Scottish Court of Session Decisions

At advising on 29th October 1977,—

LORD PRESIDENT (Emslie).—The pursuers in this action are builders. From and after 1969 they constructed houses at a number of sites in Lanarkshire. At all of these sites they constructed sewers, associated with the houses, to serve these housing developments. They aver that "All said work was completed before 16th May 1973." On this date the relevant sections of the Sewerage (Scotland) Act 1968 came into force, and it is agreed that by virtue of section 16 the sewers in question vested in the local authority, Lanarkshire County Council. The action is for payment of the sum of £67,890 alleged to be the value of the sewers which the pursuers constructed. It is directed against the county council, the statutory successor of which is Strathclyde Regional Council, and the pursuers plead that the defenders are bound to pay them the sum sued for in terms of an implied agreement between the parties and, if there was no such agreement, upon the equitable principle of recompense. In procedure roll the defenders sought unsuccessfully to persuade the Lord Ordinary to dismiss the action on both branches without inquiry and in this reclaiming motion they challenge, before us, his interlocutor allowing proof before answer, and contend that in no circumstances could the pursuers, after proof of the averments which they have made, establish either branch of their case.

The averments of the pursuers could hardly have been briefer. They say that since about 1953 they have constructed houses for private sale on various sites in Lanarkshire, including the sites with which this action is concerned. The county council was at all material times the relevant building and sewage authority. According to the pursuers "such operations were always conducted, as known to both parties, upon the basis that in due course the defenders would take over the sewers involved, paying therefor." In this connection the pursuers refer to a letter from a responsible official of the defenders dated 5th March 1954. The parties have agreed to renounce probation of this letter which appears to have been written in response to an inquiry from the pursuers relative to a particular housing development on which they proposed to embark. In this letter the writer stated, inter alia,"The usual practice in cases of this kind is for a combined drainage system to be provided from the buildings. Road gullies may also be connected to the sewers, but all other surface water would require to be dealt with otherwise by the developers. I return the sketch plan having shown thereon the sewers belonging to the county council into which the sewage from the area might be discharged. The approximate depths of the sewers are also shown. The developers generally construct, at their own expense, all internal sewers according to plans and sections previously approved by me, and carry out the work to my sight and satisfaction with a view to the sewers being taken over and paid for by the county council when circumstances warrant it doing so." The pursuers also aver that the sewers at all their developments, including those at the sites which are the subject of this action, were constructed according to the specifications of the defenders, under their supervision, and subject to their final approval. It is, further, a matter of admission in the pleadings of the parties that the areas of all these developments "could not have been properly cleansed and drained" without the construction of the sewers.

Until 1969, it seems, all sewers constructed by the pursuers at their various sites of housing development were taken over and paid for by the defenders and it is said that as a matter of practice, take-over and payment were postponed until the particular estate was occupied. In the case, however, of housing developments begun in 1969 and in subsequent years and which appear to have been completed before 16th May 1973, the defenders have refused to pay for the associated sewers constructed by the pursuers which vested in the defenders on that date. It is not averred that they had previously been "taken over" by them.

Against the background of the averments which I have just set out the pursuers say first that "it was an implied agreement between the pursuers and defenders that the said sewers would be taken over by the defenders for value and, second, esto the defenders were not obliged to pay for the said sewers in respect of said agreement they are bound to recompense the pursuers in respect of the same." This second branch of the case is supported on averment thus—"The pursuers have carried out the construction of said sewers and have without any intention of donation expended in said work a sum in excess of the sum sued for. The defenders have acquired the benefit of the said developments being properly cleansed and drained by sewers without making payment for their construction or acquisition … The work of construction of said sewers was in each case carried out by the pursuers in the erroneous belief that the defenders would on satisfactory completion pay an agreed valuation sum for them. In any event it is equitable in the circumstances that the pursuers be recompensed for their expenditure."

In developing their powerful and attractive argument designed to persuade us that the pursuers have made no sufficient averments to justify inquiry on either branch of their case and that the action should be dismissed here and now, counsel for the defenders concentrated first upon the averments of an alleged contractual liability and second upon the attempt to invoke the remedy of recompense. In so doing it became clear, as it was clear to the Lord Ordinary, that if, as he thought, the recompense case could not be disposed of without inquiry then, even if it were held that there were no relevant averments to support the plea to entitlement under contract, to repel that plea now would have no effect on shortening the proof. It became clear too, that the attack made by the defenders on the pursuers' case of recompense was being maintained upon grounds which had either been argued not at all before the Lord Ordinary or which had at best not been seriously pressed. In these circumstances it appears to me to be convenient, notwithstanding the order in which the pursuers' alternative cases were examined before us, to follow the course adopted by the Lord Ordinary and to deal first of all with the recompense case. This case arises only if there should turn out to be no contract between the parties, or no contract under which the pursuers can now compel payment.

