ECCLESIASTICAL INSURANCE OFFICE PLC AGAINST LADY IAM HAZEL VIRGINIA WHITEHOUSE-GRANT-CHRIST
EXTRA DIVISION, INNER HOUSE, COURT OF SESSION
[2016] CSIH 12A
A2852/00
Lady Paton
Lord Drummond Young
Lord McGhie
OPINION OF THE COURT
delivered by LORD McGHIE
in the cause
ECCLESIASTICAL INSURANCE OFFICE PLC
Pursuers and Respondents;
against
LADY IAM HAZEL VIRGINIA WHITEHOUSE-GRANT-CHRIST
Defender and Reclaimer:
Pursuers and Respondents: R Dunlop QC; Clyde & Co
Defender and Reclaimer: Party
2nd March 2016
[1] This is an appeal by way of reclaiming motion from a decision of the Lord Ordinary following debate. The case is about a disputed insurance claim arising from a fire. The issues at this stage relate to time-bar and delay. The pursuer insurance company had raised an action seeking to avoid the policy. The insured defended that action but did not submit a formal counterclaim for payment until some ten years after the event. The substantive dispute before us was whether a claim made by way of a plea in law and not in any formal conclusions was sufficient to interrupt the prescription provided by section 6 of the Prescription and Limitation (Scotland) Act 1973. There was a further dispute over a claim by the defender for defamation and whether that could be allowed to proceed when made outwith the three year period provided by section 18A of the Act. There was also a general plea about delay.
Statutory provisions
[2] Prescription and Limitation (Scotland) Act 1973 (“the 1973 Act”)
Reference was made to the following provisions of the 1973 Act:
“Section 6 (1) ‘If, after the appropriate date, an obligation to which this section applies has subsisted for a continuous period of five years—
(a) without any relevant claim having been made in relation to the obligation, and
(b) without the subsistence of the obligation having been relevantly acknowledged,
then as from the expiration of that period the obligation shall be extinguished: ….
Section 9 (1); In sections 6, 7 and 8A of this Act the expression ‘relevant claim’, in relation to an obligation, means 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, ….
(2) In section 8 of this Act the expression ‘relevant claim’, in relation to a right, means a claim made in appropriate proceedings by or on behalf of the creditor to establish the right or to contest any claim to a right inconsistent therewith. ….
(4) In this section the expression ‘appropriate proceedings’ and, in relation to an arbitration, the expression “the date when the arbitration begins” have the same meanings as in section 4 of this Act.
Section 4 (2) In this section ‘appropriate proceedings’ means—
(a) any proceedings in a court of competent jurisdiction in Scotland or elsewhere, except proceedings in the Court of Session initiated by a summons which is not subsequently called;
Section 18A(1) Subject to subsections (2) and (3) below and section 19A of this Act, no action for defamation shall be brought unless it is commenced within a period of 3 years after the date when the right of action accrued.
Section 19A(1) Where a person would be entitled, but for any of the provisions of sections 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.”
[3] All further references to statutory provisions are to these provisions of the 1973 Act unless specific reference is made to any other provision.
[4] The following provisions of the Court of Session Act 1988 Act were mentioned.
“6. With a view to securing that causes coming before the Court may be heard and determined with as little delay as possible, and to the simplifying of procedure and the reduction of expense in causes before the Court, the Court shall, in the exercise of the powers conferred on it by section 5 of this Act, provide by act of sederunt –
…..
(v) for the inclusion in defences to any action of any counter claim arising out of the matters on which the action is based, to the effect of enabling such counter claim to be enforced without a separate action being raised”.
For completeness it may be noted that these provisions were repealed with effect from 1 April 2015 by the Courts Reform (Scotland) Act 2014. The repeal has no direct bearing on the issues before us.
Authorities
Advocate General for Scotland v Murray Group Holdings Ltd 2015 SLT 765.
Dryburgh v Scotts Media Tax Ltd 2014 SC 651
Highlands and Islands Airports Ltd v Shetland Islands Council 2015 SLT 285
Link Housing Association v PBL Construction Ltd 2009 SC 653,
M.R.S. Hamilton v Baxter 1998 SLT 1075
Union Electric Co v Holman & Co 1913 SC 954
Wylie v Avon Insurance Co. Ltd & another 1988 SCLR 570.
Text books
Johnston Prescription and Limitation 2nd Ed
Background
[5] The following short summary of facts is uncontentious and sufficient to set the present issues in context.
[6] The defender arranged insurance for her home with the pursuers. The property was badly damaged by fire on 13 February 2000. She immediately intimated a claim. There was no dispute as to the accidental cause of the fire and reports were obtained with a view to agreeing quantum. However, by letter of 2 October 2000, the pursuers intimated that the claim was rejected on the basis that they were entitled to repudiate the policy on grounds of non-disclosure. The defender did not accept that there had been any relevant non-disclosure. The pursuers accordingly raised the present action for declarator that they were entitled to avoid the policy.
