Scottish Court of Session Decisions

Petitioner: No appearance

First Respondent: S Bell; Blacklocks (for Messrs Gebbie & Wilson, Solicitors, Strathaven)

Second Respondent: Dalgleish; Balfour + Manson LLP

24 June 2009

[1] In this petition for recall of the sequestration, the first respondent, who was the petitioning creditor in the sequestration and the second respondent who is the permanent trustee have enrolled for an award of expenses payable out of the Legal Aid Fund in terms of section 19 of the Legal Aid (Scotland) Act 1986. The motions came before me on 9 June 2009. The first respondent was represented by Mr Bell, Advocate. The second respondent was represented by Mr Dalgleish, Advocate. Neither the petitioner nor the Scottish Legal Aid were represented.

[2] Section 19 of the 1986 Act, insofar as relevant, is in the following terms:

"(1) In any proceedings to which a legally assisted person is party and which are finally decided in favour of an unassisted party, subject to subsections (2) and (3) below, the court may make an award out of the Fund to an unassisted party of the whole or any part of any expenses incurred by him (so far as attributable to any part of the proceedings in connection which another party was a legally assisted person).

(2) Before making an order under this section, the court shall consider making an award of expenses against the legally assisted person.

(3) An order under this section may be made only if -

(a) an order for expenses might be made in the proceedings, apart from this Act; and

(b) in the cases of expenses of proceedings in a court of first instance, these proceedings were instituted by the legally assisted person, and the court is satisfied that the unassisted party will suffer financial hardship unless the order is made; and

(c) in any case, the court is satisfied that it is just and equitable in all the circumstances that the award should be paid out of public funds

(4) The provisions of subsection (3)(b) above regarding financial hardship may be modified, in their application to persons who are concerned in proceedings only in a fiduciary, representative or official capacity, by regulations made under this section."

I was advised by Mr Bell that no regulations have been made under section 19 modifying its application to persons proceeding only in a fiduciary, representative or official capacity..

[3] I had previously dismissed the petition by reason of the petitioner's failure to lodge caution for expenses, having been ordered to do so. The circumstances which persuaded me to make an order for caution both in this petition and in the associated action for reduction of the bond evidencing the debt of the first respondent as petitioning creditor, are set out in my Opinion dated 17 April 2009 in the action for reduction.

[4] The first respondent is defender in the action of reduction. Having been assoilzied following the pursuer's failure to lodge caution, he enrolled a motion in terms of section 19 of the 1986 Act in respect of the expenses in the action. For the reasons set out in my Opinion (No.2) in respect of the action, which is of even date with this Opinion, I granted that motion.

[5] Turning to consider the motions at the instance of the first and second respondents in this petition, it appears to me that the statutory criteria set out in section 19 are met. As far as the first respondent is concerned the considerations which persuaded me to make an order in his favour as defender in the action would seem to apply equally to the petition. As far as the second respondent is concerned, it might be suggested, as Mr Dalgleish on his behalf appreciated, that the second respondent, who is a trustee in sequestration and accordingly has a claim on the assets under his control, will not suffer financial hardship in the event that an order for expenses payable out of the Fund is not made, at least personally. While that may be so, because the first respondent is the principal creditor in the sequestration, he will suffer financial hardship if the second respondent has to find his legal expenses out of the assets available to pay a dividend to creditors. He is the creditor of the pursuer in the sum of £50,000. If the trustee has to meet his judicial expenses from the bankrupt pursuer's assets the dividend payable to creditors will be 27.3 pence in the pound whereas if the trustee's expenses are met out of the fund the dividend will be 36 pence in the pound. The first respondent is 62 years of age. He is someone of modest means whose income does not exceed his routine domestic outlays. He has debts. He has no capital beyond his interest in a house purchased in 2004 with a mortgage and a small amount of savings. Subsection (4) makes clear that a party acting in a fiduciary, representative or official capacity may make an application under section 19. The second respondent's application is therefore competent. As the first respondent falls to be regarded as an "unassisted party" in relation to the petition process and as I am satisfied that in the event of an order not being made he (if not the second respondent personally) will suffer financial hardship then, whatever might have been the case had the first respondent not been a party to the proceedings, I consider that in this case the criterion provided by section 19(3)(b) is met.

[6] Accordingly I shall make an order for the payment out of the Legal Aid Fund of the whole of the judicial expenses in the petition in favour of both the first and second respondent.