Freely Available British and Irish Public Legal Information
[Home] [Databases] [World Law] [Multidatabase Search] [Help] [Feedback]
Scottish Court of Session Decisions
You are here: BAILII >> Databases >> Scottish Court of Session Decisions >> Tucker Or Evans v Angus Healthcare (Glenesk) Ltd [2001] ScotCS 6 (12 January 2001)
URL: http://www.bailii.org/scot/cases/ScotCS/2001/6.html
Cite as: 2001 SCLR 117, [2001] ScotCS 6
[New search] [Help]
|
OUTER HOUSE, COURT OF SESSION |
|
|
CA39/14/00
|
OPINION OF LORD MACFADYEN in the cause MRS GILLIAN TUCKER or EVANS Pursuer; against ARGUS HEALTHCARE (GLENESK) LIMITED Defenders:
________________ |
Pursuer: Beynon, Steedman Ramage, W.S.
Defenders: Howlin, Drummond Miller, W.S.
12 January 2001
Introduction
[1] In 1998 the pursuer's solicitors on her behalf concluded missives for the sale of her nursing home business to the defenders. As part of the bargain the pursuer was to convey to the defenders the heritable subjects in which the business was carried on. The missives contained provisions relating to the water rights to be conveyed to the defenders in connection with the heritable subjects. The pipeline providing the water supply to the subjects passes through land in other ownership. The pursuer therefore undertook to deliver to the defenders at settlement a Deed of Servitude granted by the owners of the land through which the water pipe passes. In the event it has proved impracticable to implement that obligation according to its terms, because part of the pipeline lies under a private road, and the owner of one half of the road is unidentifiable. In these circumstances prolonged discussions took place between the parties' solicitors in search of a solution to the problem. The solution which was proposed involved the grant of a Deed of Servitude for part of the length of the pipeline, with the section in respect of which no valid deed could be procured covered by an a non domino title fortified by title indemnity insurance. Various steps were taken with a view to putting that solution into effect. However, there was considerable delay, and the pursuer raised this action concluding for specific implement of the missives. Thereafter, on 29 May 2000, the defenders sought to resile from the bargain. The pursuer does not accept that they were entitled to do so. She accepts that she is not able to fulfil her obligation to deliver a Deed of Servitude according to its terms, but contends that the defenders have waived their right to resile on that ground. The defenders on the other hand contend that there are no relevant averments of waiver. That issue was appointed to debate.
The Missives
[2] The provisions of the missives concerning water rights are to be found in Clause 2(2) of the defenders' solicitors' letter dated 23 January 1998 (No. 6/3 of process), Clause 3 of their letter of 4 February 1998 (No. 6/5 of process) and Clause 3 of their letter of 27 February 1998 (No. 6/8 of process). Clause 2(2) of the letter of 23 January (which is in places in the missives referred to as "Condition 2") provided as follows:
"The water and sewerage search report attached to the SPH Property Certificate which accompanies the title deeds indicates as follows:- 'There is no publicly maintained water pipe ex adverso the subjects. The nearest publicly maintained water pipe lies 850 metres west of the subjects. Please note that SPH Property Search have been informed that the subjects are connected to the public water'. It would appear that the subjects of sale are served for water supply purposes by a connection to the public water supply. It is a condition of our clients' offer that you will provide a plan showing the precise line of the public water supply main from which the water supply is drawn and the line of the pipe from the said water main to the subjects of sale. In addition, you will deliver, at settlement, a formal Deed of Servitude granted by the owners of the land through which the water pipe passes vouching the formal rights of the seller to use, maintain, renew and repair the said water pipe with all appropriate rights of access on all necessary occasions for purposes of maintenance, renewal and repair etcetera. The purchasers may, in the event that the present pipe has been laid and used along its existing line for 20 years or more, accept formal Affidavits (not less than 2 in number) from the present or past owners of the ground vouching the foregoing usage and confirming its prescriptive status. The form of the said Affidavits, if acceptable, would require to be approved as acceptable to the purchasers in all respects" (emphasis added).
Clause 3 of the letter of 4 February provided inter alia as follows:
"The seller will otherwise satisfy the purchasers that the seller has a good heritable title to use all parts of the water supply system as presently used by the seller only when documentary evidence from the local authority in terms satisfactory to the purchasers has been produced by the sellers demonstrating that the length of privately owned pipe which connects the heritable subjects which forms (sic) part of the Business to the public water main is contained wholly within subjects owned by the seller. In the event that a formal Deed of Servitude vouching the seller's entitlement to use, maintain, renew and replace to Local Authority standards, from time to time prevailing, the said water pipe to the extent that it lies outwith the heritable subjects forming part of the Business and the mains water pipe and containing all necessary rights of access to exercise the said servitude rights is required by the purchasers, then the date of settlement hereunder shall be postponed at the purchasers' option to a date 14 days following the date of exhibition of the said Deed of Servitude duly executed in the seller's favour. Moreover, the seller's Solicitors, will, at the date of settlement, include in their settlement letter of undertaking, a personal obligation to deliver the said Deed of Servitude duly recorded in the Register of Sasines or the Land Register, as appropriate."
Clause 3 of the letter of 27 February added at the end of the last-quoted provision the following further provision:
"The purchaser will accept as satisfactory, as far as the obligation of the seller to produce a Deed of Servitude is concerned, a Deed of Servitude in the style annexed and signed as relative hereto, provided that the seller can satisfy the purchaser, by reference to the title deeds of Denhead Farm, that the whole length of the water pipe lies within the curtillage (sic) of Denhead Farm as owned and possessed by Mr and Mrs Still, who you advise us are the owners, provided always that if Denhead Farm is subject to a security in favour of a third party lender or lenders, and/or if any part of the land through which the pipeline passes is let, the consent of the lender or lenders and of the tenant in possession of the ground, shall also require to be obtained by the seller to the said Deed of Servitude to ensure rights of unrestricted access for maintenance purposes in the future."
