Commercially driven

Sheriff court commercial procedure (Ordinary Cause Rules, chapter 40) has now been operating for 10 years. Available in Glasgow, Aberdeen, Inverness and the Borders courts, it has become a popular means of litigating and, following the Gill review, many of its features are likely to be applied to other classes of action.

Commercial procedure involves case management by a single sheriff, who has a wide discretion both in procedure and in the types of orders available. One innovative feature, now shared with some personal injury actions, is the use of telephone conferences instead of court appearances, and these have proved a valuable tool. Over the years a body of experience has built up, on both sides of the bench, but little practical guidance has been published for those practitioners who have limited opportunity to appear.

This note is intended to provide such guidance to those unfamiliar with the procedure, and in particular case management conferences (CMCs). It is written on the basis of experience of Glasgow Sheriff Court; practice may vary elsewhere. It is not intended as a practice note, but rather to give some insight into the procedure and how best to use it.

Focusing the dispute

In commercial proceedings, parties should be more proactive and focused than in the traditional model, in which they may remain at arms’ length and limit communication with each other. The court will encourage parties to avoid delay, unnecessary conflict and wasted effort. The relationship between the parties is now regarded as an area in which the court can legitimately take an interest. Parties may be open to criticism if they refuse to talk to each other without good reason.

Experience shows that, in the majority of complex cases, discussion allows the parties to be clear on where they agree, and disagree. That in turn leads to a clearer focus on their own preparation and ultimately what procedure is best suited to the case. You don’t have to agree with each other’s case, and you don’t have to try to settle the case. What is required is that you focus where the dispute actually lies, what points are not disputed, and where the case is going next. Failure to do so may result in court sanctions, such as awards of expenses or refusal of further adjournments.

In preparing a dispute for court, it is recognised that there is a balance to be struck between two extremes. One is that the pursuer raises an action without warning to the defender and having done little preparation. The other is that parties commence litigation-by-correspondence, with exhaustive solicitors’ letters, full production of documents, and much (possibly unrecoverable) early expense. Although it is difficult to generalise, parties will be expected to have taken any reasonable and available steps to avoid litigation (such as a lawyer’s letter giving adequate detail of the claim), but will not be expected to have carried out an informal litigation. The aim is to encourage responsible use of litigation, enforced by awards of expenses where appropriate.

Some useful tools

Commercial procedure is not only flexible but can be innovative, provided this genuinely assists the focusing and just resolution of the dispute. You will be able to suggest for consideration various procedural routes to advance the case. Some of those in use since 1994 in the Court of Session commercial court have been adopted. These include:

• at an early stage, orders to exchange relevant documentation and information;
• where parties are not agreed on procedure in a complex action, requesting each party to prepare a note of issues (to identify the main disputes and how these are to be addressed);
• each party preparing a note of further procedure (for example, separate proofs on liability and quantum, or preliminary debate issues);
• once a debate is requested, the lodging and exchange of notes of argument giving an informative summary, identifying authorities (akin to rule 22);
• ordaining parties to instruct their respective experts, or agents, or principals, or a combination of these, to meet and confer on identified issues;
• joint notes of agreed evidence;
• ordaining the parties to engage in alternative dispute resolution (an express power in terms of rule 40.12(3)(m));
• ordaining a joint report by the parties’ experts, or remit to a person of skill.

In each case, the court will attempt to seek a consensus about the best way to proceed. It is unlikely, for example, that an order to attend ADR would be made where the conditions for ADR do not exist.

Case management by phone

After the initial writ is served, and defences drafted, a case management conference will be allocated.

The introduction of telephone conferences has been so successful that, at least in Glasgow, all CMCs (where lawyers are instructed) are routinely allocated for an initial telephone hearing. Any party may request a court hearing, but such requests are extremely rare. The Inner House has expressed reservations on the basis that court proceedings should be public (Jackson v Hughes Dowdall [2008] CSIH 41), but the European jurisprudence has since been considered and discussed in the Gill review (chapter 6). The review considered that there is no bar to conducting proceedings by telephone or other means, provided certain safeguards remain in place (p 159, para 63), and the Scottish Government has approved the recommendation that such procedure be encouraged.

Over time, it has become clear that CMCs work extremely well in relation to short points of procedure (such as amendment, or recovery of documents), discussion of strategic issues (such as remit to a person of skill), or the merits of various types of procedure or disposal. By contrast, conducting lengthy or detailed proceedings by telephone is a tricky and unrewarding task. Particularly where more than two parties are involved, substantial or lengthy issues, such as motions for summary decree, are best dealt with by court hearing in the traditional manner. As a result, most telephone CMCs are procedural in nature, and are available on a flexible basis according to the needs of the case. A building dispute or other complex action may require several CMCs, in order to monitor and progress the parties’ preparation both of the factual and legal disputes. Simple enforcement of a contractual invoice may require only one.

