Sheriff Appeal Court sets out test for remit to Court of Session after refusing motion

The question to be resolved in the appeal was the proper definition of alienation, and whether the grant of a personal guarantee was an alienation, which was said to be a “point of general importance” that would also apply to guarantees in personal bankruptcy.

However, the appeal sheriffs rejected the argument that the case raised a “complex or novel point of law”.

For the appellant, First Time Limited, it was submitted that the underlying intention of section 112 of the Courts Reform (Scotland) Act 2014 was to accelerate the opportunity for the Court of Session to issue a “binding judgment” where the appeal raised a “sharp legal point of considerable practical importance”.

Sheriff Principal Duncan Murray, sitting with Sheriff Principal Derek Pyle and Sheriff Paul Arthurson QC, heard that if the appellant’s argument prevailed, it would be a “knock out point” and would conclude the litigation, resulting in an “expeditious and cost effective disposal” without the need for proof.

It was argued that the 2002 decision in Jackson v Royal Bank of Scotland did not resolve the question raised in this case, meaning the appeal did raise a complex or novel point of law, and therefore the first part of the statutory test was satisfied.

Having regard to the prospective efficient disposal of the case, were it to be remitted and the appeal upheld, which would be an end of the matter, it was reasonable in the circumstances for the court to exercise its discretion and remit the appeal.

Opposing the motion, the respondent Alexander Fraser, the liquidator of Denmore Investments Limited, submitted that the point at issue was “not particularly complex or novel.”

It was argued that the case had a similar factual matrix to Jackson v Royal Bank of Scotland, in which an interim liquidator had sought reduction of a guarantee as a gratuitous alienation under section 242 of the Insolvency Act 1986.

Lord Drummond Young sitting in the Outer House had found that s.242 could apply to an alienation which became completely effectual after the commencement of the winding up – a view accepted by the sheriff as supporting his conclusion in this case.

Delivering the opinion of the court, Sheriff Principal Murray said: “The motion was refused. The court was not satisfied that the case raises a novel or complex point of law which satisfies the statutory test to warrant a remit to the Court of Session.

“For such to be the case this court requires to find that the case raises a point of wider interest which will have general application. We preferred the submission of the respondent to the effect that the case should not be viewed as having the prospect of establishing an important precedent.

“Useful factors for assessing the complexity or novelty of a point such as to warrant a remit include whether it may be said that there is a real likelihood that the issue may attract the attention of the Supreme Court at some later stage, or it may be said to give rise to a novel or complex point of law worthy of remit where there are conflicting Outer House decisions and an authorative Inner House decision would clarify the law.”

The court did however accept there to be some force in the generality of the appellant’s submission on the import of section 113 of the 2014 Act.

Sheriff Principal Murray added: “We agree that the effect of this section is to exclude consideration of a case by the Court of Session after a decision of the Sheriff Appeal Court but before final judgment. Thus a decision at debate which raises a crisp point of law which is novel or complex may well be viewed as suitable for remit.”

The appeal sheriffs also made some observations on the timing of a motion to remit.

The court stated: “An appellant has, absent there being specific statutory provision on the time for appeal, in terms of rule 6(3)(1) of the Sheriff Appeal Court Rules 2015, 28 days from the date of a decision to lodge an appeal.

“An appellant may make a motion for remit at the point of lodging the appeal. It is desirable that such a motion should be made as soon as possible.

“After the appeal is lodged a procedural appeal sheriff will then make a provisional order in terms of rule 6(7). Parties then have 14 days to make representations.

“To allow expeditious progress of the appeal if a case is to be remitted, we consider that it will be good practice for any motion for remit to be made before the end of those 14 days.”