STEWART HAVLIN AGAINST HUGH TAIT HAILES
SHERIFFDOM OF GLASGOW AND STRATHKELVIN AT GLASGOW
2014SCGLA43
PD65/14
N O T E
by
SHERIFF S. REID, Esquire,
Sheriff of Glasgow and Strathkelvin
in causa
STEWART HAVLIN
PURSUER
against
HUGH TAIT HAILES
DEFENDER
Act: Din, bto, Solicitors, Glasgow
Alt: Reid, Digby Brown LLP, Solicitors, Dundee
Summary
[1] The issue in dispute in this case is a relatively narrow one. The pursuer raised a personal injuries action against the defender. The pursuer sought payment of damages in the sum of £10,000. The action settled almost immediately. The defender lodged a minute of tender, and the pursuer accepted it. The net settlement was £4,000 together with the expenses of process.
[2] The parties agreed that the expenses should be assessed on the summary cause scale, given the amount of the agreed settlement sum.
[3] The point in dispute is whether or not the expenses (which, it is agreed, are to be assessed on the summary cause scale) should be taxed by the auditor of court or assessed by the sheriff clerk.
[4] The defender wished to avoid the perceived greater expense of a taxation before the auditor of court. To that end, the defender sought an order that the awarded expenses be assessed by the sheriff clerk at a diet of assessment (and, if it was thought necessary to achieve that end, the defender sought to remit the action to the summary cause roll for that specific purpose). The pursuer submitted that it was neither competent nor appropriate to make any such orders – and that the expenses, if not otherwise agreed, had to be determined by the auditor of court at a taxation.
Procedural history
[5] On 7 February 2014, the pursuer lodged an initial writ at Glasgow Sheriff Court, proceeding as a personal injuries action in terms of Chapter 43 of the Ordinary Cause Rules. The principal sum sued for was £10,000
[6] On 5 March 2014, a notice of intention to defend was lodged on behalf of the defender.
[7] On 7 March 2014, a minute of tender was lodged on behalf of the defender. In terms of the minute, the defender tendered to the pursuer the sum of £4,000, net of recoverable benefits, “together with the expenses of process to the date hereof” in full and final settlement of the craves of the initial writ.
[8] On 10 March 2014, a minute of acceptance of tender was lodged on behalf of the pursuer.
[9] On 10 March 2014, the pursuer lodged a motion at court (no. 7/1) seeking decree in terms of the minute of tender for the defender (no. 8 of process) and the pursuer’s acceptance thereof (no. 9 of process), together with certification of a named skilled witness.
[10] The procedure then took an interesting turn.
[11] On 14 March 2014, the defender opposed the pursuer’s motion (no. 7/1 of process). The defender’s notice of opposition explicitly sought records that the pursuer’s motion was opposed so far as it “relates to further procedure” and disclosed that the defender sought to have the action remitted to the summary cause roll “for the assessment and approval of expenses to avoid the unnecessary additional cost of taxation.”
[12] On 18 March 2014, the defender lodged a separate motion (no. 7/2 of process) seeking a formal remit of the cause to the summary cause roll again “for the assessment and approval of expenses to avoid the unnecessary additional cost of taxation”. The defender’s motion was opposed by the pursuer.
[13] On 4 April 2014, the two opposed motions called before me on the motion roll. I heard submissions for both parties. However, because of the lateness of the hour and the defender’s expressed wish to refer to some further authorities which were not then available to the court, I ordained parties to submit written submissions within 48 hours, to supplement their existing oral submissions, reserving to parties the right to a further hearing, if either party so requested.
[14] Detailed written submissions were then lodged by both parties, together with copy authorities. The defender’s agent also insisted upon a further hearing to address the written submissions.
[15] Accordingly, on 25 April 2014, I heard further submissions from the parties’ agents in chambers.
[16] Having heard those submissions, I granted the pursuer’s motion (no. 7/1 of process) for decree in terms of the minute of tender and minute of acceptance of tender (nos. 8 & 9 of process, respectively). As regards expenses, I found the defender liable to the pursuer in the expenses of the action (as assessed, per the parties’ agreement, on the summary cause scale) up to the date of lodging of the minute of tender; and I found the pursuer liable to the defender in the expenses of the action (as assessed on the summary cause scale) from the date of lodging of the minute of tender. Further, I ordered that the awarded expenses be assessed by the sheriff clerk at a diet of assessment.
