Scottish Court of Session Decisions

OUTER HOUSE, COURT OF SESSION

[2015] CSOH 175

 

PD1867/13

OPINION OF LORD WOOLMAN

In the cause

MARILYN STUART AND OTHERS

Pursuers;

against

(FIRST) MRS AMANDA ELIZABETH CROUCHER OR REID; AND

(SECOND) THE NATIONAL INSURANCE & GUARANTEE CORPORATION LTD

Defenders:

Pursuers:  Smith QC; Lefevre Litigation

Defenders:  Murphy QC, Cowan, Solicitor Advocate; Clyde & Co

18 December 2015

Background

[1]        Following the death of Russell Thomas Stuart in a road accident, several members of his family raised a personal injury action for damages. The first pursuer was the widow of the deceased. She sued in her capacity as his executor and as an individual. The other pursuers were the deceased’s three children. They each sued as individuals. In addition, the fourth pursuer sued as the legal representative of his three children.

[2]        In October 2013 the Keeper of the Rolls issued a case timetable. He fixed a diet of proof of four days to commence on 3 June 2014. The defenders admitted liability. Accordingly, the dispute between the parties related to the proper valuation of each claim.

[3]        Mr Andrew Smith QC and Mr Steven Love, advocate, represented the pursuers. Mr Smith acted speculatively and Mr Love acted on a speculative/fees recovered basis. Mr Lawrence Murphy QC represented the defenders.

[4]        In accordance with the case timetable, the parties lodged in process the documents on which they relied. The defenders’ documents included a pension valuation report. On 7 May 2014, they intimated a minute of amendment relating to the deceased’s life expectancy. They declined to agree the pursuers’ proposal of a figure of 15 years.

[5]        A number of events took place in the seven day period prior to the proof. At 3.45pm on Tuesday 27 May, the defenders lodged minutes of tender in respect of each claim. The next day they received acceptances in respect of the first pursuer’s claim as executor and the children’s claims. That left in dispute: (a) the first pursuer’s claim as an individual; and (b) the grandchildren’s claims.

[6]        The first pursuer’s claim for loss of support involved looking at her late husband’s somewhat complicated financial position. He had been involved in a guesthouse business and a letting business although he did not own the premises from which they operated. By contrast, the grandchildren’s claims for loss of society and guidance were relatively straightforward.

[7]        On Thursday 29 May the first pursuer formally rejected the tender made to her. The next day, however, she instructed her solicitors to accept the tender if the defenders did not increase it.

[8]        On Friday 30 May the defenders’ solicitors intimated an inventory of productions, which contained references to eighteen articles on cardiology. Mr Smith received the inventory at about 3.00pm. As it did not contain copies of the articles themselves, he spent much time over the weekend locating and reading the articles, as well as undertaking his own research into the medical literature.

[9]        After consulting with her counsel on the morning of the proof, the first pursuer accepted the tender. The previous day the parties had agreed a figure for pension loss.  Shortly before accepting the tender, the parties agreed the deceased’s life expectancy at 15 years.

[10]      The proof therefore proceeded solely in relation to the claims of the three grandchildren and lasted one day. It took place on Wednesday 4 June, no judge having being available to start the proof until about midday on the Tuesday. I made awards of damages in respect of each grandchild. My awards exceeded the sums tendered.

 

Expenses

[11]      The court issued various interlocutors dealing with the expenses of the action, all of which were made on a party and party basis. In summary:

a.   The defenders were held liable for the expenses relating to the grandchildren’s claims.

 

b.   The defenders were also held liable for (i) the first pursuer’s claim as executor, and (ii) the children’s claims.

 

c.   The first pursuer was held liable for the defenders’ expenses in relation to her claim as an individual from the tender date.

 

The taxation

[12]      In the usual manner the interlocutors directed the parties to lodge accounts and remitted the case to the Auditor for taxation. The pursuers’ account brought out a total of about £80,000, inclusive of VAT and fee fund dues. It included a composite fee of £26,000 submitted by Mr Smith. The defenders’ account totalled about £32,000, which included a fee of £18,250 submitted by Mr Murphy.

