Scottish Sheriff Court Decisions

SHERIFFDOM OF SOUTH STRATHCLYDE DUMFRIES AND GALLOWAY AND GALLOWAY

B412/07 conjoined with B410/07

		JUDGMENT OF SHERIFF PRINCIPAL B A LOCKHART
		in the cause
		HM SECRETARY OF STATE FOR BUSINESS ENTERPRISE AND REGULATORY REFORM Pursuers and Respondents
		against
		FRANCIS JOSEPH SMITH AND ELIZABETH SMITH Defenders and Appellants

Act: Thomson, Counsel, instructed by Shepherd & Wedderburn

Alt: S Munro, of Messrs Livingstone Brown

HAMILTON: 19 November 2008

The Sheriff Principal, having resumed consideration of the cause, refuses the appeal in these conjoined actions and adheres to the sheriff's interlocutors of 7 April 2008 and 30 May 2008 complained of; finds the defenders and appellants liable to the pursuers and respondents in the expenses of the appeal; allows an account of expenses to be given in and remits same when lodged to the Auditor of Court to tax and to report; certifies the appeal as suitable for the employment of junior counsel.

NOTE:

Background to the appeal

1. Two separate actions at the instance of the pursuers and respondents against Francis Joseph Smith and Elizabeth Smith individually were conjoined. The sheriff issued two interlocutors and notes relating to both cases, the first dated 7 April 2008 wherein he concluded that the conduct of the first and second defenders as Directors of Levencrest Limited made them unfit to be concerned in the management of a company. In the second notes of 30 May 2008 the sheriff granted a disqualification order in respect of Francis Joseph Smith for a period of not less than 30 years and against Elizabeth Smith for a period of not less than 8 years. He made certain findings of expenses against the defenders and appellants.

2. On 25 July 2008 notes of appeal were lodged on behalf of both defenders in Hamilton Sheriff Court. The notes of appeal were dated 2 July 2008, but it was explained to me that the delay in the notes of appeal being marked as received was due to certain difficulties regarding payment of the appropriate dues.

3. The note of appeal in respect of Francis Joseph Smith was in the following terms:

"The defender appeals to the Sheriff Principal on the following grounds:

1.            The order sought by the pursuers, and ultimately granted by the court. Was incompetent. The pursuers had failed to comply with the mandatory notice requirements set out in the relevant legislation. In these circumstances, it was not open to the court to grant the order sought.

2.            Further, and in any event, there was insufficient evidence before the court to justify a finding in fact that the defender had acted as a de facto director.

3.            Further, the order for disqualification was incompetent. The action proceeded in the name of the Secretary of State for Business Enterprise and Regulatory Reform. The averments on record referred instead to the Secretary of State for Trade & Industry. There were no averments on record from which findings could be made to justify an order for disqualification.

4.       Further, and in any event, the court erred in making an unqualified award of expenses in favour of the pursuer. Reference is made to paragraph 21 of the sheriff's note dated 30 May 2008."

4. The note of appeal for Elizabeth Smith was in the same terms as far as grounds 1, 3 and 4 were concerned. In her case, ground 2 was in the following terms:

"Further, and in any event, there was insufficient evidence before the court to justify a finding in fact being made to the effect that the defender had failed to discharge her responsibilities as a director, and that she had allowed Francis Smith to act as a de facto director."

5. As the interlocutors imposing the disqualification orders were dated 30 May 2008, notes of appeal ought to have been lodged within 14 days of that date. Both defenders and appellants lodged motions moving that the notes of appeal be received although late. A hearing which took place before me in Hamilton Sheriff Court on 17 September 2008 in respect of these motions. On 18 September 2008 I issued an interlocutor in which I allowed the notes of appeal to be received although late. I attached a note to that interlocutor.

6. The hearing of the conjoined appeals took place before me in Hamilton Sheriff Court on 31 October 2008. I was advised at the outset that the defenders and appellants were not insisting on the second ground of appeal. The appeal accordingly proceeded in respect of grounds of appeal 1, 3 and 4. The grounds were identical in respect of both appellants.

7. I propose to deal with each ground of appeal separately. I shall record the submissions for both parties and then give my decision on each ground of appeal.

FIRST GROUND OF APPEAL

The orders sought by the pursuers, and ultimately granted by the court, were incompetent. The pursuers had failed to comply with a mandatory notice requirement set out in the relevant legislation. In these circumstances, it was not open to the court to grant the order sought.

