Petitioners: McLean, Advocate and Howie QC; Maclay Murray & Spens LLP

Respondents: Dunlop, Advocate and Jones QC; Simpson & Marwick

23 December 2008

Introduction
[1] In this action the pursuer's claim is for damages in the sum of £700,000 against a firm of solicitors in respect of their alleged negligence. The claim is advanced both as one for breach of contract and as a delictual one. The failure alleged is an omission to give advice.

[2] The advice in question related to the landholdings comprised in one of two family estates.

[3] The action came before me on the procedure roll in respect of the defenders' two preliminary pleas: a plea of no title to sue and a plea to the relevancy of the action. The defenders sought dismissal.

The Facts Averred
[4] The 'Aberdeen Gordons' have held landed estates in East Aberdeenshire for many generations. Their ownership of lands there dates back over 500 years. As at 1965, the main holdings were Haddo Estate and Tarves Estate and they were held by the Fourth Marquess of Aberdeen and Temair, the pursuer's uncle. He created a trust ("the 1965 Trust') into which the Tarves Estate was conveyed. It was the largest asset in the 1965 Trust.

[5] Haddo Estate passed to the pursuer when a separate trust into which it had been conveyed was wound up in 1983. He continues to hold Haddo Estate.

[6] The pursuer's uncle died and his aunt, June, Lady Aberdeen, has enjoyed a liferent of the 1965 Trust assets since her husband's death, as provided for by the1965 Trust deed.

[7] The terms of clause 'LASTLY' of the 1965 Trust deed include:

"...my trustees shall on the death of my said wife or on my own death if she shall not survive me pay, convey and make over the residue of my means and estate and any accumulations of income thereon as aftermentioned to my nephew Alexander George Gordon whom failing to the person who shall then hold the title of the Marquess of Aberdeen and Temair...But I specially provide and declare that no heir called under the foregoing destination shall acquire a vested right in the said residue until he shall have survived my said wife and me and shall also have attained the age of twenty one years complete...I hereby give my Trustees power in their sole discretion at any time and from time to time (but only with the consent of my said wife during her lifetime and while she remains capax) to make advances to or for the benefit of the prospective heir at the time of any part or even the whole of the capital of the said residue...and any advances so made by my Trustees shall vest at the date of such advance in the person to whom or on whose account the same shall be made;"

[8] The pursuer's first son ('Lord Haddo') was born on 4 May 1983. In 1984, at which time Lord Haddo was still the pursuer's only child, he consulted his solicitor, Mr David McLellan of Dundas & Wilson CS as to how matters might best be arranged so as to enable his children to benefit from Tarves Estate whilst minimising any liability to tax. Dundas & Wilson acted for the pursuer in a broad range of matters and also for the Haddo and Tarves Estates.

[9] On or about 6 December 1984 a meeting took place involving the pursuer, his accountant and Mr McLellan to discuss Inheritance Tax Planning. One of the pursuer's wishes was to look into ways of passing the Tarves Estate to his children without a tax charge arising on his death. At about that time, Mr McLellan proposed setting up a new accumulation and maintenance trust to which the pursuer's reversionary interest in the Tarves Estate, arising from the terms of the 1965 Trust, would be assigned. The effect of doing so would be that that reversionary interest would not then form part of his estate on death. The beneficiaries of that trust would be the pursuer's children. In the light of the small size of the pursuer's direct family at that time, Mr McLellan advised that the class of beneficiaries ought to include other more distantly related children of the same generation, so as to minimise the risk of the trust purposes failing.

[10] Another tax advantage in the proposed arrangements would be that on the death of Lady Aberdeen, the assets in the 1965 Trust including the Tarves Estate would enjoy a 'free revaluation' for Capital Gains Tax purposes.

[11] Following that advice, the Tarves Estate Trust ('the TET') was set up. The pursuer's accountant, Beverley Michael Covell, and the factor on the Haddo and Tarves Estates, Captain Colin Andrew Farquharson, were appointed as its trustees. The TET provided for a class of potential beneficiaries comprising the pursuer's children, the children of his sister, Lady Emma Cecile Foale, and the children of his adopted cousin, Andrew David Gordon. In terms of clause '(Fifth)' of the TET, the Trustees had a discretion to determine which of that class should be entitled to take a share of its capital (subject to a provision that each child was entitled to at least a 1/100^th part of the share of the assets to which he would have become entitled if he lived to age seventy) but that discretion required to be exercised before certain specified dates. The TET provided further that if the Trustees did not exercise that discretion then each qualifying child would obtain a vested right to an equal share of the assets upon reaching seventy years of age and , in the meantime, would have a liferent interest in that prospective share.

