Saturday, November 29, 2014

Soul & Conscience letter was false said Doctor as Lord Docherty orders businessman to pay £6.5m to former employers

A BUSINESSMAN has been ordered to hand over £6.5 million to his former employers after falsely claiming via a Doctor’s Soul & Conscience letter that he was suffering from depression to avoid appearing in court.

Paul McKenzie sent the document, known in Scots Law as a soul and conscious certificate, to a judge at the Court of Session in Edinburgh after being being sued for breaking the terms of a severance package.

Mr McKenzie had sold his debt collection agency Mackenzie Hall Holdings Ltd for £33.5 million to a US-based company January 2012 but eventually left to work for a rival in breach of agreement. The company brought the action against Mr McKenzie, a member of the Blue Knights consortium that failed to become the preferred bidder for Rangers after it went into administration in 2012.

Lord Doherty, in a ruling on the case on Wednesday, said the entrepreneur sent the sick note to avoid appearing before him. However, when the court clerk with medical staff at NHS Lanarkshire in East Kilbride - they denied either treating the businessman or signing the communication.

Mr McKenzie, of Strathaven, South Lanarkshire, then obtained a sick note from his GP – suggesting he had depression.

But after being contacted, the GP - Dr Craig Smith told Lord Doherty he withdrew the note. Dr Smith said his patient told him "untruths" about his actual condition.

The doctor said that he would not have agreed to it had he known the situation.

On hearing this, Lord Doherty called the document invalid. He said Mr McKenzie has failed to provide any proof that he was too ill to attend court.

Lord Doherty wrote: "It does not emanate from a clinician at the Psychological Therapies team. No satisfactory explanation has been provided by the defender in relation to that important and remarkable matter.

"In particular, no explanation has been proffered to the effect that he consulted a qualified and clearly identified medical practitioner elsewhere and that indeed a doctor is the signatory of the document."

Mr McKenzie sold Kilmarnock-based Mackenzie Hall Holdings Ltd in 2012 to Virginia-based Portfiolio Recovery Assets for $51 million (£33.5m). He stayed on with the business but the new owners terminated Mr McKenzie's employment after he had said he would sign an agreement that he would not do anything to negatively affect the company if he left. Mr McKenzie then began working for a rival.

In December 2012, Mackenzie Hall obtained an interim interdict from a court which was designed to stop him from working for the new company but Mr McKenzie ignored the order. He tried to get the court action against him postponed for a year, but Lord Doherty refused to grant the request.

Mr McKenzie then faced a court action at the Edinburgh court. He had been due to appear at a hearing last week.

Mr McKenzie claimed he lost most of the millions he made from selling shares in his old business through spread betting on the financial markets and gambling. He also said that despite owning two properties in Cape Verde, they could not be sold.

In his ruling, Lord Doherty added: "While I recognise the sum sued for is a very large one and that the proper measures of damages is in issue, the defender has only himself to blame for not appearing at the proof."

Full opinion :


[2014] CSOH 169 CA73/13


against F Defender:Pursuers:  Sandison QC, Watt;  Shepherd & WedderburnDefender:  Party Litigant

27 November 2014

[1]        The defender was employed by the fifth pursuer between 1 September 2003 and 8 October 2012.  He founded the business.  He was its Chief Executive Officer and he was a substantial shareholder.  He was a director of that company until 21 September 2012.  The first and second pursuers are wholly owned subsidiaries of the fifth pursuer.  The defender was a director of the first pursuer between 12 September 2003 and 21 September 2012.  He was a director of the second pursuer between 30 November 2006 and 21 November 2012.  The companies’ business was the provision of debt collection services.  On or around 16 January 2012, in terms of a Share Purchase Agreement dated 16 January 2012, the defender sold his shares in the fifth pursuer to the fourth pursuer for in excess of £10 million.  On the same date the defender entered into a Service Agreement with the fifth pursuer.  On 22 July 2012, in accordance with the Service Agreement, the fifth pursuer gave the defender twelve months notice of the termination of his employment.  It exercised its rights under clause 17.5 of the Service Agreement to place him on garden leave; to direct the defender not to contact specified persons, including customers; and to require him to resign as a director of the fifth pursuer.  He refused to resign as a director.  On 8 October 2012 the fifth pursuer served notice on him terminating his employment with immediate effect.

