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OUTER HOUSE, COURT OF SESSION
[2007] CSOH 40
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OPINION OF LADY
SMITH
in the cause
JAMES
RENNIE
Pursuer:
against
THE SOCIETY OF
VINCENT DE PAUL
Defender:
ннннннннннннннннн________________
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Pursuer: Haldane; Digby Brown, SSC
Defenders: Weatherston, Solicitor Advocate; Brechin,
Tindal Oatts
23 February 2007
Introduction
[1] The
pursuer was employed by the defenders as a labourer/driver and, according to
the written pleadings in his action, injured his back twice at work in 2002,
once in June and once in December that year. Both injuries were said to have
been sustained when lifting heavy furniture. He sought damages in respect of solatium, past
and future loss of earnings and services.
Background
[2] By
letter dated 1 December 2003,
the defenders' insurers admitted liability to make reparation to the pursuer. The defenders did not, however, admit
liability on Record nor did they do so at the pre-trial meeting on 2 October 2005. Their position at that stage was, according to
the explanation given by Mr Weatherston, that whilst they did, in
principle accept that they would be liable to make payment to the pursuer,
given their breach of the Manual Handling Operations Regulations 1992, they may
have wanted to put the pursuer to proof because of concerns about his
credibility which had arisen as a result of what was contained in a medical
report that they had obtained. The
defenders did not, at the pre- trial meeting or, it seems, at any other stage,
advise the pursuers of their valuation of the claim.
[3] The
medical report to which Mr Weatherston referred was a report by Mr Iain
Mackay, Consultant Orthopaedic Surgeon, dated 28 September 2005. It followed on his having examined the
pursuer. He had recorded that the
pursuer's account of some part-time work that he had been doing was vague, that
he had had chronic problems with alcoholism (although he had not drunk any
alcohol for ten years until three days prior to the examination) and that there
was only one accident at work, in June 2002.
Mr Mackay noted that the latter was insisted on by the pursuer
despite the fact that his medical records showed that he had visited hospital
on account of an acutely painful back caused by lifting a sofa on 21 December
2002, apparently the second work related injury that year.
[4] A
pursuer's medical report had been obtained from Mr Sadhan Kumar Mukherjee,
Consultant Orthopaedic Surgeon, dated 8 April
2004. He had recorded the
pursuer having reported two accidents at work, one in June and one in December,
both 2002. There are some disparities
between the two doctors regarding their view as to the level of severity of the
pursuer's injuries. Mr Mukherjee
evidently regarded them in a more serious light than did Mr Mackay. He considered that the pursuer had a
moderately severe back problem in the form of mechanical back pain together
with disc protrusion and there was a possibility of MRI scan showing that his
condition might be amenable to surgery. Mr Mackay
on the other hand, attributed some of the pursuer's symptomatology to an
unrelated knee problem and psychological difficulties and found it difficult to
accept that his back problems were preventing him getting back to more physical
activities.
[5] Following
the pre-trial meeting, the pursuer's solicitor, Mr Dalyell, who is very
experienced in personal injury work and also a solicitor advocate, decided
senior counsel ought to be instructed. The
reasons for him doing so were that the case, by that stage, appeared to have
developed a number of complexities. Given the stance adopted by the defenders (as
outlined above), given the conflicts in the views of the medical experts, given
the conflicts in the medical reports arising from the pursuer having indicated
to Mr Mackay that there had only been one accident and given the inherent
difficulties in dealing with the pursuer who was of low intelligence and had a
background of alcoholism, the skills and experience of senior counsel were, he
considered, required. At the time that
senior counsel was instructed, no offer of settlement had been made and what
the pursuer's solicitor knew of the defenders' position was that they did not,
despite the insurer's letter, admit liability and that that had something to do
with their wanting to test the pursuer's credibility at proof. Further, the claim had a significant value. It had been originally valued at г130,000 and
though revalued at 8 November 2005,
the pursuer's valuation was still significant, at г62,000. There had been no agreement regarding the
value of any head of damage at the pre-trial meeting or thereafter.
