Scottish Court of Session Decisions

OUTER HOUSE, COURT OF SESSION [2012] CSOH 166
P1801/05	OPINION OF LADY STACEY in Petition of THE SCOTTISH MINISTERS Petitioners; for EXPENSES IN RESPECT OF A RECOVERY ORDER IN TERMS OF SECTION 266 OF THE PROCEEDS OF CRIME ACT 2002 IN RESPECT OF RUSSELL STIRTON AND ALEXANDER ANDERSON ________________

Petitioners: Crawford QC, Heaney; Morton Fraser

First Respondent: Murphy, Adam; Trainor Alston

Third Respondent: Party

Messrs Robertson & Ross: McAlpine; Robertson & Ross

Scottish Legal Aid Board: Broome

17 October 2012

Introduction

[1] On 29 February 2012, the petitioners enrolled a motion seeking expenses in the cause under the Proceeds of Crime Act 2002 in which proof was heard between 2009 and 2011. They sought expenses against the solicitors acting for Mr Stirton, Messrs Robertson & Ross (hereinafter referred to as Robertson & Ross) personally, and, while they did not in the written motion seek a particular percentage of expenses against the agents personally, in the course of argument they came to argue for 20% of the expenses to be dealt with in that fashion. Failing such an award, they sought expenses against Mr Stirton, first respondent and Mr Anderson, third respondent, (hereinafter referred to as 'the respondents'), jointly and severally, including the expenses occasioned by the interim administrator's investigative and reporting function, on the agent client, client paying scale. The petitioners also sought certification under RCS 42.13A of certain skilled witnesses, namely Mr Martin, surveyor, Mr Murray, accountant, Mr Smith, forensic document examiner, Mr Thomson, accountant, Mr Milliken, accountant, and Mr Cleghorn, accountant. They sought an uplift in fees under RCS 42.14 under heads (a) (b) (c) (e) (f) and (g).

[2] The motion as enrolled included paragraphs in which the petitioners sought to inform Mr Stirton that given his interests and those of Robertson & Ross might not coincide he should consider taking independent legal advice. They sought intimation on the Scottish Legal Aid Board (hereinafter SLAB); they sought a procedural hearing and they sought an order for written submissions.

[3] In response, the first respondent lodged opposition and the following motion:-

1. To certify that the persons named below are skilled persons who it was reasonable for the first respondent to employ in connection with the cause:

(i) Jeffrey Meek Chartered accountant French and Saunders [sic] Edinburgh;

(ii) Richard Eadie Quantity Surveyor Richard Eadie and Partners Edinburgh.

2. To find that the first respondent's agents are entitled to an additional fee in terms of Regulation 5(4) of the Civil Legal Aid (Scotland) Fee Regulations 1989 in respect of paragraphs (a) (b) (c) (d) (e) and (f).

3. To find the petitioners' law agents, the Civil Recovery Unit liable to the first respondent for the whole expenses of the cause on the basis that the estimation of the length of time the proof would take was woefully inadequate.

[4] Mr Anderson lodged opposition, in which he gave notice of the line he would take in argument. Among other things he stated that SLAB had no locus to appear at a hearing on expenses. He wished the matter to be sisted until all grounds of appeal and opposition relating to the reclaiming motion marked by him had been lodged, and lastly he stated that he did not wish to be part of any arrangement whereby written arguments were lodged in advance of the hearing.

[5] I had the motion put out By Order so that administrative arrangements could be made for it to be heard efficiently. I instructed that skeleton arguments should be lodged on behalf of all parties and I put it out By Order a second time in order to check that parties were ready to proceed. On 1 June 2012 at a By Order hearing junior counsel appeared and advised that she was instructed by Robertson & Ross on behalf of Mr Stirton and was therefore appearing both for Robertson & Ross and Mr Stirton. She advised that matters were prepared and she was ready to have a hearing fixed. She also advised that she would not be appearing for Robertson & Ross at the hearing of the motion. The petitioners were ready to proceed and sought the earliest date on which the court would be available. Mr Anderson wished to have the hearing of the motion postponed for approximately three months. He explained that he had marked a reclaiming motion and had work to do on that. I took the view that the motion had been enrolled several months before, and that parties ought to be ready to argue it. The first date on which the court was available was 10 and 11 July and therefore I fixed those dates.

The first motion hearing

[6] On 10 July the petitioners were represented by senior and junior counsel. Mr Stirton was represented by a leading junior and another junior counsel, who had not been instructed in any of the hearings prior to that date. He had changed solicitors and was no longer represented by Robertson & Ross, but by Trainer Alston. Mr Anderson was present as a party litigant. Mr Broome appeared for SLAB. Both the petitioners and Mr Anderson had lodged skeleton arguments. Mr Murphy, instructed by Trainer Alston, had a motion to make concerning an adjournment, but prior to my hearing him a preliminary matter arose. Mr Robertson of Robertson & Ross was present in court and Mr Murphy assisted by indicating that Mr Robertson wished to address the court.

