Scottish Court of Session Decisions

In the next place, it seems to me that upon a true construction of the agreement the pursuers may stop the supply at any time if it be convenient to them to discontinue pumping. It is contemplated that the pumping may be discontinued in both. The supply of water from one or other, or both, may be stopped; and in the latter event no more rent would be paid. So that as far as the pursuers are concerned it is within their power to stop the supply at any time, and apparently even without notice.

On the one hand the defenders no doubt receive a very considerable benefit, or they would not have been induced to pay £250 a-year for the surplus. It must have been a great convenience to them to obtain this supply of water. But, an the other hand, the duration of the agreement in so far as they are concerned, if it is to be read as indefinite in this sense, that they never can put an end to it, places them in a position of very great hardship. If that is the true construction, they would be bound to go on to pay for this water after it had ceased to be of any use to them. Even after they had stopped their works they would still be bound to pay £250 a-year. They might find that in the conduct of their works they could dispense with this supply of water altogether or with any supply of water, and still they would be bound to continue paying; or, just to take what has actually occurred, they find that in the conduct of their own operations they have a supply of water at command, by pumping which they can sufficiently supply themselves with water-power, and still they are asked to pay this annual sum for that which they no longer want.

It is very difficult to reconcile that with equity, and I rather think it is inconsistent also with legal principle. Whether this ought to be called in strict technical meaning a lease it is not perhaps necessary absolutely to determine. But I must say I think it comes nearer to a lease than any other nominate contract with which I am acquainted. There is no doubt that a water supply may be the subject-matter of a lease, and that is the subject-matter here. We have also a stipulated annual rent paid for that water supply, and the only thing requisite to a lease is just what is wanting here—namely, a definite ish. Therefore it seems to me that in law this is really a lease without a definite ish, and if that be so, I think it solves the difficulty altogether, and we are entitled to say that the defenders, the lessees under such an imperfect lease, are entitled to put an end to it at any reasonable and convenient opportunity that suits themselves. I am therefore for adhering to the Lord Ordinary's interlocutor.

Lord Deas—All the remarks of your Lordship go very clearly to show that in no point of view can this be a permanent arrangement. That seems quite impracticable. As I suggested in the course of the argument, an important agreement such as this, for which £250 a-year is to be paid, may be presumed to have a name in law, and here it must either be a sale or a lease. It is not a sale. That is quite clear, because there was no subject that was to be or could be permanently given. And if it is not a sale, I do not see anything else it can be but a lease. A lease of water or of water-power, as your Lordship has said, is quite well known, and there is nothing wanting here but an ish to make it a perfectly good and binding lease. But the want of an ish is a very serious want. I have always understood, and it is laid down by all the authorities, that a lease without an ish is practically void. It may not be void in this sense, that so long as it is allowed to go on the terms must be implemented, and likewise in this other sense, that neither the one party nor the other is entitled all at once, and to the great loss and disadvantage of the other, to throw it up without proper notice, so as to give an opportunity on both sides of making the necessary arrangements for bringing it fairly to an end. But subject to that observation it may be terminated by either party on notice.

I cannot see, however, that it is anything but a lease without an ish. I certainly do not look upon the subject-matter of it as something given which is of no value. The value of a thing is the price it will bring in the market, and that is the value of the water here. In that point of view it would not matter in the least that it may be of no use to the landlord. The question is, what can he get for it? It is now, I think, more than fifty years since I had first to maintain that doctrine in a question about one of the springs of water brought into Edinburgh from the Pentland Hills. The argument of the water company was that the water was running to waste, and that was perfectly true, for nobody derived one sixpence of profit from it since time began. But my argument, which recommended itself to the Sheriff and the jury, was simply that the price of water, like that of any other article, was what it would bring in the market, and on that footing the jury awarded £1000 of damages or compensation for what was never worth anything at all before. I have no doubt that that principle is equally applicable here. That was a case of course of a sale; it was taking the water for ever. But this is not a taking of the water for ever. The one party could not give it and the other party could not get it permanently. Therefore it is not a sale, and it seems to me to be a lease without an ish, and so in point of law void, although the equitable considerations I have mentioned must be observed before it can be terminated. The result is that I am for adhering to the Lord Ordinary's interlocutor.

Lord Mure—I think this is a very puzzling case, and the disposal of it depends, in the view I take of it, upon the construction of the letter of 26th May 1875, more a good deal than on that of 9th June 1875; for that letter states, in answer to a question by the pursuers about the obligations under which they were to come—“All we would expect is that you give us the water from Newton Pit if it is going, and from Hallside if it is going and Newton not, and in case neither of them is going we do not pay.” Now, I quite agree with your Lordships that this cannot be held to be a permanent arrangement to last in all time to come, because the party so dealing is the tenant, and therefore he could not make an arrangement for anything beyond the terms of his own lease; but speaking with hesitation, as my opinion differs from that of your Lordships and the Lord Ordinary, I regard Mr Dunlop as bound to give the water so long as his pits are going, and if the Steel Company could not have found water for themselves, as they appear to have done now, nearer their own works, I am clear that they could have stood on that arrangement of 26th May as binding Mr Dunlop to give the water as long as his pits were going. That being so, he was excluded from going into the market to deal with anybody else with regard to the water. The natural inference is that the counter obligation is that they are to take the water during Mr Dunlop's lease as long as he pumps it. That, I think, is the fair logical construction, and if it had stood there that construction must have been given to it.

On the other hand, it is true that the pumping in one sense is terminable at the will of Mr Dunlop—that is to say, there is nothing in that letter which prevents his firm from stopping the pumping if it suits their working arrangements to do so, and the argument is, that if it was in the power of Mr Dunlop to stop the pumping, it was optional to the defenders to decline to take the water any longer. There is a good deal in that observation, I admit, but I still think that, looking to the whole circumstances, the fair construction is, that under that provision the only event in which the defenders were not to pay was the event of Mr Dunlop not giving them water.

That being so, I am not prepared to concur with the view which your Lordships have taken. In regard to its being a lease without a definite ish—that is to say, with no precise term fixed—it may be said to be good then only for a year. But if it is a sub-lease, and the question is raised for construction upon the terms of the sub-lease, how long it is to endure—when you find that a portion of that sub-lease is to endure up to a certain period, then I think the natural construction is that it is a lease with an ish up to that period as regards both parties. According to that construction the definite ish is the pumping of the water during the period of Mr Dunlop's principal lease, and in that view it is not open to the objections that it is good only for a year.

These are the difficulties that occur to me in the case, and in that view I am not prepared to concur with your Lordships.

Lord Shand declined, being a shareholder in the defenders' company.