For the purposes of the present dispute between the parties, the part of those complex provisions that is of particular relevance is the passage highlighted in bold in the above quotation from Clause 2(2) of the letter of 23 January.
The Pleadings
[3] The pursuer's first conclusion is for decree ordaining the defenders to implement the contract constituted by the missives by making payment of the price of £1,000,000 in exchange for the pursuer inter alia delivering a valid disposition by her in their favour of the heritable subjects defined in the missives and:
|
"(vi) |
delivering valid deeds of servitude relative to mains water supply to the heritable property and relative title indemnity policy". |
[4] In article 5 of the condescendence the pursuer avers that, in terms of the provisions of the missives quoted in paragraph [2] above, because the existing water supply main passes through other subjects outwith the heritable subjects of sale, a Deed of Servitude fell to be delivered. She avers that at present there is no Deed of Servitude providing for an entitlement to the necessary water supply. Under reference to a plan (No. 6/10 of process), on which the line of the supply pipe is shown marked orange along the line A-B-C-D-E-F, she explains that the problem which has been encountered is that section C-D passes under a section of private road, and that it has not been possible to identify the heritable proprietor of one half of the road. So far as the remainder of the pipe is concerned, she avers in effect that she is in a position to comply with her contractual obligations. Draft deeds of servitude have been adjusted in respect of the sections A-B, B-C and D-E, and also quantum valeat in respect of section C-D to be granted by the identified part-owner of the road. A draft deed of servitude in respect of section E-F has been sent to the defenders' solicitors, and has not been challenged by them. So far as the problem section is concerned, she avers:
"In respect of the section of the supply pipe beneath the road between the letters C and D, the parties' Solicitors have agreed the terms of a suitable a non domino Disposition in favour of [Mrs Still, the identified part-owner of the road] to be fortified by a title indemnity policy. ... A draft a non domino disposition was ... approved by [the defenders' solicitors] on 3.9.1998. By letter of 28th April 1998 [the defenders' solicitors] confirmed that the servitude from Mrs Still required to be supported by an appropriate title indemnity to be provided by the Pursuer, the suitability and adequacy of the policy being matters for the defenders to judge."
[5] In article 6 of the condescendence the pursuer traverses in further detail the circumstances in which the problem emerged and the terms in which it was discussed. She avers that on 10 March 1998 her solicitors wrote to the defenders' solicitors informing them that part of the pipe lay beneath a private road and that it was unlikely that the identity of the heritable proprietor of the road would be ascertained; that on 18 March they wrote stating that the servitude title to the section of pipe beneath the road and verge would require to be fortified by suitable defective title indemnity cover, and that they were in correspondence with insurers; and that thereafter correspondence proceeded between the parties' solicitors "in order to agree the terms of the required draft deed of servitudes and the title indemnity policy". It is averred that the amount of the policy was suggested by the defenders' then funders, and that that suggestion was acted upon. A revised schedule provided by the insurers setting out the level of cover was sent to the defenders' solicitors on 3 June 1998. The next stage, according to the pursuer's averments, was that later in June 1998 the defenders' new funders indicated that they would require that an a non domino disposition in favour of Mrs Still be recorded to fortify the grant of the servitude; that request was acceded to by the pursuer's solicitors in 9 July; a draft deed was then "prepared and agreed", and the approved draft was sent to the pursuer's solicitors on 3 September; in the meantime there had been further intimation of a reduced level of title indemnity cover required by the funders.
[6] In article 7 of the condescendence, the narrative is carried forward. It is averred that after August 1998 "the parties' Solicitors continued to deal with the progressing of the conveyancing requirements which were necessary in order for completion to take place"; that so far as the pursuer's solicitors were concerned, that involved dealing with the solicitors acting for the four parties who were to grant servitude rights; that by 10 November the relevant deeds (except the one for section E-F) had been executed and were ready for delivery; and that by 26 January 1999 the defenders' solicitors had been informed that the proprietors of section E-F had agreed to grant a suitable deed of servitude. Between then and August 1999, it is averred, the pursuer's solicitors continued to press the defenders' solicitors to settle. A third set of funders became involved; their solicitors raised certain queries; and those inquiries were "all responded to satisfactorily" by the pursuer's solicitors. By that stage, the pursuer avers, "no matter remained in dispute or otherwise outstanding".
[7] In article 8 of the condescendence, the pursuer formulates her case of waiver in the following terms:
"In these circumstances the Defenders have waived their contractual entitlement provided for in the Missives, and Clause 2(2) of the letter of 23rd January 1998 as amended in particular. From 18th March 1998 the Defenders were aware that the Pursuer could only grant servitude water rights with the support of title indemnity policy relative to the portion of the pipe that lay beneath the road. The Defenders have been in exclusive occupation of the heritage and have operated the business since 27th February 1998. They continue to do so. They have done so under and in terms of a Minute of Agreement between the parties dated 27th February 1998. Since then, with the Pursuer's consent, the Defenders have been the Registered Operator of the Nursing Home. By 28th April 1998, the Defenders' Solicitors had indicated that proceeding to settlement of the transaction by means of a title indemnity policy would be sufficient for their clients (sic) purposes provided the terms of the policy met their client's requirements. By 3rd June 1998 [the defenders' solicitors] and [the pursuer's solicitors] had agreed on the level of cover ... which the Defenders and their then funders would need. At no stage have [the defenders' solicitors] indicated that the level of cover or policy terms being offered by the Pursuer were inadequate or in any way unsatisfactory. After 18th March 1998, both parties (sic) Solicitors continued to progress the conveyancing requirements. The Pursuer, in continuing to instruct the Solicitors to progress the transaction, and in fulfilling her obligations under the Missives and Minute of Agreement has conducted her affairs on the basis that the Defenders had waived their said contractual rights. At no point between March 1998 and 7th January 2000 did the Defenders or their Solicitors indicate that they were or would be insisting upon the whole or strict measure of entitlement provided for in Clause 2(2). The Defenders refuse or at least delay to proceed to settlement. On 7 January 2000 [the defenders' solicitors] on behalf of the Defenders indicated that their clients were having difficulties in funding settlement of the transaction and sought postponement until September 2000. Such delay was not acceptable to the Pursuer."
