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Scottish Court of Session Decisions
You are here: BAILII >> Databases >> Scottish Court of Session Decisions >> McGoff v. Bonnington Roofing Ltd & Ors [2004] ScotCS 120 (20 April 2004)
URL: http://www.bailii.org/scot/cases/ScotCS/2004/120.html
Cite as: [2004] ScotCS 120

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McGoff v. Bonnington Roofing Ltd & Ors [2004] ScotCS 120 (20 April 2004)

EXTRA DIVISION, INNER HOUSE, COURT OF SESSION

Lord Osborne

Lord Kingarth

Lord Drummond Young

 

 

 

 

 

XA145/03

OPINION OF THE COURT

delivered by LORD OSBORNE

in

APPEAL

by

JAMES McGOFF

Pursuer and First Respondent;

against

BONNINGTON ROOFING LIMITED

Defender and Appellant;

and

SIGNA INSURANCE COMPANY OF EUROPE S.A. - N.V.

First Third Party and Second Respondent;

and

MESSRS CUTHBERT SERVICE AND JACKSON LIMITED

Second Third Party and Third Respondent:

_______

 

 

Act: Howie, Q.C.; MacRoberts (Defenders and Appellants)

Alt: Moynihan, Q.C.; McGrigor Donald (Second Third Party and Third Respondent)

20 April 2004

 [1]      In about September and October 1995, employees of the defender were working on the roof of a block of flats known as Clifford Court, 271 Nithsdale Road, Glasgow. The work involved inter alia the use of gas torches. The workmen completed work on Tuesday 4 October 1995 at about 4 p.m. During the course of that day, the defender's employees had used gas torches to apply mineral felt roofing. Following these events, a fire developed in the roof of the block of flats concerned. The whole roof was damaged by the fire, which was discovered at about 6 a.m. on Wednesday 5 October 1995. This fire caused extensive damage to the flats and, in particular, to the flat of the pursuer, who sues the defender for £81,200.07, which is averred to be the total loss sustained by the pursuer in consequence of the damage to his property caused by the fire. While admitting that, on 4 October 1995, employees of the defender had used gas torches to apply mineral felt roofing and that subsequently a fire occurred, which was discovered at about 6 a.m. on 5 October 1995, the defender does not admit the cause of the fire.

[2]      The present action was raised in October 2000. By an interlocutor dated 21 August 2002, the sheriff allowed the instance of the initial writ to be amended by the addition of the names of the two third parties and appointed the defender to serve third party notices upon them. The first third party is an insurance company. The second third party is an insurance broker. In due course they entered the process. The position of the defender in relation to the third parties is this. As regards the first third party, upon the assumption that the fire was caused by the fault and negligence of the defender, which is denied, the defender contends that the first third party is liable to indemnify the defender in terms of a Contractor's Combined Contract of Insurance, which is specified, which was arranged through the second third party, the defender's insurance brokers. The defender contends in averment that this Contract of Insurance covered the damage caused by the fire. As regards the second third party, upon the assumption that the first third party is not liable to indemnify the defender in terms of the Contract of Insurance, it is contended that the second third party is "liable to indemnify the defender". However, in the course of the hearing before us, it was acknowledged that that terminology was inappropriate in the circumstances. The nature of the defender's claim against the second third party was acknowledged to be a claim for reparation for breach of contract.

[3]      In response to the claim by the defender against the first third party, it is averred that certain "heat conditions" applied to the Contract of Insurance involved. The first third party avers that the defender was in breach of these conditions. In those circumstances it is claimed that the first third party was entitled to refuse indemnity to the defender, as they stated that they did in a letter to the company which placed the insurance with them, dated 15 November 1995. The position of the second third party is that liability to make reparation to the defender is denied. Furthermore, the second third party makes a case of prescription, which is briefly averred in the following terms:

"The third party notice was received on 24 October 2002. Accordingly, any obligation to make reparation to the defender has prescribed. Reference is made to the Prescription and Limitation (Scotland) Act 1973."

It is to be observed that in their pleadings the parties to this action stated a number of preliminary pleas. In consequence, a diet of debate was arranged and took place before the sheriff on 1 September 2003. Only the defender and the second third party were represented at that diet of debate. On 21 October 2003, the sheriff pronounced an interlocutor in which he repelled the defender's sixth plea-in-law and sustained the eighth plea-in-law for the second third party, to the extent of dismissing the defender's claim for a right of relief in so far as directed against the second third party. The defender's sixth plea-in-law was in the following terms:

"Separatim esto the first third party are (sic) not liable to indemnify the defenders (which is denied) the second third party are (sic) liable to indemnify the defenders in respect of the pursuer's loss, injury and damage."

The second third party's eighth plea-in-law was in the following terms:

"Esto the second third party is liable to make reparation to the defender (which is denied) the said obligation having been extinguished by the operation of prescription, the second third party should be assoilzied from the third party notice."

