OPINION
(Expenses)

Rubislaw Quarry Aberdeen Limited (Applicants)
v
(First) Hill Of Rubislaw (Q7) Limited
(Second) Barry Stuart Clarkson
(Third) Paul Michael Clarkson
(Fourth) Stuart Andrew Clarkson, and
(Fifth) Alan Massie
(Respondents)

[1] This is a motion by the respondents for the expenses of process. This follows our Order and Opinion of 5 January 2018 in which we refused the applicants’ application for variation of title conditions. This Note should be read in the light of our Opinion. We have proceeded to determine the motion on the basis of written submissions.

[2] The respondents seek

(a) The expenses of process;

(b) Expenses as taxed on the Court of Session scale, failing which upon the Sheriff Court scale;

(c) The certification as skilled witnesses of Mr Gordon S Macdonald FRICS and Mr Bill Paterson, BSc, LLM, MCIArb, FRICS;

(d) To certify the cause as suitable for the employment of counsel; and

(e) To allow the respondents an additional fee in terms of factors (a), (b), (c), (e) and (f) of the Court of Session rules or Sheriff Court equivalent.

Submission for respondents

[3] The respondents submitted that there was nothing to justify the Tribunal departing from the normal rule that expenses should follow success. Reference was made to section 103(1) of the Title Conditions (Scotland) Act 2003 and to comments by the Tribunal in West Coast Property Development Limited v Clarke LTS/TC/2005/21. The importance and difficulty of the proceedings were such to make it appropriate for the account to be taxed on the Court of Session scale. The employment of counsel by the respondents was reasonable having regard to the difficulty and complexity of the proceedings, the importance and value of the orders sought in the proceedings and the desirability of equality of arms. Reference was made to sections 92(2) and 108(3) of the Courts Reform (Scotland) Act 2014.

[4] We were reminded that the pleadings were lengthy, that the productions included six reports of different kinds, and that the applicants led several witnesses from diverse areas of competence, namely the applicants’ principal, an architect, a development consultant, a local councillor and an ecologist. There had also been a plan to lead an estate agent. The respondents led a factual witness and two expert witnesses, namely a valuation surveyor and a quantity surveyor. The hearing took place over five days.

[5] The outcome of the proceedings was of considerable importance and value to the respondents. The first respondents were pursuing a £68m scheme for around 280 flats on the northern quarry subjects and that but for the title condition the applicants’ development would cause a significant negative impact upon value. The Tribunal concluded that but for the title condition, the applicants development would cause diminution in value of around 5% to flats located on the southern quarry subjects belonging to the second to fifth respondents.

[6] It was submitted that it was reasonable to instruct Mr Macdonald to provide expert evidence on the valuation implications of the applicants’ project for the northern quarry subjects and the southern quarry subjects. It was also reasonable for them to instruct Mr Paterson to provide expert evidence on the capital cost of the projects.

[7] Turning to the uplift sought, the respondents addressed factor (a), namely the complexity of the cause and the number, difficulty or novelty of the questions raised. It was submitted that the respondents required to consider and respond to lengthy pleadings and submissions which put in issue a diverse range of matters including ecology, architecture, economics, quantity surveying, water management, traffic management, planning, the effect of developments on other land not subject to the relevant deed of conditions, and the broader public interest in the development. It was also necessary for the solicitors to consider parties’ rights under the titles and the application of the factors under section 100 of the 2003 Act. The solicitors required to instruct expert witnesses on questions of valuation and quantity surveying.

[8] Under factor (b), namely the skill, time and labour and specialised knowledge required of the solicitor, the solicitors had dealt with the case without input from counsel from commencement of proceedings in October 2016 to the end of the adjustment period in June 2017. The work was done by property litigation specialists, namely, Mr Will Cole and Ms Melissa Smith. Turning to Factor (c), namely the number and importance of documents prepared or perused, reference was again made to the lengthy pleadings, the 31 productions lodged by the applicants and the reports and other documents on diverse matters. The solicitors prepared and adjusted the answers for the respondents and produced 28 productions including three expert reports.

[9] Turning to factor (e), namely the importance of the cause or the subject matter to the client, the first respondents already had planning permissions in respect of the northern quarry subjects for 108 executive flats and underground parking and large open plan offices. They were now pursuing an even larger scheme. The case was important to preserve the “lakeside setting” benefits which the subjects provided. The Tribunal had also recognised the benefits of the setting to the owners of the flats on the southern quarry subjects. In terms of factor (f) the amount or value of money or property involved in the cause, the Tribunal had found there was likely to be a significant negative impact as mentioned above.

