Scottish Court of Session Decisions

OUTER HOUSE, COURT OF SESSION [2009] CSOH NUMBER90
A813/06	OPINION (NO.2) OF LORD BRODIE in the cause CAROL YOUNG (ALSO KNOWN AS CAROL BALLARD) Pursuer; against WILLIAM BOHANNON Defender: ­­­­­­­­­­­­­­­­­________________

Pursuer: No appearance

Defender: S. Bell; Blacklocks (for Messrs Gebbie & Wilson, Solicitors, Strathaven)

Scottish Legal Aid Board: No appearance

24 June 2009

[1] This is a motion at the instance of the defender to find the Scottish Legal Aid Board liable to the defender in the expenses of the action in accordance with section 19 of the Legal Aid (Scotland) Act 1986 and the Act of Sederunt (Civil Legal Aid Rules) 1987 Rule 6(2)(b). On 17 April 2009 I assoilzied the defender from the conclusions of the summons and ordered that the defender lodge a statement on oath of his grounds for claiming payment out of the Scottish Legal Aid Fund of the whole or any part of the expenses incurred by him together with an estimate of the probable amount of these expenses and ordered that he intimate a copy of each of the statement of grounds and estimate to the Scottish Legal Aid Board. The motion for expenses came before me on 9 June 2009. The defender was represented by Mr Stephen Bell, Advocate. There was no representation for the pursuer or the Board.

[2] Mr Bell began by referring briefly to the circumstances which had led to decree of absolvitor being pronounced in favour of the defender on 17 April 2009. The pursuer is an undischarged bankrupt and an assisted person. She was granted legal aid to pursue this action which is for reduction of a purported personal bond in favour of the defender dated 16 April 2004. She was also granted legal aid to bring a petition for recall of her sequestration. The defender had been the petitioning creditor in that sequestration. His claim was in respect of £50,000 which was evidenced by the bond dated 16 April 2004. As well as lodging defences to the action the defender lodged answers to the petition of recall of sequestration. The pursuer's position, upon the basis of which it may be assumed that she was granted legal aid, appears from the following averments on her behalf:

"On 29 June 2006 the defender had a charge served upon the pursuer for the sum of £50,000. The basis of said charge was a personal bond allegedly signed by the pursuer on 16 April 2004. The signature on the purported document is not hers. The document is believed to have been signed in the name of the pursuer and witnessed by James McDonald, who is the father of the pursuer. In April 2004 the defender asked James McDonald to sign a document he claimed was needed for the sale of 3 Feu Road, Strathaven to Stephen Young. James McDonald did not see what he signed. He signed his own [name]. He may also have signed the pursuer's name. He had no authority to do so. He did so in reliance upon the false assurances given by the defender....At no time did the pursuer owe the defender any sum. At no time did she owe him £50,000. The said purported personal bond is a fabrication".

[3] On 12 March 2009, for reasons which are set out in my previous Opinion dated 17 April 2009, on the defender's motion, I ordained the pursuer to find caution for expenses in the sum of £20,000. It was because the pursuer failed to find caution that I granted decree of absolvitor.

[4] Having reminded me of the history of the case, Mr Bell then turned to the relevant provisions of section 19 of the Legal Aid (Scotland) Act 1986, as amended by paragraph 2(3) of Schedule 5 to the Legal Profession and Legal Aid (Scotland) Act 2007. These were as follows:

"(1) In any proceedings to which a legally assisted person is party and which are finally decided in favour of an unassisted party, subject to subsections (2) and (3) below, the court may make an award out of the Fund to an unassisted party of the whole or any part of any expenses incurred by him (so far as attributable to any part of the proceedings in connection which another party was a legally assisted person).

(2) Before making an order under this section, the court shall consider making an award of expenses against the legally assisted person.

(3) An order under this section may be made only if -

(a) an order for expenses might be made in the proceedings, apart from this act; and

(b) in the cases of expenses of proceedings in a court of first instance, these proceedings were instituted by the legally assisted person, and the court is satisfied that the unassisted party will suffer financial hardship unless the order is made; and

(c) in any case, the court is satisfied that it is just and equitable in all the circumstances that the award should be paid out of public funds......".

As Mr Bell emphasised, the amendment effected by the 2007 Act was to delete the word "severe" where it had previously occurred prior to "financial hardship" in subsection (3)(b). Parliament had therefore reduced one of the hurdles which had previously faced an unassisted party making such an application. This amendment had not been reflected in the text currently reproduced in the Parliament House Book.

[5] Mr Bell submitted that in that decree of absolvitor had been granted in favour of the defender, the criterion provided by paragraph (a) of section 19(3) of the 1986 Act had been met. To satisfy the criteria set out in paragraphs (b) and (c) he relied on the statement on oath of the defender, 7/46 of process. That statement included the following paragraphs:

"I have been the Defender in two actions raised at the Court of Session by Carol Young namely a petition for recall of sequestration and an action of reduction and damages. For both of these actions Carol Young has been legally aided and as a consequence of defending the actions, I have been caused a great deal of financial hardship. Given that in particular she was seeking entirely unsubstantiated damages against me I really had no option but to defend the actions.

Carol Young executed a Personal Bond on 16 April 2004 in my favour in the sum of £50,000 in respect of monies that I had loaned to her. In effect the sums that I loaned to her represented my whole life savings. When the sums loaned were not paid I firstly served a Charge for Payment and when that expired, petitioned for her Sequestration. No steps were taken to either suspend the Charge or indeed oppose the Sequestration proceedings in the Sheriff Court. I have to say I was surprised to find out that Carol Young had been granted Legal Aid for the Court of Session actions. Both actions raised against me were based on a handwriting expert report by John McCrae, which I understand has now been admitted as not correct by those acting for Carol Young. I am aware that the expert was not given a full set of papers by Carol Young's Agents, in particular a cheque drawn on her bank account and signed by her that pre-dated my Personal Bond. I am aware that my Solicitors intimated a copy of the cheque to Carol Young's Solicitors prior to the preparation of the report. I am aware that my Agents wrote to her Solicitors to address this omission and it appears that no action was taken.

I am aware that both my Local Agents and Edinburgh correspondents wrote to the Scottish Legal Aid Board repeatedly highlighting both the issue in respect of the handwriting expert and also explaining the other inadequacies in respect of the Pursuers case requesting that Legal Aid be suspended without success. I am aware that this correspondence with the Board commenced from 28 November 2006 (before Legal Aid was even granted) until more or less the recent conclusion of the action. It appears to me that none of the concerns raised by my Agents was addressed and the extensive correspondence was ignored. Due to the Pursuer continuing to be in receipt of Legal Aid I was forced to incur a great deal of expense".

There followed a summary of the defender's financial circumstances which indicated that the defender was in receipt of a relatively modest monthly salary, a large part of which was devoted to repayment of his mortgage. His liability for solicitor's fees was estimated at £25,000 plus VAT. Counsel's fees were estimated at £8,500. The total of these liabilities was in excess of the dividend the defender was likely to receive in the sequestration of the pursuer. The petition for sequestration had been dismissed by reason of the pursuer, in her capacity of petitioner, having failed to lodge caution for expenses in that process. However, the trustee in the sequestration had incurred expenses in lodging answers to the petition. As respondents to the petition both he and the defender had enrolled motions for awards of their expenses from the Scottish Legal Aid Fund. Depending on the outcome of that motion the likely dividend in the sequestration would either be 27.3 pence or 36 pence in the pound. It was the defender's position that unless the motion to award expenses out of the Fund was granted, he would be rendered insolvent.

[6] In terms of email dated 12 May 2009, 7/65 of process, and letter dated 22 May 2009, 7/9 of process, the Board had indicated that it was content to leave the matter of an award of expenses being awarded out of the Fund to the discretion of the Court and did not intend to oppose the application. However, conscious that it was necessary that I be satisfied that it was just and equitable in all the circumstances that an award of expenses should be paid out of public funds, Mr Bell reminded me of the issue which had persuaded me to make the order for caution for expenses and, by reference to correspondence, demonstrated how those acting for the defender had attempted to bring that issue to the attention of the Board in order that it might review the grant of legal aid.

[7] As is set out in my Opinion of 17 April 2009, those acting for the defender became concerned that the pursuer's handwriting expert, John McCrae, had been instructed to provide an opinion as to whether the signature to the Bond was genuine without having had a sight of a cheque in favour of the defender signed "C Ballard" and dated 17 July 2002. When, eventually, Mr McCrae was given the opportunity to express an opinion having seen the cheque, he accepted that it and the bond had been signed by the same person. As it had never been challenged that the pursuer had signed the cheque, this was a strong indication that the pursuer had indeed signed the bond and that, accordingly, the action was not well founded. The defender's solicitors wrote to the Board expressing their concerns in terms of letter dated 20 September 2007, 7/34 of process. That letter included this paragraph:

"We would have thought that at the very least the Legal Aid Board would now insist that the applicant's handwriting expert now be confronted with a copy of this cheque so that the expert may be made aware of the fact that the signature now being used by the applicant bears no relationship at all to the signature she was using five years ago".

