Scottish Sheriff Court Decisions

SHERIFFDOM OF LOTHIAN AND BORDERS AT EDINBURGH

[2016] SC EDIN 55

JUDGMENT OF SHERIFF WILLIAM HOLLIGAN

In causa

X

Pursuer:

Against

A, B, C and D

Act: Speir, Advocate, instructed by MHD Law

Alt: Stewart, Advocate, instructed by McNabs

EDINBURGH, 1 February 2016

The sheriff, having resumed consideration of the cause, allows the record to be opened up and amended in terms of the pursuer’s Minute of Amendment number 32 of Process and the defenders’ answers (as adjusted) thereto number 33 of Process; thereafter repels the defenders’ second and third pleas in law and the pursuer’s third plea in law; quoad ultra allows parties a proof of their respective averments; finds the pursuer liable in expenses to the defenders in relation to the proof before answer and the expenses of and incidental to the foregoing amendment procedure, limited to one half thereof; allows an account thereof to be handed in and remits the same to the auditor to tax and report; assigns 18 February 2016 at  10 am, Sheriff Court, 27 Chambers Street, Edinburgh as a diet to determine further procedure.

Note

[1]     By interlocutor dated 12 November 2015 I assigned a hearing to deal with further procedure arising out of my judgement issued therewith (“the November judgement”). Put shortly, I gave leave to the pursuer to lodge a minute of amendment.  A minute of amendment (number 32 of process) was lodged, as were answers, further adjusted, which are number 33 of process.  The matter came before me on the pursuer’s motion to allow the record to be opened up and amended in terms of the minute of amendment and answers.  That motion was opposed.  The background to this matter is set out in the November judgement and I do not propose to repeat what I said there.  For present purposes it is sufficient for me to say that the action is brought pursuant to section 29 of the Family Law (Scotland) Act 2006 (“the 2006 Act”).  The initial writ sought decree against all four defenders cognitionis causa tantum.  In the debate before me it is accepted that, at the commencement of proceedings, the pursuer’s agents were aware that executors dative had been appointed to administer the estate of the deceased.  That information had not been communicated to the drafter of the writ who proceeded upon the erroneous belief that no executors dative had been appointed.  As I narrated in my November judgment the pursuer sought and was granted leave to amend the craves of the initial writ by interlocutor dated 15 July 2015.  That amendment changed the craves of the initial writ to remove any reference to a decree cognitionis causa tantum.  The instance remained, and remains, unchanged.  The pursuer’s present minute of amendment is very brief and seeks to amend the instance of the initial writ quoad the first and second defenders (who are the remaining defenders) so as to design them as executors dative.  The defenders’ answers are extensive and contain averments dealing with the merits of the action.

Submission for the Defenders

[2]     Mr Stewart’s primary submission is that I should refuse the pursuer leave to amend.  In short, the court ought not to substitute one defender for another after the expiry of the statutory time limit within which proceedings may be brought.  Secondly, an action cognitionis causa tantum was not a competent procedure to satisfy the terms of the 2006 Act.  What the minute of amendment sought to do was to cure a radical incompetence.  If leave to amend were granted to the pursuer it should be upon the condition that the pursuer meets the expenses of the first and second defenders.  There is an important distinction to be drawn between the first and second defenders as individuals and as executors.  Mr Stewart referred to chapter 18 of the Ordinary Cause Rules; Pompa’s Trustees v The Edinburgh Magistrates 1942 SC 119; Rackstraw v Douglas 1919 SC 354; Gray Aitken Partnership Limited v Link Housing Association Limited 2007 SC 294.  Rule 18.2(2)(b) sets out certain specific areas in which amendment may be permitted.  Self-evidently, if the pursuer were to raise proceedings today the action would be time barred.  The present minute of amendment comes outwith the six month time limit.  In Pompa’s Trustees an action had been raised against The City of Edinburgh Council within the requisite time period but had not, as the statute required, been directed against the particular office holder of the council.  The minute of amendment sought to cure that defect.  The court allowed the amendment because the correct procedure had been followed and all the amendment did was to substitute the proper representative of the correct defenders.  In the present case the executor is not a “representative” of anyone.  In Pompa’s Trustees the Town Clerk represented the City of Edinburgh Council.  It was the Council which had the underlying statutory obligation.  In the course of his opinion in Pompa’s Trustees, the Lord Justice Clerk said, at page 125, that the court will not in general allow a pursuer by amendment to substitute the right defender for the wrong defender or to cure a radical incompetency in his action.  Those dicta apply in the present case.  In particular, the pursuer is seeking to substitute one defender for another.  Rackstraw was an example of substitution of a party.  Although the pursuer in that case was the same individual, during the course of proceedings he discovered that his right to bring the proceedings (which related to an entail) might have been open to challenge.  He accordingly took an assignation of the rights of an heir of entail.  By doing so he was adding to the instance another person who was entirely separate and distinct from himself as individual.  However, there was no time bar issue in that case.  Rackstraw also has a number of important observations in relation to expenses (see in particular the dicta of Lord Salvesen). 

