation relating to land; similarly if a householder asked a plumber to carry out repairs to a fixture in a house, that could not be regarded as an obligation relating to land.

In support of his submission that the obligation to deliver a disposition was a purely personal obligation, counsel for the defender cited Gibson and Hunter Home Designs Ltd. 1976 SC 23 and Lord Advocate v. Shipbreaking Industries Ltd. 1991 S.L.T. 838. Counsel also submitted under reference to two memoranda from the Scottish Law Commission that the interpretation adopted by the Lord Ordinary was not in accordance with the structure of the legislation and the mischief which the legislation was designed to cure.

Counsel for the pursuers, on the other hand, maintained that the Lord Ordinary's approach was the correct one. He disagreed with the suggestion that the obligation in the present case was not an obligation relating to land because it was a personal obligation, and he maintained that on a proper reading of the Scottish Law Commission memorandum no. 15 the construction preferred by the Lord Ordinary was consistent with the general structure of the legislation. He further submitted that there was no difficulty in holding that the examples put forward by counsel for the defender of the contract to dig a ditch on land or the contract with a plumber to carry out repairs in a house were not obligations relating to land. These were contracts for services and the fact that the services were to be performed on land did not mean that anyone had undertaken an obligation relating to land.

I agree with counsel for the defender that the obligation which is sought to be enforced in the present action arises out of the missives for sale concluded between the parties, and that it is the obligation therein to deliver a disposition of the subjects of sale. It was not disputed that the Lord Ordinary was correct in holding that it is an ordinary usage of English to describe missives of sale as a contract relating to land. I am also satisfied, however, that missives of sale may contain obligations which are not properly to be regarded as obligations relating to land. For the purposes of the Act of 1973 it is necessary to examine the nature of the particular obligation which is sought to be enforced, and to determine whether that particular obligation is an obligation relating to land within the meaning of para. 2 (e) of Sched. 1. In my opinion having regard to the natural and ordinary meaning of words, an obligation to deliver a disposition of heritable subjects is an obligation relating to land. It matters not that the obligation is a personal obligation and that no real right is involved. As was made clear by Lord President Emslie in Gibson v. Hunter Home Designs Ltd., even delivery of the disposition of heritable subjects to the purchaser merely gives him a personal right to the subjects, and he does not acquire any real right to the subjects until his disposition is recorded in the appropriate Register of Sasines. Yet it could hardly be contended that the disposition did not give rise to any obligation relating to land.

In the course of his opinion the Lord Ordinary expressed the view that certain obligations in which land was dealt with only incidentally were not "obligations relating to land". In this passage, I think the Lord Ordinary must be referring to the sort of situation envisaged by counsel for the pursuer where someone was instructed to dig a ditch on land or a plumber was instructed to carry out repairs to heritable fixtures. I agree with the Lord Ordinary that these can be regarded as cases in which land is dealt with incidentally only. As already indicated, I regard these cases as examples of contracts for services in which land is merely the environment within which the services are to be performed. In these situations the obligations to be performed are not to be regarded as obligations relating to land.

The obligation in the missives to deliver a disposition of the subjects of sale meant that the seller was obliged to convey to the purchaser the seller's whole right, title and interest in the heritable subjects being sold. I find it impossible to regard that obligation as other than an obligation relating to land.

I have had some doubt as to whether it is legitimate in this case to have regard to the terms of the Scottish Law Commission memoranda. It might be appropriate to do so if the language of the statute was ambiguous or if there was any doubt about the construction to be placed upon the statutory language. In my opinion, however, there is no real doubt in this case and I am accordingly uncertain whether regard should be had to these memoranda for assistance in construing the legislation. In any event, when regard is had to the terms of the memoranda, I am satisfied that far from supporting the defender, the memoranda are fully consistent with the construction which the Lord Ordinary placed upon the legislation.

