RECLAIMING MOTION BY TODS MURRAY, W.S. AGAINST ARAKIN LIMITED (ANDREW MCNAMARA, ASSIGNEE)
| EXTRA DIVISION, INNER HOUSE, COURT OF SESSION |
| | [2014] CSIH 67 |
Lord Brodie Lord Bracadale Lord Philip | XA59/01 OPINION OF THE COURT delivered by LORD BRODIE in the reclaiming motion by TODS MURRAY WS Pursuers; against ARAKIN LIMITED (Andrew McNamara, Assignee) Defenders: _______________ |
Pursuers: Duncan, QC, E Campbell; Simpson & Marwick, WS
Defenders: Party
16 July 2014
Introduction
[1] The pursuers in this action are a firm of solicitors. They sue for the balance of fees and outlays they claim are due to them in respect of professional services rendered by them to Arakin Limited ("Arakin"). The work in question related to three matters. The first, an arbitration between Arakin and the City of Glasgow District Council. Secondly, a litigation in Glasgow Sheriff Court between Arakin and its former accountants, MacLachlan & Brown. Third, a dispute between Arakin and Harvie Construction Limited.
[2] The action is defended by Andrew McNamara ("the defender") who, together with Mr Martin Frost, was sisted as defender in place of Arakin on consignation of the sum of £100,000 "to await further orders of the court" in terms of interlocutor of 29 May 2001. The defender's title and interest is constituted by Assignation by Arakin in his and Mr Frost's favour dated 6 April 2000 and an assignation in his favour by Mr Frost in December 2008.
[3] On 14 February 2012, following proof, the Lord Ordinary (Lord Woolman) pronounced decree against the defender for payment of the sum of £86,376.40. The Lord Ordinary reserved all questions of interest and expenses. The defender reclaimed the Lord Ordinary's interlocutor of 14 February 2012. That reclaiming motion was refused on 14 November 2012. The court remitted to the Lord Ordinary to proceed as accords.
[4] In the course of procedure which is narrated by the Lord Ordinary in his opinion of 29 July 2013, the pursuers enrolled a motion, on 18 March 2013 to uplift the sum of £100,000 consigned by the defender in terms of interlocutor of 29 May 2001, and on 26 June 2013 enrolled a motion seeking (a) interest on the principal sum of £86,376.40, (b) expenses on a solicitor and client basis, (c) interim payment of £250,000 towards expenses, (d) an additional fee, and (e) certification of Mr Alex Quinn as a skilled witness. The pursuers lodged a note of argument in support of their motions. On 15 April 2013 the defender enrolled a motion to recover from the pursuers (a) all costs with interest, (b) the sums of £103,000 and £1,586, and (c) interest on £275,000. The defender also sought return to him of the consigned sum with interest. He lodged a note of argument in support of his position. The defender subsequently enclosed further notes of argument under cover of letters dated 21 May, 3 June and 26 June 2013. The note of argument sent under cover of letter dated 3 June 2013 suggested a conflict of interest on the part of the Lord Ordinary on the basis that he had, as counsel, briefly and formally acted for the pursuers in this action at a hearing in November 2002 (as was explained by the Lord Ordinary in his opinion of 29 July 2013 that fact had been disclosed to parties on 13 March 2009 and parties had expressly stated that they took no exception to his dealing with the proof).
[5] The respective motions of the pursuers and the defenders called before the Lord Ordinary on 29 July 2013. The defender did not appear, nor was he represented at that hearing. For the reasons he gives at paragraph 24 of his opinion of 29 July 2013 the Lord Ordinary decided to proceed in the absence of the defender, having regard to the material in the notes of argument which had been sent to the court.
