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Rodger v. Paton & Ors [2004] ScotCS 135 (08 June 2004)
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OUTER HOUSE, COURT OF SESSION |
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A/2194/99
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OPINION OF LORD HARDIE in the cause CLEMENTINA BONITA RODGER (AP) Pursuer; against (FIRST) ROBERT PATON, (AP); (SECOND) BRIAN DOCHERTY and (THIRD) MRS EDITH DOCHERTY Defenders:
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Pursuer: J J Mitchell, Q.C., Artis; Burness
First Defender: J R Campbell, Q.C., Coll; Aitken Nairn, W.S. (for Hannay Fraser,
Solicitors, Rothesay)
Second & Third Defenders: Dorrian, Q.C., M J M Bell; Macbeth Currie & Co
(for Macpherson, Gibb McGuire, Cook, Solicitors, Glasgow for Second Defenders)
8 June 2004
Introduction
[1] The pursuer seeks declarator that the first defender has failed to implement and fulfil an agreement between them and in particular has failed to execute and deliver to the pursuer a valid Disposition of heritable property which the pursuer alleges was the subject of the agreement (hereinafter referred to as "the subjects"). The pursuer also seeks production and reduction of a pretended Disposition of the subjects granted by the first defender to and in favour of the second and third named defenders. The third conclusion is for a decree ordaining the first defender to implement the agreement between him and the pursuer and in particular to execute and deliver to the pursuer a valid Disposition of the subjects and to execute such other deeds as may be necessary in order to give the pursuer a valid title to the subjects. In the event of the first defender refusing or otherwise failing to implement the agreement the pursuer seeks damages from him. The remaining conclusions are for interdict and expenses. They are not relevant for the purposes of this opinion.[2] The case called before me on procedure roll on 5 and 6 May 2004 in respect of the first plea-in-law for the first defender and the first and second pleas-in-law for the second and third defenders. The first plea-in-law for the first defender and the second plea-in-law for the second and third defenders were in identical terms as follows:-
"The pursuer's averments being irrelevant et separatim lacking in specification, the action should be dismissed".
The first plea-in-law for the second and third defenders was in the following terms:-
"The action being incompetent should be dismissed."
On the second day of the procedure roll, senior counsel for the pursuer tendered a Minute of Amendment which sought leave to reduce the alternative claim for damages contained in the fourth conclusion by deleting the sum of £46,000 and substituting therefor the sum of £16,000 and by amending the conclusion for interest on the reduced sum. The Minute of Amendment included two consequential amendments to Article 8 of Condescendence and also sought leave to delete a sentence occurring at page 16D-E of the Closed Record in Article 3 of Condescendence which was in the following terms:-
"In the Autumn of 1989 about £1,300 was spent in clearing rubbish from and carrying out essential repairs to the derelict building on the subjects."
Senior counsel for the first defender and counsel for the second and third defenders objected to the deletion of this sentence as a result of which the Minute of Amendment was further amended by restricting it to the reduction of the claim for damages. Thereafter in the absence of any further objection, I allowed the Record to be opened up and amended in terms of the Minute of Amendment as restricted.
Background
[3] Mr Campbell, senior counsel for the first defender sought dismissal of the action in terms of his first plea-in-law. As background, senior counsel explained that the title to the subjects was now in the name of the second and third defenders by virtue of a disposition in their favour by the first defender (6/3 of Process). The pursuer seeks reduction of that Disposition because the pursuer alleges that the first defender bound himself to convey the land to her.
Factual Averments by the Pursuer
[4] In Article 2 of Condescendence, the pursuer avers that in the autumn of 1989 the pursuer and her husband entered into a verbal agreement with the first defender for the rental of the subjects at a rent of about £40 per week. Thereafter the pursuer's husband used a building on the subjects with the knowledge of the first defender. The pursuer further avers that late in 1990 she and her husband entered into an oral agreement with the first defender for the sale of the subjects to them at a price of £36,000 payable at the rate of £200 per month over a period of 15 years although the balance of the price could be paid off by the pursuer at any time. The first defender was not to grant any security over the subjects and the title deeds were to be lodged with either the pursuer's solicitors or the first defender's solicitor. It is averred that on or about 1 December 1990 the pursuer's husband "put the contract to purchase into the form of a written agreement between the pursuer and the first defender". Senior counsel submitted that what was incorporated was not the contract but a contract because the alleged verbal agreement had been between the first defender and the pursuer and her husband whereas the written contract was between the first defender and the pursuer alone. The original document is 6/43 of process. It is not disputed that the document is not probative. It is in the following terms:-
"Mr Robert Paton,
6 Store Lane,
Rothesay.
