Scottish Court of Session Decisions

[1] The pursuers are husband and wife. The defenders are a firm of solicitors, and the individual partners thereof. They have a place of business at 39 Huntly Street, Aberdeen. The third named defender is one of their partners, Mr Robert Anderson ("Mr Anderson"). In this action the pursuers seek damages from the defenders on the basis of the alleged failure of Mr Anderson to raise an action of damages, against the seller of certain heritable property, within the two year time limit provided for in the relevant missives and Disposition.

[2] At the end of the proof - in the course of which evidence was led over three days - a number of matters were not seriously in dispute.

[3] In late 1989 and early 1990 the pursuers were living as a family, with their daughters aged 11 and 13, at a house owned by them at 32 Whitestrips Way, Aberdeen. Following an initial meeting on site, they became interested in the purchase of the east-most half of subjects known as Millden Steading, Balmeadie, Aberdeen. In particular they had certain discussions with a Mr Donald Cameron. He was the father of Mr Craig Cameron, a tenant farmer in whose name the title to the subjects had been taken. At that time the building at Millden Steading was a disused farm building. It was uninhabitable, but the proposal was that it be converted into a dwellinghouse for the pursuers and their family. Certain plans were agreed with Donald Cameron and, according to Mrs Smith, one plan, which was produced and on which was noted specification of inter alia partitions, ceiling, walls and floor, represented the final agreed proposals. According to her all that remained to be agreed was the detail of bathroom and kitchen fittings, which Mr Cameron and the pursuers agreed could be chosen when the time came for them to be installed. Following a number of meetings with Mr Cameron the pursuers resolved to sell their own house and to buy Millden Steading.

[4] They instructed McAndrew & Company, a firm of solicitors, to submit to J & G Collie, solicitors for the seller, an offer to purchase the subjects. In consequence missives for the sale to the pursuers were concluded dated 9, 16, 19 and 20 February 1990. In terms of the missives it was agreed that the purchase price would be £17,500; the date of entry would be 9 March 1990; the seller would, by 31 March 1990, convert the steading building to form a single detached dwellinghouse in accordance with certain numbered plans (apparently the final plan spoken to by Mrs Smith, together with two other less detailed plans which were produced); the pursuers would pay an additional sum of £25,000 payable on completion of the conversion and the missives would "remain open and in full force and effect.... for a period of two years only following entry".

[5] In the event the transaction did not settle until about 17 April 1990. The pursuers then paid the purchase price and took entry, and a Disposition of the subjects by the seller was delivered. In terms of that Disposition it was provided the missives "shall cease to be enforceable after a period of two years from the date of entry hereunder". The date of entry in terms of the disposition was 31 January 1990.

[6] Following entry the seller neither commenced nor completed the conversion of Millden Steading. Letters written by Mr Barclay of McAndrew & Co on 9 May and 6 June 1990 insisting upon progress proved to be ineffectual.

[7] The first pursuer sought estimates from other building contractors in relation to the completion of the conversion of Millden Steading. He tried to contact several contractors but the only estimate he was able to obtain was for a price of £45,000. The pursuers had arranged to fund payment of the £25,000 by loan from Lloyds Bank who were to release that sum on completion of the conversion works. This was the maximum loan that the pursuers were able to obtain. The pursuers were therefore unable to proceed with the conversion works themselves. Mr Smith discussed this with his bank at the time. The bank advised him to sell the steading, subject to the possibility that they would compel him to do so.

The steading was marketed through two estate agencies, first Home Affairs and second, G A Estates, from June 1990. In due course it was sold by the pursuers for £30,000 in terms of missives which were concluded in July 1991.

[8] In the meantime the pursuers, who had concluded missives to sell 32 Whitestrips Way in contemplation of moving to Millden Steading, were unable to proceed with that sale. The purchasers were a Mr Carroll and a Miss Young. These purchasers, who apparently purchased alternative property at a greater price, claimed damages from the pursuers, and in about October 1990 raised an action against the pursuers in Aberdeen Sheriff Court.

