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Scottish Court of Session Decisions |
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You are here: BAILII >> Databases >> Scottish Court of Session Decisions >> Martin Hines & Ors v King Sturge Llp [2009] ScotCS CSOH_96 (01 July 2009) URL: http://www.bailii.org/scot/cases/ScotCS/2009/2009CSOH96.html Cite as: 2009 SLT 763, [2009] ScotCS CSOH_96, [2009] CSOH 96, 2009 GWD 25-398, [2009] PNLR 35, 2009 Rep LR 102, 2009 SCLR 670 |
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OUTER HOUSE, COURT OF SESSION
[2009]
CSOH
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A317/07
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OPINION OF LADY STACEY
in the cause
MARTIN HINES and OTHERS
Pursuers;
against
KING STURGE LLP
Defenders:
ญญญญญญญญญญญญญญญญญ________________
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Pursuers: Jones, Q.C. (Solicitor Advocate), Hamilton; Simpson & Marwick
Defenders: Higgins; MacRoberts
1 July 2009
Introduction
[1] This is an action for damages in which I heard an interesting discussion on the procedure roll. Miss Higgins for the defenders moved me to sustain the defenders' second plea-in-law to the relevancy of the pleadings and dismiss the action, and Mr Jones and Mr Hamilton for the pursuers sought a proof before answer.
Background
[2] The first pursuer, Mr Martin Hines traded as "The Vancouver Muffin Company", 73 St Vincent Street, Glasgow as at 16 April 2005. On that date a fire occurred in the premises. The second pursuers are Wallace Commercial Limited who at the time of the fire had a place of business at 69 St Vincent Street, Glasgow. Each of the pursuers seeks reparation for the cost of physical damage to building and contents, and for loss caused by interruption of business. At debate there was no discussion about the nature and extent of the sums concluded for. The defenders are King Sturge LLP, a limited liability partnership specialising in commercial property management. The defenders are variously referred to in the pleadings as "a limited liability partnership specialising in commercial property management"; "property managers" and "managing agents". The case of Henderson v Merrett Syndicates Ltd [1995] 2 A.C. to which I refer below is a case in which the defenders are referred to as "managing agents". It will be obvious to all that the defenders in the current case are not carrying out the same function as those in the case of Henderson. It may be useful to bearing mind the lengthiest description above, that is "a limited liability partnership specialising in commercial property management."
[3] In the early hours of 16 April 2005 smoke was discovered by a member of the public in St Vincent Street, Glasgow. He alerted police officers who were on patrol nearby who in turn contacted the fire brigade and fire officers arrived at the scene. According to the averments they had difficulty in finding the source of the fire. They began by investigating at the west end of Drury Street and proceeded into West Nile Street. They then moved to St Vincent Street and forced entry to the premises. They discovered several areas of fire and extinguished them. By that time fire had damaged the part of the premises occupied by the first pursuer and by the second pursuer. The pursuers aver that investigations after the fire had been extinguished concluded that the fire had originated in the office area of the premises occupied by the first pursuer and had thereafter spread throughout the building.
The Pleadings.
[4] The averments regarding the ownership of the premises, the basis of occupation by the pursuers and the nature of the defenders function at the premises are slightly odd. The pursuers aver in article three that at the time of the fire the defenders were property managers with responsibility for the maintenance of the properties in which the businesses of the pursuers were based. In reply to those averments the defenders aver that the properties were owned by The Joint Properties Ltd (JPL). The defenders were JPL's managing agent in respect of the properties. The property at 69 St Vincent Street was let to Martin White in terms of a lease between the JPL and Mr White dated 7 and 9 December 2004. The property at 73 St Vincent Street was let to Bell Bakers Limited in terms of a lease between JPL and that company dated 1 and 9 October 2001. The pursuers do not admit the defenders' averments concerning the ownership and lease hold interests in the subjects. In article 6, the first pursuer avers that at the time of the fire, he was tenant of the basement and ground floor premises at 73 St Vincent Street. He avers that the property was owned by JPL. The defenders admit that the property was owned by JPL, and deny that the first pursuer was a tenant. While the defenders have a plea of no title to sue and pleadings to that effect the point was not taken at the debate before me and matters proceeded on the basis that both pursuers were as a matter of fact running businesses from the properties at the date of the fire, although no concession was made that the pleadings were sufficient in respect of their rights of occupation.
[5] In
Article 6 the first pursuer offers to prove that at the time of the fire that:
"The property was under the control of the defenders acting in their capacity as managing agents." The pursuer then goes on to aver that the property had a fire alarm system which had been fitted some time previous to his opening as a business. That fire alarm system comprised a detector at the front door of the property and two detectors at the mezzanine level. The fire alarm system was also fitted with a monitoring system operated under the auspices of "BT Redcare", an intelligent monitoring system which allowed any trigger of the fire alarm to be reported directly to Strathclyde Fire and Rescue Services. The purpose of this system located within the first pursuer's business was to ensure rapid fire service response and the accurate identification of the property in the case of fire. The system relied upon an alarm signal being transmitted via a dedicated telephone line to an alarm receiving station operated by Group 4 Security Limited. That alarm receiving station would then send an automated immediate alert to Strathclyde Fire and Rescue Services who would then be dispatched immediately to the precise location of the fire alert. The monitoring system had been successfully used on several previous occasions known to the first pursuer. On each one the fire brigade had attended swiftly and had immediately attended at the exact address. The last recorded signal to Group 4 Security Limited was on 16 February 2005. The pursuers aver
"It is believed and averred that the telephone line had been disconnected as a consequence of non payment of bills to British Telecom by the defenders."
The second pursuers aver that they were tenants of the second floor of the premises at 69 St Vincent Street, Glasgow.
[6] The defenders admit that the property had a fire alarm system. They also admit that "BT Redcare" is a system designed as an intelligent monitoring system but they aver that no such system was fitted at the time of the fire. They deny that the property was under their control acting in their capacity as managing agents.
