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Scottish Sheriff Court Decisions
You are here: BAILII >> Databases >> Scottish Sheriff Court Decisions >> Thomas Dagg & Son Ltd & Anor v Dickensian Property Co Ltd [2005] ScotSC 7 (20 January 2005)
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Cite as: [2005] ScotSC 7
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A174/01
JUDGMENT OF SHERIFF PRINCIPAL EDWARD F BOWEN QC
in the cause
THOMAS DAGG & SONS LIMITED and TAYCOVE LTD
PURSUERS
against
DICKENSIAN PROPERTY CO LTD
DEFENDER
Act: Taylor, Solicitor, HBM Sayers.
Alt: Buchanan, Advocate, instructed by Finlayson, Solicitors.
GLASGOW, 19 January 2005.
The Sheriff Principal having resumed consideration of the cause refuses the appeal and adheres to the interlocutors complained of dated 23 November 2001, 5 March 2003, 6 July 2003 and 4 December 2003; finds the defenders and appellants liable to the pursuers and respondents in the expenses occasioned by the appeal and remits the account thereof when lodged to the auditor of court to tax and to report thereon.
NOTE:
[1] This action arises out of a dispute over works carried out on tenement property in Bath Street, Glasgow in 1999 and 2000. The first pursuers are heritable proprietors of nos.16 and 18 Bath Street and one flat at no. 20. The second pursuers succeeded John Smith (Bookmakers) Ltd as heritable proprietors of 22 Bath Street in about October 2000. The defenders own a number of flats in no. 20 Bath Street. It is not in dispute that, in the event that the defenders have a liability to pay for essential repairs to the common property, the extent of that liability is 47.5% of the overall cost. In the present action each pursuer seeks decree for the sum of £4,913.47 which sums in aggregate they maintain represent that percentage of "essential repairs" carried out in late 1999 and early 2000. [2] Before turning to an examination of the issues in the case certain aspects of the procedural history of it should be recorded. The action was originally raised by the first pursuers and John Smith (Bookmakers) Ltd as second pursuers with a single crave for payment by the defenders to them of the sum of £10, 078.90. The case was debated before Sheriff Sinclair on 23 November 2001. Argument was centred on a plea by the defenders of no title to sue. The essence of the argument was that the repair works had been instructed by a firm of factors, David Watson Property Management, whose agency had been specifically withdrawn by the defenders prior to instructions to the contractor. It was contended that the defenders incurred no liability for the debt incurred to the contractor and that it did not matter that a sum said to represent their share of the cost of the works had been settled by the pursuers. That argument was rejected by Sheriff Sinclair who allowed a proof before answer by interlocutor dated 6 February 2002. She held that this appeared to be a case where essential repairs had been instructed by a majority of proprietors who where entitled to recover an appropriate proportion of the cost from the minority. The fact that work had been instructed through the agency of factors did not affect the pursuers' right to recover. A proof diet was fixed for August 2002 but shortly before that the pursuers tendered a minute of amendment (no. 26 of process) seeking to delete John Smith (Bookmakers) Ltd as second pursuers and substituting in their place Taycove Ltd. That amendment founded on an assignation by Smiths in favour of Taycove dated 10 October 2001 which referred specifically to the present action and assigned "all right title and interest" held by Smiths to preserve the action against the defenders. That amendment was duly allowed by interlocutor dated 14 February 2003. A further diet of debate took place before Sheriff Holligan on that date. On this occasion the substance of the defenders' contention was that the action appeared to have been raised on the instructions of John and Gerard Smith, former directors of John Smith (Bookmakers) Ltd who had ceased to be such directors at the time the action was raised. They had transferred their interest in the heritable subjects to Taycove Ltd and had become directors of that company. In their submissions to Sheriff Holligan on that occasion the defenders did not seek dismissal of the action but sought an order that the pursuers specifically answer their averments supporting the contention the Smith brothers had instructed the proceedings after ceasing to be directors. By interlocutor dated 5 March 2003 Sheriff Holligan declined to grant such an order and of new ordered a proof before answer. [3] Thereafter the pursuers lodged a further minute of amendment (no. 30 of process). The effect of this was to delete the single crave for payment and to substitute two separate craves for one-half of the sum originally sued for in favour of each of the two pursuers. The motion to give effect to this was opposed, but the amendment was allowed by Sheriff