Scottish Court of Session Decisions

Mrs Christian Cameron-Head of Inverailort, with consent, pursuer, brought an action against John Cameron & Company, timber merchants, Govan, and John Cameron, the sole partner thereof, defenders, concluding, inter alia, for decree for payment of £182, 10s., “being the amount of the penalty incurred by the defenders to the pursuer under and in virtue of an agreement between them, dated 18th June 1917, so far as effeiring to the period from 1st April 1918 to 1st April 1919,” with interest from the date of citation, and for declarator that the defenders were liable to the pursuer in additional penalties at the rate of 10s. per day for such further period as might elapse from and after 1st April 1919 until the complete removal by them from the pursuer's lands of all the timber purchased under the agreement.

The contract between the pursuer and defenders was as follows:—“It is agreed between Mr John Cameron and Mr and Mrs Cameron-Head that he shall buy the 1300 (thirteen hundred) trees—standing timber—as pointed out, and pay for them a sum of £1750 (seventeen hundred and fifty pounds), payment to be made—£500 (five hundred pounds) on acceptance and the balance in two instalments at three and six months. The wood to be cleared away by 1st April 1918, under a penalty of 10s. (ten shillings) a-day until such is done. The purchaser must undertake to make good all damage of any sort and description caused to Mr and Mrs Cameron-Head's possessions by his operations. The purchaser must hold himself liable for any damage to the public road or bridge which he may do, and arrange this with the road authorities, as the proprietor will not be held responsible for this. The purchaser must make good to the farmer any damage which he may do in taking the wood across the fields, as the proprietor will not be responsible for this. The cutting of the wood can begin in August, but is not to be cut beyond the deer fence with the gate on the path till 15th October, after that cut any trees round the castle. Mrs Cameron-Head will give stabling for three horses at Glenshian, and Mr Cameron undertakes to let her have the manure of these horses. Mr Cameron undertakes to leave the stable in the good order in which he gets it. The deer fence to be closed every evening after the wood carting for the day is finished.

6d.

Stamp

John Cameron & Co.

J. Cameron-Head.

C. H. Cameron-Head.

“18 th June 1917.”

The averments of parties in so far as those relate to the subject of this report were—“(Cond. 8) A formal agreement embodying [the terms agreed upon between the parties] and dated 18th June, was accordingly made out by the pursuer, typed off in duplicate, and posted by her to the defenders on 21st June, with the request that they should return one of the duplicates after signing, and at the same time send their cheque for the first instalment of the price. In reply the defenders on 26th June returned one of the duplicates duly signed, and at the same time enclosed their cheque for the amount of the first instalment, £500, thus showing that they accepted the written agreement in all its clauses as the measure of their right and liabilities. Under the said agreement the price to be paid for the trees by the defenders was fixed at £1750, payable in three instalments as therein mentioned, and all these instalments have been duly paid. (Cond. 9) The said agreement also contained the following clause—‘The wood to be cleared away by 1st April 1918, under a penalty of 10s. (ten shillings) a-day until such is done,” and various other clauses by which the purchasers undertook ‘to make good all damage of any sort or description’ caused to the pursuer's possessions by their operations, and to make good to the farmer any damage done in taking the wood across the fields, on the express ground that the proprietor ‘would not be responsible for this.’ The pursuer's further claims against the defenders under the clauses last referred to are hereby reserved, and may more conveniently be dealt with at the conclusion of their operations. The explanation in answer is denied. (Ans. 8 and 9) The agreement condescended on is referred to for its terms. Admitted that the three instalments of the price therein mentioned have been duly paid. Admitted further that any claims the pursuer may have against the defenders arising out of their operations may more

