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Cite as: [1999] ScotCS 300, 2000 SC 172

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EXTRA DIVISION, INNER HOUSE, COURT OF SESSION

C420/14(b)/98

Lord Coulsfield

Lord Osborne

Lord Morison

OPINION OF THE COURT

delivered by LORD COULSFIELD

RECLAIMING MOTION

in the causa

WAYDALE LIMITED

Pursuers;

against

D.H.L. HOLDINGS (U.K.) LIMITED

Defenders:

_______

Act: Dean of Faculty, G.J. Clarke; Paull & Williamsons

Alt: Sir Crispin Agnew of Lochnaw, Q.C., E.W. Robertson; Bennett & Robertson

15 December 1999

In this action, the pursuers, who are the present heritable proprietors of industrial subjects at Uddingston, seek to enforce payment under a guarantee granted by the defenders in respect of the obligations of tenants under a lease of the subjects granted by former proprietors of the subjects. The question of the enforceability of the guarantee was raised in an earlier action at the instance of the pursuers against the defenders, which was dismissed on 21 December 1995. The defenders in the present case have pled that the decision in the previous action constitutes res judicata for the purposes of the present action. The plea of res judicata went to debate before the Lord Ordinary. In the debate, the pursuers maintained, firstly, that a decree of dismissal could not constitute res judicata in any subsequent proceedings: and, secondly, that, even if a decree of dismissal could constitute res judicata, there were sufficient differences between the present action and the previous action to render the plea inapplicable. By his decision dated 19 November 1998, the Lord Ordinary held that a decree of dismissal was capable of founding a plea of res judicata, but that, in the circumstances of the present case, the earlier judgment was not res judicata for the purposes of this action. He therefore repelled the defenders' plea of res judicata. Subsequently, the Lord Ordinary granted leave to reclaim. The defenders have now reclaimed against the decision of the Lord Ordinary to repel the plea of res judicata and the pursuers, in a cross-reclaiming motion, maintain that the Lord Ordinary was wrong in holding that a decree of dismissal could form the basis of a plea of res judicata.

The circumstances are fully set out in the Lord Ordinary's opinion and it is only necessary to summarise them here. The premises were let by the Scottish Development Agency, the then proprietors, to Elan International Limited by a lease dated in 1990, although Elan had taken entry some time previously. The guarantee on which this action proceeds was granted by the defenders in favour of the SDA on 15 July 1987. By it the defenders guaranteed payment of the rent and all other sums due to the SDA and the performance of Elan's other obligations in terms of the lease. The defenders also granted another guarantee, in similar but not identical terms, in respect of the premises on an unspecified date in 1987. The pursuers purchased the premises from Scottish Enterprise, the statutory successors to SDA, in 1993. Elan went into liquidation in 1994 and the pursuers now seek payment in terms of various obligations, including an obligation in damages, alleged to be due by Elan. The pursuers contend that the guarantees were conceived not merely in favour of the landlords at the time when they were granted, the SDA, but in favour of anyone who might, from time to time, be the landlord. Alternatively, the pursuers contend that the benefit of the guarantees has been assigned to them by an assignation and supplementary assignation granted by Scottish Enterprise on 16 April 1996 and 11 February 1998.

The previous action was raised in 1995. In it, the pursuers relied on the dated guarantee but made no reference to the undated guarantee. In their averments, they maintained that, by virtue of their purchase of the heritable property, the whole rights of the landlords, including rights pursuant to the guarantee, had been transferred to them. The case was transferred to the commercial roll and, after a debate, Lord Penrose, on 21 December 1995, pronounced an interlocutor dismissing the action. In doing so, he upheld the defenders' first plea in law, which was a general plea to the relevancy and specification of the pursuers' averments. In support of that plea, the defenders had submitted two arguments. The first was that the benefit of the guarantee was not assignable without the consent of the guarantor: on that issue Lord Penrose accepted the defenders' arguments. The defenders' second contention was that, even if the guarantee was assignable, it had not been assigned, the position being that the pursuers did not aver that there had been any assignation in their favour and relied only on the disposition of the heritable subjects to them as entitling them to the benefit of the guarantee: Lord Penrose indicated that, had it been necessary, he would have upheld the defenders' argument on this point also.

