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CRUDEN BUILDING AND RENEWALS LIMITED AGAINST SCOTTISH WATER


Submitted: 05 July 2017

Web Blue CoS

OUTER HOUSE, COURT OF SESSION

[2017] CSOH 98

 

CA152/16

OPINION OF LORD BANNATYNE

In the cause

CRUDEN BUILDING & RENEWALS LIMITED

Pursuers

against

SCOTTISH WATER

Defenders

Pursuer:  D Thomson; Burness Paull LLP

Defender:  Balfour;  BLM

5 July 2017

Introduction
[1]        This matter came before me for debate at the instance of the defenders.  The pursuers are suing for damages arising out of an escape of foul water from the defenders sewer, onto a site on which the pursuers were at the material time a contractor carrying out building works.  The pursuers were the contractors in terms of a Development and Licence Agreement between Glasgow Housing Association Limited and Cruden Holdings (West) Limited dated 26 June 2013 (“the contract”).  The action is based on fault and negligence, breach of statutory duty and nuisance.  As a result of the escape of foul water the pursuers were delayed in the carrying out of the contract work resulting in economic loss.

 

The issue
[2]        The issue was this:  whether, on the basis of their averments, the pursuers have title and interest to sue the defenders?

 

The material averments
[3]        The pursuers made the following averments of fact regarding their possession of the site: 

            In Article 2 of condescendence:

“The Pursuer is a company which trades inter alia as a housebuilder.  In or around 2015 the Pursuer was constructing a housing development at a Site known as Prospecthill Circus, Toryglen, Glasgow (“the Site”).  As the contractor carrying out the development upon the Site, the Pursuer had a right to possession of the Site.  The Pursuer thus had a possessory right to the Site.  … With reference to the Defender’s averments in answer admitted that the Pursuer did not have legal ownership of the Site.  Quoad ultra denied.  Explained and averred that, for the reason herein before condescended, upon the Pursuer did have a possessory title to the Site.  While performing the works in respect of the development upon the Site, the Pursuer had a right to possession of the Site and could not be deprived of such possession of the Site.”

 

In Article 4 of condescendence the Pursuers averred:

“The nuisance created by the Defender interfered with the Pursuer’s comfortable enjoyment of the Site (in particular, the Pursuer’s ability to carry on the works in respect of the development upon the Site), in respect of which it had a right of possession.”

 

The pursuer in addition made the following averments in Article 5 of condescendence:

 

“The Defender owed those duties to proprietors and occupiers of neighbouring properties, such as the Pursuer, who had a possessory title to the Site based upon its right of possession thereto.”

 

 

[4]        The following averments were made in Article 6 of condescendence with respect to the loss, injury and damage alleged to have arisen:

“The Site in respect of which the Pursuer had a possessory title, based upon its right of possession thereof, was damaged as a result of the escape of foul water.  It was contaminated with sewage.  In respect of Site A, the escape of foul water continued until on or around 10th March 2015.  That is to say, foul water escaped onto Site A for a period of approximately 9 weeks.  Once the escape of foul water had ceased, the Defender advised that there should be no human activity in affected areas for 4 clear weeks in order to allow bacterial contamination to die off.  In order to mitigate further delay the Pursuer booked in mains service contractors … to coincide the recommencement of mains services works with the expiration of the decontamination period.  The escape of foul water caused a serious delay to the carrying out and completion of the works to Site A.  The works to Site A were eventually completed on or around 24th June 2015.  That is to say, the works to Site A were delayed by approximately 13 weeks overall.  In respect of Site B the escape of foul water continued until on or around 20th April 2015.  That is to say, foul water escaped onto Site B for a period of approximately 15 weeks.  Once the escape of foul water had ceased, the defender advised that there should be no human activity in affected areas for 4 clear weeks in order to allow bacterial contamination to die off.  In order to mitigate further delay the Pursuer booked‑in mains services contractors … to coincide the recommencement of mains services works with the expiration of the decontamination period.  The escape of foul water caused a serious delay to the carrying out and completion of the works to Site B.  The works to Site B were eventually completed on or around 18th December 2015.  That is to say, the works to Site B were delayed by approximately 19 weeks overall.  … As a result of the delay to the completion of the works in Site A and Site B the Pursuer incurred substantial costs.”

