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OUTER HOUSE, COURT OF SESSION [2006] CSOH 169 |
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OPINION OF J GORDON REID Q.C., F.C.I.Arb (sitting as a Temporary Judge) in the Petition of DANIEL PATRICK COYLE Petitioner; for Judicial Review of a decision of the Auditor of the Court of Session ญญญญญญญญญญญญญญญญญ________________ |
Petitioner: J Peoples QC;
Respondent: A Young:
Shepherd & Wedderburn
Introduction
[1] This
is a petition for judicial review of decisions of the Auditor of the Court of
Session in relation to the taxation of an account of expenses, which led him to
refuse to take into account Points of Objection submitted by the solicitor
acting on behalf of the petitioner. The
First Hearing took place on
The Office of the Auditor of the Court of
Session.
[2] The
office of the Auditor of the Court of Session was established on a temporary
basis by Act of Sederunt in 1806. The
office was made permanent by the Court of Session Act 1821. The Office is held from time to time by a
distinguished and experienced practitioner in the solicitor branch of the legal
profession in
Procedural
Rules
[3] The
following procedural rules are relevant or have some bearing on the issues in
this case:-
Chapter 3 - Offices of the Court
Office of Court
3.1 .- (1) The Office of Court shall comprise-
(a) the General
Department;
(b) the Petition
Department;
(c) the Rolls
Department;
(d) the Extracts Department; and
(e) the Teind Office;
but shall not include the office of the Accountant of Court
or the Auditor.
(2) Each department of the Office of Court shall
be under the charge of an officer who shall act under the direction of the
Principal Clerk in consultation with the Lord President.
The Auditor
3.7 . The Auditor shall be responsible for the
taxation of accounts of expenses in any cause.
Chapter 42 - Appeals
under statute - Part I - Taxation of Accounts
Remit to the Auditor
42.1 .-(1) Where expenses are found due to a party in any
cause, the court shall-
(a) pronounce
an interlocutor finding that party entitled to expenses and, subject to rule
42.6(1) (modification of expenses awarded against assisted persons), remitting
to the Auditor for taxation; and
(b) without prejudice to
rule 42.4 (objections to report of the Auditor), unless satisfied that there is
special cause shown for not doing so, pronounce an interlocutor decerning
against the party found liable in expenses as taxed by the Auditor.
(2) Any party found
entitled to expenses shall-
(a) lodge an account of
expenses in process not later than 4 months after the final interlocutor in
which a finding in respect of expenses is made; and
(aa) if he has failed to
comply with sub-paragraph (a), lodge such account at any time with leave of the
court but subject to such conditions (if any) as the court thinks fit to
impose; and
(b) give written intimation of the lodging of the
account, and send a copy of it, to the party found liable to pay those
expenses.
(3) Rule 4.6(1)
(intimation of steps of process) shall not apply to the lodging of an account
of expenses.
Diet of taxation
42.2 .-(1) On receipt of the
process of the cause, the Auditor shall-
(a) fix a diet for taxation; and
(b) intimate the diet to-
(i) the party found
entitled to expenses; and
(ii) the party found
liable in expenses.
(1A) The party found
liable in expenses shall, not later than 3 working days prior to the diet of
taxation, intimate to the Auditor and to the party found entitled to expenses,
specific points of objection, setting out each item objected to and stating
concisely the nature and ground of objection in each case.
(1B) Subject to
paragraph (1C), if the party found liable in expenses fails to intimate points
of objection under paragraph (1A) within the time limit set out there, the
Auditor shall not take account of them at the diet of taxation.
(1C) The Auditor may
relieve a party from the consequences of a failure to comply with the
requirement contained in paragraph (1B) because of mistake, oversight or other
excusable cause on such conditions, if any, as the Auditor thinks fit.
(2) At the diet of
taxation, the party found entitled to expenses shall make available to the
Auditor all vouchers, documents, drafts or copies of documents sought by the
Auditor and relevant to the taxation.
