Scottish Court of Session Decisions

OUTER HOUSE, COURT OF SESSION [2009] CSOH 46
CA21/08	OPINION OF LORD HODGE in the cause PRIMARY HEALTH CARE CENTRES (BROADFORD) LIMITED Pursuers; against (1) PRABHULING RAVANGAVE, (2) SHEILA ANN TURVILLE and (3) ALAN WILLIAM HUMPHREY Defenders: ­­­­­­­­­­­­­­­­­________________

Pursuers: Munro; Shepherd & Wedderburn LLP

First Defender: Sandison; Brodies LLP

Second Defender: Beynon; Balfour + Manson LLP

26 March 2009

[1] This is an action by the pursuers, who are the landlords of heritable property in Broadford, Isle of Skye, known as the Broadford Medical Centre ("the subjects"), against the defenders, who are general medical practitioners and who were formerly partners in a partnership known as the Broadford Medical Practice. The pursuers seek declarator that the defenders are jointly and severally liable for all of the tenant's obligations under the lease of the subjects.

[2] This is the second action which the pursuers have raised against Dr Ravangave and Dr Turville seeking declarator that they are bound by the terms of the lease of the subjects. The first action resulted in decree of absolvitor. In this action Dr Ravangave and Dr Turville have pleaded res judicata. The debate which I have heard was on the scope of that defence and its application to this case. At a procedural hearing on 19 January 2009, eight days before the debate, counsel for Dr Humphrey intimated to the court that he did not contest the declarator. I was not asked to make any order in relation to Dr Humphrey beyond allowing him to withdraw his defences.

Factual background

(i) The lease and the changing structure of primary health provision

[3] Dr Humphrey owns the subjects. He practised as a general medical practitioner in partnership with Dr Ravangave and the subjects were their surgery. In about 2000 Dr Humphrey leased the subjects to the pursuers. They in turn, by lease dated 25 November and 7 December 2000, let the subjects to Dr Humphrey and Dr Ravangave as the partners of and trustees for the partnership, and their permitted successors and assignees. The lease was for a period of thirty-three years from 16 November 2000. Clause 1.3(j) of the lease provided that the obligations of the tenant would be binding jointly and severally not only on the persons who were partners of the firm when the lease was entered into but also on all persons who in future became partners of the firm. It also provided that those obligations would subsist notwithstanding any changes in the constitution of the partnership by the assumption of new partners or the retiral, death or withdrawal of any partner. That clause further provided that the pursuers would grant a discharge from joint and several liability under the lease to a partner who withdrew from the continuing partnership. That discharge could be obtained on the written application of that partner or his or her executors so long as there remained a partnership of two or more persons. I observe that the persons liable under the lease were not only the individuals who were partners in the original partnership as tenant but also the individuals who were or became bound by the terms of the lease by virtue of their status as partners. This was provided for in clause 1.3(j) and not simply as a result of the operation of the law of partnership.

[4] On 19 November 2001 Dr Turville joined the partnership as a partner. The defenders entered into a partnership agreement dated 13 November 2001. In clause 4.1 of that agreement Dr Turville acknowledged that she was liable along with the other partners to implement the obligations of the partnership under the lease. By clause 6.4 she obtained an indemnity from the other partners in respect of any liability of the partnership which was not covered by insurance.

[5] The pursuers in this action aver that the partnership ended on or about 30 September 2002 and the defenders admit that averment. The dissolution of the partnership arose out of a change in the way in which the National Health Service provided the services of general medical practitioners to the public. Until 30 September 2002 the General Medical Services Scheme provided such services in Broadford through the partnership. On and after 1 October 2002 the Personal Medical Services Scheme engaged the defenders as salaried employees of the Highland Primary Care NHS Trust ("the NHS Trust"). As a result, the pursuers aver, the partnership was dissolved but the defenders remained jointly and severally liable for the tenants' obligations arising under the lease.

