Scottish Court of Session Decisions

The Judicature Act 1825 (6 Geo. IV, cap. 120), section 10, is quoted supra in rubric.

Nobel's Explosives Company, Limited, pursuers, brought an action against The British Dominions General Insurance Company, Limited, defenders, for payment of claims under certain policies of insurance entered in to with the defenders (see 55 S. L. R. 296). After the action had been proceeded with through several stages the pursuers lodged a minute of abandonment in terms of section 10 of the Judicature Act 1825, and the defenders' account of expenses was remitted to the Auditor of Court for taxation. The defenders lodged a note of objections to the Auditor's report.

The facts of the case are set forth in the opinion of the Lord Ordinary ( Blackburn) infra.

On 26th February 1919 the Lord Ordinary repelled the defenders' objections to the Auditor's report.

Opinion.—“In this action the pursuers lodged a minute of abandonment in terms of section 10 of the Judicature Act 1825, and in respect thereof the Lord Ordinary (Lord Cullen) pronounced an interlocutor on 15th October 1918 appointing the defenders to give in an account of expenses, and remitting the same to the Auditor for taxation. In terms of the above section the defenders are entitled to their ‘full expenses and costs,’ and a question of some difficulty is raised as to whether this statutory direction entitles them to certain charges which they included in their account and which the Auditor has disallowed.

Prior to the lodging of the minute of abandonment the following procedure had taken place. On 9th November 1917 the Lord Ordinary dismissed the action as irrelevant, and thereafter the pursuers reclaimed to the Second Division. On 2nd March 1918 the Lord Ordinary's interlocutor was recalled, a remit made to him to allow a proof before answer, and the pursuers were found entitled to their expenses from 9th November 1917. On 19th March 1918 the Lord Ordinary decerned against the defenders for the sum of £41, 14s. 2d., being the taxed amount of these expenses. On the 20th March 1918 the Second Division refused a petition by the defenders for leave to appeal to the House of Lords against their interlocutor of 2nd March 1918.

The defenders now claim that the ‘full expenses and costs’ which they are entitled to recover from the pursuers should include (1) their own expenses in opposing the reclaiming note to the Inner House, which have been taxed at £26, 10s. 5d.; (2) the sum paid by them to the pursuers as the expenses of the reclaiming note, which was £41, 2s. 8d. instead of £41, 14s. 2d. decerned for by the Lord Ordinary; and (3) the expenses of the application for leave to appeal to the House of Lords, amounting to £13, 14s. 2d.

The defenders in support of their claim rely on the case of Stewart v. Stewart, 1906, 8 F. 769, 43 S.L.R. 522, in which the same question was discussed under somewhat peculiar circumstances. The action was one of divorce, the wife being pursuer. After a long and expensive proof on the question of jurisdiction, in which the pursuer was successful and obtained a decree for expenses, she came to the conclusion that a decree in an action of separation and aliment might be more suitable to her circumstances. It was assumed that the new action could not be raised till the action of divorce had been abandoned, and before taking this step the pursuer desired to ascertain whether the effect of a minute of abandonment under the statute would be to render her liable to the defender for the whole expenses of the proof on jurisdiction, including the sum already paid by him to her under the Lord Ordinary's decree, or whether these expenses would be treated as already disposed of. She accordingly lodged a minute of a bandonment in the divorce action, containing a qualification so framed as to raise this question. The Lord Ordinary had no doubt that a minute in this form did not comply with the statute and that it ought to be refused, but at the request of parties, and after hearing argument, he consented to give an opinion on the question raised, and pronounced an interlocutor, dated 19th January 1906, finding that as a condition of abandonment all these expenses would require to be paid by the pursuer. In his

