Decision of the Scottish Land Court

John Esslemont (Applicant) v Richard Fyffe (Respondent)

Case reference SLC 85/16
before
Iain F Maclean, Deputy Chairman, and John A Smith
15 February 2017

[1] Having heard the parties in debate in Edinburgh on 14 November 2016, we by our order of 7 December 2016 sustained the Respondent’s preliminary pleas and dismissed the Applicant’s application for an order in terms of section 41(1)(a) of the Agricultural Holdings (Scotland) Act 2003 (“the 2003 Act”) that the Respondent’s objection to a Notice of Diversification given by the Applicant on 15 October 2015 was unreasonable. The Applicant is the agricultural tenant of the Farm of Muirton of Corsindae (“the Farm”) of which the Respondent is the landlord. Had we been persuaded to grant an order in the terms craved, the effect would have been to permit the use by the Applicant of parts of the Farm for the non-agricultural purpose specified in his Notice of Diversification, namely “the storage of building materials in connection with conducting building activities and the administration of the business” of Monarch Conservatories Scotland Ltd (“Monarch”), a limited company of which the Applicant and his son are the directors and the Applicant the sole shareholder. The date on which the Applicant proposed to commence using the land for that purpose was specified in his Notice of Diversification as 26 December 2015, but the Applicant acknowledged in his Notice of Diversification that “the tenant has informally been using” parts of the Farm for that purpose since 1996.

[2] The Respondent having been wholly successful at debate, and having secured dismissal of the application, his agents moved for the expenses of the cause, and moved us to sanction the employment of junior counsel. The Applicant’s agents concede in their written submissions on expenses that an award of expenses in favour of the Respondent is appropriate in relation to the debate but, having regard to the terms of Rule 89 of the Rules of the Scottish Land Court 2014 (“the 2014 Rules”), have marked opposition to that part of the Respondent’s motion which seeks sanction for the employment of junior counsel. We note that the Applicant’s agents have not, in terms, conceded the expenses of the cause as moved for by the Respondent, but merely the expenses of the debate, but we consider that the Respondent is entitled to the expenses of the cause and we have so held.

[3] Rule 89 (Employment of counsel) of the 2014 Rules provides:

“(1) For the purposes of taxation, the court may sanction the employment of junior counsel for any stage of a case in any or all of the following circumstances –

(a) the case is difficult or complex;

(b) the case, or a matter arising as regards the case, is of particular importance or value to the party represented;

(c) junior counsel has been employed at a hearing and there has been no attendance by a solicitor.”

The 2014 Rules came into force as from 22 September 2014. Rule 96 of the Scottish Land Court Rules 1992, which governed the position before that date, had provided that the Court might sanction the employment of counsel in “Applications of difficulty and general importance”. The Court approached this provision upon the basis that the “normal court rules” applied to the question of the sanction of a case as being suitable for the employment of counsel: K H R Graham, The Scottish Land Court (1993) at page 58.

[4] In the sheriff court, whether to sanction the employment of counsel was formerly a matter within the sheriff’s discretion at common law, in the exercise of which the criteria of the difficulty or complexity of the case, and of the particular importance or value of the case to the party represented, had long been recognised in the case law as being of especial significance: cf. The Hon Lord MacPhail, Sheriff Court Practice (Third Ed. by Sheriff T. Welsh, QC; 2006) at paragraph 12.25. That said, however, at common law, the sheriff was not precluded from attaching weight, in the exercise of that discretion, to circumstances other than the difficulty or complexity of the case, and of the particular importance or value of the case to the party represented. That position has now been codified in statute in the light of recommendations made in the Report of Sheriff Principal Taylor’s Review of Expenses and Funding of Civil Litigation in Scotland (2013). Section 108 (Sanction for counsel in the sheriff court and Sheriff Appeal Court) of the Courts Reform (Scotland) Act 2014 (“the 2014 Act”), which came into force on 22 September 2015 by virtue of Article 2 of and the Schedule to The Courts Reform (Scotland) Act 2014 (Commencement No. 3, Transitional and Savings Provisions) Order 2015 (SSI 2015/247), now applies in civil proceedings in the sheriff court or the Sheriff Appeal Court where the court is deciding, for the purposes of any relevant expenses rule, whether to sanction the employment of counsel by a party for the purposes of the proceedings: section 108(1) of the 2014 Act.

