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Scottish Court of Session Decisions
You are here: BAILII >> Databases >> Scottish Court of Session Decisions >> McClelland v. Stuart Building Services & Ors [2004] ScotCS 200 (06 August 2004)
URL: http://www.bailii.org/scot/cases/ScotCS/2004/200.html
Cite as: [2004] ScotCS 200

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McClelland v. Stuart Building Services & Ors [2004] ScotCS 200 (06 August 2004)

FIRST DIVISION, INNER HOUSE, COURT OF SESSION

Lord President

Lady Cosgrove

Lord Wheatley

 

 

 

 

 

 

 

OPINION OF THE COURT

delivered by THE LORD PRESIDENT

in

RECLAIMING MOTION

by

DAVID McCLELLAND

Pursuer;

against

STUART BUILDING SERVICES, a partnership and ALEXANDER STUART and FREDA THOMSON STUART, the partners thereof as such partners and as individuals

Defenders:

_______

 

 

Act: Davidson; Campbell Smith Gray Muirhead (Pursuer & Reclaimer)

Alt: Crawford; Aitken Nairn (Defenders & Respondents)

6 August 2004

[1]      The pursuer has reclaimed against the interlocutor of the temporary judge dated 28 January 2003 in which he sustained the defenders' first plea in law, a plea that the action was time-barred, and dismissed the action.

[2]      The procedural history of the case is as follows. The summons was signetted on 8 March 1999. On 8 November 1999 the pursuer raised the action against R. & G. Farming and Stuart Building Services Limited, as first and second defenders, in respect of personal injuries suffered by him in an accident on 9 November 1996 at the first defenders' farm at Abernyte. He averred that at the time he was employed by the second defenders as a labourer performing work at the farm. On 7 December 1999 the action was sisted to enable the pursuer to apply for legal aid. On 25 April 2000 the sist was recalled. On 30 August 2000 defences for the second defenders were allowed to be received late. They averred the pursuer had in fact been employed by Stuart Building Services, and that Stuart Building Services Limited had been incorporated on 4 April 1996 but was dormant within the meaning of section 252 of the Companies Act 1985 throughout the period ending on 31 December 1996. On 21 November 2000 the pursuer abandoned the action so far as directed against the first defenders. On 1 December 2000, on the unopposed motion of the pursuer, the court allowed the summons to be amended so as to delete Stuart Building Services Limited as the remaining defenders and substitute therefor Stuart Building Services, as a partnership, along with Alexander Stuart and Freda Thomson Stuart as partners and as individuals. Warrant was granted to serve the summons as so amended. Service was effected on 20 December 2000.

[3]      According to the pursuer's averments, as they stood at the time of the debate before the temporary judge, the pursuer had been unaware of the correct identity of his employers. Prior to taking up employment he had been interviewed by Alexander Stuart. He was not supplied with any statement of the terms and conditions of his employment. On 19 December 1996 solicitors acting on his behalf intimated a claim to Stuart Building Services Limited at Chapelhill Farm, Trinity Gask, Perthshire. By letter dated 23 April 1997 Guardian Insurance Limited replied to the solicitors' claim, referring to the insured as "Stuart Building Services". They stated that they had investigated the accident on behalf of the insured and declined to accept liability. They did not point out that there was any significant difference between Stuart Building Services and Stuart Building Services Limited. At that time the pursuer's solicitors did not realise the significance of the omission of "Ltd" or "Limited". Following the lodging of the defences new solicitors representing the pursuer wrote to the solicitors who represented Stuart Building Services Limited advising that they were acting for the pursuer and asking for the exact designation and address of their clients, stating that there seemed to be some confusion as far as they and their correspondents were concerned. The pursuer also averred that Stuart Building Services Limited, which had been incorporated on 4 April 1996, had their registered office at Chapelhill Farm. The same solicitors represented both Stuart Building Services Limited and the defenders. Guardian Insurance Limited were the past and present insurers. At no point prior to the lodging of the defences did Stuart Building Services Limited or the defenders or any person handling a claim point out that there had been a misunderstanding, and in particular that the pursuer had not been employed by a limited company but by a partnership.

