S.L. FOR SUSPENSION AND INTERDICT
OUTER HOUSE, COURT OF SESSION
[2014] CSOH 168
P755/14
OPINION OF LADY SCOTT
In the cause
SL
Pursuer;
for
Suspension and Interdict
Pursuer: Logan; Halliday Campbell WS
Defender: M Stewart; Balfour + Manson LLP
20 November 2014
Introduction
[1] In the context of a divorce settlement and obligations arising from a minute of agreement between parties, the respondent obtained from the sheriff court a charge for payment dated 16 July 2014 which was served on the petitioner. The petitioner then raised a petition in this court seeking suspension of that charge.
[2] This case called before me on the motion roll on the respondents motion to dismiss the petition and to find the petitioner liable to the respondent for the expenses as taxed by the auditor on the solicitor and client scale. The only part of the motion which was opposed was the applicable scale of the expenses, which the petitioner submitted ought to be applied on the usual party and party basis. Accordingly the only matter for me to resolve was the appropriate scale for payment of expenses.
Agreed Principles
[3] The parties were agreed too on the general principles which applied here. That this was a matter for the discretion of the court and that where one party has conducted proceedings incompetently or unreasonably and thereby causing the other party unnecessary expense the solicitor and client scale can be applied as a sanction against such conduct ( McKie v Scottish Ministers 2006 CSIH 54)
The Issues
[4] Somewhat unusually in this case there was a sharp divergence over the facts – in terms of what happened, what was relevant and what the relevant facts meant. Accordingly the first issue raised was- how does the court make a decision faced with such a sharp dispute over the facts? Secondly, was there sufficient material to enable the court to make a decision? And if so what is it?
Background
[5] The parties divorced at Dundee Sheriff Court on 24 June 2013. On the same date they entered a minute of agreement (the minute) covering somewhat complex arrangements for the petitioner to pay the respondent the capital sum of £861,000 by 24 June 2015. This sum was to be paid in several parts, largely in relation to the sale of various properties. Relevant here was the provision for the sale of the former matrimonial home. Any offer to purchase required the consent of the respondent, which consent could not be unreasonably withheld. If there was no sale within a period of one year from the signing of the agreement in June 2013, then the petitioner required to put the property on the market or pay the sum of £21,018 to the respondent. Finally there was provision acknowledging the right of the respondent to seek further orders of the court to regulate matters relative to the sale.
[6] On 16 July 2014 the respondent served a charge for the sum of £21,018 on the basis that the petitioner had not put the property on the market nor made a payment in the terms of the minute.
[7] In related proceedings at Dundee Sheriff Court, the petitioner had lodged averments that she had received three notes of interest to the property prior to the property being put on the market. In particular it was averred that the director of the company (JW) had viewed the property, discussed his interest and then proceeded to submit a formal offer in the name of his company JPL Ltd. It was now accepted these averments were not true.
[8] In response to the charge for payment, this petition was raised in the Court of Session seeking suspension and interdict of the charge, on the basis that the respondent had unreasonably withheld his consent to an offer that had been received to purchase the matrimonial home and indeed had sought to prevent the sale by interdict. Further it was pled that the respondent had delayed and frustrated the completion of the transfer of the property company. All of which was in breach of the terms of the minute of agreement. The respondent being in breach of his obligations could not competently pursue payment and the petition sought suspension and interdict in respect of the charge for payment.
[9] After an initial hearing the charge was suspended ad interim and the respondent was interdicted ad interim from carrying out further diligence on the basis of the said charge. Subsequently at a full hearing on the respondents motion, the Lord Ordinary recalled both orders and found the petitioner liable to the respondents in the expenses of the recall.
[10] Since the recall of the interim orders the petitioner has paid the capital sum due under the minute.
Respondents Position
[11] The respondent submitted that the petitioner being in breach of her obligations was bound to make the payment sought. There was no substance to the averments of unreasonable conduct on the part of the respondent. The petitioner had produced a letter containing a conditional offer from solicitors apparently on behalf of JPL Ltd, which was a company unknown to the respondent. The respondent had then sought information about the company and vouching of the ability to pay the £800,000 required to purchase the property. This was reasonable conduct.
