Wright, Johnston & Mackenzie Solicitors

Luminar case sheds light on affidavit procedure in commercial actions

The Luminar Lava Ignite Limited v. Mama Group plc and Mean Fiddler Holdings Limited case was concerned with the proper construction of a contractual restriction imposed on sale. However during the course of debtate, Lord Hodge considered the use of affidavits or witness statements.

Generally, it is the practice in commercial matters to order parties to lodge affidavits or signed witness statements in advance of a proof with the intention that they will form the bulk of each witness’s evidence in chief.

Lord Hodge was concerned that if parties produce affidavits or witness statements at different times in advance of the proof there is a risk that if later witnesses are shown the statements of other witnesses then their evidence might be altered from what it would otherwise have been.

Where parties are ordered to exchange affidavits or witness statements on the same day there is no risk of one party having seen the other party’s statements in advance. Once the parties have exchanged statements it would be perfectly acceptable for a witness, whose statement had been exchanged, to be shown the other statements which were relevant to his evidence and for him to be given an opportunity to modify his evidence in light of that evidence.

Lord Hodge has no difficulty with this approach, however he considers that where a party lodges an initial affidavit or witness statement of a witness after the exchange of the statements of other witnesses, the solicitor tendering the statement should certify by letter to the court that the witness has not seen or been informed of the evidence of others or, if he has, specify the statements which the witness has seen or been told about the circumstances in which that has occurred.

According to Lord Hodge this approach is a move away from “trial by ambush” and is consistent with the traditions in relation to giving evidence in court. More importantly, it allows a witness to give a considered response to points that may be made against him and the evidence given by others.

For more information, contact Lyndsey Cavanagh: .(JavaScript must be enabled to view this email address)

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If you snooze, you lose!

The case of Baillie Estates Ltd v. Du Pont (UK) Ltd in the Court of Session is a timely reminder that standard terms should be offered before any email exchange that could be construed as satisfying the essentials of a contract (for example, agreement on price).

The contract between the parties was concluded by email communication after detailed discussion and negotiations had taken place. The following day, the defenders Du Pont (UK) Ltd sent an email to the pursuers, Baillie Estates Ltd, enclosing their standard terms and conditions of sale. The dispute between the parties was as to whether or not those standard terms then became a part of the contract between the parties.

In the Inner House appeal the court was faced with a relatively simple question – at the point of conclusion of the contract, what terms had been incorporated into the contract?

As there was no mention in the proposal email by Du Pont (UK) Ltd about their terms being qualified by reference to any standard terms and conditions, the court took the clear view that the discussions between the parties prior to the standard terms and conditions of sale being issued were capable of amounting to a concluded unconditional contract. Looking at matters objectively, the court stated that the parties must be held to have intended to reach a binding and concluded agreement.

The court emphasised that even if it was a regular occurence that standard conditions managed to find their way into contracts of that nature they can only form part of a contract by virtue of silence and acquiescence when it has been proposed that they should be part of the contract and before the contract is concluded.

In the present case, the standard terms and conditions were offered too late, the deal had been struck and its terms already agreed. This case is a reminder of the importance of advising clients to make clear reference to contractual terms to ensure the other party is contractually bound by them before contracts are concluded.

For more information, contact Neil Morrison: .(JavaScript must be enabled to view this email address)

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The Times They Are a-Changin…….

As from 1st February 2010, email will become the normal method of enrolling motions in most cases in the Court of Session. This is with the exception of cases initiated by petition, commercial cases and those before the Inner House, where the existing arrangements will apply.

The new system stems from Lord Gill’s Review of the civil courts system in Scotland, which supports the increased use of information technology so significant improvements could be made to the Court’s efficiency.

The new system enables parties to intimate and lodge motions with the court by email. This will afford the Officers of Court to dispose of routine motions on the date of enrolment, as any opposition to a motion must be intimated to the enrolling party prior to the motion being enrolled. Any opposition to the motion must accompany the motion on the day it is enrolled.

The receiving party must intimate any opposition, to the enrolling party not later than 5 p.m. on the second day after intimation, to allow the enrolling party to enrol the motion, together with the opposition on the third day after intimation. If the motion is unopposed, it will be enrolled and determined on the third day after intimation.

Any parties enrolling motions that refer to documents or require a document to be lodged, are to attach the documents to the email in electronic form. The court staff will print off and lodge in process the necessary number of copies of any document with fewer than 20 pages or one copy of any document comprising more than 20 pages. Any additional copies of the document will be required to be lodged by parties on the following day.

If a motion refers to accompanying productions, only the inventory of the productions should be sent by email. The inventory will then be printed off by court staff and lodged in process. The productions should then be lodged the following day.

