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OUTER
HOUSE, COURT OF SESSION
[2006] CSOH 50
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A2753/01
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OPINION OF LORD MACKAY OF DRUMADOON
in the cause
COLIN BOYD QC, THE LORD ADVOCATE
Pursuer;
against
ASAU JV AND OTHERS
Defenders:
ญญญญญญญญญญญญญญญญญ________________
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Act: C.M. Campbell, Q.C., Wolffe; Henderson Boyd Jackson
Alt: McNeill, Q.C., Bowen; Wright Johnston &
Mackenzie
24 March 2006
Introduction
[1] On 4 August
1996 an accident
occurred on the River Clyde. A steel fabrication, which was designed to form
part of an oil rig, was being towed down river.
The steel fabrication was being carried on a barge. As the barge was being towed under the Erskine Bridge the fabrication collided with the
superstructure of the bridge, giving rise to loss and damage, which the pursuer
seeks to recover from a total of five defenders.
[2] The fifth defenders are
Bouygues Offshore-Uie Ltd. They,
together with the second, third and fourth defenders, were parties to a joint
venture, ASAU JV, who are the first defenders.
[3] In terms of a third
party notice, which came before the court on 24 July 2001, the fifth defenders convened three third
parties to the action. The third third
party, Clydeport Operations Ltd, was one of those third parties. The case against the third third party
proceeded on the basis that they had been involved in discussions relating to arrangements
for towing the fabrication down the River Clyde, that they had imposed certain
requirements on the tow and that they had provided pilotage services to the
defenders, in connection with the tow.
It was contended by the fifth defenders that fault and negligence on the
part of the third third party had contributed to the occurrence of the accident
and that, in any event, the third third party had assumed responsibility for
the safe passage of the fabrication on its voyage down the River Clyde,
entitling the fifth defenders to contribution from the third third party, under
the provisions of section 3 of the Law Reform (Miscellaneous Provisions)
(Scotland) Act 1940
[4] After sundry procedure
the Record closed, of new, on 8 May 2002. The
next interlocutor in the action was dated 29 February 2004, in terms of which Lord Clarke refused a
motion by the second third party seeking to transfer the action to the
commercial roll. On 23 May
2004 the action was
sent to the procedure roll, on a variety of pleas-in-law, including the first,
second, third and fourth pleas-in-law for the fifth defenders and the third and
fourth pleas-in-law for the third third party.
On the same date the parties were ordained to lodge notes of argument
within 28 days. After further procedure
a diet of procedure roll was fixed for 27 September 2005. When
the case called before Lady Smith on 27 September 2005, the diet of procedure roll was
discharged. Amongst other orders Lady
Smith pronounced on that date was one in respect of a Minute of Abandonment,
which had been tendered at the bar by the fifth defenders, in which they
abandoned their third party notice against the third third party, under Rule
29.1(1)(b) of the Rules of the Court of Session, as
applied by Rule of Court 26.7(5). Lady
Smith found the fifth defenders liable to the third third party in the expenses
of process. Before that order was
pronounced, senior counsel for the third third party intimated to Lady Smith
that the third third party intended to enrol a motion that the fifth defenders'
liability in expenses should be on an agent and client basis. A note to that effect was included in the
Minute of Proceedings. Subsequently a
motion was enrolled on behalf of the third third party to find the fifth
defenders liable to the third third party in the expenses of process on such a
basis. That motion was opposed on the
grounds that the motion was incompetent and that, in
any event, there was no basis for awarding expenses on an agent and client
basis. That motion came before me.
