EXTRA DIVISION, INNER HOUSE, COURT OF SESSION
Lord Eassie Lord Carloway Lord Brodie	[2010] CSIH 32 XA93/09 OPINION OF THE COURT delivered by LORD EASSIE in the cause by RAYMOND BARRY POTTLE, as sole partner of the firm of McMANUS CAMPBELL & POTTLE Pursuer and Respondent; against MARIAN VAN OVERWAELE Defender and Appellant: _______

Pursuer and Respondent: Kinnear; Blacklocks

Defender and Appellant: Party

21 April 2010

[1] This is an ordinary action raised in the sheriff court at Dumbarton by a firm of solicitors, Messrs McManus, Campbell & Pottle, seeking payment of fees and outlays. The sum sued for is £2,226.23. The action was commenced in February 2001. During the considerable effluxion of time since commencement of the action, it appears that the partnership has been dissolved, we understand by death of one of the two partners. The instance was later amended to provide for the single remaining member of the partnership, Mr Pottle, to pursue the claim, which he is entitled to do by virtue of his continuing authority to wind up the partnership affairs (cf Section 38 of the Partnership Act 1890), but for convenience we may refer to the pursing party in the plural as "the pursuers". The terms of the initial writ are brief. The substance, and only detail, of the claim is put tersely in Article 3 of the Condescendence:

"During the period from March, 2000 until July, 2000 the Pursuers rendered professional services to the Defender in connection with her Petition to Recall and (sic) award of Sequestration granted against her at Dumbarton Sheriff Court and the total costs incurred by the Pursuers including fees paid to their Edinburgh Agents and Value Added Tax after deduction of sums paid by the Defender amounts to Two thousand two hundred and twenty six pounds and twenty three pence (£2,226.23). The Defender is due and resting owing to the Pursuers in the said sum."

[2] The defender instructed solicitors to act on her behalf in defending the action. The solicitors duly lodged a notice of intention to defend and on 22 March 2001 the case was sisted, on an unopposed motion, to allow the defender to apply for legal aid. The sist was briefly recalled in October 2001, when the original solicitors withdrew from acting. But it was re-sisted when the defender instructed new solicitors on 25 October 2001. However on 29 March 2002 those new solicitors instructed by the defender intimated to the court that they had withdrawn from acting. In consequence of that withdrawal the sheriff on 9 April 2002 pronounced an interlocutor recalling the sist and appointing the pursuer to intimate a copy of the interlocutor in the form G10 contained in the Ordinary Cause Rules to the defender by recorded delivery letter in order that the defender might appear personally or be legally represented, and assigned 9 May 2002 [as a diet] under certification that if the defender failed to appear personally or be legally represented decree might be granted against her with expenses in her absence.

[3] When the case called at that peremptory diet on 9 May 2002 Mr Pottle attended for the pursuer. There was no appearance for the defender. The sheriff acceded to Mr Pottle's motion for decree by default and duly granted such decree with expenses as taxed. While as at 9 May 2002 it was considered by such as were present at the diet on that day that the defender had been duly cited in terms of the interlocutor of 9 April 2002 and had not responded to that citation, it subsequently emerged that no citation upon the defender had been effected. The recorded delivery posting, upon which the certificate of execution of citation proceeded, was later returned by the postal authorities as never having been delivered.

[4] The defender first had knowledge of the existence of the decree of 9 May 2002 when she was cited to attend a diet of taxation in respect of the pursuers' account of expenses, the liability for which had been set out in the decree of 9 May 2002. She thereafter - we understand from her on advice from court officials - lodged a reponing note. Consideration of the competency of that procedure for reponing was continued by the sheriff at various dates throughout the spring of 2004 culminating in a continuation to a diet on 8 April 2004 at which the sheriff pronounced this interlocutor:

"The Sheriff, ex propio motu, Makes no order"

[5] No doubt in view of the fact that, ex facie the court process, the decree of 9 May 2002 was a decree by default, a reponing note was not the proper method by which to proceed. The defender then enrolled a motion for leave to appeal to the Sheriff Principal out of time.

[6] The motion for leave to appeal out of time came before the Sheriff Principal on 28 October 2004, when the defender was represented by her procurator. For reasons which are not explained to us, the Sheriff Principal, of consent, continued consideration of that motion "sine die". In the event, the continuation "sine die" resulted in, effectively, a three year delay before anything further happened. No explanation is available to us for that delay. At all events, the application for leave to appeal late was reactivated when the defender's agents intimated their withdrawal from acting; whereupon, on 22 November 2007, the Sheriff Principal fixed a peremptory diet for 28 November 2007. As matters happened, that diet was anticipated by the parties' appearing voluntarily before the sheriff principal on 23 November 2007 when the Sheriff Principal fixed a diet for the hearing of the application, and if need be, the appeal, to take place on 14 February 2008. That diet was later discharged on an unopposed motion, and a new diet was fixed for 8 April 2008.

