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OUTER HOUSE, COURT OF SESSION
[2006] CSOH 179
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A4996/01
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OPINION OF LORD GLENNIE
in the cause
FRESH CATCH LIMITED
Pursuers;
against
CGU INSURANCE PLC
Defenders:
ญญญญญญญญญญญญญญญญญ________________
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Pursuers: Davidson;
Tods Murray
Defenders: Duncan;
Simpson & Marwick
23 November
2006
[1] On
1 February 2006 the court pronounced an interlocutor in terms of Minutes of
Tender and Acceptance for payment of a substantial sum by the defenders to the
pursuer, found the defenders liable to the pursuer in the expenses of the
action to the date of tender and decerned for payment
of the expenses "as the same shall be taxed by the Auditor of Court". On the pursuer's motion for an additional
fee, the court remitted the application to the Auditor for him to determine in
terms of Rule of Court 42.14(2)(b).
Such a disposal is competent though relatively uncommon.
[2] Where
the question of entitlement to an additional fee is remitted to the Auditor
rather than decided by the court, that question is considered at the diet of
taxation. Certain steps relating to
taxation are regulated by Rules of Court.
Rule 42.1(2) specifies the time within which the entitled party
must lodge an account of expenses in process.
Rule 42.2(1A) specifies the time within which the party found liable in
expenses must intimate specific points of objection to the account of expenses. There is no Rule specifically regulating the
procedure to be followed in relation to the Auditor's consideration of whether
an additional fee should be allowed.
However, Practice Note 3 of 1995 provides as follows:
"Where an application for
an additional fee has been remitted to the Auditor ... there shall be lodged with
the account of expenses a full statement of reasons in support of the
particular factors which are considered [to] justify the allowance of an
additional fee.
A copy of the statement
must accompany the intimation copy account of expenses under [Rule] 42.1(2)(b)."
This makes it clear that the
statement of reasons must be intimated and lodged at the time the account of
expenses is lodged. The Practice Note is
referred to in para.42.14.1 of the annotations to the Rules of Court (at p.C340
of the Parliament House Book).
[3] The
pursuer duly lodged its account of expenses (two extensions of time for this
having been granted by the Court) but failed to lodge or intimate a statement
of reasons in respect of the claim for an additional fee. I am told that this was because the partner
handling the case was unaware of the Practice Note.
[4] The
diet of taxation took place on 18
October 2006. Parties are
agreed as to what happened at that diet.
It was the Auditor himself who first raised the problem that no statement
of reasons had been lodged. The
pursuer's representative sought, and was granted, a short adjournment to
consider the position. Upon his return
he indicated that he accepted that the Auditor could not deal with the question
of the additional fee in the absence of a statement of reasons. There is some uncertainty as to whether this
meant that he accepted that the Auditor could not deal with the additional fee
at that time, i.e. until a statement of reasons was lodged, or whether
it meant that since a statement of reasons had not been lodged he could
never deal with it. The Auditor's
recollection, contained in a letter dated 14 November 2006, is that, upon his return, the pursuer's
representative "stated that he would no longer be insisting on the recovery of
an additional fee for the pursuers".
Counsel appearing before me agreed that the recollection of those
present on behalf of the parties at the diet of taxation was that there was no
express abandonment of this sort. I do
not need to resolve this difference.
Whatever may have been said, it is clear that the pursuer's
representative did not ask that the diet of taxation be continued to allow a
statement of reasons to be lodged late.
The diet of taxation was therefore concluded on that day. Counsel for the defenders submitted that the
net effect of what the pursuer did was that it gave up its right to an
additional fee. The Auditor has not yet
issued his report.
[5] On
20 October the pursuer enrolled a motion in the following terms (amendments to
the motion, made on 24 October, being indicated in italics):
"On behalf of
the pursuer, in respect of their (sic) failure to lodge a Note of Argument with
the Account of Expenses in accordance with Practice Note no.3 of 1995, for the court to exercise its discretion
under Rule of Court 2.1 and to allow the same to be received late and to
allow a further Diet of Taxation to allow the Auditor to consider the pursuer's
motion for an additional fee ..."
Subsequently, it occurred to those
acting for the pursuer that the Auditor should be asked, before the motion was
heard, whether he would, at this late stage, be prepared to consider the
statement of reasons and reconvene the diet of taxation to discuss the question
of the additional fee in light of the matters raised in the statement. On 27 October the pursuers' solicitors
wrote to the Auditor to this effect, arguing that any question of the defenders
being prejudiced by having to attend a further hearing, if he were to allow
one, could be dealt with by an award of expenses, the pursuer's solicitors
personally accepting liability for the defenders' expenses of that further
hearing. The defenders' solicitors
responded on 31 October, stating that "in every conventional sense the taxation
is finished" and that "we consider that this taxation has concluded and the
matter is at avizandum". The Auditor set
out his views by letter from the Principal Clerk dated 14 November 2006. He gave his account (to which I have already
referred) of what had happened at the diet of taxation and said that he
"treated the taxation of the pursuer's account as being at an end". It was against this background that I heard
argument on the motion on 16 November
[6] On
behalf of the pursuer, counsel submitted that his clients were in a "Kafkaesque
trap". The powers of the Auditor were
limited. He was given a specific power
to allow points of objection to be intimated late under Rule 42.2(1C). That was inapplicable to the present
circumstances, but the fact that that power had to be given specifically showed
that the Auditor had no general dispensing power. It followed that although the Auditor had not
yet produced his report and was still seized of the matter, nonetheless he had
no power to allow the statement of reasons in late. Accordingly the pursuer had to apply to the
Court. He suggested that the Court had
power under Rule 2.1 to grant the relief sought. For the defenders, counsel submitted that
when the difficulty arose the pursuer had two options: it could either have
asked the Auditor to continue the taxation and to allow the statement of
reasons to be lodged late, which the Auditor would have had power to allow; or
it could have asked for an adjournment to enable the pursuer to apply to the
Court by motion along the lines of the present motion. The pursuer did neither. Instead, it allowed the diet of taxation to
be concluded. He submitted that in those
circumstances the present motion was incompetent. The auditor had concluded the diet of
taxation and was now functus officio save in respect of producing
his report. Further, the Court was functus officio since a final interlocutor had
been pronounced dealing with all aspects of expenses, including the question of
an additional fee. The Court had no
power under Rule 2.1 to grant the relief sought. That Rule was concerned only with time limits
imposed by the Rules of Court. The
pursuer's non-compliance was with a direction in a Practice Note rather than
with anything in a Rule of Court. In the
alternative, he submitted that the pursuer was personally barred by the conduct
of its representative at the diet of taxation.
