CUMBERNAULD HOUSING PARTNERSHIP LIMITED TRADING AS SANCTUARY CUMBERNAULD AGAINST JANICE DAVIES
EXTRA DIVISION, INNER HOUSE, COURT OF SESSION
[2015] CSIH 22
XA55/14
Lord Brodie
Lord Malcolm
Sheriff Principal Stephen, QC
OPINION OF THE COURT
delivered by LORD BRODIE
in the appeal
by
CUMBERNAULD HOUSING PARTNERSHIP LIMITED trading as SANCTUARY CUMBERNAULD
Pursuers and Respondents;
against
JANICE DAVIES
Defender and Appellant:
Act: McIlvride QC; Messrs Harper Macleod LLP
Alt: Logan; Messrs Campbell Smith LLP, Solicitors (on behalf of Barton & Hendry Solicitors, Cumbernauld)
18 March 2015
Introduction
[1] The defender and appellant (“the defender”) is the proprietor of a flatted property, 12C Scott House, Seafar, Cumbernauld. This flat is on the eleventh floor of the block known as Scott House. The defender purchased her flat from and was granted a disposition of it by the Cumbernauld Development Corporation. Her title was registered on 5 March 1992 with title number DMB44814. Her title includes rights of common ownership and other rights in respect of Scott House. The title is subject to real burdens including those imposed as conditions ELEVENTH and SIXTEENTH in entry number 1 and conditions FOURTH, FIFTH and THIRTEENTH in entry number 2. Inter alia these burdens impose an obligation to share in the cost (to the extent of 1/45, reflecting the number of flats in the block) of maintenance of the parts and pertinents which are common and mutual to the several proprietors. Condition ELEVENTH in entry 1 gave an option to the Development Corporation, as the then feudal superior, to act as factor for the block with a view to the management of the maintenance of the common parts. In the event of the superior declining to act provision is made for the proprietors appointing a factor with the various powers conferred on the factor by the relevant condition. Among the powers conferred on the factor is that of suing in its own name.
[2] The pursuers and respondents (“the pursuers”) are Cumbernauld Housing Partnership Limited. They are successors in title to Cumbernauld Development Corporation in respect of subjects including Scott House and the whole rights effeiring thereto, in terms of disposition in their favour by Scottish Homes dated 10 November and registered in the Land Register of Scotland on 14 December 2000. In this action the pursuers aver that they were appointed factors and provided management services in respect of the defender’s flat. They sue for £9574.50 as the sum outstanding in respect of fees for these management services and costs expended in carrying them out. An element in the sum sued for relates to what is stated to be due by the defender to the common repair fund.
[3] The action was raised in the sheriff court at Airdrie on 15 April 2011. Prior to that, on 14 February 2008 and again on 2 February 2011, the pursuers had registered with the Land Register of Scotland, notices of the potential liability of the defender for the costs of common repair work in terms of section 12 of the Tenements (Scotland) Act 2004.
History of the action
[4] The action went to proof on 21 May and 16 August 2013. Only one witness was led. She was Heather Elder, the pursuers’ factoring officer, who gave evidence under reference to productions 5/1 to 5/15 and 5/20 of process, which were statements of account and copy invoices. On 23 September 2013 the sheriff found, inter alia: in fact and law that the pursuers had not proved that at the relevant times they had been appointed factors in accordance with the title provisions, that they had not established that they were entitled to recover the sums sued for and that they had not established that the work set out in 5/1 to 5/15 and 5/20 of process was done or the that the charges as set out were incurred; and, in law, that the pursuers had failed to establish that the sums sued for were due by the defender to the pursuers and that, in any event, the obligation to pay any sums that might have been due by the defender to the pursuers which was enforceable prior to 15 April 2006 had been extinguished by prescription in terms of section 6 of the Prescription and Limitation (Scotland) Act 1973. In so finding the sheriff rejected a submission on behalf of the pursuers that registration of the notices under section 12 of the 2004 Act had constituted relevant claims for the purposes of section 9 of the 1973 Act. He further rejected a submission that, in any event, the defender’s payments of £14 on four occasions in November 2010 and early in 2011 following upon the offer of an arrangement made by the pursuers in October 2010 had constituted a relevant acknowledgement in terms of section 10 of the 1973 Act. It had been conceded on behalf of the pursuers that the law relating to running accounts had no application in the circumstances of the case. The sheriff accordingly assoilzied the defender.
