Scottish Court of Session Decisions

On 24 September 1998 we heard a motion in the single bills at the instance of the respondents in this appeal by which they sought to have the appellant ordained to make payment of certain expenses, under reference to sections 13(1) and 25 of the Land Registration (Scotland) Act 1979. The case before the court is an appeal by the Keeper of the Registers of Scotland against a decision of the lands tribunal, a decision which was given after a debate in an appeal to the lands tribunal against a decision of the Keeper. The circumstances which have given rise to the appeal are of some complexity, as are the issues which were debated before the lands tribunal. In very

broad terms, the present respondents are the proprietors of the landlords' interests under certain long leases. These leases contained provision for the payment of certain sums, referred to as casualties, to the landlords on each assignation of the tenants' interests. Some time before the present respondents acquired the landlords' interest in the leases, the tenants' interests had been registered. When that was done, there was a failure to register the landlords' interests in respect of the casualties. As a result, payment of the casualties cannot now be enforced against the tenants. The defect is not one which can be cured by rectification. The present respondents have obtained, from their predecessors in title, assignations of any rights in respect of payment of casualties which would have fallen due, but for the error, before the respondents acquired right to the landlords' interests. They have applied to the Keeper for an indemnity under section 12 of the 1979 Act both in respect of losses which, they allege, were sustained by their predecessors and which have been assigned to them, and in respect of losses which, they allege, they have themselves sustained. In the pleadings before the lands tribunal, the Keeper disputed the present respondents' entitlement to any indemnity on a variety of grounds. The decision of the lands tribunal went against the Keeper, who has now appealed to this court. Very broadly speaking, it appears that the principal issues which have to be decided are, firstly, whether any right to claim an indemnity under section 12 was one which could only be exercised by the persons entitled to the landlord's interests at the time of the failure to register the claims for casualties; secondly, whether the present respondents have sustained any loss which they can themselves claim; thirdly, whether the present respondents are entitled to make any claim as assignees of their predecessors; fourthly, whether any claims have been extinguished by prescription; and fifthly, what the proper basis of the valuation of any claim should be, that is, whether the claim should be calculated by reference to a diminution of market value of the landlords' interest or whether the approach should be related, in some way, to the amount of casualties unpaid. The question of valuation was, however, as we understand it not one of the matters explored before the lands tribunal, parties having agreed that discussion of that issue should be postponed until other issues of principle had been settled. We should emphasise that the foregoing summary is, we are well aware, a very sketchy and inadequate statement of the issues between the parties. It is, however, in our view sufficient to make it clear that there are a number of serious differences between the parties upon which decisions will have to be made.

Following the debate, a motion for expenses was made to the lands tribunal on behalf of the present respondents and they were awarded the expenses of the debate. The present respondents also applied to the Keeper for reimbursement of expenses sustained by them. There was some correspondence between the parties as a result of which the present respondents submitted detailed accounts of the expenditure of which they sought reimbursement. The accounts were submitted on 19 August 1998 and fell under five main heads. These were, firstly, a solicitor's business account charged on a solicitor and client basis starting from the time at which attempts were made to recover payments from the tenants under the leases and continuing through the process of the application to the Keeper and the appeal to the lands tribunal: secondly, fees to counsel both in relation to the giving of advice and the conduct of the appeal: thirdly, outlays incurred by Mr. B.G. Hamilton acting for the present respondents: fourthly, an allowance for Mr. Hamilton's time engaged in the proceedings: and fifthly, an amount for judicial expenses paid by the present respondents to the Keeper under an order of the lands tribunal relating to certain abortive procedure earlier in the appeal process. The total amount brought out is £37,021.89. It appears that the Keeper invited, or agreed to consider, details of the reimbursement sought, with a view to a possible discussion of the details of the account. However, after certain further correspondence, solicitors acting for the Keeper indicated, on 16 September 1998, that it would be premature to deal with the application under section 13(1) of the Land Registration (Scotland) Act 1979 at this stage. That intimation led to the enrolling of the present motion.

As enrolled, the motion asked the court to ordain the Keeper to make payment of the expenses sought. In the course of discussion, however, counsel accepted that the motion could not be granted in that form at this stage. He explained, however, that the principal purpose of the motion was to have it determined whether the Keeper was entitled to take the attitude that it was premature to consider any claim in the circumstances of this case.

