Scottish Sheriff Court Decisions

NOTE:

1. This action by Acorn Services (Edinburgh) Limited is for payment of £16,506 being the sum said to be due by the defender and now appellant in respect of a building contract for renovation works carried out by the pursuers at the appellant's property at St Stephen Street, Edinburgh.  The pursuers aver that they have made application for payment which the appellant either delays or refuses to make.  The action was warranted in May 2014 and the initial writ served on the defender at her home address by sheriff officers on 4 June 2014, a previous attempt to cite by recorded delivery having been unsuccessful.  No notice of intention to defend having been lodged by or on behalf of the appellant the pursuers' agents minuted for decree which was granted on 8 July 2014 and extracted on 23 July 2014.

    

2. A reponing note for the appellant was lodged on 30 July 2014 and a diet for the hearing on the reponing note assigned for 21 August 2014.  The pursuers opposed the defender's motion to be reponed in the cause.  The defender and appellant appeals the sheriff's interlocutor of 21 August 2014 refusing her reponing note.

    

3. The reponing note No 2 of process sets out the proposed defence and the explanation for the appellant's failure to appear.  The proposed defence admits the contract between the parties and states that the pursuers are in breach of the contract/implied terms of contract as a result of their failure to complete the works conform to specification/time limits.  No further specification is provided.  The appellant states that she has made payment of the first agreed partial payment but fails to state the amount of that payment or whether the sum craved constitutes the balance of the contract price.

 

 

Grounds of Appeal

4. Grounds of Appeal 1, 2 and 3 are directed towards the sheriff's exercise of her discretion with regard to the explanation for failure to appear.  The fifth ground of appeal argues that the sheriff failed to apply the "appropriate" test to the reponing note as regards the explanation for failure to appear.

    

5. Grounds of Appeal 4 and 6 are directed towards the sheriff's decision as regards the proposed defence and the report prepared on the instructions of the appellant by Create Builders.  The appellant will argue that the sheriff erred in reaching the view that the report could not properly be said to be a report on the contractual work.  The appellant argues (Ground 6) that she merely requires to demonstrate the existence of a stateable or prima facie defence.  The Sheriff was wrong to require specification of that defence at the stage of reponing.

    

   Appellant's Submissions

6. Mr Bell, Advocate for the appellant helpfully produced written submissions.  At the outset it was agreed that the proper approach for the court is that set out in Forbes v Johnston 1995 SC 220 and in particular the dicta of Lord President Hope at page 225.  Mr Bell's first submission focussed on the sheriff's approach to the averments as to both the explanation and the proposed defence.  Reading from paragraph 3 of his written submissions Mr Bell referred me to Biggart v Wilson 1948 SLT 226 and the decision of the sheriff substitute of Kilmarnock at page 26/27.  Faced with a dispute as to fact the sheriff substitute considered "The only course open to me is to allow parties a preliminary proof, which I think should be before answer, of the matters referred to in the reponing note."  Mr Bell commended this approach.  The sheriff faced with a doubt as to the explanation for the defender's failure to appear ought to have remitted the matter for proof in the manner suggested in Biggart.  Mr Bell's written submissions at paragraph 3 state  this argument with regard to the proposed defence but, as I understand it, his submissions to me on the matter of a preliminary proof referred also to the explanation put forward on behalf of the appellant as to her absence from home.  Mr Bell acknowledged that the appellant's explanation introduces elements of bad faith on the part of the pursuers however the sheriff was wrong to take the view that the appellant's absence abroad since November 2013 was not the issue.  (Paragraph [12] of the sheriff's note).  According to Mr Bell the view expressed by the sheriff in that paragraph as to the appellant's absence in itself discloses an error in law and misdirection on the part of the sheriff.  The appellant's absence from her home was the crucial matter which explained her failure to deal timeously with the initial writ.  Although the issue of bad faith on the part of the pursuers had been raised that was not the material factor underpinning the explanation.  The sheriff ought to have accepted pro veritate the appellant's explanation.  If there was doubt as to that explanation a preliminary proof ought to have been allowed.  The sheriff erred in rejecting the core issue of the appellant's absence from home.  That error allows the matter of reponing to be at large for me to decide.  In support of this submission Mr Bell referred to Wailes-Dove Bitumatic Limited v Plastic Sealant Services Limited 1979 SLT (Sh Ct) 41 and reference was made to Ratty v Hughes 1996 SCLR 160.

