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Cite as: [2008] CSOH 23, [2008] ScotCS CSOH_23

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OUTER HOUSE, COURT OF SESSION

[2008] CSOH 23

CA3/06

OPINION OF LORD DRUMMOND YOUNG

in the cause

PREFERRED MORTGAGES LTD

Pursuers;

against

(FIRST) ROBERT THOMSON SHANKS; (SECOND) MARK ROBERT SHANKS; and (THIRD) ANDREW F. DEWAR

Defenders:

________________

Act: McIlvride; Anderson Fyfe LLP

Alt: Haldane; Brechin Tindal Oatts

7 February 2008

[1] The pursuers provide secured loans for the purchase of heritable property. In 2001 they advanced funds to enable three individuals to purchase a housing development at Hurlet Hill Court, Barrhead Road, Glasgow. Before advancing funds the pursuers obtained a valuation of the development from Robert Thomson Shanks, the first defender, who practised as a chartered surveyor. The second defender was brought into the action on the basis that he was the first defender's partner at the material time, but that contention turned out to be incorrect and the pursuers ultimately accepted that only the first defender acted as a surveyor at the time of the transaction; on 10 July 2007 the second defender was assoilzied from the conclusions of the summons. The third defender is a solicitor, and it is a matter of agreement that he acted for the pursuers in the lending transaction with which the present action is concerned.

[2] The borrowers defaulted in payment, and thereafter the pursuers raised the present action, in which they have alleged that the first and third defenders were both liable to them for breach of contract and professional negligence. In the summons the pursuers concluded for two distinct sums, which amounted in total to £501,820.81. The first conclusion was framed against the defenders jointly and severally and was for payment of the sum of £316,000 with interest. The second conclusion was against the present third defender alone and was for payment of the sum of £185,820.81.

[3] Following sundry procedure, the pursuers settled their claim against the first defender (the second defender having already been released from the action) in return for payment of the sum of £50,000; the result was that on 12 September 2007 the first defender was assoilzied from the conclusions of the summons. Thereafter the action proceeded against the third defender alone. The pleadings were adjusted further to take account of the settlement with the first defender. In the amended summons the pursuer concludes for payment of the sum of £451,820.81; it is a matter of agreement that that amount represents the original sum sued for, £501,820.81, less the £50,000 paid by the first defender. In addition to that sum the pursuers conclude for interest on the sum of £50,000 at the London Inter Bank Offer Rate ("LIBOR") from 9 November 2005, the date when the pursuers' loss was calculated, until 12 September 2007, the date when the settlement with the first defender was effected.

[4] The pursuers' detailed averments regarding the transaction are as follows. In June 2001 three named individuals, John Jackson, Wendy Jackson and James Jackson, approached the pursuers for funding for the purchase of 12 flats at Hurlet Hill Court. The borrowers proposed to buy the properties from the then owner, WJ Jackson Construction Ltd, and thereafter to let the properties to tenants. The development had been constructed by WJ Jackson Construction Ltd. The pursuers agreed in principle to lend funds to the borrowers. That agreement was conditional on the borrowers' providing the pursuers with valid and enforceable standard securities over the properties and on the pursuers' being satisfied that the value of properties provided sufficient security for the repayment of the sums to be advanced. The proposed loans were to be made on a "non status" basis; that indicates a loan made by a lender in reliance on the value of heritable security without inquiry into the value of the borrower's personal covenant to repay.

[5] The pursuers obtained a valuation of the properties from the first defender, who was also asked to report on their condition. The first defender advised the pursuers that the aggregate open market value of the properties was £1,240,000. The pursuers aver that the value of the properties was materially overstated in the first defender's reports and valuations. In reliance on those reports and valuations the pursuers agreed to lend a total of £935,942 to the borrowers. That agreement, it is said, was conditional on the pursuers' being provided with valid and enforceable securities over the properties,

