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You are here: BAILII >> Databases >> Scottish Court of Session Decisions >> Beechwood Development Company (Scotland) Ltd v Mitchell (t/a Discovery Land Surveys) [2001] ScotCS 30 (12 February 2001)
URL: http://www.bailii.org/scot/cases/ScotCS/2001/30.html
Cite as: [2001] ScotCS 30, 2001 SCLR 725

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OUTER HOUSE, COURT OF SESSION

CA177/14/99

OPINION OF LORD HAMILTON

in the cause

BEECHWOOD DEVELOPMENT COMPANY (SCOTLAND) LIMITED

Pursuers;

against

STUART MITCHELL, t/a DISCOVERY LAND SURVEYS

Defender:

 

________________

 

 

Pursuers: A. Clive; McGrigor Donald

Defender: S. N. Brailsford, Q.C., D. Fairley; Simpson & Marwick, W.S.

12 February 2001

[1] The pursuers ("Beechwood") are house-builders, established in about 1987. Westpoint Homes Ltd ("Westpoint") was established in about 1990 as a development company to acquire and develop sites for residential housing, engaging Beechwood, with which it has a common management, to carry out the work of construction. Since the early 1990s Beechwood's sole business has been to perform construction contracts for which it has been engaged by Westpoint. The price payable by Westpoint to Beechwood for each contract was agreed between them before work commenced on the basis of a valuation carried out by a quantity surveyor employed by Beechwood. In general Beechwood carried out only one contract at a time. The aim of both companies was, in so far as practicable, for Beechwood to move its workforce to a new contract as soon as the prior contract had been substantially completed.

[2] In about 1993 Westpoint identified a site at Bearsden known as Mair's Garden Centre as suitable for development. It made an offer to purchase it subject to the obtaining of suitable planning permission. That offer was unsuccessful. Subsequently, however, the successful offerer having withdrawn, Westpoint in about the Summer of 1994 contracted, again subject to planning permission, to purchase the site.

[3] The site was bounded on the west by Milngavie Road and on the east by the Manse Burn. In about October 1994 Beechwood engaged the defender, a land surveyor, to provide a topographical survey of it. He did so. The lay-out plans drawn for the purpose of the relative planning application were based on that survey, including the configuration of the Manse Burn depicted thereon. An application for planning permission for a housing development of 28 apartment units in several blocks was submitted by Westpoint on 30 November 1994. It was, after amendment, granted on 23 March 1995. On the latter date an application was lodged by Westpoint with Bearsden and Milngavie District Council, the local buildings authority, for warrant to build those structures for which planning permission had been granted. This timetable was in accordance with Westpoint's practice, reasonably adopted, to apply for the relative building warrant only when, but as soon as, planning permission for the development had been granted.

[4] On 25 January 1995, the planning application having been sufficiently advanced, a price for the construction works was fixed between Westpoint and Beechwood. Under the missives of purchase (as amended) for the Bearsden site settlement of the transaction by the payment of the price and the obtaining of entry was due on 5 June 1995. It was intended that Beechwood would take possession of the site and commence work as soon as practicable after entry had been taken. Pre-contract progress meetings took place in May and early June attended by representatives of Westpoint's professional advisers, namely, Maxwell Design Consultants (the architects) and Walton Garden & Partners (the engineers).

[5] In the period since the grant of planning permission it had emerged that the lines of certain underground water mains running through the site diverged slightly from what had earlier been understood. This necessitated a minor adjustment to the line of part of the west face of the more easterly (block 2) of the two blocks of apartments which, in accordance with the planning permission as granted, were to be built on the site. No alteration was required to any other face of that block. This change was regularised in planning terms by the grant early in June 1995 of a non-material variation of the planning permission.