[3]     Mr Stewart then turned to the question of a decree cognitionis causa tantum.  Mr Stewart referred to Stair, Institutions of the Law of Scotland (More’s Edition) volume 2, chapter IV, Title XIX;  McLaren, Court of Session Practice at pages 805-806;  Walker, Civil Remedies pages 302-303; Kerr v Mangan 2015 SC 17; Simpson v Downie 2012 Fam LR 121 and Royal Insurance (UK) Limited v Amec Construction Scotland Limited 2008 SC 201.  A decree cognitionis causa tantum is declaratory.  It is not a decree for payment.  Such a decree declares that a debt is due by the deceased.  Section 29 is not a procedure to recover a debt incurred by a deceased.  As was said in Kerr v Mangan and Simpson v Downie the 2006 Act creates a novel jurisdiction.  In Kerr, Lady Smith rejected the proposition that a claim pursuant to section 29 relates to a debt owed by a deceased. Section 29 confers the right to bring an application. The matter is governed by the law of succession.  Simpson v Downie makes clear that the cohabitant has no independent right.  Mr Stewart accepted that I had decided in the November judgment that the failure to convene the executors was not an absolute bar to the making of a claim pursuant to section 29.  Whatever may be the correct alternative procedure, cognitionis causa tantum is not appropriate.  Accordingly, what the minute of amendment seeks to do is to cure the procedural defect outwith the statutory time limit.  It is an attempt to cure a radical incompetence.  There never was an inter vivos debt due by the deceased. Cognitionis causa tantum is used to declare that an obligation existed.  In the Royal Insurance case there was always an underlying right to sue, vested in the litigant.  Here, the defenders, as individuals, did not have the underlying obligation, only the executors did.  That much is made clear in the rules of court and Kerr v Mangan.

[4]     In relation to the exercise of its discretion to allow amendment, the court should consider the stage of proceedings; whether the amendment could have been brought earlier; whether there has been unreasonable delay.  In the present case, it is accepted that the pursuer’s agents were, collectively at least, aware that executors had been appointed.  Accordingly, if leave to amend was refused the pursuer would not be without a remedy.  That is a factor for the court to consider.

[5]     Mr Stewart’s secondary position was that if leave to amend was allowed then the first and second defenders, as individuals, should have an award of expenses in their favour.  The very fact of the present and recent procedure amounts to an acknowledgement on the part of the pursuer that the defenders should not have been put to the expense in defending this matter as individuals.  The authorities all support the proposition that if leave to amend is granted, payment of the defenders’expenses should be a condition of the granting of that leave.  Reference was again made to Pompa’s Trustees; Rackstraw and Morrison v Morrison’s Executrix 1912 SC 892.  If the first and second defenders were not awarded their expenses they would have no other way of ensuring their recovery.  They did not have an automatic right to be indemnified by the estate.  Furthermore, expenses should be awarded upon an agent and client basis, client paying.  Reference was made to McKie v Scottish Ministers 2006 SC 528.  At paragraph [3] of his opinion, Lord Hodge summarised the factors to be considered by the court in deciding whether to make such an award.  Mr Stewart relied upon a third of these propositions namely that one of the parties has conducted on litigation “incompetently or unreasonably”.  Mr Stewart asked what reason was there to sue the first and second defenders as individuals?  The answer is none.  The minute of amendment is effectively an acknowledgement on the part of the pursuer that the defenders’ position is correct.  The court could consider the question of expenses relating to the debate as a separate matter.  That was the case in which the defenders submitted that there needs to be a minute of amendment which there now is.  In that respect, the defenders have been successful.

