Scottish Court of Session Decisions
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Cite as: [2003] ScotCS 289
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OUTER HOUSE, COURT OF SESSION |
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A1667/02
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OPINION OF LORD DRUMMOND YOUNG in the cause EIRLYS LLOYD Pursuer; against ALYSON MARY THOMSON Defender:
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Act: Party
Alt: Olson; Franks Macadam Brown
20 November 2003
[1] The pursuer concludes for production and reduction of an extract decree obtained by the defender at Edinburgh Sheriff Court on 7 June 2002. That extract decree is for dismissal of an action raised in Edinburgh Sheriff Court by the present pursuer against the present defender together with expenses of £11,432.82, payable by the present pursuer to the present defender. [2] The Sheriff Court action, which was for damages for defamation, was dismissed by the Sheriff on 3 August 1999. The pursuer was found liable to pay the defender's expenses. The defender's account of expenses was remitted to the Auditor, who in due course reported on the account. The pursuer then lodged a note of objections. When this came before the Sheriff, on 26 January 2001, he pronounced an interlocutor in the following terms:"The Sheriff, having resumed consideration of pursuer's note of objections, repels the objections as stated, approves the Auditor's report, grants decree in favour of the defender for expenses as taxed; and meantime reserves all questions of expenses relating to the note of objections".
The pursuer appealed against that interlocutor to the Sheriff Principal. Following a hearing, the Sheriff Principal refused the appeal as incompetent on 6 April 2001. The interlocutor was accompanied by a detailed opinion in which the Sheriff Principal indicated that an interlocutor disposing of a note of objections in respect of an auditor's report was not an interlocutor that "disposes of the subject matter of the cause", in terms of section 3(h) of the Sheriff Court (Scotland) Act 1907; consequently leave to appeal was required in terms of section 27 of the 1997 Act, and that had not been obtained in the present case. Thereafter the pursuer appealed to the Court of Session, and her appeal was refused by an Extra Division on 17 May 2002. On 21 May 2002 the pursuer wrote to the clerk to the Extra Division to intimate that she was considering an appeal to the House of Lords, and that letter was acknowledged on 29 May 2002. The pursuer avers that, in respect that the Extra Division's interlocutor contained no remit to the Sheriff Court and in respect of the pursuer's letter of 21 May 2002, the clerk to the Extra Division attached a note to the process instructing that he would not issue an extract without the approval of the court; that note, it is said, is no longer in process.
[3] On 28 May 2002 the defender's agents wrote to the Sheriff Clerk to request an extract decree. On 7 June 2002 the extract decree that is under challenge in the present action was issued. This is in the following terms:"Extract Decree
Edinburgh Sheriff Court
Date of decree 26 January 2001
6 April 2001
17 May 2002
31 May 2002
Pursuer Defender
Eirlys Lloyd Alyson Mary Thomson
(formerly Minto)
... ...
The Sheriff dismissed the action against the defender and granted decree against the pursuer for payment of expenses of £11,432.82.
This extract is a warrant for all lawful execution hereon".
The extract was signed by a Sheriff Clerk Depute. The pursuer avers that on 19 June 2002 Sheriff Officers acting on the instruction of the defender's agents executed a charge and served an inhibition on the pursuer in reliance on the extract decree.
[4] In the foregoing circumstances the pursuer claims that the extract decree should be reduced on three grounds. First, she asserts that the dates of the interlocutors mentioned in the extract decree are wrong. Four interlocutors are referred to, but no interlocutor was pronounced on the fourth date mentioned, 31 May 2002. This is said to invalidate the extract. Secondly, the pursuer claims that the extract is of a decree that is not final under the 1907 Act; consequently it should not have been extracted without leave of the Sheriff. Thirdly, the pursuer states that the extract decree was premature in that when the extract decree was issued consideration was being given to an appeal to the House of Lords against the interlocutor of the Inner House, and an appeal to the House of Lords was not out of time. [5] In my opinion the first of these grounds is clearly ill founded. It is true that the fourth of the dates stated in the extract as dates of decree is obviously an error, no interlocutor having been pronounced on that date. The pursuer does not, however, suggest that the presence of that date is in any way material. Nor does she suggest that she has suffered any prejudice as a result of the inclusion of that date. Indeed, it is difficult to see how any such prejudice could occur. The dates of the operative interlocutors are all correctly stated, and the fourth date is of no importance. In the circumstances I am of opinion that the presence of the fourth, erroneous, date does not have any effect on the validity of the extract. [6] The pursuer's second ground of challenge present greater difficulties, however. The time when a Sheriff Court decree becomes extractable is governed by Rule 30.4 of the Ordinary Cause Rules 1993. Rule 30.4(1)(b) states the normal Rule; where there has been an appeal, extract is possible when the appeal has been finally disposed of. Sub-paragraph (b), however, is expressly made subject to sub-paragraph (c) of Rule 30.4(1). That sub-paragraph is in the following terms:"(c) where the sheriff has, in pronouncing decree, reserved any question of expenses, extract of that decree may be issued only after the expiry of 14 days from the date of the interlocutor disposing of the question of expenses unless the sheriff otherwise directs".
