IN APPEAL BY MARY JEANIE DIANE AUCHNIE OR WILLOX IN THE CAUSE WILLIAM JOHN AUCHNIE AND HENRY AUCHNIE AGAINST DUNCAN HENRY JAMES AUCHNIE AND GEORGE ALAN AUCHNIE
SECOND DIVISION, INNER HOUSE, COURT OF SESSION
[2014] CSIH 102
Lord Justice Clerk
Lord Menzies
Lord Boyd of Duncansby
OPINION OF THE COURT
delivered by LORD CARLOWAY, the LORD JUSTICE CLERK
in the APPEAL
by
MARY JEANIE DIANE AUCHNIE OR WILLOX
Minuter and Appellant;
in the cause
WILLIAM JOHN AUCHNIE and HENRY AUCHNIE
Pursuers and Respondents;
against
DUNCAN HENRY JAMES AUCHNIE and GEORGE ALAN AUCHNIE
Defenders:
Act (Minuter and Appellant): Martin QC, O’Rourke; Stronachs, Aberdeen
Alt (Pursuers and Respondents): Parratt, Govier; Fraser & Mulligan, Aberdeen
Alt (Defenders): RG Anderson; Peterkins, Aberdeen
14 November 2014
Introduction
[1] The action concerns the intromissions of the defenders, who are the executors on the estate of the late William Duncan Auchnie, who died on 7 February 2003. The parties, and the minuter, are the five surviving children of the deceased. They are the residuary beneficiaries on the estate in terms of a Will dated 24 June 2002. The action proceeds at the instance of two of the beneficiaries as individuals against two of the other beneficiaries, apparently only in their capacities as executors nominate. The minuter, being the only one of the five beneficiaries who is not a party to the action in some capacity, sought to enter the process for her interest as a beneficiary. She sought to do so by lodging defences as a party minuter.
[2] On 25 April 2014, the sheriff at Banff pronounced the following interlocutor:
“The Sheriff, having heard parties in debate, Refuses the Minuter’s Minute to be sisted as a party minuter; thereafter Continues the cause…”.
Without leave, the minuter marked an appeal to this court. The immediate issue, therefore, is whether such an appeal is competent.
Procedure
[3] On 3 November 2006, the estate of the deceased vested in the defenders as executors by virtue of a Confirmation granted by the Commissariot at Banff. In January 2011, the pursuers raised this action for an account of the defenders’ intromissions and, in the alternative, for payment of £350,000 or such other sum as may appear to be the true balance due to them. The action raises, amongst other things, the issue of the appropriate date for the valuation of assets for distribution purposes.
[4] In May 2012, a form of accounting was produced, including a proposed division of assets. The pursuers lodged objections. Following adjustment, a record of the objections and answers was lodged in November 2012. On 14 January 2013, a debate was held before the sheriff. On 7 February 2013, the sheriff pronounced an interlocutor repelling the pursuers’ objections. The pursuers appealed to the sheriff principal. On 27 September 2013, at Aberdeen, the sheriff principal allowed the appeal.
[5] The sheriff’s report neatly encapsulates the import of his decision and that of the Sheriff Principal as follows:
“1.4 The effect of the interlocutor of 7 February 2013 was that the deceased’s will was to be interpreted in such a way that, for the purposes of distribution, the assets in the estate fell to be valued as at the date of death and that certain income during the administration period fell to be paid over to individual beneficiaries rather than to the estate. This was an interpretation that favoured the defenders as individuals and the minuter and was to the detriment of the pursuers.
1.5 …The effect of the sheriff principal ‘s interlocutor was that the deceased’s will was to be interpreted in such a way that, for the purposes of distribution, the assets in the estate fell to be valued as at the date of distribution and that the income during the administration period fell to the estate generally. This was an interpretation that favoured the pursuers and was to the detriment of the defenders as individuals and the minuter” (emphasis added).
The defenders did not seek to appeal the sheriff principal’s decision.
