Scottish Court of Session Decisions

[1] The pursuer raised the present action against Fife Council, among others, for loss and damage associated with a progressive lung condition that he contends was caused by exposure to asbestos materials during periods of employment with two predecessor authorities, Dunfermline Burgh Council and Dunfermline District Council. Fife Council contend that they are not liable for any breach of obligation which may have been committed by their predecessors. The case called on procedure roll for debate on the Council's plea to the relevancy of the pursuer's averments to deal with that issue.

[2] Dunfermline District Council succeeded Dunfermline Burgh Council on the reorganisation of local government under the Local Government (Scotland) Act 1973 which took effect on 16 May 1975. The District Council was in turn succeeded by Fife Council under the Local Government (Scotland) Act 1994 on 1 April 1996. For the purposes of debate it was agreed between the interested parties that the material periods of the pursuer's employment ended prior to 1 April 1996, when the predecessor authorities employed the pursuer, and that there was no breach of duty within the period following the succession by Fife Council to the functions to which the pursuer's employment was related. It was further agreed that the breaches of duty founded on were properly characterised as failures to carry out protective measures and that there was no allegation of breach consisting of a positive act by either of the predecessor authorities.

[3] The argument for Fife Council can be summarised briefly: on a sound construction of the relevant provisions of the primary legislation and the regulations made under it, the delictual obligations of the predecessor authorities were not transferred effectively either in 1975 or in 1996: Procurator Fiscal v Aberdeen City Council (unreported) 2 July 1999. For the pursuer it was argued that the decision of the High Court was not binding in relation to the transfer of civil obligations, and was in any event deficient in that context because the court had not had regard to the relevant regulations. Properly construed the relevant obligations were transferred on each occasion. Counsel's detailed submissions can best be dealt with in the context of the relevant provisions.

[4] Section 1 of the 1973 Act set up new councils for the local government areas of Scotland identified in it. Subsection (5) provided that on 16 May 1975 all local government areas existing immediately before that date would cease to exist, and that the council of every such area would also cease to exist. The Act contains a number of provisions regulating the transition. Part II dealt with boundary matters. Section 24 empowered the Secretary of State to make by regulation "such incidental, consequential, transitional or supplementary provision as may appear to him to be necessary or proper" for giving full effect to the Act. That pattern was repeated. The scheme of the Act was to recognise the need for transitional provisions, but generally to leave the detailed working out of the implications of the reorganisation to subordinate legislation.

[5] It was agreed between parties that the relevant provisions of the 1973 Act for present purposes were contained in section 215. It provided:

Subsection (5) is not relevant for present purposes.

[6] In exercise of the powers conferred by section 215, the Secretary of State made the Local Authorities etc. (Miscellaneous Provision) (Scotland) Order 1975, 1975 S.I. No 629. Paragraph 3 provided:

[7] For the pursuer, Mr Ivey argued in the alternative that the transfer of delictual obligations was effected by section 215(3), and that the transfer was effected by regulation 3. Mr Wylie for Fife Council argued that subsection (3) was not habile to transfer an obligation arising from a failure to act. On the contrary it qualified the apparent width of subsection (1), so that the regulations which the Secretary of State was empowered to make could relate only to matters within the list contained in subsection (3). The regulations themselves had to be construed so as to fall within the powers conferred, and on that approach could not transfer liability for a failure to act.

