Scottish Court of Session Decisions

OUTER HOUSE, COURT OF SESSION [2011] CSOH 67
A42/05	OPINION OF J. GORDON REID Q.C. (Sitting as a Temporary Judge) in the cause SHETLAND HEALTH BOARD Pursuers; against BRIAN KELLY and ANOTHER Defenders: ­­­­­­­­­­­­­­­­­________________

Pursuers: P. M. Stuart; R F Macdonald, Health Board

Defenders: Lindsay; Anderson Strathern

15 April 2011

Introduction

[1] This case called on the Motion Roll and the Procedure Roll on 25 March 2011. The Pursuers sought leave to allow a substantial Minute of Amendment to be received with the consequent discharge of the Procedure Roll. The first Defender (the only defender remaining in the process) resisted the motion and proposed that the Procedure Roll discussion should proceed without amendment. The essential grounds of opposition were that (1) the amendment came too late, (2) allowing it to be received would amount to a breach of the court's duty under Article 6 of ECHR to ensure that disputes of this nature are determined within a reasonable period of time, and (3) the pursuers were attempting to introduce two new cases after the expiry of the prescriptive period and have in effect rewritten their fraud case against the first defender.

Nature of the Action
[2] The Pursuers sue the Defender for repayment of sums paid to him between 1995 and 1999 in response to claim forms submitted for General Ophthalmic Services (GOS) under various statutory regulations on the basis that the claims were fraudulent and the sums paid in error. In addition, the Pursuers seek payment of what they describe as considerable costs during the necessary investigation of the defenders' wrongful claims. Details are offered to be produced (Article 4 page 12A). No details of those costs have ever been produced. The Minute of Amendment does not touch on this head of claim.

History of proceedings
[3] After various internal investigations and police involvement, criminal proceedings were brought against the Defender at Inverness Sheriff Court. I was informed that these proceedings were deserted pro loco et tempore in 2004 on the basis that the Defender made payment to the Pursuers of the sum of just under £12,500, which he did.

[4] The Court of Session action was raised against the Defender and his wife in January 2005. It was sisted in March 2005 pending resolution of the defenders' Legal Aid applications. The sist was recalled briefly in June 2005 to enable the pursuers to obtain diligence to recover documents. Proceedings were also begun in June 2005 before an NHS Tribunal to determine whether the Defender's name should be removed from the statutory list of persons entitled to provide GOS under the relevant NHS regulations. Evidence was led in the tribunal proceedings in March and June 2006. Proceedings before this tribunal are recorded by some means and transcribed. The estate of the Defender was sequestrated in January 2006. The Pursuers lodged a claim with the trustee. It is not clear whether any dividend was received.

[5] The sist in the Court of Session action was recalled in December 2006 when the then second defender was assoilzied. At that time the pursuers also enrolled to have the cause re-sisted for investigations but the Court's interlocutor did not give effect to that part of the motion for reasons which are unexplained. No further steps in the Court of Session process occurred until December 2009. In the meantime, the NHS Tribunal, in June 2007, found that the Defender had perpetrated a fraud on the Pursuers. The Defender appealed to the Inner House, not on the finding of fraud but on the Tribunal's decision on the question of disposal, which was essentially whether the Defender should be entitled to work within the framework of the NHS system. The Defender's appeal was allowed in January 2008 (Kelly v Shetland Health Board 2008 CSIH 7) and the proceedings remitted to the Tribunal. The Tribunal again dealt with the question of disposal, in March 2008. The Defender appealed once more, and his appeal was allowed by the Inner House in January 2009 (Kelly v Shetland Health Board 2009 CSIH 3). Thereafter, the Tribunal held further procedural hearings in April, June and August 2009 on the question of disposal. The Defender's name remains on the relevant NHS list. The Defender obtained his statutory discharge under section 55(1) of the Bankruptcy (Scotland) Act 1985 in January 2009.

[6] By late 2009, the Defender's solicitors had withdrawn from acting in the Court of Session proceedings and the usual procedure to determine whether the Defender intended to defend the action was set in train. In the meantime, the Tribunal heard evidence in February 2010 on the question of disposal. By May 2010, the Defender had appointed new solicitors in the Court of Session action and lodged Defences (some three and a half years late).

