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Cite as: [2001] ScotSC 8

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JENNERS OF EDINBURGH v. MS A.J. NORRIS (known as Bowler) [2001] ScotSC 8 (15th March, 2001)

SHERIFFDOM OF TAYSIDE CENTRAL AND FIFE
SC589/00

JUDGMENT OF SHERIFF PRINCIPAL

R A DUNLOP QC

in the cause

JENNERS OF EDINBURGH

Pursuers and Respondents

against

MS A J NORRIS (known as Bowler)

Defender and Appellant

__________________

Act: Mr Doig, Solicitor, Glasgow

Alt: Party Appellant.

KIRKCALDY, 15 March 2001. The Sheriff Principal, having resumed consideration of the cause, Answers the question in the Stated Case in the negative; therefore Refuses the appeal and Adheres to the Sheriff's interlocutor of 21 June 2000; Finds the defender and appellant liable to the pursuers and respondents in the expenses of the appeal; in terms of Rule 88 of the Summary Cause Rules, Remits to the Sheriff Clerk at Kirkcaldy to fix an assessment diet in respect of said expenses and thereafter Remits to the Sheriff to grant decree therefor.

NOTE: This is an appeal by way of Stated Case against the Sheriff's interlocutor of
21 June 2000, which was the date of the preliminary hearing in this small claim. The pursuers raised the action seeking to recover the sum of Ł669.57, being the outstanding amount alleged to be due by the defender in respect of certain items of luggage purchased by the defender at the end of 1998. In response to the summons, the defender and appellant lodged a lengthy document which set out in one section a narrative of her defence to the action and in another section a counterclaim, in which she sought, amongst other things, damages of US $100 million.

The tenor of the defence was, firstly, that the luggage was defective and had been rejected and that accordingly the defender was not liable to pay for it and, secondly, that the agreement between the parties was a consumer credit agreement and that the pursuers had breached the terms of the Consumer Credit Act 1974. The counterclaim is somewhat confusing in its terms, but appears to claim damages for a) "material loss and gross inconvenience" and b) "injury to feelings; mental distress; disappointment and frustration." These heads of damage appear to be related to "severe stress" allegedly suffered by the defender as a result of the malfunction of the fastenings of the luggage and an inability to transport the luggage because of defective handles. The legal basis for the counterclaim is stated to be, firstly, a breach of duty under s. 2(3) of the Consumer Protection Act 1987 and, secondly, a breach of various delictual obligations.

The Sheriff dismissed the defender's counterclaim at the preliminary hearing on the basis that it was incompetent and it is that decision which is now the subject of appeal. For the sake of completeness, it should be said that, following the preliminary hearing, a proof was heard, after which the defender was granted decree of absolvitor with expenses. The appellant lodged a substantial document by way of note of appeal in which it appeared that she was appealing against that decree in her favour, as well as a variety of decisions that had been taken by the Sheriff at the preliminary hearing. After a hearing before me, at which there was a discussion about the scope of the appeal, I directed the Sheriff to state a case on the one question that is now before me. That appeared to me to be the only decision adverse to the defender that was still a live issue after the Sheriff had granted decree of absolvitor. In correspondence with my office thereafter, the defender expressed some dissatisfaction with what she perceived to be a limitation of her appeal. I did not understand her to adhere to that point of view however when the position was explained to her more fully at the start of the appeal hearing. The only issue in the appeal therefore is whether the Sheriff was correct in dismissing the counterclaim.

As appears from the Stated Case the Sheriff dismissed the counterclaim principally because there is no provision in the Small Claim Rules for a counterclaim. He also took the view that, in any event, the form and content of the counterclaim was such as could only competently be brought in the form of a separate or cross action. If the primary ground of his decision is well founded it would not matter if he had erred in relation to the second ground.

In terms of Section 39 of the Sheriff Courts (Scotland) Act 1907 the procedure in all civil causes shall conform to the rules of procedure set forth in Schedule 1 thereto. That provision however is made "subject to the provisions of any Act of Parliament in force after the passing of this Act" and would include the Sheriff Courts (Scotland) Act 1971 (hereinafter referred to as "the 1971 Act"), which introduced the form of process to be known as a "summary cause". In terms of Section 35 of that Act, that is the form of process which is to be used for the purposes of all civil proceedings of a specified type, including actions for payment of money not exceeding Ł1,500 in amount.

