Scottish Court of Session Decisions

OUTER HOUSE, COURT OF SESSION

[2016] CSOH 39

A62/15

OPINION OF LORD MCEWAN

In the cause

GARY JOHN HARPER

Pursuer;

against

SALLY ANN LETLEY

Defender:

Pursuer:  Stuart; Balfour + Manson

Defender:  Logan;  Halliday Campbell WS

9 March 2016

[1]        In this action between former spouses, the husband seeks reduction of two Sheriff Court decrees held by his ex-wife against him, suspension and reduction of diligence and interdict against further diligence.  In simple terms it is an attempt by him to prevent her enforcing a substantial award of expenses against him.

[2]        The matter has arisen in this way.  The parties were divorced on 24 June 2013 and under the decree the wife was ordained to sell a property in Broughty Ferry (“Fairfield Road”).  Having not done so the husband lodged a minute seeking an incidental order granting warrant for such person as the court saw proper to dispose of Fairfield Road.  The action was defended and after debate the minute was refused as incompetent and dismissed.  The husband was found liable in expenses.  He appealed to the Sheriff Principal; the appeal was abandoned and expenses conceded.  The amount of expenses is over ten thousand pounds.

[3]        In the present action the husband alleges that his ex-wife made a false statement about interest in the property by a third party, and, that she instructed her solicitor to make that averment in the Minute Proceedings.  That is admitted in this action.  No proof was heard about any of this.  In the present action the pursuer seeks a proof and says that the defender would never have got decree against him if the sheriff had known of the misrepresentation.  The ex‑wife has now served a charge on the expenses, hence the present action to stop further diligence.  The defender seeks dismissal and tables four pleas.

[4]        I was referred to a number of cases which I list below.

            Ferguson’s Tr. v Reid 1931 SC 714.

            McKelvie v The Scottish Steel Scaffolding Co. Ltd 1938 SC 278.

            Bain v McConnell Ltd, 1991 SLT 691.

            Johnstone and Clark (Engineers) Ltd v Lockhart 1995 SLT 440

            Royal Bank v Matheson 2013 SC 146.

            Nova Scotia Ltd v Henderson 2015 SLT 691

            The well known authority Jamieson v Jamieson 1952 SC (H.L.) 44 was also referred to in passing.

[5]        Mr Logan moved me to sustain his four pleas and dismiss the action.  He also sought recall of the interdict.  He discussed the history of the dispute and pointed out that no proof had been heard in the case raised by way of the Minute;  after debate Sheriff Way dealt with it as a matter of competency, decided the court was functus and dismissed the action.  The appeal to the Sheriff Principal was abandoned.  Expenses were awarded, taxed.  Diligence had started on the unpaid expenses.  In the Minute proceedings the basis of the action was the Minute of Agreement.  Any dishonesty on the part of the wife could not have affected the result.  The pursuer adopted the wrong remedy and should have sought implement.  He referred me to Johnstone.  The issue was really about the expenses but that raised a separate complication.  It was an omnibus figure covering the procedure before the Sheriff and the Sheriff Principal.  These expenses had been conceded in both courts.  It was not sought to reduce the decision of the Sheriff Principal.  There had never been a proof on facts untested in a different action.  He referred to Bain.  There never could be a miscarriage of justice where expenses were conceded and the whole matter dismissed by a joint minute, he looked at Ferguson’s Tr.  Here the person acted on the judgement of the Sheriff and Sheriff Principal and agreed to the taxation of all.  In any event what part of the expenses should be unravelled?

[6]        It was not proper to go behind the decision of the sheriff who had in any case followed the proper binding authorities.  The cases dealt with decrees in absence or by default.  This case was a decree in foro and any fraud was not part of the decision.  The facts were not necessary to a decision on competency.  The case had been dismissed.  There had been no absolvitor.  Matters have moved on and the pursuer has probably now been paid in full.  This court should not undertake any factual investigation.      

[7]        Mr Stuart, appearing for the husband, conceded that a section 14 order can only attach to a section 8 or 9 order under the Act.  That was what was sought before the sheriff.  It was productive of an untruth.  Counsel looked at the divorce decree wherein the house was to be sold and the sale was put into the hands of a third party.  If it was not sold, then a flat was to be sold and money paid, that sum was not paid nor the house marketed.  Diligence was done then suspended.  When Mr Woods was finally asked about his name being used he denied any knowledge.  That led to the discovery that a statement (now admitted as untrue) had been made in the pleadings.  That was discovered in August 2014.  That was three months after the appeal had been dismissed.  These circumstances meant that the pursuer was entitled to a proof before answer that the sheriff would not have made the decision he did if the dishonesty had been known.  The pursuer was not bound to fail.  Counsel referred to Jamieson.  

[8]        Counsel posed the question about reduction.  The test was to achieve “substantial justice” and that was not barred just because the appeal was abandoned.  He looked at Bain page 695 and the Royal Bank at page 156.  It was not necessary to reduce the interlocutor of the Sheriff Principal.  What was sought was to reduce the interlocutor of the sheriff and the decerniture for expenses.  The court should be slow to decline reduction if there was an answer to the Minute and the award of expenses.  There was an answer because the purported offer was fundamental to the decision of the sheriff.  He referred to Nova Scotia where all the cases were cited.  Since the offer was bogus and was the basis of the sheriff’s decision the husband was bound to succeed.  He read from McKelvie at page 280.

[9]        Counsel then looked at No 6/3 and 6/6 by Process.  These created the obligations, the core obligation being to sell the house in Broughty Ferry.  That was the “core obligation” (counsel’s words).  No sale took place.  When the husband sought the incidental order (No 6/64 of Process) to take the sale out of his hands and give it to another was to change the core obligation.  Counsel looked at Statement 3 in the Minute and compared it with the present Record Article 5 where the lie was admitted.  It was a blatant misrepresentation and had he known the sheriff would not have acted as he did.

[10]      Counsel then looked at some affidavits numbers 6/7, 6/12 and 6/11 of Process and a series of emails 6/11, numbers 5, 6 and 7.  All of these adminicles were designed to show how the lie came to be told and affect the credibility of the defender.  Counsel then looked at two hearings in the Outer House in related cases involving the same parties, before moving to an analysis of the Note by Sheriff Way.  The point to be made was that the sheriff was under the misapprehension that the wife had sold the Broughty Ferry house.  If he had known that she had not he could not have decided as he did.  Accordingly reduction was required.

{11}      Let me deal with the authorities.

{12}      I look first at Ferguson’s Trustee.  There the trustee sought payment of a stockbroker’s account from the defender.  Defences were lodged, found to be irrelevant even after amendment and decree was granted.  The defender appealed to the Sheriff who allowed further amendment, refused leave to appeal and fixed a proof.  The Sheriff Substitute fixed a proof and inter alia granted a specification of documents in favour of the defender.  With leave, the pursuer appealed to the Court of Session.  In the Court of Session the pursuer sought to review the prior interlocutor of the Sheriff allowing proof.

[13]      The pursuer had acquiesced in that prior interlocutor had obtained an award of expenses upon it and never sought to appeal it.  It was held that having acquiesced in it he could not now seek to have it reviewed notwithstanding the very general words of section 29 of the Sheriff Courts (Scotland) Act, 1907.

[14]      It is important to note that the interlocutor sought to be reviewed dealt only with procedure and not with the merits.  The parties had consented to the procedure which was to be followed.  McKelvie was again a case from the Sheriff Court and dealt with Reponing. The pursuer had had to pay under a guarantee and sought repayment from the defender.  Defences were lodged but the defenders failed to appear on the adjustment roll.  The Sheriff Substitute continued the case for intimation but when at the next calling there was still no appearance he granted decree by default.  It was then a decree in foro.  The sheriff refused the appeal and the defenders appealed to the Court of Session.  There was an explanation for the failure to appear but it appeared in the argument that the defences were dilatory and without merit. For that reason the Court refused the appeal.