[7] The pursuers aver in Article 7 that the maintenance of the fire alarm system and monitoring system in the premises of the first pursuer were the responsibility of the defenders. They aver that the defenders consequently arranged for the regular checking of both systems to ensure that the fire alarm and monitoring process was fully operational. They aver that maintenance and inspections were undertaken by CMD Fire and Security Limited ("CMD"). They aver that the defenders were fully aware that they had responsibility to the tenants and to the owner of the building for the testing and maintenance of the fire alarms. In the course of the handover meeting between the previous managing agents and the defenders on 10 December 2004, a list of contacts for various services in relation to the properties involved were discussed. The pursuers make averments about handwritten notes concerning fire alarm testing and go on to make the following averment:
"It is accordingly believed and averred that the testing of fire alarms was specifically included in the discussions between the former managing agents and the defenders as part of the hand over meetings months prior to the fire. The defenders assumed responsibility for the operation, testing and maintenance of the fire alarm systems in the buildings on behalf of the owners. The defenders owed a duty of care to the pursuers (as tenants) in the exercise of that responsibility."
[8] The
annual service charge paid by the tenants under the terms of their lease
included payment for fire alarm testing and maintenance. The pursuers aver
that the defenders accordingly knew that the defenders pursuers paid
for, and consequently relied upon, the defenders exercising reasonable care in
maintaining the fire alarm system.
[9] The pursuers aver that on 23 March 2005 an employee of CMD carried out a routine inspection and in the course of it noted that the phone line linking the alarm system and the monitoring control room had been disconnected. As a result of that the monitoring system could not function. Telephone conversations ensued thereafter between a representative of CMD and a representative of the defenders. The defenders therefore knew that the monitoring system could not function and their initial response was to ask CMD to arrange for a dedicated BT Redcare line to be reconnected or for a new line to be established. That instruction was abortive in that the representative of CMD told a representative of the defenders that he could not give instructions to BT as he did not have responsibility for the building nor for payment of the bill. The pursuers aver that the defenders' representative stated that he understood the position and would attend to reconnection of the telephone line. By the time of the fire that had not been done. Nor was any temporary signalling protection in place. The absence of a monitoring system meant that the fire services experienced significant delay in identifying the outbreak of the fire which caused or materially contributed to the extent of the fire spread and loss and hence the damage suffered by the pursuers.
[10] The pursuers aver that the defenders were aware no BT Redcare system or other temporary system was in place and that none would be so until instructed by them. Further, the defenders knew that the tenants such as the pursuers were wholly reliant on them as property managers to restore the Redcare system or a temporary alternative monitoring system. They aver that the defenders knew or should have known that telecommunication services such as telephone lines were supplied to the building for which they as property managers were responsible. The pursuers aver that under the terms of the leases in relation to each of the properties the landlords were responsible for the provision of telecommunication services and that the tenants were obliged under Clause 1.3 of the lease as follows:
"To pay when due all costs incurred by or in the name of the landlord for the provision of electricity, gas, hot and cold water, telecommunications and all other utilities to the premises."
The defenders in their capacity as property managers for the landlords were responsible for the collection of payments and charges from tenants such as the pursuers. In their capacity as property managers they were responsible for the maintenance and repair of services including telecommunication services on behalf of the landlords and for the benefit of the tenants, including the defenders. A service charge was payable under the lease in the following terms:
"To pay the landlord during each year of the period of the lease without any deduction therefrom a sum equal to a fair and equitable proportion ... of the annual expenditure, such sum (hereinafter called the service charge) being subject to the following terms and provisions - 1.5.1 The amount of service charge shall be ascertained and certified annually by a certificate fined by the landlord's surveyors, auditors, accountants, managing agents or duly appointed experienced agents."
The lease also contains the following terms:
"1.5.3 A copy of the certificate for each landlord's financial year shall be supplied by the landlord to the tenant on written request and without additional charge to the tenants.
1.5.4 The certificate shall contain a fair summary of the annual expenditure during the landlord's financial year to which it relates and the certificate ... shall be conclusive evidence for the purposes hereof of the matters which it purports to certify."
The pursuers aver that the service charge therefore covered a range of services to the building in which the pursuers carried on their business.
[11] The pursuers aver as follows:
"Any property manager exercising reasonable care would have known or should have discovered what services were provided by those contracted to serve the building under their control. The services provided are believed and averred to have included telecommunications. Further explained and averred that the reports from CMD which were sent to the defenders contained an assessment of the remote monitoring system. In each report sent to the defenders an assessment was made of 'link to the control room'. The defenders accordingly knew or should have known that CMD operated a system requiring a telephone link to an external control room."
The defenders knew or ought to have known that in the absence of BT Redcare and the absence of an operational telephone line to the property no signal could be sent directly to the emergency services.
[12] The defenders' position regarding these averments is that they admit that the defenders arranged for the regular checking of the fire alarm system; and that the relevant inspections were undertaken by CMD. Any works carried out by the defenders at or in relation to the properties were carried out within the fulfilment of their contractual obligations to the owner of the building. They were not obliged to carry out any works which were not part of their contract with the building owners. Any obligations which they had were owed to the building's owners. They did not assume responsibility to the tenants for carrying out works. They collected service charges from the tenants for the property owners. They aver that they were not at any time prior to the fire asked by the property owners to install or maintain a BT Redcare System. CMD did not report any disconnection of a telephone line relevant to any remote monitoring system in February 2005. The defenders were not responsible for the provision of telecommunication services. In terms of the leases the tenants were obliged to pay the landlords for the services provided to the landlords by the defenders.
[13] The averments of duty made by the pursuer are contained in Article 12. They are as follows:
"The defenders had a duty to take reasonable care for the safety and condition of the buildings for which they were responsible. They had a duty to take reasonable care to ensure that any fire which started in the premises under their control and for which they were responsible was detected and monitored by a fire alarm and monitoring system. They had a duty to take reasonable care to maintain the fire alarm et separatim monitoring system in a fully operational and functioning state. They had a duty to take reasonable care to ensure that when a fault was reported to them in relation to the fire alarm and monitoring system, reasonable steps were taken to ensure those faults were remedied within a reasonable period. They had a duty to take reasonable care to ensure that phone lines upon which the monitoring system depended were not disconnected. They had a duty to take reasonable care to ensure that once a disconnected phone line was identified to them, reasonable steps were taken to ensure a temporary digital communicator was put in place to ensure immediate monitoring coverage for the properties under their control and for which they had responsibility."
