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OUTER HOUSE, COURT OF SESSION
[2007] CSOH 196
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A794/05
A793/05
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OPINION OF LORD MACPHAIL
in the causes
APPA (UK)
LIMITED
Pursuers;
against
THE SCOTTISH DAILY
RECORD
AND SUNDAY MAIL
LIMITED
Defenders:
and
GRAHAM HUTCHISON
Pursuer:
against
THE SCOTTISH DAILY
RECORD
AND SUNDAY MAIL
LIMITED
Defenders
ннннннннннннннннн________________
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Pursuers: G. Henderson; Gillespie Macandrew
Defenders: R. Dunlop; Balfour + Manson
LLP
12 December 2007
Introduction
[1] These
are two closely related actions of defamation against the same defenders. In each case the pursuer has lodged a minute
of abandonment and has enrolled a motion for absolvitor, while the defenders
have lodged a motion for expenses. The
defenders' motions are in virtually identical terms. That enrolled in the action at the instance
of AppA UK Ltd reads as follows:
"On behalf of
the defenders, in respect of the pursuer's abandonment of the action, in
respect of the contingency between the present action and the associated action
at the instance of Graham Hutchison, and further in respect of the conduct of
the pursuers and Mr Hutchison between the raising of the action and said
abandonment,
To find the
pursuers jointly and severally liable with the said Graham Hutchison to the defenders
in the expenses of the action on the basis of agent/client, client paying; which failing agent/client, third party
paying; and To find the defenders' agents entitled to an additional fee under
RCS 42.14 on the basis of heads (b), (c), (f) and (g)."
[2] I
heard counsel on these motions on 31
October 2007 and again, in circumstances which I shall narrate
later, on 15 November 2007.
Procedural history
[3] The
procedural history of the actions up to 19 October 2007 is set out in the Opinion of the First
Division of that date in these cases ([2007] CSIH 82). That Opinion was not referred to at the
hearings before me, but the events it describes were narrated to me, and I
gratefully adopt the following paragraphs from the Opinion:
"[1] These are two related actions at the instance of the pursuers
and respondents, Graham Hutchinson ('Mr. Hutchinson') and AppA UK Limited
('AppA'). Mr. Hutchison is, we
understand, the Managing Director of AppA, and in his pleadings he describes
himself as AppA's 'owner'. The defenders
and reclaimers are the publishers of the Daily
Record newspaper. The issue of the Daily Record published on 29 November 2005 carried articles relating to Mr. Hutchinson and
AppA. The articles were critical of the
methods by which they sold beds, which they described as 'therapeutic beds', to
elderly customers. Within a few days the
pursuers had raised actions in which they averred that the articles in question
were defamatory of each of them, and claiming reparation therefor. Both actions were defended. From an early stage, the main issues between
the parties were whether the articles complained of bore the meaning contended
for by the pursuers, whether the sting of the articles complained of was substantially
true, and whether the articles complained of were subject to qualified
privilege. There were also issues
relating to the quantum of damages, in the event of liability being
established.
[2] The two actions have proceeded more or less in tandem. After sundry procedure, a proof before answer
was allowed, in the action at the instance of AppA on 17 May 2006, and in the action at the instance of Mr. Hutchinson
on 6 June 2006. The intention
of the parties was that the proofs should be concurrent, and should last for
eight days. In due course, diets of
proof were fixed, but for no known reason to start on different dates, that in
AppA's action being set down to start on 30 October 2007 and that in
Mr. Hutchinson's on 6 November 2007:
before us, counsel were agreed that this was done by mistake, and that
both diets of proof should start on the earlier date. On 16 October
2007
the Lord Ordinary, on the opposed motion of each of the pursuers, discharged
these diets of proof. The defenders have
reclaimed against the Lord Ordinary's interlocutors. The Lord Ordinary has, with commendable
speed, prepared an Opinion in which he has set out his reasons for discharging
the diets of proof. We have today found
each cause suitable for early disposal and have appointed the motion for review
to be heard today on the single bills.
[3] As appears from the Lord Ordinary's Opinion, senior counsel
who then appeared on behalf of the pursuers identified a number of difficulties
in relation to the state of preparation of their cases. He explained that only a very limited number
of productions had been lodged on their behalf.
