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Cite as: [2004] ScotSC 73

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SHERIFFDOM OF GRAMPIAN HIGHLAND AND ISLANDS AT ELGIN

A121/04

		JUDGEMENT of SHERIFF PRINCIPAL SIR STEPHEN S T YOUNG Bt QC
		in the cause
		ALAN PAUL HUMPHREY
		Pursuer and Respondent
		against
		ROYAL & SUN ALLIANCE PLC
		Defenders and Appellants

Act: Miss Jan McCall, advocate, instructed by Lefevre Litigation, Aberdeen

Alt: Miss Alison Hill, solicitor, HBM Sayers, Glasgow

Elgin: 10^th November 2004

The sheriff principal, having resumed consideration of the cause, sustains the appeal and recalls the interlocutor of the sheriff dated 29 June 2004; in terms of rule 31.8 of the Ordinary Cause Rules directs the sheriff clerk to fix a new date for a hearing under 9.12 (Options Hearing); finds the defenders and appellants liable to the pursuer and respondent in the expenses of the appeal and allows an account thereof to be given in and remits the same, when lodged, to the auditor of court to tax and to report; refuses the motion of the pursuer and respondent to sanction the employment of counsel for the purposes of the appeal; quoad ultra remits the cause to the sheriff to proceed as accords.

Note

[1] In this case the pursuer and respondent sues the defenders and appellants (who are a well known insurance company) for payment of £10,000 to compensate him for the loss, injury and damage said to have been sustained by him as a result of a road traffic accident which occurred on 11January 2001. In short, the pursuer claims that the accident was caused by the fault and negligence of one Scott Smith who was insured by the defenders. They are sued in terms of The European Communities (Rights against Insurers) Regulations 2002.

[2] The action was raised on 10 March 2004, and it is not in dispute that on 17 March 2004 the pursuer's solicitors wrote to the defenders' solicitors enclosing the initial writ and that the defenders' solicitors endorsed thereon their acceptance of service on behalf of the defenders on 18 March 2004. A notice of intention to defend and subsequently defences were duly lodged on behalf of the defenders. In their answer 5 they averred, inter alia;

The pursuer's claim is time-barred. The triennium expired on 11 January 2004. Lefevre Litigation wrote to HBM Sayers, letter dated 17 March 2004 with the principal writ and a request that HBM Sayers accept service of the proceedings on behalf of the defenders. HBM Sayers endorsed the principal writ with their acceptance of service on 18 March 2004.

[3] The defenders tabled a variety of pleas-in-law of which the first was as follows:

The proceedings are time-barred.

[4]

In response to this plea-in-law the pursuer tabled a plea-in-law in the following terms:

Esto the action is time-barred in all the circumstances it being just and equitable to do so the court should exercise its discretion under and in terms of section 19A of the Prescription and Limitation (Scotland) Act 1973 and allow the pursuer's action to proceed.

In support of this plea-in-law, the pursuer adjusted article 5 of the condescendence to incorporate the following averments:

With reference to the defenders' averments in answer admitted that Lefevre Litigation, agents for the pursuer sent writ by letter dated 17 March 2004 and that agent for the defenders endorsed their acceptance of service on principal copy writ on 18 March 2004. Admitted that the triennium had expired prior to service of said writ. Quoad ultra denied except insofar as coinciding herewith. Explained and averred that the pursuer's representatives, said Quantum Claims intimated a claim on his behalf to the defenders by letter dated 2 March 2001. The defenders responded by letter dated 10 March 2001 giving their insured's full version of events. On 11 June 2001 they indicated that they were conducting further enquiries. On 5 July 2001 they indicated that the further investigations carried out were of no assistance and denied liability. After further correspondence by letter dated 27 February 2002 the defenders offered to settle the present claim on the basis of a 50/50 apportionment of liability which offer was accepted on behalf of the pursuer on 4 and 16 July 2002. The pursuer's representatives sent a quantification of the pursuer's claim in letter dated 12 May 2003 and sent letters of reminder dated 20 June 2003, 7 August 2003; sent medical records with letter dated 17 September 2003 and reminders dated 29 October 2003 and 4 February 2004. By letter dated 27 February 2004 agents for the defenders indicated that no offer would be made but that they had authority to accept service of proceedings. The pursuer's said representatives instructed said Lefevre Litigation on 5 March 2004 who instructed counsel to prepare a writ by letter dated 5 March 2004; the writ was drafted and sent to agents on 10 March, it was thereafter warranted and sent to the defenders' agents by letter dated 17 March. In the circumstances it would be just and equitable to allow the pursuer's action to continue. Reference is made to section 19A of the Prescription and Limitation (Scotland) Act 1973. Said writ was served only about two months after the expiry of the triennium. The defenders have fully investigated said accident and agreed an apportionment of liability with the pursuer. They have not been prejudiced by this action being raised on 18 March instead of 11 January 2004. The only matter in dispute is the quantum of damages.

