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OUTER
HOUSE, COURT OF SESSION
[2006] CSOH 41
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OPINION OF LORD CARLOWAY
on the Note of Objections
for the defenders
in the cause
KATHYRN JANE JARVIE
Pursuer;
against
GREATER GLASGOW PRIMARY CARE NHS TRUST
Defenders:
________________
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Pursuer: Wade; Thompsons
Defenders: Dunlop; Simpson &
Marwick
15 March 2006
1.
Background
[1] The pursuer sued the defenders for
£150,000 in damages. The Auditor records
the basis of the pursuer's case as follows:
"The Pursuer was employed as a
Nurse in the Renal Unit of Glasgow Royal Infirmary between 1989 and 1996. She claimed that she had developed an allergy
to latex as a result of her having to wear latex gloves in the course of her
employment leading to skin and respiratory problems and putting her at risk
from suffering anaphylactic shock if exposed to latex. The Pursuer cited her medical problems
associated with latex as the reasons for her having to give up work. The pursuer averred that the Defenders
breached their statutory duties incumbent upon them by virtue of the Control of
Substances Hazardous to Health Regulations 1988 and amended in 1994."
So far as the outcome was concerned, the Auditor adds:
"A diet of proof before answer was
fixed for eight days commencing 20
April 2004. However, on the
Friday afternoon before the Proof the Pursuer intimated a Minute of
Abandonment. The Defenders were
subsequently assoilzied from the action with the pursuer being found liable to
them in expenses, to include an additional fee."
[2] In due course, the defenders lodged
their account of expenses. This was not
a detailed account but one based upon the block fees set out in Part V of Chapter
III of the Table of Fees annexed to Rule of Court 42.16 (cf. Chapter I). This charged some £17,371 in respect of
agents' fees and £122,356 of outlays.
The outlays were made up mostly of court dues, counsel's fees and the
various costs of some five medical experts.
The account reveals that the defences to the action were framed without
the instruction of counsel. However,
junior counsel was engaged at the adjustment stage. He adjusted the pleadings on two occasions. The fees for the defences and the adjustment
were, with some minor modifications, allowed. The defenders had, by this stage, obtained
medical reports from a consultant physician, a consultant dermatologist and a
consultant immunologist. The cost of at
least one report from each of these experts was allowed by the Auditor. No consultation with counsel was arranged
prior to the closing of the record on 12 March
2002. The case was sent to
the Procedure Roll on the defenders' preliminary plea to the relevancy of the
pursuer's averments. A diet for that
debate was fixed for 18 June 2003.
[3] A Note of Argument relative to the
anticipated debate was drafted by senior counsel and lodged on 8 January 2003. The defenders then arranged a consultation
with senior counsel and the physician, dermatologist and immunologist. This took place on 8 May 2003 and lasted some four hours. Thereafter, a new junior counsel was
instructed for an Opinion. He produced
what is described as a "lengthy" Opinion on 30 May, which senior counsel then
commented upon. Meantime, as a result of
discussions at the consultation, the defenders elected not to proceed with the
debate on the Procedure Roll. Instead,
they agreed to a proof before answer.
They also decided to amend their own pleadings. As will be seen, the Auditor taxed off all the
charges relative to the abortive Procedure Roll, including the consultation and
opinion prior thereto.
[4] The Auditor allowed a fee for a
consultation with junior counsel, which took place in July 2003, after a proof
before answer had been appointed. There
were further expert reports from the original physician and from two new
experts, a physician and a dermatologist, both based in London. These preparations involved significant
outlays, all of which were essentially allowed by the Auditor. He also allowed a fee for a another
consultation with a new senior counsel and three of the experts (the original
and new physicians and the new dermatologist) in March 2004. Counsel included this consultation, which
lasted some five hours, in his charges (infra)
for preparation for the proof. There
were substantial fees for the experts attending this meeting together with
significant sums for yet more reports from the original physician, the new
dermatologist and a new immunologist. Again, the Auditor allowed all of these
charges and the relative agents' fees. The
block agents' fee for proof preparation was also allowed. In addition, the Auditor allowed fees for a
further consultation with senior counsel, the original dermatologist and
immunologist and the new immunologist. This
was in April 2004 and lasted three and a half hours. Again counsel's fee was included in his
charges for preparation. A supplementary
report from the new physician was allowed thereafter.
[5] The case was abandoned on the Friday
before the Tuesday diet. Senior counsel
charged for twenty-one days of preparation at a daily rate, which had been
agreed in advance with agents, of £3,250.
His charges for preparation for this eight-day reparation proof thus amounted
to £68,250. He also charged a fee for
the proof itself, restricted to a global £10,000. On the assumption that the agreed daily rate
continued to be applicable, which is not clear, this fee equates to about three
days. Junior counsel charged for three
days of preparation at an agreed rate £1,625 plus "4 days commitment" at a
different agreed rate of £2,125. Most of
the experts rendered no charges in respect of the cancellation of their
services for the proof. However, two
did. In particular, the London
based dermatologist charged £2,800 for keeping his diary free on 27 and 28
April ("for cancellation and costs to practice") in addition to significant
fees for his reports and consultation attendance. The case had been abandoned on 16 April.
[6] The defenders' account was taxed on 9 November 2004.
The Auditor allowed an additional fee to agents of £8,000. In broad terms, this was an uplift of 50% on
agents' fees as taxed. However, from the
global amount of £153,223.68 (including the additional fee), the auditor taxed
off £84,069.58 to leave £69,154.10 payable by the pursuer.
