Scottish Sheriff Court Decisions

THE SHERIFFDOM OF NORTH STRATHCLYDE AT KILMARNOCK

 

 

 

L11/07

INTERLOCUTOR AND NOTE   BY   SHERIFF WILLIAM SEITH STANNERS IRELAND   in the cause   R & S MUIRHEAD Petitioners;   against   JULGEM PROPERTY LIMITED   Respondents:   ­­­­­­­­­­­­­­­­­________________

 

 

Act: Conn, Solicitor   Alt: Cruickshanks, Counsel

 

 

 

 

KILMARNOCK: 19 November 2007

 

 

The Sheriff, having resumed consideration of the cause, Finds the Petitioners liable to the Respondents in the expenses of the cause, unless otherwise determined by prior interlocutor of the Court, on a party and party basis; Certifies the cause as suitable for the employment of Junior Counsel; Allows an account of expenses to be given in and Remits the same, when received, to the Auditor of Court to tax and to report.

 

 

 

 

Note

 

 

Introduction

 

 

This note is the explanation for the interlocutor above dealing with the question of expenses in this liquidation action.

 

In order to make some sense as to how this liquidation action reached the stage whereby the question of expenses required to be taken to Avizandum, it is necessary to set out the background and history of the case in a little detail.

 

In or around 25 June 2007, the Petitioners (R & S Muirhead) presented a liquidation petition regarding the Respondents to this Court. A colleague, having considered the terms of same, made the usual order for advertisement, intimation and service but on the application of the Petitioners also appointed a well-known insolvency practitioner to be the Provisional Liquidator of the Respondent company with the usual powers specified in Parts 2 and 3 of Schedule 4 of the Insolvency Act 1986.

 

In or around 10 July 2007, agents acting for the Respondents lodged answers to the liquidation petition and also presented a Note to the liquidation process craving, inter alia, after service and any answers by the Petitioners and the Provisional Liquidator, to recall the appointment of the said Provisional Liquidator; "and to do further or otherwise in the premises as to the Court may seem proper".

 

By interlocutor of 11 July, I granted warrant to intimate the Note on the Petitioners and the Provisional Liquidator, appointed a period for answers and appointed a hearing on the Note on 1 August 2007.

 

On 1 August 2007, the Petitioning company were represented by Mr Conn, solicitor of Glasgow and the Respondent company by Mr Cruickshanks, Counsel. The matter called after a particularly busy ordinary court and after hearing certain argument, I required to continue it to the following morning of 2 August 2007.

 

On 2 August 2007, I allowed the Respondent to amend the Note for Recall of the Provisional Liquidator to insert at the end of the plea-in-law "and the Petition dismissed" and having heard parties on the Respondents' Note, I refused to recall the appointment of the Provisional Liquidator in hoc statu. On the Petitioners' opposed motion I continued consideration of the Respondents' motion to dismiss the Petition to 15 August 2007 and allowed a further period of adjustment. I specifically reserved the question of the expenses of the hearings before me on 1 and 2 August 2007.

 

On 15 August 2007, on the Respondents' motion but now of consent, I dismissed the Petition to wind up the company and recalled the appointment of the Provisional Liquidator. I found the expenses of the Provisional Liquidator as expenses to be met by the Petitioner. On that day I also began hearing Counsel for the Respondents and the solicitor for the Petitioners on the question of the liability of the expense of the whole action. Due to the lateness of the hour and difficulties with parties diaries and the congestion in the Court programme, the date was continued to a date to be afterwards fixed. The matter again called before me on 2 October 2007 when I heard parties again on the question of expenses and, at their specific invitation, made Avizandum. I should also acknowledge by 2 October parties had prepared helpful written submissions on the question of expenses to supplement their oral submissions on the earlier date. As will be seen and was clearly apparent to parties, the question of expenses becomes perhaps the most significant aspect in this whole litigation.