[6] The defenders continued to use the subjects as a surgery. The pursuers were for some time unconcerned about the defenders' liability under the lease because the rent was being paid and the pursuers were negotiating with the NHS Trust for them to take over the tenants' interest in the lease. On 1 April 2004 the NHS Trust was replaced by Highland Health Board ("the Health Board"). Until then the Common Services Agency of the NHS in Scotland paid the rent for the subjects; thereafter it was paid by the Health Board. The pursuers aver that the payment of the rent in that manner was the result of obligations which the NHS Trust and then the Health Board undertook to meet the rental payments due on premises occupied by general medical practitioners. I was informed that negotiations between the pursuers and the Health Board had not resulted in the Health Board taking over the lease because their internal financial rules did not permit them to do so. Nonetheless, the Health Board continue to pay the rent.

[7] Against this background the pursuers seek declarator that the defenders are jointly and severally liable for all of the tenant's obligations under and in terms of the lease. Their claim in the action is that, because the partnership was dissolved on 30 September 2002 and as none of the defenders obtained a discharge from their liability under the lease, the defenders' liability as individuals continues.

(ii) The earlier action

[8] The pursuers raised an action in August 2006 against Dr Ravangave and Dr Turville. They averred that the partnership ended in April 2004 when Dr Ravangave resigned and that he and Dr Turville remained liable under the lease thereafter. They did not sue Dr Humphrey who, they averred, had retired from medical practice on 31 March 2003. Dr Humphrey asserted at that time that he had retired from a continuing partnership and that the pursuers had granted him a discharge under clause 1.3(j) of the lease. I was informed that the pursuers did not accept the assertion that they had agreed to discharge him; they took the position that, while he had made a written application for discharge, they had not granted one. In view of that understanding of the facts, it is strange that the pursuers in the earlier action sued only Dr Ravangave and Dr Turville and that they averred that Dr Humphrey had been discharged from his obligations under the lease after he retired from the partnership on 31 March 2003. This approach by the pursuers, which Mrs Munro did not explain, set in motion a procedural chain of events which brought about the difficulty which they now face.

[9] In the earlier action the pursuers sought declarator that Dr Ravangave and Dr Turville were jointly and severally liable for all the tenant's obligations arising under and in terms of the lease. Their plea in law on the merits was: "the first and second defenders being liable for the tenant's obligations under and in terms of the lease, the pursuers are entitled to decree of declarator". This is substantially the same plea in law as the pursuers' plea in law on the merits in the present action.

[10] Dr Ravangave and Dr Turville averred in the earlier action that the partnership had been dissolved on 1 October 2002 when they ceased to be self-employed medical practitioners. They denied that Dr Humphrey had been discharged from his obligations under the lease. Dr Turville asserted that she was entitled to be indemnified by Dr Ravangave and Dr Humphrey under clause 6.4 of the partnership agreement. She brought Dr Humphrey into the action as a third party on the bases (i) that he was jointly and severally liable under the lease and (ii) that he was bound to indemnify her. The pursuers did not adopt her first case against Dr Humphrey as a fall-back. The action was further complicated as Dr Ravangave brought in the Health Board as a second third party. He sought relief from his obligations under the lease from the Health Board as the statutory successors of the NHS Trust who, he averred, had failed to perform their obligation to take over the lease. Dr Turville also pleaded that she was not liable to the pursuers as the pursuers had created an informal tenancy of the subjects in favour of the Health Board.

[11] The earlier action descended into what Mrs Munro described as "a procedural quagmire" for the pursuers when the parties agreed to a restricted proof which was confined to the pursuers' claims against Dr Ravangave and Dr Turville and left over for later determination, among other things, Dr Turville's claim against Dr Humphrey. As a result, Dr Humphrey was not represented at the proof hearing. He gave evidence as a witness. Dr Ravangave also did not attend the proof hearing as he had intimated to the court that he did not oppose the pursuers' conclusion that he was jointly and severally liable with Dr Turville. He also abandoned his claim against the Health Board, who were released from the action. The pursuers went to proof only against Dr Turville, who represented herself at the hearing.