As counsel for the pursuers pointed out, once a disposition has been delivered to the purchaser and has been recorded by him he acquires a real right in the subjects of sale. It is clear from the terms of Sched. 3 to the Act of 1973 that such a right is imprescriptible. At the earlier stage where a disposition has been signed and delivered, the purchaser may only have acquired a personal obligation but the short five year prescription does not apply to such obligations because they are obligations constituted or evidenced by a probative writ (para. 2 (c) and para. 4 (b) of Sched. 1 to the Act of 1973). I agree with counsel for the pursuers that since obligations constituted or evidenced by a probative writ were expressly excluded from the application of the short five year prescription by para. 2 (c), by also excluding under para. 2 (e) "any obligation relating to land" Parliament must have been intending something other than obligations constituted or evidenced by probative writs. This is entirely consistent with para. 65 (3) of Scottish Law Commission memorandum no. 15 which is in the following terms:

"(3) Rights relating to land would in most cases be automatically excluded from the effect of the new short prescription by reason of the fact that they are normally constituted by attested writs. But there should be a general exclusion of such rights in order to cover those which might be created otherwise, e.g. by holograph writing."

In my opinion that statement in the memorandum makes it quite clear that the intention was to exclude from the application of the short five year prescription, obligations relating to land which were created otherwise than by probative writs, which in the context of the Act of 1973 means attested writs. Missives of sale which are holograph or adopted as holograph (which makes them the equivalent of a holograph writing) are an obvious example of what was being referred to in para. 65 (3) of the Scottish Law Commission memorandum.

Accordingly if regard is had to the terms of the Scottish Law Commission memoranda, it appears to me that this merely confirms that the Lord Ordinary was well justified in concluding that the construction which he placed upon "obligation relating to land" was consistent with the general structure of the legislation and with the presumed intention of Parliament.

There is a further reason for supporting the conclusion at which the Lord Ordinary arrived. It was not disputed that prior to the passing of the Act of 1973, missives were subject to the long negative prescription. In this connection we were referred to the Act of 1617, cap. 12, the Conveyancing (Scotland) Act 1924, sec. 17 and Pettigrew v. Harton 1956 S.C. 67. Counsel for the defender maintained that it would be surprising if Parliament had intended that an obligation in missives should survive for 20 years. I see no reason why this should be thought to be surprising. On the contrary, since obligations in missives clearly were covered by the long negative prescription prior to the passing of the Act of 1973, before one could conclude that the law in this regard had been changed, one would require to be satisfied that Parliament had evinced a clear intention to do so. No such clear intention has been demonstrated in the present case.

For the foregoing reasons I am satisfied that the Lord Ordinary was well founded in repelling the third plea-in-law for the defender and in sustaining the seventh plea-in-law for the pursuers to that extent. [His Lordship then dealt with the pursuers' averments of loss, with which this report is not concerned, and concluded.]

I would accordingly move your Lordships to refuse the reclaiming motion and to adhere to the interlocutors of the Lord Ordinary dated 5th December 1991.

LORD MCCLUSKEY —The principal issue which arises in this reclaiming motion is whether or not an obligation undertaken by the reclaimer in missives of sale entered into in 1975 between him and the respondents has prescribed under sec. 6 of the Prescription and Limitation (Scotland) Act 1973. That depends upon whether or not the obligation in question is properly to be described as an "obligation relating to land" within the meaning of para. 2 (e) of Sched. 1 to that Act. The context in which this issue arises is fully explained in the opinions both of the Lord Ordinary and of your Lordship in the chair and it is unnecessary for me to add to those explanations. I simply refer to the first conclusion annexed to the summons in which the pursuers and respondents seek decree ordaining the defender and reclaimer to fulfil his part of the missives of sale whereby the pursuers agreed to purchase and the defender agreed to sell a specified piece of ground, "and that by making, executing and delivering to the pursuers a valid disposition of the said area of ground and to make and execute such other deeds as may be necessary in order to give the pursuers a valid title to the said area of ground". That conclusion sufficiently identifies the obligation which the respondents maintain subsists but which the reclaimer maintains has been extinguished by the operation of sec. 6 of the Act.