 

Respondents' Submissions on Expenses

 

Mr Cruickshanks, Counsel for the Respondents, sought the expenses of the cause to be awarded in favour of the Respondents against the Petitioners, to find the mode of taxation as being on an agent/client basis and to grant sanction for the employment of Junior Counsel for these full proceedings.

 

As regards the general point, pertaining to the award of expenses in the general sense against the Petitioners, Mr Cruickshanks made reference to the fact that ultimately the Petitioners have conceded to the motion for dismissal of the Petition, accordingly there having been complete success in vindication of the Respondents' position, expenses should, as in the normal case, follow success. Further, it could not be argued responsibly that the Petitioners had succeeded at an earlier diet in respect that the motion for recall of the appointment of the Provisional Liquidator had been refused. That motion had been refused in hoc statu and further the primary issue in the cause namely whether the Petition should be dismissed had been continued at that diet on the Petitioners' motion on the basis that further enquiries required to be made. At least on one view, full and thorough enquiries ought to have been made in advance of the Petition ever being raised. Those enquiries apparently drew a complete blank in that there was no further adjustments by the Petitioners who thereafter concede to dismissal and recall of the Provisional Liquidator. Accordingly, he submitted that the Petitioners could be held to have been aware throughout that there was a real and genuine dispute in respect of the Petition debt, meaning that an order for winding-up of the company could never have been made and that the Petition could be held to have been an entire abuse of process.

 

These submissions led on to the second leg of Mr Cruickshanks' submissions, namely that the award of expenses should be on an agent/client basis.

 

Mr Cruickshanks made reference to MacPhail "Sheriff Court Practice" (3^rd Edition) at paragraph 19.45 where the learned editors state

"It is also within the discretion of the Court in exceptional circumstances to order taxation of expenses between solicitor and client, client paying. It may so order as a mark of disapproval of a party's unreasonable conduct".

 

Mr Cruickshanks also submitted that there was a most helpful statement as to the modern law as regard agent/client taxation to be found in the opinion of the Lord Ordinary in the case of McKie v The Scottish Ministers 2006 SLT 668 at paragraph 3. He commended to consideration the summary of the position as expounded by the Lord Ordinary. This is to say that the Court has a 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. However, thirdly, where one of the parties has conducted the litigation incompetently or unreasonably and thereby caused the other party unnecessary expenses, 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 factors. 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.

 

Mr Cruickshanks submitted that throughout this case the Petitioners had conducted litigation both incompetently and unreasonably causing the Respondents considerable expense in order to vindicate the Respondent's position. It ought to have been clear to the solicitors for the Petitioners from a very early stage that the Petition debt was disputed. Further there were detailed answers which made clear the debt was disputed. In particular, Mr Cruickshanks made reference to certain letters between the parties at earlier stages which he submitted tended to indicate that it was known all along by the petitioning entity that any agreement as to development of lands and the removal of spoils, to put the matter in shorthand, was between the Petitioners and a director of the Respondents, and that on a personal basis, not on behalf of the limited company, the Respondents. He further founded on another letter, Number 11 of Process, which tended to indicate that there was a dispute between a Mr Robert Thomson, (who is the director of the Respondents) and Mr Robert Muirhead (the principal of the Petitioners). This letter tended to indicate again that there was a dispute over the entitlement to part of the consultancy fee for a particular land development. This letter had been written by a firm of surveyors. Mr Cruickshanks made reference to other pieces of correspondence which in terms supported that principle contention, namely that there had always been a dispute and that that dispute must have been known to the Petitioners. It is not necessary in my view to repeat all of these matter, but rather to give a flavour of the strong contentions made by Mr Cruickshanks which I required to fully consider before reaching my judgement on this point. Perhaps significantly, from the Petitioners point of view, was Mr Cruickshanks' contention that the issue for determination in respect of a disputed debt, in the forum of a liquidation proceeding, is not one of right or wrong but rather whether there is a real and genuine dispute over the debt. He submitted that the Petitioners clearly knew throughout that there was. Accordingly the Petition had been an abuse of process, a waste of time not only to the Court but to the Respondents and accordingly it is appropriate that the Court should impose taxation on an agent and client scale.