[12] Lord Glennie heard the proof and in an opinion dated 29 January 2008 found that the partnership had come to an end on 30 September 2002. As a result the pursuers failed to prove the averments upon which they relied to support their claim for declarator. Lord Glennie held that the pursuers were not entitled to found on evidence which supported a factual case which they had denied in their pleadings. He observed that the pursuers had not sought to amend their pleadings to plead the dissolution of the partnership on 30 September 2002 as an esto case and stated that, if they had sought to amend when giving their submissions on the evidence, he would have been disinclined to allow an amendment. This was principally because the fall-back case would have been prejudicial to Dr Humphrey's position as it had the potential to undermine the release which the pursuers averred they had granted him. Lord Glennie therefore concluded that Dr Turville was entitled to decree of absolvitor and put the case out for a hearing By Order.

[13] At the By Order hearing on 11 February 2008 the pursuers moved the court to allow a minute of amendment to be received. The minute pleaded an esto case that the partnership had ended on 30 September 2002 and that Dr Ravangave, Dr Turville and Dr Humphrey had become liable for the tenant's obligations from that date. Lord Glennie refused to allow the minute of amendment to be received and assoilzied Dr Ravangave and Dr Turville from the conclusions of the summons.

[14] The pursuers enrolled a reclaiming motion. I was informed that they then consulted senior counsel, who advised that there were no reasonable prospects of overturning Lord Glennie's discretionary decision to refuse to receive the minute of amendment after completion of the proof, and no reasonable prospect of success on an appeal without that amendment. Having been so advised, the pursuers abandoned the reclaiming motion.

[15] In summary, the pursuers sued Dr Ravangave and Dr Turville in the earlier action, in which they founded on clause 1.3(j) of the lease; they sought the same declarator and used the same plea in law as a link between the averments and the conclusion as in the current action; and the court granted a decree of absolvitor after a contested hearing.

The submissions of the parties

[16] Mr Sandison for Dr Ravangave advanced five principal arguments in support of his plea of res judicata. First, he submitted that the purpose of the plea was that the same issue should not be litigated repeatedly between the same parties on substantially the same grounds. This was a matter of equity and public policy. Secondly, he pointed out that both the earlier action and the current action were simple petitory actions with the same conclusions and the same substantive plea in law. Thirdly, he argued that there was no difference in the grounds of action; both actions were founded on clause 1.3(j) of the lease and the substantial question was the same, namely whether Dr Ravangave and Dr Turville were liable under the lease after the dissolution of the partnership. Fourthly, the change in the factual hypothesis - the pursuers' volte face on the date of dissolution of the partnership and on whether they granted Dr Humphrey a discharge - did not elide the plea as the date on which the partnership ended was immaterial to the pursuers' claim against Dr Ravangave and Dr Turville. Further, Lord Glennie had rejected the pursuers' attempt to make out a case on the basis that the partnership had ended in 2002 as he had regard to their averment that they had discharged Dr Humphrey and had taken account of the unfairness to him which might have resulted if the pursuers had been allowed to attempt to set aside his discharge. Whether that was correct or not was immaterial to the plea. Fifthly, the pursuers, having sought to raise the case that the partnership was dissolved in 2002, consented to decree of absolvitor when they abandoned their reclaiming motion.

[17] In support of his submissions Mr Sandison referred to Phosphate Sewage Co v Molleson ((1878) 5 R 1125 and (1879) 6 R (HL) 113)), Glasgow and South Western Railway Co v Boyd & Forrest (1918 SC (HL) 14) and Grahame v Secretary of State for Scotland (1951 SC 368). He submitted that the Boyd & Forrest case had altered the law by its focus on the essence and reality of the litigation rather than the formal grounds of action. In Grahame the Lord President (Lord Cooper) had applied a test of whether the same parties had litigated repeatedly on substantially the same basis. He argued that a new ground of action did not necessarily defeat the plea. Nor did the assertion of a different factual basis for a claim unless the pursuers could establish res noviter veniens ad notitiam. In this case, the pursuers could and should have raised in the earlier action the issue of their entitlement on the basis that the partnership had ended in 2002. They did not, and now could not do so because the plea of res judicata covered not only what had been litigated in the prior action but what ought to have been litigated if the pursuers had conducted the action effectively.

