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ESSO PETROLEUM COMPANY LIMITED AGAINST SCOTTISH MINISTERS AND OTHERS

OUTER HOUSE, COURT OF SESSION

[2016] CSOH 15

 

CA103/14

OPINION OF LORD TYRE

In the cause

ESSO PETROLEUM COMPANY LTD

Pursuer;

against

SCOTTISH MINISTERS and OTHERS

Defenders:

Pursuer:  Martin QC, Burnet;  Maclay Murray & Spens LLP

First Defenders:  Sheldon QC;  Anderson Strathern LLP

Third to Seventh Defenders:  Jones (solicitor advocate), McPherson; bto

21 January 2016

Introduction
[1]        In 2005 the Scottish Ministers, who are the first defenders in this action, resolved to construct the section of motorway near Glasgow city centre known as the M74 Completion, linking the end of the existing M74 motorway at Cambuslang with the M8 motorway west of the Kingston Bridge.  Through their agency Transport Scotland, the first defenders appointed Glasgow City Council as managing agent with responsibility inter alia for the procurement process and the land purchase and business relocation process.  Land along the motorway route was acquired by agreement or by compulsory purchase.  Following a competitive dialogue procedure, the main contract for construction of the motorway was awarded on 4 March 2008 to Interlink M74 JV, the third defender in this action.  As its name suggests, the third defender is an unincorporated joint venture created for the purposes of this project.  Its partners are the fourth to seventh defenders, respectively Galliford Try Infrastructure Limited, Balfour Beatty Civil Engineering Limited, Morgan Sindall (Infrastructure) plc and Sir Robert McAlpine Limited.  By agreement dated 26 October and 6 November 2007, the third defender engaged Jacobs UK Limited and Atkins Limited (“Jacobs & Atkins”) as specialist design consultants.  Work to construct the motorway began in about May 2008.  Handover to Transport Scotland was achieved on 26 June 2011 and the motorway was opened for public use.  A Certificate of Completion was issued by Glasgow City Council on 7 July 2011.

[2]        The land upon which the motorway has been constructed included sites formerly used for a variety of industrial purposes.  One of those sites, lying generally between Paterson Street to the west, Gloucester Street to the north, and West Street to the east, had been used since 1841 for the manufacture, bulk storage and distribution of liquid chemicals.  I shall refer to it as the Albion site.  By 2001 the Albion site was in the ownership of Albion Chemicals, whose business was subsequently acquired by Brenntag Inorganic Chemicals Limited which was the second defender in this action.  By missives of sale concluded voluntarily on 30 June 2004, the Albion site was acquired by the first defenders.  An elevated section of the new motorway, with grass embankments, has now been built upon the Albion site.

[3]        In preparation for the M74 Completion project, and prior to entering into the construction contract, Glasgow City Council as agent for the first defenders instructed the preparation of a series of reports by the Babtie Group (who subsequently became Jacobs UK Limited) with a view to mitigating environmental risks associated with contaminated land.  In September 2003, Babtie produced a “Stage 3” report identifying appropriate remediation options for land along the proposed route.  A section of this report dealt with the Albion site.  The report noted the presence of a number of contaminants associated with current and previous land use, including heavy metals, asbestos and hydrocarbons (fuel, oil, phenol, solvents and polycyclic aromatic hydrocarbons).  It made no specific mention of chlorinated hydrocarbons.   It noted a number of pathways for risk of contamination to groundwater and surface water, including vertical migration to both shallow and deep groundwater and lateral off-site migration of contaminants in groundwater.  The risk of such migration occurring was assessed as high, and the report recommended further assessment and modelling of groundwater to assess impacts.

[4]        Part 6 of the Employer’s Requirements in the Final Tender issued by the first defenders and accepted by the third defender was entitled “Contaminated Land Pollution Mitigation”.  Under the heading “General Requirements”, the tender document provided inter alia as follows:

“1.1  Introduction

1.1.1  The Design, construction, completion and maintenance of the Works shall take into account the presence of contaminated land and groundwater.

1.1.2  The Contractor shall be responsible for the implementation of any supplementary ground investigation he requires to provide information for Design and monitoring purposes.

1.1.3  The Design shall take account of the fact that there may be isolated pockets of previously unidentified contamination.  Construction and remediation activities shall take into account the potential for the existence of variable conditions not reported in the findings of the ground investigations or assessments completed to date.  For this reason, the Contractor shall operate strict environmental management procedures to ensure tight control of construction activities.

1.2  Objectives

1.2.1 The Design, construction, completion and maintenance of the contaminated land pollution mitigation Works shall achieve the following objectives:

(i) The protection of all environmental receptors including humans, controlled waters, ecology and built structures, both during construction and post construction. This will be achieved by the Design and implementation of appropriate mitigation and monitoring procedures…

…

 

1.5  Qualified Professional Assistance

1.5.1  The Contractor shall appoint for the Design, construction completion and maintenance of all contaminated land pollution mitigation Works a specialist team of environmental consultants.  The specialist team shall be appropriately qualified and experienced in the assessment and remediation of contaminated land and brownfield sites…

1.5.2 The Contractor shall employ the environmental consultants throughout the duration of the Contract.  The roles and responsibilities of the environmental consultants shall include, but shall not be limited to:

(i) the Design of contamination mitigation Works, including conducting treatabilility studies, where applicable, during the Design stage in order to verify the efficacy of the proposed Design…”

 

[5]        At the corner of Gloucester Street (to the north) and West Street (to the east), there is a roughly square area of land owned by the pursuer, to which I shall refer as the Esso site.  It is bounded to the south and west by the Albion site.  Historically, the Esso site had been used as a public house until it was acquired by the pursuer in about the 1950s for redevelopment as a petrol filling station.  It continued to be operated, latterly by a wholly‑owned subsidiary of the pursuer, as a petrol filling station and shop until about March 2013.  It is currently in a derelict condition.