A significant number of additional productions would be required in
order to substantiate the averments set out in the pleadings. The averments as to loss would require the
support of extensive productions relating to the accounts of the pursuers and
the report of an accountant. In
addition, although a large number of witnesses had been included in lists on
behalf of the pursuers, none had been precognosced and counsel 'had little or no
idea as to what they might say'. In
short, the pursuers' preparation for proof was 'hopelessly inadequate'. Counsel conceded that this was a lamentable
state of affairs. The explanation
tendered to the Lord Ordinary for this state of affairs was that the pursuers
had been placed under severe financial pressure, not only as a result of the
downturn in trade as a direct result of the contents of the articles complained
of, but also by their inability to sell by credit from the summer of 2006
onwards. Following the publication of
the articles AppA applied for a consumer credit licence. They had been unable to obtain a consumer
credit licence until early in 2007. Mr.
Hutchinson, as pursuer in his own action and as Managing Director of AppA in
the action at their instance, had instructed his Glasgow agents not to spend any
money on the preparation for the proofs until the difficulties with respect to
the consumer credit licence had been resolved.
It does not appear that the Lord Ordinary was provided with information
about the financial position of either of the pursuers, beyond that set out
above. Neither before the Lord Ordinary,
nor before us, was reference made to AppA's accounts, or similar financial
information. Information, of a general
nature, was placed before us, indicating that Mr. Hutchinson is a man of some
financial substance
[4] It is convenient at this point to supplement the information
provided to the Lord Ordinary about the consumer credit licence with
information supplied to us. As we
understand it, Mr. Hutchinson originally traded on his own account, and held a
consumer credit licence under the Consumer Credit Act 1974. When AppA started trading, they did not hold
a consumer credit licence, and accordingly insofar, at least, as that statute
applied, were trading unlawfully. AppA
sought to rectify this by applying for a licence. An adjudicator, acting on behalf of the
Office of Fair Trading, served a notice on AppA that he was minded to refuse
the application for a licence. Representations
were then made to the adjudicator on behalf of AppA. These representations included a hearing, at
which AppA were represented by senior counsel.
Having considered the representations, including various undertakings,
the adjudicator determined to grant the application for the licence. The determination is, we are told, dated 11 October 2007. The
determination stated inter alia that
the adjudicator took a serious view of the matters set out in the minded to
refuse notice which were found to be established. Although the minded to refuse notice is not
before us, it would appear that these matters had been the subject of a
separate complaint to and investigation by the Office of Fair Trading. The nature of them may be found in the terms
of the undertakings, including the undertaking that AppA 'will not use
inappropriate, high pressure or mis-selling tactics', which included 'inflating
the initial price followed by the offer of a discount', 'claiming the price can
be reduced due to any grant by the Government, a charity or any other body',
and 'claiming the AppA bed can or will alleviate the cause or symptoms of a
customer's medical condition'.
[5] Counsel for the defenders indicated that they were ready to
proceed to proof. A number of the
witnesses were elderly and there was a prospect that some of them might die
before a new diet of proof. The
defenders were prepared to restrict the diets of proof to liability only and
leave the question of quantum until later.
They had carried out a significant amount of work in preparation for the
proof."
[4] The
Court decided to reverse the Lord Ordinary's decision to discharge the diets of
proof. Lord Nimmo Smith, delivering the Opinion of the Court, said:
"[10] We accept the submissions of counsel for the defenders. We have no hesitation in concluding that this
is a case where we should interfere with the exercise of the Lord Ordinary's
discretion. We are quite satisfied that
the Lord Ordinary did go wrong and that the plain interests of justice require
us, in the exercise of our discretion, to reverse his decision. The pursuers have chosen to bring these
actions and in doing so to invoke not only the jurisdiction of this court to
award damages to the victims of defamation, but also the procedures designed to
enable actions to be disposed of fairly and within a reasonable time. There is some degree of flexibility in the
fixing of diets of proof, both so as to permit adequate time to each of the
parties to make their preparations, and also to enable them, so far as
reasonably practicable, to secure the services at proof of counsel of their
choice. But once a diet of proof has
been fixed, different considerations arise.
