MRS JULIE ANNE McLEAN (AP) V GREATER GLASGOW AND CLYDE NHS BOARD
OUTER HOUSE, COURT OF SESSION
[2016] CSOH 68
A157/94
OPINION OF LORD ARMSTRONG
In causa
MRS JULIE ANNE McLEAN (AP)
Pursuer;
against
GREATER GLASGOW AND CLYDE NHS BOARD
Defenders:
Pursuer: Dunlop QC; Lindsays
Defenders: Stephenson QC; NHS Scotland Central Legal Office
20 May 2016
Introduction
[1] This action of damages, concerning cerebral palsy sustained at birth some 26 years ago, was raised in 1994 but sisted until 2005. Thereafter, the procedural progress of the action was slow. The case of fault was initially directed against the obstetricians involved. On that basis, the defenders considered their position to be a strong one and, but for subsequent developments, the action would inevitably have been destined for resolution by means of a diet of proof.
[2] Mr Smith QC was first instructed on behalf of the pursuer in October 2011. Having considered the whole papers, he advised amendment of the case of fault. Consequently, following amendment of the pleadings in terms of the resulting minute and answers in May 2012, the focus of the action was changed. The case of fault was now directed against the midwifery staff in relation to delay in proceeding to caesarean section. A proof of eight weeks duration was fixed to commence in April 2014. Following certain admissions in relation to breach of care and, subsequently, causation, the issue of quantum of damages remained unresolved despite ongoing negotiations. As the diet of proof approached, another senior counsel was instructed on behalf of the pursuer, as Mr Smith was then not available.
[3] The action was settled on the eve of the diet of proof. The agreed damages were substantial; they comprised a capital sum of £2,100,000 plus index-linked annual periodical payments of £130,000 over the whole period of the injured party’s life. Before me, it was accepted by senior counsel for the defenders that the involvement of Mr Smith in the case had been significant, in that the successful outcome had resulted from his analysis of the case.
Expenses and taxation
[4] By interlocutor, dated 10 February 2015, the defenders were found liable to the pursuer in the expenses of the action on a party and party basis. An additional fee was granted to the pursuer’s agents. In that regard, the defenders conceded an uplift of 167%. In terms of the interlocutor, the pursuer’s account was remitted to the auditor of court for taxation. Prior to the taxation, held on 4 August 2015, the defenders lodged objections to the pursuer’s account. The auditor taxed off sums from the pursuer’s account. In particular, in respect of the fees of Mr Smith, he abated a total sum of £67,215.
Note of objections
[5] The pursuer lodged a note of objections to the auditor’s decision. The auditor has responded by minute. At the hearing before me, it was explained that the only live issue remaining was that of the abatement of Mr Smith’s fees.
[6] In support of the note of objections, senior counsel began by identifying the relevant legal principles on which he relied:
(i) In general, the court should be slow to interfere with the auditor’s discretion. The reasons which the auditor gives for taxing of items in an account must be adequate and intelligible. Where he errs in the exercise of his discretion, however, the court should intervene. Thus, if he takes into account irrelevant considerations, fails to take into account relevant considerations, makes an error of law which is material to his decision, or reaches a result which is wholly unreasonable or plainly wrong, the court may sustain an objection to his report and remit the account of expenses to him for further consideration (Magee v Glasgow Corporation 2003 SLT 777, at paragraphs 4 and 8).
(ii) In assessing whether counsel’s fees are reasonable, in the absence of any existing table of fees referable to counsel, it was relevant for the auditor to take into account what a solicitor of reasonable competency would consider appropriate to command the services of competent counsel in a comparable case, and, secondly, to determine on the basis of his own skill and expertise in taxing accounts in comparable cases, whether the fee concerned was reasonable or extravagant (Rees v Henderson (1902) 4 F 813, per Lord Trayner at 814 – 815; Elas v Scottish Motor Traction Company 1950 SC 570, 571 – 2). In that context, it was to be recognised that different charges may be made by different counsel for similar work and that a range of charges for any given work might be reasonable. On that basis, an item should only be disallowed if it could truly be said that to incur that expense was not reasonable (Malpas v Fife Council 1999 SLT 499, 500L – 501F). In the present case, where indicative fees had been agreed between counsel and instructing agents, there was a clear indication of what an instructing solicitor considered it appropriate to pay.
(iii) The reasons given by the auditor must be sufficiently intelligible as to make it plain in respect of any relevant matter why a party had won or lost (Nzolameso v Westminster City Council (2015) PTSR 549, at paragraph 32).
(iv) Self evidently, the auditor must comply with the basic principles of natural justice.
[7] The criticisms made of the auditor’s approach fell into four broad categories:
(a) Fees abated despite lack of objection by the paying party
[8] The fees which fell within this category were addressed by the auditor in his minute at paragraphs 28, 33, 46, 49, 50, 57 and 58.
