Latest civil cases, including proof by affidavit; appeals; family actions; derivative proceedings; res judicata; recovery of documents; pursuers' offers; expenses

Proof by affidavit

It is difficult to categorise Neill v Neill [2020] SAC (Civ) 10 (28 May 2020). There were a number of issues, some outwith the ambit of this article. However, consideration of the Sheriff Appeal Court’s opinion seems to me to emphasise why it is important to get the procedure right!

The issue I wish to cover here is the ground of appeal directed at the sheriff allowing additional affidavits to be lodged which had not been seen by the opponent, following the case going to avizandum. Affidavit evidence of the merits had been allowed. Whilst OCR, rule 33.28(1) and (2) permits such a course, it is unclear whether the relevant interlocutor specified that this was on the basis that the action was undefended on the merits. This might have provided a solution to the problems facing the Appeal Court, as the court observed that while the pursuer and the sheriff appeared to think the action had been allowed to proceed as undefended on the merits, this had not occurred.

Proof at large had been allowed. Accordingly, the defender was allowed to challenge the content of these affidavits at proof and indeed was allowed to receive intimation of any affidavit lodged in order that the content could be challenged. As an aside, it appears that even the original affidavits had not been intimated. In any event, the situation arose as a consequence of the sheriff being unsatisfied with the affidavit evidence so far as enabling decree of divorce to be granted. The sheriff clerk emailed the pursuer’s agent advising that the sheriff was “unable to ascertain which party was at fault”, and suggesting amending the grounds of divorce. This proposal was initially adopted, but rather than wait for the defender to confirm consent, the pursuer’s agent simply lodged supplementary affidavits. They were not intimated to the defender’s agent albeit the agent was advised of the lodging. In his judgment, the sheriff took account of the subsequent affidavits. The question was whether this process and the defender’s inability to dispute the content of the affidavits had a bearing on the sheriff’s decision on the financial craves.

The Sheriff Appeal Court determined that the procedure was contrary to natural justice, with evidence being presented behind the opponent’s back. As to whether it vitiated the determination on financial issues, if the action had been allowed to proceed as undefended on the merits, the court might well have decided that this unusual procedure did not vitiate that determination. However, it could not compartmentalise the evidence in the further affidavits to the merits alone, as the sheriff formed an adverse view of the defender. Accordingly, the court considered the case of new.

Appeals

In WPH Developments v Young & Gault LLP (in liquidation) [2020] SAC (Civ) 7 (4 August 2020) both parties moved the court to remit the appeal to the Inner House in terms of s 112 of the Courts Reform (Scotland) Act 2014. In acceding to the joint motion, the court noted that the House of Lords and UK Supreme Court had on three occasions considered the operation of s 11 of the Prescription and Limitation (Scotland) Act 1973. The instant case raised a distinct issue. It was beneficial if there was certainty as to the operation of the legislation in these circumstances. Amendment to the provisions added to the uncertainty. Accordingly, the appeal raised a complex point of law and thus satisfied the first stage of the test as to whether an appeal should be remitted.

Considering whether to exercise the court’s discretion in favour of granting the motion, the intention of the 2014 legislation was to limit onward appeals from the Sheriff Appeal Court to the Court of Session. The court observed that a crisp point of law which was novel or complex might well be suitable. The possibility of the matter ultimately being considered by the Supreme Court was also a factor, as was the raising of a point of wider interest which would have general application. In the circumstances, the motion was granted.

Family actions: decree by default

Decisions on decree by default are of necessity fact specific. In A v A [2020] SAC (Civ) 9 (17 July 2020) the decree was granted at a pre-proof hearing in early 2020 as a consequence of the defender failing to appear or be represented. As a result the divorce action was allowed to proceed as undefended. The action had been instituted at the end of 2017. The Sheriff Appeal Court noted that the merits of the divorce could not realistically be challenged and had been met by disingenuous averments in response. The defender’s claim for a capital sum remained vague and provided no basis for an award in terms of the Family Law (Scotland) Act 1985. No proper explanation was given for the inadequacy of the defender’s case. The pursuer was entitled to resolution of her divorce action within a reasonable time.

