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OUTER HOUSE, COURT OF SESSION
[2008] CSOH 43
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A733/06
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OPINION OF LADY
PATON
in the cause
JOHN HUMPHREYS
PARKES
Pursuer;
against
(FIRST) ROBIN
MacGREGOR, LLB, CA,
and (SECOND) CINTEC INTERNATIONAL LIMITED
Defenders:
ннннннннннннннннн________________
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Pursuer:
Party
First Defender: Lake,
Advocate; Harper Macleod
Second Defender: Barne, Advocate; Shepherd & Wedderburn
11 March 2008
Introduction
(i) English costs order
[1] The pursuer and
Martin Frost were defendants in a patent litigation before Mr Justice
Laddie in the High Court of Justice, Chancery Division, London. They were unsuccessful, as set out in the
judgment Cintec International Limited
v John Humphries [sic] Parkes
(t/a Dell Explosives) and Martin Frost [2003] E.W.H.C. 2328 (Ch).
[2] Following
upon that judgment, a Final Order was issued on 16 October 2003.
That Order inter alia found
the pursuer and Mr Frost jointly and severally liable to pay Cintec
International Limited ("Cintec") interim costs of г90,000. The Order (number 6/6 of process)
provided:
"UPON giving
judgment after trial of the action
AND UPON hearing
leading counsel for the Claimant [Cintec] and both the First and Second
Defendant [the pursuer and Mr Frost] in person,
IT IS ORDERED THAT:
1. both the First Defendant
and the Second Defendant are forbidden (whether acting individually or
together, or through investors, partners, agents or servants, or by instructing
or encouraging others to act) from threatening within the jurisdiction of this
Court, whether expressly or impliedly, whether directly or indirectly
(including through the media or by any other means), anyone with patent
infringement proceedings in the United Kingdom relating to the products
depicted in the photographs and drawings included in this Order, where such
threats are made:
(i) in general terms, and/or
(ii) in terms which either
expressly or impliedly threaten such proceedings in relation to any one or more
of UK Patents Nos. 2,289,750, 2,292,997, 2,294,105, 2,298,911, 2,306,884,
2,314,614, 2,335,259, 2,337,805, 2,341,856 or any patent held in the name of
the First Defendant (either individually or jointly) on 23 June 2003;
2. the Claimant is entitled
to an inquiry into the damages due to the Claimant as a result of the
Defendants' unjustified threats;
3. if the Claimant wishes to
pursue such an inquiry into damages it shall serve Points of Claim upon the
Defendants before 4 p.m. on Friday 16th January 2004;
4. the Defendants shall
serve their Responses to the Claimant's Points of Claim within 8 weeks of
service of the Points of Claim upon them;
5. a case management
conference, if needed, shall be fixed by the Claimant for a date in April 2004;
6. the Defendants are
refused permission to appeal;
7. the Defendants have until
Thursday 13th November
2003 to apply to the Court of Appeal for permission to appeal;
8. the Defendants are
jointly and severally liable for the Claimant's costs of the action, which are
to be assessed on the standard basis and to be subject to detailed assessment
forthwith;
9. the Defendants shall be
jointly and severally liable to pay, as an interim payment on account of the
Claimant's aforementioned costs of the action, the sum of г90,000 to the
Claimant by Thursday 30th October
2003, provided that this paragraph is stayed upon the
following terms:
(i) the Second Defendant
shall undertake to lodge by Thursday 30th October 2003 at a
security holder nominated by the Claimant the painting entitled Seascape by
Richard Parkes Bonnington by way of security for the Defendants' liability
for costs herein;
(ii) the Second Defendant
warrants that he is the beneficial owner of the aforesaid painting;
(iii) the First Defendant
shall undertake as soon as practicable to register a charge on his house,
Redhall Mill, [Colinton] Dell, Edinburgh EH14 1JF by way of security for
the Defendants' liability for costs herein;
(iv) in pursuance of subparagraph (iii),
the First Defendant undertakes as soon as possible:
(a) to procure that the Title
Deeds are lent to the Claimant's Scottish solicitors to enable them to prepare
the documentation relating to the charge; and
(b) to procure any necessary
consent by the first and any subsequent charge holder to the creation of a
charge in favour of the Claimant;
(v) in the event that the
First Defendant's patents or any of them are transferred to a public limited
company, or otherwise disposed of or dealt with, the Defendants undertake:
(a) to pay the interim amount
of г90,000 to the Claimant forthwith;
(b) to provide a cash deposit
of г60,000 into a designated client account at the Claimant's solicitors
to cover the estimated costs of the Claimant on the standard basis;
(vi) If the Defendants have
not made the interim payment of г90,000 and placed a cash deposit of г60,000
into a designated client account at the Claimant's solicitors to cover the
estimated costs of the Claimant on the standard basis by Thursday 11th December
2003 the Claimant shall have the right to enforce the securities under
subparagraphs (i) and (iii) above by way of sale, having recourse first
to the painting (the said right being without prejudice to any other methods of
enforcing the costs orders made above available to the Claimant);
(vii) Both parties shall have
liberty to apply relating to this paragraph 9."
[3] A
manuscript docquet was appended to the Final Order, stating "We consent to an
order in the above terms". The docquet
was signed by the pursuer and Mr Frost.
Accordingly the pursuer expressly consented to the entire Final Order,
with all its conditions.
(ii) Registration of English
costs order in Scotland
[4] The conditions suspending
enforcement of the interim costs order were not fulfilled. The pursuer and Mr Frost became liable
to pay the interim costs of г90,000.
The costs remained unpaid. On 5 February 2004, on Cintec's
application, Mr Justice Laddie granted a Freezing Injunction against the
pursuer and Mr Frost, inter alia prohibiting
them from disposing of, dealing with or diminishing the value of any of their
assets, up to a value of г185,000.
