Scottish Sheriff Court Decisions

SHERIFFDOM OF LOTHIAN AND BORDERS   Case Number: A945/11
	Judgment by   SHERIFF PRINCIPAL MHAIRI M STEPHEN     in the appeal in the cause   by   THE ROYAL BANK OF SCOTLAND PLC Appellants   against   LEONARD BAYFIELD WILCOX Respondent   __________________________

 

 

Act: MacIver, Advocate for appellants instructed by D L A Piper, Solicitors

Alt: Mr Tariq, Advocate for respondent instructed by M B M Commercial, Solicitors

 

 

 

EDINBURGH 11 May 2012

 

The Sheriff Principal, having resumed consideration of the cause, allows the appeal, recalls the sist; makes an order for defences within 14 days; requires all adjustment of pleadings by parties to be completed by 27 June 2012 and assigns 11 July 2012 at 10.00am within the Sheriff Court House, 27 Chambers Street, Edinburgh as a diet for an options hearing; certifies the cause as suitable for the employment of junior counsel ; finds the Respondent liable to the Appellants in the expenses of the appeal ; remits the account of expenses, when lodged, to the Auditor of Court to tax and to report thereon.

(signed) Mhairi M Stephen

 

BACKGROUND

1.                  The pursuers and appellants are the Royal Bank of Scotland plc. They raised an action against the defender (respondent) in September 2011 in which they seek payment of £290,476.71 (Crave 1); £175,316.44 (Crave 2) and expenses (Crave 3) said to be due to them in respect of guarantees provided by the respondent in respect of the obligations of Bayfields Limited, (Crave 1) and Turnhouse Properties (Crave 2) to the appellants who had provided banking facilities and advances to these companies. The sums craved are said to be the amounts recoverable from the respondent as guarantor in terms of both guarantees together with interest. No defences have been lodged.

 

2.                  The appellants' averments in respect of Crave 1 can be found in Articles 3 to 6 of Condescendence in the Initial Writ - "Bayfields Limited Guarantee".

·              The guarantee was granted by the respondent on 2 June 2008. A copy is lodged. (Production 1 of the pursuers' first inventory of productions).

·              Clause 1 of the Bayfields guarantee is set out in Condescendence 4.

·              On 18 May 2011 the appellants made a written demand of Bayfields Limited in respect of the agreement between the appellants and Bayfields Limited (Production 2) for the sum of £3,053,436 being the outstanding sums due excluding interest and charges.

·              On 12 August 2011 the appellants wrote to the company setting out the company's default in terms of the agreement and intimating sums due by the company of £3,067,348 following which Bayfields Limited enter administration.

·              On 26 August 2011 the appellants make a demand of the respondent in accordance with Clause 1 of the guarantee demanding immediate payment of £290,000. It is averred that payment of these outstanding sums has not been made and therefore crave payment of the principal sum of £290,000 together with interest which forms Crave 1.

 

3.                  The appellants' averments in respect of Crave 2 can be found in Articles 7 to 10 of Condescendence "Turnhouse Properties Limited Guarantee".

·              The guarantee was granted by the respondent on 14 December 2007 in respect of the obligations of Turnhouse Properties Limited. A copy is lodged. (Production 7 of the pursuers' first inventory of productions).

·              Clause 1 of the Turnhouse Properties Limited guarantee is set out in Condescendence 8.

·              On 10 May 2011 the appellants advised Turnhouse Properties Limited that they had exceeded their borrowing limit set out in the agreement between the company and the appellant (Production 8 of the pursuers' first inventory of productions). The appellants sought proposal for repayments of the outstanding sums and no proposals were made.

·              The appellants made demands for payments to the company on 12 and 23 August 2011. These demands were unmet. Turnhouse Properties Limited entered administration on 24 August 2011 without making payment of sums said to be due to the appellants.

·              By letter of 26 August 2011 the appellants wrote to the respondent demanding payment in accordance with Clause 1 of the guarantee in the sum of £175,000 exclusive of interest. It is averred that this sum has not been paid. The sum craved in Crave 2 is the sum guaranteed by the respondent in respect of Turnhouse Properties Limited together with interest (£175,316.44).

 

4.                  The appellants obtained warrant for inhibition and arrestment on the dependence of the action following which a hearing was arranged for 3 November 2011 after intimation to the respondents. The hearing of 3 November was continued on a number of occasions until 17 November when the sheriff recalled the warrant to arrest and inhibit and made the order complained of to sist the cause and discharge the options hearing.

