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You are here: BAILII >> Databases >> Scottish Court of Session Decisions >> Link Housing Association Ltd v. PBL Construction Ltd & Ors [2008] ScotCS CSOH_112 (08 August 2008)
URL: http://www.bailii.org/scot/cases/ScotCS/2008/CSOH_112.html
Cite as: [2008] CSOH 112, [2008] ScotCS CSOH_112

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OUTER HOUSE, COURT OF SESSION

 

[2008] CSOH 112

 

     

 

 

 

 

 

 

 

 

 

 

 

OPINION OF LORD CLARKE

 

in the cause

 

LINK HOUSING ASSOCIATION LIMITED

 

Pursuer;

 

against

 

PBL CONSTRUCTION LIMITED & OTHERS

 

Defenders:

 

 

ญญญญญญญญญญญญญญญญญ________________

 

 

 

Pursuers: Johnston QC; Burness LLP

Fourth Defenders McNeill QC; Brodies LLP

Fifth Defenders: Erroch; Drummond Miller LLP

8 August 2008

 

[1] The summons in this action was signetted on 8 July 2002. In it the pursuers initially sought payment of ฃ750,000 with interest, initially, from five defenders, jointly and severally. The action relates to a contract for the construction of thirty flatted dwellinghouses at Ferguslie Park, Paisley. The defenders were sued for various alleged breaches of contract, breaches of collateral warranty and "appointments".

[2] On 31 March 2006 the Lord Ordinary, Lord Wheatley, allowed the Closed Record in the action to be opened up and amended in terms of a minute of amendment by the pursuers and answers for each of the first, second, fourth and fifth defenders. The third defenders had, in terms of an earlier interlocutor, been assoilzied from the conclusions of the summons. The effect of the amendment was inter alia to delete in the instance of the summons the words "Link Housing Association Limited" and to substitute therefore the words "Link Group Limited". The second, fourth and fifth defenders reclaimed against that interlocutor. By an interlocutor of the 10th January 2007 the First Division allowed the reclaiming motion, at the instance of the second defenders, recalled the Lord Ordinary's interlocutor, refused to allow the amendment in terms of the minute of amendment and answers, and remitted to the Lord Ordinary to proceed as accords. The decision of the First Division is now reported as the Grey Aitken Partnership Limited v Link Housing Association Limited 2007 SC294. The pursuers were suing the second defenders as the design team engaged in respect of the construction project. The second defenders had entered into a collateral warranty with Gap Housing Association. It provided, inter alia, that no action or proceedings arising from any breach of it should be commenced against the second defenders after the expiry of five years from the date of practical completion in terms of the construction contract. That date was 10 July 1997.

[3] The whole property and assets of the Gap Housing Association had been transferred, in October 2000, to Link Housing Association Limited. On 7 September 2001 that association, which is a body constituted under the Industrial and Provident Societies Act 1965, changed its name to "Link Group Limited". On 29 November 2001 a company named Link Housing Association Limited was registered under the Companies Acts. As previously noted, the effect of the minute of amendment, which was considered by the First Division was, inter alia, to amend the instance by deleting "Link Housing Association Limited" and substituting there "Link Group Limited". In addressing the reclaiming motion, in the name of the second defenders, the Lord President, who gave the principal judgement described, at page 299 para 11 of his opinion, the power of the court to allow the amendment as being "widely expressed". His Lordship, however, continued as follows:

"It is, however, well settled that there are restraints upon the exercise of that power. In Pompa's TRS v Edinburgh Magistrates Lord Justice Clerk Cooper said (page 125):

'Further, our reports contain many decisions showing that the Court will not in general allow a pursuer by amendment to substitute the right defender for the wrong defender, or to cure a radical incompetence in this action, or to change the basis of his case if he seeks to make such amendments only after the expiry of a time limit which would have prevented him at that stage from raising proceedings afresh.'

Lord President Hamilton then continued

"The same restraint applied where an additional or substitute of pursuer is sought to be introduced (McLean v British Railways Board; Arif v Levy & Macrae). There has been some debate as to whether that restraint arises by reason of the incompetence of such amendment or by reason of the impropriety of introducing a new party after expiry of the limitation period (Hynd v West Fife Co-Op Limited; O'Hare's EXRS v Western Heritable Investment Co.). Before us counsel proceeded on the assumption that the latter basis was correct. This was the 'better view' suggested by Lord President Emslie in Hynd and I am content to adopt it."

