Scottish Court of Session Decisions

This was an action by J. B. W. Lee, S.S.C., Edinburgh, against the Lord Provost and Magistrates of the City of Edinburgh, as administrators of the Trinity Hospital of Edinburgh, concluding for payment of damages for alleged loss arising from certain heritable subjects which he had purchased from them, and the title to which contained building restrictions which it was alleged by the pursuer were not fully disclosed to him.

The pursuer alleged that the defenders on 21st February 1877 exposed for sale by public roup, inter alia, two lots of ground marked respectively 6 and 7 on the plan of their feus in Easter Road, Leith.

The pursuer bought these two lots, which were stated to be “part of the Trinity Hospital lands of Quarryholes, all lying in the parish of South Leith.” The entry was at Whitsunday 1877.

The articles of roup required the purchaser to erect within eighteen months of his entry a tenement of the value of £2000 in accordance with plans prepared by the architect of the superiors. The pursuer erected two tenements on the said area, which tenements included several shops. He intended that one or more of these shops should be used as a public-house, but a question arose as to his right so to use the shops.

He averred that he called upon the defenders as superiors to produce their title in support of

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his, but that they had refused to do so. He also alleged that he had ascertained from other sources that the building areas feued to him were in or about the year 1853 the subject of an excambion. They were prior to that date a part of the lands of Drum or Foredrum belonging to Mr Sligo of Drum, and were at that time excambed for a portion of the lands of Quarryholes belonging to the defenders or their predecessors. In the contract of excambion it was specially provided that the portions of ground thereby conveyed by Mr Sligo to the defenders or their predecessors were conveyed with and under the condition and real burden that “no public-houses, small workshops, piggeries, or any other erections to create a nuisance shall ever be erected or placed thereon without consent of the said John Sligo or his successors in the said lands of Foredrum.” The pursuer averred that this contract of excambion did not appear on any of the records, but this was admitted in the argument before the Lord Ordinary to be erroneous.

He further in his record (as amended in the Inner House) stated that no such servitude right or real burden was referred to in the articles of roup or in the feu-charter granted to him, the only title which the defenders produced as superiors being an extract contract between Messrs Duff, Trotter, and Nicolson, and the Provost and Council of Edinburgh, dated September 1642, and registered in their own Court books (the same year) of the lauds of Quarryholes; that the defenders never revealed the existence of any servitude right or real burden, but concealed it from him, and that there was nothing in the records to show that any of the ground feued to him was part of Foredrum and not of Quarryholes, and that he had only discovered the existence of any such burden from a demand made on him (under threat of an action) on behalf of the owner of Drum to admit the existence of it.

The defenders averred that by article 12 of the articles of roup it was provided that “the feuars shall be held to have satisfied themselves before the roup as to the sufficiency of the exposer's title, and as to the extent of their respective lots of ground, and as to all other particulars affecting and regarding the same.”… and that the pursuer was offered the fullest access to the Burgh Court books, and to the title-deeds in the City Clerk's office.

They admitted that a portion of the two lots sold to the pursuer formed part of what had at one time been the lands of Foredrum, extending to 1 acre 16 poles, and that this subject was in 1853 acquired by the governors of Trinity Hospital under a contract of excambion between them and John Sligo of Carmyle, and that the contract contained the prohibitions alleged by the pursuer, but they alleged that the remaining portion of the two lots sold formed part of the lands of Quarryholes.

The pursuer pleaded, inter alia—“The defenders having concealed from the pursuer the existence of and the restrictions contained in the contract of excambion of 1853, and having thereby caused loss and injury to the pursuer, are liable in damages.”

By interlocutor of 12th January 1886 intimation of the dependence of the cause was ordered to be made to W. A. Wood, C.A., trustee under a voluntary trust-deed executed by J. B. W. Lee, The trustee, subject to a minute of restriction which he placed on the summons, appeared to insist in the action.

The Lord Ordinary on 26th March 1886 pronounced the following interlocutor:—“Having heard counsel and considered the cause, Finds that the pursuer's averments of loss and damage arising from the state of the titles to the subjects in question, and from the representations and actings of the defenders with reference to the same, are not relevant to be remitted to proof: Quoad ultra allows the parties a proof of their respective averments on record: Grants leave to reclaim.”

“ Note.—The pursuer avers that he has been prevented from making a profitable use of his property by reason of a servitude in favour of a neighbouring proprietor, constituted by a contract of excambion, which forms part of his title, and the existence of which was concealed from him by the defenders. But the title complained of was on record, for the statement to the contrary in the condescendence was admitted at the bar to be incorrect; and by the conditions of roup the pursuer had undertaken the duty of inquiring and satisfying himself as to the ‘sufficiency of the titles and the extent of the ground, and as to all other particulars affecting the same.’ It was incumbent on him therefore to search the records for himself, or to take the risk of error in any statements as to the title which may have been made to him by the defenders.

It is true that notwithstanding the stipulation in the articles of roup the contract of sale and the conveyance which followed might be set aside on the ground of fraud. But there is no averment of fraud, and the pursuer does not attempt to reduce the contract. Holding as he does by the contract, and the right which he has acquired under it, he can have no remedy on the principle of the actio guanti minoris.”

[The matters upon which the Lord Ordinary allowed the parties a proof related to an alleged undertaking by the defenders to construct a main drain into which the houses to be built by the pursuer's tenants were to drain, and to the alleged failure of the defenders to implement their arrangement. The point has no bearing upon the present question.]

The trustee (pursuer) reclaimed.

Argued for the reclaimer—This was really a serious case of misrepresentation, made both verbally and on the face of the titles. The ground was sold as part of the lands of Quarryholes, while in reality it was part of the lands of Foredrum, which were burdened with a prohibition. The pursuer was led to understand there were no restrictions, while the defenders had full means of knowledge, it being their own property. This amounted to a case of legal fraud. Restitutio in integrum was in the circumstances impossible, because the purchaser had built on the ground and disposed of some of the buildings. Damages was the only remedy. A proof ought to be allowed.

Authorities— Gilmour v. Hart, Dec. 2, 1875, 3 R. 192; Spenser & Co. v. Dobie & Co., Dec. 17, 1879, 7 R. 396: Critchley v. Campbell, Feb. 1, 1884, 11 R. 475; Blair v. Murray, 1790, reported only in 2 Bell's Com., 7th ed., p. 263.

Replied for respondents—The question really was, whether the pursuer was entitled to damages because the property which he purchased in 1877 had not turned out so profitable as he expected. Fraud or essential error were the only two grounds upon which a purchaser could void his bargain, and there was no relevant averment of either here. The duty of making a search was by the articles of roup laid on the pursuer.

Authorities— Hamilton v. Western Bank of Scotland, June 12, 1863, 23 D. 1033; Ferguson v. Mossman, 3 Pat. App. 531; Brownlie v. Miller, July 16, 1878, 5 R. 1076, and 7 R. (H. of L.) 66.