| SHERIFFDOM OF LOTHIAN AND BORDERS Case Number: A909/12 2014SCEDIN 11 |
| | Judgment by SHERIFF PRINCIPAL MHAIRI M STEPHEN in appeal by FLEMING & REID, Solicitors, Defenders & Appellant in the cause BALFOUR & MANSON, LLP Pursuers & Respondents against FLEMING & REID, Solicitors Defenders & Appellants ___________________________ |
Act: Hennessy, Solicitor Advocate for the appellants
Alt: Webster, Advocate for the respondents
EDINBURGH, 29 April 2014
The Sheriff Principal, having resumed consideration of the cause, refuses the appeal; adheres to the sheriff’s interlocutor of 31 October 2013; remits the cause to the sheriff to proceed as accords with regard to further procedure and to fix a Chapter 18 hearing on the minute of amendment for the pursuers and respondents No 17 of process; thereafter finds the appellants liable to the respondents in the expenses of the appeal; allows an account thereof to be given in and remits same, when lodged to the Auditor of Court to tax and to report and certifies the cause as suitable for the employment of junior counsel in the appeal.
(signed) Mhairi M Stephen
NOTE:
- This is an action for payment in which the pursuers are the Edinburgh solicitors and the defenders are the local or Glasgow solicitors in divorce proceedings at the instance of their mutual client Mrs Jacqueline Clark against her husband Alexander Clark.Divorce proceedings commenced in August 2008 in the Court of Session and involved significant financial conclusions in respect of heritable property, capital and aliment at the instance of Mrs Clark.The pleadings indicate that Mrs Clark originally instructed the firm Levy & McRae, Solicitors to act as her local solicitors in the divorce.Levy & McRae had instructed the respondents as Edinburgh agents in respect of the Court of Session proceedings.After the divorce action was raised Mrs Clark then engaged the appellants as her local Glasgow Solicitors and they in turn continued the respondents’ instructions as the Edinburgh correspondents in respect of the divorce action.It appears that the divorce proceedings concluded in July 2010.
- It is not in dispute that the appellants are liable to the respondents in respect of fees and outlays incurred on behalf of Mrs Jacqueline Clark in the divorce.There is no dispute that the respondents provided professional services to Mrs Clark as pursuer in the divorce action as instructed by her and the appellants.
- On the day of the appeal hearing Mr Webster, for the pursuers, tendered a minute of amendment (No 17 of process).The amendment sought to delete the sum craved and substitute £41,324.23.It also made consequential amendments in Article 4 of Condescendence.The pursuers had identified that two of the invoices referred to had been rendered in 2008 to Messrs Levy & McRae.These invoices have been paid.The fact that they had been paid is a relevant averment for the pursuers but otherwise the amendment had no material bearing on the appeal.Mr Hennessy had no objection to the lodging of the minute of amendment and proposed to reserve his position as to answers pending the outcome of the appeal.
- The issue on appeal is one of specification.The appellants argue that the respondents fail to state the basis upon which the pursuers’ fee notes have been charged.There is no specification with regard to the number of hours engaged and the daily or hourly rate.The fee notes are lodged as productions and incorporated in the pleadings.
THE PLEADINGS
- The sheriff, following debate on the parties’ preliminary pleas, issued an interlocutor and note on 31 October 2013 allowing, before answer, a proof thus reserving the parties’ preliminary pleas.The appellants argued that the sheriff ought not to have allowed a proof as the appellants are prejudiced in their preparation for a proof by the lack of specification relating to the contractual agreement as to the basis of charging for the pursuers’ professional services.
- The pursuers’ averments in respect of the contract can be found in Article 3 of Condescendence:
“On or about 20 October 2008 the defenders formally instructed the pursuers to act as their Edinburgh agents. The defenders advised the pursuers that their fees would be paid at the conclusion of the proceedings. A copy of the letter of instruction is produced herewith and referred to for its terms which are repeated herein brevitatis causa. On or about 22 October 2008 the pursuers wrote to the defenders advising that they would wait until the conclusion of the case for payment of their fees. A copy of this letter is produced herewith and referred to for its terms which are incorporated herein brevitatis causa.”
The pursuers go on to aver that in any event the appellants are liable for the pursuers’ fees and outlays by virtue of section 30 of the Solicitors (Scotland) Act 1980. As I have said this is accepted. Further, the pursuers avers “the work was undertaken on the usual Edinburgh agent/local agent basis”. Interestingly, the defenders in Answer 3 do not accept that there is a contract between the parties however no argument was advanced on that basis before me.
- In Article 4 of Condescendence the pursuers make certain averments with regard to the charges made for the services provided and refer to various fee invoices.These are lodged in the first inventory productions for the pursuers (5/1 of process).These averments are met with a simple denial.