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note the Lord Ordinary explained the circumstances, and stated his opinion that strictly speaking the minute ought to be refused. The pursuer reclaimed against his interlocutor and her counsel was heard in the First Division, when it was suggested by the Lord President that it might be competent to raise an action of separation and aliment without abandoning the divorce action, and the case was continued to enable the pursuer to consider this suggestion. An action of separation and aliment was raised on 15th February and the record closed on 6th March. It was thereafter verbally reported by the Lord Ordinary to the First Division on the question of competency. At the discussion which followed the argument was entirely confined to the question of competency, and as the Division arrived at a conclusion favourable to the pursuer on this point, and held that she did not require to abandon the divorce action at that stage, it became unnecessary to deal with the question raised in the Lord Ordinary's interlocutor of 19th January as to the expenses payable by her as a condition of abandonment. It was, however, necessary for the Division to dispose of the reclaiming note against the Lord Ordinary's interlocutor, and this they did by refusing it. I do not think that by so doing they can be held to have affirmed the Lord Ordinary's views, and on reading the opinions delivered I am satisfied that they did not intend to do so. The Lord President says—‘As he’ (the Lord Ordinary) ‘has pronounced an opinion on what is the true effect of the minute under the statute, I see no harm at least in saying that I think his Lordship has taken completely the correct view.’ Lord M'Laren made no reference to the question at all. Lord Kinnear says—‘I think the Lord Ordinary was absolutely right in holding that the minute of abandonment could not be sustained inasmuch as the statutory condition had not been complied with, and therefore as far as that question goes we can only adhere”; while Lord Pearson carefully protects himself from being held as in any way committed to the Lord Ordinary's view on expenses. It will be noticed that Lord Kinnear does not refer to anything contained in the interlocutor reclaimed against, but to a statement in the note attached to the interlocutor.

I think the Auditor is justified in thinking that Stewart v. Stewart did not decide the point raised, and although the case is valuable for the opinions expressed by the Lord President and Lord Dundas, it appears to me that I must deal with the question as an open one.

Apart from the case of Stewart, the only authorities to which I was referred at the debate were the cases of Lockhart, 1845, 7 D. 1045, and The Mica Insulator Company v. Bruce Peebles & Company, Limited, 1907 S.C. 1293, 44 S.L.R. 674. I have not succeeded in finding any others which appear to me to throw any light on the question at issue, The former of these cases established the rule that a pursuer abandoning an action under the statute is liable for expenses as between party and party only, while the latter decided that the expression ‘full expenses’ used in the statute merely deprives the judge of the power of modifying the expenses. The opinions in Lockhart's case are short but make it quite clear that the Court intended that the expenses should be taxed on exactly the same footing as if the action had terminated at the date of abandonment with the success of the defender. Lord Jeffrey says the defender is not to be in a better situation ‘than he would be if he had got a decree of absolvitor,’ and Lord Mackenzie that the pursuer ‘cannot be in a worse position than if he had gone on with the case’ and failed. The decision in the Mica Insulator Company case appears to me to confirm the view that a rule to this effect is now well established. In that case the Lord Ordinary allowed a proof. The defender reclaimed, and the Division held that the pursuers' averments were irrelevant. They accordingly recalled the Lord Ordinary's interlocutor allowing a proof, but gave the pursuers an opportunity of amending. The pursuers availed themselves of this, and the case having been of new closed was remitted to the Lord Ordinary to proceed as accords. After a delay of nearly nine months, during which the pursuers made no motion to have a proof allowed of new, and the defenders incurred considerable expenses in preparing for a proof, the defenders enrolled the case for a new order of proof. Thereupon the pursuers immediately lodged a minute of abandonment. The defenders claimed that they were entitled to the expenses of preparing for the proof, as these were fairly part of the ‘full expenses’ incurred by them in the action. The pursuers on the other hand maintained that the expenses should not be allowed, on the ground that in ordinary taxation between party and party no expenses are payable for preparing for a proof unless there has been an allowance of proof, and that at the date of the abandonment no proof had been allowed. The Lord Ordinary (Lord Johnston) reported the case to the Division, indicating the opinion that the words of the Judicature Act were wide enough to entitle a defender to all justifiable preliminary expenditure, and that the rules applicable to party and party expenses under circumstances other than abandonment did not necessarily apply. The Division found the defenders entitled to the expenses, but on the special ground that the recalling of the Lord Ordinary's original order for proof was merely a matter of form. ‘My view,’ says the Lord President, who gave the judgment of the Court (p. 1301), ‘is that when the case went back from the Inner House it was truly in the same situation as if an order for proof had been pronounced.’ I read the judgment of the Court as tantamount to holding that the expenses in that case of preparing for proof would have been a proper charge against the pursuers even if the action had terminated at the stage it did by the defenders being assoilzied, instead of by the pursuers abandoning the action under the statute. As I have already stated, it was also held that the meaning of ‘full expenses’

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was only to deprive the judge of the power of modifying them, and I think this case is an express approval of the rule which appears to me to have been laid down in the case of Lockhart, and that reading the two cases together I am not entitled to consider the words of the statute from an equitable point of view, but am bound to hold that the only expenses in which a pursuer is liable as a condition of abandonment are those which would be awarded against him had the action terminated when it did by the defender being assoilzed. If that view is right, then it is not disputed that the objections to the Auditor's report in this case fall to be repelled.

