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OUTER HOUSE, COURT OF
SESSION
[2009] CSOH 24
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CA104/07
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OPINION
OF LORD HODGE
in
the cause
LESLEY
BOTHWELL
Pursuer;
against
MESSRS
D. M. HALL AND OTHERS
Defenders:
ннннннннннннннннн________________
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Pursuer: J. Brown, Advocate; HBJ Gateley Wareing (Scotland)
LLP
Defenders: Dean of Faculty QC, G. Walker, Advocate;
Simpson & Marwick
18
February 2009
[1] In
this action the pursuer, who owns and operates a nursery business, seeks
damages from the defenders, a firm of chartered surveyors, alleging breach of
contract and professional negligence. In
particular she alleges that Mr Gordon Porter, a partner of the defenders,
when he gave advice to her in relation to the marketing and possible sale of
her nursery at 226 Braid Road, Edinburgh failed to exercise the standard of
skill and care reasonably to be expected from a competent chartered surveyor
who had experience in advising on the marketing of residential development
sites. In this hearing parties sought
the determination of the court only on liability, leaving the quantification of
damages, if the defenders were found liable, to another day.
Factual
background
[2] The
pursuer owned a house at 226 Braid Road, Edinburgh which she used to carry on
business as a children's nursery. The
house is located in a substantial wedge-shaped garden at the junction of
Comiston Road (Pentland Terrace) and Braid Road. Since the events with which this action is
concerned the new owner has expanded the building from which a nursery
continues to operate. The site extends
to about 0.42 acres, slopes downwards in a northerly direction and is
mainly at a level below both Comiston Road and Braid Road. The nursery, known as Buckstone Nursery, was
able to accommodate up to thirty-seven children and was one of several
nurseries which the pursuer operated in the Edinburgh area. In about April 2003 the pursuer received an
unsolicited approach from a developer to purchase the site for г1.15 million. While the pursuer was content to continue her
business at the site she wished to explore whether she might receive a
significant price for the site if she sold it for redevelopment. Accordingly she contacted the Edinburgh
office of the defenders for advice and was put in touch with Mr Gordon
Porter, whom she met in that office and who visited the site on 3 June
2003. From this contact arose both the
aborted sale of the site and this action.
The attempt to
sell the site
[3] The
pursuer was and is a successful businesswoman.
In 2003 she had considerable experience in making business decisions but
had not been involved in property development transactions. She was aware that an attempt to develop the
site, if unsuccessful, could damage the nursery business which she carried on
at 226 Braid Road as the prospect of future closure of the nursery might cause
parents to withdraw their children and staff to seek employment elsewhere. She therefore engaged the services of the
defenders to investigate discreetly the prospects of an advantageous sale.
[4] On 17
June 2003 Mr Porter wrote a long letter to the pursuer setting out his
advice. In that letter he repeated his
earlier advice that the site was physically constrained and that the planning
process was slow and bureaucratic. As
considerable delay could be foreseen before a planning application would be
granted he advised that it would be sensible to give serious consideration to
any offer of г1.25 million which did not impose suspensive conditions. Having considered other transactions in
Edinburgh on comparable sites, including the proposed development of the
Fairmile Inn site nearby, he advised that the site would accommodate a maximum
of fourteen residential units. He
suggested that in order to get offers of about г1.5 million it would be
necessary to have a full marketing campaign and to accept suspensive
conditions. He suggested that if the
pursuer instructed the defenders to market the site they would prepare draft
sales particulars for her approval and conduct a restricted mailshot to
professionals and developers in order to maintain confidentiality. He also discussed the possibility of discreet
press advertising. He considered that
although the site had capacity to accommodate a considerable number of flatted
dwelling houses or coach style town houses, it would be difficult to
service. He reiterated his advice that
fourteen units was the realistic maximum density which could reasonably be
achieved, provided there were no ground problems.
[5] On 3
July 2003 the pursuer appointed the defenders as her sole selling agents in an
attempt to sell the site for redevelopment at a price of over г1.5 million and
instructed them to market the property by mailshot only. On 10 July 2003 Suzanne Lawrie, who led the
defenders' business sales team, sent the pursuer draft sales particulars which
the pursuer approved. The particulars
described the site and opined that there would be high demand for it for
residential redevelopment. The document
suggested that enquiries in that regard should be made to the City of Edinburgh
Council planning department. It invited
offers over г1.5 million. In both
the particulars and in a covering letter the defenders emphasised that the sale
was on a strictly confidential basis.
[6] The
defenders attempted to obtain a indication from planning officials of their
likely attitude to a planning application to redevelop the site. Telephone calls seeking such advice were not
successful. Accordingly on 22 July 2003
Mr Porter sent a fax to the Council's planning department enquiring about
the redevelopment prospects of the site.
As this enquiry and the Council's reply are at the heart of this action
I will quote them in full. The fax
message, to which a site plan was attached, was addressed to Ms Helen
Martin, a principal planner, and was in these terms:
" Buckstone
Nursery: Braid Road ...
