SCTSPRINT3

EXTRA DIVISION, INNER HOUSE, COURT OF SESSION

Lord Osborne

Lord Carloway

Lord Emslie

[2010] CSIH 86

OPINION OF LORD OSBORNE

in the cause

by

(FIRST) MARTIN HINES; and (SECOND) WALLACE COMMERCIAL LIMITED

Pursuers and Reclaimers;

against

KING STURGE, LLP

Defenders and Respondents:

_______

Act:: Jones QC; D Hamilton; Simpson & Marwick (for Pursuers and Reclaimers)

Alt: J Lake QC, Miss Higgins; MacRoberts (for Defenders and Respondents)

5 November 2010

The background circumstances

[1] The first-named reclaimer in this action traded as The Vancouver Muffin Company at 73 St Vincent Street, Glasgow at the time of the fire, which constitutes a part of the basis of this action. The second-named reclaimers are a company incorporated under the Companies Acts and having a place of business at 69 St Vincent Street, Glasgow. The respondents are a limited liability partnership specialising in commercial property management, having a place of business at Finlay House, 10-14 West Nile Street, Glasgow. It is averred that, at the time of the fire referred to, they were property managers with responsibility for the maintenance of the properties in which the businesses of the first and second-named reclaimers were conducted.

[2] The circumstances giving rise to the action are described in the averments of the reclaimers in this way. At approximately 3 a.m. on or around 16 April 2005, smoke was discovered by a member of the public in the vicinity of St Vincent Street, Glasgow. This member of the public, whose designation is said to be unknown, alerted police officers who were on mobile patrol nearby. Thereafter, the police officers contacted the Fire Brigade at 3.48 a.m. By 3.56 a.m., fire officers had arrived in the vicinity, along with three water pump appliances and a high reach appliance. On arrival at the scene, the fire officers encountered significant delay in finding the source of the fire. Initially they investigated at the west end of Drury Street in Glasgow. Thereafter, investigations continued around Drury Street and into West Nile Street in Glasgow. Finally, the fire officers moved to St Vincent Street where they eventually noticed blackening of the windows of The Vancouver Muffin Company at 73 St Vincent Street. After further investigation, they forced entry to these premises. Once inside, the fire officers discovered several areas of fire which were thereafter extinguished. As a consequence of the spread of fire prior to its discovery, flames had passed up the face of the building. Window frames were alight above the office of The Vancouver Muffin Company. The fire had also spread to the offices in the rest of the building, including that occupied by the second-named pursuers. The fire reached the main roof of the building, several storeys above the original outbreak. The fire officers attempted to extinguish the fire in the higher parts of the building, but the severity of it forced them to retreat. Thereafter all fire-fighting was undertaken from the exterior of the building. Before being extinguished, the fire had spread to a large proportion of the roof. Ultimately five pumping appliances and a high rise appliance were required to fight it. The severity of the blaze required the involvement of 50 fire-fighters. After the fire had been extinguished, investigation was undertaken into the origin and spread of it. Those investigations concluded that the fire had originated in the office area of premises occupied by the first-named reclaimer and had thereafter spread throughout the building.

[3] It is averred that, at the time of the fire, the first-named reclaimer was tenant of the basement and ground floor areas of 73 St Vincent Street. The property was owned by The Joint Properties Limited, "JP Limited", a company registered under the Companies Acts, having its registered office in Edinburgh. It is also averred that the property was under the control of the respondents, acting in their capacity as managing agents. Their control, as managing agents, is said to have extended to managing the property on behalf of the owners. They did so for the benefit of the owners and also for the benefit of tenants, such as the reclaimers. The control of the respondents is said to have included the control of the maintenance of the fire alarm and fire monitoring system associated with the property and the telephone line upon which the fire monitoring system relied. In elaboration of that description it is averred that the property had a fire alarm system which had been fitted some time prior to the first-named reclaimer opening his business. It comprised a detector at the front door of the property and two detectors at the mezzanine level. It was also fitted with a monitoring system operated under the auspices of "BT Redcare". BT Redcare was designed as an intelligent monitoring system which allowed any trigger of the fire alarm to be reported directly to Strathclyde Fire & Rescue Services. The purpose of this system, located within the first-named reclaimer's business premises was to ensure rapid fire service response and the accurate identification of the property affected by fire. The system relied upon an alarm signal being transmitted, by way of a dedicated telephone line, to an alarm receiving station operated by Group 4 Security Limited. That alarm receiving station would then send an automated immediate alert to Strathclyde Fire & Rescue Service. Fire officers would then be dispatched immediately to the location of fire alert. It is averred that the monitoring system had been successfully utilised on several previous occasions known to the first-named reclaimer. In particular, on several occasions, burning food had triggered the alarm and the monitoring system. On every occasion when the monitoring system had alerted the fire service, fire officers had attended swiftly at the correct address. The last recorded signal to Group 4 Security Limited had been sent on 16 February 2005. It is also averred that the second-named reclaimers were, at the material time, tenants of the second floor premises at 69 St Vincent Street, Glasgow.

[4] In condescendence VII of their pleadings, the reclaimers aver that the maintenance of the fire alarm and monitoring system in the premises of the first-named reclaimer was the responsibility of the respondents, who arranged for the regular checking of the system to ensure that it was fully operational. The maintenance and inspection were undertaken by CMD Fire and Security Limited, "CMD Limited". The respondents were fully aware that they had responsibility to the tenants and to the owner of the building for the testing and maintenance of the fire alarm system. The reclaimers make detailed averments about the circumstances in which the respondents came to assume their responsibilities following the withdrawal of the previous managing agents. A handover meeting between the two sets of agents had been held on 10 December 2004, when a list of contacts for various services in relation to the property was discussed. The reclaimers believe and aver that the testing of fire alarms was specifically included in the discussions between the former managing agents and the respondents as part of the handover meetings prior to the fire. In these circumstances it is said that they had assumed responsibility for the operation, testing and maintenance of the fire alarm system in the building on behalf of the owners. It is averred that the annual service charge paid by the tenants, including the first and second-named reclaimers, under the terms of their lease included payment for fire alarm testing and maintenance. It is averred that accordingly the respondents knew that the tenants paid for, and consequently relied upon, the respondents exercising reasonable care in the maintenance of the fire alarm system.

[5] On 23 March 2005, one Steven Fern, an employee of CMD Limited carried out a routine inspection of the fire alarm system. He noted that the telephone line linking the alarm system to the monitoring control room had been disconnected. Consequently the monitoring system in relation to the property could not function. Mr Fern reported the matter to his employers, CMD Limited. A Mr Philip Blundell, also an employee of CMD Limited, thereafter had a series of telephone conversations with a Mr Glen Spearing, an employee of the respondents. Specifically on 23 March 2005, Mr Blundell immediately contacted the respondents to make them aware that the dedicated monitoring line had been disconnected. Their initial response was to ask CMD Limited to arrange for a dedicated BT Redcare line to be reconnected or for a new line to be established. By a further telephone conversation on 23 March 2005 Mr Spearing was informed by Mr Blundell that CMD Limited did not have the authority to instruct British Telecom on behalf of the respondents and that the reconnection of the existing line or installation of a new line would require to be undertaken by them. It was said that British Telecom would not take instructions from CMD Limited, since Mr Blundell did not have responsibility for the building or for the payment of any account. During the course of that telephone conversation it is averred that the respondents intimated that they understood that position and would attend to the reconnection of the telephone line. However, at the time of the fire, the disconnected telephone line had not been reconnected, nor had any new line been created; no temporary signalling protection system had been put in place to provide temporary monitoring until such time as British Telecom had re-established a permanent dedicated line. In consequence, at the time of the fire, the monitoring element of the system was not operational.

[6] It is averred that, in consequence of the situation outlined, the fire started and spread without a signal being sent to Strathclyde Fire & Rescue Service identifying the exact location of the fire. The absence of a monitoring system meant that the fire service experienced significant delay in identifying the location of the outbreak of the fire, causing or materially contributing to the extent of the spread of the fire and the loss and damage suffered by the first and second-named reclaimers. An investigation into the cause and spread of the fire concluded that the delay in the arrival of the fire service at the correct location had allowed the fire to spread and cause loss and damage on a significantly more extensive scale than would otherwise have been the case. It is claimed that, had the respondents ensured that a monitoring system was operational at the time of the fire, the fire detectors would have been activated at an early stage and that information concerning the precise location of the fire would have been conveyed to Strathclyde Fire & Rescue Service immediately. Consequently the fire service would have been able to reach the site of the fire prior to the fire accelerating and spreading through the premises occupied by the reclaimers. In particular, it is claimed that the fire would have been contained in such a way that the structures of the building would not have been as severely affected as they were and the main roof would not have been destroyed. But for the delay in the fire service attending at the scene of the fire, it is averred that the loss and damage sustained by the reclaimers would have been substantially reduced. They go on to make further detailed averments concerning the actings of Mr Spearing following upon his being informed that the dedicated telephone line had been disconnected. In these averments, it is suggested that the reason for the disconnection of the telephone line had been a failure, over a period of months, in payment of the accounts of British Telecom for that telephone line. It is not averred which managing agents were responsible for the non-payment of these accounts, but it is averred that the respondents were managing agents over a period of time from January 2005 during which British Telecom accounts remained unpaid and led to the disconnection of the telephone line.

