OUTER HOUSE, COURT OF SESSION
 CSOH 110
OPINION OF LORD PENTLAND
in the cause
THE ROYAL BANK OF SCOTLAND PLC
Pursuers: MacLeod; Anderson Strathern LLP
Defender: Mr Stuart Hill; Party Litigant
3 July 2012
 In this action the pursuers seek production and reduction of a pretended statutory demand served upon them by the defender on or around 17 February 2010. The case came before me for debate on the Procedure Roll when the pursuers sought decree de plano on the basis that the defender had failed to plead a relevant defence to the action. The defender was unrepresented and appeared on his own behalf. Counsel for the pursuers was careful to ensure that she presented her submissions at the hearing in a fair and straightforward manner so that the defender would be able to follow the arguments.
 The facts may be briefly stated. On or about 17 February 2010 the defender sent a statutory demand ("the demand") to the pursuers at their registered office at 36 St Andrew Square, Edinburgh. The demand was sent by recorded delivery. It stated that it had to be dealt with within 21 days and that if it was ignored a winding-up order would follow. Royal Mail records appear to disclose that the demand was signed for on 19 February 2010. The pursuers aver that the demand was misplaced. Their mail recording system shows that a letter was received from the defender on 17 February 2010 and that this letter was then forwarded to a company known as Credit 1st Limited in Reigate, Surrey. The pursuers believe that the forwarded letter was the demand. It seems that Credit 1st Limited are the assignees of a credit card debt upon which a previous complaint brought by the defender against the pursuers was based. As a result of its having been misplaced, the pursuers took no action in response to the demand. They have been unable to locate any copy of it through their records. The pursuers explain in their averments that those within their organisation who were responsible for dealing with the defender were unaware of the demand until 11 May 2010 when the defender produced a copy of it to solicitors acting for the pursuers in a litigation in the High Court in London. Thereafter the pursuers' solicitors corresponded with the defender about the demand. They asked him to confirm that he would take no further action in response to it. They advised him that the pursuers considered that there was no contractual or other basis to entitle the defender to serve on them a statutory demand in any amount. In an email of 13 May 2010 the defender undertook to take no further action in relation to the demand. He was then contacted and requested to write a letter confirming this undertaking and that he would take no further action relating to another statutory demand he had served upon the pursuers dated 16 January 2010. Having received no response from the defender, the pursuers contacted him again on 11 June 2010 to advise that they would require to seek interdict and suspension of the demand dated 16 January 2010. The defender then wrote to the pursuers on 15 June 2010 threatening to release a press broadcast if the pursuers did not enter into meaningful discussions regarding payment within 7 days. That letter referred to the "statutory demand, which has expired without dispute, thus leaving the (pursuers) open to my petitioning for a winding up order".
 The demand is a highly unusual document. It was sent with a covering letter from the defender in which he referred to a Notice of Amount of Debt issued by him to the pursuers on 27 January 2010. The letter states that the pursuers have accepted that they acted fraudulently and have offered no evidence to the contrary.
 The demand claims that the pursuers are due to pay the defender the sum of г23,583,434.55. The stated particulars of the alleged debt provide inter alia that:
"A) By a notice dated 6 January 2010 and prior correspondence the Royal Bank of Scotland Plc entered into an agreement with me by which I would be recompensed for their activity in relation to a credit card account number 5434824470886993".
 The demand purports to proceed upon an invoice dated 17 February 2010 styled "Invoice No. 110". This invoice is said to comprise four components. The first is described as:
"The actual charges, interest and other payments made to you, with interest."
 These are in the sum of г270,933.73. This sum is shown as being made up of compound interest charged at the rate of 29.5% per annum on payments made by the defender to the pursuers from 28 May 1996. In the notes accompanying the invoice the defender states that the rate of interest charged is "a normal charge for an un-arranged overdraft that I have been obliged to pay."
 The second sum claimed by the defender is described as damages and is in the sum of г270,933.73. No explanation is set out in the demand justifying why the defender is entitled to damages. The only explanation given in the notes accompanying the demand for the quantification of the damages is that they are a "conservative figure" which is "notionally" calculated to be the same as the amount of the pursuers' charges.
