EXTRA DIVISION, INNER HOUSE, COURT OF SESSION

Lord Eassie Lady Paton Lord Brodie

[2010] CSIH 41 A751/05 OPINION OF THE COURT delivered by LORD EASSIE in the Reclaiming Motion for the Second Pursuer in the cause (1) ANDREW CHARLES ROBERT EDWARD ALBERT BATTENBERG; (2) SALVATORE RUSSO, as representative of the late AILSA MARGARET LEE; and (3) CAPE VALE PTY LIMITED Pursuers; against (1) THE FIRM OF DUNFALLANDY HOUSE; and (2) MICHAEL WILLIAM BARDSLEY AND MRS JANE SUSAN BARDSLEY, the partners thereof as such partners and as individuals Defenders: _______

Act: Upton; Lindsays WS (Second Pursuer and Reclaimer)

Alt: Miss Thomson, Solicitor Advocate; Brechin Tindal Oatts (Defenders and Respondents)

14 May 2010

[1] This is a reclaiming motion by the second pursuer directed to recalling, in so far as it concerns the claims advanced in the action by the second pursuer, a decree of absolvitor pronounced by the Lord Ordinary at a continued hearing on the motion roll on 24 March 2009.

[2] The reclaimer, a solicitor practising in New South Wales, is the professional executor of the estate of the late Mrs Ailsa Lee. The action was commenced in 2005 by Mrs Lee, who was the second pursuer, along with her son Andrew Battenberg, who is the first pursuer, and an Australian company, the third pursuer. In the action the pursuers seek to vindicate their respective separate titles to certain items of moveable property owned by each of the pursuers respectively and averred to be in the possession of the defenders in Dunfallandy House, Pitlochry. Among the various conclusions in the summons is a conclusion for interdict and on 2 November 2005 the Lord Ordinary granted interim interdict against the defenders prohibiting them from purporting to sell or otherwise pass title to the goods in question, which are specified in appendices to the summons, and from removing them from the house without the pursuers' consent.

[3] Defences were allowed to be lodged late on 5 January 2006 and the action was thereupon sisted on the motion of the defenders and respondents to allow them to seek legal aid. The sist was recalled on the pursuers' opposed motion on 13 September 2006. Shortly thereafter, namely on 5 October 2006, Mrs Lee died, domiciled in New South Wales. She died testate, but it appears that the identity or entitlement of the executor proved to be contentious and probate was only granted in respect of her estate some eighteen months later in April 2008. Meantime, on 19 December 2007 the agents originally instructed on behalf of the pursuers - Shepherd & Wedderburn WS - withdrew from acting and in early January 2008 new solicitors - Simpson & Marwick WS - were instructed. The case called on various occasions respecting the situation following the death of Mrs Lee, there being no executor in place who could properly represent the interests of the beneficiaries under her testament. But following the appointment of the reclaimer as executor in April 2008 an interlocutor was pronounced on 3 July 2008 giving effect to a minute of transference whereby the action, so far as at the instance of the late Mrs Lee, was transferred to the reclaimer as her executor. Despite the fact that it was only by means of that interlocutor that the reclaimer became a party to the process, the interlocutor of 3 July 2008 proceeded in these terms:

"Appoints the First, Second and Third Pursuers each to lodge in court, caution for expenses in the sum of £10,000.00 Sterling as a condition precedent to further procedure in the cause. ..."

[4] The sum of £10,000 was subsequently provided as caution by the executry estate. However, the letter from the then solicitors, Simpson & Marwick, lodging that sum with the Accountant of Court referred per incuriam to the first pursuer (Mr Battenberg) as the party providing that caution. This resulted in later confusion but the confusion was ultimately resolved on its being established that it was confirmed that the provider of the funds was Mrs Lee's executry estate; and the Lord Ordinary whose interlocutor is reclaimed accepted that to be the position. Caution was not provided by either the first pursuer, Mr Battenberg, or the third pursuer, Cape Vale. However, no doubt because of the terms of the letter lodging the funds with the Accountant of Court, when the defenders chose on 12 February 2009 to enrol the motion which ultimately led to the interlocutor of the Lord Ordinary from which this reclaiming motion arises, in respect of the absence of provision of caution, they sought decree of absolvitor only in respect of the second and third pursuers.

[5] Following intimation to them of that motion, the pursuers' solicitors, Simpson & Marwick, withdrew from acting and on 18 February 2009 the court appointed service on the pursuers of Form 30.2 in the appendix to the Rules of the Court of Session ordaining the pursuers to state whether they insisted in the action. On the same date the court continued the hearing of the motion enrolled on 12 February 2009 to 18 March 2009.

