BAILII is celebrating 24 years of free online access to the law! Would you consider making a contribution?
No donation is too small. If every visitor before 31 December gives just £1, it will have a significant impact on BAILII's ability to continue providing free access to the law.
Thank you very much for your support!
 |
[Home] [Databases] [World Law] [Multidatabase Search] [Help] [Feedback] | |
Scottish Court of Session Decisions |
||
|
You are here: BAILII >> Databases >> Scottish Court of Session Decisions >> Deans v. Thus Plc [2004] ScotCS 53 (03 March 2004) URL: http://www.bailii.org/scot/cases/ScotCS/2004/53.html Cite as: 2005 SCLR 148, [2004] ScotCS 53 |
||
[New search] [Help]
|
OUTER HOUSE, COURT OF SESSION |
|
|
CA76/03
|
OPINION OF LORD CLARKE in the cause JOHN DEANS Pursuer; against THUS PLC Defenders:
________________ |
Pursuer: Ellis, Q.C.; MacRoberts
Defenders: Davies; Harper Macleod
3 March 2004
[1] In this action the pursuer sues his former employers, the defenders, in the first place for damages of £97,764.84 for breach of contract and, in the second place, for payment of £33,600.00 which he claims represents sums due to be paid to him by the defenders under his contract with them.[2] The pursuer's damages claim is said to be in respect of a failure by the defenders and their predecessors as his employers (a company known as "Tele Data Limited") to enrol him in the Scottish Power Pension Scheme and to make the periodic payments necessary for his membership, including an employer's contribution of 5% of the pursuer's gross salary. The defenders do not dispute that they would be liable to the pursuer, not only in respect of any breaches of contract on their part in that regard, but also for any breach by their predecessors, Tele Data Limited. The defenders in answer 3 aver:
"Admitted that Tele Data Limited were in breach of contract in failing to arrange for the pursuer to be enrolled in the Scottish Power Pension Scheme in or about November 1996".
"The pursuer's right to recover the damages first concluded for, having prescribed in terms of section 6 of the Prescription and Limitation (Scotland) Act 1973, the first conclusion should be dismissed".
On 13 October 2003, I allowed the parties a debate on that plea. I also appointed the parties to lodge, in process, not later than two days before the debate, a note of argument stating the legal propositions on which it was proposed to submit that any preliminary plea should be sustained or repelled, with reference to the principal authorities and statutory authorities to be founded on. The pursuer obtempered that order. The defenders did not. When asked to explain why no note of argument had been lodged for the defenders, defenders' counsel said that it had been thought sufficient that in the note on further procedure which had been lodged, in advance of a procedural hearing, notice was given of what the defenders would intend to argue in support of the fourth plea-in-law. I did not find that to be an acceptable excuse for the defenders' failure to lodge a note of argument with reference to the authorities which were to be relied upon. I wish to make it clear that, in commercial procedure, at least, if the Court makes an order of that kind, it does so for good reason and it is not for the parties themselves to decide that they are free to ignore it. One of the purposes of requiring a note of argument is to ensure that the representatives of the party seeking to discuss a preliminary plea, at debate, apply their minds, in advance of the debate, to what exactly is the position they wish to advance at the debate. In the present case, it appeared to me, that counsel for the defenders, from time to time at least, had some difficulty in informing the Court exactly what position he was adopting in relation to the prescription plea. Some of that difficulty might have been reduced had a note of argument, clearly focussing the defenders' position, been prepared and lodged before the debate.
[4] The pursuer was employed as a sales manager with the defenders' predecessors and then the defenders during the period from 1 November 1996 until 31 December 2002. In his contract of employment, 6/1 of process, it is provided, among other things, under the heading "Pay and Benefits" "the employer contributes 5% to a pension scheme of your choice". The "5%" was agreed to be a reference to 5% of the pursuer's gross annual salary. It is averred, on behalf of the pursuer, in Article 2 of the summons as follows:
"Tele Data Limited were able to enrol their employees in the Scottish Power Pension Scheme. They had advised the pursuer of that possibility. By letter dated 11 November 1996 addressed to Tele Data Limited the pursuer indicated that he wished to join the Scottish Power Pension Scheme. This involved a deduction from the pursuer's gross salary in addition to the employer's contribution hereinbefore averred. By letter dated 19 November 1996 Tele Data Limited responded to the pursuer's letter dated 11 November 1996 inter alia confirming that the pursuer would be enrolled in the 'Scottish Power Final Salary Pension Scheme'".