Representation of Robertson & Ross

[7] Mr Robertson stated that he was a solicitor and was one of two directors of a limited company, Robertson and Ross Limited which traded as Messrs Robertson & Ross. Mr Robertson said that as a director of the limited company he wished to address the court in order to oppose the petitioners' motion for expenses against Robertson & Ross personally. I asked him how he could appear for a limited company and he stated that he would be a party litigant, and that he effectively was Robertson & Ross, and that he had detailed knowledge of the case. I was concerned that I had no power to allow him to appear and invited him to address me. He had no authorities with which to address me on my power to allow him to appear for the company. He simply stated that he wished to appear. Being aware that there were authorities on the matter I invited other parties to address me. Counsel for the petitioners argued that I had no power to allow Mr Robertson to appear. She referred to the case of Apollo Engineering Limited (in liquidation) v James Scott [2012] CSIH 4 and to the cases referred to therein. The law was in her submission clear. The case of Secretary of State for Business Enterprise and Regulatory Reform 2010 SLT 1242 (known as The UK Bankruptcy Case) and the Apollo case were to the effect that a limited company could not be represented in court by a director except, potentially, in very special circumstances. She argued that Mr Robertson had not begun to set up the necessary conditions. He had not argued that Robertson & Ross were not in funds to instruct counsel and had not explained why it was that no counsel had been instructed. Counsel for Mr Stirton made no submissions. Counsel for SLAB made no submissions. Mr Anderson argued that I had no power to allow Mr Robertson to appear. In reply Mr Robertson argued that the arguments made by counsel were incorrect, but did not explain further. He argued that if he was wrong, then he would change his ground and argue that while he was not a solicitor with extended rights of audience which would allow him to appear in the Court of Session, I should allow him restricted rights to appear in this case because he had the best knowledge possible of the matter having been involved in the case. I inquired what power I might have to grant restricted rights and he was not able to assist me.

[8] I took the view that I could not allow Mr Robertson to appear on either basis. He put no argument before me to counter the interpretation of the law given by counsel for the petitioners. I agreed with counsel's submissions. In my opinion the law is clearly stated in both cases referred to above. Mr Robertson made no submissions to the effect that there was any reason to allow him to appear except that he knew about the case. As to restricted rights of audience, Mr Robertson could not explain what power he thought I could exercise. I have no power to allow a solicitor who does not have extended rights of audience, to appear in the Court of Session.

Mr Stirton's first motion to adjourn

[9] Counsel for Mr Stirton moved the court to adjourn. He explained that Mr Stirton had changed solicitors on or about 22 June and that he, counsel, had been instructed on or around 6 July, when he was out of the country. He returned on Monday 9 July and had not been able to prepare the case. His junior had been instructed on 4 July, but the time was insufficient to prepare, as this was a very complicated case. He had not yet received all of the papers. I adjourned the motion over lunch time and after the adjournment Mr McAlpine appeared, instructed by Robertson & Ross. He did not seek an adjournment but took a neutral stance on counsel's motion to adjourn. Counsel for the petitioners opposed the motion to adjourn. She reminded me of the history of the motion, which had been intimated five months before the hearing. Her submissions had been lodged and intimated on 17 May. She argued that the petitioners were entitled to have their motion heard and that no delay should be allowed. Mr Anderson supported the motion for adjournment. He stated that counsel who had appeared in the proof for Mr Stirton should be present. I told him that there was no motion for expenses against counsel. Mr Broome was ready to proceed, and stated that it would be useful from his client's point of view to know why Mr Stirton and Robertson & Ross were now separately represented. Counsel for Robertson & Ross said that his client had concerns about conflict of interest, but had not withdrawn from acting. Mr Stirton instructed new lawyers.

[10] I regarded it as entirely unsatisfactory that counsel for Mr Stirton should appear unprepared for this motion. I accepted that counsel had only been recently instructed but Mr Stirton had been well aware for some time of the date for the motion. His previous counsel had stated that she was prepared. I was clear that the motion required to be heard and should not be delayed. On the other hand I accepted that counsel for Mr Stirton did not have all of the papers and was not prepared to address the court. The matter was of some importance as the length of the proof was such that expenses in the case would be considerable. With a degree of reluctance I therefore adjourned for two days until Thursday 12 July.

Mr Stirton's second motion to adjourn

[11] Counsel for Mr Stirton appeared on 12 July and renewed his motion to adjourn. He stated that papers had been sent to him the day before at 1:00 pm. He was not in a position to read all of the papers and was not able to prepare the case properly. He gave no explanation of what work he and his junior had carried out in the time available, and could give no coherent information as to whether any work carried out by counsel previously instructed had been made available to him. He submitted that the proof had been lengthy and that there were many files of productions. The petitioners opposed his motion. Counsel argued that while it was a lengthy proof with many productions the question before the court related to expenses and so it was not necessary to be familiar with every production. She argued that counsel could have read the opinion of the court, and her own submissions in respect of the motion, along with Mr Anderson's written submissions, and prepared in the time available. Mr Anderson supported the motion pointing out that the papers were voluminous and that no one could get up to speed in such a short time. Counsel for Robertson & Ross took a neutral stance on the motion to adjourn and sought to lodge three inventories comprising papers relating to legal aid, and authorities. I allowed them to be received. Counsel for SLAB was neutral on the motion to adjourn. Mr Anderson argued that as counsel for Robertson & Ross had brought in cases and productions which he had no opportunity to read, he could not get a fair hearing.