[5] Before I deal with the
submissions I heard in relation to the motion, I should refer briefly to the
case of Ewos Ltd v Mainland 2005 SLT
1227. The case was reported after I heard submissions in the present case. In Ewos Ltd an issue arose as to the
competency of a Lord Ordinary dealing, on a date subsequent to the dates on
which awards of expenses had been made by him, with the question of whether
those awards of expenses should be taxed on an agent and client basis. The
motions arose in the context of Rule of Court 4.15(6), which allows an
interlocutor to be corrected or altered, on cause shown. At earlier stages in
the case, Lord Drummond Young had pronounced a number of awards of expenses in
favour of the defenders. The defenders sought to have those interlocutors
rectified so that each award of expenses should be taxed on an agent and client
basis. In respect of two of the earlier interlocutors, Lord Drummond Young
had intended, on the date the particular interlocutor had been pronounced, that
the award of expenses concerned should be without prejudice to the question of
whether that award should ultimately be on an agent and client basis. On each
of those occasions, a reservation to that effect had been included in the
minute of proceedings. In respect of other interlocutors Lord Drummond Young
had not held such an intention on the dates the interlocutors had been
pronounced and no such reservations had been minuted. In paragraph [21] of his
Opinion, Lord Drummond Young expressed the view that when an award of expenses
is made it is possible for the basis of taxation to be reserved, but that any
such reservation should be recorded in the court's interlocutor, rather than in
the minute of proceedings. In those circumstances, he was prepared to rectify
those interlocutors, which had been accompanied by a reservation in the minute
of proceedings. He did so by including in the interlocutors being rectified a
reservation of the question as to whether the award of expenses in favour of
the defenders should be on an agent and client or a party and party basis. That
having been done, it was then open to the defenders to argue before Lord
Drummond Young that the awards of expenses covered by those rectified
interlocutors should be taxed on an agent and client basis. As far as the
motion before me is concerned, no point was raised on behalf of the fifth
defenders that the motion was incompetent because the reservation of the
question as to whether the award of expenses should be taxed on an agent and
client basis had been included in the minute of proceedings rather than in Lady
Smith's interlocutor of 27 September 2005. Accordingly, following the approach
taken by Lord Drummond Young in Ewos
I intend to rectify the interlocutor of 27 September 2005, in terms of Rule of Court 4.15(6), to
include reservation of the question as to whether the award of expenses made by
Lady Smith should be taxed on an agent and client or a party and party basis.
Submissions
[6] As far as the motion before me is concerned the submissions as to
the competency of my granting the motion related to the provisions of Rule of
Court 29(1). That rule is in the following terms:
"29.1 - (1) A
pursuer may abandon an action by lodging a minute of abandonment in process and
- (a) consenting to decree of absolvitor; or (b) seeking decree of dismissal.
(2) The
court shall not grant decree of dismissal under paragraph (1)(b)
unless -
(a) full
judicial expenses have been paid to the defender and to any third party against
whom the pursuer has directed conclusions, within 28 days after the date of intimation of the report of the
auditor and the taxation of the account of expenses of that party; and
(b) where abandonment is made in a proof or jury trial, the
Minute of Abandonment is lodged before avizandum is made in the proof or the
charge to the jury by the presiding judge has begun in the jury trial, as the
case may be.
(3) If
the pursuer fails to pay the expenses referred to in sub-paragraph (a) of
paragraph (2) to the party to whom they are due within the period specified in
that sub-paragraph, that party shall be entitled to decree of absolvitor with expenses."
Rule 26.7.(5) applies the provisions of Rule
29.1., as between a defender and a third party, as they apply to an action
between a pursuer and a defender.
[7] It was argued on behalf
of the third third party that it was competent for the court to award expenses
in their favour, which would be taxed on an agent and client basis. I was invited to hold that the term "full
judicial expenses" falls to be construed as including an award of expenses
providing for taxation on such a basis.
Reference was made to the provisions of Section 10 of the Judicature Act
1825 ("the 1825 Act"), the terms of which were considered in Mica Insulator v Bruce Peebles & Co 1907 SC 1293 and P. v P. 1940 SC 389. It was
submitted that it would be surprising if it was competent for the court to make
a finding of expenses on an agent and client basis in favour of a defender, or
a third party, in the event of decree of absolvitor in their favour being
pronounced, but incompetent to do in the event that the action (or the third
party notice) directed against them was being abandoned.
[8] On the basis that the
court had a discretion to make such an award of
expenses, I was invited to take account of the fact that the matter was one of
importance to the third third party. All
the facts upon which the action was based had been known to the pursuer when
the action commenced and to the fifth defenders when they had convened the
third third party into the action. This
was not a case in which the fifth defenders had brought the third third party
into the action, whilst they had been unaware of the facts relating to the
accident.
[9] Complicated issues of
economic loss were involved in the action.
The four days that had been set down for the procedure roll hearing in
November 2005 would not have been sufficient.