[9] Senior counsel departed from the assertion, stated in the note of objections, to the effect that to abate fees in the absence of objection by the paying party was necessarily incompetent, but he maintained that in order for such an exercise to be competent it must comply with the laws of natural justice. Reference was made to R (Irvine) v The Royal Burgess Golfing Society of Edinburgh 2004 LLR 334, in which, at paragraph 29, the comments by Lord Mustell in R v Secretary of State for the Home Department ex parte Doody 1994 1 AC 531, at 560, were quoted as follows:
“The standards of fairness are not immutable. They may change with the passage of time, both in the general and in their application to decisions of a particular type.”
And further, in answer to the question posed as to whether a person having the right to make representations should know what factors the decision maker will take into account:
“It has frequently been stated that the right to make representations is of little value unless the maker has knowledge in advance of the considerations which, unless effectively challenged, will or may lead to an adverse decision. The opinion of the Privy Council in Kanda v Government of Malaya (1962) AC 322, 227 is often quoted to this effect. This proposition of common sense will in many instances require an explicit disclosure of the substance of the matters on which the decision maker intends to proceed. Whether such a duty exists, how far it goes and how it should be performed depend so entirely on the circumstances of the individual case that I prefer not to reason from any general proposition on the subject”.
[10] In the context of a taxation, under reference to RCS 42.2(4), (5) and (6), in respect of the requirement for the party found liable in expenses to lodge objections and the consequences of failure to intimate them timeously, under power of the auditor to grant relief in that regard, it was clear that the content of the note of objections was a significant step in the process. In the absence of objection, it was reasonable to infer that any given fee fell within the range to be expected by a reasonably competent solicitor. In any event, the issue of the possible abatement of a fee not the subject of objection could, and should, have been raised by the auditor. It was accepted that the auditor’s assessment required appraisal of the whole account under consideration, but it was nevertheless incumbent upon him to assess the whole account fairly.
[11] Reference was made by way of analogy to Wyman-Gordon v Proclad 2011 SC 338, at paragraphs 57 and 58. It would be surprising for a decision-maker, in the context of the operation of RCS 42.2, to reach a conclusion in the absence of any representation on the matter in point. In such circumstances, it would generally be incorrect to decide any matter which the parties had declined to argue, and to determine it in favour of one party, on the basis of a ground of which the opposing party had no notice. Where following a hearing, a matter occurred to a decision-maker as being possibly material to his decision, the proper course before deciding on the matter was to afford the parties the opportunity to make further submissions.
[12] On the basis that the fees in this category had been taxed without any prior notice or objection, and without any opportunity to make further submissions pertinent to the fees concerned, it was submitted that the auditor had acted unfairly and that there was therefore a basis on which the court should interfere with his decisions.
(b) Fees said not to be recoverable on a party and party basis
[13] The fees which fell within this category were those addressed by the auditor in his minute at paragraphs 10, 12, 16, 21, 27, 32 and 46. Each of these cases was also an example of abatement for reasons not pressed before him or discussed at the diet of taxation, but in any event, the merit the auditor’s decision in each case was challenged:
(i) Paragraphs 10 and 12
[14] In respect of these fees, the auditor had abated the amount rendered, in full (paragraph 10) or in part (paragraph 12) on the basis that the referable work, or part of it, was required and carried out for the purposes of the pursuer’s application for legal aid, and that, as such, the fees were not recoverable on a party and party basis. In that respect, the auditor was clearly in error. The pursuer had been granted legal aid in 2007. The fees concerned, for work carried out in 2012, some five years later, could not have been required for the pursuer’s legal aid application. In each case, had further submissions been invited, the issue could have been clarified.
(ii) Paragraph 21
[15] I was not specifically addressed on the fee dealt with by the auditor at paragraph 21 of his minute.
(iii) Paragraphs 16 and 27
[16] In respect of the fees addressed at paragraph 16 of the auditor’s minute, the work undertaken was “Reading midwifery textbooks…; extracting relevant parts for sending to agents (engaged 4.5 hours)”. The auditor abated the fee in full on the basis that as a midwifery expert was instructed on behalf of the pursuer, it was the role of that person, and not senior counsel, to identify and reference relevant source material for the purposes of the content of an expert report, and that the cost of senior counsel doing so was not reasonable for conducting the cause in a proper manner, and that a competent solicitor acting reasonably would not have incurred it (Malpas). The stark submission by senior counsel was to the effect simply that the auditor was wrong in that analysis and that the work carried out did indeed fall within the role of senior counsel.
