Scottish Sheriff Court Decisions

STRANRAER SHERIFF COURT
Sheriff Principal B A Lockhart	A73/10   JUDGMENT OF SHERIFF PRINCIPAL B A LOCKHART   in note of appeal BY ALEXANDER TAYLOR MURRAY Pursuer and Appellant   against WILLIAM HAYDEN McCORT and JANETTE LECKIE McCORT First Defenders and Respondents And Others

 

Act: Miss Fox, Solicitor, Stranraer

 

Alt: A Dean Solicitor Advocate, Solicitor, Edinburgh

 

_____________________________________________________________________________

STRANRAER: 29 April 2013

The Sheriff Principal, having resumed consideration of the cause, finds that the Sheriff refused the Appellant's motion for modification of the expenses awarded against him on the basis of incorrect material facts, namely that the Appellant was granted legal aid in the summer of 2011 whereas he was granted legal aid on 7 December 2011, and that the Respondents were legally aided, whereas in fact they were not legally aided; accordingly, with the consent of parties, Allows the appeal and Remits the cause and the Appellant's motion for modification of the expenses awarded against him to the Sheriff for reassessment on the basis of the correct factual basis; makes no specific direction to the Sheriff in connection with the exercise of his discretion in his reassessment of the Appellants motion; Finds no expenses due to or by either party in respect of the appeal.

 

NOTE:

Background to the appeal

[1] In this case on 29 June 2012 the Sheriff made a finding of expenses against the pursuer in favour of the first named defenders. On 19 November 2012 the Sheriff, after considering written submissions from parties, inter alia refused the pursuers oral motion for modification of the expenses awarded against him. It is against that part his interlocutor of 19 November 2012 that the pursuer now appeals.

 

[2] In his Note the Sheriff deals with the pursuer's motion for modification of expenses in the following way:-

"Modification is sought in terms of Section 18(2) of the Legal Aid (Scotland) Act 1986.

The Pursuer's argument is that he should not be left with a liability for expenses that realistically he cannot hope to settle. He identifies expenses totalling £10,246.60 in respect of which he seeks modification to nil. He says that settling that part of the First Defenders' expenses for which he does not seek modification together with the fees and outlays he will be due on his own agents will more than exhaust his savings. He and his wife are both retired and have limited income.

In anticipation of the First Defenders' argument against modification he submitted that although ultimately the action was abandoned this did not mean it was unjustifiably raised. He argues that the issues were not clear cut and seeks to add weight to this aspect of this motion by reference to the First Defenders' arguments regarding the complexity of the cause. Thereafter the Pursuer rehearses parts of the issues that were litigated on.

The thrust of the First Defenders' opposition to modification is that the conduct of the Pursuer was unreasonable and inappropriate. The Pursuer should never have been given Legal Aid, the factual and legal bases underpinning the Legal Aid application were inherently unsound because the assertions made therein were unwarranted, the legal remedy sought was of questionable competence and that it is difficult to imagine that the action would have been conducted as it was but for the grant of legal aid.

The litigation between these parties was prolonged and hard fought. Having reconsidered the process, on taking account of the way it developed through amendment and onwards to its final abandonment I am persuaded that the First Defenders are accurate when they claim that without legal aid it would not have been so conducted. I believe it is a very fair question to ask whether when the Pursuer realised in the summer of 2011 that the action as initially raised was misguided he would, if without legal aid, have amended as he did and set off again even if he believed his case now stood a better chance of success. The benefit of Legal Aid to the Pursuer encouraged litigation and costs for the First Defenders. In principle after consideration of the Pursuer's conduct in the litigation. I am of the view that the Pursuer having taken on the risk of expenses he should not be permitted to avoid the outcome by virtue of the Legal Aid protection vis a vis his own expenses.

I also have to consider the practical issue of what is the level of expenses that is reasonable for him to pay having regard to all the circumstances including the means of the parties?

On the information before the court the Pursuer has capital of £10,088 from which he has to pay his own legal expenses (pre legal aid), some £7498.33 to the First Defenders for that part of the expenses awarded against him not open to modification and a further £10,246.60 being the portion he seeks to be modified. Patently without modification he cannot settle these liabilities from capital.

The total income of the Pursuer and his wife is stated at £262.25 per week. It is submitted that the DWP assesses the minimum level of income for a couple at £217.90 per week. Even on this minimal figure there is little free balance and thus without modification it would take some years before the unmodified liability would be settled from income, even if it were only the balance after applying all his capital.

