EXTRA DIVISION, INNER HOUSE, COURT OF SESSION
Lord Menzies Lady Smith Lord Wheatley	[2012] CSIH 76 XA20/10 OPINION OF THE COURT delivered by LADY SMITH in appeal from the Sheriffdom of Glasgow and Strathkelvin at Glasgow by BANK OF SCOTLAND PLC Pursuers and Respondents; against WILLIAM FORBES Defender and Appellant: _______________

Act: C MacColl; McClure Naismith LLP

Alt: Party

Minuter: O'Neill; solicitor advocate; SGLD

5 October 2012

Introduction

[1] This opinion relates to the appellant's motion for expenses. Before the sheriff and the Sheriff Principal, he was unsuccessful in resisting the respondents' claim for £15,000; decree in that sum was pronounced on 10 December 2009 and his appeal was refused on 22 January 2010. However, on appeal to this court, an Extra Division recalled the interlocutors of the Sheriff Principal and the sheriff and allowed parties a proof before answer, all as explained in the opinion of the court on 18 March 2011 ([2011] CSIH 23). Expenses were, at that stage, reserved.

[2] The appellant has now enrolled a motion in the following terms:

"The Defender/Appellant craves the court

(1) to consider the matter of expenses of the appeal to the Court of Session which were reserved in the interlocutor of 18^th March 2011 and award said expenses in favour of the defender/appellant;

(2) to give consideration of the Pursuer/Respondent's conduct in raising the action, pursuing the action on the basis of unsubstantiated averments, declaring important documents 'lost' during the progress of the cause and then abandoning the action after three years. After due consideration, direct that the expenses be taxed on an agent/client basis and grant the Defender/Appellant uplift, to be quantified and approved by the Auditor of Court upon Remit to Taxation. Appendix III is the Defender's narrative of the facts supporting a claim of uplift;

(3) to direct the Auditor of Court, that upon taxation, to treat the defender/appellant fairly and not to discriminate against him as a party litigant, and

(4) allow the whole costs of the Defender/Appellant's motion as an addition to sums claimed".

[3] By notice dated 9 May 2012, addressed to the Secretary of State for Scotland and the Cabinet Secretary for Justice, the appellant intimated
[1] that he would be seeking a declaration under section 4(4) of the Human Rights Act 1998 that the Act of Sederunt (Expenses of Party Litgants) 1976 (SI 1606) ("A/S 1976") is incompatible with articles 6 and 14 of the Convention. The Lord Advocate responded and intimated that he intended to join as a party to the proceedings.

Background

[4] We would refer to the opinion of 18 March 2011 for the details of the background circumstances. It is sufficient, for present purposes, to note the following.

[5] The respondents sought payment from the appellant of £15,000, with interest, under and in terms of a personal guarantee granted by the appellant in respect of all sums owed from time to time by a company of which he was, at one time, a director, namely Fairclaim Limited. In his defence to the action the appellant averred that the respondents had failed in their duty of fairness and good faith at the time of the guarantee transaction. The respondents stated that some of the documentation relating to the loan facilities afforded to Fairclaim Limited had been lost - they were, however, able to produce the guarantee document itself. The court was satisfied that the appellant had averred enough to entitle him to an inquiry in respect of that issue but observed that the averments were not without their difficulties; the court considered that it would be in his interests and, possibly in the interests of both parties, if they were to review the state of their pleadings with a view to seeing whether amendment was necessary (see paragraph 10 of the opinion of the court).

[6] The action did not, however, proceed to proof. The respondents lodged a minute of abandonment and the sheriff allowed it to be received by interlocutor dated 24 June 2011 following a hearing at which the appellant had opposed the respondents' motion to have it received. The appellant sought leave to appeal against that interlocutor. Leave was refused by the sheriff by interlocutor dated 12 August 2011 and the appellant was found liable in the expenses of the calling of the motion. The respondents accordingly presented their account of expenses for that motion to the appellant. It was the account incurred by them to their solicitors. The account is silent as to its basis but we note that the sheriff's interlocutor is in standard "party/party" terms; it does not provide for agent/client basis.

[7] We were advised by Ms MacColl that the respondents had decided to abandon the action for commercial reasons, having weighed the cost of the claim against the value of the guarantee.