Further to our
recent communications I confirm that D M Hall have been instructed to act on
behalf of the proprietor of the above property which is located on the apex
site between the S end of Braid Rd and Comiston Rd. (Pentland
Terrace).
The site
currently used as a nursery for a Reg. 33 children has been attracting
unsolicited approaches for residential development. We are instructed to advise the client and
are of the opinion that a tasteful residential development of appropriate
density and to a standard compatible with the surroundings can be undertaken
with vehicular access using the existing opening on Braid Road, - Pentland
Terr. is obviously at a higher level than the solum and would probably
encounter objections from Highways on seeking to service the development from
that (west) side. The nursery is housed
on [sic] a rather "unique" single
villa of Dutch barn appearance - which we would presume has no listing nor
architectural merits.
Perhaps you can
consider the location - the site extends to 0.42 Ac and advise whether within
the Dev plan and its policies, a tasteful development can be accommodated - in
principle, subject to usual caveats as to formal applications etc. and Highways
approvals. The site is not intensively
utilised at present.
Perhaps you can
advise as to your thoughts on this matter and let me know if we can provide any
other info. necessary to allow you to consider this informal request. Your assistance would be appreciated."
[7] By letter
dated 5 August 2003 signed by Ms Martin but drafted by her colleague, Eric
Dawson, the Council responded to that enquiry.
The letter was in the following terms:
"We refer to your
fax dated 22 July 2003 regarding the
above.
The spatial
character is of individual houses set within generous garden grounds. Buildings are set well back from both Braid Road and Comiston Road and any proposed
development would need to respect these building lines.
Policy guidance
states that the open nature of corner gardens will be protected where they
contribute to the character of the area.
Any development
proposal for this site should therefore respect the spatial character of the
area, the building lines and the corner garden area.
As the tapering
corner garden ground largely precludes any development on the southern half of
the site, it may be that the site is suitable for at most one additional
residential unit which would need to comply with points outlined above. We trust this is helpful at this
pre-application stage. Advice is given
without prejudice to any future decision by the Planning Development Quality
Sub Committee.
If you have any
further queries, please telephone Eric Dawson on (0131) 539 3679 (Direct
Dial)".
[8] The
pursuer in her evidence was adamant that Mr Porter had never disclosed to
her the terms of this letter. She stated
that if Mr Porter had sent her the letter she would not have proceeded
with the sale of the site. She accepted
that she had spoken with him on the telephone on several occasions at around
this time and that Mr Porter might have mentioned the response but he had
not communicated its terms which would have alarmed her. Mr Porter's evidence was that he had
communicated the content of the letter to the pursuer in a telephone conversation
but that he could not recall the precise words which he used. He gave evidence that he had said that the
Council's response was poor and something to the effect that the Council were
talking about a single unit and had not grasped the position. He said that he had definitely spoken to the
pursuer about the Council having referred to one additional unit, either in a
telephone conversation in September or at a meeting on about 28 October
2003. He explained in his evidence that
he had been dissatisfied with the Council's response as he had requested advice
on the prospects of redevelopment of the whole site, which would involve the
demolition of the existing building, and the Council's response addressed a
scenario in which that building remained.
He had tried to persuade the Council to clarify their response but
Ms Martin had stated that the Council had said all that they could. In support of Mr Porter's contention
that he had told the pursuer of the terms of the letter, the defenders produced
as a late production his terse manuscript note of a telephone conversation
dated 15 September 2003. It stated
"Spoke with LB - advised poor reply from Council - not willing to discuss or
clarify".
[9] Mr Porter
wrote to the pursuer again on 18 September 2003. In that letter he referred to their recent
telephone conversation and apologised for his oversight in not keeping her
abreast of the position. He explained
that he and Suzanne Lawrie had each assumed that the other had reported to
her. In relation to the Council's letter
of 5 August 2003 he said:
"We have had a
response (of sorts) from the Local Authority with regard to the planning
background for the site and the nature of the response [sic] would reiterate our own view that the property development
issues require to be taken further by a hard nosed and very commercial minded
developer or experienced operator".
The pursuer gave evidence, which I accept, that she
did not receive this letter. I accept,
nonetheless, that Mr Porter arranged for the letter to be posted to her
and was not aware that she had not received it.
[10] The
defenders' confidential marketing of the site generated sufficient interest
that on 7 October 2003 Suzanne Lawrie wrote to interested parties to intimate a
closing date for their submissions of 24 October and invite them to include in
their proposals an indication of the purchase price, site density, unit type,
timescale and, if available, plans in order to allow the defenders to make a
recommendation. Four developers
submitted proposals to the defenders by letters dated 23 or 24 October
2003. Their proposed developments and
indicative prices were very different.
What all the proposals had in common was an indication that any formal
offer would include a suspensive condition requiring the grant of an acceptable
planning consent.
[11] Laurie
& Company, solicitors, on behalf of Scotia Homes Limited ("Scotia") advised
that their clients would offer in the region of г750,000 to г800,000 for the
site and their proposal was to build eight apartments. They stated that they envisaged two 2 bedroom
apartments, four 2 or 3 bedroom apartments and two larger penthouses. They stated that the planners had indicated
that this was the maximum likely permissible development of the site but that
if the planning consent allowed additional units the developers would increase
their price pro rata in relation to the number of apartments and square footage.
