Scottish Court of Session Decisions

Anderson v. Express Investment Company Ltd [2002] ScotCS 251 (4 September 2002)

OUTER HOUSE, COURT OF SESSION
A1794/01	OPINION OF LORD EASSIE in the cause RICHARD ANDERSON Pursuer; against EXPRESS INVESTMENTS COMPANY LIMITED AND ANOTHER Defenders:   ________________

 

 

Pursuer: Party; Haig Scott & Co, W.S.

First Defenders: Dewar, Q.C.; Drummond Miller, W.S.

Second Defenders: Bell, Q.C.; Richard Fisher, Solicitor, City of Edinburgh Council

4 September 2002

1. The pursuer is the owner of the second floor flat in a tenement at No.2 Nicolson Square, Edinburgh. The subjacent first floor and ground floor flats are - or at least were at all relevant times - owned by the first defenders, whose business consists in owning and letting out properties. Above the pursuer's flat is a further flat, being the top flat in this four storey building.
2. On 8 August 1988 the City of Edinburgh District Council, the statutory predecessors of the present second defenders, (to whom I shall refer hereinafter as including the former City of Edinburgh District Council) served upon the proprietors of the tenement a Statutory Notice in terms of section 87(1) of the Civic Government (Scotland) Act 1982 - "the 1982 Act". The Statutory Notice, which was numbered 04479, required the proprietors to eradicate areas of wet and dry rot which had become manifest within the building. An appeal was taken against the requirements of the Statutory Notice by the pursuer under section 106 of the 1982 Act but that appeal was withdrawn by him on 17 November 1988. The proprietors did not of their own volition instruct works to deal with the wet and dry rot present in the building. Eventually, in exercise of their powers under section 99 of the 1982 Act, the second defenders instructed the works and employed for that purpose as their contractors a firm known as Ian McDonald Preservation Limited. The second defenders thereafter submitted to the pursuer a bill, or account, to which they ascribed the number 71138641 seeking payment from the pursuer of his proportionate share of the costs incurred by the second defenders in carrying out the works so instructed by them. The pursuer did not make payment. Nor did he exercise his right of appeal to the sheriff under section 106 of the 1982 Act to challenge either the amount claimed by the second defenders or his liability. In due course the second defenders raised an action in the sheriff court for payment of the account number 71138641 ("the rot account") which the present pursuer defended pleading among others that the pursuer "having acted in bad faith and in an ultra vires manner the Statutory Notice 04479 falls to be reduced ope exceptionis". The sheriff repelled the current pursuer's defences to that action and the current pursuer's appeal against that decision was refused by the Sheriff Principal on 18 May 1995. For completeness it may be noted that in the sheriff court proceedings the current pursuer, Mr Anderson, presented a counterclaim for damages against the local authority, the dismissal of which by the sheriff was also upheld by the Sheriff Principal.
3. In addition to the Statutory Notice relating to the wet and dry rot certain other statutory notices were served upon the proprietors of the tenement. Those with which the present action is also concerned are as follows:

(a) Statutory Notice No. 1974

This was issued on 26 November 1990. The work which it required to be carried out was as follows -

"repair slating of roof, pick out and re-point defective skews and raggles. Renew defective and missing zinc work forming watergates and ridging. Renew missing wooden ridge roll. Clean out rhones and roof pipes, repair or renew as required. Repair it and re-point as required front and rear elevation. Repair or renew defective mullions and sills. Cut back loose and defective plaster work in common stair and re-plaster same."

(b) Statutory Notice No. 1976

This was issued also on 26 November 1990. The work which it required to be carried out was described in these terms:

"Demolish to safe level and rebuild to same dimensions mutual 8 vent chimney stack. Reform coping to same, renew chimney cans. Repair, pick and re-point remainder of open gable. Renew coping stones to same. Clean out front mutual roof pipe and repair or renew as required."