1/12/90
Re - Shop Premises and Garden Ground of approximately 1 Acre at 14 Westland's (sic) Road, Rothesay
I , Robert Paton of 6 Store Lane, Rothesay, hereby agree to sell to Mrs C B Rodger of Ivybank Villa, Westland's (sic) Road, Rothesay. (sic). the Shop premises and piece of ground at 14 Westland's (sic) Road, Rothesay for the Sum of £36,000,00. THIRTY SIX THOUSAND POUND'S (sic).
The above monie's (sic) are to be paid in monthly installments (sic) of £200. (sic) (fixed) with no allowances for inflation or any other cause whatsover. *1st; payment to commence on the 1/2/91 and to run for 180 months thereafter. I agree that I will have no right of access to the shop or land at any time for any reason, and also I will have no say whatsoever as to what may or may not be done with the land or shop.
In the event of more than three consecutive monthly payments being outstanding I shall have the righr (sic) through the Court's (sic) to sell the Property and land for the best price obtainable with a minimum of three months national advertising and to take the best offer thereof, and any surplus monies thereof will be returned to Mrs Rodger after the deduction of my REASONABLE expenses and dispersements.
Mrs Rodger may settle up the outstanding monies at any time after 1995 without penalty.
I state categorically and unreservedly that the SHOP and Land are mine to sell and that they are free from any debt or lien or any other type of legal hold that may affect the clean title which I hold. I also state that the title is completely clear in my favour as at the time of this agreement and that there is no possible outstanding retrospective actions that could be enforced.
If for any reason whatsoever I cannot pass on clean title to Mrs Rodger on payment of the monies or if for any reason whatsoever Mrs rodger (sic) is unable to get clean title, then I agree to be held liable for damages and disbursements to mrs (sic) Rodger the amount of which will be settled and agree (sic) by an independent arbitrator whose decision shall be binding and FINAL to both parties."
The document bears to be signed by the pursuer and the first defender but is not attested.
[5] The pursuer avers that following the alleged agreement she took possession of the subjects and has enjoyed their use. She integrated the subjects into the garden of her house, Ivybank Villa. She details works which she carried out between December 1990 and 1998. These included landscaping, the erection of a Pergola, the compliance with a court order in 1995 by enclosing the subjects and the grounds of Ivybank Villa with a chain link and steel pole fence, the renovation of the former shop premises, the erection of a summer house and the erection of a new timber fence around the subjects in 1998. There is also the averment at page 16D-E of the Closed Record already specified by me relating to work carried out in the autumn of 1989. The pursuer avers payment to the first defender at the rate of £200 per month in terms of the contract from December 1990 until 1993. It is averred that a second deed was signed. The original of that deed is not produced but a copy comprises 6/2 of process. The pursuer does not seek to prove the tenor of this document, which is in the following terms:-
"BY HAND Ivybank Villa
Westlands Road,
Rothesay
PA20 0HQ
5/3/93
Re - Shop Premises and Garden Ground at 14 Westlands Road, Rothesay; Final Settlement of Agreement Dated 1/12/1990
I, Robert Paton of 6 Store Lane, Rothesay, due to numerous difficulties in my supplying CLEAN TITLE to the above Land, and with reference to all the correspondence on this matter hereby accept the payment of £10,000 (Ten Thousand Pounds Cash) as being FULL and FINAL SETTLEMENT of the above dated AGREEMENT.
As and when I am able to pass on Clean Title to Mrs Rodger I shall do so at the earliest possible time.
In light of this agreement Mrs Rodger shall have no re-dress (sic) if my Inhibitor presses for the Sale of Land.
Given all the difficulties I hereby accept this reduced payment."
The document bears to be signed by the pursuer and the first defender and to be counter-signed by witnesses who are not designed.