[17] In respect of the fee addressed at paragraph 27, the work undertaken was “Considering employment report on work prospects of (K) had she not been injured. Advice regarding statistics and data for additional information in report (engaged 3.5 hours)”. The auditor had abated the fee on the same basis adopted in relation to the fee addressed at paragraph 16; the identification and referencing of statistics and data for the purposes of the content of an expert report was a matter for its author, rather than for senior counsel, and so was not reasonable for conducting the cause in a proper manner, in that a competent solicitor acting reasonably would not have incurred it. Although the auditor reduced the level of the hourly rate charged, no specific challenge in that regard was made in this context. Rather the emphasis was on the auditor’s approach to the issue of senior counsel carrying out the work which, it was submitted, was one which had been disapproved in Marshall v Fife Health Board 2013 SLT 1129. In that case, at paragraph 14, Lord Glennie had determined that it was perfectly proper to seek counsel’s advice upon the leading of an expert report.
(iv) Paragraph 32
[18] The fee addressed at paragraph 32 was in respect of “Preparation of draft spreadsheet of damages. Complex and detailed valuation, which was being demanded by defenders. Covering all aspects of valuation with complexity in each stage. Three days of work involved in this exercise. Various amendments on subsequent dates in light of new and updated information and in light of discussions about the matter with Junior Counsel and agents.” The fee charged was £10,500 plus VAT.
[19] In abating the fee the auditor restricted the time taken to a period of one day rather than three, on the basis that it was not necessary for conducting the case in a proper manner that the whole exercise was undertaken by senior counsel. He stated that the valuation should have been drafted by junior counsel and thereafter revised by senior counsel. Although the auditor also addressed the level of the daily rate charged, no specific challenge in that regard was made in this context. Rather the emphasis was placed on the facts that the exercise was “massively complicated”, that the defenders had not objected on the basis that junior counsel should have undertaken the initial work of drafting the valuation – an issue which could have been addressed before the auditor, had it been raised – and that the instruction of senior counsel for the task had been appropriate.
(v) Paragraph 46
[20] The fee addressed at paragraph 46 was in respect of “Preparation for attendance at Consultation”. The auditor had noted that the consultation was with an expert witness and that its purpose was to discuss errors in her report. It was not clear how the auditor came by that information. The fee was abated in full on the basis that it was not reasonable, on a party and party basis, for the paying party to be liable for costs incurred in the correction of mistakes by an expert witness. In that regard, senior counsel submitted that the auditor had fallen into error in respect that there was no suggestion arising from the terms of the fee-note concerned that the purpose of the consultation was exclusively to address corrections necessary in relation to the expert report, and that, in any event, no objection to the fee had been taken by the defenders.
(c) Fees abated in respect of the time charged for work undertaken
[21] The fees which fell within this category were addressed by the auditor in his minute at paragraphs 7, 12, 17, 19, 24, 25, 27, 34, 35, 42, 44, 45, 47 and 56.
[22] As a representative example, I was directed to the fee addressed by the auditor at paragraph 7, in respect of which the work undertaken was described as “Papers sent in new instruction. Case of serious brain injury to a child some 20 years previously. Liability and quantum in dispute. Claims against doctors for negligent management of labour. Considerable volume of papers to be considered taking a total of four days preparation. Fee includes consultation on 31/10/11.”
[23] The fee had been charged at a rate of £4000 per day for all the work. The auditor had restricted the time claimed on the basis that, having regard to the stage reached in the proceedings, the time claimed was excessive on a party and party basis, that senior counsel’s fee was accordingly unreasonable in amount, and that the time claimed should therefore be restricted to three days of preparation and 1 hour 30 minutes for attendance at the consultation.
[24] Reference was made to Malpas for the propositions that it should be accepted that different charges are made by different counsel for similar work, that a range of charges for any given work undertaken might be reasonable, and that it was common experience that different individuals might approach preparation for a case in different ways and with different degrees of diligence, but that the additional work done by one would not obviously in such circumstances be described as unreasonable, that there may be a range of different ways of conducting a case, and that an item should only be disallowed if it could truly be said that to incur that expense was not reasonable in the sense that a competent solicitor acting reasonably would not have incurred it.
[25] Against that background, and on the basis, without any contradiction, that the work had taken four days to complete, senior counsel questioned whether it could be said that no competent solicitor would countenance payment of fees for that period of time. The basis on which it was asserted that the time claimed was excessive was not clear and neither was it apparent how, if four days was excessive, three days was not. The auditor’s reasons in respect of this fee did not include a specific reference to the Malpas test as to whether a competent solicitor acting reasonably would not have incurred the issued fee. I was told that in fact, specific reference to that test was made by the auditor in his minute only three times (in relation to fees addressed at paragraphs 16, 27 and 32). In these circumstances, where the time spent completing the work was the time actually required, no sufficient reason had been given to explain how the Malpas test was satisfied.
(d) Fees said to be out with the reasonable range
[26] With the exception of six fees, all of the fees which were subject to abatement by the auditor fell within this category. In total 44 fees were concerned.
