Scottish Court of Session Decisions

Sturgeon v. Gallagher, [2002] ScotCS 288 (06 November 2002)

OUTER HOUSE, COURT OF SESSION
A2785/01	OPINION OF LORD EMSLIE in the cause WILLIAM STURGEON Pursuer; against ANDREW FRAZER GALLAGHER Defender:   ________________

 

 

Pursuer: Jones, Q.C., Young; Balfour & Manson (for Levy and McRae)

Defender: Ferguson, Q.C., Higgins; Bishops

6 November 2002

Introduction

1. In this action the pursuer, who runs a farming business in partnership with his wife, sues for damages in respect of disabling injuries sustained when he was knocked down by the defender's car in 1994. Liability is admitted. In the amended Closed Record of September 2002, the damages sought include (i) a claim for loss of earnings, measured as a percentage of the diminished profits of the farming partnership consequent upon the pursuer's disability (pages 8A - 10C/D); (ii) a further claim for reimbursement of extra expenditure "equal to" a percentage of the outlays previously averred in connection with the partnership's loss of profits (page 10D); and (iii) claims in respect of certain relatives' services under Section 8 of the Administration of Justice Act 1982 (pages 13A - 14B).
2. By interlocutor of 22 October 1997, the case was sent to the procedure roll on the defender's first plea-in-law. Against the background of a late offer by the pursuer of a proof before answer, I have now heard a debate in which counsel for the defender challenged the relevancy and specification of two distinct aspects of the foregoing averments of loss. In the first place, counsel took issue with the relevancy and specification of item (ii) above, namely the final clause of the following sentence appearing at page 10D of the amended Closed Record:

"Since the accident, [the pursuer] has suffered a loss of income equal to 80% of the partnership's fall in profits and he has incurred extra expenditure equal to 80% of the outlays hereinbefore condescended on."

In the second place, while counsel had no quarrel with the first part of item (iii) above, that is, the claim in respect of nursing and domestic services provided to the pursuer by various members of his family, they challenged the relevancy of the pursuer's further claim in respect of the work carried by his son on the farm since the accident in return for a wage of £50 per week.

The Claim for Extra Expenditure

3. On the authority of Vaughan v Greater Glasgow Passenger Transport Executive 1984 S.C. 32, counsel for the defender accepted the relevancy of the pursuer's claim for loss of earnings as averred at pages 8A - 10C/D of the amended Closed Record. In particular, it was accepted that, as the former driving force within the farming partnership, the pursuer could legitimately quantify his post-accident loss of earnings by reference to the appropriate percentage of the loss of profit suffered by the partnership in consequence of his disability. After describing (at pages 8A - 9B) how the farming business was affected in the period following the accident, the pursuer's averments continue (at pages 9B - 10D) as follows:

"As a direct consequence of the pursuer's inability to work, the partnership operating the firms at Tunnoch and Auchenwynd has suffered a loss of income and has incurred increased expenditure. It has not been possible to maintain livestock numbers with the result that there has been a loss of income from livestock sales. The loss of the pursuer's expertise as a stockman has resulted in reduced prices being obtained for the cattle. This loss from livestock sales commenced in 1999 and is likely to continue each year. This loss is reasonably estimated at £5,466 per annum. There has also been a loss of income from milk sales due to lower yields. It is reasonably estimated that the loss of income from milk sales for year ends 1995-2000 amounts to about £31,051 and that the loss of income will continue at about £9,647 per annum. The farming partnership has also incurred additional business expenses as a result of the pursuer's accident. An employee has been hired at a cost of about £2,856 per annum to operate the contracting business. Additional repairs and maintenance costs in respect of buildings, machinery and fencing have arisen due to the inability of the pursuer to carry out such work. The total additional cost of repair for year ends 1995-2000 is reasonably estimated at £33,704 and these costs will continue at approximately £5,617 per annum. The partnership's overdraft has increased substantially since the accident due to the lower income receipts and higher expenditure. The additional bank charges incurred in the period 1995-2000 is £22,912 and such additional expenditure continues at approximately £6,725 per annum. The partnership has also incurred items of capital expenditure to enable the pursuer to continue providing some input in the business. A four wheel bike was purchased in 1994 at a cost of £3,300. A cordless telephone was purchased in 1994 at a cost of £99 to enable the pursuer to have ready contact with his wife in the event of an emergency. When purchasing a new tractor, the partnership required to purchase a larger tractor to ensure that it could be used by the pursuer. The additional cost of the tractor was about £6,000. These capital items will require to be replaced approximately every 4 years. The pursuer farmed in partnership with his wife. His wife's involvement was mainly for taxation reasons. The pursuer estimates that, prior to the accident, he provided services to the partnership amounting to about 80% of the total of services provided by him and his wife. His income from the partnership was 80% of its net profit. Since the accident, he has suffered a loss of income equal to 80% of the partnership's fall in profits and he has incurred extra expenditure equal to 80% of the outlays hereinbefore condescended on."

