(first) Thomas Chalmers And (second) Gail Chalmers Against Diageo Scotland Limited
| Jurisdiction | Scotland |
| Judge | Lord Ericht |
| Neutral Citation | [2017] CSOH 36 |
| Court | Court of Session |
| Published date | 03 March 2017 |
| Year | 2017 |
| Date | 03 March 2017 |
| Docket Number | A95/14 |
OUTER HOUSE, COURT OF SESSION
[2017] CSOH 36
A95/14
OPINION OF LORD ERICHT
In the cause
(FIRST) THOMAS CHALMERS and (SECOND) GAIL CHALMERS
Pursuers
against
DIAGEO SCOTLAND LIMITED
Defenders
Pursuers: Moynihan QC, Lamont; Balfour + Manson LLP
Defenders: Connal QC; Pinsent Masons LLP
3 March 2017
[1] As whisky matures in casks, ethanol evaporates from the casks. This is commonly referred to as “The Angels’ Share”. The defenders mature whisky in bonded warehouses close to the pursuers’ house. The pursuers have brought an action for damages against the defenders for damage to the pursuers’ house and outdoor property. They aver that the defenders’ release of ethanol vapour from their bonded warehouses amounts to a nuisance and has caused damage to their house and outdoor property. The action is for damages alone and not for interdict.
[2] The cause called before me on the procedural roll.
Defenders’ Submissions
[3] Mr Connal submitted that the defenders’ first plea‑in‑law should be sustained and the action dismissed. He did so under five broad headings, while acknowledging that there was a certain duplication in respect of what was said. The headings were as follows:
Fair Notice
[4] Mr Connal submitted that the facts had not been averred in sufficient detail to enable any allegation to be investigated and thereafter explored if necessary approval. The claim was of an unprecedented nature with the potential to have radical impacts on a major industry and depended on fields of science where work to reach a supportable conclusion may take months or more likely years and it was accordingly all the more essential that they provided fair notice. A proof before answer would not be an appropriate solution.
Law of Nuisance
[5] Mr Connal submitted that the pursuers’ case failed to set out an argument for the existence of culpa. The defenders were carrying on a long established operation in accordance with all requisite permits issued in the public interest by public authorities and many of the pursuers’ assertions had been rejected by an independent public body in the relatively recent past. He further submitted that:
(a) the pursuers failed to set out an adequate case that, in the locality in which their property stood, the threshold laid down by the law had been breached; the defenders’ business was longstanding and the pursuers’ properties were incomers;
(b) in any event the pursuers failed to set out a relevant and specific case to meet the fundamental legal requirement that any alleged impact must be “plus quam tolerabile”;
(c) regulation by expert public authorities, acting in the public interest, would be undermined by an uncontrollable series of individual claims seeking to set individual standards. The public permitting regime specifically requires the emission of ethanol from the warehouse, and regulation balances the interest of producers the public and individuals. The defenders’ use was permitted and was positively required for the production of whisky;
(d) As the defenders had been performing the same process on site for more than 20 years the defenders had acquired a right to emit ethanol and the emission could not constitute a nuisance. Separatim, the duration of user was an important factor in the locality issue referred to above.
Loss
[6] Mr Connal submitted that there was no specification of when or over what period the alleged damage occurred. Separatim, it appeared likely that it occurred more than five years before the commencement of the present proceedings. The averments lacked specification and prima facie gave rise to an interference that the claims have prescribed.
Specific Lack of Fair Notice
[7] He submitted that there was lack of specification in relation to the following particular matters.
(a) The pursuers’ averment in Article 2 that it is not an essential part of the process that ethanol is permitted to escape the premises.
(b) The pursuers’ averments in Article 3 use a series of phrases purportedly supportive of a scientific proposition without being prepared to specify what the phrases relied upon mean.
(c) The pursuers’ averments in Article 4 provide no detail to explain the critical assertion that the black fungus is Baudoinia compniacensis, do not specify the basis of the words “elevated” and “rare” and have not dealt with the matters raised in various calls.
(d) The averments in Article 5 seek to criticise the report in ways which are irrelevant, lack detail and fail to address the question of whether the existence of the report provided a complete answer to any claim of culpa, and were lacking in candour.
(e) The pursuers’ averments in Article 6 were lacking in specification and failed to provide details of the claim.
