| OUTER HOUSE, COURT OF SESSION |
| | [2014] CSOH 4 |
| CA132/11 | OPINION OF LORD WOOLMAN in the cause DONAL ALPHONSUS NOLAN Pursuer; against ADVANCE CONSTRUCTION (SCOTLAND) LIMITED Defender: ________________ |
Pursuer: JD Campbell QC, Murray; Drummond Miller LLP
Defender: Dunlop QC, Walker; Balfour + Manson LLP
17 January 2014
Introduction
[1] Donal Nolan owns an area of ground at Branchal Road, Cambusnethan, Wishaw ('the site'). On the morning of 19 November 2010, he observed several lorries depositing waste material at the site. He had not given permission for any tipping to take place. He took steps to terminate the operation. He contacted the police, as well as the Scottish Environment Protection Agency ('SEPA') and the local authority.
[2] Advance Construction (Scotland) Ltd ('Advance') was the contractor responsible for depositing the spoil. It had instructed hauliers to carry out the operation. Subsequent investigations revealed that the spoil contained small concentrations of asbestos. Although there have been lengthy negotiations to attempt to resolve matters, the spoil still remains on the site.
[3] Mr Nolan raised the present action against Advance in September 2011. At that stage he sought: (a) declarator of encroachment; (b) orders requiring Advance to remove the spoil, to reinstate the land and to procure a bond as security against further losses; and (c) which failing such orders, an award of £6.8 million by way of damages. That figure represented the cost of removing the spoil, the lost development value of the land, together with investigative and ancillary costs, and the cost of obtaining a bond.
The Issues
[4] In the course of the proceedings, Mr Nolan has greatly narrowed his claim. In June 2012, he deleted his conclusion for specific implement. At the close of the proof, he abandoned his claim for lost development value, which he had originally valued at £4 million. He also accepted that some elements of the claim for investigative costs are properly classified as litigation expenses.
[5] Advance accepts that its actions were unlawful. It maintains, however, that Mr Nolan is not entitled to recover damages. Its principal line of defence relates to mitigation of loss. Advance submits that Mr Nolan acted unreasonably in refusing to accept its many repeated offers to remediate the land. In consequence, he is disentitled from recovering compensation.
[6] There are several other lines of defence. Advance argues that the sum sought is excessive. In particular, it contends that the pre-existing soil itself contained asbestos, which means that the land in any event requires remediation. It also maintains that Mr Nolan has failed to prove his claim for investigative and ancillary costs. Finally, it submits that decree of declarator is unnecessary, because encroachment is admitted.
Material Facts
The pursuer
[7] Mr Nolan is a racehorse trainer, now aged 64. He retired as a jockey ten years ago. In 2001 he acquired the site, which extends to 4.2 hectares. It has a level stretch of ground of about nine furlongs, on which he used to gallop his horses. A coal mine was formerly located at the site. It was closed in the mid-20th century. Signs of the old workings are still evident, including a coal bing.
[8] Mr Nolan stays at a farmhouse about three miles away from the site. He lives there with his partner, Miss Melanie Collins. The couple have been in a relationship for over 20 years. Despite Mr Nolan having title to the site and being the sole director of various companies, Miss Collins is in charge of the couple's business affairs. She carries out all the administration for the horse-racing business. In addition, she has been involved in property development since the 1970s.
[9] Miss Collins summed up their respective business roles as follows: "Donal has no experience and leaves decisions up to me". Any reference to "the pursuer" in the course of this opinion should therefore be understood in that context. Miss Collins is the controlling mind. She took all the decisions relating to the site and to the conduct of this litigation. Another individual, Mr Connolly, was also said to be involved as a partner in the pursuer's business dealings. His role was not fully explored in the evidence, however, and it is not relevant to the issues in the case.
Residential Development at the Site
[10] The pursuer wished to develop the site for residential housing. He discussed the construction of 99 houses with North Lanarkshire Council ('NLC'). The planning officers recommended that the development should take place in three phases. In consequence, he applied to develop phase 1, consisting of twenty-eight houses. NLC granted outline permission in 2003 to Upton Park Developments Ltd and full permission in 2008 to Oscarpark Developments Ltd. Mr Nolan controlled both these companies. By autumn 2010, the development was still under consideration. The pursuer had engaged an architect and a chartered quantity surveyor to provide advice on design and costs. No finance had, however, been put in place.
The deposit of the spoil
[11] The waste material that Advance deposited on the site came from Coltness Primary School. NLC entered into a design and build contract with Graham Construction Ltd to construct a new school building. It was agreed that part of the waste material from the demolition of the old building should be re-used in the construction of the new school. The remainder was to be removed. Some was scheduled to go to a licensed landfill site near Polmont. Advance was responsible for removing the other part, which consisted mainly of subsoil. It engaged two haulage companies, Ryan Plant Ltd and Doonin Plant Ltd, to transport it to the site.
