EXTRA DIVISION, INNER HOUSE, COURT OF SESSION
Lord Emslie Lady Clark of Calton Lord Osborne	[2012] CSIH 74 XA123/11 OPINION OF THE COURT delivered by LORD EMSLIE in the Appeal by ANDREW SIMPSON Pursuer and Appellant; against JENNIFER DOWNIE Defender and Respondent: _______

Act: J.M. Scott, Q.C.; Thorley Stephenson SSC

Alt: Innes; MHD Law LLP (for Machardy, Alexander & Whyte WS)

3 October 2012

Introduction

[1] Section 28 of the Family Law (Scotland) Act 2006 provides inter alia:

"...

(2) On the application of a cohabitant (the 'applicant'), the appropriate court may, after having regard to the matters mentioned in sub-section (3) ―

(a) make an order requiring the other cohabitant ('the defender') to pay a capital sum of an amount specified in the order to the applicant; ...

(3) Those matters are ―

(a) whether (and, if so, to what extent) the defender has derived economic advantage from contributions made by the applicant; and

(b) whether (and if so, to what extent) the applicant has suffered economic disadvantage in the interests of ―

(i) the defender ...

(4) In considering whether to make an order under sub-section (2)(a), the appropriate court shall have regard to the matters mentioned in sub-sections (5) and (6).

(5) The first matter is the extent to which any economic advantage derived by the defender from contributions made by the applicant is offset by any economic disadvantage suffered by the defender in the interests of ―

(a) the applicant ...

(6) The second matter is the extent to which any economic disadvantage suffered by the applicant in the interests of ―

(a) the defender ...

is offset by any economic advantage the applicant has derived from contributions made by the defender.

...

(8) ... Subject to section 29A, any application under this section shall be made not later than one year after the day on which the cohabitants cease to cohabit.

..."

[2] Similar provisions, fenced with a six-month time-limit, appear in section 29 to cover claims where cohabitation has ceased through a party's death. Section 29A makes provision for an eight-week extension of time following the conclusion of any cross-border mediation attempt. Otherwise the periods in sections 28 and 29 are fixed, and the court is given no power to extend them in any circumstances.

[3] The pursuer and defender fall within the definition of "cohabitant[s]" contained in section 25 of the Act, in respect that, at one time, they formed a couple living together as husband and wife. It is a matter of agreement that they ceased to cohabit on 13 March 2009. Thereafter, within the one-year period stipulated in section 28(8), the pursuer applied to the sheriff at Forfar for a financial order in his favour. The defender, however, made no such application within the statutory period, and it was not until 27 April 2010 that she lodged defences incorporating a crave for financial provision on her own account.

[4] The short point raised in this appeal is whether, as the pursuer maintains, the defender's claim for financial provisions falls to be dismissed as time-barred by virtue of section 28(8) of the Act.

[5] When the case came before the sheriff at debate in November 2010 the pursuer had tabled no plea to jurisdiction, competency or time-bar, yet he was permitted to argue that the defender's claim should nevertheless be dismissed. In reply, while not objecting to the argument as such, the defender drew attention to the lack of a formal plea. The sheriff then proceeded to uphold the validity of the defender's late claim, on the basis that it formed an integral part of her defences and was relevant to the offsetting exercise envisaged in section 28(3), (5) and (6) of the Act. In the sheriff's view, both parties must be afforded an opportunity to put their pleadings in order.

[6] The pursuer duly marked an appeal to the sheriff principal who, albeit on slightly different grounds, affirmed the decision of the sheriff and remitted back to him to proceed as accords. The view taken by the sheriff principal, as expressed in his note, was that section 28(8) imposed only a procedural bar and should therefore be characterised as a limitation provision; that a plea of limitation was for the benefited party to take and might be waived; and that by failing to table a formal plea before the Record closed the pursuer must be taken to have passed from any challenge to the defender's claim on time-bar grounds. In that context, although no plea of waiver had been tabled by the defender, he refused to allow the pursuer to introduce formal time-bar pleas by way of amendment. At the same time, the sheriff principal recognised that the defender's claim was procedurally inept where, in error, applications under section 28 had been omitted from the list of family actions in the Sheriff Court Ordinary Cause Rule ("OCR") 33.1. Proceeding by way of a simple crave in defences was therefore excluded, and a counterclaim complying with OCR 19.1 should have been lodged instead.

