Peacock Group plc v Railston Ltd and WM Murchland & Company Ltd [2010] CSOH 173

Introduction

In 2001, the Peacock's store in Kilmarnock flooded when a mains water connection on the first floor failed. They raised a Court of Session action alleging that the loss and damage suffered was a result of a breach of the main contractors' contractual obligations to have carried out the shop fitting work with reasonable care and skill. The main contractors then, in turn, tabled an "indemnity" claim against their sub-contractors, bringing them into the action.

Before proceedings could fully get under way, in 2005 it came to light that after borrowing out the actual connector and copper piping in 2003 - the crucial piece of evidence - the pursuers' solicitors had lost it. On this basis, the action was dismissed by the judge who found that due to the loss of this evidence, "the prejudice to the third parties was so severe and irremediable, by reason of crucial primary evidence being unavailable for expert inspection on their behalf, that the action could not fairly be allowed to proceed against them or against the defenders whose right of relief had been rendered inoperable."

2009 Action

A couple of years passed and, by chance, the missing piece of piping was discovered languishing in a filing cabinet in 2008. With the evidence now available to all parties, a fresh action was raised. Like before, the pursuers raised an action against the defenders who subsequently brought in their sub-contractors as a third party.

Counsel for the defenders argued that the condition of the connector and copper piping had inevitably changed after spending 5 years in the filing cabinet and, as a result of this; the third parties' expert did not have an opportunity to examine the items in the same condition as the pursuers' and defenders' experts had done so many years ago. As a result of this, "There was not now, and could never be, a level playing field, and the combination of inexcusable delay and severe prejudice should lead to the immediate dismissal of these proceedings."

The judge in this second action noted that along with the first essential criteria for an application for dismissal (an inordinate and inexcusable delay), there must always be an added ingredient - namely an element of unfairness. Allowing the case to proceed to a hearing on the evidence, he stated, "I am certainly unable to hold, in advance of any inquiry, that a fair trial will not be possible, or even that a substantial risk exists in that connection."

Comment

This action shows that simple human error can have expensive consequences. There are now several cases a year in Scotland where parties try to seek dismissal for arguably excessive delay, and the test is whether real prejudice can be established. You have been warned!