Submissions on behalf of the First Defender
[6] The first submission by Mr Campbell on behalf of the first defender was that any agreement constituted by the documents 6/43 and 6/2 of process is unenforceable as an agreement to sell heritable property principally because the documents do not sufficiently identify the heritable property involved and it is not possible to frame a decree of implement by reference to the terms of the alleged agreement. Under reference to the authorities of Grant v Peter G Gauld & Co and Bogie v The Forestry Commission it was submitted that there must be a definite description of heritage and that a description by reference to a general area and location was not enough. It was further submitted that the documents relied upon amounted to no more than a description by reference to a general area and location because there was simply a postal address at which the shop and garden ground were located. Moreover, the document (6/43 of process) referred in its heading to an area of approximately one acre which is almost twice the size of the area specified in the first Conclusion of the summons and in the Disposition which the pursuer seeks to reduce. Senior counsel accepted that it would be possible to aver that the parties had agreed the boundaries of the site at the time or to make other averments which would enable the pursuer to lead evidence providing a definitive answer of the extent of the subjects which had allegedly been sold by the first defender to the pursuer. Alternatively, if the description in the present case had been qualified by a phrase indicating that the extent of the garden ground was "as occupied by the first defender" this might have enabled the pursuer to lead evidence about the site boundaries. In the present case there were two difficulties for the pursuer. The first related to what was not said in the contract and therefore there was an absence of any basis for leading parole evidence about the extent of the first defender's ownership or occupation of the land. The second difficulty was that on the face of it the contract is for approximately one acre of land. The fact that the defender at the relevant time owned half an acre does not cure the defect in the contract simply because there is something to which the pursuer may obtain title. In short, a contract which cannot be enforced by specific implement is no contract at all. The appropriate test to be applied was whether this contract could be enforced by specific implement bearing in mind that on the pursuer's pleadings there is nothing beyond the terms of the documents which would explicate the land to be conveyed. Thus the third Conclusion, if granted, would not be a decree effecting implement of the alleged contract. It was further submitted that the documents relied upon did not disclose a date of entry. Although in terms of 6/43 of process a date of entry may be implied at the end of 180 months once all the instalments had been paid, that was not the position adopted by the pursuer. It was her case that that agreement had been varied or replaced by a subsequent agreement reflected in the copy document (6/2 of process). That document referred to the difficulty in the first defender granting a "clean title" and made reference to an "inhibitor". If the date of entry is to be implied as the date of the discharge of the inhibition there are no averments that the inhibition was discharged. In summary, the first submission on behalf of the first defender was that any alleged contract was unenforceable because of the invalid description and the absence of a date of entry.[7] The second submission on behalf of the first defender related to the enforceability of the alleged agreements. It was accepted that neither of the documents was probative. 6/43 of process was not probative because it lacked attestation. 6/2 of process was a copy document and there was no offer to prove its tenor. Moreover there was no designation of the witnesses who signed this document. In that situation it was submitted that in order to enforce the contract, the documents must have become binding upon parties as a result of rei interventus. Although there was a dispute in the pleadings as to whether the first defender was aware of the actings of the pursuer following upon the alleged agreement, counsel for the first defender accepted that this was a matter for proof. His principal submission on this matter was that the pursuer does not aver actings which can be said to be unequivocally referable to the agreement upon which she founds. The relevant averments are contained in Article 3 of Condescendence but the pursuer referred to three separate agreements namely an initial agreement to rent followed by a verbal agreement of sale to the pursuer and her husband and the subsequent agreement contained in 6/43 of process to sell the property to the pursuer alone. None of these alleged agreements could be binding upon the first defender without rei interventus and it was submitted that the actings of the pursuer specified in Article 3 of Condescendence could not be said to be referable to a contract of sale to the pursuer as opposed to any of the other two contracts. Even if it was less likely that the pursuer would expend substantial sums of money if she were merely a tenant, the expenditure of money by the pursuer was equally referable to a contract to sell to her and her husband as opposed to a contract to sell to the pursuer alone. The acceptance by the first defender of the sum of £10,000 cannot be said to be unequivocally referable to one contract of sale rather than the other. Counsel for the first defender accepted that if 6/2 of process could be construed as a receipt that might be sufficient to allow a proof before answer in respect of the question of rei interventus although it did not detract from his first submission that the contract was void for uncertainty.
[8] The third submission on behalf of the first defender related to the alternative claim for damages but the concerns of senior counsel for the first defender were met by the Minute of Amendment. Accordingly I need not rehearse this argument.