[27] In respect of this category of abatement, a number of points were made:
- It was significant that at the time of the instruction of senior counsel, indicative fees had been agreed with the instructing solicitors in advance.That fact was known to the auditor.Senior counsel’s clerk had been present at the diet of taxation and had advised at that time that the rates adopted fell within the spectrum of what the market would bear.These factors appeared not to have been taken into account by the auditor.
- Where a daily rate was not charged in respect of work undertaken, the fees charged were calculated on the basis of a flat rate of £450 per hour for time expended, regardless of the type of work undertaken.In contrast, the auditor had valued fees in respect of attendance at a higher rate than the fees in respect of preparation.The reason for adopting such differential rates was not apparent.Reliance was placed on the decision in the case of Marshall, at paragraphs 16 – 18, for the propositions that counsel is entitled to charge his going rate, that his charge is for his time, and that, if his going rate is a reasonable one that is within the band of reasonable rates, it should be allowed on a party and party basis.
- Criticism was directed to the fact that when abating fees, the reason given by the auditor was repeatedly in the same terms, viz.:
“The auditor considered, based on his knowledge and experience of similar accounts that a rate of…was not within the reasonable band of rates which he would expect to see being charged for this type of work”.
It was submitted that the statement, as a reason, was opaque. Neither the extent of the reasonable band nor the position of the particular fee concerned within the band was stated. As a particular example, the fee addressed by the auditor at paragraph 8 of his minute was cited. It was submitted that in a case where all the factors justifying an additional fee were present, and where it might be expected that the appropriate fee for senior counsel would accordingly be set at the top end of the relevant band, in fact a fee which appeared to be significantly below that level had been fixed.
- It was accepted that the quoted reason cited by the auditor reflected the test recognised in Marshall (at paragraph 17), but it ought to be borne in mind that reference to “a range of fees which can properly be charged for the same type of work” was only a partial analysis.That passage was set in the context of a reference to the decision in Malpas, in which it was indicated that a fee should be disallowed only if it was unreasonable in the sense that a competent solicitor acting reasonably would not have incurred it (page 501E).Although, when making decisions abating fees, the auditor had repeated reference to what would be outwith a reasonable band, he had rarely, if at all, done so by considering what would not be incurred by a competent solicitor acting reasonably.
- There were a number of examples of inconsistency amongst the auditor’s decisions, viz:
- Although the auditor had fixed a daily rate of £2,125 in respect of preparation in relation to the fees of Mr Smith, a higher rate (greater to the extent of £100 per day) had been fixed in relation to the fee of senior counsel who was instructed for the proof as the result of Mr Smith’s unavailability.
- It was noted, that as the result of the agreed uplift in respect of the additional fee allowed in the case, the hourly rate allowed by the auditor in respect of the fees of the instructing solicitors was the same as that allowed in respect of the fees of senior counsel.
- It was noted that in respect of fees charged in 2013, the auditor had allowed for an uplift to the level of fees compared to those charged in 2012, both in respect of preparation and attendance.There was, however, no equivalent allowance for an uplift in respect of fees charged in 2014, compared to fees charged in 2013, and no explanation as to why that was the case.
- Under reference to the results of taxation in another case (see the auditor’s minute, dated 24 November 2014, in Worbey & Farrell v Elliot) it was noted that, in respect of fees charged in the same year, a higher rate (by a margin of about 20%) had been allowed in respect of preparatory work by senior counsel than in the case under consideration, notwithstanding that Worbey, it was submitted, had been a less complex litigation.
- In Stuart & others v Reid & others (2015) CSOH 175, which, again, it was submitted was a less complex case, in respect of senior counsel’s fees the auditor had allowed daily rates in respect of preparation (£2,500) and attendance (£3,000) which were higher than those fixed in the case under consideration.
[28] In summary, the auditor had erred in assessing the fees concerned, had failed to take into account what would be acceptable to a competent solicitor acting reasonably, had failed to take into account relevant considerations, had taken into account irrelevant considerations, and had acted inconsistently, unfairly and in breach of natural justice. In these circumstances, where the taxation process was thereby wholly flawed, the note of objection should be sustained and the account remitted to the auditor for consideration of new.
Submissions for the defenders
[29] At the outset it was important to put the challenges made into context. It was to be noted that it was conceded by senior counsel for the pursuer that Mr Smith’s fees were high. Further, his fees and those of junior counsel for the pursuer were disproportionately far apart. As examples, in respect of work undertaken by both on 24 June 2013, 3 December 2013 and 14 January 2014, his fees were higher than hers by factors, respectively of 3.75, 5.33 and 8.4.
