SHERIFFDOM OF SOUTH STRATHCLYDE DUMFRIES AND GALLOWAY

 

B893/11

	JUDGMENT OF SHERIFF PRINCIPAL B A LOCKHART
	in summary application
	JOHN COWIE
	Pursuer and Respondent
	against
	LUIGI AND RITA MARTALO and MRS RITA MARTALO
	Defenders and Appellants

 

Act: J Stirling, of Stirling Dunlop, Solicitors, Hamilton

Alt: Mr McNairney, of Morrisons, Solicitors, Glasgow

 

 

 

HAMILTON: 24 August 2011

 

The Sheriff Principal, having resumed consideration of the cause allows the appeal and recalls the Sheriff's interlocutors of 2 and 10 August 2011; remits the cause to the Sheriff to conduct, of new, an interim hearing on the interim orders sought on 29 August 2011 at 9.30 am within Hamilton Sheriff Court, Birnie House, Hamilton and directs the Sheriff at said interim hearing to give consideration to the terms of the Act of Sederunt (Summary Suspension) 1993 paragraphs 2 and 3; finds no expenses due to or by either party in connection with the appeal.

 

 

NOTE:

 

Background to the appeal

 

1.             In this case the pursuer and respondent craves the court:

"1. To suspend a pretended charge served by the defenders on the pursuer on 21 July 2011 and this following up on a lease between the pursuer and Frederico Scala, residing at 27 Ewing Court, Hamilton as tenants and the defenders as landlord dated 20 December 2004 and 7 January 20905 and registered in the Books of Counsel and Session on 14 February 2005;

2. To interdict the defenders and any others acting on their behalf for applying for, obtaining or executing any warrant for attachment or for carrying out an arrestment against the moveable property of the pursuer in respect of the sums specified in said charge and generally from executing any diligence or taking any steps to enforce payment of said alleged debt; and to grant interdict ad interim"

 

2.             The application was lodged and presented to the Sheriff in chambers on 2 August 2011. The solicitor acting for the pursuer and respondent addressed the Sheriff. There was no appearance by or on behalf of the defenders and appellants as service had not at that time been effected. The Sheriff pronounced the following interlocutor:

"The Sheriff, having heard the solicitor for the pursuer on interim orders sought; grants same and in terms thereof ad interim interdicts the defenders and any others acting on their behalf for applying for, obtaining or executing any warrant for attachment or for carrying out any arrestment against the moveable property of the pursuer in respect of the sum specified in said charge and generally from executing any diligence or taking any steps to enforce payment of said alleged debt, and assigns 10 August 2011 at 10.00 am as a further interim hearing on the aftermentioned order, and thereafter;

grants warrant to cite the defenders by serving upon them a copy of the summary application and warrant by way of sheriff officer service upon a period of 21 days notice, and ordains them, to answer within the Sheriff Court House, Birnie House, Caird Park, Caird Street, Hamilton on 14 September 23011 at 10.00 am."

 

3.             The Lease referred to in crave 1 was registered in the Books of Council and Session on 14 February 2005. The Sheriff Court (Scotland) Act 1907 section 5(5) provides that the jurisdiction of the Sheriff includes:

"Suspension of charges or threatened charges upon the decrees of court granted by the Sheriff or upon decrees of registration proceeding upon bonds, bills, contracts or other obligations registered in the Books of the Sheriff Court, the Books of Council and Session or any others competent".

On 21 July 2011, a charge for payment in the sum of £2,172.15 was served by the defenders on the pursuer upon the Lease. That sum is said to be in respect of arrears of rent for the period from 22 May 2011 to 3 July 2011. In terms of section 5(5) of the 1907 Act it is competent for the respondent to make application to the Sheriff for suspension of the charge. Macphail Sheriff Court Practice, third edition at paragraph 24.17 states:

"The object of suspension is to stay or arrest some action or proceeding complained of, and to retain matters in their present position until the rights of parties can be determined by a final judgment. In the Court of Session the procedure may be invoked for two main purposes: either to stay the use of legal diligence, or to review certain decrees. In the Sheriff Court, however, suspension is competent only for the former purpose, and only to the extent permitted by section 5(5) of the Sheriff Court (Scotland) Act 1907 read with the Act of Sederunt (Summary Suspension) 1993.

