Decision of the Scottish Land Court

Elizabeth A M D Lewis (Applicant) v Shonagh J Hunter (Respondent)

Case reference SLC 83/15
before
Iain F Maclean, Deputy Chairman, John A Smith and Tom Campbell
19 July 2017

Introduction

[1] On 6 July 2017 in Edinburgh we heard the submissions of junior counsel for the Applicant, Robert Sutherland, Advocate, instructed by Leyshon WS, Solicitors, Peebles and the solicitor for the Respondent, Hamish Lean, formerly of Stronachs, and now of Shepherd + Wedderburn, Solicitors, Aberdeen, at a hearing fixed to allow parties to address us in the wake of the issue of our Order of 29 March 2017 in which, under reference to the contents of the Note appended thereto, we had (ONE) sustained the first and second pleas-in-law for the Respondent, refused the Applicant’s craves and dismissed the Application, and (TWO) allowed parties twenty-one days from the date of intimation thereof to lodge with the Principal Clerk any motions or submissions on the expenses of the Application. Upon receipt and consideration of the contents of parties’ respective written submissions on expenses, lodged in conformity with part (TWO) of that Order, it seemed to us that an oral hearing would be necessary to enable the various issues arising to be properly ventilated, and we so ordered.

The Respondent’s expenses motion

[2] Mr Lean argued that the Respondent, having been wholly successful in her defence to the Application, and in conformity with the general rule that expenses should follow success, was entitled to an award of the whole expenses in her favour. If we were with him on his motion that expenses be awarded in favour of the Respondent, Mr Lean sought a 50% uplift in the fees authorised under the relevant table of fees to cover the responsibility undertaken by him in the conduct of the cause, under reference to factors (i), (ii), (iv) and (v) in Regulation 5(b) in Schedule 1 to the Act of Sederunt (Fees of Solicitors in the Sheriff Court)(Amendment and Further Provisions) 1993 (SI 1993/3080) (as amended) (“the 1993 Act of Sederunt”). Finally, he asked us to certify the Respondent’s witness Tom R. Oates BSc (Hons), MRICS, Registered Valuer, of YoungsRPS, Chartered Surveyors, Alnwick, Northumberland, as an expert witness in terms of Rule 93(1) of the Rules of the Scottish Land Court 2014 (SSI 2014/229)(“the 2014 Rules”).

The Applicant’s response

[3] Mr Sutherland acknowledged that the Applicant ultimately was unsuccessful in her application for orders of declarator of irritancy and removing of the Respondent from Castleside Farm (“the Farm”), but he contended that any award of expenses in her favour should be modified by 50%, to reflect the Respondent’s share of the responsibility for the case having reached the Land Court at all. It was argued that the Applicant had been driven to this form of litigation as a last resort, in consequence of the Respondent’s persistent refusal, over a period of years, to engage with the Applicant in response to the latter’s expressed (and legitimate, as the Court had recognised) concerns about the deteriorating state of the Farm, and the failure of all of her previous attempts, by other means, to get the Respondent to fulfil her maintenance and repair obligations under the Lease. The Applicant’s written submission on expenses placed considerable emphasis on the Respondent’s lack of response to the Applicant’s offer, contained in a letter to the Respondent’s then agents, Stronachs, from Leyshon WS dated 5 May 2015 [Production 12] of arbitration to “bring matters to a close”, and it was argued that had the Respondent taken up this arbitration proposal, the expense of a long and expensive proof would have been avoided. In his oral submission, it seemed to us, Mr Sutherland was keen to broaden the attack on the Respondent’s conduct, so as to leave it less narrowly periled on that specific alleged failure on her part. Mr Sutherland sought to resist Mr Lean’s additional fee motion, arguing that none of the four factors relied upon by him were made out in the circumstances of the present case, and opposed certification of Mr Oates as an expert witness, on the basis that he had misunderstood his role as expert and that in any event, his evidence had not been of assistance to the Court.

The Court’s discretion in relation to expenses

[4] Rule 88 of the 2014 Rules provides, without apparent qualification in respect of the scope of the discretion conferred, that the Court “may award such expenses in a case, or in any part of a case, as it thinks fit.” Rule 90 provides that in a case where it finds a party entitled to expenses, it may fix a specific sum to be paid or may make a finding subject to such modification, if any, as it sees fit. The main principle to be applied in the exercise of that wide discretion in relation to expenses is that expenses should follow success: Gourlay v Doble & Wallace 2011 SCLR 55. That was, opined the then Chairman of the Land Court, Lord McGhie, a convenient shorthand for matters more fully expressed in Shepherd v Elliot (1896) 23 R 695 by the Lord President (Robertson) in a passage to be found at page 696:

“The principle upon which the Court proceeds in awarding expenses is that the cost of litigation should fall on him who has caused it. The general rule for applying this principle is that costs follow the event, the ratio being that the rights of parties are to be taken to have been all along such as the ultimate decree declares them to be, and that whosoever has resisted the vindication of those rights whether by action or defence, is prima facie to blame. In some cases, however, the application of the general rule would not carry out the principle, and the Court has always, on cause shewn, considered whether the conduct of the successful party, either during the litigation, or in the matters giving rise to the litigation, has not either caused or contributed to bringing about the law suit.”