[6] The seller of the site had permitted Beechwood, prior to settlement of the transaction, to come onto it for the purpose of carrying out certain preliminary and investigatory works. While on site for such purposes early in June Mr Cullis, the managing director of Beechwood (and also of Westpoint), and Mr Dean Ross, an employee of Maxwell Design Consultants, noticed that the distance between the Manse Burn and the ascertained line of the water mains appeared to be less than was expected. The defender then on request re-surveyed the Manse Burn. On such re-survey it was discovered that the burn ran at certain points on a more westerly course than had been depicted on the defender's earlier survey. A consequence of that discovery was that it was now apparent that it was impossible, if the burn continued to run on that course, to construct block 2 in the position shown on the plans on the basis of which planning permission had been granted.

[7] The land on the eastern side of the Manse Burn belonged to the local authority, Bearsden and Milngavie District Council. It was in a derelict state. The official who had dealt with Westpoint's planning application supported a proposal that Westpoint acquire some of that land from the Council, divert the course of the Manse Burn through it and infill its former course, so allowing block 2 to be built on its original "footprint". Westpoint pursued that possible solution but, in the event, the members of the Council decided that it would not sell the required land. Several weeks were spent in pursuing this ultimately unsuccessful course.

[8] An alternative proposal was then pursued. This involved moving the footprint of block 2 to a more southerly position. This had certain planning disadvantages but, the proposal to acquire land from the Council having been unsuccessful, the planning official supported this move. A new planning application (this being a change which could not be dealt with as a non-material variation) was lodged on 18 August 1995. Planning permission was granted in furtherance of it on 26 September 1995.

[9] When the error in respect of the plotting of the Manse Burn was discovered early in June 1995, the building warrant which had been applied for in March had not yet been granted. Warrant to build the structures envisaged in the planning permission granted on 26 September (which in building, though not locational, terms were substantially the same as those envisaged in the planning permission granted on 23 March as varied in early June) was ultimately granted on 26 November 1995. Beechwood was then and only then in a position lawfully to build those structures. The central issues in this case are whether Beechwood has sustained any loss by reason of the defender's erroneous plotting of the Manse Burn and, if so, the measure of that loss.

[10] The defender accepts that his erroneous plotting involved a breach of contract by him and a breach of his duty of care at common law. A contention that any loss sustained by Beechwood was caused or materially contributed to by its own fault or by fault on the part of Westpoint (which had been convened by the defender as a third party) was departed from at the hearing on evidence. Counsel were agreed that the appropriate approach to the issue of causation was to determine whether and, if so, for what period the date at which building warrant was granted had been delayed by the erroneous plotting. That exercise involves (1) an analysis of what actually happened between the date of the application for warrant (23 March 1995) and the date when that application was ultimately granted (26 November 1995) and (2) an assessment of what on the balance of probabilities would have happened if the problem presented by the late discovery of the true course of the burn had not occurred. It was not disputed that, if the burn had been accurately plotted by the defender in October 1994, the planning application lodged shortly thereafter would have shown the proposed development with a lay-out in the form as ultimately approved in September 1995 and that the requisite planning permission for such a development would have been granted by March 1995.

[11] Evidence bearing on these matters was adduced by Beechwood from Mr Cullis, Mr Ross and Mr John Maxwell, the last being the principal of Maxwell Design Consultants. The defender led as a witness Mr David Meikle, the Building Control officer, then in the employment of Bearsden and Milngavie District Council, who had had immediate responsibility for "vetting" the application. The only other witness in the case was Mr Robert Brunton, Beechwood's accountant, whose evidence, which was in short compass, was concerned solely with the quantification of loss.