[9] In about late June 1990 Mr Graham McAndrew, a partner in McAndrew and Company - a firm which did not itself do court work - arranged a meeting between their Mr Barclay, the pursuers and Mr Charles Fraser of Messrs Burnside, Advocates, at which the legal position of the pursuers following the seller's failure to implement the contract was discussed. By letter dated 26 June 1990 the pursuer wrote to Mr McAndrew inter alia instructing him "to acquire the services of Mr Fraser with a view to raising an action against Mr Craig Cameron". By letter dated 27 June 1990 Mr McAndrew wrote to Mr Fraser intimating that they had now received written instructions

Thereafter until about August 1991 Mr Fraser of Burnsides acted for the pursuers in connection with possible litigation against Mr Craig Cameron and in respect of their defence to the action by Mr Carroll and Miss Young. By letter dated 6 July 1990 Mr Fraser wrote to Messrs McAndrew & Company intimating inter alia that they had intimated a claim to Messrs James & George Collie who acted on behalf of Mr Cameron.

[10] Certain problems arose in relation to the payment of Mr Fraser's fees. By letter dated 1 March 1991 Mr Fraser wrote to the first pursuer saying, inter alia,

By letter dated 11 March 1991 to the first pursuer, Mr Fraser reported inter alia on contact he had made with the solicitor acting for the seller of the steading who said that he would again be speaking with his client, "and revert to us to see whether or not we should get something out of Cameron without the necessity of going to Court". Difficulty in respect of paying Mr Fraser's fees however remained and both pursuers shortly lost the employment which they had had. Mr Fraser intimated that he was not prepared further to act for the pursuers. By letter dated 24 June 1991 to Mr McAndrew, the first pursuer wrote, inter alia, "I feel very badly let down as no-one has bothered to take Cameron to Court. Mr Fraser promised to do this but so far this has not happened".

[11] Thereafter Mr McAndrew made arrangements for the pursuers to meet Mr Anderson of the defenders. Following a telephone call with Mr Anderson, Mr McAndrew wrote on 2 September to the first pursuer reporting that he had spoken to Mr Anderson who had agreed to a meeting and passing on his telephone number so that a suitable appointment could be made. On or about that date the pursuers met Mr Anderson in his offices. Thereafter until about the end of 1992 he acted on their behalf. By that time however, no action had been raised against Mr Craig Cameron and the two year time limit provided for in the missives and Disposition had long expired. It was agreed by counsel at the end of the proof that the sole question in relation to whether it could be said that Mr Anderson was in breach of contract - in particular by not raising such an action within the two year time limit - was whether he had been instructed to raise an action or at least to advise in connection with a possible action against Mr Craig Cameron (as maintained by the pursuers) or whether (as Mr Anderson maintained) his instructions were essentially restricted to acting on behalf of the pursuers in connection with the defence of the action brought against them by Mr Carroll and Miss Young In particular counsel for the defenders did not seek to resist the submission that, if the pursuers' position on this question was accepted, a solicitor of ordinary competence acting with reasonable skill and care would have raised such an action, even if only on a protective basis pending further investigations.

[12] Having considered the whole evidence, I have come to the view, on balance, that it is more likely than not that the pursuers did, at least at the first meeting with Mr Anderson, ask for his advice in relation to legal action against Mr Craig Cameron.

[13] Both pursuers gave evidence that at the first meeting the question of litigation against Craig Cameron was clearly one of the matters raised. Both indicated that it was Mr Anderson's response that the action at the instance of Mr Carroll and Miss Young would require to be defended first so that their losses could be quantified. I found both of them to be generally credible and reliable in relation to this matter. Their evidence about Mr Anderson's response had a certain anecdotal quality to it, as did Mr Smith's evidence that shortly thereafter Mr Anderson told him (incorrectly as it turned out) that they had five years within which to raise an action. Although Mrs Smith was somewhat uncertain in relation to what had been discussed in relation to the action against the pursuers, and although Mr Smith was somewhat uncertain as to what documents had been handed over by him, neither of these factors causes me to doubt their reliability on the central issue - although equally I was not entirely convinced that the question of action against Craig Cameron was raised by them thereafter quite so consistently as they maintained.

[14] Significantly however, their evidence was supported by the evidence of the context in which the meeting with Mr Anderson first came to be arranged. As above indicated Mr Fraser of Burnsides acted on their behalf from June 1990 onwards both in relation to the defence of the action against them and in relation to possible litigation against Craig Cameron. Although he gave evidence that the focus moved more to the former as time progressed, he accepted that it was fair to say that the first pursuer consistently made it plain that he wanted redress against Mr Cameron and that this was plainly manifest in the letter written by the pursuer on 24 June 1991.