[7] The defender resisted the declarator. She set out, in considerable detail, her reasons for disputing the pursuers’ right to avoid the policy. On 27 May 2002 she intimated adjustments by way of a document called “adjustments for the defender”. These included a plea in law in the following terms:
“9. On the grounds of1,2,3,4,5,6,7,8 above, the pursuer not being entitled to avoid the policy, a decree Ad factum praestandum (an order for specific implement) should be granted requiring the pursuer to perform the pursuers contractual obligations in accordance with the Policy No. HT 98002073 issued by the pursuer in favour of the defender.”
We shall refer to the claim made in this way, at that time, as “plea 9”.
[8] It may be noted at this stage that the pursuers did not dispute that if a claim in identical terms to plea 9 had been presented in the form of a counterclaim at that time this would have interrupted the quinquennium. The substantive issue was whether the intimation of adjustments in these terms was a relevant claim within the meaning of section 6(1)(a).
[9] On 31 October 2002 the action was sisted at the defender’s instance to allow her to apply for legal aid. The defender suffered poor health. This was apparently exacerbated by the stress and anxiety of the disputed claim. She was in hospital for a time. She was unable to obtain legal aid. The pursuers made no attempt to recall the sist. The defender did so in about March 2012. She lodged a counterclaim. She adjusted to delete many of the averments in the defences as they were effectively duplicated in the counterclaim. It was not suggested that anything turned on the detail of pleading at that point. It was plain that the counterclaim was well outwith the quinquennium.
[10] The counterclaim included various claims based on defamation which had not been in the previous pleadings. In the appeal it was not disputed that no relevant claim had been made in respect of any relevant defamation within three years of publication. There is an issue between the parties as to the extent of privilege attaching to some of the statements complained of and the pursuers assert that the statements were, in any event, true or fair comment. However, in relation to the defamation claims the only issue before us was whether the Lord Ordinary had erred in the exercise of his discretion not to permit the defender to bring an action late and over-ride the time-limit in terms of section 19A.
[11] The Lord Ordinary heard parties in debate on the issues of prescription, limitation and delay and by interlocutor of 19 February 2015 dealt with various pleas, granted declarator that any obligation on the part of the pursuers arising under the policy had been extinguished by the short negative prescription under and in terms of section 6 of the 1973Act and dismissed the defender’s counterclaim.
Submissions for defender
[12] The defender accepted that the grounds of appeal could be described as falling under three distinct heads: first, has her claim for indemnity under the policy been lost by prescription; second, should the defamation claim have been allowed late; and third, should the pursuers’ case be dismissed under any Human Rights provisions because of the long delay.
[13] The argument under the first head turned on the proposition that plea 9 was effective to interrupt the running of the prescriptive period. This was the main issue at the hearing before us. In relation to the claim of defamation, the Lord Ordinary held that there was no timeous claim under section 18A and this was not challenged in the grounds of appeal. The argument was that he exercised his discretion wrongly under section 19A. The defender did not address us on this but adopted her written submissions. The third head of argument in respect of delay was based on the proposition that although it was on the defender’s motion that the action was sisted, the action should be dismissed on the ground of delay and the pursuers’ failure to prosecute their claim properly. The defender again rested on her written submissions.
[14] It may be noted that the defender set out various submissions in her written note of argument under reference to section 11 of the 1973 Act. It was not clear that this supported any of her grounds of appeal but she clarified the matter by confirming that it related to her defamation claim and the suggestion that publication had continued to a time close to the counterclaim. However, she did not press this argument. We simply add that section 11 relates to prescription. Section 18A deals with limitation of action. We are satisfied that section 11 has no bearing on the issues before us.
[15] In support of these three heads, the defender’s submissions were set out very fully in her note of argument and it is unnecessary to attempt to summarise them further at this stage. The substance of them will be clear from the Discussion below.
Submissions for pursuer
[16] For the pursuers, Mr Dunlop pointed out that the argument based on plea 9 had not been presented to the Lord Ordinary. There was no mention of it in the pleadings before him. It accordingly could not be said that his decision was in error. However, he submitted that even if the court was prepared to consider the argument based on plea 9, it was clear it must fail because that was not a relevant claim within the meaning of the Act. Mr Dunlop had not dealt expressly with the implications of plea 9 in his written note of argument and it is accordingly appropriate to summarise briefly the main points of the argument he presented to us.
[17] He contended that before a claim could be accepted as a relevant claim within the meaning of section 6 it required to be a claim made by way of a conclusion in an initiating writ or in a proper counterclaim. It had long been understood and accepted that an assertion in pleadings was not the same as a claim. He accepted that a conclusion in the same terms as plea 9 if made in the form of a counterclaim would have been a relevant claim for the purposes of section 6(1). But he contended that the authorities revealed a consistent understanding that even where made in judicial proceedings, it was not enough to assert an intention to make a claim. As a bare minimum it was necessary to make a claim by way of conclusion in an action or counterclaim. What was required in terms of the statute was a definitive step in the process of enforcing a claim. He stressed that a prescription, unlike a limitation provision, operated to extinguish a right. It was important to have certainty.
