Scottish Sheriff Court Decisions

SHERIFFDOM OF LOTHIAN AND BORDERS AT EDINBURGH

 

SQ304/10

 

JUDGEMENT

 

of

 

SHERIFF WILLIAM HOLLIGAN

 

in the Note of Objections in the cause

 

THE CITY OF EDINBURGH COUNCIL, Chesser House, 500 Gorgie Road, Edinburgh

 

Petitioners

 

JOHN STEVENS, 14B-4 Riversdale Crescent, Edinburgh EH12 5QT (correctly known as John Stephen)

 

Respondent

 

__________

___

 

Act: Massaro, HBJ Gateley

Alt: Lay representative (Mr L) and party

 

Edinburgh 18^th November 2011

 

The sheriff, having resumed consideration of the cause; sustains the Note of Objections for the petitioners; remits the matter to the auditor to tax the respondent's account of expenses in accordance with this Note; finds the respondent liable to the petitioners in the expenses of the Note of Objections; allows an account thereof to be given in and remits the same when lodged to the auditor to tax and report.

 

Note

 

[1] This is a Note of Objections to a report of the auditor dated 26^th May 2011 ("the report"). The principal proceedings ("the petition") were brought by the petitioners whereby they sought an award of sequestration against the respondent. Warrant to cite was granted on 23^rd September 2010. The petition first called on 2^nd November 2010. Consideration of the petition was continued until 30^th November when it was again continued until 14^th December on which date the petition was dismissed with an award of expenses in favour of the respondent. The interlocutor contained the usual remit to the auditor to tax the respondent's account and to report. I am not concerned with the merits of the petition. It is sufficient to say that the petition concerned an alleged liability of the respondent for council tax. As I understand it, at the first two hearings, the respondent appeared without any legal representation. On 14^th December 2010 the respondent appeared with a Mr L. I was told that Mr L was allowed to represent the respondent as a lay representative and that no objection was taken thereto. I was also told that there was some, brief discussion before the sheriff as to whether the respondent had occurred any expenses but that the matter was not considered in detail. The interlocutor of the sheriff dated 14^th December refers to the sheriff having heard the "debtor and his representative". In the light of the issues raised before me, Mr Massaro, somewhat generously it seems to me, took the view that I could refer to the respondent's representative without using his name. That I have done.

 

[2] In relation to procedure before the auditor, Mr Massaro appeared on behalf of the petitioners and the respondent appeared personally. I understand that the auditor sent parties a copy of his draft report in order to ensure that he had noted the arguments correctly after which he issued his report which is now the subject of the Note of Objections before me. The account of expenses prepared by the respondent comprises two principal elements: his own expenses, amounting to £7,190 and those of, as he put it in his account, "my legal adviser, Mr (L), amounting £5,520". The report brings out a taxed sum of £12,934. It is a matter of agreement that Mr L is a barrister admitted to the Bar of England and Wales. When the matter first called before me on 18^th August Mr L was in attendance but he did not appear on behalf of the respondent. There was sufficient time to hear Mr Massaro only. Before I adjourned the proceedings, Mr L asked for leave to address me following the nature of certain submissions made to me by Mr Massaro. In short, at the adjourned hearing I allowed Mr L to appear as the lay representative of the debtor which also gave Mr L the opportunity to respond to certain submissions made by Mr Massaro. Mr Massaro took no objection to this course of action.

 

Issues before the auditor

[3] I shall not set out in detail all that was put before the auditor but it may be helpful to understand the arguments put before me if I summarise part of the report. It was a matter of agreement that the "expenses" recoverable by a party litigant are as provided by the Act of Sederunt (Expenses of Party Litigants) 1976, SI 1606 of 1976, as amended by the Act of Sederunt (Expenses of Party Litigants) Amendment, SI 1438 of 1983 which, for convenience, together, I shall refer to as "the 1976 Order". The 1976 Order was enacted pursuant to the Litigants In Person (Costs and Expenses) Act 1975 ("the 1975 Act"), an Act of the United Kingdom parliament which applies both to England and to Scotland. The auditor decided that he should value the respondent's time at £90 per hour and apply sum that throughout the account. As I understand it, the calculation of £90 per hour was based upon a sum amounting to two thirds of the rate per hour which a solicitor would have been entitled to charge in accordance with the table of fees then in force. The figure of £90 per hour as such, was not the subject of challenge before me. I shall return to this issue. The respondent's account was broken down into a number of headings. In short, the respondent claimed 24 hours for preparation time and attendance at the three court hearings (to include travelling time from Fife). He also claimed 8 hours by way of preparation of documentation for challenging the petitioner's assertion in the petition as to the respondent's residence. He submitted a claim for 20 hours for "preparation of and consideration of legal representations by the council". The auditor records that after the second hearing the respondent realised he needed "legal advice" and, after having seen his website, instructed Mr L. The respondent met and consulted with Mr L. He made a claim for 14 hours for meeting and telephone discussions "with legal council" (sic). A further allowance was made for travelling expenses. In addition to the above Mr L submitted an invoice for two days of preparation at £1,760 per day and for £2,000 for attending court on one day. The auditor recorded that "For a barrister of 20 years standing, these figures are not excessive in a party and party account". It is recorded Mr Massaro submitted that sanction for the instruction of counsel was neither sought nor granted. The auditor appears to have proceeded upon the basis that Mr L's account was an outlay and that it was "reasonably incurred" in accordance with the 1976 Order. Mr Massaro submitted that the account, taken as a whole, was excessive. Mr Massaro then addressed the auditor on what he submitted was the proper construction of the 1976 Order to which I will later refer. In short, the auditor rejected Mr Massaro's submission. The net result is that the auditor did not tax anything off the respondent's account to which there fell to be added further items bringing out a total of £12,934.

 

Submissions for the Petitioner

[4] In relation to the proper approach to Notes of Objection to a report of the auditor Mr Massaro referred to the following authorities: Wood v Millar 1960 SC 86; Ahmed's Trustee v Ahmed (No.1) 1993 SLT 390; City of Aberdeen Council v WA Fairhurst 2000 SCLR 392; Rennie v The Society of St Vincent de Paul 2007 SLT 308. Mr Massaro then referred to both the 1975 Act and the 1976 Order. He also referred me to rules 15 and 16 of the Act of Sederunt (Sheriff Court Bankruptcy Rules) 2008 ("the bankruptcy rules") which deal with the question of representation in petitions for sequestration.

 

[5] Mr Massaro submitted that in relation to the invoice from Mr L such a fee was not "reasonably incurred for the proper conduct of the cause" as prescribed by rule 2 of the 1976 Order. Rules 15 and 16 of the bankruptcy rules permit representation by non-professional persons. The rules do not authorise a person such as Mr L to charge a fee for his appearance or for advice and assistance in connection therewith. In effect the auditor has put the respondent in a better position than he would have been than had he instructed a solicitor. The respondent could have instructed a solicitor. Had he instructed counsel he would have required sanction for his instruction in order to recover his fee. Rule 2(1)(b) allows a party litigation to recover "outlays reasonably incurred for the proper conduct of the cause". Although there was no authority dealing with the interpretation of that phrase at it appears in the 1976 Order, guidance could be obtained from authorities dealing with similar matters in party and party accounts. Reference was made to Ahmed's Trustee; City of Aberdeen Council and Rennie. Mr Massaro submitted that the question as to whether an outlay had been reasonably incurred was an objective test as determined between the two parties and having regard to the public interest. If the respondent had wanted legal advice he ought to have instructed a solicitor or an advocate and then sought sanction in the usual way. What he had done was not reasonable. In the effect, the respondent was seeking to circumvent the usual rules by instructing an English barrister and then seeking to recover his costs in full. Rules 15 and 16 were introduced following an amendment to section 32 of the Sheriff Court (Scotland) Act 1971 introduced by section 33 of the Bankruptcy and Diligence Etc. (Scotland) Act 2007 ("the 2007 Act"). The purpose of the amendment was to allow for lay representation. Reference was made to the commentary by Nicholas Grier on the 2007 Act in Current Law Statutes. The real purpose was to allow agencies such as the Citizens Advice Bureau and Money Advice Scotland to appear on behalf of debtors at the first calling of sequestration petitions. Mr Massaro also referred to rule 1.3A of the Ordinary Cause Rules (lay support) and to passages from the report of the Civil Courts Review (Volume II 2009) chapter 11, pages 19-22 and Lay Representation in the Court of Session and the Sheriff Court Consultation Paper (July 2011).

 

[6] Mr Massaro also submitted that Mr L's fee was not recoverable because the fee was unlawful. Mr Massaro accepted that this particular argument had not been pursued before the auditor but it was open to him to pursue it before me. The question was one of law. The respondent said that Mr L provided the respondent with professional legal advice and assistance and that Mr L represented him in court. Mr L was thus practising as a solicitor. Rendering a fee for practising as a solicitor is contrary to section 23(1) of the Solicitors (Scotland) Act 1980 ("the 1980 Act"). Reference was made to Millar v The Council of the Law Society of Scotland 2000 SLT 513; Agassi v Robinson (the Inspector of Taxes) (No 2) [2006] 1 WLR 2126 and Westland Helicopters Limited v Sheikh Salah al-Hejailan [2006] 4 Costs LR 549.

 

[7] In relation to the respondent's claim for time spent Mr Massaro submitted that the time claimed was excessive. The auditor approached the issue incorrectly. What the auditor should have done is to consider how much time a solicitor would reasonably, necessarily and properly have taken to carry out the work in responding to the petition, calculate the fee that the solicitor would be entitled to charge for that work based on the usual table of fees and then reduce the fee to two thirds of that sum. The auditor had not done that. The case of Bell v McGlennan (No 2) 10^th June 1994 (unreported) referred to by the auditor was not really relevant. Mr Massaro then set out the background to the enactment of the 1975 Act and the 1976 Order by reference to a number of authorities which he submitted set out the correct approach to the construction of the 1976 Order: MacBeth Currie & Co v Matthew 1985 SLT 44; Forbes v Whyte (1891) 18 R 688; Malloch v Aberdeen Corporation (No 2) 1973 SLT (Notes) 5; Hart v Aga Khan Foundation (UK) [1984] 1 WLR 994; Mealing- McLeod v The Common Professional Examination Board [2000] Costs LR 223; R (Wulfson) v Legal Services Commission [2002] Costs LR 341. What the auditor did was to take two thirds of the hourly rate a solicitor would have charged in order to reach the sum of £90 and then allow all of the respondent's time charged at that rate. That was not correct. In the proceedings before him Mr Massaro presented the auditor with an account of what a solicitor would have charged for the work. The overall result of the auditor's approach is that the petitioners were worse off than if the respondent had been represented by a qualified Scottish solicitor.

 

[8] Mr Massaro had a number of subsidiary arguments to make in the event that I was against him on his principal submission. I do not consider it is necessary to record these nor, in the light of my conclusions, to deal with them.

 

[9] As I have said, submissions in answer to Mr Massaro were made by Mr L as the representative of the respondent when the matter next called before me on 7^th October.

 

 

 

 

 

Submissions by Mr L

[10] In Mr L's submission, a barrister such as himself was a lay person in the circumstances of this case. Mr L had become involved because of issues said to arise under Article 6 of the European Convention of Human Rights (namely the use of summary warrants). Mr L said that he could only appear as representative in terms of rule 15. He was not appearing as a barrister or a solicitor. He had been allowed so to appear by the sheriff. What the petitioners were trying to do was to mount a collateral challenge to that ruling. If the petitioners were challenging the decision of the sheriff to allow him to appear as a representative then the decision should have been appealed. It was not. Although the petitioners alleged that the case was not complex it was their actions which had made it complex. The actions of the respondent were reasonable and responsible. Mr L said that a large part of his practice involved advising in relation to the law on human rights but that did not involve advising as a practitioner in other jurisdictions. Furthermore, Mr Massaro was raising points that he did not raise before the auditor and he should not be allowed to raise them now. Rule 15(1)(b) refers to "properly able to represent the debtor". The sheriff must therefore have made a decision that Mr L could represent the respondent without being in breach of other legislation. Mr L submitted that, in matters of European law he would be entitled to appear before the European Court but could not do so, as a barrister, in Scotland. In Scotland he was a lay person and "authorised" and thus entitled to do all that the rule permitted him to do as such. In terms of rule 16 the respondent was entitled to recover his costs subject to the rule. Everything which an advocate or solicitor can do can be done by a lay representative. The respondent was thus entitled to recover the expenses of the person who was doing the work for him.

 

[11] In relation to the 1980 Act, Mr L said he was not acting as a solicitor. He was representing the respondent under rule 15(3) which permitted him so to do. Otherwise any lay representative might be caught by the terms of the 1980 Act. Mr L made passing reference to certain English civil procedure rules but accepted that Scottish rules would take precedence. It was for the auditor to make findings on the facts and to make his determination. The petitioners have to be able to say that the auditor has wholly misdirected himself. At one point Mr L submitted to me that the sheriff had allowed the respondent his fees and outlays although the basis for that was not made clear. The respondent had consulted Mr L as someone with experience in human rights law. In answer to a question by me, Mr L submitted that the auditor had not dealt with Mr L as a barrister. Mr L repeated that he was not instructed as counsel and could not be counsel. However, English counsel regularly appeared in Scotland in relation to employment and immigration matters and it was not suggested that in doing so they would fall foul of section 23 of the 1980 Act.

 

[12] In relation to the interpretation of the 1976 Order, as I have him noted, Mr L accepted that the rule said what it did although, initially, he did take the position that there was no upper limit on fees which a party litigant could recover and that each case had to be taken on its own merits.

 

Reply by Mr Massaro

 

[13] Mr Massaro did not dispute that the sheriff had made an award of expenses against the petitioners but these expenses still had to be taxed in the ordinary way. Mr Massaro accepted that he had not advanced an argument as to the legality of Mr L's fee but the other arguments put before me had been raised before the auditor. In relation to the construction of the 1976 Order Mr Massaro referred again to Hart and Macbeth Currie both of which he said supported his analysis. Section 33 of the 2007 Act dealt with "lay representatives". When one looks at the auditor's report it makes reference to "professional advice" (page 5 paragraph 7); "professional legal help" (page 6 paragraph 3); "legal representative" (paragraph 10). If the respondent did not get legal advice, in which case questions of legality and "reasonableness" under the 1976 Order arise, or if it was not legal advice, why pay such a fee when there is no professional legal relationship? It was open to the petitioners to raise the questions of the legality of the fee now. Reference was made to paragraph 19.38 of McPhail on Sheriff Court Practice (3^rd edition). Whether something was lawful is matter to which the court can have regard. Employment and immigration tribunals were different bodies with their own rules.

 

Decision

 

[14] The law as to the approach to be taken by the court on a Note of Objections is well settled and contained within the authorities to which Mr Massaro referred. It is sufficient that I quote from the Opinion of Lady Smith in the case of Rennie, the most recent of these:

"[30] As regards the circumstances in which the court can interfere with the auditor's decision, as was commented in the case of Wood v Millar, the court must be careful not to substitute its own views. It should be slow to interfere and can only do so where it is satisfied that the auditor has taken irrelevant material into account, left relevant material out of account, misunderstood the material before him, misdirected himself on that material or on the law or has reached a perverse decision in the sense that he reached a decision that no reasonable auditor would, in all the relevant circumstances have reached."

 

[15] As the 1975 Act and the 1976 Order are crucial to resolution of this matter, I set out respectively the relevant parts thereof, together with section 33 of the 2007 Act and the relevant bankruptcy rules :-

 

"Section 1(2). Where, in any proceedings to which this subsection applies, any costs or expenses of a party litigant are ordered to be paid by any other party to the proceedings or in any other way, there may, subject to rules of court, be allowed in the taxation or other determination of those costs or expenses sums in respect of any work done or 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 sheriff court...

 

(Rule 2) - Expenses allowable to party litigants

(1)    Where in any proceedings in the... Sheriff Court, 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)    In this rule -

...

(d) the expression "table of fees for solicitors in judicial proceedings" means -

...

(ii) in relation to an ordinary action in the sheriff court, the table of fees in schedule 2 to the Act of Sederunt (Alteration of Sheriff Court Fees) 1971 in force at the time the work is done"

Section 33 of the 2007 Act provides as follows:-

 

"33. Power to provide for lay representation in sequestration proceedings

In section 32(1) of the Sheriff Courts (Scotland) Act 1971... after paragraph (1) insert -

(m) permitting a debtor appearing before a sheriff under section 12 of the Bankruptcy (Scotland) Act 1985... to be represented, in such circumstances as may be specified in the Act of Sederunt, by a person who is neither an advocate nor a solicitor."

Rules 15 and 16 of the Bankruptcy Rules provide:-

"15 - Representation

(1)   Where the sheriff is satisfied that -

(a)    A debtor in proceedings under section 12 of the Act of 1985 is not represented by an advocate or a solicitor; and (b) another person is able properly to represent the debtor and is authorised by the debtor to do so, that person may represent the debtor in those proceedings.

...

(3) The person(s) referred to in paragraphs (1) ... may, in representing a party, do everything for the preparation and conduct of the proceedings as may be done by an individual conducting his own action.

16 - Expenses

A party who -

(a) is or has been represented by a person mentioned in rule 15(1)... and

(b) would have been found entitled to expenses if he had been represented by a solicitor or an advocate.

May be awarded any outlays or expenses to which a party litigant may be found entitled by virtue of the Litigants in Person (Costs and Expenses) Act 1975 or any enactment under that Act."

 

I note in passing that there are parts of rule 2(3) which seem to me to be irrelevant to the remainder of the rule and are a survival from the 1976 Order as originally enacted. The 1983 Amendments do not seem to me to fit within the remaining text -see rules 2(3)(b) and (c). However, they make no difference to the matter before me.

 

[16] Before I return to the substantive issues the only issue raised before me and not before the auditor relates to the legality of otherwise of the fee charge by Mr L. I shall deal with that separately. The other matters were canvassed before the auditor and appear in the report. Whereas the sheriff made an order allowing the respondent his expenses, that order does not prescribe what the respondent is entitled to recover. The amount of the sums he is entitled to recover is a matter for taxation to which certain rules apply.

 

[17] Before I turn to the 1975 Act and the 1976 Order it is useful to consider what the position was at common law. The matter is set out in some detail in the judgment of Sheriff McPhail in the case of MacBeth Currie in which there is reference to a number of earlier authorities. Forbes v Whyte is authority for the proposition that a successful party litigant was not entitled to claim anything by way of personal expenses while absent from his home attending the litigation nor was he entitled to charge for his trouble and loss of time. In a very brief report, in Malloch v Aberdeen Corporation (No 2) a successful party litigant before the House of Lords was allowed to recover such sums as were reasonably necessary for him to spend in order to prepare his written case and to equip himself to appear and argue his case. Similar limitations on a party litigant's right to recover expenses applied in England (Buckland v Watts [1970] 1 QB 27). It was against that background that the 1975 Act was enacted (see the judgment of Sheriff McPhail in Macbeth Currie at page 47). The long title provides that the 1975 Act is "...to make further provision as to the costs or expenses recoverable by litigants in civil proceedings". Prior thereto, as the authorities disclose, there was doubt as to whether a party litigant was entitled to recover any expenses or outlays, or if they were recoverable, on what basis recovery ought to be permitted. Section 1 of the1975 Act permits a party litigant to recover expenses and outlays but leaves to subordinate legislation the detail of what the party litigant is entitled to recover. Read short, what rule 2 of the 1976 Order does is to provide that, where an order for expenses is made in favour of a party litigant, the auditor may allow as expenses such sums as appear to him to be reasonable having regard to the circumstances in respect of work done which was reasonably required in connection with the cause, together with outlays reasonably incurred for the proper conduct of the cause. The foregoing summary omits two important qualifications. Rule 2(2) sets out a list of circumstances to which the auditor may have regard. These are not relevant to the matter before me. More importantly, rule 2(1)(a) goes on to prescribe that the amount of expenses shall be "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". "Table of fees" is defined in rule 2(3)(d). As a matter of construction it seems to me that the 1976 Order does provide an upper limit to what a party litigant is entitled to recover. In effect, what the 1976 Order provides is that, whereas the party litigant is entitled to submit a claim for expenses, the auditor is obliged to measure that claim against what a solicitor would have been entitled to charge for equivalent work by reference to the relevant table of fees and then calculate two thirds of that sum. If the amount claimed by the party litigant exceeds that amount he may not recover any sum in excess thereof. I say "equivalent work" because, in my opinion, it is not a matter of the auditor simply accepting all that the party litigant seeks to claim for and then applying a fraction of two thirds. It involves an assessment of what a reasonable solicitor would have done in similar circumstances and then applying the two thirds rule to the relevant rate. I appreciate that may not be easy to apply but that is what the rule provides.

 

[18] In reaching the foregoing conclusion I find support in the judgment of Cumming Bruce LJ in the case of Hart. It appears that the English rule then under consideration was in similar terms to the 1976 Order:-

 

"The exercise which is therein imposed on the taxing master is to apply his mind to all the problems which the preparation for the action... would have imposed upon a conscientious solicitor who is notionally regarded as doing the work. The work actually done by the litigant in person, to a greater or lesser degree, may afford some guidance as to the work which a solicitor would have done... Those are all matters which the taxing master has to consider when considering the material before him on taxation. He then has to form his independent judgment based on his experience as to the time that a solicitor would reasonably, necessarily and properly have taken to do that work. Having done that, the taxing master has to decide the fees that a solicitor would be allowed on a party and party taxation and then to allow to the litigant in person two thirds of that sum. As the exercise which the rule requires imposes upon the taxing master the duty to allow two thirds of the sum which would have been allowed in respect of each item if the litigant had been represented by a solicitor, it is likely that the work actually done by a litigant in person will have very little relation to the work that a solicitor would have to do, but that will depend entirely on the nature of the litigation and the practical problems of preparation that the litigation throws up. The rule evidently contemplates that the taxing master, from his experience, would be able to analyse the material put before him and arrive at a reasonable (although inevitably not precise figure) that he would have taxed if a solicitor had done the work." (at page 1005)

 

The decisions in MacLeod and R (Wulfson) are to similar effect. I should add that the formula of "reasonably, necessarily and properly" referred to by Cumming-BruceLJ does not apply to the 1976 Order which has its own formula to be applied.

 

[19] Returning to the auditor's report I am of the opinion that the auditor was correct in accepting that the 1976 Order applies. However, with respect, given my conclusion as to its interpretation I conclude that the auditor has misdirected himself and not applied the 1976 Order correctly. What he did was to take two thirds of the hourly rate which a solicitor would be entitled to charge by reference to the table of fees then in force and reach a figure of £90 per hour. He has then applied that to the hours claimed by the respondent. There is also no material to suggest that he measured the amount of the respondent's account by reference to two thirds of what a solicitor would have been entitled to charge although, as I understand it, that information was available to him. I should add that I have considered the case of Bell v McGlennan to which the auditor referred but it does not seem to me to assist upon this issue. Accordingly, on this issue the petitioners succeed.

 

[20] I now turn to Mr Massaro's submission in relation to what I will call the reasonableness of the respondent seeking to recover Mr L's account as an outlay. For some reason the concept of reasonableness appears twice in the 1976 Order. The auditor is enjoined to "allow such expenses as appear to (him) to be reasonable.. in respect of... (b) outlays reasonably incurred for the proper conduct of the cause". I do not consider that makes a material difference to the interpretation of the rule. The authorities to which Mr Massaro referred me (Ahmed's Trustee; City of Aberdeen Council and Rennie) are all Court of Session cases. The relevant rule under consideration was what is now rule 42.10(1) of the Court of Session Rules which provides "(1) only such expenses as are reasonable for conducting a cause in a proper manner shall be allowed". That rule applied to the fees charged by counsel. There does not appear to be a separate rule dealing with outlays as such (I note that in the sheriff court there is a separate rule for outlays - rule 11, Act of Sederunt (Fees of Solicitors in the Sheriff Court)(Amendment and Further Provisions) 1993 which is couched in similar, but not identical terms to that of the 1976 Order). Ahmed and City of Aberdeen Council are both opinions of Lord Penrose. Much of the argument in those cases dealt with whether a change in the text to what is now rule 42.10 made a material difference to some of the earlier authorities. Lord Penrose held that it did (City of Aberdeen Council at page 397C) and that the rule should be interpreted as imposing an objective test (page 397 E-F). His Lordship went on to say (at page 398B) "In my opinion [counsel for the defenders] was right in his argument (a) that the fact that the auditor's adjudication is between parties is material, and (b) that the wider public interest in the costs of litigation cannot be ignored". In relation to the objective nature of the test, in the case of Rennie, Lady Smith agreed with Lord Penrose (at paragraph [28]). The matters at issue in these three cases are not particularly relevant here as they concern the recovery by counsel of certain fees in the facts particular to the litigation. However, in my respectful view, the dicta of Lord Penrose in relation to the interpretation of rule 42.10 have equal application to the interpretation of rule 2(2)(b), namely that reasonableness requires to be viewed objectively and that regard should be had to the party and party basis of the adjudication and the wider public interest in the costs of litigation.

 

[21] Notwithstanding what Mr L said, his fee was plainly in relation to the provision of legal advice. The respondent himself referred in his account to "meetings and telephone discussions with legal council" (sic) and referred to the outlay as "legal representation". It is also clear that, throughout his report, the auditor dealt with the outlay as a fee for the provision of legal advice (see paragraphs 8 and 10). In his report the auditor treated Mr L as he would have done an advocate. I refer in particular to paragraph 8 where he referred to "consultation" with counsel and to paragraph 10 when he made a direct comparison with what a Scottish advocate would have been entitled to charge. Whatever device may have been used, the substance of this matter is that the respondent chose to instruct an English barrister to advise and to represent him. He got that advice and he now seeks recovery of the fee therefor from the petitioners. The respondent could have instructed a local solicitor. He might also have instructed counsel. Whether counsel's fee would have been recoverable would have depended upon whether the court granted the relevant certification therefor. The respondent and Mr L have attempted to circumvent the ordinary rules of procedure by utilising the device of a "lay representative" and to heap the cost thereof onto the petitioners. I have no doubt that the changes to the bankruptcy rules brought about by the 2007 Act were never intended to cover this situation and it would be a distortion of their meaning so to hold. They were designed to deal with lay representatives and not those who are legally qualified and who seek payment of a fee for their work. Permission to appear as a lay representative is irrelevant to this aspect of the matter. I agree with Mr Massaro that by taking this course of action it has put the petitioners in a worse position than they would have been had the respondent been legally represented in the ordinary way. In my opinion, viewed objectively, having regard to the fact that this concerns a party and party matter and to the public interest in the cost of litigation, the attempt to recover the cost of instruction of an English barrister is not "an outlay reasonably incurred" as the rule requires. In my respectful view, the auditor has erred in his approach to this matter and that the petitioners succeed on this issue also.

 

[22] I return now to Mr Massaro's further argument as to whether Mr L's fee is irrecoverable on the basis that it is in contravention of section 23 of the 1980 Act and thus illegal. As to Mr L's point that this matter was not argued before the auditor, in my opinion Mr Massaro is entitled to pursue the argument before me. It is a matter of law and that is something which can be pursued whether it was argued before the auditor or not. If there is any unfairness in hearing it now such unfairness could be dealt with by way of expenses although given the conclusions I have expressed I do not consider that is necessary or appropriate. Section 23 provides:-

 

"(1) Any person who practises as a solicitor or in any way holds himself out as entitled by law to practise as a solicitor without having in force a practising certificate shall be guilty of an offence under this Act unless he proves that he acted without receiving or without expectation of any fee, gain or reward, directly or indirectly.

(2) Without prejudice to any proceedings under subsection (1) failure on the part of a solicitor in practice to have in force a practising certificate may be treated as professional misconduct for the purposes of part IV."

 

[23] Read short, Mr Massaro's argument comes down to this. Section 23 makes it an offence for a person to practise as a solicitor or in any way to hold himself out as entitled by law to practise as a solicitor without having a valid practising certificate. Mr L was in breach of this section.( I am not clear if Mr Massaro was alleging that Mr L was practising as a solicitor or holding out that he was practising as a solicitor.) If it is illegal so to act it follows that the fee is irrecoverable. Mr L says he was not. The only Scottish authority referred to was Miller. In that case, whereas the Lord Ordinary, Lord MacFadyen, was asked to consider section 23, the context in which he was considering it suggests to me that Miller does not help in the present case. Miller was concerned with whether reporters acting as part of the children's referral system were practising as solicitors and required a practising certificate.(See the terms of the declarator sought at page 513 H-K) There was no issue in that case that the reporters were other than qualified solicitors. Of the English cases of Agassi and Westland Helicopters I do not regard the latter as adding much to the former. However, I have reservations as to the application of Agassi to this case. The appellant, Mr Agassi, retained the services of a professional organisation to represent him in English proceedings. The issues related to taxation. The organisation had the right to instruct a barrister but had no right to conduct proceedings and no member of staff qualified as a solicitor. The question was whether their fees were recoverable. Deciding that issue involved consideration of certain sections of the (English) Solicitors Act 1974 ("the 1974 Act") namely sections 20, 22 and 25. There was also interaction with the Courts and Legal Services Act 1990. It was "common ground" between the parties (para 28 of the judgement) that the appellant could not recover the costs of the activities of the professional organisation which were not legal for them to perform. As I read the judgement, the illegality arose as a result of sections 20 and 25 of the 1974 Act. Put broadly, sections 20 and 25 have similarities to sections 32 and 33 of the 1980 Act. I was not referred to these. It does not appear to me that a section equivalent to section 23 of the 1980 Act was the subject of any discussion in Agassi. In my opinion, it is helpful to step back and look at this matter from a broader perspective. The 1980 Act is a consolidation measure. It, and its predecessors, established a framework for the practice of the profession of a solicitor. In summary, solicitors are subject to a strict regime as to qualification and training. They are subject to discipline by their regulatory body and to codes of conduct. As part of that regime, to the exclusion of others, rights in relation to certain aspects of the practice of law as set out in sections 31 and 32 are conferred upon them. (I leave aside consideration of any rights which solicitors may have other than as conferred by the 1980 Act). The 1980 Act provides sanctions for breach of these provisions which may be criminal or they may be financial (section 33). Over the years parliament has adjusted these rights. One of these adjustments relates to the representation of parties in court. The rule was to the effect that parties may either appear personally or be represented by solicitors (for convenience I will not refer to the rights of advocates). Although section 25 confers upon solicitors the right to practise as a solicitor in any court in Scotland, the exclusivity of that right has evolved over the centuries through a series of decisions (see the opinion of Lord Justice Clerk Gill in The Secretary of State for Business and Enterprise 2010 SLT 1242). Section 33 of the 2007 Act is an example of a statutory adjustment. It allows someone other than a solicitor to appear in court in proceedings brought to a hearing pursuant to section 12 of the Bankruptcy (Scotland) 1985 Act. (It may be seen as part of the general approach to debt matters where lay representatives may appear at first callings (see OCR 1.3)). However, the right is not unqualified. It requires the sanction of the court. The sheriff must be satisfied that such a representative is "able properly to represent the debtor and is authorised to do so". From a purely practical point of view, in my experience, section 12 matters often call in busy courts and there is neither the time nor the opportunity for detailed consideration of the relationship between a representative and the debtor, or whether the representative is to be remunerated. Indeed it would seem from the Agassi case that the issue there only arose at the stage of taxation of the appellant's costs, as indeed it has here. In my opinion, permission to represent a party, particularly where there is limited information, does not and cannot act as a bar to an inquiry and determination as to whether some other statutory or common law rule has been breached and what, if any, consequences flow from that. And it cannot be used in an attempt to outflank existing and well settled rules of law as to representation in the courts of Scotland. (As I was not referred to the legal basis upon which employment and immigration proceedings I derive no assistance from that). In the present case, I have already concluded that the respondent is not entitled to recover Mr L's invoice as an outlay. Now it may be that a person who does not comply with section 4 of the 1980 Act (to which I was referred), tenders legal advice, represents a party and seeks payment of a fee therefor is in breach of the 1980 Act and is thus disentitled from recovering payment of the fee. However, as a proper determination of that matter may involve consideration of sections of the 1980 Act to which I was not referred, I do not consider that I ought to express a concluded view on that issue. I should add that I also expressly reserve my opinion as to whether section 23(1) applies only to those who satisfy the first two conditions of section 4 and not the third (see page 521F of the opinion of Lord MacFadyen in the case of Miller) or whether it may extend further to someone who does not satisfy those conditions. I also reserve my opinion as to whether there are any civil consequences for its breach.

 

[24] Accordingly I shall sustain the petitioners' Note of Objections. The respondent's account of expenses will now require to be taxed in accordance with my decision. In summary, I have directed that the respondent's claim for expenses be taxed in accordance with what I have said in paragraph [17] above and that the claim for Mr L's outlays be disallowed. Parties were agreed that expenses follow success. The petitioners have been successful. They are entitled to their expenses.