(My emphasis)

 

[5]        Finally in Article 6 of condescendence this is averred:

 

The groundworks contractor undertook works to mitigate the impact of the escape of foul water on the Site.  It also undertook works to clean, tidy and repair damage resulting from the escape of foul water.” (My emphasis)

 

The material contract provisions
[6]        In terms of the contract at page 1 Cruden Holdings (West) Limited are defined as the developers and at page 2 the pursuers are stated to be the approved contractor.

[7]        The rights of occupation of the developer of the site are as set out in terms of clause 14.1 and 14.5 of the contract which provided:

“14.1 Licence to Occupy:  From and after the Date of Commencement for each Phase GHA shall grant … the Developer the right under licence (but not an exclusive right of occupation) to enter upon the part of the Site on which the relevant Phase is to be constructed for the sole purpose of carrying out the GHA Works and the Developer works, and for no other purpose whatsoever. 

 

… 14.5 for the avoidance of doubt the Developer shall not by virtue of clause 14.1 … or any other part of this Agreement have or be entitled to any tenancy or other estate, right, title or interest in the Site, other than to the extent of such licence granted.”

 

[8]        It was not a matter of contention that four points could be taken from these provisions:

(a)        Cruden Holdings (West) Limited were granted a licence.

(b)        Cruden Holdings (West) Limited were not granted a tenancy or other interest in the site.

(c)        Cruden Holdings (West) Limited were not granted an exclusive right of occupation. 

(d)       Cruden Holdings (West) Limited sole right to enter the site was for the purposes of the contract work and no other basis whatsoever.

[9]        In terms of clause 18.2 Cruden Holdings (West) Limited are entitled to alienate their rights in terms of the contract to the approved contractor and that was the pursuers.

[10]      It was not disputed that in light of the foregoing provisions the limitations to the right of possession which applied to Cruden Holdings (West) Limited equally applied to the pursuers.

[11]      Clause 4.1 of the contract essentially incorporated a standard form building contract.  Only one provision of the standard form building contract was of any significance namely:  clause 7.3 which provides:

“7.3 Access:  The Developer shall permit GHA and others duly authorised by GHA to enter upon the Site or any part thereof from time to time at any time during normal working hours (by prior notice of at least 24 hours (or immediately in the case of emergency) and in the case of all parties after reporting to the site office and complying at all times and in all respects with the principal contractor’s reasonable requirements for the purpose of viewing and examining the progress of the Developer Works and of ascertaining generally that the agreements, conditions and stipulations herein contained have been and are being duly observed and performed provided that, in the course of any such inspection, GHA and others duly authorised by GHA shall be entitled to discuss matters with the Developer but in no event may it give any instructions to any other persons on the Site.  The Developer shall procure that GHA and those authorised by GHA shall at all reasonable times have access to the Developer Works.”

 

[12]      When read in conjunction with clause 14 this defined the nature of the pursuers’ possession of the site.  Again it was not a matter of dispute that nothing in clause 7.3 conflicted with clause 14.

 

The submissions on behalf of the defenders
[13]      The core submission on behalf of the defenders was a short one.  The pursuers had not relevantly averred a title to sue.  In particular in a case based on damage to property, such as the present case, it was necessary for them in order to establish a title to sue to aver that they had a proprietary right or a right of possession similar to that of an owner with respect to the site.  They had not done so.  In support of his contention that such averments were necessary, counsel directed the court’s attention to the decision of the First Division in Nacap Limited v Moffat Plant Limited 1987 SLT 221 (“Nacap”).  It was his position that the relevant law was conveniently summarised in this case. 

[14]      The facts of the case insofar as material for the purposes of the argument before me are as set out in the headnote:

“The pursuers were laying a pipeline on behalf of the British Gas Corporation.  The pipeline was owned by the corporation.  While the pipeline was in the course of being laid by the pursuers, and at a time when the pursuers were contractually liable to the corporation for any damage to the pipeline, the pipeline was damaged.  The pursuers brought an action for damages seeking to recover from the plant hirers responsible for causing the damage the costs incurred by the pursuers in making good the damage to the pipeline.  The defenders contended that the pursuers had no title to sue for damage to the property of the corporation.”

 

 

[15]      Mr Balfour submitted that the issue which was considered in Nacap was identical to that which divided the parties in the present action. 

[16]      In Nacap at p222, it was accepted the case was governed by the following statement of the law by Lord Brandon of Oakbrook in Leigh and Sillavan Ltd v Aliakmon Shipping Co Ltd 1986 2 WLR 902 at 809:

“My Lords there is a long line of authority for a principle of law that, in order to enable a person to claim in negligence for loss caused to him by reason of loss or damage to property, he must have had either the legal ownership of or a possessory title to the property concerned at the time when the loss or damage occurred, and it is not enough for him to have only had contractual rights in relation to such property which have been adversely affected by the loss of or damage to it.” 

