Scottish Sheriff Court Decisions

AW27/09 Petition by Alan Stuart Matthew for renewal of a Guardianship Order for L.E.H.

 

Dundee, 20^th May, 2010 The sheriff, having resumed consideration of the cause, finds the applicant entitled to the expenses of the application out of the estate of the adult, L.E.H, said account to be assessed on an agent and client basis, client paying; Allows an account thereof to be given in and remits same to the Auditor of Court to tax and to report.

 

 

 

 

 

 

NOTE

 

[1] This is a summary application presented under s. 60 of the Adults with Incapacity (Scotland) Act, 2000, ("the 2000 Act") for the renewal of a guardianship order in relation to an incapacitated adult, L.E.H, the proposed guardian being Mr. Alan Matthew, Solicitor, Dundee. It is slightly unusual in that it arises from the need to "renew" a former appointment as a curator bonis, the appointment being held by the same solicitor in respect of the same incapacitated adult, on account of the concept of a curator bonis ceasing to exist due to the provisions of the 2000 Act. Section 80 of the Act rendered it incompetent after the commencement of the Act, in effect from 1^st. April, 2002, to appoint new curators bonis, tutors dative or tutors-at-law to anyone over the age of 16. Schedule 4 of the Act provided that at the date of commencement of the relevant provisions of the Act, those holding any of the foregoing offices would automatically become guardians of the persons instead, but that such appointments would be regarded as time limited and the newly created guardianship orders would require to be renewed. Schedule 4 seems to me to be virtually impenetrable but the law was altered by the Adult Support and Protection (Scotland) Act, 2007 which made it clear that all such "converted" guardianships would require to be renewed within two years of 5^th. October, 2007, though the existing order would continue so long as an application was lodged prior to that date pending the determination of the application. Otherwise the appointment would fall and would require to be the subject of a fresh application. This particular application was lodged on 2^nd. October, 2009 and the order for renewal was granted on 12^th. January, 2010, subject only to continued consideration of the issue of expenses. At least part of the reason for this was that these old offices did not have specifically defined powers - the old form of interlocutor tended to appoint persons to the office "with the usual powers" whereas under the 2000 Act the philosophy was that the least restrictive powers should be granted and that the order made accordingly should therefore be in precise terms, so that in these renewals it was necessary for applicants to seek specific powers.

 

[2] In connection with this particular application, Mr. Baijal, Solicitor for the applicant, drew my attention to the decision of Sheriff K.E.C. Mackie at Edinburgh Sheriff Court in relation to two applications under the 2000 Act with the respective references AW6/06 and AW81/05 in which he understood that the learned sheriff had reached the conclusion that the appropriate basis for an award of expenses in relation to applications under the Act was as between party and party, whereas he had hitherto assumed that agent and client was the appropriate basis and that previous accounts in relation to previous applications in this court had been taxed on that basis.

 

[3] I took time to consider Sheriff Mackie's decision. I deduce from para [5] thereof that the same solicitor was involved in each application and that law accountants had drafted accounts on his behalf, one on an agent and client basis and the other on the basis of Chapter III of Schedule 1 of the Act of Sederunt (Fees of Solicitors in the Sheriff Court)(Amendment and further Provisions) 1993. In addition it appeared that there were aspects of each account which appeared to be unsatisfactory. There was a hearing at which further material was sought from the law accountants concerned which apparently did not materialise. Approval of the accounts was accordingly refused in hoc statu on 10^th. November, 2006. Some seven months later, motions for the approval of the accounts were lodged and a hearing ensued. The position was, on one view, complicated and on another view, simplified, because in each case an award of expenses had been made simpliciter and a line of authority was drawn to the attention of the sheriff to the effect that once an award of expenses had been made on that basis, that implied that the account should be taxed on a party and party basis, and the learned sheriff concluded that the accounts should be sent back to the Auditor of Court for re-taxation on that basis. These authorities were Fowler, Petr 1917, 1 SLT 266; Johnstone (1885) 12 R 168; McGregor v Ballachulish Slate Quarries Co. Ltd 1908 SC 1; Merry & Cunningham v District Committee of the Middle Ward of Lanarkshire 1926 SLT (Sh. Ct) 107; Murphy v Muir 1927 SLT (Sh. Ct.) 55; Grant v Giffnock Collieries (1928) 44 Sh Ct Rep 211; Walker v McNeil 1981 SLT 21 and Manders v Lacon Floors Limited 1993 SCLR 311. Sheriff Mackie's judgment is a judgment from Edinburgh Sheriff Court of 7^th. July, 2008 in relation to the petitions numbered AW6/06 and AW81/05. I have to say that I am unconvinced that in an application involving the appointment of a person in a representative or fiduciary capacity the line of authority necessarily supports the conclusion that where expenses are awarded simpliciter, they must be taxed on a party and party basis, but it is not necessary for me to determine that issue for the purposes of this present litigation.

