Scottish Court of Session Decisions

EXTRA DIVISION, INNER HOUSE, COURT OF SESSION

[2014] CSIH 103

P618/14

OPINION OF LADY CLARK OF CALTON

in the competency hearing

in terms of rule of court 38.12

by

THE SCOTTISH MINISTERS

Petitioners and respondents;

against

(FIRST) JOHAR JAVED MIRZA 

First respondent:

and

(SECOND) LIMA PROPERTIES LIMITED

Reclaimers;

Petitioners and respondents:  Heaney;  Civil Recovery Unit

First respondent:  No appearance

Reclaimers:  Bowen QC;  BBM Solicitors, Edinburgh

25 November 2014

History of proceedings relevant to the reclaiming motion
[1]        On 26 June 2014, the Lord Ordinary having considered the petition of Scottish Ministers which sought recovery of certain property under and in terms of the Proceeds of Crime Act 2002, granted warrant for service of the petition upon the parties named and designed in the schedule.  The schedule designed the respondents as Johar Javid Mirza and Lima Properties Limited.  Various interested parties were also named and designed in the schedule.  The interlocutor further allowed them and any other party claiming an interest to lodge answers thereto, if so advised, within 21 days after such intimation and service.  Service was duly made on the respondents.  Answers were lodged on behalf of Johar Javid Mirza.  It was not disputed that no answers were ever lodged on behalf of Lima Properties Limited.

[2]        Thereafter there was sundry procedure which resulted in a hearing on a motion by Scottish Ministers before the Lord Ordinary on 19 September 2014.  Having considered the motion, the Lord Ordinary pronounced an interlocutor dated 19 September 2014 for a recovery order in terms of section 266 of the Proceeds of Crime Act 2002 (“the 2002 Act”) in respect of property which forms items (7), (8) and (9) designed in part 2 of the schedule to the petition.  The effect of said interlocutor was to vest said property in the trustee for civil recovery. 

[3]        At the hearing before the Lord Ordinary on 19 September 2014, no answers had been lodged on behalf of Lima Properties Limited and they were not represented by anyone with rights of audience entitled to represent said company.  The circumstances and legal issues considered at said hearing before the Lord Ordinary are set out in his opinion dated 31 October 2014. 

[4]        Thereafter Lima Properties Limited sought to reclaim the interlocutor dated 19 September 2014.  Scottish Ministers lodged objections to the competency of the reclaiming motion by note of objection in terms of rule 38.12.  In due course a hearing was allocated before a procedural judge.

The issue raised in the competency hearing
[5]        The issue to be decided is whether Lima Properties Limited are entitled to reclaim the interlocutor of the Lord Ordinary dated 19 September 2014. The disputed legal issue raised a narrow but interesting point of interpretation in relation to the reclaiming provisions and section 28 of the Court of Session Act 1988. 

Submissions on behalf of the Scottish Ministers
[6]        Counsel for the Scottish Ministers adopted his written note of argument (16 of process).  Counsel in oral submission set out the legal framework.

[7]        Section 28 of the Court of Session Act 1988 (“the 1998 Act”) states:

“Any party to a cause initiated in the Outer House either by a summons or a petition who is dissatisfied with an interlocutor pronounced by the Lord Ordinary may, except as otherwise prescribed, reclaim against that interlocutor within such period after the interlocutor is pronounced, and in such manner, as may be prescribed.”

Section 51 of the 1998 Act states:

“’...Prescribed’ means prescribed by act of Sederunt...”

The relevant rules prescribed by act of sederunt are to be found in the rules of the Court of Session 1994 (“the rules”).  Rule 1.3(1) states:

“’Party’ means a person who has entered appearance in an action or lodged a writ in the process of a cause (other than a minuter seeking leave to be sisted to a cause);  and ‘parties’ shall be construed accordingly;”

The main provisions in relation to reclaiming are to be found in chapter 38 of the rules.  Rule 38.1 states:

“(1) This Chapter applies subject to any other provision in these Rules or any enactment.

(2) Any party to a cause who is dissatisfied with an interlocutor pronounced by—

(a) the Lord Ordinary; ...

and who seeks to submit that interlocutor to review by the Inner House shall do so by reclaiming within the reclaiming days in accordance with the provisions of this Chapter. ...”

[8]        In summary, counsel for the Scottish Ministers submitted that section 28 gives a right to reclaim “except as otherwise prescribed”.  The rules prescribe the particular circumstances which apply in any particular case.  The rules must be read to include the specific definition of “party” set out in the rules.  Lima Properties Limited did not lodge answers and do not satisfy the definition of “party” within the rules.  The inevitable conclusion must be that the purported reclaiming motion by Lima Properties Limited is incompetent and should be refused.  Counsel submitted that a remedy of reduction was available in certain circumstances and the existence of such a remedy was sufficient, for example, if it was contended that there was a breach of the European Convention on Human Rights. 

