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OUTER HOUSE, COURT OF SESSION
[2025] CSOH 25
CA17/24
OPINION OF LORD SANDISON
In the cause
RUTLAND COURT REAL ESTATE
Pursuer
against
ANDERSON STRATHERN LLP
Defender
Pursuer: MacColl KC; Davidson Chalmers Stewart LLP
Defender: Thomson KC, Boffey; Burness Paull LLP
7 March 2025
Introduction
[1]
In this commercial action for damages and payment, the pursuer claims that a
substantial office property owned by it in Edinburgh and previously leased to the defender
was not, at the end of the lease, left in a state consistent with due performance of the
defender's repair and maintenance obligations. Certain elements of that claim in
particular whether alleged wants of repair were indeed present at the termination date of
the lease, whether their presence on that date was the result of breach of contract on the part
of the defender, whether the remedial works suggested by the pursuer are necessary to
remediate any such wants of repair, and what the reasonable costs of remediation are were
2
remitted to a chartered building surveyor for determination in the light of his professional
knowledge and experience, and he provided a draft report to the court on 10 January 2025.
Other aspects of the dispute, partaking of a more peculiarly legal nature, will remain for
adjudication by the court, in particular whether the cost of necessary repairs is a proper
measure of any loss in fact suffered by the pursuer. The pursuer objected to certain aspects
of the draft report. The defender did not accept the criticisms, the reporter requested the
court to issue such further directions as it thought appropriate, and the matter came before
me for discussion and a decision as to what should be done in those circumstances.
Background
[2]
The process of remitting to a reporter was initiated by a motion to that effect enrolled
by the defender. The court having heard parties and having indicated that it saw the
benefits of that course of action and proposed to grant the motion, parties agreed on the
particular terms of the remit and on the identity of the reporter. Minor adjustments to the
terms of the proposed joint remit were made by the court, and by interlocutor dated
14 October 2024 the reporter was appointed to examine and report in terms of the joint remit
as so settled. The Joint Remit was accompanied by a Schedule of Dilapidations converted
into a Scott Schedule populated with the respective positions of the parties as to the presence
and nature of claimed wants of repair, the appropriate means (if any) of remediation
therefor, and the estimated cost of such remediation. The ability and willingness of the
reporter to deal with the matters remitted to him had previously been checked and
confirmed with him by the parties and the court.
[3]
The salient terms of the remit for present purposes were as follows:
"3. The Remit
3
3.1 The Reporter is appointed to address in the Report the matters listed in 3.2
below:
3.2 Subject to the exception identified in paragraph 3.3, in respect of each item
in the Schedule of Dilapidations, to determine:
3.2.1 whether and the extent to which the wants of repair identified in
the column of the Schedule of Dilapidations headed `Breach
Complained of' existed at the Termination Date;
3.2.2 whether some, any or all of the wants of repair at 3.2.1 constitute
breaches of the lease
3.2.3 if the answer to 3.2.1 and 3.2.2 is yes, in each case whether the
works listed in the column of the Schedule of Dilapidations headed
`Remedial Works Required' were necessary (and, if so, whether in
whole or in part) to remediate that want of repair; and
3.2.4 if the answer to 3.2.1 and 3.2.2 is yes, the reasonable costs for
performing the necessary works to remediate the want of repair.
3. For the avoidance of doubt, the Reporter shall not:
3.3.1 attempt to determine whether any item in the Schedule of Dilapidations
has been, or may be, `superseded' or `diluted.'
3.3.2 attempt to determine whether the Pursuer failed to give reasonable
notice of a need for reinstatement.
...
6. Other evidential material
In order that the Reporter has sufficient material to allow him to reach an opinion on
the matters remitted to him:
(a)
The Reporter shall carry out at least one inspection of the Leased Subjects.
It shall be open to the Reporter to carry out additional inspections of the
Leased Subjects if he reasonably deems such additional inspections
appropriate.
(b)
The Reporter shall seek to interview any individuals that the Reporter, in
his reasonable opinion, considers may be able to provide information
which will assist the Reporter in reaching an opinion on the matters
remitted to him. So far as within the power of the parties to do so, the
parties shall facilitate such interviews taking place. To the extent that the
Report proceeds on the basis of information supplied to him in such an
4
interview he shall state in his Report the substance of the information
conveyed to him, the identity of the individual with whom the interview
was conducted, and the date of the interview.