Interestingly, the court observed that a litigant’s failure to challenge inadequate averments at debate did not constitute acceptance of their constituting a statable case in law. It was a perfectly valid tactical decision and there was no obligation to point out the deficiencies of an opponent’s averments. As an aside, is litigation by ambush still alive?

An attempt to withdraw a concession made in a note of argument prepared for the appeal was also refused, as it was made in the course of the appeal process and related to the pleadings as opposed to an incidental matter.

Derivative proceedings

The procedure for leave to pursue derivative proceedings was examined by the Sheriff Appeal Court in CJC Media (Scotland) v Sinclair [2020] SAC (Civ) 11 (3 August 2020). The sheriff at first instance had granted leave to raise such proceedings on consideration of the initial writ. On appeal it was held that this interlocutor was not competent, as OCR, rule 46.1 and s 266 of the Companies Act 2006 required the application to be served on the company if it was considered that there was a prima facie case for leave to be granted. If the company wished to be heard on the application, it required to lodge written submissions within 21 days of service.

This procedure had not been followed, but was an essential prerequisite. It was not a procedural nicety. It was conceded that notwithstanding the incompetency, it was open to grant retrospective leave and the Appeal Court was content to proceed on that basis. However it did not consider it was an appropriate case to grant leave. The company’s two directors had fallen out. They had pursued separate interests thereafter. Whilst the other director was in breach of his duties to the company, to grant leave and an order for indemnification for expenses provided a privilege to one member at the expense of the other. The court did not consider that a disinterested director would have insisted on raising proceedings.

Res judicata

In Chief Constable of the Police Service of Scotland v XY [2020] SC ABE 42 (1 September 2020) a plea of res judicata was taken to an application for a risk of sexual harm order. Many of the facts founded on had been the subject of prior referral proceedings. Sheriff Miller observed that whilst they could both be described as “manifestations of the state”, two public officials did not necessarily fall to be regarded as the same party for the purposes of res judicata. Here the reporter and the chief constable were different when regard was had to their focus and interest in the context of the proceedings they pursued.

Recovery of documents

Although ultimately Sheriff Cubie’s decision in XY Council [2020] SC GLA 40 (15 November 2019) related to possible contempt arising from the unilateral redaction of documents produced following the approval of a specification of documents and commission and diligence for their recovery, in considering that issue he examined the procedure regarding recovery and it is worth drawing attention to these observations.

Sheriff Cubie noted that the purpose of the procedure is to enable a court to monitor and decide on the relevance, admissibility, or confidentiality of material sought to be recovered and indeed ultimately recovered. If the haver is of the view that documentation, for which commission and diligence for recovery has been granted, is confidential, it still has to be produced.

The court then determines what is and is not confidential having considered the material. If the documentation is confidential, the court excludes it from disclosure or authorises redaction. The havers have no rights unilaterally to carry out redaction of any document which comes within the ambit of any calls in the approved specification, or to determine what can or cannot be produced if the documentation falls with that ambit. Sheriff Cubie applied his observations equally to any application in terms of the Administration of Justice (Scotland) Act 1972. He further observed that if production was sought under the data protection legislation, the haver could unilaterally redact documents produced.

In Hannaway v Discount Trade Windows [2020] SAC (Civ) 8 (19 August 2020) the Sheriff Appeal Court considered the refusal of an application in terms of s 1 of the 1972 Act in which the pursuer sought recovery of an insurance policy. The pursuer held a decree against the first defenders for damages in respect of personal injuries sustained in an accident. He averred that he intended to raise an action against their insurer to satisfy the decree. The company was not a relevant person in terms of the Third Parties (Rights against Insurers) Act 2010, as no insolvency procedure had been undertaken against it, nor had it been removed from the Register of Companies.

While the pursuer had disclosed the nature of the proposed claim and a reasonable basis for it, the Appeal Court did not consider there was a likelihood of proceedings being instituted. There was a clear obstacle to any action, as the company was not a relevant person in terms of the 2010 Act. The court had no indication when that position would change. The pursuer had been partly responsible for this state of affairs by opposing an application to remove the company from the register. He could initiate insolvency proceedings, but had provided no explanation why he had not. As the purpose of the proceedings was to ascertain whether the insurers had a defence under the insurance contract, it could not be said that the action was more likely than not to be raised. The court refused the appeal.

