Scottish Court of Session Decisions

OUTER HOUSE, COURT OF SESSION [2012] CSOH 157
PD2948/10	OPINION OF LORD BRAILSFORD in the cause GORDON BAVAIRD AND OTHERS Pursuers; against SIR ROBERT McALPINE LTD AND OTHERS Defenders: ________________

Pursuers: Marshall, Solicitor Advocate; Thompsons

Defenders: McLean QC, Watson, Solicitor Advocate; Simpson & Marwick (Fourth Defenders)

5^th October 2012

[1] This personal injuries action called for discussion on the Procedure Roll as between the pursuers and the fourth defenders. The action was one in which the pursuers are the executors nominate of the late David Wilson Melville Bavaird ("the deceased") and his children and grandchildren all being persons having a right to claim damages in respect of the death of the deceased in terms of the Damages (Scotland) Act 1976. The deceased died on 25 March 2008. The cause of his death is averred as having been mesothelioma, a disease which it is averred was caused by his ingestion of asbestos particles during the course of his employment at various times between 1948 and 1974. His exposure to asbestos during these periods of employment is averred to have been as a result of the negligence and/or breach of statutory duty of his various employers during the said period. Four parties were convened as defenders to the action. The first, second and third defenders are averred to have been employers of the deceased at various times between 1948 and 1971. The fourth defenders are South Lanarkshire Council, a Local Authority constituted under the Local Government (Scotland) Act 1994 ("the 1994 Act"). The fourth defenders are averred by the pursuers to be the statutory successor to the property, rights and liabilities of East Kilbride Development Corporation ("EKDC") by virtue of the New Town (East Kilbride) (Transfer of Property, Rights and Liabilities) Order 1996 (SI 1996/465) ("the 1996 order"). The pursuers aver that those liabilities included what is said to be "the contingent liability to make reparation" to them by virtue of the negligent exposure to asbestos of the deceased during the course of his employment with EKDC which is averred to have been between 1971/2 and 1973/4. The issue of whether or not the fourth defenders have any liability for any negligence of the sort averred in this case on the part of EKDC was the subject matter of the procedure roll discussion.

[2] Before considering the relevant statutory framework it is necessary to draw attention to the pursuers' averments relative to the deceased's illness. These averments are found in article 5 of condescendence where it is said that the deceased developed breathlessness in October 2007. He attended his general practitioner and was referred to hospital. He underwent certain tests and mesothelioma, a terminal condition, was diagnosed in December 2007. As aforesaid he died of that condition on 25 March 2008.

[3] The relevant statutory context to the issue between the parties commences with the provisions relative to the creation of the fourth defenders. In terms of section 1 and Schedule 1 of the 1994 Act the fourth defenders came into existence on 1 April 1996. Turning to consider the position of EKDC, the New Towns (Scotland) Act 1968 ("the 1968 Act") in terms of section 1 thereof gave power, if it was expedient in the national interest, to designate any area of ground for the development of a new town by a corporation to be established under the Act. The procedure was implemented by the making of an order under the 1968 Act. Section 3 of the 1968 Act set forth the objects and general powers of development corporations created by order under the Act. Section 3(2) provides;

"Subject to section 4 of this Act, every such corporation shall, for the purpose of securing the laying out and development of the new town as aforesaid, have power -

(a) to acquire, hold, manage and dispose of land and other property;

(b) to carry out building and other operations;

(c) to provide water, electricity, gas, sewerage and other services;

(d) to carry on any business or undertaking in or for the purposes of the new town,

and generally to do anything necessary or expedient for the purposes of the new town or for purposes incidental thereto."

[4] Sub-section (4) Provides;

"For the avoidance of doubt it is hereby declared that subsection (2) above relates only to the capacity of a development corporation as a statutory corporation; and nothing in this section shall be construed as authorising the disregard by a development corporation of any enactment or rule of law."

In the debate before me it was agreed by both parties that EKDC had been constituted under appropriate procedure under the 1968 Act. My understanding of the submissions of both parties was, further, that it was accepted that a development corporation, such as EKDC, was not a local authority and was properly to be regarded as a single purpose authority acting to augment the operation of the relevant local authority.

[5] It was also accepted by both parties to the debate that EKDC had been wound up and dissolved. The provisions for winding up and dissolution of development corporations are to be found in sections 36 (winding up) and 36G (dissolution) of the 1968 Act. For present purposes it is unnecessary to go further than to state that the process is in two stages first, a winding up of the development corporation which may incude the transfer of property, rights and liabilities, and second, a formal dissolution. The provision for transfer orders is set forth in section 36D as follows:

"(1) At any time after a winding up order has been made the Secretary of State may by order (a "transfer order"), made by statutory instrument and subject to annulment in pursuance of a resolution by either House of Parliament, provide for the transfer of any property, rights and liabilities of a development corporation to any person, including (without prejudice to this generality) Scottish Enterprise, . . . . . a local authority or a statutory undertaker.

