Scottish Court of Session Decisions

EXTRA DIVISION, INNER HOUSE, COURT OF SESSION

[2016] CSIH 65

XA76/15

Lady Smith

Lord Brodie

Lady Clark of Calton

OPINION OF THE COURT

delivered by LADY SMITH

in the cause

STEWART WELLS HILL and ROBERT THOMSON HILL

Pursuers and Respondents;

against

STEWART MILNE GROUP LIMITED

First Defender and Appellant;

GLADEDALE (NORTHERN) LIMITED (formerly BETT LIMITED)

Second Defender and Appellant:

Pursuers and Respondents:  Bowen QC;  Balfour & Mansons, Solicitors, Edinburgh

Defenders and Appellants:  McIlvride QC;  Morton Fraser LLP, Solicitors, Edinburgh

29 July 2016

[1]        The appellants were successful in their appeal from the decision of the sheriff for the reasons explained in the court’s opinions of 13 May 2016.  We refer to those opinions for a full explanation of the background, the factual and the legal issues that arose in this litigation and were, ultimately, determined in the appellants’ favour. 

[2]        On 12 July 2016, we granted the appellants’ motions (i) to find the respondents liable in the expenses of the appeal and of the action in the sheriff court, (ii) to certify John Duncan of URS Scott Wilson as a skilled witness, and (iii) to certify the action in the sheriff court as suitable for the employment of junior counsel. 

[3]        The appellants also sought an additional fee, having regard to the factors specified in parts (b), (e) and (f) of rule 42.14(3) of the Rules of the Court of Session.  That motion was opposed.  We heard submissions and made avizandum. 

Specialised knowledge, time and labour required of the solicitor
[4]        Senior counsel for the appellants submitted that the two principal issues  - the proper construction of a commercial contract and whether the appellants had in fact achieved completion and commissioning of the drainage and sewage systems at the residential development sites – both required specialised knowledge of the circumstances in which Scottish Water allowed connection of such systems to public mains, agreed to accept vesting of privately constructed systems and made payments to reimburse costs incurred in their construction.  These were unusual features.  They were not matters which solicitors regularly encounter and investigations were required including the identification of and seeking advice from an appropriate expert.  Considerable time and labour had been expended in obtaining and marshalling the relevant evidence including matters such as the dates that the numerous houses were accepted by the local authority as fit for occupation, the dates of their actual occupation, the dates of requests to Scottish Water for reimbursement of costs and the dates on which payments were made.  The amount of information gathered regarding these matters was not adequately reflected in the sheriff’s note or not reflected at all.  An indication of the skill, time and labour involved could be gleaned from a consideration of the Appendix.

[5]        Senior counsel for the respondents submitted that nothing raised in the appeal went beyond the routine construction of a commercial contract.  Whilst he accepted that that required to be carried out against a background of the relevant factual context, there would have to be something out of the ordinary to warrant an additional fee.  There was nothing extraordinary in this case and no indication of unusual effort being required of the solicitor.  

[6]        For the reasons advanced by senior counsel for the appellants, we are satisfied that the subject matter was unusual, required the acquisition of specialised knowledge and understanding of both a technical and legal nature, we accept that it must have demanded more than a routine level of skill, time and labour on the part of the solicitor and that an additional fee is, in all the circumstances, accordingly warranted. 

Importance of the cause or subject matter to the client
[7]        Senior counsel for the appellants submitted that although the contract was a “bespoke” one and its construction would not, of itself, have wide ranging consequences, there was potential for wide ranging significance to the appellants.  They were house builders and may have to enter into similar contracts in the future. 

[8]        The respondents resisted the suggestion that the decision could be of any general importance to the appellants.  The case required the construction of an unusually worded bespoke contract and concerned nothing that would be of general application.  It was not a test case for other contracts or of any other evident special importance.

[9]        For the reasons advanced by senior counsel for the respondents, we are not satisfied that an additional fee is warranted on the basis of importance of the cause or subject matter to the appellants. 

The amount of money involved in the case
[10]      Senior counsel for the appellants referred to: the sheriff having granted decree for £345,000;  the sum that would have been due by 13 May 2016 if the sheriff’s construction of the contract had been correct being £454,000;  the risk of the appellants being subject to a possibly open ended ongoing liability of £5000 per month.  These sums were such, he submitted, as to justify an additional fee under this head.  

[11]      Senior counsel for the respondents submitted that the sums involved were not high as compared to other construction related disputes.  Further, the appellants could have terminated the monthly payments through their own hand by carrying out snagging works so that the systems could be adopted, thereby achieving what the respondents contended was the required state of completion.  

[12]      Whilst we accept that other construction related disputes can involve far greater sums, we are persuaded, on balance, that the combination of the capital sum at stake and the risk of an ongoing significant liability demonstrates that an additional fee is also justified under this head.  It is no answer to suggest that the appellants could have brought an end to the monthly liability by doing that which the respondents contended they were obliged to do before being freed of the obligation.  Nor, as we understand it, would the remedying of whatever were ultimately determined as outstanding snagging items be a straightforward matter either as regards practicality nor as regards the potential costs involved in doing so. 

Competency
[13]      So far as the additional fee due in relation to the proceedings in the Inner House is concerned, Rule of Court 42.14 clearly applies and we will remit the fixing of the amount of that fee to the auditor. 

