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OUTER HOUSE, COURT OF SESSION
[2009] CSOH 7
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A1744/02
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OPINION OF LADY
DORRIAN
in the cause
LINK HOUSING
ASSOCIATION LIMITED
Pursuers;
against
PBL CONSTRUCTION
LIMITED and OTHERS
Defenders:
___________
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Pursuers: Johnston, QC; Burness WS
Defenders: McNeil QC,
Walker; Brodies WS
20 January 2009
[1] This
case came before me on the pursuers' motion to allow the record to opened up
and amended in terms of the pursuers' Minute of Amendment No 52 of process
and the Answers thereto, as adjusted for the fourth and fifth defenders. There was no appearance for the fifth
defenders. Parties before me were agreed
that the critical point of the Minute of Amendment was that it seeks to
introduce new pursuers by substituting Link Group Limited for the present
pursuers Link Housing Association Limited.
[2] There
is a considerable history to this effort to amend the pleadings. A motion allowing the record to be amended in
this way was originally granted by Lord Wheatley on 31 March 2006 (in
respect of a Minute of Amendment lodged and intimated on 24 March 2005), and reclaimed
by the second, fourth and fifth defenders.
The arguments advanced for the fourth and fifth defenders did not
succeed. The second defenders had the
benefit of a contractual limitation provision. The second defenders' argument was that the Minute
of Amendment sought to introduce a substituted pursuer after the expiry of the
limitation period contractually provided for.
That argument was successful and the reclaiming motion allowed. A subsequent effort to amend was made,
effectively on the same basis, before Lord McEwan on the basis of an
undertaking by counsel for the pursuers that they would renounce probation
against the second defenders. The Lord
Ordinary concluded that he was bound by the decision of the Inner House and
that it would in any event be wrong to release the second defenders on a
renunciation of proof only against them.
He accordingly refused the motion.
Subsequently the case against the second defenders was abandoned and a
further Minute of Amendment, effectively on the same grounds was introduced against
the remaining parties. The motion to
allow that to be received and answered came before Lord Clarke who issued an
opinion on 8 August 2008
allowing the Minute of Amendment to be received and answered as
appropriate.
[3] The
critical issue before Lord Clarke was whether the first proposed Minute of
Amendment, by virtue of its receipt on 24
March 2005, interrupted the period of prescription in respect of
any claim against the remaining defenders even although the amendment was not
subsequently allowed by the First Division.
If it had, the remaining question was whether the court should now
exercise its discretion to allow the fresh Minute to be received.
[4] Under
reference to authority his Lordship concluded that it was the giving of notice
which was critical and not the outcome of that notice. It was his understanding that counsel for the
fourth defenders had not sought to distinguish the present case from earlier
cases on the footing that those cases
did not involve the substitution of a new pursuer and expressed no opinion as
to whether that might be a distinction with any materiality. He concluded that he should exercise his
discretion in favour of allowing the Minute of Amendment to be received.
[5] When
the matter came before me the arguments were essentially the same but with some
refinements. In the first place counsel
for the fourth defenders sought to argue that there was a distinction between
the earlier cases and this case since they were not concerned with the
substitution of a new party. A further
argument advanced was that the application of the reasoning, applied originally
in a limitation case, should not be extended to prescription cases and that although
the court had purported to do so in a prescription case, that case was not of
general application being very much as a case decided on its own facts.
Submissions for pursuers
[6] Counsel highlighted the
fact that the basis on which the court allowed the reclaiming motion in the
present case was that the contractual limitation period applicable to the
second defender had expired. There was
no such period applicable to any of the other defenders and additional
arguments by the fourth and fifth defenders were not successful. He drew attention to paragraph 15 of the
Opinion where the Lord President stated:
"Where, as here,
the consequence of allowing 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."
[7] Counsel
submitted that the issues before me were essentially the same as those which
had been before Lord Clarke, namely whether the first proposed Minute of
Amendment had interrupted the period of prescription in respect of any claim
against the remaining defenders and if so whether, as a matter of discretion,
the Record should be amended. He conceded
that he now needed to rely on the Minute of Amendment of March 2005 as
constituting a "relevant claim" in order to avoid the operation of prescription
in respect of the present defenders.