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conveniently be dealt with at the conclusion of their operations. Quoad ultra denied in so far as not coinciding herewith. In particular it is denied that it was the intention of the parties that the pursuer should be free of obligations in connection with the contract. Explained that the stipulation providing that the defenders should make good to the farmer any damage done in taking the wood across the fields does not refer to the way leaves. (Cond. 11) Notwithstanding the terms of the contract between the parties, approximately two-thirds of the felled trees are still upon the ground. The defenders have never had a sufficient number of men employed on the work to enable it to be completed within the specified time, and even since it expired, and they became aware that the penalty of 10s. per day was to be exacted, they have made no serious effort to increase their staff of woodmen and accelerate the work. On the contrary, very shortly before the expiry of the appointed time, viz., on 27th March 1918, the defenders took on another important contract for the cutting and removal of a large number of trees on the Arisaig estate in the same district, necessitating the employment on that contract of skilled woodmen and carters who otherwise might have been available to them for the acceleration of their operations at Inverailort. The operations conducted by the defenders under and in terms of the said contract have occasioned considerable loss of privacy and amenity and disturbance of the regular working of the estate as well as interference with fences, drains, and the occupation of certain parts of the pursuer's estate in respect of the way leave aforesaid. The time bargain contained in the said contract was entered into by the parties for the purpose of limiting the aforesaid injury and inconvenience, and the defenders' prolongation of their operations in breach of the said time bargain has occasioned loss, injury, and damage to the pursuer. Further and in particular it has delayed the pursuer's planting of trees in place of those cut down under the said agreement. The loss, injury, and damage due to the defenders' delay as aforesaid is moderately assessed at the sum of 10s. per day. The averments and explanations in answer are denied. (Ans. 11) Admitted that a considerable part of the timber still requires to be removed. Admitted further that the defenders have purchased timber at Arisaig. Quoad ultra denied in so far as not coinciding herewith. Explained that the delay in removing the timber has been caused by the failure of the pursuer to provide suitable way leaves and suitable stabling as already stated. Moreover, as and when it became possible for the defenders to remove timber from the ground under the conditions, as regards way leaves and stabling, by which they were handicapped, they encountered difficulties in obtaining railway waggons and facilities for storing timber at the railway station, and this contributed to the delay. In the same way the delay occasioned by the pursuer's failure as aforesaid was accentuated by the fact that in the later stages of the war some of the men upon whose services the defenders were relying were taken from their work for military service. They have now as many men at work on the ground as can be accommodated in the premises available. Explained further that the purchase of timber at Arisaig has not in any way interfered and does not now interfere with the defenders' operations on the pursuer's lands. Explained further that no damage has been occasioned to the pursuer through the delay which has occurred in the removal of the timber. (Cond. 12) It is believed and averred that the defenders took on the fresh contract with the proprietor of the Arisaig estate in the full knowledge that they were thereby increasing their liability to the pursuer for the penalties now sued for, but they regarded a penalty of 10s. per day as negligible when set off against the further profit likely to accrue to them from securing another and important contract in the same neighbourhood. Payment of the penalty moneys incurred has already been applied for several times and refused. (Ans. 12) Admitted that payment of the penalty money has been applied for and refused. Quoad ultra denied in so far as not coinciding herewith.”

The defenders pleaded—“1. The pursuer's averments being irrelevant, the action should be dismissed. 2. The action being incompetent should be dismissed. 3. The action being premature should be dismissed, et separatim should be sisted. 5. The penalties sued for not being pactional and liquidate, and the pursuer not having suffered damage for which the defenders are responsible, the defenders should be assoilzied.”

On 11th June 1919 the Lord Ordinary ( Hunter) repelled the first, second, and fifth pleas-in-law for the defenders, allowed the parties a proof of their respective averments on the question of the causes for the defenders' delay in removing the timber, and appointed the defenders to lead in the proof.

Opinion.—“This is an action by the proprietrix of Inverailort against a firm of timber merchants carrying on business in Govan. The pursuer sold a certain amount of timber growing upon her estate to the defenders for a certain price. It was a condition of the contract that the timber should be removed by the defenders within a specified period of time. The defenders have not in fact removed the timber within that period of time. Under the contract it is provided that there shall be payable to the pursuer a penalty of ten shillings a day for every day's delay beyond the specified period.

