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Scottish Court of Session Decisions
You are here: BAILII >> Databases >> Scottish Court of Session Decisions >> Fraser v. M'Murrich [1923] ScotLR 57 (24 November 1923)
URL: http://www.bailii.org/scot/cases/ScotCS/1923/61SLR0057.html
Cite as: [1923] SLR 57, [1923] ScotLR 57
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SCOTTISH_SLR_Court_of_Session
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Court of Session Inner House Second Division.
[
v.
Facts:
A raised in the Sheriff Court an action of damages for personal injury against B in respect of a motor accident of which he was the victim. Before the summons was served, B, who had no permanent domicile in the sheriffdom, ad left the house in which he had been temporarily residing and did not personally receive the summons, which was served by registered letter. No defences were lodged, and the pursuer obtained decree in absence against the defender, though warned by the latter's agent of the risk he ran in doing so. A used arrestments on the decree, and an action of furthcoming followed. This action was successfully defended by B, who thereupon brought in the Court of Session an action of reduction of the Sheriff Court proceedings and obtained decree with expenses. A having failed to pay these his estates were sequestrated. While still an undischarged bankrupt A brought the present action, which was similar to the one he had originally raised in the Sheriff Court. The action was intimated to the trustee in the sequestration, who declined to sist himself as a party. The defender having moved that the pursuer should be ordained as a condition of insisting in his action to find caution for expenses, held ( rev. the judgment of the Lord Ordinary) that the pursuer had failed to establish facts and circumstances which excluded the application of the general rule that an undischarged bankrupt was not entitled to sue without finding caution for expenses unless in exceptional circumstances, as to which the discretion of the Court will be sparingly exercised.
Per the Lord Justice-Clerk (Alness)—“I know of neither principle nor authority which constrains me to hold that intrinsic circumstances may furnish an exception to the rule of Clarke v. Muller ((1884) 11 R. 418, 21 S.L.R. 290), but that extrinsic circumstances may not. If in either case the application of the rule would be harsh and oppressive, I apprehend that it is in the power of the Court to relax it.”
Donald Fraser, Glasgow, pursuer, brought an action of damages for £500 for personal injuries against Robert S. M'Murrich, Milngavie, defender.
The action was raised on 24th April 1923. The pursuer's estates were sequestrated on 25th May 1923, and the record was closed
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and the case sent to the procedure roll on 10th July 1923. On 25th October 1923 the Lord Ordinary ( Morison) pronounced an interlocutor in which, inter alia, he refused a motion of the defender that the pursuer should find caution.
Opinion.—“I heard argument yesterday on the defender's motion that the pursuer should find caution for expenses. It is admitted that the pursuer has been divested of his estates under the Bankruptcy Acts, and the trustee in the sequestration, to whom this action was intimated, declines to sist himself as a party to it.
I have looked into the authorities on this question and I think that as a general rule a litigant in the pursuer's position cannot be allowed to pursue an action without finding caution for expenses, I think the foundation of the rule arises from the fact that after sequestration the bankrupt is divested of his estates, which thereafter truly belong to his creditors and fall to be distributed among them in accordance with the provisions of the Bankruptcy (Scotland) Act 1913.
While this is the general rule, exceptions have been permitted by the Court in the exercise of a discretion to dispense with caution. I think this discretion has only been exercised in very exceptional circumstances.
I heard the parties' explanation of the proceedings which terminated in the pursuer's sequestration. It appears that the pursuer's bankruptcy arises from his having raised an incompetent action of damages against the defender in the Sheriff Court. From the explanations made to me I think the pursuer's mistake was an innocent one. His estates were sequestrated on the defender's application as creditor for the amount of the legal expenses—some £17—awarded against the pursuer in an undefended action of reduction, which was the sequel to the unfortunate litigation raised in the Sheriff Court in order to determine the question which is now raised here.
Mr Duffes said that the trustee in the sequestration was the defender's nominee, that the defender was his only creditor, and on the hypothesis that the pursuer would succeed in this action that the defender was also the pursuer's only debtor and the possessor of his only asset.
These circumstances appear to me to make this case a very special and, so far as I know, an unprecedented case, and I am not disposed to grant the defender's motion. The learned counsel for the defender intimated that he had no objection to the issue proposed by the pursuer for the trial of the cause.
I shall therefore refuse the defender's motion for caution and approve of the issue.”
