Scottish Court of Session Decisions

The pursuers in this action are Nigel Lowe & Associates, a firm, and Nigel D. Lowe, Phyl M. Lowe and Nigel Lowe (UK) Limited, the partners thereof. They conclude for a sum of damages on averments of breach of contract, or alternatively for a somewhat smaller sum on the basis of recompense. The defenders have a counterclaim in which they seek a sum of damages for breach of contract and a further sum on the basis of repetition. The parties have stated a number of preliminary pleas. When the case called before me on the procedure roll, I was invited to deal only with the matter of title to sue, which is raised primarily by the defenders' second plea-in-law (although some of the arguments came to be expressed in terms of the relevancy of the parties' respective averments on that matter).

In the instance the pursuers are identified as a firm, Nigel Lowe & Associates, and the three partners thereof, namely Nigel D. Lowe, Phyl M. Lowe and Nigel Lowe (UK) Limited. That is repeated in article 1 of the condescendence, which continues with an averment that the pursuers' business is the provision of consultancy services to employers, contractors and sub-contractors on all matters relating to construction contracts. The pursuers' averments in article 2 of the condescendence may be summarised as follows:

1. that the defenders were the works package contractor for the mechanical and electrical installation in a combined heat and power station being constructed at Manchester Airport Terminal 2 (which I shall call the "MAT2 contract");
2. that on or about 16 January 1992 the pursuers received a telephone call from the defenders' construction director inviting them to visit the defenders' offices with a view to their involvement as claims consultants to the defenders in respect of the MAT2 contract;
3. that a meeting took place on 28 January 1992 where discussion of such possible involvement took place;
4. that by letter dated 24 February 1992 (No. 5/1 of process) the pursuers made their final proposals for the services which they were prepared to carry out in connection with the MAT2 contract;
5. that by letter dated 28 February 1992 (No. 5/2 of process) the defenders accepted the pursuers' proposal, subject to certain qualifications;
6. that the pursuers replied by letter of 4 March 1992 (No. 5/3 of process) clarifying one matter; and
7. that the pursuers proceeded with the assignment.

The three letters mentioned are referred to for their terms and incorporated in the pleadings brevitatis causa.

The defenders' response to those averments is to admit the substance of them, except that all references in the pursuers' averments to "the pursuers" are reflected in the defenders' pleadings by references to "Lowe" (a term which the defenders define for the purpose of their pleadings as shorthand for Nigel Lowe, trading as Nigel Lowe & Associates). Answer 2 also includes a general denial. Whatever view a purist may take of that form of pleading, in which what is expressed as an admission is in part a contradiction of the other party's averments, it is in my view nevertheless a perfectly clear statement of the defenders' position. They admit that negotiations took place culminating in a contract for the provision to them of claims consultancy services on the terms averred by the pursuers, but they deny that the pursuers were party to the negotiations and contract, and aver that instead the negotiating and contracting party was Mr Lowe as an individual using the trading name "Nigel Lowe & Associates".

The basis for the defenders' position is to be found, in the first place, in the terms of the correspondence founded on by the pursuers, to which I shall return shortly, and, in the second place, in the averment which the defenders make in Answer 2 to the effect that proceedings in relation to another claim under the same contract were raised in Perth Sheriff Court in name of Nigel Lowe trading as Nigel Lowe & Associates. In response to the latter point, the pursuers aver in article 1 of the condescendence that the pursuers were wrongly designed in the proceedings in Perth Sheriff Court. They aver that they have been a partnership since 1 March 1988. The pursuers make the following further averments (at page 5B-C of the Closed Record (as further amended)):

The additional point is then made that the defenders did not dispute that the pursuers were the contracting party until they lodged a Minute of Amendment on 20 March 1997, in terms of which the Record was amended on 12 October 1997.