Furthermore little had happened in the action between November 2002 and
November 2005. In November 2002 the
solicitors acting for the third third party had sought to initiate discussions
with the solicitors acting for the fifth defenders, with a view to persuading
the fifth defenders not to insist upon their claim against the third third
party. No response had been received to
that approach. In these circumstances,
the conduct of the fifth defenders has been such as to warrant the Court making
an award of expenses on the basis sought.
[10] Senior counsel for the
fifth defenders submitted that it would not be competent for expenses to be
awarded on an agent and client basis.
That was because the words "full judicial expenses", when they appear in
Rule of Court 29.1(2)(a), should be construed as
meaning expenses taxed on the normal party and party scale. It was argued that there was logic in
adopting such an approach to the construction of the term "full judicial
expenses". The court had no power to
modify an award of expenses against a party lodging a minute of abandonment,
whether that be a pursuer abandoning an action against the defender or a
defender abandoning a third party notice against a third party. For lawyers to advise
on the abandonment of a case was never an easy exercise. Issues were rarely clear cut. If the giving of such advice had to take
account of the possibility that an award of expenses might be taxed on an agent
and client basis, the penal consequences of that occurring might discourage
parties from abandoning claims. That
would encourage parties to proceed with litigation, which they might otherwise
have brought to an end. For that reason
there was good sense in having a fixed tariff for awards of expenses upon
abandonment, namely a tariff referable to party and party expenses.
[11] Reference was made to the
cases to which I have already mentioned.
It was also submitted that the decision in the case of P. v P. had been influenced by the fact
that the action had been a matrimonial cause.
[12] In the alternative it was
argued that there were no circumstances which would warrant ordering that the
award of expenses against the fifth defenders should be taxed on an agent and
client basis.
Discussion
[13] A rule of court dealing
with abandonment was introduced in 1965, when the provisions of Section 10 of
the 1825 Act, as extended by Section 39 of the Court of Session Act 1868, were
replaced by Rule 91A of the Rules of the Court of Session 1965. Rule 91A was
inserted into the Rules of Court by the Act of Sederunt (Rules of Court
Amendment No.2) (Miscellaneous) 1984.
Its terms allowed the Lord Ordinary to grant a pursuer leave to abandon
an action "subject to payment by the pursuer of the defender's expenses". Section 10 of the 1825 Act, as extended by
section 39 of the Court of Session Act 1868, was repealed by the Act of
Sederunt (Rules of Court Amendment No.8) (Miscellaneous) 1986.
[14] After the hearing of the
motion, enquiry was made of the Lord President's Private Office to ascertain
whether any light could be shed on the background as to why Rule of Court 29.1.
is framed in the terms it is. Despite considerable
researches having been carried out by the Lord President's Legal Secretary and
his colleagues, very little light has been shed on that issue.
[15] All that has been
ascertained is that the terms of the Rule of Court 29.1., which replaced Rule
91A of the Rules of Court 1965, were based, in part, upon a Review of the Rules
of Court 1965 dated February 1987. The
review was carried out by a Working Group, prior to the enactment of the Rules
of Court 1994, by the Act of Sederunt (Rules of the Court of Session 1994)
1994. When originally enacted, Rule of Court 29.1.(2)(a) was in its present
terms, apart from a minor amendment substituting the words "the pursuer" for
"he", that was made by the Act of Sederunt (Rules of the Court of Session
Amendment No.4) (Miscellaneous) 2001.
[16] Having considered the
various authorities placed before me, I have reached the view that under the
provisions of Rule of Court 29.1.(2)(a), as applied by
Rule of Court 26.7.(5), it would be competent for me to pronounce an
interlocutor that the award of expenses against the fifth defenders and in
favour of the third third party, which was made by Lady Smith, should be taxed
on an agent and client basis.
[17] Before turning to the
provisions of Rule of Court 29.1., it is appropriate to consider briefly the
provisions of Section 10 of the 1825 Act (sometimes referred to as the Court of
Session Act 1825). Section 10 provided
that "the pursuer (had) it in his power ... to abandon the cause on paying full
expenses or costs to the defender ...". In a number of cases, the term "full expenses"
was construed as meaning expenses as between party and party, as opposed to
expenses as between agent and client (see Lockhart
v Lockhart (1845) 7 D 1045 and Mica Insulator Co. v Bruce Peebles & Co. 1907 S.C.1293). The views of Lord President Dunedin in Mica Insulator Co., Ltd v Bruce Peebles & Co., Ltd (at p.