His Lordship then proceeded to seek to analyse how the need for the proposed amendment had arisen, in the present case, and reached the conclusion that it arose from an error by those responsible for framing the summons, in the first place, and that that error was a matter of substance going to the identity of the person suing. The Lord President then stated, at page 300, para 13, of his opinion

"If that analysis is correct, then the proposal to change the name of the pursuers involves the substitution of a different person for the original pursuers (both being in existence at the time the action was raised) and is struck at by the line of authority referred to. It was not submitted that that line of authority should be overruled. Subject to the discussion which immediately follows, the second defenders' submission is, in my view, well founded and effect should be given to it."

The fourth and fifth defenders, unlike the second defenders, were not party to any contractual or other limitation in their favour. The fourth defenders sought to have the minute of amendment refused on the basis of the provisions of section 6 of the Prescription and Limitation (Scotland Act 1973). The fifth defenders for their part sought to resist the introduction of the amendment on the basis of its lateness and its extent." The submissions made on behalf of the fourth and fifth defenders did not find favour with the First Division. The Lord President, in his judgment, recognised that it would be open to the pursuers to bring a fresh minute of amendment proposing a change of name which would affect those defenders (see at page 300 para 15).

[4] The pursuers, in the event, took up the Lord President's suggestion. They lodged a fresh minute of amendment in December 2007. It is number 49 of process. A motion to allow the minute of amendment to be received was opposed by the second and fourth defenders. The motion was heard by Lord McEwan. It should be noted that the pursuers had not abandoned their action against the second defenders at that stage. In the course of discussion before Lord McEwan, however, senior counsel for the pursuers said that the pursuers would renounce probation against the second defenders and would not oppose a decree of absolvitor with expenses being granted to these defenders. The Lord Ordinary refused the motion. In doing so he observed, at para 10 of his opinion, of 21 December 2007, (unreported) that the minute of amendment was "substantially the same as the old one". In that state of affairs his Lordship continued

"I am bound by the decision of the Inner House on the point and I will refuse to allow the amendment to be received. I regard what the pursuers are again trying to do is not only unarguable but, this time, also unstateable. I rely on and adopt the reasons given by the Lord President. The matter now does not admit of argument."

His Lordship went further and opined at para 11 as follows:

"I also think it would be quite wrong to release the second defenders on a renunciation of proof against only them. That would not be fair as against the fourth defenders who claim to have the same unanswerable point against the pursuers. In any case if I release the second defenders in this way the fourth defenders will simply bring them back in and seek relief. That would cause further delays."

His Lordship having refused to allow the amendment to be received ordered a preliminary proof "on the existing record limited to the question on whether these pursuers have any right under any of the GAP contract".

[5] There matters rested, procedurally, until 8 July 2008 when the pursuers enrolled a motion to allow them to lodge a minute of amendment, number 52 of process, and to appoint the remaining defenders to lodge answers thereto. Eo die, the pursuers lodged another motion in the following terms:

"For and on behalf of the pursuer and in respect of the minute of abandonment number 53 of process to allow the second defender to lodge an account of expenses within eight weeks of the date of the court's interlocutor and to remit that account to taxation."

The latter motion was not opposed and I granted it. Opposition was however marked on behalf of the fourth and fifth defenders to the motion to allow the minute of amendment to be received.

[6] In moving the motion before me senior counsel for the pursuer accepted, in the first place, that the new minute of amendment was seeking in substance to do what the previous minutes of amendment had sought to achieve and that was principally to substitute for the existing pursuer another party which was the party which truly had the rights to pursue in the matter. Senior counsel for the pursuer submitted that the principal question, now that the second defenders were no longer in the process, was whether the first proposed minute of amendment which had been allowed by Lord Wheatley, although not subsequently allowed by the First Division, had, nevertheless, interrupted the period of prescription in respect of any claim against the remaining defenders. If it had, then whether or not a minute of amendment should now be allowed to be received was a question for the discretion of the court.

