Scottish Sheriff Court Decisions

A2373/98

The Sheriff Principal, having resumed consideration of the cause, allows the appeal and recalls the interlocutor of 28 October 1998 complained of; appoints the cause to a further continued options hearing on 23 April 1999 at 10.00 a.m.; finds the pursuers liable to the defenders in the expenses of the appeal; allows an account thereof to be given in and remits the same, when lodged, to the Auditor of Court to tax and to report.

The pursuers in this action are a limited company with a place of business in London. It appears that their business is the provision of travel and associated arrangements, mainly for backpackers. The defenders are also a limited company, with a place of business in Edinburgh. It appears that their business includes the provision of meals and entertainment services for persons such as the customers of the pursuers. In about September 1997 the pursuers and defenders entered into a contract whereby the defenders would provide group meals and entertainment for a party of some 700 people who were to visit Edinburgh during the period of the Hogmanay celebrations at the end of the year. In advance of the event the pursuers paid to the defenders the total agreed price of £16,450.00. However, it is now alleged that the meals which were in fact provided by the defenders were not of the kind contracted for, and in that situation the pursuers maintain in the present action that the defenders were in breach of contract. A sum of £8,225.00 is sought by the pursuers by way of damages.

The action was raised in June 1998, and at that stage both parties were represented by solicitors. After sundry procedure the cause called at a continued options hearing on 18 September 1998 at which time, as I was told, the then solicitor for the pursuers advised the court that she was having difficulty in obtaining instructions, and that she thought it likely that she would require to withdraw from acting for the pursuers. In that situation the options hearing was further continued until 2 October when the solicitor for the pursuers confirmed her intention to withdraw from acting. The sheriff permitted that to happen and, in accordance with rule 24.2 of the Ordinary Cause Rules, he fixed a peremptory diet for 28 October 1998, and directed the defenders to intimate a copy of the interlocutor of 2 October to the pursuers in the manner provided for in the Rules. The interlocutor pronounced by the sheriff on that date echoes the words of rule 24.2 and, inter alia, "appoints the defender [sic] to intimate a certified copy of this interlocutor upon the pursuers by recorded delivery in order that they may be present or represented at the next diet giving notice that if they fail to do so decree of absolvitor may be granted together with expenses".

That interlocutor was duly intimated to the pursuers, by the use of the Form G10 provided for in the Rules, but, when the diet called on 28 October, there was no appearance by or on behalf of the pursuers. In that situation the sheriff was moved to grant decree of absolvitor in favour of the defenders; and she did so. It is against that decision that the present appeal has been taken.

Before coming to the submissions which were advanced at the appeal hearing it is necessary to recount certain events which took place just before and after 28 October. It appears that the pursuers did receive the notice regarding the peremptory diet on 28 October and that the principal of that company, not realising that under ordinary procedure a limited company cannot represent itself and must be represented by an advocate or solicitor, intended to appear personally in court in order to state that he wished the action to proceed. However, he entered the wrong date in his diary, and did not arrive at the Sheriff Court until 29 October, by which time, of course, decree of absolvitor had been granted in favour of the defenders. I pause here to observe that in the circumstances it might not greatly have availed the pursuers if their principal had arrived in court on the correct date since of course he would have had no right of audience. However, given that the interlocutor which had been intimated to the pursuers echoes, as I have already noted, the terms of rule 24.2, and requires the pursuers to be "present or represented", it is, I suppose possible that in that situation the sheriff might have accepted that there had been a misunderstanding about rights of audience and therefore might have allowed the pursuers some further time to obtain representation.

Be that as it may, what in fact appears to have happened on 29 October was that the pursuers' principal advised a member of the sheriff clerk's staff that he wished to appeal against the decree which had been granted the previous day. It seems that he was then handed a blank Note of Appeal (Form A1) which he proceedeed to complete and to sign. That Note of Appeal was of course defective and incompetent in that, since the pursuers' principal was not a party litigant, he had no authority to sign and submit it. It is also arguable that the Note of Appeal was further incompetent, or at least vitiated, since it was never intimated by the pursuers to the defenders, contrary to what is required by OCR, r.31.4(4).

