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Scottish Court of Session Decisions
You are here: BAILII >> Databases >> Scottish Court of Session Decisions >> Howes v Crombie [2001] ScotCS 161 (26 June 2001)
URL: http://www.bailii.org/scot/cases/ScotCS/2001/161.html
Cite as: [2001] ScotCS 161
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OUTER HOUSE, COURT OF SESSION |
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OPINION OF LORD EASSIE in the cause JACQUELINE HOWES Pursuer; against ALAN S. CROMBIE Defender:
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Pursuer: J. D. Campbell, Q.C., Forsyth; Balfour & Manson
Defender: Brodie Q.C., Fairley; Simpson & Marwick
26 June 2001
[1] The pursuer in this action seeks damages in respect of certain defects averred to have been present in a house which she purchased from a Mr George Peter Fennell in early 1997. The defects are averred to have been discovered by the pursuer on taking entry to the house. She took entry shortly after conclusion of the missives.
[2] The defender is a chartered engineer and also a member of the Institute of Civil Engineers and of the Institute of Municipal Engineers who carries on business as a building and engineering consultant. His clients included Mr Fennell (the seller) to whom he provided certain services.
[3] On 28 January 1997 he provided to Mr Fennell a letter, addressed to Mr Fennell, in which he stated:-
"Having carried out periodic inspections of the house and garage constructed on Butcher's Croft, Rosemarkie, from foundation excavation to final completion, I can confirm the structural integrity of all the works and the quality of workmanship and materials throughout the construction and I am pleased to endorse the Local Authority Certification of the building works."
It is averred by the pursuer that the foregoing statement was not accurate and that the defender was professionally negligent in signing the letter in which it was contained. An issue having arisen as to whether in the particular circumstances of this case the defender was under a legal duty to the pursuer to take reasonable care in writing that letter to the seller, Mr Fennell, I heard a preliminary proof before answer on that limited issue. The proof was not concerned with either the existence or extent of the alleged defects or whether the defender was in fact in breach of the duty claimed by the pursuer.
[4] Although not a matter of any significance but simply because it is variously referred to in the documentation I would mention that the property purchased by the pursuer has undergone a number of changes of name. At one point it was known as "Butcher's Croft" or "Hill Croft"; thereafter as "Viewmount" and, following the pursuer's purchase, as "Buachaille".
[5] More importantly the house and garage were constructed by Mr Peter Fennell personally. Although some work may have been carried out by contractors, most of the construction work was physically executed by Mr Fennell himself and not by a firm of professional builders. The pursuer and her husband, Kevin Lawler, freely accepted that they were aware from virtually the outset that Fennell had, in that sense, built the house himself.
[6] The impetus to buy the house arose because the pursuer had acquired new employment in Inverness and accordingly had to move home from her existing house in Cumbria. Having viewed the house offered for sale by Mr Fennell the pursuer and her husband were much attracted to it and were anxious to acquire it. They evidently established a cordial relationship with Mr Fennell and struck an oral bargain in the sum of £150,000 at a relatively early stage. A flavour of their enthusiastic approach to the purchase may be gleaned from the letter No. 7/1 of process, undated, but evidently written to Mr Fennell shortly after they had instructed solicitors and approached a lender - Legal & General - to assist in the purchase. The letter also states that the pursuer's husband had enquired of the lender what surveyor the lender would use but the lender was not prepared to inform them.
[7] The solicitors instructed by the pursuer (largely through her husband Kevin Lawler who appears to have done the bulk and negotiation of the purchase of Buachaille and its funding) were Vallance Kliner & Associates in Glasgow, the partner principally concerned being Mr Stephen Vallance. The solicitors were not involved in any way in arranging lending finance or in the procuring of or advising on the need for any survey of the property. Those matters were, by agreement, entirely left to the pursuer and her husband. The lenders - Legal & General Mortgage Services Limited - commissioned and obtained a survey of the property by D. M. Hall, Surveyors, conducted by their Inverness representative, Mr John James Albiston.
[8] The missives whereby the pursuer contracted to buy the house are contained in the bundle No. 6/92 of process. The opening offer on behalf of the pursuer was dated 17 December 1996 and offered the price orally agreed with Mr Fennell. It did not include any term that the offer on the pursuer's behalf was subject to her obtaining a satisfactory survey. In his evidence Mr Vallance stated that from the absence of such a condition he believed that he would have been told by the pursuer that there had been such a survey. According to Mr Albiston he submitted to the lenders a report dated 16 December 1996 on D. M. Hall headed paper, the contents of which were subsequently translated into the standard Legal & General form of survey report which he signed on 24 December 1996 and which is now partially contained in No. 7/2 of process.
