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Shiprow Development Company v. Liquidator of Craiglair Property Company Ltd & Ors [2003] ScotSC 48 (23 October 2003) SHERIFFDOM OF GRAMPIAN HIGHLAND AND ISLANDS AT ABERDEEN

MB439/02

		JUDGEMENT of SHERIFF PRINCIPAL SIR STEPHEN S T YOUNG Bt QC
		in the cause
		SHIPROW DEVELOPMENT COMPANY LIMITED
		Appellants
		against
		DUNCAN DONALD McGRUTHER, Liquidator of CRAIGLAIR PROPERTY COMPANY LIMITED
		First Respondent
		JOHN MOWLEM & COMPANY plc Second Respondents
		and
		ODEON CINEMAS LIMITED Third Respondents

Act: Mr Artis, advocate, instructed by Iain Smith & Co, Aberdeen

Alt: Mr Cowie, advocate, instructed by MacRoberts, Glasgow, for the first and third respondents and Mr Kirk, solicitor, Dundas & Wilson, Glasgow, for the second respondents

Aberdeen: 23rd October 2003

The sheriff principal, having resumed consideration of the cause, sustains the appeal in part and recalls that part of the interlocutor of the sheriff dated 21^st May 2003 beginning with the words "The sheriff, on the motion ......" and ending with the words "....... to determine further procedure"; before answer allows to parties a proof of their respective averments on a date to be afterwards fixed by the sheriff; certifies the appeal as suitable for the employment by the appellants and the first and third respondents of junior counsel and otherwise reserves meantime the question of the expenses of the appeal and appoints parties to be heard thereon at Aberdeen Sheriff Court on Tuesday 4^th November 2003 at 9.30 am.

Note

On 1^st July 2002 a petition was presented to the sheriff for the winding up of Craiglair Property Company Limited ("Craiglair"). By interlocutor dated 6^th September 2002 the sheriff ordered Craiglair to be wound up and appointed the first respondent as interim liquidator. In an estimated statement of the affairs of Craiglair as at 1^st July 2002 the principal creditors of Craiglair were recorded as being the appellants to the extent of £490,688, the second respondents ("Mowlem") to the extent of £119,369, the third respondents ("Odeon") to the extent of £546,131 and the Inland Revenue to the extent of £27,305.

The interim liquidator in due course summoned a general meeting of the creditors of Craiglair to take place on 17^th October 2002. It was what happened at that meeting which has given rise to the present appeal. In a nutshell, the appellants say that the claims of Mowlem and Odeon were wrongly accepted by the liquidator to the full extent of £119,369 and £546,131 respectively. As a result Mowlem and Odeon represented a majority in value of the creditors at the meeting and so were able to secure the appointment of the first respondent as liquidator of Craiglair in the face of opposition from the appellants. The latter maintain that, if the debts due by Craiglair to Mowlem and Odeon had been correctly valued, they would have been in a position to defeat the appointment of the first respondent as liquidator.

On 31^st October 2002 the appellants presented a note to the court in the liquidation process in terms of which, in short, they asked the court to bring under review the liquidator's adjudications of the debts claimed in the liquidation by Mowlem and Odeon and "to substitute therefor the adjudications of the court such that the same shall be reduced to respectively nil and £406,378.94 or such other sum or sums as to the court shall seem fit". The application (which it is not disputed falls to be treated as a summary application) was made in terms of section 49(6) of the Bankruptcy (Scotland) Act 1985 which is applied to company liquidations by rule 4.16 of the Insolvency (Scotland) Rules 1986 and which provides that any creditor may, if dissatisfied with the acceptance or rejection of any claim, appeal therefrom to the sheriff. No specification is given in the Act of the grounds upon which such an appeal may be made.

The note was duly intimated to the liquidator, Mowlem and Odeon and answers were lodged on behalf of each of them. At a procedural hearing on 18th December 2002 the sheriff on the motion of the appellants, there being no objection, allowed parties twenty eight days to adjust the note and answers and thereafter assigned 13^th February 2003 as an evidential hearing on the note and answers as adjusted. It appears that the expression "evidential hearing" in local Aberdeen parlance simply means a proof.

