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Cite as: [2019] CSOH 111, 2020 GWD 2-25, 2020 SLT 331, [2019] ScotCS CSOH_111

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OUTER HOUSE, COURT OF SESSION

[2019] CSOH 111

CA95/19

NOTE OF REASONS BY LADY WOLFFE

In the cause

AUTAURIC LIMITED

against

GLASGOW STAGE CREW LIMITED

Pursuer

Defender

27 December 2019

Pursuer: Manson; Morton Fraser LLP

Defender: Upton; BBM Solicitors

Introduction

[1] This matter called before me on the defender’s opposed motion for its minute of

amendment to be received. The pursuer robustly opposed its receipt. I continued the

hearing, not least to afford the defender an opportunity to respond to a matter the pursuer

raised in the course of the hearing (being averments in a sheriff court action against the

pursuer by another company (Scotia Events Services Limited (“Events”)) one of whose

directors was also a director of the present defender at the material time). In fact, both

parties took the opportunity to lodge further short written submissions.

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[2] I have had regard to parties’ oral and written submissions, which I do not here

repeat, and to the additional materials lodged by the parties relative to the hearing on this

motion. This Note is a slightly expanded version of the ex tempore decision I issued at the

continued hearing.

[3] The pursuer avers that a contract was concluded between it and the defender for the

provision of a substantial outdoor stage to host a concert; that on the day in question rain

was able to penetrate the roof structure, which resulted in water pooling on the stage

thereby posing a number of risks to the performers; and that, accordingly, the concert was

cancelled at short notice with significant loss to the pursuer. The legal ground is the

pursuer’s contention that the stage provided did not conform to the contract specifications.

Discussion

Agreement of issues prior to fixing a proof

[4] I begin by noting that by the time a proof was fixed in this commercial action, the

principal issue for determination was whether the defender had breached the terms of the

oral contract averred (and admitted) to have been agreed between the parties. Quantum has

also been agreed, at a figure of over £1 million. The terms of the contract and the parties to it

are all agreed. As is customary in the commercial court, parties lodged their statement of

issues prior to the procedural hearing at which a determinative hearing of one form or

another is fixed. In its statement of issues, the pursuer particularised the principal issue into

several discrete matters (pertaining to representations, whether a particular state of affairs, if

established, constituted breaches of the admitted contract, and causation). In its own

statement of issues, the defender accepted all but one of these as correctly identifying the

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matters in dispute between the parties (the single exception related to causation). The

defender did not suggest any additional issues.

[5] In this case, parties were agreed proof before answer was required to resolve their

dispute (as defined by the pursuer’s statement of issues). Accordingly, at the procedural

hearing a three-day proof was fixed for a date in May 2020, together with the usual

timetable for lodging of witness statements and for productions, and meetings between the

parties. That timetable has been implemented, including the exchange of parties’ principal

witness statements (which stand as their evidence in chief at proof), before the defender’s

minute of amendment was intimated.

Scope and effect of the minute of amendment

[6] Turning to the scope and effect of the proffered minute of amendment, it seeks to

delete certain admissions -to the effect that the pursuer was the counterparty to the contract.

(The defender’s minute of amendment contains 14 paragraphs. Many of these are

consequential upon the defender’s proposed deletion of admissions, in answer 21, that the

parties contracted on the terms averred. The minute also seeks to delete the defender’s

admission, in answer 14 that the defender’s “Mr Prasher had come to learn of the pursuer’s

involvement ….”)

[7] While counsel for the defender’s initial position was that the minute of amendment

did not involve a retraction of the admission that an oral contract had been concluded in the

terms averred, his position evolved in the course of his submissions. If the parties to the

contract could not be identified, then, he submitted there would be no consensus in idem;

there would be “dissensus” and potentially no contract concluded at all. It should be noted

that the defender’s proposed amendment is uncertain as to the person with whom the

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defender contracted. There are references in it to both “PCL” and “PCL Presents”. Neither

PCL nor PCL Presents bears to be a legal person, but is simply a trading name (a matter

which the defender’s counsel accepted in submissions). Notwithstanding this, the proposed

amendment is that the defender “understood it was contracting with PCL” or (if as

amended at the bar) “with PCL Presents”. (By contrast, and perhaps compounding the

uncertainty, in his submissions made in moving the minute of amendment, the defender’s

counsel acknowledged that the defender could not dispute “that there was a contract with

Mr Cawdor”, ie the sole director of the pursuer.)