The defender reclaimed, and argued—Except where the circumstances were extraordinary an undischarged bankrupt was not entitled to sue without the concurrence of the trustee unless he found caution— Clarke v. Muller, (1884) 11 R. 418, 21 S.L.R. 290, per Lord President (Inglis) at 11 R. 419, 21 S.L.R. 291; Johnston v. G. H. Laird & Son, 1915, 2 S.L.T. 24; Somervell v. Tait and Others, (1908) 15 S.L.T. 1015, affd. (1908) 16 S.L.T. 139; Cook v. Kinghorn, (1904) 12 S.L.T. 186; Wilson v. Crichton, (1898) 5 S.L.T. 350; M'Murchy v. Macullich, (1889) 16 R. 678, 26 S.L.R. 421; Maclean v. Duke of Argyll, (1865) 1 S.L.R. 82; Maclaren, Expenses, p. 6; Bell's Comm. (7th ed.) vol. ii, p. 324. In the present case the circumstances were not extraordinary. The argument that the pursuer's mistake in bringing the original action was an innocent mistake was not relevant.
Argued for the respondent—The Lord Ordinary's discretion ought not to be interfered with except on very strong grounds. The Lord Ordinary's decision was right. Those for whom the defender was responsible by their actings misled the pursuer into bringing the original action in the Sheriff Court, and thus the defender was responsible for the pursuer's sequestration. Moreover, the procedure adopted by the defender's agents was blameworthy. They should have entered appearance in the Sheriff Court and pleaded no jurisdiction or have. prorogated the jurisdiction of the Sheriff Court and fought out the merits of the action in that Court. The circumstances of the case were exceptional and the ordinary rule did not apply— Thom v. Andrew, (1888) 15 R. 780, 25 S.L.R. 595, per Lord Justice Clerk (Moncreiff) at 15 R. 783, 25 S.L.R. 597; M'Quator v. Wellwood, (1908) 16 S.L.T. 110; Paul v. Gray, (1894) 1 S.L.T. 575; Thom v. Caledonian Railway Company, (1902) 9 S.L.T. 440; Oliver v. Robertson, (1869) 8 Macph. 82; Weepers v. Pearson and Jackson, (1859) 21 D. 305.
At the hearing the Court asked for further information from the parties with regard to the circumstances in which the original action of damages was brought in the Sheriff Court. After the hearing the defender lodged a minute and the pursuer lodged a note containing additional averments, the import of which sufficiently appears from the opinions of the Judges infra.
At advising—
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Now the law is not doubtful. It was settled by the case of Clarke v. Muller, 11 R. 418, 21 S.L.R. 290. The general rule is undoubtedly that a bankrupt divested of his estates is not allowed to sue without finding caution for expenses unless in exceptional circumstances, and that the discretion of the Court in recognising such circumstances as exceptional must be sparingly exercised. The rule, read shortly, appears to me to amount to this—that the decision in each case falls to be made according to its own particular circumstances. It is, as so often happens, not the principle which is in doubt but its application to the case in hand. Does this case then fall within the ambit of the rule or within the ambit of the exceptions to the rule? There is no doubt as to the rule. Equally there is no doubt that exceptions illustrating its relaxation have not infrequently received judicial sanction. I must own that at first I was disposed to think that this case falls within the exceptions rather than the rule. But on further consideration, and in light of the minute for the defender and the answers for the pursuer, I confess that my first impression was not well founded, and I am clearly of opinion that the case falls within the rule and not within the exceptions. I first thought that the defender by staying away from the Sheriff Court and by omitting to table and establish a plea of “no jurisdiction,” if he had not caused had at any rate contributed materially to the mistake into which the pursuer fell. But it now appears from an entry in the books of the defender's agents that the pursuer's agent was timeously informed that the defender was not in Dumbarton but in West Africa, and that the pursuer's agent was warned of the risk which he would incur if he took decree against the defender. To this contemporaneous record of the fact the only rejoinder of the pursuer is a denial of the correctness of the entry in question. I do not regard this reply as convincing or indeed relevant. For the pursuer omits to state in what respect the entry is incorrect, and he further omits to say what really transpired on that occasion. The pursuer therefore proceeded at his own risk and despite due warning to take decree, and for what followed he and he alone must be held responsible.