On 5^th February 2003 the appellants lodged a further note in terms of which they craved the court to discharge the evidential hearing assigned for 13^th February 2003, to ordain certain parties to lodge a variety of documents which had been referred to in the pleadings and thereafter to fix a further evidential hearing for two days on dates to be afterwards fixed. Parties were heard by the sheriff on this note on 11^th February 2003 and the upshot was that he discharged the evidential hearing fixed for 13^th February 2003, ordered the production of certain documents and assigned 20^th February 2003 as a diet to determine further procedure.

In their respective answers the respondents had tabled preliminary pleas to the effect that the appellants' original note should be dismissed in respect that the appeal to the sheriff had not been made within the time limit allowed by section 49(6) of the Act. At the procedural hearing on 20^th February 2003 Sheriff Cusine, on joint motion, appointed the respondents to lodge written submissions in relation to these preliminary pleas and allowed the appellants to lodge written answers thereto and thereafter allowed the issue of time-bar to be determined by the sheriff on the basis of these written submissions unless otherwise directed by him.

By interlocutor dated 6^th May 2003 Sheriff Cusine, having considered the written submissions and answers, repelled the respondents' respective preliminary pleas and continued the cause to the procedure roll on 21^st May 2003. No appeal has been taken against this decision. At the end of the note which he appended to his interlocutor the sheriff records that he was not addressed on the question of expenses and so had reserved this issue. While it may not matter very much, the interlocutor which he pronounced does not explicitly state that the question of expenses was being reserved.

A further hearing duly took place before Sheriff Savage on 21^st May 2003. At the conclusion of it he pronounced an interlocutor in the following terms:

The Sheriff, on the motion of the Solicitor for John Mowlem & Co Allows 2 weeks from this date for the lodging of written submissions; Allows 2 weeks thereafter for written Answers and Continues the cause to the Procedure Roll of 26 June 2003 at 2.15 pm to determine further procedure; having heard parties on the Minuter's motion to sanction the cause as suitable for the employment of Counsel Refuses same; meantime Reserves all question of expenses.

It is this interlocutor which is the subject of the present appeal, and I may perhaps at once say that it seems to me to have been somewhat ineptly worded since it did not say which parties were to lodge written submissions, which parties were to lodge written answers and what was to be the subject-matter of these submissions and answers.

In their note of appeal which was lodged on 3^rd June 2003 the appellants submit that the sheriff was in error in pronouncing this interlocutor. In particular they say, in short, that an evidential hearing is essential to the disposal of the issues in the case since there is a material dispute between the parties about some of the facts and that the remaining legal issues in the case are not amenable to written submission procedure. They also say that the sheriff erred in reserving the question of the expenses of the procedure which culminated in the rejection of the respondents' preliminary pleas.

In response to the note of appeal the sheriff helpfully produced a note dated 11^th June 2003. In this he refers to the appellants variously by name or as "the Minuter" or "the Minuters". The material part of it reads as follows:

The Motion before me was on behalf of Shiprow Development Co. Ltd and asked the Court to fix an evidential hearing. That Motion was opposed by both John Mowlem & Co., plc and Odeon Cinemas Ltd.

In support of the Motion I was addressed briefly by the Agent for the Minuter who explained that an evidential hearing was necessary. My recollection is that no detailed reasons were argued before me as to why such a hearing was necessary and in response I was addressed briefly by both the agent for John Mowlem & Co., plc and the agent for Odeon Cinemas Ltd, both of whom argued that such a hearing was not necessary. The grounds of opposition were, put simply, that there were no matters that could not be addressed by way of written submissions and answers. I have no recollection of any cogent reasons being put to me to the contrary by the Agent for Shiprow Development Co., plc. In the absence of a convincing contrary argument by the Minuters, I acceded to the request to allow the matter to proceed by way of written submissions and answers.

On the question of expenses, I had understood it to be a matter of agreement among parties, that as Sheriff Cusine had dealt with the preliminary procedure in which he reserved, by interlocutor of 6^th May 2003, the question of expenses, the question of expenses should be dealt with by him in relation to the preliminary procedure. I therefore further reserved the question of expenses in relation to that procedure and, in relation to the hearing of the Motion before me, I simply reserved the question of expenses.