[7] The reclaimers have also made extensive averments concerning the responsibilities of JPL Limited, as landlords, for the provision of telecommunications services, making reference to a lease between them and a company known as Bells Bakers Limited. However, although both reclaimers claim to be tenants and thus to have a right to occupy parts of the property, they do not aver the identity of the person or company from which they derived their tenancies, or what bearing any lease in favour of Bells Bakers Limited might have had on the situation.

[8] In condescendences VIII to XI, the pursuers make averments concerning the quantification of their losses sustained in consequence of the fire, as it in fact developed. For the present purposes it is unnecessary to be concerned with these. In condescendence XII, the pursuers make a case of fault against the respondents in these terms:

"The fire spread was caused by the fault and negligence et separatim breach of duty of the defenders. The defenders had a duty to take reasonable care for the safety and condition of the buildings for which they were responsible. They had a duty to take reasonable care to ensure that any fire which started in premises under their control and for which they were responsible was detected and monitored by a fire alarm and monitoring system. They had a duty to take reasonable care to maintain the fire alarm et separatim monitoring system in a fully operational and functional state. They had a duty to take reasonable care to ensure that when a fault was reported to them in relation to that fire alarm and monitoring system, reasonable steps were taken to ensure those faults were remedied within a reasonable period. They had a duty to take reasonable care to ensure that phone lines upon which the monitoring system depended were not disconnected. They had a duty to take reasonable care to ensure that once a disconnected phone line was identified to them, reasonable steps were taken to ensure a temporary digital communicator was put in place to ensure immediate monitoring coverage for the properties under their control and for which they had responsibility. In one or all of those duties the defenders failed and so caused or materially contributed to the loss and damage as previously condescended upon."

[9] The defenders have tabled a number of pleas-in-law. Plea-in-law 2 is one in which they seek dismissal of the action on account of the irrelevance and lack of specification of the pursuers averments. After a hearing in the procedure roll, on 1 July 2009, the Lord Ordinary sustained the defenders second plea-in-law and dismissed the action. Against that interlocutor the pursuers have now reclaimed.

[10] Prior to the commencement of the reclaiming motion, counsel for the reclaimers moved the court for leave to amend their pleadings in terms of a Minute of Amendment, number 25 of process. He explained that the Lord Ordinary had dismissed the action upon the basis that no duty of care was owed by the respondents to the reclaimers. A secondary argument had been advanced before the Lord Ordinary, which was outlined at pages 68 and 69 of the reclaiming print, in paragraphs [37] and [40] of the opinion of the Lord Ordinary. The Lord Ordinary had not in fact dealt with that secondary argument. In paragraph [40] she had made it clear that, if the court was dissatisfied with the specification of the pursuers averments upon which that secondary argument had been based, she had been asked to put the case out By Order following the procedure roll hearing, in order to give them the opportunity to cure any shortcomings in their averments by amendment. In the event, the Lord Ordinary had proceeded as described and therefore no By Order roll hearing had been held. The purpose of the present Minute of Amendment was to meet the criticisms of the reclaimers' averments advanced as part of the secondary argument. In it, no attempt was being made to alter the reclaimers' averments so as to meet the fundamental attack mounted against them by the respondents. The justification for proceeding in this way lay in the fact that it was conceivable that, during the course of the reclaiming motion, the respondents might seek to renew the secondary argument.

[11] Senior counsel for the respondents opposed the motion for leave to amend. He observed that it came at a very late stage and that its contents would require to be answered by the respondents, which could not be done consistently with the preservation of the diet for the hearing of the reclaiming motion. In any event, he submitted that the new averments in the Minute of Amendment raised as many questions as they answered. It could even be said that they obfuscated the situation. Further, they contained a demonstrable error.

[12] We decided to allow the reclaimers' pleadings to be amended in terms of the Minute of Amendment. We took that course to enable the court to consider any argument that might be deployed by the respondents in relation to the secondary argument referred to by the Lord Ordinary in paragraph [50] of her opinion. In doing so, we recorded that the amendment was allowed on the basis that, following our decision on the reclaiming motion, if the dismissal of the action were reversed, the respondents would be given leave to amend in response to the averments made by the Minute of Amendment, if so advised, at the expense of the reclaimers.

Submissions by junior counsel for the reclaimers

[13] Counsel moved the court to recall the interlocutor of the Lord Ordinary, dated 1 July 2009, and to allow a proof before answer on the whole case. He drew attention to the Note of Argument in writing compiled on behalf of the reclaimers. His submissions would relate to four matters: (1) the legal basis for the existence of the duty of care relied upon; (2) the impact, if any, of contract upon the duty of care; (3) the averments made on record, which constituted a relevant case; and (4) certain additional matters reflected in grounds of appeal (4) and (8).

[14] Turning to the legal basis for the averred duty of care, counsel submitted that there were three alternative bases relied upon to show that sufficient averments had been made to justify the case being sent to inquiry. First, it would be contended, under particular reference to White v Jones [1995] 2 A.C.207, that the relationship between the reclaimers and the respondents could properly be understood as one within the category of "special relationships". If that was so, a duty of care existed and reliance by the reclaimers on the respondents did not need to be averred or proved. Second, the reclaimers would argue that, in any event, they had averred and offered to prove that there was in fact reliance by them on the respondents in relation to the provision and maintenance of the fire alarm and monitoring system at the property. In these circumstances the reclaimers' case satisfied the objective tests set forth in Williams and another v Natural Life Health Foods Limited [1998] 1 W.L.R.830 and Henderson and others v Merrett Syndicates Limited and others [1995] 2 A.C.145, founded upon the so-called extended principle of Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] A.C. 465. Third, if the court were to hold that the objective test referred to was not satisfied, the reclaimers would rely on the tripartite test explained in Caparo Industries Plc v Dickman and others [1990] 2 A.C.605. These three bases had to be seen as alternatives. The general approach to cases of this kind was more fully explained by Lord Bingham of Cornhill in Customs and Excise Commissioners v Barclays Bank Plc [2007] 1 A.C.181, in paragraphs 4-8 at pages 190-192. It was there emphasised that the particular circumstances of an individual case were of great importance.

[15] Developing the concept of a special relationship as a basis for the existence of a duty, counsel relied on Nocton v Lord Ashburton [1914] A.C.932 and particularly the observations of Lord Haldane at pages 946-948 and 955-947; of Lord Dunedin at pages 964-965 and Lord Shaw at page 969; Robinson v The National Bank of Scotland Limited 1916 S.C.(H.L.) 154 at page 157; and Hedley Byrne & Co Limited v Heller & Partners Limited, particularly the observations of Lord Reid at pages 485-486, Lord Morris at pages 502 and 510-511, and Lord Devlin at pages 522-523 and 539. Where there was a special relationship, one party assumed a duty to exercise care in relation to the affairs of another. The existence of a fiduciary duty constituted such a relationship, but was not the only example. In recent cases a clear example of such a situation was to be found in White v Jones. Reference was made to the observations of Lord Browne-Wilkinson at pages 270-274, Lord Goff of Chievely at pages 268-269 and Lord Nolan at pages 292-294.

[16] A special relationship did not depend on any mutual dealing, let alone a relationship akin to contract; equity imposed the obligation because one person had assumed to act in the affairs of another. Reliance was not a necessary feature; what mattered was that one party knew that the economic well-being of another depended upon that person's careful conduct of the other's affairs. Foreseeability of careless conduct causing damage was sufficient to found liability. What was important was the assumption of responsibility for a task, not for the legal liability for its careful performance. The fact that one party assumed responsibility for the task pursuant to a contract with a third party could found a duty of care. Applying these concepts to the present case, it was submitted that the respondents had assumed responsibility for the task of, among other things, maintaining the fire alarm and monitoring system in the building where the reclaimers carried on their businesses. A special relationship was thus created such that a duty arose on the part of the respondents to carry out their task with reasonable care. The respondents had assumed this responsibility for the task pursuant to their contract with the owners of the building. It was not necessary for the reclaimers to show reliance or mutual dealing between the parties for the duty to exist. It was contended that the respondents knew that the reclaimers' economic well-being depended upon their careful conduct in the area of their responsibilities. In this case, involving as it did negligent inaction, the foreseeability of the respondents' careless conduct causing damage was a sufficient basis to found liability.

[17] Under questioning by the court, counsel accepted that the point made by the Lord Ordinary in paragraph [42] of her Opinion was valid. While the reclaimers averred that they were tenants, they did not explain the basis of their tenancy or who might be their landlords. They acknowledged that they had no leases with the property owners, J.P. Limited. They understood that they were sub-tenants of Bell's Bakeries Limited, who were themselves tenants of J.P. Limited, but there were no averments to that effect. Counsel was also unable to explain upon the basis of what legal obligation payment of a service charge was made. However he submitted that any lease between the reclaimers and any other party was not relevant to the matter of the special relationship. It did not bear on the respondents' task. The reclaimers had a locus, because they were legitimately running businesses in the property. The only issue relating to contract might be whether the alleged duty was so inconsistent with an existing contract that it could not be recognised. However that was not the position. Counsel went on to draw attention in detail to the reclaimers' averments, which, he contended, showed that the respondents had assumed responsibility for the task of maintenance of the fire alarm and monitoring system, including the associated telephone line, pursuant to their contract with the owners of the building. The reclaimers were offering to prove that the respondents had taken over their responsibilities from Messrs Speirs Gumley, the former property managers, although no contract was signed by the respondents and the property owners until after the fire had occurred. There were also adequate averments relating to the foreseeability of damage to the reclaimers, in the event of the defenders failing to perform their task with reasonable care.