[6]        Demolition of buildings, tanks and other structures on the Albion site commenced in May 2007, in terms of a contract entered into between Glasgow City Council as agent for the first defenders and CEP Demolitions Limited.  The floor slabs and concrete hard standing covering the site were removed in 2008.  Other works included demolition and removal of the drainage system and below-ground tanks and pipes.  In 2008, after demolition had taken place but before construction of the motorway on the site had begun, investigations carried out by Jacobs & Atkins on behalf of the third defender disclosed the presence of halogenated chlorinated hydrocarbons in groundwater beneath the Albion site.  The compounds identified included Tetrachloroethene (PCE), Trichloroethene (TCE), 1,2 Dichloroethene (DCE) and Vinyl Chloride (VC).  The latter two compounds are degradation products of PCE and TCE.  It is known that PCE and TCE were among the chemicals stored from time to time on the Albion site.  All of these compounds pose risks to human health:  all are toxic and some are known or suspected carcinogens.  Boreholes and trial pits were dug at locations across the Albion site;  some of these were close to the Esso site boundary.  The pursuer carried out its own investigations.  The results obtained from the various parties’ investigations indicated that there were concentrations of PCE, TCE and degradation products including VC present in soil and water in made ground within the Albion site at levels in excess of the designers’ calculated remedial targets. 

[7]        It was concluded that further action was needed to mitigate the risks of off-site migration of contaminants and associated risks to human health.  Particular attention was paid to the elimination of any risk to the health of the occupants of residential properties on the east side of West Street.  Various remedial options were considered.  The option selected was a “funnel and gate” system, whereby potentially contaminated groundwater would be contained within the Albion site and funnelled towards an exit “gate” for collection and disposal to sewage.  Jacobs & Atkins’ investigations indicated that the direction of flow of groundwater within the Albion site was generally in a southerly direction, although a possible divide in groundwater direction was noted in the northern part of the site.  It was proposed that the groundwater be funnelled towards a “gate” in the south-eastern corner of the site.

[8]        Containment and funnelling of contaminated groundwater within the site required the construction of an impermeable cement/bentonite barrier around the boundaries of the site.  A difficulty was, however, identified with regard to the Esso site.  If an impermeable barrier were constructed along the boundary between the Albion and Esso sites, Jacobs & Atkins considered that water levels would build up outside the barrier, within the Esso site, to an extent likely to cause surface flooding.  Accordingly, in order to avoid long term risk of flooding of land perceived to be upstream of the Albion site, especially within the Esso site, Jacobs & Atkins recommended that the northern boundary of the Albion site should not be sealed.  The bentonite wall would be installed parallel to the site’s eastern (ie West Street) and western (ie Paterson Street) boundaries to direct any contaminated water towards the exit “gate” near the southern end of West Street.  This recommendation was accepted and implemented.

[9]        The pursuer continued to monitor levels of contamination of groundwater under the Esso site.   Data collected from boreholes within the Esso site indicated a flow direction from south to northeast.  Sampling of groundwater under the Esso site carried out between November 2010 and September 2014 identified an on-going presence of PCE, TCE, DCE and VC at concentrations which the pursuer regarded as representing a potential risk to human health and/or the water environment.  On one occasion TCE was identified in the air during monitoring within the filling station shop, although the concentrations were well below limits set to ensure safe working conditions.

[10]      In this action the pursuer contends that as a result of the works for the construction of the M74 Completion, and in particular their effect upon and contamination of the groundwater flow, its property at the Esso site is now subject to contamination that has migrated or escaped from the Albion site.  It contends that such contamination has been caused by nuisance et separatim fault on the part of the first defenders consisting of carrying out works on the Albion land which have disturbed the contaminants and caused them to migrate via groundwater to the Esso site.  Specifically, the pursuer avers that

“…It was inherent in the operations carried out by the third defenders on behalf of the first defenders that there was a danger that such chemicals stored within [the Albion site] would be disturbed, escape, infiltrate the ground water below and contaminate parts of [the Esso site] which in fact occurred.  Reasonable site investigations would have revealed that risk or hazard.  The exercise of reasonable care would have prevented the escape of such deleterious substances…  Further, having regard to the nature of the operations which they authorised, the first defenders are vicariously liable for the conduct of the third defenders in creating the nuisance in the course of carrying out inherently hazardous operations which interfered with the pursuers’ interests in and use and enjoyment of [the Esso site]…”

 

The pursuer further contends that contamination of the Esso site has been caused by nuisance et separatim fault on the part of the third defender, and the fourth to seventh defenders as partners of the third defender, consisting of a failure to design and construct the M74 Completion works so as to prevent the migration of contaminants from the Albion site to the Esso site. 

[11]      The remedies sought by the pursuer include decree ordaining the first defenders to prevent any further escape of chlorinated hydrocarbons on to the Esso site as a result of the construction of the M74 Completion;  decree ordaining the defenders to carry out and complete works within the Esso site to prevent recurrence, remove the contaminants and remediate the damage caused by the escape of contaminants from the Albion site;  and payment of sums of damages amounting to around £2,800,000.

[12]      Following a debate, Lord Doherty pronounced an interlocutor (see [2015] CSOH 21) dismissing the action in so far as directed against the second defender, Brenntag Inorganic Chemicals Limited.  Lord Doherty held, however, that certain arguments presented on behalf of the first defenders could not be determined without inquiry into the facts.  By a further interlocutor dated 28 May 2015, his Lordship allowed a preliminary proof restricted to three issues, namely:

(i)         whether the operations carried out on the Albion site to construct the M74 Completion were inherently hazardous;

(ii)        whether the third to seventh defenders and Jacobs & Atkins were competent independent contractors;  and

(iii)       whether the Albion site remains under the occupation and control of the third to seventh defenders.

