Remember One Stop v Tixway UK Ltd – Mr Whyte Has Appealed against the Judgement!

We have seen the release by Duff & Phelps of their comprehensive report regarding Rangers. I suspect that the detail therein is far more than many expected, even if it raises a great deal of questions about the previous involvement of MCR with Rangers/Mr Whyte/Liberty Capital etc.

It also details, in stark terms, the effects on businesses, many being small traders, of Rangers’ financial mismanagement. Whilst the big creditors, like Ticketus and HMRC get the most publicity, there are many smaller creditors to whom the unpaid sums, and the prospect of a “pennies in the pound” CVA will cause problems.

For example, the Copland Road newsagent owed over £500 won’t, one hopes, go bust for that, but that is a decent chunk of income lost.

Many of these creditors will have been dealing with Rangers in good faith, and taking the general information from the media, would have had few concerns. And anyway, they might have thought, it is Rangers we are dealing with here!

All of which brings us back to Mr Whyte and Tixway UK Ltd.

I have written about this case before here and here.

£89,127.18 is the sum owed to One Stop. That, for any business, is a lot of money, especially as this has been due since 2008. It is the sort of debt which can affect the stability of a business, and the jobs of those employed there.

You may recall that Mr Whyte’s evidence was shredded by Mr Clark QC for One Stop, and Sheriff Ross found against the company owned by the “wholly unreliable” witness, Mr Whyte.

The decision seemed clear-cut. The preliminary legal argument which clearly was Tixway’s “trump card” was dismissed out of hand, and Mr Whyte’s evidence was roundly criticised by the Sheriff.

It was therefore astonishing to find out that Tixway UK Ltd has appealed against the decision.

It is almost impossible to appeal on the basis that the Sheriff believed the wrong witnesses. To do that one needs to persuade the Sheriff Principal or Inner House that the Sheriff who saw the witnesses made a decision on credibility and reliability which no reasonable Sheriff could have reached. If there is any criticism of Sheriff Ross’ assessment of Mr Whyte, it is in fact that he seemed to let him off lightly!

On the other hand, Sheriffs are careful in how they word their decisions. Whilst the language used by the Sheriff was restrained, I have rarely seen such a damning description of a party to a case.

There are therefore no grounds for appealing on the basis that the Sheriff should have believed Mr Whyte.

There was comparatively little law in this case, but it can only be a legal point on which the appeal is being pursued.

Sheriff Ross addressed the legalities as follows, at paragraphs 1-01 to 104 of his decision:-

101 On behalf of the defender, it was submitted that it was critical to bear in mind the distinction between these two companies. The former had been set up by Mr Keatings and Mr Snowball, and traded until about May 2008. The latter was a new company of similar name, with which the pursuer started trading in succession to the old company. The agent for the defender referred to the pursuer’s pleadings, which referred only to “Snowcast Limited”, and to her own line of questioning, in which she maintained she had been careful to ask questions only in relation to “Snowcast Limited”. She invited me to draw this distinction between the two, and to conclude that the pursuer’s case had not been made out, because all supplies post-April 2008 were made to Snowcast UK Limited, not Snowcast Limited, and accordingly there could be no debt due in respect of the former.

102 The defender’s agent is correct that the debt averred in the Initial Writ is that of “Snowcast Limited”. That is the limit of my agreement with her submission, however, and I reject this approach as misconceived. The function of pleadings is to give fair notice of the case to be made. Once evidence is led, however, that evidence is available for the court to consider. Only by objecting to evidence which does not correspond with the case on record, can the other party prevent it being available. There was no objection to the evidence led about Snowcast UK Limited, and indeed none of the witnesses regarded the distinction as significant (save for the focused point about a “clean” company). While the questioning for the defender may indeed have paid punctilious attention to the distinction (although it was not obvious at the time that any distinction was being drawn), it is not the questions that matter, but the answers. The witnesses plainly did not take the same careful approach, and it is their evidence which forms the basis of judgement.

103 What became clear from the evidence of every single witness was that nobody, in fact, made such a distinction. The two companies were referred to by each and every witness as “Snowcast”. That was because the distinction was not a real one in any witness’s mind. The same business, with the same principals, with the same supplier and customers, operated after April 2008 as had prior to April 2008. There was absolutely no evidence that any party knew or cared that a new company had been formed. The only reason for a new company was to make sure there was a clean vehicle to which the defender might give financial support. Accordingly, on no fair view could it be said that the pursuer intended to supply the old company, or that the supplies were being ordered by the old company, or that the defender was being asked to invest in the old company. All were agreed that the business was “Snowcast”, and all were intent on promoting that business. No lawyer was involved. Consequently, while the pursuer’s averments indeed refer to “Snowcast Limited” operating post-April 2008, the evidence shows that averment to be in error, and the evidence also shows that the same business was in fact operated by “Snowcast UK Limited”. I have no difficulty with that evidence, and nor did any of the witnesses. A court must reach its opinion on the evidence, not the pleadings, which have limited relevance once the evidence is led, except as a guide to whether evidence is admissible.

104 I would say that, even had this distinction been founded upon in objecting to evidence, it is likely that I would have allowed the pursuer to amend the reference in the pleadings to become “Snowcast UK Limited”, and allowed the defender time to respond. It is difficult to see how the defender’s case could have changed, in consequence. It is no more than an error in the pleadings in relation to distinction which (as the evidence shows) had no practical relevance to any of the witnesses, or the underlying contract, or the supply of goods, or the payment obligation of the defender. Even hypothetically, therefore, this formal point has no substantive merit.

What does that all mean?

