Diligence on the dependence under threat?

Sheriff Lindsay Foulis continues his series on civil court practice by examining issues including abandonment, leave to appeal and non harassment orders

Since the last article Hampden Park Ltd v Dow has been reported at 2002 SLT 95 and 2001 SCLR 951, Institute of Chartered Accountants of Scotland v Kay at 2001 SCLR 1086, Pagan v The Miller Group Ltd at 2002 SLT 176, Cameron v Cameron at 2002 SLT (Sh Ct) 23 and McDougall v Tawse at 2002 SLT(Sh Ct) 10.

Held as confessed

In Squire Light and Sound Ltd v Vidicom Systems Ltd 1987 SCLR 538 Sheriff Principal O’Brien decided that in situations in which one of a number of Defenders failed to lodge a notice of intention to defend, it was inappropriate to hold the non compearing Defender as confessed without granting decree. In T McGonigal and others v Taylor and another 2001 SCLR 1070 Sheriff Principal Bowen decided that it was appropriate to hold a Defender as confessed in a reparation action, in which the Defender was in default, but his former motor insurers had entered the process to protect their interests in view of their potential liability in terms of section 151 of the Road Traffic Act. In light of the fact that the insurers were potentially bound to satisfy the decree, they were entitled to be heard when decree was sought. The case would proceed to proof and in the event of liability being established decree would be granted against both Defender and Minuter. Another situation in which such an order might be pronounced would be if a third party, having been convened as a third party, failed to lodge answers, decree only falling to be pronounced once the question of the Defender’s liability to the Pursuer had been determined.

Diligence on the dependence under threat?

A very interesting and potentially far reaching decision has been made by Lord Drummond Young in Karl Construction Ltd v Palisade Properties plc 2002 GWD 7-212. The matter came before his Lordship by way of a motion to recall an inhibition served on the dependence of an action. Whilst Lord Drummond Young recalled the inhibition on the basis that the claim was contingent and there were no averments sufficient to justify inhibition on the dependence in respect of such a claim. However of much more interest was his Lordship’s decision in relation to a submission that the automatic granting of a warrant to inhibit on the dependence contravened the Defenders’ rights under article 1 of the First Protocol of the European Convention of Human Rights ( peaceful enjoyment of possessions). Lord Drummond Young examined the nature of inhibition on the dependence, the fact that recall is uncommon unless alternative security is found and rarely in considering the question of recall little regard is had to the strength of the inhibitor’s claim, and the examples of protective security in other jurisdictions. In light of this his Lordship concluded that the use of methods of protective security were incompatible with the Convention unless:

The person seeking to use protective security could establish a prima facie case on the merits of the action

That person could establish that there was a specific need for the protective security – normally significant risk of insolvency on the part of the debtor, steps being taken to dispose of or conceal assets, or significant risk of removal of assets from the jurisdiction.

These two matters required to be considered by a judge.

If the protective security is used without objective justification and in particular the person seeking to use the measure is ultimately unsuccessful, damages should be awarded in respect of any loss suffered.

In dealing with these four criteria, Lord Drummond Young indicated that to satisfy the first a similar test as applied to the grant or refusal on interim interdict was applicable. The second would cover absolute or practical insolvency. It would also be satisfied in the event of a liquid debt, a demand for payment had been made and either there was no obvious defence or the creditor was unaware of any possible defence. The fourth would result in damages even if malice was not established, as a result of the first or second tests not ultimately being satisfied. Whilst Lord Drummond Young expressly reserved his decision to inhibition on the dependence, it does seem that there is good reason to anticipate that this decision will be considered of considerable relevance to arrestment on the dependence. Should a warrant to arrest on the dependence now be automatically granted when a writ containing a pecuniary crave is presented for warranting? Will there be a number of motions enrolled to recall arrestments on the dependence? Lord Drummond Young further indicated that although the proceedings before him involved legal persons other than public authorities, the Convention had to be considered as the Court was a public authority.

Title to sue

In Hand v North of Scotland Water Authority 2002 GWD 8-270 Lord Wheatley rejected an argument that a tenant in terms of a registered lease had no title to sue as she did not have any possessory right or title to the property. The claim was in respect of water damage caused by ingress from a sewer. His Lordship decided that the Pursuer could prosecute a claim for economic loss. An interest under a registered lease was close to that of ownership.

Abandonment

Aberdeen Drilling Schools Ltd v Davis 2002 GWD 4-122 appears to be a rare example of the Pursuers abandoning at common law. In upholding the Sheriff’s decision to grant decree of dismissal with no expenses Sheriff Principal Young decided that the Pursuers could not be criticised for raising proceedings in the manner that they had done having regard to the facts at the time. The Defender had delayed prior to taking the steps which undermined the Pursuers’ claim which involved petitioning for the restoration of a company to the register. It has to be emphasised that this appears to be an unusual case. In V P Packaging Ltd v The ADF Partnership 2002 GWD 8-144 the Pursuers lodged a Minute of Abandonment in terms of Rule of Court 29.1. This rule is exactly reflected in OCR 23. The Pursuers were then found liable to the relevant Defenders in expenses with the remit to the Auditor to tax and report. The account of expenses was agreed rather than taxed and decree was granted. The expenses were then paid outwith the 28-day period. The Pursuers sought decree of dismissal, the Defenders absolvitor. Lord Wheatley refused the motion for dismissal not because the expenses were paid outwith the 28-day period following decree, which appeared to be the Defenders’ argument and would, it is suggested, have been reasonable. Rather his Lordship decided that decree of dismissal can only be granted if the precise terms of the rule of court were followed. In short as the expenses were agreed rather than taxed it was no longer possible for the Pursuers to avail themselves of the terms of Rule 29. Accordingly if Rule 23 is used to abandon, the account of expenses must be taxed as well as paid within the 28-day period.