The pursuers enrolled a motion for review of the interlocutor of 21 December 1995 and, in their grounds of appeal, challenged Lord Penrose's conclusions on both of the contentions argued before him. While the case was pending in the Inner House, the pursuers obtained the assignation from Scottish Enterprise dated 16 April 1996 and intimated it to the defenders, and lodged a minute of amendment in which they referred to the assignation. The defenders lodged answers in which they challenged the pursuers' right to rely for their title to sue on an assignation obtained after the commencement of the action. The pursuers, it appears, then took the view that that contention was unanswerable and that their previous argument to the effect that the conveyance carried the benefit of the guarantee was not likely to succeed. The pursuers then lodged a minute of abandonment but, in the event, only moved the Inner House to dismiss their motion for review of the Lord Ordinary's interlocutor and made no reference to the minute of abandonment. The pursuers' motion was granted unopposed. There was some discussion before us of the circumstances in which that course was followed: it may have been suggested by the court or by the clerk that the pursuers should not move to abandon but this point is not, in the end, in our view, material in regard to any of the issues before us.

The substantive questions in the present action, as in the previous action, are whether the benefit of the guarantee is assignable and whether it has been validly assigned. In very brief terms, what the Lord Ordinary held was that although the plea of res judicata could be founded on a decision to dismiss an action, such as the decision of Lord Penrose in the previous action, the averments as to the assignations which have been granted since Lord Penrose's decision in the previous action gave rise to a distinct matter of substance which was not considered in the previous action and therefore that the plea of res judicata was inapplicable. Because the case came before us on the defenders' reclaiming motion we first heard the defenders' submissions to the effect that the Lord Ordinary had been wrong to hold that the plea of res judicata was inapplicable and the pursuers' reply to that argument before we heard the pursuers' argument that the Lord Ordinary was in error in holding that a decree of dismissal could found the plea of res judicata. It would be possible to follow the same order in dealing with the reclaiming motion but there would be some artificiality in doing so. Further, the question whether a decree of dismissal can found a plea of res judicata is one of some general practical importance and we heard a full argument upon it. We therefore propose to deal with that question first.

In his opinion, the Lord Ordinary sets out very fully the arguments advanced by the parties and the authorities to which he was referred. The conclusion at which he arrived was expressed as follows:

"In the foregoing state of the decided cases I am not persuaded that it is a clear and settled rule that in all circumstances disposal by dismissal leaves open the bringing of another action in identical terms. The burden of authority is, in my view, to the effect that, where such disposal has been made without enquiry into and determination of the merits, the bringing of such an action is clearly open but where in defended proceedings there has been such enquiry and determination (as of a substantive issue of law), another such action is, or at least may be, excluded. The form of disposal is a material consideration as it may when read with the pleadings be indicative that there has or has not been a proper judicial determination of the subject in question (the first circumstance identified in Maclaren Court of Session Practice at page 396); but it is not itself determinative. It is true, as the Dean pointed out, that there are some examples in the books of the court taking the view that, a case being fundamentally irrelevant, decree of absolvitor should be pronounced. Feeney v. Dechmont Colliery Company (1896) 4 S.L.T. 210 (referred to in Lees - Notes on Interlocutors at page 25) is an example. No modern case was, however, drawn to my attention in which that course was adopted. It does not appear readily to accord with pleading and practice in the latter half of this century. Where in modern circumstances a competent court after hearing argument determines that an action is fundamentally irrelevant and disposes of it by dismissal, it is, in my view, consistent with the public and private considerations referred to in Maclaren Court of Session Practice at page 396 that such disposal, notwithstanding its form, should be capable, at least in some circumstances, of founding a valid plea of res judicata. I am not persuaded that this qualification on the more absolute propositions stated in some of the textbooks will lead to material uncertainty."

