Scottish Sheriff Court Decisions

SHERIFFDOM OF NORTH STRATHCLYDE AT PAISLEY

 

2014SCPAIS69

 

JUDGEMENT   of   SHERIFF PRINCIPAL DL MURRAY, WS   in the cause   INVERCLYDE COUNCIL Pursuer/Respondent   against   JOHN F McCLOSKEY t/a PRINCE OF WALES BAR Defender/Appellant

________________________________________

 

Act: Upton

Alt: Anderson

 

Paisley,  15 December  2014

The sheriff principal having resumed consideration of the appeal and heard parties; modifies the terms of the interlocutor of 2 June to insert “Recalls the sist granted 29 July 2013  between the words “Defender” and “Ordains”;   Refuses the appeal and adheres to the interlocutor of the Sheriff dated 7 July 2014;  Meantime Reserves expenses. 

 

DL Murray

 

 

 

NOTE:

 [1]This appeal arises from an action by Inverclyde Council against Mr McCloskey trading as the Prince of Wales Bar for arrears of rent, irritancy of the lease of those premises and removal from them.   I shall hereafter refer to the council as the respondent and Mr McCloskey as the appellant.  The action was commenced as long ago as 2011.   I need not record the historic procedure, save to note that by interlocutor of 29 July 2013 the sheriff granted decree of consent for payment of the reduced sum of £25,081.32 in terms of crave 3 of the initial writ and sisted the action.  The £25,081.32 for which decree was granted reflected the sum stated as being outstanding in the notice of irritancy, under deduction of a payment to account made by the appellant.

 

[2]The respondent enrolled a motion dated 24 March 2014 seeking recall of the sist and for decree in terms of craves 1 and 2 of the record.  These craves read short; that the appellant has allowed a sum in excess of one quarter’s rent to be in arrears for a period in excess of three months and incurred irritancy of the lease which is at an end; and that the respondent is entitled to enter upon possession and remove the appellant from the subjects.  Intimation of the motion was made in the requisite manner to the appellant’s then agents and the motion was opposed. The motion called on 28 April and was continued until 2 June.  There being no appearance by the appellant on 2 June, his then agents having intimated that they were withdrawing from acting, a peremptory diet was fixed for 7 July and notice duly served on the appellant.  At the hearing on 7 July the appellant appeared in person and Mr Upton, who appears before me, appeared for the respondent, and moved the second part of his motion, for decree in terms of craves 1 and 2 of the initial writ.

 

[3]The appeal first called before me on 9 October and I granted Mr Anderson’s motion for an adjournment of the appeal hearing fixed for that day, allowed the grounds of appeal to be adjusted, fixed a period for answers and a set a further hearing for 13 November.   I had observed when considering the papers for the appeal there was no interlocutor recording the sist as having being recalled, and drew this to the attention of parties.

 

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[4]An amended note of appeal and answers thereto were lodged. When the case called before me on 13 November 2014 Mr Anderson again appeared for the appellant and Mr Upton for the respondent.  I am grateful to counsel for the appellant and the agent for the respondent for their detailed and reasoned submissions.

 

The submissions of the appellant.

[5] The appellant in his amended note of appeal raises the following grounds of appeal: - the Sheriff had erred in law in stating there was no defence to the action and granting summary decree on that basis; the Sheriff ought not to have granted  summary decree at the peremptory diet and in doing so erred in law; and the Sheriff erred in law in granting decree on 7 July 2014 because the cause had been sisted and the sist had not been recalled. He developed these in his submissions.

 

[6]The modifications introduced by Act of Sederunt (Sheriff Court Rules) (Miscellaneous Amendments) 2012 not being applicable. Rule 17.2, of the Ordinary Cause Rules as applicable, provides:

“17.2 (1)Subject to paragraphs (2) to (5) of this rule, a pursuer may, at any time after a defender has lodged defences, apply by motion for summary decree against that defender on the ground that there is no defence to the action, or part of it, disclosed in the defences.

(2) in applying for summary decree, the pursuer may move the sheriff –

(a) to grant decree in terms of all or any of the craves of the initial writ;

(b) to pronounce an interlocutor sustaining or repelling a plea-in-law; or

(c) to dispose of the whole or part of the subject-matter of the cause.

(3) the pursuer shall intimate a motion under paragraph (1) by registered post or the first class recorded delivery service to every other party not less than 14 days before the date fixed for the hearing of the motion.

(4) On  a motion under paragraph(1) the Sheriff may –

(a) if satisfied there is no defence to the action or to any part of it to which the motion relates, grant the motion for summary decree in whole or in part as the case may be; or

1. ordain any party, or a partner, director, officer or office be of, any party –

1. to produce any relevant document or article; or
2. to lodge an affidavit in support of any assertion of fact made in the pleadings or at the hearing of the motion.”

 

 

[7] It was submitted that a motion for summary decree requires to be made on the basis that there is no defence to the action disclosed in the defences. P & M Sinclair  v The  Bamber Partnership 1987 SC 203 establishing the level of satisfaction required is more than probability, it is the near certainty that there is no defence. 

 

[8] Counsel drew attention to the difference between the Sheriff Court rule and the equivalent of the Court of Session rule 21.2.  He noted that in the Court of Session Rule 21.2 reference to “disclosed in the defences” is included but absent in the Sheriff Court rule.  Counsel suggested that this textual variance meant that there was a greater onus on a Sheriff, than a Lord Ordinary to explore the underlying legal position and whether there was a defence to the action.  He posited that the rule may have been drafted in this way given there was a greater chance of litigation in the sheriff court against a party litigant who may be unaware of a particular technical defence.