[8] Finally, the appellant was and is critical of the respondents' conduct of the case. There had been an attempt by him to recover relevant documents from the respondents in September 2009 but the respondents could not produce them; they were said to have been lost. The appellant's position was that there was thus shown to be no apparent justification for the respondents having advanced a claim against him because it was demonstrated that they had no documentary proof (documents which, he believed, had never existed). He alleged that the respondents' case was based on fabrication and that their averments were "perjured".

The Issues

[9] The issues raised by the appellant's motion and in relation to it are:

(a) Whether or not he should be found entitled to the expenses of the appeal to this court?

(b) Whether or not the Lord Advocate is entitled to be heard as a party?

(c) Whether or not the A/S 1976 is incompatible with article 6 or article 14 ECHR or both?

(d) Whether or not the appellant should be found entitled to expenses on an agent/client basis?

(e) Whether or not the appellant should be granted an uplift in expenses?

(f) Whether or not the Auditor of Court should be directed by the court to treat the appellant fairly and not to discriminate against him by reason of his status as a party litigant?

(g) Whether or not the appellant should be found entitled to the expenses of this motion?

The Expenses of the Appeal

[10] The appellant's motion for the expenses which were reserved in the opinion of 18 March 2011 was not opposed in principle and we are satisfied that he is entitled to an award in respect of those expenses.

The Act of Sederunt (Expenses of Party Litigants) 1976 SI no.1606 (as amended by SI 1438 of 1983 , art 2(a))

[11] The background to A/S 1976 is section 1(2) of the Litigants in Person (Costs and Expenses) Act 1975 which, insofar as relevant, provides:

"1.-

...........

(2) Where, in any proceedings to which this subsection applies, any costs or expenses of a party litigant are ordered to paid by any other party to the proceedings or in any other way, there may, subject to rules of court, be allowed on the taxation or other determination of those costs or expenses sums in respect of any work done, and any outlays and losses incurred, by the litigant in or in connection with the proceedings to which the order relates.

This subsection applies to civil proceedings -

(a) in the .........Court of Session ......".

[12] The prior rule was that an award of expenses could operate only so as to indemnify in whole or in part, the party in whose favour it was made. Such a party was not entitled to recover anything more in expenses than he had actually incurred or was liable to pay; it was not considered to be possible to measure the application of time and effort by a lay person
[2].

[13] The purpose of these provisions was to remedy that rule so as to allow appropriate remuneration to a party litigant for his own time. As can be seen, these are enabling provisions which, whilst allowing for expenses to be payable to a successful party litigant for his own time as well as for his outlays, leave much to the discretion of the relevant rule maker. Further, there is no indication that Parliament intended that such rules should not draw a distinction between party litigants and lawyers with professional qualifications.

[14] A/S 1976, insofar as relevant, provides

"2 - Expenses allowable to party litigants

(1) Where in any proceedings in the Court of Session .....any expenses of a party litigant are ordered to be paid by any other party to the proceedings or in any other way, the auditor may, subject to the following provisions of this Rule, allow as expenses such sums as appear to the Auditor to be reasonable having regard to all the circumstances in respect of -

(a) work done which was reasonably required in connection with the cause, up to the maximum of two-thirds of the sum allowable to a solicitor for that work under the table of fees for solicitors in judicial proceedings; and

(b) outlays reasonably incurred for the proper conduct of the cause.

(2) Without prejudice to the generality of paragraph (1) above, the circumstances to which the auditor shall have regard in determining what sum, if any, to allow in respect of any work done, shall include -

(a) the nature of the work;

(b) the time taken and the time reasonably required to do the work;

(c) the amount of time spent in respect of which there is no loss of earnings;

(d) the amount of any earnings lost during the time required to do the work;

(e) the importance of the cause to the party litigant;

(f) the complexity of the issues involved in the cause."

[15] The two-thirds ceiling provided for in paragraph 2(1)(a) would appear to have been prompted by considerations of fairness, bearing in mind that a party litigant will not have the overheads which a solicitor incurs and, not being skilled in the law, he should not be entitled to be remunerated at as a high a rate.