[18] He said it plainly was not enough to assert a right in general terms by way of defence to a contrary claim. The Lord Ordinary’s views on this did not appear to be under appeal but, in any event, this was illustrated, for example, by the contrast between the provisions of section 9(1) and (2). The claim had to be in proper form. Provision by way of counterclaim was itself a departure from the requirement of a separate action. It was to allow a defender to enforce a claim related to a principal action without the need for separate independent proceedings. Counsel referred to section 6 of the 1988 Act and chapter 25 of the Rules of Court. There was no direct authority governing the matter but the clear understanding since the time of the Act was obvious from various cases. He suggested that a good example was in relation to third party procedure. He said this was well established and needed no authority. He referred to Dryburgh v Scotts Media Tax Ltd at [12]. Johnston at p 119 was to the same effect. The dicta in both the Link Housing and Highland and Islands Airports cases were consistent with the understanding that a claim by way of action or counterclaim was required.
[19] He pointed out that in the similar English legislation where time-bar was dealt with by way of limitation, there was express provision that a counterclaim had effect from the date of the main action. Scots law had no such provision. It would have been easy enough to add something similar. The absence pointed to the fact that the date of the counterclaim was the critical date in Scots law. This was not surprising. Section 6 dealt with prescription and not limitation. The latter was a procedural plea but the former operated to extinguish a claim. It would have been odd to find that presentation of a counterclaim could have a back-dated effect to revive a claim which was dead.
[20] Reliance on a claim being in the conclusions or counterclaim was a necessary bare minimum to provide certainty. The present case showed the risk. A party might be able to hunt through reams of paper and find something they could hang their case on. The other side could not be expected to do that. It was not good enough simply to find an indication of intention to make a claim. There had to be a relevant claim. This had to be something which could be identified as a definitive step in enforcing a claim.
[21] In relation to the defamation claim, counsel submitted that there was no basis for interference with the Lord Ordinary’s exercise of the discretion he had under section 19A. He pointed out that there had been nothing in the defender’s pleadings advancing any grounds for the exercise of the power under this section. The only reference was in a different context at answer 8.28 on p 206 of the reclaiming print. The Lord Ordinary’s reasons were sound. If this court considered itself able to take a fresh look it would be appropriate to have regard to the nature of the claim. It would be relevant to have regard to the undoubted privilege which attached to the present pursuers’ assertion of a defence to a claim for payment. It was, he said, clear that the claim had no real prospect of success. It would be unfair to the pursuers to have to address this issue after a gap of 12 or 14 years.
It may be noted that both parties were agreed that if the defamation claim was allowed to proceed the issues arising in relation to the merits of that claim, including the certain disputed questions of privilege should be left over. We understood Mr Dunlop to agree that they might be regarded as open for consideration afresh at proof before answer.
[22] In relation to the general assertions of delay and of breach of article 6, it was sufficient to say that the sist had been at the instance of the defender. She had made no attempt to have it recalled. But in any event, the Rules of Court, at 21A, now provided a method for taking a plea based on general delay. The defender had attempted this but her minute had been refused by Lord Woolman on 6 February 2014. There was no justification for re-opening the matter.
[23] It should also be noted that counsel was at pains to refute the defender’s complaints that the hearing of this minute had been in any way unfair to her. Contrary to her assertions before us, he advised that very regular comfort breaks had been arranged. The hearing had been recorded and if this matter was of any relevance, further evidence could be led.
Discussion
First head of appeal
[24] It is beyond dispute that although the pursuers’ action was one relating in general terms to avoidance of an insurance policy, the substantive issue was the pursuers’ liability to indemnify the defender in respect of the fire damage on 13 February 2000. The defender had made an immediate claim in respect of the damage and followed it up with reports and quantified claims. The pursuers raised the present proceedings for the sole purpose of resisting her claim. The defender, in turn, defended the action for the sole purpose of being able to enforce the claim. The defender had no other relevant interest under the policy. The pursuers would have had no interest in the declarator they sought had it not been as a defence to her claim. It is an unattractive proposition that a party robustly maintaining a claim by way of defence in a litigation designed for the sole purpose of establishing whether that claim is maintainable against the other party should find her whole defence set at naught because of a technical rule that she did not present it in the correct way. There is accordingly some attraction in the idea that merely asserting a defence based on a claim for payment should have been enough to interrupt the prescription. However, it is not now disputed that her claim would have prescribed unless some explicit claim for indemnity was made in course of the general defence.
[25] It was expressly conceded that a claim in the same terms as plea 9 would have been adequate to interrupt the prescription if it had been expressed as a conclusion in a counterclaim. The sole issue in the first head of appeal is whether the statutory provisions require a claim to be made by way of a formal conclusion. There is no doubt that the issue before us is a matter of law. There is no discretionary provision – such as section 19A – which would allow us to give special consideration to the difficulties faced by the defender as a party litigant or as a person afflicted by serious health problems falling short of mental incapacity.
[26] Before dealing with the substantive issue it is necessary to acknowledge that plea 9 was not brought to the attention of the Lord Ordinary. The plea had been converted to a formal counterclaim before matters came to be discussed. There is clearly force in the broad proposition that there was no error in the decision of the Lord Ordinary and that this court should not be required to deal with matters which were not previously in issue. However, it is well recognised that the court will deal with new issues of law if necessary to deal with the justice of a case and if no unfairness to the other party is identified. A recent example, in the context of a statutory appeal in a tax case, can be found in Advocate General for Scotland v Murray Group Holdings Ltd. We have no doubt that it is appropriate for us, in the whole circumstances, to deal with the matter on the basis that the argument based on plea 9 is properly before us.
