The Sheriff Appeal Court has recently provided important clarification on the scope of lay representation available to companies under section 97 of the Courts Reform (Scotland) Act 2014 (the “2014 Act”). In Hastings v Day 41 Ltd [2025] SAC (Civ) 26, [link to decision here] the Court refused to permit the sole director of the defender company to appear as its representative, finding that the statutory tests for lay representation had not been met.
Background
The case arose in the context of proceedings brought by the liquidator of Cloudstream Technology Ltd against Day 41 Ltd (formerly MacLellan Property Ltd). The liquidator sought recovery of sums said to have been transferred improperly. Day 41’s sole director, secretary and shareholder, Ian MacLellan, had also been involved with Cloudstream in his personal capacity, having previously served as its director and made claims as a creditor, which were opposed by the liquidator. When Day 41’s solicitors withdrew from the case, and with a peremptory diet approaching, the company applied for permission for Mr MacLellan to conduct the proceedings as a lay representative.
Legal test for lay representation
Section 97 of the 2014 Act allows a non-natural person, such as a company, to be represented by a lay person with the court’s permission. Permission may only be granted if three conditions are satisfied:
- The company must be unable to pay for legal representation;
- The proposed lay representative must be a suitable person; and
- It must be in the interests of justice for permission to be given.
Suitability itself is subject to further statutory criteria, including the requirement that the representative should not have a personal interest in the case beyond what would ordinarily be expected of a director or office-holder.
Decision
The application was heard by Sheriff Principal Aisha Anwar KC at the pre-emptory diet who refused to allow Mr MacLellan to act.
Inability to pay
On the question of inability to pay, the court was not persuaded that Day 41 could not afford legal representation. Only a short time previously the company had lodged financial information showing net assets in excess of £1 million. There was no adequate explanation for the apparent collapse of its financial position between that point and the application for lay representation. The court stressed that clear, consistent and credible financial information is essential if a company is to demonstrate that it cannot meet the costs of legal advice.
Suitability
On the issue of suitability, the Court found that MacLellan had interests that went well beyond those of an ordinary director. As the sole shareholder and director, he was closely entwined with the fortunes of the company, but more significantly he was directly involved in related proceedings and potentially exposed to personal liability under insolvency legislation. The Court considered that these interests created a real conflict with the statutory requirement of independence. In addition, MacLellan’s past conduct weighed heavily against him. In earlier litigation before Lord Tyre, he had been found in contempt of court for breaching undertakings. The Appeal Court viewed this as a serious negative factor when assessing his suitability to represent the company.
Interests of justice
Finally, the Court concluded that the interests of justice did not favour granting permission. The proceedings raised potentially complex issues of fact and law, including allegations of gratuitous alienation and unfair preference. In such circumstances the Court considered that effective representation would be best achieved by a legally qualified professional, not by a lay person with a conflicted personal stake and a history of disregard for court orders.
Key Takeaways
The decision offers a clear message to company directors contemplating acting for their companies in litigation. Although the law provides a route to lay representation, the statutory tests are demanding and will be rigorously applied.
From a practical perspective, the ruling suggests that lay representation will rarely be permitted in complex or high-value corporate disputes. Even where directors believe they can articulate the company’s case, the Court will be slow to dispense with the safeguards of professional representation.
Please visit our dedicated Corporate Disputes webpage for more information on our team and what we can offer at Brodies LLP.
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