The letters of 24 February and 4 March 1992 (Nos. 5/1 and 5/3 of process respectively) were both written on a letterhead bearing the name "Nigel Lowe & Associates". At the foot of the page, in a position in which a list of partners would commonly be found on the notepaper of a partnership, there appeared the name "N. D. Lowe, F.Inst.C.E.S., A.C.I.Arb., M.B.I.M., F.F.B.", together with the names of two "associates", J. Hunter and J. T. Wright. In the text of the letters, "I" and ""we" were used indiscriminately. The earlier letter was signed "Nigel D. Lowe" over the typed words "N. D. Lowe, NIGEL LOWE & ASSOCIATES". The later letter was signed "Nigel" over the same typed words.

Against that background of averment the defenders' second plea-in-law is in the following terms:

Mr Brailsford, for the defenders, moved me to sustain that plea and dismiss the action. Failing dismissal, he submitted that the appropriate course to follow was to allow a preliminary proof on the pursuers' title to sue. The primary submission advanced by Mr Ellis for the pursuers was that the defenders' plea could not be sustained without inquiry, and that accordingly a preliminary proof on the question of title to sue should be allowed. He also advanced a submission (which appeared to me to be logically prior to his primary submission) that the defenders' second plea-in-law could and should be repelled on the ground that it was not supported by adequate averments.

Mr Brailsford submitted that it was for the pursuers to set out in averment the basis on which they claimed to have title to sue. He pointed to the terms of the correspondence founded on as indicating prima facie that the contracting party was Nigel D. Lowe as an individual using the trading name "Nigel Lowe & Associates". That was primarily because under the letterhead setting out that name there appeared reference to N. D. Lowe, apparently as principal. The term "associates" was not one of fixed meaning, and in any event the associates named were not the persons now said to be partners in the pursuer firm. There was nothing in the letterhead which gave any indication that the party to the correspondence was the pursuer firm. He drew attention to the provisions of the Business Names Act 1985. He did not claim that it gave any remedy to the defenders in the events which had happened, but relied on it as indicating the information which ought to have been given if the letters were letters of the pursuer firm. On their own averments the pursuers were a party to whom the provisions of the Act applied (see section 1(1)(a)). In terms of section 4(1)(a)(i), there required to be stated on all the pursuers' business letters the name of each partner. The letters Nos. 5/1 and 5/3 of process did not comply with that requirement. On the contrary, those letters were in a form which would comply with section 4(1)(a)(ii) if the party whose letters they were was Nigel D. Lowe trading as Nigel Lowe & Associates. The letters therefore bore to identify the contracting party as Nigel Lowe trading as Nigel Lowe & Associates. That was reinforced by the fact that the proceedings in Perth Sheriff Court were raised in that name. The pursuers' bare averment that they were the contracting party did not, in those circumstances, adequately explain the position. He relied on the following passage in Maclaren's Court of Session Practice at page 188:

(See also Macphail, Sheriff Court Practice, page 145, paras. 4-29 and 4-30.) In the circumstances the pursuers had not adequately set out their title.

Mr Brailsford advanced a further submission to the effect that the pursuers' averments of a previous course of dealing with other companies in the Mowlem Group were lacking in specification and should therefore not be admitted to probation. It was not made clear, he said, what was meant by the Mowlem Group. The companies with which the pursuers claimed to have had previous dealings were not identified. Nor were the directors of those companies who were said to be directors of the defenders as well. The nature and date of the previous dealings relied upon was not explained, nor was it indicated how it had been made clear that the pursuers were a partnership. There was no adequately detailed basis for the assertion that the fact that Nigel Lowe & Associates was the pursuer partnership was common knowledge in the group of companies to which the defenders belong. Those averments should therefore be excluded from probation, if any proof was to be allowed. In any event, Mr Brailsford submitted, any knowledge that the defenders might have had about the identity of the pursuer firm in previous dealings was not relevant to the issue in the present case, which was whether the pursuer firm was the party which had entered into the contract now in question.

