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James Thomson v. Newy & Eyre Ltd And Others [2005] ScotCS CSIH_21 (24 February 2005)

EXTRA DIVISION, INNER HOUSE, COURT OF SESSION

Lord Marnoch

Lord Macfadyen

Lord Eassie

[2005CSIH21]

A5244/01

OPINION OF THE COURT

delivered by LORD MACFADYEN

RECLAIMING MOTION

in the cause

JAMES THOMSON,

Pursuer and Reclaimer;

against

NEWEY & EYRE LIMITED,

Defenders and Respondents;

and

DIBB LUPTON ALSOP,

First Third Party;

and

ARCHIBALD CAMPBELL & HARLEY, W.S.,

Second Third Party:

_______

Pursuer and Reclaimer: Davies; Drummond Miller W.S.

Defenders and Respondents: Weir; Maclay Murray & Spens

First Third Party: Jones, Solicitor Advocate; Brechin Tindal Oatts

Second Third Party: No appearance

24 February 2005

Introduction
[1] This is an action of damages for breach of contract. On 19 December 1995 the defenders obtained judgment against the pursuer in the Queen's Bench Division of the High Court of Justice at Bradford for payment of the sum of £1933.25 together with costs of £142.50. The pursuer avers that he was unaware of the action until after judgment was obtained. In September 1996 the defenders, founding on the High Court judgment, petitioned for the sequestration of the pursuer in Hamilton Sheriff Court. On receiving service of the petition, the pursuer contacted the defenders, and the contract with which this action is concerned was entered into. The pursuer and the defenders give competing accounts of the contract in their pleadings, but it is common ground between them that on 14 October 1996 Mr Morris of the defenders agreed with the pursuer that if the pursuer paid £1500 immediately, the defenders would withdraw the sequestration proceedings. The sum of £1500 was duly paid. However, for reasons which we need not set out, the sequestration proceedings were not withdrawn, and after sundry further procedure an order for the sequestration of the pursuer was granted by the sheriff at Hamilton on 29 January 1997.

[2] In the events which happened, a petition for recall of the pursuer's sequestration was not presented until 11 February 1999. The sequestration was recalled on 9 March 1999.

[3] In this action, the pursuer seeks damages for breach of the defender's contractual obligation to withdraw the sequestration proceedings. The defenders aver that they instructed the first third party to have the sequestration proceedings dismissed, and consequently plead that, if the pursuer has suffered loss, injury and damage as a result of breach of contract on their part, they are entitled to be relieved by the first third party of their liability in respect of such loss. The first third party in turn claims a right of relief against the second third party, whom they instructed to act on the defenders' behalf in the Scottish proceedings..

[4] The pursuer claims damages under two broad heads. In the first place, he claims that as a result of the sequestration he suffered economic loss in the form of loss of income. Secondly, he claims damages for personal injuries, on the narrative that, as a result of the sequestration, he suffered from stress and became depressed and anxious. Although the relevancy of those claims remains in dispute, the defenders have not sought to have either claim dismissed as irrelevant without enquiry.

[5] The present action was signetted in November 2001. The defenders' position before the Lord Ordinary was that, at least in so far as the pursuer claimed damages for personal injuries, the action was time-barred in terms of section 17 of the Prescription and Limitation (Scotland) Act 1973 ("the 1973 Act"). That position was based on the proposition that the breach of contract occurred when sequestration was granted on 29 January 1997, and that the triennium ran (1) from that date or, (2) if the pursuer was entitled to invoke section 17(2)(b), from October 1997 when, according to his averments, he became aware of the sequestration, or (3) from February 1998, when he first consulted his doctor about stress-related symptoms. On any view, therefore, the triennium had expired before the action was brought in November 2001. The first third party adopted a similar position. In response, the pursuer invoked section 19A of the 1973 Act, and maintained that, if the claim for damages for personal injuries was not timeously brought in terms of section 17, it was nevertheless equitable that he should be allowed to bring it.

