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Wilkie v. Brown [2003] ScotCS 157 (30 May 2003)

SECOND DIVISION, INNER HOUSE, COURT OF SESSION

Lord Justice Clerk

Lady Cosgrove

Lord Johnston

XA159/00

OPINION OF THE COURT

delivered by

THE LORD JUSTICE CLERK

APPEAL

From the Sheriffdom of Grampian, Highland and Islands at Fort William

STUART WILKIE, Assisted Person

Pursuer and Appellant;

against

GEORGE BROWN

Defender and Respondent;

_______

Act: Summers; Drummond Miller, WS (for Mitchells Roberton, Glasgow)

Alt: Fitzpatrick; Morrisons

30 May 2003

Introduction
[1] This is an appeal from an interlocutor of Sheriff James G Nolan dated 28 October 1994 pronounced after proof in the Sheriff Court at Fort William by which, inter alia, he assoilzied the defender from the monetary crave of the initial writ.

[2] The action is for damages for breach of a contract under which the pursuer engaged the defender to carry out extensive alterations to a cottage at Glenloy. The pursuer's case was that the defender failed to complete the works; that such work as he did was unsatisfactory, and that because he walked off the site the pursuer had had to instruct interim remedial work to make the premises wind and watertight. The pursuer's claim was for the sum of £15,000 borrowed from the bank and spent by him on the interim work and for the sum of £68,072.31, plus VAT, being the estimated cost of completion of the work in accordance with the contract.

The sheriff's findings
[3] The sheriff found in fact that before September 1989 the defender had contracted with the pursuer to carry out the works specified in the applications for planning permission and building warrant for the sum of £30,613, including VAT. (findings-in-fact 11-12) and that an amendment to the contract to cover the construction of an extension had increased the contract price by £2,500 (14). The defender started the work in about September 1989 but made little useful progress between then and June 1990 (15, 16, 19, 21). By then the pursuer had paid the defender £23,600 to account and a further £1,500 to enable him to purchase certain specific materials (20). At that date the pursuer insisted that the defender progress the works urgently and refused to pay him any more money until he had done so. The defender then left the site and did not return (21). Thereafter the pursuer employed a slater to rectify the defender's bad workmanship and to slate the roof, and other workmen to roughcast the walls, to complete the flooring, to install the windows and patio doors and generally to make the property wind and watertight (22). Thereafter he applied for a completion certificate, which the local authority refused in October 1991 (23). The pursuer commissioned a firm of architects to report on the defender's work. The report disclosed structural failures and other defects which fell far short of reasonable standards of construction and did not conform to the specifications set out in the approved plans. Such works as had been done by the defender had not been done in a reasonably workmanlike manner (24-25).

[4] The sheriff has set out a long list of defects in the respondent's workmanship. He has found that the pursuer spent "a sum of his own money" on the purchase of materials required to carry out interim remedial works and in an attempt to complete the alterations (27). He has also found that after the certificate of completion was refused, the pursuer obtained a report from a local builder, Mr John McKinnon, as to the cost of putting right the defects. This report proceeded on the premise that repairs to the property would cost more than the taking down of the extension which had been erected by the defender and replacing it, re-using any existing materials that were intact. The cost of that work, on Mr. McKinnon's estimate, would be £68,072.31 plus VAT (28).

[5] In the event the work covered by Mr McKinnon's estimate was not carried out because the property was destroyed by fire in December 1992 (29).

[6] On the basis of these findings, the sheriff has found in fact and in law inter alia that the defender failed to perform his obligations under the contract; that the pursuer is entitled to declarator of material breach of contract, and that, "having suffered loss as a result of the breach of the said contract, is entitled to damages therefor" (findings in fact and law 3-4). But he found in fact and law that the pursuer "has failed to prove the extent of any such loss or damages suffered as a result of the said breach of contract by the defender" (5). He therefore sustained the pursuer's third plea-in-law, to the effect that the defender was in material breach of the contract, but sustained the defender's pleas to the extent of assoilzieing the defender from the monetary crave of the writ. This appears, on the face of it, to be an extraordinary result.

The sheriff's reasoning
Interim remedial work
[7] The sheriff says that the pursuer did not attempt to give any breakdown of the money that was spent. He had said that his receipts were destroyed in the fire; but he had failed to produce copy receipts or any documentary proof that the bank had advanced £15,000 to cover the cost. He had failed to produce copy invoices for materials or labour. The sheriff then said the following:

"Thus the court is left with the bald statement by the pursuer that the pursuer was allowed further sums totalling £15,000 by his bank to carry out remedial repairs which sum was all spent on the property. The court did not even have the benefit of either the bankers evidence or the pursuer's bank statements to support his evidence to any extent at all. It is being left to the court to decide how much was spent on what, that the sum spent was reasonable and that the sums spent on each item of remedial work was (sic) essential.

