Expenses and sanction

Kay Springham

&

Craig Murray

• Sanction for counsel

• The Dean‟s ruling

• Expenses and tenders

• Interim awards of expenses

• The test on taxation

• Interest on accounts

Sanction for counsel

• Test: whether “appropriate” to employ counsel

• McAllister v. SLAB 2011 SLT 163

• s. 21(4), Legal Aid (Scotland) Act 1986 in a sheriff

court prosecution on indictment

• When enacted, sanction in legal aid cases (both

criminal and civil) could be granted “so far as

necessary”

• The Lord Advocate explained in the House of Lords

that “necessary” would usually be clear from normal

legal practice

• Mr Wallace, MP that the test of necessity might

have a regrettable effect on the provision of legal aid

• Lady Stacey:

“[16] Thus the words “so far as necessary” appear in

the 1986 Act, apparently giving effect to the intention

of the legislature that counsel would be sanctioned to

appear in sheriff court cases in accordance with normal

legal practice.”

• Law Reform (Miscellaneous Provisions) Act 1990 deleted the test of necessity, substituting the word “appropriate”

- In McAllister, Lady Stacey held that the practice of granting sanction by SLAB and the grant of expenses in civil cases with sanction for the employment of counsel were both concerned with the test of “appropriate”

• The test for both is: “whether or not it is appropriate in

all the circumstances to sanction counsel”

• SLAB had misapplied the test, refusing legal aid because

the case was not beyond the capabilities of the

instructing solicitor

• That incorrect test was contained in the SLAB guidance

• SLAB, like a sheriff, has wide discretion

• All of the relevant circumstances must be taken into

account

• The broad test is what is “appropriate” or expected

as usual practice

• Macphail (3rd ed.) enumerates the factors which

may be relevant:

“…the test appears to be whether the employment of counsel

is appropriate by reason of the circumstances or difficulty or

complexity or the importance or value of the claim…

“A claim of small value may involve imputations on the

personal or professional character of a party of such

seriousness that representation by counsel is appropriate. It

has been said that where the case is one of serious difficulty

… the employment of counsel may generally be sanctioned

and the onus is thrown on the other side to show why it

should not be.”

Leny v. Milne (1899) 15 Sh Ct Rep 76

• SLAB appear to continue to apply the wrong test in applications for sanction, under reference to the capabilities of the instructing solicitor

• Legal aid is available for judicial review of SLAB‟s refusal to grant sanction

• Complexity may arise from difficult questions of causation, attacks on the methodology of expert reports or quantification of damages – there are a limited number of reported Sheriff Court decisions in which the Ogden tables have been used

• A motion for sanction for the employment of counsel may be made at the start of the case

• Compass Chambers encourages counsel to appear to make the motion

• Counsel can explain what the complexity or other circumstances are

• A recent motion to sanction the cause as suitable for the instruction of counsel at the outset of the action was successful at Glasgow Sheriff Court

Dean‟s Ruling

• Counsel in civil matters may appear in court without an instructing solicitor in appropriate circumstances

• Convenient for straightforward or short hearings (e.g. Rule 18 hearings, motions)

• Ideally debates, where further instructions are not required

• Counsel may require an instructing agent to be present (where it is “necessary”)

• The test of whether the attending solicitor‟s fee is allowable is one of reasonableness

• Under reference to the test for allowance of fees applied by Lord Glennie: Is the decision of the solicitor to attend a decision outside the range of decisions which a responsible solicitor would make in the circumstances?

• Some solicitors issuing standing instructions: “We will, unless counsel states to the contrary, send an instructing solicitor.”

• Ruling is permissive; it‟s not to be feared!

Expenses and tenders

McGlone v. GGBH [2013] CSOH 44

•Complex medical negligence proof

•Tenders:

£50,000 on 14 July 2010

£150,000 on 4 November 2010

£450,000 on 5 April 2012

£1,000,000 on 19 April 2012

£1,800,000 on 26 April 2012

McGlone

Defenders‟ argument resisting expenses:

P had valued case at £20m and the sum awarded

(£2,034,500) was about 10% of that (defenders had

substantial success)

P had failed in many of her arguments in the case

P‟s conduct during the proof had materially lengthened the

hearing

The P‟s failure to provide a reasoned valuation caused

prejudice to the defenders in conducting the proof

McGlone

• P argued that if those arguments were accepted, the

whole face of litigation would be altered

• Lord Bannatyne considered whether there were any

circumstances justifying a departure from the

general rule on tenders

• Lord Bannatyne held that a departure would

undermine the system of tendering

McGlone

• Even a marginal failure to beat a tender cannot justify a

departure from the general rule (Quinn v. Bowie (No. 2)

1997 SLT 576)

• A pursuer should be able to receive advice on a tender

without the uncertainty of judicial discretion

• The introduction of uncertainty is not a course to be

adopted

• “Each party had entrenched positions on every issue and

were not prepared to move a single inch”

Interim awards of expenses

• Martin & Co [2013] CSOH 25

• Petitioners obtained an order under s. 1 for a dawn raid

• At least one of the havers appears to have acted in a

highly obstructive manner; contempt of court

proceedings are pending

• Lord Drummond Young granted an award of expenses

against the first respondent on an agent and client,

client paying basis

• And made an order for interim payment of expenses.