2. The
Note of Objections,
the Auditor's Minute in Response and Submissions
[7] The Note of Objections is not always clear on what exactly is
being objected to, as distinct from what is simply narrative of the events at
taxation. However, it would appear that
the defenders are objecting to almost all of the items which are referred to in
the Note as having been taxed off. These
are as follows:
(a) CONSULTATION OF 8 MAY 2003
[8] The Auditor observes that the letter of instruction to
counsel for the consultation, which took place after the closing of the record
but before the Procedure Roll, does not reveal why a consultation was being
held at that stage. However, in attendance
were senior counsel, the medical experts, a
representative of the defenders' insurers and, of course, agents. It became apparent to the Auditor, from
agents' notes of what occurred at the consultation, that
the purpose was, at least in large part, so that counsel could understand the
state of knowledge of doctors and employers on the dangers of exposure to latex
at various dates. Counsel explored this
issue with each expert in some detail.
In addition, there was discussion about an England
and Wales Court of Appeal case (Dugmore v Swansea NHS Trust [2002] EWCA Civ 1689,
[2003] 1 All ER 333), in which the London
based dermatologist had featured.
[9] Dugmore (supra), which the Auditor refers to for
its terms, determined that, for the purposes of common law fault, employers
would not have been sufficiently aware of the dangers of latex until 1996. However, it also stated that the duty upon
employers under regulation 7 of the 1988 and 1994 Regulations (supra) to ensure that exposure to "a
substance hazardous to health is either prevented or, where this is not
reasonably practicable, adequately controlled" was absolute. Reasonable practicability only qualified
prevention and was not a defence to a failure to control the exposure. It mattered not, in that context, whether an
employer had been, or ought to have been, aware of the hazard. This proposition, which is perhaps not a
startling one, had recently been expressed by Lord Nimmo Smith in Williams v
Farne Salmon & Trout 1998 SLT 1329 (at p 1333). The Court of Appeal accepted his analysis.
[10] The Auditor records that, after the
experts had left the consultation, the discussion continued under reference to
the present case and another unrelated one.
It was decided that "tactically" it might be advisable not to proceed
with the debate, since it might not be possible for the court to determine the
case until the facts had been established.
The discussion, which involved the insurers, covered settling the case if
there was a risk of the defenders being found liable in circumstances where
they had decided not to challenge the construction reached in Dugmore (supra).
The unconnected case was further discussed, as was an issue about the
suppliers of latex gloves to the National Health Service generally throughout Scotland.
[11] The Auditor disallowed the fees for this
Consultation for three reasons. First,
he states:
"(i) It is unreasonable to allow charges to consult
with experts when the case has been appointed to the Procedure Roll by the
Defenders. It is reasonable to infer the
Defenders had reasonable anticipation that the case might be dismissed on a
question of law without enquiry into the facts.
This consultation took place four weeks prior to the Procedure Roll
Diet. The Table of Fees Part V Defended Actions para 11 Incidental Procedure
makes it clear that work described there is not chargeable prior to approval of
issues or allowance of proof. This was
neither a consultation on the sufficiency of evidence prior to
proof nor on the pleadings during the adjustment period."
The
defenders argued that the Auditor had erred in law in stating that it was
unreasonable to allow a fee for a consultation when the case was on the
Procedure Roll. On the contrary it could
be allowed in an appropriate case (Morier
v Brownlie (1895) 3 SLT
204). The pursuer countered that the
Auditor's reasoning was sound, having regard in particular to the structure of
the Table
[12] The
second reason advanced by the Auditor is that:
"(ii) The purpose of the consultation was for
Counsel 'to understand the state of knowledge regarding latex allergy at
various stages in order to apply the law to the facts of the case.' She had full Reports from [the medical
experts] and these should have disclosed the full evidence on which the
Defenders' pleadings were drawn. The
paying party should not be required to meet fees for discussing [the
unconnected case] nor should they pay for the agents'
speculative advice nor for instructions from the insurer. The relevance of Dugmore is a matter for the
Defenders' advisers alone and any advice thereon is their responsibility. 'Conducting the case in a proper manner' means
conducting the case in accordance with the Rules of Court and not considering
the relevance or impact of an English Court of Appeal decision. This consultation was for the benefit of
Counsel and the Defenders' advisers, and the cost is not recoverable on a party
and party basis."
The
defenders submitted that in many cases the obtaining of advice on the law was a
reasonable charge (Black v Malcolm (1831) 9 S 429) and the
Auditor's reasoning here was faulty. The
pursuer supported that reasoning.
[13] Thirdly,
the Auditor gives as another reason:
"(iii) The consultation also
resulted in a Minute of Amendment for the Defenders...for which they were
subsequently found liable in expenses."
The
defenders submitted that this was an irrelevant consideration, whereas the
pursuer disagreed.
(b) POST
CONSULTATION OPINION of 30 MAY 2003
[14] Junior counsel had not been at the consultation
but was asked for an Opinion thereafter. It is important, once again, to endeavour
to ascertain what the purpose of obtaining this Opinion was in the context of
the litigation. This is precisely what
the Auditor did, by looking at the letter of instruction dated 29 May. It would appear that what was being asked,
presumably by the insurers, was whether the case of Dugmore (supra) ought to
be challenged. Leave to appeal to the
House of Lords had been refused in England
and the question seems to have been whether there was, as the letter put it, an
"easier route" to the House of Lords.
This would have been with a view to trying to argue that foreseeability
of latex as a hazard could be read into regulation 7. Whilst stating that they had their own views,
agents raised a number of general points such as the content of the European
Directives, upon which the Regulations had been based, and the European
Convention on Human Rights and Fundamental Freedoms.
[15] The Auditor had the benefit of reading
counsel's Opinion. He was unable to
reveal the content of the Opinion, but was satisfied that it answered the
questions posed in the letter of instruction. He held that the Opinion did not satisfy the
requirement that the work had to be reasonable for the proper conduct of the
cause. The defenders objected to this;
if the Auditor meant that it was not reasonable to seek advice on a question of
law during the course of an action. The
pursuer argued that the Auditor was not advancing such a proposition and had
been entitled to disallow the Opinion for the reasons he had given. The Opinion did not seem to be about the
particular case but was about the broad issue of latex allergy in the wider NHS
context.