[6] The third defender acted as solicitor for the borrowers in the purchase of properties. By letters dated 3 July 2001 the pursuers instructed him to act on their behalf in the constitution of the proposed standard securities over the 12 properties. The pursuers aver that with their letters of instruction the pursuers enclosed a copy of their "Instructions to solicitors". These required the solicitor to contact the pursuers if there were any defects in the title which adversely affected their position; they also required that, if the property were less than 10 years old, the solicitor should obtain either appropriate NHBC documentation or an appropriate architect's certificate. The pursuers aver that on 4 July 2001 the third defender provided the pursuers with a written report on title on each property. In each report the third defender confirmed that the pursuers would at settlement have a good, valid and marketable title to each property. On the following day, 5 July, the third defender advised the pursuers that he held 12 standard securities executed by the borrowers and that he had had sight of a suitable architect's certificate relating to the development. In fact the relevant architect's certificate bore to have been issued for the benefit of the company which carried out the development, WJ Jackson Construction Ltd, and Northern Rock PLC. The third defender had stated to the solicitors acting for WJ Jackson Construction Ltd, Messrs Dallas McMillan, that he required an amended certificate addressed to the pursuers, but no further architect's certificate was ever provided by Dallas McMillan. No architect's certificate was exhibited by the third defender to the pursuers. Nevertheless, in reliance on the third defender's reports on title and written confirmation dated 5 July 2001, the pursuers on 9 July 2001 advanced the loans to the borrowers, making payment to the third defender's client account.

[7] The pursuers aver that the borrowers subsequently defaulted in payment. The pursuers then called up their standard securities. When they took possession of the properties they discovered that the development had never been completed. In particular, the sanitary and other fittings in the properties had not been fully installed; the garages for eight of the properties had not had their doors fitted; the boundary fence around the development had not been completed; nor had the landscaping of the common ground surrounding the properties. The roads and footpaths within the development had not been fully dressed, and the road providing access to the development from the public road had not been completed. That road was being constructed on a route required to conform to the planning permission granted by the local authority. The land on which that road was to be constructed, however, was not owned by the borrowers, and the borrowers had no servitude right of access over the route. Nor did the borrowers own any land over which access could be provided to the development conform to the conditions of the planning permission. I was informed, and I do not understand the matter to be in dispute, that the particular problem was that the local authority required a bell mouth to the access road and the borrowers did not own the land required to configure the access in that way. In addition, the pursuers aver that, although the properties were less than 10 years old, there was no NHBC documentation; moreover, the third defender had not obtained an architect's certificate relating to the properties.

[8] The pursuers' case against the first defender was framed in both contract and delict; the pursuers averred that the first defender knew that the pursuers intended to rely on the value and marketability of the properties to ensure repayment of the proposed loans in the event of default, and knew that the pursuers would rely on his valuation in that respect. The first defender had overvalued the properties; he gave advice that the aggregate open market value of the properties was £1,240,000, whereas, it is averred, the true aggregate open market value at the material time was £924,000. In addition, the first defender failed to advise the pursuers that the installation of internal fittings and garage doors had not been completed and that there were problems with the formation of roadways and the common ground around the development.

[9] The pursuers' case against the third defender is likewise framed in both contract and delict. It is averred that the third defender was under a duty to investigate the title to the properties in accordance with current best conveyancing practice and to do everything that a competent solicitor would regard as necessary to report on the title to the pursuers. It was further the third defender's duty to deal with any other matters relevant to the transaction in accordance with best conveyancing practice; in particular it was his duty to advise if there were any defects in the title which adversely affected the pursuers' position or any planning notices or orders which adversely affected the marketability of the properties. It is averred in particular that it was the third defender's duty to advise the pursuers that planning permission for the development was conditional on an access road over ground not owned by the borrowers and over which there was no servitude right of access. It was further the third defender's duty to advise the pursuers that neither appropriate NHBC documentation nor an architect's certificate relating to the properties was available.

[10] The pursuers aver that as a result of the third defender's breach of contract and fault they suffered loss. If they had been advised about the lack of an architect's certificate or the problems with the right of access, the pursuers would not have lent funds to the borrowers; it was in reliance on the third defender's advice that the pursuers made the loans to the borrowers. The borrowers defaulted, and the pursuers called up their standard securities and in February 2003 sought to exercise their power of sale. They then discovered that all but two of the ten properties were occupied by tenants, and they were compelled to raise summary cause proceedings to eject the tenants. At this point the pursuers experienced difficulty in selling the properties as a result of the borrowers' failure to complete the construction works and the absence of any vehicular right of access over the access route specified in the planning permission. The properties were ultimately sold to a single purchaser for a total price of £600,000 in March and April 2004. Following the sale, it is averred, the total loss sustained by the pursuers as at 9 November 2005 amounted to £501,820.81. In addition the pursuers remained liable for interest on the outstanding balance of the sums borrowed by them to provide the advance, at the London Inter Bank Offer Rate.

