LAWRENCE BUILDING Company Ltd v LANARK COUNTY COUNCIL
| Jurisdiction | Scotland |
| Judgment Date | 20 October 1977 |
| Date | 20 October 1977 |
| Docket Number | No. 3 |
| Court | Court of Session (Inner House - First Division) |
FIRST DIVISION.
Lord Maxwell.
Recompense—Housing development—Construction of sewers—Action by developers against local authority in recompense for value of sewers—Essential elements in claim for recompense—Ultra vires—Whether local authority had power to pay for sewers constructed by private developer—Public Health (Scotland) Act 1897 (cap. 38), ss. 102, 103.
Contract—Implied contract—Contract inferred from relationship and course of dealing between parties—Relevancy—Sufficiency of averments of agreement such as to entitle pursuers to proof.
A company of builders brought an action against a local authority claiming payment for the construction of sewers. The sewers were built to service houses they built for private sale at a number of sites in Lanarkshire from and after 1969 and were constructed in conformity with the specifications of the local authority, under their supervision and subject to their final approval. The builders averred that the local authority in practice took over and paid for the sewers when each development was occupied. All the work was completed before 16th May 1973. On that date the relevant sections of the Sewerage (Scotland) Act 1968 came into force and, by virtue of section 16, the sewers in question vested in the local authority. The builders averred that the authority was bound to pay them in terms of an implied contract between the parties or, if there were no such contract, upon the equitable principle of recompense. At procedure roll it was argued inter alia by the defenders that the implied contract was ultra vires of the local authority. The Lord Ordinary allowed a proof before answer and the defenders reclaimed.
Held (aff. interlocutor of the Lord Ordinary) (1) that in deciding whether powers exercised by the defenders under sec. 102 of the Public Health (Scotland) Act 18971 were ultra vires, the principle to be followed was that the doctrine ofultra 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; (2) that whether the equitable remedy of recompense should be available must depend on the particular circumstances of each case; and (3) that there were sufficient averments in the case which, if supported by competent evidence, could give a claim to recompense; and proof before answerallowed.
Varney (Scotland) Ltd. v. Burgh of LanarkUNK 1976 S.L.T. 46 distinguished.
The Lawrence Building Company Limited, having a registered office at 137 West Regent Street, Glasgow, brought an action against the County Council of the County of Lanark, County Buildings, Hamilton, the statutory successor of which is Strathclyde Regional Council, concluding for payment of £67,890.92 being the value of certain sewers constructed by them in housing developments, with interest thereon at the rate of 11 per cent per annum from the date of citation.
From about 1953 the pursuers built houses for private sale in Lanarkshire. They also constructed the sewers internal to each development according to the specifications of the county council, under the council's supervision and subject to their final approval. They averred that in practice the county council took over and paid for the sewers when each development was occupied. The county council refused to pay for sewers constructed by the builders on certain named sites between 1969 and 16th May 1973. The builders raised an action seeking payment of the alleged value of these sewers. They based their action on contract and on recompense. The county council argued that both branches of the claim were irrelevant.
