Scottish Court of Session Decisions

In this action the pursuers are suing for a sum which they aver is in payment of expenses which are due to them by the defender in respect of clauses contained in two Standard Securities granted by him to them. They aver further that the standard conditions specified in Schedule 3 of the Conveyancing and Feudal Reform (Scotland) Act 1970 (as amended) applied to both Standard Securities. Paragraph 12 of Schedule 3 provides as follows:

What the pursuers seek in this action to recover are all expenses which they claim reasonably to have been incurred by them in calling up the security and realising or attempting to realise the security subjects. They aver that in about May 1986 they instructed their agents, Messrs Morton Fraser & Milligan, WS, to call up both securities and to realise both security subjects. In furtherance of that, the pursuers raised actions against the defender in Stirling Sheriff Court, in Kirkcaldy Sheriff Court and in the Court of Session. I was informed that there were two actions at the instance of the pursuers against the defender in Kirkcaldy Sheriff Court. The action raised in the Court of Session was by way of petition for interdict and interim interdict against the defender. Awards of expenses were made in these actions against the defender with the exception of one of the actions in Kirkcaldy Sheriff Court in which expenses were awarded in the defender's favour upon dismissal of the action against him.

The expenses which the pursuers seek to recover in this action are set out in a business account which has been lodged in process and is 15/1 of process. By interlocutor of the Court dated 16 March 1995 this account was remitted to the Auditor of Court for taxation. I was informed that it is still before the Auditor and that for that reason the sum sued for may yet have to be adjusted. Miss Joughin, who appeared for the pursuers informed me that she did not intend to argue her third plea-in-law since she could not obtain decree de plano until the precise sum which the pursuers were entitled to had been determined by the Auditor. These expenses, of course, it should be understood, are the expenses incurred by the pursuer's agents and for which the pursuers have a liability to their agents.

The action came before me on procedure roll at the insistence of the defender, and according to the interlocutor of 29 January 1998 the defender was to argue his first, second and fourth pleas-in-law. These are set out on page 22 of the Closed Record. In support of his first plea-in-law the defender submitted that the action was incompetent because it was not competent to raise a separate action for the recovery of expenses of process. In that connection he referred me to Maclaren on Expenses at p. 19. In the defender's submission this action was an attempt to recover the expenses of process in a number of separate actions between the parties both in the Sheriff Court and in the Court of Session. He referred me also to the case of Fletcher's Trustees v Fletcher 1888 25 SLR 606 and to Lewis on Sheriff Court Practice at p. 60. The case of Fletcher's Trustees determines that unless otherwise declared, a finding of expenses by the Court is a finding of expenses as between party and party. According to the defender, what the pursuers were seeking to obtain were expenses on an agent and client basis when that had not been provided for in any of the interlocutors both in the Sheriff Court and in the Court of Session. In any event, in these other proceedings accounts of expenses had not been completed and the actions were still alive.

According to Miss Joughin, the defender's submission proceeded on a plain misunderstanding of the nature of this action. It was not an action to recover expenses awarded in the pursuers' favour in the two Sheriff Courts and in the Court of Session. On the contrary it was an action in which the pursuers sought to recover expenses which were, they averred, reasonably incurred in calling up the securities and in realising the security subjects. These expenses, it is averred, were incurred on their behalf by their agents, Messrs Morton Fraser & Milligan, WS. It would be a matter of proof, no doubt once the Auditor had taxed the business account, to what extent these expenses were legitimately incurred by the pursuers' agents in terms of paragraph 12 of Schedule 3 of the 1970 Act. In short, what the pursuers were seeking to enforce in this action was their contractual right against the defender in terms of the two Standard Securities which they averred he granted over subjects in Leslie and in Stirling. As Miss Joughin also pointed out, an action for relief of expenses paid which are extra-judicial, was competent, and in that connection she referred me to Maclaren on Expenses at p 20.

Although his first plea may not be apt to focus it, Mr Mowbray has raised an interesting point, which may also be novel, in relation to those expenses which the pursuers claim reasonably to have incurred in the court actions in which they have been awarded expenses against him. In these actions it appears that they hold awards of expenses against the defender. As Mr Mowbray put it, what the pursuers in this action are seeking to do is to get behind the interlocutors in the Sheriff Court and Court of Session actions, in order to obtain an omnibus award of expenses on an agent and client basis. The point is well made: but is it right? After some consideration I think it is not. What the pursuers have been awarded in these actions are expenses on a party and party basis. If they wish to implement these awards they may do so, but they are not bound to do so. As I understand it, they have not so far done so. That basis of a judicial award of expenses may not be the sole measure of the expenses to which they may be entitled. If, for example, parties have in advance contracted for a different measure of the expenses recoverable, the court will give effect to their agreement. That, as I see it, is what the parties have done in this case. Condition 12 of Schedule 3 is broadly expressed. What the Court must determine under its terms, no doubt in this case assisted by the Auditor of Court, is what expenses the pursuers have reasonably incurred in calling-up the securities and realising or attempting to realise the security subjects. These expenses, in my opinion, are not restricted in the way which the defender maintained before me.

In support of his fourth plea-in-law the defender submitted that the pursuers were a creature of statute. There were insufficient averments made by the pursuers to demonstrate their title to sue since they require to prove their existence. They would have to produce the necessary company documents such as the memorandum and articles of association before it was clear whether they had title to sue in this action. The defender drew my attention to the detailed averments in this regard which are to be found in his Answer 1 on pages 5 and 6. This submission also in my opinion is misconceived. While it is right that the defender has challenged the pursuers' existence as a company, that still leaves it open to the pursuers at a proof in this action to establish that they do exist as a company and that they do have authority to pursue this action. The point which the defender makes therefore is premature.

In support of his second plea-in-law the defender submitted that the Standard Securities were in respect of heritable properties respectively in Fife and Stirling. The action should be raised in the Sheriff Court where the properties lay. The Court of Session did not therefore have any jurisdiction in the matter. Again, in my opinion, this shows a misunderstanding of the nature of this action. The pursuers were not restricted in terms of their powers under these Standard Securities to raising an action in respect of the expenses of calling up and realising the security subjects, in the local Sheriff Courts in which the property lay. I am of clear opinion that this Court has jurisdiction to entertain this action.

I am therefore satisfied that this action is competent, that it is competently raised in the Court of Session, and that on the averments which they have made in this action, the pursuers have title to raise it. I will therefore repel the defender's first, second and fourth pleas-in-law and allow a proof before answer.