Scottish Sheriff Court Decisions

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URL: http://www.bailii.org/scot/cases/ScotSC/2004/39.html
Cite as: 2004 SCLR 950, [2004] ScotSC 39

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SHERIFFDOM OF TAYSIDE CENTRAL AND FIFE

SA607/03

JUDGMENT OF SHERIFF PRINCIPAL

R A DUNLOP QC

in the cause

REGISTRAR OF COMPANIES

Pursuer and Appellant

against

STONELEE PROPERTIES LIMITED

Defenders and Respondents

__________________

Act: Connell, QC instructed by McGrigor Donald, Solicitors, Glasgow

Alt: Mr Wright, representative of the defender company

DUNDEE, 28 May 2004. The Sheriff Principal, having resumed consideration of the cause, answers question 3 in the stated case in the affirmative; finds it unnecessary to answer questions 1 and 2; therefore refuses the appeal and adheres to the sheriff's interlocutor of 3 November 2003 complained of; finds the pursuer and appellant liable to the defenders and respondents in the expenses of the appeal; remits to the sheriff clerk at Dundee to fix the amount of said expenses in terms of Rule 21.6 of the Small Claim Rules 2002 and to the sheriff to grant decree therefor.

NOTE:

[1] This is an appeal by way of stated case in one of two small claims in which the defender companies are associated and the facts are common to both cases. Although I have issued separate interlocutors in respect of each appeal the terms of this note are common to both.

[2] The pursuer is the Registrar of Companies and the claim is directed to the recovery of a civil penalty from the defenders in respect of their failure to deliver copies of their annual accounts, directors' report and auditor's report on the accounts to the pursuer within the time limit prescribed by section 244 of the Companies Act 1985 (hereinafter referred to as "the 1985 Act").

[3] It was accepted that the relevant documents required to be delivered to the pursuer by 30 September 2002 and the sheriff has made a finding in fact that they were received by the pursuer on 31 December 2002. That finding in fact is not challenged in this appeal and it was not disputed that the defenders were therefore liable to a penalty.

[4] It is provided by section 242A(2) of the 1985 Act that -

"The amount of the penalty is determined by reference to the length of the period between the end of the period allowed for laying and delivering the accounts and reports and the day on which the requirements are complied with and whether the company is a public or private company ... "

[5] The sub section then goes on to set out in tabular form the appropriate penalties for different lengths of period. Where the length of the period between the end of the period allowed for laying and delivering the accounts and reports and the day of compliance is "not more than three months" the penalty for a private company is £100. Where it is "more than three months but not more than six months" the penalty for a private company is £250. The statement of claim attached to the summons asserts that, pursuant to the provisions of section 242A of the 1985 Act, the defenders were liable to a penalty of £250.

[6] The validity of that assertion came to be questioned during the course of the proceedings and in paragraph 8 of his note in the stated case the sheriff accepts that the discussion on that matter was initiated by him. In this appeal the pursuer and appellant contends that the sheriff was not entitled to raise that question since it was not an issue that had been noted on the summons in terms of rule 9.2(3)(a) of the Small Claim Rules 2002. That argument is focused in the first question of law in the stated case, which is in these terms:-

"In light of rule 9.2 of the Small Claim Rules 2002 did I err in raising arguments on issues of fact and law outwith the issue noted at the hearing?"

[7] Having raised the issue the sheriff then adopted a construction of section 242A of the 1985 Act which led him to reject the pursuer's contention that the penalty was £250 and instead found that it should only be £100. He did so on the basis that the length of the period between 30 September 2002 and 31 December 2002, when the relevant documents were received by the pursuer, was not more than three months.

[8] The second question in the stated case brings that matter under review but it is expressed in such a way that it only arises if the answer to question one is in the negative. The fundamental proposition advanced on behalf of the appellant in relation to question 1 is that it was not open to the sheriff to raise an issue of law once a Hearing prescribed by rule 9.1 had been concluded and in particular once the issues had been noted on the summons in terms of rule 9.2(3)(a) without such an issue having been noted. In support of this argument reference was made to Slessor v Burnett-Stuart 1990 SLT (Sh. Ct.) 62, Kostric v O'Hara 1990 SCLR 129, North of Scotland Hydro-Electric Board v Braeside Builders' Trustees 1990 SLT (Sh. Ct.) 84 and Kuklinski v Hassell 1993 SLT (Sh. Ct.) 23. It was recognised that these authorities were dealing with a different set of rules, but it was submitted that they still provided some guidance which could apply with equal force to the new rules.

