NOTE
(Expenses)

Paul Franklin and another v David Alexander Lawson

[1] In our Opinion of 23 May 2013 we expressed the view that a just outcome on expenses as it appeared to us at that time would be to find no expenses due to or by either party. However, we recognised that parties had an expectation that the matter would not be dealt with before an opportunity had been given for full submissions. Both parties have now provided a good deal of detail about aspects of the background to the application. It is necessary for us to reconsider matters in light of that material. We have also taken the opportunity to consider the main authorities dealing with this issue and in particular the decision on expenses in West Coast Property Developments Limited v Clarke and Others (LTS/TC/2005/21 6 October 2006) which sets out a more detailed discussion of the implications of Section 103 of the Title Conditions (Scotland) Act 2003.

[2] It is clear that despite the sympathy a Tribunal may have for a respondent who may be doing no more than seeking reasonably to preserve title conditions which are important to him, Parliament must be taken to have required a change from that approach. A party who has had complete substantive success can expect to be found entitled to expenses. In the West Coast case, the Tribunal appeared to express the view that this principle would be applied unless there was something about the conduct of the successful party which was open to criticism. We think that is too narrow. Although it will not be enough for an unsuccessful opponent to say that he or she acted reasonably, there may be particular circumstances which allow an exercise of discretion based on the particular position of the respondent. We are satisfied that the present is such a case. We have no doubt that any reasonable person in the respondent’s position would suffer personal upset from the impact of the new building on the outlook he had previously enjoyed. We are also satisfied that there will be a loss of value to his property. We think these are factors which we can properly take into account.

[3] However, we accept the importance of the fundamental approach which is to consider whose actings led to the expense of the procedure before the Tribunal. It was recognised in the West Coast case that in some cases an applicant would have to bear the expense of the initial application because that expense would often be incurred even if the application then fell to be dealt with as unopposed. But where a single benefited party has made clear an intention to object, it may well be possible to conclude that the whole cost of procedure before the Tribunal is attributable to such objection. The submission for the applicants lays some stress on the contention that the conduct of the respondent forced them to the “extraordinary costs of a hearing with expert witnesses to rebut a case that he did not make”. The applicants were said to have incurred expense to address a case which the respondent did not bring evidence to support. It is suggested that if the applicants had been aware that this was Mr Lawson’s intention, it is “very unlikely” that they would have called Mr Young. However, this does not accurately reflect Mr Lawson’s position. He did not give up the claim for compensation. He relied on the written material as evidence supported by his own evidence. He was entitled to do so. If he had intimated his intention to proceed in this way, the applicants might have decided they could safely rely on their own written evidence but we would have expected a competent solicitor to decide that the safer course was to lead his own expert in rebuttal.

[4] Although we are not persuaded that there was anything extraordinary about the costs incurred at the hearing there is no doubt that they were costs incurred because of the respondent’s opposition. We accept that the special adverse impact on the respondent in this case did not wholly outweigh the ultimate success of the applicants. Some balancing is required.

[5] We do not think that the bulk of the material now submitted adds significantly to the balancing exercise. A good deal of the material relates to various aspects of the parties’ communings. However, it is an unfortunate feature of many such cases that when initial attempts to resolve matters by discussion prove unsuccessful, relationships deteriorate. Parties can often point to some aspect of the other’s conduct which they think unreasonable when this is far from clear to an independent observer and, in any event cannot be thought to have much direct bearing on the question of who should bear the expenses of the actual application to the Tribunal.

[6] The material bearing on the interdict application is an example. It followed an exchange of correspondence. There is an implicit criticism in the submissions of the respondent’s solicitors for corresponding with the applicants direct. However, Mr Lawson had previously been asked not to contact them and it is not easy to see what else the solicitors could have done. We certainly find nothing unreasonable in the terms of their letters and merely note, in passing, that this might be contrasted with Mr Franklin’s assertions in relation to Mr Lawson’s alleged previous history in relation to other householders regarding planning matters. We do not repeat the more offensive aspect of that allegation. It was not conducive to any reasonable discussion of changing title conditions.

[7] The present applicants are critical of Mr Lawson for raising the interdict action without first seeking an undertaking from them. They assert that this was an example of Mr Lawson seeking to “bully” them. Mr Lawson has provided his account of the lead up to the action. There is a significant conflict of fact over the question of whether he gave a warning of his intention to go to court. It is clear that if a concluded view of the reasonableness or otherwise of the preliminary conduct was to be required in relation to expenses, we would have to hear evidence. However, it seems clear that Mr Lawson was acting on legal advice and that the present applicants had intimated an intention of going ahead with their building without any suggestion that they would first apply to the Tribunal. It is not clear what is meant by the pejorative reference to “bullying”. A party is entitled to seek the protection of a court when faced with a potential breach of his or her rights. But, as we have said, this material seems to have little bearing on the expenses incurred in the present application.

[8] It was submitted that our observations at paragraph [52] demonstrated an error of law. We are not persuaded that the submission has identified any such error. We entirely accept the submission that an award of expenses cannot be used as compensation for a poorly presented case. However we had in mind, not the absence of evidence which might have been presented, but our positive conclusion based on the material before us that the effect of the applicants’ proposed extension would be to produce a loss of value of the respondent’s property. It was also suggested that an award of expenses might be described as equivalent to an award of compensation. But plainly the two matters are distinct. On any view, Mr Lawson will have to pay his own expenses. He will be well out of pocket. We do not think that he would regard such a result as equivalent to an award of compensation by the back door.

[9] In our Opinion we observed that Mr Lawson had put his faith in surveyors and that he was not made aware of the terms of Mr Young’s report until shortly before the hearing. For the applicants, it is stressed that the report was lodged timeously. That is clearly correct and our observation was misleading in conveying any different meaning. However, the point was being made in the context of comment on approaches to negotiation. The material now lodged in relation to expenses discloses that the respondent had been seeking sight of the appellants’ surveyor’s report since at least September 2012. The report was dated 3 October 2012. It was not lodged until April 2013. The applicants’ material showing house prices in the area was lodged at the same time. We recognise that it is not uncommon in litigation for the disclosure of evidential material to be left to the last minute. But we would hope for a more constructive approach in applications for variation of title conditions affecting neighbours. Where a party does have powerful material to rely on, early disclosure may well lead to a settlement of some sort.

[10] Having reviewed the whole material we consider that the respondent should be found liable in the expenses of the applicants modified by fifty per cent to reflect the special position of the respondent in this case. As explained in paragraphs [54] and [55] of the earlier Opinion, we exclude liability for expenses incurred in respect of Mr Young and Mr Connon. We do not doubt their status as skilled experts but we have already expressed our conclusions as to their evidence. It may be added, in relation to Mr Young, that we are aware that the issues which arise in title condition cases tend to lie outwith the normal experience of surveyors. There is seldom any direct source of evidence of the difference in value between a house with a view and that self-same house without a view. Valuation by reference to other comparable subjects is an instinctive part of a surveyor’s expertise and Mr Young pointed to the difficulty of finding an identical house without a view. As Mr Young came to concede, this does not justify a conclusion that the view is of no value. It will usually be for the instructing solicitor to make sure that the expert witness fully understands the specific issues upon which his evidence is required in any particular litigation.


Certified a true copy of the statement of reasons for the decision of the Lands Tribunal for Scotland intimated to parties on 15 July 2013

Douglas Ballantyne – Deputy Clerk to the Tribunal