Reach of case management

Court practice: a time to ponder

The note of reasons from Lady Wolffe in Autauric v Glasgow Stage Crew [2019] CSOH 111 (27 December 2019) provides food for thought on issues relating to amendment and the impact greater emphasis on case management may have on old practices.

Dealing with the decision itself, at the time proof was assigned in this commercial action, the principal issue for determination had been identified. Quantum had been agreed, as had the terms of the contract and the parties to it. Parties had lodged their statements of issues. Various procedural steps had been undertaken before the defenders sought to amend, to delete certain admissions which included agreement as to the contract terms. That would raise the issue of whether there had been a concluded contract. The proof could well be extended, and the diet might be lost. The reason for the amendment was not that new matter had been unearthed; rather, fresh eyes had considered the amendment justified.

Referring to decisions from the High Court of Australia and observations thereon, Lady Wolffe noted that case management principles should not supplant the objective of doing justice between the parties. However, amendment was not to be viewed as the entitlement of a party to raise an arguable case subject to payment of expenses. Concerns of case management such as substantial delay and wasted expense were important. Parties had the right to raise proceedings, choose the claims and how they were framed.

However, once a party had had sufficient opportunity to identify the basis of their case and how it was to be framed, there were limits on further amendment. To permit parties unlimited court time impacted on others who wished to litigate. Accordingly, if a party had been afforded sufficient opportunity, albeit it might engender a sense of injustice, it might be necessary to refuse further time for a proposed amendment.

Active case management moderated the classic model of adversarial litigation in furtherance of these objectives and to produce efficient and effective resolution of disputes and proportionate cost. Control required to be maintained; changes in tactics would not necessarily be permitted even if the proceedings were not extended. Prolonging a litigation, or a late change of position, might result in strain and uncertainty. The court required to identify the issues and thereafter maintain the parties’ focus on those issues. Accordingly in commercial actions with the issues having been well ventilated, and disclosure, extended periods of adjustment should not be expected.

In the circumstances, Lady Wolffe refused to allow the minute of amendment to be received. She observed that the court’s view of the real issue of controversy might well be informed by the parties’ understanding of the essence of the dispute. This might differ from the “lawyer’s argument”. It was not the case that amendment should be allowed simply on penalty regarding expenses being incurred. She also considered that relevancy of the amendment should be taken into account.

Whether the foregoing is simply the views of an Outer House judge, or reflects the view of the Court of Session bench and thus should be afforded far greater weight, will be a matter for future decisions. I have often, however, been surprised as to the lack of strenuous objection to a motion to amend when a diet of debate calls or in the course of the debate. If consideration is given to the relevant ordinary cause rules requiring the lodging of rule 22 notes prior to an options hearing, together with the authorities which lay down the tests for the allowance of a diet of debate, any party against whose pleadings such a note is taken, once a debate is allowed, is on notice that there is a significant flaw in their averments. Thus to fail to investigate and remedy such a flaw until the calling or conduct of the debate, surely is vulnerable to the operation of the principles enunciated by Lady Wolffe and their consequences.

Similarly, I find it strange that at hearings which fulfil a case management function, such as pre-proof hearings or hearings in terms of OCR, rule 30AA.3, parties do not seek inter alia information as to whether their opponent has any intention to amend. If the answer to such a query is in the negative, it strengthens the basis for opposition if amendment is attempted thereafter.

Without prejudice

Although Lord Ericht made it clear that the issue of whether “without prejudice” correspondence was admissible was for a later stage in proceedings, in Transform Schools (North Lanarkshire) v Balfour Beatty Construction [2020] CSOH 19 (18 February 2020) his Lordship observed that the reason such correspondence was inadmissible was that it was contrary to public policy. It was beneficial if litigants were encouraged to settle differences rather than litigate them to a conclusion. If such correspondence was able to be used in evidence, it would discourage such attempts. Litigants should be encouraged fully and frankly to put their cards on the table. Whether such correspondence was inadmissible depended not on the use of the words but rather that it could be categorised as correspondence which attempted to resolve a dispute.

Pleadings

In Scot Roads Partnership Project v Scottish Ministers [2019] CSOH 113 (31 December 2019) Lord Clark noted that there was merit in requiring parties to make averments regarding the nature of the surrounding circumstances relied on and their effect on the construction of a contract. In commercial proceedings this requirement could be modified if fair notice was provided by documents recovered or the content of witness statements. An order for disclosure of such matters could also result in the necessary notice being given. Similarly an order can be made to provide further notice by way of averment. Lord Clark additionally noted that a witness could not perform the function of the court by offering opinion on matters central to the outcome of the case or by speaking to matters of law.

