Scottish Court of Session Decisions

OUTER HOUSE, COURT OF SESSION
	[2013] CSOH 146
PD904/12	OPINION OF LORD UIST in the cause BETTY SOPHIA SMITH FERGUSON and OTHERS Pursuers; against J & A LAWSON (JOINERS) LIMITED Defenders: ________________

Pursuers: Anderson QC, Christine; Drummond Miller LLP (for Peacock Johnson, Solicitors, Glasgow)

Defenders: N R Mackenzie; Brodies LLP

30 August 2013

Introduction

[1] The late Kenneth Ferguson was born on 21 May 1934 and died on 31 August 2006 of right lung mesothelioma. His surviving relatives have raised the present action for damages against his employers from about 1968 to 1973, when he was an apprentice joiner, averring that he contracted mesothelioma as a result of their negligence and breach of statutory duties. As the action was not raised until 25 May 2012 the defenders have taken a plea of time-bar. The pursuers accept that the action is time-barred under section 17 of the Prescription and Limitation (Scotland) Act 1973 (the Act) but submit that the court should allow it to be brought outwith the limitation period on the ground that it would be equitable to do so by virtue of section 19 of the Act. The case called before me for a preliminary proof on the question of time-bar, when I heard the evidence of two witnesses, Mrs Maureen McCulloch, a paralegal with Thompsons, Solicitors and Mrs Laura Blane, a partner in that firm, and submissions from counsel on the basis of the evidence and the pleadings.

The factual background

[2] The factual background, based on the oral evidence which I heard and the unchallenged averments for the pursuers, is to the following effect.

[3] The deceased first instructed Thompsons, Solicitors, in about June 2006 to pursue a claim for damages based on his exposure to asbestos in the course of his employment as an apprentice joiner. He identified his employers to them as "Lawson of Milltimber". Thompsons then sought to identify his employers at the material time and to obtain evidence of the degree of his exposure to asbestos. Her Majesty's Revenue and Customs identified the employers as "J & A Lawson". A Companies House report on J & A Lawson (Joiners) Limited (which is the correct designation of the defenders) was obtained on or about 18 August 2006. The corporate entity identified in that report was one of a number of possible designations of the defenders at that time. J & A Lawson (Joiners) Limited had been dissolved on or about 28 May 1985. On 22 August 2006 Companies House advised Thompsons that the company records for that company had been destroyed. Thompsons also had to identify whether any of the potential defenders had insurance. An enquiry for any relevant employers' liability insurance was raised through the Association of British Insurers (ABI) and its solicitors. Enquiry was made on 18 August 2006 in respect of J & A Lawson (Joiners) Limited to the Employer's Liability Code Enquiry Unit of the ABI under the code of practice for tracing employers' liability insurance. Thompsons gave the dates of the deceased's employment and exposure as 1 January 1968 to 1 January 1973. On 1 October 2006 the ABI replied stating that no employers' liability insurance could be traced and they could do nothing further under the Code.

[4] After the deceased's death on 31 August 2006 enquiries continued on behalf of the present pursuers to attempt to identify the correct employers and any relevant insurance cover and to obtain evidence of asbestos exposure in the deceased's employments. On 22 June 2007 confirmation was obtained from the National Archives of Scotland that they had a microfiche copy of the records of J & A Lawson (Joiners) Limited. On 26 June 2007 evidence was obtained from a witness by the name of Ian Porter about the deceased's working conditions and exposure to asbestos in his employment with J & A Lawson (Joiners) Limited, whom he described as "J A Lawson Joiners". Investigations did not reveal any relevant insurance for any potential defender until 5 February 2009 when Simpson & Marwick, Solicitors, on behalf of the ABI advised that they had managed to find some insurance with AXA relevant to employers of the deceased, limited to the period up to December 1982 and for the company which had been incorporated in 1980. (J & A Lawson (Joiners) Limited had been incorporated in 1968.) That cover was for other employers. On 18 February 2009 J & A Collie, Solicitors, whose address was the registered office of J & A Lawson (Joiners) Limited before they were dissolved, wrote advising that they could provide no information about the company.

