Scottish Court of Session Decisions

EXTRA DIVISION, INNER HOUSE, COURT OF SESSION

[2016] CSIH 83

A87/14

 

Lord Bracadale

Lord Drummond Young

Lord Malcolm

OPINION OF THE COURT

delivered by LORD DRUMMOND YOUNG

in the cause

by

PERTH & KINROSS COUNCIL

Pursuers and Respondents

against

(FIRST) SCOTTISH WATER and (SECOND) MILLGLEN (GLASGOW) LIMITED

Defenders and Reclaimers

Pursuers and Respondents:  Smith, QC;  Clyde & Co

First Defenders and Reclaimers:  Clancy, QC;  BLM

Second Defenders and Reclaimers:  No appearance

8 November 2016

[1]        The pursuers are the owners and operators of premises known as the Crieff Road Pre-School Centre in the western part of Perth.  The first defenders are a body incorporated by statute which is responsible for water supply and sewerage throughout Scotland.  The pursuers have raised proceedings in which they claim that the Pre-School Centre was damaged by flooding that occurred on 21 July 2010 when heavy rainfall backed up from a public sewer for which the first defenders were responsible.  The second defenders are piling contractors who were responsible for carrying out works at a nearby housing development; the pursuers have an alternative claim, which is not relevant to this opinion, that those piling works were carried out negligently, with the consequence that the sewer was damaged and the flooding resulted.

 

Summons

[2]        The pursuers’ summons was directed against “Scottish Water Limited” as first defenders.  The conclusion was for £738,685.66.  So far as directed against the first defenders, the averments were to the following effect.  Within the grounds of the Crieff Road Pre‑School Centre there were two large diameter public sewers, which were described in some detail.  In 2006, during the construction of the nearby housing development, damage occurred to one of the sewers, blocking it.  As a result the other sewer, of 525 mm diameter, required to cope with an increased capacity.  During 2008 on several occasions the drains serving the pursuers’ premises backed up.  The pursuers identified the 525 mm sewer as being the cause of the problem and complained on more than one occasion to the first defenders.  The first defenders advised the pursuers that they had carried out investigations but had not found any issues that could cause flooding.  On the morning of 21 July 2010, however, following heavy rainfall, severe flooding occurred at the pursuers’ premises.  The 525 mm sewer was unable to cope with the increased demand.  Water and effluent backed up from manholes within the grounds of the Pre-School Centre and from sanitary appliances within the premises.  The premises were flooded to a depth of approximately 1 metre.

[3]        In relation to responsibility for the flooding, the pursuers aver that it was caused by the fault and negligence of the first defenders, who were under a duty to inspect, maintain and repair the sewers.  Reference is made to section 2 of the Sewerage (Scotland) Act 1968.  The pursuers aver that it was the duty of the first defenders, in response to the complaints made, to investigate the cause of the prior incidents of flooding, and further aver that if proper investigation had been carried out the damage to the other sewer would have been identified and repaired.

 

Identity of the defenders

[4]        Following service of the summons and lodging of defences, the pursuers decided that they had made a mistake about the name and designation of the first defenders.  The action as originally framed was directed against “Scottish Water Limited”, who were designed as “a company incorporated under the Companies Acts and having their registered office at Castle House, 6 Castle Drive, Carnegie Campus, Dunfermline, KY11 8GG”.  The pursuers subsequently decided that the action should have been directed against Scottish Water rather than Scottish Water Limited.  They accordingly moved to amend the instance to make this correction, identifying the first defenders as “Scottish Water” and designing them as “a body incorporated by statute and having a place of business at Castle House, Six Castle Drive, Carnegie Campus, Dunfermline, KY11 8GG”.  The motion to amend came before the vacation judge, who decided to allow the amendment.  The first defenders have reclaimed against his decision.

[5]        Scottish Water Limited and Scottish Water are distinct corporate bodies, each having a legal personality of its own.  Scottish Water is a body corporate established by section 20 of the Water Industry (Scotland) Act 2002.  Schedule 3 to the 2002 Act provides for the requisite administrative structures, and other provisions of the Act impose a range of functions on the body corporate, notably water and sewerage functions.  Section 25 of the 2002 Act confers power on Scottish Water to promote subsidiary companies, and Scottish Water Limited is a wholly-owned subsidiary of Scottish Water.  Scottish Water Limited is a private company limited by shares under the Companies Act 1985.  It has three ordinary shares of one pound each, all paid up and all owned by Scottish Water.  Its registered office is situated at premises belonging to Scottish Water at Castle House, in Dunfermline; that is the address that is given for Scottish Water Limited in the original summons and for Scottish Water in the amended summons.  It is a matter of agreement that, apart from its registered office, Scottish Water Limited has no offices, “establishment”, places of business, assets or staff. Furthermore, it does not carry on any business.

