EXTRA DIVISION, INNER HOUSE, COURT OF SESSION
Lord Nimmo Smith Lord Hardie Lord Emslie	[2009] CSIH 54NO. A1744/02 OPINION OF THE COURT delivered by LORD NIMMO SMITH in Reclaiming Motion by JR QUEENAN PARTNERSHIP LIMITED Fourth Defenders and Reclaimers in the cause LINK HOUSING ASSOCIATION LIMITED Pursuers and Respondents; against (FIRST) PBL CONSTRUCTION LIMITED and OTHERS Defenders: _______

ActPursuers and Respondents: Johnston QC; Burness LLP (Pursuers and Respondents)

AltFourth defenders and reclaimers: McNeill QC, Walker; Brodies LLP (Fourth defenders and reclaimers)

Non participating parties:

First Defenders: Simpson & Marwick

Fifth Defender: Agents: Drummond Miller LLP

[Date of Issue]

25 June 2009

Introduction

[1] This is a reclaiming motion from an interlocutor dated 20 January 2009 by which the Lord Ordinary (Lady Dorrian) allowed the closed record to be opened up and amended in terms of a minute of amendment for the pursuers, number 52 of process, and answers thereto for the fourth and fifth defenders, numbers 55 and 56 of process. The effect of the amendment was inter alia to replace the original pursuers, Link Housing Association Limited, with Link Group Limited.

[2] The sole question for our consideration is whether the lodging and intimation of a previous minute of amendment to the same effect, amendment in terms of which was ultimately refused by the court, was effective to interrupt the running of the quinquennial prescriptive period. Since this is a question of law, it is convenient to set out first of all the statutory provisions and the authorities which are applicable to it.

The legislation

[3] The relevant statutory provisions are contained in the Prescription and Limitation (Scotland) Act 1973 ("the 1973 Act"). Section 6 thereof provides inter alia:

"(1) If, after the appropriate date, an obligation to which this section applies has subsisted for a continuous period of five years -

(a) without any relevant claim having been made in relation to the obligation, and

(b) without the subsistence of the obligation having been relevantly acknowledged,

then as from the expiration of that period the obligation shall be extinguished:...."

Section 9 (1) provides that in section 6 (and also sections 7 and 8A) the expression "relevant claim", in relation to an obligation, means a claim made by or on behalf of the creditor for implement or part-implement of the obligation, being a claim made in one of various specified ways including "(a) in appropriate proceedings". In section 9 (4) the expression "appropriate proceedings" has the same meaning as in section 4, which provides by sub-section (2) that the expression means inter alia

"(a) any proceedings in a court of competent jurisdiction in Scotland or elsewhere, except proceedings in the Court of Session initiated by a summons which is not subsequently called".

The authorities

[4] These and similar provisions were considered in the following cases. In Boyle v Glasgow Corporation 1975 S.C. 238 ("Boyle") the provisions in question were contained in section 6 of the Law Reform (Limitation of Actions, etc.) Act 1954, and related to the three-year limitation period for actions of damages for personal injuries. The action arose from an accident which happened on 8 July 1969. The pursuer raised an action by way of summons which was signeted and served on 28 August 1970. On 4 July 1972, still within the triennium, a minute of amendment on behalf of the pursuer was allowed to be received which contained fresh allegations of fault. On 1 August 1972 the closed record was allowed to be amended in terms of the minute of amendment and answers thereto. Thereafter, however, the Lord Ordinary after debate excluded from probation the averments relating to the fresh ground of fault, holding that this was time-barred because in his view the proposed amendment was not effective until the court pronounced an interlocutor allowing the closed record to be amended in terms thereof. The Second Division, reversing the Lord Ordinary, held that the punctum temporis at which a minute of amendment was brought within the judicial process was when the motion to allow it to be received and answered was made; and that, since that had been done within the triennium, the averments were not time-barred. The Lord Justice-Clerk (Wheatley), with whom Lords Kissen and Leechman agreed, said at pages 250 to 251:

"The question has to be determined on the basis that this is a 'new' case. If it were not, the question would not arise. If this in fact was an entirely new case, then the action would be brought when the summons had passed the signet and had been served on the defenders.... It should be noted that at and up to this point the Court in the person of the Judge is in no way involved. It seems to me therefore that the provisions of section 6 (1) supra, which is designed to give fair notice to a defender that an action is being brought against him within the prescriptive period, are satisfied, and the action is 'brought' within our procedure, when first steps in the judicial process are taken, namely when the summons has passed the signet and has then been served on the defender. As far as researches have gone, there has been no decided case to determine what is the corresponding point when an existing summons is amended by a Minute of Amendment. Manifestly in that situation it must be initiated by something within the judicial process. The lodging of a Minute of Amendment brings it into the judicial process. Intimation to the defender of the motion to the Court asking for the Minute to be received and answered within a specified period brings to the attention of the defender that the Minute of Amendment has been lodged, and it is at that point available to the defender. That seems to me to constitute fair notice. It is true that at that stage the amendment has not yet been allowed, and eventually may not be allowed, by the Court; but at least the pre-requisite of fair notice has been satisfied within the judicial process in which the defender is already involved, and if this has been done within the triennium, then that is as near to equiparation to the service of a summons as the situation permits. In fact it goes even a step further, because the Court in the person of the Judge is brought into the procedure at the stage when it is asked to give authority for the Minute of Amendment to be received and to authorise answers to be lodged within a specified period, whereas in the case of a completely new action the Court in the person of the Judge is not involved in the corresponding part of the procedure.

.....When fair notice within the judicial process and within the prescriptive [sic] period has been given, I consider that the purposes and the provisions of section 6 (1) have been effected."

[5] The soundness of the decision in Boyle was doubted in the Outer House by Lord Ross in Morrison v Scotstoun Marine Limited 1979 SLT 76. At page 78 he said:

"Speaking personally and with the greatest respect I find it difficult to understand how fair notice to a defender or a third party can be thought to have been given by the lodging of a minute of amendment which the court may never allow to be received and which, even if it is allowed to be received, may never be incorporated into the pleadings by the court's allowing the record to be amended in terms thereof. As matter of procedure it is well recognised that the lodging of a minute of amendment per se achieves nothing. Before a minute of amendment can become part of the pleadings in a case, the court must be asked: (1) to allow the minute of amendment to be received (and answered); and (2) to allow the record to be opened up and amended in terms of the minute of amendment (and answers). Unless and until motions to such an effect are granted, the minute of amendment which has been lodged in process has no effect on the pleadings. That being so, I find it difficult to appreciate how such a minute of amendment can be regarded as giving a defender or third party fair notice that a case is being made against him and a decree sought against him. However, the Second Division has said otherwise and their decision is binding upon me."

[6] Notwithstanding this criticism, Boyle was followed in Kinnaird v Donaldson 1992 SCLR 694 ("Kinnaird"), which related to the quinquennial prescription under section 6 of the 1973 Act and which is therefore directly applicable to the present case. In the course of the procedure in the Sheriff Court in that case a minute of amendment was lodged, within the quinquennium, and the record was purportedly amended in terms of that minute. Shortly thereafter, however, the parties jointly moved the sheriff to declare that part of the interlocutor dealing with the amendment pro non scripto, which motion was granted. The record was eventually amended in terms of the same minute of amendment at a later date, which was outwith the quinquennium. The defender pleaded that the pursuer's claim, introduced by the minute of amendment, had been extinguished by prescription. In the appeal to the Court of Session, the pursuer argued that his claim had not prescribed because he had timeously made a "relevant claim" interrupting the running of prescription before by inter alia lodging the minute of amendment. The defender argued that the minute of amendment did not amount to a "relevant claim" as the record was not then amended in terms of it. Lord McCluskey, in delivering the opinion of the Extra Division, said at page 703 that the pursuer's ground of appeal relating to the effect of the lodging of the minute of amendment was "unanswerable". He continued:

"In our opinion, the law applicable is as stated by the Lord Justice-Clerk in Boyle v Glasgow Corporation and in particular we refer to the passage quoted earlier [see above]. It is not necessary in this case to identify the particular moment in time when a relevant claim was made. What happened was that on 29th July 1987 the sheriff on the motion of the defender (the respondent) and of consent allowed answers by the defender to a minute of amendment for the pursuer (the appellant), No. 19 of Process, previously lodged, and allowed the record to be amended in terms of that minute and answers. Whatever the justification for the interlocutor of 18th November 1987, which purported to delete some parts of the interlocutor of 29th July 1987, it is perfectly plain that the minute of amendment No. 19 of Process was then lodged and was thus brought into the judicial process. Intimation had been made to the defender of the motion and thus fair notice had been given. Fair notice had been given within the judicial process and, as Lord Wheatley said:

'that is as near to equiparation to the service of a summons as the situation permits. In fact it goes even a step further, because the Court in the person of the judge is brought into the procedure at the stage when it is asked to give authority for the Minute of Amendment to be received and to authorise answers to be lodged within a specified period'.

This earlier part of the interlocutor of 29th July 1987 was not declared pro non scripto at a later date. In any event, given that the record was in fact opened up and allowed to be amended in terms of the minute of amendment No. 19 of Process, that must have constituted interruption. Counsel for the respondent could hardly contend otherwise and did not do so. He argued that there had been a kind of 'de-interruption'. No authority was quoted for this bizarre proposition and we consider that it has no merit. Accordingly, as parties accept that the amendment No. 19 of Process contained adequate material to constitute a relevant claim, and as we have held that the procedure outlined in the interlocutor of 29th July 1987 must be regarded as constituting the making of the claim, it follows that a relevant claim was made within the period of five years and that the respondent's first plea falls to be repelled on that distinct ground."

The procedure in the present case

[7] This action has had a complicated procedural history, which we shall set out only to the extent that is necessary for present purposes. In May 1996 GAP Housing Association Limited, a body constituted under the Industrial and Provident Societies Act 1965 ("GAP"), entered into a contract with the first defenders, PBL Construction Limited, for the construction of thirty flatted dwellinghouses in Paisley. The second to fifth defenders were involved with the contract in various capacities. The fourth defenders, JR Queenan Partnership Limited, were appointed as the Employers' Agent for the development. The development was completed, but by about November 2000 severe defects arose and it required to be demolished.

[8] Meantime, the whole property and assets of GAP were transferred, in October 2000, to Link Housing Association Limited, another body constituted under the Industrial and Provident Societies Act 1965. On 7 September 2001 that association changed its name to "Link Group Limited". On 29 November 2001 a new and different company named Link Housing Association Limited was registered under the Companies Acts. On 8 July 2002 the summons in the present action was signeted. It proceeded, in error, under the name of Link Housing Association Limited, that is to say the new company, as pursuers. The pursuers should have been Link Group Limited, that is to say the association formerly named Link Housing Association Limited, to whom the whole property and assets of GAP had been transferred. The sum sued for was £2,941,742.68.

[9] There were originally five defenders, but in the course of subsequent procedure the third defenders were assoilzied from the conclusions of the summons, leaving four defenders in the action. On 10 February 2006 Lord Wheatley heard a motion on behalf of the pursuers to amend the record in terms of their minute of amendment, number 26 of process, which had been lodged and intimated within the statutory quinquennium on 24 March 2005, and answers thereto, numbers 27, 29, 31 and 33 of process. By interlocutor dated 31 March 2006 he allowed the closed record to be opened up and amended in terms of that minute of amendment and those answers. The effect of the amendment was inter alia to amend the instance by substituting Link Group Limited for Link Housing Association Limited as the pursuers. Lord Wheatley issued an opinion setting out his reasons for deciding to allow the amendment: [2006] CSOH 53. The second, fourth and fifth defenders reclaimed against his interlocutor. By interlocutor dated 10 January 2007 the First Division allowed the reclaiming motion. The decision is reported under the name of Gray Aitken Partnership Limited v Link Housing Association Limited 2007 S.C. 294. It is apparent from the opinion of the Lord President, with whom Lords Osborne and Eassie agreed, that the reclaiming motion was allowed at the instance of the second defenders alone, because of a special limitation provision running from July 1997 in a collateral warranty entered into between them and GAP. Other arguments at the instance of the fourth and fifth defenders were unsuccessful. At paragraph 20 his Lordship said:

"In the foregoing circumstances I move your Lordships to allow the reclaiming motion at the instance of the second defenders, to recall the Lord Ordinary's interlocutor, to refuse to allow amendment in terms of the minute of amendment and answers and to remit to the Lord Ordinary to proceed as accords."

[10] As to the position of the other defenders, the Lord President said, at paragraph 15, in rejecting an argument that the Lord Ordinary's interlocutor should not be opened up because the first defenders, who were also affected by the amendment, had not reclaimed:

"Where a proposed change affects more than one party and one of these successfully opposes amendment then, albeit another party or parties consent or do not object to such amendment, the appropriate course is to refuse the amendment simpliciter. Where as here the consequence of refusing the amendment is to release the successful party from the action, it will be open thereafter for the pursuers to lodge a fresh minute of amendment proposing a change of name. That, if granted, will affect the position of the surviving defenders."

[11] In line with this advice, the pursuers lodged a fresh minute of amendment in December 2007, number 49 of process. A motion to allow it to be received was opposed by the second and fourth defenders. In the course of the discussion before Lord McEwan, senior counsel for the pursuers said that the pursuers would renounce probation against the second defenders and would not oppose a decree of absolvitor with expenses being granted to these defenders. On 21 December 2007 Lord McEwan refused the pursuers' motion. His reasons for doing so were set out in an opinion: [2007] CSOH 206. It is apparent from that opinion that the sticking point was that the second defenders remained in the action. On 10 July 2008 Lord Clarke granted a motion on behalf of the pursuers, which gave effect to a minute of abandonment against the second defenders. This left three defenders in the action, the first, fourth and fifth.

[12] On 10 July 2008 Lord Clarke heard a further motion on behalf of the pursuers, opposed by the fourth and fifth defenders, to allow a third, substantially identical, minute of amendment, number 52 of process, to be received and to appoint the remaining defenders to lodge answers thereto. On 8 August 2008 he granted this motion. His reasons for doing so were given in an opinion: [2008] CSOH 112. At paragraph 16 he rejected an argument on behalf of the fourth defenders, adopted by the fifth defenders, that the lodging of the first minute of amendment, number 26 of process, in March 2005 was not effective to interrupt the quinquennial prescription. Under reference to the cases of Boyle and Kinnaird referred to above, he said:

"I cannot see any reason, in principle, as to why the reasoning of the cases of Boyle and Kinnaird should not be applied, as regards the effect of the original minute of amendment being allowed to be received in March 2005. Both of these decisions made it clear that the relevant limitation or prescriptive period may be interrupted by virtue of fair notice being given in existing proceedings before the court as to a new basis of claim. Those cases are clear authority to the effect that such fair notice may be given by the lodging of a minute of amendment in existing court proceedings. It is the giving of the notice which interrupts the limitation or prescriptive period - not the outcome of that notice. Just as the raising of an action, which is subsequently dismissed as irrelevant, nonetheless interrupts the prescriptive period in relation to the claim on which it was based, so that a further action may be brought in relation to the same claim, provided it is brought within the prescriptive period running from the date of the bringing of the original action, so too, in my judgment, applying the reasoning in the cases of Boyle and Kinnaird, a minute of amendment, once lodged, can be said to have interrupted the prescriptive period, although subsequently refused, since the appropriate notice of the claim has been given." (Emphases in original)

At paragraph 18 his Lordship gave reasons for exercising his discretion in favour of allowing the minute of amendment to be received.