[7] As to the function of a minute of amendment in interrupting a limitation or prescriptive period, senior counsel for the pursuers referred me to two authorities. The first of these is Boyle v Glasgow Corporation 1975 SC 238. That case was concerned with a personal injury action. The pursuer alleged that he had sustained injuries in an accident which had occurred on 8 July 1969. He raised an action, the summons in which was signetted and served on 28 August 1970. On 4 July 1972, the court granted a motion to allow a minute of amendment on behalf of the pursuer to be received in which the pursuer, for the first time, averred, inter alia, a ground of fault alleging negligence on the part of an employee of the defenders. On 1 August 1972 the court allowed the Closed Record to be amended in terms of the minute of amendment and answers. The Lord Ordinary, after debate, excluded from probation the averments relating to the ground of fault based on the negligence of the defenders' employee, holding that that ground of fault as averred was time barred because the action against the defenders had stood unaltered until the Court pronounced an interlocutor allowing the Closed Record to be amended in terms of the proposed minute of amendment and answers. The pursuer reclaimed and the Second Division reversed the Lord Ordinary's decision holding that the punctun temporis when a minute of amendment is brought within the judicial process was when the motion to allow the minute of amendment to be received in and answered was made and since that had been done within the triennium, the averments were not time barred. The case was concerned with provisions of section 6(1) of the Law Reform (Limitations of Actions, etc) Act 1954 which were to the following effect:

"No action of damages where the damages claimed consist of or include damages or solatium in respect of personal injuries to any person shall be brought in Scotland against any person unless it is commenced (a) in the case of an action brought by or on behalf of a person in respect of injuries sustained by that person, before the expiration of three years from the date of the act, neglect or default giving rise to the action."

The Lord Justice Clerk, Lord Wheatley, analysed the role of a minute of amendment in relation to the interruption of the limitation period provisions in section 6(1) as follows:

"The question has to be determined on the basis that this is a 'new' case. If it were not, the question would not arise. If this in fact was an entirely new case, then the action would be brought when the summons had passed the signet and had been served on the defenders (Miller v National Coal Board 1960 SC 376; Maclaren, Court of Session Practice, 317; Alston v McDougall, 15 R 78; and Stewart v North, 17 R (HL) 60 at 63). It should be noted that at and up to this point the Court in the person of the Judge is in no way involved. It seems to me therefore that the provisions of section 6(1) supra, which is designed to give fair notice to a defender that an action has been brought against him within the prescriptive period, are satisfied, and that the action is 'brought' within our procedure, when first steps in the judicial process are taken, namely when the summons has passed the signet and has then been served on the defender. As far as researches have gone, there has been no decided case to determine what is the corresponding point where an existing summons is amended by a Minute of Amendment. Manifestly in that situation it must be initiated by something within the judicial process. The lodging of a Minute of Amendment brings it into the judicial process. Intimation to the defender of the motion to the Court asking for the Minute to be received and answered within a specified period brings to the attention of the defender that the Minute of Amendment has been lodged, and it is at that point available to the defender. That seems to me to constitute fair notice. It is true that at that stage the amendment has not yet been allowed, and eventually may not be allowed, by the Court; but at least the prerequisite of fair notice has been satisfied within the judicial process in which the defender is already involved, and if this has been done within the triennium, then that is as near to equiparation of the service of a summons as the situation permits. In fact it goes even a step further, because the Court in the person of the Judge is brought into the procedure at the stage when it is asked to give authority for the Minute of Amendment to be received and to authorise answers to be lodged within a specified period, whereas in the case of a completely new action the Court in the person of the Judge is not involved in the corresponding part of the procedure."(at pages 250-251).

The point underlying the court's decision was summarised by his Lordship later on, at page 251, in the following terms:

"When fair notice within the judicial process and within the prescriptive period has been given, I consider that the purposes and the provisions of section 6(1) have been effected."

[8] The second of the two cases cited, and relied upon, by senior counsel for the pursuers, in the present case, was Kinnaird v Donaldson 1992 SCLR 694, a decision of an Extra Division in which the opinion of the court was delivered by Lord McLuskey. That case involved the consideration of the possible role of a minute of amendment in interrupting the prescriptive period provided for by section 6 of the Prescription and Limitation (Scotland) Act 1973. Section 6(1) of the 1973 Act (which in terms of para 1(d) of Schedule 1 applies to "any obligation arising from....a contract") provides inter alia as follows:

"If...an obligation to which this action applies has subsisted for a continuous period of five years -

(a) without any relevant claim having been made in relation to the obligation...

then as from the expiration of that period the obligation shall be extinguished."

