Scottish Court of Session Decisions

Pursuer: McColl; MacRoberts LLP

Defender: Hanretty QC, E Robertson; DWF Biggart Baillie

8 May 2013

[1] On 8 May 2013 I found the pursuers liable to the defenders in the expenses of the principal action and found the defenders entitled to charge an additional fee under Rule of Court 42.14(3) under factors (a), (b) and (e) of that rule. I also found the defenders liable to the pursuers in the expenses of the counterclaim. The pursuers lodged a reclaiming motion against my interlocutor on the merits of the action and have now reclaimed my decision on expenses. This opinion sets out my reasons for the latter decision.

[2] The pursuers' opposition to the defenders' motion for the expenses of the action was based on the submission that the defenders had raised many grounds of defence and had succeeded only in one, namely the breach of their obligations in relation to data protection. In particular, Mr McColl submitted that the defenders' unsuccessful attempt to set aside the contract on the ground of misrepresentation had required parties to lead evidence about the formation of the contract which was a significant proportion of the evidence in the proof. He submitted that I should confine the pursuers' award of expenses to the defence relating to data protection or I should restrict their expenses to 50%.

Discussion

[3] The defenders succeeded before me on the merits of the principal action as I held that the pursuers' failure to comply with their contractual obligations in relation to data protection amounted to a material breach of contract. They did not succeed in their defences of misrepresentation and of a material breach of contract because the pursuers had not signed a contract with a football club when the contract commenced. Nor did they make headway with the defences relating to the Consumer Protection from Unfair Trading Regulations 2008. At the end of the proof Mr Hanretty departed from the other allegations of breach of contract which I set out in para [68] of my principal opinion.

[4] I saw the force of Mr McColl's point that the defenders had pleaded many defences and had succeeded in only one. The defences had the flavour of the scattergun. But I was not persuaded that there had been so much evidence led on unsuccessful defences and legal expense incurred as a result that I ought to depart from the normal rule that expenses follow success.

[5] The defence of misrepresentation necessitated evidence about the formation of the contract and in particular how the pursuers' officers explained to the defenders what they offered. But some of that evidence was also both relevant and important to the successful defence. It formed part of the factual matrix of the contract and helped me reach a view on the materiality of the pursuers' breach of their obligations in relation to data protection. Among the benefits which the pursuers offered was their possession of the details of all the soccer savings account holders. Their pitch was that they were in a position to facilitate the transfer of those account holders from Dunfermline Building Society to the defenders. But their use of the personal data relating to those account holders was a significant breach of data protection legislation.

[6] Similarly, the evidence of how the pursuers sought to implement the contract with various football clubs, and in particular Rangers, Celtic and Hamilton, was relevant to the successful defence as it showed how the pursuers' misunderstanding or disregard of their data protection duties and the response of third parties to the breaches of data protection legislation significantly hampered the parties' attempts to make a commercial success of their business venture. Thus much of the evidence led about how the parties implemented the contract in 2010 and 2011 would have been led even if the defenders had pleaded only the data protection breach.

[7] I accepted that the other defences would have involved the pursuers' lawyers in some legal research in responding to the pleadings and their counsel in some legal argument. But they did not require any significant evidence.

[8] When I decided that I should not depart from the normal rule that expenses follow success, I also awarded the pursuers the expenses of the counterclaim. I had regard to the possibility that the defenders could persuade the Auditor of Court that their award of expenses in relation to the counter claim included some of the expense incurred in answering the assertion of misrepresentation, although I did not think that the expenses of the proof itself had been increased materially by that assertion.

[9] In relation to the motion for an additional fee, I thought that the way in which those behind those in control of the pursuers had used different legal entities to try to get round the contractual obligations to Dunfermline Building Society, the separate contractual relationships with the football clubs and data protection rights and obligations of the various entities created significant complexity for the defenders' legal representatives. While the matters were relatively clear once evidence was led at proof, they would have been far from clear when the defenders' representatives were investigating the relationships between (i) SSL, (ii) SSSL, (iii) the football clubs, and (iv) the account holders. The pursuers' anxiety to assert commercial confidentiality and to redact documents when disclosing them increased that difficulty. The defenders' solicitors spent a great deal of time in preparing the defence. I was informed that their time sheets recorded 400 hours of work. It will be for the Auditor to assess the reasonableness of that claim, but it supported the submission about the difficulties which the defenders faced in working out who did what and who had rights and duties in relation to data protection. I considered that the defenders had shown an entitlement to an additional fee under factors (a) and (b).

[10] The litigation was important to the defenders as the pursuers' mishandling of their obligations in relation to data protection and their inducement of SSL to breach its contract with Dunfermline Building Society involved the defenders in conflict with Nationwide Building Society in circumstances which will not have enhanced the defenders' reputation. The defenders, who when the contract was live did not know the details of the pursuers' business arrangements, had a strong commercial interest in showing that the pursuers had broken their contract with them in relation to data protection. I was also informed that the sum sued for was about one-third of the annual profits of the defenders. I was persuaded that the importance of the subject-matter of the cause entitled them to include factor (e) as one of the grounds in their claim for an additional fee.