[12] By 1993, the pursuer had four children. He had, by then, made it clear to Mr McLellan that he wanted Lord Haddo to take Haddo Estate and that he wanted Tarves Estate to pass to one or more of his other children. Further, he had made it plain that it should only be if none of his immediate family survived him that any of his sister's children should receive the Tarves Estate and, furthermore, on no account should any of his adopted cousin's children receive it. Those wishes were repeated in notes provided to Mr McLellan in 1996.

[13] In 1997, Turcan Connell took over from Mr McLellan as the pursuer's solicitors. He was, in particular, advised by Mr Robert Turcan. Mr Turcan was made aware of the pursuer's wishes regarding the Tarves Estate. He was instructed by the pursuer by letter of 8 May 1998, to review the TET to ensure that there were no problems. Mr Turcan duly advised but did not draw the pursuer's attention to the need for the Trustees to exercise their discretion by a particular date. The pursuer provided Mr Turcan with notes which repeated the same wishes in respect of Tarves Estate as he had previously made known to Mr McLellan.

[14] By March 2006, Mr Turcan realised that the date by which the Trustees of the TET required to make an election had passed. In Article 5 of Condescendence, the pursuer avers:

"On about 28 March 2006, Mr Turcan contacted the pursuer. Mr Turcan advised that an urgent meeting was necessary because there was a problem with the Tarves Estate Trust. He indicated thereby that he was fully aware that the defender's remit as law agents advising the pursuer on his inheritance planning included oversight of the Tarves Estate Trust arrangements and providing advice to the pursuer thereanent. The meeting was held on 31 March 2006 at Haddo...Mr Turcan explained that he had made a mistake and he apologised for it. It was explained to the meeting by Mr Clark that because no appointments had been made in terms of Clause (Fifth) of the Tarves Estate Trust Deed, it was now the case that each of the qualified children had or shortly would have an interest in an equal share in the assets of the Tarves Estate Trust and hence in the reversionary interest in the fee under the 1965 Trust, insofar as the pursuer's interest therein had been assigned to the Tarves Estate Trust."

[15] The averments in Article 5 then go on to explain the result of the date for election by the trustees of TET having been missed:

"The intentions of the pursuer in his dealings with his reversionary interest in the fee of the 1965 Trust were thereby at risk of being substantially subverted, in that on the death of June, Lady Aberdeen, the Tarves Estate and associated assets would, instead of being held for the benefit of the pursuer's children or any of them, be likely to be held equally for at least nine beneficiaries, who (or whose issue) would ultimately take the capital of the trust at age 70. This would result in the break-up of a substantial part of the ancestral landholding associated with the Gordon family for hundreds of years...in direct contradiction to the explicitly - expressed wishes of the pursuer known to the defenders and their predecessors, Messrs Dundas & Wilson,C.S., for many years."

[16] The pursuer avers, in Article 6 of Condescendence that had the defenders advised him of the need for the TET trustees to exercise their discretion prior to the qualified children reaching their specified ages which failing that break-up of the estate would be the likely result, then the trustees of the TET would have exercised their discretion in favour of one or more the pursuer's children whilst it was still possible for them to do so thus saving the pursuer from becoming liable to:

"...make payment of a sum equivalent to said significant sum of Capital Gains Tax."

[17] The defenders, through their Mr Clark, suggested two possible solutions to the problem. Neither solution was such as to achieve the pursuer's plan that Tarves Estate pass to one or more of his children other than Lord Haddo but the defenders' recommended solution was at least such as to ensure that Tarves was retained within the pursuer's immediate family. That recommended solution was that (a) the 1965 Trust trustees buy an annuity for June, Lady Aberdeen to provide her with an income broadly equivalent to her liferent interest; (b) the trustees of the 1965 Trust exercise their power to advance capital to Lord Haddo by advancing to him the 1965 Trust assets (with the exception of some cash and the contents of Haddo House) including Tarves Estate; (c) whilst a charge to capital gains tax would arise on the making of such an advance the 1965 Trustees would be indemnified in respect of that liability by the pursuer. That recommendation was accepted.

[18] On 31 March 2006, the 1965 Trustees accordingly entered into a Deed of Appointment under which the assets of the 1965 Trust (under exception of the cash and moveables referred to above and of the sums required for the purchase of the requisite annuity) were advanced to Lord Haddo. The defenders waived their fees in connection therewith.

[19] As above noted, the Deed of Appointment had the effect of triggering a charge to capital gains tax. The ultimate extent of that liability has yet to be finalised. The pursuer avers that an interim payment has been made in the sum of £500,000. The making of an interim payment has been funded by means of Lord Haddo obtaining a loan from the Clydesdale Bank plc, which loan has been facilitated by the pursuer having granted a guarantee to the bank. Interest charges accrue on that loan. Substantial fees have also been incurred in respect of accountancy and land agents' services in connection with the implementation of the Deed of Appointment. The pursuer does not specifically aver who is liable to pay those fees but I was advised in the course of submissions that it appears that the accounts for them will be rendered directly to the pursuer.

