Scottish Court of Session Decisions

The Local Government (Scotland) Act 1889, section 70, provides—“The following regulations with respect to audit shall be observed,” that is to say,… sub-sec. (5)—“If it shall appear to any county auditor acting in pursuance of this section that any payment is in his opinion contrary to law and should be disallowed, or that any sum which in his opinion ought to have been is not brought into account by any person, whether such payment or failure to account has been made matter of objection or not, he shall by an interim report under his

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hand report thereon to the Secretary for Scotland, setting forth the grounds of his opinion as aforesaid; and the Secretary for Scotland shall cause such interim report to be intimated to the objector, if any, and to the officer or other person affected thereby; and after due inquiry the Secretary for Scotland shall decide all questions raised by such interim report, and shall disallow all illegal payments and surcharge the same on the person or persons making them, and shall allow all sums which ought to have been but have not been brought into account.” Sub-section 6—“If the Secretary for Scotland shall be of opinion that, although a disallowance or surcharge might be lawfully made, the subject-matter thereof was incurred under such circumstances as to make it fair and equitable that the disallowance or surcharge should not be made, he may abstain from making the same.” Sub-section (7)—“Every sum determined by the Secretary for Scotland under this Act to be due from any person shall be paid by such person to the county council within fourteen days after such determination has been intimated to him, and it shall be the duty of the county auditor to recover the same.” Section 75 (1)—“All payments to and out of the county fund shall be made to and by the county treasurer, and all payments out of the fund shall, unless made in pursuance of the specific requirement of an Act of Parliament or of a decree of a competent court, or on the requisition of any district committee or standing joint-committee, or for the periodical payment of salaries and wages, be made in pursuance of an order of the council signed by three members of the finance committee and countersigned by the county clerk, and the same order may include several payments. Moreover, all cheques for payment of moneys shall be signed by two members of the finance committee, and be countersigned by the county clerk or by a deputy approved by the council. (2) Any such order may be stayed by note of suspension in the Bill Chamber, and may be wholly or partially disallowed or confirmed with or without expenses.”

John Graham, accountant, No. 212 West George Street, Glasgow, County Auditor of the County of Lanark, brought an action in the Sheriff Court of Lanarkshire at Hamilton against Robert Lambie, William Neilson, William Templeton, and Allan Graham Burns Graham, members of the County Council of the county of Lanark, and William Alston Dykes, County Clerk of the county of Lanark, and Thomas Munro, Deputy County Clerk, in which he sued them for certain sums of money, amounting in all to £102, 9s. 6d.

The pursuer averred as follows:—In the course of the audit of the accounts of the County Council of Lanark for the year ending 15th March 1902 the pursuer found certain payments charged which in his opinion were illegal and fell to be disallowed, and accordingly under section 70 (5) of the Local Government (Scotland) Act of 1889 he submitted an interim report upon the matter to the Secretary for Scotland. The payments to which he alluded were (1) expenses amounting to £50, 4s. 3d. of two officials and one county councillor to London on the matter of the Police Superannuation (Scotland) Bill, charged on the police assessments; the ground of his objection was that the expenses did not fall within the scope of the Police (Scotland) Act 1857, secs. 27, 28, 29, 40, 55, and 57, which regulated the nature of the expenditure which might be defrayed out of the police assessments. (2) Expenses amounting to £52, 5s. 6d. of deputation of four county councillors and one official to London in the matter of the Agricultural Rates Act 1896, Continuation Act 1901, charged on the General Purposes Assessment; the ground of his objection was that the expenses did not appear to have been incurred in connection with the execution of any Act administered by the County Council. The Secretary for Scotland having intimated the report to each of the defenders, who were the persons who under section 75 (1) of the Local Government (Scotland) Act of 1889 had signed the several cheques by which the payments in question had been made, issued after an inquiry a determination, in which he found that the payments in question were ille gal, and surcharged the same upon the defenders “as the persons by whom the payments were made, they having signed the cheques by which payment was effected.” The determination of the Secretary for Scotland was duly intimated to each of the defenders, but they failed to make payment of the same due by them within fourteen days as required by section 70, sub-section 7, and accordingly the pursuer, as required by the above section, raised the present action against them.

The pursuer pleaded, inter alia—“(1) The sums concluded for in the petition having been determined by the Secretary for Scotland, in virtue of the powers conferred on him by the Local Government (Scotland) Act 1889, to have been illegally paid, and the said sums having been disallowed by him and surcharged on the defenders, the defenders are conjunctly or severally liable to make payment of the respective sums surcharged upon them.”

