Apollo Engineering Limited (in Liquidation) V. James Scott Limited
| Jurisdiction | Scotland |
| Judge | Lady Paton,Lord Bracadale,Lord Reed |
| Neutral Citation | [2012] CSIH 4 |
| Date | 18 January 2012 |
| Docket Number | XA156/07 |
| Court | Court of Session |
| Published date | 18 January 2012 |
| EXTRA DIVISION, INNER HOUSE, COURT OF SESSION | |
| Lady Paton Lord Reed Lord Bracadale | [2012] CSIH 4 XA156/07 OPINION OF LADY PATON in the cause APOLLO ENGINEERING LIMITED (in liquidation) Appellants; against JAMES SCOTT LIMITED Respondents: _______ |
Appellants: No appearance
Respondents: Ellis, Q.C.; MacRoberts
Amicus curiae: Springham
18 January 2012
Introduction[1] Mr and Mrs Politakis are the sole directors and shareholders of a limited company (the appellants, hereinafter "Apollo"). In 1990 Apollo entered into a sub-contract with the respondents ("Scott") to carry out pipe construction work at Coulport. Disputes arose about work done, sums due, and whether or not Scott had in effect repudiated the contract. In September 1991 Apollo went into liquidation. Scott sued the liquidator of Apollo, who responded with a counterclaim. On 24 June 1993 the action was sisted pending an arbitration in terms of the sub-contract. The parties duly entered into an arbitration (the Ford Arbitration). Various procedures took place, including adjustment of the pleadings, a legal debate, indications that a proof before answer was imminent, attempted settlement negotiations, and ultimately the sisting of the arbitration. In early 2001, a Creditors' Voluntary Arrangement enabled sufficient funds to be produced such that Apollo could continue to have legal representation. In December 2002, the winding-up of the company was sisted pending the outcome of the arbitration. Further details of the history of the case can be found in James Scott Ltd v Apollo Engineering Ltd, 2000 SC 228; McGruther v James Scott Ltd, 2003 SC 495 (OH); 2004 SC 514 (IH); Apollo Engineering Ltd v James Scott Ltd, 2008 SLT 472 (OH); 2009 SC 525 (IH).
[2] In July 2004 the arbiter reached retirement age, and retired before the arbitration was finalised. Following upon an unsuccessful attempt to continue that arbitration by means of a replacement arbiter, a second arbitration with a new arbiter Mr Spencely commenced in July 2005 (the Spencely arbitration). In the second arbitration, the sums sought by Apollo were larger and were based on a different method of calculation. The pleadings were adjusted and amended, motions for interim decree were presented, and a debate took place. The arbiter issued a final draft opinion dated 18 May 2007, indicating an intention to dismiss most of Apollo's claims. Apollo challenged that opinion by way of a Stated Case to the Court of Session in terms of section 3 of the Administration of Justice (Scotland) Act 1972. Apollo also sought judicial review of Mr Spencely's actings as arbiter. A hearing in the Stated Case process was discharged pending the outcome of the judicial review. Apollo was unsuccessful in the judicial review, both in the Outer and in the Inner House (2009 SC 525).
[3] Apollo's funds ran out. The company could no longer afford legal representation. On 2 March 2011 Mr Politakis enrolled the following motion:
"For the reasons given below [not quoted here] I respectfully seek a court order under Article 6 of the ECHR which would allow me to represent Apollo Engineering Limited in any future court proceedings. In particular I seek such order in relation to the forthcoming Stated Case procedure."
Scott opposed the motion. The court ex proprio motu appointed an amicus curiae for its assistance.
The European Convention on Human Rights (ECHR)[4] The ECHR provides inter alia:
Article 6
Right to a Fair Trial
In the determination of his civil rights and obligations ..., everyone is entitled to a fair and public hearing within a reasonable time by an independent and impartial tribunal established by law. Judgment shall be pronounced publicly ...
Article 14
Prohibition of Discrimination
The enjoyment of the rights and freedoms set forth in this Convention shall be secured without discrimination on any ground such as sex, race, colour, language, religion, political or other opinion, national or social origin, association with a national minority, property, birth or other status.
Submissions: Mr Politakis[5] The court ex proprio motu invited Mr Politakis to make submissions, although not a party to the action. Mr Politakis thereupon moved the court to grant his motion. He argued that the conditions specified in Secretary of State for Business Enterprise and Regulatory Reform, petitioner (The UK Bankruptcy case), 2010 SLT 1242 were satisfied. In particular, in terms of paragraphs [45] and [46] of that case:
(i) Apollo had a prima facie valid claim;
(ii) Apollo was unable to pay for legal representation;
(iii) Apollo had authorised Mr Politakis to represent it;
(iv) Apollo's decision to authorise Mr Politakis arose from necessity rather than choice.