[7] At the hearing on 8 April 2008 the defender was represented by a solicitor. What was established, and accepted by both sides, was that the defender had not received intimation of the peremptory diet of 9 May 2002, respecting which the decree, ex facie by default, had been pronounced. As we have mentioned earlier, the recorded delivery letter containing the intimation of the peremptory diet of 9 May 2002 was transmitted back by Royal Mail as undelivered, but at a date shortly after the peremptory diet, namely on 13 June 2002. The Sheriff Principal in the note appended to his interlocutor of 8 April 2008 allowing the appeal to be received late makes this finding respecting the fact that the defender never received any intimation of the peremptory diet at which the decree under appeal was granted:

"That fact of itself meant in my opinion that the interlocutor of 9 May 2002 and the extract following upon it dated 18 October 2002 were each improperly and incompetently pronounced/issued in the sense referred to in McPhail on Sheriff Court Practice (3^rd Ed) at paragraph 18, 19: it matters not in my view in such circumstances that no fault or blame attached to the lawyers involved, the sheriff clerk staff and the sheriff in the pronouncing of the interlocutor of 9 May 2002 since the fact remains that the defender had no notice of that diet (as was later revealed) and so no opportunity to attend it."

[8] Notwithstanding his thus having - correctly - concluded that the decree ex facie by default of 9 May 2002 was vitiated in respect that by want of proper intimation the defender was not in fact in any default, the Sheriff Principal did not take the step of simply recalling the vitiated decree and remitting to the sheriff to proceed as accords. Instead, he continued the case to a diet of appeal and in his note to the interlocutor of 8 April 2008 said, inter alia:

"In order to justify sustaining the appeal I shall require to be satisfied (a) that there exists a substantive defence to this action which ought to be heard and (b) that it is equitable in the whole circumstances that the defender should be restored to the position in the action in which she stood prior to 9 May 2002 despite the enormous passage of time since then which has clearly been prejudicial to the interests of the pursuers. There may well be a connection between these two considerations which may require to be balanced together in that the stronger any defence put forward appears to be the more equitable it may seem to allow the action to proceed so that that defence may be heard or tested and vice versa"

[9] It is not clear to us why, having decided in effect that on 9 May 2002 the defender was not in default and that the interlocutor had been incompetently pronounced, and that, as the Sheriff Principal states in his note, the defender had taken reasonable steps to challenge it, the Sheriff Principal then thought it appropriate to apply what might broadly be described as the test for allowing a party properly considered in default to be reponed against a decree of default competently and properly pronounced. It may be that the Sheriff Principal was, perhaps understandably, moved by pragmatic considerations including in particular the consideration that there was little point in allowing the appeal and remitting back to the sheriff for further procedure if it were abundantly plain that there was no conceivable defence to the action. In the event he granted leave to appeal late and continued the appeal to a future date, at which he required to be:

"...shown on paper a substantive defence in the shape of draft defences able to withstand some scrutiny"

[10] That future hearing took place a little short of a year later on 10 March 2009. The defender appeared as a self represented litigant
[1]. She presented to the Sheriff Principal, as he had required in his note appended to his interlocutor of 8 April 2008, a note, drafted by herself, as a party litigant, of her proposed defence to the action. (Although the Sheriff Principal apparently annexed the note to his interlocutor which he delivered on 6 May 2009, it is not included in the appeal print; but we were provided with copies of it). The judgment of the Sheriff Principal deals with a number of matters not pertinent to the appeal before us but as respects the terms of the defender's note of the proposed defence the Sheriff Principal reached this conclusion:

"The essence of what is said there is that the pursuers failed negligently to enrol the necessary motion for further procedure in the petition for recall of sequestration in terms of Rule 14.8 of the Rules of the Court of Session. It is however apparent from the opinion of the court in that petition for recall of sequestration delivered by Lord Coulsfield on 8 August 2001 after the hearing of a reclaiming motion before an Extra Division of the Inner House that the appellant had repeated difficulties during that petition's progress in retaining the services of solicitors and counsel who repeatedly withdrew from acting on account of their inability to obtain adequate instructions from the appellant. There are also statements about monies paid to or retained by the pursuers but it is not at all clear which if any of these monies are connected with payment of fees due to the pursuers and which were transferred for other purposes. As indicated above the appellant was reluctant to discuss the content of her document in the detail. I was therefore not assisted in my understanding of it by what she was willing to say in addressing me orally. I am in the end unable to regard the appellant's document as putting forward any clear or specific line of defence to the present action and am left unconvinced that there exists any substantive defence to it or any proper basis for mounting a counterclaim based on allegations of negligence. In that situation I find it impossible to say that justice demands the restoration of the appellant's position to where it stood immediately prior to 9 May 2002, whatever may have been the circumstances leading to the granting of decree by default on that date. It follows that the decree must be allowed to stand and that the appeal is refused."

