SRB CIVIL ENGINEERING UK LTD AGAINST RAMBOLL UK LTD [2022] ScotCS CSOH

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You are here: BAILII >> Databases >> Scottish Court of Session Decisions >> SRB CIVIL ENGINEERING UK LTD AGAINST RAMBOLL UK LTD [2022] ScotCS CSOH_93 (20 December 2022) URL: http://www.bailii.org/scot/cases/ScotCS/2022/2022_CSOH_93.html Cite as: 2023 GWD 2-22, [2022] ScotCS CSOH_93, [2022] CSOH 93, 2023 SLT 423, [2023] PNLR 11

OUTER HOUSE, COURT OF SESSION

[2022] CSOH 93

CA43/21

OPINION OF LORD ERICHT

In the cause

SRB CIVIL ENGINEERING UK LIMITED

Pursuer

against

RAMBOLL UK LIMITED

Defender

Pursuer: Ellis KC; BTO Solicitors LLP

Defender: Barne KC; CMS Cameron McKenna Nabarro Oslwang LLP

20 December 2022

Introduction

[1]

The issue in this case is whether when a contract is novated the obligations under it

are extinguished or transferred to a new party.

[2]

SRB Civil Engineering Limited ("SRBCE") and Scottish Ministers entered into a

Design and Build Agreement (the "Design and Build Agreement") for the design and

construction of up-grading works to Junction 1A of the M9 at the Queensferry Crossing.

The defender contracted with SRBCE (the "Ramboll Contract") to provide design services to

SRBCE in relation to the Design and Build Agreement. As a result of a company

reorganisation, there was a wish for the pursuer and not SRBCE to be the party to the

Design and Build Agreement. A Novation Agreement was entered into by SRBCE, the

pursuer and the Scottish Ministers substituting the pursuer for SRBCE in the Design and

Build Agreement, and an Assignation was entered into between SRBCE and the pursuer.

[3]

In this action the pursuer is seeking damages from the defender for breach of

contract and breach of duty in respect of the Ramboll Contract. The pursuer pleads a

Principal Claim, a First Alternative Claim, and a Second Alternative Claim. The case called

before me for debate on the defender's motion for dismissal. Various other legal issues had

been raised by the parties, but parties were agreed that these other issues should be dealt

with by proof before answer should the case survive the debate.

Facts and contractual terms

[4]

The background to the dispute, as averred by the pursuer, is as follows.

[5]

SRBCE as Contractor and the Scottish Ministers as Employer entered into the Design

and Build Agreement on 20 July 2011. SRBCE was operated as a vehicle for a joint venture

between the John Sisk Group and the Roadbridge Group. The defender played a central role

in assisting SRBCE to formulate its tender. The conceptual or tendered design produced,

adopted, put forward and certified by the defender was an essential part in SRBCE being

able to formulate a tender. The defender was also responsible for and undertook the

detailed design of all elements on the Junction 1A Works. The Ramboll Contract was

formed between SRBCE and the defender in respect of all of these services.

[6]

From about July 2012 onwards SRBCE planned to transfer to the pursuer its whole

right title and interest in the Design and Build Agreement. From 28 September 2012

onwards all invoices for the defenders' services were rendered to the pursuer. Thereafter all

payment of the agreed fee for those services was made by the pursuer. On or about

19 November 2012 a letter on notepaper headed with logos of the stakeholders in the joint

venture and in the name of the pursuers was sent to all suppliers of SRBCE, including the

defender. It was headed "Corporate Structure Changes". It related specifically inter alia to

the M9 works which SRBCE was obliged to perform. It advised that from November 2012

the UK business was to be conducted through the pursuer which was itself a joint venture

between John Sisk and Roadbridge. It said that the pursuer would be working with "the

same terms and conditions". It requested that all invoices relating to SRBCE orders be

addressed to the pursuer. It made known to the defender that the pursuer would be

responsible for fulfilment of SRBCE obligations to the Scottish Ministers and that the

services the defender were obliged to provide to SRBCE should thereafter be and would

have to be provided to the pursuer. The pursuer's position is that the defender did not

object and by its conduct accepted the substitution of the pursuers as the contracting party;

that the defender took instruction from and provided services to the pursuer and that the

parties acted on the basis of the substitution of the pursuers from November 2012 onwards.

[7]

A Novation Agreement was entered into between SRBCE, the pursuer and the

employer dated on 12 July and 7 November 2013 (the "Novation Agreement").

