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Scottish Court of Session Decisions |
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You are here: BAILII >> Databases >> Scottish Court of Session Decisions >> Brydon & Anor (t/a Peterson's Crane Hire) v FE Beaumont Ltd [2004] ScotCS 265 (16 December 2004) URL: http://www.bailii.org/scot/cases/ScotCS/2004/265.html Cite as: [2004] ScotCS 265 |
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OUTER HOUSE, COURT OF SESSION |
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CA162/03
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OPINION OF LORD CLARKE in the cause N. BRYDON, R. PETERSON, T/A PETERSON'S CRANE HIRE Pursuer; against F. E. BEAUFONT BEAUMONT LTD Defenders:
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Pursuer: Lindhorst; Anderson Partnership
Defenders: Robertson; Biggart Baillie
16 December 2004
Introduction
[1] In this commercial action the pursuer sues the defenders for payment of £118,595 together with interest thereon. He does so principally on the basis that he is entitled to recover this sum from the defenders, has as an indemnity due to him in respect of a sum due under the a contract entered into by the pursuer on behalf of the defenders. The pursuer has an alternative basis for his claim to the effect that if he was not acting as an agent for the defenders, in respect of the contract in question, but entered the contract with the defenders as a principal, then, the defenders were in breach of contract with them him for and the sum sued for is a a reasonable estimate of the loss suffered by the pursuer as a result of that breach of contract.The Background to the Dispute
[2] The circumstances giving rise to the claim are as follows. The pursuer is in the business of plant-hiring. The defenders manufacture, erect and demolish chimneys. In December 1998 the defenders required to hire a crane for the purpose of their business. Through their Mr Hancock, they contacted the pursuer about this. A suitable crane was obtained by the pursuer from Lerwick Port Authority. The crane was supplied to the defenders, along with a driver and operator, who was an employee of the Port Authority. On 26 22 January 1999, while the crane was being used for the purposes of the defenders, but was being operated by the driver supplied by the Port Authority, the crane toppled backwards resulting in it being damaged. [3] The Port Authority raised a commercial action against the present pursuer for the loss and damages sustained by them as a result of the damage to the crane. They sued the present pursuer on the basis of breach of contract. The adjusted summons in that action is 6/7 of process. The adjusted defences are 6/10 of process. The present pursuer tendered £95,000 in that action. The tender was accepted. In the present action the pursuer seeks to recover the sum tendered, together with the expenses he claims he required to pay the Port Authority. [4] In the earlier action, the Port Authority sued the present pursuer relying on a set of general conditions of hire which they claimed governed the contract between themselves and the present pursuer. In particular, they relied on condition 3 thereof which was to the following effect:"The Hirer will be responsible for the safe keeping of the plant, its use in a workmanlike manner and its return to the Owner at the termination of the hire in equal condition (fair wear and tear excepted)".
They relied, also, on condition 4 on of the said conditions which was to the following effect:
"When an operator is provided with the plant, he shall work under the supervision and instructions of the Hirer and his representative and, for the duration of the hire, the operator shall be deemed to have been a servant of the Hirer, who shall be responsible for his actions (including his negligence whether by way of commission or omission) as if he were in the Hirer's direct employ and the Hirer shall free and relieve the Owner of and from the consequences of all liability arising therefrom. The Hirer shall not permit any other person to operate the plant without the Owner's prior consent in writing".
The Port Authority averred that, while those general conditions of hire were not expressly incorporated into the contract of hire of the crane in question, they were incorporated into the contract by virtue of a course of dealing between themselves and the pursuer. The Port Authority also averred that the pursuer himself carried out his business applying general conditions of hire which had provisions to the like effect as those just referred to.
[5] In the present proceeding, the pursuer avers, inter alia, in article 6 of condescendence"A Minute of Tender was lodged on behalf of the pursuer in the sum of £95,000, in accordance with legal advice given to the pursuer by his agents ...".