[5] At the options hearing on 29 June 2004 the pursuer's solicitor moved the sheriff to fix a diet of proof. The defenders' solicitor moved him to fix a preliminary proof on the question of time-bar. He directed the sheriff to the defenders' first plea-in-law. The sheriff drew attention to rule 22.1(1) and (3) of the Ordinary Cause Rules which, in short, provides that a party intending to insist on a preliminary plea shall, not later than three days before the options hearing, lodge in process a note of the basis for the plea and that, if a party fails to do this, he shall be deemed to be no longer insisting on the preliminary plea which shall be repelled accordingly by the sheriff at the options hearing.

[6] A brief discussion ensued in the course of which the pursuer's solicitor submitted that the defenders' first plea-in-law was a preliminary plea, while the defenders' solicitor maintained that it was not. The sheriff evidently agreed with the pursuer's solicitor and in the result pronounced an interlocutor in the following terms:

The sheriff, having heard parties' procurators, closes the record, repels the first plea-in-law for the defender for lack of insistence, there being no rule 22 note lodged, allows to parties a proof of their respective averments and assigns 10 September 2004 at 10.00 am within the Sheriff Court House, High Street, Elgin as a diet thereof.

It is this interlocutor which is the subject of the present appeal.

[7] Opening the appeal, the defenders' solicitor submitted that the sheriff had erred in having found that their first plea-in-law was a preliminary plea and having therefore repelled it on the basis that no note under rule 22 had been lodged. She submitted that the plea was a plea to the merits of the action which raised a substantive issue so that no note under rule 22 required to be lodged in support of it. She explained that in a recent case in Paisley Sheriff Court the sheriff had indicated that a note under rule 22 did not require to be lodged in support of a plea of time-bar and that it was on the basis of this indication that the defenders' agents had concluded that the defenders did not require to lodge a note under rule 22 in support of their first plea-in-law. She referred to Macphail's Sheriff Court Practice (2nd Edn) at paragraph 9.116 where it is said of preliminary pleas: "Those usually met with may be divided into three categories: objections to the instance; objections to the jurisdiction of the court to entertain the action; and pleas against the action itself". She submitted that the defenders' first plea-in-law did not fall into any of the three categories mentioned here by Macphail, and that it was a plea to the merits in the same way as a plea of prescription - see Macphail at paragraphs 9.125/6.

[8] In response, counsel for the pursuer submitted that the sheriff had been correct to hold that the defenders' first plea-in-law was a preliminary plea with the result that, no note under rule 22 having been lodged in support of it, the sheriff had had no discretion but to repel it. Under reference to McLaren's Court of Session Practice page 379, section 17 of the Prescription and Limitation (Scotland) Act 1973, Walker on Prescription and Limitation (6th Edn) at pages 5/6, Johnston on Prescription and Limitation at paragraph 20.04 and Ketteman v Hansel Properties Limited 1987 2WLR 312 she submitted that a defence that a case was time-barred was a preliminary defence which did not touch the merits of the case and that section 17 of the 1973 Act created a rule of procedure only. A plea of prescription had the effect of extinguishing altogether the right upon which a pursuer might otherwise seek to found. In a case of limitation, on the other hand, the right of action still existed but there was a procedural bar to the raising of the action.

[9] The issue here is whether a plea-in-law to the effect that an action is time-barred under section 17 of the 1973 Act is a preliminary plea within the meaning of rule 22.1. In my opinion it is. Perhaps understandably, there does not appear to be anywhere in the Ordinary Cause Rules a definition of the expression "preliminary plea". It follows that its meaning must be no more and no less than that which it would be understood to have in the general law. In this context the classic distinction is between preliminary or dilatory defences on the one hand and, on the other, peremptory defences or defences on the merits. Thus McLaren at page 379 states:

A preliminary or dilatory defence is a defence which does not touch the merits of the case, but is based upon the failure of the pursuer to observe the rules of practice or procedure of the court before which the cause is brought. Although such a defence requires to be decided before the final decision upon the merits is reached, it is not competent to state it without at the same time stating the defence upon the merits.