The Lord Advocate

[16] The appellant submitted that the Lord Advocate should not be a party and should not be heard as that was constitutionally impermissible. Whilst he accepted that section 5(1) of the Human Rights Act 1998
[3] ("HRA") entitled the Lord Advocate to notice in accordance with rule of court 82.3 and to be joined as a party, that was in conflict with the Judiciary and Courts (Scotland) Act 2008 section 1(1) which obliged the Lord Advocate to uphold the independence of the Judiciary. He ought not, accordingly, so submitted the appellant, to be allowed to attempt to influence the judicial decision in respect of his motion.

[17] Ms O'Neill, for the Lord Advocate, submitted that he had a right to be heard and she was supported in that submission by Ms MacColl.

[18] We have no difficulty in rejecting the appellant's submissions on this matter. Section 5(1) HRA plainly confers on the Lord Advocate the right not only to have any application to this court for a declaration of incompatibility in respect of any legislation intimated to him but also to be heard on the matter. Appropriate notices were served under and in terms of the relevant rule of court. In particular, the Lord Advocate made it clear that he intended to exercise his right to be joined as a party. That is all that is required to entitle him to be represented at the hearing (or, indeed, to be present himself, if so advised) and to make submissions in respect of the application.

[19] The appellant's submissions proceeded on a misunderstanding of section 1(1) of the 2008 Act. Those provisions put onto a statutory basis the long established principle which is a cornerstone of our democracy, namely that the executive arm of government must not seek to bring improper pressure to bear on the judiciary. It would, for example, plainly be inappropriate for the Lord Advocate to seek to use an occasion when he requires to have a legitimate meeting with members of the judiciary to discuss, for instance, the efficient administration of the courts in Scotland (in which they have a mutual interest) to have a conversation with the judge(s) about a pending case with a view to seeking to influence its outcome. That is, however, quite different from according the Lord Advocate the right to be heard as a party in a litigation, particularly where Parliament has conferred that right upon him.

Incompatibility

[20] The court has power, in terms of section 4 of HRA, to declare legislative provisions incompatible with Convention rights. Insofar as relevant, those provisions are:

"4 -

.....................

(3) Subsection (4) applies in any proceedings in which a court determines whether a provision of subordinate legislation, made in the exercise of a power conferred by primary legislation, is compatible with a Convention right.

( 4) If the court is satisfied -

(a) that the provision is incompatible with a Convention right, and

(b) that (disregarding any possibility of revocation) the primary legislation concerned prevents removal of the incompatibility,

it may make a declaration of that incompatibility."

[21] We should also, since it was relied on by the appellant, refer to section 3 of HRA. Insofar as relevant, it provides:

"3 - (1) So far as it is possible to do so, primary legislation and subordinate legislation must be read and given effect in a way which is compatible with the Convention rights.

(2) This section -

(a) applies to primary legislation and subordinate legislation whenever enacted;

(b) ...............; and

(c ) does not affect the validity, continuing operation or enforcement of any incompatible subordinate legislation if (disregarding any possibility of revocation) primary legislation prevents removal of the incompatibility."

[22] The appellant submitted that the "two thirds" ceiling provided for in para 2(1)(a) of A/S 1976 was arbitrary and unscientific, so it was impossible to read it or give effect to it in a way which was compatible with his Convention rights. It was out of date and to all intents and purposes, ineffective. If applied, it would mean he would be denied his article 6 right to a fair trial because he would not be afforded parity with a represented party. It would also interfere with his right, as a party litigant, not to be discriminated against. He believed that the requirements of section 4(4)(a) of HRA were satisfied and that the court had a discretion in the matter, even if he did not satisfy the requirements of section 4(4)(b). That was because the latter had to be read in the light of section 3(1) and reading it as discretionary would afford him his Convention rights. He also submitted that the court should apply a purposive approach and refer the matter back to the legislature; it had a duty to do so given the terms of section 6(3) of HRA
[4]. He did not, however, appear to have given any consideration to sec 6(6)
[5].

[23] For the Lord Advocate, Ms O'Neill observed that a declaration of incompatibility was an unusual remedy and, indeed, was not the only means by which the incompatibility of subordinate legislation could be addressed. It was, for example, possible to seek reduction of the offending provisions, not that that had been done in this case. Moreover, it was not open to the court to pronounce a declaration of incompatibility in respect of subordinate legislation unless also satisfied that the primary legislation prevented removal of the incompatibility; the 1975 Act did not do so. Further and in any event, there was, she submitted, no incompatibility.