The letters just referred to are respectively Nos.6/2 and 6/3 of process. It is a matter of admission that between 19 November 1996 and 31 December 2002, when the pursuer's employment with the defenders came to an end, he was never enrolled by either Tele Data Limited or the defenders in the Scottish Power Pension Scheme and that no contribution to any pension scheme was made on his behalf by Tele Data Limited or the defenders. Nor for that matter were any deductions made from his salary in respect of pension contributions.
[5] In opening his submissions, at the debate, counsel for the defenders said that his primary position was that the whole of the pursuer's claim for damages, in conclusion 1, should be dismissed as having prescribed. He said he had a fallback position which was to the effect that the claim had prescribed in part. Counsel referred to the way in which the damages claim appeared to be formulated, on behalf of the pursuer, supported by an actuarial report which had been lodged in process. The quantification of the claim was, it seemed, predicated on the basis that the pursuer should have been enrolled in the pension scheme from November 1996 and that he should have had the benefit of being so enrolled accruing from November 1996. Counsel for the defenders submitted that it was important to identify what was the obligation which it was said had been breached. He contended that, on the basis of the pursuer's own pleadings, it was a contractual obligation to enrol the pursuer in the Scottish Power Pension Scheme in or about November 1996. That obligation had subsisted for a period of 5 years before the raising of the present proceedings. The present proceedings were not raised until 23 May 2003. The obligation had, therefore, prescribed in terms of section 6 and Schedule 1 of the Prescription and Limitation (Scotland) Act 1973. Section 6(1) of the 1973 Act is in the following terms:
"If, after the appropriate date, an obligation to which this section applies has subsisted for a continuous period of five years -
(a) without any relevant claim having been made in relation to the obligation, and
(b) without the subsistence of the obligation having been relevantly acknowledged,
then as from the expiration of that period the obligation shall be extinguished".
Schedule 1, para.1(g) of the Act provides that section 6 will apply "to any obligation arising from, or by reason of any breach of, a contract or promise, not being an obligation falling within any other provision of this paragraph".
[6] Having made the foregoing submission, counsel for the defenders then, however, sought to analyse the position in a different way. The obligation of the defenders and their predecessors, could be viewed as an obligation to pay, each month, a contribution towards the pension scheme. On that approach to matters the pursuer's case would have prescribed in respect of payments which should have been made up until May 1998, being 5 years before the raising of the present proceedings, but, on the other hand, the pursuer's claim in respect of individual payments, which ought to have been made thereafter, into the pension scheme, would not have prescribed. When it was put to him that there might be a third way of seeing matters, namely that the breach of obligation in question amounted to breach of a continuing obligation in the contract of employment, between the pursuer and the defenders, and their predecessors, counsel for the defenders said that he did not accept that matters could be or should be viewed in that way. That was, in any event, not the way in which the pursuer's own pleadings approached matters. The pursuer's position appeared to be perilled on a breach of an obligation to enrol the pursuer in the relevant pension scheme "forthwith" in November 1996. The non-enrolment of the pursuer in the scheme meant the loss to him of accruing rights from that time in terms of the pension scheme. There had been a coincidence of injuria and damnum in November 1996 and the 5 years prescriptive period ran from that time. Reference, in that connection, was made to the case of Dunlop v McGowan 1980 S.C.(H.L.) 73. It appeared from the note of argument lodged on behalf of the pursuer, that he sought to rely on the provisions of section 11(2) of the 1973 Act which are to the following effect:
"Where as a result of a continuing act, neglect or default loss, or injury or damage has occurred before the cessation of the act, neglect or default the loss, injury or damage shall be deemed for the purposes of subsection (1) above to have occurred on the date when the act, neglect or default ceased".
Section 11(1) provides:
"Subject to subsections (2) and (3) below, any obligation (whether arising from any enactment, or from any rule of law or from, or by reason of any breach of, a contract or promise) to make reparation for loss, injury or damage caused by an act, neglect or default shall be regarded for the purposes of section 6 of this Act as having become enforceable on the date when the loss, injury or damage occurred".