Cathcart by interlocutor dated 6 June 2003. He took the view that despite the extensive history involving two discharged diets of proof and four previous amendments by the pursuers, the purpose of the amendment was simply to clarify what amount had been paid by each of the pursuers in respect of the debt allegedly due by the defenders. [4] Thereafter the case proceeded to a proof before Sheriff Holligan who issued a judgment on 4 December 2003. He found in fact and in law that "necessary repairs" to the property had been effected; that the first and second pursuers were entitled to seek reimbursement for the sums paid by them being the amount which the defenders ought to have paid and accordingly granted decree in their favour for the sums sued for less £125 plus VAT as £250 appeared to relate to property which was not "common". [5] The Note of Appeal which was lodged thereafter challenged to an extent all four interlocutors. It contains eight grounds of appeal. Grounds one to three challenge Sheriff Holligan's findings at proof that the works carried out fell into the category of "necessary repairs". Grounds 4, 5 and 6 challenge both interlocutors issued by Sheriff Holligan on what at first sight raise issues of title to sue. Ground 4 was departed from during the hearing of the appeal and is no longer of concern. Ground 5 contains the suggestion that the order sought in the debate of 14 February 2003 ought to have been allowed, and that the consequence would have revealed that the persons instructing the action had no title to sue. It was, however, refined in the course of argument to refer to the issue of "authority" and that argument embraced Ground of Appeal 6. Ground of Appeal 7 stands alone. It challenges Sheriff Cathcart's decision of 6 July 2003 to allow the pursuers to amend the writ from one in which they sue jointly to one containing separate craves. Finally, Ground of Appeal 8 challenges Sheriff Sinclair's interlocutor, arguing that this case should be viewed as one of agents exceeding their authority. In presenting his argument based on these Grounds of Appeal counsel for the defenders and appellants focused on three principle issues: (1) was the action raised and pursued without authority; (2) were the works contracted for by agents without the authority of the defenders; and (3) did the works fall within the category of "necessary repairs". The allowance of the amendment by Sheriff Cathcart stands as a separate issue. I propose to deal with the competing submissions in relation to each of these matters in turn before giving my conclusion.Authority
[6] In finding in fact 6 Sheriff Holligan simply held that "John Smith (Bookmakers) Ltd ("Smiths") assigned their cause of action herein to the second pursuers pursuant to an assignation dated 10 October 2001". That finding was not challenged but counsel sought to add to it in the following terms:"As at the date of the assignation, the two individuals who had given instructions to raise proceedings in the name of Smiths had no authority to do so. Smiths did not ratify the raising of proceedings in its name. Smiths had prima facie title to sue but no interest to do so and in any event they had not given instructions to raise proceedings against the defenders. A subsequent assignation during the course of the action did not supply the want of interest on the part of Smiths. The action raised in the joint names of Thomas Dagg and & Sons Ltd and John Smith (Bookmakers) Ltd was accordingly an action raised without authority. The action pursued thereafter was pursued without authority".
"The company not having authorised the raising of the action it should be dismissed".
This appeared to meet with approval in the House of Lords - see the speech of Lord Morris of Borth-y-Gest at p 46. Counsel suggested, perhaps tentatively, that where an action was raised without authority the issue was more properly one of absence of interest on the part of those giving the instructions. In any event the consequence of "a company's name being used improperly" was that the action fell to be dismissed: McLaren, Court of Session Practice p 209, Newbiggin-By-The-Sea Gas Co v Armstrong, 1879 13 Ch D 310. That consequence could only be avoided by ratification of the actions of those who had purported to act in the company's name. There was no evidence that this had been done by the directors of Ladbrokes who had taken over Smiths; they were merely "informed" of the proceedings (see Notes of Evidence p 56). The assignation in favour of the present second pursuers could not be regarded as "ratification" of the actings of the Smiths - if anything, that was illustrative of the directors of Ladbrokes distancing themselves from the action. In short counsel contended that the raising of the action in name of Smiths in January 2001 fell to be regarded as a nullity. This was not a late technical argument; the pursuers had been given notice of it when the matter was raised before Sheriff Holligan in February 2003.
