Scottish Court of Session Decisions

The Act of Sederunt for Regulating Fees and Charges in the Supreme Courts of Scotland, of date July 15, 1876, in General Regulation 5, provides—“Notwithstanding that a party shall be found entitled to expenses generally, yet if, on the taxation of the account, it shall appear that there is any particular part or branch of the litigation in which such party has proved unsuccessful, or that any part of the expense has been occasioned through his own fault, he shall not be allowed the expense of such parts or branches of the proceedings.”

On 11th July 1905 Robert Archibald Craig, C.A., Edinburgh, “for himself and also as assignee of Messrs James Aikman & Sons, leather and boot factors, Jeffrey Street, Edinburgh,” raised an action against James Craig, C. A. there, in which he sought to have the defender ordained “to make payment to the pursuer, as assignee foresaid of (first) the sum of £95, 19s. 5d. sterling, and (second) the sum of £46, 18s. 9d.

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sterling, with interest on both of said two last-mentioned sums at the rate of £5 per centum per annum from the date of citation to follow hereon until payment; and to the pursuer as an individual the sum of £1000 sterling, with interest as aforesaid, from the date of citation to follow hereon till payment.…”

The pursuer averred—“(Cond. 1) The pursuer and defender were formerly associated in business as partners of the firm of J. & R. A. Craig. Since the dissolution of said firm the defender has entertained the greatest ill-will and hatred towards the pursuer, and has sought every occasion to unlawfully molest and injure him in his business, and to interfere with him in the practice of his profession, which is his (pursuer's) means of livelihood…. ( There followed specific instances of injury alleged to have been done) … (Cond. 6) In or about January 1904, one William Simpson, bootmaker, Leith and Loan head, finding himself in embarrassed circumstances. placed his affairs in the hands of the defender, in whose favour he granted a trust deed. Messrs James Aikman & Sons, leather merchants, Edinburgh, were creditors to the extent of £89 odds of the said William Simpson, and the pursuer had for a long time acted and still acts, as the defender well knew, as their agent and accountant. The defender, in looking into the insolvent's affairs, discovered that the pursuer had carried through a settlement with the insolvent's creditors in 1901, and he seized the opportunity of attacking the pursuer in reference to said settlement, although he well knew that the raking up of the 1901 settlement could do the insolvent's creditors no good, and did not, in point of fact, have any bearing whatever on the business in question. He thereupon set himself to cause the pursuer loss and injury…. (Cond. 7) In pursuance of the said scheme to damage and hurt the pursuer, and to unlawfully interfere with him in the practice of his profession, the defender, having the entire control and management of the insolvent's affairs and estate, on or about 22nd January 1904, maliciously raised, at his own hands, an action in the insolvent's name against Messrs Aikman & Sons in the Court of Session, craving for decree for a sum of £28, 18s. 3d., on the narrative that they had, under an arrangement of the said William Simpson's affairs in 1901 (in connection with which the pursuer had been employed in his professional capacity of accountant), fraudulently, and mainly through the alleged fraudulent actings of the pursuer, obtained a larger dividend to the extent sued for than the other creditors. The defender had throughout the sole control, management, and direction of the said action. The defender framed the statements in said action, knowing them to be untrue, and carried on the said action till the diet of proof, when he allowed it to drop, well knowing it was impossible to prove said statements, which he knew were false. Messrs Aikman & Sons were assoilzied in respect of no appearance of their adversary, and with expenses. The defender represented falsely and fraudulently throughout the case to his advisers that said statements were true, and he thus caused them to be represented to the Court as true, though he knew them to be false, solely with the view of injuring the pursuer. The expenses in said action amounted as taxed to £46, 18s. 9d. Said expenses, which were irrecoverable against Simpson, whose entire estate was in the defender's possession, were incurred through the defender raising and carrying on said unfounded action, well knowing it to be unfounded.… The defender had the whole interest in and control over the case. The insolvent's whole estate and moneys were in the defender's possession and under his control. The insolvent had no interest in and no control over the action.… (Cond. 8) Furthermore, to injure the pursuer, defender maliciously raised, at his own hands, in said insolvent's name, a suspension in the Bill Chamber of three bills for £5 each, drawn by Messrs Aikman & Sons on the insolvent, on the narrative that said bills, and all others in Messrs Aikman's possession, were fraudulently impetrated by Messrs Aikman & Sons in 1901, when the insolvent was in embarrassed circumstances. The defender, notwithstanding that he had treated and admitted Messrs Aikman to be creditors, as he knew they were, in point of fact, framed the statements in said suspension, well knowing them to be false, and that the truth was that the bills in question were for goods supplied to the insolvent by Messrs Aikman & Sons after the arrangement of his affairs in 1901. Nevertheless, the defender conducted and carried on said suspension against Messrs Aikman & Sons, and managed and controlled it until the diet of proof, when he dropped it.… Messrs Aikman & Sons were assoilzied in respect of no appearance of their adversary at the proof, with expenses. These expenses, which were irrecoverable against Simpson, amounted as taxed to £95, 19s. 5d., and were incurred through the defender raising and carrying on said action, well knowing it to be unfounded and the statements in the note of suspension to be untrue…. The defender had the whole interest in said case. The insolvent's whole affairs, estate, and moneys, were in the defender's possession and under his control. The insolvent had no interest in the action, and no control over it…. (Cond. 10.) The said actions were raised, managed, and controlled entirely by the defender, and he was the true dominus litis of each of them. They were inspired and carried on by defender under the cloak of insolvent's name with the view of concealing his identity with them. They were the outcome of the defender's hatred of and ill-will towards the pursuer, and were brought and insisted in with a view to damage the pursuer's reputation as a professional man. In order to vindicate his character it was essential, in the interests of his reputation as a professional accountant, that the said actions should be resisted. The pursuer accordingly