[12] No issue was raised as to the credibility or reliability of Mr Brunton's evidence. As to the other witnesses, an issue of credibility was raised in respect only of Mr Cullis. Mr Brailsford for the defender relied on certain passages in his evidence in support of the submission that Mr Cullis's evidence was, at least in certain respects, incredible. However, having considered these passages and his evidence as a whole, I see no reason to conclude that Mr Cullis was deliberately attempting to mislead the court in any respect. As to the reliability of witnesses generally, there were no particular matters of the actual history of events in respect of which there were sharp conflicts of testimony between witnesses requiring a choice between or among them. There were, not unnaturally, different emphases, particularly between Mr Cullis on the one hand and Mr Meikle on the other, the former emphasising (perhaps to some extent optimistically) the progress which Beechwood would have made but for the burn plotting problem and the latter tending, in my view, to be overly critical of Beechwood's presentation for warrant. Where witnesses were asked to hypothesise as to what might have been the case, there were inevitably differences among them. But the available documentary material allowed, at least to a material extent, a framework within which the oral testimony could be assessed. I have not found it necessary or appropriate to reach any general preference of the testimony of one witness over another. I have reached conclusions on what happened and what, but for the defender's fault, would have happened on what I consider to be a balanced assessment of what on the evidence seems most probable.

[13] The application for building warrant presented on 23 March was accompanied by architectural drawings prepared by Maxwell Design Consultants and by a structural design certificate by Walton Garden & Partners certifying that the design complied with Regulation 11 of the Building Standards (Scotland) Regulations 1990. About fourteen days later a series of engineering drawings prepared by Walton Garden & Partners was also submitted. In 1995 the Building Control Department of Bearsden and Milngavie District Council was sufficiently pressed with applications for warrant that, except in relation to very simple matters or to those of special urgency, a system was in place under which the general body of applications, after initial processing, joined a queue to await detailed consideration in chronological turn. The initial processing involved a check that there was no basic deficiency in the application (such as the absence of the requisite fee or of the appropriate type of drawings). Following such a check the application was officially "lodged". Beechwood's application was so lodged on 11 April 1995. (It is not clear why there was this delay; Mr Meikle thought that it would not be related to the later arrival of the engineering drawings; but nothing turns on this).

[14] The application was allocated to Mr Meikle for detailed consideration in due course. The date on which such consideration was first given cannot be identified on the evidence with precision. At some time (probably in the latter part of July 1995) Mr Meikle began making entries on a "Building Warrant Record Sheet". This was a form on which a record might be kept, on its face, of "Vetting Remarks, Correspondence and Telephone Call Record" and, on its reverse, of "Inspections During Construction". This form was rarely used, at least in respect of entries on its face. However, in this instance various entries were made. The purpose of so doing was to have a written record of events to assist rebuttal of any criticism of undue delay in the vetting process on the part of Mr Meikle or his department. The decision to make such entries supports the inference, also supported by other evidence in the case, that at some stage the applicant was, as perceived by Mr Meikle, "dragging its feet".

[15] The entries are, generally, in chronological order. The first bears the date "20/6" with against it a symbol which Mr Meikle explained in evidence as signifying "approximately". It reads (abbreviations being extended) "Spoke to J. Maxwell on several occasions. Requested full kit and roof details. Also drawings must show where brick/block/timber frame is being used. Drawings not clear". This entry, which appears to cover a number of occasions probably not all on the same date and which was made some weeks after the events recorded, indicates that by about 20 June there had been a number of (telephone) conversations between Mr Meikle and Mr Maxwell including a request for "full kit and roof details". That reference is to details of the timber frame which formed the principal element of the superstructure of the two blocks proposed to be built. Beechwood had used this style of building on a number of prior occasions. For this development they had sought on 2 June a quotation for its supply and erection from among others Carronvale Building Co Ltd. This had elicited a quotation from Carronvale dated 8 June. The minutes prepared by Maxwell Design Consultants of pre-contract meetings indicate that during the month of May the architects had been pressing the Building Control Department for progress on the application but none of these minutes makes any specific reference to Mr Meikle or to a request having been made for kit drawings. It seems reasonably clear that that request would have been made fairly soon after Mr Meikle had first begun to give active consideration to the application. Although it is possible, though not certain, that Building Control gave some consideration to the application in May (when certain revisals were made to the staircase arrangements), it seems likely that it was materially into June before the application reached, in any meaningful sense, "the front of the queue" - albeit Beechwood may have hoped or even expected that it would do so earlier. I am unable to accept the submission by Mr Clive for Beechwood that the application had reached the front of the queue by early May. Even had no problem of inaccurate plotting of the burn occurred, Beechwood would, whatever its expectations, not, in my view, have obtained warrant until some time substantially after the end of June.

