Scottish Court of Session Decisions

In 1890 John Paxton, manufacturer, Edinburgh, leased from James M'Kelvie the stable and loft at Manure Wharf, Fountain-bridge, at a yearly rent of £14, payable at Whitsunday and Martinmas. The lease excluded sub-tenants without M'Kelvie's consent in writing. In November 1891 Paxton gave up his business in Edinburgh, and desiring to dispose of his plant and premises, he entered into negotiations with Robert Kay Kinnimont, manufacturer, Edinburgh, and upon 10th November 1891 handed to him a pencil draft of the following letter, No. 26 of process, which on the same day Kinnimont extended and gave to Paxton—“I hereby agree to take those premises situated at Canal Loading Wharf presently occupied by John Paxton, 87 Gilmore Place, from this date, and to relieve him of rent from Novbr. 11th till the expiry of his lease, and to pay him for fittings the sum of fifteen pounds stg., including engine and boiler, &c.” Upon the same date Paxton wrote to M'Kelvie's trustees, the proprietors of the premises, this letter, No. 17 of process:—“Sirs,—As I intend giving up those premises at Canal Loading Wharf, and have secured another tenant, I will take it as a great favour if you could arrange with him from this date for a three years' and half-year's lease. By doing so you will greatly oblige yours, John Paxton.” He handed this letter to Kinnimont, who delivered it to John Merry, clerk to Mr James M'Kelvie junior, who acted for the late Mr M'Kelvie's trustees, and who at that time was absent from Edinburgh. Paxton afterwards entered into negotiations with other parties for the transfer of the premises, and upon 14th November 1891 he called at M'Kelvie's office, and stated that the arrangement between Kinnimont and him had fallen, and that he cancelled the letter formerly given. It was returned to him, and was never shown to Mr M'Kelvie junior. Upon 14th November Kinnimont was informed that the agreement was at an end, and in December Paxton purchased the premises from M'Kelvie's trustees for £115, and let them to other parties.

In December 1891 Kinnimont brought an action in the Edinburgh Sheriff Court against Paxton, claiming £100 as damages for breach of contract.

The defender maintained—“There was no completed contract between the pursuer and the defender.”

Upon 9th June 1892 the Sheriff-Substitute ( Rutherfurd) found in point of fact, —“(3) That the defender gave up business in Edinburgh about the beginning of November 1891, and that on the 9th or 10th of that month the parties entered into an agreement for a sale to the pursuer by the defender of certain plant and fittings in the premises aforesaid at the price of £15, and a transfer to the pursuer of the unexpired period of the defender's lease of these premises, provided that the landlord would consent to accept the pursuer as tenant during that period, and for some time longer;” and found in point of law ‘that the defender was not entitled to withdraw his said letter, No. 17 of process, and to resile from his agreement with the pursuer in the manner stated: Therefore repels the defences, and finds the defender liable in damages to the pursuer, assesses the damages at the sum of £10 sterling, &c.

“ Note.—It appears from the defender's statement in evidence that in the month of November last he had given up business in Edinburgh, and was working in Hawick. It was therefore natural that he should endeavour to dispose of the plant in the premises which he occupied at Fountain-bridge, and at the same time be relieved of his obligations under the lease. Apparently for that purpose he entered into negotiations with the pursuer, and it is not matter of dispute that a sum of £15 was fixed as the price of the defender's engine, boiler, &c. The defender, however, endeavours to make it appear as if this were a matter altogether apart from the pursuer's obtaining the landlord's consent to his occupation of the premises. In the opinion of the Sheriff-Substitute the evidence shows that that was not so, and that the pursuer's agreement to purchase the engine, &c., was conditional upon the landlord's consent being obtained to a lease of the premises in his favour. This is shown, not only by the parole evidence, but also by the terms of the defender's letter to the landlord, No. 17 of process, dated 10th November 1891, in which he states that he has secured another tenant. The defender no doubt says that he wrote that letter at the pursuer's request, ‘just to feel the way, and see how things would stand,’ but the Sheriff-Substitute does not think that to be a satisfactory explanation of his purpose in writing the letter in question. On the contrary, it seems to him, as already stated, that the letter shows that an agreement had been at its date concluded between the parties, subject to the landlord's consent being got to a lease in the pursuer's favour.

Now, if that be so, it was plainly an implied condition of the contract that the defender should do nothing to prevent the landlord's consent from being obtained. In place of that, however, before any answer could be received from Mr M'Kelvie, the defender entered into negotiations with other parties, with the result that on Saturday the 14th of November he called at Mr M'Kelvie's office and asked his clerk, the witness Merry, to return the letter, No. 17 of process. Merry states that he declined to do so, and the defender left saying that he cancelled the letter, and that the arrangement between him and the pursuer had fallen through. Accordingly Merry says that he never showed the letter to Mr M'Kelvie, who knew nothing about the matter until after the present action had been raised. In these circumstances the Sheriff-Substitute is of opinion that the defender acted in mala fide and in breach of his agreement with the pursuer, and that he has thus rendered himself liable in damages.”

The Sheriff-Substitute awarded £10 as damages.

Upon 25th July 1892 the Sheriff ( Blair) found that the pursuer had failed to prove that “the defender entered into an agreement with the pursuer to assign to him the lease of the premises in question sometime occupied by the defender, and to sell to pursuer a steam-engine and certain other plant for the sum of £15; therefore assoilzies the defender from the conclusions,” &c.

The pursuer appealed, and argued—There was a bargain or contract between the parties. One wished to get rid of the premises, and the other expressed his willingness to take them. The bargain was thus completed. If the proprietor had refused to take the pursuer as his tenant, that might have been a different thing, but M'Kelvie never got an opportunity of considering whether he would take Kinnimont as tenant or not, and he was prevented having that opportunity by the defender's action. If rei interventus was necessary to the conclusion of the bargain, then there was sufficient by the letter written to M'Kelvie stating that the defender had secured a tenant for the premises. It had been held that the retention of a lease by the landlord, with a definite ish and entry, was enough to make a binding bargain— Forbes v. Wilson, February 22, 1873, 11 Macph. 454; Ballantine, &c. v. Stevenson, July 15, 1881, 8 R. 959.

The respondent argued—There was here no concluded bargain for the lease of the premises to Kinnimont as a sub-tenant. There was an agreement to take the engine and fittings by the pursuer, and an offer for the lease. The letter by the defender to M'Kelvie did not complete the bargain; it merely offered a tenant. Until M'Kelvie approved of the tenant there was no completed bargain, and the defender was entitled to resile; he had done so by getting the letter back from M'Kelvie— Fulton v. Johnston, M. 8446. As no completed bargain had been made, the pursuer had no claim for damages — Allan v. Gilchrist, March 10, 1875, 2 R. 587; Malcolm v. Campbell, December 9, 1891, 19 R. 278.

At advising—