Scottish Court of Session Decisions

OUTER HOUSE, COURT OF SESSION [2013] CSOH 113

A791/10

OPINION OF LADY WISE in the cause RONALD HENDERSON t/a HENDERSON GROUP DEVELOPMENT Pursuer; against JAMES ROBERT EDWARDS WOTHERSPOON; JONATHAN LAWRENCE EDWARDS WOTHERSPOON; and BARBARA ANN CHEETHAM, all having a place of business at 5 Drummond Street, Inverness, IV1 1QF, the whole surviving partners in the now dissolved firm of MacANDREW & JENKINS, Solicitors, formerly having a place of business at 5 Drummond Street, Inverness, as such partners and as individuals Defenders: ________________

Pursuer: Mr MacColl; Anderson Strathern LLP

Defender: Haldane QC; Paterson; Simpson & Marwick

9 July 2013

Introduction

[1] In this action the pursuer, a businessman trading under the name "Henderson Group Development", seeks to recover damages from the defenders, the surviving partners of a now dissolved firm of solicitors. The defenders wish to insist in their first plea in law to the extent that they claim that certain of the pursuer's averments of loss should not be admitted to probation on the basis that they do not disclose a prima facie relevant type of loss. Separatim, the defenders seek to have certain of the pursuers averments excluded from proof as lacking in specification. The case came before me for discussion on the procedure roll.

Pleadings

[2] The pursuer avers that in about 1990 he acquired a development site at Station Road, Rothes. In 1995 he sought and obtained planning permission to build 22 flats on that development site. He avers that he intended to develop the site in two phases. Phase 1 was to comprise the construction of 12 flats with garden ground and car parking spaces. Once Phase 1 had been completed and the flats sold, the pursuer intended to complete the development of Phase 2 or to sell on that ground for development. In about March 1997, the pursuer instructed the firm, of which the defenders were then part, to act as his solicitors in relation to the development. In particular, he instructed Mr Wotherspoon to prepare a deed of conditions that would be appropriate for and facilitate the planned two phases of development to take place. It is averred that the pursuer explained to Mr Wotherspoon the nature of the development of the subjects he was contemplating and in particular its two phase nature. It is averred further that the firm of solicitors concerned were in any event aware of the nature of the pursuer's business and, in particular, that it included property development and the leasing of commercial premises to third parties. The solicitors were duly instructed to prepare the necessary deed of conditions. That was done in terms of a contract for professional services. The complaint of the pursuer in these proceedings is that the solicitors concerned failed to implement the specific instructions that he had given in relation to the title that each purchaser would have under the deed of conditions. In short, he avers that he instructed that each purchaser would have exclusive ownership of their own flat and a parking space together with shared ownership of the garden ground around their flats, and shared ownership, use and responsibility for the maintenance costs of certain common areas. One of the clauses of the deed of conditions, drafted by the first defender, states in terms that each proprietor of a flat in the development will have an equal pro indiviso right of property in common with all the other proprietors to the "whole area". The term "whole area" is then defined in the deed of conditions as "the whole of the said area of ground including all plots and public open areas thereon". Accordingly, the effect of the deed drafted by the defenders was to give each of the proprietors in the development a pro indiviso share in all 12 flats in Phase 1, in the main car park area, the parking spaces and the Phase 2 development land. It is averred that this was contrary to the pursuer's express instructions and resulted in an unmarketable title.

[3] The pursuer then avers that in about 2007, he decided to market the Phase 2 development land for sale. He received an offer of £250,000 for that phase from a company. As part of the negotiating process in connection with the proposed sale, the deed of conditions and other title deeds were examined on behalf of the proposed purchasers. In the course of that examination, it was discovered that the deed of conditions was defective in a number of respects, including that none of the 12 flats already conveyed had exclusive title to the property they had purchased, but had a pro indiviso share in each of the 12 flats. As a result, the pursuer claims breaches of contractual duties on the part of the defenders and also liability in delict.