[30] The issue was whether the fees charged were recoverable on a party and party basis. Factors which ought to be considered in relation to fees recoverable on an agent and client basis were not relevant. Reference was made to RCS 42.1 and to the annotations in the Parliament House book at 42.1.1. The conceptual distinction was clear, and the underlying reason for the distinction was the need, in the public interest, to control the expense of litigation. The general approach was as set out in Macnaughton v Macnaughton 1949 SC 42, per Lord President Cooper, at page 46:
“It is well to begin by restating the governing principles. The concern of the Court is to decide not what fees a particular counsel was justly entitled to receive from his client for his services under the conditions under which he gave them, but what fees can properly be made a charge against an unsuccessful opponent. There is no objection to the employment by a client of any counsel, however eminent, in any case, however small, or to the payment of any fee, however large. But we have a plain duty to protect unsuccessful litigants against excessive charges, and not to permit the unavoidable risks of litigation to be enhanced by the added peril of possible liability for extravagant or unreasonable expenses.”
That passage was amongst the authoritative statements of the relevant legal principles set out by the auditor at pages 3 – 7 of his minute.
[31] The court’s jurisdiction was a supervisory one. The court should interfere with decisions of the auditor only in the case of demonstrable error of law or where a conclusion was reached which was unreasonable in the Wednesbury sense. In contrast, the auditor’s function was that of a valuer. It was not for the court to substitute its own view as to what a reasonable fee might be.
[32] It was necessary to approach some of the older authorities with caution. In Rees, the context for Lord Trayner’s remarks was that, at that time, fees were sent to and received by counsel in advance. In these circumstances, whether or not a fee was reasonable could not depend on the nature of the trial (Lord Justice Clerk Kingsburgh, at 814). In these circumstances, reference to a competent solicitor’s judgment was in effect a reference to an estimate of what might be necessary for preparation and attendance, made in advance. Since that situation was not consistent with current practice, Rees was not truly authority for the proposition advanced in reliance upon it.
[33] In considering the authorities, it was relevant to note the distinction between the reasonableness of instructing work at all, and the reasonableness of any resulting fee referable to instructed work. Properly understood, the dicta in Malpas were made in relation to the former and not the latter. The issue in that case was whether it had been reasonable to instruct senior counsel along with junior counsel, rather than only junior counsel alone.
[34] Reference was made to Jarvie v Glasgow Primary Care NHS Trust (2006) CSOH 42, in which, at paragraph 24, Lord Carloway had set out the nature of the test to be applied in the review of a decision of the auditor. The position of the auditor was not dissimilar to that of a jury. Whether the expense in an account was “reasonably incurred for conducting the cause in a proper manner” (RCS 42.10(1)) was an objective test. Not all of the fees and expenses which it would be fair to charge against a client would necessarily be recoverable on a party and party basis.
[35] The test set out in Marshall was the correct approach. In taxation on a party and party basis, the onus was on the successful party to show that his expenses were reasonable and were reasonably incurred (at page 1131D). It was for the auditor to determine what was reasonable. Reference was made to the proper approach of the auditor and the court, as set out in Stuart & others v Reid & others (2015) CSOH 175, at paragraphs 24 and 25. The auditor is expected to apply his knowledge and experience in carrying out his task of assessing a fair and reasonable fee (paragraphs 30 - 35). The adequacy of reasons given by him required to be considered in the relevant context (paragraphs 26 – 29).
[36] The auditor had assessed the flat hourly rate charged by Mr Smith (£450) as being outwith the band of reasonable rates which would be expected, and in the exercise of his judgment had abated the relevant fees accordingly. The criticism that the auditor had failed to state the range of the reasonable rates was flawed. To do so would inevitably impact on the level of fees charged in subsequent cases. The reason not to stipulate any hard and fast rule as to what was reasonable was a practical one. In any event, it was in order to fix a reasonable rate in any particular case that the auditor’s role, in taxing an account, existed.
In the event, in respect of work carried out in 2013 the auditor had found that fees of £305 per hour for preparation, and £480 per hour for attendance, were reasonable in light of the complexity and importance of the proceedings. The latter figure was higher than that charged by Mr Smith.
[37] The auditor’s approach to the taxation of the account had been rational and entirely proper. His reasoning may not have involved fine detail, but his valuations were confirmed by reference to his skill and expertise. Rates determined by him were not illogical or unreasonable. The issue of what was reasonable was, after all, for him, as valuer, to determine. Substitute rates determined by him had been applied consistently.
[38] When the auditor had abated fees in relation to the amount of time claimed, he had explained why he had done so. As was recognised in Macnaughton, it was unremarkable that different counsel would approach work undertaken in different ways, but the purpose of objective taxation was to determine what was reasonable, as assessed by the auditor in the exercise of his discretion based on his experience and skill. It was entirely appropriate to abate the time charged by senior counsel in circumstances where the work concerned could have been competently undertaken by junior counsel.