[6] On 29 July 2013 the Lord Ordinary pronounced the following interlocutor:
"The Lord Ordinary, having heard senior counsel for the pursuer on the motion roll, and having considered the written submissions of parties, there being no appearance by the defender:
(1) refuses the defender's motion that the presiding Lord Ordinary recuse himself;
(2) decerns against the defender for payment to the pursuer of the sum of THIRTY ONE THOUSAND FOUR HUNDRED AND THIRTY SEVEN POUNDS AND THIRTY SIX PENCE (£31,437.46) STERLING, being the interest payable on the principal sum previously decerned for in favour of the pursuer by interlocutor dated 14 February 2012;
(3) finds the defender liable to the pursuer in the expenses of process, except insofar as already dealt with, on an agent and client, client paying basis; remits the account of expenses when lodged to the Auditor of Court to tax;
(4) allows to the pursuer an additional fee under heads (a), (b), (c) and (e) of Rule of Court 42.14(3); refuses to allow to the pursuer an additional fee under head (f) of Rule of Court 42.14(3);
(5) certifies Alexander Quinn, Law Accountant, as a skilled witness for the pursuer;
(6) decerns against the defender for payment to the pursuer of interim expenses in the sum of ONE HUNDRED AND FIFTY THOUSAND POUNDS (£150,000) STERLING;
(7) grants warrant to the Accountant of Court to pay to the pursuer the sum of ONE HUNDRED AND SEVENTEEN THOUSAND EIGHT HUNDRED AND THIRTEEN POUNDS AND SEVENTY SIX PENCE (£117,813.76) STERLING, being the total of the principal sum and interest thereon awarded in favour of the pursuer by interlocutors dated 14 February 2012 and today's date respectively; grants authority to the Accountant of Court on production of a certified copy of this interlocutor to uplift the sum of ONE HUNDRED THOUSAND POUNDS (£100,000) STERLING , being the sum consigned by the Accountant of Court by the party minuters, Mr Andrew McNamara and Mr Martin Frost, following upon the interlocutor of the Court dated 29 May 2001, together with interest accrued thereon, up to, but not exceeding, the said sum of £117,813.76, lodged in the Special Deposit Account no. 00263417 with The Royal Bank of Scotland, North Bridge Branch, Edinburgh;
(8) refuses the defender's motion enrolled on 15 April 2013".
[7] The defender has reclaimed against this interlocutor.
Procedural History
[8] Before going further, it is convenient to say a little about the long procedural history of this action. The summons was signetted on 27 May 1996. The sum concluded for was £32,696.75. As is recorded by Lord Mackay of Drumadoon at paragraph 4 of his opinion of 28 April 2006 following a hearing on Notes of Objection to accounts of expenses, although the summons did not state this explicitly, the sum initially sued for related to what was claimed as the balance of fees and outlays due in respect of professional services provided to Arakin in connection with the litigation between Arakin and MacLachlan & Brown in Glasgow Sheriff Court. On 4 September 1996, the sum sued for was amended to £41,767.38. On 19 December 1996 the pursuers were again allowed to amend the summons by adding a second conclusion for payment of the sum of £204,594.13. That conclusion related to a separate claim for fees and outlays in respect of professional services which the pursuers had provided to Arakin in connection with an arbitration between Arakin and the City of Glasgow District Council. Accordingly, when the closed record was lodged on 11 May 1999 the sums concluded for were, respectively, £41,767.38 and £204,594.13. In the closed record, as amended, of July 2011 there is a single conclusion for payment in the sum of £86,376.40. We are advised that that figure was introduced by amendment in October 2009, albeit that at paragraph 1 of the opinion of the Lord Ordinary dated 9 July 2010, following on procedure roll debate, Lord Woolman records the sum then sued for as £87,831.11. The apparent discrepancy between these latter two figures is not of consequence. Of more importance, at least from the perspective of the defender, who emphasised the fact on a number of occasions during the hearing before us, is that for much of the history of the case the total sum sued for by the pursuers has been £246,361.51 (£41,767.38 plus £204,594.13). Against that, as is explained at paragraphs 8 to 10 of Lord Mackay's opinion of 28 April 2006, the pursuers had explained to the court, and to Arakin's law accountant (in a letter dated 1 August 1997), that the sum sued for overstated what the pursuers actually claimed was due to them. As is recorded in paragraph 10 of Lord Mackay's opinion, what the pursuers maintained was due was (a) £32,696.75 in respect of the MacLachlan & Brown case, (b) £9,070.63 in respect of the Harvie Construction Limited action and (c) £62,860.77 in respect of the arbitration involving the City of Glasgow District Council.