 

[4] Although it seemed to me that her decision turned on the meaning of an interlocutor containing a decerniture simpliciter for expenses, the learned sheriff made a number of observations, in what seems to me, with respect, a very thorough analysis of such authority as there is and of the considerations relevant to the expenses which ought to be associated with a petition under the 2000 Act. She refers to section 8 of the 2000 Act, its only section in which there is any reference to the subject of expenses. It provides:-

 

"(1) Where in any court proceedings (other than, in the case of a local authority, an application under s. 68(3)), the Public Guardian, Mental Welfare Commission or local authority is a party for the purpose of protecting the interests of the adult, the court may make an award of expenses against the adult or against any person whose actings have resulted in the proceedings.

 

(2) Where in any court proceedings (other than, in the case of a local authority, an application under section 68(3)) the Public Guardian, Mental Welfare Commission or local authority is a party for the purpose of representing the public interest, the court may make an award of expenses against any person whose actings have resulted in the proceedings or on whose part there has been unreasonable conduct in relation to the proceedings."

 

Proceedings as envisaged by either of these sections would be unusual, and, without expressing a concluded view, it would be difficult to see how such awards of expenses could be other than on a party and party basis in accordance with the table of fees apposite to summary applications, because, by definition, there would be a litiscontestation involving more than one party. I observe that in the annotated version of the 2000 Act, with annotations by Mr. Adrian Ward, which purports to state the law as at 1^st. April, 2008, the learned annotator observes that, " Expenses would accordingly appear to be within the sheriff's discretion, either under the sheriff's general powers in section 3 or (as all applications under this Act are to be made by summary application), or under s 2(2) under the sheriff's inherent power to dispose of questions of expenses in summary applications (see Macphail, Sheriff Court Practice, 3^rd. Ed, Para 26.46) While expenses are not normally awarded in applications to the sheriff in his administrative, rather than judicial, capacity (ibid. para. 26.47) the purpose of most, if not all, of the provisions of this Act for application, remit or appeal to the sheriff include ensuring compliance with ECHR Art. 6, therefore it seems unlikely that any procedure before the sheriff under this Act would be held to be administrative rather than judicial (but see ibid. para 26.38 for cases where, for purposes of right of appeal, decisions by the sheriff under the 1984 Act (which I take to be the Mental Health (Scotland) Act, 1984 which has, of course, now been wholly repealed by the Mental Health (Care and Treatment)(Scotland) Act, 2003), were held to be administrative." Mr. Ward also makes reference to Sheriff Mackie's decision.

 

