[2013] CSOH 105



in the cause







Pursuer: Mohammed; W Renfrew & Co Ltd

Defender: Walker; MacRoberts LLP (First defenders)

Defender: Walker; Simpson & Marwick (Second defenders)

21 June 2013

[1] This is an application by the pursuer to recall an interlocutor of Lord Glennie dated 29 June 2001 ordering her to find caution of £20,000 as security for the expenses of each of the defenders. It is also a continued hearing on the defenders' motion for decree of absolvitor because she had failed to find that caution. As the defenders' motion depends on the failure of the pursuer's application, I consider the latter first.

[2] It is not disputed that it is competent to recall or modify an order to find caution if there has been a material change of circumstances (Whyte v City of Perth Co‑operative Society 1932 SC 482, Lord Anderson at 484). The questions are (i) whether there is a relevant change of circumstances, and if so, (ii) whether that change justifies a recall of the order.

[3] This action arises out of a building contract between the pursuer and the first defenders for the construction of a dwelling house in Bothwell. The second defenders were architects on the project. In this action the pursuer seeks reduction of two certificates which the architects issued and also the architects' decision to award an extension of time. She seeks damages from the builders for breach of contract arising out of allegedly defective work and from the architects for alleged negligence in certifying works and in granting the extension of time.

[4] The dispute has a long history. I summarise the relevant points. In September 2007 an adjudicator made a decision in favour of the builders in an application at their instance. The pursuer sought to challenge that decision in court proceedings which were eventually dismissed by the Supreme Court for procedural default (a failure to lodge security and a statement of facts and issues) in October 2010. An adjudication which the pursuer sought to initiate in 2010 did not proceed. In October 2010 the builders served a charge on the pursuer, who unsuccessfully sought suspension and interdict. On 28 October 2010 the builders commenced sequestration proceedings against the pursuer. Those proceedings were dismissed on 18 May 2011 after the pursuer entered into an approved debt arrangement scheme. The pursuer was and remains insolvent. She defaulted on the debt arrangement scheme and the DAS payment programme was revoked in July 2012.

[5] The pursuer raised this action on 8 November 2010. It was lodged for calling on 20 December 2010 and the builders lodged defences on 23 December 2010. Initially, she sought reduction of the architects' certificates and decision but made no monetary claim against them. When she sought to amend her claim in April 2011 to seek damages from the architects as well as the builders, the second defenders took an active part in the proceedings. The first defenders enrolled a motion for caution on 2 March 2011 and the second defenders enrolled their own motion for caution on 18 May 2011. After the action had been transferred to the commercial roll on the pursuer's motion, Lord Glennie heard and granted the defenders' motions for caution on 29 June 2011. Since then the action has made no effective progress as Lord Glennie directed that there should be no procedure in the action until further order of the court.

[6] The defenders enrolled for decree of absolvitor in August 2011. The pursuer attempted to obtain "after the event" legal insurance to justify the recall of the order for caution and has also applied for legal aid. The court has prorogated the time for lodging caution on several occasions and also sisted the action between 8 December 2011 and 16 August 2012. After the recall of the sist, the pursuer sought unsuccessfully for leave to reclaim the order to find caution on 31 August 2012. The court has shown considerable indulgence to the pursuer in continuing the defenders' motions for absolvitor to see if she could obtain legal insurance or legal aid.

[7] Awards of expenses were made against the pursuer on 4 May 2011 and also on 29 June 2011, when the order for caution was made. Since then Lord Malcolm has reserved all questions of expenses on four occasions.

[8] The pursuer was not able to obtain legal insurance to cover the defenders' expenses and abandoned that attempt in December 2012. But she has obtained legal aid to pursue the action. Her lawyers were on emergency legal aid cover from 12 September 2012 and she has had a certificate of legal aid since 12 December 2012. The first defenders failed in their attempt to have the Scottish Legal Aid Board review its decision. In that representation MacRoberts stated that the "court proceedings are complex and heavily expert driven". They estimated that the pursuer's costs were likely to be in excess of £100,000 if represented only by junior counsel.

[9] Mr Mohammed presented the court with a stark choice. Because the pursuer was insolvent, the options were to recall the order for caution or to grant absolvitor. He submitted that the grant of legal aid was a material change of circumstances which justified recall. This was not because the defenders could recover their expenses from the Scottish Legal Aid Board (as the pursuer's agents had suggested when enrolling his motion). His points were (i) that the action was now supported by public funding after assessment of its merits and (ii) that the expenses which the defenders incurred until September 2012, when the pursuer gained the benefit of legal aid, would be only a small proportion of the expenses if the action proceeded to proof. The existence of legal aid was a relevant consideration in the decision whether to order caution. It required exceptional circumstances to deny a claimant access to the court even if he or she were impecunious.