Report of taxation
42.3
.-(1) The Auditor shall-
(a) prepare a report of
the taxation of the account of expenses, stating the amount of expenses as
taxed;
(b) transmit the process
of the cause and the report to the appropriate department of the Office of
Court; and
(c) on the day on which
he transmits the process, intimate that fact and the date of his report to each
party to whom he intimated the diet of taxation.
(2) The party found
entitled to expenses shall, within seven days after the date of the report
prepared under paragraph (1), exhibit the taxed account, or send a copy of it,
to the party found liable to pay the expenses.
Objections to report
of the Auditor
42.4
.-(1) Any party to a cause who has appeared or been
represented at the diet of taxation may state any objection to the report of
the Auditor by lodging in process a note of objection within 14 days after the
date of the report.
(2) A party lodging a
note of objection shall-
(a) intimate a copy of
the note to any other party who appeared or was represented at the diet of
taxation and to the Auditor;
(b) apply by motion for
an order-
(i) allowing the note to
be received; and
(ii) ordaining the
Auditor to state by minute, within 14 days after intimation under sub-paragraph
(c), the reasons for his decision in relation to the items to which objection
is taken in the note; and
(c) intimate forthwith
to the Auditor a copy of the interlocutor pronounced on a motion under
sub-paragraph (b).
(3) After the minute of
the Auditor has been lodged in process, the party who lodged the note of
objection shall, in consultation with any other party wishing to be heard,
arrange with the Keeper of the Rolls for a diet of hearing before the
appropriate court.
(4) At the hearing on
the note of objection, the court may-
(a) sustain or repel any objection in the note or remit the
account of expenses to the Auditor for further consideration; and
(b) find any party
liable in the expenses of the procedure on the note.
(5) In the event of an
objection being sustained, the court shall ordain the Auditor to amend his
report to give effect to the decision of the court.
Practice Note No 3 of 1993 provides inter alia as follows:-
"1.3 The Auditor will not delay consideration of an account to await subsequent production of documentation or information which is required for the taxation of an account.
.........
2.1 Not later than 10 days prior to the lodging of an account of expenses for taxation the receiving party shall intimate a copy of it to the paying party, unless exceptional circumstances necessitate that a shorter period of intimation be given."
Practice Note No 4 of 1994 provides inter alia as follows:-
"Transactions by facsimile
transmission
11(1) Practitioners who intend
to conduct business by facsimile transmission are reminded that fax machines
can receive messages outwith the hours during which business is normally
conducted. It follows, therefore, that
there may be advantages in transmitting a message in the evening for the
following day rather than waiting until the following day when the line may be
busier"
As at
[4] When
intimating a diet of taxation the Auditor uses a standard form, a copy of which
Mr Young, counsel for the Auditor, produced in the course of the
Hearing. In that form attention is drawn
inter alia to (i) the requirement to "lodge a written note of the
specific points of objection ...NOT LATER THAN THREE WORKING DAYS before
date of taxation..." and (ii) the fact that a cancellation fee is charged where
written intimation of settlement has not been made by
Factual Background
[5] There
was little dispute about the background.