 

 

 

GROUND OF APPEAL

5.                  The appellants' appeal the sheriff's interlocutor only in respect of his decision to sist the cause. They argue that the sheriff exercised his discretion in a wholly unreasonable manner by placing weight on irrelevant considerations and failing to take account of material or relevant considerations placed before him.

 

6.                  The sheriff's note (No 11 of process) provides reasons for his decision. It is clear from the sheriff's note that he had regard to the letter of complaint to RBS dated 12 July 2011 (Production No 4 of the defender's inventory of productions). That is a letter from CCW LLP to Douglas McKegney of the pursuers. CCW act for Bayfields Limited and Mr Leonard Wilcox (the defender and respondent). The letter intimates a formal complaint and possible claim for loss suffered as a result of the conduct of the bank under four headings. The sheriff also had regard to the complaint made by Bayfields Limited/the defender to the Financial Ombudsman Service in October 2011 and a hospital appointment arranged for the defender on 22 November 2011 at the Western General Hospital in Edinburgh (copy letter Production No 9 of the defender's inventory of productions).

 

7.                  The sheriff considered that a sist at this very early stage of the action would allow matters to be addressed by the Financial Ombudsman Service speedily and also allow Mr Wilcox to receive appropriate medical treatment observing that it would be open to the appellants to enrol a motion for recall of the sist if the sist were to go on for an excessive period of time. The sheriff concludes by stating "it appeared to me that the action was at a very early stage. The respondent was due to attend hospital in early course albeit for what appeared to be a diagnostic procedure. In the absence of detailed defences I had to have regard to the likely form of defence. It appeared to me that the matters raised with the Financial Ombudsman Service had the potential to inform the defences ultimately to be framed in the instant case. Further I did not understand the procedure before the Ombudsman to necessitate any lengthy delay. In all the circumstances I considered that the sist would be appropriate."

 

APPELLANTS' SUBMISSIONS

8.                  Mr MacIver for the appellants firstly rehearsed the background to the action and the procedural steps prior to the action being sisted. The appellants then set out the law in appeals relating to the exercise of discretion. The appellate court can only intervene if satisfied that the sheriff in exercising his discretion erred in law by taking into account an irrelevant consideration or misdirected himself in law. I was referred to the chapter of Macphail on Sheriff Court Practice (3^rd Edition) dealing with appeals in respect of the exercise of judicial discretion Chapter 18.110 - 114. This, in essence, is the single ground of appeal, however, as can be seen from the note of appeal there are certain arguments which the appellant proposes to put forward in support of that ground of appeal. There were in effect five heads to the appellants' argument that the sheriff misdirected himself in law and had regard to irrelevant considerations and at the same time failed to have regard to cogent and relevant considerations. These are:-

1.                  That the decision to sist was contrary to the principle that parties are entitled to litigate to a conclusion uninterrupted by sist. The importance of this principle is clear. An interlocutor sisting an action is appealable without leave. Likewise a decision refusing to sist is appealable only with the leave of the sheriff.

2.                  A sist is premature at this stage in proceedings.

3.                  The complaint to the Financial Services Ombudsman has little bearing on the present action.

4.                  The sheriff took into account irrelevant considerations in coming to his decision. These relate principally to the complaint to the Finance Services Ombudsman (FSO) which has no effect on the status of the guarantees at all; the limited nature of any remedy following any such complaint which would benefit the administrator of the company (Bayfields Limited in administration); and his reliance on concerns relating to the health and medical treatment required by the respondent.

5.                  Relevant considerations which the sheriff failed to take account of - namely, the nature of the present action; that it was premature to sist at the stage the action had reached and importantly the lack of consideration given to the absence of any complaint regarding Turnhouse Properties Limited and its related guarantee. The outcome of the complaint to FSO has no bearing whatsoever on Crave 2.