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did so, and has paid the legal expenses Messrs Aikman & Sons have been put to in defending said two actions, and has procured an assignation thereof from Messrs Aikman & Sons, which is herewith produced…. ( There followed other instances of alleged injury.) …”

The pursuer pleaded—“(1) The defender in the circumstances libelled having caused the pursuer loss, injury, and damage through his fraudulent, illegal, and malicious actings as condescended on, is liable to the pursuer in reparation. (2) The defender having made the false and fraudulent representations condescended on with the sole view of causing pursuer loss and damage, and the pursuer having in consequence suffered loss and damage as libelled, the defender is liable therefor as concluded for. (3) The defender having unlawfully and maliciously interfered with pursuer in the practice of his profession, and to his loss, injury, and damage, all as libelled, is liable to pursuer in damages and solatium. (4) The defender being the true dominus litis in the actions before mentioned, the pursuer as assignee foresaid is entitled to decree in terms of the first and second conclusions of the summons with expenses.”

On 20th February 1906 the Lord Ordinary ( Dundas) pronounced the following interlocutor “Decerns against the defender for payment to the pursuer of the sum of £130 sterling with interest as concluded for, in full of the conclusions of the summons: Finds the pursuer entitled to expenses,” &c.

Opinion.—“This is a distressing case. The pursuer (aged thirty-four) and the defender (aged forty-one) are brothers. Both are chartered accountants. They were partners under the firm name of J. & R. A. Craig from 1894 to 1897, when the partnership was dissolved. Since then they have carried on separate businesses in premises which are situated in the same street in Edinburgh. The pursuer's ground of action is thus set forth by him on the record (condescendence 1)—[ quotes cond. 1, ut sup.] Both parties courted the fullest inquiry. I allowed an unusually wide recovery of documents, and the oral and written evidence constitute a proof of formidable dimensions. I have considered the case with great care and anxiety. It would be impossible within reasonable limits to analyse the whole evidence in detail, or to advert to every point which makes in favour of one party or the other. I shall content myself with dealing as concisely as I can with each of the episodes upon which the pursuer founds, in the order in which he has set them out upon the record, and stating for the benefit of the parties a sufficient outline of the reasons upon which my conclusion in regard to each episode is based.

With regard to the law of the matter, counsel for the parties were substantially at one. Competition between members of a profession or a trade is of course within limits lawful, though it may result and be intended to result in loss or injury to one of them and corresponding benefit to another. But competition must be carried on by legal and not by illegal methods. The law does not in such questions regard motive. An act lawful in itself is not, I apprehend, converted by a bad or malicious motive underlying it into an unlawful act so as to render the doer of it liable in an action of damages. It would not in my judgment be sufficient for the pursuer in order to recover damages, to show that the defender had acted towards him malo animo. He must, I think, establish that the injurious result to him of the defender's actings in all or in some one or more of the instances alleged was achieved by means which were in themselves illegal, and that representations made by the defender to third parties resulting in loss and injury to the pursuer, were untrue in fact to the knowledge of the defender, or at all events made by him recklessly and without sufficient justification.