[6]        Scottish Water, by contrast, fulfils a range of important statutory functions under the legislation governing water and sewerage in Scotland.  Scottish Water’s net assets are valued at £5,000,000,000. Its workforce is numbered in thousands, and it has a very large number of installations and establishments with permanent staff.  As the Lord Ordinary notes, these facts are a matter of public record.  For present purposes it is important that Scottish Water is responsible in particular for the provision and maintenance of public sewers, such as the sewer in Perth whose condition is said to have given rise to the flooding and consequential damage of which the pursuers complain.  Those responsibilities are imposed by statute, notably the Sewerage (Scotland) Act 1968 as applied and modified by the Water Industry (Scotland) Act 2002. Scottish Water Limited, by contrast, has no public responsibilities beyond those inherent in the running of a limited company.  It has no statutory or other functions in relation to water or sewerage.

 

Progress of the Action
[7]        The first defenders opposed the pursuers’ motion to amend the summons to substitute Scottish Water for Scottish Water Limited.  They did not challenge the competency of amendment in itself, but they contended, in summary, that amendment should be refused on the ground that it involved the substitution of the right defender for the wrong defender after the expiry of the prescriptive period governing the pursuers’ claim.  The damage to the pursuers’ property occurred on 21 July 2010.  The summons was served on 8 July 2015 but the motion to amend was not made until more than five years had elapsed since the date of the damage; it was heard by the Lord Ordinary on 11 September 2015.  On that basis the first defenders submitted that any claim against Scottish Water had prescribed before the motion to amend was made and, in accordance with the principles laid down in the leading case, Pompa’s Trustees v Edinburgh Magistrates, 1942 SC 119, the motion should be refused.

[8]        The Lord Ordinary rejected that argument. He held that amendment of pleadings under Rule of Court 24 is a matter for the discretion of the court, and that discretion should be exercised in favour of permitting amendment.  The proposed amendment did not involve any radical alteration of the pleadings, but merely corrected the pleadings to indicate the party which was in law responsible for the actings complained of.  In pre-litigation correspondence the solicitors acting for both Scottish Water and Scottish Water Limited had responded to letters referring to “Scottish Water Limited” without correcting the name of the company.  Furthermore, the difference between the two names could be attributed to clerical error, given the relatively wide scope that that concept has been given in recent cases.  On that basis the decision of the Inner House in Link Housing Association Ltd v Gray Aitken Partnership Ltd (erroneously cited as Gray Aitken Partnership Ltd v Link Housing Association Ltd), 2007 SC 294, was distinguished.

 

Amendment
[9]        Amendment of pleadings in the Court of Session is currently governed by Rule of Court 24.  For present purposes, two provisions of the Rule of Court are relevant.  First, RC 24.1(2)(b)(i) permits amendment “to correct or supplement the designation of a party to the cause”.  Secondly, RC 24.1(2)(d) permits amendment “where it appears… that the cause has been directed against the wrong person”, in which case an amendment may insert an additional or substitute party and direct existing or additional conclusions, averments and pleas-in-law against that party.

[10]      The power conferred by Rule of Court 24 is wide, and provided that no time limits intervene it permits the substitution of one defender for another. Where a time limit has expired, however, as through the law of prescription, a further principle becomes relevant. This is stated in the opinion of LP Cooper in Pompa’s Trustees v Edinburgh Magistrates, 1942 SC 119, at 125:

“[T]he Court will not in general allow a pursuer by amendment to substitute the right defender for the wrong defender, or to cure a radical incompetence in his action, or to change the basis of his case if he seeks to make such amendments only after the expiry of a time limit which would have prevented him at that stage from raising proceedings afresh”.

