Scottish Court of Session Decisions

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Cite as: 2022 GWD 23-319, [2022] ScotCS CSOH_49, 2022 SCLR 380, [2022] CSOH 49

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OUTER HOUSE, COURT OF SESSION

[2022] CSOH 49

CA2/22

OPINION OF LORD BRAID

In the cause

SUPASEAL GLASS LIMITED

Pursuer

against

INVERCLYDE WINDOWS MANUFACTURING LIMITED

Defender

Pursuer: Thomson, QC; MacRoberts LLP

Defender: Manson; DAC Beachcroft Scotland LLP

20 July 2022

Introduction

[1]

The pursuer, Supaseal Glass Ltd, manufactures and supplies sealed double glazing

window units. The defender, Inverclyde Windows Manufacturing Ltd, supplies and installs

replacement windows, glazed doors and conservatories. For many years, it was a long-

standing customer of the pursuer, from whom it purchased glass and sealing units.

[2]

The pursuer contends that in December 2015 a binding contract was concluded

whereby the defender agreed to purchase all of its glass from the pursuer from then until

31 December 2020, at prices agreed on an annotated price list signed by the parties, and that

the defender has been in breach of that contract since November 2017 by purchasing glass

products elsewhere. The defender's position is that no such binding contract was concluded

because, at most, the parties reached an agreement in principle which was never committed

to writing as intended.

[3]

The action called before me for a preliminary proof on the following issues:

(i) whether a choate, binding and enforceable contract was concluded between the parties at

a meeting which took place between their respective controlling minds, Alexander Gray, the

pursuer's managing director, and his counterpart at the defender, Mark Gorman, on

8 December 2015; and (ii) if so, what were the terms of that contract.

[4]

Evidence for the pursuer was given by Mr Gray; Linda Murdoch, who was

employed by the defender as an accounts administrator (and has, since 2018, been employed

by another of Mr Gray's companies); and Brian Cannie, a funeral director who has known

both Mr Gray and Mr Gorman for many years. Mr Gorman gave evidence for the defender,

as did Lynn Rayner, solicitor, who has in the past acted for both Mr Gray and Mr Gorman

but who, in this matter, was acting for the defender (and, latterly, also for Mr Gorman).

Evidence in chief was in the form of witness statements (two from Mr Gorman and one from

each of the other witnesses), augmented by oral evidence, mainly in cross examination and

re-examination. Some formal evidence was agreed in a joint minute.

[5]

Much of the evidence was the subject of Notes of Objection lodged by each party. As

agreed, I heard all of that evidence under reservation of its competency and relevancy.

The pleadings

[6]

It is worth setting out, in brief, the parties' respective positions in their pleadings.

After making detailed averments in article 5 of condescendence about the meeting of

8 December 2015, the pursuer avers in article 6:

"... at the said meeting on 8 December 2015 an agreement was reached to the

following effect: (i) Mr Gray would transfer his shares in the defender to Mr Gorman;

(ii) Mr Gorman would pay Mr Gray the sum of £57,000; and (iii) the defender would

buy all glass required by it from the pursuer, at the rates stipulated in the annotated

and initialled price list, until 31 December 2020."

[7]

The defender denies that there was any such agreement as averred by the pursuer,

and adopts the position that no formal, binding, choate agreemen ts were reached at the

meeting but that (Answer 6(ii)):

"[t]he 8 December 15 emails from Messrs Gray and Gorman represent that there was

a willingness on the part of Mr Gorman to take forward a series of formal contracts

(some between the private individuals concerned and others between the corporate

persons) addressing (i) the share transfer; (ii) a form of exclusivity arrangement in

connection with the purchase of glass; and (iii) a renunciation of certain claims. The

emails' express terms make clear that formal written agreements were going to be

required in order to give the generally contemplated arrangements contractual

effect."

The defences elsewhere refer to the parties merely having reached agreements in principle.

The law

[8]

It is convenient to set out the governing legal principles at this stage. First, neither a

contract for the sale of shares, nor one for the exclusive purchase of goods, is one which the

law requires to be in writing: Requirements of Writing (Scotland) Act 1995, section 1(1).

Second, whether a binding agreement is reached by two parties must be assessed on an

objective basis: McBryde, The Law of Contract in Scotland (3

Edition) paragraph 5-04. Third,

what is important is what is said and done, rather than what the parties thought privately.

"The judicial task is not to discover the actual intentions of each party; it is to decide what

each was reasonably entitled to conclude from the attitude of the other": Gloag on Contract,

ed) p7, approved by Lord Reid in McCutcheon v David MacBrayne Ltd 1964 SC (HL) 28 at

35. Fourth, if two parties to an agreement intend that they should not be bound until a

written agreement has been entered into, they will not be bound until that written

agreement has been executed: Gordon's Executors v Gordon 1918 1 SLT 407. However, fifth,

even if parties to an apparent contract provide that either may withdraw until the terms of

their agreement have been reduced to a formal contract, the bare fact that they have

stipulated that it shall be embodied in a formal contract does not necessarily mean that they

are still at the stage of negotiation: Stobo Limited v Morrison (Gowns) Limited 1949 SC 184.