[6] The reclaimer responded to service of that notice by returning to the Deputy Principal Clerk of Session, under cover of a letter of 26 February 2009, the appropriate form in these terms:

"I am insisting in the above cause. My new solicitors' name and address is - to be advised in due course."

Forms, similarly completed by the first and third pursuers, were also sent to the Deputy Principal Clerk under cover of a letter of 2 March 2009 by a director of the third pursuer in which he stated inter alia:

"We, along with Andrew Battenberg and Mrs Lee's estate, certainly do intend to proceed with the court action to achieve the return of our property and are in the process of appointing new solicitors to represent us.

We have enclosed with this letter, signed forms of notice of intention to insist from the company and from Andrew Battenberg. Salvatore Russo, Executor of Mrs Lee's Estate, has mailed a similar notice from Australia, but a photocopy of it is attached for your reference."

The director in question then proceed to narrate that he was currently in the United Kingdom and gave telephone and fax numbers and an e-mail address for contact.

[7] On 17 March 2009 the reclaimer's firm sent a fax to the Court in which they stated inter alia:

"We are currently in the process of instructing solicitors to represent the estate and Mr Alistair Kerr on behalf of the Estate has been in discussion with a number of firms in Scotland in respect of them being retained.

...

As you can appreciate because the estate is Australian, Scottish firms require various protocols be adhered to and completed prior to them taking carriage of the matter".

(Counsel informed us that Mr Kerr was a beneficiary and a member of the UK diplomatic service).

[8] New Scottish solicitors - Pinsent Mason - were in fact instructed on behalf of the reclaimer and the third pursuer and at the continued hearing on Wednesday 18 March 2009 the reclaimer and the third pursuer were duly represented by those agents and appeared by counsel. The first pursuer appeared in person. He told the Lord Ordinary that he had not provided caution and that it was his late mother's estate which had found the caution which had been lodged with the Accountant of Court. Counsel confirmed that the third pursuer had not provided any caution and it was therefore the case that the estate had provided caution. The Lord Ordinary continued the hearing until later in the afternoon of that date to see if matters might be clarified. In the Note which the Lord Ordinary has provided for the purposes of this reclaiming motion, the Lord Ordinary tells us:

"... Mr McConnell [counsel for the second and third pursuers] informed me that he had spoken to the personal assistant of the solicitor in Simpson & Marwick who acted for the second pursuer and been told that the caution had been lodged 'for the mother'. Mr McConnell was in possession of a faxed receipt from Simpson & Marwick for £10,000 received from the estate. He submitted that in the circumstances it would be inappropriate for the action to be dismissed insofar as laid at the instance of the second pursuer and that a further continuation would be necessary. The first pursuer's position remained that he had not lodged caution. Miss Thomson for the defenders stated that, as far as the court was concerned, the document showed that caution had been lodged for the first pursuer and she maintained her motion in respect of the second and third pursuers. I then adjourned the motion further until 24 March 2009 for the question of which pursuer had lodged caution to be clarified."

[9] When the case called in court again on Tuesday 24 March 2009 the first pursuer was present in person but the reclaimer and the third pursuer were not represented because their solicitors had withdrawn from acting in circumstances to which it will be necessary to revert. According to paragraph [5] of the Lord Ordinary's Note, what happened was:

"... Miss Thomson stated that she was no further on with clarifying the question of who had lodged caution. She moved for decree of absolvitor by default in respect of the second and third pursuers. ... She referred to the decision in Munro & Miller (Pakistan) Ltd v Wyvern Structures Ltd 1997 SC 1, while accepting that the circumstances in that case were not precisely the same as in the present case. She then went through the whole procedural history of the case as set out in the interlocutors and drew attention to the procedures which had been followed under Rule of Court 30.2. She submitted that the pursuers had been conducting themselves with a total disregard for the court and the importance of the litigation, and that I should grant decree of absolvitor in respect of the second and third pursuers in light of the history of the action."

In the succeeding paragraph of his Note, the Lord Ordinary goes on to explain the basis upon which he granted absolvitor in so far as the action was laid at the instance of the first and third pursuers. He writes:

"The basis on which I granted that motion was that the first pursuer and the third pursuers had failed to lodge caution of £10,000 as a condition precedent of proceeding further with the action as ordered by Lady Dorrian's interlocutor of 3 July 2008."