The cases which were cited by counsel for the reclaimer and which have been referred to by your Lordship in the chair relate, for the most part, to the law which had become settled by the time of the enactment of the 1973 Act. A clear statement of the general law in relation to rights in property is to be found in the opinion of the Lord President in Gibson and Hunter Home Designs Ltd. 1976 SC 23, at p. 27. As his Lordship there pointed out, the purchaser, before delivery of the relevant disposition, has no more than a right under the contract of sale (the missives) to demand performance by the seller of his contractual obligation to convey; that right is properly to be classified as a personal right as distinct from a real right. It is a right which the purchaser can exercise against the seller as distinct from a right which the owner of the heritage can exercise against the world. The same concept is found in Skinner v. Skinner 1953 S.L.T. (Notes) 82 where the Lord Justice-Clerk (Thomson) speaks of "a personal right to demand a conveyance". It appears to me that these cases do not assist in resolving the issue before this court, though they are of value in illustrating a well understood distinction in terminology with which Scots lawyers have long been familiar. They also help to illustrate that, before the passing of the 1973 Act, an obligation to effect a conveyance of heritage, arising under missives, was subject to the long negative prescription, 20 years. The submission by counsel for the reclaimer was that the 1973 Act had altered that position and had brought such an obligation within the five year prescriptive period created by sec. 6. I pause to observe that, had such a change been intended, I should have expected very clear language to effect it; but that view was not pressed upon us in debate. We were also referred to Lord Advocate v. Shipbreaking Industries Ltd. 1991 S.L.T. 838 at p. 840J–K, where Lord Coulsfield obiter accepted that "any contract to do work on land would have to be treated as one relating to the land". However, his Lordship was not there attempting to decide on the basis of a full argument the point which has been raised before us.

It is plain, in my opinion, that the 1973 Act created an entirely new term, that contained in para. 2 (e) of Sched. 1, namely "any obligation relating to land". Accordingly, this court can derive only very limited assistance from cases where the court was addressing the ordinary common law effect of particular contracts or particular forms of contract relating to heritage. In my opinion, we have to find the meaning of the expression "any obligation relating to land" from the whole context of the 1973 Act. Both the Lord Ordinary and this court were invited to examine the memorandum (Scot. Law Com. memorandum no. 9) and subsequent paper (Scot. Law Com. no. 15), being the relevant Scottish Law Commission papers which preceded the enactment of the 1973 Act. In these documents the concept of rights or obligations "relating to land" appears, but it appears without express explanation or definition and I myself have not found it any easier to resolve the ambiguities surrounding the discussion of these concepts in the paragraphs to which we were referred than to understand the precise content of the similarly worded concept in the 1973 Act. So even if it were legitimate to assume that Parliament intended to enact what the Scottish Law Commission had proposed, I do not derive any real help from these documents.

It is of some significance that, in Sched. 1, sec. 6 of the Act is disapplied in respect of "any obligation constituted or evidenced by a probative writ": cf. para. 2 (c). "Probative writ" is defined in para. 4 of the Schedule as meaning "a writ which is authenticated by attestation or in any such other manner as, in relation to writs of the particular class in question, may be provided by or under 1 any enactment as having an effect equivalent to attestation". Paragraph 2 (c) does not therefore refer to obligations constituted by ordinary missives which are probative of the parties, including missives adopted as holograph. Very few obligations to convey land or to convey a title to some interest in land would be constituted or evidenced by a probative writ as defined in para. 4 of the Schedule, except perhaps during the period, normally very short, between the delivery of a disposition and its being recorded. Paragraph 2 (c) is not confined to obligations relating to land and it appears to have been inserted partly at least in order to give parties the option of deliberately creating obligations by probative writ so as to avoid the shorter prescription period. Paragraph 2 (e) is much more general and relates to any obligation whatsoever which is properly "relating to land". When, following missives and the delivery of a disposition, the disposition is recorded, the disponee acquires a real right in the interest in land which is conveyed by the disposition. That right is imprescriptible—cf. Sched. 3 and sees. 7 (2) and 8 (2) and para. 2 (h) of Sched. 1 to the Act. The opening words of para. 2 (e) are "except as provided in paragraph 1 (a) of this Schedule", but neither party suggested that the terms of para. 1 (a) of the Schedule were of material assistance in interpreting the words "any obligation relating to land". It might have been open to argue that the words "any obligation relating to land" fell to be construed fairly widely because otherwise it would have been unnecessary to except certain of the obligations in para. 1 (a) but, in the absence of any submission on the matter, I do not rely upon the terms of para. 1 (a).