 

The court in Nacap by reference to the speech of Lord Brandon of Oakbrook then explained the justification for this rule.

 

“In the course of his speech, Lord Brandon of Oakbrook explained that the justification for this principle is that some limitation must be imposed upon the liability of a wrongdoer towards those who have suffered damage in consequence of his negligence.  Considerations of policy make it necessary to have such a rule.  The rule is simple to understand and easy to apply;  it is important that there should be certainty in law.  Similar views were expressed by Lord Fraser of Tullybelton in Candlewood Navigation Corporation Ltd v Mitsui OSK Lines Ltd.  At p. 17 he stated under reference to earlier authorities:

 

‘They show, in their Lordships’ opinion, that the justification for denying a right of action to a person who has suffered economic damage through injury to the property of another is that for reasons of practical policy it is considered to be inexpedient to admit his claim.’ ”

 

[17]      Thereafter the court explored by reference to the line of authority relied on by Lord Brandon of Oakbrook what was meant by a possessory title and gave the following guidance:

“… it is clear that the distinction which is being drawn is between ownership or a right of possession similar to that of an owner on the one hand and, on the other hand, mere contractual rights to have the use  or services of the chattel for certain limited purposes” (see p223)

 

[18]      The court finally at p223 applied the principle set out by Lord Brandon of Oakbrook to the facts of the case and it observed with respect to the rights of possession the pursuers had as follows:

“In our opinion, although the pursuers no doubt had physical possession of the pipes while they were laying the pipeline in the sense that they handled the pipes, any possession which they had was for a limited purpose only.  Any possession which they had was much less than that enjoyed by an owner or a person with a possessory right or title as recognised by the law.  Any possession which the pursuers enjoyed was for the limited purpose of proceeding with the construction of the works.  As already observed, the pursuers were not the owners of the pipeline.”

 

The court then explained the nature of the rights that the pursuers did have:

 

“In our opinion any rights which the pursuers had in relation to the pipeline arose under the terms of the contract between the pursuers and the British Gas Corporation and were thus ‘contractual rights in relation to such property which have been adversely affected by the loss of or damage to it’.  Indeed the terms of the contract between the pursuers and the British Gas Corporation make it clear that the pursuers are given possession of the site not to enable them to enjoy any broad right of possession, but so that they may perform on the site duties which are laid upon them under the contract.  To describe the pursuers’ right as a ‘possessory right or title’ is, in our opinion, wholly inaccurate.  The true description of the pursuers’ rights in relation to the pipeline is that these rights are contractual rights.  That being so, the pursuers are not persons entitled to claim in negligence for loss arising from the damage to the pipeline.”

 

 

[19]      Mr Balfour’s position was this:  the facts in the present case cannot be distinguished from those in Nacap.  The conclusion reached by the court in Nacap applies with equal force in the present case and accordingly the pursuers have no title to sue. 

 

The reply on behalf of the pursuers
[20]      Mr Thomson’s primary response to the defenders’ argument was equally pointed and was this:  the pursuers’ action is not for loss in the form of damage to the site or loss arising from damage to the site rather it is for economic loss arising from the delay which was occasioned to the works which the pursuers were carrying out on the site.  Accordingly, the present case can immediately be distinguished from cases such as Nacap.

[21]      Put another way, what the pursuers were seeking to recover was losses arising from disturbance or interference occasioned to the pursuers’ possession of the site by the ingress of water caused by the defenders. 

[22]      He did not take issue with Mr Balfour’s analysis of what the pursuers had in terms of the contract by way of possession.  Nevertheless, that gave them title to sue given that their action was not for loss in the form of damage to the site or loss arising from damage to the site.  They were claiming loss due to interference or disturbance with their possession of the site.  It was not necessary in these circumstances for the pursuers to have a proprietary right or a possessory right in the site as described in Nacap.

[23]      In development of the above he referred me to a Canadian case, from the Federal Court of Appeal:  R v Walter Cabott Construction Ltd (1975) 21 BLR 42 and in particular he directed my attention to the following observations of Urie J at pages 56 and 57.