[5] In July 2009 a solicitor advocate within Thompsons was instructed by Thompsons. He advised that J & A Lawson (Joiners) Limited were the most likely employer of the deceased at the relevant time and that they would therefore require to be restored to the Register of Companies. On 17 July 2009 he was instructed to draft the necessary petition. On the same date an investigator was asked to investigate databases to which he had access about employers' liability insurance for J & A Lawson (Joiners) Limited and on 21 July he reported that no trace of insurers for them could be found on those databases. A petition was presented to this court to restore J & A Lawson (Joiners) Limited to the Register of Companies. It set out details of the pursuers' claim. It was advertised and served on the Registrar of Companies, the Lord Advocate and at the last registered office of J & A Lawson (Joiners) Limited. In due course an interlocutor was pronounced restoring J & A Lawson (Joiners) Limited to the Register of Companies. While the petition was before the court a summons was drafted with the intention of it being served on J & A Lawson (Joiners) Limited once they were restored to the Register of Companies. Unfortunately the letter of instruction sent by Thompsons to the solicitor advocate erroneously described the proposed defenders in the action as J & A Lawson Limited, having their registered office at 1 East Craibstone Street, Aberdeen. Consequently the summons was drafted against J & A Lawson Limited and served at the registered office of J & A Lawson (Joiners) Limited within three years of the death of the deceased. At the time of the deceased's employment there was in existence another company by the name of J A Lawson Limited, which had its registered office in Edinburgh and no connection whatsoever with J & A Lawson (Joiners) Limited. No appearance was entered to defend the action (the first action).

[6] Efforts thereafter continued to find insurers who might become involved in the action on behalf of J & A Lawson (Joiners) Limited. On 1 October 2009 the ABI reported to Thompsons that no employers' liability insurance had been found for J & A Lawson (Joiners) Limited and Thompsons therefore reported to the pursuers that the best that could be done was to preserve the position by taking decree in absence. Such a decree against J & A Lawson Limited was granted on 6 July 2011.

[7] On 30 September 2011, in response to a request from Thompsons for an extended search to be carried out, the Employers' Liability Tracing Office provided to Thompsons details of the insurers of J & A Lawson (Joiners) Limited for the period from 16 May 1966 to 16 May 1977. It is not entirely unusual for that to happen as the database is an ever-growing entity, with policies being discovered by insurers from time to time. On 7 October 2011 Thompsons received an email from Brodies, Solicitors, (who were presumably contacted by the insurers following the above inquiry) stating that they had received instructions from AGF Insurers, whose records suggested that they were on cover for J & A Lawson Limited from 16 May 1966 until the end of the alleged period of employment. On 10 October 2011 Thompsons forwarded to Brodies a copy of the summons and the decree in absence. Further information about the restoration to the Register was requested by Brodies and supplied to them by Thompsons. On 9 February 2012 Brodies advised Thompsons that AGF Insurers did not insure J & A Lawson Limited, against whom decree had been taken. Following upon further correspondence, on 26 April 2012 Brodies wrote to Thompsons stating that the insurers' position was that the action against J & A Lawson (Joiners) Limited was time-barred. The present action (the second action) was raised against J & A Lawson (Joiners) limited on 25 May 2012.

The applicable law

[8] Section 18 of the Act, which applies to any action in which, following the death of any person from personal injuries, damages are claimed in respect of personal injuries or death, provides, so far as relevant:

"(2) subject to ... section 19A of this Act, no action to which this section applies shall be brought unless it is commenced within a period of 3 years after -

(a) the death of the deceased".

Section 19A(1) of the Act provides:

"Where a person would be entitled, but for any of the provisions of section 17, 18, 18A or 18B of this Act, to bring an action, the court may, if it seems to it equitable to do so, allow him to bring the action notwithstanding that provision".

[9] In the course of submissions I was referred by counsel to the following decisions: Williams v Forth Valley Health Board 1983 SLT 376; Whyte v Walker 1983 SLT 441; Donald v Rutherford 1984 SLT 70; Forsyth v A F Stoddard & Co Ltd 1985 SLT 51; Anderson v Glasgow District Council 1987 SLT 279; Anderson v John Cotton (Colne) Ltd 1991 SLT 696; Ferguson v MacFadyen 1992 SLT 44; Kelly v Bastible & Ors [1997] PNLR 227; McClelland v Stuart Building Services 2004 SLT 101; Tonner v Reiach and Hall (No 1) 2008 SC 1; and AS v Poor Sisters of Nazareth 2008 SC (HL) 146. Reference was also made to Johnston, Prescription and Limitation, 2nd Ed., para 1.03 and Chapter 13, and Stair Memorial Encyclopaedia, vol 16, para 2133.

[10] In Donald v Rutherford, a decision of the Inner House, Lord Cameron pointed out at p 70 that the test in section 19A "if it seems equitable to do so" means and can only mean that the discretion thereby conferred upon the court is unfettered. He went on to add:

"... I must emphasise that the discretion of the court is unfettered, although in every case the relaxation of the statutory bar can and must depend solely upon equitable considerations relevant to the exercise of a discretionary jurisdiction in the particular case, having regard to the fact that it is for the party seeking relief to satisfy the court that it is, in the view of the court and in the circumstances of the case and the legitimate rights and interests of the parties equitable to do so. ... But while the discretion is, in my opinion, unfettered, it must necessarily be exercised within certain limits and those limits must be as set by the circumstances of the particular case. The relative weight to be given to any particular circumstance must be for the court required to exercise the discretion to determine. The language of s 19A, in my opinion, plainly carries the implication that it is for the pursuer in such a time-barred action to satisfy the court of the equity of his claim to be allowed to proceed, and consequently for the court to proceed from that point of departure. At the same time equity requires that an equitable decision should be one which proceeds on a fair balancing of the interests and conduct of the parties and their advisers, as well as the nature and circumstances of and prospects of success in pursuit of the time-barred claim itself. But the attention to be paid and the weight to be given to these various considerations are for the court vested in this jurisdiction, as well as the balancing of the degree of prejudice which either party may be expected to suffer according as the court decides."

