Stronachs Corporate v. Mountwest 166 Ltd [2004] ScotSC 90 (07 October 2004)

BAILII is celebrating 24 years of free online access to the law! Would you consider making a contribution?
No donation is too small. If every visitor before 31 December gives just Â£1, it will have a significant impact on BAILII's ability to continue providing free access to the law.
Thank you very much for your support!

The sheriff principal, having resumed consideration of the cause, allows the appeal, recalls the interlocutor of the sheriff dated 23 April 2004 and finds no expenses due to or by either party in respect of the appeal; quoad ultra remits the cause to the sheriff and directs him to grant decree in absence against the defenders for the sum of £3,584.81 with interest as craved and expenses of £293.95.

[1] In this case the pursuers are a firm of solicitors. The defenders are a limited company incorporated under the Companies Acts and carrying on business at an address in Aberdeen. The action is for payment of the pursuers' professional account. In article 2 of the condescendence they aver that from on or around 12 July 2001 to on or around 18 November 2002 they provided professional services for the defenders at the defenders' order and during the course of their business, conform to an invoice issued by the pursuers, the total of which is £3,584.81. In article 3 the pursuers aver that they have called upon the defenders to make payment of the outstanding sum but that the defenders refuse or delay so to do. Appended to the initial writ is a copy of the pursuers' invoice dated 11 March 2003 in the sum of £3,584.81 inclusive of Value Added Tax. The narrative in the invoice is as follows:

[2] The action was raised on 3 September 2003 and the defenders were duly cited by a sheriff officer on 29September 2003. They evidently did not defend the action and on 13 February 2004 the pursuers' solicitor endorsed a minute for decree in the following terms:

[3] The sheriff decided to put the matter out for a hearing upon the basis that there was no information before him which would allow him to reach any rational conclusion upon why the dispensation sought by the pursuers should be granted.

[4] The hearing duly took place and the sheriff heard submissions from the pursuers' solicitor. Understandably the defenders were not represented at this hearing. Thereafter the sheriff issued an interlocutor dated 23 April 2004 in the following terms:

[5] It is this interlocutor which is the subject of the present appeal. In support of it the sheriff wrote a detailed and helpful note. This speaks for itself, and it is unnecessary to set it out in full here. In short, as I understand it, the sheriff concluded that, notwithstanding the coming into force on 20 July 1992 of the Act of Sederunt (Solicitor and Client Accounts in the Sheriff Court) 1992 (1992 SI No. 1434 - "the Sheriff Court Act of Sederunt"), it remained the law (as, according to the sheriff, it had been since at least 1806) that, in any undefended action in the sheriff court in which a solicitor sought decree against his client for payment of his account of professional fees, the court was obliged before granting decree in absence to remit the account for taxation by the auditor of court unless there had been a clear waiver by the client of his right to a taxation of the account. And, even if he was wrong in reaching this conclusion, the sheriff's view was that there was no rational basis before him for exercising his discretion, as he had been asked to do in the minute for decree, to "dispense with the requirement for the taxation of the pursuers' professional account". He therefore refused the minute and remitted the account for taxation "in the usual way" (as he put it).

[6] Both the solicitor who appeared before the sheriff and the solicitor who appeared before me in the appeal recognised that the minute for decree had been ineptly drafted in that it pre-supposed that in the ordinary course of events there was a requirement that, in an undefended action in the sheriff court by a solicitor for payment of his account of professional fees, the account should be remitted by the court for taxation before decree in absence could be granted. In a nutshell, both solicitors submitted that the effect of the Sheriff Court Act of Sederunt had been that there was no longer any such requirement and that it was now a matter for the discretion of the sheriff to decide whether in any particular case the solicitor's account should be remitted for taxation by the auditor of court.

