OUTER HOUSE, COURT OF SESSION [2006] CSOH 4 |
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OPINION OF R F MACDONALD QC (Sitting as a Temporary Judge) in the cause IAN STUART as Guardian to WILLIAM FINLAYSON Pursuer against SCOTTISH RIG REPAIRERS Defenders and MacGREGOR SERVICES LIMITED Third Party ________________ |
Defenders: Miss
Milligan; Simpson & Marwick WS
[2] RC 42.1, so far as relevant for the purposes of this
motion, provides as follows:
"(1) Where
expenses are found due to a party in any cause, the court shall -
(a) pronounce an
interlocutor finding that party entitled to expenses and .... remitting
to the Auditor for taxation; and
(b) ....... pronounce an interlocutor decerning against the party found liable in expenses as
taxed by the Auditor.
(2) Any party found entitled
to expenses shall -
(a) lodge an account
of expenses in process not later than 4 months after the final interlocutor in
which a finding in respect of expenses is made;
(aa) if he has failed
to comply with sub-paragraph (a), lodge such account at any time with leave of
the court but subject to such conditions (if any) as the court thinks fit to
impose."
[3] Paragraph 2(a) was amended and
paragraph 2(aa) was inserted into RC 42.1 on
The factual background
[4] So far as court procedure is concerned the factual background
is as follows. On 17 December 2004, having heard evidence over the previous
three days in a proof restricted to the question whether the third party was
liable to make a contribution to the defenders, who had settled the claim with
the pursuer, I found that the third party was liable to make a contribution to
the defenders in the sum of £125,000. I issued two interlocutors on that date.
In the first interlocutor I decerned against the
third party for payment to the defenders of that sum with interest at the rate
of 8% per annum from 17 December 2004 until payment, found the third party
liable to the extent of 50% of the defenders' expenses up to and including 16
November 2004, thereafter in 100% of the defenders' expenses and remitted the
account thereof to the Auditor of Court to tax.
In the second interlocutor
I decerned against the third party for
payment to the defenders of the expenses in the previous interlocutor as the
same shall be taxed by the Auditor of Court. On
[5] In moving the motion on behalf of
the defenders Miss Milligan advised me that the account was not lodged in time
due to a combination of errors by the defenders' solicitors and law accountants
in not picking up the deadline. A copy of the account of expenses had been
intimated to the third party's solicitors on
[6] On
[7] Two cases were referred to by Miss Milligan in support of the
motion. The first was Finlayson v British
Steel plc 2003 SLT 903, in which Lord Mackay of Drumadoon
allowed the late lodging of the pursuers' account, which was about 8 months
late due to human and excusable errors within the
solicitors' firm. At p.906, para 19 his
Lordship stated:
"It is very regrettable, and reflects the no great credit on the pursuers' solicitors, that they appear to have ignored the terms of the various letters that they received from the firms of solicitors acting for the defenders. Nevertheless I have been given a full account of the reasons why the accounts were not lodged timeously. The failure to do so arose out of human errors, particularly that which led to the correct data not being entered into the firm's computer. Comparing the prejudice the pursers would suffer, were the motion to be refused, with that which the defenders will face, if the motion is granted, I am satisfied that I should exercise my discretion in favour of the pursuers and grant the motion."
[8] The second case was King
v Global Marine Ltd, a decision of the Second Division dated 13 December
2002 confined to the interpretation of the words "the final interlocutor in
which a finding in respect of expenses is made" in RC 42.1(2)(a). The Lord
Ordinary in that case, Lord Drummond Young, had refused to exercise his
discretion to allow the pursuers' account to be lodged late having regard to
the history of the case and the correspondence between solicitors
summarised in paras 7 and 8 of the opinion of the
court. His exercise of discretion was not challenged in the Inner House.
[9] Miss
Milligan summarised her submission by stating that the account in this case was
just over a month late, that there would be no real prejudice to the third
party if I allowed it to be lodged late, but there would be a windfall benefit
of over £22,000 to the third party if I refused to allow it to be lodged late.