[2]        The Service Agreement contained covenants in terms of which the defender agreed not to be employed, engaged, concerned or interested in any other business or undertaking (cl.14.1), or to compete with the pursuers (cl.14.2) during his employment with the fifth pursuer;  and he obliged himself not to divulge or use the pursuers’ trade secrets or confidential information for any purposes other than those of the pursuers (cl.15).  In terms of clause 17.5 of that Agreement the fifth pursuer was entitled during any period of notice of termination to exclude the defender from its premises and to direct that he refrain from contacting customers, suppliers, agents, professional advisers or employees of the pursuers .  In terms of the Share Purchase Agreement the defender bound himself for a period of three years from 16 January 2012 to abide by similar further restrictive covenants (cl.7).

[3]        The defender breached the covenants in both Agreements.  The breach included acting to the detriment of the pursuers and for the benefit of a company M Ltd, whose whole share capital was registered in the name of a woman G with whom the defender had a personal relationship and a child.  On 31 July 2012 the fourth and fifth pursuers presented a petition for interdict and obtained interim interdict against him continuing to breach the covenants.  On 26 September 2012 part of the interlocutor of 31 July 2012 was recalled and was replaced by a further interlocutor.  By interlocutor of 6 December 2012  interdict was pronounced in materially the same terms as the interim interdict.  Notwithstanding the interim interdict, and then the interdict, the defender continued the prohibited conduct.  In April 2013 the fourth and fifth pursuers served upon the defender a petition and complaint for breach of interdict.

[4]        In the present action the pursuers seek damages from the defender for breach of the obligations incumbent upon him in terms of the Service Agreement and the Share Purchase Agreement.  The sum first concluded for (by the fourth pursuer) is £6,507,000 with interest from the date of citation.

[5]        By interlocutors of 25 April 2014 a proof before answer was allowed in the damages action and in the petition and complaint proceedings.  The defender was represented by solicitors and counsel until 5 August 2014.  On that date his solicitors withdrew from acting.  Since then the defender has represented himself.

[6]        On 2 September 2014 I refused a motion by the defender to discharge the diet of proof.  The basis of the motion had been that he wanted to have a year to prepare for proof.  At that time the defender also indicated that he wished to admit the breach of interdict, and the breach of covenants complained of in the damages action.  That matter was continued to give the defender an opportunity to consider entering into joint minutes of admissions.  I advised him to consider obtaining advice.

[7]        On 18 September 2014 both cases came before me once more and the defender again appeared on his own behalf.  In terms of a joint minute of admissions (No.  58 of process) the defender admitted the pursuers’ averments in the damages action anent breach of the covenants under the Service Agreement and the Share Purchase Agreement.  In terms of a joint minute of admissions (No. 31 of Process) he admitted the breach of interdict and interim interdict averred in the petition and complaint proceedings.  I pronounced an interlocutor finding the defender to be in breach of the interim interdict and the interdict.  I continued the question of disposal of the petition and complaint until after the conclusion of the damages action.

[8]        A pre-proof by order took place on 23 October 2014 at which arrangements and preparations for the proof were discussed.  On 31 October 2014 I heard two opposed motions which had been enrolled by the defender, the first being for recall of an arrestment on the dependence, and the second being to discharge the proof to allow the defender time to make a legal aid application.  The defender submitted that his financial resources had “run out” three to four weeks earlier.  It was only then that he had realised he might be eligible for legal aid.  He had now applied for income support.  There was a “95% chance” of his insolvency.  £38,000 in his bank account had been arrested.  If the arrestment was recalled he proposed to use the money released to fund the litigation.  He had not yet instructed a solicitor or submitted a legal aid application.

[9]        The defender claimed that most of the purchase price of £10 million for his shares had been lost through spread betting on the financial markets and through gambling.  £440,000 had been used for the purchase of his house.  £500,000 had been paid to his former wife as a divorce settlement.  £3,000 a month had been paid for maintenance of his children.  Brokers’ fees in relation to the share sale had accounted for £400,000 and £100,000 had gone towards payments to company staff.  Repayment of debts and taxes accounted for another £100,000.  He had two properties in Cape Verde which were worth £50,000, but he maintained it was not possible sell them.  He had disponed a house to G.  He maintained that he had concluded missives to do that before the inhibition.  Mr Sandison observed that if that were so it was very curious that his counsel had not raised that matter on 8 January 2013 when a previous motion for recall of the inhibition and the arrestment on the dependence had been heard.