[9] In reply the solicitor for the pursuer said that there could be no doubt that John Smith (Bookmakers) Ltd had both title and interest in relation to the proceedings from the outset in view of the fact that they were owners of the relevant property when the works were carried out and had paid the defenders' share of the works. It followed that the question of authority to institute proceedings was irrelevant to the issues in dispute. There was no requirement for the pursuers to make averments about instructions they gave in relation to the raising of the action. The function of pleadings was to focus issues in dispute. The issue of instruction had no bearing on the competency of the proceedings and there was no plea to the competency. Different considerations arose where, for example, a solicitor's authority to act was challenged. That gave rise to procedural consequences, namely a requirement that he should produce his mandate, and might have a consequence in expenses. It did not, however, affect the competency of the proceedings. In the present case the issue of authority was "even more irrelevant" having regard to the fact that specific evidence was given by Mr Smith that the proceedings were raised with the knowledge and consent of John Smith (Bookmakers) Ltd and that the directors of Ladbrokes who took that company over were duly informed of them (Notes p 56). The situation fell to be contrasted with that in Ward & Co v Samyang Navigation Co Ltd where there were no directors in office and the action was raised by two individuals who had no authority. In the present case there were directors in office and the evidence did not support the conclusion that the action was raised without authority. In any event it could not be suggested that where proceedings were raised without authority that they would necessarily constitute a "nullity". There was nothing to suggest this in the case of Ward. Further, in a passage (at p 51) of his speech Lord Kilbrandon had questioned the right to the defenders to raise any challenge on the question of authority when this turned on the nature of the articles of association, ie a contract between the directors and the shareholders. The passage in McLaren and the case of Newbiggin-By-The-Sea where merely authority for the procedural mechanism to be adopted when a solicitor's mandate was challenged or shown to have been wanting. That procedure did not strike at the fundamental validity of the proceedings. [10] The pursuers' solicitor founded on a passage in Sheriff Holligan's judgment following proof (at p 19 of the Note). The Sheriff had this to say:"So far as the question of title to sue is concerned it seems to me that the issue can be summarised briefly. No challenge was made to the validity or effectiveness of the assignation by Smiths in favour of Taycove. That assignation assigned to Taycove, Smiths cause of action. The assignation was given effect to by the interlocutor of February 2003 - apparently without objection. Accordingly, it seems to me that as at the date of the proof the second pursuers had title and interest to pursue the action. They are the second pursuers, not Smiths. Whatever may been the position in relation to Smiths at an earlier point seems to me to be neither here nor there. What has been assigned is the cause of action ie the right of claim. It respectively seems to me that it is nothing to the point what the position might have been in relation to the instruction of proceedings at an earlier point in the conduct of the action".
The pursuers' solicitor contended that this passage correctly analysed the position. There was simply no need for ratification of the steps taken by anyone on behalf of Smiths to raise the action and in any event once the assignation was granted ratification would have been pointless. If, however, this was a situation where ratification of the raising of the action was required it was there on the face of the assignation no. 5/16 of process which contained an express acknowledgement of the raising of proceedings.