Mr Sutherland pointed to the decision of the Court (The Hon Lord Minginish and John Smith) in Maclean & Others v The Crofting Commission (RN SLC/54/16; 2 November 2016), in which the applicants were awarded their expenses against the successful respondents, notwithstanding that their application had been dismissed as incompetent, as an illustration of the width of the Court’s discretion on expenses, although we would here observe that the Court there expressly recognised, at the end of paragraph [6] of the Note appended to the Order of 2 November 2016, that “this is a very unusual result, but it is justified, in our view, in the exceptional circumstances of this case.” Mr Lean, for his part, accepted that the Court could take a party’s pre-litigation conduct into account in relation to modification of expenses awards.

Decision on expenses

[5] As was submitted on behalf of the Applicant, we were, in the Note appended to our Order of 29 March 2017, by no means uncritical of the Respondent’s pre-litigation conduct. Upon the basis of the evidence we heard, we had no hesitation in concluding that both sides bore some degree of responsibility for the break-down in the landlord-tenant relationship (paragraph [11]) and we emphasised that whilst we had concluded that the Applicant had failed to make out the case for irritancy on the facts she chose to place before the Court, the Respondent “would be unwise to interpret our decision on this application for declarator of irritancy as representing an endorsement by us of all that she is doing on the Farm” (paragraph [53]). We expressed our ready understanding as to why the Respondent’s persistent refusal to engage with the Applicant’s husband’s “more justified concerns about various aspects of her farming practices over a prolonged period should have become a source of extreme frustration to him” (paragraph [11]). The principal difficulty we have with the submission for the Applicant that all of this should translate into a substantial modification of any award of expenses made in the Respondent’s favour is that the particular remedy pursued by the Applicant, that of declarator of irritancy and removing, was not one directed to the objective of getting the Respondent to fulfil her maintenance and repair obligations under the Lease, but to that of terminating the Lease and securing the Respondent’s removal from the Farm. The Respondent, if she wished to preserve her home and her business, had no option but to contest the proceedings, and she did so successfully, aided and abetted by the many deficiencies in the Applicant’s proof that were exposed at the hearing, and which fatally compromised the Applicant’s prospects of obtaining the orders of declarator of irritancy and removing she sought. The conduct of the Respondent unquestionably contributed significantly to the breakdown in the relationship between landlord and tenant, but it cannot, in our view, be said to be the cause of the Applicant’s decision to embark on ill-judged and ultimately unsuccessful irritancy proceedings.

[6] We also struggled with the implication of the Applicant’s argument that had the Respondent acceded to the proposal made in her agents’ letter to Stronachs dated 5 May 2015, in which it was indicated on her behalf that she was “open to utilising an arbitration procedure to bring matters to a close”, matters would (or even might) have turned out materially differently. The context in which that letter was sent was that the Applicant had served a Notice of Irritancy on the Respondent on 13 January 2015 [Production 6]. Just short of four months had elapsed since then “without any progress”, as the letter related, and “so we shall be forced to proceed on our Notice.” The paragraph that immediately follows on from that hanging reference to the Applicant being forced to proceed with the Notice of Irritancy reads in full:

“As we have indicated previously, the real objective is to get your client to fulfil her obligations under the lease in respect of her maintenance & repair obligations – so we are open to utilising an arbitration procedure to bring matters to a close. The offer on the part of the Landlord to use an arbitration procedure is open for acceptance by your client within a period of 14 days from the date of this letter – and within that timescale both sides shall either agree on the appointment of a specific Arbiter (to include the signing of relevant arbitration forms) or agree the mechanism by which the Arbiter is to be appointed within a further specific timescale.”

[7] What that paragraph fails to make clear is just what the Applicant was proposing the parties go to arbitration on: if it be on the issue of the Respondent’s alleged breaches of her obligations under the Lease as set out in the preceding Notice of Irritancy dated 13 January 2015, it would seem to us that any ensuing arbitration, assuming of course that the parties were first able to reach agreement on an arbiter or at least on a mechanism for the selection of an arbiter, would be likely to follow a very similar course to the proceedings in the Land Court that were raised by the Applicant on the subsequent Notice of Irritancy dated 19 June 2015 [Production 13], only with the additional expense to the parties of paying professional rates for the services of the arbiter and his legally qualified clerk. The Respondent was not here under any obligation to agree to go to arbitration, and given the nature of the issues, both legal and factual, that came to be canvassed before the Court, it is far from obvious to us that any benefit would have accrued to the parties from opting for arbitration over litigation before a specialist court. We are, accordingly, of the view that there is no reason here to depart from the general rule of expenses following success, and accordingly we hold that the Respondent is entitled to an award of the expenses of the Application without any modification of that award operating in favour of the Applicant.

