Scottish Court of Session Decisions

 

OUTER HOUSE, COURT OF SESSION   [2007] CSOH 129

CA79/02

SECOND SUPPLEMENTARY OPINION OF LORD MACKAY OF DRUMMADOON   in the cause   APC LIMITED (in receivership)   Pursuers;   against   (FIRST) AMEY CONSTRUCTION LIMITED, (SECOND) SIR ROBERT McALPINE LIMITED, (THIRD) TAYLOR WOODROW CIVIL ENGINEERING LIMITED and (FOURTH) BARR LIMITED, together trading as "AMEY-ROBERT McALPINE-TAYLOR WOODROW-BARR M6 JOINT VENTURE"   Defenders:     ­­­­­­­­­­­­­­­­­________________

 

Pursuer: Mure; Maclay Murray and Spens

Defenders: Borland; Pinsent Masons

 

13 July 2007

 

Introduction

This is a commercial action, in which a counterclaim has also been lodged. I have already issued an Opinion dated 23 July 2004 and a Supplementary Opinion dated 11 November 2005. The Opinion dealt with submissions relating to the principal action, which I heard during a debate that took place on 11 - 14 and

19 - 21 November 2003, with supplementary hearings on 17 December 2003 and

11 February 2004. The Supplementary Opinion dealt with submissions relating to the counterclaim, which I heard during a subsequent debate. The latter Opinion has no relevance to the issues with which this Second Supplementary Opinion is concerned.

By interlocutors dated 20 January 2005 and 24 February 2006, I dealt with the expenses of the diet of debate held during November 2003 and the two supplementary hearings on 17 December 2003 and 11 February 2004, which related to the principal action. Read together those two interlocutors found the pursuers entitled to 65% of their expenses occasioned by that debate, together with its supplementary hearings. By 24 February 2006, no proof had been allowed in the principal action or the related counterclaim.

The motions with which this Second Supplementary Opinion are concerned were enrolled by the pursuers. They are in the following terms:-

"On behalf of the Pursuers, to do the following:-

(1)               In terms of Rule of Court 42.13(2) to certify as a skilled witness Mr Denis Shields of 61 Laxdale Drive, Head of Muir, Denny, Scotland and to record his name in the Court's interlocutor;

(2)               In terms of Rule of Court 42.14(1) to allow an additional fee in respect of the expenses awarded in the Pursuers' favour, in particular on the basis of grounds (a), (b), (c), (e) and (f) set out in Rule of Court 42.14(3)."

 

 

First motion

In their written pleadings in the principal action the pursuers make reference to a document entitled "Final Account Submission : Version 2.1". The document is incorporated into their pleadings. It sets out some of the detail of the pursuers' claim against the defenders. It runs to 86 sheets.

The background to the first motion is that Denis Shields was involved in the preparation and revision of the "Final Account Submission : Version 2.1".

Mr Shields was present in court throughout the debate and the subsequent hearings. Both senior counsels made extensive reference to the document during the course of their submissions before me. On occasion, senior counsel for the pursuers consulted Mr Shields before responding to questions which had arisen during the course of the debate as to the contents of the document.

The terms of the version of Rule of Court 42.13(2), which was in force at the time of the debate and when I pronounced the two interlocutors dealing with expenses, were as follows:-

"Charges for witnesses

42.13 - (1) Charges for the attendance at a proof or jury trial of a witness -

(a) present but not called to give evidence, or

(b) who is held as concurring with another witness who has been called, may be allowed if a party has, at any time before the diet of taxation, enrolled a motion for the name of that witness to be noted in the minute of proceedings in the cause.

(2) Subject to paragraph (3), where it was necessary to employ a skilled person to make investigations in order to qualify him to give evidence in a prospective proof or jury trial, charges for such investigations and (if there is a proof or jury trial) for any attendance at it, shall be allowed in addition to the ordinary witness fees of such person at such rate which the Auditor shall determine is fair and reasonable.

(2A) ...

(3)               The Auditor may make no determination under paragraph (2) or (2A) unless the court has, on granting a motion made for the purpose, before or at the time at which it awarded expenses or on a motion enrolled at any time thereafter but before the diet of taxation -

(a)    certified that the witness was a skilled witness; and

(b)   recorded the name of that witness in the interlocutor pronounced by the court.