[12] I decided that I could not, consistently with the interests of justice, allow any further delay and therefore refused counsel's motion for an adjournment. I decided that I should proceed to hear the motion as I was given no proper reason for the failure of Mr Stirton's advisers to ensure that counsel was instructed fully and was fully prepared for a diet which had been fixed some time ago, and in which I had allowed an adjournment of two days to enable preparation. Mr Anderson claimed a locus to seek leave to reclaim. I heard him, on the basis that he had stated his support for the motion made on behalf of Mr Stirton. He submitted that counsel had not had enough time to prepare. I refused him leave as he did not identify any error of law.

Expenses: the scale, and the parties against whom a finding should be made

[13] Counsel for the petitioners adopted her written submissions, which I read and considered and which I do not repeat in full. She thereby departed from the opposition marked to the motions for Mr Stirton being heard. She noted that Mr Stirton's motion to have an additional fee had not been properly intimated, while appreciating that she had no locus to oppose it.

[14] She argued that the general rule is that expenses follow success. In this case the petitioners had succeeded; therefore they should have their expenses. In the normal case the scale would be party- party, but she argued that in this unusual case the expenses should be against Robertson & Ross, which failing should be against Mr Stirton and Mr Anderson, jointly and severally, on the agent client, client paying scale. In the course of discussion counsel submitted that 20% of the expenses should be payable by Robertson & Ross and the rest by Mr Stirton and Mr Anderson on the scale referred to above. She argued that a finding against the agents and the scale of expenses should be made because of the way in which the litigation had been conducted. She accepted that expenses are a matter for the discretion of the court, and she argued that the deficiencies in the conduct of the proof should lead to the findings she sought. I understood her to present it as a matter of degree; if I found that the deficiencies existed and were such as to amount to dereliction of duty by the agents, then a finding against them personally should be made; if there were deficiencies which had resulted in extra expense but which did not amount to dereliction of duty then that should be reflected in the scale of expenses. She submitted that Robertson & Ross had failed to take precognitions and had failed to have witnesses ready to appear and had thereby caused delay. The proof had taken place after criminal proceedings which had begun in 2004, and which had not proceeded beyond appearance on petition. In 2005, civil proceedings were started. The respondents had had legal advice at that stage and until November of 2006 had agents and counsel in common. Settlement discussions had taken place but had not come to fruition. By 2008, when a proof was allowed, the respondents were unrepresented but stated they were ready for proof. In March or April 2009 Mr Stirton instructed Robertson & Ross. Counsel submitted that while they would require to work hard, the solicitors should have been ready for proof. It began in the middle of May 2009 and continued until the beginning of July. The proof resumed in November 2009, and continued on many days in 2010, and in 2011. She argued that the petitioners were put to proof and no clear defence was pled or put in evidence. Mr Anderson who was led as a witness by the petitioners was not cross examined, and Mr Stirton was not called in his own proof, although he was called by Mr Anderson. The defence put up by Mr Stirton and Mr Anderson was essentially a joint defence. Counsel argued that there was a long cross examination of accountants, Mr Milliken, and Mr Murray, called by the petitioners, without there being an expert accountancy report for the respondents, and without there being any positive case put to either of them. Mr Thomson, another accountant, was cross examined to some extent but Mr Anderson declared that he lacked independence. There was a long cross examination of a police officer, DI Midgely, about the HOLMES police system, to no apparent purpose, there being no submission made about it. Objection was taken, unsuccessfully and at length, to evidence based on suspicious activity reports. Witnesses were called by the petitioners to give evidence of loans over heritage, which the respondents declined to agree, again for no apparent reason so far as Mr Stirton was concerned. Mr Anderson seemed to require these witnesses in order that he might ask them if the loans they made had ever been in arrears and if they had suffered loss by making the loans. That was not in dispute, and in any event was irrelevant as the allegations made were that the loans had been obtained by fraud, not that they had not been serviced. Lack of preparation was shown when the witness Mr McLeod gave a different date for a police interview from that apparent in the papers, which led to a commission and diligence for recovery of documents, and to a commission being fixed during the hearing of the proof. Counsel argued that none of that would have been needed if precognition had been carried out. In September 2010 at a By Order hearing counsel (a different counsel from those instructed in the proof, but instructed by Robertson & Ross) appeared and had no information to give the court about the state of preparation. At the end of the petitioners' case in November 2010 counsel for Mr Stirton asked for an adjournment of two weeks as no precognitions had been taken. An adjournment of one week was granted. Counsel argued that the agents for Mr Stirton failed to make proper application to SLAB for such sanction as they thought necessary. Applications made were vague and were refused and had to be repeated.

[15] Counsel argued that even after an adjournment Mr Stirton's proof was disorganised. Mr Neilson, an accountant for the business from which the petitioners argued that money had been unlawfully obtained, was led at length and examination in chief consisted of asking him to read a transcript of an interview he had given to police officers and the interim administrator's staff. Much time was spent by counsel for Mr Stirton arguing unsuccessfully that a joint minute signed by counsel did not mean what it said, and if it did, that it could somehow be rescinded. Mr Gore, a person with whom Mr Stirton and Mr Anderson claimed to have a business relationship which enabled them to make money lawfully, was led but few documents were put to him, and he stated he had never met Mr Stirton.