I was dissatisfied with the pursuers evidence regarding the spending of £15,000 not only with the manner in which it was given which I noted at the time seemed evasive, but also because it lacked any specification as to how the money was spent and also completely lacked any supporting vouchers or evidence which could apparently have been obtained. I could not rely on the pursuer's evidence in this respect and therefor (sic) in respect of the lack of any other evidence to support this leg of the claim have to absolve the defender from any liability to pay the same. In any event it is part of the pursuers case on record that none of the remedial work carried out will be of any benefit to the pursuer which makes one wonder why it was carried out in the first place.

I do not think it is sufficient for a pursuer even in these days where corroboration is not essential to simply say to the court 'I spent £15,000 on remedial work and if you believe me that is an end of the matter and I am entitled to decree for that sum'. In saying this I fully accept that the pursuer was hardly cross-examined in this respect at all but the defender has never admitted this expenditure".

Estimated cost of completion
[8] The sheriff notes that the evidence on this point came from the pursuer and Mr McKinnon. Mr McKinnon spoke to the defects in the property and to his unwillingness to remedy the defects because of, inter alia, the cost involved. He also spoke to his estimate of the cost of completing the work in conformity with the approved drawings (21/9 of Pro) and his breakdown of it (31/5 of Pro). Of Mr. McKinnon the sheriff says the following:

"I was entirely dissatisfied with Mr. McKinnon's evidence and rejected the same. It appeared to me from his demeanor in the witness box, the form of his original estimate, the fact that a breakdown only appeared two years later and the fact that that breakdown gave no details whatever of what he envisaged was involved in the headings therein, that he had simply picked a figure out of mid-air to support the pursuer's claim. My impression was reinforced by the pursuer who at page 152 of the notes stated that Mr. McKinnon had never seen a drawing or plan nor a bill of quantities prior to producing his estimate. I am not therefor (sic) prepared to hold that the cost of demolishing the work done by the defender and replacing the same and completing the contract between the parties amounted to £68,072.31 plus VAT at 17.5% at any time after the defender left the site. It is interesting to note that such was Mr. McKinnons attention to detail that his breakdown of costs does not even agree with the total of his estimate. I therefor (sic) find that I have no reliable evidence in support of the second part of the pursuer's claim".

Submissions for the parties
For the appellant
[9] Counsel for the appellant submitted (1) that the sheriff had no proper basis to refuse the claim for the interim remedial work since the pursuer's evidence that he had spent that sum had not been challenged in cross-examination and since the defender had led no evidence on the point; (2) that the sheriff had no proper basis for refusing to accept Mr McKinnon's evidence about the estimate and the breakdown of it since that evidence was not challenged in cross-examination and since the defender had led no evidence on the point; and that the sheriff had misunderstood the pursuer's evidence on the point in a material respect; and (3) that if the claim failed in respect of the foregoing elements, the finding that the defender was in breach of contract entitled the pursuer at least to nominal damages which, in this case, would be a significant amount, say £25,000 (Webster & Co. v Cramond Iron Co., (1875) 2 R 752; Murray v Marr, (1892) 20 R 119; Aarons & Co. v Fraser, 1934 SC 137).

For the respondent
[10] Counsel for the defender submitted that since the sheriff had seen and heard the witnesses his judgments as to the credibility and reliability of the pursuer and Mr. McKinnon, and his consequent findings-in-fact on both heads of claim, were inviolable. There was no record for a claim for nominal damages. The question had not been raised at the proof and there were no findings in fact directed to it. The pursuer was not entitled to nominal damages merely because a breach of contract had been proved (Webster & Co. v Cramond Iron Co., supra, Lord President Inglis at p. 754; Aarons & Co. v Fraser, supra, Lord Justice Clerk Aitchison at p. 140; Lord Murray at p. 143). The claim was a covert attempt to obtain repetition of the payment of the money paid to the defender on account.

Conclusions
[11] On both heads of the pursuer's claim, the sheriff has reached conclusions on credibility and reliability that are adverse to the pursuer's case. This court would not normally entertain an appeal against the sheriff's conclusions on those matters. But if the appellant can satisfy the court that the sheriff has erred in law in his approach to the evidence, or that his conclusions are not properly reasoned or are based upon a misunderstanding of the evidence, this court is entitled to substitute its own findings (cf. Thomas v Thomas, 1947 SC (HL) 45; Simmons v British Steel, 2003 SLT 62, at paras. [17]-[18]). At the hearing of the appeal we were given only selected excerpts from the transcript of the proof; but counsel were agreed that those excerpts covered all of the relevant evidence.

(1) The claim for £15,000
[12] In our opinion, the sheriff erred in rejecting this element of the claim. The pursuer gave clear evidence that when the defender left the site he spent the sum of £15,000 on interim remedial works to make the property wind and watertight, and that this money had come from a house account held with the Royal Bank of Scotland. Although he was unable to vouch his expenditure in detail because his receipts had been destroyed in the fire, he nevertheless specified what work had been done. It was not suggested to him in cross-examination that his evidence was untruthful on these points, or that the amount of £15,000 was excessive, or that any of the work had been unnecessary. The pursuer's credibility was not attacked in cross-examination. There was no competing evidence for the defender on this head of claim.