[7] For quite a number of years now there has been a difference of opinion among sheriffs upon the necessity in an undefended action for such a remit. Thus in Alex Morison & Co WS v McCulloch 1984 SLT (Sh.Ct.) 88 a firm of solicitors raised a summary cause action for payment of their fees in relation to a conveyancing transaction. The action was undefended. The pursuers' account having been remitted to the auditor of court for taxation, they thereafter sought decree for the sum sued for with expenses to include the auditor's fee. A question arose as to whether it had been necessary for the account to have been taxed at all. At page 89 Sheriff N E D Thomson observed: "Now when a solicitor raises an action for payment of his professional account and the action is raised in the sheriff court as an ordinary cause, there has been a long-established practice that the account should be remitted to the auditor of court for taxation, even where the action is undefended. The question has recently arisen, however, as to whether this practice should be imported into summary cause procedure ...." After considering this question in some detail, the sheriff concluded (at page 90):

[8] Sheriff Thomson's view on this question was evidently shared by the then sheriff principal of South Strathclyde, Dumfries and Galloway (R A Bennett QC) since in that sheriffdom the Act of Court 1982 No. 4 provided that it should not be necessary for solicitors suing for recovery of professional fees to have their accounts taxed by the auditor of court before decree, except when the account was challenged by the defender - see Macphail's Sheriff Court Practice (1st Edn) paragraph 21-63. Interestingly, this Act of Court was subsequently revoked by Sheriff Principal Bennett's successor, Sheriff Principal G L Cox QC, in terms of the Act of Court 1995 No. 4, possibly in response to the submission in Macphail that, since it appeared to be contrary to settled law and practice, it might be challenged as ultra vires of the sheriff principal. The "settled law and practice" referred to in Macphail were given effect in W & A S Bruce v Ewans 1986 SLT (Sh.Ct.) 20 and Lyall & Wood v Thomson 1993 SLT (Sh.Ct.) 21 (and see also R J Docherty & Co v Horne 1967 SLT (Sh.Ct.) 27). In Bruce a firm of solicitors raised a summary cause action for payment of their fees in relation to preparation of a partnership agreement. The action was undefended. A question arose as to whether it was necessary for the account to be remitted to the auditor of court for taxation where the defender had not admitted that the amount sued for was due. Sheriff J S Forbes concluded that this was necessary. After considering the opinion of Sheriff Thomson in Alex Morison & Co, Sheriff Forbes continued:

The pursuers appealed to the sheriff principal (R R Taylor QC) who refused the appeal. At page 21 he stated:

[9] Lyall & Wood was a case in this sheriffdom. A firm of solicitors raised a small claim for payment of their fees. The defender returned Form 2 having signed the boxes admitting the claim. When the sheriff (who was the same sheriff as in the present case) refused the pursuer's motion for decree and remitted their account to the auditor of court for taxation, the pursuers appealed to the sheriff principal (R D Ireland QC), arguing that in view of the defenders' express admission of the claim taxation was unnecessary. On 6April 1992 the sheriff principal refused the appeal holding that decree could not be granted in the action without taxation. After referring to the opinion of Sheriff Thomson in Alex Morison & Co, the sheriff principal continued (at page 22):

The sheriff principal went on to consider whether the general rule was subject to an exception where, in a small claim or summary cause, the defender had signed a form admitting the claim. The sheriff principal considered a number of authorities which vouched the proposition that a client's right to have his solicitor's account taxed may only be excluded upon the basis of an express waiver by the client. The authorities to which he referred all related to the practice in the Court of Session, but he concluded (as he put it) that the rule requiring taxation in the absence of express waiver was not based on any specialty of Court of Session procedure and that the ratio underlying the decisions applied equally to actions in the sheriff court. He therefore declined to follow the observation by Sheriff Principal Taylor in Bruce to the effect that taxation was not necessary where the defender had admitted that he was due the amount sued for, and concluded that decree could not be granted in the action without taxation.

