RECLAIMING MOTION BY MAN HEN LU AGAINST ANDERSONS SOLICITORS LLP AND OTHERS
FIRST DIVISION, INNER HOUSE, COURT OF SESSION
[2017] CSIH 45
A823/15
Lord President
Lady Paton
Lord Drummond Young
OPINION OF THE COURT
delivered by LORD CARLOWAY, the LORD PRESIDENT
in the Reclaiming Motion by
MAN HEN LIU
Pursuer and Reclaimer
against
ANDERSONS SOLICITORS LLP AND OTHERS
Defenders and Respondents
Pursuer: Dewar QC, Bell; Cannons Law Practice, Glasgow
Defenders: DM Thomson; DWF LLP
12 July 2017
Introduction
[1] In what are substantially amended pleadings, the pursuer now seeks production and reduction of interlocutors pronounced by the sheriff at Glasgow on 16 April and 23 September 2014. The first of these refused leave to appeal against an interlocutor of 7 March 2014, allowing the discharge of a proof at the instance of the pursuer, but finding him liable in the expenses of process to date, on an agent and client basis, and making payment of these expenses a condition precedent to proceeding with the action. The pursuer also seeks reduction of an interlocutor of the sheriff principal dated 30 September 2015, refusing a motion to allow a late appeal against the same interlocutor. He seeks reduction of a charge dated 5 November 2014, for payment of £148,202.66, which represents the expenses decerned for on 23 September 2014 consequent upon the interlocutor of 7 March.
[2] The reclaiming motion raises a question about whether the test for reduction, which is set out in Adair v Colville & Sons 1926 SC (HL) 51, has been met. It raises a wider issue concerning the procedure which ought to follow an interlocutor which makes payment of expenses a condition precedent. At present, the underlying action has lain dormant in the sheriff court for over four years.
Procedure
[3] The pursuer sued the defenders in Glasgow Sheriff Court for £500,000 in respect of alleged professional negligence. No information is given in the pleadings about the nature of this action, beyond stating that the pursuer’s averments in that action are supported by expert reports. No point was taken about this by the defenders; no doubt because they are fully aware of the case. However, in due course, if the present action proceeds to a proof, the pursuer will require, if he maintains that a miscarriage of justice has occurred, to demonstrate that he has at least a prima facie case of negligence against the defenders. That will require averment.
[4] During the hearing of the reclaiming motion, at the request of the court, the record in the negligence action was produced without objection. In it, the pursuer avers that, following a charge for payment for about £28,000, a petition for the sequestration of the pursuer was presented on 13 September 2005 by the landlord of a restaurant sublet by the pursuer. At that time, it is averred, the pursuer was resident in Hong Kong. The defenders advised the pursuer not to pay the debt meantime, whilst they challenged the sequestration petition on the ground that it had not been validly served on the pursuer; service having been effected at a former address. On 3 October the sheriff awarded sequestration. The pursuer obtained a bank draft to pay the debt, but the court declined to rehear the application for decree. No petition for recall of the sequestration was presented timeously. Sequestration of the pursuer’s estate, which had assets of about £4m, followed. The sum sued for represents the pursuer’s estimate of the loss he suffered as a result of being sequestrated. The negligence is said to be the failure of the defenders, first, to advise the pursuer that, if the point taken about service failed, he should pay the debt immediately and, secondly, to advise that a petition for recall should be lodged timeously.
[5] On 26 April 2012, decree for absolvitor was pronounced in respect of one part of the claim and the action dismissed quoad ultra. Following upon a lengthy amendment procedure during the course of an appeal to this court, the matter was remitted to the sheriff. By interlocutor dated 23 October 2013, the sheriff allowed a proof before answer, which was later scheduled to commence on 10 March 2014.
[6] On 19 February 2014, for reasons which have not been disclosed, the pursuer’s then agents withdrew from acting. On 20 February, in accordance with the normal procedure, the sheriff appointed a peremptory diet, to take place on 26 February, in order to ascertain whether the pursuer intended to insist upon the action. A new agent for the pursuer appeared on that date to maintain the pursuer’s interest in the claim and to move for a discharge of the proof. The motion to discharge was refused. The new agent then withdrew from acting. A further peremptory diet was fixed on 4 March for 7 March in order to ascertain, once more, the pursuer’s position.
