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CHAPTER FIVE Defended Actions under Commercial and Ordinary Procedure

A. Introduction

5.1 This chapter looks at the progress and outcomes of a sample of defended ¹⁶ actions raised under commercial procedure and compares it with a sample of defended actions that could have qualified for commercial procedure, but were raised under ordinary procedure. In particular, it looks at the number of diets fixed and cancelled in relation to these actions, and the progress and disposal of these two samples of actions through the courts. Because actions in which defences are lodged are of greater significance for the courts and for the evaluation of commercial procedure, the analysis is mainly restricted to a comparison commercial and ordinary actions in which defences were lodged following notification of intention to defend.

5.2 The evaluation of commercial procedure in Glasgow Sheriff Court required that actions proceeding through the Commercial Court be compared with similar types of actions proceeding in the Ordinary Court. The information provided by CMS (Court Management System) was not sufficiently accurate or comprehensive to provide the information required to undertake the evaluation. It was therefore necessary to take information directly from court processes and to rely on Sheriff Court staff to identify the sample of ordinary actions.

5.3 A sample of defended actions raised under commercial procedure was taken by selecting all actions raised in an 8-month period: between 1 August and 30 November 2001 and between 1 May and 31 August 2002. All actions raised during these specified time periods were selected for the sample, whether or not they were concluded. Altogether, the processes of 109 commercial actions with notices of intention to defend were inspected. The same number (109) of processes of defended actions raised under ordinary procedure between August 2001 and September 2002 was also inspected. This sample was drawn by Sheriff Court staff from ordinary actions and represented 'commercial type' actions proceeding through Glasgow Sheriff Court under Ordinary Cause rules. The methodology was employed with a view to isolating the impact of commercial and Ordinary Cause procedure on similar cases passing through Glasgow Sheriff Court. However, since the sample of ordinary actions was selected from actions raised between August 2001 and September 2002 but disposed ¹⁷ by December 2003, it is most likely to be biased towards shorter, and procedurally less complex, commercial-type actions raised under ordinary procedure. The sample of commercial actions, on the other hand, represented all actions raised during a certain time period. In comparing these two samples, therefore, any differences that may be found between the two samples of ordinary and commercial actions is likely to underestimate any differences that may obtain between representative samples of these two classes of actions.

5.4 The main aim of the exercise was to compare the impact on cases, and consequently on the Sheriff Court, of actions proceeding under ordinary and commercial procedure. Cases were examined and compared along the following dimensions:

• The types of cases and whether defences were lodged
• The number of diets fixed, heard and discharged
• Types of disposal
• The length of actions from NID to disposal

This research exercise does not purport to provide conclusive results ¹⁸. To do so would have required a prospective design with large samples of commercial type actions randomly allocated to ordinary and commercial procedure. The research exercise was undertaken to lend quantitative support for the qualitative findings that constitute a major part of the study, and its findings should be read in this light. Given the different methods by which the two samples were selected (see 5.3 above) and the likely bias towards simplicity and brevity in the sample of ordinary actions, the findings that this comparison throws up are likely to represent conservative estimates of any real differences between similar actions proceeding through the Sheriff Court under these different procedures.

B. The Two Samples: Case Characteristics

5.5 The case characteristics of the two samples of defended ordinary and commercial actions differed along several dimensions.

Defences lodged

5.6 Defences were more likely to be lodged amongst the actions raised under commercial procedure (73%) than 'commercial type' actions raised under ordinary procedure (63%).

Types of cases

5.7 The commercial procedure sample mainly comprised debt cases (78%), though this was even higher for actions raised under ordinary procedure (84%).

Table 5.7 Case types

Value of craves

5.8 Monetary craves were identified in 89 commercial actions ¹⁹ and 92 ordinary actions, as follows:

Table 5.8 Value of actions

The value of actions raised under commercial procedure was considerably higher, with 19% of actions craving over £50k compared with only 2% of ordinary actions. At the same time, only 14% of defended commercial actions in the sample craved £5k or under, compared with 44% of the sample of commercial type actions raised under ordinary procedure. These differences are consistent with the findings reported in Chapter 4, in which the value of actions nominated by solicitors for commercial procedure was higher than the value of ordinary actions identified by the Sheriff Clerk's Office for commercial procedure in the months preceding the introduction of the Commercial Court.

Firms raising actions

5.9 The sample of actions raised under commercial procedure was concentrated in the hands of fewer firms than the sample of commercial-type actions raised under ordinary procedure. In the commercial sample, ten firms accounted for 60% of the actions raised, while ten firms accounted for only 30% of actions in the ordinary sample. This is consistent with the large CMS derived sample of commercial actions reported on in Chapter 4 (4.4), in which six firms were found to have raised 60% of all commercial actions between 1 March 2001 and 28 November 2002 ²⁰. Firms raising the most actions in both samples were identified and also found to be consistent with the findings of the large CMS derived sample.