 

9.                  The principles relating to civil litigation and the sist of process are set out in Macphail (3^rd Edition) at 13.71 onwards. I was referred to the appropriate passages of Macphail and also to the decision in Connell v Grierson (1865) 3M 1166 per Lord Deas who at page 1167 stated: "prima facie it is a matter of right to either party to insist upon the cause going on, and the onus lies on him who wishes to stop. No sufficient grounds have been shown for delaying this case, but, to my mind, the very reverse"." The Lord President in the same case referred to a balancing of "evils". It was thus submitted that as the appellants wish to litigate this case to a conclusion if necessary, therefore the onus is on the defender to persuade the court that it is in the interests of justice that the proceedings should not be allowed to continue. The respondent puts forward no evil or prejudice which he would suffer by the litigation continuing. In so far as health issues had been raised the only information placed before the court related to the defender's pre-existing heart condition and a diagnostic day appointment at the Western General Hospital on 22 November. The suggestion that the matters before the Ombudsman might inform the present case was neither here nor there in the question of a sist. Accordingly, there was no evil or prejudice to the defender and respondent in proceeding with the cause.

 

10.              The appellants argue that it is premature to sist prior to defences being lodged and refer to the case of Clydesdale Bank Ltd v Cohen 1943 SC 244. That case decided that it was premature to seek to sist a sheriff court action pending the outcome of an action in the Court of Session between related litigants when the pleadings in the Sheriff Court cause had not yet reached the closed record stage. In the present circumstances, however, there is no other action instead a complaint to the Financial Ombudsman and it cannot be suggested that the outcome of that complaint would affect the matter of the sums due under the guarantee. I was referred to the complaint procedures of the Financial Ombudsman's Scheme (Tab 6 of the appellants' original list of authorities). Any money award which might be made by the Ombudsman was limited to £150,000 which taken at its highest would set off a very small amount of the debt due by the company in administration in respect of the original debt. Furthermore the circumstances of the complaint appear to have no bearing whatsoever on the guarantees. The guarantee which relates to Crave 1 of the initial writ is not challenged in the complaint to the Ombudsman.

 

11.              It was argued on behalf of the appellants that the complaint to the Ombudsman (Tab 5 of the defender's inventory of productions) related to a grievance towards the pursuers but beyond that the terms of the complaint were unclear and unspecific. The terms of the complaint were unintelligible; the only reference to the guarantee appears in paragraph 13 and does not amount to a challenge to the validity of the guarantee and importantly the complaint relates to Bayfields Limited only and not to Turnhouse Properties Limited (Crave 2). I was reminded that the maximum money award which could be made by the Ombudsman was £150,000. In the case of Bayfields whose continued indebtedness to the appellants is in the region of £3m this would simply reduce the shortfall to somewhere in the region of £2.85m being the difference between the capped guarantee and the sums due by the company. Thus counsel for the appellants concluded that the complaint to the Ombudsman would have no bearing on the current action firstly, as there was no clarity as to the content of the complaint, secondly, that the best possible outcome of the complaint would not affect the guarantee due to the size of the indebtedness and thirdly, that the complaint had no bearing whatsoever on the Turnhouse Properties guarantee (Crave 2). I was referred to Maitland v Maitland (1885) 2R 899 in support of this submission. Unless it is made clear that the other procedure has a bearing on this action there is no justification for a sist of process.

 

12.              Turning to the essential submission that the sheriff took into account irrelevant considerations in exercising his discretion and therefore erred in law the appellant submitted that the weight given to the complaint to the Ombudsman indicated that the sheriff had clearly fallen into error. The complaint does not touch on the second crave of the initial writ at all which relates to Turnhouse Properties Limited. The complaint as far as it can be divined relates solely to Bayfields Limited and the defender's interests in that company which is in administration. It appears that the complaint relates to general banking conduct on the part of the pursuers towards Bayfields Limited and there is no challenge to the validity of the guarantee. The complaint has no effect on the existence of the guarantee and the rights of the appellants to call up the guarantee. Given the limited effect of the remedy available to the Ombudsman any possible remedy would have a benefit to the administrator of the company and not to the defender personally. Thus the ongoing complaint to the Ombudsman was an irrelevant consideration. Furthermore the consideration given to the respondent's health was not a relevant consideration. The vouching related a diagnostic outpatient appointment but not to medical treatment. The respondent had been represented by solicitors throughout the proceedings and at the appeal was represented by counsel and solicitors. He was able to give instructions to his representatives in respect of these proceedings.