In the present case the Sheriff's interlocutor of 26 January 2001 expressly reserved the question of expenses relating to the note of objections. Consequently that interlocutor appears to fall within the terms of sub-paragraph (c). On that basis extract of the decree of 26 January 2001 could only be issued following an interlocutor dealing with expenses, unless the Sheriff made a direction to the contrary. I understood both parties to accept that no such direction had been made.
[7] Counsel for the defender submitted that, on a proper construction of Rule 30.4(1), that Rule had no application to any decree that dealt with the expenses of an action rather than its merits. The reason put forward was that otherwise extract might never be possible. When an award of expenses was made, taxation had to follow, and any hearing on the report in the taxation would itself give rise to a liability in expenses. The result was an infinite regress. In my opinion that argument is not correct. If there is a hearing on an award of expenses, and the expenses of that hearing are reserved, the successful party may do one of two things. First, he may enrol a motion relating to the expenses of the hearing on expenses, either to recover those expenses or to find no expenses due to or by either party. In that event, the sheriff's decision on the motion will dispose of the question of expenses, and extract will be possible after 14 days. Secondly, the successful party may apply to the sheriff for a direction that extract should be possible immediately, or 14 days after the sheriff's interlocutor that is to be extracted. If there are good reasons for allowing extract without dealing with the question of the expenses of the last hearing, there should be no difficulty in giving such a direction. In that way there is no risk of an infinite regress, and the successful party will always be able to obtain extract. Moreover, the wording of Rule 30.4(1)(c) refers to cases where the sheriff has, in pronouncing decree, "reserved any question of expenses". "Decree" is defined in Rule 30.1 as including any interlocutor which may be extracted, and is thus clearly habile to cover a finding in expenses. The reference to reserving "any question" of expenses is in my opinion quite general; I cannot see any basis for confining it to reservations made in decrees on the merits rather than decrees dealing with expenses. Indeed, the definition of "decree" is plainly contrary to any such suggestion. Any practical difficulties can easily be dealt with by following one of the two courses suggested above. [8] In the present case, however, neither of those courses was followed. The result is that the defender has obtained an extract decree to which she was not entitled according to the provisions of the Ordinary Cause Rules. Counsel for the defender submitted that, even if I were against him on the interpretation of Rule 30.4(1)(c), the extract should not be reduced. Reduction is an equitable remedy, and technical errors are not sufficient to justify it. In particular, if reduction is to be justified, it is necessary that prejudice should be demonstrated. In the present case, the pursuer did not aver that she suffered any prejudice in consequence of the granting of the extract decree. I agree that reduction is an equitable remedy, and that in certain circumstances the court has a discretion to refuse the remedy if it considers that there are good grounds for doing so. Nevertheless, I think that the remainder of counsel's argument requires closer examination. [9] The critical question is in what circumstances it is appropriate for the court to refuse decree of reduction even though a contravention of a legal right has been demonstrated. In this context, it is necessary in my opinion to distinguish two categories of legal defect that may affect deeds, decrees, extracts and other writings. The first category comprises three types of defects, ultra vires or other forms of incompetency, fraud, and breach of the principles of natural justice. These are all defects of a fundamental nature; indeed, a document that is ultra vires of the granter can be regarded as a nullity, and fraud involves a defect of the most serious nature. In these cases, because the defect is fundamental, I am of opinion that the court should be slow to refuse the remedy of reduction. To the extent that prejudice is relevant, I am of opinion that in these cases the mere possibility of prejudice is generally sufficient for reduction to be granted. The second category comprises all other defects; that would include, for example, procedural defects that did not go to the power of the granter of the document to act and did not contravene the principles of natural justice. In these cases, I am of opinion that, the existence or otherwise of prejudice is a highly material consideration. Indeed, if no practical prejudice can be shown, no useful purpose will be served by reduction, and decree should normally be refused. [10] In the present case the defect plainly falls within the second category. The Sheriff Court clearly had power to issue extract decrees, and the sheriff clerk depute who signed the extract decree in question clearly had power to sign decrees of that nature. Thus the decree cannot be regarded as ultra vires. Nor can it be regarded as having been issued in breach of the principles of natural justice, because the issuing of an extract follows automatically on the granting of a decree, without further representations by the parties. The extract was granted in breach of Rule 30.4(1)(c) of the Ordinary Cause Rules. While those Rules have the force of statute, they are subject to a general power to relieve from the consequences of non-compliance, found in Rule 2.1, and Rule 30.4(1)(c) contains its own special