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You are here: BAILII >> Databases >> Scottish Court of Session Decisions >> McMillan v Caldwell [1990] ScotCS CSOH_3 (15 August 1990)
URL: http://www.bailii.org/scot/cases/ScotCS/1990/1990_SC_389.html
Cite as: 1990 SC 389, 1991 SLT 325, 1991 SCLR 73, [1990] ScotCS CSOH_3

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JISCBAILII_CASE_SCOT_PROPERTY_TRUSTS_SUCCSESSION

15 August 1990

MCMILLAN
v.
CALDWELL

LORD KIRKWOOD'S OPINION.—In 1988 the defenders advertised for sale their property known as Ayton House, Aberargie, Perthshire, a country house which stands in some 12½ acres of grounds, and invited offers in excess of £230,000. By letter dated 24th June 1988 the pursuer, through his solicitors Messrs A. C. Bennett & Robertsons, W.S., of Edinburgh, made a formal offer to purchase Ayton House at a price of £250,000. Condition 3 of the offer provided inter alia as follows:

"Entry and actual occupation will be given on either (a) Friday, 29th July 1988 or (b) such other business day falling in the period between Friday, 29th July 1988 and Friday, 28th October 1988 providing that the seller gives not less than fifteen business days' notice of the proposed date of entry to fall within said period".

Condition 24 of the letter stated that the offer was to be "open for verbal acceptance by 4.00 p.m. today Friday, 26th June 1988 and in writing by first post on Wednesday, 29th June 1988". By formal letter dated 12th July 1988 the pursuer's solicitors deleted the first sentence of condition 3 of the original offer and inserted in place thereof the following:

"Entry and actual occupation will be given on the earlier of either (a) 26th August 1988, or (b) such other earlier date as may be agreed between the seller and the purchaser; the date of entry and actual occupation being hereinafter referred to as ‘the date of entry’".

By letter dated 15th July 1988 the solicitors acting on behalf of the defenders, Messrs Gillespie Macandrew, W.S., Edinburgh, sent a qualified acceptance of the pursuer's offer. The letter contained 15 qualifications and, in particular, para. 4 of the letter was in the following terms:

"Condition 3 of your said offer as amended is delete. The date of entry shall be Monday, 31st October 1988".

The letter did not specify any timelimit for acceptance of the qualified acceptance. On 18th July 1988 the pursuer's solicitors wrote to the defenders' solicitors acknowledging receipt of the formal qualified acceptance and stating that they were awaiting further instructions. Thereafter there were telephone conversations between the parties' respective solicitors and it became apparent that there were a number of matters relating to the proposed purchase of the property which had not been agreed between the parties, the most important of which was the date of entry, and it was agreed that a meeting should be held between the parties and their respective solicitors. On 9th August 1988 the pursuer's solicitors wrote to the defenders' solicitors confirming that the meeting would take place at Ayton House on Friday, 12th August 1988 at about 10 a.m. The letter stated inter alia:

"Hopefully, this meeting will serve to remedy the various points of contention between our respective clients and thereafter lead to a speedy conclusion of missives. As discussed, we feel it would be helpful to advise you of the various matters which we feel will require to be addressed at the meeting."

The letter then set out these matters under various headings. Paragraph 1 provided as follows:

"Entry — Your clients appear to be adamant that entry should be delayed until 31st October whereas our client wishes to take a much earlier date of entry. This is to allow him to carry out certain repairs and other remedial work before more inclement weather sets in. In the event that earlier entry cannot be arranged Mr McMillan has indicated he may wish to postpone entry until spring of next year since it would be impossible over the winter period to have the appropriate work carried out."

The other matters listed for discussion were moveables, boundaries, holiday lets, dry rot, planning/building control, drainage and renovation works.