Abuse of process

The Inner House considered the dismissal of the pursuer’s claim on this ground in Friel v Brown [2020] CSIH 7 (20 February 2020). Lord President Carloway determined that the action should not have been summarily dismissed. It was accepted that where a fair trial was not possible, the court had the power to bring an action to an end on that ground. The issue in this case was one of relevancy, and public policy considerations prevented a civil action initiating a collateral attack on a criminal conviction arising from the same factual background.

Time bar

The procedural implications of the Limitation (Childhood Abuse) (Scotland) Act 2017 were examined by Sheriff Drummond in LM v DG’s Executor [2020] SC DUN 1 (7 January 2020). The defender resisted the claim by averring that the action should not proceed as it was not possible for a fair hearing to take place. The alleged abuse, by the deceased DG, took place between 1981 and 1985 and the defender’s position was that he had no knowledge of the alleged events. He accordingly sought dismissal. Parties agreed that the onus was on the defender to establish that a fair hearing was not possible. The court had to consider the issue objectively, and the requirements inherent in a fair hearing were possibly less demanding in the determination of civil rights and obligations. There existed a transcript of a police interview of DG. There was accordingly the basis for cross examination of the pursuer. Sheriff Drummond considered that in the circumstances an investigation by leading evidence was necessary to decide the issue of fairness.

Commercial litigation

In Promontoria (Henrico) Ltd v Friel [2020] CSIH 1 (10 December 2019) Lord President Carloway made observations regarding the conduct of commercial litigation. The Commercial Court was for the efficient disposal of commercial disputes. The commercial judge managed the progress of the case, and ensured that the real issues were fully and clearly identified and matters proceeded as speedily and efficiently as possible. Accordingly, if a litigant failed to challenge the authenticity of a guarantee, or to assert that the certification of a copy document was defective, the judge should rule that such challenges were not open to the party later in proceedings.

In a similar vein, in MCR Oil Tools v Spex Offshore (UK) [2020] CSOH 5 (10 January 2020), in which the petitioners sought to restore two companies to the register, during submissions the petitioners sought to lodge an affidavit dealing with difficulties which would arise in Texas proceedings if orders were not granted. This motion was refused on the basis that the matter was not referred to in the pleadings, the notes of argument, or other affidavits lodged. There was a clear timetable for the lodging of documents. No fair notice was provided that this point would be an issue. The content of the affidavit would be challenged, thus requiring further documentation to be lodged and the interruption and postponement of part of the hearing. The message from both these cases is, identify the issues early and prepare and conduct the litigation accordingly.

Derivative actions

In terms of s 266 of the Companies Act 2006 a member of a company can, with leave of the court, raise an action on behalf of the company. Chapter 46 of the Ordinary Cause Rules sets out certain procedural rules. One issue which will regularly arise is the question of indemnification for the costs incurred by the member given leave to litigate. This was the issue before Sheriff McCormick in Sinclair v Clark [2020] SC GLA 2 (20 December 2019). The first issue was whether the company on behalf of whom the action was being pursued was entitled to be heard in any motion for indemnification. Following Wishart v Castlecroft Securities Ltd 2010 SC 16, Sheriff McCormick determined that the company was entitled to be heard. He further determined it competent to make an order for indemnification against the company although it was not party to the action. The defenders in the derivative action, however, whilst they had the right to be represented at the hearing on indemnification as a party in an ongoing litigation, had no right to make any submission on the issue.

Sheriff McCormick further indicated that such a motion ideally should be heard early in the process. This enabled all to be aware of the basis on which they were litigating so far as that matter was concerned. Parties and the company concerned should know where they stood.

Family actions

In Peberdy v Peberdy [2020] SC GLA 4 (3 January 2020) Sheriff Anwar concluded that it was open to the court to make an incidental order in terms of s 14 of the Family Law (Scotland) Act 1985 where parties had entered a minute of agreement, in order to give effect to the terms of that agreement. Such an order could be pronounced as a standalone order, provided the requirements of s 8(2) were met.

Legal fees

Although not strictly falling under the umbrella of civil procedure, it is perhaps worth making passing reference to the decision of Lord Doherty in A & E Investments v Levy & McRae Solicitors [2020] CSOH 14 (29 January 2020), in which his Lordship determined that a speculative fee agreement in which a solicitor’s remuneration would increase by reference to the sum recovered was a pactum de quota litis. The reasoning behind this was to prevent conflict between the lawyer’s pecuniary interest on the one hand and their duties to the court on the other. Such a conflict presented an unacceptable risk to the administration of justice. His Lordship observed that the position might change once the Civil Litigation (Expenses and Group Proceedings) (Scotland) Act 2018 came into force, albeit that legislation envisaged a regulatory regime in terms of which success fees might be capped and further provision made as to the terms and contents of success fee agreements.