Scottish Sheriff Court Decisions

Act: Mr Robert Anderson, solicitor, Lindsay & Kirk, Aberdeen

Alt: Mr Ranald Macpherson, solicitor, Simpson & Marwick, Edinburgh

Aberdeen: 25^th November 2003

The sheriff principal, having resumed consideration of the cause, sustains the appeal and recalls the interlocutor of the sheriff dated 25^th June 2003; grants the reponing note for the defenders and appellants and recalls the decree pronounced by the sheriff in absence on 7^th March 2003 so far as not implemented; finds the defenders and appellants liable to the pursuer and respondent in the whole taxed expenses of the cause to date and allows an account thereof to be given in and remits the same to the auditor of court to tax and to report; quoad ultra in terms of rule 31.8 orders the sheriff clerk to fix a date for a hearing under rule 9.12 (Options Hearing) and remits the cause to the sheriff to proceed as accords.

Note

1. In this case the pursuer and respondent sues the defenders and appellants for payment of the sum of £10,000 to compensate him for the loss, injury and damage said to have been sustained by him as a result of an accident in Aberdeen which he says was caused by the fault of the defenders. In short, he says that he lost his footing on some brass studs which had been inset into the pavement at the scene of the accident, and that the defenders had been at fault in having installed these studs and in failing thereafter to ensure that they were slip resistant in wet conditions. The initial warrant was granted on 4^th February 2003 and on 6^th February 2003 service upon the defenders was made by recorded delivery post. But they failed to lodge a notice of intention to defend and on 7^th March 2003 the sheriff in absence granted decree against them as craved with expenses as taxed.
2. On 21^st May 2003 a reponing note was lodged on behalf of the defenders. The parties were heard by the sheriff on 25^th June 2003, and the upshot was that he refused to grant the reponing note. It is the interlocutor of that date by which he gave effect to this decision which is the subject of the present appeal.
3. The defenders subsequently lodged a note of appeal against the sheriff's interlocutor, and in response to this the sheriff wrote a note in the following terms:

Note to interlocutor dated 25 June 2003.

The agent for the Pursuer, in opposing the granting of the Reponing Note submitted that the Defenders had a legal department and they ought to have kept an eye on what was happening to this action, even although that had passed the papers to their insurers. There was an obvious prejudice to anyone who already held a decree in allowing it to be reponed.

For the Defenders, it was submitted that, as their insurers had delayed, it was by then too late to lodge a Notice of Intention to Defend. They had tried to lodge such a Note on 10 April 2003, but were advised by letter dated 11 April, 2003 from the Sheriff Clerk on 11 April that decree had already been granted and accordingly, a Reponing Note would be more appropriate. The present agents were therefore instructed to lodge a Reponing Note. However, although there was a further delay from the receipt of the letter of 11 April until 20 May, that was accounted for by the fact that the person dealing with the matter had been on leave, and nothing had been done during that leave, because the matter had been overlooked.

In my opinion, while there appears to be a stateable defence, no satisfactory explanation was given for the Defenders' failure to ensure that matters were dealt with expeditiously by their insurers, nor for the further delay of 5 weeks on the part of their solicitors before the Reponing Note was intimated.

For these reasons I refused the Note.