The defenders deny these duties.
Submissions for the Defenders.
[14] Counsel opened the discussion by advising that she would address three basic issues as follows:-
1. A general discussion of what a duty of care is.
2. A discussion of existence of a duty of care by virtue of assumption of responsibility by the defender and
3. The effect of concurrent contractual obligations.
In the first part of her submissions she referred firstly to Caparo Industries plc v Dickman [1990] 2 AC 605. She referred to page 617G in the speech of Lord Bridge of Harwich for the proposition that a series of decisions of the Privy Council and the House of Lords have emphasised the inability of any single general principle to provide a practical test which can be applied to every situation to determine whether a duty of care is owed and if so what is its scope. Counsel submitted that it is necessary for there to be foreseeability of damage, but it is also necessary that there should exist between the party owing the duty and the party to whom it is owed a relationship characterised by the law as one of "proximity" or "neighbourhood" and that the situation should be one in which the Court considers it fair, just and reasonable that the law should impose a duty of a given scope upon the one party for the benefit of the other. She drew my attention to his Lordship's speech page 627:-
"It is never sufficient to ask simply whether A owes B a duty of
care. It is always necessary to determine the scope of the duty by reference
to the kind of damage from which a A must take care
to save B harmless".
His Lordship then went on to quote from Brennan J. in Sutherland Shire Council v Hayman 60 A.L.R. 1 as follows:
"The question is always whether the defendant was under a duty to avoid or prevent that damage, but the actual nature of the damage suffered is relevant to the existence and extent of any duty to avoid or prevent it."
Thus, it is not enough to ask if A owes B a duty. Rather one has to examine the actual nature of the damage and decide if the tripartite test is met, which involves foreseeability, proximity and whether it is fair, just and reasonable that there should be a duty. Counsel referred to the speech of Lord Oliver of Aylmerton at page 651 in which his Lordship said that proximity is an expression used not necessarily as indicating literally "closeness" in a physical or metaphorical sense but merely as a convenient label to describe circumstances from which the law will attribute a duty of care. The duty of care is inseparable from the damage which the plaintiff claims to have suffered from its breach. It is not a duty to take care in the abstract but a duty to avoid causing to the particular plaintiff damage of the particular kind which he has in fact sustained. She made reference to the speech of Lord Jauncey of Tullichettle at page 654 from which Miss Higgins submitted one could take that there must be a relationship of proximity before any duty of care can exist but the scope of the duty must also be determined. The scope will depend on all the circumstances of the case. While the concept of proximity is difficult to define, counsel referred to Lord Jauncey's remarks at page 655:- "the circumstances in which the law considers it proper that a duty of care should be imposed on one person towards another". She noted that his Lordship went on to say that
"if in any given circumstances a relation of proximity is found to exist, consideration must still be given to the scope of the duty which arises therefrom. In the case of physical proximity few problems will arise, but where there exists a duty of care in relation to the making of statements written or oral problems may arise if those statements are capable of being used for more than one purpose."
In the case of Caparo, the question before the Court related to the making of a report by auditors which was required by statute. The plaintiffs had relied on the report for their own purposes. It was found that the auditors did not owe any duty of care to those plaintiffs. Counsel argued that before any duty could be held to exist the person said to owe a duty would need to know that reliance was being placed on him to carry out the duty. She referred to the case of Mitchell &c v Glasgow City Council [2009] UK HL 11. It was held by the House of Lords that the City of Glasgow Council did not owe a duty to take certain steps in relation to the safety of one of their tenants who was killed by another tenant. Counsel made reference to Lord Hope of Craighead's speech at paragraph 21 as encapsulating the current law as follows:
"It must be shown that harm to B was a reasonably foreseeable consequence of what A did or failed to do, that the relationship was one of sufficient proximity, and that in all the circumstances it is fair, just and reasonable to impose a duty of care towards B."
His Lordship analysed the situation between the local authority and the tenant and came to the conclusion that it would not be fair, just or reasonable to hold that the defenders were under a duty to warn the deceased of the steps that they were taking to deal with the other tenant and that the case made against the local authority was irrelevant. The legal relationship was also analysed by Lord Scott of Foscote at paragraphs 39 and 40 in which he said as follows:
"Yet it is accepted in both jurisdictions that the Pharisee who passed by the injured man on the other side of the road would not, by his failure to offer any assistance, have incurred any legal liability. A legal duty to take positive steps to prevent harm or injury to another requires the presence of some feature, additional to reasonable foreseeability that a failure to do so is likely to result in the person in question suffering harm or injury. The Pharisee, both in England and Wales and in Scotland would have been in breach of no more than a moral obligation.
The requisite additional feature that transforms what would otherwise be a mere omission, a breach of at most a moral obligation, into a breach of a legal duty to take reasonable steps to safeguard or to try to safeguard the person in question from harm or injury may take a wide variety of forms. Sometimes the additional feature may be found in the manner in which the victim came to be at risk of harm or injury. If a defendant has played some causative part in the train of events that have led to the risk of injury, a duty to take reasonable steps to avert or lessen the risk may arise. Sometimes the additional feature may be found in the relationship between the victim and the defendant: (eg. employee/employer or child/parent) or in the relationship between the defendant and the place where the risk arises (eg. a fire in the defendant's land as in Goldman v Hargraves [1967] 1 E.C. 645). Sometimes the additional feature may be found in the assumption by the defendant of responsibility for the person at risk of injury (see Smith v Littlewoods Organisation [1987] AC 241). In each case where particular circumstances are relied on as constituting the requisite additional feature alleged to be sufficient to cast upon the defendant the duty to take steps that, if taken, would or might have avoided or lessened the injury to the victim, the question for the Court will be whether the circumstances were indeed sufficient for the purpose or whether the case remains one of mere omission."
Counsel argued that the question to ask is whether the defenders have a duty in order to prevent the particular harm which has befallen the pursuer. She argued that if the defenders' duties are formally regulated, for example by contract, then there is not likely to be a further set of delictual duties.