[8]

The recitals were in the following terms:

"RECITING

By an Agreement dated 20 July 2011 (the "Agreement") made by the [Scottish

Ministers] and [SRBCE, SRBCE] agreed to design, execute and complete the works

described in the Agreement ("the Works").

The Works to be performed under the Agreement have by way of certificates

issued for Section A on the 19 June 2012, Section B on the 1 February, 2013 and

Section C on 29 March, 2013 been completed (with the exception of the list of defects

attached to the relevant Certificate), but [SRBCE's] obligations relating to the Defects

Notification Periods (as defined by the Agreement) remain outstanding.

[SRBCE] and [the pursuer] have agreed, with the consent of [Scottish

Ministers], that [the pursuer] will take over the rights, obligations and liabilities of

[SRBCE] under the Agreement.

The parties to this novation agreement have agreed to novate the Agreement

from [SRBCE] to [the pursuer] upon and subject to the terms of this novation

agreement."

[9]

The operative part of the Novation Agreement included the following clauses:

"2.

RELEASE BY [SRBCE] OF [SCOTTISH MINISTERS]

[SRBCE] releases and discharges the [Scottish Ministers] from the further

performance of the [Scottish Ministers] duties and obligations under the

Agreement.

RELEASE BY THE [SCOTTISH MINISTERS] OF [SRBCE]

[Scottish Ministers] releases and discharges [SRBCE] from the further

performance of [SRBCE's] duties and obligations under the Agreement save

for any obligations in the Agreement as to confidentiality.

ACCEPTANCE OF LIABILITY OF [SRBCE] BY [THE PURSUER]

[The pursuer] undertakes to perform all the duties and to discharge all the

obligations of [SRBCE] under the Agreement and to be bound by the terms of

the Agreement in every way as if [the pursuer] was and always had been

named as a party to the Agreement in lieu of [SRBCE] and as if all acts and/or

omissions of [SRBCE] under or pursuant to the Agreement prior to the last

date of execution of this novation agreement were the acts and omissions of

[the pursuer].

ACCEPTANCE OF LIABILITY TO [THE PURSUER] BY [SCOTTISH

MINISTERS]

[Scottish Ministers] undertakes to perform all the duties and discharge all the

obligations of [Scottish Ministers] under the Agreement and to be bound by

the terms and conditions of the Agreement in every way as if [the pursuer]

was and always had been named as a party to the Agreement in place of

[SRBCE].

VESTING OF REMEDIES AGAINST [SCOTTISH MINISTERS]

All rights of action and remedies against [Scottish Ministers] under and

pursuant to the Agreement vested in [SRBCE] will from the last date of

execution of this novation agreement vest in [the pursuer].

VESTING OF REMEDIES AGAINST [SRBCE]

All rights of action and remedies under or pursuant to the Agreement

vested in [Scottish Ministers] will from the last date of execution of this

novation agreement lie against [the pursuer] and not [SRBCE].

AFFIRMATION OF AGREEMENT

The terms and conditions of this novation agreement represent the entire

agreement between the parties relating to the novation of the Agreement and,

except as specifically amended by the provisions of this novation agreement,

all of the terms and conditions of the Agreement remain in full force and

effect.

RIGHTS OF THIRD PARTIES

A person who is not a party to this novation agreement will have no right at

common law to enforce any term of this novation agreement."

[10]

On 20 July 2018, SRBCE as assignor and the pursuer as assignee entered into an

Assignation (the "Assignation"). The recitals to the Assignation stated:

"WHEREAS

The Assignor entered into a contract with the Scottish Ministers on or about

20 July 2011 (the "D&B Contract") for the design and construction of upgrading

works to Junction 1A of the M9 (the "Works");

The Assignor entered into contractual relations with [the defender]

("Ramboll") whereby Ramboll provided design services to the Assignor in respect of

the tender stages and to ultimately fulfil its obligations in the D&B Contract (the

"Ramboll Contract");

.....

D. The Assignor novated its rights and obligations in the D&B Contract to the

Assignee as formally recognised in a novation agreement in November 2013;

E. Defects in the pavement of the motorway which formed part of the Works

caused by breaches of the Ramboll Contract and failures in the delictual duty

of Ramboll first became apparent in about August 2013;

F. The Assignee paid substantial costs, expenses and liability in relation to the said

defects and carrying out of remedial works thereto;

G. The Parties hereto consider Ramboll to be liable and wish Ramboll to make

good the loss and damage caused by its breaches of the Ramboll Contract and its

failures in its delictual duty;

H. The Assignee stepped into the Ramboll Contract in or about September 2012

but said agreement was not embodied in a formal document at the time. An

assignation of various rights and interests of the Assignor to the Assignee may

assist in recovery of the true extent of that said loss and damage;

..."