Submissions on behalf of Lima Properties Limited
[9]        Senior counsel for Lima Properties Limited adopted his written note of argument, (15 of process) and submitted that the objections to the reclaiming motion were ill founded.  The reclaiming motion was competent.  The starting point for his analysis was the primary legislation in section 28 of the 1988 Act.  Section 28 does not state that a person ceases to be a party where that person does not lodge answers.  The wording is wide and should be so interpreted.  The word “party” is not defined in section 28 and the clear intention of parliament is to give to any party to a cause whether a pursuer, defender, petitioner, respondent or third party the right to reclaim.  Senior counsel submitted that it was significant that there is no specific exclusion in the rules which state that a party, cited as a respondent, is deprived of the right to reclaim if no answers have been lodged.  There was no such exclusion applicable to section 266 of the 2002 Act.  Senior counsel submitted that both in ordinary usage and in court documents, Lima Properties Limited are named as a party respondent.  They must be a party as the Lord Ordinary pronounced an interlocutor in respect of property owned by Lima Properties Limited.  It would be illogical and contrary to legal principle to have a situation in which decree could be pronounced against a legal person, who was not a party to an action and had no right to reclaim.  Lima Properties Limited was a party to the action and remained a party to the action when the matter was considered by the Lord Ordinary, even although no answers were lodged. 

[10]      Senior counsel submitted that the remedy of reduction would not necessarily be available merely to correct an error of law.  In the circumstances of this case Lima Properties Limited had been deprived of property without any hearing at all. 

[11]      Reference was also made to R.A Lister and Company Limited and others v E.G. Thompson (Shipping) Limited and another (No 2) (1987) WLR 1614,  Hobhouse J at 1618.  Counsel accepted that the facts in that case were very different from the present case and that the legal rules in England were also different but he submitted that the approach adopted was illustrative and helpful.

Analysis
[12]      I look to the current statutory provisions for a solution to the disputed issue.  I observe that section 28 of the 1988 Act which makes provision for reclaiming is a general provision and plainly envisages that the detail will be “otherwise prescribed” and that prescription includes prescription by act of sederunt.  It is in my opinion necessary to read section 28 as intending that the detailed provisions for particular cases may be dealt with by act of sederunt.  It was accepted by both parties that the rules which resulted from the act of sederunt make detailed, different and specific provision for a range of appeals and reviews in different circumstances.  It is necessary to analyse the specific provisions in order to reach a conclusion about whether section 28 authorises Lima Properties Limited to reclaim in this case.  I note that the rules provide a specific definition of “party”.  For the purposes of reclaiming, as set out in chapter 38 of the rules, it means a person who has entered appearance in an action or lodged a writ in the process of a cause.  There was no submission that the first part of the definition had been fulfilled.  It was not in dispute that lodging answers would satisfy the second part of the definition and I agree with that.  In my opinion, therefore, Lima Properties Limited is not a party to a cause in terms of the definition of “party” set out in the interpretation section in rule 1.3 for the purposes of the reclaiming provisions set out in rule 38.2.  That appears to me to be clear as a matter of interpretation. 

[13]      In reaching that conclusion, I accept that in parts of the rules there is specific provision made in certain circumstances to exclude reclaiming.  But there is no particular pattern and no exhaustive list of exclusions within the rules.  The only conclusion which I can reach is that bearing in mind the interrelationship between section 28, the reclaiming provisions in chapter 38 of the rules and the clear definition of “party” within the rules, it was intended that not everyone involved in an action was intended to have the right to submit an interlocutor to review by reclaiming.  Entering appearance or lodging a writ in the process is specified as a precondition because of the definition given to “party”.  I do not find this surprising in that once a person has become a party in the sense of the rules, other rules will apply to that party and the court will have powers to regulate the behaviour of the party.  Entering the process or lodging a writ will also have implications for the procedure to be followed and whether the action is to be treated as undefended which may also have legal implications.  If someone who is cited never enters the process or lodges a writ in process but had a right to reclaim, there could be considerable practical difficulties.  A litigation with a number of parties might be completed, for example, after the hearing of evidence and an interlocutor pronounced by the Lord Ordinary.  At that late stage, there would be serious difficulties if such a person had the right to challenge the interlocutor of the Lord Ordinary.

[14]      Even if senior counsel is correct in submitting that Lima Properties Limited is a “party” for other purposes, I do not think that assists his submission.  The rules have defined “party” in a particular way, in contrast for example to the rules in England, discussed in RA Lister and Company Ltd and others, which define “party” as including a person who “has been served with notice of...proceedings”.  No doubt there are a number of ways in which one might define “party” for various purposes.  I do not consider however that assists Lima Properties Limited. 

[15]      My decision does not depend on whether or not there is any real prospect of some other remedy for Lima Properties Limited.  It was not disputed as a matter of principle that a remedy of reduction existed but whether or not such a remedy would be available in the circumstances of this case was not agreed.  I was also informed by senior counsel for Lima Properties Limited that there was some “misunderstanding” with solicitors at the earlier stage of proceedings and that explained the difficulties which had arisen.  That may be so and it may be that other remedies may be available in relation to that.  But I have not taken that into account.

Decision
[16]      I conclude that the reclaiming motion by Lima Properties Limited is incompetent and I therefore refuse the reclaiming motion.