[9] The offer of 17 December 1996 (6/92 of process) also contained, within the body of the missive itself, Condition 5:-
"It is a condition of this offer that either all relevant NHBC documentation, or alternatively, an Architect Certificate of Practical Completion and that in terms satisfactory to our client together with all relevant planning permissions, Buildings Warrants and Completion Certificates for the erection of the subjects are exhibited to us prior to settlement and delivered to us with the settlement documents."
The missive was also subject to a schedule of further conditions, Condition 12 of which included the following:-
"Where the subjects have been completed within the past ten years, (or refurbished within the past 6 years under the protection offered by the NHBC's Conversion and Renewal Scheme), there will be exhibited prior to and delivered at settlement, either (a) a valid NHBC Scottish House Purchaser's Agreement, Scottish House Purchaser's Insurance Policy and relative standard Notice of Insurance Cover or (b) offer of cover (BM1/S), 'Buildmark' booklet (BM3/S) and Ten Year Notice (BM4/S) all issued by the National House Builders Council. ..."
The seller's qualified acceptance of 20 December 1996 - No. 6/92(b) of process - deleted all three of those conditions and in riposte in its Clause 3 stated:-
"There is enclosed copy Planning Permission, copy correspondence re Building Warrant and Certificate of Completion and letter from Contract Services Building and Civil Engineering Consultancy dated 30 May 1996. No other documentation shall be delivered or exhibited."
The letter of 30 May 1996 referred to in that Clause is No. 6/5 of process and is a letter from the defender to Mr Fennell to the terms of which it will be necessary to revert later.
[10] In response to what was contained in that Clause 3 of the qualified acceptance from the seller Mr Vallance on the pursuer's behalf stipulated in his missive of 13 January 1997 (No. 6/92(c)) as follows:-
"Clause 3 of your Qualified Acceptance is accepted subject to confirmation from our clients' lenders that they find the documentation to be in order and failing which the missives to follow hereon shall be void and unenforceable. Further and for the avoidance of doubt, your client warrants that there have been no alterations to the original subjects of sale."
The second sentence of that stipulation was subsequently agreed by the pursuer's solicitor to be held as deleted prior to the eventual conclusion of the contract of sale, subject however to agreement that an alteration would be made to an internal staircase prior to entry in order to render it in strict conformity with the building warrant. The contract of sale was eventually concluded on 24 February 1997 after further communings between the lenders and the pursuer's solicitors to which I shall turn shortly.
[11] The terms of the stipulation just quoted, and its antecedents, were not discussed by Mr Vallance with the lender or its surveyor. Mr Vallance was clear that he would have discussed these contract terms with the pursuer and would have copied everything to her, or her husband Kevin Lawler. He explained the import of the stipulation last quoted as being that, following the discussion, his client was satisfied with the documentation produced by the seller's solicitors, including the letter of 30 May 1996 - "the May letter" - and he only awaited the lender's instruction to proceed. If the lender found the documents acceptable for their purposes he and his client were content to conclude a bargain.
[12] In order to confirm that the lender, Legal & General, were thus content Mr Vallance wrote to them (No. 6/99 of process) on 13 January 1997 acknowledging receipt of their mortgage offer but adding:-
"We would advise that there is no NHBC documentation but enclose herewith a copy letter from Alan Crombie, Contract Services, relating to the construction and would be grateful if you would confirm that this is in order."
The letter referred to was the May letter. Legal & General replied by letter of 23 January 1997 (No. 6/100 of process) as follows:-
"We have referred this matter to our valuers and have been advised that there is no protection form (sic) the engineers if a structural defect was discovered within the next ten years. In view of this a retrospective Architect's Certificate or full engineer's report is required to enable us to proceed any further."
On the following day, 24 January 1997, the pursuer's solicitors wrote to Mr Fennell's solicitors enclosing a copy of that letter from Legal & General and enquired whether the seller was prepared to obtain a retrospective architect's certificate or a full engineer's report. By letter dated 29 January 1997 (No. 6/95 of process) Mr Fennell's solicitors wrote to Vallance Kliner Associates in these terms:-
"We refer to your letter of 24 January, 1997 and enclose copy engineer's report which our client has obtained from Contract Services. Please confirm that this will be suitable for your client's lender's purposes."