[12] Subsequently and prior to adjusted answers being lodged to this petition it had been discovered that the offer to purchase was not a real offer and it was submitted there had been deliberate falsehood by the petitioner involved. This submission was based inter alia on:
a. An affidavit from the purported purchaser and director of JPL Ltd (JW) who declared he had never heard of the property or the petitioner, knew nothing about the offer to purchase and had subsequently been told by his business partner (MJ) in the company that she had submitted an offer on behalf of the JPL Ltd
b. An affidavit from the said business partner of JPL Ltd (MJ) who stated that the petitioner had discussed her financial difficulties with her. Subsequently another business partner (AS) instructed her to submit an offer of purchase, which offer she was told would not be accepted.
c. An affidavit from business partner AS that the petitioner asked him to submit a formal offer of purchase and gave him the details, under the assurance that the offer would not be accepted. This was in order for her to gain some time in her financial difficulties and with her bank.
d. Various e mails between the petitioner regarding the offer. There was some dispute between parties as to the interpretation of these e mails. I accept that read together these emails suggest
(i) the offer to purchase the property submitted on behalf of the company was instigated by the petitioner and she offered to pay the company’s legal fees regarding same;
(ii) the petitioner was aware of the respondent’s doubts about the offer contrary to the averments and
(iii) the petitioner admits instructing her lawyer and making averments in the Sheriff Court that she had spoken to JW who was interested in purchasing them home having viewed it. The petitioner now accepts she never spoke to JW.
[13] The respondent relied upon this information as demonstrating the falsehood of the offer to purchase the property and it was submitted it showed that the petitioners conduct in these proceedings, knowingly relied upon falsehood. The purpose of this petition was to gain time and avoid making immediate payment of the sum due. Accordingly it was submitted the petition was a fraudulent device raised for that purpose.
[14] This information had been placed before the Lord Ordinary seeking recall of the orders which was granted. Consequently the sum under the charge had been paid and hence now the motion to dismiss the petition.
Petitioner’s Position
[15] The petitioner denied that the raising of the petition had been in any way improper or obtained on a false basis. The petition was based on the unreasonable conduct of the respondent in withholding his consent to the offer and in respect of frustrating other obligations arising from the minute.
[16] The allegations contained in the affidavits relied upon by the respondent were disputed in terms of their contents and veracity. It was conceded that the affidavit of JW was correct in so far as he states he did not discuss the property with the petitioner, nor did he instruct any offer for purchase. The petitioner accepted the averments made in proceedings in Dundee Sheriff Court were not true, but that action was separate to this proceeding and had no relevance to conduct here.
[17] The petitioner believed at the time the offer was made it was a genuine offer. She now accepted that it was not genuine. She denied any suggestion she had instigated or induced such an offer to be made.
[18] Here, in face of this dispute over the facts relied upon by the respondent in his motion this court could not resolve the matter without going to proof. Even then counsel suggested he doubted the truth would be found. Absent proof the respondent could not establish the falsehood he claimed was behind the petition and his motion fails.
[19] Further the Lord Ordinary who had heard detailed submissions on all of this recalled the orders only on the basis that there may be an arguable case which undermined the grant of the interim orders. No motion was made by the respondent at the conclusion of that lengthy hearing for expenses on this scale and so it ought not to be allowed now.
[20] Counsel for the petitioner spent some time addressing what he said was unreasonable conduct on the part of the respondent in respect of other obligations arising from the minute. The suggestion seemed to be that the petition would have been raised anyway. But I do not accept this suggestion. The petition sought to suspend enforcement of the charge which was for payment of the specified sum due as a result of breach of the specific obligation to sell the matrimonial home. I do not consider the averments in the petition about other obligations under the minute germane to the petition itself or to this motion.
Resolution of the Factual Dispute : How does the court make a decision when faced with a dispute over the facts?
[21] The first issue I have to decide is how to proceed given the factual dispute. I consider the prospect of holding a proof, or indeed any other additional procedure in the circumstances here utterly unpalatable and patently not in the public interest.
[22] The action had been settled. This is about the scale of expenses – a matter incidental to the legal claim or proceedings. In general terms it cannot be in the public interest to develop or engage in satellite proceedings which are themselves expensive.
[23] Here the petition is concerned with a dispute over a charge for payment of £21,018 from the sheriff court. It has been settled without a hearing of the evidence. The only question is the scale of the expenses. On any view a very modest matter. I consider it would be wholly disproportionate if not absurd to engage in any further proceedings over this issue.
[24] It must be remembered that in awarding expenses I am exercising a wide discretion at common law. The onus is on the claimant for the enhanced scale to show there is a basis for it and to persuade the court that it should do so. I have to consider an application on the material put before me in relatively broad terms and decide what is appropriate.