The Minute of Sist
[6] On 27 March 2014, the minuter lodged a minute of sist in terms of which she sought leave to enter the process as a party minuter and to lodge defences. The purpose of the minute, as averred, was as follows:
“The interest which the Minuter seeks to defend is that of having the estate valued as at the time of the Deceased’s death. The Minuter is in a position to lodge defences to that effect, since the pursuers make averments in support of valuation at the date of distribution of the estate.
4. …The Minuter simply seeks a proper method by which she may make representations in her interest before the court. In order to do so, the Minuter is obliged to seek entry to these proceedings as first craved.”
[7] In refusing to allow her to be sisted, the sheriff held that the minute came “far too late” (OCR 13.1(4)). The minuter had had ample opportunity to enter the process. She ought to have done so at least prior to the appeal being heard by the sheriff principal. It not being possible for a sheriff to overturn the judgment of the sheriff principal, the sheriff also refused the minute as incompetent.
[8] On 7 May 2014, without seeking leave to appeal, the minuter marked a Note of Appeal to this court. On 13 June 2014, there was a Procedural Hearing on the competency of the appeal (RCS 40.10). The Procedural Judge acceded to the minuter’s motion to remit the issue to a bench of 3 judges (RCS 40.10(7)(c)). A hearing was fixed for 14 November at which, with the consent of the parties, the court was asked to address competency and thereafter, if so advised, the merits of the appeal.
Competency of the appeal (Sheriff Courts (Scotland) Act 1907 s 28(1))
Submissions
[9] The minuter’s primary position was that the sheriff’s interlocutor was a final judgment “in the proceedings initiated by the minute” (Sheriff Courts (Scotland) Act 1907, s 28(1) read together with s 3(h)). The procedure by minute (OCR 13.1) constituted a separate cause, which existed independently of the principal process. It had been brought to an end by the sheriff’s refusal to sist the minuter. The word “cause” had an inclusive rather than exclusive or exact definition (1907 Act, s 3(d)). The procedure by minute was a civil proceeding competent in the ordinary civil court.
[10] The interlocutor was also a final judgment in the principal action. In either case, the interlocutor disposed of the subject matter of the cause insofar as the minuter’s involvement was concerned (Glasgow Corporation v General Accident Fire and Life Assurance Corporation 1914 SC 835). The minuter had become a party to the cause, even if only to the limited extent of asking to remain so, upon presentation of the minute (Goudie v Mulholland 2000 SC 61; cf OCR 13.1(1)).
[11] The pursuers did not acknowledge the existence of any cause other than the action of count, reckoning and payment. The procedure by minute was not a “cause” (1907 Act, s 3(d)). The minuter had sought to enter the cause as a party, but had failed. Whether the effect of the interlocutor was final as regards the minuter’s involvement in the cause was irrelevant. She was not a party to the action (OCR 13.1(1); Maclaren, Court of Session Practice (1916), p 976; Goudie v Mulholland (supra); cf Glasgow Corporation v General Accident Fire and Life Assurance Corporation (supra) at 838; and Kilmarnock and Loudon District Council v Young 1993 SLT 505). The minuter had had the option of seeking leave to appeal, but she had not done so. Accordingly, the appeal was incompetent. The interlocutor was not a final judgment in the action.
[12] The defenders adopted a “neutral” stance on the competency of the appeal.
Decision
[13] Section 28(1) of the Sheriff Courts (Scotland) Act 1907 provides that:
“… it shall be competent to appeal to the Court of Session against a judgment either of a sheriff principal or sheriff if the interlocutor appealed against is a final judgment or is an interlocutor… (d) against which the sheriff principal or sheriff either ex proprio motu or on the motion of any party, grants leave to appeal.”
For the purposes of this section, “final judgment” means (1907 Act, s 3(h)):
“an interlocutor which, by itself, or taken along with previous interlocutors, disposes of the subject-matter of the cause, notwithstanding that judgment may not have been pronounced on every question raised, …”(emphasis added).
An “action” or “cause” (1907 Act, s 3(d)) “includes every civil proceeding competent in the ordinary sheriff court”.