Court resources are by their nature finite. There are many actions before this court, all
of which require to be disposed of fairly and within a reasonable time. There is a clear public interest in the
efficient administration of justice. It
is impossible to run court business on the footing that a party may decide,
particularly at a late stage, for reasons of his own, that he does not wish to
proceed to proof on a date which has been fixed for months and that he would
prefer a later date. Obviously, there
will be cases in which supervening events, beyond the control of parties, may
affect their preparations. In such
cases, the interests of justice may necessitate the discharge of diets of
proof. Much will depend on the
circumstances of the particular case, and on the steps which parties affected
by circumstances beyond their control have taken to safeguard their
positions. Obvious steps, which were not
taken in the present case, would include enrolling for the discharge of the
diet of proof at an early stage, as soon as the difficulties begin to emerge,
and enrolling for a sist of the action.
The sooner the other party, and the court, are put in the picture, the
more likely it is that a favourable view will be taken of the party who finds
himself, or anticipates that he will be, in difficulties in his preparations
for the proof. In the present case, the
difficulties are entirely of the pursuers' own making, and in any event the
motions enrolled by them come far too late.
Parties who treat the court, and their opponents, in such a cavalier
fashion can expect scant sympathy.
[11] For these reasons, we shall allow the motion for review of each
of the Lord Ordinary's interlocutors, to the extent of recalling those parts of
the interlocutors discharging the diets of proof and finding the pursuers
liable in the expenses occasioned by such discharge. We shall appoint the proof in each action to
begin on 30 October 2007 and for seven ensuing days,
both restricted to the question of liability.
On the unopposed motion of counsel for the defenders, made at the Bar,
we shall appoint the defenders to lead at the proof. Finally, we shall find the pursuers liable to
the defenders in the expenses occasioned by the appearance at the motion roll
on 16 October 2007 and of today's hearing."
[5] On
23 October 2007 the
pursuers lodged in each action a minute of abandonment and a motion. It will suffice to refer henceforth only to
the action at the instance of AppA UK Ltd ("AppA"). The motion was in the following terms:
"On behalf of
the pursuer and in respect of the minute of abandonment number 27 of process to
assoilzie the defenders from the conclusions of the summons and to dispense
with the period of notice in terms of rule 23.3.3 with respect to the motion."
In each case the defenders lodged a
motion for expenses and an additional fee in the terms I have already set out
above.
[6] Counsel
for the defenders addressed me on the three parts of the defenders' motion: for
expenses on the basis of agent and client; for an additional fee; and for a
finding that the pursuers should be found jointly and severally liable to the
defenders in the expenses of the action. I shall consider each of the three
branches of the motion separately.
Mode of taxation
[7] An
account of expenses is taxed according to one of three modes or bases: party
and party; solicitor and client, third party paying; and solicitor and client,
client paying. The latter mode is
traditionally regarded as the most generous (Maclaren, Expenses, p 509). I was not
referred to the discussion of the relationship between the modes of taxation by
Lord Eassie in Dingley v Chief Constable of Strathclyde 2003 SCLR 160 at paragraphs 25-28. In any
event, it was common ground before me that the Court may order taxation as
between solicitor and client, client paying, as a mark of disapproval of a
party's unreasonable conduct. Counsel
for the defenders cited McKie v Scottish Ministers [2006] CSOH 54, 2006 SC 528 at paragraph [3], where Lord Hodge summarised the law in five
propositions, thus:
"First, the
court has discretion as to the scale of expenses which should be awarded. Secondly, in the normal case expenses are
awarded on a party and party scale; that
scale applies in the absence of any specification to the contrary. But, thirdly, where one of the parties has
conducted the litigation incompetently or unreasonably, and thereby caused the
other party unnecessary expense, the court can impose, as a sanction against
such conduct, an award of expenses on the solicitor and client scale. Fourthly, in its consideration of the
reasonableness of a party's conduct of an action, the court can take into
account all relevant circumstances.