I have taken it from the pleadings, the submissions of counsel and an
affidavit by the petitioner's solicitor, dated
[6] Following
an action of divorce in which the petitioner was the defender, he was by
Interlocutor dated
[7] The
Account of Expenses, running to some seventy five pages, was lodged on the last
day for timeous lodging, namely
[8] It
was accepted that the petitioner's solicitors timeously intimated Points of
Objection, running to some thirteen pages, to the pursuer's solicitors at about
[9] The
Auditor's office was open on Friday 25, Monday 28 February and
[10] At the diet of Taxation on Wednesday 2 March, the
pursuer's representative submitted to the Auditor, without giving prior notice
to the petitioner's solicitor, that there had been a failure on the part of the
petitioner to comply with Rule of Court 42.2(1A), and accordingly no
account should be taken of the Points of Objection. The petitioner's solicitor sought an
adjournment. This was refused by the
Auditor on the ground that it would involve delay in having the pursuer's
account taxed. The solicitor for the petitioner,
a partner in the firm of solicitors acting for him, apparently explained that
the Points of Objection had taken him longer to prepare than he had
anticipated. He had checked that the
General Department closed at
[11] The Auditor regarded the Points of Objection as "late" and
refused to grant relief under Rule of Court 42.2(1C). He considered that intimation to him had not
been made to him until
[12] At the taxation hearing, it became clear that the pursuer had failed to make available to the Auditor all vouchers and documentation relative to the taxation, in breach of Rule of Court 42.2(2). The solicitor for the petitioner had, in earlier correspondence with pursuer's solicitor, drawn attention to the absence of vouching.
[13] The taxation process did not take place. This fact was expressly conceded by counsel for the Auditor in the course of his submissions. The Auditor granted an adjournment to a later date notwithstanding the terms of Practice Note No 3 of 1993.
[14] By letter dated
[15] A further diet of taxation was fixed for 12 December,
subsequently re-arranged for
[16] The vouchers had still not been produced and the diet of
taxation at which Senior Counsel had appeared was once more adjourned. A further diet of taxation took place on
Submissions
[17] Mr Peoples, submitted on behalf of the petitioner that (i) the petition was competent (Urquhart v Ayrshire and Arran Health Board 2000 SLT 829; Gupta v Moss 2005 SLT 548, Bovey v The Auditor of the Court of Session 2006 SLT 2; (ii) the intimation to the Auditor was timeous because if the fourth working day ends at 4 p.m., then Points of Objection intimated by Fax after 4 p.m. on that day but before the start of the third working day before the date of the taxation must be timeous; reference was made to King v Global Marine (UK) Ltd 2003 SC 269 Secretary of State for Trade & Industry v Josolyne 1990 SLT (Shff. Ct.) 48, Secretary of State for Trade & Industry v Normand 1994 SLT 1249, alternatively (iii) the Auditor's decision to refuse to allow the Points of Objection to be received late was manifestly unreasonable; they were only late by 42 minutes; there was no obvious prejudice to the pursuer even if the taxation had taken place on 2 March 2006; the account had been intimated timeously to the pursuer; the sanction was disproportionately severe particularly as there were two further adjournments of the diet to enable the pursuer to produce vouching. Reference was made to Grier v Wimpey Plant & Transport Ltd 1994 SLT 714).
[18] Counsel for the Auditor, Andrew Young began by pointing out
that the Auditor was a member of the
[19] In the course of his submissions, I asked Mr Young to identify the reasons why the Auditor exercised his discretion as he did, because they were not specified in his Answers to the petition. This required a short adjournment to enable Mr Young to take instructions from the Auditor who was present in court. Following that adjournment, I noted Mr Young as submitting that the reasons were (i) it was for the solicitor to make out a case for the exercise of discretion; (ii) the excuse that preparation of the Points of Objection took longer than anticipated was a poor one; (iii) the pursuer could suffer prejudice if there was delay; (iv) the petitioner was unlikely to suffer prejudice as his solicitor would have to make good any loss; so little weight was given to the question of prejudice to the petitioner.