That letter and enclosure appear initially to have been sent by fax from the seller's solicitors to the pursuer's solicitors since by letter of the same date (No. 6/96 of process) Vallance Kliner Associates wrote to Legal & General enclosing what they described as "engineer's report from Contract Services" which they trusted Legal & General would find in order. It is not disputed, and is apparent from the evidence, that the report referred to was in fact a copy of the letter of 28 January 1997 from the defender to Mr Fennell (No. 6/4 of process) being the letter founded upon by the pursuer, the material part of which founded upon by the pursuer in her pleadings, is quoted in the opening paragraphs of this Opinion. I shall hereafter refer to that letter (No. 6/4 of process) as "the January letter".
[13] It is evident that the January letter was passed by Legal & General to D. M. Hall and on 4 February 1997 Mr Albiston, on behalf of D. M. Hall, wrote to Legal & General (in the letter No. 6/101 of process) stating:-
"The Engineer's Certificate provided by Alan S Crombie of Contract Services Building and Civil Engineering Consultancy is adequate to allow the provision of mortgage services and accordingly we are of the opinion that the subjects do provide adequate security.
We have assumed that Mr Crombie has the necessary Professional Indemnity Insurances."
[14] It further appears from a manuscript note made by Mr Vallance on the letter now forming No. 6/95 of process that on 5 February 1997 he was informed telephonically by Kevin Lawler that D. M. Hall were content and that on 6 February 1997 he was further informed that Legal & General would give their authority to proceed on that day or the next. In due course, the process of exchanging missives thereafter resumed leading to an eventual conclusion on 24 February 1997.
[15] Against that narration of the process of concluding the contract of sale between the pursuer and Mr Fennell it is convenient next to mention the evidence concerning the relationship between the pursuer and her lender's surveyor. It is not disputed that the selection of the source of finance for the purchase of the house was undertaken solely by the pursuer and her husband Kevin Lawler. It was also not disputed by the pursuer that at the time she and her husband had experience of buying houses and knowledge of the various survey services available from or through surveyors for those intending house purchase. The pursuer in evidence accepted that she was aware from virtually the outset that Mr Fennell had personally designed and constructed the house and, for that reason, she deponed that she and her husband wished to obtain a full structural survey from a surveyor in order ensure that they would not have unexpected problems and that the house was sound and well-built. However she further deponed that she was advised against obtaining such a survey by Mr Albiston, of D. M. Hall, who, she said, told them that since the house was brand new that it would have a completion certificate and either an NHBC certificate, or an architect's report, or an engineer's report confirming structural integrity and therefore a full structural survey was unnecessary. As I understood it from her evidence this information was not given directly to the pursuer herself but was her understanding of the import of a telephone conversation between Mr Albiston and her husband. She further accepted that she in fact knew from the outset that no NHBC guarantee would, or could, be available. She also indicated in her evidence that at the time she did not see a distinction between the functions of an architect and an engineer.
[16] In his evidence Mr Kevin Lawler maintained that it was he who had initially approached D. M. Hall and had asked them to provide a full structural survey. He maintained that he had made the initial approach to D. M. Hall on the basis of a recommendation from others and thereafter confirmed with Legal & General that D. M. Hall would be acceptable to them. He too maintained that it had been the intention of his wife and himself to instruct a full structural report and he too maintained that as a result of the advice given to him by Mr Albiston, and also the fact that the house was "brand new", he and she took the view that no structural report - or indeed any other report - required to be commissioned by them.
[17] For his part, on this aspect of matters, Mr Albiston gave a rather different account. So far as he was concerned his instructions came initially (and only) from Legal & General, the prospective lender. He had no recollection of giving any advice to the pursuer or Mr Lawler on the appropriate level of survey and was "virtually positive" that he did not. It was in any event not advice which he would have been likely to give.
[18] Insofar as it might ultimately be necessary to prefer one of these conflicting accounts to the other, my inclination is to prefer the version given by Mr Albiston. I observe that Mr Lawler's contention that it was he who selected and approached D. M. Hall and thereafter obtained confirmation from Legal & General that the firm was acceptable to them is in conflict with the terms of his undated letter (No. 7/1 of process) to Mr Fennell. It was also my impression that both the pursuer and her husband, who were aware at the time of the different types of survey available, now regretted not having obtained a full survey and in order to excuse themselves for not having done so, were persuaded that they had been advised against it. I suspect that what may have begun as wishful thinking has with time and repeated discussion now become a firm belief.
[19] Respecting Mr Albiston's communications with his client, Legal & General, his evidence was to the effect that he submitted a report on his firm's notepaper on 16 December but was then requested to put the same information into the standard Legal & General form. He did so on 24 December 1996, a partial copy of the form being No. 7/2 of process. The second and third sentences of section 15 "General Remarks" state:-
"We have assumed that the necessary Planning Permission and Building Warrants have been obtained and that Completion Certificates have been issued by the Local Authority."