 

As regards the third leg of his submission, namely that the case was appropriate for the employment of Junior Counsel, Mr Cruickshanks submitted this was clearly warranted. The entire process, including the appointment of a Provisional Liquidator, of which the Respondents had moved to have recalled and to have the Petition dismissed, was clearly a significant and major intrusion upon the Respondent. He made reference to the leading case of In re Bayoil S.A 1999 W.L.R. page 147 at page 155 and the words of Nourse L.J. that a liquidation can often be the "death knell" of a company. It followed from that that the present resistance by the Respondent was of absolute importance to the continuation of the company. He founded also that the sum in dispute was considerable, the debt being it was said one of £165,000. He also founded on the factual complexity, wide ranging issues involving who were the actual parties to particular contracts, the agreements reached between those parties, the question of whether their had been compromised agreements and other factual complexities relating to the spoils of particular developments. All of these factors were indicative of the importance of the matter to the Respondents and were indicative that the test for employment of Junior Counsel had been met on the particular circumstances of this case.

 

Submissions by the Petitioners

 

Mr Conn, Solicitor for the Petitioners accepted that the expenses of the Petition (excluding the motion for recall of the Provisional Liquidator) were conceded in favour of the Respondents but without sanction for Counsel and that those expenses themselves should be awarded on a party/party basis not on agent/client basis. He submitted that the expenses of the motion for recall of the Provisional Liquidator should be awarded to the Petitioners as they had been entirely successful. He also sought an uplift in the fees payable to the solicitor to the extent of twenty per cent. He had a subsidiary submission in that should the Respondents not be entirely successful in their arguments as regards expenses, then an award ought to be made in any final award of expenses which reflected any divided success on the question of expenses.

 

In opposition to the award of expenses on the agent and client basis, Mr Conn submitted that the Respondents' submissions failed to show that there was in fact a dispute pre-dating the raising of the liquidation proceedings and that the close examination of all the pieces of correspondence tended to show support for the Petitioners' position on the factual matrix and that the fullest information, allowing the Petitioners to come to an informed view that there was a real and genuine dispute about the debt, was not forthcoming until "late" (Mr Conn's words) adjustment in around 31 July 2007. It was only after that that the Petitioners were able to obtain certain legal advice from him that the Court was likely to hold that there was a real and genuine dispute about the debt and that, consequently, the Petition would likely be dismissed and that accordingly the Petitioners should consent to that order being made. Accordingly, they had no prior knowledge of the basis of the "real and genuine dispute".

 

Moreover, the test requires some enquiry into the facts presented and the Petitioners could not see themselves as bound to fail until on or after 31 July at the earliest. The test is variously stated as "a genuine dispute founded on substantial grounds" (Totty and Moss paragraph E1.74 or "disputed by the company in good faith and on substantial grounds", In re Bayoil SA op sit at page 150 or "a bona fide dispute whether there is any debt at all and that this dispute is not trivial or insubstantial but is based on solid grounds" (under reference to the case of In re Lympne Investments [1972] 1WLR 523 at 526). The Court had to be satisfied that the dispute between the parties met the test above quoted and it matters not that there was some agreement between the parties themselves, but rather it was for the Court to satisfy, itself, that the test had been met.

