Scottish Court of Session Decisions

Pursuer; Di Rollo QC; Lefevre litigation

Defenders: Sheldon, advocate; Ledingham Chalmers

10 November 2009

[1] This is a hearing in terms of Rule of Court 42.4(4) in respect of a Note of Objection for the pursuer to a Report by the Auditor of Court in relation to an account of expenses lodged by the solicitors for the pursuer in this action ("the judicial account"). The complaint by the pursuer relates to the Auditor's disallowance of certain charges for precognitions, a fee for a medical report and pre-litigation work all as is more particularly detailed in paragraph 6 of the pursuer's Note of Objection, number 19 of process ("the disputed charges"). In his Report, number 18 of process, the Auditor disallowed the disputed charges on the basis that the Table of Fees Chapter III Part VA (Rule of Court 42.16), under which these charges were purportedly claimed, relates to work carried out by a solicitor and thus could not be recovered in the present case as the work had been carried out not by solicitors but by a firm called Quantum Claims. This work was also carried out prior to the pursuer's solicitors being instructed.

[2] The pursuer consulted Quantum Claims, Inverness in connection with a claim for damages arising out of an accident sustained on 3 September 2004. Quantum Claims carried out investigations, prepared what are now called precognitions and instructed an expert medical report. Quantum Claims then entered negotiations with the defenders' insurers with a view to settling the claim extra-judicially. No settlement being achieved, solicitors were instructed and proceedings raised on behalf of the pursuer in June 2007. In April 2008 settlement terms were agreed and the proceedings were settled extra-judicially. As part of the settlement between the parties, it was agreed that the defenders would be responsible to the pursuer for the judicial expenses as the same may be taxed by the Auditor of Court.

[3] The judicial account was prepared by law accountants on behalf of the pursuer's solicitors and a diet of taxation took place before the Auditor on 26 February 2009. Points of objection were lodged on behalf of the defenders which, in essence, disputed liability for the cost of the work carried out by Quantum Claims prior to the instruction of the pursuer's solicitors.

[4] After hearing submissions the Auditor abated the disputed charges.

Following the lodging of the Note of Objection, at paragraph 3 of his Report the Auditor stated:-

"3. The account of expenses, including the entries to which objection has been taken, has been charged in terms of Table of Fees Chapter III Part VA. Rule of Court 42.16(1) states:-

'The Table of Fees shall regulate the fees of a solicitor charged in an account in any cause between party and party.'

The Auditor is therefore of the opinion that charges for work which has not been carried out by a solicitor cannot be claimed or recovered on the basis of Part VA of Chapter III of the Table of Fees. Accordingly, the charges claimed in the entries to which objection has been taken have all been abated in full."

[5] The pursuer submits that the Auditor has misdirected himself. On behalf of the pursuer, Mr Di Rollo Q.C. set out in brief the background to the preparation of an account of expenses. He referred me to Chapter 42 of the Rules of Court which regulates fees of solicitors and their taxation. In particular he referred me to Rule of Court 42.16 which details the Table of Fees. He submitted that in an action of this kind, namely, a defended personal injuries action, the solicitor could elect to submit a detailed account charged under Chapter 1 of the Table of Fees or, alternatively, he could elect to charge an inclusive fee (also known as a block fee) as detailed under Chapter III Part VA of the Table. In the present case the solicitors had elected, as in the vast majority of judicial accounts, to charge under the latter system which I shall refer to as the "block fee system". The fact that the solicitor has not himself carried out that work, or even if not instructed by him, does not mean that he cannot charge for it. Rule of Court 42.16 allows for the recovery of the work done by a clerk. In counsel's submission, at the time of instructing preparation of the summons, the pursuer's agents had in effect "adopted responsibility for the content of precognitions and the medical evidence" provided to them by Quantum Claims. In these circumstances the solicitors are entitled to recover the cost of the pre-litigation work in terms of the block fees. Mr Di Rollo submitted that solicitors often contract out work to precognition agents and they would be entitled to include that charge in their account. Mr Di Rollo invited me to take a "purposive approach" to the Table of Fees and to have regard to it in a practical way. In this, as in other cases, work carried out before the raising of an action is work carried out on behalf of the client and therefore the solicitor should be entitled to charge for it. He submitted that the solicitor would have to account to the client for the sums recovered and a judicial account is simply a method by which the client recovers the expense he has been put in pursuing the litigation. What happens thereafter is a matter between the solicitor and the client. The solicitor however is entitled to recover payment for that work. In addition he should be entitled to recover a sum even if it was carried out by someone else and before he was instructed.

