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You are here: BAILII >> Databases >> Scottish Court of Session Decisions >> Graham Builders Merchants v. Mann Engineering & Ors [2003] ScotCS 149 (02 May 2003) URL: http://www.bailii.org/scot/cases/ScotCS/2003/149.html Cite as: [2003] ScotCS 149, 2003 SCLR 632

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Graham Builders Merchants v. Mann Engineering & Ors [2003] ScotCS 149 (2 May 2003)

FIRST DIVISION, INNER HOUSE, COURT OF SESSION
Lord President Lord MacLean Lord Abernethy	XA95/02 OPINION OF THE COURT delivered by THE LORD PRESIDENT in APPEAL From the Sheriffdom of Lothian and Borders at Linlithgow in the cause GRAHAM BUILDERS MERCHANTS LTD. Pursuers and Respondents; against MANN ENGINEERING LTD First Defenders: and JAMES MANN HOLDINGS LIMITED Second Defenders: and JAMES WHANNELL Third Defender and Appellant: _______

 

Act: M.M. Hughes; Lawford Kidd (for Nolan MacLeod, Kirkintilloch) (Pursuer & Respondent)

Alt: Lindhurst; Somerville & Russell (for Caesar & Howie, Bo'ness) (Third Defender & Appellant)

2 May 2003

1. The third defender has appealed with leave against the decision of the Sheriff Principal of Lothian and Borders to allow the pursuers to mark a late appeal against the interlocutor of the Temporary Sheriff dated 16 February 1999, in which he assoilzied the third defender.

2. The history of the proceedings, in brief, is as follows. The pursuers sued the first defenders for payment in respect of goods supplied on certain dates between April and June 1995. The pursuers' action was also directed against the second and third defenders on the basis that they had granted guarantees in their favour in respect of any sums due and unpaid by the first defenders. Both the first and the second defenders are in receivership. The only live issue in the action is in regard to the pursuers' claim against the third defender.

3. The pursuers and the third defender came before the sheriff for debate in respect of their preliminary pleas. Having made avizandum the sheriff came to the conclusion that the pursuers' pleadings were irrelevant in two respects. The first was that they had no relevant basis for suing in respect of goods which had been supplied, not by them but by a third party, Graham Group plc. The second was that, on the face of the pleadings, the risk to the third defender as guarantor had been increased without his consent or knowledge, and accordingly his guarantee had been discharged.

4. While the sheriff reached these conclusions, he did not give effect to them by sustaining the third defender's preliminary pleas and dismissing the action, but took the unusual course of issuing his views in the form of an opinion. In that opinion he related that, in regard to each of these points, the solicitor for the pursuers had indicated at the debate that if he was of the view that the action was irrelevant, she would wish to have the opportunity to consider whether competent and suitable amendments to the pursuers' pleadings could be made. The sheriff also recorded that counsel for the third defender had not opposed this suggested course. The sheriff concluded his opinion by stating that the case would be put out for a procedural hearing to determine further procedure in the light of the opinion.

5. The procedural hearing took place on 8 January 1999. At the outset counsel for the third defender submitted that it was incompetent for the sheriff to have proceeded in the way in which he had done. He reminded him that he had requested him to sustain the third defender's preliminary pleas. For her part the solicitor for the pursuers moved the sheriff to allow the pursuers to tender amendments within a period of twenty-one days, and for the third defender to be given a further twenty-one days for answers thereto. In support of that motion the pursuers' solicitor outlined the nature of the amendments which she would seek to make. The pursuers would aver an agency agreement between them and Graham Group plc, along with averments as to how goods were ordered and supplied. The pursuers would also introduce averments that the third defender as guarantor had agreed to an increase in the credit limit which had been enjoyed by the pursuers.