Once motions have been determined under the new procedure, interlocutors can be sent to the parties by email.

The new procedure should enable to improve the efficiency of the conduct and management of civil matters, and allow routine matters to be dealt with quickly and effectively. It is clear that thus far the Court has not been taking full advantage of the opportunities that information technology can offer. This certainly is a step in the right direction, and hopefully the first step of many to significantly improve the civil courts system in Scotland.

Technology only moves forward, not backwards, and the challenge now is to harness IT technology for law firms’ benefit and the wider public at large.

If you require any help with Court of Session matters then WJM have solicitors who regularly deal with Court of Session litigation.

For more information contact Andrew Wilson, Fraser Gillies, Neil Morrison or Lyndsey Cavanagh on 0131 221 5560.

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New Sheriff Court Rules for Personal Injury Actions

On 2nd November 2009, a new set of procedural rules for personal injury actions in the Sheriff Court were introduced. These new rules will apply to all personal injury actions where the sum sued for is more than £5000.

The new rules closely reflect those of the personal injury procedure in the Court of Session and are intended to bring the Sheriff Court’s Rules (Ordinary Cause Rules) in line with the procedure used for personal injury actions in Court of Session and speed up the process.

The claimant’s written pleadings will be simplified and will only require to briefly set down the facts necessary to establish the claim, however it must identify the doctors and hospitals from whom treatment has been received, but will not require to contain detailed statements of facts and law.

Under the new rules, the claimant can ask for an order which will allow automatic recovery of documents such as accident reports, medical records, risk assessments and wage records. This is to encourage the obtaining of all documents necessary to settle a case; however the specification must be executed within 28 days of the lodging of defences.

An important change is that on the lodging of defences in the action, the Court will issue a timetable for the action setting out the dates by which important stages of the process must be carried out, for example the statement of valuation of claim. The early assignment of a proof diet, within nine months of defences being lodged, is another important aspect of the new rules. Parties must strictly adhere to the timetable or face serious consequences. Any motion to sist the cause must be applied for before defences are lodged, i.e. before the timetable is issued. If the timetable is issued, parties can only motion to vary individual elements of the timetable, and full reasons must be given.

A statement of valuation of claim must be produced by each party. The timetable sets down when a valuation is required by each party. The statements of valuation are not binding upon the parties who make them, however they should reflect a real assessment of the value of the claim together with all supporting documentation such as expert reports.

Parties are now required to hold a pre-proof conference, not later than four weeks before the proof to explore the opportunities for settlement. However, there is no reason why this conference cannot be taken earlier in the procedure to facilitate settlement. This is to avoid last minute, door of court settlement negotiations and encourage settlement before the date of the proof thus avoiding further expenses. In contrast to the Court of Session rules, the conferences can be held in person or by telephone.

Given the success of the personal injury procedure in the Court of Session, it is hoped that the simplified Sheriff Court procedure will help personal injury actions to be dealt with more quickly and effectively. The new procedure will not allow for inactivity or unnecessary delay and should lead to more cases being disposed of quickly and encourage early settlement.

For more information contact Fraser Gillies: .(JavaScript must be enabled to view this email address)

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Interim Interdict: Prevention is better than cure!

Interdict is a remedy granted by the Court either against a wrong in the course of being done or against an anticipated violation of a party’s rights. It is the Scottish equivalent of the better-known Anglo-American term “injunction”. It will only be granted if the Court is provided with evidence of the wrong or is given enough information to decide there are reasonable grounds to anticipate a violation of a party’s rights. The interdict order sought must be precise and the wording framed in such a way that the party against whom it is granted is left in no doubt what they are forbidden to do.

When a violation of a party’s rights is suspected then the preventative element of interdict really comes into its own. A party with suspicion that an imminent wrong is about to take place can apply for an interim interdict, a temporary court order restraining the other party from committing the wrong until the outcome of the interdict action Court hearing.

Getting the Interim Interdict up and running!

As soon as the interim interdict is granted, Sheriff Officers must serve the certified copy interlocutor on the Defender. The interdict is effective only once the interlocutor and service copy Writ have been served on the Defender.

The horse has already bolted!

What if the wrong has been accomplished and completed but the party seeking an interim interdict has grounds to believe that the other party intends to continue the wrong?

An interim interdict order will not be granted if the act complained of has been completed. However if there is a threat of further similar acts then it may be granted. It is prudent to raise an action of interdict as soon as a party suspects an anticipated wrong because any delay may render interdict useless as a remedy if the “horse has already bolted”.