[15] Counsel summed up her argument so far thus. (1) New categories of duties of care are to be developed incrementally and by analogy. (2) The tripartite test requires the following (i) foreseeability, (ii) proximity, (iii) that it is fair, just and reasonable that a duty of the scope proposed be found to exist. In deciding whether something is fair, just and reasonable one has to consider public policy. (3) When considering the circumstances in regard to the provision of services one must have regard to the circumstances in which they are supplied and the purpose for which they are supplied. (4) The law will only consider a duty to exist in circumstances going beyond the intended purpose of those services when the party rendering services is aware of additional reliance being placed on them. (5) The law does not normally impose a positive duty on a person to protect others. (6) Liability in negligence is not imposed for mere omissions. It is necessary that there be an additional feature such as the assumption of responsibility. (7) It is necessary to consider two things, whether there is a contractual relationship and whether matters are regulated by contract.
[16] Counsel argued that a duty could arise when the person said to owe a duty knew or ought to have known that the other person relies on him in carrying out the task. She addressed the case of Hedley Byrne & Co Limited v Heller & Partners Limited [1964] AC 465, drawing my attention firstly to the speech of Lord Morris of Borth-y-Gest at page 502. It should be regarded as settled that if someone possessed of a special skill undertakes, quite irrespective of contract, to apply that skill for the assistance of another person who relies upon such skill, a duty of care will arise. Counsel submitted that Lord Devlin's speech at page 528 made clear that the categories of special relationships which may give rise to a duty to take care are not limited to contractual relationships or those of fiduciary duty but include relationships which are equivalent to contract in the sense that there is an assumption of responsibility and that it is not necessary that there is an express assumption. It may arise by means of implication.
[17] Counsel then referred to the case of Henderson &c v Merrett Syndicates Limited &c [1995] 2 AC 145 and to the speech of Lord Goff of Chieveley at page 178. She took from his Lordship's speech that the test is an objective test in which one is seeking to discover whether the person claiming damage did in fact rely on the defender. The state of mind of the defender is not determinative of the existence of a duty; rather the test is met by looking objectively at all the circumstances to see if the pursuer did rely on the defender and if it was reasonable that he did so.
[18] Counsel next referred to the case of Williams v Natural Life Foods Limited [1998] 1 WLR 830 from which she said one could derive from the speech of Lord Steyn at page 834 the following. (1) The test is an objective test. (2) Once it has been established that a case is identified as falling within the extended Hedley Byrne principle there is no need to embark on any further enquiry as to whether it is fair, just and reasonable to impose liability for economic loss. (3) It is clear that reliance upon the assumption of responsibility by the other party is necessary to establish a cause of action, as a matter of causation in "statement" cases and (4) the existence of a contractual duty of care between the parties does not preclude the concurrence of a delictual duty in the same respect.
[19] Counsel submitted that:- (1) If someone who has a special skill undertakes to apply it for the assistance of another who relies on it a duty of care may arise. (2) If the particular facts give rise to an inference of an express or implied undertaking of responsibility then a relationship equivalent to contract exists, and there may be a duty of care. (3) An objective test has to be applied in assessing whether there has been an assumption of responsibility. The primary focus is on things said or done by the defender and his dealings with the pursuer in context. (4) If it is established that there is an assumption of responsibility then one needs to show reliance on it to establish a cause of action. There must be in fact reliance, and the reliance must have been reasonable. (5) It is necessary to show an assumption of responsibility that creates a special relationship between the pursuer and defender.
[20] Counsel next referred to the case of William Hill Organisation Limited v Bernard Sunley & Sons Limited (1982) 22 B.L.R. 8 which she referred to the Opinion of Lord Justice Cumming Bruce for the proposition that delictual duties will not exceed contractual duties. She referred to the case of Tai Hing Cotton Mill Limited v Liu Chong Hing Bank Limited [1986] AC 80 for the proposition that parties' mutual obligations in tort cannot be any greater than those found expressly or by necessary implication in contract, per Lord Scarman at page 107. Counsel then turned to the case of South Australia Asset Management Corporation v York Montague Limited [1997] AC 191 and in particular to the speech of Lord Hoffman at page 221. As I understood her, she did so for the point that the scope of duty may be limited by contract. In summing up her arguments on the contractual matters counsel argued as follows:- (1) If there is a contractual relationship there is no bar to reliance on concurrent delictual duties. (2) Unless there is pleaded any fact which would modify or add to the delictual duties then the contract circumscribes the boundaries and defines the content of the duties.
[21] Counsel then
turned to the pleadings. She began by pointing out that the pursuers averred
that the defenders were "property managers with responsibility for the
building". The defender's answer to that was that the property was owned
by the landlords, JPL, and that the defenders were JPL's managing agents but
that was not admitted by the pursuers. She noted that it was averred by the
pursuers that the pursuer was the tenant and that the property was owned by
JPL. The pursuers averred that the property was under the control pf of the
defenders. That was a bare averment with no basis in fact averred for it. There
was no reference to any lease and it was not clear on these pleadings what
right the pursuers had to be in the premises. All that was averred was that
the defenders were managing agents for the building in which the pursuer had
his business. It was not explained by whom the managing agents were engaged,
on what basis, nor what was the scope of any work they had to carry out. She
categorised the averments that the defenders had responsibility for maintaining
the premises and that the defenders had the building under their control as
being so vague as to be meaningless. There is no mention in the pleadings of
the Occupiers Liability (Scotland) Act 1960, and so no case is made under that statute. The averment
that the defenders had assumed responsibility on behalf of the owners was
irrelevant because there was no basis for them doing anything on behalf of the
owners. The averments do not explain how this responsibility was assumed, when
it was assumed, or to whom they took responsibility. The averments about the
service charge were irrelevant. It is not unusual according to counsel that
the service charge is paid to the landlord but is collected by the managing
agent. The management agent does no more than collect a debt due and this is
not an action which would be categorised in law as one which meant that the
managing agent was assuming any duty of care. All that is averred in fact is
that the landlord is entitled to be indemnified by the tenant for the cost of
upkeep of the building and the way that he does that is by having the managing
agent send out invoices. That did not import any relationship between the
tenant and the person who collected the debt. Counsel said that the averments that
the defenders were aware that the tenants, such as the pursuers, were wholly
reliant on the defenders as report managers had no averments of fact to support
the statement. There were no averments of dealings between the management
agents and the pursuers. There is nothing in the pleadings to show that the
managing agents knew the identity of the pursuers or had anything to do with
them. Anticipating the pursuers' argument, counsel submitted that if it were
to be argued that the tenant would have recourse to the managing agent if
something went wrong within the building, that must be incorrect. Any tenant
would have recourse to the landlord. There are no averments that the pursuers
ever told the managing agents that they were relying on them.