[14]      An issue was, however, raised by counsel for the respondent regarding the competency of our awarding an additional fee in relation to the sheriff court part of the proceedings under that rule.  His submission was that the Act of Sederunt (Fees of Solicitors in the Sheriff Court)(Amendment and Further Provisions) 1993 (“A/S of 1993”) applied and, in terms of its Schedule 1, there required to be a remit to the sheriff to decide whether there should be an increase in the fees to cover the responsibility undertaken by the solicitor and if so, to fix the percentage uplift.  The sheriff court was, he submitted, the appropriate court to deal with issues relating to procedures which had taken place there.  He relied on the decision in LPetitioner 1996 SLT 928 as support for his submissions.  He also asserted that this court had not previously awarded an additional fee so as to encompass proceedings in both the sheriff court and this court.  

[15]      For the appellants, Mr McIlvride submitted that in directing the court to pronounce an interlocutor awarding expenses and remitting to the auditor for taxation, whenever expenses are found due “in any cause”, Rule 42.1 referred to all parts of the cause in question including any part that had taken place in the sheriff court.  There was, accordingly, no need to have resort to the A/S of 1993.  The case of LPetitioner was not in point since there were two separate processes involved and the decision turned on an interpretation of legal aid regulations.  

[16]      Paragraph 5(b) of the A/S of 1993 provides: 

“The court may, on a motion made on or after the date of any interlocutor disposing of expenses, pronounce a further interlocutor regarding those expenses allowing a percentage increase in the fees authorised by the Table of Fees to cover the responsibility undertaken by the solicitor in the conduct of the cause. In fixing the amount of the percentage increase the following factors shall be taken into account”

There then follows a list of factors which is in identical terms to those set out in Rule of Court 42.14(3) and so include:

“….

(b) the skill, time and labour, and specialised knowledge required, of the solicitor

…

(f) the amount or value of money or property involved in the cause.”

[17]      Turning to our decision on the competency issue, whilst we accept that it is not an entirely straightforward matter, we are not persuaded that it is incompetent for this court to award an additional fee in terms which cover not only that part of the proceedings that took place in this court but also any earlier part that occurred in the sheriff court.  We do not read the case of LPetitioner as indicating that there must be a remit on any motion for an additional fee which covers that part of proceedings in the cause which took place in the sheriff court.  The decision on competency in that case turned on an interpretation of the relevant legal aid regulations (Civil Legal Aid (Scotland)(Fees) Regulations 1989, reg 5(4)) and, furthermore, involved two sets of proceedings, one of which was a petition to the nobile officium.  That is not to say that, in an individual case, the court may not decide that its particular circumstances make it inappropriate for this court to determine the issue and, accordingly, require there to be a remit to the sheriff.  However, we would expect that, in most cases, this court will, having heard a substantive appeal, be well placed to decide whether or not an additional fee should be allowed.  It would be very unfortunate indeed if the final resolution of all outstanding issues were to be delayed and further expense occasioned by what might justifiably be thought to be a cumbersome procedure, unless it is truly necessary to remit the matter. 

[18]      The question then becomes whether we should simply allow an additional fee in the usual way, indicating that, in doing so, we have had regard to heads (b) and (f) of Rule of Court 42.14 or whether, on the basis that that could only apply to the proceedings in the Inner House, we should fix the percentage uplift to be applied to that part of the taxed account relating to the sheriff court part of the proceedings, in accordance with paragraph 5(b)(ii) and(vi) of Schedule 1 of the A/S of 1993.  

[19]      In the case of Miller v Chivas Brothers Ltd [2014] CSIH 65, this court, in an appeal against the sheriff’s restriction of an award of expenses after proof, when allowing the appeal, awarded the sheriff court expenses that had been withheld, allowed a percentage increase in terms of Schedule 1 of the A/S of 1993 and fixed the percentage at 15%.  The court there evidently read the reference to “court” in the A/S of 1993 as being wide enough to cover this court, in addition to its obvious application to the sheriff court.  That makes sense.  “Court” is not defined let alone restrictively defined and it is not unusual for this court to make awards of expenses in relation to the sheriff court part of proceedings.  And this court will frequently be in as good a position as the sheriff to decide whether the solicitor’s fee should be enhanced or not.  

[20]      Further, despite the initial attractions of Mr Mclvride’s submission, we are not persuaded that rule 42.1 of the Rules of the Court of Session is intended to apply to uplifts in awards of expenses in relation to the sheriff court part of proceedings.  Reading the two sets of rules together, it seems tolerably clear that a system has been provided for which is as follow:  this court has the power to decide whether there should be an enhanced fee when awarding expenses in relation to all proceedings in the cause, whether sheriff court or Court of Session but that power derives, in the latter case from Rule of Court 42.14 and in the former from Schedule 1(5)(b) of the A/S of 1993.  That means that insofar as the enhancement in relation to the sheriff court part of the proceedings is concerned, not only must the issue be determined as a matter of principle but the extent of the percentage uplift must be specified.  In the circumstances of this case, we are satisfied that the percentage uplift should be 20%.  

[21]      In summary, we will grant the motion for an additional fee in relation to the proceedings in the Inner House, under reference to paragraphs (b) and (f) of Rule of Court 42.14;  in relation to proceedings in the sheriff court, under reference to the same heads, we will allow the appellant a percentage increase in the fees authorised by the table of fees amounting to 20%; and we will remit the appellant’s account of expenses, when lodged, to the auditor of court, to tax.