Those circumstances include the party's behaviour before the action
commenced, the adequacy of a party's preparation for the action, the strengths
or otherwise of a party's position on the substantive merits of the action, the
use of a court action for an improper purpose, and the way in which a party has
used court procedure, for example to progress or delay the resolution of the
dispute. Fifthly, where the court has
awarded expenses at an earlier stage in the proceedings without reserving for
later determination the scale of such expenses, any award of expenses on the
solicitor and client scale may cover only those matters not already covered by
the earlier awards."
[8] Counsel
for the defenders founded on several aspects of the pursuers' conduct in the
two actions. First, in response to a
commission and diligence for the recovery of documents, the pursuers had
produced 13 boxes containing a total of 34 lever arch files in no particular
order. The defenders' solicitors had had
to make a substantial effort to separate the wheat from the chaff, and had
reduced the mass of documents to two boxes and a total of eight folders. These documents covered a substantial number
of transactions.
[9] Secondly,
the pursuers had lodged three substantial lists of witnesses which listed a
total of 132 witnesses. The defenders'
solicitors had had to investigate these, and had discovered that some of the
persons named as witnesses had died many years ago. Over 50 of the witnesses had been
investigated before the intimation of the motions for abandonment, only two of
them had had anything relevant to say, and these two had not been cited for the
proof. The proof had been due to start on 30 October 2007 (the day before the first day of the
hearing of the motions before me), and the pursuers' legal advisers had no
precognitions. The 132 witnesses had
obviously been listed by the pursuers' legal advisers without their having
sought to precognosce them and thus without any knowledge of what evidence, if
any, they might be able to give.
[10] Thirdly, on 14
September 2007 the defenders had lodged a notice to admit in terms
of Rule of Court 28A.1 (no 16 of process) which called upon the pursuers to
admit 32 specified facts which had been averred in the pleadings since December
2005. The pursuers had responded by
lodging on 1 October 2007 a
notice of non-admission (no 17 of process) in which they stated that they did
not admit any of those facts. Then on 12 October 2007 they had lodged a
"notice of withdrawal" (no 20 of process) in which they stated that they
withdrew 13 "non-admissions". These had
been matters within their knowledge, and it was difficult to see why they
should have withheld the admission of them until shortly before the date
assigned for the commencement of the proof.
[11] Fourthly, counsel referred to the information about AppA's
consumer credit licence which appears in paragraph [4] of the Opinion of the
First Division. Counsel also produced the Determination of Minded to Refuse
Notice which had not been before that Court and pointed to the undertakings
given by AppA to the Office of Fair Trading ("OFT") which, counsel said,
strongly supported the defenders' averments relative to their pleas of veritas and qualified privilege.
[12] Fifthly, counsel referred to a minute of amendment lodged by
the pursuers in the action at the instance of AppA on 12 October 2007 (no 22 of process) which sought
to increase the sum sued for from г200,000 to г2,362,000. The minute of amendment referred to the
minded to refuse notice which, according to the minute, had been based on
complaints made as a result of the article. In fact complaints against the
pursuers had been investigated and had been found to be established. Counsel
said that at the hearing before the Lord Ordinary on 16 October 2007 senior counsel then appearing
for the pursuers had stated that the increase in the sum sued for had been made
on the basis of an inadequate report which senior counsel had described as "an
embarrassment". Counsel for the defenders commented that the factual basis for
the averments in the minute of amendment was demonstrably untrue.
[13] Sixthly, counsel for the defenders founded on the pursuers'
lack of preparation and their attempt to discharge the diets of proof. There had been a deliberate decision by Mr
Hutchison to instruct his solicitors not to prepare for the proofs. Counsel referred to the decision of the Inner
House reversing the decision of the Lord Ordinary.
[14] Counsel then turned to Lord Hodge's opinion in McKie and founded, first, on Lord
Hodge's third proposition. As to the
fourth, he described the pursuers' preparation as lamentable, owing to their
deliberate decision to instruct their solicitors not to prepare. He stated that the strength of the defenders'
position, and in particular their plea of veritas,
was evident from the OFT notice and from the admissions now made which should
have been made much earlier. He further
submitted that the pursuers had used the action for an improper purpose: they had made an entirely inappropriate
attempt to delay the action by swamping the defenders with documents, they had
lodged an inordinately long list of witnesses, and they had sought to discharge
the proofs on grounds which the Inner House had held to be untenable. Counsel did not dispute Lord Hodge's fifth
proposition. Finally, counsel said that
the pursuers had put the defenders to substantial expense, and it was plain
that they had acted incompetently and unreasonably.