[ ] In terms of the Assignation SRBCE and the pursuer agreed as follows:

"1. ASSIGNATION

1.1. The Assignor hereby assigns to the Assignee with immediate effect:

1.1.1. its whole right, title and interest, past, present and future in and to the

Ramboll Contract.......;

1.1.2. all claims past, present and future competent to it and/or which it has title

to bring for damages for its own loss and/or losses sustained as a result of

breaches of any contractual or delictual obligations incumbent on Ramboll as a

result of or arising from the Ramboll Contract....;

1.1.3. all claims, past, present and future, competent to it, and/or which it has

title to bring, to claim damages for, and/or recover loss and damage suffered

by, the Assignee as the party vested in the rights and obligations in the D&B

Contract after 7 November 2013, which were formerly held by the Assignor,

whether on behalf of the Assignee or otherwise, resulting and/or arising from

any breaches of contractual or delictual obligations incumbent on Ramboll as a

result of or arising from the Ramboll Contract....."

The Principal and Alternative Claims

[11]

The Principal and Alternative Claims are set out in article 1 of condescendence.

"Principal Claim

The principal position of the Pursuers is that the damages sued for in the

circumstances hereinafter averred are a measure of a loss sustained by [SRBCE]. The

Pursuers sue for recovery of that loss as assignee of SRBCE's whole right title and

interest to the contractual relations between SRBCE and the Defenders averred in

this action and of all SRBCE claims against the Defenders arising therefrom... under

paragraphs 1.1.1 and 1.1.2 of the Assignation .. The Pursuer contends that the loss

sustained by SRBCE is properly measured by the measure of damages averred,

notwithstanding substitution of the Pursuers as the contracting party in the [Design

and Build Agreement]. It was not the intention of the parties to the contractual

relations with the Defenders hereinafter averred that any loss caused to SRBCE

would disappear because of an internal reorganisation of the structure of the joint

venture by the stakeholders which substituted the corporate vehicle for the joint

venture with another for the performance of obligations in the contract with the

Scottish Ministers.

`First Alternative Claim

Alternatively failing recovery of the damages claimed on the basis of the principal

claim, the Pursuers seek payment of the damages claimed as loss suffered by them as

the party which was obliged under the terms of the contract with the Scottish

Ministers having been substituted as the contracting party and which has actually

incurred the costs of the works and others which form the measure of th e damages

claimed and which (a) succeeded to the right and title of SRBCE in the contractual

relations between SRBCE and the Defenders in the circumstances hereinafter averred

and had done so at the time the relevant costs were incurred; and (b) enjoys the

benefit of an assignation of any right title and interest of SRBCE in said contractual

relations under paragraph 1.1.1 of the Assignation.'

`Second Alternative Claim

Alternatively failing recovery of the damages on the basis of either the primary claim

or the first alternative claim, the Pursuers seek recovery of the damages claimed in

the circumstances averred as assignee of SRBCE under Clause 1.1.3 of the

Assignation in respect of any right which SRBCE has to claim damages on the

Pursuers' behalf as a loss suffered by the Pursuers as a party subsequently vested in

SRBCE's rights and liabilities under the D&B contract with Scottish Ministers

hereinafter averred.'"

Submissions for the defender

[12]

Senior counsel for the defender did not insist on his plea of no title to sue but invited

me to dismiss the action, which failing to put the case out by order for discussion of deletion

of pleadings to give effect to my decision.

[13]

He submitted that the nub of the dispute was the Novation Agreement. SRBCEs

obligations under the Design and Build Agreement had been extinguished. Any loss which

SRBCE may have suffered was avoided and therefore not recoverable in damages. This was

the legal effect of SRBCE being discharged from all liabilities under the Design and Build

Agreement in terms of the Novation Agreement (Swynson v Lowick Rose [2018] AC 313).

[14]

In relation to the First Alternative Claim, counsel submitted that the pursuer could

not recover loss suffered by SRBCE in its own right. There were no averments that indicate

that the breach occurred after the pursuer stepped into the Ramboll Contract.

Paragraph 1.1.1 of the assignation was irrelevant since SRBCE could not assign a right to the

pursuer for the pursuer to recover what on the pursuer's analysis was pursuer's own loss.