[16] The emergence of the burn problem necessarily diverted the attention of Westpoint/Beechwood and their advisers away from the obtaining of building warrant to other matters. The uncertainty as to whether land could be acquired to allow block 2 to be built on the original location and, later, whether planning permission could be obtained to build that block in a different location, rendered building warrant for the meantime superfluous. It was nonetheless important that the application should not lose its place near or at the front of the queue. There was evidence, which I accept, that a deliberate decision was taken by Westpoint and implemented by the architects to "take the foot off the pedal" in relation to the application, providing only such information to Building Control as hopefully would keep the application in place until the other problems had been resolved. Mr Brailsford for the defender invited me to reject that evidence (which came from all of Mr Cullis, Mr Ross and Mr Maxwell) but it appears to me to be entirely consistent with the other evidence in the case, including that of Mr Meikle who plainly was concerned (and at times irritated) by the slowness of the architects in July and August to provide requested information.

[17] The uncertainty as to whether the development could proceed rendered it inappropriate for Beechwood (which had negotiated with Carronvale a revised price of 320,493) to place a firm order for the supply and erection of the timber frame. However, in order to provide information requested by Building Control, Beechwood on 7 July issued to Carronvale a letter of intent for such supply and erection subject to building warrant being obtained, together with a request that Carronvale, for a payment capped at 11,000, provide to the engineers and architects design information to satisfy Building Control. After some discussion Carronvale on 19 July agreed to do so. By this time, if not earlier, it had become clear that Mr Meikle was insisting on seeing full panel drawings as well as other drawings of the proposed timber structure. Carronvale undertook to provide these. The drawings for block 1, completed in July, were ultimately delivered to Mr Meikle by the architects on 8 August. The block 2 drawings were delivered some time later. It is not possible on the evidence to determine when precisely that was done but it was before 12 September when Mr Meikle sent to the architects a letter with an accompanying schedule stating that the application had been considered and identifying a number of respects in which it was considered not to comply with the relevant Regulations.

[18] The tone of this letter confirms the impression that Mr Meikle regarded the processing of the application by the architects as less than expeditious. But the issuing of a schedule of matters requesting attention was not uncommon where an application was other than very straightforward. In ordinary course such matters would be dealt with by the applicant or its advisers and a warrant eventually granted. In the present case that was done and, although a further letter and schedule (largely dealing with matters which had arisen out of the architects' responses to the first schedule) was sent by Mr Meikle on 3 October, matters proceeded in a regular manner to the grant of warrant on 26 October.

[19] Meantime matters had advanced on the planning front. Mr Cullis had been present at a meeting of the planning committee held on 19 September when it had been resolved to grant the new planning application , albeit formal notice of the grant was not issued until 26 September. By at least 19 September Westpoint was sufficiently confident of a successful outcome to the new planning application to instruct the architects to progress the building warrant as expeditiously as was practicable. Accordingly the schedule issued on 12 September was actively addressed within a few days of its issue.

[20] The application for building warrant having been presented on 23 March was ultimately granted on 26 October, a little more than seven months later. This was on any view an unusually long time for such an application to be processed by Bearsden and Milngavie District Council. The defender avers that the drawings and particulars which had been supplied to the authority in March were incomplete in various respects. That is true in the sense that the particular Building Control officer charged with considering the application sought in the event further drawings and information, including full panel drawings (a requirement which at application stage had not been anticipated). But that was not unusual in an application, such as this, of some complexity. Although Mr Meikle had some criticism to make of the quality of the application as presented, no issue in this litigation now turns on this. Any shortcomings in the initial application were attended to, largely in the six week period between 12 September and 26 October, which length of period, it is accepted, cannot be regarded as caused by the defender's fault.