[27] The basic purpose of section 6 is to ensure that claims are brought promptly. The more specific purpose is to provide a means of extinguishing a potentially valid obligation where the creditor has failed to attempt to enforce it in judicial proceedings. Plea 9 was a relevant claim in the sense that it was a claim related to enforcement of the specific obligation in dispute: namely, the pursuer’s obligation to indemnify under the policy. The claim was made in appropriate proceedings: it was a plea asking a court of competent jurisdiction for a remedy. There is nothing in the Act to say that the claim requires to be made in a particular form. The precise form of any claim made in defences is a procedural matter determined by subordinate legislation. The only relevant primary provision is found in section 6 of the 1988 Act. But this simply provided for a counterclaim to be made in defences without specification of form.
[28] In short, we accept that a claim made as plea 9 was, is capable of falling within the language of section 6. Mr Dunlop acknowledged that there was no authority directly in point which would compel a different construction. However, he stressed that although the point had never been sharply in issue, there were dicta over a range of cases which expressly stated that the claim required to be in the form of a conclusion in an action or counterclaim. Plainly courts have proceeded on an assumption that this was the proper construction of section 6.
[29] We do not doubt the existence of such dicta. Every lawyer knows that the place for a claim for action by a court is in the crave or conclusion. We accept that this instinctive understanding of the proper place for a claim to be made is a relevant factor to be considered when attempting to construe the Act. But it is not authoritative. We are not aware of dicta reflecting that broad understanding and made in any situation where there has been an explicit claim in the general pleadings. We are not aware of any direct consideration of anything close to the issue before us and, as we shall discuss below, third party procedure can be seen to proceed on a different understanding supported by the Rules of Court. In any event, in the absence of binding authority, we are free to consider whether any understanding as to construction is well founded. There are undoubtedly contexts in which a court must be careful not to upset a settled understanding. Where parties can be assumed to have settled their affairs on one construction of an Act, it is plainly more appropriate for Parliament to be left to correct any ambiguity than that a court impose a fresh view of construction. But it was not suggested that any such considerations arose in the present case and we see no reason to think that any such difficulty arises.
[30] In dealing with the issue as a matter of direct construction of the Act, Mr Dunlop contended that “appropriate proceedings”, required a claim on which the Lord Ordinary could have pronounced a decree. That was why the claim had to be made in the conclusions of an action or counterclaim. This was his only explicit reference to the detail of construction of the provisions. We do not accept that this is a necessary construction. A relevant claim need not be an effective one. The apparent purpose of the Act can be served by due notice of a claim in a formal setting. In terms of the Act itself, the term “appropriate proceedings” is properly to be construed as proceedings before a court of competent jurisdiction: sections 9(4) and 4(2). Where the normal procedures of the court would allow any informality of claim to be corrected in an easy way, there is no obvious need to construe “appropriate proceedings” as requiring a claim expressed in a technically correct way.
[31] A requirement that “appropriate proceedings” must be proceedings which will lead, without more, to an enforceable outcome goes beyond the language of the legislation. It is also relevant to note that the provision about court proceedings appears in the same context as the provisions relating to arbitration. It can take colour from that. Appropriate proceedings include “any arbitration” in respect of which an arbiter has been appointed. There is nothing to suggest any restriction of the way in which a claim might be presented to an arbiter. Procedures in arbitration vary greatly in their formality. It cannot be said that a plea to an arbiter in the form of plea 9 would necessarily have been beyond the scope of the reference or outwith the scope of section 4(2)(b).
[32] Counsel’s main propositions were expressed in more general terms. His contention that there was a requirement for a “definitive step in the process of enforcing a claim” derives from dicta discussed below but might be accepted as intended to refer to the proper construction of the reference in section 9 to a claim “for implement or part implement” of an obligation. However, there is no great difficulty in treating plea 9 as a decisive or definitive step by the defender. She plainly included this plea with the intention of obtaining a judicial ruling on the matter. The pursuers could not have read the plea as having any other meaning. Any judicial decision is no more than a step in the process of enforcement. In the context of the need simply for a step to interrupt prescription, there seems to us to be no purposive distinction to be drawn between the judicial finding she sought and a finding encapsulated in a decree. In purely procedural terms, a court would have been able to allow a finding in terms of plea 9 to be converted into a decree by allowing a late amendment. That would only have been required as a matter of procedure to give effect to a finding dealing with the claim. It would not have changed the nature of the claim as a decisive step by the defender seeking a decision from a competent court.
[33] Before turning to specific authorities, counsel suggested that a clear illustration of the need for a conclusion could be found in well-established practice dealing with third party procedure. Where a defender convened a third party, the third party notice was admittedly a relevant claim by the defender and sufficient to interrupt the running of prescription or time-bar against the defender. But, he said, some definitive step was needed by the pursuer. The pursuer had to amend to add formal conclusions against the third party. This he said was trite and it was unnecessary to cite authority.