Discussion
Competency
[20] In my opinion the petition is competent. The subject matter of this petition is, in summary, (i) the Auditor's decision that the Points of Objection were not lodged timeously, and (ii) the reasonableness of the exercise of his discretion, on several occasions. The first raises the question whether the Auditor erred in law in his interpretation of the relevant Rule of Court. The second raises questions of procedural fairness. Neither relates to a specific item in the account of expenses. Neither is the proper subject of the Note of Objections procedure under Rule of Court 42.2(1A) which requires specific points setting out each item objected to. It is also necessary in the Note to state concisely the nature and ground of objection in each case. These provisions do not envisage the court reviewing specific items of objection which the Auditor has refused even to consider. They are intended to cover specific items which the Auditor has considered and allowed or rejected in whole or in part. Here, one complaint relates to the proper interpretation of Rule of Court 42.2(1A) on a general matter of procedure and not to specific items. The other complaint relates to a general exercise of discretion in relation to the Points of Objection as a whole. Neither relates to a specific item objected to in an account of expenses as contemplated by that rule. The suggestion that specific objection could have been taken in a Note of Objections to the items corresponding to the items which are the subject of the Points of Objection is ingenious but unsound. Doing so would not entitle the petitioner to present the arguments made in this petition. Moreover, he would be taking objection before the court to items to which he did not or rather was not allowed to take objection to before the auditor. Such a result does not seem to accord with the overall scheme of the procedure.
[21] In Urqhart the issue was whether it was competent in a Note of Objections, to deal with objections which did not relate to specific items in the Auditor's report; the Auditor had queried whether there had been sufficient compliance with paragraph 4.1 of the Practice Note (intimation of points of specific objection not later than three working days prior to the date of taxation). The Auditor held that there had not been such compliance and taxed the account without considering the abatements proposed. It appears that a letter in general terms rather than specific points of objection had been intimated. The Auditor took the view that no proper points of objection had been lodged. The complaint in the Note was that the Auditor had either failed to exercise his discretion or exercised it unreasonably; the complaint concerned the procedure followed by the Auditor. Lord Reed noted that under the Note of Objection procedure no provision was made for the Auditor to be represented even where he was accused of procedural impropriety (paragraph 8 at 832E). He also noted the restrictive form of order which the court may grant under the Note of Objection procedure. Lord Reed concluded that Rule of Court 42.4 did not envisage that the report as a whole would be challenged because of some fundamental irregularity. Nor did it envisage that the Auditor's active participation in the hearing would be necessary. He concluded that there was no matter raised in the Note of Objections with which he could competently deal under that form of procedure. With these views, I respectfully agree. At the end of his Opinion his Lordship said this:- "I shall say nothing further about the matters raised in the note, as they may come before the court again under another form of procedure".
[22] What that other form of procedure might be was not specified, but it can only be judicial review. The discussion before the court in Urquhart had the flavour of judicial review. Counsel did not suggest that his Lordship had any other form of procedure in mind. In principle at least, Urquhart supports the view that in appropriate circumstances it may be necessary to challenge the Auditor's Report by way of judicial review. The fact that in Urquhart the court was considering the terms of Practice Note No 3 rather than Rule of Court 42 in its current form, as counsel for the Auditor pointed out, is of no moment. That is a distinction without a difference.
[23] Urquhart was considered and approved in Gupta. There, an Extra Division repelled a Note of Objections which made various criticisms of the Auditor and his staff including the failure by the Auditor to adjourn a diet of taxation. The note, however, did not contain any specific objection to particular items in the auditor's report. The Note of Objections was not intimated timeously. In the Division, the objector appeared in person, having also appeared at the taxation, and may well have drafted the Note of Objections. The Court considered that at the stage of a hearing on a Note of Objections, it is contemplated that the hearing will be limited to the reasons of the Auditor for his decisions in relation to the items to which objection has been taken. The court observed that if the pursuer wished to pursue the matters raised in the Note of Objections, he would "require to select a procedure in which they can be the subject of a competent adjudication" (paragraph 7 at page 550). No indication is given of what that procedure might be, but the grounds of complaint in the Note certainly had the flavour of judicial review.
[24] In Bovey, the petitioner successfully challenged, in a petition for judicial review, the Auditor's decision that he, the Auditor had no jurisdiction to tax counsel's fee incurred in respect of criminal legal aid proceedings which resulted in appearance before the Judicial Committee of the Privy Council. The petition was presented on the basis that the Auditor had erred in law. The competency of these judicial review proceedings was neither challenged nor discussed.