Submission on behalf of the second and third defenders
[9] Senior counsel for the second and third defenders adopted the submissions on behalf of the first defender and explained that the plea to the competence was intended to relate to the submission that the contract was void for uncertainty in relation to the description of the subjects and also in relation to the lack of a date of entry. Senior counsel for these defenders invited me to sustain her second plea-in-law and to dismiss the action. She submitted that there were no averments of actings by the pursuer which were unequivocally referable to the agreement on which the pursuer founded. This submission had particular importance in view of the averments of bad faith on the part of the second and third defenders. Bad faith requires the existence of a real right or a right which is capable of being converted into a real right. In the absence of either a probative writ or an informal agreement followed by homolgation or rei interventus there would be merely a personal obligation as opposed to a real right. It was also submitted that in the context of an informal agreement the pursuer must aver knowledge on the part of singular successors of the existence of a right which is capable of being transformed into a real right. Thus knowledge of rei interventus or homologation is required if the action is to succeed against singular successors Although the pursuer avers that the first defender was aware of the work undertaken by the pursuer, there is no similar averment in relation to the second and third defenders. Nor is it averred that they had any knowledge that the pursuer asserted title to the subjects. The averments at page 29B to 30A of the Closed Record relating to bad faith on the part of the second and third defenders are bald statements by the pursuer and it is incumbent upon her to aver how these defenders were aware of the position between the pursuer and the first defender. The criticisms of the pursuer's pleadings could be subdivided into averments imputing fraudulent conduct, averments of bad faith and the terms of the third plea-in-law for the pursuer. In relation to the averments imputing fraudulent conduct it was submitted that the averments at page 27C to D, 28D and 29A went beyond averments of knowledge and bad faith and clearly imputed fraudulent activity, particularly having regard to the reference to "some other scheme with the first defender" (28D) and the doubts expressed about the payment of the purchase price or its repayment (28E to 29A). These averments were irrelevant. There was no plea of fraud. The averments did not contain precise and detailed specification required to set out a relevant case of fraud in a civil action. Thus insofar as the averments imputed fraud they were irrelevant.[10] The second issue related to the averments concerning alleged bad faith. The relevant averments were at page 30A and 39B to C. There were no averments that the first defender or the pursuer told the second and third defenders of the situation or that the second and third defenders were otherwise advised. These defenders were entitled to fair notice of the facts and circumstances from which the pursuer seeks to prove her bald assertion that they were acting in bad faith. The need for such averments was highlighted by the call for such specification made by the second and third defenders at page 33C to D. It was submitted that it was necessary for the pursuer to prove knowledge on the part of the second and third defenders of the informal agreement and also for the pursuer to establish that these defenders had knowledge of homologation or rei interventus capable of converting the informal right into a real right. The averments about the lack of enquiries made by these defenders of the planning or rating authorities or of the failure by these defenders to survey the property was not a sufficient basis for averring bad faith.
[11] The third submission related to the pursuer's third plea-in-law, which was in the following terms:
"The second and third defenders being barred personali exceptione from resisting the Third Conslusion of the Summons, decree should be pronounced in terms thereof".
Senior counsel for these defenders submitted that there were no averments in support of a plea of personal bar. On any view the plea should be repelled.
Submissions on behalf of the pursuer
[12] In reply senior counsel for the pursuer submitted that there were averments of an informal agreement between the pursuer and the first defender followed by rei interventus. The reference to one acre in the heading of 6/43 of process was not relevant. The subjects were sufficiently described. Moreover, 6/2 of process did not refer to an area of one acre. The authorities relied upon by the defenders were concerned with vague and approximate areas of ground and were of no relevance in the present case. The date of entry was not an essential of a contract for the sale of heritage. In any event, 6/2 of process was a receipt in which the first defender accepted payment of £10,000 in full and final settlement of the price for the shop premises and garden ground at 14 Westlands Road, Rothesay. The date of entry was implied to be the date of payment.[13] In relation to the second submission on behalf of the first defender, senior counsel for the pursuer submitted that informal contracts may become enforceable by operation of homologation as well as rei interventus. In Condescendence 4 the pursuer avers that by letter dated 26 September 1991 she requested the first defender to transfer the title deeds to the subjects to her solicitors. The first defender's solicitors replied by letter dated 10 October 1991 and stated inter alia "Mr Paton however has advised us that he is in essence in agreement with your proposal and would be prepared to complete an Irrevocable Mandate to this effect". It was submitted that this amounted to an acceptance by the first defender of the informal contract. Moreover and in any event, it was submitted that the clearest act of homologation was illustrated by the receipt (6/2 of process). By accepting £10,000 in full and final settlement of the price the first defender had homologated the contract to convey the property to the pursuer. It was further submitted that in any event the averments relating to the pursuer's actings amounted to rei interventus. Whether these actings were unequivocally referable to the contract for the sale of the subjects to the pursuer or were referable to something else, was a matter which should be explored in evidence.
