NOTE

 

by

 

SHERIFF D C W PYLE

 

in causa

 

MRS JESSIE MACKENZIE GRANT

 

against

 

ROBERT GRANT and MRS MHAIRI GRANT

 

 

 

13 March 2007

 

On 6 March 2007, I heard parties' solicitors in respect of the pursuer's motion, which was in the following terms:

"... to allow a percentage increase in the amount of 40% to the fees awarded (sic) to the Pursuer by the interlocutor of the Court dated 16^th February 2007, as authorised by the Act of Sederunt (Fees of Solicitors in the Sheriff Court) (Amendment and Further Provisions) 1993, (as amended), and having regard to the following grounds:-

(1)   The complexity of the cause and the number, difficulty or novelty of the questions raised;

(2)   The importance of the cause or the subject matter of it to the clients; and

(3)   The steps taken with a view to settling the cause, limiting the matters in dispute or limiting the scope of any hearing."

 

I continued the motion to today's date, having advised the parties that I intend to write a note in support of my decision.

 

I deal with each ground in turn. But before I do so, I will explain briefly what the action was about, albeit that this is discussed in detail in my judgment on the merits. As is stated there, the relevant facts can be summarised as follows:

The pursuer owned a dwellinghouse and garden ground. She decided to build a house for her son on a plot in the garden. She applied for and obtained planning permission. She chose not to proceed, but decided instead to sell the plot. The defenders purchased it. They applied for and obtained planning permission to build a house different in character to the one for which the pursuer had permission. In the course of clearing the site, the defenders used a digger to dig out ground along what they maintain is the boundary between the plot and the ground retained by the pursuer. She objected that the digging had encroached upon her ground. She obtained an interim interdict against the defenders. There has been no further encroachment.

 

The pursuer did not seek a perpetual interdict; she sought merely the expenses of the action.

 

A complication was that the conveyance to the defenders was a first registration under the Land Registration (Scotland) Act 1979. There was an interval of over a year from the date of the conveyance and the issue of the Land Certificate. It was during that interval that the alleged encroachment took place. The parties therefore were potentially in doubt as to the exact boundaries until, at the very least, they had sight of the Land Certificate.

 

The proof lasted 12 days. I found the pursuer entitled to some, but not all, of the expenses of the action.

 

In the course of my judgment, I expressed the opinion that the location of the disputed boundaries was to be determined by the Land Certificate, certainly by the time the alleged encroachment took place, being after that date that the Disposition was presented for registration.

 

The parties' submissions may be dealt with under the following headings.

 

 

 

1.      The complexity of the cause etc

 

The pursuer's solicitor acknowledged that an interdict action was of itself no more complicated than any other action. There were, however, two characteristics of this action which under this heading justified an additional fee, namely the complexity of the action and the novelty of the point which arose in it.

 

The complexity was that it was necessary for extensive evidence to be led and a decision made upon both the effect of the Disposition and the effect of the Land Certificate. The Land Registration (Scotland) Act 1979 gave no guidance as to the status of the Disposition prior to the issue of the Land Certificate. Both parties proceeded upon the assumption that until the Land Certificate was issued the Disposition was determinative of the parties' rights. It was only half way through the proof that I had raised the issue about whether the parties' rights were determined by the Land Certificate from the date of its registration, not the date of its issue. Both parties had proceeded upon the other basis, which had resulted in extensive further evidence. Both parties might have done unnecessary work, but it was not unreasonable to do so given the doubt about the status in law of the Disposition.

 

In any event, he submitted, the question of law described above was a novel one, which was not self evident.

 

In reply the defenders' solicitor submitted that the interplay between the Disposition and the Land Certificate was not complex. The legal argument at the end of the day was extremely limited. He accepted that there was an element of novelty, given that the 1979 Act was relatively new and the situation in the present case was perhaps the first occasion that it had arisen in litigation. Nevertheless, novelty of itself was not arduous; the factor in the Act of Sederunt implied that it had to increase the responsibility of the solicitor. That had not occurred here.

 

 

2. Importance to the client etc

 

The pursuer's solicitor pointed out, in support of this ground, that the pursuer is a private individual with limited resources. On that ground alone, the action was plainly of great importance to her, given the financial risks involved. The subject matter of itself would inevitably - and did in reality - cause her considerable anxiety. The action involved her home; the defenders were claiming nearly a half metre of her garden ground; she might lose a patio which was important to her. Because of these factors, the solicitor had been involved in a lot of "handholding", with much agent/client contact which would be taxed off by the Auditor. The importance of the matter to the pursuer was not to be tested objectively, but by her actual state of anxiety.