[8] He
then referred to the two cases on the point which had been before
Lord Clarke, the first being Boyle
v Glasgow Corporation 1975 SC
238. The pursuer in that case sought to
add a further case of fault by Minute of Amendment within the statutory
limitation period of three years. The
Record was then amended after the expiry of the triennium. In the Outer House it was held that the case
had not commenced until the Court allowed the Record to be amended, namely
after the expiry of the triennium. In
the Inner House the Lord Justice Clerk (Wheatley) observed as follows:-
"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 defender ............ 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 (sic)
are satisfied, and that 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 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 prerequisite 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
where 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. ..."
[9] Counsel
submitted that there was thus Inner House authority for the proposition that
for the purposes of limitation a Minute of Amendment has effect when it is
received. Although this was a limitation
case, where there is a procedural bar rather than the extinction of an
obligation, the reasoning of Boyle
was followed in a subsequent Inner House case involving prescription namely Kinnaird v Donaldson 1992 SCLR 695.
That was a case relating to quinquennial prescription. A partnership was dissolved in 1993. Their agreement as to disposal of assets
became enforceable on 30 September
1983. An action raised in
1985 made no reference to the 1983 Agreement.
In 1987 a Minute of Amendment was lodged seeking to add craves reflecting
the 1983 Agreement. The Record was
purportedly amended in terms of that Minute but the parties shortly thereafter
jointly moved the sheriff to declare that part of the interlocutor pro non scripto, which motion was
granted. The Record was eventually
amended (in terms of the original Minute of Amendment) in 1989. At that stage it was argued that any claim for
payment under the 1983 Agreement had been extinguished by the operation of
prescription.
[10] In the Inner House the argument for the pursuers was that a
relevant claim had been made in the Minute of Amendment which was first brought
before the court in 1987. The claim was
made, for the purposes of prescription, when the Minute of Amendment was served
upon the defender and when judicial notice was taken of it. Reliance was obviously made on Boyle.
The defenders' argument had been that a Minute of Amendment lodged in
process and served on the defenders would constitute the making of a relevant
claim if, but only if, the court subsequently allowed the Record to be amended
in terms of the Minute; if the court did
so allow, the date of the relevant claim would be the date of lodging of the
Minute.
[11] The court concluded that the argument for the pursuer was
unanswerable and that the law applicable was that stated in Boyle.
It concluded that in 1987 it was "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." The court then quoted part of the Opinion of
Lord Justice Clerk Wheatley narrated above.
[12] Counsel submitted that prescription in that case was treated in
the same way as limitation in the Boyle
case. Accordingly the Minute of
Amendment of 24 March 2005
therefore constituted a claim against the defenders and there has not elapsed
an uninterrupted period of five years.
[13] Turning to the issue of discretion, counsel referred to the
arguments advanced before Lord Clarke and recorded by him at paragraph 15
of his Opinion and his decision on that matter at paragraph 18. In particular he relied on paragraph 19
of the Lord President's Opinion in this case, quoted by Lord Clarke that,
"delay will not
of itself justify refusal of amendment.
There must be prejudice or some other material disadvantage to the other
party." In Thomson v Glasgow Corporation
the amendment was sought after proof had been led. In Wood,
Cork
and Britton the allowance of
amendment would have allowed the discharge of an imminent proof. Nor am I satisfied that the proposed
amendments involve a basic change in the pursuers' case against the fifth
defenders; it involves merely a
modification or particularisation of that case."
Accordingly counsel moved me to
allow the Record to be amended.
Submissions for the defenders
[14] In opposing the motion,
Counsel for the defenders sought to emphasise that the Minute of Amendment
seeks to introduce a new party, a
distinction which he submitted was significant. What had happened here in the reclaiming
motion was that "the new party tried to gain admission but was refused
entry". If one is bringing in a new
party there must be a greater degree of formality than envisaged in Kinnaird. Asked what "greater formality" meant he
submitted that it required the actual amendment of the record, not simply the
lodging and intimation of a Minute of Amendment. The reason for that is that the pursuer is
effectively seeking to raise a new action.