[6] The case came before the Lord Ordinary on the procedure roll in respect of the parties' pleas based on sections 17 and 19A. Although section 17 applies to "an action of damages where the damages consist of or include damages in respect of personal injuries" (emphasis added), the debate before the Lord Ordinary ultimately proceeded on the basis that, if the defenders' contention were upheld, the proper course would be to exclude the averments making the claim for damages for personal injuries from probation, leaving the remaining part of the action standing (see paragraph [7] of the Lord Ordinary's Opinion). The latter part of the action would, if not associated with a claim for damages for personal injuries, have been timeously raised in terms of section 6 of the 1973 Act. Before us, the parties adhered to that approach.

[7] The Lord Ordinary, having considered the factors relied upon in debate by the parties, reached the conclusion that it was not equitable that the pursuer should be allowed to bring the claim for damages for personal injury. He therefore excluded the averments in support of that claim from probation, and quoad ultra allowed a proof before answer.

[8] The issue raised in the reclaiming motion is therefore whether the Lord Ordinary erred in failing to exercise his discretion under section 19A in favour of allowing the personal injuries element of the action to proceed despite its not having been timeously raised in terms of section 17.

The legislation
[9] So far as material for present purposes, section 17 of the 1973 Act provides as follows:

"(1)	This section applies to an action of damages where the damages claimed consist of or include damages in respect of personal injuries ...
(2)	Subject to subsection (3) below and section 19A of this Act, no action to which this section applies shall be brought unless it is commenced within a period of three years after -
	(a)	the date on which the injuries were sustained ...; or
	(b)	the date (if later than any date mentioned in paragraph (a) above) on which the pursuer in the action became, or on which, in the opinion of the court, it would have been reasonably practicable for him in all the circumstances to become, aware of all of the following facts -
		(i)	that the injuries in question were sufficiently serious to justify the bringing of an action of damages on the assumption that the person against whom the action was brought did not dispute liability and was able to satisfy a decree;
		(ii)	that the injuries were attributable in whole or in part to an act or omission; and
		(iii)	that the defender was a person to whose act or omission the injuries were attributable in whole or in part ...".

[10] Section 19A provides inter alia as follows:

	"(1) Where a person would be entitled, but for ... the provisions of section 17 ... of this Act, to bring an action, the court may, if it seems to it equitable to do so, allow him to bring the action notwithstanding that provision."

The submissions before the Lord Ordinary
[11] The Lord Ordinary summarised in paragraph [11] of his Opinion the submissions made on the pursuer's behalf in support of the contention that it was equitable that the personal injuries claim should be allowed to proceed. The points made were (1) that the delay was not the pursuer's personal fault; (2) that while he might have an alternative claim against his solicitors, that remedy was not entirely clear and would be expensive and difficult to pursue; (3) that the pursuer would be significantly prejudiced if forced to pursue two actions instead of one; (4) that the defenders would not be materially prejudiced if the personal injuries aspect of the action were allowed to proceed; (5) that some of the pursuer's difficulties were the responsibility of the defenders or their agents; and (6) that the whole claim derived from a litigation (the Bradford proceedings) which went wrong.

[12] The Lord Ordinary's summary of the defenders' submissions to him is contained in paragraph [12] of his Opinion. The points made were (1) that the pursuer would not be without a remedy if he were not allowed to proceed against the defenders in respect of the personal injuries claim; (2) the fact that the pursuer had complicated the alternative remedy against his own solicitors by involving a number of different solicitors should not count in his favour in relation to the section 19A issue; (3) the two claims, for economic loss and for personal injuries, were entirely different, and the pursuer had shown no expedition in bringing forward the personal injuries claim; (4) the defenders would be put to considerable expense and inconvenience in investigating and dealing with the personal injuries claim; (5) further delay had occurred after it was known that the claim might be time-barred in terms of section 17(2); (6) the fact that the economic loss claim will proceed is a neutral factor, because investigation of the two claims would be different, and the personal injuries claim involved matters - stress and depression - of which the defenders have no personal knowledge.