dispensing power. The general relieving power in Rule 2.1 is in my view of considerable significance in the present case. It entitles a sheriff to relieve a party from the consequences of failure to comply with a provision in the Rules which is shown to be due to mistake, oversight or other excusable cause. In the present case, the extract granted on 7 June 2002 was obviously granted owing to a mistake or oversight, in that neither the defender's solicitor nor the relevant sheriff clerk depute noticed that, because of the reservation of expenses, extract should not have been granted without a direction from the sheriff. If the sheriff has power to relieve a party from his failure to comply with the Rules, I am of opinion that a judge in the Court of Session who is contemplating reduction must consider whether it is likely that that power would have been exercised. If it would, decree of reduction should be refused, on the basis that it would serve no useful purpose. [11] Whether the relieving power would have been exercised must in my opinion turn on the existence or otherwise of prejudice to the opponent of the party who seeks relief. In this context it is actual prejudice that matters, not the mere possibility of prejudice. I am further of opinion that that prejudice must exist at the date when reduction is contemplated, rather than the date when the action of reduction was raised, because the exercise of the court's discretion to refuse decree of reduction must depend on circumstances at the time when that decree is under consideration. In the present case, the pursuer avers that on 19 June 2002 Sheriff Officers executed a charge and served an inhibition, and that further diligence was threatened. No such diligence is in fact averred, no doubt because on 28 June 2002 the pursuer obtained an interim interdict in the present action against the further effecting or enforcement of diligence. During the intervening period the defender could have applied to the Sheriff for relief under Rule 2.1. Had that been done, I am of opinion that it would have been granted. The Sheriff made an award of expenses in favour of the defender as long ago as 26 January 2001. Two appeals followed, but the Sheriff's decision was upheld. No appeal to the House of Lords has been proceeded with. In these circumstances there is no conceivable practical reason to prevent the defender from enforcing her award of expenses. All that can be said against enforcement is that Rule 30.4(1)(c) prevents it. That Rule, however, appears to be designed to prevent parties and court officials from losing sight of a reservation of expenses. If a party who has been successful chooses to seek extract without obtaining any award in respect of the reserved expenses, I can see no reason for denying extract. At most, the party who applies for extract can be regarded as waiving any award of expenses in his or her favour. Moreover, I cannot regard the charge and inhibition effected on 19 June 2002 as prejudicial to the pursuer. They followed upon, and were designed to enforce, an award of expenses in the defender's favour. The only defect is a somewhat technical one, that the defender did not apply to the sheriff to make no award of expenses, or to authorise extract in terms of Rule 30.4(1)(c), or to relieve from the consequences of that Rule under Rule 2.1. If any of those applications had been made, I am of opinion that it would clearly have been granted. That would have permitted a charge and diligence. In these circumstances, I consider that the argument for exercise of the relieving power in Rule 2.1 is overwhelming. If that power had been exercised, the extract granted on 7 June 2002 would have been validated. So far as the pursuer's second ground of challenge is concerned, therefore, I conclude that no useful purpose would be served by a decree of reduction. [12] I am likewise of opinion that the third ground of challenge is ill-founded. The pursuer does not aver that she had presented a petition of appeal to the House of Lords prior to the date when the extract decree was issued; she merely avers that she had told the clerk to the Extra Division that she was considering such an appeal. Nor does she aver that any petition of appeal has subsequently been presented. The interlocutor of the Inner House was dated 17 May 2002; consequently the time limit for the presentation of a petition expired on 17 August 2002. In these circumstances, if the pursuer's second argument is put to one side, the defender would have been entitled to an extract decree from 17 August 2002 onwards. By that time, on any construction of Rule 30.4(1)(b), the pursuer's appeal had been finally disposed of, and the defender was entitled to extract. From that time onwards, accordingly, the defender would have been entitled to apply to the Sheriff to exercise the relieving power in Rule 2.1. As with the failure to observe Rule 30.4 (1) (c), I think it clear that any failure to comply with Rule 30.4 (1) (b) was due to mistake or oversight. I am likewise of opinion that no prejudice has been averred; once again, the defender had a decree in her favour, and could clearly have exercised that had one of the applications described in the foregoing paragraph been made. I accordingly conclude in relation to the pursuer's third ground of challenge that no useful purpose would be served by a decree of reduction. [13] In the foregoing circumstances I am of opinion that I should refuse decree of reduction in the exercise of the court's equitable discretion. It follows that the pursuer's second conclusion, for interdict, must also be refused; that conclusion is clearly ancillary to the conclusion for reduction, and must stand or fall with it. I will accordingly sustain the defender's first plea-in-law and dismiss the action.