For the pursuers, the Dean of Faculty submitted that the fact that a previous action had been dismissed should be a complete answer to a plea of res judicata and there should be no need to go into the case any further. The point of having dismissal as opposed to absolvitor as a means of disposing of an action was to allow the parties to start again, absolvitor being an indication of finality. There was no other reason to have the two forms of disposal. It would always be open to the defenders, if appropriate, to seek absolvitor. The rule in regard to the effect of dismissal was well settled but, even if the court did not accept that it was so settled, the rule which the pursuers suggested was a clear and certain rule while the approach adopted by the Lord Ordinary did away with any practical distinction between dismissal and absolvitor and allowed the effect of a disposal to depend on whether the judge in the second action thought that the judge in the first action had intended finality. All the major textbooks in this century set out a clear rule: reference was made to Maclaren Practice of the Court of Session 396, Mackay Manual of Practice 312, Lees Interlocutors 24, Dobie Sheriff Court Practice, Walker & Walker Evidence 46, Maxwell Practice of the Court of Session 618, Greens' Encyclopaedia of the Law of Scotland XII para. 1192, the Stair Memorial Encyclopaedia vol. 17 para. 1102 and the annotations in the Parliament House Book to rule RC18. The same rule was found in Macphail Sheriff Court Practice 9-115 and Thomson & Middleton Court of Session Practice 76. In Menzies v. Menzies (1893) 20 R. (H.L.) 108 the rule was clearly stated by Lord Watson at 110-1: the Lord Ordinary had given a strained interpretation to what Lord Watson said but properly understood it was a clear affirmation of the rule contended for by the pursuers. Other authorities were at least consistent with or supported the same rule: reference was made to Stewart v. Greenock Harbour Trustees (1868) 6 M. 954, Duke of Sutherland v. Reed 1890 18 R. 252, Cunningham v. Skinner (1902) 4 F. 1124, Wallace v. Braid (1900) 2 F. 754, Govan Old Victualling Society v. Wagstaff (1906) 14 S.L.T. 716, Dundee General Hospitals v. Bell's Trustees 1952 SC (HL) 78 and Paterson v. Paterson 1958 S.C. 141. There was therefore a line of clear and consistent authority for the settled rule. The cases relied on by the defenders and the Lord Ordinary were generally not satisfactory and there was no question of them settling a different rule. In Russell v. Gillespie (1859) 3 McQ. 757 the decree in the earlier action had purported to assoilzie the defenders "from the action as laid" and the point of the subsequent action was to determine what was intended by that interlocutor. Glasgow and South Western Railway v. Boyd & Forrest 1918 SC (HL) 14 was concerned with a situation in which the first action had ended in a decree of absolvitor and the second action had been concerned with the merits of a plea of res judicata, not the form of disposal. There was only one sentence in the speech of Lord Shaw on which the defenders could found, but even that sentence affirmed a distinction between dismissal and absolvitor; in any event, it was obiter and given after reference to few of the authorities. Johnston v. Standard Property Investment Company 1909 1 S.L.T. 23 was a case in which a decree of dismissal did appear to have been treated as a foundation for the plea of res judicata but there had been no argument addressed to the authorities and no discussion, apparently, with regard to the form of the previous interlocutor. The decision had not been noted in the next edition of Maclaren's Practice

For the defenders, Sir Crispin Agnew submitted that there were two conflicting lines of authority which could be resolved along the lines suggested in the opinion of the Lord President in Duke of Sutherland v. Reed supra at 257. Dismissal of an action as irrelevant could not bar a later relevant action but if an action was dismissed as irrelevant, or on any preliminary plea, another action could not be raised on the same averments. If there was a change in the averments, an action could be raised. Not all of the textbooks referred to the whole of what had been said by the Lord President in that case. The view suggested fitted in with what had been said in Menzies v. Menzies supra and with what Lord Shaw had said in the Boyd and Forrest case and was also consistent with the opinion of Lord Young in Wallace v. Braid. The only case in which the effect of dismissal on a preliminary plea had been fully examined was Johnston v. Standard Property Investment Company and in that case the plea of res judicata had been given effect. In Russell v. Gillespie the House of Lords, in considering the effect of a decree which assoilzied defenders from an action "as laid", had taken the approach to the decision of a plea of res judicata indicated in Edinburgh District Water Trustees v. Clippens Oil Company (1899) 1 F. 899 and although they had treated the interlocutor as one of dismissal they had examined what had happened to see if there was a decision on the merits. If a second action was in exactly the same terms as a previous action, then dismissal would bar a subsequent action on the ground of res judicata. If, for example, it was necessary to get through a gateway, such as establishing a title to sue, to reach a judgment on the merits, and it was not possible to get through that gateway then, if the matter had been fully examined and a decree of dismissal pronounced, that would count as a decision on the merits and found a plea of res judicata. The other cases had not dealt with a situation in which a preliminary plea had been examined on its merits: there were only dicta and, in cases in which the question had arisen, there were dicta saying that the plea of res judicata might apply. In the present case, if the averments were examined they were basically the same as those in the previous case. The modern cases said that the plea should be decided by looking at what had been litigated and determined and even if the scope for a plea of res judicata following a decision to dismiss an action might be narrow it did allow the plea to apply where the defect was not corrected. Margrie Holdings was a case in which the point was not argued but there was a plea of res judicata and the court had applied the Clippens test. Accordingly, the Lord Ordinary had reached the correct conclusion for the correct reasons.