At pages 395/6 McLaren goes on to quote from the judgement of Lord Truro LC in Geils v Geils 1851 1 Macq 36 at pages 39/40 where his Lordship stated:

There is really no difficulty in determining what ought to be deemed a dilatory defence and what should be held to constitute a peremptory defence. Where the defence presents no answer to the pursuer's case, but consists merely in objecting to some irregularity, or some circumstance which may well consist with the pursuer's being entitled to all the relief or advantage which he seeks to obtain by his suit in some other form or at some other time, such a defence I consider to be dilatory; but where a defence is pleaded which professes to show that the plaintiff has no case which entitles him, at any time or in any form, or in any court, to the object of his suit, such a defence I consider to be clearly peremptory.

A passage to broadly similar effect may be found in Macphail at paragraph 9.115 where it is said, inter alia:

The pleas-in-law for the defender fall into two classes: (i) preliminary pleas and (ii) pleas on the merits, which are respectively applicable to dilatory defences and peremptory defences. A preliminary plea is one which, unless met, leads to the disposal of the action without enquiry into the merits of the dispute which the action is intended to raise, unless the preliminary defence is so bound up with the merits that enquiry is necessary in order to ascertain the facts ...... If a preliminary plea is sustained, the action is dismissed or ..... sisted. If the action is dismissed, the pursuer may bring a new action on the same ground without being open to the plea of res judicata. A plea on the merits cannot be either sustained or repelled without enquiry into the facts, unless these are agreed; and if sustained, decree of absolvitor is granted to the defender.

[10] The scope and significance of a plea of time-bar are made very clear in the judgement of Lord Griffiths in Ketteman at page 339 where his Lordship stated:

A defence of limitation permits a defendant to raise a procedural bar which prevents the plaintiff from pursuing the action against him. It has nothing to do with the merits of the claim which may all lie with the plaintiff; but as a matter of public policy Parliament has provided that a defendant should have the opportunity to avoid meeting a stale claim. The choice lies with the defendant and if he wishes to avail himself of the statutory defence it must be pleaded. A defendant does not invariably wish to rely on a defence of limitation and may prefer to contest the issue on the merits. If, therefore, no plea of limitation is raised in the defence the plaintiff is entitled to assume that the defendant does not wish to rely upon a time-bar but prefers the court to adjudicate on the issues raised in the dispute between the parties.

[11] In light of these observations it is in my opinion clear that the sheriff was correct to hold that the defenders in the present case ought to have lodged a note under rule 22.1 in support of their first plea-in-law, it being a preliminary plea, and that, since they had not done so, he was obliged in terms of rule 22.1(3) to repel this plea-in-law.

[12] Rule 2.1 of the Ordinary Cause Rules provides:

The sheriff may relieve a party from the consequences of failure to comply with a provision in these rules which is shown to be due to mistake, oversight, or other excusable cause, on such conditions as he thinks fit.

Where the sheriff relieves a party from the consequences of a failure to comply with a provision in these rules under paragraph (1), he may make such order as he thinks fit to enable the cause to proceed as if the failure to comply with the provision had not occurred.

[13] The defenders' solicitor submitted in the alternative that, if I were to conclude that the sheriff had correctly repelled their first plea-in-law, I should exercise the dispensing power under rule 2.1 to grant relief to the defenders against their failure to lodge a note under rule 22.1 and to remit the cause accordingly back to the sheriff either to fix a continued options hearing or alternatively to fix a proof on the issue of time-bar. It was pointed out that the failure to lodge a note under rule 22.1 had been based upon a mistaken view of the law induced by the indication given by the sheriff at Paisley and it was submitted that an injustice would result to the defenders if they were not given an opportunity to insist upon their plea of time-bar. It was pointed out too that that this plea and the averments in answer 5 in support of it had been introduced in the defences in their original form so that the pursuer had had ample notice of these matters. Indeed, it was hard to see what else a note under rule 22.1 would say in support of the defenders' first plea-in-law beyond what was already stated in their defences. This was not a case in which there had been a negligent disregard by the defenders' solicitors of the rules of procedure or of the interests of the defenders themselves. On the contrary, the mistake which had been made had been an excusable one.