[22] Counsel turned
to the duties of care set out in Article 12, page 35. She submitted that
there is no factual averment that gave rise to such a wide duty as that first
pled, which is near to occupier's liability. As to the rest of the duties
pled, she argued that now no factual basis
for them had been pled.
[23] Counsel summed up her position by stating that there is no basis given for the requisite degree of proximity between the pursuers and the defenders. The pursuers do not aver who engaged the defenders nor the basis on which they were engaged. The pursuers claim that they are tenants, but the leases referred to do not name either of them. There is no averment that the defenders had any dealing with the pursuers or knew of their identity.
[24] She argued that if one were to look to see whether it was fair, just and reasonable to impose the duties referred to on a managing agent the answer would be that it is not. If a managing agent is engaged by the landlord then he has duties to the landlord unless he has assumed expressly or impliedly duties to other people. This is both pragmatic and good policy. It would be impossible for managing agents to do their job if they were to be liable to anyone affected by the building. For example it would be inappropriate to make the managing agent liable for default in the safety of a building unrelated to service that he has contracted to carry out. It would make no commercial sense to impose such a duty on a managing agent.
[25] Counsel submitted that there are no relevant averments that the pursuers relied on the duty said to be at the heart of the action, being in this case a duty to reinstate the monitoring line. She argued that the circumstances pled in which services were rendered regarding maintenance of the fire alarm systems are such as to show that they were all rendered to the landlord and were all in the context of the agreement between the landlord and the tenant. There are no averments that the tenants would have had any recourse to the managing agents if dissatisfied. One does not know from the pleadings what the arrangements with the landlord are. The law will only take a duty to exist where it is for an intended purpose and where the party is aware of additional reliance on its services. There is nothing in these pleadings that shows that the defenders were or should have been aware of reliance by the pursuers. There is nothing in these pleadings to the effect that the defenders told the tenants that they were maintaining the system. As there is no positive duty on a person to protect others unless there have been such assertions and reliance on them then there is no relationship and therefore no duty and the case cannot succeed. It is an objective test as to whether there is an implied assumption of responsibility. The state of mind of the defender is not the test. Thus one must look at things said or done by the parties, but in these pleadings there are no averments of any dealings between the parties. There is no contractual relationship averred between pursuers and defenders. As between the defenders and the landlords any duties would be in contract and counsel argued that the managing agents would not have duties beyond those that they had undertaken to the landlords.
Subsidiary argument for defenders.
[26] Counsel turned
to a second argument. This was to the effect that the pursuers make no
averments that, had the alleged duty existed and had it not been breached, there
would have been a functioning dedicated telephone line for a monitoring system
at the date of the fire. With regard to the averments about the monitoring
system she said that there were no factual averments about what the defenders
would have to do to take reasonable steps nor were there any averments about
what would be a reasonable period in which they must act. There are no
averments about taking general responsible responsiblity for
the monitoring system. She argued that the defenders were told on 23 March 2005 that there was no direct warning
line and that the fire happened on 16 April 2005. She submitted that the
pursuers would have to aver, for a relevant case in causation, that following 23 March 2005 it would have been reasonable to
have a phone line in place by the date of the fire and they do not do so.
[27] Counsel moved for dismissal of the pursuers' case. In the case of Jamieson v Allan McNeil & Son 1974 SLT (N) 9 Lord Maxwell dismissed a case of alleged professional negligence at debate on the basis that our system of pleading still requires in actions for damages for negligence first that the essential facts relied on should be set out with reasonable clarity; that the duties alleged to have been breached should be plainly stated and should be duties which the court can be satisfied at least might have been incumbent upon the defenders in law in the circumstances averred. She referred to Lord Hope of Craighead's speech in the Mitchell case at paragraphs 11 and 12, in which his Lordship reiterated the advantages of dealing with cases by debate as to the relevancy of the pleadings. Her argument was that this was a case which was dependent on law not fact and therefore there was no need to have a proof before answer in order to decide the case.
[28] Junior counsel for the pursuers opened his reply by saying that this was a simple and straightforward case which ought to go to proof before answer. He argued that it was sufficient that the pursuers had averred that the property was under the control of the defenders as managing agents. There was proximity between the managing agents and the pursuers by the fact that the pursuers were in the building and managing agents were there to look after the building. There was no one else who had responsibility for the fire alarm. He argued that it was enough that the pursuer offered to prove that the maintenance of the fire system in good working order was the job of the defenders. He argued that the simple case was that fire damage was caused by an alarm being defective and that the pursuers offered to prove that the managing agents had a duty to look after the fire system. He referred to the case of White v Jones [1995] 2 AC 207 which he said showed that a broad view of the existence of duty was taken by the Courts. He argued that there was no other remedy available other than that sought. White v Jones concerned disappointed beneficiaries in a case where a solicitor had not carried out the instructions of a testator prior to his death. In the report of the case before the Court of Appeal, at page 222 Sir Donald Nichols V.C. contrasted that case with the Caparo case by saying:
"The very purpose of the employment of the solicitor is to carry out the client's wish to confer a particular testamentary benefit on the intended beneficiary. There is no other purpose. If the solicitor negligently fails to achieve that purpose justice requires that there should be some remedy available."
According to counsel's argument the present case was similar in that the purpose of employing managing agents to look after a building was to keep it safe for the people working there. He referred to Customs & Excise Commissioners v Barclays Bank plc [2007] 1 A.C. for the purpose of showing that the tests used in considering whether those sued as causing pure economic loss owed a duty of care disclosed no single common denominator by which liability could be determined and the Court should focus its attention on the detailed circumstances of the case and the particular relationship between the parties in the context of their legal and factual situation taken as a whole. On that basis Mr Hamilton submitted that this case was suitable for proof before answer.
