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	Scottish Court of Session Decisions
You are here: BAILII >> Databases >> Scottish Court of Session Decisions >> Bryant Homes (Scotland) Ltd & Ors v Secretary Of State For Scotland Per Greater Glasgow Health Board [2000] ScotCS 185 (6 July 2000) URL: http://www.bailii.org/scot/cases/ScotCS/2000/185.html Cite as: [2000] ScotCS 185

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[1] The present Note is one brought under Rule of Court 41.8.(1)(a) to the Inner House by the Secretary of State for Scotland per Greater Glasgow Health Board, respondents in an arbitration at the instance of Bryant Homes (Scotland) Limited, Ambion Homes Limited and John Dickie Homes Limited, claimants, known as the Mearnskirk Consortium. By letters dated 18 January 1994, 12 and 18 April and 12 and 13 July 1995, between the Consortium and Greater Glasgow Health Board, the Consortium agreed to purchase from the latter certain subjects described therein. In terms of the missives and, in particular, clause 7 of the letter of Greater Glasgow Health Board, dated 12 April 1995, the Consortium were, in the circumstances there set forth, entitled to make application to Greater Glasgow Health Board for a deduction from the purchase price of the subjects in respect of certain exceptional costs. By letter dated 14 June 1995, the Consortium made an application to Greater Glasgow Health Board for such a deduction. Thereafter correspondence passed between the parties and certain discussions took place. Following these discussions, the application was refused by Greater Glasgow Health Board on 13 October 1997. Differences having arisen between the parties as to the entitlement of the Consortium to such a deduction, in terms of clause 19 of the letter of 12 April 1995 of Greater Glasgow Health Board, such differences were referred for arbitration. In due course, by deed of submission to arbitration, dated 19, 30 and 31 July 1998, these differences were referred to the decision of Mr. Christopher R. Ford, as sole arbiter, to determine the same. Subsequently a Statement of Claim and Answers were received and adjusted and a closed record made up. Following that, the arbiter allowed the holding of a debate on the parties' preliminary pleas. Notes of argument were submitted and the parties were heard in debate on 21 July 1999.

[2] On 19 August 1999, the arbiter issued a Draft Part Award. He also issued a Note on Reason for Draft Part Award. Copies of these documents have been produced along with the present Note. Thereafter, on 6 October 1999, the respondents lodged with the arbiter a Minute under and in terms of Rule of Court 41.5 making application for a case for the Opinion of the Court on nine questions set out therein, which has also been produced. By letter dated 15 November 1999 from the clerk to the arbiter, it was intimated that the arbiter had decided, in terms of Rule of Court 41.7.(1)(a), to state a case on questions 2, 3 and 7 in the Minute. In respect of questions 4, 5 and 6, he had decided, in terms of Rule of Court 41.7.(1)(c), to defer a decision on the application until the facts had been ascertained. He refused to state a case on questions 1, 8 and 9 in the Minute. He issued a Certificate of Refusal to State a Case on 15 November 1999, which has also been produced. That certificate was intimated to the respondents under cover of a letter dated 16 November 1999 from the clerk to the arbiter.

[3] Question 1 in the Minute for the respondents under Rule of Court 41.5.(1) is in the following terms:

In respect of that question, the arbiter has refused to state a case in terms of Rule of Court 41.7.(1)(b)(i) and (ii), since he considered that the question did not arise and did not require to be decided for the purposes of the appeal. Question 8 set forth in the same Minute for the respondents was in the following terms:

The arbiter refused to state a case in relation to that question in terms of Rule of Court 41.7.(1)(b)(i), since he considered that that question did not arise. Question 9 in the respondents' Minute was in the following terms:

The arbiter refused to state a case in relation to this question, in terms of Rule of Court 41.7.(1)(b)(i), since he considered that that question did not arise, agreement having been reached that certain averments were to be deleted from the closed record. Against this background, in the present Note, the respondents seek an order on the claimants to show cause why a case should not be stated on questions 1, 8 and 9 in the respondents' Minute. They also seek certain other orders, with which, for the present purposes, it is not necessary to be concerned.