As previously noted, the pursuer's principal position in the present proceedings is that when he entered into the contract with the Port Authority for the hire of the crane, he was doing so as an agent for the defenders who were unnamed principals. The pursuer's averments in support of the existence of a relationship of agency between him and the defenders are to be found in article 2 of condescendence. They are as follows:
"On or about 10 December 1998 the pursuer received an enquiry from Mr John Hancock of the defenders in relation to the proposed hire by them of the pursuer's 25 tonne crane ... Mr Hancock advised on 10 December 1998 that the crane was required in connection with works to be carried out by Beaumfonts at an incinerator in Lerwick. Mr Hancock was at all times acting by and with the authority of the defenders. The pursuer indicated that for such a job the defenders should obtain the use of the 90 tonne crane ('the crane') available from the Port. On or about 10 December the pursuer telephoned the Port and enquired regarding the availability of the crane and rates therefor. In the course of his discussions he spoke with Christopher King and John Anderson of the Port. He told Mr Anderson that he was enquiring regarding the crane on behalf of a third party. The details regarding the availability and cost of the crane which was stated to be £55 per hour were communicated to Mr Hancock by fax on 10 December 1998. He confirmed that the defenders would be requiring the crane and asked for details of it and its working heights/radius and loads. The pursuer obtained copies of the radius sheets and details for the crane from the Port and faxed these to Mr Hancock. Mr Hancock thereafter by telephone instructed the pursuer to deal hire the crane together with the driver thereof from the pPort for 15 and 16 December on behalf of the defenders. In accordance with the defenders' instructions, the pursuer, acting as their agent, telephoned Mr King and entered into a contract with the Port for hire of the crane ('the Contract'). In so doing, the pursuer acting acted as agent for a disclosed but unnamed principal, namely the defenders."
"We have available 25 tonne crane with 34 metres of boom and man cage at £32/hour. If however this machine cannot reach theirre pintey nintey (sic) tonne machine available from local harbour at £55/hour".
The defenders' Mr Hancock responded to that fax by fax of the same date, 7/2 of process, which is in the following terms:
"We would confirm that we require your 90 tonne crane complete with Manbasket for two days next week i.e. 15 and 16 January December at the Incinerator Plant standing approximately 12.5m from the building giving a 15m radius. Height u/h approx. 50m.
Hire cost at £55/hr.
We would require the crane at 8 a.m.
Could you sent send details of the above crane. Working heights/radius/loads." (emphasis added)."
On the month of11 December the defenders faxed the pursuer in the following terms (7/3 of process):.
" Could you send details of the 90 tonne crane By Return as we have to add the details to our Method Statement. Prior to work on site."
A further document, 7/6 of process, dated 11 December 1998 was sent by the defenders to the pursuer. It is headed "purchase order" it contains the words "telephone confirmation". I it states, inter alia,
"to hire of your 90 tonne crane complete with man basket for two days on 15 and 16 December 1998. Site: Incinerator Plant Lerwick: £55 per hour, crane ready for work 8 a.m." (emphasis added)
On 14 December 1998 the pursuer faxed the defenders' Mr Hancock (7/8 of process) in the following terms:
"John there is a very bad weather forecast for this area all week. I think you should delay your job!!"
It appears that the defenders accepted the pursuer's recommendation to delay the work in question. On 13 January 1999 the defenders faxed the pursuer (7/9 of process) in the following terms:
"With regard to the work that had to be cancelled i.e. the demolition of the incinerator chimney at the Lerwick Waste to Energy Centre, we can now advise our customer wishes to put this work in hand again.
Accordingly, if it is available, we would like to book your 90 T crane to commence work on site next Tuesday, 19 January at 8 a.m.
It is anticipated we require the crane on site for a total of 3 days and we appreciate that the crane may not be available on a Thursday, i.e., we would have to use it on Tuesday, Wednesday and Friday.
All work to be carried out against the original Order Number we supplied and on site you should Laise liaise with our subcontractors who are providing the labour, namely Horizon Specialist Contracting Ltd.
If the crane is not available or if there are any other problems, please contact the undersigned immediately.
As requested last time, we need a man basket with this crane". (emphasis added).
On the footing that the pursuer was acting as agent for the defenders, in obtaining the hire of the crane in question from the Port, the pursuer's position, as I understood it, was that the contract of hire incorporated the Port's general conditions of hire.
In article 3 of condescendence, the pursuer then proceeds to aver as follows:
"The Port was the owner and the defenders the hirer for the purposes of the conditions. The crane driver provided with the crane was effectively in the employ of the defenders at the time of the accident. The crane was not, in the course of the hire, kept safe, et separatim, used in a workmanlike manner, et separatim, at the termination thereof, returned to the Port in an equal condition to that in which it had been supplied. The defenders were thereby in breach of the contract and liable to the Port in damages".