 

13.              The relevant considerations which the sheriff failed to take account of in reaching his decision amounted to three in number. Firstly, the sheriff erred in failing to have regard to the stage the case had reached. The sheriff made a clear error when he states "In the absence of detailed defences I had to have regard to the likely form of the defence" this discloses an error in law as the sheriff appears to have regarded the premature stage of the case as a virtue rather than a difficulty. Secondly, the sheriff failed to have regard to the straightforward nature of the action. If there is a defence to the enforcement of the appellants' right to payment in terms of the guarantee then that defence is still available and ought to be stated. There can be no prejudice whatsoever to the defender and respondent in this regard and indeed, any defence which the respondent could have availed himself of at the outset is still available to him and any defence will not be affected by the complaint or the outcome of the complaint to the Ombudsman. Thirdly, the sheriff appears to have given no consideration to the complete absence of complaint in respect of Turnhouse Properties Limited and the relevant guarantee which is the subject of Crave 2. The outcome of any complaint to the Ombudsman clearly has no bearing on this crave.

 

14.              The sheriff was aware of the nature of the letter of complaint from the defender's solicitor to RBS (Tab 4 of the defender's productions) and refers to this in the course of his note. That letter forms a detailed statement of claim based upon the respondent's instructions.

 

15.              Accordingly, the appellants asked me to accept that the sheriff had erred in the exercise of his discretion and invited me to apply the same considerations relied upon by the appellants to the question of whether the sist should be recalled. The same contentions which favoured allowing the appeal favour recall namely, the appellants' rights to litigate; that it was premature to sist prior to defences being lodged and indeed prior to the record closing; the lack of prejudice to the defender and respondent; the lack of relevance of the complaint to the Ombudsman to the current action; the lack of challenge to the guarantees; the complete absence of any complaint relating to the guarantee in Crave 2. Clearly, as a matter of fact, the sist had been in place for approximately four months and the sheriff, himself, envisaged a short sist but that had proved overly optimistic as there is no resolution of the complaint and further delay would prejudice the appellant. Furthermore, there would, in any event, be a period of some three months before the options hearing at which stage the record may close and that there was sufficient time to allow the defender and respondent to marshal his defence, if there was any defence. The Ombudsman's request for a stay or sist of proceedings was an irrelevant consideration as he is not a party to the proceedings and the outcome of the complaint would not have a bearing on the guarantees. It was clear from the current information provided that the Ombudsman had only now, after a period of some five months, contacted the appellants.

 

16.              Accordingly, I was urged to allow the appeal and recall the sist. In view of the fact that the appeal involved some complexity I was asked to certify the cause as suitable for the instruction of junior counsel.

 

RESPONDENT'S SUBMISSIONS

17.              Mr Tariq, Advocate for the respondent had helpfully prepared a note of argument which assisted me in following the submissions for the respondent. The written note of argument is comprehensive and I will accordingly briefly summarise the points raised.

 

18.              Mr Tariq's motion was to refuse the appeal and adhere to the sheriff's interlocutor of 17 November 2011.

 

19.              Mr Tariq referred to the rules and principles which applied when the court is considering a discretionary matter such as whether to sist an action. Referring to the principles set out in Macphail on Sheriff Court Practice Ch 18 I was reminded that the test was indeed a high one for the appellants to meet when seeking to interfere with a discretionary decision as in this case.

 

20.              The sheriff had clearly considered the factors which favoured sisting the cause and his note makes it clear that he had conducted a proper balancing exercise in reaching his decision. He had considered the stage the case had reached; he accepted that arguments relating to economic duress might feature in the defences and that the complaint to the FSO might therefore have relevance to that matter. He had regard to the respondent's state of health and that there was no need to consider that the sist would be for a significant duration.

 

21.              Mr Tariq reminded me that was competent to sist the cause at this stage and prayed in aid examples of sists commonly granted at an early stage such as in actions raised to prevent a time bar operating or where one party to the action sought a sist pending determination of a legal aid application. Mr Tariq questioned whether Clydesdale Bank v D & H Cohen referred to by the appellant had any relevance to the present situation. The proceedings before the Ombudsman did not equiperate with the situation in the Clydesdale Bank case. Mr Tariq also referred to Keel v Keel 1985 SLT 52 and Graham v The National Coal Board 1964 SLT 53.