Accordingly where there is substitution of one party for another that
can only be done by actual Amendment.
[15] Where an amendment seeks to bring in a new pursuer and is
refused the original lodging of that Minute of Amendment will not have the
effect of interrupting prescription. The
Minute of Amendment will not have been a relevant claim because the pursuer was
not allowed to advance that claim.
[16] The existing authorities were not against that proposition. Counsel
emphasised that Boyle was a limitation case where the emphasis was on the
bringing of a new case. The court was
specifically looking at limitation provisions and there is no expression of
opinion on prescription issues. The
passage at page 251 that
"it is true that
at stage the amendment has not yet been allowed and eventually may not be
allowed by the court; but at least the prerequisite of fair notice has been
satisfied within the judicial process in which the defender is already
involved...."
was almost obiter even for the purposes of limitation. In a limitation context it is really
irrelevant to look at the ultimate decision - what the court is trying to do is
identify the point at which the action has been brought. A pursuer who has had a Minute of Amendment
refused within the triennium may simply raise a new action. The discussion in these cases of "fair
notice" is one which is particularly apt to limitation but not to
prescription. It is highly unlikely that
the Lord Justice Clerk in Boyle was
thinking of the possibility of a refused Minute of Amendment still providing a
protective mechanism against the operation of a time limit. The court in Boyle could not have thought of refusal of the Minute of Amendment
as something which would nevertheless allow prescription to be interrupted by the
simple fact of lodging the Minute of Amendment.
Boyle is not authority for the
view that in a prescription case the mere lodging of a Minute of Amendment,
especially one seeking to introduce a new pursuer and one which is subsequently
refused, is enough to interrupt the running of prescription.
[17] The position of a person who lodges a Minute of Amendment which
is refused is not in a similar position to a person who abandons. A pursuer who has raised and abandoned an
action has clearly had a relevant claim.
A person seeking to be sisted to proceedings but whose motion is refused
has not had a relevant claim. Fair
notice alone is not sufficient: for the purposes of prescription there must be
a relevant claim. In Boyle the court concentrated on the
passing of the signet and service of an action in relation to
commencement. For the purposes of
prescription the Act specifically excludes for the purposes of a relevant claim
a summons which has not called. Counsel
then referred to Johnston's Prescription and Limitation (1999) at
page 336 where it is suggested that:
"At any rate,
there is nothing in the language of the 1973 Act to suggest that a relevant
claim can be made against a new defender simply by giving fair notice within
the prescriptive period that a claim is intended or imminent. Section 4 of
the Act speaks against this by requiring that the 'appropriate proceedings' in
which the claim is made be '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'. A summons
is called after it has been served on the defenders; accordingly a defender may
well have fair notice of a claim owing to service of the summons but that will
still not interrupt prescription if the summons does not call. If this is so, it is difficult to see why
giving fair notice of a Minute of Amendment should be sufficient to interrupt
prescription."
[18] Counsel accepted that on one view the case of Kinnaird appears to apply Boyle for the purposes of the
prescription element of the 1973 legislation.
However, he submitted that properly read, although the court applied Boyle to the peculiar circumstances of Kinnaird, it is not authority for the
view that all the views of Boyle are
applicable to all prescription cases. He
submitted that Kinnaird had a
singular set of facts and was effectively decided on the basis of that singular
set of facts and referred to the serious criticism made by the court about the
conduct of the litigation.
[19] Counsel submitted that the circumstances of Kinnaird were so singular that it should
be restricted to its own facts. He drew
attention to the strange consent motion which led to the relevant part of the
original interlocutor as being treated as pro
non scripto and the fact that counsel for the defenders had not in that
case argued that Boyle was not applicable to prescription cases. Kinnaird should not be followed because
(a) it did not deal with a subsequently refused Minute of Amendment; and (b) it
did not deal with the position of an incoming pursuer but rather of a new case
between existing parties.