[4] The averments of loss are contained in article eight of condescendence. These can be divided into three categories. First, there are averments about the cost of remedying the defects in the deed of conditions as part of a "remedial convayancing process". No issue arises in relation to the relevancy of those averments. Secondly, the pursuer avers that but for the breach of contract and fault of the defenders, he would have sold the Phase 2 development land in 2007 to the company who had offered a price of £250,000. He avers that the value of the land, after remedy of the defects, has a market value at the current time of about £100,000, thus the capital value is about £150,000 less than would have been achieved but for that breach of contract and fault. Again, no issue is taken with the relevancy of those averments. Thirdly, the pursuer makes detailed averments about the use to which he would have put £162,500 of the sale proceeds that would have been generated had the sale in 2007 gone ahead. In summary, it is said that he would have used £162,500 to facilitate the lease of certain commercial subjects in Nairn. Details of the annual rent and the proposed period of the lease are given. The rent that the pursuer claims he would have achieved on the Nairn property, had he been able to make the investment, is quantified. Further, he avers that he would have insisted on the right he had to have the commercial premises transferred to him by a partnership in which he was a partner for a sum £600,000 lower than their capital value. It is this third type of losses that the defenders challenge as irrelevant.

Submissions for the defenders

[5] Senior counsel for the defenders summarised the case law identifying what she argued was the correct approach to testing whether the controversial averments of loss on behalf of the pursuer fell within the scope of what is recoverable on a breach of contract. In particular, she relied on the well-known dicta from Hadley v Baxendale [1854] 9 Ex 341 as the long standing authority for the proposition that to be recoverable the consequences relied on must have been in the contemplation of the parties or arising normally in the course of things. In Koufos v C. Czarnikow Ltd, The Heron II [1969] 1 AC 350, it was made clear that the court did not intend that every type of damage which was reasonably foreseeable by the parties when the contract was made should either be considered as arising naturally, or be supposed to have been in the contemplation of the parties - per Lord Reid at p385. Considerable emphasis was placed on the case of Transfield Shipping Inc v Mercator Shipping Inc [2009] 1 AC 61. This leading modern authority clarified that the test for recoverability was the presumed intention of the parties at the time the contract was entered into and the court must determine objectively what was in their minds. It was clear from the speech of Lord Hoffmann (in particular paragraphs 11 - 15 and 21 - 22) that a party may not be liable for foreseeable losses if they are not of the type or kind for which he could be treated as having assumed responsibility. Ms Haldane argued that it was important to distinguish between different types of loss that flowed from the same breach. It was not enough in this case for the pursuer to aver that the defenders knew he was a man of business. All that flowed from that was that the defenders would, had they addressed their minds to it, have accepted liability for any remedial conveyancing work and for the drop in value of premises with a title defect.

[6] From the case law, senior counsel made the following propositions in relation to losses arising from breach of contract: -

1. The rule in Hadley v Baxendale in relation to the measure of damages still holds good and foreseeability is the starting point.
2. The modern law has recognised that while Hadley v Baxendale can provide an answer in most cases, it may not provide the requisite degree of certainty in every case.
3. A broader principle may have to be applied, as explored in the Transfield case. The key question is what obligation to make compensation for breach of contract would a reasonable observer understand the contracting party to have undertaken.
4. The broader approach, applicable to ships and charters in the Transfield case, is equally applicable to the relationship of solicitor and client. This relieves the court of the obligation to determine all questions by slavish adherence to probability. Modern commercial relationships must be taken into account. In any event on either the traditional or the modern approach, the result would be the same.

Counsel attributed the source for most of her propositions to an article by Lord Hoffmann, "The Achilleas: Custom and Practice of Foreseeability?" 2010 Edinburgh Law Review (Vol 14) 47.