 

[9] Counsel submitted that the new formulation rule 17.2(2):

“An application may only be made on the grounds that –

1. an opposing party’s case (or any part of it) has no real prospect of success; and
2. there exists no other compelling reason why summary decree should not be granted at that stage.

 

simply made clear, what was the developed understanding of the import of the old rule.

 

[10] He recognised that Frimokar (UK) Ltd v Mobile Technical Plant (International) Ltd 1990 SLT 180 makes clear that the defence must be tested at the time when the motion is considered:

“It is for the defender, before that stage, to be in a position to satisfy the court that there is the framework of a defence available.”

 

 

[11] I was referred to the House of Lords decision in Henderson v 3052775 Nova Scotia Ltd 2006 SC (HL) 85, paragraph 14 of the opinion of Lord Rodger:

“Rule 21.2(4) gives the court a power to grant the motion, but does not require it to do so where it would not be appropriate in all the circumstances (Frew v Field Packaging Scotland Ltd, per Lord Prosser, p 1195F). Next what the pursuer is entitled to seek is summary decree.  The very description “summary” decree indicates that the procedure is intended to be used where the matter can be determined in a summary fashion, without there being any need for a prolonged examination of matters of fact or law.”

 

[12] In paragraph 15 Lord Rodger stated:

“A motion for summary decree will be appropriate where the pursuer anticipates being able to satisfy the court without the need for any prolonged legal debate, that there is no defence to the whole or part of the action because the defender’s averments are irrelevant.”

 

[13] In paragraph 17 it is made clear that while the court is concerned to examine whether any defence is disclosed in the defences it is not confined to considering the defender’s averments and may look at documents or other materials:

“So the rule envisages that the court may look beyond the pleadings and consider what, in substance, each of the parties and, more particularly, the defender is saying. It is this power which allows the court to deal with a party who tries to use written pleadings not to present a real defence but to throw up a smokescreen of supposed fact behind which he can delay the progress of an action or part of an action which he is bound to lose.

[18] A rule of this kind serves the interests of justice and helps to make the legal system work more efficiently.  The rule must be interpreted and applied in a manner which promotes those ends and does not create injustice for defenders. As we have seen, in a motion for summary decree a judge can clarify matters of fact by having documents or articles produced or affidavits lodged. But all this takes place within a system the disputed matters of fact or generally resolved by a judge sees and hears witnesses giving oral evidence at our proof.”

 

[14] In the instant case counsel argued that the sheriff required to consider the notice of irritancy dated 21 February 2013. The effectiveness of the notice of irritancy, he submitted, must be accepted before summary decree can be competently granted.    Counsel suggested that without assessment of the notice of irritancy, the test of whether or not there is any defence available could not be determined.  He pointed out that the sheriff’s note omitted to make any reference to the notice of irritancy, which he prayed in aid, that the sheriff had not given proper consideration of the validity of the notice of irritancy.  He submitted in the absence of any reference in his note to looking at the notice it could not be held that the sheriff had considered whether it was effective.   

 

[15] It was further submitted that the terms of the defence required the sheriff to consider the terms of the notice of irritancy.  This meant that he must have regard to the terms of the Law Reform (Miscellaneous Provisions) Act 1985 (the Act) section 4 provides:

 “(1) A landlord shall not, for the purpose of treating a lease as terminated or terminating it, be entitled to rely - (a) on a provision in the lease which purports to terminate it, or to enable him to terminate it, in the event of a failure of the tenant to pay rent or to make any other payment, on or before the due date therefor or such later date or within such period as may be provided for in the lease; or (b) on the fact that such failure is,or is deemed by a provision of the lease to be a material breach of contract, unless subsection (2) or(5) below applies.

(2) This subsection applies if – (a) the landlord has, at any time after the payment of rent or other payment mentioned in subsection (1) above has become due, served a notice on the tenant - (i) requiring the tenant to make payment of the sum which he has failed to pay together with any interest thereon in terms of the lease within the period specified in the notice; and (ii) stating that, if the tenant does not comply with the requirements mentioned in sub-paragraph (i) above, the lease may be terminated; and (b) the tenant has not complied with the requirement.

(3) The period to be specified in any such notice shall be not less than-(a) a period of 14 days immediately following service of the notice.”

 

[16] Counsel developed this argument with specific reference to condescendence 4 and the answer thereto, of the closed record number 24 of process.  Answer 4 included “quoad ultra denied.”  He argued this was not a situation where the appellant was engaged in dilatory defences.  In counsel’s submission, the function of the general denial is to seek proof of that matter in law or in fact.  Quoad ultra denied without any further explanation would not be tantamount to an admission of matters which may be inferred from other matters which are admitted.  He pointed out that quite properly the respondent’s pleadings made reference to the notice of irritancy dated 21 February 2013 and the notice of termination on irritancy dated 11 March 2013.  It was his position that a flat denial as pled by the appellant did not result in these two documents being accepted by the appellant, and that the respondent should be put to proof on these matters.  It was not an irrelevant or dilatory defence.  In these circumstances, his position was that the sheriff required to consider whether the notice of irritancy of 21 February 2013 complied with the Act and was therefore effective.

 

[17] That question he submitted was best determined at debate or preliminary proof and in these circumstances the motion for summary decree motion should not have been granted.

 

[18] Counsel further developed this argument with reference to Gray v Boyd 1996 SLT 60.  In Gray v Boyd the Lord Justice Clerk (Ross) and Lord McCluskey, (Lord Morrison dissenting,) accepted that a defence which consists of a blank denial of the pursuer’s averments is not an irrelevant defence.  In particular he referred to Lord McCluskey’s judgement at 65 b:

“The word “denied” is not inconsistent with any other averment.  Nor is it inconsistent with the pleas in law.  Inconsistencies in defenders’ pleadings have in a number of the reported cases been treated as warranting the court in discounting or rejecting certain parts of the pleadings on the ground that bare averments to one effect could not be reconciled and could not stand along with other averments to a different effect, and that the pleader had totally failed to explain the inconsistencies appearing on the face of the pleadings. The present case is not in that realm.”