[7] The adjustment of the record continued until 22 September 2010 when the record closed. In the Defences, as adjusted, the Defender raised issues about prescription and the effect of his sequestration and subsequent discharge in January 2009. He also made various calls on the Pursuers for further specification. The cause was, in October 2010, appointed to the Procedure Roll. The Defender produced a Note of Argument in late November 2010. The March 2011 diet was fixed in December 2010. In the meantime, a further hearing had taken place in the NHS proceedings in September 2010 although I was informed that this was entirely taken up by negotiations between the parties.

[8] In January 2011, further evidence was heard in the Tribunal proceedings and written submissions were exchanged and lodged on behalf of the parties in early February 2011. A decision by the Tribunal on the question of disposal is currently awaited. Throughout the Tribunal proceedings, the Defender has been represented by a solicitor and/or counsel. The only evidence led by the Defender at the NHS tribunal hearings was his own.

[9] The Pursuers intimated their Minute of Amendment on Tuesday 22 March 2011; it appears to have been lodged in Court on 24 March. On that day, the pursuers enrolled a motion for receipt of the Minute of Amendment, Answers, and discharge of the diet of Procedure Roll.

The Minute of Amendment
[10] The proposed Minute of Amendment, which extends to about fifteen pages, (i) provides (at paragraphs 2 and 3) further specification of the conduct founded on in the Closed Record (article 3 pages 8B-C) and the legal basis of the claim; at paragraph 2(c) of the Minute of Amendment it is averred that the NHS proceedings concern the same facts upon which the pursuers rely in this action, (ii) introduces a new statutory claim for payment under the National Health Service (Optical Charges & Payments (Scotland) Regulations 1989 and 1998 but this claim too is linked to allegations of fraud (paragraph 3, new article 5) (iii) makes further averments in response to the Defender's plea of prescription (paragraph 4 [erroneously numbered 3], and (iv) adds two new pleas-in-law, one based on the statutory claim and the other seeking reparation for fraudulent misrepresentation; and varies the existing pleas-in-law (paragraph 5 [erroneously numbered 4]. There were other alterations proposed in paragraph 1 of the Minute which need not be specified here.

[11] In the course of his submissions, counsel for the Pursuers sought leave to amend the Minute of Amendment to cure defective numbering. I granted leave. More significantly, I also granted leave to delete a sentence on page 12 (new article 6) which appeared to insert a case based on unjust enrichment. A possible new case, based on unjust enrichment, no longer features in the Minute of Amendment.

Decision
[12] I have decided to allow the Minute of Amendment to be received.

[13] Although this action was raised in 2005, there are reasonable explanations for the slow progress. The action was sisted for almost two years pending the outcome of Legal Aid applications. The Defender's estate was sequestrated and he was not discharged until 2009. Almost six months elapsed while the Defender changed solicitors and prepared Defences. No real progress could be made until Defences were lodged. This occurred in May 2010. Counsel for the Defender indicated in his submissions that the Defender had chosen to let sleeping dogs lie. The Defender, at no stage, sought to have the action dismissed under RC 21A(1) on the ground of inordinate and inexcusable delay. That rule only came into effect on 1 December 2008 (by virtue of the Act of Sederunt (Rules of the Court of Session Amendment No 5 (Miscellaneous) 2008/349) but the Inner House has held that the Court has always had an inherent power to dismiss an action for want of prosecution (Tonner v Reiach & Hall 2008 SC 1; Hepburn v Royal Alexandra Hospital NHS Trust 2010 SLT 1071).

[14] The Defender founds, in particular, on the period between the lodging of his Note of Argument on 25 November 2010 and the diet of Procedure Roll. The Note, in summary, asserts that (i) the averments of fraud lack specification and are consistent with inaccurate claims being submitted in good faith (which is the Defender's position), (ii) the claim for costs of investigation lack specification, and (iii) the averments in response to the prescription plea lack specification.

[15] Although the grounds of opposition to the motion assert that the passage of time has materially prejudiced the Defender's ability to counter the Pursuer's allegations, counsel for the Defender did not refer to any unfair prejudice which the Defender had suffered or would suffer if the Minute of Amendment were to be received and subsequently allowed. This is not surprising in the light of the history described above. The allegations appear to have been considered both in criminal and NHS proceedings. The NHS proceedings appear to have been comprehensive and lengthy. The Defender gave evidence in the NHS proceedings and chose to lead no other evidence in support of his position. The Pursuers aver that the facts founded on in the NHS proceedings are in substance the same as those in the present action; that the Defender has admitted liability to make repayment and has already repaid almost £12,500.