[7] Turning to delictual liability, senior counsel contended that albeit the approach to delictual liability was different, the same result would ensue. Reference was made to the leading cases of Hughes v Lord Advocate [1963] SC (HL) 31, at page 44 - 45 and South Australia Asset Management Corporation v York Montague Ltd and Others [1997] AC 191 (per Lord Hoffmann at p212 - 214). The dicta of Lord Reed in Newcastle Building Society v Paterson Robertson & Graham [2001] SC 734 was also referred to, where it was emphasised that the nature and content of the duty together with the circumstances giving rise to the duty would necessarily define the recoverable losses. Ms Haldane argued that the pursuer's case was based on a hypothetical situation, namely if he had had the money, he avers what he would have done with it. That was a type of loss that was too remote to be recovered. In any event, he had not in fact sustained that loss, he had simply averred what he would have done given the opportunity to invest the money. If the pursuer wanted a particular interest protected, he should have informed the defenders of that and brought the loss of that interest within the duty of care. The defenders' only duty was to prepare a deed of conditions, nothing more nothing less.

[8] Counsel gave other examples of the application of the principles being referred to. In particular, she relied on the case of Pilkington v Wood [1953] 1 CH 770, where it was clear that some knowledge was required on the part of the defendant about what the pursuer's intentions were before he would be liable for more remote losses. Reference was also made to Kuwait Airways Corporation v Iraqi Airways Co [2002] 2 AC 883 and Roe v Minister of Health and Another [1954] 2 QB 66. It was all a question of implying an intuitive "common sense" approach. The immediate response to the pursuer's pleadings in this case should be that the losses pled go beyond the scope of the defenders' duty. The pursuer appeared to be claiming for a loss of opportunity to invest sale proceeds in a certain way, but this was not relevant - see Galoo and Others v Bright Grahame Murray and Another [1994] 1 WLR 1360, per Glidewell LJ at 1369-1372.

[9] Ms Haldane argued that no proof was required in this case before addressing the issue of the relevancy of the third type of loss claimed by the pursuer. The extent of the duties between the parties were set out in the pleadings. It was easily possible to conclude that some of the losses claimed did not fall within the duties set out as a matter of common sense. The interest being protected had to be identified and it would delineate the nature of the duty and the extent of the relevant losses. The pursuer's "failed venture" averments were too remote, outwith the scope of the duty of care owed or not in contemplation as a contractual matter. That part of the claim was accordingly irrelevant and should not be admitted to probation.

[10] Dealing separately with the specification points, senior counsel pointed to particular averments in the amended closed record at page 20D to 21C. These claimed that the pursuer would have invested to facilitate a lease on a commercial property at Nairn and that such an opportunity was lost as a result of the defenders' breach of contract and fault. Taken at its highest, this was nothing more than a claim for lost opportunity. It was not a scientific calculation based on the rent that would have been received. It was not clear what the pursuer was claiming. The pursuer never entered into the transaction referred to. There were third parties involved who have nothing to do with the defenders, or wouldn't be known to the defenders. The averments on this aspect lacked specification of what loss had been incurred. A further attack was made on averments at page 21C-D, that the partnership known as "The Henderson Group" (in which the pursuer was a partner) had agreed that it would hold the commercial unit at Nairn on the basis that the pursuer would be entitled to call for its transfer to him in return for a debit being made against his partnership capital account in the sum of £250,000. It was submitted that more specification was required in relation to this matter. It was not clear how exactly the arrangement had been arrived at. It was not said when the pursuer would make a call for transfer and in what circumstances. It was unknown whether the partnership had funds for the transfer to be made. It was not clear to an objective reader of the pleadings what was being claimed. In the absence of further specification these averments were also irrelevant.

[11] Senior counsel for the defenders also made some comments on the total quantification of loss and whether it was adequately specified in the pleadings, although it was accepted that this did not form part of the intimated note of argument. To summarise the primary points argued, she referred also

to the case of Aneco Reinsurance Underwriting Ltd v Johnson & Higgins Ltd [2001] UKHL 51. In that case, where the failure in duty was in relation to the availability of reinsurance cover in the market, without which advice a transaction would not have gone ahead, it was emphasised that the claimant had to identify the relevant transaction as the defendant was not responsible for loss arising from any other transaction, only the one on which advice had been given - see pages 185, 193 and 195. In this case, if the pursuer wished to protect himself against a particular loss, he would have to have brought his intention to enter into the transaction in question to the attention of the defenders. The defenders in this case had no knowledge of what the pursuer would do with the money. Even if they had done, that did not make all losses recoverable.

