Note
(Expenses)

Colin Gray v The Keeper of the Registers of Scotland and Perran John Horrell and another

1) The Appellant, Mr Gray and the Interested Parties, Mr and Mrs Horrell, were adjoining proprietors in dispute over land lying between their houses. The dispute arose from an unexplained, but admitted, error by the Keeper who included in the Interested Parties’ title plan a substantial area which had been owned by the Appellant under a Sasine title. The Keeper was unable to correct the error because of a dispute between the parties which turned on competing claims to possession. In the event we found that the Interested Parties had established possession of a substantial part of the disputed ground. We intimated the terms of our decision in principle and invited parties to try to agree a precise boundary line. We said that failing agreement we would need to determine this after inspection. In the event agreement was reached. The parties are now in dispute over expenses.

2) The parties lodged lengthy and detailed submissions and we do not attempt to set them out in any detail. They recognised that the Land Registration (Scotland) Act 1979, section 12, makes provision for the Keeper to indemnify in respect of errors such as that made in the present case and that the indemnity might be expected to include the expense of litigation: MRS Hamilton v The Keeper 1999 SLT 840. However, we were asked to deal separately with the expenses of the litigation before us. The Appellant sought an award against the Keeper mainly on the basis that it was a gross error by the Keeper which had caused the litigation. This argument was set out at some length in the initial submission marked as received on 10 November and elaborated in a Further Submission received on 10 December 2015. Reference was made not only to the initial unexplained error but to a series of so-called errors which may well have added to the confusion of pre-litigation discussion. Reference was also made to possible confusion over the issue of expenses recoverable under section 12 and those recoverable as judicial expenses.

3) In these first submissions the Appellant made no claim against the Interested Parties asserting that as between them the case was a classic example of divided success. By a submission received on 18 January 2016 the Interested Parties set out their claim against the Keeper, on similar lines to that of the Appellant. However, they advanced an alternative claim against the Appellant. In response, the Appellant, in a lengthy submission received on 15 February, resisted that claim and sought an order that if his claim against the Keeper was unsuccessful, he should be found entitled to expenses against the Interested Parties. The Appellant and Interested Parties each set out in some detail their analysis of the nature of the dispute between them with reference to particular areas of ground and the extent of concessions and ultimate success. We have had regard to all the detail but it is unnecessary for us to repeat it at this point. As will be seen, we are satisfied that the matter requires to be approached on a fairly broad basis.

4) We think the broad principles to be applied in relation to expenses are well established and do not need further analysis for the purposes of the present case. The Appellant cited classic authority but, for convenience, we refer to two decisions of the Scottish Land Court for discussion of issues of “divided success” and “modification” though they raise no new issues of principle. In Nevis Estates Ltd v Cameron 2011 SLCR 117 at para [64] the Court said: “We consider that the principle of expenses following success is the appropriate starting point although it is well established that various factors can properly lead to a departure from this principle. It is worth keeping in mind that although reference to expenses “following success” is a convenient shorthand, a more reliable way of approaching the matter is to consider who caused the litigation. Where a person has been put to expense by the need to litigate to establish or defend a right it is normally appropriate that he be entitled to the expense incurred.” At [67] the court pointed out that a decision to apply a special scale for taxation is in effect a sanction or penalty but said that “The question of modification of a successful party’s entitlement should not be regarded as a penalty but as a question of whether it is reasonable for the losing party to pay for particular aspects of the winning party’s expenditure.”

5) At [71] the court referred to its decision in Oosterhof v Scottish Ministers (in the same volume of decisions at 174) for full comment on issues of divided and partial success. The court continued: “Where parties are in dispute over land and the Court finds for one party in respect of one part and another in relation to another, success is properly to be seen as divided. It is obvious that in assessing liability for expenses different levels of importance will have to be attached to different parts having regard to their importance and the time and effort spent on them. The fact of success in relation to two out of three areas does not necessarily lead to apportionment of liability for expenses in the same ratio. However, the fact that success was divided in this way may at least be taken as a starting point.”