(c) COUNSEL'S FEES FOR PROOF
(i)
Preparation
[16] The Auditor recognised, following Lord Penrose's dicta in Ahmed's Tr v Ahmed (No. 1)
1993 SLT 390 that it may be reasonable to allow counsel a fee for preparation
in advance of a proof in addition to any fee for appearance at the proof
itself. In that case an inclusive fee
had been charged, as was the custom at the time. The Auditor also analysed and followed the
reasoning of the same Lord Ordinary in City
of Aberdeen
Council v WA Fairhurst 2000 SCLR 392. Notably he quotes a passage from the Opinion
where the importance of the difference, maintained in the Rules of Court,
between party and party and agent and client accounts is stressed. In that case, the argument centred upon a
"commitment fee". This was a relatively
novel charge and was not related to preparation, or indeed any work actually
done. It was a fixed sum which, it was
agreed between counsel's clerk and agents, would be payable in respect of
counsel's acceptance of instructions for the proof, if the proof were cancelled
within certain dates. It would seem that
no fees were charged for appearance at the proof itself but there were separate
charges for preparation. The Auditor
determined that a commitment fee was reasonable in the circumstances and his
decision to do so was upheld.
[17] In this case, the Auditor observes that there was no agreed
commitment fee of the type in City of
Aberdeen Council v WA Fairhurst (supra). There were agreed daily rates for preparation
and for conducting the proof but nothing in the nature of a "commitment fee"; despite the terms
of junior counsel's fee note and the entry for senior counsel's fee in the
account. There was also no agreement on
the amount of time to be spent on preparation. The Auditor comments adversely on the fact
that all that was done in this case was to include counsel's fees, without
modification, in the party and party account. Put another way, the account proceeds on an
assumption that what would be allowed on a party and party account will be the
same as that permitted on an agent and client taxation. The Auditor followed the additional dicta in City of Aberdeen Council v
WA Fairhurst (supra at 398) that,
in a party and party taxation:
"the court [has] an obligation to
protect unsuccessful litigants from being unduly burdened by the risk of
ruinous expense...
(a)...the fact that the Auditor's adjudication is between
parties is material, and
(b)...the wider public interest in the costs of litigation
cannot be ignored".
The
auditor allowed six days of preparation at £2,000 per day for senior counsel,
thus taxing off £56,250. He allowed the
whole of the three days of preparation charged by junior counsel, but at a
slightly reduced rate of £1,500.
[18] The defenders do not challenge the
Auditor's selection of daily rates. Under
reference to Albyn Properties v Knox 1977 SC 108 and Petrie v North Milk Co-operative [2005] CSOH 45, unreported, Lord Reed (at
para [25]), they do object to the selection of six days of preparation for
senior counsel on the basis that the Auditor has given no reason for selecting
that figure in circumstances where it was not disputed that twenty-one days
preparation had in fact been carried out. The pursuer submitted that the Auditor had
exercised a discretion on this aspect of the case and
the defenders had failed to point to any error in that regard. He had expressed an opinion on the
information before him.
(ii) Proof
[19] As the Auditor observes, counsel's
instructions to appear at the proof fell on the date of settlement; the Friday
before the Tuesday. The Auditor
recognised that counsel were still entitled to charge a fee, given that they
had kept their diaries free from other engagements and had been unable to
accept alternative instructions until the date of settlement. The Auditor allowed fees for two days of
proof at a daily rate of £2,500 for senior and £1,750 for junior. In selecting these figures, which again the
defenders do not challenge, the Auditor took into account the fact that he had
already allowed reasonable remuneration for preparation. He comments:
"... it is
reasonable that Counsel is allowed two days which he has kept free from other
engagements and has been unable to accept other instructions. It is unreasonable to allow eight days as the
Auditor is satisfied that he would have picked up other work, whether advocacy
or written, after the two days".
[20] The defenders take issue with the
Auditor's reasoning on the basis that what was being charged was a commitment
fee, the basis for which had been set out in City of Aberdeen
Council v WA Fairhurst (supra). Whether counsel
would have picked up "written work" was irrelevant. Whether he had been allowed substantial
preparation time was also irrelevant. The
correct approach was that taken in Magee v Glasgow City Council 2003 SLT 777. There,
the Temporary Judge took the view that the "commitment fee" of £6,000 charged
by counsel was correctly charged separately from a preparation fee. He did not agree with the Auditor's approach
of allowing a period for preparation, a fee for the first day of the proof,
upon which the case settled, and a further day for "commitment" of £2,000. Rather he approached the matter thus:
"[26]... once counsel is instructed
for a proof however long or short, he is committed to that case on the days for
which he is instructed, whatever may be the amount of preparation required. By accepting instructions he is agreeing not
to undertake any other court work on those days. If a case settles before the proof, on the
morning of the first day of the proof, or even after the proof has begun, counsel are entitled to be compensated for the loss of fees
for appearing in court."
The
defenders explained that there had been no pre-existing agreement relating to a
"commitment" fee in that case and submitted that such an agreement was not a
pre-requisite of a commitment fee being allowed.
(d) EXPERT'S CANCELLATION FEE
[21] As noted above, the London
based dermatologist charged for keeping his diary free on 27 and 28 April,
when the case had been abandoned on 16 April. He was the only one of the five medical
experts to make a separate charge for this.
