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Scottish Sheriff Court Decisions |
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You are here: BAILII >> Databases >> Scottish Sheriff Court Decisions >> Secretary Of State For Business Enterprise And Regulatory Reform v. Smith & Anor [2008] ScotSC 35 (19 November 2008) URL: http://www.bailii.org/scot/cases/ScotSC/2008/35.html Cite as: [2008] ScotSC 35 |
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SHERIFFDOM OF
B412/07
conjoined with B410/07
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JUDGMENT
OF SHERIFF PRINCIPAL B A LOCKHART |
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in the cause |
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HM SECRETARY OF STATE FOR BUSINESS
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against
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FRANCIS JOSEPH SMITH AND ELIZABETH SMITH Defenders and
Appellants |
Act: Thomson, Counsel, instructed by Shepherd
& Wedderburn
Alt: S Munro, of Messrs Livingstone Brown
The Sheriff Principal, having resumed
consideration of the cause, refuses the appeal in these conjoined actions and
adheres to the sheriff's interlocutors of 7 April 2008 and 30 May 2008
complained of; finds the defenders and appellants liable to the pursuers and
respondents in the expenses of the appeal; allows an account of expenses to be
given in and remits same when lodged to the Auditor of Court to tax and to
report; certifies the appeal as suitable for the employment of junior counsel.
NOTE:
Background
to the appeal
1. Two
separate actions at the instance of the pursuers and respondents against
Francis Joseph Smith and Elizabeth Smith individually were conjoined. The sheriff issued two interlocutors and
notes relating to both cases, the first dated 7 April 2008 wherein he concluded
that the conduct of the first and second defenders as Directors of Levencrest
Limited made them unfit to be concerned in the management of a company. In the second notes of
2. On
3. The
note of appeal in respect of Francis Joseph Smith was in the following terms:
"The
defender appeals to the Sheriff Principal on the following grounds:
1.
The order sought by the pursuers, and ultimately
granted by the court. Was incompetent.
The pursuers had failed to comply with the mandatory notice requirements
set out in the relevant legislation. In
these circumstances, it was not open to the court to grant the order sought.
2.
Further, and in any event, there was
insufficient evidence before the court to justify a finding in fact that the
defender had acted as a de facto director.
3.
Further, the order for disqualification was
incompetent. The action proceeded in the
name of the Secretary of State for Business Enterprise and Regulatory
Reform. The averments on record referred
instead to the Secretary of State for Trade & Industry. There were no averments on record from which
findings could be made to justify an order for disqualification.
4.
Further, and in any event, the court erred in
making an unqualified award of expenses in favour of the pursuer. Reference is made to paragraph 21 of the
sheriff's note dated
4. The note of appeal for Elizabeth Smith
was in the same terms as far as grounds 1, 3 and 4 were concerned. In her case, ground 2 was in the following
terms:
"Further,
and in any event, there was insufficient evidence before the court to justify
a finding in fact being made to the effect that the defender had failed to
discharge her responsibilities as a director, and that she had allowed
Francis Smith to act as a de facto director." |
5. As the interlocutors imposing the
disqualification orders were dated
6. The hearing of the conjoined appeals took
place before me in
7. I propose to deal with each ground of
appeal separately. I shall record the
submissions for both parties and then give my decision on each ground of
appeal.
FIRST GROUND OF APPEAL
The
orders sought by the pursuers, and ultimately granted by the court, were
incompetent. The pursuers had failed to
comply with a mandatory notice requirement set out in the relevant
legislation. In these circumstances, it
was not open to the court to grant the order sought.
Submissions for defenders and
appellants
8. The notice provisions in respect of a
disqualification order are contained in the Company Director's Disqualification
Act 1986 section 16(1) which provides:
"A
person intending to apply for the making of a disqualification order by the
court having jurisdiction to wind-up a company shall give not less than ten
days' notice of his intention to the person against whom the order is sought;
and on the hearing of the application the last mentioned person may appear
and himself give evidence or call witnesses." |
On
the face of it there was an obligation on the pursuers and respondents to give
ten days' notice prior to making an application to the court. There was no finding in fact in the sheriff's
judgment regarding the giving of notice or otherwise.