 

The defenders' solicitor submitted that the importance to the client must be tested objectively; just because the pursuer was excitable does not mean that the action is objectively important. Every court action is likely to be important to a litigant.

 

 

3. Steps taken to settle etc

 

The pursuer's solicitor drew attention to certain correspondence which has passed between the parties' agents during the course of the action.

 

First, he referred to his letter of 1 November 2004 to the defenders' agents in which he offered on behalf of the pursuer to accept the boundary line as pegged out by the pursuer's expert, Mr Smith, subject to certain conditions which included the defenders being liable in the expenses. By a letter of 10 November 2004, the defenders' agents responded by confirming that the defenders were prepared to consider the proposal, that they suggested a counter proposal which was close to the pursuer's proposal, but involved their expenses being paid by the pursuer, albeit that the agents did suggest that each party may need persuading that each pay their own expenses.

 

Secondly, the pursuer's solicitor referred to his letter of 24 February 2005. He said that by that time the parties had seen the plan which the Keeper proposed to incorporate into the Land Certificate. This letter confirmed that the pursuer was accepting the boundaries contained in that plan.

 

Thirdly, he referred to a business entry of a telephone conversation on 3 June 2005 between him and the defenders' solicitor during which they discussed the significance of the Land Certificate plan and the question of expenses.

 

The pursuer's solicitor submitted that these documents illustrated the efforts made by the pursuer to settle the action. It was, he said, clear after the Land Certificate had been issued that there was no ongoing issue to litigate about, that the pursuer had plainly been justified in raising the action in the first place and that the action could be settled if the defenders conceded expenses.

 

The defenders' solicitor said that these documents had been shown to him only shortly before the hearing of the motion. There had been many more discussions about settlement and in broad terms he was continually seeking to reach a settlement, but the pursuer's responses through her solicitor were dismissive.

 

In any event, he submitted that this ground for an additional fee was meant to cover the circumstance in which the solicitor was involved in a lot of work in relation to settlement or limiting the scope of the dispute. It was not intended to be used effectively as a back door attack on the question of who should be found liable in the expenses.

 

 

Discussion

 

The issues raised in this motion are by no means straightforward. There is a dearth of judicial authority on the matter - doubtless because it is well known that appeals against decisions on expenses are discouraged. Indeed, in the Court of Session, decisions on additional fees are usually dealt with by the Auditor and are rarely questioned.

 

It is clear that what the court must do is to decide whether a percentage increase of fees is appropriate to cover the responsibility undertaken by the solicitor in the conduct of the action. The rule then goes on to specify the factors (often colloquially referred to as "the seven pillars of wisdom") which the court must take into account. It is obvious that in almost all actions, the factors will apply to some or other extent. It is therefore a question of degree in each case as to whether an additional fee is appropriate. I was not referred to any authorities, but I respectfully agree with the dictum of Lord Johnston in Keystone Properties Limited v Sun Alliance and London Insurance plc, unreported 7 June 1994, in which he stated,

"In my opinion, the Rule of Court is designed primarily to reward solicitors upon whom special (my italics) responsibilities are imposed qua solicitor in the conduct of the case."

 

In considering those special responsibilities, the court must examine the facts and circumstances of the action under reference to the factors relied upon by the party seeking the increase and to assess their weight. (Lord President Hope in Gray v Babcock Power Limited 1990 SLT 693 at p695)

 

With that approach, I deal with the factors relied upon in turn.

 

 

1. The complexity of the cause etc

 

In my opinion, there was nothing especially complex about this action; nor was there any novel question justifying an additional fee.

 

The pursuer's solicitor said that the parties may well have wrongly litigated upon both the terms of the Disposition and the terms of the Land Certificate. If they were in error, it does not seem to me appropriate that one of the solicitors should be rewarded by an uplift in fees. But even if the parties were justified in litigating on that basis, in my view that did not make the action especially complex. Certainly detailed expert evidence was required and was not always easy to follow. But any difficulty was caused by the nature of the exercise in plotting a plan on the ground; it was not because two plans had to be plotted.

 

On the question of novelty, I accept that this may well be the first occasion that the effect of retrospective registration under the system of land registration has had to be considered. But that alone, in my view, does not justify an uplift. It seemed to me that the most basic - and easily understood - principle of registration meant that the rights of the parties were determined as at the date of registration of the title, no matter when the Land Certificate was issued. By litigating prior to its issue, each party was bound to be taking a chance that her or their favoured version of the boundary would not be supported in the decision of the Keeper. That the parties' solicitors might not (and I emphasise the word 'might') have understood that self evident principle does not make the matter a novel one.

