HOE INTERNATIONAL LIMITED AGAINST MARTHA GOODNOW ANDERSON AND SIR JAMES ALEXANDER FREDERICK ACKROYD
EXTRA DIVISION, INNER HOUSE, COURT OF SESSION
[2015] CSIH 24
CA201/13
Lord Menzies
Lady Smith
Lord Brodie
OPINION OF THE COURT
delivered by LORD MENZIES
in the reclaiming motion
HOE INTERNATIONAL LIMITED
Pursuers and Reclaimers;
against
(FIRST) MARTHA GOODNOW ANDERSEN and (SECOND) SIR JAMES ALEXANDER FREDERIC AYKROYD
Defenders and Respondents:
Pursuers and Reclaimers: Duncan QC; Brodies LLP
Defenders and Respondents: O’Brien; Shepherd & Wedderburn LLP
29 January 2015
Background
[1] The pursuers are a company incorporated and registered in Taiwan. In September 2012 they entered into a share purchase agreement with the defenders in relation to the purchase of the entire share capital in a distillery. The pursuers took the view that the defenders were in breach of warranties contained in that agreement. They decided to raise a commercial action in the Court of Session seeking damages for breach of these warranties, and instructed their solicitors to prepare a summons to that end.
[2] The pursuers’ solicitors prepared a summons, which contained the following notice on the opening page:
“By this summons, the pursuer craves the Lords of our Council and Session to pronounce a decree against you in terms of the conclusions appended to this summons. If you have any good reason why such decree should not be pronounced, you must enter appearance at the Office of Court, Court of Session, 2 Parliament Square, Edinburgh, EH1 1RQ, within 3 days after the date of the calling of the summons in court. The summons shall not call in court earlier than 42 days after the date of service on you of this summons. Be warned that, if appearance is not entered on your behalf, the pursuer may obtain decree against you in your absence”.
[3] The period of 42 days was selected because, although the second defender resides in England and would otherwise be entitled to 21 days’ notice, the first defender resides in the United States of America, and the pursuers’ agents intended to serve the summons by post.
[4] The summons passed the signet on 19 December 2013. However, service was not effected by post as originally intended, because the defenders instructed a Scottish firm of solicitors to accept service on their behalf. A docquet was appended to the principal summons in the following terms:
“At Edinburgh on 20th December 2013.
I, Stephanie Higgins, hereby accept service of the foregoing summons on behalf of and as instructed by Martha Andersen and James Aykroyd (defenders)”.
[5] Neither Ms Higgins nor the objectors dispensed with any period of notice as they were entitled to do in terms of Rule of Court 16.10(1) and (2) of the Rules of the Court of Session. Moreover, none of the parties applied to the court to either shorten or extend the period of notice in terms of Rule of Court 13.4(2).
[6] The pursuers’ solicitors attempted to lodge the summons for calling on 22 January 2015; however, on the previous day the defenders had enrolled a motion contending that the instance had fallen, because the summons had not called within a year and a day after the period of notice expired: Rule of Court 13.13(6).
[7] The issue is a short one, and turns on the period of notice. The parties were agreed that if it was 21 days, the instance had fallen, but if it was 42 days the instance had not fallen and the summons could call.
[8] This issue required to be resolved as a matter of urgency. The matter came before the Lord Ordinary on 28 January 2015 on the defenders’ motion that he should declare the instance of the summons had fallen. He was told that it would be “prudent” if matters were resolved by 12.30pm that day. (We observe in passing that in his interlocutor and note the Lord Ordinary referred to the defenders as “objectors” throughout. In view of the fact that the summons had not called when he dealt with the matter, we consider that he was correct to do so. However, the reclaiming print before us refers to them as “defenders and respondents”, and it is convenient to refer to them here as such).
[9] Having heard submissions for and against the motion, the Lord Ordinary pronounced an interlocutor on 28 January 2015 declaring that the instance of the summons had fallen. The pursuers immediately sought review of this interlocutor and for urgent disposal on the single bills on the basis that the action required to call no later than 30 January 2015 in order to prevent the instance falling. On 29 January 2015 we heard submissions for and against this reclaiming motion. On that date we granted the reclaiming motion, held that the instance had not yet fallen, and indicated that we would give our reasons in writing. This we now do.