[7] On 7 March 2014, the pursuer appeared personally. It is said that the pursuer has a poor understanding of English. His son was with him in court. It appears that the sheriff permitted his son to speak for him. The basis for allowing this is uncertain. The sheriff agreed to discharge the diet of proof and to sist the cause to enable the pursuer to instruct new agents. The pursuer had accepted that he would have to pay the expenses of the discharge. On the defenders’ opposed motion, the pursuer was found liable in the expenses of the cause to date, on an agent and client basis. It was made a condition precedent to further procedure that the expenses were paid.
[8] The pursuer instructed yet another agent. The agent advised that the interlocutor should be appealed. The motion for leave was due to be heard on 1 April 2014. Unfortunately, the agent took ill. A substitute moved for a continuation, but this was refused, as was the motion for leave itself, “for want of insistence”. However, it appears that the sheriff stated that he would entertain a subsequent (incompetent) motion for leave to appeal once the agent became available. He heard such a motion on 16 April 2014, but refused it.
[9] In due course, the expenses were agreed at £148,100. Decerniture for that amount was pronounced on 23 September 2014. The decerniture was extracted on 24 October and a charge served for that amount, together with sundry further charges, on 5 November 2014. On 19 November the pursuer presented a petition to this court seeking suspension of the charge. Interim suspension was granted, presumably on the basis that a relevant action of reduction would follow. Meantime, the pursuer attempted to appeal to the sheriff principal, without leave. The sheriff principal declined to hear this application, presumably on the basis that it was manifestly incompetent. Nothing happened for almost a year. Eventually, on 30 September 2015, the sheriff principal did hear the application. He refused it on the ground, it is averred, that the decree for expenses had been extracted and, in any event, there was no reason to allow a late appeal.
[10] On 8 October 2015, the Lord Ordinary refused to recall the interim suspension, but it was only on 11 November that the present action was raised.
The Action of Reduction
[11] The action originally challenged the interlocutors of March, April and September 2014, together with that of the sheriff principal in the following year. The basic contention in support of the action was that the interlocutor of 7 March had resulted in a miscarriage of justice. It was said that the award of expenses had failed to do substantial justice. There had been no radical amendment of the pursuer’s case. The sheriff had not ascertained whether the pursuer could afford to pay the expenses. No date for payment had been specified. The pursuer had been prevented from progressing the action or from obtaining a final decree which, if made the subject of an appeal, could open up the earlier interlocutors. There had been no incompetent or unreasonable conduct meriting an award on the agent and client scale.
[12] In relation to the hearing on 16 April 2014, the pursuer avers that:
“... the sheriff asked [the agent] if he was aware that the pursuer had consented to the award of expenses. [The agent] said that he was not aware that the pursuer had consented to the award of expenses, but assumed that the sheriff’s recollection that he had was correct. Working on that assumption, [the agent] did not continue with his submission, and the motion for leave to appeal was refused by the sheriff.”
The sheriff reports that, at the hearing, the pursuer had said that, whereas he was content to pay the expenses of the discharge of the proof, the court should reserve all other questions of expenses until new agents had been instructed. The sheriff explained to the pursuer that he was not prepared to proceed in that way, given that the action was now 4 years old and had undergone a tortuous procedural history. That had included a substantial amendment, as well as a debate and an appeal to this court. The sheriff took the view that the action had been conducted incompetently or unreasonably. In these circumstances, he formed the view that the court ought to impose the sanctions which it did. The sheriff recalled stating that his recollection had been that the pursuer “had consented”, but, having reviewed his record of what took place on 7 March, confirmed that “that was not the case”.
[13] In the debate before the Lord Ordinary, the challenge was confined to the interlocutor of 16 April 2014 and based on the averment that the sheriff had misled the agent into abandoning his pursuit of leave to appeal. The Lord Ordinary held that the sheriff had been entitled to make the decision of 7 March and that it could not be reviewed by reduction. Prior to, or at, the hearing of 16 April, the agent could have taken instructions on what had happened during the course of the hearing on the pursuer’s motion to discharge the proof. He should have observed that it was specifically stated in the interlocutor that the motions in relation to expenses had been opposed. The Lord Ordinary took the view that the pursuer had to accept responsibility for his agent’s actings. He did not consider that a miscarriage of justice had been relevantly averred and accordingly held that the action should be dismissed.