1. (Cond. and Ans. 2.)—… Upon the whole matter I am forced to the conclusions that the defender was not really a candidate for this appointment [as liquidator of a company]; that he desired to deprive his brother of it; that with that end in view he made statements … which were in fact untrue, and which he had no ground for believing to be true; that the communication of these statements to the Court resulted directly in the pursuer losing the appointment which he would otherwise, as matter of course, have obtained; and that this loss is a matter which sounds in substantial damages to the pursuer.

2. (Cond. and Ans. 3.)—… The story is a strange one, and I have had great doubt in arriving at my decision. But my opinion is that the only safe and proper conclusion, as regards this episode is to hold that the pursuer's contention is not conclusively proved.

3. (Cond. and Ans. 4.)—… In regard, therefore, to the matters set forth in condescendence 4, I hold that the pursuer has failed to make out a case for damages against the defender.

4. (Cond. and Ans. 5.)—… The result, then, of this matter is that I hold that the defender did in fact procure the deprivation of his brother, for the time being, of this trusteeship, and that he intentionally adopted illegal means to that end … It follows that the pursuer is, in my judgment, entitled to damages. It appears that [ the trustee] during his brief period of trusteeship, obtained remuneration to the extent of £36, 15s., which would otherwise have found its way to the pursuer himself.

5. (Cond. and Ans. 6 to 10 inclusive.)—The next topic is concerned with the affairs of William Simpson, bootmaker, Leith and Loanhead…. By the form in which the present summons and condescendence are framed, I think that the pursuer has definitely confined himself, as regards this part of the case, to the recovery, if possible, from the defender of the two sums of £95, 19s. 5d. and £46, 18s. 9d. respectively, for which he specially sues as assignee of the Aikmans, upon the ground that, both in

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the said petitory action for £28, 18s. 3d. and in the said suspension, the defender was the verus dominus litis, and is therefore bound to recoup the pursuer in these sums, which he has had to pay to Aikmans. In my opinion the pursuer's case upon this point fails….

6. (Cond. and Ans. 11.)—… In regard, therefore, to the matters contained in condescendence 11, I find no legal ground for awarding damages against the defender, although, as I have said, these matters … are, to my mind, of a distinctly suspicious character, and indicative of a hostile attitude upon the part of the defender towards his brother.

7. I think that I have now dealt with all the main issues which are raised upon the record and in the proof. The assessment of damages in such a case as this cannot, of course, be made upon any close and precise calculation. The damages must, I think, clearly be of substantial amount, but not of course of a vindictive character. Upon the best consideration which I can give to the matter, I believe that the justice of the case will be met by an award of £130, for which sum I shall decern in favour of the pursuer.”

The Auditor having taxed the pursuer's account on the footing that he had failed on a particular part or branch of the litigation the pursuer lodged objections to the Auditor's report. In his objections he maintained that in disallowing the expenses connected with the dominus litis branch of the case the Auditor had acted contrary to the finding of the Lord Ordinary.

In answer the defender stated that the Auditor had taxed the pursuer's account rightly and in accordance with the directions in General Regulation 5 of the Act of Sederunt of 15th July 1876.

On 9th June 1906 Lord Dundas pronounced this interlocutor—“… Remits the said account to the Auditor to reconsider and re-tax upon the footing and having regard to the opinions expressed in the subjoined note with reference to the first objection stated by the pursuer, and to report,” &c.