Section 9 (1) of the 1973 Act, provides inter alia:

"In section 6... of this Act the expression "relevant claim" in relation to an obligation, means a claim made by or on behalf of the creditor for implement of an obligation, being a claim made -

(a)    in appropriate proceedings,..."

The proceedings, with which the Extra Division were concerned, had commenced in the Sheriff Court. They involved a dispute between parties in a business partnership as to how the assets of the partnership should be dealt with after its dissolution. The parties had in fact entered into an agreement about these matters which had become enforceable on the 30 September 1983. An action was raised by one of the partners against the other in 1985, in the Sheriff Court, in which certain remedies were sought. These proceedings made no reference to the 1983 agreement. In 1987 the pursuer in the proceedings lodged a minute of amendment which sought to add a crave seeking implement of the 1983 agreement. The record was amended in terms of this minute but the parties shortly thereafter jointly moved the Sheriff to declare the interlocutor dealing with the amendment as pro non scripto, which motion was granted. The record was, however, subsequently amended in terms of the minute of amendment in 1989. The defender pleaded that the pursuer's claim for payment under the 1983 agreement had been extinguished by the five year prescription in terms of section 6 of the 1973 Act. The Sheriff repelled that plea but the Sheriff Principal upheld it, on appeal, holding that the claim had prescribed on the 30 September 1988. The Extra Division reversed the decision of the Sheriff Principal holding that the lodging of a minute of amendment may amount to the making of a relevant claim within the terms of section 9(1) of the 1973 Act and that, in the circumstances of the present case, the lodging of the minute of amendment in 1987 had interrupted the prescriptive period. In reaching their decision, on the matter, the Extra Division applied the law as discussed by Lord Justice Clerk Wheatley in the case of Boyle supra. The essence of the matter was said to be the question of fair notice of a claim being made within the judicial process. That notice had been given by the lodging of the minute of amendment in 1987, whatever the position had been with regard to the motion being subsequently held to be "pro non scripto".

[9] In the present case the pursuers aver that the defects in the buildings were brought to their attention for the first time in November 2000. As previously noted, the action was signetted on 8 July 2002. The original Minute of Amendment was lodged on 24th March 2005. Lord Wheatley allowed the record to be amended in terms of the Minute of Amendment and answers thereto on 31 March 2006. Thus, it was submitted, on behalf of the pursuers, following the approach of the court in the cases just referred to, the prescriptive period of five years under section 6 of the 1973 Act had been interrupted by the lodging of the original minute of amendment. (It has to be noted that neither the fourth nor the fifth defenders opposed the lodging of that minute and they lodged answers thereto). The amendment procedure had taken some time to be completed before it was determined by Lord Wheatley. In the foregoing circumstances, prima facie, the position was that the prescriptive period of five years in relation to claims against the fourth and fifth defenders had not yet expired.

[10] Senior counsel for the fourth defenders opposed the receipt of the minute of amendment and in relation to the main point of the pursuers, at this stage, being what the effect of the amendment procedure in 2005/2006 was, had one point to make in response. It was this. The authorities relied upon by the pursuers did not avail them, it was said, in the circumstances of the present case because the amendment in the present case had, by reason of a decision of the First Division, not been allowed to be made. In that situation senior counsel contended that there had been no "relevant claim" made in terms of section 9 and for the purposes of section 6 of the 1973 Act. Senior counsel for the fourth defender seemed to seek to derive some support for this approach to matters from certain observations of Lord Ross in the case of Morrison v Scotstoun Marine Limited 1979 SLT (Notes) 76 at page 78. In that case the Lord Ordinary raised a question over the Second Division's approach in the case of Boyle. He did so in the following way:

"Speaking personally and with the greatest respect I find it difficult to understand how fair notice to a defender or a third party can be thought to have been given by the lodging of a minute of amendment which the court may never allow to be received and which, even if it is allowed to be received, may never be incorporated into the pleadings by the court's allowing the record to be amended in terms thereof. As a matter of procedure it is well recognised that the lodging of a minute of amendment per se achieves nothing. Before a minute of amendment can become a part of the pleadings in a case, the court must be asked: (1) to allow the minute of amendment to be received (and answered); and (2) to allow the record to be opened up and amended in terms of the minute of amendment (and answers). Unless and until motions to such an effect are granted, the minute of amendment which has been lodged in process has no effect on the pleadings. That being so, I find it difficult to appreciate how such a minute of amendment can be regarded as giving a defender or third party fair notice that a case has been made against him and a decree sought against him. However, the Second Division have said otherwise and their decision is binding upon me."

