Scottish Court of Session Decisions

In this action, the pursuer sought production and reduction of a pretended decree pronounced in Hamilton Sheriff Court ordaining payment by the pursuer to the defender of the sum of £300,with interest thereon and expenses as taxed, which was pronounced on 5 November 1993. Production and reduction of a pretended charge served upon the pursuer on 7 March 1994, executed pursuant to and in terms of the said decree, in the sum of £775.87, was also sought. This decree was obtained in a Small Claims process, which was commenced on or about 23 December 1991.

In the Small Claims summons, the defender in this action averred, as the basis of his claim, that:

The wall referred to in the preceding averments was located in a common close forming part of heritable subjects known as 22/36 Main Street, Uddingston, a property in which members of the family to which the pursuer and the defender belong have interests. The pursuer in the present action defended the action against him in Hamilton Sheriff Court and the matter was sent to proof. On or about 21 July 1992, those proceedings were sisted by the Sheriff on the basis that there were other proceedings before this court, upon which those proceedings were dependent. Subsequently, on 13 August 1993, the defender in the present action enrolled to have the sist in the Small Claims action recalled. The pursuer in the present action failed to appear at that time and accordingly a further diet was fixed for 5 November 1993. The pursuer in the present action did not appear in the Sheriff Court on this latter date and accordingly, on 5 November 1993, the Sheriff granted decree for the sum claimed, together with expenses. This decree was extracted on or about 22 November 1993. No appeal was taken against it.

In the present action, the pursuer sought reduction of the decree concerned on the ground that it was induced by fraud on the part of the defender. Some details of the ground of action are set forth in condescendence 6. It is there said that the defender raised the action in the Sheriff Court when he had no legal basis for doing so; that the action was incompetent and unfounded; and that the defender proceeded to seek, and, in the absence of the pursuer, obtained decree against him. The present action has been defended from the outset. I refer to the closed record, as further amended, for details of the parties' positions.

In due course, on 30 May 1997 a proof before answer was allowed on the joint motion of the parties. The action came before me at a diet of proof on 13 October 1998, when the pursuer's proof commenced. The first witness led in support of the pursuer's case was the defender. His examination in chief and partial cross-examination occupied the whole time available for the proof, a period of four days. At the end of that period, the diet of proof was adjourned to a date to be fixed.

The case came before me again on 21 October 1999, the first day of the continued diet of proof. At the outset of the proceedings, counsel for the pursuer said that the action was to be abandoned at common law. To that end he lodged a minute of abandonment. There was no dispute between the parties that it was then appropriate for the court to grant a decree of absolvitor, which was done. There remained for determination the issue of the expenses of the action, which, it was agreed, was to be determined by an exercise of the court's discretion. Thereafter, both counsel for the pursuer and counsel for the defender sought awards of expenses in their clients' favour.

In moving me to award expenses in favour of his client, counsel for the pursuer recognised that it was unusual for an unsuccessful pursuer, who was abandoning his action, to seek expenses against a successful defender. However, the circumstances of the present case were unusual and there were cogent reasons why that course should be followed. Counsel for the pursuer said that the basic reason justifying his motion was that evidence had been given by the defender to the effect that fundamental matters bearing on the merits of the action had not been disclosed until he gave evidence. The position was that the fraud alleged in the present action consisted in the defender having knowingly moved for a decree in the Sheriff Court proceedings on the basis of an incorrect statement of facts, set forth in the statement of claim in that action. In that connection, counsel for the pursuer referred to the averments in condescendence 4 in the present action, which were concerned with certain admissions apparently made on behalf of the defender in the action against him at the instance of Associated Rentals Ltd in the Sheriff Court at Hamilton, in which interdict and interim interdict were sought by the pursuers against the defender to prevent him blocking off the common close at 22/36 Main Street, Uddingston. Counsel for the pursuer said that originally these averments in condescendence 4 had been denied. That was an improper situation, since the averments concerned were an indisputable matter of public record. In consequence of that position, in the present action, a motion for summary decree had been enrolled on behalf of the pursuer, which came before the court on 25 October 1996. At that time counsel for the defender indicated that he had been about to lodge a minute of amendment, the effect of which would have been to aver that the apparent admissions relied on in condescendence 4 did not represent the true position of the defender. In those circumstances, the court had refused that motion in hoc statu. The substance of what was said to be the defender's true position was that a Mr McKillop, a solicitor then acting on behalf of the defender, had made unwarranted averments on behalf of his client. Against that background, at that stage, the pursuer's advisors had sought the defender's permission to precognose Mr McKillop in relation to those matters, which would have involved a waver of the duty of Mr McKillop to preserve the confidentiality of communications between himself and his client. The defender did not give permission for the precognition of Mr McKillop.