Submissions for the pursuer

[12] Mr McColl invited me to refuse the defenders' motion and fix a proof before answer on the present pleadings. He submitted that an examination of the facts was required before deciding what losses fall within the scope of the defenders' breach of duty. It was clear from the case of Newcastle Building Society v Paterson Robertson & Graham [2001] SC734 paragraph 8, that an understanding of the circumstances giving rise to the duty was required which could not be achieved without an examination of the facts. Whether the losses were of the type within the reasonable contemplation of the defenders would depend on that examination. There were averments that the defenders were aware of the type of business that the pursuer carried out. It was averred also that they knew he was carrying out the development project in two phases. These were matters for enquiry that required examination before ascertaining the scope of the defenders' duties. Almost without exception, the authorities examined by senior counsel for the defenders related to arguments taking place after enquiry. It was more usual to hold an enquiry into the facts before reaching a decision on matters such as remoteness of damage.

[13] Counsel for the pursuer referred to the relevant parts of the record that in his submission illustrated that there was sufficient, after proof, to hold that all the losses claimed by the pursuer were relevant. In particular, he drew attention to the passages in article three of condescendence that offered to prove that the defenders had been put on notice about his plans for the development site in two phases. They had been asked to attend to the conveyancing to facilitate that development and they knew the nature of the pursuer's business. Where it was averred that the pursuer was a man of business and traded in property, the scope of the defenders' duties required to be understood in the context of them having acted within that context. It was also averred that Mr Wotherspoon had visited the subjects and was shown where the two phases were. There were also specific averments about what the pursuer had instructed he wanted so far as ownership of each flat was concerned. He had instructed specifically that full ownership of Phase 2 was to remain with him, but that the car park was to be shared between Phase 1 and Phase 2. It was noteworthy the defenders deny that the pursuer gave specific instructions in relation to these matters. Mr McColl confirmed that he did not regard it as material to point out the distinctions between the contractual and delictual duties. The pursuer's case on either basis was that the defenders should have put him in a position that he could take forward the Phase 2 land as he saw fit.

[14] Turning to the averments of loss, the attack was on averments about what the pursuer would have done with the sale proceeds of Phase 2. The pursuer offers to prove that the defenders would have known very well that the pursuer would have generated sale proceeds from Phase 2 and reinvested them. His inability to do so was a direct consequence of the defenders' breach of either their delictual or contractual duties. It was noteworthy that the pursuer specifically averred what the defenders knew or should reasonably have foreseen. In particular, it was specifically averred that the pursuer would have invested £162,500 on the sale of Phase 2 for the lease of certain commercial property to a named company for a specified rent. It was easy to calculate the net loss as being the rent the pursuer would have received (£342,000) less the sum invested (£162,500), namely £179,500. Further, it was clearly averred that because of the absence of the tenancy, the said commercial unit was worth £600,000 less than it would have been as the pursuer had the right to purchase it and would have done so, as soon as the lease with the named company had been agreed. Thus the basis for that additional £600,000 loss is clearly set out. At page 22 of the closed record as amended, it is averred in terms that all of the heads of loss, including the head under attack at procedure roll, were of a type that the defenders should have foreseen "had they turned their minds to the potential consequences of them acting in breach of contract and in breach of the delictual duties owed by them by the pursuer". In assessing the relevancy of the pursuer's averments of loss, his offer to prove that the loss specified was reasonably foreseeable was important. If the pursuer was offering to prove that reasonable foreseeability it could hardly be said without enquiry that the averments were irrelevant.