The basis upon which the Lord Ordinary granted absolvitor in so far as the action proceeded at the instance of the reclaimer is set out in the penultimate paragraph of his Note:

"So far as the second and third pursuers were concerned, there had been no appearance on their behalf at the continued hearing of the motion on 24 March 2009 and the court had received a letter from their third set of solicitors stating that they had withdrawn from acting for them. On two previous occasions the procedure under Rule of Court 30.2 had been invoked against the second and third pursuers. I saw no point in that procedure being invoked again, particularly in light of the deplorable procedural history of the case, in which a Closed Record should have been lodged by 7 March 2007. Accordingly, I granted decree of absolvitor also insofar as the action was laid at the instance of the second pursuers (sic) and found that the non-appearance of the third pursuers against the procedural background of the action constituted an additional reason for absolvitor insofar as the action was laid at their instance."

[10] Counsel for the reclaimer provided us with certain information concerning the circumstances in which the reclaimer came to be unrepresented at the continued hearing on Tuesday 24 March 2009. As the Lord Ordinary records, the solicitors, Pinsent Mason, instructed for the hearing on Wednesday 18 March, withdrew from acting. They did so on the afternoon of Monday 23 March 2009. At 1552 hrs GMT (0052 hrs on Tuesday 24 March 2009, Eastern Standard Time in Australia) they sent an e-mail to the court stating:

"We were asked to assist the second and third pursuers in this action at very short notice. We have asked for further instructions and set certain conditions to us acting further. Those conditions have not been met, nor do we have further instructions, so have advised the other parties that we have withdrawn from acting".

Among the stipulations made by Pinsent Mason as a condition of their continuing to act (including their appearing at the continued motion roll hearing on 24 March) were payment of £20,000 by way of an advance on fees and the provision of certain documents for the purposes of the money laundering regulations. Counsel informed us that it was clearly not possible within the very short time available between the setting of those conditions after the hearing on 18 March 2009 and Monday 23 March 2009 for the estate to meet them. However, at 0807 hrs Eastern Standard Time on Tuesday 24 March 2009 (2307 hrs GMT on Monday 23 March) the reclaimer sent a fax from his firm's office in New South Wales to the court stating:

"Refer to our previous correspondence and have been advised that the Second and Third Defendants have initiated a motion to strike out the Estate's claim on the basis that the Estate failed to pay the caution ordered by the court in respect of the proceedings.

We enclose copy of the recept (sic) provided by Simpson & Marwick Solicitors who acted on behalf of the Estate in respect of the caution, and we have written to Mr Anderson requesting that he confirm with the court the caution was in fact paid by the Estate and not by Andrew Battenberg."

Immediately after sending that fax, at 0808 hrs EST, the reclaimer sent by fax to the defenders' solicitors a letter on his firm's notepaper stating:

"We refer to your application in respect of the Estate filed with the Supreme Courts.

We advise that the Estate is in the process of briefing new Solicitors in the application and we have been advised that they will be available on 30 March 2009.

Accordingly we are seeking adjournment of the application until that date and would appreciate if you would advise the position that you will take.

We also enclose a copy of the letter forwarded to the Supreme Courts today for your information."

Counsel informed us that the reference to the solicitors being available on 30 March 2009 was not in any way an idle statement, since Lindsays WS (the solicitors currently acting for the reclaimer) were indeed able to accept instructions on 30 March 2009.

[11] While the first fax was apparently received by the court - since it is date-stamped by the court as having been received on 24 March 2009 - it appears that it may not have reached the Lord Ordinary in time for the continued hearing on that date, since the Lord Ordinary makes no reference to it in his Note. When asked about the Australian solicitors' second fax, namely the fax to her firm on 24 March 2009, Miss Thomson confirmed to us that at the time of the continued hearing on that date, she had a copy of it (and we presume the enclosure) with her in court. She told us that she believed she had advised the Lord Ordinary of having received the letter, but it appears that she did not provide the Lord Ordinary with any copy of it, or impress on the Lord Ordinary the contents of the letter. Again, the Lord Ordinary makes no mention whatever of that letter. In our view it is hard to see that the Lord Ordinary would have expressed himself as he does in his Note were he to have had knowledge of these faxed communications from the reclaimer's firm of solicitors in New South Wales.