The Pursuer's Claim
[20] The pursuer offers to prove that no ordinarily competent solicitor would have failed to advise him timeously of the need for the TET trustees to exercise their discretion in favour of one or more of his children if the break up of the Tarves Estate was to be avoided. He offers to prove that, in all the circumstances, the defenders had both a contractual and delictual duty to give such advice.

[21] As to remedy, the pursuer's primary position is that he is personally entitled to payment of the sum sued for. He also has an alternative position. In Article 7 of Condescendence he avers:

"Explained and averred that esto the obligation to pay said tax and the consequent liability to pay interest and professional fees are not be (sic) regarded in the circumstances as a loss that has fallen upon the Pursuer, which is denied, it is a loss that has fallen upon a member of his immediate family (Lord Haddo) and/or related trustees of a family trust (the Trustees of the 1965 Trust) in circumstances where the loss resulted from breach of duties owed by the Defenders to the Pursuer and those other parties have no right of action against the Defenders. On said denied hypothesis, the Pursuer accordingly sues in the alternative to recover said loss on behalf of the related party who has sustained it, and will account to the appropriate party for such damages as may be awarded in respect thereof."

[22] The pursuer's alternative position is based on the proposition that if the tax liability is not to be regarded as the pursuer's and he is not allowed to recover on the basis averred in the abovequoted passage, then a loss that has undoubtedly been sustained on account of the defender's alleged breach of duty will go uncompensated thus falling into what has, in various authorities, been referred to as a 'black hole'.

The Defenders' Response
[23] The defenders deny that, in the circumstances of the case, they had a duty to tender the advice that the pursuer avers they were under a duty to give.

[24] As regards remedy, the defenders' case is that the pursuer has sustained no loss; any loss was suffered not by him but by other members of his family, particularly Lord Haddo. They also raise questions as to the quantification of the tax liability and professional fees as an issue but those questions did not form any part of the debate before me.

Submissions for the Defenders
[25] The defenders sought dismissal. They did so principally on the basis that if the tax liability sounded in damages it was not a loss sustained by the pursuer. It was, on that hypothesis, a loss sustained by Lord Haddo who had 'put his hand in his pocket' and he had a good right of action against the defenders in respect of it: Rind v Theodore Goddard (A Firm) [2008] EWHC 459 (Ch). Their position was that Lord Haddo would be able to rely on the ius quaesitum tertio on the basis that when the TET was created it was created for the benefit of known beneficiaries of which Lord Haddo was one: Clark Contracts v Burrell Co (Construction) (No 2) 2003 SLT Sh Ct 73 (where it was conceded that the ius quaesitum tertio was available); McLaren Murdoch & Hamilton Ltd v Abercromby Motor Group Ltd 2003 SCLR 323. Also, he would have a right of action under the principles articulated in White v Jones [1995] 2AC 207. The defenders also relied on Chappell v Somers & Blake [2004] Ch D 19 in support of that submission although in that case, where a solicitor acting in an executry was sued in respect of rental that should have been earned on a property asset in the estate, it was held that it was appropriate for the executrix to have claimed, rather than the residuary beneficiary, bearing in mind that she would have a duty to account to him. Rather than rely on the actual decision in that case, the defenders sought to draw support from the part of the discussion by Neuberger J at paragraph 15 to the effect that one possibility was that the beneficiary could sue the solicitors directly. If Lord Haddo did not have a right of action then it lay with the 1965 Trust trustees on the basis that they were comparable to the executrix in Chappell. However, their principal submission was that Lord Haddo did have a right of action and that any decree in the present action at the instance of the pursuer would not be res iudicata in any subsequent action by him.

[26] The pursuer had, it was submitted, suffered no loss. If the defenders paid damages to the pursuer he would be better off and Lord Haddo and/or the 1965 Trust trustees would be at liberty to raise a fresh action against them in respect of their losses. The defenders did not accept that the grant of an indemnity and guarantee of itself constituted a loss and referred to the discussion in Jackson v Clydesdale Bank 2003 SLT 273 in that regard.

[27] Separately, it was submitted for the defenders that the eventual disposal of the Tarves Estate did not fall within the scope of the duty of care owed by the defenders to the pursuer. The pursuer had chosen to divest himself of his interest in the estate, when the TET was set up, for no consideration and there was, accordingly, no damage from which the defenders could be said to have a duty to protect him: South Australia Asset Management Corporation v York Montague Limited [1997] AC191 ('SAMCO'). Reference was also made to Matthews v Hunter & Robertson 2008 SLT 634 as being, it was said, an analogous case. Further, it was open to the trustees of the TET to take their own advice (Wilson & Duncan: Trusts, Trustees and Executors p. 457). It did not follow that the defenders ought to have known that the trustees were relying on their advice.

