Scottish Sheriff Court Decisions

SHERIFFDOM OF GRAMPIAN, HIGHLAND AND ISLANDS AT BANFF

[2017] SC BAN 2

A17/15

INTERLOCUTOR AND NOTE

BY

SHERIFF PHILIP MANN

In Causa

(First) Arthur J Gallagher Insurance Brokers Limited (Formerly Giles Insurance Brokers Limited) and (Second) Arthur J Gallagher Services (UK) Limited

Pursuers

Against

(First) Graham Hudson and (Second) George Stubbs Insurance Services Limited

Defenders

Act:  Howie QC, Senior Counsel

First Defender:  Beveridge, Solicitor

Second Defender:  Manson, Advocate

Banff 16 January 2017

The sheriff, having resumed consideration of the cause, refuses the second defender’s opposed motion, number 7/6 of process, for summary decree of dismissal; Makes no further order meantime and continues the cause to the options hearing already fixed; meantime, reserves the question of expenses of the hearing on 10 January 2017.

Note

Introduction

[1]        This is an action in which the pursuers sue the first defender for damages for breach of a restrictive covenant following termination of the first defender’s employment with the second pursuers; and also sue the second defenders for damages for inducing the first defender’s breach of covenant and for conspiring with the first defender to injure the business of the first pursuer.

[2]        The second defenders were brought into the action subsequent to its having been raised against the first defender alone.  The cause so far as laid against the second defender is in the course of the adjustment period following upon the second defenders having lodged defences.  An options hearing is due to take place on 24 February 2017.

[3]        Prior to convening the second defenders the pursuers obtained an order for the recovery of documents by way of commission and diligence.  This was on 24 September 2015.  The recovery process has not yet been completed, although the pursuers served a copy of the specification of documents upon the second defenders on 6 October 2015.

[4]        The second defenders have lodged a motion for summary decree of dismissal of the pursuers’ case against them in terms of rule 17.2 of the ordinary cause rules.  The motion is opposed by the pursuers but not by the first defender.

[5]        I heard submissions on behalf of the second defenders and the pursuers on 10 January 2017.  The pursuers were represented by Mr Howie, QC and the second defenders were represented by Mr Manson, Advocate.  Mr Beveridge, Solicitor, appeared for the first defender but made no submissions.

Summary Decree

[6]        Rule 17.2 of the ordinary cause rules is in the following terms:

17.2.    (1) Subject to paragraphs (2) to (4), a party to an action may, at any time after defences have been lodged, apply by motion for summary decree in accordance with rule 15.1(1)(b) (lodging of motions) or rule 15A.7 (lodging unopposed motions by email) or rule 15A.8 (lodging opposed motions by email) as the case may be.

(2) An application may only be made on the grounds that—

(a) an opposing party’s case (or any part of it) has no real prospect of success; and

(b) there exists no other compelling reason why summary decree should not be granted at that stage.

(3) The party enrolling the motion may request the sheriff—

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

(b) to dismiss a cause or to absolve any party from any crave directed against him or her;

(c) to pronounce an interlocutor sustaining or repelling any plea-in-law; or

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

(4) The sheriff may—

(a) grant the motion in whole or in part, if satisfied that the conditions in subparagraph (2) are met,

(b) ordain any party, or a partner, director, officer or office-bearer of any party—

(i) to produce any relevant document or article; or

(ii) to lodge an affidavit in support of any assertion of fact made in the pleadings or at the hearing of the motion.

(5) Notwithstanding the refusal of all or part of a motion for summary decree, a subsequent motion may be made where there has been a change in circumstances.

Submissions

[7]        Mr Manson had helpfully lodged a detailed note of arguments and submissions before the hearing.  I am grateful to him for that because it significantly cut down the length of time needed to deal with the motion.

[8]        Mr Manson referred to two cases for the general principles applicable to a motion for summary decree.  These were Henderson v 3052775 Nova Scotia Ltd 2006 SC (HL) 85, a case involving a Court of Session rule which was substantially in the same terms as rule 17.2 of the ordinary cause rules before it was recently amended to its current form; and Maclay Murray and Spens v Orr [2014] CSIH 107, a case involving rule 17.2 in its current form.  He also referred to a number of cases on the law relating to inducement and conspiracy but for reasons which I hope will become clear I do not intend to rehearse counsel’s submissions in relation thereto on the basis that it is not necessary for my decision on the motion.  Suffice to say that Mr Manson maintained that the pursuers’ pleadings, as they presently stand, are irrelevant and lacking in specification

[9]        Mr Manson’s position, on the authority of Henderson and Maclay Murray and Spens, was that the court, in deciding whether or not the pursuers’ case had any real prospect of success, must not only assess the pleadings with reference to the ordinary standards of relevancy and specification but must also look at any material extraneous to the pleadings placed before the court.  He maintained that matters had to be assessed as they stood at the current time and that it was for the pursuers to place before the court materials which demonstrated not only that they could make a specific and relevant case against the second defenders but also that that case had a real prospect of success.  They had not produced any material, far less anything that could demonstrate those things, and therefore it had to be the position that their case had no real prospect of success.  Accordingly, the second defenders were entitled to summary decree of dismissal.

[10]      Mr Howie maintained that the remedy of summary decree was intended for situations where the court could instantly say that a party’s case had no real prospect of success whatever the state of the pleadings.  He had in mind cases such as where, for example, the defender might come to court with a settlement agreement indicating that the dispute had in fact been settled or where, for example, it could be instantly verified from a decree and relevant pleadings that the instant case was res iudicata.

