Scottish Court of Session Decisions

OUTER HOUSE, COURT OF SESSION

[2015] CSOH 47

CA56/14

OPINION OF LORD DOHERTY

In the cause

(FIRST) BNP PARIBAS SECURITIES SERVICES TRUST COMPANY (JERSEY) LIMITED;  and (SECOND) BNP PARIBAS SECURITIES SERVICES TRUST COMPANY LIMITED (AS TRUSTEES OF THREADNEEDLE PROPERTY UNIT TRUST)

Pursuers;

against

MOTHERCARE (UK) LIMITED

Defender:

Pursuer:  Richardson;  CMS Cameron McKenna LLP

Defender:  D Thomson;  Brodies LLP

22 April 2015

Introduction

[1]        The pursuers (“the landlord”) are the heritable proprietors on behalf of the Threadneedle Property Unit Trust of a Grade B listed building at 123 Sauchiehall Street, Glasgow.  The defender was the tenant of the building under a lease between Legal and General Assurance (Pensions Management) Limited, Razzle Dazzle (Scotland) Limited and Kenneth Cairnduff dated 6 and 20 February 1986.  The tenant’s interest in the lease was assigned to the defender by an assignation dated 2, 9 and 21 March 1995.  The lease expired on 28 June 2013.

[2]        The landlord and the tenant are in dispute about sums which the landlord claims in respect of wants of repair and dilapidations.  In order to limit the expense of resolving their differences the parties, after raising this action, agreed a remit to Jon Rowling, a chartered building surveyor and the director of Goodrow Building Consultancy Limited (“the reporter”).  He was instructed to address the following questions: 

“(i) Whether the individual wants of repair identified in [an Agreed Schedule] (a) presently exist;  and (b) existed at 28 June 2013; 

(ii) What works are required to remedy those wants of repair identified in response to question (i); 

(iii) In light of the answers to question (ii), (a) whether the costs of effecting works claimed by the pursuers in the column in the Agreed Schedule labelled “Landlord’s Revised Cost 24/10.2014”, are reasonable and, (b) if not, what would be a reasonable cost;” 

By interlocutor dated 18 November 2014 the court ordered a remit to the reporter to investigate and report on the facts and circumstances in terms of the parties’ remit.

[3]        The parties in the remit directed the reporter to produce a draft report.  Clause 11 of the remit directed that if a party objected to the draft report on an issue of law the reporter was to apply to the court for directions.  I have heard counsel in a debate on the tenant’s Note of Objections to the draft report.  I am invited to give directions to the reporter.

[4]        Three contractors were invited to tender for the remedial works contract.  The lowest tender received was submitted by Redpath.  Redpath was also the only tenderer who offered to carry out items 54 to 64 for a lump sum price.  The remaining tenderers quoted a provisional sum for this element of the work.

Scope of the court’s jurisdiction

[5]        In BAM Buchanan Limited v Arcadia Group Limited [2013] CSOH 107A, 2013 Hous. LR 42, Lord Hodge conveniently summarised the scope of the court’s jurisdiction on applications for directions:

“Scope of the court's jurisdiction

[4] There is no dispute as to the scope of the court's jurisdiction. As the parties had agreed to give Mr Morrison the remit of determining their factual disputes, they have excluded probation of the matters which his report covered. They have confined their right to challenge his report to issues of law. This is consistent with the general approach of the court which Lord Eassie set out in Allied Dunbar Assurance Plc v Superglass Sections Ltd (unreported) 20 August 2004 at paras 23 and 24: where the parties have agreed a remit to a skilled person to determine a question and he has performed that remit, the court will not allow another mode of proof. See also Dixon v Monkland Canal Co (1825) 1 W. & S, Lord Gifford at 655;  and Lord Blantyre v Glasgow, Paisley and Greenock Railway Co (1851) 13 D 570, Lord President Boyle at 573. Absent a reservation in the remit of the right to have a further proof, which would defeat the cost saving purpose, the reporter's decision governs questions of fact.

[5] The legal challenges available are familiar. As the reporter has received a contractual remit, any failure to implement the directions of his remit, including a failure to exhaust the remit, would ground a legal challenge. If the reporter misconstrued a legal document, such as the lease, in a material way, that would be an error of law which would invalidate his determination to the extent that the error affected his decision. So also would be a material misunderstanding of a non-legal document, although the court allows the decision maker greater discretion in interpreting such documents and will not treat a tenable interpretation as an error of law (Findlay, Petitioner [2006] CSOH 188, at paras 31–33). Where there required to be a factual basis for a decision, the absence of such a basis would support a legal challenge to the decision. Taking into account an irrelevant matter or failing to take into account a relevant matter are familiar grounds of challenge (Wordie Property Co Ltd v Secretary of State for Scotland 1984 SLT 345, Lord President Emslie at 347 ). Another way of analysing those grounds is to say that the decision maker has acted on the basis of a mistaken view as to the facts.  Mr Dunlop for the pursuer referred me to that formulation in Learning Trust v MP and the Special Educational Needs and Disability Tribunal [2007] ELR 658, [2007] EWHC 1624 (Admin), Andrew Nicol QC sitting as a deputy judge of the High Court at para.29. Wednesbury unreasonableness is another ground of legal challenge (Wordie (above)). So also is the failure to give an adequate statement of reasons for a decision so that the informed reader and the court are left in no substantial doubt as to the reasons for the decision (Safeway Stores Plc v National Appeal Panel 1996 SC 37, Lord Justice Clerk Ross at 40-41).” 

