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Cite as: [2007] ScotCS CSOH_26, [2007] CSOH 26

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OUTER HOUSE, COURT OF SESSION

[2007] CSOH 26

A523/03

OPINION OF

LORD DRUMMOND YOUNG

in the cause

PEACOCK GROUP PLC

Pursuers;

against

RAILSTON LIMITED

Defenders;

and

WILLIAM MURCHLAND & CO

LIMITED

Third Party:

________________

Pursuers: Bowen; Simpson & Marwick

Defenders: Cowie; Balfour & Manson

Third Party: Haldane; Dundas & Wilson CS

9 February 2007

[1] The pursuers have raised an action against the defenders in which they seek damages of £76,968 for breach of contract. The pursuers' averments, in summary, are as follows. The pursuers carry on business as retailers of clothing, footwear and leisurewear. They occupy a unit in a shopping centre at Portland Gate in Kilmanock. In January 2000 they entered into a contract with the defenders for certain shopfitting works at those premises. Part of the works consisted of plumbing, which was subcontracted by the defenders to the third party. In the course of the works the third party installed a particular type of connector between sections of plastic and copper water pipe in the staff lavatory on the first floor. The fitting on the connector for attachment to the copper pipe consisted of a rubber insert, a metal gripper ring with teeth to grip the copper pipe, and a plastic spacer to keep the gripper ring in position. The correct installation of the connector on to the copper pipe requires that the fitting be tightened by a wrench or similar hand tool. It is averred that when installing the connector the third party failed to tighten the fitting correctly. On 6 July 2001 the connector failed when it became detached from the copper pipe. As a result water at mains pressure escaped from the pipe and poured through the ceiling on to the ground floor retail area. The building itself, fixtures, fittings and stock were saturated. It is averred that on examination after the flood the copper pipe had no gripper ring marks where it had been in contact with the fitting for the connector; had the fitting been tightened correctly by the third party the copper pipe would have had such marks to indicate that the gripper ring was in full contact with the pipe. The pursuers rely on an implied term in their contract with the defenders that the defenders would use the skill and care reasonably to be expected of shopfitters of ordinary competence, and allege a breach of that duty as a result of defective work by the third party.

[2 ] The defenders deny the pursuers' averments, but make an esto case that, if the plumbing work was installed as averred by the pursuers, the third parties were at fault. Averments of fault are made against the third party which broadly correspond to those made by the pursuers against the defenders. The third party denies that it was at fault. It avers that the plumbing work was performed over a period of seven to ten days in August 2001, eleven months prior to the flood. The connector that was installed was a particular form of compression stop tap, which was approximately 25 mm in diameter. It is said that the manufacturer's instructions for the installation of fittings between 16 and 50 mm did not require the use of a wrench. The third party followed the manufacturer's instructions. Even if that were wrong, however, the failure would have been obvious when the water main was turned on, as the stop tap would have leaked immediately or within 24 hours at the most. It is said that a wrongly installed stop tap could not have withheld water pressure for eleven months after installation before failing.

[3 ] The summons was signetted in February 2003. On 8 July 2003 three productions, nos. 6/1 to 6/3 of process, were lodged on behalf of the pursuers. These comprised a section of copper pipe, the pipe joint fitting recovered from the pursuers' premises, and a new pipe fitting kit. It is obvious from the pleadings alone that the section of copper pipe and pipe joint fitting were important items of real evidence. According to the inventory of process those productions were borrowed out of process on 11 November 2003; the relative receipt indicated the borrower as the pursuers' agents. Since then the productions have not been returned to process, and attempts to find them, by the pursuers' agents in particular, have been unsuccessful.