(c)
The Reporter may (but is not required) to ask the parties to produce such
other evidence or material as the Reporter may reasonably consider
necessary, available or appropriate and to have regard to the same when
forming his view on the maters remitted to him.
7. Status of the Reporter's Report
7.1 The Report shall be in writing and include reasons.
7.2 The parties acknowledge and agree that, in respect of the matters covered,
the remit is in place of probation by the parties of their respective averments.
7.3 The parties acknowledge and agree that any determination in respect of
an item in the Schedule of Dilapidations is entirely without prejudice to the
parties' right to lead evidence and to make submissions as to whether or not
any these items will be superseded or diluted by any works likely to be
carried out by the Pursuer.
8. Direction from the Court
8.1 The Reporter may apply to the court for directions in relation to any
specific question of law or construction of the Lease or for any other direction
that they may reasonably require.
8.2 In the event that a party intimates any objection ... the Reporter must
forthwith apply to the Court for such a direction in relation to any question of
law or construction of the Lease raised in such an objection, and the Report
shall not be finalised until the Reporter has received such directions from the
Court."
[4]
In November 2024 the reporter indicated that he would prefer to instruct expert
advice in relation to certain issues arising out of the mechanical and electrical works
identified in the Schedule. The matter was brought before the court at the instance of the
pursuer and on 26 November 2024 a commercial judge refused to authorise the engagement
of such assistance and issued a brief explanatory note setting out that it was not for the court
to rewrite the remit but simply to interpret it. The judge did not consider that the remit
5
empowered the reporter to employ third party assistance, and gave that direction, further
drawing the reporter's specific attention to clause 6 of the remit, setting out how he was to
obtain sufficient material to enable him to express the opinion required of him.
Submissions for the pursuer
[5]
On behalf of the pursuer, senior counsel adopted the terms of the Note of Objections
which had been lodged. As the draft report stood, the reporter had failed to exhaust his
jurisdiction. In particular, despite determining that, in a number of cases, there had been
wants of repair existing at the termination date that constituted breaches of the lease, the
reporter had failed to determine the reasonable costs for performing the necessary works to
remediate those wants of repair as he was required to do under and in terms of clause 3.2.4
of the remit. He had expressly said that he could not provide answers to all of the questions
remitted to him on cost and consequentially had merely set out certain views on a number of
items contained within the Schedule sent to him as gathering and setting out the parties'
own respective views on the subject-matter of the remit. Those items included the curtain
walling and the mechanical and electrical elements of the remit. In relation to the curtain
walling, he had stated that he was not convinced that the technical solution proposed by the
pursuer was correct because of the presence of neoprene fins which had not been taken into
account by it, and further that costs had been extrapolated into the Schedule without proper
justification, concluding that, whereas wants of repair existed and remedies were required,
the project design and specification had not been satisfactorily worked through and the costs
presented were based upon wider works planned to the exterior of the property, as well as
having been sourced from a single contractor. As a result, he did not supply his own
opinion on costs for certain items in the Schedule, observing that some at least of those costs
6
could only be derived by a contractor's quantity surveyors in the full knowledge of what
was being asked of them, and considering any cross-over in relation to the wider works.
Turning to the mechanical and electrical works, he had concluded that as many as four of
the boilers in the building were faulty during the final months of the lease, and that whilst it
would seem more than likely that remedial works and costs should have been incurred, he
was unable to place a cost against this item as he did not have sufficient information from
the pursuer to do so. Further, he had identified a potentially significant issue with the
chillers in the building, but noted his view that the pursuer had not sought to validate the
problem through a series of further investigations and a designed solution. He had
expressed the view that in those circumstances, it was not possible for anyone to comment
on cost. All of these issues would, he had acknowledged, feed into the ultimate figures
required for preliminaries and professional fees.