[15] In reply to the defenders' submissions on this branch of the
motion, counsel for the pursuers observed that he did not know of any
defamation action where expenses had been awarded other than on the party and
party scale: those were the reasonable expenses one could reasonably expect to
incur. Nothing the defenders' counsel
had said had indicated that those would not be reasonable expenses. As to the documents recovered, they were the
sales and employment records of a well-run company and it had been for the
defenders to decide what to lodge. Fees
were chargeable for considering and photocopying the documents. It could have come as no surprise to the
defenders that the actions were abandoned, in view of what senior counsel had
said to the Lord Ordinary about the absence of preparation for the proof and
the decision of the Inner House. As to
the notice to admit, a response had to be made within 21 days. Accordingly it frequently happened that
nothing was admitted, and it was not unusual for a notice to be lodged later
withdrawing the non-admissions. Counsel
repeated the explanation relative to the consumer credit licence which had been
given in the Inner House. The North
Ayrshire Trading Standards Service had received many more complaints about the
pursuers after the publication of the article than they had before, and it was
not surprising that in the light of that, the minded to refuse notice had been
issued. Counsel accepted that at the time
of the minute of amendment there was only a short accountant's report available
to the pursuers: it had therefore been a good idea to restrict the proofs to
the question of liability. The defenders
had not considered it necessary to answer the minute of amendment.
[16] Counsel accepted that the reason for abandonment was the lack
of preparation by the pursuers, which was their own fault. But they had made a full and frank admission
before the Lord Ordinary on 16
October 2007, unlike the
situation in McKie where the action
had settled on the morning of the proof.
The Lord Ordinary's finding that the expenses which he awarded should
not be on an agent and client basis had not been appealed. It would be difficult for the Court to form a
view on the merits. It was sufficient
that the pursuers had lost a valuable claim, and should pay only party and
party expenses.
[17] In my opinion the submissions for the defenders are well
founded. It appears to me that the
pursuers' conduct of these litigations may be aptly described as wholly
unreasonable. It is sufficient to refer
to the inordinately long lists of witnesses none of whom had been precognosced,
the failure to make proper and timeous admissions, the unsubstantiated and
large increase in the sum sued for, and above all to the pursuers' deliberate
instruction of their legal advisers not to make preparations for the
proofs. It is clear from the information
provided by the Office of Fair Trading that there was much merit in the
defenders' position on record. The
pursuers have caused the defenders much unnecessary trouble and expense. It is in my view wholly appropriate that the
Court should impose as a sanction against such conduct an award of expenses on
the solicitor and client scale, client paying, relative to the expenses not
covered by earlier awards. In each
action I shall accordingly assoilzie the defenders and find the pursuers liable
to the defenders in the expenses of the action in so far as not already dealt
with, on the solicitor and client scale, client paying.
Additional fee
[18] Counsel for the defenders
also moved for the allowance of an additional fee taking account of the factors
listed in heads (b), (c), (f) and (g) of Rule of Court 42.14(3).
[19] As to head (b), counsel submitted that specialised knowledge
had been required of the defenders' Edinburgh and local solicitors, who were
specialists in media law. The defenders
had stated a plea of qualified privilege.
As soon as the actions were raised, it had been very important to secure
that the defenders' journalists retained all their records of their
investigations in order to demonstrate that they had acted as responsible
journalists. Counsel referred to Reynolds v Times Newspapers Ltd [2001] AC 127 and to Adams v Guardian Newspapers Ltd 2003 SC 425, and said that the present cases would have been the first in Scotland
in which the issue of qualified privilege fell to be discussed in the light of Reynolds after proof. I note, however, that the parties had agreed
that there should be inquiry by way of proof before answer, and the issue would
have arisen for discussion by counsel at the hearing on evidence. Accordingly I am not persuaded that in this
respect specialised knowledge was required of the defenders' solicitors.
