Scottish Sheriff Court Decisions

Sheriffdom of Tayside, Central and Fife at DUNFERMLINE

SA 732/09

 

Opinion of Sheriff George Alexander Way

 

In Small Claim

 

HOMEBANK FINANCIAL SERVICES LIMITED -V- MR. & MRS HAIN

 

 

1. This and another Small claim (Dignan SA731/09) called for First Hearings on 11^th December 2009 when the defender took the same point of competence in each case. The issue was whether a Limited Company, such as the pursuers, could prepare a Small Claim summons at their own hand and present this for warrant. The issue was identical in each case and so I allowed argument to heard in SA732/09 but this would apply to both actions. Messrs Yuill and Kyle now represent the pursuers.

 

2. The thrust of the argument advanced by the defenders' solicitor was that the Summons had been drafted unlawfully and in consequence, should not have been warranted. Reference was made to Dana Ltd v Stevenson, 1989 SLT (Sh Ct) 43, in which it was held that a summary cause summons could not be warranted because it had been drafted by the employee of a limited company who was not a solicitor. That decision was founded on the terms of s 32 of the Solicitors (Scotland) Act 1980 which makes it an offence for an unqualified person to draw a writ relating to legal proceedings. As subs (2) of that section makes plain this provision is directed towards preventing unqualified persons drafting writs for gain or reward. In my view that argument in relation to this case is wholly misconceived. In any event the decision was made prior to amendments to the 1980 Act , which now provides at section 32 (2B): -

 

" Subsection (1)(b) shall not apply to a person who is, by virtue of an act of sederunt made under section 32 (power of Court of Session to regulate procedure) of the Sheriff Courts (Scotland) Act 1971, permitted to represent a party to a Summary Cause."

 

The Sheriff Courts (Scotland) Act 1971 states at section 35 (2) that the Small Claim is a subset of the Summary Cause and accordingly the exception at 32(2B) of the 1980 Act applies to this case. I do not, therefore, find the actual decision in Dana of much assistance. Sheriff Mcphail ( as he then was and latterly the Hon. Lord Macphail.) however, in that case discusses the origins and development, in our jurisprudence, of a general rule that artificial legal entities must be represented by a properly qualified individual. The late Lord Macphail reiterated his views on this point in his seminal work on Sheriff Court Practice (Macphail 3^rd Edition para. 1.35/4.118 et al). The solicitor for the defenders when he invoked this high authority did not demur from the conclusion that in all cases an artificial legal entity must be legally represented. It is necessary, therefore, to review the authorities referred to.

 

3. The justification for such a limitation on access to justice for companies and other non natural legal entities, as applied in the sheriff court, can be seen in the case of Scottish Gas Board v Alexander, 1963 SLT (Sh Ct) 27, in which it was decided that an employee of the Scottish Gas Board, who was also a member of the Faculty of Advocates, was not entitled to appear in the capacity of employee of a corporate body. The ratio of that decision has never been challenged. A similar approach was taken by Sheriff Principal Macleod in Strathclyde Regional Council v Sheriff Clerk, Glasgow 1992 SLT (ShCt) 79 :

 

" In my view, the position of a party litigant is quite special and in acknowledging his right of audience the courts acknowledge this special position. He is the natural person litigating. In this respect he is quite different from artificial persons who can litigate only by being represented. It seems to me that the justification for requiring such a representative to be an individual who is subject to the discipline of a branch of the legal profession and familiar with law, practice and procedure of the court applies equally whether that artificial person be a corporation or an unincorporated body."

 

Sheriff Principal Bowen sums up the wider juridical concerns in Clark Advertising Ltd v Scottish Enterprise 2004 SLT (ShCt) 85 in which he had to consider whether the dicta in earlier cases was Human Rights compliant on the contention that as article 6(1) of the ECHR applies not only to natural persons but to companies and commercial entities they have an inalienable right to conduct their own case. He dealt with the issue succinctly in the following passage :

"I respectfully consider, however, that the various passages to which I have referred might have gone further in dealing with the public interest justification that an artificial legal entity must always be legally represented. It is a matter of answerability and accountability. At the extreme, it is not acceptable that cases which may have no proper foundation and which may involve ill-founded accusations should be conducted by individuals who can attempt to avoid the consequences of their actions by maintaining that they are representing the interests of a distinct legal entity, and can protect themselves by shielding behind it. Even if an opponent is possessed of substantial resources there is no reason why he should be subjected to prolonged litigation at the hand of one who purports to represent another. On a more prosaic level, there is a presumption that a legal representative has the instructions of his client and will represent the interests of that client with due regard to his duties to the court. The court cannot entertain the same confidence in the member of a firm who owes no such duties and who may in substance be representing his own interests. The rule therefore exists not merely to enhance the operation of the courts in terms of efficiency, but also to promote the integrity of justice. That, in turn, provides for the protection of potential opponents whose interests must not be lost sight of. There can be little doubt in my judgement that the existence of a rule requiring artificial entities to be legally represented is both proportionate and legitimate.

 

4. I do not doubt the cogent reasons advanced for the restrictions laid upon artificial legal entities but these cases pre-date the amendments to the Small Claims Rules. The present Rules provide at SCR 2.1 :

Representation- 2.1. (1) A party may be represented by -

(a) an advocate;

(b) a solicitor;

(c) a person authorised under any enactment to conduct

proceedings in the sheriff court, in accordance with the terms of that

enactment; and

(d) subject to paragraph (3), an authorised lay representative.