The substitution did not transfer anything to the defender in relation to past breaches. The

pursuer had failed to plead how substitution had taken place (MRS Distribution Ltd v DS

Smith (UK) Ltd 2004 SLT 631, Blyth and Blyth v Carillion 2002 SLT 961).

[15]

In relation to the Second Alternative Claim, Counsel for the defender submitted that

clause 1.1.3 of the assignation was intended to assign to the pursuer any right that SRBCE

may have had to recover losses suffered by the pursuer as the party vested in the Design

and Build Agreement. The pursuer voluntarily gave up the ability to seek damages by

entering into the Novation Agreement. The loss suffered by SRBCE was avoided as a result

of the Novation Agreement. There was, therefore, no question of there being a transferred

loss recoverable by SRBCE. This was not a situation where the law allowed one party to

recover loss suffered by another party in order to avoid a legal black hole. The black hole

had been created by SRBCE's own actings. (Alfred MacAlpine Construction Ltd v Panatown Ltd

(No.1) [2001] 1 AC 518, Swynson v Lowick Rose, BV Nederlandse Industrie v Rembrant Enterprises

Inc [2020] QB 551, Mclaren Murdoch & Hamilton Ltd v Abercromby Motor Group Ltd 2003

SCLR 323).

Submissions on behalf of the pursuer

[16]

Senior counsel for the pursuer invited me to allow a proof before answer with all

pleas standing.

[17]

The averments as to the substitution of the pursuer for SRBCE depended on the

defender starting to invoice the pursuer for its services in September 2012, a letter in about

November 2012 and acceptance by conduct. The presumption against delegation could be

displaced by informal arrangements (WJ Harte Construction v Scottish Homes 1992 SC 99).

Analogous situations depended on the facts (Skene v Greenhill 1825 4S 25; Blyth and Blyth v

Carillion).

[18]

All the losses averred were sustained by SRBCE and it was appropriate for the loss

measured by these investigations and remedial works to be recovered by the pursuer. The

transfer of the interest in the Design and Build Agreement to the pursuer was irrelevant to

the claim against the defender (McLaren, Murdoch & Hamilton v Abercromby Motors). The

damage had already occurred before SRBCE transferred its interest to the pursuer by the

Novation Agreement (GUS v Littlewoods 1982 SC (HL) 157). As assignee the pursuer may

recover SRBCE's losses to the extent that SRBCE could have recovered damages if it had not

granted the assignation and had not transferred the interest in the Design and Build

Agreement (Offer-Hoar v Larkstore [2016] 1 WLR 2926, followed in Pegasus Management v

Ernst & Young [2012] PNLR 24). The Novation Agreement did not remove the loss already

sustained by SRBCE and sued for by the pursuer's assignee. The Novation Agreement was

a transfer not a discharge.

[19]

Counsel submitted that the First Alternative came into question only if the

expenditure incurred by the pursuer itself was not recoverable as a measure of loss suffered

by SRBCE. The pursuer could recover that expenditure as losses of the pursuer in its own

right as successor to SRBCE in the Design and Build Agreement. The pursuer incurred the

expenditure. If the loss was not that of SRBCE it was that of the pursuer. The loss in

relation to the detailed design failures may, after the facts are elucidated, have been incurred

after the "substitution in" of the pursuer for SRBCE in the contract with the defen der. If it

turned out that the substitution invested in the pursuer all rights of SRBCE including those

to claim for prior breaches, the pursuer would be able to sue in its own right for the losses

which it incurred in respect of pre-substitution breaches. This would be inherently more

likely in the event that the losses were not those of SRBCE. In the circumstances it was

appropriate for the averments to remain on record as a fall back pending determination of

the facts.

[20]

Counsel submitted as a fall back that if the loss was not recoverable on the Principal

or First Alternative basis, it was recoverable on the basis that SRBCE had the right to recover

losses incurred by subsequent parties' vested in the rights and obligations of the Design and

Build Agreement (McLaren, Murdoch & Hamilton at paragraph 42; Alfred McAlpine v

Panatown; Axon Well v Craig [2015] CSOH 4). If the loss was not recoverable on the Principal

Claim or the First Alternative Claim, a breach of contract (and associated breach of duty)

had produced a loss which the pursuer had no direct right to recover. The law would not

tolerate that such a loss should go unrecovered. The transfer of rights and obligat ions to the

pursuer and to the Design and Build Agreement was irrelevant to the measure of loss

(GUS v Littlewoods at page 177).

Analysis and decision

[21]

The defender seeks dismissal of the action on the basis of the following argument.