What happened thereafter, however, brings no credit to the sheriff clerk's staff at this court. The purported Note of Appeal, dated 29 October 1998, was accepted on that date and, moreover, the appropriate court dues, paid by the pursuers' principal, were accepted and in due course accounted for in the cashier's department. Furthermore, the sheriff who had pronounced the interlocutor of 28 October was asked to write a Note, and did so. However, the sheriff clerk concerned failed to note the marking of the appeal on the interlocutor sheet (as required by r. 31.4(8)); and failed to send written notice of the appeal to every party, and to certify on the interlocutor sheet that he had done so (as required by r. 31.5(2)).

In all of the foregoing circumstances the defenders, of course, were totally unaware of the fact that any kind of appeal had been marked against the interlocutor of 28 October, and on 12 November they obtained an extract of the decree contained in that interlocutor. Given that a Note of Appeal against that interlocutor had been lodged, and paid for, that extract decree should never, in my opinion, have been issued; but it seems that whoever issued the extract must have done so in ignorance of the fact that, at least ostensibly, the interlocutor in question was the subject of an appeal.

What appears to have happened next was that the pursuers then instructed their present solicitors and, around the beginning of December, my clerk brought the matter to my attention (though he seems to have been unaware of the fact that the interlocutor of 28 October had been extracted; and indeed that was not revealed to me until the hearing on the appeal). At the beginning of December my clerk advised me that Mr Simpson, the pursuers' solicitor, was anxious to proceed with the appeal though he recognised that in its then form it was probably incompetent. He had also indicated to my clerk that in any event he did not consider that the ground of appeal stated by the pursuers' principal in the Note completed on 29 October was either satisfactory or sufficient. At that stage I took the view that, had the original Note of Appeal been competent, it would have been open to Mr Simpson to amend the grounds of appeal in terms of rule 31.4(5). However, since the original Note of Appeal was in my view incompetent I suggested to my clerk that the only way forward would be for the pursuers to enrol a motion seeking leave to withdraw the original Note of Appeal and in effect to lodge a late Note of Appeal.

It seems that that suggestion was passed on to Mr Simpson, and he duly enrolled a motion (no. 7/2 of process) in which he moved me to allow the original Form A1 to be withdrawn, and to allow late lodging of a replacement Form A1, signed in this instance, of course, by himself. That motion duly came before me on 15 December 1998. The motion was opposed on behalf of the defenders but, having heard submissions on both sides, I concluded that the motion should be granted, albeit with a finding of expenses against the pursuers. It was as a consequence of that decision that the appeal hearing eventually took place before me on 18 March 1999.

I have set out the procedural history of this case in some detail because it is of importance in various respects in relation to the determination of this appeal. Needless to say, the first question which falls to be determined is whether the appeal is competent given the existence of the extract decree which was issued on 12 November 1998.

The leading contemporary authority on that matter is the Inner House decision in the case of Alloa Brewery Co Ltd v. Parker 1991 SCLR 70. In that case the primary question before the court was whether the so-called dispensing power, formerly contained in rule 1 of the 1983 Ordinary Cause Rules, and now contained (albeit in somewhat different terms) in rule 2.1 of the 1993 Rules, could be prayed in aid so as to allow a late appeal to be marked after the interlocutor in question had been extracted. That question was, of course, a somewhat different one from the question which has arisen in the present case - though it might well have arisen in the same form had I been made aware of the existence of the extract at the stage when I was considering the pursuers' motion to be allowed to depart from the original Note of Appeal, and in effect to appeal late. However, I do not consider it necessary to consider that particular point further since the underlying principle which was approved by the Court in the Alloa Brewery case is quite simply that "there can be no appeal against an extracted judgment" (see per Lord Clyde at p. 71B; see also Tennents v. Romanes (1881) 8R 824, per Lord President Inglis at p. 825).

At first sight the foregoing principle would indicate that the present appeal must be regarded as incompetent since, at least in its present form, the appeal was marked only after the interlocutor appealed against had been extracted. On that point Mr Simpson, for the pursuers, sought to argue that the present grounds of appeal are no more than a replacement for the grounds of appeal noted by the pursuers' principal on 28 October, and therefore are not struck at by the principle which I have mentioned. In my view, however, that submission ignores the fact that the present grounds of appeal are in existence only because, in response to the motion of the pursuers, I allowed them to be received though late. On that basis it must, I think, follow that the appeal, as it is presently before me, was marked after the date of the extract with the consequence that, at least prima facie, it is struck at by the rule that there can be no appeal against an extracted judgment.