9. I was referred to para 36 of the
sheriff's note dated
"It
was denied that notice was given in terms of section 16 of the Act. Section 16 was not discretionary. Ten days notice had to be given. Although Mr Finlayson came to accept that
there was evidence from Mr Beckett that the letters had been sent, he
maintained there was no evidence of ten days' notice having been given. This, he maintained, was fatal to the
pursuers' case." |
He
also referred to para 40:
"Miss
Strachan referred to Mr Becket's evidence of the drafting and issuing of the
section 16 letters. In terms of the
record, the pursuers were never seeking to prove the letters were sent. It would have been a simple matter to
challenge. There is no authority in
any event to suggest that failure was fatal.
The defenders had chosen to defend." |
I
was then referred to para 70 of the sheriff's note of
"In
my opinion, the requirements of section 16 were not a matter for proof. Mr Finlayson offered no authority for his
proposition that, in the absence of proof that section 16 had been complied
with, the proceedings were effectively struck down. That, however, is not my reading of the
import of this section. It clearly has
its object that person who may be the subject of a disqualification order be
given notice of the Secretary of State's intention, so that at the hearing of
the application that person may appear and give evidence or call
witnesses. Whenever it was that
section 16 letters were sent out in this case, the circumstances that section
16 seeks to bring about were amply satisfied by the procedure which had been
employed in this case, which involved the compilation of a Record in the case
of both defenders with the Secretary of State's case being carefully set out
in articles of condescendence, each of which was individually addressed and
responded to by each of the defenders.
In these circumstances the object of section 16 has clearly been
satisfied. In my opinion, whether or
not ten days notice was given is, in the context of this case, neither here
nor there. Both the defenders and appellants
were clearly put on notice of the Secretary of State's intention, and had
ample time to prepare to resist the application. I therefore reject Mr Finlayson's
submission that this section could play any part in this case at the state at
which he first raised the point." |
10. I was referred to two authorities by
solicitor for the defenders and appellants which he conceded were both against
him. The first was the Secretary of State for Trade and Industry v
Langridge 1991 CH 402. This was a
Court of Appeal decision in
"In
those circumstances, and applying the principles to which I have referred
above, I would have no hesitation in holding that in this case, the failure
to serve a proper ten day notice was a procedural irregularity which did not
render the Secretary of State's application for a disqualification order
against Mr Langridge either void or voidable, and that the Secretary of State
originating summons should not be struck out." |
11. The majority view in that case was followed
by the Second Division in
"Counsel
pointed out that it was a matter of agreement that the applicant had failed
to comply with the provisions of section 16(1) in that ten days' notice of a
disqualification order had not been given.
Counsel maintained that on a proper construction, the provisions of
section 16(1) dealing with notice were mandatory ...." |
He
continued
"We
have carefully considered the terms of the judgments delivered in the Secretary of State for Trade and Industry
v Langridge. We find ourselves in
agreement with what the judges in the majority said. We find their reasoning more persuasive
than that of Nourse LJ in his dissenting judgment. We recognise that section 13 of the Act of
1986 does contain penal provisions, but as Harman J observed in Re Jaymar Management Ltd at 1990 BCLC at
662: "The
statute is a statute brought for the protection of the public and not a
purely penal statute."" |
12. It was conceded that, prima facie, these two cases provided authority for the pursuers
and respondents' position in this case, namely that section 16 was directory
not mandatory and that therefore it was not necessary to prove that the strict
terms of section 16 had been complied with.
It was submitted that what had changed since these two cases was that
the court now has to take into account section 3 of the Human Rights Act 1998
which provides:
"1. So far as is possible to do so, primary
legislation and subordinate legislation must be read and given effect in a
way which is compatible with the Convention rights." |
It
was submitted that section 3 obliges the court to look again at statutory
provisions and where it can be done, give effect to a Convention compliant
interpretation thereof. It was submitted
that section 3 especially released the court from the obligation to follow
precedent where it is not consistent with a Convention compliant interpretation
of the statutory provision.