[13] Thereafter answers to the minute of amendment were lodged on behalf of the fourth and fifth defenders, and a period of adjustment ensued. On 8 January 2009 Lady Dorrian heard counsel on the motion of the pursuers to allow the closed record to be opened up and amended in terms of the minute of amendment and answers thereto, numbers 52, 55 and 56 of process. The motion was opposed only on behalf of the fourth defenders, there being no appearance for the fifth defenders. By interlocutor dated 20 January 2009 Lady Dorrian allowed the motion. Her reasons for doing so are set out in her opinion: [2009] CSOH 7. As Lord Clarke had done, her Ladyship considered the authorities. With these authorities in mind she addressed the question, at paragraph 28, whether a relevant claim within the meaning of the statutory provisions set out above could be made when a minute of amendment was served upon a defender and judicial notice was taken of it, and rejected an argument on behalf of the fourth defenders that this would be capable of constituting a relevant claim if, but only if, the amendment was subsequently allowed. She concluded, at paragraph 32, that the cases of Boyle and Kinnaird, which she regarded as binding on her, were applicable to the present situation. She then went on to consider the exercise of her discretion in allowing the amendment.

[14] No issue is taken in the present reclaiming motion with the exercise by Lady Dorrian of her discretion - or, for that matter, by Lord Clarke of his - and, as already indicated, the sole issue is one of law. We shall now proceed to consider it.

Submissions for the fourth defenders

[15] Notwithstanding the decisions in Boyle and Kinnaird, senior counsel for the fourth defenders sought to persuade us that the lodging of the minute of amendment, number 26 of process, amendment in terms of which was ultimately refused by the First Division, did not have the effect of interrupting the prescriptive period, especially since it sought to introduce new pursuers. At the heart of the matter, counsel submitted, was the need in the law of prescription for there to be a relevant claim in order to stop the running of prescription. Where a minute of amendment had been intimated, but amendment in terms thereof was ultimately refused, it never became part of a formal claim. Counsel accepted that, in lodging a minute of amendment in terms of which Link Group Limited would be substituted for Link Housing Association Limited as the pursuers in the action, the latter could be said to be acting "on behalf of" the former, within the meaning of section 9(1) of the 1973 Act. He submitted however that a minute of amendment presented by the wrong pursuers with a view to substituting the right pursuers was only effective if amendment was allowed. Unless this was done, there was no claim by anyone. Counsel sought to distinguish Boyle by submitting that that was a case of limitation, rather than prescription, that the amendment did not seek to substitute a new pursuer and that the amendment was in fact allowed. The statutory provisions relating to prescription and limitation respectively were different: a summons required not only to be signeted and served, but also lodged for calling, to interrupt prescription; but, in terms of section 17 of the 1973 Act, the service of a summons, albeit without calling, was sufficient to avoid limitation. This pointed to a greater degree of formality being required to avoid prescription. Consistently with this, as was decided in Boyle, the lodging of a minute of amendment in process was sufficient to avoid limitation. On the other hand, more formality was required for a minute of amendment to interrupt the prescriptive period than its mere lodging; subsequent allowance of the amendment supplied that formality. The passage in Boyle in which the Lord Justice-Clerk contemplated that amendment might eventually not be allowed was obiter. Boyle taken on its own was not an authority which governed the present case. Counsel equally sought to distinguish Kinnaird, on the ground that the record there had actually been amended. He pointed out that the respondent in that appeal had not sought to argue that Boyle was not applicable. It might be doubted, he submitted, whether the reference to Boyle in Kinnaird was a necessary part of the court's reasoning.

