Remedies, Contract and

Neil Beynon,

1. Introduction

1.1. The above title might, on first reading, appear to be much too broad.

1.2. The aim, however, is to offer some suggestions for when our profession returns to practising in a way that enables the legal system to function properly and fully so as to enable the rule of law to flourish.

1.3. There is citation of cases in which I have been instructed and where the judgements can be accessed on the SCTS website. One of the cases cited, McKenzie, infra, was the subject of excellent coverage in the Dundee Courier which contained a precis of the facts and the judgement illustrated by a location map and a photograph depicting the significant scale of the relevant accident and ensuing damage (24.10.2018 – Dave Finlay). The article shows that first rate court reporting directly after judgement has not been lost from the print media in . The cases have a theme – asserting property rights (in the widest sense) by way of a damages claim, interdict or other court order and defending such claims.

2.1. Contract interpretation

2.2.1. It is, I suggest, generally accepted that the case of Arnold v Britton [2015 AC] 1619 restored much needed reasonable certainty and clarity to the process of judicial interpretation of contracts. This approach has been adopted in Scotland by the Inner House with perhaps the best example being Hill v Stewart Milne Group Ltd [2016] CSIH 35. The chronology is important. The construction or interpretation of commercial contracts proceeded on the basis of clear settled principles illustrated by Professor Gloag’s textbook (2nd edition) at pages 373-374 and Lord President Dunedin’s often cited dictum in Muirhead & Turnbull v Dickson (1905) 7R 686 at 694, “Commercial contracts cannot be

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arranged by what people think in the inmost minds. Commercial contracts are made according to what people say”. That dictum attaches primary importance to the language adopted or agreed upon by the parties. In carrying out the construction exercise, the Courts here and south of the border had regard to the contract’s surrounding circumstances at the time of its conclusion and falling within the actual knowledge of the parties where such an exercise was needed. The English case of Prenn v Simmonds [1971] 1 WLR (HL) 1381 at 1385 was followed, for example, in the Outer House case of British Coal Corporation v SSEB 1991 SLT 302 at 310L. In that case, the Court required to take into account evidence from the parties’ former directors and senior managers concerning rather historic but implemented documents relative to the sale of coal by the Pursuers to the Defenders. This settled approach was the subject, in my opinion, of a radical departure by the House of Lords in a series of cases commencing with Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 WLR 896 where the approach of Lord Hoffman in that and other cases attracted both support and reservation or even disquiet. In Investors Compensation had Hoffman observed that background knowledge “includes absolutely anything which would have effected the way in which the language of the document would have been understood by a reasonable man”. This dictum, and its focus on a “matrix of fact” had these consequences: (1) prolongation of commercial litigation; with significant expenses/consequences?; (2) courts focussing not on applying the ordinary meaning of the agreed upon language but actually or coming to chase to rewriting contracts on the basis of perceived commercial realities. Point 2 was well articulated by Principal D J Risk in Partnership of Ocean Quest v Finnie Ltd 2000 SLT (Sh Ct) 157 and 161 who adopted the Hoffman method but with obvious reservation.

2.1.2. Britton saw a return to the conventional approach even though the unsuccessful parties (Lessees) clearly had the real sympathy of the Supreme Court but no more than that. By 4 to 1, with Lord Neuberger giving the leading judgement and with whom Lord Hodge agreed but with his own reasoning, the ratio is clearly one that requires the specific agreed upon language to be given its ordinary meaning as this would be read by a reasonable man. In a Scottish context Lord Hodge’s analysis (especially at paragraph [77]) is useful.

2.1.3. What has this meant in practice? Perhaps this is best illustrated by an example of court construing and applying a provision. In McKenzie and Others v (1) Asda Group Ltd and DHL Services Ltd [2018] CSOH 102, after finding that the two commercial drivers employed by the Defenders caused the accident founded upon due to their joint and several fault and the Lord Ordinary, Lord Woolman went on to make these findings:

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“Quantum [19] As I mentioned above, quantum is agreed in the joint minute. It states: ’28. In the event that the first and second defender, or either of them, is found liable to make to the pursuers, quantum of damages is agreed to the date of proof in the following sums: i. £75,000 to the first pursuer; ii. £20,000 to the second pursuer; and iii. £5000 to the third pursuer.’

