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Cite as: [2003] ScotSC 35

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Training Profit (UK) v. Rickman Tooze Independent Financial Advisors [2003] ScotSC 35 (15 May 2003) A1937/02
JUDGMENT OF

SHERIFF PRINCIPAL IAIN MACPHAIL QC

in the appeal

in the cause

TRAINING FOR PROFIT (UK) LTD

Pursuers and Respondents

against

RICKMAN TOOZE INDEPENDENT

FINANCIAL ADVISORS LTD

Defenders and Appellants

_________________________

Act: Bookless; Archibald Campbell & Harley WS

Alt: Frazer; Drummond Miller WS

EDINBURGH, 15 May 2003.

The Sheriff Principal, having resumed consideration of the cause, allows the appeal; recalls the interlocutors of 13 August 2002 and 2 December 2002; appoints defences to be lodged within fourteen days from this date; assigns 24 July 2003 at 10 am as an options hearing; allows parties to adjust their pleadings until 14 days before the date of the options hearing.

NOTE

Introduction

[1] This is an appeal against an interlocutor refusing a reponing note. There is, however, a preliminary question whether the decree in absence which the defenders seek to have recalled is a competent one. At the opening of the appeal on 5 March 2003 I raised the question of the competency of the decree and continued the hearing until 18 March 2003 to enable the parties to consider the matter. On 18 March 2003 I heard parties' submissions both on the issue of competency and on the question whether, if the decree was competent, the defenders should be reponed.

Competency

[2] The crave of the initial writ is in the following terms:

'The pursuers crave the Court to grant decree against the defenders for payment to the pursuers of the sum of FOUR THOUSAND FOUR HUNDRED AND NINETY NINE POUNDS AND NINETY NINE PENCE (£4,499.99) STERLING with interest thereon at the rate of four per centum above the base lending rate in effect at that time and calculated on a daily basis (and compounded on the expiry period of each three month from the due date) in respect of the period from the Sixteenth day of March Two thousand and two until payment and to find the defenders liable in the expenses of the action.'

[3] On 13 August 2002 the pursuers minuted for decree ' in terms of the crave of the initial writ' in respect that the defenders had failed to lodge a notice of intention to defend. On 15 August 2002 Sheriff Mackinnon pronounced the following interlocutor:

'The Sheriff, on pursuers' motion, grants decree in absence as craved with £221.40 of expenses.'

On 30 August 2002 an extract decree for payment was issued in these terms:

'The Sheriff granted decree against the defender for payment to the pursuer of the undernoted sums.

'Sum decerned for £4,499.99 with interest at 4 per cent a year above the base lending rate in effect at that time and calculated on a daily basis (and compounded on the expiry period of each three month from the due date) in respect of the period from 16 March 2002 until payment, and granted decree against the defender for payment of expenses of £221.40.'

It will be seen that the extract repeats the material terms of the crave, except that the clerk has added the words 'a year' which do not appear in the crave.

[4] The pursuers lodged a reponing note which Sheriff Lothian refused on 2 December 2002. They now appeal against the refusal of the reponing note.

[5] In order to test the competence of the decree it is necessary to see whether it satisfies the rule that a decree must be clear and precise (Bank of Scotland v Logie 1986 SLT (Sh Ct) 47 at p 48; Macphail, Sheriff Court Practice (2nd edn) p 562, para 17.14). At the opening of the appeal I questioned the use of the phrases 'at that time' and 'from the due date'. At the continued hearing of the appeal the pursuers' solicitor admitted that those phrases were not clear, but he argued that 'from the due date' meant 'from 16 March 2002' and 'at that time' meant that interest was to run at four per cent above the base lending rate at the time when the interest was calculated. He submitted that the pursuers had been entitled to crave a pactional rate of interest (Sheriff Court Practice p 294, para 9.93). He said that the contractual provision for the calculation of the interest appeared in clause 20 of the parties' agreement which had been quoted in article 2 of the condescendence. It is stated in article 2:

'By virtue of clause 20 of the said agreement in the event of late payment by the defenders interest accumulates at the rate of "four per centum above the base lending rate in effect at that time and calculated on a daily basis (and compounded on the expiry period of each three month from the due date) in respect of the period from the due date until receipt" by the pursuers of the full sum due as cleared funds.'

[6] The defenders' solicitor submitted that the decree was so flawed that it did not make sense. The crave had not included the words 'a year' or 'per annum'. The phrases 'the base lending rate', 'at that time', 'the expiry period of each three month' and 'from the due date' were all obscure. The appropriate course, he argued, was to allow the appeal, grant the reponing note and make an order for defences. The pursuers could then seek to amend their crave, if so advised.

