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STEWART & MCISAAC v. SCOTTISH LEGAL COMPLAINTS COMMISSION


Submitted: 26 February 2014

EXTRA DIVISION, INNER HOUSE, COURT OF SESSION

[2014] CSIH 23

Lady Paton

Lady Dorrian

Lord Drummond Young

XA53/13

OPINION OF THE COURT

delivered by LADY DORRIAN

in the Appeal

by

STEWART & McISAAC

Appellants;

Against a decision of the Scottish Legal Complaints Commission

Respondents:

_______________

Act: J Brown; Balfour + Manson LLP, (for Levy & McRae, Solicitors, Glasgow)

Alt: Lindsay QC; Anderson Strathern LLP

26 February 2014

[1] This is a case in which the appellants contend that a complaint accepted as eligible by the respondents, and classified by them as one relating to inadequate legal services, was in fact time-barred. The appellants contend that the respondents erroneously interpreted the rules relating to the timeous lodging of such complaints. Rule 4(6) of the Rules of the Scottish Legal Complaints Commission 2009 ("the 2009 Rules") provides that:

"A complaint will not be accepted (unless the Commission considers that the circumstances are exceptional) if it is made more than 1 year after .......... the professional services suggested by it to have been inadequate appear to have been provided."

Rule 4(7) provides that:

"In determining whether the period of 1 year mentioned in paragraph (6) has elapsed, there is to be disregarded any time during which the complainer was, in the opinion of the Commission, excusably unaware-

(a) ...

(b) of the inadequacy of the professional services in question."

[2] In about August 2007 the appellants were engaged by the complainers to act on their behalf in the conveyancing associated with the acquisition of subjects at Ordies Farm, near Forres, purchased for development and onward sale. The complainers had previously engaged Messrs Masson Cairns, solicitors, Grantown‑on-Spey to act on their behalf in the purchase from Moray Estates Limited of certain land for the purposes of the development. At the same time Masson Cairns also acted on behalf of the firm of P&S Masson in the purchase from Moray Estates Limited of land adjacent to that being purchased by the complainers. The complainers then agreed terms with P&S Masson to purchase part of that adjacent land which that firm had recently purchased. From that stage onwards, the appellants were engaged by the complainers to act on their behalf. The appellants issued a letter of engagement dated 28 September 2007. The purchase transaction between the complainers and P&S Masson settled uneventfully in 2007. The complainers agreed with P&S Masson that the latter would be obliged to lay services to the land to the reasonable satisfaction of the complainers, upon the basis that the precise configuration would be a matter for subsequent discussion and agreement. The title obtained by the complainers imposed an obligation upon P&S Masson to that effect.

[3] Planning permission was obtained over the site, which was developed for sale as a number of serviced plots. P&S Masson laid services to the development, in a configuration agreed between the parties, all in terms of the obligation imposed upon them in the purchase transaction.

[4] In late 2009 the appellants were instructed in connection with the sale by the complainers of certain plots within the development, and issued a letter of engagement thereanent dated 11 December 2009. Having been advised by the complainers of the route of the services, the appellants drafted a deed of servitude which was agreed with P&S Masson, executed by them, and registered in January 2010. The appellants prepared a draft deed of conditions for the proposed development which was exhibited to solicitors for the prospective purchasers. Those solicitors identified that the route through which the services had been laid passed through land owned, not by P&S Masson, but by Network Rail. Although there was a servitude right of access over this land, established by prescriptive usage, there was no right to lay pipes and cables for the purpose of the development. It thus became necessary for the complainers to negotiate with Network Rail for an express grant of the necessary rights.

[5] P&S Masson commenced negotiations with Network Rail on behalf of the complainers and accepted liability for the additional cost of so doing, which involved payment of a substantial fee and reimbursement of Network Rail's expenses. During the currency of negotiations, it was agreed that the appellants should take over from P&S Masson in bringing the negotiations to a conclusion. A dispute arose between P&S Masson and the complainers as to whether P&S Masson were obliged to pay the expenses which the appellants had incurred in connection with the negotiation with Network Rail. The complainers agreed with P&S Masson that the appellants' expenses should be excluded from the settlement between them and advised the appellants of this by e mail dated 2 October 2010, in which the principal complainer wrote:

"I strongly disagree with paying these costs as we would not be in this situation if it was picked up while purchasing."

[6] During the currency of negotiations, the complainers, by letter dated 8 January 2012, intimated a complaint to the appellants, who advised that if the complaint was to be pursued they could not continue to act for the complainers. The complainers did not pursue the matter further at that stage, and instructed the appellants to complete the transaction with Network Rail. Following finalisation of the transaction, the complainers renewed their complaint, and the appellants withdrew from acting in July 2012.