[12] Prior to the deposit taking place, Advance took a number of preparatory steps. It put up security fencing around the boundary of the site, made up a haul road, sent a bulldozer to level the waste material and installed a portakabin. It also carried out a survey to establish the ground levels. It intended to carry out a second survey once the tipping operation had ceased. The aim of the two surveys was to enable Advance to calculate the precise amount of spoil deposited at the site. That was designed to avoid any dispute with the landfill operator over tipping charges.
[13] Advance also applied to SEPA for an exemption to allow 5,000 tonnes of waste material to be deposited at the site. The application was made under para 19 of schedule 3 of the Waste Management Licensing Regulations 1994 (now repealed and replaced by the Waste Management Licensing (Scotland) Regulations 2011). The application form erroneously stated that the operation would begin on 29 November 2010. SEPA replied on 15 November seeking further information. Before matters were finalised, Advance realised that it did not have permission to tip the spoil at the site. Accordingly, no exemption was granted.
[14] The lorries containing the spoil began arriving at the site on 15 November 2010. The dumping took place on an area that broadly coincided with phase 1 of the proposed development. Mr Nolan and Miss Collins learned about the operation on the morning of Friday 19 November 2010. They immediately went to the site where they found several tipper lorries waiting in a queue. At least one of them was in the process of dumping spoil when they arrived. They noticed that the lorries bore the livery of either 'Ryan Plant' or 'Doonin Plant' and that Advance's logo featured on the portakabin and the bulldozer.
[15] Miss Collins exhibited Mr Nolan's title deeds to the police to vouch his ownership. On learning that it did not have permission to carry out the tipping operation, Advance immediately instructed the hauliers to cease any further transfer or deposit. Its position from the outset has been that it was the subject of deception.
[16] Advance's technical manager, Lance Gordon, explained matters at the proof. Two individuals, William Edward and Jim Aitken, approached him and represented that they acted for the owner of the site. They stated that it was a landfill facility with the correct licences in place. Mr Gordon asked to see the licences, which they undertook to forward to him. He was not overly concerned about the absence of paperwork, because it is common within the industry for documentation to arrive late. He saw no reason to doubt the representations made to him. Mr Edward had formerly worked for Advance and his daughter is one of its employees.
After the incident
[16] Shortly after the incident, Mr Nolan and Miss Collins met Seamus Shields, the managing director of Advance. The pursuer's solicitor described the meeting as a "fruitful" one. Mr Shields acknowledged that the deposit was wrongful. In the course of discussions, he raised the question of Advance purchasing the site, or entering into a joint venture with the pursuer. The pursuer accepted Advance's explanation of the circumstances leading up to the deposit of the spoil. It paid him a sum of £5,000 as a contribution toward compensation. No one was then aware that the spoil contained asbestos.
[17] The degree of accord between the parties is illustrated by a letter dated 25 January 2011 sent by the pursuer's solicitors to Advance's solicitors. It enclosed a handwritten letter, signed by Mr Nolan and addressed to Advance, which stated:
"I hereby provide you with my consent as follows: -
(1) For permission (retrospectively) to deposit all soils upon said site pursuant to any contractual agreement(s) which you may have entered into with 3rd parties for the deposit of said soils."
[18] Potentially that letter could have been of great significance to the present litigation. Mr Dunlop informed me, however, that he had instructions not to found upon it as relieving Advance from liability.
[19] From about March 2011, the pursuer's attitude toward Advance began to change. He queried whether it had been deceived into depositing the spoil. Suspicion turned into belief. He became convinced that Advance had engaged in fly-tipping in order to avoid incurring the expense of removing the spoil to a landfill site. He was concerned about his own duty as the landowner to deal properly with the waste materials: Environmental Protection Act 1990; Van de Walle v Texaco Belgium SA [2005] Env LR 24 Mountpace Ltd v Haringey LBC [2012] Env LR 32.
[19] The pursuer's misgivings grew in the light of the information he received from the experts whom he instructed to investigate matters. They advised him that there might be as much as 16,000 tonnes of spoil and that it would be very expensive to remove, given the very high rate of landfill tax applicable to asbestos. It was against that background that he raised the present action in Hamilton Sheriff Court.
Offers to Remediate
[20] Advance has made repeated offers to remediate the site. Because of their significance in relation to mitigation, it is necessary to consider them in some detail. For the sake of convenience, I shall generally narrate the communications as if they passed between parties. In fact they mainly took place between their respective solicitors. The pursuer did not accept any of the offers. Miss Collins explained that she distrusted Advance, as it had "proved beyond a shadow of doubt that it was unreliable". She enlisted the aid of Mr Alex Neil MSP and he became involved in several meetings and email correspondence about the dispute.