Shortly thereafter, this action was raised.
[8] The pursuer's second plea-in-law is in the following terms:
"The Defenders having waived part of their contractual right under and in terms of Clause 2(2) of the letter of 23rd February (sic; sc. January) 1998, they are bound to implement the contract as concluded for first."
The defenders state a general plea to the relevancy and specification of the pursuer's pleadings. In addition, their fourth plea-in-law is in the following terms:
"The Defenders, being entitled to resile from the parties' contract by reason of the Pursuer's failure to tender a valid title to the said water supply in terms of the parties' missives, the Defenders should be assoilzied."
The Law on Waiver
[9] There was no real dispute between the parties about the law applicable to the issue between them. Mr Howlin, for the defenders, referred to three cases. The first was Armia Limited v Daejan Developments Limited 1979 SC (HL) 56 in which on the subject of waiver Lord Fraser of Tullybelton (with whose speech Lords Diplock, Edmund-Davies and Russell of Killowen agreed) said (at 68-69):
"I should add that the case on waiver can not, in my opinion, be disposed of simply on the ground that the respondents, who seek to rely on waiver, did not aver or prove that they had suffered prejudice or acted to their detriment in reliance on the appellants' conduct. The word 'waiver' is a vague term - see Gloag on Contract (2nd Edition) 281. In Banning v Wright [1972] 1 WLR 972, Lord Hailsham of St Marylebone LC at 979C, said this:
'In my view, the primary meaning of the word "waiver" in legal parlance is the abandonment of a right in such a way that the other party is entitled to plead the abandonment by way of confession and avoidance if the right is thereafter asserted.'
In the same case Lord Reid at 981D said:
'It [waiver] always, I think, involves the idea of giving up or abandoning some right or rule.'
In W. J. Alan & Co. Ltd. v El Nasr Export & Import Co. [1972] 2 QB 189, 213A, Lord Denning MR expressed the opinion that it was not necessary for the party relying on the waiver to have suffered prejudice by his reliance, but that it was enough if he had conducted his affairs on the basis of the waiver. In the present case the reason why the plea of waiver fails is not that the respondents suffered no prejudice (although in my opinion that is true) but that the appellants never abandoned their right to refuse the title offered, and the respondents never conducted their affairs on the basis that they had."
Although Mr Howlin did not cite the speech of Lord Keith of Kinkel in Armia, Mr Beynon for the pursuer did, and it is therefore convenient to note here the passage (at 71) on which he founded:
"Your Lordships were favoured with an interesting argument from the respondents' side of the Bar as to the nature of waiver as a legal concept. Starting from the proposition to be found on the first page of Rankine on Personal Bar that similar principles govern personal bar in Scotland and estoppel in England, and the further proposition that waiver is an aspect of personal bar, counsel founded on the formulation of the concept of waiver stated by Lord Denning MR in W. J. Alan & Co. ... at p. 213:
'The principle of waiver is simply this: if one party, by his conduct, leads another to believe that the strict rights arising under the contract will not be insisted upon, intending that the other should act on that belief, and he does act on it, then the first party will not afterwards be allowed to insist on the strict legal rights when it would be inequitable for him to do so.'
Counsel was particularly concerned to carry the contention that it is sufficient for the party relying on the plea of waiver to establish that he has acted in some way in reliance on a belief induced by the words and conduct of the other party, and that he need not show that he has acted to his prejudice."
After noting that waiver might arise in a number of guises in a variety of contexts, and declining to accept that there were no important juridical differences between personal bar in Scotland and estoppel in England, Lord Keith continued (at 72):
"The word 'waiver' connotes the abandonment of a right. (See Banning v Wright ... per Lord Hailsham of St Marylebone LC at p. 979, Lord Reid at p. 981). The abandonment may be express, or it may be inferred from the facts and circumstances of the case. I am of opinion that certain of the Scottish cases cited as being concerned with the latter aspect are disclosed, upon close examination, to be cases where one party to a contract has plainly accepted as being conform to contract performance tendered by the other party which he might, if so minded at the time, have rejected as defective. ... I conclude from these cases that the question whether or not there has been waiver of a right is a question of fact, to be determined objectively upon a consideration of all the relevant evidence."
[10] The second case to which Mr Howlin made reference was James Howden & Co. Ltd v Taylor Woodrow Property Co. Ltd 1998 SCLR 903. He emphasised certain passages in the opinion of Lord Kirkwood. At 913F, his Lordship, after reference to Armia, said:
"We were referred to a number of authorities on the question of waiver and, in my view, these authorities establish that waiver involves the giving up or abandonment of a right, and that the abandonment may be express or it may be inferred from the facts and circumstances of the case."
