NOTE
(Expenses)

(1) Lawrence Riva and (2) Capitol Investment Scotland Limited v Edinburgh Airport Limited

[1] In these two references of objections to blight notices, the respondents maintained preliminary arguments on the formal validity of the notices and on the relevancy and specification of the applicants’ pleadings. The issues on these arguments were essentially similar in each case and were heard together. The Tribunal upheld one of the respondents’ arguments and dismissed both references. Reference may be made to the Tribunal’s Opinion dated 27 June 2013. The respondents now seek an award of expenses against the applicants, jointly and severally, on a ‘solicitor and client, client paying’ basis, or alternatively ‘solicitor and client, third party paying’. The applicants oppose on each of these elements. The matter has been considered on the basis of written submissions.

[2] In summary, the Tribunal has decided that the respondents are entitled to the expenses of these proceedings, on the ‘party and party’ basis, jointly and severally against the applicants.

Respondents’ Submissions

[3] The respondents first submit that they are entitled to expenses on the general principle that expenses follow success. There was no criticism of the respondents’ conduct and no basis for refusing expenses or limiting this to their appearance at the hearing. They then refer to the legal position on the ‘client paying’ (or indemnity) basis of expenses, as summarised by Lord Hodge in McKie v Scottish Ministers 2006 SC 528 at 530. They submit that the applicants conducted their case incompetently and unreasonably.

[4] In summary, the respondents submit that the applicants had paid no or scant consideration to the requirements for service of a blight notice under Section 101, and particularly Section 101(1)(c), of the Town and Country Planning (Scotland) Act 1997. Regard could be had to their behaviour before the action commenced. They had previously served similar blight notices and referred the respondents’ objections to the Tribunal, but withdrawn those applications very shortly before the hearing of similar arguments. The respondents had in that process highlighted the applicants’ similar failures. They had “made no attempt at all between serving the blight notices and withdrawing their application to address this issue”. Then, it is submitted, they “made absolutely no attempt to address this issue” in this second referral after the respondents again raised the issue. A debate on preliminary pleas had been fixed for February 2013 and discharged following the appointment of new solicitors. Their case had been fatally flawed from the outset. They had simply dismissed the respondents’ attempts to highlight this. Significant time, expense and resource for the respondents could have been avoided had the applicants taken any time to adequately consider their position and the requirements of the legislation. Apart from the issues which resulted in dismissal, the applicants’ case had “numerous other fundamental flaws”, and their actions in bringing it were “wholly unjustified and unreasonable”. The second claim had been brought in exactly the same terms as the first which they had recognised as fatally flawed and abandoned. The applicants’ conduct of the second claim was also wholly unreasonable. Reference was also made to the applicants’ post-litigation conduct in writing indicating their continued determination to achieve “a ‘fair’ outcome for our property and its potential” and referring to the possibility of a further similar claim. The process, it is submitted, “ought not to be used over and over again as a learning process”. The fact that the applicants raised this reference as party litigants was irrelevant: they had legal advice and representation at different stages.

[5] Replying to the applicants’ suggestion that any award should be apportioned between the two applicants, the respondents submit that where several pursuers combine in an unsuccessful action arising out of the same state of facts, it is well established that they should be liable jointly and severally in any award of expenses. They also refuted the suggestion that the expenses recovered for the first withdrawn claim covered the expenses of this claim. In relation to the suggestion that there had been no negotiations, the respondents indicated that it had become clear at an early stage of correspondence that there was a fundamental disagreement on the matter of expenses.

Applicants’ Submissions

[6] The applicants’ submissions, in their letters of 30 August and 3 October, can be summarised as follows. They submitted that each party should be responsible for their own expenses, or alternatively the respondents should be held entitled to only a ‘simple appearance fee’. The applicants had paid the respondents’ audited expenses of the previous proceedings and, as the respondents had asserted that nothing had changed, the key points remained the same, etc., the respondents had been paid in full for the work required in these proceedings. There was no legitimate reason to move away from the ‘party and party’ basis. The applicants had terminated the previous proceedings in order to strengthen the substance of their pleadings, and their case had been prepared, adjusted and presented by professional solicitors, thus helping to focus arguments and eliminating additional, potentially irrelevant issues. The Tribunal had rejected the respondents’ submissions on the formal validity of the blight notices and on the relevancy and specification of the applicants’ pleadings on Section 101(1)(b) of the Act. The two applicants were separate legal entities: any award should be split between them. The applicants drew attention to what they described as a ‘vastly inflated’ amount claimed by the respondents, and referred to the extent to which the respondents’ account had been reduced at taxation on the previous occasion. There had been no negotiations on this issue. The respondents’ solicitors had not conducted this expenses issue in a fair and reasonable way.