Submission for
the third party
[10] Mr McIlvride for the third party
invited me to refuse the defenders' motion to allow their account to be lodged
late. It was entirely within my discretion to decide whether to allow the account
to be lodged late. It was in reality about two and a half months late as the
defenders' solicitors became aware on
"We are unable to detect any error of approach by
the temporary judge. He did not suggest that the operation of rule 2.1 was
necessarily altogether excluded in cases of ignorance of a rule. He was, on the
other hand, entitled to treat such ignorance, on the part of a practitioner
before the court, as highly material to his exercise of his discretion,
particularly where the solicitor was aware that new rules had been brought into
force and had nevertheless not troubled to read them. In relation to counsel's
appeal to the interests of justice, we would observe that the rules of court
are designed to serve the interests of justice by ensuring, inter alia, that cases are dealt with
expeditiously, without undue expense and without undue demands on the resources
of the court. The interests of justice are not well served by an approach which
too readily excuses failures to comply with those rules."
[11] The position in the present case
was worse because the defenders' solicitors knew of the rule but did not comply
with it. Prejudice to the third party would arise from the defenders'
non-compliance with the peremptory terms of the rule.
[12] Fane v
"Although the presence or absence of
prejudice attributed to the delay may be relevant in a particular case, the
rules are designed to regulate the general conduct of business, not just to
suit the convenience of the parties. Non-compliance with them is not
necessarily to be excused simply because no particular prejudice can be
identified."
[13] At p 54C-D Lord McCluskey himself stated:
"Many aspects of a solicitor's business are
affected by time limits and solicitors must be alert to such matters, not least
when considering how to deal with the problems created by the temporary absence
of a partner or assistant."
[14] The present case was not one involving illness or absence of
the solicitor dealing with the case. The
law accountants had been instructed before the Inner House interlocutor of
[15] Mr McIlvride then went on to submit
that, if I were not prepared to accept his submission that leave should not be
granted for the late lodging of the account, I should impose conditions on the
late lodging of the account. He suggested as a condition that the account
should run only from
[16] In summary, the motion should be refused as no sufficient cause
had been shown for the failure to comply with the rule of court.
Response for the defenders
[17] In response Miss Milligan pointed out that the terms of the
rule of court under consideration in Fane
required special cause to be shown and that Brogan was concerned with the application of the general dispensing
power under RC 2.1. The terms of the
present rule of court had been brought in to help solicitors faced with the
unduly onerous terms of the previous rule of court. The present case was at
what Miss Milligan termed as "the more minimal end of the scale" of failure
to comply with RC 42.1(2)(a). A condition restricting
the amount recoverable to a proportion of the taxed account of expenses would
be tantamount to the imposition of a financial penalty and therefore
incompetent. It was accepted that the party seeking leave to lodge an account
late had to explain to some degree. It took longer than usual to prepare this
account. She was unable to explain why, once the account had been "bounced" by
the Auditor, a motion for the certification of skilled witnesses, and not the
present motion, had been enrolled. Mistakes were made, but if leave were not
granted for the defenders' account to be lodged late, this would be a very
expensive mistake for the defenders' solicitors. As in Finlayson, this was a case where the time limit had not been picked
up. In answer to a question from me, Miss Milligan accepted that, if I
were minded to grant the motion subject to conditions, it would be possible to
make it a condition that the defenders should pay the expenses of the taxation.