[4 ] Prior to the disappearance of the productions the pursuers' agents had commissioned an expert report from Burgoynes, consulting engineers. The representatives of Burgoynes who prepared the report had access to the productions and took photographs of them, and the report proceeded to a significant extent on the basis of the state of the pipe and fitting. Thus the report includes, at paragraph 4.2, a section headed "Detailed inspection of the incident parts"; this section describes the pipe and fitting. In that section it is noted that testing showed that a correctly formed joint would create pronounced marks on the copper pipe, where the gripper ring teeth "bite". It is further noted that no such marks were present on the incident copper pipe. Nor was there evidence of gouges or other damage where a gripper ring had been pulled from the pipe end. Photographs of the pipe and fitting are appended to the report. The writer of the report, Mr. DJ Pointon, noted at paragraph 6.2:

"I have also considered the situation if the fitting handed to me [the production] was the one which failed. If this is the case, then I am satisfied that the incident has been the result of an inadequately tightened joint pulling apart.

... [T]he physical evidence indicates that a gripper ring has never been in full contact with the pipe, as would occur if a gripper ring was present and the joint was fully tightened. This indicates that the joint has never been adequately tightened and essentially just fell apart, possibly due to fluctuations in water pressure and other normal vibrations on the system."

That point is repeated in the summary at the end of the report.

[5 ] In due course a diet of proof was fixed. It was then noticed that the productions lodged on 8 July 2003 were not in process, and the third party enrolled a motion to ordain the pursuers to make the productions available within 14 days. That motion was granted, but the productions were not found. This was explained to the court at a by order hearing that had been fixed when the third party's motion was granted. Thereafter the third party enrolled a motion for decree of absolvitor in their favour in respect that the third party required to examine the pipe fitting and that the pipe fitting, having been borrowed from process by the pursuers' agents, could not be located. That motion was opposed by both the pursuers and the defenders, but the defenders enrolled a further motion for decree of absolvitor in their own favour. The pursuers also enrolled a motion for summary decree on the basis that no defence to the action was contained within the defences. When the motions came before the court I was addressed at some length on the legal issues that arose following the disappearance of the productions. It became clear, however, that there was considerable doubt as to the circumstances surrounding the borrowing out of the productions; the pursuers' agents had been unable to identify the signature that appeared on the inventory of productions. I took the view that the circumstances surrounding the borrowing out of the production were potentially important, and that it was premature to reach a decision on the parties' motions without further investigation into the circumstances. For this reason I allowed the parties a preliminary proof to examine the circumstances surrounding the apparent borrowing out of productions numbers 6/1 to 6/3 of process on 11 November 2003. At the same time the pursuers were appointed to lodge a note of their position in relation to the matters assigned to the preliminary proof, and the defenders and third party were permitted to lodge answers to such note, if so advised. All of the parties' motions were dropped.

[6 ] A note and answers were lodged in due course, and the preliminary proof proceeded on the basis of the statements in those documents, subject to one major modification. This occurred because further investigations had been carried out by the pursuer's agents into the disappearance of the productions. The result of those investigations was set out in a letter written by the pursuers' agents to the third party's agents, a copy of which was lodged in process. The first three paragraphs of that letter contained a full explanation of what had happened when the productions were borrowed out; I should record that that explanation is commendably candid, and credit should be given to the pursuers' agents for the manner in which they investigated and recorded the matter. All three parties agreed that the statement of the circumstances surrounding the disappearance of the productions contained in the first three paragraphs of the letter should be accepted as fact. Consequently it was unnecessary to lead any evidence, and counsel's submissions proceeded on the basis of the facts stated in the letter. In summary, the critical feature of the letter was that the pursuers' agents accepted that they were responsible for borrowing out the productions nos. 6/1 to 6/3 of process; and an explanation was given for the signature that appeared on the borrowing receipt.