[6] Mr Di Rollo submitted that charges such as those disputed in the present case were made and allowed on a regular basis. They had never been successfully challenged before. There was no ruling in the Court of Session dealing with this particular issue. He referred me to two decisions of different Auditors, the first being a Note in the case of Marron v Teague Homes (Scotland) Limited, dated 22 June 2001. In that case, pre-litigation work carried out by Quantum Claims Limited was included in the solicitor's account of expenses. These charges were challenged and the matter came for taxation. I note that the Joint Auditor stated the following (at paragraph 2), "As I had not previously come across the point raised in paragraph 3, I said that I would write this Report on it. I have looked through the index of reported cases in Scotland on expenses for the last twenty years and I have read the relevant passages of the Scottish textbooks available to me but I have not come across any decision on this point. In the absence of authority for taxing these items off, I have fallen back on 'precedent and practice' and I have not sustained the defenders' challenge to the work carried out by Quantum Claims Limited just because it was they who did it. A number of items involving them have been taxed off but that was on other and traditional grounds." Mr Di Rollo also referred me to the case of Kevin Michael Easton v Consafe (Burntisland) Limited (November 2002) where the then Auditor took the same view as in the earlier case in that he would "fall back on precedent and practice" by not sustaining the defenders' challenge to work carried out by Quantum Claims. Mr Di Rollo emphasised therefore that the charges sought in the present account of expenses were the sort of charges regularly appearing in such accounts and the Auditor was wrong to take the view that he did.

[7] Counsel submitted that the point raised in the present hearing was one which has not previously been decided and was an important one for future practice. If the disputed charges are disallowed then such pre-litigation work will simply not be done, or it will have to be done again, or there would be no appropriate recompense for the work already carried out in preparation for litigation.

[8] Counsel submitted that the Auditor, on a narrow interpretation, had taken the view that as such work was not carried out by a solicitor and as there was no provision under Part VA for work to be carried out by a clerk, the charges were not allowable. He submitted that this approach was incorrect because as solicitors had elected to charge under the block fee system, it mattered not who carried out the work. It had been the practice for many years to include such charges and it was appropriate to do so. Work regularly carried out by clerks or others was chargeable despite not being carried out by qualified solicitors. The Auditor was wrong and I was invited to uphold the Note of Objection. Thereafter in terms of Rule of Court 42.4 I was invited to ordain the Auditor to amend his Report and to give effect to the decision of this Court. Expenses of the hearing before me were also sought.

[9] In response, Mr Sheldon, counsel for the defenders, invited me to repel the Note of Objection and to find the pursuers liable in expenses of the hearing. He submitted that the overarching principle of taxation is that it is a method by which the court controls the expense of litigation. Chapter 42 of the Rules provides the vehicle by which the Court can do that. The Rules therefore provide the framework for the preparation of accounts. If not allowed by the Rules it is appropriate for the Auditor to disallow the charges.

[10] Mr Sheldon referred me to Rule 42.16(1) He submitted that the whole tenor of Chapter 42 prescribes that fees of solicitors only may be properly charged for. I was referred to Rule 42.10 (1)

"Only such expenses as are reasonable for conducting the cause in a proper manner shall be allowed."

This allows the Auditor a discretion but that discretion is limited by the Rules. Mr Sheldon referred to Rule 42.10(2), 42.12, 42.14(2)(b)(d) and 42.16(1). All these rules clearly refer to work carried out by solicitors. Part VA permits the solicitors in the present case to charge in terms of a block fee whilst Chapter 1 of the Table of Fees permits a solicitor to charge on an itemised basis. It can be seen under paragraph 5 of Chapter 1 that the time of a clerk is chargeable at a reduced rate from that of the solicitor. There is therefore express provision for non-solicitors. In the present case the solicitors chose not to adopt this method of charging but to seek an inclusive fee pursuant to Part VA. Mr Sheldon submitted that Part VA covers only work done by solicitors including the taking of precognitions and, separately, a pre-litigation fee. The Rules do not permit charges to be made for work done by others.