[16] Counsel then turned to Mr Anderson's case. She argued that his witnesses did not advance the case. A solicitor, Mr Cockburn, was called to speak to letters he had written, which were not in dispute. Time was wasted as Mr Anderson had not considered the difficulty of Mr Cockburn's claiming confidentiality. The point of calling Mr Cockburn to give evidence seemed to be to assert that he personally believed that his clients had not been the subject of extortion. Mr Sams was called to give evidence that he did not buy the filling station, which was not in dispute. Mr McRae was called to speak to the completion of police statements by police officers. He stated that one was copied from the other. That evidence was not in dispute and had already been led from the first officer. Thereafter Ms Harris was called to give evidence about her work as a solicitor in the civil recovery unit, and Mr Ramsay was called to give evidence about his work as an assistant to the interim administrator. None of that was relevant and seemed to be called by Mr Anderson in furtherance of a conspiracy theory. There was a great deal of time taken up, counsel argued, in connection with the appointment of the interim administrator and her state of health. Further time was taken in arguing that the interim administrator's identity should be revealed, despite there being a Public Interest Immunity Certificate given by the Lord Advocate and upheld by the court. All of that was unnecessary and again related to a conspiracy theory. Counsel for Mr Stirton, and Mr Anderson also wasted time by seeking to call Anne Ramsay and DI McCusker. They were not able to explain the significance of these witnesses. When DI McCusker attended court, they decided not to call him, as he declined to give a precognition. All of that wasted time.

[17] Counsel argued that Mr Stirton and Mr Anderson attempted to put forward fundamentally misconceived submissions. They appeared to submit that because the criminal case had not proceeded, the work done by the police could not be relevant to the civil case. They submitted that because the interim administrator had become ill, they could not get a fair hearing. They submitted that because tax authorities had accepted estimates of income in the past, no questions could now be raised about income. They failed to recognise that the history of the petition was dealt with by Lord Glennie and was therefore not a matter to be argued again in the proof. Mr Anderson wasted time by attempting to argue that the court had been in collusion with some other unspecified party.

[18] Counsel argued that there were negotiations toward settlement in 2006. During the proof, counsel for Mr Stirton sought adjournments for discussion, but no offers in settlement were made. Offers to settle were made by the petitioners between February 2010 and 2011. None were accepted.

[19] Counsel argued that for all of the reasons given by her, the defence of the action had been aimless, half hearted, inconsistent, undirected, and unco-ordinated. It had therefore prolonged matters and led to extra expense. She argued that the agents had failed to take precognitions, had failed to apply to SLAB effectively for sanction, had instructed the experts Mr Meek and Mr Eadie late in the day and in a bizarre fashion, by failing to send all of the papers to them, and by failing to have witnesses available when required. Thus taxation should be made on the agent client, client paying scale, and a portion of the expenses should be against the agents personally.

[20] She argued that the law was as expounded in Macfadyen on Court of Session Practice, paragraphs 502 and 711. If one party was put to additional expense through the fault or improper conduct of the other party's law agent the expenses so caused could be granted against the law agent. Counsel referred to Bremner v Bremner 1998 SCLR 561, Stewart v Stewart 1984 SLT (Sh Ct) 58, Blyth v Watson 1987 SCLR 459, McKie v Scottish Ministers 2006 SC 528, Maltby v DJ Freeman & Co [1978] 1WLR 431, Myers v Elman 1949 AC 281, Davy Chiesman v Davy Chiesman [1984] Fam 48 and the Solicitors (Scotland) (Standards of Conduct) Practice Rules 2008.

[21] When counsel for Mr Stirton was called on to speak he sought a short adjournment which I granted. He then said that he regretted that he was not able to make adequate or substantive replies to the submissions made. He had not had time to prepare. He said that he wished to move to have Mr Stirton's expenses modified under the legal aid legislation. Mr Stirton had no assets and relied on members of his family for support. He did not claim any benefits. Counsel had nothing else to say.

[22] Counsel for Robertson & Ross argued that an award against solicitors was meant to punish misconduct or neglect. While the proof had been very long, there was no misconduct or neglect such as that found in Stewart v Stewart. He referred to the case of Orchard v SSEB (1987) 1QB 565, and argued that neither failing in the outcome of the case nor the existence of a degree of negligence was sufficient; what was required was serious misconduct. He referred to Nelson v McBeath unreported, 18 January 2007, a decision of Sheriff Principal Sir Stephen Young. He argued the test was whether there had been abuse of process. Counsel also referred to Reid v Edinburgh Acoustics Ltd (No 2) 1995 SLT 982. He referred in passing to a New Zealand case, Harvey v McDonald 2001 UKPC 18.

[23] Counsel argued that the decision made by the court in the proof had been basically made on credibility and reliability and was not based on any finding that Mr Stirton had insisted on arguments found to be wrong in law. Certain decisions were for counsel and there was only so much a solicitor could do. Some precognition had been done. As regards a finding that expenses should be on the agent client, client paying scale, counsel argued that the petitioners were relying on the same deficiencies in submitting that expenses should be against the agents as they relied on in their submissions about the appropriate scale.