[14] In relation to the submissions on behalf of the second and third defenders, senior counsel for the pursuer submitted that the test applied by counsel for these defenders was too high. Actual knowledge of the contract and of the subsequent actings was unnecessary. It was sufficient if there were facts and circumstances which put these defenders on enquiry. The third plea-in-law was directed at the third Conclusion of the summons which sought decree of implement against the first defender. It was not a conclusion directed at the second and third defenders. Although counsel for the pursuer considered that the first plea-in-law for the second and third defenders could be repelled at this stage, he was content that it should remain as part of the general plea to the relevancy and invited me to allow a proof before answer.
Authorities
[15] In the course of submissions reference was made to the following authorities: Grant v Peter G Gauld & Co 1985 SC 251; Bogie v The Forestry Commission 2002 SCLR 278; McArthur v Lawson (1877) 4 R 1134, Law v Thomson 1978 SC 343; Rodger (Builders) Limited v Fawdry & Others 1950 SC 483; Wallace v Simmers 1960 SC 255; Trade Development Bank v Warriner & Mason (Scotland) Limited 1980 SC 74; Stodart v Dalzell & Another (1876) 4 R 236; Secretary of State for Scotland v Ravenstone Securities Limited 1976 SC 171; Stone v Macdonald 1979 SC 363; Gordon District Council v Wimpey Homes Holdings Limited 1988 SLT 481; Milne & Co v Aberdeen District Committee (1899) 2 F 220; Bryce v Allied Iron Founders Limited 1969 SLT (Notes) 29; Gloag: "On Contract"; Bell "Principles of the Law of Scotland"; Lees: "Pleading and Interlocutors"; Stair Encyclopaedia; McBryde, Law of Contract in Scotland;; MacPhail: Sheriff Court Practice; Halliday: "Conveyancing Law and Practice".
Discussion
Identification of the subjects
[16] I considered that at this stage in the proceedings the issue for me was whether I was able to determine that the pursuer's case was irrelevant and should be dismissed without affording her the opportunity of leading evidence. There is clear authority in the case of Grant v Peter G Gauld & Co that one of the essentials of a contract for the sale and purchase of heritage is the identification of the subjects of sale. As was observed by Lord Justice Clerk Wheatley at page 258:
"There is no doubt that a definite description of the heritage which is being offered for sale is essential to a valid contract, and must be contained in the missives of offer...... At the end of the day the issue turns on the wording of the missives of offer."
In that case the offer to purchase related to "the ground at present being quarried by our client and the surroundings thereto extending to 12 acres". The conditions included a condition in the following terms:
"The actual boundaries will be agreed between you and your client".
In these circumstances the Court had little difficulty in concluding that there was an absence of the precision required in the identification of the subjects and that an acceptance of such an offer could not constitute a concluded contract for the purchase and sale of heritage. However, as Lord Macfadyen observed in Bogie v The Forestry Commission, at page 292, the identification of the subjects of sale may be achieved in a number of ways including a description "by name or otherwise in some way that permits their precise identity to be established by evidence." I respectfully agree with Lord Macfadyen's statement of the law in this regard. Applying that approach to the present case, the pursuer avers in Condescendence 2 that in late 1990 she and her husband asked the first defender if he would sell the subjects to them. Following discussions the first defender offered to sell the subjects for £36,000 and the pursuer and her husband accepted the offer. The agreement provided that the price was to be paid at the rate of £200 per month over a 15 year period and the title deeds were to be lodged with either the pursuer's solicitors or the first defender's solicitors. Thereafter the pursuer's husband put the contract to purchase into the form of a written agreement between the pursuer and the first defender (6/43 of process). Although the heading of that document refers to an area of approximately one acre, the text of the offer simply refers to "the shop premises and piece of ground at 14 Westland's (sic) Road, Rothesay". The penultimate paragraph of the document also confirms that the shop and land are owned by the first defender. The subsequent document dated 5 March 1993 (6/2 of process) refers to the agreement dated 1 December 1990 and in referring to the shop premises and garden ground at 14 Westlands Road, Rothesay makes no reference to the area of ground involved.