(2) The persons referred to in paragraph (1)(c) and (d) above may in

representing a party do everything for the preparation and conduct of a small

claim as may be done by an individual conducting his own claim.

(3) If the sheriff finds that the authorised lay representative is(

a) not a suitable person to represent the party; or

(b) not in fact authorised to do so,

that person must cease to represent the party.I

 

The current position is, therefore, that (unlike the Summary Cause Rules that restrict lay representatives involvement to preliminary procedure and exclude them from any investigation into the merits of the case) a lay representative may act throughout the case. This is made clear in Macphail 3^rd Edition para 32.13 where the learned author states:

" a party in a small claim may be represented by an advocate, solicitor or authorized lay representative. However, differing from the rule for a summary cause, the Small Claim Rules allow an authorized lay representative to act for a party throughout the whole proceedings. "

 

5. That might be thought to be an end of the matter. The restrictions set out by the earlier authorities have been modified by more recent legislation for Small Claims. The wider issue raised in Dana is dealt with by SCR 1 which defines "authorised lay representative" as a person to whom section 32(1) of the Solicitors (Scotland) Act 1980 (offence to prepare writs) does not apply by virtue of section 32(2)(a) of that Act. He or she cannot, therefore, charge a fee for the drafting. The solicitor for the defenders, however, referred me to the decision of Sheriff Brian Kearney in Ross & Liddell Ltd -v- Haggerty 2003 SCLR 491. In that case Sheriff Officers prepared and presented for warrant a Summary Cause Summons on behalf of clients seeking to expand the services they offered in the field of debt recovery. Sheriff Kearney held inter alia that Sheriff Officers were barred by their ancient office from being "authorised lay representatives" ; in any event that the statutory exception in the Solicitors (Scotland) Act 1980 could not be prayed in aid as the Sheriff Officers were seeking fees or reward; and that a firm or other artificial legal entity could not be an authorised lay representative; this must be a natural person. He argued that from this I should accept that an artificial legal entity could not, at it's own hand, present a Summons or Writ to the Court. I see the force of this submission. It is clear, from all of the authorities referred to above, that our jurisprudence relies heavily on the concept that the Court is entitled to have a natural person responsible to it for the drafting and conduct of litigation. The courts are a scarce, still largely publicly funded, resource. The bench is entitled to expect litigation to be prepared in an appropriate manner and conduct in court kept within due bounds. This is in accord with the observations of Sheriff Principal Bowen in Clark Advertising and is implicit in both the restrictions on lay representatives acting in the higher value Summary Cause proper and rule SCR 2.1(3)(a) which allows the Sheriff to declare that a lay representative is not a suitable person and that he or she must cease to act. In my opinion, for these reasons, the court must know who any lay representative is and both the Summary Cause and Small Claim Summons ( Forms SC1 and Small Claim form 1) must at Box 5 disclose the name and address of the authorised lay representative if they have drafted the same for a Pursuer that is an artificial legal entity.

 

6. The solicitor for the defenders, however, also submitted that SCR 2.1.(2) states that the authorised lay representative is permitted to do everything that an individual ( my emphasis) may do in the preparation and conduct of a claim and that as the pursuers were not individuals but an artificial legal entity then the lay representative could do nothing. In discussion he urged me to accept that the current Small Claim Rules were intended to allow natural persons (disappointed consumers and the like) to seek assistance from lay organisations such as the Citizens Advice Bureau but that Limited Companies and other artificial legal entities must instruct representatives with their own rights of audience. I regret to say that I do not find that argument persuasive. The rule states that a party may be represented inter alia by an authorised lay representative. An artificial legal entity cannot be a party-litigant, for all the reasons stated above, and it must be represented by a natural person in court. However, such an entity is clearly still a party to the litigation and it can choose it's representative from those which the rules of court allow including an authorised lay representative. In my opinion the proper interpretation of SCR 2.1.(2) is that the lay representative may only do those things, on behalf of the party they represent, that an individual or natural person may do for themselves. In other words they are not in the same category as representatives with their own rights of audience and so, for example, they cannot serve the summons by recorded delivery or undertake any other step of procedure for which the Court requires the signature of an officer of Court to prove valid execution.

 

7. I anticipate that with increased jurisdiction limits and the pressures upon High Street solicitors, in the present economic climate, there will be more appearances by authorised lay representatives as time goes by. I reject the submissions of the defender that the summons in this Small Claim is fundamentally null, provided the summons is drafted by an authorised lay representative. I would have required the details of the original authorised lay representative to be added to Box 5 and I would have invoked the dispensing power contained within SCR 3 to allow this but, as the defenders are now represented by solicitors, this seems a rather artificial device. I shall accordingly simply direct that the case be appointed for a First Calling, of new, in order that issues may be noted on the merits and a Proof fixed if so advised.

 

This/

 

 

 

 

This is a Small Claim and I cannot determine expenses at this time. In the event, however, that at the conclusion of the action the Court sees fit to award expenses on the Summary Cause defended Table of Fees this matter will require to be argued and so I shall formally reserve all question of expenses meantime.

 

Dundee 19^th January 2010

 

 

George Alexander Way

Sheriff of Tayside Central and Fife.