[18] Counsel then turned to consider the situation in the event of the court rejecting the suggestion that there existed a special relationship between the respondents and the reclaimers. In such a situation, he relied upon what had been referred to as the extended Hedley Byrne principle. The submission was that the reclaimers had made sufficient averments of the assumption of responsibility by the respondents and the reliance upon that assumption of responsibility on the part of the reclaimers. In that way the reclaimers had averred a relevant case. In connection with this submission, counsel relied upon Hedley Byrne & Company Limited v Heller & Partners Limited, Henderson and others v Merrett Syndicates Limited, particularly the speech of Lord Goff of Chievely at pages 178-183, White v Jones and particularly the speech of Lord Browne-Wilkinson at pages 275-276 and Williams v Natural Life Health Foods Limited, particularly the speech of Lord Steyn. What emerged from these authorities was the need to make an objective assessment of whether responsibility had in fact been assumed. The question of whether there was reliance upon that assumption of responsibility and the reasonableness of such reliance could be determined after inquiry. In this connection there were important averments at pages 14C-D and 19A-D of the reclaiming print.

[19] On the assumption that the reclaimers' submissions in relation to the extended Hedley Byrne principle were rejected, it was submitted that the tripartite test in Caparo Industries Plc v Dickman could be satisfied in the circumstances averred. The test was set out by Lord Bridge at pages 617 and 618 of the report. The tripartite test was satisfied in the circumstances of this case.

[20] Counsel submitted that the court would appreciate that before an action such as this could properly be dismissed, a high test had to be satisfied. That test was whether, if all the pursuers' averments were proved, the action was nevertheless bound to fail. The authority to that effect was well known and could be found in Jamieson v Jamieson 1952 S.C.(H.L.) 44, Royal Bank of Scotland Plc v Bannerman Johnstone & Maclay 2005 S.C.437, at paragraph 40 and Miller v South of Scotland Electricity Board 1958 S.C.(H.L.) 20.

[21] Counsel then proceeded in detail to examine the averments made by the reclaimers in the context of the various tests which he had described. He submitted that, whatever approach one adopted in law to the applicable test in the circumstances of this case, the conclusion was that it could not be said that the action would be bound to fail if all of the reclaimers' averments were established. In these circumstances dismissal was inappropriate.

[22] Finally counsel turned to deal with additional matters arising out of grounds of appeal 4 and 8. He indicated that ground of appeal 4 was not to be insisted upon. Ground of appeal 8 was to the effect that the Lord Ordinary had erred in fact and law in failing to distinguish the reclaimers' case from that of Mitchell v Glasgow City Council 2009 S.C.(H.L.) 21 and consequently relying on that case in order to dismiss the pursuers' case on ground of relevancy (paragraph [50]). It was clear that the facts of that case were far removed from those of the present one; what was contended for was the existence of a duty on the part of a local authority towards a tenant arising from the alleged danger presented by the behaviour of another local authority tenant. The question in that case concerned the scope of the defenders' duty of care, which was considered by Lord Hope of Craighead to be a matter of law, as appeared from paragraphs [11] and [12] of his Opinion. That was not the issue in the present case. The issue here was whether, on the facts averred by the reclaimers a duty of care arose towards them incumbent upon the respondents. In these circumstances, the Lord Ordinary's view expressed in paragraph [50] of her Opinion was erroneous.


Submissions of junior counsel for the respondents

[23] Counsel indicated that, first, she would make submissions concerning the relevance of the reclaimers' averments of breach of any duty; second, she would make submissions relating to the alleged existence of a duty of care. As regards the first of these matters, her contention was that the averments of breach of duty, to be found in condescendence XII, were irrelevant. In relation to the averments in condescendence VII, it was submitted that there were no averments that the respondents could be seen as responsible for the non-payment of British Telecom's bills, which had resulted in the disconnection of the telephone line. There were no averments at all of that matter. In condescendence XII there were averments about a duty to take "reasonable steps" to ensure that faults were remedied within a "reasonable period". These averments were irrelevant, since there was nothing to suggest what was meant by "reasonable steps" and no indication of what might be considered a "reasonable time". In connection with these submissions counsel relied upon Gibson v Strathclyde Regional Council 1993 S.L.T.1243. In short, there had to be appropriate factual averments to support averments of duty.

[24] Looking at the matter in another way, in relation to the question of causation, because the averments did not disclose what steps should have been taken in what particular time, it could not be said what might have been achieved by the taking of such steps in that time. Thus there was a lacuna in that element of the reclaimers' case. Nothing contained in the amendment made at the outset of the hearing had the effect of curing these defects. This argument was quite independent from the main contention of the respondents relating to the matter of a duty of care.

[25] Counsel then turned to consider the issue of a duty of care. She explained that, first, she would examine the case law relating to when a duty might come into being; second, she would examine the averments made by the reclaimers; and, third, she would consider the reclaimers' grounds of appeal. Counsel acknowledged that there might be a number of ways of approaching the issue of the existence of a duty of care, which had already been ventilated: (1) the existence of a special relationship; (2) whether there was an assumption of responsibility and reliance upon it; and (3) the Caparo tripartite test. In the reclaimers' presentation, the first of these appeared to be emphasised. On any view, it could be said that the mere foreseeability of harm could not, in itself, be a sufficient basis for the existence of a duty of care. There was no positive duty to protect others from harm. Liability in negligence was not imposed for mere omission. In effect, a duty of care would only be imposed where it was fair, just and reasonable to do so. Among the situations in which that might be so, would be that where there had been a definite assumption of responsibility and reliance upon it. In the end the existence of a duty was a matter of fairness and public policy. A duty to take steps to safeguard another person would arise only where the person in question had assumed responsibility for the safety of that person. Where a party's conduct was regulated by contract, there was little scope for the implication of the duty of care going beyond the terms of the contract. In connection with these propositions counsel relied upon Mitchell v Glasgow City Council, in particular, the observations of Lord Hope of Craighead at page 27, Lord Scott of Foscote at page 35 and Lord Rodger of Earlsferry at page 38.

[26] Counsel submitted that much reliance had been placed by the reclaimers on the decision in White v Jones. While that case was inconsistent with the much earlier Scottish case of Robertson v Jones 1861 4 MacQ.167, it was not argued that White v Jones was not part of the law of Scotland. That could hardly be done in view of what was said in Robertson v Watt & Company (4 July 1995) (unreported) and Holmes v Bank of Scotland 2002 S.L.T.544. However, it had to be recognised that White v Jones arose out of very special circumstances which, in no way, resembled the facts of the present case.

[27] In the reclaimers' submissions that there had been much reference to the concept of the special relationship. However, counsel submitted that, in substance, there was no difference between that approach and the approach found in Caparo Plc v Dickman. It was plain that the approach followed in that case, if applied to the circumstances of the present case, would not result in the conclusion that a duty of care existed in the reclaimers' favour. The facts here were that the respondents' actions were referable to their contractual duties towards the owners of the property. They had not been aware of the position of the reclaimers. There were no averments to show that the respondents were even aware of the reclaimers' existence, or what presence they had in the building in question. In the light of these features of the case, whichever test were applied, the reclaimers' case would fail.

[28] Counsel went on to examine the decisions on assumption of responsibility as the basis for a duty of care. The first of these was Hedley Byrne & Company Limited v Heller & Partners Limited. It was evident from what was said there that the inquiry had to be whether there was a relationship that gave rise to a duty. That had to involve the assumption of responsibility and reliance upon that, before a duty of care would come into being. Here there was no relationship between the defenders and the reclaimers, at least so far as the averments of the latter were concerned. In any event it was difficult to see why a person in the position of a tenant would rely upon the agent of the landlord. It was evident from the observations of Lord Devlin at page 529 that the special relationship that might give rise to the assumption of responsibility had to be equivalent to contract. It was difficult to see in what sense there was any relationship between the reclaimers and the respondents here. Counsel next drew attention to Henderson v Merrett Syndicates Limited, on which she placed reliance, particularly the expressed approach of the court in the speech of Lord Goff of Chieveley at pages 180-182. If it was appropriate to adopt the approach of considering whether a special relationship existed in the circumstances of this case, an objective test had to be applied. It was submitted that there were no averments to support the existence of such a relationship here. Henderson v Merrett Syndicates Limited arose out of a very special arrangement in the insurance market and was of little assistance in the circumstances of the present case.

[29] Turning to Williams v Natural Life Foods Limited, counsel pointed out that the assumption of responsibility was the primary focus in the circumstances of that case, based upon things said or done by the defendant in dealings with the plaintiff. Quite simply, in this case, there were no such dealings. There was no assumption of responsibility in any meaningful sense.

[30] Counsel moved on to consider White v Jones. It had to be recognised that in that case there were no direct dealings between the solicitor in question and the disappointed beneficiary. It was plain from the details of this decision that it was primarily based on the special circumstances of the case. It was evident that the House of Lords had been much influenced by the particular circumstance of the case and had adopted an incremental approach by way of analogy, as appeared from the observations of Lord Browne-Wilkinson at page 270. There was little or no resemblance between the circumstances of that case and the present one, which rendered it of little assistance. Looking at the judgments there, it was evident that several different approaches had been employed in reaching the conclusion. One of the important features of the present case was that, while the reclaimers averred that the respondents had "control" of the building in question, that averment had to be seen in the light of the situation as it was and, in particular, the contractual arrangements. At the time of the fire it was acknowledged that there was no formal contract between the respondents and the landlord; such a contract was entered into only after the fire. However, even if the respondents were to be seen as involved in an informal contractual arrangement under which they were responsible for the management of the property, that did not give to them absolute control over it.