4. Opening the appeal, the defenders' solicitor submitted that I should recall the interlocutor of the sheriff and grant the reponing note. He proceeded to explain the history of the matter as follows. The accident which had given rise to the pursuer's claim occurred on 16^th August 2001. The claim was expeditiously intimated to the defenders, his solicitors having written to them on 21^st August 2001. On 11^th September 2001 the defenders' finance department (which was not to be confused with their legal department) sent details of the claim to their outside insurers, Zurich Municipal Insurance ("Zurich"). No further correspondence about the claim took place between the defenders and the pursuer's solicitors. All subsequent correspondence was between these solicitors and Zurich. This began on 26^th September 2001 when Zurich wrote to the solicitors intimating their involvement, inviting all correspondence to be sent to them and repudiating liability. On 4^th October 2001 the pursuer's solicitors told Zurich that they were applying for legal aid. The application of which the defenders were aware was dated
   1^st May 2002 but, according to the pursuer's solicitors, a previous legal aid application had been made and rejected. So it might be that the application dated 1^st May 2002 was in fact a second application. At all events, on 6^th November 2002 the pursuer's solicitors told Zurich that they had received an expert opinion in support of the merits of his claim which they then renewed. On 15^th November 2002 the pursuer's legal aid application was granted.
5. The action was raised on 4^th February 2003 and service upon the defenders was effected on
   7^th February 2003. Here, the defenders' solicitor emphasised that he had no criticism to direct at the pursuer's solicitors on account of the delay between 15^th November 2002 and 4^th February 2003. The notice of intention to defend should have been lodged by 28^th February 2003 and, when it was not, decree in absence was granted on 7^th March 2003. The initial writ and citation were sent to Zurich soon after 7^th February 2003, and certainly in plenty of time to allow Zurich to instruct the defenders' agents to lodge a notice of intention to defend timeously. But as a result of oversight and delay on their part Zurich failed to send instructions to the agents until
   9^th April 2003. The defenders' solicitor frankly stated that he could not offer any explanation for this delay apart from oversight on the part of Zurich. He confirmed from his own experience that Zurich fully understood the importance of entering appearance in an action before the induciae of twenty one days had expired. So there was no question of a misunderstanding on the part of Zurich. It had been a pure oversight.
6. The instructions from Zurich were received by the defenders' agents on 10^th April 2003. On that same day they wrote to the pursuer's solicitors intimating their interest on behalf of the defenders and stating that they would be lodging a motion to allow a late notice of intention to defend to be received. On 11^th April 2003 the pursuer's solicitors sent a faxed reply stating that decree in absence had already been granted and suggesting that a reponing note should be lodged.
7. The defenders' solicitor frankly acknowledged that matters had not been pursued in his office immediately. He explained that 11^th April 2003 was a Friday and that he had gone on holiday that day. He said that he had not seen the faxed reply from the pursuer's solicitors dated
   11^th April 2003 and that no one in the firm had dealt with it during his absence. He returned from holiday on 22^nd April 2003 and it was not long after that that he became aware of the earlier correspondence. He nonetheless delayed lodging the reponing note until he was reminded about it on 19^th May 2003 when he received a further letter dated 16^th May 2003 from the pursuer's solicitors. He stated that he fully accepted responsibility for the delay between 22^nd April and 19^th May 2003. He acknowledged that shortly after 22^nd April 2003 he had become aware, not only of the faxed letter dated 11^th April 2003 from the pursuer's solicitors, but also of the fact that the motion to allow the late notice of intention to defend to be received had been returned by the sheriff clerk. It was only after receiving the letter dated 16^th May 2003 that he was stirred into action, and on 20^th May 2003 he wrote to the sheriff clerk enclosing the reponing note. This was thus received by the court on 21^st May 2003.
8. The defenders' solicitor proceeded to examine a number of authorities on the subject of reponing. For present purposes I need only refer to the last of these, namely Forbes v Johnstone 1995 SLT 158. In that case the sheriff refused the reponing note because, although a stateable defence had been set forth, he considered himself bound by authority to reject it as he was not satisfied that the defender in question had a reasonable excuse for non-appearance. On appeal to the Court of Session it was held that it was no longer a requirement of the rules that the sheriff had to be satisfied that there was a reasonable excuse for non-appearance and that, as it was a matter for the sheriff's discretion, he was entitled to take account of all the circumstances and to balance one consideration against another in deciding whether to allow a reponing note. Giving the opinion of the court, the Lord President (Hope) stated at pages 161/2:

(The pre-1990 rules) have now been superseded by the amended rule 28 and by rule 8.1 of the (current Ordinary Cause Rules). And there is a significant difference in wording between these rules and the rules as they stood prior to the amendment. Instead of requiring the sheriff to be satisfied with the defender's explanation, as was stated in the former rule 29(2), the rules now in force require only that the sheriff must have considered the note: see rules 28(3) and 8.1(3). There is now even less justification than there might be thought to have been in the case of the former rule for insisting that the sheriff must be satisfied that the defender has demonstrated that he has a reasonable excuse for his failure to enter appearance before he can consider whether the defence is a stateable one, and that a sheriff who is not satisfied on this point must refuse the reponing note........