[21] On the other hand it is clear, in my view, that the progress of the application at an earlier stage was delayed by that fault. Mr Brailsford accepted that, if I rejected (as I have) his submission that I should hold that Beechwood had not "taken its foot off the pedal", he was unable to explain a period of some four weeks other than as consequential on the defender's fault. I am accordingly satisfied that delay in obtaining building warrant was to some extent caused by the fault of the defender. The issue then is the extent of that delay.

[22] I have already held that it was materially into June before Mr Meikle first gave detailed consideration to the application and requested further information including full kit and roof details. The precise timing is not established on the evidence but it is a reasonable inference that that request was made by about the middle of that month. It is not wholly clear whether Mr Meikle at that stage specifically requested full panel drawings but it is, in my view, a fair inference that, if it had been possible at that stage usefully to advance the application, that requirement would quickly have been identified and attended to by Westpoint. Had there been no problem of the location of block 2, Beechwood would have been in a position in the latter part of June to place a firm order with a selected timber kit supplier and to have obtained from it the drawings and details required by Mr Meikle. In the events which occurred that took some time but I am satisfied that, in circumstances where possession had been taken of the site and where there were important financial reasons why Beechwood should progress construction as quickly as possible, such drawings and details could, with the application of appropriate pressure, have been provided within about 10-14 days of their being requested. This is marginally longer than the upper end of the range spoken to by Mr Maxwell in this regard. There would indeed have been a strong incentive for Westpoint to progress the provision of the drawings as quickly as possible since (1) Beechwood was at risk of sustaining loss by being unable to commence construction at Bearsden when its relevant workforce had completed work at the prior site at Kelvinside and (2) Westpoint was incurring interest charges on the loan used for the purpose of acquiring the Bearsden site. Allowing time for Mr Meikle to consider the timber kit drawings once provided, it appears to me to be probable that he would have been in a position to issue and would have issued the equivalent of his schedule of 12 September by on or about 4 July, some 10 weeks prior to the date when he did in the event issue such a schedule. Matters would then have proceeded at about the same pace as in fact was maintained after 12 September and would have resulted in the grant of warrant on or about 17 August. This time scale is broadly consistent with Mr Maxwell's estimate that building warrant could have been expected about 6-7 weeks after it was known that Building Control wished sight of panel drawings. That delay of about 10 weeks is, in my view, a reasonable estimate of the delay attributable to the defender's fault.

[23] Beechwood's claim for damages is now under three heads, namely, (1) direct site costs, (2) reduction in contribution to overheads and profit and (3) increase in the cost of materials.

[24] Claim (1) as finally presented arises out of the circumstance that Beechwood unproductively expended resources on certain men and services during the period when it had possession of the Bearsden site but was unable to carry out work for which building warrant was required. Postponement of three weeks from the (amended) settlement date of the purchase transaction was secured (until 26 June) but thereafter Beechwood had to keep on the site, largely for security reasons, a nipper (general labourer) during the working day and a security officer at night. The nipper was able to do some productive work (such as the uplifting of slabs). His weekly wage of 241.65 falls to be modified to some extent for this factor. Applying a modification of 20%, I calculate the applicable rate at 193.32 per week. The rate for the security guard was 296.66 per week. These unproductive costs over a 10 week period amount to about 4,900. Beechwood also incurred site electricity and telephone charges which, apportioned to a 10 week period, I assess at about 400 and 500 respectively. A weekly sum of about 10 was also incurred for site sundries (tea/coffee and others), amounting over 10 weeks to 100. The total direct site costs, so far as now insisted in and as are attributable to the 10 week period, accordingly amount to about 5,900. Interest on that total may appropriately be allowed (on a broad basis having regard to when these respective costs were incurred) from 1 October 1995 until payment.

