PETITION OF MASH HOLDINGS LIMITED FOR JUDICIAL REVIEW OF A DECISION OF THE SCOTTISH FOOTBALL ASSOCIATION LIMITED
OUTER HOUSE, COURT OF SESSION
[2016] CSOH 86
P1039/15
OPINION OF LORD BANNATYNE
In the petition of
MASH HOLDINGS LIMITED
for Judicial Review of a decision of the Scottish Football Association Limited
to approve Mr David King as a fit and proper person to hold the position of director of Rangers International Football Club Plc
Petitioners;
Petitioners: Sandison QC; Brodies LLP
Respondent: Dunlop QC; Burness Paull LLP
Interested Party: Maguire; Anderson Strathern LLP
23 June 2016
Introduction
[1] This judicial review came before me on 28 April 2016 for a first hearing. When the matter called a motion was moved on behalf of the petitioners to dismiss the action with no expenses due to or by any party.
[2] The respondent (The Scottish Football Association Limited) and the interested party (Mr David King) first moved that the appropriate order in the circumstances would be refusal of the prayer of the petition. Mr Sandison on behalf of the petitioners did not oppose this motion and I therefore refused the prayer of the petition.
[3] So far as the motion regarding expenses both the respondent and the interested party opposed this and moved counter motions in the following terms:
On behalf of the respondent; to find the petitioners liable to the respondent in the expenses of the petition and proceedings on an agent and client basis and on behalf of the interested party; to find the petitioners liable to the interested party in the expenses of the petition and proceedings on an agent and client basis and for an additional fee.
Background
[4] The petition concerned a decision made by the respondent on or around 19 May 2015 to approve the interested party as a fit and proper person to hold the position of director of Rangers International Football Club Plc (“RIFC”) in terms of article 10.2 of the Articles of Association of the respondent.
[5] In broad terms the substantive argument which was to have been advanced on behalf of the petitioners at the first hearing was this: the decision of the respondent was vitiated on the basis that it was irrational and because of the failure of the respondent to state the reasons for its decision.
[6] Both the respondent and the interested party sought refusal of the prayer of the petition. In addition to a challenge to the substantive arguments which were to be advanced on behalf of the petitioners as above set out there were also two preliminary arguments advanced on behalf of the respondent and interested party: they challenged the petitioners’ title and in addition plead a defence based on mora, taciturnity and acquiescence. Had the first hearing proceeded before me the respondent and interested party would have insisted on both their preliminary arguments and their arguments with respect to the substance of the petition.
Submissions in support of the petitioners’ motion
[7] In support of his motion regarding expenses Mr Sandison drew the court’s attention to the background to the petition. It was his position that a number of matters which were in the public domain caused the petitioners to believe that the interested party was not a fit and proper person to be a director of RIFC. These matters are set out in detail in paragraphs 6 to 8 of the petition. Rangers Football Club Limited (“RFCL”) is a wholly owned subsidiary of RIFC.
[8] In light of their knowledge of these matters the petitioners wrote to the respondent on 3 June 2015 drawing these matters to their attention. In reply the respondent, had in effect, said that the matter was none of the petitioners’ business. The petitioners wrote again to the respondent on 1 July and 10 September 2015, however, they received no substantive answer to the issues which they had raised.
[9] It was Mr Sandison’s position that on the basis of the said public information the decision of the respondent was ex facie irrational or alternatively no adequate reasons had been given for the decision. The petition was accordingly raised and answers lodged by the respondent and interested party. These, however, did not amplify the position.
[10] At a procedural hearing on 20 October 2015 Mr Dunlop on behalf of the respondent said that he was not going to add anything further in substance to the respondent’s answers.
[11] On 14 April 2016 the respondent substantially adjusted its answers (these adjustments are as shown in bold type in the answers). In terms of these adjustments it was Mr Sandison’s position that the respondent gave details of the information which it had before it at the time of making its decision which had a bearing on the fitness of the interested party. In particular the adjustments made detailed averments with respect to the various points of concern which the petitioners had regarding the interested party’s fitness. None of this information had previously been supplied to the petitioners. It was not disputed that none of this information had previously been supplied to the petitioners.
[12] This change of position, which Mr Sandison described as a volte-face, had come on the last day for adjustment. The adjustments gave the basis for the respondent’s decision. It set out the material which the respondent had before it at the relevant time and explained the reasoning process followed by the respondent in reaching its decision. In light of these adjustments a consultation had been arranged at as early a point as possible with the petitioners. The significance of what had been disclosed was explained by Mr Sandison to the petitioners. They were advised that belatedly the respondent had supplied what the petitioners had been seeking since their first letter to them in June of 2015. In these circumstances the petitioners decided, having regard to the advice of senior counsel, that they would not proceed with the action.
[13] Against that background Mr Sandison’s position was this: had the information now, at the last moment, been provided at the outset the petitioners would not have raised the present proceedings or had it been given at an earlier stage the petition would not have been proceeded with. The respondent he submitted had brought the expense of this particular process upon itself. It was unclear what role the interested party had played in this matter. However, if he was to seek expenses it should in light of the foregoing be against the respondent.
