Act: Gardiner, Balfour + Manson

Alt: Hood, Drummond Miller

28 January 2011

[1] This action is essentially one of damages for failure to implement missives of purchase of a house in Inverkip for £316,000. The sum sued for is £85,000 plus interest.

[2] The action was raised in September 2008. The missives had fallen through in June of that year. From the raising of the action until 8 March 2010 it was defended on the merits solely on the basis that the sum sued for was excessive. That the pursuer and defender had contracted with one another was admitted, as was the defender's breach of the contract and the pursuer's entitlement to damages as a result.

[3] The pursuer exercised his option to rescind the bargain and to claim damages from the defender "for any proper and reasonable losses incurred by the seller including without prejudice to this generality any shortfall between the price hereunder and the price on the first resale, any additional bridging interest, charges, expenses, and costs legal or otherwise, incurred by the seller arising from the purchaser's failure to settle, subject always to an obligation on the seller to take all reasonable steps to minimise said losses, charges, expenses and costs". His claim for damages totalling £85,000 is made up as follows:

[4] Between 8 December 2008 and 30 January 2009, the cause was sisted to enable an application by the defender for legal aid to be considered. Between then and January 2010 four proof diets were assigned and discharged. With a fifth diet of proof pending on 30 March, the defender presented a minute of amendment. It asserted that the solicitors acting for the defender had no authority from her to conclude missives. However, it contained no plea in law and no attempt was made to delete the admissions that the defender was party to the missives and was in breach of the terms thereof. On 8 March the sheriff allowed the minute to be received and answered and the minute and answers to be adjusted before the proof diet.

[5] It was against that background that the sheriff on the same day also granted the pursuer's motion for caution and ordained the defender to lodge caution of £4,000 by 22 March. The defender failed to find caution whereupon her solicitor withdrew from acting. She also did not attend the diet of proof on 30 March at which decree for the sum sued for was pronounced against her in respect of her default by failing to find caution.

[6] The defender appealed to the sheriff principal. He appointed 9 June as a diet to hear the appeal. That hearing was discharged on the day, apparently on the basis that the defender was trying to instruct new solicitors. To that point she had handled the appeal as a party litigant. She had spoken to another solicitor, Ms Melrose, whom she understood to be willing to consider the file. A fresh diet was assigned for 25 August when the defender appeared personally and the appeal was dismissed. Apparently the solicitor she had tried to instruct did not receive her file from the previous solicitor early enough to enable her to consider the papers and advise. The defender's grounds of appeal to the sheriff principal were as follows:

"I could not afford to caution, so decree was granted. I am on low income receiving tax credits there is an Inhibition on my house I could not borrow money to pay caution because of this. I do owe Mr Aikman something but not amount that he says. I have not even seen proof of amounts in question".

These grounds of appeal were written out by the defender on 12 April, more than a month after the minute of amendment denying any liability was tendered to the sheriff.

[7] On 3 September the defender appealed to this court. Thereafter, as a result of her failure to give written intimation of her name and address and that of her agent to the Deputy Principal Clerk in terms of Rule of Court 40.7(1), the appeal was deemed to be abandoned. On 6 October, before the sheriff court process had been returned to the sheriff clerk, the defender attended at the court offices in Edinburgh and, on discovering that the appeal had been deemed to be abandoned, enrolled a motion to sist the process, which led to a further motion being enrolled on 13 October "for the process to be reponed", which in turn led to the case calling on 20 October before Lord Osborne. He pronounced an interlocutor reponing the defender from the deemed abandonment of her appeal. In terms of that interlocutor the appeal was also sisted until 1 December. On the expiry of the period of sist a timetable was issued on 2 December requiring grounds of appeal to be lodged by 30 December. As a result of the defender's failure to lodge grounds of appeal by 30 December, parties were appointed to be heard by order on 25 January. That is when the case first came before me.

[8] After hearing submissions from counsel, Mr Gardiner for the defender and Miss Hood for the pursuer, I adjourned the hearing until 27 January in order to give consideration to the issues arising. I indicated to parties that that would also allow them to consider whether the matter could be resolved by them and, failing that, give them an opportunity to make any further submissions they wished to clarify any issues which had arisen in the course of the discussion. I was particularly concerned that from October 2008 until 8 March 2010 the action had been defended on the merits solely on the basis that the sum sued for was excessive. At no stage prior to March 2010, including prior to the raising of the action, had it been suggested that missives had been concluded without authority.

[9] When Mr Gardiner first appeared before me, ground of appeals had still not been lodged, nor even drafted. He appeared on the strength of legal aid which had been granted under the provisions relating to "special urgency" and which he indicated was confined to taking instructions and appearing in relation to the by order hearing. His motion was to allow four weeks to enable the defender's full application for legal aid to be dealt with and full instructions to be given to counsel to draft grounds of appeal. Alternatively, he moved me to order the lodging of grounds of appeal in a shorter period. At that stage counsel's confidence that there was a stateable defence was confined to quantum. He added that there might be a complete defence on the basis of lack of authority to conclude missives, but was not sufficiently confident of that point to include it in the grounds of appeal which were lodged the following day. By the day of the adjourned hearing, that had changed and fresh grounds of appeal were tendered, founding in addition on the proposition that the sheriff had erred by failing to take account of a stateable defence on the merits as set out in the minute of amendment. Miss Hood invited me to refuse the appeal in terms of Rule of Court 40.13(2(b).