Submission for the Pursuer

[6]     When the pursuer raised the action, the craves of the initial writ sought decree cognitionis causa tantum.  That decree contains two parts, namely a declarator that a debt is due and an order for payment.  Mr Speir referred to Trayner’s Latin Maxims under the heading “Cognitionis Causa Tantum”.  The craves were amended in July so as to delete references to a decree cognitionis causa tantum and to seek orders in terms of section 29 directed against the executors.  The November judgment held that it was not incompetent not to call an executor  as a defender in a section 29 claim because Parliament could not have intended that the action can only be brought against an executors dative in circumstances where there may be no executors dative at all.  In the present case the pursuer raised an action against members of the class of those persons having an interest in the estate.  Mr Speir submitted that an action of declarator and a claim for payment would have been enough on its own; there was no necessity to proceed by way of a decree cognitionis causa tantum.  The raising of an action cognitionis causa tantum, and then seeking leave to amend, was specifically endorsed by the authors of Cohabitation, second edition, (Malcolm, Kendall and Kellas- see paragraph 1-72 thereof and Stevens v Thomson 1971 SLT 136).  Mr Speir did not accept the authorities require that a decree cognitionis causa tantum could only be raised in circumstances where there existed an inter vivos debt. 

[7]     Mr Speir went through the chronology of the present action in some detail.  The pursuer’s agents realised at an early stage after the commencement of proceedings that there were executors.  The procedure leading up to the relevant interlocutor began some time earlier but by interlocutor dated 15 July amendment was allowed so as to delete the craves cognitionis causa tantum and to substitute claims in terms of section 29.  As at August it was thought that the only issue outstanding was the designation of the defenders as executors.  The proof before answer disclosed that the defenders had a more significant underlying point namely that, if the action had not been raised against the executors timeously, the action itself would fail.  The court did not support the defenders’ submission but, in accordance with the procedure laid down in Royal Insurance, gave to the pursuer an opportunity to lodge a minute of amendment. It was clear for some time that the remedies which the pursuer sought were directed against the first and second defenders as executors dative.  That was clear from the craves and also from the relevant averments of fact.  Mr Speir suggested that one could consider the present amendment in terms of rule 18.2(2)(b)(i).  There had already been an award of expenses in favour of the first and second defenders in relation to the amendment procedure.  That was done in July.  Mr Speir did take issue with a certain part of the defenders’ averments now contained within the answers, as adjusted, namely answer 3 after the general denial to the end.  These averments were irrelevant and also incorrect because the defenders had been convened a long time before the current minute of amendment.  Reference was made to Macphail on Sheriff Court Practice (Third Edition) at paragraph 6.04.  The first and second defenders were executors dative and they were convened for any interest they may have.  They were more formally convened in July.  Mr Speir submitted that the pursuer should be entitled to the expenses of the proof before answer and there should be no expenses due to or by either party in relation to the current minute of amendment and answers.  The pursuer should also be entitled to the expenses in relation to the motion for leave to amend.  Mr Speir did not accept Mr Stewart’s submission in relation to “representative” capacity.  Such a description would apply to an executor, trustee, judicial factor and so forth.  Accordingly, rule 18(2)(b)(i) or (ii) might apply. 

