Scottish Sheriff Court Decisions

SHERIFFDOM OF GRAMPIAN HIGHLAND AND ISLANDS AT BANFF

Judgement

Of

Sheriff Philip Mann

In causa

Neil Henderson Douglas and Others

Against

Hilary Anne Barrowman MacAndrew and another

Case numberA52/02

Banff 29 July 2011

The Sheriff, having resumed consideration of the cause and the Pursuers' motion 7/5 of process, Recalls the sist pronounced on 24 January 2005; Thereafter on the unopposed motion of the Pursuers, and having noted the lack of insistence on the part of the Pursuers in any event, Dismisses the cause in so far as not determined by the Interlocutor dated 10 September 2002; Finds the First Defender personally liable to the Pursuers in the expenses of the cause up to and including the interlocutor dated 28 January 2003, in so far as not already awarded, but restricted to one half of the taxed amount thereof; Remits the Pursuers' account of expenses when lodged to the Auditor of Court to tax and to report; Finds no expenses due to or by any party to the cause except in so far as already and otherwise awarded but without prejudice to any question of relief as between the First and Second Defenders; Refuses the Pursuers' opposed motion for sanction of the cause as suitable for the employment of counsel.

Sheriff Philip Mann

Note/

Note

1. History

1.1 It is, I think, necessary and appropriate that I set out the procedural history of this case in some detail.

1.2 This is an action of accounting (crave 1) at the instance of certain beneficiaries on the estate of the late Leslie Sydney Henderson against Mrs Hilary MacAndrew and Leslie Henderson, the First and Second Defenders respectively, as executors of the late Mr Henderson and as individuals. There are two additional craves against the Defenders for payment to the Pursuers of a sum of money. Mrs MacAndrew is a solicitor and it was her firm who carried out the administration of the executry estate on instruction from the executors. Leslie Henderson was a "lay" executor.

1.3 The action was warranted on 14 May 2002. By interlocutor dated 10 September 2002 summary decree was granted in terms of crave 1 ordaining the Defenders to produce a full account of their whole intromissions with the deceased's estate. Following that interlocutor the Defenders lodged a "statement of estate". The Pursuers lodged objections thereto, although they were late in doing so and required further time. By interlocutor dated 28 January 2003 the Defenders were ordained to lodge a properly audited Account of Charge and Discharge by 25 March 2003 with the Pursuers being allowed 14 days thereafter to lodge objections. The case was continued to 14 April 2003. On that date the Pursuers were allowed a further 6 weeks in which to lodge objections with the Defenders thereafter being allowed to lodge answers. Number 13 of process is the Pursuers' note of objections to the Account Charge and Discharge. The cause was continued to 24 June 2003. On that date it was sisted for possible settlement. That sist was recalled on 27 January 2004 and the cause was continued to 10 February 2004 for possible settlement. On 10 February 2004 the cause was again sisted for settlement. That sist was recalled on 23 December 2004 when an options hearing was fixed for 25 January 2005. On 24 January 2005, a joint motion having been lodged, the options hearing was discharged and the cause again sisted for negotiation between the parties to proceed.

1.4 The cause has remained sisted until now. However, on 23 September 2010 the Pursuers enrolled a motion, 7/5 of process, for recall of the sist and for re-enrolment of the cause for further procedure. A hearing on that motion was assigned for 12 October 2010 on which date the motion was continued to 26 October 2010 to allow further investigations into procedure. By at the latest 26 October 2010 (but in fact much earlier) it had become known that the Second Defender had died and on that date the hearing, on the Pursuers' motion, was continued to 7 December 2010 to allow for the sisting of the Second Defender's executor as a party to the cause. On 7 December 2010 on the Pursuers' unopposed motion the cause was continued to 18 January 2011 to allow the Second Defender's executor to consider his position. On 18 January 2011 the cause was again continued on the Pursuers' unopposed motion for clarification of the Second Defender's executor's position. On 1 March 2011 it was continued on the Pursuers' unopposed motion to allow further investigations and negotiations.

