Scottish Court of Session Decisions

You are here: BAILII >> Databases >> Scottish Court of Session Decisions >> Watts v. Bell & Scott W.S. [2004] ScotCS 11 (14 January 2004)
URL: http://www.bailii.org/scot/cases/ScotCS/2004/11.html
Cite as: [2004] ScotCS 11

[New search] [Help]

Watts v. Bell & Scott W.S. [2004] ScotCS 11 (14 January 2004)

OUTER HOUSE, COURT OF SESSION

OPINION OF T.G. COUTTS, Q.C.

(Sitting as a Temporary Judge)

in the cause

JUSTIN ALEXANDER WATTS

Pursuer;

against

BELL & SCOTT, W.S.

Defenders:

________________

Pursuer: Murphy, Lake; Semple Fraser

Defenders: Young; Balfour & Manson

14 January 2004

[1] In June 2002 the defenders failed to transmit an offer on behalf of the pursuer for the former Caledonian Club, Abercrombie Place, Edinburgh. Prior to the debate, the defenders admitted liability to make reparation in respect of any loss sustained by the pursuer thereby.

[2] The pursuer's claim was for the loss of profit he alleges he would have made on redeveloping that property. The defenders admit that they were aware that the pursuer sought to acquire the premises for the purpose of redevelopment to form flatted residential property for resale. The precise development proposed by the pursuer is not admitted. The late offer which was made to the selling agents was the highest offer but the selling agents had not obliged themselves to accept the highest offer and also required that evidence of funding had to be submitted with an offer. The pursuer avers that the lower offer, which was accepted from a different party, did not provide evidence of funding. The pursuer specifically avers that had his offer been submitted on time with a valid date of acceptance, it would have been accepted and that he would have concluded missives for the purchase of the premises.

[3] The pursuer avers that the defenders were aware that he would sustain loss in the form of loss of profit if he were unable to purchase the premises. The pursuer specifies in some detail in condescendence 7what he proposed to do and the approximate costs that he would have to meet. It is unnecessary to repeat these averments except to note that the pursuer does not aver that he had planning permission for the development and admits that his offer was at market value. To the defenders' averments that the pursuer had no established record of successfully completing developments in his own name of the scale of their proposed redevelopment of the Caledonian Club, the pursuer responds in non-specific terms that he had undertaken the refurbishment and conversion of properties in Edinburgh. He makes no averment about whether or not does he aver those were in his own name, nor that the refurbishments undertaken were of the scale envisaged in the Caledonian Club redevelopment.

Argued for the defenders
[4] The defenders contended that loss of development profits was not relevantly pled in this action. Counsel founded in particular upon Jenmain Builders Ltd v Steed & Steed 2000 BNLR 616. In that case the measure of damages was discussed at p.625. It was considered critical that the plaintiff had suffered no loss because what had happened was that they had lost the opportunity to purchase the property at a price that was equal to or greater that its value. It was said that the approach that loss would properly be ascertained by making an estimate of profit was misconceived (at 625E). There were no special circumstances found in Jenmain. All that had been lost was an asset. There was no distinction said counsel between Jenmain and the present case. Counsel also cited Aylwen v Taylor Johnson Garrett 2001 BNLR 903 as a further example of failure to demonstrate a loss in circumstances similar to the present.

Argued for the pursuer
[5] The present case is an example of the damages for breach of contract discussed in the classic case, Hadley v Baxendale (1854) 9 EX 355, where it was said:

"Now we think the proper rule in such a case as the present is this:- Where two parties have made a contract which one of them has broken, the damages which the other party ought to receive in respect of such breach of contract should be such as may fairly and reasonably be considered either arising naturally, i.e., according to the usual course of things, from such breach of contract itself, or such as may reasonably be supposed to have been in the contemplation of both parties, at the time they made the contract, as the probable result of the breach of it. Now, if the special circumstances under which the contract was actually made were communicated by the plantiffs to the defendants, and thus known to both parties, the damages resulting from the breach of such a contract, which they would reasonably contemplate, would be the amount of injury which would ordinarily follow from a breach of contract under these special circumstances so known and communicated. But, on the other hand, if these special circumstances were wholly unknown to the party breaking the contract, he, at the most could only be supposed to have had in his contemplation the amount of injury which would arise generally, and in the great multitude of cases not affected by any special circumstances from such a breach of contract. For, had the special circumstances been known, the parties might have specially provided for the breach of contract by special terms as to the damages in that case; and of this advantage it would be very unjust to deprive them."

[6] The breach of contract here pled falls within and is governed by the dicta in Haberstich v McCormick & Nicholson 1975 SC 1. That case is authority for there being no inflexible general rule in cases involving solicitors' negligence. Counsel also referred to Diamond v Campbell-Jones [1961] 1 Ch 22, Cottrill v Steyning & Littlehampton Building Society [1966] 1 WLR 753, in which cases damages were to be assessed on the basis of a sum to represent the net prospective profit which a purchaser had been prevented from making and G & K Ladenbau (UK) Ltd v Crawley & De Reya [1978] 1 WLR 266 where it was said, in the light of the defendants' knowledge about the plantiff intending to develop the land, that loss of profits was an appropriate head of damages. Jenmain supra was based on tort and is in any event distinguishable. The present action is for damages for breach of contract.

Decision
[7] Even assuming Jenmain to be sound law and binding in a Scottish case based on breach of contract, the pursuer in the present case has sufficient by way of pleading to set forward the special features and the uniqueness of the purchasing opportunity which entitle him to enquiry. I am unable to say that the pursuer could not, on his averments, satisfy a Court that there were such special features in the proposed development, known to the defenders, which would entitle him to claim the loss of profit he might have achieved had he developed. What that profit would have been cannot be determined on averment and allowance will have to be made for a variety of contingencies and potential difficulties which would give rise to a substantial discount on the broad figures put forward in the pursuer's pleadings. The defenders prevented the pursuer exploiting what he says was a unique opportunity to develop. He avers that there were no obvious rivals in the market and he would have succeeded in his offer. All this requires to be explored at proof. It cannot be said at this stage that the pursuer has suffered no loss as a consequence of the defenders' negligence. Accordingly, I shall allow a proof before answer on the quantification of the pursuer's claim.