[9] The defender lodged a counterclaim seeking, in total, payment of the sum of £62,519,141.00. The Lord Ordinary summarises the basis of the counterclaim at paragraph 68 to 86 of his opinion of 9 July 2010. It proceeded upon allegations of professional misconduct and dishonesty on the part of partners of the pursuers and those instructed by them in connection with the present action. At paragraph 86 of his opinion the Lord Ordinary characterises the allegations as among the most serious that could be made. For the reasons given in his opinion of 9 July 2010, the Lord Ordinary found the counterclaim to be fundamentally irrelevant and lacking in specification. He dismissed it on that basis, as well as it being an abuse of process.
[10] The defender reclaimed against the interlocutor of the Lord Ordinary of 9 July 2010. His motion for review of that interlocutor was refused by the court after a hearing on the Single Bills on 3 March 2011.
Grounds of appeal
[11] The grounds of appeal for the defender and reclaimer are no. 467 of process. There are seven grounds, each of which proceeds on the narrative that the Lord Ordinary failed to address or adjudicate on a matter referred to in the defender's motion of 15 April 2013. In summary the grounds are as follows.
Ground 1
The pursuers sued for sums that were not due. The Lord Ordinary erred, having been persuaded that the sum sued for was £86,376.00 whereas it was in fact £246,289.00.
Ground 2
The Lord Ordinary erred in awarding the pursuers' expenses on an agent and client basis in circumstances where the pursuers and their agents were guilty of misconduct and the Lord Ordinary had erred in concluding that the sum was due by the defender to the pursuers in respect of fees and outlays, whereas in fact the pursuers were Arakin's debtors.
Ground 3
The Lord Ordinary had awarded fees in respect of work done by Mr Robert Dobbie, a partner of the pursuers notwithstanding the fact that he had raised the present action in circumstances where Arakin had overpaid the pursuers and consequently was the pursuers' creditor.
Ground 4
The Lord Ordinary had certified Alexander Quinn, law accountant, as a skilled witness notwithstanding the fact that Mr Quinn had not been informed by the pursuers of facts which were material to the calculation of the fees to which the pursuers were entitled.
Ground 5
The Lord Ordinary had erred in failing to find the pursuers personally barred from seeking payment of fees, having regard to the terms of the letter written by their partner, Mr Michael Simpson, on 7 July 1994.
Ground 6
The Lord Ordinary erred in failing to have regard to the rule of law that solicitors are prohibited from suing a client in respect of the fees, until the account of fees has been taxed.
Ground 7
The Lord Ordinary failed to apply the rule, stated in Wilson On Debt (2nd edition) at paragraph 11.1 that when a debt of money is demanded and the defender is not first told how much was asked of him, and it is to be paid, that a summons is raised at once, and the pursuer then asks expenses, it is the defender who is entitled to expenses not the pursuer.
Submissions
Submissions for defender and reclaimer
[12] The defender represented himself. He was assisted by his wife, Mrs Janette McNamara, who had been granted permission by interlocutor of 8 April 2014, to act as his lay representative in terms of Rule of Court 12.B.1. The defender and Mrs McNamara alternated in making submissions to the court. In addition, the defender provided the court with a number of documents setting out his arguments. These were: Note of Argument for Defender and Reclaimer (No. 470 of process); Addendum Note of Argument on behalf of defender (No. 474 of process); Defender's Authorities for Appeal (No. 476 of process); Reading List 1 for Glasgow District Council dispute (No. 477 of process); Reading List 2, MacLachlan & Brown account (No. 478 of process); Reading List 3 (No. 480 of process); Reading List 4 (No. 481 of process); Statements by Mr Duncan closing submissions for proof (No. 482 of process); and Defender's response to pursuers' authorities (No. 485 of process).
