SHERIFFDOM OF GLASGOW AND STRATHKELVIN AT GLASGOW

A1364/12

JUDGMENT

of

SHERIFF PRINCIPAL C A L SCOTT, QC

in the cause

RBS Invoice Finance Ltd

Pursuers

against

A.S.C. Anglo Scottish Concrete Ltd

Defenders

Glasgow, 4 December 2013.

The sheriff principal, having resumed consideration of the appeal, Refuses same; Adheres to the sheriff's interlocutor dated 23 August 2013; Finds the defenders liable to the pursuers in the expenses of the appeal; Allows an account thereof to be given in and remits same, when lodged, to the auditor of court to tax and to report thereon.

NOTE:-

[1] Counsel for the defenders opened his submissions by explaining that the defenders' managing director, Mr Lawrie Clark, dealt with all legal matters relating to the company. Any documentation or information relating to the current litigation would have been passed to him. Counsel acknowledged the fact that the defenders had previously instructed lawyers to act on their behalf. However, he referred to communication problems although did not provide any specific detail in that regard.

[2] On 19 April 2013, the sheriff allowed a proof and 28 June 2013 was assigned as a diet therefor. Counsel submitted that the lawyers instructed on behalf of the defenders had failed to advise them of the diet. In any event, the defenders and their erstwhile agents parted company sometime in July 2013. Counsel stated that the defenders were told that the court would write to them. There having been no appearance by or on behalf of the defenders on 28 June, the case was continued to the hearing after service roll on 26 July to allow for settlement to be implemented. The interlocutor from 28 June appointed the solicitor for the pursuers to intimate the July diet upon the defenders.

[3] Counsel for the defenders suggested that they were unaware of the July diet. He asserted that they had not been told about it. There being no appearance once again by or on behalf of the defenders, when the case called on 26 July 2013, the sheriff assigned a peremptory diet on 23 August. It was counsel's position that the defenders had only received notice of the August diet on 22 August at 4 pm. In other words, they had only then received the actual letter of intimation from the pursuers. In those circumstances, counsel asserted that the defenders' managing director, Mr Clark, had been unable to instruct solicitors in time to appear for the following day (viz. 23 August) and Mr Clark himself had determined not to appear at the court given the general rule which prevents individuals appearing in court on behalf of corporate bodies.

[4] The intimation relating to the August diet had, it appeared been sent out on or about 12 August and had been signed for on 13 August. Counsel accepted that it had been delivered to the defenders' address in the instance which address was, indeed, the defenders' registered office. However, as I understood the position from counsel's submissions, immediately adjacent to the registered office there is a depot for drivers collecting and delivering goods. The inference underlying counsel's explanation was that the intimation of the August diet had somehow found its way into the depot part of the premises as opposed to that part of the premises which might properly be regarded as the registered office. Whilst the intimation had been signed for it had not been signed for by any employee of the defenders.

[5] Had the intimation been properly directed to the defenders' registered office (as opposed to the depot adjacent to it) counsel asserted that it would have found its way directly to the managing director, Mr Clark. With the passage of time, however, the intimation apparently found its way to the defender's Beith office in Ayrshire. It reached there on 22 August and that was when it first came to the attention of Mr Clark. Counsel informed the court that, according to his information, when the pursuers made previous contact with the defenders they had regularly written to the Beith office.

[6] In inviting the court to allow the appeal and to recall the sheriff's interlocutor granting decree by default, counsel submitted that there was a substantive defence to the action. He also referred to the case of McKelvie v The Scottish Steel Scaffolding Company Ltd 1938 SC 278 which he submitted supported the defenders' position in the present action. The writ had been warranted in December of 2012 and, accordingly, there had been limited delay as far as overall procedure was concerned.

[7] Mr Sinclair, for the pursuers, stressed that, in the McKelvie case, there had been fault on the part of the agents of the party in default. He also argued that the amount in dispute ought to be a factor which the court takes into consideration in determining whether it would be reasonable to recall decree in these circumstances. Mr Sinclair suggested that the defenders were a limited company with a net worth in the region of £938,000. (That assertion was unchallenged). He submitted that the court should consider the level of prejudice were the decree against the defenders to stand given that the pursuers' claim is for a much lesser sum, ie in the region of £6,000 plus interest.

[8] Mr Sinclair suggested that further detail required to be added to the chronology of events provided by counsel for the defenders. He pointed out that towards the end of April 2013, settlement between the parties had been agreed. It had been agreed by way of a telephone conversation between the pursuers' agent and the defenders' then agent. Reference was made to a copy letter dated 3 May 2013 which in turn referred to a joint minute and motion associated with settlement of the case.

[9] It was not disputed by the defenders that settlement had been reached. It was, however, disputed by them that their erstwhile agents had actual authority to settle on their behalf. Mr Sinclair submitted that it was, at least, clear that the agents possessed ostensible authority. At all odds, the proof assigned for 28 June 2013 had been discharged to allow for settlement to be implemented not negotiated.