[15]      The Lord President observed (p.280) that:

“(he) should be extremely reluctant that a decree pronounced against any defender should become final where there was a substantial defence that had never been heard, and, although the decree was granted by default after certification …”

Bain was a case which did concern reduction.  The circumstances which arose from the Sheriff Court procedure in Kilmarnock were described by the Lord Ordinary as “lamentable”.  In the first place the Sheriff acted “ultra vires” in dismissing the action.  Then in the appeal to the Court of Session the solicitors failed to lodge necessary papers to give effect to an agreement.  The appeal was deemed to be abandoned.

[16]      The Second Division allowed a proof before answer in an action of reduction over what had occurred.  They said that it was not possible to define categorically the cases in which reductions were competent (p.365 G).  It is clear from the remainder of the opinion (p.696 A to C) that the Court regarded what had happened as “highly exceptional”.

[17]      In Johnstone v Clark it was sought to reduce a Sheriff Court decree in foro.  The facts averred were that the defender was injured in an industrial accident at work.  He sued I.C.I. and the pursuers.  The pursuers denied liability, pleaded contributory negligence and indemnity and contribution from I.C.I.   No notice of intention to defend was lodged and a decree in absence was obtained against I.C.I. and the pursuers.  I.C.I. were reponed and when the pursuers later tried to be reponed it was incompetent since by then the extracted decree had become in foro.  The failure to defend was due to a breakdown in communication between their insurers and their solicitors.

[18]      In allowing a proof before answer the Lord Ordinary considered the misdirection and non-receipt of documents to be an exceptional circumstance.  There was also a risk of substantial injustice where the pursuers had a defence and the other defender would receive a windfall.

[19]      The Royal Bank is very different.  In the first place the decree was in absence and a restricted proof before answer took place inter alia about the faults of the Bank’s legal advisers.  It was accepted that the Bank had a defence to the action.  The Lord Ordinary looked at the degree of fault in allowing decree to pass which he regarding as being without mitigation.  That view was not upheld by an extra Division which granted reduction on the basis that there was a substantial defence which had never been heard.

[20]      3052775 Nova Scotia involved reduction of a decree by default and proof before answer was allowed.  The facts were complex and more than one action was involved concerning the same parties. Due to withdrawal of legal representations, decree by default passed and was never reclaimed.  It was clear from the pleadings that there was a substantive defence to the action and answers to that defence.  The defence had, of course, not been heard.  The Lord Ordinary held that the circumstances were exceptional such that reduction might be necessary to produce substantial justice.

[21]      Let me look more closely at what is averred in this case.  The pursuer seeks reduction of two decrees dated 31 January2014 (No 6/1 (1) of Process) and 16 January 2015 (No 6/2 (1).  He further asks for suspension, reduction and interdict against further diligence.  The decrees are called “the pretended decrees”.  These decrees follow on the minute and answers procedures before a sheriff at Dundee.  The pleadings and the Sheriff’s Note are incorporated in the present Record.  The Sheriff found the Minute to be incompetent and awarded expenses against the husband in the January 2015 decree.  There was an unsuccessful appeal to the Sheriff Principal which was abandoned and expenses conceded.  Both sets of expenses form the decree in January 2015, Strictly speaking this is not admitted by the pursuer but the matter was, and had to be, conceded in argument.  The pursuer then avers that the wife’s defence to the incidental application was on the basis that she had taken steps to market the house and that “ … a Mr Woods had previously viewed (it) …”.He goes on to aver (Cond 5) that the statement that Woods had previously viewed it … (etc) … was untrue and the defender knew it to be untrue.  The wife answers this in this way (Ans 5):

“… admitted that the averment in the Answers that Mr Wood had visited the property was untrue … the (wife) instructed her solicitor to make that averment …”

[22]      Clearly if correct this is a serious matter for the wife and the solicitor who is not represented in this action.  Looking to the Record in the Minute (No 6/4 (1) of Process) a similar averment about Wood (stated as Woods) appears in Ans 3.  He is said to have previously viewed the property.

[23]      The further procedure in the Minute is clear.  All that was argued to Sheriff Way was whether the Minute was competent. There was no suggestion of any argument on relevancy and the alleged untruth about Wood was never in issue and indeed at that time was not known.  The Sheriff issued a full reasoned Note and followed authorities which he regarded as correctly decided.  It is not for me here to discuss his Note but quantum valeat I agree with him and his conclusion.