[12] Rorke
Homes Limited proposed to pay г1.6 million and submitted an indicative proposal
which comprised twenty 2 bedroom flats in a four-storey building which was located
in the centre of the site.
[13] Abbey
Projects Limited ("Abbey") stated that they were prepared to offer г1.825
million on condition that they would receive planning consent for the
construction of twenty residential units.
Mr Gordon Bennett, Abbey's managing director, stated that Abbey had
and were developing 248 units in Glasgow and a further 125 in Sheffield and
Liverpool and that they were very keen to get their first Edinburgh
development.
[14] Southglen
Developments Limited ("Southglen") suggested a price of г1.4 million
conditional upon the obtaining of planning consent for the demolition of the
existing building and the erection of six townhouses. They enclosed drawings of their scheme. They suggested that twelve months be allowed
to obtain planning consent and that a mechanism should be agreed to adjust the
land price in the event that a smaller development was approved. Their director, Gary Hay, stated in that
letter,
"We appreciate
that the price offered is slightly below the asking price but we do believe
that the scheme devised by our architect would be less contentious with regard
to planning than a higher density scheme.
We have considered a higher density scheme of apartments on the site to
try to generate a higher land value but our architect advised that such a
scheme would undoubtedly face more difficulties with the planning authorities
than a scheme for six townhouses. We
believe that the scheme enclosed allows us to make a realistic offer for the
site which should not be drastically reduced through the planning process".
[15] Having
received these proposals the pursuer and Mr Porter met on 28 October 2003
to discuss them and to allow the pursuer to decide whether to proceed with the
proposed sale of the site. The pursuer,
recognising that it was difficult to obtain planning permission for a
substantial residential development, was particularly interested in developers who
had experience of achieving significant developments. The pursuer in consultation with
Mr Porter decided to arrange meetings with two of the developers who had
made proposals, namely Abbey and Southglen.
The pursuer, Mr Porter and Ms Lawrie met representatives of
Abbey on 30 October 2003 and representatives of Southglen on 3 November
2003. At the meeting on 30 October,
Mr Gordon Bennett and Mr Scott Martin of Abbey and Mr Hector
Black of Covell Matthews, their architect, represented Abbey's interest. At the meetings the parties discussed the developers' track records, the
proposed developments and the developers' assessment of the prospects of
obtaining planning permission. Both
Abbey and Southglen were confident that they could persuade the Council's
planners to support their proposals. Mr Porter
did not disclose the Council's letter of 5 August 2003 at either of the
meetings or give any indication that he had received any advice from the
Council of the prospects of developing the site. In his discussions with the pursuer which
followed the presentations Mr Porter advised the pursuer of the
difficulties which developers faced in obtaining planning permissions. The pursuer said that she was a businesswoman
and was aware of the risks. She and
Mr Porter thought that both Abbey and Southglen had proposals which had
reasonable prospects of success. In the
circumstances the pursuer chose to proceed with the Abbey proposal as it
involved the higher price.
[16] Although
the pursuer and Mr Porter met Mr Bennett, Mr Martin and
Mr Black, the architect who prepared the proposal for Abbey, at the
meeting on 30 October 2003 and discussed their proposal, they did not know
in advance what discussions Abbey or Mr Black had had with the planning
authority. Mr Porter formed the
view that different planning officials had given different responses to the
parties' pre-application enquiries and saw the comments of Scotia (see
paragraph 11 above) as support for that view. Mr Porter said in evidence that the
Abbey representatives gave the impression that they had discussed their
proposal with planning officials and Mr Black was very positive about his
relationship with Council officials and the processes which he had in place to
advance the proposal. Mr Gordon
Bennett gave evidence that he understood at the time that the Council had been
consulted on the proposal and that they were positive or at least "not
negative" in their response. This
supports Mr Porter's evidence that at the meeting on 30 October Abbey
indicated that they had run the proposal past the Council's planning officials
and were very positive about the processes they had in place for the
proposal. I accept Mr Porter's
evidence on this matter. Mr Black's
recollection was that Abbey had told the pursuer and Mr Porter that he had
not discussed the proposal with planning officials. Having regard to the evidence of
Mr Bennett and Mr Porter, I consider that Mr Black's
recollection is incorrect.
[17] In fact
Abbey and their advisers had not shown their proposal to the Council's planning
officials or discussed with them the form of development which they
proposed. Mr Black had telephoned
the Council's duty planner on 21 October 2003 and had discussed various
relevant planning policies. In his
telephone record he listed eight topics for discussion and recorded the
official's response. But under the
entry, "massing and precedent", which would have related to the particular
proposal, he recorded no discussion.
This supported his evidence that he had not discussed the proposal with
officials. But neither the pursuer nor
Mr Porter knew that. They accepted Abbey's
representation that they had.