[5] Section 108(6) of the 2014 Act defines “relevant expenses rule” as meaning, in relation to any proceedings mentioned in section 108(1), any provision of an act of sederunt requiring, or having the effect of requiring, that the employment of counsel by a party for the purposes of the proceedings be sanctioned by the court before the fees of counsel are allowable as expenses that may be awarded to the party. Section 108(2) of the 2014 Act provides that the court must sanction the employment of counsel if the court considers, in all the circumstances of the case, that it is reasonable to do so. In considering that matter, the court, in terms of section 108(3) of the 2014 Act, must have regard to -

“(a) whether the proceedings are such as to merit the employment of counsel, having particular regard to—

(i) the difficulty or complexity, or likely difficulty or complexity, of the proceedings,

(ii) the importance or value of any claim in the proceedings, and

(b) the desirability of ensuring that no party gains an unfair advantage by virtue of the employment of counsel.”

However, over and above those matters to which the court, in the exercise of its discretion, must have regard, or particular regard, section 108(4) of the 2014 Act provides that it may have regard to such other matters as it considers appropriate. In V (as Parent and Guardian of J (a Child) v M & D (Leisure) Limited [2016] SC EDIN 22, Sheriff Peter J Braid observed that the new test under section 108 of the 2014 Act “broadly follows the common law approach while at the same time being subtly different and somewhat labyrinthine in its approach to the reasoning required of the court”; Sheriff Douglas Kinloch commented upon the “in some respects, perhaps somewhat curious” wording of section 108 of the 2014 Act in David Brown v Viva Insurance [2016] SC LIV 84.

[6] It seems to us that as Rule 89 of the 2014 Rules has been framed, our discretion is more circumscribed than that conferred by section 108 of the 2014 Act on the sheriff court and the Sheriff Appeal Court, with the consequences that: (i) we are bound, in its exercise, to confine our consideration to the circumstances specified in sub-paragraphs (a),(b) and (c) of Rule 89(1); and (ii) we are not entitled to attach weight to factors which cannot be brought under one of those heads.

[7] Here, the Respondent was represented by both counsel and solicitor at the hearing and so sub-paragraph (c) of Rule 89(1) of the 2014 Rules does not come into play. The Respondent’s agents, in moving for sanction to be granted, advanced four arguments in support of their position:

(i) Junior counsel (Mr MacColl) who conducted the debate for the Respondent, was also instructed in other related proceedings between the same parties (i.e. Application RN SLC/67/15 at the instance of the present Respondent for an order finding and declaring that the present Applicant “having inverted its possession, no longer holds the Farm … under a lease governed by the Agricultural Holdings (Scotland) Acts 1991 and 2003”) and that it was entirely appropriate that continuity of instruction be maintained in this debate;

(ii) when the date for the diet of debate was fixed, this was done by reference to the availability of junior counsel on both sides, and at no time prior to the hearing on 14 November 2016 did the Applicant’s agents disclose that their counsel, Mr Sutherland, would not be conducting the debate;

(iii) there was no existing judicial authority to guide on the questions of statutory interpretation which were ventilated at the debate; and

(iv) had the Respondent been unsuccessful in his opposition to diversification, the “potential ramifications for him and his ownership of the … [Farm] … and the larger Corsindae estate were significant and adverse to his interests” and justified the instruction of junior counsel in respect of the matter and the conduct of the debate.