[14] The whole circumstances rendered an expenses award as he had moved appropriate.
Reply on behalf of the respondent
[15] Mr Dunlop began by saying this: answers had been lodged in October 2015 and these answers had set out five lines of defence:
- The petitioners lacked standing in that they were not a member of the respondent.
- Mora, taciturnity and acquiescence.
- The decision was not irrational.
- There was no duty incumbent upon the respondent to provide reasons.
- Even if there was such a duty proper reasons had been given.
These five lines of defence had been maintained throughout.
[16] At the procedural hearing in October Mr Dunlop had argued that the two preliminary matters should be dealt with first and separately from the substantive issues. This motion had been opposed on behalf of the petitioners. It was in terms of this position, namely: that the preliminary matters and substantive matters should be separated and dealt with in two tranches that he had advised the court that he was content with his pleadings. However, the court had decided that the preliminary and substantive issues should be heard together.
[17] Mr Dunlop described Mr Sandison’s position relative to expenses as outlandish. The onus was on the petitioners to establish standing and irrationality. Absent, standing the petitioners had no entitlement to be given any information regarding the decision making process.
[18] He submitted that the petitioners could not come along and say: we now see how you arrived at the decision and therefore can abandon with impunity as regards expenses. That was to leave aside consideration of the various lines of defence which had been put forward by the respondent (and the interested party) and which the respondent would have maintained at this hearing. This approach urged upon the court by Mr Sandison he submitted could not be the correct approach.
[19] In any event the argument being put forward by Mr Sandison that the adjustments had resulted in some huge change in position on the part of the petitioners did not make sense given the terms of the petitioners’ note of argument which had been lodged on 21 April 2016 which continued, in spite of the adjustments, to assert a rationality argument.
[20] His position in summary was this: the petitioners had in effect abandoned their action and the normal rules should be followed, the party who had abandoned paid the expenses.
Submissions relative to the awarding of expenses on an agent and client basis
[21] The basis upon which Mr Dunlop argued for agent and client expenses was this:
the person who in practical terms stood behind the petitioners and controlled them was a Mr Ashley. It was contended that in bringing the present petition proceedings Mr Ashley was simply continuing a vendetta which he was pursuing against the interested party. Therefore the present proceedings were an abuse of process. In support of this submission my attention was directed to the decision of Mr Justice Peter Smith in Sports Direct International Plc v Rangers International Football Club and David King [2016] EWHC 85(CH). I was advised that Mr Ashley also in practical terms stood behind Sports Direct International and controlled that company. In particular Mr Dunlop referred me to various observations made by Mr Justice Peter Smith at paragraphs 85 to 87 and 90 of his judgment. In these paragraphs the judge inter alia observed:
“I have referred to Mr King’s evidence which is unchallenged that Mr Ashley is pursuing a vendetta against him” (see: paragraph 86).
And at paragraph 90:
“It is therefore in my view undoubtedly the case that SDI’s whole procedure is an abuse and it should be dismissed for that reason in addition to the various failings I have identified above”.
[22] Mr Dunlop submitted that the same vendetta identified in the above case was being pursued here and the respondents were collateral damage in this and thus entitled to expenses on an agent and client basis.
Submissions on behalf of the interested party
[23] Mr McGuire adopted the entire submissions made by Mr Dunlop. He made two further arguments in support of an award of expenses on an agent and client basis being made.
[24] First it was his position that it was sufficient for such an award to be made that the petitioners had abandoned their case at the door of the court.
[25] Secondly he directed my attention to paragraph 9 of the petition. In this paragraph certain averments were made regarding the actings of the interested party on 4 June 2015. These actings post-dated the decision of the respondent. In terms of a rationality challenge averments regarding matters which post-dated the decision could have no relevance. What had to be looked at was the information available to the decision‑maker at the time of making the decision. He described the making of these averments which could have no relevance to the matters before the court as mudslinging and another part of the vendetta.
[26] With the respect to the issue of an additional fee Mr McGuire relied solely on sub‑paragraph (e) of Rule of Court [42.12]: “the importance of the cause or subject-matter of it to the client”. He accepted that all litigation was of importance to clients. However, at the heart of this matter was a claim that the interested party was not a fit and proper person to be involved as a director of a football club. This issue was of considerable importance to the interested party. He would have been materially adversely affected if he had lost his role as a director. It was contended he would not be able properly to deal with various financial interests were he not a director.
Reply on behalf of petitioners to the counter motions
[27] So far as awarding expenses on an agent and client basis Mr Sandison in short submitted: no evidence of a vendetta was before this court; nothing could be taken from anything which Mr Justice Smith had said in the Sports Direct case as evidence supporting the assertion that the present proceedings formed part of a vendetta. It was accordingly his position that I could not hold on the basis of the information before me that there was a vendetta.