Agency
[11] The defenders' counsel contended that the facts as established at proof illustrated that all the co-proprietors were deemed to be principals in the contract which was entered into with the building contractors. That was the position despite the fact that the factors had no authority to act for the defenders who were not now responsible for the factors' error. He contended that, on the evidence, the case should not be viewed as one of a majority of proprietors seeking to recover from one proprietor for necessary repairs; it was a case of the factors purporting to instruct work on behalf of the all the proprietors when in fact they did not have authority to act for all. In support of this argument counsel referred to a number of passages in the evidence which indicated that David Watson Property Management Ltd regarded themselves as "common managing agents" (p 109) and that they regarded their clients as the "co-proprietors" (p 117). After the works had been completed they had invoiced the defenders for their share of the cost despite the fact that they had been put in funds by the other proprietors before instructing the works (Notes pp 136, 142 and 178). Counsel argued that Sheriff Sinclair had been wrong in her interlocutor of 6 February 2002 when she had held certain of the defenders' averments to be irrelevant and had caused them to be excluded from probation. The evidence, he maintained, disclosed that those averments were well founded. Sheriff Sinclair had further erred in awarding expenses against the defenders in the light of what had transpired to be correct. [12] On this aspect of the case the solicitor for the pursuers submitted that the contention that the factors had treated the defenders as principals was simply not supported by the evidence. That evidence disclosed that the first pursuers and Smiths made efforts through the factors to persuade the defenders that it was necessary to carry out the works. The defenders did not want to carry out the works and were not prepared to contribute to them and this was communicated to the other proprietors. At that stage the factors simply continued to act as agents for the consenting proprietors. He pointed to a number of passages in the evidence of Mr Cochrane (Director of the first pursuers) Mr Smith, and Mr Anderson of David Watson Property Management Ltd which illustrated that there was never any doubt that the defenders were not prepared to consent to the works and that the only way that they could be put in hand through the factors was by the remaining proprietors putting them in funds to an extent which included the defenders' share. That did not mean that the factors were acting as agents for the defenders and it had never been put to Mr Anderson that the factors considered themselves to be so acting. Even if they had so considered themselves it made no difference to the underlying position in law. The repair works were necessary, the pursuers had paid the defenders' share and the involvement of the factors made no difference to that fundamental position.Necessity of Repairs
[13] Counsel for the defenders and appellants drew attention to the fact that it could be difficult to distinguish between essential repairs and improvements and made passing reference to Stewart's Judicial Factor v Gallagher, 1967 SC 59 (a case which concerned "improvements" under the Rent Act 1965). He contended that "necessity" of repairs involved showing what the consequences would be of not carrying out the work involved. There should, he argued, have been assessment of the age, character and prospective life of the building and without that simply asserting the work was "necessary" was insufficient. The pursuers' principal contention was that the works were necessary to prevent water ingress into the building. Neither Mr Cochrane of the first pursuers or Mr Smith could say what was "necessary" in that respect (Notes pp35 and 79). Mr Anderson of the Factors had prepared a schedule of works without going on to the roof. He could not say what was necessary. He had not spoken to any "imminent danger" which required repair, but to "preventative maintenance" (Notes p170). Whilst the managing director of the contractors had said that the repairs were necessary (Notes p 254) that answer was not based on a proper assessment of the overall condition of the building. There was no evidence of the "mechanics of failure" leading to water ingress. Indeed there was evidence (Notes p 94) that the cause of water penetration had not been determined. [14] By way of reply the solicitor for the pursuers contended that on a proper reading of the evidence, particularly that of Mr Hunter the managing director of the contractors, there was evidence of the necessity of the repairs. It was too narrow simply to focus on the original remit, that is the schedule of works prepared by Mr Anderson, as the need for further work became apparent as the works in the original schedule were investigated. The solicitor examined in detail the various items set out in two estimates prepared by Mr Hunter leading to a summary at p 219 of the Notes of Evidence. Mr Hunter had said in relation to his first estimate that whilst the works were improvements "to what this was like" they were "emergency repairs to make the property safe and watertight as best we could in the areas that were affected". In relation to the second quotation works involving the removal of chimneys were necessary because, in Mr Hunter's words, these were either or could have become "very dangerous". This evidence he contended amply vouched the proposition that the works were necessary and the sheriff was entitled so to find. In any event this was a situation where the sheriff had reached a decision on a factual matter based on the evidence which he had the advantage of hearing. There was no question of a misdirection and an appellate court should be slow to interfere in relation to his factual conclusions: Thomas v Thomas, 1947 SC (HL) 45.Exercise of Discretion in Relation to Amendment