The Lord Ordinary's decision
[13] The core of the Lord Ordinary's reasoning in support of his conclusion that the personal injuries claim should not be allowed to proceed is to be found in the following passage in his Opinion:

	"[14]	I am not persuaded that the circumstances as disclosed and the pursuer's arguments thereon are such as to make it just and equitable that the personal injuries claim should proceed. The pursuer had ample time and advice available to him prior to the expiry of the triennium. There is no hint on averment that he ever involved the defenders in the allegation of stress. In relation to his being sequestrated he would have had title to sue for that part of his claim, even if any monetary benefit might have accrued to his trustee.
	[15]	However, the factor which finally tips the balance against the pursuer is the averments (52D) that it was not thought necessary to raise proceedings immediately although the triennium had expired. Such advice was given in September 2000 over a year before raising the action, and in the event an 18-month period was allowed to lapse after the expiry of the triennium and [before] the raising of the action. In this case it is the pursuer, not the defenders, who would have a windfall benefit, if allowed to proceed with this action. The fact that he may have a claim for economic loss is in my opinion a neutral factor which in this case, gratuitously, would allow him to tack on a time-barred personal injuries claim. A situation could arise whereby the economic loss claim failed and as a result of having pursued a bad action, the pursuer would have been enabled to present an otherwise time-barred claim. If the matter is tested simply as to whether the personal injuries action could have been presented separately, I do not consider that the pursuer in such a case would succeed on a section 19A invocation."

The pursuer's amendment
[14] In response to the point made by the Lord Ordinary in the third sentence of paragraph [14] of his Opinion, the pursuer tendered a Minute of Amendment by which he sought to add to his pleadings averments in the following terms:

"During the course of the sequestration the pursuer wrote frequently to the defenders and the [first] third party telling them of the consequences of the sequestration upon him and his family. In particular, he wrote to the defenders on 28 January 1998 advising them that the sequestration was a 'tremendous strain' on him and his family, that it was causing him loss of sleep, and asking them not to 'prolong the distress'. By letter dated 7 February 1998 he advised the [first] third party that the sequestration was causing him considerable distress and that he had been prescribed anti-depressants by his general practitioner. By letter dated 11 January 1999 the [first] third party wrote to the pursuer apologising 'for the stress this matter is obviously still causing you and your family'. By letter dated 13 April 1999 the pursuer advised the [first] third party of his intention to seek financial redress 'for the hardship, mental, physical and financial'.

At the commencement of the hearing on the summer roll the pursuer was allowed to amend his pleadings in those terms. The defenders and the first third party did not oppose such amendment, although they reserved their position as to whether they might in due course require to answer the averments thereby added to the pursuer's pleadings.

The pursuer's submissions in the reclaiming motion
[15] Before this court Mr Davies for the pursuer submitted that, in declining to exercise his discretion under section 19A in favour of the pursuer, the Lord Ordinary had failed to take into account a number of relevant considerations. First, the Lord Ordinary had erred in regarding the fact that the defenders would have to deal with the timeously-raised claim for economic loss as neutral. It was therefore wrong to test the matter by asking whether, if the personal injuries claim had been presented on it own, it would have been possible to invoke section 19A successfully. The fact that the economic loss claim, if it had stood alone, would have been timeously raised, and would have had to be dealt with on its merits meant that, if the personal injuries claim were allowed to be brought under section 19A, it would involve no new issue on the merits, and in addition there was some overlap in the material which would require to be addressed for the purpose of quantification of the claims. To allow the personal injuries claim to proceed was therefore less prejudicial to the defenders in the context of the economic loss claim than it would have been if the personal injuries claim had stood alone. The existence of the economic loss claim therefore could not be regarded as a neutral factor. Secondly, although the Lord Ordinary referred to the advice tendered to the pursuer by his solicitors, he did not expressly address the possibility of an alternative remedy against them, or the difficulties which would be inherent in such an action. Thirdly, in saying in paragraph [14] that the pursuer would have had title to sue for the personal injuries claim while sequestrated, he failed to recognise and take into account the difficulties of such an action, including the difficulty of funding it. For these reasons, Mr Davies submitted, the Lord Ordinary should be held to have failed properly to address the exercise of his discretion under section 19A, and the exercise of that discretion therefore became a matter which fell to be addressed by this court de novo.

[16] In submitting that this court should allow the personal injuries claim to proceed, Mr Davies relied on the six factors summarised by the Lord Ordinary in paragraph [11] of his Opinion.