[6] A
pre proof consultation took place on 7
November 2005. By letter
dated 8 November 2005,
the pursuer's solicitor advised the defenders' solicitor that they were
instructing both senior and junior counsel for the proof, which was due to
begin on 15 November 2005.
[7] By
tender lodged on 10 November, the defender offered г5,000.
[8] On
the first day of the proof, the defenders increased their offer of settlement
and the case eventually settled at the sum of г16,500 net of benefits, together
with expenses as taxed, which represented a gross settlement figure of г24,500
plus expenses as taxed.
The Pursuer's Account
[9] The
outlays in the pursuer's account that was lodged for taxation (No. 22 of
Process) included a total of г5750 plus VAT in respect of senior counsel's
fees. They were disallowed by the
auditor.
The Auditor's Report
[10] There was a full debate at the taxation before the Auditor. The defenders challenged the inclusion in the
account of senior counsel's fees on the basis that it was not reasonable to
have instructed him. They did not
challenge the amount of those fees. Nor
did they put forward any alternative position such as that if it was reasonable
to have instructed senior counsel, it was not reasonable to have continued to instruct
junior counsel as well. The challenge
was confined to issue of whether or not it was reasonable to have instructed
senior counsel.
[11] The Auditor was persuaded to tax off senior counsel's fees in
their entirety and after having taxed off those fees and one or two other
items, he issued a report which was lodged on 28 August 2006 bringing out the sum of г17,714.58 as
recoverable expenses.
The Note of Objections
[12] The pursuer lodged a note of objections to the Auditor's report
on 8 September 2006. The objection related only to senior counsel's
fees having been taxed off.
The Auditor's Minute
[13] By interlocutor dated 12
September 2006, the Auditor was ordained to state the reasons for
his decision in relation to the matter to which objection was taken. He did so in a Minute which was lodged on 17 October 2006.
[14] The Auditor states the following at the beginning of his
Minute:
"The only matter
in dispute is Senior Counsel's charges for the pre-proof consultation and proof
which are set out in pages 5 and 6 of the judicial account No.22 of Process. They total г6756.25. This represents approximately 45% of the
outlays and 27% of the account as lodged."
and at the end of the Minute, he
adds as his final reason for disallowing the fees:
"...the
instruction of Senior Counsel has resulted in a substantial expense and it is
reasonable that that should be borne by the pursuer and not the paying party."
[15] On p.3-4 of the Minute, he records the arguments that were advanced
before him for each party. At page 4 he
records as being a concession that Mr Gibson, who represented the pursuer
at the taxation, accepted that Mr Dalyell was a highly experienced
solicitor specializing in personal injury actions. Whilst he states, at p.6, that he regards two
matters relied on by Mr Gibson as irrelevant, namely that the pursuer's
agents had put the defenders' agents on notice that they were instructing
senior counsel and that it was in the best interests of the pursuer that senior
counsel was instructed, he does not indicate what weight, if any, he gave to
the other matters relied on. They were
that the pursuer had had two accidents, that he had sustained a moderately
severe back injury, that liability was in issue, that there was no agreement on
any of the heads of damage, that the claim was valued in the sums to which I
have referred, that the defenders had refused to give the pursuer's their
valuation of the claim at the pre trial meeting and that there were problems
with causation, liability and quantum.
[16] As regards the arguments advanced on behalf of the defenders,
they were to the effect that this was a small personal injury case, settled at
a figure that was much less than the pursuer's valuations and that the pursuer
was a difficult man who had been unco-operative and was likely to have made a
poor witness.
[17] From p.4-5, the Auditor makes reference to certain authorities:
City of Aberdeen Council v W.A Fairhurst and Others 2000 SCLR, Ahmed's Trustee v Ahmed (No 1) 1993 SLT 390 and
Kathryn Jane Jarvie v Greater Glasgow Primary Care NHS Trust (2006) CSOH 41.