"In addition we have assumed that an Architect's Certificate has been provided as without such certification resaleability will be restricted. We are aware that the first floor accommodation has been altered since the completion of the ground floor accommodation..."
Mr Albiston explained that the "General Remarks" section then continued on to an attached continuation sheet, not included in the documents lodged in process. Mr Albiston further deponed that he subsequently received from Legal & General a copy of the May letter with an enquiry whether it be in order. Mr Albiston gave a negative reply to that enquiry. He stated in evidence that the May letter did not "say enough" and "lacked weight". At a later point he received a copy of the January letter for his consideration. He advised Legal & General that he was content with that letter and in consequence of that expression of his contentment and the lender's acceptance of it the transaction eventually proceeded.
[20] In order to complete the framework of relationships it is necessary to advert to the evidence relating to the defender's relationship with his client, the seller, Mr Fennell.
[21] The defender was called as a witness by counsel for the pursuer. In summary, according to the defender, the first occasion upon which he provided services to Mr Fennell in relation to this property was in 1991 when he gauged the water supply from a bore hole on Butcher's Croft with a view to ascertaining its adequacy as a supply for the house which Fennell then proposed to build. The defender provided the results in a letter (No. 6/98 of process). The defender stated that he assumed Mr Fennell would pass that letter to the local authority in support of an application for a building warrant. He therefore accepted that someone other than Mr Fennell would rely on that letter. At a later point in time the defender was provided with plans drawn up by an architect - a Mr Leach - with a request that he satisfy himself of the structural sufficiency of what was proposed in those plans. The defender expressed himself as being so satisfied and granted (in No. 6/7 of process) the structural design certificate for new buildings required under the Buildings (Scotland) Act 1959 as amended. The defender went on to say that he thereafter made certain visits to the property while it was being constructed. He eventually provided Mr Fennell with the May letter when that was asked by Mr Fennell. The defender's understanding of the request was that it was sought in order to assist in obtaining a completion certificate from the local authority. The defender provided all those services to Mr Fennell for a fixed fee of £300, agreed at what he described as a relatively early stage in their relationship. He regarded his involvement with the property as concluded effectively with the May letter. He stated that he always understood that Mr Fennell's intention in constructing the new house was that it was for Mr Fennell's own residence, the house being constructed in a superb location. (The excellence of the location appeared to be a matter of universal acceptance among all the witnesses who were acquainted with the property.)
[22] Although the defender was also engaged to a certain extent in relation to a project being undertaken by Mr Fennell on Mull, his next current recollection of being involved with the house in issue was in January 1997 when he was visited at his home by Mr Fennell on an evening - identified by regard to the date of the January letter - as 27 January 1997. The defender's recollection was that Mr Fennell then indicated that he had been advised by his solicitor that he should have a further letter - conceived by the defender as a letter of comfort - which would tie the structural work to the remaining building work. Fennell asked for a letter which was more expansive and covered more than just the structural element. He, Mr Fennell, stated that he had been advised by his solicitors that he should have such a letter. The defender deponed that he sought to explain to Mr Fennell that he had only been involved in the structural work and that other matters were normally for an architect. He was however willing largely to replicate his earlier letter (the May letter) and to make a reference to the local authority completion certificate. The defender gave plain testimony that he was not told by Mr Fennell that the request for the additional letter was for exhibition to an intending purchaser or such a purchaser's lender. He was clear in his evidence that he was unaware that the property was on the market; his understanding all along had been that Fennell intended to reside in the house himself and that remained the case.
[23] On the following morning, 28 January 1997, his wife, who attended to his typing and secretarial needs, typed out the January letter which was then faxed to the solicitors acting for Mr Fennell before being sent to Mr Fennell.
[24] While the witness accepted that the letter might at some point, in the long term, be seen by a third party there was no question of its being requested for exhibition to such a party in the short term. In any event, the defender considered that its terms were merely "indicative" of a state of affairs and were not such that any third party reliance would be placed upon them.
[25] There was also tendered on the pursuer's behalf the witness Valerie Love who was employed as an associate in the firm of solicitors acting on behalf of Mr Fennell in the sale transaction and who made certain contemporaneous notes of telephone conversations in January 1997. She indicated that her involvement with the sale was, however, marginal, the seller, Mr Fennell, being truly a client of the firm's consultant Mr Camrass. Miss Love had no recollection of the transaction or of the two telephone conversations of which she made file notes. The two manuscript file notes to which she spoke were the notes contained in Nos. 6/103 and 6/104 of process which she endeavoured with large, but not total, success to decipher. However she had no real recollection of the conversation and she accepted readily that what was noted in her file notes, even as deciphered, did not indicate that she had advised the defender that a transaction involving the sale of the property was in contemplation.