Further, on Cintec's application, in terms of the Civil Jurisdiction and
Judgments Act 1982, Schedule 6, paragraph 5, and rule 62.37
of the Rules of the Court of Session, a certificate of the costs order was
registered in the register of judgments of the Books of Council and Session.
[5] Schedule 6
of the 1982 Act provides inter alia as
follows:
"General effect of registration
6.(1) A certificate registered under this Schedule shall, for the
purposes of its enforcement, be of the same force and effect, the registering
court shall have in relation to its enforcement the same powers, and
proceedings for or with respect to its enforcement may be taken, as if the
certificate had been a judgment originally given in the registering court and
had (where relevant) been entered.
(2) Sub-paragraph (1) is subject to the
following provisions of this Schedule and to any provision made by rules of
court as to the manner in which and the conditions subject to which a
certificate registered under this Schedule may be enforced ...
Stay or sisting of enforcement in certain
cases
9. Where
a certificate in respect of a judgment has been registered under this Schedule,
the registering court may, if it is satisfied that any person against whom it
is sought to enforce the judgment is entitled and intends to apply under the
law of the part of the United Kingdom in which the judgment was given for any
remedy which would result in the setting aside or quashing of the judgment,
stay (or in Scotland, sist) proceedings for the enforcement of the judgment, on
such terms as it thinks fit, for such period as appears to the court to be
reasonably sufficient to enable the application to be disposed of.
Cases in which registration of a certificate
must or may be set aside
10. Where
a certificate has been registered under this Schedule, the registering
court -
(a) shall set aside the
registration if, on an application made by any interested party, it is
satisfied that the registration was contrary to the provisions of this
Schedule;
(b) may set aside the
registration if, on an application so made, it is satisfied that the matter in
dispute in the proceedings in which the judgment was given had previously been
the subject of a judgment by another court or tribunal having jurisdiction in
the matter."
[6] Rule 62.37
of the Rules of the Court of Session provides as follows:
"Enforcement of judgments from another part
of the United
Kingdom in Scotland (money provisions)
(1) An application under paragraph 5
of Schedule 6 to the Act of 1982 (application for registration in the Court
of Session of a certificate in relation to a money provision in a judgment from
another part of the United Kingdom) shall be made by presenting to the Keeper
of the Registers -
(a) a certificate under paragraph 4(1)
of Schedule 6 to the Act of 1982; and
(b) any certificate of
currency conversion under rule 62.2(1)(b).
(2) On presentation of the
certificate mentioned in paragraph (1)(a), the Keeper of the Registers
shall -
(a) register the certificate
in the register of judgments of the Books of Council and Session; and
(b) issue an extract of the
certificate with a warrant for execution.
(3) An application under -
(a) paragraph 9 of schedule 6
to the Act of 1982 (application to sist proceedings for enforcement of a
certificate registered under paragraph (2) of this rule), or
(b) paragraph 10 of Schedule 6
to the Act of 1982 (application to reduce the registration under paragraph (2)
of this rule),
shall be made by petition."
(iii) Charge for payment and
subsequent sequestration
[7] Thereafter, a charge for
payment of the costs of г90,000 was served on the pursuer. The charge expired without payment. Cintec then sought the pursuer's
sequestration in Edinburgh sheriff
court, relying upon the expiry of the charge without payment as constituting
apparent insolvency in terms of section 7 of the Bankruptcy (Scotland)
Act 1985.
[8] Section 7
of the 1985 Act provides inter alia:
"(1) A debtor's apparent insolvency shall be
constituted ... whenever -
(a) any of the following circumstances
occurs - ...
(ii) following the service on
him of a duly executed charge for payment of a debt, the days of charge expire
without payment ...
unless it is
shown that at the time when any such circumstance occurred, the debtor was able
and willing to pay his debts as they became due or that but for his property
being affected by a restraint order or subject to a confiscation, or charging,
order, he would be able to do so ...
... and in the
foregoing provisions of this subsection -
'charging order'
has the meaning assigned by section 78(2) of the Criminal Justice Act 1988
or by section 27(2) of the Drug Trafficking Act 1994;
'confiscation
order' and 'restraint order' mean a confiscation order or a restraint order
made under Part 2, 3 or 4 of the Proceeds of Crime Act 2002..."
[9] On
10 June 2004, the
pursuer was sequestrated.
(iv) Pursuer's actions for
recall of sequestration, and reduction of award of sequestration
[10] In this action, the pursuer
seeks reduction of the award of sequestration.
In another action, he sought recall of the award of sequestration. Relevant dates in relation to each action are
as follows:
[11] The petition for recall: A petition for recall was presented to the
Court of Session in 2004. First orders
were granted on 22 June 2004. There followed a delay in the service of the
petition. On 25 January 2005, Cintec sought an order against the
pursuer, ordaining him to advertise and serve the petition. Ultimately, the question of recall was
debated before Lord Macphail. On 26 July 2005, he dismissed the
petition. The pursuer reclaimed. The matter came before the Inner House on 30 November 2005, when the
pursuer no longer insisted upon the reclaiming motion (apparently under the
impression that he held a decree for reduction:
see paragraph [12] below).
The reclaiming motion was duly refused for want of insistence.
[12] The summons for
reduction: The first step in the
current action for reduction of the award of sequestration was the pursuer's
motion for interim interdict against the trustee in bankruptcy (the first
defender, hereinafter referred to as "the trustee"). On 10 December
2004, Lord Menzies refused the motion, as he was not satisfied
that a prima facie case had been made
out. Later in December 2004, the
papers in the case came before me in chambers with the following Note from a
Clerk of Court:
"My Lady,
I am unsure of
how to proceed with the attached motion.
The case
involves a debtor who is applying by Summons to reduce an award of
sequestration dated 10/6/04.
The petitioning
creditor from the sequestration proceedings [i.e. Cintec] wishes to apply by
motion to be sisted in this action really as a [watching] brief, although they
may, I am told, dependant on the pleadings, seek to lodge answers.