[34] We accept that the practice is clear in relation a claim by a pursuer, although again it may be said that the decisions in this context relate to the question of whether a pursuer has attempted to direct a claim against the third party rather than to the precise form of the claim. But in relation to the claim by the defender against a third party, it is clear that the relevant claim need not be in a conclusion. Rule 26.1 provides for the procedure to be followed when a defender “claims” that he has a right of contribution, relief or indemnity against a person who is not a party to the action. Such a claim will appear in the averments and pleas in law: rule 26.2. Where such claim does not appear in the original defences it will be able to be added by adjustment. The Third Party Notice – in terms of Form 26.1 - A is needed to bring that claim to the attention of the third party. It does not provide for the claim to be set out in any formal way. There is no doubt that service of a Third Party Notice is effective to interrupt the running of prescription against the defender. Although we must go on to consider the cited authorities and to look further at the purpose of the legislation, it appears to us that acceptance that such procedure is effective to interrupt prescription although no claim appears by way of conclusion, is sufficient to lead us to reject the pursuer’s contention in the present case. Third Party Notice in the style provided by Form 26.1- A does not make a formal claim. It merely brings the existence of a claim formally to the notice of a party who has not until that point had any connection with the judicial proceedings. There is no need for special provision for notice when the claim is against an existing party. The intimation of adjustments including the claim gives adequate notice.
[35] The earliest of the cases cited to us on this matter was Wylie v Avon Insurance. In that case there was a claim made by way of declaratory conclusion seeking to set up a contract and the dispute was as to whether it was wide enough in its terms to cover a claim for an alleged breach of the contract. It was held that the conclusion did not make such a claim. It was merely an “abstract or academic conclusion”: at p572. Lord Dervaird contrasted the nature of the action setting up the contract with the requirement to make a claim. “Were the pursuer ever to seek indemnification in respect of a particular incident giving rise to a claim under the policy, he would have either to amend the present action to include a conclusion to that effect or to raise a fresh action. That clearly demonstrates that there has not as yet been made a claim in appropriate proceedings for implement of the relevant obligation.” While this is a clear enough expression of opinion, it was made in the context of drawing a distinction with the abstract nature of the conclusion in that case. The court was not attempting to draw a distinction between a claim clearly expressed in pleading and one set out in a conclusion.
[36] The most authoritative guidance to construction now comes from the opinion of the Lord President (Lord Gill) in the Highlands and Islands Airports case. In that case there was, again, a declaratory conclusion, but it was focused on a breach of contract and sought a finding of liability to pay the cost of repairs. The case confirms the obvious point that an informal claim will not suffice. “The claim must be made formally by way of litigation”: para [14]. But it provides clear authority for the need to take a practical approach rather than a technical approach to the interpretation of the 1973 Act: para [16]. A practical approach effectively stresses the importance of purpose in the construction of these provisions. The main thrust of the decision can be noted at paragraph [17]:
“Counsel for the defender submitted that in its original form, the summons at most indicated the likelihood that the pursuer would make a claim; but did not make the claim itself. I do not agree. On a fair reading, the summons left the defender in no doubt that a claim was being made, that it was a claim for payment and that precise quantification of it would follow in due course. That, in my view, was sufficient to constitute the making of a relevant claim. It was plainly a claim in part implement of the defender’s alleged obligation, being a definitive step in the process of enforcing them.”
As there was a declaratory conclusion in that case, the Lord President’s apparent reference to the summons as a whole cannot be taken as a positive acceptance of the sufficiency of averments which are not reflected in a conclusion. However, we see no difficulty in regarding plea 9 as a definitive or decisive step in the process of the defender seeking to enforce her rights.
[37] The court also dealt with the meaning of the expression “appropriate proceedings”. Lord Gill accepted the view expressed in M.R.S. Hamilton v Baxter 1998 SLT 1075 that the requirement that proceedings be appropriate refers to the forum in which proceedings are raised rather the form in which the proceedings are raised. This appears to do little more than follow the terms of section 4(2) which is adopted in the definition by section 9(4). But clearly the stress on “forum” as opposed to “form” gives no support to the contention that the relevant claim can only be one made by way of conclusions.
[38] It may also be noted that in the Highlands and Islands Airports case there is reference, at para [7], to the Lord Ordinary’s conclusion that, since prescription involved a curtailment of rights, the legislation fell to be construed in a way that minimised that effect. We accept that broad proposition. It means that we should be slow to read into the statutory provisions any requirement which would curtail the defender’s rights. But it is appropriate to add, for avoidance of doubt, that we accept Mr Dunlop’s submission that provision for extinction of claims after five years is not inconsistent with a creditor’s rights under the European Convention on Human Rights. No question arises, in this context, of requiring to strain the meaning of the 1973 Act provision to give effect to section 3 of the Human Rights Act 1998.