The averments of the parties were as follows:—(Cond. 2) "Since at least about 1953 the pursuers have constructed houses for private sale on various sites in Lanarkshire and for which the defenders were and are both building and sewage authority. 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. The defenders are so in respect of sites at Kylepark; Uddingston; Carmunnock; Mount Vernon and Burnt-broom, Baillieston. They have not refused to do so previously. Reference is made to the defenders' letter to the pursuers' Mr Bruce dated 5th March 1954, produced herewith. The sewers at said developments and at the sites which are the subject of time action were constructed according to the
specifications of the defenders, under their supervision and subject to their final approval. The take-over and payment was as a matter of practice postponed until the estate was occupied. The defenders' averments in answer except insofar as coinciding herewith are denied." (Ans. 2) "Admitted that the pursuers have constructed houses for private sale on various sites in Lanarkshire. Admitted that the sewers serving certain sites were taken over by the former Lanarkshire County Council. Admitted that the said County Council made certain payments to the developers who had constructed the said sewers. The said letter dated 5th March 1954 is referred to for its terms. Admitted that the sewers taken over by the said County Council were constructed according to their specifications, under their supervision and subject to their final approval. Quoad ultradenied. Explained and averred that Lanarkshire County Council formerly had certain statutory powers of acquisition in respect of sewers. In the event of their exercising the said powers, they were liable to make compensation for the rights so acquired. Reference is made to Sections 102, 144 and 145 of the Public Health (Scotland) Act 1897. The pursuers at all times knew or ought to have known that the said County Council had a discretion under the said Act as to whether or not they should take over the sewers serving a particular development. The pursuers also knew or ought to have known that the said County Council could not lawfully bind themselves as to the future exercise of their said discretion. Neither the said County Council nor any of their officials at any time gave any undertaking to the pursuers that the said County Council would take over the said sewers on completion." (Cond. 3) "Further and in particular from 1969 onwards the pursuers constructed houses at sites in Lanarkshire including inter aliasites known as Burntbroom; Baillieston Phase II; Holmbrae; Uddingston Phases I and II; Steppshill; Stepps; Holbrae; Uddingston Phase III. At all of said sites the pursuers constructed sewers associated with said houses to serve said developments, in accordance with the practice aforesaid. All said work was completed before 16th May 1973. In the event and in terms of the Sewerage (Scotland) Act 1968 said sewers vested in the local authority, which in this case is the defenders. They have declined to make payment therefor. The defenders' averments in answer except insofar as coinciding herewith are denied." (Ans. 3) "Admitted that the pursuers constructed houses at certain sites in Lanarkshire. Admitted that they constructed sewers to serve the said developments. Admitted that such of the said sewers as had not been taken over by the said County Council in exercise of their powers under the Public Health (Scotland) Act 1897 vested in the said County Council in terms of the Sewerage (Scotland) Act 1968. Admitted that the said County Council made no payment therefor. Quoad ultradenied." (Cond. 4) "It was an implied agreement between the pursuers and defenders that said sewers would be taken over by the defenders for value. The cost of construction at said sites was as follows:—Burntbroom: Baillieston Phase II:—£11,096.11; Holmbrae: Uddingston Phases I and II £19,685.74; Steppshill: Stepps:—£22,079.03; Holmbrae: Uddingston Phase III:—£15,030.04. Accordingly the defenders are bound to recompense them in respect thereof. The defenders' averments in answer except insofar as coinciding herewith are denied." (Ans. 4). "Not known and not admitted what was the cost of constructing the sewers serving the said sites. Quoad ultra denied. Explained and averred that prior to 16th May 1973 the said County Council had made no exercise of their powers of acquisition under the Public Health (Scotland) Act 1897 in respect of any of the sewers serving the sites referred to in Article 3 of the condescendence. Accordingly they were under no liability to make compensation to the developers, or owners of those sites. On 16th May 1973 the said powers of acquisition ceased to be exercisable by the said County Council, and at the same time such of the said sewers as were then completed vested in the said County Council. Reference is made to section 60 (2) of, and Schedule 2 to, the Sewerage (Scotland) Act 1968 and to the Sewerage (Scotland) Act 1968 (Commencement) Order 1972 (S.I. 1972 No. 363). From and after 16th May 1973 it became unlawful for the said County Council to make any payment for the acquisition of the said sewers." (Cond. 5) “Alternatively, esto the defenders were not obliged to pay for said sewers in respect of said agreement, they are bound to recompense the pursuers in respect of the same. The pursuers have carried out the construction of said sewers and have without any intention of demolition 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. Said areas could not have been properly cleansed and drained nor drained by sewers without the construction of said sewers. The work or construction of said sewers was in each case carried out by the pursuers in the erroneous belief that the defenders could on satisfactory completion...To continue reading
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