[24] Mr Anderson had lodged a skeleton argument in reply to counsel for the petitioners' skeleton argument, which, as with the petitioners' skeleton argument, I have taken fully into account and which I do not repeat in full. He relied on it and supplemented it with oral submissions. He began by stating that he had not been asked if he had any objections to the late production of documents by other people, and that the petitioners' counsel had referred to authorities without giving him notice. He asked what I had meant when I had asked questions of Mr McAlpine about the agents seeking a fee for trying to find the identity of the interim administrator. He submitted that Robertson & Ross had not been dilatory. He had been a party litigant but had attended most of the consultations held with Mr Stirton. Counsel had never said that any witness needed to be precognosced. Time was lost due to the interim administrator's health, and as the petitioners were not relying on her evidence, they should not have called her and he should not have to pay for time taken by her evidence. He submitted that the petitioners had caused delay deliberately. They must have had a plan to call him as a witness and so they must have known that the estimates of time they gave were too short. He accepted that expenses should follow success, but submitted that he should be liable only for seven weeks, being the first estimate of time required given by the petitioners. The interim administrator should have had no work to do in this case as all the documents were taken by the police and handed to her. He had taken care at the proof to ask all witnesses if they knew the interim administrator and all with the exception of Mr Ramsay and Ms Harris said they did not, thereby showing that she had done no work to investigate the case. All of the work was done by the police in Operation Maple. In his written submissions Mr Anderson sought to distance himself from the way in which Mr Stirton's defence had been conducted, for example in the failure to lead Mr Stirton as a witness in his own defence. He asserted that many decisions were taken by counsel in the face of opposition by both Mr Stirton and the agents. He said that Robertson & Ross had a precognition of Mr Neilson, and that the examination of him by reference to his statement was a waste of time, but he, Mr Anderson, should not be held responsible for what he regarded as counsel's failures. He had said at the outset of the hearing, and in oral submissions, that he believed counsel should be represented, and as I understood him that was because he made criticism of counsel, especially in his written submissions. I pointed out to him that he had no motion to have an order finding expenses due by counsel. Mr Anderson denied that settlement discussions had taken place, stating that the counsel first instructed, prior to proof, had been dismissed for acting without instructions. He argued that the contractual arrangements between the petitioners and the interim administrator should be disclosed. He maintained his position that questions put by him to Ms Harris were relevant. He maintained that the interim administrator was 'far too close to the Scottish Ministers and to the Home Office in England to act as an independent officer of the Court. We believe that the ruse of an alias was as much to preserve her in a role where she never came to any conclusions adverse to the state as to preserve her safety.'

[25] In conclusion Mr Anderson argued that it was ridiculous that counsel for the petitioners selected the figure of 20% as the portion of expenses she sought against the agents while on her feet, as she should have had that worked out in advance.

Discussion

[26] Thus there was no dispute that expenses should follow success, although Mr Anderson argued for a restriction related to the time which the proof had taken. The scale of fees was in dispute as was the finding against Robertson & Ross. In my opinion the case of McKie sets out clearly the law in Scotland on the matter of the scale of any award of expenses. I respectfully agree with Lord Hodge that the law may be summarised in the five propositions he enumerates in paragraph 3.

[27] I found the cases of assistance in illustrating the situations in which the court had held that the agents had been guilty of misconduct such as to render them liable in expenses. In particular I found Sheriff Principal Ireland's analysis in Stewart to be illuminating. In that case a solicitor entered a defence in a summary cause genuinely but erroneously believing that there was authority to support the submission he sought to make. The pursuer sought caution and the solicitor insisted on the defence. At proof he consented to decree and at the motion for expenses conceded that he could not find any authority supportive of his argument. The court found him liable in expenses.

