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FIRST DIVISION, INNER HOUSE, COURT OF SESSION
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Lord President
Lord Eassie
Lord McEwan
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[2008] CSIH 11
A858/05
OPINION OF THE COURT
delivered by LORD EASSIE
in
RECLAIMING MOTION
in the cause
BRIAN and JEAN GRAY
Pursuers and Respondents;
against
WILLIAM WELSH
Defender and Reclaimer:
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Act: Richardson; Pinsent Masons (Pursuers and Respondents)
Alt: McIlvride; Gillespie MacAndrew LLP (Defender and
Reclaimer)
5 February 2008
[1] This
reclaiming motion is brought by the defender against an interlocutor of the
Lord Ordinary in which, following the hearing of a debate on the Procedure
Roll, the Lord Ordinary allowed a proof before answer.
[2] In May 2004
the parties concluded missives whereby the pursuers agreed to purchase from the
defender a new house to be constructed in a housing development in
Crossford. More particularly, what the
pursuers agreed to buy was described in the missives as follows:
" ... Plot 9 on your [i.e. the defender's]
Estate Layout Plan at Holmwood Park Crossford, Lanarkshire, which plan is
demonstrative only and not taxative and may be varied by you as circumstances
require together with the dwellinghouse Type KEBLE to be erected by you thereon
with any garden ground and all rights common, mutual or otherwise pertaining
thereto at [a specified price] with, in addition, the costs of any additions or
variations ordered by me/us [i.e. the pursuers] in writing ... ".
The pursuers aver that prior to the conclusion of the
missives they had had discussions with a Mr. Munsey, said to have been an agent
of the defender, respecting variations to the house proposed to be constructed
on the plot, which were agreed by Mr. Munsey by his signing on 18 March
2004 a letter of that date sent to him by the pursuers. It is averred by the pursuers that "said
variations included the layout of the Garden".
[3] We do not
understand it to be in dispute that at the time of conclusion of the missives
construction of the house had either not begun or, in any event, was some way
from completion. But in the event the
house was duly constructed and the pursuers took up occupation. Plot 9 thereafter acquired the postal address
of 5 Holmhead Park.
[4] The plot
which the pursuers purchased is bounded on its northern side by the River
Clyde. Neighbouring plots lying to the
east of the pursuers' property with the postal addresses 7, 9 and 11 Holmhead Park similarly have as their respective
northern boundaries the River Clyde. It
is averred by the pursuers that in October 2004 and again in January 2005,
following a period of high rainfall, the garden ground of those neighbouring
properties was disturbed and slumped down towards the Clyde.
It is averred that following the occurrence of those landslips the
defender undertook certain remedial works to deal with the consequences, for
the gardens of those neighbouring properties, of the landslips. It is to be noted, however, that the
landslips did not extend to the pursuers' property. Essentially, what is sought in the present
action are the costs of preventative measures to obviate an alleged risk of a
similar landslip or erosion affecting the pursuers' garden ground in the event
of future spates. It is not averred that
the preventative measures are necessary to secure the avoidance of risk to the
integrity of the house, as opposed to the garden ground.
[5] Central to
the pursuers' case is their claim that the landslips or erosion which have
occurred in the neighbouring gardens, and the alleged risk of future landslip
or erosion in the case of the pursuers' garden, arise from the fact averred by
them that the ground adjacent to the Clyde which slipped or was eroded in the
case of the neighbouring properties, and which is said to be at risk of similar
slippage or erosion in the case of the pursuers' garden, is what is termed in
the pursuers' pleadings as the "Made Ground".
[6] The term
"Made Ground" is derived from this averment in Article 4 of the Condescendence:
"The Garden and the gardens of the
Neighbouring Properties were formed by the defender from Made Ground to a depth
varying between 1.6 and 2.6 metres overlying the original, natural sub-soil
(the 'Made Ground')."
Having thus averred that the "Made Ground" was constructed or
formed by the defender, the pursuers go on to aver:
"The Made Ground is of a variable
composition but consists predominantly of granular, silty, gravely sand along
with concrete and brick rubble and other secondary constituents. The Made Ground had not been formed from
materials selected and compacted in accordance with conventional engineering
specifications. Accordingly, the Made
Ground is defective."
The claimed causal link between the "Made Ground" and the
risk of slippage is described by the pursuers in their averment towards the end
of Article 5 of the condescendence as follows:
"The stability of the Made Ground is
dependent upon ground water influences and on the uniformity of the engineering
properties of the soils. The soils which
form the Made Ground are predominantly granular or have a high granular
content. Said soils encourage the rapid
permeation of ground water when the water level in the River Clyde is
high. Accordingly, the Made Ground is
susceptible to river level fluctuations and other ground water influences. When the water level in the River Clyde drops
rapidly and there is a slower fall in the level of ground water, the Made
Ground becomes unstable."