[39] The other Inner House case to which we were referred was Link Housing Association v PBL. In that case a minute of amendment was lodged within the prescriptive period seeking to replace the original pursuers with a new company. Amendment in terms of the minute was successfully opposed by one of a number of parties. It was held that the whole amendment accordingly fell to be refused but that a fresh minute could be presented against any remaining party. A minute in similar terms to the original was duly presented but this came outwith the prescriptive period. For present purposes the point of significance in the decision was the acceptance that the original intimation of an application to amend was sufficient to interrupt prescription because it gave fair notice of a claim in the existing proceedings. The outcome of the notice was irrelevant in the context. At para [17] Lord Nimmo Smith, giving the opinion of the court, said,
“What is required is fair notice to the defenders that a claim is being made on behalf of the pursuers. In our opinion, the lodging and intimation of a minute of amendment serves to give fair notice. We cannot see that it does anything less than is done by the lodging of a summons for calling. In either case the formality of the procedure, in the context of a judicial process, leaves the defenders in no doubt about the pursuers’ intentions. There is no requirement that there be a judicial decision: it is the act of the pursuers in stating the claim in a formal document intimated to the defenders that is relevant”.
His Lordship went on, in para [18], to consider the submission that when the amendment was refused the interruption of the prescription ceased to have effect. In that context, he said, “The true position is, in our opinion, that a relevant claim, once made, in whatever form, irreversibly interrupts prescription.”
[40] We are satisfied that the dicta in both these cases can be seen to give broad support to the defender’s contentions. A practical approach to construction of the section would accept that a claim relating to the relevant breach of obligation is a relevant claim within the meaning of the section and that a claim which explicitly asks the court to make an order enforcing the creditor’s rights is a claim for implement of the obligation made in appropriate proceedings. Such a construction allows a fair and just result in the present case. However, it is clear that the issue of construction cannot be assessed simply by reference to the circumstances of the present case. If there were clear practical reasons, or reasons of policy, for requiring any claim to be made in conclusions, that would be an important consideration. But we are not persuaded that any such reasons have been demonstrated. The purpose of the legislation was not to clarify rules for effective litigation nor, indeed, to lay down any rules of procedure. It was to provide a fair means of extinguishing stale claims while preserving claims which were being insisted on in a formal way. All that is needed to serve that purpose is plain notice. Debtors are entitled to be free of the threat of litigation. So it is not enough to show an intention to claim. There is an obvious need for some step bringing the claim before the court. But there is no obvious need for further formality.
[41] Mr Dunlop placed considerable stress on the need for certainty and we entirely accept the need for a tolerable degree of procedural certainty. It must be clear that a claim is being made. However, we do not accept that the claim in the present case can fairly be described in terms of the defender having to “search through reams of paper” to “come up with something she could call a claim”. That the defender intended a claim was obvious from the word go and, as we are satisfied that plea 9 can be accepted as a relevant claim, the fact that the pursuers may have lost sight of it is not a matter entitled to any weight. In the normal course of things the existence of an appropriately worded claim in the pleadings would be obvious and well known to both parties. Both parties may well have been distracted by the nature of the defender’s other pleas before the Lord Ordinary and by the sheer volume of material she had seen fit to add to the pleadings. We understand that Mr Dunlop was not involved at the stage of the early adjustments. He would prepare for hearings on the basis of the pleadings presented to him, by which time the claim made in plea 9 had been converted to a counterclaim. But solicitors ought to have been aware of the plea. They had made up a closed record in December 2002 not realising that the need for this had been superseded by the earlier sist. That record set out plea 9 as the last of nine pleas in law. It is certainly surprising that in the twenty one pleas in law eventually stated by the defender in her attempts to answer the prescription plea, there was no reference to the existence of the previous plea. But the pursuers were aware at all times that she was seeking to be indemnified by the pursuers for loss of her home. No question of prejudice arises.
[42] We accept that there is an attraction in the argument that identifying a claim in the conclusions of an action or counterclaim provides a clear cut off point which would lead to clarity and certainty. Prescription operates to extinguish an obligation. Debtors are entitled to be free of stale claims. But the need for this has to be balanced against a creditor’s right not to lose a claim without good reason and the fact that the benefit of certainty may be more apparent than real.
[43] Where a claim is made in proceedings initiated by a creditor, it would almost inevitably be referred to in the conclusion: but this might only be by implication. There is, no doubt, more scope for uncertainty where a claim is set out in defences. The need for a counterclaim may be less obvious if the claim is relied on by way of pure defence. But, in all cases, reference to the pleadings will normally be needed to identify the claim itself. The conclusion can be seen to be a step beyond the claim. Conclusions are frequently expressed in monetary terms only. There is an implied declarator – made subauditus - in every conclusion for payment: Union Electric Co. Ltd v Holman & Co. page 957. But normally the substantive content of such a conclusion can only be found in the pleadings: that is, in the condescendence or pleas in law. It would seem pointless to treat section 6 as necessarily requiring a claim to be made in a conclusion rather than in general pleadings when the nature of the actual claim being made could only be determined by reference to the averments or pleas-in-law. Insistence on a claim being made in the conclusions would not add to certainty in any clearly demonstrable way.