6. The sheriff once more made avizandum. He prepared a note of the discussion which had taken place, in the course of which he rejected the proposition that it had been incompetent for him to put out the case for a procedural hearing. He also expressed the view that the amendments which had been outlined by the pursuers' solicitor did not cure the defect in the pursuers' pleadings. He stated that an averment of agency between the pursuers and Graham Group plc did not provide an inference of knowledge or consent on the part of the third defender as guarantor in regard to an extension of the guarantee to include the agent. All it could provide was specification that an agency agreement existed between Graham Group plc and the pursuers. Further, amendments as to how goods were ordered and supplied were insufficient to extend a guarantee to include a third party. He then stated,

"With reference to the submission that averments could be introduced to disclose an agreed increase in the credit limit, such averments might overcome the defect concerning intimation of the increase in risk which the guarantor might incur but it does not overcome the fundamental defect that the party supplying the goods differs from the pursuers to whom the guarantee was purportedly given".

In these circumstances the sheriff refused leave to the pursuers to amend. Accordingly in an interlocutor dated 16 February 1999, which was less than six weeks after the date of the procedural hearing, he dismissed the action, except insofar as already disposed of.

7. Unfortunately the interlocutor and the sheriff's note were not transmitted by the sheriff clerk to the parties. The pursuers' solicitor did not make any enquiry of the sheriff clerk about a decision from the sheriff until 28 January 2002, which was over 3 years after the date of the procedural hearing. The sheriff clerk responded by sending a copy of the interlocutor and the note to the solicitor, with an apology for the fact that this had previously been overlooked. Within fourteen days thereafter the pursuers lodged a note of appeal. The question for the sheriff principal was whether he should exercise the dispensing power contained in Rule 2.1(1) of the Ordinary Cause Rules to allow the appeal to proceed out of time. Under Rule 31.1 appeals against an interlocutor such as that of 16 February 1999 required to be marked within fourteen days of its date.

8. In the note which accompanied his decision to allow the appeal to proceed the sheriff principal stated that there was no doubt that the time which had elapsed since the date of the sheriff's interlocutor was "very substantial". He considered that the solicitor for the pursuers was open to some criticism for not having made earlier enquiry of the sheriff clerk. He observed, on the other hand, that some sheriffs were far from speedy in the writing of judgements. Moreover, he said, account had to be taken of the fault on the part of the sheriff clerk's office. He then stated:

"Accordingly I took the view that the exceptionally long period since the issue of the sheriff's judgment should not, on its own, be taken as pointing conclusively in the direction of refusing the motion for the pursuers".

9. The sheriff principal went on to say that he also took into account the fact that the pursuers had no prospect of recovering the sums sued for from either the first or the second defenders. He added that the sheriff did not appear to have been of the view that the pursuers' case against the third defender was so hopelessly irrelevant that it could never be capable of succeeding however it was pled. That led him to conclude that there would indeed be a risk of prejudice to the pursuers were their motion to be refused. The third defender might not be so disadvantaged on account of the passage of time in regard to the proof of factual matters. He observed that the third defender was a director of both of the other defenders.

10. The sheriff principal added that he did not consider that the argument that allowing the case to proceed involved a breach of the right of the third defender under Article 6(1) of the European Convention on Human Rights to a determination in a reasonable time provided a very compelling reason for refusing the pursuers' motion. In regard to an argument for the third defender that any right of the pursuers to payment had prescribed, and that an amendment would, in effect, amount to the putting forward of a wholly new case, the sheriff principal said that he was unable to say that any proposed amendment would necessarily fall foul of the line of authority against the introduction of a new case after the expiry of the prescriptive period.

11. In conclusion the sheriff principal stated:

"In the result I was of the view that there was something to be said on both sides in relation to the granting or refusal of the pursuers' motion. In such an evenly balanced situation I took the view that it would be inappropriate, and possibly unjust, to deny the pursuers any opportunity to challenge the sheriff's decision, and that the appropriate course was to grant the motion and allow the appeal to proceed".

12. In approaching the decision of the sheriff principal, we have, of course, to bear in mind that, even if we would have taken a different view of the pursuers' motion, it is not open to us on that basis to substitute our own conclusion. As was submitted by Mrs Hughes, who appeared before the pursuers, we require to be satisfied that the sheriff principal misdirected himself in law, failed to take into account a relevant and material factor, left some relevant and material factor out of account, or reached a result which was wholly unreasonable (DTZ Debenham Thorpe v I Henderson Transport Services 1995 SC 282 at page 285).