I may add that if I did not feel myself bound by these authorities, and thought that I was at liberty to construe the words of the statute, I should have reached the same conclusion as Lord Dundas did in Stewart's case. The limited construction which has been placed upon the words ‘full expenses’ does not seem to give fair effect to what appears to me to have been the intention of the Act, and the reasons given by Lord Jeffrey and Lord Mackenzie in their opinions in Lockhart's case are open to obvious criticism. If the defender is not to be in a better situation ‘than he would be if he had got a decree of absolvitor,’ it is at least somewhat hard that he should be placed in a worse situation, as is the fact, in respect that he has no decree of absolvitor to show for his money. Similarly with regard to the pursuer the present rule leaves him in a better position than he would have been had he failed, in respect that he is at liberty to raise a new action. Yet the provision in the statute appears to me to be expressly designed to reinstate the defender against the expense he has incurred by having been subjected to an admittedly abortive action. It may be that, as Lord Dunedin says in the Mica Insulator Company case in dealing with the view of Lord Johnston, ‘any opposite rule would lead to inextricable confusion,’ and there is a passage in Lord President Boyle's opinion in Lockhart's case which suggests that some such state of confusion existed prior to that decision which the Court desired to put an end to.

The present case is, I think, an exceptionally hard one for the defenders. So far as I can judge from the opinions delivered in the case, the objection to the relevancy was by no means a frivolous one, and the debate probably convinced the pursuers that if they went further they would, in the words of the Lord Justice-Clerk, ‘have the luxury of paying, which is the legitimate penalty of stating a case which they failed to prove.’ That they were wise enough to take the hint is no consolation to the defenders for having to pay the expenses of convincing them, but as the expenses were disposed of instead of being reserved, and as I think that I am bound by the decisions referred to, to hold that the present account falls to be taxed strictly on party and party lines, I see no alternative, so far as I am concerned, to repelling the objections.”

The defenders reclaimed, and argued—The defenders' objections to the Auditor's report ought to be sustained. The words “full expenses and costs” contained in section 10 of the Judicature Act 1825 (6 Geo. IV. cap. 120), covered all the expenses incurred by the defenders throughout the progress of the action, and included any expenses paid by them to the pursuers on account of the defenders' failure to succeed on a minor point in the case. The pursuers being the raisers of the action were originally responsible for all the expenses that had been incurred, and having now seen fit to abandon the case ought to pay the penalty of their ill-considered action. The present case was governed by that of Stewart v. Stewart, 1906, 8 F. 769, 43 S.L.R. 522. The case of Lockhart v. Lockhart, 1845, 7 D. 1045, was distinguishable from the present one, the terms of the remit there having been for taxation as between party and party. So also was the case of Mica Insulator Company, Limited v. Bruce Peebles & Company, Limited, 1907 S.C. 1293, 44 S.L.R. 674, where the point in the present case was not raised.

Argued for the pursuers—The defenders objections to the Auditor's report ought to be repelled. The provisions of the Judicature Act 1825 did not entitle defenders to restitution on the abandonment of their action by pursuers. The case of Stewart v. Stewart could not be considered to have decided the point, as only two out of the five Judges there expressed their opinion on it, whilst two did not do so, and one expressly reserved his opinion. The Act did not contemplate that defenders were to get more by way of expenses than would have fallen to their share if the case had been ultimately unsuccessful and absolvitor had been pronounced in their favour with expenses. Restitution or reinstatement in the latter eventuality was unknown. The Act only served to deprive the Court of the power to modify expenses. On the abandonment by a pursuer of his action a defender was merely entitled to receive an award of expenses as between party and party— Mica Insulator Company, Limited v. Bruce Peebles & Company, Limited ( cit.), per Lord President Dunedin at p. 1299. The case of Lockhart v. Lockhart had decided the point here raised in favour of the pursuers, and had been followed in practice ever since.

At advising—