Having sought and obtained an adjournment to consider the problem, he
chose to do nothing. The position was
similar to that where a party might be precluded from reclaiming an
interlocutor passed "of consent": Anderson v British Coal Corporation
1992 SLT 398. Finally he submitted that
I should refuse the motion on its merits.
The pursuer was in the present difficulty because of a deliberate
decision at the diet of taxation not to do anything.
[7] In
the course of argument counsel helpfully referred me to the following cases: U.C.B. Bank plc v Dundas & Wilson 1991 SLT 90, Taylor v Marshalls Food Group Ltd. (No.3) 1999
SLT 629, Petrie v North Milk Cooperative Ltd. (24 March 2005, Lord Reed,
unreported), Coyle, Petitioner (25
October 2006, Gordon Reid QC, unreported).
None were directly in point but they provided useful guidance. The first two of those cases help to identify
the point in time after which it is too late for a party to move the court to
allow an additional fee. In the U.C.B. Bank case, it was held to be
competent to move for an additional fee some months after an interlocutor
making an award of expenses and decerning for payment
of the expenses as taxed by the Auditor, since an allowance of an additional
fee did not involve any alteration or recall of the decerniture. In Taylor,
however, it was held that it was too late to move for an additional fee after
the Auditor had produced his report of taxation, since once the report has been
issued the matter of expenses has been finally dealt with (subject to the Note
of Objections procedure) and the (previously inchoate) interlocutor decerning for expenses takes effect. Both the Auditor and the court are at that
stage functus.
[8] The
present case falls between those two positions.
The Auditor has not issued his report.
It cannot therefore be said that the matter of expenses has been finally
dealt with by him. Nor has the inchoate
interlocutor decerning for the expenses as taxed yet
taken effect. Accordingly, it cannot be
said that the motion is incompetent for the reasons given in Taylor. Nonetheless, I have come to the conclusion
that the court has no power to accede to the motion. The motions in U.C.B. Bank and Taylor
were motions for an additional fee. They
were properly made to the court in terms of the Rules. Similarly, a motion to allow an account of
expenses to be lodged after the 4 month period prescribed by Rule of Court
42.1(2)(a) requires to be made to the court: see Rule 42.1(2)(aa). The reason for
this is that the lodging of the account of expenses triggers the start of the
taxation process. However, once the
matter is before the Auditor in the taxation process, matters of procedure are
for him and any application for relief for failure to comply with a procedural
requirement should be made to him. This
is demonstrated by Rule 42.2(1C). The
power to relieve a party from the consequence of failing timeously
to intimate points of objection is given to the Auditor, not to the court -
though the exercise of the discretion by the Auditor may be challenged by
judicial review (see Coyle) or,
possibly, at a hearing on a Note of Objections (c.f. the discussion at para.[19] of Petrie). In that case, the requirement to intimate
points of objection within a certain period is imposed by the Rules. Accordingly the power to relieve from the
consequences of failure to comply with this requirement, if it is to be given
to the Auditor, has to be given in the Rules.
But other matters of procedure, not regulated by Rules of Court, are
also for him to determine. Because the
practice and procedure relevant to taxation of expenses is not laid down by a
Rule of Court, no Rule of Court is required to give the Auditor power to
relieve a party from the consequences of a failure to comply with any
particular procedural requirement. For
example, I was told that the Auditor sometimes continues the diet of taxation
to allow further vouching to be lodged, ex
hypothesi late.
This is simply a facet of the discretion he is called upon to exercise
in the course of the procedure before him.
The fact that, as here, a particular procedural requirement is set out
in a Practice Note does not alter the position.
As counsel for the defenders conceded, correctly in my opinion, the
Auditor would have had power in the present case, had he been asked to do so,
to allow the statement of reasons to be lodged late and to continue the diet of
taxation for this purpose. Further, it is
a discretion which can be exercised by him at any time until he has completed
the taxation. Just as a court has power
to allow further matters of argument, and possibly even evidence, to be raised
after the conclusion of a hearing whilst the case is at avizandum, so too the Auditor has
a discretion, upon an application by one or other party, to allow further
matters to be raised before him at any time before he issues his report. Such a power will, perhaps, not readily be exercised
and its exercise may, of course, be the subject of challenge by judicial review
or otherwise - but in the first instance the discretion is his and it is not
for the court at this stage to tell him how to exercise it.
[9] In
the present case, it is not clear to me that the Auditor has sought to exercise
his discretion. His statement, in his letter, that he "treated the taxation of
the pursuer's account as being at an end" suggests that he regards the fact
that this stage has been reached as precluding him, as a matter of law, from
entertaining the pursuer's application.
If that is his view, it is, in my opinion, incorrect.
[10] It may be that the pursuer will make a further application to
the Auditor. For that reason it is
better that I say nothing about the submissions made to me about the merits of
the application.
[11] For these reasons, I refuse the motion as incompetent.
