Scottish Sheriff Court Decisions

SC2469/05

 

JUDGMENT

OF

SHERIFF PRINCIPAL

JAMES A TAYLOR

in the cause

Libby Dale (formerly Libby Porteous)

PURSUER/RESPONDENT

against

 

Lets Glasgow Ltd

DEFENDERS/APELLANTS

                                                                        

 

 

 

GLASGOW, November 2006.

 

The Sheriff Principal, having resumed consideration of the cause, Refuses the appeal and Adheres to the interlocutor of the Sheriff; Finds the defenders and appellants liable to the pursuer and respondent in the expenses of the appeal as they might be taxed; Assigns 27 November 2006 at 2.30 pm within the Sheriff Court House, 1 Carlton Place, Glasgow as a diet of assessment.

 

 

 

 

 

NOTE:

 

This is an appeal from a decision of the Sheriff in a summary cause. The pursuer and respondent (hereinafter "the respondent") had retained the defenders and appellants (hereinafter "the appellants") to factor a property which the respondent had let to a third party. The respondent sued the appellants for three months rent and also for the cost of repairing damage to the fabric of the subjects of let. There was no averment that the tenant had made payment of rent to the appellants which the appellants had not passed on to the respondent. There were no averments explaining how the appellants might be liable to the respondent for a breach of the tenancy agreement regarding damage, occasioned by the tenant, to the fabric of the building. The summons was thus completely irrelevant. It had not been framed by a solicitor.

 

The respondent had obtained decree in absence against the appellants. That decree was recalled. The proposed defence in the Minute for Recall of decree is in the following terms:-

 

"The money owed to the pursuer is from the tennant (sic). The tennant (sic) pays Lets Glasgow rent. We pass on to landlord. In this instance the tennant (sic) failed to pay Lets Glasgow several months rent. Therefore we cannot pay the pursuer until the tennant (sic) pays Lets Glasgow."

 

When the case called for its first hearing, neither party was represented by a solicitor. The pursuer was personally present. A Miss Saddiq, a Director of the defenders, appeared for the appellants. Although the Stated Case is silent on the point there is a clear inference that the Sheriff accepted Miss Saddiq as an authorised lay representative in terms of Rule 2.1 of the 2002 Summary Cause Rules. In the Stated Case the learned Sheriff records that he was informed that settlement had almost been reached and that after a short adjournment to enable parties to discuss settlement further, the learned Sheriff was informed that agreement had been reached whereby the respondent would receive £1,350 plus £150 of expenses from the appellant. Miss Saddiq confirmed that payment would be made within seven days. The case was then continued to 12 April 2006 to enable settlement to be effected.

 

I was informed by Miss MacGregor, solicitor for the respondent, that, to the best of her knowledge, on 12 April 2006 another gentleman had appeared on behalf of the appellants and denied that any settlement had been reached. The Sheriff allowed a diet of proof which was assigned for the court of 19 May 2006. On 19 May 2006 the diet of proof was discharged on the defenders' motion and a new diet assigned for 16 June 2006. On 16 June 2006, whether by design or accident, the Sheriff scheduled to hear the proof was the same Sheriff as had presided at the first hearing when settlement terms had been agreed. At the proof diet the respondent was again personally present and a gentleman appeared on behalf of Lets Glasgow Ltd.

 

Although not recorded in the Stated Case it is reasonable to infer, indeed both solicitors at the appeal hearing invited me to so infer, that the gentleman was not a solicitor. The Stated Case records that the gentleman stated that no agreement had been reached in terms of which the appellants would make payment of any sums to the respondent. The respondent moved that decree should be granted in terms of the extra judicial settlement which had been reported to the court at the first hearing. The learned Sheriff adjourned in order that he could review his notes. The notes confirmed that an agreement had been reached on 29 March 2006. In the Stated Case the learned Sheriff records: "I took the view that it was in the interest of justice that I grant decree in the appropriate terms." The appropriate terms were the terms of the extra judicial settlement.