“… it is fundamental to a building contract that work space be provided unimpeded by others.  The proposition of law is succinctly put by the learned author of Hudsons Building and Engineering Contracts, 10th Edition (1970), at p318, as follows:

 

‘Since a sufficient degree of possession of the site is clearly a necessary pre‑condition of the contractors performance of his obligations, there must be an implied term that the site will be handed over to the contractor within a reasonable time of signing the contract … and, in most cases it is, submitted, a sufficient degree of uninterrupted and exclusive possession to permit the contractor to carry out his work unimpeded and in the manner of his choice.  This must particularly be so when a date for completion is specified in the contract documents.’ ”

 

[24]      What Mr Thomson took from this passage was the following:  to the extent that the contract document says that:  what was given to the pursuers was not a lease;  exclusive rights of possession were not given to the pursuers;  the purpose for which possession was given was to carry out contract works, then so be it.  In the context of the present action these considerations were of no relevance. What was of significance was this:  the rights given to the pursuers were such that they had possession of the site to the extent that nobody including the owner of the site could interfere or disturb the pursuers in their performance of their contractual obligations. 

[25]      Accordingly, a fortiori the defenders could not interfere with the pursuers’ said right of possession.  Their wrongful act had caused such disturbance or interference with the pursuers’ right of possession.  It had caused them delay and thus economic loss.  It was his position that in such circumstances the pursuers in order to have title to sue did not have to show ownership with respect to the site or a possessory right similar to ownership.

[26]      In support of this argument Mr Thomson directed the court’s attention to Mull Shellfish Ltd v Golden Sea Produce Ltd 1992 SLT 703 (“Mull Shellfish”).  In this case the defenders had challenged the pursuers’ right and title to sue.  The pursuers who were mussel farmers in terms of a tenancy from the Crown Estate, claimed for loss arising from damage caused by the defenders to free floating mussel larvae.  The pursuers, it was accepted, had no proprietary or possessory right to the larvae.  Nevertheless, the court repelled the defenders’ argument that the pursuers had no right or title to sue.  It was Mr Thomson’s position that the ratio of the decision was this:  although the pursuers had no proprietary or possessory title to the larvae nevertheless a disturbance or interference with the larvae by the defenders which had resulted in economic loss to the pursuers was sufficient to give them title.  The above situation he submitted was analogous to the possession by the pursuers of the site and the defenders interference with that possession in the present case.

[27]      Mr Thomson went on to argue that a secondary reason for holding that the present case could be distinguished from Nacap was this:  the line of authority on which the defenders relied was essentially based upon considerations of policy and pragmatism (see:  for example, the discussion in Nacap at page 222 H to L).  The principle founded upon was seen not to be unjust because, for example, the person who directly suffered loss (in the form of damage to his property) could in principle assign his claim to others who suffered correlative harm (see:  Nacap, at page 224A).  However, in the present case:  the pursuers did not sue in respect of damage to the site, further, if the pursuers could not proceed against the present defenders it would be without a remedy since there could be no question of an assignation from the owner of the site.

[28]      Moreover, Mr Thomson advanced a secondary argument, that even if the court were not with him in respect to his primary argument, it was his position that the pursuers in any event had such a possessory right with respect to the site as was envisaged in Nacap.

[29]      In support of the above argument he took as his starting point the right of possession which a contractor such as the pursuers obtained as explained by Urie J in R v Walter Cabott Construction Ltd.

[30]      In development of this argument he submitted:  one cannot dismiss the significance of such rights obtained by a contractor merely because they are contractual;  a right of possession under a lease, for example is contractual but is sufficient to give title to sue inter alia in respect of economic losses (see:  Hand v North of Scotland Water Authority 2002 SLT 798).  Rather, he submitted the critical question was this:  whether there was a right of possession, which was being exercised, at the time of the loss and damage.  As the Lord Ordinary in the case of North Scottish Helicopters Ltd v United Technologies Corporation Inc 1988 SLT 77 at 81 observed of the line of authority upon which the present defenders rely.

“In none of the cases cited did the claimant maintain that he had possession of the property in question at the material time”.

 

[31]      By contrast, he submitted, that is precisely what the pursuers do offer to prove in the present case.