[25] As regards claim (2), Beechwood, under the heading "Reduction in turnover, overhead, recovery and profit in financial year" avers on Record:

"The delay resulted in a reduction of the pursuers' turnover which otherwise would have been earned in the financial year to 31 March 1996. The pursuers did not generate turnover from the resources devoted to the contract in the period of the delay. That turnover would have contributed to recovery of the pursuers' head office overheads (which were incurred in any event) and to the generation of their profit in that financial year. In the over-run period for the works for the development caused by the delay, those resources would otherwise have been able to generate turnover from other activities namely works for a development at Thorntonhall the commencement of which was delayed as a result of that over-run. There is no practicable means of assessing this loss other than application of a formula utilising the percentage of the pursuers' turnover represented by overheads and profit. That percentage was 17.65% in the year to 31 March 1994 and 11.75% in the year to 31 March 1995 giving an average of 14.7%. The amount payable by Westpoint to the pursuers for the building works was 1,383, 988 and the original period for those works was 52 weeks. The calculation of this head of loss is accordingly as follows:

 

O&P%

x

contract sum

x

period of delay

(100 + O&P%)

 

contract period

   

being

       

  14.7

x

1,383,988

x

22 = 75,042.20

114.7

 

52.

 

"

The period of delay referred to in that formula is one of 22 weeks. Mr Clive at the hearing on evidence restricted Beechwood's claim to a period of 17 weeks. I have held that the appropriate period is one of 10 weeks.

[26] At the hearing on evidence Mr Clive's primary submission was that Beechwood's claim under this head should be assessed not on the basis of the formula averred but on the basis of an evaluation of loss of gross profit for the "lost" period, that evaluation being based on the average sales (turnover) of the preceding two financial years as disclosed in Beechwood's accounts. The rationale, he submitted, for this approach was (1) that loss of gross profit was the most reliable indicator for this type of claim and (2) that the gross profit relationship (to turnover) should be applied not to the particular contract sum (for the construction of the Bearsden development) but to Beechwood's ordinary or typical trading over the relative period, such trading being estimated by reference to the prior accounts. Only in the event of this submission being rejected should the averred formula be used. In relation to the formula reference was made to J F Finnegan Ltd v Sheffield City Council [1988] 43 BLR 124, per Sir William Stabb, Q.C, at pp.134-6.

[27] Mr Brailsford submitted that this head of claim should be wholly rejected. It was not open to Beechwood, having averred a particular basis for this head of claim, now to advance a different basis of which the defender had had no notice. There was, in any event, no evidence to support it. As to the formula basis, there was again no evidence to support it. No accountancy evidence had been led in relation to either basis of claim. Beechwood had simply failed to lay before the court a proper evidential basis on which an award of damages could be made under this head. Reference was made to Duncan v Gumleys 1987 S.L.T. 729, especially per Lord Justice Clerk Ross at pp. 733-4. It was also material to notice that Beechwood's next building project (at Thorntonhall) had started in the late Spring of 1996 and that it and the Bearsden contract had run simultaneously for a time.

[28] Before dealing with those arguments it is appropriate to recall that the trading pattern of Beechwood in the 1990s was that it carried out work solely for Westpoint and that it did so in broad terms sequentially, transferring its main operations from one site to another when such operations were complete on the earlier and ready to commence on the later. Some overlap at either end was consistent with this, since finishing work could be carried out on the first site after transfer of the main operations to the second and preliminary work could be carried out on the second before such transfer. However, full-time efficient deployment of Beechwood's resources depended on Westpoint being in a position to make sites available at appropriate times.