Following upon those events, the pursuer had then attempted to address the problem by the recovery of documents. A commission and diligence, in terms of the specification of documents, No. 29 of process, as amended, was granted by the court on 14 October 1997. A commission was fixed and Mr McKillop was cited to attend, which he did on 17 November 1997. A report of that commission was No. 36 of process. Mr McKillop said that any documents which might fall within the terms of the specification had been passed by him to the defender's new solicitors, Messrs Ross Rodgers of Rutherglen. At the same commission, a Mr Steven Maguire, a solicitor with Messrs Ross Rodgers, was also examined before the Commissioner. He testified that he did not have any papers which fell within the terms of the specification and never had had. Following upon those proceedings it was stated by counsel for the pursuer that the firm of Messrs Ross Rodgers must have been in possession of the documents sought. Accordingly a continued diet of commission was convened on 5 October 1998, the report of which is No. 39 of process. On that occasion, a Miss Shona Aird, a solicitor with Messrs Ketchen & Stevens, Solicitors, Edinburgh correspondents for Messrs Ross Rodgers, was questioned. She disclosed that she had possession of two of four files which had been received from the defender's former solicitors, Messrs MacDonalds Sergeants, of which Mr McKillop was a partner. She stated that she did not know the current whereabouts of the other two files. She said that all four files had been transmitted to counsel for the defender, Mr Raj Jandoo, Advocate on 5 December 1996. At the continued diet of commission Mr Jandoo also was examined. He stated that he did not have possession of the two files concerned. Counsel for the pursuer explained that on 8 October 1998 the Commissioner had found the two missing files within his box at Parliament House; they had mysteriously appeared there, unaccompanied by any covering letter; he had examined their contents, but had found in them no documents falling within the terms of the specification of documents which had been approved. The Commissioner had written a supplementary report, No. 43 of process, dealing with those matters.

Reverting to the evidence which the defender had given at the first diet of proof, counsel for the pursuer said that the defender had spoken of an assignation in his favour by his father of certain rights in relation to the demolished wall, which might be thought to have validated the claim made by the defender in the Small Claims procedure in the Sheriff Court. He had also spoken in evidence of the fact that the terms of his Small Claim had been amended to reflect the consequent change in his position in the Small Claim. That was the first occasion on which there had been any disclosure by the defender of an alleged amendment to that Small Claim. The position was complicated by the fact that the relevant minute book relating to the Small Claim in Hamilton Sheriff Court had been destroyed by fire. Counsel for the pursuer explained that the principal summons in a Sheriff Court Small Claim was used as an interlocutor sheet. On the disposal of such an action, the principal summons was returned to the pursuer. It had to be assumed that that had been done in the present case, yet the document had not been seen by the pursuer in the present action. The court had refused a commission and diligence to recover that document, sought during the course of the first diet of proof. A letter, dated 26 November 1991, No. 44 of process, purporting to be a pre-litigation claim made by the defender to the pursuer, which referred to the assignation in favour of the former, had never been received by the pursuer.