Depending upon the answers to these questions, the action in so far as directed against some of the defenders may not be maintainable.

[13]      I should note that the evidence led at the preliminary proof, in the form of witness statements, expert reports and oral evidence, ranged over issues not falling within its scope.  This was perhaps inevitable when expert evidence was led under reference to detailed reports produced to address the merits of the parties’ dispute.  I shall, however, endeavour in this opinion to confine myself to addressing the three issues above, without attempting at this stage to work through the consequences of my conclusions in relation to those issues.  Nothing in this opinion should be read as the expression of a view on the merits.

 

Issue 1:  Inherently hazardous operations
Legal analysis
[14]      As a general rule, the employer of an independent contractor is not liable for injury caused to a third party by the fault of the contractor:  Stephen v Thurso Police Commissioners (1876) 3R 535.  The rule has exceptions.  For present purposes I am concerned with the question whether, and if so to what extent, Scots law recognises an exception where the operations instructed by the employer are “inherently hazardous”.  The answer to this question is controversial.  The root of that controversy may be said to be the following dictum of Lord Watson in Dalton v Angus (1881) LR 6 App Cas 740 (an English appeal) at 831-2:

“When an employer contracts for the performance of work, which properly conducted can occasion no risk to his neighbour’s house which he is under obligation to support, he is not liable for damage arising from the negligence of the contractor.  But in cases where the work is necessarily attended with risk, he cannot free himself from liability by binding the contractor to take effectual precautions.  He is bound, as in a question with the party injured, to see that the contract is performed, and is therefore liable, as well as the contractor, to repair any damage which may be done.”

 

[15]      The history of the reception of Lord Watson’s observation into the law of Scotland was traced in detail by Lord President Hamilton in Stewart v Malik 2009 SC 265 at paragraphs 10-19.  Lord Hamilton noted that that reception had occurred largely through the work of textbook authors including Glegg, Gloag and Henderson, and Walker, and that (para 16):

“In all these textbooks English cases are liberally cited.  In none of them is it suggested that there is any basis upon which, in this field, the law of Scotland is different from that of its southern neighbour.”

 

His Lordship went on to list a significant number of first instance cases, in both the Outer House and the sheriff court, where Dalton v Angus has been cited and applied;  I shall return to some of these later.  He also noted that the view was not unanimous:  for example, in Southesk Trust Co Ltd v Angus Council [2006] CSOH 6, Lord Macphail had doubted whether the “hazardous operations” exception was part of the law of Scotland.

[16]      The difficulty with an “inherently hazardous operations” exception is that it is extremely unclear what it means.  Any operation which might result in injury to person or property unless appropriate precautions are taken might be said to be inherently hazardous.  Perhaps the high watermark of the scope of the exception in English law is the much criticised decision of the Court of Appeal in Honeywill & Stein Ltd v Larkin Bros Ltd [1934] 1 KB 191.  In this case a photographer engaged to take photographs of the interior of a theatre using magnesium flares to create a flash negligently set fire to a curtain, and it was held that the company which had engaged the photographer as an independent contractor was liable to the theatre owner for the costs of repair.  The principle was stated thus by the Court at 199-200:

“…If a man does work on or near another’s property which involves danger to that property unless proper care is taken, he is liable to the owners of the property for damage resulting to it from the failure to take proper care, and is equally liable if, instead of doing the work himself, he procures another, whether agent, servant or otherwise, to do it for him.”    

 

The problem, however, as Professor Atiyah observed (Vicarious Liability in the Law of Torts, 1967, at page 332) is that

“The truth of the matter is that damage or injury can be caused by the execution of practically any work, if it is done without due care, and conversely, that practically anything can be done without causing injury if sufficient care is taken in doing it.”

 

In Biffa Waste Services Ltd v Maschinenfabrik Ernst Hese GmbH [2009] QB 725, the Court of Appeal expressed the view that the doctrine enunciated in Honeywill was “so unsatisfactory that its application should be kept as narrow as possible” and that it should be applied only to activities that are “exceptionally dangerous whatever precautions are taken”.  One of the contentious issues in the present case was whether that view is consistent with the position currently reached by Scots law.

[17]      A further difficulty with the expression “inherently hazardous operations” is that it appears to be a legal construct without any basis in scientific categorisation.  In the course of the preliminary proof, I heard oral evidence from four expert witnesses all of whom had prepared written reports, namely (for the pursuer) Mr Kelvin Hughes and Mr Tom Parker, (for the first defenders) Mr Alan Dow, and (for the third to seventh defenders) Dr Alexander Lee, all geologists with specialisations in groundwater flow modelling and remediation of contaminated land.  None of these witnesses professed familiarity with the expression “inherently hazardous”:  Mr Parker found it “baffling”;  Mr Dow observed that it was not a phrase with which he was familiar;  Dr Lee considered that the phrase was not generally used in connection with contaminated land.  The expert witnesses were concerned rather to emphasise the distinction between, on the one hand, the existence of a hazard and, on the other hand, the existence of a risk of significant harm to persons or property from the hazard if appropriate steps were not taken to mitigate the risk.  It therefore becomes a matter for the court to make findings of fact based upon expert evidence given under reference to criteria utilised by contaminated land specialists, and then to attempt to assess whether the circumstances fall within the scope, whatever that might be, of the exception to the legal rule of non-liability for operations undertaken by an independent contractor.