[28] Submissions were also made on behalf of the defenders to the effect that even if the scope of their duty of care did encompass the destination of the trust estate, there were no adequate averments of causation. The TET trust deed did not set out the interests of the pursuer's children as being preferential. The pursuer was not in a position to secure that the trustees exercised their discretion in accordance with his wishes. Further, the pursuer did not aver precisely which children would have benefited. And it was those children who had lost out, if anyone had. Neither did the pursuer specify, in his alternative case, to which member or members of his family he would account if he was successful in securing the payment of damages.

[29] The matter of damages was also approached by the defenders as a question of remoteness. What had, on the averments, occurred was that the pursuer's wishes (not rights) had been frustrated and had led him and others to choose a particular course of action but that did not sound in damages. These were benevolent and extraneous steps which ought properly to be regarded as collateral and too remote. Reference was made in support of that submission to Redpath v Belfast and County Down Railway [1947] KBD 167 where payments made to persons injured in a railway accident out of a distress fund voluntarily supported by the public were held to be irrelevant to the calculation of loss, Andrews LCJ stating that: "...the causa causans of the Fund was not the accident but the bounty or charitable motives of the subscribers". The case of Gardner and Another v Marsh & Parsons (A Firm) and another [1997] 1 WLR 489 was also referred to. Redpath was amongst the authorities relied on there, where the fact that a landlord in a long lease had, five years after the plaintiff's purchase of a property which had been the subject of a negligent pre purchase survey by the defendant surveyors, remedied the defects that the surveyor should have identified, at no cost to the plaintiff, was left out of account. It was considered not to be part of a continuous transaction of which the purchase of the lease as a result of the surveyor's negligence was the inception but was res inter alios acta and thus collateral to the negligence.

[30] It was submitted, further, that the only possible foreseeable result was that certain beneficiaries would have their entitlement diminished not that there would be the myriad of negotiations and steps undertaken that occurred: Balfour Beatty Construction (Scotland) Ltd v Scottish Power plc 1994 SC 20, Simmons v British Steel plc 2004 SC (HL) 94. It was, in particular, not foreseeable that the 1965 Trust trustees would advance Tarves Estate to Lord Haddo.

[31] Regarding the pursuer's alternative case, the defenders submitted that the circumstances here could be distinguished from those envisaged in the case of Alfred McAlpine Construction Ltd v Panatown [2001] 1 AC 85 as enabling one person to sue in respect of a loss incurred by another. Reliance was placed on the fact that there was no privity of contract between Lord Haddo and the defenders, that there was a delictual claim available to the beneficiaries (although senior counsel focussed in his submissions only on Lord Haddo as being the beneficiary who had an available claim), and that the beneficiaries had not lost the tax that had been paid by Lord Haddo.

Submissions for the Pursuer
[32] On behalf of the pursuer it was submitted that the pursuer had title to sue and had pled a relevant case. The defenders' approach failed to take account of the realities of the situation. The circumstances set out were that although the pursuer could not ultimately control where the trustees of the TET put its assets, he was in a position to put his wishes to them in that regard and the trustees could legitimately have taken those wishes into account in deciding how they were going to deal with them. What had actually happened as a result of the defenders' failings was exactly the kind of thing that fell within the scope of their duty of care. The plan had been to achieve the devolution of the Tarves Estate to the pursuer's children, or one of them, without the incurring of a tax charge. The loss that had arisen was the locus classicus of the kind of losses that solicitors in the position of the defenders in this sort of case were retained to protect against. The defenders had, furthermore, charged fees for doing work for the TET and had immediately moved to devising a rescue scheme when the error was spotted and those actions were all eloquent of their retainer extending generally to working for the TET.

[33] The relevant questions were, it was submitted: was the kind of loss suffered within the scope of the retainer? Was it caused by the negligence? If so, was it too remote? Then, was it met by the 'black hole' theory discussed in Panatown? On the pleadings these questions could all be answered in the affirmative. The loss was the price of the salvage operation. It led to the tax liability. The 1965 Trust trustees required to be indemnified by Lord Haddo and the pursuer. A debt was now owed to the bank by Lord Haddo. It was guaranteed by the pursuer; his loss in that regard had a present value albeit that it would be discounted from the full amount of the debt due. Similarly, the pending liability for professional fees had a present value.