The objections

[6]        The Note of Objections for the defender (number 20 of process) raised six matters.  However, following its preparation the reporter prepared written comments (number 23 of process).  In the result only two of the initial objections were insisted upon at debate.  Mr Thomson also indicated that in relation to the objection in respect of item 27 both parties hoped that examination of the title deeds of a neighbouring party might well lead to the issue being resolved.  If it did not, then a further hearing relating to that objection might be necessary.

Item 308

[7]        Item 308 relates to a sum of £15,000 in respect of strip out works which have already been completed to the ground floor and first floor of the building.  The works pre-dated the preparation of tenders for remedial works.  Receipts and invoices relating to item 308 were made available to the reporter.  He concluded that the costs of effecting these works had been reasonable.

[8]        Mr Thomson challenged that conclusion.  The main ground upon which he did so was that the reporter had also approved as reasonable the sum of £5,120 in the Redpath tender (6/9 of process, page 44) for stripping out tenant installed fit out back to shell in rooms F1 - F6 on the first floor.  He contended that since that figure was for strip out there must be some overlap or double counting between it and the figure of £15,000 for item 308.  He submitted that, at the very least, the reporter had failed to adequately explain why there was no such overlap or double counting.

[9]        I am not persuaded that Mr Thomson has identified any error of law by the reporter in relation to item 308.  In my opinion it is tolerably clear from the reporter’s report and his additional comments that item 308 relates to works which were carried out to remove certain tenant’s alterations before the tenders were submitted.  The sum of £5,120 relates to other works which remain outstanding.  There is no overlap between the two sums.  I am also satisfied that the reporter was entitled to conclude, and has concluded, that each of the costs of £15,000 and £5,120 are reasonable.  Reading his report and comments as a whole, and in context, I do not consider that it was incumbent upon him to say more than he has done.

Items 54 - 64

[10]      Items 54 - 64 relate to the replacement of bronze windows to the front elevation of the building.  The reporter approved as reasonable the lump sum cost of £92,903 contained on pages 14-15 of the Redpath tender.

[11]      Mr Thomson submitted that the reporter had no adequate basis upon which to reach that conclusion.  He had no previous experience of costing bronze windows such as these.  All that he had was a single costing prepared by one specialist contractor.  He ought to have sought to obtain one or more further quotations.  Only then could he have been confident that the price tendered for the work was in fact reasonable.  The reality was that the reporter had not exercised his own independent judgement in order to assess the reasonableness of the suggested cost.

[12]      Mr Richardson submitted that the reporter’s approach disclosed no error of law.  The reporter’s professional opinion was that market-tested data in the form of tender returns was superior to taking figures from published construction cost data (number 22 of process, paragraph 4.3.1).  The defender had not obtained an alternative quotation for the works although it had had the opportunity to do so (ibid, paragraph 4.3.9).  It was plain from a fair reading of the report and the reporter’s supplementary comments (number 23 of process, page 6) that the reporter had indeed applied his mind to the tendered price and had been satisfied that it was reasonable.

[13]      I agree with Mr Richardson that this objection discloses no error of law.  The tender involves the work being done by a specialist sub-contractor for a lump sum.  That has the considerable advantages of (i) use of a specialist sub-contractor (which the planning authority would be likely to insist upon (see number 23 of process, page 6));  (ii) the risk of cost variation lying with the contractor;  (iii) the cost being included in a tender (the Redpath tender) which was also the lowest tender overall.  The market has been tested by going to three tenderers, but only one was prepared to offer to carry out the work for a fixed price.  It is not without significance that each of the tenderers would have prepared and submitted their tenders in the knowledge that a number of competitive tenders were being sought.  A tender is likely to produce the best indication of cost because it is market-tested and because costs for repair works to bronze windows are not available in price books (see number 23 of process, page 6).  These were all matters which the reporter was entitled to, and did, have regard to.  While he had not obtained prices for repairs to bronze windows in the past, he nonetheless had his independent judgement and a wealth of experience as a building surveyor to draw upon when considering whether the cost proposed was reasonable.  There is nothing in the material placed before me which causes me to doubt that he duly considered these factors and drew upon those resources.  In my opinion he was entitled to reach the conclusions which he did on this issue.

Conclusion

[14]      Neither of the objections advanced by the defender is well founded.  I shall repel them.  I shall also repel the other objections (other than the objection relating to item 27) which were not insisted upon.  Subject to the parties confirming the position in relation to item 27, the reporter should proceed to issue his report in its final form.  I shall reserve meantime all questions of expenses.