[15] More importantly, Mr McAndrew gave evidence as to his initial contact with Mr Anderson. Although he could not remember the precise terms of the telephone call, he made it plain that his recollection was that he had made it clear to Mr Anderson that the pursuer had wanted to raise an action against Mr Cameron. He seemed clear in his own mind that he had explained the overall position in which the pursuers found themselves to Mr Anderson before asking if he was prepared to meet them. He was "quite sure" that he would have discussed not only the action by Mr Carroll and Miss Young but the overall difficulties in relation to the steading. His evidence was confirmed by the contemporary records of letters he wrote to the pursuers. In particular, on 2 September 1991 he wrote,

By letter dated 11 September 1991 he wrote to the first pursuer asking him to up-date him on "the progress which you are making (I hope) with Lindsay & Kirk regarding the raising of an action against Craig Cameron". And on 19 September 1991 he again wrote inter alia expressing disappointment that Mr Fraser was not co-operating "with regard to handing over the papers that Bob Anderson will require in order to advance any court action against Craig Cameron". Although he accepted of course that he had not been present at the time when the pursuers met Mr Anderson, he thought it "highly unlikely" that their instructions to Mr Anderson would have related only to the defence of the action against them, indeed, further that he could not believe that that was the only matter discussed. I would only add that although invited on behalf of the pursuers to find that when, by letter dated 31 October 1991, Mr McAndrew wrote to the defenders enclosing "herewith copies of the various missives concluded on behalf of Mr and Mrs Smith for your attention", he sent inter alia the missives with Mr Cameron, Mr McAndrew himself was not sufficiently clear in his recollection about this to enable me to make such a finding, and it appears that that letter was in response to a letter dated 9 October 1991 from Mr Anderson asking for missives apparently in connection with the claim against the pursuers by Graham Carroll and Miss Annette Young. Whether and if so when Mr Anderson received the relevant missives was not, however, at the end of the day a central issue, there being no dispute that if necessary he could have obtained copies of them.

[16] By contrast it was Mr Anderson's recollection that Mr McAndrew first told him in a very general telephone call that the pursuers were being sued by a couple and that he was asked to speak to them in relation to that. Further it was his recollection that the discussion with the pursuers at the first meeting was restricted to the question of the defence of the action currently being pursued against them and that the question of action against Craig Cameron was not discussed at all until September 1992 and then during the course of discussions in relation to potential settlement of the claim by Mr Carroll and Miss Young (a claim which was finally settled in or about November 1992 in the sum of £3,000, which sum had been retained on joint deposit receipt following the sale, and from the proceedings, of the steading). Although I had no reason to doubt that Mr Anderson was doing his best to recall what happened, now a substantial time ago, his recollection appeared to me to be substantially less clear than that of the pursuers. In particular he was more inclined to rely, not so much on what he remembered but on what the documents in his own file appeared to suggest. His evidence about what was said to him by Mr McAndrew and by the pursuers was repeatedly qualified by phrases such as "I believe I was asked..." and "as I recall.." and he resisted suggestions that the pursuers had raised the question of the action against Mr Craig Cameron at the first meeting with phrases such as "It was not my recollection that...". While it is quite true that documents in his file showed an early concentration on the defence to the action raised by Mr Carroll and Miss Young I am unable to place the strong reliance upon that which was urged upon me. In the first place, in large measure, this is not inconsistent with the position of the pursuers, whose evidence essentially was that they were being told that there was no real point in assessing or progressing the claim against Craig Cameron at that stage. Further, it is clear that the file cannot be regarded as a complete and careful record of all that took place. It became plain in the course of the evidence that a number of documents were missing from it (including letters and documents referred to in correspondence) and the earliest file note of any meeting of the pursuers was dated 20 January 1992 notwithstanding the accepted evidence that the pursuers met with Mr Anderson about once a month from September 1990 onwards. Mr Anderson accepted that even the title page to the file which at one point referred to "defence of payment action", was not fully completed. While there is no doubt that on 7 October 1992 he wrote to the pursuers thanking him for their recent letter dated 26 September 1992 and saying inter alia,

the letters of 26 September 1992 referred to were not on file, and it is difficult overall to accept that the question of action against Craig Cameron was only raised in September 1992. Further, in response to that letter the pursuer wrote on 10 October 1992 inter alia saying that "I do wish to take action against Craig Cameron if it is possible". In addition on 30 October 1992 he wrote again saying inter alia "Is it not about time we applied for legal aid and had Cameron in Court...". Notwithstanding these letters Mr Anderson accepted that he effectively ignored these requests. Further, although, as he accepted, it seemed plain from at least the second of these letters that at least by then he must have had the missives, he still had no recollection of ever having read them. It is certainly true that when at the end of the year the pursuers consulted new solicitors - Mr Ward of Duthie, Ward & Company - it was some months before the question of action against Mr Cameron was discussed with him (probably May 1993 - as the first pursuer himself accepted), but initially it seemed the focus of Mr Ward was in relation to possible redress against McAndrew & Company and the first pursuer gave evidence that he understood that Mr Anderson had passed all relevant papers to them in connection with possible action against Mr Cameron..

