ECCLESIASTICAL INSURANCE OFFICE PLC AGAINST LADY IAM HAZEL VIRGINIA WHITEHOUSE-GRANT-CHRIST
OUTER HOUSE, COURT OF SESSION
[2015] CSOH 23
A2852/00
OPINION OF LORD BOYD OF DUNCANSBY
In the cause
ECCLESIASTICAL INSURANCE OFFICE PLC
Pursuers;
against
LADY IAM HAZEL VIRGINIA WHITEHOUSE-GRANT-CHRIST
Defender:
Pursuer: Dunlop QC; Simpson & Marwick WS
Defender: Party
19 February 2015
[1] In about 15 January 1998 the defender purchased a former church building known as St Brandon’s, Boyndie, Banffshire from the Church of Scotland General Trustees for the sum of £20,000. Subsequently the defender arranged insurance cover for the building with the pursuers. In the proposal form she represented to the pursuers that there was no one residing with her who had been convicted of any offence other than a driving offence. She also represented that no business would be operated from the premises.
[2] In the evening of 13 February 2000 the premises were substantially damaged by fire. The following day 14 February the defender made a claim on her insurance policy. That claim was repudiated by letter from the pursuers’ agents dated 2 October 2000. The basis for the repudiation was, first that the defender’s husband had resided in the premises. It is averred that he has two criminal convictions which were not disclosed. Secondly, the pursuers said that the defender’s husband had been operating a business from the premises. That too had not been disclosed. The pursuers say that these were material facts. Had they been disclosed they would have had a bearing on the assessment of risk and/or the amount of the premium. In the event that the material facts had not been disclosed, the pursuers say that they are entitled to repudiate the claim and avoid the policy.
[3] Shortly after the letter from the pursuers’ agents repudiating this claim the pursuers raised the present action. The conclusions seek a declarator that the pursuers are entitled to avoid the policy on the ground that the policy was obtained by the non-disclosure to the pursuers by the defender of material facts. Secondly they seek the production and reduction of the policy. By minute of amendment lodged on 17 April 2012 and allowed by the court on 16 August 2012 the pursuers added a further conclusion for a declarator that any obligation on the part of the pursuers arising under the policy has been extinguished by the short negative prescription under and in terms of section 6 of the Prescription and Limitation (Scotland) Act 1973 (“the Act”).
[4] The defender disputes the factual basis upon which the pursuers seek to avoid the policy. In particular in her averments she says that her husband was at the time estranged from her and living elsewhere. She also says that no business was operated from the premises.
[5] The defender has raised a counterclaim in terms of rule of court 25. This was lodged on 9 March 2012. It has eight conclusions. They include a conclusion for indemnity under the policy for losses arising from the fire. The conclusions also include ones for payment of what is termed “patrimony” and “solatium”. The solatium element is in respect of alleged defamatory statements attributed, in part, to the pursuers.
[6] The matter came before me on the procedure roll in respect of the pursuers’ first and fourth pleas-in-law in the summons and the first, second, third and sixth pleas-in-law in the answers to the counterclaim and on the defender’s first plea-in-law in the counterclaim and her general plea to relevancy and specification in the principal action and counterclaim. The motion before me from the pursuers was decree in terms of the third conclusions; that is that any obligation arising under the policy has been extinguished by the short negative prescription. If I acceded to that motion then the other two conclusions are of no relevance and Mr Dunlop invited me to dismiss these. He also sought dismissal of the counterclaim. The defender seeks dismissal of the principal action and decree de plano in the counterclaim.
[7] Both parties produced written submissions. I am grateful to them for their assistance. I have taken account of all that has been said in both submissions.
[8] The record, including interlocutors runs to 303 pages. Much of it is taken up by the defender’s averments in the principal action and the counterclaim. It is not possible to deal with all of the matters raised by the defender in this opinion. In particular answer 8, which deals with the issue of prescription, runs to 160 pages. Much of it is repetitious and irrelevant to the issue of prescription. I will however deal with those matters that have a bearing on the issues to be determined in this debate.