[5] The pursuers appealed to the sheriff principal. In terms of interlocutor dated 31 March 2014 the Sheriff Principal made further findings‑in‑fact, among which (finding‑in‑fact (27)) was that correspondence between the parties including a letter of 12 October 2010 followed by certain payments by the defender had constituted an agreement for payment by the defender to the pursuers of the total sum then outstanding. The sheriff principal sustained the appeal and recalled the interlocutor of the sheriff. He granted decree against the defender for payment of the sum of £9550.40.
[6] The defender now appeals to this court.
The pleadings
[7] Before going any further it is convenient to say something about the pleadings in the case.
[8] The pursuers’ pleadings have the look of a standard debt‑collecting writ. The pursuers aver that the defender is the heritable proprietor of the flat at 12C Scott House and that the pursuers were the appointed factors and provided management services in respect the defender’s property. They sue for the balance of their account. The pursuers make reference to payments made by the defender in 2002, 2003 and 2004 and further payment made following communication between the parties which included the pursuers’ letter of 12 October 2010. The sole plea‑in‑law for the pursuers is in these terms:
“The pursuers having supplied goods and services to the defender and being entitled to payment therefore (sic) in terms of the agreement between the parties decree should be granted as craved”.
[9] The defender admits little of substance expressly, although given the terms of Ordinary Cause Rule 9.7 which provides that where a statement by one party which is within the knowledge of another party is not denied it shall be deemed to be admitted, the defender’s response of “not known and not admitted” to the pursuers’ averments that the defender made payments on various dates in respect of items in the pursuers’ statements of accounts, can be regarded as an admission. The defender makes a number of calls on the pursuers: to produce documentary evidence of their appointment, to explain whether invoices were issued to the defender and if so on what dates, and to produce the pursuers’ statement of account dated 22 March 2011. The defender takes a general plea to the relevancy but in so far as a particular defence is discernible from the defender’s pleadings it is one of extinction of an obligation to pay by virtue of the short negative prescription. Certainly that is the subject of the only plea‑in‑law tabled by the defender other than the plea to relevancy (not argued at any stage in the litigation). The precise terms of the prescription plea are somewhat awkward:
”Separatim, esto the sum sued for being due (which is denied), any obligation incumbent upon the Defender to make payment to the Pursuer having prescribed, as the sum sued for being excessive, decree should not be pronounced.”
Nevertheless there can be little doubt as to what is intended. The plea is supported by averments that elements of the pursuers’ claim are time‑barred in terms of the 1973 Act and that there has been no interruption of the prescriptive period:
“in relation to the work carried out on the dates detailed as common repairs and separate and distinct from the statement of factoring account.”
Grounds of appeal
[10] Notwithstanding the limited terms of her pleadings, the defender took two lines of defence in submission before the sheriff and sheriff principal which were additional to the prescription point. These were: (1) the pursuers had not established that they had been appointed as factors of the relevant property and therefore that they had title to sue; and
(2) the pursuers had not established who had carried out the work referred to in their productions and that the pursuers had paid or otherwise incurred any of the costs there set out. These contentions are maintained in the defender’s grounds of appeal to this court, as is the contention that any liability to make payment has been extinguished by the passage of five years without a relevant claim or a relevant acknowledgement being made, as provided by section 6 of the 1973 Act. In response to the sheriff principal’s finding‑in‑fact (27), there is added the contention that, in a context, as accepted by the sheriff at first instance, that there was an on-going liability on the part of the defender, given that services were still being provided, there was not enough in the letter of 12 October 2010 of the pleadings to allow the conclusion that there was a separate and distinct contract to pay off the claimed outstanding sum such as to entitle the pursuers to decree. Moreover, there was difficulty in reconciling the evidence with the sum in respect of which decree was granted.