(2) A transfer order may

(a) transfer the property, rights and liabilities on such terms (which may include transfer either with or without consideration) as the Secretary of State may provide in the order,

(b) include provisions amending any enactment relating to Scottish Enterprise, . . . . . . a local authority or a statutory undertaker for the purpose, or in consequence, of any transfer made to any such body by virtue of subsection (1) above, and

(c) contain any such incidental, consequential, supplementary or ancillary provisions as the Secretary of State thinks necessary or expedient for the purposes of the order.

(3) Any property, right or liability transferred to any person by a transfer order shall vest in that person on such date as may be specified in the order."

[6] In the case of EKDC the process commenced with The New Town (East Kilbride) Winding Up Order 1992 (SI 1992/355) ("the 1992 order"). Paragraph 3 of the 1992 order provided that the development corporation should be wound up, the winding up to commence on 1 March 1992 and be completed by 31 December 1995. In the course of the winding up two transfer orders were made under the provisions of section 36D of the 1968 Act. First, The New Town (East Kilbride) (Transfer of Property, Rights and Liabilities) Order 1995 (SI 1995/3068) ("the 1995 order"). Paragraph 2 of the 1995 order provides;

"(1) Subject to the provisions of this Order -

(a) the heritable property specified in the Schedule to this Order, insofar as owned by the development corporation immediately before the day on which this Order comes into force; and

(b) the development corporation's interest immediately before the day on which this Order comes into force in the standard securities, minutes of agreement, policies of assurance and other contracts and agreements specified in the Schedule to this Order,

shall, together with the development corporation's rights, liabilities and obligations pertaining thereto, transfer to and vest in the council at the beginning of the day on which this Order comes into force.

(2) For the purposes of paragraph (1) above, a reference to any liability or obligation specified in, or of a description specified in, or relating to any property or matter specified in, any part of the Schedule to this Order shall be deemed to include any liability or obligation of the development corporation subsisting immediately before the date on which this Order comes into force whether or not any relevant claim (within the meaning of section 9 of the Prescription and Limitation (Scotland) Act 1973) has been made in relation to the liability or obligation at any time before that date."

[7] The second transfer order was the 1996 order which provided in terms of paragraph 2 that "Any property, rights or liabilities of the development corporation shall transfer to and vest in the council on 1^st April 1996". In terms of paragraph 1 of the said order "the council" referred to meant South Lanarkshire Council, the fourth defenders in this action.

[8] In terms of paragraph 2 of The New Town (East Kilbride) Dissolution Order 1996 (SI 1996/1066) EKDC was dissolved on 5 April 1996.

[9] Against the foregoing statutory framework the fourth defenders' position was that at the date of EKDC's dissolution there was no liability so far as that body was concerned relative to the deceased which was capable of being transferred to the fourth defenders. As no liability existed at the time EKDC was dissolved it followed that any liability which was created subsequent to dissolution, such as, for example, could arise on the deceased's development of mesothelioma in 2008 could not rest with the fourth defenders. The liability which the pursuers sought to vindicate in the present action was delictual. "The obligation to make reparation for such loss, injury and damage is a single and indivisible obligation ... The right to raise such an action accrues when injuria concurs with damnum." (Dunlop v McGowans 1980 SC (HL) 73 per Lord Keith at 81). The fourth defenders' submitted that even in the pursuers' pleadings it was accepted that there was no liability extant at the date of dissolution of EKDC in respect of the pursuers' current claim, the averments contending for no more than a "contingent liability" to make reparation being transferred to the fourth defenders by virtue of operation of the 1996 order. That provision transferred the "liabilities" of EKDC to the fourth defenders. The statutory provision relied upon by the pursuers made no provision for the transfer of a contingent liability. In any event a contingent liability was one which depended upon the existence of some form of obligation (Liquidator of the Ben Line Steamers Ltd, Noter 2011 SLT 535, per Lord Drummond Young at para 25). Having regard to the nature of delictual liability no such obligation could be said to exist in relation to the present claim as at the date of dissolution of EKDC in 1996 (in re T & N Ltd and Others [2006] 1 WLR 1728 per David Richards J at paras 15 and 142).

