Royal Insurance Uk Limited V. Amec Construction Scotland Ltd And Others

JurisdictionScotland
JudgeLord Emslie
Neutral Citation[2008] CSOH 107
CourtCourt of Session
Docket NumberA2381/02
Published date25 July 2008
Date25 July 2008
Year2008

OUTER HOUSE, COURT OF SESSION

[2008] CSOH 107

A2381/02

OPINION OF LORD EMSLIE

in the cause

ROYAL INSURANCE (UK) LIMITED

Pursuers;

against

AMEC CONSTRUCTION (SCOTLAND) LIMITED and OTHERS

Defenders:

________________

Pursuers: McNeill, Q.C., McLean; DLA

First Defenders: Howie, Q.C., Borland; MacRoberts

Second Defenders: Johnston, Q.C.; Simpson & Marwick

Third Defenders: Doherty, Q.C., MacColl; Brodies

25 July 2008

Introduction
[1] Between 1987 and 1990 several buildings in central Glasgow underwent major reconstruction works involving the respective defenders as contractors, architects and structural engineers.
Significant problems manifested themselves some years later, and the pursuers' claim covers inter alia disturbance and remedial costs relative to one of the buildings of which they became tenants in 1991. The action was raised in September 2002, and is principally founded upon alleged breaches of collateral undertakings which the respective defenders granted in the pursuers' favour relative to the conduct of the reconstruction works. In addition the pursuers assert a contractual right, by virtue of the same collateral undertakings, to be indemnified against the losses which they have sustained.

[2] Since 2002 the action has had a chequered procedural history involving changes of front by the pursuers and, in parallel, a series of disputes arising out of the defenders' determined efforts to have the pursuers' claims dismissed or restricted on legal or procedural grounds. This latest dispute takes the form of an opposed motion by the pursuers for amendment of their instance so as, for the first time, to state the trustee capacity in which they sue, and in order to set that dispute in its proper context it is convenient to begin with a brief outline of the prior procedural history of the case.

[3] Following lengthy adjustment and amendment procedures, during which the pursuers temporarily made averments of loss based on the decision in Alfred McAlpine Construction Ltd v Panatown Ltd, 2001 1 A.C. 518 ("Panatown"), a debate on the first and third defenders' preliminary pleas took place in the latter part of 2005. In essence, the issues raised at that debate concerned the pursuers' entitlement to claim disturbance and remedial costs where multiple relevant invoices had apparently been rendered to and paid by third parties. At that stage, the argument of the first and third defenders was formally directed to the relevancy of the pursuers' pleadings, and the pursuers' fundamental title and interest to pursue the action as a whole were not in issue. Following that debate a proof before answer was allowed, and a 12-week diet was subsequently set down to commence on 25 September 2007.

[4] From November 2006, however, further extensive amendment procedure took place in the course of which the first defenders, followed by the second and third defenders, tabled a formal challenge to the pursuers' title and interest to maintain the action. In particular the first defenders averred the disclosure, in the pursuers' own statutory accounts for the year ended 31 December 1992, of an arrangement whereby

"... With effect from that date the pursuer transferred not merely its whole insurance business and staff to Royal Insurance PLC, but all its assets and liabilities as well."

The relative balance sheet, it was averred, showed that the value of leasehold property held by the pursuer was by the same date reduced to nil, as indeed was that of its other former assets. In these circumstances, the first defenders alleged that the collateral undertakings under which the pursuers bore to sue, and the lease representing their supposed interest in the building, had ceased to be their property prior to the inception of these proceedings. They therefore called on the pursuers to condescend upon the basis on which any title or interest to insist in this action could be supported.

[5] By way of adjustment to their answers in February and June 2007, the pursuers responded in inter alia the following terms:

"Until about 1992, the pursuers carried on business as insurers in the United Kingdom and elsewhere. They did so as part of the Royal Insurance group of companies. Their staff occupied the premises. During the course of 1992, the said group reorganised their businesses. As a result, at the end of 1992, the insurance business carried on in the United Kingdom by the pursuers was transferred to another company within the group, namely Royal Insurance PLC (PLC), although until about 1996 the pursuers continued to conduct some insurance business outwith the United Kingdom. After said transfer at the end of 1992, the staff previously employed by the pursuers at the premises became employees of other Royal Insurance group companies. The pursuers employed no staff themselves in the United Kingdom from the end of 1992. The legal framework for the said business transfer was provided by an Agreement between the pursuers and PLC dated 31 December 1992. The Agreement is governed by English law. In terms thereof as construed under English law, the pursuers declared themselves to be bare trustees of the assets that they held, insofar as said assets were not required by PLC to be conveyed to them, for the benefit of PLC. The pursuers' interests in the said lease and in the undertakings ... have not been required to be conveyed to PLC and are accordingly held by the pursuers as bare trustees under an English trust for the benefit of PLC. As such, the pursuers retain title and interest to pursue this action. The pursuers remained and remain as tenants under the said lease, subject to the said tenants' obligations. They provided accommodation for employees of other Royal Insurance group companies in the premises on an informal basis. The pursuers remained and remain liable to the landlords for payment of the rent and related payments due under the said lease, but have been relieved of those charges by other Royal Insurance group companies in consideration of the fact that group employees were occupying the premises."

[6] When the Closed Record was finally amended in June 2007, all three defenders had preliminary pleas and supporting averments to the effect that, on the pursuers' own pleadings taken pro veritate, the latter had no title or interest to pursue the action in their own right. The critical assets and liabilities were now vested in the pursuers in a different legal capacity, namely that of trustees, and as the instance confirmed this was a capacity in which they did not sue. In light of that development it was necessary to consider whether the pending proof should still proceed or whether, as the defenders maintained, the new challenge to the pursuers' title and interest was sufficiently important to be the subject of a fresh procedure roll debate instead. By interlocutor of 6 July 2007 I granted the defenders' opposed motion for discharge of the diet of proof, and in its place re-appointed the cause to the procedure roll on the respective defenders' new preliminary pleas.

[7] Thereafter, for the reasons more fully set out in my opinion dated 9 November 2007, I rejected the defenders' challenge to the pursuers' title and interest to pursue this action notwithstanding the absence of any reference in the instance to the trustee capacity in which their claim was said to be advanced. Although the action was raised in September 2002, ostensibly by the pursuers in their own right as an individual corporate entity, it was only between late 2005 and mid-2007 that it emerged (and was belatedly averred) that in fact the relevant cause of action had all along been held by the pursuers as bare trustees under an English trust pursuant to the corporate restructuring of the Royal Insurance group in 1992. According to the defenders, this revelation was fatal to an action commenced on the wrong footing; the pursuers as an individual corporate entity lacked title and interest to sue when the action was raised, and could not competently cure that lack pendente processu; and their non-observance of the established rule whereby a pursuer's special capacity must be stated in the instance of a summons was a further ground on which the defenders' pleas should be sustained. In my judgment, however, the pursuers' title and interest to sue could not sensibly be impugned where they were the only legal persona involved at any stage; where they had throughout held all requisite capacities for the purposes of this action; where no relevant capacity, title or interest had ever been held by any third party; and where the focus of the defenders' complaint might thus realistically be regarded as technical, and as a matter of form, in respect that the pursuers did not initially design themselves as trustees in the instance of the summons.

[8] Having reached that conclusion on the substantive issue of the pursuers' title and interest to sue, I went on to hold that the court could not simply ignore the pursuers' omission to design themselves properly in the instance, and that their non-observance of the established rule in that regard rendered the summons defective in form and thereby incompetent. As a matter of proper practice, in my view, the action could not be allowed to proceed while the instance remained as it was.

The present dispute
[9] In response to the foregoing decision, the pursuers now seek to amend the Record by adding at the end of their own instance the words "
... as trustees for Royal Insurance plc conform to an Agreement between Royal Insurance plc and the pursuers dated 31 December 1992". They maintain that these additional words merely supplement their designation, curing a technical want of form, and that there could be no valid bar to amendment along such lines.. By contrast the defenders characterise the proposed amendment as an illegitimate attempt to cure, if not a fundamental lack of title or interest to sue, then certainly a...

To continue reading

Request your trial
1 cases
  • Shetland Nhs Board V. Brian Kelly
    • United Kingdom
    • Court of Session
    • 15 April 2011
    ...the parties and should not be allowed on that basis either. [24] I was referred to Royal Insurance (UK Ltd v Amec Construction (Sc) Ltd 2008 CSOH 107, at paragraph 10 and Macphail v Lanarkshire CC 1951 SC 301. These cases emphasise that the question whether to allow or refuse an amendment i......

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT