Scottish Court of Session Decisions

 

OUTER HOUSE, COURT OF SESSION
	[2013] CSOH 134
XA59/01	OPINION OF LORD WOOLMAN   in the cause   TODS MURRAY WS   Pursuer;   against   ARAKIN LTD   Defender: _______________

 

Pursuer: Duncan QC; Simpson & Marwick WS

Defender: Party, Absent

 

29 July 2013

 

Introduction

[1] I have issued two earlier opinions in this case. The first followed a debate in which I dismissed the counterclaim and deleted certain parts of the defences in the principal action: [2010] CSOH 90. The second followed a proof in which I held that the pursuer was entitled to payment of £86,376.40, together with interest: [2012] CSOH 26. Together they set out in detail the issues in dispute and the whole history of the case. Each of those decisions was unsuccessfully reclaimed by the defender. The matter now comes before me to deal with various ancillary motions, including interest and expenses.

 

Procedure

Motion to uplift consigned sum

[2] On 29 May 2001, Lord Mackay of Drumadoon ordered Mr McNamara (and his then fellow Minuter, Mr Martin Frost), to consign the sum of £100,000 in the name of the Accountant of Court "to await the further orders of this Court." On 18 March 2013 the pursuer intimated a motion to uplift that sum, together with interest. Mr McNamara marked opposition to that motion the following day. In his accompanying statement, he also sought to reopen various substantive issues that had been determined by the court and for orders to be pronounced in his favour.

[3] The deputy in charge of the Offices of Court sent an email to Mr McNamara on 21 March informing him that the motion would be heard on 10 April. Mr McNamara did not, however, attend that hearing. Senior counsel for the pursuer informed the court that his instructing agents had been in email contact with Mr McNamara late the previous afternoon. During a short adjournment, the clerk of court contacted Mr McNamara by telephone at his home on Arran. He stated that he had not received intimation of the hearing.

[4] When the court reconvened, senior counsel stated that his agents had examined their communications with Mr McNamara. There was nothing in them expressly to indicate that he was aware of the hearing. Senior counsel invited the court to adjourn to a date shortly after 1 May, when the Inner House was due to decide upon the expenses of the reclaiming motion.

[5] In granting that motion I indicated that it would be convenient to deal with all outstanding matters at one hearing. I directed the clerk to write to Mr McNamara with a copy of the interlocutor and minute of proceedings so that he could be made aware of the position.

[6] I wish to add one observation. In my view it was surprising that Mr McNamara was unaware of the date of the hearing. The parties to a litigation are responsible for checking the court rolls and liaising with the General Department to discover when cases are scheduled to be heard. Mr McNamara has a great deal of experience of litigation. He regularly communicates with the court offices.

 

Further Motions Enrolled

[7] On 15 April 2013 Mr McNamara enrolled a motion to recover from the pursuer (a) all costs with interest, (b) the sums of £103,000 and £1,546, and (c) interest on £275,000. He also sought return to him of the consigned sum with interest. He lodged a six page note of argument in support of his position.

[8] He enclosed further notes of argument with his letters of 21 May, 3 June and 26 June. It appears that Mr McNamara's daughter, Miss Carol McNamara, prepared the note of argument enclosed with the letter of 3 June 2013. It suggests that there may have been a conflict of interest on my part, because I appeared as senior counsel on behalf of Tods Murray at a 2002 hearing in the case. The note then states:

"while he was the presiding Judge in this case he disregarded statute, Solicitors' Rules, case law and legal authorities which, had they been properly applied and considered would have hampered the pursuers' case. He failed to record true circumstances of the case or to record unchallenged evidence in favour of Arakin. Of further note, on appeal the three presiding Judges supported the un-judicial decisions of Lord Woolman without reference to the defenders' submissions."

 

[9] The clerk of court replied by letter on 21 June 2013. She referred to the minute of proceedings for 13 March 2009. That was the first hearing in which I was involved as a judge in this case. The minute records that:

"Lord Woolman informed parties that on reading the closed record, he discovered that seven years ago he had a "walk-on" role, representing the pursuers at a hearing in November 2002. Lord Woolman indicated that he had no recollection of the case or the issues and only became aware of this involvement on reading the closed record. Lord Woolman informed parties that he was certain that he is able to deal with this case and that his prior involvement would not affect his judgement, but stated that if either party did not wish him to hear the proof in this case, that he would recuse himself.

 

Both Mr Duncan and Mr McNamara confirmed to Lord Woolman that they took no exception to his dealing with the proof."

 

[10] The letter went on to inform Mr McNamara that the interlocutor dated 13 March 2009 expressly refers to the minute of proceedings. The letter added two points. First, that the closed record includes all prior interlocutors. Second, that the minute has always been available to view by the parties.

[11] On 25 June 2013, Mr McNamara replied using his wife's email address. He stated "I have no recollection of Lord Woolman stating that he had worked for Tods Murray against Arakin." He requested a transcript of the hearing on 13 March 2009. It was not possible to comply with that request, as the proceedings were not recorded.

[12] On 26 June 2013, the pursuer enrolled a motion seeking (a) interest on the principal sum, (b) expenses on a solicitor and client basis, (c) interim payment of £250,000 towards the expenses, (d) an additional fee, and (e) certification of Mr Quinn as a skilled witness. The pursuer lodged a note of argument in support of its motions.

 

Hearing 1 July 2013

[13] A one day hearing was set aside to deal with all the motions on Monday 1 July 2013. The previous evening, Mrs McNamara sent an email to the solicitor acting for the pursuer, which was copied to the clerk of court and stated:

"late last week my husband had an attack of gout and was prescribed a course of treatment by the doctor. Today he has had severe stomach upset and is unable to travel and will be unable to attend the hearing tomorrow."

 

[14] The court convened at about 10am on 1 July. In light of Mrs McNamara's email, I continued the case until 22 July. At the time that the hearing was taking place, Mr McNamara telephoned the office of the Keeper of the Rolls. He confirmed that he would not be in attendance that day and added that he would not be available for a hearing in July. That telephone message only reached the court after the hearing had been concluded and the interlocutor pronounced.

 

 

 

 

 

Correspondence

Letter to Mr McNamara

[15] The clerk of court then wrote to inform Mr McNamara that the court sought a medical certificate in relation to his non-attendance that day. She also told him that the hearing had been continued until Monday 22 July between 2pm and 4pm. She explained that in order to complete the hearing within the shorter period, senior counsel for the pursuer had indicated that he would rest on his written submissions. With her letter, the clerk enclosed a copy of the interlocutor, the minute of proceedings, and a transcript of the hearing.

[16] By the time that the clerk wrote her letter, the Keeper's office had made her aware of Mr McNamara's indication that he would not be available for a hearing in July. The clerk therefore stated in her letter:

"This message only reached the Court after it had continued the hearing until 22 July 2013. If you wish the hearing to be rescheduled, you should make such a request by motion with a note of the reasons why. If you are unable to attend on 22^nd July on medical grounds, a medical certificate will require to be submitted in advance of the hearing."

 

Mr McNamara's Reply

[17] Mr McNamara replied to the clerk by letter dated 10 July 2013. In relation to the request for a medical certificate, he stated:

"I note the court requests a medical certificate to confirm I had gout and that a symptom of treatment of gout causes severe diarrhoea. If the court requires I shall request from my doctor a note to confirm my attendance for gout and the symptoms relevant to the treatment."

 

[18] Mr McNamara went on to express concern about the limited time available and to request that the court allocate at least one day for the hearing. He also stated that:

"I am unable to attend on the 22^nd July as the second week of July is our family holiday in which we will be sailing in the west coast of Scotland with eight members of our family."

 

Further Letter to Mr McNamara

[19] On 12 July, the clerk wrote to Mr McNamara and asked him to provide a medical certificate in respect of the hearing on 1 July as soon as possible. The letter continued:

"On the evening of Sunday 30 June, your wife sent an email to the court indicating that you were indisposed and unable to attend that hearing. Accordingly, the court determined that the case should be heard on Monday 22 July, the only date in the reasonably near future which could be found.

 

The fact that a party is scheduled to go on a family holiday is not a good reason for non-attendance at court. Accordingly the hearing will take place on 22 July 2013.

 

With regard to the time allocated to the hearing, you have an opportunity to put your submissions in writing. In addition, counsel for the pursuer has indicated that he rests on his written submissions. Accordingly, the bulk of time at the hearing will be available to you."

 

Letter from Robert McNamara

[20] On 17 July 2013 Mr McNamara's grandson wrote a letter addressed to the clerk of court. He sent a copy by email to the solicitor acting for the pursuer on the same date. She provided a copy to the court on the following day. But the court did not receive its own copy until 22 July. It stated that:

 

"My grandfather is on a family holiday and has chartered a yacht and will be unavailable until the second week in August."

 

Enclosed with that letter was a five-page note prepared by Mr McNamara in which he gave detailed reasons for resisting the pursuer's motions.

 

Hearing on 22 July 2013

[21] When the case called in court on 22 July, Mr McNamara was not present. After a short discussion, senior counsel for the pursuer indicated that he was prepared to continue all motions for one week in order to give Mr McNamara a final opportunity to appear. I granted the continuation. Every attempt was then made to bring the hearing on 29 July to the attention of Mr McNamara, using messengers at arms, recorded delivery post, email and telephone contact numbers. These efforts were made by the clerk of court and by Simpson and Marwick WS.

[22] The clerk of court sent an email to Mrs McNamara's email address, which her husband had used in previous correspondence. The clerk enclosed a copy of the interlocutor dated 22 July, together with a letter which stated:

"You should note that if you fail to appear or be represented at the hearing set down for 29 July 2013 at 10 am, the court may pronounce orders against you in your absence."

 

[23] On 23 July, the clerk of court received a 'read receipt' from Mrs McNamara's email address. On 24 July messengers at arms instructed by Simpson and Marwick attended at Mr McNamara's address in Arran. The person residing there indicated that Mr McNamara was currently on holiday and was expected to return home at the weekend. She also told the messengers at arms that he telephoned her every other day and she would inform him of their visit.

 

Hearing on 29 July 2013

[24] Mr McNamara did not attend the hearing on 29 July. I decided to proceed in his absence for the following reasons:

                                      i.     he failed to provide a medical certificate in respect of the 1 July hearing;

                                    ii.     he failed to enrol a motion to seek an adjournment of the 22 July hearing;

                                   iii.     he elected to go on a family holiday on a yacht which he had chartered;

                                   iv.     prior to that hearing, he took the time to prepare and lodge a further lengthy note of argument;

                                    v.     every step had been taken to bring the 29 July hearing to his attention;

                                   vi.     it appeared that he was aware of that hearing - his wife received the court's email on 23 July;

                                 vii.     the pursuer expressed concern that Mr McNamara might take steps to deal with his assets in a way which would make any recovery more difficult or even impossible;

                                viii.     there was difficulty in securing another date in the reasonably near future to hear the motion; and

                                   ix.     Mr McNamara and his daughter had set out in detail the arguments he wished to present. I was therefore able to gauge his position on the various motions.

 

Motion to Recuse

[25] Although there is no transcript of the hearing on 13 March 2009, Simpson and Marwick has lodged a copy of its file note of the hearing. It is in similar terms to the minute:

"CZS attendance at By Order Hearing before Lord Woolman in Court No 8.

 

Alistair Duncan appeared on behalf of the pursuers and Mr McNamara on behalf of himself.

 

Lord Woolman said that from considering the Record it was apparent from an interlocutor of 29 November 2002 that he had appeared on behalf of the pursuers in front of Lady Smith for an opposed motion.

The Judge said he had no recollection of that appearance and accordingly thought that there would be no difficulty in him being able to exercise his judgement appropriately in this litigation. However if either of the parties had any objection then he would recuse himself from hearing the case and would need no explanation from either party.

 

Alistair Duncan confirmed that there was no objection.

 

Mr McNamara confirmed that he had no objection."

 

[26] Mr McNamara has not challenged the accuracy of what took place at the hearing, as recorded in the minute of proceedings and the file note. He did not raise the issue at any hearing before me, or in the reclaiming motions. I conclude that he has waived any right to take this point.

 

[27] Further and in any event, the test is to be determined not by a disappointed litigant, but by a fair-minded and informed observer: Helow v Advocate General for Scotland 2009 SC (HL) 1.

[28] In the whole circumstances, I declined to recuse myself.

 

Mr McNamara's Position

[29] Mr McNamara does not accept that the litigation on the merits has now been determined. Two examples illustrate his approach. At paragraph 1 of the document headed "Reasons for Motion", he states that the original summons was erroneous and without foundation and adds:

"The Lord Ordinary and the Inner House ignored this line of defence, demonstrating bias and partiality in favour of the pursuers in breach of the judicial oath and item 5 of the Bangalore principles as recorded on the Statement of Principles of Judicial Ethics for the Scottish Judiciary 2010."

 

[30] The document enclosed with Arakin's letter dated 26 June 2013 and headed "Response to pursuer's opposition to defender's motion 15 April 2013 for hearing July 1" concludes by stating (i) "Tods Murray raised a fraudulent action against Arakin." and (ii) "For the courts to award costs to the pursuer let alone a higher rate is supporting dishonesty."

[31] Mr McNamara's underlying theme appears to be that as the court has reached a mistaken conclusion, all the substantive issues should be not only revisited, but reversed. Meantime he should be treated as if he had succeeded in the litigation. I reject that approach.

 

The pursuer's motions

Interest on the principal sum

[32] I granted decree for the principal sum of £86,376.40 in February 2012. The pursuer has lodged a spread-sheet showing that the interest on the principal sum until 29 July 2013 is properly calculated at £31,437.36.

[33] The pursuer arrives at that figure on the basis of two concessions which operate in favour of Mr McNamara. The first is that the interest should only run from the date of the auditor's report on each of the taxations, rather than from the date of citation: Taylor v Marshalls Food Group 1999 SLT 629 at 639K. The second is that interest should run at the rate of 8 per cent per annum until 4 December 2008 and then at 4 per cent per annum until 1 July 2013: Farstad Supply AS v Enviroco Ltd 2013 CSIH 9.

[34] In my view, the pursuer's calculation is correct and I shall grant decree for the sum of £31,437.36.

 

Expenses

[35] In my view expenses should follow success. I see no basis for awarding Mr McNamara the expenses of the action. The pursuer seeks an award of expenses on the solicitor and client scale, client paying. Lord Hodge reviewed the law on this matter in McKie v The Scottish Ministers 2006 SC 528 at paragraph 3:

"The law on this issue is well settled and may be summarised in the following five propositions. First, the court has discretion as to the scale of expenses which should be awarded. Secondly, in the normal case expenses are awarded on a party and party scale; that scale applies in the absence of any specification to the contrary. But, thirdly, where one of the parties has conducted the litigation incompetently or unreasonably, and thereby caused the other party unnecessary expense, the court can impose, as a sanction against such conduct, an award of expenses on the solicitor and client scale. Fourthly, in its consideration of the reasonableness of a party's conduct of an action, the court can take into account all relevant circumstances. Those circumstances include the party's behaviour before the action commenced, the adequacy of a party's preparation for the action, the strengths or otherwise of a party's position on the substantive merits of the action, the use of a court action for an improper purpose, and the way in which a party has used court procedure, for example to progress or delay the resolution of the dispute. Fifthly, where the court has awarded expenses at an earlier stage in the proceedings without reserving for later determination the scale of such expenses, any award of expenses on the solicitor and client scale may cover only those matters not already covered by the earlier awards."