[18]      In Stewart v Malik, Lord President Hamilton (with whom Lords Eassie and Marnoch agreed) did not find it necessary to decide whether the acceptance in Scottish textbooks and in the majority of first instance decisions of English law as applicable in Scotland was well founded.  That case was concerned with the removal of a load-bearing wall in a ground floor shop resulting in damage to the flat above, and the question was whether the owner of the shop, who had instructed an independent contractor to carry out the building works, was liable to the proprietor of the first floor flat.  The pursuer’s case was based upon removal of a load-bearing wall being an inherently hazardous operation, and the court identified the issue as being:

“whether the works in contemplation were of such a character that, notwithstanding the careful selection of an independent contractor to execute them, the defender as lower proprietor could not be thus relieved of liability to the pursuers for their negligent execution.”

The court noted that according to the Scots law of the tenement, the defender owed an obligation of support to the pursuer as proprietor of the flat above but, importantly for present purposes, acknowledged that failure of support did not of itself, without proof of negligence or nuisance, give rise to liability in reparation (Thomson v St Cuthbert’s Co‑operative Association Ltd 1958 SC 380).  Under reference to Dalton v Angus, the court held that the Scots law of the tenement cast on the “servient” proprietor a positive duty to avoid endangering the “dominant” property which was personal to him and could not be elided by the instruction of an independent contractor. 

[19]      It is noteworthy that many of the cases, both English and Scottish, on inherently hazardous operations have concerned interference with rights of support.  In the present case it was submitted on behalf of the first defenders that if Scots law did recognise an “inherently hazardous operations” exception, Stewart v Malik established that it was confined to cases involving rights of support and, in line with the views expressed in England in Biffa Waste, that it should not readily be extended to other situations.  I am not persuaded that there is any peculiarity about interference with rights of support that renders the exception applicable to that situation alone.  I have already noted that it is settled, at least in Scots law, that non-interference with a right of support is not an absolute duty and that liability in reparation for damage caused by interference requires proof of negligence or nuisance (the latter also, of course requiring proof of fault:  RHM Bakeries v Strathclyde Regional Council 1985 SC (HL) 17).  What is, in my opinion, clear from Stewart v Malik is that Scots law does in certain circumstances recognise an exception from the general rule that an employer is not liable for negligence of or nuisance caused by an independent contractor.  It seems to me, however, that some further basis in principle must be identified for the application of the exception than simply restricting it to cases involving interference with rights of support.

[20]      One of the Outer House decisions not concerned with rights of support is Noble’s Trs v Economic Forestry (Scotland) Ltd 1988 SLT 662.  This was an action for nuisance at the instance of the owner of a hydro‑electric scheme against an upstream proprietor and its independent contractor in respect of the construction of a dirt road in a manner which caused sand, silt and gravel to be washed down the river, causing damage to the hydro‑electric scheme.  The Lord Ordinary (Jauncey) dismissed the action in so far as directed against the upstream proprietor who had instructed the forestry operations, on the grounds that it was not averred that the operations were inherently dangerous and that the law did not impose strict liability.  Citing a dictum of Cockburn CJ in Bower v Peate (1876) 1 QBD 321 (a right of support case) at 326, Lord Jauncey observed:

“A landowner will be liable to his neighbour if he carries out operations on his land which will or are likely to cause damage to his neighbour’s land however much care is exercised.  Similarly will a landowner be liable in respect of carrying out operations, either at his own hand or at the hand of the contractor, if it is necessary to take steps in the carrying out of those operations to prevent damage to a neighbour and he, the landlord, does not take or instruct those steps.  In the former case the landowner’s culpa lies in the actual carrying out of his operations in the knowledge actual or implied of their likely consequences.  In the latter case culpa lies in not taking steps to avoid consequences which he should have foreseen would be likely to flow from one method of carrying out the operation.”   

 

[21]      Lord Jauncey’s summary of the law was adopted in GA Estates Ltd v Caviapen Trustees Ltd (No 1) 1993 SLT 1037, in which the purchaser of a shopping development sought reparation for flooding which it claimed was caused by the negligent design by the developer’s consulting engineer of a pond and culvert on neighbouring land retained by the developer.  The shopping centre owner submitted that he had made sufficient averments of the undertaking of a hazardous operation (the creation of a pond and culvert in a stream running under the shopping centre) to bring the case within the exception.  The Lord Ordinary (Coulsfield) referred to Dalton v Angus and Noble’s Trs, and also to a gloss on Dalton v Angus by Lord Dervaird in Borders Regional Council v Roxburgh District Council 1989 SLT 837 (a case concerning support of a neighbouring property) that “the person who instructs the work must know, or at least ought to know that the work which he is instructing is necessarily attended with risk”, and held that the shopping centre owner’s case against the developer was relevant for proof.  Lord Coulsfield further commented:

“Counsel for the [developer] submitted that the [developer] had employed competent consultants to design the works and had, therefore, performed [its] obligation to instruct the steps necessary to prevent damage to a neighbour.  I do not think, however, that in the passage quoted, Lord Jauncey meant to imply that, in a case in which the landowner can reasonably foresee that the work will be attended by risk, he is not liable if the steps taken to avoid the risk are inadequate because of his contractor’s negligence.”

[22]      Aside from the difficulty of defining the limits of the “inherently hazardous operations” exception, there are forceful policy arguments to be made both in favour of and against the imposition of liability on a landowner for the fault of an independent contractor.  In favour of liability, it may be contended that the risk of damage to neighbouring land ought to be assumed by the person for whose benefit the work is being performed, and who is at liberty to seek appropriate indemnities from the contractor against negligence of or nuisance caused by the latter.  The neighbouring proprietor should not have to shoulder the risk of the contractor’s inability to pay, in circumstances where he (the neighbour) has no effective control over the precautions taken to avoid damage.  Against liability, it can be argued that giving the injured neighbour a direct right of action against the employer of a negligent contractor is merely to give an unnecessary remedy against a person who is not to blame for the damage, contrary to the principle of Scots law that culpa is required for liability in respect of both negligence and nuisance.  Policy considerations such as these were canvassed at the preliminary proof;  a fuller discussion, with contemporary resonance, can be found at Atiyah, op cit, pages 333‑336.  Such considerations are, however, of limited relevance to my task as a judge sitting at first instance, which is to apply the law of Scotland as it is rather than as I may consider that it ought to be.