[12] In the course of his submissions counsel for the reclaimer assisted the court with a careful and extensive review of the authorities relating to appeals against decrees by default. Without intending any disrespect to counsel's argument or his industry, we do not consider it necessary to set out that review at length for two reasons. First, as a practical matter, counsel helpfully tendered a full and well-drafted written note of his submissions, a copy of which is retained in the process. And secondly, as it appeared to us, the only real issue of law dividing the parties was whether, as Miss Thomson maintained, in an appeal against a decree by default the appellate court was confined to a judicial review of the exercise by the judge at first instance of his discretion (applying the usual principles for review of the exercise of judicial discretion) or whether, as Mr Upton for the reclaimer maintained, the appellate court was not confined to such a review but enjoyed a discretion of its own on the question of recalling the decree and reponing the party in default. In support of her position Miss Thomson referred only to the annotations to the Rules of the Court of Session at para 38.16.7 and to Skiponian Ltd v Barratt Developments (Scotland) Ltd 1983 SLT 313. Counsel for the reclaimer referred in particular to Anderson v Garson (1875) 3 R 254 per the Lord President (Inglis) at p 254; Hyslop v Flaherty 1933 SC 588 per the Lord Justice Clerk (Alness); Winning v Napier, Son & Co Ltd 1963 SC 293 per the Lord President (Clyde) at p 297; and the terms of Rule of Court 38.11(2).

[13] In our opinion the submission advanced by Mr Upton is well-founded. In Anderson v Garson the Lord President said:

"It is always a matter in the discretion of the Court (1) whether a party against whom a decree by default has gone out is to be reponed at all; and (2) if so, upon what conditions it is to be done."

A similar view was expressed in very similar language by the Lord President in Winning v Napier, Son & Co Ltd. In Hyslop v Flaherty the Lord Justice Clerk said:

"There is no general rule in such a matter as this; each case must turn on its own circumstances. In some cases the Court has reponed; in others it has refused to repone."

Rule of Court 38.11(2) reads:

"A decree by default may, if reclaimed against, be recalled on such conditions, if any, as to expenses or otherwise as the court thinks fit."

In our view the terms of this Rule of Court are wholly consistent with the earlier authorities to the effect that the appellate court has its own discretion in deciding whether to recall a decree pronounced in default. Skiponian Ltd v Barratt Developments (Scotland) Ltd was not concerned with the recall of a decree by default but with a decision by the court at first instance (with all parties present) to refuse a motion to discharge a diet. It is not relevant to the present case. Further, as counsel for the reclaimer aptly observed, and reflecting what was said by the Lord President (Rodger) in Munro & Miller (Pakistan) Ltd v Wyvern Structures Ltd 1997 SC 1 towards the end of the opinion, the judge granting decree by default may well be unaware of the reasons for the non-appearance of the party in default and those reasons may make that non-appearance wholly excusable. In principle, therefore, the decision whether to recall a decree by default should not be confined to the question whether, on the information available to it, the first instance court granting that decree had exercised its discretion reasonably.

[14] We thus approach the matter on the basis that we enjoy a discretion in deciding whether to recall a decree by default; and we also approach the matter at this stage on the view that in acceding to Miss Thomson's motion at the bar for decree by default, and granting absolvitor from the claims of the reclaimer, the Lord Ordinary was in fact holding the reclaimer to be in default. On those bases we have, without any real difficulty, reached the conclusion that we should exercise that discretion in the reclaimer's favour.

[15] In that respect we observe at the outset that the continued hearing on the motion roll on 24 March 2009 was not a peremptory diet in the sense of any of the diets catalogued in Rule of Court 20.1, which rule deals with the granting of decrees by default. While we of course accept, given the expression of the Rule's being without prejudice to other circumstances, which is to be found in the opening words of para (1) of the rule, that the catalogue of peremptory diets may not be exhaustive of all the circumstances in which decree by default may properly be pronounced, none of the works on practice to which we were referred
[1] give support to the suggestion advanced by Miss Thomson to the effect that non-appearance at a hearing on the

motion roll constitutes default at a peremptory diet entitling the court to grant decree by default. Further, the express purpose of the continuation of the hearing of the motion for absolvitor on the ground of failure to find caution was simply to clarify whether the funds lodged with the Accountant of Court were provided by the executry estate rather than the first pursuer. The reclaimer, as the Australian solicitor acting for the executry estate, having been deprived of continuing representation in Scotland for the continued hearing on the motion roll by the withdrawal on the afternoon of Monday 23 March 2009 by Pinsent Mason by reason of his, to our mind perhaps understandable, difficulty in satisfying Pinsent Mason's preconditions for continuing to represent them at the continued hearing on Tuesday 24 March, did his best to communicate with the court by sending a fax to it. As counsel for the reclaimer accepted, with hindsight the fax might have been in fuller terms. But the fax essentially answered the sole issue for which the hearing had been continued from 18 to 24 March. Whether or not the fax reached the Lord Ordinary, it is plain that the reclaimer had acted promptly, first thing in the morning, to address the only issue relevant to the continued hearing. It is also relevant to note that the answer given by the reclaimer in the faxed message to the court on that issue confirmed the conclusion which the Lord Ordinary reached on the basis of the other information put before him, videlicet that the executry estate had indeed provided the funds lodged with the Accountant of the Court. Accordingly, the absence of representation on the part of the reclaimer was, on any view, without any consequence as to the expressed reason for which the hearing of the motion had continued.