[32]      Lastly he argued that failing the court being satisfied by either of the above detailed arguments, nevertheless, he submitted that there was a rather uncertain dividing line between those cases in which a pursuer will and will not have a title to sue in cases of the present type.  The requirement that an action should not be dismissed unless the pursuer is bound to fail, even if he proves all of his averments (see:  Jamieson v Jamieson 1952 SC (HL) 44), is acutely engaged in such cases.  Consistent with that, it should be noted that in Mull Shellfish the court observed at page 706:

“In our opinion in order to justify dismissal of the action the appellants have to show that on no reasonable view of their averments can the respondents be considered to have a title or interest to sue the appellants for damages for nuisance in the circumstances disclosed in the pleadings …”

 

 

Response on behalf of the defenders
[33]      With respect to the arguments advanced by Mr Thomson in terms of Mull Shellfish, Mr Balfour said this:  the critical distinction between that case and the present case was that the pursuers had a lease.  They had a right of possession of the type envisaged by Nacap.  There was no merit in this argument.

[34]      So far as the pursuers’ attempt to distinguish the present case from Nacap he submitted that the principle outlined in that case could not be read as being limited in the way submitted by Mr Thomson.  It was a general principle which covered the circumstances of the present case.    It clearly covered economic loss and he reminded me of the remarks of Lord Fraser of Tullybelton in Candlewood Navigation Corporation Ltd v Mitsui OSK Lines Ltd [1986] AC 1 at page 17 which are quoted with approval in Nacap:

“They show, in their Lordships opinion, that the justification for denying a right of action to a person who has suffered economic damage through injury to the property of another is that for reasons of practical policy it is considered to be inexpedient to admit this claim”.

 

[35]      He went on to refer to two sections of the pursuers’ pleadings.  These are underlined in the averments earlier set out in this opinion and submitted that these averments emphasised the point he had made above that the present case could not be distinguished from Nacap.

[36]      So far as the pursuers being left without a remedy, he submitted that this formed no basis for ignoring the principle in Nacap.  The purpose of the legal principle was to limit the liability of a wrongdoer.

[37]      Turning to the observations of Urie J in R v Walter Cabott Construction Ltd he submitted that the present case was one where there were express provisions governing the nature of possession given to the pursuers.  There was no basis for implication of terms into the contract regarding this issue.  Therefore the observations had no relevance.  Secondly and more significantly, any possession given to the pursuers in terms of the contract was far removed from the possession contemplated in Nacap

[38]      Turning to Hand v North of Scotland Water Authority his position was that he accepted that a leaseholder had sufficient possession to fall within the ambit of the principle in Nacap.  The difference between the possession of a tenant and the possession of the pursuers was stark and accordingly the decision in Hand added nothing to the pursuers’ argument.

[39]      Finally with respect to North Scottish Helicopters Ltd v United Technologies Corporation Inc he said this:  in North Scottish Helicopters the pursuers enjoyed broad rights of possession.  In contrast the pursuers in the present case only had narrow and very limited rights of possession.  He submitted that the decision in North Scottish Helicopters Ltd v United Technologies Corporation Inc in no way supported the pursuers’ position.

[40]      So far as the pursuers reliance on Jamieson v Jamieson it was his position that the court could at this stage form a clear view regarding title on the basis of the pleadings as they stood.  There is no reason to send the case to a Proof Before Answer.

 

Procedural history following avizandum
[41]      Following my making avizandum and having written my opinion but before I had signed the opinion and interlocutor, the pursuers sought leave to amend.  This was opposed.

[42]      The material provisions of the minute of amendment were that the pursuers sought to delete the said two underlined sections of the pleadings and to decrease the sum sued for to reflect that they no longer sought to recover certain expenses.

[43]      The matter came before me for a hearing.  Mr Thomson explained that the purpose of the minute of amendment was this:  Mr Balfour had relied in his submissions on these two passages in the pleadings.  Mr Thomson’s position was that he accepted that there was damage to the site but the pursuers’ position was that their claim was not founded on this.  He wished by means of the minute of amendment to make this absolutely clear.  The action was based on interference by the defenders with the pursuers’ ability to carry out their obligations in terms of the contract.

[44]      Having heard Mr Thomson, Mr Balfour took a pragmatic view and did not oppose the amendment.  I accordingly allowed the pleadings to be amended.  Both parties were thereafter content to allow the case to proceed on the basis of their submissions already made.  I thereafter resumed consideration of the case on the basis of the pursuers’ averments as amended.

 

Discussion
[45]      I start with the pursuers’ primary argument that the present case can be distinguished from cases such as Nacap as the pursuers are suing for economic loss arising from delay occasioned to their carrying out of the contract works and not for loss due to damage to the site or arising therefrom, accordingly the principle explained by Lord Brandon is not applicable in the present case.