[6]
In such circumstances, the reporter had failed to do that which the court (and the
Joint Remit) had tasked him to do. He had not, to use formal language, exhausted his
jurisdiction. At best, the present draft of his report was incomplete. The reporter required
to address all the matters that had been remitted to him (including those contained in
paragraph 3.2.4 of the joint remit) and to use his skill (together with the information
provided to him) to quantify "the reasonable costs for performing the necessary works to
remediate the want of repair". Reference was made to Blantyre v Glasgow, Paisley and
Greenock Railway Co (1851) 13 D 570; to Williams v Cleveland and Highland Holdings Limited
1993 SLT 398; and to Maxwell, Practice of the Court of Session, p 314ff.
[7]
On a separate point, certain determinations made by the reporter seemed illogical
and were not explained by him. The draft report contained a number of determinations
where he had failed to adopt costings for wants of repair that had been agreed between the
7
parties or to provide any quantification of remedial cost where the parties were agreed that
there was a want of repair requiring remediation, and that without providing any (or, at
least, any proper) reasons for doing so. One matter appeared simply to have been omitted
from the report in error, or at least without any explanation. Such an approach was illogical,
irrational as a matter of law and failed to comply with the reporter's obligation (expressed in
clause 7.1 of the joint remit) to provide reasons. A list of supposed examples of that
approach having been taken was set out. They required to be revisited.
[8]
Having seen the pursuer's objections, the reporter emailed parties and the court. He
stated that he accepted that in some respects he had not complied with his remit, and that
further reasons should have been stated generally in responding to the questions posed and
in particular in relation to the amending of some of the costs put forward in the Scott
Schedule which he considered contained pricing errors. On the question of the curtain
walling, he reiterated the concerns expressed by him in the draft report and put forward
three options which, he thought, would assist him in arriving at figures in which the parties
and the court could have confidence. The first such option was for him to discuss the work
necessary to comply with the tenant's repairing obligations with a specialist
contractor. However, that would not necessarily be straightforward and would probably
take some considerable time, easily a few months, firstly to identify not only a suitable
contractor, but also to source one willing to take the time and effort retrospectively to price a
project that was very unlikely to proceed because of the pursuer's apparent determination to
pursue a quite different solution. Alternatively, the reporter repeated his earlier rebuffed
suggestion that he be allowed to engage an independent quantity surveyor. The final option
in these circumstances would be for him to proceed alone, but the clear subtext of his
position was that this mode of proceeding would be at best sub-optimal.
8
[9]
Turning to the chiller units, the reporter repeated the difficulty in this connection
which he had identified in the draft report. Both parties were aware that there was an issue,
but no one knew how it could be addressed at this stage and so he could not confirm how
much work might be involved, nor place a cost against it. The only positive solution he
could suggest was for the two engineers respectively appointed by the parties to discuss the
matter and report back to him a sum sufficient to address the matter. Alternatively, if he
was to remain tasked with deriving a cost for what amounted to unknown works, he would
probably request a further tripartite discussion with the engineers to assist him to arrive at
some kind of reasoned cost. He requested further directions from the court on all of the
matters of difficulty.
[10]
In light of the reporter's position in response to the Note of Objections, the pursuer
indicated that, as previously, it was content to allow him to engage a quantity surveyor to
assist him in relation to the curtain walling, but wished him to determine the issues
concerning the chiller units on his own. It was content for the court to ignore matters upon
which he had expressed an opinion as to costs which was at odds with any agreement (or at
least was not the subject of active disagreement) between the parties.
Submissions for the defender
[11]
On behalf of the defender, senior counsel submitted that the reporter had discharged
his function appropriately and in line with the nature of the joint remit.
[12]
The reporter had not failed to exhaust his jurisdiction. The proceedings before him
were fundamentally adversarial in nature. The onus of proving, firstly, that there were
wants of repair at the termination date constituting breaches of the lease, and secondly, what
the reasonable costs for performing such works as were necessary to remediate those wants
9
of repair might be, fell squarely on the pursuer. To the extent that the pursuer failed to
produce reliable or cogent evidence of its reasonable costs before the reporter, it was entirely
unsurprising that he was not able to confirm a figure constituting a loss. He was entitled to
say that he could make nothing satisfactory out of what had been presented to him. Putting
matters another way, if he was not able to answer the question posed by paragraph 3.2.3 of
the joint remit positively, at least in part, he had no jurisdiction to attempt to answer the
question posed by paragraph 3.2.4, and not answering it did not constitute a failure to
exhaust his jurisdiction. The same result would have been occasioned if the proceedings
had been at probation before the commercial judge. Proof of a breach, but a related failure
to prove loss, was fatal to recovery. A finding by the reporter that he could not assess the
pursuer's loss, due to lack of cogent and reliable evidence, was not a failure to exhaust his
jurisdiction, but a consequence of the deficiencies in the pursuer's evidence before him. The
pursuer had been given every opportunity to persuade the reporter, including the
opportunity presented by inquisitorial interviews of its experts. It had failed to do so.