[7] Offers in respect of two of the building plots had been received in late 2009, and a qualified acceptance issued in respect of the first but, because of the difficulty identified with the route of the services, that acceptance was withdrawn and no further contractual negotiations entered into with prospective purchasers, pending resolution of the problem. It appears that both prospective purchasers eventually withdrew their interest.

[8] In about August 2012 the complainers intimated a complaint to the respondents. For present purposes, the important information provided in that complaint was (a) that in September 2007 they had instructed the appellants to act in the purchase transaction; (b) that the said transaction was completed in November 2007, with registration of the property being effected in January 2008; (c) that following receipt of planning permission in November 2011, the appellants were also instructed to "act on our behalf in marketing three building plots and the existing farmhouse"; and (d) that rectification of the servitude problem was achieved only in March 2012.

[9] The respondents intimated this complaint to the appellants by letter dated 4 September 2012. This letter has not been produced to us, but it appears that in the letter the respondents asked for sight of the appellants' terms of business and to be advised of "the dates that your firm were initially instructed and ceased acting in respect of the matter". In response to that letter, the appellants advised the respondents, in a letter dated 7 September 2012, that they "were initially instructed in August 2007 and ceased acting in July 2012." They enclosed their terms of engagement, a document which on the face of it clearly related only to the purchase of ground at Ordies Farm, by Forres. No reference was made to the sale and marketing of plots for which the appellants were instructed in 2009. In their covering letter, the appellants suggested that the complaint was time barred, "nearly three years have passed since the complainers became aware of the matter referred to".

[10] The respondents replied by letter dated 14 December 2012, indicating that they had determined that the complaint was eligible and that they had classified is as a services complaint. In giving their reasons for rejecting the suggestion that the complaint was time barred, they indicated as follows:

"As this is a service complaint the relevant time limit would be whether the complaint has been submitted within one year of the date of the service ending. The firm have confirmed that they were initially instructed in August 2007 and ceased to act in respect of this matter in July 2012. The complaint form was submitted on 21 August 2012, within one year from the date the service ended and accordingly the SLCC consider that the complaint is not time barred."

The respondents' summary of the complaint was attached. In it, the complaint was described as relating to the "action and inaction" of the respondents "who were instructed in 2007 to act in relation to the purchase of the land" and the nature of the inadequate services provided by the appellants was summarised as being that the appellants had (1) failed properly to examine the title deeds of P & S Masson, and failed to identify that the section of road under the railway line belonged to Network Rail, with the result that the deed of servitude prepared by them was defective; and (2) unduly delayed the sale of the plots and farmhouse in that they failed, or at least delayed, to obtain valid servitude rights of access for services in respect of the area of the railway line.

Submissions

Appellants
[11] Counsel for the appellants submitted that the rule is clear that time ran from the provision of the services which are alleged to be defective, but the respondents' policy, in terms of which they interpret the rule, was that time ran not from the date of provision of services, as the rule says, but from the end of the engagement. In rule 4(6) conduct complaints - in respect of which time runs from the date of conduct or conviction - were dealt with in the same paragraph as services complaints, the implication being the simple interpretation that in a services complaint time ran from the date on which the allegedly inadequate services are provided. That is a particular and identifiable date.

[12] Unlike the 2009 rules which made little distinction between conduct complaints and services complaints, and provided one rule applying to them both, new rules were introduced in 2013, and rule 4(6) which now divides complaints based on conduct and complaints based on inadequate services, provides as follows:

"Subject to the provisions contained in rule 4(8):

(a) A complaint alleging professional misconduct, unsatisfactory professional conduct or a conviction, will not be accepted if, in the opinion of the Commission, it is made more than one year after the alleged occurrence of the professional misconduct, unsatisfactory professional conduct or conviction complained of.

(b) A complaint made by a client alleging inadequate professional services, i.e. where professional services have been provided by a practitioner in connection with any matter in which the practitioner has been instructed by the client, will not be accepted if, in the opinion of the Commission, the complaint is made more than one year after the date on which any services in respect of that matter were last provided to that client."

[13] The respondents could have adopted a rule in this form in 2009 but had not done so. The terms of the 2013 rule could not be a guide to the interpretation of the 2009 rule.

[14] The respondents' argument was that one must look to the whole engagement. They defined services in the widest possible terms, and were effectively saying that if part of the services supplied were inadequate that pervaded the whole of the services provided. It was accepted for the appellants that a certain degree of reality was required in identifying the nature of the professional services provided, but where those were identifiable, narrow in scope and limited, there was no justification for a wider interpretation. Even if there were an inadequacy in the way the appellants dealt with the servitude or deed of conditions, this did not infect the services which they provided thereafter.