Civil evidence – hearsay

This matter has arisen in the recent decision of Irvine v Arco Atholl Ltd 2002 GWD 8 –247. In a dispute between the Defenders and Third Party, the Defenders sought to lead hearsay evidence of a telephone conversation and a proposal form completed by the Defenders’ company secretary. It was argued inter alia that the evidence of the conversation could not be relied upon as it contravened Article 6(1) of the Convention. Lord Mackay decided that there was no fundamental objection to this evidence being led as far as the Convention was concerned. There was no requirement that all parties had to have equal access to persons whose evidence might be led in a hearsay form. In looking at whether the proceedings were fair, there had been an opportunity to take a statement from the author of the hearsay evidence. Thus the hearsay statement could have been compared and if necessary made the subject of cross examination. Further submissions could be made as to the weight to be attached to the hearsay evidence.

Leave to appeal
In Umair v Umair 2002 SLT 172 the question arose as to whether the procedure whereby the grant or refusal of leave to appeal was determined by the sheriff making the original decision contravened the European Convention of Human Rights. The Inner House refused the appeal. The Convention did not require a right to appeal. It could be expected that a judge whose decision was unable to be appealed would deal with the matter in a judicious manner. The same expectations applied when a decision could only be appealed with leave of the sheriff making the original decision. The question of leave was not a separate stage divorced from the original decision but rather was closely linked to the original decision. There was no breach of Article 6 in the same sheriff deciding both points. It further had to be remembered that the sole purpose of leave was to ensure proceedings were not delayed by unnecessary appeals. The sheriff who made the original decision was best placed to reach a decision on the application for leave. Although the hearing with regard to leave could in theory be heard by another in circumstances where expediency so dictated, such a hearing might amount to a rehearing of the arguments.

Non harassment orders
In McGuire v Kidston 2002 GWD 8-148 an appeal was taken against a decision to grant a non harassment order following proof. In allowing the appeal Sheriff Principal Nicholson agreed with the submissions made on the part of the Appellant that as a non harassment order was more serious, it should only be granted when the protection granted by an interdict was insufficient. The interim interdict had brought the Defender’s behaviour to an end. Further the terms of the order in any event could only extend to the terms of the crave – section 8(5) of the Protection from Harassment Act 1997 being unable to give a sheriff the power to grant an order even wider than what was sought.

Family actions
The question of the ascertainment of a child’s views to an order in terms of section 11 of the Children (Scotland) Act 1995 was looked at by the Inner House in Shields v Shields 2002 GWD 5-6 143. Intimation of the action to the child had been dispensed with at the commencement of proceedings due to the child’s age (71/2 years). When the judgment was issued the child was nine years old. No further attempt had been made to ascertain the wishes of the child. The Inner House decided that the Court required to consider whether it was appropriate to ascertain the child’s views at the time the order was to be made and required to consider this matter ex proprio motu if necessary. The Inner House further indicated that whether the views of a child should be sought was a question of practicality. How the views are ascertained might differ from case to case. The weight given to such views is a separate matter. This depended on the child’s age and maturity. This decision is not simply of relevance in relation to the particular circumstances of the case. It is submitted that solicitors will now have to give greater thought as to whether the dispensation of intimation to a child should be sought at the commencement of an action and also whether the views of a child should be sought by other means. This may well require to be investigated at the Child Welfare Hearing. In Cameron v Cameron 2002 SLT (Sh Ct) 23 it is also worthy to note the remarks of Sheriff Principal Nicholson as to the use of Minutes of Tender to deal with pecuniary craves in family actions. I have to say that I have always had difficulty with the concept that Minutes of Tender could be used in such actions to deal with such craves. Whilst the Sheriff Principal does not state that a Minute of Tender would never be appropriate in a family action to deal with such craves, nevertheless family actions are different to actions when pecuniary craves alone are sought. In the latter there is a single matter in issue ie. will sums require to be paid at the end of the day, in the former there are always other issues which require to be decided, even if that is only whether divorce should be granted. Sheriff Principal Nicholson indicates that this does not prevent offers to settle the financial side being made and taken into account ultimately in the determination of expenses. For what it is worth it strikes me that the Sheriff Principal’s observations relating to the appropriateness of Minutes of Tender in family actions are well founded and if offers to settle the financial issues are made these can be made in the likes of correspondence which can be founded on for the purposes of expenses at the conclusion of the litigation.

Expenses
In Robertson v Deutag Overseas (Curacao) NV 2002 GWD 6- 194 the question arose as to the criteria which apply in motions for any additional fee in terms of the general regulations of the Act of Sederunt. Sheriff Cusine awarded a 25% increase taking account of the expertise required of the Pursuer’s solicitor, notwithstanding the fact that such actions might be commonplace for a solicitor with that expertise. Other factors were the medical complexities, the number of productions, the value of the claim and the importance to the client. Could this work the other way round if the expert in a field is faced with a motion for certification of the cause as suitable for the employment of Counsel when Counsel is instructed by a general practitioner? In Guardian Investments Ltd v Iain Smith & Co 2002 GWD 8 –264 Sheriff Principal Young indicated that when the question as to whether a company should find caution for expenses is considered, the company’s ability to meet part of the expenses, and whether the company was very likely to succeed, were factors. Likewise the reasons for the financial difficulties were a factor – in this case it was alleged that the Defenders were the cause of the Pursuers’ difficulties. The order for caution did not breach Article 6 of the Convention.

As is usual it is hoped that the foregoing is of assistance for future battles!