[25] Petrie concerned a Note of Objections complaining that the Auditor had refused to award an additional fee. It was accepted that this could be the subject of such a Note (paragraph 17). Lord Reed endorsed that view (paragraph 19) explaining that, soundly construed, it was not the intention of the Rules of Court to require a review of the Auditor's determination of the question of an additional fee to be resolved by way of judicial review. That view, in so far as it touches upon the question of judicial review, is specific to the question of additional fee, which features as an item in an account of expenses, of necessity as an indeterminate amount. Standing Lord Reed's observations in Urquhart as endorsed in Gupta, I do not consider his Lordship's observations can or should be given any wider currency. As such, they are of no assistance to the Auditor here.
[26] I note, in passing, that in Petrie, the Auditor considered an objection to the grant of an additional fee even although this did not feature in the Points of Objection (paragraph 3). Lord Reed also noted that the Auditor, like other officials is subject to direction by the court on questions of law. The order the court ultimately made was to remit the account to the Auditor for further consideration of the application for the allowance of an additional fee.
[27] These authorities support the competency of this petition. They certainly do not suggest that the petition is incompetent.
Were the
Points of Objection Late?
[28] The petition and the arguments before me proceeded on the basis
that a working day, within the meaning of Rule of Court 42.2(1A), fell to be
construed as the working day of the Auditor's office, which closes at
[29] Proceeding on the basis then, that "working day" means the
working day of the Auditor's office, I am of the opinion that the Auditor was
correct in law when he concluded that the Points of Objection were late. Rule of Court 42.2(1A) requires that they be
intimated "not later than 3 working days prior to the date of taxation." The rule does not say not later than "in the
course of" or "during" or the "commencement" of third working day (
[30] There is some support for that view in paragraph 11(1) of the Practice Note No. 4 of 1994 to which I was referred in the course of submissions. It encourages fax transmissions in the evening "for the following day" rather than waiting until the following day.
[31] On that view therefore, the petitioner's Points of Objection were one minute late at most. In my opinion, therefore the Auditor was technically correct to conclude that the Points of Objection were not intimated timeously in accordance with Rule of Court 42.2(1A). I observe, in passing, that it was not suggested at the Hearing before me that the Auditor formed or intimated that view before the first diet of taxation. Nor is it clear that he would have raised the point if the pursuer's representative had not done so. Furthermore, there was no suggestion that the business of the Auditor's office was disrupted or inconvenienced by the late arrival by one minute of the petitioner's Points of Objection.
[32] Zafar
related to the procedure for appealing to the Employment Appeal
Tribunal. The relevant procedural rules
required the lodging of a notice and a copy of the Employment Tribunal's
extended note of reasons for its decision within a certain time limit. The appellant faxed the note of reasons late;
the Employment Appeal Tribunal refused
to exercise a dispensing power in the rules.
The appellant presented a judicial review petition for reduction of that
decision. The discussion concerned when
documents fell to be treated as delivered for the purposes of the rules. The court held that delivery required
acceptance by the deliveree of the article to be delivered; and that no delivery could take place while
the office in question was closed and unoccupied. (481B-C). the court also concluded reluctantly that
transmission by fax was not "delivery" for the purposes of the relevant rules
(483A); although that view seemed to be
capable of mitigation by reference to the practice of accepting faxed
documents. The discussion before me
proceeded on the basis that intimation to the Auditor by fax was acceptable.
Exercise of
Discretion
[33] Given the history and my views on the lateness of the Points of Objection, it might seem abundantly obvious how any reasonable auditor would exercise his discretion. However, the challenge to the exercise of his discretion is resisted and I must express my views on it.
[34] One can readily understand that the Auditor would wish to
encourage parties to adhere to the timetable set forth in the rules. He is, in my view, entitled to adopt a policy
which is relatively strict but not utterly inflexible. However, he is bound to exercise his
discretion in a reasonable and fair manner when asked to do so. Here, I agree that the excuse for late
intimation was poor but it was not suggested that it was wilful non observance
of the rules. Most litigation solicitors
work to deadlines on a "just in time" basis.