Submission for applicants

[10] It was submitted that section 103(1) of the 2003 Act did not bind the Tribunal to find in favour of the successful party, since the section still allowed the Tribunal to make such order as to expenses “as they see fit”. It was also necessary to consider whether there was divided success. Reference was also made to Franklin v Lawson (LTS/TC/2012/23) where the Tribunal had modified expenses in favour of a successful applicant to allow the exercise of a discretion based upon the particular position of a respondent.

[11] In this case the Tribunal had accepted that the application was not advanced for the commercial benefit of the applicants themselves. Had the variation been granted the site would have been leased at a peppercorn rent and the project run as a charitable concern. The project had been advanced in the light of a growing public enthusiasm and encouragement from a range of organisations and others. The outcome would produce a substantial commercial benefit for the respondents and financially there was significant inequality between the applicants and the corporate first respondents.

[12] It was further submitted that the second, third, fourth and fifth respondents (“the individual respondents”) should not have any claim for expenses. The applicants had agreed to release them from the proceedings in May 2017 on a no expenses due to or by basis. After a delay their solicitor conceded that they were only nominally staying as respondents on the basis that their expenses to date were settled by the first respondents and that the first respondents indemnified them against future expenses. So the continued presence in the litigation of the individual respondents was a result of these arrangements and had not been compelled by the applicants. There had been no separate representation of the individual respondents.

[13] The applicants further submitted that any award of expenses should be limited. There had been no need for the pattern of delay and continuation that emerged in the pleading phase of the case. The applicants should not have had to deal with separate submissions from the individual and corporate respondents or to have to press for progress. Furthermore, about one day had been lost in dealing with arguments under the heading of Kennedy v Cordia that the evidence of four of the applicants’ witnesses should be excluded. This argument was only insisted in as against two witnesses and in any event was unsuccessful. The respondents had also cited extensive past authority which was not of great assistance, and the extensive authorities which had been cited were not determinative to the outcome.

[14] The Tribunal had accepted in paragraph [105] that the applicants’ project had merit and should be given significant weight. Thus it could not be said that the respondents enjoyed undivided success. It was also pointed out that some of the respondents’ evidence was unsatisfactory and the applicants highlighted the Tribunal’s criticisms of Mr Macdonald’s report at paragraph [92]. Had the report been straightforward and addressed the issues clearly, his evidence and the leading of other evidence in anticipation would have been curtailed. It was submitted that a half-day could reasonably be attributed to this problem.

[15] It was submitted that Mr Paterson had had no involvement with the quarry and it was not reasonable to rely on him in any expert capacity when he was relying on assumptions rather than known facts. Mr Macdonald’s evidence was deficient in vital aspects and did not meet the standard of expert evidence. He had not visited the flats, he did not have files of information relating to them and could not confirm the basis of his calculations or remember the multiplier he had used and had not provided his workings.

[16] It was recognised that it was reasonable for the respondents to instruct junior counsel, but not senior counsel in the knowledge that the applicants were not represented by senior counsel.

[17] Turning to the uplift sought, it was pointed out that the respondents had instructed senior counsel and that for most of the hearing the solicitor involved was a junior solicitor reflecting the reality that the burden of running the case rested with counsel. The documents were not particularly extensive. The respondents had given advance notice of their case through witness statements and as most of the evidence was led by the applicants, the conducting of the respondents’ case mainly involved cross-examination and legal argument by counsel. There was no particular requirement of specialised skill and knowledge of property litigation specialists in the pleading phase of the case. There was no clear indication of unusual demands being placed on the respondents’ solicitors during the period before counsel was instructed. Nor was there anything exceptionally demanding in the number or importance of documents perused. The variation itself did not directly involve an amount or value of money or property and there was no clear evidence that the respondents’ development proposals would be curtailed by the applicants’ development. The negative impact on the northern quarry subjects was unquantified and the diminution in value of the flats did not suggest that a high amount of money was involved.

Reply for respondents

[18] The respondents rejected the idea that the application had conferred some benefit upon the respondents since the outcome of the case in the respondents’ favour merely maintained the status quo. Franklin v Lawson was just an example of the Tribunal exercising its discretion on the particular circumstances of a case. There were no circumstances in the present case to justify departure from the usual rule. In cases involving private property rights there was no basis on which to take account of the limited funds of the applicants.

[19] In this case there was no question of divided success. Reference was made to Cope and Others v Ms X (Expenses) (LTS/TC/2012/02) in which it was well established that the concept of substantive success looks at the eventual outcome as opposed to winning on all points of detail.