[11] Of the total loss claimed by the pursuers of £501,820.81, £50,000 has been recovered from the first defender, and the pursuers seeks to recover the balance of £451,820.81 from the third defender, together with interest on the sum recovered from the first defender. Counsel for the third defender challenged the pursuers' right to claim the whole of that sum from the third defender. At debate, she invited me to sustain the third defender's pleas to the relevancy and competency of the pursuers' case and to dismiss the action. She submitted that the pursuers' case was predicated on the proposition that, having recovered £50,000 from the first defender, they were entitled to recover the whole of the rest of that loss from the third defender. That clearly assumed joint and several liability as between the first and third defenders; it was only on that basis that the third defender could be liable for the balance of the total loss sustained by the pursuers. That meant, however, that the pursuers were claiming to recover from the third defender losses attributable to the first defender's negligent overvaluation of the subjects.

[12] I agree that the pursuers' case is predicated upon joint and several liability as between the first defender and the third defender. The history of the calculation of the claim is set out in the pleadings, and it is clear that the sum now claimed from the third defender represents the balance of the total loss sustained by the pursuers less the £50,000 recovered from the first defender; such a claim must be based on joint and several liability. The initial question that arises is whether such a claim can properly be made in the circumstances of the present case. I think that strictly speaking this is an issue of relevancy rather than competency; the joint and several conclusion has disappeared from the pleadings, and what is in issue is the legal basis for the pursuers' claim rather than the competency of the remedy. Nevertheless, the relevant principles are those that would apply in a debate on competency.

[13] The competency of a joint and several claim has been considered in a number of cases. In Barr v Neilsons, 1868, 6 M 651, and Hook v McCallum, 1905, 7 F 528, it was held that it was incompetent to raise a joint and several conclusion against two individuals for separate slanders uttered by each, in the absence of any averment of conspiracy between the two. These decisions clearly proceed on the basis that each slander is a distinct wrong, and the loss caused by each is distinct; a pursuer cannot proceed on the basis of joint and several liability against two defenders for two separate and unconnected wrongs. In Belmont Laundry Co Ltd v Aberdeen Steam Laundry Co Ltd, 1898, 1 F 45, the pursuers raised an action against a former employee on the ground that he had left the pursuers' service in breach of the contract between them, and against the employee's new employer on the basis that it had induced him to do so, in the knowledge of the contract with the pursuers. It was held that a joint and several conclusion was competent. Lord Adam stated (at 1 F 47):

"No doubt the ground of action against each defender is different -- that against Innes being breach of contract, and that against the Aberdeen Steam Laundry Company the doing of a wrongous and illegal act -- but they both contributed to produce the one wrong of which the pursuers complain, and therefore I think that they are conjunctly and severally liable in the consequences".

The critical point seems to be that the pursuers complained of a single loss, namely the loss of the employee's services, which was caused by the separate acts of both defenders. In subsequent cases this feature, generally described as a "single wrong", has been treated as the criterion for distinguishing when a joint and several conclusion is competent.

[14] In Grunwald v Hughes, 1965 SLT 209, the pursuers had employed an architect to design and supervise structural alterations to the premises in which they carried on a restaurant business. In the course of the works a boiler was installed by heating and ventilation engineers. When it began operation, the pursuers noticed that the floor tiles under the boiler were being deformed and coming close to the burner tubes. They pointed this out to the architect, who stated that there was no danger. He did not inform the heating engineers. Thereafter a fire broke out in the area under the boiler, causing substantial damage to the premises. The pursuers sued the architect and heating engineers jointly and severally. It was held that this form of conclusion was competent. Lord Justice-Clerk Grant stated (at 211-212):

"In an action based on delict it is commonplace to have a joint and several conclusion against two delinquents who have both contributed to the single wrong which the pursuer has suffered....It seems to me that the test which has been, and should be applied is the same whether the action be based on delict or on breach of contract. That test is whether the two defenders have contributed, albeit in different ways, to cause a single wrong.

... In the present case the pursuers aver a single wrong, the setting on fire of their premises, to which, they say each defender, by his breach of contract contributed".

In the same case Lord Strachan stated (at 214):

"In the present case the one wrong of which the pursuers complain is the fire and its consequent damage and the pursuers have averred that each defender caused the fire by their breach of contract. In those circumstances... I am of opinion that the action is competent".