[11]      Mr Howie pointed out that at this stage of the action the pursuers were absolutely entitled, by virtue of the ordinary cause rules, to adjust their pleadings in advance of the options hearing.  He pointed out that the second defenders’ motion for summary decree was based solely on their contention that the pursuers’ case was lacking in relevancy and specification.  He maintained that a motion in terms of rule 17.2 was not a substitute for a debate on preliminary pleas, which was the appropriate way of determining whether a case should be dismissed on the basis of lack of relevancy or specification.  He pointed out that in Maclay Murray and Spens the court was considering the motion for summary decree after the options hearing.  This, he said, had to be the case given that it was held that matters had to be determined on the basis of how matters stood at the date of the motion and the acceptance by the court that the party under attack should not be granted the indulgence of the court, indulgence not being necessary if the party had a right, to leave it to a later date to provide a different or better explanation of his position.

[12]      Mr Howie maintained that, in any event, and on a proper reading, the pursuers’ averments could be said to be relevant and specific.  He maintained that because of the nature of the dispute the pursuers’ case necessarily relied on inference and that there was enough in the pursuers’ pleading to enable the necessary inferences to be drawn by the court after proof.

[13]      Reference was also made during discussion to the fact that there was an ongoing recovery of documents process in which the second defenders had been served with a specification of documents.

Discussion and Decision
[14]      I accept Mr Howie’s contention that a motion for summary decree under rule 17.2 is not a substitute for a debate on preliminary pleas to relevancy and specification.  It is clear to me, looking at the cases of Henderson and Maclay Murray and Spens, that it is an additional procedure which allows a party, and the court, to go behind the pleadings in whatever state, which cannot be done at debate, and point to extraneous material which demonstrates with the requisite degree of certainty that the opposing party’s case has no real prospect of success.

[15]      In both Henderson and Maclay Murray and Spens there was extraneous material that the court could take into consideration.  In this case there is no such extraneous material before the court.  It has to be borne in mind that this is the second defenders’ motion and it must surely be for them to persuade the court that the motion should be granted.  Accordingly, the onus must be on them, in the first instance, to point to such specific thing in the pleadings, or to place before the court such extraneous material, as they consider demonstrates that the pursuers’ case has no real prospect of success.  It seems to me that the second defenders should not succeed in their motion simply by asserting, or even establishing, that the pursuers’ pleadings are irrelevant and lacking in specification at the particular time and looking to the pursuers to demonstrate there and then that they have materials on the basis of which they can make their pleadings relevant and specific.  Nor should the pursuers be under the additional obligation to point to extraneous materials demonstrating that their case has a real prospect of success if all that the second defenders can say is that the pursuers’ pleadings are lacking in relevancy and specification.  If that is all that the second defenders complain about they can seek to have the action dismissed at debate at the appropriate time.

[16]      It so happens that in both Henderson and Maclay Murray and Spens the court had access to materials provided by the party whose case was under attack but I see nothing in either of these cases to suggest that the burden is on that party to satisfy the court that their case has a real prospect of success if all that is said by the party making the motion is that the pleadings are irrelevant and lacking in specification.

[17]      In Henderson the issue was whether there had been a gratuitous alienation by an insolvent company by way of a sale of heritable property at an undervalue.  It could be seen from the pleadings and from the disposition that the consideration for the sale was substantially below value.  It was against that background that the court scrutinised material placed before it by the defenders whose case was under attack.

[18]      In Maclay Murray and Spens the motion was made by the pursuers in reference to the defender’s counterclaim.  The extraneous material was examined against the background that it could instantly be verified from an analysis of the defender’s own pleadings in the counterclaim that the actions of an individual relied upon by the defenders could not amount to the breach of confidentiality which was material to the defender’s case.  Additionally, there was extraneous material produced by the pursuers which directly and compellingly contradicted the defender’s assertions of fact.

[19]      In this case, the second defenders do no more than maintain that the pursuers’ pleadings are irrelevant and lacking in specification.  They do not point to anything in the pleadings that calls for the kind of explanation sought and considered in either Henderson or Maclay Murray and Spens.  Nor do they produce any extraneous material.  That does not persuade me that it can be said at this time that the pursuers’ case has no real prospect of success.  Accordingly, the second defenders’ motion falls to be refused.

What If I Am Wrong?
[20]      If I am wrong in disposing of the motion on the foregoing basis then what next?  Even proceeding on the basis that the pursuers’ pleadings are irrelevant and lacking in specification and that I must take cognisance of the fact that the pursuers have not produced any extraneous material to bolster their case I would not grant the second defenders’ motion for summary decree of dismissal.

[21]      In both Henderson and Maclay Murray and Spens it is clear that the motion was considered after the closing of the record and thus that the party concerned had had the opportunity to which they were entitled to make the most of their pleadings.  In Henderson, the defenders had even been allowed to amend their pleadings on appeal from the grant of summary decree against them before the appeal was allowed and the case remitted back to the Lord Ordinary for a further hearing on the motion for summary decree.  In Maclay Murray and Spens, there had also been a completed recovery of documents procedure.  In these respects, this case is distinguishable from both Henderson and Maclay Murray and Spens.

[22]      This case is in the middle of an adjustment period during which the pursuers are entitled to make adjustments to their pleadings.  They also hold an order for recovery of documents by commission and diligence which has still to be completed.  In my view, fairness demands that the pursuers have the opportunity to adjust their pleadings as provided for in the ordinary cause rules and to recover what documents they can by commission and diligence before consideration is given to whether or not summary decree of dismissal ought to be granted.  Accordingly, I would have exercised the discretion vested in me by rule 17.2 by refusing to grant the second defenders’ motion.

 
Expenses

[23]      I have not been addressed on the question of expenses.  I suspect that parties will agree that expenses should follow success.  If that is the case then parties should lodge a joint minute to that effect and I will grant the appropriate interlocutor in chambers.  However, if parties wish to address me on the matter they should alert my clerk and a hearing will be fixed.