 

The Petitioners position is that up until the adjustments made by the Respondents in or around 31 July 2007 and the productions lodged at the same date, the combined averments and productions did not show a dispute necessarily satisfying the test. With respect to Mr Conn he developed a number of propositions to support that but which again given the circumstances of what I have come to hold below, I need not rehearse in any great detail. His submissions as I understand them ultimately came to this. If the Court were to take the view that there was at least information available to the Petitioners to form the view that there was a real and genuine dispute that that judgement comes with the benefit of hindsight only after the adjustments made by the Respondent referred to. It would therefore be inappropriate for the Court to make an award of expenses on an agent and client basis, as that is an exceptional basis and that prior to that judgement being formed it would have been necessary for the Court to have some form of enquiry on the facts. That latter position, namely that it would be possible to hear some form of proof is broadly approved of, at least in certain circumstances, in the cases of Todd v James Watson (Unreported, Court of Session 25 June 2004) and McPlant Services Limited v Contract Lifting Services (Scotland) Limited a decision by Sheriff Principal Young at Aberdeen 6 June 2007 (now 2007 GWD 22-373).

 

It could not, otherwise, be said that the Petitioners through their agents had sought to mislead the Court as regards the possible additional debts that might be due by the Respondents to other creditors. This was the argument that had been developed by the Petitioner at the time when the Respondents sought the recall of the Provisional Liquidator namely that it appeared that the Respondents owed other debts. The Court at that stage had been satisfied on the appropriate test as to the recall of a Provisional Liquidator, that the possibility of the existence of other creditors, who might be sisted, in part, justified the refusal of the recall of the Provisional Liquidator, in hoc statu.

 

In summary, the submissions as to the existence of other debts due by the Respondents had been made in good faith and on information then available to the Petitioners and could not be held to have been misleading on an ex party basis, and accordingly for all the reasons above stated, an award of expenses ought not to be made on an agent/client basis but rather if at all, on a party/party basis.

 

There was a further argument by Mr Conn that in fact the expense of the hearings of 1 and 2 August should not be awarded to the Respondent but that rather no expenses should be awarded to either party for those diets. This is on the basis that the Petitioners had been successful to the extent that the Court had been satisfied not to recall the appointment of the Provisional Liquidator on that date and that on the basis of the legal submissions made by the Petitioners. The Petitioners therefor had been entirely successful as regards the failure by the Respondents to secure the recall of the Provisional Liquidator and indeed there was an argument that the expenses of the diets of 1 and 2 August should be awarded in favour of the Petitioners. Should expenses be awarded to the Petitioners, an additional fee of fifteen to twenty per cent would be appropriate given the skill and specialised knowledge of the solicitor.

 

Turning to the question of whether the cause was suitable for sanction for the employment of Junior Counsel, Mr Conn opposed this. He submitted that liquidation of a company is not a matter of great complexity normally requiring the involvement of Counsel. It is a matter of everyday law for a commercial firm. The Respondents' agents profess an expertise in the matter, having a "corporate recovery group" and indeed the partner apparently overseeing the particular file of the Respondents within the particular law firm is an accredited specialist. Accordingly, the cause was a matter which was perfectly within the competence of the Respondents' agents and there was no special requirement for Counsel. He also disputed that the case was complex on a legal basis, there being only a few previous cases quoted in regards to this cause. He disputed that there were factual complexities. The sum involved, although large, was not an unusually large sum for a commercial firm of the size and renown of the Respondents' agents to be involved in. As regards the "importance to the client" test: the Respondents are a non trading company with a single asset and no employees which appears to be funded by one of the directors. Mr Conn had a subsidiary argument that esto the Court was of the view that the preliminary hearings on the questions of recall of the Provisional Liquidator and dismissal of the proceedings were suitable for Counsel, there was no requirement for Counsel's involvement at the expenses hearings. Finally, if the Court found in favour of the Petitioners on some of the questions regarding expenses, there would ultimately be some form of mixed success and the Court could hold that the expenses of the diets to determine expenses could be on a no expenses due to or by basis or the Court might wish to restrict expenses to twenty five per cent in favour of the Respondents with the remainder being on a no expenses due to or by basis.

