Scottish Court of Session Decisions

This is an appeal by way of stated case from an arbitration between the claimants, Rogerson Roofing Limited and the respondents Hall & Tawse Scotland Limited. The arbiter stated the case at the instance of the claimants.

On 6 July 1990 the respondents, as main contractors, entered into a sub-contract for the performance of certain roof-decking works. As the claimants aver, the contract documentation refers to the sub-contractor as "Rogerson Roofing" but the contract was signed by the managing director "for George Rogerson Ltd." For purposes of the debate before the arbiter and before this court, counsel proceeded on the basis that the party to the sub-contract had been George Rogerson Ltd. Although the pleadings in the arbitration are somewhat confusing, it was also agreed in the debate before us that the works were begun on 17 July 1990 and were carried out by George Rogerson Ltd. According to the claimants, the sub-contract works were completed on 7 December of the same year. While, Mr. Ellis, who appeared for the respondents, did not specifically admit this, for present purposes he was content to proceed on the basis that any work which formed the subject of the claim in the arbitration had been completed by early December 1990.

It is apparent from what we have said so far that it was not the claimants, but another company, George Rogerson Ltd., who carried out the sub-contract works. This is the matter which gave rise to the issues debated before us since in the arbitration the respondents' pleadings included a plea that the claimants had no title to sue for the sums in dispute. It is agreed that originally the claimants raised an action against the respondents in the Court of Session but that it was eventually sisted in the light of an arbitration clause in the sub-contract. The respondents raised no plea as to the claimants' title to sue in those proceedings in the Court of Session. Indeed the plea of no title to sue was not added to the respondents' pleadings in the arbitration until about May 1997.

The plea itself, which is the first plea-in-law for the respondents, is in these terms:

As the accompanying averments for the respondents make clear, the plea is based on Clause 26-1 of the sub-contract between the parties:

On the claimants' own averments, they were not one of the original parties to the sub-contract. In the arbitration, however, they are pursuing contractual claims which are said to arise under the sub-contract. It is apparent that the claimants can do so only as assignees of the original sub-contractors, George Rogerson Ltd: indeed they specifically aver that this is the basis upon which they pursue the present claim. The respondents challenge the claimants' title to sue because, they say, George Rogerson Ltd. did not validly assign their rights to the claimants.

The respondents' averments relating to the plea are contained in Answer 1:

Those averments must be read in the context of the averments which the claimants inserted in Article 1 of the Condescendence in response to the respondents' plea:

Having heard debate on the respondents' preliminary pleas, the arbiter proposed to sustain all three and to dismiss the claim. As is apparent, the specific point which the respondents raised about the purported assignation to the claimants related to the question of the respondents' own consent to the assignation in terms of Clause 26-1. The pleadings contain averments about personal bar and waiver and, from his draft Note, it is apparent that the arbiter heard elaborate submissions on those matters. In the end, however, he decided to sustain the plea of no title to sue on the basis that the claimants had not averred that the architect had consented to the assignation in terms of Clause 26-1. It appears that this point did surface during the debate before the arbiter but that counsel for the respondents did not mention it until his second speech and counsel for the claimants, Mr. Howie, did not, accordingly, deal with it until his second speech. Neither counsel had put it at the centre of his argument.

In these circumstances the first two Questions which the arbiter stated for the opinion of this court are in these terms:

Before us Mr. Howie simply submitted that, where the respondents had tabled a plea of no title to sue and had averred the basis upon which that plea was being advanced (the alleged lack of the respondents' consent), the scope of the plea was circumscribed by the averments and the arbiter had been wrong to propose to sustain it on a different basis (the alleged lack of the architect's consent). In support he cited Maclaren, Court of Session Practice, p. 190 where it is said that a plea of no title to sue:

The statement by Maclaren is vouched by the opinions of the judges in North British Railway v. Brown, Gordon and Co. (1857) 19 D. 840. It is not necessary to examine the matter in more detail since, on behalf of the respondents, Mr. Ellis did not challenge the law as set out by Maclaren in the passage which we have quoted.

Mr. Howie argued that, in effect, the arbiter had contravened the approach laid down by Maclaren by proposing to sustain the plea on the basis of an objection which the respondents had not specified in their answers in the arbitration. Mr. Howie submitted that this approach should apply in arbitrations just as much as in actions before the courts and Mr. Ellis did not suggest otherwise. He acknowledged that, in the light of the authorities, Mr. Howie's criticism of the arbiter was sound and that the respondents' plea of no title to sue could not be construed as covering any lack of consent by the architect. It followed that he accepted that the arbiter had erred in proposing to sustain the plea on that basis. We shall accordingly answer the first two Questions in the negative.