 

22.              Mr Tariq addressed me on the question of the potential defence of economic duress and the relevance of the complaint and matters referred to the FSO which had the potential to inform that defence. I was referred to Huntly on Contracts (Tab 5 of the respondents' bundle of authorities) and McBryde on the Law of Contract in Scotland ( Tab 6). Duress is a coercion of the will so as to vitiate consent. It would be argued on behalf of the respondent that if it were proved that the appellants used economic duress to form the contract between themselves and Bayfields Limited then the contract may be void and if so the guarantee granted by the Respondent would have no effect. This argument might form part of the defence to the case - namely if commercial pressure on the part of the appellants amounting to duress was sufficiently proved that the respondent and the company entered the banking contract and obligations against their will then the underlying obligations on which the guarantee depended may be void. Accepting that the matters referred to the FSO were wider than the issue of the guarantees upon which this action proceeds, nevertheless the complaint raises the issue of pressure or leverage on the part of the appellants which may have relevance to economic duress. Accordingly, the sheriff was entitled to have regard to that matter.

 

23.              Mr Tariq wished to draw to my attention recent developments relating to the FSO complaint firstly, that the name of the respondent had been added to the complaint alongside Bayfields Limited and secondly, a recent letter from the office of the FSO confirmed that the investigation was proceeding in the sense that the office of the FSO had been in touch with the appellants.

 

24.              Mr Tariq sought to emphasise the direct connection between the services provided by the pursuers to the companies and the defender's liabilities to the pursuers.

 

25.              Furthermore, in terms of the guarantee, although the primary liability for the debt lies with the principal debtor company the guarantor, in this case the respondent, becomes liable in the event of the principal debtor failing to meet their obligations. However, it was the respondent's argument that if the principal debtor's liability to the bank is an obligation which may be void the guarantor will not be liable in terms of the principle that the guarantor has the right to avail himself of any defence available to the principal debtor. In this regard I was referred to the decision in Associated Japanese Bank (International) Limited v Credit du Nord SA 1989 [1WLR 255] (Tab 3 of the respondent's bundle of authorities). Thus the respondent considered that the sheriff was entitled to have regard to the relevance of the complaint to the FSO to the current action.

 

26.              Mr Tariq in his written note of argument deals fully with the grounds of appeal advanced on behalf of the appellant and urged me to refuse the appeal. Mr Tariq concluded by stressing that there would be considerable prejudice to the respondent if the sist was recalled. Firstly, there was a significant chance that the Financial Services Ombudsman may not proceed with his investigation and referred to the recent correspondence in support of this proposition. The loss of that opportunity would prejudice the respondent in respect of his framing of defences to the action; that the respondent would be placed in an unequal position vis á vis the pursuers who are a multi-national banking organisation whereas the respondent is an individual in a relatively weak financial position. I was urged to have regard to the interests of justice and that indeed the outcome of the FSO investigation would benefit the court as it would firstly inform the defences and may focus the issues for the court potentially reducing the ambit of enquiry in due course. Accordingly, I was urged to refuse the appeal; certify the cause as suitable for the employment of junior counsel and award expenses in favour of the respondent.

 

DECISION

 

27.              The power of an appeal court to intervene where a sheriff or judge of first instance has made a decision in the exercise of a discretion is summarised in Macphail - Sheriff Court Practice (3^rd Ed) in Ch 18 as follows:

"18.111 The appellate court may intervene if it is satisfied that the judge did not exercise his discretion at all; or that in exercising it he misdirected himself in law, or misunderstood or misused the evidence or material facts before him; or took into account any irrelevant consideration; or failed to take into account some relevant consideration; or if his conclusion is such that, although no erroneous assumption of law or fact can be identified, he must have exercised his discretion wrongly. Expressions which have been judicially employed to describe such a conclusion include: "completely" or "plainly" wrong; "wholly unwarranted"; "manifestly inequitable"; "unreasonable"; and "unjudicial".

 

28.              Clearly the weighing up of relevant considerations in a discretionary decision is called the balancing exercise. I have to consider the sheriff's reasons before I can come to a decision in this appeal. It is not for me to substitute my own decision instead it is necessary to look at how the sheriff exercised his discretion in coming to the view that the action should be sisted.

 

29.              The reasons which the sheriff gives are:-

§           A sist would allow the respondent to receive appropriate medical treatment.

§           The stage the action had reached - a sist would allow the FSO to address speedily the matters in the complaint.

§           The matters raised with the FSO had the potential to have relevance to the issues of economic duress and have the potential to inform the defences ultimately to be framed in the action.

 

30.              It appears that the sheriff may have had some regard to the fact that the office of the FSO sought that the action be stayed (sisted).