In support of his submission that the pursuers had made relevant averments of their title to sue, Mr Ellis pointed to the fact that they had averred unequivocally that they were the party that had entered into negotiations with the defenders and contracted with them to provide claims consultancy services in connection with the MAT2 contract. If those averments were well founded, the pursuers' title to sue was plain. In face of those averments, it could not be said that the pursuers were bound to fail to establish their title to sue. The defenders' second plea-in-law therefore could not be sustained at this stage. The issue was not whether the pursuers existed as a firm, but whether that firm, rather than Mr Lowe as an individual, was the party to the contract with the defenders. The point made by the defenders by reference to the Business Names Act 1985 and the form of the letterhead used for the correspondence on which the pursuers relied could not be regarded as demonstrating conclusively that the contracting party was Mr Lowe as an individual. It was open to the pursuers, despite the terms of the correspondence, to maintain their position that they, not Mr Lowe as an individual, were the contracting party. Mr Ellis referred to Bovis Construction Ltd v Whatlings Construction Ltd 1994 SLT 865 in which Lord President Hope, after referring to the ordinary rules for the construction of contracts, which exclude reference to extrinsic evidence in the absence of ambiguity, but recognise the legitimacy of looking at the surrounding circumstances in interpreting the words used by the parties in the contract, went on to say (at 869H-K):

It was therefore open to the pursuers to seek to prove that, notwithstanding any contrary inference that might be drawn from the form of the correspondence, they were the party that had contracted with the defenders. Apart from the principal averments that they were the contracting party, their averments that they had been a partnership since March 1988 and that the raising of the Sheriff Court proceedings in Mr Lowe's name was a mistake were relevant averments in support of their position. Moreover, the defenders' knowledge of the fact that Nigel Lowe & Associates was a partnership was a relevant part of the surrounding circumstances, and the averments of a prior course of dealings between the firm and companies in the Mowlem Group from which an inference might be drawn that the defenders had such knowledge were in principle relevant to the issue of title. The defenders' second plea-in-law could not be sustained without first giving the pursuers the opportunity to prove their averments.

Mr Ellis recognised the force of Mr Brailsford's submission that the averments at page 5 B-C were lacking in specification. He pointed out, however, that the specification point had been taken for the first time in the course of Mr Brailsford's submissions, and had not been foreshadowed in the defenders' pleadings or in their Note of Arguments. He indicated that the pursuers would be in a position to make those averments more specific, and that if proof on the question of title was allowed leave would be sought to amend to do so.

Mr Ellis then turned to his submission that the defenders' second plea-in-law could and should be repelled at this stage. He relied on the following passage in Maclaren's Court of Session Practice at page 381:

Here the defenders had not made adequate averments explaining the basis on which they took up the position that the party to the contract was Mr Lowe trading as Nigel Lowe & Associates rather than the firm. In the absence of such averments, the mere denial that the pursuers were the contracting party and the assertion that Mr Lowe as an individual was the contracting party constituted an insufficient foundation for the plea to title. That plea should therefore be repelled without inquiry.

It is convenient to deal with that last point first. I am satisfied that the defenders' second plea cannot be repelled at this stage. The pursuers' title to sue depends on their assertion that they, the firm, entered into the contract to provide the defenders with claims consultancy services in connection with the MAT2 contract. An averment that the firm was not the contracting party seems to me, therefore, to be a proper basis for a plea of no title to sue. Apart from the assertion that the contract was with Nigel Lowe trading as Nigel Lowe & Associates, the defenders rely on two particular matters as supporting their objection to the pursuers' title, namely (i) the fact that the contractual correspondence emanating from Nigel Lowe & Associates was on a letterhead which by reference to the requirements of the Business Names Act 1985 could be construed as supporting the inference that that was a trading name of Mr Lowe as an individual, not the firm name of the pursuers, and (ii) the fact that another action in relation to the same contract was pursued in name of Nigel Lowe trading as Nigel Lowe & Associates. It seems to me to be clear that in these matters the defenders have identified a sufficient basis for their objection to the pursuers' title to pursue this action.

