Euan McSherry

A recent Scottish court ruling (Martin McGowan v Springfield Properties) highlights the dangers businesses face when using legal interdicts (or injunctions, under English law) to silence whistleblowers, leading to substantial damages and reputational harm.

Martin McGowan, formerly a client of Springfield Properties, alleged unsafe practices at Springfield sites involving asbestos and other hazardous materials. In 2016, Springfield denied the claims and obtained an interim interdict preventing McGowan from repeating the allegations. The company argued the claims were false.

However, in 2020, Springfield pled guilty to criminal charges under the Health and Safety at Work Act 1974, confirming the presence of asbestos on their sites. Following this conviction, McGowan successfully applied for recall of the interdict in 2021. The court granted absolvitor, meaning McGowan had committed no wrong, and the interdict was deemed unjustified.

McGowan then sued Springfield for damages, claiming the interdict had led to blacklisting in the construction industry. Springfield argued the claim was time-barred under the five-year negative prescription rule and that McGowan still needed to prove the interdict was wrongfully obtained. The Outer House rejected the prescription argument but agreed McGowan had to prove wrongful interdiction.

On appeal, the Inner House sided with McGowan. It ruled that the interdict was a continuing wrong under the Prescription and Limitation (Scotland) Act 1973, meaning the prescriptive period began only when the interdict was recalled. The court also held that the decree of absolvitor was final and binding, making the wrongful nature of the interdict res judicata. Springfield’s criminal conviction further supported McGowan’s original allegations.

The case returned to the Outer House to assess causation and damages. Springfield attempted to introduce undisclosed documents during cross-examination, which the court rejected as an ambush. They also tried to suggest a contractual document was a sham without prior notice in pleadings. Again, the court disallowed the line of questioning due to lack of fair notice.

Springfield argued McGowan should have mitigated his losses by seeking earlier recall of the interdict. The court dismissed this, noting that the duty to mitigate arises only after the wrongful act ends. Since the interdict was a continuing wrong, mitigation was not applicable until its recall.

The court found that the interdict caused McGowan distress, reputational damage, and loss of earnings. £25,000 was awarded for the mental health impact, and £20,000 for reputational harm, referencing Munro v Brown (2011). The largest award was for lost earnings. McGowan claimed he missed out on a multi-million-pound contract due to the interdict. The court assessed his chance of securing the contract at 66 per cent, awarding £247,080 based on expert accounting evidence.

A further £50,000 was awarded for general loss of employment opportunities, acknowledging the impact of the interdict and external factors like the pandemic. Interest was calculated from the date of the wrongful act in 2016, not the date of recall, applying four per cent during the interdict period and eight per cent thereafter. The total award, including interest, reached £558,033, with further expenses pending.

This case underscores the risks businesses face when seeking interim interdicts. If the interdict is later recalled and found wrongful, the company may be liable for significant damages. The judgment confirms that recall and decree of absolvitor are conclusive evidence of wrongful interdiction. It also clarifies that the prescriptive period begins only when the interdict ends, and that mitigation duties do not apply during ongoing wrongs.

The decision reinforces the importance of procedural fairness. Attempts to introduce surprise evidence or raise new allegations without proper notice were rejected. The case also illustrates how damages for loss of chance, particularly in commercial contexts, can be substantial.

Unlike in England, where a cross-undertaking in damages is required when seeking an injunction, Scots law places the risk squarely on the party seeking the interdict. Businesses must weigh this risk carefully. Misuse of legal tools to suppress whistleblowing or dissent can lead not only to reputational damage but also to heavy financial liability.

Euan McSherry is a partner at Aberdein Considine