[10]      I refused the motion for recall of the arrestment.  Standing the admission of liability, the defender’s own estimate of the risk of insolvency, and the lack of full and appropriate vouching of his resources, it appeared to me to be reasonable in all the circumstances that the arrestment should continue.

[11]      I also refused the motion for a discharge of the proof.  The motion came at a very late stage.  The material placed before me by the defender was unsatisfactory.  The possibility of discharging the diet had not been raised at the hearings on 18 September or 23 October: nor had there been any mention of making a legal aid application.  As at 31 October no solicitor had even been instructed to consider or prepare a legal aid application.  I indicated that the refusal was in hoc statu; and that if a stage was reached where a solicitor was satisfied that the defender was eligible for legal aid, and that there were grounds for submitting a legal aid application, the matter could be reconsidered.

Events of 17 and 18 November
[12]      The diet of proof had been set down for 18-21 November 2014 and 11 and 12 December 2014.  At lunchtime on Monday 17 November 2014 an envelope was delivered by hand to the reception at Parliament House with a request that it be passed to my clerk.  The contents were a single sheet (6/67 of process).  There was no covering note or letter.  The document is a single sheet which is partly printed and partly written in manuscript.  The printed parts are represented below in regular font and the manuscript parts are in italic font:

“Psychological Therapies Team  NHS Lanarkshire 4th Floor PRIVATE    Atholl House Churchill Avenue East Kilbride G74 1LU

CHI [A 10 digit number] Date:  14/11/14

[The defender’s name]  Our Ref:  

[The defender’s address and postcode] Your ref:   PD/RM D.O.B   [Date]



I can confirm the above patient is suffering from severe anxiety and depression, and is not fit enough to attend court at this time.  I would suggest a review after a period of 3-6 months.

Signature [indecipherable]

[NHS pro forma printed information]

GP Notified\Referral”

[13]      The document’s appearance is odd.  The “printed” parts of the document look as if they have been photocopied or scanned.  This feature, and the absence of a doctor’s name on the document, were brought to my attention by my clerk.  On my instructions she emailed the defender at 15.16.  She indicated that the hand delivered letter had been received, and she asked him for the name of the practitioner he had attended and where that consultation had taken place.  The defender did not reply until 20.11.  His email stated:

“…  I got a referral to Dr McCabe on the 14th Nov.  …  Should the courts wish a report from the Psychological Therapies Team then please send me the appropriate mandate which I will sign for authorisation …”

[14]      On the morning of 18 November my clerk contacted the Psychological Therapies Team at Atholl House to seek confirmation that the document emanated from them.  She was advised that it did not, and that the defender was not a patient of the Team.  My clerk reverted to the defender advising him of this information and repeating the request for the full name of the doctor who signed the letter and the place where the defender had attended that doctor.  The defender replied that his appointment “was a Private Consultation on 14th Nov 2014” but he provided no further details.

[15]      Given the questions which arose as to the document I did not convene the court until the enquiries already mentioned had been made.  When the Court convened Mr Sandison moved for decree by default in terms of rule of court 20.1 in respect of the defender’s failure to appear at the proof diet.  Given the history the defender’s conduct and his recent attempts to discharge the proof, and the considerable doubt as to the purported soul and conscience certificate’s authenticity, the court ought to be very sceptical of his claim - made on the eve of the proof - that he was unfit to attend.  The pursuers had incurred substantial outlays.  The attendance of lay and expert witnesses (some from the United States) had been arranged at considerable expense.

[16]      I wished further clarification as to the provenance and authenticity of the soul and conscience letter.  I continued the pursuers’ motion until 21 November to enable further inquiries to be made.

Developments after the hearing on 18 November
[17]      Between 18 and 21 November the defender was requested again on a number of occasions to provide the full name of the doctor who signed the letter and the place where he consulted that doctor.  He did not provide that information.