The Act of Sederunt (Summary Suspension) 1993 provides as follows:

"Summary application for suspension of charge

2. Where a charge for payment has been executed on any decree to which section 5(5) of the Sheriff Court (Scotland) Act 1907 applies the person so charged may apply to the Sheriff in the Sheriff Court having jurisdiction over him over suspension of such charge and diligence.

Sist of diligence

3. (1) On sufficient caution being found or other security given for-

(a) the sum charged for with interest and expenses; and

(b) a further sum to be fixed by the Sheriff in respect of expenses to be incurred in the suspension process,

The Sheriff may sist diligence, order intimation and answers, and proceed to dispose of the cause in a summary manner ..."

 

4.             Macphail continues at paragraph 24.17:

"Paragraph 2 of the Act of Sederunt provides that where a charge for payment has been executed on any decree to which section 5(5) of the 1907 Act applies, the person so charged may apply to the sheriff in the sheriff court having jurisdiction over him for suspension of such charge and diligence ..."

Macphail continues at paragraph 24.20

"24.20 The procedure is by way of summary application. In the initial writ craves for interdict and interim interdict are often added to the crave for suspension, for example when a poinding has been executed or a warrant for sale of the poinded goods granted. It is usual to grant interim interdict because in most cases the pursuers object in raising the action would be defeated if diligence were to be executed. ...

24.21 A caveat may be lodged against the suspension of a charge. In that event the first step is to order a hearing, as in cases where a caveat against an interim interdict has been lodged. In other cases the Sheriff first considers whether to make an order for caution or consignation. Where the application relates to a threatened charge, such an order appears to be within his discretion. Where, however, it relates to a charge which has been executed, paragraph 3(1) of the Act of Sederunt requires that sufficient caution be found in the hands of the sheriff clerk for the sum charged for with interest thereon, and expenses, and a further sum to be fixed by the Sheriff in respect of expenses to be incurred in the suspension process. It has been held that the Sheriff has a discretion to fix such sum as he judges to be reasonable, which may be a lesser sum than the aggregate of those amounts, but it seems clear that that view is not warranted by the plain terms of the Rule then in force or the present Rule. On caution being found, the Sheriff may sist diligence, order intimation and answers, and proceed to dispose of the cause in a summary manner. The Sheriff appears to have a discretion as to the sisting of diligence at that stage. It is thought that where an ex parte application to sist diligence is made, the Sheriff should appoint an early hearing hereon, however he disposes of the application. ..."

It accordingly appears that the Sheriff when the solicitor for the respondents appeared before him in chambers on 2 August 2011 granted interim orders but did not apply his mind to the question of caution in terms of paragraph 3(1) of the Act of Sederunt.

 

5.             In terms of the Sheriff's interlocutor of 2 August 2011 the further interim hearing called before a different Sheriff on 10 August 2011. The Sheriff records in her note:

"The defenders' agent immediately advised the court the interim order granted on 2 August 2011 was incompetent. Despite his claim the order was incompetent the agent had taken no steps to appeal that decision. The agent seemed to be of the view that he could argue the alleged incompetence before me and have me overturn Sheriff Livingstone's decision. In order to preserve the status quo and allow the agent to mark an appeal to the Sheriff Principal challenging the competency of the interim order I continued the cause to the diet previously assigned for 14 September 2011. The agent has now marked an appeal claiming the order of 2 August 2011 is a fundamental nullity, a matter for the Sheriff Principal to determine."