[20] Turning to the individual respondents, the arrangements between them and the first respondents involved extra judicial settlement negotiations and were privileged. Those respondents had title and interest to respond to the application. Arrangements involving the first respondents would not have prevented the applicants seeking recovery of expenses against the individual respondents personally had the applicants been successful. Conversely these arrangements should not deprive the individual respondents of their entitlement to apply for judicial expenses against the applicants.

[21] As to the pleadings stage of the case, it was submitted that the applicants’ pleadings had not been presented in the form of succinct written pleadings and this had extended the process. The fact there were separate submissions between the two sets of respondents is inherent in cases of the present nature. In fact in this case the application had to be intimated to over 40 parties who could have made representations separately. In any event the respondents had single representation after the initial answers were lodged thus ensuring the opposition was conducted efficiently.

[22] Turning to the conduct of the proceedings, it only took an hour to deal with preliminary matters before the evidence began. This was not unusual. As to the evidence of Mr Macdonald it was submitted that there was nothing unusual or unsatisfactory in the manner in which his evidence was presented. The Tribunal had accepted the substance of the evidence of both experts.

[23] For the avoidance of doubt the respondents only sought certification of the cause as suitable for the employment of junior counsel, which was conceded by the applicants.

[24] As to the responsibility of the solicitor, it should be borne in mind that when counsel had been instructed in June 2017, he had still been a junior counsel. It could not be indicated that the case lost complexity since notice was given through productions and witness statements. Often complex cases were conducted via witness statements in the commercial court of the Court of Session. The specialised knowledge of the solicitors meant that they were able to prepare the written pleadings.

Applicants’ reply

[25] The applicants provided an additional three page submission in response to the above. We do not rehearse it here as it adds little to the points already made.

Discussion by Tribunal

[26] The respondents have been successful in their opposition to the application and, in line with the authorities, expenses would normally follow success. The applicants have highlighted the public spirit of their proposed venture and the disparity between the parties’ resources. While we naturally have sympathy on these matters, we are unable to find any recognised basis for not applying the general rule. The applicants must have been aware of the risks in being unable to satisfy the Tribunal as to the merits of a variation in the light of s103(1) of the 2003 Act. The matters they raise are very different from the particular circumstances allowing modification in Franklin v Lawson, where but for s103 an unsuccessful respondent would not have had an award of expenses made against him. We are therefore disposed to allow the respondents their expenses.

Individual respondents

[27] Our understanding in the light of the submissions is that at some point after the final adjustment of the pleadings, and prior to the hearing, the individual respondents came to be represented by the same solicitor acting for the first respondents. The individual respondents had hitherto been represented by a different office of the same law firm in question. Cases of this nature may often commence by involving a diverse number of separately or self-represented respondents. We would expect where it can be seen from the pleadings that there is a substantial community of interest, all respondents wishing representation should aim to become represented by a single solicitor. This has occurred in the present case and we do not think the respondents should be criticised for doing so.

[28] This leaves the issue of the individual respondents who are said to have been agreeable to being let out of the process, and only did not do so the because the first respondents were prepared to indemnify and pay their expenses. Be that as it may, the Tribunal’s findings have established that the individual respondents still had a real interest to protect and thus participate in the proceedings. We are aware of no principle or precedent to suggest that in circumstances where a party is encouraged to remain in the process by another respondent providing indemnity, that this should result in the former not being entitled to an award in the event of success. Accordingly we do not propose to restrict an award to the first respondents alone.

Court of Session or Sheriff Court scale

[29] The Tribunal has a broad discretion in terms of r28(3) of the Tribunal rules. We consider that the logistical difficulty and complexity of the case, lasting as it did for five days with a fairly large number and diverse range of witnesses, and with significant interests of parties at stake, would have justified the application being raised in the Court of Session had the Court of Session had statutory jurisdiction. Accordingly we will allow expenses to be as taxed by the Auditor of the Court of Session according to the level of fees payable in the Court of Session.

Counsel

[30] There was ultimately no dispute that the Tribunal should sanction the employment of junior counsel, which we propose to do.

Modification

[31] The applicants pointed to various matters where the respondents had not “won”. This included time spent by the respondents objecting to witnesses, and to extensive legal submissions which it was maintained did not add much to the proceedings. We agree that up to an hour was lost on the first day dealing with such objections, and more time again dealing with the same topic during closing submissions, in which the respondents were unsuccessful. On this particular point we would add that had the respondents’ solicitors made a serious attempt to address the Tribunal clerk’s email of 30 May 2017, seeking to bring about a degree of informal case management on certain matters, then the sort of delay which did occur on the first day might have been less likely to have occurred. We also agree that certain of the respondents’ legal submissions, e.g. at para [61] discussed at [95] were unsuccessful.