[10] I do not doubt that for many years in the sheriff court it was settled practice in an undefended action by a solicitor for payment of his professional account to remit the account for taxation before granting decree in absence against the client. Given that it was a requirement in the Court of Session until 1992 that there should be such a remit for taxation, it is not hard to understand why it should have been thought that the same practice should be followed in the sheriff court (especially in days gone by when almost all sheriffs were advocates who had been in practice in the Court of Session). But I must respectfully doubt the opinion of Sheriffs Principal Taylor and Ireland to the effect that there was a rule of law in the sheriff court that there should be such a remit. As already noted, Sheriff Principal Ireland refers to a number of authorities which vouch the proposition that a client's right to have his solicitor's account taxed may only be excluded by an express waiver on the part of the client. But it does not follow from the fact that the client has a right to have his solicitor's account taxed that the court is under an obligation in an undefended action by the solicitor against the client to refrain from granting decree for payment of the amount brought out in the account unless and until it has been taxed by the auditor of court. Since he was rejecting the view of Sheriff Thomson based, as it was, on what seem to me to be some cogent considerations, it might have been thought that Sheriff Principal Ireland would have cited some authority for his opinion that there was a rule (and not merely a practice) which required the taxation of a solicitor's account in an undefended action. But he does not do so beyond referring to the opinions of Sheriff Forbes and Sheriff Principal Taylor in Bruce. He observes that the fact that other professional accounts are not subjected to taxation does not demonstrate that taxation is wrong when applied to a solicitor's account. It is hard to disagree with this, but equally it does not support the conclusion that taxation is right in such a situation. He also comments that the courts have always assumed responsibility for the regulation of fees charged by members of the legal profession. This is perfectly correct, as may be seen, for example, in the Acts of Sederunt regulating respectively the fees of solicitors in the Court of Session and in the sheriff court. But again it does not follow from the assumption by the courts of such a responsibility that as a matter of law a solicitor's account must be remitted for taxation in an undefended action by the solicitor against his client.

[11] In Bruce Sheriff Forbes proceeded upon the basis that it was difficult to see why the sheriff court practice should stand in any different position from that which apparently obtained in the Court of Session. But he did not go so far as to say that there was a rule of law to the effect that there should be a remit of the solicitor's account for taxation. Sheriff Principal Taylor refers to Dobie's Sheriff Court Practice at page 338 and to Lewis's Sheriff Court Practice (8^th Edn) at page 105. In Dobie at page 338 it is said: "An action by a solicitor against his client for payment of his business account proceeds in ordinary form, but decree will not be granted for payment, save of consent, without the account being taxed. Even where the action is undefended the first order is a remit to the auditor to tax the account and to report". There is a statement to similar effect at page 130 where it is said: "Where a solicitor's account is sued for the account must be remitted for taxation before decree is taken". But no authority is cited by the learned author for these statements. Likewise in Lewis at pages 105/6 it is stated: "In actions for payment of a solicitor's account, the account sued for must in the first place be remitted to the auditor for taxation, unless the defender has dispensed with taxation". But again no authority is cited in supported of this proposition. Nor, apart from his references to Dobie and Lewis, does Sheriff Principal Taylor cite any authority in support of his conclusion.

[12] At the end of the passage on page 338 of Dobie there is a note which refers to rules 110 -112 of the Act of Sederunt of 10 July 1839 (which regulated procedure in the sheriff court). These provided:

In so far as they had not already been repealed (for example, by section 51 of the Sheriff Court Act 1853), the provisions of the Act of Sederunt of 1839 were finally repealed by section 52 of the Sheriff Courts (Scotland) Act 1907 as being inconsistent with the rules of procedure set forth in the First Schedule to the 1907 Act, section 39 of which provided that the procedure in all civil causes should be conform to these rules of procedure - see Fyfe's Sheriff Court Practice (1^st Edn, 1913) at paragraph 1168. In any event it is plain that the procedure in rules 110/2 of the Act of Sederunt of 1839 only applied where a solicitor sought payment by his client of his professional account in connection with judicial proceedings which had taken place, or were still taking place, in the sheriff court in which the summary application was presented. Furthermore, the procedure could not be invoked where liability for payment of the account was disputed by the client. It is noteworthy too that, while these rules mirrored closely certain of the provisions of the Act of Sederunt of 6 February 1806 to which I shall shortly refer, they did not go on to provide, as did the Act of Sederunt of 1806, for the mandatory remit for taxation of a solicitor's account in any action by him in the Court of Session for payment of the account.