Moreover, the Points of Objection were late as a result of the merest
technicality. It was accepted that the
pursuer received timeous intimation so could not claim prejudice. The auditor himself did not declare himself
to have been disadvantaged in his preparation for the diet or that the business
of his office was disrupted; this is hardly surprising given that, at worst,
the Points of Objection were only one minute late. The diet had to be adjourned anyway because
the pursuer, in default, failed to produce the requisite vouchers. To suggest that the petitioner will not be
prejudiced because his solicitor will make good any loss, if a relevant
consideration at all in the present circumstances, is more than outweighed by
the other compelling factors which I have mentioned. In my opinion, the Auditor's decision to
refuse to accept the Points of Objection on
[35] Let us suppose that I am wrong and the Auditor acted reasonably
on 2 March when he refused to accept the Points of Objection as being
properly before him. The process of
taxation did not take place on that date and required to be adjourned. The next diet took place on
[36] Grier, ( a court of five judges) highlights the function of procedural rules. There (at 1994 SLT 714 at 719C-H), the court adopted certain observations made in an earlier case (Dalgety's Trs v Drummond 1938 SC 709, 1938 SLT 495) which noted that
"the dispensing power was meant to enable the Court to do justice where a member of the legal profession has acted in ignorance of the Rules of Court and of the provisions which they contained. The proviso gives express power to extend time, and that, I think, is a power to extend time when the error is brought about by the solicitor's failure to inform himself of the terms of the new Rules"
Lord President Normand emphasised the phrase "not being due to wilful non‑observance of the rules" (at page 500) as did Lord Moncrieff. The modern Rule of Court (2.1(1)) refers to "such other excusable cause" rather than "not being due to wilful non-observance"; however, the modern phrase will embrace the older phrase. Rule of Court 42.2(1C) also refers to "other excusable cause"
[37] In King, a party attempted to lodge an account of expenses more than one year "late". The attempt failed. The case is not of assistance for present purposes. Josolyne and Normand concerned the timeous application by the Secretary of State for a company director disqualification order. The court in each case held that the date of the application to the court was the critical date and not the date of any consequential order for service or the date of service. I did not find these cases to be of assistance for present purposes.
Summary
[38] 1. The petition is
competent. One complaint relates to the
proper interpretation of Rule of Court 42.2(1A) on a general matter of
procedure and not to specific items. The
other complaint relates to a general exercise of discretion in relation to the
Points of Objection as a whole. Neither
relates to a specific item objected to in an account of expenses as
contemplated by that rule.
2. The petitioner's Points of Objection
were one minute late at most. On the
basis that "working day" means the Auditor's working day, the Auditor was
technically correct to conclude that the Points of Objection were not intimated
timeously in accordance with Rule of Court 42.2(1A).
3. The Auditor's decision to refuse to
accept the Points of Objection on
4. The Auditor's decision on
5. The Auditor's decisions constituted a
rigid and unjustifiable application of procedural rules which are intended to
oil the wheels of justice not clog them up.
Result
[39] I shall repel the petitioner's first plea-in-law, sustain his
second plea-in-law, and repel the Respondent's pleas-in-law. I shall (i) reduce the decisions of the
Auditor dated 2 March 2005 and 20 March 2006 whereby he refused to
consider the petitioner's Points of Objection to the pursuer's account of
expenses in the action of divorce between the petitioner and Mrs Coyle,
(ii) reduce the Auditor's Report dated 4 April 2006 of the said account of
expenses, and (iii) ordain the Auditor, in the absence of any agreement between
the petitioner and Mrs Coyle, of new, to fix a diet of taxation, of new to
tax the account of expenses and in doing so to consider inter alia the
Points of Objection already intimated to him on behalf of the petitioner in February
2005. All questions of expenses in
relation to these judicial review proceedings are, meantime, reserved.