The Royal Bank Of Scotland Plc V. Nigel Percival Mckinnon Matheson
| Jurisdiction | Scotland |
| Judge | Lord Mackay of Drumadoon,Lord Philip,Lord Eassie |
| Judgment Date | 31 August 2012 |
| Neutral Citation | [2012] CSIH 64 |
| Date | 31 August 2012 |
| Docket Number | CA36/11 |
| Court | Court of Session |
| Published date | 31 August 2012 |
| EXTRA DIVISION, INNER HOUSE, COURT OF SESSION | |
| Lord Eassie Lord Mackay of Drumadoon Lord Philip | [2012] CSIH 64 CA36/11 OPINION OF THE COURT delivered by LORD PHILIP in the Reclaiming Motion by THE ROYAL BANK OF SCOTLAND PLC Pursuer & Reclaimer; against NIGEL PERCIVAL MCKINNON MATHESON Defender & Respondent: _______ |
Alt: Dunlop, QC, Pugh; MBM Commercial LLP
31 August 2012
[1] This is an appeal against an interlocutor dated 15 September 2011 by which the Lord Ordinary refused the motion of the pursuer and reclaimer ("the bank") for reduction of a decree in absence granted against them in Court of Session action A140/10 at the instance of the defender and respondent ("Mr Matheson"), and granted decree of absolvitor. The action was one of two actions raised by Mr Matheson against the bank both of which arose out of a complaint by him that the bank had wrongfully withdrawn an extension to a loan facility granted by them to a company of which he was a director. In action A140/10, Mr Matheson sued as assignee of the company for damages for loss suffered by the company. The other action, earlier in date, was raised in Perth Sheriff Court in about December 2008. In that action, he sues for psychiatric and other injury allegedly suffered by him personally. In both actions the sum sued for is £200,000 together with interest. The sheriff court action is still proceeding.
[2] The events leading up to the grant of decree in absence in action A140/10 were as follows. The summons was signetted and served on the bank on 15 March 2010. At that stage Mr Matheson was represented by MBM Commercial LLP, solicitors practising in Edinburgh. They ceased to act for him about September 2010. Thereafter he represented himself. The summons was lodged for calling on 15 February 2011. That fact was overlooked by McGrigors LLP, the solicitors acting for the bank, in the circumstances set out below. As a result no defences were lodged on behalf of the bank. Decree in absence was granted on 1 March 2011 and was extracted on 15 March 2011.
[3] On the morning of 14 March 2011 McGrigors became aware for the first time that decree in absence had been granted. They sought instructions from the bank and prepared defences. A motion for recall of the decree in terms of rule of court 19.2 was enrolled on 16 March 2011. McGrigors were unaware that the decree had already been extracted until after intimating their motion for recall to Mr Matheson. The motion came before the Lord Ordinary (Uist) on 18 March 2011 and was refused. No opinion was issued.
[4] Recall having been refused under rule of court 19.2, the bank raised the present action on 21 March 2011. On the following day, the Lord Ordinary (Hodge) suspended the decree in absence ad interim and interdicted Mr Matheson from instituting any diligence on it or taking any other steps to enforce it.
[5] As the action was a commercial action, it came before the court for a preliminary hearing in terms of rule of court 47.11 on 12 May 2011. At that hearing Mr Matheson argued that the action should be dismissed on the ground that the bank had failed to set out any relevant averments justifying reduction, while the bank reserved its position as to the relevancy of Mr Matheson's defences. The cause was appointed to a procedural hearing and debate to consider Mr Matheson's argument for dismissal, the bank's contentions as to the relevancy of Mr Matheson's defences, and submissions by both parties as to the scope of any proof. At the same time the Lord Ordinary (Glennie) appointed parties to intimate and lodge notes of argument, and appointed the bank to intimate and lodge affidavits relating to the question of "mistake", that is, the circumstances in which decree in absence was allowed to pass and to be extracted before the hearing on the bank's motion under rule of court 19.2.