[20] [Counsel for the second Defenders] argues that I should strike out the claims for the second and third pursuers on the basis that they represent pure economic loss. I construe paragraph 28, however, as precluding that argument. A joint minute is a contract. The form of words chosen by the parties here does not admit of qualification. Once the condition is met, payment must follow (my emphasis).

[21] But in any event, the claim by the second and third pursuers relates to outlays and costs incurred by them as persons then occupying Blue Cedars and does not represent pure economic loss.

Conclusion [22] At this stage I shall make an award of damages and expenses in favour of the pursuers, in accordance with the figures set out in the joint minute.”

This case is the one featured in the Courier article.

2.1.4. So, it can be seen that contractual construction has returned to what is state in McBryde on The Law of Contract in Scotland (3rd edition) at 8.08 as summarised above.

2.2. Damages for alleged exercise of undue influence and facility and circumvention

2.2.1. The conventional view has been that where a contract, including a disposition has been procured by undue influence and/or facility and circumvention, the correct remedy is to seek reduction which now can be sought in the Sheriff Court (section 38(2)(g) of the Courts Reform (Scotland) Act 2014). The basis for this was the absence of authority to the contrary: see McBryde, supra at 16.11 and 16.36.

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2.2.2 In Anderson and Anr v Wilson [2018] CSOH and [2019] CSIH 4, two of five adult daughters alleged that their late father had been subjected to undue influence and facility and circumvention by the defender husband of one of their siblings resulting in a disposition of most of the agricultural land on an estate at alleged gross undervalue. The Disposition did not include the mansion house. The Defender’s position, in fact, was that since the granting of the disposition, he had made substantial improvements to the land giving rise to a obvious defence to a claim for reduction. The Pursuers sought damages representing the difference between what they would have been bequeathed on the death of their father had there been no disposition and what they would actually receive on the winding p of the father’s estate. The Commercial Judge, Lord Bannatyne, held that damages were not a competent remedy (paras. [14] and [122]). In the Inner House, the opinion of the First Division being delivered by Lord Menzies, the competency issue was addressed in these terms on an obiter basis because the claim failed for reasons including and no title to sue. “[42] We agree with the commercial judge’s conclusion that the pursuers have made sufficiently relevant averments of facility and circumvention and of undue influence. On the basis of these averments we would have been inclined to allow the pursuers’ claims for damages to proceed to proof, were it not for our decision on the other issue.” Essentially, the Inner House agreed with the apparent in the South African civil code. Nonetheless, the Inner House’s position provides a reasonable basis for seeking damages in a future case reliant on the above grounds of fault. There was an “esto” conclusion for reduction for obvious reasons.

3.1. Delict; vicarious liability

3.1.1. On 2.3.2016, the UK Supreme Court issued 2 complimentary judgements in this area; in Cox v Ministry of Justice, the department was held liable vicariously for the negligence of a prisoner working on a paid basis in a prison kitchen who injured a catering manager; in Mohamud v WM Morrison Supermarkets plc, the defenders were found liable for the unprovoked and intentional by an employed petrol station worker on a visitor to the station. These cases are found at [2016] UKSC 10 and 11.

3.1.2. The reasoning in both cases was followed and applied in Armes v Nottinghamshire County Council [2017] UKSC 60 were a local authority was held to be liable vicariously for sexual/physical by foster parents on children under the supervision of the authority and the day to day care of the remunerated but not employed foster carers who were selected by that authority.

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3.1.3. The leading judgement in Cox and Armes was given by Lord Reed who also agreed with the judgement of the Court in Muhamed (Lord Toulson). If there was any difference in in this area then I suggest it would have been referred to but there is no such reference.