Submissions for defenders and appellants

8. The notice provisions in respect of a disqualification order are contained in the Company Director's Disqualification Act 1986 section 16(1) which provides:

"A person intending to apply for the making of a disqualification order by the court having jurisdiction to wind-up a company shall give not less than ten days' notice of his intention to the person against whom the order is sought; and on the hearing of the application the last mentioned person may appear and himself give evidence or call witnesses."

On the face of it there was an obligation on the pursuers and respondents to give ten days' notice prior to making an application to the court. There was no finding in fact in the sheriff's judgment regarding the giving of notice or otherwise.

9. I was referred to para 36 of the sheriff's note dated 7 April 2008:

"It was denied that notice was given in terms of section 16 of the Act. Section 16 was not discretionary. Ten days notice had to be given. Although Mr Finlayson came to accept that there was evidence from Mr Beckett that the letters had been sent, he maintained there was no evidence of ten days' notice having been given. This, he maintained, was fatal to the pursuers' case."

He also referred to para 40:

"Miss Strachan referred to Mr Becket's evidence of the drafting and issuing of the section 16 letters. In terms of the record, the pursuers were never seeking to prove the letters were sent. It would have been a simple matter to challenge. There is no authority in any event to suggest that failure was fatal. The defenders had chosen to defend."

I was then referred to para 70 of the sheriff's note of 30 May 2008:

"In my opinion, the requirements of section 16 were not a matter for proof. Mr Finlayson offered no authority for his proposition that, in the absence of proof that section 16 had been complied with, the proceedings were effectively struck down. That, however, is not my reading of the import of this section. It clearly has its object that person who may be the subject of a disqualification order be given notice of the Secretary of State's intention, so that at the hearing of the application that person may appear and give evidence or call witnesses. Whenever it was that section 16 letters were sent out in this case, the circumstances that section 16 seeks to bring about were amply satisfied by the procedure which had been employed in this case, which involved the compilation of a Record in the case of both defenders with the Secretary of State's case being carefully set out in articles of condescendence, each of which was individually addressed and responded to by each of the defenders. In these circumstances the object of section 16 has clearly been satisfied. In my opinion, whether or not ten days notice was given is, in the context of this case, neither here nor there. Both the defenders and appellants were clearly put on notice of the Secretary of State's intention, and had ample time to prepare to resist the application. I therefore reject Mr Finlayson's submission that this section could play any part in this case at the state at which he first raised the point."

10. I was referred to two authorities by solicitor for the defenders and appellants which he conceded were both against him. The first was the Secretary of State for Trade and Industry v Langridge 1991 CH 402. This was a Court of Appeal decision in England in respect of a decision of an inferior court to dismiss a petition for disqualification because of the failure to comply with the ten day requirement in section 16. By a majority the Court of Appeal heard that the provisions of section 16 were directory only and not mandatory. I was referred to the judgment of Lord Justice Balcombe at 414. He concluded:

"In those circumstances, and applying the principles to which I have referred above, I would have no hesitation in holding that in this case, the failure to serve a proper ten day notice was a procedural irregularity which did not render the Secretary of State's application for a disqualification order against Mr Langridge either void or voidable, and that the Secretary of State originating summons should not be struck out."

11. The majority view in that case was followed by the Second Division in Scotland in the case of Secretary of State for Trade and Industry v Lovett 1996 SC 32. At page 126 of the Opinion of the Court the Lord Justice Clerk stated:

"Counsel pointed out that it was a matter of agreement that the applicant had failed to comply with the provisions of section 16(1) in that ten days' notice of a disqualification order had not been given. Counsel maintained that on a proper construction, the provisions of section 16(1) dealing with notice were mandatory ...."

He continued

"We have carefully considered the terms of the judgments delivered in the Secretary of State for Trade and Industry v Langridge. We find ourselves in agreement with what the judges in the majority said. We find their reasoning more persuasive than that of Nourse LJ in his dissenting judgment. We recognise that section 13 of the Act of 1986 does contain penal provisions, but as Harman J observed in Re Jaymar Management Ltd at 1990 BCLC at 662: "The statute is a statute brought for the protection of the public and not a purely penal statute.""