(4) ... "

By the date the motion was heard Rule of Court 42.13 had been amended into the following terms:-

"...

(2) Subject to paragraph (3), where it was necessary to employ a skilled person to make investigations in order to qualify him to give evidence in a prospective proof or jury trial, charges for such investigations and if there is a proof or jury trial, for any attendance that it shall be allowed in addition to the ordinary witness fees of such a person at such rate which the auditor shall determine as fair and reasonable.

... "

In moving the first motion counsel for the pursuers explained that the motion had been enrolled because of a concern on the part of the pursuers' law accountant. The concern was that in the absence of a certificate issued by the Court noting Mr Shields' name in terms of Rule of Court 42.13(2), it would not be possible for the pursuers to recover the reasonable expenses they had incurred (or at least 65 % of those expenses) in instructing Mr Shields.

Notwithstanding the law accountant's concern, counsel for the pursuers explained that in his submission the motion was incompetent. For that reason, notwithstanding the fact that the motion had been enrolled on behalf of the party for whom he appeared, counsel for the pursuers invited me to refuse the first motion as being incompetent. In doing so he relied on the case of Parratt v Ceiling Décor Ltd 1998 SC 179. Counsel for the pursuers also invited me to make clear that, if I was minded to accept his submission and refuse the first motion, I should indicate that I was doing so because I considered the motion was incompetent because no proof had been allowed in the principal action when the expenses of the debate relating to the principal action has been dealt with by the Court.

Counsel for the defenders also invited me to refuse the first motion on the grounds that it was incompetent. He stressed that the first motion should be dealt with in accordance with the terms of the Rule 42.13 as they were when the interlocutors dated 20 January 2005 and 24 February 2006 had been pronounced. That rule related to the charges for witnesses. In particular the rule dealt with a situation where it was necessary to employ a skilled person to make investigations in order to qualify him to give evidence. Prior and during the diet of debate and the two subsequent hearings, the Court had only been concerned with a document, which had been prepared and revised by Mr Shields for the purpose of assisting the framing of the written pleadings and in connection with which Mr Shields had also provided some assistance to the pursuers' counsel and solicitors in preparation for and during the course of the debate.

In presenting his submissions, counsel for the defenders also founded on the case of Parratt v Ceiling Décor Ltd, which he invited to follow. Counsel for the defenders stressed that in dealing with the first motion I should not go any further than to refuse the motion. He argued that at this stage it would not be appropriate for me to give any guidance to the Auditor as to how he should deal with the pursuers' claim to recover any charges they had incurred in instructing Mr Shields.

Second motion

Rule of Court 42.14(3) lays down certain specific criteria by which an application for an additional fee is to be judged. Paragraph [3] of the Rule provides inter alia:-

"In determining whether to allow an additional fee...the court... shall take into account any of the following factors:-

(a)    the complexity of the cause and the number, difficulty and novelty of the questions raised;

(b)   the skill, time and labour, and specialised knowledge required, of the solicitor ... ;

(c)    the number or importance of any documents prepared or perused;

(d)   ...

(e)    importance of the cause or the subject matter of it to the client;

(f)     the amount or value of money or property involved in the cause;

..."

In moving the second motion, counsel for the pursuer founded on the fact that the debate had been wide ranging. It had lasted for seven days, together with the two subsequent hearings. The issues dealt with during the debate had been complex. The submissions and discussions before the Court had not only concerned the application of the law, but had also involved an analysis of certain of the facts of the case, which the defenders had themselves argued were of relevance to the questions which the parties had agreed to place before the Court for answer. It was argued that the questions which were before the Court during the debate were such that they could only have been dealt with by solicitors and counsel with specialised skills in construction law and a detailed understanding of the earthworks operations which lay behind the litigation. Relevant to all of that had been the need to collate a vast volume of documentation, the need to identify the discrete issues for consideration by the Court, which were of relevance to the prosecution of the principal action, and the need to coordinate expert input into the preparations of the productions and the instruction of counsel for the debate. The fact that counsel and Mr Shields had each had important roles to play did not detract from the need for the active involvement of highly qualified and experienced solicitors. In addition it was argued that the principal action was an important one for the pursuers, who are in receivership. A successful outcome of the case would be a material importance to the pursuers' creditors, in particular the Royal Bank of Scotland plc, who were funding the litigation. The amount of money involved in the litigation was substantial, with the sums concluded for approaching £11 million, before any account was taken of interest.