3.1.4. The review, and I would say development, of this area began with Lord Philipps of Worth Matravers’ final judgement as Court President in Various Claimants v Catholic Child Welfare Society [2012] UKSC 56 (“The Christian Brothers case”) at para 19 where he said “The law of vicarious liability is on the march”.

3.1.5. The critical task that the Supreme Court addressed (and resolved) was to resolve inconsistent case law where the wrongdoer was not an employee and often in a context where there may be a number of separate defenders who may or may not be liable vicariously jointly and severally.

3.1.6. It is clear that once there is a “sufficient connection” between the relationship of the actual wrongdoer and the main party against whom proceedings are to be directed is identified the Court should take into account these factors: (i) whether it is just, fair and reasonable to impose vicarious liability of a type/scope contended for, taking account of perhaps of insurance/ability to satisfy a judgement (not usually a key factor); (ii) whether the activity was undertaken for the benefit of te party who is to be sued on a vicarious basis and (iii) whether that party had sufficient control over that activity. There is clearly no precise test, but the old almost overwhelming focus on whether the Defender was an employer (or near equivalent) is superseded; see Cox, supra from [17] onwards.

3.1.7. To illustrate this approach I refer to a pending where, as instructed, interim interdict was obtained by the owners of a seabed cable connected the UK with the US via the Republic of Ireland. Their case was directed against the Scottish owners and operators of a modern scallop fishing vessel which dredges the seabed using a large towed plough. The Pursuers alleged that the named fishing vessel was responsible for significant seabed cable damage whilst dredging at a specific location south east of the Isle of Man. The basis of the alleged identification was a shore based vessel identification system. The basis for the averred vicarious liability for the alleged intentional, professional and ordinary negligence of the vessel’s skipper and 1st mate was (i) sole ownership and operation of the vessel by the Defenders; (ii) the ability of the Defenders to laydown and require procedures that would avoid the risk of damage to the cable completely and in accordance with long established UK statute and International regulation and practice; (iii)

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the Defenders equipping the vessel with state of the art navigation and plotting equipment designed to identify the location of the cable and the need to avoid it during operations and (v) lastly, a shared economic profit share purpose between the Defenders and the whole crew. The interim interdict has not been the subject of any attempt to recall it.

3.2. McKenzie: Fact Finding in Action

3.2.1. The basic found facts in this case were as follows. Firstly, a substantial detached residential property in the village of Drum lying to the south of the A977 linking Kincardine Bridge with Kinross was owned by the 1st Pursuer and occupied, at the material time by her and her adult daughter and school age granddaughter as a family unit. The property had substantial garden ground. Second, on the relevant date, a supermarket delivery van driven by an employee of the 1st Defenders was heading east towards Kinross with the driver looking for his next delivery address. Third, a fully laden 44 tonne aviation fuel tanker (an articulated vehicle) driven by an employee of the 2nd Defenders, attempted to overtake the delivery van using the oncoming opposite part of the 2 way carriageway. In the course of that activity the delivery van attempted a right hand turn colliding with the tanker resulting in the awful death of that driver, his vehicle ending up traversing the 1st Pursuer’s garden and spilling fuel therein. The damages claims have already been addressed in 2.1.3.

3.2.2. The Lord Ordinary had the benefit of expert reconstruction evidence but elected to treat that evidence as helpful background material [para. 11]. He noted that like many accidents, various factors can be involved, even over a short period of time but the critical task is to apply the relevant test for the existence and scope of a and then determine causation. He found both drivers negligent to a material degree on apportioning liability 75% and 25% to the respective defenders.

3.2.3. Two lessons were reinforced on me whilst preparing for and conducting the pursuers’ case. Firstly, a site inspection, well ahead of the proof was invaluable as it showed just how busy the road was in terms of volume, lawful speed and variety of traffic on a typical lunchtime/early afternoon occasion. Crossing the road for example, with the instructing , required real care to be taken. Secondly, ensuring that there was a contract governing damages (and not merely a minute of admissions simplified the Lord Ordinary’s task, I suspect.

Neil Beynon, Advocate Terra Firma Chambers | June 2020

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