[18] On 4
November 2003 Abbey (Scotland) Limited made a formal offer to purchase the site
for г1.825 million subject to obtaining an acceptable planning consent. Thereafter the missives were negotiated and
concluded. Although the initial proposal
was made on behalf of Abbey Projects Limited, the missives were entered into in
the name of Abbey (Scotland) Limited. I
use the term "Abbey" hereafter to refer to either or both companies as the
precise corporate manifestation of the Abbey economic interest is not relevant
to this action.
[19] Abbey
then worked on their proposal and prepared a planning application. At a
design team meeting on 22 January 2004 Mr Bennett discussed with
Abbey's professional advisers whether to request a pre-application meeting with
planning officials to discuss the proposal before submitting the planning
application. It was later decided to submit
the planning application without such consultation as that would delay the
project. Abbey submitted the planning
application in the joint names of themselves and the pursuer in April 2004.
[20] Unfortunately
the planning officials did not favour the proposal. The urban design team within the planning
department criticised the proposal,
principally for crowding the site. The
landscape department criticised the proposal for seeking to build close to
trees which were the subject of a tree preservation order. Mr Eric Dawson, who had given urban
design advice, expressed surprise to Mr Black at the scale of the proposed
development in the light of the advice which he, through Ms Martin, had
given in the letter of 5 August 2003. On
6 July 2004 Mr Black wrote to Mr Bennett of Abbey and reported his
discussions with planning officials. He
expressed disappointment that he had not known of the letter of 5 August
2003 and expressed the view that the defenders' pre-application enquiry might
have prejudiced the planning officials' opinion of Abbey's current
application. On 9 July 2004
Ms Lawrie of the defenders sent Mr Black copies of the defenders'
pre-application enquiry and the Council's response of 5 August 2003. Mr Black sought to arrange a meeting
with Mr Dawson to discuss the application and, by letter dated 13 July
2004, sent the pre-application enquiry and the Council's reply to
Mr Bennett. In that letter he
stated that he was unclear as to why the defenders had not divulged the
Council's letter at the meeting on 30 October 2003 and advised that he had
spoken to a planning officer and thought that the Council was not likely to
deviate from the position stated in the letter.
He went on to say:
"The planners'
advice to D M Hall was that the site is suitable for one additional
house. This does not preclude the
demolition of the existing building and redevelopment of the site for a flatted
development of a reduced scale, respecting the building lines."
He expressed the view that a development of twenty
flats was unlikely to obtain planning permission but that a reduced development
of ten flats had better prospects.
Mr Black prepared a smaller scheme for the site which comprised six
townhouses. But Mr Bennett decided
to persist with the application for twenty flats and not to show the Council the
proposal for a smaller development.
[21] Planning
officials made clear their view that they were not likely to support the
proposed development and that Abbey should consider withdrawing the application
in order to prepare a more modest development on the site. Abbey instructed Mr Black to obtain the
advice of a planning consultant. On 24
August 2004 Mr Black consulted with Mr Andrew Munnis of Montagu Evans
on the twenty flat proposal and Covell Matthews' smaller scheme of six townhouses. In a letter of the same date Mr Black
recorded Mr Munnis's advice which included the view that the Council's
pre-application response would have prejudiced Abbey's application as the
Council would have been more likely to defend their letter than negotiate. Mr Munnis advised Mr Black that the
planning application should be withdrawn.
On Mr Bennett's instructions it was.
[22] At
about the same time Mr Bennett telephoned the pursuer. He angrily criticised her for not informing
him of the Council's letter of 5 August 2003 and suggested that if he had known
of the letter in the autumn of 2003 he would not have proceeded with his
proposal. The pursuer explained to him
that she was unaware of the letter.
Mr Bennett also criticised Covell Matthews for providing what he
alleged was improper advice. That caused
Mr Black to respond by letter dated 24 August 2004. In that letter Mr Black refuted the
allegation and stated that he had always advised that it would be a challenge
to obtain permission for twenty flats on the site but that he had thought that
was achievable having regard to the information which he had at the time. He defended the decision to proceed with a
fully worked out proposal in the application without pre-application
consultation as a valid approach and suggested that the existence of the
statement in the Council's letter of 5 August 2003 that the site might be
suitable for at most one additional residential unit had severely prejudiced
the application. He stated that if that
information had been available to him at the time he would have advised
differently.
[23] Mr Bennett
also wrote to the defenders on 26 August 2004 and copied the letter to the
pursuer. He suggested that the asking
price of г1.5 million indicated that a considerable amount of development was
possible and that the defenders' failure to disclose the Council's "generally
negative" letter of 5 August 2003 amounted to a misrepresentation. He asserted that Abbey had incurred
considerable expenditure in preparing the scheme and submitting the planning
application and that they would not have done so if they had known of the
letter. He invited the defenders to
re-imburse the abortive expenditure and stated that he was consulting
solicitors on the matter.
[24] As
Abbey had incurred such expense, Mr Bennett was annoyed at the failure of
the project and was keen to avoid paying money for a project which would not
proceed. In my opinion his complaint to
Covell Matthews should be seen in that context as the architects had requested
that he pay an agreed fee for their work.
