Scottish Court of Session Decisions

LORD CLYDE'S OPINION.—This is an action for damages arising out of certain alleged defects in the wiring used in certain items of electrical equipment installed in a new naval vessel, H.M.S. Challenger. The vessel had been ordered by the Ministry of Defence from Scott's Shipbuilding Co. Two contracts had been entered into between them, a design contract of 10th June 1977 and a supply contract of 28th September 1979. Scott's Shipbuilding Co. contracted with G.E.C. Electrical Projects Ltd. for the design of the electrical and machinery control and surveillance systems including the electrical propulsion system required for the vessel and the provision of the electrical propulsion system. This was achieved by a design subcontract of 25th July 1977 and a supply subcontract embodied in a number of letters dated between 1978 and 1981. In March 1981 the rights and liabilities of Scott's Shipbuilding Co. in the two contracts with the Ministry of Defence and the two contracts with G.E.C. Electrical Projects Ltd. were taken over by Scott Lithgow Ltd. That company is the first-named pursuer in the present action. Scott's Shipbuilding Co. was originally the second-named pursuer but that company abandoned its claim and on 15th October 1986 the action so far as laid at its instance was dismissed. The narrative which I have given so far is obscured in the pursuers' pleadings by the use of the expression "the first-named pursuers" which is expressly defined at the outset as including, where the context requires, reference to Scott's Shipbuilding Co. The third pursuer is the Lord Advocate on behalf of the Secretary of State for Defence and the action is now pursued by Scott Lithgow Ltd. and the Lord Advocate.

G.E.C. Electrical Projects Ltd. is the first defender. That company subcontracted the works to four other companies and they are respectively the second, third, fourth and fifth defenders. The fourth defender is in receivership and has not lodged defences. The third defenders are separately represented and the first, second and fifth defenders share a common representation. The Lord Advocate has been called on behalf of the Secretary of State for Defence as a third party and there is a second third party which is an insurance company. The action has come before me on procedure roll. At the outset it was explained that a preliminary plea tabled by the third party challenging the relevancy of the defenders' averments would not be argued but should be reserved until after a proof. The Lord Advocate was not further involved in the procedure roll discussion in his capacity as third party. It was also agreed that preliminary pleas tabled by the first, second and fifth defenders (plea 12) and the second third party (plea 2) which related to the dispute between those parties should be reserved until after a proof. Before me the pleas argued were all pleas against the pursuers and I heard counsel for the third defender, for the first, second and fifth defenders and for the second third party on pleas directed against the pursuers' averments. The second third party claimed to have an interest as insurers in the liability in law of the first and second defenders and counsel supplemented the submissions made by counsel for the first and second defenders. No question arose as to the competency or otherwise of their contributing to the debate.

A number of issues were debated before me but it was generally recognised that the most important related to the existence of a duty of care owed by the defenders to the pursuers. The case is one where the whole sums claimed by the pursuers are of the nature of economic losses following upon defective performance of contracted work. The pursuers founded particularly on the case of Junior Books Ltd. v. Veitchi Co. Ltd . 1982 SC (HL) 244 and the argument involved a review of a number of decisions which have followed upon that case. For the most part the argument was conducted on a somewhat general level but it has to be remembered that there are two pursuers in the present action and five defenders (of whom the fourth has not appeared). Perhaps because the initial presentation of the argument was made by counsel for the third defenders and because the first, second and fifth defenders shared a common representation, no great attempt was made at least until a later stage to distinguish the separate claims by the pursuers against each of the five defenders, and in particular to differentiate the character of the quasi-delictual claim against the first defenders from the claims against the other defenders. However, at the outset it is useful to approach the matter on a broad basis.

The review of the case law which was presented by counsel disclosed the developments in the approach to the question of the existence of a duty of care. The review commenced with the familiar statement of principle pronounced by Lord Atkin in Donoghue v. Stevenson 1932 SC (HL) 31 and proceeded through Hedley Byrne & Co. Ltd. v. Heller & Partners Ltd . [1964] AC 465 and Dorset Yacht Co. Ltd. v. Home Office [1970] AC 1004. In the latter case Lord Reid referred to Lord Atkin's formulation and warned that it was not to be treated as a statutory definition. But he added that the time had come "when we can and should say that it ought to apply unless there is some justification or valid explanation for its exclusion. For example, causing economic loss is a different matter." Then in Anns v. Merton London Borough Council [1978] AC 728 Lord Wilberforce (at p. 751), referring to that trilogy of cases formulated his two stage approach, first whether there was a necessary proximity of a relationship to create a prima facie duty of care and secondly, if so, whether there were any considerations which ought to negative or restrict the scope of the duty, the class of persons to whom it is owed or the damages to which a breach of it might give rise. That approach can be traced in many of the cases but more recently some preference has been expressed for a different formulation. In Peabody Donation Fund v. Sir Lindsay Parkinson [1985] AC 210 Lord Keith of Kinkel (at p. 240) warned against treating the observations of Lord Reid and of Lord Wilberforce to which I have referred as being of a definitive character. He continued:

"The true question in each case is whether the particular defendant owed to the particular plaintiff a duty of care having the scope which is contended for, and whether he was in breach of that duty with consequent loss to the plaintiff. A relationship of proximity in Lord Atkin's sense must exist before any duty of care can arise, but the scope of the duty must depend on all the circumstances of the case."

Having then quoted a certain passage from the Dorset Yacht Co. case his Lordship added (at p. 241C):

"So in determining whether or not a duty of care of particular scope was incumbent upon a defendant it is material to take into consideration whether it is just and reasonable that it should be so."

Lord Keith's warning was taken up by Lord Fraser of Tullybelton in Candlewood Navigation Corporation Ltd. v. Mitsui O.S.K. Lines Ltd . [1986] AC 1 at p. 21 where it was recognised that the observations of Lord Wilberforce in Anns related to a context different from that with which the Candlewood case was concerned. Lord Fraser however added that Lord Wilberforce's speech contained a useful reminder of the part played by policy in the decision how far the liability of a wrongdoer should extend. In the later case of Yuen Kun Yeu v. Att. Gen. of Hong Kong [1988] A.C. 175 Lord Keith, delivering the opinion of the Privy Council, observed that Lord Wilberforce's formulation of the two stage test had been treated with some reservation in subsequent cases in the House of Lords of which he gives examples. He continued (at p. 191E):

"Their Lordships venture to think that the two stage test formulated by Lord Wilberforce for determining the existence of a duty of care in negligence has been elevated to a degree of importance greater than it merits, and greater perhaps than its author intended."

He also pointed out that the first stage of the test entailed not simply the foreseeability of harm but the whole concept of the necessary relationship between plaintiff and defendant described by Lord Atkin in Donoghue v. Stevenson . The trilogy of cases described by Lord Wilberforce demonstrated particular sets of circumstances which were judged to have the effect of bringing into being a relationship apt to give rise to a duty of care. "Foreseeability of harm is a necessary ingredient of such a relationship, but it is not the only one." The second stage of Lord Wilberforce's test was one which Lord Keith considered (at p. 193) would rarely have to be applied. "It can arise only in a limited category of cases where, notwithstanding that a case of negligence is made out on the proximity basis, public policy requires that there should be no liability." But he concluded that for the future the two stage test was not to be regarded as in all the circumstances a suitable guide to the existence of a duty of care.

The correct approach accordingly appears to be embodied in the single question whether in the circumstances there existed a duty of care having the scope contended for. This, as senior counsel for the first, second and fifth defenders submitted, shows a difference in emphasis on the former approach although counsel for the pursuers preferred to treat it simply as a re-formulation. Instead of ascertaining the existence of a prima facie duty of care and then asking whether for any reason it should be limited or negatived, the current approach takes account of all the considerations and asks whether in light of all of them the duty of care on which the pursuers' claim is based should be held to exist. On this approach a claim for economic loss is not to be resolved as a matter of remoteness of damages although considerations of remoteness are not necessarily excluded from the assessment of loss. Since the question is not simply whether a duty of care exists but whether the particular duty of care with the scope claimed by the pursuer exists, the character of the loss falls to be considered as an ingredient in that question and not as a distinct issue. Insofar however as use may be made of Lord Wilberforce's approach, it is to be noted that in Junior Books Ltd. v. Veitchi Co. Ltd . the defenders had all along conceded that the first stage of that test was satisfied so that the dispute depended upon satisfaction of the second stage. Indeed in the case of Norwich Union Life Insurance Society v. Covell Matthews Partnership 1987 S.L.T. 452 on which counsel for the pursuers founded the second defenders, the main contractors in that case, also accepted that the first stage of the test was satisfied and the issue with them depended upon the relevance of the element of reliance and the concept of economic loss. In the present case no concession was made regarding the first stage of the test.

The pursuers however, as I have said, took their stand on the decision of the House of Lords in the case of Junior Books Ltd.as they pointed out, although the case has been distinguished in a number of recent English decisions, it has not been overturned or held to be incorrect. It stands as a correct decision. They argued that the present case was not materially distinguishable from Junior Books Ltd. and indeed was a fortiori of that decision.

In Junior Books Ltd. v. Veitchi Co. Ltd . it was held that a nominated subcontractor might be liable to the employer for the cost of repairing a defective floor together with consequential loss. The floor was alleged to have been negligently laid by the subcontractor during the construction of the pursuers' factory. The defenders accepted that the relationship between the parties was such as to place certain duties of care on them in the work of laying the floor. What they disputed was the scope of the duty. The defenders thus conceded that the first branch of Lord Wilberforce's test was satisfied and that there was a relationship of close proximity between the pursuers and the defenders. They argued that the second branch was not satisfied. Lord Roskill who gave the principal speech stated at p. 273:

"I look for the reasons why, it being conceded that the appellants owed a duty of care to others not to construct the flooring so that those others were in peril of suffering loss or damage to their persons or their property, that duty of care should not be equally owed to the respondents who, though not in direct contractual relationship with the appellants, were as nominated subcontractors in almost as close a commercial relationship with the appellants as it is possible to envisage short of privity of contract, so as not to expose the respondents to a possible liability to financial loss for repairing the flooring should it prove that that flooring had been negligently constructed."

His Lordship then reviewed a number of cases from which he concluded that all the conditions existed to give rise to the relevant duty of care relied on by the respondents. He then turned to the second stage of Lord Wilberforce's proposition. The only reason which had been suggested for limiting the damage recoverable was that the law had not allowed recovery for pure economic loss in the past. Lord Roskill held that that was not a sufficient reason. He expressed the view that the recovery of "damage to the pocket" by itself should not be disallowed and he expressed the view that the concept of proximity, which always or mostly involved some degree of reliance, would not easily be found to exist in ordinary transactions of the purchase and sale of goods so that no untoward consequences should follow from the decision reached in the case. Lord Fraser expressed his full agreement with Lord Roskill's speech and expanded upon two particular matters which he regarded as important. Lord Fraser relied particularly on the very close proximity between the parties which he described (at p. 265) as "extremely close, falling only just short of a direct contractual relationship." Lord Russell agreed with Lord Fraser and with Lord Roskill but Lord Brandon dissented. Lord Keith, while agreeing with the result, proceeded upon the narrower basis that the existence of the defective floor must result in a diminution of the profits of the business because of the cost of maintenance, so that the cost of replacing the floor would be a proper head of claim. The approach taken by Lord Keith in that case however was not one which counsel for the pursuer sought to invoke or to apply to the circumstances of the case before me.

The pursuers sought to derive from the Junior Bookscase a general principle that a liability for pure economic loss may arise where someone doing something specially for someone else does it without due care. It was submitted that Junior Bookswas decided on the basis of a proximate relationship and that it followed upon the decision in Hedley Byrne. Senior counsel for the pursuers referred in particular to Lord Devlin's speech where his Lordship said ([1964] A.C. at p. 530):

"whenever there is a relationship equivalent to contract, there is a duty of care. Such a relationship may be either general or particular… Where there is a general relationship of this sort, it is unnecessary to do more than prove its existence and the duty follows. Where, as in the present case, what is relied on is a particular relationship created ad hoc,it will be necessary to examine the particular facts to see whether there is an express or implied undertaking of responsibility."

The decision in Junior Books should be seen as based on a wider principle than the fact of an actual reliance by the pursuers on a representation. What the House of Lords did in Junior Books was to extend the principle that a sufficient proximity can enable the inference that the defender has accepted responsibility for economic loss caused by his negligence so as to apply it not only to negligent advice but also to negligent manufacture of an article. The hallmark of the kind of case in which a duty of care arose was, as counsel for the pursuers put it, the idea of doing something specially for a known or readily ascertainable employer. The pursuers' principal contention was that that situation sufficed to create a duty of care on the manufacturer.

