CAPITAL DOCUMENT SOLUTIONS LTD AGAINST (FIRST) HIGHLAND COPIERS LTD AND (SECOND) MICHAEL RAE
FIRST DIVISION, INNER HOUSE, COURT OF SESSION
[2016] CSIH 88
P890/15
Lord President
Lady Clark of Calton
Lord Glennie
OPINION OF THE COURT
delivered by LORD CARLOWAY, the LORD PRESIDENT
in the petition of
CAPITAL DOCUMENT SOLUTIONS LTD
Petitioners and Respondents
against
(FIRST) HIGHLAND COPIERS LTD and (SECOND) MICHAEL RAE
Respondents and Reclaimers;
Petitioners and Respondents: J MacKenzie (sol adv); Shepherd & Wedderburn LLP
Respondents and Reclaimers: JT Young; Harper MacLeod LLP
23 November 2016
Introduction
[1] This is a reclaiming motion against a decision of the Lord Ordinary to award the expenses of a petition for interdict and an order under section 1 of the Administration of Justice (Scotland) Act 1972 to the petitioners. The short point raised is whether the Lord Ordinary erred in her discretion to include in the award the expenses of a commission and diligence.
Background
[2] The petitioners provide office equipment throughout Scotland. The second respondent was a sales executive employed by a company, which was acquired by the petitioners in 2013. He left shortly after the acquisition, and set up the first respondents, effectively as a competitor. He managed to acquire a spreadsheet detailing the petitioners’ confidential arrangements with their customers.
[3] In August 2015, the petitioners presented a petition for interdict to prevent the respondents from making use of, or disseminating, the confidential information. The petition also sought an order under section 1 of the 1972 Act for a commission and diligence to recover documents relating to the information. The section 1 order was granted without intimation. It was executed by way of a “dawn raid” on the respondents’ offices and home. Interim interdict was subsequently granted. There followed a somewhat protracted commission procedure, with several hearings over many months. The respondents unsuccessfully challenged certain aspects of the procedure, and were found liable to the petitioners for the expenses of process from October 2015 to March 2016. It was only in July 2016 that the commissioner produced his final report with associated recoveries. The petitioners then sought, and were granted, a permanent interdict against the respondents from making use of the confidential information. This application was, by then, unopposed.
[4] The respondents opposed the petitioners’ motion for the expenses primarily on the basis that those of the commission procedure, which will no doubt be considerable, should be excluded. The petitioners ought to bear the expenses for the commission, pending subsequent proceedings.
Lord Ordinary’s Reasoning
[5] The Lord Ordinary awarded the expenses to the petitioners. She reasoned that both the interdict and the commission procedure concerned the same confidential information, with the averments of wrongdoing relating to preventing use of that information. The permanent interdict had been unopposed only once the material sought by the commission had been recovered. The ordinary rule that expenses follow success applied. The costs of the commission were reasonable and necessary for the recovery of the information, and assisted in establishing the basis for the interdict. Certain English authorities (infra), which had been cited and related to third party havers, were not of assistance.
Submissions
Respondents
[6] The respondents submitted that the Lord Ordinary had erred in the exercise of her discretion. A section 1 petition was not adversarial litigation, but a pre-action application. Obtaining documents under a commission and diligence did not amount to success in the traditional sense. The general position was that the respondents, as havers, ought to be entitled to the expenses of the commission, unless there had been unreasonable resistance to recovery. The petitioners could then seek recovery of these expenses if they were successful in subsequent proceedings. A haver, whether a third party, pursuer or defender, was entitled to his expenses from the party executing the commission (Forsyth v Pringle Taylor & Lamond Lowson (1907) 14 SLT 658).
[7] The principle that the petitioners ought to bear the expenses of the commission procedure was an equitable one. The approach taken in England & Wales was that a party seeking an order for pre-action disclosure would bear the expenses of the application and subsequent procedure (see the Civil Procedure Rules 1998, r 46.1; Friston: Civil Costs: Law and Practice (2nd ed) paras 7.406 et seq; Totalise v Motley Fool [2002] 1 WLR 1233). It would only be where the respondent had clearly acted unreasonably that the general rule ought to be departed from.
[8] The inclusion of the interdict in the petition did not alter the general principle that the expenses of the commission ought to be borne by the petitioners. The Lord Ordinary had erred in treating the section 1 order as a remedy complimentary to the interdict. She had also erred in placing weight on the consideration that, if the petitioners were not awarded their expenses, they would thereby require to bring further proceedings.
Petitioners
[9] The petitioners replied that they had been successful in all aspects of the petition, and the normal rule should be applied. The petition was directed against wrongdoers. This was not a case of an innocent third party being asked to produce documents. Appeals against the discretionary award of expenses were “severely discouraged” (Maclaren: Expenses p 4). Given the broad nature of the Lord Ordinary’s discretion, she had been correct to award expenses in favour of the petitioners in circumstances where the prayer of the petition had been granted and the petitioners had thus been entirely successful. The respondents had not identified any irrelevant factors taken into account, nor any relevant factors which had not been taken into account. There was no basis to challenge the exercise of her discretion.
Decision
[10] Reclaiming motions, which solely raise an issue of expenses, are to be “severely discouraged” (Maclaren: Expenses, p 4; Caldwell v Dykes (1906) 8F 839, LP (Dunedin) at 840). An appellate court should not interfere with the exercise of a Lord Ordinary’s discretion in this area other than upon well-established grounds.
[11] The first principle, or “starting point”, in relation to expenses is that the cost of litigation falls upon the person who has caused it (Ramm v Lothian and Borders Fire Board 1994 SC 226, LJC (Ross) at 227). That usually means, in simple terms, that the award will follow success.
[12] A petition such as this, for not only a section 1 order but also interdict in respect of alleged wrongdoing on the part of respondents, as distinct from proceedings purely involving a third party haver, tend to be adversarial in character, although they will not always be so. It will be a matter for the court of first instance to determine whether the party, against whom the orders are sought, has “caused the litigation” and if so, whether there is any reason from departing from the first principle. One reason for doing so could be that the petitioners’ actions in, for example, obtaining an order for a commission and diligence without prior intimation, were unnecessary on unreasonable, having regard to prior communings and other matters. The decision will ultimately turn on questions of fact and degree.
[13] The Lord Ordinary correctly directed herself that expenses normally follow success. The petitioners were indeed successful. Despite the terms of the answers to the petition, the respondents ultimately elected not to oppose the grant of permanent interdict, but that was only following upon the recoveries in the commission process. The Lord Ordinary specifically found that the recovery of the confidential information assisted in establishing the basis for the permanent interdict. She held that the commission was thus a necessary and reasonable step in the process. There was, in her view, therefore no basis to depart from the general rule.
[14] There is no apparent error on the part of the Lord Ordinary and no basis upon which to interfere with her discretion. Although it is correct to say that the petitioners may have had grounds upon which to secure an interim interdict on the basis of the averments in the original petition and, of course, for a section 1 order, the action taken in executing the commission in advance of intimation cannot be said to have been either unnecessary or unreasonable in circumstances in which material demonstrating wrongdoing was recovered. The Lord Ordinary was then entitled to proceed to apply the first principle, to determine that the commission was a necessary and reasonable part of a litigation caused by the respondents and to find them liable to the petitioners in the expenses of process, including that commission.
[15] The reclaiming motion is accordingly refused.