[10] The fourth defenders recognised that the question of liability of employers who had negligently exposed their employees to asbestos dust, where employees subsequently developed asymptomatic pleural plaques and were at risk of developing asbestos related disease, had been considered by the House of Lords in Rothwell v Chemical & Insulating Co Ltd and anr [2008] 1 AC 281. That decision was clearly not in point so far as the question for determination in the present case was concerned but, it was submitted, gave authoritative guidance as to the correct approach to the existence of liability in actions for negligence for asbestos related disease. In that regard reliance was placed on the analysis of Lord Rodger of Earlsferry at paragraphs 87-91;

"87. In summary, three elements must combine before there is a cause of action for damages for personal injuries caused by a defendant's negligence or breach of statutory duty. There must be (1) a negligent act or breach of statutory duty by the defendant, which (2) causes an injury to the claimant's body and (3) the claimant must suffer material damage as a result.

88. In these cases the claimants do not suggest that the presence of the asbestos fibres in their lungs constitutes an injury. Rather, they argue that the plaques constitute an injury - the plaques are 'a physical change' in their bodies, as envisaged by Lord Pearce in Cartledge [1963] AC 758, 779. Taken by themselves, however, the plaques are benign and asymptomatic. So, even assuming that the plaques could constitute a relevant 'injury' to the claimants' bodies, they do not cause them any material damage and so do not give rise to a cause of action. There is a small risk that, if the number of plaques increases, they may then cause the claimants some discomfort. But the mere existence of that risk does not give rise to a present claim for damages: Gregg v Scott [2005] 2 AC 176. 'The mere possibility of damnum will not found a claim to reparation': Brown v North British Steel Foundry Ltd 1968 SC 51, 68 per Lord Guthrie. If the risk were to eventuate, then at that stage the claimant concerned would have a claim for damages for the effects of the condition that he developed.

89. Under reference to Gregg v Scott, counsel for the claimants accepted that, by itself, the present risk that they might eventually develop asbestosis or mesothelioma does not give rise to a claim for damages. He also accepted, on the authority of Hicks v Chief Constable of South Yorkshire [1992] 2 All ER 65, 69d-f, that even extreme anxiety amounting to fear of impending death is not itself actionable. By itself, therefore, the anxiety felt by the claimants about the risks of developing a serious disease in the future is not actionable. But he argued that, if you aggregated the three elements of the non-actionable pleural plaques, the non-actionable risk of developing diseases and the non-actionable anxiety, you produced an actionable claim. The logical difficulties of such an approach are self-evident and, in my view, insurmountable.

90. Of course, if the plaques were an actionable injury, the risk that they might eventually result in a harmful condition would be an element in any claim. So, too, would the related anxiety. But the starting point for the claimants' alternative argument is that the plaques are not an actionable injury. In other words, the law treats them as a condition that is not serious enough to require its intervention. Very understandably, the claimants may be anxious about the plaques, just as they may be anxious about all sorts of other problems and potential problems in their lives. Such anxiety is a normal human emotion. But, if the plaques themselves are not a condition for which the law will intervene to give damages, it would make no sense for it to give damages for anxiety associated with the plaques.

91. There is a further, even more important, objection to the argument. The claimants' anxiety is not actually about any risk to their health caused by the plaques themselves. Rather, they are worried that at some time in the future they may develop asbestosis or mesothelioma as a result of the accumulation of fibres in their lungs. The plaques alert the claimants to a heightened risk of that happening, but they would not be a cause of the illness if it did develop. So, on the alternative approach, the claimants are seeking to make the plaques actionable by adding in a risk that they may develop a disease that would not be caused by the plaques but by the accumulation of fibres in their lungs. Putting the point another way, a claimant with plaques would have a claim for damages for the risk that he would develop asbestosis or mesothelioma, when a claimant without plaques, but with exactly the same risk of developing those diseases, would have no claim. The plaques would be nothing more than a 'hook' on which to hang a claim for damages for something which they did not cause. My noble and learned friend, Lord Hoffmann, rejected that approach in Gregg v Scott [2005] 2 AC 176, 288-289, paras 86-90, and, for the reasons he gave, I would reject it in this case too."

On this reasoning there could be no liability owed by EKDC to the deceased as at the date of that body's dissolution.

[11] In response to these submissions the pursuers submitted that determination of the issue under discussion depended on the answer to two questions; viz (1) Did EKDC owe the deceased any obligation immediately prior to the transfer of property rights and liabilities on 1 April 1996 and, if so, what was the character of such obligation? (2) Did the legislation transferring property rights and obligations effectively transfer any obligation which existed? In answering the first of those questions the pursuers submitted that a liability can exist without a cause of action in a delictual case. In support of this proposition reference was made to in re T & N Ltd and others (supra) and in particular to passages in the opinion of David Richards J at paragraphs 51 and 60. Adopting this approach it was submitted that the correct categorisation of the liability extant immediately prior to the transfer of liabilities was as a contingent liability and further submitted that support for this position could be derived from the opinion of Lord Drummond Young in Liquidator of Ben Line Steamers Ltd, Noter (supra) at paragraph 21.

