Scottish Court of Session Decisions

OUTER HOUSE, COURT OF SESSION [2011] CSOH 104
CA166/09	OPINION OF LORD GLENNIE in the cause MATTHEW PURDON HENDERSON Pursuer; against (FIRST) FOXWORTH INVESTMENTS LIMITED and (SECOND) 3052775 NOVA SCOTIA LTD Defenders: ­­­­­­­­­­­­­­­­­________________

Pursuer: Moynihan QC; Balfour + Manson LLP

Defender: Sandison QC; Halliday Campbell WS

17 June 2011

[1] On 12 April 2011 I sustained the third and fourth pleas-in-law for the defenders and assoilzied the defenders from the conclusions of the summons: see [2011] CSOH 66. I reserved all questions of expenses.

[2] The defenders now move for the expenses of the action and for an additional fee under heads (a), (b), (c), (e) and (f) of Rule 42.14(3). Both aspects of the motion are opposed by the pursuer.

[3] Although logically the question of an additional fee falls to be considered after determination of the incidence of expenses, it may be convenient if I express my view on this aspect of the motion at this stage on the assumption that the motion for expenses is granted. I am not persuaded that it would be appropriate to allow an additional fee in the present case. I accept, in terms of head (a), that there were many uncertainties about the facts relevant to the questions at issue in the action, but uncertainty is not the same thing as complexity. The uncertainties arose from the absence of documentary and other material, and I am not persuaded that the efforts of the solicitors to gather together further material, considerable though they no doubt were, justifies the award of an additional fee. Nor am I persuaded, under reference to head (b), that there was any extraordinary degree of skill, time and labour involved on the part of the solicitors for the defenders. In terms of head (c), it is true that there were a number of lever arch files of documents, but many of these were repetitious (their inclusion in the bundles prepared for the proof being because of arguments about the admissibility of copies of certain documents); and in any event the fact that there are several files of documents is by no means unusual in a commercial action. Mr Sandison, for the defenders, argued that some considerable time, skill and effort was taken up in the need for the solicitors for the defenders to consider the relevance of documents produced by the pursuers, but I am not persuaded that that adds anything of substance to the argument. So far as concerns head (e), I need only note, as has been noted on many occasions, that almost every case is important to the client. What is necessary is to show that this was a case of extraordinary importance, and I am not persuaded that this is so. Finally, under reference to head (f), I am not persuaded that the amount or value involved in the cause was such as to justify the award of an additional fee. As noted in para.[93] of my Opinion, there is some uncertainty as to the amount for which the standard security was granted. It may have been £1.85 million or it may have been only £300,000. That has not been determined. Looking at the matter in the round, and having regard to all the facts and circumstances which were involved, I am not persuaded that an additional fee would be appropriate. Accordingly, I refuse that part of the motion.

[4] I turn now to the motion for expenses. The defenders were successful in the action. The general rule is that expenses should follow success. Mr Moynihan did not challenge this. In those circumstances it might be anticipated that an award of expenses should be made in favour of the defenders. But Mr Moynihan argued that that would not be the appropriate order in the special circumstances of this case.

[5] Mr Moynihan's argument was this. As noted in the early parts of my Opinion in this matter, this action is closely related to another action brought by the pursuer against the second defender, 3052775 Nova Scotia Limited. In that action the pursuer was successful. After a number of interlocutory skirmishes, which reached the House of Lords in connection with an appeal against the grant of summary decree, the pursuer obtained decree of reduction in default of the defender's appearance at the diet of proof. The pursuer was awarded his expenses. I was told that that award of expenses was on a full indemnity basis (agent client, client paying). The pursuer has had his expenses taxed in that action in the sum of £116,564.24. But he has not been paid those expenses. Mr Moynihan argues that it would be unjust to make an order that the pursuer pay the expenses of the defenders in the present action when the pursuer holds a judgment against the second defender for the expenses of the first action, which judgment has not been met. Both defenders in this action, albeit separate legal entities, are controlled by Mr Liu. The proper order in those circumstances would simply be to make no order as to expenses in the present action on terms that the order for expenses in the first action is not enforced. If I were in his favour on this point in principle, the precise method of achieving this could be discussed, but it might involve the pursuer giving an undertaking not to enforce that award of expenses or the court making an order in that action that the interlocutor awarding expenses was to be reduced or held pro non scripto.

[6] Mr Sandison accepts that the court has a general discretion as to expenses. But he submits that I should not accede to Mr Moynihan's argument. There is no clear evidence that the two defenders in the present action are owned or controlled by Mr Liu. The pursuer should be left to his right of retention, if that is available to him. If retention is not available, so be it. Any order depriving the first defender, Foxworth, of its expenses because of a debt owed to the pursuer by the second defender, Nova Scotia, would cut across the rights of other creditors of Foxworth.

[7] There is considerable force, so it seems to me, in the general point made by Mr Moynihan. Equally, however, I accept the need for caution urged by Mr Sandison. I do not have before me sufficient evidence to find that the two defenders are both controlled or beneficially owned by Mr Liu, though if the matter were fought out, and evidence from the defenders was not forthcoming, the evidence that I do have combined with inferences which might be drawn from the absence of evidence might suffice. I do not consider that I should make an order at this stage which deprives Foxworth or, it may be, its creditors, of the fruits of its successful defence of this action. But as at present advised I am reluctant to allow the defenders in this action to enforce an order for expenses against Mr Henderson when he holds an order for expenses in his favour in the first action which has not been met.

[8] In the judgment of the Supreme Court in Inveresk Plc v Tullis Russell Papermakers Limited 2010 SC (SC) 106, Lord Collins at para [116] referred to two English cases in which the court ordered a stay of execution of a judgment in circumstances where, because there was not the requisite identity of parties, the strict requirements of set off were not fulfilled. Those cases are Burnet v Francis Industries Plc [1987] 1 WLR 802 and Canada Enterprises Corpn Ltd v Macnab Distilleries Ltd [1987] 1 WLR 813. I do not see why I should not adopt that approach here. I shall make an order that the pursuer should pay the defenders their expenses of the action and remit to the Auditor to tax those expenses. But instead of a decerniture for payment of those expenses, I shall add a proviso that the order for expenses is not to be enforced without a further order of the court permitting enforcement. At the hearing of any motion for such an order, the court will expect to be provided with full information, in so far as relevant to the motion, as to (a) whether the order for expenses in the first action has been satisfied, and if not why not? (b) the ownership (beneficial or otherwise) and control of the two companies, Foxworth and Nova Scotia, (c) whether there are any creditors of Foxworth who have an interest to support or oppose the motion, and, if so, the extent of their claims, the extent of the assets available to meet their claims, (d) whether any such creditors do support or oppose the motion, and (e) anything else of relevance. The court will then be in a position to determine the motion apprised of all relevant information.

[9] I shall therefore grant the defenders' motion for expenses, remit the account of expenses to taxation, with the proviso that the order for expenses may not be enforced without further order of the court. I shall refuse the motion for an additional fee.