[18]      At 18.23 on Wednesday 19 November the defender emailed my clerk attaching a letter from Dr Craig Smith (6/73 of process):

“…19th November 2014


Dear Sir/Madam

RE: [Defender’s name, address and date of birth]

As General Practitioner to the above I can confirm that he has been suffering from anxiety and depression and has been reviewed by my colleague and has been commenced on antidepressants.  Due to this ongoing low mood and anxiety I do not feel that it would be suitable for him to appear in court at the present moment and I would be grateful if he could be excused this on medical grounds.

If you require further information please feel free to contact myself.

On Soul and Conscience

Yours sincerely


Dr Craig J Smith”

[19]      On the morning of 20 November my clerk emailed the defender:

“…  The Court still awaits the full name of the doctor who signed the letter dated 14 November 2014 and the location of where you attended to obtain the letter.

If you now intend to rely upon the letter from [the GPs’ practice], please can you send the original hard copy marked for my attention …

As previously advised the case will call again tomorrow at 10 am …”

The defender indicated by email that he wished to rely upon both 6/67 and 6/73.  A copy of Dr Smith’s letter was forwarded by my clerk to the pursuers’ solicitors.

[20]      On 19 November 2014 the pursuers obtained affidavits from Patrick Dolan (the Team Co-ordinator of the Psychological Therapies Team at Atholl House) and from Kenneth Ewing-Day (the Deputy Team Co-ordinator).  Both affirmed “clearly and categorically” that the letter 6/67 of process was not produced by the Psychological Therapies Team.  Both gave full explanations - which are set out in their affidavits (6/69 and 6/70 of process) - in support of their conclusion.

[21]      On 20 November the pursuers’ solicitors contacted Dr Smith by telephone.  Thereafter they emailed him setting out an account of the background to the litigation and attaching copies of the affidavits from Mr Dolan and Mr Ewing-Day.  At 15.14 that day Dr Smith faxed the following letter to my clerk: …

20th November 2014


Dear Sir/Madam

RE: [Defender’s name, address and date of birth]

As General Practitioner to the above I was asked on 19th November to provide him with a soul and conscience letter for him so that he could be excused from a court appearance due to his recent diagnosis of anxiety and low mood having seen my colleague Dr Godley on 11th November who has commenced him on antidepressants because of this.  He told me at the time that the court was of [sic] a minor civil matter and one which he was not greatly involved in.  He has also told me that he had consulted a private psychologist about his ongoing symptoms who has also provided a soul and conscience letter but this had been rejected and [sic] as it had not been done by a general practitioner.  He showed me a copy of this letter on his phone.

I have subsequently been made aware that the original soul and conscience letter was a forgery and obtained dishonestly and that his appearance at the Court of Session is much more serious than the “minor matter” which he initially described to me.

I now feel that the whole consultation with me has been dishonest and if I had known the true facts I would not have agreed to provide him with a soul and conscience letter.  As the consultation was based on deception and untruths I cannot guarantee how much of his symptomology and complaints concerning his low mood and anxiety are truthful and feel there has been a breakdown in the doctor patient relationship a relationship which we have to build on trust with each other and one which generally practitioners value highly.

To that extent I am withdrawing my original soul and conscience letter because of the way I was asked to provide this and due to the fact that I am now unable to state confidently whether or note [sic] [the defender’s] symptoms are genuine  because of the dishonesty he was involved in during the consultation.  I can no longer provide a soul and conscience letter excusing him from court appearance on medical grounds and I feel he is well enough to attend court.

If you require further information please feel free to contact myself.

Yours sincerely,


Dr Craig J Smith

On soul and conscience.”

My clerk immediately contacted the defender and the pursuers’ solicitors and forwarded Dr Smith’s letter to them.

The continued motion on 21 November
[22]      On 21 November Mr Sandison renewed his motion for decree by default in terms of the first and fifth conclusions of the summons.  The defender had failed to attend the proof on 18th November.  The proof was a peremptory diet.  It was clear, he submitted, that the soul and conscience letter of 14 November was a forgery.  That was amply vouched by the affidavits of Mr Dolan and Mr Ewing-Day.  Even if that had not been clear, there would have been every reason to conclude (given the history of the defender’s wilful breach of the contractual covenants and of the interim and permanent interdicts, and his repeated unsuccessful attempts to discharge the proof) that the obtaining of the certificate had just been a further example of the defender’s manipulative and dishonest conduct.  In the result, the facts spoke for themselves.