 

[19] Counsel maintained that the instant case was likewise, not in that realm.  The bare denial in answer 4 was not inconsistent with any other pleading, nor with any plea in law.  He accordingly submitted it was for the respondent to be put to proof and summary decree could not be competently granted.

 

[20] Counsel’s second ground of appeal was that, if I did accept that consideration had been given to the irritancy notice, notwithstanding the absence of reference to it in the sheriff’s note, that the notice was defective.  This was because it failed to specify the basis on which the sum said to be outstanding was arrived at.  Even if the point had not been taken before the sheriff I should allow the appeal given the defect in the notice of irritancy

 

[21] He referred me to Scott v Muir 2011 SLT (Sh. Ct.) 179 a decision of the Sheriff Principal of Lothian and Borders.   Sheriff Principal Stephen’s decision in the appeal followed proof in that case.

 

[22] In Scott v Muir the appellants had represented themselves at the proof and did not take any point about the validity of the notice of irritancy.   The sheriff principal allowed a new point of law on the irritancy notice to be considered on appeal.  Counsel submitted that I should adopt that approach and give consideration to the question of the irritancy notice in the instant case, notwithstanding it was not argued before the sheriff at first instance.   He further submitted that his argument was about the fundamental validity of a notice, which was a pre-requisite for the respondent’s ground of action against the appellant.  This was an argument available to the appellant throughout the course of the proceedings.  Accordingly it was appropriate to consider this, as it should have been material to the sheriff in considering whether or not to grant the summary decree on 7 July.

 

[23] Counsel submitted that regard had to be had to whether the notice was effective.   While a decision of the Sheriff Principal of Lothian and Borders was not binding upon me, it was highly persuasive and should have been highly persuasive to the sheriff in considering the motion of summary decree.    If the sheriff principal’s decision was followed the notice was defective, because it failed to specify the period over which the arrears had arisen, and summary decree should not have been granted.

 

[24]In support of his view that the notice was defective counsel referred me to Gloag and  Henderson page 873 of the most recent 13^th edition which cites the decision in Scott v Muir:

“The landlord is not entitled to rely on a provision for irritancy in the event of the tenant’s failure to pay rent or make any other payment on or before the due date or within a stipulated period unless he has served a notice on the tenant after the date when the payment became due, specifying the period from which the rent arrears arise.”

 

[25] Counsel drew attention to the Scottish Law Commission Report No 75 “Irritancies in Leases” which he produced and paragraphs 2.9 and 4.2 in particular focusing on the intention behind the introduction of section 4 of the Act.

 

 

[26] Counsel also argued that the terms of the notice of 21 February 2013 were confusing and that this amplified the problem with the absence of specification of the period or periods, to which the arrears were said to relate.  It was important that the tenant have clarity about the sum claimed.  In terms of section 4(2)(a)(i) of the Act, the notice must require the appellant to make payment of inter alia, the sum which he has failed to pay. The notice of 21 February required payment of rent “outstanding and due.” He argued that the logical inference from the phrase “outstanding and due” is that the sum quoted may be made up of a) an amount of rent which is in arrears (“outstanding”); and b) amount of rent which had fallen due, but which is not yet in arrears (“due”).  Only the first of these constitutes a potential ground for irritancy for the latter is not a sum which the respondent has failed to pay.

 

[27] He suggested that the logical inference is that “outstanding and due” incorporates a sum payable but not yet in arrears. He referred to the case of McFarlane v Robb (1870) 9M 370.  There the second division expressed the view that care must be taken about not being misled by the double application of the word, “due,”  which might be used as synonymous with payable and that a debt may also be referred to as due before it was payable.  He submitted that the use of “outstanding and due” in the irritancy notice was therefore confusing to the tenant and might give rise to doubt as to the actual sum sought.  He equated this with the difficulties which the sheriff principal felt arose in Scott v Muir, in terms of clarity for the tenant, of the sums which were being claimed by the landlord as being payable. Thus in the absence of specification of the basis of the arrears and the confusion over what was meant by “outstanding and due” the notice was defective and accordingly summary decree should not have been granted.

 

[28] The third ground of appeal related to submissions that the sheriff should not have granted summary decree at the peremptory diet and in doing so he erred in law.  Counsel accepted that it was competent for summary decree to be granted at a peremptory diet.  The decision of Sheriff Principal Taylor in Glasgow Housing Association v Li 2010 Hous.LR 6 being authority for that proposition.  The corollary being, before summary decree could be granted proper notice had to be given.  He submitted in the instant case the proper notice had not been given.  He referred me to the procedural history of the case which I have outlined above.  He indicated that it was his position that the form G 10 and interlocutor intimated to the appellant, giving him notice of the peremptory diet, did not given him requisite notice for a motion for summary decree by recorded delivery post, required by Rule 17.2 of the OCR.  

 

[29] Counsel focused on what fair notice the appellant was given about what would happen on 7 July.  He recognised it was agreed that the hearing fixed for 28 April to consider the motion for summary decree was continued, to allow discussions to take place, to 2 June.  However no further discussion took place, and on Friday, 30 May the then agents for the appellant withdrew.  When the case called on 2 June there was no appearance by or on behalf of the appellant.  Following 2 June the appellant had intimation of the form G10 and the interlocutor, but all he is told in the form G10 is that he must attend on 7 July or decree may be granted in his absence.