 

In Pompa’s Trustees, a claim for compensation for damage by rioting under the Riotous Assemblies (Scotland) Act 1822 was made against the magistrates of Edinburgh.  Under statute, however, the claim should have been made against the town clerk.  The pursuers sought to amend the crave of their writ to add the town clerk as an additional defender, but they did so after the time limit of one month prescribed in the 1822 Act.  The court permitted the amendment notwithstanding the general rule stated above.  The action as originally raised involved an admitted error, but this did not involve “a radical and fundamental incompetence, but a mistake in detail which, as it happens, now possesses no real significance”.  The basis of the pursuers’ case, if the amendment were allowed, would remain the same as before.

[11]      It appears, therefore, that when an amendment is proposed after a time limit has expired the court must consider the substance rather than the mere form of the amendment and consider whether any of the criteria stated in the quoted passage applies: the substitution of an entirely different defender, or the curing of a radical and fundamental incompetence, or a change in the basis of the case.  On the facts of Pompa’s Trustees, it can be seen that a change in the identity of the defender will not matter provided that the substance of the action remains the same.  Similarly, in Hynd v West Fife Co-operative Ltd, 1980 SLT 41, a pursuer who had raised proceedings for personal injuries based on inadequate instruction and fault on the part of his employers’ manager in relation to inadequate supervision of a cleaning operation was permitted to add a further case based on a defective system of work.  The court accepted (at page 43) that it would be an improper, and to that extent incompetent, exercise of the court’s discretion to allow a pursuer by amendment to defeat the protection afforded by the limitation statutes.  That would occur where, for example, an amendment sought to convert a case into what was virtually a new action outwith the triennium.  The initial question, however, was whether the proposed amendment did or did not change the basis of the pursuer’s case.  From that point of view, the court indicated, it was irrelevant whether the principle in question was considered as one of strict competency or the proper exercise of the court’s discretion.

[12]      The nature of the decision that the court is called upon to make in cases of this nature has been touched upon in a number of decisions. In our opinion a correct statement of the law is found in Sellars v IMI Yorkshire Imperial Ltd, 1986 SLT 629, where LJC Ross stated (at 635)

“[W]hen an amendment is proposed which would have the effect of radically altering the pursuer’s case after the expiry of the triennium, the court has a discretion as to whether or not to allow such an amendment. This is because, under [the relevant Rule of Court], the court has a discretion as to whether or not to allow an amendment. If an amendment has the effect of making a radical alteration to the pursuer’s case after the expiry of the triennium, the court may well exercise its discretion so as to refuse to allow the amendment, but, in my opinion, the court does have a discretion in the matter”.

 

An example of a case where that might be permitted was where a defender had deliberately concealed material facts from the pursuer.  The conclusion that the court has a discretion was reached in view of the wording of the Rule of Court, which uses the word “may”, and also because in Pompa’s Trustees the Lord President used the expression “in general”, which suggested that on occasion the court might permit an amendment even after a statutory time limit had expired.  We accordingly conclude that the question of whether to permit an amendment is a matter within the discretion of the court, and is not to be regarded as a matter of pure competency.  Nevertheless, the principle laid down in Pompa’s Trustees applies, and if a fundamental amendment is proposed after the expiry of a time limit the court should be slow to exercise its discretion in favour of permitting the amendment; the fundamental policy of the law is that contained in the statutes governing prescription, limitation and other time limits, and that should normally be followed.

[13]      A further example of the application of the principle in Pompa’s Trustees is found in Link Housing Association Ltd v Gray Aitken Partnership Ltd (erroneously cited as Gray Aitken Partnership Ltd v Link Housing Association Ltd), supra.  In that case a housing association, GAP Housing Association Ltd, entered into a construction contract with a contractor in 1996.  The contractor employed the second defenders, Gray Aitken Partnership Ltd, as architects, and Gray Aitken entered into a collateral warranty with GAP.  The collateral warranty contained a limitation provision which provided that no proceedings arising from any breach should be begun more than five years from the date of practical completion, that date being in 1997.  In October 2000 the members of GAP agreed to transfer its whole assets and engagements to another body, Link Housing Association Ltd, which was constituted under the Industrial and Provident Societies Act 1965; Link accepted the transfer.  In May 2001 Link resolved to change its name to Link Group Ltd, and in November 2001 a company named Link Housing Association Ltd was registered under the Companies Acts.  It had the same registered office as Link Group Ltd.  In July 2002 the pursuers raised an action in the name “Link Housing Association Ltd” against inter alia the architects for damages for breach of contract.  In March 2005 the pursuers sought to amend by deleting the name “Link Housing Association Ltd “and substituting the name “Link Group Ltd” as pursuer.  The architects argued that the amendment had the effect of introducing a new pursuer, which would have the effect of defeating the contractual limitation provision in the collateral warranty.  The pursuers argued that the error was of the nature of a clerical error, and could be corrected.