When I first saw the papers in the case it appeared to me that the appeal was incompetent since the interlocutor dated 21^st May 2003 did not fall within the terms of any of paragraphs (a) to (e) of section 27 of the Sheriff Courts (Scotland) Act 1907 and leave to appeal had not been granted by the sheriff. I therefore fixed a hearing for 7^th July 2003 to consider this issue. At this hearing I was persuaded that, although it did not say so in terms, the effect of the interlocutor of 21^st May 2003 had been to refuse proof (see section 27(d) of the 1907 Act), the sheriff having apparently rejected the motion made before him on behalf of the appellants to fix an evidential hearing. I therefore held the appeal to be competent and appointed it to proceed on a date to be afterwards fixed.

At this point it may be of assistance to examine rather more closely the parties' pleadings as set out in the record of the note and answers which forms no. 7 of process. Statements of facts 1, 2 and 3 and the answers thereto explain the background to the appeal to the sheriff, and I need say no more about these. In statement of fact 4 the appellants describe briefly what happened at the creditors' meeting on 17^th October 2002. In particular they aver that a Mr Anthony Wallace, a solicitor of Messrs MacRoberts, Glasgow (who act in these proceedings for the liquidator and Odeon) was appointed by the liquidator to act on his behalf in chairing the meeting and in adjudicating on the creditors' claims for the purposes of voting upon the liquidator's appointment. It is then said that these adjudications were made "on false premises, as averred below", and that they were opposed by the appellants at the meeting. In his answer 4 the liquidator admits that Mr Wallace acted as chairman of the meeting, but otherwise these last averments are denied by all three respondents.

In statement of facts 5 the appellants refer to Mowlem's claim in the liquidation for £119,369 which is said to be in respect of repayment of a loan. They say that this sum is the subject of the first crave in an action in this court against Craiglair in which the latter has counterclaimed for payment of the sums of (1) £461,948 and (2) £34,000. The appellants aver that the counterclaim is supported by productions and they go on to say: "Notwithstanding the counterclaim, Mowlem's claim was admitted in full for the purposes of voting upon the liquidator's appointment. The liquidator and the chairman of the meeting each refused to allow the counterclaim in the balancing of Mowlem's account with the company. It is respectfully submitted that that decision to allow the whole amount of the Mowlem claim as submitted, and to disallow the amount of the counterclaim in balancing Mowlem's account with the company, was wrong in fact and in law. It was inequitable. Mowlem's debt should have been compensated by the value of the counterclaim and reduced to nil value for the purposes of voting upon the appointment and for the other purposes of the liquidation". In their answer 5 Mowlem under reference to their claim against Craiglair admit that Craiglair has counterclaimed for the two sums mentioned. Otherwise their position is essentially one of denial of all the averments of the appellants in their statement of facts 5.

Answers 5 for the liquidator and Odeon appear to be in identical terms. They admit that Craiglair has counterclaimed against Mowlem for the two sums mentioned but otherwise their position too is essentially one of denial of all but the opening averments of the appellants in statement of facts 5. Referring to Craiglair's counterclaim for payment of the sum of £461,948, they say in short that this is based upon an agreement which was made between Mowlem on the one hand and the appellants (and not Craiglair) on the other. They also say that a suspensive condition in the contract has not been purified in that it has not been reduced to writing. Beyond their general denial, they say nothing about the claim for payment of £34,000.

The appellants in turn deny the averments of the liquidator and Odeon about the counterclaim for the sum of £461,948. They say that in the action between Craiglair and Mowlem the latter averred on record that the contract in question was between Mowlem and Craiglair. The appellants then aver: "Further explained and averred that at the meeting the chairman did not in the presence of those attending for the (appellants) consider or refer to (Craiglair's) pleadings in the said action. The chairman did not in the presence of those attending for the (appellants) consider the pleadings or the merits of (Craiglair's) counterclaim. In any event his adjudication was wrong. The chairman of the meeting had a conflict of interest which disabled him from giving proper and objective consideration of the said pleadings and from being seen to do so". These averments are denied by all three respondents.