[28] I considered all of the circumstances of the case and the written and oral submissions made to me. I came to the conclusion that the way in which the defence of Mr Stirton and Mr Anderson had been conducted caused unnecessary expense. Junior counsel who was instructed alone in the first tranche of the proof stated that he had been instructed close to the diet of proof, and funds were available for appearance in court but not for reading the papers in preparation. That situation, which seemed to me very unusual and unsatisfactory, continued throughout the proof. It was illustrated at an early stage when a motion was made by Mr Anderson and counsel for Mr Stirton to amend an answer to a notice to admit from 'admitted' to 'denied'. Counsel explained that Mr Anderson had dealt with the notice prior to proof, when he was dealing with both his own pleadings and those of Mr Stirton. When counsel was instructed he had not had time to check everything and missed the mistake that had been made. Mr Anderson said it had been a slip of the pen. At a late stage counsel for Mr Stirton sought to lodge late a set of accounts which was already a production for the petitioners, but of which he was unaware. The lack of familiarity with the papers thus demonstrated caused time to be taken up. More fundamentally, Mr Stirton and Mr Anderson insisted on irrelevant matters. They conducted the proof as if the question before the court was whether the criminal case in which they appeared on petition could be proved. They appeared to cross examine and submit on the basis that what determined truth was the vigour with which a proposition was asserted by them, without regard to other relevant evidence. They insisted that as Mr Gibson and Mr McLeod denied in court that they had been the subject of extortion, all other evidence which suggested that they had made payments of protection money was of no consequence and required no attention from them. They failed to grasp that the court required to consider the admissible statements made outwith the court, for example on precognition on oath or to officials of HMRC, and to consider evidence of payments made. They failed to engage in providing any explanation for payments, beyond their own assertion that Mr Gibson and Mr McLeod made money, and so had no problems. They failed to lead any detailed evidence of work done by Mr Stirton to enable him to fund the development of the filling station. Instead, they led vague evidence with a lack of supporting documents. Mr Anderson led evidence from Mr Stirton which was worthless because he suggested the answer in the question. For example he asked Mr Stirton if it was correct that he, Mr Anderson, had told Mr Stirton that he had agreed with the Inland Revenue that he, Mr Stirton, had worked as a builder. Questions of that sort were asked on several occasions. Mr Anderson led Mr Cockburn to show that he had written letters on behalf of his clients Mr Gibson and Mr McLeod, in which he explained that they denied being the subject of extortion. When asked if he believed his clients Mr Cockburn very properly indicated that he was not required to believe his clients, but to act on instructions. His evidence was a waste of court time. Further, Mr Anderson had not considered client confidentiality as it applied to Mr Cockburn. Therefore when Mr Cockburn declined to answer a question about the advice he had given to his client Mr Gibson, Mr Anderson was obliged to seek an adjournment. Mr Stirton left the court to see Mr Gibson and returned with written instructions addressed to Mr Cockburn from Mr Gibson, indicating that Mr Gibson waived confidentiality. That exercise took up court time. The respondents put the petitioners to proof, which took up court time. They insisted on attempting to lead evidence about the errors made by the civil recovery unit in the original petition, a matter which had been the subject of a decision by Lord Glennie. They insisted on attempting to lead evidence apparently designed to show that the interim administrator was not independent, but was instructed to do the bidding of the petitioners. They made similar suggestions to Mr Murray, an accountant led by the petitioners. They attempted to lead evidence that the civil recovery unit was in some way too close to the interim administrator and the petitioners. They spent considerable time attempting to discover the name of the interim administrator, who appeared under a pseudonym, and to get behind the PII certificate given by the Lord Advocate. They moved me to recuse myself many times, ultimately arguing that I was in collusion with unnamed persons. Counsel for Mr Stirton spent considerable time on cross examination of a witness on the HOLMES system, and on suspicious activity reports, but made no submission about either matter. There was no relevance in that examination. Both Mr Stirton and Mr Anderson spent time endeavouring to show that mortgages had been paid regularly, instead of concentrating on the question before the court, which was whether the loans had been obtained by fraud. I do not know if settlement was discussed prior to proof, as counsel for petitioners submitted, as Mr Anderson denied that. It is however correct that Mr Stirton's counsel sought and obtained an adjournment of the proof in the middle of at least one court day on the basis that serious discussions on settlement were to take place. According to counsel for the petitioners Mr Stirton made no offer to settle. That assertion is not denied and so I accept it. Thus time was wasted. Time was clearly wasted at the end of the petitioners' proof when Mr Stirton sought an adjournment to take precognitions. No satisfactory explanation has ever been given for the failure to be ready. The instruction of Mr Eadie and Mr Meek, a surveyor and an accountant who were asked to report as experts, was inefficient. It was not done until many days of proof had passed. Mr Eadie was not given all of the relevant information, and Mr Meek was sent papers over a period of time so that he had all of the relevant papers only very shortly before he gave evidence. His report was available only at the last minute. Thus time was taken cross examining the petitioners' witnesses without any positive case being clearly put to them, and examination in chief of these experts was not efficient. Both examination in chief and cross examination would have been more efficient if reports had been available earlier. The witnesses to be called for Mr Stirton were, I was told, the subject of consultation during the proof. I accept that such decisions need to be made in light of other evidence but time was taken while instructions were obtained. There were occasions when Mr Stirton ran out of witnesses and while that wasted court time I accept that in a proof of this sort it can be difficult to ensure that witnesses are always available while avoiding having members of the public attending and waiting for long periods.

[29] In my opinion the scale of expenses awarded may be used to reflect a decision that the litigation has been conducted unreasonably and/ or incompetently thereby occasioning extra expense to the opposing party. An award of expenses against agents personally is appropriate if the agent has failed in his duties to the court. That failure may be obvious, such as failure to appear when instructed. It may be a failure to observe procedural rules, such as a failure to intimate when required on a paramour in a divorce action. Or it may be a failure to recognise that the position taken up is untenable, such as occurred in Blyth v Watson and Stewart v Stewart. If on the other hand a position is taken up which is unsuccessful, then there is no necessary implication that the agent has failed in his duty. An example is seen in the case of Orchard v SSEB in which a legally aided person brought an action which failed and in which the claims made by him were described in the judgment of the court as 'weird in the extreme' and 'bizarre', in that the plaintiff asserted that the electricity supplied by the SSEB led to amongst other things, the appearance of water from electricity sockets, and the movement of objects in his house. Steyn J (as he then was) at first instance held that the plaintiff knew that these things were caused by his family and not by the defendants before the hearing commenced. The defendants sought an order for the solicitors to pay the expenses which had been awarded against the plaintiff. It was argued that the plaintiff's legal adviser must have known that the claim stood no chance of success. The court refused that motion on the basis that the solicitors had acted properly. The Court of Appeal upheld the decision. In his opinion Sir John Donaldson MR stated that agents owe a duty to the court to conduct litigation with due propriety. They were not however subject to expenses just because the action failed, nor were they so liable in a case of error of judgment, not even where the error was of an order that was equivalent to negligence. The continuance of an action or a defence when it had no, or substantially no, chance of success might constitute such misconduct, but in this case did not, when the plaintiff had witnesses said to be expert who supported his case.