[13] Contrary to the comments of the sheriff that we have quoted, the court was not asked to decide how much was spent on individual items of this work, nor whether the sum spent was reasonable, nor whether the sum spent on each item was essential. These questions were not raised in cross-examination. There is nothing in the sheriff's comment that since the pursuer pled that none of the remedial work was of any benefit to him, it made one wonder why the work was carried out in the first place. The work was carried out because, in the emergency created by the defender's breach of contract, the property had to be made wind and watertight.

[14] Since the sheriff accepted that the remedial work was done (findings-in-fact 22 and 27) and since the amount of it was not challenged, we cannot follow why the sheriff was not prepared to accept the pursuer's evidence. It is significant that the sheriff does not say that he disbelieved the pursuer. He says that the pursuer "seemed evasive," but counsel for the defender has been unable to point to any question in that part of the pursuer's evidence to which it could be said that he gave an evasive or unsatisfactory answer. The sheriff himself has not pointed to any particular matter on which he thought that the pursuer was evasive. In our opinion, the sheriff should have held that this element of the claim had been proved.

(2) The claim for remedial work as estimated by Mr. McKinnon
[15] Mr. McKinnon spoke to the estimate and the breakdown of it and explained what the various heads of work consisted of. The line of cross-examination was to the effect that the defender had not contracted to do all of the work that was shown in the estimate; but the sheriff found against the defender on that line (finding in fact 11) and it has not been renewed at this appeal. There was no cross-examination of Mr. McKinnon on any other line. It was not put to him that his evidence was untruthful or exaggerated. He was not challenged on the amount of the estimate overall, or on any individual item.

[16] The sheriff does not say what it was about the demeanour of Mr. McKinnon that he found to be unsatisfactory. He does not say in what respect the form of the original estimate was unsatisfactory. The fact that the breakdown appeared two years after the estimate - no doubt for the purposes of the proof - is in our view unsurprising. We cannot see what adverse inference can reasonably be drawn from that fact. If the breakdown gave no details of what Mr McKinnon envisaged would be involved in the headings that it set out, that was a matter for counsel for the defender to pursue if he thought it significant. The discrepancy between the total of the estimate and the rounded-up total of the breakdown - all of £17.69 - is in our view of no consequence. We fail to see why all or any of these considerations justified the sheriff in his conclusion that Mr McKinnon had "simply picked a figure out of mid-air to support the pursuer's claim." In our opinion, the sheriff has given us no rational basis for the conclusion that Mr McKinnon's evidence should not be accepted.

[17] Furthermore, a material factor in the sheriff's conclusion on Mr. McKinnon's credibility was his understanding that the pursuer had said that Mr. McKinnon had never seen a drawing or plan or a bill of quantities before producing his estimate. We have been referred to that passage in the evidence. It is obvious that the sheriff misunderstood what the pursuer said and that there is no basis in that evidence for the sheriff's view.

[18] For these reasons, we consider that the sheriff had no proper basis for his refusal of this element of the claim. We consider that on the uncontradicted evidence of Mr. McKinnon, and in the absence of any competing evidence or of any proper reason not to accept him as a witness of credit, this element of the claim was proved.

(3) The claim for nominal damages
[19] In view of our conclusions on the evidence, the question of an award of nominal damages does not arise. We doubt whether it would have been proper to make such an award in this case since an alternative claim for nominal damages was not pled, was not canvassed at the proof and is not the subject of any finding-in-fact. It is our impression that if there had been record for such a claim, and if the present claim for damages had not been proved, an award of nominal damages might well have been appropriate.

[20] We are not persuaded that a breach of contract confers an automatic entitlement to at least nominal damages (cf. Stair Memorial Encyclopaedia, vol. 13, para. 74). Much of the difficulty raised in discussions of the point arises from the distinction made in the earlier cases between "actual damage" and trouble and inconvenience (eg, Webster v Cramond Iron Co., supra, Lord President Inglis at p. 755; Murray v Marr (1892) 20 R 119, Lord Trayner at p. 127). In Webster & Co. v Cramond Iron Co. (supra, at p. 754), Lord President Inglis commented that "It is impossible to say that a contract can be broken even in respect of time without the party being entitled to claim damages - at the lowest nominal damages"; but that dictum must be read in the context of his statement at the start of his opinion that, there having been a breach of contract in respect of time, " ... the pursuers are entitled to damages for breach of contract to the extent to which they have sustained damages, but to no greater extent" (at p. 753). There could be cases, in our view, where a breach of contract was to the immediate benefit of the innocent party. In that event, it would be contrary to principle that the innocent party should be entitled to nominal damages for the mere fact of the breach.