Kleinwort Benson Limited V. City Of Glasgow Council
| Jurisdiction | Scotland |
| Judge | Lord Macfadyen |
| Docket Number | CA143/00 |
| Date | 10 May 2002 |
| Court | Court of Session |
| Published date | 10 May 2002 |
| OUTER HOUSE, COURT OF SESSION | |
| CA143/00
| OPINION OF LORD MACFADYEN in the cause KLEINWORT BENSON LIMITED Pursuers; against CITY OF GLASGOW COUNCIL Defenders: ________________ |
Pursuers: Moynihan, Q.C., Weir, Maclay Murray & Spens
Defenders: Glennie, Q.C., Mrs Wolffe, Simpson & Marwick, W.S.
10 May 2002
Introduction
[1]This action arises out of a series of seven interest rate swap contracts entered into between the pursuers and the defenders' statutory predecessors, the City of Glasgow District Council ("GDC"), in September 1982. It was subsequently held that such contracts were ultra vires of local authorities such as GDC. Accordingly, this action, in which the pursuers seek repayment of various sums which they paid to GDC under the contracts, and in which GDC were the party originally called as defenders, was signetted on 6 March 1992, and served on GDC on or about the same date. Before defences were lodged the action was, on 7 April 1992, sisted of consent pending the outcome of proceedings in the High Court of Justice in England. The proceedings in England were finally disposed of in 1997 (Kleinwort Benson Ltd v Glasgow City Council [1999] 1 AC 153). The outcome of those proceedings was that it was held that the English courts did not have jurisdiction to entertain the pursuers' claims.
Procedural History
[2]On 25 September 2000 the pursuers enrolled a motion seeking (1) recall of the sist and (2) transfer of the action to the commercial roll in terms of Rule of Court 47.10. That motion was opposed by the defenders, but only in relation to the question of transfer to the commercial roll. The motion called before me on 29 September when, on joint motion, it was continued until 5 October 2000. On the latter date, having heard counsel, I granted the motion transferring the action to the commercial roll.
[3]Per incuriam the interlocutor of 5 October 2000 does not bear to recall the sist. My notes of the hearing confirm, however, that Mrs Wolffe, who appeared for the defenders at that hearing as well as the debate, stated that they did not oppose the recall of the sist. Thereafter the action proceeded and a number of steps were taken and a number of hearings took place, all on the hypothesis that the sist had indeed been recalled. Attention was first drawn to the omission from the interlocutor of 5 October when the case called before me for debate on 28 June 2001. Mr Moynihan, senior counsel for the pursuers, submitted that I should correct the interlocutor of 5 October in exercise of the power conferred on me by Rule of Court 4.15(6). In my view it is questionable whether the omission of the words "recalls the sist" from the interlocutor is of any practical significance. Plainly both parties and the court have all acted as if the sist was recalled at that stage. Recall of the sist at that stage is, in my view, implicit in the remainder of the interlocutor and in all that has happened since. In the circumstances, however, I take the view that it is appropriate, in order to set the record straight, that I should correct the interlocutor by adding express reference to the recall of the sist, and I shall therefore do so.
[4]Prior to the hearing on 5 October the pursuers had lodged a minute of amendment seeking to substitute the present defenders for GDC. Their motion to amend to that effect was not opposed, and was granted.
[5]In addition, the pursuers had, prior to the hearing on 5 October, lodged what bore to be a Note of Adjustments (No. 8 of process). At the hearing I pointed out that, since defences had not yet been lodged, adjustment was premature. On the other hand, it seemed to me that, if the pursuers wished to alter their averments, it was convenient that they should be allowed to do so before the defenders prepared their defences. That would enable the defences to address the pursuers' pleadings from the outset in the form that they wished them to take. As I recollect the matter, I therefore suggested that the pursuers' pleadings might also be amended in terms of the Note of Adjustments (No. 8 of process). Counsel for the pursuer moved accordingly. There was, again as I recollect the matter, no real opposition on behalf of the defenders to the adoption of that expedient. I therefore allowed the summons to be amended in terms of No. 8 of process.
[6]Where a motion for transfer of an action to the commercial roll is granted before defences have been lodged, Rule 47.10(3) provides that the case should be put out for a preliminary hearing within fourteen days after the lodging of defences. In view of the nature of this case, the defenders sought an extended time for lodging defences, and I allowed a period of eight weeks for that purpose. That period expired on 30 November 2000, and the case was in due course put out for a preliminary hearing (a few days late) on 18 December.