[16] In the absence of such prejudice, any inconvenience or additional expense caused by a late amendment lodged at or shortly before the first occasion on which a complex cause, with an unusual history and background such as the present case, appears on the Procedure Roll will normally be met by an award of expenses. Different considerations will arise where the diet is a proof and where the case and the background are straightforward. It is perhaps not surprising that counsel for the Pursuers chose to await the conclusion of the NHS proceedings, in which he was instructed, in February 2011 (even although they were concerned with the question of disposal) before setting about the task of considering the question of amendment in the light of the calls made by the Defender (some of which were intimated in the middle of September, shortly before the record closed) and the Note of Argument.

[17] In support of his submissions on the lateness of the Amendment, counsel for the Defender referred to Dryburgh v NCB 1962 SC 485 and Anderson v UK 2010 EHCR 145. In Dryburgh the pursuer lodged a Minute of Amendment shortly before the diet of proof in a personal injuries action. The Lord Ordinary refused to allow it to be received. The First Division adhered. The proposed amendment would have radically changed the basis of the pursuer's case. The general observations of the Lord President at pages 491-2 and the reasons for them relate to amendment on the eve of inquiry by proof or jury trial and do not apply here or at least they do not apply without qualification. Their underlying basis, as can be seen from the Opinion of Lord Guthrie, is prejudice to the defender. In addition, as the Lord President observed the whole grounds of the action [would] have completely changed (at page 491) after the expiry of the statutory limitation period and would have fallen within the scope of the dictum of the Lord Justice-Clerk in Pompa's Trs v Edinburgh Magistrates 1942 SC 119 at 125. That is not the case here.

[18] Anderson was an unusual case on its facts. The various proceedings took numerous twists and turns which began with a statutory tenement repairs notice and ended up with an action against the local authority and a neighbour (a commercial property company) based on fraud and illegal conspiracy. The Court noted that the reasonableness of the length of proceedings had to be assessed in the light of the circumstances of the case and certain criteria, namely the complexity of the case, the conduct of the applicant and the relevant authorities, and what was at stake in the dispute.

[19] Here, the Defender also founds on the period between December 2006 and 2009. However, during that period the court action, which was only begun with a view to eliding prescription, was, in effect, in abeyance pending the outcome of the NHS proceedings both as to the merits and the mode of disposal and the Defender's sequestration proceedings. The NHS proceedings are still not concluded. While it is true that the merits were resolved in 2007, the Defender took the deliberate step of doing nothing in the Court of Session action and refrained from lodging Defences either himself or through his trustee. The means were available to him to make progress. Any assessment of whether the Defender's civil rights and obligations have been or are being assessed within a reasonable time must take these circumstances into account. He only lodged Defences in May 2010.

[20] By allowing the Minute of Amendment to be received, the final outcome of the proceedings may be delayed by a few months at most (the extra time caused by the amendment procedure). In the circumstances, that cannot on any view constitute a violation of the Defender's Article 6.1 rights. I heard lengthy submissions from counsel on 25 March which lasted most of the day until 4.15pm. Even if I had there and then refused the Minute of Amendment the Procedure Roll debate could not then have taken place. Such a Procedure Roll discussion would have been entirely artificial given the terms of the Minute of Amendment and the implicit recognition that the current state of the Pursuers' pleadings is inadequate. Moreover, another diet probably several months hence would have been required. It seems to me, viewing matters broadly, that in a case of this nature with the background described above, it is in the interests of justice that the Minute of Amendment should be received. It is relatively common for a party to seek leave to amend after debate has highlighted inadequacies in his pleadings. Such leave is normally granted.

[21] The Defender also argued that a new claim for damages for fraud is introduced by the Minute of Amendment. I disagree. The Pursuers' case in the Closed Record is rooted in fraud. The substance or foundation of the case remains unchanged. Counsel for the Defender accepted that the Closed Record contained a common law case of fraud seeking repetition. The basic facts are the same. Whether the sums claimed as a consequence of the averred fraud are described as sums which are repayable or as damages is of little materiality. The sums being claimed are not being changed by the proposed Minute of Amendment.