In the circumstances the correct course is to endeavour to give the words in the statute their ordinary meaning. I agree with the Lord Ordinary that the first or golden rule of construction is that the words of a statute must be given their natural and ordinary meaning in their context unless to do so would produce injustice, absurdity, anomaly or contradiction. Thus the interpretation of an entirely new phrase, constructed of ordinary words, in a statute such as the 1973 Act becomes a matter of impression, each of the words in the phrase having been given its natural and ordinary meaning. In my opinion, it is clear that an obligation to make, execute and deliver to the purchaser under missives a valid disposition of a specified area of ground to which the missives relate is an obligation relating to land. On a correct view, the obligation which the missives create in this regard is an obligation to convey the title to the specified interest in land. The delivery of the disposition is merely the means whereby the title can be transferred from the seller to the purchaser to have a real title valid against the world. If the obligation created by the missives in this regard is not an obligation relating to land then I cannot understand what it is an obligation relating to. Of course, it is an obligation relating to making, executing and delivering a disposition, but that is simply a piece of mechanics. The underlying obligation is an obligation to convey a title to an interest in land. It appears to me not only that it is capable of being described as an "obligation relating to land" but that it would be difficult to describe it as anything else.

It was submitted by counsel for the reclaimer that to interpret the words "any obligation relating to land" to embrace an obligation to deliver a disposition of an interest in land would be to open the door to a very wide category of obligations simply on the basis that they had some connection with land. For example, it was said, if one party undertook an obligation to dig a ditch on another's land, or if a house owner employed a plumber to repair fittings in his house, the obligations arising would have to be regarded as "obligations relating to land". Whether or not any such obligation properly falls to be described as an obligation relating to land it is unnecessary to decide in this case. To that extent I would not wish to endorse the obiter observation of Lord Coulsfield quoted earlier, although I do not express any opinion that it is incorrect. But if a landowner were to engage someone to dig a ditch or a plumber to repair a fitting then it might be proper to describe the obligations arising as obligations relating to services rather than to land. However, it is unnecessary for the purposes of the present case to seek to draw the line between obligations arising under a contract constituted by missives which properly relate to land and obligations which do not. Plainly, there may be a contract relating to land which creates obligations which do not themselves relate to land. Both parties accepted that that was so and it is unnecessary to multiply examples of such obligations.

All that this court has to decide on the main question in this case is whether or not the obligation which is sought to be enforced by the first conclusion is an obligation relating to land within the meaning of Sched. 1, para. 2 (e). For the reasons I have given I consider that the obligation is within that subparagraph. [His Lordship then dealt with the pursuers' averments of loss and concluded:]

I agree with your Lordship in the chair that the Lord Ordinary came to the correct conclusions and that the reclaiming motion should be refused.

LORD KIRKWOOD —I am in full agreement with the opinion of your Lordship in the chair and in these circumstances I can express my views quite briefly.

Clause 4 of the missives provided inter alia that in exchange for the purchase price the seller would deliver a valid marketable disposition of the subjects of sale. The principal question for determination in this case is whether that obligation constituted an "obligation relating to land" within the meaning of para. 2 (e) of Sched. 1 to the Prescription and Limitation (Scotland) Act 1973, in which event the prescriptive period was 20 years, or whether the obligation was simply one arising from a contract and accordingly was affected by the prescriptive period of five years in terms of sec. 6 of the Act.