[17] Separately, I refused the pursuer’s motion (made orally at the bar on 4 April and insisted upon on 25 April 2014) for the expenses of the opposed motion procedure to be awarded against the defender’s solicitors personally.
Submissions for the defender
[18] For the defender, it was acknowledged that the action had settled in the sum of £4,000; and that, having regard to the sum decerned for, the parties had agreed that the expenses, for which the defender was liable, should be determined on the summary cause scale.
[19] The defender’s agent invited me to assign a diet of assessment, to determine the precise amount of expenses due.
[20] He submitted that the court had an inherent common law power to determine the most appropriate procedure to be followed within any litigation and, specifically, in relation to expenses. Case law illustrated, in a variety of ways, the exercise of this broad discretionary power to regulate expenses in a variety of ways. It was also submitted that the discretionary power was exercisable in the context of actions that had settled by way of acceptance of a minute of tender. Reference was made to Raymond McAteer v Glasgow City Council 2014 CSOH 42; Ross Brown v Sabre Insurance Company Limited 2013 CSOH 51; Morrison v British Broadcasting Corporation 2007 Rep LR 2; Neilston v Motion 1992 SLT 124; McIlvanney v A Gordon Company Limited 2010 CSOH 118; Emma Lawson v Sabre Insurance Company Limited, 2 August 2013, Peterhead Sheriff Court (Sheriff G Murray), unreported; Bond v British Railways Board 1972 SLT (Notes) 47; McDonald v Zurich Insurance Company (UK) Ltd 2012 CSOH 65; Lassiter v Highway Insurance Company Limited 2011 CSOH 161; Hylands v Glasgow City Council 2008 CSOH 69; Coyle v William Farley Installations Ltd 1991 SCLR 248.
[21] The defender also submitted that the action should not have been raised as an ordinary action in the first place. Reference was made to Macphail, Sheriff Court Practice, (3rd Ed), paragraph 19.49; Smith v British Rail Engineering 1985 SLT 463 and McPherson v British Railways Board 1985 SLT 467. Having regard to the Judicial College Guidelines for the Assessment of General Damages in Personal Injury cases (12th ed), pages 35 to 38 and 62 to 64, and to the decision of Sheriff Principal Pyle in David Jaffray v Sabre Insurance Company Limited 2012 SC 1811 it was submitted that there was no prospect that the pursuer’s claim would ever have achieved a settlement or award greater than the summary cause limit.
[22] The defender’s agent explained that his primary position was that the court had an inherent common law power to regulate the issue of expenses; that, in the exercise of that power, it was open to the court to order that the expenses in the present case be determined at a diet of assessment rather than at a diet of taxation; and that, in those circumstances, it was not necessary to formally remit the ordinary action to the summary cause roll. However, the defender’s alternative position was that, if it was necessary to remit the action to the summary cause roll in order to allow the awarded expenses to be assessed by the sheriff clerk, then he submitted that it was appropriate to do so – and, to that end, as a fall-back position, he invited me to grant the defender’s motion (no. 7/2 of process). Reference was made to Borthwick v Bank of Scotland 1985 SLT (SH Ct) 49, Purvis v Graham 1924 SC 477 and United Creamers Co Ltd v Boyd & Co 1912 SC 617. (He explained that, when dealing with a similar motion at Fort William Sheriff Court, the sheriff had concluded that a motion to remit was a necessary prerequisite to the assigning of a diet of assessment in an ordinary action. No written judgment or note had been issued in that case.)
[23] Separately, the defender’s agent opposed a motion made at the bar by the pursuer’s agent for the expenses of the opposed motion procedure to be awarded against the defender’s agents personally.
Submissions for the pursuer
[24] The pursuer submitted that it was neither competent nor necessary to assign a diet of assessment for the determination of an award of expenses in an ordinary action; or, except on joint motion, to remit an ordinary action to the summary cause roll.
[25] With reference to the competency of the proposed procedure, I was referred to Chapter 26 of the Ordinary Cause Rules 1993 (which make express provision for remit between courts); and to section 37 of the Sheriff Courts (Scotland) Act 1971 (allowing remit on joint motion between different rolls). Reference was also made to Macphail Sheriff Court Practice, paragraph 13.45. Absent express provision in the Rules or under statute permitting the remit of an action from the ordinary cause roll to the summary cause roll, otherwise than on joint motion, it was submitted that the defender’s motion was accordingly incompetent.