[8] In setting out their arguments in support of their motion for sanction, the Respondent’s agents, although making passing reference to Rule 89 of the 2014 Rules, did not expressly relate those arguments to the circumstances adumbrated in either of sub-paragraphs (a) and (b) of paragraph (1). Whilst the questions of statutory construction we required to consider at the debate, concerning the proper interpretation of sections 40 and 41 of the 2003 Act, were unquestionably novel, the Respondent’s agents did not, in their written submissions on expenses, even attempt to persuade us that the case which gave rise to those questions was either difficult or complex: as the Applicant’s agents observed in their written submissions opposing sanction, the debate itself was of relatively short compass and although the points at issue had not been previously decided by us, disposal of them did not require a lengthy or complex hearing. It was also submitted on behalf of the Applicant that the conduct of the debate was something which ordinarily would fall within the competence of a solicitor knowledgeable and experienced in agricultural law, and the Respondent’s agents were a firm with a dedicated agricultural and rural property team led by a partner accredited by the Law Society of Scotland as a specialist in agricultural law. The Respondent’s agents’ rejoinder to that was to argue that whilst their firm did indeed have a dedicated agricultural and rural property team led by a partner accredited by the Law Society of Scotland as a specialist in agricultural law, that specialism related primarily to non-contentious agricultural matters rather than litigation conducted in the Land Court.

[9] It does not necessarily follow that because the issues raised in a case before the Court are novel, then the case itself must therefore be either difficult or complex. Here, the particular issues of statutory interpretation which were explored by the parties at debate had not been the subject of prior judicial determination, but it cannot, in our opinion, be said that the arguments here were finely balanced and that the decision could easily have gone either way. The parties’ legal representatives did not require to possess any special expertise in agricultural law in order to devise and present the arguments they developed at the debate and we did not, ultimately, find the issues which arose for decision difficult to decide.

[10] We shall assume for present purposes that the Respondent’s submission that had he been unsuccessful in his opposition to the application for an order in terms of section 41(1)(a) of the 2003 Act, the “potential ramifications for him and his ownership of the … [Farm] … and the larger Corsindae estate were significant and adverse to his interests” represents his attempt to invoke sub-paragraph (b) of paragraph (1) of Rule 89 of the 2014 Rules, but without further specification, we are not in a position to assess how significant and adverse to his interests those “potential ramifications”, for him and his ownership of the Farm and the estate of which it forms part, might be. We do know, because it is one of the undisputed facts upon which the debate proceeded, that parts of the Farm have been used for non-agricultural purposes in connection with Monarch’s business since in or about 1996, which might be thought to beg the question what has changed to render this case, in which the Applicant sought an order which would, if granted, have regularised that position, now one of such particular importance to the Respondent as to justify sanction for the employment of counsel under Rule 89(1)(b) of the 2014 Rules. We accordingly hold that the Respondent has failed to make out a case for sanction under this head.

[11] Whilst we entirely understand why the Respondent’s agents should have wished to retain the services of Mr MacColl for the debate, given his prior involvement in the case and familiarity with both the factual background and the legal issues arising, and we acknowledge that in light of that prior involvement, his employment constituted an eminently sensible and efficient use of the Respondent’s resources, we are not entitled, as we interpret Rule 89 of the 2014 Rules, to attach weight to that consideration in determining whether to sanction the employment of counsel. The fact that the Applicant’s agents, at the stage of fixing a date for the hearing, may themselves have had the instruction of counsel in contemplation, but ultimately decided not to do so, is similarly irrelevant to our decision.

Postscript

[12] Rule 1(4)(b) of the 2014 Rules provides that this Court is to have regard to practice in the sheriff court in making any order in relation to a matter not expressly provided for in the 2014 Rules. Here, the circumstances in which we may sanction the employment of counsel are expressly provided for in the 2014 Rules, but those circumstances are more restrictively defined than in the new rule for the sheriff court and the Sheriff Appeal Court set out in section 108 of the 2014 Act, and the scope of our discretion is correspondingly limited. It is difficult to conceive of any reason why there should be a different, and more restrictive, test for sanction of the employment of counsel in the Land Court than that which applies in the sheriff court and the Sheriff Appeal Court, and this seems to us to be a matter deserving of further consideration when the operation of the 2014 Rules is brought under review.