Would you be
prepared to grant the motion without appearance? "
On 22 December 2004 I granted Cintec's motion to be
sisted as a defender to the present action, without requiring the appearance of
counsel or parties, and without requesting any submissions. Thereafter the trustee and Cintec failed per incuriam to enter appearance. On 28 September
2005, decree in absence was granted, reducing the award of
sequestration. The defenders then
undertook a reponing procedure. As a
result, the decree in absence was recalled on 7 October 2005.
(v) Debate in action for
reduction of award of sequestration
[13] After sundry procedure, the
action for reduction came before me for debate on 5-6 July 2007, and
1-2 November 2007. Both the trustee
and Cintec sought dismissal of the action.
The pursuer for his part sought decree de plano. He advised the court that he had been
formally discharged from bankruptcy on 8 March
2007.
The pursuer's pleadings
[14] In the first three articles
of Condescendence, the pursuer avers that the proceedings in the Chancery Court
in England were ultra vires; that Cintec fraudulently misled the Chancery
Court; that evidence and productions had
been tampered with; and accordingly that
the decisions of the Chancery Court (and thus the Scottish award of
sequestration) should be set aside and reduced.
Further, it is maintained that the debt in question was not a liquidated
sum, and should not have been registered in Scotland. Finally, it is pointed out that, in terms of
S.I. 1986/1925, the pursuer could not have been sequestrated in England.
[15] In Article 4 of Condescendence, the pursuer in effect
seeks to review the merits of the decision to award sequestration, arguing that
he was hampered in paying the interim costs of г90,000 by the English
Freezing Injunction. In Article 5,
the pursuer (i) challenges the conduct of the sequestration, averring
alleged breaches of fiduciary duty on the part of the trustee in
bankruptcy; and (ii) makes
averments about Cintec's alleged motive in seeking sequestration (being in
effect "a scheme designed to remove the pursuer as a pre-established competitor
in the field of Water Suppression of Explosives, Bombs, and terrorist devices
..."). Article 6 relates to
expenses. Article 7 draws attention
to a possible confusion between Cintec and QuintetQ, the semi-privatised
Ministry of Defence agency. Article 8
contains criticisms of Mr Justice Laddie, and averments that he should not
have granted the Freezing Injunction. In
Article 9, the pursuer avers that Cintec misled Mr Justice Laddie
when seeking the Freezing Injunction, and in Article 10, makes averments
about Cintec's alleged motive in seeking the Freezing Order. Articles 11, 12, and 13 allege
non-compliance of legislation such as section 70 of the Patents Act 1977
and section 7 of the Bankruptcy (Scotland)
Act 1985 with European Community law, and with the European Convention on Human
Rights (ECHR). Article 14 concerns
the alleged wrongful admission of two claims by the trustee in bankruptcy.
Submissions for the trustee
(i) No exceptional
circumstances justifying reduction
[16] Mr Lake referred to the
Bankruptcy (Scotland)
Act 1985 sections 5, 7, 9, 12, 15(4), 16, and 17. Section 15(4) is in the following terms:
"Without
prejudice to any right to bring an action of reduction of an award of
sequestration, such an award shall not be subject to review otherwise than by
recall under sections 16 and 17 of this Act."
With reference to section 15(4),
Mr Lake cited authorities giving guidance about the availability of the
remedy of reduction, and the circumstances in which reduction might be
granted. He referred to Adair v Colville & Sons 1926 S.C. (H.L.) 51, Viscount Dunedin at pages
55 to 56, Lord Shaw at pages 60 to 62, and Lord Carson at page
67; Central
Motor Engineering Co. v Galbraith 1918
S.C. 755, the Lord President at pages 765 to 766, and 768 to 769, Lord Mackenzie at pages 769 to 770, and Lord Skerrington
at pages 770 to 771; and Smillie v Olympic House Ltd 2004 S.L.T. 1244, Lord Drummond Young at
paragraphs [6] and [10]. Those
authorities established that (unlike the wide discretion available in recall of
a sequestration to which sections 16 and 17 of the 1985 Act applied) there was
only a very narrow basis upon which reduction might be granted. Possible grounds for reduction might be a
fraud on the court, or lack of jurisdiction.
The test was a high one: the
court proceedings had to be demonstrated to be "fundamentally null". A mere error of law, or a particular view
taken on the facts, would not suffice. Counsel
stated that he did not contend that the pursuer's previous action for recall
rendered the action for reduction incompetent.
However he did contend that reduction was a remedy rarely granted, only in
exceptional circumstances, and that there were no relevant averments of such exceptional
circumstances in the present case.
(ii) Enforcement of the
English judgment in Scotland
[17] Counsel referred to the
Civil Jurisdiction and Judgments Act 1982, section 18 and Schedule 6. A certificate had been obtained from the
English court in terms of that section and schedule. In terms of paragraph 3 of Schedule 6,
such a certificate would not be issued until:
"(a) either -
(i) the time for bringing an
appeal against the judgment has expired, no such appeal having been brought
within that time; or
(ii) such an appeal having
been brought within that time, that appeal has been finally disposed of; and
(b) enforcement of the judgment
is not for the time being stayed or suspended, and the time available for its
enforcement has not expired."
Accordingly the certificate could
not have been obtained unless a stage in proceedings had been reached when the
successful party was entitled to enforce the judgment.
[18] The certificate had been duly registered in terms of Rule of
Court 62.37 (quoted in paragraph [6] above).
[19] Referring to paragraphs 6 and 9 of Schedule 6 to the 1982
Act, counsel submitted that, if the pursuer wished to challenge the English
decision, he had to suspend the registered decree. Until he did so, the registered decree was a
proper basis for the sequestration. Only
the English court could reduce the English decree. Reference was made to Clarke v Fennoscandia Limited 1998 SC 464, at pages 467G to 468C,
468G to 469A. The Scottish courts could
not determine whether the English proceedings were vitiated. Thus the validity of the English decree had
to be challenged in the English courts.