[4]      Before the temporary judge counsel for the pursuer accepted that the sole basis on which the pursuer could meet the defenders' plea of time-bar was if he could persuade him to exercise his discretion, in terms of section 19A of the Prescription and Limitation (Scotland) Act 1973, to allow the action to proceed. In his Opinion the temporary judge observed that it was the solicitors' failure to note who was the correct defender at the early stage of the first reply from the insurers that caused the subsequent difficulties. He was not of the view that that mistake was such as could have been made without a failure to pay proper attention. He noted that the defenders did not claim any difficulty in investigation. However, he concluded:

"The wrong defender was convened and there does not appear to me to be any excuse for that. It is not, in my view, equitable that a correct defender be substituted for an incorrect defender over four years after the accident, absent any good reason for that occurring. Given the failure to establish who the pursuer's employers were, after the clear indication from the insurers as to who their insured was, and given the fact that the pursuer's payslips did not indicate that he was employed by a limited liability company, I am not persuaded that on the pursuer's averments there is pled an appropriate case to enable me to exercise my discretion in favour of allowing the action to proceed".

 [5]      During the course of proceedings in the Inner House the pursuer amended his pleadings. He added averments that on or about 8 January 1997 Alexander Stuart or Freda Thomson Stuart telephoned the pursuer's solicitors and confirmed that the letter of 19 December 1996 intimating the pursuer's claim had been received. He or she advised that the letter was going to be forwarded to "their insurers". The conversation lasted five minutes. At no time was it pointed out that Stuart Building Services Limited was dormant or had not been the employers of the pursuer at the date of the accident. The pursuer's solicitor wrongly assumed that the pursuer had been employed by a private limited company. She did not thoroughly research the designation of the pursuer's former employers and did not specifically ask Alexander Stuart or Freda Thomson Stuart to confirm the position. Since the incorporation of Stuart Building Services Limited they were and are the directors of that company. There was, and is, no clue in the descriptive name "Stuart Building Services" to indicate that it was a partnership. Many public and private companies in the United Kingdom are referred to without specifying the words "plc", "Ltd" or "Limited". When intimating the pursuer's claim to the limited company the pursuer's local agents inadvertently used the name Stuart Building Services Limited. Their reminders in letters dated 14 February and 14 April 1997 were also addressed to that company.

[6]      For the pursuer Mr. Davidson invited this court to recall the interlocutor of the temporary judge and to allow a preliminary proof related to the application of section 19A to the circumstances of the present case. He submitted that the exercise by the temporary judge of his discretion was open to attack in respect that, in concentrating almost exclusively on the conduct of the parties, he had failed to have regard to the lack of actual prejudice to the defenders, apart from the loss of their defence of time-bar. Furthermore, he had wrongly had regard to wage slips. The defenders' averments in relation to them were not admitted, and there had been no agreement in respect of them. There was also a separate question as to whether the action had been defended throughout by a single interest.

[7]      Mr. Davidson went on to submit that, even if it was the case that the pay slips referred to the pursuer's employers as Stuart Building Services, this was not determinative of the legal entity by which he was employed. A mistake which consisted of failing to distinguish between the limited company and a partnership which had almost the same name should be considered more generously. It was wrong for the temporary judge to assert that there was a clear implication from the insurers' letter that the pursuer had been employed by a partnership. The pursuer's solicitor had been lulled into a false sense of security.

[8]      It was also submitted that the temporary judge had said hardly anything about the prospects of the pursuer making a successful claim against his solicitors. He merely expressed the opinion that the local solicitor had made a mistake. The temporary judge had not even said that there was a prima facie case of professional negligence. As regards the defenders' position, it had to be borne in mind that it was not said that they would have any difficulty in investigating the claim. The results of the insurers' investigations were available. There was no suggestion that the evidence of any witness had been lost through death or impaired through illness or dimming of memory.

[9]      For the defenders Miss Crawford emphasised that it was for the pursuer to aver the facts and circumstances which would provide an appropriate basis for the exercise of discretion in his favour. She maintained that there had been no misdirection on the part of the temporary judge. The amendments which had been made by the pursuer merely followed the same theme as that of the existing averments and did not alter the position. It was well-recognised that if there had been apparent negligence on the part of the representatives of a pursuer, the court would be reluctant to exercise its discretion in his favour. Section 19A did not provide an automatic release from the effect of the negligence of a solicitor. It was wrong to argue that the defenders would obtain a windfall benefit.

