Scottish Sheriff Court Decisions

Judgement

Of

Sheriff Philip Mann

In causa

Grafton Merchanting

V

Robert Manson

Lerwick February 2012 Sheriff Mann

Act: Baijal

Alt: Gordon

The sheriff, having resumed consideration of the cause;

1. Finds the Defender liable to the Pursuers in the expenses of the amendment procedure following upon the Defender's Minute of Amendment number 13 of process, with the exception of the hearing on 7 February 2012, and that on the party and party scale and remits the account thereof when lodged to the Auditor of Court to tax and to report;

2. Finds no expenses due to or by either party in respect of the hearing on 7 February 2012

Sheriff Philip Mann

Note

1. Background and Preliminary Matters

1.1 On 7 February 2012 I conducted a Rule 18 Hearing at which the Pursuers were represented by Mr Baijal and the Defender was represented by Mrs Gordon. Parties were largely in agreement as to the substantive issues as reflected in my interlocutor of that date. Parties were in dispute about the issue of expenses.

1.2 Mr Baijal indicated that he was seeking expenses on a scale and covering a period which was unusual in relation to amendment procedure. He insisted that his motion for expenses on that basis be addressed at the hearing. Mrs Gordon, who was appearing as a local agent, sought to persuade me that I should defer consideration of the matter until a later date, probably the first day of the proof which had been assigned, when either the principal agent for the Defender or counsel would be in a position to address me. Mr Baijal pointed out that the Pursuers' position on the expenses that he now sought, including that a relevant motion would be made at the hearing that day, had been made abundantly clear to the Defender's principal agents on more than one occasion. They had had ample notice of the matter and if they had seen fit not to attend the hearing or arrange for counsel to appear then they would have to take the consequences of that.

1.3 I preferred Mr Baijal's submissions on this point. The Defender's agents had not been ambushed. They knew that the matter was up for debate at the hearing. Whilst I appreciated that Mrs Gordon was in a difficult position I was not prepared to allow the matter to be dictated by the convenience of one of the parties. I therefore directed that agents should address me there and then on the substantive issues relating to Mr Baijal's motion for expenses.

2. The Pursuers' Submissions

2.1 Mr Baijal took me through the procedural history of the case and helpfully provided a written chronology.

2.2 The Defender had lodged a Notice of Intention to Defend and had thereafter personally lodged a response to the initial writ which did not constitute defences in proper form. The Pursuers had sought decree by default but the Defender, having by then instructed agents to represent him, was allowed to lodge defences in proper form. These defences did not mirror exactly the response lodged by the Defender personally. They included a defence that Lerwick Sheriff Court had no jurisdiction and that the matter should be tried in the English courts. At a continued options hearing a motion on behalf of the Defender for dismissal of the cause was refused and a debate was fixed. A few weeks before the debate the Defender instructed new agents who contacted the Pursuers to indicate that the defences would need to be amended and that they would attend to that before the debate. On the morning of the diet of debate a minute of amendment was lodged on behalf of the Defender, the diet of debate was discharged and the usual orders for answers and adjustments was made.

2.3 The Minute of Amendment withdrew the defences thus far pled and introduced a defence that English Law applied. It stated four separate defences based on the English Law of Equity. As a result of the new defences the Pursuers had to consult an expert, namely an English Barrister, to enable them to respond to the Minute of Amendment. In the course of adjusting his Minute of Amendment the Defender had chopped and changed the basis of his defence. On each such occasion the Pursuers' expert had to be consulted and the Pursuers' answers had to be adjusted. The Defender's last adjustments to the Minute of Amendment had been made at the last minute, necessitating the Pursuers moving for their own final adjustments to be received, though late.