In our view, the appropriate place to start in considering these competing arguments is with Maclaren's Court of Session Practice and the authorities cited there. Maclaren treats res judicata as a peremptory defence and says (at 396)

"(a) res judicata. This is a plea that the substantial merits of the cause have

already been decided by a competent court in an action between the same parties, or parties having a like interest, and consequently should not be again adjudicated upon. The court is in use to give effect to this plea on the grounds - (a) of public policy; and (b) that a person should not be subjected to a second action upon the same grounds.

In order that a previous judgment may found a plea of res judicata in a subsequent cause the following circumstances must concur:

(1) there must be a proper judicial determination of the subject in question. Hence a decree in absence, or a decree founded on a compromise, or a decree of dismissal on the ground of incompetency or irrelevancy will not found the plea nor will the mere opinions of judges on questions not raised in the previous case or not concurred in by the majority of the court."

The authorities cited in regard to the proposition that a decree of dismissal will not found the plea are Barclay v. Barclay (1842) 5 D. 394 and Gillespie v. Russell, Duke of Sutherland v. Reed, Menzies v. Menzies, Wallace v. Braid and Cunningham v. Skinner.

Barclay v. Barclay was a case in which there were competing applications for service as heir to an estate and one of the applications was dismissed when the party indicated that he did not intend to proceed with it. It was held that the dismissal was not res judicata but the case is of no particular assistance for the present purpose. The headnote to the decision in Gillespie v. Russell in the House of Lords reads:

"For want of facts relevant and sufficient to support the conclusions of the libel the Court of Session had assoilzied the defenders from the first action 'as laid', but without pronouncing any final determination on the merits of the cause. Held by the House (affirming the interlocutors appealed from) that this decision was no bar to a second action for redress in the same matter, but proceeding upon new allegations."

The first action was an action in which the pursuer, with the concurrence of her husband, alleged that she had been induced by fraudulent misrepresentation to let a coalfield of much greater value than she had supposed and she sought to have the lease set aside. The Lord Ordinary pronounced an interlocutor finding that the pursuers had not averred facts relevant and sufficient to support the conclusions and assoilzied the defenders. The Inner House varied the interlocutor by substituting the words "assoilzied the defenders from the action as laid". In the second action the pursuer made new and more detailed allegations in regard to the same alleged fraud. The Lord Chancellor, at 761, expressed the view that the second action contained apt averments and allegations disclosing facts which, if true, proved that the defenders, inter alia, resorted to fraud. He then said:

"The consequence is that issues are properly directed; a jury will say whether the pursuer's averments and allegations of fraud are true, and complete justice will be done between the parties. But to hold that the judgment in the first action, which decided matter of form only, is a bar to the second action which is properly laid, would in my opinion be a denial of justice."

Lord Brougham expressed the view that even without the addition by the Inner House of the words "as laid" the previous decision would only have been an absolvitor from the action as laid and added that he agreed that the object of the court in adding those words was to make it clear that the pursuers still had the power of bringing a fresh action. Lord Cranworth expressed some doubt about that conclusion but Lord Chelmsford said at 764:

"The only point necessary to be decided is whether the judgment in the first action enabled the defenders to plead it as res judicata to the second action. It is unnecessary for this purpose to look further than the record which upon the face of it expressly confines the judgment to a determination upon the sufficiency of the action as laid. It might, perhaps, have been competent for the Court of Session to deal differently with the first action, but your Lordships are not called upon to say what they might have done, but what was de facto the judgment of the court in that action; and as there can be no doubt that all that which they intended to decide, and which, in fact, they did decide, was that the action was irrelevantly and insufficiently laid, they cannot be said to have decided anything as to the merits of a case sufficiently laid as it is in the second action; and therefore the interlocutor deciding that the plea of res judicata ought to be repelled was right, and must be affirmed."