[11] We shall look at these matters in turn. We shall do so in the order that they were addressed by counsel.
Failure to establish appointment as factors and therefore title to sue
[12] This point had impressed the sheriff; for him it was enough to dispose of the action. However, after an initial indication that he intended to argue it, Mr Logan, who appeared for the defender, reconsidered, and having done so expressly abandoned this ground of appeal. In our opinion this was a sound decision on Mr Logan’s part. As the sheriff principal points out in his judgment, there was undisputed evidence that the pursuers have been acting as factors of the property since 2001 and that the defender had dealt with them as such (indeed that can be taken to have been admitted). To the extent to which the precise mechanism by which they became factors was properly an issue, and we do not see that it was, the pursuers have the benefit of the presumption omnia rite et solemniter acta praesumuntur, that is it is presumed that acts done have been done legally and regularly, until their illegality or irregularity is proved: Dickson A Treatise on the Law of Evidence (3rd edit) para 114 (4). Had the abolition of the feudal system on 28 November 2004, in terms of the Abolition of Feudal Tenure etc (Scotland) Act 2000, been material, as the sheriff thought it was, then, as appears from the judgment of the sheriff principal, regard would have to have been had to the provisions of the Title Conditions (Scotland) Act 2003 and, in particular, section 65.
[13] Nothing further need be said about this ground.
Prescription
Relevant prescriptive period
[14] Parties are at issue as to what was the relevant prescriptive period for charges made by the pursuers as factor in respect of services and outlays in the carrying out of proprietors’ maintenance obligations. Mr Logan submitted that it was the short negative prescriptive period of five years provided by section 6 of the 1973 Act. Mr McIlvride QC, who appeared on behalf of the pursuers, argued that the relevant period was twenty years, as provided by section 7 of the Act. In our opinion, Mr Logan was right in the result, albeit not for the reason he gave.
[15] Section 6 of the Act provides, inter alia, that:
“(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…
(2) Schedule 1 to this Act shall have effect for defining the obligations to which this section applies”
[16] Paragraph 1 of Schedule 1 lists a variety of obligations to which section 6 of the Act and therefore the short negative prescription applies. Mr Logan opted for the obligation specified in sub‑paragraph (g) as being what was apposite in the present case, that is:
“any obligation arising from, or by reason of any breach of, a contract or promise, not being an obligation falling within any other provision of this paragraph.”
However, Mr McIlvride pointed to the introductory wording of paragraph 1 which provides that section 6 applies to the listed obligations “subject to paragraph 2” of the Schedule. Turning to paragraph 2 it can be seen that in terms of sub‑paragraph (e) of that paragraph, section 6 does not apply to “any obligation relating to land”. In Mr McIlvride’s submission, what was founded on by the pursuers in the present case was an obligation relating to land. As had been explained by the Lord Justice-Clerk (Gill) in Smith v Stuart 2010 SC 490 at paras 9 and 10, the expression “obligation relating to land” is not defined by the 1973 Act. It must therefore be given its natural and ordinary meaning. Subject to land being the main object of the obligation, the expression is apt to cover a wide range of obligations. It is not limited to obligations relating to real rights in land. However, here, the liability of the defender to maintain the parts of the block held in common, her obligation to contribute to a share of the cost of that maintenance, the arrangements for the selection of a factor, and the powers of that factor, including the power to sue in its own name, were all imposed or provided for by the defender’s heritable title. Thus, the underlying obligations very clearly relate to land, as indeed did the actual maintenance work (being work done on or in respect of heritable subjects), the cost of which was what was sued for in the present action.
[17] We were not immediately attracted by the approach advocated by either counsel. While it may be possible to analyse the relationship between the pursuers and the defender in terms of contract, such an exercise has a rather forced quality about it. On the other hand, a construction of the Act which has the result that what are essentially tradesmen’s bills do not prescribe before the passage of twenty years seems extravagant. More importantly, we consider that both suggested constructions ignore the full terms of Schedule 1. An item in the list of obligations to which section 6 of the Act applies which is set out in paragraph 1 of the Schedule is that found at sub‑paragraph (ac):
“any obligation to pay a sum of money by way of costs to which section 12 of the Tenements (Scotland) Act 2004 applies”.