[24] Whilst the availability of resources could, she submitted, engage a litigant's article 6 rights in relation to securing access to the court, that was not the position here. The appellant's article 6 rights were not engaged. There was no question of him not having been afforded access to the court and article 6 did not confer on him a right to recovery of expenses incurred in exercising his right of access. Nor did it confer on him a right to recovery of expenses not actually incurred. Expenses would not be awarded by the European Court of Human Rights: McCann and Others v United Kingdom (1996) 21 EHRR 97
[6]. Further, it followed from the fact that the appellant's article 6 rights were not engaged that his article 14 rights were not engaged either - for article 14 to be applicable, the matter at issue required to fall within the ambit of another Convention right.

[25] Ms O'Neill submitted that in the event it was held that the appellant's article 6 rights were engaged, it had not been shown that his article 14 rights were breached. The difference in treatment as between party litigants and represented parties was not a difference as between litigants in analogous circumstances nor did it result from the application of a prohibited ground of discrimination. Being a party litigant was not a relevant status. She also observed that the level of recovery allowed where a solicitor has been instructed reflects an allowance for overheads and profit that does not apply in the case of a party litigant: Forbes v Whyte (1891) 18R688; Macbeth Currie & Co v Matthew (1985) SLT (Sh Ct) 44. However, the party litigant can

benefit personally from the award, unlike the represented party and can also recover outlays incurred. The two- thirds ceiling struck a fair balance.

[26] For the respondents, Ms MacColl submitted that there was no incompatibility. A/S 1976 governed the issue raised and should not be ignored.

[27] We have no hesitation in rejecting the appellant's submissions. For the reasons submitted by Ms O'Neill, his article 6 rights are not engaged. His article 14 rights are, accordingly, not engaged either; they do not afford protection to party litigants as a class and are not "stand alone" rights. The engagement of Article 14 is dependent on the facts underlying the allegation coming within the ambit of one of the other Convention rights. It is, however, clear that the right to a fair trial for the determination of the appellant's civil rights afforded by article 6 (in this case for the determination of the issue of whether or not he owed money to the respondents) does not relate to issues involved in the awarding of expenses.

[28] In these circumstances, we do not require to consider whether section 3(1) HRA requires us to interpret section 4(4)(b) as the appellant would have us do. In any event, the terms of section 4(4)(b) are so clear that it would not be possible to interpret them in a way which gives the court a discretion to ignore them altogether, as the appellant invited us to do. Then, applying section 4(4)(b) to the present circumstances, it is clear that its requirements are not satisfied; nothing in the 1975 Act would prevent removal from A/S 1976 of the two-thirds ceiling, if it were the case that it breached a Convention right.

[29] Further, we agree with Ms O'Neill that the comparison that the appellant seeks to draw between party litigants and those who are represented is not apt. Indeed, on one view, the party litigant is in a stronger position since the outcome for him - if he succeeds in securing an award not only for his outlays but also for work done - can be that he receives a sum of money over and above his outlays whereas the represented litigant will only recover sums he has already paid or is due to pay to his solicitor. The represented party cannot recover anything in respect of his own time and trouble irrespective of the hours he may have spent in, for instance, collating documents and attending meetings and court. We are satisfied that the two-thirds ceiling is a reasonable one and allows the Auditor ample scope for arriving at a fair result on taxation of a party litigant's account.

[30] We, accordingly, refuse that part of the appellant's motion which seeks a declaration of incompatibility.

Whether or not the appellant should be awarded expenses on an agent/client basis?

[31] The appellant's essential argument was that his article 6 and article 14 rights were breached by the two-thirds ceiling in para 2(1) of A/S 1976. The court should, accordingly, read those provisions as though that ceiling was deleted and, in accordance with his motion, award him expenses on an "agent/client" basis. He also, separately, referred to rule of court 42.5 (1)
[7] and submitted that the power to modify

an award of expenses enabled the court to increase it. The appellant clearly stated, however, that he was not asking for a solicitor's fee nor (despite the terms of his

motion) was he asking for an uplift. He recognised, he said, that he was not a solicitor. Rather, it became clear that his concern was that, as he perceived it, the respondents' conduct had caused him many extra hours of work for which he would not be able to recover expenses unless the award in his favour was on an agent/client basis. The conduct he relied on was that referred to above, put shortly, that the respondents had acted improperly and it was quite wrong of them to have carried on with the action for three years and then abandon it. He relied on the case of Trunature Ltd v Scotnet (1974) Ltd 2008 SLT 653, where expenses were awarded on an agent/client basis, but it was not entirely clear how it was thought to support his argument other than as being an example of a case where such an award was made. We note, however, that the successful party in Trunature was represented by solicitors and counsel and was not a party litigant; awards of expenses to party litigants were not at issue.

