Scottish Court of Session Decisions

Pursuers: Webster; Balfour + Manson LLP

Defenders: McGregor; Shepherd & Wedderburn, WS

26 March 2008

Introduction

[1] The pursuers are travel agents. In late 2006 they were contacted by certain of their clients, comprising individuals living in the Western Isles and Shetland Islands, who wished to participate in the Island Games due to take place in Rhodes in June and July 2007. The pursuers approached the defenders, who are aircraft brokers, to procure aircraft for the outward flight from Scotland to Rhodes and the return flight to Scotland. The defenders were made aware of the purpose of the flights, of the number of passengers (189), and of the requirement to return to Scotland in time to permit regular same day onward transfers for the passengers. By exchange of emails in January 2007, an agreement was reached between the pursuers and the defenders whereby the defenders undertook to procure flights for that number of people from Inverness to Rhodes departing on 28 June 2007 and returning on 7 July 2007 (by midday if possible) for a total price of £81,270.

[2] The outbound flight took place according to plan. However, the defenders failed to procure an aircraft for the return flight on 7 July 2007. In consequence, the pursuers were obliged to make alternative transportation arrangements for their clients to return home on that day. The alternative flight did not arrive in Inverness in time for same day onward transfers to take place. It was necessary, therefore, for the pursuers to arrange overnight accommodation for their clients in Inverness and alternative connections to the Islands. The pursuers claim £55,893.00 as damages from the defenders for their breach of contract, which sum includes the costs of chartering in a replacement aircraft and arranging overnight accommodation and onward transfers, as well as administrative and travel costs incurred by the pursuers themselves in making these arrangements.

[3] There is now no dispute that the defenders were in breach of contract in failing to procure a return flight. Nor, subject to the points identified below, is there now any dispute about the quantum of the pursuers' claim. The defenders do, however, raise questions of causation and contributory negligence. The pursuers contend that those matters do not provide the defenders with any defence to the action. In those circumstances the pursuers move the court to grant summary decree in terms of Rule of Court 21.2.

[4] Under reference to Henderson v 3052775 Nova Scotia Limited 2006 SC (HL) 85, Mr McGregor, who appeared for the defenders, reminded me of the approach the court is required to take in hearing a motion of this sort. It was made clear in that case that the procedure "is intended to be used where the matter can be determined in a summary fashion, without there being any need for a prolonged examination of matters of fact or law": para.[14]. The court has to be satisfied that there is no defence to the action disclosed in the defences. This may be "because the defences, taken pro veritate, are legally irrelevant": para.[15]. In such a case "the court may sustain the pursuer's plea to the relevancy of the defences and grant decree de plano." If the jurisdiction were confined to issues of legal relevancy, Rule 21.2 would be deprived of much of its usefulness, since a defender could still put off the evil day by lodging dilatory defences. But Lord Rodger makes it clear in that paragraph that the issue of legal relevancy is only "one reason" why a court may be satisfied that there is no defence to the action disclosed in the defences. That the jurisdiction is not so confined is explained in para.[19]:

"... a judge who is considering a motion for summary decree is entitled to proceed not merely on what is said in the defences, but on the basis of any facts which can be clarified, from documents, articles and affidavits, without trespassing on the role of the proof judge in resolving factual disputes after hearing the evidence."

In other words, while the judge hearing a motion for summary decree must not seek to determine issues of genuinely disputed fact, his investigation may go wider than the narrow question of relevancy. If, for example, it can be seen clearly, from documents or other material put before the court at the hearing of the motion, that certain non-admissions or denials of fact in the defences have no basis, and that there is no genuine dispute of fact between the parties, the court is entitled to take that into account in considering whether the defender has shown any relevant defence to the action. This is because, in terms of Rule 21.2, the defences must disclose a genuine defence to the action. As Lord Rodger goes on to say in para.[19],

"the judge can grant summary decree if he is satisfied, first, that there is no issue raised by the defender which can be properly resolved only at proof and, secondly, that, on the facts which have been clarified in this way [i.e. from documents, articles and affidavits], the defender has no defence to all, or any part, of the action."

It is not enough, of course, that at the end of this process the judge thinks that the defender is unlikely to succeed at proof. Before he can grant summary decree, the judge must be satisfied on the available material that the defender is bound to fail and that there is nothing of relevance to be decided at proof.

