Scottish Court of Session Decisions

[1] The pursuers and appellants carry on the business of a public house at premises in North Silver Street, Aberdeen. The defenders and respondents are the statutory successors to the Grampian Regional Council in regard to sewerage works. In this action, the appellants are seeking to recover losses which they aver they sustained because of the very substantial prolongation of certain sewer replacement work carried out by Grampian Regional Council. On 18 February 1999, the sheriff sustained certain pleas in law for the respondents and dismissed the action. The appellants have now appealed to this court.

[2] It is convenient to begin by setting out some of the appellants' material averments. In condescendence 2 they aver:

[3] The appellants then elaborate on the problems which arose as a result of the failure to investigate the ground conditions, including the discovery of unexpected utility services crossing the line of the sewer. They then aver:

[4] They then make further averments imputing fault to the defenders for their failure to make appropriate investigations. In condescendence 3 the appellants aver that they sustained loss and damage caused by the way in which the Regional Council elected to carry out the works as condescended upon. They continue:

[5] That duty is then further elaborated upon by reference to, among other things, the common practice of statutory undertakers in carrying out such works.

[6] With regard to loss, the appellants aver, firstly, that there was no vehicle access to the premises while the works were being carried out and that this caused difficulties, in particular in relation to delivery of beer which was often rendered unsaleable. Those averments were held irrelevant by the sheriff and the appellants did not seek to reopen that issue. The appellants further aver:

[7] The pursuers' first plea in law is a plea that they have sustained loss and damage through the nuisance created by the Regional Council and their second plea is a plea that the sum sued for is reasonable.

[8] In his note, the sheriff records the arguments addressed to him under four heads. The first of these was an attack by the respondents on the relevancy of the averments in relation to the shortcomings of the planning and execution of the works. That argument was rejected by the sheriff and was not reopened in the appeal. The second argument related to some particular parts of the averments of fault in respect of failure to make investigations. The sheriff accepted that argument and held that certain averments should not be remitted to probation. The appellants did not seek to reopen that issue. The third point concerned the averments about the unsaleability of beer, to which we have already referred. The fourth submission made to the sheriff, which was the submission which led to dismissal of the whole action, was made by reference to the decision in Dynamco Limited v. Holland and Hannen and Cubitts (Scotland) Limited 1971 SC 257 and was that the appellants were seeking to recover a pure economic loss not associated with any physical or material injury or damage to property and that such a loss was too remote to sustain a claim for reparation. The sheriff accepted that argument and, on that basis, dismissed the action. He also held that the averments in relation to loss of profit were, in any event, too inspecific to go to proof.

[9] Having considered the arguments advanced in the appeal, we have come to the view that the proper course is that this action should be remitted to the sheriff to proceed to a proof before answer. In the circumstances, we do not think it is desirable to enter into too much detail in considering the legal arguments advanced or the issues which may arise after proof especially as, in our view, there are issues which may arise but which were not canvassed, or at least only briefly referred to, in the argument before us. Put shortly, the appellants' contention was that the rule which prohibits the recovery of pure economic loss was a rule which applied to an action of damages based on fault and negligence but had no application to a case based on nuisance. On the other hand, the respondents' principal contention was that this was in substance an action based on fault and negligence and not an action based on nuisance and therefore that the pure economic loss was too remote. Before the sheriff the respondents did not argue that there was no relevant case of nuisance and as a result the issue as to whether or not there was a nuisance in this case, and, if so, what the nature of that nuisance might be, was never focused. There was a passing suggestion that the issue of the relevancy of the averments of nuisance might be raised in the appeal but in our view it would not have been proper to allow that to happen, especially as no notice had been given in any grounds of appeal that any such point might be raised and the appellants did not agree to its being discussed. Further, on the point of the remoteness of pure economic loss, the only authority after the Dynamco case which was referred to was the case of East Lothian Angling Association v. Haddington Town Council 1980 S.L.T. 213 and there was no reference to any of the series of more recent cases in which the House of Lords has considered questions bearing upon the recovery of financial loss. In R.H.M. Bakeries v. Strathclyde Regional Council 1985 SC (HL) 17, Lord Fraser of Tullybelton in giving the only extended speech in the House of Lords, quoted with approval from the opinion of Lord President Cooper, in Watt v. Jamieson 1954 SC 56 and in particular quoted the following statement:

[10] In the face of that pronouncement, we do not think that it can be affirmed, without careful consideration of the authorities relating to pure financial or economic loss, that in a case of alleged nuisance it is necessarily too remote to claim mere financial loss. In our view, that may be an issue of some delicacy. There are also earlier authorities to which reference might have to be made, in addition to Walker's Trs. v. Caledonian Railway Co. (1882) 9 R. (H.L.) 19 which was mentioned in the debate. We should say further that, looking to the fact that there are averments of nuisance which were not challenged as such in the debate before the sheriff, it would not be appropriate to allow further debate in this court or before the sheriff and that the appropriate course would be to remit the case to allow a proof before answer to be held. The legal questions which arise in this case can, in our view, only be dealt with properly once the facts have been ascertained and it is possible to consider the nature and extent of any nuisance and its effect on the appellants' property and business.

[11] That, of course, leaves over the question whether the averments of financial loss are themselves sufficiently specific. The sheriff's reason for holding them lacking in specification was that they did not give fair notice of the duration of the period of loss or how the sum averred was arrived at and did not aver what loss was sought in respect of the period after the works were completed. We must respectfully differ from the opinion expressed by the sheriff on this issue. In our view, the averments clearly relate to the period between the alleged reasonable time for the completion of the works, about six weeks, and the actual period required, six months. The sum by which the pursuers' trade is alleged to have been diminished is specifically stated and while the calculation is not specified, the defenders can no doubt recover any material documents which may bear on that calculation. The period of diminished business after the cessation of the works is also specified, within a broad margin, and in our view there is no real reason why these averments of loss should not go to proof.

[12] In the whole circumstances, therefore, in our opinion the proper course is to allow the appeal and remit the cause to the sheriff to proceed to a proof before answer.