[17] It appears to me that the present case is different from those cases in which the subjects of sale are incapable of identification. In the present case there is reference to a postal address at which there is situated shop premises and garden ground. I do not consider that the description is materially different from the description in missives for the sale of a dwellinghouse and garden ground which are described as situated at a particular postal address. In such a case, if there were any dubiety about the extent of the subjects of sale, it would be competent to lead evidence as to the respective parties' understanding. In that connection I would refer to the Opinion of the Lord Chancellor in Houldsworth v Gordon Cumming 1910 SC (HL) 49 at p. 51 where he stated:-
"In my view these negotiations are crucial, and all that passed, either orally or in writing, is admissible in evidence to prove what was in fact the subjects of sale; not to alter the contract, but to identify its subject."
The parties' understanding of the extent of the subjects for sale in the present case may also be explained by reference to the extent of the subjects which were occupied by the pursuer following upon the alleged agreement. She avers that she arranged extensive landscaping works of the subjects so as to integrate them into the garden of her house and that she renovated the derelict building which had been the shop premises at that location. The first defender does not aver that he owned land at that location beyond the subjects. Reliance is simply placed upon the reference to 1 acre in the heading of the letter. I would not be prepared to determine the issue of the extent of the subjects without affording parties an opportunity of adducing evidence as to their respective understanding of the subject matter of the alleged agreement between them.
[18] In all the circumstances I am not prepared to conclude that there is insufficient identification of the subjects on the basis of the reference to one acre in the heading of 6/43 of process. This is not a case where the ambiguity, if any, as to the identification of the subjects is so obvious that it cannot be said that the parties were in agreement as to the extent of the subjects of sale. Before determining this issue, I consider that the pursuer should be afforded the opportunity of leading evidence to identify the subjects. I am reinforced in that opinion by the admission in Answer 2 for the first defender to the effect that
"in or around 1990 or 1991 the first defender entered into an agreement with the pursuer's husband, Thomas Rodger, in terms of which Mr Rodger was to purchase said subjects by the payment of instalments of £200 per month over a period of 15 years."
Although it is averred that that agreement was oral and was never reduced to writing and that the pursuer was not a party to it, it may be significant that the first defender appears to be referring to the original oral contract relating to the sale by him of the subjects, the only difference between the parties being that the first defender maintains that that contract was with the pursuer's husband alone, whereas the pursuer's position is that it was with her and her husband. The pursuer avers that that contract was committed to writing in the form of a written contract between the pursuer and the first defender. It is also significant that this admission refers to the "said subjects", ie. the subjects described in the first conclusion of the Summons. The first defender does not suggest that there is any ambiguity about the extent of the subjects of sale by him to the pursuer's husband. If 6/43 is construed as referring to the same subjects as formed part of the oral agreement, in terms of the first defender's admission to which I have referred, there would appear to be no dispute between the parties as to the extent of the subjects of sale.
Date of Entry
[19] In support of the submission that a date of entry was an essential condition of a contract for the sale of heritage, counsel for the first defender relied upon the Opinion of Lord Maxwell in Law v Thomson at p, 346 where he stated:-
"In my opinion, normally at least, there must be an agreed date of entry before there can be a binding contract. An agreement for the sale 'sometime' is not, in my opinion, an agreement which the law would normally recognise."
This is not an unequivocal statement that an agreed date of entry is an essential in every contract for the sale of heritage. In the passage quoted, Lord Maxwell qualifies his statement by indicating that an agreed date of entry was normally (my emphasis) required. In fairness to Lord Maxwell he goes on to acknowledge that there may be exceptions to this rule and it is clear that his observations are obiter. Moreover, as Lord Ross observed in Stone v Macdonald, it appears that all the relevant authorities were not cited to Lord Maxwell. In the Secretary of State for Scotland v Ravenstone Securities Limited reference is made in the opinions of Lord President Emslie and Lord Cameron to the question of the necessity of an agreed date of entry. At page 189 Lord President Emslie expresses the following opinion on this matter:-
"There remains the argument about the date of entry. None was expressly prescribed in the correspondence. In spite of the obiter dicta in the case of Freeman and a statement to the same effect by Lord Keith, obiter, in Stobo v Morrison's Gowns 1949 SC 184 at 194, there is a considerable body of authority for the view that a date of entry is not one of the essentials of a contract for the sale of land (vide Bell's Lectures on Conveyancing, 3rd edition., Vol. 2, p. 696; the article by Burns in Vol. 13 of the Encyclopaedia of the Law of Scotland, para. 376; Smith v Marshall 22 D 1158). I do not, however, require to resolve any doubt there may be upon the matter since in a case in which parties have agreed that settlement shall take place on the fulfilment of certain conditions and have not specified any earlier or later date for entry it will be presumed that the date of entry as purchasers will be the date of settlement itself."