I do not find it easy to conclude from the speeches in the case of Junior Books that a general principle of the width formulated by counsel for the pursuers here was being laid down. Neither the case itself nor the cases which have followed upon it invite such a conclusion. In the case itself it is evident that the majority who admitted the claim did so on the specialities of the circumstances. Lord Fraser stated (at p. 265) that he was deciding the appeal "strictly on its own facts." Lord Roskill (at p. 277) listed the particular facts which led him in the circumstances of the case to reach the conclusion that the relevant duty of care existed. Furthermore, in the cases following on Junior Booksthere has been a marked reluctance to extend the scope of the case. In Muirhead v. Industrial Tank Specialities Ltd . [1986] QB 507 Robert Goff L.J. (at p. 52) concluded from his study of Junior Books that it was safest to treat it "as a case in which, on its particular facts, there was considered to be such a very close relationship between the parties that the defenders could, if the facts as pleaded were proved, be held liable to the pursuers." The case has been subjected to such considerable analysis that in Simaan General Contracting Co. v. Pilkington Glass Ltd. (No. 2) [1988] QB 758 Dillon L.J. observed (at p. 784) that the case "cannot now be regarded as a useful pointer to any development of the law, whatever Lord Roskill may have had in mind when he delivered his speech. Indeed I find it difficult to see that future citation from the Junior Books case can ever serve any useful purpose." In D. & F. Estates Ltd. v. Church Commissioners for England &c [1989] AC 177 Lord Bridge declined to embark on any further analysis of the case and observed (at p. 202):

"The consensus of judicial opinion, with which I concur, seems to be that the decision of the majority is so far dependent upon the unique, albeit noncontractual, relationship between the pursuer and the defender in that case and the unique scope of the duty of care owed by the defender to the pursuer arising from that relationship that the decision cannot be regarded as laying down any principle of general application in the law of tort or delict."

His Lordship then proceeded to quote with approval, two substantial passages from Lord Brandon of Oakbrook's dissenting speech in the case. Lord Oliver of Aylmerton (at p. 215) observed of the case of Junior Books:

"it depends upon so close and unique a relationship with the plaintiff that it is really of no use as an authority on the general duty of care and it rests, in any event, upon the Hedley Byrne doctrine of reliance."

He also adopted what was said in Lord Brandon's dissenting speech on the general limits of the general duty of care in negligence.

On the other hand it has to be recognised that the decision in the case stands. Furthermore it is not easy to see that the circumstances of it were necessarily unusual or unique. A building contract involving a nominated subcontractor who is a specialist in his particular trade is by no means unusual. I find it hard to believe that there could not be other cases in which the subcontractor knows that he is relied upon and a comparably close relationship be found to exist. The use of the word "unique" in the speeches of Lord Bridge of Harwich and Lord Oliver of Aylmerton which I have quoted is not easy to understand. If a duty of care can exist in the circumstances of the Junior Books case there seems no reason why in other circumstances where a correspondingly close proximity of relationship can be found a duty of care should not also be affirmed. If, as appears to be the position, the essential is the discovery of a sufficiently proximate relationship then the question must be one to be resolved in the light of the circumstances. On this approach the decisions in some of the recent English cases where no duty of care has been found can be seen to be examples of particular circumstances where no sufficiently proximate relationship existed. In Yuen Kun Yeu v. Att. Gen. of Hong Kong no duty existed where there was an ascertained class of potential depositors and no sufficient proximity could be found. That illustrates one kind of circumstance where no relationship of the required standard was held to exist.

It seems to me correct to see the decision in Junior Books as depending critically on the close proximity which was found there to exist between the parties. This was the consideration which Lord Fraser of Tullybelton (at p. 265) and Lord Roskill (at pp. 277–8) both saw as distinguishing the case from that of the producer of goods to be offered for sale to the general public and so provided an answer to the "floodgates" argument. It is that aspect which serves to distinguish the general observations on the law expounded by Lord Brandon in his dissenting speech in Junior Books and adopted with approval in D. & F. Estates Ltd. After making the comment about the Junior Books case which I have already quoted, Lord Bridge went on to say:

"The dissenting speech of Lord Brandon of Oakbrook on the other hand enunciates with cogency and clarity principles of fundamental importance which are clearly applicable to determine the scope of the duty of care owed by one party to another in the absence, as in the instant case, of either any contractual relationship or any such uniquely proximate relationship as that on which the decision of the majority in Junior Books was founded."

I note that his Lordship expressly refers to the uniquely proximate relationship as an exception from the application of the general rule expounded by Lord Brandon. Senior counsel for the pursuers accepted Lord Brandon's observations as properly presenting the general rule but he submitted that they were not applicable to the circumstances of the Junior Books case where the particular relevant degree of proximity existed.

Furthermore, I am not persuaded that the pursuers' proposed principle is sufficiently precise to represent what the legal position is or indeed might be. Merely to require that the delinquent was doing something specially for an ascertained person or persons does not seem to me to be sufficient. The test endeavours to distinguish the case where a person buys a suit made to measure as opposed to one off the peg. In the course of the discussion the purchaser of a wedding cake was compared with the purchaser of an ordinary loaf of bread and the purchase of a specially built limousine with the purchase of a standard mass-produced motor car. But it is not evident that the distinction proposed sufficiently isolates the situation of the particularly proximate relationship which lies behind the duty of care. Certainly I have not been able to draw from the authorities to which I was referred a general proposition of the kind which counsel for the pursuers proposed. The question appears to defy any more general principle than the existence of a proximate relationship and thereafter the matter is one to be resolved in the circumstances of the case.

In considering the circumstances in which a duty of care may exist along the lines of the precedent set in Junior Books one factor which was discussed before me is that of pure economic loss. The claims which the pursuers make in the present case are for what is described as purely economic loss. It is not suggested that the defective wiring was dangerous or harmful to any persons or any property, nor that it entailed any threat or risk of any such harm or danger. It is not suggested that the equipment of which it formed part was itself endangered or harmed on account of the defects in question. The damages which the first pursuers claim comprise, stated shortly, the cost of replacing the wire together with other direct costs entailed in that work and certain additional and consequential costs and charges. The damages which the third pursuers claim comprise sums for the delay in obtaining the vessel and certain other consequential losses. The only injury alleged in the case is the defective condition of the wire itself.

It cannot of course be said that pure economic loss is never recoverable on grounds of negligence. Hedley Byrne is one example of one class of case where just such a claim may lie. That was a situation in which one person was acting in reliance upon the advice or representation of another where that other knew that reliance was being placed on what he said and that the other was likely to suffer loss if the advice or representation was inaccurate. A Scottish example can be seen in the case of John Kenway Ltd. v. Orcantic Ltd .1980 SLT 46. Again in Ross v. Caunters [1980] Ch. 297 a solicitor was held liable for the economic loss suffered by a beneficiary owing to negligence in the preparation of a will. In that case no element of reliance existed but the person was an ascertained individual whom the solicitors could readily have foreseen would be injured by their failure to exercise due care. In his dissenting speech in Junior Books Lord Brandon of Oakbrook found little difficulty in the consideration that the claim was for purely pecuniary loss, independent of any physical damage to persons or their property. His Lordship stated (at p. 280):

"If that were the question to be decided in the present case, I should have no hesitation in holding that, in principle, and depending on the facts of a particular case, purely pecuniary loss may be recoverable in an action founded on delict alone."

His Lordship gave as example first, that of the type of case represented by Hedley Byrne and secondly, the type of case where a person who has a cause of action based on Donoghue v. Stevenson reasonably incurs pecuniary costs in order to prevent or mitigate imminent danger of damage to the persons or property exposed to that danger. On the other hand, in the case of Dynamco v. Holland & Hannen & Cubitts (Scotland) Ltd . 1971 SC 257 where damage was negligently caused to the property of a third person, it was held that a claim for pure economic loss consequentially sustained by the pursuer would not lie. In what appears to be the most recent consideration by the House of Lords of this somewhat troublesome area of law, D. & F. Estates Ltd. v. Church Commissioners for England [1989] 1 A.C. 177 it was held that the cost of repairing defective plaster in a flat and other consequential expenses was not recoverable by the current tenants of the flat from the main contractors who had built the block of flats some 15 years earlier. Lord Bridge, having reviewed the principles under which economic loss might be recovered observed (at p. 206):

"These principles are easy enough to comprehend and probably not difficult to apply when the defect complained of is in a chattel supplied complete by a single manufacturer. If the hidden defect in the chattel is the cause of personal injury or of damage to property other than the chattel itself, the manufacturer is liable. But if the hidden defect is discovered before any such damage is caused, there is no longer any room for the application of the Donoghue v. Stevenson principle. The chattel is now defective in quality, but is no longer dangerous. It may be valueless or it may be capable of economic repair. In either case the economic loss is recoverable in contract by a buyer or hirer of the chattel entitled to the benefit of a relevant warranty of quality, but is not recoverable in tort by a remote buyer or hirer of the chattel."

His Lordship subsequently proceeded to consider the more difficult question which might arise in relation to more complex structures. Lord Oliver of Aylmerton, having stated certain propositions involved in the decision of the House of Lords in Anns, observed that:

"in no other context has it previously been suggested that a cause of action in tort arises in English law for the defective manufacture of an article which causes no injury other than injury to the defective article itself. If I buy a secondhand car to which there has been fitted a pneumatic tyre which, as a result of carelessness in manufacture, is dangerously defective and which bursts, causing injury to me or to the car, no doubt the negligent manufacturer is liable in tort on the ordinary application of Donoghue v. Stevenson . But if the tyre bursts without causing any injury other than to itself or if I discover the defect before a burst occurs, I know of no principle upon which I can claim to recover from the manufacturer in tort the cost of making good the defect which, in practice, could only be the cost of supplying and fitting a new tyre. That would be, in effect, to attach to goods a non-contractual warranty of fitness which would follow the goods into whosoever hands they came. Such a concept… is, in my opinion, contrary to principle."

I do not find it useful to explore the problem before me simply from the point of view of the character of the damages claimed. The consideration that the pursuers seek damages for what may be described as purely an economic loss is one to be borne in mind in determining whether a duty of care of the scope contended for by the pursuers had been relevantly averred in the case. It is the existence of the duty which is the critical question. The character of the damages is an element in its solution. I should add that I would find it difficult to draw any distinction between cases where the subject of the damage is heritable and those where it is moveable.

Another factor which was discussed before me in the course of the argument in relation to the Junior Books case as compared with the present is the factor of nomination of the subcontractor. That factor features in the list of what Lord Roskill described as crucial facts in the Junior Books case. Indeed counsel for the defenders submitted that the present case was distinguishable from Junior Books principally on the point that there was no nomination of any of the defenders in the present case while in Junior Books the defender was a nominated subcontractor. That is clearly the position so far as concerns the second to fifth defenders but, as I shall consider later, there is a reference in the pleadings to the first defenders as being "approved". Counsel for the pursuers submitted that nomination was not an essential element. He referred to Lord McCluskey's decision in the case of Norwich Union Life Insurance Society v. Covell Matthews Partnership where his Lordship observed that the fact that the defenders were nominated in the Junior Books case did not appear to be in itself an essential feature of a case such as that before him. Counsel for the pursuers argued that at least where the involvement of the second to fifth defenders in the project was as close as he claimed it to be then the fact that there was no actual nomination of them as subcontractors was not fatal to the pursuers' case.

I am prepared to accept that nomination is not a necessary factor before a duty of care can arise but it is in my view an important element where it exists. Where it does exist it obviously serves to point towards the degree of proximity which is required. But without it the proximity of relationship may not be established. In Simaan General Contracting Co. v. Pilkington Glass (No. 2) Bingham L.J. observed (at p. 781):

"Where a specialist sub-contractor is vetted, selected and nominated by a building owner it may be possible to conclude (as in the Junior Books case) that the nominated subcontractor has assumed a direct responsibility to the building owner. On that reasoning it might be said that the defendants owed a duty to the Sheikh in tort as well as to Feal in contract. I do not, however, see any basis on which the defendants could be said to have assumed a direct responsibility for the quality of the goods to the plaintiffs: such a responsibility is, I think, inconsistent with the structure of the contract the parties have chosen to make."

Another element in the Junior Books case which gives rise to a possible ground of distinction is that of reliance. Certainly Lord Fraser of Tullybelton regarded the matter as one consideration which provided a safeguard against the opening of the floodgates. His Lordship observed at p. 265:

"The respondents, or their architects, nominated the appellants as specialist subcontractors and they must therefore have relied upon their skill and knowledge."

Lord Roskill at p. 277 included in his list of eight facts which he described as crucial in giving rise to the duty of care relied on by the pursuers, two references to reliance:

"(5) The respondents relied upon the appellants' skill and experience. (6) The appellants as nominated subcontractors must have known that the respondents relied upon their skill and experience."