[26] Further, it was submitted that, since the action was raised as an ordinary cause, any expenses allowed in the cause must be taxed. Reference was made to Ordinary Cause Rule 32.1. It was noted that if the pursuer had pursued the claim as a summary cause, the sheriff (ex proprio motu or in the motion of any party) could have allowed an account of expenses to be taxed by the auditor of court, instead of being assessed by the sheriff clerk (Rule 23.2A(1), Summary Cause Rules 2002). However, no such express provision existed in the Ordinary Cause Rules, to allow expenses awarded in an ordinary cause to be assessed by the sheriff clerk, rather than to be taxed by the auditor of court.
[27] In any event, it was submitted for the pursuer that it was appropriate for the expenses in the present action to be taxed. It was submitted that, statistically, most taxations never proceed and that, accordingly, the auditor’s fee was unlikely to have to be paid in any event (though it was acknowledged that there may be some form of cancellation fee payable). In contrast, if the expenses were to be assessed, the court would be inconvenienced by having to assign diets of assessment and approval, which diets would, in turn, require the parties to incur expenditure in instructing representation. It was submitted that taxation allowed for a swifter, and less formal, mode of resolution, without wasting court time. It was also submitted that a taxation would allow a greater latitude of time for settlement to be agreed, whereas assessment often occurred within approximately four weeks. It was submitted that the financial cost to the court of the matter proceeding via assessment would be in excess of the auditor’s fee, and that taxation would relieve the court of the procedural and economic burden associated with assessment.
[28] Lastly, the pursuer’s agent refuted the assertion that the action should never have been raised as an ordinary cause. The pursuer’s agent submitted that the assessment of damages was not an exact science; that the pursuer’s agents had valued the claim in excess of the summary cause limit at the time it was raised; and that no criticism could be made of the decision to pursue the action as an ordinary cause.
Reasons for decision
[29] Having considered the parties’ submissions, I ordered inter alia that the awarded expenses should be assessed by the sheriff clerk at a diet of assessment. I reached this decision for the following reasons.
[30] Firstly, in an ordinary action the court has, at common law, a wide inherent discretionary power in relation to the issue of expenses. That judicial discretion may be exercised in every case, unless the power is expressly removed, confined or qualified by statute. The discretion is to be exercised in each case in order to achieve substantial justice. Thus, the discretion is exercisable to determine whether to make an award of expenses at all; and, if so, to determine by whom, on what basis, and to what extent, expenses are to be paid (and, indeed, to determine the precise amount of the expenses payable) (Macphail, Sheriff Court Practice, para 19.03; MacLaren, Expenses, page 3).
[31] The broad scope of the court’s discretion in relation to the issue of expenses was described in the following terms in Howitt v Alexander & Sons 1948 SC 154 (per the Lord President (Cooper) at page 157, citing McLaren, Expenses, page 21):-
“I gravely doubt whether all the conditions upon which that discretion should be exercised have ever been, or ever will be, successfully imprisoned within the framework of rigid and unalterable rules, and I do not think it would be desirable that they should be”.
[32] There are numerous examples of the infinitely variable ways in which the courts have exercised that broad common law discretion to regulate awards of expenses to achieve substantial justice in the circumstances of particular cases. The authorities referred to illustrate the broad range of the court’s judicial discretion in the determination of expenses. That discretion has been exercised to provide that expenses should be restricted to the sheriff court ordinary cause scale in a Court of Session action (McAteer, supra; Neilston, supra; and Coyle, supra); or the awarding of expenses on the sheriff court summary cause scale in a Court of Session action (Brown, supra); or the refusal of sanction for the employment of counsel (McAteer, supra; Brown, supra); or ordering a percentage reduction in the recoverable expenses (Brown, supra; Morrison, supra; Lawson, supra; or the modification of expenses to a fixed sum or, indeed, to nil (McIlvanney, supra).