The Scottish civil court system is founded on “written pleadings”. Your case needs to be spelt out so that the other party knows what you are seeking to prove. The type of last minute surprise witnesses, so beloved of TV programmes like Petrocelli (did he ever finish that house by the way), would not be allowed in Scotland (and I know Petrocelli was a criminal lawyer).

It looked at the time, and the marking of an appeal confirms, that the defences of this case was not really based upon the factual position, although that was the “fall back” but on the legal “knock out punch” which the defence submissions mentioned above refer to.

The thought process of the lawyer for Tixway seems to me to have been as follows (and I apologise to her if I misinterpret her position):-

A             The claim is based on Tixway guaranteeing the bills incurred by Snowcast Ltd.

B             But most, if not all, of the supplies came after Snowcast UK Ltd was established as a separate company.

C             These supplies were therefore to the order of Snowcast UK Ltd, not Snowcast Ltd.

D             The guarantee given is only alleged to have been in respect of Snowcast Ltd.

E              Therefore any guarantee for Snowcast UK Ltd is irrelevant to the case against my client because that only mentions Snowcast Ltd.

F              If I keep quiet and only ever refer to Snowcast Ltd, then I will not tip off the Pursuer to their mistake, and with one bound my client is free.

There seems though to have been a fatal flaw in the plan.

There is a rule in the Scottish court system that if irrelevant evidence is brought out, or evidence for which there is no basis in the written pleadings, it is necessary to object to it. The Sheriff would then hear legal argument about the nature of the objection. This would, as the Sheriff pointed out, have given the Pursuer the chance, even if the objection had been upheld, to amend the written case to add in the reference to Snowcast UK Ltd.

Instead the tactics of the defender in sitting quiet about these matters till the end of the case clearly backfired as, by that stage, the Sheriff had heard all the witnesses refer to each Snowcast interchangeably. There was the discussion about setting up a “clean company”. There was no doubt in anyone’s mind that in practical terms there was no difference between Snowcast Ltd and Snowcast UK Ltd. Indeed I suspect that witnesses would have referred to “Snowcast” as meaning both companies.

Ironically, this point might have worked if there had been an objection the first time that Snowcast UK Ltd had been mentioned in evidence. At that stage the Sheriff would not have heard the evidence referred to above. The Sheriff might have decided that, when witnesses were in the box, it was too late to change the written pleadings to reflect the difference and similarity of the two companies.

In all likelihood the Sheriff would have allowed the evidence anyway under reservation. This means that he would have heard it, and at the end of the case decided if it was legally relevant. I suspect that, going on the evidence he heard, he would have allowed it in any event.

However, what is clear is that the lawyers for Tixway UK Ltd have marked an appeal. Until that is dealt with, One Stop will not get their money. Even once there is a decision in the appeal, and from what I have read in the decision I cannot see how it has any prospects of success, One Stop still has to enforce payment from Tixway UK Ltd.

From being lauded as a “billionaire” with untold wealth “off the radar” when he first came to public notice in November 2010, it is a come down here for his company to be scrabbling about with appeal to avoid payment for goods which were delivered and for which Mr Whyte had offered his company as guarantor.

His company is entitled to appeal, as long as the lawyer sees any merit in the appeal. It may be that Tixway’s agent has been able to detect a scintilla of a case, and I do not criticise the lawyers for acting for their client.

However, it is symptomatic of how Rangers under Mr Whyte operated, namely that bills were put off and not paid for as long as was legally possible.

I hope One Stop gets what is legally due to them. I hope that the non-payment of this bill has not harmed the company or its owners and employees too much.

If people had paid attention to the publicity this case was given when it was raised, and before Mr Whyte concluded his takeover, then it might have saved Rangers some of the embarrassment it has endured over recent months. Instead the pursuers were rubbished as publicity seekers, looking to make money by threatening bad press for Mr Whyte, the esteemed owner of Rangers.

It is therefore perhaps ironic that, amongst the list of creditors of Rangers is Media House, Jack Irvine’s PR company, for a sum just under £20,000. Jack, despite his boast, does not always get paid.

Finally, the directors of One Stop deserve huge credit for their persistence in going ahead despite the undoubted concerns the case would have brought them. Having Mr Whyte in the witness box exposed his “unreliability” to public and undisputable gaze.

One hopes that One Stop do get their money, and very soon.

 

Posted by Paul McConville

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4 Comments

Filed under Civil Law, Craig Whyte's Companies, One Stop Roofing Supplies Ltd v Tixway UK Ltd

4 responses to “Remember One Stop v Tixway UK Ltd – Mr Whyte Has Appealed against the Judgement!

  1. Red Etin

    Paul,
    Petrocelli always presented his cases by demonstrating with “flashbacks” how the real situation differed from what had seemed obvious to everyone else. I see very fertile minds in action in this case, figuring out alternatives to occupy legal and financial minds. One wonders how, on a day to day basis, CW is managing to keep all these balls in the air.
    Regards,
    James

  2. renfrewdave

    as someone who has used one stop from time to time over the last 4 years i have found them good to deal with, products delivered when promised and the guys behind the counter with good trade knowledge and helpfull. i can only hope they get their money.

  3. ifa007

    Craig Whyte Exclusive Interview
    Here is the transcript of Jim Delahunt’s exclusive interview with Craig Whyte on Friday, April 6.

    http://www.clyde1.com/news/local/jim-interview-craig-whyte/#.T37-ZoostWs.twitter

  4. Pingback: Craig Whyte and His Court Actions – A Quick Update, including Andrew Ellis v Whyte? | Random Thoughts Re Scots Law by Paul McConville

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