[32] The appellant also referred to the sheriff court award of expenses to which we refer above. The respondents had presented him with, he said, an agent/client account and he had paid it. That demonstrated that there was an agreement between them that that was the appropriate basis on which expenses should be awarded as between them.

[33] For the respondents, Ms MacColl submitted that A/S 1976 governed awards of expenses where they were awarded in favour of a party litigant and the court could not award them on any other basis. In particular, rule of court 42.5 provided only for reduction in what might otherwise have been the award - that was the natural meaning of the word "modified" - and it was not open to the court to award a party litigant expenses on an agent/client basis. Regarding the respondents' conduct, there was nothing unreasonable about it. It was not accepted that there had been any impropriety. Whilst she accepted that awarding expenses on an agent/client basis can be used by the court to mark its displeasure with the conduct of a party (British Railways Board v Ross and Cromarty County Council (1974) SC 27; Walker v McNeil (1981) SLT(N) 21), there was nothing to merit our doing so in this case. The respondents had acted reasonably, they had had a basis for their pleadings including the guarantee document, which had not been lost, and they had an arguable case that the defences were irrelevant. They had abandoned the action for commercial reasons. As for the sheriff court expenses, the fact that the appellant had paid the account - which was actually a party/party account prepared on a time and line basis - was not indicative of any agreement regarding future awards.

[34] We again have no hesitation in rejecting the appellant's submissions.

[35] First, they proceed on a misunderstanding. At the heart of his motion lies a concern that work carried out by him which was caused by the respondents suing him and persisting in this action will not be appropriately remunerated unless the court direct the Auditor to apply the agent/client basis. That is not, however, correct. The Auditor has a wide discretion under A/S 1976 para 2 to make an award in respect of all work which the appellant reasonably required to do in connection with the litigation and to do so having regard to the time taken to do it. He does not require expenses to be on an "agent/client" scale for that to happen.

[36] Secondly, the payment by the appellant of the sheriff court award of expenses in response to intimation of the respondents' solicitors' account does not demonstrate either that expenses were quantified on an agent/client basis - we cannot conclude that that was the basis of the account he relied on - or that there was an agreement between parties that the expenses in relation to the appeal to this court would be recoverable on that basis.

[37] Thirdly, we cannot, on the basis of the appellant's assertions, conclude that there was any impropriety in the respondents' conduct of the case.

[38] Fourthly, even if we did have any concerns about the respondents' conduct, we could not mark our disapproval by awarding expenses on an agent/client basis. We have no power to do so under A/S 1976 and no power to do so under the rules of court. It would be surprising if we did since in the case of a party litigant there is, by definition, no client, no solicitor and the party litigant has not incurred a solicitor's account. Rule of Court 42.5 does not, we would add, give the court power to increase awards of expenses. We agree with Ms MacColl that the word "modified" carries its natural meaning and indicates only that the court has power to award less than it might otherwise do.

[39] Accordingly, whilst we will pronounce an interlocutor finding the appellant entitled to the expenses reserved in the interlocutor of 18 March 2011, we will refuse the appellant's motion for those expenses to be awarded on an agent/client basis.

Whether the appellant is entitled to an uplift in expenses?

[40] The appellant stated that he was not in fact seeking an uplift. If he had done so, we would have refused this part of the motion. Whilst an additional fee may be allowed to be added to a solicitor's account under and in terms of rule of court 42.14, there is no similar provision in respect of the account of a party litigant.

Whether or not the Auditor of Court should be directed to treat the appellant fairly?

[41] We have no reason to anticipate that the Auditor will fail in his duty to treat the appellant fairly; there is no need for any such direction and so we also refuse this part of the appellant's motion.

Whether or not the appellant should be found entitled to the expenses of this motion?

[42] We will reserve these expenses.