12. It was conceded that, prima facie, these two cases provided authority for the pursuers and respondents' position in this case, namely that section 16 was directory not mandatory and that therefore it was not necessary to prove that the strict terms of section 16 had been complied with. It was submitted that what had changed since these two cases was that the court now has to take into account section 3 of the Human Rights Act 1998 which provides:

"1. So far as is possible to do so, primary legislation and subordinate legislation must be read and given effect in a way which is compatible with the Convention rights."

It was submitted that section 3 obliges the court to look again at statutory provisions and where it can be done, give effect to a Convention compliant interpretation thereof. It was submitted that section 3 especially released the court from the obligation to follow precedent where it is not consistent with a Convention compliant interpretation of the statutory provision.

13. I was referred to schedule 1 of the Human Rights Act 1998 and in particular:

"Article 6 1. In the determination of his civil rights and obligations or of any criminal charge against him, everyone is entitled to a fair and public hearing within a reasonable time by an independent and impartial tribunal established by law. ..."

And article 8:

"2. There shall be no interference by a public authority with exercise of this right except such as is in accordance with the law and is necessary in a democratic society in the interests of national security, public safety or the economic war being with a country, for the prevention of disorder or crime for the protection of health or morals, or for the protection of the rights and freedoms of others."

14. It was submitted that a disqualification order amounted to a substantial interference with the fundamental rights of an individual. In making an application for disqualification the State was seeking to interfere with the Convention rights of the defenders and appellants. It was submitted that article 8 made it plain that the State could only interfere on three conditions: (i) interference was necessary (ii) the interference was proportionate to the public interest that the State was seeking to protect and (iii) the process of interference is in accordance with the law. If the state did not observe these conditions, there was also a breach of article 6. An individual was entitled to expect that a court would act fairly.

15. Against that background the court required to look at what was meant by section 16. It was submitted the court was required to read section 16 in a Convention compliant manner. It was submitted that Parliament had enacted section 16 to afford a measure of protection to those who might be the subject of an application for a disqualification order. A plain reading of section 16 was consistent with the giving of notice being interpreted as a mandatory provision. It was submitted an independent observer might expect that the rule was mandatory rather than being qualified.

16. It was submitted that the result of this process would amount to a substantial interference with the defenders and appellants' article 8 rights. That application required to be in compliance with the law and there should be a strict interpretation to the procedural framework enacted by Parliament. The purpose of the Human Rights Act was to protect an individual from an abuse of power by the State. It was submitted the sheriff should have interpreted section 16 as mandatory and a failure to do so would be a breach of the article 6 and 8 rights of the defenders and appellants.

Submissions for pursuers and respondents

17. Counsel for the pursuers and respondents stated that the court was dealing with an area of law which has, as its primary aim, the protection of the public. This was clear from the remarks of the Lord Justice Clerk in the case of Secretary of State for Trade and Industry v Lovett supra. There was no attempt on behalf of the defenders and appellants to interfere with the sheriff's findings in fact, findings in fact and law or findings in law. The conclusion was that the defenders and appellants were unfit to be concerned with the management of companies and that a necessary consequence was that they ought to be disqualified from so doing. In considering this ground of appeal, it was necessary to bear in mind that the main purpose of these statutory provisions in the 1986 Act was the protection of the public. It was submitted there was no proper articulation on the part of the defenders and appellants as to the respects in which their human rights had been breached.

18. The law in Scotland was clear. The case of Secretary of State for Trade and Industry v Lovett supra provided authority for the proposition that the provisions of section 16 were not mandatory. They were merely directory. I was referred to the case of Amplifaire Ltd v Secretary of State for Scotland 1999 SLT 937. I was referred to the opinion of the court at page 941:

"He (counsel) referred to what was said by the Lord Chancellor in London & Clydesdale Estates Ltd v Aberdeen District Council. What Lord Hailsham said at 1980 SC HL page 30 was: "When Parliament lays down a statutory requirement for the exercise of legal authority it expects it authority to be obeyed down to the minutest detail. But what the courts have to decide in a particular case is the legal consequences of non-compliance on the rights of the subject viewed in the light of a concrete state of facts and a continuing chain of events. It may be that what the courts are faced with is not so much a stark choice of alternatives but a spectrum of possibility in which one compartment or description fades gradually into another. At one end of this spectrum there may be cases in which a fundamental obligation may have been so outrageously and flagrantly ignored or defied that the subject may safely ignore what has been done and treat it as having no legal consequences upon himself ... At the other end of the spectrum the defect in procedure may be so nugatory or trivial that the authority can safety proceed without remedial action, confident that, if the subject is so misguided as to rely on the fault, the courts will decline to listen to his complaint." Counsel also referred to the terms of section 233(4) of the 1972 Act and maintained that there can be no question of the interests of this appellant having been substantially prejudiced by a failure to comply with any of the relevant requirements. In our opinion, while it is to be regretted that the incorrect schedule was served upon the appellant, it has made no material difference to the appellant's position and there has been no substantial prejudice to him by the failure to provide the correct reference to section 86. The question of non-compliance with the enforcement notice has not arisen. The appellant has exercised his right of appeal which was properly set out in the schedule and if he is correct the enforcement notice will fall. If he is incorrect and the enforcement notice is upheld he is at least by now in no doubt whatever as to the terms of section 86 of the Act and is fully aware that an enforcement notice must be complied with. For these reasons we are entirely satisfied that there has been no prejudice to the appellant and accordingly this ground of appeal must also fail."

19. It was submitted that what the Division was saying was that the real issue was about prejudice. It was the consequences of the failure to comply with the statutory provisions that were important. There required to be prejudice to the appellant before any question of non-compliance could be considered significant. There was no suggestion in this case that there had been prejudice to the appellants by any failure to comply with the provisions of Section 16. What had happened in this case, as the sheriff had noted, was that a summary application was presented in writing and answers were lodged. Parties were given an opportunity to set out in full their positions in writing and the parties were allowed a proof on these pleadings. There was not the slightest indication on record that either of the appellants did not know the intention of the pursuers and respondents and the grounds on which they sought disqualification orders. Had there been such doubt, there could have been a legal debate on the record.

20. It was submitted that on binding authority, namely the Inner House of the Court of Session, the provisions of section 16(1) were directory not mandatory. In addition, it was submitted that there was no prejudice properly averred from any failure on the part of the defenders and respondents to give ten days' notice or their intention to raise proceedings.

21. As far as the submissions in respect of the Human Rights Act 1998 were concerned it was noted that section 3(1) contained the words "so far as it is practicable to do so." It was submitted that these words laid bare the proposition for the defenders and appellants that section 3 having been enacted, ipso facto previous court decision were no longer binding. Secondly it was submitted that the words placed an important limitation on the effect of section 16. The court is not given a free hand to re-write legislation so that it complies with Convention rights.

22. It was accepted that the case of Secretary of State for Trade and Industry v Lovett supra was decided before the Human Rights Act 1998 was enacted. However there remains binding authority from the Inner House of the Court of Session of the proper interpretation of section 16. I was referred to the opinion of the court;

"We are not persuaded in the present case that section 16(1) contains any ambiguity ..."

To succeed in this case, the defenders and appellants would have to persuade the court that the proper interpretation of section 16(1) was that the provision was mandatory because it is a breach of articles 6 and 8 of schedule 1 of the Human Rights Act not to serve such a letter. Article 6 concerns the right to a fair trial. There is nothing said on behalf of the defenders and appellants that the failure to serve a notice resulted in an unfair trial. Article 8 provides that there should be no interference by a public authority with the exercise of the right to respect his private and family life except such as is in accordance with the law. It was submitted that the failure to intimate a notice in terms of section 16 was according to the law. There was Inner House authority for that.

23. As far as the actual breach of section 16 was concerned, there was no evidence led by the defenders and appellants at the proof to the effect that a notice had not been served. In para 36 the sheriff stated that it was accepted on behalf of the defenders and appellants that letters under section 16 had been sent. There was no evidence that they had not been received. The sheriff again confirmed at para 70 that there was no support for the proposition that, in the absence of proof that section 16 had been complied with, the proceedings were effectively struck down. There was evidence from the pursuers and respondents' witness John Beckett at page 179/7 to the effect that section 16 letters were sent out to the directors (the defenders and appellants). This evidence was not challenged on behalf of the defenders and appellants in cross-examination. They did not give evidence to the effect that they did not receive the letters. I was referred to the case of O'Donnell v Murdoch McKenzie & Co 1967 SCHL 63 at 71 where Lord Upjohn said:

"The defenders called no evidence, and in such cases, as it was established in your Lordship's House in Ross v Associated Portland Cement Manufacturers, only the most favourable inferences should be drawn from the pursuer's evidence."