[20] On the other hand, as to head (c) I am satisfied that it was
necessary for the defenders' solicitors to peruse a large number of documents;
and as to head (f) it is clear that in Mr Henderson's action the claim was
substantial, and that AppA in their minute of amendment ultimately assessed the
value of their claim at a very high figure.
Counsel for the pursuers observed that given the nature of the case it
was hardly surprising that the latter claim was a large one, and cited McManus v Beckham [2002] EWCA Civ 939, [2002] 1 WLR 2982. In my opinion, however, the fact remains that
the pursuers in AppA chose to face the defenders with an increased claim of a
magnitude which added to the degree of responsibility necessarily borne by the
defenders' solicitors.
[21] As to head (g), counsel stated that the defenders lodged full
and frank defences at the outset and had sought to limit the matters in dispute
by serving the notice to admit. The
pursuers had failed to respond to the notice timeously, and that had "increased,
or at least reinforced, the responsibilities and consequent workload imposed on
the [defenders'] solicitors as the proof approached with all pleas standing and
no concessions being made" (Boal v Newalls Insulation Co Ltd 1994 SCLR 534
at 537). Counsel for the pursuers said
that the notice to admit had been lodged at a relatively late stage, but in my
opinion it was responsibly lodged and dealt with matters within the knowledge
of the pursuers to which they should have responded much more promptly than
they did.
[22] I shall therefore allow in each action an additional fee taking
account of the factors listed in heads (c), (f) and (g) of Rule of Court
42.14(3).
Joint and several liability
[23] Finally, counsel for the
defenders submitted that AppA should be found jointly and severally liable with
Mr Hutchison to the defenders in the expenses of the actions. Counsel submitted that the two actions were
so closely connected that the claims of the two pursuers could have been made
in a single summons. In that event the pursuers
could have been made jointly and severally liable in expenses, and they should
not be permitted to avoid that result by raising two separate actions. The defenders had attempted to secure an
agreement that one action should be selected as the leading action on the lines
described in Macphail, Sheriff Court
Practice (3rd ed), paragraph 13.42, text keyed to footnote 50,
but the pursuers' solicitors had not responded.
[24] Counsel submitted that Mr Hutchison, as managing director of
AppA, was the dominus litis in AppA's
action. Counsel referred to Mathieson v Thomson (1853) 16 D 19 at 22, 23-24, Harvey v Corporation of
Glasgow 1915, 1 SLT 286 at 286-287, and Court
of Session Practice ed The Rt Hon Lord Macfadyen, C[115], and submitted
that Mr Hutchison, through his interest in the subject matter of the AppA
action, had a proper control over the proceedings in that action. In his own pleadings he described himself as
the "owner" of AppA. Counsel produced a
company search report relative to AppA which stated that he was the only
shareholder. Counsel produced a further
company search report relative to another company named AppA Beds Ltd which had
been incorporated on 14 September 2006. Mr Hutchison's name did not appear in that
report, but he was now the secretary of that company, having been so appointed
two days after the intimation of the minutes of abandonment. Counsel stated that on 18 October 2007 the defenders had received an
anonymous telephone call bearing to be from an employee of AppA. The caller had stated that Mr Hutchison had
told the caller that AppA was to fold and to be "phoenixed" in another
form. The defenders now entertained a
not unrealistic apprehension that AppA might not be able to meet their
expenses. Mr Hutchison fitted the
definition of dominus litis by Lord
Rutherford in Mathieson at 23-24
which had been approved in Harvey:
"[H]e is a party
who has an interest in the subject matter of the suit; and through that
interest, a proper control over the proceedings in the action.
[ . .
. ] [W]hen you go a step further,
and find a party with a direct interest in the subject matter of the
litigation, and through that interest master of the litigation itself, having
the control and direction of the suit, with power to retard it or push it on,
or put an end to it altogether, then you have a proper character of dominus litis; and though another name
may be substituted, the party behind is answerable for the expenses."