APPELLANT’S SUBMISSIONS
- Mr Hennessy appeared on behalf of the appellants.His straightforward proposition was to the effect that the lack of specification as to the basis of charge, the number of hours, the time spent on the case and the failure to stipulate the hourly rate was fundamental in a case involving payment of the respondents’ professional fees and indeed to the issue of what their reasonable remuneration ought to be.The appellants are unable to prepare for proof as they are completely in the dark about the evidence which might be led as to the level and basis of charge.The appellants should not have to guess. There was no basis upon which the court could assess either the reasonableness of the amounts charged or what reasonable remuneration might be.The lack of specification was sufficiently material that it undermined the pursuers’ case and the action ought to be dismissed as irrelevant.Mr Hennessy argued that the appeal should be allowed; the sheriff’s interlocutor of 31 October 2013 recalled; the defenders’ second plea in law sustained and the action dismissed with expenses.
- Mr Hennessy’s simple proposition related to specification.The defenders cannot know how the fees had been charged without someone giving evidence about this. Therefore the appellants are prejudiced and quite unable to prepare for any proof.It is not acceptable for a party to have to wait until proof to know the basis of the opponent’s case.
- I was referred to Macphail Chapter 9 and the following authorities Semple Fraser v Quayle 2002 SLT (Sh Ct) 33; Steelmek Marine and General Engineers Trust v Shetland Sea Farms Ltd 1999 SLT (Sh Ct) 30;Wilkie v Scottish Aviation Ltd 1956 SC 198;Avintair Ltd v Ryder Airline Services Ltd 1994 SC 270 and finally Robert Barry & Co v Doyle 1998 SLT 1238.
- It was submitted that, in the event that the pursuers seek “reasonable remuneration” the pleadings are defective.With reference to Wilkie v Scottish Aviation Ltd there was absent from the pursuers’ pleadings any averments that would allow them to be entitled to rely on custom for charging fees.This is hinted at in the averment in Condescendence 3 which states: “The work was undertaken on the usual Edinburgh agent/local agent basis.”Nevertheless, this is quite insufficient to allow the pursuers to lead evidence from which a court could decide what was or was not reasonable remuneration.There were no specific averments which supported there being a custom which was “reasonable certain and notorious”.There was therefore no relevant case on quantum meruit. In Avintair there had been no concluded contract or agreement as to remuneration. The Inner House stressed the need to plead what is reasonable.A claim for payment quantum meruit may be measured by the ordinary or market rate of payment but there would require to be averments to that effect.In Robert Barry & Co v Doyle the Lord Ordinary was persuaded by the finest of margins to allow a quantum meruit case to proceed to proof before answer.Mr Hennessy pointed out that the pleadings in this case lacked any averments as to the reasonableness of the charge or rate of remuneration.The absence of such averments in this case renders the pursuers case irrelevant.
- The decision of Sheriff Principal Taylor in Semple Fraser WS v Quayle is said to be of particular importance and similar to the current appeal.In Semple Fraser the only specification was that a global fee of ‘X’ was a reasonable fee for a commercial firm in all the circumstances and given the importance of the matter to the defender.The pursuers’ answer to the lack of specification lay with taxation.The Sheriff Principal’s decision on specification can be found at page 38 in the following terms:
“The defender is entitled to a breakdown of how the pursuers arrive at the sum sued for in order that he can assess whether he is going to incur the cost of taxation. The present defender does not even know the number of hours worked by the pursuers nor the hourly charge out rates. It may be that he is prepared to make payment of the pursuers’ fee upon being informed as to how it is made up. In my opinion the defender is entitled to fair notice of the case against him and fair notice has not been given. Furthermore, a client must be entitled to say to a court that he never instructed certain work to be carried out by his solicitor. The extent of the instructions to a firm of solicitors is a matter to be resolved by the court and not by the Auditor.”
RESPONDENTS’ SUBMISSIONS
- Mr Webster in response argued that the allowance of proof before answer was the proper disposal.The appellant argues that he does not know the case which he has to meet and objects to having to prepare for a proof in a vacuum.That is not so as the averments are entirely sufficient and adequate given the circumstances of this case where one solicitor is suing another solicitor in respect of involvement for a mutual client in an action for divorce.The fee notes are lodged and adopted brevitatis causa into the pleadings and the defenders are aware of the work undertaken and what is reasonable.
- The pursuers do not rely on a customary rate as in Wilkie v Scottish Aviation Ltd.In that case the pursuer did rely on proof of a customary rate of remuneration but had no averments to support that other than the rate being “reasonable, certain and notorious”.
- In Robert Barry v Doyle the decision of the court indicates that the history of dealings between the parties may be sufficient for a case for payment quantum meruit to be made out.Brief averments on the history of dealings were sufficient for a proof before answer in that case.
- Likewise Avintair is authority for the proposition that, in the absence of agreement as to remuneration, the law would imply that a reasonable rate of remuneration should be paid.How that may be measured had to be assessed by other reasonable evidence based on what the pleadings point to.
- In the circumstances of this case the pursuers, in support of this proposition, rely on the payments made to account of fees already.Earlier fee notes rendered to the client per Messrs Levy & McRae had been paid without demur or challenge.The inference to be drawn from this is the rate of charge is reasonable and this provides evidence of reasonableness.A full narrative is provided in the fee notes. It is thus entirely proper for the pursuer at proof to put forward evidence of these fee notes being paid and a lack of challenge.There is no challenge on the grounds that the fee notes are excessive.It matters little who has actually paid the fee note – namely whether it is the client or the local agent.The important feature is the lack of objection.There is no plea to the effect that the fee or sum sued for is excessive.
- Mr Webster explained that the minute of amendment was designed to take account of the first two invoices paid by Messrs Levy & McRae in respect of the computation of the sum sued for. However, it was proposed that the fee notes and the payment of the fee notes remain part of the pursuers’ case.They are part of the factual matrix which the pursuers rely on in advancing the argument as to reasonable remuneration.
- Accordingly, I was urged to refuse the appeal.If I was minded to allow the appeal the case should be put out by order in respect of further procedure or amendment.I was asked to sanction the cause as suitable for the employment of counsel for the pursuers.
DECISION
- This action is a straightforward action for payment of professional fees by one firm of solicitors against another.They are respectively the Edinburgh agents (pursuers) and the local agents (defenders and appellants) acting for a mutual client in divorce proceedings in the Court of Session, Edinburgh.
- The pursuers sue for professional fees together with outlays and fees due to counsel in the divorce proceedings.The fee notes are incorporated into the pleadings and are lodged in the first inventory of productions for the pursuers.The sheriff describes the fee notes and invoices more fully at para [3] of his judgment.The invoices mostly contain a detailed narration of work undertaken with a global fee. The final account of expenses is a detailed account in respect of emergency legal aid work from November 2009 to January 2010 running to some 21 pages.In that invoice the outlays to counsel constitute virtually 80% of the invoice.
- The sheriff in his judgment concludes: “In my view, the pursuers have averred enough to justify a proof before answer.I consider that the case of Semple Fraser WS v Quayle is distinguishable.” In my view the sheriff was correct to distinguish this case from Semple Fraser.He goes on to state: “without hyperbole it is difficult to imagine a less specific case than Semple Fraser”.In Semple Fraser the fee was charged at a global figure.There was no narrative.It was said to be a “reasonable fee in all the circumstances of the case and for a commercial firm to charge.”As the sheriff observes the circumstances of Semple Fraser are far removed from the circumstances in this case.I consider that there are three principal reasons to distinguish Semple Fraser firstly, the pursuers and respondents give either a detailed narrative or a detailed breakdown of the work carried out. They give significant details.Secondly, the professional fees which the pursuers seek to recover are in connection with matrimonial litigation with which both parties were closely involved on behalf of their mutual client.The appellants are not in the same position as the defenders in Semple Fraser v Quayle.They are solicitors acting in tandem with the pursuers.They have knowledge of the work undertaken.Thirdly, as counsel for the respondents stressed, fee notes have already been paid without challenge or objection.The pursuers are entitled to rely on payment as evidence in support of what is reasonable remuneration.
- The specification required will vary or differ according to the facts and circumstances of any case.I refer to Macphail on Sheriff Court Practice 9.29.The author is discussing specification:
“The defender may seek dismissal of the action on a plea of specification. That plea finds it proper application in a case where a defender does not know the case against him and objects to being taken by surprise at the proof. It is possible for a condescendence to be relevant, in respect that it states facts sufficient to render the action relevant in law, but to be lacking in specification in respect that it does not give fair notice of all the facts which the pursuer intends to establish. The decree of specification which will be deemed sufficient for fair notice depends on the particular circumstances of each case.”
Applying that reasonable statement of the law to the averments in this case it is necessary, therefore, to place the averments in the context of the relationship between the parties and professional knowledge. That, coupled with the specification provided in the invoices and fee notes, in my view, gives adequate specification of the case which the defenders require to meet. I agree that the sheriff was entitled to take the view that the pursuers’ failure to aver the number of hours worked and the charge out rates is not fatal to the case as regards specification. In other words there is sufficient in the averments and the fee notes to allow the pursuers to put forward a case on reasonable remuneration. The authorities of Robert Barry & Co v Doyle and Avintair emphasise the rule that a party who has provided services is entitled to be paid for what he has done. In Avintair Lord President Hope at the conclusion of his opinion stated:
“A claim for payment quantum meruit may be measured by the ordinary or market rate of payment for the goods or services, but the circumstances may be such that there is no ordinary or market rate. In that case the best one can do is to seek to show by other evidence what is reasonable.”
In both Avintair and Barry very little was required by way of averment to allow proof before answer. In Barry the history of the dealings between the parties was said to have been sufficient at least for a proof before answer. In Steelmek Marine Engineers Trust v Shetland Sea Farms Ltd the Sheriff Principal dismissed the action due to lack of specification. This was due to a failure to specify any breakdown between “hire and material” charges and labour charges. In that case had the action proceeded to proof the pursuers would have been ham strung in the sense that they could only point to the invoice in its bald state. However, this is not the situation in the present case where invoices have been lodged and the pursuers intend to and are entitled to rely on those and on payment of interim invoices by the defenders.
- In these circumstances I agree with the conclusions reached by the sheriff and will refuse the appeal.I was asked to sanction the employment of junior counsel for the appeal.The sheriff sanctioned counsel for the debate.The employment of counsel for the subsequent appeal appears to me to be both reasonable and proportionate and I will accordingly sanction the employment of junior counsel.