The relevant rules of court
[10] Rule of Court 13.4 provides as follows:
“(1) Subject to any other provision in these Rules, the period of notice in a summons shall be –
(a) in the case of service within Europe, 21 days from whichever is the later of the date of execution of service or the giving of intimation before calling on a warrant for intimation;
(b) in the case of service furth of Europe under rule 16.2(2)(d) or (e) (service by an huissier etc or personally), 21 days from whichever is the later of the date of execution of service or the giving of intimation before calling on a warrant for intimation;
(c) in the case of service furth of Europe other than under sub-paragraph (b), 42 days from whichever is the later of the date of execution of service or the giving of intimation before calling on a warrant for intimation; and
(d) in the case of service by advertisement under rule 16.5 (service where address of person is not known), other than in an action to which rule 49.12 (notice of family actions by advertisement) applies, 6 months from the date of publication of the advertisement.
(2) An application may be made by motion to shorten or extend the period of notice in a summons.”
Rule of Court 13.13 provides inter alia as follows:
“(1) A summons shall not be called earlier than the day on which the period of notice expires.
(2) A summons shall be lodged for calling not later than 12.30pm on the second day before that on which it is to be called.
(3) A summons may be called –
(a) during session, on a sederunt day; or
(b) in vacation, on a calling day of which notice has been given in the Rolls
…..
(6) Where a summons has not called within a year and a day after the expiry of the period of notice, the instance shall fall”.
Rule of Court 16.10 provides as follows:
“(1) An agent may accept service or intimation of a document on behalf of the person on whom service is to be executed or to whom intimation is to be given and may dispense with any period of notice.
(2) A person on whom service of a document is executed or to whom intimation of a document is given may dispense with any period of notice as respects him in relation to that document.
(3) Where a period of notice is dispensed with under paragraph (1) or (2), it shall be deemed to expire on the day on which the party on whose behalf service is executed or intimation is given receives written intimation that the period of notice has been dispensed with”.
Discussion and decision
[11] The Lord Ordinary took the view that it was clear from the opening words of the lettered sub-paragraphs that Rule of Court 13.4 prescribes a “service” test. He went on to observe:
“The question in each case is short and straightforward. Where and how did service take place? Here the answer is unequivocal. The summons was served on both objectors within Europe. As a result, I conclude that the period of notice is 21 days”.
The Lord Ordinary found 19th century authority to support this approach, in McLaren on Court of Session Practice (at page 320) which states that a foreigner who is personally cited in Scotland is subject to the normal induciae, and Dickson, De Wolf & Co v Wilkin 1859 31 Scot Jur 595, in which the Lord Ordinary considered:
“that personal citation within Scotland involves, in all cases, as its correlative, the shorter induciae of 14 days. It is only where edictal citations are necessary, and are given, that a right arises to the long induciae, which are exclusively appropriated to edictal citations”.
The Lord Ordinary went on to observe:
“When a summons is drafted, the period of notice is selected on the best information available. Everyone recognises, however, that the circumstances may change. A person may no longer reside at the address at which he was thought to live and a different form of service is required, for example, advertisement. Accordingly, the period of notice that appears on the first page of the summons is indicative, not determinative”.
The Lord Ordinary identified other factors which buttressed his conclusion:
“First, there is the question of certainty and convenience. The parties and their agents can check the court process to see when and how service was made. That enables them to determine the timetable for calling. Second, the rules changed in 1986 to introduce the service test in place of the former ‘residence’ test. It would be odd if the latter continued to regulate matters. Third, no prejudice arises to either party. If an individual instructs acceptance of service in Scotland, he should not retain the right to 42 days’ notice. Equally, a pursuer knows that service took place on a particular date and can make the appropriate calendar entries to ensure that the summons is lodged for calling in good time”.
[12] Senior counsel for the pursuers submitted that the Lord Ordinary erred in law in his interpretation of the Rules of Court. Rule of Court 13.4 is one of a number of rules concerned with the necessary content of a summons. If the period of notice specified in accordance with Rule of Court 13.4(1) is specified as 42 days, unless the court grants an application made by motion to shorten or extend the period of notice in a summons in terms of Rule of Court 13.4(2) or the court pronounces an interlocutor dispensing with service under Rule 16.5, or the agent who accepts service dispenses with any period of notice in terms of Rule of Court 16.10, the period of 42 days specified in the notice must stand. The 19th century authority which the Lord Ordinary considered supported his conclusion was not well founded, as the statement in McLaren was not in fact supported by the two cases on which the learned author relied (Dickson, De Wolf (supra), and Horne v Smith (1823) 2S 500). Senior counsel submitted that certainty and convenience supported the pursuers’ position, namely adherence to the period stated in the notice.