 

31.              Access to the courts is a constitutional matter. Citizens and corporate bodies alike have the right to take their case to court. The courts exist to vindicate all parties' rights and enforce their obligations. Once litigated actions should proceed without unnecessary delay. Justice should not be impeded without proper reason or cause. This principle appears to be reflected in the decision of Lord Deas in Connell v Grierson when he states: "Prima facie it is a matter of right to either party to insist upon the cause going on, and the onus lies on him who wishes to stop". The general rules are conveniently set out again in Macphail on Sheriff Court Practice Ch 13

 

"13.71 General Rules

It is a general principle of civil procedure that an action should be litigated without interruption to a conclusion in conformity with the settled rules of practice and procedure, and each party is entitled to insist upon the cause proceeding to judgment. In certain circumstances, however, it is in the interests of justice that a stop should be put on the further conduct of the proceedings so that the parties are precluded from taking any further steps therein until the arrival of a certain date or the occurrence of a particular event or more usually for an indefinite period until further orders of court. Such a stoppage of procedure is called a sist of process, and it is made under an order of court pronounced in the exercise of its discretionary jurisdiction."

 

32.              Accordingly, accepting that a sist is indeed a serious interference with the orderly progress of the case the decision is a matter of discretion for the sheriff hearing the motion to sist. The onus lies with the party moving the motion to satisfy the court that the interests of justice require the proceedings to be interrupted.

 

33.              I entirely accept the respondent's submission that the sisting of an action before defences is neither incompetent nor uncommon. That however, is nothing to the point. There is no hard and fast rule save the prima facie statement by Lord Deas which is capable of being displaced in the interest of justice. The examples given by the respondent in his note of argument and repeated orally have little effect in this appeal. They are instances where the pursuer or parties themselves are likely to seek a sist in the interest of justice where an action has been raised to beat a time limit. Normally parties should not be in court without first having carefully assessed their case and collated the necessary information they will need to prove the case. The instances given in court by counsel for the respondents are specific exceptions to that rule namely, a party who has required to raise proceedings in court in order to protect their right to pursue an action and where it is likely that their investigations have not yet been completed. In these circumstances it is likely that both parties will favour an interruption in order that investigations can be concluded. In some cases where proceedings have been raised to beat a time bar, service of the Initial Writ may be the first notice a Defender has received of the allegations against him and a reasonable period is required for him to instruct solicitors and investigate. It would be contrary to the interests of justice to require either party to proceed when unprepared for these reasons. Likewise the issue of legal aid which was also raised by the respondent is a common situation where either a pursuer or defender may seek a sist once the action has been raised especially if the action had required to be raised speedily to beat a time limit or to obtain some interim protective measure before full enquiries had been concluded. The decision in Kent v Kent referred to by the respondent is of no assistance to the respondent. That specifically deals with a sist for legal aid. The point in that case was that the sheriff stated having a policy in dealing with motions for a sist. Nevertheless the sheriff also referred to the need for speedy and efficient despatch of court business. The Sheriff Principal, who did not require to hear full argument on the point, stated that the sheriff was wrong to disable himself by referring expressly to the policy he adopted in dealing with such motions. Nevertheless the Sheriff Principal specifically endorsed the sheriff's view on the concern expressed by the sheriff of the need for the speedy and efficient dispatch of business. Likewise the case of Graham v NCB 1964 SLT (Sh Ct) 53 can be seen as an exceptional case: firstly as it dealt with the sheriff's refusal to sist a case in circumstances where there had been a practice of sisting reparation actions involving coalminers as Pursuers where the NCB were Defenders and further the application for a sist was in effect a joint motion. I cannot see that that case assists in this appeal. Any sheriff exercising a discretionary function in these circumstances requires to have regard to all material and relevant considerations for and against.

 

34.              It is necessary to look at all the relevant material considerations which were before the sheriff. Nevertheless it is necessary to look at the individual factors which the sheriff had regard to and then look at the balancing exercise in the round.

 

35.              In my view the sheriff erred in considering that the early stage of the action was a factor in favour of sisting. Rather it appears to me to be a factor which would contra- indicate a sist as being appropriate. In my view the decision in Clydesdale Bank v Cohen deals with this point. The decision in that case does not deal with whether one case had a bearing on another case but that it was not possible to say anything about that matter until the parties had by adjusted pleadings focussed the issues in dispute. The decision in the Clydesdale Bank case was made at the stage of the open record and before the pleadings had been finalised. The appeal court supported the sheriff's decision to refuse the motion to sist as premature. It is fundamental to the principles of fairness and notice in litigation that each party has notice of the facts and legal propositions on which each seek to rely. Accordingly, it appears to me that the sheriff ought to have taken the view that the stage that the case had reached was a factor which tended to weigh against a sist of process.