[14] In response, counsel for the pursuer submitted that I should refuse to relieve the defenders from the consequences of the failure to lodge a note under rule 22.1. She submitted under reference to DTZ Debenham Thorpe v I Henderson Transport Services 1995 SLT 553 that no compelling reason had been advanced to support the proposition that it would be in the interests of justice to grant relief to the defenders and that the error on the part of their solicitors ought not to be excused. In effect, the defenders were seeking to be relieved against the consequences of a mistake on the part of their solicitors so that they could in turn argue that the pursuer should not be relieved of the consequences of a mistake on the part of his solicitor (namely raising the present action after the expiry of the triennium). Counsel further submitted, as I understood her, that, if I were to grant relief to the defenders in this case, I should be setting a precedent to the effect that a solicitor might always avoid the requirements of rule 22.1 by seeking relief from a sheriff principal upon the basis that he or she had proceeded upon a mistaken view of the law.

[15] In a brief reply, the defenders solicitor drew attention to Eurocopy (Scotland) plc v British Geological Survey 1997 SCLR 392 in support of the proposition that the word "mistake" in rule 2.1(1) was apt to include an error by a solicitor in his or her understanding of the rules - see the opinion of the court delivered by Lord MacLean at page 397A/D.

[16] In the absence apparently of any reported authority on the point, it seems to me that the mistake made by the defenders' solicitors in this case in their interpretation of rule 22.1 was understandable, especially in light of the expression of opinion said to have been given by the sheriff at Paisley. If I were to refuse to grant relief to the defenders, I should be depriving them of the opportunity to advance what would, subject always to the pursuer's own application for relief under section 19A of the 1973 Act, be a complete answer to his claim. It scarcely seems right that I should do so in the circumstances, given in particular that they made their position on the question of time-bar clear from the outset in their defences and given too that, beyond perhaps referring in terms to section 17 of the 1973 Act, it is not obvious what more they should say in a note under rule 22.1 in support of their first plea-in-law than they have already said in their defences. Of course, the effect of granting relief to the defenders will be to prejudice the pursuer to the extent that he will now have to fall back on his application under section 19A in order to defeat the defenders' plea of time-bar. But the advantage which was given him by the sheriff's decision was essentially of the windfall variety, and I am not much troubled that he should lose such an advantage especially when consideration is given to the injustice that would be done to the defenders if they were not to be relieved from the consequences of their solicitors' misunderstanding of rule 22.1. In all the circumstances I have had very little hesitation in concluding that it would be appropriate to grant relief to the defenders under rule 2.1.

[17] It seems to me that I would be usurping what ought properly to be the function of the sheriff if I were now to remit the cause to him with a direction that he should fix a proof on the issue of time-bar. In my view the manner in which this issue should be resolved ought to be decided by him. Since the decision of his which is under appeal was made at the options hearing, I think that the proper course in terms of rule 31.8 would be to recall his interlocutor and to direct the sheriff clerk to fix a new date for an options hearing (not a continued options hearing). On the assumption that the defenders take advantage of the relief which I have given to them, they will be able to lodge a note under rule 22.1 in support of their first plea-in-law and at the new options hearing the sheriff will be able to determine further procedure in the cause accordingly. Likewise, he will be able to determine further procedure if the defenders fail to lodge a note under rule 22.1, only in this instance they will no longer be able to argue that they were unaware that their first plea-in-law was a preliminary plea within the meaning of rule 22.1.

[18] Counsel for the pursuer submitted that, if I were to hold that the sheriff's decision had been correct but that relief should be granted to the defenders in terms of rule 2.1, then the defenders should be found liable to the pursuer in the expenses of the appeal. The defenders' solicitor submitted that in these circumstances no expenses should be found due to or by either of the parties in respect of the appeal. In this context it is I think important not to lose sight of the fact that the question whether or not relief should be granted to the defenders in terms of rule 2.1 was raised for the first time in their supplementary note of appeal which was lodged on 29 October 2004, only four days before the date assigned for the hearing of the appeal. In the event, at the outset of the hearing I allowed the defenders' grounds of appeal to be amended in terms of their supplementary note of appeal. On one view it may be said that success in the appeal has been divided, the pursuer having successfully defended the decision of the sheriff and the defenders having been successful in their application for relief under rule 2.1. But since this application was introduced at such a late stage in the proceedings and since the appeal would not have been necessary in the first place if the defenders' solicitors had not made a mistake in their understanding of rule 22.1, I think that it would be appropriate to find the defenders liable to the pursuer in the whole expenses of the appeal.

[19] Counsel for the pursuer sought sanction for her employment for the purposes of the appeal. This was opposed by the defenders' solicitor, I think rightly. In my opinion the issues raised in this appeal were not of such difficulty, complexity or importance that they could not have been handled satisfactorily on behalf of the pursuer by a competent and experienced solicitor.