[44] Counsel drew attention to the provisions of English legislation designed to place a time-bar on claims after six years: Limitation Act 1980 section 35. By contrast with Scottish provisions it appears that a claim made by way of counterclaim in English proceedings is taken to have been made at the same date as the original claim. We were not addressed on the detailed requirements of English counterclaims but, for present purposes, it is sufficient to say that any stress on certainty is not reflected in these provisions. There would be no certainty that any claim was dead until the pleadings reached a stage when a counterclaim was impossible. We accept that provisions for limitation serve a different purpose from prescriptive provisions but that does not, itself, provide an explanation as to why certainty might have been thought an important aspect of the Scottish legislation but not the related English provisions.
[45] It is clear that the pursuers could have been in no possible doubt as to the defender’s intention. If clarity is the dominant consideration, there is no reason why a claim such as was made by plea 9 should not be accepted as a relevant claim. It was intended as a judicial claim. It was every bit as much a decisive step in the eyes of the defender as a conclusion headed “counterclaim” would have been. It unmistakeably conveyed the decision to make a formal claim to the pursuers. The contention that a clear claim made by way of a formally stated “plea“ to a court of proper jurisdiction is not to be regarded as a relevant claim for the purposes of prescription appears to us to demonstrate an unduly technical approach to construction. This is not required by either the language or the purpose of the section. Taking a practical approach we are satisfied that plea 9 was sufficient to interrupt the running of prescription. Nothing in the authorities requires a different conclusion and, in any event, this is in accordance established practice in relation to defenders’ claims against third parties.
Second head of appeal
[46] No action was raised in respect of the allegations of defamation until the counterclaim in 2012. Apart from the claim based on publication of the pleadings to the printer which was plainly part of the normal court process and a privileged occasion, the claims against the pursuers related to publication of material some ten years earlier. There was a reference to publication on the web on 6 April 2012 but it was not averred that this publication was at the hand of the pursuers. The claim for malicious publication in or before 2002 would plainly be time-barred by the provisions section 18A, and the Lord Ordinary was asked to exercise a discretion under section 19A to allow the defender to bring the action notwithstanding these provisions. Before us, the defender did not challenge the time-bar but challenged the Lord Ordinary’s stated reasons for refusing to over-ride the provisions of section 18A.
[47] It is up to the party seeking a favourable exercise of the court’s discretion to establish the grounds upon which it might be exercised. The defender’s pleadings made little express attempt to do so. It is plain that, as a start point, she required to show that there was a good reason for her failure to raise a claim within three years of the publication complained of. She did not attempt to rely on the provisions of section 18A(4) or suggest that there had been any significant delay in the publication first coming to her attention. Essentially the plea turned on her ill-health. She expressly disclaimed any reliance on section 18A(2). She did not suffer unsoundness of mind. She relied on medical reports and on assertions made orally before the Lord Ordinary: see para [13] and [29] of his Opinion.
[48] We are entirely satisfied that the Lord Ordinary was entitled to conclude that there was no adequate explanation for the delay in bringing the proceedings. While it may only be the initial three year period of failure to raise an action which positively requires some justification, we have no doubt that, in exercising his discretion, the Lord Ordinary was entitled to look at the whole period of delay. The defender did suffer from ill-health over that period, but it was not contended that this prevented her from attending to all business affairs throughout the ten years in question. Her own pleadings demonstrate an involvement with various official bodies over that period, as set out in the counterclaim under 6.4. We are satisfied that the failure to provide a good explanation for the delay was, in itself, sufficient justification for a refusal to exercise the discretion in the absence of any special circumstance.
[49] In the absence of adequate justification for delay it is unnecessary for us to say much about the other grounds for refusal to exercise a discretion under section 19A. The second ground was based on an assessment of the potential value of the claim. The Lord Ordinary noted that the material complained of was an accurate summary of what was asserted in the court action. We might have gone further than the Lord Ordinary in expressing doubt as to the ultimate prospects of success in the defamation claim. Mr Dunlop urged us to take account of this if we felt it appropriate to take a fresh approach to section 19A. However, we are satisfied that our role at this stage is limited to consideration of the Lord Ordinary’s exercise of his discretion. We have no ground to interfere with this and, accordingly, no justification for any attempt to consider the matter afresh. The Lord Ordinary made his assessment on this head on the basis of an acceptance that the defender might succeed in establishing defamation, but that the measure of damages would have to reflect the fact that the factual dispute could eventually be reported freely if the case came to proof. We accept that the Lord Ordinary does not appear to have taken account of the elaborate claims made by the defender as to the consequences of the alleged defamation to date. However, we consider that reliance on this is largely misconceived. The defender had various difficulties arising from the destruction of the premises and her inability to re-build but these were due to the pursuers’ refusal to indemnify, not to the defamatory nature of anything published by them by way of explanation for that refusal. We are satisfied that the Lord Ordinary was entitled to take account of the potential measure of damages. We see no manifest error in the way he did this.