The defenders object to the Auditor taxing off his fee for this. The Auditor writes:
"At the outset of this case, the
Defenders instructed three physicians practising in Edinburgh
... Following the Dugmore decision, it
was decided that the physicians employed in that case ... be instructed. The Pursuer's advisers chose not to appear at
the motion ... at which the court certified the experts and allowed an additional
fee. The Court was deprived of the
opportunity of considering whether the instruction of the English experts was
reasonable in the context of conduction the case in a proper manner, the three
Scottish experts already having submitted reports on which the pleadings were
drawn. [The pursuer] conceded that the
charges could not be struck out entirely and a reasonable charge should be
allowed."
The
Auditor did allow substantial sums in respect of the dermatologist's reports
and attendance at consultations (including airfares). No objection is taken to the Auditor's
reduction to the levels of fees charged.
When dealing with the cancellation fee, the Auditor quoted from a letter
from the dermatologist justifying the fee:
"3. My records indicate that I heard of
the cancellation on 19 April. I
undertook no private work on 27/28 April; indeed I would normally have undertaken
work on 26 April but this was not possible because of the period of notice
(as I would have seen patients for patch testing on Monday, Wednesday and
Friday of the week).
4. 2-weeks before the trial date I had
completely reviewed all the documentation made available to me as well as
reviewed the pertinent literature to ensure familiarity with matters that the
Claimant's Counsel may have challenged me with."
The Auditor concluded:
"Although abandonment was late ... sufficient
notice was given to enable [the dermatologist] to re-arrange his commitments
and avoid this expense".
The
defenders submitted that the Auditor had erred in looking behind the
certification. His conclusion was an
assumption. It was not disputed that he
had not done any work on the days in question.
In these circumstances, the Auditor's reasoning was not understandable. The pursuer pointed out that the
dermatologist had not said that he had undertaken no work,
simply that he had not undertaken private work.
The Auditor was of the view that he should have been able to re-arrange
his diary and that was a view that was open to him.
(e) ADDITIONAL FEE
[22] The Auditor taxed off about £2,300 from agents' fees of
£17,371. However, he then allowed an
additional fee of £8,000, representing slightly more than a
50% uplift. The Note of
Objections has a slightly different calculation but the percentage is broadly
the same. The objection is simply that
no reasonable Auditor would have awarded such a low amount, given that the
Court had allowed an additional fee under four of the heads in Rule of Court
42.14(3), namely: (a) the complexity of the cause and the number, difficulty or
novelty of the questions raised; (b) the skill, time and labour and specialised
knowledge required, of the solicitor or the exceptional urgency of the steps
taken by him; (c) the number or
importance of any documents prepared or perused; and (e) the importance of the cause or the
subject-matter of it to the client. In
setting out his position, the Auditor refers to the submissions made to him to
the effect that agents had spent some 361.80 hours on the case, of which
240 hours would be allowable on a party and party account and that £175.00
per hour would be a reasonable charge out rate.
Therefore, it was contended, the additional fee should have been such as
to reflect the total of £42,000 which would be reasonable for the hours
chargeable. If, it was said, the Auditor
taxed agents' fees at £16,000 (which is rather more than the eventual figure), this represented an uplift of 165%. Thus, what was being sought was in excess of
three times the taxed amount of agents' fees.
[23] The Auditor's response to this appeared, at first and in terms
of the defenders' submissions, to be a little convoluted. With some analysis, it is, as submitted by the
pursuer, relatively straightforward. The
Auditor refers to the hourly rate permitted in terms of the Table of Fees on
party and party accounts over the relevant years. This spanned a range from £86 in 1999 to £120
by 2003. If, as the Auditor notes, a
165% increase were to be applied to them, the hourly rates would have been £228
to £317. Such rates would not even have
been recoverable on an agent and client account. Thus, they could never have been granted on a
party and party taxation since such a taxation could
not award more than could be recovered from the client. Comparing the £175 figure, which the
defenders deemed reasonable, to the more recent of the hourly rates permitted
by the table, an uplift of around 50% was reasonable. In that regard, as the Auditor notes, the
purpose of the Additional Fee is to provide an uplift on the party and party
account as taxed and not to make up the difference between that and an agent
and client account.
3. Decision
[24] There was no dispute on the test to be applied for the review
of a decision of the Auditor. As the
Lord Justice-Clerk (Thomson) said in Wood
v Miller 1960 SC 86 (at 98):
"It is not the function of a Judge reviewing an exercise of
a discretion to substitute his own view of the
material under consideration. The
decision of the Auditor stands in a not dissimilar position to the verdict of a
jury. If the Auditor had no material to
go on, his exercise will fall, but if he had material, then, so long as the
decision he reached on it was not unreasonable, it cannot readily be upset."
As Lord Bonomy accepted in Malpas v Fife Council 1999 SLT 499 (at 500), the court should only
interfere if it were satisfied that the Auditor:
"had proceeded on the basis of irrelevant material or had
left relevant material out of account or had misunderstood the material before
him or had misdirected himself on that material or on the law or had made an
unreasonable decision, that is a decision that no auditor acting reasonably
would have made ... If the decision ... is one which is within the range that a
person might make or do in the exercise of his own judgment or discretion then
it cannot be described as unreasonable."
It was also not disputed
that, in taxing an account, the Auditor is required to apply a objective test
in determining whether the relevant expense in the account was, in terms of
Rule of Court 42.10(1), "reasonably incurred for conducting the cause in a
proper manner" (see McNair's Extrx v Wrights Insulation Co 2003 SLT 1311
para [8]). The Auditor had the correct
test of reasonableness in mind. He also
had in mind the dicta of Lord Penrose in City
of Aberdeen Council v WA Fairhurst
(supra) that:
"There is a more material difference, at least in language,
between the overall tests of 'fair and reasonable in all of the circumstances'
and 'reasonable for conducting the cause in a proper manner'. One must assume that the rules envisage the
possibility that there may be expenses and fees which it is fair to impose on a
client because of his relationship with his solicitor and the circumstances in
which work is performed on his instructions and expenses which it is
appropriate to recover from an unsuccessful opponent. Rule 42.10(1) must ... be interpreted as
imposing an objective test in this context.