[9] The essence of the dispute at this point is this. The pursuers submit that any obligation to indemnify the defender under the policy arose on 14 February 2000. No relevant claim was made in relation to the obligation until the counterclaim was lodged on 9 March 2012. They further submit that the subsistence of the obligation was not relevantly acknowledged by the pursuers. Accordingly they submit that the obligation has been extinguished by virtue of section 6(1) of the Act. In relation to the counterclaim, they submit that the conclusion which seeks indemnification for losses has prescribed. In respect of the rest of the counterclaim those parts which seek damages for alleged defamatory statements are either irrelevant because they were made by others, not the pursuers, or because they attract either qualified or absolute privilege. In respect of alleged defamatory statements attributed directly to the pursuers the pursuers submit that any action is now time barred by virtue of section 18A of the Act. Finally the pursuers submit that the counterclaim is an abuse of process.
[10] This case has a long history. A reading of the interlocutors gives a flavour of its process. The action commenced in October 2000. Shortly after it was sisted to enable the defender to apply for legal aid. The sist was recalled in September 2001. Defences were lodged late and it appears that from February 2002 the defender has represented herself. There were two motions on the defender’s behalf for commission and diligence which were partially granted and at the defender’s instance continued adjustment of the record. On 31 October 2002 on the unopposed motion of the defender the cause was once again sisted to enable her to apply for legal aid. There matters rested until March 2012 when the sist was recalled.
[11] The defender in her note of argument at paragraphs 26 to 29 complains about the inordinate and unreasonable delay. There are two strands to her complaint. First she says that the pursuers failed to properly prosecute the summons. Secondly she says that the court as a public authority have a duty to comply with article 6(1) of the European Convention on Human Rights which guarantees a fair trial within a reasonable time. The defender concludes at paragraph 35 that it would be reasonable and equitable for the court “to grant the defender decree of dismissal of the conclusions of the summons”.
[12] It should be noted that these complaints of delay have already been dealt with by the court. In particular by interlocutor dated 6 February 2014 Lord Woolman refused the defender’s motion to receive a minute under rule of court 21A.1 for dismissal of a claim due to delay. In any event the sist granted by the court on 31 October 2002 was at the instance of the defender to enable her to apply for legal aid. Since the action was essentially one of declarator that the pursuers were entitled to avoid the defender’s insurance policy both parties had a real interest in resolving the litigation. Yet it appears that the defender did nothing during this time to recall the sist until it was eventually done so in March 2012. An examination of the interlocutors of the court during the time that the case was live shows that much of the delay was at the instance of the defender some of it due to her ill health.
[13] In her oral submissions the defender specifically asked me to take into account her submission that her health problems had been caused by the pursuers’ actions. That had contributed to her inability to respond to the action and had prevented her from getting legal aid.
[14] A look at the interlocutors and the minute of proceedings shows that the court has taken account of her health problems. She has been given considerable leeway in the presentation of her defence. It is of course unfortunate that for whatever reason the defender has not been represented in court and through much of these proceedings. However while the court can express sympathy for her health problems and make appropriate allowances, the judgment must be made on the basis of the law.
[15] Turning to the matter of prescription the issue is whether or not the defender made a relevant claim in relation to the obligation, or the pursuers relevantly acknowledged the subsistence of the obligation, in order to interrupt the running of the prescriptive period.
[16] Relevant claims defined in section 9 of the Act as “a claim made by or on behalf of the creditor for implement or part implement of the obligation, being a claim made – (a) in appropriate proceedings….”.
[17] Mr Dunlop identified three possible relevant claims asserted in the defender’s pleadings. The first was the summons itself seeking inter alia a declarator that the pursuers were entitled to avoid the policy under which the obligations arose. A short point in relation to this was that the summons itself was not a claim and it was not made by or on behalf of the creditor.
[18] The defender’s position with regard to the summons is perhaps more nuanced. Her argument as I understood it was that the presenting of the summons acted to postpone the ascertaining of the obligation. Accordingly no relevant claim could be made until that matter had been determined. Under reference to paragraph 15 of the written submissions the defender submitted that the matter having been brought into court by the pursuers there had to be a determination of the conclusion of the summons before the defender could make a claim. She cited Hood v Dumbarton District Council 1983 SLT 283 and Telfair Shipping Corporation v Inersea Carriers SA [1985] 1 WLR 553.
[19] Neither of these cases assist the defender. In Hood the issue was whether on a proper construction of section 6 it is the occurrence of a single event which operates as an interruption of the period or a state of affairs. An action had been raised in the sheriff court more than five years before the action in the Court of Session but abandoned within the period of five years. The defender submitted that the claim arose when the action was commenced in the sheriff court and accordingly the claim had prescribed. The court held that the period relied upon must be one during which no claim persisted. Accordingly as the action had been abandoned within the five year period the defender’s plea that the obligation had been extinguished was rejected.