13. I was referred to schedule 1 of the Human
Rights Act 1998 and in particular:
"Article
6 1. In the determination of his civil rights
and obligations or of any criminal charge against him, everyone is entitled
to a fair and public hearing within a reasonable time by an independent and
impartial tribunal established by law. ..." |
And
article 8:
"2. There shall be no interference by a public
authority with exercise of this right except such as is in accordance with
the law and is necessary in a democratic society in the interests of national
security, public safety or the economic war being with a country, for the
prevention of disorder or crime for the protection of health or morals, or
for the protection of the rights and freedoms of others." |
14. It was submitted that a disqualification
order amounted to a substantial interference with the fundamental rights of an
individual. In making an application for
disqualification the State was seeking to interfere with the Convention rights
of the defenders and appellants. It was
submitted that article 8 made it plain that the State could only interfere on
three conditions: (i) interference was necessary (ii) the interference was
proportionate to the public interest that the State was seeking to protect and
(iii) the process of interference is in accordance with the law. If the state did not observe these
conditions, there was also a breach of article 6. An individual was entitled to expect that a
court would act fairly.
15. Against that background the court required
to look at what was meant by section 16.
It was submitted the court was required to read section 16 in a Convention
compliant manner. It was submitted that
Parliament had enacted section 16 to afford a measure of protection to those
who might be the subject of an application for a disqualification order. A plain reading of section 16 was consistent
with the giving of notice being interpreted as a mandatory provision. It was submitted an independent observer
might expect that the rule was mandatory rather than being qualified.
16. It was submitted that the result of this process
would amount to a substantial interference with the defenders and appellants'
article 8 rights. That application
required to be in compliance with the law and there should be a strict
interpretation to the procedural framework enacted by Parliament. The purpose of the Human Rights Act was to
protect an individual from an abuse of power by the State. It was submitted the sheriff should have
interpreted section 16 as mandatory and a failure to do so would be a breach of
the article 6 and 8 rights of the defenders and appellants.
Submissions for pursuers and
respondents
17. Counsel for the pursuers and respondents
stated that the court was dealing with an area of law which has, as its primary
aim, the protection of the public. This
was clear from the remarks of the Lord Justice Clerk in the case of Secretary of State for Trade and Industry v
Lovett supra. There was no attempt
on behalf of the defenders and appellants to interfere with the sheriff's
findings in fact, findings in fact and law or findings in law. The conclusion was that the defenders and
appellants were unfit to be concerned with the management of companies and that
a necessary consequence was that they ought to be disqualified from so
doing. In considering this ground of
appeal, it was necessary to bear in mind that the main purpose of these
statutory provisions in the 1986 Act was the protection of the public. It was submitted there was no proper
articulation on the part of the defenders and appellants as to the respects in
which their human rights had been breached.
18. The law in
"He
(counsel) referred to what was said by the Lord Chancellor in London & Clydesdale Estates Ltd v
Aberdeen District Council. What
Lord Hailsham said at 1980 SC HL page 30 was: "When Parliament lays down a
statutory requirement for the exercise of legal authority it expects it
authority to be obeyed down to the minutest detail. But what the courts have to decide in a
particular case is the legal consequences of non-compliance on the rights of
the subject viewed in the light of a concrete state of facts and a continuing
chain of events. It may be that what
the courts are faced with is not so much a stark choice of alternatives but a
spectrum of possibility in which one compartment or description fades
gradually into another. At one end of
this spectrum there may be cases in which a fundamental obligation may have
been so outrageously and flagrantly ignored or defied that the subject may safely
ignore what has been done and treat it as having no legal consequences upon
himself ... At the other end of the
spectrum the defect in procedure may be so nugatory or trivial that the
authority can safety proceed without remedial action, confident that, if the
subject is so misguided as to rely on the fault, the courts will decline to
listen to his complaint." Counsel
also referred to the terms of section 233(4) of the 1972 Act and maintained
that there can be no question of the interests of this appellant having been
substantially prejudiced by a failure to comply with any of the relevant
requirements. In our opinion, while it
is to be regretted that the incorrect schedule was served upon the appellant,
it has made no material difference to the appellant's position and there has
been no substantial prejudice to him by the failure to provide the correct
reference to section 86. The question
of non-compliance with the enforcement notice has not arisen. The appellant has exercised his right of
appeal which was properly set out in the schedule and if he is correct the enforcement
notice will fall. If he is incorrect
and the enforcement notice is upheld he is at least by now in no doubt
whatever as to the terms of section 86 of the Act and is fully aware that an
enforcement notice must be complied with.