[14] The action underwent further amendment in the course of this reclaiming motion; notably to limit the conclusion for reduction to the interlocutors of 16 April and 23 September 2014 and what occurred thereafter. It is worth observing that, if the pursuer is to make any progress, he will have to reduce that of 1 April 2014 too, since that is the only competent interlocutor refusing leave to appeal. However, nothing was made of this at the hearing. The position in relation to that of 16 April remains the same, post amendment. It is that, according to the pursuer, exceptional circumstances are relevantly averred. The sheriff had misled the pursuer’s agent into believing that the interlocutor of 7 March had been pronounced of consent. The pursuer’s agent was thereby dissuaded from developing his submission. It was:
“scarcely possible to postulate a more exceptional circumstance than that a sheriff has (albeit unwittingly) misled a party’s agents in relation to the events which occurred in a previous hearing at which the sheriff presided, but the party in question was unrepresented”.
Submissions
Pursuer
[15] The pursuer submitted that, in terms of Adair v Colville & Sons (supra) and Philp v Reid 1927 SC 224, exceptional circumstances had been relevantly averred. The sheriff had inadvertently misled the pursuer’s agent, thereby disabling him from developing his submission. Although the sheriff had reported that he had refused the motion principally because the pursuer did not specify how he had failed in the exercise of his discretion, if he had thought that the orders had been pronounced of consent, the motion for leave would have been refused on that basis alone. The sheriff had erred in the exercise of his discretion, having regard to the absence of incompetent or unreasonable conduct and to the draconian nature of the orders. The sheriff had failed to have regard to the practical effect of payment being made a condition precedent; the likely result being an end to the action (Moyes v Burntisland Shipping Co 1952 SC 429). The Lord Ordinary had been overcritical of the agent’s conduct. The agent had taken instructions and read the interlocutor of 7 March prior to the hearing, but there had been no reason for him not to accept what the sheriff, who (as distinct from the agent) had been present at the hearing, had asserted. The hearing had been attended by the pursuer, who had poor English, and his son, who was not a lawyer. The defender’s agent, who had been at the hearing, had not sought to correct the sheriff.
[16] It was accepted that it may not be appropriate to reduce the orders post 16 April. The decerniture for expenses (and subsequent charge) may remain valid, depending upon the outcome of any motion for leave to appeal post reduction and the result of any subsequent appeal. The sheriff principal’s interlocutor would remain effective in any event.
Defenders
[17] According to the defenders, no exceptional circumstances existed. Reduction was not a remedy as of right. It had to be applied carefully (Adair v Colville & Sons (supra) at 56). It was not available when other remedies were open or had been unsuccessfully used (ibid). It was not an alternative to an appeal, but was available only in exceptional circumstances (Philp v Reid (supra) at 230). In order to succeed, there had to be a miscarriage of justice (Adair v Colville & Sons (supra) at 68). It was not a miscarriage just because the court had erred in law or fact (Philp v Reid (supra) at 229). It was not a reason for reduction that the party had acted per incuriam through negligence, mistake or error (ibid), supineness or slackness (ibid at 234). It did not follow that, because an appeal was not competent, reduction was available (Scoular v McLaughlan (1864) 2 M 955 at 960-2; Walker: Civil Remedies 172). A wholly exceptional case had to be made out, not merely proof of some invalidity in the decree (Arthur v SMT Sales and Service Co 1999 SC 109 at 115). The pursuer had to take responsibility for the actions of his agent (Aslam v Glasgow City Council [2016] CSIH 78 at para [36]).
[18] The averments amounted to no more than a proposition that the sheriff had wrongly stated that he had understood the interlocutor of 7 March to have been pronounced of consent. The pursuer’s agent had presumably seen the interlocutor in respect of which he had sought leave to appeal. He must have been told by the pursuer that the sheriff had pronounced the order in the face of opposition. Because the interlocutor of 16 April was of a class which was final and not subject to appeal, the pursuer was illegitimately attempting, by way of reduction, to bring under review an interlocutor not susceptible to appeal. In any event, having regard to the lapse of time since April 2014, reduction should not be pronounced. The interlocutor of 16 April had not been challenged, on the basis now advanced, until March 2017.