[34] It was submitted that there was no question of the indemnity and guarantee being outwith the contemplation of the defenders at the time of the delictual wrong since they had themselves devised the plan involving them. So far as contemplation at the time of contracting was concerned, since the avoidance of liability to tax was an inherent part of the scheme under which the TET was set up, the type of losses which had occurred were plainly within their reasonable foresight at that time. Foreseeability was, it also ought to be recognised, a question of fact and could not properly be determined at debate stage.

[35] Regarding the defenders' submission that there was an absence of the requisite causal link, the pursuer's approach was to say that this was a case of a person being driven to take urgent steps in response to the defenders breach of duty and, as discussed in SAMCO, at p. 218-9, the chain of causation was not broken in such circumstances. As to the defenders' repeated submission that the loss sustained was not the pursuer's, at the very least, he had suffered loss because of having had to grant the indemnity and guarantee and would be liable for the professional fees once the invoices were rendered. Further, under the principles discussed in Panatown and in McLaren Murdoch & Hamilton, on the pursuer's alternative case, he was entitled to recover the full amount borrowed by Lord Haddo, on his behalf.

[36] Whilst recognising that , in the case of Panatown, their Lordships did not wholly adopt the analysis of loss arising from the breach of contract to carry out works on the property of another that was set out by Lord Griffiths in the case of Linden Gardens Ltd v Lenesta Ltd [1994] 1 AC 85, reliance was placed on the general comments made by him regarding the absurdity of suggesting that there would be no recoverable loss where , for instance, a husband contracted with builders who negligently performed work on a house that was put into the name of his wife after he entered into the contract.

[37] As to the defenders' submission that recourse could be had by Lord Haddo and/or other beneficiaries to the ius quaesitum tertio, the pursuer submitted that neither it nor indeed, the approach in White v Jones provided the answer in a case such as the present one where what was involved was an inter vivos trust. The beneficiaries had no rights in the trust unlike a named beneficiary in a will; they only had the right to be considered by the trustees. This was not a disappointed beneficiary case. Rind was a tentative first instance decision following a poor but binding decision of the Court of Appeal. It did not provide the answer in the present case. It was also suggested that the intention in White v Jones was to afford a remedy in a case where the Panatown approach would not work because the person who could have sued under the contract with the solicitor was dead. There was no room for the White v Jones approach if the Panatown one provided a remedy. Further Panatown was appropriate for precisely this sort of case where family arrangements had fallen through because of the breach of duty of someone who had contracted with only one of their number. And in the event of the pursuer recovering under Panatown principles and not remitting the appropriate sum to Lord Haddo, he would have a right to call for an accounting from the pursuer which was relevant to any consideration of the defenders' argument that a decree in the present action would not be res iudicata in a subsequent action at the instance of Lord Haddo.

Discussion
[38] It is important to recognise that this case is at procedure roll stage. The test to bear in mind is well known. It is set out in Jamieson v Jamieson 1952 SC(HL) 44 and is that the case should only be dismissed if, assuming that the pursuer proves his averments, his claim against the defenders will necessarily fail.

[39] I am persuaded that the pursuer is correct to seek to approach the case on the basis that the defenders were instructed in terms of a retainer which had as its purpose not only the fulfilment of the pursuer's wishes but also the benefit of his direct family. It was under those arrangements that the defenders were instructed to carry out work in respect of the Tarves Estate generally. At the heart of the particular work that has given rise to the present claim, was the pursuer's firm wish that he wanted Tarves Estate to go to one or more of his children. It was with that in mind that the TET was set up. The other children in the class of beneficiaries, namely the pursuer's sister's children and his adopted cousin's children, were only included because he had only one child at the time the Trust was set up and the defenders advised him to widen the class so as to protect against its failure. The pursuer offers to prove that as time progressed and he and his wife had further children, he repeatedly made it plain to the defenders that he wanted Tarves Estate to be for them, not for his wider family and definitely not for his cousin's family. There is also a clear theme that, in keeping with the family history which goes back for many centuries, the pursuer wished to protect against the Estate being broken up. Further and importantly, the pursuer makes clear in his averments that the defenders were being instructed to advise on a means of Tarves Estate being handed on in accordance with his wishes in such a way as avoided giving rise to a tax charge if at all possible.

[40] Against that background, the pursuer offers to prove that had he received timeous advice regarding the need for the TET trustees to make the appropriate election, the result would, as a matter of fact, have been that the trustees would have followed his wishes and the Tarves Estate would have been appointed to one or more of his children. That did not, however, happen. The date was missed. The defenders told the pursuer they had made a mistake. They apologised. They devised the rescue scheme which was ultimately adopted and, indeed, they advised the pursuer to adopt it. Given the terms of the 1965 Trust, it was not possible to pass the Tarves Estate to any of the pursuer's children other than Lord Haddo, but at least by doing that, the estate was retained within his immediate family. There were costs involved in doing so in the form of a substantial charge to capital gains tax and professional fees. None of those costs would have arisen had the rescue scheme not been implemented but the way the pursuer views it is that that scheme would never have been necessary had it not been for the defenders' mistake, a mistake which he offers to prove amounted to a negligent failure in performance. The pursuer offers to prove that such a failure amounts to both a breach of contract and a breach of the defenders' delictual duty of care.