 

Discussion

 

The written and oral submissions by the Counsel for the Respondents and solicitor for the Petitioners have been of great assistance and have required a decree of earnest reflection and consideration. I have also had to return to my notes of the earlier hearings and, in particular, the hearings of 1^st and 2^nd August 2007 at which the Respondents' motion for recall of the Provisional Liquidator was considered. However, I require to state here and now that on a check of my notes it was abundantly clear to me and thus, one must presume, with respect, to the Petitioners' agents that the thrust of Counsel's submissions was directed not only to the question of the recall of the Provisional Liquidator but also and importantly to the real question of these proceedings namely whether the Petition for liquidation should be dismissed and that on the basis that there was a bona fide dispute based on matters of substance (to paraphrase the test in the cases above quoted) as to the subject matter of the Petition for Liquidation namely the alleged debt owed by the Respondents to the Petitioners.

 

In re-reading my notes on the submissions made, it was clear that Counsel's submissions, at the commencement of his address, were directed not only to the question of whether there should be recall of the Provisional Liquidator but that the whole proceedings at that stage should be dismissed. The argument from the Petitioners' solicitor at these diets that dismissal was premature and that given that the Court at that stage did refuse the Respondents' motion for recall of the Provisional Liquidator, in hoc statu, should be taken as some justification for any award of expenses in favour of the Petitioners or alternatively some basis on which any expenses should be awarded to the Petitioners, is not a submission which finds favour with me.

 

The ultimate position in these proceedings is this: the Petitioners have consented to dismissal of the Liquidation Proceedings. It seems to me that accordingly the Respondents can realistically and properly be held to have been successful and in these circumstances, broadly put, the Respondents are entitled to the expenses of the whole proceedings.

 

On checking my notes, I do find that on 2^nd August 2007 on the Petitioners' opposed motion I continued consideration of the Respondents' motion to dismiss the Petition to 15 August 2007 at 12 noon. I did so on a basis of fairness to the Petitioners' position given that there were adjustments made in or around 31 July and it seemed to me only proper that any Petitioner, indeed any party, where adjustments take place on the eve of a Debate/Hearing/Proof should have some time to consider the matters more fully and indeed to discuss them with their client. This is what in fact occurred on that date. However, that does not ultimately affect the position as regards the ultimate success of the Respondents. Indeed it is clear that the Petitioners had, having considered the additional matters raised by the Petitioners, formed the view that they could advise their clients, the Petitioners, that the Court was likely to hold that there was a genuine and real dispute based on significant matters (to paraphrase) and that accordingly the Court would be likely to dismiss the Petition. However the matter is dressed up, the reality is that the Respondents have been successful in obtaining the dismissal of the Petition to wind up the company and in my view have been successful and there is no contrary reason shown that should not obtain the expenses.

 

The argument from the Petitioners that as they had been successful in persuading the Court not to recall the Provisional Liquidator justifies some award of expenses in favour of Petitioners or refusal of expenses in favour of Respondents does not find favour. I say that because, of course, the test as to whether a Provisional Liquidator should continue in office, or not, is a different test from that of whether a liquidation should be dismissed. I was satisfied on the submissions made by the Petitioners that there were grounds, at the time I made the order, to continue the appointment of the Provisional Liquidator. However, that does not ultimately affect the real issue between the parties, namely whether the liquidation Petition should be granted or dismissed; I repeat ultimately on this matter the Respondents have been successful. It should be noted of course that I continued the appointment or, more accurately, refused the motion of the Respondents for recall of the office of the Provisional Liquidator in hoc statu. I was influenced by the realities that this was a dispute in which both parties were ingathering information and seeking to present some complex factual matters to the Court and that until matters might otherwise be resolved the assets of the company, by the continuing in office of a Provisional Liquidator should be protected. There was too at the time I refused the motion to recall, at least the possibility that another potential creditor might enter the process.

 

Accordingly, I am of the view that indeed the Respondents have been successful and are entitled to the expenses of all the diets at least until 15 August 2007.

 

The next question is whether those expenses should be on a party and party basis or on an agent/client basis.