C. Findings: A Comparison of Ordinary and Commercial Actions

Comparing samples

5.10 The impact of commercial procedure on the throughput of actions in the Sheriff Court might have been most clearly isolated had the two samples been similar in every respect other than the procedure under which they were raised. The two samples selected were found to differ along several dimensions: the value of actions raised under commercial procedure was higher; the actions raised under commercial procedure were concentrated in the hands of fewer firms; and the case profile of commercial actions differed, though not substantially. These differences, however, also reflected actual differences between commercial-type actions proceeding under commercial and those raised under ordinary procedure.

A decision was taken to compare the two samples by examining only those actions in which defences were lodged (69 ordinary actions and 79 commercial actions). These actions were singled out for comparison because commercial procedure impacts on actions and on shrieval involvement only once defences are lodged. Because the sample of ordinary actions represents actions already disposed of by the Sheriff Court (see 5.3), the findings are likely to underestimate real differences between a representative sample of commercial and ordinary actions.

i. Diets fixed

Debates

5.11 The two samples were inspected for the number of debate diets fixed.

Table 5.11 Debates fixed in actions with defences lodged

Amongst actions in which defences had been lodged, diets for debate were fixed in only 11% of commercial actions, compared with 23% of ordinary actions.

In some actions, more than one diet of debate was fixed. Altogether 20 debate diets were fixed in 69 ordinary actions compared with 11 diets in 79 commercial actions. Calculated as a ratio of diets fixed to actions with defences lodged, 29 diets of debate were fixed for every 100 ordinary actions compared with 14 diets for every 100 commercial actions, a ratio of 29:100 compared with 14:100. Thus, amongst actions with defences lodged, ordinary procedure generated twice as many diets of debate as commercial procedure.

This is likely to underestimate real differences between commercial and ordinary actions in the likelihood of debates fixed.

Proofs and proofs before answer

5.12 The samples were also inspected for diets of proof, and proof before answer.

Table 5.12 Proof and pba hearings fixed in actions with defences lodged

There was little difference between the ordinary and commercial samples in the likelihood of proof and proof before answer diets being fixed. Diets for proof and proof before answer were fixed in 72% of ordinary actions compared with 68 % of commercial actions in which defences were lodged.

In some actions, more than one diet was fixed. 26 proof or proof before answer hearings were fixed in 69 ordinary actions compared with 28 amongst 79 commercial actions. Calculated as a ratio, there appears to be little difference between ordinary and commercial actions as to the number of proof and proof before answer diets generated by actions with defences lodged ( 38:100 for ordinary actions with defences lodged, compared with 35:100 for commercial actions).

These findings were expected since, when early settlement is not achieved, commercial procedure seeks to fix a diet for proof or proof before answer at the earliest opportunity.

ii. Diets heard and cancelled

Debates

5.13 Though debates were less likely to be fixed amongst actions raised under commercial procedure, those fixed were more likely to be heard. Only 1 of 20 debates fixed under ordinary procedure was heard (5%), compared with 3 of 11 debates fixed under commercial procedure (27%). When debates were not heard, they were less likely to be cancelled on the day amongst commercial than ordinary actions ( 27% of debates fixed under commercial procedure were cancelled on the day, compared with 60% of all debates fixed under ordinary procedure).

Table 5.13 Debates heard and cancelled

The impact of commercial procedure on the Sheriff Court is even clearer if the ratio of diets cancelled on the day to the proportion of all actions raised is calculated. Amongst actions with defences , 12 hearings were cancelled on the day the diet was called in the ordinary sample, compared with 3 hearings in the Commercial Cause sample. Calculated as a ratio of diets cancelled on the day to actions with defences lodged, 17 diets were cancelled on the day for every 100 ordinary actions with defences lodged compared with 4 diets cancelled on the day for every 100 commercial actions with defences lodged, a ratio of 17:100 compared with 4:100. Thus, amongst actions with defences lodged in these two samples, ordinary procedure generated four times as many debates cancelled on the day as commercial procedure.

Proofs and proofs before answer

5.14 As we have seen above (5.12), proof and proof before answer diets were as likely to be fixed amongst actions raised under commercial as ordinary procedure. However, where diets were fixed, they were more likely to be heard among actions raised under commercial procedure (14% of all proof and proof before answer diets fixed were heard compared with 4% among ordinary actions). Also, diets that were not heard were less likely to be cancelled on the day among actions raised under commercial procedure (36% compared with 65% amongst ordinary actions).