It is, in our view, clear that the primary question in that case was as to the effect of the interlocutors in the previous action and that what the House of Lords held was that, notwithstanding the use of the word "assoilzie", the interlocutor in the previous action should be treated as an interlocutor dismissing the action as irrelevant. In order to reach that conclusion, their Lordships had to consider what had been decided in the previous action but they did so, in our view, to discover what the effect of the previous interlocutor was intended to be, not, as Sir Crispin suggested, in order to apply the usual tests, as set out in the Clippens Oil Co. case and other authorities, for the application of the plea of res judicata. In our view, however, the judgments do go a little further and suggest, if they do not positively affirm, that where a second action is brought following a dismissal of a previous action the question for the court is whether the second action is "properly laid" and that if it is it will be allowed to proceed.

In Duke of Sutherland v. Reed, the pursuer raised an action in the Court of Session seeking declarator that certain crofters had no right or title to pasture cattle upon certain lands and also seeking interdict. The pursuer had previously presented a petition in the Sheriff Court seeking interdict. That petition was disposed of in a manner which the court in the later case described as remarkable. The sheriff heard some limited evidence on the question of possession of the land in question and then proceeded, as the Lord President observed at 257, to make a finding in fact on a matter on which he had not allowed any proof. Proceeding on that finding, the sheriff then held that the action before him was incompetent. When the subsequent case came to the Court of Session, a plea of res judicata was taken and on that plea the Lord President observed:

"Now perhaps it might be thought sufficient for the present purpose, without further criticising the mode of conducting the process by the sheriff substitute, to say that his finding that that process was incompetent can never by any possibility be res judicata to bar an action which undoubtedly is competent for trying the question. An action dismissed as incompetent cannot prevent the pursuer of that action from raising a competent action to try the same question. It would be just as absurd to say that because an action had been dismissed as irrelevant, therefore the pursuer of that action could never bring a relevant action to try the same cause. That question was raised in the well-known case of Russell v. Gillespie where the House of Lords held, reversing the judgment of this court, that the fact of the second action being relevant when the first action was irrelevant was a complete answer to the plea of res judicata. It appears to me that this kind of incompetency is a case a fortiori altogether. If the former action was incompetent the case could not be tried, and was not tried, under it, and therefore that plea falls to the ground."

That passage formed the basis of the defenders' submission that any conflict in the authorities could be resolved on the basis that the plea of res judicata could be applied to a finding of irrelevancy or incompetency on the same basis as it could be applied to a decree of absolvitor, namely by considering whether the parties, the subject matter and the issue litigated and decided were the same. In our view, the proper reading of what the Lord President said in Duke of Sutherland v. Reed is the same as is implied by the House of Lords decision in Russell v. Gillespie, namely that if a subsequent action is raised after an initial action has been dismissed as incompetent or irrelevant, then the question is whether the new action is competent and relevant.

That then brings us to the case of Menzies v. Menzies. The action arose from the pursuer's attempts to reduce an agreement which he had made with his father in relation to entailed estates at a time when his father was the heir in possession and the pursuer was the next heir. In the first action, reported at (1890) 17R 881, the pursuer averred that the consideration which he had received for consenting to the agreement was grossly inadequate, and that it was the duty of a person who was acting as his father's agent, and who knew that the pursuer had no independent advice and was relying upon him, to have disclosed certain facts which, if the pursuer had known them, would have led him not to enter into the agreement. The pursuer therefore averred that he was induced to enter into the agreement by misrepresentation and improper concealment and under essential error induced thereby. That action was dismissed as irrelevant. In the second action, the pursuer averred fraudulent misrepresentation and the case went to proof. The Lord Ordinary found that the pursuer was induced to enter into the agreement by representations in regard to a material matter of fact made to him by the father's agent and that those representations, although not made fraudulently or with intent to deceive the pursuer, were not consistent with fact. On that basis, the Lord Ordinary reduced the agreement. The defenders reclaimed and the Second Division recalled the Lord Ordinary's interlocutor and assoilzied the defenders. The report in the House of Lords records, at 110:

"The majority of the court proceeded on the ground that the averment of fraudulent misrepresentation had been negatived, and that, quoad ultra, the matter was res judicata in respect that the facts proved amounted to no more than had been averred and held irrelevant in the former action: at the same time their Lordships intimated opinions that, independently of the pleas of res judicata, the pursuer had failed to establish his case."

The pursuer appealed to the House of Lords and on appeal the defenders abandoned the plea of res judicata. It was in that context that Lord Watson is reported as saying:

"The dismissal of an action upon relevancy, without any enquiry into the merits, can never be res judicata."

The context of that remark is, in our view very important. As the report shows, the very point on which the Second Division had held that the plea of res judicata could be maintained was that a decision to dismiss an action as irrelevant could be founded on as res judicata in a subsequent action in which the averments or the facts found were the same as the averments in the action which had been dismissed. That seems to us to be precisely the position which the defenders are adopting in the present case and it is precisely the position which Lord Watson was at pains to negative.

Cunningham v. Skinner was a case in which a person who had raised an action of damages for slander became bankrupt and was ordered to find caution but failed to do so, following which the action was dismissed. Some time later, another action was raised by the same pursuer against the same defenders on almost the same grounds. The defenders pled res judicata but the plea was rejected by a majority of the Second Division. The reason given by the Lord Justice Clerk, at 1128, was as follows:

"The contention is that although in ordinary circumstances a decree of dismissal will not debar the party from raising another action, yet that in that case the true and proper judgment should have been one of absolvitor. That may be so, and assuming that it was, the question comes to be, whether the court must proceed on what was done, and not on what might or should have been done. I am of opinion that the former view is the right one. I think the authorities go distinctly to that, viz., that if a judgment is one of dismissal it cannot be founded on to exclude a subsequent action. Therefore while it may be possible that, if the court had been asked to grant absolvitor, it might have done so, the absence in fact of such a decree makes objection to a new action untenable."

Lord Traynor concurred but Lord Young dissented on the ground that a mistake had been made in granting dismissal rather than absolvitor in the first action and that the court was entitled to look at the ground of the judgment and why it was pronounced in order to decide whether the first action formed a bar to a subsequent action.

It is, in our view, clear that these authorities provide strong support for the proposition found in Maclaren and that they are not subject to being read in the qualified way which was proposed in the argument on behalf of the defenders. Maclaren's proposition is also very clearly supported by a dictum of Lord Deas in Stewart v. Greenock Harbour Trustees (1868) 6 M. 954 at 958, cited by Lord Shaw in Glasgow & South Western Railway v. Boyd & Forrest Ltd. (referred to below) The decision in Wallace v. Braid and the later decisions in Dundee General Hospitals v. Bell's Trustees and Paterson v. Paterson in our view support the same conclusion but it is not necessary to examine them in detail. It is, however, perhaps worth mentioning more particularly Govan Old Victualling Society v. Wagstaff, which also supports the rule, because that was a case in which Lord President Dunedin gave the only judgment, in which the other members of the court concurred. The precise circumstances of the case are not important. What is important is that, at 718, the Lord President said:

"Now, it seems that an action of the same sort was raised in the Sheriff Court, which was dismissed with the pursuer's acquiescence. Accordingly the plea was taken by the defender in this action of res judicata. That plea was not dealt with by the Lord Ordinary so far as technically to pronounce any interlocutor upon it. My Lords I am clearly of opinion that res judicata in the circumstances was a bad plea. I do not see how an action which was dismissed in the Sheriff Court can ever be res judicata in an action in the Supreme Court, because it is, I think, impossible, as Lord Watson said (Menzies v. Menzies 20 R. (H.L.) at page 110), to conceive how the dismissal of an action upon relevancy could found a proper plea of res judicata."