[50] The third ground referred to by the Lord Ordinary was the fact that there was no indication that the defender had sought any remedy against the newspapers or journal involved. The defender challenged that ground on the basis that she was entitled to choose which wrongdoer to pursue. However, the fact is that she did not pursue any in time. In the exercise of his discretion the Lord Ordinary was entitled to consider whether she should be allowed to make a claim out of time against one wrong-doer rather than another. He clearly was aware that the pursuers were asserting a defence of privilege. A claim against the newspapers which published the material without a right to claim privilege might have been a better target. We see no error in the Lord Ordinary’s third ground. It might not have been of much weight on its own but there is nothing to suggest that he gave it much weight. The absence of adequate explanation for delay could properly be regarded as the dominant reason for refusal to exercise the discretion.
[51] In short, we are satisfied that the Lord Ordinary’s decision under section 19A was one he was entitled to make and we have no justification for interfering with it.
Third head of appeal
[52] We consider the defender’s contentions on the third head to have no merit. Put very shortly, the essence of the argument was that, as it was their action, the pursuers should have taken active steps to avoid delay. They made no attempt to recall the sist. This led to the delay of about ten years for which the pursuers should be seen to be responsible. It was also contended that there was a breach of the defender’s right to a fair trial under article 6(1) of the European Convention on Human Rights because the court itself should have taken steps to make sure the action proceeded.
[53] Where a party asserts that an action should be dismissed because of delay falling short of any statutory period of prescription or limitation, provision is made by Rule of Court 21A for the presentation of an application. The defender sought to take advantage of this rule. Her application was refused by Lord Woolman on 6 February 2014. There was nothing in the grounds of appeal seeking to bring that decision under review. But even dealing with this contention afresh, we are satisfied that there is no basis upon which it could succeed. Dismissal of an action for delay which is not covered by any express statutory provision is a remedy of last resort. In the present case it is sufficient to say that it is clear that the defender had the dominant interest in the outcome of the litigation. The cause had been sisted on her motion. She could have had the sist recalled at any time. It might also be said that the grounds upon which the pursuers sought to have the policy set aside related to matters within the defender’s personal knowledge. She has not set forth any basis upon which it might be said that delay has prejudiced her ability to deal with the issues in dispute.
[54] We are aware of dicta of the European Court of Human Rights which might possibly have provided some kind of start point for a contention that the court had failed to ensure that the action was progressed without delay. But we were not referred to the detail of such dicta. We do not think they could have advanced the argument in the present case. Where the only delay was due to a sist which was at her own instance and which she could have had recalled at any time, we are satisfied that no breach of the defender’s rights under article 6 can properly be identified. Further, it must be noted that the remedy for any breach by the court of the defender’s rights under article 6 could not be one which penalised the pursuers.
Decision
[55] For the above reasons the interlocutor of the Lord Ordinary of 19 February 2015 must be recalled. In the principal action, the pursuers’ fourth plea in law falls to be refused and it appears that this means that the first plea cannot be sustained at this stage. A hearing by way of a proof before answer will be required to deal with the merits. The defender’s pleas in her defences are so voluminous and convoluted as to be virtually incomprehensible. We are satisfied that her fifth to thirty third pleas were properly repelled. Her main defence is a challenge to the factual grounds of the pursuers’ action and her defence and any necessary propositions in law can probably be taken to be covered by the first two pleas. The third and fourth appear to add little of substance but in absence of detailed discussion we think they can be left standing. Our present thinking is that the material in Answer 8 is largely irrelevant to the substantive issue and deletion of that material and the pursuers’ averments in answer to it, would make preparation for proof much easier for all concerned. We shall put the case out for further hearing on that matter. It might be helpful to say that we think the relevant issues will relate solely to events up to and including the date of the fire. It is possible that evidence of later actings might be relevant if they were relied on simply as tending to show something about the situation up to the time of the fire but we have not yet attempted to identify any such material in the lengthy pleadings.
[56] In relation to the counterclaim, the pursuers’ third plea must be repelled. The sixth plea was properly sustained. It relates to the claim for damages for defamation. Pleas seven to ten are superseded by dismissal of that claim. The second plea must have related solely to the defamation claim but is not so limited in its terms and should now be repelled. The counterclaim remains insofar as needed to deal with the defender’s positive claim for indemnity and the first, fourth and fifth pleas on behalf of the pursuer will fall to be considered after a hearing by way of proof before answer. The defenders’ pleas in the counterclaim were all repelled by the Lord Ordinary in light of his decisions on the prescription and limitation issues. We have not heard submissions on the detail of these pleas. Some may fall to be repelled as being based essentially on issues of defamation but they are a convoluted mixture of assertions of fact and law. The conclusions are unusual, to say the least, and the pursuers will no doubt wish to challenge the relevance of significant parts of the counterclaim. However, we think that it would be advisable now to sist the counterclaim until the principal action is decided. If the defender does not succeed in her defence to the principal action, there will be no substance in the counterclaim and it would be unfortunate to waste further time and effort on it at this stage. If she is successful in the defence there would clearly have to have a proof on quantum, at least. At that stage the parties can consider whether the whole legal issues can be left to be determined after proof or whether further debate is needed.
[57] We note that by interlocutor of 17 March 2015 the Lord Ordinary made a finding of expenses against the defender. That was plainly based on the pursuers’ success at the debate and that interlocutor now falls to be recalled. Parties should intimate any motions to be made in respect of expenses in time for them to be dealt with at the “By Order” hearing.