Turning back to sub‑paragraph (e) of paragraph 2, upon which Mr McIlvride relied as taking “any obligation relating to land” out of the paragraph 1 list of obligations subject to the short negative prescription, one sees the introductory wording: “except as provided in paragraph 1 ...(ac) ...of this Schedule”. Thus, an “obligation to pay a sum of money by way of costs to which section 12 of the Tenements (Scotland) Act 2004 applies”, while no doubt an “obligation relating to land”, is excepted from those obligations to which section 6 does not apply by virtue of paragraph 2 of the Schedule. Section 6 therefore applies to it.
[18] Is then the obligation in respect of which the pursuers sue in this action an “obligation to pay a sum of money by way of costs to which section 12 of the Tenements (Scotland) Act 2004 applies”? In our opinion it is. Were it otherwise the result would be that the obligation of a former owner to pay his share of common maintenance charges incurred during his period of ownership would only prescribe after twenty years, whereas the liability of a new owner in respect of the same sort of obligation, imposed by virtue of a notice registered under section 12, would prescribe after five. That would seem odd but, in our opinion, it is not a conclusion which is arrived at on a proper construction of the relevant provisions.
[19] It is convenient to set out the terms of section 12 of the 2004 Act in full:
“12 Liability of owner and successors for certain costs
(1) Any owner who is liable for any relevant costs shall not, by virtue only of ceasing to be such an owner, cease to be liable for those costs.
(2) Subject to subsection (3) below, where a person becomes an owner (any such person being referred to in this section as a “new owner”), that person shall be severally liable with any former owner of the flat for any relevant costs for which the former owner is liable.
(3) A new owner shall be liable as mentioned in subsection (2) above for relevant costs relating to any maintenance or work (other than local authority work) carried out before the acquisition date only if–
(a) notice of the maintenance or work–
(i) in, or as near as may be in, the form set out in schedule 2 to this Act; and
(ii) containing the information required by the notes for completion set out in that schedule,
(such a notice being referred to in this section and section 13 of this Act as a “notice of potential liability for costs”) was registered in relation to the new owner's flat at least 14 days before the acquisition date; and
(b) the notice had not expired before the acquisition date.
(4) In subsection (3) above–
“acquisition date” means the date on which the new owner acquired right to the flat;
and
“local authority work” means work carried out by a local authority by virtue of any enactment.
(5) Where a new owner pays any relevant costs for which a former owner of the flat is liable, the new owner may recover the amount so paid from the former owner.
(6) This section applies as respects any relevant costs for which an owner becomes liable on or after the day on which this section comes into force.”
Thus, section 12 “applies” to a liability or obligation on the owner of a flat for “relevant costs”. The purpose of the section is to facilitate the recovery of such costs by providing that such liability lies not only with the owner at the time when the costs are incurred but also, subject to a requirement for registration, with any new owner who acquires the flat from a former owner who is liable. The section also confirms that an owner does not escape liability for past charges by selling the property. Section 11(9) of the 2004 Act provides that for the purposes of section 12 of the Act, “relevant costs” means, as respects a flat:
“(a) the share of any costs for which the owner is liable by virtue of the management scheme which applies as respects the tenement ...; and
(b) any costs for which the owner is liable by virtue of this Act.”
The expression “tenement” is defined by section 26 as meaning:
“ a building or a part of a building which comprises two related flats which, or more than two such flats at least two of which–
(a) are, or are designed to be, in separate ownership; and
(b) are divided from each other horizontally”.
Scott House is therefore a tenement. The expression “management scheme” is defined by section 27 as including:
“any tenement burdens relating to maintenance, management or improvement of the tenement”.
The liability for a share of the cost of maintenance imposed on the defender by conditions ELEVENTH and SIXTEENTH in entry number 1 and conditions FOURTH, FIFTH and THIRTEENTH in entry number 2 of her title is therefore a liability by virtue of a management scheme in terms of section 11(9) and therefore a relevant cost in terms of section 12.