[26] For his part, the defender did not dispute that Miss Love may well have spoken to him on the telephone on the occasions noted in the file note. However, he, like Ms Love, had no recollection of the terms of those conversations.
[27] Evidence was also led on behalf of the pursuer from a consulting engineer, Mr Alan Cruden, who expressed certain views on the practice within the profession and his views on the import of the January latter as regards the liability of the signatory. However, as he had never been asked to provide a letter such as the January letter or come across a letter in similar or approximately similar terms, I have to say that I find his evidence of limited assistance.
[28] In their approaches to the legal principles to be applied no radical difference emerged as between counsel for each party.
[29] Under reference to the speech of Lord Hoffman in Banque de Bruxelles v Eagle Star [1997] AC 191 counsel for the defenders pointed to the necessity of bearing in mind the scope of the duty for which it is contended and he further referred to the dictum of Brennan J. in the High Court of Australia in Sutherlandshire Council v Heyman [1985] 60 A.L.R. 1, 48:-
"It has to be borne in mind that the duty of care is inseparable from the damage which the plaintiff claims to have suffered from its breach. It is not a duty to take care in the abstract but a duty to avoid causing to the particular plaintiff damage of the particular kind which he has in fact sustained."
The scope of the duty currently contended for was such as to include a duty to prevent the pursuer suffering economic loss due to her purchasing Butcher's Croft at more than the market value or to her expending monies alleged to be necessary to make the house habitable or to make it conform to the building regulations or to protect it from further damage. That formulation proceeded in substance from the averments of loss in Article 7 of the Condescendence. I did not understand the submissions of counsel for the pursuer to be in conflict or inconsistent with that preliminary exposition by Mr Brodie for the defender.
[30] Counsel were thereafter substantially at one in agreeing that whether a duty of care respecting the damage claimed to have been suffered from its breach should be held to exist was to be tested by three heads, not however to be viewed as distinct, separate heads but as convenient guides to the ultimately pragmatic question whether that duty should be imposed. Those three heads may be stated thus:-
1. It must be reasonably foreseeable by the author of the statement that if it were to be negligently compiled, and thereafter issued, a recipient of the statement is likely to suffer damage of the nature claimed;
2. The relationship between the maker of the statement and the party advancing a claim based on that statement must be sufficiently proximate; and
3. It must be fair, just and reasonable that the law should impose that duty of care (in its given scope) on the one party for the benefit of the other.
In relation to this three-branch test I was referred to a number of authorities including Hedley Byrne v Heller [1964] AC 465; Caparo v Dickman [1990] 2 AC 605; Marc Rich & Co A.G. v Bishop Rock Marine [1996] AC 211. In relation to the adoption of this three-fold test in Scotland reference was also made by counsel for the defender to British Telecom v James Thomson Engineers 1999 SC (HL) 9; Gibson v Orr 1999 SC 420 and Forbes v City of Dundee District Council 1997 S.L.T. 1330.
[31] Although in relation to the first of these tests counsel for the defender made a submission that it was not reasonably foreseeable by the defender that in writing the January letter the pursuer would suffer economic loss, in making the submission counsel offered recognition that in the circumstances of the present case that proposition rather ran into the proximity test which formed a perhaps more central issue in the case.
[32] In regard to that issue counsel for the defender submitted that an essential aspect of the proximity test was that there be actual contemporaneous reliance on the statement in question by the person thereafter founding on it. Counsel referred to the passage in the speech of Lord Reid in Hedley Byrne at 486 in which his Lordship referred to there being no logical stopping place
"short of all those relationships where it is plain that the party seeking information or advice was trusting the other to exercise such a degree of care as the circumstances required, where it was reasonable for him to do that, and where the other gave the information or advice when he knew or ought to have known that the inquirer was relying on him".
The summary of the guidance to be taken from Hedley Byrne formulated by Lord Oliver in Caparo at 638 and quoted by Neill L.J. in James McNaughton Paper Group Ltd v Hicks Anderson & Co. [1991] 2 QB 113 at 124 included as point (4) that the advice communicated "is so acted upon by the advisee to his detriment". Counsel for the defender further referred to what was said by Sir Michael Fox in giving his judgment in the Court of Appeal in England in Preston v Torfaen Borough Council [1993] Construction Industry Law Letter 864, when, at 866, he observed:-
"Actions in tort will lie in respect of economic loss consequent on reliance on negligent statement under the principle of Hedley Byrne but it is accepted that the principle cannot apply here since the plaintiffs knew nothing of the defendant's advice and did not rely on it."