The pursuer then proceeds to make detailed averments regarding the incorporation of the Port's standard conditions into the contract of hire by reason of a course of dealing, or alternatively, by reason of custom of trade. Both of these concepts, as far as the pleadings go, appear to be employed by the pursuer, to base a case that the Port's conditions of hire were binding on the defenders and that, accordingly, the pursuer, as agent, having paid the Port damages for breach of the relevant conditions, he is entitled to be indemnified therefor by the defenders.
[7] The matter came before me for discussion at debate upon the defenders' preliminary plea. In the event, in the discussion before me, counsel for the pursuer's position was that the pursuer did not rely on any course of dealing argument but relied on custom of trade as giving the pursuer the right to indemnification, a right which he seeks to enforce in the present action. As I understood the position, the averments relied upon by the pursuer in this respect are as follows. In article 3 of condescendence, among averments regarding course of dealing, there appear the following averments"The defenders could not have hired the crane or its equivalent in the whole circumstances condescended upon without agreeing to such a condition being incorporated in the contract or an obligation of like effect being implied therein in accordance with the certain, uniform, reasonable and notorious custom and practice in the plant hire industry. At no point did the defenders suggest that they did not wish to be subject to any standard conditions nor did they seek to contract out of any implied term."
The remaining averments in article 3, however, then, appear to revert to a case based on a course of dealing between the pursuer and the Port which, as I have previously indicated, counsel for the pursuer disclaimed at the debate before me as, in itself, providing a basis for the present claim against the defenders. Custom of trade is, however, revisited by the pursuer in article 5 of condescendence. Article 5 contains the pursuer's fallback position, as it were, and provides that, esto the pursuer was not acting as an agent for the defenders, in respect of the hire of the crane, and that the parties were acting both as principals then,
"the said term was an implied term of the contract entered into between the pursuer and the defenders in accordance with the certain, uniform, reasonable and notorious custom and practice in the plant hire industry. Implication of the said term is reasonable in all the circumstances. Reference is hereby made to the foregoing condescendence. The defenders are accordingly on this hypothesis in any event liable as hirer to the pursuer for loss and damages sustained by him as a result of the damage to the crane"
The averments contained in article 5 of condescendence, it seems, are there to provide support for the pursuer's third plea-in-law which is in the following terms:
"3. Esto (which is denied) the pursuer having entered as principal into a contract with the defenders, having sustained loss and damage through the defenders' breach of contract as condescended upon is entitled to reparation therefor."
The Defenders' Submissions and discussion thereof
[8] In seeking dismissal of the action at the debate before me, counsel for the defenders, in the first place, submitted that the pursuer's case, insofar as it relied on a relationship of agent and principal existing between the parties, was irrelevant and lacking in specification. In the first place, such a case was inconsistent with the position which the pursuer had adopted in the action at the instance of the Port. In that action the Port sued the pursuer as a principal. In his defences, 6/10 of process, the pursuer did not claim that he was acting as an agent for the present defenders. The present defenders were not convened as a party to the previous proceedings. The pursuer's averments in defence, in the other proceedings, were only consistent with his considering that he was the hirer of the plant in question from the Port. In any event, the pursuer's case of agency was made simply as an assertion and was not supported by sufficient relevant and specific averments. The pursuer's averments, in article 2, were consistent with him simply being someone who was in the business of hiring out plant, obtaining the particular piece of plant from the Port in order to perform a contract of hire with the defenders. There was nothing to suggest that the Port were ever informed by the pursuer that he was acting as agent for a third party. The case based on agency should be held to be irrelevant. The alternative case based on the pursuer acting as principal depended on custom of trade to enable the pursuer to succeed. on In this case, it was submitted, it was necessary for him to aver, and establish a custom of trade, which meant that as a matter of contract, the defenders had agreed to indemnify the pursuer for any liability he, as principal, might have under a contract with a third party. Counsel for the pursuer referred me to a number of authorities relating to custom of trade. In the first place he scited Guthy Duthie & Co v Merson & Gerry 1947 SS.C..43, in which Lord President Normand at pages pps. 49 and 50 indicated that an the effect of a custom of trade being established is that it applies to all contracts of a particular type in the absence of express provision to the contrary. Counsel also referred to the case of Laurie v Denny's Trustee (1853) 15D 404 and the case of "Strathlorne" Steamship Co v Baird & Son 1916 SC (HL) 134. In the last mentioned case, the Lord Chancellor, at pages pps.135 to 135-136 said this:"In order that a custom or, to use abording a more exact that phrase, a commercial usage, may be binding upon parties to a contract, it is essential that it should be certain, and that it should be uniformed, that it should be reasonable, and that it should be notorious. To use the words of Sir George Jessel M. R. in the case of Nelson v Dahl (1879) 12 CHh. D 568, at page 575 'It must be so notorious that everybody in the trade enters into a contract with that usage as an implied term. You It must be uniform as well as reasonable, and must have quite as much certainty as the written contract itself'". (emphasis added).