Finally, agreement must be reached on the essentials of a contract. A concluded contract is

one which settles everything that is necessary to be settled and leaves nothing to be settled

by agreement between the parties. What the essentials are may vary according to the

particular contract under consideration: May & Butcher Ltd v R [1934] 2 KB 17, Viscount

Dunedin at 21.

The evidence

Undisputed facts

[9]

(In the narrative which follows I will refer to the parties as Supaseal and Inverclyde,

for ease of reading.) The following facts are not in dispute. Mr Gorman held a majority

shareholding of 86% in Inverclyde, and Mr Gray a minority shareholding of 14%. Though

not a director of Inverclyde, Mr Gray provided strategic advice to it. For some years

Inverclyde had purchased glass products from Supaseal at "mates' rates". By November

2015, for whatever reason, relations between Mr Gray and Mr Gorman had broken down

such that it was in their mutual interests that one buy out the other's interest in Inverclyde.

In the days leading up to the key meeting of 8 December 2015, discussions had taken place

between the parties, including discussions between Mr Gray and Lynne Rayner, as the

company's solicitor, but no agreement had been reached.

[10]

The meeting on 8 December 2015 took place at Inverclyde's premises and was

attended only by Mr Gray and Mr Gorman. A discussion took place about the price which

Mr Gorman would be willing to pay Mr Gray for his shares, and after a certain amount of

haggling a figure of £57,000 was agreed. A discussion also took place about the terms on

which Inverclyde would, in the future, buy glass products from Supaseal. During the

meeting, Mr Gray phoned Irene Henderson, who worked in the Supaseal office, and asked

her to email a price list of the glass products supplied to Inverclyde, which she did. Mr Gray

and Mr Gorman then discussed prices. New prices were agreed for the three products most

commonly purchased by Inverclyde from Supaseal. Those new prices were written on the

price list in manuscript, which both men signed (the pleadings state "initialled" but it is

clear from a comparison of the price list with the witness statements lodged in process that

both men in fact added their signatures).

[11]

Mr Gray then emailed Lynn Rayner from his iPhone, at 1545 on 8 December 2015, in

these terms:

"Afternoon Lynn

Mark and I have agreed the following:

Payment of £57000.00 & sign up to buy all glass from Supaseal Glass Ltd until

31 December 2020 at the rates we have agreed. Mark will send you a signed

attachment in his e-mail. We also agree to sign a document relinquishing any further

claims against each other apart from trading invoices."

[12]

That was followed by this email from Mr Gorman to Ms Rayner at 1658:

"Hi Lynn

Alex and I have agreed the following:

Payment of £57000.00 & sign up to buy all glass from Supaseal Glass Ltd until

31 December 2020 at the rates we have agreed. We also agree to sign a document

relinquishing any further claims against each other apart from trading invoices."

As the absence of any reference to a signed attachment in his email suggests, Mr Gorman

did not in fact send the annotated price list to Ms Rayner, as Mr Gray had said he would do.

[13]

Ms Rayner did not reply to those emails until 14 December 2015, when she emailed

Mr Gray (copying in Mr Gorman) in the following terms, so far as material:

"Thank you for your email of 8th December, 2015 in which you advised that you have

agreed to sell your 14 ordinary shares in [Inverclyde] to ....Mark Gorman for the sum

of £57,000...

Can you please send a suitable letter to me as agent for the company along with your

Share Certificate? I will then arrange for the appropriate Stock Transfer Form to be

prepared and an appropriate Minute signed by the Company.

I note that you and Mark have also agreed to the Company buying all glass from

[Supaseal] until 31st December 2020 at the rates agreed. If you have a document

signed by yourself and Mark agreeing this then I suggest that you send a copy to me

and I will store it with the paperwork for the Company.

I will speak to Mark about framing a suitable document in which you relinquish any

further claims against each other apart from trading invoices."

[14]

Ms Rayner also emailed Mr Gorman on the same day:

"Thanks for your email. Can you confirm when you will be in a position to make the

payment so I can prepare the necessary paperwork? If you have something in

writing between yourself & Alex about the glass then please let me have a copy.

I note that you are each relinquishing any claims against each other apart from

trading invoices. Can you give me a call about this?"

[15]

Mr Gray replied to Ms Rayner's email on 15 December, stating, insofar as material

for present purposes:

"I have attached the price list which both Mark and I have signed, is this along with

our respective e-mails of last week not sufficient? If not, will you be drafting

something more appropriate?"

That elicited no response.