[14] No separate or independent cause was brought into existence by the lodging of the minute. The minute is not an initiating writ (cf OCR 3.1). It is an application made during the dependence of an existing ordinary action. It is a step in that process (Macphail, Sheriff Court Practice (3rd ed), para 5. 43). On a proper construction of section 3(d) of the 1907 Act, procedure by minute is not a separate civil proceeding. The minute has no substance or purpose beyond seeking leave to enter the existing action, to which it is ancillary and without which it could not exist. It is disposed of by an interlocutor correctly bearing the process number of the principal action. That being so, the interlocutor cannot be seen to dispose of the subject matter of any cause. It merely refuses to sist the minuter. The interlocutor is not a final judgment for the purposes of section 28(1) of the 1907 Act. The appeal, without leave, is incompetent.
[15] If the minuter’s broader argument that the sheriff’s interlocutor was a final judgment in the ordinary action were to succeed, it would have to be shown that the effect of bringing an end to the minuter’s involvement was the disposal of the subject matter of the cause at least as regards the minuter’s interest. The subject matter of the cause, being an action of count, reckoning and payment, is the liability of the defenders as executors to account and make payment to the pursuers as two of the residuary beneficiaries of the estate. Notwithstanding the outcome of the debates before the sheriff and sheriff principal on the objections and answers, the subject matter of the cause is yet to be disposed of in terms of the craves in the principal action. Since the minuter was never a party, the refusal to sist her as such had no bearing on any claim made or resisted in the process (cf Glasgow Corporation v General Accident, Fire & Life Assurance Corp 1914 SC 835, Lord MacKenzie at 838). Goudie v Mulholland 2000 SC 61 was an altogether different situation where the actions of a pursuer had prevented the court ruling on a minute to sist. There is no such situation here.
The merits of the minuter’s appeal against the refusal to sist
Submissions
[16] The minuter submitted that, the sheriff having being satisfied in respect of the minuter’s title and interest and proposed defence, he had erred in holding that there was no reason why an earlier application had not been made (OCR 13.1(4)). The terms of the rule, which provide that the sheriff had to be satisfied of that reason, required only that the sheriff was made aware of the nature of the reason. It was accepted that the decision was one for the exercise of the sheriff’s discretion. However, he had failed to take account of, or failed to give sufficient weight to, the following factors: the minuter had not received any formal service of the writ; her interests had not been prejudiced for so long as the sheriff’s decision stood; her interests would not be represented in her absence from the process; she had no right of appeal against the decision of the sheriff principal; her interests may be prejudiced for all time coming, as the proceedings may be res judicata against her; and the minuter had an interest in participating in any proof in respect of the valuation of the estate in general and her interest therein in particular.
[17] It was relevant to consider whether the court had fulfilled its obligation pars judicis to ensure that any party with an interest in an action had the opportunity to appear (Lord Blantyre v Lord Advocate (1876) 13 SLR 213). The critical error on the part of the sheriff had been his failure to decide on whether the sheriff principal’s decision would be res judicata in a competition between the defenders, as executors, and the minuter. The proceedings would not be res judicata against her since she had a different interest from that of the pursuers (cf Allen v McCombie’s Trs 1909 SC 710).
[18] If the minuter were allowed to enter the process, the procedure to follow thereon would be a matter for the sheriff’s discretion (OCR 13.2). The minuter would ultimately be entitled to appeal any final interlocutor and thereby submit all prior interlocutors to review (1907 Act, s 29). Sisting the minuter would be the most efficient procedural course to resolve all matters in a single action (Goudie v Mulholland (supra)), albeit perhaps subject to an adverse award of expenses in relation to the procedure to date.
[19] The pursuers answered that the sheriff had been correct in the exercise of his discretion not to allow the minuter to enter the process, although he had erred in considering that she had title to defend the action. The minuter had no title as a beneficiary to oppose the craves for count, reckoning and payment. She ought to have sought to enter the process as a co-pursuer or raised separate proceedings which might have been conjoined with the present action. The correct procedure was that provided by Chapter 14 of the Rules.