[18] Mr Beynon for Dr Turville adopted Mr Sandison's submissions. He submitted that the basis of liability in each action was identical. Applying the test of what was litigated and what was decided, the answer was that it had been decided in the earlier litigation that Dr Ravangave and Dr Turville were not liable under clause 1.3(j) of the lease. Decree of absolvitor had been pronounced in relation to that matter. The issue was res judicata. No question of res noviter arose; the defenders in the earlier action had averred that the partnership had been dissolved in 2002 and the tax returns, on which Lord Glennie had relied in accepting that view of the facts, had been available to the pursuers in the proof.

[19] Mrs Munro for the pursuers submitted that the plea did not apply to this case and argued that the defenders had taken a maximalist view of the plea which the case law did not support. She referred to Short's Trustee v Chung (1999 SC 471), in which Lord Prosser stated (at p.475 D):

"The defender and reclaimer could not of course succeed with a plea of res judicata, on the basis that a matter had not been previously litigated, when it could and should have been. The basis for such a plea is to the opposite effect: that a matter which the pursuer seeks to litigate has already been litigated".

She submitted that the issue which the pursuers now sought to litigate had not been determined in the earlier action. Secondly, she pointed out that the parties to the action were not the same as Dr Humphrey was a defender in this action while the pursuers had made no claim against him in the earlier action. Thirdly, she submitted that the subject matter of the action was different because the pursuers in this action were proceeding on a different factual hypothesis: a 2002 dissolution of the partnership before Dr Humphrey withdrew from medical practice and not an April 2004 dissolution. Fourthly, the test for res judicata was "what had been litigated and what had been decided?" To answer that question it was necessary to examine the averments as well as the conclusions and the pleas in law. She submitted that what the earlier litigation had decided was that the dissolution of the partnership had occurred in 2002. The issues whether the pursuers had discharged Dr Humphrey and, if so, the legal effect of that discharge on the obligations of Dr Ravangave and Dr Turville had not been determined. Because of the state of the pleadings and the absence of Dr Humphrey from the proof hearing, the pursuers had not been able to raise the issues which they now sought to raise. There was therefore no re-run of the earlier action.

[20] In addition to the cases to which Mr Sandison cited, Mrs Munro referred to Edinburgh & District Water Trustees v Clippens Oil Co Ltd ((1899) 1 F 899) and Forrest v Hendry (2000 SC 110). She submitted that when properly analysed, the decision of the House of Lords in Boyd & Forrest did not sit easily with the cases which were decided before it and after it. She did not deny that the pursuers had had fair notice of the position which Dr Ravangave and Dr Turville adopted on the date of dissolution in the first action; but Scots law had no doctrine akin to English law's issue estoppel. Finally, she submitted that the pursuers in the current action had raised a new case against the defenders, namely that they were liable as guarantors under schedule 4 of the lease. She invited me to repel the pleas of res judicata.

Discussion

[21] In Scotland the plea of res judicata is based on considerations of public policy and seeks to prevent the same parties from litigating the same issue repeatedly on substantially the same grounds (Grahame v Secretary of State for Scotland 1951 SC 368, the Lord President (Lord Cooper) at p.387). Although the plea is available in many legal systems, its precise scope may vary between those systems. In "Sheriff Court Practice" (3^rd ed at para 2.104 to 2.109) Lord Macphail sets out the five conditions which have to be satisfied for the plea to succeed. They are (i) that there is a prior determination by a court of competent jurisdiction, (ii) that the decree in the prior action is pronounced in foro contentioso without fraud or collusion, (iii) that the subject matter of the two actions must be the same, (iv) that the media concludendi in the two actions must be the same, and (v) except where the earlier decree is a decree in rem, the parties to the second action must be the same as or representative of the parties to the earlier action, or have the same interest. In this case it is only the fourth and fifth conditions which are in controversy.

[22] I can deal briefly with the final condition, namely that the parties are the same. In this case the pursuers have sued Dr Ravangave and Dr Turville in both actions. The fact that in the second action they have added Dr Humphrey as a defender is of no consequence to the plea. Were it otherwise, it would be easy for a pursuer to avoid the plea of res judicata by convening an additional defender.