[5] I also bear in mind that, as is emphasised at para.[14], the motion for summary decree is not intended to replace a hearing on the Procedure Roll or, in the Commercial Court, a debate. Those are procedures particularly suited for the consideration of complex legal questions. The reasons for this are well summarised by Lord McCluskey in Mackay's Stores Limited v The City Wall (Holdings) Limited 1989 S.L.T. 835 at 836H-J. But this does not mean that points of law can never be resolved on a motion for summary decree, particularly in a case where, as in the Commercial Court and as in this case, the court is able to provide time for a full discussion of the issue. In a case where there was both (a) a point of law which the pursuer contended should be resolved in his favour and also (b) an allegation that the non-admissions and the denials in the defences were wholly dilatory, it would be unfortunate if the pursuer was prevented from seeking to obtain decree without delay simply because the point of law could not be argued on a motion for summary decree and the non-admission or denial on record would prevent his succeeding at Procedure Roll or debate. In such a case, I suppose, the difficulty could be avoided by the pursuer enrolling a motion for summary decree to be heard at the same time as the Procedure Roll discussion or the debate, so that all the arguments could be dealt with at the one hearing: but such a course would be unnecessarily burdensome and is not required on a sensible reading of Rule 21.2.

[6] Having heard the argument on the motion for summary decree in this case I am satisfied that the issues are capable of being dealt with on such a motion and, furthermore, that I should grant the motion. My reasons, briefly, in relation to the two points raised by the defenders, are as follows.

[7] The causation argument runs as follows. The defenders say that it was an implied term of the contract between them and the pursuers that the pursuers would confirm the booking of their return flight at the time when the booking of the outbound flight was confirmed "and in any event, prior to the departure of the outbound flight". They say that this term is customary in the travel industry and that both they and the pursuers are experienced in that industry. They say that the pursuers failed, in breach of contract, to confirm the booking for the return flight in accordance with that implied term. They go on to say this:

[8] Mr Webster, for the pursuers, argued that the averments concerning the implied term were insufficient to entitle the defenders to a proof on this issue. He referred to the speech of Lord Buckmaster in The "Strathlorne" Steamship Company Limited v Hugh Baird & Sons Limited 1916 SC (HL) 134 at 136. It is there said that in order for a custom or commercial usage to be binding upon parties to a contract "it is essential that it should be certain, that it should be uniform, that it should be reasonable, and that it should be notorious." Mr Webster pointed out that there were no averments to this effect by the defenders; and he argued that their case that there was an implied term based upon custom was therefore irrelevant or at least wholly lacking in specification. He added, however, that even if there was such a term, there were no averments sufficient to go to proof on the question of what consequences flowed from the alleged breach of it. It is said that, had the pursuers inquired at the time of confirmation of the outbound flight whether a return flight had been booked, they would have been told of the difficulties and that no return flight had in fact been booked. The defenders aver that a return flight could have been sourced by the pursuers with another aircraft booking company. One was entitled to view that with a certain degree of cynicism, standing that the defenders themselves as aircraft brokers had been unable to procure a flight. But in any event there was no quantification given. There was no offer to prove that this would have cost any less than the pursuers had to pay in any event. Or such arrangements, even if possible, would have reduced the pursuers' loss. The defenders were in the business and could very well plead a relevant case as to what aircraft were available at what cost if there was a relevant case to be made.

[9] I would not have been prepared to grant summary decree simply on the basis that the averments in support of the alleged implied term are so slight. The pleading could with advantage have been fuller; but it is arguable that an averment to the effect that such a term is "customary" in the particular industry is shorthand for saying that it is certain, uniform, reasonable and notorious; and therefore sufficient to allow evidence to be led along those lines. However, it seems to me that Mr Webster is clearly right in saying that the defenders' case is wholly deficient in showing how the alleged breach of this alleged term had any consequence at all in terms of causing the pursuers' loss, and that for the reasons which he gave. I asked Mr McGregor whether, although there was no further detail in his pleading, there was any further information that the defenders wished to put forward which would support or improve their case, but he answered in the negative. In those circumstances it seems to me that the causation argument put forward by the defenders has no substance. The defenders would not be entitled to lead evidence as to any specific flights that were available or as to any savings that the pursuers might have made had they pursued other avenues of inquiry.