[7] The pursuers
advance their claim for recovery of the costs of the proposed preventative
works intended to rectify the alleged deficiencies in the Made Ground on two
bases.
[8] The first
basis is that, according to the contention advanced by the pursuers, in terms
of the missives and the variations agreed with Mr. Munsey, the scope of
the defender's contractual obligations included that of "constructing" the
garden ground and that, consequently, there is to be implied into the claimed
contractual obligation to construct the garden ground a term that the work of
carrying out that construction would be done with the reasonable care and skill
to be expected of a competent contractor.
We did not understand counsel for the defender to quarrel the notion
that if there were an express contractual obligation to "construct" the garden
ground including, in particular, a contractual obligation to construct the
"Made Ground" such a term might be implied.
His primary position was that on a proper interpretation of the missives
there was no such contractual obligation.
Nor was the provision of Made Ground the subject of any agreed variation
or addition. Whatever might have been
done by the defender by way of contribution to the "Made Ground" was accordingly
not the subject of any contractual obligation undertaken in terms of the
missives. A contract for the sale of
land did not carry with it any warranty as to the quality of the land or its
suitability for any particular purpose and so, absent any contractual
undertaking to carry out a work of construction on the garden ground, there
could be no contractual liability upon the defender.
[9] The second
basis of the pursuers' claim is to the effect that in the absence of a
contractual obligation to construct the Made Ground there was nonetheless a
delictual duty on the defender, when de
facto taking on the work or activity of constructing the Made Ground, to exercise
reasonable care when performing that task.
Put very shortly, that duty arose from the whole circumstances of the
case which inferred an assumption of responsibility on the defender's part in
carrying out de facto the work of
constituting the Made Ground. And it
mattered not that the loss claimed by the pursuers was simply economic loss in
the sense of having received a "defective" garden.
[10] It has to be
said that the nature of this alternative delictual case is perhaps not clearly
focused in the pursuers' pleadings, which follow the somewhat pro forma approach commonly encountered
where the contractual relationship results in parallel duties which can equally
be expressed as contractual or delictual duties of reasonable care. We also recognise that the argument for a
completely free-standing delictual responsibility was ultimately developed largely
in the light of some probing from the court, on the hypothesis that the
missives were to be interpreted in the manner contended for by counsel for the
defender, that is to say, as not encompassing any contractual obligation to
construct the Made Ground.
[11] In his
argument in support of the alternative delictual case, counsel for the pursuers
advanced four principal propositions.
The first was that the existence of a contractual relationship does not
preclude a concurrent delictual duty.
The second proposition was that where a party (i) assumes responsibility
for rendering a service to another in a particular manner and (ii) the
recipient relies on the manner in which the service is rendered, the party
rendering that service will be liable to the recipient for any loss flowing
from the negligent performance of the service, including economic loss. The third proposition was that the extent of a
concurrent delictual duty is qualified in respect that its scope will not be
greater than the concurrent contractual duty.
The fourth proposition was that the possible existence of a delictual
duty as in the second proposition is not restricted to situations in which
advice is being given, and provided that the necessary conditions are
fulfilled, such duties can exist in circumstances such as the provision of
services in relation to design and construction. In the course of the argument counsel for the
pursuers went on to advance the further, and in the present case perhaps
important, proposition that as between contracting parties a delictual duty may
exist independently of the contractual relationship and where the delictual
duty does not arise concurrently with a contractual obligation the delictual
duty may be of a wider scope than the scope of the contractual obligation. In regard to these propositions we were
referred to a number of authorities including :
Henderson and Others v Merrett Syndicates Limited [1995] 2 AC 145; Barclays
Bank plc v Fairclough Building
Limited and Others (No. 3) 44 Con LR 35;
Storey v Charles Church Developments plc 73 Con LR. 1; Payne
and Others v John Setchell Limited
[2002] PNLR 7; Tesco Stores Limited v Costain
Construction Limited [2003] EWHC 1487 (unreported); Mirant-Asia
Pacific Limited v Ove Arup & Partners
International Ltd. [2005] PNLR 10;
and Holt v Payne Skillington and De Groot Collis
(1995) 77 BLR 51. Ultimately, the basic
submission in the pursuers' argument was that in the circumstances of the
development of a housing estate, and the defender's having chosen to form the
garden ground, to at least the extent of forming the Made Ground, there was in
the circumstances of the present case sufficient to warrant inquiry whether the
defender had, or was to be taken as having, assumed a duty of reasonable care
in the construction of the Made Ground.