The proposed meeting took place, as arranged, on Friday, 12th August 1988 at Ayton House. It was attended by the pursuer, his wife and the pursuer's solicitor, Mr Robert Alexander, an associate solicitor with the firm of A. C. Bennett & Robertsons, W.S., and by the defenders and their solicitor, Mr Derek McCulloch, a partner in the firm of Gillespie Macandrew, W.S. All the persons present at the meeting gave evidence as to what took place in the course of the meeting. While the evidence was very detailed and there were some conflicts of evidence as to precisely what was said in relation to certain matters, the salient facts were not really in dispute. While a number of matters were discussed, the most important issue was the date of entry.

After the meeting had gone on for some time, but no agreement had been reached, the pursuer indicated that he wished to have a private discussion with Mr Alexander as he was not clear as to his legal position. The meeting then adjourned and the defenders and Mr McCulloch withdrew to another room. During the adjournment Mr Caldwell, the first-named defender, instructed Mr McCulloch to withdraw the qualified acceptance as, in light of certain observations which the pursuer had made, he was concerned that Mr Alexander might be planning to present them with a formal acceptance of their qualified acceptance. Mr Caldwell was concerned about this possibility as he had already indicated in the course of the meeting that the date of entry proposed in the qualified acceptance, namely 31st October 1988, was no longer acceptable to him. Mr McCulloch then went back through to the other room and told Mr Alexander that he had had instructions from the defenders to withdraw the qualified acceptance and he stated in terms that he was withdrawing it. He also indicated that the defenders were nevertheless prepared to continue with the discussions. The pursuer and his wife gave evidence that Mr McCulloch did not withdraw the qualified acceptance but Mr Alexander expressly conceded that Mr McCulloch had informed him that the qualified acceptance was withdrawn. In the circumstances I accepted the evidence of the two solicitors that Mr McCulloch did state to Mr Alexander that the qualified acceptance was withdrawn and I think it likely that the pursuer and his wife just did not hear it being said, particularly as they might not have been in a position at that stage to appreciate its significance. There was also evidence from the defenders, which I accepted, to the effect that after the meeting resumed Mr Caldwell and Mr McCulloch had referred to the fact that the qualified acceptance had been withdrawn. After the meeting resumed, further discussions took place for about 15 minutes, relating to the date of entry and other matters, but Mr Alexander then made a remark to the effect that Mr Caldwell was wasting everyone's time and Mr Caldwell took offence at that remark and forthwith terminated the meeting. The pursuer, his wife and Mr Alexander then left the house.

Mr Alexander stated that at the time he left the house he had no reason, in light of what had taken place at the meeting, to suppose that the defenders had agreed to conclude a contract for the sale of the house. Further, he did not at that stage think that the oral withdrawal of the qualified acceptance had not been effective. Mr Alexander then drove the pursuer and his wife back to Edinburgh and in the course of the journey he indicated to them that in his view it might still be possible to accept the qualified acceptance. He expressed this view on the basis (a) that the qualified acceptance had not contained any time limit for acceptance and (b) that the verbal withdrawal of the qualified acceptance might not be effective in that, to be effective, any withdrawal should have been contained in a probative writing. He returned to his office and consulted with one of the partners, and he then advised the pursuer that, in his opinion, it was still open to him formally to intimate acceptance of the qualified acceptance. He then arranged for a formal acceptance of the qualifications contained in the qualified acceptance to be prepared and had it signed by one of the partners of the firm. The letter, which was dated 12th August 1988, was in the following terms:

"Dear Sirs

R. J. McMillan

Ayton House, Aberargie, Perthshire

Mr and Mrs I. C. Caldwell

On behalf of and as instructed by our client Roderick John McMillan, residing at 42a Kensington Park Gardens, London, we hereby accept the qualifications contained in your formal Qualified Acceptance of 15th July 1988 on behalf of and as instructed by your clients Mr Iain Clayton Caldwell and Mrs Gabrielle Phyllis Caldwell, residing at Ayton House, Aberargie, Perthshire, to the terms of our formal offer dated 24th June 1988 to purchase All and Whole the entire subjects known as and forming Ayton House, Aberargie, Perthshire (more particularly described in the preamble to our said Offer), and as amended by the terms of our formal letter of 12th July 1988 and now hold the bargain as concluded between our respective clients on the terms and conditions contained in said letters passing between our respective Firms.