The present appeal

[7] Before this court, the position advanced by senior counsel for the pursuer differed from that which had been unsuccessful in the court below. No longer was it contended that the defender's claim should be taken to have been extinguished by any form of prescription. On the contrary, section 28 of the Act was characterised as a free-standing, self-contained statutory innovation whereby Parliament, for the first time, allowed cohabitants to apply to the court for financial provision when their cohabitation ceased. This novel entitlement arose only where the stated conditions for its exercise were met, and of these the most important was compliance with the one-year time-limit under sub-section (8). No pre-existing substantive right was involved; only an eligibility to benefit from the court's discretion was in issue; and the straightforward answer to the present problem was that, in order to qualify under section 28, an application had to be made within the prescribed one-year statutory period. Compliance with the requirement in sub-section (8) was, in other words, an integral and imperative precondition without which there could be no statutory entitlement, and the court's jurisdiction under sub-section (2) could not competently be engaged. Section 28(8) was thus quite different in nature from provisions such as sections 6 and 17 of the Prescription and Limitation (Scotland) Act 1973, which concerned the extinction of independent substantive rights or the limitation of pre-existing rights of action. The issue arising under section 28(8) was one of strict competency, or perhaps one concerning the jurisdiction of the court to entertain a cohabitant's claim. It was not an issue of prescription, nor a fortiori of limitation, at all. Sections 28 and 29 of the Act could, moreover, be traced back to a report by the Scottish Law Commission on Family Law in 1992 (No. 135), where the imposition of fixed time-limits was seen as a necessary means of discouraging stale claims. In that report the Commission had proposed a statutory power under section 29, but not under section 28, for the court to extend the time-limit in special circumstances. Significantly, however, that proposal had not met with parliamentary approval.

[8] In further support of her argument, senior counsel referred us to a range of authorities which vouched a strict approach to similarly-worded statutory time-limits. These included inter alia WY v Law Society of Scotland 2009 SC 430; Petch v Gurney [1994] 3 All ER 731; Regina v Weir [2001] 1 WLR 421; and Mucelli v Government of Albania [2009] 1 WLR 276. In addition, Royal Bank of Scotland plc v Clydebank District Council 1992 SLT 356 was a case in which the court enforced a strict six-year time-limit affecting claims for statutory compensation notwithstanding the fact that both parties sought adjudication on the matter. Similarly, in Treadwell's Drifters Inc v RCL Ltd 1996 SLT 1048, the Lord Ordinary ex proprio motu dismissed an action as incompetent even though no such issue had been formally raised by either party.

[9] In the result, it was said, the sheriff principal had affirmed an incompetent claim which was not even in proper form. This appeal should therefore be sustained and the interlocutors of the sheriff and sheriff principal recalled. Even if, contrary to senior counsel's main argument, it had been open to the sheriff principal to characterise section 28(8) as a mere limitation provision, there was no valid reason why the pursuer's proposed amendment should have been refused. The pursuer's intention to take the time-bar point had been intimated to the defender well in advance of the debate; the argument had been entertained at debate without objection; no question of waiver could thus arise, and no such plea had been tabled; and in the absence of any prejudice to the defender the introduction of confirmatory pleas should have been allowed. In these respects, the court's discretion had not been exercised on a proper basis, and the difficulty was compounded if the sheriff principal had, in addition, erred in his characterisation of section 28(8).