Note.—“As regards the first of these objections a misunderstanding has arisen, for which I do not hold the Auditor at all responsible. He has taxed the account in the manner appropriate where there is a ‘particular part or branch of the litigation’ in which the party ‘found entitled to expenses generally’ has ‘proved unsuccessful.’ But the clause of the Act of Sederunt upon which the Auditor has proceeded is not, in my opinion, applicable in the present circumstances. As matters have turned out it would probably have saved some time, trouble, and expense if I had expressed more clearly on 20th February 1906 the view which I held and hold in regard to this case. I now explain that my opinion was, and is, that it is in substance an action for damages in respect of one wrong done, viz., a system of persecution or oppression or illegal interference inflicted by the defender upon the pursuer. Upon this general issue, which I regard as a very grave one, I found in favour of the pursuer, and I awarded him a substantial though I think a moderate amount of damages, and found him entitled to expenses. I intended that he should have his expenses not only in regard to those ‘episodes’ or phases of the case in which he was absolutely successful, but also in regard to the others, as to which my verdict was one of ‘not proven.’ The latter do not, in my opinion, constitute particular parts or branches of the litigation within the meaning of the Act of Sederunt. Further, although the first conclusion of the summons as framed—inartis-tically framed as I think—concludes only for payment of specific sums in name of expenses which the pursuer sought to recover upon the ground (which I held to be not sufficiently proved) that the defender was the verus dominus litis in the legal proceedings out of which the expenses arose, the conclusion does not, in my judgment, constitute a particular part or branch of the litigation in the sense of the Act of Sederunt. It is clear (articles 6 to 10 inclusive of the condescendence) that the averments upon this head of the case asserted a ‘pursuance’ of the ‘scheme to damage and hurt the pursuer,’ which in the main I have held to be proved, and I think that they were relevant in support of the general issue of the case. The pursuer is therefore, in my opinion, entitled to his expenses upon this part of the proof. The whole sense and justice of the matter would, in my judgment, be defeated if the pursuer was to be deprived of his expenses in the manner and to the extent which would result from the Auditor's taxation, which I think proceeded on a misunderstanding of my view in regard to the nature and substance of the case as now explained. The Auditor will be good enough to reconsider and re-tax the account in the light of the opinions which I have now expressed. …”

The defender, reclaimed, and argued—The Auditor was right in taxing the pursuer's account on the footing that he had failed in a separable part of his case. The claim as an assignee was definitely confined to the issue of dominus litis on which the pursuer had failed. That was a “particular part or branch of the litigation in which such party has proved unsuccessful,” and the Auditor was bound to disallow the expenses effeiring thereto in taxing under a general finding of expenses—A.S., Regulating Fees, July 15, 1876, General Regulations 5. The Act of Sederunt was imperative in its terms. It was the Auditor's duty so to tax even where the expenses granted were subject to modification — M'Elroy & Sons v. Tharsis Sulphur and Copper Company, June 28, 1879, 6 R. 1119, 16 S.L.R. 683, or where only a portion, e.g., two-thirds, of the expenses had been allowed— Arthur v. Lindsay, July 13, 1895, 22 R. 904, 32 S.L.R. 680. The Auditor had therefore acted rightly and in accordance with the remit to him in the interlocutor of 20th February, which contained a general finding of expenses. It was not open to the Lord Ordinary

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subsequently to vary that interlocutor as he proposed to do by his interlocutor of 9th June. He was at the latter date functus, and assuming he had originally power to award pursuer full expenses although partially unsuccessful, that was not what he had done.

Argued for the respondent—The matter of expenses was in the discretion of the Lord Ordinary, who here allowed the pursuer his full expenses, and the Court would not interfere unless he had erred on some clear principle. There was no such principle here. On the whole circumstances his Lordship thought the pursuer entitled to expenses, being of opinion that the proof on the first and second conclusions of the summons threw light on the third, in which the pursuer had been successful. He was further of opinion that the defender's statements were false and inconsistent with the evidence of his own witnesses. Dealing, as here, with the circumstances of a case his Lordship's discretion was absolute. Even if the pursuer had entirely failed he might have got full expenses— Barrie v. Caledonian Railway Company, November 1, 1902, 5 F. 30, 40 S.L.R. 50, The general finding of expenses in the interlocutor of 20th February was quite sufficient to give the pursuer his full expenses. It was quite unnecessary to add “without deduction.” That being so, the defender should have had an interlocutor pronounced to suit his views at that time. The objection came too late now. It ought to have been raised before the Lord Ordinary when judgment was pronounced and expenses moved for— Murray v. Macfarlane's Trustees, November 6, 1895, 23 R. 80, 33 S.L.R. 53; Electric Construction Company, Limited v. Hurry & Young, February 6, 1897, 24 R. 525, 34 S.L.R. 295; Macfie v. Blair, Dec. 12. 1884, 22 S.L.R. 224. In any case the Act of Sederunt was not imperative on the judge, but only on the Auditor, and it was open to the former to act as the Lord Ordinary had done.