 The third sum claimed is described as restitution and is stated in the sum of г23,029,367.09. The only basis set out in the demand attempting to justify why the defender is entitled to restitution from the pursuers is that this is calculated as the profits made by the pursuers with the allegedly fraudulent use of the defender's money. No information or detail is provided by the defender in relation to any such alleged fraud.
 The fourth claim is for fees and is stated in the sum of г12,200. The fees are said to be "as my agreed Fee Schedule". The fees appear to comprise charges for letters sent at the rate of г200 per letter; phone calls at the rate of г400 each; and research at the rate of г100 per hour.
 In the pursuers' pleadings they aver that the defender is not a creditor in relation to them. They say that there is no basis (in contract or otherwise) for the pursuers to pay any of the sums claimed by the defender. The pursuers go on to aver that they have made clear to the defender that they do not accept that they are due to pay him any sums of money. They explain that the defender has raised no proceedings in relation to the alleged debts. The contract upon which the statutory demand is purportedly based has never been the subject of judicial consideration. The pursuers make it clear in their pleadings that they deny that there has ever been any contract or other arrangement between them and the defender which would justify him in serving the demand. In these circumstances, service of the demand is said to be inappropriate and wrongful. The pursuers have obtained interim orders in a petition preventing the defender from presenting a winding-up petition based on the demand. The pursuers aver that the presentation of such a petition would be likely to damage their reputation and would be likely to undermine confidence in their solvency. It would result in unfavourable media comment and customer concern.
 In these circumstances, it was clearly incumbent on the defender to set out in his pleadings the basis on which he contends that the pursuers are due to pay him the very substantial sum he claims. When one considers the defenders' pleadings, it is entirely clear that he has failed to set out any legitimate basis for his claims against the pursuers. The defender's pleadings are not easy to follow. On page 22C-D he asserts that: "we had a contract", but no detail of this is provided. The gist of the defender's written case appears to be that since the pursuers did not dispute the demand, they cannot be allowed to deny that they are due to pay him everything that is claimed in it. The pursuer avers that "the alleged credit card debt is the source of the matter" (page 21A). He goes on to say that it was "my questioning the validity of that alleged debt that led to the pursuers admitting fraud and agreeing to compensate me." There are other averments made by the defender which are broadly to the effect that the pursuers' alleged failures to rebut his allegations, including his assertions of fraud, mean that he does not need to explain or justify the amounts claimed in the demand. These various passages were highlighted in the pursuers' Note of Argument (number 17 of process).
 In summary, the defender's position in his pleadings seems to be that his various assertions of the existence of a contract, the perpetration of fraud by the pursuers against him and their agreement to compensate him must be taken as having been admitted by the pursuers due to their having failed to challenge the demand.
 At the Procedure Roll hearing the defender produced and referred to an affidavit he sent to the pursuers' solicitors on 13 January 2011. Counsel for the pursuers did not object to the defender relying on the affidavit. The defender's purpose in so doing was to attempt to answer the pursuers' criticisms of his pleadings. In the affidavit the defender referred to certain invoices he sent to the pursuers in January 2010 and to a Notice of Amount of Debt dated 25 January 2010, which he also sent to the pursuers. He states that no dispute concerning this notice was raised by the pursuers. He claims that the invoices and accounts were not disputed by the pursuers. He then refers to a document which he describes as a Certificate of Dishonour, which he issued on 17 February 2010, in which he stated the account as being г23,583,434.55. With this Certificate a further invoice was enclosed. He then states that no dispute whatsoever concerning the Certificate of Dishonour was raised by the pursuers. In paragraph 20 of the affidavit the pursuer states as follows:
"THAT, having had no response to my legitimate invoices and statements, as a last resort in order to get redress, a statutory demand was issued by me on 17 February 2010."
The pursuer observes in the affidavit that the time for response to the statutory demand expired on 12 March 2010 and that no reply to the demand was received before the expiry date. In paragraph 27 of the affidavit the pursuer states the following:
"THAT, the pursuer, having been notified of the contents of this affidavit, is hereby given 21 days from receipt of it, to rebut it point by point with his own affidavit signed under penalty of perjury and under full commercial liability by a member of his staff having full knowledge of the matter, after which he waives any right to dispute it. Any individual points rebutted will not affect the truth of the remainder."