(c) Statutory Notice No. 3320

This bears to have been issued on 10 November 1992 and its requirements were as follows:

"Renew section of main truss and intermediate ceiling ties damaged by fire. Reinstate low bearing petition destroyed by fire within in Flat 2A."

As respects each of the Statutory Notices the proprietors did not execute the repairs required by the Notices. It appears that the local authority therefore stepped in and, having instructed contractors to carry out the works, thereafter sought from the pursuer his proportionate share and rendered to him these accounts or bills.

(a) Account Number 71206021, dated 25 January 1993, respecting Statutory Notice 1974;

(b) Account Number 71206071, dated 25 January 1993, respecting Statutory Notice 1976; and

(c) Account Number 71209531, dated 8 April 1994, respecting Statutory Notice 3320.

The pursuer disputes having received service of Statutory Notice number 3320. He did not challenge either Statutory Notice 1974 or Statutory Notice 1976 by an appeal to the sheriff under section 106 of the 1982 Act. Nor did he take any such appeal respecting any of the three accounts issued in respect of the Statutory Notices, notwithstanding the contention now advanced that Statutory Notice No.3320 was not served upon him.

4. In the present action, which came before me for debate on the Procedure Roll, the pursuer seeks in the first conclusion of the summons a declarator that -

"the first and second named defenders fraudulently and illegally combined to induce and did fraudulently and illegally induce the second named defenders to issue to the pursuer pretended account number 71138641; Statutory Notice 1974; Statutory Notice 1976; Account Number 71206021; Statutory Notice 3320; and Account Number 71209531."

A second conclusion seeks declarator that those accounts and Statutory Notices are "fraudulent, illegal, invalid and void" and a third conclusion seeks production and reduction of those accounts and Statutory Notices. It may be observed that Statutory Notice No. 4479, relating to the rot eradication works, is not included in those Statutory Notices whose validity is impugned. A fourth conclusion seeks production and reduction of the sheriff court decrees whereby the pursuer was ordained to make payment of the rot account. A fifth conclusion seeks payment by the first defenders alone of a sum of £100,000.

5. Before endeavouring to identify in his pleadings the basis upon which the pursuer now seeks to challenge the validity of the Statutory Notices and accounts in question, I think it convenient to note what is not claimed by the pursuer. First, as respects the rot account, it may be reiterated that it is not sought by the pursuer to question the validity of Statutory Notice 4479 which proceeded the execution of the works within that account. Secondly, it is not averred that the rectification or repair works to which the Notices referred were not in fact carried out by contractors instructed by the second defenders; and thirdly, it is not contended that the sums which the second defenders contracted to pay to the contractors carrying out those repair works were excessive. Had any of those matters been in issue they could and should have been the subject of challenge in an appeal under section 106 of the 1982 Act. Similarly, any question relating to service of Statutory Notice 3320 could similarly have been raised in an appeal respecting the account which followed it.
6. The plea-in-law for the pursuer which purports to focus the ground of challenge is in these terms:

"The Statutory Notices and Accounts and Decree following thereon as condescended upon having been perpetrated by the conspiracy, fraud, bad faith and malice of the first and second named defenders or those for whom they are responsible as condescended upon, Decree of Declarator and Reduction should be pronounced as concluded for."