 

[36] When this action was first raised in 1996, it appeared to be in short compass. The pursuer sought payment from the defender of its outstanding professional fees. It was therefore a simple action for recovery of a debt. Since then Mr McNamara has introduced a great many factual and legal issues, which have been exhaustively examined over many hearings.

[37] In my view, Mr McNamara's conduct of the litigation has been unreasonable and incompetent. He has thereby caused the pursuer unnecessary expense. In making that finding I take into account several factors:

                        i.         it has been difficult to discern any substantive defence to the action;

                       ii.         Mr McNamara has argued lines of defence that are plainly incompetent, such as the incorporation of a case based upon professional misconduct;

                     iii.         he has made very serious allegations against a number of professional persons, without being in possession of an expert report upon which to found them;

                     iv.         he has persisted in repeating those allegations even when they have been held to be unjustified;

                       v.         in the case of Mr Simpson and Mr Dobie, his conduct may be characterised as a sustained campaign;

                     vi.         he has caused substantial delay; for example, by raising irrelevant matters which were the subject of the proof before Lady Smith and by not paying awards of expenses for several years;

                    vii.         at every stage, Mr McNamara has engaged in voluminous correspondence and communications with the solicitors for the pursuer and with the court, sometimes using an intemperate tone;

                  viii.         he continues to make allegations against the court and those representing the pursuer.

[38] In those circumstances, I conclude that it is appropriate to make an award on the solicitor and client scale in this case.

 

Additional fee

[39] The pursuer seeks an additional fee in terms of heads (a) (b) (c) (e) and (f) of Rule of Court 42.14. It is competent to grant such a motion in addition to expenses on the solicitor and client scale: Trenature v Scotnet (1974) Ltd 2008 SLT 653. As I heard the debate and the proof in this action, I have decided that I am better placed than the auditor to adjudicate on this issue.

[40] I shall grant an additional fee in respect of heads (a) (b) (c) and (e). There is a large measure of overlap in the considerations that apply to the first three heads. There is a vast amount of documentation in this case. Senior counsel for the pursuer informed me that his instructing solicitor had been involved in the case from the outset and she had been placed under extreme stress by the huge volume of correspondence and the documents, many irrelevant, sent to her by Mr McNamara and those for whom he is responsible.

[41] Over the course of the last 17 years she has been the one constant factor on the pursuer's side. Many different counsel have been instructed at various stages and it has been of critical importance that Mrs Stewart had such a detailed knowledge of the case. That enabled her to give instructions both outside and inside court about the many different aspects of the case.

[42] In my view, it is plain that the pursuer should receive an additional fee under these three heads. I am satisfied that the cause is a complex one having regard to the number, difficulty and novelty of the questions raised. I am also satisfied that the case required the skill, time, labour and specialised knowledge of the solicitor.

[43] I shall also make an award in terms of head (e). When a party levels accusations of deception, incompetence, and bad faith against individual solicitors, that is plainly a matter of utmost importance to them and their firm. It is reflected by Mr Dobie devoting twenty per cent of his chargeable time to this case in the period prior to the proof.

[44] I decline to make an award in respect of head (f). In my view the mere fact that someone sues for a particularly large sum of money does not necessarily entitle the other party to an additional fee. Although the defender counter-claimed for £62 million, in my view any neutral third party would properly regard that as a fanciful sum.

 

Certification of skilled witness

[45] I derived considerable assistance from the evidence of Mr Quinn, law accountant: see paragraphs [6] to [11] of my opinion after proof. In my view it was reasonable for the pursuer to instruct him in this case and I shall certify him as a skilled witness.

 

Interim payment of expenses

[46] The pursuer seeks an interim payment of £250,000 toward its expenses. Although unusual in Scotland, such an order may be made if special reasons are present: Martin and Co (UK) Ltd [2013] CSOH 25.

[47] As shown in the following table, Mr McNamara has delayed paying several awards of expenses made against him to date. The unpaid sums total £36,847.61.