On behalf of the defenders, the motion was opposed on the basis that the award of an additional fee was not merited at this stage of the action. Counsel for the defenders argued that if I was against him on that basic submission, then the matter should be remitted to the auditor in terms of Rule of Court 42.14(2)(b).

Under reference to the case of Zyskzkiewicz v University of Glasgow 1995 S.C.L.R. 1124, it was argued that the pursuers had not placed sufficiently detailed information before the Court to warrant the grant of additional fee. Reference was also made to Whittome v Whittome (Number 2) 1994 SLT 130 at page 133 D-H, for the purposes of illustrating the importance of drawing a distinction between the complexities in litigation that counsel required to be deal with (which it was conceded that present litigation had) and complexities that required to be dealt with by the solicitors (the existence of which the pursuers had not demonstrated).

Discussion

I have reached the conclusion that the first motion should be refused as incompetent. In that regard I follow the approach taken by Lord McLean in Parratt v Ceiling Décor Ltd. This motion relates to an award of expenses occasioned by a debate. Whatever role Mr Shields may have played during the preparations for and the conduct of the debate, he was not undertaking investigations in order to qualify himself to give evidence as a witness during that debate, nor, of course, was there any question of his giving evidence at the debate.

A proof has not been allowed in this case. In these circumstances, it is possible that at a later stage in the proceedings a question may arise as to whether Mr Shields should be certified as a skilled witness under reference to the provisions of Rule of Court 42.13(2). However, I am quite satisfied that stage had not arrived by the dates on which I determined that the pursuers were entitled to payment of 65% of their expenses occasioned by the debate.

As I have indicated, counsel for the defenders argued that it would not be appropriate for me to give any guidance to the Auditor as to how he should deal, during any taxation of the account of expenses following upon the interlocutors of 20 January 2005 and 24 February 2006, with any claim by the pursuers for reimbursement of charges they have paid to Mr Shields. I agree. Once the Auditor has reported to the Court on any taxation that the parties have deemed to be necessary, the parties can consider whether they accept the Auditor's decision on the recoverability of Mr Shields' charges. If either or both of the parties object to the Auditor's decision on that issue, they could bring the matter before the Court by means of a Note of Objection.

As far as the second motion is concerned, I am satisfied that it should be granted. I do so on the basis of all five of the heads relied on by the pursuers. In reaching that decision, I have, of course, taken account of the submissions I heard in respect of this motion. I have, however, also taken into account my experience of listening to the submissions during the debate and the supplementary hearings relating to the principal action and considering the numerous productions to which I was referred during that debate.

This is a very complex cause. A considerable number of difficult and indeed novel questions arise out of the pleadings. They led to the questions relating to the principal action that were focussed for the Court to answer during the debate. As I indicated in paragraph [6] of my Opinion of 23 July 2004, I understood that those questions were posed for discussion during the debate because the parties hoped that such answers might assist in negotiating a settlement of some or all of the financial disputes between them.

During the course of the debate there was fairly wide ranging discussion on the part of both senior counsel, not only as to the contents of a number of the productions, but on certain other factual issues, on which I received ex parte submissions. Frequently, when such factual issues arose, both senior counsel involved their solicitors and expert advisers (most of who sat in court throughout). That illustrated to me that the solicitors had been and remained actively involved in the preparation for and conduct of the debate. Their presence in Court was in no sense limited to maintaining a watching brief, whilst discrete questions of law were debated. Expenses

It was agreed by counsel that I should deal with the question of expenses without the need for a further hearing. The Court has been asked to deal with two separate motions. I intend to find the pursuers entitled to their expenses for the motion relating to the allowance of an additional fee and liable to the defenders for the latter's expenses in respect of the motion relating to certification of Mr Shields as a skilled witness in terms of Rule of Court 43.13(2).

Similarly, as far as the defenders are concerned, I will find them entitled to their expenses in relation to the motion seeking certification of Mr Shields, but liable to the pursuers for the latter's expenses in connection with the motion for an additional fee.