There has been delay, I understand, for more than a year, and the action takes this form—the pursuer sues, first, for payment of a year's penalty, or a year's liquidate damages in respect of the delay; then for a declarator that there is a liability upon the defenders to pay at the rate of ten shillings a day for all delay beyond the year that has expired. There is a third conclusion with which I cannot deal—I do not think the pursuer insisted in it before me—at all

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events it is not a conclusion that I can give any remedy upon.

The position of the defenders is this—they say the action is premature, because the claim for damages in respect of delay is a claim that only emerges when the contract has been completed. Alternatively they contend in the first place that the stipulated payment under the contract in respect of delay was in the nature of penalty—a sum which the Court might modify according to the circumstances under which the claim was made, and depending for its insistence in by the pursuer upon her establishing that she had actually suffered damage. In the second place, they contended that the delay that has taken place here beyond the contract period has arisen from circumstances for which they were not responsible, and in reality because of the fault of the pursuer in not fulfilling conditions, expressed and implied, imposed upon her by the terms of the contract. In particular, they allege that it was an implied condition in such a contract as they had entered into with the pursuer that reasonable facilities should be provided to them for the removal of the timber, and they say that they did not get such reasonable facilities. To this the pursuer makes answer that it was arranged between the parties that one road should be provided, and that that road was in fact provided. The contract does not give one any guidance in the matter, and where no guidance is given upon a matter such as this I think the question of the pursuer's right to recover must depend upon whether or not reasonable facilities had been given.

The defenders have also alleged that it was really part of the contract that although one road alone should be provided for a certain time, after that limited period of time three roads should be made available, and they suggest that without such facilities it was an impossibility for them to complete the contract within the stipulated period of time. On that matter it appears to me that I cannot form an opinion without knowing the facts; and although perhaps the defenders have not very clearly averred when the arrangement was made as regards the receiving the three roads, I take it that it was at the interviews that are referred to by the pursuer in her condescendence.

There is another small matter which will also require to be proved, that is, as regards the question of whether accommodation was provided for the defenders' horses as agreed to by the pursuer in the contract. On that there is a dispute between the parties.

Having indicated the defenders' position, I come to their third plea that the action is premature. I have some doubts as to whether the action is not premature, and I indicated my doubts to the pursuer so that the pursuer might have an opportunity of amending her record by putting in a declarator that the payment under the contract was really a payment of the nature of liquidate damages and not a penalty. But the pursuer has not considered it necessary to amend, and although I have doubts about the matter, I am not prepared to say in this case that the action should be thrown out. I think the real question between the parties, viz., as to whether the pursuer can insist in her claim at all, will arise upon proof upon the points I have already indicated as arising upon the defence to the action.

So far as concerns the defenders' contention that the sum is a sum payable as penalty that the Court can modify, my opinion is against the defenders. It appears to me that the parties here have arranged for a moderate payment of so much per day when delay occurs, and when delay has occurred in such circumstances I do not think it is for the Court to revise the amount the parties have agreed upon. I think if there may be damage—and it is clear that there may be damage—although it is difficult to say what it may be or to prove the amount of damage consequent upon delay, and parties fix beforehand upon a reasonable sum, then the Court will take that sum as a pre-estimate of damage and will not interfere with what has been arranged.

I propose to repel the first, second, and fifth pleas-in-law for the defenders and allow parties a proof of their averments upon the question as to the causes for the delay, the defenders to lead. I think the defenders are prima facie bound to establish that the reason for their delay beyond the time stipulated in the contract arose from causes for which the pursuer is responsible, and therefore on that part of the case they are really pursuers in the issue.”