[29] On the second day of this procedure roll junior counsel outlined the three areas in which he proposed to develop his argument as follows:- (1) The duty of care by assumption of responsibility. (2) The contractual agreement by the defenders and (3) When the defenders should have acted in relation to the defenders' second argument.
[30] He argued under reference to the case of White v Jones that if the relationship between the pursuers and the defenders was within the category of special relationships a duty of care thereby exists and it is not necessary that there is actual reliance by the pursuers. He stated that the origin of the relationship was in the contract between the defenders and the owners of the building. He submitted on an esto basis that if it was necessary to show that reliance was placed by the pursuers then the pleadings were sufficient to do these. Counsel argued that if the Court was not with him on either of these points then he would fall back on a tripartite Caparo test which he argued was satisfied. He referred further to the Customs & Excise case and to paragraph 82 on page 213, in the speech of Lord Mance. He argued that pursuant to the contract between owners and managing agents, the defenders had undertaken management of the building and were thereby in a relationship with those occupying the building which imported a duty on them to take reasonable care to keep safe those people. That special relationship does not depend on mutual dealing still less a relationship similar to a contract. All that it means is that "A has assumed responsibility for B's affairs". He argued that reliance is not necessary. It is sufficient that A knows that B's economic wellbeing is dependent on A's careful conduct. He drew a distinction between negligent statements where there will require to be reliance as a matter of causation because if there is no reliance on a negligent statement then there can be no loss, and negligence by acting or failing to act. In actions for negligence by action or inaction there is no requirement for reliance. Forseeability of conduct causing damage is enough. Counsel argued that what the defender has assumed is responsibility for the task, that is in this case, taking care of the fire system, and not for legal liability. He referred to the speech of Lord Browne -Wilkinson in the case of White v Jones at page 273. When responsibility for the task is assumed, counsel argued, the person assuming responsibility thereby creates a special relationship which creates a duty to carry out whatever the task may be carefully. He summed this up by saying that a professional person undertakes to perform work whether under a contract or not to enable a party to confer a benefit on an identified third party then he owes a duty to the third party to perform that work with reasonable care.
[31] Turning to the facts of this case counsel made the following eight submissions:- (1) The defenders assumed responsibility for the task of maintaining the fire alarm and monitoring system in the building. (2) A special relationship was created, such that the law imposed a duty to carry out the task with reasonable care. (3) The defenders assumed responsibility for the task of maintenance and monitoring pursuant to a contract with the landlord. That contract contained the origin of the task and the task is the origin of the duty. (4) The pursuers do not have to show reliance on the assumption by the defenders of the task nor do they need to show mutual dealing. The duty exists regardless of either. (5) The defenders knew the pursuers' economic wellbeing in the form of a successful business and use of commercial property depended on the defenders' careful conduct. (6) In a case such as this, if there is negligent inaction, the foreseeability of the defenders' careless conduct causing damage to the pursuers is sufficient to found liability. (7) The defenders undertook to perform work including maintenance of the fire alarms and the monitoring system in order to allow JPL to confer a benefit on the tenants including the pursuers. The benefit is the early detection of fire. (8) In these circumstances a duty is owed.
[32] Counsel's secondary position was that if he needed to meet the objective test of reliance, then his pleadings do so. The defenders are specialists in managing commercial property. He argued that the relationship of proximity is present because the alarm is there to protect the tenants and the proximity is plain as they are in the building. He pointed out that those who work in the building had no relationship with CMD, who actually maintained the fire alarm system. Therefore they had no remedy except to sue the defenders.
[33] Mr Hamilton then referred to the case of Realstone Limited v Messrs J. E. Shepherd &c [2008] CSOH 31, decided by Lord Hodge. He made reference to paragraph 10 in which Lord Hodge made the familiar observation that the Court may dismiss an action on relevancy only if it is satisfied that even if the pursuers were to prove their record on all material points the action would nonetheless be bound to fail. In paragraph 12 Lord Hodge stated that he was not persuaded that the mere existence of a contractual chain from A to B to C means in all circumstances that C cannot owe A a duty of care to avoid causing A economic loss. One has to look at the circumstances of the particular case. At paragraph 24 Lord Hodge stated that he considered that a proof before answer was necessary to determine the existence of a duty of care in the case with which he was dealing. In paragraph 25 he made reference to the Customs & Excise case which he found emphasised the need to have regard to the detailed circumstances of the particular case and the particular relationship between the parties.
[34] In dealing with counsel for the pursuers' second point, Mr Hamilton submitted that Article 6 of Condescendence, page 10D to page 11B explained precisely how the functioning telephone line is central to the operation of the monitoring system. Page 12A-B emphasised that the operational phone line is essential. Page 13A-B has averments that the defenders arranged for checks to ensure that the monitoring process was fully operational. Page 14E to page 16A has averments which set out how important this is and at page 16C it is averred that absence of the line is causative of the loss and damage. At page 16D to 17C it is averred that had the defenders restored the telephone that would have avoided or minimised the loss. At page 23D to 24D there is a plain statement of what the defender should have known and should have done and at page 35D to 36C there is a plain statement that based on those averments the defenders had a duty to ensure that there was a functioning telephone line. He noted that the defenders argue that the pursuers had to aver that it would have been reasonable for the defenders to have had a phone line installed in the period between 23 March and 16 April. His response to that was that the pursuers offer to prove that if the defenders had ensured that the telephone line was present the loss would not have been suffered. He therefore invited the Court to reject the second aspect of the defenders' argument.
Reply for the defenders
[35] Counsel replied. She said that in the case of White v Jones an incremental move had been made from the case of Ross v Cauntors [1980] Ch. 209. In the present case there was no analogous situation to that of a managing agent to allow incremental development. There were no averments that there could be no recovery against anybody else and therefore that should not be considered at procedure roll. She argued that it is not appropriate to describe the tenant in this case as a person who was entitled to a benefit in the same way as the disappointed beneficiary in the case of White. This is because the landlord engages managing agents to maintain his own building and therefore does it for his own benefit. If a landlord failed to maintain his own building he could lay himself open to action by his tenants or at least to the withholding of rent. Therefore he has an interest in contracting with managing agents. She pointed out that many landlords appoint managing agents for empty buildings or indeed for buildings that they occupy themselves. Thus the situation is different from the case of the testator and the solicitor.
