Scottish Court of Session Decisions

OUTER HOUSE, COURT OF SESSION [2011] CSOH 34
CA131/09	OPINION OF LORD HODGE in the cause MRK 1 LIMITED Pursuers; against (FIRST) MOHAMMED ZAHIR SAKUR AND SUNEIA MOMADE and (SECOND) THE FIRM OF SARA PROPERTIES Defenders: ­­­­­­­­­­­­­­­­­________________

Pursuers: Coutts; Morton Fraser

Defenders: No appearance

17 February 2011

Background

[1] In this action the pursuers sought implement of missives, which the parties had entered into in 2008, for the purchase of subjects at Dens Road Market, Dundee, by payment by the defenders of the purchase price of £1,550,000.

[2] The action commenced as an ordinary action in October 2008. The defenders denied liability to implement the missives on several grounds, including the assertion that they had been induced to enter into the contract through the fraud of the pursuers and others.

[3] In March 2009 Fyfe Ireland LLP withdrew from acting for the defenders and on 20 March 2009 the court pronounced the standard order ordaining the defenders to intimate whether they insisted in their defences. The court required to pronounce a similar order on 6 August 2009 after the defenders' second agents, Balfour & Manson LLP, withdrew from acting. Those agents resumed their agency some time in August 2009, and on 3 September 2009 the case was transferred to the commercial roll on the unopposed motion of the pursuers.

[4] On 15 September 2009 the court allowed the defenders to lodge a minute of amendment. On the following day, the court granted the defenders permission to lodge a counterclaim. Thereafter, the defenders counterclaimed on the basis that the pursuers had been unjustifiably enriched as a result of the transfer by the defenders to them of certain other heritable properties in partial implement of the agreement which the defenders sought to reduce ope exceptionis.

[5] On 11 January 2010 the court allowed the defenders to lodge an adjusted minute of amendment and certain additional productions. The minute of amendment, as adjusted by sixteen pages of adjustments, involved a material re-drafting of the defences. As a result, once the pursuers had answered the minute of amendment and the pleadings were amended, at a continued procedural hearing on 8 February 2010 I awarded the pursuers not only the expenses of the amendment procedure from 11 January 2010 but also the expenses of process from 15 September 2009 to 11 January 2010. At the same hearing I allowed the parties a proof before answer restricted to the question of whether the defenders were bound to implement the missives of purchase and assigned six days for the proof commencing on 21 September 2010.

[6] On 6 September 2010 after the defenders' solicitors, Balfour & Manson LLP, had again withdrawn from acting, I once again pronounced an order ordaining the defenders to intimate whether they insisted in their defences and, in view of the proximity of the proof diet, limited the period in which they were to respond to seven days. The defenders thereafter appointed new agents, Messrs Drever & Heddle, and enrolled a motion to discharge the proof diet.

[7] On 14 September 2010 Mr Dunlop QC appeared on behalf of the defenders to move that motion. He stated, frankly, that, having consulted with the defenders, he could not support the defence which had been advanced. He sought an opportunity to tender a minute of amendment within four weeks if, after investigation, there appeared to be a defence which could be stated against the order for implement. I therefore discharged the proof diet, appointed the defenders to intimate a minute of amendment by 21 October 2010 and, on the pursuers' motion, found the defenders liable in the expenses of process to date.

[8] The pursuers, having two substantial awards of expenses in their favour, arrested sums in the hands of Drever & Heddle on 16 and 17 September 2010. Thereafter, at a by order hearing on 28 October 2010, Mr Summers on behalf of the defenders moved for the recall of the arrestment on the ground that the defenders had given the funds to their solicitors to investigate their case. About £27,800 had been arrested in the hands of the solicitors, who were already due £6,000 in legal fees from that sum. Those funds having been arrested, the defenders had no other means of investigating whether they had a defence to the action. I was informed that the solicitors would have to withdraw from acting unless I recalled the arrestment.

[9] Mr Summers stated that he thought that the major issue between the parties was the question of the quantification of loss; but he did not rule out the possibility that there might be a defence on the merits. Ms Coutts opposed the motion and explained that the pursuers now had a claim for expenses of about £27,500. If the defenders had other funds, there was no need to recall the arrestment; if they had not, the litigation was pointless as the awards of expenses in favour of the pursuers and the fees of the defenders' solicitors which had already been incurred would exhaust the residue of the arrested funds.