 

36.              The sheriff refers to a sist allowing the respondent to receive appropriate medical treatment. I find it difficult to understand the significance of that factor. The sheriff refers to receiving appropriate medical treatment but appears then to acknowledge that the respondent was due to attend hospital for a diagnostic procedure. I was referred to a copy letter giving an outpatient appointment. Accepting entirely that the respondent had referred to a pre-existing heart condition nevertheless it was not clear what relevance the outpatient appointment had in the matter of the sist. I consider that the respondent's right to access the courts to assert his own right to defend the action was properly and adequately protected by him being represented by solicitors and indeed by counsel at the appeal. There is no suggestion that the respondent was not in a position to give full instructions to his solicitor. In other words I consider that the sheriff ought not to have had regard to the question of the respondent's medical condition in the absence of clear vouching or information relating to that medical condition and a clear link between the respondent's condition; this litigation and actual prejudice. Apart from the information provided relating to the outpatient diagnostic appointment there was nothing before the court to suggest that there was a connection between that appointment and the need to have the case interrupted.

 

37.              The most significant aspect to the appeal related to the relevance or otherwise of the respondent's complaint to the Financial Services Ombudsman. It was accepted on behalf of the respondent that no challenge had been made to the validity of the guarantees per se save that the respondent's position seemed to be that in the event of the FSO upholding the complaint against the appellants this may provide some basis for challenging the liabilities of the principal debtor company on the argument that certain of the banking arrangements on which the action relies were induced by economic duress. If successful in this challenge the liabilities of the company (principal debtor) may be reduced or extinguished. There was a direct nexus between the respondent's guarantee and the debtor's liability.

 

38.              Likewise it was accepted that the outcome of the complaint could not release the respondent from his obligations under the guarantee. Nevertheless, the respondent argues that the complaint has direct relevance to the underlying guarantee which is central to this action.

 

39.              In my view, this approach is misconceived. The complaint to the FSO is a complaint to a public body set up by Parliament to deal with financial services complaints. For the complainer it is an alternative dispute resolution procedure but not so for the financial body (the appellants). The complainer may accept or reject the decision of the Ombudsman. The decision is not appealable save that there could be judicial review proceedings which may challenge the decision making process rather than the merits of the decision.

 

40.              These proceedings had commenced prior to the complaint to the FSO which was made in October 2011 and followed service of the initial writ. The nature of the FSO process is of a completely different nature to a court. There is no requirement for a court to sist or stay proceedings pending resolution of an FSO complaint unless the complainer is the pursuer. For the complainer, the complaint to the Ombudsman is an alternative to resolving his dispute by way of court proceedings. However the Respondent and complainer is not pursuing any action in court instead it is the Appellants who are the Pursuers and who are entitled to insist in pursuing an action to vindicate their rights.

 

41.              It is important to observe, given the particular circumstances of this case, that the nature of the complaint is wide ranging and somewhat inspecific (No 5 of the defenders production). In so far as any reference is made to the guarantees in this complaint they are not challenged. Indeed, it is my understanding that, the guarantees themselves are not challenged by the respondent.

 

42.              Accordingly, it appears to me that the complaint before the FSO is a process initiated by the respondent which has no clear bearing on these proceedings. I cannot see what justification there might be for a sist of these proceedings pending a decision by the FSO which may or may not be accepted by the respondent complainer. If, as appeared to be suggested, the main purpose of sisting is to wait and see whether the FSO decision offers up information which may be of assistance to the respondent in framing his defence that would also be an irrelevant consideration for the court. The rules of procedure require a defender to lodge defences within the requisite period. There is nothing which prevents the respondent from doing so. He has given instructions to solicitors who in the past have made complaints under four separate headings to the appellants (production no 4 of the defender's productions). That letter may shed more light on the respondent's position. However the importance of that letter to me is that it demonstrates that no prejudice would befall the respondent in stating his defence now. No issue arose with the proposition that the respondent was entitled to avail himself of any argument or defence which the debtor company might use in relation to the original debt. (Japanese Bank case). It is however, noteworthy that the capped level of the guarantee in Crave 1 is but a small proportion of the stated debt or liability of the company in administration. Unless the underlying liability is void due to economic duress or pressure or force or fear the significant underlying debt would not be other than marginally reduced by any award that the FSO might order.