[20] Accordingly, the obligation to pay a share of factoring costs for which the pursuers sue is subject to extinction by operation of the five-year negative prescription.
Relevant claim
[21] In the event that the court was against him on his submission that the relevant prescriptive period was one of twenty years, and that therefore section 6 applied, Mr McIlvride submitted that the pursuers had made a “relevant claim” as provided by section 9(1) by, on 14 February 2008 and again on 2 February 2011, registering notices of the potential liability of the defender for the costs of common repair work in terms of section 12 of the 2004 Act. For that submission to be sound, registration of a notice under section 12 must amount to:
“the execution by or on behalf of the creditor in an obligation of any form of diligence directed to the enforcement of the obligation”.
If it does, section 9(1) provides that it: “shall be deemed to be a relevant claim in relation to the obligation.” In terms of section 6(1)(a) of the 1973 Act, the making of a relevant claim interrupts the running of an otherwise continuous prescriptive period of five years.
[22] Perhaps understandably in a case where there was much ground to cover and a principal sum of less than £10,000 at stake, we were not favoured with very detailed submissions on what was meant by “the execution by or on behalf of the creditor in an obligation of any form of diligence directed to the enforcement of the obligation”. Mr McIlvride referred to the opinions of Lord President Emslie and Lord Cameron in Lord Advocate v Royal Bank of Scotland 1977 SC 155, but he recognised that nothing in these opinions took him beyond the proposition that the arrestment of moveables may properly be described as a diligence even although, until arrestment has proceeded to an action of forthcoming, it confers no real right of ownership or security over the subjects arrested.
[23] The definition of “diligence” is problematic. In his opinion in Lord Advocate v Royal Bank of Scotland supra, at 174, Lord Cameron refers to what appears at p1 of Graham Stewart A Treatise on the Law of Diligence. The author begins his work with the following:
“’Diligence’, says Professor Menzies [Lectures on Conveyancing p285], ‘is the legal procedure by which a creditor strives to obtain performance of his debtor’s obligations.’ While this is perhaps as good a concise definition as can be given of a subject embracing so many and widely differing forms of procedure, it is somewhat too vague for practical purposes and indeed includes what is commonly known as diligence but also all petitory actions. Diligence may be more accurately defined as the legal procedure by which a creditor attaches the property or person of his debtor, with the object of forcing him either (1) to appear in Court to answer an action at the creditor's instance, or (2) to find security for implement of the judgment which may be pronounced against him in such an action, or (3) to implement a judgment already pronounced”.
A more modern treatment of the subject is by Gretton in volume 8 of The Laws of Scotland Stair Memorial Encyclopaedia, as updated. At para 101 Gretton notes the definition of diligence offered by Graham Stewart and goes on:
“Whilst this definition has often been quoted, it is arguable how successful it is. It is perhaps a definition of not one but three concepts, linked by the undefined concept of attachment, a concept as problematic as diligence itself. Moreover, actual legal usage of the term has been so protean as to evade this or any other definition.”
[24] Accepting therefore that it is difficult precisely to define “diligence” but that, as Gretton puts it, “the term has been used in a wide variety of denotations”, our approach has been to consider the consequence of registration of a notice in terms of section 12 of the 2004 Act with a view to determining whether or not it fits with the relevant wording in section 9(1) of the 1973 Act. In terms of section 12(1) of the 2004 Act, an owner of a flat does not cease to become liable for his share of maintenance costs simply by ceasing to be an owner. His liability subsists until it is discharged or extinguished by prescription. However, in the event of registration of a notice in appropriate form, where another person becomes an owner (“the new owner”), he thereby also becomes severally liable with the former owner of the flat for the costs for which the former owner is liable. Registration of a notice has no other effect; it is just that, the giving of notice, albeit by being placed in the Land Register. Thus, while it might be said to “attach” to the property in that limited sort of way, it creates no real right, either of ownership or security over the flat in question. A creditor who registers a notice does not improve his position in relation to his original debtor or his original debtor’s property. Rather, once a new owner takes title, the notice creates a new obligation, with a new obligant in the person of the new owner, existing in parallel with the original obligation of the former owner. We do not see that as “the execution ... of any form of diligence”, but irrespective of whether we are correct about that matter, the fact that the only effect of registration of a notice is the creation of a new obligation means, in our opinion, that it cannot be regarded as an instance of “execution ... directed to the enforcement of the [original] obligation”.