    

7. Mr Bell's submission on Ground of Appeal 6 namely the sheriff's approach to the proposed defence is focussed in paragraph 2 of his submissions (page 4).  Standing the decision in Consultants and Technologists North Sea Limited v Scott 1986 SLT 685 the sheriff was wrong to require specification of the proposed defence.  Specification is not required at the stage of reponing.  The proposed defence disclosed a prima facie stateable defence and gave the outline of the appellant's position on the pursuers' discharge of his obligations under the contract.  The sheriff's approach to the proposed defence goes far beyond what is required of the party seeking to be reponed and raises issues of relevancy and specification which would normally be reserved for debate.  In Consultants and Technologists North Sea Limited v Scott, at page 686 the Lord Justice Clerk stated:-

   "We are of opinion that he misdirected himself.  He was wrong in looking in a reponing note for the specification required in a debate on relevancy on a closed record.  A reponing note is only required to state a prima facie defence of substance."

    

   The court in Consultants and Technologists also referred to McKelvie v Scottish Steel Scaffolding Company 1938 SLT 159 and Nisbet v McLeod (1923) 39 (Sh Ct) Rep 248 where Sheriff Principal Mackenzie stated:-

   "As a reponing note does not generally contain more than an outline of the defence, it should not be scrutinised too critically on the matter of relevancy".

    

   The court in Consultants and Technologists agreed with that approach.

    

8. To summarise Mr Bell's submission it was not necessary at the stage of reponing to add further specification.  The proposed defence disclosed adequately the appellant's defence.  Accordingly, I was asked to allow the appeal, recall the sheriff's interlocutor of 21 August and allow the defender to be reponed.  I was asked to award expenses to the appellant in the event of success and that sanction for the employment of junior counsel ought to be granted.  Mr Bell submitted that employment of counsel was necessary due to the citation of authority and the complexity of the reponing procedure.

    

   Submissions for the pursuers and respondents

9. In a short response Miss Ridley observed that the sheriff was correct to take the view she did on the basis of the submissions and material available to her.  It was agreed that Forbes v Johnston sets the correct test and in Miss Ridley's opinion the sheriff had followed that test.  The narrow issue for the court to decide was whether the sheriff erred or went too far in her analysis of the appellant's reponing note.

    

10. Miss Ridley submitted that the sheriff had no material before her which indicated any support for the assertion made by the defender that she was abroad since November 2013.  No tickets, affidavits or travel log.  The sheriff correctly refers to the material which cast doubt on that assertion and deals with the principal submission made at the reponing hearing namely that the pursuers acted in bad faith.  The defender refers to an ongoing dialogue but there is no indication whatsoever of what that dialogue is supposed to be.

     

11. The proposed defence set forth in the reponing note is a bare outline and no more.  It fails to give any specification of the true nature of the defence.  There is no indication of why time was material and what the level of delay is said to have been.  There is no indication of what was done or not done by the pursuers which can be said to have breached their obligations under the contract with regard to the renovations – were they defective? were they incomplete?  Neither the court nor the pursuers have any idea.  No indication has been given by the defender as to the nature of her complaint as to breach of contract.  No notice has been given to the pursuers prior to or at the reponing note hearing as to what the issues are likely to be.  The sheriff was therefore entitled to take the view that the proposed defence was a dilatory one.

     

12. I was asked to adhere to the sheriff's interlocutor, award expenses, in favour of the respondent.  Should I be against her, Miss Ridley opposed the appellant's motion for certification of the cause as suitable for the employment of counsel.  There was no complexity.  The case law is settled and the test authoritatively decided in Forbes.

