Former managers of Lewis estate have mixed success in appeal against dismissal of parts of claim against ex-client

About this case:

• Citation:
  [2023] SAC (Civ) 13
• Judgment:
  External link
• Court:
  Sheriff Appeal Court
• Judge:
  Sheriff Principal N A Ross

Pursuer and appellant Goldsmith & Co (Estates) Ltd sought payment from defender and respondent Scaliscro Estates Ltd in the sum of £90,981.36 for what it said were unforeseen costs relating to the maintenance of the defender’s estate on Lewis. The respondent maintained that the appellant had not stated with sufficient clarity the nature of the work it was claiming for.

The appeal was heard by Sheriff Principal Nigel Ross, along with Appeal Sheriffs Harry Small and Brian Mohan. McShane, advocate, appeared for the appellant and Garioch, advocate, for the respondent.

Required

In 2018, the parties agreed by email exchanges that the appellant would perform certain services for the respondent’s Lewis estate at a fixed monthly fee of £1,500 plus VAT. The contract also provided for the appellant to charge travel fees and a fixed hourly rate for “unforeseen work” that needed to be done. After three years, the relationship between the parties broke down, and following the end of the contract the appellant submitted an invoice mainly attributable to unforeseen services. The respondent refused to pay and averred that the sum demanded more than double the anticipated charges under the contract.

It was the respondent’s position before the sheriff that it did not have fair notice of all but one of the appellant’s heads of claim. It accepted that the claim for commission on rent receipts was sufficiently specified but took issue with the second head, involving travel costs, and the third, which was stated as being for additional hours spent on lodge development tasks including dealing with multiple architects over the 3.5 years of the contract.

The sheriff found that the appellant had not given fair notice of its case and refused probation to the majority of the heads of claim. Counsel for the appellants submitted that the sheriff had required too much, as there was no contractual requirement to provide details of who was carrying out work. The work to be carried out was obvious to both parties at the time. The contract was akin to one of agency, albeit that the appellant did not claim they had a right to carry out any work they chose.

For the respondent it was submitted that, even if the works were known about, it was still necessary for the appellant to state what was done and why. The context was of a general services contract which lasted in excess of 3 years, and the respondent was being required to identify specific works over an extended period. That was not possible, nor was it possible to reverse-engineer any works done to calculate what works had been performed, as there was no finished product for which the appellant was wholly responsible.

Entitled to be told

Delivering the opinion of the court, Sheriff Principal Ross began by noting: “In a commercial action, fair notice may be based on a combination of relatively brief written pleadings together with productions such as affidavits, a Scott schedule, timesheets or other sources of evidence. That flexibility does not, however, relieve the pursuer from giving fair notice. A challenge to the adequacy of specification is assessed by testing whether fair notice has been given of what will be proved. The same rules will apply to any substantive defence.”

He continued: “The appellant relies on the fact that the respondent, as owner, must have known about, and impliedly approved, the appellant carrying on works in relation to project management of the construction of the gamekeeper’s cottage. That is no doubt correct, as the respondent does not claim ignorance of these works were being done. That is not, in our view, equivalent to regarding the respondent as adequately informed about the sums claimed by the appellant.”

Explaining the notable omissions in the appellant’s case, the Sheriff Principal said: “In relation to the third head, neither the averments, nor the schedule, relate this claim back to the contract terms. It is not presently possible to identify why this work was done. The appellant presents this as additional work, but that does not clarify whether it is additional hours, or additional tasks outside the core tasks. If the latter, the appellant does not explain why the work was carried out at all.”

He went on to say: “The respondent is entitled to be told why this work was done, particularly where there is an obvious clash with the contract itself - the ‘contractual administration of the refurbishment of the lodge’ was expressly excluded from the contract. There is no averment to the effect that the respondent authorised or otherwise approved any such additional work. The lack of specification serves to thwart any contractual analysis.”

Sheriff Principal Ross concluded: “We consider that the sheriff was correct, with one exception, to repel the heads of claim which he did. That exception is the second head, for travel costs. The contract provides for travel costs to be invoiced separately, and these are not included in the monthly fee of £1500. Accordingly, there would appear to be grounds for some claim for travel costs for at least the six core visits each year. We will allow the appeal only in this minor respect, by reinstating the second head of claim.”

The appeal was therefore allowed only to that extent, with the cause remitted to the sheriff to proceed as accords.