Decision of the Scottish Land Court

John Macaulay (Applicant) v Mrs Mary Ann Morrison (Respondent) and Mark Tayburn (Interested Party)

Case reference SLC 119/15
before
Iain F Maclean, Deputy Chairman, and John A Smith
21 June 2017

Introduction

[1] In our Order dated 13 March 2017, having heard the parties in debate, we sustained the Interested Party’s preliminary plea and dismissed, for want of interest, the Applicant’s application (RN SLC/119/15) for an order under section 14(4) of the Crofting Reform (Scotland) Act 2010 (“the 2010 Act”) modifying the entry in the Crofting Register relating to croft 1A Tolsta Chaolais. We did not, at that stage, dispose of the question of liability for expenses.

The expenses motions

[2] After the issue of our Order and Note dated 13 March 2017 containing our decision on the substantive issue of whether the Applicant had set out in his pleadings a sufficient interest to challenge the registration of croft 1A Tolsta Chaolais in the Crofting Register, we received, on 20 and 22 March 2017 respectively, motions and submissions on expenses from the Respondent and from the Interested Party. Both moved for the Applicant to be found liable to them in the expenses of the application. The Applicant wrote to the Court on 28 March 2017 enclosing a motion that “consideration of expenses be adjourned until the matter of any further proceedings in terms of section 1(7) of the Scottish Land Court Act 1993 [“the 1993 Act”] has been determined.”

The requisition for a special case

[3] The Applicant subsequently notified the Principal Clerk in writing, in conformity with rule 83(1) of the Rules of the Scottish Land Court 2014 (“the 2014 Rules”), that he was requiring that a special case be stated on questions of law arising in those proceedings for the opinion of the Inner House of the Court of Session, as provided for in section 1(7) of the 1993 Act.

[4] The Applicant’s notification under rule 83(1) was accompanied by a draft statement of case, as is required by rule 84(1) of the 2014 Rules. Rule 84(2) of the 2014 Rules stipulates that:

“The draft statement of case must specify –

(a) the decision to which it relates;

(b) whether that decision adequately sets out the facts necessary for the determination of the proposed question of law and, if it does not, any findings which the court is asked to make (being findings necessary for such determination);

(c) in what respect the decision is erroneous in law;

(d) the question of law proposed to be submitted to the Court of Session;

(e) what interim orders are requested to sist procedure or otherwise to regulate the affairs of parties pending determination of the special case.”

[5] Rule 84(3) of the 2014 Rules provides that on receipt of a notification under rule 83(1) and a draft statement of case under rule 84(1), the Principal Clerk is to send a copy of the notification and the draft statement of case to each of the other parties. Rule 85 of the 2014 Rules provides that:

“A party may, within 3 weeks after receiving intimation of a requisition for a special case and draft statement lodged in terms of rule 84, lodge with the Principal Clerk a note –

(a) of any alterations which the party proposes should be made to the draft statement of case;

(b) of the party’s observations on anything specified in the draft under paragraph (2)(b) of rule 84;

(c) specifying any question of law not included in the draft but which the party considers it appropriate to submit to the Court of Session;

(d) stating whether, and if so in what respect, the party considers the decision to be erroneous in law; and

(e) stating what interim orders (if any) should be made to sist procedure or otherwise to regulate the affairs of parties pending determination of the special case.”

[6] Both the Respondent and the Interested Party have availed themselves of the opportunity to lodge notes in terms of rule 85, and thus we have reached the stage in the procedure at which, in terms of rule 86 (Finalisation of special case) it is for the Court to settle the terms of the special case, subject to giving such opportunity for further comment and adjustment by the party giving notification under rule 83 as it thinks fit. Before we settle the terms of the special case, however, there are preliminary matters, arising out of the contents of the notes lodged by the Respondent and the Interested Party under rule 85, that we shall require to address, in addition to the outstanding expenses motions.