[23] There is more difficulty with the fourth condition. What are the media concludendi? In Edinburgh and District Water Trustees v Clippens Oil Co Ltd ((1899) 1 F 899 at p.907), the Lord President (Lord Robertson) acknowledged the difficulty in defining "this abstract expression" and in drawing a line between grounds of action and arguments. Lord Macphail in the book mentioned above equated the media concludendi with points in controversy between the parties. Lord Trayner in "Latin Maxims and Phrases" defined them as the grounds of action - those allegations or grounds on which a pursuer seeks to have decree pronounced - and Paul Beaumont in his article on the plea in 1985 Scots Law Times (News) 133 treated them as the grounds of claim or issues. But the precise meaning of the phrase and the difference between it and the subject matter of the action may not matter. In Grahame the Lord President (at p.387) opined that the Boyd & Forrest appeal had corrected a tendency in earlier Scottish cases to concentrate too narrowly on the precise terms of the conclusions or of the pleas in law and that judges were "directed to look at the essence of the matter rather than the technical form, and simply to inquire -What was litigated and what was decided?"

[24] In this case the parties disagree on the extent to which the House of Lords in Boyd & Forrest altered the prior law. To resolve that issue it is necessary to examine the circumstances of that appeal and the decision which the House of Lords reached. It was the third time that the parties had taken their disputes arising out of the railway building contract to the House of Lords. The contractors' claim was for payment for works quantum meruit on the basis that the works in question, which had not been foreseen at the time of contracting, were not covered by the contract. The contractors sued for a sum of money which they averred was vouched by an account of the works carried out and they supported the conclusion with a general plea in law that the sum was due and resting owing (see Session Papers, volume 888). The railway company in its defences pleaded that the works were carried out under a lump sum contract and that they had paid all sums due under that contract. The contractors in response pleaded that the contract was not binding as they had been entered into it (a) as a result of fraud on the part of the railway company's engineer who compiled the report on the bore holes or (b) in essential error induced by the railway company. A restricted proof took place and in the first hearing the House of Lords overturned the lower courts' finding of fraud (1912 SC (HL) 93). The second hearing in the House of Lords dealt with the argument that the contract had been entered into in essential error induced by the innocent misrepresentation of the railway company and that the contractors were therefore entitled to payment quantum meruit. The House of Lords rejected that argument (1915 SC (HL) 20) and parties consented to the House pronouncing a decree of absolvitor which expressly reserved the contractors' right to refer two specified claims arising out of the works to an arbiter. Thereafter, the contractors sought to refer to an arbiter a claim which included the sums covered in the first court action in which the House of Lords had pronounced decree of absolvitor.

[25] The railway company then brought an action to interdict the arbiter from proceeding with the items which had been included in the earlier action, pleading res judicata. The Lord Ordinary (Lord Dewar) granted interdict but the Second Division recalled his interlocutor. The House of Lords restored the Lord Ordinary's interlocutor, which had upheld the plea of res judicata. When the Inner House considered the case, the Lord Justice Clerk (Lord Scott Dickson at p.19) referred in his opinion to earlier Scottish cases on the plea of res judicata including Macdonald and others v Macdonald (1842) 1 Bell's Appeals 819, Phosphate Sewage Co and Clippens Oil Co. He quoted Lord Blackburn in Phosphate Sewage Co (at p.121) where he stated:

"the plaintiff in the action is not obliged to join all his media concludendi in one suit; if he has one medium concludendi, and fails in proving that, he may start another, and that whether or not he knew of it at the former time, provided it be a separate medium concludendi".

He also quoted Lord Kinnear in Clippens Oil Co (at p.909) where he said:

"The validity of a plea of res judicata must necessarily depend upon the pleadings and decision in the previous action, and not upon any rights or equities which may have arisen antecedent to the pleadings or from any extra-judicial communications between the parties. The question always is, what was litigated and what was decided".

Finally he referred to Mackay's Manual of Practice (at p.312) in which the author stated:

"Decree of absolvitor is a decree by which the merits of the action are finally determined in favour of the defender. It consequently forms res judicata, and excludes a new action on the same grounds. A new action on different grounds may always be raised, notwithstanding decree of absolvitor".