I consider that his complaint against the defenders falls to be viewed
in a similar light. Nonetheless, his
stance may have had a considerable influence on the pursuer's perception of
events. The anger which he expressed in his
telephone call to her and the views which he expressed in correspondence which
he copied to her appear to have caused her to view the Council's letter as
determining the development potential of the site.
[25] There
was other evidence on the significance of the Council's letter of 5 August
2003. Mr Hector Black said in
evidence that he considered the letter to be very significant as it was in
conflict with Abbey's proposal. He would
have wished to have seen the letter at the outset of the project so that he
could have discussed it with planning officials to ascertain whether they were
serious in their stance. Mr David
McFarlane, who was the planning officer responsible for processing Abbey's
application, explained that his initial view of the application was that it
involved overdevelopment of the site.
Having seen on the case file the Council's letter of 5 August 2003
he was surprised by the scale of the proposed development as there was a big
difference between what the letter envisaged and twenty flats. But he stated that the Council's letter was
simply the view of a planning official and was not a material consideration in
the determination of the planning application.
He accepted that individual planning officials might have given
differing views in response to
pre-application enquiries. In this case his consideration of the
relevant planning policies and the responses of consulted planning officials
confirmed his initial view that the Abbey proposal involved overdevelopment of
the site.
[26] The
pursuer raised this action as she attributed the decline of her nursery
business at the Buckstone Nursery to the attempted sale of the site. As Abbey and the pursuer had to notify
neighbours of the planning application, the pursuer was aware that parents
living in the locality and her staff would learn of the development
proposals. In April 2004 the pursuer
therefore advised both parents and staff of the application, explaining that
the nursery would continue to trade if planning permission were not obtained,
that the process would take time and that she would keep them informed of
developments. Thereafter parents
withdrew their children and staff sought employment elsewhere. This caused the decline of the nursery
business and she sold the part of the site on which the nursery is situated in
November 2006.
The allegations
of breach of contract and negligence: expert evidence
[27] The
pursuer averred that the defenders were in breach of an implied term of their
contract that they, and in particular Mr Porter, would attend to her
business with the degree of skill and care to be expected of an ordinarily
competent chartered surveyor experienced in advising on the marketing of
residential sites. She also averred that
parallel duties arose in delict. Her
case was that such a surveyor would know of the risk of damage to the nursery
business if parents and staff learned of the planning application and that she
had an interest in proceeding with the sale of the site only if it had a
reasonable prospect of being completed.
The Council's letter of 5 August 2003 made it highly improbable
that planning permission would be granted to Abbey's development. Her case, accordingly, was that
Mr Porter failed in his duty in three respects. First, he should have sent her a copy of the
Council's letter as soon as he received it.
Secondly, he should have given her detailed advice on the import of the
letter and informed her that the Council, having committed itself to a position
on the further development of the site, was unlikely to permit more extensive
development. Thirdly, he should have
informed the prospective developers, whom he and the pursuer met, of the letter
and asked them whether they still believed that they would obtain permission
for their schemes.
[28] The
pursuer led the evidence of Mr Peter Lyell, an experienced chartered
surveyor, who gave his evidence in a thoughtful and dispassionate way. He impressed
me as a careful witness. He
expressed the view that the Council's letter of 5 August 2003 was "an
event", a significant development in the sales process which he would have
drawn to his client's attention. He
would either have sent the client the letter or reported fully on its
terms. He considered that the Council's
response contained information which was very different from the advice which
the defenders had given their client.
If he had advised his client that a development of fourteen units might
receive planning permission, this letter would have stopped him in his
tracks. He would have expected the
defenders to have reported this immediately, either by copying the letter or at
the very least by discussing its contents with the client. The defenders' letter of 18 September 2003
was inadequate as it did not convey the gist of the Council's advice. He could not think of a good reason why a
surveyor would not send a copy of the Council's letter to his client. He opined that the defenders by failing to
disclose the terms of the Council's letter to the pursuer fell below the
standard of the competent and ordinarily skilled chartered surveyor.
[29] In so
far as the letter did not answer the question which the defenders had posed,
Mr Lyell would have sought clarification from the planning official or
have sought the advice of an architect or planning consultant. The prospects of obtaining planning
permission were important to the client's decision whether to sell the
property. He recognised that the
Council's comments were not a final decision but thought that they had the
potential to prejudice an application for a bigger development. This was because if the expressed view was
not challenged at the time it would become the planner's "default setting" in
their approach to the development of the site, namely that there was little
prospect of larger scale development being permitted. He was not surprised by Mr Bennett's
reaction when he saw the letter.
Mr Lyell thought that he might have discussed the Council's letter
with the prospective purchasers with whom the pursuer had meetings but he
emphasised that he would need the client's permission to do so. He ultimately did not suggest that it was
negligent not to do so in the light of the information which the various
offerors themselves appeared to have obtained from other planning officials.
[30] Before
discussing the expert evidence led by the defenders it is appropriate to
summarise Mr Porter's explanation of his actions. He made the enquiry to the Council as he had wanted to see if there were any
"show-stoppers" which would prevent the successful marketing of the site. He sought guidance on the permissible density
of a redevelopment of the whole site.