In statement of facts 6 the appellants refer to the claim of Odeon in the liquidation for the sum of £546,131. They accept that the claim should have been admitted to the extent of £406,378.94 and that this represented a penalty to be paid to Odeon under a contract in respect of certain land. But they say that there was wrongly included an additional sum of £90,000 with interest and expenses since it did not represent any present debt or liability of Craiglair but was "a speculative contingency to allow for the possibility of a loss on the sale of the said land".

Answer 6 for Mowlem simply reads: "Not known and not admitted". Answers 6 for the liquidator and Odeon again appear to be in identical terms. They admit what the appellants have to say about Craiglair being indebted to Odeon in the sum of £406,378.94. But they say that this sum represented one of two sums awarded to Odeon against Craiglair in a judgement of the High Court of Justice, Chancery Division, which was subsequently registered for execution in the Books of Council and Session. They then aver: "Separatim, the judgement provided for an assessment of damages together with interest thereon. Said assessment has been undertaken by Odeon. The sum of £90,000 claimed is in respect of professional fees associated with the subsequent marketing and sale of the property in question. The professional fees have been incurred by Odeon. Accordingly, they are neither speculative or contingent". Odeon then aver that they have incurred legal fees of £40,000 to a firm of solicitors, surveying fees of £40,000 to another firm and "security costs associated with keeping the premises secure in the sum of £10,000". Finally they aver: "The foregoing costs had been incurred as at the date of the first order deliverance being granted in the liquidation".

The appellants deny these last averments and aver, inter alia: "Explained and averred that the ..... judgement registered for Odeon in the Books of Council and Session ..... makes no reference to the assessment of damages. At the meeting the reference to the inclusion of a sum of £90,000 in the adjudication of Odeon's debt was stated as comprising losses anticipated in relation to the sale of property, not professional fees and security costs. Separatim and in any event the sum of damages, if any, is contingent upon assessment, and assessment of damages if not agreed is not for Odeon but for the court in England ...... Further separatim, no vouching of any such claim by Odeon was produced to the liquidator or to the meeting at the time of the adjudication of the debt. The only vouching produced to the meeting was the extract registered decree and relative charge in Odeon's favour. In the absence of vouching the adjudication should have taken no account of the pretended debt of £90,000". These last averments are all denied by the liquidator and Odeon and, as already indicated, the position of Mowlem is one of not known and not admitted.

In statement of facts 7 the appellants go into some detail about what, according to them, happened at the meeting on 17^th October 2002. In a nutshell, they say that various irregularities occurred at the meeting. In particular they aver: "The procedure upon which (the liquidator) accepted office was tainted by conflicts of interest, which the liquidator refused to consider despite objections. He will require to decide upon the conduct of the action by and counterclaim against Mowlem. He has a conflict of interest. The liquidator appointed Mr Anthony Wallace, solicitor of Messrs MacRoberts, Glasgow, to chair the creditors' meeting notwithstanding the objections of the (appellants). Mr Wallace had a conflict of interest, which the (appellants) raised at the meeting. The liquidator ignored the (appellants') protests. The liquidator delegated to Mr Wallace the adjudication of the creditors' claims for the purposes of voting at the meeting. MacRoberts are retained as solicitors in the liquidation. MacRoberts act on behalf of Odeon in the preparation of the liquidation petition. The chairman acted for Mowlem as their proxy at the meeting. Further, the liquidator made comments at the creditors' meeting suggestive of being dismissive of the merits of the counterclaim. Neither the chairman of the meeting or the liquidator addressed their minds to the counterclaim. Neither considered the merits of the counterclaim as disclosed by the record in the Mowlem action and the productions thereto". The appellants go on to aver that, subject to the outcome of the present proceedings, they intend to requisition a general meeting of the creditors of Craiglair to ensure the appointment of an alternative person as liquidator of Craiglair. They then deal with various matters which are not material for present purposes and thereafter revert to the action between Craiglair and Mowlem. Referring to this action they aver: "On the hypothesis that Mowlem's averments are true in respect of the liquidator determining on the basis of solicitors' advice prior to the adjudication of debts at the meeting of creditors that there was no merit in proceeding with the counterclaim, which is not known and not admitted, a solicitor involved giving such advice should have been disqualified from chairing the meeting and adjudicating upon the debts. It is believed and averred that MacRoberts as solicitors to the liquidation would have been involved in giving such advice to the liquidator. Mr Wallace of that firm should accordingly not have been appointed as chairman to adjudicate upon the debts".