The Respondent’s continued involvement in these proceedings

[7] The first of those preliminary matters concerns the continued involvement of the Respondent in these proceedings. The present application was one of two challenges to the first registration of croft 1A Tolsta Chaolais in the Crofting Register received by us, the other being Application RN SLC/127/15 at the instance of Mrs Mary A. Taylor and Mrs Ena Jess, to which the Respondent and the Interested Party were also parties. Although not formally conjoined, the two applications were heard together at debate, after which we issued separate Orders dated 13 March 2017 dismissing them for the reasons given in an appended Note common to both Orders. Mrs Taylor and Mrs Jess did not invoke their right to request us to state a special case for the opinion of the Inner House of the Court of Session on any question of law arising out of our decision to dismiss their application, and so we were in a position to entertain parties’ motions for expenses in Application RN SLC/127/15. In our Order dated 31 May 2017 addressing liability for expenses, we explained how, in the course of the debate, an issue had arisen as to whether the Respondent retained any interest to oppose the two applications. We had not required to reach a concluded view on that issue at that stage, it being enough for the disposal of the two applications that we sustained the preliminary pleas for the Interested Party in each case, which we did in our Orders dated 13 March 2017, but when the Respondent moved for an award of expenses against Mrs Taylor and Mrs Jess, it became necessary for us to revisit it.

[8] When Application RN SLC/119/15 and Application RN SLC/127/15 were commenced, respectively on 3 and 16 December 2015, Mrs Mary Ann Morrison was called as the Respondent in both applications, and by dint thereof she unquestionably had title to defend the challenges to first registration of croft 1A Tolsta Chaolais, of which she was then the tenant. By letter dated 30 April 2016, the Respondent’s representative, her brother Mr Kenneth J. MacLennan, advised the Court that the croft had been assigned to a Frances Muriel Berrill on 29 February 2016. The Court on 4 May 2016 wrote to Ms Berrill’s solicitors to afford her the opportunity to enter the process, given her interest in the matter. As at the date upon which the Court wrote to Ms Berrill’s solicitors, the Respondent was still shown as tenant of croft 1A Tolsta Chaolais on the Crofting Register, but by the date of her solicitors’ reply to the Court on 19 May 2016, Ms Berrill’s name had been entered as tenant. Her solicitors confirmed to the Court that their client did not wish to enter the process as a party.

[9] In a letter to the Court dated 1 April 2017, the Interested Party stated, in support of his expenses motion in Application RN SLC/127/15, that “Both I and Mrs Morrison have been entirely successful in vindicating our rights”, but that statement begged the question what rights the latter had to vindicate. She had ceased to be the tenant of croft 1A Tolsta Chaolais months before. Ms Berrill might have substituted herself as a party in place of the Respondent (cf. rule 10(d)(i) of the 2014 Rules) but she chose not to do so. The only arguments advanced on behalf of the Respondent for her continued involvement in the proceedings was that she was under obligation to Ms Berrill in terms of the parties’ bargain to ensure vacant possession of the whole subjects assigned to her and having also been a party to an agreement between the tenants of crofts 1A, 1B and 1C Tolsta Chaolais as to the respective boundaries of their crofts, upon the basis of which she had proceeded to apply for first registration of croft 1A Tolsta Chaolais, she felt bound by good faith to defend it when it was challenged. We did not, and do not, consider either of these arguments to be well founded as a matter of law. The Respondent’s dealings with Ms Berrill are, in our view, res inter alios acta aliis non nocet (the principle enshrined in that Latin brocard being that things done between two parties generally are considered to be irrelevant in a question involving different or other parties). We expressed the view, in the Note which accompanied our Order dated 31 May 2017 in Application RN SLC/127/15, that after she assigned in favour of Ms Berrill, the Respondent no longer retained any interest to continue to defend that application. We considered it to be axiomatic that if the Respondent had no interest to defend those proceedings, then Mrs Taylor and Mrs Jess could not be held liable to her for any expenses she may have incurred by so doing.

[10] We went on to observe that even if we were wrong about that, we would not have been minded to make any award of expenses in favour of the Respondent, on the basis that from the point at which the Interested Party, who had not been called as a respondent, entered the process on 6 October 2016 to argue the case of the crofters who had agreed the boundaries of croft 1A Tolsta Chaolais for the purpose of first registration, the continued involvement of the Respondent, who had no separate interest to defend, was rendered quite superfluous. That involvement in substantial part had simply duplicated the efforts of the Interested Party and served no useful purpose. Accordingly, in our Order dated 31 May 2017, we found no expenses due to or by either party as between Mrs Taylor and Mrs Jess and the Respondent.