 

[30] It was counsel’s position that the appellant considered the form G 10 and thought he was going to be asked if the intended to proceed when he attended the court on 7 July. In his mind if he attended and indicated his intention to continue his defence of the action decree would not be granted. As a lay person, counsel submitted, the appellant did not appreciate that the motion for summary decree would be considered.  The appellant was not prepared to argue why summary decree should not be granted against him when he attended on 7 July.

 

[31] Counsel also drew my attention to the sheriff’s note which intimates the case called as a peremptory diet, but makes no reference as to whether or not the appellant sought to maintain his defence of the action.

 

 

[32] It was counsel’s submission that the hearing went directly to consider the pursuers motion for summary decree, which he submitted was an error of law as the sheriff should not have considered the motion for summary decree, the appellant not having had the required notice.

 

[33] The final ground of appeal was that the action was sisted, and in the absence of the sist being recalled the summary decree motion could not be competently considered.  He referred to paragraph 13.82 of McPhail 3^rd edition

“Once the action has been sisted, no step of procedure, however formal may be taken, and no interlocutor pronounced, until the sist is recalled.”

 

In these circumstances he submitted the sheriff had fallen into error and the appeal should be upheld as decree could not be competently granted because the sist had not been recalled.  Counsel submitted that the sist could not have been recalled on 2 June, because the motion to recall the sist and seek summary decree had been opposed and it should not be considered until the appellant had the opportunity to be heard.   Counsel further submitted that had the appellant attended on 2 June, he would have requested the matter remain sisted for further negotiation.

 

[34] Counsel submitted that a fair procedure required that, where possible an opposed motion is not to be granted without the party opposing it making representations.  To grant a motion without the party being allowed to oppose it, he said, was an affront to the principles of natural justice.  The motion of 20 April he pointed out was continued on joint motion to 2 June 2014. Counsel then referred to Bell’s Dictionary Watson’s 7^th edition, developing an ingenious argument:  whether the interlocutor of 2 June be properly described as an interlocutor, as it simply notes a procedural step. Referring to pages 577 and 578, he submitted that it was not on those definitions properly considered an interlocutor or an order of the court. This meant the motion could be continued to 7 July while the cause remained sisted.  But the interlocutor of 7 July did not deal with recall of the sist.  Indeed in terms of the note the sheriff proceeded, mistakenly, on the basis of the sist having been recalled on 2 June.

 

[35] Further he submitted that the text of an interlocutor is important and strict rules applied to the modification of an interlocutor.  An interlocutor requires to state clearly that recall of the sist was granted that was not done here on 2 June neither was it done on 7 July.    In the absence of the sist having been formally recalled summary decree he maintained could not be competently granted.

 

The respondent’s submissions

[36] The agent for the respondent accepted that the general test of what was to be considered in a motion for summary decree in terms of rule 17.2 was summarised in Henderson v Nova Scotia. This requires the sheriff to address his mind to the substance of the defence and the authenticity of the defence.  He drew attention to the purpose lying behind a motion for summary decree set out in the context of Court of Session action in Henderson v Nova Scotia at paragraph 13.  He submitted that in the instant case the appellant had effectively lodged skeleton defences denying the respondent’s averments.  The appellant had not made any positive case and at best following enquiry by the sheriff on 7 July sought to make a factual defence about water ingress, which was irrelevant.   He submitted that the ratio to be drawn from Henderson v Nova Scotia was that the judge requires to take a broad view considering all the factors and circumstances.   It was however for the defender to posit what his defence is and not for the Sheriff to seek out a possible defence.  The sheriff had to concentrate on the defence as presented to him by the appellant when he was considering the motion on 7 July (Frimokar (UK) Ltd v Mobile Technical Plant (International) Ltd 1990 SLT 180.

 

[37] He disputed the suggestion that there is a material difference between the rules in the Court of Session and the sheriff court and notwithstanding the different wording and the phrase “disclosed in the defences” included in the Court of Session rule being absent from the sheriff court rule.  It was his position that there is no more of an obligation on the sheriff in considering a motion in terms of rule 17.2, in its form as applicable to this case than a Lord Ordinary considering a motion for summary decree in the Court of Session under rule 21.2.

 

[38] He referred to McLaughlin v Morrison 2014 SLT 111.  He submitted that the analysis by Lord Jones at paragraph 4 of his decision in MacLauchlan v Morrison demonstrated an acceptance that consideration of a motion for summary decree in an action in the Court of Session also involved an exploration by the judge of whether the defender presented an authentic and substantive defence. That equated to the requirement in the sheriff court.  Lord Jones’ reasoning also made clear the obligation on the judge to consider the position as presented to him at the time the motion was before him reflecting the position as set out in Frimokar (UK) Ltd v Mobile Technical Plant (International) Ltd 1990 SLT 180.

 

[39] The respondent’s agent indicated that the sheriff here was faced with a record which included a general denial in answer 4. There was no specific pleading in relation to the notice of irritancy being invalid, and crucially no suggestion from the appellant on 7 July that he challenged the notice of irritancy.  But that he suggested was not unsurprising, for the appellant had allowed decree to pass for the sum set out in the notice warning of irritancy dated 21 February 2013, under deduction of a sum paid to account. The agent having been present when the motion for summary decree was considered on 7 July recounted that the appellant was specifically asked by the sheriff what his defence to the action was. The appellant focused on the issue of water ingress and at no point made any challenge to the effectiveness of the notice of 21 February. In these circumstances the sheriff was entitled to accept that the issue of water ingress was not a proper defence to the action given appellant’s occupation in terms of a lease which contained a full repairing and insuring obligation.   Accordingly he submitted  the sheriff had not misdirected himself as to the whole circumstances as presented to him by the defender and properly exercised discretion to grant summary decree, no defence having been stated to the action.