[23]      I have already noted that the court in Stewart v Malik did not find it necessary to express an opinion of general application on the extent to which the exception is recognised in Scots law.  It would be presumptuous of me to attempt to do so.  For the purposes of the present case it is sufficient for me to conclude, on the basis of the foregoing authorities, that the exception is recognised at least to the following extent:

1.         Liability of an employer for negligence of or nuisance caused by an independent contractor exists in Scots law beyond the specific situation of interference with rights of support.  It is capable of applying more generally to operations carried out on a person’s land which cause or are likely to cause damage or injury to or on a neighbouring property.

2.         In order for liability to arise, it is not enough to prove that damage to a neighbour’s land is likely to occur if a potentially hazardous operation is performed without taking adequate precautions.  As Lord Jauncey observed in Noble’s Trs, liability arises only where either (a) the operation will or is likely to cause damage to the neighbour’s land however much care is exercised, or (b) it is necessary to take steps in the carrying out of the operation to prevent damage to the neighbour’s land, and those steps are not taken by the landlord either personally or on his instructions.  As regards alternative (b), I interpret Lord Jauncey’s reference to “necessity” as meaning steps specifically taken to avoid damage to the neighbouring property which would otherwise occur or be likely to occur, as opposed to taking reasonable precautions when carrying out a hazardous operation to prevent a risk of damage or injury from eventuating. 

3.         For the avoidance of doubt, an employer does not escape liability for damage or injury to a neighbour’s property caused by the carrying out of an inherently hazardous operation – in the sense in which I have defined that expression – simply by giving instructions, however detailed, to the independent contractor.  The true meaning of the exception is that in circumstances where it applies, the landowner remains liable regardless of whether he carries out the operation himself or instructs another to do it.

4.         The reasonableness of the steps taken specifically to avoid damage to neighbouring land is to be assessed at the time when the operation was undertaken, and not with the benefit of hindsight after damage or injury has occurred.

[24]      Approaching the matter from a policy viewpoint, it does not appear to me that recognition of the exception to the above extent imposes an undue burden upon a landowner employing an independent contractor.  In the first place, Scots law, perhaps in contrast to English law, requires proof of culpa in relation to nuisance as well as in relation to negligence, and it may be that the concerns which provoked the views expressed by the Court of Appeal in Biffa Waste have less force here.  In the second place, as observed by Sheriff Principal Bowen in Crolla v Hussain 2008 SLT (Sh Ct) 145 at para 26, danger of unfairness to landowners has been avoided by the courts taking a firm line in confining the application of the exception to cases where it is the nature of the operation itself which is hazardous rather than the means of carrying it out.  I express no view as to whether the exception is recognised by Scots law to a greater extent than that just outlined, as it is unnecessary to do so for the purposes of the present case.  In particular, I should not be taken as accepting that the exception is capable of applying to situations other than damage to or injury occurring on neighbouring land.  If it were to be so applied, an answer would have to be found to Atiyah’s example (op cit) at page 331:

“…If a person riding in a taxi were to tell the taxi-driver to turn right, and the driver did so without signalling, it could be said that the act of driving a vehicle across the road was necessarily attendant with risk unless precautions were adopted, that it therefore became the duty of the passenger to take those precautions, and that he should be liable for damage caused by the failure to take those precautions – a manifestly unsound conclusion.”

 

Liability of contractor for independent sub-contractor
[25]      The discussion thus far has been concerned with liability of an employer to a third party for damage caused by the negligence of or nuisance created by an independent contractor.  This case also raises - or at least on one view may also raise – the issue of the liability of a contractor to a third party for damage caused by the negligence of or nuisance created by a subcontractor carrying out an inherently hazardous operation.  There is much less authority on this issue;  such as there is, however, is adverse to the existence of any such liability.  In Duncan’s Hotel (Glasgow) Ltd v J & A Ferguson Ltd 1974 SC 191, another Outer House case, a ground floor shop was badly damaged by fire and, in the course of extensive reconstruction, piling operations were carried out which caused damage to a hotel on the upper floors of the building.  The hotel owner sued the shop owner, who convened the contractor as a third party.  One of the issues debated was whether the contractor was liable for negligence or nuisance committed by its piling subcontractor.  The Lord Ordinary (Stott) held that it was not, observing (page 198):

“Against [the contractor] the primary case is that [the piling subcontractor] were their subcontractors, and if a building employer is to be held liable for negligence or nuisance committed by his contractor in the course of hazardous or illegal work, so a contractor must, in the same way, be liable for the subcontractor whom he employs.  That is by no means a self-evident proposition.  What the building employer is being held liable for is negligence or nuisance in the hazardous work which, in the last analysis, is being done for him and on his instruction, whether by himself or by his servant or by a contractor or by a subcontractor employed by him. The relationship between contractor and subcontractor is rather different. No doubt, in a sense, the contractor in employing a subcontractor is appointing someone to do part of his work for him. But the work is being done not for him but for the building employer, and there is no compelling reason to assume that in delegating part of the work to a subcontractor he is to be taken as accepting responsibility for the subcontractor's delicts. His obligations, unlike those of his employer, do not stem from occupation or possession or interest in the end-product of the work, but merely from the terms of his contract, and if the terms of the contract do not include an acceptance of liability for a subcontractor's delicts, it is difficult to find any principle of law apt to impose such a liability upon him.”