[20] Counsel accepted that where a Minute of Amendment had been
lodged within the prescriptive period and the amendment allowed after the
prescriptive period then this would operate as an interruption because one would
effectively have to deem the amendment back-dated to the lodging of the Minute,
otherwise there would be valid grounds of concern of the kind highlighted by
the Lord Justice Clerk in Boyle at
page 251 that:
".... the
situation could arise where the Minute was lodged and intimation given
timeously, that the procedure which followed thereon took the case outwith the
triennium before the final authority of the court to allow the Record to be
amended was granted."
[21] The fact that the refusal of the original Minute in this case was
on a ground which applied only to the second defenders was neither here nor
there. The refusal, whatever the reason,
took the Minute of Amendment out as a critical step.
[22] Turning to the question of delay, counsel submitted that
Lord Clarke had not given appropriate weight to the case with which the
defenders were faced. Apart from the
original delay, the delay since the case was in the Inner House had been almost
beyond explanation. Leave to appeal was
refused by the Inner House in April 2007 and it was not until June 2008 that
the pursuers eventually decided on the present procedure. The Lord President had virtually indicated to
the pursuers what they should do in paragraph 15 of his Opinion when he
said:
"Where, as here,
the consequence of allowing 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."
[23] Counsel submitted that any delay amounted to prejudice since
one effectively had a claim that was becoming staler by the minute. The general prejudice was that the claim was
continuing to hang over professional parties.
One can readily identify potential prejudice to the defenders who have
done nothing to exacerbate matters.
Accordingly, on this basis the motion should be refused.
Reply for pursuers
[24] In short reply Mr Johnston submitted that no very solid
reason was advanced for the argument that fair notice was a relevant
consideration for limitation purposes but not for prescription. In limitation one is looking to the
commencement of an action which in Boyle
was addressed by means of fair notice.
For prescription one is looking for the making of a relevant claim and
it is not obvious why fair notice should not be a relevant consideration
also. There was no basis for considering
that there is something special in the introduction of a new pursuer as
opposed, for example, to the introduction of a new case. There is nothing in the Lord President's
observations in the Inner House or in Pompas
Trustees to warrant such a distinction.
Discussion
[25] Let me deal first with the
defenders' argument that Kinnaird was
a case which was so special on its facts that it cannot be said to be of
general application in other cases involving prescription. It is true that the court was highly critical
of the way in which the litigation had been conducted. Like Jarndyce v Jarndyce
it had become a litigation wholly about the conduct of the litigation. However, the court's observations were
designed to "avoid the risk of any repetition of such an unsatisfactory saga"
and I do not think that the conduct of the litigation played a material part in
the substantive decision of the court. Rather the decision was clearly based on
an adoption of the reasoning in Boyle.
[26] The ratio of Kinnaird seems to be, following the
reasoning in Boyle, that the lodging
and intimation of a Minute of Amendment, even if no amendment follows,
constitutes a relevant claim for the purposes of prescription. The primary basis on which the defenders
sought to distinguish the case from the present was on the basis that Kinnaird was not dealing with a Minute
of Amendment which had been refused. There
were in turn two parts to this issue: first the argument that refusal of itself
means that there is not a "relevant claim" and secondly, that in a situation
where the Minute of Amendment has been refused, the analogy relied on in Boyle
cannot be applied to a prescription
case since a relevant claim can only be made in the Court of Session in a
summons which is called.
[27] In Kinnaird the
record was, as I understand it, amended in terms of the original Minute of
Amendment. Here it is not the original
Minute of Amendment which would bring the pursuers into the action but a
subsequent one: the pursuers seek to argue that intimation of the original,
even though it was refused, is sufficient notice of the case now being made to
constitute a "relevant claim". The
defenders say that a Minute of Amendment which has been refused, at least where
it seeks to substitute one party for another, can never constitute a relevant
claim since the party advancing it has been refused leave to become part of the
action. Despite the initial attraction
of such an argument, I think there are flaws in it. In the first place, it
ignores the reason that the amendment was refused in the first place. The
defenders say this is of no moment, but I do not agree. If the amendment had been refused because it
was wholly invalid against these defenders the position might be different, but
that was not the case. The reason for
the refusal related to the second defenders and that appears to place the pursuers
in a position more akin to a party who has abandoned an action for reasons
other than nullity rather than one whose action has been dismissed. Clearly,
the situation was different so far as the second defenders were concerned. However, the Minute of Amendment put the
obligation into contention between the present parties and its refusal was not
based on any defect in the case between these same parties.