[21] Advance sent its first written offer on 19 May 2011, some four months before the litigation was raised. Its solicitors wrote:
"... to reiterate the offer that our clients have repeatedly made that they will remove from site the material which they deposited and only that material and remove it to a safe site which has already been identified. They will then reinstate the area to the way in which it was prior to them commencing the tipping or alternatively they would be prepared to consider otherwise reinstating the ground in a different manner if this could provide settlement. In that regard we would need fairly detailed proposals."
[22] The pursuer replied to the effect that he wished to ascertain the nature and amount of the spoil and whether SEPA had approved a method statement for its removal and the reinstatement of the site. In July 2011 the Finance Director of Advance visited Mr Neil at his constituency surgery. Mr Neil subsequently reported to the pursuer that Advance was "keen to try to find a way forward which is mutually agreeable". It was willing either to have direct discussions, or to refer the matter to mediation.
[23] On 9 and again on 19 September 2011, Advance again offered to remove the material. It undertook to return "this site to the condition and ground levels that existed prior to any dumping taking place". The following day, the pursuer raised the present action and arrested on the dependence. That motion was granted on the basis of the initial writ, which contained the following averment:
"The pursuer has sought the removal of said contaminated waste materials by the defenders, but as at the commencement of these proceedings the defenders have refused or delayed to do so."
[24] In October 2011 Advance lodged defences and successfully moved to remit the case to this court. At an early stage in the proceedings (it is not clear when) the parties had another meeting. One of the pursuer's experts, Alexander Boyd, arranged and chaired the meeting, which took place in a hotel on the M8. He told the representatives of Advance that it should (a) remove the material from the site, (b) provide a bond, and (c) compensate the pursuer for the upheaval caused by its conduct. When the meeting finished, he departed thinking that matters would resolve on that basis. Shortly afterwards, however, he was surprised to learn that the pursuer was only prepared to settle the action in return for a payment of £3 million.
[25] A few months later Miss Collins consulted with Miss Joughin, advocate. Counsel advised her to accept Advance's offer. She added that there would have to be a good reason to reject it. This evidence was adduced from Mr Boyd, who was present at the consultation. It is very unusual to hear such testimony in the course of a proof. Normally it would be protected by privilege. Mr Campbell expressly indicated, however, that he did not object to this line of questioning.
Further offers of remediation
[26] Another meeting took place in about April 2012 between Miss Collins and Mr Shields. During the course of their discussion, he offered to remove the waste material to a location in Baillieston. Miss Collins visited the proposed site and found it to be a residential development under construction by Bellway Homes. She said that the location was clearly unsuitable and that his suggestion deepened her mistrust of Advance. However, she only appears to have made the visit a year after the proposal was made.
[27] Advance made further written offers to remediate throughout 2012.
a. On 20 July (shortly after the pursuer abandoned his claim for specific implement) it stated that the work would be carried out by an independent contractor.
b. On 23 October, it stated:
"Either the material will be entirely removed, at our clients' sole expense, thus rectifying the entire problem at the site; or the removal exercise will not cure the problems, in which case your client's claim for damages is not only left intact, it is far easier to prove."
c. On 7 November, it stated that the work would be overseen by David Murray and Associates, engineers, who themselves would use specialist contractors (REC Asbestos Removal).
d. On 21 December, it proposed that the removal contractor should be Yuill & Dodds Ltd, whom Miss Collins had previously approved.
[28] None of these offers was accepted. On 30 May and again on 7 November 2012, the pursuer indicated that he would arrange for the removal of the waste material himself. No such steps were in fact taken.
[29] In the course of 2013, Advance made further efforts to reach an extra-judicial settlement. It wrote to the pursuer on 7 May and stated:
"standing the proximity to the Proof, it is appropriate that we make one final attempt to try and resolve matters to parties' mutual satisfaction with a view to minimising court time and expenditure."
[30] The letter set out a detailed proposal for the removal and disposal of the waste material, which was to be carried out either by Advance or by a third party contractor. It added that the offer was "without prejudice to any damages claim your client may have."
[31] On 9 May the pursuer made a counter-proposal. He required Advance (a) to remove the waste material in terms of an agreed method statement; (b) to pay £5 million in damages, together with legal costs and landfill tax; and (c) to grant a formal indemnity in his favour. On 24 May Advance rejected the counter-proposal on the basis that the financial claim was "unrealistic". Instead it proposed that one of two named contractors would remove the waste material in compliance with regulatory requirements. Advance and its parent company would provide an indemnity to the pursuer in respect of any claim or liability arising from (a) the dumping of the waste material; and (b) the removal operation. The letter concluded by stating that damages should remain a discrete matter.