Conversely, I am of opinion that the defenders' second plea-in-law cannot be sustained without inquiry. The fundamental obstacle to sustaining that plea at this stage is the pursuers' unequivocal averment that they, the firm, were the party that contracted with the defenders. If that averment is established, the challenge to their title must fail. There is, in my view, force in the defenders' submission that, when regard is had to the requirements of section 4 of the Business Names Act 1985, it may be inferred that "Nigel Lowe & Associates" was a trading name of Mr Lowe as an individual, not the firm name of a partnership among Mr Lowe, Phyl M. Lowe and Nigel Lowe (UK) Limited. But that, in my view, is an inference which the pursuers are entitled to seek to displace. Section 5 of the Act provides a limited civil remedy for breach of section 4, but the defenders do not claim to be entitled to any such remedy. I see no basis for holding that a party to whom the Act applies is disabled from confessing to a breach of the requirements of section 4, and establishing (contrary to the appearance of the correspondence) its true identity. The pursuers are in my opinion free to prove if they can that at the material time the business carried on under the name Nigel Lowe & Associates was carried on by the firm. The defenders' reliance on the 1985 Act and the form of the letterhead used by Nigel Lowe & Associates does not in my opinion render irrelevant the pursuers' averments to the effect that the firm was the contracting party. The averment that the pursuers have been a firm since 1988 is in my view relevant to that issue. The averment that the designation of the pursuer in the Sheriff Court action as Nigel Lowe trading as Nigel Lowe & Associates was wrong is in my view a relevant answer to the defenders' reliance on inference from that designation in that action. In my opinion the pursuers have made relevant averments in support of their title to sue, and consequently the defenders' second plea cannot be sustained without inquiry.

I have come to the conclusion that averments about previous dealings between the pursuers and companies in the Mowlem Group in support of the inference that the defenders were aware that Nigel Lowe & Associates was a firm name, if sufficiently specific, are in principle relevant. I was originally attracted to the view that since the identity of the contracting party was a matter of fact, averments bearing on the defenders knowledge were irrelevant, but on reflection I take the view that it cannot be said that evidence about a previous course of dealings with the Mowlem Group, and any knowledge that may as a result be imputed to the defenders as to the identity of the party trading under the name Nigel Lowe & Associates, could have no bearing on whether the assertion that the firm was the contracting party on this occasion is accepted or rejected. I would therefore not exclude the averments at page 5B-C of the Closed Record (as further amended) from probation on the ground that they are irrelevant.

Mr Ellis accepted, however, that those averments were lacking in specification. I was not impressed by all of the points taken by Mr Brailsford about specification. For example, I do not consider that the defenders can claim to be prejudiced by the pursuers' failure to specify what they mean by the "Mowlem Group". On the other hand, the pursuers' failure to specify (i) the companies in the group with whom they say that they had prior dealings, (ii) the directors said to be common to those companies and the defenders, (iii) the date and nature of the previous dealings, and (iv) how those dealings brought home to those concerned that Nigel Lowe & Associates was the name of the firm rather than the trading name of the individual, all seem to me to be legitimate subjects of complaint. I note what Mr Ellis said about the defenders' failure to focus this point before the hearing on the procedure roll, and about the pursuers' ability to improve the specification of the averments. It seems to me, however, that the appropriate course for me to take is to deal with the averments as they stand. They are, in my view, lacking in specification, and should not be admitted to probation. It is open to the pursuers, if so advised, to tender a minute of amendment proposing the introduction of properly specific averments on the matter. If and when they do so, their motion to amend will fall to be considered on its merits. As matters stand, I shall exclude the averments from probation.

In the result, therefore, I hold that before the defenders' second plea-in-law can be sustained or repelled it will be necessary to allow a proof. The parties were agreed that in that event it would be appropriate to order a preliminary proof restricted to the issue of the pursuers' title to sue. I agree that that is the appropriate course. At the beginning of the debate, Mr Brailsford accepted that the defenders' first plea-in-law should be repelled. I shall accordingly (a) repel the defenders' first plea of consent, (b) sustain the defenders' fourth plea to the extent only of excluding from probation the pursuers' averments in article 1 of the condescendence at page 5 B-C of the Closed Record (as further amended) beginning with the words "Further explained and averred ..." and ending with the words "... Defenders form part", and (c) allow parties a preliminary proof before answer of their respective averments bearing on the question whether the pursuers were or were not party to the contract referred to on record.