Evicted tenants of property held in trust for them allowed proof in action for reduction of eviction order

About this case:

• Citation:
  [2023] CSOH 42
• Judgment:
  External link
• Court:
  Court of Session Outer House
• Judge:
  Lord Stuart

Pursuers Mohammad and Manawar Sharif sought to establish that defender Mohammed Moughal, who acquired their family home by agreement following the first pursuer’s sequestration, had knowingly misled the First-tier Tribunal in applying for the eviction order. The defender opposed the application on the basis that grounds for reduction had not been made out.

The case was considered by Lord Stuart. Roxburgh, advocate, appeared for the pursuers and Tosh, advocate, for the defender.

Exceptional circumstances

In 2012, the first pursuer was sequestrated. He was anxious to retain the family home and so agreed with his trustee in sequestration and the defender that the defender would purchase the property from the trustee. By a Trust Deed dated 13 May 2014, the defender acknowledged that, although he was the heritable proprietor, he held the property in trust on behalf of the pursuers and would convey it back to them when directed.

A short assured tenancy was created by the parties, with the rent payable intended to fund the sums due by the defender in terms of a buy to let mortgage he took out to acquire the property. However, on 23 July 2019, the defender applied for an eviction order on the basis that he wanted to sell the property. This course of action was prohibited by the Trust Deed, however when the application came before the First-tier Tribunal the pursuers had no physical record of the deed nor was it mentioned in submissions.

Permission to appeal the decision of the FtT was refused by the Upper Tribunal and the Court of Session. The Trust Deed was not mentioned in any of these applications, which the pursuers made without the benefit of legal representation. In February 2023 the second pursuer, who had acquired the first pursuer’s interest in the Trust Deed due to health concerns on his part, raised ongoing proceedings in Paisley Sheriff Court seeking to implement it. The pursuers offered to prove to the Lord Ordinary that the defender had knowingly misled the FtT when he applied to evict them.

Counsel for the defender submitted that the FtT decision was a decree in foro and could only be reduced in exceptional circumstances, which the pursuers’ averments failed to disclose. For the pursuers it was submitted that the circumstances in which the defender came to hold the property were unusual, and there was a substantive defence to the defender’s application, raised in full knowledge of the terms of the Trust Deed, that had not been heard.

Substantial justice

In his decision, Lord Stuart said of previous case authority on reduction: “In the case of Man Hen Liu v Andersons Solicitors LLP and Others (2017) the Lord President (Carloway), citing Lord Abernethy in Malcolm v Park Lane Motors (1998), stated [that] ‘reduction is competent if it is necessary to avoid a miscarriage of justice or, to put it another way, to produce substantial justice. It is not possible to define categorically the cases in which reduction is competent but it is clear that the circumstances must be exceptional’.”

In assessing whether reduction was needed to produce substantial justice, he said: “Reduction will be competent where it is necessary to achieve substantial justice or avoid a miscarriage of justice. It is not possible to define categorically the cases in which reduction is competent. Cases turns on their own individual facts and circumstances [and] reduction of a decree in foro is only available in exceptional circumstances.”

He continued: “Reduction is a question of judicial discretion. The existence of, or failure to use, an alternative remedy is not necessarily a bar to reduction. The court should be reluctant to foreclose a substantive defence where this has not been heard. It might be a good ground for reduction where a party intentionally kept back from the court a fact that materially undermined their entitlement to the orders sought.”

Turning to the circumstances of the case, Lord Stuart said: “In light of the propositions above. I agree with Ms Roxburgh that the proper approach is to consider the whole facts and circumstances of the case in the round, rather than taking a more deconstructionist approach as argued for by Mr Tosh. In any event, the propositions narrated above answer the criticisms advanced by Mr Tosh; at least at this stage in proceedings.”

He concluded: “I am far from persuaded that, if the pursuers prove all they aver, they would necessarily fail to establish circumstances amounting to a miscarriage of justice or that reduction was required to produce substantial justice. Indeed, it seems to me that the circumstances of this case, if proved, might be just such a case that the equitable remedy of reduction is designed to meet; but that is for another day.”

The case was thereafter put out by order to allow for addresses on further procedure.