[20] Telfair Shipping Corporation is a case about a charter party and indemnification of a liability by a third party. The court held that the liability of the person to be indemnified had to be ascertained before the claim could be made. That is not the case here. The party to be identified under the policy is known and the fact of the pursuers’ liability under the policy is known. The liability is patent and remains extant unless the policy is avoided.
[21] Accordingly I conclude that the summons is not a relevant claim for the purposes of section 6 nor does the presenting of the summons to the court act or postpone the ascertaining of the obligation. I note in passing that if the defender was right then it would not have been competent for her to have presented the counterclaim until after disposal of the principal action.
[22] The second possible relevant claim is contained in the defences to the principal action lodged by the defender. Mr Dunlop submitted that in fact in the original defences the formal position taken by the defender was to deny that a claim had been submitted by her. He disavowed any intention of being over-technical but said it was the case that the defences as lodged made no mention of the claim.
[23] More pertinently he submitted that what is contained in defences cannot amount to a claim in appropriate proceedings. He referred me to a number of authorities which are detailed in the note of argument in support of his position. He also pointed to a case which he accepted pointed the other way and to a textbook which asserted that a claim could be made in defences.
[24] In Highlands & Islands Airports Ltd v Shetland Islands Council 2014 SLT 424 the pursuers raised an action for declarator (1) that the defenders were in breach of a contract for the provision of professional services relevant to a runway extension and also a breach of duty of care to the pursuers in relation to the services and (2) that in the provision of professional services by the defenders to the pursuers defects had arisen. The defenders, having failed to correct them, had become liable to pay the pursuers the cost of repairing pursuant to the contract. Later, after the expiry of the quinquennium the pursuers sought by way of amendment to introduce a third conclusion for payment in the sum of £14,210,000. The defenders claimed that any conclusion for payment had been extinguished by operation of prescription. Lady Scott held that sections 6 and 9 of the Act should not be read narrowly. The court should adopt a purposive interpretation (paragraphs 33 and 34). She held that “part implement” in section 9 could suggest a claim constituting a step in the process of implementation of the claim.
[25] It is not necessary for me to express any view on the soundness of that decision but I am not satisfied that it is relevant here. The conclusion for declarator is at the instance of the pursuer seeking to avoid a claim whereas in Highlands & Islands Airports Ltd the conclusion seeks to assert the claim.
[26] In Woolman on Contract 5th Edition at paragraph 13(10) the author states a relevant claim can be made if the creditor contests any claim inconsistent with his own alleged rights, for example as a defence to an action brought by the debtor. The authority for this proposition is said to be section 10 of the 1973 Act. However section 10 defines “relevant acknowledgement” for the purposes of section 6 and 7 of the Act. It does not assist in defining a relevant claim which is dealt with in section 9.
[27] Putting to one side the perhaps special circumstances which Lady Scott found in Highlands & Islands Airports Ltd in my opinion a relevant claim must be one in which a creditor seeks payment by way of a conclusion in appropriate proceedings. In an action such as this where an insurance companies seeks declarator to avoid a policy the appropriate response by a defender is either to raise her own action of payment or to counterclaim. In both cases however such proceedings have to be raised within five years of the obligation subsisting.
[28] The third possible relevant claim that is asserted is the counterclaim. The pursuers accept that it is a relevant claim for the purposes of section 6. However since it was not lodged until 2012 on its own it cannot have any bearing on the extinction of the obligation.
[29] The defender submits that she has suffered ill-health as a result of the pursuers’ actions. The court has from time to time seen medical reports which vouch the fact that she has health problems which have continued for some time and from which she still suffers. She has detailed these in the pleadings and in Part A of an appendix to her written submissions. Section 6(4) of the Act provides that in the computation of the prescriptive period any period during which the creditor was under legal disability shall not be reckoned as part of the prescriptive period. “Legal disability” is defined (in section 15) as disability by reason of non-age or unsoundness of mind. The defender does not offer to prove that she is or has been of unsound mind. On the material that she has placed before the court it is clear that her health problems do not and have never amounted to unsoundness of mind.
[30] The defender also contends that the pursuers made relevant acknowledgements of the obligation. These are said to be contained in statements recorded in the press on 15 December 2002 and detailed at answer 8.1.1. The statement quoted in the answer is to the effect that the purpose of the pursuers’ action in court is to establish that they will not have to make payment. Even if a statement in the press could be construed as a relevant acknowledgement, which I doubt, the terms of what is quoted are at odds with an acknowledgement of an obligation.