[31] Finally junior counsel turned to deal with cases which were concerned with the relationship between delictual duties and contractual duties. In this connection she advanced two propositions: first, that, if there was a contractual relationship between parties, that was no bar to the existence of delictual duties; and, second, unless there was pleaded any fact that added to or modified the contractual duties of a party, then the contract circumscribed the boundaries of the delictual duties. In that connection she relied on William Hill Organisation Limited v Bernard Sunley and Sons Limited (1982) 22 B.L.R. 8, Tai Hing Cotton Mill Limited v Liu Chong Hing Bank Limited and Others [1986] A.C. 80; and South Australia Asset Management Corporation v York Montague Limited [1997] A.C. 191. It appeared that the reclaimers here relied on contract for the origin of the "task" which they claimed the respondents had undertaken. Yet the scope of that task was unknown or, in any event, unclear. In particular their responsibilities in relation to the fire alarm system were undefined. It was evident that the respondents, as management agents, had no locus apart from that conferred upon them by contract. Yet there was no formal contract. In a context in which the relationship between the respondents and the landlords was so obscure, it would be inappropriate for the court to attribute to the respondents a definite responsibility for any particular task. In the absence of averments about those matters, even if a proof before answer were allowed, it would not be open to the respondents to lead evidence in relation to these matters without fair notice.

[32] Having lodged a Supplementary Note of the respondents' submissions, which referred particularly to the shortcomings in the reclaimers' averments, counsel concluded her submissions.

Submissions of Senior Counsel for the Reclaimers

[33] Senior counsel began by adopting the submissions of his junior. He went on to comment on the order in which the reclaimers' submissions had been made. There was no particular magic in that. However, it had been considered that the "special relationship" test was applicable to the circumstances of this case; if that test were passed, then there would be no need for further enquiry. However, plainly there was an interrelationship between the tests; one test might be more appropriate in one set of circumstances and another in another. The reclaimers would seek to show that, if the court were to hold that no special relationship existed between them and the respondents, the test in Caparo Industries Plc v Dickman could be satisfied in the circumstances of this case. It was evident from Mitchell v Glasgow City Council that the tests referred to could be seen as part of the law of Scotland.

[34] Senior counsel then proceeded to emphasise the significant elements of fact in the present case. The first of these was that it was undisputed that the landlords of the building had had a fire alarm system with a remote monitoring arrangement in place, involving the use of a dedicated telephone line. Secondly, it was plain that that fire alarm system was designed to serve 69 and 73 St Vincent Street, Glasgow, both owned by the landlords. Thirdly, the purpose of the fire alarm system was to mitigate damage to property and injury to persons, in the event of the occurrence of a fire. Fourthly, it was averred that the respondents had control of this system and of the dedicated telephone line; that much was evident from the averments made at page 10 of the reclaiming print. It followed from that state of affairs that it was the respondents' responsibility to deal with problems arising in relation to the telephone line. It was acknowledged that, at the time of the fire, there was no formal contract between the respondents and the landlords. The former had taken over responsibility only in January 2005. It was also acknowledged that the precise scope of the respondents' duties had not been averred, but the admission referred to at page 25 of the reclaiming print in Answer 7 was important. On 23 March 2005, CMD Limited had reported to the respondents that the dedicated telephone line had been disconnected and could only be reconnected on the initiative of the reclaimers. While it might be that the responsibility for the non-payment of the British Telecom Account for the dedicated line was that of Speirs Gumley, the respondents had come into the position of managing agents and had a duty to deal with the situation which they found in relation to that matter. In Condescendence VII, the reclaimers had clearly averred that the maintenance of the fire alarm and monitoring system was the responsibility of the respondent. Lastly, CMD Limited had clearly informed the respondents on 23 March 2005 concerning the position regarding the disconnection of the dedicated telephone line. As averred at page 15D to E of the reclaiming print the respondents clearly understood that it was for them to attend to the reconnection of the line. All that was a basis for justifiably averring and claiming that the respondents knew or ought to have known that, if nothing were done by them, the benefit of the system would be lost. Another facet of the situation of importance was that the reclaimers had had no way of knowing that the remote monitoring element of the fire alarm system was not functioning; they were not in a position in which they could test it, yet they had had experience of its successful operation in the past and might reasonably assume that it remained functional. In these circumstances it was quite proper that the reclaimers relied on the respondents to take reasonable care to maintain the system in full working order. The respondents must have known that the occupants of the building relied upon them for the performance of their duties. All these circumstances amounted to a proper basis for the submission that there was "proximity" between the reclaimers and the respondents, in the sense of Caparo Industries Plc v Dickman. The respondents could reasonably have foreseen that, as long as the dedicated telephone line remained disconnected, a fire would put the property and their interests in greater jeopardy than would have been the case had that not been so.

[35] There had been some criticism of the reclaimers' averments in relation to the scope of the respondents' duty. In particular criticism was focussed upon the terms of Condescendence XII where references were made to the taking of "reasonable steps" within a "reasonable period". However, while no particular steps were desiderated, it was quite evident that steps necessary were those required to achieve a reconnection of the dedicated telephone line. Further, as regards the issue of time, the line remained disconnected at the time of a fire and it was to be implied from these circumstances that a reasonable time was something less than the period between 23 March 2005 and the occurrence of the fire on 16 April 2005. These criticisms did not justify the withholding of the reclaimers' case from proof.

[36] Criticism had been directed to the reclaimers' pleadings in respect that they contained no averments concerning the terms of the leases held by them. That criticism was unfounded. A duty of care in delict could be recognised regardless of the terms of those leases. Furthermore, the respondents did not require to be aware of the reclaimers' existence prior to the fire. Approaching the case on the basis of the tests set out in Caparo Industries Plc v Dickman, that consideration did not matter; those tests could be satisfied here and accordingly enquiry should be ordered. On that basis, it was not necessary to aver a "special relationship" of the kind recognised in White v Jones, or of reliance, an ingredient of the extended Hedley Byrne & Company Limited v Heller & Partners Limited test.

[37] Senior counsel then drew attention to the approach of the Lord Ordinary in this case. In paragraph [49] of her opinion she had concluded that the Caparo test could not be met on the basis of the reclaimers' averments. She recognised that it might be foreseeable that damage to a business conducted within the premises might occur if the fire alarm system was not maintained, but she did not identify any averments from which the other components of the test, proximity and the fair, just and reasonable component could be satisfied. However, the Lord Ordinary did not explain why she had so concluded. Paragraph [38] of her opinion did not constitute a convincing explanation.

[38] Turning to the case of Hedley Byrne & Company Limited v Heller & Partners Limited in particular, senior counsel said that it was not the reclaimers' contention that the present case was closely comparable to that. There was no parallel in the present case with the situation contemplated by Lord Devlin at page 531.

[39] Counsel for the respondents had not attempted in her submissions to deal with the important statement of principle to be found in White v Jones between page 271E and 272B in the speech of Lord Brown-Wilkinson. It was there recognised that there need not be any mutual dealings between the figured parties A and B for there to be a duty of care. Thus, in the present case it was of no moment that there had been no mutual dealings between the reclaimers and the respondents. All that it was necessary for the reclaimers to aver and show was that they were in lawful occupation of parts of the property. About that there was no dispute. What the reclaimers averred that the respondents had done was to assume responsibility for the task of the management of the property. That, of course, embraced the handling of any problems that arose in relation to the operation of the fire alarm and monitoring system and, in particular, the securing of the reconnection of the dedicated telephone line. One of the important features of Mitchell v Glasgow City Council was that in paragraphs 23 and 29, Lord Hope of Craighead emphasised the importance of the assumption of a responsibility. It was that feature which lay at the heart of the reclaimers' case.

[40] It had been represented to the court that White v Jones was an exceptional case, the circumstances of which could readily be distinguished from those of the present one. However the fact was that the principles described in White v Jones had been applied in several cases involving somewhat different circumstances. These were: Gorham v British Telecom [2000] 1 W.L.R. 2129; Killick v Price Waterhouse Coopers (No. 1) [2001] P.N.L.R. 1; and Esterhuizen v Allied Dunbar Assurance Plc [1998] 2 F.L.R. 668. In all the circumstances the reclaiming motion should be allowed.

Submissions of Senior Counsel for the Respondents
[41] Senior counsel began by adopting the submissions of his junior. He considered, first, the relationship between the various tests for the existence of a duty of care to which reference had been made. He submitted that all of these tests were means of analysing facts with a view to reaching an answer to the question of whether a duty of care existed. The consequence was that, if a particular test led to a negative answer, that was an indicator that others would achieve the same result. It was inconceivable that different tests could produce different answers in relation to the same set of circumstances. As regards the inter-relationship of tests, senior counsel drew attention to the observations of Lord Goff of Chievely in Henderson v Merrett Syndicates Limited at page 180 and what was said in paragraphs 35 and 36 in Customs and Excise Commissioners v Barclays Bank Plc; also paragraph 93 there could be an overlapping between the different tests, as appeared from paragraph 21 in Mitchell v City of Glasgow Council. Turning to the circumstances of the present case, the concept of a "special relationship" encompassed fiduciary relationships and situations in which responsibility had been assumed. The respondents were not arguing that the concept of assumption of responsibility was confined to the exercise of professions. It could apply to persons rendering services in other circumstances. The question was whether it could be properly applied here. It was accepted that White v Jones showed that it was not necessary to point to dealings between the parties for there to have been an assumption of responsibility. However, what was required was the communication, express or implied, by one party to another that liability was undertaken to that party. It was extravagant for the reclaimers to argue that if a task were undertaken by one party from which another might benefit that there would be a potential liability to anyone affected by the performance of that task. What the reclaimers' pleadings did not achieve in the present case was to make it clear how the respondents were said to have assumed responsibility towards the pursuers for the maintenance in an efficient condition of the fire alarm and monitoring system. There was in fact no communication between these parties; there was no interaction at all. Mere reliance on the performance by the respondents of any contract that they may have had with the landlords could give rise to no liability. While in the present case there were faint averments relating to service charges paid in respect of, among other things, the fire alarm system, they were so uncertain that they did not give rise to any relationship between the reclaimers and the respondents.