[13]
Dealing with the curtain walling, the reporter had explained that the nature of the
work was specialist in nature and that he lacked reliable cost information from the pursuer
on its losses in that regard. That was suggestive not of a failure to exhaust any jurisdiction,
but of failings in the presentation of the pursuer's case. He had set out cogently his
reasoned basis as to why the pursuer's assertions on cost were incorrect. The problems
which befell the curtain walling element of the pursuer's claim stemmed from its reliance on
a single-sourced tender from one contractor which appeared to have proceeded on an
erroneous basis regarding the appropriate technical solution and how costs were to be
apportioned accordingly. In relying upon that single source of evidence, without either
supportive or corroborative evidence from another source, the pursuer took the risk that it
10
might not discharge the burden of proof it bore before the reporter. The reporter had not
been persuaded that the evidence tendered by the pursuer was correct, nor appropriate. His
reasoning for that view was detailed and cogent, setting out the many deficiencies which
arose in the presentation of the relative chapter of evidence, notwithstanding the
opportunities the pursuer had been afforded. He had ultimately set out why the pursuer's
curtain walling claim had failed before him, and what would have been required to advance
it. That represented not a failure to exhaust jurisdiction, but a finding of a failure to lead
cogent evidence in support of the pursuer's case. The findings arrived at by the reporter
were the necessary consequence of that failing.
[14]
In relation to the mechanical and electrical aspects of the claim, the reporter had
similarly identified where the pursuer had failed to present evidence to him in relation to
the faulty boilers. That could not be criticised. With respect to the chillers, where the
pursuer had failed to present cost information to the reporter, the result arrived at was the
necessary consequence, as it would have been before this court. In the absence of cogent
and reliable evidence to support a finding, it would have been inappropriate for the reporter
to innovate or conduct his own investigations on the pursuer's behalf. The reporter's
position in relation to preliminaries and professional fees was clear and did not constitute a
failure to exhaust any jurisdiction, but rather, merely a disagreement on the part of the
pursuer with the reporter's findings.
[15]
The criticism made of the reporter by the pursuer was misplaced and unfounded.
He had discharged the joint remit conscientiously, diligently, and fairly. He had given the
pursuer and its experts the benefit of many doubts where they erred in their presentation of
the case, and did not exclude certain wants of repair due to failures and errors in that
presentation. Ultimately, however, the deficiencies in the presentation of the pursuer's
11
claim for loss had given rise to consequences. Had such deficiencies also been before the
court at probation, there would have been no different result. Blantyre v Glasgow, Paisley and
Greenock Railway Co dealt with a quite different set of circumstances, where a reporter had
died and where all parties were agreed he had failed to exhaust his remit.
[16]
In Williams v Cleveland and Highland Holdings Limited, the court was clear that the
scope for objections to a reporter appointed by joint remit was restricted. Only cogent and
articulate objections relating to the performance by the reporter of his duty, or to some issue
of principle identifiable ex facie of the draft report would do (1993 SLT 401J-K). The pursuer
here offered neither. Rather, its complaint was, in reality, a disagreement with findings
which arose solely as a result of its own failures in the presentation of its case and the
justification of its claim. The reporter was not obliged to embark upon a "voyage of
discovery": HFD Management Services LLP Family Pension Trust v Apleona HSG Ltd
Buchanan Ltd v Arcadia Group Ltd 2013 Hous LR 42 at [4].