At 915C his Lordship added:
"But waiver cannot, in my view, be constituted by an undertaking to postpone the exercise of the right. It is, in my opinion, an essential element of waiver that a right is abandoned for all time and is therefore extinguished. In this connection I respectfully agree with the observations of Lord Murray in Atlas Assurance Co. Ltd v Dollar Land Holdings plc [1993 SLT 892], where he stated (at 894) that
'what is averred must be consistent with abandonment and inconsistent with merely suspending the sanction of resiling by the creditor to give the debtor a further opportunity to fulfil the contract'.
... I have reached the conclusion that an essential feature of waiver is the abandonment of a right for all time...".
The third case which Mr Howlin cited was Atlas Assurance Co. Ltd. He referred to the following passage (from page 894E) which immediately precedes the passage quoted in the excerpt from the opinion of Lord Kirkwood in James Howden & Co. Ltd above:
"As the authorities cited demonstrate, there are two requirements for relevant averments of waiver. The first is that, in the absence of express abandonment, there should be facts and circumstances averred from which abandonment may be inferred."
Having set out the averments relied upon in that case, his Lordship continued (at 894G):
"Can it be said ... that, from these facts and circumstances, it could reasonably be inferred that that the pursuers had abandoned their option to resile? An affirmative answer could be given only if these averments were not also consistent with a desire on the part of the pursuers to enforce the contract even at the expense of further delay in payment of the price ..."
[11] It is, in my view, sufficient for the purposes of the present case to take from those authorities the propositions (1) that waiver is constituted by the giving up or abandonment of a right, (2) that such abandonment may be express or may be a matter of inference from the actings of the party in whom the right in question was vested, (3) that determination of whether abandonment is to be inferred requires objective consideration of the facts and circumstances of the case, and (4) that circumstances which are also consistent with retention of the right in question will not support an inference that the right has been abandoned. It appears also to be necessary, for the purpose of relevantly supporting a plea of waiver, to aver that the party taking the plea has conducted his affairs on the basis that the right has been abandoned, but the issue between the parties in the present case does not turn on that aspect of the matter.
Express Waiver
[12] Mr Howlin's first submission was that on a sound construction of the missives any waiver of the defenders' right to strict performance of the pursuer's contractual obligation to deliver a Deed of Servitude supporting the water supply required to be express. There was no averment of express waiver of the defenders' right to delivery of an effective Deed of Servitude granted by the owners (i.e. all the owners) of the land through which the water pipe passes. The case of waiver was accordingly irrelevant, and the action should be dismissed.
[13] The foundation for this aspect of Mr Howlin's submissions is to be found in certain, somewhat tortuous, provisions of the missives. The trail begins in the initial offer dated 28 November 1997 (No. 6/1 of process). Clause 1.1(b) of that offer identifies the subjects of sale as including "all ... servitude rights reasonably required for the full enjoyment of the subjects or for the provision of water, drainage and electricity services thereto". Clause 7 (Warranties and Undertakings) provides inter alia as follows:
|
"The Seller warrants, represents and undertakes to the Purchaser in the terms set out in the Schedule annexed hereto declaring that:- |
||
|
(c) |
the rights and remedies of the Purchaser in respect of any breach of warranty, representation or undertaking shall not be affected by Completion, by any investigation made by or on behalf of the Purchaser into the affairs of the Seller, or the Business, the Purchaser failing to exercise or delay the exercise of any of its rights or remedies or any other event or matter whatsoever except a specific duly authorised waiver or release". |
|
The Schedule contains inter alia a warranty in the following terms:
|
"6. |
The Seller warrants that:- |
||
|
(m) |
That included in the Heritable Property are all necessary servitudes for water supply ... with adequate rights of access for maintenance and repair on all necessary occasions ..." |
||
In the qualified acceptance dated 11 December 1997 (No. 6/2 of process) qualification (or Condition) 21 is in the following terms:
|
"Condition 6(m) ... of your said Schedule will be held to have been deleted as your client will be held to have satisfied itself concerning the terms thereof." |
The response to that qualification is to be found in the letter of 23 January 1998 (No. 6/3 of process), which is the letter which first introduced the specific obligation on the pursuer (Clause 2(2)) to deliver a Deed of Servitude in relation to the water supply. Qualification 21 of that letter is in the following terms:
|
"Condition 21 of your qualified acceptance letter is agreed subject to your client's compliance with the requirements contained in Condition 2 of this qualified acceptance letter ..." |
There the matter rested.
[14] Mr Howlin submitted that the reference in declaration (c) of Clause 7 of the original offer to "a specific duly authorised waiver" meant an express waiver. He accepted that to come within the scope of the declaration a waiver would not require to be in writing, but might be oral. He submitted, however, that it could not be "specific" if it was a matter of inference from actings. Accordingly, the parties' contract specifically precluded implied waiver of any right of the category to which declaration (c) of Clause 7 applied. The question therefore came to be whether the pursuer was seeking to rely on implied waiver of a "warranty, representation or undertaking" to which declaration (c) applied, i.e. one given in the Schedule. That depended, Mr Howlin submitted, on the proper construction of qualification 21 of the letter of 23 January. The acceptance therein of qualification 21 of the letter of 11 December, if it had been in absolute terms, would have removed from the contract the warranty that the "Heritable Property" included "all necessary servitudes for water supply". That acceptance was not, however, absolute; it was "subject to" the pursuer's compliance with the requirements of Condition 2 of the letter of 23 January. That meant that it did not take effect if the pursuer did not so comply. In the event the pursuer had not complied with the requirements of Condition 2. The acceptance of the deletion of warranty 6(m) therefore flew off. The matter in connection with which the pursuer was seeking to rely on waiver was therefore a matter still covered by warranty 6(m). There was, however, no averment of the only sort of waiver that was permissible in terms of the parties' contract, i.e. "a specific duly authorised waiver". The averments of waiver to be inferred from the parties' actings were in these circumstances irrelevant.