 

[40] In addressing the Scott v Muir decision he took as a starting point section 4 of the Act.  He submitted that the terms of the Act were definitive as to what was required.  There must be a provision in the lease which permits the landlord to terminate the lease in the event of the tenant failing to make payment of rent or any other payment, which has to be a material breach 4(1). Notice had to be given to the tenant requiring the tenant to make payment of the sum which the tenant had failed to pay 4(2)(a)(i). The notice had to warn the tenant that in the event of the tenant failing to make payment the lease may be terminated 4(2)(a)(ii). The tenant had to be given a period of not less than 14 days to make payment 4(3).  He submitted that a proper reading of the section, giving words their ordinary meeting required no more than that.  He submitted therefore  the sheriff principal in Scott v Muir had been wrong to extend the requirement to include the need for an explanation of the basis on which the sum outstanding was claimed.

 

[41] The respondent’s agent submitted that the notice says verbatim what is required, namely payment within 14 days.  In relation to the point taken regarding “outstanding and due” he submitted that counsel for the appellant was seeking to draw an artificial and false distinction. He submitted the words were linked by “and” accordingly one would expect that words on each side of “and“ had to apply.  There was in fact no confusion about whether all or part might not yet be payable.  Giving the words their ordinary meaning, in the context, there was no dubiety as to what the tenant required to do to avoid the lease being terminated.

 

[42] Under reference to the judgement of the Appellate Committee of the House of Lords in CIN Properties Ltd v Dollar Land 1992 SC (HL) 104 he drew my attention to Lord Jauncey of Tullichettle’ s  observations at p125 commenting on section 4 of the Act:

“Section 4 gives effect to the first recommendation of the Scottish Law Commission and the contrast between the two sections is significant. Whereas in the case of irritancy clauses relating to monetary breaches, operation thereof is limited only to the extent appropriate notice must be given by the landlord to the tenant before operation of the notice, in the case of such clauses relating to non-monetary breaches operation is limited by consideration of whether in the circumstances a fair and reasonable landlord would seek to rely on the cause.”

 

Lord Jauncey continued by stating:

“I do not consider that it would be appropriate for this House to develop the law further than Parliament has seen fit to do.”

 

[43] He said that was the clearest indication from the Appellate Committee that it was not appropriate to expand the position beyond the terms of the statutory modification introduced by section 4 of the Act.  He submitted that this was exactly what the sheriff principal had done.  He submitted that she had fallen into error, in expanding what was required by way of a notice of irritancy arising from a monetary breach.  This was beyond the statutory requirement and ran contrary to the approach adopted by the House of Lords.

 

[44] He reminded me that Sheriff Principal Stephen’s decision was only to be viewed by me and by the sheriff as highly persuasive and neither I, nor the sheriff was bound by it, her decision only being binding on sheriffs within the Sheriffdom of Lothian and Borders.

 

[45] He submitted that the Scottish Law Commission had not proposed, and the Act introduced following the SLC recommendations, did not require that the period from   which the arrears accrued had arisen be set out in terms.  Had this been the intention of Parliament or the SLC it would have been easy to draft the report and the legislation to make such a specific provision.  Crucially no such provision was made.  Therefore  he submitted, the sheriff principal had fallen into error and gone beyond the intention of Parliament to read into the Act that there is such a requirement. 

 

[46] He suggested that the underlying intention at the heart of section 4 was that the tenant be given an opportunity to pay.  He submitted that if the tenant considers the sum stated in a notice, which the tenant is required to pay to be wrong the tenant has a number of options.  They might pay the sum claimed and pursue the landlord for recovery of the overpayment.  They might pay the sum they believed to be due and defend any subsequent action arising from the landlord maintaining the greater sum was due.  Or they could approach the landlord and seek to agree the correct sum to be paid.

 

[47] These options he submitted explained why the statutory formulation proposed by the SLC was believed to address the issue which the SLC had been asked to review following the judicial comments in Dorchester Studios (Glasgow) Ltd v Stone 1975 SC(HL) 56.

 

[48] As to the reporting of Scott v Muir in Gloag and Henderson that was simply the editors reflecting the legal position as expressed by another sheriff principal and no more should be read into it than that. 

 

[49] In his submission the sheriff was entitled to grant summary decree, the notice being valid and certainly no challenge or suggestion was made by the tenant on 7 July that he had a defence based on the invalidity of the notice of 21 February.

 

[50] On the facts here, the appellant was well aware that there were significant sums due under the lease which had remained unpaid.  He had accepted that the sum stated in the notice was correct as he had permitted decree to pass for that sum, less the sum which he had paid to account of his debt. 

 

[51] He referred to Glasgow Housing Association v Li, the leading authority for the proposition that summary decree could be granted at a peremptory diet. In the instant case he submitted there had been proper notice given of the summary decree motion and therefore Sheriff Principal Taylor’s decision was persuasive authority that the sheriff was entitled to grant decree at the peremptory diet on 7 July, proper notice having been given in terms of the rules. The motion was duly enrolled, intimated and opposed by the appellant’s former agents.  In his submission there was no requirement that it had to be re-intimated following the agents withdrawal.  Further given the interlocutor itself was intimated to the appellant he had visibility of what was to be considered if he attended on 7 July.

 

[52] The respondent’s agent submitted it was disingenuous to suggest that there was any confusion in the mind of the appellant in respect of the matter.  He suggested the appellant would have been aware the motion for summary decree had been enrolled, for it was opposed by his then agents before they withdrew from acting. The appellant, he submitted, knew that decree could be granted if he failed to attend on 7 July notice having been given in the required form, of both the motion for summary decree and of the peremptory diet.  He was further able to advise that the appellant had indicated to the sheriff that he had taken further legal advice before the peremptory diet on 7 July and appreciated that the order for removal was to be considered by the court that day. Proper notice having given back in April of the motion for summary decree and proper notice having been given of the peremptory diet there was no error of law in summary decree being granted by the sheriff.