 

[26]      A similar point arose in MTM Construction Ltd v William Reid Engineering Ltd 1998 SLT 211, in which a main contractor sued a welding sub-subcontractor for damage caused to machinery owned by the main contractor when a building went on fire, allegedly due to the negligence of the welding sub-subcontractor.  The Lord Ordinary (Abernethy) expressed agreement with Lord Stott’s opinion and held that only the ultimate employer had a co‑existent liability (together with the party who carried out the allegedly negligent operation) for the negligent performance of works which were “extra-hazardous and inherently dangerous” resulting in loss to a third party.  (I observe in passing that it is noted at the end of the report of this case that a reclaiming motion was granted without the issuing of a written judgment.)

[27]      In the absence of any contrary authority, I conclude that Scots law does not render a contractor liable to a neighbouring landowner for damage caused by the negligence of or nuisance created by a subcontractor carrying out an inherently hazardous operation in the sense in which I have used that expression.

 

Application to the circumstances of the case
[28]      It should be emphasised at the outset that the operation whose inherent hazardousness falls to be assessed is the construction of a section of the M74 Completion on the Albion site.  It is not, for the avoidance of doubt, the carrying out of the protective measures, including the construction of the bentonite impermeable barrier, that were determined to be necessary following the 2008 investigations.  Applying the test which I have identified above, it is therefore necessary for me to make a finding as to whether the construction of that section of the motorway was either (a)  likely to cause damage to the Esso site however much care was exercised, or (b)  likely to cause such damage unless appropriate steps were taken specifically to avoid damage to the Esso site which would otherwise occur or be likely to occur.  As I have noted, the assessment must be made at the time when the operations were commenced and not with the benefit of hindsight.  I am also not here concerned with the reasonableness or adequacy of the steps that were in fact taken;  that is a matter for another day.

[29]      Adopting the terminology of the expert witnesses, the hazard founded upon by the pursuer in the present action was the presence, at the time of commencement of site preparation operations on the Albion site, of chlorinated hydrocarbons in soil or groundwater within the site.  The risk said to exist was that without adequate precautionary measures being taken, chlorinated hydrocarbons would or would be likely to migrate, in groundwater or otherwise, to locations including the Esso site where they or their degradation products could pose a significant risk to human health. 

[30]      I can deal shortly with the first of these elements, namely the existence of the hazard.  It was not disputed by either the first or the third to seventh defenders that prior to commencement of any demolition works, the Albion site  was contaminated by PCE, TCE, 1,2 DCE and VC as a consequence of the chemical storage and other works which were carried on there over a period of many years.  That was the conclusion of Mr Parker, which was accepted by Mr Dow, at least in his oral evidence, and by Dr Lee.  I am therefore able to make a finding in fact to that effect.

[31]      As regards the second element, the parties’ respective positions after the preliminary proof were as follows.  The pursuer invited me to find in fact that the first defenders ought to have known, and did know, (i)  that the carrying out of operations on the Albion site would disturb the above contaminants, and (ii)  that such disturbance would lead to their migration on to neighbouring land including the Esso site.  The first defenders submitted that I could find only that the operations might disturb the contaminants and that such disturbance might lead to migration on to neighbouring land.  The third to seventh defenders’ position was somewhat different in that Dr Lee had been asked to express an opinion as to whether operations on the Albion site were “exceptionally dangerous whatever precautions [were] taken”, ie the formulation used by the Court of Appeal in Biffa Waste.  As discussed above I regard this formulation as somewhat too narrow to represent current Scots law;  the question as I see it is whether the carrying out of the operations would or was likely to disturb the contaminants and, if so, whether such disturbance would or was likely to lead to migration to neighbouring land.  It is on that basis that I turn to examine the evidence.

[32]      The possibility of contamination of groundwater, and of off-site migration of contaminants in groundwater, was identified in the 2003 Babtie report (see paragraph 3 above) in which it is stated (page 6):

“PATHWAYS

Potential pathways for risks to controlled waters (groundwater and surface water) from on-site soil contamination include: infiltration and leaching from soil and vertical migration to both shallow and deep groundwater; lateral off-site migration of contaminants in groundwater towards surface waters, namely the Kinning House Burn; and leaching from soil, entering the drainage system and/or backfill surround to underground services/structures, with subsequent lateral migration along the service lines to surface waters.”

 

Babtie identified inter alia a high risk of contamination of shallow groundwater, with a “substantial” potential magnitude of consequence.  Direct contact and leaching to groundwater was assessed as likely and the risk as “high”.

[33]      On 26 November 2008, after demolition and site clearance had taken place, Jacobs & Atkins reported as follows:

“The site area associated with the former Albion Chemical Works and operational Esso petrol filling station on West Street forms part of the Kingston Bridge/Port Eglinton Chainage (0m - 1500m) of the M74 Completion.  The various phases of ground investigation and detailed quantitative risk assessment completed concluded that there were no unacceptable risks identified to end users of the site or the water environment.  However, there remained a residual risk of lateral off-site migration of contaminated water within the Made Ground combined with volatilisation and inhalation of VOCs.  This could potentially affect an off-site residential receptor to the east of West St.  This is a current development converting a former warehouse to flats in this area.

 

Detailed quantitative risk assessment reported within the West Street Addendum Report indicated that there are concentrations of tetrachloroethene (PCE), trichloroethene (TCE) and daughter products including Vinyl Chloride (VC) present in soil and water within the Made Ground at levels in excess of the calculated remedial targets. It was therefore concluded that further action is needed to mitigate the risks of off-site migration of contamination and associated risks to human health.”

[34]      In his report, Mr Parker explained the risk as follows.  Information in the Babtie report and in desktop studies suggested that there were contaminants in the sub-surface of the Albion site.  The act of carrying out investigative and remedial works on site had the potential for mobilisation of contaminants in three ways:

  • removal of the concrete hard standing would allow additional rainfall recharge into the subsurface that would leach contaminants in the unsaturated zone into the shallow groundwater;
  • removal of the drainage system would potentially mobilise contaminants within the drains and within the bedding surrounding the drainage system; and
  • removal of below ground pipe runs between tanks, which were notorious sources and pathways for contaminants in the subsurface, would release those contaminants into groundwater.