The Respondent’s additional fee motion

[8] Paragraph (1) of Rule 99 (Fees allowed at taxation) of the 2014 Rules provides that:

“The fees allowed to solicitors at taxation are to accord with those for the time being payable in ordinary actions in the sheriff court except in so far as the court may, as regards a particular case, order otherwise.”

As was noted by Lord McGhie, sitting as a Divisional Court, in Stott v Willox 1997 SLCR 165 at page 165, “It has been the usual practice for the Land Court to attempt to follow closely Sheriff Court practice in relation to taxation of expenses”, and in conformity with that usual practice, although the 2014 Rules do not provide expressly for the making of such applications, we have, in the past, entertained motions at the instance of successful parties for an uplift in the fees allowable under reference to the factors listed in Regulation 5(b) in Schedule 1 to the 1993 Act of Sederunt. Regulation 5(b) provides:

“The court may, on a motion made on or after the date of any interlocutor disposing of expenses, pronounce a further interlocutor regarding those expenses allowing a percentage increase in the fees authorised by the Table of Fees to cover the responsibility undertaken by the solicitor in the conduct of the cause. In fixing the amount of the percentage increase the following factors shall be taken into account:-

(i) the complexity of the cause and the number, difficulty or novelty of the questions raised;

(ii) the skill, time and labour, and specialised knowledge required, of the solicitor;

(iii) the number and importance of any documents prepared or perused;

(iv) the place and circumstances of the cause or in which the work of the solicitor in preparation for, and conduct of, the cause has been carried out;

(v) the importance of the cause or the subject-matter of it to the client;

(vi) the amount or value of money or property involved in the cause;

(vii) the steps taken with a view to settling the cause, limiting the matters in dispute or limiting the scope of any hearing.”

[9] We are not persuaded that an uplift is justified here by reference to factors (i), (ii) and (iv). So far as factor (i) is concerned, we do not consider that the cause was inherently complex, or that it raised a multiplicity of difficult or novel questions. Whilst it is true that not many contractual irritancy cases have come before the Land Court in recent times, the applicable law thereon is well settled and the questions raised in this case, be they legal or factual, cannot be said to be have been either difficult or novel. In relation to factor (ii), whilst we, of course, much appreciate the assistance we received from Mr Lean, an accredited specialist in agricultural law who appears frequently before this Court and who conducted these proceedings on behalf of the Respondent with his customary proficiency, we do not think that, in terms of the skill, time and labour, and specialised knowledge required, of the solicitor, there was, in the particular circumstances of this case, anything that distinguished it from the general run of agricultural cases in which he appears before this Court.

[10] In invoking factor (iv) in support of his motion for an uplift, Mr Lean made clear that he was not relying in any way on the “place” aspect thereof, and the only circumstance of the cause he advanced as a reason for allowing an uplift under this head was that the hearing was split between July and November, which, he submitted, rendered the conduct of the proof more difficult than if it had all been heard over consecutive days. Mr Sutherland, in response, pointed out the four month hiatus was due to the non-availability of the Respondent’s own expert witness at any earlier available date, and he argued that it would be inequitable to sanction an uplift in the fee allowable to the Respondent’s solicitor to reflect the difficulties attendant upon picking up the threads of a case again after such an interruption where that delay was itself caused by the non-availability of one of the Respondent’s own witnesses.

[11] Split hearings, in our experience, generally are the consequence of parties initially putting forward unrealistic estimates of how many days in court the case is likely to need, and identifying dates for the continued hearing that the diaries of the parties, their legal representatives, and the Court can all accommodate almost inevitably results in the interposition of some delay, which sometimes, as here, can stretch to a matter of months rather than weeks. Such standard exigencies of litigation would not, in our view, ordinarily provide justification for allowing an additional fee, and we do not consider that a case has been made out for such an uplift in the particular circumstances prevailing here.

[12] We are, however, satisfied that we should allow Mr Lean a percentage uplift to cover the responsibility undertaken by him in the conduct of the cause under reference to factor (v). Had the Applicant been successful in obtaining an order of declarator of irritancy and removing as craved, the Respondent would, as Mr Lean pointed out, have lost her home, her place of business, and in consequence her livelihood. The stakes for her in this litigation could scarcely have been higher, and that did, in our opinion, place an added burden of responsibility on the shoulders of her solicitor. We consider that an uplift of 30% should be allowed under reference to factor (v) to reflect the significance we attach thereto.