[16]

A Share Purchase Agreement was subsequently drawn up by Ms Rayner. It included

some terms which had not previously been discussed between Mr Gray and Mr Gorman, in

particular a non-solicitation clause, but no issues arose out of that and the Agreement was

duly signed by both men. Ms Rayner made it clear to Mr Gray that she could not tender

legal advice to him. Notwithstanding the prior reference to a discharge of claims, no such

document was ever drawn up, nor was any further documentation ever prepared in relation

to the purchase of glass by Inverclyde from Supaseal.

[17]

Finally, it is noteworthy that before the Share Purchase Agreement was signed,

Mr Gorman began making payment for the shares. He paid £15,000 in December 2015 and

£22,000 on 11 January 2016, with the balance of £20,000 being paid upon execution of the

Agreement.

Mr Gray

[18]

Turning to the areas where the evidence diverged, Mr Gray said that at the meeting

an oral agreement was reached between him and Mr Gorman that Inverclyde would buy all

its glass exclusively from Supaseal for a period of five years, until the end of December 2020.

In his witness statement he gave a verbatim account of how the conversation between him

and Mr Gorman had unfolded. He had admittedly gone into the meeting with a view to

reaching such a deal as part of the overall package which he hoped to agree with

Mr Gorman to bring his involvement in Inverclyde to an end, and the five year exclusivity

deal was agreed by Mr Gorman. On Mr Gray's evidence, that was why he had asked for the

price list to be emailed to the meeting, and why there was a discussion about prices in

relation to the three most commonly purchased products. He anticipated that those prices

would increase over the coming five years, and did not wish to be tied into prices which

were too low. He increased the rates on those three products. Mr Gorman had accepted at

the meeting that he could no longer expect to get "mates rates". Mr Gray did not trust

Mr Gorman whether that lack of trust was merited or not is neither here nor there for

present purposes and that was why he insisted that both of them email Lynn Rayner in the

terms they did. Having done that, and secured Mr Gorman's signature on the price list, so

far as he was concerned the exclusivity deal was in place from that moment on. It was put

to him that he had pre-prepared the emails to Lynn Rayner, which he denied, and he

pointed out, with some justification, that they could not have been entirely pre-prepared

since he could not have anticipated the terms on which agreement would be reached. So far

as the reference to relinquishing claims was concerned, he said that this wording had come

from Lynn Rayner, who had mentioned that possibility in one of the conversations he had

with her in the days before 8 December 2015.

[19]

In cross-examination, Mr Gray's evidence was robustly challenged, but he largely

adhered to his statement. He insisted that he could remember the detail of the conversation

between him and Mr Gorman at the meeting. He agreed that before the share purchase

agreement was signed, certain revisals were made to it by Ms Rayner which he accepted.

He had not prepared the text of the emails in advance of the meeting. He did see the overall

agreement reached as a package.

Mr Gorman

[20]

Mr Gorman's position in evidence was more elusive. In his first witness statement,

he said that he and Mr Gray were both aware that he was being advised by Lynn Rayner

and that she would be asked to prepare the legal document they needed. He emailed

Ms Rayner in the terms he did because he was asked to do so by Mr Gray to show that he

was willing to take forward a formal agreement in these terms. Mr Gray had already

prepared the emails on his phone. As far as Mr Gorman was concerned, sending an email to

the lawyer did not mean that he was tied in to anything. He had no intention of being

legally bound simply by sending an email. He "knew" that a contract would be needed to

put it all into effect. He was happy to indicate that contracts could be prepared along the

lines of what was said in the emails. At the same time, he thought that if Ms Rayner did not

put something formal in place, then there was nothing to lock him in . He deliberately did

not respond to Ms Rayner's email of 14 December 2015, because he did not want to take that

forward unless he absolutely had to. He had not agreed an exclusivity deal. By using the

words "sign up" it was intended that a written agreement would be needed.

[21]

In his rebuttal statement, Mr Gorman responded in detail to Mr Gray's witness

statement, commenting in particular on what Mr Gray claimed was said at the meeting. He

also said that Inverclyde could not have purchased all of its products from Supaseal,

because it required some products which Supaseal did not supply, and he named two other

companies from which Inverclyde purchased glass products (in passing, I would observe

that this arguably should have been included in the first statement; it is not as if Mr Gorman

did not know that the pursuer's position in its pleadings was that an exclusivity deal had

been entered into, but no issue was made of this by the pursuer and I will let it pass).