I desire to add that there can be no doubt that the circumstances founded on by the pursuer and also by the defender are in this case not intrinsic but extrinsic to the action itself. That does not appear to me to conclude the matter. I find no limitation to the exceptions to the rule with which the cases deal. It may well be that in the ordinary case the circumstances pleaded are intrinsic to the action itself. But that is by no means universal. It may well be also that when the Court approaches the contemplation of extrinsic circumstances it may find itself in the realm of controversy and even of contradiction. That is no doubt unfortunate, and may even prove embarrassing. But I know of neither principle nor authority which constrains me to hold that intrinsic circumstances may furnish an exception to the rule of Clarke v. Muller but that extrinsic circumstances may not. If in either case the application of the rule would be harsh or oppressive, I apprehend that it is in the power of the Court to relax it. As Lord Young said in the case of Thom v. Andrew (15 R. 780, at p. 782, 25 S.L.R. 595 at 596)—“The Court will not exercise its discretion in the way of ordaining the party to find caution unless the interests of justice appear to require it.” That is, I think, the touchstone of the problem.
I will only further add that cases dealing with the liability of a pursuer as a condition of proceeding with an action to pay to his opponent expenses previously incurred to him appear to me to have no application. We are not here concerned with a motion by the defender that the pursuer should as a condition-precedent of proceeding with his action pay to the defender the expenses of the lamentable series of litigations which preceded the institution of this action. That motion has not been made. The motion with which alone we are concerned is of quite another character. It is that the
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But while all that is so I am clearly of opinion, for the reasons which I have stated, that the pursuer has failed to establish facts and circumstances which exclude the application of the general rule, and that accordingly, being divested of his estates, he must find caution for expenses as a condition of proceeding with his action. I therefore suggest to your Lordships that the Lord Ordinary's judgment should be recalled.
The question of ordaining a party to find caution for expenses is indisputably a question for the discretion of the Court. As a general rule, however, an undischarged bankrupt is not allowed to sue an action except on condition of finding caution unless he obtains the concurrence of his trustee in the action— Clarke, 11 R. 418, 21 S.L.R. 290. That general rule has come to be recognised because in the ordinary case of an undischarged bankrupt suing an action the interests of justice require it. That at least I take to be the meaning and effect of Lord Young's opinion in Thom v. Andrew, 15 R. 780, 25 S.L.R, 595. As the same Judge observes in Ritchie v. M'lntosh, 8 R. 747, at p. 748, 18 S.L.R. 528, “The person truly vested in the claim refuses to make it, and so prima facie it cannot be considered a good claim. The Court in that case may allow the divested person to make the claim, but only on finding caution for expenses.” The rule, however, though general, is not absolute, although exceptions are very rarely admitted. The most familiar are cases where the action is directed against the trustee in the sequestration, or against the trustee and the creditors. An exception may also be admitted, as in the case of Thom v. Andrew, when the action is of a personal character. The present action is not within either of these categories, and the question appears to me to be whether, having regard to its own special circumstances, these are so exceptional and peculiar as to warrant a departure from the general rule, the onus of course being on the pursuer to show that they are. In the opinion of the Lord Ordinary they are, and he has accordingly refused to ordain the pursuer to find caution. For my own part I should be reluctant in a matter of this kind to interfere with what in the exercise of his discretion the Lord Ordinary has done; but it is enough to say that in the present case it now appears very plainly in the light of the fuller statements made at our bar that the circumstances are not such as the Lord Ordinary took them to be.
The facts appear to be these. While the present action was raised on 24th April 1923, the accident which befel the pursuer, and according to his averments occasioned his injuries, took place so long ago as October 1921. Negotiations for a settlement between the pursuer's agents and the agents for the company with which the defender was insured, were carried on until nearly the end of January 1922, but no agrement was come to. Thereupon, without any notice being given either to the agents of the insurance company or of the defender (who it appears was at the date of the accident on a temporary visit to this country and who had meantime returned to West Africa), the pursuer raised an action in the Dumbartonshire Sheriff Court against the defender making a claim for damages similar to the claim in the present action. The summons was served by registered letter at the address of the defender's mother, at which while in this country the defender had resided. On the expiry of the induciœ decree was taken in the undefended roll. Arrestments were used on the decree and an action of furthcoming brought. No jurisdiction had been founded and this latter action was dismissed. The present defender then brought an action to have the decree which had been obtained against him in absence reduced. The pursuer did not defend and the present defender was found entitled to expenses, which amounted to about £17. The pursuer having failed to pay this inconsiderable sum his estates were sequestrated. The defender is not, as the Lord Ordinary thought, the only creditor, claims largely in excess of the defender's having also been lodged by two other creditors, viz., two firms of law agents who had acted for the pursuer.