What the rules now in force ........ 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 would 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 an 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 (the emphasis is mine).

9. The defenders' solicitor drew attention to the final two paragraphs of the sheriff's note quoted above and submitted that he had erred in apparently directing himself that he required to be given a satisfactory explanation for the defenders' failure to appear before he could grant the reponing note. In any event, even if the defenders were obliged to provide a satisfactory explanation for their failure to appear, the sheriff in his note had not explained why he had not found the explanation tendered to him on behalf of the defenders satisfactory. Instead of considering the whole circumstances as he should have done, the sheriff appeared to have thought that it was sufficient for him to consider the defenders' explanation for their failure to appear and that, if he was not satisfied with this, he should refuse the reponing note. In these circumstances he had erred in law and the question whether or not the reponing note should be granted was thus at large on appeal.
10. The defenders' solicitor submitted that the sheriff had further fallen into error in taking into account the period which had elapsed between 11^th April 2003 and the date upon which the reponing note was eventually lodged. In terms of rule 8.1(1) a defender might apply to be reponed by lodging with the sheriff clerk, before implement in full of a decree in absence, a reponing note setting out his proposed defence and explaining his failure to appear. Thus what the defenders in the present case had been required to do had been to explain their failure to appear and for this purpose timeously to lodge a notice of intention to defend. The rule did not require them to explain any subsequent delay on their part. It was accepted that such a delay might be a relevant consideration to be taken into account by the sheriff in deciding whether or not, upon the whole circumstances of the case, he should grant or refuse a reponing note. But this was not the same thing as saying, as the sheriff appeared to have thought, that the defenders were required to put forward a satisfactory explanation for such a further delay on their part. In any event, if an explanation for the delay was required, it was to be noted that this had occurred on account of fault on the part of the defenders' agents rather than the defenders themselves or Zurich. Under reference to Differ v GKN Kwikform Limited 1990 SLT (Sh.Ct.) 49 it was submitted that in a reparation case such as this it should only be in the most extreme circumstances that the penalty of decree in absence should be visited upon a defender where there had been a procedural default only.
11. The defenders' solicitor then submitted that, the sheriff having fallen into error, it was appropriate that I should reconsider the reponing note and reach my own view on the question whether or not the defenders should be reponed. Here he drew attention to a number of factors. In the first place the defenders had a serious defence to the action, and not merely a stateable one. The pursuer's claim was based upon his having lost his footing as a result of brass studs having been inset into the pavement at the scene of the accident, and it was his position that the defenders had been at fault in having installed these brass studs. In response, the defenders maintained that they were entitled within the framework of the discretion conferred upon them to install street furniture such as these brass studs which, moreover, had been manufactured by a national company and installed in other parts of the country as well as in Aberdeen where the accident was said to have occurred. Thus this was not a case in which it was being claimed that there had been something wrong with the pavement which should have been remedied by the defenders. The latters' position was that there was no defect at all in the pavement, and their defence was thus on the law as well as on the facts.
12. Turning to the history of the case, the defenders' solicitor submitted that the delay which had occurred had not in all the circumstances been prejudicial to the pursuer. Here he referred to the history of events as outlined above. He suggested that at any time after decree in absence had been granted against the defenders the pursuer could have proceeded to execute diligence against them. But in the event he had not done so. Besides, the defenders were a local authority and were insured so that the pursuer could be assured that any damages which were properly found due to him at the end of the day would be paid to him. Moreover, it could not be said to be prejudicial to him to be deprived of the windfall which he had secured when decree in absence had been granted against the defenders. By contrast, the latter would clearly be prejudiced if the decree in absence were allowed to stand. Finally, in reparation actions such as the present one the court, so it was submitted, should be slow to impose the sanction of decree in absence for the whole sum craved in circumstances such had arisen in this case. The situation here was to be distinguished from an ordinary action for payment where there was no obvious defence to the pursuer's claim. In all the circumstances the reponing note should be granted and the cause allowed to proceed as if appearance had been entered by the defenders in terms of the rules.
