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You are here: BAILII >> Databases >> Scottish Sheriff Court Decisions >> Smith v. Strathclyde Passenger Transport Executive [2003] ScotSC 38 (24 June 2003)
URL: http://www.bailii.org/scot/cases/ScotSC/2003/38.html
Cite as: [2003] ScotSC 38
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Smith v. Strathclyde Passenger Transport Executive [2003] ScotSC 38 (24 June 2003)
A7262/00A
JUDGMENT OF SHERIFF PRINCIPAL EDWARD F BOWEN QC
in the cause
BRIAN SMITH
PURSUERS
against
STRATHCLYDE PASSENGER TRANSPORT EXECUTIVE
DEFENDER
Act: Gillies, Solicitor, Jeffrey Aitken, Solicitors.
Alt: I Scott, Advocate, instructed by Simpson & Marwick, WS.
GLASGOW 24 June 2003.
The Sheriff Principal having resumed consideration of the cause refuses the appeal and adheres to the sheriff's interlocutor dated 31 January 2003; finds the defenders and appellants liable to the pursuer and respondent in the expenses occasioned by the appeal and remits the account thereof, when lodged, to the auditor of court to tax and to report thereon.
NOTE:
[1] The defenders in this action are Strathclyde Passenger Transport Executive. They are a body created by virtue of a statutory power vested in the relevant Minister under Section 9 of the Transport Act 1968. In terms of Section 10 of that Act they have power to carry passengers within and to and from a "designated area", and certain subsidiary powers. The present action relates to an agreement whereby the pursuer contracted with the defenders to provide public passenger bus services in the area of Tarbert, Carradale and Campbeltown. It is a matter of agreement that this area falls outwith the defenders' "designated area".
[2] The action is one of damages for breach of contract. In response to the pursuer's claim, the defenders accept that the contract documentation, comprising a service specification, tender, and letter of acceptance, bore on the face of it to be an agreement between the parties. They contend, however, that when entering into the agreement they were acting as agents for Strathclyde Regional Council. They aver that:
"The pursuer knew, or is deemed by law to have known, that the defenders had power to contract as principals only in respect of the Strathclyde Passenger Transport area; that the Tarbert/Carradale/Campbeltown areas in which the contract was to be performed lay outwith the Strathclyde Passenger Transport area".
They go on to say that the pursuer "knew or is deemed by law to have known that the defenders entered into the contract as agents for Strathclyde Regional Council".
[3] As I have indicated the defenders accept that the contract documentation did not disclose the identity of their principals and they advance no suggestion that their alleged principals were identified in the course of negotiations. Before the sheriff, and before me, they argued that the identity of their principals was discoverable from a public source, namely the relevant statutory provisions, and indeed contended that on the basis of those provisions it is apparent that they could only act as agents in relation to services provided outwith their designated area. Their position, it was maintained, is that of an agent acting on behalf of a disclosed and 'identified' principal. In support of that position they relied on the case of Armour v T L Duff & Co, 1911 2 SLT 394. That was an action brought by Mr Armour, a Ship Store Merchant, against a firm of Steamship Owners and Brokers for payment for goods sold and delivered to a ship. The form of the order was:
"Please supply the SS Sylvia with the following stores".
The sheriff-substitute granted decree of absolvitor upon the basis that the defenders were acting as agents for a disclosed principal. This was upheld by the sheriff who said:
"If a firm of brokers gives an order in these terms it seems to me that they are acting on behalf of the owners of the ship and as these can be discovered, the principals of the broker are disclosed".
That view was upheld by the Second Division. In a passage founded on by counsel for the defenders in the present case Lord Guthrie said:
"Now it so happens that there would have been no difficulty in ascertaining from the register how things stood, because the excerpt which has been lodged shows that not only does the register contain full information as to the owners of the ship, but it shows that the ship was subject to a mortgage, it tells who the mortgagees were, and it shows that these mortgagees were in possession. In these circumstances I think the sheriffs were right in holding, without in the least impugning Mr Armour's bona fides in the matter, that he had no right to raise the action against Duff & Co either on the footing which is now abandoned that they were the true owners, or on the footing which is still maintained, that, although not the true owners they held themselves out as the true owners".