1299), as to the construction of section 10 of the 1825 Act, were approved of and followed in Nobel's Explosives Co. v British Dominions General Insurance Co. 1919
S.C 455 (see Lord Justice Clerk Scott Dickson, p. 460, and Lord Dundas, pp. 461
- 462).
[18] However, in P. v
P. 1940 S.C. 389 it is possible to identify a different approach to the
construction of the term "full expenses".
In an action of divorce, after the wife defender had reclaimed against a
decree of divorce pronounced in favour of the husband pursuer, the husband
pursuer lodged a minute abandoning the action "in terms of the statute". The defender having moved for expenses, as
between solicitor and client, the pursuer contended that 'full expenses' within
the meaning of section 10 of the 1825 Act meant expenses only as between party
and party. The Second Division found the
defender entitled to the whole expenses of the case, taxed as between solicitor
and client. In considering the views of
Lord President Dunedin in Mica Insulator
Co. v Bruce Peebles & Co.( at p.1299), Lord Justice Clerk Aitchison identified
the question that had been before the court for decision in the earlier case as
having been whether the court could modify an award of expenses in favour of
the defender, following upon the lodging of a minute of abandonment by the
pursuer. Whilst not questioning the court's
ruling on that question, Lord Justice Clerk Aitchison stated that he was not
prepared to take the view that had Lord President Dunedin been considering the
construction of section 10 of the 1825 Act in a matrimonial cause, he would
have laid down that under no circumstances could the court award expenses as
between solicitor and client. The Lord
Justice Clerk's view was that the court had such a power and that it should be
exercised in favour of the defender. The
other members of the court agreed.
[19] Were
my decision in the present case to have depended on construing the provisions
of section 10 of the 1825 Act, I would consider that the decision in P. v
P. was binding on me. In any event, it would appear from the
opinions in Lockhart v Lockhart that the court in that case may
have proceeded on the basis that even if a defender has been granted absolvitor,
and the pursuer has been acting in male
fide, the defender could only
have been awarded expenses taxed on a party and party basis. Such an approach would not accord with
current practice. Although it may not
happen very frequently, defenders are awarded expenses taxed on an agent and
client basis when the pursuer has been acting in bad faith.
[20] As Lord Justice Clerk
Aitchison pointed out in P. v P. the
question as to the correct construction of the term "full expenses" was not one
that was central to the court's decision in Mica
Insulator Co. v Bruce Peebles &
Co. In the latter case, Lord President
Dunedin's views on that question are to be found on page 1299. They are couched in brief and slightly
tentative terms:
"But, then, 'full expenses' means, I think,
expenses as between party and party, and does not admit any other form of
taxation, such as, exempli gratia,
between agent and client."
No further explanation is provided for that construction of section 10. In
Mica Insulator Co. v Bruce Peebles & Co. the opinion of
Lord President Dunedin was one with which the other three members of the Court
concurred. Having regard to the
reasoning in P. v P., I see no reason why, as a matter of principle, the defender in
an action, which had been abandoned under section 10 of the 1825 Act, should
not have been entitled to seek an award of expenses taxed on an agent and
client basis.
[21] In my opinion, there was
nothing in the terms of Rule of Court 91A that required, or even, supported such
a construction being placed on what the Rules of Court then provided, namely
that the Lord Ordinary could grant leave "subject to payment by the pursuer of
the defender's expenses". Turning to the provisions of Rule of Court 29.1., I
do not see any reason why, as a matter of principle, it should not be competent
for the court to make an award of expenses, on an agent and client basis,
against a party who abandons an action, a counterclaim or a claim directed
against a third party.
[22] As far as the terms of
Rule of Court 29.1.(2)(a) are concerned, I do not
consider that they fall to be construed in the manner argued for by senior
counsel for the fifth defenders. I find
nothing in the terms of the rule that requires that such a construction be adopted. The reasons why Rule of Court 29.1.(2)(a) were enacted (and amended) into their current terms
remain slightly unclear. However, the
Court's power to award expenses to a successful party on an agent and client
basis is well established (e.g. Plasticisers Ltd v William R. Stewart & Sons
(Hacklemakers) Ltd 1973 SLT 58 and British
Railways Board v Ross & Cromarty County Council 1974 SC 27). If it had been intended that Rule 29.1.(2)(a) should not permit the making of awards of expenses
on an agent and client basis, the Rule could have explicitly provided for that. In my opinion, the inclusion of the words "full
judicial expenses" does not carry with it, as a necessary implication, that the
making of an award of expenses, subject to taxation on an agent and client
basis, should be excluded as being incompetent.