[9] In my view it is unnecessary to reach any conclusion on this submission, since I am satisfied that, in the circumstances of this case, the premise upon which it is founded is a false premise. In expressing that view I recognise that the note of the sheriff presiding at the rule 9.1 Hearing is not a model of clarity and there are signs of a lack of appreciation of what were the legal issues in the case. For example, the note that no penalty is due is inconsistent with the other matters noted, not least the apparent acceptance by the defenders that the relevant documents had not been lodged with the pursuer by the due date of 30 September 2002. Accordingly a penalty was due, the question being what was the appropriate level of that penalty. The issue of when the relevant documents had been posted to the pursuer can have no significance other than as tending to show that they had been received by the pursuer before the penalty exigible moved from £100 to £250. Accordingly when one analyses the sheriff's note of issues the only sensible interpretation of it is that the defenders resisted the pursuer's claim for a penalty of £250 because the relevant documents had been received by the pursuer before that level of penalty became exigible. When one expresses the issue in that way it cannot in my view be resolved without knowing when the increased penalty became exigible and that in turn depends on the terms of the relevant statutory provision.

[10] On that view the sheriff was accordingly well founded in thinking that the pursuer should have expected to have to address that question. Indeed that is precisely what the pursuer apparently set out to do in the evidence led on his behalf. It seems from the terms of paragraph 9 of the sheriff's note that Mr Ritchie, led on behalf of the pursuer, gave evidence in chief about the so called "corresponding date rule" and the manner in which the pursuer calculated the relevant time periods in relation to the operation of section 242A(2). That evidence can only have been given with a view to supporting the claim for payment of a penalty of £250 rather than £100. I would question whether the pursuer can now be heard to object to the sheriff basing his decision on a matter which was introduced in evidence in that way, although in view of the conclusion I have reached in relation to the terms of the note of issues it is unnecessary to make that a ground of my decision.

[11] It follows therefore that in my view, whether or not rule 9.2(3)(a) operates as a restriction on the sheriff raising issues of law outwith the rule 9.1 Hearing, in the particular circumstances of this case the sheriff was entitled to have regard to the proper interpretation of section 242A of the 1985 Act. Having reached that view it seems to me that I am then entitled to consider the question of the interpretation of that section, if not under question 2 then under question 3, which is a general question "Was I entitled in law to reject the pursuer's claim for penalties of £250 from each defender?"

[12] The pursuer and appellant's approach in relation to the merits of his claim was founded on what is referred to as "the corresponding date rule." That so-called rule is identified in the decision of the House of Lords in an English appeal Dodds v Walker 1981 2 All ER 609. In that case the House was concerned with a statutory provision which required an application by a tenant for a new tenancy to be made not more than four months after the giving of the landlord's notice terminating the tenancy. The solicitor advocate for the appellant submitted that this provision was not dissimilar to that contained within section 242A of the 1985 Act. In effect that section required the calculation of the period of three months after 30 September 2002, which was the date on which the relevant event was supposed to occur.

[13] In examining the case of Dodds v Walker particular attention was drawn to the speech of Lord Diplock as follows:-

"My Lords, reference to a "month" in a statute is to be understood as a calendar month. The Interpretation Act 1978 says so. It is also clear under a rule that has been consistently applied by the courts since Lester v Garland 1808 15 Ves 248 that, in calculating the period that has elapsed after the occurrence of the specified event such as the giving of a notice, the day on which the event occurs is excluded from the reckoning. It is equally well established, and is not disputed by counsel for the tenant, that when the relevant period is a month or a specified number of months after the giving of a notice the general rule is that the period ends on the corresponding date in the appropriate subsequent month, ie the day of that month that bears the same number as the day of the earlier month on which the notice was given.

The corresponding date rule is simple. It is easy of application. Except in a small minority of cases ... all that the calculator has to do is to mark in his diary the corresponding date in the appropriate subsequent month. Because the number of days in five months of the year is less than in the seven others the inevitable consequence of the corresponding date rule is that one month's notice given in a 30 day month is one day shorter than one month's notice given in the 31 day month and is three days shorter if it is given in February. Corresponding variations in the length of notice reckoned in days occurs when the required notice is a plurality of months."

[14] On that approach it was submitted that the period of three months, during which the penalty was only £100, expired at midnight on 30 December 2002. That conclusion was also supported by Registrar of Companies v Radio-Tech Engineering Limited (Judge Moseley QC 26 June 2003 - Chancery Division unreported), which dealt with a different but closely analogous provision of the 1985 Act and which followed the decision in Dodds v Walker.

[15] Although the solicitor advocate for the appellant was unable to cite any Scottish authority in which Dodds v Walker was explicitly referred to, he submitted that there were a number of Scottish authorities in which the calculation of a passage of time produced the same result as that achieved by an application of the corresponding date rule. In that regard reference was made to Ashley v Magistrates of Rothesay 1873 11M 708, Keenan v Carmichael 1991 SCCR 680 and Lees v Lovell 1992 SCCR 557, none of which appear to have been cited to the sheriff. Reference was also made to Lester v Garland (sup cit) in which an old Scottish case of Mercer v Ogilvie (1796) was discussed. The treatment of that case at page 751 of Lester showed that the corresponding date approach had been followed.