[39] Where fees had been abated in their entirety, the auditor had explained the basis for his decision. He had been correct to abate fees charged in relation to the correction of errors by an expert witness. It was not reasonable that a paying party should have to pay for the inadequacies of the successful party’s witness. It was not suggested that it had been wrong for Mr Smith to spend time considering texts on midwifery. Rather, it was submitted that the work was more properly the function of an expert witness. That being so, it was not reasonable that time spent by Mr Smith in that regard should be recoverable from the paying party.
[40] The auditor had set out fully in his minute the reasons for the abatements made. He had set out the proper test in law, and had adopted it. It could not be said that his application of the test, as valuer, had been so deficient as to justify sustaining the note of objections. On the contrary, the note of objections ought to be refused.
Decision
[41] As set out in his minute, the auditor had regard to, and sought to apply, the test set out in RCS 42.10 (1), and the guidance to be found in the cases of Malpas, Macnaughton, Jarvie and Marshall. Thus, his decisions were made against the background of the following principles:
- Only such expenses as are reasonable for conducting the cause in a proper manner shall be allowed (RCS 42.10 (1)):
- That rule must be interpreted as imposing an objective test (City of Aberdeen Council v WA Fairhurst [2000] SCLR 392, quoted in Jarvie, at paragraph 24);
- There may be a range of different ways of conducting a case that might all be described as reasonable. It follows that in deciding whether to allow or disallow a fee, the auditor should only disallow an item if it can truly be said that to incur that expense was not reasonable in the sense that a competent solicitor acting reasonably would not have incurred it (Malpas, at 501E);
- The concern of the court is to decide, not what fees a particular counsel was justly entitled to receive from his client for his services, but what fees can properly be made a charge against an unsuccessful opponent (Macnaughton, at 46);
- In the public interest there is a duty not to permit the cost of litigation to be escalated by extravagant or unreasonable expense (Macnaughton at 46);
- The auditor must reach an objective view on what is reasonable. Although the amount of time spent in preparation may be a relevant consideration, it is unlikely to be determinative and in some cases may carry little weight. The fact that a party may wish meticulous and detailed preparation to be carried out does not mean that it is reasonable for an unsuccessful opponent to be burdened by the resultant charges (Jarvie at paragraph 38);
- It is not necessary for the auditor to provide a detailed analysis of his reasoning as to how he reaches a particular figure. What is required that he reaches a view based on his knowledge and experience (Jarvie at paragraph 39).
[42] It is appropriate to view the position of the auditor and what is to be expected of him against that background. His role is that of a valuer. His jurisdiction is a practical one. In this case, a general criticism underlaid the submissions for the pursuer to the broad effect that the reasons given by the auditor in his decisions were inadequate. In that regard, the referable test is whether or not an informed person reading the decision would be left in no real and substantial doubt as to what were the reasons for it and what were the material considerations which were taken into account in reaching it (Wordie Property Limited v Secretary of State for Scotland [1984] SLT 345, 348). In this context, the informed readers are members of the legal profession, well versed in the practice and procedure of the Court. In these circumstances, it is not necessary for the auditor to provide a detailed analysis of his reasoning. The position of the auditor is as set out by Lord Carloway in Jarvie, at paragraph 39.
[43] The criticism of the auditor that he has repeatedly failed, when abating fees, to make specific reference to the Malpas test of whether a competent solicitor acting reasonably would have incurred the fee in question, is not a compelling one. The true test in terms of RCS 42.10 (1), is whether the expense is reasonable and, in that context, where counsel’s fee is concerned whether, on the basis of the auditor’s recognised extensive knowledge and experience, it falls within the band of reasonable rates to be expected for the type of work concerned. The reference in Malpas to whether a competent solicitor acting reasonably would not have incurred it, is simply the measure by which reasonableness is to be judged. In circumstances where detailed reasons are not necessary, it does not follow from the fact that no reference was made to the measure, that no regard was had to it, particularly in circumstances where the auditor has expressly stated that he sought to apply the relevant dictum.
(a) Abatement in the absence of objection by the paying party
[44] It was accepted for the pursuer that it was not incompetent for the auditor to abate a fee in circumstances where no specific objection was taken to it. That concession was rightly made and is consistent with the content of Part 1 of Chapter 42 of the Rules of Court. The content of these provisions requires the auditor to carry out the exercise of taxation, involving abatement where necessary, irrespective of whether points of objection are made.