[14]      It was held by the court that the error was not in the nature of a clerical error, but rather a matter of substance going to the identity of the person suing.  LP Hamilton categorized the issue (at paragraph [12]) as “whether the amendment proposed corrects the designation of an existing party to the cause or substitutes another person for the original pursuer”.  The critical point was that the action had been brought in the name of a corporate body different from that in which right, title and interest to the claim under the contract were vested. “Link Housing Association Ltd” and “Link Group Ltd”, although the names were similar, were different persons, and had been confused, so that the action had been raised in the name of the wrong person.  That was regarded as a matter of substance going to the identity of the person suing.  On that basis amendment should not be permitted.  Furthermore, the error could not be considered a clerical error as there was no suggestion in the pleadings or otherwise that the name of the pursuers had been mistranscribed.  On this reasoning, we would comment that the court does not appear to have given detailed consideration to the criteria for the identity of an artificial legal person.  It seems to have been assumed that the name defined the person, but for reasons that we develop subsequently we consider that this is too simplistic.  Nevertheless, it does appear to us to be significant that the error was made by the pursuer as to its own designation, with an obvious risk of ambiguity or confusion so far as the defenders were concerned.  It is also significant that the case was one where the employer’s rights under the collateral warranty from the architect had been the subject of an assignation by the original beneficiary of the warranty; this meant that there was a real and material risk of ambiguity.  The latter point appears to us to be a clear and important point of distinction from the present case.

 

Amendment and the Identity of a Party

[15]      In applying the principles laid down in Pompa’s Trustees, the critical question is whether on a proper analysis the proposed amendment involves a fundamental change in the pursuer’s case, whether as to the identity of the parties or the ground of action or the general competence of the action.  That analysis must in our opinion address the substance of what is proposed, not its mere form.  This means that the case as originally pled and the amended case that is proposed must each be considered as a whole: the identity of the parties, the remedy sought and the ground of action must be taken together in deciding whether there is a fundamental change.

[16]      The present case involves a change in the description of the defender.  The significance of that change depends on whether that change should properly be categorized as a mere change in the name of the defender who has been sued, or as a change in the identity of that defender.  A change in identity will generally be of a fundamental nature; a change of name, if both names refer to the same legal person, will not be fundamental.  The identity of a legal person is not the same as the name, but is a more fundamental concept.  When an artificial legal person is involved, its identity is obviously an abstraction; the person is something that only exists in the legal system, not in the physical world.  In that situation there is a temptation to equiparate the person with the name.  Nevertheless we consider that to be mistaken.  A legal person, although an abstraction, is more than a mere name.  A legal person is invariably the focus of a range of rights, obligations and other legal relationships, and the existence of those relationships is a critical aspect of the existence of that person in the legal system.

[17]      Such legal relationships can perhaps be categorised as either “vertical” or “horizontal”.  The “vertical” relationships relate to the governance of the person; with a limited company, for example, they would include the existence of the board of directors, the general meeting, and the wide variety of agency relationships that are essential if a limited company is to carry on business.  The “horizontal” relationships are with outside parties, and include those falling under the law of obligations, whether contractual, delictual or restitutionary, and property rights.  They also include statutory responsibilities, which in the case of some legal persons can assume great importance.  All of these relationships may be relevant to the identification of the legal person in question.  Consequently, when a party is sued as a defender, the identification of that party is not confined to the name used, but extends to matters such as the obligations and responsibilities that are said to be incumbent on the party.  These may demonstrate who actually is the person intended to be sued, and may further demonstrate that the name that has been used is wrong.  In such a case, we are of opinion that the action must be taken to be directed against the intended person, with the error confined to the use of the wrong name.