This was responded to by an unsigned letter from the Board dated 21 September 2007, 7/35 of process, which has a look of being a pro-forma document (although it may not be). No attempt is made in that letter to answer the points made in the solicitors' letter. The solicitors replied by letter dated 25 September 2007, 7/36 of process. It suggested, for reasons which are there set out, that the Board may have misunderstood what had been put to it in the letter of 21 September 2007. It stated that the solicitors would be founding upon the correspondence in any application for expenses payable out of the Fund on the basis that the Board had been made aware of the fact that a legal aid certificate had been obtained through deception and yet had chosen to do nothing about it. The Board did not reply to that letter. The solicitors wrote again in terms of the letter dated 16 June 2008, 7/37 of process. They re-iterated their concerns. They enclosed copies of correspondence between them and the pursuer's solicitors. The Board replied, sending two letters, both dated 17 June 2008, 7/58 and 7/59 of process. One letter was unsigned. The other letter was signed with an indecipherable signature. Neither letter focused on the concerns raised by the solicitors, rather they emphasised that the Board could not disclose information which had been provided to it by an applicant for legal aid. The solicitors had not been requesting disclosure of such information. In common with the rest of the correspondence emanating from the Board to which Mr Bell referred, there is no means of identifying the individual author on the face of the letter. The defender's solicitors wrote to the Board again on 24 July 2008. This letter was responded to by two letters to the Board, both unsigned and dated 25 July 2008, 7/60 and 7/61 of process. These letters confirmed that a response had been issued by the Board to the solicitors on 17 June 2008 and that the grant of legal aid remained in place. The defender's solicitors wrote again to the Board in terms of the letter dated 30 September 2008, 7/38 of process. That letter drew attention to the fact that the proof diet had been fixed for 16 and 17 October 2008 and that the cost implications for the defender of that proof going ahead were "horrendous". The solicitors again set out their concern that the pursuer's expert had not been shown the cheque. It stated that the "granting of Legal Aid here is a total abuse of process". It asked the Board to consider allowing withdrawing legal aid. The solicitors wrote again by letter dated 24 October 2008. The Board replied in terms of an unsigned letter dated 27 October 2008, 7/62 of process. That letter was in the following terms:

"Thank you for your letter of 24 October 2008.

I can confirm that all objections to this application have been considered and legal aid remains in place".

[8] Having regard to the information put before me, it appeared to me that the statutory criteria for making an award of expenses in favour of the defender payable out of the Legal Aid Fund, as provided by section 19 of the 1986 Act were met. I considered making an award of expenses against the legally assisted pursuer but did not do so because doing so would have conferred at best marginal benefit on the defender given that the pursuer is bankrupt.

[9] I have to be satisfied that the defender, as the unassisted party, will suffer financial hardship as a result of proceedings instituted by the legally assisted pursuer unless the order for payment of expenses out of the Fund is made. As originally enacted, the standard to be met was "severe financial hardship" but that has been modified by Parliament deleting the adjective "severe" in terms of the 2007 Act. I have been satisfied that the defender will suffer financial hardship if an order is not made. He is a 62-year old man of relatively modest means. His income barely meets his outlays. Other than a house purchased for £115,000 in 2004 with the assistance of a mortgage and some very limited savings, he has no capital. He has liabilities in relation to legal expenses in excess of £33,500 and, allowing for the likely recovery from the sequestration of the pursuer, he will be rendered insolvent in the event that no order is made.

[10] I also have to be satisfied that it is just and equitable in all the circumstances the award should be paid out of public funds. In my opinion the conduct of the defender's legal advisers and that of the Board are relevant considerations. It appears to me from consideration of the correspondence between those acting for the defender and those acting for the pursuer on the one hand and the Board on the other demonstrates that the defender's solicitors took such steps as were available to them with a view to both the pursuer's advisers and the Board giving further consideration to the evidential basis upon which legal aid had been granted and the action raised. The Board has not chosen to defend its conduct in the matter. Whether that is because of a wish to safeguard public funds or to avoid embarrassment I do not know. It has the result that the Board has not offered any explanation of why it acted as it did. In the absence of explanation, the terms of the Board's letters and the lack of any signature on all but one of them or, as far as I can see, any means of identifying who it was who is responsible for sending the letter (other than a number and the abbreviation "ADMIN" against "our reference"), raises the question as to whether any of the correspondence from the defender's solicitors was considered by someone with the requisite seniority to understand and then to make a decision on the points which had been brought to the Board's attention by the defender's solicitors. At all events, the failure of the Board to do more than confirm that the original award of legal aid was in place had the result that the defender was put to the expense of preparing for a defence to the action. It appears to me that this is a case where it is just and equitable in all the circumstances that an award should be met out of public funds to reimburse him for that expense and I shall so order.