     

    Reponing

13. Chapter 8 of the Ordinary Cause Rules governs reponing.  Rule 8.1 provides that a "defender may apply to be reponed by lodging….a reponing note setting out his proposed defence….and explaining his failure to appear".  The powers of the sheriff are set out in paragraph (3) of Rule 8.1 – "the sheriff may on considering the reponing note, recall the decree in so far as not implemented subject to such order as to expenses as he thinks fit;…"  In Forbes v Johnston 1995 SC 220 the Inner House sets out the correct approach to a reponing note.  The court expressly disapproved of a two stage test.  The court must consider all material factors and in particular must consider whether there is a stateable defence along with any explanation tendered for lateness.  In order words, the party seeking to be reponed need not clear the hurdle of providing a satisfactory explanation for his failure to appear before he addresses the court on the proposed defence.  The sheriff requires to consider the note in its entirety before deciding whether or not to exercise his or her discretion in favour of the party seeking to be reponed.  Forbes emphasises the discretionary nature of the sheriff's decision and in the exercise of his or her discretion the sheriff requires to take into account all of the circumstances and to balance any considerations in favour of reponing (such as a stateable defence) against other considerations which may point against reponing (such as disregard of court rules and procedure).  The sheriff correctly refers to this test in paragraph [7] of her note.

     

14. The party seeking to be reponed must provide the court with all material in support of his reponing note and upon which the sheriff is to exercise discretion.  The hearing on the reponing note is the only opportunity for the defender to set out for the sheriff the reasons why decree should be recalled and that he should be restored to process.  Sheriff Principal Risk considered the process of reponing in Ratty v Hughes 1996 SCLR 160.  In Ratty Sheriff Principal Risk stated:- "It seems to me that the defender must lay all his cards on the table at the outset."  Proper consideration of the rule of court and the decision in Forbes indicates to me that the sheriff must take into account and carefully weigh up the material available to the court before deciding the matter.  There is no right to be reponed and it is incumbent upon the defender seeking to be reponed to place all material before the sheriff that may have a bearing both on the explanation and proposed defence.  It is not for the court to continue the hearing on the reponing note for that purpose.  In any event there is no suggestion from the sheriff's note that any motion for a continuation was made by the agent appearing on behalf of the appellant.  (Ground of Appeal 2).

     

15. The appellant referred to a number of authorities.  It is noted that no authorities were cited before the sheriff.  Clearly, the five judge decision in Forbes v Johnston (supra) sets the test which the court should apply.  Providing the court follows that test the matter lies within the discretion of the sheriff.

     

16. Standing the test in Forbes v Johnston the matter of reponing relies on the information provided in the reponing note with regard to both the explanation and the proposed defence.  As I have said the party seeking to be reponed must place as much information before the sheriff as he can.  The specific facts and circumstances surrounding the explanation and the nature of the defence will be the determining factors for the sheriff.  Study of other authorities is of limited assistance.  Reponing procedure is by its nature specific to each case.

     

    DECISION

17. The function of the appellate court in appeals against discretionary decisions is set out in Macphail on Sheriff Court Practice 18.110 onwards.  There is no basis to interfere on appeal with a discretionary decision unless it can be shown that the sheriff applied the wrong test or the wrong principle and came to a result that was clearly or plainly wrong.  It is the essence of discretion that two minds considering the same set of facts and circumstances may come to different outcomes or decisions without either being wrong in law.  As regards the explanation for failure to appear the sheriff was clearly presented with two submissions firstly, the appellant was out of the country from November 2013 as a result of which she was unable to deal with the initial writ when served.  This submission is clearly underpinned by the appellant's assertion that the pursuers' agents were well aware of that fact and therefore turning to the second point they acted in bad faith in proceeding to serve the initial writ on the appellant at her home address knowing her to be out of the country.  The sheriff clearly had regard to the weight or lack of weight in that submission and the appellant's failure to place before her any material which supported that submission.  It appears that the sheriff simply had the e-mail of 10 April 2014 which is referred to in her note.  The second important submission related to the nature of the defence and whether the report prepared in July 2014 by Create was truly an objective and independent report on the works carried out by the respondents under the contract.