[17] On the question of quantum it was accepted on both sides that what the pursuers lost was the right to advance a claim in court (against Mr Craig Cameron). In these circumstances the parties were agreed that the proper approach was described in the Opinion of the Court in Kyle v P & J Stormonth Darling, WS 1992 SC 533. At p.548 it was there said:

[18] In the first instance the submissions on behalf of the pursuers were that this was a claim which would have been bound to succeed. In that connection the primary position adopted was that the pursuers' loss would have been assessed by the Court by reference to the value of the steading (had it been converted in accordance with the contract) at the date when the Court came to make its award - which date, it could reasonably be assumed, would have been about July 1993. At that date the pursuers' expert, Mr Peddie, suggested a value for the steading, had it been converted in accordance with the relevant plans, of £105,000. From that it was accepted there would require to be deducted (a) the £30,000 received by the pursuers when they sold the steading (unconverted) and (b) the sum of £25,000 which the pursuers would have had to pay to Mr Cameron on completion of the conversion. In these circumstances the pursuers' primary submission was that the claim would have been valued in July 1993 at £50,000. The secondary position was that if it was thought inappropriate to measure the loss by the value of the converted steading on the date when the claim happened to come to Court, it would be appropriate to measure the pursuers' loss by the difference between the value they should have obtained in April 1990 (at about which time the conversion should have been completed) - a figure of £65,000 being assessed by Mr Peddie - less (a) the £30,000 which the pursuers were in fact able to obtain on sale of the unconverted steading and (b) the sum of £25,000 which would have to have been spent - namely a loss as at April 1990 of £10,000. The Court, it was argued, would have awarded interest on this sum at 15% per annum from April 1990 until 1 April 1993 (when the rate of interest changed) and at 8% per annum thereafter, producing a total probable award in July 1993 of £14,617. In the second place counsel for the pursuers accepted that if this was not a case in which it could be said that the pursuers would have been bound to succeed in any particular sum, nevertheless the Court should take the view that the claim had a measurable value and that modest discounts only should be made to reflect such potential difficulties as were referred to by the defenders.

[19] On behalf of the defenders it was submitted that the pursuers had not established that the lost right had an ascertainable, measurable, non-negligible value. In any event it was plain that the claim, for a number of reasons, had a minimal value. Three factors were in particular referred to in support of these submissions.

[20] In the first place it was submitted that Mr Cameron had a strong defence open to him under the missives. Condition 3 of the offer provided that it was an essential condition of "any bargain to follow hereon that the specifications, relevant plans and schedule of finishing of the said dwellinghouse are agreed between the purchaser and seller and recorded in writing". On the evidence this essential condition had not been satisfied. At best there was known to be a plan with some specification on it. Although the authority of Donald Cameron to act on behalf of his son in any discussions with the pursuers was, it was said, not explored, the thrust of the defenders' submission was not so much that there had not been agreement on all relevant matters but that such agreement had not, as provided, been recorded specifically in writing.

[21] Secondly, the pursuers would have had substantial difficulty in persuading a court that they had sustained any loss. There was no one approach to damages but properly understood the missives embodied two distinct contracts, namely a contract to sell heritage and a contract to convert the steading. (Reference was made to McKillop v Mutual Securities 1945 SC 166 and Hoey v Butler 1975 SC 87). The breach of contract related to the building contract. Where a building contractor fails to carry out or complete building work the normal measure of damages is the difference between the contract price and the actual costs of completion by others (reference being made to Hudson's Building & Engineering Contracts, 11^th Edition, Vol. I at 8-168 and McGregor on Damages, 16^th Edition at 1142). Although in the present case the Court could not have awarded damages on this basis, as the pursuers sold the steading without completing the conversion works, the likely alternative would have been to consider the wasted costs incurred by the pursuers in entering into and extracting themselves from the transaction - less any proceeds of sale. Prima facie this approach would indicate no loss since the pursuers spent £17,500, plus some borrowing costs and legal fees, but recovered £30,000 from the sale. Furthermore, the pursuers' approach to damages by reference to the "added value" of the converted steading was for a number of reasons misconceived. Even if that was not right it was wholly wrong to take, as the appropriate date for valuation, July 1993, thereby exposing the defaulting builder to the increases in value caused simply by the way in which the market moved between 1990 and 1993.