The defenders reclaimed, and argued—The action was irrelevant. The clause of the contract founded on stipulated for a penalty and not for liquidated damages, for there was no relative proportion between the sum to be paid and the various items of damages penalised. The value of the occupation of the land would vary at different times. That disproportion indicated that the clause was as it itself stated a penalty clause—Mayne on Damages (8th ed.), p. 173; Clydebank Engineering and Shipbuilding Company, Limited v. Don Jose Ramos Yzquierdo y Castanada, 1904, 7 F. (H.L.) 77, per Lord Davey at p. 82, and Lord Robertson at p. 84, 42 S. L. R. 74. Dingwall v. Burnett, 1912 SC 1097, 49 S.L.R. 882, was referred to. If so, the pursuer must aver she had suffered damage to the extent of the sum sued for. There was no such averment. Further, the action was premature and incompetent. The pursuer should wait until the completion of the contract, and then sue for general damages for breach or sue upon the penalty clause, or she should treat the contract as discharged by the alleged breach. But she was not entitled, as she was doing in the present action, to hold the contract as subsisting and uncompleted and to sue upon the clause in question. The clause in question gave no right of action until the contract was completed. Under it the defenders might never have to make a payment. Consequently the action was premature— British Glanzstoff Manufacturing Company, Limited v. The General Accident, Fire, and Life Assurance Company, Limited, 1913 S.C. (H.L.) 1, 50 S.L.R. 13. As the sum sued for was not yet due the action should be

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dismissed and not merely sisted— Crear v. Morrison, 1882, 9 R. 890, 19 S.L.R. 639. Further, the action was incompetent in respect that the pursuer was founding upon a cause of action, but was not stating her claim for the whole consequences thereof. She had reserved her claims for damage due to the same breach. That applied whether the clause was a penalty or a liquidate damages clause, and it rendered the present action incompetent— Duke of Abercorn v. Merry & Cuninghame, Limited, 1909 S.C. 750, per Lord Mackenzie at p. 751, and Lord M'Laren at p. 753, 46 S.L.R. 574; Stevenson v. Pontifex & Wood, 1887, 15 R. 125, 25 S.L.R. 120. That also showed that the action should have been delayed until the completion of the contract, but if the action was to be competent now the damages for the future should have been estimated for. Jackson v. Cowie, 1872, 9 S.L.R. 617, was not in point, for there the contract was one for instalments. The 10s. a-day was not of the nature of rent for the occupation of the lands, for the purchase price was paid to cover, inter alia, the period of occupation, however long that was.

Argued for the pursuer—The Lord Ordinary was right. The clause in question stipulated for liquidate damages, not for a penalty. There was a strict proportion between the penalty and the breach. Time was always most important in such contracts as those, and though the actual breach of the contract might be infinitesimal as where one tree remained, yet the damage caused by the presence of woodcutters, &c., was not much less than at the beginning of the contract. If so, then the clause stipulated for liquidate damages— Clydebank case ( cit.), and 1903, 5 F. 1016, per Lord Trayner at p. 1029, 40 S.L.R. 713. Further, the action was neither premature nor incompetent. The purpose of such a clause as the present was to ensure that the completion of the contract should not be delayed, and if action could not be brought until the completion of the contract that object would be frustrated— Clydebank case ( cit.), per Lord Robertson at p. 84; Johnston v. Robertson, 1861, 23 D. 646, per Lord Cowan at pp. 653–4, which also showed that the clause was really one of liquidated damages of the nature of pactional rent. The clause in question did stipulate for what was in substance an equivalent of rent in addition to the contract price. The 10s. accrued de die in diem, and strictly speaking a fresh action could be brought daily. The rule requiring that the whole consequences of an act should be sued for at once only applied in case of delict or quasi-delict where the Court had to assess the damages, and did not apply where, as here, the parties had agreed on the amount of damages ab ante. In such circumstances such an action as the present was competent— Jackson v. Cowie ( cit.). The opinions in the Glanztoff case must be read in the light of the facts of the case, which were very special and quite different from the present— Muir's Executors v. Craig's Trustees, 1913 S.C. 349, per Lord President Dunedin at p. 355, 50 S.L.R. 284.