[13] It crossed my mind briefly that it might be said that rule 32.1 of the current Ordinary Cause Rules was authority for the proposition that a solicitor's account must be remitted for taxation even in an undefended action for payment to him by his client of the account. This rule provides: "Expenses allowed in any cause, whether in absence or in foro contentioso, unless modified at a fixed amount, shall be taxed before decree is granted for them". So far as I have been able to discover, this rule first found expression in the sheriff court in the Act of Sederunt of 12 November 1825, section 1 of chapter XVII of which provided: "The sum of expenses to be given in any decree, whether in absence, or in foro, shall always be taxed before extract". The rule seems to have had a number of re-incarnations - see, for example, rule 105 of the Act of Sederunt of 1839 and rule 99 of the original First Schedule annexed to the Sheriff Courts (Scotland) Act 1907. But it seems to me to be perfectly clear that the rule in its present form, as in its previous forms, only applies to expenses allowed in a cause pending before the sheriff court and does not apply to a solicitor's professional account for payment which he has raised an action in the sheriff court against his client.

[14] I have already referred to the statements in Dobie and Lewis. So far as I have been able to discover, there are no similar statements to be found in any of the older text books which I have consulted, let alone any authorities cited in support of these statements - see McGlashan's Sheriff Court Practice (4^th Edn, 1868), Dove Wilson's Sheriff Court Practice (4^th Edn, 1891), Wallace's Sheriff Court Practice (1^st Edn, 1909) and Fyfe's Sheriff Court Practice (1^st Edn, 1913). In Begg on Law Agents (2^nd Edn, 1883) it is said: "It is the practice of the court, under the provisions above quoted (viz. the final section of the Act of Sederunt of 1806) to remit to the auditor all accounts sued for by law agents for all kinds of business, although the Act of Sederunt appears to relate only to accounts for judicial proceedings in the Court of Session" (page 161, footnote 5). But there is no suggestion that the same practice was applied in the sheriff court. In J W Hastings: Expenses in the Supreme and Sheriff Courts (1^st Edn, 1989) it is said at page 118: "In accordance with the common law, which the Court of Session codifies in the regulations for solicitors in the table of fees, a solicitor's business account must be taxed before even a decree in absence will be granted for solicitors' remuneration". Although it is not stated, the reference to the regulations is presumably a reference to what was then rule 350(c) of the Rules of the Court of Session 1965 (as to which see paragraph [20] below). But no authority is cited to vouch what was said to be the common law. It is then said: "In the sheriff court, it was held that decree in an action of payment could not be granted until full details of the remuneration and outlays claimed were given and the account taxed. A similar decision was made when an account in a criminal cause was sued for". The first sentence here is supposedly vouched by references to Docherty v Horne and Bruce, and the second by a reference to McKay v McIntosh 1952 SLT (Sh. Ct.) 88. Of this last case (which was defended) all that need be said is that it does not appear to have had anything to say about the granting of decree in absence in an undefended action by a solicitor for payment of his account.

[15] I turn now to the Sheriff Court Act of Sederunt. It was made on 16^th June 1992 and came into force on 20^th July 1992, that is in both cases after Sheriff Principal Ireland had issued his decision in Lyall & Wood. Rule 2(1) provides: "Subject to section 61A(1) of the Solicitors (Scotland) Act 1980, the sheriff may remit the account of a solicitor to his client to the auditor of court for taxation". Rule 2(2) then provides for what is to happen where such a remit is made. In short, the solicitor has to lodge the account with the auditor of court within twenty one days, the account has to be in such form as to enable the auditor of court readily to establish the nature and extent of the work done, the auditor of court then has to assign a diet of taxation, the solicitor has to post a copy of the account to the client (if this has not already been done) and give notice in terms of Form A of the date, time and place of the taxation to the client, the auditor has to report his decision to the court, the solicitor or the client may lodge objections thereto and finally the sheriff has to dispose of such objections in a summary manner, with or without answers. Rule 3 then provides for what is to happen where the auditor of court taxes the account of a solicitor to his client in respect of the conduct of a litigation on behalf of the client, and there follow various detailed provisions about how such an account is to be taxed. It may be inferred from the existence of this rule that rule 2 applies to the account of a solicitor to his client for professional services in respect of any matter and not merely the conduct of a litigation on behalf of the client. Finally (and perhaps significantly in the present context) rule 4 in effect removes solicitor and client accounts from the ambit of the Act of Sederunt (Fees of Solicitors in the Sheriff Court) 1989 (1989 SI No. 434).