[18] His decision is explained in the last paragraph of p.6 of the
Minute:
"In all the
circumstances the Auditor was not satisfied that the recovery of Senior
Counsel's fees for the consultation and proof were reasonable in the context of
the conduct of the case in a proper manner. In the Auditor's experience there was nothing
stated at taxation, or now contained in the Note of Objections, that lifted
this case from the straight forward personal injury actions of which the
Auditor has considerable experience. The
pursuer was advised by a very experienced solicitor and Junior Counsel and it
was reasonable that they conduct the pre-proof consultation and represent the
pursuer at the proof. Finally, the
instruction of Senior Counsel has resulted in a substantial expense and it is
reasonable that that should be borne by the pursuer and not the paying party."
Submissions for the Pursuer
[19] For the pursuer, Miss Haldane submitted that the Auditor
had misdirected himself. He had taken
account of an irrelevant factor in respect that he had been influenced by the
amount of senior counsel's fees and the relative percentage that they bore to
the account as a whole. Further, whilst
he narrated what was relied on by the pursuer in support of the fees being
included in the account, he had failed to indicate what weight, if any he gave
to those factors. He had not applied the
test, which was as set out in Rule of Court 42.10.
[20] This was, she submitted, a case in which an able and
experienced solicitor-advocate had judged that senior counsel was required. He had taken the view that since everything
was being disputed and there were complexities, as relied on before the
Auditor, it was appropriate to instruct him. She added as a separate factor that the
pursuer's history of alcoholism and low intelligence, together with the account
he had given to Mr Mackay of only having had one accident added to the
difficulties inherent in the case. It
was going to be necessary to handle him expertly when he was giving evidence. She referred, in support of her submissions to
the Aberdeen City Council case and to
the case of Cooper v Wood (1863) 2M 346. She sought to draw a
parallel between the present case and the former in respect that in both, the
defenders had been put on notice of the particular instruction challenged. In the City
of Aberdeen case, in finding in favour of the pursuers, Lord Penrose had
referred to the defenders as being intransigent and commented that the remedy
for any disadvantage which had accrued through senior counsel accepting the
particular instructions had lain in the hands of the defenders themselves, who
could have avoided the cost complained of if they had not settled so late in
the day.
[21] Miss Haldane's motion was that I should uphold the
objection and direct the Auditor to allow the fees of senior counsel to be
included in the pursuer's account.
Submissions for the Defenders
[22] For the defenders, Mr Weatherston began by submitting that
even if I were to grant the pursuer's motion, the account should be remitted
back to the Auditor since he had not given consideration to alternative
positions namely whether the level of senior counsel's fees was excessive and
whether, if senior counsel fees were to be allowed, those of junior counsel
should be allowed as well. The whole
level of outlays would, he submitted require to be taken into account again.
[23] In opposing the motion, he submitted that the Auditor's
approach had been influenced by the question of what it was reasonable to allow
in a party/party account as opposed to an agent/client account, and that had
been appropriate. It was not for the
Auditor to determine whether it was reasonable per se to instruct senior counsel but whether the expense of doing
so was reasonably recoverable. A
balancing exercise had to be carried out. Insofar as the pursuer sought to support the
inclusion of senior counsel's fees under reference to the pursuer himself being
a difficult client, the defenders should not be responsible for that expense.
[24] Regarding the position of the defenders' at the pre-trial
meeting, Mr Weatherston, who had attended the meeting on their behalf,
said that by then Mr Mackay's report was available and because of it, the
defenders could not concede liability. He
went on to say that they needed to hear the evidence of the pursuer. He also said, however, that the defenders'
position was that, in principle, they accepted that they had a liability to
make a payment to the pursuer but that they may have wished to put him to his
proof. The tender was lodged because
they were approaching the date of the proof.
[25] Mr Weatherston submitted that it was possible to infer
from the Auditor's Minute what it was that had influenced him. The most important factors were, he said, Mr Gibson's
concessions. The Auditor was aware of
the relevant tests. He had not reached
his decision solely by reference to the level of senior counsel's fees. In any event, that fee level was relevant
because the Auditor was being asked to fix the amount to be recovered from the
defenders and it increased the level of their liability. The fees required to be looked at in the
context of the whole claim.