The most recent discussion of the remedy of recompense is to be found in the case of Varney (Scotland) Ltd. v. Burgh of Lanark 1976 SLT 46—an action for payment for sewers in which the circumstances were somewhat different from those in this case. From the opinions of their Lordships of the Second Division in that case it may be taken to be clear that there are three factors which are essential to the success of any case based on recompense. The first is that the pursuers must have incurred a loss. The second is that the defenders must be lucrati by the action of the pursuers. The third is that there must have been no intention of donation on the part of the pursuers towards the defenders. In all such cases too it must be shown that in all the circumstances it would be equitable for the pursuers to be reimbursed. In some cases, although perhaps not in others, it may also be necessary for the pursuers to show that they did what they did as the result of error on their part.

In this action the pursuers have made averments directed to all of these factors. Before the Lord Ordinary the defenders appear to have argued only that the averments that the defenders were lucrati, and that it would be equitable for them to be reimbursed, were irrelevant. Their position now is that, with the exception of the averment that the pursuers had no intention of donation towards the defenders, no relevant averments have been made of any of the other ingredients which are essential to the success of the recompense case which the pursuers hope to establish.

In developing their attack on the averments designed to support the recompense case, counsel for the defenders concentrated attention mainly upon the related elements of loss to the pursuers resulting in benefit to the defenders, and upon the element of error which, they said, was a necessary one in the circumstances of this particular case.

So far as the pursuers' alleged loss is concerned the proposition was that the averments show only that the pursuers' expenditure on the sewers was expenditure on subjects which belonged to them for their own benefit, for the sewers were essential if they were to sell their houses. They never lost that benefit and it is nothing to the point that by operation of law the sewers vested in the local authority on 16th May 1973. Here, in short, there was, at best, expenditure by the pursuers in suo and such expenditure, even if it is incurred in the hope or expectation that it will be reimbursed by someone else, is not a loss for the purposes of a claim to recompense. This, said the defenders, is the clear import of the authorities and reference was made to Gloag on Contract, 2nd edn., p. 322 and the cases of Rankin v. Wither (1886) 13 R. 903, Patmore & Co. v. B. Cannon & Co. Ltd., (1892) 19 R. 1004, Edinburgh & District Tramway Co. v. Courtenay, 1909 SC 99 and Gray v. Johnston, 1928 S.C. 659. All that the pursuers can be saying is that the defenders could, by exercising their power under section 103 of the Public Health (Scotland) Act 1897, have constructed the sewers themselves but did not do so, or might after their construction by the pursuers have exercised their power under section 102 of that Act to acquire right to use them on payment of compensation.

So far as benefit to the defenders is concerned the case is to be distinguished from Varney in which under section 219 of the Burgh Police (Scotland) Act 1892 the defenders had a statutory duty to construct the sewers in question. In this case the defenders had no duty to construct the sewers. All they had was (1) a discretion under section 103 of the Public Health (Scotland) Act which, read short, provides thus:

"The local authority shall have power to construct within their district … such sewers as they may think necessary for keeping their district properly cleansed and drained"

; and (2) a power under section 102 of that Act, in terms of sections 144 and 145 to acquire, on making compensation, "the rights and powers vested in any person to make sewers or to use any sewer with or without the buildings and other things thereto pertaining." Both powers are granted by the statute in permissive terms only, and it will not do to say that because of the existence of these powers the defenders are lucrati either because the pursuers have done at their own expense what the defenders could have done, or because they have constructed sewers the use of which the defenders could have acquired, if so advised, on payment of compensation.

On the matter of error the point made by the defenders was, shortly stated, that the only error which can be relevant is a justified but mistaken belief as to existing facts. There was no such error here but merely a mistaken belief, which is not said to have been induced or encouraged by the defenders, that the defenders would probably do in the case of the post-1969 sewers what they had done in previous cases.