[13] There is a substantial degree of repetition as among the various documents. Similarly, in the course of oral submission, the defender and Mrs McNamara reiterated their points. In response to an observation by the court that the issue in this reclaiming motion was whether or not the Lord Ordinary's interlocutor of 29 July 2013 was well founded rather than whether or not his interlocutor of 14 February 2012 was well founded, the defender explained that the focus of his argument was on paragraphs 56 and 57 in the Lord Ordinary's opinion of 29 July 2013. In these paragraphs the Lord Ordinary states that he found difficulty in understanding the basis upon which, in his motion enrolled on 15 April 2013, the defender sought recovery of the sums of £103,000 and £1,547 and interest on the sum of £275,000. As appears from the passage quoted by the Lord Ordinary at paragraph 56 from the reasons for motion which had been lodged by the defender, the position that the defender was advancing in support of his motion of 15 April 2013 was that he was entitled to the sums of £103,000 and £1,547 because these were sums which he alleged had been due by the pursuers to Arakin. Interest was sought on the sum of £275,000 because a guarantee in that sum had been required from Arakin in order to have arrestments released.
[14] That the defender saw paragraphs 56 and 57 of the Lord Ordinary's opinion of 29 July 2013 as the route by which he could attack the interlocutor of 14 February 2012 was confirmed by the terms of his oral submissions. He emphasised that Arakin had been sued for some £246,000 and not the £86,376.40 referred to by the Lord Ordinary. Even if the Lord Ordinary had been correct in concluding that the pursuers were entitled to payment of £86,376.40 that was very much less than they had sued for. However, Lord Woolman's decision of 14 February 2012 was "unsafe". It failed to take into account of "judicial admissions" made by senior counsel acting for the pursuers. The pursuers had raised their action before their account had been taxed and they had demanded the sum of £75,000 on account of fees without having rendered invoices. The sum of £1.04 million had been arrested in security of the summons for payment of £32,696.75. A guarantee had then been demanded for release of the arrestment. The solicitors acting for the pursuers in this litigation had failed to advise senior counsel then instructed of a payment by Arakin of £70,000. That senior counsel had acknowledged that only a relatively small sum was outstanding. When the pursuers' ledgers were provided they demonstrated that the pursuers were the debtor of Arakin in the sum of £1,546.82. When the pursuers' accounts were subjected to taxation abatements amounting to some £80,000 had been made by the Auditor. The defender was not only dissatisfied with Lord Woolman's decision as expressed in his opinion of 14 February 2012 but he was "highly critical" of the opinion of the court dated 14 November 2012, refusing the reclaiming motion against Lord Woolman's interlocutor.
[15] When the court put it to the defender that the thrust of his submissions appeared to be that he wished to overturn the decision of the Lord Ordinary as expressed in his interlocutor of 14 February 2012, something which was not the subject of this reclaiming motion, the defender responded by saying he was not asking to overturn anything; rather he was simply looking for the application of commonsense to a question of expenses. However, towards the end of his submissions, returning to the claims for payment of £103,000 and £1,546, he referred to the Lord Ordinary's expression of difficulty in understanding the basis for these claims and said: "We are talking about off-set".
Submissions for the pursuers and respondents
[16] Mr Duncan QC and Mr Ewen Campbell appeared on behalf of the pursuers and respondents.