[17]
Turning to the further objections by the pursuer, to the extent that the reporter did
not adopt costs for wants of repair previously agreed between the parties, that was
irrelevant. It was not for the court to interrogate the reporter's factual findings. He was the
final arbiter on questions of fact. Any purported agreement by the parties on certain
findings could be ignored by him: his joint remit did not oblige him to accept them. That
constituted neither illogicality nor irrationality: HFD at [22].
[18]
The reporter had included reasons in his report. That the pursuer did not like, or
was dissatisfied by, his findings in fact did not equate to any failure on his part. In many
instances complained of by the pursuer, the reporter had allowed costs for a want of repair,
simply not at the level sought by the pursuer. That was not a failure on his part, but merely
12
his determination of what the reasonable costs for performing those works were, in answer
of the joint remit made to him. The complaints of the pursuer in this regard focused on a
series of relatively low value items, where the defender elected for commercial, economic or
pragmatic reasons not to challenge the rate claimed by the pursuer in the Scott Schedule.
However, the joint remit obliged the reporter to determine the reasonable costs. That was a
function he had fulfilled, albeit the pursuer was in many instances disappointed at the
result. In some cases the costs allowed had been increased above those suggested by the
pursuer. In others the difference was de minimis or appeared to represent only minor
typographical or transposition errors. In one or two instances, no breach of the repair and
maintenance terms of the lease had been found by the reporter, inevitably meaning that
there was no applicable cost of repair. The defender invited the court to repel the objections
of the pursuer to the draft report and to direct the reporter to finalise it and issue it to the
court.
[19]
In response to the reporter's comments on the Note of Objections, the defender did
not support him being allowed to engage third-party assistance. That would go beyond the
terms of the joint remit.
Decision
[20]
Three questions are raised by the content of the pursuer's Note of Objections, all of
which can and must be resolved by way of a proper construction of the joint remit against
the background of the general law on remits to reporters of this kind. The first question is
whether the reporter has, as matters stand, exhausted his remit. The second is whether his
jurisdiction extends to assigning a value to the cost of appropriate remedial works where the
parties have agreed upon (or at least have not disagreed about) a different value. The third
13
is whether he is entitled to engage the further expert assistance which he seeks in order to
resolve some of the more complex issues in dispute.
Exhaustion of remit
[21]
The question raised in this connection, put in the very clear words used by
Lord Wood in Blantyre at 571, is whether the report is "conclusive upon the matters of fact
required to be ascertained". The matters of fact required to be ascertained are those set out
in section 3.2 of the joint remit set out above. No issue arises for present purposes out of the
matters carved out of the remit by section 3.3. In essence, then, the reporter was to
determine, in respect of each matter identified as a want of repair in the Scott Schedule,
whether and to what extent it existed at the date of termination of the lease (question 1); in
respect of each such matter which did so exist, whether its existence as at that date
constituted a breach of the lease (question 2); if the answers to questions 1 and 2 were
positive in respect of any such matter, whether the works suggested in the Schedule by the
pursuer were necessary to at least some extent in order to remediate the relative lack of
repair (question 3); and, again if the answers to questions 1 and 2 were positive in respect of
a matter, to state the reasonable costs for performing the necessary works to remediate the
relative want of repair (question 4). It is important to note that an answer to question 4 is
clearly required when questions 1 and 2 are answered positively, irrespective of the answer
to question 3.
[22]
It follows that those criticisms of the draft report which turn on the absence of an
answer to question 4 despite questions 1 and 2 having been answered positively by the
reporter are valid criticisms that he has, in those respects, failed to exhaust his jurisdiction.
14
He has not answered questions which he was required to answer, and he must now be
directed to do so.
[23]
If the material presented to the reporter, together with such further enquiries as he
saw fit to make, had failed to persuade him that positive answers fell to be given to either
question 1 or question 2 in respect of any particular claimed want of repair, then there
would have been no need to proceed to answer question 4 in that respect. That was the
situation figured in HFD at [23]. However, any want in the material made available to the
reporter, or otherwise sought out by him in terms of the joint remit, which led to him being
unable to answer question 3 positively in respect of any matter, did not absolve him from
the responsibility of answering question 4. As has been seen, an answer to that question is
required regardless of the answer to question 3, and furthermore that answer must be given
regardless of the adequacy of the material before the reporter. In this context, no question of
any burden of proof on the pursuer arises. While the remit to the reporter took the place of a
proof before the court of the matters so remitted, it did not involve the provision by the
reporter of a simulacrum of such proof. The reporter is not some variety of deputy judge;
rather, where the terms of his remit permit or indeed require, his appointment entails the
deployment of his skills and experience so as to provide a more efficient (and potentially
more accurate) determination of the remitted matters than a judge could reasonably be
expected to furnish. Whether or not that was quite the situation subjectively contemplated
by both parties when the terms of the joint remit were settled, an objective construction of its
terms permits of no other result.