[25] The approach taken by Lord Hodge in McKie supra is instructive here. Firstly, in his observation that in determining the scale of expenses that it may be more difficult for the court to reach a firm view on conduct in relation to the merits of the action where there has been no completed proof. He noted that with one exception in all the other cases cited to him the proceedings had terminated before any hearing of evidence was completed and the court had reached its view on the material placed before it- and so must he [at paragraph 4]. Secondly, where there was a dispute of facts over one aspect of the conduct claimed to be malicious and unreasonable, which he decided could not be resolved without hearing evidence, the result was he drew no conclusion. The pursuer seeking the enhanced scale of expenses accordingly could not found on that aspect of the unreasonable conduct in his claim at paragraph 7. This it respectfully seems to me is the correct approach and I adopt it here.
[26] It is an approach recognised in the context of other issues – see the opinion of Lord Carloway in DVD (parent and child residence) 2002 SC 33 at 37D).
[27] Finally it is an approach which meets my concerns at the disproportionate court time and expense which can arise from detailed review of expenses claims. The kind of concern expressed by the court within the similar territory of applications for Protective Expenses Orders (PEO) under Rule of Court 58A. Such orders also involve the exercise of a wide discretion. In Carroll v Local Review Body of Scottish Borders Council 2014 CSOH 30 Lord Drummond Young suggested PEO proceedings should be kept “short and simple” and discouraged a stringent or detailed examination of the applicant’s case.
[28] Adopting this approach I have left aside the material which is in factual dispute – such as the affidavits produced by the respondent.
The Remaining Undisputed Material: Is there sufficient to reach a view and if so what is it?
[29] The next issue for me to decide was whether I can reach a view on the material before me and if so, what is it? I have had regard to the following accepted facts:
a. The petitioner had not paid the sum due or marketed the matrimonial home in apparent breach of the minute of agreement.
b. The offer to purchase submitted in the name of JPL Ltd was made and it was not genuine
c. The three emails relied upon by the respondent, were sent by or on behalf of the petitioner. I consider that the various e mails regarding the offer to purchase, read together, suggest the petitioner was closely engaged in the submission of an offer, including setting the terms of the offer and offering to pay the fees for same. Given the acceptance that this offer was not genuine, then this background involvement carries an inference of unreasonable conduct.
d. The petitioner‘s pleadings in the sheriff court were false. I do not agree this is not relevant. This history in associated proceedings supports the respondents claim regarding the petitioner’s conduct here.
[30] No clear explanation was given for why the petitioner had made payment and consequently agreed to dismissal of the petition. It was suggested that once the interim orders were recalled the petitioner had no reason to continue proceedings. This is consistent with the submissions of the respondent that the purpose of this petition was as a device to gain time, without there being any real substance to the claim.
[31] Having put aside the affidavits, I am not persuaded on the respondents submissions that the petitioners conduct here was fraudulent. But I am persuaded that it was unreasonable. I am satisfied that the petition was raised in order to gain time and obtain temporary relief from the charge without any intention to take matters further. In so doing the petitioner made claims regarding the respondents conduct which the petitioner knew were without any real substance and throughout the petitioner was aware she was due to make the payment sought. In these circumstances I am satisfied that I should make the order sought and award expenses on the solicitor and client scale.
[32] These accepted facts have satisfied me that the whilst I could not reach a conclusion of the respondents submission that the petition was fraudulent, I am satisfied that the petitioner’s conduct in raising the petition and seeking interim orders was unreasonable.
The Limited Scope of the Expenses Here
[33] Having reached this conclusion I am left with some concern at what this achieves in real terms and the likely limitations on what this award amounts to in the context of a fairly lengthy court hearing. Whilst the petitioner objected to the respondent seeking expenses on the solicitor client scale before me, when he had not done so at the last hearing, nothing more was said. Neither counsel addressed me on the fact that the Lord Ordinary made an award of expenses of the hearings occasioned by the recall of the interim orders, or about the effect of this interlocutor on this motion.
[34] In my view it is clearly not open to me to interfere with or qualify that prior interlocutor – see McKie supra [at paragraph 3]. This means the most substantial part of any expenses incurred in this action have been dealt with on the usual scale without any application being made. What I award is likely to be minor in comparison. Yet this motion, without advance notice, took something in excess of three hours of court time. I question whether this is a proportionate or reasonable use of that court time.
[35] Accordingly for the reasons given I grant the respondents motion to award expenses, which have not been previously determined, on the solicitor and client scale.