In that same case Lord Shaw of Dunfermline at pages 140 to 141 said:
"I think that the distinction should be made plain between a settled and established practice in the general sense of the mere occurrence of instances (many of which may have sprung from express contract), and a settled and established practice which amounts to the acceptance of a binding obligation of a custom apart from particular bargain".
Reference was also made by counsel for the defenders to the cases of Clacevich v Hutchison (1887) 15R 11 and Bruce v Smith (1890) 17R 1000. The submission on behalf of the defenders, was that the pursuer had not set out averments sufficient to support the case that, by virtue of a custom of trade, as that concept is discussed on the findand defined in the authorities, there was a term, implied into the contract between the pursuer and the defenders, that the defenders would indemnify the pursuer for the liability he might have occurred incurred in respect of the contract which he had entered into with the third party. Counsel for the defenders then referred to the averments of the pursuer in article 4 of condescendence and to the pleadings in the previous action. Counsel contended that the pleadings in the previous action were only consistent with the pursuer's position in those proceedings being that he had contracted with the Port as a principal and that the Port's standard terms and conditions were not incorporated into the contract between him and the Port. The inconsistency between that position and the position now being adopted by the pursuer in the present proceedings remained unexplained.
[9] What appeared to be a somewhat faint attemptattack was made by counsel for the defenders on the averments of the pursuer regarding the sum which the pursuer paid in settlement over reportsof the Port's claimed against him. In particular, it was asked, why did the pursuer allow the judicial expenses to run up to the eve of the a proof without having convened the present defenders, if the position of the pursuer had always been as it is now stated to be.The Pursuers' Submissions in reply and discussion thereof
[10] In opening his reply, counsel for the pursuer confirmed that in both his principal case, based on agency, and his esto case based on the parties having contracted with each other, as principals, in respect of the hire of the crane, his claim was based not on any express term of any contract between the parties, nor on any course of dealing, but on a custom of trade which implied a term into the contract. Counsel referred me, in the first place, to Bell's Commentaries (7th Editioned.) at page p. 457 para 6, where it is stated:"All contracts made in general terms, in the ordinary course of trade, are presumed to incorporate the usage of and custom of the trade to which they relate. The presumption is, that the parties no know such usages, and do not intend to exclude them."
Counsel submitted that, on his averments, the pursuer's position, in his dealings, on behalf of the defenders, was that of a gratuities gratuitous agent. In this connection reference was made to Bell's pPrinciples in cChapter vi VI para 218 for where the learner learned writer states:
"Gratuitous Mandate is constituted by consent and binds the mandatary who accepts (a) to execute the order express or replyimplied, to account for his intromissions, and to restore what is entrusted in him; empowers him to do all that is necessary to fulfil the order; entitles him to reimbursement of his advances or outlays, and relief from his engagements, but gives him no right to remuneration; and, leaving the property in risk of the things entrusted to him with the mandant, it entitles the mandant to revoke the mandate raebus integris".
The pursuer, it was said, had averred sufficient to allow him to establish a relationship between himself and the defenders, as just described, with all the legal consequences thereof. The pursuer was acting, it was submitted, on behalf of a disclosed but un-named principal, the defenders. The legal consequences of that being so with regard to the position of the third party was described by Bell in his pPrinciples cChapter viVI at para 224.