[7] In my opinion the decree cannot stand because it is not sufficiently clear and precise. In Middleton v Leslie (1892) 19 R 801 Lord President Robertson said (at p 802):

' . . . it is right that the Court should so express the decree that the defender shall be in no doubt regarding the obligation he has to discharge.'

Although that was said of a decree ad factum praestandum, the principle is understood to be of general application: Bank of Scotland v Forsyth 1968 SLT (Sh Ct) 15 at p16 per Sheriff Sir Allan G Walker, QC; Bank of Scotland v Logie 1986 SLT (Sh Ct) 47 at p 48 per Sheriff Principal S E Bell, QC. Thus Sheriff Lees states (Notes on Interlocutors (2nd edn, 1915) p 20, para 37):

'Care should be taken that the judgment is so framed that the loser is left in no doubt as to what he is to do or to pay, and the winner should know exactly what he has gained.'

It is not a sufficient answer to say that the meaning of the decree may be understood by reference to the pleadings or the terms of the parties' contract. Sheriff Lees advises (p 19, para 35):

'35. The Judgment should not proceed on a Pleading or a Production.- Where feasible, it is desirable that the judgment should be complete in itself. It may safely decern in terms of the craving of the initial writ, for the principal writ remains in the custody of the clerk of Court. But pleadings and productions may be borrowed up and be lost or tampered with or be unable to be got readily when wanted.'

[8] But the judgment 'may safely decern in terms of the craving' only where the crave is intelligible. On the most charitable view, the meaning of the crave in this case is doubtful. There is no indication of whether the rate of interest of 'four per centum' is an annual rate or a monthly rate or some other rate. The phrases 'at that time' and 'from the due date' are obscure, and the expression 'on the expiry period of each three month' is garbled. It seems clear that the pleader has simply repeated the words in the agreement without translating them into intelligible English.

[9] I would not agree with the defenders' solicitor that the expression 'base lending rate' is obscure. I think it is generally understood to mean the interest rate set by the Bank of England which used to be known as 'bank rate'. I note that in Bank of Scotland v Forsyth 1969 SLT (Sh Ct) 15 Sheriff Sir Allan G Walker, QC, granted decree with interest at a pactional rate of '2 per centum per annum above bank rate'. I was not referred to the decision of Sheriff Nicholson (as he then was) in Royal Bank of Scotland plc v Geddes 1983 SLT (Sh Ct) 32 and I therefore need not express any view upon it. I refer to Royal Bank of Scotland plc v Dunbar 1985 SLT (Sh Ct) 66 and Bank of Scotland v Logie 1986 SLT (Sh Ct) 47.

[10] In the other respects to which I have referred, however, the decree in the present case appears to me to be so lacking in clarity and precision as to be incompetent. Since the Sheriff was not entitled to pronounce such a decree, I understand that I have power at common law to recall it (Kirk v Kirk Edinburgh Sheriff Court, 14 March 2003, so far reported only in 2003 GWD 11-313). I have therefore decided to do so.

Reponing

[11] I shall, however, state my views on the arguments relative to reponing which were presented on the assumption that the decree was competent. It is now necessary to say more about the facts. The pursuers sue the defenders for a sum said to be due in terms of a contract whereby the pursuers provided the defenders with a stand at an exhibition. The defenders are an English limited company with a place of business in Cirencester. They were cited there on 17 July 2002. The form of citation (Form O4) told them, amongst other things:

'IF YOU WISH TO DEFEND THIS ACTION you should consult a solicitor with a view to lodging a notice of intention to defend (Form O7). The notice of intention to defend, together with the court fee of £50.00 must be lodged with the sheriff clerk at the above address within twenty one days of 17 July 2002.

. . . . .

PLEASE NOTE THAT IF YOU DO NOTHING IN ANSWER TO THIS DOCUMENT the court may regard you as admitting the claim against you and the pursuer may obtain decree against you in your absence.'

[12] The defenders, wishing to defend the action, consulted their solicitors, as Form O4 had advised them to do. The solicitors, naturally enough, were not qualified to advise them about Scottish procedure but, surprisingly perhaps, neither advised them to consult Scottish solicitors nor tried to find a firm of Scottish solicitors for them. The defenders therefore decided to lodge a notice of intention to defend without professional help. They did not know that, as a limited company, they would have to use the services of a solicitor. They completed the notice of intention to defend and sent it to the court by special delivery on 5 August 2002. Unfortunately they omitted to send the court fee of £50. On 7 August 2002 the Sheriff Clerk's office returned the notice with a letter which stated:

'I return herewith your notice of intention to defend for the following reason:-

A limited company must be represented by a solicitor.