15
Agreed values
[24]
The issue of the extent of the reporter's jurisdiction in instances where parties do not
disagree on the face of the Scott Schedule about the cost of remedying any claimed want of
repair set out therein is not a particularly acute one, since in most if not all of those instances
the apparent agreement brought out by the Schedule is in reality the product of the cost in
question being so minor that the defender has not troubled to dispute it. Nonetheless, the
answer in principle to the question posed is clear. The task of the reporter was to provide
answers to the four questions posed in the joint remit, including (where appropriate in the
sense already discussed) question 4. The fact (if fact it be) that the parties were agreed
amongst themselves as to what the answer to any question should be in no way absolved
the reporter from stating his views on the matter. Given that the remit involves the
substitution of his views for any other mode of proving the remitted matters, those views
furnish the definitive answers as to the facts to which the questions posed relate. Directions
to that effect will be issued.
[25]
To the extent that certain observations in HFD at [23] may suggest that the reporter's
views on matters of apparent agreement on the face of the Schedule between the parties may
simply be ignored so far as inconsistent with such agreement (and I am not sure that they
do), I disagree with them. It will in due course be open to the parties jointly to ask the court
to pronounce a decree consistent with a shared view of certain facts rather than with the
view taken on those facts by the reporter, and the court would be likely to accede to such a
request, but in the absence of any such approach it must proceed on the basis that the
reporter's views provide the factual basis informing its own disposal of the case.
16
External assistance
[26]
The question of whether the reporter may engage external assistance in dealing with
the matters remitted to him again falls to be determined by construction of the joint remit.
Section 6 thereof entitles the reporter to interview any individuals whom he reasonably
considers may be able to provide him with information which will assist him in reaching the
opinions required of him, and may also ask the parties to produce such other evidence or
material as he may reasonably consider appropriate to that end. The facility of interviewing
individuals so as to obtain relevant information would not in my view extend to the length
of engaging persons to consider matters and express their own professional opinions to him.
However, if he thinks that asking the parties to instruct more or different professional
advisers in order to produce material (including in the form of opinions) which he
reasonably considers necessary, available or appropriate to enable him to discharge his
functions, then he may do so. Directions to that effect will be provided to him.
[27]
It is to be hoped that some expedient within the terms of the joint remit which will
enable the reporter to state his views on the matters on which he is currently in doubt can be
identified and deployed. It will be recalled that his ultimate views on those matters do
require to satisfy certain legal standards in order to be valid, and in particular in the current
context require to have a factual basis, to take into account relevant matters and to exclude
irrelevant ones, to be Wednesbury rational, and to be supported by adequate reasons: see
BAM Buchanan at [5]. If the reporter is quite as adrift on the issues of the curtain walling and
the mechanical and electrical installation as his communication to the court suggests, then it
may prove very difficult for him to steer a safe course amongst each such Scylla and every
such Charybdis capable of wrecking his enterprise, especially if parties are unwilling to
provide reasonable assistance to him. If matters come to that, interesting questions may
17
arise as to how best to deal with the resulting situation. Although in former times the
practice of remitting technical matters to a reporter was adopted by and with the consent of
the parties, supplemented if need be by resort, plausible to a greater or lesser extent from
case to case, to the concept of acquiescence in an appointment favoured by the court, I am
far from satisfied that nowadays it is beyond the powers of the court to impose a mode of
resolving any difficulties which may manifest themselves in the working out of an
established remit without the agreement of the parties. However, that is not a question
which yet requires to be addressed, and with the application of some good sense and
cooperation where needed, it may still be avoided in this case.
[28]
Directions will be issued to the reporter along the lines set out.
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