In the absence of a definition of that term in the Rules of Court, I see
no reason why the term should involve any more than that the award of expenses
should be made by the court, that the court has no power to modify the award
against the abandoning party and that the account of expenses should be subject
to taxation, if necessary, by the Auditor of Court, on the basis provided for
by the court. Nor am I persuaded by the
argument that construing Rule of Court 29.1.(2)(a) so as to allow the court to
make an award of expenses on an agent and client basis would dissuade
litigants, who were otherwise minded to abandon their claims, from doing so.
[23] For these reasons, I am
satisfied that it would be competent for me to make an award of the nature
sought by the third third party.
However, it is only in exceptional circumstances that such awards are
made. Such awards lie within the discretion of the court. They have been made
in circumstances in which the court has deemed it appropriate to mark its
disapproval of the conduct of a party. Such circumstances have included where
the party being found liable in expenses has acted unreasonably or displayed a
degree of irresponsibility or in a manner that amounts to an abuse of
process. The submissions advanced on
behalf of the third third party have not persuaded me that I should take such a
view of the conduct of the fifth defenders.
[24] The accident giving rise
to this action may on one view be a comparatively simple one. The fabrication was too large to be towed
under the Erskine
Bridge, when the state of the tide was such as
prevailed when the tow was being undertaken.
The facts relating to what happened, and how it happened, may have been
known before the action was raised.
However, reading through the Closed Record it is clear that certain of the
legal issues involved in the action are complex, particularly those relating to
the recoverability of economic loss.
That may be one reason why, almost five years after the action was first
raised, it remains before the court. The third third party was convened as a party
to the action shortly after the action was raised. Thereafter the pleadings were adjusted and
amended up until November 2002. I was informed
that, in November 2002, the solicitors acting for the third third party had
sought to discuss the case with the solicitors acting for the fifth
defenders. However, their efforts to do
so had come to nothing. Indeed, senior
counsel for the third third party acknowledged that between November 2002 and
the abortive procedural roll hearing, before Lady Smith on 27 September
2005, very little
happened in the action.
[25] Senior counsel for the
fifth defenders outlined to me why the fifth defenders had reached their
decision to abandon their case against the third third party. That explanation involved referring, in
general terms, to when expert evidence had become available to the fifth
defenders and to when legal advice had been tendered by senior and junior
counsel acting for the fifth defenders.
In particular, reference was made to an expert's report, which had become
available in draft form during 2003, but had not been finalised until August
2005. Thereafter, whilst the pleadings
had been in the process of being amended further, during the weeks leading up
to the diet of procedure roll, advice had been tendered that although the fifth
defenders' case against the third third party would probably not be dismissed
at procedure roll, it should nevertheless be abandoned in the light of the
expert advice now available. It was
submitted that the fifth defenders had acted responsibly in seeking leave to
abandon their claim against the third third party, at the time when they
did.
[26] Having regard to the
facts of the present case, I am not persuaded that I should make an award of
expenses against the fifth defenders on an agent and client basis. I accordingly refuse the motion on behalf of
the third third party. I am not
satisfied that there is anything exceptional about the circumstances in which
the fifth defenders have conducted themselves in seeking to convene the third
third party as a party to the action and then seeking to abandon their claim
against them. On the basis of the
information before me, I do not consider that it would be appropriate for me to
take the view that the fifth defenders were primarily, let alone solely,
responsible for the delay there undoubtedly has been in making progress in the
action. The fifth defenders may have failed to respond to approaches which
their solicitors had received from the solicitors acting for the third third party. However, these approaches do not appear to
have been pressed very hard and in any event, between the time when they were
first made and the lodging of the minute of abandonment, very little appears to
have happened in the case, other than preparations for the procedure roll. In
my opinion, on the basis of the information placed before me, it cannot be said
that the fifth defenders acted unreasonably or recklessly, let alone in bad
faith, in deciding to convene the third third party or in their conduct after
the third third party was convened. In
these circumstances I refuse the motion.