I was referred to the case of Chaplin v Caledonian Land Properties Ltd 1997 SLT 384 where it was held that the sending of the notice having been proved, its receipt required to be presumed unless there was evidence rebutting that presumption. Lord Rodger at 387 B-C said:

"In my view the petitioner has satisfied me that the letters of 14 August 23 October 1992 were posted, then a presumption arises that they were duly addressed and delivered to the office of Bell Ingram. That presumption can be rebutted by evidence which satisfied the court that they were not so delivered."

In this case there was unchallenged evidence of the sending of the letter and no evidence in rebuttal. The court was entitled to hold that the letters had been received. If the defenders and appellants wanted to maintain that they did not receive the letters, they should have given evidence to that effect.

Decision on the first ground of appeal

24. I have no hesitation at all in rejecting this ground of appeal. I consider I am bound by the decision of the Inner House in the case of Secretary of State for Trade and Industry v Lovat supra which declared that the provisions of section 16(1) of the Company Directors Disqualification Act 1986 are directory and not mandatory. I also consider the case of Ampliflaire Ltd v Secretary of State for Scotland supra to be relevant. That case set out that prejudice would require to be demonstrated to allow a strict application of section 16. There clearly has been no prejudice. The purpose of section 16 is to give notice to a person that there is an intention on behalf of the Secretary of State to seek a disqualification order in order that he might prepare for the evidential hearing. That is clear from section 1 which describes that on the hearing of the application the person may appear and himself give evidence or call witnesses. If the person did not receive notice of such a hearing, that person would be prejudiced. However, regardless of whether or not a notice under section 16 was served, the fact of the matter is that the application was served giving full details of the nature of the orders sought and the grounds on which the orders were sought. Both defenders and appellants were given the opportunity to answer in detail those allegations in writing. They both took that opportunity. A record was prepared for the proof giving notice of both sides' averments. Both parties were represented by solicitors at the proof. It could not by any stretch of the imagination be said that the defenders and appellants had been prejudiced by the lack of giving notice.

25. In my view there has been no breach of the human rights of the defenders and appellants either under article 6 or under article 8 of the Convention. As far as article 6 is concerned, both defenders and appellants have received ample notice of the allegations against them. They were represented by a solicitor at the proof. There is no allegation of unfairness in the manner in which these proceedings were conducted.

26. As far as article 8 is concerned, it provides that there should no interference by a public authority in the exercise of right to private and family life except as is in accordance with the law. In this case the proceedings have been in accordance with the law as laid down by the Inner House of the Court of Session. In the absence of unfairness, there cannot in my view be said to be any interference by a public authority with the defenders and appellants' human rights. I emphasise that the purpose of this Act is to protect the public from those who abuse their positions as company directors.

27. If more was needed, which it is not, there is evidence from John Beckett that in fact section 16 notices were in fact served on the defenders and appellants. John Beckett, a representative of the pursuers and respondents, was not cross-examined on that evidence. No evidence was led on behalf of the defenders and appellants that the notices were not received. I am persuaded by the case of O'Donnell v Murdoch McKenzie supra that the evidence on behalf of John Beckett on behalf of the pursuers and respondents can be given the most favourable inferences it reasonable bears. I am persuaded by the case of Chaplin v Caledonian Land Properties Ltd supra that the sending of the notice having been proved, its receipt may be presumed unless there is evidence rebutting that presumption. There is no such evidence.

28. For all these reasons I reject the first ground of appeal.

SECOND GROUND OF APPEAL

29. The defenders and appellants indicated they were not proceeding with the second ground of appeal.

THIRD GROUND OF APPEAL

Further, the order for disqualification was incompetent. The action proceeded in the name of the Secretary of State for Business Enterprise and Regulatory Reform. The averments on record referred instead to the Secretary of State for Trade and Industry. There were no averments on record from which findings could be made to justify an order for disqualification.