 

I find myself, respectfully, in agreement with the summary of the legal position propounded by the Lord Ordinary in the McKie case op sit. Lord Hodge having mentioned and considered a number of the cases submitted to him by Counsel in that case, has in my view, respectfully, set out the test the Court requires to apply in any award of expenses. As the Lord Ordinary observes (page 669 at paragraph [4]) where parties settle an action before a proof on the merits has been heard, it may be more difficult for the Court to reach a firm view as to a party's conduct in relation to the merits of the action than where the proof has been completed and the judge has made a final determination. Nevertheless, there are cases where the Court can reach a judgement simply on the basis of the material placed before it. It respectfully appears to me that that is a proper statement of the test and one which I require to apply in the present circumstances. However, that test recognises that it will be perhaps an easier task for the Court where, in fact, evidence has been lead.

 

I find myself persuaded by Mr Conn's submission, at least to this extent, that it is most difficult in a case such as this to hold that the Petitioners have acted unreasonably or improperly or that they have abused the Court process, or at least I am unable to form that view without having had the benefit of hearing evidence. I say this because, as it turns out, whilst the Petitioners have ultimately recognised that their position is legally untenable which is to say that their advice has to be to their client that the Petition is likely to be dismissed and they should consent thereto, that is entirely a different position from holding, as the presiding Sheriff, that the position was always clear to them. It may well be that after proof a different view might have been taken as to the various letters referred to in the Productions and what inferences might be drawn from them, in the context of a proof, as to what knowledge the Petitioners had as to whether the debt truly was a debt owed by the particular respondents to the Pursuers. However, it seems to me that it would be inappropriate having considered all of the submissions made and having looked at my notes and at the pleadings to draw the view that the Respondents have shown that the Petitioners should be made the subject of an award of expenses on an agent/client basis. As the learned editors in McPhail point out, such an award ought only to be made in exceptional cases and that, in my view, in the circumstance enumerated by the Lord Ordinary in the case of McKie namely that it is clear that a party has conducted the litigation incompetently or unreasonably or has made inadequate preparation or has sought to use the Court for an improper purpose. I am not satisfied on all of that in this case.

 

I now deal with the question as to whether the cause was suitable for the employment of Junior Counsel. I have taken some time to review the authorities all of which now date back to the earlier part of the twentieth century or earlier which are referred to by the editors of McPhail at paragraph 12.25. It is useful, to look again at the opinion of Sheriff McKay in the case of Leny v Milne (1899) 15 Sh. Ct. Rep. 76 at page 77. It is clear that the Sheriff had given the matter much thought and had carried out some researches into the practice within the Sheriffdom. The Sheriff said the following.

 

"The expenses of the employment of Counsel by each of the Defenders, although the Pursuers were represented by their agent only is, I think, a matter which requires careful consideration. Such employment will no doubt add heavily to the costs of the case; and while parties are always entitled to the services of Counsel, it does not follow that their opponents, if unsuccessful, must pay them. ... ... ... When Counsel are employed by one side, there is a rule of professional etiquette that notice should be given, which enables the opposite party, if he chooses, to have Counsel also. But if he prefers to employ an agent, this notice certainly does not determine that the cost of Counsel must be paid. Neither, on the other hand does the employment of an agent, as here, show that the case was not one for the employment of Counsel. I find on enquiry that in many Sheriff Courts the expense of Counsel, though employed on one side only, is as a general rule, allowed. I think, however, this should not be done unless the case is one of serious difficulty, or one of very large value, or one which relates to personal character. In these cases - and there may be others, though probably these are the chief - I think the cost of Counsel may generally be sanctioned, and that the onus is thrown on the other side to show why it should not be."