Counsel for the defender further submitted that the concept of actual reliance meant what one would expect, namely some mental process leading to a decision which is induced, or to which the decision taker is led, by a consideration of the advice given in the statement in question. In regard to this aspect - reliance - counsel for the pursuer referred to what was said by Donaldson L.J. in J. E. B. Fasteners Ltd v Marks Bloom & Co. 1983 1 A.E.R. 583, 588b-g, but I do not find what is said there to be in conflict with the notion that for the existence of actual reliance there has to be some consideration of the terms of the statement by the person claiming to have acted in reliance upon it and that such consideration should induce or materially contribute to the decision to embark on the transaction or course of conduct in issue.
[33] In the present case I do not consider that it has been demonstrated that the pursuer placed any actual material reliance on the terms of what was contained in the January letter. The pursuer, through her solicitor, expressed her contentment with the documents provided by the seller with his qualified accepted (No. 6/92(b) of process). That documentation included the May letter but not the January letter. The only reservation expressed was that the lender be satisfied with that documentation. Indeed, the terms of the missive (No. 6/92(c)) in stipulating for nullity in the event of lack of lender approval envisaged the conclusion of a contract in advance of such approval or satisfaction. There was really no evidence to the effect that the pursuer herself, or indeed her solicitor, were moved to proceed by virtue of a consideration of the terms of the January letter and I did not understand counsel for the pursuer to suggest such. His submission was rather to the effect that the whole transaction was dependent on the lender's satisfaction with the documentation produced. Unless the lender was so satisfied the transaction would not proceed. Only to that extent was there "reliance". In other words the reliance suggested was second-hand and turned on the lender's being content.
[34] The "reliance" upon which counsel for the pursuer founded being thus of that indirect nature, it is appropriate to examine the reliance placed by the lender, through their surveyor, on what was said in the January letter.
[35] In his evidence Mr Albiston stated that the terms of the May letter were such that it would not be reasonable to place reliance on it. The terms of the letter were, he said, too imprecise or "woolly". It "lacked weight".
[36] The May letter is in these terms:-
"Having carried out stage inspections of the construction of the above property at Butcher's Croft from foundation to completion, I can confirm that the building has been structurally built using high quality materials and to a high standard of workmanship.
The roof structure has been designed and supplied by Pasquill Building Components to current structural standards.
I can certify therefore that the building is structurally sound and has been constructed using good structural practice."
Having expressed the view that it would not be reasonable to rely upon a statement couched in the terms of the May letter Mr Albiston nonetheless maintained that it was reasonable for him to rely upon the terms of the January letter. I have to say that I find quite unpersuasive Mr Albiston's attempt to explain why, the May letter not being material upon which it would be reasonable to rely, he nonetheless claimed that he reasonably relied upon the January letter. While the two documents are not in identical terms they are very similar. The only differences appear to be the omission from the January letter of any reference to the roof system and the inclusion in the January letter of a reference to the endorsation of the local authority certificate and in its concluding paragraph immediately following the passage already quoted a reference to the expected life span of the building. However, as Mr Cruden accepted, confirming that a completion certificate had been granted by the local authority did not advance matters beyond what was already known. Further, the omission of a reference to the life span was not the reason wherefor the May letter was not appropriate for reliance. It may also be noted that it is not averred that the life span of the building is less than fifty years and the passage from the January letter, namely its last sentence, dealing with lifespan is not included in the passage relied upon in the pleadings. While I can understand his taking the view that it would not be appropriate to rely upon the May letter, I am far from satisfied that, at the time, Mr Albiston did place any real reliance on what was said in the January letter, beyond taking the view that, in some formal sense, documentation was in place.
[37] It was next recognised by counsel on both sides that a further important factor in the proximity test was the state of knowledge, actual or inferential, of the maker of the statement respecting the proposed transaction for whose purposes reliance might be placed upon the statement.
[38] Counsel for the pursuer acknowledged in his submissions that it was necessary that the maker of the statement have knowledge of either (i) a particular addressee, or (ii) a particular limited class of persons (to whom the person claiming reliance belongs) coupled with knowledge that the statement would be communicated to that class or certain members of it. Counsel for the pursuer also volunteered his acknowledgement that the pursuer could not found a claim on the May letter, irrespective of its terms, because it was issued at a time when no transaction respecting the property was pending and also because it was issued on the possible understanding that it would facilitate the issue of a local authority completion certificate. However, as respects the January letter, the position was, he said, different since the defender did appreciate, or ought to have appreciated, that the request which led to the January letter was made for the purposes of a current transaction concerning the house and the defender's professed ignorance of that matter should be rejected.
