Blog: Appeal Court judgment offers clarity for future simple procedure claims



Andrew Foyle

Andrew Foyle reflects on the significance of a recent Appeal Court judgment for future Simple Procedure claims.

An Appeal Court judgment delivered last week by Sheriff Principal M M Stephen QC may have a significant impact on future Simple Procedure claims.

To understand its significance, it’s important to recall the fundamental principles of Simple Procedure that replaced the previous Small Claims procedure. Introduced by section 72 of the Courts Reform (Scotland) Act 2014 (“the 2014 Act”) the Simple Procedure Rules (SPR) are made by Act of Sederunt (2016 No 200) and came into force on 28 November 2016. It governs virtually all claims raised in the courts in Scotland with a value of less than £5,000.

A major element of the Simple Procedure was that sheriffs would be more proactive in managing cases and would have regard to certain principles, including ensuring that unrepresented parties were not unfairly disadvantaged. This power has led to sheriffs scrutinising Simple Procedure cases in far more detail than they used to do under the old (Small Claims) rules.

However, it has transpired that in some courts, sheriffs have insisted upon further evidence being produced before they would grant a decree, even where the case was entirely undefended.

In a number of recent cases at Hamilton Sheriff Court, three of which were the subject of this appeal, Cabot Financial UK Ltd had undefended cases dismissed for failure to comply with such an order and to produce evidence requested by the sheriff. In two of those cases, the respondents had not entered the process at all. In the third, the respondent had lodged a form with the court admitting the debt and requesting time to pay it. Yet all three actions were dismissed. Consequently, Cabot Financial UK Ltd appealed to the Sheriff Appeal Court.

In my opinion, the outcome of these three test cases may be a positive turning point in the use of SPR for those in the debt recovery industry. For in reviewing the three test cases, key elements within the Appeal Court judgment included:

  • In an undefended case, (the Sheriff) has very limited discretion to refuse to grant decree and/or demand production of further evidence.
  • That discretion will generally only be available to the court where there are manifest issues arising from the pleadings about (i) the competence of the action; (ii) jurisdiction; or (iii) prescription;
  • Beyond these three areas it is not open to the court to require production of documents in undefended cases and the Appeal Court adopted the position that “not much will be required in a debt action” at the stage that it is undefended.

Notably, the court was particularly critical of the dismissal of the case where the respondent specifically admitted the claim and asked for time to pay. The court called this “difficult to follow, far less agree [with]”. The Court took the position that where a party admits a claim made against them, a sheriff should not look behind that admission other than in exceptional circumstances, and decree should be granted.

The court adhered to the principle that “it is not the sheriff’s function to advocate the cause of the defender who chooses not to contest the claim”, and that “reliance on unspecified knowledge of other cases is not [sufficient to allow further inquiry].”

In reaching these conclusions, the court held that the new, more extensive and inquisitive powers of the Sheriff in Simple Procedure cases are intended to be used in contested cases and significantly, not in cases that are undefended. Their use in undefended claims, according to the Appeal Court, “risks not only the court exceeding its jurisdiction but will inevitably lead to an inconsistency of approach and involve the judiciary, parties and the court system in an intolerably burdensome and unnecessary procedure which would have the effect of delaying justice and imposing unwarranted costs on parties and the justice system”.

The checks and balances in our legal system are important and in my opinion the judgment of the Appeal Court is a positive and welcome development that offers further clarity in the application of SPR.

Andrew Foyle is a partner at Shoosmiths