[10] Mr Walker submitted that there had been no relevant change of circumstances. The pursuer was impecunious. She had defaulted on the order to provide caution. Her legal aid gave the defenders no benefit. If she lost the action, it was likely that her liability would be modified to nil and a defender had to show financial hardship in order to win an award of expenses against the Legal Aid Fund (Legal Aid (Scotland) Act 1986, ss 18 and 19). The grant of legal aid did not affect the liability of the pursuer to the defenders in respect of the period when she was not an assisted person. The defenders' solicitors estimated that the first defenders had already incurred expenses, recoverable on a party/party basis, in excess of £20,000. The second defenders had incurred expenses on a similar basis of about £17,500. The grant of legal aid was irrelevant to this liability. The court should therefore grant decree of absolvitor.

[11] I continued the application overnight to allow me to reflect on the issues and consider the history of the action which the process disclosed. I have not found this an easy application to decide. I have come to the view (i) that in the circumstances of this case the grant of legal aid is a relevant change of circumstances and (ii) that it is appropriate in the interests of justice to recall the order for caution.

[12] In coming to this view I have had regard to the following legal considerations. First, it is well-established that mere impecuniosity is not a sufficient ground for the order of caution. More is required (Will v Sneddon Campbell & Munro 1931 SC 164, Lord Justice Clerk Alness at 168). Secondly, the court may have regard to a wide variety of factors (McTear v Imperial Tobacco Ltd 1996 SC 514). Those factors include the nature of the action and the pleadings: the quality of the case that the pursuer seeks to advance is clearly relevant. Thus, if an action is without merit and is being advanced to achieve delay, an order for caution will be justified (Stevenson v Midlothian District Council 1983 SC (HL) 50). Other factors include the conduct of the pursuer, the nature of the pursuer's interest on the action, and the likely cost of the action to the defenders. It seems to me that a court may also take into account the impracticability of an impecunious person pursuing a complex and expensive case without the benefit of legal assistance. A defender may be entitled to protection against the costs of defending a claim which the pursuer is not in a position effectively to advance.

[13] Thirdly, a litigant with a stateable case should not be excluded from pursuing his claim in court by an order for caution other than in exceptional circumstances (Stevenson (above), Lord Fraser of Tullybelton at 58; McTear v Imperial Tobacco Ltd 1996 SC 514, Lord Sutherland at 519D-F).

[14] I do not know the factors which Lord Glennie had in mind when he ordered caution and I do not question the appropriateness of his order when it was made. Several factors which existed in June 2011 are still relevant. The pursuer is impecunious; her case is complex and will involve both parties in significant expense if fought to a legal determination; and much time and money have already been spent on legal challenges associated with the building dispute. What differs from the circumstances which existed when the order was made in June 2011 is that the pursuer now has legal aid to present her case in a reasonably coherent and efficient manner. Until legal aid became available she did not have the means to fund the dispute. In my view that by itself is a material change of circumstances which opens the matter up for reconsideration.

[15] On considering the matters afresh I have regard to the legal considerations set out in paragraphs [12] and [13] above. Justice requires fairness to both parties. I accept that the grant of legal aid does nothing to make it more likely that the defenders will be able to recover anything of their expenses if they succeed in their defence. While the order of caution provides protection only in relation to future expenses (Douglas v McKinley (1902) 5 F 260), it is likely that a significant proportion of the expense to which Mr Walker referred would have been incurred since March 2011, when the first defenders' motion was enrolled. On the other hand, I am not persuaded that there are now exceptional circumstances which justify the order for caution. It is not possible for the court to take a view on the merits of the claim and the defence which are "expert driven". Legal aid will allow the pursuer to advance her case. The action forms part of a wider building dispute. The builders obtained an interim decision from the adjudicator and have sought, as was their right, to use that decision to sequestrate the pursuer's estates. This is one of those cases where there is a real risk that an interim decision in an adjudication can become a final determination because it precipitates insolvency. In my opinion, justice between the parties points towards the recall of the order.

[16] I therefore grant the motion for recall and refuse the defenders' motion for absolvitor. I wish to point out that the pursuer cannot expect that the court in managing the progress of the action will show her the indulgence which she has been shown in the past. Her advisers will be expected to come forward with proposals to conduct the litigation in an efficient and cost‑effective manner, such as, where appropriate, the remit of disputed matters of fact to a man of skill, and the court will be astute to prevent unnecessary expense.