[22]

In cross-examination Mr Gorman said for the first time that he had felt intimidated

by Mr Gray. Interestingly, he accepted that he had agreed to a price increase for the three

products in question because he accepted that Inverclyde could no longer purchase at the

same rates as before, the companies no longer being part of the same group, which was

consistent with Mr Gray's evidence of what he had said at the meeting in that regard. He

also accepted that he had not told Mr Gray that his belief was that there would be no

binding agreement until a formal contract had been signed, nor had he told him that his

mind-set was that he privately did not agree to the exclusivity deal. An apparent

inconsistency between his witness statement and the defences prepared on his instructions

was also put to Mr Gorman. Whereas in the former he said that he had signed the price list

to show the lawyer what he was prepared to commit to in a formal contract, the defences

stated that the reason he did not attach the price list was because he did not wish to give the

indication that he had agreed that Inverclyde was to be formally bound by a signature

having been added to the price list. It was put to him that if his evidence was correct, it was

surprising that he had not forwarded the annotated price list to Ms Rayner. Mr Gorman did

not give a satisfactory explanation for the apparent contradiction and appeared

uncomfortable when asked to explain it, at one stage stating that he did not know if the price

list was attached or not, then denying that he had deliberately not attached the price list in

an attempt to get out of the deal, then stating that it probably did enter his mind that he did

not want to agree but never said that to Mr Gray.

[23]

Mr Gorman was then asked about an averment in the defences (but about which he

had not given evidence in either witness statement), namely, that immediately Mr Gray left,

he telephoned Ms Rayner to say that he was dissatisfied with the exclusivity deal and that

he did not agree with it. He said he had done that. He accepted that Mr Gray would not

have known this. He was unable to explain why Ms Rayner had made no mention of that

telephone call, or why her emails of 14 December 2015 appeared inconsistent with there

having been such a conversation.

Linda Murdoch

[24]

Ms Murdoch's evidence was mostly about background facts, to which I attach little

weight. She also spoke to a conversation with Mr Gorman, at some point after 2015, when

he told her that an exclusivity deal had been agreed, that he had to buy glass from Supaseal

and that there was a signed contract in place. She stood by that evidence even when it was

put to her that there was no signed contract in existence. (Mr Gorman denied that any such

conversation had taken place.) Ms Gray's evidence was inconsistent as to whether she was

uncertain whether the agreement was for 2 or 5 years (paragraph 13 of her witness

statement) or that she knew it was for 5 years (her evidence in cross-examination). She also

said that she "knew" they had to sign a contract.

Brian Cannie

[25]

Mr Cannie spoke to an occasion in 2019 when he was phoned early one morning by

Mr Gorman, who was upset because sheriff officers had visited him at the instance of

Supaseal. Mr Cannie had tried to act as a go-between, and had phoned Mr Gray to find out

what was going on. Mr Cannie said that Mr Gorman told him that his company had a

contract with Supaseal. (Mr Gorman denied that any such conversation had taken place.)

Lynn Rayner

[26]

Ms Rayner spoke to the emails she had received and sent, and to her role in drawing

up the Share Purchase Agreement. Significantly, she did not speak to any telephone call

between herself and Mr Gorman on 8 December 2015, nor was a file note of any such call

produced. Although she said that she had made it clear to Mr Gray that she was not acting

for him, and had acted for Mr Gorman in drawing up the Share Purchase Agreement, she

was constrained to accept that her letter of engagement and email of 26 November 2015

stated that she was at that stage acting only for Inverclyde.

The notes of objection

The defender's note

[27]

The defender objected to elements of the evidence of all three of the pursuer's

witnesses. Insofar as Mr Gray gave evidence about Mr Gorman fraudulently diverting

Inverclyde money to himself, it was complained that fair notice had not been given, and that

the evidence was irrelevant to the issues. Insofar as he gave evidence about performance

and breach, that was said to relate to issues which did not fall within the scope of the

preliminary proof. Ms Murdoch's evidence was objected to in its entirety, partly because it

dealt with allegations of fraud; partly because no fair notice had been given of her alleged

conversation with Mr Gorman; and partly because she gave evidence of her opinion of

Mr Gorman's character, which was inadmissible. Mr Cannie's evidence was also objected to

in its entirety, as irrelevant to the matters in dispute, and because of a lack of fair notice.

[28]

Disposing of those objections in turn, I repel the objection to Mr Gray's evidence

about fraudulent activity, which was foreshadowed in the pursuer's averments and which

gives context to the meeting of 8 December. That said, I attach little weight to that evidence,

other than that it confirms that (for whatever reason) Mr Gray did not trust Mr Gorman, and

that the relationship between the two men had deteriorated to the point where it could not

continue. I sustain the objection to evidence about performance and breach, which fell

outwith the scope of the preliminary proof and which I have disregarded. Since I propose to

reject Ms Murdoch's evidence as unreliable, there is no real need to consider the objection to

her evidence, but for completeness I sustain the objection to her opinion evidence about

Mr Gorman's character. Finally, while Mr Cannie's evidence was mostly of doubtful value, I

repel the objection insofar as it relates to Mr Gorman's statement that he had an agreement

with the pursuer, which is relevant and available as an adminicle of evidence.