[5] Sheriff Mackie at para [11] of her judgment made the point that, in the absence of any authority on the subject of expenses under the 2000 Act, it was appropriate to look at what awards were regarded as appropriate in the case of others acting in a fiduciary capacity. I wonder, but express no concluded view, as to whether a distinction requires to be drawn between applications for the appointment of an intervener or guardian on the one hand, and actions for the benefit of the incapacitated adult where the intervener or guardian raises or defends proceedings in respect of the adult's interests, which need not, of course, proceed by way of summary application, and where the person acting in the fiduciary or representative capacity has to have in mind the same considerations as an ordinary litigant. In this particular case, I am dealing with the specialty of an application for the renewal of a guardianship where the applicant was formerly curator bonis to the adult, which office has now ceased to exist as a matter of law, for persons aged 16 and over, to be replaced by a guardian, where the 2000 Act, as amended by the Adult Support and Protection (Scotland) Act, 2007, set out that all such "converted" guardians had to have their guardianship renewed by 5^th. October, 2009, or at least the procedure for renewal initiated, or be faced with making a new application for guardianship, so that while this is similar to an application for guardianship or intervention orders, it is not such an application as those dealt with by Sheriff Mackie in her judgment. The application for renewal had to proceed by summary application, so that to that extent, there is no material distinction, in my opinion. However, in Macphail's Sheriff Court Practice, 3^rd Ed at para. 19-45, the learned author states, " A person who in a fiduciary or representative capacity, such as a trustee, judicial factor or liquidator, engages in a reasonable and necessary litigation, is entitled to be indemnified out of the estate in respect of expenses reasonably and properly incurred by him; and in such a case, taxation between solicitor and client, client paying, is usually the appropriate basis of taxation." He supports this assertion by reference to Miln's Judicial Factor v Spence's Trs. 1929 SLT 279 and Sinclair v Royal Bank of Scotland 1983 SLT 256.

 

In the former case, a judicial factor raised an action of multiplepoinding as pursuer and nominal raiser presumably to have judicial determination of the destination of funds he had accumulated in his fiduciary capacity. The decision is about on what basis he was entitled to an award of expenses out of the fund. He was awarded expenses out of the factorial estate to be taxed as between agent and client, without further specification, and the account was remitted to the Auditor of Court to tax and to report. At the diet of taxation, there was a dispute about what the interlocutor meant - whether it was agent and client, client paying or third party paying. The Auditor referred the dispute back to the court and Lord Fleming, after hearing argument, concluded that the award should be of expenses to be taxed as between agent and client, client paying. In his judgment at p.281 he said:-

 

"The award upon which the judicial factor relies did not find any of the other parties to the case liable in damages. It finds that the expenses incurred by the judicial factor are a proper charge against the trust estate, which means, of course, that they must ultimately be borne by those interested in that estate. The award in favour of the judicial factor was not, however, made on account of his success in the action, but is merely an example of the ordinary rule that a person who in a fiduciary or representative capacity, e.g. a trustee or judicial factor or a liquidator, engages in a reasonable and necessary litigation is entitled to be indemnified out of the estate in respect of expenses reasonably and properly incurred by him. I do not see that there is any ground for making any distinction as regards this matter between a trustee under a trust deed and a judicial factor or liquidator. Persons holding these offices are all entitled to be indemnified out of the estates under their charge for expenses properly incurred by them, and accordingly in a sense a third party pays these expenses; but I think it is a novel idea that they are therefore to be restricted to what might be recoverable under the scale of agent and client, third party paying......the meaning of the award in favour of the judicial factor is that he is to receive out of the estate the expenses of all proper and necessary steps taken by him so that he may be kept completely indemnis."

 

Curators bonis were a species of judicial factor historically and have metamorphosed into guardians by virtue of section 80 of the 2000 Act. They remain, however, persons assuming responsibility for the affairs and estate of an incapacitated person and from that perspective it seems to me that guardians in 2010 are in no different position from judicial factors in 1929.

 

[6] In Sinclair v The Royal Bank of Scotland Ltd. 1983 SLT 256, there was a competition among trustees about the meaning and application of a certain testamentary writing, so that there was a litiscontestation and all parties received expenses from the estate but on a party and party basis. I do not consider that that reflects a situation which is on all fours with the basic summary application under the 2000 Act for the appointment of a guardian.

