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Cite as: [2004] ScotCS 274

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Caledonia Subsea Ltd v. Micoperi Srl [2004] ScotCS 274 (16 November 2004)

OUTER HOUSE, COURT OF SESSION

CA44/2000

OPINION OF LORD MACKAY OF DRUMADOON

in the cause

CALEDONIA SUBSEA LIMITED

Pursuers;

against

MICOPERI SRL

Defenders:

________________

Pursuers: Swanson, Solicitor Advocate; Maclay Murray & Spens

Defenders: No representation

16 November 2004

[1] This is a commercial action in which the pursuers are a company with its Registered Office in Aberdeen. The defenders are a company, which is formed under the law of Italy and has its Registered Office in Italy. The commercial action was raised in March 2000. After sundry procedure, including a reclaiming motion heard on 24 May 2002, the action was transferred to my roll in the commercial court on 15 October 2003.

[2] Preliminary hearings took place on 30 October 2003, 10 December 2003 and 28 January 2004. At the last of those hearings I fixed a procedural hearing for 2 March 2004 and ordained parties, if they had not already done so, to lodge in process, by 26 February 2004, notes of proposals for further procedure and lists of witnesses, including witness summaries. I also ordained parties to lodge in process, by 26 February 2004, the draft of a joint minute setting out in chronological order what could be agreed between the parties, including, but not limited to, the history of events giving rise to the action.

[3] By 2 March 2004, both parties had lodged in process notes of proposals for further procedure and lists of witnesses, including witness summaries. A joint minute of admissions, which was signed by a solicitor - advocate on behalf of the pursuers and senior counsel on behalf of the defenders, was also lodged in process on 27 February 2004.

[4] By interlocutor dated 2 March 2004, I allowed parties a proof before answer and appointed that the proof before answer should proceed on Tuesday 16 November 2004 and the two ensuing days. When fixing the proof before answer on 2 March 2004, I ordained both parties to lodge in process, within two months of that date, any further productions in their possession, on which they intended to rely during the proof. The pursuers have not lodged any further productions since 2 March 2004. They had previously lodged a total of 59 productions. On 4 May 2004, the defenders lodged a further 240 productions, additional to the 35 productions they had previously lodged.

[5] On 7 October 2004 the case came before me at a By Order hearing. By this stage the Court had received written notice from the defenders' solicitors, Henderson Boyd Jackson, that they were withdrawing from acting for the defenders (No. 35 of process). Accordingly, on 7 October 2004, I pronounced an order in terms of Rule of Court 30.2 ordaining the defenders to intimate to the Court, within fourteen days of service of the interlocutor of 7 October 2004 upon them, whether or not they intended to insist in their defences to the action. I fixed a further By Order hearing for 5 November 2004 and ordained the defenders to be represented at that hearing, if they intended to continue with their defence to the action.

[6] By letter dated 29 October 2004, Anderson Strathern, Solicitors, informed the Court that they had received instructions to act for the defenders. By agreement between the parties' respective solicitors, the By Order Hearing was adjourned until 9 November 2004. On that occasion the pursuers were represented by Mrs Swanson, solicitor-advocate, and the defenders by Mr O'Neill, Q.C., who had been instructed by Anderson Strathern. Prior to the By Order Hearing, a motion had been enrolled on behalf of the defenders seeking the discharge of the diet of proof before answer fixed for 16 November 2004. That motion was opposed by the pursuers. Having heard submissions on behalf of both parties, I refused that motion.

[7] Senior counsel for the defenders sought a discharge of the proof on the basis that there was insufficient time to prepare for the proof on 16 November 2004. I was informed that the defenders' previous agents had withdrawn from acting for the defenders, because they had experienced difficulty in obtaining instructions from the defenders. That difficulty in obtaining instructions had first arisen during the summer months of 2004. I was informed that the diet of proof of proof before answer was still entered in the diary of the senior counsel, who had previously been engaged to appear for the defenders at the proof before answer and that that senior counsel had no competing engagements. I was informed, however, that notwithstanding the preparations that had been carried out by the defenders' previous agents, the view had been reached that there was insufficient time to prepare for the defenders to be represented at the proof in a week's time.