Both parties were agreed that prior to the passing of the 1973 Act an obligation of this nature contained in missives of sale was subject to the long negative prescription. However, counsel for the defender and reclaimer submitted that the position has been altered by the passing of the 1973 Act which had introduced for the first time the concept of an "obligation relating to land". While the contract constituted by the missives may be regarded as a contract which related to land, the question in this case was whether the particular obligation to deliver a disposition was an obligation "relating to land". Counsel argued that the obligation to deliver a disposition of the subjects was a purely personal obligation to deliver a deed which was subject to the short negative prescription of five years. A personal obligation to deliver a disposition to the purchaser was not an obligation relating to land notwithstanding the fact that the objective of the contract was the conveyance of land to the purchaser. Many mercantile contracts related to land in one way or another and consideration had to be given to where the line was to be drawn between an obligation which related to land and an obligation which did not so relate. If the words "relating to land" were construed too widely, and applied to purely personal obligations, it would mean that the obligations contained in, for example, a contract to excavate a trench, or a contract with a plumber to carry out repairs to a fixture in a house, would be subject to the 20-year prescriptive period and Parliament could not have intended such a result. It was clear that the personal obligations contained in such contracts could not properly be regarded as obligations relating to land. Similarly, a personal obligation to deliver a disposition to a purchaser was not an obligation relating to land.

Counsel for the pursuers and respondents submitted that even though the obligation to deliver a disposition was a personal obligation it was nonetheless an obligation relating to land and the Lord Ordinary had been correct in so holding.

In my opinion, the words "any obligation relating to land" introduced by para. 2 (e) of Sched. 1 to the Act must be given their natural and ordinary meaning. Applying this test, I am in no doubt that the obligation to deliver a disposition of the subjects of sale falls squarely within the definition of an "obligation relating to land" contained in para. 2 (e). It is true that the delivery of the disposition is simply the first step in the process whereby the purchaser acquires a real right to the heritable subjects. Once the purchaser has received a valid disposition he will have a personal right to the subjects and this personal right can be transformed into a real right by recording the disposition. When that has been done the purchaser's real right of ownership in the land is imprescriptible (Sched. 3, sees, 7 (2) and 8 (2) and para. 2 (h) of Sched. 1 to the Act). In my opinion, however, it is important to bear in mind that in the case of missives for the sale of heritable property, the actual subject of the contract is the land itself and I cannot regard the obligation to deliver a disposition of the subjects, to enable the purchaser to acquire a real right thereto, as being other than an obligation "relating to land". The other types of contract to which counsel for the defender specifically referred could not, in my view, properly be regarded as containing obligations relating to land. I would have thought that a contract to excavate a trench is an example of a contract to provide services. Although the services are to be supplied on the land in question, the contractual obligation to provide those services could not be said to be an obligation relating to land. However, each case must be decided in light of its own particular circumstances and I do not feel that there is anything to be gained by attempting to consider what other obligations would, or would not, be capable of being regarded as obligations relating to land. It is sufficient for the determination of this case to hold that the particular obligation with which we are concerned, namely, an obligation in missives to deliver a disposition of the subjects of sale, is an "obligation relating to land" within the meaning of para. 2 (e) of Sched. 1, and that accordingly the 20-year prescriptive period applies.

Although, like your Lordship in the chair, I have some doubt as to whether or not it is permissible in this case to have regard to the terms of the Scottish Law Commission memoranda, on which counsel for the defender sought to rely, I would have taken the view that the conclusion at which I have arrived was perfectly consistent with the approach of the Scottish Law Commission in para. 65 (3) of memorandum no. 15 of 1970. Further, in view of the wording of para. 2 (c) of Sched. 1 to the Act, it is clear that para. 2 (e) must have been intended to refer to obligations which were not constituted or evidenced by probative writs as defined in para. 4 (b) of Sched. 1.

[His Lordship then dealt with the pursuer's averments of loss, and concluded:]

On the whole matter I agree that the reclaiming motion should be disposed of in the manner proposed by your Lordship in the chair.