[42] Emphasis was placed by senior counsel for the reclaimers on the task undertaken by the respondents. However, looking at the averments of the reclaimers at pages 17 and 18 of the reclaiming print, what the respondents had done was to agree to install a telephone line. It was not said that that was not done with due care.

[43] Turning to the tripartite test formulated in Caparo Industries Plc v Dickman, the Lord Ordinary had dealt with that shortly. The reclaimers' averments were quite simply insufficient to enable the court to conclude that a case based upon the tripartite test might succeed. Furthermore, in relation to the issue of proximity, no details were averred of contractual responsibilities. It was unclear what tasks the respondents had actually undertaken; in any event, they had undertaken to perform those tasks for the landlords not for others. In relation to the issue of the fair, just and reasonable aspect of the test, the contractual situation could not be left out of account. The respondents had not contemplated coming under any obligations to persons such as the reclaimers in entering into their responsibilities. In all the circumstances the reclaimers' case failed to meet the requirements of this test.

[44] Turning to the respondents' criticisms of the reclaimers' averments regarding breach of the alleged duty and causation, it was submitted that there was insufficient specification in the averments to enable a proof to be allowed. The averments in Condescendence XII were fatally lacking in specification. Furthermore there was ambivalence in the reclaimers' averments as to what it was that the respondents should have done, whether see to the installation of a new telephone line, or the re‑connection of the existing line. Plainly the time within which these tasks might be achieved would vary depending on what was involved. The respondents were entitled to fair notice in relation to these matters. On this basis also the proper course was for the reclaiming motion to be refused and the action dismissed.

Conclusions

[45] During the hearing of this reclaiming motion, there was much helpful discussion and analysis of the application of the various tests which have been devised for use in this difficult area of the law, involving liability for financial losses based on negligence, which continues to develop. The submissions of the reclaimers were formulated, perhaps for understandable reasons, upon the basis that the three tests upon which they relied, the special relationship test, the extended Hedley Byrne test and the tripartite test of Caparo, were to be seen as distinct alternatives. The respondents argued that, if in a particular set of circumstances one of these tests was not satisfied, then it followed that the other tests also could not be satisfied. I take leave to doubt whether that approach to the different tests formulated is correct. It appears to me that, in order to achieve justice in widely differing situations, the courts have devised different tests apt to the particular situations with which they were dealing. In these circumstances, the problem is to reach a view as to which of the several tests is in fact appropriate to the kind of circumstances with which the court has to deal. I believe that I am confirmed in that view by what was said in Customs and Excise Commissioners v Barclays Bank Plc, one of the more recent decisions in this area. In paragraphs 92 and 93 in that case, Lord Mance considered the inter-relationship of the tests that have been formulated. He there said this:

"[92] Lord Browne-Wilkinson, at pp 273G to 274G, addressed the doubts expressed by Lord Griffiths in Smith v Eric S. Bush and Lord Roskill in Caparo Industries Plc v Dickman by explaining assumption of responsibility as 'assumption of responsibility for the task not the assumption of legal responsibility'. He said: 'If the responsibility for the task is assumed by the defendant he thereby creates a special relationship between himself and the plaintiff in relation to which the law (not the defendant) attaches a duty to carry out carefully the task so assumed.' On this basis he explained Smith v Eric S. Bush and Caparo as cases where there had been 'the conscious assumption of responsibility for the task' (p 274B), and said that, although the categories of cases of special relationship were not closed, the only two hitherto identified were: '(1) where there was a fiduciary relationship and (2) where the defendant has voluntarily answered a question or tenders skilled advice or services in circumstances where he knows or ought to know that an identified plaintiff will rely on his answers or advice. In both these categories the special relationship is created by the defendant voluntarily assuming to act in the matter by involving himself in the plaintiff's affairs or by choosing to speak'. He recognised that neither of these categories covered the circumstances in White v Jones: p 275C. But he considered a duty of care in White v Jones to be justified because 'the law in this area has not ossified', because Lord Devlin in Hedley Byrne had himself envisaged that there might be other sets of circumstances in which it would be appropriate to find a special relationship giving rise to a duty of care, and because the case fell within Lord Bridge's statement in Caparo that novel categories for negligence could be developed 'incrementally and by analogy with established categories'. A duty owed by the negligent solicitor to the disappointed beneficiary was closely analogous with existing categories of special relationship: p 275F.

[93] This review of authority confirms that there is no single common denominator, even in cases of economic loss, by which liability may be determined. In my view the threefold test, foreseeability, proximity and fairness, justice and reasonableness provides a convenient general framework although it operates at a high level of abstraction. The concept of assumption of responsibility is particularly useful in two core categories of case identified by Lord Browne-Wilkinson in White v Jones at p 274F-G, when it may effectively subsume all aspects of the threefold approach. But if all that is meant by voluntary assumption of responsibility is the voluntary assumption of responsibility for a task, rather than of liability towards the defendant, then questions of foreseeability, proximity and fairness, reasonableness and justice may become very relevant. In White v Jones itself there was no doubt that the solicitor had voluntarily undertaken responsibility for a task, but it was the very fact that he had done so for the testator, not the disappointed beneficiaries, that gave rise to the stark division of opinion in the House. Incrementalism operates as an important cross-check on any other approach".

It appears to me that that passage indicates that the relationship between the different tests is not simple and that they cannot properly be seen as strict alternatives the one to the other.

[46] With that background and bearing in mind the analysis of the various tests which has been set before the court, I now turn to the reclaimers' averments in this case with a view to applying the test of relevance which is apt in the circumstances. That test was, of course, most recently expressed by Lord Hope of Craighead in Mitchell v Glasgow City Council in paragraph [10] of his judgment. He said:

"It is well established that an action will not be dismissed as irrelevant unless, even if the pursuer proves all his averments, it must necessarily fail (Jamieson v Jamieson, per Lord Normand, p 50)".

[47] There is no doubt, upon the basis of the averments of the reclaimers, that in the building in question the landlords had installed a fire alarm system which possessed a remote monitoring facility the operation of which was dependant upon the existence of a dedicated telephone line from the building to a control or monitoring centre. It was not a matter of controversy that that fire alarm system served the whole of the building concerned, including premises at 69 and 73 St Vincent Street, both of which were owned by the landlords. Plainly the fire alarm system was there to give early warning of any fire, thus mitigating any damage to property and injury to persons that might be caused by it. As regards the position of the respondents themselves, in Condescendence VI the reclaimers aver:

"The property was under the control of the defenders acting in their capacity as managing agents. The control of the defenders, as managing agents, extended to managing the property on behalf of the owners. They did so for the benefit of the owners, and also for the benefit of the tenants, such as the pursuers. The control of the defenders included the control of the maintenance of the fire alarm and fire monitoring system and the telephone line upon which that fire monitoring system relied".

While one might think that this averment is couched in unduly wide and unqualified terms, to the extent that it refers to the respondents as being in control of the property, looking at the situation more narrowly, it is evident from what is averred elsewhere, particularly concerning the events of 23 March 2005, that the respondents, as managing agents, understood that they were responsible for the reconnection of the telephone line, on which the remote monitoring system depended. I refer to what is averred at page 15D-E of the reclaiming print:

"The defenders intimated in the course of that telephone conversation that they understood that position and would attend to the reconnection of the telephone line".

While it was accepted that, at that time and at the time of the fire, the respondents had no formal contract for the management of the building with its owners, nevertheless, on the averments, there was plainly an informal arrangement between those parties, under which the respondents had assumed responsibility for the matters just mentioned, among others. In any event, that is plainly averred at the outset of condescendence VII.

[48] It seems to me to follow from the material to which I have referred that the respondents knew or ought to have known that, if nothing were done by them to achieve the reconnection of the telephone line, the benefit of the remote monitoring of the alarm system would be lost with the consequence that is obvious. Thus, I consider that the foreseeability element of the Caparo tripartite test could be satisfied in the circumstances of this case.

[49] Proceeding upon the basis that the Caparo tripartite test is a useful guide in the circumstances of this case, the next question which must be addressed is whether there was a relationship of proximity between the respondents and the reclaimers. There is no doubt that the reclaimers' averments about their own position in the occupation of the building are sparse. They refer to the reclaimers as being "tenants", but no specification at all is given as to the terms of the leases which they might have enjoyed. However, what they do aver at page 14C-D of the reclaiming print is this:

"Further explained and averred that the annual service charge paid by the tenants including the first and second pursuers under the terms of their Lease included payment for Fire Alarm testing and maintenance".

