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Scottish Court of Session Decisions |
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You are here: BAILII >> Databases >> Scottish Court of Session Decisions >> UBC Group Ltd v Atholl Developments (Sclacbuie) Ltd [2010] ScotCS CSOH_21 (02 March 2010) URL: http://www.bailii.org/scot/cases/ScotCS/2010/2010CSOH21.html Cite as: [2010] ScotCS CSOH_21, [2010] CSOH 21 |
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OUTER HOUSE, COURT OF SESSION
[2010] CSOH 21
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OPINION OF LORD GLENNIE
in the cause
UBC GROUP LIMITED
Pursuers;
against
ATHOLL DEVELOPMENTS (SLACBUIE) LIMITED
Defenders:
ญญญญญญญญญญญญญญญญญ________________
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Pursuers: Dean, Solicitor Advocate; Halliday Campbell WS
Defenders: D Logan; Fyfe Ireland LLP
2 March 2010
[1] On 12
February 2010, at a continued
preliminary hearing in this matter in terms of Rule of Court 47.11, the
pursuers moved the Court to sist the cause for arbitration pursuant to an
arbitration clause in the contract between the parties. I refused that
motion. I have been asked to provide a note of my reasons for so refusing.
[2] It was not in dispute that the issues raised in the action and
in the counterclaim fell within the scope of the arbitration clause in the
contract. In those circumstances, the Court will normally sist the cause at
the behest of either party. In the present case, however, it was argued by the
defenders that the pursuers had, by their conduct and in particular by their
delay in taking the point, lost their right to insist on the action being
sisted.
[3] Such an argument is normally considered as a species of
waiver. It was held in Presslie v Cochran McGregor Group Ltd
1996 SC 289 that the question to be resolved in each case was whether the
facts and circumstances gave rise to the inference that the party seeking to
rely upon the arbitration clause had abandoned its right to do so by the time
it sought to enforce it; and that the test to be applied was whether the
actings (including the failure to act) of that party, objectively construed,
were inconsistent with an intention to insist upon its contractual right to go
to arbitration. That is the principle of general application which can be
taken from that case. The case also, however, raised an issue of Scottish
procedure. According to our traditional system of pleading, service of the
summons and defences is followed by the making up of an Open Record and,
thereafter, an automatic adjustment period. Parties to a dispute are entitled
to alter their positions at any time until the Record is closed. Accordingly,
although a plea to sist for arbitration should be taken in limine, the
defenders, the parties seeking to rely upon the arbitration clause in that
case, were held to have been entitled to reserve their right to take the plea
while the Record was still open; and no inference that they had abandoned their
right to arbitrate could be derived from the fact that they had failed to
inform the pursuers that they were reserving it, nor from the fact that they
had corresponded on the basis that no arbitration plea had been taken. That is
a quite separate point from the principle of general application to which I
have referred, dependent entirely on the peculiarities of our system of
pleading.
[4] In a commercial cause such as the present there is no Open or Closed
Record. Nor is there any automatic right of adjustment, though the Court will
usually at the first preliminary hearing allow parties to adjust their
pleadings on some or all of the issues in dispute. There is therefore no procedural
moment up to which parties are free to change their case at will or simply not
to commit themselves. In addition, it was made clear in Practice Note No.6 of 2004
that before a commercial action is commenced the issues in dispute should have
been focused between the parties: see para.11. In a commercial cause, a party
commencing proceedings should generally know in advance what his case is and
the likely line to be taken by the defender. It is this discipline which
enables parties to lodge in process a document, preferably agreed, setting out
the issues which will require judicial determination in the course of the
action: see para.12(4). There is therefore, in the ordinary case, no reason
why a party seeking to sist the cause for arbitration should not know from the
start that he intends to seek a sist. Nor is there any reason why he should
not be expected to make his position clear. The position is, therefore, very
different from that which obtains on the Ordinary Roll.
[5] It is, of course, not uncommon for a party seeking to
arbitrate a dispute to commence an action in Court and then apply to sist it.
In a case where the arbiter has no power to award interest, the institution of
Court proceedings which are then sisted for arbitration enables the pursuer to
recover interest by this route. Or a party may commence court proceedings
simply to obtain security for his claim by diligence. In such cases the
pursuer will be expected to make it clear that this is what he is doing. In
the instant case there was no suggestion in the Summons that a sist was sought.
At the first preliminary hearing, both parties lodged Notes of Issues in
accordance with the Practice Note. The defences included a plea in law seeking
to have the action sisted for arbitration but, in their Note of Issues, the
defenders made it clear that they were not insisting on that plea and were
content for it to be repelled. The Note of Issues lodged by the pursuers did
not mention arbitration at all. Instead it identified the major issues between
the parties which required to be resolved in the action. On the basis that the
action was proceeding in court, the Court allowed the defenders to lodge a
counterclaim and the pursuers to lodge answers thereto if so advised, and allowed
the parties thereafter to adjust their respective pleadings. At the continued
preliminary hearing of 12
February 2010, the pursuers
sought to have their adjustments, which included for the first time the plea to
sist for arbitration, received late.
[6] In La Pantofola D'Ora SPA v Blane Leisure Limited 2000 SLT
105, Lord Hamilton refused a motion by the pursuers to sist in
circumstances where that motion was not enrolled until after considerable
procedure in the case. The facts of the case were very different and I need
not set them out. Applying the decision in Presslie and other cases, he
held that the question whether a party had waived his right to insist on
arbitration depended on an objective assessment of that party's conduct in the
whole circumstances of the case. In the circumstances of the present case as I
have set them out, it seems to me that the pursuers' conduct was unequivocally that
of a party intending to proceed by litigation rather than arbitration. The
point does not bear much elaboration. If the pursuers were simply commencing
proceedings so as to protect their position as regards interest, or to obtain
security for their claim, or for some other reason, that could and should have
been stated right from the beginning. Even if the Summons had not included a
plea in law to that effect, the point could have been flagged up in the Note of
Issues lodged on their behalf; or it could have been raised at the first
preliminary hearing when the defenders for their part indicated that they were
no longer insisting that the case go to arbitration. Instead of doing any of
this, the pursuers, to my mind, made it clear that they were expecting the
disputes between the parties to be resolved in Court.
[7] In La Pantofola D'Ora, Lord Hamilton discussed briefly
the question of whether, for waiver to be "effective", there had to be some
reliance on the waiver by the other party, or to put it another way, whether it
had to be shown that the other party had conducted its affairs on the basis of
the waiver. He indicated that he did not need to decide the point because he
found that there had been reliance in that sense. I do not need to decide the
point either. On the basis that the matter was to be dealt with in Court
rather than in arbitration, the defenders applied for and were granted
permission to lodge a counterclaim in the action. Pleadings were exchanged in
the counterclaim. If reliance is necessary, that pursuit of the counterclaim
in the action is quite sufficient.
[8] For those reasons, I refused the pursuers' motion to sist for
arbitration.