Powerful though these submissions for the defenders were, I have come to be of opinion that it would be going too far and too fast to give effect to them without inquiry. The difficulty of defining all the circumstances in which a claim of recompense will lie and the circumstances in which it will not is well recognised [see the opinion of the Lord Justice-Clerk in Varney at p. 47]. It may be that in a straightforward case like the Edinburgh and District Tramway Co. case or that of Gray v. Johnston in which someone clearly does no more than to incur expenditure in suo or to render services to another in the mere expectation or hope that someone else will ultimately meet the bill or provide some other kind of compensating benefit, it would be unreasonable to admit in equity a claim of recompense. The question of whether the equitable remedy of recompense should be available, however, must in my opinion depend on the particular circumstances of each particular case and it is by no means clear to me that, when evidence which may competently be led on the averments in this case has been led, this will be seen to be the simple case of mere expenditure in suo in the mere expectation or hope of future reimbursement. The defenders say, for example, that this case must be looked at on the basis that there was no question of the defenders having at any time a duty to construct the sewers themselves. I do not agree that this will necessarily be so. It is matter of agreement that the sewers which were constructed were necessary for keeping those parts of the defenders' district on which the housing developments were completed properly cleansed and drained. Recognition of that necessity by the defenders would, in my opinion, agreeing with the Lord Ordinary, have placed the local authority concerned under a duty to exercise the power given to them by section 103 if the pursuers had not constructed them. I do not rehearse the argument or the authorities to which reference was made in course of the hearing before us, for they are sufficiently explored in the Lord Ordinary's opinion and it is sufficient for me to say that I agree both with the Lord Ordinary's conclusion upon this question and the reasoning by which he supports it. It follows therefore that in the case of the housing developments carried out by the pursuers since 1969 and, it may be, in the case of all the pre-1969 developments, each enterprise may well have been embarked upon in circumstances in which both parties recognised that if the pursuers did not construct the sewers the defenders would be bound to do so if the intended development was in fact carried out, and that what was done by the pursuers was just what might be thought to be both sensible and convenient to both parties having regard to their community of interest in the development itself as a whole. Mutuality of interest in the sewers would be clear, given the duty which the defenders might have had to construct them and it is not difficult to suppose that there would be material advantages in constructing the sewers in an early phase of the development before it could be said that it was necessary, in the absolute sense, for the defenders at their own expense to resolve a live drainage and sewage problem. One must, in my opinion, know what were the whole circumstances, as both parties knew them, in which the pursuers came to do what they did, and these circumstances must be looked at against the background of the long previous history of the parties' relationships and attitudes from 1953 to 1969 when, it seems, enterprises indistinguishable from those in the post-1969 years were carried out, and all sewers built by the pursuers were paid for in due course by the defenders. Without knowing these whole circumstances I for one would not be prepared to decide on the bare averments that the pursuers' expenditure could not be regarded as loss which it would be equitable to allow them to recover or that the defenders ought not to be regarded as having acquired the benefit of that expenditure when sewers which they might otherwise have constructed or have had to construct themselves happened to fall into their ownership by operation of law. My reluctance to decide these important questions on the pleadings is all the greater in that, as the defenders' argument on the pursuers' contract case showed, the possibility that there was an agreement between the parties which was later discovered to be ultra vires of the defenders, or which became unenforceable, should not be discounted. These are just the kind of circumstances which would suggest that an equitable remedy might be available to the pursuers. So far as error is concerned that too must be examined against the same whole circumstances including the letter of 5th March 1954 and the precise repetition after 1969 of the pre-1969 procedures on the part of the defenders, namely the provision of specifications and the supervision to their final satisfaction of the whole work of construction.

The remaining point taken before us on the recompense case was that, if the defenders were under a statutory duty to construct the sewers, the pursuers should not have proceeded to construct them at their own hand but should have done what was done in the case of T. Docherty Ltd. v. Monifieth Town Council, 1970 S.C. 200, namely, present a petition under section 91 of the Court of Session Act 1868 or bring proceedings for declarator of the alleged duty. This was the point on which alone the pursuers' claim of recompense in the case of Varney foundered. Like the Lord Ordinary I am not persuaded that this point can be disposed of without inquiry. Even if one accepts that Varney was rightly decided, and I am not required to express my opinion on the matter, the distinctions between Varney and this case are obvious and material. In Varney there was a clear statutory duty resting on the defenders and the pursuers proceeded to construct the sewers in the knowledge that the defenders were not prepared to pay for them or construct them themselves. In this case it is by no means clear that there would have been a duty on the defenders to construct the sewers at the stage when the section 91 petition was presented in Docherty's case or that it would have been either reasonable or practicable for the pursuers to have the question of liability for the cost of the sewers determined before the work of construction began. In any event there was, so far as one can judge, no hint of any dispute having arisen between the parties before 16th May 1973 and it is difficult to see how in the circumstances averred in this case the pursuers could have brought any competent form of action against the defenders which would not have run the risk of dismissal as unnecessary.

For all the foregoing reasons and in spite of the wider attack made upon the recompense case in this Court, I am of opinion that the Lord Ordinary was right in allowing proof on the recompense case. That proof will necessarily involve inquiry upon all the averments of fact in the record regardless of what happens to the pursuers' primary case of contract, and since the only effect of leaving standing the pursuers' plea of a contractual liability on the part of the defenders would be to allow that case to be argued after the proof, I would not have been surprised if the defenders had invited us to repel that plea only if we were against them in their attack on the recompense case. They have, however, urged us to dispose of that plea now regardless of the survival of the recompense case and I must therefore address myself to the argument which they presented to that end. I do so briefly because, like the Lord Ordinary who heard argument on the same lines, I am not persuaded at this stage that the contract case could not conceivably succeed.

