Scottish Court of Session Decisions

Lord President.—I have found it impossible to discover in this action an action of rescission, and I agree with, the Lord Ordinary that it is “an action of reparation—an action of damages for deceit, and nothing else.” It is neither in form nor in substance an action of rescission. The form of the summons, the parties called, and the pleas, none of them indicate or embody a claim of rescission; there is neither an offer of restitution nor an adequate explanation of the absence of such offer. The fact that, by agreement, the parties have entrusted the winding-up of the partnership to a third party, and that this winding-up is proceeding, has no effect in altering the relation between the litigants so far as regards the present question. The partnership subsists, and it has traded for several years. On the mere question of form a reductive decree might have been asked with an express saving of the liquidation; or, if the pursuer could not reconcile this to his views of process, at least a declarator might have been asked, which would have stated restitution as the thing he claims. What he asks is not restitution but damages, and these two remedies are entirely different in themselves, and are open to different defences.

If the action be one of damages, then it was scarcely disputed that it is necessary to the pursuer's success that he prove fraud. Now, that there are in the case several things constituting, so far as they go, cogent evidence of fraud, cannot be ignored. Each of these matters is involved in circumstances requiring a good deal of attention, but several misstatements were made, which, when all is said, are not well accounted for. Still, the question is one of personal conduct; the Lord Ordinary saw and heard the witnesses whose conduct is inculpated, and he has held that the pursuer has failed to prove that the misstatements were made fraudulently. I attach the more weight to the Lord Ordinary's conclusion, because his opinion discloses a complete grasp of the points which bear against the honesty of the gentlemen involved. With these things fully in view, he absolves the defender. As I do not regard any one of the proved misrepresentations, nor the whole taken together, as demonstrative or conclusive of fraud, I do not feel justified in rejecting the Lord Ordinary's conclusion that in fact there was no deceit.

I am for adhering to the interlocutor reclaimed against.

Lord M'Laren.— I agree with your Lordship and the Lord Ordinary. I think the rule which renders necessary the averment and proof of fraud, where damages are sought, is by no means artificial or technical, but is a rule consistent with equity and justice. Where a pursuer only desires to set aside a contract of sale on the ground of innocent misrepresentations he may obtain relief, but only on condition of making restitutio in integrum. While the other party may thus be deprived of the benefit of a bargain which he considers advantageous to him, and is desirous of retaining, yet he receives compensation in the shape of restitution. But when we are in the region of damages it does not appear to be consistent with equity, or with any sound principle of law, that in respect of a mistake for which neither party is responsible, the seller shall pay to the purchaser a sum of damages, the purchaser retaining such benefit as the contract has given to him. The remedy of damages—according to all the light which our decisions throw on the question—perhaps there is not very much light to be got from them—that remedy is confined to the case of proved fraudulent misrepresentations, and the damages are given as compensation for loss sustained through fraud. I agree with your Lordship in the chair that on a question of the fraudulent character of representations which are proved or admitted to be made, the judgment of the Lord Ordinary is entitled to the utmost weight, because such questions generally resolve into matter of credibility, and of the fairness or unfairness of professions made by the principal witness, the defender. I see no ground for disturbing the Lord Ordinary's judgment on the question of the fraudulent character of the misrepresentations which were the basis of the sale, and which were certainly not correct in fact. It follows, in my opinion, that the action must fail.

Lord Kinnear.—I concur.

LORD ADAM was absent.