[11] By the same process of logic which underpinned our disposal of the Respondent’s motion for expenses in Application RN SLC/127/15, we have concluded that the Respondent cannot, in any real sense, be considered still to be a party to these proceedings, and as such entitled to lodge a rule 85 note in response to the Applicant’s draft statement of case. In dismissing Application RN SLC/119/15 and Application RN SLC/127/15, we did not, in terms, sustain the preliminary plea tabled on her behalf. The Respondent’s rule 85 note, in any event, once again adds nothing to what is set out in the rule 85 note for the Interested Party, and indeed its only substantive content repeats word for word the corresponding part of the latter document. We have, accordingly, declined to receive the rule 85 note for the Respondent, but given the coincidence in its terms with those of the rule 85 note for the Interested Party, this will not affect the substance or scope of the special case.

Response of the Interested Party and the Respondent to the Applicant’s expenses motion

[12] The response of the Interested Party to the Applicant’s motion for consideration of expenses to be adjourned “until the matter of any further proceedings in terms of section 1(7) of the [1993 Act] has been determined” was set out in a letter to the Court dated 1 April 2017, in which it was contended that it was:

“entirely otiose. If a party requisitions a special case, that would have the effect of sisting any undetermined motions, including motions on expenses. However, until such time as a special case has been requisitioned, the Court’s Order of 13th March stands. That order ordained parties to make such motions and submissions in relation to expenses as advised … So far as I am aware, there is no requisition to the Court seeking that the Court state a special case to the Court of Session and, in the absence of this, Mr Macaulay’s motion is, at best, irrelevant.”

The Respondent wrote to the Court in identical terms on 4 April 2017.

[13] The implication of the Interested Party’s letter to the Court dated 1 April 2017, written by him before he received intimation of the Applicant’s requisition for a special case, is that once a special case has been requisitioned, the Court is precluded from determining any outstanding motions, including expenses motions. Where a special case is pending, there is an obvious practical reason for deferring the determination of outstanding motions on expenses, because the outcome of the special case may be that the Court will require, on receipt of the opinion of the Inner House of the Court of Session upon the question of law referred to it, to “bring its decisions on matters with regard to which the question of law arose into conformity with the opinion”: rule 87(2) of the 2014 Rules. With the possibility that any decision made by the Court on expenses at first instance may have to be revisited in the light of the contents of the opinion of the Inner House, little useful purpose would be served by making such a determination meantime, particularly since, pending the disposal of the special case, no execution could follow on any order decerning for payment of the expenses found due. That said, however, the precise limits of what the Court yet may do where a special case has been requisitioned are far from clearly delineated. Quite where those limits are located is an issue here because in his rule 85 note, notwithstanding the position he previously adopted in relation to the outstanding expenses motions, the Interested Party calls upon the Court to decide two matters.

The application for an order for caution

[14] The Interested Party submits, under reference to rule 85(e) of the 2014 Rules, that the Applicant “should be ordained, as a condition precedent to the transmission of the special case to the Court of Session, to find caution in the sum of £10,000 as security for the expenses of the Interested Party in the Court of Session and to lodge the said sum with the Principal Clerk.” The argument developed by the Interested Party in support of that proposition is derived less from any concern that the Applicant would not be able to satisfy any decree for expenses that might be pronounced against him (the Interested Party expressly acknowledges that the Applicant’s financial position is not known to him, and that as a matter of law, mere impecuniosity in any case would not be a sufficient ground for an order for caution), and more from the Interested Party’s assessment of the merits of the special case, which the Applicant is seeking to pursue “without the benefit of legal assistance.” It is explained that:

“The Interested Party, having been able to proceed to the present pass with the assistance of an employee, will now be obliged, to defend his position, to instruct solicitors and counsel and to incur significant expense in doing so. The Interested Party is entitled to protection against the cost of defending a claim which the Applicant is not in a position effectively to advance.”