[7]At the preliminary hearing which took place on 18 December 2000 it became apparent that there was some confusion as to the extent to which the pursuers' pleadings had been adjusted or amended. It was not, however, appreciated at that stage what the nature of the confusion was. It was only at the continued preliminary hearing which took place on 1 February 2001 that it became apparent that there had been a misunderstanding about the Note of Adjustments in terms of which amendment had been allowed on 5 October. While the Note of Adjustments on which the pursuers wished to rely, and which was lodged in court, was in the terms to be found in No. 8 of process, the Note of Adjustments which had been intimated to the defenders, and which Mrs Wolffe therefore understood to be under discussion on 5 October, was an earlier draft. That earlier draft has subsequently been lodged as a production (No. 17 of process). At the hearing on 5 October, nothing was said that alerted the pursuers or the court to the fact that the Note of Adjustments lodged in court (No.8 of process) had not been intimated to the defenders, or that alerted Mrs Wolffe to the fact that the Note of Adjustments of which the defenders had had intimation (now No. 17 of process) was not the document in terms of which amendment was being sought and allowed. By 1 February it had been appreciated that the confusion over the terms of the amendment allowed on 5 October might have an impact on issues of limitation. The preliminary hearing was further continued to 15 March and to 4 May. On the latter date the case was appointed to debate. The parties' pleadings, as they stood at the date of the debate, are to be found in the Record (No. 25 of process).
The Pleadings
[8]The primary basis of the pursuers' claim is that they are entitled to restitution under English law. They have an alternative claim for repetition under Scots law. The English law basis of the claim is formulated in the following three pleas-in-law:
| "1. | The Proper Law of the obligation to make restitution being English Law, and the sums concluded for being due by the defenders to the pursuers in accordance with the Law of England on the grounds specified in Pleas 2 and 3, decree should be pronounced as concluded for. | |
| 2. | The pursuers having made payment to GDC under a mistake in law the pursuers are entitled to restitution of the sums paid as condescended on. | |
| 3. | There having been failure (or absence) of consideration for the payments by the pursuers to GDC, the pursuers are entitled to restitution of the sums paid as condescended on." |
[9]The defenders seek to resist the pursuers' claim on a number of bases. These include those formulated in their third and fourth pleas-in-law, which are in the following terms:
| "3. | Esto English Law is the proper law of any obligation incumbent upon the defenders (as statutory successors to GDC) (which is denied) and on the hypothesis that the English Law of Limitation governs that obligation, any claim by the pursuers founded upon an absence of consideration in respect of any sum paid by them more than six years (i) prior to the making of a relevant claim founded upon a failure of consideration, (ii) et separatim and in any event, prior to the service of the present action being time barred in terms of Section 5 of the Limitation Act 1980, the pursuers' averments thereanent should be excluded from probation et separatim their claim to that extent should be dismissed. | |
| 4. | Esto English Law is the proper law of any obligation incumbent upon the defenders (as statutory successors to GDC) (which is denied) and on the hypothesis that the English Law of Limitation governs that obligation, any claim by the pursuers founded upon mistake being a new claim and being time barred in terms of Section 35 of the Limitation Act 1980, the pursuers' averments thereanent should be excluded from probation et separatim their claim to that extent should be dismissed." |
[10]It is convenient to defer referring to the parties' averments until it is necessary to do so in recording the arguments advanced in the course of the debate.
The Scope of the Debate
[11]In opening the debate for the defenders, Mrs Wolffe moved me to sustain the defenders' third and fourth pleas-in-law and repel the pursuers' first, second and third pleas-in-law. In effect, the defenders' contention was that, having regard to the relevant law of limitation, the claims based on English law were made too late. The effect of giving effect to Mrs Wolffe's motion would be to leave the pursuers with only the alternative Scots law basis for their claim.
[12]The debate proceeded on certain agreed hypotheses. These were:
- that English law was the proper law of the obligations founded on by the pursuers; and
- that in so far as the issues between the parties turned on matters of English law, the court should be entitled to base its decision on the submissions made, without requiring proof of English law.
[13]Mrs Wolffe indicated that there was substantial agreement between the parties as to...
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