Having explained the foregoing aspects of the case, counsel for the pursuer proceeded to refer to certain authorities which he contended were relevant to the court's decision. In the first instance, he made reference to Sheriff Court Practice, MacPhail, 2^nd Edition, paragraphs 19.7, 19.11 and 19.12. These dealt with situations in which the court had departed from the normal rule that expenses followed success. It was made clear that a successful party might be made liable for expenses if, for example, he had obstructed the precognition of witnesses, or failed to produce material documents. In the present case the fundamental problem was that the defender had first revealed that there had been an amendment to the claim before the Sheriff in the evidence which he gave at the first diet of proof. That had created a situation in which the pursuer was unable to disprove that assertion. It was for that reason that the pursuer had been advised that abandonment was appropriate.

Counsel for the pursuer went on to refer to Barry v Caledonian Railway Co [1902] 5 F. 30. In that case, successful defenders had been made liable to an unsuccessful pursuer in expenses because they had refused to allow the pursuer to precognose their servants and so ascertain the nature of the accident with which the action was concerned. Reference was also made to Armour v T. L. Duff & Co 1912 S.C. 120. In that case, successful defenders were refused full expenses on account of misleading statements in their defences, calculated to induce the pursuer to proceed with the action, which he might otherwise have abandoned. In the whole circumstances, counsel for the pursuer submitted that the expenses of the action should be awarded in favour of his client.

Counsel for the defender moved me to refuse the pursuer's motion and to grant the motion which he made on behalf of the defender for an award of expenses against the pursuer. He submitted that there was no justification in the circumstances of the present case for the court departing from the ordinary rule that expenses should follow success. It had to be recognised that the action was unusual; fraud was averred against the defender and it had to be supposed that, before that had been done, the pursuer had been in possession of material to justify such a serious allegation. Furthermore, on any view of the matter, the pursuer should not be entitled to the whole expenses of the action. Since the first diet of proof, at which the evidence said to be crucial had been given by the defender, nothing had been done by the pursuer. In consequence, further expense had been generated to no purpose. Counsel for the defender submitted that, in exercising its discretion in relation to the issue of expenses, the court could not give weight to evidence given by the defender, since his testimony had not been completed. When the first diet of proof had come to an end, the defender was being cross-examined; that cross-examination had not been completed and now never would be. It could not be assumed that the evidence of the defender founded upon by the pursuer represented his final position on the matter concerned.

Counsel for the defender went on to submit that the conduct of the present action by the pursuer had been most unsatisfactory. In that connection he pointed out that, in condescendence 2, at page 6B of the closed record, as further amended, the summons in the Small Claims action was referred to for its whole terms, which were held as repeated brevitatis causa. In terms of Rule of Court 27.1, in that situation, the pursuer had had a duty to produce that document at an early stage in the action. He had failed to do so. It had not yet been produced. During the course of the first diet of proof, the pursuer had sought to recover that document by means of commission and diligence. The court had quite rightly refused the pursuer's motion at that stage. The fact of the matter was that the importance of that document had been obvious from the outset, yet the pursuer had neglected to recover it at an appropriate time. Furthermore, much had been said about the significance of the averments in the action at the instance of Associated Rentals Ltd. In Answer 4 in the present action, the defender made certain averments about the pleadings in that action. He averred that he had instructed his agents to amend his pleadings in that action because they did not reflect his instructions. In due course, a minute of amendment on his behalf had been prepared but had not been allowed by the court. It was self-evident that Mr McKillop must have had instructions for the preparation of that minute of amendment. In addition, counsel for the defender argued that it was unclear what the fraud said to have been involved in the present action was. The pursuer's pleadings in this action were most unsatisfactory in that regard. The defender had been quite entitled to vindicate his position in relation to a serious allegation of fraud.