[39] In support of that contention Mr Campbell founded largely on the evidence of Miss Love; the fact that the January letter had been sent by fax to the seller's solicitors, and the circumstance that the request came some months after the completion of the construction works. Although initially somewhat attracted to that contention I am ultimately not persuaded that when viewed in the context of the whole evidence those factors properly justify the conclusion that in meeting the request for the January letter, the defender knew that it was for the purposes of a potential purchase.
[40] The defender said in evidence that he did not dispute the taking place of the telephone calls between him and Miss Love but, like her, he had no recollection of them. It is not, I think, evident from the terms of the notes made by Miss Love that the defender was informed that the house was in the course of being sold and Miss Love agreed that one could not tell from her notes whether any mention had been made by her of a sale of the house. One may speculate that Miss Love may have mentioned the sale. On the other hand one can equally speculate that she may simply but wrongly have assumed the defender already to know of the sale or she may not have thought it necessary to explain more than that Mr Fennell would be coming to obtain a further certificate or letter.
[41] For his part, as is apparent from the summary of his evidence already given, the defender's position was that he understood Mr Fennell to wish to retain the house for his own use and he was unaware that it was on the market; the reason for the request made to him by Fennell was that Fennell's solicitor had advised Fennell that he should have a fuller, more expansive letter covering the non-structural works in order for that to be included on his file. The defender went on to say that he explained to Mr Fennell that he had only been involved in the structural work but he was prepared to re-issue the earlier letter with a link to the completion certificate. He effectively envisaged that letter simply being put up with the title deeds.
[42] I say nothing whatever concerning the defender's competence as an engineer but the assessment which I formed of him during the course of his evidence was that he was not perhaps a particularly sharp, alert or questioning individual. I did not form the impression that in giving evidence the defender was endeavouring other than to be truthful. As the defender himself rather indicated the circumstances of his dealings with Mr Fennell were perhaps a little unusual but, as he put it, Mr Fennell was an "eccentric character". Mr Fennell was not led as a witness.
[43] In the course of his evidence the defender relatively offered the view that, perhaps with hindsight, he might have contemplated some reliance being placed on the January letter "in the long term" in the respect that it would be with the house documents. But he did not contemplate anyone placing 100% reliance on it because its terms were not specific but only "indicative" of a general state of affairs.
[44] Counsel for the pursuer founded on that concession in the defender's evidence of possible long-term limited reliance, taken in conjunction with the other circumstances pertaining to the issuing of the January letter, as supporting the view that the defender ought reasonably to have had in contemplation a short-term reliance for the purposes of a particular transaction concerning the house by a restricted class or people such as a purchaser or a lender.
[45] I have given this contention and the concession careful consideration but I have come to the view that it is not sufficient for the pursuer to point to a long-term possibility of reliance. In a sense, the whole difficulty about liability for negligent statements faced by the law is that in the long-term there may be many people who may see the statement and even rely upon it to some degree and accordingly the proximity test is deployed in order to restrict that potentially wide liability resulting simply from a generous foreseeability test.. As I understand it, it is for that reason that one looks to knowledge of a specific transaction or a specific class of transactions. Thus in his dissenting judgment in Candler v Crane Christmas & CoI [1951] 2 K.B. 164, 180-181, to which I was referred, Denning L.J. stated (in a passage which received approval in Hedley Byrne) that, taking accountants as an example:-
"They owe the duty, of course, to their employer or client; and also I think any third person to whom they themselves show the accounts, or to whom they know their employer is going to show the accounts, so as to induce him to invest money or take some other action on them. But I do not think the duty can be extended still further so as to include strangers of whom they have heard nothing and to whom their employer without their knowledge may choose to show their accounts. Once the accountants have handed their accounts to their employer they are not, as a rule, responsible for what he does with them without their knowledge or consent."
[46] In this context, as was pointed out counsel for the defender, the May letter might have been shown to the local authority (as to which there was in fact no evidence) but it was in a longer term put into circulation and shown to other parties including the pursuer and the lender. However it was accepted by the pursuer's counsel that the pursuer could not proceed on the basis of the May letter because it was necessary that the statement be made with a particular transaction in view. Put otherwise, the May letter could not avail the pursuer since at the time of its issue it there was no sufficiently defined class of addressee or transaction known to the defender. The January letter was, said counsel for the defender, in no different position, there being no evidence that the defender was aware of the particular sale transaction now in issue nor any proper basis for saying he ought to have had that knowledge. In my view there is force in the contention thus advanced by counsel for the defender.