Paragraph 9 of the Schedule gave the pursuer a breathing-space,
but it did not give the Scottish courts power to review what had occurred in
the courts in another jurisdiction. Thus
where a debtor received a charge for payment on the basis of a certificate
granted in terms of the 1982 Act (which was as good as a decree), or where he
received a copy of a petition for sequestration, the appropriate course for a
debtor who wished to resist enforcement was to apply to the Court of Session in
terms of paragraph 9 to suspend the operation of the certificate pending
the exploration and resolution of matters in England. It would also be appropriate for the debtor
to enter any Scottish sequestration proceedings to explain that the judgment
which formed the basis of the sequestration was under challenge and had been
suspended by the Court of Session, and that sequestration should not be granted
meantime.
(iii) No relevant case
disclosed in the Closed Record
[20] Counsel then referred to the
Closed Record. Taking each article of
Condescendence in turn, he submitted that there were no relevant averments to
support the first conclusion "for the production and reduction of the decree
(award) of sequestration dated 10 June
2004 and or the 8 March
2004".
[21] Details of counsel's submissions under this head are reflected
in the section headed "Discussion" below.
Counsel ultimately submitted that the pursuer's pleadings either sought
a remedy which the Scottish courts could not give (i.e. concerning reduction of
the decisions and orders of an English court), or, where they sought a remedy
which the Scottish courts might give, the pleadings did not disclose a proper
basis upon which that remedy might be granted.
Conclusion
[22] Counsel invited the court to
sustain the trustee's (first defender's) second plea-in-law insofar as the
pursuer's case was concerned with attacks on the English proceedings, and the sixth plea-in-law (directed to relevancy); and to dismiss the action.
Submissions for Cintec
[23] Counsel for Cintec formally
adopted the trustee's submissions in their entirety, with the proviso that
Cintec wished to challenge the competency of the action of reduction where an
action for recall of sequestration had already been attempted. The court was invited to sustain Cintec's
(the second defender's) second, fourth, and fifth pleas-in-law.
(i) The enforcement of
foreign decrees and adoption of the trustee's submissions
[24] Counsel had four
propositions:
(1) Section 18 and Schedule 6
of the Civil Jurisdiction and Judgments Act 1982 provided a mandatory
scheme for the enforcement of United Kingdom
court monetary judgments from one part of the United
Kingdom to another part of the United
Kingdom.
(2) Schedule 6 of the
1982 Act provided exhaustive grounds on which any attempt to enforce a monetary
judgment from another part of the United Kingdom which had not been correctly
certified in terms of Schedule 6 might be resisted.
(3) It was not competent to
look behind a certificate issued in terms of Schedule 6 by attacking the
court judgment forming the basis of the certificate; and therefore
-
(4) It was not competent for
the pursuer to seek to set aside ope
exceptionis judgments of the English court.
It was not clear whether the pursuer challenged the costs order, or
decisions on the merits, but whichever English judgment he sought to reduce, it
was incompetent for him to do so. It was
a form of "back-door" review which the court had rejected in Clarke v Fennoscandia Limited 1998 SC 464.
The first defender's submissions on this matter were adopted.
[25] Counsel further submitted that this was not a case where a
party sought decree conform, at common law.
There was a statutory scheme (the 1982 Act), and when it came to a
question of enforcing court orders granted in one United Kingdom jurisdiction in
another United Kingdom jurisdiction, it was not the common law which applied,
but rather section 18 and Schedule 6 to the 1982 Act. Referring to Dicey, Morris and Collins on The Conflict of Laws (14th edition)
at page 574, counsel submitted that Rule 35 (concerning decree
conform) of the English Rules of Court was not relevant: it was section 18 and Schedule 6 to
the 1982 Act which provided an exclusive procedure by way of registration (page
678). Thus a later Fennoscandia report (2001 S.L.T. 1311) in which a proof before
answer was permitted on averments of fraud in American proceedings was not
relevant, as it was not a case involving the 1982 Act.
[26] When considering the relevancy of the averments, the only
decree with which the court should be concerned was the award of
sequestration. Thus when considering the
question of exceptional circumstances, only the circumstances surrounding the
award of sequestration in the Scottish sheriff court were relevant, and not the
circumstances surrounding any other court order or decree.
(ii) Additional argument
challenging the competency of the present action
[27] Having adopted and enhanced Mr Lake's
submissions, Mr Barne went further and submitted that, in the
circumstances of the present case where the remedy of recall had already been resorted
to by the pursuer, it was not competent for him to seek a decree of reduction
of the same award of sequestration at the same time as seeking a recall.
[28] Counsel accepted that it was competent to seek reduction of an
award of sequestration. There had been
some doubt in earlier authorities, because of the existence of the remedy of
recall. But the cases demonstrated that,
where the alternative remedy of recall was not used, it was competent to seek
reduction.
[29] Reference was made to Adair
v Colville & Sons, cit. sup. at page 55; Smillie
v Olympic House Ltd, cit. sup.; Wright
v Tennent Caledonian Breweries Ltd 1991
S.L.T. 823; McBryde, Bankruptcy (2nd ed.) at paragraph 6-24. Counsel submitted that a proper reading of
those authorities (although they were not entirely clear) suggested that if an
action of recall of sequestration were raised, it was not competent to raise an
action of reduction at the same time.
Only if the recall action had been finalised, and subsequently new
material emerged, could a debtor seek reduction of the award of sequestration.
(iii) Concluding submissions
for Cintec
[30] Counsel contended that, esto the summons was competent, it was
irrelevant for all the reasons advanced by Mr Lake. No exceptional circumstances justifying
reduction had been made out. Even if the
court were to conclude that the averments of fraud were relevant, they were too
inspecific to give the defenders fair notice.