[15] Mr McColl made a number of observations about the applicable law. Under reference to Jamieson v Jamieson [1952] SC (HL) 44, he submitted that in order to succeed in having the challenged averments of loss deleted, the defenders would require to show that the pursuer would fail in his case on this type of loss even if all his averments were proved. It would be going too far, too fast, to reach such a conclusion in this case. Counsel referred also to the often cited authority of Victoria Laundry (Windsor) Ltd v Newman Industries Ltd [1949] 2 KB 528, arguing that it should be noted that in that case the recovery of loss of profit in general was permitted. The discussion was about some types of profit that were so unexpected that they couldn't be recovered. In any event, there had been an enquiry before answer in the Victoria Laundry case. In this case, the defenders could not properly argue that the pursuer's loss of profit case was out of the ordinary. It was noted that the only averment on record for the defenders in relation to loss was the usual one that the nature, extent and consequences of any loss and damage sustained by the pursuer was not known and not admitted.

[16] Counsel for the pursuer agreed that Hadley v Baxendale was still good law. Recoverability of damages that may "fairly and reasonably" be seen as arising naturally from the breach of contract or such as may have been in the reasonable contemplation of the parties, had they applied their minds to it, were recoverable. The averments made by the pursuer in this case were sufficient to bring the case within those limitations. While it was accepted that some "policy brakes" had been put on the more general test in Hadley v Baxendale, the issue in the present case was where the line should be drawn. So far as Scots Law was concerned, the issue of where the line should be drawn between recoverable and irrecoverable loss was firmly a jury question i.e. a question to be decided after inquiry. Authority for that proposition could be found in the case of A/B Karlshamns Oljefabriker v Monarch Steamship Co Ltd [1949] SC (HL) 1. In particular, Lord Wright at page 20 expressed the view that:

"the question whether damage is remote, or 'natural' and direct, can in general only be decided on a review of the circumstances of each special case. Remoteness of damage is in truth a question of fact..."

That general rule may have been what Lord Reed had in mind when he talked of the necessity for an examination of the facts in Newcastle Building Society v Paterson Robertson & Graham (at paragraph 8). It is not the precise loss that requires to be within the contemplation of the parties at the time of contracting, only the category of loss. Reference was made to Cosar Ltd v UPS Ltd [1999] SLT 259, which also dealt with a hypothesis in that the defenders had allegedly failed to deliver a tender which, had it been delivered, would have been accepted. The case involved a procedure roll discussion on whether the pursuers had made sufficient averments for enquiry on, inter alia, particular heads of damage argued by the defenders to be excluded by remoteness. Lord Hamilton, then a Lord Ordinary, referred to the Monarch Steamship case and agreed that the question of whether a head of damage was excluded by the factor of remoteness would normally involve consideration of issues of fact and be decided by a jury or in modern times by a judge - page 264 C - D. Lord Hamilton also expressed doubts in Cosar about that part of the pursuer's claim for loss of the profits which, had their tender been successful, they would have earned by the performance of a service contract. However, despite expressing such doubts, he decided that such a claim could not be dismissed without enquiry. It was, in his view, undesirable to decide issues such as remoteness of damage in contract which could be regarded as a policy restraint, without first ascertaining the whole facts.

[17] Mr McColl made clear that he took no particular issue with the defenders' suggestion that the law in relation to remoteness of damage had progressed from Hadley v Baxendale through various decisions and culminating in the Transfield Shipping case. However, he reiterated that all of the relevant cases had been determined following enquiry and that it would be a departure from common sense to decide where to draw the policy line without hearing evidence, particularly in a case like the present where the pursuer averred matters of the defenders' knowledge. So far as the position in delict was concerned, there was no real distinction in the test to be applied. However, again it should be noted that in the leading case of Hughes v Lord Advocate there had been a proof before answer of the legal issue and in Newcastle Building Society v Paterson Robertson & Graham, Lord Reed had allowed a proof before answer in respect of the delictual case. In the present case there was sufficient on record to allow the pursuer to prove that he couldn't sell and reinvest the proceeds as a result of the defenders' negligence and that the defenders knew that selling and reinvesting was the type of business the pursuer was involved in. Thus the loss was entirely related to the negligent act and not to some other supervening event such as money received and stolen or a building that had been destroyed. It could not be said that the pursuer's case on the type of loss that related to investment of the proceeds of sale of the transaction that could not proceed because of the defenders' breach of contract and negligence were irrelevant and they should proceed together with the other averments to a proof before answer.