1.5 On 29 March 2011 the case called before me for the first time. I was advised that the Pursuers did not intend to seek to bring in the Second Defender's executors. I was advised that Mr Henderson's executry estate had been wound up and that the only issues remaining were as to how the cause should be finally disposed of and as to the question of expenses. I continued the cause to 12 April 2011 to allow parties to address me fully on these matters. On 12 April 2011 it became clear that the Pursuers' agent (who appeared as a local agent on the instructions of the principal agents) was not in a position to advise the court what further procedure was sought by the Pursuers and was thus not in a position to argue the question of expenses. I continued the cause to 4 May 2011 and ordained the Pursuers to then state what further procedure they wished to pursue. Ex proprio motu another sheriff discharged the hearing assigned for 4 May 2011 as I was not required to sit at Banff that day for any other matter. The cause was reassigned to 19 May 2011 and it was against the foregoing background that on that date I heard the Pursuers and the First Defender as to the disposal of the cause and on the question of expenses. There was no appearance on behalf of the Second Defender's executor.

2. Submissions on 19 May 2011

2.1 At the outset of the hearing on 19 May 2011 Mrs Daley (who was appearing as local agent for the principal agents) indicated that her motion was for dismissal of cause, other than crave 1, with decree for expenses against the First Defender as an individual. As regards the Second Defender Mrs Daley's motion was for dismissal with no expenses due to or by either party. She also moved for certification of the cause as suitable for the employment of counsel.

2.2 Mrs Daley referred briefly to the history of the cause and accepted that the deceased's estate had been wound up so that it was appropriate that the craves, other than crave 1, be dismissed. Under reference to the case of Craig v Hogg (1896) 4 S.L.T. 94 she submitted that the expenses should be awarded against the First Defender as an individual. Under reference to the case of Shepherd v Elliot (1896) 3 S.L.T. 330 she submitted that the general rule on expenses was that he who causes the expense should pay. I asked her whether or not the First Defender would have any right of relief as regards any award of expenses against her. Her position was that the First Defender would have a right of relief against the executry estate, the inference being that there was no inherent unfairness to the First Defender in seeking an award of the full amount of expenses against her whilst seeking a finding of no expenses due to or by either party in relation to the Second Defender.

2.3 In moving for certification of the cause as suitable for the employment of counsel Mrs Daley explained that counsel had been employed for the drafting of the writ and such like because of the fact that one of the Defenders was a solicitor. That fact made it difficult for any other solicitor to pursue the action and the employment of counsel was seen as a means of distancing the solicitor for the Pursuers. As Mrs Daley put it, counsel acted as a barrier.

2.4 Mrs MacAndrew appeared on her own behalf. She pointed out that the pleadings did not lay the blame for any delay in the administration of the deceased's estate at her door alone; both executors were being blamed. She submitted that if there was to be any finding of expenses against the Defenders it should be against them both as executors and not personally. Her position was that if the Pursuers were insisting on an award of expenses then the proper course of action would be to sist the Second Defender's executors in his place so that such an award could be sought against both Defenders. The Pursuers, however, were seeking that the craves, other than crave 1, be dismissed as against the Second Defender with no expenses due to or by. She would have difficulty obtaining any relief from the estate of the Second Defender. This was down to the Pursuers' delay in prosecuting this action and on that account, if for no other reason, there should be no further award of expenses against her.

2.5 Mrs MacAndrew submitted that it could not be demonstrated that it was her actions as an individual that had necessitated the raising of the action. She indicated as a matter of background that the Pursuers had been persistently seeking advances of their shares of the estate and that it had been the Second Defender's view that until the whole estate had been administered they were to get nothing. She pointed out (and this was not disputed by Mrs Daley) that although the Account of Charge and Discharge lodged in compliance with the interlocutor of 28 January 2003 disclosed a higher value estate than had been disclosed in the statement of estate originally lodged by the Defenders in response to the interlocutor of 10 September 2002, this was as a result of a further asset having come to light after the lodging of the statement of estate.

2.6 Mrs MacAndrew maintained that if the Pursuers were in difficulty because they felt that the only realistic way of dealing with the Second Defender was to have the action against him dismissed that was down to their own failure. The Second Defender had been dead for some years. His death was known to the Pursuers (who were relatives) and they could and should have pursued the option of sisting his executors at an early date.

2.7 As regards sanction for counsel, Mrs MacAndrew's position was that the Pursuers' motion came too late and in any event that there was nothing particularly complex about the action such as would justify the employment of counsel.

2.8 In a brief reply Mrs Daley maintained that it was open to me to sanction counsel at any stage before final disposal of the action. She also said that she could not say with all certainty that the Pursuers wanted dismissal of the action. She did not know what they wanted. It seemed to be the case that if I was with her on the question of expenses then the Pursuers would be content; but that if I was against her the Pursuers might seek some sort of further procedure, although she could not say what that further procedure might be. She did confirm that there was no longer any issue with the outstanding craves. She also confirmed that her instructing agents were aware of my interlocutor of 12 April 2011 and that I had made it clear that I had expected the Pursuers to state what further procedure they sought in the action.