Tribunal’s Consideration

[7] The Tribunal is firstly of the clear opinion that the respondents are entitled to the expenses of their successful resistance to this reference. In reaching this view, we appreciate that the applicants were in fact successful in two of the three issues argued at the preliminary hearing or debate. That fact does not make this a case of ‘divided success’, because the respondents succeeded in having the whole reference dismissed. Sometimes, it can be seen that successful parties have caused additional expense by unsuccessful arguments on some points, but in this case we do not consider that any significant additional expense was caused in this way.

[8] Nor do we accept that the respondents can be said already to have recovered their expenses in these proceedings because the issues in the previous proceedings were said to have been the same. The respondents were put to the expense in these proceedings of preparing answers, adjustment, a note of arguments, etc., in addition to their appearance at the hearing. That said, we can appreciate the possibility that some items of work had in fact previously been done, or substantially done, in the course of the first proceedings. Presumably, if the applicants simply tried again, in the same circumstances, there would be no need for any fresh investigation into the circumstances or the respondents’ position and some at least of the legal research would already have been done. These are matters which we would expect the Auditor to consider if the amount of expenses again cannot be agreed.

[9] That brings us to the second issue, as to the basis of the award of expenses on this occasion. We have considered on the material available whether in this case to depart from the normal rule that expenses are awarded on the ‘party and party’ basis, under which expenses reasonably incurred in the conduct of the proceedings are recovered, as opposed to expenses on a ‘client paying’, or indemnity, basis, which covers work which the particular solicitors, who may have a higher charging rate, have carried out on the instructions of the client (unless such is shown to be unreasonable). Following Lord Hodge’s summary of the principles applicable, we have particularly considered whether, on the material available, the applicants’ conduct of the litigation, including before these proceedings commenced, can be categorised as incompetent or unreasonable.

[10] The applicants’ claim was of a specialist and complex nature and was, to put the matter neutrally, not straightforward. While parties before a tribunal might often reasonably expect to be able to conduct their claim without legal representation, ideally this claim would have been advanced throughout by solicitors (or perhaps other experts) competent in this particular area and would have been concluded in one set of proceedings in which the applicants’ position was fully pled and argued. What in fact happened, as we understand it, was that over the period of the two proceedings the applicants at some times had professional advice and representation, from two firms of solicitors, but sometimes had not. Their first claim ‘stuttered’ to the point where they felt it better to discontinue it and endeavour to focus it better in new proceedings based on new blight notices. There was some delay in these proceedings, an earlier diet of debate on the preliminary issues being discharged because the applicants wished to revert to professional representation.

[11] Looking at this whole procedure, while there are obviously unfortunate aspects (which have caused additional expense which the respondents either have recovered or will be entitled to recover), we think the respondents’ criticisms are over-stated and we are not prepared to categorise the applicants’ conduct overall as either incompetent or unreasonable. The decision to abandon the first proceedings with a view to strengthening the applicants’ position seems to us to be reasonably based. As far as the second proceedings are concerned, the applicants eventually had their position presented by undoubtedly competent solicitors with the issues appropriately focussed. We cannot jump to conclusions about other aspects of the applicants’ claims, but as far as the issues argued at the debate are concerned, the applicants succeeded in two and we do not accept that they “paid no or scant attention” to the one on which they lost. The applicants’ arguments cannot be described as hopeless to the point of unreasonableness or incompetence. Some of the applicants’ correspondence at times when they were not represented bordered on irrelevance, but as we have said, in the end they did take steps to have their position competently argued and their position was reasonably arguable. Nor does the applicants’ letter written after the Tribunal’s decision alter our overall view of matters.

[12] In reaching this view of the applicants’ conduct of the proceedings, we have taken no account of their comments about the amounts of expenses claimed against them or about the respondents’ solicitors’ handling of this issue. Nor do we accept the applicants’ submission that the basis of the award of expenses requires to be consistent with the ‘party and party’ basis awarded on the last occasion. It will be seen that we have considered whether the bringing and conduct of a second set of proceedings with very similar issues shows incompetence or unreasonableness in this case. Repeatedly litigating on the same matter may well in some cases attract expenses on the ‘client paying’ basis.

[13] The respondents alternatively invited us to award expenses on the ‘solicitor and client, third party paying’ basis. As we understand it, this involves postulating instructions by a reasonable litigant, rather than by the actual client. In our view, however, the normal basis of ‘party and party’ expenses, in which the test is simply reasonableness in the conduct of the case, is an adequate basis for the award in this case.

[14] Finally, the closeness of the two applicants’ interests and the unity of procedure, with all the expense jointly caused in the procedure which has taken place, does in our opinion justify a joint and several award of expenses in this case. Again, of course, to the extent that there is duplication of effort between the two proceedings, that will be a matter for the Auditor.


Certified a true copy of the statement of reasons for the decision of the Lands Tribunal for Scotland intimated to parties on 5 November 2013

W Douglas Ballantyne – Deputy Clerk to the Tribunal