The court will balance the competing interests of speed and proper presentation. It avoids the risk in ordinary procedure that the case loses momentum and starts to drift in the “black hole” between a traditional options hearing and further substantive procedure. The sheriff will require to be satisfied that parties are making meaningful progress.

Provided they are, it may be acceptable that the preparation period be extended and the court maintains a “hands off” approach. By contrast, a simple debt recovery may not justify any extended procedure, and the matter can be appointed to an evidential hearing at the first or second CMC. In such cases there is likely to be a clear saving of litigation time. In the case of an (apparently) dilatory defence, the CMC is a useful way of eliciting a direct explanation of the defender’s position, and discussion of the merits.

Juggling business

Contrary to common belief, the commercial sheriffs are still required to carry out a full range of shrieval duties, civil and criminal. Their wider workload is restricted from time to time to allow them to attend to commercial duties. This means that CMC allocation must, to some extent, dovetail with their other duties.

In Glasgow, CMCs are allocated on a flexible basis, at such intervals and on such dates as suit the parties’ reasonable requirements. Each commercial sheriff has a CMC day every three weeks or so, where CMCs are allocated at intervals of 15 or 30 minutes. Between these dates, there are frequent ad hoc arrangements for CMCs, and most days will have at least one CMC allocated. These tend to be arranged directly between the sheriff and parties, and most likely held at 9.30am, to allow the sheriff to take court business from 10am.

Accordingly, while experience shows that CMCs rarely last more than half an hour, and frequently only 10 minutes or so, parties may need to bear in mind that time allocated may be insufficient. This can be accommodated, but should be mentioned to the clerk in advance. If a hearing is likely to be very lengthy, or involve reference to much documentary material or authority, it is likely to be more efficient to arrange a hearing in court.

When and how

Because of the focused nature of a telephone hearing, it is important that parties take some time to work out what their aims are. Parties often discuss matters directly with each other in advance, to make sure they understand the competing positions, resolve any minor misunderstandings, and identify the procedure to be proposed. Such an approach is valuable and to be commended. It is open to the parties, at the CMC, to suggest innovative methods of advancing the dispute, and having thought this through in advance frequently pays dividends.

Because, as they have evolved, CMCs have become primarily administrative in nature, they can be convened at any stage of proceedings, and on the request of parties or of the court, sometimes at fairly short notice. Efforts will be made to accommodate the principal agents’ diaries, but exceptionally it may be necessary to allocate a date when one or other principal agent cannot attend. To maximise flexibility, such attendance is unlikely to be the most important consideration, and an appropriately briefed alternate will normally be able to provide adequate cover. The sheriff will make allowances for logistical difficulties.

Where an important step in process is required, such as a motion for summary decree, or a significant opposed motion, a court hearing is likely to be convened, allowing sufficient time for preparation.

Clear the line

The sheriff will initiate the CMC by telephoning parties at the arranged time. This relatively informal arrangement tends to work well, but can be a challenge if matters do not go smoothly. The clerk will have a note of your direct line number; this will be marked in the process. If you are not at your nominated phone at the right time the sheriff will have to chase you via your switchboard, which can be a vexing experience, and may delay both your case and the subsequent court timetable. Every sheriff has learned to hate muzak while being kept on hold. The following general practice is recommended:

• Use a direct number if possible, to avoid the delay of going through a switchboard, and redirect your other calls. The sheriff’s call is likely to be on time.
• If you have to change extensions, email the sheriff and clerk in good time (bearing in mind emails may be delayed).
• If you have to use a switchboard, make sure the operator is briefed (the prizewinner so far is the telephonist who asked: “Sherry who?”).
• Conducting CMCs by mobile phone is an exceptional arrangement, and to be discouraged, as it frequently doesn’t work. Most often, agents don’t answer, presumably because they don’t hear the ringtone, and the CMC has to be aborted. Also, sound quality and reception are frequently problematic.
• Do not, unless compelled, use a speakerphone. The sheriff needs to use one, and if others do so the effect is of having a conversation at opposing ends of an empty aircraft hangar. In addition, background noise is an issue.

Recording the outcome

Sheriffs tend to conduct telephone CMCs without the assistance of a clerk, and therefore require to draft the interlocutors. The sheriff has limited opportunity to write full notes when matters are canvassed in discussion rather than in formal submissions, and for that reason is likely to conclude the CMC by rehearsing with parties the proposed content of the interlocutor. This allows parties to raise any further points, if so advised, before it is formally drafted and signed. A practice has also grown up of, where appropriate, appending a note to the interlocutor. These notes are not part of the interlocutor, but record the salient points of the CMC for subsequent reference. They also serve as a reminder to the sheriff of the discussion had.