4. Put shortly, counsel for the defender complained that since the averred heads of increased expenditure by the partnership must (along with the averred losses of income) form part of the calculation of the firm's loss of profit, and consequently of the pursuer's claim for lost earnings, the pursuer could not relevantly maintain a further claim in respect of the same heads of extra expenditure. Moreover, in face of what had gone before, it was not clear from the averment at page 10D how "he" (the pursuer) had incurred this extra expenditure. Alternatively, if (as appeared to be implied) the "outlays" referred to were in any way different from the "extra expenditure" condescended on, the defender was in the dark as to what these might comprise and would suffer material prejudice in preparing for a proof.
5. In response, counsel for the pursuer confirmed that the extra expenditure in question went no further than the heads itemised at pages 9D - 10C, but nevertheless maintained that the averment at page 10D was sufficiently relevant and specific to warrant probation alongside the preceding claim for loss of earnings. The precise basis of this additional claim was not, however, explained in the course of the debate. At one point, junior counsel for the pursuer intimated a wish to "clarify the matter" by substituting "income" for "profits" in the critical sentence at page 10D, but his senior subsequently declined to move such an amendment, perhaps recognising that this might adversely affect the relevancy of the pursuer's loss of earnings claim which had not hitherto been under challenge.
6. On this issue I have reached the conclusion, without much hesitation, that the pursuer's averment at page 10D regarding extra expenditure incurred by him is neither relevant nor sufficiently specific to warrant probation. Even accepting that the "outlays" mentioned there do not go beyond the various items of partnership expenditure averred at pages 9D - 10B, I still have difficulty in understanding how these outlays can be brought into account twice or, failing that, what extra expenditure can have been incurred by the pursuer himself "equal to 80%" of their value. In my view it is not without significance that a clarifying amendment for the pursuer, along the lines discussed above, was in contemplation during the debate. In all the circumstances, I propose to exclude the disputed averment at page 10D from probation. However, before doing so, I shall (with the agreement of parties) put the case out By Order to enable the pursuer, if so advised, to attempt a cure without incurring the delay and expense of a reclaiming motion.