Submission for the pursuers

[11] The broad proposition for the pursuers was that the pursuers themselves were blameless, although it was accepted that they had to bear responsibility for any failure on the part of Thompsons. The error in question was a minor one and pursuing an alternative remedy against Thompsons for professional negligence would not be without its own problems. The deceased's widow was now 77, it was not necessarily a foregone conclusion that negligence would be established, there could be problems of apportionment of liability with the solicitor advocate who drafted the summons, there were potential problems with the funding of an action of professional negligence, there would be an inevitable delay if another action had to be raised and also inconvenience in having to establish possible liability against the present defenders in the context of an action for professional negligence. So far as the defenders were concerned, the only substantial prejudice to them was the usual one that they would lose their cast-iron defence based on limitation. There was no point in raising a second action in the absence of insurers to meet any decree and when insurers surfaced Thompsons acted promptly. If the correct company had been sued in the first instance and decree in absence taken against it at a time when it was thought to be uninsured then the insurers who later appeared would almost certainly have sought to reduce that decree with the result that the insurers would then find themselves in exactly the same position as that in which they now found themselves, the insurance interest having been discovered only in September 2011. In real terms the insurers of the defenders would be obtaining a windfall benefit from the fact that no insurers were identified when the first inquiry was made in August 2006, but insurers were identified when the same inquiry was made five years later in September 2011.

Submission for the defenders

[12] The broad proposition for the defenders was that the claim was stale, the defenders themselves were blameless, the pursuers were responsible for the actings of Thompsons as their solicitors, the claim was of doubtful merit, the defenders would be prejudiced if the action were allowed to proceed and there was an alternative remedy against Thompsons for professional negligence.

Discussion and conclusion

[13] The circumstances of this case are, so far as I am aware, unique. I therefore obtain little or no assistance from decisions based on different facts. In exercising the discretionary jurisdiction under section 19A I consider that I must have regard to realities, and that involves considering the position of the insurers of the defenders as the defenders themselves are really just a formal legal entity which is not trading and has no assets. While insurance is an irrelevant consideration in determining liability and damages, I am of the view that it can be a relevant consideration in the exercise of the equitable jurisdiction under section 19A, and that it is a highly relevant consideration in the circumstances of this particular case. The pursuers' primary objective was to find insurers who would be able to satisfy any decree obtained, and I am satisfied that Thompsons exercised all due diligence in their endeavour to trace insurers for the present defenders. The first action was raised against the wrong company and decree in absence was taken. The whole purpose of raising the action was to obtain damages against the defenders. In my opinion Thompsons, who were acting for the pursuers on a speculative basis, could not have been criticised had they advised the pursuers that there was no point in going to the expense of raising an action to obtain a worthless decree, it being thought at that time that there was no fundholder who could satisfy any decree. The fact that the first action was raised against the wrong company has not in any way prejudiced the insurers of the defenders, who are in effect the party defending the action.

[14] It is, I think, necessary to pose the question: what would the position have been if the first action had been raised against the correct company, the present defenders, and decree in absence taken against them? There was no possibility of the decree being enforced against the present defenders directly. The insurers of J & A Lawson (Joiners) Limited were not discovered until September 2011, after Thompsons made a further inquiry. No steps could have been taken in relation to the insurers until their identity was discovered. Had decree in absence in the first action been taken against the correct company I am in no doubt that the insurers would have sought to have had it reduced and I do not see how the pursuers could have resisted reduction of that decree, knowing that the insurers knew nothing of the first action and were in no position to defend it. The position that the insurers find themselves in now is that they do not have to seek to reduce any decree and can proceed to defend the action against the defenders. In a sense, therefore, they are in a better position than they would have been had decree in absence been taken against the correct company within the triennium. They are now in the same position as they would have been had decree in absence been taken against the present defenders and that decree subsequently reduced, with the result that it was all along void. In these circumstances it seems to me that it would be unjust to refuse to allow this second action, in which a prima facie case against the defenders is pleaded, to proceed.

[15] As I am satisfied that it would be equitable to do so I shall therefore allow the pursuers to bring the action outwith the limitation period.