Having failed to get a response on the telephone, he deliberately wrote
a short and informal communication both to get a prompt response and also to
discourage too formal a response from which planning officials might be
reluctant to depart. When he received
the letter of 5 August 2003 from the Council he thought that it did not
answer the question which he had posed.
It assumed that the existing building would be retained while his
question addressed the redevelopment of the whole site. He telephoned the Council to seek
clarification but was informed eventually that the Council would neither
clarify the letter nor discuss the matter further. He did not consider that the letter was a
"show-stopper" as it acknowledged that there was scope for development. As a result of an oversight he did not
telephone the pursuer to speak about the Council's response until 15 September
2003. See paragraph 8 above.
[31] In his
experience developers who bid for a development site almost without exception
made their own enquiries of the planning department to obtain a view on the
potential of the site, as the sales particulars had suggested that they should
have done in this case. The different
offers received suggested that planning officials had given materially
different advice in response to separate enquiries. Scotia's offer confirmed this view. One of the purposes of the discussions with
Abbey and Southglen had been to explore whether they had made adequate
enquiries of the planning authority in relation to their proposals. Abbey's representatives said that they had
used their contacts to run their proposals past the planners. Their architect expressed very positive views
about his relations with the planning officials and the processes which he had
put in place for the proposal. See
paragraph 16 above. Mr Porter
thought that it would not have been appropriate to tell Abbey's representatives
of the letter of 5 August 2003 as the advice in it was only questionably
relevant and might have affected adversely the price which they would
offer. By the time he and the pursuer
met Abbey and Southglen, the various developers had made further enquiries about the site to inform
their proposals. He advised the pursuer that, if Abbey applied for permission
for twenty units, the size of their development might be reduced during the
planning process. He advised the pursuer
that both the Abbey and Southglen proposals were good quality schemes which
were worthy of consideration. The
pursuer decided to proceed with the Abbey proposal, which offered the higher
price, in the knowledge of the planning risk.
[32] Mr Porter
was not surprised by Mr Bennett's reaction but suggested that he as a
developer would seek to blame others. While
Mr Black treated the letter as being more significant than he had, he
considered that to be a question of professional judgement.
[33] The
defenders led the evidence of Mr John Brown, who also was an experienced
chartered surveyor and was a senior director in the land and development team
in DTZ, with responsibility for residential sales and development
opportunities. He explained that there
was always uncertainty in residential planning applications and observed that
the defenders had warned the pursuer of this in their initial letter of advice
dated 17 June 2003. He expressed
the opinion that Mr Porter had not acted negligently in not sending
Ms Bothwell the letter of 5 August 2003. Mr Brown did not consider the Council's
letter of 5 August 2003 to be helpful as it envisaged the retention of the
existing building and gave no indication of the possible size of the additional
unit. It did not address the possible
scale of a development which could be accommodated if the existing building
were demolished and the whole site redeveloped.
He suggested that it was not possible to make a judgement on the
prospects of Abbey's proposed development until one had negotiated with the
planning authority and tested the proposal in the planning process. The identity of case officers within the
Council could change and the contributions of other officials could alter an
initial opinion. As a result it was not
prudent to rely on an initial response to a general pre-application
enquiry. He expected that developers who
discussed particular proposals with planning officials would get more useful
guidance at the pre-application stage.
Once developers had come up with their own development schemes, he
considered that the Council's letter of 5 August 2003 ceased to be
relevant to the planning prospects of those schemes. What was important was the obtaining of the
views of planning officials on a particular scheme. It was not uncommon for a determined developer
to overcome the initial resistance of planning officials to his proposals, if
necessary by appealing to the Scottish Ministers.
[34] In
Mr Brown's opinion the weight to be attached to the Council's letter of
5 August 2003 was a matter of professional experience and judgement. He did not accept the proposition that the
Council's letter made it unlikely that planning permission would be granted for
more than one additional house on the site or that it made it very unlikely
that Abbey's proposal would receive planning permission. His view was that the letter was of little
relevance to the prospects of developing the whole site. It did not comment on density of design. Nonetheless, a chartered surveyor who decided
not to pass on such information to his client would be bold. He would have passed on the information but
would have told the client that the answer did not address the questions
asked. He would have told his client that
the letter was disappointing; it suggested that there was development potential
but there were also constraints. He
would have said that more detail was required and that one should be cautious
of relying on initial planning discussions.
What Mr Porter had told his client in his letter of 18 September
2003 was sufficient as the defenders had previously warned the pursuer of the
uncertainties associated with planning applications. He did not consider that Mr Porter had
been negligent. Mr Brown also
stated that he would not have revealed the Council's letter when one came to meet
with prospective developers as matters had moved on by then, particularly as
the developers represented that they had discussed their proposals with the
planning authority.
[35] Mr Brown
pointed out that after he had seen the Council's letter Mr Black
considered that his reduced scheme was feasible. He stated that, although Southglen's offer
had shown the value of a proposal similar to Mr Black's, the planning
potential of the site had never been tested by pursuing an application to a
decision of the planning committee.