[32] In his response of 4 June, the pursuer: (i) queried the suitability of one of the contractors, (ii) stipulated that the works should be authorised and supervised by SEPA, (iii) asked to see a draft method statement and indemnity, and (iv) undertook to provide vouchers for all the costs he had incurred. He also made a new proposal:
"Instead of removing the material we apply to [NLC] for planning permission to cap the site. When it is received our clients will carry out the work at your client's expense, subject to SEPA's advice and supervision. Budgets will be obtained in advance."
[33] This was the first time that the pursuer had mentioned capping as a solution. On 6 June Advance purported to accept that counter-proposal, leaving over the question of damages. Following a debate, however, I held that this sequence of letters did not constitute a concluded agreement.
Credibility and reliability
Mr Nolan
[34] Mr Nolan struck me as a remarkable witness. In a commercial action in which at one stage he sought a sum in excess of £6 million, he professed to know virtually nothing about the circumstances. His witness statement is less than half a page long. It states that Miss Collins was in charge of all issues involving development at the site on his behalf. When giving evidence, his stock answers were "I don't know", "probably", and "you should ask Melanie". In reply to a question about one of the offers made by Advance he responded:
"I don't know about this. I'm not up to all this paperwork. I'm not going to contradict you. I do not want to tell lies. I wouldn't read this letter anyway. I would pass it to my partner."
[35] Even allowing for Miss Collins' role within their relationship, Mr Nolan's lack of knowledge was extraordinary. He stated that he did not give instructions to raise these proceedings - "Melanie would have done that". He was unaware of:
i. whether he was a director of various companies;
ii. the extent of the site ("I haven't a clue");
iii. the identity of the solicitors instructed on his behalf (he had changed firms several times);
iv. whether he had been informed of the defender's offers to remediate;
v. whether he had told his solicitors that he was going to remove the material;
[36] As a result I found Mr Nolan's evidence to be of little value. He was wholly unreliable and he contributed little to my understanding of the case.
Miss Collins
[37] In matters of dispute I do not accept Miss Collins as a reliable witness for the following reasons:
i. She was unable to formulate a clear rationale for rejecting Advance's offers to remove the spoil.
ii. She was inclined to be evasive when difficult questions were put to her.
iii. She was quick to impute dishonesty to other witnesses.
iv. She was dismissive of expert evidence that contradicted her own opinion.
v. She did not appear to be willing to achieve a practical solution.
[38] I was particularly concerned about two key questions arising out of the proceedings in the sheriff court. First, why did the initial writ contain a crave for specific implement, if the pursuer did not wish Advance to remove the waste material? Second, who gave instructions for the averment that Advance had refused the pursuer's requests to remove the material, standing the pre-litigation offers that had been made? Those questions cry out for an explanation. Yet Miss Collins was unable to provide one. She stated that its wording had nothing to do with her. I regard that answer as being disingenuous.
[39] I concluded that Miss Collins' aim was to maximise the financial sum that she could recover from Advance. That was why she adopted the unshakeable belief that any offer made by Advance was tainted. At best, she failed to evaluate them in an objective manner. Her perspective was a distorted one.
Mr Alexander Boyd
[40] Alexander Boyd of NPL Environmental Ltd is a geotechnical engineer. He had been providing advice to Miss Collins in 2010 about another planning matter. When she mentioned the problem at the site, he suggested digging four trial trenches. He undertook the work at the end of March 2011 and was the first to uncover evidence of asbestos. On 5 April he sent an email to Miss Collins, which stated:
"Just a quick note on the sampling from the Branchal Road Site.
The visual examination of the long trenches revealed a little asbestos, solvents, what looks like grease oil, wood and organic materials.
...
The asbestos is probably from a roof tile though there are other coloured specimens that show either boarding or fabric."
[41] Mr Boyd also informed her that a sizeable quantity of spoil had been deposited, and that the cost of removal would be substantial. Following laboratory testing of soil, he informed SEPA in May 2011 that he had found small quantities of asbestos at the site. In his July 2011 report, he stated:
"The site has been covered with approximately 5000 m3 of waste materials containing asbestos, building rubble, old oil containers, plastic, steel sheets, old electrical wiring mixed through a clay matrix."
[42] Subsequently, Mr Boyd and Miss Collins fell out and he ceased carrying out any work on her behalf. He believes that she misrepresented his findings in three key respects. First, she exaggerated matters at meetings with SEPA by referring to the spoil as "toxic waste" or "hazardous waste". He did not regard those terms as warranted. Second, he thought that she over-stated the amount of the spoil. As he put it in his affidavit:
"My estimate of the deposited waste was five thousand tonnes. I have since heard a figure quoted by Melanie Collins of fifteen thousand tonnes and I dismissed that as being ridiculously excessive."