[29] The claim under this head is essentially one for reimbursement to Beechwood of contributions to overheads and net profit which would have been made had Beechwood not, as a result of the defender's fault, lost a period of effective working (now assessed by me at 10 weeks). Although Mr Clive presented his primary contention as one for loss of "gross profit" that is, as I understand it, essentially the same as one for loss of contribution to overheads and net profits, gross profit going first to meet overheads and the balance representing net profit. This understanding appears to be supported, at least in the present case, by the fact that the average gross profit percentage which Mr Clive urged me to take (14.7%) is the same percentage as that averred for "overheads and profits". The essential difference (subject to one mathematical oddity) between the claim as averred and Mr Clive's primary contention appears to be that the relative fractions are in the first case applied to the particular contract sum and in the second to an average revenue derived from the two preceding financial years. The averred approach appears to be the well recognised "Hudson Formula" (see Hudson's Building and Engineering Contracts (11th edition) para. 8-182; Keating on Building Contracts (6th edition) pp. 230-1), except that I am, on reflection, not clear why a denominator of 114.7 rather than of 100 is taken. (The difference is relatively marginal - 12.8 rather than 14.7 - and is in the defender's favour).

[30] Beechwood's accounts for the years ending 31 March 1994 and 31 March 1995 are agreed documents. They show respectively turnover of 1, 176,723 and 1,707,483, gross profit of 207,643 and 200,607 and accordingly percentages of 17.65 and 11.75 of gross profit to turnover. The earlier accounts also show, for comparative purposes, the results for the year ending 31 March 1993. These results are turnover of 289,760 and gross profit of 29,492, a relative percentage of 10.18%.

[31] Mr Brunton spoke in evidence to Beechwood's accounts ended 31 March 1996 and gave certain limited evidence in relation to them. In particular, he spoke to the dramatic reduction in gross profit as between that year (9,542) and the preceding year (200,607). He attributed that reduction to loss of revenue in the later year. He also spoke to Beechwood's delay in commencement of the Bearsden development having financial implications. He stated that these were difficulty to quantify but made reference to a formula "which has been produced". He was not asked to elaborate on this and Mr Clive at the hearing on evidence disavowed any intention to rely on that reference as being expert evidential support for the formula approach. The appropriate approach, Mr Clive submitted, was substantially a matter of law to be applied by the court to the established financial circumstances.

[32] In my view there is a sufficient evidential basis to allow an award of damages under this head to be assessed and made. I am satisfied that Beechwood did sustain a loss by reason of its inability for a period in 1995 to generate income through carrying out construction works. While the dramatic fall in gross profit from that earned in the year to 31 March 1995 to that earned in the year to 31 March 1996 may not wholly be explained by that inability, it is consistent with a situation in which, by reason of enforced idleness, a loss of productive earning is sustained. Not the whole period of unproductive earning can be attributed to the defender's fault but, in my view, a part of it can. The task is then to assess the amount of the relevant loss.

[33] While an evidential basis must be laid upon which such an assessment can be made, that does not, in a case of this kind, necessarily involve, in my view, expert accountancy evidence. Provided the pattern of ordinary trading is established, together with relative information as to the finances of the company, the court may be in a position to make an evaluation. In Duncan v Gumleys by contrast there was a complete absence of evidence in respect of a critical element (the value of the house in its defective condition) in the relative calculation of damages, the Lord Ordinary being effectively forced to speculate on this matter. In the present case sufficient, and essentially unchallenged, evidence has, in my view, been laid before the court to enable an appropriate assessment of the type of loss in issue to be made. I accordingly reject Mr Brailsford submission that there is no evidence before the court to allow any award under this head.