[7 ] It was clear that the condition of the pipe and fitting was critical to the pursuers' case; this was apparent from the terms of their expert report, and indeed from the pleadings themselves. It was accordingly essential for the pursuers to establish that condition by leading appropriate evidence. The original pipe and fitting were not now available because of the disappearance of the productions nos. 6/1 to 6/3 of process. Consequently the crucial question was whether, despite the disappearance of the productions, the pursuers should be entitled to lead secondary evidence of the condition of the pipe and fitting. The pipe and fitting were described in the pursuers' expert report in the manner described at paragraph [4] above. They had also been examined by an expert instructed by the defenders, and I was informed that that expert had prepared a report; that report had not been lodged in process. The pipe and fitting had not, however, been examined prior to their disappearance by any expert instructed on behalf of the third party.

Submissions

[8 ] For the third party it was contended that the pipe and fitting were essential. The third party had not obtained an expert report before the productions went missing; because it was the party ultimately blamed for the failure of the pipe, however, it was vital that the third party should have such a report in order to have an opportunity of meeting the pursuers' case. To obtain a proper report, it was essential that the expert instructed should be able to examine the productions; without examination of such productions the third party would be unable to test the pursuers' case. Reference was made to authorities, notably Scottish and Universal Newspapers Ltd. v Gherson's Trustees, 1987 SC 27; Levison v Jewish Chronicle Ltd., 1924 SLT 755, and McGowan v Belling & Co. Ltd., 1983 SLT 77 were also cited. In the present case the pursuers, through their agents, had been responsible for the productions when they disappeared. Moreover, serious prejudice was caused to the third party by the disappearance of the productions. For these reasons counsel submitted that the third party was entitled to absolvitor. The defenders' position was that, if the third party was entitled to absolvitor because of the loss of the productions, the defenders were also entitled to absolvitor. The defenders sought to blame the third party for any failure that might have occurred in the pipe; consequently they were liable to be prejudiced if the third party escaped liability. Thus the defenders and the third party stood together, and counsel adopted the submissions for the third party.

[9 ] For the pursuers it was submitted that the court should allow three named witnesses, all representatives of Burgoynes, to give evidence regarding the condition of the pipe and fitting. One of those witnesses, Mr. Graham Cooper, had examined the pipe and fitting, and the results of his examination were set out in Burgoynes' report. In addition, the report contained two photographs of a new set of components, laid out to illustrate their positions. No photographs were available of the copper pipe, but Mr. Cooper's evidence would be available as to the state of the pipe. In particular, Mr. Cooper would be able to give evidence regarding the lack of marks on the copper pipe. Counsel accepted that the presence or absence of "bite" marks on that pipe was crucial to this part of the evidence. He further submitted that initially all proper steps had been taken to preserve the joint and pipe; they had been taken from the premises by Burgoynes, and sent on by Burgoynes to the pursuers' agents. Thereafter they had been lodged as productions. Counsel submitted that the fact that they had been lodged was an important distinction from Scottish and Universal Newspapers v Gherson's Trustees, supra; in that case, the pursuers had failed to lodge the relevant financial documents, which had accordingly never been in process. Where productions were lodged, and had been examined, their importance became less, and the loss of the productions would accordingly be less culpable. In the present case the defenders had been able to make use of the productions and have them examined by their own expert. Thus evidence would be available from the defenders' expert, and the third party could rely on such evidence; there was a unity of interest in the positions of the defenders and the third party. The pursuers' secondary position was that, even if secondary evidence regarding the productions was excluded, a proof should still be allowed. The pursuers did not concede that they would not be able to establish their case without evidence of the state of the pipe and fitting, and an alternative basis might exist for that case. Finally, counsel for the pursuers submitted that, even if a proof were refused, the interlocutor should be dismissal rather than absolvitor. The pursuers might obtain further information regarding the case at a later stage, or the missing productions might be discovered.

Discussion

[10 ] The legal principles that are relevant to the present case are in my opinion set out by LP Emslie in Scottish and Universal Newspapers Ltd. v Gherson's Trustees, supra, at 1987 SC 47:

"From these passages [in Dickson on Evidence] I take the true rule applicable to a case such as this to be that secondary evidence of the contents of the missing records will be admitted only if it is shown that they have been destroyed or lost without fault on the part of the pursuers who had effective control of the records when the action began. A party in the position of the pursuers indeed will, according to Dickson, sec. 237, probably be required to show a special casus amissionis not attributable to any fault on his part. It must be recognized accordingly that the leading of secondary evidence to prove the contents of missing documents - a manifestly unsatisfactory expedient - is a privilege to be earned by a party in the position of the pursuers in this case."

