CourtCourt of Session (Inner House - First Division)
Judgment Date15 July 1971
Date15 July 1971
Docket NumberNo. 30.


Lord Kissen.

No. 30.

ReparationRelation of fault to injuryDamagesFinancial lossRemotenessElectric cable on industrial estate brokenConsequent loss of production in factoryNo property of occupiers damagedWhether loss natural and probable result of damage.

ReparationExtent of rightContractors breaking electric cable while working on industrial estateWhether duty to occupiers to ascertain position position of cables.

In the course of building operations on an industrial estate contractors broke an underground electric cable carrying power to a factory and to other premises. No property of the occupiers of the factory was damaged, but production was interrupted, with consequent loss to them. In an action of damages brought by them against the contractors they averred that the defenders were under a duty to ascertain the position of electric cables on the estate and to take reasonable care to avoid damaging them.

Held that the law of Scotland does not admit a claim of damages for financial loss that does not arise from damage to the claimant's own property, and that the loss alleged was too remote to sound in damages; and further (per Lord Cameron, who reserved his opinion as to the existence of the duty alleged) that the loss was in any event not a natural or direct result of the breach of any such duty.

Authorities on remoteness of damage reviewed in relation to financial loss without damage to property belonging to or possessed by the victim.

Dynamco Limited, occupiers of a factory on East Mains Industrial Estate, Broxburn, brought two actions of damages in the Court of Session, one against Holland & Hannen & Cubitts (Scotland) Limited, and the other against James Harrison & Company (Builders) Limited. In both actions they averred that they had sustained financial loss when, on 24h February 1969 in the first case and on 26th March 1969 in the second, an underground electric cable supplying power to their factory had been broken by an excavator or digger being used by the defenders during operations being carried out by them on the estate in the course of its development.

The following narrative is taken from the opinion of the Lord Ordinary (Kissen):"The legal basis of each of these two actions for damages by the same pursuers is identical. The averments of the circumstances of the separate accidents on which the actions are based are similar. The loss which is averred in each action has the same basis. The debate in the Procedure Roll covered both actions.

"In both actions the defenders have a plea in law to the effect that, as the pursuers' averments are irrelevant et separatimlacking in specification, the actions should be dismissed. The defenders in the first of these two actions, that is, the action against Holland & Hannen & Cubitts (Scotland) Ltd., have a plea in law of no title to sue, but their counsel said that they were not asking for this to be sustained. The pursuers have a plea in law in both actions to the effect that certain pleas in law by the defenders, being unsupported by relevant averments, should be repelled and inquiry restricted to the quantum of damages. The pursuers' counsel did not move at the debate that these preliminary pleas in law should be sustained but asked for a proof before answer in each action. The defenders' counsel moved that each action should be dismissed. [His Lordship dealt with an alternative submission on behalf of the defenders, with which this report is not concerned, and continued]

"Before I consider the submissions which were made by counsel, I state, briefly, the factual and legal bases of the two actions, as averred by the pursuers. The pursuers were the occupiers of a factory at East Mains Industrial Estate, Broxburn. The machinery which was used for production in their said factory was operated by electricity, which was carried to their factory and to other premises by an electric cable which was owned by the South of Scotland Electricity Board. On two separate occasions in 1969 this electric cable was damages by workmen. The result of each of these accidents was that the the pursuers' factory was deprived of electricity supplies for a period. The consequence of he deprivation of electricity on each occasion was loss of production and of profit, for which damages are claimed. The legal basis of the actions is, briefly, that the accidents were caused by the defenders' fault and negligence. It is averred that they did not take care to avoid damaging the electric cable, did not ascertain its position and did not give the appropriate information or instructions to the workmen who damaged the cable. The pursuers aver, inter alia, that the defenders knew or ought to have known that it was probable that electric cables would supply parts of the industrial estate and that it was their duty to take reasonable care not to damage such cables and so cause loss and damage to occupiers on the said estate. The loss for which the pursuers claim damages in each action was, as I have said, a financial loss which was not due to any physical damage to property owned or possessed by them."

The purusers pleaded in both actions, inter alia:"(1) The pursuers having sustained loss, injury and damage through the fault and negligence of the defenders, as condescended on, they are entitled to reparation from them therefor."

Both defenders pleaded, inter alia:"The purusers' averments being irrelevant, et separatim lacking in specification, the action should be dismissed." This was plea (2) in the first action, and plea (1) in the second.

On 20th January 1971, after a Procedure Roll discussion, the Lord Ordinary (Kissen) sustained the plea to relevancy and dismissed both actions.

At advising on 15th July 1971,

LORD MIGDALE.The point raised in each of these reclaiming motions is the same, so I propose to deal only with the first case. The pursuers, who are now the reclaimers, have a factory at East Mains Industrial Estate, Broxburn. They produce articles by means of machinery powered by electricity. At 2.50 P.M. on 24th February 1969 the electricity supply failed and it was not restored until 6.26 A.M. on 25th February. For about 15 hours their production stopped. The cause of the stoppage was that a J.B.C. excavator, operated by a servant of the defenders, came into contract with and damaged an underground electric supply cable which had been laid by and was the property of the South of Scotland Electricity Board. The pursuers claim damages from the defenders on the ground that they failed to ascertain the routes of such cables before using the excavator. The place where the

cable was damaged was some 500 yards from the pursuers' property. The pursuers' premises, plant and material were not damaged. Their claim is in respect of financial loss resulting from loss of production during the 15 hours for which their plant was idle and is made up of (a) wages and overhead costs, 335; and (b) loss of profits on lost products, 480a totla of 815

As the pursuers' case is a claim for reparation flowing from a breach of duty, they will have to show that the defenders owed them a duty and were in breach of that duty. The defenders deny that they owed any duty to the pursuers in the circumstances of this case. They also deny they were in breach of duty. So both these questions are open. They do not, however, arise at this stage, for the defenders contend that, even if they were in breach of a duty owed to the pursuers, the damage which they claim to have sustained in not recognised as reparable by the law of Scotland. They contend that there are certain losses in respect of which that law will not sustain a claim. In particular, it will not recognise a claim for financial loss which does not stem from damage to the climants' property.

The pursuers, on the other hand, contend that they have relevantly averred that the defenders owed them a duty to take reasonable care not to damage the electricity supply cable, that the defenders were in breach of that duty because they failed to ascertain the route of the cable and damaged it through the use of their excavator, and that their financial loss was a reasonably foreseeable consequence of the cutting off of electricity. Accordingly the defenders should have had that event in contemplation. Counsel for the pursuers conceded that liability for consequences, even if foreseeable, does not extent to all events which can be causally traced back to the breach of duty, but contended that in this case the pursuers are liable.

While I recognise that it may be difficult to lay down a rule which can be of general application, it is not necessary to do so in this case. The law of Scotland has for over a hundred years refused to accept that a claim for financial loss which does not arise directly from damage to the claimant's property can give rise to a legal claim for damages founded on negligence. That is the conclusion at which the Lord Ordinary has arrived, and I agree with him.

This proposition is supported by three cases. In Allan v. BarclayUNK1 the pursuer claimed damages in respect of the loss of the services of his workman who was injured in a road accident due to the fault of the defender's servant. Lord Kinloch reported the case to the First Division and the claim was disallowed. Lord Kinloch said (at p. 874): "The grand rule on the subject of damages is, that none can be claimed except such as naturally and directly arise out of the wrong done; and such, therefore, as may reasonably be supposed to have been in the view of the wrongdoer." Their Lordships in the Division took the same view, and Lord President M'Neill (at p. 875) said it appeared to be a new proposal in the law of Scotland.

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