SHERIFFDOM OF GRAMPIAN HIGHLAND AND ISLANDS AT PORTREE

SA27/08

JUDGEMENT of SHERIFF PRINCIPAL SIR STEPHEN S T YOUNG Bt QC in the cause ROLF NAPOLI Pursuer and Respondent against LUCY STONE Defender and Appellant

Act: Party

Alt: Mr Douglas Cowan, solicitor, Harper Macleod, Glasgow

Portree: 16th September 2009

The sheriff principal, having heard the solicitor for the defender and appellant and the pursuer and respondent in person, dismisses the appeal as incompetent; on the unopposed motion of the pursuer and respondent, finds the defender and appellant liable to him in the expenses of the appeal as the same may be assessed by the sheriff clerk on a date to be afterwards fixed by her; quoad ultra remits the cause to the sheriff to proceed as accords.

Note

[1] In this small claim the pursuer sought decree for payment to him by the defender of the sum of £1,103.40 with interest and expenses. The action was raised on 17th June 2008 and the return day and the hearing date were fixed respectively for 4th and 11th August 2008. On 28th July 2008 the defender lodged a formal response in which she indicated that she intended to state both a defence and a counterclaim, and on 8th August 2008 she lodged a further document incorporating a claim for payment to her by the pursuer of the sum of £3,000 with interest and expenses, answers to the pursuer's claim and a statement of facts in support of her own claim.

[2] The hearing duly took place before the sheriff on 11th August 2008 and it appears that he adjourned it until 8th September 2008. On 27th August 2008 the pursuer lodged a document incorporating what were effectively answers to the defender's counterclaim, and at the adjourned hearing on 8th September 2008 the sheriff fixed a hearing on evidence to take place on 4th November 2008.

[3] Rule 9.2 of the Small Claim Rules 2002 provides, inter alia, as follows:

Purpose of the Hearing

9.2. (1) .................

(2) At the Hearing, the sheriff shall

(a) ascertain the factual basis of the claim and any defence, and the legal basis on which the claim and defence are proceeding; and

(b) seek to negotiate and secure settlement of the claim between the parties.

(3) If the sheriff cannot secure settlement of the claim between the parties, he shall

(a) identify and note on the summons the issues of fact and law which are in dispute;

(b) note on the summons any facts which are agreed; and

(c) if possible reach a decision on the whole dispute on the basis of the information before him;

(d) ..................

(4) Where evidence requires to be led for the purposes of reaching a decision on the dispute, the sheriff shall

(a) direct parties to lead evidence on the disputed issues of fact which he has noted on the summons;

(b) indicate to the parties the matters of fact that require to be proved, and may give guidance on the nature of the evidence to be led; and

(c) fix a hearing on evidence for a later date for that purpose.

No doubt to assist the sheriff to carry out his duties under this rule, page 2 of the principal copy of the summons contains a section headed "FOR OFFICIAL USE ONLY" in which space is provided for the sheriff's notes as to 1. Issues of fact and law in dispute, 2. Facts agreed, and 3. Directions and guidance upon evidence to be led. But in this particular case this space has been left blank and I have been unable to find elsewhere on the summons any notes of the kind desiderated by rule 9.2(3).

[4] At the hearing on evidence on 4th November 2008 the pursuer was present and ready to proceed. But the defender was absent and her solicitor produced a letter dated 3rd November 2008 from her general practitioner who certified on soul and conscience that she was unfit on medical grounds to appear in court that day. What happened then is recorded by the sheriff in his stated case as follows:

[2] .......... In that situation I adjourned the hearing. It seemed to me that potentially the counterclaim was ill founded. There was also the possibility of a reference to arbitration. Accordingly, I did not allow a further full hearing or proof. Instead I continued the case until 1st December for discussion of the issue of the counterclaim and to see if parties agreed to go to arbitration.

[3] On 1st December 2008 the action called before me again. No progress had been made on the issue of arbitration. However I felt able to deal with the counterclaim on the basis of the information available and without the necessity of hearing evidence.

In the succeeding paragraphs of his stated case the sheriff went on to consider the matters raised in the counterclaim, and the upshot of this was that he decided to dismiss the counterclaim and allow the principal action and defence to proceed. He explained his decision in his stated case as follows (the Association to which the sheriff refers was the party with which, according to the pursuer, he had originally contracted):

[11] On any view, if the pursuer was correct, and this was not contradicted on the defender's behalf, the matters raised in the counterclaim did not form part of or arise from the grounds of the principal action of the pursuer and a decision thereon was not necessary for the determination of the question in controversy between the parties.

[12] I decided that the counterclaim considerably and unnecessarily widened the factual matters to be gone into. The defender apparently intended to lead the evidence of six witnesses, including one from Inverness and one from Kinross. It seemed to me that the defender or the Association would not be prejudiced by the counterclaim being dismissed and parties' and the court's attention being focused in the first instance on the issues raised in the principal action. Thereafter it would be competent for the issues raised in the counterclaim to form the basis of a separate action at the instance of either the pursuer (sic) or the Association.

[13] In all the circumstances, I decided that the interests of justice dictated the dismissal of the counterclaim and the allowing of the principal action and defences to proceed.