[8] In light of the foregoing, the effect of the minute of amendment, if granted, would

have the potential to open up additional questions including whether there was a concluded

contract. Having regard to the averments in the sheriff court action, that Alexander Prasher

(who is described in the sheriff court pleadings as the sole director of Events (and who was

one of the directors of the defender at the material time)) and Paul Cawdor (ie the sole

director of the pursuer) “have contracted with each other in their capacity as Directors on

behalf of the parties in excess of 10 occasions since in or around 2000, all of which contracts

between the parties have been formed orally”, there is a prospect of the proof being

extended to consider whether there was a similar course of dealing. Counsel for the

defender assumed that the minute of amendment would not have an impact on the proof,

though it may have a material impact on the timetable and proof preparation, not least in

requiring a further round of principal witness statements on these issues. Counsel for the

pursuer was less sanguine as to the effect of the minute of amendment. It may imperil the

proof. The pursuer’s counsel strongly challenged the relevancy of the proposed amendment;

it could not be assumed that there would be no debate on the amended averments, once

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these were settled. Counsel for the defender’s position was that it was inappropriate to

assess matters of relevancy at this stage.

The explanation for the admissions made and now sought to be deleted

[9] This is not a case in which a minute of amendment is prompted by discovery of some

hitherto unknown fact or change in the law as previously understood. It was not suggested

that agents and counsel previously instructed had exceeded their instructions. Counsel for

the defender’s explanation was that he had brought fresh eyes to the defender’s case.

[10] In considering such explanation as there was for the reason and timing of the

proposed minute of amendment, I note that the agents and counsel instructed previously

were reputable and able. I would have expected some explanation to have been tendered

from them to confirm whether the present state of the pleadings resulted from prolonged

oversight of an obvious matter, as counsel for the defender inferred (his “elephant in the

room” submission). However, they are not here to provide any positive explanation of what

is, at least by implication, a suggestion of at least extreme laxity or a dereliction of their

respective professional duties as agent and counsel in confirming the client’s instructions on

key matters – such as the identity of the pursuer or the counterparty of any contract being

admitted. This is not a case of mistaken identity, ie where one company name is similar to

that of another and the amendment is to substitute the correct party. No new document or

fact has emerged. On the limited documentation available and referred to in the course of

submissions, the name of the pursuer (ie as a limited company, “Autauric Ltd”) did not

initially appear in associated documentation after the oral contract was concluded. Rather it

was “PCL” or “PCL Presents”, ie what is averred and admitted to be the trading name of the

pursuer. It would therefore be surprising if the question of the correct name or identity of

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the pursuer were not something on which specific instructions had been taken - at least by

the time matters were considered by the defender’s previous legal advisers. In my view,

there is force in counsel for the pursuer’s observation that the key admission now to be

deleted was a qualified admission and therefore must have been the subject of specific

instructions by the defender to the pleader of the defences to make that qualified admission.

[11] I accept the pursuer’s submission that the defender does not provide a credible

explanation of how these admissions came to be made, now suggested to have been made

unwittingly. Counsel for the pursuer noted the many opportunities the defender had once

these proceedings were raised to confirm its instructions on this critical issue, including:

when the defender received the summons, when it consulted with and gave instructions to

its counsel and agents to prepare defences, when those defences were lodged and were later

adjusted, when the pursuer’s identification of the real issues was agreed, and the scope of

the proof determined at the procedural hearing. (The pursuer sought to make a similar

point under reference to some pre-litigation communings. In light of the defender’s

objections that these were made on a “without prejudice” basis I do not take these into

account.)

[12] While counsel for the defender made passing reference to the regulations requiring

disclosure of the names and other prescribed details of limited companies, it was not

suggested that the absence of this made any difference, or caused any prejudice, or

otherwise led to any remedy or sanction provided for in those regulations. Given that the

contract was, on the present averments, concluded orally, it is difficult to see how there

could have been any prejudice at the material time when the contract was formed. In any

event, no submissions were made to bring these regulations into play; nor were they

produced.