Yours faithfully,

‘Adopted as holograph’

A. C. Bennett & Robertsons".

Mr Alexander then took the acceptance to the office of Gillespie Macandrew, W.S., at 31 Melville Street, Edinburgh. When he arrived at reception he met Mr McCulloch, handed him the letter and told him what it was. Mr McCulloch said that he had withdrawn the qualified acceptance and that it was therefore no longer open for acceptance but Mr Alexander explained that it was his view that the qualified acceptance could only be effectively withdrawn in writing and that the verbal withdrawal had not been effective. Mr McCulloch kept the letter and Mr Alexander returned to his own office. About half an hour later a letter from Mr McCulloch was delivered to Mr Alexander's office confirming the verbal intimation of withdrawal of the defenders' qualified acceptance. The pursuer is now seeking inter alia decree of implement of the missives allegedly concluded between the parties for the purchase of Ayton House.

Although there was a great deal of evidence led as to exactly what took place at the meeting at Ayton House, counsel for both parties were agreed that the essential facts were not really in dispute. In particular, counsel for the pursuer conceded that it had been established that Mr McCulloch had intimated verbally to Mr Alexander the withdrawal of the qualified acceptance. In the circumstances counsel were agreed that, while other arguments had been advanced, the most important issue between the parties was whether or not Mr McCulloch's verbal withdrawal of the qualified acceptance had been effective. If it was effective, then it had not been open to Mr Alexander thereafter to intimate a written acceptance holding the bargain as concluded and there was accordingly no binding contract between the parties for the sale of Ayton House. On the other hand, if the verbal withdrawal of the qualified acceptance had not been effective, then valid missives had been concluded.

Counsel for the pursuer submitted that as the offer and the qualified acceptance had been contained in formal letters, each of which was adopted as holograph, the qualified acceptance could only be effectively withdrawn by means of a probative letter (i.e. a letter which was either holograph or adopted as holograph). A verbal withdrawal was not sufficient. The pursuer was founding on completed missives relating to the sale of heritage which were prima facie valid and the contents of the missives could not be qualified or contradicted by oral evidence. If a party was permitted to withdraw a probative offer orally, then this would lead to uncertainty; and a great advantage of the law relating to the completion of written contracts is that it is "clear and certain" (Rutherford Ltd. v. Allied Breweries Ltd. 1990 S.L.T. 249, per Lord Caplan at p. 252). The law could only have regard to the terms of the formal missives and could not take account of what was said in the course of the verbal communings between the parties. The missives remained valid and enforceable unless and until the defenders succeeded in their claim that they should be reduced ope exceptionis. The only ground of reduction founded upon by the defenders was that the pursuer, in purporting to accept the qualified acceptance, had not been acting in good faith. However, bad faith, or lack of good faith, was not a ground of reduction (Walker, Civil Remedies, p. 147). A contract could be valid notwithstanding the fact that one of the parties had not been acting in good faith. For example, a contract to purchase an antique would be valid even though the purchaser was well aware that the article was in reality worth very much more than the price which the seller was asking. Further, in so far as the defenders alleged that there was a lack of consensus between the parties, the defenders were seeking to rely on their own error of law in respect that they wrongly believed that the verbal withdrawal of the qualified acceptance was effective. In the course of his submissions counsel for the pursuer referred to Incorporation of Bakers of Edinburgh v. Hay (1868) 6 S.L.R. 144; Steuart's Trs. v. Hart (1875) 3 R. 192;Stewart v. Kennedy (1890) 17 R (HL) 25;Brooker-Simpson Ltd. v. Duncan Logan (Builders) Ltd. 1969 S.L.T. 304; Findlater v. Maan 1990 SC 150; Gloag on Contract, pp. 161, 398 and 437-438 and McBryde on Contract, paras. 19.01-19.02. In any event, the pursuer also founded on the fact that, after the defenders' solicitor had intimated verbally that the qualified acceptance was being withdrawn, the defenders had continued to negotiate and had gone over the same ground which had been traversed in the earlier discussions. These continued negotiations were not referable to the possibility of entering into a new contract, but the defenders had continued to negotiate on the basis of the original offer and the qualified acceptance and, by doing so, they had by implication departed from their verbal withdrawal of the qualified acceptance. With regard to the defenders' plea of personal bar, the pursuer and his solicitor had not at any stage acknowledged, or by word or action led the defenders to believe, that the verbal withdrawal of the qualified acceptance was being accepted as valid and effective. In the circumstances the defenders' challenge to the validity of the missives had failed and the pursuer was entitled to the decree of implement which he sought.

