Scottish Court of Session Decisions

[1] The pursuers in this action, Tods Murray, W.S., sue the defenders, Arakin Limited, for certain sums of money which they claim are due to them by the defenders. The defences include a counter-claim for payment by the pursuers to the defenders of £1,000,000 with interest, in respect of loss and damage said to have been suffered by the defenders through the pursuers' breach of contract or negligence. In addition to asserting their entitlement to reparation for such breach of contract or negligence, the defenders by their first plea in law claim that being entitled to such reparation, they are entitled to retain any sum due to the pursuers pending resolution of the counter-claim.

[2] By interlocutors dated 9 May 2000, the Lord Ordinary refused, as incompetent, a motion enrolled by a Mr. Martin Frost and a Mr. Andrew McNamara, and decerned against them for payment of the expenses incurred by the motion, in which he had found them liable. Mr. Frost and Mr. McNamara reclaim.

[3] The background to the motion is to be found in an "assignation of claim" by the defenders in favour of Mr. Frost and Mr. McNamara. It is unnecessary to consider the terms of that document: before the Lord Ordinary, the debate on the motion proceeded on the hypothesis that it was a valid and effectual assignation by the defenders in favour of Mr. Frost and Mr. McNamara of the right of action which the defenders had sought to vindicate by means of the counter-claim. Founding upon that document, Mr. Frost and Mr. McNamara lodged a Minute of Sist in terms of which they seek to be sisted as assignees, in room and place of the defenders, in the counter-claim. On 9 May 2000, a motion enrolled by them came before the Lord Ordinary, asking the court to allow the Minute of Sist to be received, and seeking warrant to intimate it to the pursuers. As the Lord Ordinary points out, the motion bore to be made "on behalf of the defender". It was, however, amended, and it is clear that it is as individuals that Mr. Frost and Mr. McNamara have lodged the Minute of Sist, and enrolled the motion. It is moreover clear that they seek to be sisted, in place of the defenders, only in relation to the counter-claim.

[4] Section 6 of the Court of Session Act 1988 provides inter alia as follows:

[5] By chapter 25 of the Rules of the Court of Session 1994 the court made such provision for counter-claims. In particular, it was provided by Rule 25.1(1) that in any action (with certain exceptions which are not here in point) "a defender may lodge a counter-claim against a pursuer" in certain specified circumstances. Consistently with the terms of section 6(v) of the 1988 Act, providing for "the inclusion in defences" of any counter-claim, it is clear from the terms of chapter 25 of the Rules of Court not merely that it is only a defender who may initially lodge a counter-claim, but that the essence of a counter-claim is that it is made by the defender. Merely as examples, one may note such procedural provisions as are contained in Rule 25.3(2) to the effect that the court may "on the motion of the pursuer or defender" allow a period for adjustment, and Rule 25.4(2), providing that notwithstanding abandonment by the pursuer, "a defender may insist in his counter-claim, and the proceedings in the counter-claim shall continue in dependence as if the counter-claim were a separate action."

[6] The Lord Ordinary says that in his opinion the issue which required to be resolved in order to deal with the motion was a procedural, rather than a substantive one. He observes that if the assignation of claim was a valid and effectual assignation, then no doubt Mr. Frost and Mr. McNamara might vindicate in appropriate proceedings the rights that they had acquired. He goes on to say this:

That opinion is based both upon the view that the Rules of Court do not contemplate a counter-claim being brought or maintained by any party other than a defender, and upon the broader basis that the introduction of counter-claim procedure was founded on considerations of expediency, which justify allowing a defender to make his counter-claim against the pursuer in the same process, without the need to bring a separate action, but do not justify allowing a third party to enter the process to maintain a claim against the pursuer.

[7] We are satisfied that the Lord Ordinary's conclusion, and his reasons for reaching it, are sound. In presenting the reclaiming motion, Mr. Frost and Mr. McNamara went into some detail as to steps which had been taken with a view to their replacing Arakin Limited as defenders in the principal action as well as the counter-claim. It is not necessary to consider these steps. What is now being sought is a different procedure, whereby Arakin Limited would remain as defenders in the action brought by the pursuers, whereas the counter-claim against the pursuers would be pursued by Mr. Frost and Mr. McNamara. It was suggested that because Mr. Frost and Mr. McNamara, as assignees, could (subject to questions of prescription or time-bar) pursue a claim which had been vested in their cedent, or indeed might be sisted in room and place of Arakin Limited if the pursuers abandoned the present action, so that the proceedings in the counter-claim would continue in dependence "as if the counter-claim were a separate action" in terms of Rule of Court 25.4(2), the court should see the present situation as analogous, and should as an exercise of discretion grant the motion. But the attempt to draw such an analogy is in our opinion misconceived. For Mr. Frost and Mr. McNamara to pursue a cedent's claims in proceedings where their cedent is not, or is no longer, a party would be one thing. For a cedent such as Arakin Limited to remain as defender in the principal action, at the same time as the counter-claim is being pursued not by the cedent but by its assignees is quite another matter. In our opinion that would be entirely inconsistent with both the purpose and the provisions of the 1988 Act and the Rules of Court.

[8] It is to be observed that refusal of the motion is a refusal of this specific procedure, and does not touch upon the substantive rights which are said to have been assigned. These can be vindicated, by competent procedures. We should perhaps add that the rights and obligations inter se of cedent and assignee, where the former remains as the party in a litigation, were not the subject of any submissions to us, and that is not a matter upon which, in this context, it would be appropriate for us to comment. Mr. Frost and Mr. McNamara touched on various other matters, which have no bearing upon the question which is before us, and we make no comment on those matters. The reclaiming motion is refused.