[10] In addition to tendering these grounds of appeal, at the adjourned hearing on 27 January Mr Gardiner made very detailed submissions about the whole circumstances of the litigation, supported by reference to a variety of documents. I shall reflect the factual situation as it emerged from these submissions and then explain my decision.

[11] The firm of solicitors originally instructed had to cease trading. The defender's current local agent took over the agency in July 2009. Mr Gardiner did not rely on this in any particular respect. It was simply a factor which could have explained one or more of the proof discharges. The solicitor who took over in 2009, Mr Young, continued to be instructed as at 27 January 2011. He had withdrawn from acting a few days before the proof at which decree was granted. He did so when legal aid was withdrawn following upon his advising the Scottish Legal Aid Board (SLAB) of the order for caution and that it was no longer appropriate that the defender should continue to have legal aid. When the case was before the sheriff principal the defender contacted Ms Melrose, as narrated above.

[12] However, the defender reinstructed Mr Young in September 2010 when she received from this court notification of the requirements of Rule of Court 40.7(1) and (2) in a letter dated 9 September 2010. A member of staff in Mr Young's firm called Pauline sent an e-mail to the defender on 17 September advising that Mr Young was on holiday but would return on 29 September when she should arrange an appointment to see him. She also said that she had spoken to another solicitor in the firm whose view was that in terms of the letter received from this court she would require to give written intimation to the Deputy Principal Clerk and the opposing Edinburgh agents. Mr Gardiner advised me that the defender had understood that she required to submit to the court and the opposing solicitor a form which she downloaded and which stated that she wanted to go ahead with the appeal. An internal e-mail of 5 October from Pauline to Mr Young records that the defender phoned to say that she had phoned Edinburgh as Mr Young had advised her to do, was told that she should have asked for the case to be sisted, and required to lodge a process and appeal print and provide six copies by the following day, 6 October. That exchange was apparently initiated by a phone call the defender received from the General Department advising her that the deadline specified in Rule of Court 40.7(2) mentioned in the original letter from the court was about to expire. Mr Gardiner advised me that the defender had come to the court on 6 October with a view to trying to lodge the process and appeal prints but was advised that the appeal had already been deemed abandoned. When I pressed him for more detail about the date and surrounding circumstances, I found the responses vague and am not persuaded that the defender attended at the court on 6 October with a process and an appeal print. What is before the court is a make shift appeal print, No. 19 of process, with a stamp reflecting that it was lodged on 19 October, the day before she was reponed. However, her attendance is confirmed by the motion sheet entry which was completed on 6 October and which is referred to in paragraph [7] above.

[13] On 26 October an application was submitted to SLAB for legal aid for the appeal. The defender understood that Mr Young would deal with all aspects of the case thereafter. In letters of 26 October and 11 and 23 November, SLAB asked Mr Young for further information. That information was apparently provided by 25 November. By letter of 17 December SLAB intimated refusal of the application on the ground that probable cause for the appeal to the Court of Session had not been shown and the application did not address the grounds for appeal nor the merits of the appeal, in respect that there was no note from the defender's solicitor addressing prospects of success.

[14] I was advised that, although the defender understood that Mr Young would deal with the question of grounds of appeal, she was regularly in contact with the firm for reassurance that that was so. I was shown a series of e-mails dated 22, 23 and 24 December from her to Mr Young which apparently went unanswered. She asked if she should go through to the Court of Session and deal with whatever had to be done by 30 December, mentioned that the court office would be closed from lunchtime on 24 December, and expressed concern that the appeal might be thrown out. She appears also to have tried unsuccessfully to speak to Mr Young.

[15] The deadline for grounds of appeal passed. An application was made to SLAB on 30 December, the date when grounds of appeal were due, to review the decision to refuse legal aid. That remained outstanding as at the dates of the hearings before me. However, no indication was given to me of any communication between the defender and Mr Young at or about that time. It was not until 14 days after the deadline for grounds of appeal that any further action appears to have been taken, and that was confined to preparing an application for legal aid under the special urgency provisions. That was granted immediately in these terms:

"to instruct counsel and Edinburgh agents, lodge appendixes to appeal print, lodge notes of argument, lodge estimate of length of hearing, attend keeper's office".

The next significant development was the hearing before me. It was only then, on 25 January, that a proper submission was made to SLAB regarding the merits and prospects of success of the appeal in the form of an eight page note drafted by Mr Gardiner.

[16] Other information was provided which I did not consider to have any material bearing on the decision to be made. The defender had apparently attended the sheriff court on 29 March 2010 and had actually gone to the court room where there was some discussion of her case. There is no interlocutor for 29 March in the process. However, her appearance is recorded in a note to the following day's interlocutor. The only reason for advising me of this was to explain why the defender thought that it was pointless returning to court on 30 March, the day appointed for the proof. I was also provided with some information about the appeal hearing before the sheriff principal at which the appeal was dismissed. It is not clear whether submissions on the merits of the appeal were considered. It was suggested by Mr Gardiner that the defender raised the question of challenging the sheriff's interlocutor ordering caution, but by then the time for seeking leave to appeal against that had already expired. It is possible, but far from clear, that there was some discussion of whether it was in the circumstances open to the defender to challenge the order to find caution.