[16] While in his Note the Lord Ordinary refers to the withdrawal of what he describes as "the third set of solicitors", it would appear that he did not have the information which we have been given concerning the particular conditions stipulated by those solicitors on the previous Wednesday (probably Thursday, in New South Wales). We suspect that had he been aware of the nature of those stipulations the Lord Ordinary might have taken a different view of matters. Further, it is to be observed that at the time of the withdrawal of the first "set of solicitors", namely Shepherd & Wedderburn, the reclaimer was not in office as executor of the estate. As the executor, the reclaimer represents the interests of the beneficiaries in the estate; and he is not to be held responsible - at least without clear information - for the delay in his being appointed. On the withdrawal of the second firm of solicitors engaged in this action, Simpson & Marwick, the reclaimer responded very promptly to the Form 30 notice; his firm sent the fax of 17 March 2009 to which we have referred above; and in the event he and the third pursuers arranged representation, at short notice, for the continued motion hearing on 18 March 2009. We have therefore considerable difficulty with the Lord Ordinary's observation that he "saw no point in the [Rule of Court 30.2] procedure being invoked again". The rule lays down that procedure; it had been responded to positively and timeously on each previous occasion and plainly there is ultimately no requirement for an individual, such as the reclaimer, to appoint solicitors as opposed to appearing in person. There was no imminent diet of proof or debate, which might have been put in jeopardy. Further, the defenders' agents had been advised by the Australian solicitors that representation would be in place by 30 March 2009 - as indeed happened. Had that information been impressed on the Lord Ordinary - as it ought to have been - it would, as a practical matter, lead him naturally to consider whether a decision to invoke the Rule of Court 30.2 procedure should be postponed; but that, of course, was not the basis upon which the Lord Ordinary proceeded.

[17] We would add that subsequently to the Lord Ordinary's decision, during the dependency of the reclaiming motion before the Inner House, the reclaimer lodged a minute for breach of the interim interdict. While allowance of the reclaiming motion would not, we think, be essential to continuation of those proceedings for breach of the interim interdict, it is an added factor favouring the granting of the reclaiming motion.

[18] Finally, for completeness, we would record that the solicitor advocate for the defenders suggested in the course of her address to us that the granting of decree of absolvitor was justified on the basis of the procedural history which the Lord Ordinary had (no doubt at her invitation) described as "deplorable" and the decision in Tonner v Reiach & Hall 2008 SC 1. As to that suggestion, we do not understand either from the terms of the Lord Ordinary's Note, or from what was said to us by Miss Thomson, that the decision in Tonner v Reiach & Hall was cited to the Lord Ordinary or that the Lord Ordinary based his decision on it. Nor, in our view, does the present case in any way meet the substantive conditions for ending an action on the basis of "inordinate and inexcusable delay" as discussed in the decision in Tonner v Reiach & Hall. Further, on any view, it would not justify decree of absolvitor. Moreover, as to the Lord Ordinary's description of the procedural history in this case as being "deplorable", we note with understanding the observations of counsel for the reclaimer that for some one-fifth of the duration of the action, it was sisted at the instance of the defenders; that the delay in the grant of probate in New South Wales was in consequence of a dispute in that jurisdiction - as to which we in Scotland cannot form a judgment as to whether resolution of the dispute was culpably delayed or protracted (and, if so, where the blame might lie); that during the period of the disputed probate proceedings in Australia, the action nonetheless called in court on various occasions to review the situation; that as executor the reclaimer represents beneficiaries; and that no criticism was advanced, or could be advanced, in respect of the reclaimer's conduct following his being put in office as executor on the estate. Suffice to say, we see force in those observations.

[19] In these circumstances we recall the decree of absolvitor pronounced by the Lord Ordinary on 24 March 2009 in so far as it affects the claim advanced in the action by the second pursuer, the reclaimer and we shall remit the case to the Lord Ordinary to proceed as accords.