A further relevant consideration was that, over a long period of time, the defender had endeavoured to put an end to the present proceedings. By letter dated 20 September 1995, No 38/1 of process, he had written to the solicitors for the pursuer. The defender had repeated his offer to undertake not to enforce the decree against the pursuer. That letter had never been answered. Furthermore, on 18 July 1997, the defender had lodged an affidavit in the present action, sworn by himself, in which he stated that he was willing to give an undertaking not to enforce the decree sought to be reduced nor to assign the same or intromit in any way with the same, on the basis that the case would be concluded and the proceedings against him dismissed with no expenses due to by either party. That reasonable position had been spurned by the pursuer. In a letter, dated 12 August 1997, from solicitors for the pursuer to the solicitors for the defender, the pursuer had refused the defender's offer of an undertaking not to enforce the decree. All this showed that the defender had adopted a reasonable position throughout the course of the present action, which had nevertheless been insisted in by the pursuer. Faced with that posture on the part of the pursuer, it was entirely justifiable for the defender to defend his good name against a charge of fraud.

Turning to other aspects of the case, counsel for the defender drew attention to the fact that, from an early stage in the action, the pursuer had been made aware of the existence of the assignation in the defender's favour granted by his father, No. 24/4 of process. That document had been produced by the defender in 1997. On 26 September 1997, the court had had to deal with a motion at the instance of the pursuer seeking authority for the forensic examination of the document concerned. Although that motion was never disposed of, the fact of its having been enrolled made it entirely clear that the pursuer was well aware of the assignation and of its significance from an early stage in the case.

Upon the assumption that the court did not accept his primary submission, counsel for the defender made certain subsidiary submissions. In the first place, if the court were not prepared to award all of the expenses of the action against the pursuer nevertheless expenses should be awarded against him from 20 September 1995, the date on which the pursuer had written the letter to the pursuer's solicitors, offering to undertake not to enforce the decree. Alternatively, were that submission not to be accepted, expenses should be awarded against the pursuer from 9 July 1997, the date of the affidavit to which reference had been made, in which such an undertaking was set forth. In the event of that submission not being accepted expenses should be awarded against the pursuer from 17 October 1998, the day following the end of the first diet of proof. Had the pursuer applied his mind to the problems which he now considered insuperable, the action should have been abandoned then. Finally, any award of expenses against the defender should be made against him, as an assisted person.

Counsel for the defender finally made certain submissions relating to the authorities on which the pursuer was relying. In Armour v T. L. Duff & Co, the court had taken the view that the defenders' averments were misleading and calculated to induce the pursuer to proceed with the action, which he might otherwise have abandoned. It was submitted that that could not be said of the defender's averments in the present action. The pursuer had only himself to blame for insisting in the present action for as long as he had done without a sufficient basis in evidence for it. So far as Barry v The Caledonian Railway Co was concerned, it ought to be recognised that there was a material difference between a railway company declining facilities for the precognition of its employees and a client declining a waver of a confidentiality in relation to his own solicitor.

In reply counsel for the pursuer said that his complaint was not that the assignation on which the defender relied had not been produced. The essence of this complaint was that the defender had said that there had been an amendment made on his behalf in the Small Claim action, during the course of his evidence. That information should have been, but was not, disclosed to his advisors earlier. On the contrary, that information had been concealed by the defender. In relation to the criticism which had been directed against the basis of the present action, reference was made to Rowe v Elliot 1973 S.L.T.(Notes) 41. In that case, the court recognised that there was a fraud on the court where a pursuer knowingly set forth false facts in an initial writ, in respect of which a decree was subsequently pronounced in absence. In such a case as that, the court did not look at the merits of the claim and pronounced the decree upon the basis that the claim was honestly advanced.

Turning to the defender's subsidiary submissions, it was not true to say that nothing of value had been done between the date of the last diet of proof and the present time; there had been quite extensive discussions between the parties' advisors concerning how the issue in the action might be obviated and the case settled, although these discussions had borne no fruit.