[45] In the event, the fees addressed by the auditor at paragraphs 28, 33, 46, 49, 50, 57 and 58 of his minute, and which were said to have been abated notwithstanding the absence of any stated objection, were abated on the basis that a single hourly rate of £450 was not within the band of reasonable rates which the auditor would expect to see being charged by senior counsel for the type of work concerned, or that the expense concerned was not one in respect of which, on a party and party basis, it would be reasonable to find the paying party liable. These were decisions which the auditor was entitled to make on the basis of his knowledge and experience. In these circumstances, having regard in addition to the fact that the parties to the taxation are informed members of the legal profession, well versed in the practice and procedure of the Court, the absence of a specific opportunity to make representation cannot be said to be, in that context, necessarily prejudicial. To require representation in respect of every intended abatement would undermine the practical function of the auditor’s role as valuer. In relation to these particular fees, in respect of which it cannot be said that the auditor’s decisions were plainly wrong, and where it therefore is not appropriate for the court to exercise its power to intervene, it has not been demonstrated that any unfairness has in fact resulted.
(b) Fees not reasonable on a party and party basis
[46] In respect of the fees addressed by the auditor at paragraphs 10 and 12 of his minute, abated in respect of the pursuer’s application for legal aid, I accept, for the reasons submitted by senior counsel for the pursuer, that it does appear that the auditor’s reasoning cannot be correct. To that extent, I will therefore remit the account of expenses to the auditor for further consideration.
[47] In respect of the fees addressed by the auditor at paragraphs 16, 21, 27, 32 and 46, I am not persuaded that I should interfere with his decisions.
[48] I find that the auditor was correct, in relation to the fee addressed at paragraph 16, to identify the work undertaken by Mr Smith (“reading midwifery text books; extracting relevant parts for sending to agents (engaged 4.5 hours)”) as being a task, not for senior counsel, but for the midwifery expert already instructed. The auditor correctly stated that it is part of the role of an expert witness to identify and reference relevant source material for the purposes of an expert report.
[49] In relation to the fee addressed at paragraph 27 (“considering employment report on work prospects of (K) had she not been injured. Advice regarding statistics and data for additional information in report (engaged 3.5 hours)”), I find that the auditor was correct to categorise the identification and referencing of relevant statistics and data for the purposes of an expert report as being part of the role of the author of the expert report, and not that of senior counsel. Although in Marshall, unsurprisingly, it was noted that it was perfectly proper to seek counsel’s advice upon leading an expert report, that situation is to be distinguished from one where senior counsel incurs expense by, in effect, himself directly contributing materially to the content of the expert report concerned.
[50] In relation to the fee addressed at paragraph 32, it does not appear to me that the auditor can be said to have erred in his approach. In a matter such as the preparation of a draft spreadsheet of damages, it is the common and expected practice that junior counsel will produce a first draft for subsequent revisal by senior counsel. Had that approach been adopted, it is reasonable to conclude that the expense incurred by senior counsel’s involvement would have been less than was in fact charged. It was suggested in submission that as a result of the abatement made, the effect was that the defenders required only to pay for senior counsel’s involvement on the basis that junior counsel ought to have been instructed, but without having to pay a fee for what would have been the corresponding input of junior counsel. Be that as it may, in circumstances where no fee in respect of junior counsel’s involvement on that basis was rendered, that was not a relevant matter for decision by the auditor.
[51] In respect of the fee addressed at paragraph 46, the auditor proceeded on information available to him that the purpose of the consultation was to discuss errors in the report of an expert witness. It is not apparent to me that, on that basis, he was wrong to decide that it was not reasonable for an unsuccessful party to pay for the correction of errors made by an expert witness instructed by the successful party. It was submitted that there was nothing in terms of the fee note (“Preparation for and attendance at Consultation”) to suggest that the purpose of the consultation was limited to the correction of such errors. However, in circumstances where the onus is on the successful party to show that his expenses are reasonable (Marshall, at paragraph 9), it is to be noted that the terms of the fee note, in so far as indicating that the purpose of the consultation was not so limited, were less than explicit.
(c) Fees abated in respect of the time charged for the work undertaken
[52] It was accepted by the parties, and indeed by the auditor, that, as set out in Malpas, at page 501, a range of charges for any given work might be reasonable, that preparation might be approached with different degrees of diligence and that additional work done would not necessarily be unreasonable. However, the context of the description of the test set out in that passage (that an item should only be disallowed if can truly be said that to incur that expense was not reasonable, in the sense that a competent solicitor acting reasonably would not have incurred it) was the principal issue of determining the reasonableness of the instruction of the work, rather than the reasonableness of the time taken to carry it out.
[53] In respect of the time expended in carrying out a piece of work, when the taxation is on a party and party basis, the auditor must reach an objective view of what is reasonable. Although regard must be had to the time actually expended, that is unlikely to be a determinative factor and may carry little weight. A party may wish such preparation to be carried out and the work may be instructed on that basis, but it does not follow that it is reasonable that the unsuccessful opponent should be liable for the whole expenses incurred (Jarvie, at paragraph 38). Viewed in that context, and according due weight to the auditor’s knowledge and experience of similar cases, I am not persuaded that in respect of the fees addressed by him at paragraphs 7, 12, 17, 19, 24, 25, 27, 34, 35, 42, 44, 45, 47 and 56 of his minute, he has plainly fallen into error. That being so, in respect of these fee notes I am not prepared to intervene.