[18] So far as the specification issues were concerned, counsel disputed that the pursuer's claim could in any sense be characterised as a loss of a chance. The averments required to be taken in context. It was clear that what the pursuer offers to prove is what would have happened had the defenders not breached their contract or been negligent. He would have sold the phase two land, invested the proceeds and secured the lease. The sums he had lost as a result of being unable to do so, were clearly averred. Secondly, so far as the issue of the transfer of the pursuer's right to have transferred to him the commercial unit for a debit on his partnership account of £250,000 was concerned, this was also clearly specified. The defenders argued that there was no specification in relation to a date or a mechanism for this. On the issue of the date, it is clearly averred that he would have insisted on the transfer as soon as the lease was agreed. On mechanism, the pursuer offers to prove first, that there was an obligation to transfer the property to him and secondly, that on his insistence that obligation would have been complied with. This was not a claim based on the obligation and there was no prejudice to the defenders through the lack of further details about how the transaction would have been effected. In any event, the onus was on the pursuer to prove those averments at enquiry. While there had been no notice of any issue being taken with the arithmetic of the damages claimed, the sums were simple. The total sum claimed before remedial conveyancing costs was £929,500, comprising £342,000 (loss of rent) plus £600,000 (a loss in capital value of the commercial unit) plus £250,000 (loss of the sale price of Phase 2) less £162,500 (proposed investment in the commercial unit) and £100,000 (residual value of phase two). When the conveyancing remedial costs were added, these sums sued for in the first conclusion was achieved.

Reply for the defenders

[19] In her reply, senior counsel for the defenders referred again to the Transfield case where Lord Hoffmann had expressed the view (paragraph 25) that while the question of whether damage was foreseeable was a question of fact, the question of whether a given type of loss was one for which a party assumed contractual responsibility involved the interpretation of the contract as a whole against its commercial background and was accordingly a question of law. It should also be noted that the South Australian Asset Management Corporation case was omitted from the list of authorities that had been put before Lord Hamilton in the Cosar case. Whether that would have altered the then Lord Ordinary's view was unknown. So far as the pursuer's pleadings were concerned, the pursuer's averments in relation to the scope of the defenders' duty were fairly restricted. The real question was whether the defenders could reasonably have predicted any of what the pursuer now claims were consequences of their breach of contract or fault. There was ample authority that there must be actual or imputed knowledge on the part of the defenders in relation to the type of loss claimed. The cases of Aneco, Pilkington v Wood, Galoo and Transfield were again relied on.

Discussion

[20] The correct approach to the arguments presented on behalf of the defenders that the third type of losses claimed by the pursuer in this case, namely those arising from what he would have done with the sale proceeds of the property that he was unable to sell due to the defective title, is irrecoverable, is clearly settled. It is that I may delete such averments without proof only if I am satisfied that the pursuer would necessarily fail in this aspect of the claim even if he established all of those averments - Jamieson v Jamieson [1952] SC (HL) 44. The issue between the parties is whether the third type of loss can be said at this stage to be irrelevant, i.e. without the need for inquiry. What requires to be determined is whether the alleged losses arising from the inability to reinvest sale proceeds go beyond the scope of the duties of the defenders and the extent of any losses consequent upon any failure in that duty. In Transfield Shipping Inc v Mercator Shipping Inc [2009] 1 AC 61, Lord Hoffmann reviewed the previous authorities in relation to recoverable losses following breach of contract. He noted that a party may not be liable for foreseeable losses if they were not of the type or kind for which he could be treated as having assumed responsibility (paragraph 21). In determining whether a type of loss was one for which a party could be treated as having assumed responsibility, one looks to see what would reasonably have been regarded by the contracting party as significant for the purposes of the risk he was undertaking (paragraph 22). It is clear from the speech of Lord Hoffmann in Transfield that there will be scope scope for discussion in many cases about whether a particular type or kind of loss, even if foreseeable, should be excluded as being outwith those which the contracting parties intended should fall within the scope of the contractual duties. Lord Hoffmann also expressed the view in Transfield that, while the question of whether a type of loss was foreseeable was a question of fact, the issue of whether a given type of loss was one for which a party assumed contractual liability involving, as it does, the interpretation of a contract as a whole against its contractual background was, like all questions of interpretation, a question of law (paragraph 25).