Lord Walker stated (at 215):

"I can see no reason in principle why two defenders should not be jointly and severally liable for their separate breaches of contract, provided always that each breach was a material cause of the whole damage".

In all these opinions it seems clear that the crucial issue is whether the actings of each defender contributed to a single loss sustained by the pursuer. For this purpose the precise nature of the legal liability of each defender does not matter, provided that the actings of each defender contributed to the single loss.

"Of course, their alleged failures are different, but in a material respect their failures jointly contributed to substantial losses".

[16] It is accordingly essential to identify the loss on account of which the pursuers have raised proceedings against each of the defenders. In so far as it affects both the first and third defenders, this can be seen most clearly from the original summons. In the summons the pursuers sued for a total loss of £501,820.81, which represented the difference between the amount due to them by the borrowers and the amount that they actually realized through the sale of the properties. That amount is divided between the two defenders on the basis that the first defender is only liable for the consequences of providing wrong information whereas the third defender is liable for giving negligent advice; I will return to this distinction again at paragraph [19] below. Because the first defender was liable for providing incorrect information, he is responsible only for the consequences of the information's being wrong. In the present case, the first defender stated that the open market value of the properties was £1,240,000, whereas their true open market value at the time of the valuation was £924,000. That meant that the pursuers had £316,000 less security as a result of the incorrect valuation. That set a limit to the first defender's liability, and that limit was reflected in the sum that was claimed against the first defender. The third defender, by contrast, was liable for giving incorrect advice. If incorrect advice is given the defender is responsible for all the foreseeable loss which is a consequence of the course of action that he advises. Consequently the third defender was liable for the whole of the pursuers' loss, and his liability was not restricted in the same way as the first defender's liability. That is why the original conclusions were for payment of £316,000 from the defenders jointly and severally and the balance of the pursuers' loss, £185,820.81, from the third defender alone. In my opinion that approach to the loss sustained by the pursuers indicates that it is a single loss that is claimed from both defenders, namely the difference between the amount due by the borrowers and the amount realized from the heritable security. The total sum is broken down in the manner that I have explained, but that is done for reasons that have nothing to do with the existence of joint and several liability; it merely reflects the limitation on the first defender's liability.

[17] It follows that the present case is one in which both defenders were originally sued for a single loss, even though the extent of joint and several liability was restricted by the limitation on the first defender's liability. Such a claim is not in my opinion distinguishable from cases such as Grunwald v Hughes, supra. The joint and several conclusion was accordingly competent, and the third defender's challenge to the pursuers' reliance on joint and several liability must fail. I should add that authority for restricting a joint and several conclusion because of a financial limit that applies to one of the defenders is found in Duthie v Caledonian Railway Co, 1898, 25 R. 934. In that case the liability of the first defenders was restricted in amount under the Employers Liability Act but the second defenders' liability, which was at common law, was unrestricted. The court ultimately granted decree against both defenders jointly and severally to the extent of the first defenders' liability under the Act and against the second defenders for the balance of the sum due to the pursuer. That is what the pursuers sought to do in the present case, although the limitation on the first defender's liability arose from the nature of his duty rather than any statutory limitation.

[18] The second argument advanced by counsel for the third defender was that the pursuers' averments of loss were irrelevant. The correct approach, she submitted, was to consider the scope of the duty of care of each defender, and to determine the loss that was attributable to each defender's breach of his duty of care. It was not appropriate to attribute the whole of the pursuers' loss to the third defender, subject only to partial concurrent liability of the first defender. The pursuers had failed to make averments of the losses that flowed specifically from the third defender's negligence, or at least failed to give adequate specification of such averments. In order to deal with this argument it is necessary to consider the precise nature of the third defender's liability to the pursuers and the consequences that that has for the extent of the pursuers' loss for which the third defender may be responsible.

[19] In South Australia Asset Management Corporation v York Montague Ltd, [1997] AC 191, the House of Lords considered the liability of a surveyor for a negligent valuation. In that case Lord Hoffmann, who delivered the principal speech, stated (at 214):

"[T]he principle... is that a person under a duty to take reasonable care to provide information on which someone else will decide upon a course of action is, if negligent, not generally regarded as responsible for all the consequences of that course of action. He is responsible only for the consequences of the information being wrong. A duty of care which imposes upon the informant responsibility for losses which would have occurred even if the information which he gave had been correct is not in my view fair and reasonable as between the parties. It is therefore inappropriate either as an implied term of a contract or as a tortious duty arising from the relationship between them.