As a result of the Novation Agreement, the Scottish Ministers have no claim for past or

future breaches of the Design and Build Agreement against SRBCE. This was because the

Novation Agreement effected a novation by delegation in terms of which a new debtor is

substituted and the obligations that lay on the original debtor are discharged. Since SRBCE's

liability to the Scottish Ministers under the Design and Build Agreement was discharged in

relation to any past breaches, any corresponding obligation on the defender to relieve

SRBCE from the consequences of those breaches was also discharged. Any loss that SRBCE

may have incurred to the Scottish Ministers was discharged and as therefore SRBCE had

suffered no loss there was nothing for the pursuer to recover. The loss suffered by SRBCE

was avoided as a result of the Novation Agreement and there was therefore no question of

there being a transferred loss recoverable by SRBCE. Therefore the action fell to be

dismissed.

[22]

I do not accept that argument. The legal effect of the Novation Agreement is not, as

the defender submits, that the obligations and liabilities of SRBCE to the Scottish Ministers

disappear, but that they are transferred to the pursuer.

[23]

The Novation Agreement is an example of delegation. Delegation is a form of

novation. The nature of delegation is apparent from the following:

"Innovation is the turning of one obligation into another; and if it be a third person

becoming debtor for relief of a former debtor, it is called Delegation "(Stair

Institutions of the Law of Scotland I.18.8) (emphasis added)

"Obligations are also dissolved by novation or innovation, which, in the strict

acceptance of the word, denotes the change of one obligation to another in such

manner that both the debtor and creditor continue the same. The first obligation

being thus extinguished by novation, the cautioners in it must necessarily get free;

and all the penalties or damage arising from it are understood to be purged or rather

discharged: so that the debtor remains bound only by the new

obligation....Delegation, which may be accounted a species of novation, is the

changing of one debtor for another, by which the obligation laid on the first debtor

is discharged."(Erskine's Institutes III.iv.22). (emphasis added)

"Delegation is the extinction of the liability of one party by the substitution of the

liability of another. It is a form of novation the extinction of one debt by the

substitution of another". (Gloag on Contract (2

Edn) p 258) (emphasis added)

"Delegation is a kind of novation, by which the original debtor, in order to be

liberated from his creditor, gives him a third person, who becomes obliged in his

stead to the creditor.." Pothier Treatise on the Law of Obligations part III Chapter II

ArticleVI.1 (emphasis added)

[24]

Where there is delegation the obligations owed by the original party under the

contract are extinguished, but that is not all that happens. A new party is substituted for the

original party. The new party takes over these obligations and becomes obliged in the

original party's place.

[25]

These two elements - extinction and substitution - are found in the Novation

Agreement in this case.

[26]

Extinction is dealt with in clause 2 in respect of the obligations of the Scottish

Ministers and clause 3 in respect of the obligations of SRBCE. Clause 3 states:

"3.

RELEASE BY [SCOTTISH MINISTERS] OF [SRBCE]

The [Scottish Ministers] releases and discharges [SRBCE] from the further

performance of [SRBCE's] duties and obligations under the Agreement ...."

[27]

Substitution is dealt with in clauses 4 and 5, which impose obligations on the pursuer

in substitution of the extinguished obligations of SRBCE. The new obligations replicate the

extinguished obligations and are retrospective:

"4.

ACCEPTANCE OF LIABILITY OF [SRBCE] BY [THE PURSUER]

[The Pursuer] undertakes to perform all the duties and to discharge all the

obligations of [SRBCE] under the Agreement and to be bound by the terms of the

Agreement in every way as if [the pursuer] was and always had been named as a

party to the [Design and Build] Agreement in lieu of [SRBCE] and as if all acts

and/or omissions of [SRBCE] under or pursuant to the Agreement prior to the last

date of execution of this novation agreement were the acts and omissions of [the

Pursuer].

ACCEPTANCE OF LIABILITY TO [THE PURSUER] BY [SCOTTISH

MINISTERS]

[Scottish Ministers] undertakes to perform all the duties and discharge all the

obligations of the [Scottish Ministers] under the Agreement and to be bound by the

terms and conditions of the Agreement in every way as if [the pursuer] was and

always had been named as a party to the Agreement in place of [SRBCE] (emphasis

added)."

[28]

The effect of the substitution in respect of rights of action and remedies is set out in

clauses 6 and 7. Clause 6 provides that rights of action and remedies against Scottish

Ministers vest in the pursuer. Clause 7 provides:

"7.