[28] In any event, Boyle and
Kinnaird, taken together, would seem
to answer this point. In Boyle the Lord
Justice Clerk clearly envisaged not only the situation of an amendment which
has not been allowed but of one which "eventually may not be allowed" by the
Court. The implication is that an
amendment which is not allowed may nevertheless be sufficient for the
commencement of an action. In Kinnaird
the reasoning of Boyle was applied
for the purposes of "a relevant claim" and it is worth noting the arguments in
the context of which the court decided that case. The pursuers argued that in a prescription case
a "relevant claim" could be made when a Minute of Amendment is served upon a
defender and judicial notice is taken of it. It is clear that the argument was
that the reasoning in Boyle (which
was recognised as a limitation case - p700E-F) applied equally to prescription
cases. The argument for the defenders,
similar to that advanced here, was that this would be capable of constituting a
relevant claim, if, but only if, the amendment was subsequently allowed - in
other words, if refused it would not suffice (P702). The court clearly held that it was a relevant
claim and that decision appears to be binding on me
[29] The second part of the defenders argument was that a Minute of
Amendment was not sufficient, and the analogy used in Boyle regarding signetting and service of a summons was not valid in
prescription cases since calling of the summons is an essential requirement for
the purposes of a relevant claim.
[30] Of course, the issue of the bringing of an action and the
making of a relevant claim are not quite the
same: in limitation a new case commences when the summons has passed the signet
and is served on the defenders. If the
summons does not call, the action has nevertheless been commenced. It was on the basis of these requirements -
notice and the bringing into the judicial process - that the Lord Justice Clerk
in Boyle based his reasoning that the
lodging and intimation of a Minute of Amendment could be seen as analogous to
the commencement of an action. It is
perhaps less clear that such an analogy truly applies in a case of prescription
rather than limitation, especially if one is to leave out of account the
question of whether the amendment is eventually allowed. In a case in which the amendment is
subsequently allowed, one does have at that stage an averment in a summons
which has called, even though the averment was not there at the time of the
calling of the summons. Calling may be
an essential step in the making of a relevant claim but, on calling, the claim
is deemed to have been made when the summons was served not only at the date of
calling. Moreover, the same argument, in
relation to the need for calling of a summons, would have applied to the sort
of amendment with which the court was concerned in Kinnaird, yet the court held that a relevant claim had been made. Accordingly, I do not accept the argument that
the analogy applied in Boyle is not
similarly applicable in prescription cases.
[31] As to the distinction which Counsel argued on the basis that Boyle
and Kinnaird involved new cases as opposed to new parties, it is interesting to
note what the Lord Justice Clerk said in Boyle
at pages 251/252 about Miller v NCB 1960 SC 376. In that case a new defender was added by
amendment but the only timeous service on those defenders was of the unamended
record which contained no indication that the action was brought against them. Service of the amended record was made only
after expiry of the triennium and so the case against those defenders had not
been commenced timeously. The Lord Justice
Clerk said that "if proper notice within the judicial process had been served
timeously on the [new defenders]
there would have been no question about its competency". It seems clear therefore that he intended his
analogy to apply to the introduction of new parties as much as to the
introduction of a new case.
Decision
[32] I have therefore concluded
that the cases of Boyle and Kinnaird, which are binding on me, are
applicable to the present situation.
[33] On the issue of discretion I am in complete agreement with the
conclusions of Lord Clarke which appear to me to apply as much at this stage of
the case as they did at the stage with which his Lordship was dealing. Counsel for the defenders did not seek to
argue any specific prejudice to the defenders and relied only on potential
prejudice. I do not agree with his submissions that Lord Clarke did not
adequately consider the situation with which the defenders were faced. His rationale applies equally to the present
situation and I am grateful to adopt and apply it.
[34] I will accordingly allow the Closed record to be opened up and
amended in terms of the Minute of Amendment and Answers, as adjusted, and of
new close the Record.