 

Mr Foster, solicitor for the respondent, submitted that since Miss Saddiq was not a solicitor there was strictly speaking no representation on behalf of the appellant at the first hearing. Accordingly the Sheriff would have been entitled to grant decree in absence. Given the lack of representation it followed that anything said by Miss Saddiq to the court could not be taken into account by the learned Sheriff on the basis that she was not authorised to appear. This submission, which came to Mr Foster rather late in the hearing, overlooks the terms of Rule 2.1. That rule allows representation by a lay representative at the first hearing. Accordingly, the submission by Mr Foster fails. However Rule 2.1(2) limits representation by a lay representative to a first hearing held in terms of Rule 8.2(1). It does not permit lay representation at a diet of proof. Thus it is correct to say that the appellants were unrepresented but the lack of representation was at the diet of proof as opposed to the first calling of the case.

 

Mr Foster's primary submission relied upon the decision in Morgan Guaranty Trust Company of New York v Lothian Regional Council 1995 SC 151; 1995 SLT 299. That case, he submitted, was authority for the proposition that a payment made under an error of either fact or law could be recovered under the condictio indebiti. Until the decision in Morgan Guaranty it had been thought that if the error was one of law then there could not be recovery. In the present case Mr Foster submitted that the appellants believed that the contract gave to the respondent the legal remedy which she sought and accordingly they agreed to make payment. The agreement to settle was therefore entered into whilst they were under an essential error as to their legal liability. Mr Foster pointed out that if the appellants had made payment of the sum due within the seven day period they would have been entitled to seek repetition. The question which he posed was: "Can the courts give a remedy to the respondent greater than the remedy the pursuer would have obtained had the contract been tested in court?" The answer to that question, said Mr Foster, had to be a resounding "No".

 

Although it is not clear from what has been noted in the summons, both parties accepted that the defence stated was along the lines of what was proposed in the Minute for Recall of the decree. In other words, the appellant's position was that all rents received by the appellants were dealt with in terms of the contract. The learned Sheriff, submitted Mr Foster, was stuck with the terms of the contract and the learned Sheriff could only dispose of the case in terms of that contract. I put to Mr Foster that the agreement might be said to be the equivalent of a Joint Minute and that once such is lodged it cannot be withdrawn except in very special circumstances (Macphail Sheriff Court Practice 2^nd Edition, paragraph 14.64). In reply Mr Foster submitted that the extra judicial settlement could not be equiparated to a Joint Minute. A Joint Minute invited the court to grant decree in specific terms and is an application to the court by both parties. Negotiating the terms of a settlement is different, he said, and seeks to avoid a decree. The verbal exchange before the learned Sheriff at the first calling of the case never invited a particular disposal. It was thus not the equivalent of a Joint Minute.

 

Mr Foster went on to submit that, without proper enquiry as to the relevance or the merits of the action, the court had granted a decree where the only issue which had been taken into account was that settlement had not been effected in terms of the agreement. Mr Foster submitted that had he appeared at the proof diet when decree was granted, the Sheriff would not have been entitled to grant decree upon an explanation being given to the court that the defenders now knew that they had a relevant defence to what was an irrelevant action. I was referred to Macphail at paragraph 9.32 and to Written Pleadings by John McKenzie at paragraphs 6.34, 6.37 and 6.38. From these passages Mr Foster advanced the proposition that before granting decree the court had a duty to enquire into the relevance of the respondent's case. The fact that we were here dealing with a summary cause as opposed to an ordinary action mattered not. The case fell to be dismissed and should have been dismissed by the learned Sheriff. Reference was made to Gordon District Council v Acutt, (unreported, Sheriff A L Stewart, 1 May 1987). Acutt was an action for recovery of possession of heritable property. The pursuers failed to make any averment that at the date the action was raised the defender was in arrears of rent. Furthermore there was no averment that it was reasonable for the court to make the order. Averments of this nature were required to meet the relevant statutory provision which at the time was Section 15(2)(a) of the Tenants Rights Etc (Scotland) Act 1980. The Sheriff held that in the absence of such averments the action was incompetent. I was also referred to Renfrew District Council v Inglis, (unreported, Sheriff Principal R C Hay WS, 28 May 1991) and to the case of Midlothian District Council v Drummond 1991 SLT (Sh Ct) 67 in support of the same proposition.