It was not clear from the pleadings what the alleged fraud was, or why
it was said to affect the outcome of the action or the counterclaim. However Cintec's primary position was that
the action was incompetent, for the reasons given. Cintec's second, fourth and fifth pleas-in
law should be sustained, and the action dismissed as incompetent, failing which
as irrelevant or inspecific.
Pursuer's motion for a sist, or a proof, or a proof before answer
[31] Responding to the defenders'
submissions, the pursuer moved for a sist, or a proof, or a proof before
answer. The reason for the sist was the
imminence of an Inner House judgment in Wilkie
v AIB and Brown, which might be
relevant to the sisting of the petitioning creditor Cintec as a party to the
present action on 22 December
2004 (see paragraph [12] above). The pursuer considered that Cintec had no locus in the present action. However he had been given no opportunity to
oppose the sisting of Cintec as a party.
Cintec had taken virtual control of the present proceedings. It had been Cintec who organised the reponing
procedure. The pursuer felt that, but
for Cintec's involvement, the decree in absence reducing the award of sequestration
would have remained in existence, and he would not have had to be in court,
arguing the matter. The Accountant in Bankruptcy
was adopting one position (unfavourable) about sisting the petitioning creditor
in Wilkie, and quite another position
(favourable) in the present case. Thus
the present action should be sisted until the Inner House judgment clarified
the law.
[32] The pursuer further explained that the Freezing Injunction,
together with Cintec's litigation against him in the USA,
had made matters difficult for him. Had
the Freezing Injunction been a restraint order, the pursuer would not have been
sequestrated. His motion at present was
to sist the action for reduction.
[33] Mr Lake for the trustee invited the court to deal with the
pursuer's motion at the same time as ruling upon the merits of the debate. He submitted that there was nothing in Wilkie v AIB and Brown which was relevant to the present debate. In Wilkie,
the trustee sought reduction of a gratuitous alienation, and much turned on
the precise wording of the legislation.
By contrast, the present case concerned reduction of an award of
sequestration; whether Scottish courts
could interfere with an English decree;
and whether there were averments of the exceptional circumstances which
might justify reduction of a decree. The
present case was at a procedure roll debate which might result in the
resolution of the whole matter. It was
therefore inappropriate to grant a sist at this stage.
[34] Mr Barne for Cintec made similar submissions.
[35] In the exercise of my discretion, I ruled that I would hear all
the submissions, and then write on all the submissions and issues together. Accordingly I continued the pursuer's motion
to sist until the end of the debate, at which point I would take the matter to avizandum together with all other
issues, and ultimately issue a written ruling.
The pursuer wished to have it expressly recorded that the fact that the
debate was to continue should not be taken as a concession on his part, or a departure
from his stated position, namely that he questioned Cintec's locus in the
present action and wished to have the present action sisted pending the outcome
in the case of Wilkie v AIB and Brown. The pursuer then proceeded to present his
submissions.
Submissions for the pursuer
[36] The pursuer stated that the
whole litigation process had begun in Scotland. It was to do with intellectual property and
safety. He had become aware that Cintec
might be infringing his patents relating to controlled explosions, and that
there might be safety implications. He
described Cintec as:
"... a late-coming
plagiariser ... who had produced a defective product which was then sold to the
British Army for use in Iraq"
(all as set out in paragraph 3-19
of the document entitled "The Pursuer's Initial Concerns", referred to in paragraph
[42] below). He contended that
plagiarism is a form of fraud (paragraph 4-4 of the continuation of that
document).
[37] The pursuer accordingly raised an action in the Court of
Session, and sought interim interdict before Lord Bonomy. Interim interdict was refused, but the court
was concerned about the safety issues.
Ultimately the pursuer did not lodge the summons for calling.
[38] The next development was Cintec's raising of proceedings in the
Chancery Court in London. In terms of section 70 of the Patents
Act 1977, Cintec sought to restrain the pursuer from making illegitimate claims
about alleged patent infringement. The
pursuer decided to defend the action. He
mortgaged his home to fund his defence.
He reached an agreement with Mr Frost such that the latter had a
share in the patents and acted as the second defendant and lead litigant in the
defence. Ultimately the defence was
unsuccessful. The Final Order dated 16 October 2003 was
issued. Cintec had also raised
proceedings against the pursuer in the USA.
The pursuer was conducting that litigation on his own. He hoped to be the first party litigant to
reach the Supreme Court.
[39] In the course of the debate, the pursuer sought leave to lodge
in process:
(a) An open letter to the Lord President,
dated 23 October 2007,
entitled "Open letter - true cause of the Lockerbie Air Disaster" (number 6/22
of process).
(b) A 53-page document
entitled "Complaint by [the pursuer]:
Nature of complaint: Conspiracy
to Defraud John H Parkes Explosives Engineer (Trading as Dell Explosives) by
Cintec International Ltd & Cintec USA, said fraud aided and abetted by
Cintec's manifold legal agents in England, Scotland, & the United States of
America" (number 6/21 of process).
(c) A copy of the August 2007
edition of "The Firm" magazine, containing an article high-lighting the
pursuer's involvement in the aftermath of the Lockerbie disaster (number 6/23
of process).
[40] Mr Lake for the trustee did not object to the late lodging
of those productions, provided that (i) they were not deemed to be part of
the pleadings; and (ii) counsel would
refer only to such parts of the productions as were referred to by the pursuer
in the course of his submissions. Mr Barne
for Cintec adopted a similar approach.
[41] I allowed the productions to be lodged, subject to the provisos
expressed by counsel. In relation to the
53-page document, the pursuer ultimately referred to the following parts: page 7 paragraph (7), page 8 paragraphs
(9), (10), and (11), page 11 the paragraph headed "Re Transco plc", page
12 paragraph (15), pages 13, 14, and 15 paragraph (19) with
notes (iii), (iv), (v), (vi), (x) and (xi), page 18 paragraph (8), page 19
paragraph (10), page 23 paragraphs (c) and (d), page 37 paragraphs (3)
to (6) and AIB Support, page 36 paragraphs (1) and (2), and page 35 paragraph (4).