[10] The second line of argument advanced by the defenders was that the loss was caused in whole or in part by the contributory negligence of the pursuers. It is said that, quite apart from their failure to confirm the return flight in accordance with the implied term, the pursuers, as members of the Association of British Travel Agents ("ABTA"), were bound by the ABTA Code of Conduct and were required in consequence thereof to ensure that accurate information was provided to their clients. By failing to confirm with the defenders that a return flight had been booked, the pursuers failed to provide accurate information to their clients to allow them to make an informed judgment in their choice of travel arrangements. No travel agent, acting with ordinary skill and care, would have allowed clients to travel on the outbound flight without having confirmed the booking of the return flight. The pursuers' breach of contract and breaches of the ABTA Code of Conduct were wrongful acts which contributed to the loss they incurred with the consequence that damages should be reduced.

[11] Mr Webster argued that this defence was irrelevant on two grounds. The first was that, again, there was no attempt to quantify what would have happened had the pursuers acted differently. This argument is, in effect, the same as the argument in respect of the breach of the implied term. I agree with it and for those reasons would in any event have held that the defenders did not show any relevant defence to the claims made against them.

[12] However, there is another ground for holding that the contributory negligence argument must fail. Mr Webster submitted that a plea of contributory negligence was simply not available as a matter of law. I agree with him.

[13] The Law Reform (Contributory Negligence) Act 1945 amended the law in the United Kingdom relating to contributory negligence. Prior to that Act, the fact that the person suffering the damage had been at fault and had thereby contributed to the damage, was a complete defence to a claim for negligence. It was not a defence in contract. The law prior to the Act is helpfully summarised in a passage from the judgment of Pritchard J in Rowe v Turner, Hopkins & Partners [1980] 2 N.Z.L.R. 550 at 555-556, quoted by Judge Newey, Q.C., in Basildon District Council v J E Lesser Limited [1985] Q.B. 839 at 847-8. Whether that passage is apposite in every detail to the position under Scots law may be open to question, but in its essentials it seems to me correctly to state the position. MacQueen and Thomson, Contract Law in Scotland, 2^nd Ed., at para.6.45 confirm that, before the 1945 Act, contributory negligence was no part of contract law in Scotland.

[14] The 1945 Act altered one aspect of this by providing that contributory negligence was no longer a complete defence but that, in a case where a person suffers damage as a result partly of his own fault and partly of the fault of any other person or persons, liability should be apportioned. This is achieved by section 1(1) of the Act, which provides:

[15] In England, the Court of Appeal has held that under the 1945 Act there is power to apportion liability in a contractual claim where the defendants' liability in contract was the same as their liability in negligence independently of the contract: Forsikringsaktieselskabet Vesta v Butcher [1989] 1 AC 852, per O'Connor LJ at 860-867. That is referred to as a Category 3 case. By contrast, it was held in that case, approving the decision of Judge Newey QC in Basildon District Council v J.E. Lesser (Properties) Limited, that there was no power to apportion liability under the Act in a Category 1 case, i.e. where the defendants' liability arises from breach of some contractual provision which does not depend on negligence on the part of the defendant.

[16] The present case is a Category 1 case. In Lancashire Textiles (Jersey) Limited v Thomson Shepherd & Co Limited 1985 SC 135, Lord Davidson held that contributory negligence could not apply so as to reduce damages for breach of a contract for the sale of goods. The ratio of that decision appears to have been that the averments of breach in terms of section 14 of the Sale of Goods Act 1979 were not averments of a "wrongful act" or of breach of statutory duty, the terms used in the definition of fault in section 5 of the 1945 Act. I do not find that reasoning particularly easy to understand if one has regard to the ordinary meaning of the term "wrongful act"; and Lord Davidson does not put forward an analysis of that term which explains why it does not encompass a plain breach of contract.

[17] As Mr McGregor pointed out under reference to the decision of the High Court of Australia in Woolworths Limited v Crotty [1942] 66 C.L.R. 603, 619, the term "wrongful act" is a term "which in a perfectly natural meaning can be applied to breaches of contract as well as to torts". On this basis, and fortified to some extent by passages in McBryde, The Law of Contract in Scotland, 7^th Ed., at para. 22-33 and MacQueen and Thomson, Contract Law in Scotland, 2^nd Ed., at paras.6.44 - 6.45, Mr McGregor submitted that the position under Scots law was different from that in England. In the Scottish definition in the Act, fault is not defined by reference to negligence. Rather it encompasses any wrongful act, be it delictual or arising from a breach of contract.