(1)	The pursuer himself was not at fault in delaying to bring proceedings in respect of the personal injuries claim. He instructed solicitors timeously, and followed their advice. He was not advised, during the course of the triennium, that proceedings in respect of the personal injuries claim had to be raised before it expired.
(2)	It was acknowledged that the pursuer had to accept responsibility for the actings of his advisors, in so far as they were criticised for the decision in September 2000 not to bring an action as soon as it was realised that the triennium had expired. But by that time, the triennium had, on any view, expired. If the pursuer's advisors were at fault, that was a factor against the court's exercising its discretion under section 19A in his favour, because he might have an alternative remedy, but that alternative remedy would be difficult and expensive to pursue. A number of advisors had been involved over the relevant period.
(3)	The pursuer would be prejudiced if he had to pursue two actions with repetitive content. His depression was ongoing. Early resolution of the claims was likely to assist his recovery.
(4)	There would be little real prejudice to the defenders if the personal injury claim were allowed to proceed. The purpose of the time bar imposed by section 17 was to protect defenders from stale claims. Here the defenders would have to deal with the economic loss claim in any event. The personal injury claim, so far as its merits were concerned, rested on the same basis. Moreover, the defenders had a right of relief against the first third party.
(5)	The defenders and the first third party were in part to blame for the delay. The sequestration, which occurred because of the defenders breach of contract, inhibited the pursuer's ability to pursue a claim for damages. The first third party's delay in meeting costs incurred by the pursuer's original solicitors delayed the release of his files to his new solicitors.
(6)	The whole claim arose from the fact that the proceedings against the pursuer in the High Court at Bradford were not served properly on him.

[17] Balancing all the relevant circumstances and the interests of the parties (Anderson v Glasgow District Council 1987 SC 11), the court should hold that it was equitable to allow the personal injury claim to proceed. Failing a decision to that effect at this stage, a proof before answer should be allowed, with all pleas relating to the question of time bar left standing.

The defenders' submissions in the reclaiming motion
[18] For the defenders, Mr Weir's primary submission was that the Lord Ordinary had not been shown to have erred in declining to exercise his discretion in favour of the pursuer. While Mr Davies had described the purpose of section 17 as being to protect defenders from stale claims, it might also be said to be to encourage expedition in raising actions. The loss of the right to proceed with a claim not timeously made was what Parliament had authorised by section 17. The defenders relied heavily on the pursuer's averments at pages 52C to 53A of the Reclaiming Print, which disclosed that the expiry of the triennium was recognised by the pursuer's solicitors in September 2000, yet the action was not raised until over a year later, in November 2001. These were unusual averments in the context of a section 19A case. Recognition of the expiry of the triennium ought ordinarily to lead to immediate recourse to section 19A. At page 52B to C, there was disclosed an earlier delay between the release of the former solicitors' files to be read by Quantum Claims on 1 February 2000, and Quantum Claims' instruction of the pursuer's present solicitors on 5 September 2000. The delay after it was realised that the triennium had expired was relied on by the Lord Ordinary as an important factor against the exercise of the section 19A discretion (paragraph [15]). That was a factor to which he was entitled to give considerable weight. What the Lord Ordinary said in the latter part of paragraph [15] about the fact of the economic loss claim being a neutral factor had to be read in the context of the submissions which the defenders had made, as recorded by the Lord Ordinary in paragraph [12]. The submission had been that the fact that the claim would proceed in respect of the economic loss claim was neutral "because the investigations for both claims would be different". The only link between the two claims was the averment at 41B to the effect that the pursuer had been certified as unfit to work by his General Practitioner. The Lord Ordinary was entitled to say what he said about neutrality on the basis that he accepted the defenders' submissions on that point. It had not been shown that the Lord Ordinary had failed properly to address the discretion conferred on him by section 19A.

[19] Mr Weir's secondary submission was that, if the section 19A discretion required to be exercise de novo, the result should be the same as that reached by the Lord Ordinary. He relied principally on three factors.