Common uses of interdict

Interdict is often used to prevent an infringement by a neighbour or third party of the land owner or occupier’s rights. The nuisance must be repeated or continuing to be actionable and must cause the party seeking interdict substantial or serious inconvenience. It must not be an isolated act. It is quite difficult to obtain an interdict for anticipated nuisance although it is possible, generally any interdict obtained will be limited to some extent.

Another issue which interdict can be applied to is encroachment whereby there is a permanent intrusion of a person’s free and legal use of their property. If unlawful encroachment is threatened, or having been completed, continues despite protest then an action of interdict is competent. Examples of encroachment are: unlawful mining and quarrying, tree roots penetrating beneath a neighbour’s property, excavation of a neighbour’s common access farm road and even the swinging of a crane jib over a person’s property.

Interdict is not just used within property disputes and can also be used to prevent infringement of intellectual property rights and to prevent shareholders from voting at meetings.

Compromise?

If the Sheriff has granted an interim interdict after being addressed by the party seeking the interdict’s solicitor then an early diet for hearing parties will be fixed, whereby the other party who is being restrained can seek to have the interim interdict dropped or to limit the scope of the interdict. The restrained party’s solicitor may offer a formal undertaking to the Court that certain acts will not be done in return for a concession that certain acts should be allowed to be carried out in the meantime until the action is disposed of. Clearly whether a formal undertaking will satisfy a Sheriff will depend on the circumstances of the individual case.

The test!

In order to meet the test for interim interdict:

1. There must be a statable, prima facie, on the face of it case to try.
2. The balance of convenience must favour the person seeking the interdict. This is really weighing up the balance of advantages and disadvantages to the two sides of the interim interdict remaining in place until the action is disposed of. For example, if irreparable damage would be sustained if the interim interdict was not continued then the balance will plainly be on the side of the party seeking the interdict.

Breach of interim interdict

Where a party fails to obey an interim interdict that has been granted the Court can impose a penalty of imprisonment or a fine. A formal undertaking to the Court is no different to an interim interdict’s power; so if breached, it will be regarded as contempt of court and the party in breach will face criminal sanctions if a breach is proved beyond reasonable doubt.

For more information contact Neil Morrison: .(JavaScript must be enabled to view this email address)

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New Scottish Parliament Bill to regulate property factors

A “factor” is the traditional term for a property manager in Scotland. In recent years, property factors’ activities have become a source of grievance for many homeowners who have complained of excessive invoices with high rates of compound interest and penalty charges. When homeowners complain or ask for a breakdown of the charges; often no breakdown is forthcoming. In addition, often when homeowners query a repair or improvement works, they receive no response.

Currently in Scotland, property factors are largely unregulated and yet they can have a huge impact on thousands of homeowners across the country. Over a third of all houses in Scotland share communal facilities such as gardens, common close, stairwells and roofs. The management of these shared responsibilities is usually administered by a property factor. Some title deeds require a property factor to be appointed.

Problems arise when the homeowners are unhappy with work undertaken by the property factor, poor quality repairs, unnecessary work or take issue with the level of administrative charges and interest added to their bill. What can they do? Well, really their only option is Sheriff Court action but this can be an expensive and time consuming process which can take many months to resolve and property factors will usually instruct lawyers to defend the action and string the process out hoping the homeowners will give up. Also as the property factors generally decide the terms of the contract between the parties, homeowners can often find themselves legally “boxed in”.

The Bill that has been lodged in Parliament proposes a two-fold solution. Firstly, a Property Factors’ Register would be created and all property factors will have a compulsory duty to register. Failure to do so will be an offence liable to criminal prosecution. Secondly a Property Management Committee (“PMC”) would be created which would hear disputes between homeowners and factors. The PMC would be informal and no legal expenses would require to be paid unlike the Courts. For the avoidance of doubt homeowners would still be able to litigate in the Sheriff Courts; the PMC is just a more accessible, low cost, additional forum to resolve the dispute.

It is hoped that if the Bill becomes law, property factors currently causing grief to thousands of homeowners will be brought to account and vulnerable homeowners will have a great deal more protection and be able to seek redress cheaply and easily.

For more information contact Fraser Gillies: .(JavaScript must be enabled to view this email address)

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Getting more money from your debtors for late payment!

Cash flow is crucial to the survival of any business and the Late Payment of Commercial Debts (Interest) Act 1998 can help you maintain financial stability. The legislation covers debts that arise under commercial contracts for the supply of goods or services. The Act’s primary aim is to deter companies from paying their bills late.