[16] Form A referred to in rule 2(2) provides for various details to be given to the client including the date, time and place of the taxation and statements that, if the client wishes to object to any part of the account, he must appear or be represented at the taxation and that, if he does not do so, he will lose any right to object to the account. Provision is also made on the form for the case number to be given, and plainly this must be the number of the action which the solicitor has raised against the client for payment of his professional account.

[17] Section 61A(1) of the Solicitors (Scotland) Act 1980 provides that where a solicitor and his client have reached an agreement in writing as to the solicitor's fees in respect of any work done or to be done by him for his client it shall not be competent, in any litigation arising out of any dispute as to the amount due to be paid under any such agreement, for the court to remit the solicitor's account for taxation.

[18] In the current Rules of the Court of Session the rule equivalent to rule 2(1) in the Sheriff Court Act of Sederunt is rule 42.7(1) which provides: "Subject to section 61A(1) of the Solicitors (Scotland) Act 1980, the court may remit to the auditor the account of a solicitor to his client - (a) where the account is for work done in relation to a cause in the Court of Session, on the motion of the solicitor or the client; or (b) in an action in which the solicitor or his representative sues the client for payment of the account". Rule 42.7 is derived from rule 2(5) of the Act of Sederunt (Rules of the Court of Session Amendment No. 3) (Taxation of Accounts) 1992 (1992 SI No. 1433 - "the Court of Session Act of Sederunt"). This Act of Sederunt was made on 14 June 1992 and came into force on 20 July 1992 which of course was the very same day upon which the Sheriff Court Act of Sederunt came into force. In this situation, and since both Acts of Sederunt (made, as they both were, by the Lords of Council and Session) deal with more or less precisely the same subject matter, it is I think a reasonable inference that they were both intended to achieve the same practical result. In other words, in construing rule 2(1) of the Sheriff Court Act of Sederunt I think that it is legitimate to see what was the effect of rule 2(5) of the Court of Session Act of Sederunt.

[19] In order to understand this effect it is helpful to go back to the Act of Sederunt of 1806 (which is considered in some detail in Maclaren on Expenses at pages 512/6). This provided that, in order to provide an easy method by which the accounts of practitioners, as between agent and client, in the Court of Session might be checked and liquidated, it should be competent, either to the client or to the agent, to make a summary application to the court, the procedure for which was very similar to that to be found in rules 110 - 2 of the Act of Sederunt of 1839 to which reference has already been made. But the Act of Sederunt of 1806 included also an important provision which, as already noted, did not appear in the Act of Sederunt of 1839 and which was in the following terms:

[20] This provision was re-enacted in subsequent Rules of the Court of Session and finally became rule 350(c) of the Rules of the Court of Session 1965 (1965 SI No. 321). In its original form rule 350 provided:

[21] In Alex Morison & Co Sheriff Thomson questioned whether rule 350(c) was intended to apply to an action by a solicitor for payment of his account for non-judicial work, and in Bruce Sheriff Principal Taylor observed that he thought that Sheriff Thomson might be correct in saying that rule 350(c) referred only to accounts of expenses in judicial processes (cf Begg on Law Agents quoted in paragraph [14] above). For present purposes I am not sure that it much matters whether this is correct or not. What is important is that the whole of rule 350, including rule 350(c), was repealed by rule 2(5) of the Court of Session Act of Sederunt and substituted by a new rule 350 in very similar terms to those of rules 2 and 3 of the Sheriff Court Act of Sederunt. Thus the new rule 350(1) provided: "Subject to section 61A(1) of the Solicitors (Scotland) Act 1980, the court may remit to the auditor of court for taxation the account of a solicitor to his client - (a) where the account is for work done in relation to a litigation in the Court of Session, on the motion of the solicitor or the client; and (b) in any case, in an action in which the solicitor or his representatives sue the client for payment of the account". The new rule 350(2) provided that the motion under rule 350(1)(a) might be enrolled notwithstanding that final decree in the litigation had been extracted. The new rule 350(3) and (4) was in very similar terms to rule 2(2) of the Sheriff Court Act of Sederunt. And the new rule 350(5) appears to have been in identical terms to rule 3 of the Sheriff Court Act of Sederunt. In particular, it speaks, as does rule 3, of the auditor of court taxing the account of a solicitor to his client in respect of the conduct of a litigation so that it may be inferred that rule 350(1)(b) applied to accounts for all types of work done by a solicitor and not merely an account in respect of the conduct of a litigation. (In passing, I note also that rule 2(2) of the Court of Session Act of Sederunt excluded solicitor and client accounts from the ambit of taxations under rule 347 - cf rule 4 of the Sheriff Court Act of Sederunt).