Counsel for the pursuers submitted that reliance was not an essential element and founded upon Lord McCluskey's observations on that matter in Norwich Union Life Insurance Society v. Covell Matthews Partnership . His Lordship there certainly recognised that "actual reliance" is not an essential element in all cases of pure financial loss, although it may be of critical importance in cases like Hedley Byrne. In these cases the pursuer's complaint is that he acted in reliance on the defenders' representation so that the reliance plays a part in the causal chain of events. In the present case it is not suggested that the pursuers did anything because of their reliance and I am not sure if the word does more than reflect the giving and assuming of a responsibility which is an important or even essential part of the nature of the relationship between the parties between whom the close proximity has to be established. But it is recognised in the cases as a significant element and indeed in D. & F. Estates Ltd. v. Church Commissioners for England Lord Oliver of Aylmerton (at p. 216) thought that the decision in Junior Books could be justified by reference to the principle of reliance as established by Hedley Byrne. If it can be said that the pursuer relied on the defender that must go a considerable distance towards supporting the idea of a close relationship. If that cannot be said it may still be possible to find the proximity sufficient to create the duty of care but I feel that it would at the least be much more difficult to do so. In Ross v. Caunters the fact that no reliance had been placed by the beneficiary on the skill of the solicitor was not material. But the effect of a reliance may be that the party relied on may be taken to have assumed a responsibility towards a particular person. In Yuen Kun Yeu v. Att. Gen. of Hong Kong Lord Keith of Kinkel observed (at p. 196) both of Hedley Byrne and Junior Books that:

"These decisions turned on the voluntary assumption of responsibility towards a particular party, giving rise to a special relationship."

In some of the recent English cases reliance has been noted as at least an important factor. In Muirhead v. Industrial Tanks Specialities Ltd . Robert Goff L.J. identified reliance by the plaintiff on the defendant as a relevant factor in the case of Junior Books and in Simaan Contracting Co. v. Pilkington Ltd. (No. 2) one step in the reasoning put forward by Bingham L.J. (at p. 781) was that there was no meaningful sense in which the plaintiffs in that case could be said to have relied on the defendants.

Another question which emerged during the course of the debate before me was whether the position would be any different if the defects in question were immediately obvious or only discoverable on a detailed inspection. The pursuers submitted that that issue was not relevant to the claim being made for economic loss. The defenders claimed that the matter was a relevant consideration. The point is not focused in the pleadings and for that reason I do not propose to explore it. Whether or not there was a reasonable opportunity for intermediate examination is a matter that might emerge at a proof and the significance if any of it, is something to be resolved after the evidence is disclosed. In the absence of any detailed averment or any full argument upon it in the context of the present case, I do not feel it appropriate to consider it further.

Another factor which featured in the debate was the consideration that the parties here are linked in a succession of contractual relationships. Furthermore, it appears that in the supply subcontract there are provisions limiting the first defenders' liability by restricting the amount of damages to which they may be liable. The mere existence of a contractual relationship between the parties does not exclude the possibility of a claim by the one party against the other based on negligence. As Lord Kissen observed in Junior Books at p. 257:

"The fact that a claim may be based on contract does not exclude that claim being also based on delict."

A different kind of example in the case of a construction contract can be found in the case of John Kenway Ltd v. Orcantic Ltd . where the claim by the pursuers proceeded upon quasi-delict. But the fact that the parties have sought to structure their relationship by express contractual provision seems to me a relevant and important consideration in deciding whether at least between those with no direct contractual link the possibility of a direct liability for negligence was intended. Junior Books is an example of a case where it was held that a direct duty of care did lie on the subcontractor to the employer. But in Muirhead v. Industrial Tank Ltd . Robert Goff, L.J., seeking to formulate a principle behind the decision in Junior Books in the assumption by the nominated subcontractor of a direct responsibility to the building owner, added (at p. 528):

"I feel very diffident in so analysing Junior Books, because that analysis appears to me to be difficult to reconcile with the factual situation in that case, in which the parties had deliberately structured their contractual relationship in order to achieve the result that (apart from any special arrangements) there should be no direct liability inter se."

In Greater Nottingham Co-operative Society Ltd. v. Cementation Piling & Foundations Ltd . [1989] Q.B. 71 such a duty was held to be excluded on the ground of the direct contractual warranty between the employer and the subcontractor which was silent on the liability which the plaintiffs sought to be enforced. That seems to have been the critical ground of distinction which the court drew as against the circumstances in the Junior Books case. But a more general discouragement to the inferring of a duty of care in a contractual situation is to be found in the judgment of the Privy Council delivered by Lord Scarman in Tai Hing Cotton Mill Ltd. v. Liu Chong Hing Bank Ltd .[1986] AC 80 at p. 107. His Lordship there said:

"Their Lordships do not believe that there is anything to the advantage of the law's development in searching for a liability in tort where the parties are in a contractual relationship. This is particularly so in a commercial relationship. Though it is possible as a matter of legal semantics to conduct an analysis of the rights and duties inherent in some contractual relationships… either as a matter of contract law… or as a matter of tort law… their Lordships believe it to be correct in principle and necessary for the avoidance of confusion in the law to adhere to the contractual analysis: on principle because it is a relationship in which the parties have, subject to a few exceptions, the right to determine their obligations to each other, and for the avoidance of confusion because different consequences do follow according to whether liability arises from contract or tort, e.g. in the limitation of action."

This statement was perhaps, as counsel for the pursuers submitted, not directly related to the problem raised in the present case but it provides a warning which may well be useful in the context of the present debate.

The existence of the limitation provision is an illustration of the difficulty which may occur in the recognition of a quasi-delictual remedy. Lord Roskill sought to resolve this problem in Junior Books in a cautious suggestion (at p. 277) that a relevant exclusion clause "according to the manner in which it was worded might in some circumstances limit the duty of care…" On the other hand in Leigh & Sillavan Ltd. v. Aliakmon Shipping Co. Ltd . [1986] AC 785 Lord Brandon of Oakbrook (at p. 817) found no convincing legal basis for this observation by Lord Roskill which was in any event obiter. However in Muirhead v. Industrial Tank Specialities Ltd it was held that the plaintiff customer was bound by a clause in the contract between the manufacturer and the supplier limiting the manufacturer's liability. A question would arise in the present case, as counsel for the pursuers pointed out under reference to Smith v. U.M.B. Chrysler (Scotland) Ltd . 1978 SC (HL) 1 whether the limitation clause would cover the first defenders' own negligence. In Simaan Contracting Co. v. Pilkington Glass Ltd. (No. 2) Bingham L.J. expressed the opinion (at p. 782) that it was not just and reasonable to impose on the defendants in that case the duty of care which the plaintiff claimed. He took that view for two reasons. The first was:

"because there is no reason why claims beginning with the Sheikh should not be pursued down the contractual chain, subject to any short-cut which may be agreed upon, ending up with a contractual claim against the defendants. That is the usual procedure. It must be what the parties contemplated when they made their contracts. I see no reason for departing from it."

The second reason was the difficulty created by the possible importation of exempting conditions in the contracts. If the condition limited the duty, that was unfair to the plaintiff who was not a party to the contract. "But if the duty is unaffected by the conditions on which the seller supplied the goods, it is in my view unfair to him and makes a mockery of contractual negotiation." Dillon L.J. expressed a clear view (at p. 786) that the "normal chain of liability" was the proper course for enforcing remedies. In Greater Nottingham Co-operative Society Ltd. v. Cementation Piling & Foundations Ltd . the express warranty which had been granted was held to exclude the quasi-delictual duty of care which the plaintiffs sought to establish. Mann L.J. observed (at p. 109):

"However where there is a privity, then in my view the rights and obligations of the parties in regard to economic loss should be solely dependent upon the terms of the privity. I recognise that to breach a contract may also be a delictual act. That is a proposition quite different from asserting that there can be a duty in tort giving rise to a liability to compensate for economic loss in circumstances where the contract between the parties is silent. Contractual silence in my view is adverse to the establishment of a close relationship for the purposes of the law of tort in regard to economic loss."

I take the view as matter of generality that while contractual relationships do not by themselves exclude the existence of a quasi-delictual duty of care the existence of such relationships and of any restraints on liability are relevant considerations bearing on the decision whether such a duty can exist in any given case. The fact of the contractual chain in the present case seems to me to point away from any conclusion of a duty of care being placed on the defenders. In my view a background of contractual relationships may well exclude the inference of a duty of care. A direct privity of contract will almost certainly do so except in cases where the quasi-delictual duty is simply a different formulation of the existing duty under the contract, but in any such case the terms of the contract in question will probably require to be considered.

A much more fundamental point arises in relation to the pursuers' interest in the defective equipment. This was another circumstance which was canvassed before me as bearing upon the existence or otherwise of a duty of care. One curious feature of the present case is that the pursuers do not aver which of them, if any of them, owned the vessel or the defective equipment at any stage of the history. Thus the claims are not put forward by either of the pursuers as being the owner or the possessor of the vessel. Counsel for the defenders argued that without an averment that either of the pursuers owned the article which was allegedly defective, that is in particular the wire in question, the case was irrelevant. Counsel founded particularly on the decision in Candlewood Navigation Corporation Ltd. v. Mitsui O.S.K. Lines Ltd . In that case one who was simply the time charterer of a vessel was held not entitled to recover damages for economic loss caused by damage to the chartered vessel by a third party. Lord Fraser, giving the judgment of the Privy Council recognised that the issue of principle was of application and of importance in the law of negligence generally. The principle embodied in the English case of Cattle v. Stockton Waterworks Co . (1875) LR 10 QB 453 and the Scottish case of Simpson & Co. v. Thomson (1877) 5 R. (H.L.) 40 was affirmed. Lord Fraser of Tullybelton quoted a statement of it formulated by Scrutton L.J. in Elliot Steam Tug Co. Ltd. v. Shipping Controller [1922] 1 K.B. 127 at pp. 139–40 in the following terms:

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

[[1986] A.C. at p. 15C–D].

Counsel for the pursuers submitted that in the present case the concept of ownership did not matter. The basis on which Junior Books was decided was that of a proximate relationship, not of ownership. In Leigh & Sillavan Ltd. v. Aliakmon Ltd . Lord Brandon (at p. 817) observed that the decision in Junior Books "is of no direct help to the buyers in the present case, for the plaintiffs who were held to have a good cause of action in negligence in respect of a defective floor were the legal owners of it." But it was submitted before me that the proper view of Junior Books was that it did not proceed as a case of damage to property. On the other hand I note that in Simaan General Contracting Co. v. Pilkington Glass Ltd. (No. 2) Bingham L.J. observed (at p. 781):

"The Junior Books case has been interpreted as a case arising from physical damage. I doubt if that interpretation accords with Lord Roskill's intention, but it is binding upon us."

In the present case the pursuers are averring physical damage to the wire in question caused by the handling and use to which it is subjected without damage to other property.

Even if counsel were correct in seeing the ratio of Junior Books as not one of damage to property, the fact that the defective property was the property of the pursuers in that case seems to me to be a critical consideration for the pursuers' position as one to whom a duty was owed. That Junior Books did not innovate upon the principle discussed in Candlewood is evident from what Lord Fraser said about Junior Books in that case ([1986] A.C. at p. 24):

"That case may be regarded as having extended the scope of duty somewhat, but any extension was not in the direction of recognising a title to sue in a party who suffered economic loss because his contract with the victim of the wrong was rendered less profitable or unprofitable."

In Norwich Union Life Insurance Society v. Covell Matthews Partnership the duty of care which was held to exist was a duty on an architect, main contractor and subcontractors to one who was the owner of the land on which the building with its allegedly defective element was built. The case was one which more readily fell within the scope of the decision in Junior Books. It does not seem to me that the proximity of relationship which the pursuers claim to have existed in the present case is sufficient to overcome the basic defect of their having not averred any interest in the vessel or the defective equipment.

In the present case the pursuers aver no other interests than those of contracting parties. The first pursuers had contracted with the first defenders for the supply of the equipment which included the wire now alleged to be defective. The third pursuers had contracted with the first pursuers for the construction and delivery of the vessel. The existence of the design contract and the design subcontract add nothing to the pursuers' title. The manufacturing work on the electrical equipment appears to have been carried out between 1979 and 1980. From all that appears the equipment and the wire was at that stage the property of the defenders who were manufacturing the equipment. The defects were brought to light in 1983 but it is not even explained who owned the vessel or more particularly who owned the wire either at that stage or at any time before it. Counsel for the pursuers could only submit that one could infer that the units with the defective wire were owned either by the first pursuers or by the third pursuers. But as senior counsel for the second third party pointed out, that approach would not solve the problem. The relevancy of the claim by each pursuer falls to be tested by reference to the weaker alternative and on that approach each pursuer's claim will fail. If the wire and the equipment was the property of the defenders then again I see no legal basis for the pursuers' entitlement to claim. Their failure to make any averments on this matter seems to me to be fatal to all of their quasi-delictual cases and on this point at least in my view, their case is not relevantly pled. However, I turn next to look at the cases of fault in more detail.