It is plain on their averments, that, whatever might have been the precise legal basis for the reclaimers' occupation of the relevant parts of the building, they must have been in lawful occupation of those parts. That is a reasonable inference from what they aver and indeed, there is no suggestion to the contrary. In these circumstances, in my opinion, it might well not be difficult for the reclaimers to argue successfully that there was a relationship of proximity between them and the respondents, as managing agents, with responsibilities for the management of the building on behalf of the landlords. By way of illustration, section 3 of the Occupiers Liability (Scotland) Act 1960 plainly recognises the potential for landlords to owe delictual duties of care to tenants and others, notwithstanding the contractual foundation of the landlord-tenant relationship. If landlords can incur liability on that basis, to my mind, it is not impossible to conceive of their responsible contractors, agents or employees, incurring similar liability where primary wrongdoing can be laid at their door.

[50] In relation to the fire alarm and monitoring system, the payment of service charges by the reclaimers, to my mind, would indicate that they inevitably relied upon the availability of that system in a functional condition. Thus departing for a moment from consideration of the Caparo tripartite test as such, it could be argued, in my opinion that there was also reliance on the part of the reclaimers on the performance by the respondents of their responsibilities with due care. In view of the limited circumstances in which the special relationship test of White v Jones has been applied, I would hesitate in concluding that that test could necessarily be satisfied in the circumstances of this case, although I would not exclude that possibility, especially having regard to the fact that the development of this area of the law is seen as a process of incrementalism. However, the position may be clearer in relation to the application of the extended Hedley Byrne test.

[51] Reverting to the possible application of the Caparo tripartite test, it is evident from the reclaimers' pleadings that they do not claim that there were ever any direct dealings between the reclaimers and the respondents as managing agents. However, I do not regard that state of affairs as necessarily fatal to the advancing of a claim such as is involved here. It appears to me that there may be a relationship of proximity between parties consistently with there being no direct dealings between them, a situation resulting from the nature of the position occupied by one in relation to the other. It appears to me that my view in this regard is consistent with what was said in White v Jones at page 271 by Lord Browne-Wilkinson. There he said at letter G-H:

"Thus, a trustee is under a duty of care to his beneficiary whether or not he has had any dealing with him: indeed he may be as yet unborn or unascertained and therefore any direct dealing would be impossible".

Further, at page 272A-B he said:

"Thus, in my judgment, Nocton demonstrates that there is at least one special relationship giving rise to the imposition of a duty of care that is dependent neither upon mutuality of dealing nor upon actual reliance by the plaintiff on the defendant's actions".

[52] However, there is one further feature of the present case that appears to me of some importance in the present context. As was submitted on behalf of the reclaimers and can be inferred from their averments, the occupants of the building, including the reclaimers, had no way of knowing that the dedicated telephone line had been disconnected on account of unpaid British Telecom accounts. As already pointed out, they averred that they were paying a service charge which was intended to meet the costs of the system. In these circumstances it would be wholly understandable if the reclaimers and other occupants of the building in a similar position were under necessity of relying upon those responsible for the management of the building to ensure that there was no prolonged disconnection of the telephone line for that reason. Thus there would appear to be a degree of reliance by the reclaimers and others upon, in this instance, the respondents to perform their duties with reasonable care.

[53] The third element in the tripartite Caparo test is of course the issue of whether it would be fair, just and reasonable for the liability relied upon to be imposed upon the respondents. While I would not wish at this stage to reach any concluded view about this matter, in view of the course of action which I propose to your Lordships, it appears to me for the several reasons which I have already expressed that a case could be made that that test also was satisfied. In all these circumstances I have reached the conclusion that I cannot hold that, if all the reclaimers' averments were proved, their claim would be bound to fail.

[54] It remains to consider whether the criticisms advanced by the respondents of the reclaimers' averments regarding breach of duty and causation are such that the action should be dismissed upon that basis. This matter was, of course, not determined by the Lord Ordinary. In this connection attention was focused particularly upon the reclaimers' averments in condescendence XII and the case of Gibson v Strathclyde Regional Council. As regards the matter of breach of duty, I would recognise that certain of the averments in that condescendence, particularly those that refer to reasonable steps requiring to be taken to ensure that matters were remedied within a reasonable period of time are somewhat vague. However, it seems obvious from implication from the circumstances of the case and the date of the occurrence of the fire that what is being said is that steps should have been taken to ensure the reconnection of the dedicated telephone line after the respondents became aware of the problem on 23 March 2005 and, at the latest, prior to the occurrence of the fire on 16 April 2005. I would take it that those steps would comprise simply the settling of the unpaid accounts and the making of an arrangement with British Telecom for the restoration of the line. It is true that there are averments concerning the possible installation of a new line, but the need for that course of action is very far from obvious. In this state of the pleadings, while it may be anticipated that, at any proof that might take place, there could be difficulty as regards the scope of questioning regarding the matters in question, it does not appear to me that the shortcomings of the reclaimers' pleadings are of such a serious character that the case must be excluded from probation. In particular I do not consider that this case is comparable to Gibson v Strathclyde Regional Council, where the averments made during the course of the debate were, on the face of it, extravagant and absurd.

[55] Turning to the issue of causation, it is plain that there may be difficulties in relation to the establishment of the causation of the loss claimed, particularly in the case of the first named reclaimer, in whose premises, it appears, the fire may have started. However, I regard issues of causation as essentially matters of proof in a case such as this. Accordingly I do not consider that the points raised relating to causation could constitute a reason why proof should be denied.

[56] In the whole circumstances, for the reasons which I have explained, I am unable to affirm the decision taken by the Lord Ordinary to dismiss the action. I would therefore move your Lordships to recall the interlocutor of the Lord Ordinary dated 1 July 2009 and allow a proof before answer on the whole case.


EXTRA DIVISION, INNER HOUSE, COURT OF SESSION

Lord Osborne

Lord Carloway

Lord Emslie

[2010] CSIH 86

OPINION OF LORD CARLOWAY

in the cause

(FIRST) MARTIN HINES; and (SECOND) WALLACE COMMERCIAL LIMITED

Pursuers and Reclaimers

against

KING STURGE LLP

Defenders and Respondents

_______

Act:: Jones QC; D Hamilton; Simpson & Marwick (for Pursuers and Reclaimers)

Alt: J Lake QC, Miss Higgins; MacRoberts (for Defenders and Respondents)

5 November 2010

(1) The Pursuers' Averments
[57] The Lord Ordinary describes the averments regarding ownership of the premises, the basis of the pursuers' occupation of them and the nature of the defenders' function as "slightly odd". This is understatement. The first pursuer is said to have traded from 73 St Vincent Street, Glasgow (Closed Record p 5 C-D). More specifically, he was a "tenant" occupying the basement and ground floor areas. Although Joint Properties Ltd. (JPL) are named as the owners of this "property", (10 B-C), it is not said that the first pursuer leased the premises from JPL. Indeed, the pursuers do not aver from whom the first pursuer leased the premises at all; nor do they refer to the terms of any lease, written or oral, to which he was a party.

[58] The second pursuers are said to have a place of business at 69 St Vincent Street (6 A-B). The physical relationship between numbers 69 and 73 is not explained in the pleadings and the pursuers were not able to elaborate on this at the bar. The second pursuers were tenants of the second floor premises at number 69 (11 C-D). But the pursuers do not say from whom the second pursuers leased the premises; nor do they refer to the terms of any lease to which they were a party.

[59] The pursuers do not directly admit the defenders' averments that JPL leased each of the two properties to Bell Bakers Ltd. and Martin White in terms of leases registered in the Books of Council and Session, but these leases are nevertheless later referred to by them (20 B-D, 21C-22D, 22D-E).

[60] The defenders are averred to be a firm "specialising in commercial property management". They are said to be:

"Property Managers with responsibility for the maintenance of the properties in which the business (sic) of the first and second pursuers were based" (6 D-E).

There is no effort to plead a factual basis upon which this general averment of, presumably legal, "responsibility" is grounded. Later on in the pleadings it is accepted by the pursuers that the defenders were in a contractual relationship with JPL.

[61] In relation to 73 St Vincent Street, it is said that:

"The property was under the control of the defenders acting in their capacity as managing agents. The control of the defenders, as managing agents, extended to managing the property on behalf of the owners. They did so for the benefit of the owners, and also for the benefit of the tenants, such as the pursuers. The control of the defenders included the control of (sic) the maintenance of the fire alarm and fire monitoring system and the telephone line upon which that fire monitoring system relied. The property had a fire alarm system which had been fitted some time previous to the first pursuer opening as a business" (10 B-D).

[62] The fire alarm was "fitted with a monitoring system operated under the auspices of 'BT Redcare'", which resulted in the communication of the locus of any fire "directly" to the local fire services through the offices of a security company. This monitoring system had been triggered on previous occasions, known to the first pursuer, when burning food had caused the alarm to operate. The last episode had been on 16 February 2005.

[63] The averments continue:

"The maintenance of the fire alarm system and the monitoring system in the premises of the first pursuer were the responsibility of the defenders. The defenders consequently arranged for the regular checking of both systems to ensure that the fire alarm and monitoring process was fully operational. The maintenance and inspections were undertaken by CMD Fire and Security Ltd..." (13 A-B).

It is said that:

"...the defenders were fully aware that they had responsibility to the tenants and to the owner of the building for the testing and maintenance of the fire alarm systems" (13 B-D).

[64] The defenders had only taken over the property management from other agents on 10 December 2004. When they did so, there were discussions about the testing of "fire alarms".