For these reasons we are entirely satisfied that there has been no
prejudice to the appellant and accordingly this ground of appeal must also
fail." |
19. It was submitted that what the Division was
saying was that the real issue was about prejudice. It was the consequences of the failure to
comply with the statutory provisions that were important. There required to be prejudice to the
appellant before any question of non-compliance could be considered significant. There was no suggestion in this case that
there had been prejudice to the appellants by any failure to comply with the
provisions of Section 16. What had
happened in this case, as the sheriff had noted, was that a summary application
was presented in writing and answers were lodged. Parties were given an opportunity to set out
in full their positions in writing and the parties were allowed a proof on
these pleadings. There was not the
slightest indication on record that either of the appellants did not know the
intention of the pursuers and respondents and the grounds on which they sought
disqualification orders. Had there been
such doubt, there could have been a legal debate on the record.
20. It was submitted that on binding authority,
namely the Inner House of the Court of Session, the provisions of section 16(1)
were directory not mandatory. In
addition, it was submitted that there was no prejudice properly averred from
any failure on the part of the defenders and respondents to give ten days'
notice or their intention to raise proceedings.
21. As far as the submissions in respect of the
Human Rights Act 1998 were concerned it was noted that section 3(1) contained
the words "so far as it is practicable to do so." It was submitted that these words laid bare
the proposition for the defenders and appellants that section 3 having been
enacted, ipso facto previous court
decision were no longer binding. Secondly
it was submitted that the words placed an important limitation on the effect of
section 16. The court is not given a
free hand to re-write legislation so that it complies with Convention rights.
22. It was accepted that the case of Secretary of State for Trade and Industry v
Lovett supra was decided before the Human Rights Act 1998 was enacted. However there remains binding authority from
the Inner House of the Court of Session of the proper interpretation of section
16. I was referred to the opinion of the
court;
"We
are not persuaded in the present case that section 16(1) contains any
ambiguity ..." |
To
succeed in this case, the defenders and appellants would have to persuade the
court that the proper interpretation of section 16(1) was that the provision
was mandatory because it is a breach of articles 6 and 8 of schedule 1 of the Human
Rights Act not to serve such a letter.
Article 6 concerns the right to a fair trial. There is nothing said on behalf of the
defenders and appellants that the failure to serve a notice resulted in an
unfair trial. Article 8 provides that there
should be no interference by a public authority with the exercise of the right
to respect his private and family life except such as is in accordance with the
law. It was submitted that the failure
to intimate a notice in terms of section 16 was according to the law. There was Inner House authority for that.
23. As far as the actual breach of section 16
was concerned, there was no evidence led by the defenders and appellants at the
proof to the effect that a notice had not been served. In para 36 the sheriff stated that it was
accepted on behalf of the defenders and appellants that letters under section
16 had been sent. There was no evidence
that they had not been received. The
sheriff again confirmed at para 70 that there was no support for the proposition
that, in the absence of proof that section 16 had been complied with, the
proceedings were effectively struck down.
There was evidence from the pursuers and respondents' witness John
Beckett at page 179/7 to the effect that section 16 letters were sent out to
the directors (the defenders and appellants).
This evidence was not challenged on behalf of the defenders and
appellants in cross-examination. They
did not give evidence to the effect that they did not receive the letters. I was referred to the case of O'Donnell v Murdoch McKenzie & Co 1967
SCHL 63 at 71 where Lord Upjohn said:
"The
defenders called no evidence, and in such cases, as it was established in
your Lordship's House in Ross v
Associated Portland Cement Manufacturers, only the most favourable
inferences should be drawn from the pursuer's evidence." |
I
was referred to the case of Chaplin v
Caledonian Land Properties Ltd 1997 SLT 384 where it was held that the
sending of the notice having been proved, its receipt required to be presumed
unless there was evidence rebutting that presumption. Lord Rodger at 387 B-C said:
"In
my view the petitioner has satisfied me that the letters of 14 August
In
this case there was unchallenged evidence of the sending of the letter and no
evidence in rebuttal. The court was entitled
to hold that the letters had been received.
If the defenders and appellants wanted to maintain that they did not
receive the letters, they should have given evidence to that effect.
Decision on the first ground of
appeal
24. I have no hesitation at all in rejecting
this ground of appeal. I consider I am
bound by the decision of the Inner House in the case of Secretary of State for Trade and Industry v Lovat supra which
declared that the provisions of section 16(1) of the Company Directors Disqualification
Act 1986 are directory and not mandatory. I also consider the case of Ampliflaire Ltd v Secretary of State for
25. In my view there has been no breach of the
human rights of the defenders and appellants either under article 6 or under
article 8 of the Convention. As far as
article 6 is concerned, both defenders and appellants have received ample
notice of the allegations against them.