Reply by the Defenders

[8]     Mr Stewart referred to paragraphs 4.105-6 of Macphail which distinguishes the position of an executor and those in a representative capacity.  So far as decree cognitionis causa tantum is concerned, one could see that as being a sub species of an action of constitution.  If that procedure was not properly utilised then the action was not competent.  Actions of constitution and cognitionis causa tantum are declaratory in nature.  They declare that a right exists.  Section 29 does not give rise to a substantial right it merely allows a person to make an application to the court.  The reference to Trayner supported Mr Stewart’s construction.  Mr Stewart also referred to Bells Principles of the Law of Scotland (Tenth Edition) at paragraph 1854 (and following).  Cognitionis causa tantum assumes an underlying obligation or right and that the debtor is deceased.  The action is raised to enforce the right against the heirs of the estate.  There must be an underlying obligation which the creditor seeks to have declared or constituted against the estate.  That is not what section 29 does and in support of that construction Mr Stewart relied upon Kerr and Simpson.  At one point, Mr Stewart drew an analogy between the difference between ordinary actions and petition procedure in the Court of Session and summary applications in the Sheriff Court but that submission was not pressed. 

Decision

[9]     When this initial writ was warranted both the instance and the craves were drafted in a form seeking decree cognitionis causa tantum.  For present purposes I shall set aside the fact that executors dative had in fact been appointed.  It is accepted that an error was made in the drafting of the writ.  The issue before me is one of competence.  In the November judgment I held that not suing an executor was not, in itself, sufficient to render the action incompetent (see paragraph [18]).  One of the principal reasons why I reached the conclusion I did is that the absence of executors would mean that pursuit of claim pursuant to section 29 of the 2006 Act would thus become impossible.  Mr Stewart pointed out that in the November judgment (at paragraph [17]) I said that an executor “should” be called as a defender, whereas rule 33.6A(1) provides that an executor “shall” be sued.  However, it seems to me that shall implies can.  Self-evidently, an executor can only be sued if there is an executor to be sued.

[10]   The authors of the text book on cohabitation argue that, in the absence of an executor dative, an action seeking decree cognitionis causa tantum is competent and indeed appropriate (paragraph 1-72).  In the same paragraph the authors go on to say that the theory behind the process is that “a decree cognitionis causa tantum is a decree of constitution.  It is a decree “for the purpose merely of constituting a debt against the estate, not against the person”, and “derives its name from the purpose from which it is intended to effect – namely, to have the amount of the debt ascertained or cognosced”” (the quotation is from Trayner).  The authors go on to say that if an action cognitionis causa tantum has been raised to preserve the time bar and amendment is required outwith the six month time limit the amendment “should generally be allowed”.  The authority for that proposition is Stevens v Thomson 1971 SLT 136 to which I previously referred.  In essence, the question before me is whether this approach is correct.

[11]   Firstly, the matter at issue is the procedure available to a person making a claim pursuant to section 29 of the 2006 Act.  Procedure is merely the mechanism for vindicating rights.  Underlying the rules of procedure is, or ought to be, the principle of fairness.  As the authorities to which I was referred make clear, over the decades the law has taken an increasingly relaxed attitude to rules of procedure. 

[12]   I was not referred directly to any case law as to just what does constitute an action cognitionis causa tantum.  Of the materials cited to me, the first paragraph of the extract from Walker on Civil Remedies is the most instructive:-

“An action of constitution is brought to have determined judicially a liability to pay and the amount payable, without demanding payment.  The common form of a decree for constitution includes a declarator that the debt is due and a decree for payment.  A decree for payment is in fact in itself a decree of constitution.  An action for damages seeks constitution of the claim and also payment.  Constitution is rarely sought alone, but usually along with payment or adjudication” (page 302).