Counsel for the defenders submitted that before there could be a concluded contract there had to be consensus in idem placitumbetween the parties. When the meeting at Ayton House began, the qualified acceptance was on the table but at that stage it was clear that there was no consensus and no concluded bargain. Indeed, the purpose of the meeting was to ascertain whether or not consensus could be reached. In his pleadings the pursuer had denied that at the meeting Mr McCulloch had verbally withdrawn the qualified acceptance but it was now admitted that the verbal withdrawal had, in fact, been intimated to Mr Alexander. In these circumstances, the question which arose was whether or not a written offer relating to the sale of heritage could effectively be withdrawn by oral intimation to the other party's solicitor. Mr McCulloch had accepted that, as a matter of usual and prudent practice, a letter would normally be delivered confirming the verbal withdrawal but this would be done simply for the purpose of having a record of what had occurred and avoiding any dispute in the future. However, the law did not require formal written intimation of withdrawal and all that was required was that the withdrawal should be brought to the notice of the other party's solicitor before an acceptance had been sent. Until an offer had been accepted, there was locus poenitentiae. While a formal letter adopted as holograph was necessary to conclude a binding contract for the sale of heritage, the withdrawal of an offer did not require to be in any particular form so long as the other party had notice of the withdrawal before he accepted the offer. In this case the defenders were not seeking to lead oral evidence for the purpose of varying a written contract. The issue was whether or not there was ever consensus and a concluded contract at all. It was clear that if a written offer for the purchase of heritage contained a mistake in a material matter, the party who had made the offer could correct the mistake and withdraw the erroneous offer by telephone or telex at any time before an acceptance had been despatched (Halliday, Conveyancing Law and Practice,Vol. II, para. 15.06; Gloag on Contract, pp. 38 and 437-438;Steuart's Trs. v. Hart ). Counsel accepted that the onus was on the party who claimed to have withdrawn the offer to prove that intimation of the withdrawal had been made timeously to the other party, but he submitted that in this case the defenders had succeeded in discharging that onus. If a party could withdraw by telephone an offer which contained, for example, an error as to the price being offered, there was no reason why he should not also be able to telephone and intimate that he had decided not to be bound by the offer at all. In each case, the party concerned was intimating that he was not now prepared to be bound by the terms of the written offer which had been submitted. Further, a party who had received verbal notice of the withdrawal of an offer and who then purported to accept the offer would be acting in bad faith and in such circumstances he could not then enforce the purported contract and the other party would be entitled to decree of reduction (Rodger (Builders) Ltd. v. Fawdry 1950 SC 483). In the present case, Mr Alexander had admitted that he had been given verbal intimation of the fact that the defenders were withdrawing their qualified acceptance and he had, very shortly afterwards, delivered a letter purporting to accept the offer constituted by the qualified acceptance. In these circumstances the pursuer's solicitor must be regarded as having acted in mala fide and accordingly the missives and, in particular, the purported acceptance of 12th August 1988, fell to be reduced ope exceptionis. Counsel also referred to Thomson v. James (1855) 18 D. 1; Burnley v. Alford 1919 2 S.L.T. 123 and Wolf & Wolf v. Forfar Potato Co. 1984 S.L.T. 100. While the pursuer had argued that the fact that the defenders had continued with the discussions after the verbal withdrawal of the qualified acceptance had been intimated implied that they had departed from the verbal withdrawal, there was no record for such a case nor had that suggestion been put to any of the witnesses. In any event, such a contention was not supported by the evidence of Mr Alexander who had stated that it was only after the meeting had ended that it had occurred to him that the verbal withdrawal might not be valid. At no stage did he suggest that the continuation of the discussions carried with it the implication that Mr McCulloch's verbal withdrawal of the qualified acceptance was being departed from.