The Claim under Section 8

7. For the defender, it was submitted that Section 8 of the 1982 Act, properly construed, covered services in the nature of physical care and support rendered to the injured party as an individual. Accordingly, the present claim in respect of farming labour rendered by the pursuer's son to the partnership for a wage was irrelevant and should be excluded from probation. Support for this approach was, it was said, readily available from a number of different sources, notably the treatment of the issue of relatives' services by the Scottish Law Commission in recommending and drafting the legislation in question. Throughout both the Commission's Memorandum (No. 21 of 1975) and subsequent Report (No. 51 of 1978), it was repeatedly made clear that the pre-existing mischief , as reflected in the Scottish caselaw culminating in Edgar v Lord Advocate 1965 S.C. 67, was that no claim could be maintained at common law in relation to nursing or other domestic services provided by a relative except in the rare and artificial situation where there existed a prior contract for remuneration. The Scottish Law Commission gave no hint that the nature and scope of the services claimable at common law were thought to pose a problem. Thus the purpose of the legislation was essentially to reverse the onus regarding the presence or absence of a prior contract, so that relevant services would in all cases be claimable unless any possibility of remuneration was contractually excluded.
8. It therefore came as no surprise to find that all of the reported cases on Section 8 in Scotland since 1982 referred to nursing and domestic services as being the proper subject-matter of the legislation, and that there was no reported decision which bore to support the novel approach taken by the pursuer here. Reference was made in this context to Denheen v British Railways Board 1986 S.L.T. 249; Howie v Upper Clyde Shipbuilders Ltd 1991 S.L.T. 2; Farrelly v Yarrow Shipbuilders Ltd 1994 S.L.T. 1349; Stirling v Norwest Holst Ltd (No. 2) 1998 S.L.T. 1359; McManus' Executors v Babcock Energy Ltd 1999 S.C. 569; and Duffy v Lanarkshire Health Board 1999 S.L.T 906.
9. Reliance was also placed on the position in England, where the services claimable at common law were similarly those in the nature of "voluntary care", and in the words of the English Law Commission (Report No. 56) "... reasonably necessary for the injured person to receive". This was confirmed as the true position by the House of Lords in Hunt v Severs 1994 2 A.C. 350, where the leading speech of Lord Bridge of Harwich, considering the position in Scotland as well as that in England, met with the agreement of all of their Lordships including Lords Keith and Jauncey.
10. In Ward v Newalls Insulation Co Ltd 1988 1 W.L.R. 1722 and Hardwick v Hudson and Another 1999 1 W.L.R. 1770 (both of which cases were very fairly brought to the attention of the Court by counsel for the pursuer), the Court of Appeal had reached decisions materially at variance with pursuer's present claim. Ward was a case where, following injury to one partner, the business engaged the services of his son. It appears to have been accepted by all concerned that no claim for the son's services could be presented at common law, and the claim before the Court proceeded on the basis that the actual cost to the business should be treated as part of the plaintiff's loss of income from the partnership.  More significantly, Hardwick was a case where, following injury to one of the partners of a garage business, his wife was engaged to do additional work and the issue was whether the value of that work could be claimed by analogy with "services" claimable at common law. In refusing that aspect of plaintiff's claim, the Court affirmed that although a tortfeasor could be liable to compensate his victim for nursing or other essential personal services rendered voluntarily by a member of his family or other carer, the plaintiff's wife's role in providing gratuitous services to her husband's business fell into a commercial and not a domestic environment and different considerations applied. Brooke L.J. attached significance (at page 1775H) to the way in which the various parties had chosen to arrange their affairs, to the benefit accruing to the business from the fact of the wife's services being gratuitous, and (at page 1776) to the fact that the wife's services to the business fell into a different category from the personal services of a voluntary carer which had long been recognised as claimable at common law. The opinion of Colman J. at page 1777 was to a similar effect, rejecting the claim inter alia because the services in question were provided "... in a commercial, as distinct from a domestic, environment".
11. For all of these reasons, it was submitted, the pursuer had no legitimate claim in respect of the work performed by his son under contract to the farming business, and the averments at pages 13C - 14B were thus irrelevant and should be excluded from probation.
12. In reply, counsel for the pursuer contended that on a fair reading of the plain words of Section 8 there was nothing to exclude a claim of the type now put forward. The son's farming services were clearly "necessary", in the sense that following the accident he had been obliged to stand in for his father despite his own previous career intentions, and the defender had shown no valid reason why the cost of these services should be held to fall outwith the scope of Section 8. It was accepted that Edgar and the other pre-Act Scottish cases all dealt with claims for nursing and domestic services, but in counsel's submission the mischief which the 1982 Act was intended to overcome was the iniquity of any loss to a "family unit" being irrecoverable and thereby conferring a windfall gain on the wrongdoer. It was significant that in paragraph 18 of their Report, the Scottish Law Commission referred several times to the desirability of avoiding loss to a family unit, and mentioned nursing and domestic services elsewhere as mere examples. Accordingly any services, so long as they were productive of loss within a family unit, were intended to be claimable under Section 8. The fact that Parliament had deliberately declined to define "necessary services" in a restrictive manner, when it would have been easy to do so, was a further indication in favour of the wide construction contended for. Similarly, the concept of services being rendered "to the injured person" should receive a broad and non-technical interpretation consistent with the realities of the situation. Any other approach would, in counsel's submission, produce "unnecessary curiosities", such as a claim being maintainable in respect of cooking or washing for the individual benefit of an injured spouse or mother, but not in respect of cooking or washing formerly carried out by that same individual for the family as a whole or for third parties.