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The test to be applied by the court considering the receipt of a minute of amendment

[13] For the purpose of identifying the test to be applied by the court on receipt of a

minute of amendment, counsel for the defender relied on a passage in McPhail’s Sheriff

Court Practice and on the observations of the Lord Justice Clerk (Thomson) in Thomson v

Corporation of Glasgow 1962 SC(HL) 36 at 52. Counsel for the defender relied especially on

the observations in that case that “amendment is, in theory, a belated adjustment for which

the laggard has to pay” (ibid at page 52). Counsel for the defender accepted that there will

be additional time required – he suggested a further two months for revised witness

statements, for example – and further expense in the form of answers and enquiries

necessary for them. The defender accepts it will meet the expenses of the amendment

process. Implicit in this submission is the premise that any prejudice is sufficiently

compensated by an award of expenses.

[14] Counsel for the pursuer referred to Aon Risk Services Australia Ltd v the Australian

University [2009] HCA 27 (“Aon”), a decision of seven justices in the High Court of Australia.

Under reference to paragraphs 30 (per French CJ) and paragraphs 111 to 114 (per five other

Justices of remaining court of seven) counsel for the pursuer invited a more modern and

nuanced approach. The High Court of Australia in that case considered in detail the many

factors that might inform the question of whether a party should be allowed to amend its

pleadings. Much of the discussion in that case was taken up with a consideration of an

earlier decision in that jurisdiction (Queensland v J L Holdings) and whether it precluded a

number of the factors the court identified in Aon. French CJ wrote (at paragraph 30):

“It might be thought a truism that ‘case management principles’ should not supplant

the objective of doing justice between the parties according to law. Accepting that

proposition, JL Holdings cannot be taken as authority for the view that waste of

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public resources and undue delay, with the concomitant strain and uncertainty

imposed on litigants, should not be taken into account in the exercise of interlocutory

discretions of the kind conferred by rule 502. Also to be considered is the potential

for loss of public confidence in the legal system which arises where a court is seen to

accede to applications made without adequate explanation or justification, whether

they be for adjournment, for amendments giving rise to adjournment, or for vacation

of fixed trial dates resulting in the resetting of interlocutory processes”.

[15] In their joint judgement the five justices observed, at paragraphs 111 to 114:

“111. An application for leave to amend a pleading should not be approached on

the basis that a party is entitled to raise an arguable claim, subject to payment of

costs by way of compensation. There is no such entitlement. All matters relevant to

the exercise of the power to permit amendment should be weighed. The fact of

substantial delay and wasted costs, the concerns of case management, will assume

importance on an application for leave to amend. Statements in JL Holdings which

suggest only a limited application for case management do not rest upon a principle

which has been carefully worked out in a significant succession of cases. On the

contrary, the statements are not consonant with this Court’s earlier recognition of the

effects of delay, not only upon the parties to the proceedings in question, but upon

the court and other litigants. Such statements should not be applied in the future.

112. A party has a right to bring proceedings. Parties have choices as to what

claims are to be made and how they are to be framed. But limits will be placed upon

their ability to effect changes to their pleadings, particularly if litigation is advanced.

That is why, in seeking the just resolution of the dispute, reference is made to parties

having a sufficient opportunity to identify the issue they seek to agitate.

113. In the past it has been left largely to the parties to prepare for trial and to seek

the court’s assistance as required. Those times are long gone. The allocation of

power, between litigants and the courts arises from tradition and from principle and

policy. It is recognised by the courts that the resolution of disputes serves the public

as a whole, not merely the parties to the proceedings.

114. Rule 21 of the Court Procedures Rules recognises the purposes of case

management by the courts. It recognises that delay and cost are undesirable and that

delay has deleterious effects, only upon the party to the proceedings in question, but

to other litigants ...”

I also note the observation to the end of paragraph 94 (of the judgement of the five justices),

that:

“where a party had had a sufficient opportunity to plead his or her case, it may be

necessary for the court to make a decision which may produce a sense of injustice in

that party, for the sake of doing justice to the opponent and to other litigants.”