Beyond that consideration of how, if ever, an award of expenses might be settled can only be speculation. It would involve either hard pressure using the rigours of the law or some compromise. That would be for parties to consider.

The Pursuer's agents observe in their written submission that it is understood that the First Defenders are very wealthy. No figures were produced by either party regarding the First Defenders' means and no submission regarding their wealth or otherwise were made on their behalf. However, I note that they were also in receipt of legal aid. From that I deduce that their wealth is not unlimited. It also means that in so far as they were legally aided their solicitors may look to payment for their costs from the Scottish Legal Aid Board.in so far as their legally aided costs are not recovered from the Pursuer. Thereafter it would be for the Board to recover these costs from the Pursuer.

The nub of this issue is that the Pursuer wishes modification to nil because he can never pay the expenses. To modify much less than 100% is of no assistance to him because he will still have a liability that he can never satisfy. On the other hand to modify expenses to such a degree leaves the First Defenders or in substitution the Scottish Legal Aid Board with no entitlement to seek to recover legal expenses in excess of £10,000 from the Pursuer. Notwithstanding the lack of resources of the Pursuer to leave the First Defenders or the Board with no entitlement to recover that sum in the face if the litigation raised is iniquitous. It may take years to settle unless otherwise compromised, but that is a matter for parties. I consider, having regard to all the circumstances of this dispute including the means of the parties and their conduct that the reasonable amount of expenses that the Pursuer should pay is the unmodified expenses as contained in the First Defenders' accounts of expenses (Nos. 33 and 34 of Process) subject always to taxation by the auditor of Court. I refuse the motion of the Pursuer for modification of expenses. "

 

[3] The Note of Appeal lodged on behalf of the Pursuer and Appellant sets out that the Pursuer appeals the Sheriff's interlocutor of 19 November 2012 on the following grounds:-

"1. In exercising his discretion, the Sheriff misunderstood certain material facts as follows:-

a. On page 4 of his Note, the Sheriff states:-"having considered the process,

 

a) On page 4 of his Note, the Sheriff states "having considered the process, on taking account of the way it developed through amendment and onwards to its final abandonment, I am persuaded that the First Defenders are accurate when they claim that without Legal Aid it would not have been so conducted. I believe it is a very fair question to ask whether, when the Pursuer realised in the summer of 2011 that the action, as initially raised, was misguided, he would, if without Legal Aid, have amended as he did and set off again, even if he believed his case now stood a better chance of success. The benefit of Legal Aid to the Pursuer encouraged litigation and costs for the First Defenders". From this it is clear that the Sheriff believes that the Pursuer had the benefit of Legal Aid in the summer of 2011. However, as a matter of fact, the Pursuer did not have Legal Aid during the summer of 2011. As stated on Page 2 of the Pursuer's submission in respect of his Motion for modification, the effective date of the Pursuer's Legal Aid Certificate is 7 December 2011. The Pursuer's Legal Aid Certificate is lodged in process and forms Production Number 5/21. Additionally, the Pursuer does not seek modification of the expenses of the amendment procedure referred to.

b) On Page 5 of his Note, the Sheriff states "The Pursuer's Agents observe in their written submission that it is understood that the First Defenders are very wealthy. No figures were produced by either party regarding the First Defenders' means, and no submission regarding their wealth or otherwise were made on their behalf. However, I note that they were also in receipt of Legal Aid. From that I deduce that their wealth is not unlimited. It also means that in so far as they were legally aided, their Solicitors may look to payment for their costs from the Scottish Legal Aid Board in so far as their legally aided costs are nor recovered from the Pursuer. Thereafter it would be for the Board to recover these costs from the Pursuer." This is incorrect. At no time during these proceedings have the First Defenders been in receipt of Legal Aid, and accordingly their solicitors cannot look to payment for their costs from the Scottish Legal Aid Board...

2. In exercising his discretion, the Sheriff misdirected himself in law. In Armstrong v Armstrong and Shevline v Shevline 1990 SC161, it was held that in assessing a party's liability, the court should consider the means of both parties at the date of the Proof, the amount of expenses awarded against the party found liable, and the amount of any aliment and periodical payments awarded against that party; and that the sum should not be fixed as a matter of course at nil or at a nominal figure, nor, on the other hand, at a figure so high as to make it for practical purposes impossible for the party found liable, with the resources available to him to pay it. It was held further that in a case where the Court considered that a party had taken improper advantage of obtaining Legal Aid, that party's liability might be fixed at a somewhat higher figure, but that this should not be carried the length of seriously jeopardising his meeting his liability for expenses or his obligations in respect of aliment or periodical payments. In the present case, the Sheriff has refused modification, notwithstanding that this will leave the Pursuer with "a liability that he can never satisfy."

3. In exercising his discretion, the Sheriff has erred in weighing the relevant considerations by giving too much weight to the Pursuer's alleged conduct in connection with the dispute, and insufficient weight to his means."

 

[4] This appeal came before me in Stranraer Sheriff Court on 22 April 2013.

 

Decision based on incorrect material facts

 

[5] Parties were agreed that the Sheriff did proceed on the basis of two erroneous material facts:-

1. The Sheriff proceeded on the basis that the Pursuer had the benefit of legal aid in the summer of 2011. However, the effective date of the Pursuer's legal aid certificate is 7 December 2011. This is demonstrated from the Pursuer's legal aid certificate which is lodged in process and forms production 5/21.

2. The Sheriff proceed on the basis that the First Defenders were in receipt of legal aid. He concluded that, insofar as they were legally aided, their solicitors may look to payment for their costs from the Scottish Legal Aid Board (SLAB) insofar as their legally aided costs are not recovered from the Pursuer. Thereafter it would be for the Board to recover these costs from the Pursuer. That material fact is incorrect. At no time during these proceedings have the First Defenders been in receipt of legal aid and accordingly their solicitors cannot look to payment for their costs from the SLAB.

 

[6] In the case of Cullen v Cullen 2000SCLR491, the opinion of the court at 494A stated inter alia:-

"In these circumstances our view is that, in the event that the appeal court interferes with the decision of the original court, the reassessment of the liability of the assisted person falls to be carried out by the latter court, subject to whatever directions are considered by the appeal court to be appropriate. The evident intention of section 18(2) is that the original court would be expected to be particularly familiar with the circumstances of the case, including in particular the conduct of the parties in connection with the dispute."

Parties were agreed that, in light of the material incorrect factual basis on which the Sheriff proceeded, the correct course was for me to remit the question of modification of the Pursuer's liability for the First Defenders' expenses to the Sheriff for reassessment on the basis that the Pursuer did not have legal aid until 7 December 2011 and that at no time did the First Defenders have legal aid. My interlocutor reflects this agreement.

 

Whether any direction should be given to the Sheriff on the basis of which he would carry out his reassessment of the Pursuer's liability for the First Defenders' expenses.

 

 

Submissions for the Pursuer and Appellant

 

[7] Solicitor for the Appellant referred me to the cases of Armstrong v Armstrong and Shevline v Shevline 1970 SC161 which considered the terms of the Legal Aid (Scotland) Act 1967 section 2(6):-

"where a person receives legal aid in connection with any proceedings ...his liability by virtue of an award of expenses against him with respect to the proceedings shall not exceed the amount (if any) which in the opinion of the court or tribunal making the award is a reasonable one for him to pay and may have regard to all the circumstances, including the means and the conduct in connection with the dispute of all parties."

 

[8] This provision is in similar terms to the current provision in section 18(2) of the Legal Aid (Scotland) Act 1986. In that case it was held that in assessing a party's liability, the court should consider the means of both parties at the date of the proof, the amount of expenses awarded against the party found liable, and the amount of any aliment any periodical payments awarded against that party; and that the sum should not be fixed as a matter of course at nil or a nominal figure, nor on the other hand at a figure so high as to make it for practical purposes impossible for the party found liable, with the resources available to him to pay it. It was further held that, in a case where the court consider that a party had taken improper advantage of obtaining legal aid, that parties liability might be fixed at a sum what higher figure.

 

[9] I was referred to the Opinion of the Court at page 166 as follows:-

"The very language of this statutory provisions shows that no precise mathematical formula is envisaged. It is a discretionary matter in each case for the court, dependent on the fixing of a reasonable figure on the information placed before the court. The figure should not be so high as to render it for practical purposes impossible for the party, with the resources available to him, to meet the liability. It equally seems clear that it was not intended that the liability should as a matter of course be fixed at a nominal sum or even at nil.... The starting point in fixing the parties liability must clearly be the means of the litigants...The next factor to be considered is the amount of expenses which has been awarded against the party...for the purpose in question it would be quite sufficient to inform the court of an estimate of the amount of these expenses...In the ordinary case the above considerations should be enough to enable the court to fix a sum which would be reasonable, not so high that little prospect of it being paid, nor so low as to put an undue burden on the legal aid fund. There may be cases in which the conduct of one or more of the parties in the course of the litigation has been such that the court considers that an improper advantage has been taken of the opportunity of getting legal aid, in which event a somewhat higher figure of that party's liability should be assessed, but this should not be carried the length of seriously jeopardising his meeting that liability..."