[8] In my opinion the provisions of the Act providing for transfer and those of the regulations are properly regarded as alternatives. No provision of the regulations would be "necessary or proper" if the matter dealt with were already covered by a provision of the primary legislation. The first issues therefore are whether there is substance in the argument that liability for any breach of a delictual obligation of a predecessor authority was transferred to the successor authority by section 215(3), and, if so, whether there was a transfer of liability for a failure to act. In general it is clear that subsection (3) was concerned with a range of specific matters involving the actions of the predecessor authority in implement of its statutory functions where the it was intended to provide for the continuing effectiveness of things done. That is obvious in every head except the penultimate, which was the provision relied on: "any condition or requirement imposed or treated as imposed by or on such an authority". Written agreements or instruments were treated as entered into or made by the successor. Notices continued to have effect. It is easy to envisage examples. A stop notice under the planning legislation would remain effective as if given by or to the successor. The provisions make sense in relation to formal acts done by to or in relation to the performance of the local authority's statutory functions. The scope of the contentious paragraph, which is expressed in very general language, is less obvious. But, in my view, the scope of the penultimate provision is limited by three considerations: (a) the reference to the performance of local authority functions; (b) the specific reference to positive acts "done" by a predecessor authority; and (c) the ejusdem generis rule of construction. If this provision had been intended to transfer liabilities for breach of contractual or delictual obligations outstanding on reorganisation the limitation to things "done" would have made no sense. The provision makes sufficient sense if read as relating to the imposition of conditions or requirements on a local authority, or on a third part in relation to a local authority, by central government or under a statutory provision. The provision is not in any event habile to transfer liability for an omission to perform a common law or statutory duty of care for the safety of employees engaged in an activity which the authority was entitled to conduct. The reasoning in Procurator Fiscal v Aberdeen City Council in relation to the interpretation of the expression "made" is helpful in this respect, though generally I have not found the case of assistance in relation to civil rights and obligations generally since it was decided without reference to the regulations.

[9] For similar reasons, there is no basis for considering that section 215(3) should qualify or control the scope of subsection (1). Subsection (1) in terms provides that nothing in any other provision should prejudice its generality. But more generally it is not limited to provisions relating to acts done in the discharge of local authority functions. I do not think that there is any reason for construing the provision more narrowly than its language invites. It is specifically related to incidental, consequential, transitional and supplementary provisions. There may in one sense be an overlap between the provisions. A deed given effect in a question with a successor authority in terms of subsection (3) may have permanent effect, but also be seen as a consequential effect of reorganisation. For example a conveyance of heritable property executed by a predecessor authority would have effect under that provision as if executed by the successor. It might have been contended that that was an incidental result of reorganisation. But that is not obvious, and there is an intelligible reason for making specific provision for that and similar situations. An outstanding liability for performance of a contractual obligation would not obviously be regulated by that subsection, but would be a matter requiring regulation at the transition between authorities. Unless regulated by order made in pursuance of subsection (1) there could have been doubt about the consequences of reorganisation.

[10] It was also argued that subsection (2) qualified subsection (1). But in my opinion that provision is concerned with necessary adaptations to ensure that pre-existing legislation would apply in the new regime at the transitional phase, and is narrower in its scope and different in its effect from subsection (1). The point was given greater emphasis in relation to the 1994 Act. But the intent appears to me to be clear. Pre-existing legislation dealing with or applying to local authorities under the superseded regime could be adapted to ensure that the successor authority was brought within its terms.

[11] Accordingly, I consider that section 215(1) conferred a wide-ranging power to make regulations inter alia to ensure continuity in the relationships of local authorities with third parties. Against the background of that view, there is no reason to read regulation 3 of the 1975 regulations restrictively. On its terms it is capable of transferring liability for a prior breach of obligation to the new authority, and I do not accept that there is any reason for construing it otherwise. The argument for Fife Council had the unattractive consequence that if there had been an action in court against a predecessor authority for breach of an obligation of care owed to an employee regulation 3(3) would have continued that action against the successor authority, but if the action had not been raised until after the operative date it could not be maintained against the successor because liability for the breach had not been continued. Such an inconsistent effect of reorganisation would be at least surprising. In my opinion, regulation 3 was effective to transfer to Dunfermline District Council any liability of the Burgh Council to make reparation for loss and damage caused by any negligent omission to take steps to protect the pursuer from exposure to asbestos products or caused by any relevant breach of statutory duty in that regard.

[12] The 1994 Act dealt with a wide range of administrative changes apart from the reorganisation of local government areas and forms of elected authority. New water and sewerage authorities were established. Specific provision was made for transport within Strathclyde and so on. There were extensive provisions for control of financial management. The provisions with which the debate was concerned, and especially section 181, had a wider application than the regulation of the transition between old and new local authorities. But it is in relation to that transition that they have to be construed. As with the earlier reorganisation, the old authorities and their local government areas ceased to exist when the new territorial sub-division of the country came into effect and the new authorities came into being: section 1.