The draft interlocutor is emailed to the clerk, who will prepare the interlocutor in a format for signing. It will be issued by post to parties shortly thereafter, and should therefore be available to parties soon after the hearing.

Effective submissions

Because the CMC is a court hearing, some formality will be appropriate, but not to excess. The sheriff should be addressed as “sheriff”. Parties refer to each other as they would in a courtroom.

The object of the CMC is to advance the case, to identify further procedure, and to allow parties and the court to understand each other fully. For this reason, it will rarely be helpful to adopt the traditional court-style submission of starting at the beginning, rehearsing the facts at length, and eventually reaching a conclusion. Unlike in court, it is difficult or impossible for others to interrupt, or make a sotto voce comment, or convey their own reaction. Nor can you assess the reactions to what you are saying, to judge whether it is necessary to labour the point, or to guide the other parties through a lengthy series of documents.

For this reason, it is a good idea to commence with the conclusion of your submission, and then to explain it as succinctly as possible. That should mean everybody else understands your position and, more importantly, can respond succinctly to a succinct point. As a general indication, if you find yourself pausing for breath for the third time, you have probably spoken too long!

Because of these factors, telephone conversations are not particularly suitable for a tripartite discussion about lengthy or complicated matters. It is difficult to refer to authorities or a substantial number of documents, and it is not possible for the parties to have an extrajudicial conversation as they could in court. If there is a substantial motion, the CMC will most likely be adjourned to a court hearing. One benefit of parties speaking to each other beforehand is that the focus for discussion at the CMC can be identified.

Motions for expenses

Motions for expenses are mostly (except where unopposed or reasonably straightforward) left to a court hearing. Experience shows that arguments by telephone about expenses can materially hamper, and in some cases derail, the principal discussion. They often quickly break down into examination of the minutiae. This, at the best of times, is an exacting task for the sheriff, who is unlikely to have been involved in the finer detail of parties’ communications or ongoing relations. If an award of expenses is considered important, parties are likely to be invited to arrange for a court hearing.

One word of caution – if motions for expenses are used as primarily tactical moves against an economically-disadvantaged party, or as simply another means for parties to wage war, the sheriff may conclude that commercial procedure is not appropriate and return the matter to the ordinary roll. In general, you will require to present cogent reasons to persuade a sheriff to allow a prima facie just case to be defeated by purely economic factors.

Future development

Commercial procedure to date has been well patronised by agents, which has been assumed to be a sign of a successful and useful procedure. It is designed to be adaptable and flexible to meet the changing requirements of litigation and to take advantage of the possibilities afforded by technology. As such it will continue to evolve.

There are no doubt issues to be addressed and improvements to be made. If any solicitor identifies such issues or improvements, they should feel able to contact the court clerk in writing, and these will be duly considered on their merits.

Litigation by email

Another area of innovation is email contact with the sheriff. The court is likely to permit legally represented parties to contact the sheriff direct by email (but not telephone) at any time. It is a well used facility, and is used to request CMCs be arranged, to give an initial indication of a discussion to be had at the next CMC, or to postpone or continue CMCs.

It is to be used responsibly, but experience has shown that practitioners are almost invariably highly professional in their approach. Direct contact helps to limit delay, and the next step in procedure to be speedily identified. It allows parties to focus on the real disputes, and have them considered by the court at short notice. Obviously, if matters are purely procedural, such as lodging documents or enrolling motions, contact should be made with the clerks in the usual manner.

Due to the demands of commercial procedure, a case involving a party litigant will not normally be appointed to, or allowed to remain on, the commercial roll. Exceptions have been made where, for example, a solicitor has withdrawn from acting and another is not yet appointed. Email facilities are not normally used, and CMCs will require to call in court rather than be conducted by telephone.

It is important to bear in mind that an email to the sheriff is a submission to a court. Every party is entitled to know what is being said by every other party, and to comment if need be. Accordingly, there is no “private” email communication and a degree of formality is appropriate. All emails to the sheriff must be copied to the other agents, and to the allocated clerk of court. The sheriff is contacted as “sheriff” and agents’ surnames are used.

Note that court fees do not disappear simply because a clerk is bypassed! For example, a motion made direct to the sheriff during a telephone CMC will still attract a fee. Documents or amended pleadings can be attached to emails, and these will be treated as lodged at the court. The clerks will be able to advise on these matters.