[22] Even If I am wrong on this point, I am doubtful whether it is appropriate or desirable to refuse to allow the Minute of Amendment to be received. If a claim has prescribed, it has prescribed whether or not it features in a Closed Record or an amended Closed Record. Practice has varied as to when such arguments should be heard. Although counsel for the Defender submitted that it was appropriate to hear arguments on fundamental points at this stage and specification points at the stage of moving the amendment, he did not cite any authority to support that approach. The modern view leans towards a consideration of all matters, not at the stage of receipt, but at the stage of moving the amendment (Greenhorn v J Smart & Co (Contractors) Ltd 1980 SC 427 at 432- where the case was at the Procedure Roll stage). However, where a Minute of Amendment is lodged shortly before a proof or jury trial it will probably be more convenient to deal with the objections to it at the stage of receipt as in Hynd v West Fife (Co-Operative Ltd 1980 SLT 41.

[23] The statutory case is, however, new although it is based on the same essential facts and claims the same sums. It is difficult to see the point of it. It too relies on fraud. While I have strong reservations as to whether the statutory case serves any purpose at all, I will not exclude it at this stage. However, it seems to me that if it truly does add something significant to the pre-existing case, then that may well be a change to the basis of the case which should not be allowed; on the other hand, if it does not add anything, it does not do anything to focus the true issue in controversy between the parties and should not be allowed on that basis either.

[24] I was referred to Royal Insurance (UK Ltd v Amec Construction (Sc) Ltd 2008 CSOH 107, at paragraph 10 and Macphail v Lanarkshire CC 1951 SC 301. These cases emphasise that the question whether to allow or refuse an amendment is a matter for the discretion of the court; that in general the court will not allow a pursuer to change the basis of his case if he seeks to make such amendment only after the expiry of a time limit which would have prevented him at that stage from raising proceedings afresh. The scope of the qualification in general may be quite limited. Whether the basis of a case is being changed will be a question of fact and degree. If the foundation of the action is unchanged but the method of its formulation or its superstructure is altered, the court is likely to allow the amendment.

[25] Here, we are only at the stage of receipt of the Minute of Amendment. However, as matters presently stand, I consider that the proposed Minute of Amendment (as amended at the Bar) does not, in principle, change the basis of the Pursuers' case. It remains rooted or grounded in the allegation of fraud. Its foundation remains unchanged. The essential facts remain unchanged. The sums sued for have not changed.

[26] Counsel for the Defender also argued that it was not clear whether the Pursuers were still directing their case against both defenders. This had a bearing on arguments on whether there should be averments of collusion, conspiracy or common purpose. While this was plainly not at the forefront of the draftsman's mind when preparing the Minute of Amendment, it seems to me reasonably clear that as the second defender has been assoilzied, the conclusion and the averments fall to be treated as being directed against the Defender as the only remaining defender in the process. Counsel for the Pursuers confirmed that to be the position and undertook to remove any ambiguity in the pleadings. I therefore do not consider that this line of argument should result in my refusing to allow the Minute of Amendment to be received.

[27] Finally, reference was made to Rowan Timber Supplies (Sc) Ltd 2011 CSIH26 where the pursuers sought recovery, on the basis of unjustified enrichment, of water charges paid in error. The defence was that liability to pay had prescribed. The response was to invoke section 6(4) of the Prescription & Limitation (Scotland) Act 1973 on the basis that the individual or repeated issue of invoices by the defenders demanding the erroneous payments induced the pursuers to refrain from making a claim for repayment. The First Division allowed a proof before answer holding that the pursuer's averments were sufficient to establish that the circumstances induced them to refrain from pursuing a claim for repayment (paragraph 18).

[28] As noted above, the Pursuers have, in paragraph 4 [erroneously numbered 3] of their Minute of Amendment amplified their averments based on section 6(4) of the 1973 Act, no doubt in response to the criticism set forth in the Defender's Note of Argument. It would be quite wrong for me, on the motion roll, to prevent the Pursuers from attempting to provide further specification on this aspect of their case, by refusing to allow the Minute of Amendment, or this part of it to be received. Whether they have provided such specification may have to be debated at a later stage.

Disposal
[29] I shall therefore, in the exercise of my discretion, pronounce an Interlocutor allowing the Pursuers' Minute of Amendment to be received, with any Answers within 28 days, as proposed. The case will be put out By Order by the Court, following any adjustment of the Minute and Answers, in accordance with Court of Session Practice Note No 2 of 2010, to ensure that further progress in this action can be made within a reasonable time. To what extent, if at all, any of the foregoing arguments will need to be reconsidered when the Pursuers come to move their amendment remains to be seen.

[30] I shall reserve all question of expenses of the motion and the discharge of the Procedure roll diet.