6) The Appellant laid great stress on the gross error of the Keeper and on actings before the start of litigation which added to the confusion and “increased the likelihood of litigation to one of almost inevitability”. We accept that there may be circumstances in which it is appropriate to have regard to the actings of parties before the start of litigation but we are satisfied that the general position in relation to expenses is that parties must be taken to have assessed their positions at the start of litigation. Our concern is with the cause of the expense of the process of litigation, not with the cause of the dispute. There would have been no litigation in the present case if parties had been able to agree that the land should be divided as it ultimately was.

7) It is important to stress that nothing we say should be taken to cast doubt on the reasonableness of the Appellant in maintaining his position to the end. It would, we think, have been entirely understandable if he had a sense of outrage that he should have lost so much of what plainly started as his land. The effect of the 1979 Act was to accept the possibility of some patent injustice to individuals in the public interest of establishing the certainty and security of registered titles. This was balanced by the broad scheme of indemnity. In the present case, the issue of “good faith” was a difficult one and it was entirely reasonable for the Appellant to continue a litigation challenging the Interested Parties on that basis. On the purely factual issues of possession, he quite reasonably disputed Mr Horrell’s claim to have established possession of the disputed ground. We think it beyond dispute that the reasonableness of an unsuccessful party’s arguments or the narrowness of the issues does not justify departure from the principle that the successful party is entitled to expenses. But a different approach will be required in relation to the claim for indemnity and no observations in the present judgment can properly be relied on as having any direct bearing on that claim.

8) Litigation under the provisions of section 25 is unusual in that the practice is to treat the Keeper as respondent. There are cases where that is a proper reflection of the dispute. The cases cited by the Appellant at page 5 of the Further Submission provide examples. However, in most cases, the Keeper has a neutral role in the proceedings and the real dispute is between neighbours. As in the present case, these are cases where the Keeper would have been willing and able to rectify the title sheet if the neighbouring proprietors had been in agreement.

9) We see no justification for any special approach to expenses in the present case to reflect the nature of the error. The fact that the error was said to be obvious or “gross” was inevitably a factor which had a bearing on the merits. It is clear that it gave rise to the argument about the good faith of the possessor. But the degree of fault by the Keeper was not sharply in issue before us. We were not required to make any finding about that for the purposes of our decision. If the issue of possession had not been disputed by the neighbouring proprietors there would have been no need for proceedings before us no matter how “gross” the error.

10) Although the Keeper has conceded that “there is an argument” that she be found liable in the expenses of procedure up to the point of her lodging answers, we are satisfied that there is no real justification for such an award. Indeed, the Appellant responded to this by submitting that it was a weak and contradictory argument. The answers did not change anything. Her position was known before the start of the Tribunal proceedings. In the circumstances, we do not consider it appropriate to make an award against the Keeper based, as it would be, solely upon conduct before the start of these proceedings.

11) The Appellant submitted that as any liability against either Appellant or Interested Party would add a further element in the claim under these parties’ indemnity claims against the Keeper, we should instead make a direct finding against the Keeper. We do not find that argument persuasive. Although the provisions of section 13(1) may be wide enough to open the possibility of an argument that we should allow the existence of the indemnity scheme to influence our decision on expenses, the section does not expressly expand or add to our powers in regard to awards of expenses: MRS Hamilton p 857 at F and L. While there may be cases justifying a different approach, we are satisfied in the present case that we should approach expenses in the normal, well established, way and without regard to the possibility of indemnity.

12) The dispute which required resolution by the Tribunal was between the Appellant and the Interested Parties. It ended with a division of the disputed ground. It can be seen that the total area in dispute was about 0.57 acres and that the final division was about half and half, agreed after intimation of our decision of 27 August 2014. We accept that this can properly be described as a case of divided success as opposed to partial success. Each disputing party was found entitled to part of the land in dispute. However, that does little more than provide a start point. The Appellant challenged the factual issue of possession of what he and his wife saw as “their land” and they challenged the good faith of the Interested Parties in relation to their possession. They lost on these important issues. The final line was based on a sensible compromise agreement. In short, the eventual sharing ratio in this case provides no sound guidance on the question of which party caused the expense of litigation whether we have regard to the whole erroneous area or simply the part which remained in dispute at the start of the proceedings.