Submissions for defenders and appellants

30. Solicitor for the defenders and appellants submitted that the actions were raised in the name of the Secretary of State for Trade and Industry. Due to governmental reorganisation certain responsibilities of the Secretary of State for Trade and Industry were transferred to the Secretary of State for Business Enterprise and Regulatory Reform. To enable this to take place, Parliament enacted Statutory Instrument 2007 No 3224. That Statutory Instrument gave effect to certain changes required as a result of this re-organisation. I was referred to the sheriff's judgment of 30 May 2008 as follows:

"10. (i) Objection to the competency. Mr Finlayson's opening submission was that there was no Condescendence which could permit the Secretary of State to seek any period of disqualification. The article 1 of Condescendence referred to the Secretary of State for Trade and Industry. The instance had previously been amended to "The Secretary of State for Business Enterprise and Regulatory Reform." The condescendence did not reflect this. Accordingly, Mr Finlayson submitted, no order could be made. There had to be support for the crave on a factual basis and this was not present. 11. In response, Miss Strachan submitted that this could be viewed as an oversight and did not limit the court's discretion. Any reference to the Secretary of State for Trade and Industry could be read as if it were a reference to the succeeding Secretary of State for Business Enterprise and Regulatory Reform. I was referred to SI 2007 No 3224. ... The matter could, in any event, be cured by amendment and Miss Strachan moved accordingly. Mr Finlayson opposed this at this stage. This was amendment after judgement and the issue which had now been raised was one of the factors which he had considered in deciding not to lead evidence. He submitted that Regulation 12 did not assist the Secretary of State. 12. I dealt with the issue in the following way. Firstly, I considered that, the instance having been amended as it had been and the pursuer designated as Secretary of State for Business Enterprise and Regulatory Reform, any reference to the pursuer which followed thereafter could properly be read down as referring to the Secretary of State for Business Enterprise and Regulatory Reform. The instance was closely followed by a crave by the pursuer, and a heading "condescendence for the pursuer" it could hardly be any clearer, then, who the pursuer was, and the reference to the pursuers' predecessor in article 1 of condescendence could only sensibly by read down as referring to the pursuer who was designed in the instance. On that basis alone I would have rejected Mr Finlayson's submission that the court was disabled from making any order. In addition, SI 2007 No 3224 is of further assistance. Regulation 12(4) provides that: "anything (including legal proceedings, which, at the coming into force of this order, is in the process of being done by ... the Secretary of State for Trade and Industry may, so far as it relates to a relevant function ... be continued by ... the Secretary of State for Business Enterprise and Regulatory Reform." 13. The functions of a Secretary of State for Trade and Industry are, by Regulation 11, transferred to the Secretary of State for Business Enterprise and Regulatory Reform. Clearly the functions of the Secretary of State for Trade and Industry in making Applications under the 1986 Act have been transferred to the Secretary of State for Business Enterprise and Regulatory Reform. Clearly also such an application could be continued by the Secretary of State for Business Enterprise and Regulatory Reform. Regulation 12(5) provides that: "Anything done ... by ... the Secretary of State for Trade and Industry in connection with the relevant function ... has effect, so far as necessary for continuing its effect after the coming into force of this order ... as is done by ... the Secretary of State for Business Enterprise and Regulatory Reform." 14. The statute came into force on 12 December 2007. 15. The effect of SI 2007 No 3224 is that anything which is in the process of being done by the previous Secretary of State can be continued by the succeeding Secretary of State, and anything done by the previous Secretary of State has effect as if it had been done by the succeeding Secretary of State. There is accordingly a statutory basis for the transfer of function from one Secretary of State to another, and in these circumstances it would be absurd in my opinion if the Secretary of State for Business Enterprise and Regulatory Reform were to be disabled from seeking an order in this action because of a reference in the Article of Condescendence to his predecessor. Clearly the intentions of the Statutory Instrument is to provide for a smooth transfer of things which have been done, and things in the process of being done, from one Secretary of State to the other. This Conjoined Application is an example of precisely that. Viewing Mr Finlayson's objection against this background and context it is clear that any reference to the Secretary of State for Trade and Industry requires to be read as if it referred to the Secretary of State for Business Enterprise and Regulatory Reform. Accordingly there is no obstacle to the Secretary of State for Business Enterprise and Regulatory Reform seeking, and a court granting, the order sought. I have concluded that the effect of the Statutory Instrument is that this application has to be treated as if brought by the Secretary of State for Business Enterprise and Regulatory Reform. 16. In any event I allowed Miss Strachan to amend Article 1 of Condescendence. I have already made a finding in fact that the pursuer was the Secretary of State for Business Enterprise and Regulatory Reform in my interlocutor of 7 April 2008. Amendment was, in my opinion, a mere technicality and could not prejudice the defenders in any way, even coming at the late stage that it did."