[47] Mr Brodie also submitted that a further factor in the proximity test was the importance of the maker of the statement being aware not just of the likelihood of reliance but the likelihood of reliance without other independent enquiry. In support of that submission reference was made to what was said by Lord Oliver in Caparo at 638C at point (3) of the guidance to be deduced from Hedley Byrne namely that it be "known actually or inferentially that the advice ... communicate is likely to be acted upon by the advisee ... without independent inquiry". Further reference was also made to Smith v Eric S. Bush [1990] 1 AC 831 at 872 at which Lord Jauncey states:-
"Knowledge actual or implied of the mortgager's [the plaintiff's] reliance on the valuation must be brought home".
Even if it were to be assumed that the defender did in fact have knowledge of the existence of an ongoing sales transaction, or that he ought to have appreciated that existence, it would equally be expected that the subjects would be independently surveyed by an intending purchaser, or by a lender whose survey report might commonly be communicated to the intending purchaser. That apart, it was further submitted that it was not to be envisaged that anyone contemplating purchase or loan would place exclusive reliance on such an uninformative document as the January letter.
[48] In my view there is also force in this contention. As has already been mentioned, Mr Albiston took the view that no intending purchaser or lender could reasonably be seen as likely to rely on the May letter. Mr Cruden took a similar view. As I have also already indicated, the January letter is not significantly different from the May letter in terms of its precision. It is hard to see that any intending purchaser or lender would simply take such a document as his exclusive source of advice and not proceed to have the house properly and fully surveyed.
[49] I would add that, although perhaps not clearly articulated, the defender's references in his evidence to any reliance being "less than 100%" and the terms of his letters being "indicative" are, I think, understandable in that context. Put in other words, by reason of the generality and vagueness of the text, the defender took the view that he was not assuming any legal responsibility but simply indicating what had happened. As counsel for the defender pointed out, awareness by the adviser of an assumption of responsibility is a further important factor in the proximity test - see White v Jones [1995] 2 AC 207; Henderson v Merit Syndicates [1995] 2 AC 145.
[50] I turn now to the third branch of the tridental test, namely that it be fair, just and reasonable to impose the duty of care of the scope contended for on the defending party for the benefit of the other.
[51] Counsel for the pursuer did not make any particular submission on this branch, but there was, of course, implicit in what was advanced by and on behalf of the pursuer the obvious consideration that if her averments respecting the condition of the house be true - an assumption upon which I must proceed for present purposes - she purchased a house with significant defects and one has the natural sympathy for any house purchaser in that position.
[52] For his part, however, counsel for the defender submitted that what the pursuer, through her advisers, was seeking to do was not fair. She was effectively trying to treat the January letter as a warranty of the quality of the buildings. The defender had received no payment for the grant of this letter. The pursuer, who was aware of the existence and value of obtaining a full structural survey, had elected not to do so for reasons with which the defender was not concerned. It was truly the responsibility of Mr Albiston's firm to advise the lender.
[53] While reiterating my appreciation of the pursuer's position, I again have to say that I find force in the contention advanced on behalf of the defender. I would also observe that, as was remarked upon by Mr Brodie, the impression given by Mr Anderson and also by Mr Cruden at several points in their evidence was that they saw the defender's letter as the equivalent of a guarantee - a substitute for the NHBC guarantee - exonerating the surveyor. Insofar as that equiparation may have been suggested it is in my view unsound. That apart, it was not otherwise evident to me why the pursuer required to pursue these proceedings rather than alternative remedies invoking more proximate relationships.
[54] On the whole matter, looking to all the branches of the threefold test, my conclusion is that in the particular circumstances of their case the pursuer has not demonstrated a relationship of such proximity that it would be fair and reasonable to hold that the defender, in writing the January letter, was under a duty of care towards the pursuer of the scope contended for by her. I shall therefore grant decree of absolvitor.
[55] For completeness I should record that in the course of his submissions Mr Campbell for the pursuer submitted that, since no evidence had been led on behalf of the defender, in light of the observations in O'Donnell v Murdoch McKenzie & Co. Ltd 1967 S.C. (H.L.) 63 the court should draw from the evidence only inferences favourable to the pursuer. In relation to that submission I observe firstly that I have difficulty with the application of that principle to the situation in which a pursuer has chosen to call the defender as a witness. Had the defender not been so called and had not given evidence it might have been justified to draw inferences of fact unfavourable to him by reason of his silence. But that is not the case. Further, insofar as Mr Campbell may have sought to apply that approach, not to matters of fact, but to the application of the proximity test, I agree with Mr Brodie that the approach is not sound.