The first proposition was that there were no relevant averments from which the agreement alleged could be inferred. The alleged agreement was that the sewers would be "taken over" and paid for at some future date. This could not therefore be a contract in exercise of the defenders' power to construct sewers under section 103 and, said counsel for the defenders, was not one which clearly fell within the power given by section 102 which was limited to acquisition of a right to use a sewer. In these circumstances the facts which are relied on to demonstrate this peculiar implied agreement require the most careful scrutiny and, when that is given, all that is found is (i) a reference to previous developments in which the defenders in the event took over and paid for sewers and it is not said that they did so because of any contract; (ii) a reference to the letter of 5th March 1954; and (iii) the allegation that in every case before and after 1969 the sewers were constructed according to the specifications of the defenders under their supervision and subject to their final approval. According to the defenders the existence of an agreement relating to each of the disputed developments could never be inferred from such scanty material. I am not prepared to agree with that submission at this stage. I do not consider that the use of the expression "take over" in the defenders' letter and in the pursuers' pleadings necessarily falls to be read as meaning more than "to assume responsibility for." Proof of the history will in any event show what is meant. Further, an agreement may be inferred from facts and circumstances and from the relationship and actings of parties towards each other. It is not in my view impossible that, when evidence has been led in relation to all the developments which are said to have been carried out repeatedly in accordance with an identical drill for a period of over 20 years, the true relationship of the parties towards each other in the case of each development, and the circumstances in which each was begun, supervised, and completed, will emerge clearly enough to enable one to say with confidence whether or not an agreement between the parties of the kind alleged by the pursuers is or is not to be implied. If it should turn out that the defenders would inevitably have come under a duty to provide sewers for these developments when completed, and they and the pursuers were aware of this before the work began, the existence of some such agreement would not be at all surprising. As the Lord President (Clyde) said, in the case of T. Docherty Ltd. at p. 206 when discussing the question of the immediate necessity for a sewer, "The petitioners have received planning permission, and they aver that they are now about to commence work on the development, that the site is ready for work to begin, and that the men and equipment are ready to move in. It is obviously commonsense that parties should know where they are, and that the new sewers in the area which have to be laid at an early stage should be constructed at the proper levels and in the light of the overriding obligation on the town council effectually to drain the whole burgh. On the other hand, the petitioners' averments are not expressly admitted by the respondents, and no one can tell under modern conditions how long it will take to complete the whole development. It might be unfair on the burgh in these circumstances to impose on them an immediate obligation to build the sewerage system for draining the whole area. For it is conceivable that the development may never be completed, or that the whole system for the area may never be needed. In such circumstances some practical arrangement between the parties might well be reached which would be reasonable for both. Such an arrangement might be on the lines indicated in the footnote in Muirhead, Municipal and Police Government in Scotland, (3rd ed.), vol. i, p. 406, whereby the petitioners would lay down the sewers in the development area at their own expense on lines and levels approved by the respondents, under an agreement with the latter that, as soon as a specified proportion of the houses were erected, the respondents would take over the sewer and pay the petitioners the price thereof. An arrangement of this sort would be a recognition of the burgh's statutory duty on this matter, while at the same time it would avoid their being compelled to carry out that duty before it becomes necessary." Before leaving this branch of the argument I am bound to point out that even if the pursuers at the end of the day establish the existence of an implied agreement of the kind for which they contend they may be faced with the formidable difficulty of showing (a) in what circumstances they were entitled to demand performance of the obligation to pay, and (b) that the time when the obligation to pay could be enforced had arrived. There is, it will be observed, no question of any voluntary "take-over" of the sewers having occurred before the statutory vesting date and there is no averment that by the time this action was brought the various developments had been "occupied" although we were informed at the Bar that this was probably the position. If, further, the pursuers' case is that payment could have been demanded under the alleged agreement earlier than the date of occupation of each development (and the evidence will no doubt disclose what "occupation" meant in the context of the alleged practice) they may have little prospect of leading evidence on the pleadings as they stand in support of such an earlier date when performance of the obligation to pay became prestable.

In addition to submitting that there were no relevant averments of any implied agreement counsel for the defenders renewed before us the arguments presented to the Lord Ordinary that in any event the implied agreement was ultra vires of the local authority and, alternatively, that it became unenforceable on the coming into force of the Sewerage (Scotland) Act 1968.

The first of these submissions proceeded upon the assumption that the alleged agreement can only have been entered into in purported exercise of the power to acquire rights to use sewers conferred by section 102 of the 1897 Act. What was said was that the use of the words "take over" in the agreement shows that acquisition of ownership of the sewers was contemplated and this is not authorised by section 102. I do not agree. It may well be seen, when the proof has been taken, that the expression which is not a term of art means no more than to take over responsibility for management and maintenance of the sewers and become free to use them for local authority purposes. It was further argued that section 102 authorised only the acquisition of rights in respect of existing sewers and was not available in respect of sewers yet to be constructed and, further, under reference to the cases of Weller v. Ker (1866) 4 M. (H.L.) 8 and Ayr Harbour Trs. v. Oswald, (1883) 10 R. (H.L.) 85 that the local authority could not fetter the future exercise of their discretion by binding themselves to acquire rights in sewers before they had come into existence. In my opinion it would be unwise at this stage to give effect to or to reject either of these arguments. As the Lord Justice-Clerk reminded us in the case of Glasgow Corporation v. Flint 1966 S.C. 108 at p. 119:

"In Graham v. Glasgow Corporation Lord Justice-Clerk Aitchison, at p. 125, quoted with approval the well known dictum from the speech of Lord Selborne L.C. in the Great Eastern Railway Co. case that the doctrine of ultra vires‘should be reasonably, and not unreasonably, understood and applied and that whatever may fairly be regarded as incidental to, or consequential upon, those things which the legislature has authorised ought not (unless expressly prohibited) to be held, by judicial construction, to be ultra vires.’"

That test is no doubt relevant to the solution of the question of the local authority's power in this case and I am not persuaded that it ought to be applied by considering section 102 in isolation. It may well be that at the end of the day the arrangement will be seen to be one made by a local authority which, like the local authority in T. Docherty Ltd.,was going to come under a statutory duty to construct sewers if the projected developments were carried through to completion. If this should prove to be the proper context in which to view the arrangement then, having regard to sections 102 and 103 read together, it may well fall to be regarded as one of those practical arrangements mentioned in T. Docherty Ltd., which it would be entirely reasonable for the local authority to enter into and which it would be unreasonable to hold to be ultra vires of the powers of the local authority in the matter of the proper cleansing and draining of their district.