13) There is no doubt that the Interested Parties enjoyed the substantive success. The Appellant came before the Tribunal seeking return of all the land covered by his Sasine title. The Interested Parties were prepared to concede some of that land. The precise extent of their willingness to concede was never spelled out in terms which went as far as the boundary as finally agreed. But we think it likely that, if the Appellant had been willing to accept that line in September 2013, the Interested Parties would have agreed to amendment on that line rather than face the uncertainty of litigation. There would seem to be little of substance, from their perspective, between the line which they had offered to accept, in their letter of 11 September 2013, and the boundary ultimately agreed.

14) However, in the proceedings before us, the Interested Parties did not in fact concede all the land on the Appellant’s side of the final line. Although the Tribunal does not apply a formal tender procedure, the principles underlying judicial tenders are sound and well understood. If a party wishes to take a stand on an offer, the offer needs to be made in clear terms. Time was spent examining Mr Horrell’s assertion of possession of an area in respect of which we did not find in his favour. We did not find him to be an entirely candid witness and were satisfied that there was a tendency to exaggerate in relation to some of his contentions as to possession.

15) Weighing matters as best we can and having regard to the overall expense occasioned to the parties by the litigation, including recognition of the fact that, for various reasons, the Appellant probably incurred significantly greater expense than the Interested Parties, we have concluded that the Appellant should be found liable to the Interested Parties in expenses to the extent of two-thirds.

16) Both parties claimed that expenses should be awarded on an agent and client basis. However, while this approach may well be justified in relation to an indemnity claim, we see no reason for judicial taxation in this case to be on anything other than a party and party basis. The issue of certification for employment of counsel does not now arise sharply. However, it is right to record our view that we think the case was appropriate for use of counsel – including senior alone (as was the case here). The question of good faith in relation to possession and questions as to the nature of possession required by a deemed proprietor in competition with another person asserting possession are far from straightforward and we welcomed the assistance of Mr Howie – and, indeed, that of Mr MacDonald.

17) A claim is made by both Appellant and Interested Parties for an additional fee, or uplift. Plainly the two sides are not in the same situation but, in this case, we can see some justification for uplift on both sides. The background of a gross error by the Keeper as opposed to a genuine confusion of titles was unusual. The various factors to be taken into account do overlap and, without attempting to analyse the detail under each head, we are satisfied that there was a level of responsibility in the present case taking it well above the run of the mill Sheriff Court case on which the taxation will be based. In assessing the appropriate uplift we have in mind that there are no block fees in relation to work in the Tribunal and, where an account is to be charged on an itemised basis, there is less justification for uplift in respect of the volume of work and material to be considered. Even in difficult and complex cases, many items of work charged will be of a routine nature. Uplift applies to them all. We consider that a reasonable uplift for the Interested Parties would be 20%. In relation to the Appellant it must be said that where a solicitor is using counsel there will normally be less justification for uplift than when a solicitor is facing counsel. However, as we understand it, counsel was not instructed until fairly late in the process and we do not doubt that some uplift would have been appropriate. Approaching the matter on a broad basis we consider that an uplift of about 10% might have been appropriate for the Appellant’s solicitor.

18) Certification of Mr Niven as an expert witness is not opposed by the Appellant and we accordingly allow this. Certification of the Appellants’ surveyors, Fraser Clark and Richard Wildi and the witness, Nigel Astell, is no longer relevant. However, it may be said, for completeness that we think that it would have been appropriate in the particular circumstances to certify one surveyor as a potential expert. Although we had some reservations as to whether such evidence would have had much bearing on the disputed issues before us, it was certainly important to have a clear understanding as to where the various contentious lines were to be found on the ground. We are not persuaded that a tree expert was needed in this case.


Certified a true copy of the statement of reasons for the decision of the Lands Tribunal for Scotland intimated to parties on 19 April 2016

Neil M Tainsh – Clerk to the Tribunal