 

[7] In Fowler, Petitioner 1917 1 SLT 266, at the conclusion of a petition to disentail where one of the prospective heirs was a minor, a curator ad litem was appointed to represent the interests of the minor in the litigation. The petitioner was found liable to the respondents in expenses without further order or specification of the scale in the interlocutor awarding expenses. The Auditor of Court determined to tax the account of the curator ad litem on the agent and client, client paying basis. Objections were lodged and the matter came before the Lord Ordinary, though a central plank of the argument appears to have been that an interlocutor for expenses having been granted without further specification of the scale, the award had to be on a party and party basis. Lord Anderson, at p. 268, acknowledged that as a matter of generality that was so but also concluded that there was an element of discretion vested in the Auditor which he had properly exercised on this occasion by allowing expenses on an agent and client basis because "a curator ad litem is entitled to reimbursement of all expenses reasonably incurred by him." Again, in my opinion, this reflects a position wherein a person in acting in a fiduciary capacity normally gets an award on an agent and client, client paying basis.

 

[8] In Johnstone, Petr. 1885 12 R 468, Lord Kinnear concluded that a curator ad litem appointed to safeguard the welfare of a minor in connection with another petition to disentail was entitled to recover the expenses "which have properly been incurred" including, specifically, the expenses of his appointment, though there was no discussion about the scale of expenses which would be appropriate.

 

[9] In McGregor v Ballachulish Slate Quarries Co Ltd., 1908 SC 1, where on the day that the shareholders of a company in extraordinary general meeting voted for its voluntary winding up, a creditor's petition was granted at the Court of Session for its compulsory winding up, the liquidator appointed by the shareholders presented a petition to allow the voluntary winding up to be continued under the supervision of the court, which was granted. An interlocutor was pronounced which, inter alia, "Finds the petitioner and the respondents entitled to their expenses as these may be taxed by the Auditor, to whom remits for taxation, and directs these expenses to be expenses in the liquidation." The Auditor taxed the petitioner's account on an agent and client basis. The respondents argued that where the court intended that a party should get his expenses on any basis other than party and party that that should be reflected in the interlocutor awarding expenses. In the opinion of the Court given by the Lord President (Dunedin) he stated that that would be the normal rule but said in relation to a case of this nature that it was an exception to the normal rule "because there is in the proper sense of the word no question of party and party." At page 168 it was stated, "He was not found entitled to expenses as having been the victor in a litigation against another party. He was found entitled to expenses because it was his petition that initiated the whole matter and really formed the true basis of the liquidation. Now, in this case the truth is there is no question of any party against party to whom the rule is to apply. Accordingly I think the Auditor has done according to the ordinary practice, and according to the right practice, in allowing the petitioner the expenses he has incurred so far as reasonable - that is, his expenses taxed as between agent and client."

 

That approach again accords with my conviction that, in the absence of litiscontestation, expenses in respect of a summary application under the 2000 Act for the appointment of a guardian should be on an agent and client basis, though I accept the point about what the interlocutor awarding expenses should state.

 

[10] Sheriff Mackie was also referred to Merry & Cunninghame v District Committee of the Middle Ward of Lanarkshire 1926 SLT (Sh Ct) 107, which I have also considered but do not find in its facts and circumstances anything of any relevance to the present issues. I simply observe, however, that like the succeeding case of Murphy, it does appear to reflect an approach which is more interested in the merits of the case and how expenses should be resolved having regard to the expenses than the technical terms of an interlocutor purporting to deal with expenses, at least so far as concerns proceedings in the sheriff court.

 

[11] I confess to the soaring of my independent spirit on a reading of the judgment in Murphy v Muir 1927 SLT (Sh Ct) 55, a decision of Sheriff-Substitute Neish at Edinburgh, refusing to follow the line taken on expenses in the Court of Session and supporting his position, in essence, by reference to the greater variety of work in the sheriff court, the fact that judgments are normally issued in writing in the sheriff court as opposed to extempore in the Coourt of Session and it is normal to know the outcome of a case before seeking expenses in the sheriff court. He also posed the question, at least by inference, where is the fairness in not allowing parties at whatever point in the procedure it may be apt to do so an opportunity to address the court on the subject of the expenses of the action and on what basis they should be awarded. He considered the merits of the action to be more important than the time at which a competition over expenses took place. I respectfully concur.