The defenders in answer stated, inter alia—“That even if the payments were illegal, they have not been surcharged on the person or persons makings them in terms of the statute. The Standing Joint Committee made the first four payments” [those in connection with the first deputation], “and the County Council the remaining five” [those in connection with the second deputation], “both by the medium of the Finance Committee. Under section 75 of the Act of 1889 all cheques for the payment of money from the county funds must be signed by two members of the Finance Committee, and countersigned by the County Clerk, or by a deputy approved by the Council. In such a case the persons signing the cheques are not the persons making the payment. The individual members of the Finance Committee who signed the cheques in question have no veto or

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responsibility as such apart from their committee, and their signing the said cheques was merely a method of carrying out a payment made by the County Council or said committees, and a certification that the payment had received the sanction of the Finance Committee. It was in no sense a payment made by such members. The County Clerk and Deputy County Clerk, whose signatures appear on said respective cheques, were bound to obey the instructions of the Finance Committee in granting said cheques, but they did not sign them as the said determination alleges. One or other of them countersigned the said cheques as required by section 75 (1) of the Act of 1889, to attest the authenticity of the signature of the members of the Finance Committee signing them, and the fact that they were such members. Beyond verifying these facts, these officials incurred no responsibility by countersigning. Further, the first four of said payments were disbursed by the County Council on account of the Standing Joint Committee in terms of the Act of 1889, under which the County Council is bound to pay whatever may be required by the Standing Joint Committee, and the Council have no responsibility as to the expenditure of the money.”

They pleaded, inter alia—“(4) The payments disallowed being lawfully and properly charged against the County Council, et separatim, their legal chargeability not being within the competence of the Secretary for Scotland to decide, the determination of the Secretary for Scotland is ultra vires and inept, and decree of absolvitor should be granted. (5) The defenders not being within the meaning of the statute the persons making the payments challenged, should not have been surcharged therewith, and are entitled to be assoilzied with expenses.”

On the 30th March 1904 the Sheriff-Substitute (THOMSON) pronounced the following interlocutor—… “Finds that the de fences stated are incompetent in the Sheriff Court, repels the same accordingly, and grants decree against the several defenders conjunctly and severally for payment to the pursuer of the several sums in terms of the prayer of the petition.” …

Note.—“The pursuer's case is simple; he tables a formal determination of the Secretary of State for Scotland, and craves a decree of the Court in terms thereof.

“The defenders object to the determination, first, on the ground that it is wrong in law—wrong on the merits—inasmuch as it determines that certain payments were illegal, whereas on a sound view of the law they are perfectly legal; and second, on the ground that even if the payments were illegal, the determination surcharges the wrong parties, inasmuch as it treats the signers of the cheques by which the payments were made, as the parties by whom the payments were made, whereas the signers were the mere instruments of the County Council or of the Standing Joint Committee; and this objection is specially pressed on behalf of the County

Clerk and Deputy County Clerk, who countersigned the cheques on the express authority of their superiors.

“But even if I thought those objections to the determination were well founded, I could not possibly give effect to them, because they involve a reduction of the determination, and I have no power to reduce it. The statute has made the Secretary for Scotland the judge of the legality or illegality of certain payments and of the devolution of responsibility for such of these payments as he finds to be illegal. The statutory jurisdiction which is thus conferred upon him is a special one, and it is out of the question to hold that his exercise of it can be reviewed in the Sheriff Court. If he exceeds his statutory jurisdiction or fails to take the steps which the statute prescribes, there may be a remedy, but most certainly not in the Sheriff Court, even giving the widest construction to the power conferred by the Sheriff Court Act of 1877, of setting aside ‘deeds or writings’ by way of exception. Accordingly I must give effect to the determination as it stands.” …

The defenders appealed to the Sheriff (GUTHRIE), who on 6th August 1904 pronounced the following interlocutor—… “Finds that the pursuer has not stated facts and circumstances relevant and sufficient to support the prayer of the petition.” …

