Royal Insurance (uk) Limited V. Amec Construction Scotland Limited And Others
| Jurisdiction | Scotland |
| Judge | Lord Emslie |
| Neutral Citation | [2005] CSOH 162 |
| Court | Court of Session |
| Published date | 25 November 2005 |
| Year | 2005 |
| Date | 25 November 2005 |
| Docket Number | A2381/02 |
| OUTER HOUSE, COURT OF SESSION [2005] CSOH 162 | |
| 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
Third Defenders: MacColl; Bishops
25 November 2005
Introduction
[1]In this action the pursuers, who are tenants of a substantial office building in Glasgow, claim sums totalling approximately £10 million from three sets of defenders, namely the main contractors, architects and engineers who were involved in a major redevelopment of the building in the late 1980s. The owners of the building at that time, and the employers for the purposes of the redevelopment works, were the Scottish Provident Institution. However the pursuers, as prospective purchasers of the building after redevelopment, sought and obtained collateral warranties from all three defenders in the form of broadly similar Deeds of Undertaking. When the works were completed the pursuers duly purchased the building, but they later sold it on to another company, Sterling Estates Limited, who leased it back to them on a full repairing and insuring basis.
[2]As regards the first and third defenders, at whose instance a procedure roll debate has now taken place before me, the pursuers' claim is based on (i) alleged breaches of warranty and (ii) associated obligations of indemnity, all by reference to these defenders' respective Deeds of Undertaking. According to the pursuers, seriously unsuitable fill material was used in the course of the redevelopment works which, over time, has expanded in contact with groundwater and caused severe damage to the lower parts of the building. Necessary investigations have been followed by extensive remedial works, coinciding with the relocation of all of the pursuers' staff to different premises. In essence, the pursuers' claim comprises the cost of these measures.
[3]The parties' detailed pleadings run to over 120 pages, but for present purposes the issue can be quite shortly stated. Throughout the Closed Record the pursuers are repeatedly identified as the party directly responsible for repair, renewal, rebuilding and reinstatement under the lease; as the party by whom all investigations and remedial measures were instituted following the emergence of damage; as the party whose staff were relocated while the remedial works were carried out; and as the party whose various losses in connection with the damage to the building are now sought to be recovered from the defenders. Averments along such lines appear in most of the articles of condescendence, especially article 9 which concerns the quantum of the claim, and to a certain degree the first defenders' admissions and averments follow suit. However, after listing multiple quantified heads of claim between pages 89 and 91 of the Closed Record, the pursuers go on to aver as follows:
"In some cases said costs have been initially invoiced to, and payment has been initially made by, other companies within the pursuers' group of companies or agents acting for the pursuers, namely said D J Orchard & Associates. A Schedule identifying said companies and agents and the categories of costs they have respectively met on behalf of the pursuers to 23 March 2005 is produced, referred to for its terms and held as incorporated herein brevitatis causa. Said Schedule will be updated as the remedial works are carried forward. However, the pursuers will have to reimburse all their said group companies and agents in relation to all costs incurred on their behalf arising from the defenders' said breaches. They will have to do so because said costs are being incurred on the pursuers' behalf to fulfil the liabilities and obligations of the pursuers under and connected with the pursuers' said Lease, and responsibility for said costs ultimately lies therefore with the pursuers. All said losses have flowed directly and in the ordinary course of events from the said breaches of said warranties. They were in any event reasonably foreseeable at the time when the said warranties were given as being likely to result from the said breaches."
[4]The relative Schedule (No.6/30 of Process) sets out 21 numbered "categories of costs", which appear to coincide with most, but not all, of the averred heads of claim. Opposite each category in the Schedule is a box identifying the party by whom the relevant cost has been met, and the significant feature for present purposes is that only box 7 (relative to the remedial works undertaken by the main contractors "Skanska") contains any reference to the pursuers or to their alleged agents. Almost all of the parties names in the other boxes appear to be companies within the group to which the pursuers belong.
Submissions for the defenders
[5]Against that background, senior counsel for the first defenders maintained that, as illustrated by cases such as Edgar v Lord Advocate 1965 SC 67 and P&O Developments v Guy's & St. Thomas' Hospitals Trust 1999 BLR 3, and confirmed by the House of Lords in Linden Gardens Trust Ltd v Lenesta Sludge Disposals Ltd 1994 1 AC 85 and Alfred McAlpine Construction Ltd v Panatown Ltd 2001 1 AC 518 (esp. per Lord Browne Wilkinson in the former case at p.114-5, and Lord Clyde in the latter at pp.532 and 536), the general rule of the common law was that a wrongdoer could only be held liable in respect of losses actually sustained by the pursuer himself. Accordingly, if costs were voluntarily met, or services provided, by third parties to the pursuer's advantage, such costs or services would prima facie cease to be claimable by the pursuer from the wrongdoer concerned. Only if a pursuer was in some way legally liable to pay or reimburse a third party "benefactor" could the relevant loss be said to remain with him as a legitimate head of claim.
[6]In the circumstances of the present case, counsel submitted, the pursuers' averred claims for breach of warranty were fundamentally irrelevant, in that the payments allegedly made by third parties were not plainly and unambiguously averred to be the subject of a legal liability of reimbursement on the part of the pursuers. The pursuers could maintain no valid claim against the defenders for alleged losses of which they had effectively been relieved by the voluntary intervention of others. A fortiori, in the context of the claimed indemnity, the pursuers had failed to aver themselves into the protection of the term "liabilities". In these respects, the pursuers had no answer to the first defenders' preliminary plea, and there were no other principles of law behind which they could now shelter. In particular, the well-known "black hole" authorities on which the pursuers sought to found were readily distinguishable on their facts, in respect that they were largely concerned with situations in which the subject matter of a claim, such as damaged property, was transferred into the ownership of a third party. Accordingly they could not assist the pursuers in the circumstances of this case, where no such transfer was involved and where, in any event, the first defenders' Deed of Undertaking expressly limited the scope of their potential liability to two parties. Moreover, the presumption against donation could not relieve the pursuers of the onus of averring relevant losses, and the obiter remarks of Lord Griffiths in Linden Gardens and Panatown could not readily be reconciled with the established general rule.
[7]In counsel's submission, the real problem for the pursuers was that although they had tabled averments at p.92 asserting that they would "... require to reimburse all their said group companies and agents ...", (apparently with the intention of bringing themselves within the general rule discussed above), the explanation which immediately followed was an obvious non sequitur and called into question the substance and validity of the primary assertion. Whatever might be the nature and extent of the pursuers' obligations under the lease, their existence could in no way define the relationships between the pursuers and the various parties by whom different "categories of costs" had been met. Over and above that, the dates on which alleged obligations to reimburse arose were not stated, and in counsel's submission this was critical: unless a given obligation of reimbursement was in place before any relevant expenditure by a third party, the claim was extinguished and could not be revived. To make matters worse, the whole circumstances in which the relevant invoicing and payment occurred were left to speculation; box 7 of the Schedule introduced further confusion by inexplicably including the pursuers' alleged agents as a paying party in their own right; and in six other boxes the pursuers' insurers appeared as paying parties. These features further called into question the existence and validity of any alleged obligation to reimburse. While admittedly junior counsel for the pursuers had, in the course of the debate, volunteered suggestions as to...
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Royal Insurance (uk) Limited V. Amec Construction Scotland Limited And Others
...specification, on 1, 2 and 3 November 2005. At advising, on 25 November 2005, the Lord Ordinary (Emslie) allowed a proof before answer ([2005] CSOH 162). Following an extensive amendment procedure, the defenders sought recall of the allowance of the proof before answer and to have the case ......