 

6.             The note of appeal on behalf of the defenders' is in the following terms:

"Refusal of the Sheriff on 10 August 2011 to grant audience to the defenders' agent to address her at the interim hearing set for 10 August 2011 on (1) the fundamental nullity of procedure to date whereby interim interdict was purportedly granted on 2 August 2011, and (2) why, therefore, interim interdict should be recalled, and requests the Sheriff to write a Note."

 

7.             The hearing on that note of appeal took place before me in Hamilton Sheriff Court on 18 August 2011.

 

The Sheriff's decision to refuse to hear the appellants' agent on 10 August 2011 and to continue the interim order until 14 September 2011 to allow the appellants to appeal

 

8.             After discussion, it was clarified by solicitor for the appellants that he stated to the Sheriff that he was seeking recall on the basis that the order made by the Sheriff on 2 August 2011 was incompetent. The Sheriff had indicated to him "I cannot overturn another Sheriff's decision".

 

9.             In my view the Sheriff cannot be criticised, in the particular circumstances of this case, for declining to hear whether the interim order should be continued when any decision that she made in the circumstances of this case would be effectively acting as a court of appeal in respect of the decision of the Sheriff who had heard the application on 2 August 2011. The correct course was for the Sheriff's decision to be appealed on the grounds that it was incompetent. That was the issue at the appeal before me.

 

Submissions

 

10.         At the appeal before me solicitor for the appellant indicated that the interim interdict granted by the Sheriff should not have been granted. In terms of paragraph 3(1) of the Act of Sederunt a pre-condition of sisting diligence, which was in effect what the interim interdict was doing, was that caution should be found. The Sheriff's interlocutor of 2 August 2011 was silent on the question of caution. It was submitted that an interdict preventing further diligence was effectively a sist for diligence in terms of paragraph 3(1)

 

11.         It was submitted that the Sheriff's interlocutor was incompetent because it did not address the question of caution. If the Sheriff had granted interim interdict for one week to allow consideration of the question of caution at that date, the matter may have been different. But the position was that caution had not been considered and it required to be so in terms of Rule 3(1) of the Act of Sederunt.

 

12.         Solicitor for the appellants' primary submission was that I should recall the interlocutor and dismiss the cause. If I was not so disposed, I should recall the interlocutor and remit the cause to the Sheriff to proceed in terms of paragraphs 2 and 3 of the Act of Sederunt.

 

13.         Solicitor for the respondent argued that caution was only required if the Sheriff was being asked to sist diligence. He submitted that the service of a charge was not diligence. At the pre-warrant hearing stage before the Sheriff on 2 August 2011 no diligence had been effected. The days of charge had not then expired. It was submitted that paragraph 24.20 of Macphail, which I have set out in paragraph 4 hereof, was authority for the proposition that interim interdict was not appropriate where diligence has not been effected. If there had been effective diligence e.g. an arrestment had been served or a poinding had taken place, the court could be moved to sist that diligence on caution being found.

 

14.         I was referred to Gloag & Henderson, twelfth edition, paragraph 49.01 as page 1184 where the learned authors state:

"Once the 2007 Act (the Bankruptcy and Diligence etc (Scotland) Act 2007) is brought into force, the available diligences will be civil imprisonment, arrestment, earnings arrestment orders, current maintenance arrestment, attachment, inhibition, land attachment, attachment of money and residual attachment. ... Diligence may competently proceed only on a lawful warrant thereof, namely a decree or a document of debt. A decree for payment is warrant for any of the above diligences. Most diligences proceed on a decree or warrant obtained."

 

15.         It was significant, it was submitted, that there was no reference to the execution of a charge, which is a warrant to do diligence. It was submitted, having regard to the list of diligences set out in Gloag & Henderson at paragraph 49.01 service of a charge was not diligence. It was submitted that the terms of paragraph 3(1) of the Statutory Instrument (Summary Suspension) 1993 did not come into play at the stage of service of a charge. A sist of diligence was accordingly not competent.