The pursuer's agents had delayed until November 2001 before raising the action, despite having taken the view in September 2000 that the triennium had expired in January 2000. The averments introduced by amendment (see paragraph [14] above) emphasised the fact that the pursuer was aware in 1998 of having suffered in his health as a result of stress occasioned by the sequestration. His averments at pages 40 and 41 of the Reclaiming Print referred to stress-related symptoms in February 1998 and a diagnosis of stress-related chest pains in March 2000. There were no averments of worsening thereafter. The pursuer was therefore in a position to make the personal injury claim which he now made before the expiry of the triennium. His solicitors had deliberately refrained from raising proceedings for over a year after they were aware of the claim and of the fact that the triennium had expired.
The second factor on which Mr Weir founded was the prejudice which the defenders would suffer if the pursuer were allowed to proceed with the personal injuries claim. That prejudice lay in the loss of the protection which section 17 gave them (Donald v Rutherford 1984 SLT 70, per Lord Cameron at 77). He recognised that there had to be taken into account also that if the pursuer were not allowed to proceed, he could be said to be prejudiced. That prejudice might be mitigated by an alternative claim, but such mitigation depended on an assessment of any difficulties in the way of the alternative claim (Forsyth v A. F. Stoddard & Co Ltd 1985 SLT 51 at 54-55). In the present case the defenders could point not only to the loss of the section 17 defence, but also to the fact that if the personal injuries claim were allowed to proceed, it might turn out to involve complex issues of causation, and lead to substantial expense and inconvenience.
It could not be said, Mr Weir submitted, that the prejudice which the defenders would suffer if the personal injuries claim were allowed to proceed would be elided by the fact that the defenders claim a right of relief against the third party.

[20] Mr Weir's primary position was that the pursuer's recourse to section 19A could be dealt with on the basis of the submissions made. On that basis the result reached by the Lord Ordinary should be upheld, either because he had not been shown to have fallen into error, or because, addressing the issue de novo, this court should reach the same conclusion. Failing such disposal, Mr Weir submitted that any proof before answer should be restricted to the section 19A issue.

The first third party's submissions in the reclaiming motion.
[21] Mr Jones for the first third party adopted Mr Weir's submissions, and added further submissions of his own.

He submitted that if Mr Davies was right that the defenders' right of relief against the first third party elided the prejudice suffered by the defenders if the personal injuries claim were allowed to proceed, it would be right then to take into the balance of prejudice the prejudice which the first third party would suffer in that event.
In so far as Mr Davies had referred to difficulties which the pursuer had had in raising proceedings during the sequestration, and attributed those to the first third party's failure to seek recall of the sequestration, the pursuers had no pleadings in support of such a case. In any event, the sequestration was recalled two and a half years before this action was signeted. That delay could not be the responsibility of the first third party.
In the averments attributing responsibility for delay to the first third party (Reclaiming Print page 52) it was not asserted that the first third party had ever been asked and refused or delayed to pay fees.

Discussion
[22] There was no real dispute among the parties as to the proper approach to be adopted in considering whether, in terms of section 19A, it was equitable that a claim, prima facie time barred in terms of section 17, should nevertheless be allowed to proceed. It is necessary to balance all the relevant circumstances of the particular case and the interests of all parties concerned (Anderson v Glasgow District Council at 24; Donald v Rutherford at 77).

[23] In order for the pursuer to succeed in this reclaiming motion it is necessary for him in the first instance to demonstrate that the Lord Ordinary has gone beyond the proper scope of the discretion conferred on him by section 19A. We are persuaded that the pursuer has succeeded in that respect. The Lord Ordinary, accepting a submission advanced on the defenders' behalf in somewhat broader terms than it was made, held that the fact that the defenders had to face a timeously raised claim for damages for economic loss resulting from the same breach of contract was a neutral factor in considering whether equity favoured allowing the personal injuries claim to proceed despite its not having been timeously raised. In our view, the Lord Ordinary erred in taking that view. The case proceeded on the basis that the claim for economic loss was timeously made, because it was brought less that five years after the right of action arose. The situation was thus that, whatever the position might be in respect of the personal injuries claim, the defenders would have to deal with the economic loss claim on its merits. The case was therefore not one in which the personal injuries claim stood or fell on its own. The defenders could not escape all liability to the pursuer by resisting the pursuer's attempt to have recourse to section 19A in respect of the personal injuries claim. It was therefore, in our opinion, wrong to test the section 19A claim, as the Lord Ordinary did, by asking whether the personal injuries claim, if it had stood alone, would have been allowed to proceed under section 19A. The position is, in our opinion, made all the clearer by the fact that there is a considerable overlap between the circumstances on which the economic loss claim proceeds and the circumstances on which the personal injuries claim proceeds. Both require exploration of the assertion that in addition to the commercial loss arising from the award of sequestration itself the pursuer was rendered unfit for work by circumstances stemming from his sequestration.

