Scottish Court of Session Decisions

FIRST DIVISION, INNER HOUSE, COURT OF SESSION

[2016] CSIH 87

A479/15

Lord President

Lady Clark of Calton

Lord Glennie

OPINION OF THE COURT

delivered by LORD CARLOWAY, the LORD PRESIDENT

in the reclaiming motion by

STEWART McLEOD

Pursuer and Reclaimer

against

PRESTIGE FINANCE LTD

Defenders and Respondents

Pursuer: Party

Defender: Stalker; Blacklocks (for Optima Legal, Glasgow)

24 November 2016

Introduction

[1]        This is a reclaiming motion (appeal) against an interlocutor of the Lord Ordinary dated 20 May 2016 dismissing as irrelevant an action for production and reduction of a sheriff court decree.

Background
[2]        The pursuer is the owner of heritable property in Stewarton.  The defenders are creditors in respect of a loan to the pursuer secured over that property.  In particular, in 2007, the pursuer granted a standard security in favour of Morgan Stanley Bank International Ltd.  The security, which was registered in the Land Register on 18 April 2007, was assigned to the defenders on 9 July 2009.  The pursuer failed to pay the monthly instalments of the sums borrowed as they fell due.  As a consequence, the defenders sought to recover possession of the property by calling-up the security in terms of the processes provided by section 19 of the Conveyancing and Feudal Reform (Scotland) Act 1970.

[3]        Following an unsuccessful attempt to serve a calling-up notice by recorded delivery, a further notice was deemed to be served on 14 May 2012, having been sent to the Extractor in accordance with section 19(6) of the 1970 Act.  The defenders then lodged a summary application at Kilmarnock Sheriff Court, seeking warrant to enter possession, to eject the pursuer and to sell the property, in terms of section 24(1B and D).  The pursuer had made an offer to make payment towards the arrears, but that had not proved acceptable to the defenders.

[4]        When the summary application initially called on 13 March 2013, it was sisted to allow the pursuer to make proposals for payment.  The sist was recalled in October 2013.  The application was again continued to allow the pursuer to make another proposal.  The pursuer failed to attend a hearing on 9 October 2013, and decree was granted.  That decree was recalled in terms of section 24D of the Act on 20 November 2013.  A hearing was then fixed for 15 May 2014.

[5]        At the hearing the solicitor for the defenders stated that she did not propose to lead any witnesses, but to rely on certain documents demonstrating a number of matters, including the service of the calling-up notice, the indebtedness and compliance with the debtor protection requirements in the 1970 Act.  The pursuer said that he was not going to lead any witnesses either, and left the court at that stage, stating that he did not recognise the jurisdiction of the sheriff.  He was advised by the sheriff that, if he were to leave, decree was likely to be granted against him.  That decree then followed.

[6]        The decree was extracted on 10 June 2014.  The following day, the pursuer lodged a motion seeking leave to appeal late.  In a Note dated 3 July 2014, the sheriff principal refused that motion as incompetent, on the basis that the decree had been extracted and that the only remedy was therefore this action for reduction.  No steps were taken to enforce the decree in 2014, the pursuer having undertaken to sell the property.  Meantime, the arrears continued to accumulate.

[7]        In May 2015, the defenders stated their intention to enforce the decree.  On 19 May, the pursuer sent to the defenders a cheque for the arrears, drawn on the “WeRe Bank”.  This institution is not a regulated bank or a participant in the interbank clearing system.  The defenders refused to accept payment in that form.  No other payment was tendered.  On 1 June 2015, a charge to remove the pursuer from the property was served.  It was only after that, that the present action was raised.  Interim interdict was granted on 12 June 2015. 

Lord Ordinary’s reasoning

[8]        Following upon a Procedure Roll debate, on 20 May 2016 the Lord Ordinary sustained the defenders’ plea to the relevancy and dismissed the action.  He recognised that the remedy of reduction of a decree in foro is an equitable one, only available in exceptional circumstances to ensure that substantial justice is done (Adair v Colville & Sons 1926 SC (HL) 51; Bain v Hugh LS McConnell 1991 SLT 691).  He was not satisfied that the pursuer had averred sufficient circumstances to merit reduction in terms of the test.  The arguments which had been presented by the pursuer to the Lord Ordinary were, first, that the assignation to the defenders had required his consent.  That was rejected as wrong in law.  His second point was that he was entitled to see the principal document of debt before being required to pay the assignee.  This was similarly regarded as unfounded as a legal proposition.  Thirdly, the fact that the pursuer may have been unaware of the calling-up notice, at the time when it was served on the extractor, was irrelevant in circumstances where he had entered the summary application process.  The fourth submission was that the sheriff court lacked jurisdiction.  This was regarded as plainly wrong standing the relevant statutory provision which afforded that court jurisdiction.  A fifth contention, that the debt had been wrongly calculated, was regarded as irrelevant to the defenders’ entitlement to take action following upon the calling-up notice.  The fact that the pursuer had reacted to his failure to appeal late, not by immediately seeking reduction but by attempting to sell the subjects, while indebtedness increased, was a factor pointing against the exercise of any discretion in favour of the pursuer.  The defenders had not been obliged to accept the payment tendered by the cheque.  Although there was a difficulty, as described by the Lord Ordinary, about the production of principal documents at the hearing on the summary application, he did not consider that this constituted exceptional circumstances.  He had been informed that, at the hearing, the defenders’ solicitor had the principal calling-up notice, which had been returned by the extractor duly receipted, in her possession.  The Lord Ordinary had also been shown the Land Register title sheet showing the existence of the standard security and the relevant assignation to the defenders.

Decision
[9]        The pursuer’s grounds of appeal, and indeed the averments in the summons, are largely incomprehensible in so far as they might be read as legal propositions directed towards faults in the Lord Ordinary’s reasoning.  Some of the submissions by the pursuer to this court had the same characteristics, but there is a complaint, which is capable of being understood, about a failure to produce original documents in the summary application process. 

[10]      It is important to note that, at the hearing in the summary application process, the pursuer did not present any argument based upon a lack of principal documents.  Rather, he left the hearing, having been warned of the consequences of doing so and, in particular, that decree may follow.  He did not appeal the decree which did follow until it was too late to do so.  He might have been able to present such an argument had a timeous appeal been marked. 

[11]      The court is satisfied that principals of the documents, the absence of which the pursuer now complains, do in fact exist.  The task for this court is then to determine whether the Lord Ordinary’s assessment of exceptional circumstances was in error.  The test is, as the Lord Ordinary has set out, that the remedy of reduction, being an equitable one, is only available in circumstances where it is necessary to ensure that substantial justice is done.  The court is unable to identify any error in the Lord Ordinary’s approach.  For the reasons given by him, there are no exceptional circumstances requiring the court to intervene in order to ensure substantial justice in this case, where it is clear, in relation to the only understandable argument presented to the court, that any documents which required to be lodged in the summary application process did and do in fact exist. 

[12]      For these reasons, the reclaiming motion is refused.