In their answers 7 the respondents all deny the averments in statement of facts 7 which I have quoted above. In addition, in their answer 7 Mowlem refer to the counterclaim against them by Craiglair for the sum of £34,000. They say that this sum related to the last tranche of a management fee payable by Mowlem to Craiglair and that it was agreed that this "would only be paid when the surplus rental includes Units 1 and 2. The surplus rental does not include Units 1 and 2". These averments are denied by the appellants.

Statement of facts 8 and the answers thereto deal with the question of time-bar which has already been disposed of by the sheriff. It is unnecessary therefore to say anything more about these.

In summary therefore it can be seen that there are a number of significant areas of factual dispute between the parties. In dispute in particular are the questions (a) whether the agreement which forms the basis of the counterclaim for £461,948 was between Mowlem on the one hand and Craiglair or the appellants on the other, (b) whether payment of the sum of £34,000 was subject to the condition claimed by Mowlem and whether this condition had been met, (c) what the damages referred to in the English judgement were meant to cover, at what amount (if any) they should be stated and whether the fees of £90,000 said by Odeon to have been paid by them had in fact been paid, and (d) what happened at the meeting on 17^th October 2002 and, in particular, whether various irregularities occurred as averred by the appellants.

The appellants have tabled two pleas-in-law directed to the merits of their appeal to the sheriff. In addition they have tabled a variety of preliminary pleas, three of which in particular are directed to the relevancy and specification of the answers for each of the liquidator, Mowlem and Odeon. The latter have tabled various pleas-in-law directed to the merits of the appeal. As already indicated, their pleas to the effect that this was out of time have already been repelled. Significantly, they have not tabled any preliminary pleas directed to the relevancy or specification of the appellants' averments.

Opening the appeal, counsel for the appellants drew attention to the areas of factual dispute between the parties. He then submitted that an appeal to the sheriff under section 49(6) of the 1985 Act was judicial in character rather than administrative (and I did not understand counsel for the liquidator and Odeon or the solicitor for Mowlem to dispute this). It followed that the procedure to be adopted by the sheriff should itself be judicial in character and not administrative, and should address judicially the issues which the parties had placed before him. Thus where, as in the present case, there were issues of fact between the parties, this required a hearing to be set down by the sheriff at which evidence might be heard before submissions were made. It would always be open to the parties to agree the evidence, but in this case they had not done so. It was submitted that the procedure adopted by the sheriff in his interlocutor of 21^st May 2003 of written submissions and answers by the parties was inappropriate and not one which should have been followed by the sheriff within the discretion available to him under section 50 of the 1907 Act. This provides, inter alia, "In summary applications (where a hearing is necessary) the sheriff shall appoint the application to be heard at a diet to be fixed by him, and at that or any subsequent diet (without record of evidence unless the sheriff shall order a record) shall summarily dispose of the matter and give his judgement in writing". The sheriff's interlocutor, so it was said, had had the effect of taking the case off the rails. In the circumstances it should be recalled (except to the extent that the sheriff had refused to sanction the employment of counsel) and the cause remitted to the sheriff to set the matter down for a hearing of evidence followed by submissions on the parties' respective pleas-in-law and otherwise to proceed as accords. In proposing this course of action, counsel confirmed that in effect he was asking the court to fix a proof before answer under reservation of the appellants' preliminary pleas-in-law.