[21] For practical purposes in this case there is little difference in the approach to be taken so far as the recoverability of damages is concerned, whether these arise in contract or in delict. In Newcastle Building Society v Paterson Robertson & Graham [2001] SC734, Lord Reed expressed the following views ( at paragraph 8) :-

"The starting point of any discussion of damages must be the precise nature of the duty broken. Damages (whether in contract or in delict) are intended to place the pursuer in the position he would have been if the duty had not been broken; and the basic measure of damages is therefore a comparison between what the pursuer's position would have been if the defender had fulfilled his duty, and the pursuer's actual position. The nature of the duty is therefore of central importance. In relation to a duty of care, for example, one cannot do better than adopt the words of Brennan J in the High Court of Australia in Sutherland Shire Council v Heyman at p 48: 'It has to be borne in mind that the duty of care is inseparable from the damage which the plaintiff claims to have suffered from its breach. It is not a duty to take care in the abstract but a duty to avoid causing to the particular plaintiff damage of the particular kind which he has in fact sustained.' Thus the scope of the duty may limit the kinds or categories of damage for which liability will arise, or (as in Banque Bruxelles Lambert) the quantification of damage. In the present case, however, the nature of the alleged duties, and the circumstances giving rise to them, featured very little in the discussion before me: I was simply told that 'default is not in issue' and that 'the only issue is damages'. For the reasons I have explained, however, the assertion - and even the agreement - that there has been a breach of duty does not take one very far, without there being also specification of the content of the duty, and an understanding of the circumstances giving rise to the duty. This cannot be achieved without an examination of the facts. Very little is however said about the facts in these pleadings; but that aspect of the pleadings was not criticised."

It is clear from that dicta that the circumstances in which a duty arose between, as in this case, solicitor and client, require to be scrutinised to see whether the defenders could have had a duty to avoid causing the particular loss sustained by the pursuer. The examination of the facts referred to by Lord Reed starts of course with scrutiny of the pleadings. As already indicated, in order to sustain the defenders' plea in relation to the third type of loss averred, I would require to be satisfied that, even if all the pursuer's averments were proved, this type of loss fell outwith the scope of the defenders' duty in contract and in delict. However, as Mr McColl pointed out, the starting point is that the pursuer offers to prove that this third type of loss was reasonably foreseeable. He avers also that the context in which he claims to have given very clear instructions in relation to the development was one in which the defenders were aware of the type of business he was engaged in and, in particular, that he was involved in property development and the leasing of commercial premises to third parties. It is also clear from the averments, if proved, that the drafting of the deed of conditions was part of a two phase project with the pursuer retaining title to Phase 2 for the purposes of the business that the defenders knew he was involved in. Taking those averments together, I do not consider that it can be said at this stage that the third type of loss is definitely not of a kind or type for which the defenders ought fairly to be taken to have accepted responsibility, using the characterisation adopted by Lord Hoffman in the Transfield Shipping Inc case. As was seen in the case of Victoria Laundry (Windsor) Ltd v Newman Industries Ltd [1949] 2 KB 528, there can be different types of loss of profits. Some types of loss may ultimately be irrecoverable if beyond the scope of the type of losses that it would be reasonable to attribute acceptance of liability to the defenders. In my view, it would be premature to carry out that exercise now when it can best be carried out after enquiry. I respectfully agree with the following expression of the approach to be taken by Lord Hamilton in Cosar Ltd v UPS Ltd [1999] SLT 259 at 264 :-