[42] The pursuer then presented an outline of argument entitled "The
Pursuer's Initial Concerns", and (later in the debate) a further two-page
extension. With reference to page 1 of
that document, the pursuer drew attention to the article in "The Firm"
magazine, and to the open letter to the Lord President dated 23 October 2007. That letter
stated inter alia:
"... Although I have up to this point hesitated to
make a connection between my knowledge of the actual cause of the Lockerbie
disaster and my present experiences in the Courts, the relentless and ruthless
abuse of the legal process in the English, American, and Scottish courts at my
expense finally leads me, and several sympathetic informed observers, to
conclude that I may be the victim of a political agenda. It now appears clear to all concerned that
the loss of my patents and my sequestration in Scotland
is but part of a subtly engineered mechanism to reduce me in all senses. I am financially ruined and on the verge of
being rendered homeless. The cumulative
effect of the aforementioned events has undoubtedly affected my health and led
to two strokes. My doctor has informed
me that my life expectancy has been reduced ..."
[43] The pursuer referred to pages 2 to 13 of "The
Pursuer's Initial Concerns". Those pages
record concerns about the behaviour of Cintec and the trustee.
[44] In paragraph 3-9, the pursuer drew attention to the fact
that:
"... shortly after
Cintec's English action against the pursuer, the UK Patents Act was revised in
order to bring said statute into compliance with EU Community and Human Rights
Law. The result of this revision was
that section 70 of the UK Patents Act was overhauled to the extent that
the pursuer could not have been found guilty of issuing 'unjustified threats of patent infringement proceedings' had the
Patents Act at that time been compliant EU and Human Rights Law."
[45] In paragraphs 3-10, 3-11, and 3-13, the pursuer states that "a
freezing order is a restraint order by any other name ... Cintec's freezing order
was but another mechanism employed to further reduce and cripple the pursuer ...
the pursuer [in the sheriff court] ... was armed with authorities that show a
freezing order [has] for all [intents and purposes] the same effect as a
restraining order."
[46] The pursuer contended that the award of г90,000 as an
interim payment on account of Cintec's costs in the Chancery Court was not a
liquidated sum. He referred to Article 43
of the Hague Convention:
"A foreign
judgement which orders a periodic payment by way of a penalty shall be
enforceable in the State in which enforcement is sought only if the amount of
the payment has been finally determined
by the courts of the State of origin."
[47] The pursuer claimed that costs were still to be
determined. He had appealed the costs order. He understood that such appeals were ruled
upon by one judge, and were generally refused.
[48] The pursuer further submitted that it was not possible to obtain
a greater penalty in a second state than could be obtained in the genesis
state. In England,
one could be sequestrated for a period of one year only, whereas in Scotland
the penalty was greater, as one could be sequestrated for a period of three
years. In support of his proposition,
the pursuer referred to Horst Ludwig
Martin Hoffmann v Adelheid Krieg [1988] EUECJ R-145/86, where the European Court held that a foreign judgment which has
been recognised by virtue of Article 26 of the Brussels Convention of 27 September
1968 on Jurisdiction and the Enforcement of Judgments in Civil and Commercial
Matters must in principle have the same effects in the state in which enforcement
is sought as it does in the state in which judgment was given.
[49] Cintec had inflicted far greater commercial and physical damage
upon the pursuer in Scotland
than it could have done in England,
where there was an automatic right of appeal against an award of bankruptcy,
and where a debtor could be freed from bankruptcy after one year (rather than the
three year period in Scotland). In paragraph 4-2 the pursuer stated that
"Whereas Cintec's frauds were committed upon the Chancery Court in England
and a Scottish defendant, the [pursuer] contends that when Cintec used Scotland's
courts and her draconian insolvency provisions as a weapon to destroy and bury
said pre-established Scottish competitor, that action itself becomes
fraudulent". In a second paragraph 4-2,
the pursuer in effect seeks decree de plano:
"With the
greatest respect to the court, and reliant upon his averments in paras 4-1
and 4-2 above, and in the interest of bringing these proceedings to a swift
conclusion, the pursuer submits that in the light of the petitioning creditor's
frauds, this is cause enough to reduce the [pursuer's] sequestration."
[50] Reference was then made to Derry v Peek (1899)
14 App. Cas. 337, where it was stated that "fraud is proved when it is shown a
false representation has been made (1) knowingly; or (2) without belief in its truth; or
(3) reckless or careless whether it be true or false"; and to R
v Secretary of State for the Environment
& William Morrison Supermarket plc CO/1314/95 (High Court of Justice, Queen's
Bench Division), where the law on bias was set out, and Lord Woolf stated:
"When
considering whether there is a real danger of injustice, the court gives effect
to the maxim [that justice must be seen to be done], but does so by examining
all material available and giving its conclusion on that material."
Further, in R v Inner West London Coroner, ex parte Dallaglio [1994] 4
All E.R. 129, Simon Brown L.J. advanced the following proposition:
"Any court
seized of a challenge on the ground of apparent bias must ascertain the
relevant circumstances and consider all the evidence for itself so as to reach
its own conclusion on the facts."
The pursuer pointed out that, in
his sequestration, the trustee would be paid out of the pursuer's estate. Further, the pursuer had criticisms of the
way in which the trustee had dealt with his patents, a valuable part of his
estate.
[51] The pursuer submitted that the crucial question in the present
case was: "Who is the liar? Who is the cheat?" The issue was whether Cintec was guilty of
frauds on the Chancery Court. As a
result of its approach in the Chancery Court, Cintec had a judgment in Scotland. The pursuer believed that it was also fraudulent
to use the draconian powers of the Scottish Bankruptcy Act as a brutal debt
collection instrument. One could not
achieve a stronger penalty in the second state than one could in the first
state. Thus, for example, one could not
extradite an individual to a state which had the death penalty. It was an abuse of the insolvency process to
seek the pursuer's sequestration in Scotland.