[8] In refusing the motion, I took account of the fact that it was clear that the firm of solicitors, which had been initially instructed by the defenders, had withdrawn from acting because of the defenders' failure to give full instructions to them. I was, however, far from satisfied that it would be impossible for new solicitors and counsel to prepare for the proof before answer, which was scheduled to commence in a week's time. No doubt a longer period of time for preparation would have been welcomed, by the new firm of solicitors and counsel that they might instruct. I took the view, however, that provided that the managing director of the defenders and the witnesses that were due to give evidence on behalf of the defenders were prepared to make themselves available for meetings with the defenders' current legal advisers, who might have included the senior counsel originally engaged for the proof, it would have been perfectly possible to have built on the preparations previously carried out, in response to orders of the Court, and to prepare for a proof in a week's time.

[9] On 10 November 2004, the day following the hearing of the motion seeking the discharge of the proof, Anderson Strathern, Solicitors, wrote to the Deputy Principal Clerk of Session advising him that they no longer acted on behalf of the defenders. Their letter stated that they were unaware of the identity of the new agents who were to be instructed (No.40 of process). Anderson Strathern's letter gave no reason why they no longer acted for the defenders.

[10] On 12 November 2004, the Court received a fax message sent from Rome by Mr Gianna Manca, an Italian Lawyer, registered with the Law Society of Scotland (No. 42 of Process). The fax message stated that Mr Manca had been briefed by an Italian colleague, Mr Filoppo Muratori, who in turn had been briefed by the defenders. The fax message rehearsed some of the history of the action and noted that the defenders' conduct in dealing with the first set of agents had left much to be desired. The fax message also referred to previous Opinions in the case, contended that the Court of Session did not have jurisdiction to deal with the case and indicated that if the Court of Session were to uphold its jurisdiction in the case, the defenders would have no course open to them but to apply to the Court of Justice in Luxembourg to set aside the judgement of the Court of Session.

[11] When the diet of proof called on 16 November 2004, the pursuers were represented by their solicitor-advocate, Mrs Swanson. The defenders were not represented by counsel or a solicitor-advocate. There was, however, present in Court an Italian lawyer, Mr Filippo Muratori. He had been referred to in the fax dated 12 November 2004, which the Court had received from Mr Gianni Manca.

[12] When the proof was called, the first issue that arose was whether Mr Muratori had any right to appear in court and represent the defenders. I adjourned briefly to allow the pursuers and Mr Muratori to consider this issue. When the Court reconvened Mrs Swanson, the solicitor-advocate for the pursuers submitted that Mr Muratori had no right to appear. In making those submissions she founded on the provisions of Article 5.3 of Directive 98/5/EC of the European Parliament and of the Council of 16 February 1998 to facilitate practice of the profession of lawyer on a permanent basis in a Member State other than that in which the qualification was obtained. Article 5.3 is in the following terms:

"3. For the pursuit of activities relating to the representation or defence of a client in legal proceedings and insofar as the law of the host Member State reserves such activities to lawyers practising under the professional title of that State, the latter may require lawyers practising under their home-country professional titles to work in conjunction with a lawyer who practices before the judicial authority in question and who would, where necessary, be answerable to that authority or with an 'avoué' practising before it.

Nevertheless, in order to ensure the smooth operation of the justice system, Member States may lay down specific rules for access to supreme courts, such as the use of specialist lawyers."

[13] Mrs Swanson also founded on the provisions of paragraph 11 of the European Communities (Scotland) Regulations 2000. That paragraph provides as follows:

"1. 11.-(1) Subjects to paragraphs 2(2) and (4) no enactment or rule of law or practice shall prevent a registered European lawyer from pursuing professional activities relating to the representation of a client in any proceedings before any court, tribunal or public authority (including addressing the court, tribunal or public authority) only because he is not a solicitor or advocate.