13. As regards the Scottish authorities after 1982, counsel described them as neutral, on the basis that since they all concerned nursing and domestic services it was not surprising to find such services described as falling within the scope of the legislation. It did not follow that services of a different kind were necessarily excluded and, with the possible exception of Duffy, a case which concerned the donation of organs for transplant, the Court had not so far had to consider the true ambit of Section 8.
14. Greater assistance was to be found, according to junior counsel at least, from the Inner House decision in Ingham v John G. Russell (Transport) Ltd 1991 S.L.T. 739. This was a case concerning Section 9 of the 1982 Act, where the phrase to be construed was "personal services". In its context, the Court held that the adjective "personal" applied to the source of the services in question rather than to their character. If that was right, counsel argued, and services from father to son could be of a commercial nature under Section 9, it would be anomalous if the same did not apply to services from son to father under Section 8. Senior counsel, however, did not seek to develop this line of argument, acknowledging that the terminology of the two sections, and the situations which they addressed, were materially different. It is therefore unnecessary for me to express any concluded view on this issue, although it may perhaps be relevant to note in passing that the decision in Ingham, to the effect that the adjective "personal" in Section 9 did not denote the character of the services provided, tends to make it easier to construe Section 8 in the manner contended for by counsel for the defender.
15. According to counsel for the pursuer, the position in England was an imperfect and inadequate guide in the present context. The common law there permitted claims by "voluntary carers" who were not family members, and against that background the Court's reluctance to contemplate any extension of the range of qualifying claims was understandable. Moreover, the cases of Ward and Hardwick could be distinguished. Ward did not involve a mainstream claim for services at common law at all. And although the significance of the decision in Hardwick was acknowledged, counsel reminded me that the claim there was not presented under Section 8 or its English counterpart; that the wife's extra work had in fact been commercially beneficial to the business, thus introducing a special feature which affected the decision of the court; and that the emphasis there on the commercial nature of the arrangements was different from the family arrangement entered into in the present case.
16. Against that background, it was submitted, the son had clearly stepped in after the accident to help his father out, and there was nothing in the pursuer's averments to take the claim for services outwith the proper scope of Section 8 of the 1982 Act. The claim was accordingly relevant to go to inquiry, and the defender's contrary arguments should be rejected as unsound.
17. In preferring the submissions for the defender in this case, I begin by noticing certain general rules which apply to the construction of legislative provisions. First, the pre-existing common law or statutory position is always a legitimate source of guidance, on the basis that an Act of Parliament is presumed not to alter the pre-existing law to any greater extent than necessary, at least without clear language demonstrating a deliberate intent to do so. And second, the mischief struck at by the provision in question, and its legislative history (including any relevant Law Commission Memoranda and Reports), are also valuable guides as to what Parliament must be taken to have intended. Bearing these rules in mind, I am not persuaded that in enacting Section 8 of the 1982 Act Parliament intended to go further than facilitate claims for the recognised range of services in circumstances where remuneration was not the subject of prior contractual agreement. In other words, the mischief struck at by Section 8 was not that the recognised range of relatives' services in respect of which a claim might be maintained at common law was too narrow, and required to be significantly widened, but rather that the absence of prior contractual agreement was sufficient to defeat meritorious claims within that recognised range. In my opinion there is nothing in the statute itself, or in the Scottish Law Commission Memorandum and Report which preceded it, to suggest otherwise.
18. As it seems to me, the fact that Parliament intended to preserve some material restriction in the nature of the services covered is clear from the inclusion of the adjective "necessary" and from the requirement that the services in question be rendered "to the injured person". It would have been easy for Parliament to provide otherwise if the true purpose had been to permit "family unit" claims without restriction, as was argued on the pursuer's behalf. Moreover, if that had truly been the intention, I have difficulty in seeing why the term "relative" should have been defined in Section 13 as including a divorced spouse, and a wide variety of ascendants, descendants and collateral relatives, who might not be part of any de facto "family unit". In my opinion the "context" of Section 8 is not simply the avoidance of injustice to a family unit, as asserted by counsel for the pursuer, but rather the avoidance of a more particular injustice, recurring in the pre-existing caselaw, whereby claims of a nursing or domestic nature had to be rejected on account of the absence of a prior contract for remuneration. This latter "context" has the merit of deriving not only from a broad consideration of the common law position as it existed prior to the passing of the Act, but also from a broad consideration of the desirability (recognised by the Scottish Law Commission in their Report of 1978) of bringing Scots Law into line with the common law of England under which claims by "voluntary carers" were permitted with or without antecedent agreement as to payment. As discussed in Hunt v Severs, the position relative to such claims ended up very similar on both sides of the Border following the passing of the 1982 Act in Scotland, and it would in my view have been strange if Parliament had instead set out, without clear and unequivocal wording, to create a radical difference between Scots Law and English Law in the field of damages for personal injuries.