[18]      In this connection, we would make two further observations.  First, in determining who is the person intended to be sued, an objective approach must be taken.  This is in accordance with the general approach to construction used in the law of contract and commercial law generally.  It is also in accordance with the way in which contractual notices are construed: Mannai Investments Co Ltd v Eagle Star Life Assurance Co Ltd, [1997] AC 749, at 767-768 per Lord Steyn, 775 per Lord Hoffmann and 782 per Lord Clyde.  We consider that documents produced in a court process should be interpreted in the same general manner, on an objective basis and according to the understanding that a reasonable man would have.  A subjective approach would be likely to lead to serious uncertainty, and quite possibly unfairness.  Thus in the present case the critical question is how a reasonable litigant or professional adviser, in the position of Scottish Water, Scottish Water Limited and their advisers, would construe the summons: objectively, who would be considered the defender sued?

[19]      Secondly, in determining the identity of a person called as a defender where the correct name has not been used, the critical question is in our opinion whether the person intended has been identified with sufficient clarity, objectively considered.  In determining this issue, evidence of surrounding circumstances may be admitted, in the same way that it is admitted in construing contracts and other legal documents of almost any sort.  In the case of an artificial legal person, that would include evidence of the range of legal relationships described above.  In many cases these will disclose quite adequately the identity of the defender who is truly intended by the pursuer, and in that event that person must be regarded as the defender.  In other cases, by contrast, the evidence may reveal a material ambiguity or uncertainty, and in that event failure to use the correct name may be fatal.  We would emphasize, however, that such an ambiguity or uncertainty must be material; the question in all cases is whether a reasonable person in the position of the purported defender would identify itself as the person who is intended to be the defender.

 

Meaning of the Original Summons and Effect of the Proposed Amendment
[20]      The pursuers seek to amend the name and designation of the first defenders from “Scottish Water Limited”, designed as a company incorporated under the Companies Acts and having their registered office at Castle House in Dunfermline to “Scottish Water”, designed as a body incorporated by statute having a place of business at the same address.  At a linguistic level, the error in the original summons is said to consist of the addition of the word “Limited” to the name and their designation as a company incorporated under the Companies Acts with a specified registered office.  Notwithstanding these features of the summons, the pursuers assert that there was an evident intention to sue the statutory body known as Scottish Water, and that that appears from the substance of the summons.

[21]      In our opinion it is clear from the terms of the summons considered as a whole that the pursuers’ intention was to raise proceedings against Scottish Water, and not against Scottish Water Limited.  The substance of the action relates to a failure to maintain public sewers in the vicinity of the pursuers’ premises at the Crieff Road Pre-School Centre.  The sewers and their location are described, and it is averred that the drains on the pursuer’s premises connected into the smaller of the sewers, that the larger sewer was blocked, and that in consequence the smaller, 525 mm, sewer backed up on a number of occasions between 2008 and 2010, causing severe flooding on 21 July 2010.  It is averred that the flooding was caused by the fault and negligence of the first defenders, who were under a duty to inspect, maintain and repair the sewers in accordance with section 2 of the Sewerage (Scotland) Act 1968.  In particular, it is said that the cause of the flooding was the failure of the first defenders to carry out adequate investigation of the causes of prior incidents of flooding following complaints made by the pursuers.

[22]      In our opinion those averments make it clear that the person sued is the legal entity responsible for the maintenance of public sewers and the fulfilment of duties under section 2 of the Sewerage (Scotland) Act 1968.  That legal entity is Scottish Water, as we have recorded at paragraphs [5] and [6] above.  It is, in particular, the body that is subject to the responsibilities imposed by section 2 of the 1968 Act.  In view of the overall scheme of statutory responsibilities that govern the maintenance of the public sewerage system, it cannot in our opinion be said on any objective basis that the person sued in the original summons is any entity other than Scottish Water.  This conclusion becomes even clearer when the position of Scottish Water Limited is considered.  This company, which is a wholly-owned subsidiary of Scottish Water, has no assets or staff and does not carry on any business.  It has no public responsibilities beyond those involved in running a limited company. In particular, it has no responsibilities under the Sewerage (Scotland) Act 1868 or any other legislation relating to public sewers.  Objectively, it could not sensibly be understood that a company of this nature was responsible for the maintenance of the sewers in the facility of the pursuers’ premises.