In his judgment, Lord Cameron stated at page 196:-
"It is not essential, however, in my opinion that a precise date of entry should be a matter of specific stipulation and agreement before it can be held that a contract for the sale of heritage has been completed. It may well be possible to infer from the correspondence produced agreement of parties on a date of entry. Clearly when the stage of settlement of the transaction is reached at that point entry can be demanded by the purchaser and while as a matter of practice this is a matter which ought to be dealt with specifically in the contract (cf. Burns: Conveyancing Practice, p. 162) it is not of such imperative necessity that absence of specific reference to a stipulated date of entry has the inevitable legal consequence that no completed contract of sale can be inferred from missives which are sufficient in other respects. This would seem to follow also from Bell's Lectures on Conveyancing, 3rd ed ii. 696 where it is stated in terms that 'Though it is not absolutely necessary that the missives of sale should specify more than the subjects sold and the price or that they should provide a conclusive mode of ascertaining and fixing the price, they usually do more.' Craigie, Heritable Rights, 248 states that 'Missives of sale consist of an offer to sell and an acceptance thereof. They require (1) to show consensus in idem as both the subjects sold and the price'. Nothing is said as to the necessity of showing consensus in idem as to the date of entry. It was stated by Lord Benholme, Lord Ordinary, in the case of Smith v Marshall 22 D 1158 that the essentials of an effectual and binding feu contract are that it should state the subject and extent of the feu and the annual feu duty. This statement of the law was not disapproved when his decision was reclaimed..... In my opinion, therefore, the absence from correspondence of specific mention of a date of entry is no objection to its validity as setting out an informal agreement for sale of the subjects. The date would be implied by law and on the logic of Christie would give a right of entry as from the time of settlement of the transaction in the absence of other indication.... But in any event I am of opinion that the absence of a specific stipulation in the correspondence as to an ascertained date of entry is no obstacle to the validity of the agreement informally arrived at provided it can be set up by the actings of parties either by way of homologation or rei interventus subsequent to the making of that agreement."
In Gordon District Council v Wimpey Homes Holdings Limited, Lord Cullen, as he then was, stated at 485C
"The discussion before me showed that it has been stated repeatedly for over 100 years in textbooks and in judicial opinions that agreement as to the date of entry is not essential. The strength of that authority was recognised by the First Division in Secretary of State for Scotland v Ravenstone Securities Limited, although the decision itself did not turn upon it. I do not consider that there is any reason in principle to doubt the soundness of that proposition. It is not difficult to see why agreement as to the subjects and the price, by whatever means that is indicated, is essential to the making of a binding contract of sale... It does not appear to me that the same considerations apply to the date as from which the seller is bound, as a matter of contract, to furnish the purchaser with entry to the subjects."
Formalities of Contract
[21] It is not in dispute that the contract for the purchase and sale of the subjects is not probative. Accordingly, in addition to establishing the subjects of sale and the agreed price, the pursuer requires to validate the informal contract by homologation or rei interventus. If the averments of the pursuer are sufficient to enable her to lead evidence in support of either homologation or rei interventus following upon the alleged informal contract, she is entitled to a proof before answer as between her and the first defender. I shall accordingly consider each of these issues.
Homologation
[22] The pursuer avers that in March 1993 she paid £10,000 in cash to the first defender in full and final settlement of the Agreement dated 1 December 1990. At paragraph 27A of Bell's Principles under reference to homologation, it is stated inter alia: " they are such acts of the obligor as imply distinct and unequivocal consent; and, it may perhaps be said, such as to make it unfair or contrary to good conscience to hold that he is not bound." As counsel for the pursuer submitted, it is difficult to conceive of an act more indicative of acceptance of an agreement than his acceptance of a substantial sum in cash as being in full and final settlement of his agreement with the pursuer. In fairness to senior counsel for the first defender, he accepted that if 6/2 of process could be construed as a receipt for such a payment that could constitute actions on his part "proving the agreement" and might be sufficient for probation of the pursuer's averments in that regard. In my opinion the averments about acceptance by the first defender of payment in full and final settlement of his agreement with the pursuer are sufficient averments of homologation to entitle the pursuer to a proof before answer.