Title to sue
[41] Although the defenders did not expressly depart from their plea of no title to sue, it was not pressed. I am readily persuaded that it should be repelled in respect that on the one hand the pursuer sues in respect of a contractual duty owed to him under a contract between him and the defenders and on the other hand he sues in respect of a breach of a duty of care owed to him as a client of the defenders. I do not see that there is any problem with his title to sue. The real issue between the parties lies elsewhere.

Scope of the defenders' duty
[42] The pursuer sues in respect of the economic impact of the defenders' negligence. Leaving to one side for the moment the issues that arise from the fact that the pursuer himself is not yet out of pocket to any extent, I turn to the question of whether the particular economic impact concerned, namely the cost of a tax liability and professional fees, could constitute a loss which was within the scope of the retainer. It seems obvious to me that it could. The purpose of the pursuer's instructions to the defenders was to achieve his wishes, namely the transmission of Tarves Estate to his children, without incurring tax. In his claim he sues in respect of tax costs and associated professional fees which he offers to prove arose because of the defenders' negligence. Thus, whilst bearing in mind that, as it was put by Lord Bridge of Harwich in Caparo Industries Plc v Dickman [1990] 2AC 605;

"It is never sufficient to ask simply whether A owes B a duty of care. It is always necessary to determine the scope of the duty by reference to the kind of damage from which A must take care to save B harmless" (p.627)

and, in a similar vein, the approach in SAMCO to the effect that a plaintiff has to show not only that a duty was owed to him but that it was a duty in respect of the kind of loss for which he claims, I am satisfied that the pursuer, in his pleadings, sets out a case that shows that the loss for which he sues was within the scope of the duty of care owed to him by the defenders. I do not agree with the defenders that the circumstances of his case are analogous to those in the case of Matthews v Hunter & Robertson (an executor's claim for negligence prior to the death of a testator). Nor am I persuaded that the fact that the trustees of TET could have sought separate advice shows that there was no duty of care owed to the pursuer in the circumstances pled.

Causation and remoteness
[43] It is necessary to ask whether the loss for which the pursuer sues was reasonably foreseeable (a) at the time that the parties entered into their contract; and (b) at the time of the alleged negligence. It is difficult to answer questions about foreseeability purely by examining a pursuer's pleadings. Whilst of course one can proceed on the basis of a hypothesis that the pursuer will prove all the facts averred, one is conscious that the evidence which will be led on the basis of the notice given by those averments is liable to provide a much fuller and clearer factual picture. However, on the pleadings the defenders were, at the time of contracting with the pursuer, plainly aware that the pursuer wished to avoid paying tax if possible. There is nothing to suggest that that awareness did not persist at the time of the alleged negligence. Similarly the defenders were, on the pursuer's averments, aware throughout of the pursuer's keen desire to see to it that it was his direct family that took Tarves Estate, not those within the wider class of beneficiaries. Thus, had the passing of the last date for effective exercise of the trustees' discretion given rise to a tax charge and professional fees of itself, the pursuer would plainly be in a strong position to establish the requisite foresight for causation purposes. The question that then arises is whether the fact that the tax charge and associated fees arose from a conscious decision on the pursuer's part, a decision that he did not have to make, breaks the chain of causation. The client's exercise of choice in such circumstances could, obviously, do so. It is not every cost that arises from every course of action determined upon following upon negligence or breach of contract that is recoverable. However, the urgency with which the innocent party requires to act is relevant as is the nature and extent of any choice he had in the matter. Here, given the risk of Tarves Estate vesting on the death of the liferentrix of the 1965 Trust, any steps taken to remedy the situation plainly had to be taken quickly. So far as the nature and extent of the available options is concerned, the pursuer offers to prove that, in effect, he had two options. One was to leave matters as they were, the result of which would have been quite contrary to his wishes as repeatedly expressed over the years and clearly made known to the defenders. The other was the option which was actually recommended by the defenders. In these circumstances it would appear that the pursuer is in a strong position to show that the chain of causation was not broken and that, rather, the circumstances of his case are similar to those envisaged in SAMCO at p.218-9. I am satisfied, accordingly, that the pursuer's case does not fail the relevancy test so far as causation is concerned.

