British Overseas Bank Nominees Limited And Another Against Stewart Milne Group Limited
| Jurisdiction | Scotland |
| Judge | Lady Wolffe |
| Neutral Citation | [2018] CSOH 125 |
| Date | 21 December 2018 |
| Docket Number | CA64/18 |
| Court | Court of Session |
| Published date | 21 December 2018 |
OUTER HOUSE, COURT OF SESSION
[2018] CSOH 125
CA64/18
OPINION OF LADY WOLFFE
In the cause
(FIRST) BRITISH OVERSEAS BANK NOMINEES LIMITED; (SECOND) WGTC
NOMINEES LIMITED, together as nominees and trustees for the Janus Henderson UK
PROPERTY PAIF
Pursuers
against
STEWART MILNE GROUP LIMITED
Defender
Pursuer: Thomson QC; Brodies LLP
Defender: McKenzie; Anderson Strathern LLP
21 December 2018
Introduction and background
Précis of circumstances giving rise to debate
[1] The car park at a retail park developed in 2009, designed and constructed by the
defender, is averred to be subject to ponding and flooding at its northern boundary. The
pursuers acquired the site on 27 June 2013. In reliance on a collateral warranty in their
favour dated 24 June and 28 August 2013 (“the Collateral Warranty”), the pursuers sue
the defender for breach of various obligations defined by reference to a building contract
entered into between the defender and the pursuers’ predecessors as owners of the site.
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[2] The defender argues that, at the time these proceedings were raised, any claim
Northburn would have had against the defender would have been extinguished by
prescription and, it has a defence in the form of a contractual bar against a like claim by
the pursuers. The defender also argues that, properly construed, the pursuers, as
beneficiaries under the collateral warranty, can have no higher right than the original
counterparty.
[3] The pursuers’ reply is to argue that, on delivery of the Collateral Warranty to the
pursuers, after its execution, the defender came under the obligations to the pursuers
including those obligations which arose under clauses 2.1 and 2.2. Prior to the delivery of
the Collateral Warranty to the pursuers, the defender owed no contractual obligations to
the pursuers.
[4] These issues were argued at debate.
Background
The Building Contract between the defenders and a third party (Northburn)
[5] The defender entered into a building contract (the “Building Contract”) with
Northburn Developments Limited (“Northburn”) dated 20 and 21 August 2008 for the
design and construction of eight new retail units to developer’s shell standard, together
with garden centre slab, sundry tenant fit-out works and associated car parking, service
yards and related external works (the “Works”) at Souterford Road, Uryside South,
Inverurie (the “Site”).
[6] The Building Contract was in the form of the SBCC Design and Build Contract for
use in Scotland (DB/Scot) 2005 Edition October 2007 Revision, as amended by the
document entitled “Amendments to the SBCC Design and Build Contact for use in
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Scotland 2005 incorporating Amendment 1 (Issued April 2007) and October 2007
Revision”. In the Building Contract, Northburn was referred to as the Employer and the
defender as the Contractor.
Allegedly defective works
[7] The defender carried out the Works in terms of the Building Contract. As part of
the Works, the defender designed and constructed the car parking area at the Site. The
Works were completed in or around 2009. The pursuers’ case is that, in carrying out the
Works, the defender had breached various obligations which it owed in terms of the
Building Contract. The pursuers aver that the “[d]efender’s design and construction of
the Works did not comply with the terms of clauses 2.1, 2.2, 2.11 and 2.17 of the Building
Contract. The car park at the Site, as designed and constructed by the [d]efender, suffers
from flooding at its northern boundary. A properly designed and installed car park
would not suffer from flooding in ordinary course.” The alleged failures of design and
construction are further particularised. The detail of these alleged breaches do not matter
for present purposes. It suffices to note that the pursuers’ claim is based on the Collateral
Warranty granted in their favour in the following circumstances.
The pursuers’ acquisition of the Site and the Collateral Warranty in their favour
[8] The pursuers became the owner of the Site (and the buildings/development which
had been constructed thereon by the defender in terms of the Works carried out under the
Building Contract) pursuant to missives entered into between them and Northburn dated
27 June 2013 (comprising two letters) (the “Missives”). In terms of the Missives, the date
of entry was 27 June 2013. Further, again in terms of the Missives, Northburn was obliged
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