Scottish Court of Session Decisions

INFOPetitioners: R Dunlop; Balfour + Manson LLP

14 July 2009

[1] This judicial review seeks reduction of a decision of the Auditor of the Court of Session abating to nil entries in an account of expenses for the petitioners relating to work undertaken by the Clerk to the Tribunal. After sundry procedure before the Tribunal, awards of expenses were made in favour of the Law Society and the Tribunal on 25 September 2002 and 20 April 2005. An issue arose about the precise wording of the interlocutors but after debate before the Auditor it was agreed by all parties that the Auditor should tax the accounts on an agent and client indemnity basis. There was no difficulty with the accounts presented on behalf of the Law Society. However an issue arose in relation to the accounts prepared on behalf of the Tribunal. Those accounts included amounts in respect of work undertaken by the Clerk to the Tribunal. It was argued on behalf of the solicitor against whom the award of expenses had been made, that if the Tribunal's accounts were to be taxed on an agent and client indemnity basis, those accounts should be based on a pro rata calculation of the time spent by the Clerk on this case as against the full value of the annual payment which he received from the society for running the Tribunal.

[2] Provisions in relation to the expenses of the Tribunal are made in Part II of Schedule 4 to the Solicitors (Scotland) Act 1980. Paragraph 19 provides:

"Subject to the provisions of Part IV, the Tribunal may make in relation to any complaint against a solicitor such order as it thinks fit as to the payment by the complainer or by the respondent of the expenses incurred by the other party and by the Tribunal or a reasonable contribution towards those expenses."

Paragraph 22 provides:

"The expenses of the Tribunal so far as not otherwise defrayed shall be paid by the Society as part of the expenses of the Society."

[3] The scheme of the legislation therefore is that the expenses of the Tribunal may, in the first instance, be met by an award against the unsuccessful party in a complaint, and thereafter, insofar as they are not defrayed by such awards of expenses, they shall be paid by the Society as part of the expenses of the Society. In other words, so far as the expenses are not met from awards of expenses, they are to be met by the profession as a whole.

[4] As a matter of practical fact the arrangement between the Law Society and the Tribunal is set up in reverse. In other words, the Society pays an annual sum to the Clerk for the running expenses of the Tribunal, including her own salary. The Society also, in the first instance, pays outlays incurred by the Tribunal. However all monies recovered by the Tribunal by way of expenses are in turn paid to the Society. This, however, is a practical arrangement between the Law Society and the Tribunal and it does not alter the position in the legislation that the running costs are to be met by awards of expenses, with the Law Society taking up the slack.

[5] The Auditor was presented with a note of advice from a law accountant. That analysis suggested that the work of the Clerk to the Tribunal "rightly falls to be recovered as part of the expenses of the Society".

[6] In concluding that the Clerk's charges required to be abated from the accounts the Auditor stated:

"The Auditor does not agree with Mr Flett's interpretation for at least three reasons. Firstly, even on Mr Flett's analysis and for the reasons set out in paragraph 11 above, the charges in respect of (the Clerk) are not 'expenses of the Tribunal', whether otherwise defrayed or not. Secondly they have not and will not be paid by the Society. Thirdly, they are not, in this case claimed as part of the expenses of the Society."

[7] In presenting the petition for judicial review Mr Dunlop, for the Tribunal argued that the Auditor had erred for three reasons.

[8] First of all the Auditor's approach was difficult to reconcile with long standing authority to the effect that a solicitor who conducts his own cause is entitled to seek an award of expenses, despite the fact he has not actually incurred costs, in the sense of paying someone else to do the work. This line of authority was vouched by Cuthbertson v Elliott (1860) 22 Dunlop 389 and Macbeth Currie v Matthew 1985 S.L.T. (Sh. Ct.) 44.