That observation is significant because the only real and substantial support for the defenders' argument in this case comes from Johnston v. Standard Property Investment Company Limited, in which case also Lord President Dunedin gave the only judgment. The case arose out of conveyancing transactions of some complexity involving the granting of deeds about which the Lord President spoke very critically. The essence of the transactions, as we understand them, was that a bondholder in possession of certain property sold it in lots and sought to create real burdens and rights of relief in regard to payment of feu duty. Eventually, an action for payment of a share of feu duty was raised against Johnston. With regard to that action the Lord President said, at 25:

"It is trite law that if there is a cumulo feu duty over a piece of ground which has been split up between different proprietors of the dominium utile and if one of them is distressed for the whole of the feu duty, as he is always liable to be, he has an equitable relief against the other for a proportional share of it, and accordingly, but for the specialties here, there would have been no defence to that action. But Mr. Johnston, conceiving that he had a good answer upon the terms of the advertisement and upon the terms of the disposition which I have recited, defended the action, and it was dismissed by Lord Dundas upon the plea that the pursuer had no title to sue. That interlocutor was taken to the Inner House, but the reclaiming note was abandoned; that is to say, it was refused of consent, and the interlocutor of Lord Dundas became final."

Later on, after further transactions had taken place, two further actions were raised both dealing with aspects of the same transaction. In one of them, which was an action in the Court of Session, the court held that the bondholder was not in any way capable of interfering with the allocation of feu duty or creating any relevant real burden and in that action decree of absolvitor was granted. The other action was an action in the Sheriff Court which was appealed to the Court of Session and was before the court at the same time as the Court of Session action. In that action, the same point as had been considered in the action before Lord Dundas was raised and with regard to it the Lord President said:

"But when I come to the other action, although if matters were entire the opinion I have just given would lead to decree, the result is entirely different, because there is here a clear plea of res judicata. Mr. Irons raised precisely this action before Lord Dundas and the action was dismissed, but it was dismissed upon the merits of the question. A decree of dismissal may be just as good res judicata as absolvitor. It comes to the Inner House and the interlocutor is adhered to it. It seems to me that this is clearly res judicata as between this pursuer and this defender and once it is admitted that Weatherhead is truly Irons it is between the same pursuer and defender, although of course I look upon the decree given as wrong on the merits. Accordingly I think that the appeal must also be refused, although the actual plea to be sustained is not the plea of no title but the plea of res judicata."

Before making any comment on that decision, it is perhaps desirable to refer to what was said by Lord Shaw in Glasgow and South Western Railway Company v. Boyd & Forrest. Briefly, the circumstances of that case were that a firm of contractors had raised an action in which they claimed various sums but in which the defenders were assoilzied. Subsequently, the contractors sought to invoke an arbitration clause in the contract and the plea of res judicata was taken. The substantial question before the court was whether the questions litigated and decided in the action were the same as the questions arising in the arbitration. The decision was that they were and that the plea of res judicata was well-founded. The bulk of the speech of Lord Shaw was concerned with the question of what is meant by the expression media concludendi. Lord Shaw came to the conclusion that what was concerned in the action was, as the Lord Ordinary had said, that the summons concluded for payment of all sums alleged to be due in respect of work executed and that was what had been litigated and decided. He continued by saying that the appellants had obtained their definite, final and complete answer to that question by the decree of absolvitor which had been pronounced and he continued:

"It is too late in the day to attempt to place a decree of absolvitor on the same plane as a decree of dismissal. Sometimes a decree uses the word absolvitor with such conditions attached as show that what was truly meant was a dismissal - such as the case of Gillespie v. Russell, in which the former suit was on the ground of insufficient or irrelevant averments truly dismissed, but in which the judgment was expressed as absolvitor from the action 'as laid'. It is easily possible also to figure a good plea of res judicata in the case of a fresh action containing what is in substance a mere repetition of the averments in an action disposed of by dismissal. But in the plain and ordinary case such as the present is, the rule of law prevents the duplication or multiplication of legal proceedings. That rule was thus expressed in the language of Lord Deas in Stewart v. Greenock Harbour Trustees when he said 'We have had this matter again and again before us, and if there be a distinction established in our practice, it is, that the word "dismiss" is used when it is open to the party to bring another action and the word "assoilzie" when it is not open'."