[16] In a brief reply the representative of the respondents offered no specific contradiction of the argument advanced on behalf of the appellant other than adopting the sheriff's reasoning and pointing out the absence of Scottish authority explicitly endorsing Dodds v Walker.

[17] The learned sheriff's position is encapsulated in paragraphs 12 and 13 of his note as follows:-

"[12] Taking the corresponding date rule at face value I considered the terms of section 242A. The period allowed for laying and delivering the accounts and reports ended on 30 September 2002. The amount of the penalty to be applied was to be determined by reference to the length of the period between the end of the period allowed for laying and delivering the accounts and reports and the day on which the requirements are complied with. I took the view that, giving the words their ordinary meaning, the defender companies had until midnight on 30 September 2002 to lodge their accounts.

[13] The period by which the amount of the penalty was determined therefore commenced on 1 October. That is the period between the end of the period allowed for lodging the accounts and the actual date of lodging. The corresponding date three months on by which the accounts required to be lodged to avoid the increase to penalty was therefore 1 January. The accounts having been lodged on 31 December the appropriate penalty was £100."

[18] No fault was suggested nor can be found in what is said in paragraph 12. In my view however it appears from paragraph 13 that, while purporting to follow the corresponding date rule, the learned sheriff has misunderstood the proper application of that rule. 30 September 2002 was the date by which the relevant documents required to be delivered to the pursuer and the penalty period was calculated by reference to the number of months that elapsed after that date. As I read both Dodds v Walker and Registrar of Companies v Radio-Tech Engineering Limited the end of the first penalty period was the corresponding date in the third month after 30 September 2002, that is to say 30 December 2002. There does not appear to me to be any warrant for adopting the first of the month as the corresponding date if one is applying the rule described in Dodds v Walker.

[19] There is evident utility in the corresponding date rule and the unanimous view of their Lordships (including Lord Fraser of Tullybelton) in Dodds v Walker should in my opinion receive decisive weight, albeit expressed in an English appeal. I am encouraged in this view by the fact that a similar approach is evident in a number of different Scottish cases without the court having explicitly applied the description "the corresponding date rule".

[20] It does not follow however that an application of the corresponding date rule has the practical effect contended for by the appellant in this case. The provisions of section 242(A)(2) differ in an important respect from the statutory provisions under consideration in Dodds v Walker and Registrar of Companies v Radio-Tech Engineering Limited. In each of these cases a step had to be taken within the period of months specified after the relevant date. Thus in Dodds v Walker the tenant's application had to be made before the expiry of the four month period after the giving of the landlord's notice and in Registrar of Companies v Radio-Tech Engineering Limited the accounts had to be lodged within the ten month period after the relevant accounting reference period.

[21] By contrast section 242A(2) refers to the period between two dates - the first date being the end of the period allowed for delivery of the relevant documents to the pursuer and the second being the date of the day on which delivery is in fact made. In my view, this manner of expression clearly indicates that neither date is to be counted in the period by reference to which the level of penalty is to be determined.

[22] I am willing to accept the relevance of the corresponding date rule in identifying the end of the three month period and indeed that seems to me to be the proper scope of the rule. But in my opinion the proper interpretation of section 242A(2), and in particular the use of the word "between", is that the delivery of the relevant documents on the day after the expiry of that period is sufficient to avoid liability for the increased penalty that will arise in respect of the ensuing penalty period. In this case therefore, the relevant documents having been delivered to the pursuer on 31 December 2002, the question is whether the length of the period between 30 September 2002 and 31 December 2002 is "not more than three months." Upon a proper application of the corresponding date rule the period of three months after 30 September 2002 ended on 30 December 2002. Accordingly the period between 30 September 2002 and 31 December 2002 was not more than three months but in fact three months exactly and the appropriate penalty was therefore £100.

[23] In my view the sheriff erred in thinking that the respondents had until 1 January 2003 to lodge the relevant documents if they were to avoid the increased penalty. His reasoning appears to proceed along similar lines to that adopted by Bridge LJ in the Court of Appeal in Dodds v Walker. However in the House of Lords Lord Russell of Killowen viewed that approach as involving a departure from the corresponding date principle, a departure which he was unable to accept simply because the period started to run at the outset of the first of a month. He did not consider that a departure from "the sound and well established" corresponding date rule was required in that one instance.

[24] In the result, while I have differed from the sheriff in his analysis of the effect of section 242(A)(2), I have arrived at the same conclusion with regard to the appropriate level of penalty and accordingly the appeal falls to be refused. In the whole circumstances it seems to me that the appropriate course is simply to answer question 3 in the affirmative and to find it unnecessary to answer questions 1 and 2. Parties were agreed that expenses should follow success.

[25] Before concluding this note I should record that the representative for the respondents indicated that he had been under the impression that if he proved when the accounts had been despatched by post and that that date was within the three month period after 30 September 2002 that would constitute an absolute defence. Suffice it to say that no question of law regarding that matter has been raised in the appeal and in any event the learned sheriff has dealt with that argument satisfactorily and rejected it.