[46]      I am satisfied that there is no point of distinction.  The wrong in the present case was done to the site.  It is due to what happened to the site as a result of the leaks from the sewer that the pursuers aver they sustained loss.  But for the damage which occurred to the site, as a result of the escape of water from the defenders’ sewer, the pursuers would not have been delayed, would not have suffered loss and there would have been no basis for their action.  They have suffered economic damage through injury to the property of another, namely:  the site.  I believe the pursuers cannot separate their claim from what happened to the site.  The underpinning of their claim is what happened to the site, namely:  the damage to the site.

[47]      All the pursuers have in relation to the site is contractual rights which have been adversely affected by the damage to the site which resulted in the delay to their carrying out of the contractual works and consequential economic loss.  The pursuers’ case fully falls four square within the line of authority cited by Lord Brandon.  It cannot be distinguished therefrom.

[48]      Beyond the above I think that it is instructive when considering Mr Thomson’s primary submission to examine one of the authorities, cited by Lord Brandon as founding the principle, enunciated by him in Leigh and Sillavan Co Ltd v Aliakmon Shipping Co Ltd namely:  Cattle v Stockton Waterworks Co 1875 LR 10 QB 453.

[49]      The material facts are:  a waterworks company had a main which was situated on a road.  K was the owner of the field on both sides of the road.  The plaintiff was employed by K to create a tunnel under the road in terms of a contract at a fixed price.  There was a leak from the defendant’s main which obstructed the plaintiff’s works and thus delayed their completion causing pecuniary damage to the plaintiff.  The court held that the damage sustained by the plaintiff by reason of his contract with K becoming less profitable, or becoming a losing contract, in consequence of injury to K’s property, gave the plaintiff no right of action against the defendant.

[50]      I believe that this case deals precisely with the situation before me.  The plaintiff in

Cattle v Stockton Waterworks Co and the pursuers in the present action both made a claim for economic loss arising from delay which had been incurred in their carrying out of a contract.  A delay in each case had been caused by ingress of water due to the fault of a water company.  I can identify no point of distinction between Cattle v Stockton Waterworks Co and the present case. 

[51]      I note that in the speech of Lord Fraser of Tullybelton in Candlewood Corporation Mitsui Ltd [1986] AC 1(referred to with approval in Nacap) at page 17 E to F he says this with respect to the Cattle case:

“These two cases of Cattle, LR 10 QB 453 and Simpson, 3 App Case 279 have stood for over 100 years and have frequently been cited with approval in later cases, both in the United Kingdom and elsewhere.  They show, in their Lordships’ opinion, that the justification for denying a right of action to a person who has suffered economic damage through injury to the property of another is that for reasons of practical policy it is considered to be inexpedient to admit his claim.”

 

[52]      I am of the view that the decision in Cattle v Stockton Waterworks Co clearly shows that the primary submission made on behalf of the pursuers that the present case can be distinguished from the line of authority referred to in Nacap is incorrect.  Beyond the above, I have also found assistance in considering the primary issue before me, in the observations regarding the principle of Scrutton LJ in Elliot Steam Tug Co Ltd v Shipping Controller 1922 1 KB 127 at 139/140, where under reference to Cattle v Stockton Waterworks he says this:

“At common law there is no doubt about the position.  In the case of a wrong done to a chattel the common law does not recognise a person whose only rights are a contractual right to have the use or services of the chattel for purposes of making profits …… without possession of or property in the chattel.  Such a person cannot claim for injury done to his contractual right.”

 

Applying this formulation of the principle to the circumstances of the present case I note:  the pursuers only had the use of the site (the chattel) in order to make a profit and a wrong was done to the site causing economic loss.  Thus they have no title to sue.

[53]      Further Mr Thomson in advancing his argument that the present case could be distinguished from the said line of authority cited by Lord Brandon directed the court’s attention to a single authority, namely:  Mull Shellfish. 

[54]      I do not regard the opinion of the court in that case as supporting the pursuers’ position that they do not require to have a right of ownership or a right of possession similar to an owner to establish a title to sue. 

[55]      Mr Thomson emphasised that the pursuers in Mull Shellfish had no proprietary or possessory right in the mussels or mussel larvae nevertheless it was held that the defenders had failed to demonstrate that the pursuers had no title and interest to pursue the claim.  The argument advanced by Mr Thomson then proceeded;  the decision in Mull Shellfish in essence was:  that all that had to be shown to establish title was that mussel larvae had been interfered with or disturbed by the actings of the defenders and this had resulted in economic loss to the pursuers as mussel farmers. 