Rei Interventus
[23] I have already referred to the averments of the pursuer relating to her actings in relation to the subjects following the alleged agreement in December 1990 and to work allegedly carried out by the pursuer in the autumn of 1989 prior to the alleged agreement. It is obvious that the work undertaken by the pursuer in 1989 cannot be referable to the alleged contract between her and the first named defender in December 1990. However, in relation to work undertaken subsequent to December 1990 it is not possible at this stage to determine whether that work is unequivocally referable to the alleged informal agreement between her and the first defender. In my opinion the pursuer should be afforded the opportunity of establishing that matter. Accordingly as between the pursuer and the first named defender it is appropriate that a proof before answer should be allowed.
Mala Fides
[24] It is clear that the action against the second and third defenders cannot succeed unless the pursuer can establish that these defenders were not acting in bona fide when they took title to the subjects. Having considered the authorities referred to in the course of submissions I am of the opinion that it is not necessary for the pursuer to aver and prove actual knowledge on the part of the second and third defenders of the informal contract and of the actings which constitute homologation or rei interventus. Clearly if there were such knowledge on the part of these defenders there would be no doubt that in accepting the disposition of the subjects they acted in mala fide. In Stodart v Dalzell & Another, Lord Justice Clerk Moncrieff observed at page 241:-
".... I am quite satisfied that the purchaser knew enough to put him on his inquiry. I am quite satisfied from the evidence of Hamilton and McMorran that they and the purchaser knew that Dalzell had some sort of right. The pursuer asked the question before the purchase, and was told that Dalzell was in possession of a portion of the ground. This was quite sufficient to create an obligation to enquire...."
Lord Gifford also concluded that the pursuer in that case was bound to make enquiry. In that regard he said at page 242:-
"Dalzell was in possession of this ground, and part of his house was even built upon it. The pursuer knew this perfectly; indeed he knew the exact extent to which Dalzell's house was built upon the ground which he was purchasing and he explains that he knew that it was only a small part of the house which was built on the ground in question.
But whatever was the exact state of the knowledge of the pursuer, and whatever was the opinion which he might have formed as to the legal right of Dalzell, I think that there is enough proved in this case to bar the pursuer from pleading that he is a bona fide singular successor....."
Similar views were expressed in Trade Development Bank v Warriner & Mason (Scotland) Limited by Lord McDonald in the Outer House, and by Lord President Emslie and Lords Cameron and Kissen in the Inner House. At page 97, Lord President Emslie stated:-
"... it is clear that a party who takes a heritable title.... from another is not in bona fide when he knows that the granter has already bound himself to grant that right to another, ie. has granted to another a right which is capable of becoming a real right. Even if he does not actually know all this he will still be in bad faith if he knows that some sort of right has already been conferred upon another in respect of the relevant subjects, but proceeds without any enquiry".
At page 106, Lord Kissen observed:-
"I agree that the question for decision is whether 'there is disclosed a situation in which they (the pursuers) should have been put on their enquiry as to whether the defenders had acquired in Unit 2 a right of such a nature that it was capable of being turned into a real right.'"
Adopting that approach to the pleadings in the present case, the pursuer avers that from at least 1990 it was obvious to any visitor that the subjects were occupied as part of the pursuer's property. In Article 5 of Condescendence, the pursuer avers that had the second and third defenders visited the subjects before purchasing them, it would have been obvious to them that they appeared to be occupied as part of the pursuer's property. Moreover, the pursuer avers that had these defenders made local enquiry, they would have established that they were known to be occupied as such. In Answer 5, these defenders deny any knowledge of the pursuer's entitlement to the subjects and aver that they visited the subjects in or around September 1998 when there was no fence around the property or any indication that it was being used by any party other than the first defender. It appears from the pursuer's averments relating to the fencing of the property that there is a dispute of fact concerning the state of the property in 1998. I consider that the pursuer is entitled to an opportunity to establish her factual averments. If she does so, there would appear to be sufficient to impose upon the second and third defenders an obligation to make enquiry as to the nature and extent of her right to the property. While I have some sympathy for the submissions on behalf of these defenders concerning the averments implying fraud, I was not invited to exclude any averments from probation. In the circumstances I shall allow a proof before answer to enable the pursuer to have the opportunity of establishing that the second and third defenders acted in mala fide when they received the disposition of the subjects in their favour.
Result
[25] For the reasons which I have already discussed I shall allow a proof before answer. I shall also reserve the question of expenses.