[23]      In the foregoing circumstances, we are of opinion that the entity that was intended to be convened as the first defenders is manifestly Scottish Water and not Scottish Water Limited, and that, objectively, that should have been understood by those companies, their officers and advisers.  That means that the proper defender was originally convened, notwithstanding the error in the name used.  Consequently it cannot be argued that the proposed amendment is used to circumvent the prescriptive time bar.  Equally, it cannot be said that the proposed amendment brings about any fundamental change in the nature of the pursuers’ case: that case remains an action against the entity that is responsible for the maintenance of public sewers based on the failure of that entity to perform its public responsibilities properly.

 

Discretion under Rule of Court 24

[24]      When a motion to amend is made under Rule of Court 24, the court has an ultimate discretion as to whether or not to allow the amendment.  That discretion is obviously not unfettered, and the court must observe the principles set out in cases such as Pompa’s Trustees, as well as the principles that apply generally to the exercise of any discretionary judicial power.  One factor that may be of great importance in exercising the discretion under Rule of Court 24 is the existence or absence of prejudice to the other party.  In considering the possibility of prejudice, we are of opinion that, as with the identity of the person intended to be sued (paragraph [18] above), an objective approach must be adopted; the question is whether a reasonable person in the position of the other party would be likely to be prejudiced.

[25]      In the present case we are in agreement with the Lord Ordinary that the court’s discretion should be exercised in favour of allowing the proposed amendment.  The court’s discretion should not usually be used to circumvent a time bar: Pompa’s Trustees, supra, at 125; Sellars v IMI Yorkshire Imperial Ltd, supra, at 635.  In the present case, however, for the reasons already discussed there is no such circumvention.  That by itself is almost decisive in favour of allowing the amendment.  This conclusion might be overcome if prejudice to the first defenders could be shown, but in our opinion it is plain that there is no such prejudice, for a number of reasons.  First, Scottish Water Limited is a wholly-owned subsidiary of Scottish Water, sharing the same address.  In those circumstances it must have been obvious to the officers of Scottish Water Limited and their legal advisers that the party sued was the entity responsible for the maintenance of public sewers, namely Scottish Water, rather than Scottish Water Limited.  On this basis alone we consider that there was no realistic possibility of any prejudice to the defenders.

[26]      Secondly, when the summons initiating the present action was served defences were lodged, and the motion to amend was opposed.  The Lord Ordinary concluded that the defences and the opposition to the motion could only have been instructed by Scottish Water, acting as if they were Scottish Water Limited, because Scottish Water Limited had “no earthly existence beyond Companies House and the formalities maintained at their registered office”; they were a dormant company with a share capital of £3; the Lord Ordinary doubted whether they were insured; and in any event the effect of the amendment was to allow them out of the action.  On that basis the opposition to the motion could only be instructed by Scottish Water, which was the entity that would suffer prejudice through the loss of a possible defence offered by a plea of prescription.  The inevitable inference was that the opposition was presented on behalf of Scottish Water.  We agree with this reasoning, which in our opinion negates any suggestion that Scottish Water has suffered any prejudice through the error in the original summons.

[27]      Thirdly, before the action was raised correspondence passed between the pursuers and solicitors who were understood to represent those responsible for the flooding.  The Lord Ordinary records that he was informed that the drafting error in the present case had been made by an in-house solicitor advocate employed by the pursuers, who had copied the details of the first defenders from pre-litigation correspondence without checking or re‑checking.  The correspondence opened on 4 January 2013 with a letter intimating a claim sent by solicitors acting for the pursuers’ insurers to “Scottish Water, Claims Department, Fairmilehead, 55 Bucktone Terrace, Edinburgh EH10 6XH”.  Reminders were sent on 25 February and 12 June 2013, both addressed to “Scottish Water Limited, Claims Department”, at the same address.  This elicited an email response on 22 July 2013, which was followed with another letter from the pursuers’ solicitors to “Scottish Water Limited” at the same address on 19 August 2013.  The response of 22 July 2013 could only have come from Scottish Water, since Scottish Water Limited had no apparent presence at the address to which the letter had been sent in Edinburgh.  The summons itself, although it named the first defenders as “Scottish Water Limited”, was served on “Scottish Water”, and it reached their solicitors who intimated in a letter of 14 July 2015 that they had been instructed to act for “Scottish Water” to defend the action.  It appears that the individual responsible for writing that letter entered appearance and signed the defences of behalf of Scottish Water Limited. The error in the name was not corrected.