[18] As a matter of language this submission has some superficial attraction. However, I have come to the conclusion that it must fail. In reaching this view, I do not base myself on any definitive notion of what is covered by the term "wrongful act", though Mr Webster, under reference to the opening lines of Chapter 1 of Glegg on Reparation, 4^th Ed. (1935), pointed out that the word "wrong" tended to be used in reparation rather than contract. Rather, I base myself on the structure of the Act itself, and in particular section 5. In Reeves v Commissioner of Police of the Metropolis [2000] 1 AC 360 at 382, Lord Hope, under reference to the passage from the judgment of Pritchard J to which I have referred, explained that the definition of fault in section 4 of the Act, i.e. that part of the Act applying to England, "comprises two limbs". He said this:

"The first limb, which is referable to the defendant's conduct, comprises various acts or omissions which give rise to a liability in tort. The second limb, which is referable to the plaintiff's conduct, deals with acts or omissions which would, but for the Act, have given rise to the defence of contributory negligence. The first is directed to the basis of the defendant's liability, while the second is concerned with his defence on the ground that the damage was the result partly of the plaintiff's own negligence."

That analysis was repeated by Lord Hoffman in Standard Chartered Bank v Pakistan Shipping Corporation [2003] 1 AC 959 at para.11:

"In my opinion, the definition of 'fault' is divided into two limbs, one of which is applicable to defendants and the other to plaintiffs. In the case of a defendant, fault means 'negligence, breach of statutory duty or other act or omission' which gives rise to a liability in tort. In the case of a plaintiff, it means 'negligence, breach of statutory duty or other act or omission' which gives rise (at common law) to a defence of contributory negligence."

The structure of section 5 is identical, though, as I have pointed out in para.[14] above, a few of the important words are different. Adapting Lord Hoffman's words, under the 1945 Act as applied to Scotland:

(a) In the case of a defender, fault means "wrongful act, breach of statutory duty or negligent act or omission" which gives rise to a liability in damages; and

(b) In the case of a pursuer, it means "wrongful act, breach of statutory duty or negligent act or omission" which gives rise (at common law) to a defence of contributory negligence.

Let it be assumed that the defenders' breach of contract in this case could properly be described as a "wrongful act" giving rise to a "liability in damages" within the first limb. One then has to look to the act of the pursuer and ask whether it is a "wrongful act" which gives rise at common law to the defence of contributory negligence. The answer in a Category 1 case such as the present is clearly: No. Lord Hoffman puts it in this way in para.12 of Standard Chartered Bank v Pakistan Shipping Corpn:

"It follows that conduct by a plaintiff cannot be 'fault' within the meaning of the Act unless it gives rise to a defence of contributory negligence at common law. This appears to me in accordance with the purpose of the Act, which was to relieve plaintiffs whose actions would previously have failed and not to reduce the damages which previously would have been awarded against defendants."

That reasoning appears to me to apply with equal force in Scotland. The structure of the definition section is the same and the analysis must also be the same.

[19] The conduct of the pursuers in the present case cannot be "fault" within the meaning of the Act since it does not give rise to a defence of contributory negligence at common law. That is because their claim is in contract and does not rest upon a breach of a duty of care commensurate with that which would be owed at common law. Put shortly, the 1945 Act does not entitle to defenders to set up a case of contributory negligence as a defence in whole or in part to the pursuers' claim.

[20] Since hearing submissions in this case it has come to my notice that Lady Clark of Calton has recently held that contributory negligence is not available in response to a claim based upon a contractual indemnity: Scottish and Southern Electricity plc v Lerwick Engineering & Fabrication Limited (unreported 7 March 2008, [2008] CSOH 41) at paras.[25]-[26]. That appears to be entirely consistent with my decision in this case.

Conclusion

[21] For these reasons I am satisfied that there is no defence to any part of the action. I propose, therefore, to grant the motion for summary decree in the sum claimed of £55,893.00 plus interest. I have not been given a figure for interest. If parties can agree the appropriate figure, I will happily include it in the decree to be pronounced in terms of this Opinion. I shall defer signing a substantive interlocutor until the parties are able to agree the figure. I propose also, unless I hear and am persuaded by argument to the contrary, to order that the defenders pay the pursuers their expenses of the action. If any other incidental matter requires to be brought before the court, it would be helpful if they could be notified to my clerk as soon as possible. I shall appoint the cause to come out By Order to allow these matters to be addressed.