Third, Mr Boyd believed that Miss Collins had inflated the figure of financial compensation to which the pursuer was entitled.
[43] Miss Collins disputed his contentions. She feels a sense of betrayal, because Mr Boyd gave evidence on behalf of Advance and supported its position in a number of respects.
[44] I found that Mr Boyd gave his testimony in a straightforward and level fashion. His evidence largely corresponded with that of the documents and the other experts. I could discern no reason for him to lie about matters. I accepted his denial that he was motivated by commercial considerations. In those circumstances, I found him to be a reliable witness.
Mr Gordon
[45] Senior counsel for the pursuer made a sustained attack on the credibility of Mr Gordon, the technical manager for Advance. He submitted that Mr Gordon's account of how Advance had come to deposit the spoil on the site "does not bear close examination, and is false; in any event, it is unsupported by any credible evidence." When I pressed him on the basis for this statement, Mr Campbell pointed out that Mr Edward had not been brought to court and that it did not square with the application for an exemption made to SEPA on 12 November 2010.
[46] Mr Campbell also submitted (a) that Mr Gordon had misled SEPA by stating that the work was going to commence on 29 November, rather than 15 November; and (b) that it was unlikely that Advance would have carried out a topographical survey if it believed that it was lawfully depositing waste material at a licenced landfill site.
[47] I was troubled by the date given in the application to SEPA, but in general Mr Gordon struck me as a frank and open witness who had come to court to tell the truth. One moment during his re-examination made a particular impression upon me. Mr Dunlop asked him whether he understood that Mr Campbell had challenged his veracity. Mr Gordon paused for a long time before replying, as if to indicate that he found it difficult to take that suggestion on board. I regarded that as a genuine response. It fitted with my overall impression of him as an honest person. In my view it is inappropriate to speculate on why Mr Edwards was not brought to court or on what his evidence might have been.
[48] Accordingly, I accept Mr Gordon's evidence (a) that Advance is a very sizeable company with 600 employees which operates for a number of major house-building contractors and has never previously been prosecuted; (b) that he continually asked to see the licences, but without success and that it is common in the industry for paperwork such as licenses to be shown after the contract had commenced; (c) that there were many landfill sites to which the spoil could have been taken; and (d) that it was his standard practice to undertake a survey whenever Advance starts a site for record-keeping purposes.
How Much Spoil was Deposited?
[49] In my view the correct estimate of the amount of spoil is 2,807m3. Using a conversion factor of +2 (the industry standard) that converts to 5,600 cubic tonnes. I accept the evidence in this regard from Andrew Parsons, the expert geologist called on behalf of Advance. He has 22 years' experience, is a director of IKM Consulting Limited, sits on the Contaminated Land Advisory Group of the Scottish Government and is a representative of the Environmental Industries Commission.
[50] Mr Parsons used robotic laser equipment to survey the site and calculate the amount of the spoil. It is the most up-to-date technology for carrying out this exercise and I detected no flaw in the methodology he employed. Further, Advance also used a robotic instrument to undertake its pre and post deposit surveys. Those results were then fed into a computer software program, which calculated that there was 2,796 m³ of spoil. Accordingly, these two methods yielded an almost identical result.
[51] In my view, the other methods of calculation do not engender the same degree of confidence. Mr Farleigh carried out a physical site survey, but he based his estimate of 16,000 tonnes on two questionable foundations. First, he used an area measurement of 6,175 m2, whereas the robotic surveys measured the area at 5,055 m2. Second, he used one trench measurement to derive an average depth of only 1.3 m for the waste material. He stated that Mr Boyd provided him with details of the ground levels at the site. But Mr Boyd denied ever meeting Mr Farleigh and did not agree that the average depth was 1.3 m. Likewise the logs of the trial pits dug by Mr Parsons and Mr Jamieson did not square with that figure.
[52] The waste transfer notes should have provided the best evidence of the amount of the spoil. Unhappily, however, they were incomplete and could not be relied upon. An NLC official, Julie Heron, examined the available notes relating to all the waste material removed from Coltness primary school. She concluded that it involved a total of 18,000 m³, of which 15,000 m³ had gone to other sites. That implies that about 3,000 m³ went to the site.
[53] Avondale Environmental Ltd, which operates the asbestos landfill facility near Polmont, issued an advice note dated 29 September 2010 stating that it received a total of 13.36 tonnes of waste material from the school. It is difficult to know what weight to attach to that note. According to Miss Collins, when she sought to check it in November 2011, Avondale indicated that it had never received an enquiry from a contractor in relation to Coltness primary school.