The fee for lodging a notice of intention to defend is £50.00.'

The letter did not, as it might have done, refer to the expiry of the induciae or suggest that the defenders should seek leave to lodge the notice late or obtain the advice of Scottish solicitors. As I have already narrated, the decree in absence was granted on 15 August 2002 and extracted on 30 August 2002.

[13] The next material event was a curious episode. On 10 September 2002 sheriff officers instructed by the pursuers purported to serve a charge on the defenders in Cirencester. It stated that if they did not pay £4920.57 within 28 days they were liable to have further action taken against them including the poinding and sale of articles belonging to them. The charge was, of course, quite incompetent: the pursuers should have proceeded under Schedule 6 to the Civil Jurisdiction and Judgments Act 1982. On the other hand it did give the defenders notice that the decree had been granted and extracted.

[14] The defenders, however, who had done nothing in response to the letter from the Sheriff Clerk's office of 7 August 2002, waited until 26 September before they wrote to the sheriff clerk's office. In their letter they admitted that by an oversight they had not sent the court fee, but they pointed out that they had followed the advice in the notice of citation to consult a solicitor and they had not 'done nothing in answer to' the citation. They wanted to know if they could still defend the action. By a letter dated 27 September the Sheriff Clerk's office replied:

'You may seek to defend this action by lodging a reponing note in terms of Ordinary Cause Rule 8.1(1).

'May I suggest that you may wish to seek legal advice from a Scottish solicitor with regard to this matter.'

The defenders then consulted a firm of solicitors in Glasgow who referred them to their present solicitors in Edinburgh. On 8 October the defenders sent an e-mail to the latter solicitors. After these solicitors had advised the defenders by telephone, the defenders on 10 October instructed them to lodge a reponing note. The solicitors sent the reponing note to the court with a letter dated 22 October, although it is marked as having been lodged on 4 November. On 4 November the hearing on the reponing note was fixed for 2 December.

[15] The reponing note gives a short account of the matters narrated above and continues:

'4. The defenders seek to defend the action at the instance of the pursuers. The defenders maintain that the pursuers failed to provide the proper goods and services which they had contracted for. In particular, the defenders state that they were misled by the pursuers as to the number of stands and delegates attending the exhibition in London at which they wished to exhibit their stand and product. The defenders believe they have been overcharged for the goods and services provided.'

[16] The reponing note having been refused, the defenders lodged a note of appeal. They omitted to request that the Sheriff write a note setting out the reasons for his decision, as they were required to do by rule 31.4(1)(d) of the Ordinary Cause Rules 1993. The Sheriff, however, voluntarily wrote a full note at very short notice before the hearing of the appeal. In the final paragraph he summarises his reasons thus:

'There has been considerable delay in this case caused by the failure of the appellants to observe the requirements even when such failure has been drawn to their attention. Further, the basis in law which they consider justifies them in refusing to pay the price contracted for is not set out clearly in the reponing note.'

[17] At the hearing of the appeal the defenders' solicitor admitted that he was unable to explain the delay by the defenders between their receipt of the letter from the Sheriff Clerk's office of 7 August 2002 and their reply of 26 September 2002. He submitted, however, that they had not 'done nothing' in answer to the citation: they had indicated their intention to defend the action by sending the notice of intention to defend, albeit without the necessary court fee. Contrary to the view of the Sheriff in his note, there had not been a 'very long delay' or 'such a degree of delay . . . caused by the fault of the now appellants that it would be unfair to the pursuers to delay matters further.' The defenders' English solicitors should have advised them to consult Scottish solicitors. He further argued that the reponing note set out a stateable defence that the contract had been induced by misrepresentation by the pursuers, and the sum sued for was excessive. He cited Forbes v Johnstone 1995 SC 220, 1995 SLT 158, 1995 SCLR 154.

[18] The pursuers' solicitor submitted that it had been the defenders' responsibility to see to it that the action was properly defended. They must have been aware of the consequences of their failure to do so. They had failed to consult Scottish solicitors. They had failed to send the court fee. They had made no attempt to have the notice of intention to defend received late. The pursuers' solicitor founded, in particular, on the delay from the service of the purported charge on 10 September 2002 until the defenders instructed their present solicitors to lodge a reponing note. He also submitted that the proposed defence was excluded by the terms of clause 10 of the contract which, he said, provided that the pursuers accepted no responsibility for the number of people attending the exhibition.