13. Responding to the submissions for the defenders, the pursuer's solicitor submitted that the appeal should be refused, or alternatively that the matter should be remitted back to the sheriff for reconsideration as had been done in Forbes v Johnstone. It was well established that the issue whether or not a reponing note should be granted was entirely a matter for the discretion of the sheriff. In the present case, so it was submitted, nothing had been said by the defenders' solicitor to suggest that the sheriff had not had before him all the material facts in the case. On the contrary, he had had the opportunity to consider the whole circumstances, and there had been no change in these circumstances since the hearing before the sheriff. Although he had not referred to Forbes v Johnstone in his note, his attention had in fact been drawn to it. This case demonstrated that, in considering whether or not to grant a reponing note, the sheriff was required to carry out a balancing act considering the terms of the reponing note including the explanation for the failure to appear and the defence proffered. It was acknowledged that the sheriff's note was not detailed, but it was suggested that it could be seen in the third paragraph thereof that he had in fact considered all relevant matters. He had, so it was said, carried out the necessary balancing act and had concluded that, although there was a stateable defence to the action, he would not allow the reponing note since no satisfactory explanation had been offered for the defenders' failure to appear. In summary, he had had before him all the relevant material, he had exercised his discretion and had balanced the question of whether or not a stateable defence had been put forward alongside the explanation for the delay, and it had not been shown that he had acted unreasonably in reaching the conclusion which he had. And, even if he had fallen into error, the cause should be remitted back to him to reconsider the reponing note afresh - see Forbes v Johnstone and McGarry v O'Connor 1991 SLT (Sh.Ct.) 43.
14. In a brief reply, the defenders' solicitor submitted that the normal rule should apply where on appeal it was shown that a court of first instance had erred in the exercise of its discretion namely that the matter was at large for consideration by the appeal court. Forbes v Johnstone had been an exception to this rule, as had McGarry v O'Connor in which a full explanation for the defender's failure to appear had only been vouchsafed at the hearing of the appeal.
15. In addition to the authorities which I have already mentioned, I was referred to Davison v Anderson 1921 SC 369, McKelvie v Scottish Steel Scaffolding Company Limited 1938 SC 278, Graham v Wylie & Lochhead Limited (Court of Session, 17^th February 1949, unreported), Smart v Miller 1966 SLT (Sh.Ct.) 80, Olsen v Keddie 1976 SLT (Sh.Ct.) 64, Wailes Dove Bitumatic Ltd v Plastic Sealant Services Ltd 1979 SLT (Sh.Ct.) 41, Guardian Royal Exchange Group v Moffat 1986 SLT 262, Rayment v Jack 1988 SLT 647, Cozy Legs of Scotland v Razno & Co Ltd 1991 SLT (Sh.Ct.) 52, Mullen v Harmac Limited 1994 SLT 926 and McDonough v Focus DIY Limited 1994 SLT 596.
16. The sheriff's decision to refuse the reponing note was made by him in the exercise of his discretion - see rule 8.1(3). It is well settled that an appellate court may only interfere with such a decision if it is shown that the court of first instance has misdirected itself in law, misapprehended the material facts, taken into account an irrelevant factor, left out of account a relevant factor or reached a decision which may be categorised as wholly unreasonable or plainly wrong. In certain situations an appellate court may also interfere if additional material has come to light which was not before the court of first instance or if there has been a material change of circumstances since it made its decision. Applying these principles to the present case, I think that it appears clear from the last two paragraphs of his note that the sheriff fell into error in two respects in particular. In the first place, he appears to have erred in law in supposing that it was a condition of his granting the reponing note that the defenders should explain to his satisfaction both their "failure to ensure that matters were dealt with expeditiously by their insurers" and "the further delay of five weeks on the part of their solicitors before the reponing note was intimated". And secondly (and no less significantly), he appears to have left out of account certain material factors inasmuch as there is no sign in his note that he sought to examine the whole circumstances of the case, and in particular the prejudice that might be sustained by the pursuer on the one hand and the defenders on the other if the reponing note were to be granted or refused, as the case might be.