[11] Counsel for the pursuer then went on to submit that the extent of the authority of an agent, like the pursuer, was dictated by customer custom of trade. That particular submission was, in the first place, made under reference to Gloag on Contract (Second Edition2nd ed.) page p. 126 and ff. I was also referred to British Crane Hire v Ipswich Plant Hire Limited (1975) 1 QB 303. That last named case, although not without interest for the present case, since it deals with standard terms and conditions in relation to plant hire, to similar effect as those with which the present case is connected, was not (and I think this was accepted by counsel for the pursuer) a case involving custom of trade but was more concerned with terms being implied into contracts by what was described as "a common understanding between the parties in question in relation to the contract in question". At page 311 Lord Denning MR, said:"... it is clear that both parties knew quite well that conditions were habitually imposed by the supplier of these machines; and both parties knew the substance of those conditions. In particular that if the crane sank in soft ground it was the hirer's job to recover it: and that there was an indemnity clause. In these circumstances, I think the conditions on the form should be regarded as incorporated into the contract. I would not put it so much on the course of dealing, but rather on the common understanding which is to be derived from the conduct of the parties, namely, that the hiring was to be on the terms of plaintiffs' usual conditions. As Lord Reid said in McCutcheon v David MacBrayne Ltd. (1964) 1 WLR 125, 128 quoting from the Scottish text book, Gloag on Contract 2nd ed (1929), p7:
''"The judicial task is not to discover the actual intentions of each party; it is to decide what each was reasonably entitled to conclude from the attitude from of the other'". It seems to me that, in view of the relationship of the parties, when the defendants requested this crane urgently and it was supplied at once - before the usual form was received - the plaintiffs were entitled to conclude that the defendants were accepting it on the terms of the plaintiffs' own printed conditions - which would follow in a day or two. It is just as if the plaintiffs had said: "We will supply it on our usual conditions", and the defendants said "Of course, that is quite understood"."
It is, it seems to me, crucial to one's understanding of that case to have regard to certain material facts which were set out in at page 310 of the Master of the Roll's jJudgement in the following terms:;
"But here the parties were both in the trade and were of equal bargaining power. Each was a firm of plant hirers who hired out plant. The defendants themselves knew that firms in the plant-hiring trade always imposed conditions in regard to the hiring of plant: and that their conditions were on much the same lines. The defendants' manager, Mr Turner (who knew the crane), was asked about it. He agreed that he had seen these conditions or similar ones in regard to the hiring of plant. He said that most of them were, to one extent or another, variations of a form which he called 'the Contractors' Plant Association fForm'. The defendants themselves (when they let out cranes) use the conditions of that form. The conditions on the plaintiffs' form were in rather different words but nevertheless to much the same effect".
In the present case there are no averments of similar facts in relation to the position of the pursuer on the one hand and the defenders on the other. mostMost importantly the defenders themselves were not a firm who hired out plant and who used, in doing so, conditions of contract similar to those involved ofin the Port. In the event, counsel for the pursuer said that he relied on the foregoing authority, to show what the position between the pursuer and the Port was. It is, however, in my judgement, something of a leap to say that because of the relationship between those parties, a third party, like the defenders, who was not a member of the particular trade in question, is to be held bound, by custom of trade, as between himself and one of those parties, by a term which arises from the relationship of the other parties. The question remains whether the pursuer has made averments which that provide any legitimate basis for that leap to be made. Counsel for the pursuer made reference to the Scottish cases of Robert Barry & Co. v Doyle 1998 SLT 1238 and William Teacher & Sons Ltd v Bell Lyons Lines Ltd 1991 SLT 876 which, he recognised, were not custom of trade cases but were rather following the approach applied in the British Hire Corporation case. Ultimately, in relation to the pursuer's case based on agency, counsel for the pursuer sought to justify the leap I have just described above in the following submissions. The pursuer had averred a relevant case that, as a gratuitous mandatory, he was entitled to be reimbursed for the payment made to Port to settle the action raised against him in respect that the contract he had entered into with the Port which incorporated the Port's conditions of hire which were not unusual in contracts for the hire of plant. The defenders, it was said, knew or ought to have known that these were terms which "they were likely to be bound to" and made no effort to instruct the pursuer to contract in on any other basis.