[26] Mr Weatherston referred to the case of Wood v Miller 1960 SC 86 for a passage in the Lord Justice Clerk's opinion
to the effect that it was not the function of a judge, when reviewing the
exercise by the Auditor of his discretion, to substitute his own view of the
material under consideration.
Discussion
[27] The starting point is to consider the terms of Rule of Court 42.10
which applies where an account of expenses is, as here, presented to the
Auditor for taxation in accordance with an order of the court. It provides:
"(1) Only such expenses as are reasonable for
conducting the cause in a proper manner shall be allowed."
[28] The rule applies to whole of the account and covers,
accordingly, outlays incurred as well as fees allowable to the solicitor. The present case concerns, of course, an
outlay included in the account, namely the fees payable to senior counsel. Given the terms of the rule, before the
Auditor can disallow an outlay, he must be satisfied that it was not reasonable
that liability for it be incurred. As
was commented by Lord Penrose in the City
of Aberdeen Council case, the test is an objective one. The Auditor has to ask himself what a
reasonable solicitor would do so as to conduct the cause in a proper manner. Would such a solicitor, for that purpose, have
incurred liability for that outlay? That,
in turn, must require recognition of the possibility of there being a range of
reasonable decisions open to a competent solicitor on the question of whether
or not to incur liability for the particular outlay. It will then only be if the decision taken
lies outwith that range, at the time that it is taken, that the Auditor will be
able to determine that the outlay was not reasonably incurred and should not be
included in the account. The wording of
the rule does not, in particular, mean that it is a question of asking whether
the case could have been properly conducted without the incurring of the
challenged expense. That is not the
test. Whilst previous formulations of the rule required the application of a
test of necessity, which would have made such a question relevant, that is not
the import of the rule in its present form, as discussed by Lord Penrose in the City of Aberdeen Council case.
[29] Further, the time at which the reasonableness of the decision
to incur the expense is to be tested must be at the time the decision is taken.
At that point, the final amount of the
liability in question may not be known, nor will its extent proportionate to
the whole expenses incurred. And there
is nothing in the rule to suggest that the Auditor requires to consider the
reasonableness of recoverability in the sense of carrying out a balancing
exercise as between parties or as between the amount of the outlay and the
amount of the overall account, as was suggested by Mr Weatherston. Certainly, it is plain that the Auditor will,
in many cases of a remit by the court, be taxing the account in the context of
a contest between parties to a contested litigation and that fact is relevant
in the sense that a competent solicitor
incurring a liability in such a litigation will if acting properly, be aware of
and take account of the fact that by doing so he will be increasing to some
extent the account of expenses which, if his client is successful, will be
presented to his opponent in the end of the day. That is not, however, to say that the Auditor
should try to carry out some balancing exercise at taxation, once the precise
figures are known.
[30] As regards the circumstances in which the court can interfere
with the Auditor's decision, as was commented in the case of Wood v Miller, the court must be careful not to substitute its own view. It should be slow to interfere and can only do
so where it is satisfied that the Auditor had taken irrelevant material into
account, left relevant material out of account, misunderstood the material
before him, misdirected himself on that material or on the law or had reached a
perverse decision in the sense that he reached a decision that no reasonable
auditor would, in all the relevant circumstances, have reached.
[31] I am satisfied that in this case the Auditor has erred in several
respects. Firstly, he has taken
irrelevant material into account in respect that it is, in my view, plain that
he has been influenced by the amount of senior counsel's final fees and the
proportion which they bore to the whole outlays and the whole account. I do not suggest, as I have already indicated,
that the fact that the instruction of senior counsel will give rise to some
additional expense should be left out of account when considering whether or
not it was a liability that it was reasonable for the solicitor to decide to
incur but its actual extent will not be known at that stage (if, for instance,
the case had settled after the pre-proof consultation, the cost of senior
counsel would have been much less) nor will its extent as a proportion of the
whole outlays or the whole account. Whilst it may be possible, in retrospect, to
say, as here, that the instruction of senior counsel resulted in substantial
expense, that is not something that was known at the time of his instruction. Indeed, the fact that Mr Dalyell wrote
putting the defenders on notice of senior counsel's instruction is indicative
of his approach being that he was hoping
that the fact of his having instructed senior counsel would precipitate
settlement at such a stage that the expenses of proof would have been avoided.