2.9 After hearing submissions on 19 May 2011 I took the case to Avizandum.

3. Submissions on 25 July 2011

3.1 Whilst at Avizandum I became aware of certain cases which are relevant to the basis upon which any award of expenses against the First Defender should be pronounced. None of these cases had been cited by the parties and I considered it appropriate that they be given the opportunity to address me further and fully on the matter.

These cases were:

·       Dyer v Craiglaw Developments Ltd 1999 S.L.T. 1228 in which it was held that a finding against the liquidator of a company "as liquidator" restricted the liability for expenses to the assets of the company and that if that was not intended then the word "as" should be omitted.

·       Liquidator of Nairn Public Hall Co 1946 S.C. 395 in which it was held that a finding of expenses against a liquidator "personally" made the liquidator personally liable with the expenses not being a charge in the liquidation. In this case the interlocutor was framed with an express declaration to that effect for the avoidance of misunderstanding.

·       Kilmarnock Theatre Co. v Buchanan 1911 S.C. 607 in which it was held that under a simple decree against the liquidators they are personally liable but have a right of relief out of the assets of the Company but that under a decree against them "personally" they have no right to recover; a decree of the latter type falling to be pronounced only where the liquidators have been personally blameworthy.

3.2 I put the case out for a further hearing on 25 July 2011. On that date Mrs Daly commenced by submitting that none of the cases to which I had referred altered her submissions of 19 May 2011. However, she then referred to the case of Cameron v Gibson (reported as Cameron v Macintyre's Executor (No 2)) 2006 SLT 1088. In that case an executor dative had defended an action of reduction of an adoption order brought by the natural brother of the deceased (and continued by the natural brother's executor on his death). It was held that the litigation was truly a competition between the person who, if the adoption order was reduced, was entitled to the intestate estate and those who (including the executor dative Defender) were entitled to it if the order was not reduced; and that in those circumstances the unsuccessful Defender was liable for the expenses of the successful Pursuer and had no entitlement to charge expenses for which he was found liable, or his own expenses, against the share of the estate due to the Pursuer. In light of that case, Mrs Daly changed her position and submitted that since the Defenders had not been defending for the benefit of the estate any award of expenses against the First Defender should be against her personally (as opposed to "as an individual", which had been her submission on 19 May 2011) with no right of relief against the executry estate.

3.3 Mrs MacAndrew submitted that the cases to which I had referred could be distinguished from this case in so far as they involved a finding of expenses against a representative party "personally" with no right of relief against the estate for which that party was responsible. In none of the cited cases had there been any delay in prosecuting the action, whereas in this case there had been inordinate delay on the part of the Pursuers. Mrs MacAndrew maintained that she should be entitled to relief from the executry estate for any award of expenses against her because she could not be shown to have been at fault. Because the estate had been distributed to the beneficiaries, including the Pursuers, and because the Pursuers had delayed in prosecuting this case it would be practically impossible for her to obtain relief. That being the case and because the Pursuers' complaint was, in reality, about the form of the accounting rather than delay in accounting or less than full accounting, there should be no further award of expenses against her.

3.4 In response to an enquiry from me parties confirmed that the executry estate had been distributed after deduction of the administration expenses due to Mrs MacAndrew's firm.

3.5 Mrs Daley was, due to lack of clarity in her instruction, still not in a position to say that the Pursuers accepted that there was no substantive issue remaining to be resolved between the parties but she accepted that she was instructed to debate the question of expenses and that that was only up for debate in the context of the final disposal of the action.

4 Discussion and Decision

4.1 Mrs Daley initially sought dismissal of the action against both Defenders. At the hearing on 19 May 2011 Mrs Daley (who, I acknowledge, was acting for and on the instruction of the principal agents) then introduced an element of doubt, which she was unable to dispel at the hearing on 25 July 2011, by indicating that it seemed that in regard to the First Defender their motion for dismissal might depend on whether or not I was with them in regard to their motion for expenses against the First Defender. This seems to me to be an improper position to adopt. The question of expenses is a matter for consideration only once a decision has been taken as to the disposal of the cause, or a particular part of the cause in question, and it is not appropriate to go back on that decision whatever the outcome on the question of expenses. So, I deal firstly with the disposal of the cause untrammelled by the question of expenses. The Pursuers have had ample opportunity to consider their position as regards the future conduct of this case. They were ordained specifically to state what further procedure they wanted. The Pursuers either want dismissal or they don't. I think it is clear enough that the Pursuers recognise that dismissal is the only real outcome and I proceed on the basis that that was their motion, which was unopposed by the First Defender. This action has been lurching along for years with seemingly not much happening. It is high time that it is brought to an end. The executry estate has been wound up and, as I understand it, the beneficiaries have been paid what is due to them. I have no difficulty in dismissing the cause in so far as it has not been determined, having in any event noted the failure or inability of the Pursuers to state what further procedure would be appropriate and their obvious lack of insistence, at least against the Second Defender.

