Act: Nigel Henderson, Party

Alt: McBrearty; Brodies LLP

18 November 2011

Introduction

[1] In this action the pursuers and reclaimers (" the pursuers") seek separate awards of damages amounting to £323,229.50 against the defenders and respondents ("the defenders"). Those claims for damages proceed on the basis of averments of negligent misrepresentation by an employee, Alex Scanlon, for which the defenders are alleged to be responsible, and alternatively on averments of material breach of contract on the part of the defenders themselves. On 17 October 2008, the Lord Ordinary, Lord Woolman, dismissed the action.

[2] In the subsequent reclaiming motion against that decision, reclaiming prints were lodged on 7 November 2008. On 11 November 2008 the Court ordered that grounds of appeal be lodged within 28 days. They were not. Grounds of appeal were not lodged until 11 July,2011, approximately 2 years 7 months after they were due.

[3] On 20 January 2010 and 25 January 2010, the pursuers' former solicitors, who had raised the present action on behalf of the pursuers enrolled to abandon the reclaiming motion. Those motions were dropped by the Court on account of uncertainty as to the legal aid position of the pursuers. On 21 June 2011 the pursuers, acting on their own behalf, enrolled motions to allow grounds of appeal to be received late and to allow a Minute of Amendment to be received. Opposition to those motions was marked by the defenders and the motions were withdrawn. Similar motions were enrolled by the pursuers on 11 July 2001. Once again the motions were marked as opposed and withdrawn.

[4] On 4 August 2011, two motions were enrolled by the pursuers: (i) to allow grounds of appeal to be received late and (ii) to allow a Minute of Amendment to be received in order to reflect the fact that they now appeared as party litigants. Those motions were marked as opposed by the defenders.

[5] The grounds of appeal lodged are extensive and extend to seven closely typed pages. In addition to commenting on the decision of 17 October 2008, they deal with other matters including allegations against the defenders which are not mentioned in the parties' current pleadings and were not discussed during the Procedural Hearing before Lord Woolman.

[6] The Minute of Amendment tendered by the pursuers is also extensive. It extends to over twelve closely typed pages. It seeks to increase the damages claimed by each of the pursuers to £3,948,500 and to found the claims for damages on grounds additional to and discrete from those previously founded on.

[7] The defenders, for their part, enrolled a motion on 3 October, 2011 seeking refusal of the reclaiming motion. That motion was marked as opposed by the pursuers on the basis that it was frivolous and vexatious. The three motions were heard together in the Single Bills and are dealt with in this opinion.

History

[8] Before addressing the submissions advanced in relation to the three motions in question, it is appropriate to note, in outline, the nature of the long-standing dispute between the parties. It arises out of identical loan agreements which each of the pursuers entered into with the defenders on 22 July 1997, on which date the defenders lent to each of the pursuers the sum of £400,000. The pursuers contend that during October 1998 they inquired of Alex Scanlon, a business relationship manager employed by the defenders, what the breakage fees would amount to were they to repay their loans earlier than the term of 15 years provided for in each of the loan agreements. The pursuers contend that they were told that the breakage costs would amount to £240,000, whereas the defenders, for their part, contend that the actual breakage fees for the loans in October 1998 would have been about £36,000. They also contend that Mr Scanlon communicated to the pursuers that breakage fees of £30,000 would be payable for the repayment of £300,000 of one of the loans.

[9] In an action in the Court of Session, which was raised in 2004, the pursuers each sued the defenders for £251,000 in damages. As in the present action the damages were claimed on the basis of negligent misrepresentation on the part of Mr Scanlon, and alternatively on the basis of material breach of contract on the part of the defenders themselves. After preliminary procedure, the earlier action proceeded to a Procedure Roll hearing. In her opinion, dated 18 October 2006, the Lord Ordinary, Lady Smith, dealt with the history of that action. That history included a number of occasions when continuations on the Adjustment Roll were granted, the Record was closed, the action was subsequently restored to the Adjustment Roll and the Closed Record was further amended.

[10] The action was sent to the Procedure Roll on 13 April 2006 on the motion of the defenders. On 10 May 2006 the defenders lodged a Note of Argument. A Procedure Roll hearing was fixed to take place on 27 September 2006. Shortly before that hearing the pursuers enrolled to allow a fresh Minute of Amendment to be received and to have the hearing discharged. That motion was refused on 26 September 2006 by Lord Menzies. The following day, at the start of the Procedure Roll hearing before Lady Smith, senior counsel for the pursuers again moved that the hearing be discharged. That motion was argued on the basis of a concession on behalf of the pursuers that the defenders' criticisms of their written pleadings were well founded, although senior counsel was not yet in a position to tender a Minute of Amendment. The motion seeking discharge of the Procedure Roll hearing was refused and the Procedure Roll hearing proceeded. After the close of the respondents' submissions, senior counsel for the pursuers sought leave to amend. That motion was also refused. Lady Smith subsequently issued an interlocutor dated 18 October 2006, sustaining the defenders' plea to the relevancy of the action and dismissing the action.

[11] The pursuers then marked a reclaiming motion against Lady Smith's interlocutor. By interlocutor dated 2 November 2006 they were appointed to lodge grounds of appeal within 28 days from that date. They failed to do so. On 7 December 2006, the Court, on the unopposed motion of the defenders, refused the motion for review of Lady Smith's interlocutor of 18 October 2006 in respect that the pursuers had failed to lodge grounds of appeal.