[32] The last matter takes me to the second respect in which the
Auditor erred. The fact of Mr Dalyell's
letter was not wholly irrelevant, contrary to what the Auditor says. It was relevant for the reason I have stated
above.
[33] Thirdly, it seems to me that the Auditor was quite wrong to
regard the fact that Mr Dalyell was a highly experienced solicitor who
specialised in personal injury actions as a matter which counted against the
pursuer. On the contrary, it was
relevant and supportive of the pursuer's position at taxation that a solicitor
of such knowledge and experience had considered it appropriate to instruct
senior counsel.
[34] Fourthly, given the Auditor's comment that there was "nothing
that lifted this case from the straight forward personal injury actions" of
which he had considerable experience, he has failed to have regard to the
particular difficulties, complexities and responsibilities that arose from
there having been two accidents, from the defenders' refusal to admit
liability, from the potential value of the claim and from the difficulties with
the pursuer. Assuming that the
defenders' position was as explained by Mr Weatherston in the course of
this hearing, any competent solicitor would have been left puzzled as to what
exactly their approach was going to be. It
was not a straightforward approach on their part and clearly gave rise to
questions as to what exactly was going to be their line of attack at
proof. There is no indication in the
Auditor's Minute of him having properly considered a central matter raised in
the note of objections, namely the difficulty that the pursuer's solicitor felt
he was in as a result of the defenders' attitude to liability and of the
relevant medical opinions being divided or of his having had regard to the
defenders' own indication that the pursuer was a difficult man to handle. It seems to me plain that the pursuer's
solicitor was entitled to take the view, following the pre-trial meeting, that
real difficulties had arisen in the case. Further, I
do not accept, as Mr Weatherston submitted, that such problems as there
were in handling the pursuer and, importantly, as there were likely to be in
handling him as a witness, should be regarded as the pursuer's problem and not
something for which the defenders should have to pay. The fact was that the credibility and
reliability of a man of low intelligence with a history of alcoholism was going
to be under attack at the proof, if the case did not settle. The need for skilled advocacy in such
circumstances is self evident.
[35] Fifthly, the Auditor's final comment that the cost of senior
counsel is a "substantial expense" and that it is reasonable that the pursuer
bear that expense, is irrelevant. It
indicates a view of matters as at the point of the account being taxed not at
the time of the decision to instruct senior counsel. It seems to indicate that had the expense not
been "substantial" then it might not have been reasonable to expect the pursuer
to bear it. It perhaps indicates,
further, that if the damages recovered by the pursuer had been significantly
less, it might also not have been reasonable to expect the pursuer to bear the
cost. But these matters are immaterial
to the question of whether the outlay was reasonably decided on for the proper
conduct of the case.
[36] It is, in these circumstances, my opinion that the Auditor took
account of irrelevant material, failed to have regard to relevant material, and
misdirected himself in respect of some of the material that was before him. There being no issue raised regarding the
amount of senior counsel's fees at taxation (nor any regarding the instruction
of both senior and junior counsel in the event that senior counsel's fees were
allowed) it would not be appropriate to accede to Mr Weatherston's motion
that there be a remit so as to, in effect, enable the defenders to begin again
and mount those challenges now. Quite
apart from anything else, I was told that the taxed account, which includes the
fees of junior counsel, has been paid. I
shall, accordingly, pronounce an interlocutor ordaining the Auditor to amend
his report to give effect to my decision by reinstating senior counsel's fees
which are the items deleted by him from pages 5 and 6 of the account and by
making any consequential revisals to the final sum brought out as due.
[37] Miss Haldane also moved that, in the event of the pursuer's
motion being successful, the defenders should be found liable in the expenses
of the Note of Objections and the procedure following thereon. Mr Weatherston did not seek to resist
that motion. I shall also, accordingly,
find the defenders liable to the pursuer in the expenses of the Note of
Objections and the procedure following thereon including, for the avoidance of
doubt, this hearing.