[13]      At the diet of taxation on 17 November 2014, Mr Smith represented the pursuers. He was accompanied by his instructing solicitor. Mr Cowan attended with a law accountant on behalf of the defenders. In advance of the hearing, the parties agreed the fee of the pursuers’ solicitors at £15,000 plus VAT.

[14]      At the hearing, Mr Smith and Mr Murphy developed their respective written submissions.  There were two issues for determination. First, what was the effective date of the tender?  Second, were counsel’s fees reasonable?

[15]      The Auditor taxed off sums from both accounts. He abated about half of Mr Smith’s fee (£13,000); and £1,110 from Mr Love’s fees. He also disallowed Mr Smith’s fee of £1,800 for the taxation. With regard to the defenders’ account, the  Auditor taxed off £9,631.80.

 

Note of objections

[16]      The pursuers lodged a note of objections to the taxation. They sought: (i) reinstatement of the sums abated from counsel’s fees; (ii) full abatement of the defenders’ account, failing which an order remitting it back to the Auditor to tax afresh; and (iii) the expenses of the hearing before me on the Note of Objections. The defenders did not challenge the Auditor’s decision.

[17]      The Auditor appended a note to each of his reports following the taxation setting out the reasons for his decision. There were a number of key elements.

a.   He stated that he regarded the level of counsel’s fees as excessive, compared to those he would expect to see charged for a case of this type.

 

b.   He decided that the first pursuer should have accepted the tender made to her as an individual by the close of business hours on 28 May 2014.

 

c.   He apportioned the recoverable expenses incurred by the defenders from the tender date onwards. He attributed one-third to the grandchildren’s claims and two-thirds to the first pursuer’s claim.

 

d.   He concluded that the issues in the taxation were “not sufficiently novel or complex to require the involvement of Senior Counsel and that a competent solicitor acting reasonably would accordingly not have incurred the charge.”

 

[18]      Mr Smith challenges the Auditor’s decision on two broad and overlapping grounds. First, that he has failed to provide adequate reasons. Second, that his decisions on each branch of the claim are unreasonable.

[19]      In accordance with rule of court 42.4(2A), the Auditor lodged a minute which amplified the reasons set out in the note. He included a timeline identifying each step taken by the pursuers’ legal team and the reasons behind each branch of his decision. It is sufficient to note the following points.

[20]      First, the Auditor held that “by 12.08 on Wednesday 28 May 2014, Mr Smith had had an opportunity to consider the tender intimated and lodged the previous afternoon and to decide that it should not be accepted.” By then, “he had before him all the necessary evidence, both factual and expert, to enable him to make an informed decision on whether to advise the First Pursuer to accept or reject the tender”.

[21]      Second, on the morning of Tuesday 3 June when the case called in court, Mr Smith stated that the widow’s claim “was to have been the most complicated part of the case.”

[22]      Third, the Auditor did have regard to the fact that life expectancy was not agreed until shortly before the proof.

[23]      Fourth, he abated the fees of counsel on both sides as they were “not within the band of reasonable rates” that he would expect to see charged in “this type of case.”

 

The legal framework

[24]      In taxing a party and party account, the Auditor’s task is to determine whether the proposed fee is fair and reasonable. A party is of course entitled to challenge his decision. Over the years, a substantial body of case law has developed in this area: see Crossan v Caledonian Railway Co (1902) 5F 187; MacNaughton v MacNaughton 1949 SC 42; Wood v Miller 1960 SC 86; McDonald v Salmond & Others 1999 SC 396; Urquhart v Ayrshire & Arran Health Board 2000 SLT 829; City of Aberdeen Council v W A Fairhurst 2000 SCLR 392; McNair v Wrights Insulation Co Ltd 2003 SLT 1311; Jarvie v Greater Glasgow Primary Care Trust [2006] CSOH 42; and Tods Murray v Arakin (Taxation of Accounts) 2007 SCLR 759.