7. The apparent background to that proposition which emerges from the pleadings consists in the essentially undisputed fact that on 8 October 1988 a fire occurred in the tenement, the seat of the fire apparently being in the cavity between the floor of the pursuer's second floor flat and the ceiling of the subjacent flat owned by the first defenders. The fire damaged, among others, the load bearing beams in that cavity. Each of the proprietors in the tenement had an insurance policy against the risk of fire with the same insurance company, Commercial Union Assurance Company Limited. Each policy was apparently effected through the agency of the same firm of solicitors who, as it happened, acted for the first defenders and had acted for both the pursuer and the uppermost proprietor in their acquisitions of their respective parts of the tenement. In order to repair the fire damage a common scheme was arranged but, in the event, it did not proceed. It is averred by the pursuer that in light of the tender price for the common scheme the insurers made offers to him and to the topmost proprietor to settle on a particular basis, which the pursuer, at least, rejected. Litigation subsequently ensued between the pursuer and his insurers. For their part the first defenders independently reached a settlement with the insurers. The pursuer makes averments respecting the level of that settlement, seeking to draw inferences from the close relationship between the first defenders and the solicitors who held an agency for the insurers that it was excessively generous, although that matter is plainly res inter alios acta so far as the pursuer is concerned.
8. It appears that when agreement on a possible common repair scheme fell down the first defenders proceeded with the repair of the fire damage to their property. In doing so they separately instructed the execution of works by contractors who were then engaged in carrying out the rot eradication works on the instruction of the second defenders. As part of that instruction from the first defenders, the contractors sought to effect repairs to the interface between the ceiling of the first defenders' property and the floor boards of the pursuer's house. It is averred by the pursuer that in doing so they entered into the pursuer's flat and carried out certain repairs to a beam in the space between the floor and ceiling and covered over the hole between the properties which had resulted from the fire. The quality of those repairs is questioned by the pursuer. The cost of the repairs were met by the first defenders as part of their separate contract with Ian McDonald Preservation Limited, the contractors otherwise engaged by the second defenders on the rot eradication works.
9. According to the pursuer's averments, the entry into his flat to carry out the works of repairing the beam and covering the hole in the ceiling are part of what is described by him as a conspiracy between a Mr Forbes, the first defenders' property manager, and an officer of the second defenders, namely a Mr Sutherland. Put shortly it is averred by the pursuer that the former arranged with the latter to "activate" the Statutory Notice and thereby obtain, with the pursuer's agreement, access to the pursuer's flat to carry out the works in the Statutory Notice (apparently, though the averments are not absolutely clear, Statutory Notice 4479). The access so granted was then allegedly abused by those members of the personnel of the first and second defenders of whom it is averred (Closed Record, as amended, p.24E) that they -

"conspired to satisfy the Commercial Union Insurers.... and to seal off the first and top floor flats from the second floor flat owned by the pursuer but in doing so trespassed upon the property of the pursuer without authority and caused damage to the pursuer's property by leaving him with a defective patched-up repair which, when it fails, as it inevitably will, shall not now be covered by insurance for a proper repair."

The pursuer goes on to aver (p.26A-B) that the second defenders ", in bad faith, obtained another Statutory Notice relating to the repair of the wooden load-bearing beam above the pursuer's flat which they instructed the firm of Brecks to carry out." The pursuer then avers that the first defenders separately paid Brecks to erect a stud position wall within his flat. There thereafter follows a further averment of conspiracy (Closed Record 26E) namely that said employees of the first and second defenders -

"fraudulently conspired together to trespass on to the pursuer's flat and instruct and pay for work on his part of the said load-bearing beams, both beneath and above his flat, thereby defeating the pursuer's insurance claim and leaving the pursuer with two defectively repaired beams which will fail in the foreseeable future."

As I ultimately understood the pursuer's position it was, put shortly, that the averred fraudulent conspiracy to trespass into the pursuer's flat to effect those repairs to the beams had the effect of rendering void and invalid not only the rot account but also the other Statutory Notices and charges for the works carried out pursuant to them.