They were represented by a solicitor at the proof. There is no allegation of unfairness in the manner
in which these proceedings were conducted.
26. As far as article 8 is concerned, it
provides that there should no interference by a public authority in the
exercise of right to private and family life except as is in accordance with
the law. In this case the proceedings
have been in accordance with the law as laid down by the Inner House of the
Court of Session. In the absence of
unfairness, there cannot in my view be said to be any interference by a public
authority with the defenders and appellants' human rights. I emphasise that the purpose of this Act is
to protect the public from those who abuse their positions as company
directors.
27. If more was needed, which it is not, there
is evidence from John Beckett that in fact section 16 notices were in fact
served on the defenders and appellants.
John Beckett, a representative of the pursuers and respondents, was not
cross-examined on that evidence. No
evidence was led on behalf of the defenders and appellants that the notices
were not received. I am persuaded by the
case of O'Donnell v Murdoch McKenzie
supra that the evidence on behalf of John Beckett on behalf of the pursuers
and respondents can be given the most favourable inferences it reasonable
bears. I am persuaded by the case of Chaplin v Caledonian Land Properties Ltd
supra that the sending of the notice having been proved, its receipt may be
presumed unless there is evidence rebutting that presumption. There is no such evidence.
28. For all these reasons I reject the first
ground of appeal.
SECOND GROUND OF APPEAL
29. The defenders and appellants indicated they
were not proceeding with the second ground of appeal.
THIRD GROUND OF APPEAL
Further,
the order for disqualification was incompetent.
The action proceeded in the name of the Secretary of State for Business
Submissions for defenders and
appellants
30. Solicitor for the defenders and appellants
submitted that the actions were raised in the name of the Secretary of State
for Trade and Industry. Due to
governmental reorganisation certain responsibilities of the Secretary of State
for Trade and Industry were transferred to the Secretary of State for Business
Enterprise and Regulatory Reform. To
enable this to take place, Parliament enacted Statutory Instrument 2007 No
3224. That Statutory Instrument gave
effect to certain changes required as a result of this re-organisation. I was referred to the sheriff's judgment of
"10.
(i) Objection to the competency. Mr
Finlayson's opening submission was that there was no Condescendence which
could permit the Secretary of State to seek any period of
disqualification. The article 1 of
Condescendence referred to the Secretary of State for Trade and
Industry. The instance had previously
been amended to "The Secretary of State for Business Enterprise and
Regulatory Reform." The condescendence
did not reflect this. Accordingly, Mr
Finlayson submitted, no order could be made.
There had to be support for the crave on a factual basis and this was
not present. 11. In response, Miss Strachan submitted that
this could be viewed as an oversight and did not limit the court's
discretion. Any reference to the
Secretary of State for Trade and Industry could be read as if it were a
reference to the succeeding Secretary of State for Business Enterprise and
Regulatory Reform. I was referred to
SI 2007 No 3224. ... The matter could,
in any event, be cured by amendment and Miss Strachan moved accordingly. Mr Finlayson opposed this at this
stage. This was amendment after
judgement and the issue which had now been raised was one of the factors
which he had considered in deciding not to lead evidence. He submitted that Regulation 12 did not
assist the Secretary of State. 12. I dealt with the issue in the following
way. Firstly, I considered that, the
instance having been amended as it had been and the pursuer designated as
Secretary of State for Business Enterprise and Regulatory Reform, any
reference to the pursuer which followed thereafter could properly be read
down as referring to the Secretary of State for Business Enterprise and
Regulatory Reform. The instance was
closely followed by a crave by the pursuer, and a heading "condescendence for
the pursuer" it could hardly be any clearer, then, who the pursuer was, and
the reference to the pursuers' predecessor in article 1 of condescendence
could only sensibly by read down as referring to the pursuer who was designed
in the instance. On that basis alone I
would have rejected Mr Finlayson's submission that the court was
disabled from making any order. In
addition, SI 2007 No 3224 is of further assistance. Regulation 12(4) provides that: "anything
(including legal proceedings, which, at the coming into force of this order,
is in the process of being done by ... the Secretary of State for Trade and Industry
may, so far as it relates to a relevant function ... be continued by ... the
Secretary of State for Business Enterprise and Regulatory Reform." 13. The functions of a Secretary of State for
Trade and Industry are, by Regulation 11, transferred to the Secretary of
State for Business Enterprise and Regulatory Reform. Clearly the functions of the Secretary of
State for Trade and Industry in making Applications under the 1986 Act have
been transferred to the Secretary of State for Business Enterprise and Regulatory
Reform. Clearly also such an
application could be continued by the Secretary of State for Business
Enterprise and Regulatory Reform.