 

[12] It is clear, I think, that in Walker v McNeil 1981 SLT (Nts) 21, Lord Maxwell, whose opinions are always worthy of close consideration, was less than happy about being constrained by the line of authority prohibiting the subsequent variation of an interlocutor awarding expenses without further specification in a case involving employees seeking declarator of their pension rights following a change of ownership of their employer. At the foot of page 21, he said, "In my opinion in the light of the whole circumstances disclosed to me in this case, looked at objectively, the attitude on the part of the pension fund trustees has been less than reasonable. It appears that they have had at no time any reasonable ground for opposing the pursuers' demands or at any rate for adopting the attitude that all the pursuers could get was the return of their contributions. It seems to me that the pursuers ought not, in these circumstances, to have been put in the position of having to raise this action and go through with it to the point of an abortive procedure roll. In the circumstances, in my opinion this would be an appropriate case in which to award expenses on the agent and client basis as sought by the pursuers." He went on, however, to acknowledge that, insofar as expenses had already been awarded to the pursuers without further specification, the authorities to be found at page 431 of Maclaren, Expenses, were binding upon him and that meant that those expenses had to be restricted to party and party.

 

[13] Finally the decision of Sheriff Principal Nicholson in Manders v Lacon Floors Limited 1993 SCLR 311 appears to me to turn on the peculiar facts and circumstances of that case and to have no general application.

 

[14] In the applications considered by Sheriff Mackie, both of which were applications for the appointment of guardians under the 2000 Act, in each case interlocutors had been pronounced in which the applicants were found "entitled to the expenses of the application as taxed out of the adult's estate." Patently, there was no further specification of the scale on which expenses were to be assessed. One account was presented on an agent and client basis, client paying and another on a party and party basis. There were a number of issues with the accounts and I have the impression, I trust not incorrectly, that the learned sheriff was less than happy with the agents, their law accountants and the Auditor of Court. However, she states in terms in paragraph 8 of her judgment that one of the issues with which she requires to deal is, "On what basis should an account of expenses in an application under the Adults with Incapacity (Scotland) Act be taxed ?" At paragraph 11 of her judgment, she acknowledges that a guardian is acting in a fiduciary or representative capacity and that it is accordingly apt to look at authorities on the awards of expenses to persons acting in such a capacity. She refers to the text of Macphail, 3^rd. edition at para 19.45, to which I have earlier made reference and which supports agent and client, client paying as the usual basis for assessing expenses for a person acting in a representative capacity. Having considered the authorities, at the end of para. 14 of her judgment, she says, "Accordingly it seems to me that, if asked for, it is likely, depending upon the circumstances, that expenses as between agent and client will be awarded, so that a person acting or about to act in a fiduciary capacity may be reimbursed for expense reasonably and necessarily incurred for the benefit of the ward." So far, so good.

 

[15] The difficulty arises on a consideration of paras. [32] and [33] of the learned sheriff's judgment wherein she expresses the opinion, on the face of it obiter, that the question of expenses in applications such as these requires further consideration. At para. [32] she says, "The amount of the sums claimed as expenses in each case appeared to me to be significant in relation to the size of the adult's estate." I recognise, of course, the importance of being pragmatic in relation to incurring expenses that are so substantial as to erode an estate wholly or substantially, but it seems to me that that is one of the difficult considerations with which an applicant and his or her legal adviser has to grapple whenever the propriety of an application under the 2000 Act is required to be considered. It is an over-simplification to say that if an adult is incapacitated then he or she requires a guardian but commonly that will be the case. Whether that guardian requires powers of control over the adult's finances and property will depend on the circumstances of the case and the nature and extent of the adult's estate. Of course, the applicant for appointment for guardianship will commonly not be able to ascertain the extent of an incapacitated adult's estate until the appointment has been made. There are commonly difficult human rights considerations reflected in Section 1, amongst others, of the 2000 Act, including the statement of principle that there should be no intervention in the affairs of an adult unless such intervention will benefit the adult and such benefit cannot otherwise be achieved. Such intervention is to be the least restrictive option in relation to the freedom of the adult. Account has to be taken of the wishes and feelings of the adult so far as they can be ascertained, and that imposes on the applicant and his or her legal representative a duty to explore what the wishes and feelings of the adult were prior to the onset of incapacity. The views of others are also to be ascertained and the powers to be sought should not be more than are reasonably necessary for the protection of the adult and his or her estate. There is already a developing jurisprudence as to what effect is to be given to these principles and considerations in given circumstances. I do not regard these as easy questions and while I would have concerns about any application the effect of the making of which would be denude the adult's estate, I recognise that there may be cases where to obtain the legitimate benefit of having care costs met by a local authority, there may be merit in incurring such costs to get the guardian appointed so that applications for funding can be made by a duly authorised representative.