[17] Mr Duncan referred to and adopted his note of argument (No.473 of process). Prior to turning to the grounds of appeal, Mr Duncan advanced four submissions. First, insofar as the reclaiming motion sought to challenge an award of expenses, this being a matter for the exercise of the Lord Ordinary's discretion, the test for challenging the exercise of a discretion, as set out by Lord Reid in Thomson v Glasgow Corporation 1962 SC (HL) 36 at 66 had to be met. The arguments advanced by the defender made no attempt to engage with that well understood principle. Second, a large part of what had been advanced by the defender was no more than a rehearsal of arguments previously made before the Lord Ordinary at the Procedure Roll debate and at proof. This was particularly the case with the contention that the true position had been that the pursuers were Arakin's debtors. That matter had been decisively resolved at proof against the defender and in favour of the pursuers as reflected by the Lord Ordinary's interlocutor of 14 February 2012. The reclaiming motion against the Lord Ordinary's decision had been refused. The observation made in the opinion of the court delivered by Lord Menzies dated 14 November 2012, at paragraph 18, was apposite. As Lord Menzies had observed, throughout the course of what had been a protracted litigation, the defender had sought to revisit arguments and allegations which had not found favour with the court on previous occasions. The defender had done exactly that once again before this court. Third, Mr Duncan submitted that the central feature of the defender's argument amounted to allegations of fraud and abuse of process on the part of the pursuers and those who had acted for them which had been determined to be entirely unfounded on a number of previous occasions. Fourth, it seemed to be suggested by the defender that because for a substantial period of time the pursuers, at least in a formal sense, were suing for a sum greater than that which was eventually awarded after proof, the pursuers should not be entitled to expenses. That was not the practice of the court. If a defender accepts that he is liable to make payment to a pursuer but in a sum less than is being claimed, it is open to him to make a formal tender in the sum that he considers to be due. This did not occur in this case. The suggestion that the defender had somehow been locked into a litigation against his will was simply absurd. He had lodged a counterclaim in the sum of £62,000,000 which was eventually dismissed. He had engaged in unnecessary procedure, for example, the proof into an allegation of tampering with documents lodged in process which was heard by Lady Smith and is the subject of her opinion of 31 October 2003.
[18] In Mr Duncan's submission there was no basis whatsoever for any of the grounds of appeal. As far as ground 1 was concerned, the Lord Ordinary had dealt with the matters raised by the defender's motion enrolled on 15 April 2013. There was no significance in the supposed discrepancy between £86,376.00 and £246,289.00 as the sum sued for. In any event it was the smaller sum which had been sued for since October 2009. As far as ground 2 was concerned, this was no more than a repeated rehearsal of scurrilous allegations which the court had rejected as unfounded. Again, ground 3 was a repetition of allegations which had been dealt with at proof. Ground 4 did not constitute a coherent attack on the decision to certify Mr Quinn as a skilled witness which is recorded in paragraph 45 of the Lord Ordinary's opinion of 29 July 2013, and is explained at paragraphs 6 to 11 of his opinion of 14 February 2012. The plea of personal bar, which is raised in ground 5, had not previously been founded upon. Grounds 6 and 7 were again a repetition of arguments which had failed at proof, based as they were on a misapprehension as to what were the relevant rules of law.