[6] In further written submissions to the court, Mr Politakis emphasised that the company's claim could readily be demonstrated and proved. The methodology underlying the sums claimed was simple, consisting of measurement of the sub-contract by reference to contract drawings followed by the application of Composite Bill rates to that measurement, with the claim being split into two parts, one pre-Scott's-repudiation, and the other post-Scott's-repudiation. Although the claim was clear and simple, Scott's approach to the dispute had obfuscated and obstructed any resolution, and now the company had no funds. Despite all the procedures to date, the company had not yet been allowed to lead evidence to prove its claim. A refusal to allow Apollo to be represented by Mr Politakis would amount to a breach of Apollo's rights under Article 6 of the ECHR. The motion should be granted.
Submissions: Scott[7] Senior counsel submitted that, under Scots law, the motion must be refused. Such a refusal would not result in a breach of Apollo's Article 6 rights. Esto the ECHR had the effect that the court had a discretion to grant the motion, the court should exercise that discretion by refusing the motion.
[8] Focusing upon Article 6 of the ECHR, counsel's contention was that the right of access to justice was not absolute. Limitations on access to a court could lawfully be imposed, provided that the limitations pursued a legitimate aim, and there was a reasonable relationship of proportionality between the means employed and the legitimate aim sought to be achieved. Reference was made to The UK Bankruptcy case 2010 SLT 1242 (IH); [2009] CSOH 50 (OH); Teltronic-CATV v Poland [2006] ECHR 21, paragraphs 34, 46-47; Ewing v Times Newspapers Ltd 2010 SLT 1093, paragraphs 10-11; and Monarch Energy Ltd v Powergen Retail Ltd 2006 SLT 743, paragraph 12.
[9] A "legitimate aim" included (i) the efficient conduct of court business; and (ii) the interests of other parties: Ashingdane v UK (1985) 7 EHRR 528, paragraphs 56-58; Luordo v Italy (2005) 41 EHRR 26, paragraphs 85-86; The UK Bankruptcy case cit sup, Lord Hodge in the Outer House at paragraphs 9-10; Lord Advocate v McNamara 2009 SC 598, Lord Reed at paragraph [41] citing Bhamjee v Forsdick.
[10] Counsel then reminded the court of the position in England where, as a result of the Woolf reforms, Rule 39.6 of the Civil Procedure Rules 1998 (SI 1998/3132) and Practice Direction 39A permitted a company employee authorised by the court to represent the company. However those provisions had been brought into existence as part of a package of measures designed to protect the court from irresponsible behaviour. For example, the court's permission was required for such representation; there was a system of case management by judges; another party could apply for a "striking-out" of the claim. In relation to the court's permission, paragraph 5.3 of Practice Direction 39A specifically empowered the court to withhold permission for some "particular and sufficient reason", including the complexity of the issues, and the experience and position of the proposed representative. It was notable that the English courts prior to the Woolf reforms had held that a company's lack of funds to instruct counsel did not amount to "exceptional circumstances" justifying a departure from the normal rule that a limited company should litigate through legal advisers: Radford v Samuel [1993] BCC 870, at pages 873; Floods of Queensferry Ltd v Shand Construction Ltd and others [1997] 81 BLR 49.
[11] Against that background, senior counsel submitted that the following factors were of relevance in the present case:
(i) Apollo's unusual situation: As the liquidation of Apollo had been sisted pending the outcome of the arbitration, the directors were able to litigate without being liable for expenses. In that special situation, it was legitimate and proportionate to require the company to be represented by a professional. That would protect the interests of both the court and Scott. The professional would have a discretion whether or not to pursue certain lines and arguments.
(ii) Apollo was the author of its own difficulties: Counsel accepted that Apollo currently had no funds, but pointed out that the company had in the past had funds with which to litigate, but had exhausted those funds by wasteful procedure. Two arbitrations had taken place. The sums now sought by Apollo had almost doubled, and the methodology by which they were calculated had changed. A hearing in the Stated Case procedure had been discharged to allow the hearing in the Inner House of a reclaiming motion in the judicial review proceedings brought by Apollo, challenging the actings of the arbiter and the auditor of the Court of Session. Apollo had been unsuccessful in the judicial review proceedings, both in the Outer and Inner House. Apollo had not conducted litigation reasonably or responsibly. Apollo had been represented by seven different firms of solicitors. Scott had been unable to recover expenses because the liquidation of Apollo was sisted.
(iii) Mr Politakis was not an appropriate person to...
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