[33] The discretionary power remains exercisable in the context of a judicial settlement (by means of minutes of tender and acceptance of tender). Thus, in Morrison v British Broadcasting Corporation, supra, Lord Emslie stated:
“I have no difficulty in accepting that the offer of expenses in a conventional minute of tender refers, not to any fixed amount, but to such expenses as the court, in its discretion, considers appropriate in all the circumstances. As the Lord President (Hope) put it in McKenzie v H D Fraser & Sons 1998 SC 311 at 319, the expenses offered in a tender must be those which are ‘…appropriate to the case as determined by the court’. Similarly, at paragraph 8 of the opinion of the court in Brackencroft Ltd v Silvers Marine Ltd 2006 SC 633 the Lord President (Hamilton) said: ‘The meaning of the expression ‘the expenses of the process’ is not in doubt. It is an elastic, a flexible phrase, and is always subject in interpretation by the court…the court determines what the phrase connotes and what expenses are covered by it’”.
[34] I acknowledge that there appears to be no reported decision in which the judicial discretion has been deployed in an ordinary action to order the assessment of awarded expenses, rather than taxation. However, as stated by the Lord President (Cooper) in Howitt, supra, the conditions upon which the broad judicial discretion is to be exercised have not been “successfully imprisoned within the framework of rigid and unalterable rules”, nor should they be.
[35] Expenses are merely incidental to the substantive legal process itself (Young v Nith Commissioners (1880) 7R 891 per Lord Young at 897-98). That is why, for example, a separate action for the recovery of expenses is incompetent; and why appeals in relation to the issue of expenses alone are severely discouraged. Taxation and assessment are simply mechanisms by which the precise amount of awarded expenses can be calculated. They are a means to an end.
[36] In my judgment, if the issue of expenses is “incidental” to the substantive legal process, then the precise manner or mechanism by which those expenses are to be calculated may properly be characterised as being “ancillary to the incidental”.
[37] Logically, if the court’s broad discretion in relation to expenses can extend to the calculation of the precise sum due (or the imposition of various formulae by which the precise sum due is to be calculated, restricted or limited), then, in my judgment, it follows that the judicial discretion must include the power to prescribe the mechanism (whether that be assessment or taxation) by which the precise amount of expenses is to be calculated, in order to achieve substantial justice in any particular case. Majus includit minus.
[38] Besides, whether the initial “number-crunching” is carried out at a diet of assessment or at a diet of taxation, the court retains ultimate responsibility to determine the final amount of the expenses (at a diet of approval in the case of an assessment procedure, or by way of a motion for approval of the auditor’s report in the case of a taxation). In other words, either way, the court ultimately has the final say on the precise calculation of the amount of expenses. In this case, a motion would still require to be lodged for approval of the assessed expenses.
[39] Secondly, the question then arises whether that broad common law power has been curtailed, to any extent, by statute or statutory instrument.
[40] In my judgment, there is no such statutory limitation on the sheriff’s broad common law discretion in dealing with expenses.
[41] The pursuer’s agent placed particular weight upon Ordinary Cause Rule (“OCR”) 32. 1. It states:-
“Taxation before decree for expenses
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”.
The pursuer’s agent submitted that the use of the words “shall be taxed” in OCR 32.1 indicated a mandatory requirement for taxation – and impliedly excluded any other form of procedure. There is a certain initial attraction in that argument. However, in my judgment, this literal interpretation is too narrow. Firstly, OCR 32.1 is designed to deal with a specific issue, namely, to ensure that a decree (with the ancillary warrant for execution of diligence) is not granted until the awarded expenses are determined or calculated in a precise amount. It is not intended to be prescriptive or exclusive as to the manner or method by which the precise amount of expenses is to be calculated. Secondly, in my judgment, absent express provision excluding, restricting or limiting the court’s inherent broad discretionary power in relation to expenses, that broad power remains untrammelled. In other words, restrictions on the discretionary power are not lightly to be implied.
[42] Since the primary purpose of OCR 32.1 is to prevent the execution of diligence for recovery of awards of expenses prior to the calculation of the precise amount of those expenses, in my judgment the proper interpretation of the Rule is that it is not intended, impliedly or otherwise, to curtail the court’s inherent power to regulate the issue of expenses (including by prescribing the methodology by which the precise amount is to be calculated). If such a restriction was to have been placed on the court’s discretionary power, it could and should have been stated expressly.