[10] In resisting the appeal, counsel for the defender submitted that the sheriff principal's reasoning and conclusions were sound and should be affirmed. Properly construed, section 28(8) comprised only a procedural bar capable of being asserted or waived by the benefited party. As the House of Lords had made clear in Ketteman v Hansel Properties Ltd [1987] AC 189, especially in the speech of Lord Griffiths at p.219, a plea of limitation must be tabled or the right of challenge would be lost. In addition, many of the pursuer's authorities fell to be distinguished as concerning appeal time-limits rather than first instance claims, and as cases in which no argument based on waiver was before the court. Significantly, in Connell v Ferguson (1857) 19D 482, Lord Deas had opined that it was not pars judicis for the Lord Ordinary to dismiss an action on competency grounds where, without formal objection, proceedings had taken place in various courts over a period of some 7 years. By reference to Macphail, Sheriff Court Practice, 3^rd ed, at para 2.09, and to the opinion of Lord Young in Douglas v Tait (1884) 12 R 10, at p.14, it should not be regarded as pars judicis for the court to take a technical point on competency unless either a nullity, or some important external interest, could be identified. It made no difference that, in this case, section 28(8) formed part of the same section by which the statutory entitlement to claim had been introduced. Sub-section (2) did not itself contain any restriction as to time, nor any cross-reference to sub-section (8). In addition, as the sheriff recognised, there could be unfairness if a claim by one party on the eve of the time-limit could not be met by a full defence. In the whole circumstances, bearing in mind that the proper construction of section 28 was not necessarily self-evident, the sheriff principal had been entitled to do what he did.

Discussion

[11] As Millet LJ explained in Petch v Gurney at pp.736-8, an important question in the case of any statutory time-limit is whether its provisions were intended to be mandatory or merely directory. In order to resolve such an issue, the court must look to the subject matter and context of the provisions in question, and seek to ascertain the real intention of the legislature:

"Where statute requires an act to be done in a particular manner, it may be possible to regard the requirement that the act be done as mandatory but the requirement that it be done in a particular manner as merely directory. In such a case the statutory requirement can be treated as substantially complied with if the act is done in a manner which is not less satisfactory having regard to the purpose of the legislature in imposing the requirement. But that is not the case with a stipulation as to time. If the only time-limit which is prescribed is not obligatory, there is no time-limit at all. Doing an act late is not the equivalent of doing it in time. That is why Grove J said in Barker v Palmer (1881) 8 QBD 9, at 10 - 'provisions with respect to time are always obligatory, unless a power of extending the time is given to the court'. This probably cannot be laid down as a universal rule, but in my judgment it must be the normal one. Unless the court is given a power to extend the time, or some other and final mandatory time limit can be spelled out of the statute, a time limit cannot be relaxed without being dispensed with altogether; and it cannot be dispensed with altogether unless the substantive requirement itself can be dispensed with."

[12] Along similar lines, in Royal Bank of Scotland plc v Clydebank District Council, the Lord Justice Clerk (Ross) held that where the relevant six-year time-limit had not been complied with the respondents had no enforceable claim to compensation. At p.361 he said this:

"The legislation makes it clear that the assessment of compensation is to be undertaken by the Lands Tribunal and also that after the lapse of six years from the date on which the claimant first knew of the vesting of the interest the claim can no longer be referred to the tribunal. ... (The) obligation on the acquiring authority is an obligation to pay compensation as provided for in the statute, that is, an obligation to pay compensation where that has been agreed or has been assessed by the Lands Tribunal. Since it was no longer possible for the compensation to be assessed by the Lands Tribunal, the result is that the respondents are under no obligation to pay compensation unless compensation was agreed between the parties. ... (In) the circumstances which have occurred, the petitioners have no enforceable right to payment of compensation."

In the same case, Lord McCluskey at p.364 put the matter in this way:

"In my opinion, it is impossible to separate the right to compensation from the statutory framework for determining what that compensation should be. Part of that statutory framework is that any reference to the Lands Tribunal to determine a question of disputed compensation must be made within six years from the date of vesting. I have no difficulty in reading that provision ... as cutting off the right of either or both parties to go to the tribunal after six years, and indeed this was not in dispute ... But if the right of the dispossessed owner to have the compensation determined by the tribunal is lost, then what is left? The only right left is the right to receive whatever sum the parties might agree should be paid."

