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Kelly & Ors v. Stoddart Sekers International Plc [2004] ScotCS 258 (02 December 2004)

OUTER HOUSE, COURT OF SESSION

A1869/01

OPINION OF R F MACDONALD QC

(Sitting as a Temporary Judge)

in the cause

ANNE FRANCES IZZARD KELLY and OTHERS

Pursuers

against

STODDART SEKERS INTERNATIONAL PLC

Defenders

________________

Pursuer: C. G. Sanders; Morisons

Defenders: C. MacNeill; The Anderson Partnership

2 December 2004

Introduction
[1] The late James Kelly ("the deceased") was born on 25 February 1936 and died on 5 February 1994. The cause of death given in the death certificate was carcinomatosis and pleural mesothelioma. The first pursuer is his widow and the second, third and fourth pursuers are his daughters. The parties are agreed that between 1958 and 1962 he commenced employment with Henry Widnell & Stewart ("HW & SL") as a labourer and remained in their continuous employment until about 1982. The parties are further agreed that HW & SL became a wholly owned subsidiary of the defenders in or about 1959 and that for the purposes of this action only the defenders accept liability to make reparation to the pursuers in respect of any breach of duty owed to the deceased by HW & SL arising from the deceased's employment with the said company. The pursuers aver that during the course of his employment with HW & SL the deceased was exposed to asbestos and that as a result of their negligence and breach of statutory duty he contracted the said fatal condition.

[2] The present action was raised on 10 March 1997, over one month after the expiry of the triennium. The pursuers aver that in the circumstances it would be equitable for the court to allow the action to be brought in terms of Section 19A of the Prescription and Limitation (Scotland) Act 1973 ("the 1973 Act"). The defenders aver that it is not in the circumstances equitable for the court to allow the action to be brought under Section 19A. At a preliminary proof on the question of time bar I heard evidence from the first, second and third pursuers and Mr Chris Shaw, a solicitor in practice in Newcastle-upon-Tyne. In addition, a joint minute agreeing certain formal matters was lodged.

The Pleadings
[3] The pursers aver that in about June 1996 the first and third pursuers sought the assistance and advice of Industrial Disease Compensation Limited ("IDCL"), a company which provides advice in relation to personal injury resulting from industrial disease and which may, if an agreement is entered into between them and a client, fund the pursuit of a claim (including litigation) on a commission basis. At the behest of IDCL the first and third pursuers attended a meeting on 13 June 1996 which was also attended by Messrs Russell Young, Solicitors, Newcastle. The purpose of the meeting was to give initial advice to the pursuers, who were advised that they may have a claim against the deceased's former employers, and the first pursuer gave the solicitors authority and instructions to release details of the claim to IDCL so that that IDCL could assess whether they were prepared to fund pursuit of the claim. The solicitors opened a file relating to these pursuers and sent details of the claim to IDCL on 24 June 1996. Unknown to the solicitors, IDCL had confirmed with these pursuers that they were prepared to fund a claim and an agreement was entered into between these pursuers and IDCL on 25 June 1996. A copy of that agreement was sent to the solicitors by IDCL authorising and instructing the solicitors to proceed with the claim, but the copy agreement was placed in a new file rather than the existing one. The solicitors did not know when the copy agreement was received by them and they received no further communication from IDCL, who did nothing further to ensure that an action was raised timeously. On 25 February 1997, following a change of premises, the copy agreement was discovered by the solicitors, who took immediate action and instructed the raising of court proceedings in Scotland. As a result, the summons in the present action was served on 10 March 1997.

The pursuers go on to aver as follows:

"If the action is not allowed to proceed the pursuers will suffer prejudice. The present claim is funded by Industrial Disease Compensation Limited. The pursuers do not have the means to fund litigation themselves. Should the pursuers require to raise an action in relation to professional negligence on the part of Messrs Russell Young they would require to seek Legal Aid. It is not certain that Legal Aid would be made available to them and, in any event, the application and its determination would result in delay in the pursuers receiving damages. Further, any action the pursuers may raise against said solicitors is not straightforward. The pursuers would have to consider whether Industrial Disease Compensation Limited should be sued for negligence on its part. Alternatively, even if the pursuers sue the solicitors and not the company the solicitors may bring the company into the action as third parties resulting in further delay and uncertainty for the pursuers. In the circumstances it would be equitable for the court to allow the action to be brought in terms of Section 19A of the Prescription and Limitation (Scotland) Act 1973."