[30] In the case of Reid v Edinburgh Acoustics, the Lord Ordinary was of the opinion that solicitors might be guilty of an abuse of process if they initiated or continued a case which had no, or substantially no, prospects of success if they acted unreasonably in so doing. In that case the Lord Ordinary was of the opinion that it was not competent to make an award of expenses against counsel. He declined to make any award against agents when they had acted on advice of counsel. In the present case Mr Anderson criticised the conduct of counsel in his submissions but had no motion to have counsel found liable in expenses, and accordingly counsel were not represented. I therefore did not require to consider whether it is competent to make an award against counsel, nor whether any such award should be made.

[31] Robertson & Ross were obliged to act in accordance with Mr Stirton's instructions to defend the case. His position was that he had not been involved in any unlawful conduct. The agents were therefore obliged to present that defence. They were faced with witnesses from the police and from HMRC who claimed that Mr Gibson and Mr McLeod had said that they had been the subject of extortion. I accept that counsel was required to put to those witnesses the contrary position. They were not, however, acting reasonably in proceeding in the manner outlined above. They called witnesses and asked questions which were irrelevant to the matter before the court. A great deal of court time was thus wasted.

[32] I have decided that it has not been shown that the conduct of the defence by Robertson & Ross amounted to dereliction of their duty to the court. I refuse the motion for expenses against them personally. I have decided however that the conduct of the defence of Mr Stirton and Mr Anderson was incompetent and unreasonable and that they thereby caused the petitioners unnecessary expense. In coming to that decision I have considered all of the circumstances including preparation prior to the proof starting, and conduct of the proof itself. I do not accept counsel's submission that the proof having been decided on grounds of credibility and reliability, no time was wasted on erroneous submissions in law. In my opinion the respondents did waste time by failing to engage in the questions before the court and instead spending time on irrelevant matters. I will therefore make an order for expenses against Mr Stirton and Mr Anderson jointly and severally, on the agent client, client paying scale.

Certification of witnesses

[33] Counsel for the petitioners argued that the witnesses for whom she sought certification were all skilled witnesses reasonably instructed by the petitioners. I sought to explore fully with counsel the effect of certification, given that her motion was opposed by a party litigant. She explained that the question was whether or not the witness was a skilled witness in relation to the matter on which he had been instructed. If so, and if it was reasonable to instruct him, then a fee for the perusal of a report written by him would be allowed to the agents. Any fee charged by the skilled witness for his appearance could also be allowed. It was not necessary that he was called to give evidence. Any questions as to the amount of any fees were a matter for the auditor. In the present case objection had been notified in advance by Mr Anderson to certification of Mr Murray and Mr Thomson, on various bases including the fact that each of them was in the employment of a party who was at least closely connected to the petitioners, and therefore was simply carrying out their duties in employment, rather than carrying out fee paid work as a self employed practitioner. Counsel argued that this was a matter for the auditor. If no fee was charged, there should still be certification as the agents were required to read skilled witnesses' reports. If there was a fee charged by the witness for the work done by him, it would be for the auditor to decide in all the circumstances if that fee was reasonable.

[34] Counsel for Mr Stirton had no submissions to make. The petitioners had initially, in written submissions, opposed certification of Mr Stirton's skilled witnesses but withdrew that opposition on the basis that while the witnesses did not give evidence which ultimately found favour with the court, they were skilled witnesses.

[35] Mr Anderson argued that I had found in my opinion that Mr Martin was "not shifted from his opinion in cross examination". He submitted that the duty of an expert was to shift if it was correct to do so, and Mr Martin had not done so. Mr Thomson and Mr Murray were in employment and so could not be classed as experts. Mr Cleghorn was not an expert because the report he considered contained errors he had missed. Mr Anderson argued that Mr Milliken's report was a draft paid for by Strathclyde police and so he was not an expert; Mr Murray was not an expert because he had no experience of the taxi trade and made massive errors.

[36] I decided that all of the witnesses for whom the petitioners and Mr Stirton sought certification should be certified. They were all experts in their fields and in my opinion it was reasonable that they were instructed. In my opinion there is nothing in any of Mr Anderson's criticisms. I accepted most of Mr Martin's evidence. There was nothing in his evidence to suggest that he adhered to his view unreasonably. Mr Thomson, Mr Milliken and Mr Murray were all expert accountants who spoke to reports. The level of fees charged by them is a matter for the auditor. Mr Cleghorn did not eradicate all errors from Mr Thomson's report; that does not disqualify him from being certified as a skilled witness. The witnesses for Mr Stirton were instructed very late and in a disorganised way, which was relevant to my decision on the scale of expenses. They were however skilled witnesses in

that they were experts, whether or not their evidence was helpful or accepted as correct.

The petitioners' motion for an additional fee

[37] Counsel for the petitioners sought an uplift in fees under RCS 42.14. I found head (a) to be satisfied on the basis that the cause was complex due to the circumstantial nature of the evidence. Head (b) I found satisfied due to the skill, time and labour required to manage the documents and understand the relevance of them. Head (c) I found satisfied due to the number and importance of the documents and the work necessarily undertaken to authenticate them. I found head (e) satisfied as the case was important due to the public interest in recovery of the proceeds of unlawful conduct. Head (f) is satisfied due to the value of the property the petitioners sought to recover. Finally, head (g) is satisfied by the work done in drafting and agreeing notices to admit, joint minutes and offers to settle. I therefore grant the motion.