Note.—… “It humbly appears to me that the payments were not ‘made’ by the persons who signed and countersigned the cheques, except in a sense that a payment is made or goods delivered to John Smith by a messenger who is sent to pay or deliver by his employer. Suppose that employer be a banker or a lawyer directed to make a payment for a client, and that by mistake he pays through his messenger to a wrong person, the client's recourse is not against the messenger who did what he was ordered, and was bound to do, but against the banker or lawyer. In this case, which when analysed appears to be equally simple, the gentlemen who signed the cheques were merely the hands of the County Council who ordered the illegal payments to be made. This becomes clear when we turn to section 75 of the Act, which enacts—section 75 (1)—that all payments out of the county fund shall be made by the county treasurer, and except in certain specified cases, not including those now in question, that all payments out of the fund are to be made in pursuance of an order—see section 75 (3)—of the council signed by three members of the finance committee and countersigned by the county clerk. That is followed by a direction that cheques shall be signed by two members of the finance committee, & c Obviously the duty of the person signing the cheques is only to see that the sum being paid falls under one of the heads enumerated in section 75 (1) or under an order of the council, and they have not to do with the validity or legality of that order. It may even happen, as with the defendant Lovering in Attorney—General v. Tottenham Local Board, 27 Law Times, R. 440, cited by Mr Smith, that they

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had voted against the payments for which in an executive capacity they sign the cheque. The accurate application of the rule would lead to the Treasurer's clerks being surcharged with 10s. paid by him by the Council's direction to a carriage-hirer for driving the members of a deputation in question to the railway station. It appears therefore that the rule respondeat superior must here be applied in construing the words in section 70, ‘persons making them,’ i.e., the payments, and that the pursuer has failed in his condescendence to set forth any case against the defenders. He avers (Art. 4) that notice was given to ‘each of the defenders being the persons who had signed the several cheques,’ but entirely forgets that the real responsibility rested on those who ordered the payments of which the cheques were but the means or the signs. It is not alleged that the objection was ever notified to those truly responsible, for there is not, as I have tried to show, reason or justice in saying that the defenders in respect of the ministerial act of signing the cheques were the ‘officers or persons’ to whom, as ‘affected thereby,’ notice of the objection should be made. The result of sustaining the relevancy would be, if a decree were ultimately given against them, that the defenders would be forced to raise other actions for their relief, whether against the persons receiving the moneys or against the individual councillors who authorised the payment it is unnecessary now to inquire.”

The pursuer appealed to the Court of Session.

The case was, by arrangement, argued and decided as though the defenders had brought an action of reduction of the Secretary for Scotland's determination.

Argued for the appellant—(1) On both questions, viz., whether the payments were legal or illegal, and who were the parties who made them, the decision of the Secretary for Scotland was final— Maclachlan & Mackinnon v. Cameron and Others, March 12, 1899, reported immediately infra No provision for review was contained in the statute, and sub-secs. 6 and 7 of sec. 70 were quite incompatible with the idea of review. That the Secretary for Scotland's decision should be final was supported by the analogy of the English Local Government Act 1888, sec. 71, which, by reference to the Public Health Act 1875, sec. 247, permitted an appeal to the Local Government Board, which was final, as well as to the King's Bench Division. (2) His decision was in fact a right one, as the persons who signed the cheques were the persons who made the payments in the sense of the Act. The object of the Act was to provide a check against maladministration, and the only way to effect this was to provide a means of recovery from individuals. If the County Council as a whole or any of its committees were to be regarded as having made the payments, the money illegally paid out could never be restored to the county funds. Section 70, sub-sec. 5, differed on this point from sec. 247 of the Public Health Act 1875, which contained the additional words “or authorising the making of the illegal payment.”

Argued for the respondents—(1) On neither question was the Secretary for Scotland's decision final. It was contrary to principle and policy that upon a question involving rights to property there should be no appeal to a court of law. Such right of appeal could only be taken away by explicit enactment, and there was none such in the Act. Such an idea was incompatible with subsec. 2 of sec. 5. The corresponding English Act of 1888 favoured the respondent's view, for by a reference to the Public Health Act 1875, sec. 247, it permitted appeal to the Court of King's Bench. (2) The persons signing the cheques were not the persons “making” the payments in any reasonable sense. The people who really made the payments were the committees who had the right to authorise, and did in fact authorise, the payments. The persons who signed the cheques merely performed a mechanical function under sec. 75 (1), and their only duty was to see that the cheques were technically correct. The cases of the Magistrates of Leith v. Leith Dock Commissioners, July 25, 1899, 1 F. (H.L.) 65, 36 S.L.R. 956, and Osborne v. Barclay, Curie, & Company, 1901, A.C. 269, were also referred to.