Scottish Sheriff Court Decisions

(1) This appeal arises following debate in an action of damages for breach of contract. The pursuers were main contractors in a contract with Clyde Valley Housing Association Limited for the construction of houses at Old Monklands, Coatbridge. The defenders were engaged as subcontractors to carry out certain ground works. The pursuers maintain that defects have appeared in the works carried out by the defenders and have raised the present action seeking damages for £120,000.

(2) When the case was debated before the sheriff it was a matter of concession on the defenders' part that it was appropriate for the case to proceed to proof, but an attempt was made on their behalf to exclude certain matters from probation. The sheriff in his note expressed "some sympathy" for the defenders' position but said that he was persuaded by the pursuers' submissions that a proof before answer should be allowed on the whole averments of parties. I pause to observe that in taking that course he repelled both preliminary pleas for the defenders. From this form of disposal, which allowed the preliminary plea for pursuers to remain standing, it appears that it is only the defenders' pleadings which might be regarded as of doubtful relevance. I am not confident that this was the course which was intended.

(3) In article 3 of condescendence the pursuers set out that defects came to their attention in June 2002. It is said that settlement has occurred at a number of the residential properties on site. These are specifically identified. After some preliminary averments it is averred that "the defenders have used inadequate material beneath the affected properties which has caused settlement". The said fill material is described as a "heterogeneous mix" and is said to be "unable to adequately support the floor slabs and houses constructed above". These averments along with certain others constitute in my view a clear and specific case directed against the defenders for using in-fill material which was both inadequate and disconform to the contract specification. The averments go on, however, to narrate that the work "was not carried out using competent tradesmen nor executed with the skill and competence reasonably to be expected of such tradesman. Settlement has occurred as a result of inadequate compaction of the in-fill material beneath the said properties"

(4) These two sentences were attacked by the solicitor for the defenders who maintained that they were wholly lacking in specification as to what it was that the defenders' tradesmen ought or ought not to have done and in consequence were irrelevant. In the course of discussion the solicitor for the pursuers accepted that the first of these sentences introduced an unnecessary complication. He accepted that if the in-fill material did not conform to contract, or that it was not properly compacted, that that was sufficient for his purposes and it was not necessary to make averments about the use of incompetent tradesmen or the incompetent actings of competent tradesmen. In my view that concession could not have been withheld. The defenders attack on the relevancy on that averment was well founded.

(5) A more difficult issue arises in relation to the question of the averment that "settlement has occurred as a result of inadequate compaction of the in-fill material beneath the said properties". If that averment stood alone I would have had no difficulty in holding that it was irrelevant in respect that the use of the expression "inadequate compaction" gives no proper specification as to what the fault in compaction was. However, the solicitor for the pursuers directed my attention to averments at the end of article 3 which deal with the defenders' obligations in terms of the provision of compacted hard-core. Reading these along with the sentence under attack (which I take to be no more than an averment of a general nature) I consider that there would appear to be adequate averments of a failure to comply with the contractual requirements regarding hard-core, and although I entertain some reservations as to its relevancy I do not consider that the second sentence which was criticised should be withheld from probation. I allow it to stand on the clear understanding that the averment relates to a breach of a contractual obligation in relation to compacting and is not to be regarded as a more general allegation of fault.

(6) The principal issue in the case arises in relation to article 5 of condescendence which contains the averments of loss. The pursuers set out that they have carried out investigative surveys and instructed certain remedial works. The total involved amounts to slightly more than £86,000. A detailed breakdown is provided. The pursuers go on to aver that: "Additionally the pursuers have required to divert the time and attention of management from other projects to the present matter. The pursuers reasonably anticipate that their clients, Clyde Valley Housing Association Limited, will require them to remedy defects in those properties with inadequate floor slab thickness. Said slabs are unlikely to provide a satisfactory long-term platform to the affected houses and are likely to deform in future. The pursuers reasonably anticipate that the carrying out of said remedial works will require the decanting of those tenants of Clyde Valley Housing Association Limited who presently reside in the affected properties, for which the cost the pursuers will be held liable". These averments raise two separate and distinct issues. The first is whether the averments relating to the diversion of management time are so lacking in specification as to be irrelevant. The second and more far reaching issue is whether the averments regarding a loss which is "anticipated" but which ex concessu may never occur, are relevant.

(7) I am in no doubt that the averment about diversion of management time is one which cannot justifiably proceed to proof. It is barely pled as an averment of loss at all. The argument which purported to support it seem to suggest that it could open a line of evidence of which the defenders have notice and this was all that was necessary. It would then be for them to cross-examine any witness whose testimony tended to establish the cost or amount of such management time. In my judgment that is not a reasonable or proper approach. The defenders are not even told of the "other projects" on which management time was expended. They cannot be expected to prepare for any eventuality. There is no reason why they should not be told how much management time has been diverted, what it was diverted on, and how the pursuers propose to quantify their loss. The averment does not seek to introduce an incompetent head of claim, but the averment is so essentially lacking in specification as to be irrelevant.