13. At the same time it is plain that, in order to justify the granting of a motion to allow a late appeal to be marked, the circumstances require to be sufficiently exceptional to justify that course (cf Graham v John Tullis & Sons (Plastics) Ltd 1992 SLT 507 at page 509).

14. In the present case a very substantial period had elapsed, not simply since the date of the sheriff's interlocutor, but since the date of the procedural hearing on 8 January 1999. The first time at which the pursuers' solicitor made enquiry of the sheriff clerk about the decision on the matters which were discussed at that hearing was more than three years after the hearing. We note that the opinion which the sheriff had issued prior to that hearing set out in detail the reasoning which led him to identify the defects in the pursuers' pleadings. The purpose of the procedural hearing was to determine whether the pursuers could propose competent and suitable amendments to their pleadings. At the conclusion of that hearing the sheriff had to consider, apart from the objection which had been taken by counsel for the third defender, the motion which the pursuers had made for leave to amend. The pursuers' solicitor appears to have accepted that, as they stood, the pursuers' pleadings were irrelevant, but sought to cure the defects by amendments which she outlined at the hearing. On the face of it, standing the explanation of his views which the sheriff had already set out in the opinion which he had issued, the questions on which he reserved judgment at conclusion of the procedural hearing were relatively limited.

15. In these circumstances we are surprised that the sheriff principal stated merely that the pursuers' solicitor was "open to some criticism for not having made earlier enquiry". There was nothing to suggest that the sheriff was likely to require a protracted period in which to arrive at a decision on the matters which had been discussed at the procedural hearing. The sheriff principal does not appear to us to have taken account of the nature and extent of those matters although this, in our view, was a relevant and a material factor, pointing to the likelihood of a relatively early determination.

16. It is clear that the sheriff principal took into account the fact that "the only prospect of recovery lies in the possibility of successfully pursuing their claim against the third defender". It is reasonably plain that, in making this remark, the sheriff principal had in mind the enforcement of a contractual remedy. However, we were informed by Mr Lindhorst, who appeared for the third defender, that he had invited the sheriff principal to take into account that, in the circumstances, the pursuers would have a remedy against their solicitor in respect of the losses which had been sustained by them in the event of leave to mark the appeal being refused. There is nothing to show that the sheriff principal took account of this submission.

17. We have already noted that in conclusion the sheriff principal took the view that there was something to be said on both sides in regard to the granting or refusal of the pursuers' motion. While we can readily see that the sheriff had to take into a account a number of factors, the important point is that he required to be satisfied that the circumstances were sufficiently exceptional to justifying his permitting the late marking of an appeal, standing a delay of exceptional length. We are not satisfied that the sheriff principal applied the correct approach in this respect.

18. Counsel for the third defender also advanced the argument that permitting the pursuers to proceed with an appeal would not serve any purpose. He drew attention to the fact that in his note the sheriff had referred to the defect in the pursuers' pleadings with regard to the party by whom the goods were supplied as "fundamental". He also pointed out that at no stage had the pursuers' legal representatives proffered a written amendment to the pleadings. In particular, he criticised the pursuers for not having supported their submissions by demonstrating that they could after all make averments which were both competent and suitable to enable their action against the third defender to proceed.

19. We consider that there is some force in his criticism. As we have already noted, the sheriff principal appears to have considered that it might be unjust to deny the pursuers any opportunity to challenge the sheriff's decision. He also observed that he was unable to say that any proposed amendment would necessarily be affected by the law of prescription. In making these remarks it appears that he approached the viability of the pursuers' case by asking himself whether he was satisfied that the pursuers could not mount a relevant case. However, there is much to be said for the view that, having regard to what had happened, it should have been for the pursuers to satisfy the sheriff principal that, at least prima facie, they could make a relevant case.

20. In the light of these considerations we are satisfied that the sheriff principal failed to take into account certain relevant and material factors, and took an approach to the pursuer's motion which was not well founded. In the result he arrived at a conclusion which was, in our view, not a reasonable one.

21. In these circumstances the third defender's appeal will be allowed. We note that in his interlocutor dated 16 February 1999 the sheriff not only dismissed the action but also assoilzied the third defender from the crave. The latter was plainly inappropriate. Accordingly, in adhering to that interlocutor we do so under exception of those words.