However, there is also some authority for the proposition that the foregoing rule will not apply where there has been some irregularity in the issuing of the extract. Thus, in Anderson Brown & Co Ltd v. Morris 1987 SCLR 187 (the decision in which was apparently accepted by the Court in the Alloa Brewery case) it was held that, where a decree had been extracted after a motion to allow a late appeal to proceed had been lodged, the extract was incompetent with the consequence that the appeal could competently proceed. Again, in Gaunt v. Marco's Leisure Ltd 1995 SCLR 966 it was held to be appropriate to distinguish the Alloa Brewery case in circumstances where a decision by a sheriff had not been intimated to either of the parties, and where an extract of that decree was subsequently issued ex proprio motu by a sheriff clerk after the days for appealing against the interlocutor in question had expired.

In my opinion the present case bears some similarities to the two cases which I have just mentioned. In this case what purported to be an appeal was in fact lodged one day after the date of the interlocutor in question, and roughly two weeks before the issuing of the extract decree. It is true, as I have already noted, that the Note of Appeal was incompetent in certain respects; but, as I have also noted, it was never rejected by a sheriff clerk on that ground, and instead was acted on at least to the extent of accepting the appropriate court dues and to the extent of inviting the sheriff to write a Note. In those circumstances I am of the view that, despite the irregularity of the Note of Appeal, the sheriff clerk ought nonetheless not to have issued an extract decree. In that situation I am of opinion that, if the existence of the extract had been brought to my attention at the stage when I was being invited to exercise the dispensing power so as to allow a late appeal to be marked, I would have been entitled to distinguish the present case from the Alloa Brewery case for the reasons which I have just mentioned. For the same reasons I consider that the present appeal is distinguishable from those cases where it has been held that an appeal is not competent against an extracted decree. In the present case I consider that the extract was issued irregularly, and in that situation I am of opinion that it is competent for me to consider the present appeal on its merits. I therefore turn to do so.

Essentially, the submission advanced on behalf of the pursuers was that the failure to appear or be represented on 28 October had arisen through a simple error in relation to entering the correct date in a diary; that, by granting decree of absolvitor, the sheriff had denied the pursuers any further opportunity to pursue their claim against the defenders; and that the pursuers in any event had a statable claim which ought to be allowed to proceed to a judicial determination. In support of that submission the solicitor for the pursuers began by suggesting that the terms of the Note written by the sheriff suggest that she had failed to recognise that she had a discretion as to what to do in the absence of appearance by or for the pursuers. In my opinion, however, that criticism of the sheriff cannot be supported. At the time when she wrote her Note all that she had before her by way of grounds of appeal was the Note of Appeal which had been drafted by the pursuers' principal on 29 October. That Note simply states that there had been a mistake regarding the date of the hearing, and states a desire for the action to proceed. There is nothing there to suggest that the sheriff's decision might be challenged on the basis that she had not approached it as an exercise of discretion, and accordingly I do not consider that it can properly be assumed that she did not approach the matter in that way simply because she does not say in terms in her Note that she recognised that she had had a discretion to exercise.

The solicitor for the pursuers also submitted that the sheriff should in any event have been slow to move to a decree of absolvitor without giving the pursuers a further opportunity to appear at a later date; and in support of that proposition reference was made to Coatbridge Health Studios v. Alexander George & Co 1992 SLT 717, with particular reference to a passage in the opinion delivered by Lord McCluskey at p. 720K. That case, however, predated the arrival into ordinary cause procedure of the provisions which are now in Chapter 24 of the 1993 Rules, and which require continuation of a cause in circumstances where a party's solicitor withdraws from acting. There was no such provision under the former Rules, and all that Lord McCluskey was saying in the case referred to was that the practice now provided for under Chapter 24 ought generally to be followed where a solicitor withdraws rather than simply moving to the grant of a final decree by default. In the present case, however, Chapter 24 procedure had already, as I have earlier described, been followed prior to the peremptory diet on 28 October, and I therefore do not consider that the Coatbridge case provides any support for the proposition that the sheriff ought, as a matter of sound practice, to have continued the case yet again when the pursuers failed to appear or be represented on that date. In that regard I should also add that, like the Editor of the Scottish Civil Law Reports, I am inclined to think that it goes too far, as was suggested by the sheriff principal in McGowan v. Cartner 1995 SCLR 312, to hold that a sheriff should never grant a decree by default without giving the party concerned a further opportunity to appear and, as necessary, explain the default.

