Cramaso LLP v Viscount Reidhaven's Trustees
| Jurisdiction | Scotland |
| Judgment Date | 07 December 2011 |
| Date | 07 December 2011 |
| Docket Number | No 16 |
| Court | Court of Session (Inner House - First Division) |
Court of Session Inner House Second Division
Lord Justice-Clerk (Gill), Lord Hardie, Lord Marnoch
Reparation - Misrepresentation - Negligent misrepresentation - Duty of care - Pursuers not in existence at the time when misrepresentation made - Whether sufficient proximity for duty of care
The pursuers came into existence as a legal entity on 16 November 2006. The pursuers' members were Mr Erskine and his wife, and Mr Erskine introduced all of the capital of the business. The parties entered into a 15-year lease of a grouse moor in a formal lease signed in December 2006 and January 2007. The lease was an improving lease in terms of which the pursuers had to invest heavily in the early years to improve the moor and could enjoy the benefits of those improvements during the currency of the lease before returning possession of the improved moor to the defenders. The pursuers incurred expenditure since entering into the lease but were disappointed by the small numbers of grouse which they found on the moor after taking possession of it. They raised an action seeking reduction of the lease and damages which they averred had resulted from misrepresentations by Mr Lewis, an employee of the defenders. Following a proof before answer the Lord Ordinary (Hodge) granted absolvitor. The Lord Ordinary found that there had been a material misrepresentation regarding estimating the number of birds on the moor in an email, dated 29 September 2006, written by Mr Lewis to a chartered surveyor instructed by the defenders, the contents of which were passed to Mr Erskine with the consent of Mr Lewis. The Lord Ordinary held that Mr Lewis owed a duty of care to Mr Erskine and that he had failed in that duty, but that he did not owe such a duty to the pursuers which were not in existence when the misrepresentation was made. The pursuers reclaimed. The parties agreed that in appropriate circumstances a duty could be owed to a class of persons which included some not actually in existence at the date of the negligent misrepresentation in question. The respondents argued that for the necessary degree of proximity to be established it had to be made clear to the maker of the impugned statement that there was, at least, a high degree of probability that an identifiable person would act upon that statement to his potential detriment. If perceived reliance was essential to a relationship of proximity and thus to the existence and scope of a duty of care, then at the time the alleged misrepresentation was made only Mr Erskine was capable of being perceived as a person to whom a duty could be owed as at that time there was simply no other identifiable person within the contemplation either of Mr Lewis or the defenders who could be affected in any way. In any event there was not, in principle, any distinction between the pursuers and any other assignee selected by Mr Erskine and it was impossible that a relationship of proximity could extend so far.
Held that there was no good answer to the respondents' submissions (para 9); and reclaiming motion refused.
Cramaso LLP raised an action under the commercial cause rules in the Court of Session against the Right Honourable Ian Derek Francis Ogilvie-Grant, Earl of Seafield, the Honourable James Andrew Ogilvie-Grant, Viscount Reidhaven, David Henry Houldsworth and David John Carmichael MacRobert as trustees of Viscount Reidhaven seeking reduction of a lease and damages which they averred resulted from misrepresentations by an employee of the defenders. The cause called before the Lord Ordinary (Hodge) for a proof before answer, on 23 to 27 November and 1 and 2 December 2009, and 8, 9, 11 and 12 February 2010. On 11 May 2010, the Lord Ordinary granted decree of absolvitor ([2010] CSOH 62). The pursuers reclaimed.
Cases referred to:
Aiken v Stewart Wrightson Members Agency LtdWLRUNKUNK [1995] 1 WLR 1281; [1995] 3 All ER 449; [1995] 2 Lloyd's Rep 618; [1995] CLC 318
Caparo Industries plc v DickmanELRWLRUNKUNKUNK [1990] 2 AC 605; [1990] 2 WLR 358; [1990] 1 All ER 568; [1990] BCC 164; [1990] BCLC 273
Reeman v Department of TransportUNK [1997] 2 Lloyd's Rep 648; [1997] PNLR 618
Smith v Eric S Bush (A Firm); Harris and anr v Wyre Forest District Council and anrELRWLRUNK [1990] 1 AC 831; [1989] 2 WLR 790; [1989] 2 All ER 514; 21 HLR 424
White v JonesELRWLRUNKUNK [1995] 2 AC 207; [1995] 2 WLR 187; [1995] 1 All ER 691; [1995] 3 FCR 51
Wild v National Bank of New Zealand Ltd [1991] 2 NZLR 454
The cause called before the Second Division, comprising the Lord Justice-Clerk (Gill), Lord Hardie and Lord Marnoch, for a hearing on the summar roll, on 7 to 9 June and 7 July 2011.
At advising, on 7 December 2011...
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