4.2 I now turn to the question of expenses. The case of Craig v Hogg relied upon by Mrs Daley was a case concerned with the effect of a decree for expenses against a party "as judicial factor". It was not concerned with the question on what basis the decree for expenses should be granted in the first place. For that reason I find it to be unhelpful on this particular point.

4.3 There are three possibilities for an award of expenses against a Defender who has been called in a representative capacity such as executor. The first is an award against the Defender "as executor" which would have the effect, as in Craig v Hogg and Dyer v Craiglaw Developments Ltd, of restricting the claim to the value of the estate in the Defender's hands as executor. The second, again referring to Dyer v Craiglaw Developments Ltd, is an award against "the Defender, executor of the late..." (that is, without the word "as") which would have the effect of enabling the Pursuers to claim the whole amount of the expenses from the Defender as an individual whilst preserving the Defender's right of relief against the executry estate. The third is an award against the Defender "personally". This would have the effect of making the Defender personally liable without any right of relief against the executry estate, as explained in Liquidator of Nairn Public Hall Co and Kilmarnock Theatre Co. v Buchanan.

4.4 It seems to me that the basis upon which this action was raised was delay on the part of the Defenders in administering the deceased's estate and properly accounting for it to the Pursuers. Despite her submissions on 25 July 2011 I do not think that Mrs MacAndrew can avoid that conclusion. On 19 May 2011 Mrs MacAndrew maintained, in effect, that the responsibility for the delay lay at the door of the Second Defender and that as the Pursuers were seeking no award of expenses against him there should be no award of expenses against her. I reject that contention. There is nothing to suggest that Mrs MacAndrew distanced herself from whatever stance was adopted by the Second Defender. She did not resign as executor, as she could have done if the Second Defender's stance had put her in an untenable position. Depending on what she can prove in any separate process Mrs MacAndrew may have a right of relief from the estate of the Second Defender for any expenses awarded against her in this cause.

4.5 Turning to the basis upon which any award of expenses in this cause should be made, I think it impossible to determine otherwise than that any award of expenses should be against the executors personally. I do not see why the executors should have a right of relief against the executry estate, which in this case (seeing that the estate has been distributed but assuming that the executors have taken the usual indemnity from the beneficiaries) would really mean that all of the beneficiaries would suffer the expenses despite the award in favour of those beneficiaries who pursued the action. After all, the conduct of the executors which brought about the action was not for the benefit of the estate. This is quite unlike a case where a third party sues the executors in that capacity for some debt or other said to be due from the estate and where the executors defend for the benefit of the estate and the beneficiaries thereof. As in the case of Cameron v Gibson the true contest is between the Executors personally and the beneficiaries.

4.6 Mrs Daley relied on the case of Shepherd v Elliot in submitting that he who causes the expense should pay. I think that this was probably just another way of saying that expenses should follow success. No doubt that is the general rule but in Shepherd v Elliot the Lord President said "In some cases, however, the application of the general rule would not carry out the principle, and the Court has always, on cause shewn, considered whether the conduct of the successful party, either during the litigation, or in the matters giving rise to the litigation, has not either caused or contributed to bring about the law suit."

4.7 In this case the Pursuers were successful in obtaining a summary decree on their first crave and they were awarded expenses against the Defenders in that respect in the interlocutor of 10 September 2002. I express no opinion on the form of that award of expenses or of its effect but simply pause to observe that it was not expressed to be joint and several.

4.8 It is clear from the interlocutors which I have reviewed that there was some procedure following upon the summary decree which was necessary in order that that decree be implemented but it is also clear that some of that additional procedure was caused by failure on the part of both parties to obtemper the interlocutors timeously. It can also be seen that there have been several instances where the Pursuers have brought the matter back into court only to have the cause sisted (again) for further discussions and negotiations or, latterly, to allow the Pursuers to consider how to progress the action in light of the death of the Second Defender.

