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Ian Hamilton QC v The Royal Bank of Scotland Group PLC - Oban Sheriff Court, 26 February 2009


The Pursuer raised a small claim action against the Defenders based on the Defenders' alleged negligence. The Pursuer claimed payment of a sum he had invested in shares in the Defenders following a rights issue. The Defenders lodged an incidental application for a direction to have the action treated as an ordinary cause under sections 37(2)(b) and 37(2B) of the Sheriff Courts (Sc) Act 1971. In terms of section 37(2B), the Sheriff had to decide whether the case involved difficult questions of law or questions of fact of exceptional complexity. If it did, the Sheriff then had discretion to decide whether the case should be remitted. The Sheriff referred to this as a two stage process. In contrast, section 37(2)(b) involved a one stage process - if it was decided that the case involved difficult questions of law or a question of fact of exceptional complexity, the case had to be remitted and the Sheriff had no discretion to decide not to do so (Mullan v Anderson 1993 SLT 835). In this case the Sheriff decided that the allegations of negligence involved a number of questions of law, including legal issues about company insolvency, the duties owed to the Pursuer and how the Defenders were alleged to have breached those duties. He was also of the view that factual issues, such as the accounts of the Defenders at various times, the Defenders' insolvency and the advice given to the Defenders by auditors and others, involved questions of fact of exceptional complexity. In deciding how to exercise his discretion, the Sheriff considered the different characteristics of small claims and ordinary cause procedure. He considered that full written pleadings were necessary in this case and the small claims procedure made no provision for these beyond the statement of claim. It was not possible to have a debate on the legal issues in a small claim at a separate hearing before the proof. The sheriff considered the issue of expense and had to determine whether the legal difficulty or factual complexity of the case merited the additional expense of the ordinary cause procedure. In this case he thought that it did. The small claims procedure was intended to deal with claims of low value that did not involve difficult legal issues or complex facts. It was never intended to deal with a case like this. In terms of section 37(2)(b), the Sheriff had to consider the importance of the case, both to the parties and generally, and he thought that this case was of considerable importance to the public. The Sheriff granted the Defenders' incidental application.