[36] With regard to the case of Realstone, Miss Higgins argued that Lord Hodge set out in paragraph 13 that the surveyors in that case had drawn up a plan in return for a fee. It was arguable that a duty would be likely to be owed in those circumstances. In the present case there were no averments to enable the court to consider the situation; rather there were bare averments of duty with no backing in factual averments. In the Customs & Excise case and in particular at paragraph 8, page 192 it was clear that the matter had to be looked at in the context of the whole situation. While that would normally suggest that a proof before answer would be required, she submitted that the pleadings in this case are inadequate for inquiry. There are no pleadings about any factual situation.
[37] In relation to her second argument, counsel said that the pursuer's relied on references to faxes sent on 23 March 2005 and she submitted that the pursuers have no information at all and therefore no factual basis for their averment on page 24 and page 19 to the effect "believed and averred". Mr Jones who made the fourth speech agreed with this and wished to have it put out for a By Order hearing if I was against him on this.
Reply for the Pursuers.
[38] Senior counsel for the pursuers made the fourth speech and opened by saying that the only criticism of the pursuers' pleadings that he was prepared to accept is that the pleadings are overstated not understated. He adopted his junior's submissions. This is a simple and straightforward case. It is averred that the defenders were "in control". This was described as a bare averment. It may be bare but is all that is needed. He suggested that the real matters in issue were as follows:- (1) Where A has agreed to provide services for B and A delegates provision of those services to C, whether C owes a common law duty of care to B in the provision of the services. In that example, A is the landlord, B is the pursuers and C is the defenders. Where it is C's job to maintain a fire alarm and C fails to do so with the result that the fire goes undetected and thereby causes loss and damage which otherwise would not have occurred and is attributable to C's fault and neglect, is C in breach of duty of care and if so to whom? His answer to that second question is that he is in breach of a duty of care. Senior counsel argued that defenders' counsel had to distinguish this case from White v Jones. She had begun to do so by saying that the facts were not analogous. She pointed out that it concerned solicitors not managing agents. She said that the pursuers cannot show a case from which they are going to make an incremental step. This makes it different from the case of the testator and the solicitor. His response to these criticisms was as follows:- (1) The pursuers do not rely on White by analogy. He accepts that White was incremental and was built on the case of Hedley Byrne. It established a new category of case as can be seen in Lord Bingham's speech. The pursuers rely not on analogy and not on increment but on principles enunciated by Lord Bingham. These were approved by Lord Mance.
[39] He then went toaddressed
the the absence of pleadings as to the
terms
of the contract between landlords and defenders. He said that tThe
existence and terms of the contract are only relevant to an understanding of
the particular task which the defenders appear to assume or undertake. The
obligation on the landlord is to secure maintenance and that is set out at page
13A. The defenders assumed responsibility for the operation, testing and
maintenance of the fire alarm system. At page 21A-B of the record the pursuers
say that there is a contract and that is all they need to say. Mr Jones
turned to White and Lord Goff's speech at 259G. Mr Jones
submitted that the House of Lords look at policy decisions to see whether or
not they should extend the reach of the law. Once they have done so, lower
Courts should follow them rather than look at policy considerations.
Mr Jones argued that it was not fair, just and reasonable that the
wrongdoer should escape liability.
[40] He then
went on to discuss the formula "believed and averred". He said that he
accepted that it was meant to be an inference drawn from facts pleaded. He had
checked his papers and he could assert as a matter of fact that the telephone
line had been disconnected because the agents had failed to pay the bill. If
therefore the Court took the view that the pleadings on causation were
deficient by use of the formula "believed and averred" he would want the case
put out By Order so that he could consider whether or not he should amend. He
said that the same position is true of the other causation point concerning the
timing of the reinstatement. He argued that the date by which they knew there
was no system was 23 March and the fire happened on 14 April. He said it was
plain that the pursuers were saying that if they the
defenders had not been negligent they would have reinstated if it before
the fire. If however the Court was of the view that the pursuers need to spell
that out he would wish to have the case put out By Order.
Discussion
[41] The defenders have argued that the pleadings are fundamentally irrelevant and that the ascertainment of facts will not assist in determining whether a duty exists, and what is its scope. They argue that this is a case in which dismissal at this stage is appropriate. The pursuers in contrast argue that they have averred a relevant case and that a proof before answers should be allowed. In my opinion the pursuers have failed to state a relevant case.
[42] The pursuers aver that they were running businesses in the premises at the time of the fire but do not aver on what legal basis they were there. There are no averments about any lease entered into between the pursuers and the owners of the building. In my opinion the pleadings must fairly be read as admitting that the managing agents were appointed by the owners of the building. There are no averments about any express reliance by the pursuers on the defenders, nor are there any pleadings about circumstances from which it could properly be inferred that the pursuers firstly relied on the defenders and secondly made it known to the defenders that they were doing so. There are no averments that the pursuers had any contractual relationship with the defenders.
[43] The law is not concerned with negligence in the abstract but only with failure to take care where there is a duty to take care and where the failure has caused the damage complained of. It is essential to consider firstly whether a duty exists. The ways in which duties may arise are many and varied and as was said by Lord MacMillan in Donoghue v Stevenson 1932 SC (HL) 31 the categories of negligence are never closed. Since then, various tests have been used in law in deciding on the existence and extent of duties.
[44] It is necessary to consider in each case what the pursuer offers to prove in order to determine whether a duty of the scope claimed does in law exist. The situation with which this case is concerned is one which can be described as a failure on the part of the defenders to act. There is in general no duty on one person, legal or natural, to prevent harm to another. Such a duty may exist where there is foreseeability of damage and proximity recognised by law such as in the situation of those using a public road on which to drive a car. There may be such a duty if the defender has assumed responsibility for the wellbeing of the pursuer. Such an assumption may arise from the relationship between them such has that of parent and child or in other ways. The law may decide that there is a relationship between the parties in the situation arising which creates the duty to take care. Or the duty may arise from an express or implied assumption in the particular circumstances of the case. If a duty does arise, the defender is under a duty to take reasonable care for the safety or well being of the pursuer and is liable for omissions as well as acts. The case of Customs and Excise Commissioners v Barclays Bank is authority for the proposition that the test set out in Henderson v Merrett is not a conclusive single test; one may seek assumption of responsibility and if it is not found go back to the Caparo tripartite test.