10. The foregoing encapsulation represents as best I can a summary of what I believe to be the pursuer's case, but his averments are at times diffuse and liberally seasoned with bald references to "malice", "bad faith", and "fraud". Counsel for the defenders were critical of such a bald employment of those terms and indicated their, in my view understandable, difficulty in comprehending the true nature of the pursuer's case. To an extent, and again I think understandably, they took the references to a "fraudulent conspiracy" as suggesting the commission of fraud - which, as counsel for the second defenders appeared to recognise, might possibly constitute an exceptional basis for reduction of the Statutory Notices and accounts otherwise challengeable only by the means of the Statutory Appeal under section 106 of the 1982 Act. However, as counsel for the second defenders particularly pointed out, fraud in that sense is constituted by a false statement or a machination to deceive, made knowing the statement or machination to be false and it required specific averment of, among other things, the allegedly false statement. Reference was made to the Royal Bank of Scotland v Holmes 1999 SLT 563. Apart from the obvious difficulty that it was hard to see how the second defenders could conspire with themselves to defraud themselves, in the present case there were, said counsel, no averments of that kind of fraudulent misstatement or misrepresentation.
11. In my view counsel for the defenders are correct in saying that the pursuer's averments do not disclose any relevant case of fraud, or indeed conspiracy to commit fraud. It is not, for example, said by the pursuer that any untrue statement was made with the requisite knowledge of its falsity, or reckless indifference to its truth or falsehood which had the practical result of the issue of the Statutory Notices. Indeed, a misstatement of the need for repair was a matter which would plainly have been open to challenge by means of an appeal under section 106 of the 1982 Act. If I have correctly understood and analysed the pursuer's complaint as it emerged not just from his written pleadings but also from the discussion before me, his essential complaint is not that any of the Statutory Notices in question were issued on the basis of a knowing, fraudulent, untrue assertion of the need for the execution of repairs to the tenement but that Mr Forbes and Mr Sutherland agreed to use the opportunity of access to the pursuer's flat given for the purposes of the statutory notice - apparently the rot notice - to allow the first defenders to instruct the contractors engaged in the statutory notice works to carry out the additional task of repairs to the beam and the hole in the ceiling with a view to allowing the first defenders to effect a repair of the fire damage of their property independently of the rest of the tenement.
12. In his submissions to me Mr Anderson did not point to any averments of the making of any untrue representation, or any machination to deceive. Rather, in the course of his submissions, the pursuer referred to Walker on Civil Remedies, p.1014 under the heading "conspiracy to injure" and, as I carefully noted him, stated that a conspiracy to injure was the whole foundation of his case. He added, in a statement which might explain the somewhat confusing nature of his pleading, that if there were a conspiracy to injure "that is fraud and actionable as fraud". That contention, for which no authority was offered by Mr Anderson, is, I think, manifestly incorrect.
13. Mr Anderson having thus confirmed that the foundation of his case is the delictual concept of a "conspiracy to injure", it is appropriate to examine the parameters for liability under that concept. The passage in Professor Walker's work to which the pursuer referred is in these terms:

"If a person does an act lawful in itself and without employing unlawful means, resulting loss to another party is not actionable, even though the motive be malicious. But a combination of several persons in action wilfully injurious to another in his trade is unlawful and actionable, and if the real or predominant object of the combination is to injure it is actionable if damage follows, even where the protection or furtherance of trade or other interests was a subsidiary object. But if the real or predominant object is the protection of trade interests in the honest belief that they would otherwise suffer, the knowledge that damage to another's trade will result does not prejudice the defence. So, too, combination to do something rendered unlawful by the way it is done is actionable conspiracy."