The pursuer's note

[29]

I sustain the pursuer's objection to Mr Gorman's evidence insofar as it contradicted

an admission in the defences about the number of shares held by Mr Gray in Inverclyde.

Beyond that, the objection was in the main either that there was no record for passages of

the evidence, or that Mr Gorman sought to give evidence about what his subjective

intentions were. Insofar as the first of these is concerned, Mr Gorman was entitled to give

evidence about the background, as Mr Gray did. As regards evidence of subjective

intention, while that is strictly irrelevant in ascertaining what the parties intended, which

must be assessed objectively, it is instructive in the present case as a guide to Mr Gorman's

credibility and reliability and it would be artificial not to have regard to his evidence about

what was in his mind at a time when he was ostensibly reaching agreement with Mr Gray.

Accordingly I repel the remainder of the pursuer's objection to Mr Gorman's evidence.

[30]

The pursuer also objected to Ms Rayner's evidence. While much of it is of limited

assistance, it is relevant to the global picture, and I will repel that objection also.

Credibility and reliability

[31]

I do not accept Linda Mitchell's evidence as reliable. There were inconsistencies in it,

to which I have drawn attention. It is a matter of established fact that there never was a

written agreement for the purchase of glass, so Mr Gorman is unlikely to have told her that

there was, particularly in light of his evidence that, privately, he never intended to enter

such an agreement. I therefore discount her evidence in its entirety (including her assertion

that the parties "had to" sign a contract).

[32]

Insofar as they gave relevant evidence, I find Ms Rayner and Mr Cannie to be

credible and reliable witnesses. They have no axe to grind. Mr Cannie spoke to Mr Gorman

having told him that he had a deal with Supaseal. He would have no reason to make that

up, or even to be mistaken about it, if it had not been said. I prefer his evidence on this

matter to that of Mr Gorman.

[33]

That leads to a wider consideration of Mr Gorman's evidence. There are two major

obstacles to my accepting his evidence as credible and reliable. The first is why, if his

account of what was said at the meeting is correct, did he send an email to Ms Rayner on the

day of the meeting stating in terms that he had agreed to sign up to purchase all glass until

the end of 2020? The second is that if he had telephoned Ms Rayner immediately after

sending the email to say that he had not after all agreed what was in the email, that would

have been something so unusual that she would surely have remembered it. For that

matter, one might have expected to see it in his witness statement rather than having it

teased out of him in cross-examination. Equally tellingly, Ms Rayner's emails of

14 December 2015 are entirely at odds with her having been told that there was no

agreement. I therefore repel as unreliable and incredible Mr Gorman's evidence that he

made such a telephone call, and that he did not tell Mr Gray that he agreed to the exclusivity

deal proposed.

[34]

There are further cogent reasons for not accepting Mr Gorman's evidence insofar as

it is inconsistent with Mr Gray's. First and foremost, his own account of what he did say

one thing to Mr Gray, while privately thinking another is effectively an admission of

dishonesty. Second, I have already referred to the inconsistency in his position as to why he

did not attach the price list to his email to Ms Rayner, for which he gave differing reasons,

which he was unable to explain. There were other inconsistencies in his evidence, for

example his statement that he was happy to indicate that a contract could be prepared along

the lines of what was in the emails was patently never his true position. Finally, he

appeared uncomfortable when put on the spot during his evidence and did not give his

evidence in a convincing manner.

[35]

Mr Gray, on the other hand, while he was not slow to use any opportunity he could

to denigrate Mr Gorman, and was often more anxious to make his point than to answer the

question put to him, sometimes in a bombastic manner, nonetheless gave a clear and

consistent account of what happened at the meeting, which in many material respects was

supported either by the contemporaneous documentation or indeed by aspects of

Mr Gorman's evidence where the two were not inconsistent. One example of this I have

already mentioned, namely, where Mr Gorman accepted that he had said at the meeting that

he did not expect to continue to receive "mates' rates". While it is entirely possible that

Mr Gray did enter the meeting with the emails which were subsequently sent, partly

prepared as already pointed out, they could not on any view have been completely

prepared in advance of agreement being reached I do not find that to be a reason to reject

his evidence. It would be entirely understandable if he had gone into the meeting with a

firm idea of what he wanted to achieve. Nor do I accept Mr Gorman's evidence that he was

intimidated by Mr Gray, at least to the extent that his free will was overcome (for which the

defender has no pleadings in any event). Mr Gray is undoubtedly a stronger and more

forceful personality than Mr Gorman but that is far from amounting to intimidation.

[36]

For completeness, there are aspects of Mr Gray's evidence which I do not accept: for

example his assertion that it was Mr Gorman who brought up exclusivity is unlikely to be

correct, when Mr Gray had exclusivity in mind as one of the things to discuss when he

entered the meeting. However I find the substance of his evidence on the material issues to

be credible and reliable.