[12] Counsel for the pursuer, were while accepting that a gratuitous mandatory could not, automatically, make this his principal liable for everything that the mandatory had engaged for with a third party, in this case while it was accepted the obligation to indemnify the Port had not been expressly brought to the defenders' attention at the time of the contract being entered into by the pursuer, nevertheless, by reason of custom of the trade, the pursuer had the right to be relieved of the obligations on him to reimburse the third party, the Port. [13] Turning to deal with his esto case, counsel for the pursuer reiterated that, if his agency case fell, and the parties were to be held as dealing with each other as principals, then his claim against the defenders relied, once again, entirely on the application of the law in relation of to custom to of trade and, in particular, that a custom of trade had to be implied into the contract between the parties which resulted in the right of relief which he now sought to enforce. It should be noted, however, that his esto case, as a matter of pleading, is not so predicated when one has regard to the relevant plea-in-law, which is based on a breach of contract by the defenders giving rise to a claim for damages. Counsel for the pursuer referred, in support of his esto case, to the averments in in article 3 of condescendence, which he said voted supported a case of the universality of the custom of such conditions being incorporated into contracts for the hire of plant and the defenders' knowledge thereof. I was then referred by counsel to a number of authorities including the case of Duthie cited above and Hogarth & Sons v Leith Cottons Sea Oil& Co 1909 SC 955. In the last mentioned case it was held that for a custom of trade to have legal effect it ought to be uniform, universal and notorious, definite and certain and not inconsistent with the expressed terms of the contract in to which it was said to be incorporated. Reference was also made to Sinclair v McBeath (1868) 7 M 273 and Steel Co of Scotland v Tancred, Arrol & Co (1887) 15 R 215. The last mentioned case was, in particular, referred to for the citation by the Lord Justice Clerk, at page 222, of a passage from Dickson on eEvidence which refers to "customary conditions which the parties may be presumed to have passably tacitly agreed to". The last authority referred to by counsel for the pursuer, in this chapter of his submissions, was Wilkie v Scottish Aviation Ltd 1956 SC 198. That case, it has to be noted, was concerned with the rate of remuneration which a chartered surveyor was entitled to charge for acting as a valuer, adviser and witness in arbitration proceedings, where there had been no express agreement about his remuneration. The court held that, in such a situation, the surveyor was entitled to remuneration at "the customary rate" if he could prove the existence of a custom which was reasonable, certain and notorious. Lord President Clyde, in that case, at page 205 said this:"To establish a customer, however, of this kind, the evidence must show that it is reasonable, certain and notorious. As Lord Alverstone, CJ said in Devonald v Rosser & Sons (1906) 2 KB 728 at p.741, "
wwith regard to the question of the alleged custom, I may say that I have always understood that a custom cannot be read into a written contract unless, to use the language of Lord Denman, CJ in REGReg.. v Stoke-Uupon-Trent, it is '"so ununiversal that no workman could be supposed to have entered into"' v "the 'service without looking to it as part of the contract"" To establish a custom it is not essential to prove that the defenders actually knew of it. It is enough if it was so well recognised that it ought to have been known to both parties - Lord Forres v Scottish Flax Co (1943) 2 All ER 366, per Scott, LJ, at p.368.:
There is, after- all, nothing inequitable in such a requirement.
"If a person employs a professional man to perform some service and makes no enquiry as to the basis upon which the professional man is to be remunerated for this service, it is not unreasonable that he should pay for the service on the usual and customary basis. It is not open to him to complain that he is unaware of it, if he has never even taken the trouble to ascertain it before engaging another to do work for him without specifying a precise fee".
As I understood him, counsel for the pursuer, relied on that passage principally for the proposition that if the custom was established to exist, then it could be held to be applied in a particular contract, even though one of the partyies to the contract was unaware of it. It seems to me, however, that that decision, in any event, has very much to be seen in the context of the facts of the particular case, relating, as it did, to the rate of remuneration which the pursuer was entitled to be paid at, work having been done by him, and, in any event, the pursuer still had to get over the initial hurdle of being able to show what the custom was and that it was reasonable, certain and notorious.