I have recited at length the various legal proceedings which preceded the present action because, as I understood the argument of the respondent, he sought to establish that the attitude of the defender therein had been in some way unjust and oppressive. In effect, I think I am entitled to say that it was contended that he had from the first so conducted himself, and had deliberately so conducted himself, as to mislead the pursuer into following the course he did and so brought about his sequestration. If that had been so—if there were reason for thinking that the pursuer had been trapped by the defender—then there might have been some justification for giving him the relief which he seeks. But I am unable to discover any ground whatever for reaching that conclusion. In my opinion the difficulty in which the pursuer now finds himself is entirely due to his own ill-considered action in raising the Sheriff Court proceedings. The slightest inquiry beforehand would have enabled
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Accordingly the pursuer has failed, in my judgment, to show any cause for departing from the general rule, and I agree that we should recal the Lord Ordinary's interlocutor and ordain the pursuer to find caution.
The Lord Ordinary has decided that this case is exceptional for two reasons which are stated in his opinion. The first is that the pursuer's mistake in suing in the Sheriff Court was an innocent one. There is a twofold rejoinder to this ground of judgment—(1) it is irrelevant; and (2) it is unfounded in fact.
(1) It is, generally speaking, irrelevant to inquire into the origin of a pursuer's bankruptcy; the only relevant consideration is, does it exist in fact? In particular it seems to me to be a circumstance of no materiality that the pursuer's sequestration took place during the currency of the litigations. A qualification of the proposition, that it is irrelevant to inquire into the origin of bankruptcy, may arise in connection with the conduct of a defender. If it could be shown that the bankruptcy had been brought about by improper conduct on the part of the defender, the Court would not allow him to profit by this. If, for example, in the present case, the defender's agents had done anything to induce the pursuer to bring his Sheriff Court action, as by representing that the defender was resident in Dumbartonshire at the date of service, the Lord Ordinary's interlocutor might well have been justified. But we know now that the defender and his agents did nothing of that character. They were unaware of the proceedings until the induciœ of the citation had almost expired.
(2) We also now know that what was done was not a mistake or blunder but a wilful act of professional negligence on the part of the pursuer's then agent. This appears from the information supplied to the Court by the defender's advisers since the case was taken to avizandum. I have not left out of account the averments made in the last note lodged for the pursuer, which do not appear to me to be contradictory of or inconsistent with the statements in Mr Mackay's communication addressed to your Lordship in the chair. On the last day of the induciœ of citation (24th February) the defender's agents informed the pursuer's agent that there was no jurisdiction. Despite this warning the pursuer's agent took decree in absence, and had his account of expenses taxed. The suggestion is that the defender and not the pursuer should bear the consequences of this act of professional negligence. That appears to me to be an extravagant suggestion.
The second reason relied on by the Lord Ordinary we now know to be unfounded in fact. It now appears that the defender is not the pursuer's only creditor, but that there are two other creditors whose claims exceed £100. The grounds on which the Lord Ordinary proceeded have thus been entirely displaced.
It was urged, however, that his decision could be supported on other grounds. There is nothing in the nature of the action itself to take the case out of the ordinary rule. It has no specially personal feature, such as a desire to have character vindicated. It is a claim as for money due, and the pursuer would only have a radical or residuary interest in any decree which he might obtain. It was maintained, however, that the defender's agents were blameworthy as regards procedure, and that the defender should accordingly be deprived now of his legal rights. It was said that the defender's solicitors might have entered appearance in the Sheriff Court action and have pleaded “no jurisdiction” or have prorogated the jurisdiction of the Sheriff Court and fought out the merits of the action in that Court. It is true this might have been done, but I am of opinion that the defender's solicitors had no duty to do so. I go further and say that had they taken either of these courses they would have been in breach of the duty which they owed to their client. It is no part of a solicitor's duty to cover up or remedy the blunders of an opponent, far less to neutralise the effects of a wilful act of negligence. The duty of an agent in a litigation is to get his client out of it as speedily, as successfully, and with as little expense as possible. The defender's solitors
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I therefore agree that the interlocutor of the Lord Ordinary should be recalled and the pursuer ordained to find caution.
The Court recalled the interlocutor reclaimed against, and remitted the cause back to the Lord Ordinary to proceed as accords.
Counsel for the Reclaimer (Defender)— Mackay, K.C.— Gilchrist. Agents— Manson & Turner Macfarlane, W.S.
Counsel for the Respondent (Pursuer)— Aitchison, K.C.— Duffes. Agents— W. G. Leechman & Company, Solicitors.