[37]

Counsel for the defender submitted that I should find Mr Gray's evidence incredible

because in his witness statement he sought, through his use of italics and quotation marks,

to give evidence about the precise words used by himself and Mr Gorman at various

junctures of their meeting on 8 December 2015, on the basis that it took place nearly 7 years

ago. I do not find that so inherently improbable as to be incredible. Mr Gray's account of

how the discussion proceeded hangs together. In context, his description of what each said

to the other is entirely plausible, such as Mr Gray asking for £100,000 and Mr Gorman

replying "no, I can't afford that, I don't have it" particularly as Mr Gorman's position in

evidence was that he could not in fact afford to pay £100,000. I do not accept the defender's

suggestion that Mr Gray was indulging in "post-factual rationalisation". The verbatim

remarks attributed to himself and Mr Gorman at the meeting may not be accurate to the last

word. Nonetheless, I do find the substance of Mr Gray's evidence about what was said at

the meeting to be correct.

[38]

In his rebuttal statement, Mr Gorman subjected Mr Gray's account of the words used

by each of them to a detailed analysis, commenting that in some instances, the words

suggested might have been used; in other instances, that he couldn't remember; and in still

others, that he definitely would not have used the words suggested. Counsel for the

defender submitted under reference to Browne v Dunn (1893) 6 ER 67 and Chen v Ng

[2017] UKPC 27 at [48] to [61] that, because Mr Gorman had not been asked in cross-examination

whether he said the things attributed to him by Mr Gray, Mr Gorman's account of the

meeting must therefore be preferred. I consider that to be wrong, in two respects. First,

Browne v Dunn did not lay down an absolute rule that a witness must be cross-examined on

every point with which the cross-examiner wishes to take issue. As Lord Herschell made

clear at 71, it is simply a matter of dealing fairly with witnesses. He went on to say at the

end of the passage in question:

"... it will not do to impeach the credibility of a witness upon a matter on which he

has not had any opportunity of giving an explanation by reason of there having been no

suggestion whatever in the course of the case that his story is not accepted (emphasis

added)".

So, if there is a rule, it is simply that a witness whose credibility is to be challenged must be

given a fair opportunity to provide an explanation, which may require cross-examination if

there has been no prior suggestion to the witness that his credibility is in issue. The present

case is a commercial action in which witness statements were not only exchanged, but

Mr Gorman has in fact commented at length on Mr Gray's account of the meeting. It was

abundantly clear to Mr Gorman, who is to all intents and purposes a party to the action, that

his account of the meeting, and therefore his credibility and reliability, was to be challenged

by the pursuer. Fairness did not require anything further by way of cross-examination. The

facts are very different from those in Browne v Dunn, where the witnesses were not parties,

and were not given any opportunity to comment on a suggestion that a document to which

they spoke was a sham, which had not previously been suggested. Second, even if the rule

was as contended for by counsel for the defender, fairness in the present case would simply

require that I discounted Mr Gray's evidence on the facts which were not put, rather than

that I must accept Mr Gorman's. For the reasons which I have already given, I do not find

Mr Gorman to be a credible and reliable witness, and his evidence could not get in by the

back door, so to speak, simply because certain questions were not put in cross-examination.

[39]

However, to a large extent this discussion is beside the point, given the battle lines

which were engaged prior to the commencement of the proof, and the large measure of

agreement about what took place at the meeting, to which I have already referred. On any

view, whatever precise words were used, the parties did arrive at a price for the shares; and

did discuss an exclusivity deal whereby Inverclyde would purchase glass from Supaseal for

a period of five years, at the prices recorded in the annotated price list; that they did so is

confirmed by the contemporaneous emails which both men sent to Lynn Rayner.

Decision

[40]

Having already recorded the undisputed evidence above, and given my reasons for

preferring Mr Gray's evidence to that of Mr Gorman, I will now deal with the various

discrete issues which emerged during the course of the proof.

One agreement, or more than one agreement?

[41]

Counsel for the defender made much of the fact that the pursuer had averred that an

(ie a single) agreement had been reached for the sale of Mr Gray's shares to Mr Gorman and

that the defender would purchase all of its glass from the pursuer until 31 December 2020.

He submitted that (as Mr Gray had accepted in his evidence) this was a single package, and

that either the whole agreement was immediately enforceable, or none of it was. That is

indeed what is pled, but Mr Gorman accepted that he and Mr Gray were the respective

controlling minds of Inverclyde and Supaseal, and that when they were discussing the glass

they were doing so on behalf of those companies. On no view could there have been only

one agreement, given that Mr Gray and Mr Gorman were negotiating as individuals in

relation to the shares, and on behalf of their companies in relation to the glass (and that is so

whether concluded agreements were reached, or merely agreements in principle). It must

follow that there were two agreements: one between Mr Gray and Mr Gorman as

individuals, for the sale of Mr Gray's shares at a price of £57,000 (and that they would each

grant a discharge of all claims against the other); and the other between Inverclyde and

Supaseal, that Inverclyde would "sign up" (using the term in the emails for the moment) to

purchase all of its glass from Supaseal for 5 years on the prices agreed. On the basis of

Mr Gray's evidence, I am however willing to proceed on the basis that the agreements were

interlinked, so that either both were immediately enforceable, or neither was.