[14] Counsel for the pursuer then turned to address the criticism made of the pursuer's averments re quantum in article 6 of condescendence. The pursuer, it was submitted, had set out, in averment, more than was necessary to give notice of a relevant basis of claim. The "scenario" as it was put, was one of a global settlement in the other action, when legal advice had been given, to the present pursuer, that, on the balance of probabilities, the pursuers in the other action would succeed. It was averred that the settlement terms in that state of affairs, were reasonable. That was all that was required in a case like the present. Counsel referred to the case Caledonian North Sea Ltd v London Bridge Engineering Ltd 2000 SLT 1123 and particularly the opinions of Lord President Rodger at page 1160 D-E, Lord Sutherland at page 1179 D-E, Lord Coulsfield at page 1209 B-C and Lord Gill at page 1217 B-C. Applying the approach adopted by their Lordships, in that case, all the pursuer had to do, it was submitted, was to aver that the sum sued for was reasonable. It was, of course, open to the defenders to challenge the reasonableness of the sum paid at any proof. I was also referred to the case of Cheltenham & Gloucester Plc v Sun Alliance & London Insurance Plc 2001 SC 965 and the opinion of Lord President Rodger, in that case, at page 974. The Lord President cited, with apparent approval, a passage from the judgement of Bingham J (as he then was) in the case of Ben Shipping Co. (PTE) Ltd v An Bord Bainne, The Joyce (1986) 2 All ER 177 at page 187 B-G where his Lordship acknowledged that it was"Good sense and common practice for a defendant to give notice of a claim against him and any proposed settlement to a person against whom he intends to seek indemnity or contribution, if such person is not joined as a third party. This gives that person the opportunity to raise any points or objections he wishes, and will make it somewhat harder for him to raise arguments later which he could have raised at the time."
On the other hand his Lordship went on to say that this "commonsense practice" did not amount to a rule of law. Any criticism of the pursuer in failing to aver the giving of notice, to the present defenders, of the proposed settlement, was, therefore, as a matter of relevancy, without foundation.
[15] In conclusion, counsel for the pursuer reverted to the merits of the case and urged the court to have regard to the pursuer's averments, as a whole, before reaching the view that they did not entitle the pursuer to have a proof before answer in the case. In particular he referred to the fact that the Port's standard conditions apparently prohibited subletting of the plant. That, he said, pointed to the relationship between the pursuer and the defenders as being one of agency.Decision
[16] Having considered the pursuer's pleadings, and the submissions made in relation thereto, I have reached the conclusion that they are irrelevant and the action falls to be dismissed. As has been noted, the pursuer now perils his whole case on the right to be paid the sum he sues for, being based on a contractual term brought about by virtue of custom of trade. The pursuer's primary position is that that right, is a right of indemnity, arising out of a contract of agency between himself and the defenders in respect of the hire of the crane. As has been seen, however, the pursuer admits the content of the documents 7/1, 7/2, 7/3, 7/6, 7/8 and 7/9 of process which were the written communing passing between the parties at the relevant time in relation to the hire of the crane. None of these can be read as involving the defenders considering that they were instructing the pursuer, as an agent, to hire the crane on their behalf. The content of those documents, in particular and, perhaps most importantly, the defenders' Purchase Order 7/6 of process, is inconsistent with the one averment of the pursuer which I consider may support a relationship of agency. That averment is in article 2 of condescendence where the pursuer avers"Mr Hancock thereafter by telephone instructed the pursuer to hire the crane together with the driver thereof from the Port for 15 and 16 December on behalf of the defenders. In accordance with the defenders' instructions, the pursuer, acting as their agent, telephoned Mr King and entered into a contract with the Port for the hire of the crane ('the Contract')."