Discussion
[18] As I observed at the outset, RC 42.1(2)(aa) in its present form gives no guidance to the court on
what factors are to be taken into account in deciding whether to grant leave
for the late lodging of the account. There is no requirement upon the party
found entitled to expenses to show cause why leave to lodge the account late
should be granted, but I think that the court must be able to reach the
conclusion that it is appropriate in all the circumstances of the case that
leave to lodge the account late should be granted. It seems to me that the
court, in deciding whether to grant leave for the late lodging of the account,
is exercising a wide discretionary jurisdiction. The discretion which is
exercised must, of course, be a judicial discretion - in other words, a
discretion exercised on a sound rational basis. The exercise of a discretion involves the balancing of relevant factors,
among which is that of relative prejudice. In my view other relevant factors in
the present context are the reason for the failure to lodge the account in time
and the time which has passed since the deadline for lodging the account. Miss
Milligan accepted that some sort of explanation for the lateness had to be
forthcoming from the party seeking leave.
[19] I also observed at the outset that no reason was given in the
written motion why leave should be granted. I have to admit that, having heard
Miss Milligan's submission, it is not entirely clear to me what the reason was
for the defenders' account not having been lodged in time. Miss Milligan sought
to compare this case with that of Finlayson,
but I think the circumstances of Finlayson
are clearly different from the circumstances of the present case. The
written motion in Finlayson sought
leave for the late lodging of the account "in respect that a programming defect
in the pursuers' agents' computerised accounts department database failed to
bring the 4 month limit for judicial accounts to the department's notice"
(see para 7 of the opinion), but it appears that what
had happened was that one of the staff in the firm of solicitors concerned had
failed to input the date of the final interlocutor into the computer database.
That was therefore a case where there was within the solicitors' firm a system
in force for bringing to the attention of the accounts department the deadline
for the lodging of the account, but the system failed on account of a human
error. I consider that the information
provided to me by Miss Milligan in support of the present motion was both sparse
and vague. I was not told that the solicitors for the defenders had in force
any system, electronic or otherwise, for drawing their attention to the time
limit for lodging accounts. Nothing was said by Miss Milligan which indicated
that the solicitor dealing with the case was alert to the time limit at any
stage before the attempt was made to lodge the account on
[20] So far as the question of prejudice is concerned, it is clear
that if leave to lodge the account late is refused the defenders will suffer
considerable prejudice in losing their entitlement to the award of expenses in
their favour, whereas the only prejudice which the third party will suffer is
the loss of the protection of the 4 month time limit in RC 42.1(2)(a). That will be the position in all cases with the
exception of those where some specific prejudice to the party against whom the
award of expenses has been made can be identified. If the inevitable prejudice
to the party found entitled to expenses were to be considered a proper basis
for granting leave, as it appears, at least in part, to have been in Finlayson (see para
19 of the opinion), the result would be
that the 4 month time limit in RC 42.1(2)(a) would in effect be nullified. Such
an approach seems to me to be at odds with what was said by Lord Reed at para 33 of Brogan. I
appreciate that those observations were made in the context of the general
dispensing power in RC 2.1, but I consider that they apply mutatis mutandis to RC 42.1(2)(aa), which contains a specific dispensing power, namely, a
power to relieve a party from the consequences of failure to comply with RC
42.1(2)(a), which is obviously intended to ensure expedition in the lodging and
taxation of accounts. The interests of justice would not be well served by an
approach which too readily excused failure to comply with the 4 month time
limit in that rule. In any event, even if there is no prejudice at all to the
third party in leave being granted, as the court pointed out in the case of Smith, non-compliance with the rules is
not necessarily to be excused simply because no prejudice can be identified.
[21] Accordingly, having considered the circumstances laid before me on behalf of the defenders, I do not consider
it appropriate in all the circumstances to grant leave to lodge their account
of expenses late. While the solicitors
were obviously keen to set in motion the steps for the preparation of the
account, they were, for no obvious reason, lax in observing the 4 month time
limit, assuming they were aware of it.
[22] For the sake of completeness I should record whether, had I
been minded to grant leave, I would have imposed any conditions. I reject Mr McIlvride's submission that it would be open to me to
impose a condition that the defenders should receive only a proportion of their
taxed expenses. I consider that it would be incompetent to impose such a
condition for two reasons. First, such a condition would amount to an
alteration of my interlocutors of
Decision
[23] For the reasons given above I shall refuse the motion.