I was also referred to the case of McKenzie v Lothian's & Border's Police 1995SCLR737 where Lord Gill at 740G stated; "If the pursuer had been without means, or if the effect of my refusing modification had been to leave him without means, that would have been a good reason for modifying his liability to nil, whatever his conduct in the litigation. In this case, however, the Pursuer has recovered a substantial sum. The amount of expenses is that the Defender seek to set off is just over 11% of that sum...I conclude therefore that the Pursuers means do not of themselves necessitate a modification to nil."

He then concludes at 741B 'I am therefore entitled to take into account the Pursuers conduct of the litigation as well as his means in order to determine whether there should be any modification of his liability and, if so, what the amount of that modification should be.'

 

[10] I observe that it is interesting to note that, in the commentary following that report in SCLR, the commentator stated:-

"this case is of significance for the robust view taken by the Lord Ordinary of the Pursuer's conduct as another element of his decision. The previous Scottish cases on 'conduct' have all stressed at what is significant is whether an improper advantage has been taken of the opportunity to have legal aid; here unnecessary procedure was generated and the assisted person had to pay the price."

 

[11] I was asked to make a direction to the Sheriff in the following terms;

"The Sheriff should first consider the Pursuers means and, when assessing his means, account should be taken of his liability for his own solicitors account. The Sheriff should then consider the amount of expenses awarded against the Pursuer and after that, assess a sum which would be a reasonable one for the Pursuer to pay. This should be a sum which the Pursuer, with the resources available to him, would be able to meet. If the Pursuer's means of themselves necessitate modification to nil. then the expenses should be modified to nil. If the Pursuers means do not of themselves necessitate modification to nil, then the Sheriff should take into account the Pursuers conduct as well as his means in order to decide whether there should be any modification. Specifically, the Sheriff should consider whether the Pursuer took improper advantage of obtaining legal aid. Only the Pursuers conduct as an assisted person should be considered i.e. from December 2011. The Sheriff should then assess a figure which would be a reasonable one for the Pursuer to pay. Again, it must be a figure which the Pursuer, with the resources available to him, will be able to meet."

 

 

Submissions for the First Defenders and Respondents

 

[12] Solicitor Advocate for the Respondents stated that he did not accept the proposition that, if a party's means of themselves necessitate modification to nil, the Sheriff could not consider conduct. The current statutory provision, namely 18(2) of the Legal Aid (Scotland) Act 1986 provides:-

"that the liability of a legally assisted person under an award of expenses in any proceedings shall not exceed the amount (if any) which in the opinion of the court or tribunal making the award is a reasonable one for him to pay, having regard to all the circumstances including the means of all the parties and their conduct in connection with the dispute. "

There was a wide discretion given to the Sheriff to assess a figure on the basis of the party's means and the conduct of the parties. Both factors required to be considered.

 

[13] In this case the Appellants means were set out in page 5 of the Sheriff's Note as follows;

"On the information before the court, the Pursuer has capital of £10,088 from which he has to pay his own legal expenses (pre legal aid) some £7498.33 to the First Defenders for that part of the expenses awarded against him not open to the modification and a further £10,246.60 being the portion he seeks to be modified. Patently without modification he cannot settle these liabilities from capital. The total income of the Pursuer and his wife is stated at £262.25 per week. It is submitted that the DWP assesses the minimum level of income for a couple at £217.90 per week. Even on this minimal figure there is little free balance and thus without modification

it would take some years before the unmodified liability would be settled from income even if it were only the balance after applying all his capital."