[20] The minuter was not entitled to rely on the other beneficiaries, or the executors, to represent her interests. Having failed to enter the process as a pursuer, the proceedings before the sheriff and sheriff principal were now res judicata against her as a beneficiary. Nevertheless, the minuter had not been entitled to service of the proceedings, as she need not have been convened as a defender. There had been no requirement for intimation to the minuter for her interest, albeit that such intimation may represent best practice.
[21] The minuter had been aware of the proceedings, which was tantamount to intimation. She had elected not to enter them. She had attended all of the interlocutory hearings, the debate before the sheriff and the appeal before the sheriff principal. She had been party to legal advice received by the defenders as executors. She was in a farming partnership with one of the defenders. As the sheriff observed, it ought to have been obvious to the minuter that there was a possibility that his judgment would be overturned on appeal and that, in any event, her interest in the estate could be affected by the outcome of the litigation.
[22] The defenders adopted a neutral approach on the merits of the appeal.
Decision
[23] The decision on whether to allow a person to sist himself as a party to an action is a discretionary one. Where the cause is at an early stage, and the minuter can show the appropriate title and interest, the normal course will be to allow the sist. That may be subject to an award of expenses, if the minuter has delayed unduly in making the application, such that the cause has to return to a procedural stage prior to that which it had already reached.
[24] The position becomes more difficult, as the rule itself envisages, once the record has closed. Again, an award of expenses may cure any prejudice caused by allowing a sist in advance of a debate or proof. However, once substantive decisions have actually been taken in foro contentioso, it will seldom be appropriate to allow a sist of a new party which returns the cause to a procedural point before such decisions could have been made. The substantive decisions do not disappear as a result of the sist of a party. They remain extant and will be res judicata as between the parties.
[25] It is not easy to see how, in terms of practicalities, the minuter could be allowed to enter the process at this late stage. If she were allowed to enter as a party minuter, she would presumably then lodge answers (OCR 13.2(1)) which averred the same or similar facts and raised identical points of law as had already been advanced by the defenders and adjudicated upon by the sheriff and sheriff principal. The cause would have to return to the stage of the Options Hearing (OCR 13.2). It would presumably be sent once more to debate (OCR 9.12(3)(c)). At that diet, the minuter would require to persuade the sheriff to reach the same decision as he had made originally (notwithstanding that of the sheriff principal). In the unlikely event that that succeeded, she would have to move the sheriff principal to reverse his own decision, were the matter to be appealed again (as would be inevitable). If unsuccessful in that seemingly impossible task, she would then be able to attempt an appeal to this court.
[26] This is all possible perhaps in abstract procedural theory. In that respect, the application is competent. It is also properly made under Chapter 13 of the rules and not Chapter 14, which deals with a different type of minute involving substantive pleadings (see Macphail (supra) para 5.58). However, given that the Sheriff Principal’s decision binds both himself and the sheriff, following the principle of stare decisis, the minuter would have to proceed laboriously through all the same procedural steps as have already passed in order to appeal substantive decisions, already taken and thus far binding on the existing parties, to this court. It will be in very rare circumstances indeed that the court would countenance such a convoluted procedural course. Accordingly, it is impossible to maintain that the sheriff erred in the exercise of his discretion to refuse to sist the minuter. In that regard, he does not appear to have failed to take into account any relevant considerations. It was the minuter who presented her case on the basis that the sheriff principal’s decision was not res judicata (see Sheriff’s Note para 2.1.3 under reference to Allen v McCombie’s Trs 1909 SC 710). There was no reason to decide otherwise when determining what was the minuter’s own application to sist set against that stated background. The sheriff’s decision was a reasonable one. It was based, in particular, on the fact that the minuter had been fully aware of the progress of the action throughout and had ample time in which to seek to sist herself as a party prior to any debate. Had it required to do so, therefore, the court would also have refused the appeal on its merits.
[27] The court has expressly made no observations on what substantive remedies may remain open to the minuter based, for example, on the fact that she never received any formal intimation of the action. In particular, it too expresses no view on whether the interlocutor of the sheriff principal is, in a technical sense, res judicata as respects the minuter’s apparently separate interest in the estate.