Decision of the Scottish Land Court

Mrs Morean Elizabeth Hamilton (Applicant) v Trustees of the late Jane M Caulfield (Respondents)

Case reference SLC 16/14
before
Lord Minginish, Chairman, and Mr John A Smith
11 June 2015

[1] In this application the applicant sought declarator that a field rented by her from the respondents was held on a tenancy governed by the Agricultural Holdings (Scotland) Act 1991; what is sometimes referred to as a ‘1991 Act tenancy’ or a full, secure, agricultural tenancy. It was put down for a hearing by way of proof over three days from 10 to 12 June.

[2] When the proof got under way we heard the evidence-in-chief of the applicant, upon the conclusion of which, Mr Henderson, advocate, appearing for the pursuer, sought to interpose, for the witness’s convenience, the evidence of Mr Iain Graham Smith. This was not opposed by counsel for the respondents, Sir Crispin Agnew of Lochnaw QC. Accordingly we heard Mr Smith’s evidence.

[3] One of the things someone claiming a 1991 Act tenancy must prove is that the land is used “for agriculture for the purposes of a trade or business” (sec 1(2)). For this purpose the applicant gave evidence that in addition to using the field for her horses she sold the grass to an agricultural contractor, Mr Smith. She produced, and spoke to, what bore to be 12 invoices or annual statements from John Smith & Sons (Mr Smith’s trading name) covering the years from 2000 to 2013 (save for 2005 and 2009 for which no statements were lodged), productions 7A-L. These narrate the rolling, harrowing, cutting and baling of three paddocks, the charges for that work and the purchase by the contractor of the resulting bales. The applicant gave evidence that these productions related to the field in question and two neighbouring fields. She gave evidence that she had first engaged Mr Smith in 2000, that he had done the work shown in production 7A, that he had purchased the resulting bales at £13.00 each and had remitted the difference between the purchase price of the bales and the cost of the services rendered to her. She spoke to the same arrangement having continued uninterrupted to date. She had not been able to find Mr Smith’s invoice for 2005, possibly because it had been the year her father had died.

[4] Mr Smith then gave evidence. In examination-in-chief he gave evidence that he had known the applicant and her husband for many years. He could not remember when he had started cutting the fields and baling the grass but his men had been doing so for a number of years. He had produced annual invoices for the work and identified production 7 as comprising these invoices. In cross-examination he initially gave evidence to the same effect, saying that the invoices had been raised annually. He was then questioned as to whether he had been asked to put together a collection of invoices for this case and he said he had. Some invoices had been found but others had been filled in retrospectively, shortly before the case had come to court. He denied that the content of these invoices was merely guesswork; he could tell how many bales he had taken in any particular year from his “Bale Book”. He acknowledged that only the first two invoices bear an invoice number. He admitted that the rest had been made up for the purposes of this case. He accepted that the court could not rely on them as accurate. He ‘guaranteed’ that the work of rolling, harrowing, cutting and baling had been done every year but he accepted that it was a somewhat informal arrangement and that the invoices had been prepared at the applicant’s request.

[5] In re-examination Mr Smith confirmed that all but the first two invoices had been created after the event. Asked whether that was because invoices had in fact been raised at the time but subsequently lost or because he had stopped rendering invoices, he said that sometimes the value of the bales came to the same as the cost of services and there was no need to render an invoice. Referred specifically to production 7C, bearing to relate to the year 2002, he thought it was an accurate record of the work done and how matters had been conducted that year. Asked whether the applicant had received payment of a balance in respect of any of the invoices he said ‘no’.

[6] Questioned by the court, Mr Smith explained that he had been approached by the applicant in relation to this case about six months to a year ago. They had figured out how many bales had been produced in each year. They had found some papers and produced the invoices which were now in court. The two of them had sat down together to do this; he had not done it on his own and from his own records.

[7] Although as a party the applicant would, in our view, have been entitled to be present during Mr Smith’s evidence, counsel agreed between themselves that she should not be. At the close of Mr Smith’s evidence Mr Henderson asked for an adjournment. After discussion with Sir Crispin and attempting to get the advice of an officer of the Faculty of Advocates we authorised him, if authority was needed, to take instructions from his client, albeit she had not completed her evidence. Having done so, Mr Henderson advised of the abandonment of the application with expenses against the applicant. He consented to our order taking the form of one of refusal of the application (to avoid it being re-raised) and to sanctioning of the employment of senior counsel.

[8] In addition to these matters Sir Crispin moved us to award expenses on an agent and client basis (which we take to mean agent and client, client paying) and certification of Mr Andrew McDiarmid BVM&S, CertES (orth), MRCVS as an expert witness. He referred to the case of Mckie v Scottish Ministers 2006 SC 528 for the relevant principles in relation to the first issue. Here the applicant had concocted a case to bring to court and in so doing had deceived those representing her, had attempted a fraud on the court and had caused the respondents a great deal of expense. Without the evidence of the invoices the defender had no case and was bound to fail, as evidenced by the abandonment of the action.

[9] Mr Henderson submitted that we should award expenses only on a party and party basis. It had to be borne in mind that the applicant had not had the opportunity of commenting on Mr Smith’s evidence. It required a significant departure from the norms of litigation for expenses to be awarded on an agent and client basis.

[10] In Mckie Lord Hodge (at page 530) identified five propositions in accordance with which a question of whether to award expenses on an agent and client basis should be decided. These include – as the third and fourth – conducting the litigation incompetently or unreasonably, thereby causing the other party unnecessary expense and the proposition that the court can take into account all relevant circumstances, including the party’s behaviour before the action commenced. It is clear that awards on this scale are made as a sanction against misconduct in the litigation.

[11] Fabricating documents for use in support of an otherwise unstateable case is worse than conducting a case incompetently or unreasonably. As an attempt to pervert the course of justice, it is criminal and in that regard we are sending a copy of this judgement to the Procurator Fiscal at Kilmarnock so that consideration can be given as to whether the applicant should be prosecuted. We take Mr Henderson’s point that the applicant has not had the opportunity of giving evidence on these matters but we have no reason to disbelieve Mr Smith. His evidence was, after all, given very much against interest in as much as his co-operation in what the applicant apparently asked him to do does not reflect well on him either. It would therefore seem to be the case that the applicant has come to court with a false case. In so doing she has caused the respondents very significant expense. We are fully satisfied that expenses should be on an agent and client, client paying, basis and we have so awarded.

[12] We are not satisfied, on the other hand, that Mr McDiarmid should be certified as an expert witness for the purposes of this case. He is an equine veterinary surgeon, with the above-mentioned qualifications, and we do not doubt his expertise with horses. But the only thing he was to speak to was his inspection of the field and his assessment that it had been used for the longstanding grazing of horses (see his report, production 14), a matter which is not in dispute and which the court could have assessed on its own expertise, had an inspection been necessary. Accordingly we have refused certification.