However, the fact remains that it will always be open to an appellate court to reconsider a decree by default, even where the granting of that decree cannot itself be open to criticism, if the court can be satisfied that the default is excusable and that the interests of justice in effect call for the case to be allowed to proceed (see Macphail, Sheriff Court Practice, 2^nd ed. para 14.12). In the present case the solicitor for the pursuers suggested that I ought to follow that course by virtue of the dispensing power contained in OCR, r. 2.1(1). In my opinion, however, that rule is apt only where there has been a "failure to comply with a provision" in the Rules, and I do not consider that a default by failing to appear or be represented at a peremptory diet can be so described. However, the inapplicability of rule 2.1(1) is really of no moment here since, as I have already mentioned, it is well established that an appellate court has in any event a discretion to consider the whole circumstances surrounding a default.

The solicitor for the defenders submitted strenuously that in the present case I ought not to exercise my discretion in favour of the pursuers. He suggested that, if one looks at the history of this case, it can be seen that the pursuers' failure to appear or be represented on 28 October is not simply an oversight standing alone but instead is the culmination of a course of errors and oversights which cumulatively have operated to the prejudice of the defenders. By reference to an inventory of productions lodged during the appeal hearing, and containing certain correspondence, it was submitted that, from a very early stage after the raising of the action, the solicitors for the defenders had been pressing the pursuers to provide some vouching in support of their claim, but this had produced no results. The quantification of the pursuers' claim, it was submitted, is entirely lacking in specification, and simply appears to pluck certain figures out of the air; and the absence of any response to requests for vouching has meant that the defenders are still unaware of the exact nature of the claim being made against them. In those circumstances, it was submitted, the pursuers really cannot now be heard to say that they have a statable claim against the defenders which ought to go to proof. Furthermore, it was also submitted, the defenders are likely to suffer prejudice if this case ultimately does go to proof because the additional passage of time may cause them difficulty in tracing witnesses and evidence necessary for such a proof.

I have to say that I share the anxieties expressed by the solicitor for the defenders in relation to the pursuers' averments of loss. While this is not the stage at which to express any final or concluded view on that matter, I have some difficulty in understanding how the present averments could ever lead to proof of actual loss; and it should be added that the solicitor for the pursuers himself conceded that, if this action is to proceed, some amendment of those pleadings will be required. On the other hand, the pursuers' case is not just about quantification of loss since it also, and a priori, contains allegations of breach of contract on the part of the defenders. As I understand it, it is not suggested that the averments relating to breach of contract are insufficient to show that the pursuers have a statable case; and to that extent at least it appears that the pursuers have a claim which may merit judicial examination.

The existence of a statable case has long been regarded as a consideration which may lead an appellate court to exercise its discretion in favour of allowing an appeal against a decree by default (see, for example, McKelvie v. Scottish Steel Scaffolding Co 1938 SC 278); and in the present case I am disposed to conclude that, notwithstanding that the pursuers' averments of loss are presently unvouched and lacking in specification, they nonetheless appear, at least prima facie, to have a case which ought to be allowed to proceed further. I also take note of the fact that the error which led to decree by default being granted on 28 October 1998 was, on its own, of a relatively minor kind which, as I have seen in other cases, can occur even in the case of otherwise careful and competent solicitors. Moreover, as I have already noted, the pursuers' principal took immediate, albeit incompetent, steps to try to restore the situation by marking an appeal on the day after the decree had been pronounced. Finally, I also take note of the fact that, although some nine months have elapsed since this action was raised, that is not an excessively lengthy period by comparison with some litigations; and it seems to me that, since this is essentially a fairly simple and straightforward action, it ought to be possible to bring it to a fairly speedy conclusion if it is now to be allowed to continue.

Taking all of the foregoing considerations into account, I consider that this is a case where I should exercise my discretion in favour of the pursuers. Consequently, I have allowed this appeal and I have recalled the interlocutor of 28 October 1998. So far as future progress of the action is concerned, I note that the action was still at the stage of a continued options hearing prior to the peremptory diet of 28 October. That being so, it seems to me that the appropriate course is for me to appoint the cause to a further continued options hearing so that the future course of the action can be determined; and I have done that. There remains, however, the matter of expenses. So far as that is concerned, the solicitor for the pursuers readily, and rightly, accepted that, even if the appeal were to be succesful, the pursuers would nonetheless be bound to meet the defenders' expenses in respect of the appeal. I have therefore found the pursuers liable to the defenders in those expenses.