In the recent Scottish case of A & B Taxis v The Cooperative Insurance 2017 SC PER 10, the court refused the defender's application seeking to recall a decree in absence, highlighting the importance of a comprehensive system to deal with litigated cases within court deadlines.
Background facts and circumstances
Proceedings were served upon the defender by RD Post on 8 October 2016. The defender failed to lodge a Notice of Intention to Defend within the 21 day notice period, resulting in decree passing on 4 November 2016.
Although there was contact between the pursuer's agents and the defender's English agents, Scottish agents were not appointed until 21 December 2016 and a Reponing Note seeking to recall the decree was not intimated until 10 January 2017. In the interim, a charge for payment had been served by Sheriff Officers directly upon the defender and arrestment had been posted.
Ordinary Cause Rule 8.1 allows a defender to apply for recall of a decree in absence, by setting out the proposed defence to the action and explaining his failure to enter appearance. The Sheriff must consider and take into account all the circumstances and balance one consideration against another when deciding whether or not to grant the Reponing Note.
The court usually adopts a benevolent attitude to explanations but it will not…”accept an explanation which demonstrates that the failure was due to a reckless indifference to, or deliberate disregard of, the rules of procedure.”
The Court’s Decision
The Initial Writ was served directly upon the defender at their place of business. The defender provided no details of their system for receipt of mail and when the charge for payment was served upon them, rather than take urgent action, took another month to instruct a Scottish solicitor to act on their behalf.
The court decided that the defender did not have a proper system for dealing with litigation or the diligence which might flow from that. They offered no explanation for systemic failures, no explanation for their delay in instructing Scottish solicitors and the detail within the proposed defence was insufficient.
The court was persuaded by the views of Sheriff Principal Stephens in a similar case, Bialas – Krug v EUI Ltd 2014 SC EDIN 38, in which the court refused a Reponing Note on the basis that a “major motor insurer (having) no system at all to deal with and ensure important procedural time limits are met...” was tantamount to reckless indifference to the litigation process.
These cases are a warning, in particular to insurers dealing with high volumes of correspondence, that a considered and reliable system for identifying and dealing timeously with litigation is critical. Defenders must react quickly and appropriately to deal with litigation or risk the wrath of the court for their “reckless indifference.”