[25]      From those authorities I derive the following propositions regarding the respective roles of the Auditor and the court:

a.   The Auditor acts essentially as a valuer.

 

b.   He is expected to apply his knowledge and experience in carrying out his task of assessing a fair and reasonable fee.

 

c.   The court will be slow to disturb his decision if he has properly exercised his discretion.

 

d.   It will not substitute its own views for those of the Auditor.

 

e.   It will not attempt to tax an account itself.

 

f.    The court will, however, intervene if the Auditor did not have sufficient materials on which to proceed, or his decision is unreasonable.

 

Adequacy of the reasons

[26]      Mr Smith contended that the Auditor had failed to provide adequate reasons for his decision. Instead he had provided “a short series of conclusory statements which, despite the detailed submissions made to him, give no meaningful indication of the factors to which he had regard.”

[27]      I reject that submission. The Auditor is not required to issue lengthy decisions covering every point. His is a practical jurisdiction. He has crisply set out the circumstances, the issues and his reasoning in the note and minute.

[28]      The test is whether an informed person reading the decision would be left “in no real and substantial doubt as to what the reasons for it were and what were the material considerations which were taken into account in reaching it”: Wordie Property Company Limited v Secretary of State for Scotland 1984 SLT 345, 348 per Lord President Emslie.

[29]      I am satisfied that the test is met here. I therefore reject this ground of challenge.

 

Level of counsel’s fees

[30]      Mr Smith contended that, in the absence of a table of fees for counsel, the correct question to ask was – what would a reasonable solicitor be prepared to pay to instruct counsel?  He rested his submission on two Outer House decisions: Malpas v Fife Council 1999 SLT 499 and Marshall v Fife Health Board [2013] CSOH 140. In particular, he relied on Lord Glennie’s statement in Marshall that:

“The Auditor should only disallow an item if it can truly be said that it was unreasonable to incur the expense in the sense that a competent solicitor acting reasonably would not have incurred it … the reasonableness test applies to Counsel’s fees too … there is no reason why an award of expenses on a party and party basis should not provide full recovery for a successful party who has acted reasonably in the litigation and whose expenses have been reasonably incurred and are reasonable in amount.”

 

[31]      Although the Auditor has concerns about whether that approach squares with earlier authorities and practice, he regarded himself as bound by it in this case. He framed his decision on this point as follows:

“based on his knowledge and experience of similar cases and accounts … the rate of £500 per hour charged by Senior Counsel for all work was not within the band of reasonable rates which he would expect to see being charged by Senior Counsel in this type of case, but that daily rates of £3,000 for attendance and £2,500 for preparation were reasonable in light of the nature of this case and the number of pursuers.”

 

[32]      According to Mr Smith, the Auditor did not apply the Malpas/Marshall approach. Further, the decision yields an unsatisfactory result. A solicitor instructing counsel on a speculative basis cannot know whether there will be a shortfall between the fee charged and its recovery from the other party.

[33]      I see no reason to disturb the Auditor’s decision. He expressly said that he did apply Lord Glennie’s approach and has given reasons for reaching his decision on the point.

[34]      Different counsel will charge different fees for the same work. Solicitors will hold differing views as to the reasonableness of the fees in question. It is precisely because of these variations that the office of Auditor exists. His task is to provide an independent adjudication, based upon his unrivalled knowledge and experience of these matters.

[35]      It may be a matter of nuance, but I am disinclined to approach the matter by asking whether the fee is unreasonable. Posing the question in that way tends to cede too much weight to the view of the instructing solicitor. While that view will no doubt be a factor, it cannot be determinative.  As Lord President Cooper said in MacNaughton v MacNaughton 1949 SC 42, at 46:

“The concern of the Court is to decide not what fees a particular counsel was justly entitled to receive from his client for his services under the conditions under which he gave them, but what fees can properly be made a charge against an unsuccessful opponent”.