(d) Fees said to be outwith the reasonable range
[54] Some weight was placed on the fact that in this case indicative fees for senior counsel had been agreed. It was conceded that as a factor, that circumstance although relevant was not determinative. Where in the face of that factor, the auditor had abated a fee, it must be implicit in his decision that he had come to a view as to whether the agreement on the indicative fee was appropriate. As was recognised in the submissions before me, the Court should be slow to interfere with the exercise of such judgement by the auditor.
[55] I note, in passing, that emphasis was placed on the complexity of the case and to the fact that a significant uplift was agreed in relation to an additional fee. Although that was a matter which was referable to the input of the solicitors instructed in the case, I accept that it was a relevant, although not determinative, factor for the auditor to take in account when assessing, in the context of this case, what a reasonable fee for counsel might be. It does not necessarily follow, however, from the level of fees fixed by the auditor, that he failed to take that factor into account.
[56] It was also emphasised, and indeed accepted for the defenders that Mr Smith’s input had altered the course of the action to the benefit of the pursuer. Whilst I accept that fact, I am not persuaded that it is a factor which should have determined the level of his fee on a party and party assessment. It is to be anticipated that senior counsel, if instructed, will bring skill, experience and expertise to the work required, including the identification of case strategies more likely to succeed than others. Whilst Mr Smith undoubtedly deserves appropriate credit in this case, the auditor was entitled to make his decisions, as he appears to have done, on the basis of what would be reasonable for any senior counsel in relation to the work concerned.
[57] It must be borne in mind that in this case the context of the auditor’s determinations, as to whether fees charged fall within the band of reasonable rates to be expected to be charged by senior counsel for work of the relevant type, was taxation on a party and party basis. The assessment necessarily involves a judgement as to what it is reasonable for an unsuccessful party to pay.
[58] In submitting that a flat hourly rate, if reasonable as a going rate, applied across the board, was an appropriate fee on the basis that counsel was entitled to charge for his time by the application of his going rate, heavy reliance was placed on dicta by Lord Glennie in the case of Marshall, at paragraph 18. That decision, however, concerned the specific issue of whether a lower rate than would normally be considered reasonable was appropriate in a case where liability was admitted and trial was limited to the issue of quantum. The question of differential rates for preparation and attendance did not arise in Marshall. That being so, I do not accept it as being authority for the proposition that if counsel chooses to charge for his time by using a flat hourly rate it should be allowed on a party and party basis irrespective of the work undertaken.
[59] While such an approach might well be the subject of agreement as between instructing solicitor and counsel, in considering what it is reasonable for an unsuccessful party to pay, it is appropriate to attach due weight to the exercise of the auditor’s discretion where it is based on his knowledge and experience. In recognising the extent of that discretion, the fact that the auditor’s adjudication is between the parties is material, as are the requirement to protect unsuccessful litigants from being unduly burdened by the risk of excessive expense, and the wider public interest in the cost of litigation (City of Aberdeen Council, at 398).
[60] Against that background, where the auditor has determined that differential rates in respect of preparation and attendance are appropriate, and that a flat hourly rate is not reasonable, on the proper application of the relevant test, then in circumstances where it is not plain that he has erred in that respect, it would not be right to interfere with his decision. In that regard, the fact that an alternative approach might be more attractive to senior counsel representing the successful party is not in itself a reason to find fault with the auditor’s decisions.
[61] I am not persuaded that reference to the results of taxations in other cases is of assistance. While there may be comparisons to be drawn, the auditor’s task is to determine what is reasonable in the case in question.
[62] I consider that the criticism that no uplift in fees was applied in respect of work carried out in 2014, relative to fees for work carried out in 2013, is not one to which I am able to respond. It was not suggested that there should have been such an uplift; it was merely submitted that there had not been one. It does not follow that because there had been a prior uplift, there should have been one in the succeeding year, and assuming that there was no uplift for good reason, there being nothing to suggest the contrary, it is not clear why any explanation should be required.
Conclusion
[63] With the exception of those fees addressed by the auditor at paragraphs 10 and 12 of his minute, I am not persuaded that his decisions in relation to abatements fall to be regarded as unreasonable in the Wednesbury sense, or that he has acted inconsistently, unfairly, in breach of natural justice or in error of law.
[64] In the result, I sustain the note of objections but only in respect of the fee notes addressed at paragraphs 10 and 12 of the auditor’s minute. To that limited extent, I remit the account of expenses to the auditor for further consideration of them by him. Otherwise, the note of objections is refused.
[65] I reserve, meantime, all questions of expenses.