[19] The law which is applicable when a reponing note is considered was stated by a Full Bench in Forbes v Johnstone. The Court said (at p 225A-D):

'What the rules now in force, that is the amended rule 28 [of the Schedule to the Sheriff Courts (Scotland) Act 1907 as amended prior to 1993] and rule 8.1 [of the Ordinary Cause Rules 1993] respectively, require is that the defender must set forth in the reponing note his proposed defence and he must explain his failure to appear. They also require the sheriff to consider the note before he decides whether or not to recall the decree. It is unlikely that a sheriff will be willing in the exercise of his discretion to recall the decree unless he is satisfied that the proposed defence is a stateable one. As for the explanation, it is not a requirement of the rules that he must be satisfied that it provides a reasonable excuse for the non-appearance. The sheriff in the present case has pointed out that defenders may fail to enter appearance timeously for various reasons, some of which may be inexcusable. But it might result in injustice if a defender who had a perfectly sound defence were to be denied the opportunity of entering the process simply because the explanation for his non-appearance was not a reasonable one. As the matter is at the sheriff's discretion he is entitled, in such a case, to take account of all the circumstances and to balance one consideration against another in deciding whether to allow the reponing note.'

[20] In the present case the Sheriff reached the view that the proposed defence had not been clearly stated. It may be that the matter was not distinctly argued before him. At the hearing of the appeal it was clear that the proposed defence was that the defenders had been induced to contract by a misrepresentation by the pursuers as to the numbers of stands at, and persons attending, the exhibition at which the stand was to be provided. The defenders say that they would not have agreed the contract price if they had known the true facts. Before me the pursuers did not suggest that the defence had not been clearly stated. Their criticism of it was that it was excluded by clause 10 of the contract. That criticism cannot be entertained at this stage, however, because the contract has not been produced. Article 2 of the condescendence states:

'The said agreement is produced herewith and its terms adopted and held as repeated herein brevitatis causa.'

In fact, however, it is not produced. I drew that to the attention of the pursuers' solicitor at the opening of the appeal but the contract was not lodged at the continued hearing. It is not possible, accordingly, for the court to examine the contract and fail to be satisfied that the proposed defence is a stateable one.

[21] It also appears that when the Sheriff was considering the reponing note he took an irrelevant consideration into account. He correctly noted that the defenders had failed timeously to take advice from a Scottish solicitor as to what they should do if they wished to defend the action, had failed to send the fee with their notice of intention to defend and had failed to take steps to have a notice received late. He also, however, placed great emphasis on the element of delay. He says that in refusing the reponing note he was 'principally influenced by the very long delay which had developed as a result of [the defenders'] failure to respond promptly and properly to the action which had been properly raised against them.' It appeared to him 'that such a degree of delay had been caused by the fault of the now appellants that it would be unfair to the pursuers to delay matters further.' Further, the Sheriff appears to have considered that the delay had run from 15 March 2002, the date when, according to the pursuers' averments, the sum sued for should have been paid, until the lodging of the reponing note. The only matters rule 8.1(3) requires the Sheriff to consider, however, are the proposed defence and the explanation for the non-appearance: any delay prior to the raising of the action or after the failure to appear timeously by lodging a notice of intention to defend is nothing to the purpose. If Parliament had intended the Sheriff to consider, in addition to the contents of the reponing note, such matters as the defender's conduct in connection with the dispute or any prejudice caused to the pursuer by delay on the part of the defender, it could readily have so provided. If, of course, the nature of the explanation and the nature of the defence, considered together, suggest that the defender's purpose is merely to delay the pronouncement of a decree against him, the reponing note will be refused: Neilson & Marshall v Genis Sheriff Principal Sir Allan G Walker, QC, Glasgow Sheriff Court, 9 December 1970, unreported; Purves v Strathclyde Industrial Services Sheriff Principal Caplan, QC, Dumbarton Sheriff Court, 21 October 1983, unreported; Macphail, Sheriff Court Practice (2nd edn) p 235, para 7.33. In such a case, however, the inference of unjustifiable delay is drawn only from the contents of the reponing note and not from other matters, and it is relevant because it undermines any plausible matter stated in the note.

[22] Accordingly, had it been necessary to do so I would have held that the Sheriff's exercise of his discretion should be set aside because he had taken into account an irrelevant consideration, and that the matter was therefore open to me to consider. I would have held that although the defenders' explanation for their failure to appear was not entirely satisfactory, they had put forward a defence which they should be given an opportunity to substantiate. I would therefore have recalled the interlocutor refusing the reponing note.

Result

[23] In the result, however, I have decided to recall the decree in absence on the ground that it is incompetent. The foregoing interlocutor therefore recalls the decree and the interlocutor refusing the reponing note, makes an order for defences and fixes an options hearing. A further interlocutor to be pronounced today will deal with the question of expenses and remit the cause to the Sheriff to proceed as accords.