I consider firstly the submission made by counsel for the defender to the effect that the whole basis of the pursuer's action was flawed and that the normal course in regard to expenses should be followed, since all that had happened was that the pursuer now recognised the defective nature of his action. I reject this general attack upon the basis of the pursuer's action in averment. It appears to me that the case of Rowe v Elliot makes clear that a fraud may be involved in a situation in which a decree is obtained from a court upon the basis of averments made in support of a claim, which are known to be false by the claimant. In granting a decree in absence or by default, I consider that a court proceeds upon the assumption that the claim before it is put forward honestly and in good faith. In any event, whether I am right or wrong about that matter, it appears to me that had the defender considered that there was force in his contention in this respect, he could have challenged the formulation of the pursuer's claim in this action at a procedure roll diet. That he did not do.

As I understood it, the pursuer's main contention was that the defender had improperly failed to disclose that the Small Claim summons had been amended, to reflect the assignation given to the defender by his father, until he stated that that had been done in his evidence to this court. In my opinion, there is some force in this contention. In the present action, the pursuer's case, as I understand it, was that the pursuer came into court claiming fraud on the part of the defender in respect that the defender had obtained a decree in the Sheriff Court on the basis of averments in the Sheriff Court action, which the defender knew to be false. In the face of a claim of that kind, if the defender's position was that, in fact, the statement of claim in the Sheriff Court proceedings had been amended to show a proper legal basis for action, based on the assignation to him by his father, then one might have properly expected that position to have been disclosed by the defender in his defences to this action. It appears to me that that view is in accordance with what was said by Lord Guthrie in Armour v T. L. Duff & Co, at page 125 where he said, after setting out his proposal in relation to expenses:

Similar views were expressed by Lord Salvesen and The Lord Justice Clerk. In the present action, as the defender in his evidence quite frankly disclosed, he thought that it was a legitimate tactic to refrain from disclosure of relevant matters with the result that the pursuer might be "ambushed". It appears to me that, if that was the approach that was adopted by the defender here, as appears to have been the case, there is a price to be paid for that approach to litigation. While I acknowledge the pursuer's complaint regarding non-disclosure of the amendment said to have been made to the Small Claims summons, in my opinion, the pursuer could and should have taken steps which would have enabled him to have ascertained with confidence what had been done in the Sheriff Court action. Had that been done there is at least a likelihood that he might have been able to avoid the plight in which he found himself following upon the first diet of proof. I have in mind that, had the pursuer adopted a prudent course, he would have taken steps to recover the summons in the Sheriff Court action before committing himself to the present litigation. Had that been done, in all probability, he would have been able to see from the material recorded on that summons by the Sheriff what amendments if any had been made to the statement of claim. The pursuer attempted to obtain a commission and diligence to recover that document during the course of the first diet of proof, which, in my opinion, was a hopelessly late stage at which to take that step. By appropriate procedure, steps could have been taken to recover the document prior to the commencement of the present action, but, in any event, ought to have been taken immediately upon the commencement of this action, having regard to the averment made in condescendence 2 and to the terms of Rule of Court 27.1.

Having considered the pursuer's contentions in relation to the denial by the defender of facilities to precognose Mr McKillop, the conclusion which I have reached is that that denial had no ascertainable consequences in the circumstances of the present case. It is unclear to me what particular advantage to the pursuer would have been obtained by the opportunity to obtain a precognition by Mr McKillop. Whatever admissions may have been made on behalf of the defender in the action at the instance of Associated Rentals Ltd, it is clear that he took steps to try to have those admissions excised from that case prior to the commencement of the present action. In these circumstances, it appears to me to have been imprudent to have placed reliance upon their existence. Finally, I should make it clear that I was not impressed by the contentions advanced by counsel for the defender, based upon the various offers made by the defender to refrain from enforcing the decree under consideration. It appears to me that those offers would not have afforded to the pursuer the remedy which he sought in the present action.

In the light of these various considerations, my conclusion is that justice would be done as regards the expenses of the action if I were to refuse the pursuer's motion for expenses and to accede to the defender's motion for expenses, but only to the extent of one-half of those expenses. That is the course which I shall follow.