 

[53] The respondent’s agent urged me to reject the proposition on behalf of the appellant, that the appellant appearing as a party litigant on 7 July was relevant to the sheriff in exercising his discretion.  He submitted the sheriff had to direct his mind as to whether there was defence to the action as laid out in  Henderson v Nova Scotia.  The sheriff can have regard to additional material beyond the pleadings to assist his consideration of whether it is reasonable in all the circumstances to grant summary decree.  That should not extend to providing special treatment for a party litigant. Rule 17.2 as now drafted is simply an expansion by way of clarification of the position as it has always been.  He submitted that decisions on the Court of Session summary decree rules were relevant and he referred to the decision of Sheriff Principal Risk in Whitelaw Laidlaw Bank Ltd v Green 1994 SLT 18 which he submitted I should accept as a correct statement of the law.

 

[54] His considered conclusion was that there was an error in the interlocutor of 2 June fixing the peremptory diet. He accepted that the sheriff, the clerk, the appellant and he,  had not appreciated that the sist had not been formally recalled in the interlocutor.  It was his position that the interlocutor of 2 June should have recorded that the sist was recalled to enable the peremptory diet to be fixed.   He submitted that that was a matter which I could rectify at this stage.  Accordingly he submitted I should modify the interlocutor of 2 June to record the sist as having been recalled to fix the peremptory diet.  That reflecting the basis on which Sheriff Pender had proceeded when considering the motion for summary decree. 

 

Discussion

[55] I consider that there is no substance to the intricate and ingenious argument which counsel for the appellant wove around the question of the definition of an interlocutor or order of the court.  I am satisfied that fair notice was given to the appellant of the requirement to attend court, that decree would be granted if he failed to attend and that the motion for summary decree motion would be considered.  I consider that the appellant had proper intimation and notice of the summary decree motion by virtue of it being intimated to his agent in March.  That intimation remains valid even although the motion was continued until 7 July when it was heard at the peremptory diet.

 

[56] In relation to the recall of the sist, it is clear from his note that the sheriff failed to appreciate that the sist had not been formally recalled.  He proceeded on the basis that the sist had been recalled and he could deal with the motion on 7 July.  It is a matter of regret that recall of the sist was not addressed in the interlocutor of 2 June.   In order to fix a peremptory diet a sist should be recalled.  Proper notice having been given of a motion to recall a sist, it may be validly recalled in the absence of a party or any representative of that party, notwithstanding previous intimation of opposition to the motion to recall the sist.   The very need for a peremptory diet to be fixed arises as a result of non-appearance.  There must be a means to fix a peremptory diet in these circumstances to allow the case to progress.  That cannot be thwarted by the non-appearance of the party.   Procedurally the sist should have been recalled to fix the peremptory diet.  The recall of the sist is not a determination of a party’s rights and may be done in their absence, notice having been given.   Had the sheriff noted that the interlocutor had not recorded the sist as having been recalled he should have utilised the power conferred by OCR Rule 12.2.2 which provides for the correction of a clerical or incidental error in an interlocutor:

12.2.2 “At any time before extract, the sheriff may correct any clerical or incidental error in an interlocutor or note attached to it.”

 

[57] I endorse the position as stated in Eurocopy (Scotland) PLC v British Geological Survey 1997 SCLR 392 at 395 A

“ it is a sound principle that unless there is a clerical or incidental error which has been corrected under the rules it is not permissible to look behind what is stated in an interlocutor, or to read out of an interlocutor what is there expressed.  An interlocutor should express clearly what the court has decided, what order or orders are made, and when they were made.”

 

The sist was overlooked and the position was not rectified as it should have been in the interlocutor of 7 July. The omission to record the recall of the sist, in the interlocutor of 2 June, being such an error, as anticipated by OCR 12.2.2, I may regularise the position in this appeal.  Not doing so would substantially and unfairly prejudice the respondent.  Accordingly I shall correct the terms of the interlocutor of 2 June to record the sist as having been recalled, as it was or should have been on 2 June. 

 

[58] Was on the information as presented to him at the peremptory diet the sheriff entitled to grant summary decree or in  doing so did he err in law?   In relation to the blank denial, there can be difficulties over what is required in the circumstances as here where there is no conflict between that blank denial and any other pleadings or plea in law.

 

[59]The form of OCR 17.2 in relation to summary decree applicable in this action is as noted above.  This is because the action was commenced before 1 August 2012 and consequently the amendment introduced for actions after that date is not relevant.

 

 

[60] That is similar terms to the Court of Session rule considered by Lord Caplan in Frimokar (UK) Ltd v Mobile Technical Plant (International) Ltd 1990 SLT 180 at page 182 he stated:

“The court is looking to see if the defenders can present a genuine issue not to test the articulation of that issue… The question of the defence must be tested at the time when the motion was decided and it is for the defender, before that stage, to be in a position to satisfy the court that there is the framework of a defence available. “

 