Discussion
[19] It is necessary to reiterate the point which is put by the court to the defender at the very beginning of the Summar Roll hearing: it is the Lord Ordinary's interlocutor of 29 July 2013 and not his interlocutor of 14 February 2012 which is the subject of review in this reclaiming motion. Leaving aside what the Lord Ordinary construed, entirely understandably, as an application that he should recuse himself (a matter which was not touched on before us), the various motions which the Lord Ordinary had to consider and did consider on 29 July 2013 were dependent on the issues that he had determined, following proof, in terms of his opinion of 14 February 2012. That does not mean that in reviewing the interlocutor of 29 July 2013 it is open to this court to review once again (for the court has already refused a reclaiming motion on this matter) the interlocutor of 14 February 2012. As was made very clear to us by the defender, he does not consider that the pursuers were entitled to raise an action against Arakin in May 1996 or that they had a basis for the subsequent amendment of the sums sued for or that they were entitled to use diligence on the dependence; according to the defender the pursuers were Arakin's debtors rather than the position being the reverse. However, these were issues for proof and they have been determined at proof in favour of the pursuers and against the defender. They cannot now be reopened. That is so in respect of the defender's assertion that Arakin was entitled to repayment of the sums of £103,000 and £1,546 as it is with all other assertions as to the state of accounts between the pursuers and Arakin which were repeated by the defender in the course of his written and oral submissions in support of this reclaiming motion. The Lord Ordinary states, at paragraph 56 of his opinion of 29 July 2013, that he finds it difficult to understand any basis for these claims. That does not amount to an admission that they are good claims which the Lord Ordinary had left out of account, rather the reverse. However, the short point is that what was decided by the Lord Ordinary on 14 February 2012 must be taken to have been correctly decided. This court has already confirmed that by its interlocutor of 14 November 2012.
[20] Given that the pursuers had succeeded in obtaining payment of the sum awarded on 14 February 2012, after a litigation which has been protracted by the conduct described in the opinions of the Lord Ordinary, it was open to him, as a matter of discretion, to grant each of the motions enrolled by the pursuers on 26 June 2013. As Mr Duncan submitted, nothing was put forward by the defender which would suggest that it is open to us to interfere with the Lord Ordinary's exercise of his discretion in these matters.
[21] Something to which the defender clearly attaches importance is the fact that for much of the history of the litigation the pursuers' pleadings indicated that they were suing for sums totalling in excess of £246,000 whereas in October 2009 they amended to insert a single conclusion in a sum which appears in the closed record as £86,376.40. That is the sum eventually awarded by the Lord Ordinary. That the pursuers were for a time suing for more than they were finally awarded is not a matter of any consequence. As Mr Duncan submitted, it is always open to a defender to lodge a formal tender in such sum as he considers he is properly due to make payment. If, in the face of such a tender, a pursuer continues with his action, claiming a higher sum, but fails to obtain an award from the court which is in excess of the sum tendered, then the usual consequence will be that the pursuer must pay the defender's expenses from the date of tender. A defender is thus able to protect himself against extravagant claims. In this case there was no tender. Moreover, it would appear from the opinion of Lord Mackay that whatever might appear from the pursuers' pleadings, it had been made clear to the court and to Arakin's law accountant that it was a lesser sum that the pursuers claimed was due. While it is true that that lesser sum was in excess of the £86,376.40 finally awarded, what is recorded by Lord Mackay indicates that the pursuers were not proceeding on the basis that the sum sued for was an exact statement of their claim.
[22] As far as the motion enrolled by the defender on 15 April 2013 is concerned, having regard to the Lord Ordinary's decision on 14 February 2012, there is simply no basis whatsoever for any part of that motion being granted.
[23] On 29 July 2013 the Lord Ordinary also dealt with the applications, on the one hand by the pursuers, and, on the other, by the defender to uplift the sum of £100,000 consigned in terms of the interlocutor of Lord Mackay of Drumadoon dated 29 May 2001. At paragraphs 51 and 52 of his opinion of 29 July 2013 the Lord Ordinary explains the basis upon which he authorised the pursuers to uplift the consigned monies. The purpose of consignation was to provide the pursuers with some security as against the financial consequences of the defender and Mr Frost becoming parties to the action. There very clearly have been consequences. As Macphail, Sheriff Court Practice (3rd edition), paragraph 11.48 states:- "If the defender succeeds, he will get [the consigned sum] back, if he fails, the other party will be entitled to it". Here the defender has failed. The Lord Ordinary correctly ordered that the consigned sum could be uplifted by the pursuers.
[24] We shall accordingly refuse the reclaiming motion and adhere to the Lord Ordinary's interlocutor. We reserve all questions of expenses.