Counsel for the liquidator and Odeon submitted that the appeal should be refused. He argued that the fixing of the procedure in a summary application such as this was a matter for the discretion of the sheriff with the result that it was only in very limited circumstances that an appellate court would be entitled to interfere with the lower court's exercise of its discretion. Moreover, a summary application was just that, namely a summary procedure designed to allow matters to be dealt with expeditiously, without undue delay and with as little form as possible. Against this background it was quite appropriate for the sheriff to have taken the view on
21^st May 2003 that the matter should be dealt with by way of written submissions and a consideration of the documents which had been lodged in the process. It was plain that certain matters in the appellants' averments had been denied by the respondents, but these could be determined in light of the parties' pleadings, the submissions and the documents. This was the view which the sheriff had taken, and he was entitled to have done so in the exercise of his discretion in light of the submissions that had been made to him.

Counsel proceeded to examine various well-known authorities which bear upon the question when an appellate court might interfere with the exercise by a lower court of a discretion, and in short his position was that no grounds had been made out by the appellants which would allow an appellate court to disturb the decision of the sheriff. Counsel thereafter examined the various areas of factual dispute between the parties and submitted once again that these could be resolved by a consideration of the documents and the parties' written submissions. At the end of the day, said counsel, if the sheriff took a factual view in light of the documents which was considered to be unsupportable, the matter could be taken further on appeal.

The solicitor for Mowlem adopted the submissions which had been made by counsel for the liquidator and Odeon. In short his position was that the sheriff had not erred in the exercise of his discretion in refusing an evidential hearing in the light of the parties' pleadings and the submissions which had been made to him on 21^st May 2003. The appeal should therefore be refused and the sheriff's interlocutor adhered to.

In my opinion the submissions for the appellants are to be preferred. In considering the matter on 21^st May 2003 the sheriff clearly had a discretion to determine what further procedure should be allowed to dispose of the appellants' appeal. Where a court of first instance has such a discretion, it is well established that an appellate court may interfere with the exercise of that discretion only in certain limited circumstances. These are conveniently summarised in Macphail's Sheriff Court Practice (2^nd Edn) at paragraph 18.111 where it is said: "The appellate court may intervene if it is satisfied that the judge did not exercise his discretion at all; or that in exercising it he misdirected himself in law; or misunderstood or misused the evidence or the material facts before him; or took into account an irrelevant consideration; or failed to take into account some relevant consideration; or if his conclusion is such that, though no erroneous assumption of law or fact can be identified, he must have exercised his discretion wrongly".

In the course of his submissions counsel for the liquidator and Odeon was at pains to emphasise the limited nature of the submissions which were made to the sheriff as set out in the second paragraph of the section of his note which I have quoted above. I did not understand there to be any dispute that what was there stated by the sheriff was an accurate reflection of what had been said to him in the course of the hearing on 21^st May 2003. Counsel submitted, as I understood him, that I should judge whether or not the sheriff had erred in the exercise of his discretion only in light of the submissions that were made to him. In my opinion this cannot be correct, at least when consideration is being given to the question whether the sheriff misdirected himself or otherwise erred in law. A sheriff may be forgiven for misdirecting himself if, when the case is before him, a relevant submission is not made to him as it might to have been. But if the submission is made on appeal, and if it establishes that the sheriff did misdirect himself, then the appellate court must in my view be entitled to give effect to it, albeit that the fact that the submission was not made until the stage of an appeal may have a bearing upon the question of expenses.

As the sheriff records in his note, the motion before him on behalf of the appellants was to fix an evidential hearing. The critical question which he therefore had to decide was whether or not there were issues of fact between the parties which would need to be resolved before he could proceed to a determination of the appellants' appeal and which could, moreover, be resolved, not simply by a consideration of the documents in process, the pleadings and parties' submissions, but only after oral evidence had been led. In considering this critical question, he clearly had to have regard to the submissions which were made to him, and here I cannot help feeling a certain sympathy for him since it appears from what he says in his note that he was not given the assistance that he was entitled to expect towards resolving this question. I have already drawn attention to what seem to me to be a number of significant areas of factual dispute between the parties, and I have drawn attention too to the fact that the respondents have not tabled pleas-in-law designed to challenge the relevancy of the appellants' averments. Given that the grounds upon which an appeal may be made to the sheriff under section 49(6) of the 1985 Act are not specified, this may not perhaps be as surprising as might have been first thought. Besides, and contrary to what I understood to be another submission of counsel for the liquidator and Odeon, the sheriff in my view will not be confined in dealing with the appeal to a consideration of the documents which were available at the meeting on 17^th October 2002. Thus, apart from anything else, a sheriff in a case of this kind may hear evidence about the claim which is the subject of the appeal, which the liquidator may not (see Japan Leasing (Europe) plc v Weir's Trustee (No 2) 1998 SC 543) - and indeed it seems to me that an important aspect of an appeal to the sheriff under section 49(6) is that he should be able to look at the matter afresh and in light, if appropriate, of material that may not have been available at the creditors' meeting.