Section 13(1) provides:

From section 25, it appears that a decision of the Keeper as to whether or not to reimburse certain expenditure might be the subject of an appeal under that section. Section 13 was considered by Lord Hamilton in a commercial case between the same parties relating to a similar matter, but with this difference that the Keeper conceded, in that case, that there was an entitlement to an indemnity. It was contended on behalf of the Keeper in that case that section 13(1) could apply only in respect of expenditure incurred in pursuing an extra-judicial application to the Keeper. Lord Hamilton rejected that contention and held that if in the course of pursuing a prima facie well-founded claim an applicant reasonably and properly incurred expenditure not recoverable under an award of expenses made in his favour by the court or the tribunal, he might still obtain reimbursement of it from the Keeper, provided that such recovery was not inconsistent with or already covered by an order for the payment of expenses made by the court or the tribunal. Lord Hamilton also held that section 13 did not confer on the court or the tribunal any wider power in relation to expenses than they respectively had otherwise.

Before us, the present respondents contended that Lord Hamilton erred in holding that no wider power was conferred on the court under section 13(1) than existed otherwise. It was submitted that the words "subject to any order by the Lands Tribunal for Scotland or the court" meant simply "without prejudice to any order", so that the obligation to make payment existed unless there was some order made to modify it. The provision was entirely general and required the Keeper to reimburse any expenditure, judicial or extra-judicial. The provision appeared to be designed to allow the citizen to pursue a claim against the Keeper without necessarily incurring the obligation of putting up a substantial sum of money in doing so. It was appropriate, therefore, that the claimant should be able to make interim claims for expenditure and the main purpose of the present motion was to have it made clear that the Keeper was under an obligation to deal with such claims and, if appropriate, to pay them. Any question of a possible repayment of money arising as a result of a later order of the court or tribunal could be dealt with by requiring caution or an indemnity from the person to whom the payments were made. Reference was made to the Henry Report and to the equivalent English provisions in section 25 of the Law of Property Act 1969 as indicating a similar approach.

On behalf of the Keeper, it was submitted that there was a distinction between judicial expenditure and expenditure reasonably and properly incurred. The Keeper supported the approach taken by Lord Hamilton. The Keeper did not take the view that he was necessarily prohibited from making interim payments but his position was that, when the case had been disposed of and an account for reasonable expenditure had been submitted, it would then be possible to take a view as to whether expenditure had been reasonably and properly incurred. Until that had been done, it was not possible, at least in the present case, to say whether any claim was prima facie well-founded. In any event, on the account as submitted it was not possible to make a proper assessment of any sums which might properly be reimbursed.

In our view, it is clear that, as Lord Hamilton held, section 13(1) does not expand or add to the powers of the court in regard to making awards of expenses, interim or otherwise. The subsection does not, on its terms, confer any power on the court at all. What it does is to place an obligation on the Keeper to reimburse expenditure reasonably and properly incurred. Accordingly, the appropriate way of proceeding is to apply to the Keeper and, if necessary, to appeal against his decision under section 25 or proceed by judicial review. What the Keeper has to do, in our view, is to apply the statutory test to any application made to him, and decide on that basis whether to make reimbursement or not. The decision is not a discretionary one in the way that an ordinary decision on the expenses of a judicial proceeding would be: and the decision of the tribunal or the court on an appeal would similarly be a decision on the statutory basis. On the other hand, it appears to us that the Keeper must have some discretion as to whether he is in a position to deal with any given application made to him in relation to expenses incurred in pursuing a claim to indemnity under section 12, so long as the claim is not finally determined There may well be cases in which some part, or the whole, of an application under section 13 is susceptible of determination even though a judicial proceeding is still in process, and there does not appear to be any reason in principle why an application should not, if appropriate in all the circumstances, be made by instalments. On the other hand there may equally be cases in which no decision can properly be taken until the judicial process is completed. If the Keeper takes an unreasonable view in deciding whether or not to deal with an application for reimbursement, his decision may, of course, be subject to review either through the appeal process or by judicial review. So far as the present case is concerned, therefore, the position seems to be simply this, that the subject matter of the motion before us is not a matter for this court to determine at this stage but that any application must be made to the Keeper, who must consider it and decide firstly whether he can appropriately deal with it at this stage and, secondly, if he can deal with it, whether he is under an obligation to reimburse the whole or any part of the claim.

We would only add two points. Firstly, we do not think that there is anything in section 13(1) to indicate that it was intended to function as some sort of legal aid provision. It may, in practice, give some benefit to a litigant, but it is not in our view designed to assist a litigant in obtaining finance for proceeding with a claim. It confers a legal right, which must be determined on the statutory terms. Secondly, we express no opinion on the question of the interrelation between awards of expenses and applications for reimbursement. The fact that there is provision that awards of reimbursement are subject to any orders of the court suggests that there may be an overlap between matters which can be dealt with by the court as expenses of process and claims for reimbursement under section 13(1). If so, a court applying the ordinary rules as to expenses following success might reach a different conclusion from that which would be reached by the Keeper under section 13(1). On the other hand, it might be arguable that a court or tribunal should take account of the terms of section 13(1) in deciding whether or not to make an award of expenses. However, any questions which may arise can only be resolved as the cases occur.