Henderson v Nova Scotia and the other authorities make clear that in considering a motion for summary decree the judge is entitled, and should (my emphasis) consider other factors.  I reject the proposition that there is any greater obligation on the sheriff to explore the position because the appellant was a party litigant.  In Henderson v Nova Scotia Lord Rodger summarises what should be done.  I consider the obligation on a judge is similar whether applying rule 17.2 of the OCR or 21.2 of the Court of Session rules.  I am satisfied that the sheriff properly considered the motion having regard to those factors.  In the instant case the appellant accepted the sums stated in the irritancy notice were due to the landlord, indeed he made substantial payment to account of that sum and allowed decree to pass for the balance.  As explained in the sheriff’s note the focus of the defence which the appellant sought to maintain, in response to his enquiry, was in relation to the condition of the premises in the light of alleged problems of water ingress.  Given this was a full repairing and insuring lease that clearly was a defence of no substance.  There is no reference in the sheriff’s note about his view of the effectiveness of the notice of irritancy but I consider that he was entitled to proceed on the basis that it was not challenged by the appellant.  I am satisfied that the sheriff correctly sought to explore with the appellant the basis for any defence to the action and no point being raised specifically on the irritancy notice the sheriff exercised his discretion to grant summary decree in the light of the defence placed before him, in a manner which gives me no basis to interfere with his decision. I take support for this from par 9.114 of Macphail:

“When determining the relevancy of such a defence the court will consider any material probative documents which are produced and any explanations or concessions made at the bar” 

 

[61] Although not raised before the sheriff, the question of whether the notice of irritancy of 21 February 2013 is valid, arises as a ground of appeal.  As in Scott v Muir it is validly raised at the appellate stage.  This effectively means that any failure on the part of the sheriff to consider it makes that only a moot point.  If I conclude the notice is not effective the appeal must succeed.  Alternatively, if I find the notice to be valid the summary decree may stand.  I concluded that in these circumstances I did not require to revert to the Sheriff to deal with issue of the validity of the notice of 21 February in a supplementary note.

 

 [62] The critical issue is therefore, did the letter from Harper MacLeod of 21 February 2013 constitute a valid notice of irritancy.  It was in the following terms:

“…You have failed to pay rent outstanding and due, as at today’s date, in the sum of £44,276.42.  You have also failed to pay insurance premia outstanding and due as at today’s date, in the sum of £804.90.

On behalf of our client we hereby give you notice in terms of the Lease that you are required to pay the sum of £45,081.32 within fourteen days following service of this notice, and if you do not make payment as aforesaid, then the Lease may be terminated at the instance of our client.”

 

In terms of the decision in Scott v Muir it does not, for it fails to set out the detailed basis on which the sum is calculated.  The decision of Sheriff Principal Stephen is highly persuasive, all the more so for it being referred to by the editors of Gloag & Henderson without qualification.  The Sheriff Principal sets out at para 40 of her decision her analysis of the notice contained in the letter of 19 February 2010 and at para 42 her view of the confusion created as to how the sum said to be outstanding is established. There are however a number of differences in fact between the situation in Scott v Muir and the present case. 

 

[63] I read section 4(2) of the Act to require that the tenant must know what he has to do and within what period.   As the notice in Scott v Muir failed to set out the period within which payment had to be made I agree with Sheriff Principal Stephen that it failed to comply with the statutory requirement.  Sheriff Principal Stephen sets out her reasoning for finding the notice of irritancy in Scott v Muir is defective stating para 41:

 “A straightforward reading of the legislation makes it clear that the notice must specify a period within which the tenant must make payment of rent.  And that period forms part of the requirement which the tenant is to be given. The tenant requires to know what he has to do and within what period.”

 

[64] I endorse those observations as a correct expression of the law.  In the instant case, as indicated, contrary to the position in Scott v Muir there is no issue on this point for the notice of 21 February satisfies the statutory requirement in providing the correct period for compliance: fourteen days’ notice being given of the need for payment, before irritancy.  The issue in this case is whether counsel is correct in submitting I should follow the second aspect of the decision of the sheriff principal in Scott v Muir, for the decision goes further and concludes that the notice of irritancy must both specify the period within which the tenant has to make payment and (my emphasis) the periods from which the rent arrears had arisen.

 

[65] In the light of arguments on how the sum stated in the notice was derived Sheriff Principal Stephen stated in para 43

“Clearly the tenant cannot know what the landlord’s understanding of the rent arrears is unless he stipulates the dates from which the rent is due and unpaid.  That would hardly be an onerous obligation on the landlord…..it appears to me for the notice to be effective it should specify the periods from which the rent arrears arise.”

 

 

[66] While I agree with much of Sheriff Principal Stephen’s analysis.  I depart from her conclusion at the end of para 43.  I do not share her view that in order to address the mischief which section 4 of the Act was introduced to remove, that specification of period for which the rent arrears are said to arise requires to be read in.

 

[67] I do not consider that the appellant’s argument about confusion being caused by the use of the phrase “outstanding and due“ to result in any genuine confusion in the instant case.   The appellant was being required to pay the sum of £45,081.32, a clear statement of the sum required to be paid to purge the irritancy.  The appellant allowed decree to pass for the sum sued for £45,081.32 (as set out in the notice and broken down between arrears of rent of £44,276.42 and insurance premiums of £804.90) under deduction of the £20,000 paid to account.  The fact that the appellant allowed decree to pass for the sum stated as being payable in the notice under deduction of the payment to account of the arrears of rent which he had made reinforces that he did not challenge these monies were due to the respondent.  

 

[68] I did not receive significant submissions in relation to the reasonable recipient test as set out in Mannai Investment Co Ltd v Eaglestar Life Assurance [1997] AC 749 and I need not say much about  it.  The issue here turns on statutory interpretation, and not on interpretation of contract.  Sheriff Principal Stephen took a similar view in Scott v  Muir.  As did the court in Kodak Processing Companies Ltd v Shoredale 2010 S.C. para 25:

“the observations of Lord Jauncey of Tullichettle and Lord Hoffmann in Mannai Investment Co Ltd v Eagle Star Life Assurance Co Ltd (pp 762 and 776 respectively) are not directly relevant to the resolution of the problem, for the reason that those observations are focused upon a consideration of the adequacy of notices in a contractual context, not a statutory one.”