The remaining submission for the defenders upon the pursuers' contract case was that, since sections 102 and 103 were repealed on the coming into force of section 16 of the Act of 1968 on 16th May 1973, the agreement thereafter became impossible of performance. The sewers became vested in the local authority on that date and could not thereafter be taken over. Until take-over had occurred no right to payment could accrue to the pursuers and since they had acquired no right to payment before 16th May 1973 there was none to survive, under the Interpretation Act 1889 section 38 (2) (c), the repeal of sections 102 and 103 of the Act of 1897. Without expressing any concluded opinion on the merits of this submission, I am far from satisfied that the pursuers will necessarily fail to show that they had acquired a right to payment under the contract before 16th May 1973. It is not impossible that the pursuers will be able to show that they acquired right to payment on mere construction of the sewers contingent only, for example, on the occupation of the housing developments with which they were associated. It hardly needs to be said that the acquisition of a contingent right of that kind before 16th May 1973 would qualify for the protection of section 38 (2) (c) of the Interpretation Act [see, for example, the case of Moray County Council v. MacLean, 1962 S.C. 601 and the cases therein discussed].

Upon the whole matter I hold that the reclaiming motion fails and that the Lord Ordinary's interlocutor should be affirmed.

LORD CAMERON .—The course taken by the Lord Ordinary and his reasons for allowing a proof before answer on both branches of the pursuers' case are fully explained in his careful opinion in which, while expressing his doubts as to the relevancy of the pursuers' averments on the contract branch of their case, he reaches the conclusion that, as the averments of fact upon which both the case on contract and that on recompense are rested are almost identical it would not add materially to the length of the proof, which he felt that in any event would have to be allowed on the averments related to recompense, to permit also enquiry into the case on contract, even though it might be of doubtful relevancy.

On the face of it this would appear to be a sound and appropriate course to follow in this very unusual action. The full arguments, however, which the defenders deployed in the debate on the reclaiming motion have demonstrated that the pursuers' dual basis of claim is open to formidable attack particularly on the contract branch and that if the pursuers are to obtain the benefits of proof at all these may accrue to them through the defects rather than the virtues of their pleadings. On full consideration of their arguments I have come to be of opinion that the Lord Ordinary's judgment should not be disturbed and that the whole case should be allowed to go to proof before answer. I do not require to repeat the narrative of the circumstances out of which the action arises or the details of the arguments which were presented on either side, and I can, I hope, express my agreement with the conclusion at which your Lordship in the chair has arrived with reasonable brevity. I propose first to consider the pursuers' case so far as founded upon contract and the attacks which are made upon it. On this branch of the case it appears to me that two questions have to be answered at this stage: (one), whether the pursuers have made averments which, if supported by relevant evidence, are sufficient to instruct the conclusion of a contract or contracts between the pursuers and the county council under which the pursuers would lay and construct sewers to the satisfaction of the county council and the county council would subsequently "take over" and pay for them, and (two), if so, whether such contract or contracts were intra vires the county council operating as it was within the limits of powers conferred upon them by the Public Health (Scotland) Act 1897 and in particular sections 102 or 103 of that Act. If both these questions can be answered in the affirmative then the case must go to proof on the issue of contract, but only if both questions can be answered in the pursuers' favour. If the first cannot be answered in the pursuers' favour the second clearly does not arise. As I have indicated, the pursuers' pleadings are so tenuous in averments of fact that it is only with the greatest difficulty, even with the help of counsel and of such assistance as can be gleaned from the terms of a certain letter written in March 1954 to an official of the pursuers by the drainage engineer of the county council, that even the skeleton of a contract can be identified; but even a skeleton may be enough. It would seem that the pursuers rely first upon the unbroken course of actings by the county council in respect of a series of housing site developments within their jurisdiction undertaken for commercial reasons by the pursuers for a period stretching back to at least 1953 and, second, upon the terms of the letter I have referred to. It is averred that "such operations were always conducted as known to both parties upon the basis that in due course the defenders would take over the sewers involved and pay for them." At least five areas or sites are referred to by name as being those in which such operations were carried out. I think it is important to note also that these facts are in large measure admitted by the defenders, who in particular admit that certain sewers constructed by the pursuers on sites developed by them were "taken over" by the county council. Neither the pursuers nor the defenders offer any interpretation of the words "take over", and certainly there is nowhere in the pleadings any averments which would indicate that such "take over" involved an acquisition or conveyance in favour of the county council of any heritable rights in the sewers or the ground in which they were laid. There is, however, very considerable, if not complete, agreement between the parties as to what in fact was done and also as to the fact that payments were made by the county council "to the developers who have constructed the sewers on development sites," i.e., the pursuers. The defenders, however, make no admission as to the precise date when such payments were made nor any averment or explanation of how such payments came to be made on any particular date, far less as to when, as matter of stipulation, they became legally exigible. Up to this point neither party in their pleadings aver that the sewers so constructed and "taken over" were necessary for the proper drainage and cleansing of the sites on which development had taken place, although such an inference can readily be drawn from the actings of the parties so far as these are matter of admission, having regard to the functions of the local authority and the convenience to the pursuers of such an agreement. The letter of 5th March 1954 to which I have referred is clearly of major importance. In construing it, however, one must keep in mind that it is not a conveyancer's writ or a legally drafted document; it is a practical businessman's letter, but at the same time it was written by a responsible and senior official of the county council whose authority to write it is not in dispute, nor is it suggested that in so far as it might be held to place certain obligations on the county council that the writer was not authorised to do so. The critical paragraph, in my opinion, is that beginning with the words "The developers generally construct at their own expense all internal sewers." The letter, however, is silent as to the point of time at which payment should become exigible for any work completed in accordance with plans approved and carried out to the writer's sight and satisfaction. But it is a reasonable inference that payment would not be exigible until at least completion of the sewerage works, when it would be a matter of circumstance and mutual arrangement when payment should be made and the complete system "taken over." It would appear from the pleadings, and is certainly not a matter of specific denial by the defenders, that this letter appears to have set the pattern for the relations of parties in developments of sites subsequent to its date, including those which form the subject matter of the present action. The pursuers also aver that the sewerage scheme for the particular sites in issue here were in fact completed at specified costs and to the satisfaction of the county council officials and the fact of completed construction itself is admitted. There is no averment however, which specifies that as part of the contract there was an express stipulation as to when payment should become exigible. Consequently there is no averment as to the precise time when the right to demand payment arose. The pursuers, however, do make averments, which incidentally are denied by the defenders, that as "matter of practice" not of expressed or even implied stipulation the "take over" of sewers and payment therefor took place simultaneously and was postponed until each estate was occupied. In referring to this practice the pursuers gave no indication of what meaning is to be attached to the use of the word "occupied," and no assistance of course is obtained from the defenders. Is "occupation" complete with occupation of all houses on the site, or if not what degree of occupation would suffice to justify the statement that the estate is not occupied? This is all left in the air without further explanation or exposition. It is unfortunate that the matter is left in this state as there is no averment that the time for requiring payment had arrived prior to the raising of the present action.

