Royal Insurance (uk) Limited V. Amec Construction Scotland Limited And Others

JurisdictionScotland
JudgeLord Emslie
Judgment Date09 November 2007
Neutral Citation[2007] CSOH 179
CourtCourt of Session
Date09 November 2007
Published date09 November 2007
Docket NumberA2381/02

OUTER HOUSE, COURT OF SESSION

[2007] CSOH 179

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; Bishops LLP

9 November 2007

Introduction
[1] This is an action of damages against contractors, architects and structural engineers who were involved in major reconstruction works affecting several buildings in central Glasgow between 1987 and 1990.
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] After sundry procedure a debate on the first and third defenders' preliminary pleas took place in the latter part of 2005. In essence, the issues raised in the course of 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, however, 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. From November 2006, however, an 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.

[3] 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."

[4] 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 sustained the defenders' opposed motion, discharged the diet of proof, and in its place re-appointed the cause to the procedure roll on the respective defenders' new preliminary pleas. I have now heard an extensive debate on the disputed issue of the pursuers' title and interest to sue.

The issue for determination
[5] By comparison with previous authorities on title and interest to sue to which I have been referred, the situation here is unusual.
Such earlier cases have commonly involved the holding of relevant rights and interests by independent third parties at or after the time when proceedings were raised, sometimes resulting from a disposal of some sort by pursuers themselves. Remedial attempts pendente processu have thus tended to involve an initial transfer or retrocession in the pursuers' favour, or alternatively reduction of an offending divestiture. For example in Westville Shipping Co Ltd v Abram Steamship Co Ltd 1923 S.C (H.L.) 68, assignations from A to B, and then from B to C, were reduced, with the result that A's original title and interest revived. A striking feature of the present case is, however, that no legal persona other than the pursuers is said to have been involved at any stage. If the pursuers were to be described as A, there is no B or C to be considered here. The pursuers have on averment been the trustees of the bare trust said to have been created in 1992, and all parties agree that it is the trustees of that trust who, since 1992, have had title and interest to sue the defenders under the collateral undertakings which they granted.

[6] Against that background, the real issue for determination comes to be whether, as maintained by the defenders, the absence of any reference to trust capacity in the pursuers' instance is an irremediable defect requiring dismissal of a claim which currently stands at £10 million. By virtue of the recent amendment process the pursuers now have averments of their trustee status in condescendence 2, but according to the defenders it is the instance alone which serves as the definition clause of an action and inter alia identifies the party entitled to obtain decree, do diligence or grant a discharge. In particular, under well-settled rules of practice, one must look to the instance alone to discover any special capacity in which a person sues, and since no special capacity is mentioned in the pursuers' instance here they must be taken to have raised and pursued this action in their own right and not as trustees. The pursuers, on the other hand, dismiss such criticisms as matters of mere pleading practice and "labelling", and stress that as a single and indivisible legal persona they hold, and have at all material times held, the trust title and interest on which the present action is founded. On that basis, it is said, the defenders' new pleas are misconceived and fall to be repelled.

The parties' submissions
[7] In support of their respective positions, the various parties advanced wide-ranging arguments at some length and with considerable reference to judicial and textbook authority.
In the end, however, certain matters were not seriously in dispute. In particular:

a. The parties were ultimately in agreement as to the powers and duties of trustees in general. Trustees always had a duty to take reasonable steps to ingather, protect and preserve the trust estate, and in that connection owed an obligation to account to the trust beneficiaries: Elgin County Road Trs. v Innes 1886 14 R. 48, esp. per LP Inglis at 51; Mackenzie Stuart, Law of Trusts, pp.200-3; Halsbury's Laws of England, 4th ed. (re-issue), vol.48 at para.842. In a question with trust beneficiaries, trustees were not in a position to "shake off" the trust or to act as auctor in rem suam: Stair Memorial Encyclopaedia, vol.24 at paras.170, 171, 186 and 221. In...

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2 cases
  • X Against A, B, C And D
    • United Kingdom
    • Sheriff Court
    • 12 November 2015
    ...of his propositions Mr Stewart referred to a number of authorities; Royal Insurance (UK) Limited v AMEC Construction Scotland Limited 2008 SC 201; Hunter v London Midland and Scottish Railway Company 1938 SLT 598 and Morrison v Morrison 1912 SC 892. In the present case, the first and second......
  • X Against A, B, C And D
    • United Kingdom
    • Sheriff Court
    • 1 February 2016
    ...302-303; Kerr v Mangan 2015 SC 17; Simpson v Downie 2012 Fam LR 121 and Royal Insurance (UK) Limited v Amec Construction Scotland Limited 2008 SC 201. A decree cognitionis causa tantum is declaratory. It is not a decree for payment. Such a decree declares that a debt is due by the deceased.......
1 books & journal articles
  • Smoothing the Rugged Parts of the Passage: Scots Law and its Edinburgh Chair
    • United Kingdom
    • Edinburgh Law Review No. , September 2014
    • 1 September 2014
    ...and consequences of our law of trusts”). For earlier glimpses, see Royal Insurance (UK) Ltd v AMEC Construction Scotland Ltd [2007] CSOH 179, 2008 SC 201 at para 12(b) per Lord Emslie (summarising an argument of counsel); Ted Jacob Engineering Group Inc v Matthew [2014] CSIH 18 at para 90 p......

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