Negatively, not all of the fees and expenses which it is fair to charge
against a client will necessarily be recovered on a party and party taxation"
(a) CONSULTATION 8 MAY 2004
[25] It is important to note in
limine that the fee charged here is not made in a detailed account under
Chapter I of the Table of Fees, but one where agents have elected to use the
block fees set out in Chapter III, Part V.
Agents must, of course, chose one or other
basis of charging but not both.
Although, nevertheless, the Auditor may allow a fee for work done in a
case which is not specifically provided for under the block fee system, it
remains of some relevance to bear in mind the structure of the Table, since it
does give parties a good indication of what kinds of work will be recoverable
on a party and party account and what level of expenditure might be regarded as
reasonable.
[26] In deciding to disallow the consultation fee, the Auditor has
taken into account the fact that it was held at a time when there was no
obvious purpose for it in the context of "conducting the cause in a proper
manner". Part V provides for
consultations being held at two stages in a litigation: first, when the pleadings are being adjusted; and secondly, after
a proof has been allowed. The reasons
for this are relatively self-explanatory.
At the stage of drafting the pleadings, counsel requires to ensure that
he has a proper basis for averment or denial and a consultation may be needed
for that purpose and to see whether other lines of attack or defence might be
available. Once the record is closed,
however, so far as the proper conduct of the case is concerned, the averments
ought to be in their final form. After
the allowance of proof, a consultation may be necessary to determine whether
there is sufficient evidence to support the pleadings and whether any further
evidence might be available.
[27] A party can, of course, have a consultation at any stage of a
case. He will not, however, be able to
recover its cost if it was not reasonable, in the context of the proper conduct
of the case, to have one at that particular stage. In this case, there was certainly no obvious
reason, for the purposes of the litigation, in having a consultation four weeks
prior to a Procedure Roll debate. It
ought to be assumed, in the context of a properly conducted litigation, that a
decision on whether to proceed to debate or proof has been taken before the
motion sending the closed record to its destination. It also has to be assumed, in the same context, that the pleadings are in a settled state when the
record closes. Where this has occurred,
it will only be in exceptional cases that a consultation at this stage will be
deemed reasonable.
[28] In a detailed account at least, a conveyancing case may be an
exception where a consultation between agents and counsel might indeed be
reasonable prior to a Procedure Roll debate.
In that type of case, the intermingling of law and legal practice might
be usefully explored at a meeting between counsel and agents with a view to a
clear presentation at debate (Morier v Browlie (supra)). The Auditor in the
present case was not laying down an absolute rule that under no circumstances
could a consultation ever be regarded as reasonable when it occurs after the
closing of the record and prior to a debate on relevancy. He was, however, setting out what is regarded
as a well settled general rule. One
factor in his decision to exclude the consultation fee was that, in this case,
no reason, that he regarded as satisfactory, had been put forward as to why such
a consultation should form a reasonable charge, especially in the context of a Part
V account. In this context, it is not
appropriate to look at this consultation in isolation. Once a proof before answer had been allowed,
the Auditor did allow for not only one consultation with junior counsel but
also two further substantial consultations with senior counsel. Seen in that whole process, where the Auditor
has been nothing if not generous in allowing three pre-proof consultations, it
cannot be said that the Auditor's decision not to allow this one was anything
other than reasonable on this basis alone.
[29] The second reason put forward by the Auditor is also one
carrying significant force. From his
perusal of the notes, much of the time spent at the consultation did not cover
matters concerned with the proper conduct of this particular litigation at
all. Rather it was a meeting to advance
counsel's knowledge on certain general matters in a case where the Auditor had
already allowed the costs of several expert reports. It also involved the canvassing of entirely
different issues, notably the supply of latex gloves, a separate litigation and
the merits of the insurers challenging the Court of Appeal approach to
regulation 7 (supra). Having had the benefit of agents' notes on
what had occurred at the consultation, the Auditor was entitled to the view
that what was being discussed was not connected with the proper conduct of this
case but with generic issues, the costs of which ought not to be imposed upon a
single litigant.
[30] The third reason given by the Auditor is also a sound one. In any case where a party amends his pleadings, that is to say indulges in "belated adjustment",
the expense of that amendment will normally be taxed off by the Auditor where
the amending party is ultimately successful. That is so because such amendment is seldom
(there are exceptions) capable of being classified as part of the proper
conduct of the case. It will be
different when the Court has actually pronounced an order dealing with the
expenses of the amendment in a manner which counters that normality; but that is not the
case here. The expenses of the amendment
were awarded against the defenders. That
award, of course, covers only the pursuer's expenses in dealing with the
defenders' Minute. However,
when it comes to taxing the successful defenders' account, the absence of a
court order governing the defenders' expenses of amendment in no way means that
they can then charge that amendment against the pursuer. On the contrary, the defenders' expenses
related to amendment are not recoverable against an unsuccessful pursuer. Indeed, there was no positive attempt to
recover these expenses in this account. Where
the Auditor discovers, upon an analysis of a consultation note,
that much of the discussion was taken up with matters which prompted amendment
of the pleadings, the proper course is to disallow these. That is precisely what the Auditor has
done. Once again, therefore, the
Auditor's reasoning on this aspect cannot legitimately be criticised.
(b) OPINION of COUNSEL
[31] It is not common for agents to seek a
formal Opinion of counsel on a point of law during the currency of a case,
although advice on the prospects of success might be sought by way of Note or
consultation. Actions are usually
prefaced by some form of intimation and, in certain situations, an Opinion
might be taken in advance of it being raised (in case of both parties) or, at
the latest, at or about the time of lodging defences. There are old cases where pre-litigation
advice has been taken and allowed upon a taxation (Black v Malcolm (supra)), but the traditional approach in
the years which followed these cases was to disallow a charge related to such
advice as not forming part of the expenses of process (i.e. the view of the
whole Court in Dougal v Marshall (1834) 12 S 532). That approach has to be tempered by the terms
of the current Table of Fees, which specifically allow agents a block fee for
pre-litigation work related to the action, and presumably reasonable outlays
might be permitted too.
[32] However, this objection is not concerned
about an Opinion sought at or before the early stages of an action concerning
the merits of the case. It concerns an
Opinion sought when the case was still on the Procedure Roll, when the only
question of law current was the relevancy of the pursuer's averments. It could be argued that it is not a good
ground for disallowing the expense of an Opinion that it was asked for at a
particular stage, if it was reasonable to instruct it at some point. Whether that is sound might depend on what
occurred thereafter in the litigation.
If the Procedure Roll debate had proceeded and the defenders' plea had
been sustained, it would have been difficult to argue that obtaining an Opinion
prior to the debate on an unrelated matter of law was a reasonable charge on a
party and party basis. Be that as it
may, in relation to the Opinion in question, the Auditor's decision is not
based upon the stage which the action had reached. Indeed, by the time of the Opinion, a decision
may already have been taken to proceed to a proof before answer, even if one
had not formally been allowed. Rather,
it is based on the Auditor's view that the questions being answered in the
Opinion were not sufficiently linked to the conduct of the cause. Agents do not appear to have been asking
counsel for a Note, or to advise, on any matters directly
relevant to the conduct of the cause or even on the prospects of success. Rather, they were posing general questions
about liability for latex allergies in the NHS generally and on the prospects
of having the House of Lords disapprove of the decision of the Court of Appeal
in England by
using a Scottish case as a procedural route. In that connection, the Auditor has had the
benefit of seeing exactly what the advice related to and that was his concluded
view. Having regard to the tests
applicable to reviewing decision of the Auditor, it is not possible to say that
his decision on this matter involved any error of law, misdirection on the
material before him or any unreasonableness. This is again especially so against a
background of his allowing a fee for a consultation with junior counsel on 30 July 2003.
(c) COUNSEL'S FEES FOR PROOF
[33] In Macnaughton v
Macnaughton 1949 SC 42, referred to in McNair's
Extrx v Wrights Insulation Co (supra) the Court was concerned with the
principles governing counsel's fees on a party and party taxation in respect of
a rule which was not dissimilar to the one now under consideration. That was on the old consistorial scale which
involved allowing all expenses "so far as not unreasonable or
extravagant". The Lord President
(Cooper) said (p 46):
"The concern of the court is to decide not what fees a
particular counsel was justly entitled to receive from his client for his
services under the conditions under which he gave them, but what fees can
properly be made a charge against an unsuccessful opponent. There is no objection to the employment by a
client of any counsel, however eminent, in any case, however small, or to the
payment of any fee, however large. But
we have a plain duty to protect unsuccessful litigants against excessive
charges, and not to permit the unavoidable risks of litigation to be enhanced
by the added peril of possible liability for extravagant or unreasonable
expenses.
In obedience to this principle the search of the Court has
always been for the 'proper fee' of 'competent counsel' for the conduct of a
case of known magnitude and difficulty, involving a stake of known value or
importance. The answer cannot be found
by applying arbitrary standards or rules of thumb, but requires an appraisal of
the nature and amount of the services given.
The first approximation can be found by reference to the current
practice of solicitors in instructing counsel in an average case of the type in
question presenting no specialities.
But, if the case is abnormal in magnitude or difficulty or in any other
respect, a second approximation must be made to reflect these specialities, and
this second approximation may yield a substantially higher figure.
...
It is for the Auditor - at least in the first instance - to
apply his mind to these factors in making what I have called the second
approximation..."
[34] Traditionally, counsel did not charge
separately for preparation. Certainly in
a party and party account, preparation, for whatever diet, was generally
included in the fee charged for the appearance at that diet. That fee would be on the basis of a daily
rate. There was nothing chargeable
against the other party by way of a "retainer" or similar fee. If the case were one of more than usual
complexity, the daily rate charged could be higher than normal in order to
reflect the degree of difficulty. That
higher rate might be charged because it had been deemed necessary to instruct
particularly eminent counsel to address the problems. The rate would often remain at a uniform level
throughout the diet, although it was often higher for the first day. The levels of fee took into account the
obvious incident of pre-proof preparation. If a diet were discharged, counsel's fee (or a
portion of it) might still, on a party and party taxation, be payable,
depending on the circumstances. That fee
was again calculated in units of one day. The number of days allowed
took into account the timing of the discharge relative to the likely timing of
the preparation for it. It also
had regard to the number of days set down for the diet. The fee was assessed on an objective
basis. It did not take into account the
actual time counsel spent on preparation or even whether any preparation had
actually taken place. Equally, it took
no account of whether or not the particular counsel was, in any given
situation, able to pick up more or less lucrative work as a substitute. The question for the Auditor was what was a reasonable amount to be charged against the unsuccessful
party in all the circumstances.
[35] The traditional approach developed in an
era when, because of the tests of necessity and economy, it was thought that,
again for the purposes of a party and party taxation, counsel need only be
instructed perhaps two or three working days prior to the relevant diet. This would leave a somewhat limited amount of
time for preparation. The view that it
was desirable for several reasons that the services of a chosen counsel ought
to be secured in advance, even for cases of an ordinary nature, resulted in an
increasing tendency towards instructing counsel at a greater distance from an
allocated diet than had hitherto been deemed necessary or desirable. This occurred markedly in cases where there
was perceived complexity and it was anticipated by agents that greater than
normal preparation might be required.
[36] As late as Ahmed's Tr v Ahmed (No 1)
(supra), the Auditor was applying
"conventional periods" in taxing off the whole fee for the first day of a four
day proof where counsel had been instructed on a Friday morning for a Tuesday
proof and the diet of proof had been discharged on the same Friday morning. It was not even argued in that case that this
was an error. What was contended was
that seemingly, and perhaps rather unusually, counsel had been instructed by
agents to prepare for the proof before he was actually instructed to appear at
it. Nevertheless, he charged an
inclusive fee. The argument presented
was that the preparation element in the proof fee ought to have been allowed. The Lord Ordinary determined that it was not
reasonable to expect agents to delay instructing counsel to commence
preparations for a Tuesday proof until the previous Friday afternoon. No doubt that is correct under modern
conditions especially where, as in that case, the issues were not
straightforward (see Ahmed's Tr v Ahmed (No 2) 1993 SLT 651). However, it is difficult to separate the
concept of preparation for a proof from instructions to appear at it. The two might normally be expected to go together, or at least the latter to assume the former. Be that as it may, although only an Outer
House decision, Ahmed's Tr v Ahmed (No 1) (supra) signalled the way for counsel to charge for preparation
separately from the fee for an appearance.
[37] The problem, if it be one, from the
approach in the argument sustained in Ahmed's
Tr v Ahmed (No 1) (supra) is that it does depart from the
traditional one, illustrated in the inclusive fee note, of the Auditor allowing
a daily rate which reflects the level of preparation. If preparation is charged separately, that is
a factor which ought, it should follow, to be taken
into account in determining the daily rate. A higher daily rate for a more complex case
will become more difficult to justify if a fee, particularly a substantial one,
for coming to grips with the complexities has been separately charged and
allowed. On the other hand, if these
complexities merited the use of eminent counsel, it may still be possible to
argue for both preparation and an enhanced proof rate. No doubt either method of charging might be
permitted in given cases. Some counsel
may prefer to charge in the traditional way and others separately for
preparation and appearance. In either situation,
it remains important to bear in mind the differences, which still exist,
between party and party as against agent and client accounts.
[38] The Auditor must reach an objective view
on what is reasonable. Although that may
have some regard to the amount of days actually occupied in preparation, that
is unlikely to be a determinative factor and in some cases may carry little
weight. In many cases, the scope for
meticulous detailed preparation is, if not infinite, considerable. A party may wish such preparation carried out
and he is perfectly entitled to instruct that work. That does not mean, however, that it is
reasonable for his unsuccessful opponent to be burdened with the resultant
charges.
[39] The Auditor sees a very large number of
accounts over a considerable range of cases.
He is placed, with that experience, in an ideal position to determine
what is reasonable for preparation time in a given type of case because he sees
the range of charges made by a large number of counsel in similar
situations. It is not necessary for the
Auditor to provide a detailed analysis of his reasoning as to how he reaches a
particular figure, allowed in days, for preparation. The Auditor is addressing his decisions, and
the contents of his Minute on a Note of Objections, to members of the legal
profession, well versed in the practices and procedures of the Court. In selecting a number of days appropriate for
preparation, the Auditor is applying his knowledge and experience to the case
as disclosed on record and in the account and supporting vouchers. There is no need for him to repeat the
contents of these documents in order to set out what the parties already know
about the nature of the case and the work carried out in connection with it. The Auditor is expressing a view, based on his
knowledge and experience, that he considers that a particular number of days is
reasonable for a case of the particular type and complexity. That view will normally be respected by the
court, unless some misunderstanding or other defect in reasoning is apparent. Here, the proof was set down for an eight-day
period. That, it was anticipated by the
parties, was sufficient time in which to lead and test the appropriate evidence
and to explore the various issues in submission. It is not an abnormal period within which to
conduct a proof in a personal injuries case. The Auditor has allowed a period of six days
preparation, inclusive of two lengthy consultations, for that proof. On the face of things, that would appear to be
a substantial allowance for such a case. There is certainly no basis for supposing that
the period of days allowed by the Auditor is anything other than entirely
reasonable.
[40] A "commitment fee" is a fee, which
counsel's clerk agrees in advance with agents, to the effect that counsel will
be paid a particular sum in the event that a proof, for which he is instructed,
does not proceed. It is well illustrated
in City of Aberdeen Council v
WA Fairhurst (supra). It is essentially a form of special retainer,
not normally recoverable upon a party and party taxation. The proof in that case had been set down for
six weeks, a period significantly greater than in the normal litigation. The issues were intricate and concerned the
professional negligence of consulting engineers and specialist earthworks
contractors. It was decided by the
Auditor that it had been reasonable for the proper conduct of that cause for
agents to have instructed counsel to conduct the proof well in advance of the
diet and to have secured acceptance of those instructions by way of the
commitment fee. The Auditor considered
that it was also reasonable, and allowable upon a party and party taxation, for
agents to have entered into this agreement with counsel's clerk, some six weeks
in advance of the diet. A speciality of
the case was that the potential agreement had been intimated to the ultimately
unsuccessful party in advance of it being finalised. The Court refused to interfere with the
Auditor's determination in all the circumstances.
[41] There is no commitment fee in this
case. Given the short duration of the
proof, it would have been surprising if there had been. There are charges in respect of counsel's
appearance at the proof. These charges
are, as a generality, entirely legitimate even on a party and party account
given the late abandonment of the cause.