[34] I also reject Mr Clive's primary approach. I do so essentially on two grounds. First, fair notice has not been given of an intention to advance such a contention. The defender's advisers were, having regard to Beechwood's pleadings, entitled to proceed on the basis that this head of claim was to be presented on the averred basis. Had they been apprised that it was to be presented on consideration of the average turnover over prior years (rather than the contract price of the work which should have been available during the "lost" period), they might well have chosen to challenge, by cross-examination or otherwise, the proposition that such an average was typical. Secondly, I am not persuaded that the average of the two prior years does give a more reliable basis for valuing the "lost" revenue than does the contract price for the Bearsden work. The latter is, indeed, the work which, but for the defender's breach of duty, would have been in train during the relevant period. That particular work was in the event postponed rather than wholly lost but the postponement had a knock-on effect in relation to later work. While there is evidence that there was some overlap between the Bearsden work and that at Thorntonhall, it is also clear that there was a significant measure of delay and of disruption to the orderly progress of Beechwood's commitments, key personnel being transferred from Bearsden to Thorntonhall some months later then they would otherwise have been including the project manager whose place at Thorntonhall had to be filled by a less than satisfactory substitute. There is nothing to suggest that the lost time was ever made up. In broad terms, the use of the actually contracted-for work of 1995 is, in my view, a preferable base. It is also the basis used in the "Hudson Formula" to assess unproductive work, albeit in a slightly different context.

[35] Accordingly, I take the contract sum of 1,383,988 as the figure to which the relative fractions fall to be applied. As to the first fraction I consider, given the fluctuations in annual figures, that an average taken over the previous three rather than two years is appropriate. This produced an average of 13.19% (rather than 14.7%). I then, albeit with some hesitation, follow the pleaded calculation of grossing up the denominator and taking the fraction 13.19/113.19 (that is, 11.65%). The second fraction is that of the period of delay as assessed by me as caused by the defender's fault over the total contract period, namely, 10/52. Applying those fractions produces a loss of productivity figure of 31,007. This sum fairly represents, in my view, Beechwood's established loss of principal under this head. To that figure I add interest from 21 September 1995 at the rate of 8% per annum. That date stands about half way through the relative period of delay.

[36] As regards claim (3), this relates to the circumstance that when a sub-contract for the supply and erection of the timber superstructure was ultimately placed with Carronvale, the price was 343,801 rather than the earlier negotiated price of 320,493, a difference of 23,308. There was evidence (from Mr Cullis) to the effect that the difference arose because of increases in the interval in the price of the basic materials (timber and gyproc). Mr Cullis accepted that it was possible that what was ultimately contracted for with Carronvale was not identical to that previously negotiated. But that issue was not further explored, albeit detailed specifications appear to be attached to each of the lodged quotations. There is no evidential basis on which I could hold that there were important differences between the two. Carronvale's original quotation of 8 June 1995 was open for acceptance within 14 days. It was not then accepted, the discovery of the burn problem having meantime intervened. Beechwood did not in those circumstances commit itself to a sub-contract for work or materials which might never be required. It did so only towards the end of that year after planning permission and building warrant had been granted. In the circumstances this was not, in my view, unreasonable conduct. Although it is not clear on the evidence when precisely the increases in the prices of basic materials occurred, there is no ground for holding that to mitigate its loss Beechwood ought to have placed a firm contract at some earlier (unidentified) time prior to those increases taking effect. In these circumstances the defender is, in my view, liable for this head of claim. Mr Clive sought interest on this sum from 30 May 1996, certification and payment for a very substantial proportion of Carronvale's work of supply and erection having occurred by then. I am satisfied that this is reasonable. I accordingly allow interest at 8% on 23,308 from 30 May 1996 to the date of decree.

[37] Total damages I accordingly assess in the principal sum of 60,215 with interest on the three heads of claim from the respective dates indicated..

[38] I shall in the whole circumstances repel the defender's pleas 1-7 inclusive, sustain the pursuers' third plea and grant decree in their favour decree for the sum of 60,215 with interest on the sum of 31,007 from 21 September 1995, on the sum of 5,900 from 1 October 1995 and on the sum of 23,.308 from 30 May 1996, each at the rate of 8 per cent per annum, until payment.


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