 

It was necessary to take measures to avoid migration of contaminants to neighbouring land while site preparation work was being undertaken.

[35]      Mr Dow agreed that operations on ground containing contaminants had the potential to mobilise those contaminants;  that contaminants which entered groundwater could, under certain circumstances, migrate to other ground;  that the work carried out on the Albion site involved disturbance of the land which had the potential to disturb chlorinated hydrocarbons present there unless such disturbance was managed;  and that if no steps were taken to manage the disturbance it was likely that the contaminants would migrate to other land.  The Babtie report showed that there had been appreciation prior to commencement of work on site of potential offsite migration of contaminated groundwater.  For his part, Dr Lee noted in his report that archaeological digs and site works may have led to the “smearing” of substances of concern within shallow soils, and to an increase in infiltration resulting in contaminant mobilisation and dissolution.  He also agreed that changes in surface cover could contribute to local recharge increasing groundwater flux.

 

Conclusion
[36]      As will be apparent, there was little if any dispute among the geologists on this aspect of the evidence.  I accept the opinion of Mr Parker in particular that the carrying out of demolition and site preparation operations on the Albion site was likely to disturb the contaminants within that site, including PCE, TCE and their degenerative products;  and that such disturbance was likely to lead to migration of those contaminants through the pathway of groundwater to neighbouring land, unless specific measures were taken to prevent such migration.  I find, on uncontroverted evidence, that the presence of these compounds in land has the potential to create a risk to human health and, in particular, that their presence in soil and groundwater beneath the Esso site represents at least a theoretical risk to human health.  I accordingly hold that the operations carried out on the Albion site are properly to be categorised as inherently hazardous operations as that expression is used in Scots law.  It follows that, in my opinion, the first defenders are not relieved of potential liability for damage to the pursuer’s land caused by negligence or nuisance by virtue of having engaged the third defender as an independent contractor and having instructed it to take appropriate and adequate precautionary measures.

 

Issue 2:  Competence of contractors and design subcontractors
[37]      The principal witnesses who gave evidence on behalf of either the first or the third to seventh defenders relevant to the competence of the third to seventh defenders and of Jacobs & Atkins as design subcontractors were:

  • Mr Graham Edmond, a chartered engineer who is currently Head of Construction for Transport Scotland.At the time of conclusion of the M74 Completion contract he was a project manager and head of the branch within Transport Scotland responsible inter alia for the M74.
  • Mr Ian Bruce, a chartered engineer who was at the material time Head of Policy, Planning and Projects in Glasgow City Council.He was the Engineer appointed by Glasgow City Council for the M74 Completion project and is now retired.
  • Mr Stephen McFadden, a chartered engineer who was at the material time Head of Policy and Design within Land and Environmental Services at Glasgow City Council.He was the Engineer’s Representative for the M74 Completion project.
  • Mr Matthew Lawman, an environmental consultant who was appointed by the third defenders as a consultant during the tender stage in 2007.
  • Mr John Logan, who was at the material time employed by the seventh defenders as Environmental Manager for the M74 Completion project.
  • Mr Alan Watt, chief executive of the Civil Engineering Contractors Association Scotland.

The evidence given by these witnesses was not challenged by the pursuer.  Witness statements by Mr Lawman and Mr Logan were accepted as their evidence without the need for attendance at court.

 

Competence of the third to seventh defenders
[38]      The M74 Completion was put out to tender as a “design and execution” project under the EU competitive dialogue procedure.  First, expressions of interest were invited.  Only one expression of interest was received, from the joint venture which is the third defender.  The joint venture was invited to complete a pre-qualification questionnaire (PQQ) to allow the first defenders, through their agent Glasgow City Council, to assess its technical ability and financial standing.  A technical assessment panel and a financial assessment panel were appointed comprising appropriate individuals from Transport Scotland and the three local authorities concerned.  Mr Bruce chaired a joint meeting of assessment panels and an interview panel.  In his opinion the panels comprised the individuals with the most relevant experience in Scotland.

[39]      Stage 1 of the assessment process consisted of marking and assessing the PQQ information submitted by the parties to the proposed joint venture.  Stage 2 consisted of a previous performance assessment.  The result was that the joint venture passed the pre‑qualification assessment and was deemed to be a competent bidder.  The competitive dialogue process then began, albeit that there was only one bidder.  Because of that, Transport Scotland commissioned a shadow financial bid from EC Harris to allow the joint venture’s financial bid to be independently appraised.  After successful completion of the competitive dialogue phase, a final tender was invited.  Following submission of the tender, a final assessment process was carried out over a period of months and the contract was awarded on 4 March 2008.

[40]      The four members of the joint venture are and at the material time were highly experienced in highway construction.  All are members of CECA Scotland.  All had in the past been, and continue to be, engaged in major road and bridge construction projects in Scotland.  According to Mr Watt’s evidence, which I accept, they all know the Scottish transport infrastructure market very well, have long established working relationships with Transport Scotland, and are likely contenders for major projects undertaken by Transport Scotland.  Mr Bruce described the joint venture partners as having a resilience and experience which “you would not get better from anyone else”.

[41]      It was submitted on behalf of the pursuer that the court was not in a position to determine whether the first defenders had employed competent contractors, as the evidence consisted of the mere ipse dixit of the witnesses.  All that could be concluded was that the first defenders had purported to assess, amongst many criteria, the third defenders’ experience of dealing with contaminated land, in a situation in which there was no other bidder.  The fact that the third to seventh defenders required to engage Jacobs & Atkins as design subcontractors in relation to mitigation of contamination on the Albion site might suggest that they did not themselves have the necessary competence in contamination issues.