The principle thus stated distinguishes between a duty to provide information for the purpose of enabling someone else to decide upon a course of action and a duty to advise someone as to what course of action he should take. If the duty is to advise whether or not a course of action should be taken, the adviser must take reasonable care to consider all the potential consequences of that course of action. If he is negligent, he will therefore be responsible for all the foreseeable loss which is a consequence of that course of action having been taken. If his duty is only to supply information, he must take reasonable care to ensure that information is correct and, if he is negligent, will be responsible for all the foreseeable consequences of the information being wrong".

A distinction is thus drawn between the mere provision of information for use in making a decision about a transaction and providing advice about such a decision. In the former case, the liability of the person providing the information is limited to the consequences of the provision of wrong information; in the latter it is not so limited, but extends to all foreseeable loss that results from the course of action that has been advised.

[20] South Australia Asset Management Corporation v York Montague Ltd was concerned with advice given by valuers to lenders, but in subsequent cases the position of solicitors who act for lenders has been considered. In Bristol & West Building Society v Rollo Steven & Bond, 1998 SLT 9, a firm of solicitors had acted for a building society in connection with a loan transaction. It was a term of the solicitors' instructions that the building society should be able to obtain vacant possession in the event of default. The loan was advanced in reliance on the solicitors' report. Thereafter the borrower defaulted, and it was discovered that there was a sitting tenant in the house, which had the effect of reducing the sale price. The building society sued the solicitors for damages, including the difference between the sum advanced by them to the borrower and the sum received when the house was sold. Lord MacLean stated (at 1998 SLT 11):

"The critical fact which the pursuers offer to prove is that, if they had been provided with an accurate report on title and if they had been informed that there was a sitting tenant with security of tenure, they would not have made any advance to the borrower... It must, therefore, be clearly understood and appreciated from the outset that this is not a case where a professional adviser, such as a surveyor, has provided a valuation report on property which, it is said, was seriously and negligently deficient, resulting in loss to the person relying upon its terms".

After considering South Australia Asset Management Corporation v York Montague Ltd, Lord MacLean continued:

"Counsel for the pursuers submitted that the defenders as solicitors were not merely providing information to the pursuers. They were, he said, policing the transaction by assuring the pursuers that all the conditions of loan were met.

I have reached the conclusion that counsel for the pursuers is correct in his analysis.... When [the solicitors] were instructed by the pursuers to ensure that the transaction accorded with the conditions of the offer to advance, and to ensure that the borrower was obtaining full vacant possession of the property, they must have known that, as a result of their report, the pursuers would immediately release the loan funds to the borrower. This, as it seems to me, was not simply providing advice: it was, in effect, advising the pursuers to take a certain course of action, namely to lend a certain sum to the borrower on the security of the property. There were no other factors or variables at that stage for the pursuers to consider".

A broadly similar approach was followed by Lady Paton in Leeds & Holbeck Building Society v Alex Morison & Co, 2001 SCLR 41, at paragraphs [45]-[48], and by Lord Reed in Newcastle Building Society v Paterson Robertson and Graham, 2001 SC 734, at paragraphs [13] and [14]; in the latter paragraph Lord Reed stated:

"It is of course true that the risk of default is inherent in any loan transaction; but the critical factors in the present case are that the purpose of the report (unlike a valuation, in most cases) may be not merely to enable the lender to decide how much to lend, but to decide whether to lend at all; and insofar as any inference can be drawn from the pleadings, the report may have been relevant to the lender's assessment of the risk of default".