[4] From the terms of her note it appears that the learned sheriff adopted the general approach advanced by the defenders based on their analogy with the situation in Armour v T L Duff. She held, however, that the relevant statutory provisions did not convincingly "point directly or conclusively to the defenders acting in capacity of agents". She did not consider that the defenders were necessarily restricted to acting as agents when they did any of the things they were empowered to do under Section 10 of the 1968 Act. She further accepted an argument that Section 63 of the Transport Act 1985 gave Strathclyde Regional Council and its statutory successors wide powers which included contracting with the defenders in their area of skill and expertise relative to the provision of Passenger Transport Services within the geographical area with which the case is concerned. That Section did not, on the sheriff's view, restrict the Regional Council to using the defenders as their agents. In the light of these considerations the sheriff declined to assent to the defenders' motion to dismiss the action.
[5] The first point which in my view falls to be dealt with relates to the application of Armour v Duff. Before the sheriff the agent for the pursuer contended that the case fell to be distinguished from the present because there was nothing in the contracting documents to suggest that the defenders were acting merely as agents. That argument was again pressed before me. In Armour, the contract was placed by the store merchant for supply of good to a ship. It was readily apparent that the person placing the order was not a shipowner, and the true owner was "readily discoverable". It was a straightforward application of the law of agency. In the present case, ex consessu the contract itself bore not the slightest indication that the defenders were not the principals. The law of agency which was applied in Armour could not apply here.
[6] That argument, I have to say is not without its attractions. The competing argument as advanced by counsel for the defenders is that everyone is deemed to know the law, and if the law is that the defenders could not enter into a contract other than as agents of an identifiable principal in an area outwith that designated by statute, the pursuer is deemed to have that knowledge. Whilst that proposition appears equally formidable it is to be noted that the part of the law of agency on which the defenders themselves found is based on disclosure and identification of a principal, not simply the underlying reality of the existence of that principal. I am not, therefore, wholly convinced of the applicability of Armour in a case where the existence of a principal is not hinted at on the face of the contract. Whilst the case could be readily disposed of on that point I would prefer to reserve my opinion on it since I am of the view that it can also be resolved by examining what counsel for the defenders described as the central question, namely whether the legislation makes plain the limits of the defenders' capacity to act as principals.
[7] On that question I have no great difficulty in arriving at the same conclusion as the sheriff. Central to the argument, on both sides, is Section 63 of the Transport Act 1985. Subsection (2) provides that:
"It shall be the duty of a Regional or Islands Council in Scotland, in relation to any part of their area which is not a passenger transport area - (a) to secure the provision of such public passenger transport services as the Council consider it appropriate to secure to meet any public transport requirements within their area which would not in their view be met apart from any action taken by them for that purpose".
That, said counsel for the defenders, fitted their position. The statutory responsibility for the provision of bus services in the area to which the action relates was plainly vested in the Regional Council. In terms of Section 10(1)(xxxi) of the 1968 Act the defenders had power
"to provide for any person technical advice or assistance, including research services, as respect any matter in which the Executive have skill or experience".
That empowered the defenders to provide assistance to the Regional Council, but Section 10 did not otherwise grant power to them to operate out of their own area. Be that as it may it does not appear to me to point to conclusively to a position whereby the defenders could only act as agents. Section 63 of the 1985 Act does not restrict the Regional Council to the appointment of agents in fulfilling their statutory duty and indeed, as the solicitor for the pursuer pointed out subsection (vi) grants them power
"to take any measures that appear to them to be appropriate for the purpose of or in connection with promoting...the availability of public passenger transport services".
I agree with the submission that the Regional Council are not restricted to the appointment of agents. Assuming the defenders to be well founded in their contention that the power to enter into this agreement was derived from Section 10(1)(xxxi) of the 1968 Act there is simply no basis for making the assumption that they could not have been acting as sub-contractors.
[8] That in my view is sufficient for disposal of the appeal. The sheriff was correct to conclude that the pursuer could not have reached the conclusion that the defenders were acting as agents and that they had authority to do so. The appeal accordingly fails.