[15] As was observed by the Full Court in MacIntyre v Dagg (RN SLC/65/96, Order and Note dated 10 June 1999), where the respondents in an internal appeal from a decision of a Divisional Court sought to have the applicant ordained to find caution for expenses as a condition precedent to proceeding further with his appeal, a motion for caution based entirely on a challenge to the merits of an application, with no express attempt made to found on a risk of the successful respondents being unable to recover their expenses from the appellant, is unusual, and such a motion “cannot be regarded simply as a method of short circuiting an appeal.” In that case, “with some hesitation”, the Full Court held that the absence of express reference to financial risk was not fatal to the success of the motions. The Full Court was “satisfied that the appeal has no identifiable prospects of success”, and the appellant’s own written submissions demonstrated that he did not have funds available to meet an award of expenses without difficulty. The applicant in MacIntyre was seeking an order in terms of section 12(2) of the Crofters (Scotland) Act 1993 requiring the owners of a house to grant a conveyance of the house site to him on the basis that it was the “dwelling house on or pertaining to the croft tenanted by him”. The Full Court was satisfied that the appeal had no identifiable prospects of success, because the house site had been decrofted and, whilst the decrofting direction stood unreduced, the Land Court could not grant the appellant the remedy he sought. In the event, the appellant secured reduction of the decrofting direction by means of a petition for judicial review in the Court of Session (reported as MacIntyre v Crofters Commission 2001 SLT 929) and the appeal to the Full Court was enabled to proceed, although the appellant was, ultimately, unsuccessful: MacIntyre v Dagg 2003 SLCR 84.

[16] The circumstances of that case were somewhat special and the dénouement of the proceedings may be thought to serve as a salutary warning against determining motions for caution, after an appeal has been marked, in reliance primarily on the preliminary view of the court whose decision is under appeal on the merits of that appeal. More fundamentally, however, we are not satisfied that it even would be competent for us to entertain the Interested Party’s motion for caution. The question is begged as to why, if, as the Interested Party has contended, the Applicant’s motion that consideration of expenses be adjourned until the special case has been determined is “entirely otiose”, because where a party requisitions a special case, “that would have the effect of sisting any undetermined motions, including motions on expenses”, the position should be any different with regard to his motion for caution. The Interested Party characterises his motion for caution as a request for an interim order as contemplated by rule 85(e) of the 2014 Rules, but we do not consider that it falls to be so categorised.

[17] In principle, once an appeal has been marked against an interlocutor of an inferior court, that court is functus officio, that is, it has discharged its official duty in the cause unless and until the superior court remits the cause back to it. Thus, in the sheriff court, pending an appeal, the sheriff has no power to pronounce further interlocutors except where authorised by statute to do so, or, perhaps, where in exceptional circumstances not provided for by statute the interests of justice urgently require an order of court in the interval between the marking of the appeal and its transmission to the sheriff principal: Macphail’s Sheriff Court Practice (3rd Ed.; 2006, by Sheriff T. Welch, QC) at paragraph 18.69. The statutory authorisation is provided by Rule 31.10 (Interim possession etc. pending appeal) of the Sheriff Court Ordinary Cause Rules, in the terms:

“(1) Notwithstanding an appeal, the sheriff from whose decision an appeal has been taken shall have power-

(a) to regulate all matters relating to interim possession;

(b) to make any order for the preservation of any property to which the action relates or for its sale if perishable;

(c) to make provision for the preservation of evidence; or

(d) to make any interim order which a due regard to the interests of the parties may require.”

[18] In the Land Court, there is a rule to similar effect for internal appeals in the form of rule 72 (Appeal against order which is not final decision) of the 2014 Rules, which provides:

“(1) If an order appealed against is not a final decision, the taking of the appeal does not stay procedure in the case and the divisional court may make such order, or interim order, as appears to it to be requisite having regard to the balance of convenience.

(2) Without prejudice to the generality of paragraph (1) an order, or interim order, under that paragraph may include one –

(a) concerning the preservation of evidence;

(b) for the consignation or payment of money;

(c) as regards custody of anything; or

(d) for the production of documents.”

The corollary of the provision in rule 72(1) that if an order appealed against is not a final decision, the taking of the appeal does not stay procedure in the case, must surely be that if the order appealed against is a final decision, then the taking of the appeal does do so.