In all these circumstances I should be slow to be compelled to hold that without enquiry it can be affirmed that there was no contract entered into between the parties under which if the sewers were constructed in pursuance of the arrangements and to the satisfaction of the county council officials as averred the county council came under a contractual obligation to take over and pay for them. It must be kept in view here that both parties were operating against a background and in a context which was perfectly familiar to them both. The county council had a responsibility as the local authority for making provision, where necessary, for proper drainage and cleansing of their area. Such arrangements as are averred enabled what was necessary to be done in a manner which accorded with common sense, the interest of the developer and the responsibility of the county council as housing and drainage authority alike. The fact that it was known to the county council that these sites were being developed for housing purposes in accordance with planning approval given by them seems to me to lead to acceptance of the almost inevitable consequence that it was necessary for the proper cleansing and drainage of the area that sewers should be provided which connected with the main sewers. As the learned Dean of Faculty put it, the contract had to be read against the general background and in light of the circumstances and of the statutory obligations which rested on the county council. Taking all these considerations into account the final difficulty which I have felt remains, and it is a real difficulty, arises out of the defenders' contention that whether or not the contract could be spelled out by the averments and letter to which I have referred, there is no relevant averment on record which determines the time at which the county council became liable to make payment and at the same time to "take over" the sewers. I have already referred to this. No doubt it was indicated from the Bar—and the indication was not challenged by counsel for the defenders—that all of the sites covered by the present action were occupied prior to the signetting of the summons but unfortunately there is no such averment and the only statement on record relative to this is that contained in condescendence 2 only. The pursuers say that "take over" and payment was "as matter of practice" postponed until the estate was occupied. This averment as I have noted is covered by a denial from the defenders. The matter of practice may be matter of convenience in the manner in which a legal liability, already attaching, is discharged. I confess that I have found this point of very great difficulty but have come, with some hesitation, to the view that what has been said is only put on a basis of practice that is, of convenience, and one can readily appreciate the convenience to both parties. It is something less than a specific averment to the effect that it was only on an agreed point of time that a right to demand payment arose for the pursuers. In the learned Dean's argument, as he put it "the precise time was not of the essence in the creation of the liability by them. Take over can only arise when the work is completed and it would be noted that take over is co-related with payment and therefore the right to payment would be enforceable as and when the take over operation occurred" but this still leaves the gap in the pleadings unfilled—or at the best for the pursuers a question not clearly resolved. It is at least possible that the precise point of time when payment could be compelled was ambulatory in the sense that "take over" could take place at any time after completion of the work depending on the particular convenience and arrangements of the parties. Much would therefore depend on how the evidence of the practical working of the arrangements came out and the inferences to be drawn from that evidence. On the whole matter I find it possible, although with hesitation, to affirm that there is just enough averred by the pursuers to entitle them to proof of their averments in support of a case of contract, or at least that it would be unsafe and dangerous to refuse enquiry on the ground that no proof relevantly led in support of these averments could establish the setting up of a contract arising out of the repetitive circumstances of construction, "take over" and payment set out on record. The defenders also attacked the pursuers' case on contract on the ground that any such contract as averred by the pursuers would have been ultra viresthe county council as not authorised by the terms of section 102 of the Public Health (Scotland) Act 1897 and also as involving an attempt which would be ultra vires to deprive the council of future power to exercise a statutory discretion. The first of these grounds was based on the contention that, if there was any contract entered into between the pursuers and the county council it was necessarily made under the powers conferred on the council by section 102 of the Public Health (Scotland) Act 1897. It was then argued for the defenders that no such powers as would be necessary to enable the type of contract founded upon by the pursuers to be entered upon were conferred on the county council by that Act. This was not an acquisition of right or powers vested in any person to make or use sewers with or without the buildings and other things thereto pertaining—which was all that a local authority was empowered to do under this section. In my opinion this is too narrow a reading of the section—if there is a power to acquire a right to make a sewer—and if the power to make is acquired it would seem to follow that it would be within the power of the local authority to contract with a third party to do the work of construction. Thus the powers conferred by section 102 would extend to sewers still to be constructed as well as to acquisition of right and powers to make use of sewers already constructed. How these powers can be best operated is peculiarly a question of administrative discretion, in respect that if the power to make or use sewers is given by the statute—and this would appear to me a reasonable inference from the language of the section—then I can see no reason why the authority should not decide to obtain and exercise a right to make and to use when the sewers are made. In this interpretation of the powers conferred by section 102 I think the argument of the learned Dean was well founded. It was also submitted that the manner in which the county council would have been exercising such powers as were conferred on them by section 102 rendered the contract founded upon in any case ultra vires because by entering into it the council deprived themselves of exercising a discretion which they were bound to exercise. This argument, I think, is also unsound. There is no doubt that where a discretion is confided to a public body to be exercised in the discharge of a statutory duty that body cannot decide not to exercise it or seek to erect a bar against its exercise in future cases. But in my opinion that is not the case here, as it would appear plain enough from the record that control of a decision as to the provision of sewers in any particular development was not foreclosed by anything which appears to have been agreed, while complete control remained as to the plans and specifications of any sewers which it was proposed should be constructed. In these circumstances I do not think it could be successfully maintained on these pleadings that a plea of ultra vires on this particular ground could be sustained. The further argument as to the effect of section 16 of the Sewerage (Scotland) Act 1968 appears to me also unsound. No doubt both sections 102 and 103 of the Act of 1897 are repealed by the Act of 1968, but there is nothing in that Act which affects or takes away rights which have already accrued and, upon a possible interpretation of the contract on which the pursuers found, it could be said that certain rights have accrued to the pursuers under that contract even though the precise time for payment to be made in individual instances has still to be settled. In one sense it could be argued, as the Dean submitted, that the effect of the Act of 1968 was merely to propel the date of "take over" in virtue of the compulsory vesting of all sewers brought about by section 16. I do not think, however, it is necessary to express a concluded view on this submission (which presents certain difficulties as it is not to be assumed that "take over" and vesting are in any sense synonymous) as I think that for reasons already set out the plea of ultra vires is ill founded in so far as founded on a construction of section 102 and on the assumption that the only statutory power which the county council could exercise in this matter is to be found in the provisions of that section of the Act of 1897.