The stated case contains a third question added at the request of the respondents:

As the terms of the question show, the arbiter would have allowed a preliminary proof before answer on the matter of the claimants' title to sue, had it not been for his decision on the matter of the architect's consent. Mr. Ellis submitted that he would have been wrong to do so and that he should have dismissed the claim in terms of the respondents' second and third pleas-in-law:

In essence Mr. Ellis submitted that, even though the arbiter had erred in sustaining the plea of no title to sue on the basis of the lack of any averment of the architect's consent, his decision to dismiss the claim had none the less been correct, since it was irrelevant and lacking in specification in relation to the circumstances of the assignation to the claimants. In advancing this submission Mr. Ellis drew particular attention to the failure of the claimants to answer the call upon them to produce the assignation and the letter of 31 December 1990 by which, they aver, the assignation was intimated to the respondents.

On one view, this approach by the respondents might seem designed to blur the distinction between a plea of no title to sue and a plea to the relevancy of a party's pleadings. That indeed was one of Mr. Howie's criticisms of Mr. Ellis's argument. Before the arbiter and before this court, Mr. Ellis countered that criticism by referring to the decision of the Second Division in Life Association of Scotland Ltd. v. Blacks Leisure Group PLC 1989 S.C. 166. The pursuers in that case craved a declarator of irritancy of a lease and removing. The pursuers' action was founded on a written notice of irritancy which their predecessors as landlords had given to the defenders. The defenders argued inter alia that the action was irrelevant since the pursuers did not aver that their predecessors had assigned their rights under the notice to the pursuers. The sheriff principal upheld the submission and dismissed the action. The Second Division adhered to his interlocutor. In effect, said Mr. Ellis, like the defenders in Life Association, the respondents in the present case were entitled to argue that, in the absence of averments as to the consent of the respondents and indeed of the architect, the claim was irrelevant and should be dismissed. Life Association showed that there was nothing inappropriate in such an argument being advanced as one of relevancy rather than as a matter of title to sue. Mr. Howie on the other hand pointed out that the Lord Justice Clerk specifically recorded (1989 S.C. at p. 167) that the issue had been put forward not as relating to title to sue, but as relating to relevancy. For that reason, the Second Division had not required to consider whether the point could properly be regarded as merely one of relevancy rather than of title to sue and their decision was not an authority on the point.

We agree with Mr. Howie that, for the reason which he gave, the decision in Life Association does not deal specifically with the issue. In any event the present case differs from Life Association in as much as, here, the pursuers do make the basic averments that the relevant contractual rights were assigned to them. Mr. Ellis's argument related essentially to the specification of the averments relating to the assignation. If the averments relating to the assignation were sufficiently precise, then he accepted that the arbiter had been correct to allow a preliminary proof before answer since there were factual issues to be clarified in relation to averments of waiver and personal bar which the claimants had made in relation to the respondents' delay in challenging their title to sue. But he pointed out that those averments were introduced by the pursuers with an averment which presupposed the existence of an assignation:

If, therefore, the averments relating to the assignation were insufficiently specific to be allowed to go to proof, then the claimants' whole case, the other aspects of which were tied into the averments of assignation, must be dismissed.

Mr. Ellis criticised a number of aspects of the claimants' averments about the alleged assignation. He pointed out that, not only had the claimants failed to produce the assignation, but they do not even aver whether it was in writing. In their pleadings they give no details of when the agreement to assign the rights was entered into or of when it was executed. He maintained that the lack of specification would hamper the respondents in preparing for proof and that it had in any event crossed over the line into irrelevancy.

Despite - or perhaps because of - the excellent argument which we heard from both counsel, we have not found this an easy matter. With some hesitation, however, we have come to the view that the claimants' averments about the assignation are sufficiently specific to be admitted to a preliminary proof before answer at which any issues relating to waiver and personal bar can be explored. The claimants' averments are capable of being interpreted as an offer to prove that the rights under the sub-contract were assigned to them towards the end of 1990 and, apparently, by the time of the alleged letter dated 31 December 1990 intimating the assignation to the respondents. Other things being equal, those averments would be sufficiently precise for proof.

Of course, we are conscious that the respondents have raised the specific points which we have mentioned about the nature of the assignation and that they have sought to focus the issues by inserting a call on the claimants to produce the assignation and the letter. We are equally conscious that, so far at least, the claimants have not answered the call and that their counsel could advance no very satisfactory explanation for this. None the less we see little real reason to believe that the respondents are substantially prejudiced by this failure since they have means open to them in the arbitration to deal with the matter - whether by seeking a sist of the proceedings until the claimants answer the call or by taking steps to obtain a court order for the recovery of any documents in the claimants' hands.

Moreover, since any preliminary proof will be before answer, it will be open to the respondents to advance any appropriate submissions as to the legal sufficiency of the claimants' case once the facts have been ascertained. In those circumstances we think it preferable not to comment on those legal issues. We shall accordingly simply answer Question 3 in the affirmative.