14. It appears from that text, and also from the speeches in the authorities referred to in the footnotes, particularly Sorrell v Smith [1925] A.C. 700 that the concept of conspiracy to injure has been developed respecting injury to a person's trade or business. If that is a necessary condition of liability - which I believe it to be - the present pursuer does not meet it since he is not carrying on any trade or business injured by the alleged actings on behalf of the defenders. Further, it is clear that the predominant motive of the conspiracy must be injury to the pursuing party and actions taken by the defending party or parties for the advancement of their own patrimonial interest do not give rise to liability even if they have known or foreseeable deleterious effects for the pursuing party. The present pursuer's complaint is not that the defenders took steps with the primary intention of injuring him but that the first defenders took steps, allegedly in conjunction with the officer of the second defenders, to secure and repair their property which resulted in repairs to other parts of the tenement, particularly the interface between their property and that of the pursuer. The quality of those repairs - but not their necessity - the pursuer seeks to challenge on the basis that their quality in some unexplained way prejudices his rights against his insurers. Since it is not averred that the predominant motive of the alleged conspiracy was to injure the pursuer's interest and since the facts as disclosed in averment yield the clear contrary inference of a desire on the part of the first defenders to advance their own interests in securing the repair and consequent use of their own property, I consider that no relevant case supportive of a claim in terms of the delictual concept of conspiracy to injure has been set out in the pursuer's pleadings.
15. I would add, as a corollary, that I consider there to be force in the submission of counsel for the defenders that the averments of conspiracy in themselves lack specification. As counsel for the first defenders pointed out, there is much averred in the pursuer's pleadings which is plainly of no pertinence, such as the averments touching the relationship between the first defenders and their Edinburgh solicitors, including a reference to a complaint of professional misconduct concerning one of the partners of the firm of solicitors made by the pursuer to the Law Society of Scotland and rejected by the Society. The terms of the first defenders' contract with their insurers and settlement of their claim under that contract are res inter alios acta. Whatever may be said about such matters being "background", essentially what is alleged is, firstly, that the first defenders' Mr Forbes communicated with Mr Sutherland, of the second defenders, with whom he had understandably had earlier dealings having been a property manager for a property owing company, in order to encourage or request the second defenders to proceed to instruct the repair works covered by the Statutory Notice 4479, the pursuer's appeal against that Statutory Notice having been withdrawn by him, and to issue a further statutory notice respecting another defective beam. A proprietor is, however, entitled to represent to the local authority that the local authority should serve a Statutory Notice and should carry out repairs required by such a Statutory Notice and the suggestion that a sinister inference may be drawn from the fact, if it be, that Mr Forbes asked Mr Sutherland to proceed with the Statutory Notice procedure is one which I would reject. The second circumstance particularly relied upon is that it is averred that the contractors instructed by the local authority to carry out the Statutory Notice works accepted a separate contractual instruction from the inferior proprietors - the first defenders - to carry out separate works at the first defenders' expense to the interface between their property and the superior floor owned and occupied by the pursuer. The utility for a proprietor of instructing contractors already on site to carry out additional work separate from the contract with which they are engaged is not difficult to perceive. That a proprietor should take such an understandable step does not, to my mind, yield the inference of conspiracy.
16. Moreover, even if, having been moved to instruct contractors to carry out the rot eradication works, the decision of the second defenders to allow the contractors to perform the acts of entering the pursuer's flat to carry out gratuitous but, in the event, substandard repairs to the floor of the flat and the subjacent ceiling of the first defenders' property constituted involvement in a conspiracy to injure the pursuer, it does not by any means follow that the Statutory Notice was invalid or that the account for the recovery of a share of the costs of the repair work executed pursuant to that Statutory Notice was also invalid. Even more strongly, it follows that the other Statutory Notices, unrelated to the alleged trespass, and the accounts for the works properly carried out pursuant to them cannot on any view be treated as invalid. Accordingly, for this reason also, I consider that the action insofar as seeking reduction of the Statutory Notices and the accounts submitted by the second defenders for recovery of the works carried out by them pursuant to those Statutory Notices and Statutory Notice 4479, to be misconceived.
17. As already narrated, the rot account was the subject of proceedings for payment in the sheriff court resulting in decree against the pursuer, upheld on appeal to the Sheriff Principal from whose decision no further appeal was taken. Reduction of the sheriff court decrees is sought. The grounds for seeking such reduction are not entirely clear but the matter is superseded by my conclusion that no relevant case has been set out for the reduction of the account. It may be reiterated that the Statutory Notice upon which the account followed is not challenged in these proceedings. The apparent basis of challenge to the decree is that it was obtained by "fraud upon the court". The averment (Closed Record 46D-E) proceeds:

"The basis upon which the second defenders' case proceeded upon was founded upon a false representation and concealed from that Court the fact that said Account and Statutory Notice proceeded upon a lawful act which had been obtained by unlawful means."

