Morrison Sports Limited and others v Scottish Power -
Decision of Inner House, Court of Session 8 December 2009
You may recall that in our February 2010 edition we discussed
the decision of the Inner House of the Court of Session in this
case. The Inner House - Scotland's appeal court - held that the
claimants could advance their claim for damages on the basis of an
alleged breach by Scottish Power of obligations imposed on them by
the Electricity Supply Regulations 1988.
The Supreme Court has reversed the Inner House decision. As this
latest judgment is favourable from a defender's point of view we
are pleased that we now need to reverse the conclusions in our own
earlier article!
The facts
The factual background can be briefly stated, for the facts are
not terribly important in the context of these decisions. The
claimants' premises in Paisley were damaged by a fire in 1998 and
they claimed that this was caused by a modification to an
electrical fuse which they alleged had been carried out by
employees of Scottish Power. This was denied by Scottish Power and
remains unresolved. Neither appeal court heard any evidence, but
only legal argument on whether the 1988 Regulations and the related
primary legislation, the Electricity Act 1989, provided a private
right of action to a party who suffers loss as a result of another
party's breach of the Regulations.
The law
The question of whether a statute provides a right of action for
damages has caused difficulties to the courts over the years. Most
of us will be aware of the speech of Lord Browne-Wilkinson in X
v Bedfordshire County Council [1995] 2 AC 633. Whether that
case causes your eyes to light up or to glaze over, it remains a
highly influential judgment, as is illustrated in the present case
by the extensive reference to it both by the Inner House and the
Supreme Court (notwithstanding that they came to quite different
conclusions!).
It would be an overstatement to say that the Supreme Court's
decision represents a radical transformation of the law in this
area but it is a judgment which will likely assist defenders in
similar cases. Two particular aspects should be highlighted.
First, the decisions of the Inner House and the Supreme Court
decisions were based primarily on their interpretations of a
particular section of the Electricity Act 1989, section 29. This
section states that regulations made under the section could
provide for criminal penalties but nothing in the section affected
any liability to pay compensation for loss caused by a breach of
the regulations.
This reservation of a liability to pay compensation was
interpreted by the Inner House as confirming a private right to
claim such compensation. The Supreme Court gave this interpretation
extremely short shrift. The Supreme Court pointed out that, had it
been the intention of Parliament to create a private right of
action for breach of the regulations, that would have been a
"comparatively straightforward task" and creating such a right by
way of a reservation of unspecified compensation would be to
"botch" that task.
Many statutes do allow a private right of action. For example
section 47(2) of the Health and Safety at Work etc Act 1974,
provides that a breach of health and safety regulations shall:
"so far as it causes damage, be actionable except insofar as the
Regulations provide otherwise".
The Supreme Court's decision may allow future argument that the
lack of such clear language points away from the existence of a
private right of action.
Secondly, the Inner House relied squarely on their
interpretation of the wording of section 29, downplaying the
significance of other factors. For example the Inner House only
briefly touched upon the existence of other means of enforcement of
the statutory scheme. In contrast, the Supreme Court pointed out
that the criminal sanctions in the Act, and a system of statutory
inspections, suggested that Parliament's intention was to use these
means to ensure compliance with the Act and Regulations.
One factor highlighted in X v Bedfordshire was the
question of whether the Act could be said to be designed to protect
a limited class of the public. That would point to an injured party
having a right of action. In suggesting that all members of the
public within the United Kingdom could be regarded as a particular
class, the Inner House weakened this factor. The Supreme Court, in
contrast, said that the protection of a limited class of the public
had been regarded by the courts as "one of the necessary
preconditions of the existence of a private law cause of
action".
Comment
With statutory obligations so often being more stringent than
common law duties of care, avoiding any liability for statutory
breach will almost always be to the advantage of the defender. The
Supreme Court's judgment demonstrates that without an express
provision conferring civil liability claimants will have difficulty
in establishing a breach of statutory duty and subsequent cause of
action. There may, of course, be common law remedies available to
them.
Contributed by David Pollok