[6] The procedural hearing and debate was held on 24 and 27 June 2011 when counsel for the bank addressed the court on the test to be applied in an action for reduction of a decree in absence. Mr Matheson argued that the bank's pleadings failed to reveal a relevant defence to his own action and that the action of reduction should be dismissed. Following the debate, the Lord Ordinary made an order allowing parties a proof before answer, restricted to the question of "mistake". His reason for doing so was that he was satisfied that the test for reducing a decree in absence was less strict than that applicable to an action for reduction of a decree in foro. There was no precise test which required to be met in order to reduce a decree in absence. The court was required to consider all the circumstances of the case and to exercise its discretion in the light of those circumstances. Since he was satisfied that the bank had a plainly arguable defence to the action brought by Mr Matheson, inquiry should focus on the "mistake" which led to the decree in absence having been allowed to pass and other avenues of redress being lost.
The circumstances in which decree was allowed to pass in absence
[7] As we have already recorded, the summons was signetted and served on the bank on 15 March 2010. On 1 April 2010 Mr James Cormack, the partner dealing with the matter at McGrigors, emailed MBM Commercial, who were then acting for Mr Matheson, and asked them to notify his firm when the summons was to be lodged for calling. McGrigors did not intend to rely solely on MBM notifying them, as they had their own system for checking whether a summons had called. In any event, they knew from about September 2010 that MBM were no longer instructed by Mr Matheson in connection with the sheriff court action and might have assumed that they were no longer instructed in the Court of Session action. The evidence was that the case was added to McGrigors' internal calling list which they used to check if cases in which they were instructed had been lodged for calling. It was the responsibility of a trainee to examine the Court of Session rolls each day to check whether any case on their internal list was on the calling list. This system was clearly necessary because of the consequences of failing to notice when a summons had called.
[8] Once a summons is called, the defender is required to enter appearance within three days and to lodge defences within seven days. Failure timeously to enter appearance and/or lodge defences entitles the pursuer to apply by motion for decree in absence in terms of rule of court 19.1, which provides that the court shall grant decree if satisfied that it has jurisdiction and that the rules of service have been complied with.
[9] Rule of court 13.13(6) provides that where a summons is not called within a year and a day after the expiry of the period of the notice, the instance shall fall. So the bank and McGrigors were both interested in knowing when action A140/10 would call as they hoped that it would not be lodged for calling in time. Mr David Eynon, a senior solicitor at McGrigors, who was responsible for the day to day conduct of action A140/10, was aware in February 2011 that it would require to call soon if it was not to fall and had made an entry in his diary to check with the court on the date the instance was due to fall. The summons had been served on 15 March 2010 and the period of notice was 21 days. According to the Lord Ordinary's reckoning the instance would have fallen if the summons had not called by 6 April 2011. By February 2011, Mr Cormack, Mr Eynon and others at McGrigors were aware that MBM Commercial were no longer acting on behalf of Mr Matheson and that he was conducting both actions himself. Ms Katherine Allan, of the bank's legal department, who had responsibility for the sheriff court action, was also aware of this. Accordingly neither McGrigors nor the bank would have expected to be told by MBM Commercial when the summons was to be lodged for calling, and the Lord Ordinary took the view that they had no reason to suppose that Mr Matheson would have been aware of the etiquette in this respect.
[10] Nevertheless, Mr Matheson did in fact intimate to the bank and to McGrigors that the summons was about to be, and subsequently had been, lodged for calling. There had previously been considerable correspondence between the bank and Mr Matheson, including correspondence with Miss Allan, who had since 2001 been employed as legal counsel in the legal-litigation division of the RBS Group. There had been a debate in the Sheriff Court action in late January and early February 2011, and on 2 February 2011, the day after the debate, Mr Matheson wrote to Miss Allan and towards the end of his letter said this:
"I am going to instruct solicitors to bring the action in the Court of Session live, but I am also going to try to regenerate the goodwill my business has lost through the bank's actions...I would like to think that there is a way forward...I would ask you to reply to me within seven days of this letter..."
[11] In cross examination, Miss Allan accepted that the expression "bring the action ... live" was a reference to the action being lodged for calling and that she had picked up the point at the time. She did not however recall having mentioned it to Mr Eynon. There was an indication in the letter that Mr Matheson was proposing to re-appoint solicitors and she regarded this as important and helpful. Her position was that she would hear from McGrigors in due course if and when the summons was lodged for calling, as she relied on them to update her on developments in any case. She replied to Mr Matheson by email on 14 February, and on 15 February Mr Matheson sent another email to her which, since she only worked part-time, she did not pick up until 17 February. In that email he said:
"I am aware that we are awaiting a decision in relation to the action in Perth Sheriff Court, but please do not be under the misapprehension that that may close the matter....
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