Adopting the approach as one of considering the particular circumstances of the case I take the view that, as counsel submitted, I have to look separately at the claims of each of the pursuers against the respective defenders. I take first the claims made by the first pursuers. So far as their case on quasi-delict against the first defenders is concerned I would not have been prepared to hold at this stage that the circumstances there were such as to exclude the duty of care claimed to be owed by the first defenders against the first pursuers. The averments which I shall consider in a moment reflect some closeness of relationship between the first pursuers and the first defenders. But in the particular case of the first defenders there is an averment directed at the first defenders that:

"They knew or ought to have known that the pursuers relied upon their expertise as electrical contractors with regard to the design and manufacture of the electrical propulsion system. They knew or ought to have known that the pursuers relied upon their expertise in the design and wiring of the component parts of that system."

Furthermore, the parties were in an actual contractual relationship. So far as the averments which I have quoted are concerned, some criticism was made on the ground that the averments failed to specify to which of the pursuers reference was being made. I can only take it that the reference is to both the pursuers and so includes here the first pursuers. In addition to that the fact of the contractual relationship may throw the existence of the alleged distinct quasi-delictual duty into doubt. I have already referred to the case of Greater Nottingham Cooperative Society Ltd. v. Cementation Piling and Foundations Ltd . with which perhaps some comparison may be possible although the existence of the contractual relationship in that case was not prominent. I take the view that it would be premature to determine this issue at least without seeing the terms of the contract in question and for that reason I would have allowed this claim to go to enquiry if it was otherwise relevant.

I turn next to the claims made by the first pursuer against the second to fifth defenders and I take that group of defenders together because I cannot see any ground for differentiating between them so far as the present issue is concerned. While the third defenders feature in the averments more prominently than the second or fifth defenders I did not understand it to be suggested that there was a valid ground of distinction in that respect. In the event I do not find the differences to be sufficient to warrant making a distinct treatment of them. In relation to these defenders there is no averment of reliance by either of the pursuers upon them or any of them. It is not suggested that any of these defenders was nominated, selected, vetted or approved by the first pursuers or indeed by the third pursuers. In art. 1 of the condescendence the pursuers aver:

"All defenders knew that the goods or services being ordered from and supplied by them, whether ordered by the pursuers or either of them or by the first defenders, were to be supplied to the first-named pursuers in Scotland for the purpose of their business there, and in particular, for use in the construction by the first-named pursuers of the vessel hereinafter condescended upon."

Junior counsel for the pursuers submitted that that averment was by itself enough to bring the case within the ambit of Junior Books. I have already expressed my disagreement with the approach on principle advanced by counsel for the pursuers. Later in that condescendence the pursuers aver that the third defenders "completed interconnecting wiring or switchboards at the ship and carried out subsequent modifications at the ship during testing… participated in discussions as to switchboard and switchgear arrangements on the vessel and the change in insulation hereinafter referred to… discussed with and provided to the first-named defenders design information for specification of the switchboard." It was submitted that the averment in relation to meetings attended by ministry representatives, that "neither the ministry nor such representatives had responsibility for, nor did they instruct the defenders as to how the defenders would or could meet, the requirements of the eventual specification," meant that reliance was being placed on all the defenders, but I am unable to read that positive inference from that averment.

The involvement of the first, second and third defenders with the pursuers is further reflected in the averment that:

"The part of the specification which dealt with switchboards was produced by the first, second and third defenders as part of the design supply contract,"

it being explained that this led later to the various subcontracts for supply. In art. 6 of the condescendence the pursuers aver:

"After the design contract and design subcontract had been entered into the first and third pursuers were in regular and frequent contact with the first-named defenders in respect of design of switchboards and consoles… Throughout the development of the specification, regular meetings of a design team organised by the first pursuers had been held and attended by the third pursuers' representatives and the first defenders. The representatives of the third pursuers had provided the team with an initial outline specification."

Later it is averred that after the Ministry of Defence had become conscious of the potential hazards of P.V.C. insulated wire the first pursuers "asked the first defenders to seek a suitable alternative but the first defenders sought the assistance of the ministry in finding an alternative." It is then averred that the ministry sent a letter to the first pursuers with certain advice. It is further averred that the first and third defenders were well aware of the communications between the first and third pursuers with regard to the avoidance of P.V.C. insulated wire and detail is given of meetings of the first and third pursuers attended by the first defenders or the first and third defenders discussing the matter of the wire. The discussions which occurred in 1978 between these parties occurred before the sub-subcontracts were entered into. It is also to be noted that the ministry's concern with the kind of wire to be used arose initially as the result of a fire at an English shipyard and their realisation of the possible danger of using wire which was insulated with P.V.C. One alternative which was suggested was not available and consequently the specification DGS 2001 detailed Raychem type 44 or equivalent. The pursuers aver that the system was installed in the vessel by the first pursuers under the supervision of the first defenders. Senior counsel for the pursuers also drew my attention to averments to show that the first, second and fifth defenders were engaged on inspection and testing of the equipment with the pursuers.

It was on all these averments, but principally the first of them, that counsel relied to demonstrate circumstances on which they had relevantly pled the duty of care. In addition to them there are the averments of reliance which I have already quoted but upon which counsel for the pursuers did not, consistently with the main principle of his argument, place particular reliance. As counsel for the pursuers submitted, the parties had all come together to design and produce the electrical propulsion system for a highly specialised and unique vessel for the third pursuers. The pleadings disclosed a close involvement by all of them. The equipment was not manufactured for sale on the open market nor was it such as could be purchased on the open market. It was something to be produced specially for the particular customer.

The presentation made by the pursuers is thus in line with their approach in principle that it is enough to show that something was being done by the defenders specially for the pursuers. I have already rejected that as sufficient to constitute a duty of care without further consideration of the circumstances. Looking at the circumstances as they are averred in relation to the second to fifth defenders, I am not persuaded that they are relevant to support the duty of care which the pursuers here alleged. The duty in the case of each of these defenders is the same, namely to handle and use the wire in manufacture in such a way as not to cause damage to it and to check and inspect their work during construction to ascertain whether damage had been sustained. Notwithstanding the involvement of the defenders particularly with the design of the equipment I do not find sufficient grounds for finding such a close proximity of relationship between them and the main contractor, the first defenders, as would imply an assumption of responsibility on their part to the first pursuers for negligence in manufacture. While their knowledge and skill may have contributed to the working out of the design and the specification, I find nothing from which I can infer a reliance on their skill as manufacturers and it is a duty of care in respect of manufacture which is founded upon in the present case. If the problem is looked at as one of foreseeability of loss, I am not persuaded that these defenders should have reasonably foreseen that defects in the equipment which they supplied to the first defenders would be likely to cause economic loss not to the first defenders but to the first pursuers or even to the third pursuers. Given the series of contractual relationships which existed, I should not have thought that the repair burden would have been expected to fall on the first pursuers. Even if these defenders had or should have foreseen that, that would not in any event have sufficed by itself. As Lord Keith observed in Yuen Kun Yeu v. Att. Gen. of Hong Kong at p. 192, foreseeability of harm is a necessary ingredient in the relationship which constitutes a duty of care but it is not the only one.

I turn next to the third pursuers' claims. What I have already held in relation to the first pursuers' claims against the second to fifth defenders applies also to the third pursuers' claims against them and the considerations which have led me to the view that there are no relevant averments to support the duties of care towards the first pursuers apply also to the claims made by the third pursuers against these defenders. That leaves the third pursuers' claim against the first defenders on quasi-delict. Here again there are the general background averments of knowledge that the equipment was for use in the vessel for which the third pursuers had contracted with the first pursuers and of the involvement of the first defenders in discussions and correspondence with the pursuers. In particular the first defenders produced designs for inter alia the electrical propulsion system and the eventual design specification DGS 2001 was based in part on the first defenders' design and suggestions. But in addition to that background there is the averment which I have already noticed that the pursuers, and that I take to include the third pursuers, relied on the first defenders' expertise. Further the pursuers' averments in art. 2 of the condescendence indicate, although they do not expressly state, that the first defenders were an electrical contractor approved by the third pursuers for the design development phase. Some indication was given that this merely meant that their names featured on a list of contractors approved by the third pursuers. It was also pointed out that the approval related to the design development phase and not to the manufacture. But the allegations of fault in art. 11 of the condescendence are not unrelated to matters of design, and while the first defenders may not have been technically nominated subcontractors they did have some special status as is implied in the approval. The particularly close involvement of the first defenders also appears from the averment that they supervised the installation by the first pursuers of the equipment in the vessel.

The duties of care alleged in art. 11 are tabled in somewhat wide terms:

"It was their duty to avoid acts or omissions which might, with reasonable foresight, cause damage to persons such as the pursuers who were concerned in the construction of the vessel. In particular, it was their duty to take reasonable care in their involvement with the construction of the vessel as might reasonably be expected of an electrical contractor of ordinary competence."

The allegations of fault which follow sometime later are however more precise:

"Nevertheless the first defenders failed to bring to the attention of the pursuers the special qualities and properties of Raychem Type 44 wire and in particular, its susceptibility to damage when handled in particular ways. Furthermore, they failed to bring to the attention of the pursuers the susceptibility of the said wire to damage when in close proximity to other works on the vessel such as the connecting of ships' main cables."

Had the first defenders negligently represented to the third pursuers that the wire was not susceptible to damage and the third pursuers relying on that representation had sustained loss, there would be grounds for holding that a duty of care existed along the principle of Hedley Byrne. It was not suggested in argument that the principle would not necessarily apply if the negligence was one of a failure to advise where advice was expected. Given the degree of relationship which appears to have existed between the first defenders and the third pursuers, demonstrated by their involvement in the design and specification and the reliance which the third pursuers placed on their expertise in the design and manufacture of the electrical propulsion system and the design and wiring of the component parts of that system, I would not be prepared to hold at this stage that a duty of care of the scope contended for did not exist between the first defenders and the third pursuers. In my view the proper course would have been to allow this claim to proceed to proof under reservation of its relevancy.

I now leave the matter of the general attack on the relevancy of the pursuers' case and turn to a separate matter which was raised solely by the third defenders. The third defenders have in their second plea-in-law pled that they are not subject to the jurisdiction of the Court of Session and that the action so far as directed against them should be dismissed. Counsel for the third defenders argued that the pursuers had not averred any ground of jurisdiction against them. The pleadings start with the bald averment:

"The parties are as designed in the instance."

The third defenders are a limited company with their registered office in Lancashire in England. The present action was commenced in 1985 prior to the coming into effect of any relevant provisions of the Civil Jurisdiction and Judgments Act 1982. It was assumed by the third defenders that the pursuers were seeking to found upon sec. 1 of the Law Reform (Jurisdiction in Delict) (Scotland) Act 1971. That section requires that the delict forming the cause of action should have been committed in Scotland. It was submitted under reference to Kirkcaldy D. C. v. Household Manufacturing Ltd . 1987 S.L.T. 617 that "delict" here means injuria and not damnum, and under reference to Russell v. F. W. Woolworth & Co. Ltd . 1982 S.C. 20 that it was sufficient that there had been a material breach of duty inside Scotland. Reference was made to the grounds of fault alleged against the third defenders. Article 13 of the condescendence discloses that the breach of duty is a failure to carry out their subcontract work in a proper manner. In particular there is an alleged failure to wire the switchboards subcontracted to these defenders in such a way as not to cause damage to the wire and an alleged failure to check and inspect their work during construction to ascertain whether damage had been sustained. It was then submitted that none of these breaches of duty were committed in Scotland. It is not averred that they were, and from their address in the instance and the pursuers' reference to supply to the pursuers in Scotland it appears that the third defenders were not within Scotland. Counsel for the third defenders thus argued that the delict was committed in England.

Counsel for the pursuers explained that they claimed a jurisdiction in Scotland under the Act of 1971. Junior counsel argued first that it was sufficient that the damnum by itself occurred in Scotland. He founded upon the recognition by Lord Allanbridge in Kirkcaldy D.C. v. Household Manufacturing Ltd . at p. 620 that the word "delict" can have a wider as well as a narrower meaning, the wider meaning comprehending both injuria and damnum.He founded upon the reference in the Act to the delict "forming the cause of action" and submitted that for a cause of action there must be both injuria and damnum. If injuria alone was intended the Act should have read "forming part of the cause of action." Albeit with some courteous reticence, he was constrained to submit that Lord Allanbridge's preference for the so called narrower view was incorrect and that the word "committed" should be construed widely so as to embrace both injuria and damnum.