Reference was made to Lazarus
Estates Ltd v Beasley [1956] 1 QB 702, where Lord Denning stated:
"No court in
this land will allow a person to keep an advantage which he has obtained by
fraud. No judgment of a court, no order
of a Minister, can be allowed to stand if it has been obtained by fraud. Fraud unravels everything. The court is careful not to find fraud unless
it is distinctly pleaded and proved; but
once it is proved, it vitiates judgments, contracts and all transactions
whatsoever ..."
Lord Johnston had noted similar
submissions from counsel at paragraph [15] of Clarke v Fennoscandia Ltd (No
2) 2001 S.L.T. 1311 at page 1313K-L as follows:
"... Both the
English and Scottish courts recognise that fraud on the court raises relevant
issues in respect of the enforceability of foreign decrees ... That the court
would interfere also by means of interdict was clear from the case of Ellerman Lines Ltd v Read [1928] 2 K.B. 144. [Counsel] argued strongly that the element of
justice featured strongly in the equation in as much that if this defence was
legitimate and excluded, a gross injustice would have been done to the
interests of the pursuer ..."
[52] Summarising his reasons why, in his submission, a Scottish
court could reduce an English decree, the pursuer referred to:
(i) The maxim "Ex turpi causa non oritur actio"
(translated in Trayner's Latin Maxims as "No right of action arises from a
disgraceful or immoral consideration").
(ii) The dicta of Lord Johnston in Clarke
v Fennoscandia Ltd (No 2) 2001
S.L.T. 1311, referred to in paragraph [51] above.
(iii) Horst Ludwig Martin Hoffmann v Adelheid
Krieg, referred to in paragraph [48] above.
[53] Concluding his submissions under reference to his 53-page
document (referred to in paragraph [39] above) the pursuer made the
following further complaints about what had happened:
The
non-published patent lie/fraud
[54] The pursuer stated that Cintec
had lied in court about Cintec's patent not being published. He referred to the 53-page document at page 7
paragraph (7); page 12 paragraph (15),
page 13 paragraphs (19) and (iii), page 14 paragraphs (iv) (v)
and (vi), page 15 paragraph (x), and page 18 paragraph (8).
The
freezing order
[55] The pursuer stated that
there had been lethal use of the freezing order. He referred to the 53-page document at page
19 paragraph (10).
Altered
evidence
[56] The pursuer stated that
there had been 25 or 26 bundles of productions before Mr Justice
Laddie. Photographs and materials had
been altered. Certain facts had been
hidden (for example, the issue of a defective product, and of rigid supports to
prevent certain consequences of an explosion).
The pursuer did not think that Messrs. Shepherd & Wedderburn
had been aware of the alterations or the implications arising therefrom. The pursuer referred to the 53-page document
at page 8, paragraphs (9) (10) (11) and the additional note, and page
11. He explained that he had been
concerned about the product and about safety, and had made Transco (potential clients
of Cintec) aware of his concerns.
Undue
influence and pressure preventing payment
[57] The pursuer referred to a
letter from Messrs. Shepherd & Wedderburn to the pursuer's then solicitors
(Messrs. Doyle & Co. Edinburgh) dated 23 February 2004, in which certain proposals were put
to the pursuer. The pursuer had then
attempted to remortgage his home.
However a subsequent fax from Messrs. Shepherd & Wedderburn dated 6 April 2004 (attached to an
early version of the Closed Record number 21 of process at page 6-7)
pointed out that if the pursuer were to remortgage his property, he would be in
breach of the Freezing Order. Cintec's
instructions were to be sought on the matter, and the pursuer was expressly
reminded that one option open to Cintec was to "seek [the pursuer's] committal",
i.e. imprisonment for breach of a court order.
Vexatious
litigant scenario
[58] The pursuer referred to
page 23 of the 53-page document in connection with an incident where
Cintec had presented certain correspondence to the court in the USA. The correspondence concerned an attempt
(ultimately unsuccessful) to have the pursuer declared a vexatious litigant.
[59] The pursuer's position was that he was entitled to decree de plano. The
action should not be dismissed. His
primary motion was that the action should be sisted to await the Inner House
ruling in Mr Wilkie's case.
Reply on behalf of the trustee
[60] Mr Lake referred to Lord Johnston's
decision in Clarke v Fennoscandia Ltd (No 2) 2001 S.L.T.
1311. That case had concerned a foreign
judgment to be enforced at common law.
Scottish courts could refuse to enforce a decree at common law if there
were stateable averments of fraud on the initiating court in another
country. Matters were very different
where the enforcement in Scotland
was governed by section 18 and Schedule 6 of the Civil Jurisdiction
and Judgments Act 1982. Accordingly
Lord Johnston's decision could not be prayed in aid by the pursuer.
[61] The pursuer had suggested that there were no denials of fraud
in the pleadings. That was not correct,
as there were general denials throughout the defenders' pleadings, entitling
them to a proof. Decree de plano should
not therefore be granted.
Reply on behalf of Cintec
[62] Mr Barne confirmed that
the present case concerned section 18 and Schedule 6 of the 1982 Act,
not enforcement of a foreign decree at common law. Accordingly the court must look at Schedule 6
for a possible defence to enforcement.
None of the circumstances identified in Schedule 6 had been
relevantly pled. As was made clear in
Dicey, Morris and Collins on The Conflict
of Laws (14th ed.) at paragraph 14-243, in such
circumstances fraud was not a ground for setting registration aside.
[63] In relation to the pursuer's submissions concerning bias, it
was not clear who was said to be biased.
If the accusation was made against the Accountant in Bankruptcy, that
was not relevant to the question whether there should be a reduction of the
award of sequestration.