[54] Miss Collins's own method of measurement involved counting the lorry loads that came to the site. It quickly became apparent that her approach was flawed, because she assumed (i) that the tipping had started on 8 November, rather than 15 November, and (ii) that each lorry load was completely full. I therefore place no reliance on her estimate of 15,000 tonnes.
What is the concentration of asbestos within the spoil?
[55] The experts agreed that the levels of asbestos are very low, the concentration being in the range 0.001% to 0.007%. Mr Boyd stressed that "the deposited material was inert and did not contain any significant hazardous or toxic material. According to Kenneth Boag, SEPA's head of operations in south-west Scotland, the spoil is not classified as hazardous waste. Mr Jamieson took a more cautious view. Although the asbestos concentrations are within the limit for Special Waste (ie hazardous waste), he believed that the material is a risk to human health because it exceeds 0.001%.
Was the soil at the site already contaminated?
[56] Because of its fire retardant properties, asbestos was commonly used at collieries. After mines are closed and the buildings demolished, it is often found in the soil. The experts all accepted that there might be asbestos in the pre-existing soil at the site. Mr Parsons explained that he was "very confident" of making such a finding, based upon his experience as a member of the team that carried out due diligence on similar sites when British Coal was sold. In the event, his tests showed that the pre-existing soil did contain low levels of asbestos.
[57] Mr Jamieson accepted that finding of asbestos in the soil at a former colliery is well-recognised. Mr Boyd said that he "would not be surprised" for asbestos to be present in the soil at the site.
[58] Asbestos does not leach downwards. Accordingly any finding would not result from new spoil being deposited above. I conclude that there is asbestos in the pre-existing soil. That means that the site could not have been used for housing without some form of remediation.
Removal or Capping?
[59] The problem of dealing with the asbestos in the spoil can be addressed by either removal or capping. Both solutions are possible. Mr Parsons took the view that capping is the appropriate option. Mr Jamieson agreed that capping can be used for brownfield sites, even where they are to be developed for residential housing. His reservations related to the attitude of SEPA and whether it would require removal.
[60] SEPA has a primary role in ensuring the safe production, transport, handling and disposal of waste in terms of the Environmental Protection Act 1990, the Waste Framework Directive 2008 (2008/98/EC) and other legislation. It investigated the incident at the site, but did not initiate a prosecution. Instead it wrote an advisory letter to NLC in relation to its responsibilities as the originator of the waste. It also issued warnings (a) to Ryan Plant Hire regarding the quality of the waste transfer notes, and (b) to Advance regarding the disposal of the waste without a paragraph 19 exemption.
[61] Mr Boag explained that, as the spoil is not classified as hazardous waste, it does not require to be sent to a designated asbestos landfill site, such as the one operated by Avondale. However, the spoil could not be used for open or garden spaces in residential developments.
[62] Mr Boag indicated that SEPA's general policy was to require removal of waste material as soon as possible. But he emphasised that each case must be considered on its own merits. In this instance, SEPA has decided not to use its powers to require removal of the material. Further, it had not been asked to comment on a capping solution, as this is a local authority matter.
The measure of loss
Which Option?
[63] Mr Parsons also stated that if the question of asbestos in the soil was not being addressed, the ground levels at the site could be re-profiled at a modest cost.
[64] Mr Campbell provided a range of calculations based upon the figures contained in Mr Farleigh's report dated 26 September 2012, which estimated that the total cost of removal might amount to £1.7 million. In my view, the much more compelling evidence came from the quotations from contractors obtained by Mr Parsons.
a. Removal The estimates from four contractors for removal of the spoil ranged from £181,600 (excl VAT) to £335,487 (excl VAT).
b. Capping The estimates from two contractors varied from £97,140 to £140,520 (inclusive of VAT).
[65] As removal is more expensive, the pursuer is confined to recover the cost of capping: Pomphrey v James A. Cuthbertson Limited 1951 SC 147. Further in this case I conclude that the pursuer would not use any sum to remove the spoil. I do not accept Miss Collins's evidence to the contrary. It defies common sense. Removal of the spoil would not of itself allow residential development to take place. Further remediation by way of capping would still be required. The clear economic advantage lies in simply retaining the sum. An award of compensation should not be made if the person does not intend to apply it for the purpose in respect of which it is granted: Ruxley Electronics v Forsyth [1996] 1 AC 344.
The further problem
[66] Any award based on the cost of capping throws up a further question. The pre-existing soil requires remediation. Can the pursuer recover damages in respect of an expense which he would in any event have had to incur? In Performance Cars v Abraham [1962] 1 QB 33, the defendant negligently collided his car with the plaintiff's Rolls Royce. The plaintiff sought the cost of re-spraying his car. In fact it had been involved in an earlier collision and he had been awarded damages against another defendant for the cost of a re-spray, which had not been paid.