31. It was submitted that the sheriff had misinterpreted the provisions of the Statutory instrument. It was submitted what the statutory instrument does is to allow proceedings started by the Secretary of State for Trade and Industry to be carried on by the Secretary of State for Business Enterprise and Regulatory Reform. It authorises the transference of the cause from one pursuer to the other. It was submitted that this allowed the new Secretary of State to introduce himself into the process by amendment. What it could not do, it was submitted, was absolve the new Secretary of State from any failure to amend himself into the process. It was submitted that the Secretary of State for Trade and Industry was a different individual from the Secretary of State for Business Enterprise and Regulatory Reform. The Statutory Instrument produced a mechanism for the handover. However, it still had to take place. I was referred to Macphail, third edition, 9.77 which provides for parties to be identified in the instance. I was referred to para 9.82 which indicates that the crave required to be precise. I was referred to 9.99 which provided:

"The pursuer should therefore set forth in the condescendences title, and the circumstances in which he is compelled to assert it, of the grounds of the defender's liability and the necessity of raising the action against him."

I was also referred to 9.101:

"It is essential to state, preferably in article 1 or 2, the ground of jurisdiction of the court and the facts on which that ground is based."

32. It was submitted that the question of title to sue was something which had to be considered by the court in every process. The pursuer required to set out the basis on which he claimed the right to bring the action against his opponent. If the court cannot establish his title and interest to sue, the pursuer will not be allowed the order which he seeks.

33. At the time of the judgments on 7 April 2008, although the instance had been amended to the name of the Secretary of State for Business Enterprise and Regulatory Reform, the pursuer and respondent was described in the condescendences as the Secretary of State for Trade and Industry. On that basis he sought a disqualification order. The defenders and appellants admitted the designation. Although the instance was amended on 26 February 2008, there were no averments regarding the change from the Secretary of State from Trade and Industry to the Secretary of State for Business Enterprise and Regulatory Reform. The motion to amend the instance was made during submissions after the conclusion of the evidence on 26 February 2008. I was referred to the case of Overseas League v Taylor 1951 SC 105 where Lord Justice Clark Thomson said at 107:

"While the court will not be swayed by technical or immaterial mistakes, it must be kept in view that accuracy is the foundation of procedure, and practitioners must realise that laxity which springs from carelessness will not necessarily be condoned."

Microwaves Systems (Scotland) v Electro Physiological Instruments Ltd 1971 SC 140 at 143:

"In that state of the pleadings counsel for the pursuer submitted that the pursuer had not set forth clearly on record their title to sue ... They had failed to explain on record what the position was quoad the assignation."

34. It was submitted that where the pursuers and respondents sought an order, there must be set out on record the basis on which it was said that the pursuers and respondents had a title and interest to sue. The Secretary of State for Trade and Industry at the outset had done so. But by the time amendment was made at the hearing of evidence, the Secretary of State for Business Enterprise and Regulatory Reform had not done so. It was submitted that the sheriff had erred in allowing amendment at the second hearing on the disqualification order of article 1 of condescendence. It was submitted it was inappropriate to do so.

35. For these reasons it was suggest that the order for disqualification was incompetent.

Submissions for the pursuers and respondents

36. Counsel for the pursuers and respondents noted that it appeared to be suggested that the current pursuers had no title to sue. It was submitted that the authorities to which reference had been made were all cases in which a pursuer without a good title at the commencement of the action was held unable to obtain the remedy which he sought. He took no issue with these authorities. It was admitted by the defenders and appellants that, at the time the proceedings were raised, the Secretary of State for Trade and Industry had title and interest to raise these proceedings. These proceedings were raised before the 2007 statutory instrument came into force on 12 December 2008 i.e. after the first day of evidence took place on 23 October 2007, but before the second day of evidence on 28 February 2008. At the hearing at the conclusion of the evidence the sheriff allowed the motion to amend the instance to the Secretary of State for Business Enterprise and Regulatory Reform. The sheriff made a finding in fact in his judgment that the pursuer was the Secretary of State for Business Enterprise and Regulatory Reform. It was submitted at that time the issue of title and interest to sue was over. It was not a live issue. At the subsequent hearing on the length of disqualification the question of the designation of the pursuers and respondents in article 1 was raised and leave was allowed to amend. However it was suggested that this was not a step which was necessary to cure any defect. It was obvious from the sheriff's initial finding on 7 April 2008 that the pursuer and respondent was the Secretary of State for Business Enterprise and Regulatory Reform.