Counsel also submitted that, even if the general rule was that the withdrawal of a formal offer had to be in the form of a probative writing, the pursuer was nevertheless personally barred from insisting in the present action in that, verbal intimation of withdrawal of the qualified acceptance having been given, he and his solicitor had not given any indication that they regarded the verbal withdrawal as being ineffective. If they had challenged the effectiveness of the verbal withdrawal at the time, Mr McCulloch could at once have put the withdrawal of the offer in writing. Accordingly, the pursuer and his solicitor had, by their silence, allowed the defenders to believe that the verbal withdrawal was being accepted as valid and effective. In the circumstances there had been no valid contract concluded between the parties and the pursuer was not entitled to decree of implement.

In this case the pursuer made a formal offer to purchase Ayton House and the offer was met by a qualified acceptance. It is clear that the qualified acceptance constituted a counter offer which was open for acceptance by the pursuer and if there was a valid written acceptance by the pursuer then the bargain would have been concluded. However, the pursuer did not originally accept the counter offer as there were a number of matters which he wished to discuss with the defenders and accordingly a meeting between the parties was arranged which was attended by the pursuer and his wife, the defenders and their respective solicitors. At the meeting a number of matters were discussed, particularly the proposed date of entry, and the meeting was adjourned at the request of the pursuer before any agreement was reached. It is clear on the evidence that at that stage there was no consensus and there was no concluded contract. In his pleadings the pursuer originally denied that there had been a verbal withdrawal of the qualified acceptance, but it is now a matter of admission that during the adjournment the defenders' solicitor, Mr McCulloch, verbally intimated to the pursuer's solicitor, Mr Alexander, that the qualified acceptance was withdrawn. Thereafter, further discussions took place but no agreement was reached and, in particular, there was no agreement as to the date of entry. When the meeting was over Mr Alexander returned to his office in Edinburgh, had a letter of acceptance prepared and delivered it to Mr McCulloch.

In these circumstances this case raises very sharply the novel and interesting question as to whether or not a formal offer relating to the proposed sale of heritable subjects can effectively be withdrawn orally. Counsel for the pursuer contended that once a probative offer had been sent to the other party's solicitor, it could only be withdrawn by another probative writing and it was submitted that such a rule would have considerable practical advantages in that it would provide an element of certainty in the law and would avoid the type of dispute which had arisen in this case. On the other hand, counsel for the defenders argued that a withdrawal of an offer did not require to be in probative form and that a withdrawal would be effective provided notice of the withdrawal had been brought to the attention of the other party's solicitor, either verbally or in writing, before an acceptance had been despatched.

I was not referred to any authority which was directly in point. However, having considered the evidence which was led in this case and the arguments advanced by counsel, I reached the conclusion that the submission made by counsel for the defenders on this matter was well-founded. A contract for the sale of heritage requires to be constituted by probative writing and once valid missives have been concluded, the terms of the missives cannot be varied or contradicted by oral evidence. However, the question in this case is whether or not there ever was a valid and binding contract for the sale of Ayton House to the pursuer. While the pursuer's original offer and the qualified acceptance were contained in formal letters which were adopted as holograph, I do not accept the submission of counsel for the pursuer that a probative offer can only be withdrawn by means of another probative writing. Every case must, of course, depend on its own particular facts. I agree with the view expressed by the late Professor Halliday (Conveyancing Law and Practice, Vol. II, para. 15.06) to the effect that if a written offer for the purchase of heritage has been made and it contains an error in a material respect, for example, if the price stated is greater than the client has authorised, then the agent of the prospective purchaser can correct the mistake and withdraw the erroneous offer by telephoning or telexing the seller's agent at any time before an acceptance has been despatched. While no question of an error in the terms of the offer arises in the present case, I can see no reason in principle why a solicitor who has submitted a written offer to the other party's solicitor should not be able to intimate verbally that his client is no longer prepared to be bound by the offer and that the offer is withdrawn, always provided that the notice of withdrawal is communicated to the other party's solicitor before an acceptance has been sent. In Gloag on Contract (2nd edn.), at p. 38, the learned author, dealing with the subject of withdrawal of an acceptance, stated as follows:

"It is remarkable that there is no definite authority on the question whether an acceptance can be recalled or revoked by adopting some channel of communication (e.g.,telegraph or telephone) which brings the fact of the recal [sic] to the notice of the offerer before he has actually become aware of the acceptance. Common sense would seem to dictate an affirmative answer to the question, and this is supported by the only authority in point"

, and reference was then made to Countess of Dunmore v. Alexander (1830) 9 S. 190.

In my opinion, the law does not require that the withdrawal of a written offer relating to the sale of heritage must be in the form of a probative letter and I have reached the conclusion that the essential requirement is that the withdrawal should have been communicated to the other party's agent before an acceptance has been despatched. I would expect that in most cases the withdrawal of an offer would be made in writing or, if made verbally, would be confirmed in writing so that there is a record of the fact that the notice of withdrawal had been given in order to avoid any dispute on the matter arising in the future. Once a written offer has been made and there is what bears to be a formal acceptance, then the onus will be on the party who made the offer to prove that timeous notice of withdrawal of the offer was communicated to the other party's agent and there may well be cases where, if the matter is the subject of dispute, a party who alleges that the offer was withdrawn verbally will have difficulty in discharging the onus of proof that notice of withdrawal was given timeously.

In this case it is now conceded that, at the meeting at Ayton House, the defenders' solicitor intimated to the pursuer's solicitor that, on the instructions of his clients, he was withdrawing the qualified acceptance. Once that intimation had been given, I consider that it was no longer open to Mr Alexander to accept the counter-offer constituted by the qualified acceptance and it did not matter that Mr McCulloch had not yet delivered written confirmation of the withdrawal. The withdrawal of the offer, once communicated to the pursuer's solicitor, meant that there was no consensus between the parties and I consider that the purported acceptance of the counter-offer, in the knowledge that it had been withdrawn, was not effective in law to complete the contract and accordingly that no valid contract for the sale of Ayton House was ever concluded between the parties. In these circumstances I consider that the defenders are entitled to have the purported missives reduced ope exceptionis.

For the sake of completeness, I should say that I did not accept the pursuer's argument that the defenders, by continuing with the negotiations, particularly on the question of the date of entry, after the adjournment of the meeting had impliedly departed from the verbal withdrawal of the qualified acceptance. The pursuer has no record for such a case and in any event, in the circumstances of this case, it seems to me that the continued discussions could be regarded as being referable to the possibility of reaching a new agreement on different terms, particularly as there were references, after adjournment, to the fact that the qualified acceptance had been withdrawn. It is also of significance that it apparently did not occur to Mr Alexander at the conclusion of the meeting that the verbal withdrawal had been impliedly departed from and, indeed, his subsequent actions were based principally on his belief, which I consider to have been erroneous, that the verbal withdrawal of the qualified acceptance had not been effective because it had not been in writing. Further, I would not have upheld the defenders' alternative argument to the effect that, even if the verbal withdrawal was not valid, the pursuer was nevertheless personally barred from raising the present action. It is clear that at the time Mr McCulloch intimated his withdrawal of the qualified acceptance Mr Alexander did not tell Mr McCulloch that he disputed the effectiveness of the verbal withdrawal. On the other hand, he did not intimate to Mr McCulloch that he was accepting the verbal withdrawal as being valid and effective. In my opinion, the fact that the pursuer and his solicitor did not, at the time, challenge the effectiveness of the verbal withdrawal does not, in the circumstances of this case, provide the basis for a plea of personal bar.

For all these reasons I shall reduce the missives ope exceptionis, sustain the second plea in law for the defenders and pronounce decree of absolvitor.

[1990] SC 389

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