[67] Lord Evershed MR said that "the necessity for respraying was not the result of the defendant's wrongdoing because that necessity already existed." Donovan LJ said:
"the question, as I see it, is this: what extra burden in the matter of respraying was put upon the plaintiff company by the second collision? To my mind the answer must be: None, for the earlier collision had already imposed the burden of re-spraying upon them."
The Court of Appeal has subsequently approved that approach: Steel v Joy [2004] 1 WLR 3002.
[68] This poses a significant difficulty for the pursuer.
Mitigation
[69] A person must take "all reasonable steps to mitigate the loss consequent on the breach, and [is debarred] from claiming any part of the damage which is due to his neglect to take such steps": British Westinghouse v Underground Electric Railways [1912] AC 673, 689 per Viscount Haldane LC. Determining whether a pursuer has discharged that duty is a question of fact.
[70] In my view, the pursuer did not take all reasonable steps in this case. The offers of remediation were plainly reasonable. It is difficult to see what more Advance could have done. It proposed (a) that third party contractors would undertake the work; (b) that it would be supervised by independent engineers to the satisfaction of SEPA; and (c) that any remaining damages after remediation would be reserved. The offers were therefore framed in textbook fashion. They were simple and straightforward. Shortly before the proof, Advance unilaterally granted an indemnity relieving the pursuer of liability in respect of the removal.
[71] Was it reasonable for the pursuer to reject these offers? Looked at objectively, there is only a slender basis for Miss Collins' mistrust of Advance. Her belief that it engaged in fly-tipping is hard to reconcile with the steps it took in relation to the site, including its prior notice to SEPA and the display of its logo. These are not the hallmarks of a clandestine operation. A reasonable person might have posed two questions. First, why would a substantial enterprise like Advance imperil its commercial reputation on one relatively small operation? Second, why would it compromise itself further by carrying out the remediation in an unlawful manner?
[72] There is also the pursuer's failure to follow counsel's advice. In Donnelly v Baird & Co Ltd 1908 SC 536 a man had become incapacitated in consequence of an injury to his hand. His employers applied to terminate or reduce the payments it was making to him under the Workmen's Compensation Act 1897. They did so because he had refused to follow the recommendation of three doctors that one of his fingers be amputated. By a 5:2 majority, the court held that the man's conduct precluded him from receiving further payments. His conduct was unreasonable. Lord McLaren stated (at page 541):
"a prudent and reasonable man will be guided by medical opinion rather than by his own fears; and, without saying that the case is absolutely clear, my view is that by refusing to submit to the operation the party has disentitled himself to further payments. Any difficulty I have felt in considering the case is almost entirely removed by the consideration that nothing but good can come to this young man from the operation."
[73] In my view, the inference is as strong or stronger when a pursuer declines to accept the advice of counsel, particularly when Miss Joughin stated that there had to be a good reason to reject the offer made by Advance.
[74] In a commercial contract, it is generally appropriate to accept an offer from the party in default: Payzu Ltd v Saunders [1919] 2 KB 581, 589 per Scrutton LJ. It will depend on the whole context. In two recent cases involving vehicle collisions, the court has held that a claimant may reasonably refuse the defendant's offer of a replacement car: Copley v Lawn [2010] Bus LR 83 and Sayce v TNT (UK) Ltd [2012] 1 WLR 1261.
[75] Finally, it is difficult to square the pursuer's alleged mistrust of Advance with the terms of the pre-litigation correspondence, which do not mention it. It is also impossible to reconcile with the terms of the initial writ. Why did he seek an order for specific implement requiring Advance to remove the spoil, if that was the precise opposite of what he wished?
[76] In the present case, Advance should have been given the opportunity to cure the problem it caused. The circumstances ineluctably point toward the conclusion that the pursuer has failed to mitigate his loss.
What is the effect of mitigation?
[77] The effect of a failure will depend on the circumstances of the particular case. The general principle is that damages should be assessed on the basis of what the pursuer would have received, if he had been acting reasonably: McAuley v London Transport [1957] 2 Lloyd's Rep 500, 505 per Jenkins LJ. But the position is not entirely straightforward. In Sayce, Moore-Bick LJ commented on the difficulty of reconciling the various cases on mitigation (at paragraphs 29 and 30). He made that remark in the context of an obiter remark by Longmore LJ in Copley that a claimant might still be entitled to damages, even if he had acted unreasonably.