[56]      However, on examination of the opinion of the court I am persuaded the foregoing submission is incorrect.  Rather, the decision of the court to reject the defenders primary position that there was no title to sue appears to be based on the pursuers’ rights as tenants. 

[57]      The court at p706 sets out the defenders’ contention that the lack of proprietary or possessory right in the mussel larvae means the pursuers had no title to sue. 

[58]      The court then at p707 explains that the defenders contention cannot readily be reconciled with:

“…the passage in Rankine on leases (3rd Ed), at page 709, which is in the following terms:  ‘the title of a tenant to sue a neighbour in respect of actual or threatened injury caused through the fault of the latter, or through nuisance … depends solely on the amount of his interest in the subjects let to him.’ “

 

[59]      I take from the above passage that the court is saying that one basis for rejecting the defenders’ position is that the pursuers were a tenant.

[60]      In elaboration of their position the court goes on at p707to explain:

“Accepting as we do that the leases of the seabed sites were drawn restrictively and contained no express rights to take mussel larvae or mussels from the loch, we consider that the question nonetheless still arises whether such rights are conveyed by the Crown to the respondents by necessary implication from the express terms of the leases.  It seems clear that just as proprietary rights in mussels and scalps can be rendered nugatory by the poisoning of free floating larvae in the surrounding sea, so a tenant’s right to rear and cultivate mussels, restricted though that might be, can equally be rendered nugatory.  It appears to us that the express terms of the leases granted by the Crown to the respondents do necessarily imply that the respondents are to have the right which the Crown alone would otherwise enjoy to attract free floating mussel larvae to settle upon the equipment which they are entitled to have at their sites, there to appropriate them to be reared and cultivated as mussels for them to market.”

 

[61]      It seems to me what the court is saying is that by implication into the lease the pursuers are given a possessory right similar to ownership in the mussel larvae.

[62]      I consider that on a proper analysis of the reasoning in the opinion the court allowed the matter to proceed to Proof Before Answer on the basis that the pursuers could establish right and title through the leasehold interest which they held. 

[63]      I do not find anything in the decision which assists the argument advanced by Mr Thomson.  Right and title in the Mull Shellfish case was based on the interest of the pursuers as tenant who has a possessory right which is a right of possession similar to that of an owner (see:  Hand v North of Scotland Water Authority).  The pursuers in the present case are not in the position of a tenant.  Rather they are in an entirely different position.

[64]      I think Mr Balfour was correct in asserting that Mull Shellfish falls within the line of authority referred to by Lord Brandon.

[65]      For the foregoing reasons I conclude that the pursuers’ first argument that the present case could be distinguished from cases such as Nacap is not well‑founded and falls to be rejected.

[66]      Mr Thomson advanced a second argument as to why Nacap could be distinguished.  This was to the effect that the principle in Nacap was based on policy and pragmatism.  It should not be applied to the present case as it would leave the pursuers without a remedy.

[67]      I believe, on a consideration of the basis for the principle, which emerges from the authorities, that Mr Balfour is correct in saying: the purpose of the rule is to limit the liability of the wrongdoer and therefore the consideration that if Nacap is followed the pursuers are left without a remedy is irrelevant and gives no basis for not following the principle in Nacap.

[68]      Mr Thomson, on the basis that if I were not with him in respect of his primary submission, went on argue that the pursuers in any event had such a possessory right as was envisaged in Nacap and accordingly they could bring themselves within the ambit of the principle in Nacap.

[69]      So far as this argument is founded on the observations of Mr Justice Urie in Cabott I observe first the pursuers’ rights of possession with respect to the site are based on express provisions of the contract and not on any implied right. 

[70]      Secondly any possessory right which the pursuers obtained as a result of the terms of the contract is as submitted by Mr Balfour a far cry from the possessory title as contemplated in Nacap, namely:  a right of possession similar to an owner.  The right given to the pursuers in terms of the contract is of a wholly different character, nature and extent.  It is a very limited and circumscribed right which has none of the elements necessary to make it similar to a right of ownership.

[71]      I am not satisfied that the decision in Hand v North of Scotland Water Authority supports an argument that the pursuers contractual right of possession is of a type which falls within the definition of possessory right in Nacap.  The material facts in Hand v North of Scotland Water Authority are these: 

“The tenant of a public house under a registered lease raised an action of damages against a water authority, claiming solatium and loss of revenue allegedly as a result of a persistent ingress of water caused by the perforation and blocking of a sewer.”