The remaining averments of the pursuer are wholly consistent with the content of the productions I have referred to, and with the position being that the parties contracted as principals with each other, the pursuer simply sourcing the particular crane from the Port authority. It appears from the relevant documentation that the pursuer simply suggested that a suitably sized crane could be obtained from the Port. As far as the defenders were concerned they hired that crane from him. Because, however, of the one averment that I have highlighted above I might have been prepared, with considerable hesitation, to allow the pursuer a proof before answer in relation to the question of whether or not he was acting as an agent, had I considered his averments in relation to custom of trade to be relevant. I have, however, reached the conclusion that his averments about custom of trade, even in the context of a relationship of agency are irrelevant. The question is whether the pursuer has relevantly averred that such a relationship of agency gave a right to the pursuer to be indemnified for the sum he paid to settle the other action, that right arising by virtue of custom of trade. While in general, no doubt, an agent is entitled to be indemnified for payments made, and liabilities incurred, within his express or implied authority, on behalf of the principal, the true question, it seems to me, in the present case, is esto there was a contract of agency, did the defenders as principals, give the pursuer authority, either expressly or impliedly, to accept, on their behalf, the Port's standard conditions and, in particular, the conditions upon which the Port relied in suing the present pursuer. That question, it seems to me, when properly understood, has nothing to do with custom of trade. It is a question as to what authority the pursuer, as agent, had, to accept the Port's conditions as governing the hire of the crane in question. The pursuer can point to no express authority being granted. It is not averred that the application of these conditions was brought to the defenders' attention, as governing the position, at the time the defenders requested the hire of the crane. The pursuer now disclaims any case based, on implication, by course of previous dealing between the parties. The matter goes further. It has never, of course, being judicially determined that the Port did incorporate their standard conditions and terms into the contract which they had with the pursuer for the hire of the crane. The pursuer simply settled that the case raised against him on the basis of legal advice that they probably did. But the de quo of the dispute is concerned with whether or not there was incorporation of the standard terms, which included a specific term, which probably reversed what would normally be the position at common law, namely that the plant owner would have to bear the cost of damage done to his plant by his own operator's negligence. The fallacy which underlies the pursuer's position throughout, is, it seems to me, that the existence of standard written conditions, of a particular trade association, result in a custom of trade that the content of those standard terms and conditions apply to every contract relating to the kind of business in which the members of that particular trade deal. If that was so, of course, the standard terms and conditions would, in effect, have become redundant. Far from that being the case, it is necessary for anyone relying on such conditions to show that they have been incorporated into the specific contract, which is the subject of dispute, either expressly or by course of dealing, or because of the kind of "common understanding" described by the court in the British Crane Hire Corporation Limited case cited above. There is, it seems to me, a leap of reasoning in the pursuer's case, as I understood it, to the effect that because of the existence of such conditions of contract, a principal (whether or not he is engaged in the particular trade himself) who instructs an agent to hire plant on his behalf, by custom of trade, authorises his agent to accept these conditions and agrees to indemnify him in respect of any liability that may result therefrom. Since I do not accept that the Port's terms and conditions were incorporated into the principal contract of hire, by virtue of custom of trade, for the reason that to so hold would mean that the terms and conditions were redundant, I cannot accept that they apply, by custom of trade, as between the defenders as principals and the pursuer as agent. I repeat, it appears to me that the true question is one of authority, express or implied, and, accordingly, even if the pursuer has made out a relevant case of agency, he has not, in my judgment, made out a relevant case of his authority extending to accepting the Port's terms and conditions of contract, on behalf of the defenders, and to be relieved of any liability arising therefrom.
[17] If, on the other hand, the relationship between the parties was not one of agency, but was one of principal contracting with principal, which seems to me is, on the face of things, the more likely position, then similar considerations to those I have just discussed in relation to custom of trade equally apply. The pursuer accepts that the standard conditions were not incorporated expressly into any contract between himself and the defenders. Nor were they incorporated by course of dealing. The continued existence and use of the standard terms and conditions, and the recognition by the pursuer in his own pleadings that there are different, though similar conditions which apply in different cases, means, it seems to me, that the position has not been reached that, by custom of trade, the content of these terms and conditions is implied into every hire of plant and that, in particular, that, in every case, the hirer, by custom of trade, accepts liability for damage done to the owner's plant where this arises from the negligence of the owner's own operator. The continued need to employ such standard terms and conditions, containing such a provision, argues against the imposition of such terms by virtue of a custom which is notorious, universal and reasonable. The pursuer's case, as averred, in my opinion, merely amounts, at most, to use the words of Lord Shaw in the "Strathlorne" Steamship Company case to "a settled and established practice in the general sense of the mere occurrence of instances (many of which may have sprung from express contract)" rather than "a settled and established practice which amounts to the acceptance of a binding obligation of a custom apart from particular bargain". For these reasons the pursuer's case, as pled, is irrelevant. [18] For completeness I should say that had the pursuer's averments on the merits of the matter been sufficient to entitle him to a proof before answer, I would have considered that his averments as to how the sum sued for came to be paid in the previous proceedings, and its quantification, were sufficient to allow him a proof before answer on that aspect of the case. [19] I shall, in the whole circumstances, sustain the defenders' first plea-in-law and dismiss the action.