[78] Moore-Bick LJ had previously analysed the consequences of mitigation in Uzinterimpex JSC v Standard Bank plc [2008] Bus LR 1762. That case involved a claim for conversion against a bank in respect of a quantity of cotton held in a warehouse. In order to avoid further storage costs and depreciation, the bank offered to sell the cotton and hold the proceeds in an account to await the outcome of the dispute. The plaintiff's attitude toward the bank "was coloured by a lack of faith and confidence" and it rejected the bank's proposal. The Court of Appeal held that damages could only be recovered for losses incurred prior to the date of that offer.
[79] Moore-Bick LJ (with whom Sir Anthony Clarke MR and Laws LJ agreed) stated at paragraph 67:
"It is impossible to ignore the claimant's own conduct in relation to ... loss, since, if he has failed to take advantage of an opportunity reasonably available to him to avoid it in whole or in part, it will be difficult for him to justify requiring the defendant to pay compensation for loss that could not fairly be attributed to his wrongful act."
[80] In my view, the same reasoning applies in this case. By failing to accept the offer made by Advance, the pursuer is the author of his own misfortune. If he had accepted Advance's offer to remove the spoil in May 2011 (which I hold was a reasonable one), the spoil would have been removed and most of the investigative costs would not have been incurred. I conclude that the estimated cost of re-profiling the ground to address the difference in levels caused by the spoil (£19,600 exc. VAT) represents reasonable compensation for the pursuer in the circumstances of this case. To award any sum in respect of capping would amount to betterment.
Claim for Costs to date
[81] The pursuer originally claimed the sum of £300,000 in respect of the various costs that he had incurred as a result of the deposit of the spoil. They included investigating the extent and content of the spoil, reinstating the road, employing a night watchman and securing the site.
[82] In the course of the proof, Mr Nolan was not asked any questions about the invoices vouching these costs. When Miss Collins was questioned about them in examination in chief, Mr Dunlop made two objections. First, he submitted that this evidence ought properly to have come from Mr Nolan. Second, he argued that the evidence was irrelevant, because many, if not most, of the invoices were addressed to companies that Mr Nolan controlled, such as Oscarpark Ltd and Oscarpark Developments and Recycling Ltd. I allowed this line of evidence, subject to competency and relevancy.
[83] I draw attention to these objections because they demonstrate that in the course of the proof, Advance put the pursuer on notice that it challenged these invoices.
(a) Proof of Payment
[84] An invoice only establishes that a debt has been incurred. It does not prove payment. Neither Mr Nolan nor Miss Collins was asked whether the invoices vouching these costs had actually been paid. On the evidence, I am not satisfied that the invoices were paid. Even if it were possible to travel that far by way of inference, it would be conjecture to determine whether they had been paid by the pursuer, or by one of his companies.
(b) Title to Sue
[85] Miss Collins explained that Mr Nolan had been advised to put the bills in the name of his companies. Whatever the practical or tax advantages of taking that course, it is not the case set out in the pleadings. The pursuer's second plea-in-law makes it plain that he sues for losses sustained by him. Mr Campbell submitted that it was "trivialising the matter" to say that the invoices were not in Mr Nolan's name. He argued that both Mr Nolan and Miss Collins were "de facto agents of one another or their companies". There were no averments to support that approach. It was unclear to me how Miss Collins acted at the same time both as the agent of Mr Nolan and of the companies to whom the invoices were addressed.
[86] It is inappropriate to blur the lines of legal personality without the clearest averments and proof. If an invoice was rendered to a company, it remains the company's debt. Miss Collins ought to have been well aware of this point. In a recent case involving one of her former companies, the court rejected a similar argument: Upton Park Homes Ltd v Macdonalds 2010 PNLR 12.
(c) Damages or Expenses?
[87] A pursuer cannot recover by way of damages an item that should properly be included in an account of judicial expenses: McDowall v Stewart (1871) 10 M 193. That principle has stood unchallenged for over a century: Shanks v Gray 1977 SLT (Notes) 26. Both Mr Nolan and Miss Collins accepted in cross-examination that the investigative costs were incurred for the purposes of the court action. She expressly affirmed that position in re-examination.
(d) Failure to mitigate
[88] If the pursuer had accepted Advance's offer to remove the spoil in mid-2011, he would not have incurred most of the investigative costs.
Summary
[89] In my view, each of these points presents a formidable obstacle to this head of claim. Taken together, they are insurmountable. I hold that the pursuer has failed to prove that he incurred and paid the invoices on which he founds.
Decree of declarator
[90] Advance admits encroachment. There is therefore no dispute between the parties on this point. In those circumstances, I decline to grant decree of declarator, on the footing that it would serve no practical purpose: North British Railway Co. v Birrell's Trustees 1918 SC (HL) 33, 47 per Lord Dunedin.
Conclusion
[91] I propose to grant decree in favour of the pursuer in the sum of £19,600 plus VAT. I shall put the matter out for a by order hearing to determine further procedure. Meantime I reserve all questions of expenses.