Stewart Mcleod V Prestige Finance Limited
| Jurisdiction | Scotland |
| Judge | Lord Tyre |
| Neutral Citation | [2016] CSOH 69 |
| Court | Court of Session |
| Docket Number | A479/15 |
| Published date | 20 May 2016 |
| Date | 20 May 2016 |
| Year | 2016 |
OUTER HOUSE, COURT OF SESSION
[2016] CSOH 69
A479/15
OPINION OF LORD TYRE
In the cause
STEWART McLEOD
Pursuer;
against
PRESTIGE FINANCE LIMITED
Defenders:
Pursuer: Party
Defenders: Stalker; Blacklocks
20 May 2016
Introduction
[1] The pursuer (“Mr McLeod”) seeks reduction of a decree granted on 15 May 2014 at Kilmarnock Sheriff Court in favour of the defenders (“Prestige”), who are the heritable creditors in respect of a debt secured over Mr McLeod’s residence in Stewarton, Kilmarnock (“the subjects”). In terms of the decree, Prestige were granted warrant to enter into possession of and sell the subjects; warrant was also granted to officers of court to summarily eject Mr McLeod from the subjects. The action came before me on Prestige’s motion for debate of the relevancy of Mr McLeod’s pleadings.
Background to the sheriff court action
[2] Prestige’s sheriff court action for warrant to exercise its statutory remedies under the Conveyancing and Feudal Reform (Scotland) Act 1970 took the form of a summary application, in accordance with section 24(1D) of that Act as amended. Prestige’s averments were to the following effect. The pursuer is the proprietor of the subjects. In 2007, he granted a standard security over the subjects in favour of Morgan Stanley Bank International Ltd. The standard security, which was registered in the Land Register on 18 April 2007, was assigned to Prestige by an assignation registered on 9 July 2009. Mr McLeod failed to repay monthly instalments of sums borrowed as they fell due. Following an unsuccessful attempt by Prestige to serve a calling-up notice by recorded delivery post, it was deemed to be served on 14 May 2012 by being sent to the Extractor of the Court of Session in accordance with section 19(6) of the 1970 Act. Prestige complied with the pre-action debtor protection requirements imposed by the 1970 Act (as amended) upon creditors seeking possession of subjects used for residential purposes. Prestige further averred that in July 2012 Mr McLeod made a proposal to pay £100 per month towards arrears which was not acceptable to them.
[3] Mr McLeod’s defences in the sheriff court action were skeletal and, in my view, having regard to matters that must have been within his knowledge, uncandid. The only averment by Prestige admitted by him was that he was the proprietor of the subjects.
[4] The procedural history of the sheriff court action, according to Prestige’s averments in the present action which I do not understand to be disputed, was as follows. The case called on 13 March 2013 and was sisted to await the outcome of a payment arrangement proposed by Mr McLeod. The sist was recalled in September 2013 and the case was continued until 9 October 2013 after Mr McLeod made another payment proposal. He failed to attend the hearing on 9 October and decree was granted against him. He applied to recall the decree under section 24D of the 1970 Act, which application was granted on 20 November 2013. An evidential hearing was fixed for 15 May 2014 in order for the action to be determined on its merits.
The evidential hearing
[5] In advance of the evidential hearing, Prestige lodged copy (though not principal) documents including a copy of the calling-up notice bearing the Extractor’s acknowledgment of receipt, documents vouching compliance with the debtor protection requirements of the 1970 Act, and a statement of Mr McLeod’s account. On the morning of the hearing (according to Prestige’s narrative which again I do not understand to be disputed), Prestige were represented by a Ms Hamilton of Optima Legal, Solicitors. The case called before Sheriff Murphy in the callover, at which time Ms Hamilton advised the court that the parties were ready to proceed. She indicated that she did not intend to call any witnesses; Mr McLeod intended to represent himself. Mr McLeod challenged the jurisdiction of the court. The parties were informed that other cases would be dealt with first.
