When you install the heating, the adhesive fails. As a result the main contractor sues you for breach of contract.The writ looms large and lands squarely on your desk. Your initial reaction is that the failure was because of another party (presumably the other subcontractor). You also have a concern about the figures being levied against you. You have never been involved in litigation before and ask an engineer employed by you to contact a trade association for advice. Your employee took advice from a solicitor employed with the association and concluded that (a) it was appropriate to defend the action (b) that it was not necessary to instruct solicitors yet.
A Notice of Intention to Defend ("NID") was duly lodged with the appropriate fee and draft defences prepared by the English solicitor advising, albeit not in the correct form. Your employee's understanding, based on advice received, was that the court would send out a formal document detailing what needed to be done next.
The NID was lodged and the sheriff clerk duly issued a timetable calling for defences by 31 December, adjustment until 14 February and fixing an options hearing on 28 February. The "defences", such as they were, were lodged on 20 December. These were not in the correct form and the contractor's solicitor was therefore not able to produce the required Record but wished to address the sheriff at the Options Hearing.
The hearing took place on 28 February. You were not present nor represented and the contractor's agent asked the court to grant decree by default. You had failed to lodge defences in the correct form and failed to appear at the hearing. The decree was extracted on 21 March and a charge served on 7 April. You raised proceedings to have the charge suspended and the decree reduced although unfortunately you were unsuccessful at either. This is what happened in Anderson Floor Warming Limited v Antrim Electrical & Mechanical Engineers Limited  CSOH 164.
This is a salutary tale of the importance of instructing solicitors at the earliest opportunity when litigation presents itself. On the face of it, the subcontractor may have had a defence to the action. However, because of a failure to understand the court procedures decree has been granted against the company. Despite the surrounding facts and circumstances the decree remains in place and the subcontractor failed in an action for reduction. The charge having expired, it would now be open to the contractor to serve winding up proceedings.
The court in this case re-stated the legal position that, in order to have a decree reduced exceptional circumstances need to exist. It was felt, in this case, that nothing "exceptional" could be demonstrated. What this means for the subcontractor is that it is not entitled to be heard on any possible defence to the action. He faces making payment of the principal sum, together with interest and expenses. The existence of the decree is likely to negatively impact on its credit rating. As the matter has already been decided by the court, any right of relief, against the main contractor or indeed the third party, is likely to be severely constructed.
If you find yourself faced with litigation we recommend you instruct solicitors at your earliest opportunity so as not to fall foul of the procedural aspects of the litigation process. Often seen as an emergency purchase, in the long run it could be the best purchase you make for the future of your business.