Pursuers’ Submissions
[8] Mr Moynihan submitted that the pursuers case was very simple. The defenders’ bonded warehouse emits ethanol at a level which germinates the fungus Baudoinia compniacensis which covers the pursuers’ property in an unsightly black coating. The fact that the black coating is attributable to ethanol emitted by such warehouses has been known to the defenders for some time. These circumstances amount, in law, to a nuisance and the pursuer is entitled to compensation for the damage to his property. The factual issues raised in the defenders’ pleadings and Note of Argument could only be properly addressed at proof before answer.
Pleadings
[9] The pursuers pled as follows:
“COND.2. The defenders own and operate a whisky aging facility in Bonnybridge, Falkirk. The premises include nine bonded warehouses. Whisky is matured in casks within the warehouses. As the whisky matures, ethanol evaporates from the casks into the surrounding atmosphere (commonly referred to as “the angel’s share”). Ethanol evaporates from the casks at the rate of approximately 2% by volume per year. With reference to the defenders’ averments in answer, admitted that during the maturation of whisky, and as an essential part of that maturation process, air enters the casks and ethanol and other substances leave them, under explanation that it is not an essential part of the process that the ethanol is permitted to escape the premises and to damage neighbouring properties.
…
COND.3. Ethanol vapour in relatively high humidity strongly stimulates the germination, growth and development of a fungus known as Baudoinia compniacensis. Elevated ambient ethanol vapour in addition to high relative humidity are prerequisites to establishment of colonies of this fungus.
…
COND.4. The bonded warehouses are adjacent to the Woodlea Park development. The pursuers’ house lies approximately 350 metres east north east of the bonded warehouses. The predominant wind is towards east north east. Accordingly, the pursuers’ property lies directly downwind from the warehouses in the prevailing wind. Ethanol vapour is released from the bonded warehouses and is carried by the prevailing wind onto the pursuers’ property. This has caused the exterior of the pursuers’ house and some of their moveable property, including a car, to be discoloured by an unsightly black fungus. The black fungus is Baudoinia compniacensis. With reference to the defender’s averments in answer, admitted that the premises operated in this location prior to the building of the Woodlea Park development. Quoad ultra denied. Explained and averred that the levels of ethanol in the vicinity of the pursuers’ house are elevated. They are between 5 and 11 parts per million (ppm). The ambient background readings in a rural location near Kilsyth are between 1 and 2 ppm. It would be extremely rare to get ambient levels of 3 or 4 ppm. The expected levels are 1 or 2 ppm.
COND.5. The defender’s release of ethanol vapour from their bonded warehouses amounts to a nuisance. The nuisance is caused by the defenders’ fault. The presence of black fungus on the houses throughout the Woodlea Park development is obvious. Black fungus has been associated with bonded warehouses across Scotland for a considerable number of decades. Scientific literature has discussed bonded warehouses and their link to the development of extensive dark stains on exterior surfaces. These have been shown to extend to a variety of surrounding buildings, vegetation and other structures. The staining has been reported to extend downwind following the direction of the prevailing wind. Friend [1965] reported the growth of fungus on trees and leaves, as well as other surfaces. Watson et al [1984] hypothesised that alcohol evaporating during the maturation process (that is, alcohol being stored in wooden barrels for at least three years), could provide a carbon source to fungi in the environment. Similar situations have been identified in the vicinity of bourbon, brandy and sherry maturation warehouses. Sweeney [1988] considered that the evaporation of alcohol from bonded warehouses used for the storage of whisky provided a source of nutrients (when considering the presence of black fungus in the majority of Scottish District Councils). In 2001 Sporometrics Inc was hired by Hiram Walker & Sons Distillery in Ontario, Canada, to investigate discolouration of property in the vicinity of bonded warehouses in Lakeshore, Ontario. That investigation resulted in 2007 in the identification of a new genus and species Baudoinia compniacensis (known as “the warehouse staining fungus”) as the cause of the discolouration. The results and subsequent biological investigations were widely reported. Reference is made, for example, to the article by James A Scott and others entitled “Baudoinia, a new genus to accommodate Torula compniacensis” published in Mycologia, volume 99(4): 592‑601 (2007). Grigoriev [2011] suggested that Baudoinia compniacensis is worldwide in its distribution and reported from most geographic localities where spirits are manufactured and aged. In the circumstances, the defenders knew or ought to have known that the release of...
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Thomas Chalmers And Another Against Diageo Scotland Ltd
...relevant, and gave them an opportunity to amend to remedy defects of specification in their averments on loss: Chalmers v Diageo Scotland [2017] CSOH 36. After amendment the defenders remained dissatisfied as to the relevancy and specification of the pursuers’ pleadings in relation to quant......