Mr Cullen's argument on his plea of ultra vires was directed against the pursuers only in so far as the contract on which they found was said to be necessarily based on the county council's purported exercise of its powers of acquisition of rights or powers to make or use any sewers, i.e., exercise of powers contained in section 102. I am, however, not convinced that this is in reality a case of exercise of powers conferred by section 102 only. Looking to the averments of parties and in particular the defenders' admissions as to the necessity of provision of sewerage systems on the various sites, I incline to the opinion that it can be argued with force that the county council was acting in pursuance of powers conferred by and in discharge of duties laid upon it by section 103 when—if it did—it entered into the contract on which the pursuers found. I am therefore of opinion that the defenders' plea of ultra vires could not be sustained at least at this stage in the action.

There remains for consideration the relevancy of the pursuers' case on recompense. This of course only arises in the event of the pursuers' failure to establish the case of contract on which they primarily rely. The nature of the remedy and of the constituent elements required to establish a claim for recompense were fully and helpfully debated with ample citation of authority. As the remedy is equitable it appears to me to follow that it becomes impracticable, even if it were desirable, to seek a limiting definition of the circumstances in which it can be invoked or by reference to the particular facts of decided cases. As it was put by Lord President Dunedin in Edinburgh and District Tramways v. Courtenay 1909 SC 99 at p. 105:

"I do not think it is possible—it certainly would not be easy—but I do not think it possible to frame a definition of recompense which shall by itself in all its terms at once include all classes of cases which fall within the doctrine and at the same time successfully exclude those which do not … the result is that each case must be judged by its own circumstances."