[15] Mr Beynon's first response to those submissions was to argue that on a proper construction of declaration (c) of Clause 7 of the letter of 28 November waiver inferred from the actings of the parties was capable of constituting "a specific duly authorised waiver". The declaration did not refer to express waiver. Whether a waiver inferred from actings was "specific" was a matter of degree. It could not be said that any implied waiver was necessarily not a specific waiver. Secondly, Mr Beynon submitted that in a sound construction of qualification 21 of the letter of 23 January, the deletion of warranty 6(m) had been accepted. The words "subject to" were merely a cross-reference to and reinforcement of Clause or Condition 2 of the letter, an indication that the reason for the acceptance of the deletion of warranty 6(m) was the imposition on the pursuer of the new obligation under Clause 2. For these reasons, Mr Beynon submitted, there was nothing in the parties' contract to preclude a plea that the defenders had, by their actings, waived their right to insist on strict compliance with Clause 2.
[16] In my view the provisions of the missives that require to be examined in order to deal with these submissions constitute a poor advertisement for the traditional process of developing the definition of the rights and obligations of seller and purchaser through qualification and counter-qualification. In addition, the critical phrases - "a specific duly authorised waiver" in Clause 7(c) of the original offer, and "subject to" in qualification 21 of the letter of 23 January - lack clarity.
[17] In the event, I have come to the conclusion that Mr Howlin's submission is correct on the first point. Although it would have been much clearer if the reference had been to "an express waiver", or perhaps preferably "an express written waiver", I am of opinion that, in the context of the formulation of a series of formal warranties set out in a Schedule to the offer, the natural meaning of "a specific ... waiver" is an express waiver. I am of opinion that, on a sound construction of the missives, the parties have expressly contracted to exclude the possibility of a plea that waiver of rights and remedies arising from breach of warranty should be inferred from the actings of the parties.
[18] In my opinion, however, Mr Howlin's submission breaks down at the next stage. The prohibition of a plea of waiver based on inference from the defenders' actings applies only to rights and remedies for breach of a warranty, representation or undertaking contained in the Schedule. It seems to me, however, that in this case the circumstances in which the pursuer is seeking to rely on implied waiver are not circumstances to which the prohibition in Clause 7(c) truly applies. It is, in my view, helpful to consider how the contractual provisions about the water supply developed. Initially, the defenders, in making their offer to purchase the business, described the heritable subjects included in the subjects of sale as including inter alia "all ... servitude rights reasonably required for the ... provision of water ... services thereto" (Clause 1.1(b)), and sought from the pursuer a warranty that the subjects included "all necessary servitudes for water supply" (Clause 7 and Schedule, paragraph 6(m)). In the first qualified acceptance (No. 6/2 of process) the pursuer sought to qualify Clause 1.1(b) of the offer by reference to the title deeds, and sought to delete paragraph 6(m) of the Schedule. In response to that, the defenders in the next step in the missives (No. 6/3 of process) proposed two related developments. First, in Clause 2(2), having narrated their understanding of the factual position with regard to the water supply, they introduced the stipulation, on which they now rely, for a formal deed of servitude by the owners of the land through which the pipe passes. That was, it seems to me, plainly intended as a substitute for the more general warranty in paragraph 6(m) of the Schedule to the offer. Secondly, reinforcing that view, they accepted the deletion of paragraph 6(m), but said that that was "subject to" compliance with the requirements of "Condition 2". There is, in my view, some force in Mr Howlin's analysis that the effect of that form of words was that, if the pursuer failed to comply with Condition 2, the warranty contained in paragraph 6(m) would be reinstated. On that basis it could be said that it would be the breach of that warranty rather than the failure to comply with Condition 2 that would justify the defenders in resiling from the missives. But it does not follow from that analysis that the pursuer is seeking to rely on implied waiver in a context in which it is prohibited by Clause 7(c). On the contrary, the pursuer's plea of waiver is directed at the defenders' right to rely on her failure to comply with Condition 2, not at their right to rely on breach of the warranty in paragraph 6(m). There is nothing in Clause 7(c) to prevent the pursuer from pleading implied waiver of the defenders' entitlement to insist on strict compliance with Condition 2. If that plea succeeds, the point at which the warranty in paragraph 6(m) might be revived will not be reached, and the context in which the prohibition in Clause 7(c) might be relied upon will not arise. I therefore reject the submission that the averments of waiver are irrelevant simply because they seek to infer waiver from the defenders' actings.
Inference of Abandonment
[19] Mr Howlin's alternative submission was that, if the contract did not exclude reliance on a plea of waiver founded on inference from the parties' actings, the pursuer's averments did not relevantly support a reasonable inference that the defenders had permanently abandoned their right to resile from the missives on the ground that the pursuer was unable to deliver the requisite deed of servitude covering the whole length of the pipe. It was not reasonable to infer that the defenders would abandon their right to resile for want of strict compliance with the obligation to deliver such a deed of servitude before acceptable substitute protection of their position had been put in place. It could not be inferred from their participation in the search for an alternative solution, or for that matter from their approval of documents forming part of the alternative solution, that they had given up their contractual entitlement. The terms of the title indemnity policy were never agreed. The pursuer does not aver that they were. Although her pleadings at an earlier stage contained an averment that the terms of the policy had been agreed, that averment was deleted by paragraph 2(vi) of the Minute of Amendment, No. 21 of process. All that is said to have been agreed is the level of cover. Mr Howlin pointed to the terms of the defenders' solicitors' letter to the pursuer's solicitors dated 28 April 1998 (No. 12/5 of process) in which, when returning the revised draft deed of servitude, they said:
"The Deed of Servitude still requires to be supported, of course, by an appropriate title indemnity which you are to provide and as to the suitability and sufficiency of which, for their title and wider purposes, our clients will be the sole judges".