 

The effective date of the tender

[36]      Deciding whether to accept a tender is a very important step: Pagan v The Miller Group Limited 2002 SC 150.  Defenders are not allowed to lodge tenders late with a view to forcing a quick decision: Wood v Miller 1960 SC 86. The court, however, takes into account other considerations.  It recognises that tenders provide important protection to defenders and do assist in brokering settlements.

[37]      Mr Smith submitted that the Auditor should have held that the effective date of the tender was 3 June. He argued that the decision to award the expenses against the first pursuer from 28 May was unreasonable, having regard to (a) the late timing of the tender, (b) the last minute developments regarding pension loss and life expectancy, and (c) her difficulty in consulting in person with counsel, given that she resides in Aberdeen.

[38]      I do not accept that argument. In the opinion of the Second Division in McLean v Galbraith Stores Limited 1935 SC 16:

“where a tender is declined, the question is whether expenses should run against the pursuer from the date of the tender or from such later date as will give the pursuer time to consider whether or not the tender ought to be accepted. We are of the opinion that, in the case of a declinature, the expenses ought to run from the date of the tender itself, in the absence of special circumstances which may justify some other direction. We hold that to be the general rule, although there may be qualifications of the rule in the particular case.” (at pp 168-9)

 

[39]      Lord Justice-Clerk Aitchison delivered the opinion of the court. Before doing so, he consulted with the judges of the First Division and the opinion has their concurrence. It is therefore of high authority. It also states that if a party contended that expenses should run from a later date, he should raise it “when the finding for expenses is made and before the remit to the Auditor.” (p 169)

[40]      In this case, the pursuers’ legal representatives did not raise the matter before the remit. Further, the Auditor did not adhere to the general rule. He did not hold that the tender was effective on 27 May. He afforded the first pursuer a degree of latitude. I see no basis to interfere with the exercise of his discretion.

[41]      As I reject this ground of challenge, it follows that I also reject Mr Smith’s submission that the Auditor should have abated the defenders’ account in full.

 

Apportionment

[42]      Mr Smith maintains that the Auditor acted unreasonably in apportioning the expenses incurred after 28 May, because “there is no reasoning to shed light on why this split was considered necessary and appropriate.”

[43]      In this case the first pursuer’s claim was undoubtedly the more complex one. In my view the Auditor was entitled to adopt a broad brush approach and hold that the greater part of expenses incurred by the defenders in the relevant period related to her claim.

[44]      I decline Mr Smith’s invitation to consider the relative amounts of work attributable to the claims. To do so would be to trespass into the province of the Auditor and effectively carry out a taxation.

 

Senior counsel’s fee for the taxation

[45]      Mr Smith submitted that it was appropriate for him to attend the taxation because the Auditor’s decision in relation to counsel’s fees is of considerable importance, not only to the present pursuers but to their agents in respect of future cases.

[46]      I see no reason to quarrel with the Auditor’s conclusion that the issues raised in the taxation were not sufficiently novel or complex to justify the instruction of senior counsel. In any event, one party should not be required to underwrite a test case for the benefit of the other party.

[47]      For the avoidance of doubt, I reject Mr Murphy’s submission that counsel’s fee for a diet of taxation is not a competent outlay in a party and party account, because it is not mentioned in the table of fees. I do not regard that omission as preventing recovery in an appropriate case.

 

Miscellaneous challenges

[48]      Mr Smith advanced a number of other grounds of challenge. For example, he submitted that the Auditor had wrongly (i) applied the apportionment of expenses between the grandchildren and the first pursuer; (ii) taxed off two-thirds instead of one-third of counsel’s proof preparation fee; (iii) abated the proof fee charged by senior counsel by about 29 per cent, whereas he allowed in full the proof fee of the solicitor advocate for the defender. I decline to consider these issues because they were not raised with the Auditor.

 

Decision

[49]      For the reasons I have given, I repel the Note of Objections.