[10] I refused the defenders' motion because the pursuers had the awards of expenses in their favour in this action. They were entitled to enforce those awards once taxed. If the defenders were straightforward in their assertion that they had no other funds and I had allowed the recall of the arrestment, it was likely that the pursuers would have been unable to recover the expenses already awarded in their favour. I pointed out to Mr Summers that the defenders were in substance asking to use funds, which were due to and attached by the pursuers, to investigate at this late stage in the action whether they had a defence to the order for implement. The solicitors, through counsel, intimated their withdrawal from acting and, in the same interlocutor, I again ordained the defenders to intimate whether they insisted in their defence to the action.

[11] Thereafter at a by order hearing on 18 November 2010 Mr Mohammed Zahir Sakur ("Mr Sakur") appeared in person. He requested time to obtain legal advice from the Citizens' Advice Bureau to see if the defenders could arrange pro bono representation. Ms Coutts submitted that, if the court were to give the defenders further time, it should be only for a short period and that the court should require the defenders to state at the continued hearing whether they had a defence to the merits and to the pursuers' quantification of their loss.

[12] I explained to Mr Sakur that he had to ascertain (i) whether the missives were binding on the defenders, and (ii) if so, whether the defenders could implement their obligations. If they could not, he should concentrate on obtaining advice on the quantification of the pursuers' loss, by reference to the market value of the subjects of sale and of the subjects which the defenders had transferred to the pursuers. I continued the by order hearing till 16 December 2010.

[13] On 16 December, when the case called at 9 am Ms Coutts appeared on behalf of the pursuers but Mr Sakur did not appear. I had the case called again. Ms Coutts moved for decree, which I initially granted and continued the case to a by order hearing on 20 January 2011 to deal with issues of quantification. But, after Ms Coutts and her instructing agents had left the court, Mr Sakur appeared. I therefore arranged for the case to be re-called so that I could hear what Mr Sakur had to say. He explained that it was still not clear whether the defenders had a defence on the merits. He had approached the Citizens' Advice Bureau who had written to the free legal services unit to seek representation but they had not yet received a response. Ms Coutts, understandably, opposed any further indulgence of the defenders. But I allowed one final continuation of the by order hearing to 20 January 2011.

The interlocutor reclaimed against

[14] On 20 January 2011, after the case had been called, only the legal representatives of the pursuer appeared. I spoke to the macer and confirmed that he had called the case and had looked to see if Mr Sakur was in the building. Ms Coutts represented forcefully that the court had already been very indulgent of the defenders and that the pursuers were adversely affected by having to attend repeated hearings without a good prospect of recovering their expenses. There had been no intimation to her agents or the court that the defenders had secured legal representation or that they were advancing a defence against implement. She renewed her motion for decree for implement.

[15] In the circumstances I considered that the defenders had been given many opportunities to see if they had a defence and, if so, to state it. This had occurred against a background in which the defenders' legal representatives had withdrawn from acting on three occasions before the proof diet, which suggested a failure by the defenders to give instructions or to fund the defence. I considered that it was unfair to expose the pursuers to further expense. I took account of the fact that the defenders could continue a defence on the issue of the quantification of damages, which appeared to be the only issue over which there was a genuine dispute, if they failed to implement the missives. I therefore granted decree, ordaining the defenders to implement the missives by payment of the purchase price of £1,555,000.

[16] About ten minutes after I left the bench, and shortly before I was to commence a preliminary hearing at 9.30 am, Mr Sakur arrived in court and sought to be heard. I considered in chambers whether I should again recall the order I had made, but decided that in all the circumstances I should not. I considered that the court had indulged the defenders on several occasions and had thereby exposed the pursuers to further expense which, on the information which Mr Summers had provided on 28 October 2010, they had little prospect of recovering.

[17] I therefore asked my clerk to intimate to Mr Sakur that I was not prepared to recall the order and require the pursuers' representatives to return to court and that, if the defenders had a defence against implement, his representatives should seek to advance that defence through a reclaiming motion.