"The defenders assumed responsibility for the operation, testing and maintenance of the fire alarm systems in the buildings on behalf of the owners. The defenders owed a duty of care to the pursuers (as tenants) in the exercise of that responsibility. ...the annual service charge paid by the tenants including the first and second pursuers under the terms of their Lease (sic) included payment for Fire Alarm testing and maintenance. The defenders accordingly knew that the tenants paid for, and consequently relied upon, the defenders exercising reasonable care in maintaining the fire alarm system" (14 B-D).

The averments do not say to whom the service charge was paid and, as already noted, do not contain any specification of the singular "Lease" referred to.

[65] On 23 March 2005, CMD observed that the telephone line, upon which the monitoring system relied, had been disconnected. The defenders were informed of this on the same day. They asked CMD to arrange for reconnection, but CMD said that BT would not accept that CMD had authority to instruct this. The defenders told CMD that they (the defenders) would "attend to the reconnection of the telephone line". On 4 April 2005, the defenders asked CMD to establish the cost of reconnection and this was communicated to them on 13 April 2005 as follows:

"Works will take about a week and cost approx. £100 for linebox and quarterly rental of approx. £40/month..." (18 D-E).

However, no connection had been re-established by 16 April 2005, when a fire broke out and damaged both premises. Because this had not been done, the fire services were delayed in identifying the location of the seat of the fire.

[66] There are further scattered averments about responsibility and reliance thereafter such as:

"The defenders were aware that tenants, such as the pursuers, were wholly reliant on them as property managers to restore the Redcare system..." (19 A-C).

and

"All communication from British Telecom in relation to the failure to pay the bill for the telephone line...was sent to the managing agents. The managing agents had responsibility to pay the bill. The pursuers relied on them to do so. The defenders knew, or ought to have known, that tenants in the building, including the pursuers, relied on them to do so. The managing agents failed to pay the bill. The phone line was therefore disconnected. ...The defenders were accordingly the managing agents over a period of time during which the non-payment of the BT bill by them led directly to the disconnection of the telephone line" (19 C-E).

This is followed by another averment about "Leases" that:

"Under the terms of the Leases in relation to each of the properties forming the basis of the current action, JPL...as Landlords, were responsible for the provision of telecommunications services" (20 B-C).

A particular clause in the Lease between JPL and Bell Bakers Ltd. (which earlier in the Closed Record the pursuers decline to acknowledge) obliged the tenant "To pay when due all costs incurred by or in the name of the Landlord for the provision of... telecommunications and all other utilities to the Premises". It is also said that the defenders:

"in their capacity as property managers for JPL (and under the terms of their contract of property management service with JPL) were responsible for the collection of payments and charges from tenants such as the pursuers under the terms of the said Leases on behalf of JPL... [T]he defenders, in their capacity as property managers for JPL (and under the terms of their contract of property management service with JPL), were responsible for the maintenance and repair of services, including telecommunications services, on behalf of JPL and for the benefit of the tenants, including the pursuers" (21 A-B).

Further reference is made to a service charge contained in the leases between JPL and Bell Bakers Ltd. and Martin White.

(2) Duty of Care - General
[67] The Lord Ordinary has analysed the application of the law of reparation to the case in broadly accurate terms. There is no general duty on one person to prevent harm to another. But such a duty can arise where there is a proximate (neighbourhood) relationship of a type which the law recognises as giving rise to such a duty. Such a relationship can occur in the context of a contract (e.g. employment) but it need not do so (e.g. road traffic).

[68] The search for an overarching principle, which defines when a duty of care does arise, has not been particularly successful in recent decades. In submissions, there was much reading of extracts from the oft quoted speeches in the familiar English House of Lords cases. The parties' arguments are largely set out in written form and need not be rehearsed in detail. It is sufficient to note that the pursuers maintained first that it was sufficient that they were in a special relationship with the defenders. That in itself gave rise to the existence of a duty of care (Customs & Excise Commissioners v Barclays Bank [2007] 1 AC 181, Lord Bingham at paras 4-6, Lord Mance at paras 92-93; White v Jones [1995] 2 AC 207, Lord Browne-Wilkinson at 270-276, Lord Nolan at 295; Nocton v Ashburton [1914] AC 32, Viscount Haldane LC at 946, Lord Dunedin at 964, Lord Shaw at 969; cf Robinson v National Bank of Scotland 1916 SC (HL) 54, Viscount Haldane LC at 157). Secondly, even if no such relationship existed, the pursuers had averred that they had relied on the defenders in a manner which created a duty of care (Hedley Byrne & Co v Heller & Partners [1964] AC 465, Lord Reid at 485-6, Lord Morris of Borth-y-Gest at 502-3, Lord Hodson at 510-11, Lord Devlin at 523; Lord Pearce at 539; Henderson v Merrett Syndicates [1995] 2 AC 145, Lord Goff of Chieveley at 178-180; Williams v Natural Life Health Foods [1998] 1 WLR 830). Thirdly, if all else failed, the pursuers could fall back upon the tripartite test set out in Caparo Industries v Dickman [1990] 2 AC 605.

[69] The defenders were reluctant to make any positive submission, based upon these cases, on what legal test should be applied; other than that, whatever test were used, the pursuers' averments did not pass it. Several propositions could be derived from Mitchell v Glasgow City Council 2009 SC (HL) 21. The tripartite test was part of the law of Scotland. Foreseeability of harm was not sufficient, as there was no general duty to protect others. Liability was not imposed for a mere omission. A duty arose only where it was fair, just and reasonable that this be done. This test could be satisfied if the defenders had assumed a responsibility to the pursuers. The question of whether there was a duty was a matter of fairness and public policy. A duty to take active steps arose only when a person had assumed responsibility for the safety of another. But where parties' conduct was regulated by contract, there was little room for a duty of care beyond that stated in the contract. It was not maintained that White v Jones (supra) was not part of the law of Scotland (Holmes v Bank of Scotland 2002 SLT 544, Robertson v Watt & Co, Second Division, 4 July 1995, unreported). However, where contracts existed, they required to be looked at in order to see what delictual obligations might run beside them. In the absence of facts being pleaded to justify a modification of the contractual duties, the contract would normally define any duty of care (William Hill Organisation v Bernard Sunley & Sons (1982) 22 BLR 8, Cumming-Bruce LJ at 29; Tai Hing Cotton Mill v Liu Chong Hing Bank [1986] 1 AC 80, Lord Scarman, delivering the judgment of the Privy Council, at 107; Banque Bruxelles v Eagle Star [1997] AC 191, Lord Hoffman at 211).

[70] It is sufficient, for a decision in this case, to confine any analysis of the applicable legal principles to the dicta in Mitchell v Glasgow City Council 2009 SC (HL) 21, which has the benefit of being about the duties of landlords to tenants, albeit in the context of personal injury and third party criminal actings. Under reference to the celebrated dicta on the test for relevancy by Lord Normand in Jamieson v Jamieson 1952 SC (HL) 44 (at p 50) and Lord Keith of Avonholm in Miller v South of Scotland Electricity Board 1958 SC (HL) 20 (at p 33), Lord Hope of Craighead stressed (para [12]) that:

"There will, of course, be cases where the existence or scope of a duty of care cannot safely be determined without hearing the evidence But no advantage is to be gained by sending a case to proof when it is clear from the averments that, even if everything that the pursuer avers is proved, the case must fail".

[71] On duty of care, Lord Hope made three observations in limine (para [15]), two of which are of some relevance to this case. First, "foreseeability of harm is not of itself enough for the imposition of a duty of care". Secondly, there is no "positive duty on a person to protect others" (i.e. not to make "mere omissions"). Lord Hope went on to explain that, in "commonplace situations", the creation of a duty arises from the relationship of proximity between the parties (para [16]). He agreed with Lord Reed's analysis in the Outer House (2008 SC 351 at para [94]) that, if a defender is to be held responsible, it is because the situation is one:

"where it is readily understandable that the law should regard the defender as under a responsibility to take care to protect the pursuer from that risk".

In that regard Lord Hope also referred, with apparent approval, to the:

"three fold test which requires, in addition to foreseeability and a relationship of proximity, that the situation should be one in which the court considers it fair, just and reasonable that the law should impose a duty of a given scope upon the one party for the benefit of the other" (para [21], under reference to Lord Bridge of Harwich in Caparo Industries v Dickman [1990] 2 AC 605, at pp 617-618)".

[72] Lord Hope quoted, again presumably with approval, Lord Bingham of Cornhill in Van Colle v Chief Constable, Hertfordshire Police [2007] 1 WLR 1821 where he stated (at para 42) that the tripartite test was "currently the most favoured test of liability". He continued with Lord Bridge's reasoning that:

"the concepts of proximity and fairness amount in effect to little more than convenient labels to attach to the features of different specific situation which, on a detailed examination of all the circumstances, the law recognises pragmatically as giving rise to a duty of care of a given scope".

Lord Hope proceeded to identify these situations as: (1) where the defender creates the source of danger; (2) where a third party who causes damage was under the control of the defender; and (3) where the defender has assumed responsibility to the pursuer in respect of the duty owed. He concluded (para [25]), by stating that the tripartite test was part of the law of Scotland and that:

"It is really no more than an expression of the idea that lies at the heart of every judgment about legal policy. If liability is to attach, it should be in situations where this is readily understandable because, looking at both sides of the argument, it is fair and reasonable that there should be liability".

Of some interest also are the remarks of Lord Rodger of Earlsferry (at para [51]) that:

"When the position of the parties is regulated in this way by a mixture of contract and statute, prima facie there is little room for the common law of delict to impose a duty of care...".