Table 5.14 Proof and pba diets heard and cancelled

Among those actions in which defences were lodged , 17 hearings were cancelled on the day that the diet was calling in the Ordinary Cause sample compared with 10 diets in the Commercial Cause sample. Calculated as a ratio of diets cancelled on the day to actions with defences lodged, 25 proof and pba hearings were cancelled on the day for every 100 ordinary actions with defences lodged, and 13 diets were cancelled on the day for every 100 commercial actions with defences lodged, a ratio of 25:100 compared with 13:100. Thus, amongst actions with defences lodged in these two samples, ordinary procedure was likely to generate twice as many proof and proof before answer diet cancellations on the day as commercial procedure. Like debates cancelled on the day (see 5.13), the implications of these findings for Sheriff Court efficiency are clear.

These findings concur with impressions formed by the dedicated clerk to the Commercial Court. She was of the belief that once fixed, commercial proofs were more likely to be heard than Ordinary Cause proofs, and those that did "go off", were more likely to "go off" earlier than ordinary proofs.

iii. Disposals

5.15The two samples were inspected for disposals (see Footnote 17). This revealed some interesting differences in the style or 'culture' of commercial and ordinary procedure.

Table 5.15 Types of disposals

Commercial cases proceeded more informally than ordinary actions: commercial actions were more likely to be disposed of by informal motion, 'lodged' either in communication by e-mail or by telephone, or by 'no further orders' from the bench.

iv. Length of actions

5.16 Processes were inspected to compare the length of time taken for commercial and ordinary actions to proceed through the Sheriff Court. This was measured from the date on which a Notice of Intention to Defend was lodged to the date of disposal. In commercial actions, 'no further orders' were treated as disposals, and marked as disposed as of the final case management conference.

Analysis was restricted to those actions in which defences were lodged since they are most indicative of the differential impact of procedure. Sists, transfers and "Don't Knows" were not included. Altogether, cases were disposed in 65 commercial actions with defences lodged, compared with 47 ordinary actions.

Table 5.16 From NID to disposal amongst actions with defences lodged

Because of sampling bias, the findings are likely to underestimate the time taken for ordinary actions to be disposed of by the Court (see 5.3). Even so, a comparison between the two samples shows that ordinary actions took longer to proceed through the court than commercial actions. Amongst actions with defences lodged, only 16% of commercial actions took more than 39 weeks (9 months) from NID to disposal, compared with 30% of ordinary actions . Had the ordinary sample been randomly drawn and not selected from concluded cases, then the differences between the two samples are likely to have been greater.

5.17 The value of craves was found to make an impact on case duration. While 60% of disposed commercial actions were concluded within 26 weeks from notification of intention to defend, 90% of actions with a crave of up to £3k and 80% with a crave of over £3k and up to £5k were concluded within the same time period. As we have seen (5.8 above), the value of actions proceeding under commercial procedure was higher - only 24% of commercial actions had craves of £5k or under, compared with 44% in the sample of ordinary actions. Had the commercial sample comprised a similar proportion of low value craves of £5k, its overall speed of throughput is likely to have been considerably higher. The sample is too small, however, to estimate by how much. What we can say with certainty, however, is that despite the higher value of the commercial sample, commercial actions were more likely to conclude within 39 weeks. Amongst disposed actions with defences lodged, only 16% of commercial actions took more than 39 weeks from notification of intention to defend to disposal, compared with 30% of ordinary actions. ²¹

5.18 Research undertaken to monitor the implementation of the new rules for ordinary procedure ( OCR 93) between 1995 and 1996 ²² reported on the length of proceedings for different actions raised under ordinary procedure. Defended (with NID) debt actions were found to take, on average, 34 weeks from writ to conclusion. The commercial sample was compared with the length of debt actions raised under ordinary procedure in this earlier study. To ensure comparability with the earlier study, all defended commercial actions were included for comparison, whether or not defences were lodged.

Table 5.18 From registration to disposal amongst defended commercial and ordinary actions

Defended commercial actions took 8 weeks less, on average, from registration to disposal than ordinary defended debt actions. This finding is more convincing than it may at first appear. Defences were lodged in 77% of the sample of commercial actions. The mean average length of commercial actions with defences lodged was 28 weeks, compared with 19 weeks where they were defended but no defences lodged. The sample of ordinary actions in the previous study is likely to have contained a lower proportion of actions with defences lodged than the sample of commercial actions in this study, (see 5.6). If it were possible to compare only actions in which defences were lodged, we would expect to see a substantially higher mean length amongst ordinary actions than actions raised under commercial procedure. Secondly, since only 75% of the sample of the ordinary actions had been disposed by the conclusion of the study in 1996, the average mean length of ordinary actions was certain to increase, as more actions were disposed.

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