 

[14] It was submitted that it could not be said that the Appellant was without means, as envisaged by Lord Gill in the case of McKenzie v Lothian & Borders Police supra. It might properly be said he had limited means. The Sheriff had been granted a wide discretion. He was entitled to consider both the limited means available to the Appellant and also his conduct in deciding whether to modify his liability. Solicitor Advocate for the Respondents then proposed to set out the instances in which he considered the conduct of the Appellant was unreasonable. I do not think these are issues for me. They are issues for the Sheriff in exercising his discretion and I do not propose to narrate what was said to me about the conduct of the Appellant. He then submitted that I should give a direction to the Sheriff in the following terms;

"The Sheriff should form a view as to whether the factual inaccuracies, once corrected, were relevant to the issues. He then required to consider, in the round, the question of the means of the Appellant and the Appellants conduct. The Sheriff should not take the view that, if he concluded that the Appellant was without means or if the absence of modification would leave him without means, the question of his conduct should be excluded. The conduct of the Appellant required to be considered along with his means, as required by section 18(2) of the 1986 Act."

 

[15] In making this motion, the Solicitor Advocate for the Respondents referred me to the case of Greene v Courtney 2007CSOH200. In that case Lady Dorian was dealing with a question on modification in connection with a First Defender. She found in fact:-

"As far as means is concerned First Defender had a legal aid certificate with a nil contribution. She had been unemployed for over a year when the department in which she worked as a painter closed. She had virtually no funds and in order to pay expenses would bankrupt her. She received income support of £63.44 per week and allowance towards housing costs of £72.01 per week."

This was clearly a case where the first party had limited means. Notwithstanding these facts, the Lady Dorian refused modification."

 

 

Decision

 

 

[16] In this case the Sheriff required to consider a motion on behalf of the Pursuer for a modification of the expenses awarded against him. After hearing parties the Sheriff refused modification. The motion was presented in terms of section 18(2) of the Legal Aid (Scotland) Act 1986 which provides;

"the liability of a legally assisted person under an award of expenses in any proceedings shall not exceed the amount (if any) which in the opinion of the court or tribunal making the award is a reasonable one for him to pay, having regard to all the circumstances including the means of all the parties and their conduct in connection with the dispute."

 

It is clear from the Sheriff's Note that he proceeded to make his decision to refuse modification on the basis that the Appellant was granted legal aid in summer 2011 and that the Respondents were also in receipt of legal aid. The correct factual position was that the Appellant did not receive legal aid until 7 December 2011 and the Respondents at no time had legal aid. Both these factors figure substantially in the Sheriff's reasons for his decision. Parties were agreed that the only conclusion be reached was that the Sheriff proceeded on the basis of incorrect material facts.

They were accordingly agreed that I should allow this appeal and remit the cause to the Sheriff for reassessment in light of the correct factual situation.

 

[17] In light of the decision in Cullen v Cullen supra I am entitled to give any directions I consider appropriate to the Sheriff in carrying out his reassessment. I am not prepared to give any specific direction. This is a discretionary decision for the Sheriff in terms of section 18(2) of the 1986 Act. It is for the Sheriff now to exercise his discretion anew in light of the correct factual basis before him. That decision could only be overturned on appeal if it were shown it could be said to be wholly unreasonable or wholly unwarranted on the correct facts available to the Sheriff. Put simply, the Sheriff has to consider all the circumstances, including the means of the parties and their conduct in connection with the dispute, and then, in exercising his discretion, to assess what is a reasonable figure, if any, for the Appellant to pay in respect of the expenses for which he has been found liable. Conduct which would be considered would only relate to the period after 7 December 2011 when the Appellant was granted legal aid. He has been found liable, without modification of expenses relating to the period when he did not have legal aid.

 

[18] The Sheriff may find the cases to which I have referred in my narration of the parties submissions of assistance. The Sheriff should take into account both the means of the Appellant and his conduct as an assisted person. It is clear from the Sheriff's Note from the information given to him at the first hearing that the Appellant is not without means. I do not understand Lord Gill's judgement in the case of McKenzie v Lothian Borders Police supra, taken as a whole, to be authority for the proposition that, if a person has limited means, the fact that his means are thus limited should preclude the Sheriff also considering the conduct of the parties in addition to such information of means as is available. I accordingly do not propose to give any specific direction to the Sheriff in exercising his discretion in respect of

 

his assessment of the Appellants' liability for the First Defender's expenses on the basis of the correct facts in this case.

 

[19] As far as the expenses of the appeal is concerned, this was necessitated by the Sheriff's misunderstanding of the date when the Appellant was in receipt of legal aid and his erroneous impression that the Respondent did have legal aid. In the whole circumstances I consider there should be no expenses due to or by either party in respect of this appeal.