[25] Counsel for the pursuers said it had been appropriate to raise
two separate actions because separate heads of damage had been sought. Counsel had assumed, however, that both
actions would be heard together, without the necessity to enter into a joint
minute. That did not mean that the
pursuers would have been jointly and severally liable in expenses. This was not the usual dominus litis situation. It
was accepted that the instructions for the conduct of the AppA litigation came
from Mr Hutchison. But it would be
impossible for a limited company to raise proceedings without some person, usually
the managing director, directing how they should be conducted. If that person was a major shareholder, that
did not mean that he was liable for the expenses of the action. There was no rule of law to that effect, and
there was no reason for piercing the corporate veil. Counsel referred to In re Union Accident Insurance Co Ltd [1972] 1 WLR 640 and to
section 726(2) of the Companies Act 1985.
[26] In my opinion the submission for the defenders cannot be
sustained. While Mr Hutchison may seem
to fit the classic description of a dominus
litis, it appears never to have been held that any person who controls a
company and directs the conduct of the company in legal proceedings raised by
or against it, is liable as dominus litis
for the payment of any expenses awarded against the company. So to hold would require the Court to lift
the veil of the corporate personality of the company, a course which is adopted
only in exceptional circumstances. In
the present case I would not be prepared to take that step in the absence of
full argument. I shall therefore refuse
to find AppA jointly and severally liable with Mr Hutchison for the expenses of
the defenders.
Hearing on 15 November 2007
[27] In the course of his reply
on 31 October 2007 counsel
for the pursuers submitted, in my view correctly, that the Court should
disregard the information given by the defenders about the anonymous phone
call. Counsel explained that AppA Beds
Ltd had been formed because it had been thought that a new company with which
Mr Hutchison's name was not associated might have a better chance than AppA of
obtaining a consumer credit licence.
That plan, however, had backfired, because the OFT regarded the new
company as the same as AppA. Counsel
took instructions about the anonymous allegation that Mr Hutchison had said
AppA was to fold. After a short interval
counsel stated that the pursuers' Glasgow
agents had telephoned Mr Hutchison to ask him about the allegation, and he had
told them he had never said he intended Appa to fold.
[28] After hearing counsel on 31 October 2007 I made avizandum. On 8 November 2007 the defenders' solicitors
wrote to my clerk to say that on 26 October 2007 a petition had been presented
to the Court by the Advocate General for Scotland on behalf of the
Commissioners for Her Majesty's Revenue and Customs ("HMRC") craving an order
that Appa UK Ltd be wound up and a liquidator appointed. The solicitors enclosed a copy of the
petition and of the first order dated 30
October 2007. The petition
states that the petitioner is a creditor of AppA UK Ltd in respect of
г261,036.67 and that the company is unable to pay its debts. In view of this information I put the case
out by order on 15 November 2007.
[29] At the hearing on 15 November 2007 counsel for the defenders
stated that it was clear that on 31 October 2007 Mr Hutchison had not told his
Glasgow agents the whole truth, with the result that counsel for the pursuers
had not presented an accurate picture to the Court. Counsel for the pursuers stated that what had
been discussed in court had not been the financial position of AppA but whether
it was Mr Hutchison's intention to put it out of business and start a new
company, and instructions had been taken on that matter. Mr Hutchison had not told his legal advisers about
AppA's difficulties with HMRC. His
solicitors had become aware of the position on 2 November 2007, after service of the petition on 1 November 2007. Counsel then gave details of the company's
attempts to negotiate with HMRC prior to the bringing of the petition.
[30] I consider that the facts stated by counsel for the pursuers
speak for themselves and comment is superfluous. It is sufficient to record that, as one would
expect, in the unenviable situation in which his clients had placed him counsel
for the pursuers conducted himself as an officer of the Court with complete
propriety.
Result
[31] As I have indicated, in each
action I shall assoilzie the defenders and find the pursuers liable to the
defenders in the expenses of the action, in so far as not already dealt with,
on the solicitor and client scale, client paying. I shall also allow an additional fee taking
into account the factors listed in heads (c), (f) and (g) of Rule of Court
42.14(3). Quoad ultra I shall refuse the defenders' motion.
