Scottish Court of Session Decisions

The Caledonian Railway Company, defenders, lodged a note of objections to the Auditor's report on their account of expenses in an action brought against them by John Smellie, pursuer. They objected to the disallowance of items incurred for investigations preliminary to the preparation of their defences.

The pursuer had sued the defenders for £49,000 damages for breach of a contract for the construction of a railway line, entered into on 29th March 1899 between the pursuer and the Paisley and Barrhead Railway Company, whose obligations were subsequently taken over by the defenders. The work was completed and paid for in 1906, but the pursuer only brought his action in February 1913. His averments were of great length, and minutely detailed the facts alleged as constituting breach of contract with reference to the various details of the work done. On 27th June 1914 the Lord Ordinary ( Dewar) dismissed the action as irrelevant and found the pursuer liable in expenses. On 1st February 1916 the First Division adhered, and found the pursuer liable in additional expenses since the date of the Lord Ordinary's interlocutor, and remitted to the Auditor to tax and to report. [See ante, p. 336.]

The defenders' account of expenses contained, inter alia, (1) an item amounting to £629, 5s. 2d., being an account incurred by them to Messrs Formans & M'Call, C.E., Glasgow, and (2) an item amounting to £26, 16s. 6d., being an account incurred by them to J. Gilchrist Bennet, C.E., Paisley. Both accounts were for expert investigations to enable the defenders to prepare their defences. The Auditor disallowed items amounting to £497, 19s. 3d. of the former account and the whole of the latter, and annexed to his report the following

Note.—“The Auditor in Messrs Formans & M'Call's account has allowed £105 for plans, &c., as against £183, 15s. charged. Quoad ultra the charges in their account have been disallowed, and their outlays of £3, 13s. 3d. sustained.

In addition to the above sum of £105 for plans the Auditor, in the very exceptional circumstances of the present case, would have allowed Messrs Formans & M'CaIl a further sum of at least £105 for assistance and information which were essential to enable the defenders to meet the heavy and remarkable claim of over £49,000 made against them, supported by elaborate and detailed statements of fact relating to the execution of railways and relative works many years ago. The defenders, their directors, and salaried officers were necessarily ignorant of the facts, and even their engineers could only supply them with the necessary information as the result of much labour and research.

The pursuer maintains that no initial expense should be allowed beyond the maximum instruction fee of £3, 3s., and he refers to the case of Towers-Clark v. Wester Moffat Colliery Company, 1914, 1 S.L.T., p. 371. In that case it was alleged that the defenders had worked and abstracted coal from several hundred yards beyond the boundaries in his lease, with the result that the pursuer's mansion-house had been undermined and rendered uninhabitable. The pursuer had no means personally of knowing the amount or value (1) of coal wrongously abstracted, or (2) of the damage done to the mansion-house. He accordingly employed an engineer and architect to make the necessary investigations, measurements, &c., without which he could not make a relevant or reasonable claim.

The Auditor in Towers-Clark's case allowed what he regarded as fair and reasonable charges to the engineer and architect. He did so in accordance with the settled practice of his predecessors for upwards of thirty years of not applying the £3, 3s. instruction fee to cases where it cannot be reasonably applied or regarded as applicable. A familiar and really frequent example is the case of personal injury by railway or motor car accident and cases of that class. The charge for medical examination and report is invariably allowed, with a fee for further examination and report where a tender is made.

In 1884, in the case of Macdonell's Trustees v. The Oregonian Railway Company, 11 R. 912, there was a full debate before the Second Division on the question of whether in a petition for the liquidation of the company there should be an order for intimation and service. The Court unanimously dismissed the petition with costs to the company. At taxation the petitioners argued that the agents for the respondents could get only the £3, 3s. fee, but the Auditor (Mr Edmund Baxter) held that this fee was wholly inapplicable, and his judgment was acquiesced in by the petitioners, who paid about £40 of costs.

In taxing the defenders' account in the present case the Auditor felt that he was bound to follow and apply the Lord Ordinary's judgment in Towers-Clark's case and he has done so. He understands, however, that objections to this will probably be lodged by the defenders, and as the question raised is one of importance and of frequent occurrence he has thought it right to deal fully with it with a view to an authoritative judgment.”

The case was heard in the Single Bills.

Argued for the defenders—The ordinary rule was contained in C.A.S., 1913, K, iv, Appendix ii, rule 3. But this rule was not

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inflexible, but admitted of exceptions in cases in which justice could not be done by a rigid application— Shirer v. Dixon, 1885, 12 R. 1013, 22 S.L.R. 669; Govan v. J. & W. M'Killop, 1909 S.C. 562, per Lord Low at p. 566, 46 S.L.R. 416. This case was exceptional, for the preliminary investigations were necessary in defence; the action was brought long after the defenders could reasonably be supposed to be conversant with the facts alleged; the contract was originally between the pursuer and another railway. The Mica Insulator Company, Limited v. Bruce Peebles & Company, Limited, 1907 S.C. 1293, 44 S.L.R. 674, was distinguished, for in it the preliminary investigations were not for the purpose of replying to the pursuers' averments but for a counter attack. Towers-Clark v. Wester Moffat Colliery Company, 1914, 1 S.L.T. 371, was not in point, for there the action was by a landlord against his tenant, and it was clearly the former's duty to be conversant with the actings of his tenant. Even if an allowance of proof made a difference, Govan's case ( cit.) could not be distinguished on that ground, for there the preliminary investigation was prior to the raising of the action.

Argued for the pursuer—The rule of the C.A.S., 1913, was imperative and must be applied without exception. Expenses of process, therefore, not of preliminary investigations, were all that could be allowed, and the Auditor rightly allowed only the regular fee of £3, 3s. If exceptions to the rule were to be allowed in special circumstances the framers of the rule would have expressed it so as to admit of such exceptions. In Shirer's case ( cit.) the Court was practically in the position of taking a proof and the inquiries were regarded as precognitions, and further, the case came within the special rules applying to husband and wife. Govan's case ( cit.) was distinguished, for a proof was allowed in it, and though Lord Low, at p. 565, thought the rule might be relaxed, he also based his judgment on the fact that the investigations were immediately necessary as the evidence derived therefrom would have deteriorated with lapse of time. Tower-Clark's case ( cit.) was in the pursuer's favour, so was the case of The Mica Insulator Company, Limited ( cit.). The latter case showed that the provision of an Act of Sederunt could not be set aside by one of the Divisions, for it was the act of the Whole Court, per Lord President (Dunedin) at 1707 S.C., p. 1301. In any event this case was not special, for though the matters were detailed and technical, the defenders had an expert department which could give all the assistance required. The transference of the railway made no difference, for the defenders must have been fully cognisant of the facts when they took over the railway.

At advising—