In response the defenders aver as follows:

"Explained and averred that esto, as averred by the pursuers, the deceased died on 5^th February 1994, the present action is time-barred. The summons was served upon the defenders on 10^th March 1997. Reference is made to the Prescription and Limitation (Scotland) Act 1973, as amended, Section 18. It is not in the circumstances condescended upon equitable for the Court to allow the action to be brought in terms of Section 19A of the said Act. Esto the action was not brought timeously for the reasons condescended upon, which is not known and not admitted, the pursuers have a remedy against their advisers. The defenders have been prejudiced in their investigations of the present claim due to the passage of time. The last of the premises at which the deceased was employed closed in or about 1981. Few records relating to the company have been retained. Other than those of historic interest which were deposited with the Scottish Record Office in Edinburgh, the only information retained are (sic) certain Personnel Records and Minute Books. In order to aver a defence in the present action the defenders have required to rely upon the recollection of William Gardiner, a former employee of HW & SL, date of birth 29th August 1920. Prior to the Service of the Summons in the present case the defenders are unaware of any other claim relating to asbestos exposure arising from the premises at which the deceased worked".

By way of riposte to these averments the pursuers aver that William Gardiner gave evidence on commission in February 1998 and was able to recollect events during the relevant periods and that any time lost was relatively insignificant against the background of the period of time which has elapsed since HW & SL ceased to trade and the deceased was employed by them.

The Evidence
[4] The third pursuer, Mrs Maureen Ferguson, who is now aged 38, said that after her father's death she went to the premises of IDCL in Dalkeith with a view to making a claim arising out of her late father's death. She was told that if mesothelioma was on the death certificate that would be fine. She went home and spoke to her mother about the matter. She thereafter consulted with the solicitor Chris Shaw from Newcastle on more than one occasion in the IDCL office in Dalkeith. She recollected that she had first met him in May or June 1996 and that her mother was with her. She had meetings thereafter with Mr Shaw every fortnight, reducing to every month. The meetings stopped in 1997. Her mother kept phoning the solicitors in Newcastle and was not receiving any reply from them. The first pursuer, Mrs Anne Kelly, now aged 66, spoke to her daughter Maureen having enquired about compensation in May or June 1996. She thereafter attended a meeting with Chris Shaw and instructed him to pursue a claim on their behalf. The death certificate was photocopied by him. She received a letter in 1997 to contact Russell Young, Solicitors, Newcastle but when she attempted to do so she received no reply. The second pursuer, Mrs Anne-Marie Forrest, now aged 41, spoke to her mother and sister Maureen having contacted IDCL after her father's death. All three pursuers who gave evidence spoke to the fact that the present action was being funded by IDCL and also to the fact that they themselves would not be able to fund an action of professional negligence against Russell Young.

[5] The detailed evidence about what happened in connection with the making of a claim by the pursuers came from Chris Shaw, a solicitor practising in Newcastle-upon-Tyne. He has been a solicitor since 1994 and in June 1996 he was working as an assistant in the personal injury department of Russell Young, Solicitors, Newcastle. He did general industrial disease work. The firm worked closely with IDCL. A significant proportion of their work came from IDCL, who funded the claim. The firm of Russell Young was no longer in existence as the Law Society had intervened in 1999 or 2000. In 1996 the firm was covered by the standard Law Society Indemnity Policy for professional negligence.