 

It respectfully appears to me that the other authorities cited by the editors of McPhail are effectively glosses on the opinion of the Learned Sheriff. I have carefully considered the criticisms, no doubt responsibly made, by Mr Conn of the Respondents decision to employ Counsel. However, I am drawn to the view that this case is one which meets the test set out by the Learned Sheriff in the Leny case. I do so broadly for the following reason. The liquidation of any company is a matter of considerable importance and whilst it may well be that this particular company is on a small scale, it has existed for a period as seems clear and indeed has been involved in various commercial contracts over the years and that these contracts themselves were in the circumstance of this particular case of substantial value in monetary terms.

 

It seems to me on consideration of the pleadings and on the productions which contained references to inter alia sets of correspondence that the matter was not without a degree of complexity and sufficient complexity both as to the facts and to the legal interpretations that might be made of the letters themselves to be such as to justify the employment of Counsel. There is of course, moreover, the submission made by Mr Cruickshanks that the liquidation of a company can in reality be its "death knell" which of course goes to the status and reputation of the company also. Ultimately, it is an exercise of discretion to be made in light of the Leny test as to when employment of Counsel should be allowed. I have been drawn to the conclusion that the employment of Counsel ought to be sanctioned in this particular case.

 

Having dealt with that broader issue, I then turn to the subsidiary issues as to whether the Court ought to take a view and express in this interlocutor any restriction on the general award of expenses which falls to be made in this particular case as to stages of proceeding or in percentage terms.

 

On reflection I have come to the view that the Respondents have been substantially successful throughout. In my view, it was quite appropriate that once Counsel was instructed that Counsel should remain with the case especially as, as I said in my introductory remarks, the actual question of expenses becomes almost the largest matter in this case and in my view it would be artificial to say that Counsel having won the war as to the question of dismissal should bow out for the hearing on expenses especially, as I repeat, given that the issue of expenses was particularly significant in this cause. The fact that I have not awarded agent and client expenses to the Respondents does not detract from the substantial success obtained by the Respondents on the question of expenses and in these circumstances I am drawn to the view that the expenses of the whole cause, unless otherwise determined in previous interlocutors, should be made in favour of the Respondents on a party and party basis with a certification that the proceedings were suitable for the employment of Junior Counsel. As Mr Conn recognised whether and to what extent a percentage uplift of solicitors fees would have been in order would only arise if sanction for Counsel had been refused by the Court and therefor I do not require to make any determination on that point in this present case.

 

Finally, I should not leave this case without making a general observation. It seems to me that whilst I have not been able to hold that the Petitioners have acted unreasonably or have abused the Court process, to the extent that I would have been able to make an award of expenses on an agent/client basis against them, I am and remain uneasy about the bringing of these proceedings. The Petition proceeded on the basis of Section 123(1)(a) of the Insolvency Act 1986 - a demand for payment not answered within three weeks; not it should be remembered ion terms of a decree (Section 23(1)(b)). I am still left of the view that there remains some lurking unease, however difficult to actually specify, that these types of proceedings too often are used as a form of diligence, or to put pressure on some purported debtor to make some compromise or other payment in favour of a Petitioner. The Sheriff Principal of this Sheriffdom has recently deprecated that practice in the case of Butler v The Accountant in Bankruptcy (Opinion Issue date 5 September, 2007). In that case Sheriff Principal Kerr observed the following "There has been a tendency in recent years among some who act for creditors to utilise sequestration or liquidation procedure as a means of applying pressure to a debtor to pay the debt of the one particular creditor for whom they act by raising a petition for sequestration or liquidation, obtaining the appointment of an Interim Trustee or Provisional Liquidator and then withdrawing the proceedings when the debtor pays his creditors debt together with the expenses of the procedure which have been incurred. In so doing they may appear to be using sequestration procedure as an equivalent of doing diligence, but improperly so in my view and I regard this practice as dubious and one which nothing should be done to encourage.

 

Of course I can make no adverse judgement, as I have set out at some length in my decision on the agent/client basis of taxation, in this particular case, but it seems to me that the words of the Sheriff Principal might with advantage be reflected upon and indeed observed in cases like this which might be contemplated within this Sheriffdom.