[15] Finally, counsel for the defenders and appellants maintained that Sheriff Cathcart had erred in law when, in June 2003, he allowed the pursuers to amend their case from being joint pursuers to several pursuers. The sheriff, he argued, had attached insufficient weight to the earlier procedural history and had given undue weight to the purported purpose which was to clarify the amount due to each of the pursuers. The pursuers had amended on three previous occasions. The case had been set down for debate on 28 September 2001. That diet had been discharged as a result of the second amendment before the debate proceeded before Sheriff Sinclair in November of that year. It had been set down for proof in August 2002 but that diet had been discharged as a result of the pursuers' amendment. There had been further amendment before the diet of debate in February 2003. Insufficient weight had been attached to that long history. By allowing the amendment validity had been given to an incompetent action which had dragged on for several years. Reference was made to Eunson v The Braer Corporation, 1999 SLT 1405 at 1408 J/K where it was observed that each share in common property was "an independent asset" and that no individual proprietor could sue in respect of damage affecting another's share. [16] The solicitor for the pursuers pointed to the fact that the amendment was competent in terms of Ordinary Cause Rule 18.2(2)(a). There was no possible prejudice to the defenders by the allowance of it. The form in which the crave originally stood did not make the action incompetent and indeed there was no plea by the defenders suggesting that this was so. Where there was no question of a radical incompetence being cured and where there was no prejudice to the defenders it was well within the discretion of the sheriff to allow the amendment. Boulting v Elias 1990 SC 135 was an example of a case in which amendment had been allowed at the stage of appeal despite a lengthy previous history and in the face of an argument that the pursuers "had already been given ample opportunity to put their pleadings in order" (p 148-9). Eunson v The Braer Corporation was not a case which involved allowance of amendment and in any event was not authority for the view that a joint claim in a case of this type was incompetent. The court should have regard to the principles on which an exercise of discretion would be interfered with as set out in Britton v Central Regional Council, 1986 SLT 207 and refuse to interfere with Sheriff Cathcart's decision.Decision
[17] The spirit of the conduct of modern litigation is that it should focus on the true issues between the parties. It is unfortunate, to say the least, that this case - which does not involve a significant sum of money - should have dragged on for several years partly because of a number of legal complexities which have nothing to do with the essence of the dispute. The central question is whether there is some good reason for the defenders not contributing to the cost of work carried out on parts of property held in common with the other proprietors. [18] The reason for the defenders' refusal to pay is not, I am bound to say, entirely clear from their pleadings. The suggestion appears to be that at least some of the work constituted "renewal and improvement". There is a curious averment that "...the work instructed by the pursuers did not address the defenders' concerns regarding the building. The defenders' concerns were that the building was structurally unsound which has proved not to be the case". There is a strong hint in this that the defenders' objection to the works at the time they were proposed was that the building was not worth repairing. That theme emerges from two questions put to Mr Hunter at the close of his cross-examination (Notes p 254). It was put to him that "a building can come to a point where nothing can be done to fix it?" He replied in the affirmative. He was then asked, "Is that building at that point?" [19] It is, I perceive, against that background that the defenders' counsel presented his argument that in showing that repairs were necessary there should be "an assessment of the age, character and prospective life of the building". I reject that contention. No authority was advanced for the view that repairs which are obviously required to preserve the integrity of a building cease to be "necessary" because it would be economically sensible to demolish. To take that approach would involve considerations of a whole range of factors, not least of which would be the implication of planning controls and relocation of businesses. In a situation where steps are required to prevent water penetration, and to eliminate danger from collapsing chimneys, it seems to me that prima facie that is a case of "necessary" repair in the sense that it would be