[6] Mr Shaw gave his evidence by reference to the relevant files of Russell Young covering the period June 1996 to 7 April 1997 (nos. 8 /2 - 8/9 of process). Number 8/9 of process was a copy of the agreement dated 25 July 1996 entered into between the first pursuer and IDCL relating to the claim. Page 47 of no.8/2 of process was a copy letter dated 3 June 1996 from Rab Amos, an employee of IDCL, to the third pursuer advising her that he had arranged for a lawyer to meet with her and her mother to discuss the problems surrounding her father's death and asking if they could attend the office of IDCL on 13 June 1996, bringing with them the death certificate and any medical evidence they had. (This letter appears to have followed upon a memo by IDCL at page 48 referring to the third pursuer and stating "Attended May 1996 and that she would like IDCL to act on her behalf in making a claim against her father's former employers for asbestosis".) Page 46 of no.8/2 of process was a memorandum from Mr Shaw to IDCL dated 24 June 1996 in which he stated that "this claim warrants further investigation". Mr Shaw could not recollect having met the first pursuer at Dalkeith on 13 June 1996 but accepted there would have been regular meetings at the IDCL offices in Dalkeith and that if the first pursuer said that she met him that would very likely be correct. Page 44 of no.8/2 of process was a copy letter dated 25 February 1997 from Russell Young to the defenders intimating the claim on behalf of the first pursuer. That was the first intimation of a claim to the defenders. Mr Shaw accepted that, from a consideration of the documentation, there had been on the part of Russell Young a period of inactivity between June 1996 and February 1997. He was of the view that there must have been two files opened in the same name in the Russell Young office. The authority for them to act had been put in one file and not acted on until several months later. As far as he personally was concerned, he had not been given the necessary authority to do the work. What had occurred was set out in a memorandum by him at page 40 of no.8/2 of process. This memorandum, which is headed "Professional Negligence - Scottish Asbestosis Claim" was written by him to Russell Young, the sole principal of the firm of Russell Young, Solicitors, and he thought he had dictated it on Tuesday 25 February 1997. The relevant part of this memorandum reads as follows:

"We have a potential problem in relation to the above claim in that it appears that we have now missed limitation as at February 7 1997.

The background is that I took instructions at the Dalkeith office from Mrs Anne Kelly in June 1996 with regard to a potential claim in respect of the death of her husband Mr John Kelly on 5 February 1994 from asbestos related disease.

Mr Kelly worked as a fitter for a carpet manufacturing company for a period of 24 years between 1958 and 1982 where his wife alleges that he was exposed to asbestos. There is no other relevant asbestos exposure.

Also Mrs Kelly herself wished to explore the possibility of bringing a claim as she suffers from severe respiratory problems and there is some suggestion that she may have occupational asthma as she herself worked in carpet manufacturing.

One referral has been sent to IDC in respect of the claim on behalf of Mr J Kelly, but two files (same reference) have been opened in the office.

One file with the original note has been kept with my own files, the second file has been placed with the Scotland Vibration White Finger claims.

No further action was taken by myself in respect of the original instructions, it would appear that no registration fee was paid to IDC and accordingly no client contract was submitted from IDC.

The client contract has in fact been submitted and placed on the file that was kept with the Scotland VWF claims. This file was brought to my attention by Mark Ross on Tuesday 25 February.

Neither of the files were (sic) marked with a limitation warning".

In short, therefore, the position was that the necessary authority from IDCL to proceed with the claim had been placed in the wrong file within the office of Russell Young, Solicitors. Following upon his having discovered that the claim was time-barred, Mr Shaw took the necessary steps for an action to be raised in Scotland. A letter of 24 March 1997 from him to the first pursuer (8/2 of process, page 10) referred to a telephone conversation that day between his secretary and the first pursuer's daughter and advised that she was to attend an appointment with him at 3 pm on Friday 4 April 1997 at the Dalkeith office in order that he could further discuss her late husband's claim. He had no recollection of such a meeting but thought that the first pursuer would have been advised what the problem was with the claim. It was not a matter for him to notify the firm's professional indemnity insurers. He notified Mr Russell Young, and it was a matter for him. He accepted that the firm did not rely upon IDCL to advise them of any time bar difficulties. In response to a question from me Mr Shaw stated that it was a mystery to him why Newcastle solicitors were dealing with a claim which involved Scottish pursuers making a claim against a Scottish company arising out of an alleged wrong in Scotland and which had no connection with England. He added that IDCL and Russell Young were "heavily linked" and that "it was sometimes difficult to distinguish between the two". He accepted that instructions to proceed with the claim had been received in time but not carried through, and that this was not because of any fault on the part of the pursuers.