Prior to the meeting of 8 December 2015, was it the parties' intention that any agreement(s)

reached would be reduced to writing?

[42]

There is no objective evidence supporting Mr Gorman's statement that both he and

Mr Gray were aware that he was being advised by Lynn Rayner and that she would be

asked to prepare the legal document they needed. The contemporaneous evidence points

the other way. First, Ms Rayner was at that time acting only for Inverclyde, not for Mr Gray

or Mr Gorman, which suggests that neither of them thought they needed a solicitor, let alone

that Ms Rayner would be acting for Mr Gorman. Second, if Mr Gorman did not know that

an exclusivity deal was to be discussed, he could not have been aware that any agreement

reached in that regard would need to be committed to writing. Third, he accepted that he

said nothing to Mr Gray to the effect that a written agreement would be required.

Did the parties agree at the meeting of 8 December 2015 that their agreements must be

reduced to writing?

[43]

Neither party said at the meeting that there would require to be written agreements

before they would be bound. Mr Gorman may have thought that the oral agreement he had

reached would not be binding unless and until a written agreement was entered into and

that he never intended to enter such an agreement, but he did not communicate that belief to

Mr Gray. His belief is irrelevant in ascertaining what was agreed. Insofar as the share

purchase and the exclusivity agreement were concerned, there was simply no mention of a

written agreement at all. The clearest indication that Mr Gray and Mr Gorman regarded

themselves as immediately bound by the agreements reached is that Mr Gorman began

making payments before the share purchase agreement had been signed. For what it is

worth, Ms Rayner, in her email of 14 December 2015, clearly did not anticipate that a written

agreement would be required in relation to either the shares, or the exclusivity agreement.

As regards the shares, she said only that she would arrange for the appropriate Stock

Transfer Form to be prepared and an appropriate Minute signed by Inverclyde. By asking

for a copy of any agreement about the glass, she signified that she did not think either that a

written agreement was necessary or that the agreement reached was in principle only; and

neither Mr Gray nor Mr Gorman challenged her on that. Nor had Ms Rayner been

instructed, by that stage, to prepare a share purchase agreement. There was no reason why

she should have been, in her capacity as solicitor for Inverclyde, and not as the solicitor for

Mr Gorman.

[44]

There are three principal factors which the defender relies on as showing that the

parties did not regard themselves as immediately bound. The first is the reference in the

emails to the defender "sign[ing] up" to buy all glass from the pursuer. However, in the

context of emails written by businessmen, the term simply indicated that the parties had

reached an agreement, rather than that they literally had to sign a written agreement before

they considered themselves to be bound: in everyday language, "signing up" to something

signifies a willingness to be bound without any necessary connotation that a written

agreement will be required. The second factor is that Ms Rayner did prepare a Share

Purchase Agreement, which underwent some revisals (at her instance) before it was signed;

and Mr Gray was prepared to accept in evidence that he could have walked away at any

time before it was signed. There are a number of answers to that. It remains unclear on

what basis, or on whose instructions, Ms Rayner prepared the Share Purchase Agreement,

when she had previously stated that only a Stock Transfer Form would be required and that

she was acting only for Inverclyde. Further, whether or not Mr Gray would have been

entitled to walk away was (as senior counsel for the pursuer submitted) a question of law,

not one of fact. His evidence about that is strictly inadmissible. As a matter of fact he was

prepared to, and did, agree to the revisals to the Share Purchase Agreement and he did

execute it but it by no means follows that there was no binding agreement until he did so.

The third factor is that the parties also referred in their respective emails of 8 December 2015

to signing a document relinquishing claims against each other. The defender argues that

this showed that all agreements were to be reduced to writing; since no discharge was ever

drawn up and signed, there was no binding discharge and the same reasoning applied to the

exclusivity agreement. The first difficulty with this argument is that any agreement about a

discharge of claims must have been between the men as individuals (there was no

suggestion that there were potential claims between Supaseal and Inverclyde, which were to

continue to have a trading relationship) and the absence of a written discharge did not prove

to be an obstacle to concluding an agreement in relation to the shares. Anyway, it is an open

question as to whether, if either man now attempted to sue the other, a defence would be

available based upon the agreement to discharge claims. Further, the reference to signing

(as opposed to signing up to) a discharge rather leads to an inference that no other

agreement did require to be signed.

[45]

The defender also founds upon Mr Gray's email to Ms Rayner of 15 December 2015

as showing that he did not consider that a binding agreement had been reached. If anything

I read that the other way the question "Is this not sufficient" implies that the questioner

thinks that it is sufficient and in any event, whether it was sufficient or not was a question

of law.