[31] The defender also points to the terms of a letter from the pursuers’ solicitors to the defender dated either 1 March 2000 or 4 May 2000 in which the writer states that “on the basis that the information which you have provided to me is accurate, they (the pursuers) will admit the claim in respect of the fire”. There is no specification within the pleadings as to what information had been given to the author of the letter but I understand that it was to the effect that the information in the proposal form was accurate. That of course is the nub of the dispute between the parties.
[32] As I read the letter it is nothing more than a conditional admission of liability and the condition not having been purified the obligation does not arise. However even if the letter could be construed as a relevant acknowledgement it only advances the date from which the prescriptive period could commence by a few months. None of the statements or letters relied upon by the defender as a relevant acknowledgement is within five years of the lodging of the counterclaim. Accordingly it is clear that there was no relevant acknowledgement within this period.
[33 On the basis that the obligation may have prescribed the defender seeks to invoke the equitable jurisdiction provided for in section 19A of the 1973 Act to allow the counterclaim to proceed. However section 19A only applies to limitation of actions under Part 2 of the Act and not to prescription under Part 1.
[34] For all of these reasons I am clear that there is no answer to the pursuers’ claim that any obligation to indemnify the defender for loss arising from the fire on 13 February 2000 has prescribed.
[35] Insofar as the counterclaim seeks indemnification for an insured loss under the policy that obligation has now prescribed for the reasons given above.
[36] However the defender also avers that she is “a victim of the pursuers’ summons being a breach of contract, calumnious, scandalous, vexatious, frivolous, an affront to the defender and abuse of process made with malicious intent”. She contends that false and malicious statements were repeated in various court processes including in an application to the Lands Tribunal for Scotland. The defender also seeks damages for what she says are defamatory statements made to and about her. The complaints are detailed at length in the pleadings, in the note of argument and in Parts B and C of the appendix to the note of argument.
[37] It is not necessary or desirable that I go through each and every complaint. One is said to be contained in the letter dated 2 October 2000 repudiating the insurance claim. That allegation cannot stand as it attracts qualified privilege. It is the essence of the dispute between the parties.
[38] Other statements allege to have been made in various court processes are absolutely privileged.
[39] Other statements allege to be defamatory of the defender were not made by the pursuers but by others for whom the pursuers have no responsibility. They include what might have been put on the internet.
[40] What is left are statements quoted in newspapers said to have been made by the representatives of the pursuers in 2002. These include statements in the Daily Record, Sunday Mail and Banffshire Journal. The pursuers, of course, are not responsible for their publication. However, assuming that the pursuers’ representatives were accurately quoted and the statements were untrue at its highest there might be a relevant case. However, any action arising out of these statements has long since time barred under section 18A of the Act.
[41] The defender again seeks to invoke the provisions of section 19A to allow her to continue with the proceedings in respect of the alleged defamatory statements. I have decided not to exercise the powers under section 19A in respect of these allegations for the following reasons. First there is no explanation for the delay in bringing proceedings. Secondly, what the defender complains about is an accurate description of the stance taken by the pursuers in repudiating the claim and taking the court action. They do of course assert wrongdoing by the defender and if untrue are potentially defamatory. However the extent of any loss should be measured against the fact that if the case ever got to proof the factual issues between the parties could be reported in the press without any complaints. Thirdly in any event there is no indication that the defender has sought reparation from the publishers of the newspapers and journals involved.
[42] For all of these reasons I am satisfied that the counterclaim is irrelevant and should be dismissed.
[43] Mr Dunlop submitted that the counterclaim constituted an abuse of process. He points out that with compound interest the sum now sought in the conclusions in the counterclaim exceeds £23,000,000.
[44] I have some sympathy with the submission made by Mr Dunlop given the wide nature of the claims made in the pleadings but I think it is not necessary for me to conclude that the counterclaim is an abuse of process. I note the factual issues between the parties have never been resolved and as a result of my interlocutor may never be resolved. The counterclaim, though too late, was an appropriate response insofar as it sought indemnification for loss arising under the policy.
[45] I shall sustain the first and fourth pleas-in-law for the pursuer and grant declarator as third concluded for. I shall sustain the first, third and sixth pleas-in-law for the pursuer in the counterclaim and dismiss the counterclaim. I shall repel the defender’s pleas-in-law. I shall reserve the question of expenses.