Conclusion on the Evidence
[7] On the basis of the evidence which I heard and the documents contained in the files numbers 8/2 - 8/9 of process I am satisfied that the third pursuer, Mrs Maureen Ferguson, consulted an employee of IDCL in Dalkeith (probably Rab Amos) in May 1996 and asked IDCL to act on her behalf in making a claim against her father's former employers for asbestosis. Following upon that meeting IDCL on 3 June 1996 wrote to the third pursuer asking her and her mother to attend the office on 13 June 1996 at 3 pm for a meeting with a lawyer to discuss the problems surrounding her father's death. On 13 June 1996 the first and third pursuers met Chris Shaw at the offices of IDCL in Dalkeith and discussed with him the making of a claim arising out of the death of the deceased. Following upon that meeting, Mr Shaw on 24 June 1996 composed a memorandum (8/2 of process, page 46) which he sent to IDCL. In that memorandum he stated "I feel that this claim warrants further investigation" and also referred to "a possibility of a claim for Mrs Kelly herself who suffers from severe asthma/respiratory problems", stating that "we should be arranging a further appointment with Mrs Kelly to discuss her own claim". On 25 July 1996 the first pursuer entered into an agreement with IDCL which is no. 8/9 of process. She paid a registration fee of £25 inclusive of VAT upon signing the agreement, in return for which IDCL agreed to underwrite her legal and medical costs of pursuing the claim for personal injury. A copy of that agreement was shortly thereafter forwarded by IDCL to Russell Young, Solicitors. Within the office of Russell Young two files in respect of the claim on behalf of the deceased had been opened. One of them was kept with the files relating to Mr Shaw and the other was placed among a bunch of files known as the Scotland Vibration White Finger Claims. When the copy agreement was received by Russell Young from IDCL it was placed in the file that was kept in the bunch of files known as the Scottish Vibration White Finger Claims. That file, containing the copy agreement, was brought to the attention of Mr Shaw by another employee of Russell Young, Mark Ross, on Tuesday 25 February 1997, twenty days after the expiry of the triennium. Mr Shaw thereafter took steps which resulted in the present action being brought against the defenders on 10 March 1997. Accordingly, the action was not brought on time due to a failure on the part of Russell Young, Solicitors, who were instructed in ample time to raise an action. The copy agreement sent by IDCL to Russell Young, which should have resulted in Russell Young raising an action in time, was placed in the wrong file, but I am not satisfied that the misfiling in itself had the consequence that an action was not raised in time. Even if the copy agreement had been misfiled, there should still have been some system within the office for recording the date of the time bar for any potential claim so that the file was brought to the attention of a solicitor in time for an action to be raised. As was noted by the memorandum written by Mr Shaw on Tuesday 25 February 1997, neither of the files was marked with a limitation warning. It therefore seems to me that the present action was not raised in time because Russell Young had no limitation warning on either of the files relating to the deceased.

Submissions for the parties
[8] Mr Sanders for the pursuers submitted, as I have held, that the firm of Russell Young allowed the case to become time-barred. Although the firm no longer existed, it had professional indemnity insurance in force at the time. There was no suggestion that IDCL did anything that prevented an action being raised in time. No action had been raised against the dissolved firm of Russell Young, but a claim had been intimated to their insurers, who had indicated that they would not raise any time bar point if an action had to be raised subsequently. Although I had heard evidence that the pursuers could not fund an action of professional negligence themselves, Mr Sanders accepted that he could not say that they would not be entitled to legal aid in England. No evidence had been led about their eligibility or otherwise for legal aid in an action for professional negligence against the dissolved firm of Russell Young.

[9] So far as the law on the application of Section 19A was concerned, Mr Sanders stated that it was unnecessary to traverse the various cases dealing with this provision as I had recently reviewed them in my Opinion in the case of Lannigan v Glasgow City Council (12 August 2004, unreported). At paragraph 27 of my Opinion in Lannigan I sought to summarise the effect of the various decisions on Section 19A as follows:

"The onus is on the pursuer to satisfy the Court that it is equitable to allow him to bring the action notwithstanding that it is time-barred under Section 17 of the 1973 Act. While Section 19A confers an unfettered discretion upon the court, it is generally relevant to consider the conduct of the parties, the prejudice to the pursuer if he were not allowed to bring the action and the prejudice to the defenders if he were allowed to bring the action. I must first determine whether the pursuer's averments in relation to Section 19A are relevant. If they are......I must then decide on the basis of the material available to me whether it would be equitable to allow the pursuer to bring the action out of time".