In terms of the Law Reform (Miscellaneous Provisions) (Scotland) Act 1985, section 35 of the 1971 Act was amended so as to introduce a form of summary cause process to be known as a "small claim". A small claim process is to be used for the purposes of such descriptions of summary cause proceedings as are prescribed by the Lord Advocate. In terms of the Small Claim (Scotland) Order 1988 it is provided that a small claim process shall be used for the purposes of actions for payment of money not exceeding Ł750 in amount.

In terms of Section 32 of the 1971 Act, the Court of Session is given power to regulate and prescribe the procedure and practice to be followed in any civil proceedings in the Sheriff Court and in pursuance of that power the Act of Sederunt (Summary Cause Rules, Sheriff Court) 1976 was enacted, section 3 of which provides:-

"3(1) The rules for regulating the procedure in a summary cause other than a small claim shall be the rules set out in the schedule to this Act of Sederunt.

The following provisions of the Ordinary Cause Rules 1993 shall apply to a summary cause insofar as not inconsistent with those rules:-

............................."

Sub-section 2 then sets forth a number of particular provisions of the Ordinary Cause Rules which are to apply to a summary cause.

In terms of Section 35(1)(A) of the 1971 Act it is made clear that there is nothing to prevent the Court of Session from making different rules of procedure and practice in relation to different descriptions of summary cause proceedings. Such rules were enacted in relation to small claims by the Act of Sederunt (Small Claim Rules) 1988, section 2 of which provides:-

"2(1) The provisions of the Schedule .... shall have effect for the purpose of

providing rules for the form of summary cause known as a small claim ...."

The Schedule that is referred to in section 2 contains the Small Claim Rules and in terms of Rule 1(2) it is provided that these rules shall apply to a small claim. Accordingly it is plain that in respect of both the summary cause and the small claim the Court of Session has directed that different rules shall apply to each procedure.

Both the Ordinary Cause Rules and the Summary Cause Rules make provision for counterclaims. In terms of the Small Claim Rules 1988 it is provided by rule 2 as follows:-

"2(1) The provisions of the Ordinary Cause Rules specified in Appendix 2 to these rules shall apply to a small claim insofar as not inconsistent with these rules.

(2) The provisions of the Summary Cause Rules specified in Appendix 3 to these rules shall apply to a small claim insofar as not inconsistent with these rules."

In neither Appendix 2 nor Appendix 3 does one find any reference to either Ordinary Cause Rule 19 or Summary Cause Rule 21, which are the rules dealing with counterclaims. The appellant's contention is that in this state of affairs the Small Claim Rules simply make no provision for counterclaims and one should not elevate the absence of a provision into a positive provision which excludes them. In my opinion this submission is unfounded. The machinery of a counterclaim was first introduced into the practice of the Court by rules of procedure and that is still the basis upon which a counterclaim can be made. Prior to that time it was necessary for such a claim to be made in a separate or cross action (see Fulton Clyde Ltd. v J & F McCallum & Co. 1960 SC 78). Accordingly, the absence of a provision supporting a right to counterclaim is a clear indication that such right is not intended. Furthermore, there would be little point in specifying those Ordinary Cause or Summary Cause rules, which do apply to the small claim procedure, if it was not intended that the other rules do not apply. If one looks at all three sets of rules together it is perfectly clear that the extent to which the rules appropriate to one procedure will be applicable to another is a matter of careful and deliberate selection. It must follow that the omission of other rules is equally the result of a deliberate decision. This is entirely consistent with the aim of providing a simple and distinctive set of rules for Small Claim procedure. I am quite satisfied therefore that the proper interpretation of Rule 2 of the Small Claim Rules is that the rules specified in Appendices 2 and 3 are the only Ordinary Cause and Summary Cause Rules that apply to small claim procedure.

I find support for this view in the case of Slessor v Burnett-Stuart 1990 SLT (Sh.Ct.) 62. In that case the defender had wished to lodge a counterclaim in a small claim process but had been told by the Sheriff that there was no provision for a counterclaim under the small claim rules. In granting decree, the Sheriff superseded extract for three months to allow the defender to raise his own small claim to cover the matter that was the subject of the proposed counterclaim. On an appeal to the Sheriff Principal, it was contended that the defender had a right of set off arising out of a claim against the pursuer for his breach of the contract between the parties. It seems clear that the thinking behind this change of approach was that such a right was properly a defence to the action and could be raised without the need for a counterclaim. The Sheriff Principal refused the appeal, effectively on the basis that it was too late for the defender to then raise the point advanced. In doing so however he expressly endorsed the correctness of the Sheriff's approach with regard to the counterclaim.