[25] We therefore do not consider that the registration of section 12 notices interrupted the operation of prescription in the present case.
Relevant acknowledgement
[26] The argument under this head is that the defender’s completion and return of an income and expenditure form sent under cover of letter from the pursuers dated 5 October 2010 and the four payments made by the defender following the pursuers’ offer to accept payment at the rate of £14 per fortnight, made in their letter of 12 October 2010, plus the reiteration of a reference to an outstanding balance in the pursuers’ letter of 5 January 2011, constituted a relevant acknowledgement on the part of the defender of the subsistence of an obligation to pay in terms of section 10(1)(a) of the 1973 Act.
[27] It was accepted by Mr McIlvride that one cannot relevantly acknowledge an obligation which, as at the date of the acknowledgement, has already been extinguished by prescription: Richardson v Quercus 1999 SC 278. Thus, where, as was the case here, the sum claimed by the pursuers in October 2010 included a portion which related to a period of time which was more than five years prior to October 2010, then liability for that portion could not be re‑established by an acknowledgement of indebtedness. Once extinguished, an obligation remains extinguished. To re‑establish an obligation which has prescribed requires more than acknowledgment that it once existed; it requires its reconstitution in what is properly a new obligation. By making finding‑in‑fact (27), that is what the sheriff principal found to have occurred here. We shall consider whether he was well founded in doing so later in this opinion under the head of new contract, but that is a different matter to that which we are presently addressing. At this point the issue is whether by making four payments in the sum of £14 following on correspondence from the pursuers, the defender is to be taken as having made “such performance ...towards implement of the obligation as clearly indicates that the obligation still subsists”.
[28] The sheriff did not consider that the payments founded on could be taken as a clear indication that the relevant obligation subsisted. He thought it no more than an acceptance by the defender that she owed a sum equal to the total of the four payments. The payments could have been intended by the defender to be made in respect of then current rather than past expenditure. Mr Logan reminded the court of what had recently been said by the Supreme Court about the need for restraint on the part of appellate courts in reviewing findings in fact by courts of first instance: McGraddie v McGraddie 2014 SC (UKSC) 12, Henderson v Foxworth Investments Ltd 2014 SLT 775.
[29] We would observe that success or failure of this aspect of the argument makes a difference of less than £300 to what the defender may be liable to pay in that the effect of success is merely to push back the date of interruption of prescription from 15 April 2011 when the action was raised, to 27 November 2010 when the first payment of £14 was received. Looking at the matter broadly, in a context where there had been a history of no payment being made whatsoever, a resumption of payment immediately after correspondence from the pursuers referring to an outstanding liability appears to us to qualify as performance towards implement of such liability as had not already prescribed. In so determining we do not see this as offending against anything said in McGraddie or Henderson. We are not disturbing the sheriff’s findings of primary fact or, indeed, any purely factual inference drawn by the sheriff. What is under consideration is a mixed question of fact and law informed by entirely uncontentious evidence. In these circumstances we feel able to agree with the sheriff principal that the sheriff was wrong in his conclusion on the point.
Failure to establish the fact that the work in respect of which charges were made had been carried out
[30] As we have already indicated, the sheriff held that the pursuers had not established that the work set out in the statements of the factoring account and copy invoices spoken to by Ms Elder, 5/1 to 5/15 and 5/20 of process, was done or that the charges as set out there were incurred. Mr Logan submitted that he had been right to do so. Ms Elder had no direct knowledge of the work to which the statements and invoices related. In Mr Logan’s submission the pursuers had failed to prove that any sums had been due by the defender at all but his criticism was particularly pointed in respect of the more recent period where no copy invoices were available. It had therefore not been possible to check the statements of account against copy invoices for all the charges which were sued for. However, there had been enough material to allow some apparent errors and inconsistencies to be identified. That put the reliability of everything which had been lodged in process in question.
