Outer House dismisses large part of £7+ million claim over negligent installation of wind turbines

About this case:

• Citation:
  [2025] CSOH 11
• Judgment:
  External link
• Court:
  Court of Session Outer House
• Judge:
  Lord Braid

Arthur Simmers raised an action against Green Cat Renewables Ltd and Green Cat Contracting Ltd seeking over £7 million in losses arising from the installation of the turbines in their present locations. The defenders’ principal submission was that, insofar as the pursuer was suing in respect of transfer of loss claims relating to business vehicles he had established, the action was irrelevant and ought to be dismissed.

The case was heard by Lord Braid in the Outer House of the Court of Session. Thomson KC and Mitchell, advocate, appeared for the pursuer and Barne KC for the defenders.

Legal black hole

In May and June 2016, the pursuer contracted with the defenders, as consulting engineers and contractors respectively, in relation to the design and construction of three wind turbines in Rothienorman, Aberdeenshire. The turbines were to be erected on land leased to three Special Purpose Vehicles (SPVs) incorporated by the pursuer, with the objective of having them accredited for the purposes of the Feed-In Tariffs Scheme to generate income for the SPVs.

The pursuer’s principal complaint was that the turbines were erected at the wrong locations, and therefore not at the locations for which consent had been granted, and he averred that he and the SPVs had suffered losses through breach of contract, and separately the fault and negligence, of both defenders. The total loss, estimated by reference to the risk of revocation of the FIT accreditation and inability to maximise the energy generation of the turbines, was said to be approximately £7.18 million, split equally by the SPVs.

It was submitted for the pursuer that, following the decision of the Inner House in Forthwell Ltd v Pontegadea UK Ltd (2024), there was some support for the existence of a transferred loss principle in Scots law, as to prevent particular losses from falling into a legal black hole. The relevant question was not whether the pursuer must suffer the consequences of the arrangements put in place, but instead if the loss should be allowed to go uncompensated.

For the defenders it was submitted that the SPVs were entitled to sue the defenders in their own right by virtue of the jus quaesitium tertio, which was Scots law’s true solution to the legal black hole. If a transferred loss principle was recognised, it was not available to the pursuer as there was neither a transfer of heritage from one company to another nor an intercompany transfer.

Unfortunate outcome

In his decision, Lord Braid said of the existence of a transferred loss principle: “The ratio of Forthwell is narrow, and that case does provide some support for the view that the current state of the law is that in some circumstances a loss sustained by a third party can be recovered by a pursuer, at least where there was a contractual intention to benefit that party, or where property has been transferred. Beyond that, however, I acknowledge that it is difficult to discern from Forthwell any encouragement for a right to recover such a loss in any other circumstance.”

He noted that the pursuer had avoided the pitfalls that led to the demise of the claim in Forthwell but added: “The biggest problem for the pursuer is that he avers that neither the proposal (issued by the first defender to the pursuer) nor the contract demonstrates an intention as between the parties to benefit the SPVs. Senior counsel for the pursuer made a valiant attempt to draw a distinction between an intention to benefit a third party, and an intention that a third party should be able to sue under the contract, only the latter giving rise to a jus quaesitum tertio. That may well be so, but the averment in question unequivocally addresses the former.”

Assessing the impact of the Forthwell case, Lord Braid said: “To the extent that Forthwell might offer a glimmer of hope to third parties in some situations that a transferred loss might be recoverable, the pursuer does not make relevant averments to bring himself within the limited circumstances where that might be the case. On the contrary, his pleaded case expressly disavows the very circumstance which might have been relevant.”

He concluded: “In many ways, this is an unfortunate outcome, not least as the defenders aver that the SPVs would have had a right to sue by virtue of the creation of a jus quaesitum tertio, which the pursuer denies. That could only have been determined after proof, and had the pursuer been successful in resisting this aspect of the defence, it is possible that the court might have held, on the defenders’ pleadings, that there was an intention to benefit the SPVs, but not such as to create a jus quaesitum tertio.”

Lord Braid therefore dismissed the transferred loss elements of the pursuer’s claim, and fixed a by order hearing to hear addresses on the precise terms of the interlocutor to be pronounced.