The court also observed that it had difficulty understanding the insurers’ reluctance to release the policy. Any question of confidentiality could be addressed by redaction or lodging the policy in a confidential envelope. The diligence was not a fishing one, as the basis for action was clear. The purpose was to assess the strength or otherwise of the insurers’ defence. As a final comment, it is interesting to contrast Sheriff Cubie’s observations regarding a haver redacting a document with the comment in the Sheriff Appeal Court’s opinion.

Pursuers’ offers

The issue in Davidson v Clyde Training Solutions [2020] SC EDIN 34 (3 August 2020) was whether the pursuer’s offer had been effectively withdrawn, thus preventing the defenders subsequently accepting it. In terms of OCR, rule 27A.3(3) such an offer could be withdrawn by the lodging of the appropriate minute. No such minute had been lodged. The offer was purportedly withdrawn by an email to the court.

Sheriff McGowan considered that while OCR, rule 22A introduced the new phenomenon of pursuers’ offers, their purpose was to facilitate settlement and thus he could consider the pre-existing law relating to tenders. A tender could be treated as no longer open for acceptance by reason of any important change of circumstances known to both parties, albeit there had been no formal withdrawal. In the instant case, the pursuer’s offer was to be treated as lapsed. Considering the law of contract, the same conclusion was reached. In this case, the defenders had rejected the pursuer’s offer, which resulted in that offer being unavailable for later acceptance.

The Sheriff Appeal Court examined pursuers’ offers in Wright v National Galleries of Scotland [2020] SAC (Civ) 12 (27 August 2020). The pursuer had failed at first instance but had succeeded on appeal, the award exceeding the figure set out in a pursuer’s offer at first instance in terms of rule 27A. The Appeal Court considered that it could be substituted for the sheriff in rule 27A.8(1). It had pronounced the relevant judgment in overturning the decree of absolvitor with an award to the pursuer. The circumstances were quite different from those considered by the Inner House in Anderson v Imrie 2019 SC 243. The purpose of rule 27A was to provide a means to facilitate settlement and it mattered not whether the judgment which was at least as favourable was pronounced at first instance or on appeal, provided the offer had been made prior to proof. The relevant period for the purpose of the uplift ran from the date by which the offer could reasonably have been accepted until the judgment.

Expenses

In Keenan v EUI Ltd [2020] CSOH 89 (15 October 2020) the pursuer had sued for £1,250,000. The action settled for £43,500 inclusive of interim damages. The motion for the expenses of the action to date was opposed by the defenders, who sought a modification of expenses to the date of tender to nil with an award in their favour thereafter. Failing this, expenses should be restricted to the sheriff court scale. Before the action was raised, the defenders had offered the sum eventually tendered. The pursuer’s quantification of claim lodged in process exceeded £1,100,000. Two months before the proof was due to commence, the defenders intimated surveillance footage taken over a four-year period. A minute of amendment was subsequently intimated referring to this footage, followed shortly thereafter by the tender which was accepted six days later.

Lord Weir concluded on the authorities that there were a number of clear principles. Litigation should not be commenced or prolonged unnecessarily. Notwithstanding a tender required an offer to pay expenses, this did not bind a court’s discretion in determining expenses. All relevant material would be considered, including a party’s conduct. In the absence of proof it was difficult properly to make a finding of dishonesty such as would justify departure from the normal rules relating to tenders. The sum at which an action settled could be taken into account.

Lord Weir considered that he could not reach a firm conclusion that the pursuer had been dishonest about the effects of her symptoms so as to justify departure from these normal rules. The only conclusion he felt able to reach was that when the tender was lodged, the pursuer considered there was a considerable litigation risk that the tender could not be beaten. The pre-litigation offer had only been open for acceptance for a limited period, after which it was considered to be withdrawn. At that stage, the pursuer was still investigating the value of her claim. Lord Weir further did not consider that modification to the sheriff court scale was appropriate. At that stage, the information available justified raising the action in the Court of Session.

Update

I seem to have missed this but Santander Consumer (UK) plc v Creighton; Santander Consumer (UK) plc v Simpson (January article) has been reported at 2020 SLT (Sh Ct) 61.

The Author

Lindsay Foulis, sheriff at Perth

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