[24] We do not consider that the other grounds upon which Mr Davies attacked the Lord Ordinary's decision justify the conclusion that he erred in the exercise of his discretion. The error which we have identified in paragraph [23] above results, however, in our view, in the need for us to consider de novo whether the discretion conferred on the court by section 19A ought to be exercised in the pursuer's favour.

[25] As in virtually every section 19A case, it goes almost without saying (1) that if the court's discretion is exercised in the pursuer's favour the defenders will suffer prejudice in respect that they will be deprived of the statutory defence available to them under section 17, and (2) that if the court's discretion is not so exercised the pursuer will suffer prejudice in the loss of what might, time bar apart, have been a well-founded claim. It is also well recognised that the prejudice which would otherwise be suffered by the pursuer may be elided, to some extent, if he has an alternative remedy, such as an action of damages for professional negligence against his solicitors. That consideration will be of greater or lesser force according to how straightforward the alternative claim would be. Against that background of general considerations, it is a point of considerable force that the pursuer failed to pursue the claim in question with promptitude (a) when its availability was recognised, and (b) when it was realised that the triennium set by section 17 had expired. That is so even where the pursuer is himself blameless, because he must accept responsibility for failure on the part of those acting for him (Forsyth v A. & F. Stoddard & Co Ltd at 54). In so far as the Lord Ordinary founded on that consideration, we are in agreement with him. As we have indicated, however, we are of opinion that it cannot be said in the circumstances of the present case that the fact that the economic loss claim will proceed in any event is a neutral consideration. We consider that it is a factor which weighs in the pursuer's favour that, come what may, the defenders will have to deal with the economic loss claim on its merits. Although the position is not entirely clear on the pleadings, it seems likely that there will be a material degree of overlap between the evidence bearing on the economic loss claim and that bearing on the personal injuries claim. The extent to which the pursuer was disabled from working as a consequence of the stress, anxiety and depression which he avers was caused by the sequestration will, it seems to us, have a bearing on both claims.

[26] There are a number of other aspects of the matter on which we can express a view at this stage. For example, we accept that the pursuer cannot elide the prejudice which the defenders will suffer if the personal injuries claim is allowed to proceed by pointing to the claim for relief which the defenders make against the first third party. For the purpose of assessing the weight of that prejudice, it is in our view appropriate to regard the interests of the defenders and those of the first third party as aspects of the same interest. Further, we do not consider that the pursuer can rely on the origin of the problem as being in the fact (as he avers it) that the action in the High Court in Bradford was not properly served on him. Where the claim is based on the subsequent contract not to proceed with sequestration, the antecedents of that contract are irrelevant.

[27] We do not consider, however, that it would be appropriate for us to reach a final conclusion on whether we should exercise our discretion under section 19A in favour of the pursuer simply on the basis of the parties' respective pleadings. The history of the matter is somewhat complex. It involves an assessment not only of the conduct of the pursuer and the defender, but also of the conduct of both third parties. It involves an assessment of the actings and motivation not only of the pursuer himself, but also of various representatives of his. These include his original solicitors, Quantum Claims and his present solicitors, all of whom contributed to the sequence of events which resulted in this action not being raised until some time after the expiry of the triennium, whatever view may be taken of when that occurred. We do not consider that the defenders are right in saying that the pursuer cannot rely on complications stemming from his changes of representation. The actual facts, as they occurred, require to be considered. In these circumstances we consider that a decision on the application of section 19A should be deferred until after the circumstances have been clarified by the leading of evidence. Two possible courses are open to us. The one preferred by the defenders is that there should be a proof before answer restricted to the section 19A issue. The other, preferred by the pursuer, is that there should be a proof before answer at large, with all pleas relating to time bar standing. We have reached the conclusion that, because of the extent to which the facts bearing on time bar and the facts bearing on the merits of the claim are intermingled, the more satisfactory course is to allow a proof before answer at large.

Result
[28] We shall accordingly allow the reclaiming motion, recall the Lord Ordinary's interlocutor of 2 July 2004 and allow to parties a proof before answer of their respective averments, including their averments relating to the issue of time bar.