The opinion of Lord Brand is to similar effect (at 1987 SC 53):

"The best evidence rule is, in my opinion, clear and simple: 'a party must adduce the best attainable evidence of the facts he means to prove' (see Dickson, sec.195). Where the terms of a document are in issue the best evidence rule normally demands that the document itself, as the primary evidence, should be produced. Secondary evidence is, however, admitted to prove the contents of documents which had been destroyed or lost without fault in the party founding on them (see Dickson, sec. 236)."

Scottish and Universal Newspapers Ltd. v Gherson's Trustees involved the loss of documents, but in my opinion it is clear that identical principles must apply to the loss of non-documentary productions; items of real evidence may indeed be of even more fundamental importance to proving a case than items of documentary evidence.

[11 ] The meaning of fault for the purposes of the best evidence rule was also considered in Scottish and Universal Newspapers Ltd. v Gherson's Trustees. On this matter, the Lord President stated (at 1987 SC 47):

"There is no difficulty in interpreting the word 'fault' in this context. It simply means failure in a duty to take all proper steps or to use all due diligence to see that these records were preserved and remained accessible for use in the proof ... It must, I think, depend on the circumstances of each case whether the party tendering the secondary evidence has expended the appropriate amount of care and diligence, and the steps required of such a party will no doubt be affected by the nature and importance of the documents, the contents of which are of vital importance in the proof, to the ascertainment of the truth, and to the interests of all parties. The more important the documents the more necessary will it be for the party who has them to take all proper steps to preserve them."

The prejudice caused by the failure to produced documents is relevant in the following manner (1987 SC 47-48):

"I accept... that the leading of secondary evidence of the contents of documents cannot be incompetent merely because the absence of the documents themselves will gravely prejudice the opponents in the litigation. To say, however, that the question of prejudice has no role to play in deciding upon the admissibility of secondary evidence of the contents of documents is to go too far. In my opinion ... it is entirely relevant in ascertaining the importance of the documents in the litigation to consider to what extent their absence will obviously prejudice the other parties. The greater the obvious prejudice which would be occasioned by the loss of the documents the more necessary will it be for the party who controls the documents to take whatever steps are required to see that they are not lost."

[12 ] When the foregoing principles are applied to the facts of the present case, I am of opinion that secondary evidence as to the state of the pipe and pipe joint fitting should not be permitted. For the reasons stated above, I consider it very clear that the condition of the pipe and fitting was of fundamental importance to the pursuers' case. The productions were accordingly vital pieces of real evidence. The pipe and fittings were lodged in process at a fairly early stage in the action, but some months later they were borrowed out of process by the pursuers' agents and went missing while in the hands of the pursuers' agents. Prima facie, therefore, the pursuers' representatives were responsible for the loss, and there was no suggestion that any other person was responsible, or that the cause of the loss was something outwith the control of the pursuers or their representatives. The pipe and fitting had been examined by the pursuers' experts and also by an expert for the defenders, but they had not been examined by any expert acting on behalf of the third party. It is clear from the pleadings that the position of both the pursuers and the defenders is to blame the third party for the condition of the pipe, the defenders on an esto basis. In these circumstances it seems to me to be manifestly unsatisfactory, and indeed unfair, to expect the third party to rely in any way on the defenders' expert report; that report was not prepared on their behalf, and the author cannot have been expected to take the third party's interests into account by, for example, considering lines of inquiry that might help to exonerate them.