17. The sheriff having fallen into error, the next question is whether I should remit the matter back to him for reconsideration or whether the matter should be treated as at large on appeal to be reconsidered by myself in accordance with the normal rule where a court of first instance is shown to have erred in the exercise of its discretion. In Forbes v Johnstone it was perhaps understandable that the Court of Session should have considered it appropriate to remit the matter back to the sheriff given that it was clear that he had only reached the decision which he had as he had considered himself bound by authority (which had subsequently been overruled) to refuse the reponing note. And in McGarry v O'Connor the full explanation for the defender's failure to appear was only disclosed at the appeal, so again it was understandable why it should have been thought appropriate to remit the matter back for reconsideration by the sheriff in light of this explanation. But in the present case, apart from the lapse of time since the hearing before the sheriff, nothing has changed in the circumstances, and in this situation I do not think that it would be right that the sheriff, having once fallen into error, should be given a second bite at the proverbial cherry. In my opinion no good reason has been advanced why I should depart from the ordinary rule in these situations, and accordingly I propose to reconsider the matter myself.
18. It is plain that the defenders have a substantial defence to the pursuer's claim both on the merits and in relation to the quantum of the claim. The defenders' failure to enter appearance timeously was due chiefly to oversight, not on their part, but on the part of their insurers. It has not been suggested that, regrettable though it may have been, there was anything deliberate about this failure, for example that the insurers were in some way deliberately trying to delay the course of justice. Again, the inaction of the defenders' solicitors over the period of five weeks or so between 11^th April and 19^th May 2003 was a straightforward case of oversight. No doubt this too was to be regretted, but in the grand scale of things it was scarcely the worst example of delay that may be encountered in cases of this kind. In theory the defenders' own legal department ought perhaps to have kept an eye upon what was happening after the papers in the case had been sent to their insurers. But in practice I do not think that they can be seriously criticised for having assumed that reputable and experienced insurers such as Zurich would look after their interests on their behalf. Moreover, the overall period of delay between 28^th February 2003, by which date the notice of intention to defend ought to have been lodged, and 21^st May 2003, when the reponing note was lodged, was not very great in the context of reparation claims such as the present one.
19. The effect of granting the reponing note will be to deprive the pursuer of a windfall payment which on any view is likely to be in excess of the sum to which he may be found entitled if he is successful in his claim - and, if the defenders are right in what they say about the merits of the claim, the truth may be that the pursuer will be found entitled to no compensation at all from the defenders at the end of the day. And another effect of granting the reponing note will be that he will have to wait somewhat longer before any payment which is found due is made to him than he would have done if steps had been taken promptly to enforce the decree in absence - and here it will be noted that he is said to have been aged 70 at the time of the accident. On the other hand, he is claiming only solatium (and not a loss of earnings) and he has the virtual assurance, by reason of the defenders being backed by Zurich, that any sum which is found due to him will in fact be paid with interest.
20. If the reponing note is refused the defenders will suffer the obvious prejudice of having to pay out a larger sum than they would be likely to have to pay on the assumption that the pursuer's claim against them succeeds - and here too it is to be recalled that the defenders appear to have a substantial defence on the merits of the claim.
21. Looking at the circumstances as a whole, I have had very little difficulty in concluding that this is a case in which it would be appropriate to grant the reponing note, and I have therefore recalled the decree in absence granted by the sheriff on 7^th March 2003 so far as not implemented.
22. The defenders' solicitor frankly conceded that, whatever the outcome of the appeal, they should pay the whole expenses of the cause to date, including the appeal.