Discussion
[36] Parties
were agreed on the law to be applied to the facts when skilled witnesses with
relevant expertise disagreed on whether the actions of a professional man
accorded with acceptable professional practice.
Mr Brown, advocate, on behalf of the pursuer submitted that the
cases pleaded in contract and delict did not differ. There had been a failure of a duty of care to
avoid foreseeable economic loss. He
accepted that the appropriate test was that of Lord Clyde in Hunter v Hanley 1955 SC 200, namely (in this context) that the pursuer had
to prove that the chartered surveyor who is said to be negligent had been
guilty of such failure as no chartered surveyor of ordinary skill would have
been guilty of if acting with ordinary care.
[37] Mr Brown
referred to my decision in Honisz v Lothian Health Board 2008 SC 235 as an adequate summary of the
relevant law where there was a conflict between the evidence on that issue
between the skilled witnesses led by each party, and the Dean of Faculty did
not demur to that. In Honisz, which concerned medical
practice, I summarised the law in
five propositions as follows:
"First, as a
general rule, where there are two opposing schools of thought among the
relevant group of responsible medical practitioners as to the appropriateness
of a particular practice, it is not the function of the court to prefer one
school over the other (Maynard v West Midlands Regional Health Authority,
Lord Scarman at p.639F-G). Secondly, however, the court does not defer to
the opinion of the relevant professionals to the extent that, if a defender
lead evidence that other responsible professionals among the relevant group of
medical practitioners would have done what the impugned medical practitioner
did, the judge must in all cases conclude that there has been no
negligence. This is because, thirdly, in
exceptional cases the court may conclude that a practice which responsible
medical practitioners have perpetuated does not stand up to rational analysis (Bolitho v City and Hackney Health Authority, Lord Browne-Wilkinson at
pp.241G-242F, 243A-E). Where the judge
is satisfied that the body of professional opinion, on which a defender relies,
is not reasonable or responsible he may find the medical practitioner guilty of
negligence, despite that body of opinion sanctioning his conduct. This will rarely occur as the assessment and
balancing of risks and benefits are matters of clinical judgment. Thus it will
normally require compelling expert evidence to demonstrate that an opinion by
another medical expert is one which that other expert could not have held if he
had taken care to analyse the basis of the practice. Where experts have applied their minds to the
comparative risks and benefits of a course of action and have reached a
defensible conclusion, the court will have no basis for rejecting their view
and concluding that the pursuer has proved negligence in terms of the Hunter v Hanley test (paragraph [36] above). As Lord Browne-Wilkinson said in Bolitho (at p.243D-E), 'it is only where
the judge can be satisfied that the body of expert opinion cannot logically be
supported at all that such opinion will not provide the benchmark by which the
defendant's conduct falls to be assessed.'"
[38] In this
case Mr Brown conceded that the pursuer had not established on the
evidence that Mr Porter should have advised her that in the light of the
letter of 5 August 2003 it was unlikely that the Council would have
granted planning permission for more than one additional unit. He also accepted that the defenders were not
under a duty to tell the pursuer of the letter immediately and that
Mr Porter was entitled to attempt to get the relevant planning officials
to clarify its terms. He submitted that
he had established breaches of duty by Mr Porter, which were a development
of his pleaded case, namely (a) the failure to inform the pursuer of the
material part of the letter of 5 August 2003 by the time she had to decide
whether or not to proceed with the proposed sale and (b) the failure to inform
prospective purchasers of that letter, having first obtained the pursuer's
permission to do so.
[39] He submitted that in relation to those two
cases he did not need to show that the expert evidence led on behalf of the
defenders did not stand up to rational analysis because there was a substantial
degree of convergence between the evidence of the two experts on those
issues. I do not accept that that was
so. Mr Porter's actions were
supported by Mr John Brown in so far as he opined that (a) if
Mr Porter did not inform the pursuer of the content of the Council's
letter beyond what was said in the letter of 18 September 2003, that would not
have been negligent but simply a question of professional judgement and (b)
that there had been no need to inform prospective developers of the letter in
October 2003.
[40] In
relation to the first case, the answer on which the pursuer principally founded
in Mr John Brown's evidence occurred at the end of his cross-examination
when he agreed with the proposition that if the pursuer had had no knowledge of
the letter of 5 August 2003 she would not have been in a position to assess the
risk of proceeding with the sale. He
said that it would have been wrong if she had not known because the letter was
a communication from the planning authority and was part of the process which
would lead to her making the decision.
In my opinion that answer must be seen as a response to the hypothesis
put in the question and in the context of Mr John Brown's evidence as a
whole. In giving his opinion that
Mr Porter was not negligent, Mr John Brown was aware of the reference
to the Council's response in the letter of 18 September 2003. He also described the Counsel's letter of
5 August 2003 as a response to a very preliminary general inquiry as
distinct from a commentary on a particular proposal. He advised that he considered that the letter
was in large measure rendered irrelevant by the information which the
prospective developers had provided, or purported to provide, about their own
enquiries of planning officials in relation to their specific proposals in
October 2003.