The reference to the "suitability and sufficiency" of the indemnity was not simply a reference to the amount of the cover. There was thus an unfilled gap in the pursuer's pleadings in respect that there was no averment that in any respect other than the amount of cover, the defenders had accepted that the proposed policy was "suitable and sufficient". The gap was plainly disclosed in article 8 of the condescendence, where it was averred that the defenders' solicitors have at no stage indicated that the level of cover or the policy terms were inadequate or in any way unsatisfactory. That fell short of an averment of approval of the terms of the policy. Moreover, it was far from clear on the face of the pursuer's pleadings when, according to her contention, the waiver had taken place. Further, the form of the first conclusion, and in particular head (vi) of the steps to be taken by the pursuer in return for payment of the price, appeared to contemplate that the defenders had come under an obligation to accept a deed of servitude supported by a title indemnity policy. The pursuer's case was one of waiver, and her averments failed to explain the origin of a positive obligation on the defenders' part to accept something different from the form of title expressly contemplated in the missives. To support such a positive obligation there would require to be averments of variation of the contract. In all these circumstances the case should be dismissed.
[20] Mr Beynon, by way of introduction to his submissions, contended that the pursuer's case was not that the defenders had abandoned outright their entitlement to a deed of servitude in respect of the water supply; rather what was relied on was a form of conditional waiver: her contention was that the defenders had abandoned their right to delivery of a deed of servitude in respect of the length of the pipe which ran through land the owner of which could not be identified, provided they got the a non domino disposition and the title indemnity policy to cover that length of pipe instead. He accepted that on the authorities waiver required permanent abandonment. He contended, however, that the abandonment could be conditional. He submitted that this case, like any case of waiver, turned on its facts. The pursuer's case, when read fairly, was that the defenders had waived only their right to a valid deed of servitude in respect of section C-D of the pipe where it lay under the private road. That was the only part in respect of which the pursuer was not in a position to perform her obligations according to their terms. Whether the defenders had abandoned or given up their strict contractual entitlement in respect of that length of pipe was a question that required to be answered in light of all the circumstances of the transaction. At this stage, the issue was whether the pursuer had averred facts which were capable of giving rise to the inference of abandonment. The case should only be dismissed if it could be affirmed that the pursuer was bound to fail after proof.
[21] The critical averments, Mr Beynon submitted, were those in article 8 of the condescendence, where it is averred that by 28 April 1998 the defenders' solicitors had indicated that proceeding to settlement by means of a title indemnity policy would be sufficient for their clients' purposes "provided the terms of the policy met their client's requirements"; that the level of cover was agreed; and that it was never suggested that the terms of the policy were inadequate or unsatisfactory. In that connection he submitted that as early as 20 February 1998 the defenders' solicitors had indicated that in principle a suitable title indemnity was an acceptable alternative to a deed of servitude; in their letter of that date (No. 24/3 of process) they stated:
"We have to say that, even if our clients were not committed in practical terms to proceed with [named funders], they would still be requiring the Deed of Servitude or a suitable title indemnity for full value with a built in escalator and loss of rent cover."
The letter of 28 April 1998 (No. 12/5 of process), while reserving to the defenders the judgement as to whether the title indemnity cover was suitable and sufficient, supported the inference that the right to resile for want of the deed of servitude was being given up, provided a suitable and sufficient title indemnity was provided. If that inference was correct, the defenders would remain entitled to resile if the pursuer tendered neither a deed of servitude nor a suitable and sufficient title indemnity, but they would not be entitled to resile, in face of a tender of a suitable and sufficient title indemnity, on the ground that the pursuer was unable to deliver a valid deed of servitude. The defenders admit that "at no stage have [their solicitors] indicated that the level of cover or policy terms being offered by the pursuer were inadequate or in any way unsatisfactory (answer 8 as amended by paragraph 2 of the Answers (No. 22 of process)). In these circumstances there was nothing unreasonable in inferring that the defenders had abandoned their right to strict compliance with the obligation to deliver a valid deed of servitude, when they had done so on the basis that a title indemnity policy was in principle an acceptable alternative, and that they retained the right to resile if the policy tendered was judged by them not to be sufficient and satisfactory. What they did not retain in the circumstances was the right to fall back on the pursuer's inability to provide a valid title indemnity as ground for resiling without reference to whether the alternative on offer in the form of the a non domino disposition and the title indemnity policy was in any way deficient. In these circumstances the pursuer had said enough in her averments to justify the allowance of a proof before answer.
[22] In reply to those submission, Mr Howlin argued that the conditional waiver case that Mr Beynon sought to advance was indistinguishable from a case of variation of the contract. As a matter of specification, he submitted, it was impossible to tell from the pursuer's pleadings when the alleged conditional waiver had taken place. Mr Beynon could not rely on the letter of 20 February (No. 24/3 of process) because that was before the conclusion of the missives. Clause 11(10) of the letter of 28 November 1997 (No. 6/1 of process) provided that the missives contained the whole agreement and superseded all prior negotiations and communings (see also the Contracts (Scotland) Act 1997, section 1(3)). In any event, the pursuer's pleadings did not bear to make a case of conditional waiver.