In the Stated Case the Sheriff has made reference to the question of set off and it seems clear that he had in mind the argument that was advanced at the stage of appeal in Slessor v Burnett-Stuart. The appellant did not advance any argument that set off applied and there was no discussion of the circumstances in which it might operate. Set off operates so as to reduce or extinguish the amount of the pursuers' claim. Accordingly it has the effect of a defence against a claim for recovery by the pursuers of all or part of their claim. Although it is unnecessary to examine this issue further, I do not consider that there is any inconsistency between the possibility of pleading a defence of set off and the absence from the Small Claim Rules of any procedure for a counterclaim.

Accordingly, if this action is governed only by the provisions of the Small Claim Rules, in my opinion the Sheriff was fully justified in his view that a counterclaim was not a competent step in a small claim process.

That is not an end of the argument, however, for the appellant has also submitted that, in relation to a certain class of litigant, all three sets of procedural rules applied. The starting point for the appellant's submissions in this regard was a passage in Macphail Sheriff Court Practice 2^nd edn. (para 5.02) which includes the statement that "properly speaking all the sittings of the court at which civil business is considered ... are sittings of the ordinary court." She contended that the Ordinary Cause Rules, the Summary Cause Rules and the Small Claim Rules were all procedural rules for the conduct of civil business in the ordinary court and that, as a small claim was still a matter of business in the ordinary court, all three sets of rules were relevant. Since both the Ordinary Cause Rules and Summary Cause Rules made provision for counterclaims she submitted that a counterclaim was competent, even though this action was proceeding as a small claim. She expressly accepted however that this state of affairs did not apply in every situation. Whether it did or did not would depend on whether the defender in the small claim was within a class of person who was "effectively prohibited from raising a fresh action" to vindicate the claim that, but for the Small Claim Rules, would proceed as a counterclaim.

The appellant contended that she was effectively prohibited from raising her own action, primarily because of the fear of the expenses associated with ordinary actions. Although she believed that she was eligible for legal aid, at least on financial grounds, she did not know whether that was in fact the case and had not checked the position. She also made a number of submissions regarding the fact that she had been unwell since the Autumn of 1998 and that affected her ability to act in the litigation. There was a subtle difference between being a pursuer on the one hand and a defender with a counterclaim on the other. The counterclaim was simply an extension of defending oneself and in her state of health it was easier to be a defender than a pursuer. A combination of these factors amounted to an effective prohibition against her raising an ordinary action. She accepted however that, if the pursuers had not raised their action against her, she would have required to raise her own action if she wished to pursue her own claim. She did not dispute that such an action would have to be an ordinary action.

The appellant was unable to point to any provision which enabled the Court to identify the existence of a class of person such as suggested by her, maintaining that it was part of the general discretion of the Court to decide in particular cases whether a litigant fell into that class. It is, so far as I am aware, a novel proposition that the applicability of the rules of court depends upon the individual characteristics of a particular litigant. There was no authority advanced for that proposition and in my view it is completely without merit. In my view nothing has been said by the appellant that would cause me to depart from the view that I have already expressed, based upon my understanding of the proper interpretation of the various rules of procedure, which have statutory effect.

The only other matter that should be mentioned is an argument advanced by the appellant on the strength of a statement in Gloag & Henderson The Law of Scotland 10^th Edn.(page 41) as follows: "On a counterclaim arising from the same contract or facts on which the original claim was based, there is jurisdiction in the court in which the original claim is pending." This passage arises in a chapter dealing with jurisdiction and does not seem to me to have any relevance to the issue in this appeal. The jurisdiction of the court is a different question from the procedure that the court is directed to follow in the exercise of its jurisdiction.

I adhere to the view therefore that the Sheriff was perfectly correct in his conclusion that this counterclaim was incompetent. In these circumstances I do not consider that it is necessary to go on to examine the Sheriff's alternative basis for dismissing the counterclaim. I shall therefore answer the only question in the Stated Case in the negative and refuse the appeal. Parties were agreed that expenses should follow success.