[45] It
seemed to me, following discussion of the law as set out in the cases of Hedley
Byrne v Heller, Caparo Industries v Dickman, Henderson v
Merrett, White v Jones, Williams v Natural Life foods, Customs
&Excise v Barclays Bank, Mitchell v Glasgow City Council and
Realstone Ltd v J & E Shepherd that there is no single clearly
defined test of the existence of a duty. Rather there must be a careful
consideration of all the facts and circumstances in order to decide if a duty
does exist. In order to carry out that careful examination there must be
pleadings from which the court could find that such a duty does exist. Therefore
it is necessary to have factual averments from which the court may understand
the nature of the relationship, and may, if so advised,
hold that the relationship is such as to impart a duty and to give reasons for
so holding.
[46] There are no averments in this case which lead me to conclude that the pursuers' offer to prove that the defenders expressly assumed responsibility for the pursuers' well being and that the defenders knew that the pursuers were relying on them. There are no pleadings to the effect that the defenders undertook to the pursuers that the defenders would supply, or maintain, any fire precautions at all. Nor are there any pleadings to the effect that the pursuers told the defenders that they were relying on them to provide and maintain efficient fire precautions. Rather it seems to me that the pleadings suggest that the defenders were in a contractual relationship with landlords and that they would therefore carry out such services as the landlords requested of them. The arrangements for fire precautions were the responsibility of the landlords and for all that is seen in the pleadings the landlords could have decided to remove any precautions which existed. If they did so, they might or might not be in breach of any contract which might exist between the landlords and the pursuers, but there are no pleadings on that subject. Any such decision would on these pleadings be a matter not for the defenders but for the landlords. The pursuers aver that the property was under the control of the defenders acting in their capacity as managing agents. I agree with counsel for the defenders' submission that that is a bare averment with no other averments of fact to specify what is meant by it. Similarly, the averment that "the maintenances of the fire alarm system and monitoring system in the premises were the responsibility of the defenders" is a bare averment with no factual averments on which to base it. The averment that "the defenders were fully aware that they had responsibility to the tenants and to the owner of the building for the testing and maintenance of the fire alarm systems" has no factual basis in the pleadings. There is nothing from which it can be inferred that the defenders had any such awareness.
[47] The averments at page 14 of the record to the effect that there were discussions between managing agents when one firm took over from another do not seem to me to be of relevance to the assumption by the defenders of duties to the pursuers. The pursuers aver that the pursuers paid a service charge for fire alarm testing and maintenance. That averment does not seem to me to indicate anything other than that the landlord had certain obligations under the lease.
[48] The duty
that the pursuers seek to found on is said to be a duty on the part of the
managing agents based on their proximity in law to the pursuers. I am not
persuaded that that is made out. I agree with the defenders submission that
any extension of the ambit of the duty of care requires an incremental approach
and justification by the pursuers, and moves by means of analogy with existing
duties. There is no case to which I have been referred of managing agents
having the duty sought by the pursuers. I can see no basis for extending it in
the way that the pursuers seek. If it were suggested that a reasonable way to look
at this would be to ask "who does the managing agent do the work for?"
I prefer the answer of the defenders, that he does it for the owner to the
answer for the pursuer that he does it for the pursuer. That is because he
takes instructions from the owners. On counsel for the pursuers' argument the purpose
of the work is to keep the property safe for the businesses which are run
there. But counsel for the defenders is I think correct when she argues that
the purpose is the preservation of property for the benefit of the land lord.
It seems to me that the essence of this case is the lack of any averments from
the pursuers that they relied on the defenders to attend to fire protection for
reasons such as that the defenders told them they would do so, or that the
pursuers told them they were so relying without demur from the defenders. This
can be seen in the Henderson case where Lord Goff of Chieveley at page 189 quotes from
Oliver J in Midland Bank Trust Co Ltd v Hett Stubbs and Kemp
[1979] Ch 384.
"The case of a layman consulting a solicitor for advice seems to me to be as typical a case as one could find of the sort of relationship in which the duty of care described in the Hedley Byrne case exists; and if I am free to do so in the instant case I would therefore hold the relationship of solicitor and client gave rise to a duty in the defendants under the general law to exercise the care and skill upon which they must have known perfectly well their client relied. To put it another way, their common law duty was not to injure their client by failing to do that which they had undertaken to do and which at their invitation he relied on them to do. ...."
In relation to the test set out in Henderson v Merret and as interpreted in Customs & Excise v Barclays Bank there are no averments that the pursuers relied on the defenders, and told the defenders that they were relying on them to maintain the fire alarm in working order. If, for example, JPL had told the defenders that they were to cease contracting with any service contractor for the fire alarm then there is nothing in the pleadings to indicate that the pursuers would have expected to have been told by the defenders.
[49] Nor am I persuaded that the pleadings disclose a state of affairs from which it can be inferred that the test set out in Caparo is met. It may be foreseeable that damage to business conducted within the premises may occur if the fire alarm system is not maintained, but I do not find averments from which the other components of the test, proximity and the fair just and reasonable component, could be met.
[50] I am not of the view that these averments are such as to require proof before answer. While it is clear that all the circumstances must be considered and while I am mindful of the test to be met before dismissal, namely that even if the pursuers prove their averments, they must fail, I agree with counsel for the defenders that there are not sufficient averments to warrant inquiry. I am rather of the view that this is a case similar to that referred to by Lord Hope of Craighead in the Mitchell case which fails the test of relevancy. Had I been of the view that the case did warrant inquiry I would have put it out by order as requested in order that the pursuers might consider their position on the secondary argument.
[50] In those circumstances I dismiss the action. I was not addressed on expenses.