[24]      What is critical here is that before the Sheriff and the Sheriff Principal both parties were represented and so the decrees are in foro.  One amount of expenses covers the debate and the conceded appeal.  They are not apportioned.

[25]      As I indicated in my summary of the argument I was asked to look at affidavits numbers 6/7 (1) from a Joseph Patrick Woods, number 6/11 (1) from an Amar Sharif and number 6/12(1) from a Marie Johnston.  None of them forms part of the pleadings.  In the record are incorporated brevitatis causa certain emails dated 4 July 2013, 26 September 2013 and 5 November 2013.  What was said about these emails was that they affect credibility.  That may be true but it is not a subject for the debate before me.  I am not prepared to consider any of these productions.  They cannot in any way be tested in cross examination before me and to consider these would be unfair to the defender. I was referred to a decision of Lady Scott in a related action between the same parties.  It is reported at [2014] CSOH 168 and in number 6/13 (1) of process.  It raises a different point and was heard as a motion relating to the scale of expenses.  Some of the issues raised before me were discussed and in particular the alleged misrepresentations by the wife over the sale of the property.  Affidavits and emails were produced and looked at.  Lady Scott was, in my opinion rightly, unwilling to conduct a proof into these matters and get involved in further proceedings (Paras 21, 22) in a case which had effectively settled.  I refer also what she said about drawing conclusions where there has been no proof.  Her actual decision is not material for present purposes.  Since the affidavits were disputed she discounted them.  In the same way I am not prepared to look at affidavits not incorporated in the pleadings.

[26]      What then is to be done.  In my opinion the husband adopted the incorrect remedy in the Sheriff Court.  He should have sought specific implement of the Separate Agreement.  He joined issue with his ex-wife in the Minute Proceedings, took an appeal, abandoned it and agreed the taxed expenses.  Whether the wife was dishonest about Wood is irrelevant for two reasons;  it has never been investigated and can having nothing to do with competency.

[27]      In my opinion the authorities assist the defender.  All of these deal with circumstances quite different to the present and it is easy to see why the circumstances in some of them were “exceptional”.  In almost all of these there has been a complete failure by legal representatives or some gross incompetence by the lower court – (Bain is a good example.)  The Court is often motivated by the obvious desire to allow a proper defence to be heard if there is one (McKelvie) but not where there is none.  Furthermore I have earlier said that both parties acquiesced in the Sheriff Court procedure.  That is a powerful factor against now allowing any form of review by way of reduction (see Ferguson’s Trustees).  There has been no failure by legal advisors (Johnston v Clark) and there is nothing at all exceptional about this case.  It is also important to note that no reduction is sought of the decree of the Sheriff Principal and the expenses have never been apportioned.  There is a final point which was touched on by Mr Logan and it is this.  Reduction must have some practical effect so that the court is not seen to act in vain.  To reduce both decrees of the Sheriff would still leave the interlocutor of the Sheriff Principal intact as well as the expenses finding in his court.  It would be wrong to allow the husband to relitigate the Minute a second time in the hope of a different result (which would be unlikely) on the issue of competency.  It would be necessary to have a proof on the present Record and probably involved the Sheriff as a witness (see Cond. 7) before any of that could be achieved,  To do all or any of this on a question of expenses only should not, in my opinion, be countenanced.  There must be some finality to these endless disputes and I repeat that the present problem has not resulted from any dishonesty by the wife but became of the selection of the wrong remedy.  As Lady Scott said this case is now in the territory of “satellite litigation”.

[28]      In my view on the authorities, and what is averred, the pursuer is bound to fail.  I will accordingly dismiss the action, and sustain the defender’s first and third pleas in law and find it unnecessary to deal with her second and fourth pleas.  I will repel all the pleas for the pursuer.  I was told there is an outstanding issue over an interdict.  I heard no argument about that but I will continue the case for a hearing on interdict if necessary and on expenses which are meantime reserved.