It is the sheriff's decision to dismiss the counterclaim as he did which is the subject of this appeal, and the single question of law posed by the sheriff in his stated case is "Did I err in dismissing the counterclaim?"

[5] It will be apparent from what I have already said that the hearing on evidence which the sheriff had originally fixed on 8th September 2008 has not yet taken place and so no decision has yet been made by him in relation to the pursuer's claim in the principal action. Accordingly, as soon as I saw the papers in the case, it occurred to me to question whether the appeal was competent having regard to the provisions of section 38 of the Sheriff Courts (Scotland) Act 1971 which provides, inter alia, as follows:

38. In the case of -

(a) any summary cause an appeal shall lie to the sheriff principal on any point of law from the final judgment of the sheriff; and

(b) .......................

but save as aforesaid an interlocutor of the sheriff ................ in any such cause shall not be subject to review.

In the context of section 38 the expression "summary cause" of course includes a small claim. Section 45(3) of the 1971 Act provides in short that expressions used in that Act and in the Sheriff Courts (Scotland) Act 1907 shall have the same meanings in both Acts. In section 3(h) of the 1907 Act it is provided that: ""Final judgment" means an interlocutor which, by itself, or taken along with previous interlocutors, disposes of the subject-matter of the cause, notwithstanding that judgment may not have been pronounced on every question raised, and that the expenses found due may not have been modified, taxed or decerned for".

[6] At the hearing today I invited the solicitor for the defender to address me on the competency of the appeal. He submitted that the decision of the sheriff to dismiss the counterclaim fell to be regarded as a final judgment within the meaning of section 3(h) of the 1907 Act. He suggested that, for the purposes of this subsection, the cause was the counterclaim by itself as opposed to the combination of the principal claim and the counterclaim, and he submitted that, if it was accepted that the counterclaim constituted a separate cause, then the sheriff's decision to dispose of it was indeed a decision which disposed of the subject matter of the cause. It followed, so he argued, that the sheriff's decision constituted a final judgment and hence could be appealed without leave. He drew attention to section 27(c) of the 1907 Act which provides that an appeal to the sheriff principal shall be competent against all final judgments of the sheriff and also against an interlocutor sisting an action. He submitted that, just as the decision of the sheriff to sist an action could be appealed without leave, so too should the decision of a sheriff to dismiss a counterclaim be capable of being appealed without leave. He drew attention to Macphail's Sheriff Court Practice (3rd Edn) at paragraph 18.34 where it is said: "It is of the essence of a final judgment, as compared with an interlocutory judgment, that, when read by itself or with earlier interlocutors, it should conclusively decide the issues between the parties as recorded in their craves and pleas, including rights to expenses". Under reference to this passage he submitted, as I understood him, that the counterclaim constituted a separate action and that the sheriff's decision to dismiss it had conclusively decided the issue between the parties in relation to it.

[7] Not surprisingly, as a lay man the pursuer was unable to offer any assistance on this question. But I had little difficulty myself in rejecting the submissions of the defender's solicitor. In my opinion the defender's counterclaim was simply one part of the cause as were his defence and the pursuer's claim and accordingly the decision of the sheriff to dismiss the counterclaim did not have the effect of disposing of the subject matter of the cause. On the contrary it disposed of only part of the subject matter of the cause and hence was not a final judgment within the meaning of section 3(h) of the 1907 Act. Besides, for an interlocutor to be a final judgment it is normally essential that it should dispose of the question of expenses - see Macphail at paragraph 18.36 - and this I think must mean the expenses of the cause as a whole and not merely the expenses of only one part of it. Needless to say, the sheriff's decision did not deal with the question of expenses at all. In these circumstances the defender's appeal was in my view incompetent having regard to the terms of section 38 of the 1971 Act, and I dismissed it accordingly.

[8] I might add here that all this seems to me to be consistent with rule 23.1(1) which provides that an appeal to the sheriff principal, other than an appeal to which rule 23.4 applies, must be by note of appeal in Form 21 and lodged with the sheriff clerk not later than 14 days after the date of final decree. In a small claim there is no final decree until the expenses have been dealt with - see rules 9.8(3) and (4) and 21.6(10). There is no provision in the rules for an appeal at an interim stage in the proceedings.

[9] This leaves unanswered the question whether, given that the defender evidently did not accept that it should be dismissed, it was competent for the sheriff to have dismissed the counterclaim before the hearing on evidence had taken place. Since this is now academic, and since in any event I did not hear any argument on the question and it may arise in a subsequent (timeous) appeal in this case, I must reserve my opinion on it.

[10] Rule 23.4(c) provides that one of the outcomes of an appeal in a small claim is that the sheriff principal may remit, if he considers it desirable, to the sheriff, for any reason other than to have further evidence led. In light of this I was initially unsure whether it would be competent for me, having dismissed the appeal as incompetent, to remit the cause to the sheriff since the purpose of doing so would be to allow him to proceed with the hearing on evidence. But on reflection I concluded that this particular rule would not be an obstacle since the object of the rule is plainly to prohibit the leading of further evidence following an appeal and since no evidence has yet been led before the sheriff there cannot be any question at this stage of further evidence being led.