[42]      I reject this submission.  I am entirely satisfied on the evidence before me that the third to seventh defenders were competent independent contractors for the purposes of the M74 Completion project.  They are all substantial and long established infrastructure contractors whose previous experience of comparable projects afforded a prima facie indication of their competence to be awarded this contract.  The pre‑qualification assessments carried out by the first defender and their managing agents were thorough and did not take the joint venturers’ competence for granted.  Technical and financial assessments were carried out by individuals qualified to do so, and steps were taken specifically to address the fact that the joint venture was the only bidder.  No evidence was led to suggest that the third defender and its members were not competent to undertake this project as an independent contractor.  I reject in particular the submission that the appointment of a design subcontractor afforded an indication that the contractor in some way lacked competence in addressing issues such as contaminated land.  It was clear from the Employer’s Requirements in the Final Tender Issue that this issue would require to be investigated and appropriate protective measures taken.  The construction contract provided expressly for the engagement of a specialist team of environmental consultants with responsibility for inter alia design of contamination mitigation works.  There is accordingly no merit in the submission.  I am satisfied that there is ample evidence to entitle me to find that the third to seventh defenders were competent independent contractors.

 

Jacobs & Atkins
[43]      In the light of what I have held elsewhere in this opinion, it is not clear to me whether any useful purpose is served by making a finding regarding the competence of Jacobs & Atkins as environmental design subcontractor, but I do so for what it is worth.  Mr Bruce described Jacobs & Atkins as “the biggest and best in the UK”;  Mr McFadden expressed a similar view.  Mr Watt described them as two household names in relation to highway works who were very experienced and had a good reputation in Scotland, the UK and overseas for major projects.  There was no contrary evidence.  I am satisfied that Jacobs & Atkins were competent design subcontractors as regards contaminated land pollution mitigation.

 

Issue 3:  Occupation and control of the Albion site
[44]      As noted earlier, a Certificate of Completion of the M74 Completion contract was issued on 7 July 2011.  Statutory responsibility for maintenance of the motorway now rests upon the first defenders in terms of section 2 of the Roads (Scotland) Act 1984.  However, clause 49 of the conditions of the construction contract provided for a five-year period of maintenance after completion during which the third defender is obliged to execute:

“…all work of routine maintenance and compliance surveys as described in the Contract and all work of repair amendment reconstruction rectification and making good of defects imperfections shrinkages or other faults”.

 

The third defender is entitled to be paid for such work unless, in the opinion of the Engineer, it is necessitated by use of materials or workmanship not in accordance with the contract or neglect or failure of the contractor to comply with any repair etc obligation under the contract.  Clause 61 provides that on expiry of the maintenance period, the Engineer must issue to the first defenders (with a copy to the third defender) a maintenance certificate stating the date on which the third defender has completed its obligations to design, construct, complete and maintain the works to the Engineer’s satisfaction.  A maintenance certificate has not yet been issued.  Issue of the maintenance certificate will not however relieve the first or third defenders of any liability of one to the other arising out of their respective obligations under the contract.  The third to seventh defenders entered into a lease with the first defenders of inter alia the Albion site for the purpose of exercising the third defender’s rights and implementing its obligations under the contract.  The lease was for the period from 1 May 2008 until final completion.

[45]      The contract confers no express entitlement upon the third to seventh defenders to enter upon the first defenders’ property, except in so far as such entitlement may be implied from the obligation to execute works of routine maintenance.  The procedure for obtaining access to fulfil obligations to maintain the landscape of the motorway or to rectify defects was described in evidence by Mr Roger Reid, a chartered civil engineer employed by the sixth defenders who is the senior manager responsible, on behalf of the joint venture, for the maintenance and defects correction period.  In order to obtain access, the third defender requires permission from Transerve, which is Transport Scotland’s maintenance contractor for the motorway.  Details of the proposed works must be provided in order to enable Transerve to assess whether they will affect traffic flow.  Once the third defender has received an initial indication that the proposed works and access requirements are acceptable, a formal application is submitted.  This process is followed no matter how minor the proposed works may be. 

[46]      On behalf of the first defenders it was submitted that if there are any defects in the system of treatment of contamination on the Albion site, the third defenders will require to rectify such defects.  They will be in sole control of such remedial works and, in that sense – which is the only relevant sense – they will have control of the Albion site.  They should be regarded as having occupation and control of the Albion site for the purpose of remediation of any continuing issue of contamination of the Esso site.

[47]      I am not persuaded by this submission.  The third to seventh defenders have no right of access to the Albion site without the express permission of the first defenders.  It is, of course, in the interests of the first defenders to allow access in order for the third defender’s maintenance obligations to be implemented, although it should not be forgotten that a substantial part of what was the Albion site now consists of a motorway in constant use, and not merely of landscaped embankments.  If, in due course, remedial work is found to be necessary within the Albion site to avoid continuing damage to neighbouring land caused by the fault of the third defender, then it may equally be in the first defenders’ interest to allow access to at least part of what was the Albion site in order for such remedial work to be carried out by or at the expense of the third to seventh defenders.  In that eventuality, it may be that some or all of these defenders would be given occupation and control of part of the Albion site, although one can envisage alternative courses of action whereby occupation and control is given to another contractor engaged to effect any necessary remedial work.  It will be recalled that the issue that is before me for determination is “whether the [Albion site] remains under the occupation and control of the third to seventh defenders” (my emphasis).  Having regard to the very restricted availability of access to any part of the Albion site, let alone to that part which now consists of motorway, it is clear to me that the question contained in the issue must be answered in the negative.

 

Disposal
[48]      In accordance with parties’ request, I shall put the case out by order for discussion of further procedure in the light of my determination of these three issues.  All questions of expenses are reserved.