[12] In seeking to answer the argument advanced on behalf of the fourth defenders in Rothwell (supra) it was submitted that the correct analysis was to be found in the speech of Lord Scott of Foscote at paragraph 64.

[13] In determination of the issue between the parties to the debate I am of the view that the questions posed by the pursuers and narrated in paragraph 11 above are the correct focus, the answers to these questions resolving the issue. Whilst it was necessary to have regard to the statutory and regulatory framework under which EKDC was created and subsequently wound up and dissolved in order to give the argument the necessary context, in the end of the day the only regulation of direct applicability was, as averred by the pursuers, regulation 2 of the 1996 order. As already noted that provided for the transfer of "[A]ny ... liabilities ..." to the fourth pursuers. That language is, in my view, entirely general and habile to cover the whole extent of EKDC's liabilities as at the date of the order coming into force. Such a construction would be consistent with a regulatory purpose of providing for any extant liability still outstanding at a date shortly prior to dissolution of EKDC and, in that context, would equally be consistent as a measure following on from and in supplement to the more specific transfer of property rights and liabilities contained in the 1995 order. If my construction of these regulatory provisions is correct then the answer to the question before me for resolution depends on the interpretation to be placed on the word "liabilities" in regulation 2 of the 1996 regulations.

[14] As a matter of ordinary English usage liability means being bound or obliged to do something in accordance with a rule.
[1] As at the date of dissolution in 1996 EKDC could not, on that construction of the word "liability", be said to be bound or obliged to make reparation to the deceased. A liability in that sense could only arise, as was, in my view, correctly submitted by the fourth defenders on the concursus of injuria and damnum which did not occur in the present case until, at earliest, October 2007 (Dunlop (supra); Rothwell (supra)). The pursuers appear to have anticipated this problem by expressly averring that the liability owed to them was of a contingent nature. The attraction of this characterisation is that the language of regulation 2 of the 1996 order would be sufficiently wide to encompass such a liability. The problem is however whether, in the context of the facts of the present case, any liability of a contingent nature can properly be said to have existed in 1996 when EKDC was dissolved.

[15] The nature of a contingent debt has recently been fully and comprehensively considered by Lord Drummond Young in Liquidator of Ben Line Steamers Limited, Noter (supra). The issue in that case was the meaning of contingent debt in an insolvency. Lord Drummond Young's discussion of the nature of contingent obligations was however of more general import and covered the possibility of contingent obligations in delictual liability. At paragraph 25 Lord Drummond Young defines a contingent obligation as follows;

"A contingent obligation must be distinguished from two other concepts. First, as the passage cited from Erskine makes clear, it must be distinguished from, a 'pure' obligation, one that is presently subsisting and enforceable, and from a future obligation, one that will definitely be enforceable at a future date. The distinction from a pure obligation is invariably clear, and in most cases the same will be true of the distinction from a future obligation; in particular, an obligation that is payable on someone's death or on an identified future date will be future and not contingent. In individual cases, however, the distinction between a future and a contingent obligation may be less clear; an example is an obligation at a future date to pay a fixed sum plus a share of profits, which is an obligation that is in part future and in part contingent. Nevertheless, conceptually the distinction is clear, and this is not affected by the existence of borderline cases. Secondly, a contingent obligation must be distinguished from a mere spes obligationis, or the hope or expectancy of an obligation yet to emerge. This is explained by Lord Reid in Re Sutherland as follows (at 247-248):

'[I]f I see a watch in a shop window and think of buying it, I am not under a contingent liability to pay the price: similarly, if an Act says I must pay tax if I trade and make a profit, I am not before I begin trading under a contingent liability to pay tax in the event of my starting trading. In neither case have I committed myself to anything. But if I agree by contract to accept allowances on the footing that I will pay a sum if I later sell something above a certain price I have committed myself and I come under a contingent liability to pay in that event.'

The critical point is that some sort of obligation, normally either contractual or statutory, is required before there can be said to be a contingent obligation"

[16] As Lord Drummond Young makes clear, the critical requirement for the existence of a contingent obligation is the requirement for some form of obligation. In my opinion it is clear, following the reasoning of Lord Keith in Dunlop v McGowans (supra) and Lord Rodger in Rothwell v Chemical & Insulating Co Ltd and anr (supra) that at the date of dissolution of EKDC in 1996 there was no obligation owed by that body to the deceased. There plainly existed a risk that the deceased would develop a condition that would give rise to an actionable right but at the critical date there existed "a mere possibility of damnum". It follows that, in my opinion, there was in 1996 no obligation capable of being transferred from EKDC to any successor authority.

[17] I am accordingly of the view that no contingent liability existed as at 1996 which was capable of being transferred by the 1996 order. I am therefore satisfied that the argument advanced by the fourth defenders is well founded and will dismiss the action in so far as against them.