VESTING OF REMEDIES AGAINST [SRBCE]

All rights of action and remedies under or pursuant to the Agreement vested in

[Scottish Ministers] will from the last date of execution of this novation agreement lie

against [the pursuer] and not [SRBCE]".

[29]

The legal effect of the Novation Agreement is that the pursuer has been substituted

for SRBCE. The pursuer is are liable to the Scottish Ministers as if the pursuer and not

SRBCE had been the original party to the Agreement. SRBCE's obligations to Scottish

Ministers have been extinguished, but liability to Scottish Ministers has not vanished:

SRBCE's obligations to Scottish Ministers have been replaced with new obligations of the

pursuer to the Scottish Ministers. Under these new obligations, the pursuer is liable to

Scottish Ministers in respect of breach of contract and breach of duty in respect of the Design

and Build Agreement as if the pursuer, and not SRBCE, was the original party to that

Agreement.

[30]

Nor has the loss suffered by Scottish Ministers for any breach of the Design and

Build Agreement vanished. The Scottish Ministers are no longer entitled to recover their

loss from SRBCE. SRBCE's obligations have been extinguished and so damages cannot be

recovered from SRBCE for breach of these obligations. However, the actions or omissions of

SRBCE are now to be treated as actions or omissions of the pursuer. Scottish Ministers are

entitled to recover from the pursuer the same damages which they could have recovered

from SRBCE had the Novation Agreement never been entered into. The liabilities to Scottish

Ministers under the Design and Build Agreement remain, but are now liabilities of the

pursuer and not SRBCE.

[31]

In the present action, we are one step removed from the Novation Agreement. The

pursuer is suing the defender for breach of contract and breach of duty in relation to the

Ramboll Contract.

[32]

The original parties to the Ramboll contract were the SRBCE and the pursuer. This

action has been raised not by SRBCE but the pursuer. In respect of title to sue, the pursuer

founds on the Assignation. The Assignation provides

"1.1. [SRBCE] hereby assigns to the [the pursuer] with immediate effect:

1.1.1. its whole right, title and interest, past, present and future in and to the Ramboll

Contract.......;

1.1.2. all claims past, present and future competent to it and/or which it has title to

bring for damages for its own loss and/or losses sustained as a result of breaches of

any contractual or delictual obligations incumbent on [the defender] as a result of or

arising from the Ramboll Contract...;

1.1.3. all claims, past, present and future, competent to it, and/or which it has title to

bring, to claim damages for, and/or recover loss and damage suffered by, [the

pursuer] as the party vested in the rights and obligations in the D&B Contract after

7 November 2013, which were formerly held by [SRBCE], whether on behalf of the

[pursuer] or otherwise, resulting and/or arising from any breaches of contractual or

delictual obligations incumbent on [the defender] as a result of or arising from the

Ramboll Contract...."

[33]

The pursuer has title to sue under the Assignation. If the legal effect of the Novation

Agreement had been no more than the extinguishing of SRBCE's obligations, then there

would have been force in the defender's argument that the pursuer had suffered no loss for

which it should be compensated. But that is not what happened here. There was delegation

in terms of the Novation Agreement. SRBCE's obligations to Scottish Ministers were

replaced by the pursuer's obligations to Scottish Ministers. The effect of the Novation

Agreement is that the pursuer became liable to the Scottish Ministers to make good the

Scottish Minister's loss from the start of Design and Build Agreement.

[34]

When it comes to quantifying the loss, there is no practical difference in the amount

of the loss which would have been sustained by SRBCE under its extinguished obligations

and the loss sustained by the pursuer. The pursuer is liable to Scottish Ministers as if it had

always been a party, so the amount of the pursuer's loss in respect of the period prior to the

date of the Novation Agreement is the same as SRBCE's loss would have been.

[35]

In addition to its averments on the Novation Agreement, the pursuer also pleads that

there was substitution from November 2012 on the basis of letters and the actings of the

parties. Although it can be difficult to establish delegation on the basis of letters and actings

as there is a presumption against delegation (W J Harte Construction Limited v Scottish Homes,

MRS Distribution Ltd v DS Smith) the appropriate time to assess whether that presumption

has been overcome is after hearing the facts. That issue is best dealt with after the facts have

been established.

Order

[36]

I shall repel the defender's first plea in law (no title to sue) for want of insistence,

refuse the defender's motion to dismiss the action, and allow a proof before answer. I shall

put the case out by order for discussion of further procedure.

Scottish Court of Session Decisions