Whatever force there may or may not have been in the observations of Lord Ross on the decision in the case of Boyle, it is binding on me as it was on his Lordship. What is more, as has been seen, it was subsequently approved of, and applied by the Inner House in the case of Kinnaird. Senior counsel for fourth defenders apart from pointing out the difference which existed between the situation in the present case and the position which arose in the previous authorities, namely that the minute of amendment was in the event not allowed, on appeal, did not bring to my attention any further reason, in principle, why the decisions in those previous cases should not be applied in the present case.

[11] Senior counsel for the fourth defenders submitted that if the court were to be against him on the application of the Boyle and Kinnaird decisions to the present situation, and the matter then became one of the court exercising its discretion, or not, to allow the minute of amendment, then regard should be had to the following factors in relation to the procedural history of the case, which would point to the discretion being exercised by refusing the motion.

[12] The original minute of amendment had been lodged in March 2005. The decision of the First Division was issued in January 2007. The pursuers had then taken until October 2007 to lodge a fresh minute of amendment which was, to all intents and purposes, the same as the minute of amendment now before the court. There had been further delay after Lord McEwan had refused to allow that minute of amendment to be received. There was prejudice to the defenders due to the delay arising from the passing of time from the events giving rise to the alleged claim. Senior counsel for the fourth defenders, however, conceded that he was not able to say that the minute of amendment, in any material sense, altered the basis of the claim advanced against these defenders at the closing of the record. It could not be argued that a "radically new claim" would be introduced if the amendment were to be allowed. If the minute of amendment was refused to be received it may be that the pursuers would have a remedy against the legal representatives who were responsible for the mistake which necessitated amendment being sought.

[13] Senior counsel for the fourth defenders informed the court that in their answers to the minute of amendment allowed by Lord Wheatley the fourth defenders had introduced averments and a plea regarding prescription. These would be reintroduced if the proposed minute of amendment was allowed to be received and answered.

[14] Junior counsel for the fifth defenders adopted the submissions made on behalf of the fourth defenders and invited me to refuse the pursuer's motion. He also advised the court that if the minute of amendment was allowed to be received and answered it was likely that the fifth defenders would introduce averment and pleas regarding prescription.

[15] In reply senior counsel for the pursuers addressed the question of delay and prejudice. He pointed out that some delay in the matter arose due to a delay by the Lord Ordinary dealing with the first minute of amendment in issuing his judgment in relation thereto. Further delay was caused by the time it took for the matter to be dealt with and decided by the First Division. The pursuers had then sought leave to appeal to the House of Lords, which was refused in April 2007. There had been a change of agents for the pursuers, once the question of the original proceedings having been raised in the name of the wrong pursuers became a live issue. The agents now acting for the pursuers, as from June 2007, put the other parties on notice that they may wish to revisit the question of lodging a minute of amendment. It had been hoped that the position of the second defenders could be dealt with by renouncing probation against them. That approach had been rejected by Lord McEwan. The agents originally instructed for the pursuers and their insurers had had to be kept abreast of all developments. Discussions between the pursuers and the second defenders as to how the second defenders might be removed from the proceedings had taken some time but had culminated in the minute of abandonment. These factors provided a reasonable explanation for the delays which had arisen. Senior counsel for the pursuers recognised that if the amendment were to be allowed the remaining defenders in answering it, may wish to oppose the record being amended in terms of the minute of amendment because of questions of prescription. That should not however for the time being, prevent the court allowing the minute of amendment to be received and answered.