[31] In evaluating Mr Logan’s attack on the sufficiency of the evidence led by the pursuers a number of matters have to be kept in mind. The first is what was the true nature of the dispute between the parties, as disclosed by the pleadings. A civil action is intended to be a rational process for resolving issues which are truly in dispute. As appears from Ellon Castle Estates Company Ltd v Macdonald 1975 SLT (Notes) 66, which was cited to the sheriff principal, the line of defence to an action must be clearly stated in averment and supported by an apposite plea‑in‑law. Each party must state with candour what are the material facts upon which he relies and admit the facts stated by his opponent which he knows to be true. Parties are not entitled to lurk in ambush behind equivocal averments and less than frank denials. Their pleadings will be read in that light and in the expectation that they have understood and attempted to discharge their obligation to engage honestly and reasonably with the litigation process. On a fair reading of the pleadings in this case there was only one issue and that was prescription. The accuracy of the pursuers’ averments had not even been put in issue by a plea‑in‑law. The second matter to be kept in mind is that in civil proceedings hearsay evidence is admissible. There was no need for Ms Elder to have direct knowledge of the relevant work. It was sufficient that she could say that from the pursuers’ records it appeared that work had been done and that costs to the stated value had been incurred. The third matter is that these records, as the records of a business, apparently regularly kept, are presumed to be accurate until any particular inaccuracies are demonstrated: Erskine Institutes, IV.ii.4, Dickson supra paras 114 and 1104. However, demonstrating a particular inaccuracy or inconsistency does not have the result of displacing the presumption in relation to the whole records; it merely affects the particular item. Moreover, as was emphasised by Mr McIlvride, where, as here, the defender choses to lead no evidence, only the most favourable inferences should be drawn from the pursuers’ evidence: Ross v Associated Portland Cement Manufacturing Ltd [1964] 1 WLR 768, O’Donnell v Murdoch McKenzie & Co Ltd 1967 SC (HL) 63.
[32] The sheriff found Ms Elder to be credible. That being so, when regard is had to the foregoing matters, he should have found her evidence sufficient to establish the share of factoring fees and costs due by the defender to the pursuers in the period under consideration.
A new agreement to pay the outstanding sum
[33] Our observations on the function of pleadings and the requirement of fair notice apply to the pursuers as they apply to the defender. We do not see the case that found favour with the sheriff principal to have any proper basis in the record. The pursuers were accordingly not entitled to advance it and we are not prepared to give it effect. In any event such a case would seem to be not without its problems. In so far as anything was agreed to, it was an arrangement to make payments at a rate of £14 per fortnight. If the argument were to be that in the event of the defender failing to keep to that agreement the pursuers would be entitled to claim payment on some other basis, that would require to be teased out in averment. However, it is not necessary to go that distance; the pursuers simply have not pled a case of a new contract entered into in October or November 2010 and therefore cannot argue it.
Quantification and disposal
[34] Mr Logan did not press his point that there was an insuperable difficulty in reconciling the evidence with the sum for which decree was granted. The court had indicated that it was not inclined to become involved in matters of arithmetical detail and it is accordingly grateful to counsel for their agreement as to what sum is due by the defender on various hypotheses as to how the law applies to the facts in the case.
[35] We have decided that the short negative prescription applies to the sum sued for, that no relevant claim was made interrupting the five‑year period until service of the initial writ on 15 April 2011 but that the defender is to be taken to have made a relevant acknowledgement by making payment of the sum of £14 on 27 November 2010. Upon that basis parties were agreed that the sum due is £3620.88 (liability to pay to the extent of £6157.27 having prescribed). We shall therefore recall the interlocutor of the sheriff principal and substitute decree for payment by the defender to the pursuers of the sum of £3620.88 with interest thereon at the rate of 8 per cent per annum from 15 April 2011 until payment. We shall reserve all questions of expenses.