That is consistent with the dicta quoted by the defenders from William Hill Organisation v Bernard Sunley & Sons (supra); Tai Hing Cotton Mill v Liu Chong Hing Bank (supra) Banque Bruxelles v Eagle Star (supra).

[73] The issue becomes one of applying the tests set out by Lord Hope to the facts so far as averred by the pursuers in order to see whether, even if they prove all of their averments, the pursuers are still bound to fail.

(3) Duty of Care - Specific
[74] The starting point must be to see whether the duty of care said to arise is one which the law does recognise as existing. It is a reasonable conclusion from the terms of the pursuers' averments, that the pursuers do not seek to demonstrate that either pursuer was the tenant of JPL or had any form of contractual relationship with them. Neither pursuer attempts to suggest that they had any contractual relationship with the defenders, or indeed any dealings with them at all. That is significant.

[75] The situation with which the case is concerned is, at least at one level, an entirely ordinary one. The owners of the premises, namely JPL, lease two areas to named tenants in terms of registered commercial leases. The extent of any rights and duties owed to and by the owners and the tenants will depend, prima facie, upon the terms of these leases. There is an obvious need for certainty in the field of commercial, and indeed other, leases. Parties to a property relationship will seek to define their rights and responsibilities by reference to the terms, express or implied, of their leases. Were they to do otherwise, there is a substantial risk of "unacceptable circumvention" of established principles of the law of contract (White v Jones (supra), Lord Goff at 268).

[76] It is clear that JPL engaged the defenders as their agents in managing the property. The pursuers accept that JPL do have a contract with the defenders. The terms of that contract are not specified in the pleadings. They may be written or oral, express or implied, but they will govern the relationship between the defenders and JPL. The rights and duties as between those two contracting parties will be defined in terms of their commercial relationship as contained in the agreement between them. It is not averred that there was, in terms of that agreement, an obligation upon the defenders to ensure, or to take reasonable care to ensure, that the telephone line which connected the alarm mechanism to the security company was operational.

[77] Research by the parties has plainly failed to unearth any case, or indeed any statement of principle, which imposes a quasi delictual duty upon a landlord's property agent to take reasonable care for the property of the landlord's tenant. In that apparent state of the law, the starting point reached is that the law does not recognise the existence of any such duty whether pragmatically or as something readily understandable. On the contrary, what is both pragmatic and so understandable is that the rights of tenants are governed by the terms of their leases, whether express or implied, and that the persons falling under any obligation to the tenants are those from whom they take their lease.

[78] Of course, there may be situations where either an owner or his agent or a third party expressly undertakes to look after an alarm system. They could do so in a lease or other contractual document. They could do so orally, by stating to the other party that they will do so. Scots law would recognise a legally binding obligation as arising simply from such an undertaking, provided it is correctly expressed. It appears that much of what occurred in Hedley Byrne &Co v Heller & Partners (supra) and subsequent cases stemmed from the different approach taken in the English law of contract (see Williams v Natural Life Health Foods (supra), Lord Steyn at 839). But there is nothing of the nature of an undertaking by the defenders to the pursuers averred in the present case.

[79] Despite what appears to be an inauspicious starting point in relation to legally recognised duties, the pursuers attempt to bring their cases within the scope of the dicta in the English House of Lords cases, even although these cases are primarily concerned with possible extensions of the existence of duties of care into new situations. Thus, the pursuers aver that the defenders had "control" of the premises, including the fire alarm systems. But this is not consistent with the premises, including the fire alarm systems, being owned by JPL and leased by them to Bell Bakers Ltd. and Martin White. The defenders are averred to have been simply managers of the property, as agents for the owners. Their obligations were purely contractual ones to do whatever they were instructed to do. They could have had no rights of control beyond their agency and these rights rested with the owners, not their agents.

[80] Put shortly, the defenders had no special relationship with the pursuers and certainly none akin to contract (Customs & Excise Commissioners v Barclays Bank (supra), Lord Bingham at para 4). At least, it must be said, if a pursuer is to bring himself into the category of being in a special relationship with a defender, such as to give rise to a duty of care, it is incumbent upon that pursuer to aver specifically what his relationship with the defender is, by reference to the various contractual or other relationships which, in a situation such as this, must exist. The pursuers do not attempt to do this; refusing steadfastly to say from whom they leased their respective premises and what the terms of their occupation were.

[81] Similar considerations apply to the averments about the defenders having "responsibility" for the fire alarm systems. Where premises are leased, the lease may expressly provide that the landlord, or the tenant, be responsible for the maintenance of services such as a fire alarm system. If the lease is silent on the issue, then a tenant cannot complain that his landlord has failed to maintain it or vice versa. The failure to maintain a service not contracted for cannot found a successful claim for damages in that context. Put shortly, if the lease does not impute responsibility for the maintenance of a service, neither a tenant nor a landlord can create an obligation on the other party to maintain that service out of the ether. There can certainly be no such obligation resting on an agent, where it does not already rest with the principal.

[82] If there is no duty on the part of the defenders to maintain the fire alarm system beyond whatever was in their contract with JPL, there can be no duty upon them to maintain that system for the benefit of others. The matter can be tested, albeit not conclusively, thus. If a tenant of premises managed by the defenders were concerned about the lack of an operational alarm system, what steps, beyond installing and maintaining his own system, could he take? He could not seek specific implement against his landlord, in the absence of a term in the lease imposing the relative obligation. He could certainly not seek to sue the landlord's agents; for the very reason that they are simply agents and not personally liable for the implement of contractual duties in terms of a lease entered into by the landlord. Far less could he attempt successfully to take action against a person with whom he has no contractual relationship at all, as is the case here.

[83] White v Jones (supra) involves a particular situation. It must be recognised that it is authority in England, accepted in Scotland (Robertson v Watt & Co (supra)), for the proposition that a solicitor may have a duty to a beneficiary derived from his undertaking to a testator. But that is far removed from the situation here, where the relevant parties will remain in contractual relationships with the owners of the premises and/or their lessees and sub-lessees. In the ordinary situation, of which this case is one, there is much to be said for the straightforward dicta of Lord Keith in White v Jones (at 251) that, short of the existence of a ius quaesitium tertio, a third party cannot benefit from the terms of a contract between others (see also Lord Mustill at 291). Certainly, there is no foundation for the creation between the parties in this action of a quasi fiduciary relationship of the type envisaged in Nocton v Ashburton (supra) or White v Jones (supra, Lord Browne-Wilkinson at 271).

[84] The final attempt to establish the existence of liability is contained in the pursuers' averments that the defenders assumed responsibility for the fire alarm systems and owed a duty to the pursuers (as tenants) in the exercise of that responsibility. The pursuers later aver that the defenders were aware that tenants, such as the pursuers, were wholly reliant on them as property managers to "restore" the system. Whether a duty is owed is, as Lord Hope said, a question of law, albeit that the facts may have to be established in advance of a decision. The defenders may, as between themselves and CMD and/or JPL, have assumed responsibility for reconnecting the telephone line, but there is no basis for the averment that this resulted in an added responsibility to persons who were not even tenants of the landlords.

[85] There is no basis stated for the general averment that the defenders were aware that tenants were relying on them to maintain the system. On the contrary, in relation to the pursuers, there is no averment that the defenders had had any dealings with the pursuers at all. There is no averment that the first pursuers had formed a view on who was responsible for the telephone connection and reasonably relied upon some act by the defenders in that regard. There is no averment that the second pursuers even knew that there was a telephone connection prompted by the alarm system. The reconnection of a telephone line requires no special skill. There is no basis in averment to support a conclusion that any reliance placed by the pursuers upon the defenders was reasonable (see Williams v National Life Health Foods (supra) Lord Steyn at 837) given the lack of any relationship between them. All of this can be contrasted to the type of situation envisaged in Hedley Byrne v Heller & Partners (supra), where it was clear that the defendants knew, or ought to have known, that the plaintiffs were relying upon them for advice (see Lord Reid at 486).

[86] For these reasons, the Lord Ordinary has reached the correct conclusion that this case falls to be dismissed. The reclaiming motion should accordingly be refused.

[87] The defenders did have a subsidiary argument, based upon Gibson v Strathclyde Regional Council 1993 SLT 1243, that the pursuers' averments of breach of duty and causation were irrelevant because they did not state that, had the defenders performed their duties, the monitoring system would have been in place by the time of the fire. However, it is averred that the defenders were aware of the disconnection of the line on 23 March. The line, which would have taken a week or less to reconnect, was still not functioning on16 April. These averments would have been sufficient to merit a proof on this part of the case.


EXTRA DIVISION, INNER HOUSE, COURT OF SESSION

Lord Osborne

Lord Carloway

Lord Emslie

[2010] CSIH 86

OPINION OF LORD EMSLIE

in the cause

by

(FIRST) MR MARTIN HINES; and (SECOND) WALLACE COMMERCIAL LIMITED

Pursuers and Reclaimers;

against

KING STURGE LLP

Defenders and Respondents:

_______

Act:: Jones QC; D Hamilton; Simpson & Marwick (for Pursuers and Reclaimers)

Alt: J Lake QC, Miss Higgins; MacRoberts (for Defenders and Respondents)

5 November 2010

[88] For the reasons given by your Lordship in the chair, I agree that the Lord Ordinary's interlocutor of 1 July 2009 should be recalled, and that a proof before answer should now be allowed on the whole case. I have nothing further to add.