(8) The averments about an anticipated requirement by the employers to remedy defects and the consequent expenses raise a more complex issue. As he did before the sheriff, the solicitor for the defenders submitted that these averments sought to advance a claim for a loss which might never be sustained, and in any event gave inadequate notice as to how any such loss was to be quantified. He cited in support of his argument a passage in Kyle v P & J Stormonth Darling 1994 SLT 194 which sets out that the burden of proof is on the pursuer in respect of three elements wherever it is contended that a negligent act has caused loss, injury and damage. These are (a) the negligent act, (b) the loss injury and damage and (c) that the act caused the loss injury and damage complained of. The passage proceeds: "In these respects the rules governing claims based on breach of contract or on both such breach and on negligence are not materially different". The defenders had not adequately averred what the loss injury and damage was or that it had actually been caused by the pursuers' breach of contract. It was in essence a claim which was too speculative. In that respect reference was made to paragraph 22-75 of MacBryde on Contract and to the case of Sapwell v Bass 1910 2KB 486. In that case the defendant breached a contract to provide a stallion to serve the plaintiff's brood mares. It was held that profit from the sale of foals which might have been produced as a result of this union was too speculative.

(9) In response the solicitor for the pursuers pointed out that the court was required to deal with all claims for breach of contract in a single action. That applied to all damage both present and future: Stephenson v Pontifex & Wood 1887 15R 125. It was no bar to an award of damages that they are difficult to access: Chaplin v Hicks 1911 2KB 786. Certain passages were cited from the judgments delivered in that case to the effect that the court would award damages even if assessment was "a matter of great difficulty". The pursuers' agent also founded on Caledonian Property Group Limited v Queensferry Property Group Limited 1992 SLT 738. That was an Outer House decision on relevancy. The case concerned a sale of heritable property to which the pursuers had taken entry on the agreed date. They alleged that the defenders were in breach of contract in failing to deliver a local authority completion certificate for the premises within the time period specified in the missives and in respect of the fact that certain stone work did not comply with the relevant planning permissions. The pursuers' intention had been to re-sell the property. The defenders alleged breach caused them delay and they alleged that in that period there was a downturn in property prices whereby they "anticipated" that they would make a capital loss of approximately a million pounds. The defenders argument was that this was a speculative claim. Until the pursuers were in a position to establish a loss it was not sufficient for them to proceed on the basis that they might do so. That argument was rejected and the case allowed to proceed to proof.

(10) I am satisfied, as the pursuers' agent submitted, that this head of claim does not fall to be regarded as too remote to be recoverable. But that is not the issue; it is whether there is any right to claim for a loss which may never occur. In that respect I consider that even if a claim is regarded as in a sense speculative that does not in itself prevent it proceeding. As Chaplin v Hicks and indeed Kyle v Stormonth Darling indicate the courts are prepared to acknowledge a right to recover in respect of a "lost opportunity". I am doubtful however as to whether this case falls within the same category, and indeed in some respects it is a claim which is more focussed than a "lost opportunity" claim. It is a claim for a prospective loss. The question is whether this is a future loss which at this stage can be reasonably anticipated for the pursuers. If, on an objective view this can be established the pursuers would be entitled to an award of damages even if these were difficult to assess.

(11) That view does not however detract from the principle that the pursuers must give adequate notice of what it is they are claiming. In my view the present averments fail to meet that test. I was informed that the averments are intended to cover both a claim for the cost of remedying any defects to floor slabs as well as expenses sought by the employers as a result of decanting tenants. In my view the averments fail to make it clear that the first of these is advanced and in any event provide no specification whatsoever as to the work involved or the likely costs of remedying such defects. Equally, no indication is given as to the nature and level of claims which are likely to arise from the decanting of tenants. I consider that to allow these averments to proceed to proof in their present form is a recipe for trouble. It would be very far from clear how far the pursuers could go in leading evidence in support of these averments.

(12) In the whole circumstances I take the view that the sheriff ought not to have allowed the case to proceed to probation without modification. In addition to the tenth sentence of condescendence 4 I shall exclude from probation those sentences in condescendence 5 which deal with diverted management time and the anticipated claim from Clyde Valley Housing Association. I have no alternative but to take that course in the absence of any motion to amend. It is for the pursuers to consider whether they should proceed to do so now. In a case where future damage is "reasonably anticipated" it seems to me that there may be an issue as to whether the pursuers should sist the action until such damage has arisen and then make averments in the light of the loss which has actually arisen. It is a matter for their judgment whether to take any such course here.

(signed) E F Bowen