[13] With these observations in mind, and after giving careful consideration to the competing submissions before us, we have reached the conclusion that the parliamentary intention behind section 28, read as a whole, is that the court's novel jurisdiction to entertain cohabitants' financial claims may be exercised only in respect of applications which are made within the one year time-limit laid down in sub-section (8). The entitlement conferred by sub-section (2) is in our view of a procedural nature, permitting a claimant to seek a discretionary order from the court. A cohabitant has no independent substantive right to financial provision. Section 28(2) conferring the new entitlement, and sub-section (8) spelling out the time-limit, seem to us to be intimately connected, such that their combined effect is exactly as it would have been if sub-section (2), standing alone, had commenced with the words "On an application made not later than one year after the day on which the cohabitants cease to cohabit ...". Either way, in our opinion, it is only compliance with the time-limit which validates an application and clothes the court with the necessary jurisdiction. Failing such compliance, an essential qualifying component of the statutory scheme is missing, and in such circumstances we do not consider that section 28(2) can competently be operated as if it stood alone. For the purposes of that sub-section, in other words, the only qualifying application is one made within the one-year time-limit under sub-section (8). On that basis senior counsel for the pursuer was, in our view, well-founded in describing the issue as one of jurisdictional competency, rather than as one involving either an extinctive prescription or, alternatively, the limitation of a pre-existing right of action. As it seems to us, these conclusions flow from a proper analysis of the nature and context of the statutory provisions in question. We are, however, also influenced by the further considerations (i) that the purpose of the short statutory time-limits in sections 28, 29 and 29A of the Act was to discourage stale claims; and (ii) that Parliament enacted these time-limits without conferring any relevant power of extension or relief on the court.

[14] No doubt a strict statutory regime of this kind may work hardship in some cases, for example where one party delays making a claim until the one-year period is nearly up and the other, taken by surprise, is left with no opportunity to follow suit. On the other hand, Parliament must have envisaged such circumstances when the relevant provisions were enacted, and deliberately elected to make no provision for discretionary relief. In any event, the provisions of section 28(3), (5) and (6) clearly entitle a party to lodge effective offsetting defences even though the possibility of a net payment in his or her favour may be denied on time-bar grounds.

[15] For completeness we should add that, had it been necessary for us to do so, we would have felt unable to support the sheriff principal's refusal to allow the amendment by which the pursuer sought to introduce formal time-bar pleas. For the reasons set out above, it seems to us that the sheriff principal erred in law in characterising section 28(8) as a mere limitation provision which could be waived by the pursuer as the benefited party. Furthermore, we would respectfully question whether the conditions for waiver were met in this case where there was no question of the pursuer abandoning his challenge to the competency of the defender's claim. Intimation of that challenge pre-dated the debate, and the argument was then fully deployed, without objection, notwithstanding the absence of a formal plea. Where the case had essentially progressed no further than the debate stage, and the real question in controversy between the parties was obvious, we can see no sound reason why the pursuer's minute of amendment should not have been allowed. Other than the loss of a windfall advantage gained on technical grounds, the defender could point to no obvious prejudice. There is also the further consideration, to which the sheriff principal appears to have attached little or no weight, that the defender's claim was not in proper form under OCR 19.1.

Disposal

[16] In the result we shall sustain the appeal, recall the interlocutors of the sheriff and sheriff principal dated 9 December 2010 and 17 August 2011, and dismiss as incompetent the defender's crave for financial provision under section 28 of the 2006 Act. Even at the hearing of this appeal, the pursuer's contentions on competency were advanced without objection from the defender, and in all the circumstances we see no need to take the formal step of allowing the pursuer's amendment at this stage.