Scottish Sheriff Court Decisions

(A1560/05)

JUDGMENT OF

SHERIFF PRINCIPAL EDWARD F BOWEN QC

in the appeal

in the cause

ASHFORD AND THISTLE SECURITIES LLP

Pursuers and Respondents

against

MAUREEN KERR

Act: Ms K Lumsdaine, Solicitor, DLA Piper Rudnick Gray Cary Scotland LLP

Alt: McColl, Advocate, instructed by Warners, Solicitors

EDINBURGH, 28 FEBRUARY 2006

The Sheriff Principal, having resumed consideration of the cause, refuses as incompetent the motion for the pursuers and respondents no 7/2 of process; finds the pursuers and respondents liable to the defender and appellant in the expenses occasioned by the motion and remits the account thereof, when lodged, to the Auditor of Court to tax and to report; certifies the cause as suitable for the employment of junior counsel for the purposes of the said motion.

NOTE:

1. The present defender is the tenant of subjects at 138 High Street, Dalkeith in terms of a lease entered into with the previous owners of the subjects, Parkcross Limited. The pursuers have purchased the subjects from Parkcross Limited or from the receiver thereof. In the present action they contend that the defender had as at 14 February 2005 failed to pay rent for a period in excess of 21 days. A notice to irritate the lease was served on the defender on that date requiring payment of the outstanding rent within 14 days. The pursuers avers that the defender failed to make payment and that the lease was irritated on 3 March 2005. In the present action the pursuers seek declarator of irritancy and decree of removing. Following debate the sheriff granted decree in the pursuers' favour on 19 December 2005.

2. The defender has appealed against pronouncement of that decree. Prior to debate she founded, in general terms, on three lines of defence. These were first, that the pursuers had failed to give notice of the change of landlord; second, that a payment of £2,000 had been made to the pursuers thereby constituting a new lease; and third, that there was a verbal agreement with the previous landlords in terms of which no rent was to be paid until March 2009 upon the basis that the defender agreed to carry out repairs and refurbishment work to the property. The first of these lines of defence was abandoned before debate; the second line was rejected at debate and is not the subject of appeal. The defender maintains her position in relation to the alleged verbal agreement and contends that the sheriff was wrong to reject this line of defence as irrelevant. Moreover she now advances certain other matters which were not argued before the sheriff, notably that the demand notice served on 14 February 2005 included a sum due to the previous landlords which is not recoverable by the present pursuers.

3. No diet has yet been assigned for the appeal. Shortly after the marking of it the pursuers lodged and intimated a motion in terms of which I am requested to ordain the defender to lodge caution in the sum of £11,000 for violent profits. The motion is said to be made in terms of Ordinary Cause Rule 34.5(2). At the outset of her submissions in support of the motion the solicitor for the pursuers acknowledged the distinction between actions of ordinary removing and extraordinary removings. She accepted that the present action was in the nature of an extraordinary removing in respect that it was brought prior to the date of removal in terms of the lease. She contended that, in the form in which it now stood, Ordinary Cause Rule 34.5 did not distinguish between ordinary and extraordinary removings and that the present motion was accordingly competent. The relevant provision simply read "34.5(2) In any defended action of removing the sheriff may order the defender to find caution for violent profits".

4. The pursuers' solicitor no doubt felt it important to make this point in order to contrast Ordinary Cause Rule 34.5 from the original Sheriff Court Rule 110 from which the present Rule is derived. That original rule had been determined not to be applicable to extraordinary removings: Simpson v Goswami 1976 SLT (Sh Ct) 94. The pursuers' solicitor drew attention to the fact that in terms of Rule 110 the power to make an order for caution for violent profits in any defended action was preceded by the words "provided also". She maintained that it fell to be regarded as a power to be exercised in exceptional circumstances rather than in generality. In further support of her submission that the court had power to make an order in an extraordinary removing the solicitor for the pursuers founded on passages in the updated version of the Stair Memorial Encyclopaedia in the section in Landlord and Tenant. Paragraph 507 thereof is in the following terms: "The right to demand caution for violent profits in an extraordinary removing is based not on statute but on common law and established practice. It is not to be confused with caution for rent in actions of irritancy. The right to demand caution for violent profits is founded on the fact that the lease has come to an end and, because the irritancy may first have to be proved, the demand may be refused, although there may come a stage in the action when the demand is allowed. Where the landlord seeks to end the tenancy because of some extraneous element such as failure to pay rent, the relevant facts must be established before the defender can be regarded as a violent possessor and before the court can order caution. A different result might follow if the arrears of rent or other breach were admitted". Further under the heading "Caution in Extraordinary Removing" it is stated "See now OCR 34.5(2) (substituted by SI 1993 1956)".