[15] The respondents had averred that the interpretation adopted by them was consistent with (a) their policy, details of which, although not published were available on demand; and (b) the way the Law Society of Scotland had dealt with the former two year time bar which had operated when that body had responsibility for dealing with complaints against solicitors. The validity of the respondents' approach could not be tested by the former practice of the Law Society of Scotland, particularly since the extent of the respondents' jurisdiction was wider than that formerly enjoyed by the Law Society. Moreover, although it was perfectly proper for the respondents to operate a policy, that policy required to be a lawful one, in accordance with a proper interpretation of the rules, and made known to interested parties. The respondents were not entitled to adopt a policy which put an unjustifiable gloss on the rule. Solicitors could not be expected to submit representations on a policy of which they were unaware.

[16] Here there were two separate and distinct supplies of services, one in relation to the purchase of the adjacent property, and one in relation to the sale and marketing of certain plots. Once registration had been completed following the 2007 transaction the appellants' obligations to the complainers under the letter of engagement of September 2007 were concluded. That was the date from which time began to run for any complaint relating to the 2007 transaction, and the claim in this respect was time barred. Further, the services rendered by the appellants in connection with preparation of the deed of servitude in 2009, was concluded by January 2010. The e mail of 2 October 2010 indicated that the complainers had by then made a link between their difficulties and the perceived failures of the appellants. That date was the date at which, allowing generously for a period during which the complainers might have been unaware of the problem, the time referred to in the rule began to run. The complaint was thus time-barred and, in the absence of exceptional circumstances, should not have been accepted as eligible by the respondents.

Respondents
[17] The respondents contend that time did not begin to run, for the purpose of the regulations, until the last date upon which it can be demonstrated that services were rendered to the complainers. This having been in July 2012, the complaint was not time-barred. Their position was reflected in their policy on time limits which stated that the period of one year for making a complaint ran from "the date service was last provided", and in a best practice note, issued by them in terms of s40 of the Legal Profession & Legal Aid (Scotland) Act 2007, in which it is stated that "... complaints require to be made within one year of the service ending or the conduct occurring." The best practice note was issued after the complaint in the present case, but accurately reflected the policy in operation prior to that date. Their policy was in accordance with the policy adopted by the Law Society of Scotland in relation to the former limitation period of 2 years which applied when the Law Society of Scotland had responsibility for adjudicating on such complaints. There was a sound policy basis for such an approach, since clients are likely to be very unwilling to make a complaint when the solicitor client relationship was continuing.

[18] This policy, and the interpretation applied by the respondents, was entirely consistent with the terms of the rule. It was not accurate to say that the rules only made a distinction between conduct complaints and services complaints from 2013. Examination of the 2009 rule showed that the date from which time started to run for a conduct complaint was the date of occurrence of the conduct; whereas for a services complaint it was the date on which the services suggested to be inadequate were provided. That did not obviously occur on a specific date. Moreover, the term "professional services" was in the plural, indicating that the drafter of the rule did not have in mind a specific act or omission. In combination, that suggested that the running of time in respect of a services complaint did not commence merely on the occurrence of some specific inadequacy in service, but from the completion of the services. Individual tasks or activities which formed part of the provision of these professional services did not, in themselves, constitute the professional services for the purposes of rule 4(6). Rather, it was the overall provision of these services that constituted professional services for the purposes of rule 4(6).

[19] In any event, the appellants having advised them that they were initially instructed in August 2007 and ceased acting in July 2012, it was reasonable for the respondents, on the information given to them, to conclude that there had been one continuous course of instruction. There was therefore no error in law. Even if one could say that there were two separate complaints, one relating to 2007 and one relating to 2009, the complaint regarding 2009 was not restricted to the conveyancing in respect of the deed of servitude or deed of conditions, but was a complaint of continuing inadequate services, since it was claimed that this initial failure was compounded by the inordinate delay in obtaining rectification, and that these matters combined led to certain losses.