2.4 All of the foregoing, said Mr Baijal, demonstrated that the Defender had thus far conducted the litigation incompetently and unreasonably and entitled the Pursuers to seek an award of expenses on the scale appropriate to agent and client, client paying. In support of this he referred to the case of McKie v Scottish Ministers [2006] CSOH 54 and in particular to paragraph [3] of Lord Hodge's judgement where he set out the law on the issue of the scale of expenses to be awarded. Lord Hodge set out five propositions;

"First, the court has discretion as to the scale of the expenses which should be awarded. Secondly, in the normal case expenses are awarded on a party and party scale; that scale applies in the absence of any specification to the contrary. But, thirdly, where one of the parties has conducted the litigation incompetently or unreasonably, and thereby caused the other party unnecessary expense, the court can impose, as a sanction against such conduct, an award of expenses on the solicitor and client scale. Fourthly, in its consideration of the reasonableness of a party's conduct of an action, the court can take into account all relevant circumstances. These circumstances include the party's behaviour before the action commenced, the adequacy of the party's preparation for the action, the strengths or otherwise of the party's position on the substantive merits of the action, the use of a court action for an improper purpose, and the way in which a party has used court procedure, for example to progress or delay the resolution of the dispute. Fifthly, where the court has awarded expenses at an earlier stage in the proceedings without reserving for later determination the scale of such expenses, any award of expenses on a solicitor and client scale may cover only those matters not already covered by the earlier awards."

In particular, Mr Baijal focussed on the expense to the Pursuers of having to consult their expert on English Law on several occasions during the adjustment period.

2.5 As to the period to be covered by the award of expenses Mr Baijal, without reference to authority, submitted that that should be from the date of the lodging of defences in proper form, which was 27 May 2011 until the present date. He accepted that any award of expenses would need to exclude any award already made.

3. The Defender's Submissions

3.1 Mrs Gordon did not dispute Lord Hodge's analysis of the law but argued that the Defender had been perfectly entitled to change his agents. In effect, she argued that the Defender had been entitled, also, to change the basis of his defence and to seek to focus the issues between the parties by way of the amendment procedure envisaged by the rules of court. She submitted, in effect, that there was nothing in Mr Baijal's chronology that would entitle me to find that the Defender had thus far conducted the litigation so incompetently or unreasonably that he should be visited with the award of expenses sought by the Pursuers. She conceded that the Pursuers should be entitled to an award of expenses for the amendment procedure on the usual client and client scale and submitted that that should adequately compensate the Pursuers.

4. Discussion and Decision

4.1 I preferred Mrs Gordon's submissions. This is not, so far, a particularly protracted litigation. It appears that the Defender may initially have got his defence totally wrong but in my experience there is nothing particularly unusual about that. The Defender's motion at the continued Options Hearing to have the action dismissed may have been misconceived but I cannot see that that alone would justify the award of expenses sought by the Pursuers. The Defender changed his agents which he was perfectly entitled to do and, again, there is nothing unusual about that. The Defender's new agents set about amending the pleadings following the process which is specified in the rules of court. They were entitled to do so in order to focus the real issues in dispute between the parties. It is clear that the position adopted by the Defender was restated and refined during the adjustment process but that was, no doubt, in response to the Pursuers' Answers and their adjustments thereto. Again, there is nothing particularly unusual about that. I cannot help but notice that the Defender's assertion in his defences, as amended, that the dispute is governed by English law is admitted by the Pursuers. The contract which underlies this dispute was proffered by the Pursuers. It was their choice to proffer a contract that was governed by English law. They can hardly complain that the Defender has now pled that in his defence even though he initially overstated his defence by asserting that this court did not have jurisdiction. Any expense occasioned to the Pursuers by having to consult an expert in English law results from the contract proffered by them rather than from any incompetence or unreasonableness on the part of the Defender in stating his defence. I can understand that the Pursuers might not have been obliged to found on the English law aspect of the contract in their initial writ but if they had done so much of the procedure which has taken place in this litigation thus far might have been avoided.

4.2 For the foregoing reasons, and looking to Lord Hodge's analysis of the law, I cannot see any justification for awarding expenses on any scale other than the normal party and party expenses. The same reasoning applies to the period to be covered by the award.

4.3 In my view it is only fair and equitable that in relation to the hearing on 7 February there should be a finding of no expenses due to or by either party, Mrs Gordon having been successful in the matter which occupied most of the court's time on that occasion.