[11] Mr Sheldon submitted that, as he understood the position, Quantum Claims would charge the pursuer for work and also obtain a percentage of any sums recovered. If the solicitor thereafter takes over conduct of the case and charges for work done by Quantum Claims there is therefore double charging. (In response Mr Di Rollo disputed this assertion by Mr Sheldon and indicated that how Quantum Claims is remunerated was irrelevant to the issue that I had to decide. He did not seem prepared however to elaborate as to how Quantum Claims pursued its remuneration in such matters.)

[12] Mr Sheldon submitted that what is being sought in the account of expenses is remuneration to the solicitor for work that the solicitor has not done. He referred me to a Minute by the Auditor of the Court of Session in the case of Miller v Activate Scotland Limited where the Auditor, the predecessor to the present Auditor, had disallowed certain work carried out by Quantum Claims prior to the solicitors being instructed. A Note of Objection was lodged in that case but the matter did not proceed further. A copy of the Minute by the Auditor was provided to me for information.

[13] Mr Sheldon's principal submission was that the Auditor of Court in the present case was correct in taking the view that only work carried out by a solicitor should be chargeable under Part VA but if the Court took the view that the Auditor was stating the principle too widely, the Court would still be entitled to have regard to the circumstances in which the Auditor made his decision in the present case. In particular, having regard to the fact that the precognition work and pre-litigation work was undertaken by Quantum Claims prior to the instruction of the solicitors these items should not be chargeable in solicitor's account of expenses. This was work not carried out by the solicitor and the solicitor took no part in the instruction of it.

[14] In reply Mr Di Rollo submitted that if I took the view that the solicitors were not entitled to charge for the Quantum Claims' work, I should remit the case to the Auditor with a view to him considering whether a fee was appropriate, at the very least, for perusing documents provided by Quantum Claims. Mr Sheldon responded by directing me to a substantial fee charged in this case on page two of the Account, namely, the sum of £611.75 for "Fee on Instruction." Clearly that should cover the review of any papers provided by Quantum Claims and I should refrain from remitting the case back to the Auditor.

Decision

[15] In my opinion the Auditor has not misdirected himself. As a general principle, where an unsuccessful party is made responsible for the payment of the successful party's expenses, it is the expense incurred by that successful party to his or her solicitor in pursuing the action on his or her behalf. Inter alia, Chapter 42 sets out the parameters as to what the solicitor may charge. In effect the pursuer asks me to interpret the relevant provisions of Chapter 42 so as to allow work, not done by the solicitor, but to include work done at a point prior to the instruction of the solicitor and, obviously, not undertaken at the behest of the solicitor. That seems to me patently wrong.

[16] The Table of Fees contained within Rule of Court 42.16 regulates the fees of solicitors. They do not regulate the fees of any other organisation. It is clear that if solicitors choose to charge an account under Chapter 1 of the Table they are entitled to charge for the time of a clerk, presumably, however, acting under the instructions of, or employed by the solicitor to undertake such work. That work is chargeable at a lower rate than that chargeable by the solicitor. There is a difference between how the solicitor elects to pursue a case (and the resources he deploys) and a lay organisation passing over information to the solicitor. In Part VA there is no provision for the work being carried out by anyone other than the solicitors. That being the case I do not see how work carried out by a completely separate organisation, namely Quantum Claims, particularly if undertaken prior to any involvement of the solicitors, can properly be recovered in the account of expenses. I do not understand how solicitors can "adopt" that pre-litigation work and therefore charge as if they had undertaken it. They may be able to charge for perusing papers handed over to them but that is a different matter. That is not what they are seeking in the account of expenses. In the present case all of the items referred to in paragraph 6 of the pursuer's Note of Objection were undertaken by Quantum Claims prior to the involvement of the solicitors. In these circumstances, the work, having been undertaken by someone other than the pursuer's solicitors and having been undertaken prior to the solicitors becoming involved, is not recoverable in the account of expenses. In my view therefore the Auditor was correct to disallow the disputed charges.

[17] I am not disposed to remit the case back to the Auditor. The Account appears to take account of a significant fee on receipt of instructions and in any event had the solicitors wished to present this "fall-back" position they could have done so at Taxation.

[18] Accordingly I repel the pursuer's objections to the Auditor's Report and find the pursuer liable to the defenders for the expenses of the hearing.