[28]      The foregoing correspondence makes it apparent that the first defenders were aware that proceedings were contemplated against either “Scottish Water” (in the opening letter) or against “Scottish Water Limited” (in later correspondence), and they were aware that the proposed ground of action was failure to maintain a public sewer, but they made no attempt to correct any errors or to identify the party who should properly be sued.  In this connection it is pertinent, as the Lord Ordinary notes, that the first defenders are a utility monopoly with the privilege of statutory incorporation, and it might be thought that they should correct any errors of this nature. In these circumstances any allegation of prejudice through use of the wrong name appears quite unstatable.  Overall, we agree with the Lord Ordinary that it is fair and reasonable and in the interests of justice to allow the amendment.

 

Significance of Link Housing Association Ltd v Gray Aitken Partnership Ltd
[29]      In their submissions the first defenders relied heavily on the decision of the First Division in Link Housing Association Ltd v Gray Aitken Partnership Ltd, supra.  This case was distinguished by the Lord Ordinary on a number of different bases, and we agree with him in this conclusion.  In our opinion the following are material points of distinction.  First, the error in that case was made by the pursuer in relation to its own identity, “Link Housing Association Ltd” as against “Link Group Ltd”.  That is a matter that was obviously within the knowledge of the pursuer, and thus the degree of culpability can be said to be greater.  That is especially so in view of the fact that the difference in the name amounted to more than the mere addition of the word “Limited”.  Secondly, the error in Link appears to us to have involved a significant risk of ambiguity and confusion.  The employer’s rights under the collateral warranty from the architect had been assigned by the original beneficiary of the warranty, GAP Housing Association Ltd, to the original Link Housing Association Ltd, a body constituted under the Industrial and Provident Societies Act 1965.  That body changed its name to Link Group Ltd, and another company by the name of Link Housing Association Ltd was incorporated six months thereafter.  In view of the original assignation of the warranty and the possibility of further assignations, the risk of confusion appears to us to have been significant.  We regard this as an important point of distinction; no such risk of confusion arose in the present case.

[30]      Thirdly, the court in Link does not appear to have considered the criteria for the identity of a legal person in any detail.  It is possible that the name by itself was taken as determinative of identity.  Nevertheless, for reasons that we have already discussed, we consider that the question of identity should be approached on a wider basis.  Even if that is done, however, in Link the original contract, the collateral warranty, was granted in favour of one entity, GAP Housing Association Ltd, and was then transferred to another, ultimately known as Link Group Ltd.  Thus there was nothing in the grounds of action to identify one particular person rather than another as the true pursuer.  In this way the most critical features of the present case, that it relates to the maintenance of a public sewer and that Scottish Water is the statutory body responsible for such maintenance, had no parallel.  This we regard as a further important point of distinction.

[31]      In Link Group Ltd detailed consideration was given to the question of whether the error in the name of the pursuers could be categorized as a clerical error.  It was held that this was impossible, as it was not suggested that the name of the pursuers had been mistranscribed.  The Lord Ordinary held that the conception of a clerical error had subsequently expanded beyond that; he referred in particular to the relatively recent decision of the United Kingdom Supreme Court in Marley v Rawlings, [2014] UK SC 2; [2015] AC 129, at paragraphs [74]-[82] per Lord Neuberger and paragraph [92] per Lord Hodge.  The wider conception of a clerical error was a mistake “arising out of office work of a relatively routine nature”: ibid.  We agree that Marley marks an important extension in the concept of clerical error.  We further agree with the Lord Ordinary that this extension is better suited to the reality of working in modern conditions, where the use of computers and electronic forms of communication permit the easy copying and pasting of material, and increase the range of situations in which an error in routine work may occur.  The Lord Ordinary stated that he had been informed that the drafting error in the present case was made by a solicitor advocate, who had copied the details of the first defenders from pre-litigation correspondence without checking or rechecking.  The original error was, of course, made in the pre-litigation correspondence, and it might be that the error at that stage was the result of a deliberate choice rather than a mere error in office work of a relatively routine nature.  For this reason we are doubtful whether the error in the present case was ultimately a clerical error.  Nevertheless, it is not necessary to decide this question.  We are satisfied for the reasons already given that Link Housing Association Ltd v Gray Aitken Partnership Ltd can readily be distinguished.

 

Conclusion

[32]      For the foregoing reasons we are of opinion that the Lord Ordinary was correct to allow the amendment.  We will accordingly refuse the reclaiming motion and affirm his interlocutor.