[12] Following the dismissal of the earlier action, and before the end of 2006, the present action was raised, on essentially the same grounds as before, although the quantification of the damages sought, £323,229.50 for each of the pursuers, proceeds on a slightly different basis. After a Procedure Roll hearing before the Lord Ordinary, Lord Woolman, the present action was also dismissed as irrelevant.

Motions before the Court

[13] Returning to the three motions that are before this Court, the first pursuer addressed the Court in amplification of the written submissions which he had prepared in advance. Following the interlocutor of Lord Woolman dated 17 October 2008, the pursuers had been advised by senior counsel that they were unlikely to receive legal aid in connection with an appeal. At that time the pursuers were unable to fund the costs of instructing counsel themselves, and understood from their solicitor that only a lawyer could appear for them in the reclaiming motion. They were unaware that they could appear on their own behalf as party litigants. They had also been advised by their solicitor that the present action was "frozen", leading them to understand that there were no prospects of pursuing the action and that there was nothing further they could do. In April 2009, the solicitor for the pursuers since the present action was raised left the firm and in September 2010, the firm itself ceased acting for them altogether.

[14] The Court was informed that since the present reclaiming motion was marked, the pursuers had consulted the Financial Services Authority and the Scottish Legal Aid Board. Eventually, as a result of their involvement in other court proceedings and the first pursuer's discussions with third parties, the reclaimers were encouraged to proceed with the reclaiming motion. Every effort had been made to instruct another firm of solicitors. Those efforts had proved to be unsuccessful. For a variety of reasons, certain firms of solicitors were not prepared to accept instructions. Other firms were only prepared to act for the pursuers if they were funded in advance, which the pursuers were in no position to arrange, having been sequestrated in 2002. It was only in March 2011 they learnt that they could appear before this Court as party litigants.

[15] As regards the Minute of Amendment, it was tendered to reflect the fact that the pursuers were now party litigants. Since it sought to make a material change in the pursuers' pleadings, introducing serious criticisms of the defenders' commercial conduct, the motion also sought under reference to Rule 38.17(2) that the Court should recall the interlocutor of the Lord Ordinary, Lord Woolman, and remit the cause back to the Lord Ordinary for a further hearing. It was submitted that the pursuers' claims against the defenders should not be refused on technical grounds.

[16] Subsequent to the hearing before us, the first named pursuer submitted further written submissions dealing with delays that had occurred in the earlier action. He stated that these had been occasioned by the need to obtain sanction from the Scottish Legal Aid Board before arranging meetings with counsel, instructing expert witnesses for advice; and instructing senior counsel.

[17] The defenders marked opposition to the motion seeking to allow grounds of appeal to be received late on the basis (a) that the pursuers had failed to provide a satisfactory explanation for the extended delay and (b) that the pursuers had not identified, in the proposed grounds, any basis on which it would be appropriate for the Court to interfere with the exercise of the Lord Ordinary's discretion. The pursuers' motion to allow a Minute of Amendment to be received was opposed on the basis that its contents were not necessary to enable the Court to determine the real question in controversy between the parties in the present action.

[18] Amplifying on the terms in which opposition to the pursuers' motions had been intimated, counsel for the defenders founded, in particular, on (a) the pursuers' considerable delay in lodging grounds of appeal, (b) the history of the earlier action, in which the reclaiming motion had been refused by reason of a similar failure to lodge grounds of appeal timeously, and (c) the delay in tendering the Minute of Amendment and the doubtful relevancy of much of its contents. No satisfactory explanation had been tendered which would warrant the Court exercising its discretion to allow either document to be received late. For the same reasons, it was said, the reclaiming motion should also be refused.

Discussion

[19] Having considered the submissions made on behalf of the parties, we have reached the clear conclusion that the pursuers' motions should be refused. In our opinion no satisfactory explanation or excuse has been forthcoming as to the inordinate delay in lodging the grounds of appeal, especially in circumstances where the previous reclaiming motion was refused on account of a similar failure to lodge grounds of appeal timeously.

[20] Furthermore the grounds of appeal now tendered are extensive and raise new matters. They do not consist of "brief specific numbered propositions stating the grounds on which it is proposed to submit that the reclaiming motion should be granted." As such they do not comply with Rule of Court 38.18. Importantly, the new matters raised in the grounds of appeal, which were not before the Lord Ordinary, are considerably amplified upon in the Minute of Amendment. The Minute of Amendment goes on to seek damages from the defenders in excess of ten times the sums currently concluded for.

[21] In our opinion the history of the litigation between the parties is also relevant to the issue of whether the Court should allow the Minute of Amendment to be received. As stated above, the periods of delay on the part of the reclaimers which that history discloses have not been satisfactorily explained. There is also considerable force in the submission for the defenders that the Minute of Amendment contains averments of doubtful relevance. Furthermore, looking at the matter in the round, were the Minute of Amendment to be allowed the case against the defenders would be entirely recast and for all practical purposes would amount to the raising of a fresh action. Allowing the pursuers to amend their pleadings to the extent they propose would inevitably require the action to go back to the Lord Ordinary for a complete rehearing of the case before him.

[23] In all the above circumstances we are not persuaded that it would be an appropriate exercise of our discretion to allow the grounds of appeal to be lodged late or to allow the Minute of Amendment to be received. We accordingly refuse the motions on behalf of the pursuers, grant the motion on behalf of the defenders, refuse the reclaiming motion and adhere to the Lord Ordinary's interlocutor dismissing the action as irrelevant.