• First respondent did not oppose the motion for

expenses or the scale sought – suspicion was raised

that she was about to declare herself bankrupt

• There are no interim costs orders in Scotland of the

sort in England & Wales

• Diligence on the dependence of an action where

there is no conclusion for payment is not possible (s.

15A(2)(a) of the Debtors (Sc) Act 1987)

• Anticipated 6 months for a taxation on the account

• Jacob J in Mars UK Ltd v. Teknowledge Ltd [1999]

2 Costs LR 44:

“I approach the matter as a question of principle. Where a

party has won and got an order for costs the only reason

that he does not get the money straightaway is because of

the need for detailed assessment … It does not seem a

good reason for keeping him out of some of his costs that

you need time to work out the total amount.”

• LDY held that statement of principle was equally applicable in Scotland; and was satisfied of competency of an order for interim payment of expenses

• He held that it would be necessary to show „special reasons‟ (that appears to go further than the authorities discussed at the hearing)

• Petitioner produced an account of £78k and sought payment of £50k ad interim

• Petitioner undertook to repay, with judicial interest, any overpayment after taxation

• A further application for expenses has been made in the case (subject to a possible reclaiming motion)

• It is debatable whether there have to be “special reasons” (as LDY held)

• Lord Woolman made a similar order in Tods Murray v Arakin Ltd [2013] CSOH 134 – again on the basis of there being „special reasons‟

• Might apply to payment of outlays (e.g. experts) before taxation

The Test on Taxation

• There can be uncertainty about whether the cost of

a particular piece of work will be recovered at

taxation.

• Marshall v Fife HB [2013] CSOH 1402 – gives some

useful direction on this.

Marshall v Fife HB

• Decision of Lord Glennie

• Provides solicitors and counsel with clarity of the

level of recoverable fees that can be obtained under

an award of expenses.

• Some fees of counsel were challenged at taxation:

- as they were “agent/client”

- because it was a liability admitted case

The “agent/client” challenges

• Junior counsel had charged a fee of £500 for a

consultation pre-litigation, advising on procedure

and tactics.

• The Auditor abated the full fee on the basis that they

were “agent/client” charges.

• Ld Glennie held that the Auditor had erred in law –

on a taxation on a party and party basis, the only

relevant test is that of reasonableness.

The “agent/client” challenges

• He continued by saying that:-

“The Auditor should only disallow an item if it can truly

be said that it was unreasonable to incur the expense in

the sense that a competent solicitor acting

reasonably would not have incurred it.”

• He reinstated the full fee.

• For the same reasons reinstated fee charged by junior

counsel for advising on lodging of an expert report.

The „liability admitted‟ challenge

• Auditor reduced counsel‟s fees as excessive because

the trial only related to quantum.

• Ld G: “Counsel is entitled to charge his going rate,

and it is not to be expected that that rate will

change simply because the issues remaining in the

case focus on quantum rather than liability. If his

going rate is a reasonable one, i.e. within the

band of reasonable rates, it should be

allowed...”

So what can we take from this...?

• It‟s only where a fee is unreasonable that it will be

taxed off or moderated.

• Whether a fee is reasonable or not is not a single

figure – it is a band of figures.

• It‟s only where the fee is so high no responsible

solicitor would have incurred it, that it can be

altered by the Auditor.

Practical points

• Compass Chambers can make available the Note of

Objection lodged in the Marshall case

• If counsel‟s fees are being challenged, our Practice

Manager (Gavin Herd) and counsel are happy to

assist.

• Challenging the Auditor is straight-forward (a Note

of Objections) and cheap.

Interest on accounts

• Until Taylor comes in only method of obtaining

interest is to go to Auditor (and extract

interlocutor)

• Change in practice since July 2013

• Extract used to back-date interest to interlocutor

awarding expenses

• Now does so only to date of Auditor‟s report.

• Change in practice being challenged (McNicol v

SLAB – unreported)

Contact

Gavin Herd

Practice Manager

Phone: 0131 260 5648

Fax: 0131 225 3642

gavin.herd@compasschambers.com

Compass Chambers

Parliament House

Edinburgh

EH1 1RF

DX 549302, Edinburgh 36

LP 3, Edinburgh 10

www.compasschambers.com