[23] There is no doubt that if the parties' rights and obligations in relation to the sale of the nursing home fall to be measured solely by the terms of the missives, the pursuer is unable to comply fully with her obligation in terms of Clause 2(2) of the letter of the letter of 28 January 1998 (No. 6/3 of process) to "deliver, at settlement, a formal Deed of Servitude granted by the owners of the land through which the water pipe passes vouching the formal right of the seller to use, maintain, renew and repair the said water pipe ...". In that event, her inability to fulfil that obligation entitles the defenders to resile, and, they having sought to do so, the pursuer is not entitled to specific implement of the missives. The pursuer recognises that that is so, and that her entitlement to decree of specific implement is therefore dependent on the soundness of her plea that the defenders have waived their entitlement to resile on that ground. It follows that the relevancy of the action stands or falls with the relevancy of the averments in support of the plea of waiver.
[24] It is worth noting that the pursuer is not wholly unable to fulfil her obligation to deliver a valid deed of servitude. She is able, and offers, to do so in respect of the whole length of the pipe with the exception of section C-D, where it passes under the private road, the owner of which is unidentifiable. It seems to me, therefore, that the plea of waiver is concerned only with the defenders' actings in relation to that section of the pipeline. There are two elements in the solution proposed to the problem in relation to that section. One element is the provision of an a non domino disposition, but I do not understand the defenders' argument to focus on that element. The pursuer avers that its terms have been agreed. The main focus of attention in Mr Howlin's submissions was the absence of agreement on the terms of the title indemnity policy. Before examining the extent to which the averments support the inference that the defenders had reached the point of abandonment of their contractual right to a deed of servitude, however, I propose to examine a little further the nature of the case that the pursuer seeks to make.
[25] Mr Howlin was no doubt correct in his submission that the pursuer's pleadings do not expressly make a case of conditional waiver. It is simply averred that they have waived their entitlement to insist on compliance with Clause 2(2). It seems to me, however, that when attention is focused on the form of the first conclusion, the reference (in head (vi) of the steps to be taken by the pursuer in return for payment of the price) to delivery of a title indemnity policy is inconsistent with a suggestion of absolute waiver of the right to rely on Condition 2(2) in relation to section C-D of the pipe. The whole tenor of the pursuer's averments, moreover, is that the defenders gave up their entitlement to strict compliance with Clause 2(2) because they were willing to accept instead the combination of the a non domino disposition and a suitable and sufficient title indemnity. Mr Howlin suggested that the form of conclusion could only relevantly be supported by averments of variation of the contract, but I do not consider that that is correct. As Lord Keith of Kinkel pointed out in Armia the borderline between variation and waiver is not always easy to draw, but in my view the case made by the pursuer in the present case is properly to be analysed as one of waiver. I do not see any objection in principle to waiver being conditional. It is no doubt settled that for waiver to be established there must be circumstances yielding the inference of permanent, rather than mere temporary, abandonment of the right (James Howden & Co. Ltd). It does not seem to me, however, that that stands in the way of acceptance of an inference that a party has permanently, but conditionally, given up a contractual right. A party may say: I give up my right permanently and absolutely. Or he may say: I give up my right permanently, provided I receive instead the following substitute benefit. Either of these things may be said expressly, or may be a matter of inference from the actings of the person vested in the right in question.
[26] It seems to me that the conditional nature of the waiver asserted by the pursuer may provide a satisfactory answer to one of the points made by Mr Howlin in argument. He said that it could not be a reasonable inference in the circumstances that the defenders had given up their right to insist on a valid deed of servitude before a satisfactory alternative form of protection was in place. There is, in my view, considerable force in that point. It was in that context that he placed weight on the absence of an averment that the terms of the title indemnity policy had been agreed. Without agreement on these the defenders could have no assurance that they would attain the level of protection that they required in relation to title to the water supply. If the pursuer were arguing for absolute waiver, that would be a very telling point against the inference of abandonment being objectively reasonable. But it seems to me that the point loses much of its force in the context of a case of conditional waiver. If the right to strict compliance with Clause 2(2) has been given up only on the basis that there will be provided instead (a) an a non domino disposition and (b) a suitable and sufficient title indemnity policy, the defenders are left in a position in which failure on the pursuer's part to provide either or both of those substitute forms of protection would constitute failure to purify the condition on which the right to resile had been given up, and that right would in that event, but in that event only, re-emerge. When all of that is taken into account, it cannot in my view be said ab ante that the inference of that type of conditional abandonment is incapable of being regarded as objectively reasonable.
[27] Mr Howlin was, in my opinion, correct in his submission that Mr Beynon was not entitled to point to the terms of the letter of 20 February 1998 (No. 24/3 of process) as affecting the parties' contractual rights and obligations, because (i) it came before the conclusion of the missives, and (ii) reference to it was excluded by Clause 11(10) of the original offer. But that was not the purpose for which Mr Beynon, as I understood him, referred to that letter. He pointed to it merely as background indicating that the possibility of a title indemnity in substitution for a valid deed of servitude was under discussion from an early stage, even before missives were concluded. It did not in any way detract from the terms of Clause 2(2), but it provided part of the context of the subsequent discussions about an alternative to compliance with Clause 2(2).