I am quite satisfied that this argument is not sound. I am not wholly persuaded that the word "delict" admits of the wider meaning which has been suggested. No illustrations of this wider meaning were given in argument and I note that Lord Allanbridge in the Kirkcaldy case in explaining the wider meaning (at p. 620B) states:

"The fundamental concept of the law of delict is breach of legal duty causing unjustifiable harm."

It may be that the phrase "the law of delict" may import the element of damnum as an ingredient in a claim based on wrongdoing, but the word "delict" by itself seems to me to connote wrongdoing by itself. In sec. 1 (3) of the Act "delict" is defined to include quasi-delict but no mention is made of damnum. I respectfully adopt Lord Allanbridge's conclusion based on the word "committed" which seems to me correct. That verb sits more easily with the construction of delict as injuria than with the inclusion of damnum. Further, as counsel for the third defenders pointed out, it may be possible to raise proceedings in some cases of quasi delict without any damnum having occurred (Walker on Delict (2nd edn.), p. 40). Nor am I persuaded that "cause of action" includes both injuria and damnum. The precise meaning of the expression was not explored in argument but it may well be that the cause of action is the wrong on which the action is based and the happening of damage creates a right of action. Further to that, if as Lord Murray explains in Russell v. Woolworth at p. 23 the purpose of the Act was to extend the pre-existing common law which required the additional step of personal service and that law proceeded upon the requirement of material injuria in Scotland, it seems to me the more difficult to reach the conclusion that the Act intends the Scottish court to have jurisdiction simply where the damnumwas sustained in Scotland. On this branch of the argument counsel for the pursuers' proposition went so far as to claim that it was sufficient that damnum on its own occurred in Scotland. That requires not simply the construction of the delict as including damnum but as meaning damnum by itself. That seems to me to be an impossible interpretation of the Act and I have little difficulty in rejecting this branch of the argument.

That brings me to the second argument presented by the pursuers which was that there had been a material breach of duty committed in Scotland. On this branch of the argument there is no dispute on the construction of the Act. It is accepted that delict means injuria and not damnum and that the test prescribed by the Act is satisfied if a material breach of duty is committed in Scotland. The problem relates to the application of this understanding to the present case. Counsel for the pursuers founded on the case of Russell where, as Lord Murray expressed it, at p. 25, even if the goods were handed over to the first defenders (the pursuers' employers in that case) in England, the supply in the circumstances of that case carried with it "a duty of care towards the first defenders and their employees in Scotland". Counsel claimed that there was a continuing breach of the duty of care which extended over the period of supply. The equipment with its potential for carrying loss was manufactured, sent on its way and received in Scotland where it caused delay and loss. The present case was not materially distinct from Russell nor from cases such as Longworth v. Hope (1865) 3 Macph. 1049 where slanderous material was printed in England but circulated in Scotland, and this was regarded (at p. 1055) as a wrong done in Scotland, just as in the case of a personal injury inflicted by a person standing on one side of the border upon a person standing on the other side. Jurisdiction in Longworth was founded by arrestment but the observations of the judges are of assistance in resolving this somewhat nice question.

The case of Russell can be distinguished in some respects from the present. In that case the pursuer who was employed by the first defenders was handling a box of plastic bottles of shampoo when the bottom of the box fell out. The goods had been manufactured and packed in England by the second defenders and the pursuers' complaint was that some of the bottles of shampoo had leaked out, soaking the bottom of the box because the bottles had not been properly secured against reasonably foreseeable shocks and stresses of transport. There the delict averred by the pursuer as being the delict in terms of the Act of 1971 was "the supply in Scotland of goods negligently manufactured and packaged as is hereinafter more particularly condescended upon" (1982 S.C. at p. 24). It was in light of the supply by the second defenders to the pursuers' employers for their retail trade in Scotland that Lord Murray (at p. 25) held the averments sufficient to attribute a duty of care on the second defenders towards the pursuer in Scotland. The duty continued over the period of supply so that the breach could be seen as occurring in Scotland. Where goods which in their use or handling in the course of supply have a potential to cause danger to those who use or handle them, are supplied across a frontier it is not difficult to see that a duty of care on the part of a manufacturer who negligently created the danger may exist to persons using or handling the goods and a breach of that duty may then be held to have been committed within the country to which they have passed. But the present is not that kind of case. Here there is no suggestion of foreseeable danger to anyone's person or property. In the case of Kirkcaldy D.C. v. Household Manufacturing Ltd . the pursuers sought to found on the approach taken by Lord Murray, but Lord Allanbridge observed (at p. 620F–G):

"In my view there are no sufficient averments in the present case to demonstrate that the first defenders supplied any or all of these units to the pursuers in Scotland. This argument is therefore not open to them on their present pleadings."

Counsel for the pursuers before me argued that if the element of supply had been there, Lord Allanbridge would have accepted that he had jurisdiction. I note that his Lordship referred to "the vital question of whether or not that supply took place in Scotland" and I accept that the inference suggested is probably correct. But that case as I understand it related to the supply of chimney units which caused fires in the houses in which they were installed.

In resolving the problem of jurisdiction in the present case I have to identify a delict committed by the third defenders. I have already held that by delict is meant a breach of duty of care. But I have already taken the view that the third defenders did not owe any duty of care to the pursuers. No delict was committed and accordingly the question whether the Act of 1971 applies does not arise. I have then for the purposes of the present chapter of the case to assume that there was a duty of care owed by the third defenders to the pursuers who were in Scotland. While it is strictly accurate to say that the whole activities which are criticised took place in England, the place where the breach took effect was in Scotland. On that approach I consider that the case can be compared with the situation described in Longworth. In that sense I consider that it can properly be concluded that there was a material breach of the duty in Scotland. In this case the defective goods were supplied to Scotland, albeit not directly by the third defenders, and it was in Scotland that the effect of the faulty manufacture was felt, or, as counsel for the pursuers put it, it was in Scotland that the defect struck home. In my view a concentration solely on the acts and omissions in the manufacturing process involves too narrow an approach to the ascertaining of the delict in the circumstances of the present case. The breach of duty was not complete at the close of the manufacturing process. No injuria had yet been committed. While the pursuers' averments are remarkably deficient in explaining the basis of jurisdiction, I consider that the ground which has been explained would have been sufficient to give the court jurisdiction and on that basis I shall repel the third defenders' plea of no jurisdiction. That of course does not mean that I am accepting that there was a delict committed because I have only dealt with the matter on the assumption, contrary to what I have held, that there was a breach of a duty of care.

The next issues which I have to consider relate to matters of alleged breach of contract. The pursuers base their claim against the first defenders on allegations of breaches of contract as well as allegations of quasi-delict. In art. 9 of the condescendence they aver that their loss was caused by a breach by the first defenders of their obligations under the design subcontract. The submission made by the first defenders here was that the pursuers have failed to distinguish clearly which of the defects in the wiring were due to design fault and which were due to fault in manufacture. The second to fifth defenders are blamed only for defects in manufacture and the complaint was that it was not possible to distinguish from the pleadings which defects should be attributable to which defender. The ways in which the damage occurred are set out in art. 8 of the condescendence as being three in number, namely what are described as techniques in the manufacture of the switchboards and control panels or consoles, fault in the design of cabinets and fault in the design position of cables in relation to the main ship cables. The question was raised whether the latter two of these related to work by the first or by the second to fifth defenders. The alleged design fault on the part of the first defenders was assumed to be in the first group but it was not possible to distinguish among the examples given which were truly faults of design and which were faults of manufacture.

Counsel for the pursuers argued that given the complex nature and considerable extent of the defects it was sufficient to aver the ways in which the damage had occurred under the three heads without specifying precisely which piece of wire was affected by which particular cause. The first group was intended to cover defects of manufacture only, not of design. It seems to me clear that in any one case it would be possible both for a design defect and a manufacturing defect to have contributed to the result and it seems to me impracticable to resolve that kind of problem by averment in the circumstances of the present case. Indeed counsel for the defenders recognised that individual pieces of wire could be affected by one or other or both of the two principal causes alleged. In these circumstances I do not find the averments of breach of the design subcontract so lacking in specification as to warrant their exclusion from proof.

In art. 10 a case is averred of breach by the first defenders of the supply subcontract. The averments in this article of condescendence are directly related to matters of manufacture. Indeed they follow closely the wording used in each of the condescendences alleging faulty manufacture forming the ground of fault against each of the second to fifth defenders. The basis of the attack here was that the first defenders nowhere aver that they themselves manufactured anything. As senior counsel for the second third party pointed out, the structure of the conclusions for damages demonstrates that the first defenders could not have manufactured any of the equipment which included the defective wiring because there is no conclusion directed solely at them. They are only brought in along with one or other of the other defenders. Senior counsel for the pursuers accepted indeed that the first defenders had not themselves engaged in any such manufacture although they may have made other articles with which this action is not concerned.

Counsel for the pursuers accepted that the case might have been better worded but submitted that it should not be excluded from probation. The supply subcontract, as is indicated in art. 3 of the condescendence was for the supply to the first pursuers of the electrical propulsion equipment. The first defenders had, as is indicated in art. 4 of the condescendence, subcontracted to others the manufacture and supply to themselves of certain items of the equipment. The first defenders however still remained liable to the first pursuers in contract for the performance of their duty to supply the equipment contracted for in the supply subcontract without defect. A distinction was recognised between the position in contract and that in delict under reference to a passage in the speech of Lord Bridge in D. & F. Estates Ltd. v. Church Commissioners for England at p. 208E. The averments which the pursuers have made in art. 10 sit very uneasily with the explanation which counsel for the pursuers put forward. However, while the pleadings are certainly open to criticism I do not consider them to be such as would justify striking out the case at this stage and I consider that this condescendence should be allowed to go to proof.

I should add that a similar argument was made in relation to the quasi-delictual case brought against the first defenders in art. 11 of the condescendence. However, as senior counsel for the pursuers pointed out, such an attack in that context is misconceived. While a substantial passage of the averments there is material which also appears in the condescendence of faulty manufacture, when this article is explored it is found eventually to allege failure not in manufacture but failures to advise the pursuers of the susceptibility of the wire to damage. I have already quoted the averments in question. No attack was made on these averments in art. 11 in relation to their relevancy as supporting a duty to volunteer advice on the risk of using the wire in question and so far as concerns the challenge which I am presently considering I would have taken the view that the condescendence should go to proof.

I now turn to another chapter in the case and another issue which was raised purely by the first defenders. This issue concerns the matter of a jus quaesitum tertio. The cases of breach of contract are tabled primarily by the first pursuers who were the contracting party, but the third pursuers also seek to pursue these cases on the ground of a jus quaesitum tertio. In relation to each case of breach of contract the pursuers aver:

"The said contractual duties were owed by these defenders both to the first-named pursuers and to the third-named pursuers in respect that by the said contract a jus quaesitum tertio thereto was created in favour of the third-named pursuers by reason of their being referred to therein and the said contract being a subcontract for the advancement of their interests in the vessel."

Two questions were debated before me, first whether the pursuers had relevantly averred the existence of a jus quaesitum tertio and secondly whether in any event a tertius was entitled to claim damages for defective performance and not merely implement for non-performance. This latter question is one of principle and I consider it first.

It was submitted by counsel for the first defenders that even if a jus quaesitum was constituted in the third-named pursuers that did not extend to entitling them to sue for damages. Counsel founded on a passage in Gloag on Contract (2nd edn.), p. 239, in the following terms:

"A person who undertakes duties under a contract, and by failure to fulfil them properly causes loss, is not liable on the contract to a person with whom he did not contract, but on whom the loss has happened to light. If he is liable at all, it must be on the ground that he owed a duty to the party injured, and that his failure to perform that duty amounted to delict or negligence; all attempts in such cases to infer liability on the principle of jus quaesitum tertio have failed. That principle, though it may entitle a tertius to sue on nonfeasance of contract, will not entitle him to damages for misfeasance, because the real foundation of his title to sue is that the debtor in the contract has agreed to be liable to him, and it is not to be presumed that the debtor in a contract has agreed to be liable to a tertius in respect of his defective performance."

A like view is presented in the 9th edn. of Gloag and Henderson, Introduction to Scots Lawat para. 10.8.