Discussion
[20] In our view, the correct interpretation of rule 4(6) is that time starts to run from the date upon which solicitors last provided services to a complainer in respect of the transaction for which they were instructed. Such an interpretation is consistent with the way in which rule 4(6) as originally drafted draws a distinction between a conduct complaint and a services complaint. We agree that not every individual task or activity carried out by a solicitor constitutes "services" for the purpose of the operation of the rule, which requires to be construed in the wider manner contended for on behalf of the respondents. Such an interpretation does no violence to the wording of the rule, yet accommodates the difficulty that clients may be unwilling to complain until the work for which the solicitor was engaged has been completed. This of course means that in every case it will be necessary to identify the nature of the services the solicitor has been engaged to carry out. In the present case, the solicitors were engaged on two separate occasions. The first, in 2007, was in relation to the purchase transaction. The second, in 2009, was in relation to the marketing and sale of certain building plots. In our view it was quite apparent from the documentation available to the respondents that this was the case. The information referred to at para 8 above, contained in the complaint, the Terms of Engagement provided by the appellants, and even the reference by the appellants to having been "initially" instructed in 2007, all pointed towards there having been two separate engagements. The commission itself, in preparing the summary of the complaint, treated it as consisting of two matters. It was argued for the respondents that the facts were not sufficiently clear for the court to reach a conclusion about the matter, yet all of this information is apparent on the face of the documentation which was available to the respondents. It is clear even from the position adopted by the complainers that the involvement of the solicitors in regard to the purchase ended at the latest by the time of registration of the deed in question, in January 2008, and that in that regard a complaint made in August 2012 was out of time, unless the complainers were able to avail themselves of the exceptional circumstances proviso contained within the rule.

[21] As to the complaint regarding 2009, the services for which the appellants were engaged was not merely the preparation of a deed of servitude or a deed of conditions; the services for which they were engaged were the wider services in connection with the marketing and sale of the building plots. We are satisfied that the complaint related in the wider sense to those services, which continued to be provided until the summer of 2012, with the result that this aspect of the claim is not time barred. In any event, the complaint in relation to the services which were commenced in 2009 related not only to the issues which arose in relation to the absence of a right of servitude over the entire route of the services, but to the consequences which flowed from this, in respect of which it is also alleged that the appellants were at fault in the length of time which was taken to achieve rectification of the problem. It is clear that the complainers are maintaining that the services continued to be defective until rectification was achieved, so even if we had found in favour of the more rigid interpretation offered for the appellants, we would still have reached the view that the claim was not time barred.

[22] Counsel for the appellant submitted that were we to reach the conclusion that the complaint regarding the services provided in 2007 appeared to be time barred, but that the complaint regarding services which were provided between 2009 and 2012 was not, we should remit the case to the respondents with a direction that only the latter claim should be allowed to proceed. However, as counsel for the respondents pointed out, the question of whether there were exceptional circumstances which might allow a complaint regarding the earlier services to proceed has not been addressed. Accordingly, we consider that it is appropriate that we remit the matter to the respondents not only for the claim regarding later services to proceed to inquiry, but for consideration of the question whether the exception provided for in rule 4(6) arises.

[23] In this connection it is instructive to examine what was the nature of the complaint as specified in the complaint form, as opposed to the summary of that complaint compiled by the respondents. If one examines the complaint form, it is rather difficult to identify either that there truly was a complaint relating to the 2007 transaction, or what the nature of such a complaint might have been. In the form the complainers wrote that the appellants were negligent in examining the title deeds of Gateside Farm, (the property owned by P & S Masson), and aver that in response to this suggestion the appellants had suggested that "the problems were caused as a result of the purchase of the original area of land at Ordies purchased from Moray Estates in 2007," in which the complainers were represented by another firm of solicitors. The complainers go on to state:

"However, we do not feel this is the case, as the original purchase did not relate to Gateside Farm or require servitudes through it. The problem causing the delay to the plot sales and subsequent losses was in Stewart and McIsaac's failure to obtain valid servitude rights of access and for services in respect of the section of road under the railway line ... it was them alone who acted in that part of the transaction".

On the face of it, this appears to be a complaint related to what happened in 2009, not 2007. It would appear from their letter of 7 September 2012 that this is how the appellants had understood the complaint form, when replying to the respondents' letter. If the complaint is to be read as a complaint relating to 2007, it is not exactly clear wherein the complaint is said to lie. It appears that as at 2007, no agreement had been reached as to the line over which the services were to be taken. It may be that it is to be maintained that any route would have to go under the railway bridge, but that is not maintained at present. In the absence of any agreed route for services, the appellants imposed an obligation upon P & S Masson that they would have the responsibility for laying the services in a configuration to be agreed between the parties and to the reasonable satisfaction of the complainers. It may well be determined on the facts that in 2009 they erred in failing to appreciate that the method by which P & S Masson were offering to complete the obligation laid upon them in 2007 was a method by which they could not fully discharge that obligation, but that again would appear to be a complaint related to services provided in 2009.