[13] Section 181 provided:

[14] Regulations were again made under the powers conferred by section 181: The Local Government (Transitional Financial Provisions) (Scotland) Order 1996, 1996 S.I. No 682. The powers relied on in making these regulations, however, were not restricted to section 181. They relied inter alia on section 15 which related to the transfer of property. The structure of the 1996 regulations departed materially from that found in the 1975 regulations. A range of specific matters was dealt with, and thereafter it was provided by regulation 19:

one of a number of specified specific provisions for the allocation and transfer of assets and liabilities relating to particular functions. The expressions "demitting authority" and "accounting authority" were defined.

[15] The arguments advanced in relation to the second reorganisation were similar to those relating to the earlier changes. Mr Wylie argued that if section 181(1) were as wide in its application as to empower the Secretary of State to make provision by regulation for the transfer of civil obligations, subsections (2) and (3) were redundant. In any event these provisions qualified and limited the construction of the regulations. If the pursuer's view of subsection (1) were correct one would not require the other two provisions. In the context of the discharge of the local authority's functions, one would expect the regulations to deal with matters of administration rather than with fundamental civil rights and obligations. The Secretary of State's powers were contained within the scope of subsection (2). The regulations themselves had a curious structure. The focus was on the transition from old to new authority. Some of the provisions found in the 1975 regulations were now found in the principal Act. If the intention of Parliament were not that such transfers of civil obligations as were intended were to be found in the principal Act it would be very odd to make provision in section 181(4)(g) for the continuation of proceedings. The substance of the regulations was the making of provision for financial and accounting matters. One would not expect something so fundamental as the transfer of civil rights and obligations to be tacked on as a footnote to such a framework. Aberdeen City Council had specifically addressed the question whether liability for omissions transmitted under the Act and held that it did not. That decision should be followed. The 1996 regulations, properly construed, did not relate to the pursuer's situation at all, but dealt with financial transactions and accounting matters. The title of the regulations, the terminology used, and the content of the specific provisions showed that what was intended was the regulation of financial matters such as administration and the collection of revenues. The general theme was the control of public law matters, not private law rights and duties. The definition of "accounting authority", and the use of that term, showed the true nature of the regulations.

[16] Mr Ivey argued that regulation 19 was habile to transfer liability for breach of a delictual obligation. Section 181 conferred very wide powers. Subsection (1) was not qualified by subsections (2) or (3). The final words of subsection (1) made that clear. Sub-section (2) dealt with a specific power to alter pre-existing statutes to accommodate necessary changes resulting from the reorganisation. This was a far-reaching power which clearly had its place in the principal Act, but it did not bear on the construction of subsection (1). Regulation 19 had to be read in its terms. It was related to residual rights and obligations to be dealt with after the specific transfers. It could not be read as relating simply to administration and finance. Mr Ivey referred to the principal provisions relating to the transfer of functions inter alia to Strathclyde Passenger Transport Authority and to the new water authorities: sections 40 and 91. Regulation 19 acknowledged that these transfers had already been provided for. They were referred to in defining the residue, but pointed to what would otherwise have been within the scope of the provision if not excluded. It was clearly intended to transfer civil rights and obligations. It would be inconceivable that Parliament would have intended to transfer functions to new authorities without making provision for civil rights and obligations. It would be very odd that the specific transfers to the new water authorities, the passenger transport authority and the other new authorities should encompass assets and liabilities but that the residue of the predecessor authorities' assets and liabilities should fly off. Again as an alternative Mr Ivey argued that if the regulations did not effect the transfer of the predecessor authority's obligations, section 181(3) did.