[4] When the Note came before us for a hearing, senior counsel for the respondents explained that agreement had been reached between the parties relating to question 9 in the respondents' Minute, which was accordingly no longer in issue. Having explained the background which has just been narrated, he then proceeded to point out that the letter dated 13 October 1997, written on behalf of the respondents, with which question 1 was concerned, had had a dual purpose. In the first place, it contained a decision by the respondents on the application by the Consortium for the deduction in the purchase price referred to above. In the second place, the respondents had taken the opportunity afforded by the letter to make an offer in settlement of the dispute which had arisen following that application. It was also to be noted that that part of the letter, in which the offer had been made, opened with an indication that it was written without prejudice to the decision outlined in the earlier part of the letter and entirely without any admission of liability. Furthermore, at the conclusion of the letter, it was stated that the letter had been written entirely without admission of liability and without prejudice to the whole rights and pleas of the respondents and was not to be founded upon in any proceedings which might follow thereon. Senior counsel for the respondents explained that there had been some discussion concerning the use of the letter in question at the debate. He had wished that an edited version of the letter, in which that part of it expressing the respondents' offer would have been excluded, should have been substituted for the unexpurgated version of the letter in process. However, senior counsel for the Consortium had taken up the position that it should be included or excluded in its entirety. Senior counsel for the respondents also explained that there was a practical relationship between question 1 and question 7 in the respondents' Minute. If question 7 were to be answered in the affirmative, contrary to what would be the respondents' contention, the letter, with which question 1 was concerned, would assume considerable importance, since it set forth the respondents' reasons for reaching the decision which they did on the application of the Consortium.

[5] Counsel for the respondents submitted that the arbiter had misapprehended the status of the letter of 13 October 1997. Not only had the letter of 13 October 1997 been lodged in process by the respondents, which was a fait accompli which could not be undone, but its terms had been incorporated into their pleadings by the respondents, as appeared from the averments made in Answer 6 on page 14 of the closed record. Indeed the terms of the letter were also referred to in the averments for the claimants in Statement of Facts 6 on page 13 of the closed record. In these circumstances, it had not been open to the arbiter to decide that the letter "should be excluded from process". It was difficult to understand how the arbiter could have reached the view that question 1 did not arise and did not require to be decided for the purposes of the appeal, in terms of Rule of Court 41.7.(1)(b)(i) and (ii). The use of the letter in the arbitration proceedings was plainly a matter of importance to the respondents, particularly if question 7 were to be answered in the affirmative. Furthermore, having regard to the reasons stated by the arbiter in the Note on Reason for Draft Part Award it was plain that the confidential nature of that part of the letter which referred to an offer for settlement, conceived in favour of the respondents, had been lost by the fact of the incorporation of the letter into the respondents' pleadings. Counsel for the respondents recognised that the precise terms of question 1 were not wholly satisfactory, but they had been designed to reflect the reasoning of the arbiter in the Note on Reason for Draft Part Award already referred to. Counsel for the respondents also submitted that, in the nature of things, a statement by a decision-maker of the reasons for a decision could not be confidential. The "without prejudice" language, in any event, could not apply to statements or assertions of fact, as appeared from Richardson v. Quercus Limited 1999 SC 278.

[6] Turning to deal with the issue of the proposed question 8, counsel for the respondents pointed out that there was a close connection between that question and question 7. At the debate, it had been argued on behalf of the respondents that the onus lay on the claimants to prove that the respondents had not exercised their discretion in a reasonable manner in relation to clause 7 of the qualified acceptance. However, the arbiter had found that, in terms of clause 7, the respondents had to discharge the burden of proof that they had used their discretion reasonably. It was for that reason that the respondents had sought successfully to have a case stated on question 7 in their Minute. In the event that the court answered question 7 in the negative, it would be established that the onus lay on the claimants to show the unreasonableness of the respondents' decision. It was in that situation that the significance of question 8 emerged. If the claimants were to endeavour to show the unreasonableness of the respondents' decision, then it would be necessary that they should have pleadings to that effect, which they did not, as appeared from Statement of Facts and Answer 6 in the closed record. The underlying proposition on which the respondents relied was set out in their plea in law 3 on page 19 of the closed record. This plea appeared to have been repelled, according to the terms of paragraph 6.1 of the Draft Part Award, although the position was not clear. Against the foregoing background it was difficult to understand the logic of the arbiter expressed in the Certificate of Refusal in relation to question 8. It was there said that the arbiter refused to state a case in relation to that question, in terms of Rule of Court 41.7.(1)(b)(i) "since the question does not arise". If question 7 were to be answered in the manner desired by the respondents, then plainly the issue raised by question 8 was a real one, which did arise.

[7] Senior counsel for the claimants said that, at the outset, it was necessary to recognise the nature of the procedure which had been involved before the arbiter. He had made certain decisions in the light of submissions made to him at a debate. Thereafter a request had been made for the stating of a case on certain questions. Whether a case was to be stated on those questions was, at least to some extent, a matter within the discretion of the arbiter. Where an application for the stating of a case was made before the facts had been ascertained, the arbiter might defer consideration of the application until the facts had been ascertained. In relation to question 8, in one sense, the question posed did not arise as an individual question, having regard to the conclusion which the arbiter had reached in relation to the onus of proof of reasonableness of the respondents' decision. It was of significance to note that the question raised as question 8 was not embraced within the preliminary issues described in paragraph 2 of the Note on Reason for Draft Part Award, although it was agreed that submissions had been made to the arbiter in support of the respondents' plea in law 3, as appeared from paragraph 6 of the Note on Reason for Draft Part Award, on page 8 of that document.