[41] In
relation to the second case he stated on re-examination that if, as Abbey's
representatives represented at the meeting on 30 October 2003, the prospective
developers had obtained more up to date information which was relevant to their
proposals he would not have shown them the letter of 5 August 2003. See
paragraph 34 above. In so far as there was
convergence between his evidence and that of Mr Lyell on this issue it was
that there had been no failure in duty in not telling the prospective
developers of the letter. See paragraph
29 above.
[42] I
therefore do not accept that Mr John Brown's evidence supported the
revised cases which counsel advanced on behalf of the pursuer. I am also satisfied that there is a rational
basis for Mr John Brown's
view. First, the defenders' fax was a
general enquiry and the Council's letter of 5 August 2003 did not answer the
question about the potential for the redevelopment of the whole site. Nor did it comment on a particular
proposal. Secondly, it appears to me
that the constraints on the redevelopment of the whole site which it identified
were (i) the spatial character of the surrounding houses and gardens, (ii) the
building lines and (iii) the policy guidance on protecting corner gardens.
[43] Thirdly,
as Mr Brown conceded in his submission, the letter did not make it
unlikely that the Council would grant planning permission for more than one additional
unit. The letter did not address the
redevelopment of the whole site and it appears that individual planning
officials may have given different views on the potential of the site to
different enquirers. Both Scotia
(paragraph 11) and Mr Hector Black (paragraph 20) considered that there
was scope for significant development on the site, albeit not as extensive
development as Abbey had proposed, after they had consulted planning officials
on their proposals. Southglen's proposal
(paragraph 14) which, like Mr Black's, was for six townhouses,
attributed considerable value to the site.
[44] Fourthly,
while the letter was, in Mr Lyell's words, "an event" as it was a
communication from the planning authority in response to a general enquiry, it
would in large measure have been superseded by the information which
prospective developers had obtained or purported to have obtained from planning
officials in relation to their own proposals for the site and which was
reported to the pursuer and the defenders in the offer letters and in the
meetings with prospective developers. See
paragraphs 11, 15 and 16 above. I am not
persuaded that the defenders are to be criticised for not challenging the
representations made by the developers.
[45] Fifthly,
it was a matter of agreement between the skilled witnesses that most planning
applications for significant residential development in Edinburgh involve
uncertainty. The defenders had warned
the pursuer of this at the outset. They
also warned the pursuer that in the light of the Council's response the pursuit
of a planning permission would require a determined and forceful
developer. See paragraph 9 above.
[46] Finally,
while it is possible that the planning officials who had to recommend to the
planning committee whether to grant an application would be influenced at least
unconsciously by the views expressed by another planning official on the
potential of a site in a pre-application letter, those views would not be a
relevant consideration in a planning decision.
As it appears that different planning officials may give different views
in response to general pre-application enquiries, such views would amount at
most to what Mr Lyell referred to as a "default setting" and it is the
examination of planning policies and consultation responses which should
determine a planning official's recommendations to the planning committee. This is consistent with Mr McFarlane's
description of his approach to Abbey's application.
[47] In
those circumstances, while I recognise that Mr Lyell's view of good
practice was shared by Mr John Brown as he also would have informed his
client of the gist of the letter of 5 August 2003 and while I see no
disadvantage arising from doing so, I see no basis for rejecting Mr John
Brown's view that the significance of the letter was a matter of professional
judgement and that if all that the defenders told the pursuer of the letter was
what was stated in the letter of 18 September 2003 (paragraph 9 above), that
was not a failure to show the required standard of professional skill and care,
particularly when assessed in the context of the information apparently
available to the pursuer when she decided to proceed with the sale in early
November 2003.
[48] In any
event, I am persuaded that, in either the telephone conversation of 15 September
2003 or at the meeting once the offers had been received, Mr Porter
mentioned to the pursuer the fact that the Council had referred to only one
additional unit and that they had not addressed the redevelopment of the whole
site. The contemporary telephone note of
15 September 2003 which refers to the Council's refusal to clarify
suggests that he told her the gist of the Council's response in that telephone
call, as I would have expected the pursuer, who is an alert and practical
businesswoman, otherwise to have asked what it was that they would not clarify.
Nonetheless, I consider it likely that Mr Porter would not have
emphasised the reference to one additional unit because he held the view that
the response did not answer the question which he had posed and I am not
surprised that the pursuer has no
recollection of any reference to that phrase.
It appears to me that the importance which the pursuer has attached to
the phrase in her written pleadings and in her evidence is the product of
hindsight and has been prompted in large measure by what Mr Bennett said
to her when he decided to withdraw his application and sought to blame others
for Abbey's wasted expenditure. In my
opinion the principal constraints on the redevelopment of the whole site were
those listed in paragraph 42 above.
Conclusion
[49] As I
have concluded that the pursuer has not proved that the defenders broke their
contract or were negligent in their advice to her, I sustain the second and third
pleas in law for the defenders and assoilzie them from the conclusions of the
summons.