Robertson & Ross motion for an additional fee

[38] Counsel for Robertson & Ross argued that his client had taken responsibility for the case and should be entitled to an additional fee under the legal aid regulations. He referred to papers he had produced to show that agents had carried out work. In his appendix 1 he lodged details of legal aid accounts which stated in narrative form the work for which claim is made. From that I noted that the agents sought a fee for trying to find the identity of the interim administrator, a matter I found relevant in considering the conduct of Robertson & Ross. Appendix 2 consisted of authorities, and appendix 3 comprised correspondence between SLAB and Robertson & Ross.

[39] Counsel for SLAB explained that his only interest was to oppose the motion for an additional fee made on behalf of Mr Stirton. The procedures set out in the Act of Sederunt (Civil Legal Aid Rules) 1987, paragraph 7 had not been followed, but counsel was instructed not to take that point. He indicated that he had considered whether Robertson & Ross, as opposed to counsel for Mr Stirton, had a locus to argue an additional fee; his provisional view was that they did and in any event he did not wish to take the point. Regulation 5(4) of the Civil Legal Aid (Scotland) Fees Regulations 1989 provides for the possibility of an additional fee to be allowed at the discretion of the court to cover the responsibility undertaken by a solicitor in respect of the conduct of proceedings. Various heads are set out. Counsel reminded me that this was a matter for my discretion. He submitted that if I found that the conduct of the litigation for Mr Stirton had caused extra expense for the petitioners, then it would be illogical to find that there should be uplift in fees in respect of the responsibility for the case. He referred to the case of Whittome v Whittome (No 2) 1994 SLT 130 at 133. Counsel argued that the rule which was discussed in that case was in identical terms to the rule which I required to apply.

[40] I decided that I should not allow an additional fee to Robertson & Ross. I was aware that I did not know if difficulties in presentation of the case had been caused by the client, or by agents, or by both. I took the view however that the case was lacking in preparation and focus. Work done to discover the identity of the interim administrator was an example of irrelevant work. I was not therefore able to find that Robertson & Ross had undertaken responsibility for the case in the way in which they should, although I stopped short of finding that there had been an abuse of process.

Mr Stirton's motion to have his liability modified

[41] Mr Stirton was in receipt of legal aid after the first tranche of the proof. He included in his opposition to the petitioners' motion, intimated 12 March 2012, a motion that any order for expenses against him be modified to nil for the period for which he had legal aid. Counsel submitted that he had no assets and relied on his family for support. Counsel for the petitioners in opposing modification referred to the case of Bell v Inkersall Investments Ltd (No 2) 2007 SC 823.

[42] I am required by the legislation not to make an award in expenses that exceeds in all the circumstances the amount that the assisted person should reasonably be required to pay. In exercising my discretion in this matter I am required to have regard to the means of the parties and the amount of expenses. I also have to consider all of the circumstances of the case, but modification, or lack of it, should not be used to mark the court's view that conduct has been improper. I was not satisfied that standing the findings about unlawful conduct involving Mr Stirton which I made and the view I took of the conduct of the proof, that any modification should be made.

Interim administrator's work to be included in expenses.

[43] Counsel for the petitioners submitted that the expenses of the interim administrator's investigative and reporting function should be included in any award made. She referred to the Proceeds of Crime Act 2002, section 271(2) arguing that the interim administrator's function was an essential part of the proceedings. She emphasised that she did not seek any expenses incurred in preservation of the property. She submitted that section 284 of that act provided that the fee be paid by the petitioners, but argued that it should be regarded as an outlay and should be recovered in expenses. She referred to the case of SOCA v Gale 2011 UKSC 49 and in particular to paragraphs 78, 87 and 105. Mr Anderson submitted that the interim administrator had not carried out her work properly, and in any event the petitioners had not relied on her report or her evidence. No other party addressed this matter. I agreed with the submission made by counsel for the petitioners, and therefore the expenses reasonably incurred in the investigative and reporting functions of the interim administrator are included in the expenses of the cause.

Expenses of the hearing on expenses

[44] The petitioners moved for expenses of the hearing on expenses. They are entitled to those expenses, having broadly succeeded. Mr Anderson moved for his expenses occasioned by the delay on the first two days set down for the hearing. In my opinion, if Mr Stirton's case had been prepared, the hearing would have been completed in those two days. Mr Anderson had lodged written submissions, in time, and made his oral submissions in a reasonable period of time at the hearing. I therefore agree that he should not be liable for expenses for the first two days. Mr Anderson did not succeed in his opposition to the motion and so I will not make an award in his favour. Mr Robertson took up some time when he sought to appear for Robertson & Ross. It was not apparent that he had made any preparation for his motion, as he was unaware of the recent cases on the matter. However, as I decided to adjourn due to Mr Stirton's counsel not being prepared, the first two days would have been wasted in any event. Counsel for Robertson & Ross was of assistance to the court. I did not find Robertson & Ross personally liable. Nevertheless in all the circumstances I find no expenses due to or by Robertson & Ross in respect of the hearing in expenses. I find Mr Stirton liable to the petitioners for the expenses of the motion including expenses attributable to 10 11 12 and 13 July, and Mr Anderson liable for expenses for 12 and 13 July only, jointly and severally with Mr Stirton. Counsel for Mr Stirton moved for modification of his expenses which I refused. I therefore find Mr Stirton liable in expenses to SLAB for the hearing on expenses.