[22] In my opinion it is abundantly clear that the purpose of the new rule 350(1) was to do away with the requirement that had existed in the Rules of the Court of Session between 1806 and 1992 that in every case in which a solicitor sued his client for payment of his account of expenses the court should remit the account to the auditor of court and should not pronounce decree, either in absence or after hearing parties, without a report having been made by the auditor of court. In place of this requirement the court was given a discretion to determine in any given case whether or not the account of a solicitor to his client should be remitted for taxation.

[23] Likewise, in my opinion the effect of rule 2(1) of the Sheriff Court Act of Sederunt was to do away with any requirement (if such existed at all) that in every action by a solicitor against his client for payment of his account, including an undefended action, the court should remit the account for taxation before granting decree and instead to confer upon the sheriff a discretion to determine whether or not in any given case there should be a remit for taxation.

[24] In his note, as I understand it, the sheriff concluded that the use of the word "may" in rule 2(1) of the Sheriff Court Act of Sederunt reflected the fact, as he would have it, that before the Act of Sederunt came into force the court was not obliged to remit a solicitor's account for taxation where there had been an express waiver by the client of his right to have the account taxed, but was otherwise obliged to do so. In other words, according to the sheriff, the law was not changed by rule 2(1). For my part, I can agree with this last conclusion, albeit not for the reason stated by the sheriff. As already indicated, I doubt that there was ever a rule of law in force in the sheriff court (as opposed to an admittedly long-standing practice) that decree in an undefended action by a solicitor against his client for payment of his account could not be granted until the account had been taxed. And even if there was such a rule of law, I think that the effect of rule 2(1) when read, as I think it must be, alongside rule 2(5) of the Court of Session Act of Sederunt, was to do away with this rule of law. In my view rule 2(1) must be given its plain and simple meaning, namely that the sheriff, far from being obliged even in an undefended action to remit the account of the solicitor to his client for taxation, has a discretion to do so. And here I would merely add two observations. In the first place, rule 2(1) applies to all types of civil proceedings in the sheriff court, and not merely ordinary causes. And secondly in a defended action, faced with a client who wished to assert his right to a taxation of his solicitor's account, the sheriff would require a very cogent reason, such as an express waiver by the client, for refusing to remit the account for taxation.

[25] In his note the sheriff further expressed the opinion that, even if there was a discretion in the present case, there was no rational basis for exercising it by granting the motion for the pursuers. In the form in which the motion appeared in their minute for decree, I dare say that the sheriff was quite right. But of course the true question that he had to consider (and I do not criticise him for not having done so in light of the pursuers' minute for decree) was not whether he should exercise his discretion to dispense with the requirement for taxation but whether he should exercise his discretion to remit the pursuers' account for taxation. He had to exercise his discretion reasonably and accordingly, if he was going to remit the account for taxation, he had to find a rational basis in the particular circumstances of the present case for taking this positive step. In my opinion, in the absence of any opposition from the defenders there was no such rational basis, and the sheriff ought not therefore to have remitted the account for taxation but instead should have granted decree in absence without further ado. I have accordingly recalled his interlocutor and remitted the cause to him with a direction to grant decree in absence against the defenders.

		JUDGEMENT of SHERIFF PRINCIPAL SIR STEPHEN S T YOUNG Bt QC
		in the cause
		STRONACHS CORPORATE
		Pursuers and Appellants
		against
		MOUNTWEST 166 LIMITED
		Defenders and Respondents

	[Home] [Databases] [World Law] [Multidatabase Search] [Help] [Feedback]
	Scottish Sheriff Court Decisions
You are here: BAILII >> Databases >> Scottish Sheriff Court Decisions >> Stronachs Corporate v. Mountwest 166 Ltd [2004] ScotSC 90 (07 October 2004) URL: http://www.bailii.org/scot/cases/ScotSC/2004/90.html Cite as: [2004] ScotSC 90

Scottish Sheriff Court Decisions