This is significant because in the House of Lords Lord Dunedin, with whom Lord Parmoor and Lord Atkinson concurred and whose speech was therefore the majority judgment of the House, stated (at p.26) that he did not question the authorities which the Lord Justice Clerk had cited. For Lord Dunedin the question was what was the import of the House's judgment in the second appeal.

[26] It is clear from the opinions of the judges of the Second Division that counsel disagreed fundamentally in their understanding of what had been the scope of the original action and what the parties had agreed in the second appeal which had led the House of Lords to pronounce the decree of absolvitor. See Lord Dundas at p.20 and Lord Salvesen at p.21. This also was the principal issue on which their Lordships focused in their speeches in the House of Lords. Of the Law Lords who formed the committee in the third Boyd & Forrest appeal only Lord Shaw of Dunfermline had sat on the second appeal; the others had to interpret from the papers what had occurred at that hearing.

[27] I recognize that there are passages in the speeches of the Lord Chancellor (Viscount Finlay) (at pp.24-25) and of Lord Shaw of Dunfermline (at pp.30-31) which would support the view that the plea of res judicata could succeed where the pursuer in the second action had had an opportunity to plead a case in an earlier action and had failed to do so. In other words, the plea of res judiciata could be pleaded against a pursuer to the same effect as a plea of "competent and omitted" against a defender. Lord Shaw sought to equate the positions of a pursuer and a defender in this regard (pp.30-31). In the view of both the Lord Chancellor and Lord Shaw, the contractors could have advanced an esto case in the original action to the effect that, even if the contract were valid, the money which they claimed, or at least part of it, was due under the contract; and, as they had failed to plead such a case in that action, the contractors were barred by the plea of res judicata from making that assertion in the arbitration.

[28] That view of the plea appears to be consistent with English law in which res judicata has extended beyond what has already been adjudicated. As Lord Keith of Kinkel stated in Arnold v NatWest Bank Plc [1991] 2 AC 93 at p.104F, "cause of action estoppel extends also to points which might have been but were not raised and decided in the earlier proceedings for the purpose of establishing or negativing the existence of the cause of action". It appears that in English law, other than in special circumstances, a party is barred from raising a ground of claim, a defence, or facts, which, if they had been raised in the first action, would or might have affected the decision (Halsbury's Laws of England Vol 16(2), para 984; Robinson v Robinson [1943] P 43). But that was not the view of the majority of the House of Lords in Boyd & Forrest in relation to Scots law and, so far as I can ascertain from later Scottish cases, it has not found favour since.

[29] Lord Dunedin, in delivering the majority judgment, founded on the width of the plea in law of "due and resting owing" in the original action and on the fact that the parties had agreed that the House of Lords should pronounce decree of absolvitor in that action, thereby disposing of that plea. He pointed out that, had the pursuers wished to pursue their claim under the contract, they could have asked the House to pronounce an order declaring that the contract was valid. He interpreted the agreement in the House of Lords as having been that the parties had been content that all matters be disposed of, except for the two matters which were the subject of the reservation. And he saw the wider claim in the arbitration as an afterthought. Lord Shaw (pp.27-28) confirmed that this understanding of the agreement was correct; the pursuers' counsel had deliberately pleaded the contractors' claims in general terms to cover any possible view which might have been favourable to them after evidence had been led and the decree of absolvitor had been intended to dispose of all but the reserved matters.

[30] Thus in my opinion the decision of the House of Lords in Boyd & Forrest was consistent with the approach of the House in Phosphate Sewage Co and of the Inner House in Clippens Oil Co. The House of Lords looked at what had been litigated and what had been decided.

[31] The decision in Boyd & Forrest may, as the Lord President suggested in Grahame (at p.387), have widened the scope of the plea in so far as the House of Lords looked beyond the averments in the first action, in which the esto case founding on the contract had not been pleaded, to address the pursuers' purpose in stating a deliberately wide plea in law and the nature of the agreement which led to the decree of absolvitor in that action. But the case does not, in my opinion, provide any authority for the extension of the plea of res judicata to embrace grounds of claim which a pursuer could competently have pleaded in the earlier action where he omitted to do so.