 

In reply, Miss McGregor for the respondent submitted that parties had entered into an agreement to pay a specific sum within a specific time and that agreement had then been transmitted to the Sheriff who had recorded it in his notebook. This enabled the Sheriff to make a finding-in-fact as he had done in the Stated Case. Although she had not been present at the diet when decree had been granted, she had been informed by the respondent that the court had been informed that it was the respondent's position that the tenant had made payment of the rent to the appellants and that the rent had not been paid to the respondent. This cured one of the two aspects of the Statement of Claim which she accepted was irrelevant. She very properly accepted that nothing could have been said to the court which could cure the other irrelevance in the summons, namely the claim that the appellants had a liability to make good damage to the fabric of the building occasioned by the tenant.

 

Although the summons is irrelevant it would appear from the submissions made to me at the appeal hearing and the productions lodged, that there is a factual dispute between the parties as to the extent that the tenant has made payment of that which he is obliged to pay in terms of his lease with the respondent. The difficulty for the court is that the case must proceed on the basis that, notwithstanding the irrelevant summons, the parties reached a compromise agreement which was reported to the Sheriff and recorded by him in his notebook. Mr Foster explained that the appellants did not accept that an agreement had been reached but he correctly accepted that he was bound by the learned Sheriff's finding-in-fact to that effect. Even if Mr Foster is correct in submitting that what was before the court was not the equivalent of a Joint Minute, what he cannot escape is that parties have entered into an extra judicial contract to settle the litigation. That contract is binding upon them. Although I was not referred to the passage that is the view offered in Macphail Sheriff Court Practice 2^nd Edition at paragraph 14.65. Paragraph 14.66 goes on to provide what should happen where there is a dispute as to whether settlement terms have been agreed. The procedure suggested is that the party asserting there has been agreement should lodge a minute setting forth the circumstances of the alleged settlement and the other party should lodge answers thereto. The Sheriff can then dispose of the motion for decree on the basis of the admitted facts. If there are insufficient admitted facts to enable a decision to be reached, the action should be sisted to enable the party asserting the contract of settlement to raise an action of declarator of the alleged agreement to settle. In a sense that is what happened here. The respondent asserted that there was a contract of settlement. The appellants, although strictly speaking not represented at the proof, disputed that. The Sheriff briefly adjourned the case to enable him to consult the notes made at the first hearing. His notes clearly disclosed that a settlement had been reached. Accordingly he disposed of the motion on the basis of the facts as inevitably they would be found should there have been a hearing following the lodging of a minute and answers. Given this is a summary cause with the emphasis being on speed and informality, in my opinion he was entitled to do that which he did.

 

I accept that Rule 8.3(3)(c) imposes on the Sheriff a duty to consider the relevance of the Statement of Claim in the summons. Had he commenced the first hearing he would no doubt have looked at the summons and formed the view that it was not "soundly based in law" and would, in the circumstances, have been entitled to dismiss the action. However I do not think that stage in proceedings had been reached. The Sheriff records in his Stated Case that when the case called he was informed that settlement had almost been reached. What he then did was allow parties further time to see if settlement could be reached before starting the first hearing. Accordingly the obligation on the Sheriff in terms of Rule 8.3(3)(c) did not come into play. The procedure set out in Rule 8.3 had not commenced.

 

The case of Acutt, Inglis and Laurie, relied upon by Mr Foster, can be distinguished. In each of the cases the pursuer sought decree in terms of the crave of the summons. I can see why, in such circumstances, the court must be satisfied that the case is "established in fact and in law" to borrow the words of Sheriff Principal O'Brien QC in Laurie. In this case the pursuer did not seek decree in terms of the crave of the summons. She sought decree in terms of an extra judicial settlement entered into by the parties and previously reported to the court. In addition, it is also significant that Sheriff Stewart decided Acutt on the basis that the summons was incompetent as opposed to irrelevant.

 

I do not accept, as was submitted by Mr Foster, that a court can never grant decree on an irrelevant summons. If a Minute of Tender is lodged by a defender and accepted by a pursuer, the court has no obligation to examine the Initial Writ and ascertain if it is relevant. Quite the reverse. When the parties have contracted to settle on a particular basis the court is obliged to give effect to that settlement.

 

I agree with Mr Foster's analysis of the law in so far as it relied upon the decision in Morgan Guaranty Trust Company of New York. If the appellants did enter into the contract to settle this case based upon a misapprehension as to their legal liability, then they should be able to reduce the contract of settlement. That however must be a separate process from the present case.

 

I have come to the view that the appeal fails. Parties invited me to deal with expenses on the basis of success and accordingly the appellants must be liable to the respondent in the expenses of the appeal.