[44] What about remoteness? The authorities relied on by the defenders, Redpath v Belfast and County Down Railway and Gardner and Another v Marsh & Parsons (A Firm) and another, involved circumstances where it was considered that the influx of financial benefit on which the defenders in each case sought to rely arose quite independently of the cause of action and could not, accordingly, be regarded as naturally attributable to it. The decision in Redpath also appears to have been influenced by the consideration that at the time of the railway accident following upon which the voluntary public fund was set up, those who were injured could have had no reasonable expectation of such funds being made generously available to them (see p.174). In Gardiner & Another the Court appears to have been influenced by the fact that the negotiations with the landlord were not caused by the negligence (the purchase was caused by the negligence) and that their successful conclusion did not occur until a number of years after it. In contra distinction to the circumstances in those cases, what the pursuer offers to prove in the present case is that, far from the events of the rescue scheme being separate and independent from the negligence, they were devised by the defenders themselves and were clearly attributable to it. Given the overarching theme of the pursuer's case to the effect that the defenders knew they were being instructed by the pursuer for his family, it does not seem to me that adverse economic consequences sustained by any of the direct family could be said to be too remote. Whilst it could be said that the pursuer's claim seems to lack clarity to the extent that he points both to the effect upon him of having had to guarantee Lord Haddo's debt and to Lord Haddo having incurred that debt - the obvious reaction is "he cannot have it both ways" - that is in the context of him presenting both a principal and an alternative claim. The principal claim presented by the pursuer is for the economic effect on him of having become Lord Haddo's guarantor and being liable to be the recipient of accounts for professional fees. He offers to prove that there is a present value to be put on the effect on him of having granted the guarantee. Whilst, as the defenders submitted, the present state of the authorities is to the effect that the grant of a guarantee does not necessarily constitute a loss, as discussed in Jackson v Clydesdale Bank, that is not to say that no damages can ever be recoverable in respect of the grant of a guarantee. As Lord Eassie observed, at p. 280, it will all depend upon a close examination of the particular facts and circumstances of the case.

Black holes
[45] I am not wholly convinced that it is helpful to compare the situation of a person who finds himself out of pocket on account of the breach of a contract to which he was not a party with the extraordinary gravitational pull of the dense collections of mass in outer space that are colloquially known as black holes but, one way or another, that is how they have come to be known. The phrase was originally used by Lord Stewart in GUS Property Management Ltd v Littlewoods Mail Order Stores Limited 1982 SC (HL) 157 at p.166. In such circumstances the party in breach of contract points to the fact that the other party to the contract has suffered no loss and also to the fact that the party who has sustained the loss is not a party to the contract and therefore has no title to sue under it. The claim for damages in respect of the breach of contract disappears, so it is said, into a legal black hole and, as was commented by Lord Drummond Young in Mclaren Murdoch & Hamilton Ltd v The Abercromby Motor Group Limited p.339;

"In a well-regulated legal universe, black holes should not exist".

In Panatown, the history of the solution to the black hole problem was discussed. In particular, Lord Clyde, in his speech, looked at the question of how Scots Law might seek to resolve the issue. I do not propose to repeat herein Lord Clyde's clear exposition of the history of the identification of the means by which the gravitational pull of black holes can properly be resisted. It is sufficient to note that, in effect, he identifies that if a breach of contract occurs which causes loss that is capable of being measured financially, the innocent party may recover damages even if the loss in question has in fact been sustained by somebody else. In those circumstances, however, the pursuer sues on behalf of the person who has directly sustained the loss and is under an obligation to account to that other person in respect of any damages recovered. I would add that I agree with Lord Drummond Young that the emergence of this rule should be regarded as the identification of a right to raise an action which is deemed by law to exist in a case where loss resulting from a breach of contract occurs to someone other than the contracting party and is not a matter of identifying the express or implied intention of the parties to the contract. It does seem plain, on a proper reading of Panatown and the authorities referred to therein, that what is identified is actually a matter of policy rather than one of the ascertainment of contractual intention.

[46] It seems to me, further, that once it is recognised that a pursuer in such a case has a duty to account to the party who has in fact sustained the loss, that must be an answer to the defenders' res iudicata concerns. Whilst, strictly, they may be correct that a decree in the present action would not be res iudicata in an action at the instance of Lord Haddo, it would be an answer to his claim that he already had a right to call upon the pursuer to account to him for any sums recovered in the present action.

[47] Turning then to the defenders' submission that there is no need to resort to the Panatown principle because it would be open to Lord Haddo to rely on the ius quaesitum tertio, I reject it. The ius quaesitum tertio arises in circumstances where rights are conferred directly onto a third party by a contract entered into between other parties. The parties to the contract must intend to benefit the particular third party, Peddie v Brown [1857] 3 Macq. 65; Finnie v Glasgow and Southwestern Railway Co [1857] 3 Macq. 75; and the third party upon whom the right to benefit is conferred must be identified in the contract. In the present case, the contract between the pursuer and the defenders was not one which directly conferred a right to any benefit upon Lord Haddo. At best, he was entitled to have the trustees have regard to him as being a possible recipient of the trust assets but nothing further than that. I do not, accordingly, agree that the ius quaesitum tertio could be relied on by Lord Haddo.