 The defender submitted that the affidavit set out why a contract existed between him and the pursuers. He argued that everything stated in the affidavit now stood as a matter of fact because the affidavit had not been responded to. He argued that by failing to attempt to rebut any of the points referred to in the affidavit the pursuers conceded that they had no defence to the claim for the amount stated in the demand. He maintained that his calculations were well set out and explained. They provided the basis for the debt which, he insisted, could not be regarded as being in dispute. He observed that a statutory demand had to be replied to within 21 days. In the absence of any response to it and at the point of its expiry the grounds for winding up of the pursuers crystallized. There was nothing in the insolvency legislation which entitled the court to set aside a statutory demand in these circumstances.
 In my opinion, the defender's position in this action is seriously misconceived. He appears to think that unless the pursuers choose to respond to his various assertions that substantial sums are due to be paid by them to him he is entitled to serve a statutory demand leading to winding-up of the pursuers. The fundamental difficulty with this approach, as it seems to me, is that section 123(1) of the Insolvency Act 1986 makes it clear that a company will be deemed unable to pay its debts if a creditor to whom the company is indebted in a sum exceeding г750 then due has served on the company a written demand in the prescribed form requiring the company to pay the sum so due and the company has for three weeks thereafter neglected to pay the sum or to secure or compound for it to the reasonable satisfaction of the creditor. Thus there has to be a legitimate basis on which the party serving the statutory demand can claim to be a creditor of the company to whom the demand is addressed. The defender has, in my opinion, completely failed to set out any basis on which he can properly claim to be a creditor of the pursuers. What he has done is to issue to the pursuers a number of demands, in the form of various documents, in which he has asserted that the pursuers are due to pay him substantial sums. But he has never been able to identify any underlying basis for his alleged entitlement to be paid these sums of money. Accordingly, it follows that the defender cannot be regarded as a creditor of the pursuers and he was not entitled to serve on them a statutory demand under section 123(1)(a) of the 1986 Act.
 It may also be observed that the defender's position is inconsistent with the principle that silence cannot normally be held to import assent (Wylie and Lochead v McElroy and Sons (1873) 1 R. 41 per Lord Neaves at 44; McBryde on Contract paragraph 6-71). There is nothing in the defender's pleadings which would justify the view that this rule should not be applied in the circumstances of the present case.
 As to the defender's allegations that the pursuers have committed fraud, it is clear that he has no relevant or specific averments in his pleadings to support a case of fraud. It has long been a requirement of our system of pleading that allegations of fraud must be based on clear and specific averments of fact from which an inference of fraud may legitimately be drawn (Shedden v Patrick (1852) 14 D per Lord Fullerton at 727; Gillespie v Russel (1857) 18 D. 677 per Lord President McNeill at 684). In addition, the individuals within an organisation said to be responsible for the fraud should be identified in the averments (Royal Bank of Scotland v Holmes 1999 S.L.T. 563 per Lord MacFadyen at 569K - 570E). The defender's pleadings contain no such averments.
 In these circumstances, the statutory demand was, in my view, fundamentally null, invalid and of no legal effect. It cannot form a proper foundation for a winding-up of the pursuers since the defender has been unable to show that he was entitled to serve such a notice on the pursuers. Accordingly, the demand falls to be reduced. The defender has, in my opinion, no colourable defence to the action. His pleadings are irrelevant and lacking in specification.
 I should add that the defender also sought to argue, on the basis of a 72 page historical analysis set out in his Note of Arguments (number 18 of process), that the court has no jurisdiction against him because he resides in Shetland, which he contends is not part of the United Kingdom. The defender's arguments, as I understood them, rested on the proposition that the Pawning Document granted by King Christian I of Denmark and Norway in 1469 only pledged about 3 or 10 per cent of the land in Shetland. This was, according to the defender, a private arrangement relating only to the king's lands in Shetland and it left the remainder of the land of the islands in the outright ownership of the people of Shetland. Even today that continued to be the position with the result that sovereignty over the islands continued to reside with the 90 or 97 per cent of land-owning inhabitants, who were "sovereign in their own right".