Discussion
[64] The pursuer seeks reduction
of the award of sequestration granted in Edinburgh
sheriff court on 10 June 2004. In Scots law, such a remedy may be granted
only in exceptional circumstances: section 15(4)
of the Bankruptcy (Scotland) Act 1985;
Adair v Colville & Sons 1926 S.C. (H.L.) 51, at pages 55 to 56, 60
to 62, and 67; Central Motor Engineering Co v Galbraith 1918 S.C. 755, at
pages 765 to 766, and 768 to 771;
Smillie v Olympic House Ltd 2004 S.L.T. 1244, at paragraphs [6] and
[10]. Exceptional circumstances might
include a fraud on the court, or a lack of jurisdiction. A pursuer must demonstrate that the
proceedings are fundamentally null, not simply that the sheriff made an error
in law, or took an approach or a view of the facts with which the pursuer did
not agree.
[65] In the present case, the pleadings contain no averments of such
exceptional circumstances insofar as relating to the sheriff court proceedings. In particular, Articles 1 to 3 of
Condescendence contain no averments of fraud or ultra vires acts occurring in the sequestration proceedings in the
sheriff court in Scotland. The statutory
instrument referred to (S.I. 1996/1925) applies to England,
and is not applicable in relation to the Scottish courts who have jurisdiction
over the pursuer in matters relating to sequestration. In relation to Article 4, the restraint
orders referred to in section 7 of the Bankruptcy (Scotland) Act 1985 are
very different from freezing injunctions, as the sheriff correctly held; also there are no averments of, for example,
fraud or fundamental nullity. In Article 5,
the criticisms of the trustee do not provide a relevant basis for reduction of the
sequestration award, as (i) the Bankruptcy (Scotland) Act 1985 permits a
review of events following sequestration in petition proceedings for recall,
but not in petition proceedings for reduction, and (ii) in any event,
there are no averments suggesting that the award of sequestration itself was a
fundamental nullity. Nor do the
averments relating to Cintec's alleged motive in seeking sequestration provide
a relevant basis for reduction.
Articles 6, 7 and 8 contain no averments justifying the
reduction of the Scottish award of sequestration. Article 9 concerns the procedure in the
English court, which would require to be challenged in England: see Clarke v Fennoscandia Limited 1998 S.C. 464, in particular Lord Justice
Clerk Cullen at page 468 G:
"As regards the
enforcement of the English order for costs by means of a procedure for
registration under the Civil Jurisdiction and Judgments Act 1982, it is
clear that a Scottish court is not entitled to review the judgment which is
sought to be enforced."
Article 10 of Condescendence
contains averments relating to Cintec's alleged motive in seeking the Freezing
Injunction and are not relevant to support a claim for reduction of the
Scottish award of sequestration.
Articles 11, 12 and 13 relate to alleged non-compliance of United
Kingdom legislation with European Community
law and the ECHR, which has no relevance in the context of the remedy which the
pursuer seeks. In any event, the present
action is an inappropriate procedure in which to challenge United Kingdom
legislation which has been duly enacted by Parliament. Article 14 relates to events occurring
after the award of sequestration, and does not provide a relevant ground for
reduction of that award. Thus the
summons fails to make relevant averments which would support a conclusion for
reduction of the award of sequestration in the sheriff court in Scotland.
[66] Furthermore, the procedures in the present case are governed by
the Civil Jurisdiction and Judgments Act 1982. The sheriff court was presented with a prima facie valid certificate in terms
of that Act. As the certificate had been
registered in Scotland
in terms of Schedule 6 to the 1982 Act, enforcement in Scotland
is governed by section 18 and Schedule 6 to that Act: cf. Dicey, Morris and Collins, The Conflict of Laws (14th
ed.) paragraphs 14-242 and 14-243.
Accordingly the pursuer cannot rely upon Clarke v Fennoscandia (No 2) 1981
S.L.T. 1311, as that case concerned the enforceability of a foreign judgment by
decree conform at common law, and not the statutory scheme for enforcement of
monetary judgements within the United Kingdom
under the 1982 Act. The question of
a possible defence to enforcement is governed by Schedule 6 to the
1982 Act, and the pursuer's pleadings disclose no such statutory
defence. In such circumstances,
references to the maxim ex turpi causa
non oritur actio, or to questions of liquid or illiquid sums, or to
subsequent amendments to the Patents Act 1977, cannot assist the pursuer. Insofar as the pleadings criticise the
English Chancery Court's Final Order of 16 October 2003, this court cannot go behind that order
unless or until it is reduced, and any action seeking reduction of the English
decree would require to be raised in England: Clarke
v Fennoscandia Limited 1998 SC 464. The appropriate procedure ad interim would be to suspend any steps
in the Scottish sequestration, pending resolution of the matter in the English
courts, all as outlined by counsel for the first defender in paragraph [19]
above. The decision in Horst Ludwig Martin Hoffmann v Adelheid Krieg, cit. sup., cannot in my
view be prayed in aid by the pursuer, as it is the Scottish courts who have
jurisdiction in a question of enforcement of the English costs order simply by
reason of the pursuer's residence and domicile.
In such circumstances it is irrelevant in my view to compare Scottish enforcement
procedures with English enforcement procedures.
In any event, as indicated above, I do not consider the current
proceedings to be an appropriate vehicle for an attempted challenge of duly
enacted United Kingdom
legislation.
[67] In my opinion, therefore, the pursuer's summons is irrelevant.
Motion for a sist, or a proof, or a proof before answer
[68] As the pursuer's summons is
irrelevant, it would serve no useful purpose to grant a sist, or a proof, or a
proof before answer. I accordingly refuse
the pursuer's motion.
Competency of action of reduction
[69] On the approach which I have
taken in paragraphs [64] to [67] above, it is unnecessary that I give
a view about Mr Barne's additional argument about the competency of the
present action of reduction.
Decision
[70] For the reasons given above,
I shall sustain the first defender's sixth plea-in-law and the second
defender's second plea-in-law (each directed to the relevancy of the action),
and I shall dismiss the action. I reserve
the question of expenses to enable parties to address me on that matter.