[11] At this point it becomes necessary to look more closely at the services which the pursuers were instructed to provide. These were to present and conduct the subsequent necessary steps in a petition for the recall of an award of sequestration of the defender's estates. A petition for such recall was drafted by counsel and presented. The basis for recall of the petition for sequestration was that it had not been served on the defender in these proceedings. Answers were lodged. Upon the lodging of answers, Rule of Court 14.8 required that, within 28 days, the petitioner enrol a motion for further procedure. In casu that date was 3 May 2000. It is not in dispute that the pursuers, as the solicitors acting for the petitioner in the petition, failed to take that step required of them by that Rule of Court. Before us, counsel for the pursuers hinted that there might be some explanation for that failure, into which he did not go, for he accepted that the pursuers had failed to take the necessary steps required of them in the progress of the petition.

[12] In light of that failure by the pursuers to obtemper the provisions of Rule of Court 14.8, the respondents to the petition intimated on 20 June 2000 a motion for dismissal of the petition for recall of the sequestration on the grounds of that particular failure. Thereupon the pursuers in this action withdrew from acting in the petition. The defender in due course instructed new solicitors and counsel to oppose a renewed motion by the respondent in the petition for its dismissal on the basis of the pursuers' failure to obey the terms of Rule of Court 14.8. In doing so they sought excusal, in terms of Rule of Court 2.1, of the pursuers' failure (as agents for the current defender) to obey the terms of Rule of Court 14.8. The Lord Ordinary declined to excuse the failure and proceeded to dismiss the petition for recall of the sequestration. In his note the Lord Ordinary said:

"Counsel for the petitioner was unable to advise me of any mistake, oversight and other excusable cause for the failure to comply with Rule of Court 14.8. In these circumstances having regard to the time which had elapsed since answers were lodged and also to the fact that no efforts were made by the petitioner to progress this action, I did not consider that it was appropriate to grant the relief sought under Rule of Court 2.1. Accordingly I granted the motion on behalf of the first respondent and dismissed the petition."

That decision of the Lord Ordinary was upheld in the Inner House, in the decision to which the Sheriff Principal refers.

[13] We revert now to the proceedings before the Sheriff Principal on 10 March 2009. We do not think it necessary to set out in full the whole terms of the note of defence drafted by the defender and tendered to the Sheriff Principal at the hearing on that date, which he discusses in his judgment of 6 May 2009, more specifically the note annexed to his interlocutor of that date. Insofar as pertinent to the issue whether the defender may have a colourable defence to the present action, the note which the defender prepared appears to us to contain three principal points.

[14] First, the defender points to the pursuers' failure to take the required steps under Rule of Court 14.8, which failure led to her petition for recall of the sequestration being dismissed. In that respect she maintains, in effect, that she should not be liable to make payment for services thus defectively performed. Secondly, the defender says that the sum sued for is excessive. And thirdly, she says that she believes she has a claim for damages against the pursuers in respect of their negligence in failing to obtemper the requirements of Rule of Court 14.8.

[15] We have already set out what the Sheriff Principal says respecting these points in the appellant's document setting out her suggested defence but, for convenience, we repeat:

"The essence of what is said there is that the pursuers failed negligently to enrol the necessary motion for further procedure in the petition for recall of sequestration in terms of Rule 14.8 of the Rules of the Court of Session. It is however apparent from the opinion of the court in that petition for recall of sequestration delivered by Lord Coulsfield on 8 August 2001 after the hearing of a reclaiming motion before an Extra Division of the Inner House that the appellant had repeated difficulties during that petition's progress in retaining the services of solicitors and counsel who repeatedly withdrew from acting on account of their inability to obtain adequate instructions from the appellant. There are also statements made about monies paid to or retained by the pursuers but it is not at all clear which if any of these monies are connected with payment of fees due to the pursuers and which were transferred for other purposes. As indicated above the appellant was reluctant to discuss the content of her document in any detail and I was therefore not assisted in my understanding of it by what she was willing to say in addressing me orally. I am in the end unable to regard the appellant's document as putting forward any clear or specific line of defence to the present action and am left unconvinced that there exists any substantive defence to it or any proper basis for mounting a counterclaim based on allegations of negligence. In that situation I find it impossible to say that justice demands the restoration of the appellant's position to where it stood immediately prior to 9 May 2002, whatever may have been the circumstances leading to the granting of the decree by default on that date. It follows that that decree must be allowed to stand and that the appeal is refused."