[17] In my opinion section 181(1) is wide in its meaning, and empowered the Secretary of State to make provision by regulation for the transfer of civil rights and obligations of predecessor authorities to their successors. Subsection (2) is wider in its scope than subsection (2) of section 215 of the 1973 Act. But the additional specific powers make clearer the purpose of the provision and strengthen the view that it deals with a different matter from subsection (1). It is a specific, and in some respects perhaps somewhat surprising, power to alter and amend primary legislation as well as secondary legislation to adapt it to the new framework. The power is not "incidental, consequential, transitional or supplementary" in any ordinary sense of that expression. Superseding the primary legislative function of Parliament by executive action, albeit subject to annulment, can hardly be described in those terms. It is no surprise that the power was specified. It cannot be read as other than an extension of the general power in subsection (1) by permitting in exercise of that power things which would otherwise have been at least of doubtful competence. Subsections (3) and (4) are again more ample in their specification than the equivalent provisions of the 1973 Act. But it appears to me that the purpose is broadly the same. It is not "incidental, consequential, transitional or supplementary" in the ordinary sense of those words. Together the subsections provide for certain events to have permanent effect in relation to the successor authority as if it had been party to the events in the first place. The additions made to the list in subsection (4) do not affect that. It is perhaps odd that provision is made for continuity of legal proceedings in the principal Act when the continuity of the rights and obligations necessarily underlying any such litigation was not dealt with and was left for treatment in subordinate legislation. But given the history of the earlier solution Parliament must be taken to have understood that the transfer of civil rights and obligations had been dealt with by regulation. As in the case of the 1973 Act, I am of opinion that section 181(1) is not qualified by any other provision of the Act, and is habile to empower the Secretary of State to make regulations sufficiently wide to provide for the transfer of civil rights and obligations.

[18] The exclusions from regulation 19 are instructive. I consider that Mr Ivey was correct in his contention that the specific transfer provisions point to the content of the residue dealt with in the regulation. Paragraph (2) can reasonably be taken to be an indication that, but for the exclusions, rights liabilities and obligations which were already the subject of specific transfer provisions would have been within the wide general language of paragraph (1). The selection by Parliament of designations such as "accounting authority", "demitting authority", "disaggregating authority" "successor authority" and so on does not, in my opinion, affect the interpretation of the regulation. It is plain that the reorganisation created a number of more or less complex relationships between the former local authority structures and those provide for in the new scheme. Some of the expressions appear imaginative. There is no reason, however, to treat them as narrowly definitive of the function of any provision that refers to the expressions or uses them. In particular I reject the argument that the expression "accounting authority" indicated that the provisions were only concerned with bookkeeping and financial matters. The "accounting authority" may be any of the councils listed in the first and second schedules to the Order or any of the new Police, Fire or valuation Boards listed in the second schedule. The expression is a shorthand way of referring to them as a group without identifying any of their particular functions or responsibilities. As with the 1975 regulations, in my opinion the 1996 regulations, and regulation 19 in particular, fall to be construed on their terms. The regulation is habile to transfer to Fife Council any liability for breach of obligation owed to the pursuer by the predecessor authorities.

[19] In my view the transfer was not effected by the primary legislation. The provision in section 181(4)(g) relating to legal proceedings, as already mentioned, does appear odd. The principal Act might not have been followed by valid regulations. In that case there would have been a risk that existing actions would have survived, inter alia, in respect of breaches of delictual obligations by a predecessor authority, but no new actions could have been raised. One might have expected that the underlying civil rights and obligations would have been dealt with in the same context. But it does not appear to me to be appropriate on that ground to give a distorted or unusual meaning to any of the other provisions of section 181(4), and in particular paragraph (f), nor to construe the regulations more narrowly than their terms suggest one should.

[20] In Procurator Fiscal v Aberdeen City Council there are obiter observations on the transfer of civil rights and obligations under the 1973 and 1994 Acts. I have not discussed these in detail. It is clear that the court was not addressed on the regulations brought into effect for the purposes of either Act. Since these regulations are in my view determinative of the present issue, it is unnecessary to comment further on the decision.

[21] In the circumstances I shall refuse the first defenders' motion that their first plea in law should be sustained and that the action so far as directed against them should be dismissed. The pursuer's motion was for proof before answer, and I shall grant that motion, reserving pleas except in so far as dealt with in he limited argument before me.