The view has however been questioned by the late Professor Emeritus Sir Thomas Smith in his Short Commentary on the Law of Scotland. At p. 782 he discusses the point and the authority adduced for Gloag's statement. Professor Gloag founded substantially on the case of Robertson v. Fleming (1861) 4 Macq. 167. As Professor Smith points out that case, and indeed others referred to by Gloag, are cases of persons disappointed by the negligence of a law agent who was acting for another trying themselves to claim damages against the law agent. They were not claims truly based on a jus quaesitum tertio. But at p. 177 the Lord Chancellor (Campbell) observed:

"The Scotch authorities, under the head ‘Jus quaesitum tertio,’ have no application, for these contemplate a vested right absolutely acquired by a consummated transaction"

; and at p. 210 Lord Chelmsford, having noted the respondents' reliance on the doctrine of jus quaesitum tertio, stated that it applied to the present case to a certain extent only. "Thus, although the Pursuers were not aware of the intention of Hamilton to give the Bond, yet he having employed the Defender to prepare it for the Pursuers' benefit, they would have been entitled to have demanded it from the Defender when it was deposited with him after its execution, for the right to it was absolutely vested in them. But the law of jus quaesitum tertio does not, with the right to the thing itself, create an incidental duty to be performed by the Defender to the Pursuers, for the nonperformance of which he would be responsible to them."

I am not persuaded that these observations do not provide some support for the view expressed by Gloag. But on the other hand they appear to relate to a very restricted view of a jus quaesitum tertiowhich may well have been overtaken by later cases on that branch of the law. Furthermore, the case was concerned with what would now be clearly seen as a quasi-delictual claim and the decision was not followed in the case of Ross v. Caunters to which I have already referred. The observations about jus quaesitum tertio in the case of Robertson accordingly have thus the less significance. Counsel for the pursuers pointed out that in cases where a law agent was employed with a view to a donation being made to a third party, no services were provided by the law agent to or for the third party. That kind of case was different from the case where someone was employed to manufacture an article to be sold to a third party. In such a case, unlike the case of donation, a jus quaesitum tertiomight arise carrying with it the right to claim damages for negligent performance. But whether or not Gloag's principle holds in relation to cases of donation, the case before me is not in that category and the generality of Gloag's rule in its application to the present case is open to question. Counsel founded upon Professor Smith's arguments and referred me to Cullen v. McMenamin Ltd . 1928 S.L.T. (Sh. Ct.) 2 where what seems to have been a claim for damages by a tertius was upheld, although the problem clearly caused the sheriff-substitute considerable anxiety and he was not assisted by any discussion of authority. I also note that in the case of Blumer & Co. v. Scott & Sons (1874) 1 R. 379 which I shall require to discuss later, although the action was unsuccessful the Lord President (Inglis) observed (at p. 384):

"It appears to me, therefore, impossible to hold that Ellis & Sons had any right to sue on the contract between Blumer & Co. and Scott & Sons, or had any right to claim damages for loss suffered by them in consequence of any alleged breach of contract on the part of Scott & Sons."

It is to be noticed that his Lordship refers to a right to claim damages and no question appears to have been raised as to any impropriety in a claim of that kind being made in that context.

Counsel for the pursuers submitted that if there was a right and title in the third party to sue for performance that must mean that there was an enforceable obligation between the contracting party and the tertius. A normal constituent of that obligation is the right to sue for damages for negligent performance. It would be a curious situation if the party was bound to perform and was not bound to perform with due care. The jus enjoyed by the tertius should carry with it the rights of a contracting party to sue for damages for negligent performance.

In general I can see no reason why a third party should not be entitled to sue for damages for negligent performance of a contract under the principle of jus quaesitum tertio, but whether he is so entitled must be a matter of the intention of the contracting parties. That has to be ascertained from the terms of their contract. I see nothing to prevent the parties expressly agreeing such a provision and if they did so, no reason why it should not be effective. If done expressly, then it could be clearly agreed how far any limits or exclusions which might operate in relation to a claim by the contracting party should extend to the third party. I see no reason why it should not be possible to infer such a provision from the terms of a contract although I would accept that it may well be difficult to do so. That indeed seems to me to be the difficulty which lay behind the objection in principle which Professor Gloag records. Senior counsel for the first defenders elaborated on the point by suggesting that the debtor in the contract would probably not be in a position to know what loss would be suffered by the tertius as a result of a defective performance. Senior counsel for the pursuers replied that in many cases the effect on the tertius would be well known to the debtor. The point may have more force as regards claims falling under the second head of the rule in Hadley v. Baxendale (1854) 9 Ex 341, at p. 354, and may not be a problem so far as damages within the first head of that rule are concerned. In order for the inference to be drawn the terms of the contract would have to be such as to imply a clear intention by the debtor to submit to a liability in damages to the tertius. But I cannot exclude the possibility that in some circumstances it may be possible to draw such an inference.

The approach to the problem taken by counsel for the pursuers was on the basis of an alleged right in the tertius to enforce the contract against the party in breach. But it may be that that is too loose an approach to the question. Counsel for the second third parties pointed out that without a more precise approach even on the matter of an alleged right to enforce the contract, problems could arise. It was not clear whether the right in the tertius would be to enforce a delivery of the equipment to the first pursuers as the contract required or whether it would be a right to have the equipment delivered to the third pursuers. Questions of the obligation to pay for the equipment might then arise and questions of the amount of damages to which the respective pursuers might be entitled. In the present case the third pursuers are not seeking implement of obligations under the subcontracts nor interdict against threatened actings in breach of these obligations, but damages for an alleged breach of obligations implied in those contracts. It may then be appropriate to consider whether the parties to the subcontracts intended that the third pursuers should have the right to recover damages for defective performance rather than simply a right to enforce the contract. On that approach the single question which has to be answered is whether in the circumstances the parties intended that the debtor under the contract should have a direct liability to the tertius for damages sustained by him in the event of a defective performance of the contract. The problem begins to look like the contractual equivalent of the issue which I have already discussed in relation to the quasi-delictual claims.

I turn next to the question whether the pursuers have averred a jus quaesitum tertio in the present case and to their averments relating to that matter. The debate before me was conducted simply on the basis of the pursuers' pleadings and I have already quoted the single sentence on which the pursuers found in respect of each of the two contracts in question. The design subcontract has been incorporated into the pursuers' pleadings but the supply subcontract has not been so incorporated. It appears from art. 3 of the condescendence to have been constituted by a number of letters and orders and not incorporated into a single formal document. However junior counsel for the pursuers expressly stated that I should proceed upon the averments alone. As I understood it, at the outset of the debate it was not thought that there was anything in the contracts which would strengthen the argument. For the purpose of the pursuers the critical averment was said to be sufficient to enable the case to go to proof. The language used by the pleader appeared to echo the account given of the essentials of a jus quaesitum tertio in the current edition of Gloag & Henderson, para. 10.4. In the discussion of the subject in that work it is indicated that a jus quaesitum tertio may be created by express words or may be inferred when the sole interest is in the tertius. I did not understand it to be disputed however that the jus may be inferred even although the tertius is not the only person to obtain some benefit from the contract in question, so long as its benefit is not merely incidental to a contract in which the parties intended to benefit themselves alone. It may be more difficult to infer the creation of a jus where the tertius is not the sole beneficiary of the agreement, but I see no objection in law to such a possibility.

The critical averment which the pursuers have tabled states two reasons for the jus quaesitum tertio. The first is that the third pursuers are referred to in the contract. The averment is remarkably unspecific in failing to explain the context in which the reference is made. As Lord Wensleydale observed in the case of Finnie v. Glasgow & South-Western Railway Co . (1857) 3 Macq. 75 at p. 90, the persons in whose favour the stipulation is made need not be named. It is enough that they should be sufficiently described and the stipulation be clearly meant to be in their favour. The relevance of the reference alleged in the present case however remains obscure. It is not expressly stated that the parties made any express provision entitling the third pursuers to sue the first defenders and I have difficulty in reading the averment as bearing such a construction. If there was no express provision giving the third pursuers the right which they now claim then the reference would have to be one from which that right is to be inferred. The bald averment however gives no indication of the significance or the context or the content of the reference. On the other hand the defenders have not focused the issue by any call for explanation in the pleadings, nor indeed by the tabling of any plea directed to this issue so as to encourage the pursuers to further specification on this particular point. The fact of the reference does carry the pursuers some distance and as their counsel pointed out, does serve as a point of distinction from the cases of Finnie, Blumer and Henderson to which I refer later. But while absence of reference may exclude the jus quaesitum tertio it does not follow that the presence of a reference necessarily creates it.

The second reason stated in the averment is that the contract was a subcontract for the advancement of the interests of the third pursuers in the vessel. Junior counsel for the first defenders described this last phrase as meaningless or at least as not sufficient to constitute a jus quaesitum tertio. The averment relates to the general effect of the contract. The language, as I have already noted, appears to have derived from a passage in Gloag & Henderson's Introduction to the Law of Scotland. The pursuers do not state that the first defenders intended that the contract should be for the benefit of the third pursuers. As the Lord Chancellor (Lord Cranworth) observed in Finnie v. Glasgow & South Western Railway Co . at p. 88:

"The jus quaesitum must be not merely a jus in which the tertius is interested, but it must be a jus that was intended to be beneficial in some way to a third person."

Thus the creditor of a firm had no title to sue a new firm which had purchased the old one with an undertaking to pay all the business liabilities of the old firm, because it was not entered into for his benefit but in the interest of the contracting parties who could revoke it if they wished (Henderson v. Stubbs Ltd . (1894) 22 R. 51). While counsel for the pursuers accepted that for a jus quaesitum tertio the contract required to be for the benefit of the person claiming the right, the pursuers' averment might well be thought to go no further than to show that the eventual customer was the third pursuers. Counsel for the pursuers however submitted that there was here an intention to benefit the third pursuers and that benefit was not merely incidental. The vessel was to be designed and provided for the third pursuers. They had a material interest in the contract and the contracts in question were entered into for their benefit.

Counsel referred me to the case of Blumer & Co. v. Scott & Sons . In that case Ellis had agreed to purchase from Blumer a ship being built by the latter, the engines to be built and fitted by Scott or by Black to the satisfaction of Ellis. There was a clause providing for liquidate damages in the event of delay in completion of the vessel. Thereafter Blumer contracted with Scott for the supply of the engines to be finished to the satisfaction of Blumer. Scott failed to deliver the engines on time and Ellis and Blumer raised an action against him concluding each for a sum as loss due to the delay or alternatively for payment of the combined sum to Blumer. The defenders sought dismissal of the action at least as regards the claim by Ellis. They argued that there was no contract between Ellis and Scott and no jus quaesitum tertio. The pursuers argued that Ellis had an interest in the contract, it was made solely because of his contract with Blumer, and Scott was directly liable to Ellis. The First Division held that no action should lie by Ellis against Scott. The Lord President (Inglis) pointed out that in the contract with Ellis the equipment had to be to the satisfaction of Ellis while in Scott's contract with Blumer the equipment had to be to the satisfaction of Blumer. The two contracts were wholly different and Ellis had no title to sue on Scott's contract. Lord Ardmillan observed that Ellis was not named or described in the contract with Scott nor were the engines to be delivered to Ellis nor finished to their satisfaction. It thus was not clearly apparent that the agreement was for his benefit. He also observed that Blumer could have, with Scott's consent, annulled the contract and contracted instead with Black and thus the contract was not irrevocable. Lord Deas dissented and Lord Jerviswoode concurred with the majority.

The matter of irrevocability is one which has been much discussed under reference particularly to Lord Dunedin's consideration of it in Carmichael v. Carmichael's Exrx . 1920 SC (HL) 195. But no argument was raised before me on the issue whether irrevocability is an ingredient for or a consequence of the constitution of a jus quaesitum tertio and I am not required to explore that question. As I have mentioned, counsel for the pursuers sought to distinguish the case from the present one in respect that in Blumerthe pursuers were not mentioned in the contract on which they sought to sue. The third party must be referred to separately or as a member of a class in order to have a title to sue. The case of Blumer is indeed different in that respect but that element does not seem to me to have been the main ground of the decision. What were of particular importance in that case were the terms of the contract in question which pointed to Blumer and not Ellis being the beneficiary. In the present case it appears that the equipment was supplied by the first defenders to the first pursuers who in turn supplied it to the third pursuers. It was not supplied by the first defenders to the third pursuers. But there is no indication of the contractual terms in this regard. Nor am I aware of what similarities if any there were between the subcontracts and the main contracts. The decision in the case however is not questioned and at the very least it demonstrates how different provisions in the two contracts may operate to exclude the existence of any jus quaesitum tertio. Counsel for the pursuers submitted that the fact that there was a chain of contracts involved here did not preclude the possible inference of an intention in the subcontracts to benefit the eventual recipient of the goods. While I accept that as a general proposition, the fact of the existence of the main contracts and the relationship between the terms of the main and the subcontracts may have a bearing on the issue before me. Indeed the conclusion to be drawn in relation to one of the subcontracts on the matter of a jus quaesitum tertio may not necessarily be the same as that to be drawn in respect of the other.