 

[69] I note that the background to the Scottish Law Commission’s report were the concerns expressed by the House of Lords in Dorchester Studios (Glasgow)Ltd v Stone 1975 SC (HL)56.   Lords Kilbrandon and Fraser  suggested that the law as they found it: that a conventional irritancy for non-payment of rent was not purgeable, might not in Lord Kilbrandon’s words “fairly reflect social policy “ and both he and Lord Fraser suggested might be “worthy of consideration by the Scottish Law Commission”.  Par 1.1 of the SLC report records the reference from the Secretary of State:

“Without prejudice to the Commission’s freedom to offer advice on any possibilities of reform of this branch of the law I should be glad if the Commission would in the light of Dorchester Studios (Glasgow) Limited v Stone and Another and the observations made in the judgements in that case consider and advise on the operation of irritancy clauses in leases of commercial and industrial property (including leases of land for commercial or industrial development) and on related matters.”

 

[70] As set out in par 2.9 of the report the perceived need for reform identified by the SLC was the absence of a requirement of a warning to the tenant.

 

[71] This translated following consultation in the recommendation at 4.3

 

“We remain of the view that in cases of default by a tenant in the making of monetary payments (whether of rent or otherwise), where a minimum period for remedy of the default can be prescribed by legislation a statutory procedure of the kind we originally envisaged is the most appropriate means for protecting the tenant. We have given careful consideration, in the light of consultation, to what the prescribed period should be and have come to the view that the relevant notice should specify a period of not less than 14 days from the date of its service. We therefore recommend that, where there is  default in the making of a monetary payment under a lease, the landlord should not be entitled to rely on such default as grounds for termination of the lease unless he has given the tenant written notice specifying a period of not less than 14 days for the remedying of the default in payment and stating that, unless the default was remedied within the period specified, irritancy may result.”

 

[72] The SLC produced a draft bill which subject to minor stylistic modifications was adopted and became section 4 of the Act.  The object of the SLC recommendations, substantively adopted in the Act was to remedy the harm of an irritancy occurring without the tenant realising. The purpose of the notice being to give the tenant fair warning that a failure to comply within the time limit specified would result in irritancy.    That may be seen clearly in the terms of section 4(2). 

 

[73] I note this simply by way of background for I conclude that the matter is properly resolved by consideration of the terms of this subsection. I do not consider this to be a Pepper v Hart 1993 AC 593 situation.  

 

[74] I do not read into section 4 the second requirement as proposed by Sheriff Principal Stephen.  I depart from her view in relation to her decision that the periods from which the rent arrears had arisen also require to be stated in the notice.  I find no basis for this in terms of the statute or in the SLC report.   I take the terms of the statute as being clear.  While I can see that there would be merit in providing more explanation in the notice as to the basis for the calculation of the sum due I do not consider that to be required by the statute.  I draw support for this interpretation from the decision of Lord Morton of Shuna, at first instance, in CIN Properties Ltd v Dollar Land 1990 SC 351.  In that case the notice did, in terms of what I might suggest is best practice, set out how the arrears had arisen. There terms of the irritancy notice being set out at 354.  It is however notable that in reaching his conclusion that the notice was effective Lord Morton at 362 only quoted a couple of key sentences which he saw as providing compliance with the requirements of the Act. 

 

“Accordingly on behalf of CIN Properties Ltd. I hereby require you to pay the said sum of £234,367.50 together with the interest before mentioned by 4th January 1989 failing which CIN Properties Ltd. shall have no alternative but to raise a court action against you. In addition to the other remedies open to CIN Properties Ltd. if you fail to comply with the foregoing requirements as to the payment I have to inform you that the lease of the above subjects may be terminated”

 

Sheriff Principal Stephen was referred to CNN Properties Ltd v Dollar Land Ltd 1990 SC 351, at first instance, but recognised that case turned on substantially different issues.  She did not refer specifically to the finding of Lord Morton of Shuna at first instance, which I have found of assistance.  It is also notable that Sheriff Principal Stephen recognised that she might be wrong on the issue of specification of the arrears [para 45].

 

 [75] I read section 4(2) of the Act as laying down the minimum requirements of an adequate notice.  It does not prescribe any form which the notice should take, or confine the notice to contain only the requirement to pay and the statement that if payment is not made within the time provided “the lease may be terminated”. I would agree with the opinion of Lord Morton that the two sentences quoted above from the letter of 15 December comply with the statutory provision as there is the requirement to pay and the statement that if there is failure to meet the requirement the lease may be terminated.

 

[76] Clearly the full expression of the notice in the letter of the 15 December is preferable in terms of the information conveyed to the tenant, than the second paragraph’s more limited expression of information.  The notice of 21 February in the instant case only provides details of the sum outstanding and the time limit by which time it must be paid.  I have however reached the view that I should follow Lord Morton’s judgement.   I agree with him that contrary to the Sheriff Principal’s view that reference to a sum and the date by which it must be paid complies with the express terms of section 4 of the Act.

 

[77] I also find support for taking a narrow view of the terms of  section 4 of the Act in the quotations from Lord Fraser and Lord Jauncey referred to above [para 42 ]in CIN Properties Ltd v Dollar Land Ltd where they express reluctance to expand beyond the terms of the Act.  Having heard full argument I am satisfied that the irritancy notice of 21 February, fulfils the requirements of the Act and is valid.   Accordingly for the reasons stated, I adhere to the interlocutor of the sheriff and refuse the appeal.

 

[78] Notwithstanding this finding, parties had requested given the various options which were open to me that I reserve the question of expenses meantime.   If parties wish me to hear them on the matter of expenses they should enrol the appropriate motion.  Alternatively if they can reach agreement, a motion for expenses enrolled and marked as of consent, may be granted in chambers.

DLM