Understanding of that averment is not assisted by the fact that elsewhere, at Closed Record 28E, the pursuer avers that the same Statutory Notice was "a lawful act done by lawful means". Be that as it may, it appears to me that since as already indicated I am unable to find any basis whereon the Statutory Notices and the accounts are invalid and fall to be reduced, it appears to me that no such false submission or concealment was advanced to or perpetrated on the sheriff court.

18. There is elsewhere in the pursuer's pleadings averments to the effect that at a hearing held before a commissioner appointed by the sheriff to execute a diligence for the recovery of documents the first defenders' manager, Mr Forbes, and an architect, Mr McLay, gave false testimony. This allegation has been the subject of proceedings in the sheriff court resulting in dismissal of the allegation and the sheriff's findings have not been the subject of any further appeal. That apart, inaccurate answers to a question at a commissioner's hearing respecting a diligence for the recovery of documents (which in the present instances appear to have consisted in answers to inadmissible questions regarding the merits of the dispute, rather than the existence of possession or last whereabouts of the documents) are not readily to be translated into inaccurate evidence tendered before the court actually dealing with the merits. The challenge to the validity of the sheriff court decree plainly falls.
19. The pursuer has a further fifth conclusion directed against the first defenders alone for payment of a sum of money. The plea-in-law in support of that conclusion is in these terms:

"The pursuer, having suffered loss, injury and damage through the fault of the first named defenders or those for whose (sic.) they are responsible, is entitled to reparation from the first named defenders therefor."

There are no averments of "fault", other possibly than those relating to the "conspiracy to injure" which the pursuer explained to be the foundation of his case and which I regard as irrelevant. As inferior proprietors the first defenders had a clear interest in restoring the integrity of their ceiling and effecting repairs to it and the floor joist and beams above. There is no attempt by the pursuer to plead any relevant breach of the law of the tenement. So mere averment that in effecting those repairs the first defenders' contractors went into the pursuer's flat - even if a "trespass" - will not do. Even if the repairs were substandard, the injury does not flow from the trespass itself (assuming a trespass to have occurred) but from the substandard nature of the repairs for which, as employers of an independent contractor, the first defenders would not be vicariously responsible. I therefore consider the fifth conclusion for the pursuer to be unsupported by any relevant averments.

20. Given the conclusion that the pursuer's action is irrelevant and falls to be dismissed it is also unnecessary for me to consider the pursuer's motion that I should grant decree de plano against the defenders on the basis of alleged lack of candour in their answers. The pursuer, in his submission in support of his motion to grant decree de plano referred to various authorities on this topic. These were: Ellon Castle Estates Co v McDonald 1975 S.L.T. (Notes) 66; Foxley v Dunn 1978 S.L.T. (Notes) 35; Lossie Hydraulic Co v Ecosse Transport 1980 S.L.T. (Sh.Ct.) 94; Edward Gibbon (Aberdeen) v Edwards 1992 S.L.T. (Sh.Ct.) 86; EFT Finance v Hawkins 1994 S.L.T. 902; Gray v Boyd 1996 S.L.T. 60. Put shortly, as best I could understand his argument, the submission made by Mr Anderson was that where any averment or allegation of a conspiracy were made the defending party had to make detailed and specific averments in response even though the allegation of conspiracy be irrelevant, bald and lacking in specification. In my opinion an allegation of conspiracy is one which calls for very clear and specific averments on the part of him who makes the allegation and it is hard to see circumstances in which a mere denial of bald circumstances would be an irrelevant answer worthy of the granting of decree de plano. More importantly, the present case is not one of bald denial. Substantive answers are presented, including in particular averment by the first defenders that they instructed and paid for the repairs to the beam and interface. This submission by the pursuer is also misconceived.
21. For these reasons I shall dismiss the action by upholding the fourth plea-in-law for the first defenders and the first plea-in-law for the second defenders.