The argument before me was, as I have already stated, at the outset directed purely to the averments which I have quoted. Junior counsel for the pursuers expressly invited me to proceed on the averments alone which he argued were sufficient for inquiry, and although senior counsel for the first defenders stated in the course of his submission that he had no objection to the contracts being looked at, I was not invited to do so and the terms of the documents were not explored. It seemed at that stage that the pursuers were perilling their case on the particular averments. However in the hands of senior counsel for the pursuers the argument was further developed to the effect that the references in the contracts to which the averments relate created a jus quaesitum tertio. This was to be understood as being the effect of the references in the respective contracts. The references were sufficient to create the rights claimed. Senior counsel stated that he had no objection to my looking at the contracts. It seemed to me singularly unfortunate that this whole chapter of the case had been argued on the averments alone and I took the view that it was too late at the stage of the final speech to turn to the documents, only one of which in any event was incorporated into the record, when none of the other counsel who had addressed me on this chapter had referred to the contracts or invited me to look at them. It may be that the terms of the contracts, when examined, will still leave room for argument on the question here and I am not prepared to venture into that territory myself without having the assistance of counsel and without their having an opportunity to state any contentions they may have on the actual terms of the documents. Accordingly, while I have grave doubt over the sufficiency of the averments which have been made, I consider that I would be going too far too fast to reject the third pursuers' title at this stage. I am prepared to hold as matter of law that they could competently have a jus quaesitum tertio whereby they could claim damages from the first defenders, but whether in the circumstances they do have such a right is a matter which would be left to inquiry when the facts and in particular the whole terms of the relevant contracts can be explored.

I now turn to a further area of the case which was the subject of debate before me and that is the damages which are claimed by the pursuers. The first matter to be considered is the method by which the claims for damages have been tabled in the conclusions. The problem discussed here related to questions both of relevancy and competency. In their conclusions the pursuers sue each for four distinct sums. These sums are each sought respectively from the first and second defenders, the first and third defenders, the first and fourth defenders, and the first and fifth defenders, in each case jointly and severally or severally. The loss and damage is set out in a schedule which is adopted into the pleadings subject to certain corrections. Page 19 of the schedule discloses that the first pursuers are claiming the costs of replacement wiring, additional losses associated with that and certain financing charges, all of which total £5,938,345.82. The third pursuers claim for loss of use of the vessel and certain other costs and charges totalling £5,688,427.11. The total of these two sums is £11,626,772.93.

Counsel for the first defenders challenged the relevancy of the pursuers' averments on the apportionment of their loss between the second to fifth defenders. Each of these defenders had manufactured distinct groups of equipment. Each of them could only be liable for the defects in the equipment which they had respectively supplied. But the pursuers aver that:

"The said claims cannot be separated between one item of equipment and another. When the work of repair was carried out by the first pursuers and the first defenders the first pursuers applied a single job number to all works and costs therefor and all extra direct costs and direct labour costs were charged against that number viz. 8087. Furthermore, the costs invoiced by the first defenders therefor produced no separation of costs of repair for separate items of equipment but are as indicated in para. 1.1 of the schedule. Consequently, none of the costs can be separated."

What the pursuers have done in these circumstances is to allocate the total sums claimed by them by reference to the cost price of the respective items of equipment at supply from the various defenders to the pursuers. The total of that cost (£663,258) is not stated to relate solely to the equipment where wiring required replacement. Counsel for the pursuers however explained that it did, but the point might have been clarified in the pleadings. A lack of precision in the pleadings is also evident in the loose reference to "the pursuers" where probably only the first pursuers are meant.

Counsel for the defenders submitted that this scheme of allocation was absurd and unreasonable. Counsel for the first, second and fifth defenders described it as unrealistic. There was no necessary correlation between the repairs cost and the supply cost. The amount of wire would not bear any constant relationship to the cost of the equipment. Furthermore as counsel for the first, second and fifth defenders pointed out, the extent of replacement work might vary between particular pieces of equipment. For example, the pursuers' pleadings indicate that only one of two Voith Schneider panel controls required repair. Indeed it appears that the equipment supplied included several items other than those where defective wiring was involved. It was argued that the loss was beyond what was foreseeable. It was also argued that the losses claimed to be due to delay should not be apportioned between the defenders on the basis of the supply cost of the equipment. The single scheme of apportionment could not reasonably be applied both to the damages sought by the first pursuers and those sought by the third pursuers. It was also pointed out that the supply was made by the first defenders to the first pursuers and the prices fixed under the terms of that contract would bear no necessary relationship to the relative extent of the defects attributable to the second to fifth defenders. The question was also raised whether the alleged defective work of the second to fifth defenders coincided exactly with the defective work for which the first defenders were alleged to be liable, but counsel for the pursuers stated that that was the case.

Counsel for the third defenders sought to develop his attack on the apportionment to the stage of arguing that the pursuers' claim for a joint and several decree against the respective pairs of defenders was incompetent. Insofar as his argument on apportionment related to the allocation of the claim between the second to fifth defenders, the pursuers do not seek a joint and several decree against them and the point is one of relevancy rather than competency. The joint and several liability is claimed against the first defenders and each of the others successively. As between the first defenders and each of the others the attack was developed along the line that a joint and several liability could only be claimed where each of the defenders in question could be sued separately for the whole loss (Grunwald v. Hughes 1965 S.L.T. 209). One criticism was then raised arising out of the pursuers' averment that the first defenders subcontracted part but not all of these works to the other defenders. That suggested that they had done some themselves. Indeed the first defenders are themselves charged with breach of contract for faulty manufacture. But if they had done some work themselves then a joint and several liability could not lie. On the other hand a summation of the sum sued for shows that the whole cost of rewiring is attributable to the equipment made by the second to fifth defenders and I consider that the proper view is that the whole of the defective work was work done by the second to fifth defenders. The first defenders did none of it. On that basis this ground of criticism disappears.

It was then pointed out that the failure to identify the specific items alleged to be defective could lead to the incompetency of the conclusions since the sums sued for jointly and severally each related to defects each of which could be due either to faulty design or to faulty manufacture or to both. As soon as one defect was found to be due solely to one or other of these faults a joint and several decree could not be pronounced. This seems to me a real problem but it is one which might not arise even if the case went to proof against all the defenders and it is one which should be left over for resolution after the proof. On the view which I have already taken about the second to fifth defenders, the problem will not arise at all since there is only one defender left in the case and no apportionment will have to be made. This attack on the apportionment was also used to fortify an argument that the pursuers should have expressly averred that the method which they have adopted to apportion the total loss is reasonable. If that had been averred then explanation should also have been given why it was reasonable. It was not for the defenders to work out how much of the loss might be attributable to each of them. It seems to me that there is considerable force in that criticism. The pursuers' claim for damages is remarkably deficient in stating that the amounts sought are reasonable, and while their second plea-in-law alleges the moderation of their estimates there is nothing in the averments of apportionment to support such an allegation and almost nothing in the more particular claims. Counsel for the pursuers argued that the averment that the costs could not be separated between one piece of equipment and another implied that the method of apportionment was the only reasonable way and that whether it was or was not reasonable was a question for the court. I am not prepared to affirm at this stage that the approach taken is so grotesque that it could not serve as some basis for the apportionment and if the matter was a live issue I would have admitted it to proof.

I turn next to the further attacks which were made on the particular claims for loss presented by the pursuers. These are detailed in the schedule to which I have referred and which is lodged as a production and incorporated in the pleadings. While preparation of a separate schedule of the damages may have some advantages, such schedules tend to present figures and calculations without explanation. The pursuers in the present case have sought to overcome this by including in the closed record a commentary on the schedule but in a number of places further explanations would have been welcome to throw light on obscurities in the schedule. Beyond that there are a number of areas in which counsel for the pursuers was obliged to provide explanations at the bar which should have been contained in the pleadings. This was itself an indication of the somewhat scanty detail which had been given for what is in all a very substantial claim.

The first claim made by the first pursuers is for direct losses of replacement wiring. The first item in this is a detail of "invoices received as included under insurance notification job number 8087 (see appendix I)." The general criticism on the method of apportionment was laid against the costs tabled in appendix I of the schedule which are presumably the actual costs of replacement of the wiring. But the matter is obscured by an unexplained calculation in appendix I of a "claim for two-thirds funding." Counsel for the pursuers referred to an averment which alleged that the replacement work was carried out by the first pursuers and the first defenders. He said that it was reasonably to be inferred that the first pursuers would have to pay for the work done by the first defenders. I see no justification for such reticence. If the invoices have been paid by the first pursuers and they have lost the money then they ought to say so. As regards the reference to the claim for two-thirds funding, counsel for the pursuers explained that this related to a dispute between the first pursuers and the first defenders which was the subject of separate proceedings and that the proper course was to proceed on the basis of a liability of the first pursuers for the full amount. It seems to me unfortunate that the claim is presented with what seem to be unnecessary obscurities. However I am not persuaded that this is matter which would cause prejudice or practical problems to the defenders in the preparation of the case and while I deplore the reticence of the pleading I am not disposed to reject the claim on the ground of lack of specification.

Appendix II was criticised for its obscurity. It comprises a list of four places with sums of money appropriated to each and a total sum brought out. The pursuers submitted that it obviously referred to rewiring carried out by the first pursuers and the yards where the work was done and the labour charges involved. In the closed record the pursuers aver, as I have already noticed, that the work was carried out both by the first pursuers and by the first defenders. Anxiety was also expressed on the point whether the direct labour charged in paragraph 1.2 overlapped with that included in the later claims for labour contained in paras. 2.1 to 2.4. I take the view that these criticisms are not sufficient to require me to reject the claim at this stage and that there is here material which could properly go to proof before answer. It was also pointed out that appendix III does not clearly vouch the figure claimed in paragraph 1.2 of the schedule but it was explained by counsel that the total is to be found among the figures listed in the appendix.

Counsel also criticised the averments supporting the date of 9th September 1983 as the date under reference to which certain of the claims for delay were calculated. The point arises first in relation to paragraphs 1.3.1 and 1.3.2. It is presented as an anticipated completion date and reference is made in the closed record to consideration given by the pursuers early in 1983 to the question of a completion date and the selection of the date in question. As counsel pointed out, the pursuers do not aver that in fact the vessel would have been completed on 9th September 1983 but for the wiring problem and they rely on a date forecast at the start of the year. The pursuers explained that they set out in the closed record the evidential basis for the delay claims and that it was matter for proof whether or not their founding on predictions of early 1983 was sufficient to establish 9th September 1983 as the date on which the vessel would have been completed. The defenders' criticism may or may not be sound. But it is a matter which in my view should be left over until after enquiry. Certainly the pleading is not so defective as to vitiate the claim at this stage. It would undoubtedly have been preferable for the pursuers to have averred that the vessel would have been completed by 9th September 1983 but for the rewiring and I am not prepared to regard the failure to do that as fatal.

As regards the subcontract cleaning in para. 1.3.4 it was pointed out that it admittedly covers a period from January to December 1983 rather than the extended period of September 1983 to actual completion in July 1984. The pursuers aver that Scott Lithgow considered it fairer to make such a calculation but counsel for the third defenders indicated from the appendices to the schedule that the calculation presented appears to produce a figure much in excess of that on what might be thought to be the more relevant basis and the significance of the "fairness" was equivocal. Counsel for the pursuers explained that the schedule figures only gave the cost of subcontract cleaning over the final period of completion, that cleaning work had also been done by the pursuers themselves, that during the final stages of completion the amount of cleaning work escalated so that a calculation based on the actual work done in the final period would be greater than that claimed. The fairer course had been taken of claiming a figure based on cleaning costs related to a period short of the final completion period. The point seems to me to be one again which should be left for enquiry.

Questions were raised on the reason for hiring portacabins (para. 1.3.5) but an explanation for that is given at p. 107 of the closed record. Question was also raised as to the reason for the work of platers and helpers and additional cleaning (para. 1.3.9) but an explanation for that is given at p. 108 of the record. I do not find these criticisms to be of significance. A question was however raised regarding the claims for the additional project management costs given in para. 1.3.11 of the schedule but the pursuers replied that there was other work on which the persons in question could have been engaged and from which the costs could have been recovered. Counsel for the second third party pointed out that the charges in para. 1.3.11 of the additional project management costs may overlap with the items included in the overheads charge so as to involve a duplication of claims. Counsel for the pursuers accepted that such double counting might have occurred but submitted that the matter should be resolved at proof. Without an assurance that there is a duplication here, I am not prepared to strike out the particular parts of para. 1.3.11 and I consider that that would be a matter to be resolved after proof.