"...in seeking to exclude at debate a head of damage for breach of contract as being too remote, a defender requires to satisfy the court that, even were the pursuer to prove all the facts within the scope of his averments and the judge of fact were to apply the guidance derived from Hadley v Baxendale and subsequent authorities as liberally in favour as the pursuer as such authorities might legitimately allow, the pursuer's claim would be bound to be rejected."

[22] In this case, the context in which the pursuer gave what he claims were very specific instructions to the defenders, requires to be explored. There is, in my view, a sufficient basis on record for that to be done at proof before answer of the legal issue. The pursuer's detailed averments in relation to the nature and extent of his instructions are met with a denial by the defenders. So far as the detailed averments of loss are concerned, against a background of the defenders being aware of the type of business the pursuer was involved in, I cannot say at this stage that would not have been within their reasonable contemplation that the pursuer would have reinvested the sale proceeds of the Phase 2 development land in the way he sets out. The defenders accept that the second type of loss claimed, namely the diminution in the capital value of the Phase 2 development land as a result of the proposed sale in 2007 falling through, is a relevant claim. It seems to me that the investment of the money from that proposed sale would in general terms be in the contemplation of the defenders, given the knowledge they had about the pursuer's business. Whether or not all of the losses arising from the pursuer's inability to sell and reinvest the money are losses that the defenders should have foreseen and must be treated as having assumed responsibility for will depend on how the facts emerge at proof. The extent to which the defenders should have known about the business activities of the pursuer will depend on the circumstances proved. The court cannot have an understanding of those circumstances without enquiry by way of proof before answer.

[23] In Cosar Ltd v UPS Ltd, Lord Hamilton, in sending a slightly doubtful claim for loss of profits and fees for proof before answer, noted that none of the cases cited to him in argument had been decided without enquiry into the facts. Those cases included, for example Victoria Laundry (Windsor) Ltd v Newman Industries Ltd. In the present case, with one exception (Galoo Ltd and Others v Bright Grahame Murray and Another) all of the authorities cited by the defenders, including Transfield Shipping Inc v Mercator Shipping Inc, the Achilleas, on which great reliance was placed, were decided only after enquiry into the facts. In my view, none of the views expressed in those decisions alters the general rule that issues of the law of remoteness of damage in a particular case can best be applied after enquiry into the facts.

[24] So far as the specification issues are concerned, I do not consider that there is any want of specification in the pursuer's pleadings. On the issue of the securing of the commercial lease following the proposed sale of Phase 2, I agree with Counsel for the pursuer that this is not a loss of a chance claim. What the pursuer offers to prove is what he would have done with the proceeds of sale he would have received, but for the breaches of duty he alleges. He specifies the sum he would have invested, where he would have invested it and the return he would have received. In relation to the criticism about the lack of specification of the circumstances in which he would have sought a transfer of title of the commercial unit to him for a debit of £250,000 on his capital account, it is averred that the pursuer would have insisted on such a transfer as soon as the lease was agreed. I note that it is specified that the lease would run for 20 years from January 2008. Accordingly the time at which the transfer would have taken place is as specific as it can be. So far as the mechanism is concerned, what the pursuer offers to prove is that the partnership had an existing obligation to transfer a title to him on demand and that such an obligation would have been complied with. Should the pursuer fail to prove both those things, his claim for loss of capital value will not succeed. Again, I consider that there is sufficient notice given to the defenders of what the pursuer's intentions were.

Decision

[25] For the reasons explained above, I shall allow a proof before answer leaving all pleas standing. I shall reserve meantime all questions of expenses.