[17] The main focus of the appeal is to challenge the order to find caution. Under reference to Stevenson v Midlothian District Council 1983 SC (HL) 50 and Matheson v Marsh 1996 SC 25, Mr Gardiner submitted that a litigant with a stateable case should not be excluded from the court by an order, eg. to find caution, with which he could not comply except in exceptional circumstances. In general that is no doubt so. However, one such circumstance is that the case sought to be presented is devoid of merit - see Matheson v Marsh at page 27 H to page 28 A. Depending upon the stage at which the matter is considered and the principal issue in question, there must inevitably be a number of factors and circumstances to be taken into account by the court. The question before me arose at a late stage in the proceedings following failures by the appellant on two occasions to comply with the procedural rules of this court, after a protracted and unsatisfactory history before the sheriff and the sheriff principal. In this case I consider it appropriate to have regard, not only to the stateability of the appellant's case, but the way in which it has been conducted and the potential consequences for both parties.

[18] The defence of absence of instruction, sought to be introduced by amendment, has all the hallmarks of opportunistic invention. It contradicts admissions on record. It seems to have been introduced as a last resort. It was also contradicted by the defender's handwritten ground of appeal before the sheriff principal. Mr Gardiner sought to explain that contradiction by reference to the fact that Mr Young had been awaiting an opinion from a professor of conveyancing that did not arrive until April 2010. Whether the defender or her solicitor had it prior to 12 April when she wrote out the ground of appeal is not clear. However I do not accept that, if her position was genuinely as set out in the minute of amendment, she would have omitted to mention that in the ground of appeal.

[19] I therefore conclude that the stateable defence which the defender had was confined to quantum. The defender's stated defence in Answer 7 is quite unspecific. Mr Gardiner was able to amplify it by explaining that it was arguable that certain professional expenses associated with sale and resale were wrongly charged twice, that the capital element of mortgage payments could not be claimed in addition to the total capital loss on resale, that electricity and gas accounts were not appropriate claims and that £3,000 was excessive for solatium. I see force in the submission that these are arguable points. At their very highest their value probably falls somewhat short of £10,000. None of these points touches upon the loss on resale claim of £66,000. I was advised that the defender's only asset is her current home which she shares with her husband and children, the youngest of whom is 7. That home would be lost if the defence of the case was unsuccessful.

[20] Throughout both hearings I was conscious of the potential for injustice to the defender if these points were not addressed. I was advised that between the hearings there had been discussions between the parties. Counsel considered it inappropriate to give me details. I did not ask. Having concluded that the defence open to the defender was a fairly narrow one, I considered it appropriate to have regard also to the expense involved for both parties. I have power in terms of Rule 40.13.(2)(a) to make such order as I think fit to secure the expeditious disposal of the appeal. I could not imagine that such an order in this case would not include a finding against the appellant of liability for the expenses of this appeal to date, and a requirement that these and the expenses for which she has already been found liable in the sheriff court should be paid as a condition precedent to further procedure in this court. The defender's stated position is that she is unable to pay anything at all towards the sum claimed by the pursuer. Meanwhile, he has already incurred very significant legal expenses in pursuing an action, the unsatisfactory conduct of which over a period of excess of two years by and on behalf of the defender has enabled the defender to avoid facing up to her responsibility. Against that background, I was satisfied that greater injustice was likely to be caused to the pursuer by allowing the appeal to proceed than would result to the defender by refusing the appeal.

[21] Mr Gardiner strove manfully to convince me that the defender was not someone who was trying to delay the inevitable but had actually been taking a considerable interest in her case throughout. The two are not mutually inconsistent. My impression is that the defender's own conduct has been geared towards postponing the inevitable requirement to fulfil her obligation to the pursuer. While she does not appear to have been well served by Mr Young and ought to have been aware of that in light of the history I have narrated above, she continues to instruct him. In the context of her dispute with the pursuer, she must take responsibility for the conduct of the case by her instructed solicitor. Between them they failed to give notice in terms of Rule of Court 40.7(1), failed to lodge a process and appeal prints timeously in accordance with Rule of Court 40.7(2), failed to lodge grounds of appeal timeously in terms of Rule 40.13, failed to take reasonable steps to secure legal aid for the appeal timeously, failed to take any action in relation to the omission to lodge grounds of appeal until notified that by the court that the case would be heard by order, and then took no action to remedy the absence of grounds of appeal until prompted on the first day of the court hearing, in spite of the availability of special urgency legal aid for all the necessary related work. The failure to comply with the rules in this court had already resulted in the appeal being deemed abandoned and thereafter revived by reponing.

[22] Viewing the defender's failure to comply with the timetable in light of the whole history of the cause, I decided that the appropriate course to follow was to refuse the appeal.