19. I am fortified in the conclusion which I have reached by the fact that all of the post-1982 Scottish decisions to which I was referred bear to re-affirm the traditional scope of permissible claims in this area. It is true that, with the possible exception of Duffy, the cases happen to concern claims of a nursing or domestic nature, but it is nonetheless significant that over a period of twenty years no contrary judicial view appears to have been expressed. According to counsel for the pursuer, this is because claims of the present type are few and far between, but I think that a more likely explanation is that the true purpose and scope of Section 8 have been generally acknowledged and accepted by the practising profession since 1982.
20. The English cases are also in my view helpful in this context, affirming the limited nature of the claims permissible under the common law equivalent of Section 8 and (in the case of Hunt v Severs) affirming the broad similarity between Scots Law and English Law which the passing of Section 8 achieved. The decision in Hardwick is perhaps of particular relevance here, inter alia drawing a clear distinction between, on the one hand, permissible claims in respect of personal and domestic care and, on the other, impermissible claims arising "... in a commercial, as distinct from a domestic, environment."
21. Turning to the particular averments on Record in this case, it seems to me that the pursuer's position is untenable. According to the averment at page 10C, the pursuer before the accident "... provided services to the partnership" amounting to "... an estimated 80% of the services provided by him and his wife". Against that background it is clear that, however they may colloquially be described, the replacement farming services provided by the son have also been rendered to the partnership, and that is confirmed by the fact that the son's wage of £50 per week (i.e. part of the alleged value of his services) has all along been due and payable by the partnership and forms part of the calculation of the pursuer's primary claim for loss of earnings. In these circumstances, I do not see how the son's services can legitimately be described as "rendered to the (pursuer)" so as to fall within the qualifying requirements of Section 8. Similarly, having regard to the terms of the Section regarding contractual arrangements, it is difficult to see how the pursuer's claim can avoid disqualification by the existence of a contract under which the son agreed to work for no more than £50 per week. Moreover, it is hard to see how the claim in respect of such services can survive the fact of being rendered in a commercial, rather than a domestic, context. As I understood senior counsel for the pursuer to accept, the son's services in this case were not designed to facilitate the pursuer's recovery or return to work, but represented a wholesale takeover of the pursuer's physical work on the farm.
22. In my view the pursuer's difficulties do not end there. Even if, contrary to the conclusion which I have reached, the pursuer's construction of Section 8 were to be regarded as correct, I do not consider that the claim on Record can properly be said to concern a "loss to the family unit". The son's wage was, and is, a matter of contract between him and the farming partnership and, as senior counsel for the defender pointed out, no apparent loss was suffered on either side. The son has all along received his contractual entitlement, and if his wage was agreed at less than market rates, then (as with the wife's gratuitous services in the Hardwick case) that represented a substantial saving or gain to the partnership.  Since any "family unit" must be taken as encompassing both sides of that arrangement, the pursuer in my view ends up without that special form of loss on which his argument fundamentally depends. The son might, of course, have stipulated for a full wage, in which event the pursuer's claim for loss of income would have been increased by the partnership's greater liability, but in my view the fact that this did not happen cannot warrant the pursuit of a compensatory claim for services instead - a manoeuvre described by junior counsel for the pursuer at one point as "... merely a shift of a loss of income claim into the category of services".
23. In my opinion the practical consequence of the conclusion which I have reached is fair and reasonable, not merely giving effect to the arrangements that were actually entered into, but also recognising that the distinct claims for loss of earnings and for services must be determined on their own independent merits. By contrast, against the background of the decision in Vaughan, the consequence of the pursuer's argument appears to me to be wholly unreasonable, namely the availability of a claim under Section 8 wherever a business from which an injured person derived earnings (whether carried on individually or in partnership or through the medium of an incorporated company) engages the services of a relative of the pursuer in substitution for those of the injured person himself, either gratuitously or on favourable terms. In such circumstances, the injured person may have no knowledge of, or interest in, the arrangement, for example where severely disabling injuries have been sustained, and the "relative" involved may be a divorced spouse, or someone else outwith the scope of any de facto "family unit". In my opinion, Parliament cannot reasonably be taken to have intended such a consequence.

Conclusion

24. For all of these reasons, I hold that the pursuer's averments at pages 13C - 14B are irrelevant and must be excluded from probation along with the claim at page 10D in respect of extra expenditure. However, as mentioned in paragraph 6 above, I shall initially put the case out By Order to enable the pursuer to consider his position on the latter issue.