[32] But in our opinion these are matters which cannot result in a conclusion that there has been divided success on substantive matters. We consider the correct approach is for the applicants to argue before the Auditor under Court of Session rule 42.5(2)(a) and (b) that a successful party should nevertheless have expenses on certain matters disallowed on account of that party having been unsuccessful on the relevant matter or having incurred expenses through his own fault. Equally we do not accept the argument that just because the Tribunal found that the applicants’ project had merit under certain of the section 100 factors, that that meant there has been divided success in the necessary sense. This is to misunderstand the balancing exercise involving sections 98 and 100 whereby the Tribunal require to consider whether overall it would be reasonable to grant the variation.

Certification of expert witnesses

[33] Rule 28(5) of the Tribunal rules makes general provision for certification of expert witnesses. We have also had regard to the more up to date Court of Session rule 42.13A referring to skilled witnesses. In terms of sub-para (2) of the latter the issue is whether Mr Paterson and Mr Macdonald were skilled persons and whether it was reasonable to employ them. They are a professional quantity surveyor and surveyor respectively. In general terms we accepted the substance of their evidence which was relevant to the matters in issue. We would certify them as expert witnesses.

[34] We criticised Mr Macdonald’s report in paragraph [92] which in particular related to the lack of transparency in the quantification of diminution in value to the northern quarry subjects. We are in no doubt that this lack of transparency gave rise to confusion during the hearing. In these circumstances we do not think that the applicants should have to pay for the valuation of the diminution in the northern quarry subjects referred to in part 7 of his report of 2 March 2017. In terms of r.42.13A(1) we would not think expenses were reasonably incurred for this section of the report. This is a matter which, if expenses are not agreed, the applicants can properly draw to the attention of the auditor.

Uplift

[35] We have accepted that the case was sufficiently complex and difficult to justify its being raised in the Court of Session. However not all Court of Session cases are allowed an additional fee and we are not persuaded that an uplift should be allowed in the present case. In terms of paragraph (a) the respondents emphasise the diversity and range of matters raised within the section 100 factors. While it is true that witnesses emerged from several different areas of professional practise, little of this was in the form of contentious expert opinion requiring challenge from opposing witnesses. Rather, with the exception of an isolated dispute between quantity surveyors, most of the evidence consisted of elaborating the factual background. While some of this evidence was technical, it was not fundamentally in dispute. This background then required to be analysed in terms of the familiar section 100 factors, but we are not of the impression that doing so involved particular difficulty or novelty.

[36] In terms of paragraph (b) emphasis was made as to the specialised knowledge of the respondents’ solicitors who specialise in property litigation. This particularly related to the period prior to counsel’s involvement, where the work involved preparing fairly detailed sets of pleadings. However the work in this period would have involved making inquiries under the various headings of the section 100 factors. By and large the factors are well understood by the legal profession and published academic writers. The respective pleadings are each 9 or 10 pages long but not remarkable in complexity. So we are not persuaded an additional fee is justified under this head.

[37] Turning to head (c) in all there were some 60 productions plus witness statements. This is not an unduly large number, and for the most part related to factual background. The solicitors would no doubt have had the advice of counsel as to the importance of these. As to factors (e) and (f), our impression is that the sums of money involved, although significant were not in any sense momentous to any of the respective respondents. The actual extent of diminution in value to any particular property was not quantified and, in the case of the northern quarry subjects, was probably not capable of more than general analysis. Moreover, we understood the first respondents to be property developers and the type of risks thrown up in the litigation will be inherent to their business. So in all we are not prepared to allow an additional fee on any of the above heads.

Decision

We accordingly allow the respondents the expenses of process against the applicants. We sanction the employment of junior counsel. In the event that parties cannot agree expenses, the expenses should be taxed by the Auditor of the Court of Session according to the fees payable in the Court of Session. We have not allowed any general modification to the expenses awarded, but have highlighted in this Note, without seeking to be exhaustive, matters where the applicants might properly seek abatements before the Auditor. We certify Mr Gordon S Macdonald, FRICS and Mr Bill Paterson, FRICS, as expert witnesses. We refuse the respondents’ motion for an additional fee.


Certified a true copy of the statement of reasons for the decision of the Lands Tribunal for Scotland intimated to parties on 26 June 2018

Neil M Tainsh – Clerk to the Tribunal