[22] Thirdly, on the evidence it was reasonable to suppose that the prospective defender, Mr Craig Cameron, could not have met a court award of more than a few thousand pounds (meaning something less than a five figure sum). Although in his evidence he indicated that he had net profits/drawings in the years 1990/92 of about £15,000 per annum (produced by a mixture of sales and subsidies), his moveable assets were limited to agricultural machinery of relatively modest value and a car, also of modest value. He had no savings or investments. Although there was an Aberdeen flat in his name, this was fully mortgaged and there was no other clear evidence of any property available to him.

[23] Considering the evidence and the parties' submissions as best I can I have come to the view that this is not a case in which it could be said that the pursuers would have been bound to succeed nor equally that the pursuers have failed to prove that it had any measurable value. In assessing the appropriate value to be put upon the lost right, it would, I consider, be relevant to take account of all of the factors referred to by the defenders - in particular to recognise that the second of these factors would materially have impacted upon any award made by a court and that all three factors would have had an important part to play in the making and acceptance of any offer in settlement.

[24] Dealing with the factors in turn, it seems to me that the likelihood is that the defence based upon the missives would not have succeeded. It is not clear to me what more required to be agreed in writing than was contained within the plan spoken to by Mrs Smith. The defenders took no issue so far as I understood it with the fact that the precise nature of bathroom and kitchen fittings still required to be agreed. Further, I consider that counsel for the pursuers was reasonably well-founded in submitting that Mr Cameron could be said to have waived any right to found upon the relevant clause in circumstances where settlement of the "bargain" had taken place. The defenders' argument however is one which would, it seems to me, probably have been advanced in litigation and with a potential for difficulty for the pursuers which could not reasonably have been ignored by those advising them.

[25] Secondly, while I agree with counsel for the defenders that it cannot be said that there is only one approach to damages which could have been adopted, it is in my view highly unlikely that a court would have proceeded to assess the pursuers' loss by reference to an assumed value in 1993, taking account at the date when the claim happened to come to court of the material increases in property prices after 1990, all in circumstances where a crystallised loss could readily have been assessed in or about April 1990 when the conversion work should have been completed. Although referred by the pursuers' counsel to Di Ciacca v Archibald Sharp & Sons 1994 SLT 41 and Wroth & Another v Tyler 1974 1 Ch. 30, these are cases which dealt with claims of a different nature and do not in my view afford any persuasive support for the pursuers' primary approach. Further while the argument to the effect that the pursuers could not be said to have suffered any loss was not in my view bound to succeed in the circumstances of this case, nevertheless it would have had a significant potential for success which could not reasonably have been ignored.

[26] Further, it seems to me that the defenders' arguments about the abilities of the prospective defender to meet any decree were well-founded. Their assessment of what the evidence disclosed (very far removed from the averments on record - which may, it seems, have referred to Mr Donald Cameron) cannot reasonably be disputed. Although counsel for the pursuers argued that since the farming sale proceeds and subsidies were paid into a bank account which Mr Craig Cameron had, the pursuers could have arrested on the dependence to protect their position, the evidence did not disclose that any time the account, which was no doubt a running account, from which Mr Cameron drew funds to live and work, was in credit in any significant sum.

[27] Taking all of these factors into account - and taking account also of the probability, as the pursuers' counsel argued, that the defender in the prospective action would have had the problem of facing legally-aided pursuers, I consider it reasonable to value the loss of the claim at the sum of £5,000 - being the sum which the defender, reasonably advised, would have been likely to offer and which the pursuers, reasonably advised, would have been likely to accept in settlement. It was agreed that interest would run on whatever sum I awarded at the rate of 8% per annum from 1^st July 1993 until payment.

[28] In all the circumstances I shall repel the first, third and fourth pleas-in-law for the defenders, sustain the first plea-in-law for the pursuers and pronounce decree in the sum of £5,000 with interest thereon at the rate of 8% per annum from 1^st July 1993 until payment.