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This observation is a helpful reminder of the shift in the balance of power between parties

and the court in respect of the progress of a litigation. The adoption of active case

management powers moderates the classic model of adversarial litigation in furtherance of

other objectives. The whole of this important case repays careful reading, not least for the

clarity of its discussion of the effect of active case management in shifting the focus from

being solely concerned with doing substantive justice between the parties to one involving

recognition of these other, wider objectives in a modern system of civil justice.

[16] Indeed, active case management is the hallmark of a modern commercial court,

whose principal objectives include efficient and effective resolution of disputes and

proportionate cost. Effectiveness means maintaining an appropriate control over the

conduct of the parties. This does not mean that changes in tactics are permissible, so long as

they do not prolong the overall resolution of the dispute. The court no longer passively

cedes control of the pace and conduct of litigation to the parties. The court’s raison d’etre is

to do justice between the parties but, in doing so, it may have regard inter alia to the strain

and uncertainty that prolonged litigation or a late change in a party’s position imposes upon

parties. Effectiveness also means the exercise of the court’s power to facilitate parties’

identification of the real issues in dispute, and then maintaining their focus on those issues.

[17] In commercial actions before this court, it is expected that the parties will have

complied with the pre-action protocol, with the effect that the issues are well-ventilated

between the parties and that they will have disclosed material documents and expert reports

to each other by the time proceedings are raised. For this reason, the commercial judge is as

a generality unlikely favourably to countenance requests for long periods of adjustment at

the outset of litigation. That factor is relevant to the exercise of the court’s case management

powers. In the context of active case management in commercial actions, the question of

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allowing a fundamental change at an advanced stage in the proceedings might be framed by

asking: Has the litigant had sufficient opportunity to identify the issues in dispute and to

reflect this understanding in its pleadings (or in similar statement of its position, such as a

note of argument or statement of issues)?

[18] I regard it as a not insignificant factor that this case was well conducted by parties

consistent with the practice and ethos of the commercial court. As the annotations to the

opening of chapter 47 of the Rules of the Court of Session 1994 make clear, the purpose of

creating specialist case management powers available to the commercial judge in

commercial actions was to provide the business community with a greater degree of speed

and flexibility in the resolution of disputes (per Lord President Hope in Sterling Aquatic

Technology Ltd v Farmocean AB 1983 SLT 713, 715L) and that, once placed in the hands of the

commercial judge, to ensure she has all the powers for a speedy disposal (per Lord President

Emslie in Jones and Bailey Contractors Ltd v George H Campbell & Co (Glasgow) Ltd 1983

SLT 461, 462). Under the rubric “procedure in commercial actions”, rule 47.5 provides that

the “procedure in a commercial action shall be such as the commercial judge shall order or

direct”. That rule confers a wide discretion on the commercial judge to exercise her case

management powers to achieve these objectives.

[19] In this case, by virtue of the commercial court procedures and case management,

parties agreed what could be agreed and identified the real issue in dispute between them.

This was essentially whether the defender breached the terms of the admitted contract and

whether that caused loss to the pursuer in the sum agreed. In my view, that is the material

context in which to consider the defender’s minute of amendment.

[20] Turning to the specific matters in this application, among the factors counsel for the

pursuer identified as relevant to the court’s consideration of whether to allow the minute to

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be received included the increased worry for the pursuer: what had been uncontested has

become highly contentious. This feature was referred to in the passages from Aon already

quoted. On the issue of the timing of the minute of amendment in relation to any proof (one

of the factors referred to in Thomson and founded on by counsel for the defender), counsel

for the pursuer noted that the minute came after exchange of the principal witness

statements and which was stood as their evidence in chief for the proof.

Decision

[21] Whether a minute of amendment is to be received is pre-eminently a matter for the

court’s discretion having regard to a number of factors. These factors are bound to vary

from case to case. It would be unwise to try to identify all of the factors; they may include,

but are not necessarily restricted to, the whole history of the conduct of the case (and which

may include pre-litigation communings, if appropriately disclosable or vouched), the scope

of the amendment, the reasons it is necessary, the reasons for its timing, whether it assists in

identifying the real issue in dispute between the parties, its effect on the other parties and on

any hearings, and issues of prejudice.