Decision

[16] I have reached the conclusion that the principal point taken by the fourth defenders, and adopted by the fifth defenders, in discussion before me, is unsound. I cannot see any reason, in principle, as to why the reasoning of the cases of Boyle and Kinnaird should not be applied, as regards the effect of the original minute of amendment being allowed to be received in March 2005. Both of these decisions made it clear that the relevant limitation or prescriptive period may be interrupted by virtue of fair notice being given in existing proceedings before the court as to a new basis of claim. Those cases are clear authority to the effect that such fair notice may be given by the lodging of a minute of amendment in existing court proceedings. It is the giving of the notice which interrupts the limitation or prescriptive period - not the outcome of that notice. Just as the raising of an action, which is subsequently dismissed, as irrelevant, nonetheless, interrupts the prescriptive period in relation to the claim on which it was based, so that a further action may be brought in relation to the same claim, provided it is brought within the prescriptive period running from the date of the bringing of the original action, so too, in my judgment, applying the reasoning in the cases of Boyle and Kinnaird a minute of amendment, once lodged, can be said to have interrupted the prescriptive period, although subsequently refused, since the appropriate notice of the claim has been given. The submission made on behalf of the defenders is in stark contradiction to what Lord Justice Clerk Wheatley said in Boyle for, as will be seen from the passage cited above, his Lordship, at page 251, acknowledged that the lodging of the minute of amendment was sufficient to interrupt the prescriptive period, even though it may not be subsequently allowed. This he did by remarking "it is true that at that stage the amendment has not yet been allowed and eventually may not be allowed by the court; but at least the prerequisite of fair notice has been satisfied within the judicial process in which the defender is already involved....". (emphasis added). The argument advanced by senior counsel for the fourth defenders in the present case was similar to that unsuccessfully advanced on behalf of the defender in the Kinnaird case and which the court described as being "bizarre" namely that the recalling of the original interlocutor allowing the Minute of Amendment by the Sheriff had "de-interrupted" the prescriptive period (see the opinion of the court at page 703 E-F).

[17] For the foregoing reasons I reject the argument advanced by the fourth defenders and adopted on behalf of the fifth defenders, regarding the effect of the original minute of amendment. (I should add that senior counsel for the fourth defenders did not seek to distinguish the present case from the position in Boyle or Kinnaird on the footing that in neither of those cases was the minute of amendment concerned with the substitution of a new pursuer and I express no opinion one way or the other, as to whether that might be a point of distinction with any materiality).

[18] I, therefore, turn to the question as to whether I should exercise my discretion in favour of allowing the minute of amendment to be received, on the footing that, prima facie, on the present averments, the claims which are made against the remaining defenders have not prescribed and that the prescriptive period in relation to claims against the remaining defenders has been interrupted by the lodging of the original minute of amendment. In his judgment, in the present case, the Lord President at page 302, in dealing with an argument made on behalf of the fifth defenders, that the original Minute of Amendment should not be allowed because of the delay in bringing it, observed as follows:

"In my view the argument of counsel for the fifth defenders falls to be rejected. Delay will not in itself justify the refusal of amendment. There must be prejudice or some other material disadvantage to the other party. In Thomson v Glasgow Corporation the amendment was sought after proof had been led. In Wood, Cork v Glasgow Health Board and Britton v Central Regional Council the allowance of amendment would have involved the discharge of an imminent proof. Nor am I satisfied that the proposed amendments involve a basic change in the pursuers case against the fifth defenders; it involves merely a modification or particularisation of that case."

It has already been noted that the Lord President clearly envisaged the possibility of the pursuers bringing a fresh minute of amendment as they have now done (see Lord President's opinion at page 300). That the preparation and presentation of that fresh Minute of Amendment took as long as it did, and that when it was originally presented it was done so when the obstacle of the second defenders remaining as parties to the action had not been addressed, is regrettable. Nonetheless some explanation has been given for that state of affairs and the fact of the matter is that counsel for the fourth defenders frankly could point to no prejudice to the defender apart from delay, and in particular, frankly conceded that the minute of amendment involved no basic change in the substance of the matter. There has been no substantive procedure in this case, such as a debate or proof. Such delay as there has been has arisen from the necessity to seek to amend to bring in the correct pursuer and the defenders' resistance to that. The defenders have been on notice since 2005 of the problem with regard to the party in whose name claims have been brought. In all the foregoing circumstances I have reached the conclusion that it would be appropriate for me to exercise my discretion by granting the pursuers' motion and allowing them to lodge their minute of amendment, number 52 of process, to appoint the remaining defenders to lodge answers, if so advised, within 28 days, and to allow a period of adjustment on the minute of amendment and answers.


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