Regulation 12(5) provides that: "Anything
done ... by ... the Secretary of State for Trade and Industry in connection with
the relevant function ... has effect, so far as necessary for continuing its
effect after the coming into force of this order ... as is done by ... the
Secretary of State for Business Enterprise and Regulatory Reform." 14. The
statute came into force on 15. The effect of SI 2007 No 3224 is that
anything which is in the process of being done by the previous Secretary of
State can be continued by the succeeding Secretary of State, and anything
done by the previous Secretary of State has effect as if it had been done by
the succeeding Secretary of State.
There is accordingly a statutory basis for the transfer of function
from one Secretary of State to another, and in these circumstances it would be
absurd in my opinion if the Secretary of State for Business Enterprise and
Regulatory Reform were to be disabled from seeking an order in this action
because of a reference in the Article of Condescendence to his
predecessor. Clearly the intentions of
the Statutory Instrument is to provide for a smooth transfer of things which
have been done, and things in the process of being done, from one Secretary
of State to the other. This Conjoined
Application is an example of precisely that.
Viewing Mr Finlayson's objection against this background and context
it is clear that any reference to the Secretary of State for Trade and
Industry requires to be read as if it referred to the Secretary of State for
Business Enterprise and Regulatory Reform.
Accordingly there is no obstacle to the Secretary of State for
Business Enterprise and Regulatory Reform seeking, and a court granting, the
order sought. I have concluded that
the effect of the Statutory Instrument is that this application has to be
treated as if brought by the Secretary of State for Business Enterprise and
Regulatory Reform. 16. In any event I allowed Miss Strachan to
amend Article 1 of Condescendence. I
have already made a finding in fact that the pursuer was the Secretary of
State for Business Enterprise and Regulatory Reform in my interlocutor of |
31. It was submitted that the sheriff had misinterpreted
the provisions of the Statutory instrument.
It was submitted what the statutory instrument does is to allow
proceedings started by the Secretary of State for Trade and Industry to be
carried on by the Secretary of State for Business Enterprise and Regulatory
Reform. It authorises the transference
of the cause from one pursuer to the other.
It was submitted that this allowed the new Secretary of State to
introduce himself into the process by amendment. What it could not do, it was submitted, was
absolve the new Secretary of State from any failure to amend himself into the
process. It was submitted that the
Secretary of State for Trade and Industry was a different individual from the
Secretary of State for Business Enterprise and Regulatory Reform. The Statutory Instrument produced a mechanism
for the handover. However, it still had
to take place. I was referred to
Macphail, third edition, 9.77 which provides for parties to be identified in
the instance. I was referred to para
9.82 which indicates that the crave required to be precise. I was referred to 9.99 which provided:
"The
pursuer should therefore set forth in the condescendences title, and the
circumstances in which he is compelled to assert it, of the grounds of the
defender's liability and the necessity of raising the action against him." |
I
was also referred to 9.101:
"It
is essential to state, preferably in article 1 or 2, the ground of
jurisdiction of the court and the facts on which that ground is based." |
32. It was submitted that the question of title
to sue was something which had to be considered by the court in every
process. The pursuer required to set out
the basis on which he claimed the right to bring the action against his
opponent. If the court cannot establish
his title and interest to sue, the pursuer will not be allowed the order which
he seeks.
33. At the time of the judgments on
"While
the court will not be swayed by technical or immaterial mistakes, it must be
kept in view that accuracy is the foundation of procedure, and practitioners
must realise that laxity which springs from carelessness will not necessarily
be condoned." |
Microwaves Systems (
"In
that state of the pleadings counsel for the pursuer submitted that the
pursuer had not set forth clearly on record their title to sue ... They had failed to explain on record what
the position was quoad the assignation." |
34. It was submitted that where the pursuers
and respondents sought an order, there must be set out on record the basis on
which it was said that the pursuers and respondents had a title and interest to
sue. The Secretary of State for Trade
and Industry at the outset had done so. But
by the time amendment was made at the hearing of evidence, the Secretary of
State for Business Enterprise and Regulatory Reform had not done so. It was submitted that the sheriff had erred
in allowing amendment at the second hearing on the disqualification order of
article 1 of condescendence. It was
submitted it was inappropriate to do so.