Submissions for the pursuers

[16] Senior counsel for the pursuers submitted that the distinction sought to be made between prescription and limitation did not hold good. In the latter case, section 17 of the 1973 Act looked to the time when an action was commenced. In the former, section 6 looked to the time when a relevant claim was made. The effect of either was to give fair notice of the claim. In Boyle fair notice was recognised as the proper test. It could be seen in that case, by reference to the reasoning of the Lord Ordinary whose decision was reversed, that the focus was sharply on the identification of the correct point in time. The Boyle test was adopted in Kinnaird. The same applied where what was sought was the introduction of a new pursuer. The fourth defenders now accepted that fresh pursuers could be substituted for the original pursuers by allowance of an appropriate minute of amendment, the lodging of which by the original pursuers could be regarded as having been done "on behalf of" the substituted pursuers. Such an amendment was therefore no different from any other. It made no difference that the amendment might not ultimately be allowed. This was no different a situation from that which arose where an action had been raised and subsequently abandoned: British Railways Board v Strathclyde Regional Council 1981 SC 90. By sections 6(1)(a) and 10 of the 1973 Act, a relevant acknowledgement by the defender was sufficient to interrupt the prescriptive period. The underlying notion was that a claim should not be allowed to become stale. It was enough if it was known that it was being insisted in. There was no reason therefore why the lodging of a minute of amendment should not by itself be sufficient to interrupt the prescriptive period. Counsel accepted that the passage in Boyle about the effect of the ultimate refusal to allow an amendment was obiter in the circumstances of that case. Nevertheless, the reasoning was correct. When the present action was previously before the First Division, the Lord President at paragraph 15 of his opinion implicitly acknowledged that the lodging of the minute of amendment number 26 of process would have had the effect of interrupting the prescriptive period. Otherwise in allowing the reclaiming motion at the instance of the second defenders, the court would have conferred an unintended windfall benefit on the other defenders.

Discussion

[17] We have no hesitation in accepting the submissions of senior counsel for the pursuers as being sound. The reasoning in Boyle was followed in Kinnaird, correctly in our respectful view. What is required is fair notice to the defenders that a claim is being made on behalf of the pursuers. In our opinion, the lodging and intimation of a minute of amendment serves to give fair notice. We cannot see that it does anything less than is done by the lodging of a summons for calling. In either case the formality of the procedure, in the context of a judicial process, leaves the defenders in no doubt about the pursuers' intentions. There is no requirement that there be a judicial decision: it is the act of the pursuers in stating the claim in a formal document intimated to the defenders that is relevant. The counterpart is a relevant acknowledgment by the defenders, which again requires no judicial decision. We can see no basis upon which the present case can be distinguished from Kinnaird, applying Boyle, bearing in mind that the first minute of amendment here, number 26 of process, was not merely intimated, lodged, received, and answered in 2005, but also by interlocutor of 31 March 2006 Lord Wheatley allowed the closed record to be opened up and amended in terms of that amendment and relative answers. No doubt this decision was successfully reclaimed against by the second defenders, just as the allowance of amendment was held pro non scripto in Kinnaird, but in our view the original decision makes it even more difficult to accept the fourth defenders' contention that no sufficiently formal step of process ever occurred to constitute a relevant claim in this case.

[18] Moreover, once a relevant claim has been made, whether by way of a new action or by amendment, it does not seem to us that subsequent events can somehow reverse the interruption of prescription. In Kinnaird the court described as "bizarre" the respondent's contention that some form of "de-interruption" could occur, and in the British Railways Board case even abandonment of a Sheriff Court action was not held to have that effect. The true position is, in our opinion, that a relevant claim, once made in whatever form, irreversibly interrupts prescription and in effect starts the running of a new quinquennium in the claimant's favour. To judge by the Lord President's observations quoted at paragraph [10] above, this view was shared by the First Division in disposing of the "Gray Aitken" reclaiming motion at an earlier stage of the present case.

Result

[19] For these reasons, we shall refuse the reclaiming motion and adhere to the interlocutor of the Lord Ordinary dated 20 January 2009.