[16] In respect of what the Sheriff Principal says in that passage, it may be observed first, that while as the Inner House did note, the defender had had difficulty in obtaining the services of solicitors, the pursuers withdrew from acting in the course of July 2000 (after the intimation of the motion for dismissal on the basis of want of obtemperance of R.C. 14.8) and the intimation under certification following that withdrawal was only intimated to the reclaimer [the present defender] on 14 July 2000. The reclaimer responded by seeking a further extension of time and in due course instructed new agents, who withdrew from acting on 7 August 2000. Notwithstanding their withdrawal the defender was successful in instructing solicitors and counsel for the hearing of the motion for dismissal on 14 September 2000 at which her counsel unsuccessfully sought excusal of the pursuers' failure. But, be that as it may, in our view, given the basis of the motion for dismissal, it cannot be said that the pursuers' failure to take the steps required of them by the terms of Rule of Court 14.8 was not material to the basis upon which the petition for recall of the sequestration of the defender's estates was dismissed. Indeed it was the real foundation of the successful motion for dismissal of the petition.

[17] Given the pursuers' failure to obtempter those requirements of the Rules of Court and thus, prima facie, fulfil their duty to their client, questions arise as to their ability to recover fees for work which was rendered nugatory or useless by that failure. The defender puts it bluntly, in terms understandable to any lay consumer, in paragraph 9 of the note which she tendered to the Sheriff Principal:

"I do not feel that I should be asked to pay for a service which I have not received".

In response to that understandable lay person's sentiment, counsel for the pursuers sought to submit that it would be for the defender to show that her petition for recall of sequestration would have met with success. While that may well be the case in respect of any claim for consequential damages based upon the pursuers' negligence, we are not persuaded, at least on the brief argument presented to us, that such is necessarily the case where a solicitor sues for fees in respect of a litigation process designed to ventilate an issue important to the client but in which, through his fault in taking the necessary procedural steps, the client is deprived of that opportunity. In other words, where a solicitor undertakes to conduct a litigation on behalf of a client, his undertaking encompasses the undertaking of the proper procedural steps to allow the client's case to be judicially determined on its merits. If he culpably fails in that undertaking, so that the client is deprived of that judicial determination, we do not think it clearly unarguable that the client is entitled to dispute the solicitor's entitlement to fees for work which was in the event rendered nugatory, and of no value, by a failure to take the appropriate procedural steps in circumstances in which that failure led to the proceedings being dismissed.

[18] But it is not for us to reach a final and conclusive decision on that issue. The procedures followed in the present case in respect of an appeal against a decree by default, recognised as having been incompetently granted, are not adapted to a proper discussion and resolution of that issue, which may not be without difficulty. In our view what required to be decided - on the doubtful assumption that the test for granting such an appeal and reponing a litigant in default applied to the defender, who was not in default - was whether there was an arguable or colourable defence, not whether it would necessarily succeed. We think that there is such an issue.

[19] The second principal point which we identify in the defender's note tendered to the Sheriff Principal was that she complained of the sums sued for being excessive. Given the brevity of the initial writ - and the absence (respecting which we do not intend criticism of the framer of the initial writ) of any incorporation into the pleadings of any account of fees lodged in process - we do not consider that there was a basis upon which it can be said that a challenge to the amount claimed, particularly where payments to account of fees have been made, can simply be dismissed as having no arguable merit. As we understand matters, the pursuers' account of expenses in the petition proceedings has not been taxed; and it would in any event be a matter for the sheriff's discretion whether the account of expenses should be submitted to taxation (cf McPhail on Sheriff Court Practice paragraph 21.73).

[20] In these circumstances we have come to the conclusion that on the basis of the first and second points identified in the defender's note of proposed defence - even assuming that it is appropriate to apply the test for a decree in default - we require to allow this appeal. We thus do not consider that it is necessary for us to enter into the potentially difficult question as to whether there is a proper claim for damages which the defender may advance at this belated stage.

[21] We have to say that we allow the appeal with reluctance, given the length of time which has passed in this litigation; the relatively small sum at stake; and the apprehension which we have that ultimate resolution of the dispute may yet be some way in the future. It is in our view unfortunate that the pursuers did not recognise that when the procedure "had gone off the rails" by reason of the absence of proper service on the defender of the peremptory diet of May 2002 they did not take the pragmatic step of recognising that the procedure should be put back on the proper rails. Instead they insisted upon maintaining a decree by default which, as the Sheriff Principal recognised was not competently pronounced. While we regret the further continuation of this litigation, we are ultimately persuaded that the interests of justice require that the defender be given an opportunity to advance the defences indicated in her note, which we do not consider can be said prima facie to be without any merit or colourable argument.