The provisions of section 11(2), it was submitted, would not, however, have any application to the one off failure by the defenders' predecessors to enrol the pursuer in the relevant pension scheme in November 1996. They could only apply, if at all, to a continuing obligation to make employer's contributions to the scheme. At this point, however, counsel for the defenders, suggested that the pursuer could probably have been enrolled in the scheme right up until his contract of employment terminated in 2002 and that a payment could have been made, at that stage, to represent the amount of contributions which should have been paid from November 1996. Had that occurred, however, that would simply, it was said, be "compensation" for the breach of contract which occurred in November 1996 and did not demonstrate that the obligation in question had not prescribed in November 2001. Section 11(2), it was submitted, was meant to cover cases like nuisance. It did not cover the breach of an obligation to do something within a specified time. Such a failure did not amount to a continuing breach. Counsel referred me to the provisions of Schedule 2 of the 1973 Act which, he submitted, made provision for certain kinds of continuing relationship, into which the present case did not fall. Had the pursuer nominated a private pension scheme, the breach of the defenders and their predecessors would have been the failure to make the necessary contributions into the pension scheme in question. It was difficult to see why the commencement of the breach should be postponed to the end of the contract of employment.
[7] Counsel for the defenders then referred me to the case of Reid v Beaton 1995 S.C.L.R.382. In that case an employee, who was sued by his employer for breach of contract, counterclaimed for a sum representing arrears of wages due to him for the period from 1 March 1987 until the end of October 1991. The principal action was abandoned, but the defender employee insisted on his counterclaim. The counterclaim had been received in Court on 20 September 1993. The employer pleaded, inter alia, that any sum claimed by the employee had prescribed by virtue of section 6 of the 1973 Act. The Sheriff Principal held that, in a contract of employment, where the employee is paid weekly, the obligation to pay his wages becomes enforceable, week by week, and prescribed week by week, since para.1 of Schedule 2 of the 1973 Act did not apply to postpone the operation of the prescriptive period. Having referred, however, to that case, counsel for the defenders returned his focus to his contention that the obligation to be performed was to enrol the pursuer in the relevant pension scheme in 1996. There was no continuing obligation, thereafter, to be performed. But, in any event, if one looked at matters in another way, namely that the defenders, and their predecessors, had failed to perform a continuing obligation to make monthly payments to the relevant pension scheme, then, applying the approach in the case of Reid, it was appropriate to see each failure to pay a contribution as a breach of contract which prescribed 5 years from its date. After further discussion, counsel for the defenders submitted that the latter approach to matters should be regarded by the Court as the appropriate way to analyse the position and that, accordingly, the Court should hold that the pursuer's claim had not prescribed in relation to the sums which the defenders should have paid after 23 May 1998 and that the defenders would not oppose any motion, on behalf of the pursuer, to amend his pleadings to enable him to present matters on that footing.[8] In reply senior counsel for the pursuer moved the Court to allow a proof before answer on the whole pleadings. He did not, at this stage, invite the Court to repel the defenders' plea in relation to prescription. The pursuer's position was that he sued in respect of breach of his contract of employment by the defenders and, before them, their predecessors. The breach in question related to a continuing failure on the part of the defenders and their predecessors to have him enrolled in the relevant pension scheme. There was no time limit to be found in the contract of employment whereby the employer had to carry out that obligation. Senior counsel for the pursuer said that there was nothing to prevent the employer from applying "back service credit" to enable the pursuer to get the pension benefits which he would otherwise have been entitled to had he been enrolled in the pension scheme in November 1996. Any loss to the pursuer arising from the failure to enrol in November 1996, was not irremediable, at least until the end of his contract of employment. The pursuer could have sued for implement of the obligation in question at any time up until the termination of his contract of employment. Both the loss and damage to the pursuer, and the liability to pay damages therefor, arose when the employment ceased and it was no longer possible to enrol the pursuer in the relevant pension scheme and thus to make payment of the contributions which should have been made over the preceding years. Senior counsel for the pursuer placed great stress upon the fact that the pursuer's claim, in the present case, was one of damages rather than payment or implement. That distinguished his position, it was said, from that of the employee in the case of Reid, who was suing for payment of the sums in question. For that reason, in the case of Reid, the provisions of section 11(2) of the 1973 Act, accordingly, did not arise for consideration. In the present case the defenders, and their predecessors, had agreed to make pension contributions, in a particular way, throughout the duration of the contract of employment and the pursuer was to obtain a continuing benefit, in a particular way, throughout his contract. So the obligation, in question, was an obligation which was of a continuing nature throughout the contract of employment and the breach of it was a continuing neglect or default for the purposes of section 11(2) of the 1973 Act. The prescriptive period did not, accordingly, commence until the neglect or default ceased which was when the contract of employment was terminated.