 

43.              Accordingly, it is my opinion that the complaint before the FSO has little clarity; has doubtful direct connection with these proceedings and therefore the ongoing complaint before the FSO was an irrelevant consideration when the sheriff exercised his discretionary power. In so far as I was referred to authorities on this matter the decision in Maitland v Maitland (1885) 2R 899 had some relevance. In that case the Inner House allowed an appeal from the decision of the Sheriff of Chancery who had allowed a sist of competing petitions claiming to be served heir of Tailzie pending the outcome of separate petitions to her Majesty the Queen which had, in turn, been referred to the Committee of Privileges. The Lord President specifically referred to the lack of clarity connecting the petitions before the sheriff with the petitions before the Committee of Privileges and therefore considered that there were no good grounds for postponing the procedure in the petitions before the Sheriff of Chancery.

 

44.              Finally, I turn to one of the most cogent arguments and what appears to me to be a highly relevant matter which the sheriff seems to have somewhat glossed over in his note. That is the undisputed circumstances relating to the liabilities of Turnhouse Properties Limited (in administration). The complaint pending before the FSO has no bearing whatsoever on Turnhouse Properties Ltd. and the averments in support of Crave 2 of the initial writ. These averments are Arts of Condescendence 7 to 10. The respondent accepts that the complaint does not refer to Turnhouse Properties Limited and has nothing to do with that company. The complaint was indeed originally in the name Bayfields Limited (in administration) and now in the name of the respondent also. Counsel for the respondent submitted that "it may be that the investigation raises issues that would inform any defence to the Turnhouse guarantee". That in my view, is a quite speculative, erroneous and therefore irrelevant consideration. It therefore appears to me the sheriff failed to give sufficient weight to the complete absence of any challenge to the Turnhouse Properties Limited guarantee which forms no part of the FSO consideration. This material consideration forms no part of the sheriff's decision although the Sheriff notes this as a ground of appeal. In my view, this omission adds significant weight to the force of the appeal.

 

45.              The importance of the general principle that actions should be litigated to a conclusion without interruption save in the interests of justice may be seen clearly in the provisions of s.27 of the Sheriff Courts (Scotland) Act 1907 which provides that interlocutors sisting an action are appealable without leave. That may be contrasted with interlocutors refusing a sist which require leave from the sheriff.

 

46.              I propose to allow the appeal and it therefore falls upon me to consider the factors which weigh for and against the sist remaining or the sist being recalled. The same considerations which were central to the appeal apply with regard to this further balancing exercise. Furthermore, it is clear that the sheriff envisaged firstly, that the procedure before the Ombudsman would be dealt with speedily in the sense that he understood the procedure would not necessitate any lengthy delay. As a matter of fact it appears that there has been some inexplicable delay in so far as the appellants had only recently been contacted by the Ombudsman at the time of the appeal hearing in March. The action has now been sisted for almost six months. I can see no prejudice to the respondent in the current action proceeding and lodging defences. I can see no reason why the ongoing complaint before the FSO should not continue to a conclusion whilst these proceedings are ongoing. The documentary productions lodged on behalf of the respondent indicate to me that the respondent is in a position to instruct defences. On the other hand the very compelling reasons which point to a recall of the sist lie in the fundamental rule that a litigant who wishes to proceed with an action before the courts is entitled to pursue that action. The very reason given by the sheriff in favouring a sist is in my view a compelling reason for recalling the sist and determining the issues which are in dispute between the parties - the stage which the action had reached when the motion was considered was critical. The Appellants have no notice of the respondent's position in answer to the specific averments which they make in this initial writ. The appellants are entitled to have that notice and the court is entitled to have regard to the respective positions of the parties as set out in their written pleadings in determining the areas or issues which are in dispute in order that further procedure can be set. Accordingly, I will recall the sist granted by the sheriff on 17 November and make an order for defences to be lodged within 14 days. The date for the options hearing will be allocated by the sheriff clerk.

 

47.              I consider that the issues which arose were of sufficient complexity to justify certification of the cause as suitable for the employment of junior counsel. I will allow the successful appellants the expenses of the appeal.

(signed) Mhairi M Stephen