Decision and reasons
[23]      The defender did not appear for the proof diet.  No indication of any health problems had been given at any previous calling of the case.  It seems that he first attended at the GP practice complaining of symptoms of anxiety and depression on Tuesday 11 November - a week before the proof.  He was unknown to the practice before that date.  He was prescribed anti-depressant medication.  No soul and conscience certificate appears to have been either sought or obtained at that stage.  Nothing was done to alert the court or the pursuers to any suggestion that the defender would be unfit to attend the proof until the letter of 14 November was hand delivered to Parliament House on the afternoon of 17 November.  Standing (i) the history of the defender’s conduct in relation to wilful breach of his contractual obligations and wilful breach of the interim and permanent interdicts (ii) his previous unsuccessful attempts to discharge the proof diet (iii) the events leading up to and following 18 November, I think it likely that the defender deliberately left raising the issue of his fitness to attend court until the very last minute because he knew that by doing so it would leave the pursuers and the court with little or no time to investigate the issue properly before the proof was due to commence.

[24]      The soul and conscience certificate 6/67 of process cried out for further scrutiny.  It appears to be written in manuscript on scanned or photocopied paper headed Psychological Therapies Team, NHS Lanarkshire, the address given for the Team being Atholl House in East Kilbride.  The signature of the author of the document is illegible.

[25]      The defender was asked repeatedly to clarify the full name of the signatory and where the consultation with him took place.  He was evasive and did not answer those questions.

[26]      When the defender was asked to comment on the fact that the Psychological Therapies Team at Atholl House indicated that he was not a patient and that the letter did not emanate from any clinician there, he provided no explanation.  Instead his response was to make an appointment with Dr Smith.

[27]      It is clear from Dr Smith’s letter of 20 November that the account which the defender gave of his circumstances when he attended at the surgery on 19 November was inaccurate and misleading; and that it included reliance by him on the letter of 14 November.

[28]      Whatever else it is, it is clear that 6/67 of process is not what it bears to be.  It does not emanate from a clinician at the Psychological Therapies Team.  No satisfactory explanation has been provided by the defender in relation to that important and remarkable matter.  In particular, no explanation has been proffered to the effect that he consulted a qualified, and clearly identified, medical practitioner elsewhere and that that doctor is the signatory of the document.

[29]      Dr Smith’s letter of 19 November was obtained at a consultation on what ought to have been the second day of the proof.  He has withdrawn it in the circumstances explained in his letter of 20 November.

[30]      The upshot is that there was, and is, no valid soul and conscience certificate certifying that the defender was unfit to attend court on 18 November.  I am not satisfied that he was unfit to attend.

[31]      The defender failed to attend a peremptory diet.  The proof was restricted to the issue of damages.  While I recognise that the sum sued for is a very large one, and that the proper measure of damages is in issue, the defender has only himself to blame for not appearing at the proof.  I agree with Mr Sandison that in the circumstances of this case the consequences of that failure should be that decree by default is pronounced.

[32]      Even if 6/67 had been signed by a duly qualified medical practitioner I would not have accepted it as a basis for excusing the defender’s non-appearance without making further inquiry, particularly in view of the factors I have outlined at paragraph 23 supra.  As the Second Division observed in The Scottish Ministers v Smith 2010 SLT 1100, at paragraph 7:

“[7]      A medical certificate to the effect that a person is unfit to attend court is not conclusive evidence of that fact.  In every case it is for the court to decide, from the certificate and any other relevant circumstances, whether it is persuaded that the person concerned is unfit to attend and, if so, what the consequences of that should be.”

[33]      I shall grant decree by default by pronouncing decree for payment by the defender to the fourth pursuer of the sum of £6,507,000 with interest thereon at the rate of 8 per cent per year from the date of citation until payment, all in terms of the first conclusion; and for payment by the defender to the pursuers of the expenses of the action. 

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