[10]      The initial question to which we have to direct our attention is whether the exercise of the discretion of the temporary judge, as set out in his Opinion, is open to successful attack (Elliot v. J.K.C. Finney 1989 S.L.T. 605 per Lord Justice Clerk Ross at page 607). In Forsyth v. A.F. Stoddard & Company Limited 1985 S.L.T. 51 Lord Justice Clerk Wheatley, at page 53 observed:

"And when this matter is brought before the appeal court the test is not primo loco whether that court considers it equitable to permit the action to proceed but is whether the judge in the court below in the exercise of his unfettered discretion has misdirected himself in law or otherwise transgressed the limits of discretion reposed in him so as to permit an appellate court to intervene and set aside his decision".

 [11]      There is some force in the pursuer's criticism of the approach which the temporary judge took to the conduct of the pursuer and his local solicitor. The temporary judge went too far in saying that the insurers' letter "indicated plainly that their insured was the partnership which was in fact the sole trading entity". As we have already noted, he referred at the end of his Opinion to this as "the clear indication from the insurers as to who their insured was". At the same time it should at least have raised a question as to whether the pursuer's employers had been a limited company, as the solicitor assumed, or had been some other legal entity such as partnership or a sole trader. The temporary judge evidently fortified his view by reference to the pay slips which had been handed to him by the defenders during the course of the debate. Quite apart from the fact that they were not the subject of admission or agreement, the same point evidently applies to them.

[12]      Further, it does not appear that the temporary judge gave much, if any, consideration to the associated question as to whether the pursuer would have prospects of success in a claim against his solicitor. That was plainly of significance in regard to whether, and to what extent, the pursuer would be prejudiced by the present action being brought to an end.

[13]      There is a further aspect of the case which, it appears, the temporary judge did not take into consideration. The pleadings of the parties show that the claim made on behalf of the pursuer against the limited company was treated by the defenders and their insurers as a claim against the defenders. We should add that in the course of the hearing of the reclaiming motion Miss Crawford accepted that at the time the sole insurance was that of the defenders with the Guardian Insurance Company. Furthermore, it is of some significance that when the pursuer's solicitors realised that the action had been raised against the wrong entity, the authority of the court was sought and obtained to amend the instance so as to substitute the defenders for the limited company. This was done without provision for the abandonment of the action against the limited company, let alone provision for payment of their expenses. It appears that, although an order was made for service on the defenders, the amendment was treated by the pursuer, without demur on the part of the limited company, as a substitution of the defenders as the real defenders in the case. It is not possible, on the basis of the pleadings, to determine the circumstances in which this took place, nor on whose instructions defences had been lodged on behalf of the limited company. However, the overall inference which arises from the pursuer's pleadings is that from the outset the real and continuing interest in resisting the pursuer's claim was that of the defenders.

[14]      In these circumstances we are satisfied that the Lord Ordinary misdirected himself in the exercise of his discretion. It follows that it is open to this court to consider for itself whether, despite the fact that the action was brought against the defenders some four years after the accident, it is equitable that it should be allowed to proceed. We do not doubt that the pursuer's solicitor should not have assumed that the pursuer had been employed by the limited company. The solicitor should have made enquiry as to the identity of his employers, in particular in the light of the insurer's reference to "Stuart Building Services". As regards the defenders, we take into account, as did the temporary judge, that the delay did not of itself cause any prejudice to them. While there is no doubt that the limited company and the defenders were distinct legal entities, the distinction between them for the purposes of resistance to the pursuer's claim appears to us to be highly technical, for the reasons which we have given above. While there would be some prospects of the pursuer succeeding in a claim against his former solicitors, it cannot be assumed that it is more probable than not that the claim would succeed.

[15]      In these circumstances we are fully satisfied that Mr. Davidson has made good his submission that the pursuer would be entitled to enquiry in regard to the application of section 19A in the circumstances of the present case. However, it is open to question whether the holding of a proof would serve any practical purpose. Miss Crawford drew our attention to the fact that in Clark v. McLean 1994 S.C. 410 the court observed at page 414 that there was no need for enquiry where there was no particular issue of fact between the parties which required to be established by proof and where all of the issues could be dealt with perfectly well on ex parte submissions, as they would have been at procedure roll. Our provisional view is that the same applies in the present case. However, as Mr. Davidson did not go so far as to invite this court to exercise the discretion under section 19A without enquiring into the circumstances, the case will be put out By Order so that parties can address the court on the question whether, in the light of the conclusions which we have reached, any useful purpose would be served by allowing proof, as opposed to the court exercising its discretion in favour of allowing the action to proceed.

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