unrealistic to expect continued use or occupation of the building without the requisite steps being taken to remedy the problems. If there is a compelling reason for not proceeding with such work, I would expect some evidence of that. In this case the defenders led no evidence. [20] In any event I am wholly satisfied that the evidence of Mr Hunter at p 186 of the Notes onwards identified by the solicitor for the pursuers amply justified the sheriff's conclusion that the works fell into the category of necessary repairs. Finding in fact (13) records the defects discovered by Mr Hunter's firm at the outset. These included severe weathering and erosion through to a vent in a mutual chimney head, two rear wall chimney heads in a dangerous condition, cracked cement skews where the slates met the end of the tenement and a dormer window wide open to weather ingress. That finding, which was not challenged, was in itself sufficient for a finding that repairs were necessary. [21] In these circumstances the pursuers were plainly entitled to succeed on the central issue in the case and the other matters are to my mind peripheral. Turning firstly to the question of "authority" it is in my judgement clear on the authority of Ward & Co v Samyang Navigation Co Ltd that even if the present action was raised in name of Smiths by persons acting without authority the action was not a "nullity". In Ward & Co there was no director in office at the time of raising of the action but it was held that "the company being a competent principal in relation thereto could subsequently ratify the unauthorised act done in its name". It is thus clear that the raising of the action did not fall to be regarded as a nullity. The present case is if anything stronger than Ward & Co since there were directors of the company in office, although that is perhaps not material. I agree with Sheriff Holligan that when the action was raised Smiths had title and interest to sue and that title and interest having been validly assigned the question of whether anyone had authority to give the instruction on behalf of Smiths is not material. [22] The matter does not end there. In Ward & Co the defenders founded on the pursuers' articles of association which provided that the business of the company should be managed by its directors for the proposition that in the absence of directors there was no one competent to give the instructions for the raising of an action. In his speech (at p 51) Lord Kilbrandon doubted the soundness of that proposition and went on to express "even graver doubts" as to whether "the validity of the company's act, resting as it must on a construction of the contract with the shareholders, can in such a matter be challenged by someone whose only relationship with the company is one of indebtedness". In the present case it seems to me to be extremely doubtful whether it is open to the defenders to challenged the validity of the action being raised in Smiths' name when that company had a title and interest. If it be the case that the raising of the action was truly unauthorised the solicitor who raised it must have been acting without mandate. The recognised procedure for such a case - which is designed to protect the position of defenders in relation to expenses - could have been resorted to. Finally, and in any event I agree with the submission by the solicitor for the pursuers that if ratification of the act of raising the action in Smiths' name was necessary it is to be found in the terms of the assignation. To a degree counsel for the defenders was correct when he stated that the directors of Ladbrokes, in granting that assignation, "distanced themselves" from the litigation. Nevertheless, the assignation acknowledged in terms that an action had been raised in name of Smiths and by assigning all right, title and interest to pursue it the new directors were in my judgement plainly acknowledging that the raising of the action met with their approval. [23] I am equally satisfied that there is no merit in the defenders' argument in relation to agency. For the reasons advanced by the solicitor for the pursuers as set out in paragraph 11 above I am satisfied that this is not a case which should be regarded as one of agents exceeding their authority. The last part of finding in fact (15) which records that the contractors "were instructed by the factors on behalf of the majority proprietors to carry out the works" was properly made. Sheriff Sinclair was correct when she took a similar approach to the case. [24] Lastly, I consider that Sheriff Cathcart was well entitled to exercise his discretion in favour of allowing the minute of amendment which separated the single crave for payment into two separate craves in favour of each of the two pursuers. Whilst it was strictly speaking incompetent for the case to have proceeded with a single crave for payment on behalf of two separate pursuers that was a technical matter which was capable of being cured at any stage. The point had not been taken by the defenders at any earlier stage and they were not prejudiced in the conduct of the action by the allowance of the amendment. On any view it was an exercise of discretion with which I would not be prepared to interfere. [25] In the whole circumstances the appeal falls to be refused in whole, the interlocutors of the sheriffs upheld, and the defenders found liable to the pursuers in the expenses occasioned by the appeal.