[12] For his part
counsel for the defender disputed the argument advanced by his opponent. He placed particular reliance on the speeches
in Murphy v Brentwood District Council [1991] 1 AC 398 and Invercargill City Council v Hamlin
[1996] AC 624. Among the other
authorities to which counsel for the defender and reclaimer made reference was Tai Hing Cotton Mill Limited v Liu Chong Hing Bank Limited [1986] 1 AC
80. Counsel for the defender pointed out
that a contract for the sale of land had no implied warranted of quality or
fitness for purpose and that if a seller had chosen to place additional soil on
it he incurred no responsibility to the purchaser. Counsel further stressed that the claim in
the present case was not in respect of damage suffered as a result of the
alleged defect, but an economic loss claim for the costs of remedying or
repairing the defect itself. Counsel
contended that a house builder was not liable for such economic loss, outwith
the terms of his contract.
[13] Having
considered fully the submissions of counsel respecting the bases of liability
for which the pursuers contend, we have ultimately come to the conclusion that
the second basis - namely the claimed delictual liability going beyond the
scope of any parallel contractual duty and said to arise from the defender's
having effectively chosen to construct the Made Ground in the overall context
of the contract to construct and sell the house and garden and prior
discussions anent variations or additions - involves potentially difficult
issues of law. We believe that those
issues are potentially also "fact sensitive".
There may be various circumstances relevant to the delictual case now
advanced as a free-standing case independent of the scope of any contractual
obligation on the part of the defender, such as the nature and extent of the
activity undertaken by, or on behalf of, the defender in constructing the "Made
Ground"; the circumstances in which that
was done in the context of the marketing of a housing development; and the circumstances in which the defender
came to carry out remedial works in the gardens of the Neighbouring Properties. This is of course not a complete catalogue of
the potentially relevant factual matters.
In light of these circumstances we have come to the conclusion that
resolution of the issues arising under the delictual case should take place
after inquiry into the facts. Given that
conclusion we do not consider it appropriate to discuss further, at detailed
length, the submissions advanced by counsel on this important aspect of the
case in advance of that inquiry. In so
saying, we hasten to add that we intend no disrespect to the industry of
counsel and the quality of the argument with which we were favoured.
[14] In view of our
conclusion that inquiry into fact is appropriate before endeavouring to answer
the issues arising on the delictual case, it is appropriate in our view also to
leave a decision on the construction or interpretation of the terms of the
missives to the judge ultimately hearing the proof before answer. While we presently see some force in the
argument for the defender that simply on the terms of the missives and even the
copy letter of 18 March 2004 there was no obligation to
"construct" the garden ground, we recognise that such an interpretation might
ultimately sit uncomfortably with the facts and events established at
proof. So we do not express that as a
finding quoad the proper construction
of the missives. Since the letter of 18
March 2004
is not incorporated into the contract or formally admitted the same applies to
it, a fortiori.
[15] Having formed
that view on the appropriate way of addressing the issues of principle in the
case, we naturally do not ignore the complaint advanced by counsel for the
defender, before the Lord Ordinary and again before us that, in any event, the
pursuers' pleadings do not give sufficient notice or specification of the
respect in which the defender allegedly failed to fulfil any duty of care
respecting the construction of the Made Ground, whether arising ex contractu or quasi ex delicto.
[16] This complaint
is essentially related to the fact that all that the pursuers do in their
pleadings is to aver that the Made Ground was not constructed in accordance
with any conventional engineering specification but they do not say which, if
any, such conventional engineering specification would be appropriate. The averments in issue are in Article 8 of
the Condescendence as follows:
"A contractor building to reasonable
and workmanlike standards would have formed the Made Ground from materials
selected and compacted in accordance with conventional engineering
specifications. The Garden had not been
formed from material selected and compacted in accordance with conventional
engineering specifications".
[17] Counsel for
the pursuers explained their position by saying that the pursuers did not
contend that any particular conventional engineering specification should have
been followed. The complaint was simply
that the Made Ground did not accord with any
such conventional specification and by that very fact there was a breach of
duty (assumingly that it produced the necessary causal consequences). Given that explanation we do not think that
the action should at this stage be dismissed for want of particularisation in
the pleadings on the aspect of which the defender complains. It occurs to us that the generality of the
pursuers' pleadings on this aspect might possibly rebound to the defender's
advantage.
[18] In these
circumstances we have decided that we should refuse the reclaiming motion and
adhere to the Lord Ordinary's interlocutor which allowed a proof before answer
subject to the exclusion of certain averments respecting events in the gardens
of properties in another street (Holmwood Green) as to which exclusion no issue
was taken in the reclaiming motion.