[22] In my view the minute of amendment in this case is not necessary to determine the

real issue of controversy between the parties. What is the “real issue” is a question for the

court but this may, of course, be informed by the parties’ understanding of what is the

essence of disputes they have brought to the court for it to resolve. This is not the same

thing as a “lawyer’s argument”, as counsel for the pursuer characterised the defender’s

reason for bringing the minute of amendment forward, or, because fresh eyes had identified

“a point to be taken”, to use counsel for the defender’s language.

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[23] In this case, by virtue of the commercial court procedures and case management,

parties agreed what could be agreed and identified the real issue in dispute between them.

This was essentially whether the defender breached the terms of the admitted contract and

whether that caused loss to the pursuer in the sum agreed. In my view, that is the material

context in which to consider the defender’s minute of amendment. Accordingly, the real

issue of controversy between the parties was that referred to above (at para [4]), being the

sharp issue of liability against an agreed background of what the contract between the

parties required of the defender. That discrete issue was the outcome of parties’ considered

positions, articulated and agreed under the discipline of the commercial court’s case

management powers.

[24] In considering counsel for the defender’s reliance on Thomson, I note that in that case

the Lord Justice Clerk, Lord Thomson, referred to a number of factors, including prejudice,

as assessed by “the structures within which our system works” and “the whole history of

the case”. Consistent with Thomson, I take into account, as part of the current “structures”,

the wide discretion conferred on the commercial judge by rule 47.5, as well as the purposes

for which those powers are exercised (as articulated by Lords President Hope and Emslie, as

already noted). Properly construed, Thomson is not authority for the bald proposition that

the overriding consideration in allowing an amendment was simply that the person

amending would pay. On this matter I am attracted to the more nuanced and multi-faceted

approach of the High Court of Australia in Aon. While the court in Aon was considering its

own case law and procedures, its general observations about the impact of case management

powers in moderating the worst excesses of an unqualified adversarial system are

instructive. I refer to the question posed at the end of paragraph [17], above, as helpful in

assisting in the exercise of the discretion available to the commercial judge under the Rules.

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[25] In considering that question, I also note the absence of a credible explanation,

including a frank acknowledgement of a genuine mistake or oversight (if that is what has

occurred), as opposed to an unattractive speculation from silence. The defender’s approach

was premised on the assumption that it will be sufficient to allow a minute of amendment to

be received upon an offer that the amending party will pay the other side’s expenses (which

counsel for the pursuer rightly points out does not compensate for all of the expense actually

incurred) simply to enable the defender to pursue a newly identified “point to be taken”. In

my view that justification will not suffice. The defender has had a reasonable opportunity to

consider its position in response to the pursuer’s claim and to agree what are the real issues

in dispute. I have already noted the scope and potential effect of the proposed minute of

amendment on the substantive procedure and settled issues in this case. Having regard to

the whole circumstances, I do not regard it as commensurate with modern case management

procedure in this court to grant this motion and I refuse it.

[26] Finally, for completeness, I should note that I do not accept counsel for the

defender’s submission that the court may not have regard to issues of relevancy at the stage

of receipt of a minute of amendment. While it is correct that more searching consideration of

issues of relevancy is for a full debate, that does not preclude a more pragmatic approach

when, in the appropriate case, the court may consider the strength (or otherwise) of

averments proposed to be added by amendment. In this case, the proposed amendment was

to add averments of the defender contracting with PCL or PCL Presents, neither of whom

was a legal entity. PCL or PCL Presents were accepted to be trading names, which

necessarily lead to Autauric as the legal entity trading via these names. In these

circumstances, counsel for the pursuer’s submission that these averments were irrelevant

appeared well founded.

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Coda

[27] In contrast to the Civil Procedure Rules (“the CPR”) in England, our Rules do not

articulate an overriding objective of civil litigation or an acknowledgement of considerations

of efficiency, effectiveness or the proportionate use of resources (including court resources).

Again in contrast to the CPR, our Rules do not impose a positive obligation on litigants to

assist the court in achieving that overriding objective. Maybe they should. In the meantime,

I would encourage parties and practitioners litigating commercial actions to recognise, as

Megarry J said 35 years ago, that civil justice “Is a co-operative process to which solicitors,

counsel [and I would of course now add solicitor-advocates] and judges all make their

contribution”: Barbour’s Settlement Trusts [1974] 1 WLR 1198 at 1203.