(2) In proceedings referred to in paragraph (1), where the professional activities in question may (but for these Regulations) be lawfully provided only by a solicitor or advocate, a Registered European lawyer shall act in conjunction with the solicitor or advocate who is entitled to practise before the court, tribunal or public authority concerned and who could lawfully provide those professional activities.

(3) The solicitor or advocate referred to in paragraph (2) shall, where necessary, be answerable to the court, tribunal or public authority concerned in relation to the proceedings.

(4) A Registered European lawyer shall not have a right of audience in the supreme court unless he has completed the course of training in evidence, pleading and practice in relation to that court which must be completed by any member of the professional body with which he is registered who seeks a right of audience in that court."

[14] Mrs Swanson understood that while Mr Muratori was a qualified Italian lawyer he had not registered with either The Law Society of Scotland or the Faculty of Advocates and that in any event he was not accompanied in Court by counsel or solicitor-advocate. In these circumstances, she submitted that Mr Muratori did not have a right to appear before the Court and for that reason the defenders were unrepresented at the proof.

[15] I took the view that it was appropriate to allow Mr Muratori to address me in the issue of whether he had the right to appear on behalf of the defenders. He confirmed that he had the opportunity of reading Article 5 of the Directive and the provisions of the 2000 Regulations. He confirmed that he was not registered with either the Law Society of Scotland or the Faculty of Advocates. He also confirmed that he had not undergone any course of training, as provided for in paragraph 11(4) of the 2000 Regulations and that he was not accompanied by any counsel or solicitor-advocate. During the course of what he had to say, Mr Muratori indicated that one of the directors of the defenders, who was to be a witness in the proof, had been be unable to travel to Scotland because he was in Egypt, closing negotiations on an important contract.

[16] Having considered the submissions made to me by Mrs Swanson and what was said to me by Mr Muratori I was quite satisfied that it would not be competent for me to hear submissions from Mr Muratori, on behalf of the defenders. I indicated my decision to that effect.

[17] Mrs Swanson then made a motion that I should grant decree by default. In doing so she founded on the provisions of Rule of Court 20.1(1) and (4). She acknowledged that in considering whether or not to grant decree of default I was entitled to exercise my discretion. However, under reference to the case of Munro & Miller (Pakistan) Ltd v Wyvern Structures Ltd 1997 S.L.T. 1356, she argued that I was entitled to take into account the history of the action and in particular the fact that as recently as 9 November 2004 the defenders had unsuccessfully sought a discharge of the proof. In referring to Munro & Miller (Pakistan) Ltd she founded in particular on the passages in the Opinion of the Court, delivered by Lord President Rodger, at pages 1357C-D and 1357L-1358B.

[18] It was argued by Mrs Swanson that, for many months, the defenders had been aware of the diet of proof before answer and that if I was to refuse to grant decree of default I would effectively be giving the defenders a 'second bite at the cherry' and, in effect, adjourning the diet of proof, which I had refused to do on 9 November.

[19] Having considered the submissions that Mrs Swanson made, I was satisfied that this was a case where decree by default should be pronounced. In reaching that view I take account of what happened since I first began managing this case on 30 October 2003. In particular I take account of the fact that the solicitors and senior counsel, who initially acted for the defenders, had arranged for the orders that I had pronounced relating to witness lists, witness summaries, the lodging of productions and the preparation of a joint minute to be fulfilled. I also took account of the fact that one reason why the defenders had parted company from their first firm of solicitors, Henderson Boyd Jackson, had been on account of the fact that they had failed to co-operate with those solicitors in preparing for the proof.

[20] Accordingly I have pronounced decree by default in terms of the four conclusions of the summons. Interest on the sums specified in the first two conclusions will run from 9 May 2000, the date of citation, at the rate of eight per cent per annum and on the sum specified on the third conclusion from 31 March 2001, at the rate of eight per cent per annum.