 

 

2. Importance to the client etc

 

In describing this litigation in my judgment as 'lamentable', it is obvious that I did not think it to be important at all, even recognising, as I did, that feelings can run high where there are disputes about boundaries between heritable properties.

 

Nevertheless, I can accept that the factor as set out in the rule does not in express terms rule out the possibility of an uplift in fees because only the client sees the cause or the subject matter as especially important. At the end of the day, the rule requires the court to consider an uplift of fees from the point of view of the solicitor, not the client. An anxious client may well increase the solicitor's responsibility.

 

In my opinion, the court should be slow to award an increase simply because a litigant is having to take a risk with his own funds. Expenses are an important factor in ensuring parties look to compromising a dispute and it would be unfortunate if the court simply as a matter of course awarded an uplift to the privately funded litigant and thereby, if only in a small way, discouraged settlement. That is not to rule out such an award in appropriate cases, but I do not think that this is one of them.

 

I consider that different considerations apply to the importance of the subject matter. It is well known that owners of heritable property, particularly when it is their home, can become very anxious indeed about an alleged encroachment. That doubtless often reflects badly on them, but it is rarely the fault of the solicitor who acts on their behalf. It seems to me that such cases - and this is a very good (or bad!) example - can often result in a special responsibility being placed upon the solicitor, such that an uplift of fees is appropriate.

 

 

3. Steps taken to settle etc

 

While no other documents were produced, I can well accept that the defenders' solicitor was encouraging settlement throughout this action. The stumbling block for both parties was undoubtedly who was to be liable in the expenses. That was unfortunate, but in many respects was inevitable given the events that had occurred and the unwillingness of the parties to speak directly amongst themselves to resolve what was on any sensible view a dispute about very little of consequence, if anything at all.

 

It is difficult to know from the terms of the rule in what circumstances it is appropriate to award an uplift in fees. At first sight, it does appear strange that on one construction the successful party is in effect able to have a second opportunity to influence the amount of expenses awarded when one would normally expect that he would found upon any extra-judicial offer made during the course of the action at the point that the court was considering the question of liability in the expenses of the action as a whole. On the other hand, I am in doubt that, as the defenders' solicitor maintained, the factor applies only where a great deal of additional work has been done. If that was the intention of the draftsman, I see no reason why it was not expressly stated in the rule. Moreover, the issue of time and labour is already expressly contained in the second factor which the court must take into account.

 

I am unable to reach any conclusion on this question. What I have decided, however, is that if the fact, of itself, that an offer has been made justifies an uplift in fees it is not justified in the circumstances of the instant case.

 

The suggestion by the pursuer that the parties accept Mr Smith's measurements was an attempt by her to achieve the most she could ever hope to achieve from the action and could not in practice be said to be any compromise on her part. The same can be said about the proposal made in the telephone conversation on 3 June 2005. During that conversation the pursuer's solicitor apparently said that the physical boundaries were consistent with the Keeper's plan. I do not understand what is meant by that. Nor would I expect the defenders to understand it either. It was self evident to me that the plan was definitive of the rights of the parties, but there was still a potential dispute about how the plan would be plotted on the ground. Indeed, one of my criticisms of the parties was that having received the Land Certificate they did not instruct their respective experts to visit the site and agree a physical plotting of the plan. That, it seems to me, might well have resolved matters, albeit that there would still have been an argument about which party paid the expenses to that point.

 

It cannot be forgotten that it was only during the course of the proof that the pursuer eventually came to the view (in my view unreasonably late) that the defenders would not seek again to encroach on her ground.

 

In the whole circumstances, I do not consider that there was a special responsibility upon the pursuer's solicitor on the basis of this factor.

 

Conclusion

 

I therefore conclude that the motion ought to be granted but only in respect of the second factor relied upon, being number (v) in the rule, and that only to the extent of the importance of the subject matter of the cause to the pursuer.

 

I will allow a percentage increase of ten per cent in the fees authorised by the Table of Fees in respect of the expenses awarded to the pursuer.

 

I have arranged for the Sheriff Clerk to intimate this Note in draft form to the parties prior to the next calling simply to allow them to consider any motion which may have to be made in respect of the expenses of the motion. I am inclined to the view such expenses ought to be awarded in favour of the pursuer and will pronounce an interlocutor to that effect, unless the defenders wish the opportunity to seek to persuade me otherwise. This might well avoid an unnecessary appearance by the parties' solicitors. It would be helpful if, either by fax or e-mail, the parties can tell the Sheriff Clerk whether they agree that the expenses of the motion can be left to be dealt with as I propose.