[28] With respect to the averments in paragraph 9 of the petition these related to the issue of title and interest and not to the rationality challenge to the decision.
[29] So far as the point argued by Mr McGuire that I should award agent and client expenses on the basis of the lateness of the abandonment he said this: the abandonment could not have come at an earlier stage as the adjustments which had caused the abandonment did not come until the last minute.
[30] Finally regarding the additional fee the petitioners had brought a judicial review of the decision of the respondent. It was a rationality challenge with respect to the decision of the respondent. What was being said was there had been such an error by the respondent that the decision should be reduced. If successful that would not automatically have led to the interested party’s removal as a director. He was a director of RIFC, who were not members of the respondent. It was RFCL which was a member of the respondent. All that would have happened if the petition had been successful was that RFCL could theoretically be subject to disciplinary procedure if he were to continue as a director and accordingly the likely result of the petitioners being successful would be a reapplication to the respondent. The significance which the interested party sought to attach to the petitioners’ action was absent.
Discussion
[31] On the primary issue argued before me regarding the awarding of expenses I am clearly of the view that the petitioners’ argument should be rejected. I am persuaded that there is no proper basis for not following the normal rule that expenses should follow success. Where a party seeks on the morning of a first hearing to have the action dismissed then that party in my opinion must be held to have been unsuccessful. It cannot be said that in these circumstances the respondent and interested party have been other than successful in their defence of the petition.
[32] The argument put forward by Mr Sandison that the circumstances herein justified an exception to the normal rule was in my opinion misconceived.
[33] The argument he put forward in essence invited me to hold, where I had not heard any argument, far less full argument, on the five lines of defence put forward on behalf of the respondent, as outlined by Mr Dunlop, were not well founded. For me to hold, in the absence of having heard full argument, that I was satisfied that these arguments were not well founded would be wholly illegitimate. There is no basis upon which I could have made such a finding. The mere fact that the petitioners now assert that in light of the adjustments made on 14 June they are satisfied with the information they have been given and there is no purpose in proceeding with the judicial review does not justify not following the normal rule. That assertion does not mean that this judicial review was well founded. It does not mean that one or more than one of the lines of defence put forward on behalf of the respondent and interested party would after a full hearing thereon not have been upheld (such as the challenge to the petitioner’s title; the challenge on the grounds of Mora, taciturnity and acquiescence and the argument that there was no duty to provide reasons etc).
[34] The only matter I can be properly satisfied about is this: the petitioners have abandoned their action and therefore the respondent and interested party have been successful.
[35] For the above reasons I find the petitioners liable to the respondent and interested party in the expenses of the petition and proceedings.
[36] With respect to the motion for expenses on an agent and client basis, I am not persuaded that I should grant the respondent’s and interested party’s motion.
[37] I do not believe that there is evidence before the court which would entitle me to hold that the present judicial review proceedings were in essence an abuse of process in that they were no more than part of an ongoing vendetta by Mr Ashley against the interested party.
[38] I do not believe that I was entitled with respect to this issue to take anything from the Sports Direct case. The fact that the interested party’s evidence in that case to the effect that Mr Ashley was pursuing a vendetta was unchallenged does not I believe establish anything in relation to the matter before this court. There may have been all sorts of reasons why in those proceedings the evidence given by the interested party on this issue was unchallenged. It does not follow from this observation that I could hold the proceedings before me formed party of any such vendetta. The only part of the present proceedings to which I was referred in support of the allegations of vendetta were certain averments in paragraph 9 of the petition. I did not believe that there was sufficient in these averments to properly infer the present proceedings formed part of a vendetta, even leaving aside the explanation as to why these averments had been made tendered by Mr Sandison. Overall having regard to the whole circumstances I could not hold that these review proceedings had been brought for an improper purpose.
[39] Mr McGuire in the course of his submissions suggested that the mere lateness of the abandonment was sufficient to justify an award on an agent and client basis. I am not persuaded that there is any merit in this argument. Lateness of itself is not sufficient to justify an award of expenses on an agent and client basis. A detailed and on the face of it not unreasonable explanation was tendered by Mr Sandison why the abandonment came so late in the day. I am unable to identify any basis upon which I could hold the lateness of the abandonment justified an award on the above basis.
[40] Lastly with respect to the issue of the additional fee I am not convinced I should grant this. As argued by Mr Sandison these are judicial review proceedings challenging the rationality of a decision and their purpose is no more than reduction of the decision of the respondent. No decision in favour of the petitioners would decide the fitness or otherwise of the interested party to be a director. If the petitioners were successful it would not automatically have resulted in his removal as a director, as RIFC was not a member of the respondent. At worst for the interested party if the petition were successful it would have required a new application to be made to the respondent. I accept the litigation was important to the interested party but no more important I believe than most litigations are to litigants. I did not believe its importance brought it into a category justifying an additional fee. I was not convinced any real damage would be done to his financial interests by the petitioners being successful in these proceedings. I accordingly refuse the motion for an additional fee.