     

18. In the Wailes-Dove case the Sheriff Principal decided that the sheriff required to be "satisfied" with the defender's explanation observing that it is possible to be satisfied with something less than a good or sound explanation.  In this appeal counsel suggested that had the sheriff taken account of the explanation put forward in the reponing note to the effect that "The defender was in Italy attending to the care of an elderly relative since November 2013, which was within the knowledge of the pursuers" it was indeed a sound explanation for the appellant being unaware of the initial writ.  The sheriff ought to have been satisfied as to that explanation.  However, the sheriff was neither satisfied as to the veracity of the explanation nor the suggestion that the defender's absence was a matter within the pursuers' knowledge.  The argument presented to the sheriff in support of reponing was that the pursuers had acted in bad faith.  The sheriff considers the copy e-mail dated 10 April 2014 relied on by the defender at the reponing hearing at para [10] of her note.  She observes :-

    "It is, in my view, a reasonable inference from the terms of the e-mail and in particular the reference to 'an appointment' that at least on 17 April 2014 the defender was available to meet the author.  There is nothing in the e-mail to the effect that the defender was abroad."

     

    The sheriff had no material available to her about how the pursuers were said to have known of the defender's absence in Italy caring for a relative.  No information is produced by way of correspondence with the pursuers.  Furthermore, there is no vouching produced to the sheriff with regard to the appellant's absence.  It would be reasonable to produce vouching of travel arrangements or a certificate from the elderly relative's medical attendant.  The sheriff also refers at paragraph [12] to a number of other factors which tended to raise doubts about the explanation in the reponing note.  The sheriff specifically refers to the report from Create Builders dated 9 July 2014 which is addressed to the defender in first name terms relating to the renovation and refurbishment works at 52 St Stephen Street, Edinburgh.  The letter is sent to that address.  The report is the only other piece of information supplied to the sheriff in support of the reponing note.  In her decision the sheriff gives ample reasons why she was not satisfied as to the core statement in the reponing note to the effect that the appellant's absence from her home in Italy from November 2013 was a matter within the pursuers' knowledge.

     

19. What the court has to do is to consider the explanation and any material provided which supports or casts doubt on the explanation and decide whether the explanation is satisfactory.  That is a task which involves an analysis of the reponing note, submissions by parties and the exercise of judgement.  In her decision the sheriff carefully considers the central plank of the explanation and the matters said to be within the pursuers' knowledge.  No information at all, far less reliable information was provided about how the pursuers can be assumed to have known about the defender's whereabouts.  The sheriff proceeds on the information available and correctly observes at paragraph [17]:-

    "that where a defender seeks to be reponed it is for the defender to prepare and set out fully whatever is his or her explanation for failing to lodge a notice of intention to defend timeously and proposed defence.  It is for the defender to produce any documents in support of their position.  It is not unusual for a defender to lodge proposed defences along with the reponing note.  It is for the defender to provide the court with all material upon which the exercise of discretion is to be made."

     

    The sheriff's observations are correct.  The appellant has not taken the opportunity "to lay all their cards on the table" (see Ratty v Hughes).  The sheriff has given detailed reasons for not being satisfied as to the explanation put forward on behalf of the defender.  She indicates why she doubts the explanation and that is due to the lack of affirmative vouching and the doubts which arise from the documents relied on by the appellant.  The present case can be easily distinguished from Biggart (supra).  In Biggart, the explanation involved elements of bad faith or misrepresentation on the part of the pursuer.  However, the misrepresentation is specified and leads to a dispute as to fact.  In this case there is simply an assertion as to the appellant's absence coupled with a bald statement as to the pursuers' knowledge of that.  Biggart is not authority for the proposition that unsupported assertions require to be remitted to a preliminary proof.  Macphail at para 7.29 refers to "highly exceptional circumstances" justifying a proof when referring to Biggart.

     

20. Finally, the second substantial ground of appeal relates to the sheriff's consideration of the proposed defence set out in the first part of the reponing note.  As the sheriff correctly observes the contract is admitted.  The appellant in the reponing note states that she proposes to defend this action on the following grounds:-

    "First.  Pursuers' breach of contract/implied terms of contract…….