[6] The case called again at 12 noon, this time before Sheriff Foran who had become available. Mr McLeod was permitted to be assisted by a lay supporter who would take notes. Mr McLeod again challenged the jurisdiction of the court and requested the transfer of the case to the Court of Session as what he described as a “court of record”. Sheriff Foran refused this request. Mr McLeod then sought to lodge a document that he described as a counterclaim. This document, which was produced in the present proceedings, contained three craves (i) stating Mr McLeod’s objection to the jurisdiction of the sheriff court on the ground that “the Sovereign Man bares [sic] the right and privilege to be heard in a court of Common Law”; (ii) asserting that Prestige had presented no evidence to the court or himself of “Proof of Claim to a Valid Cause of Action”; and (iii) objecting that Prestige was hiding or unable to supply the “Original Instrument of Indebtedness”. Sheriff Foran refused to allow the document to be lodged on the grounds that it did not contain any counterclaim and, in so far as it stated additional grounds of defence, had not previously been intimated. Mr McLeod continued to dispute the sheriff’s jurisdiction, but she instructed parties to proceed with the hearing.
[7] Ms Hamilton stated that she did not intend to call any witnesses. Mr McLeod indicated that he would only give evidence if someone from Prestige did so. The sheriff invited Ms Hamilton to begin her submission, which she did. At this point Mr McLeod rose and began to leave the court. He advised the sheriff that he did not intend to take any further part in the proceedings as he did not recognise the jurisdiction of the sheriff or the court. He was warned that if he left decree was likely to be granted against him, but he nevertheless proceeded to depart with his supporter and another friend. Ms Hamilton presented her submission and the sheriff granted decree in the following terms (with identifying details removed):
“The Sheriff (1) Granted warrant to the Pursuers to enter into possession of the subjects known as [address] being the subjects more particularly described in the Standard Security recorded in the Land Register of Scotland under Title Number [AYR3860] on 18 April 2007 and to sell the Security Subjects; (2) Found and Declared that the Pursuers have a right to enter into possession of and to sell the said subjects and to receive and recover the rent of and for the said subjects or at least so much of the rent as shall satisfy and pay the Pursuers all sums of principal and interest due to them under the said Standard Security and to exercise in relation to the said subjects all other powers competent to a creditor in lawful possession of the Security Subjects by virtue of the Conveyancing and Feudal Reform (Scotland) Act 1970; (3) Granted warrant to Officers of Court to summarily eject the Defender and his family, dependants, tenants and sub-tenants, servants and employees with their goods, gear and whole belongings from the said subjects and to make the same void and redd to the end that the Pursuers might enter thereon and peaceably possess and enjoy the same; (4) Found the Defender liable to the Pursuers in expenses of the action as taxed.”
An extract of the decree was issued by the sheriff clerk to Optima Legal on 10 June 2014.
[8] I pause at this stage to express my concern regarding the evidential basis upon which this decree was sought by Prestige and granted by the sheriff. The form of procedure was a summary application, but that procedure contains no relaxation of the ordinary rules of evidence. As noted in Macphail, Sheriff Court Practice (3rd ed, 2006) at paragraph 26-26:
“The sheriff is directed to dispose of the matter at the hearing ‘summarily’. The hearing is, however, a proceeding in a judicial process, in which it is necessary to observe the rules of evidence and any relevant principles of civil litigation, for example as to the recovery of documents, as well as the rules of natural justice.”
The hearing on 15 May 2014 was an evidential hearing. Yet the solicitor for Prestige presented her case without having lodged either a principal or certified copy of the document founded upon, namely the calling-up notice, and without a witness to speak to any of her averments. Where a party comes to court founding upon a document as the basis of the right which it seeks to vindicate, the “best evidence” rule requires production of the principal document. There is no relaxation of that rule to be found in procedure for summary applications. It is, of course, open to the parties to agree that copies will be treated as equivalent to principals. In the present case, however, Mr McLeod had made clear that he objected to the case being heard without production of the principal “Original Instrument of Indebtedness” – which I interpret as a reference to his credit agreement with Morgan Stanley – and without oral evidence being led on behalf of Prestige, so there could be no question of the court proceeding on the basis that parties were agreed that copy documents would suffice. In my opinion the sheriff erred in granting decree without sight of the principal or a certified copy of the calling-up notice bearing the Extractor’s receipt, and without any evidence in oral or affidavit form in support of Prestige’s averments, none of which was a matter of admission by Mr McLeod. Had Mr McLeod remained in court to insist upon this point it would, in my view, have been difficult for Prestige to resist. Despite his ill-advised departure, it ought to have been raised by the sheriff ex proprio motu. It could have constituted a strongly arguable ground of appeal to the sheriff principal. Matters, however, have proceeded otherwise.
Events subsequent to the evidential hearing
[9] On 11 June 2014, Mr McLeod...
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