[19] So far as special case procedure is concerned, rule 92 of the Rules of the Scottish Land Court 1992 (“the 1992 Rules”), which formerly governed the position, had provided that:

“Neither the requisition for a special case nor any subsequent proceeding therein shall have the effect of staying procedure in the Application, or Applications, in course of which the said question, or questions, of law are alleged to have arisen, unless it be so ordered.”

The 2014 Rules are less categorical in this regard, rule 84(2)(e) providing merely that the draft stated case must specify “what interim orders are requested to sist procedure or otherwise regulate the affairs of parties pending determination of the special case.”

[20] Section 2 (Interpretation) of the 2014 Rules provides definitions of the terms “final decision” and “final order”. “Final decision” means “as regards a substantive issue, a decision declared by the court to be a final decision on that issue”, whereas “final order” means “an order of the court which either by itself or taken with a previous order or orders disposes of the subject matter of all substantive issues in a case and of the question of liability for expenses (even if issues of law or of fact referred to in the pleadings have not been decided or issues of modification, taxation or the like in relation to expenses are still to be resolved)”.

[21] Here, our Order dated 13 March 2017 was a final decision, but it is not a final order, because it does not dispose of the question of liability for expenses. Because it was a final decision, there was no requirement on the Applicant, in notifying the Principal Clerk in terms of rule 83(1) that he was requiring that a special case be stated for the opinion of the Court of Session, to comply with rule 83(2)(b), which provides that:

“Unless the decision was a final decision –

(a) The notification must show why it is appropriate, in the interests of a just and fair disposal, that a special case be presented at the stage the proceedings have reached; …”

[22] In McColl v Beresford’s Trustees 1920 SLCR 60, the Land Court refused a motion for rehearing where the applicant had lodged a requisition for a special case to the Court of Session, to which the respondent had proposed observations or alterations on the draft case.

Such a motion was held to be incompetent, because it was impossible, according to ordinary procedure, that two courts should be considering the same point at the same time, and also the Land Court having disposed of the case by a final judgment, “they are functus and there is nothing before us to which, in view of the appeal to the Court of Session on that judgment, any further proceedings in this court can apply.”

[23] The First Division of the Inner House disagreed, holding that the Land Court should have considered and decided the application for a rehearing. Founding on the equivalent rule to rule 92 of the 1992 Rules which then applied, it was observed that there was nothing in the rules which precluded the Land Court from considering that motion. If the motion for a rehearing had been refused, the requisition for a special case would have stood, and the adjustment of the case in ordinary course would have followed. If it had been entertained and granted, the requisition for a special case “would naturally fall to the ground”; and that because if the case had been reheard, the Land Court would then have gone on to pronounce a final judgment on the additional evidence that might then have been the subject of a requisition for a special case. The Inner House also rejected the argument that, having disposed of the case by a final judgment, the Land Court were functus. They were not functus because, according to their own rules, the appellant was entitled to a rehearing if an application was made within three months of the final judgment.

[24] We consider that the combined effect of rules 83(2), 84(2)(e) and 85(e) is to bring about a situation equivalent to that which pertains under the 2014 Rules where there is an internal appeal against an order which is a final decision, namely that the requisition of the special case will “sist” procedure (we do not think any significance falls to be attached to the difference in the terminology between the references to “sist procedure” in rules 84(2)(e) and 85(e) and “stay procedure” in rule 72(1)). We have little hesitation also in concluding that the sort of “interim orders … to regulate the affairs of parties pending determination of the special case” which rules 84(2)(e) and 85(e) have in contemplation are such as are particularised in rule 72(2), and that an order on an incidental application for a party to be required to find caution as a condition precedent to the transmission of the special case to the Court of Session is not such an order: cf. Cunningham v Cunningham 1964 SC 78. Where a special case has been requisitioned in respect of a decision that was a final decision, we are of opinion that the Court’s powers are principally limited to settling the terms of the special case in conformity with rule 86, and making such interim orders to regulate the affairs of parties pending determination of the special case as properly fall within the scope of rules 84(2)(e) and 85(e) of the 2014 Rules.