 

Decision

 

16.         This case involves a Lease in which the respondents are the landlords and the appellant is the tenant. A charge in respect of outstanding rent of £2,172.15, applicable to the period from 22 May 2011 to 3 June 2011, was served on the appellant on behalf of the respondents. The service of this charge proceeded upon the fact that the Lease had been registered in the Books of Council and Session for preservation and execution on 14 February 2005. The registration of a Lease is to be likened to a decree obtained in a court. Registration for execution permits the landlord to proceed with diligence in respect of arrears of rent as if he held a decree for that sum. The first step in the process of proceeding with diligence is to serve a charge. This is necessary before any of the forms of diligence outlined in paragraph 49.01 of Gloag & Henderson can be carried out. Paragraph 2 of the Act of Sederunt provides where a charge for payment has been executed on any decree to which section 5(5) of the 1907 Act applies, the person so charged may apply to the Sheriff in the Sheriff Court having jurisdiction over him for suspension of such charge and diligence. It is accordingly competent for the respondent to make this application.

 

17.         The provisions of paragraph 3(1) of the Act of Sederunt (Summary Suspension) 1993 allow a Sheriff to sist diligence on sufficient caution being found or other security given for (a) the sum charged for with interest and expenses and (b) a further sum to be fixed by the Sheriff in respect of expenses to be incurred in the suspension process. As is stated at paragraph 24.21 of Macphail, to which I have already referred:

"... the Sheriff first considers whether to make an order for caution or consignation. Where the application relates to a threatened charge, such an order appears to be within his discretion. Where, however, it relates to a charge which has been executed, paragraph 3(1) of the Act of Sederunt requires that sufficient caution be found in the hands of the sheriff clerk for the sum charged for with interest thereon, and expenses, and a further sum to be fixed by the sheriff in respect of expenses to be incurred in the suspension process. ... on caution being found, the sheriff may sist diligence, order intimation and answers, and to proceed to dispose of the cause in a summary manner ..."

I do not accept the submission on behalf of the respondent that service of a charge is not diligence it is the first step in the diligence process. It is clear from a consideration of the Act of Sederunt that the respondent is entitled to apply to the court to suspend the charge and sist diligence in terms of paragraphs 2 and 3 of the Act of Sederunt.

 

18.         It accordingly appears to me that the Sheriff on 2 August 2011 was wrong to grant interim interdict without considering the question of caution in terms of paragraph 3(1) of the Statutory Instrument (Summary Suspension) 1993. It would have been open to him, on the basis of the averments in the application, in the exercise of his discretion, to have granted interim interdict and to continue the application for a very short time to allow the question of caution to be considered when the now appellant was represented. At that hearing the Sheriff would then consider the question of caution having heard parties. If he ordered caution, once it had been found, the Sheriff would be entitled to sist diligence, order intimation and answers and proceed to dispose of the cause in a summary manner as required by paragraph 3(1).

 

19.         In this appeal the only issue for me is the competency of the Sheriff's interlocutor of 2 August 2011. My decision is that it is incompetent in hoc statu. I take the view it would have been competent for the Sheriff to make an order for interim interdict and continue the matter for a short period for the specific purpose of hearing parties on the question of caution in terms of paragraph 3(1) of the Act of Sederunt. The interim interdict in the form in which it was granted on 2 August 2011 is an incompetent order as it does not have regard to the provisions of the Act of Sederunt.

 

20.         In these circumstances I take the view that the correct course is to allow this appeal and recall the Sheriffs' interlocutors of 2 and 10 August 2011. I have remitted the cause to the Sheriff to hold a hearing on the appellants' motion for interim interdict and direct the Sheriff to give consideration to the terms of the Act of Sederunt on 29 August 2011 at 9.30 am.

 

21.         In the whole circumstances I consider it appropriate that there should be no expenses due to or by either party in respect of the appeal.