[13]   Theoretically, every claim for payment, however simple, is both an action of constitution and payment.  Where the identity of the person or persons against whom the claim is pursued is clear there is no need to pursue constitution – a decree for payment will suffice.  However, there are certain cases in which either the nature of the claim, or the person or persons available to satisfy it, give rise to an issue.  In the passage referred to above, Professor Walker cites Friese-Greene’s Trustees 1944 SC 336 as authority for the proposition that a decree for payment is in itself a decree of constitution.  That case involved sequestration.  One of the issues was whether the creditor could obtain a decree for payment of the whole debt or whether he was restricted to a claim in the sequestration in which his debt would be ranked along with others.  It is clear from the opinion of the Lord President (at page 341) that it was competent to seek a decree cognitionis causa tantum or a decree of declarator and payment.  In the case of sequestration, a decree of declarator may be sought against the trustee but he is not, in the ordinary course of things, personally liable for the satisfaction of the debt.  It falls to be satisfied out of the estate of the debtor in accordance with the relevant rules of ranking and distribution.  Where there is a deceased estate in which an executor has been appointed a creditor may seek decree of declarator and payment against the executor or decree for payment only.  Where there is no executor, the debt requires to be constituted against the estate. Those with an interest to oppose it must be given an opportunity to do so because it is their patrimony which may be diluted.  The passages in Bell to which Mr Stewart referred set out the history of this procedure. If a creditor wanted to proceed against the heritage of the deceased, and there was no executor, there was a procedure by which an heir could be charged to accept or renounce the succession. If the heir renounced the succession an action of constitution would follow which would enable the creditor to proceed against the estate (haereditas jacens). There is no longer a need for a charge. The passage from Stair to which I was referred goes no further than to state the declaratory nature of the remedy sought.  Mr Stewart submitted that decrees cognitionis causa tantum concerned the constitution of debts due by the deceased which already existed.  It may be that the reported authorities all concern such claims. The short answer to that proposition is the passage I quoted above and the case of Friese-Greene’s Trustee.  Underlying an action of constitution is a cause of action which the pursuer wishes to pursue but which has not yet been judicially determined. It may be a claim for reparation, a claim for debt or a statutory claim. I do not consider it is necessary to narrow down an action of constitution (which includes the formulation cognitionis causa tantum) to common law claims. In my opinion, actions of constitution cognitionis causa tantum were intended to deal with a problem where someone had a claim against a deceased estate but there were no executors against whom an action could be pursued. In this case, by pursuing his claim, all that the pursuer sought to do was to constitute his claim against the estate – as the definition of cognitionis causa tantum in Trayner says “to have the amount of the debt ascertained or cognosed”.  I see no reason to exclude statutory claims from actions of constitution. A claim pursuant to section 29 is a cause of action: it gives a right to pursue a claim. It is not yet a debt against the estate and does not become so until the court has made an award.  An action of constitution is flexible enough to comprehend section 29 claims. There is nothing in Kerr which is inconsistent with my conclusion. What is more, there is no obvious alternative procedure and Mr Stewart was careful to offer none.  If no other exists, then, as I said in the November judgment, that would defeat the pursuer’s claim and leave persons in his situation with neither remedy nor right.  That I do not accept.  I therefore reject the submission that the procedure adopted on the writ was not competent.

[14]   In relation to the substitution of one set of defenders for another it follows from what I have said that the pursuer’s writ was not radically incompetent.  The present amendment does seek to substitute one set of defenders for another but only in a formal sense.  As I have said in the November judgment, following the opinion of Lord Emslie in Royal Insurance, the matter is one of proper practice.  I am not concerned as to which sub rule of chapter 18 is applicable.  All that rule 18.2(2)(b) does is to make clear the amplitude of amendment which may be sought; it is not prescriptive in its terms.  In my opinion, the real substance of the rule is to be found in rule 18.2(2) namely whether the amendment is “necessary for the purposes of determining the real question on controversy between the parties”.  The present amendment does exactly that.  As Mr Spier submitted, when the error was identified steps were taken to address the issue.  The amendment is formal.  Those with an interest in the estate have, in one form or another, been involved in the present action since its inception.  I am therefore inclined to exercise my discretion in favour of the pursuer and to allow amendment of the instance. 

[15]   In relation to Mr Spier’s submission as to the relevancy of the defenders’ averments in answer 3, given my general conclusion, I am not minded to delete any averments.  The issue was not greatly insisted upon.  The matter before me is essentially leave to amend rather than a debate on relevancy.  I shall accordingly allow the record to be opened up and amended in terms of the pursuer’s amendment number 32 of process and the defenders’ answers number 33 of process.  I shall repel the second and third pleas in law for the defenders (being the pleas contained within the defences, as amended).  I shall repel the pursuer’s third plea in law and, quad ultra allow a proof.

