Supplier of slurry tank damaged by landslip fails in attempt to have breach of contract action thrown out by prescription

About this case:

• Citation:
  [2022] CSOH 47
• Judgment:
  External link
• Court:
  Court of Session Outer House
• Judge:
  Lord Braid

The firm of C&L Mair Ltd, the pursuer, had contracted with Mike Dewis Farm Systems Ltd for the supply and installation of a slurry tank, which was later damaged by a circle slip of a nearby embankment. The pursuer sued for breach of contract, with the defender maintaining that it no longer had any obligation to the pursuer by the time the claim was raised. 

The case was heard by Lord Braid. J Brown, advocate, appeared for the pursuer and M Steel, advocate, for the defender. 

Wasted expenditure 

In February 2012 the defender completed the installation of a slurry tank at the pursuer’s farm, Townhead, in Dumfries. The tank was located on a large area of level ground, beyond which was an embankment. In September 2016 a circle slip of that embankment caused the ground at its base to move, which the pursuer averred caused sufficient damage to the tank to require that it be demolished and rebuilt elsewhere. 

It was the pursuer’s case that the defender had failed to give any consideration to the risks posed by the embankment while installing the tank and therefore were in breach of their contractual obligation. The defender denied any such breach and also pled that in any event, any obligation owed by them had been extinguished by prescription. 

Counsel for the pursuer submitted that no loss had occurred until the time of the slip, with a loss which might or might not be suffered being insufficient to commence the prescriptive period. The circle slip was an event that was not certain to occur, and it would have been impossible for it to raise a claim on the basis that loss would be suffered at a future date were it to occur. 

It was the defender’s submission that damnum always occurred where wasted expenditure was incurred, no matter the circumstances, subject to there being a causal link between the wrongful act and the loss. Applying that approach to the present case, any iniuria had occurred by February 2012 at the latest when the pursuer incurred what turned out to be wasted expenditure which failed to achieve its purpose. 

Hypothetical crystal ball 

In his decision, Lord Braid observed: “The authorities show that Scots law at least admits of the possibility that there are situations where damnum will not be held to have occurred where loss is wholly dependent upon a future even that which may or may not occur, or is otherwise merely contingent. Counsel for the defender did not dispute that proposition as such, but his approach appeared to leave little, if any, room for its operation.” 

He continued: “The starting point in all cases must be to ask when, objectively assessed, loss first occurred, but there remains a distinction between loss which has occurred (even though not appreciated as such at the time) and loss which has not yet occurred (but may do so in the future), the latter being purely contingent and not amounting to damnum.” 

Turning to the facts of the present case, Lord Braid said: “When can it be said that some loss, injury or damage first existed as a matter of objective fact? To hold that it occurred in 2012, more than four years before the slip occurred, is not so much to apply hindsight as to look at matters in 2012 through the prism of a hypothetical crystal ball. Even with the benefit of hindsight, it cannot be said that loss had occurred in 2012.” 

He went on to say: “The pursuer had not acquired something that was necessarily less valuable than it ought to have been. It was simply not known whether or not a slip would occur. The pursuer would have been unable to raise an action against the defender before the slip occurred. The situation is to be contrasted with that which would have existed if (unknown to anyone at the time) the slip had already occurred but had not yet caused the slurry tank to suffer damage; or a chain of events had been set in motion whereby it was inevitable that the embankment would slip.” 

Lord Braid concluded: “It follows that the pursuer’s loss was purely contingent until the slip did in fact occur in 2016. Until then, it could not be said that the pursuer had suffered any loss; there was merely a risk that it might. Accordingly, damnum did not (on the facts averred) occur until 2016, and the pursuer’s claim has not prescribed.” 

Lord Braid therefore repelled the defender’s plea on prescription and ordered that the action proceed to proof on the remaining averments and pleas.