Having considered the areas of factual dispute between the parties, I am not persuaded that it will be possible to resolve these by reference only to the documents which have been produced, the pleadings and parties' written submissions. In my view it is plain that the sheriff will require to hear evidence from witnesses on these matters, and in my respectful opinion the sheriff misdirected himself in apparently reaching the conclusion that this would not be necessary. And since he has misdirected himself, it is open to me to reverse his decision, and this is what I have done. (In passing, although the point has had no bearing on my own decision, it is interesting to notice that, when the matter was before the sheriff on 18^th December 2002, there was no objection to the appellants' motion that an evidential hearing on the pleadings as adjusted should be assigned).

As already indicated, the argument before me concentrated largely on the question whether the sheriff should have ordered an evidential hearing and, while there will clearly have to be an opportunity for submissions to be made after the evidence has been led, I understood nothing to have been said about the precise form that these submissions might take. In these circumstances I ought not to express any concluded opinion on this aspect of the case. This will be for the sheriff to decide once the evidence has been heard. I will only say that, while I can understand the attraction of parties by agreement lodging written submissions to assist the court to resolve a straightforward, isolated legal issue in a case (such as the issue in this case of time-bar), I should be very cautious about adopting this procedure on its own as a means of assisting the court to resolve more complex issues of fact and law after a proof - even assuming such a procedure to be competent in the first place. In fairness to the parties (and to the court) I think it likely that there would have to be an opportunity to present oral submissions (possibly after the receipt of preliminary written submissions). Indeed it may be said that this is no less than is demanded by the right under article 6 of the European Convention on Human Rights to "a fair and public hearing".

Counsel for the appellants also challenged the last part of the sheriff's interlocutor of 21^st May 2003 in terms of which he reserved all question of expenses. He submitted that the procedure in connection with the respondents' pleas of time-bar which had culminated in Sheriff Cusine's rejection of these pleas in terms of his interlocutor dated 6^th May 2003 had been a self-contained procedure in which the respondents had been entirely unsuccessful and which had had no bearing on the merits of the appeal. Accordingly Sheriff Savage on 21^st May 2003 should without further ado have found the respondents liable to the appellants in the expenses of this preliminary procedure.

In response, counsel for the liquidator and Odeon submitted that Sheriff Savage had been quite entitled to reserve the question of the expenses of the preliminary procedure for subsequent consideration by Sheriff Cusine. This submission too was adopted by the solicitor for Mowlem.

In my opinion the sheriff cannot be faulted for having reserved the question of expenses as he did. He explains this part of his decision in the final paragraph from his note which I have quoted above. It was not suggested that he had erred in his understanding of what had been agreed among the parties, and it seems to me that it was entirely sensible that he should reserve the question of expenses of the preliminary procedure to be dealt with, if appropriate, by Sheriff Cusine at a later stage in the proceedings. If and when the case next calls before Sheriff Cusine the appellants can always move at the bar to be awarded these expenses. Alternatively, they can at any time lodge a written motion to the same effect which could be dealt with at some convenient time by Sheriff Cusine

Both counsel and the solicitor for Mowlem moved for the expenses of the appeal in the event of success for their respective clients. The appellants have been successful in the major point raised in the appeal, but not on Sheriff Savage's decision to reserve all question of expenses. In the circumstances I think that it would be appropriate to give parties an opportunity to address me further on the question of the expenses of appeal.

It was not in dispute that I should certify the appeal as suitable for the employment by the appellants and the liquidator and Odeon of junior counsel.