[43] In contrast, echoes of the breadth of the sheriff’s discretionary power in relation to expenses in an ordinary action appear in the Act of Sederunt (Fees of Solicitors in the Sheriff Court) (Amendment and Further Provisions) 1993 (SI 1993, number 3080). Regulation 5(a) in schedule 1 of the Act of Sederunt states:
“The court shall have the following discretionary powers in relation to the table of fees:-
(a) in any case the court may direct that expenses shall be subject to modification”
[44] In this context, “modification” should be understood in the wide sense of meaning regulation or determination as to the amount, or as to the manner of calculation of the amount (which would include the mechanism of calculation). This is the wide interpretation favoured by the editors of Macphail, Sheriff Court Practice, which states (at paragraph 19.09):
“The sheriff has a wide and quite general discretionary power to direct that expenses shall be subject to modification, that is, subject to assessment (my emphasis) or restriction in such a way that the precise sum to be paid may be exactly ascertained. He may direct modification, in the sense of assessment (my emphasis), in order to save the further expense of remitting the successful parties’ account to taxation.”
[45] Lastly, having concluded that I did have power to make the order sought by the defender (i.e. to order assessment rather than a taxation), I also concluded, in the exercise of that judicial discretion, that it was appropriate in the particular circumstances of the present case to order that the awarded expenses should indeed be subject to assessment at a diet of assessment, rather than taxation. I did so for the following reasons. Firstly, the action had settled at a sum that fell within the summary cause limits. Secondly, the parties were agreed that the expenses should be calculated on the summary cause scale. Thirdly, the action had settled almost immediately following service of the writ, with no defences having been lodged, and minimal procedure, with the result that the calculation of the judicial expenses due was likely to be an exceptionally straightforward exercise (well within the ability of the sheriff clerk at a diet of assessment). Fourthly, consistent with the action being, in nature, more suitable to the summary cause procedure, the calculation of the expenses due was likely to be achieved in a much more speedy and summary manner by way of assessment, than by way of taxation. Fifthly, the costs associated with a taxation procedure (notably the auditor’s fee, including any cancellation fee) were likely to substantially exceed the minimal costs associated with the assessment procedure, and, in my judgment, were likely to be disproportionate to the value of the sum decerned for by way of expenses. Sixthly, the pursuer was unlikely to suffer any material prejudice if the expenses were calculated at a diet of assessment, rather than at a diet of taxation. Indeed, given the relative speed and saving in expense associated with the assessment procedure, it was reasonable to infer that the pursuer was likely to benefit (in the sense that a final determination would be made more quickly and cheaply than by way of the taxation process). Seventh, conversely, the defender was likely to be materially prejudiced if the expenses were calculated at a taxation due to the real risk that, failing agreement between the parties, the defender would require to bear the substantial fee (or cancellation fee) payable to the auditor, which outlay was likely to be disproportionate to the value of the expenses ultimately payable to the pursuer. Taking all of these factors into consideration, and having regard to overall considerations of economy and efficiency in the conduct of litigation, I concluded that substantial justice was achieved between the parties by means of an order requiring that the expenses be assessed at a diet of assessment by the sheriff clerk, rather than at a taxation.
[46] Separately, I concluded that it was not necessary for the action to be formally remitted to the summary cause roll, prior to ordering that the expenses be calculated at a diet of assessment. To that extent, the defender’s motion (number 7/2 of process) was unsuccessful. However, that motion was lodged as a precautionary “fall-back” position only, given the outcome of a similar hearing in Fort William Sheriff Court. The essence of the defender’s position was clear: the defender was simply requesting that the expenses should be determined at a diet of assessment, rather than at a diet of taxation. The defender’s motion (7/2 of process) was a means to that end. Given the breadth of the judicial discretion as to the manner in which expenses were to be dealt with, I considered that it was not necessary to make a formal remit to the summary cause roll to achieve the defender’s desired objective. Instead, I considered that it fell within my broad judicial discretion to regulate the precise mechanism by which those expenses were calculated, specifically to order that the expenses be calculated at a diet of assessment (rather than a diet of taxation) – and that there was no need to formally remit the entire action to the summary cause roll to achieve that. Accordingly, I did not
require to determine whether or not it was competent to order such a remit between the rolls.
Sheriff
GLASGOW, 17 June 2014