[32] In Scots law the general rule remains as Lord Blackburn stated in Phosphate Sewage Co (which I quoted in paragraph [25] above), that a pursuer in an action "is not obliged to join all his media concludendi in one suit; if he has one medium concludendi, and fails in proving that, he may start another, and that whether or not he knew of it at the former time, provided it be a separate medium concludendi." I observe, as Mr Sandison pointed out, that there is authority that a person claiming damages for personal injuries arising out of an accident must pursue both his case at common law and any case of breach of statutory duty in the same action as, for the purposes of the plea of res judicata, common law negligence and breach of statutory duty are not separate media concludendi. See Matuszczyk v National Coal Board 1955 SC 418. There is also authority which requires a pursuer who is claiming damages arising from a single act which is a delict or a breach of contract to advance all his heads of claim in the same action as in such circumstances there is only one cause of action (Stevenson v Pontifex & Wood (1887) 15 R 125, Dunlop v McGowans 1980 SC (HL) 73 and Esso Petroleum Co Ltd v Hall Russell & Co Ltd 1988 SLT 874). But the plea of "competent and omitted" is not available against a pursuer.

[33] In Phosphate Sewage Co the Lord President (Lord Inglis, at p.1140) described the position of the pursuer "who may choose his own time to bring his action, and ..., if he has more than one distinct and separate ground of action, may try first one and then the other". He also (at p.1139) gave two examples of where the plea of res judicata would not succeed. In the first example, a pursuer initially raised an action to challenge the validity of a deed based on forgery, failed in that action and thereafter raised an action against the same defender based on the assertion that the granter's signature had been obtained by fraudulent misrepresentation. In the second example, a creditor sued his deceased debtor's son as a cautioner and, on failing in that action, sued him as the representative of the deceased in the second action. Similarly, in Short's Trustee v Chung, the trustee in sequestration sought and obtained reduction of a disposition which was a gratuitous alienation of heritable property under section 34 of the Bankruptcy (Scotland) Act 1985. Then, when he had failed to obtain rectification of the Land Register to reverse the alienation, he raised a second action against the alienee in which he sought an order for the execution and delivery of a disposition of the alienated subjects. This was the context of Lord Prosser's dictum which I quoted in paragraph [19] above. While the trustee in sequestration could have sought the execution and delivery of a disposition under section 34(4) of the 1985 Act in the first action, he had not done so. But that did not bar his pursuit of the second action.

[34] In Forrest v Hendry, which involved a dispute arising out of the dissolution of a partnership, Lord Macfadyen repelled the plea of res judicata in relation to a claim for the value of goodwill. In the earlier action, which parties settled on the acceptance of a tender, the claim for goodwill had not been put in issue. Lord Macfadyen looked at the substance of the dispute which had been litigated in the first action and gave effect to an express reservation in the pleadings of that action and also the terms of a letter which accompanied the tender. At p.122G he observed that the fact that Mr Forrest could, had he chosen to do so, have brought a claim for goodwill in the earlier action to diminish his liability to Mr Hendry did not mean that he had in fact put that claim in issue and that it had been determined.

[35] These examples and cases support the test of what was litigated and what was decided. That test, as Lord Prosser suggested in Short's Trustee (at p.477), is useful to avoid detailed and occasionally fruitless analysis of the concepts of subject matter and media concludendi. In applying that test in cases which are carefully pleaded, the legal grounds of action which are pleaded will usually determine whether the plea of res judicata succeeds. But the court is not tied to the parties' precise formulations in their pleadings; it may look at the substance of the matters pleaded, especially if the pleadings fail to focus on, or if they mask, the issues which were in dispute and determined in the earlier action.

[36] I am not persuaded that there is a special rule in petitory actions. In my opinion, Lord Shaw's emphasis in Boyd & Forrest on the petitory nature of the action, the monetary conclusion and the plea-in-law, and his focus on what was new in a real and substantive sense, fall to be interpreted in their proper context of the deliberately widely drawn pleadings and the parties' agreement to allow decree of absolvitor to be pronounced. So far as he sought to go further and equate the positions of pursuers and defenders, his views did not find favour. I consider that Mr Sandison's interpretation of that case goes beyond that for which the case is authority. Whether legal policy should favour an extension of the plea of res judicata to cover matters which might relevantly have been raised in the earlier proceedings is not for me to decide.