37. It was significant that at no time was there any plea of no title to sue. I was referred to Macphail para 9.117:

"The usual form of the plea is "The pursuer having no title to sue, the action should be dismissed." The grounds of objection must be specifically averred, and if the pursuer fails to set forth his title on record when thus challenged, his action will be dismissed."

38. In this case there was no objection on the part of the defenders and appellants and no plea in law of no title to sue. Although the sheriff allowed article of condescendence to be amended at the hearing on the disqualification, this was unnecessary. In any event it was a reasonable exercise of his discretion.

Decision on third ground of appeal

39. This ground of appeal also has no merit. The action was originally raised in the name of the Secretary of State for Trade and Industry. It was admitted on record on behalf of the defenders and appellants that he was empowered in terms of the 1986 Act to bring this application for a disqualification order. On 24 December 2007 Statutory Instrument 2007 No 3224 came in to force transferring the duties to the Secretary of State for Business Enterprise and Regulatory Reform. This was recognised at the hearing on evidence on 28 February 2008 and the instance amended accordingly. In his judgment of 7 April 2008 the sheriff found in fact that the pursuer and respondent was the Secretary of State for Business Enterprise and Regulatory Reform. There is no plea in law on behalf of the defenders and appellants that there is no title to sue. The matter is only raised at this stage. There is still no plea in law there is no title to sue. In my view it is entirely clear that, when the instance was amended to give effect to the alteration of the identity of the Secretary of State in terms of the statutory instrument, references in the record to the Secretary of State for Trade and Industry should reasonably be read as references to the Secretary of State for Business Enterprise and Regulatory Reform. I respectfully agree with the observations of the sheriff in paras 10 to 16 of the note attached to his interlocutor of 30 May 2008 which I have set out in para 30 hereof. This ground of appeal fails.

FOURTH GROUND OF APPEAL

Further and in any event the court erred in making an unqualified award of expenses in favour of the pursuer.

40. I was referred to the sheriff's note of 30 May 2008 as follows:

"21. Miss Strachan submitted that expenses should follow success and, as the Secretary of State had succeeded, expenses should be awarded in favour of the Pursuer. Mr Finlayson, whilst acknowledging that expenses should follow success, submitted that the Applications should have been brought as one application from the beginning. I should therefore modify expenses accordingly. Miss Strachan informed me that the Secretary of State's policy was to raise separate actions. The grounds were different in respect of each defender and until the substance of the defence became clear, it was appropriate to have separate Applications.

22.           In my opinion, Miss Strachan's submissions are to be preferred. The grounds relied upon by the Secretary of State were different in respect of each Defender, and until such time as the defences emerged it could not be said that the Applications could run together. It was not inappropriate that the Secretary of State should have commenced proceedings in the way that was done, and it can properly be regarded as a bonus to the Defenders that the Applications became conjoined and further costs were restricted thereafter. I have, therefore, awarded expenses to the Pursuers."

Submissions for the defenders and appellants

41. Solicitor for the defenders and appellants submitted there was a clear nexus between the interests of the two defenders. They were husband and wife. The roles of the two defenders were interconnected and intertwined. It was suggested it was difficult to see how these applications could have been dealt with other than together. It was suggested a single action should have been raised involving both defenders.

Submissions for the pursuers and respondents

42. Counsel submitted I should be slow to interfere with the sheriff's discretion in this matter. The mere fact that parties had agreed to conjoin the actions when the pleadings were formalised did not carry with it the suggestion that the court should mark disapproval of the conduct of the pursuers and respondents in raising two separate actions. The specific grounds for disqualification averred against the two defenders and appellants were different, albeit they related to the same Company. It was submitted that the expenses were a matter for judicial discretion. There was nothing so unreasonable about the sheriff's decision to warrant interference with his conclusion.

Decision

43. Expenses are a discretionary matter for the sheriff. I have carefully considered the submissions in the contents of the two applications. In my opinion the sheriff exercised his discretion in this case in a reasonable manner and I am not prepared to interfere with his exercise of that discretion. This ground of appeal fails.

Conclusion

44. In the event I refuse these appeals and I adhere to the sheriff's interlocutors of 7 April 2008 and 30 May 2008 in respect of these conjoined actions. I have awarded the expenses of the appeals to the pursuers and respondents. There is an important public interest issue in these appeals and I consider it was proper for the pursuers and respondents to instruct counsel in connection with the appeals. I accordingly certify the appeal as suitable for the employment of junior counsel.