 

[16] Sheriff Mackie, at the conclusion of para. [32], makes reference to section 68 of the 2000 Act and has in mind, I deduce, subsection (6) which imposes upon the Public Guardian the duty to regulate the fees and outlays charged by a guardian in the administration of the adult's estate and requires the Public Guardian, in the exercise of that duty, to take into account the value of the estate. With the greatest of respect to my learned colleague, I have difficulty in seeing what that has to do with the account of expenses for the appointment of the guardian in the first place, as opposed to the annual administration charges following appointment.

 

[17] I have the misfortune to disagree with my learned colleague most particularly when she suggests that applications under the 2000 Act are not complex pieces of litigation. No doubt she is correct in her suggestion that the computer and the word processor make the task of preparing the petition simpler in practical terms but that would be to ignore the thinking time which each of these applications require and the range of investigations required to ensure that the statutory requirements are met. While I recognise that Mr. Ward and others have suggested forms for applications and formats for powers to be craved, the reality remains that the agent framing the application must consider what is appropriate for each adult having regard to their personal circumstances, the nature and extent of their incapacity and the nature and extent of their estate. In my experience, and I have been considering these applications weekly since April, 2002, very view of them are straightforward and most are multi-faceted. Perhaps that has not been the experience in Edinburgh.

 

[18] In my opinion, there is a clear line of authority for the proposition that in respect of an application for appointment as guardian, the appointee is entitled, where seeking an award of expenses is appropriate at all, to expenses on an agent and client, client paying basis. This reflects the correctness of ensuring that someone prepared to take responsibility in a fiduciary capacity is not personally out of pocket for doing so. Of course the expenses to which an applicant would be entitled would be those "reasonably and necessarily incurred" and that is a matter initially for the discretion of the Auditor of Court and thereafter for the sheriff if objections to the account are taken, and perhaps there is a need for the Public Guardian from time to time to consider whether accounts appear to demonstrate charges that are being unreasonably and unnecessarily incurred, but that does not affect the principle applicable to be basis upon which such accounts should be charged. This is not a litiscontestation and there are no "parties" as that concept is normally understood in relation to litigation in Scotland. An award of expenses on a party and party basis, where the notion behind that concept is that the expenses of litigation between parties should be kept as minimal as possible so as not to discourage litigation where litigation is required, is foreign to an uncontested application for the appointment of a person to act in an administrative and representative capacity. It follows that in relation to this particular application that Mr. Matthew should be found to be entitled to an award of expenses from the estate of the adult and that those expenses should be assessed on an agent and client, client paying basis. I have decerned accordingly and remitted the case to the Auditor of Court to tax and to report.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ANNEX 2 SHERIFF COURT

 

JUDGMENT RECORD AND CATEGORISATION SHEET

 

----------------------------------------------------------------------------------------------------------------

 

CASE NUMBER: AW 27/09

 

AUTHOR: Sheriff Richard A Davidson

 

Date Signed by Author: 20^th. May, 2010-05-26

 

Date Received by Mrs. Cranston:

 

Date Published on Web:

 

___________________________________________________________________________

 

SHERIFF'S EDITING COMMENTS;

 

Was editing necessary ? Yes

 

Judgment has been edited as required - Yes, 26^th. May, 2010-05-26

 

CATEGORISATION OF JUDGMENT:

 

The judgment should be recorded under the following categories:

 

Adults With Incapacity: Guardianship : Expenses

 

___________________________________________________________________________