[9] Senior counsel referred me to the discussion of the provisions of section 11(2) in Johnston on the Law of Prescription and Limitation at paras.4.65-4.73. At para.4.68 it is stated as follows:
"In the preceding sections a distinction has been drawn between cases where there is a duty to act before a certain date and cases where there is simply a continuing duty to act. In cases where there is a duty to act before a certain date, section 11(2) does not apply, since there is no continuing duty to act and no breach of duty until the deadline has passed. It is reasonably easy to say that, when the deadline is missed, the wrong and the loss flowing from it come into being".
This passage follows on from the discussion by the writer of English cases in relation to the law on limitation in that jurisdiction regarding omissions where there is no duty to act before a certain date. It is observed by the writer, at para.4.58:
"Two lines of authority can be distinguished in the English cases. First, that where there is a continuing obligation to act and an omission to do so, there is no loss until it becomes impossible to act in order to remedy the omission. Secondly, that there is loss at the initial moment of failure to act, even though the loss may only be nominal, and may in the event be sustained, if at all, only in part".
The writer then reviews Scottish cases in which such issues have been aired and at para.4.63 states:
"The Scottish cases have invariably favoured the line that the loss arises when remedying the omission becomes impossible, a line which is consistent with the 'realisation of loss' approach to cases of acts rather than omissions. Nonetheless, it was seen earlier that, where positive acts are concerned, there are cases in which the date of transaction is the appropriate date for the running of prescription. The corollary is that there are likely to be cases of omissions where on the facts it is preferable to take prescription to run from the date when the duty ought to have been performed, rather than the date when remedying the omission became impossible".
Senior counsel for the pursuer maintained that, for the time being, at least, it was sufficient for him to contend that the provisions of section 11(2) were apt to cover the present situation or, at least, that their application could not be ruled out without further inquiry into the facts. The pursuer sought to prove that the defenders, and their predecessors, had been guilty of a continuing act of default under the terms of the contract of employment. Senior counsel referred me to the Scots case of Ferguson v Maclennan 1991 S.L.T.321 and the English case of Midland Bank Trust Co Ltd v Hett Stubbs & Kemp (1979) Ch.384, both of which are discussed by Johnston on Prescription and Limitation and, which, it was said, illustrated the proposition that prescription should not begin to run in relation to an omission to act until the loss became irredeemable.
[10] I have reached the conclusion that it is not appropriate for me to reach a decision on the issue of prescription in this case without proof. It appears to me necessary that there should be inquiry into the facts and circumstances so that the nature of the obligation upon which the pursuer founds, and how it should be categorised, for the purposes of the law of prescription, can be clearly identified. Among the facts which may be relevant in this connection would be what were the possibilities for the pursuer to be enrolled in the relevant pension plan, at any time during the course of his employment, and upon what terms and with what consequences. While both counsel referred me to certain possibilities being open in terms of the relevant pension scheme, proof is required to establish precisely what these possibilities were and how they might have operated. The factual position, in that respect, is particularly important, it seems to me, if consideration is to be given to the possible operation of section 11(2) of the 1973 Act in the circumstances of this case.[11] There is also a feature of the case, upon which neither counsel relied in the discussion before me but about which, it seems to me, it might be appropriate to hear some evidence. That feature is the fact that the pursuer himself was, in terms of the agreement between himself and the defenders' predecessors, and the defenders, required to have deducted from his earnings, contributions towards the pension fund. That never appears to have been done. The defenders do not make any point about this in their defences. There is, for example, no suggestion that it raises any question of personal bar or acquiescence on the part of the pursuer. The pursuer himself, in any event, refers to "frequent reminders" by him to the defenders, and their predecessors, regarding the matter. These averments are denied by the defenders. I consider that it would be appropriate to hear the facts in relation to this question which may have a bearing on how matters fall, ultimately, to be viewed from a legal point of view.
[12] Having decided that inquiry is necessary in this case, it would be inappropriate for me to say anything more about the law, at this stage. I shall, accordingly, allow a proof before answer on the whole of the pleadings, as they stand.