 

[48] Counsel for the pursuer invited me to draw the inference that Mr McNamara will try to avoid his liabilities, having regard to the manner in which he has conducted these proceedings.

[49] With regard to the size of any sum awarded, Mr Quinn has provided a statement dated 21 June 2013. He indicates that the insurers and the pursuer have paid a total of over £1 million (exclusive of VAT) in respect of fees and outlays. He also indicated that the likely costs in the preparation of an account in this case are likely to be substantial and may take about four months to prepare.

[50] I conclude that special reasons do exist in this case. Given the whole history of this litigation and the approach which Mr McNamara continues to adopt, in my view it is reasonable to infer that he will resist payment as long as possible. Given the estimated expenses in this case, there is also a question (I put it no higher than that) of whether he has the funds available to satisfy the claim. In those circumstances I shall adopt a conservative approach and order him to make an interim payment of £150,000.

 

Uplift of consigned sum

[51] A consigned sum is a conditional payment. "If the defender succeeds, he will get it back, if he fails, the other party will be entitled to it": McPhail Sheriff Court Practice 3^rd ed. 11.48. The pursuer has produced a letter from HM Revenue and Customs dated 4 March 2013, which certifies that there are no tax liabilities in respect of the consigned sum.

[52] As the pursuer has succeeded, I shall authorise it to uplift the consigned monies to the extent of the principal sum and interest. It will be open to Mr McNamara to seek the return of any balance.

 

Motions enrolled on behalf of Mr McNamara

[53] Counsel for the pursuer argued that because of Mr McNamara's non‑appearance, I should treat these motions as either dropped or not insisted upon. In my view the preferable course is to consider them on the merits, given the very full written submissions which have been lodged at different dates.

[54] With regard to the consigned sum, I have explained the basis upon which it was lodged. As the pursuer has been successful, it is entitled to uplift the monies in the way I have described. There is no basis to return the whole sum to Mr McNamara.

[55] I regard Mr McNamara's motion for the expenses as misconceived. The court has held that he was unsuccessful at debate, unsuccessful at proof, and unsuccessful in the reclaiming motions. He is the author of the pursuer's considerable expenditure in this action and I cannot see any basis which would entitle me to award him expenses.

[56] Mr McNamara also seeks payment of the sums of £103,000 and £1,547, together with interest on the sum of £275,000. I find it difficult to understand the basis for these claims. Sheet 2 of the document headed "Reasons for Motion" states:

"d) With reference to Mr Martin Gill's affidavit (which is supported by Mr Steven Clark's (accountant) and A. McNamara's evidence) at the time of raising their action, Tods Murray was Arakin's debtor for a sum of £103,000 excluding VAT (relating to payments for the Tods Murray for the McLauchlan and Brown dispute) in a Reconciliation produced by the defenders (and ignored by the court) which was based on paragraph [42] of Lord Mackay's opinion [2006] CSOH 64. The defenders' Reconciliation has been lodged with the court since 2001 - the £103,000 shown due to the defenders in that document nullifies the pursuers' Reconciliation and award but was completely disregarded by the court."

 

"6) A few weeks prior to proof the pursuers supplied the defender with Tods Murray's ledgers where it was recorded that Arakin was, in fact, in credit to Tods Murray in the sum of £1,547. Please note, the opposing QC, Mr Duncan made no challenge to any item relative to the GDC dispute and on that basis Arakin seeks full recovery of all costs with interest."

 

"7) The pursuers demanded and received £275,000 bank guarantee thus denying Arakin the use of its resources. The defender seeks the recovery of the lost interest on that sum to be classified as an offset against the sum awarded to the pursuers."

 

[57] The claim for capital sums appears to be an illegitimate attempt to reopen substantive matters. With regard to the claim for interest, the sum of £275,000 was lodged by the defenders in return for the pursuer agreeing to lift an arrestment on the dependence.

[58] In my view there is no merit in Mr McNamara's motions and I shall refuse them.