[28] It seems to me that the dispute between the parties comes to this. The pursuer says that the defenders have acted in a way that shows that they have given up the right to insist on strict compliance with Clause 2(2) provided they get an a non domino disposition and a suitable and sufficient title indemnity policy to cover section C-D of the pipe, and must therefore, if they are to resile, do so on the ground that the pursuer is failing to tender one or other or both of these components of the alternative solution. The defenders say that they have co-operated with the pursuer in her efforts to identify an alternative means of giving good title to the problematic length of the pipe, but that it cannot reasonably be inferred that they have by doing that given up their strict contractual entitlement in advance of complete agreement on all the components of the alternative solution. They have approved the form of certain elements of that alternative solution, but must be regarded as having reserved their position on whether or not to accept the alternative package as a whole. That is a dispute which in my view cannot properly be resolved without a proof. Waiver is a matter of circumstance, and it would only be if I were persuaded that the pursuer's averments are incapable of supporting the inference which the pursuer seeks to draw from them that I would dismiss the action as irrelevant. It seems to me that the pursuer's averments are capable, on one view, of supporting the inference of waiver of the conditional sort discussed above. It is averred that from very shortly after the missives were concluded, the parties have been in discussion of the alternative solution. The defenders have co-operated in pursuing that solution. One element of it, the a non domino disposition, has been agreed. An important aspect of the other element, namely the amount of cover under the title indemnity policy, has been agreed. The terms of the policy had been before the defenders for almost two years before they resiled, during which time the whole arrangements had been reviewed at the instance of a new set of funders, but no question was raised by the defenders or their funders as to the sufficiency of the proposed policy or as to whether its terms were satisfactory. Apart from the asking and answering of the questions resulting from the involvement of the defenders' third set of funders, nothing is averred to have changed between January 1999 and May 2000. I do not feel able to affirm that the circumstances set out in averment by the pursuer are incapable of supporting the inference that the defenders gave up their right to resile for want of a valid deed of servitude, accepted in principle that the alternative package would be sufficient provided it was implemented in terms satisfactory to them, and thus retained the right to resile only if those terms proved to be unsatisfactory. I do not exclude the possibility that it may be legitimate after proof to go further and infer from the defenders' actings that they did actually accept as suitable and sufficient the terms of the proposed title indemnity policy. I therefore consider that the appropriate course is to allow a proof before answer.
The Operation Agreement
[29] On 27 February 1998, when it became apparent that the transaction for sale of the business would not settle on the intended date, the parties entered into an Agreement in terms of which, until settlement, the defenders would operate the nursing home on certain terms. The defenders had an option to terminate the Agreement if settlement was postponed beyond a period of two months due to failure on the part of the pursuer to implement her obligations under the missives. The Agreement was drafted by the defenders themselves. The copy produced (No. 6/17 of process) is not executed, but it is not disputed that the parties have acted upon it. Indeed the defenders continue to operate the nursing home in accordance with the terms of the Agreement.
[30] By amendment in November 2000 the pursuer added to the summons a second conclusion (further amended at the beginning of the debate) in the following terms:
"Separatim, for declarator that the pursuer is entitled (a) to serve a notice on the Defenders terminating the Agreement between the parties dated 27th February 1998 and requiring the Defenders, their employees and their agents to remove themselves after a period of 2 months from the date of the notice from the [nursing home] and (b) to recover possession of the Business including the said heritable property, on the basis of the Defenders having purported to resile from the Contract by letter dated 29th May 2000 and by their otherwise being unwilling to implement their Contract with the pursuers."
In article 10 of the condescendence, the pursuer avers that she is entitled to serve a notice of the sort contemplated because the defenders served notice resiling from the missives. Her entitlement to do so is said to rest on an implied term of the Agreement. The averments conclude with the sentence:
"In the event of the Defenders not wishing to proceed with implementation of the missives, for whatever reason then the Pursuer would be entitled to resume operation of the business."
A motion for summary decree in terms of the second conclusion was heard and refused on 23 November 2000.
[31] At the debate, Mr Howlin submitted that the second conclusion was not supported by relevant averments. It was introduced by the word "Separatim", which suggested that the pursuer contended that it could stand independent of the first conclusion. The suggestion appeared to be that the pursuer could terminate the Operation Agreement simply because the defenders had sought to resile from the missives, regardless of the facts (1) that the Operation Agreement according to its terms was intended to operate, subject to an option in the defenders (but not the pursuer) to terminate it if entry was delayed beyond two months by the pursuer's failure to implement her obligations, until settlement took place, and (2) that the pursuer, by her first conclusion, was seeking implement of the missives. The second conclusion flew in the face of the first. It also failed to recognise that repudiatory breach of contract by the defenders (which is what the defenders' attempt to resile from the missives would be if the pursuer's primary contention is sound) required acceptance by the other party to bring the contract to an end (White & Carter (Councils) Ltd v McGregor 1961 SC (HL) 1), but the pursuer, so far from accepting the repudiation, was seeking by her first conclusion specific implement of the repudiated contract.
[32] It is unnecessary to discuss this aspect of the case further, because Mr Beynon indicated that the only purpose for which the pursuer sought to rely on the second conclusion was as a means of recovering possession of the nursing home in the event of her failing to obtain decree in terms of the first conclusion. To make that clearer, he sought leave to amend to substitute "Alternatively" for "Separatim" at the beginning of the second conclusion, and by deleting the last sentence of article 10 of the condescendence (quoted in paragraph [30] above). I allowed those amendments to be made. I am not wholly convinced that they are sufficient to make the restricted scope of the second conclusion clear, but on the understanding that its only purpose is the one indicated by Mr Beynon, I am content that it and the relative averments in article 10 can remain part of the pleadings so as to be available to be relied on if the outcome of the proof makes recovery of possession of the nursing home by the pursuer necessary. It seems to me, however, that if that need arises, the practicalities of hand-over and of related licensing matters, and the interests of residents in the nursing home, make it highly desirable that the parties co-operate in making suitable arrangements. I express the hope that, if decree of specific implement is ultimately refused, the parties will be able to make such arrangements without requiring further intervention on the part of the court.
Result
[33] For the reasons which I have given, I am of opinion that the pursuer's averments in support of her plea of waiver are sufficient to be remitted to proof before answer. I shall repel the pursuer's third plea-in-law, since it is not in a form apt for reservation. Quoad ultra I shall allow a proof before answer, reserving both parties' preliminary pleas. I shall also put the case out By Order, for the purposes of fixing a diet of proof and setting a timetable for any other procedural steps necessary in preparation for the proof.