[9] In the second place it was submitted that the Auditor's approach cuts across the usual rule that, in assessing expenses, one ignores the actual source of funding in litigation as res inter alios acta. In many cases the party found entitled to an award of expenses will not actually have incurred any personal liability to pay. Examples are numerous: for example, a speculative personal injury claim, nd insured defender in a professional negligence claim, an insured pursuer, or many others. The same issue arose in respect of in-house solicitors for local authorities, the National Health Service and so on. In each of these examples, the party found entitled to expenses will include charges in the account which, on the Auditor's analysis, "do not represent costs which have been or will be incurred by" him. Yet there is no question that such costs are recoverable.

[10] Finally it was submitted that the Auditor's decision runs contrary to an unbroken line of authority, north and south of the border, which extends back almost 160 years. Following that line of authority, it is no answer to say that the Clerk is salaried; nor is it relevant to ask who pays the salary. The costs of the Tribunal include the costs of the Clerk and it makes no sense to say that the Tribunal can only recover expenses if it engages an independent solicitor as Clerk, and not when it engages a full time salaried Clerk. Reference was made to Attorney General v Shillibeer (1849) 154E E.R. 1356; Lord Advocate v Stewart (1899) 7 S.L.T. 141; Regina v Burt ex parte Presburg [1960] 1 Q.B. 625; Re Eastwood, Deceased [1975] Ch. 112 and FACT v Northwest Aerials [2006] 2 Costs L.R. 361. I was advised that this issue arises from a change of practice by the Auditor, and that previously the costs at issue in this application had been included in accounts of expenses without demur.

Discussion

[11] I think it is very unfortunate that the opinion presented to the Auditor was that of a law accountant and not of solicitor or counsel. One of the results of that was that the line of authority presented to me was at no stage laid before the Auditor. MMoreover the analysis of the law accountant was in my view wrong. The expense of the Clerk may ultimately be met in full by the Society. The Society may, as indeed it does, fund the Tribunal annually and in advance. That however is nothing to the point. These are practical and sensible arrangements made to ease the running of the disciplinary system and the working of the Tribunal. However, the responsibility of the Society under the statute for the running costs of the Tribunal, including the salary of the Clerk, is limited to the extent that those costs are not met by awards of expenses. I agree with Mr Dunlop that the arrangements between the Tribunal and the Society are res inter alios acta. I also agree with his submission that the Auditor's decision runs contrary to authority. , In the case of Attorney General v Shillibeer there was an excise information in which the Crown was represented by a salaried employee, the Crown solicitor. The Crown succeeded and was awarded costs. It was argued that because the Crown employed the solicitor at an annual salary, they had not incurred any expenditure in matters relating to the action. The Court however said:

"It is perfectly clear that the Crown incurred expenses about the suit, and that, unless the Crown is compensated by payment of the ordinary costs, there would be no mode of compensation; because it is impossible to say what proportion the expense of conducting this particular suit would bear to the entire salary for the year, until the end of the year, when all the suits are known, or when the expenses of each can be calculated."

[12] The ratio of that case was accepted and applied in Lord Advocate v Stewart where a similar question arose. In the case of Re Eastwood, Deceased the Court of Appeal held that the appropriate method of taxation of a bill of costs where a party was represented by a salaried solicitor was to treat it as though it were the bill of an independent solicitor, assessing the reasonable and fair amount of a discretionary item. The ratio of these cases would appear to me to apply equally to the situation of the Clerk to the Tribunal. The Clerk to the Scottish Solicitor's Discipline Tribunal is an integral part of the Tribunal. Provision is made for the appointment of a Clerk in Part I of Schedule 4 to the Solicitors (Scotland) Act 1980. The initial complaint against a solicitor, in terms of the disciplinary rules, requires to be made to the Clerk whose functions in the ensuing complaint are clearly set out in the discipline rules. I am satisfied that the Auditor erred in law in disallowing the expenses of the Clerk. Accordingly I will grant the petitioners' motion and reduce the decision of 9 March 2009 insofar as it abated to nil all entries in the petitioner's accounts of expenses relating to work undertaken by the Clerk of the Tribunal. I will make an order remitting the taxation of the said accounts of expenses to the Auditor to determine the reasonableness or otherwise or those accounts, including the charges therein relating to work undertaken by the Clerk to the Tribunal.