The Respondent’s certification motion

[13] In advance of the hearing, the Respondent’s agents intimated, in conformity with the procedure laid down in Rule 26 (Expert witnesses) of the 2014 Rules, their intention to call Mr Oates to give evidence as an expert witness, and they lodged a report by him dated 15 June 2016 [Production 47] on the condition of the fixed equipment on the Farm, to which he spoke at the hearing. His report was based on a visual inspection of the Farm carried out on 9 June 2016, just short of one year after the date of issue of the Notice of Irritancy, and as we noted at paragraph [30] of the Note that accompanied our Order dated 29 March 2017, as with the Applicant’s expert, Mr Jones, he made no claim to having walked every fence line, or rattled every post in the course of his visit to the Farm.

[14] The scope of Mr Oates’s report and his oral testimony was much narrower than that of Mr Jones, being restricted to relating his impressions of the state of the fixed equipment on the Farm. As the evidence emerged, it increasingly seemed to us that the two experts were, on a proper analysis, essentially saying much the same thing about the state of the fencing, which was the item of fixed equipment on the Farm that featured most prominently in the Annexure to the Notice of Irritancy. Because, to the extent that the two experts were addressing the same issues, there was here no real conflict in the evidence for us to resolve, there was little we needed to say about Mr Oates’s evidence in the Note that accompanied our Order dated 29 March 2017, but in opposing the Respondent’s certification motion, Mr Sutherland advanced a number of criticisms of that evidence which, in his submission, provided reasons for us to refuse to certify him as an expert witness.

[15] Paragraph (3) of Rule 93 (Charges for skilled persons) contains a list of matters to which the Court may have regard in determining whether to sanction recovery of the charges of a person as a skilled or expert witness, being:

“(a) whether and to what extent the person’s special qualifications fall within a recognised area of knowledge, expertise or experience;

(b) what those special qualifications are;

(c) the relevance of the person’s knowledge, expertise and experience to the issues in dispute;

(d) if a report from the person was instructed, whether it was reasonable in all the circumstances to give that instruction at the time it was given;

(e) the terms of the instruction; and

(f) the quality of any—

(i) report produced; or

(ii) evidence given,

by the person and the value of that report or evidence to the court in resolving an issue in the case.”

[16] In developing his criticisms of Mr Oates’s evidence, Mr Sutherland founded particularly on paragraph (3)(f), arguing that his report and evidence were not of value to the Court in resolving any issue in the case. Being based on an inspection of the fixed equipment on the Farm that took place nearly a year after the relevant date, being the date of the Notice of Irritancy dated 19 June 2015, its contents were to all intents and purposes irrelevant to the Court’s task. Indeed, it emerged in the course of the hearing on expenses that Mr Oates’s report had been instructed on behalf of the Respondent only when her agents learned that the Applicant was proposing to lead an expert witness, and the view was taken that the Respondent in that case had better have one too.

[17] Mr Sutherland also questioned the quality of Mr Oates’s report. He suggested that its contents betrayed an imperfect understanding on the part of Mr Oates as to the duties and responsibilities of expert witnesses in civil proceedings, for an authoritative recent account of which, see Kennedy v Cordia (Services) LLP 2016 SC (UKSC) 59. In so doing, Mr Sutherland was picking up on an issue which the members of the Court themselves had identified as Mr Oates gave evidence, and on which they pulled him up during his time in the witness box. It appeared to us, and Mr Oates effectively conceded under questioning from the bench, that in paragraph 4 of his report, in which he comments on the various alleged breaches of the Respondent’s maintenance obligations with regard to the fixed equipment on the Farm listed in the Annexure to the Notice of Irritancy, where the point being made by the Applicant was well founded in fact, his response was either merely to record the Respondent’s own response to that complaint as she had related it to him, or to leave a blank in the space for comment and thus make no response at all. In most, if indeed not all, of these instances, as we explain in paragraph [36] of the Note which accompanied our Order dated 29 March 2017, the item listed in the Annexure to the Notice of Irritancy to which he was responding (or not, as the case may be) did not represent a failure on the part of the Respondent to maintain fixed equipment on the Farm in breach of Clause 10 of the Lease, because it concerned the farmland of the Farm and not the fixed equipment on the Farm. That said, however, having taken it upon himself to comment upon the contents of the Annexure to the Notice of Irritancy, it was, in our opinion, incumbent upon him to approach that task in an independent and impartial manner. In the foregoing circumstances, we cannot be confident that he did so. We did not, ultimately, find the report he produced or the evidence he gave to be of value in resolving any issue in the case and accordingly, we have declined to certify him as an expert witness.