[21] In the present case the pursuers make the averments of fault and loss set out at paragraphs [9] and [10] above. In summary, it is said that the third defender failed to advise the pursuers that the access specified in the planning permission required use of land which was not owned by the borrowers and over which there was no servitude right of access; further, the third defender failed to advise that no architect's certificate was available. If the pursuers had been advised of those facts, they would not have lent the funds to the borrowers. In my opinion those averments are sufficient to indicate that the third defender was providing advice to the pursuers and not merely information. The third defender's responsibility as solicitor acting for a lender on heritable security was to confirm that the title of the security subjects was adequate; for obvious reasons the adequacy of the title included the availability of necessary rights of access. The third defender's responsibility as solicitor for a lender also included ensuring that the documentation relating to the construction of the development was in order and confirming that fact to the lenders; once again, that is a very obvious responsibility in the case of a newly built property. It is averred that the pursuers would not have proceeded with the loan if they had been advised of the correct position. In view of the fundamental importance of proper title and ensuring that construction has been duly completed that averment is understandable. Moreover, the pursuers aver that the loan was a "non-status" loan, in that the pursuers relied entirely on the heritable security to ensure repayment, without regard to the borrowers' personal resources; that suggests that it was particularly important to ensure that the security was fully effective. In these circumstances the pursuers' case is that the third defender provided incorrect advice about two critical aspects of the transaction. That case is in my view properly characterized as an advice case. The result is that the third defender is potentially liable for the whole of the foreseeable losses that are a consequence of the advice given by him. I should point out that in this respect the present case is very close to the circumstances considered by Lord MacLean in Bristol & West Building Society v Rollo Steven & Bond, and the result is in my opinion the same.

[22] In the course of argument counsel for the third defender submitted that a solicitor's liability should be restricted to the losses that fall within the scope of the duty of care owed by the solicitor. No doubt that is true, but the important point is that the solicitor will normally advise a lender that the proposed security is good. In those circumstances the solicitor's advice is critical to the transaction, and it will be obvious that the transaction will not proceed unless matters such as title and completion are properly established. In those circumstances the solicitor's advice is responsible for the very fact that the transaction goes ahead. That is the basis on which the solicitor may be liable for the whole of the losses that result from the transaction.

[23] Nor can it be said that there is any contradiction between the pursuers' averment that they would not have proceeded with the loan transaction had they received accurate advice from the third defender and their averments in the original version of the summons that they would not have proceeded with the loan transaction had they received an accurate valuation from the first defender. All that this involves is an assertion that the pursuers would not have lent funds to the borrowers if they had known the true value of the security subjects or if they had realized that there were problems about the title to the security subjects and their completion; in other words, the value of the subjects, title to the subjects and the state of completion of the subjects were all critical to the decision to lend.

[24] One factual situation that was discussed during the course of argument was a case where land that was essential for access was missing but, when the problem was discovered, the lender was able to obtain the necessary land for a relatively small sum. In such a case the same general principle applies: the solicitor is responsible for all of the foreseeable losses that are a consequence of the negligent advice given by him. The difference is that those losses are mitigated through the acquisition of the necessary land. Consequently the solicitor's liability would be limited to the cost of the additional land, the legal and other expenses of acquiring it, and any consequential losses that resulted from the delay in obtaining satisfactory access. If the land is not acquired an argument based on mitigation will be available to the solicitor. In the present case, the pursuers have made fairly elaborate averments about the steps that they took to sell the properties after the borrowers defaulted. They aver that they took advice from a firm of chartered surveyors known as Barr Brady, and the details of the transaction that was ultimately concluded with a purchaser are set out. Nevertheless, if the third defender thought that the price obtained was inadequate, he would be entitled to plead a failure to mitigate. A further possibility is that the third defender might wish to challenge the adequacy of the sum paid in settlement by the first defender. In that event there is nothing to prevent the third defender from bringing the first defender into the action as a third party.

[25] Finally, counsel for the third defender submitted that the pursuers did not give fair notice of the way in which the claim against the third defender was calculated; in particular it was not clear how the original claim, which involved joint and several liability to the extent of £316,000, came to be converted into a claim in which the whole of the pursuers' loss, apart from the £50,000 paid by the first defender, was sought from the third defender. The answer to this argument is found in my opinion in the proper analysis of the third defender's liability, and in particular the fact that that liability is based on negligent advice rather than negligent information. On that basis the third defender is potentially liable for the whole of the pursuers' loss in entering into the loan transaction. As to the details of that loss, I am of opinion that adequate specification is given. In any event, in the commercial court it is not usual to advance arguments based on specification at debate; questions of specification should be raised in the course of preliminary or procedural hearings and decided at that stage.

[26] In the foregoing circumstances I am of opinion that the pursuers have set out a relevant case of breach of contract and negligence, and have relevantly averred the losses flowing from such breach of contract or negligence. I will accordingly refuse the third defender's motion for dismissal of the action, and I will repel the third defender's fourth plea in law, which is to the competency of the action. Quoad ultra I will allow a proof before answer, reserving the parties' remaining pleas in law.