It is reasonable that an unsuccessful party bear at least a proportion
of fees payable to counsel in respect of a cause due to start on a Tuesday when
it is abandoned on a Friday. Conventionally,
abandonment on Friday afternoon would normally have merited perhaps a fee for
the first day (enhanced) even for a four-day proof. Whether more than that would be allowed would
be a matter for the Auditor to determine in all the circumstances. In this case, for an eight-day diet, he has
allowed fees for two days. That would
appear to be entirely in keeping with modern practice especially against a
background where he has also allowed preparation fees for the proof in
addition. In assessing reasonableness,
the Auditor has taken into account the fact that counsel: "would have picked up other work, whether
advocacy or written, after the two days". In so saying, he is not attempting to assess
damages or the loss suffered by the actual counsel in the case or even by a
hypothetical counsel. He is having
regard to this factor in determining overall reasonableness in the context, which
he has already noted, that he has to have some regard, not only to the
interests of the parties, counsel and agents, but to the "wider public interest
in the costs of litigation". He is
striking a balance on a scale containing these, and many other,
factors. Perhaps "written" work is a
little loose terminology and "chambers" might have been a more appropriate
substitute.
[42] For the reasons given above, I am unable
to agree with the Temporary Judge in Magee
v Glasgow City Council (supra), a case where there was no
contradictor, in several respects. First, despite the use of that terminology,
what was being charged in that case does not appear to have been, and ought not
to have been described as, a "commitment fee".
It was not of the type illustrated in City of Aberdeen
Council v WA Fairhurst (supra). It appears to have
been a fee for the successive days of an eight-day proof, which settled on the
first day. The Auditor allowed a second
day's fee also. That was an entirely
correct way to proceed, since there was nothing by way of a special retainer to
assess in the context of reasonableness. For the reasons already outlined above, when
the stage is reached when it becomes reasonable to charge an element of
counsel's fee for a discharged or otherwise cancelled proof in a party and
party account, it is not necessary for counsel's preparation to be charged
separately from the first day of a proof.
That preparation may be subsumed into the fee for the first and
subsequent days, having regard to the complexity of the action. The more complex the case, the higher the
daily rate may be and the more reasonable it may be to have particularly
experienced counsel charging at that rate.
If preparation is charged separately then that may have a bearing on the
level of daily fee chargeable, even if it will not strictly have a bearing on
the number of days allowed by the Auditor.
In fixing that number, the Auditor is not engaged in the exercise of
assessing what the Temporary Judge described as "compensation" for
counsel. He is not assessing what
counsel might be "entitled to", that being an issue determinable on an agent
and client taxation. He is deciding
what, in all the circumstances, it is reasonable to have charged as an outlay
by agents against an unsuccessful opposing party in respect of the instruction
of counsel for a discharged or cancelled proof. As already explained, he will do that, having regard to a large number of factors, not least his wide
knowledge and experience of what is reasonably charged in the many accounts
(both agent and client and party and party) which come before him across the
wide range of cases he deals with. It is
not for the Court to start indicating to the Auditor what it thinks might be
appropriate in respect of counsel's fees for a proof and especially to suggest,
for example, that a certain proportion of days out of the total ought to be
chargeable in a party and party account. It is, of course, the Court's function to
supervise the Auditor's decisions and to reverse them if the well-known tests,
including unreasonableness, are met.
There is no such unreasonableness on this aspect of the Auditor's
decision.
(d) EXPERT'S CANCELLATION FEE
[43] It is true to say that the Auditor decided
to mention, in his reply to the Note of Objections, the fact that the pursuer
had failed to oppose the motion for certification of the London
based experts. It was perhaps going too
far to say that the court was deprived of considering whether the instruction
of those experts was reasonable, since, whether a motion for certification is
opposed or not, the court may make suitable enquiries into that matter. It is possible to interpret the Auditor's
remarks as suggesting that he regarded the certification as at least unusual
where three Edinburgh based experts
had already been instructed and had reported on the relevant issues. He was, in that regard, pointing this out to
the pursuer in a marked fashion, perhaps for future reference. It is not entirely surprising that he should
have done so. However, it is clear from
the terms of the Auditor's Minute that he was well aware that this point was
irrelevant to his consideration of their fees.
That this is so is plain from the fact that he allowed substantial fees
for reports from and consultations with both the additional experts.
[44] When it came to the cancellation fee, the Auditor
was faced with the fact that out of all the experts for the defenders, only one
had elected to charge a separate cancellation fee (one other having included it
as an element). The expert's engagement
as a witness at the proof was cancelled ten days before he was due to appear. On the face of things, the charge was at least
an unusual one and apparently an extravagant charge in the context of a party
and party account. There was some
attempt to justify the fee by reference to the fact, which was not disputed,
that the expert had not been able to arrange private work for the two days in
question. However, it was not said that
he did no remunerative work on these days or that he actually suffered loss. Even if he had, the Auditor was entitled to reach
the conclusion he did that there was ample notice of the cancellation to enable
him to re-arrange his affairs without material loss and that no fee was payable
to him in respect purely of the cancellation of the diet.
(e) ADDITIONAL FEE
[45] The Auditor has allowed an Additional Fee uplift of 50%. Were the account a detailed one, the hourly
(or quarter hourly) rates chargeable would have been those laid down, from time
to time, in the Table of Fees as representing a reasonable charge out rate for
agents generally in the ordinary case.
The block fee system also incorporates the same rates for some purposes
and the blocks themselves are based on them, albeit that in some situations
agents may gain and in others they may lose depending on the time the work
takes. The Auditor has accepted, having
regard to the various elements determined as applicable to justify an
additional fee, the defenders' submission that £175 per hour would be a
reasonable rate in this case. Comparing
that rate to the Court set figures produces, in round terms, an increase of
50%. The Auditor has then allowed that
percentage and applied it, again approximately, to the sums allowable in the
account for the work carried out by agents.
His approach appears again to be entirely reasonable and no grounds for
a successful challenge to that reasoning have been presented.
[46] It follows from all of the above that I will repel the
objections in the Note.