[37] For completeness, I should also state that I am satisfied that the plea of res judicata in Scotland does not extend to the English doctrine of issue estoppel which Lord Keith discussed in Arnold v Natwest Bank Plc at pp.105-109. See Anderson v Wilson 1972 SLT 170 (Lord Keith) and Clink v Speyside Distillery Co Ltd 1995 SLT 1344 (Lord Cullen).

[38] But my conclusions in the preceding three paragraphs do not assist the pursuers in this case. For, when one asks what was litigated and what was decided in the first action, the answer is that it was decided that Dr Ravangave and Dr Turville were not liable for the tenant's obligations under and in terms of the lease. Whether that decision would have been reached if parties had organized the progress of the action in a different way may be open to question. The result in that action appears to have flowed from the decision to have a limited proof which excluded Dr Turville's claim against Dr Humphrey. But, as Lord Cooper pointed out in Grahame (at p.389), the plea of res judicata is not concerned with whether the earlier decision was right or wrong.

[39] Mrs Munro is correct in her assertion that the pursuers were not allowed to advance a case that Dr Ravangave and Dr Turville were liable on the basis that the partnership had been dissolved in 2002. But such a case would not have altered the legal basis of their claim, namely that liability arose under clause 1.3(j) of the lease. If the pursuers had been allowed to argue an esto case in the first action, they would simply have pursued the same legal claim on a different factual basis. The pursuers had all the facts to support that case available to them. In the context of the plea of res judicata, a pursuer can bring forward a different factual basis for the same legal claim in a new action only if he could not with reasonable diligence have been aware of the facts when he conducted the first action. There must be res noviter veniens ad notitiam (Phosphate Sewage Co, the Lord Chancellor (Lord Cairns) at p.117, Lord Hatherley at p.119 and Lord Blackburn at p.121 and Boyd & Forrest, Lord Shaw at p.31). In this case there is not.

[40] Finally, Mrs Munro raised the alternative case that the defenders were liable as guarantors under the fourth schedule to the lease which set out the covenants of a guarantor. See paragraph [20] above. The pursuers averred that "the obligations of the Lease ... remain incumbent on the defenders in terms of the guarantees given by them in terms of Schedule 4 to the Lease". I am satisfied that this averment does not allow the pursuers to escape the plea of res judicata for two reasons. First, the defenders incurred liability under clause 1.3(j) of the lease and if the guarantee had been intended to bind Dr Ravangave and Dr Turville, it added nothing material to their liability under that clause. It is not a different ground of action. If one asks the question, what was litigated and what was decided, the answer is, whether the defenders were liable in terms of the lease. Secondly and in any event, I am persuaded that the schedule was not intended to bind them but to provide the covenants which would be made if a third party guarantor were required. In particular, I note that the persons defined as the tenant in the heading of the lease were Dr Humphrey and Dr Ravanage, who were the original partners, and their permitted successors and assignees and not the partnership as a separate entity under Scots law. Thus, where in the fourth schedule the guarantor undertakes obligations along with the tenant, it appears to me that the parties must have envisaged the guarantor to be a person or persons other than the defenders. While I recognize that clause 1.3(j) is a provision which can operate in the context of a Scottish partnership, that does not alter the definition of the tenant in the heading of the lease or the inferences which can be taken from that definition as to the intention of the parties in the fourth schedule. Further, clause 5.15.7, which on the assignation of the lease or the subletting of part of the premises empowered the landlord to require the provision of a guarantee in terms of the fourth schedule, provided that the guarantee would be in a separate deed and that neither Dr Humphrey nor Dr Ravangave could be requested to give such a guarantee. I am therefore satisfied that the defenders have no separate liability as guarantors under this schedule which would enable the pursuers to elide the plea of res judicata.

Conclusion

[41] I therefore sustain the first plea in law of each of the first and second defenders and grant decree of absolvitor to Dr Ravangave and Dr Turville. The case against the third defender remains. I will therefore have the case put out By Order to determine any further procedure in the action so far as directed against Dr Humphrey.