 In my opinion, the proposition that the Court of Session does not have jurisdiction in the present case is flawed and must be rejected. It would be unsatisfactory and surprising if the Court of Session did not have jurisdiction to reduce a statutory demand served on a Scottish company at its registered office in Scotland by a person residing in Shetland. It is obvious that there are very strong factors connecting such a case with this court. It seems to me that by instituting in Scotland a legal process which could potentially lead to the winding-up of a Scottish company by the Scottish courts the defender must be taken to have impliedly accepted that it is for the Scottish courts to rule on the validity and legality of the steps taken by him as part of that legal process. So even before one comes to consider the defender's contention that he does not live in Scotland it can immediately be seen that the present case has particularly strong and obvious connections with the Scottish courts.
 As to the historical background, it seems to me that it must now be regarded as settled in law that Shetland forms part of the United Kingdom and lies within the territorial jurisdiction of the Court of Session. Questions of the type that the defender sought to raise at the debate as to the exact nature and extent of what was pledged by the impignorations of 1468-69 nowadays fall to be addressed by historians rather than by the courts. As I understand it, one effect of the 1468-69 arrangements was that King Christian commanded those living in the Shetland Islands to pay their taxes to the Scottish Crown and to obey the Scottish king until the islands were redeemed. They never have been redeemed and the right of redemption must, I think, now be regarded as having been lost.
 From the sixteenth century Scottish law and customs increasingly infiltrated life on the islands. As the Lord Ordinary (Lord Hunter) explained in the St. Ninian's Isle Treasure case (Lord Advocate v University of Aberdeen and another 1963 S.C. 533 at 540) from an early stage following the impignorations the Scottish Parliament assumed the right to legislate for Shetland (as well as Orkney) as part of the Kingdom of Scotland. By a gradual process the local judicial institutions and laws of the islands were encroached upon and superseded by the judicial institutions and law of Scotland.
 I note that in the Stair Memorial Encyclopaedia (Volume 24, paragraph 328) the view is expressed that there is a strong case for assuming Scotland's acquisition of dominium over Orkney and Shetland prior to 1707 and that the Treaty of Union did nothing to displace this. The Scottish (and hence the British) title to Orkney and Shetland was well-established by 1707. There is, in my opinion, considerable force in the views on the subject expressed by the distinguished international lawyer Professor John Grant; these are quoted in the same paragraph in the Stair Memorial Encyclopaedia. Professor Grant takes the view that Shetland (and Orkney) form part of the United Kingdom. He observes that for a very long time there has been peaceful, open, continuous and effective occupation of Shetland by the British Crown. This has been coupled with a clear and unequivocal intention on the part of the Crown to act as sovereign. There is no competing claimant in modern times. For some considerable time past the United Kingdom has, Professor Grant points out, undoubtedly exercised full sovereign powers over Shetland. The long-established exercise of sovereignty over Shetland by the United Kingdom results, in his view, from the exercise of a full range of governmental and legislative functions over the islands over a large number of years without interruption or, it may be added, challenge. All this seems to me to be undoubtedly sound.
 I note also that in Lord Advocate v University of Aberdeen and another supra Lord Patrick, whose opinion was concurred in by the other members of the Inner House, said this (on page 556):
"What is certain is that since 1468 the right of sovereignty over the (Shetland) islands has belonged to the kings of Scotland and afterwards of Great Britain."
 Lord Mackintosh observed (at page 560) that Shetland "is and has for long been under the sovereignty of the Scottish and thereafter the British Crown".
 In my opinion, as these statements in the Inner House clearly show, it is now settled that, as a matter of law, Shetland is part of the United Kingdom. The British Crown has the right to exercise sovereignty over the islands. Scots Law applies there and the Scottish courts have territorial jurisdiction there. In the circumstances, I have no difficulty in holding that this court has jurisdiction over the defender in the present action.
 The defender urged me to allow a proof at which evidence could be led from historians on the matters discussed in his Note of Argument, but I do not consider that this would be appropriate. There would be no point in having such a proof since it is clear in law that this court has jurisdiction over the defender in the present action and that his arguments to contrary effect are misconceived.
 In the whole circumstances, I shall grant decree of reduction de plano, sustaining the pursuers' pleas-in-law and repelling those proponed on behalf of the defender. Since the original of the demand has been lost, I shall hold production of it to be satisfied by the copy lodged as a production for the pursuers. I shall reserve all question of expenses.
 The pursuers' motion for summary decree, which was enrolled so as to call on the day of the Procedure Roll debate need not, in the circumstances, be considered.