The basic elements which have to be established in order to found a claim for recompense, however, are clear enough. The only question at this stage is whether there is sufficient material and specification in the pursuers' pleadings relative to these elements to warrant enquiry. I am of opinion that there is. The essential elements are familiar—work done which has involved a claimant in loss or expense which is not work done in suo, that is, on his own property or for his own benefit or with a view to his own profit or benefit. The expense or loss incurred must be to the profit or gain of the party against whom a claim is asserted and who is alleged to have been lucratus thereby, and the work done must have been done without the animus donandi. I do not think that in every case of recompense it is of necessity that the work must have been done in error as to the true situation or relationship between the parties. It is not, however, necessary in this case to pursue that matter, because if there was no contract between the parties then plainly the pursuers were acting under an obvious error as to the true situation of the county council's powers and consequent liability to pay for sewers constructed in the circumstances set out in the pleadings. It has been decided that to do work in what has been called the mere expectation of recompense or reward is not enough to found the plea. But it is obviously a question of circumstances and degree whether what has been done was merely in expectation of reward. For my part, I think, that the use of the word "expectation" can be misleading and not very happy. Much depends on the circumstances and actions which are said to have induced the expectation and therefore the extent to which that expectation is to be regarded as justified in the circumstances of the particular case as having been the reason for undertaking of the work by which the claimant incurred loss and the other party became lucratus. The present case, in its circumstances, is in my opinion materially different from Gray v. Johnston 1938 S.C. 659 upon which much reliance was placed by the defenders. There the pursuer failed not only because he worked in part at least for his own benefit in what was no more than a hope that on the death of the man for whom he worked he would emerge as his heir to his estate, but also because he could not quantify any loss. The hope on which reliance was placed was founded on certain promises said to have been made by the deceased to make the claimant his heir, but further, as Lord Anderson put it, the true basis of the pursuer's claim there was not "for recovery of what he has not disbursed, but for what he has not ingathered," p. 674. That was obviously a very different case from the present. Here the work was done admittedly for the benefit of the county council; the work was done to their specification and satisfaction and according to plans passed and approved by them and under the inspection of their officials; the work was done in order to enable the county council to discharge by the hands of the pursuers a statutory obligation which by law they would have had at some stage to discharge. Further, the pursuers admittedly incurred expense in undertaking and completing the work. The mere fact that it was done in ground which ex hypothesi belonged to them at the time it was done does not in my opinion lead to a necessary inference that it was work done in suo. I note at this point the defenders' argument based upon the case of Edinburgh and District Tramways v. Courtenay that the test to be applied as to whether work was done in suo is by ascertainment of the simple fact whether at the time the work was carried out it was executed in or on the claimant's own property and so its value accrued to them. The passage from the judgment of Lord Dunedin at p. 106 upon which this contention was founded does not appear to me to lay down such a rigid rule or a rule of general application. Indeed in the earlier passage of the same opinion, which I have already quoted, Lord Dunedin is careful to point out that the variety of classes of cases in which a claim to recompense can relevantly be associated is such as to prevent any detailed and limiting or comprehensive definition of those cases being made. I think that the defenders' argument here depended on far too narrow an interpretation of the words in suo, which relate in my opinion with equal force and relevance to interest as to property. The county council were certainly lucratus in the sense that they acquired a valuable asset, namely, a complete and satisfactory system of sewerage in each developed site, so that any gain from the work done by the pursuers accrued to the county council and the measure of that gain provides a measure of the loss sustained by the pursuers in incurring the expenditure which they say they made. I think it is amply clear from the averments which the pursuers do make that apart from the intervention of the county council non constat that the pursuers would have provided such a system of private sewers or drains of the quality and extent which they did, had it not been for the action of the county council. In these circumstances and being of opinion that the case on recompense must go to proof, I do not think it is necessary or desirable to say anything further on this branch of the case, but I content myself with agreeing with your Lordship in the chair that it is not possible to dispose of it without enquiry. There remains for consideration a final argument which was put forward to the effect that the pursuers here have failed to take a remedy which was open to them and they therefore are not entitled now to seek a remedy in recompense. It was argued that as a statutory remedy existed and was not resorted to the pursuers are no longer entitled to seek a remedy in equity. The legal remedy which it is said the pursuers failed to make use of and invoke was an application to the Court of Session under section 91 of the Court of Session Act 1868 to compel performance by the county council of their statutory duty to provide necessary drainage in the shape of a sewerage system of the sites under development. The argument was in effect founded upon the recent decision in the case of Varney v. Burgh of Lanark 1976 SLT 46. It seems to me, however, that that argument is misdirected. This is not a case in which there was failure or alleged failure on the party of a local authority to perform its statutory duty. On the contrary this case arises out of action by the local authority directed towards performance of its statutory duty, and properly so directed, if the plea of ultra vires is held to be unsound.

In these circumstances I do not see that, assuming the soundness of the decision in the case of Varney in the particular circumstances of that case, it provides any support for the defenders' contention at this point, and in my opinion the contention is unsound. In the whole matter, therefore, agreeing with your Lordship I am of opinion that the attack upon the relevancy of the pursuers' case at this stage cannot be sustained, that the course adopted by the learned Lord Ordinary was correct and that his interlocutor should be affirmed and the reclaiming motion refused.

LORD GRIEVE .—I agree with your Lordships that this reclaiming motion should be refused and that a proof before answer should be allowed on both branches of the pursuers' case.

I agree with the opinion of your Lordship in the chair which I have had the advantage of reading and discussing with you.