    The pursuers failed to carry out the said works conform to contract specification and conform to an agreed time limit.  The pursuers are in breach of contract/implied terms of contract as a result of their failure to complete works to conform to specification/time limits.  The defender will require to have the said works carried out by alternative contractors at further costs.  The defender has suffered stress and inconvenience as a result of the said breach of contract."

     

21. These are the matters which the defender seeks to place in issue.  As the sheriff observes draft defences have not been tendered and accordingly the sheriff required to proceed on the basis of the information provided in the reponing note.  The report from Create appears to have been produced in support of the defence.  From an analysis of the case of Consultants and Technologists, the question for the court in that case as in the present appeal is whether the sheriff had misdirected herself in law in refusing the reponing note.  Of course, that case was decided prior to Forbes v Johnston.  The sheriff in Consultants and Technologists appears to have adopted a two part test which has now been disapproved of.  The present case and Consultants and Technologists can be readily distinguished.  In that case the sheriff had a note of the defence sufficiently specified which he could apply his mind to.  That case involved a lease.  The sheriff appears to have embarked upon the exercise of construing the terms of the proposed defence.  In that case the Division considered that the sheriff was "wrong in looking in a reponing note for the specification required in a debate on relevancy on a closed record.  A reponing note is only required to state a prima facie defence of substance".  The Division then went on to refer to McKelvie v Scottish Steel Scaffolding Limited where Lord Moncrieff stated:-

    "I also would be most reluctant in any case in which prima facie there appeared to be a proper defence put forward to allow decree to pass against the defender without investigation of that defence."

     

    It is important to emphasise that the court in both cases refers to "defence of substance" and "proper defence".  The defence in this case is quite different.  The appellant's argument appears to suggest that no specification was required at all and it was sufficient for the proposed defence to sketch a mere outline which the sheriff required to accept.  In the present case the sheriff did not look for a polished and relevant defence.  She was looking for some specification.  The defence suggests breach of contract/implied terms of contract as a result of failure to complete works conformed to specification/time limits.  These are bald assertions and give no clue whatsoever either to the court (or to the opponent) as to the true defence.  The sheriff gives her analysis of the proposed defence in paragraphs [15] and [16] of the note.  The appellant produced a copy of the report by Create Builders in support of the proposed defence.  The sheriff considered that report as she was asked to do.  The sheriff was entitled to take the view based upon a straightforward reading of that report that it was not a report giving an opinion on the contract works.  Instead the author of the report had been instructed to quote for additional works all as narrated in the sheriff's note paragraph [15].  The sheriff, following Consultants and Technologists, concluded at paragraph [16]:-

    "It appeared to me that the proposed defence was dilatory.  Without applying the scrutiny that might be given to pleadings at a debate upon their relevancy I noted the absence of any specific challenges to the pursuers' claim.  The defender offered only a bald statement that the pursuers' works did not 'conform to contract specification' and agreed time limits.  It also appeared that the production of the report from Create Builders and the claim that this was a report following an examination of the pursuers' works was intended to mislead the court."

     

    Whether or not the report was intended to mislead the court is perhaps another matter but nevertheless there is sufficient material available to the sheriff to lead her to the conclusion that the proposed defence was sufficiently inspecific that it amounted to a dilatory defence.  The sheriff did not apply the same scrutiny that would be applied at debate.  She looked for some specification as to the proposed defence.  There was none.  Therefore, she did not misdirect herself as to the test to apply to the proposed defence.

     

22. In all these circumstances I am satisfied that the sheriff did not err in law.  I cannot fault the sheriff's decision either to dismiss the proposed defence as dilatory or fail to be satisfied as to the explanation for the defender's failure to lodge a notice of intention to defend.  This appeal is accordingly refused.

     

23. On the question of expenses the appellant will be liable to the respondents in the expenses of the appeal.  It follows that I do not require to decide Mr Bell's motion for certification of the cause as suitable for the employment of counsel.

(signed) Mhairi M Stephen