Decision
[19] In Malcolm v Park Lane Motors 1998 SLT 1252, Lord Abernethy (following Adair v Colville & Sons 1926 SC (HL) 51 and Bain v Hugh LS McConnell 1991 SLT 691) said (at 1256):
“... reduction is competent if it is necessary to avoid a miscarriage of justice or, to put it another way, to produce substantial justice. It is not possible to define categorically the cases in which reduction is competent but it is clear that the circumstances must be exceptional.”
In a case where the pursuer’s substantive complaint is that he has been stymied from pursuing his case by an interlocutor which has made payment of expenses a condition of proceeding with the action, his remedy is to seek leave to appeal, as he did in this case. Where leave is refused, there is no further remedy in the process at least unless and until the defender seeks decree of default by reason of non-payment (see, by analogy with caution, McCue v Scottish Daily Record and Sunday Mail 1998 SC 811).
[20] In order to demonstrate that a miscarriage of justice has occurred, a pursuer, whose action has been halted, must first show that he has a case of substantial merit to be pursued. The terms of his record in the underlying action appear to show at least a prima facie case. Secondly, he requires to show that there are exceptional circumstances which merit the order of which he complains being reduced. That in turn necessitates him demonstrating that, but for the particular circumstances, the order would have been different (ie in this case, that leave to appeal would have been granted). The issue for the court at this stage, however, is to determine solely whether, in the event of the pursuer proving all that he avers, he would still be bound to fail. In this regard, the case on record is different from that which was before the Lord Ordinary.
[21] The starting point for the pursuer is that he avers that the sheriff misled his agent into thinking that the earlier interlocutor had been pronounced “of consent”. The sheriff accepts that what he said about that was incorrect. That is an important feature where a party is attempting to establish a miscarriage of justice. It may be that, looked at with hindsight and objectively, a robust agent may have noted the terms of the interlocutor and attempted to refute the sheriff’s assertion. However, where the agent was not present at the earlier hearing and, from the pursuer’s side, only lay persons were, it might reasonably be said that it would take some degree of courage to contradict the sheriff who had pronounced the order at the hearing. The significant feature is that the pursuer has averred that his agent was misled by the sheriff. If he proves that, there is a potential for a finding that substantial justice has not been achieved.
[22] The court is not persuaded on the pleadings that, if the pursuer proves that the agent did not pursue his submissions because of the sheriff’s erroneous intervention, he would nevertheless have been refused leave. It is interesting that the sheriff accepts that he thought at the time that the orders had been pronounced of consent, and that that would, “in any event”, have been grounds to refuse leave. That may be significant. He reports that he refused leave “principally” because he had not been presented with any clear indication of how he had erred in the exercise of his discretion. The motion sheet, if produced, may throw some light upon this, but the sheriff’s note is consistent with the agent’s lack of presentation when, on the face of things, he would have been able to advance a case of unreasonable use of discretion based upon the factors set out in the pleadings regarding the previous conduct of the action and the draconian effect of the remedy.
[23] The court is not persuaded that, if the pursuer proves his averments, he would necessarily fail to establish circumstances amounting to a miscarriage of justice. Given that the interlocutor challenged remains in a depending action, delay cannot be regarded as a bar to reduction. The court will therefore recall the Lord Ordinary’s interlocutor of 16 November 2016 and allow a proof before answer of the parties’ respective averments.
Postscript
[24] The problem which remains is that the action, in which the various orders have been made, is still languishing in Glasgow Sheriff Court. If the action for reduction ultimately fails, or if it succeeds but leave to appeal is again refused, or is granted but the appeal itself fails, then the case will remain in limbo. Unless and until the defenders enrol for decree by default, by reason of non-payment of the expenses, it will remain in that state. This is not satisfactory in the modern era. Where a court grants an order in the terms made here, the interlocutor should provide for a time limit within which the account of expenses should be agreed or lodged for taxation. It should state that failure to do so may result in the expenses being irrecoverable. The interlocutor should certify that failure to pay the taxed (or agreed) expenses within a particular period of time will result in decree of default passing against the paying party (see Macfadyen ed: Court of Session Practice para 503). The other party will require to lodge a motion accordingly, again within a specified period, to bring the proceedings to an end, which failing, the action should be allowed to proceed.