The Act entitles businesses to claim statutory interest on any commercial debts owed by other businesses, large or small. In addition, businesses can recover reasonable debt recovery costs unless the supplier has acted unreasonably. If there are contractual terms between parties in respect of interest then the legislation does not apply; however businesses can challenge the contractual terms if they do not provide a substantial remedy. A claim can be made once a payment is deemed late - interest will accrue 30 days after formal notice of the debt was intimated or 30 days after goods or services delivered unless the contract specifies otherwise.

The rate of interest charged is 8% above the base rate of the Bank of England. A compensation payment is also payable: £40 for debts up to £999, £70 for debts between £1000 and £9,999, and finally any debt above £10,000 is £100.

Creditors should take advantage of the legislation outlined above to ensure they get an enhanced rate of interest in respect of unpaid debt that is due to them.

For more information contact Neil Morrison: .(JavaScript must be enabled to view this email address)

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Does a claim for breach of pre-contractual good faith exist in Scots law?

It sometimes happens, one party strings along a number of negotiating parties giving assurances to each one that a contract will be concluded only to terminate contractual negotiations suddenly and choose one lucky party leaving the other suitors irate and perhaps with wasted expenditure. Can the wasted pre-contractual expenditure be recovered from the defaulting party? In mainland Europe where the concept of acting in good faith is given much greater importance, many countries’ laws recognise a claim for “breach of pre-contractual good faith” and will allow the aggrieved party to sue for damages against the other party for breaking off negotiations in bad faith with a consequent loss of expenditure or might even go so far as to forbid the other party from withdrawing from the intended contract.

In Scotland, the concept of good faith is more limited and it is much more difficult to recover wasted expenditure. However in the famous Scottish case of Walker v Milne the Scottish judges appeared to embrace the principle of good faith as the case established that the defaulting party was liable for the other party’s wasted pre-contractual expenditure. Walker owned an estate of land in the west end of Edinburgh where Coates Crescent is now located. He wanted to have a statue placed in the estate and subscribers of a statue of Viscount Melville advised they would locate the statue on Walker’s estate. The statue works caused inconvenience and expense to Walker. Suddenly the statue subscribers decided to take the statue into the centre of Edinburgh where it stands to this day in St Andrew’s Square. The Court decided that Milne should pay Walker for any loss or expense incurred in preparing and altering his plans to accommodate the statue.

The contractual bargain between the parties had been substantially settled when the subscribers decided to up sticks and move the statue to St Andrew’s Square which would seem contrary to good faith in the absence of any disagreement about the contractual terms. However the significance of the case has been eroded by subsequent cases which have narrowed the scope of the precedent, namely by Dawson v Coates Paton. In this case, it was held that Scots law will not favour recovery of expenditure made merely in the hope or expectation that a contract will be concluded.

What then for our cheated party who has had the wool pulled over their eyes and been left saddled with expenses? Does Scots law provide any protection? It appears that Scots law while not having a specific claim of “breach of pre-contractual good faith”, does have various legal concepts which could be used to address liability issues in pre-contractual negotiations: fraudulent misrepresentation, promise, personal bar and the somewhat limited, narrow concept of Walker v Milne reimbursement of expenditure. However as Scots law offers significantly less protection than our continental cousins it is best to prevent such a situation arising in the first place by ensuring that a mechanism is put in place to govern what happens to expenditure incurred if the negotiations fail. Alternatively parties should ensure a binding contract is in place before incurring significant expense.

For more information on Scots Contract Law, contact Neil Morrison: .(JavaScript must be enabled to view this email address)

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You Couldn’t Make It Up…

THERE’S A MOOSE LOOSE ABOOT THIS HOOSE!

A Swedish man has been arrested on “suspicion of unlawful threats and animal welfare offences” after shoving 19 mice through the letterbox of his musophobic ex-wife’s Stockholm flat.

Knowing that his ex-wife suffered from musophobia - an unreasonable and disproportionate fear of rats and mice - the jilted ex-husband arrived at her apartment in the northern Stockholm suburb of Märsta in the early hours of Sunday morning bearing a paper bag full of mice.

The 37-year-old woman awoke to find the scampering murines in her apartment and called the police at 7.30am.

Police arrested the 59-year-old man and took him in for questioning.

The 19 mice captured at the woman’s apartment are also being housed at the police station pending the advice of the county veterinarian.

According to the Aftonbladet newspaper, the man has demanded the return of his mice.

Lars Lisberger of Stockholm police said: “She was scared out of her wits and is now being cared for in hospital.

“He has treated both the mice and his ex-wife badly, so I do not think that he should be given any of them.

“But we shall have to wait and see what the authorities decide.”

Wright, Johnston & Mackenzie LLP would like to acknowledge the source of this news which came from the Scottish Legal News online newsletter.

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