[16]   That takes me to the question of expenses.  The relevant defenders have already been awarded the expenses of the amendment procedure, all as is set out in the interlocutor of 15 July 2015.  That amendment dealt with the craves of the initial writ.  That leaves the expenses of the proof before answer (which for all practical purposes was a debate) which resulted in the November judgement and the expenses of the amendment procedure before me.  Both sides seek awards of expenses. Had the misunderstanding at the time the action was raised not have occurred, none of the foregoing procedure would have been necessary.  I can see the force in Mr Stewart’s submission that there is a distinction between the defenders as individuals and their capacity as executors dative.  Nonetheless, the points taken by the defenders at the proof before answer and the motion for leave to amend were far reaching.  The defenders sought dismissal of the action on the grounds inter alia of incompetency.  In that they were unsuccessful.  They were successful to the extent that the pursuer had to seek leave to amend.  That amendment was opposed.  In support of his argument seeking the expenses of both sets of procedures, Mr Stewart referred me to the cases of Rackstraw, Pompa’s Trustees and Morrison v Morrison’s Executrix 1912 SC 892.  He submitted that these authorities supported the proposition that the expenses of the amendment procedure ought to be borne by the pursuer.  It seems to me that, on closer examination, these authorities are not so clear.  In Morrison, the pursuer tendered a minute of amendment and conceded the expenses thereof at the outset (page 894).  The issue before the Inner House related to caution.  The concession was made because the action up to then was “quite useless” (see the opinion of the Lord President at page 895).   In Pompa’s Trustees, the sheriff substitute dismissed the action, having refused the pursuer leave to amend.  The appeal was allowed but leave was not granted to amend in terms of the minute of amendment tendered to the sheriff substitute.  Leave was granted to lodge an amendment in different terms from that previously tendered.  It is not clear from the report what view the Inner House took as to the expenses of the appeal nor is it clear to me whether the observations of the Lord Justice Clerk as to “the conditions as to expenses” related to the expenses of the “new” amendment procedure or whether it extended further.  The circumstances in Rackstraw were even more complicated.  That was a case involving a decree of disentail.  The matter having gone as far as the Second Division, it was found that there was a fundamental defect in the pursuer’s title.  Subsequently, he obtained an assignation of another party’s rights.  He sought, and was granted, leave to amend and the action then proceeded upon the pleadings, as amended, and, in particular, whether the pursuer now had title to sue.  In the course of deciding that question, the Lord Ordinary awarded the expenses of the earlier amendment procedure in favour of the defenders.  The Inner House made an order for expenses which was more extensive than that made by the Lord Ordinary but did so “in so far as those expenses are not available to the defender in any subsequent proceedings” (page 358).  Going back to first principles, rule 18.6 provides that a party amending is to be found liable in the expenses of the amendment procedure unless it is just and equitable that the expenses should be dealt with in some other way. If a party enrols a motion seeking leave to amend and that leave is granted then expenses should be awarded in favour of the other party or parties occasioned by that amendment procedure.  It may be that expenses are awarded upon condition that they be satisfied before the action is allowed to proceed further.  An award of expenses may be particularly apposite in circumstances where, as a consequence of the amendment, a party held liable in expenses disappears from process.  That seems to me to be what happened in Rackstraw. Unless an award of expenses is made as part of the amendment procedure the opposing parties may lose the opportunity to recover their expenses.  That is not the case here: it is the designation of the defenders which is changing not that of the pursuer. At the end of the day, whatever the cases I was referred to truly decided, expenses remain a matter for my discretion.   On the one hand, had the pursuer’s agents not fallen into error when the proceedings began, none of the subsequent procedure would have been necessary.  On the other hand, the defenders have resisted every attempt made by the pursuer’s agents to cure the defect and indeed have, at various stages, sought dismissal of the action.  In my opinion, the appropriate disposal is to award to the defenders one half of the expenses of the proof before answer and the amendment procedure. However, I do add this observation. The defenders were convened in this action by virtue of their interest in the estate of the deceased. To the extent that there are sufficient funds, I incline to the view that irrecoverable expenses incurred by the defenders are expenses which might legitimately be a charge on the estate. I have assigned a date to determine further procedure.