[10] Mr Sinclair expressed surprise at the explanation provided on behalf of the defenders regarding the premises adjacent to what was undoubtedly their registered office. He pointed out that the explanation provided in the course of the appeal hearing by counsel for the defender materially differed from that put forward in ground of appeal No 4. Mr Sinclair, on the hypothesis that the defenders were adhering to the most recent version of events, observed that it was far from clever to have a "premises set-up" such as that described by counsel particularly where a limited company's registered office was concerned. One would expect a limited company to operate what Mr Sinclair described as a robust procedure when it came to the receipt of documentation.

[11] In any event, Mr Sinclair contended that the import and consequences of the court's interlocutor of 26 July 2013 were clear. It was not unreasonable to think that it ought to have been eminently possible for the defenders to arrange to have a solicitor appear in order to explain the situation to the court and to ask the court to continue the case to a further date to enable lawyers to be properly instructed. Mr Sinclair indicated that the defence as pleaded was two pronged. It was argued that the sum sued for by the pursuers was excessive and that there had been no agreed price. Accordingly, a term of reasonableness required to be imported into the contract. However, Mr Sinclair pointed out that there had been no suggestion forthcoming from the defenders regarding any offer to make payment in a sum regarded by them as reasonable whether to the pursuers or to the company known as Plant-Tec. It was submitted that the defence could not be regarded as substantive in line with those authorities relating to what amounted to a substantive defence. There had been no offers from the defenders to pay expenses in respect of the abortive procedure or in regard to the appeal, for instance, as condition precedent to the sheriff's interlocutor being recalled. All that, submitted Mr Sinclair, was also a salient feature of the authorities.

[12] In a short reply, counsel for the defenders challenged the relevance of the sum sued for. He submitted that whether a sheriff's decree ought to be recalled ought not to be determined by the quantum of the sum being claimed. With regard to settlement, it was suggested that a trainee solicitor in the employment of the defenders' erstwhile lawyers had settled the action without authority. Under reference to the pursuers' contentions on record regarding personal bar, counsel suggested that in March 2012, the defenders had informed Plant-Tec that, inter alia, the defenders' terms and conditions meant that their suppliers were precluded from assigning any invoices in the manner now founded upon by the current pursuers. Counsel also suggested that any expenses to be awarded against the defenders ought to be limited to the appeal and to the peremptory diet on 23 August 2013, on the hypothesis, of course, that the appeal be allowed.

Decision

[13] In my opinion, the refusal of this appeal is justified by a number of features. Firstly, I was simply not satisfied as to the veracity of the explanation put forward on behalf of the defenders as to the circumstances in which they failed to be represented at the diet on 23 August 2013. As Mr Sinclair pointed out, the explanation given by their counsel in the course of the appeal differed from ground of appeal No 4. Moreover, it seemed to me that counsel's historical narrative of events leading up to the peremptory diet was somewhat nebulous. If, as was suggested, the defenders and their erstwhile agents parted company "sometime in July", one might reasonably have expected the defenders to make contact with the court forthwith to establish the procedural status of the action against them. Nothing of that sort seems to have taken place and the defenders appear to have allowed matters to take their course. Had they made due inquiry with the court, they would have been able to establish the existence of the diet assigned for 26 July.

[14] Secondly, even if credence is given to the defenders' explanation regarding intimation of the diet being delivered to some sort of depot immediately adjacent to their registered office, that in itself does not, in my view, avail them in this appeal. It is of paramount importance that the address of a limited company's registered office be absolutely clear and free from any ambiguity in the context of service or delivery of documents. It is plain that the situation described by counsel for the defenders was known to them and was tolerated by them. The defenders themselves were, therefore, at fault and the pursuers should not be prejudiced in being deprived of their decree in such circumstances.

[15] Thirdly, I do not accept as accurate the explanation to the effect that the defenders' managing director was unable to instruct a lawyer to appear on 23 August 2013 nor do I accept the suggestion that he was in any way justified in refraining from attending the court himself owing to the rule precluding the representation of corporate bodies by non-solicitors or counsel. Both of these propositions, to my mind, sound highly improbable. At the very least, it would have been reasonable to make contact with the court to explain the defenders' apparent predicament and to request a continuation of the case. The fact that that was not done amounts to another failing on the part of the defenders.

[16] Fourthly, I was not persuaded that a substantive defence truly exists in the current litigation in the sense of there being a credible line of defence or one which is genuinely adhered to. Had that been so, and given the nature and extent of the defence as stated, one would have expected an offer from the defenders to make payment of some sort. Mr Sinclair submitted that no such offer existed and that was not contradicted by counsel for the defenders. There is, it seems, no dispute that the work in question was actually carried out and that monies are due in respect of parts and labour at least to some extent.

[17] Accordingly, for all these reasons I have, in effect, in the particular circumstances of this appeal, refused to exercise the court's general dispensing power in favour of these defenders. There was, in my judgement, no proper and credible basis for granting the appeal. The expenses of the appeal have been awarded in favour of the pursuers.