[8] Turning to deal with the proposed question 1 in the respondents' Minute, counsel for the claimants explained that discussion of the letter of 13 October 1997 arose for the first time on the morning of the debate. The respondents' counsel had wished to replace the production concerned with a sanitised version of the letter, which would not have contained any reference to the offer of settlement made. It had been suggested that the letter possessed significance because it contained the reasons of the respondents for the decision which they had reached. However, the respondents had not averred that their reasons were contained in that letter. Strictly speaking, any issue relating to the letter did not arise in the context of the debate which had been conducted before the arbiter. It arose in the context of a discussion of the appropriateness of the use of a document which had been produced.

[9] In the light of the foregoing arguments, we have reached the conclusion that the arbiter should be directed to state a case for the Opinion of the Court on questions 1 and 8 of the questions set forth in the Minute for the respondents, in terms of section 3(1) of the Administration of Justice (Scotland) Act 1972. Dealing first of all with question 1 of the respondents' Minute, it appears from the Certificate of Refusal to State a Case that the arbiter's refusal in relation to this question was in terms of Rule 41.7.(1)(b)(i) and (ii) "since the question does not arise and does not require to be decided for the purposes of this appeal." We find ourselves unable to agree with that ground of refusal. It is quite clear that the admissibility of the letter of 13 October 1997 was the subject of argument at the debate in fact, although we have some difficulty in understanding why that was so, having regard to the fact that the debate had been convened for the purpose of the discussion of the parties' preliminary pleas, as opposed to the making of decisions concerning the admissibility of documentary material in evidence. Be that as it may, it appears to us that the letter concerned is plainly of fundamental importance in the present arbitration. As appears from the deed of submission to arbitration itself and, in particular, paragraph (3) of the preamble, the letter concerned was the letter of refusal of the claimants' application by the respondents. Furthermore, it is quite apparent from the pleadings of the parties in the Statement of Facts and Answer 6, at pages 13 and 14 of the closed record that the letter concerned is being founded upon by both parties. Indeed, on page 14 of the closed record the letter is held as repeated in the respondents' pleadings brevitatis causa. In these circumstances, it is clear that use of the letter will inevitably be made in the course of the arbitration proceedings. It is, on the face of it, difficult to understand how it can be "excluded in its entirety" from the process. In addition to these considerations, while we would not wish to express any concluded opinion upon the terms of question 1 at this stage, we find it difficult to understand how the arbiter reached the conclusion that the "without prejudice" qualification could have survived the use of the letter in their pleadings by both parties. Prima facie, both parties have abandoned any confidential quality which the letter may have possessed by the use which they have made of it in the pleadings. In these circumstances, it appears to us that question 1 does arise and requires to be answered for the purposes of the appeal.

[10] Turning now to the issues raised in relation to question 8 in the respondents' Minute, it appears to us clear that the arbiter has repelled, inter alia, the respondents' plea in law 3, as far as it relates to the findings of the Draft Part Award. That having occurred, we cannot envisage any circumstances in which that plea in law could survive. Question 8 is, of course, designed to raise the issue of the legal soundness of that decision. While it is true that the arbiter has decided in paragraph 4.1 of the Draft Part Award that, in terms of clause 7 of the qualified acceptance, the respondents are to bear the burden of proof that they used their discretion reasonably, that decision has been made the subject of review in question 7 of the respondents' Minute. If, in due course, question 7 were to be answered in the negative and if it were to be decided that the burden of proof of the unreasonableness of the respondents' decision lay on the claimants, then plainly the issue of the adequacy of the claimants' averments in relation to that matter would arise as a real issue. However, standing the decision of the arbiter to repel plea in law 3 for the respondents, unless that decision could be challenged, the issue of the adequacy of those averments could not be ventilated. In these circumstances, we have difficulty in understanding how it can be said that question 8 "does not arise", in terms of Rule of Court 41.7.(1)(b)(i), the reason given by the arbiter for his refusal to state a case in relation to that question in the Certificate of Refusal. It appears to us that there is a direct relationship between the subject-matter of question 8 and the subject-matter of question 7, with the result that the former is a question which does arise.

[11] Accordingly, the arbiter will require to state a case which includes question 1 and question 8 in addition to those questions upon which he has already decided to state a case, namely questions 2, 3 and 7 in the Minute lodged by the respondents under and in terms of Rule of Court 41.5.