Challenge was also made to the claim for overheads. These have been added at a rate of 214 per cent to the direct labour costs in para. 1.2 and to other items in subsequent paragraphs. I was referred to Lord Maxwell's decision in Wimpey Construction (U.K.) Ltd. v. Martin Black & Co. (Wire Ropes) Ltd . 1982 S.L.T. 239 where his Lordship after proof disallowed a 12.5 per cent addition to the claims made in respect that it was "a purely notional figure not related to any quantifiable reality" and "did not represent even a broad estimate of any loss actually sustained or any cost actually incurred by anyone as a result of the accident" (p. 245). On the other hand in the present case the pursuers explain in the closed record that the overheads cover costs incurred by the company beyond the direct productive employment and give examples of the matters comprised therein. They state that 214 per cent was the actual rate for the year in which the replacement work was carried out. Counsel for the pursuers submitted that Lord Maxwell did not hold that overheads could never be claimed and referred to Owners of Dredger Liesbosch v. Owners of Steamship Edison [1933] AC 449 at p. 468 as an example where such a claim was allowed in principle. It was argued that nevertheless the pursuers should aver and prove that the direct labour engaged on the replacement work actually attracted an overhead charge of 214 per cent and that that amount of overheads would have been covered by other work if the rewiring had not been required. This relates to a point raised in connection with the claim for profits. While there is room to question whether the claim for overheads is wholly and directly attributable to the claim to which it is attached, it seems to me that the problem is one for proof rather than further specification. In Tait & Lyle Food & Distribution Ltd. v. Greater London Council [1982] 1 W.L.R. 149 a claim for managerial time was admitted as a proper claim although it failed in the absence of proof of any sufficient sum (p. 152H).

In para. 1.4 a claim is made for loss of profits where it is averred in the closed record that during the period between September 1983 and July 1984 the first pursuers "could have been doing other work." Counsel for the defenders argued that the pursuers should aver specifically that there was other work which they would have done and from which they would have earned a profit. Profit is also claimed in para. 2.7. Counsel for the pursuers submitted that the word "could" implied that there was other work which the first pursuers would have been able to do but for the defenders' defective programme. The pursuers' averments seem to me somewhat unsatisfactory but I regard the matter as one of doubtful relevancy and not of such importance as to make it appropriate to strike out the claim at this stage.

Section 2 of the first pursuers' claims is described as additional foreseeable losses associated with replacement wiring and comprises a detail of alleged additional losses incurred in respect of a variety of trades. The calculation is explained in the closed record as the difference between the actual labour used between January 1983 and July 1984 and such labour as the pursuers anticipated in December 1982 would be needed to complete the vessel by September 1983. Counsel for the defenders challenged the attribution of all this alleged additional labour to the replacing of the wiring. The magnitude of the figures involved certainly raises a question. On the other hand the pursuers aver that the magnitude reflects the enormity of the disruption caused by the wiring work. They claim that this work was all occasioned by the necessity to do the rewiring and the degree of disruption and the double working involved is matter of fact for enquiry. I agree that this is properly a matter to be explored at a proof.

Section 3 of the first pursuers' claim is in respect of finance charges. The first head here is in respect of interest charges made by the first pursuers' parent company on balances of payments made in respect of the over-run of the contract after September 1983. A general attack was made here especially by counsel for the second third party that the claim for finance charges was bad as being too remote a loss and one which was attributable to an independent cause. Counsel founded on the Liesbosch case. It was pointed out that the pursuers gave no explanation of their need to borrow from their parent company. Any loss here was said to arise from the first pursuers' impecuniosity and not from any fault or breach of contract by the defenders. In reply the pursuers argued that they were claiming for a direct loss in respect of an expense which they required to make. They submitted that this was not a case of loss caused by impecuniosity but one method of assessing loss to the pursuers occasioned by the defective wire and they compared the approach taken by Forbes J. in Tate & Lyle Food & Distribution Ltd. v. Greater London Council [1982] 1 W.L.R. 149 in selecting a commercial rate of interest to apply to the period during which the plaintiffs were out of the money in question. It is not explained how or why these charges came to be made and I have some doubt as to the relevancy of this head of claim, but it is connected with the approach to be taken in assessing interest on the claim and I consider it proper to leave over a final determination on the relevancy of it. I was also reminded that finance charges have been recognised as a direct loss on the basis that a contractor will either have to incur interest charges or forego interest on resources of his own where owing to delay he is required to lay out money beyond what he anticipates will be met by the usual interim payments under a contract (F. G. Minter v. Welsh Health Technical Services Organisation (1980) 13 B.L.R. 1). A question was also raised regarding the rates of interest charged as referred to at pp. 111B and 114E of the closed record but that is a matter to be explored at proof.

The second head of the financing charges is described as direct loss as per sec. 1. This appears to be a charge for interest on the alleged outlays over the period February 1983 to July 1984. I have considerable doubt over the relevance of this claim. It seems to be one for interest on losses from the actual date of the loss to July 1984. Interest is sought on the whole award including this claim from July 1984 in the fifth paragraph of the conclusion of the summons. This seems to be a situation where interest is being claimed on interest. On the other hand the pursuers aver in the record that this interest was a cost incurred by the first pursuers. A question was raised about the period taken into account in the calculation of this head of claim although it was explained that finance charges were incurred from the time when the defects were discovered and it has to be noted that the total in para. 3.8 of the schedule is taken only from that part of appendix 21 which ends on p. 78. It seems to me proper in the whole circumstances to reserve the relevance of this head of claim until the facts are explored.

The third head of the financing charges is described as additional foreseeable losses as sec. 2. This is a further interest charge applied this time to the total of the losses alleged in sec. 2 including the overheads addition but excluding the profit. The pursuers state in the schedule that they have allocated the additional losses in the same proportion and time scale as the direct losses in sec. 1 as a precise allocation of the additional losses cannot be properly achieved. Counsel for the defenders attacked this approach as hypothetical and artificial since it was far from evident that there was any relationship between the time scale of the loss of sec. 1 and the loss in sec. 2. If there are losses actually sustained it is unclear why they cannot be dated and directly quantified. Further in the closed record the pursuers aver that the losses are "in respect of the delay period," but the schedule appears to relate to losses from February 1983. The propriety of receiving interest on these alleged losses over the period prior to July 1984 is also open to question. However these problems do not seem to me necessarily fatal at the stage of relevancy and I would be prepared at least to admit the head of claim to enquiry.

The damages sought by the third pursuers, the Ministry of Defence, fall under four heads described briefly on p. 19 of the schedule but not fortified by any other detail in that document. Some explanation is however contained in the closed record. The first head is one for over £3.5 m. for loss of use of the vessel calculated at £12,000 for 308 days. It is not evident from the pleadings what was the substance or nature of any loss which the third pursuers sustained because of the delay in delivery. The pursuers have not explained in any detail how because they did not have the vessel between September 1983 and July 1984 they came to sustain their financial loss of the order of £12,000 per day. However, counsel for the pursuers submitted under reference to McGregor on Damages (15th edn.) at para. 1270 and the cases there mentioned that damages were due where a body like the third pursuers were wrongfully deprived of property which they would have put to use albeit not commercially. Counsel for the pursuers argued that as their averments suggest if the vessel had not been delayed it would have gone into service. Counsel did not claim that there was a commercial price which could be put on anything it might have done. They submitted that there were funds paid out by the third pursuers for the vessel during the construction period and as can be found on p. 12 of the schedule by the initial target date for completion only £1.9 million of the original purchase price of £39.9 million remained unpaid. The loss here arose because the Ministry of Defence had paid out money and got nothing when they could have used the vessel. I am not prepared at this stage to exclude this claim in principle.

Counsel also challenged the rate of £12,000 which is said to be a discounted figure reached by negotiation. While the occasion for the negotiation and the parties who were engaged in it are not explained, one can infer that it was a figure agreed between the first and third pursuers. It appears from the top of p. 115 to have had something to do with liquidated damages costings. The pursuers aver that it was a "mutually acceptable compromise." While there is mention of some arbitration elsewhere it remains obscure what the significance of this agreed figure was meant to have. Further the £12,000 is derived from what is described as an original contract price of the vessel of £60 million. But it is then explained that the contract price was £39.9 m. The balance is a sum added by the pursuers as an "estimated additional sum" to cover inter aliaescalation on labour and materials to the date of delivery. It is not easy to see how the loss of use of the vessel in September 1983 should be calculated by reference to the value which it would have in July 1984. So far as the quantification is concerned and the figure of £12,000 in particular it was argued that the averments demonstrated how that figure had been reached and it was matter which the court could take into account in reaching a solution to the quantification of the claim. This does not seem to be a matter which I should resolve at this stage of the case.

It was also said that if, as it appears to be, the claim was in respect of a liquidated damages claim made under a contractual provision between the first and third pursuers then presumably the third pursuers would have recovered the sum from the first pursuers. But the claim is made now by the third pursuers against the defenders. Counsel questioned whether this was a claim to be made by the first or by the third pursuers. On the last day of the debate before me senior counsel for the pursuers explained that the rate of loss in question was an agreed rate but the claim had been in effect given up as an element in reaching settlement with the first pursuers in the dispute between the pursuers which had been the subject of arbitration. This explanation may give rise to further complications and it would undoubtedly have been preferable to have had the explanation averred in the pleadings. However I am not persuaded that the claim may not be sound in principle and while there are distinct problems regarding the method of quantification I am not prepared at this stage to strike it out as irrelevant.

The second head of the third pursuers' claim states "Additional MoD costs in regard to the integrated navigational communications system (I.N.C.S.) and the Towed Unmanned Submersible (T.U.M.S.)." No explanation whatever is given for this very substantial claim of £1.8 m. and counsel for the defenders attacked the lack of specification. Counsel for the pursuers submitted that this was an additional loss and it was a question for the court whether they should go to proof or not. I have little hesitation in rejecting this claim. It is remarkable that a sum of £1.8 m. should be claimed with no notice given of the substance of it beyond a broad description which could well be meaningless to those not familiar with the detail of naval operations.

The third head of the third pursuers' claim is for costs and charges arising out of arbitration proceedings. No explanation is offered as to the substance or scope or outcome of this arbitration. It may have been between the first and third pursuers but that is not stated. The record gives a break-down of the costs but the matter otherwise remains obscure. In the course of the details of the first pursuers' claim there is included in their direct losses the cost of an arbitration (para. 1.3.11 and appendix 13) and that is left equally obscure. Counsel for the pursuers stated that on account of the rewiring the first and third pursuers had required to go to arbitration. They argued that the defenders were perfectly aware of the arbitration and accordingly expansion of the averments was not necessary. The claim had been appropriately stated in short form. Counsel explained that the dispute which went to arbitration was under the supply contract and related to a claim for indemnification. The matter had been settled. No attack on principle was made against this head of claim or indeed the first pursuers' claim in this regard. With considerable hesitation I would allow this matter also to go to proof.

The final head of the third pursuers' claim is for a bonus payment made to the first pursuers for early completion. The relevance of this was also challenged and it was submitted that if the first head was bad this one must be also. Counsel for the pursuers submitted that it was a question of fact whether it had been reasonable to make this payment. The claim is clearly linked with the first claim and its fate may depend upon the success of that claim. I have allowed that claim to go to proof and I consider that this should also be admitted to probation.

With the exception of the second head of the third pursuers' claim for damages I am accordingly of the view that the other heads of claim should at least be admitted to proof before answer. That proof however would be between the first and third pursuers and the first defenders together with the first and second third parties. I shall accordingly sustain the second plea-in-law for the first, second and fifth defenders so far as it relates to the cases on negligence preserving it so far as the first defenders are concerned in relation to the cases of breach of contract in conds. 9 and 10 and I shall repel their third and fourth pleas-in-law insofar as the relevance or otherwise of the matters there challenged can be covered by the second plea which still stands so far as the cases on breach of contract against the first defenders are concerned. The action will be dismissed as laid against the second and fifth defenders in terms of their second plea and as laid against the first defenders in terms of their plea so far only as the case on negligence in cond. 11 is concerned. So far as the third defenders are concerned, I shall repel their second plea-in-law but sustain their third plea-in-law and dismiss the action so far as laid against them. So far as the pleas-in-law for the second third party are concerned I shall sustain their first plea-in-law so far as it relates to the second, third and fifth defenders and so far as it relates to the case on negligence against the first defender in cond. 11. I shall leave the pleas to the competency standing since they cannot be resolved without enquiry. I shall exclude from probation para. 4.2 on p. 19 of the schedule.