4.9 Leaving aside for the moment the question of the First Defender's right to remuneration for her professional services, which is an element in the Pursuers' case and which does not really concern the Second Defender, the liability of the Defenders to the Pursuers is either several or joint and several. If it is several then each would be liable for his or her own share with no right of relief against the other; but I have no way of truly determining what the respective liabilities of the Defenders should be on such a basis. If it is joint and several then the Defenders would have a right of relief inter se; but given that the Pursuers seek dismissal of the cause against the Second Defender with no expenses due to or by either party and given that the Second Defender is deceased and that his executor has not been afforded an opportunity of addressing the court I do not see that I could legitimately make an award of expenses on a joint and several basis. In any event, and understandably in the circumstances, I was not asked to do so.

4.10 I have already referred to the fact that part of the Pursuers' case against the Defenders, or at least against the First Defender, is that the First Defender was not entitled to remuneration for her professional services as executor. This issue features both in the Pursuers' pleadings and in their objections to the Defenders' Account Charge and Discharge, number 13 of process. I was not advised as to the extent to which this matter featured in the discussions and negotiations between the parties during the lengthy periods when this case was either sisted or continued but I was told that the estate was wound up on the basis that the First Defender's firm was entitled to and did take their professional fees from the estate.

4.11 The focus of the action in its early stages was to have the Defenders produce their Account Charge and Discharge. The Pursuers have been successful in that respect. It is clear, however, that there was delay by the Pursuers in lodging their objections to the Account Charge and Discharge lodged in compliance with the interlocutor of 28 January 2003 and furthermore that there was an element of divided success in that whereas the Pursuers then succeeded in obtaining a full accounting from the Defenders the matter has been settled on the basis that the First Defender, or her firm, was entitled to make professional charges in relation to the administration of the executry estate. Furthermore, some of the procedure following upon the Pursuers' motion number 7/5 of process resulted from the Pursuers' indecision about whether or not to call in the Second Defender's executors. It seems to me that the measure of success enjoyed by the Pursuers has been greater than that enjoyed by the Defenders and in all of the circumstances I think that substantial justice is done between and amongst the parties by finding the First Defender liable to the Pursuers for the expenses up to and including the interlocutor of 28 January 2003, in so far as not already awarded, but restricted to one half of the taxed amount thereof, and otherwise finding no expenses due to or by any of the parties.

4.12 The only realistic disposal as regards the Second Defender is dismissal with no expenses due to or by either party but I have added a rider to my interlocutor that that is without prejudice to any question of relief as between the First and Second Defenders. This, I think, would preserve any claim for relief that the First Defender might have against the Second Defender if she can prove in any separate process that the fault giving rise to this action lies wholly at the door of the Second Defender

4.13 That leaves the Pursuers' motion for sanction for employment of counsel. I agree with Mrs Daley that there is nothing to stop me granting sanction at this stage should I consider that to be appropriate. That much is clear from paragraph 12.24 in MacPhail, Sheriff Court Practice, third edition. That paragraph suggests that the motion for sanction should be made to the sheriff who conducted the case. In this case, because of the passage of time, there has been a succession of Sheriffs who have been involved. The Sheriff who could best lay claim to be the "Sheriff who conducted the case" is probably the Sheriff who granted the summary decree but it would be impracticable to arrange for this matter to call before that Sheriff now. This case is not complex in its merits and I do not see that I am at any disadvantage in dealing with the motion for sanction simply because I first became involved with the case at this late stage. The Pursuers' motion for sanction was made not on the basis of complexity or value of the cause but on the basis that employment of Counsel was justified because one of the Defenders was a practising solicitor. In my view, that is not a good reason for sanctioning the employment of Counsel. Solicitors are professionals and one solicitor should be able to pursue another solicitor on behalf of a client in an objective and professional manner without bias or prejudice. I can understand that where both solicitors are known to one another and no doubt transact with one another on a frequent basis then it will be difficult or even inappropriate for one solicitor to pursue another; but that is not necessarily the case as is clear from the fact that Mrs Daley, a solicitor well known to Mrs MacAndrew, appeared in opposition to Mrs MacAndrew at the hearings before me. If the solicitors initially consulted by the Pursuers felt compromised by the fact that they were opposing another solicitor known to them, there is no reason why the Pursuers could not have instructed other solicitors who were not at that disadvantage. Indeed, that is, arguably, what ought to have happened in this case. There is nothing so novel or complex in this case that it could not have been dealt with by a competent solicitor. It would not be fair on the opposing parties that they should have to bear the additional expense of counsel in such a situation. Accordingly, I have refused to certify the cause as suitable for the employment of counsel.