 

[72]      The defenders sought dismissal as the pursuer did not have a proprietary or possessory right in the public house.  The Lord Ordinary at paragraph 8 rejected the defenders’ argument.  He explained the basis of his decision in this way: 

“The pursuer has possession of the heritable right of lease registered in the General Register of Sasines, which in my view plainly constitutes a property right and one which is not only close to ownership but which is in many respects identical to the interests of that ownership.”

 

[73]      I agree with the Lord Ordinary’s analysis that a leasehold interest “is in many respects identical to that interest of ownership”.  However, it is possession of an entirely different character, nature and extent to that which the pursuers in the present case had at the material time.

[74]      In addition, I find the reasoning of the Lord Ordinary to be consistent with the reasoning of the court in Mull Shellfish.  The interest of a tenant is sufficient to fall within the ambit of the principle in Nacap and thus to give title to sue.

[75]      Mr Thomson also made reference to North Scottish Helicopters Ltd v United Technologies Corporation Inc.  The material facts are:  a finance company leased a helicopter to the first and second pursuers.  The terms of the lease placed all responsibility for the keeping the helicopter operational upon the lessees.  The finance company, although owners, were essentially financiers.  In accordance with the provisions of the lease the second pursuers permitted the first pursuers, their subsidiary, to use the helicopter.  The pursuers had unrestricted use of the helicopter and were bound by the lease to comply with statutory maintenance and safety requirements and to indemnify the finance company against destruction of or damage to the helicopter. 

[76]      In holding that the pursuers had a possessory right not merely a contractual right to the helicopter the core of the Lord Ordinary‘s reasoning is given at page 81 where he says this:

“In the present action the pursuers do not merely have contractual rights in relation to the helicopter which were adversely affected by the fire.  If that was the full extent of the pursuers’ rights, then their claims would fall on grounds of policy.  In my opinion each of the pursuers had a possessory title to the helicopter at the time of the fire.  The first pursuers had physical possession derived from the second pursuers in accordance with an arrangement which had the approval of Scamba.  The second pursuers had been put in possession of the helicopter by Scamba under a lease which required them to comply with statutory safety requirements.  Beyond that condition Scamba placed no restriction upon the use to which the second pursuers could make of the helicopter during the currency of the lease.  Similarly under the contractual arrangements which affected them, the first pursuers were not restricted in the use which they could make of the helicopter while it was in their possession.  The line of authority quoted by Lord Brandon in Leigh and Sillavan(supra)emphasises the crucial importance of legal ownership of or possessory title, to the property concerned.  In none of the cases cited did the claimant maintain that he had possession of the property in question at the material time.”

 

[77]      The pursuers in the present case simply did not have the wide and unfettered degree of possession which the pursuers had in Scottish Helicopters Ltd v United Technologies Corporation Inc.  Rather, the position of the pursuers in the present case was that their possessory rights in relation to the site were severely restricted, wholly circumscribed and very limited.  I do not believe that the above case provides any assistance to the pursuers’ argument.

[78]      For the foregoing reasons I do not believe there is any substance in the secondary argument advanced on behalf of the pursuers to the effect that they had a possessory right of a type as defined in Nacap.

[79]      I now turn to the final argument advanced on behalf of the pursuers:  that it could not be said at this stage that the action was bound to fail.  Counsel emphasised certain comments by the court in Mull Shellfish and observed that the decision of the Inner House in Mull Shellfish was to allow the matter to proceed to Proof Before Answer.

[80]      I am of the view that the circumstances in the present case are entirely different from those in Mull Shellfish.  I believe on the basis of the submissions which I have accepted that the pursuers are bound to fail as they cannot establish right and title to sue.  I am unable to identify any evidence which could be led at proof which would advance their position with respect to that issue.  I accordingly reject this argument.

Conclusion
[81]      For the foregoing reasons I conclude that:  (1)  the pursuers in order to have title to sue required to have a proprietary right or right of possession in the site of a type as described in Nacap;  (2) on their averments their right of possession is not similar to that of an owner as described in Nacap and;  (3) on their averments they have mere contractual rights to use the site for certain limited purposes.  Accordingly the pursuers’ case is irrelevant on the basis that there is no title to sue.

 

Decision
[82]      I accordingly sustain the defenders’ first and second pleas in law;  repel the pursuers’ pleas in law and dismiss the action.  I reserve all questions of expenses.