Against the interlocutor of 21 October 2003, the defender has appealed to this court.

[4]      In the Note associated with his interlocutor of 21 October 2003, the sheriff has set out the basis of his decision. He has explained that, in his opinion, the argument presented on behalf of the second third party was correct. Where a negligent act or omission or breach of contract has been accompanied by a quantifiable loss, he concluded that the prescriptive period of five years began to run from the date when quantifiable loss was sustained. In elaboration of that position he said this:

"In the present case, I take the view that the insurers' repudiation of the defenders' claim gave rise to the loss of certain rights under the policy of insurance which the defenders, had it not been for the alleged negligence on the part of the second third party, stood to benefit from. Therefore, the loss and damage sustained by the defenders arose at the time of the insurers' repudiation. Furthermore, that analysis is consistent with the undisputed submission advanced by counsel for the defenders in the Arif case in which Lord Coulsfield held that the pursuer's arguments were insufficient to rebut the contention that the claim must have prescribed.

Even if it could be said that being deprived of those 'rights' did not truly amount to a quantifiable loss, I consider that, on any view of matters, the defenders must be taken to have suffered a readily identifiable loss in relation to the policy premium paid. In other words, they had paid a not insignificant amount of money for insurance cover. With the effective withdrawal of that cover, certainly as far as the 'fire/roof claim' was concerned, it would mean that the defenders had overpaid in relation to the premium charged by the insurers, and would, therefore, be entitled to recover that loss.

I do not accept counsel for the defenders' contention that any diminution in the value of the premium would not amount to a 'material' loss. It seems to me that, where the defenders have paid just under £6,000 in relation to the annual premium, and the insurers have repudiated liability regarding a claim totalling £1m, the defenders have most definitely suffered a pecuniary loss of some sort."

 [5]      When this matter came before us on 20 April 2004, once again only the defender and the second third party were represented. The motion of senior counsel for the defender was that this court should allow the appeal, repel the eighth plea-in-law for the second third party and remit the action to the sheriff to proceed as accords. In the course of his submissions to us, he indicated that both he and senior counsel for the second third party were agreed that the sheriff's second ground of decision, relating to the premium paid under the Contract of Insurance, was demonstrably wrong, having regard to authorities which had not been put before the sheriff. In this connection he referred to Tyrie v. Fletcher (1777) 2 Coup. 666, at page 668. This case showed that it was a fundamental principle of a contract of insurance that, if the insurers had commenced to bear the risk concerned, for however short a time, the premium paid was not returnable. Unfortunately this case had not been cited to the sheriff.

[6]      Thereafter, senior counsel for the defender proceeded to develop an argument to the effect that the sheriff's first ground of decision, based upon the view that the repudiation of the contract of insurance, effected by the letter of 15 November 1995, had caused loss to the defender, which meant that the defender's claim against the second third party had prescribed, was erroneous. It is not necessary for us to narrate this argument in detail, in the present context. Suffice it to say that the argument depended upon facts which were recognised to be to some degree uncertain and which were not the subject of averment and, furthermore, that the argument, as supported by authority, was one which had not been presented to the sheriff.

[7]      Senior counsel for the second third party moved the court to refuse the appeal. He recognised that, unfortunately, the arguments now presented and to be presented to this court were radically different from those which had been presented to the sheriff. Furthermore, important authorities which supported these arguments had not been cited to him. In addition, he recognised that, in certain respects, the averments of both the defender and the second third party were inadequate as a basis for these arguments. He also recognised that, in certain respects, the case now sought to be put before the court depended upon facts which were uncertain and not the subject of any averment.

[8]      At this stage in the hearing of the appeal it became apparent to us that the whole position was most unsatisfactory. Arguments were being addressed to this court for consideration which depended upon uncertain facts which were not the subject of averment. Furthermore, the sheriff had heard a debate based upon different arguments and had not had the benefit of a full citation of authority. After further discussion involving both counsel who appeared in the appeal, we reached the conclusion that we should not endeavour to make a decision upon such an unsatisfactory basis. In these circumstances, we allowed the appeal, recalled the interlocutor of the sheriff dated 21 October 2003 and remitted the case to the sheriff to proceed as accords. In view of the nature of the circumstances in which this disposal was made, it was a matter of agreement that no expenses should be found due to or by either party.

[9]      We envisage that what now ought to happen is that the defender and the second third party should be given the opportunity to amend their pleadings in the action, so far as they relate to the issue of prescription, so that that issue can be properly debated before the sheriff. It is to be hoped that, on that occasion, the issues which are now seen to arise will be the subject of full debate involving citation of all the relevant authorities.

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URL: http://www.bailii.org/scot/cases/ScotCS/2004/120.html