[25] Further, and in any event, the expenses in respect of which the Interested Party seeks an order for caution are the expenses which the Interested Party asserts he will incur in instructing solicitors and Counsel in the Court of Session, and accordingly, even if we are wrong in our analysis of what powers remain to us under the relevant rules of court and at common law after a special case has been requisitioned, we are of opinion that any application for an order for caution in respect of expenses in the Court of Session should be made in the Single Bills, the motion roll of the Inner House, after the special case, as settled, has been transmitted to the Court of Session.

The argument that the Applicant’s questions of law have been rendered hypothetical

[26] In his rule 85 note, the Interested Party advances an argument that because the Applicant, in his draft statement of case under rule 84, sought no order “suspending completion of the registration process” in terms of sections 9 and 10 of the 2010 Act, the registration of croft 1A Tolsta Chaolais must now be regarded as completed and beyond challenge, with the result that the questions of law which the Applicant proposes be submitted to the Court of Session are rendered “purely hypothetical” and with “no practical consequence in the real world.” The basis of the Applicant’s argument is that, in terms of section 10(1) of the 2010 Act, the process of first registration is completed when (a) no application is made to the Land Court under section 14(1) of the 2010 Act before the end of the 9 month period mentioned in section 12(5) of the 2010 Act; or (b) such an application having been made – (i) the application has been abandoned; or (ii) the Court makes no order or makes an order under section 14(4)(b) of the 2010 Act.

[27] Here, it is contended, in dismissing Application RN SLC/119/15, the Court made no order in the sense in which that expression is employed in section 10(1)(b)(ii) of the 2010 Act, and in the absence of any order by the Court suspending ad interim the completion of the registration process pending the determination of the special case, as might have been sought by the Applicant in terms of rule 84(2)(e) of the 2014 Rules, the registration of croft 1A Tolsta Chaolais in the Crofting Register is now unchallengeable, the 4 weeks allowed by rule 83(1) of the 2014 Rules for the lodging of a draft statement of case specifying what interim orders “to sist procedure or otherwise to regulate the affairs of parties pending determination of the special case” are requested having elapsed. The Land Court are “asked for a ruling on this”. However, at a later point in his rule 85 note, the Interested Party specifies two questions of law, formulated with a view to ventilating this argument, which he considers it appropriate, in terms of rule 85(c), to submit to the Court of Session, being:

“1. Standing the terms of section 10(1) of the [2010 Act], where an application is made to the Land Court under section 14(1) of [the 2010 Act] before the expiry of the period mentioned in section 12(5) [of the 2010 Act] and the Land Court makes no order, is the Land Court’s decision to make no order subject to review by the Court of Session by way of special case?

2. Where the Land Court makes no order in respect of a timeous application made to it under section 14(1) of the [2010 Act] and no request is made to the Land Court by way of interim order to suspend ad interim the completion of the registration of the croft in question under sections 9 and 10 of [the 2010 Act] in the requisition for a special case, is it competent for the Court of Session, in the subsequent special case, to pronounce an interlocutor which would allow the making of an order in terms of section 14(4)(a) or(b) of [the 2010] Act?”

These two questions of law, then, call into question whether our Order dated 13 March 2017 is even subject to review by the Court of Session by way of the special case procedure in these circumstances.

[28] It seems to us that, for the same reasons we have given in relation to the Interested Party’s application for an order for caution, we are precluded from giving a “ruling” on this submission, upon which, of course, we have not had the opportunity to hear any contra-submission from the Applicant. We have considered whether it would, instead, be open to us, in settling the terms of the special case, to include the Interested Party’s questions of law, notwithstanding that: (i) the circumstances in which they are said to arise post-date the issue of the final decision appealed against; and (ii) were we to do so, the Inner House would not, on receipt of the special case, have the benefit of any decision by us thereon. We have come to the conclusion that this latter course of action too would be procedurally inept, and that in settling the terms of the special case, we should refuse to include the Interested Party’s proposed two questions of law, for those reasons. Once the special case, as settled, has been transmitted to the Court of Session, it would, on the face of it, be open to the Interested Party, if so minded, to advance the legal arguments that inform the two questions of law that he has proposed be submitted to the Court of Session under rule 85(c) of the 2014 Rules as preliminary objections to the competency of the special case, in conformity with the procedure set out in Rule 41.5 of the Rules of the Court of Session 1994.