[48] I am not persuaded that Lord Haddo is in a position to claim under the principle identified in the case of White v Jones, where it was held that the assumption of responsibility by a solicitor to a client who instructs him to prepare a will extends to intended beneficiaries so that it is open to such a beneficiary to claim directly against the solicitor in the event of negligence in the carrying out of the client's instructions. In White v Jones, the final intentions of the testator were held to be firm, clear and attainable. There was no doubt that had it not been for the negligence of the solicitor, the plaintiffs would have inherited a specific sum of money. There was reference to the "Albazero" principle (as subsequently discussed in Panatown). However, their Lordships distinguished the circumstances in which that principle applied from those where the intended beneficiary of a testator does not inherit due to the negligence of the solicitor instructed to prepare a will.

[49] The extension of duty of care identified in White v Jones was necessary because the third party who had suffered the loss was not able to look to the deceased client to sue for his benefit. So far as the executors were concerned, their Lordships recognised that executors may be unwilling to assist a disappointed beneficiary by pursuing a claim of such a nature for his benefit. The circumstances here are different and I do not see that the principle in White v Jones would be of assistance to Lord Haddo.

[50] The defenders also sought to rely on the case of Chappell v Somers & Blake where the administration of an estate was delayed and during the period of delay properties in the estate were left vacant and rental, accordingly, not earned on them. There, the executrix sued. The defendant solicitors argued that the loss was not her loss but that of the residuary legatee. It was held that the claim was, properly, that of the executrix to whom the solicitors owed a duty of care and that there was considerable doubt as to whether it would be right to impose on them a duty of care owed to the residuary legatee. In my view, the approach in Chappell in fact reflects the narrowness of the White v Jones principle and serves to reinforce the conclusion that the circumstances of this case would not be able to be brought within it.

[51] I should also refer to the case of Rind, since much reliance was placed upon it by counsel for the defenders in support of their case that Lord Haddo could sue the defenders directly. I am not persuaded that it affords adequate support for that submission. It was a decision on a summary application where the judge, Morgan J, specifically stated that the detailed facts and circumstances needed to be investigated at a trial (paragraph 87). Further, as observed by counsel for the pursuer, what appears to have prompted the conclusion that was reached to the effect that a son's case against his mother's solicitors in respect of alleged negligence in advising on estate planning could go forward to that trial, was a recognition that, as matters stood, there seemed to be binding Court of Appeal authority that required him to do so. However, at paragraphs 56 and 57, it is evident that the judge is not entirely comfortable with doing so as it appeared that the Court of Appeal had not, before reaching that binding decision, had the benefit of a full citation of authority.

[52] I recognise that the purser's case is not without difficulties. On the one hand he seeks to recover damages in respect of his having granted a guarantee for the debt incurred to meet the tax liability together with associated professional fees, his senior counsel expressly recognising that that claim would be calculated on the basis that a sum less than the full amount of the loan and interest was to be included in it. On the other hand, he claims in the alternative on behalf of Lord Haddo for the full amount of the loan and interest and associated professional fees. His fallback position, therefore, is of a greater claim than is his starting point, a result which seems to be counter-intuitive. That is not to say, however, that it makes the action irrelevant. I accept that the two cases are pled as distinct alternatives.

[53] In all the circumstances, I am satisfied that the pursuer advances a relevant case that the defenders are liable directly to him in respect of the economic consequences comprising his granting of a guarantee and the professional fees associated with the rescue operation. That is because he sets out a case in the averments that indicates that the avoidance of such consequences fell within the scope of the defenders' duty of care both in contract and in delict. Further, I am satisfied that his averments set out a relevant case that such economic consequences were of a kind which was reasonably foreseeable, not too remote and not collateral but arising directly from the alleged failure of duty.

[54] Separately, the pursuer sets out a relevant case that he can, alternatively, seek to recover the amount of Lord Haddo's bank loan and interest charges, on behalf of Lord Haddo. It was not suggested that he would seek damages both in respect of the granting of a guarantee and on behalf of Lord Haddo for the loan and interest. If he did, there would plainly be an illegitimate element of double recovery. The professional fees are common to both approaches and given that it is not yet confirmed upon whom that liability will rest, I can see that it is not appropriate to dismiss that part of the claim at this stage. It will, however, be incumbent on the pursuer to clarify matters in that respect.

[55] In all these circumstances, I cannot be satisfied that the action will necessarily fail and I will, accordingly, pronounce an interlocutor allowing a proof before answer.