35. For these reasons it was suggest that the
order for disqualification was incompetent.
Submissions for the pursuers
and respondents
36. Counsel for the pursuers and respondents
noted that it appeared to be suggested that the current pursuers had no title
to sue. It was submitted that the
authorities to which reference had been made were all cases in which a pursuer
without a good title at the commencement of the action was held unable to obtain
the remedy which he sought. He took no issue
with these authorities. It was admitted
by the defenders and appellants that, at the time the proceedings were raised,
the Secretary of State for Trade and Industry had title and interest to raise these
proceedings. These proceedings were
raised before the 2007 statutory instrument came into force on
37. It was significant that at no time was
there any plea of no title to sue. I was
referred to Macphail para 9.117:
"The
usual form of the plea is "The pursuer having no title to sue, the action
should be dismissed." The grounds of
objection must be specifically averred, and if the pursuer fails to set forth
his title on record when thus challenged, his action will be dismissed." |
38. In this case there was no objection on the
part of the defenders and appellants and no plea in law of no title to
sue. Although the sheriff allowed
article of condescendence to be amended at the hearing on the disqualification,
this was unnecessary. In any event it
was a reasonable exercise of his discretion.
Decision on third ground of
appeal
39. This ground of appeal also has no
merit. The action was originally raised
in the name of the Secretary of State for Trade and Industry. It was admitted on record on behalf of the
defenders and appellants that he was empowered in terms of the 1986 Act to
bring this application for a disqualification order. On
FOURTH GROUND OF APPEAL
Further
and in any event the court erred in making an unqualified award of expenses in
favour of the pursuer.
40. I was referred to the sheriff's note of
"21. Miss
Strachan submitted that expenses should follow success and, as the Secretary of
State had succeeded, expenses should be awarded in favour of the Pursuer. Mr Finlayson, whilst acknowledging that
expenses should follow success, submitted that the Applications should have
been brought as one application from the beginning. I should therefore modify expenses
accordingly. Miss Strachan informed me
that the Secretary of State's policy was to raise separate actions. The grounds were different in respect of each
defender and until the substance of the defence became clear, it was
appropriate to have separate Applications.
22.
In my opinion, Miss Strachan's submissions are
to be preferred. The grounds relied upon
by the Secretary of State were different in respect of each Defender, and until
such time as the defences emerged it could not be said that the Applications
could run together. It was not
inappropriate that the Secretary of State should have commenced proceedings in
the way that was done, and it can properly be regarded as a bonus to the
Defenders that the Applications became conjoined and further costs were
restricted thereafter. I have,
therefore, awarded expenses to the Pursuers."
Submissions for the defenders
and appellants
41. Solicitor for the defenders and appellants
submitted there was a clear nexus between the interests of the two
defenders. They were husband and
wife. The roles of the two defenders
were interconnected and intertwined. It
was suggested it was difficult to see how these applications could have been
dealt with other than together. It was
suggested a single action should have been raised involving both defenders.
Submissions for the pursuers
and respondents
42. Counsel submitted I should be slow to interfere
with the sheriff's discretion in this matter.
The mere fact that parties had agreed to conjoin the actions when the
pleadings were formalised did not carry with it the suggestion that the court
should mark disapproval of the conduct of the pursuers and respondents in
raising two separate actions. The
specific grounds for disqualification averred against the two defenders and
appellants were different, albeit they related to the same Company. It was submitted that the expenses were a
matter for judicial discretion. There
was nothing so unreasonable about the sheriff's decision to warrant
interference with his conclusion.
Decision
43. Expenses are a discretionary matter for the
sheriff. I have carefully considered the
submissions in the contents of the two applications. In my opinion the sheriff exercised his
discretion in this case in a reasonable manner and I am not prepared to
interfere with his exercise of that discretion.
This ground of appeal fails.
Conclusion
44. In the event I refuse these appeals and I
adhere to the sheriff's interlocutors of