[46]

For these reasons, the factors in paragraph [44] outweigh those relied on by the

defender. What was in Mr Gorman's mind (or for that matter, Mr Gray's) was irrelevant.

On the basis of what Mr Gray and Mr Gorman said and did, I find on the balance of

probabilities that the parties did reach a binding exclusivity agreement on 8 December 2015,

just as they reached a binding agreement for the sale of Mr Gray's shares, and that they did

not intend that either agreement would require to be formalised in a written agreement

before it became enforceable. That intention is unaffected by the fact that a Share Purchase

Agreement was subsequently entered into: it did not have to be.

[47]

That is sufficient to dispose of the defender's argument, founded as it was on

Gordon's Executors, above. I accept the proposition advanced by the defender that the court

will not make the parties' bargain for them in circumstances where the agreement to do

something depends on negotiations yet to take place, or where there is otherwise no

consensus on one or more essential of the contract: East Anglia Electronics Ltd v OIS plc 1996

SLT 808 at 812 E-F; Scottish Coal Company Ltd v Danish Forestry Company 2010 SC 729 at [17].

However, on the evidence, the agreement in this case cannot be described in those terms. It

may be that (as happened with the sale of the shares) further negotiations might have

resulted in the exclusivity agreement already reached being innovated upon before being

reduced to writing, but that is a different issue. If, for example, Mr Gorman had second

thoughts about the wisdom of having agreed that Inverclyde would purchase "all" its glass

from Supaseal, (if it truly is the case that certain glass products were purchased from

different suppliers) and if Supaseal does not sell the products in question, then any written

agreement may well have reflected that by qualifying what was meant by "all" glass. But

that is nothing to the point, and brings us back to the law, which is that whether a contract

has been concluded or not, and if so, on what terms, must be assessed objectively having

regard to what was said and done, rather than what either party thought privately. The nub

of the matter is that since I have found that Mr Gorman did say that Inverclyde would

purchase all glass from Supaseal for 5 years, at the prices agreed, and since the parties did

not negotiate with a view to embodying the result of their negotiations in a further written

agreement or agreements, there is no presumption that until such further agreements were

executed, no enforceable agreement had been achieved.

What were the terms of the contract or was it void for uncertainty

[48]

The two parts of the question to be answered are essentially counterparts of each

other. If the court is able to conclude what the terms of the contract were, and if they

include the essentials of the contract, the contract is unlikely to be void for uncertainty.

[49]

The test as to whether a contract is sufficiently certain to be enforced is generally said

to be whether or not decree for specific implement could safely be pronounced: Macarthur v

Lawson 1877 4R 1134; Gloag on Contract, (3rd Edition), page 11. In the latter passage, the

author stated that "It is a question of degree whether a particular obligation, taking the

words used and the legal implications, is too vague for enforcement".

[50]

The submission for the defender is that the parties merely reached a general measure

of agreement on the heads of terms of a proposed contract which they both intended to be

sent to a lawyer for the purpose of initiating the process of preparing a binding and

enforceable agreement by way of a written deed. I have already held that the evidence

showed no such thing. The terms of the oral agreement reached between the parties was

that Inverclyde would purchase all of its glass from Supaseal for a period of 5 years, at the

prices agreed between Mr Gray and Mr Gorman. Those comprise the essentials to the

agreement. Who were the parties? Supaseal and Inverclyde. What was to be purchased by

Inverclyde? All its glass. From whom? Supaseal. For how long? Until December 2020. For

how much? At the prices shown on the price list, subject to the changes which were

initialled. In the words of Viscount Dunedin in May & Butcher, quoted above, everything

had been settled that it was necessary to settle and nothing remained to be settled. I accept

the pursuer's submission that the agreement was sufficiently specific that its terms could be

enforced by decree of specific implement. This is not a case where the court is required to

make the parties' agreement for it, nor did the parties merely reach an agreement to agree.

The defender founds on arguments (a) that the emails should be construed as if they are a

contractual document and (b) that the use of th e words "sign up" signified that further

contractual elements fell to be agreed. Neither of those is sound. The parties concluded an

oral agreement before the emails were sent, and the emails should not be construed as if

they constitute a contractual document. I have already rejected the argument that "sign up"

meant that the parties literally had to sign a written agreement. Doubtless, if Ms Rayner or

another solicitor had drawn up an agreement it would have had "bells and whistles"

attached, but that does not affect the basic proposition that all of the essentials had already

been agreed in sufficiently precise terms.

Disposal

[51]

For all of these reasons, the pursuer has proved that a choate, binding and

enforceable contract was concluded between the parties, and has proved what the terms of

that contract were. I will repel the defender's first to fourth pleas in law, and put the case

out by order to discuss further procedure.