[13 ] In such circumstances the applicable rule of law is that laid down by the First Division in Scottish and Universal Newspapers Ltd. v Gherson's Trustees, supra: if secondary evidence is to be admitted it must be shown that productions have been destroyed or lost without fault of the party who had effective control of the productions. "Fault" for this purpose means a failure to take all proper steps or to use all due diligence to ensure that productions are preserved and remain accessible for use at a proof. The appropriate standard of care and diligence varies according to the circumstances, but where productions are of particular importance in establishing the facts of the case a high standard will apply. Similarly, where the loss of a production is liable to cause significant prejudice to the other party, a high standard will be demanded. In the present case, the productions that it be lost were of critical importance, and the third party is manifestly prejudiced. In these circumstances a high standard of care and diligence applies. When productions go missing in the hands of a party's representatives without any explanation, I consider it clear that that level of care and diligence is lacking. I am accordingly of opinion that the pursuers have failed to establish that the productions have been lost without fault on their part, and secondary evidence is not admissible.

[14 ] Counsel for the pursuers submitted that the present case was distinguishable from Scottish and Universal Newspapers Ltd. v Gherson's Trustee because the productions have been lodged in process and have only been lost subsequently. That is true, but in my opinion it does not affect the result. The productions were still lost through the fault of the pursuers' representatives, and the prejudice to the third party is exactly the same. The result might have been different if an expert instructed by the third party had had an opportunity to examine the productions before they went missing, but that did not happen, and it cannot be contended that the third party was in any way at fault in not having the productions so examined.

[15 ] Counsel for the pursuers also contended that at a proof on the merits the court could rely on the evidence of the representatives of Burgoynes who had examined the pipe and fitting and on the photographs that they had taken: see paragraph [9] above. That is no doubt true up to a point, but the fundamental problem remains that the productions, which are themselves of fundamental importance to the case, have not been examined by any expert acting for the third party; consequently the evidence about their condition is likely to be one-sided. Indeed, unless representatives of the third party are able to examine the productions, it is very difficult to see how any effective cross-examination could be mounted on the basic condition of the pipe and fitting. That seems to me to cause insurmountable prejudice to the third party.

[16 ] For the pursuers a secondary argument was advanced that a proof should be allowed even if secondary evidence regarding the productions was excluded. That argument proceeded on the hypothesis that the pursuers might be able to establish a case without evidence of the state of the pipe and fitting. The difficulty with that contention, however, is that the case that is presently made for the pursuers on record is firmly based on the condition of the pipe as observed by Burgoynes. Thus the pursuers aver:

"On examination after the flood the copper pipe had no gripper ring marks where it had been in contact with the fitting for the connector. Had the fitting been tightened correctly by [the third party] the copper pipe would have had such marks to indicate that the gripper ring was in full contact with the pipe."

Those averments are said to yield the inference that the third party had failed to tighten the fitting to an adequate standard and that that failure was the cause of the flood. In these circumstances it seems to me that it would not be appropriate to allow the pursuers' case to go to proof to discover whether they could establish it by an alternative route. If that course is to be followed, the alternative case should be made squarely on record, and there should be no significant reference to the observed condition of the pipe.

[17 ] At the conclusion of the proof the defenders and the third party moved for decree of absolvitor in the event that I decided not to allow secondary evidence as to the condition of the pipe and fitting. In my opinion that is going too far. It is true that a decree of absolvitor was pronounced in Scottish and Universal Newspapers Ltd. v Gherson's Trustees, but that followed the conclusion of a proof on the merits, not a preliminary proof; moreover, it was a matter of concession in that case that without secondary evidence of the missing documents the pursuers were unable to prove their case against the defenders. In the present case I cannot at this stage conclude that the pursuers have no possible case; all that I can do is to rule that secondary evidence of the state of the missing productions will not be admissible. In these circumstances I am of opinion that the correct disposal of the case is to grant decree of dismissal; that reflects the fact that the pursuers' present case is dependent on evidence of the state of the pipe and fitting but will allow them to make an alternative case if they think fit.