5. In response to this argument counsel for the defender submitted that the motion was incompetent. He founded on Simpson v Goswami. Ordinary Cause Rule 34.5 was to all intents and purposes in the same terms as Sheriff Court Rule 110. It provided no basis for extending a right to seek caution for violent profits to a case where a tenant remained in bona fide possession. Further it was wrong to suggest that there was any basis in "common law and established practice" whereby there was a right to caution for violent profits in an extraordinary removing. That suggestion had been rejected by Sheriff Principal Bryden in the case of Mackays v James Deas and Son Limited 1977 SLT (Sh Ct) 10. A similar and consistent view had been taken by Sheriff Mitchell in Glasgow in the case of Imperial Hotel Glasgow Limited v Brown 1990 SCLR 86.

6. I am satisfied that the pursuers' motion is incompetent. Even if it is not technically incompetent upon the ground that Rule 34.5(2) does not apply to extraordinary removings, it is not competent upon the ground that the present defender is not in "violent possession". In Simpson v Goswami the Sheriff Principal said: "In an ordinary removing, on the expiry of the contractual term if the tenant remains in possession he does so as a "violent" possessor and he therefore may reasonably be required to find caution for violent profits unless he can produce an instantly verifiable defence. The position in the case of an extraordinary removing where it is sought to cut short a tenancy because of some extraneous factor such as the non payment of rent is different. There the irritancy founded upon must be established before the defender can be branded as a violent possessor and ordained to find caution for violent profits". He pointed out that in that case the defender maintained that he was justified in withholding his rent because of the pursuers' failure to fulfil her obligations in regard to repairs. His Lordship said "If that defence is established there will clearly be no question of the defender being in violent possession of the premises or of his having irritated the lease".

7. In the present case emphasis was placed on the fact that decree had already been pronounced. I do not think that this affects the issue. The situation is not one in which it would have been competent to make an order for caution for violent profits at an early stage of the proceedings, simply because the defender was not in "violent possession". Even if the defence is of questionable relevance that would go no further than possibly pointing to an order for caution for expenses, not the far reaching sanction of caution for violent profits. I do not consider that the fact that decree has been pronounced affects that essential issue of competency when the decree is subject to appeal.

8. As I have indicated it may be open to debate whether the incompetency of the pursuers' motion arises because Rule 34.5 does not apply to extraordinary removings, or to the more fundamental ground that caution for violent profits is not a competent order for the court to make when the tenant remains in possession prior to the ish. But in any event there is in my view no material distinction to be drawn between the terms of Ordinary Cause Rule 34.5 and the original Sheriff Court Rule 110. In the Imperial Hotel case the court was dealing with Rule 103(3) contained in the 1983 Rules. Sheriff Mitchell commented that the former Rule 110 was in identical terms to the present Rule 103(3). In Fact Rule 34.5 of the present Rules and Rule 103(3) of the 1983 Rules are in identical terms; the minor alteration came prior to 1983. It was a change of style, not of substance. I do not consider that it mis-states the position to say that Rules 110 and 103(3) were in identical terms. Overall I see no reason for taking a different view to that of Sheriff Principal Bryden, or for that matter to Sheriff Mitchell.

9. As to the passage in the Stair Memorial Encyclopaedia I do not consider that it can be fairly read as containing more than an indication that the right to demand caution for violent profits in an extraordinary removing can arise, but only in the most exceptional of cases. It should be clearly understood that there is a marked difference between liability for violent profits once the rights of parties have been established and a requirement to find caution for such profits at an earlier stage of any litigation. That, as Lord Kinnear said in Inglis Trustees v Macpherson (1910 SC 46 at 50) "is a totally different thing which cannot be imposed except by virtue of some statutory enactment or long established practice". It is hard to identify any such practice in the case of extraordinary removings.

10. In the whole circumstances I am in no doubt that the pursuers' motion falls to be refused as incompetent. I find the pursuers liable in the expenses occasioned by the motion. I am satisfied that the instruction of junior counsel, on behalf of the defender in a matter which was of some complexity and of considerable significance in the context of the litigation, was justified.