The case of Lannigan was decided at the procedure roll stage, whereas this case falls to be decided after proof. No question was raised about the relevancy of the averments relating to time-bar and it was therefore for me to decide on the basis of the evidence whether it would be equitable to allow the pursuers to bring the action. Mr Sanders accepted that the cases showed that, in general, a pursuer, although he may have been personally blameless, was answerable for the acts of his agents (see e.g., Forsyth v A F Stoddard & Co Limited 1985 SLT 51 per Lord Hunter at page 56), but he submitted that there was a complication in this case because of the involvement of IDCL and the fact that the solicitors in question were English solicitors. He pointed out that the first pursuer was a lady in her sixties who did not keep well. If this action were dismissed, the pursuers would have to "go back to square one" and that would "put the pursuers through the hoops". So far as prejudice to the defenders was concerned, the obvious prejudice was the usual one in that they would be deprived of a cast iron defence. It was submitted that the very short delay in raising the action would cause the defenders very little prejudice and that the delay had not made any practical difference to them so far as investigating the claim was concerned.

[10] Mr MacNeill for the defenders pointed out that the first intimation of this claim to the defenders was contained in the letter of 25 February 1997, by which time the claim was time-barred. There was no averment or evidence that the defenders were in any way to blame for the action not having been raised in time. While it was true that the delay in question did not make the investigation of the claim more difficult, the claim was one which would have in any event been a difficult one for the defenders even if the action had been brought in time as there had been no other asbestosis claims relating to the same period. The main reason why I should not allow the action to be brought out of time was that the pursuers were stuck with responsibility for the failure of their agents: Forsyth v A F Stoddard (supra) and Morrice v Martin Retail Group Limited 2003 SCLR 289 at page 269B, para 9. Nothing had been put forward which would even cast doubt on the fact that the pursuers had an unanswerable claim against Russell Young which would be met by the Solicitors' Indemnity Fund. There was no substance in the suggestion that the involvement of IDCL raised any complication. This was a case of a straightforward oversight on the part of the solicitors acting for the pursuers and there was nothing in favour of the pursuers which would make it equitable for me to allow the action to be brought out of time.

Discussion and Conclusion
[11] I shall first examine the conduct of the parties. It is quite clear that no blame can be attached to the defenders for the action not having been brought in time. It is quite clear that the reason why the action was not raised timeously was due to the fault of Russell Young, who were instructed by IDCL when they sent the copy agreement to them on or about 25 July 1996, well within the triennium. The pursuers must accept responsibility for the failure of Russell Young to raise the action in time.

[12] So far as the question of likely prejudice to the pursuers if they are not allowed to bring the action out of time is concerned, they would have no right to damages against the defenders, but there is a possibility of an alternative remedy against Russell Young. The fact that there is such an alternative remedy does not in itself mean that the pursuers should not be allowed to bring this action out of time (Thomson v Brown [1981] 1WLR 744), but it is a highly relevant consideration for me in deciding whether I should exercise my discretion to allow the pursuers to bring this action out of time. I accept that they will suffer some prejudice if they have to proceed with an action for professional negligence against Russell Young. They will require to instruct solicitors to raise an action in England and there is bound to be some delay. While I heard unchallenged evidence (which I accept) that none of the pursuers was in a position to fund such an action, I heard no evidence to the effect that they would be ineligible for legal aid for the purpose of raising such an action, and Mr Sanders accepted that he could not submit that the pursuers would not obtain legal aid in England. I do not accept that either the involvement of IDCL or the English dimension will give rise to complications. I accept the submission of Mr MacNeill that this is a case of a straightforward oversight on the part of the solicitors acting for the pursuers.

[13] So far as any likely prejudice to the defenders if the pursers are allowed to bring the action out of time is concerned, it seems to me that the only prejudice which the defenders would suffer would be the usual one of losing their immunity from suit under Section 17 of the 1973 Act. Mr MacNeill frankly accepted that it could not be said that if I allowed the action to be brought out of time the defenders would encounter difficulties which they would not have encountered had the action been brought in time.

[14] In my opinion the responsibility for this action not having been raised in time rests entirely with the pursuers as responsible for Russell Young, Solicitors and the pursuers have a remedy against Russell Young if they are not allowed to bring this action out of time. If the pursuers were allowed to bring this action out of time, the defenders would be prejudiced by losing their statutory defence. I therefore conclude that it would not be equitable to allow the pursuers to bring this action out of time under Section 19A and I shall refuse to allow them to do so.

Decision
[15] For the reasons set out above I shall repel the third plea-in-law for the pursers, sustain the first and second pleas-in-law for the defenders and dismiss the action.