[13] Counsel for the defenders founded on the rule change in 1986 referred to by the Lord Ordinary and contrasted Rules 72 and 75A(1) of the Rules of Court as they stood at 1985 with the current Rules of Court. This showed that there was a conscious decision to move away from residence in calculating the induciae, to a system based on where service actually took place. It would be strange, he submitted, if a pursuer was to be held to a 42 day period of notice just because this was stated in the summons, irrespective of the fact that service was actually going to be effected in Scotland. He accepted that Horne v Smith did not support the proposition in McLaren, and that Dickson, De Wolf did not provide much support for this either, and he did not suggest that much weight should be given to any of these 19th century authorities.
[14] We agree with the submissions for the pursuers. The statement in the summons is clear and unequivocal – “the summons shall not call in court earlier than 42 days after the date of service on you of this summons”. We regard that as amounting to an undertaking by the pursuers that they will not seek to have the summons called earlier than 42 days after the date of service. There are procedures which can be invoked to seek to change or dispense with this period of notice in certain circumstances. If service cannot be executed under Rule of Court 16.1 or 16.2, the party who wishes to execute service may apply by motion for an order for service by advertisement, in terms of Rule of Court 16.5 (in which case the period of notice would require to be changed to that prescribed for such form of service), or, on special cause shown, for an order to dispense with service. In terms of Rule of Court 16.10, an agent may accept service and may dispense with any period of notice, and a person on whom service is executed may also dispense with any period of notice; when this is done, the period of notice shall be deemed to expire on the date on which the party on whose behalf service is executed or intimation is given receives written intimation that the period of notice has been dispensed with. (It is to be noted that the period of notice is not deemed to expire on the date on which the agent or person dispenses with notice, but only on the date on which the party on whose behalf service is executed receives written intimation of this fact). Or, in terms of Rule of Court 13.4(2) an application may be made by motion (by either party) to shorten or extend the period of notice in a summons.
[15] None of these things happened in this case. No application was made to the court in terms of either Rule of Court 13.4(2) or 16.5. The agents for the defenders did not dispense with any period of notice in terms of Rule of Court 16.10, nor was there any written intimation to the pursuers that the period of notice had been dispensed with. In these circumstances we consider that the pursuers were bound by the undertaking given in the notice in the summons, namely that the summons would not call in court earlier than 42 days after the date of service on the defenders. (We note that this accords with what is stated in Macfadyen on Court of Session Practice at D[5]).
[16] We do not agree with the Lord Ordinary’s categorisation of the period of notice that appears on the first page of the summons as indicative, not determinative. We consider that, in the absence of an interlocutor dispensing with service or shortening or extending the period of notice, and in the absence of receipt by the pursuers of written intimation that the period of notice has been dispensed with, the period of notice that appears on the first page of the summons is determinative.
[17] If the pursuers had lodged the summons for calling on the 22nd day after service was accepted on behalf of the defenders, we consider that they would have been in breach of the undertaking given in the summons. The offices of court might well have refused to receive the summons. If the summons had been received and had called, arguably the defenders would have legitimate grounds for complaint. In the absence of a court order in terms of Rule 13.4(2) or 16.5, or receipt by the pursuers of written intimation of dispensation with notice in terms of Rule of Court 16.10(3) we consider that both parties are bound by the terms of the period of notice stated in the summons.
[18] We have not found the 19th century authorities to which we were referred to be of assistance to us in reaching this conclusion. In our view the issue falls to be decided on a proper construction of the Rules of Court as they are presently framed. The change in the Rules of Court in 1986 from a “residence” focus to a “service” focus does not in our opinion advance the argument one way or the other – the issue turns on the period of notice after service which is specified in the summons. Certainty and convenience appears to us to favour the construction which we have taken – the period before which the summons will not call is clear on the face of the summons and is free from ambiguity.
[19] The Lord Ordinary expressed the view that no prejudice arises to either party on the basis of his conclusion. He observes that if an individual instructs acceptance of service in Scotland, he should not retain the right to 42 days’ notice. However, in that event there are mechanisms provided for in the rules (Rule 13.4(2) and 16.10(3)) whereby the period can be shortened, either at the hand of the defenders’ agents, or by an application by either party to the court.
[20] For these reasons we granted the reclaiming motion, recalled the interlocutor of the Lord Ordinary dated 28 January 2015 and found that the summons should have been allowed to have been lodged for calling on Thursday 22 January 2015 (which is the date on which the solicitors acting for the pursuers attempted to have it lodged for calling) and that the relevant periods should run as if the summons had been lodged for calling on 22 January 2015.