These authorities do, of course, support the defenders' position to some extent. It is, however, not easy to see precisely what Lord Shaw had in mind in the sentence in which he suggested that there could be a good plea of res judicata in the case of a fresh action containing a mere repetition of averments previously dismissed, particularly having regard to his approval of the dictum of Lord Deas to the effect that dismissal leaves it open to a party to bring a fresh action. The defenders' suggestion, essentially, was that in a case in which the whole issue was one of law or one which could be determined upon averments without the need for proof, then that issue constituted "the merits" of the action and a decision upon it, even if expressed as a dismissal, could be regarded as res judicata. That, however, is certainly not consistent with the dictum of Lord Deas and that dictum, is, in our view, in accordance with the tract of authority which we have discussed earlier in this opinion. Lord Shaw's expression of opinion does not appear to have been regarded in any of the later decisions or textbooks as qualifying the rule which, as we have seen, was expressed by Maclaren and followed by the other textbook writers.

The decision in Johnston supra, however, is plainly one in which the court treated a prior dismissal as being, in the circumstances, res judicata. All that can be said, really, is that that decision is entirely isolated: that it proceeded, so far as the judgment shows, without any detailed consideration of the law relating to the plea of res judicata and without any reference, explicitly at least, to authority: and that there is no attempt to explain how the decision could be fitted in with the rule indicated by cases such as Menzies v. Menzies. It is, also, perhaps significant that the case does not seem to have been founded upon in subsequent authorities or regarded as justifying a qualification to the rule expressed in textbooks. The decision must be regarded with respect but, in the absence of some explanation of how it was reached, as against the other authorities to which we have referred, it does not seem to us to justify a modification of the rule which in our view has been clearly understood and accepted for over a century at least. If the decision had proceeded upon reasoning or reference to authority, we could of course not have decided to ignore it without referring the question to a larger court. In the somewhat unusual circumstances in which this issue arises, however, we have reached the conclusion that it is not necessary for us to do so. In our view, the rule which the authorities overall clearly establish is the rule briefly and clearly expressed by Lord Deas, namely that the difference between dismissal and absolvitor is that dismissal leaves it open to bring a fresh action while absolvitor does not.

It is, of course, true as the defenders submitted, that there may be cases in which a decision reached after a debate is in reality a decision on the whole substantial subject matter of the case and that it may be thought inconsistent with the principle which lies behind the plea of res judicata that a party who has lost an action on such a basis should be free to raise repeated actions in the future. As to that, however, it can be said that in at least the majority of cases it should be possible for a defender who wishes to protect his position by obtaining a decree of absolvitor to do so, if necessary, by allowing the action to go to proof or by making appropriate admissions or renouncing probation. There may, of course, be cases in which an action can be disposed of on a point of law and investigation into complex facts may thereby be avoided. Even in such a case, however, the rules of court permit an action to be tried in stages (see R.C. 36.1) and, particularly in a commercial cause, it should be possible to structure the procedure so as to achieve an appropriate result. If it is not possible, that seems to us to be a matter which might be better addressed by considering whether further rules of court are necessary rather than by blurring the distinction which the authorities establish between dismissal and absolvitor and so creating uncertainty as to the effect of a decision. The opportunity which our procedure affords of taking a plea to the relevancy enables a defender to have an action against him dismissed without the necessity of going to proof but it is not unreasonable that when advantage is taken of that opportunity, the decision should be subject to the possibility of a further action being raised.

In all the circumstances, therefore, we are of opinion that the Lord Ordinary should have refused the plea of res judicata on the ground that the dismissal of the previous action could not be res judicata for the purposes of the present action. In these circumstances, it is not necessary for us to examine in detail the arguments which were addressed for and against the Lord Ordinary's decision on the question whether, assuming that a decree of dismissal could provide the basis for a plea of res judicata, the present action was not one in which that plea was available to the defenders. In brief the Lord Ordinary held that the pursuers' averments in relation to the assignation in their favour represented a relevant and substantial difference between this action and the former action, with the result that the plea could not be relied on by the defenders. In our view the Lord Ordinary reached the correct conclusion on that point, for the reasons which he gives.

The effect of our decision, therefore, is that the reclaiming motion falls to be refused.