JUDGEMENT OF SHERIFF K. ROSS
A439/03 Trevor Mitchell v Hass Tek Services Limited
DUMFRIES: 25 April 2008
The Sheriff, upon resuming consideration of the defenders' Note of Objections, Sustains the same to the extent of abating the fees of junior counsel for his attendance at the discharged diet of proof on 22 October 2007 by £2,683 to £3,150 and the fees of senior counsel for her attendance at the discharged diet of proof by £4,025 to £4,725 with a consequential abatement to the VAT chargeable thereon of £1,173.90 (a total abatement of £7,881.90); Otherwise, Approves the Report of the Auditor; Grants decree against the defenders for payment to the pursuer of the expenses of the discharged diet of proof on 22 October 2007 of £51,111.73
Note:
[1] A proof in this case was assigned for 22 October 2007 and the four succeeding days. On 22 October the proof was discharged on the joint motion of parties who were agreed that the expenses of the discharged diet should fall on the defenders. Parties expressed the hope that the matter would settle but requested that a further diet of proof should be fixed in case negotiations did not succeed. The case was continued for that purpose. A further diet has now been assigned.
[2] The Auditor has taxed the pursuer's expenses in respect of the discharged diet. The taxed sum is £58,993.63. That sum includes outlays of £45,017.31, of which approximately £6,000 relates to fees paid to a variety of expert witnesses for the preparation of reports and approximately £36,000 relates to the fees of senior and junior counsel. The defenders have lodged a Note of Objections to the Auditor's Report and seek substantial abatements of the expenses taxed by the Auditor. The matter called before me in respect of that.
[3] Miss Robertson, who appeared for the defenders, took me through the Note of Objections which contained 150 points in relation to the fees and outlays of the solicitors for the pursuer and a further 16 points relating to the fees of counsel. Several general themes of objection emerged. It was submitted that the expenses awarded covered only those necessitated by the discharge of the diet of proof and not items which could properly be regarded as for the general furtherance of the pursuer's case. Second, much of the work performed in preparation for the proof, and the outlays incurred, was not lost by the discharge but could be re-used in any subsequent proof. Third, there were elements of work which were truly agent and client in nature and should not be allowed on a party and party basis. Fourth, there was an element of duplication in respect of work involved in the taking of precognitions. Fifth, some of the work was unnecessary. Many of the same arguments applied to the objections taken to the fees of counsel but, in addition, it was submitted that the fees charged for attendance at the discharged diet, and for case preparation, were excessive and out of line with recent practice.
[4] Mrs Colledge, who appeared for the pursuer, submitted that the terms of the interlocutor awarded the expenses of the discharged diet to the pursuer. These included the steps taken to prepare for the proof which had not proceeded. She advised me that it had been conceded by the defenders before the Auditor that the terms of the interlocutor implied that the pursuer was entitled to recover the cost of preparation. It had also been conceded that if the proof had proceeded most of the items in the account would be proper entries. She referred me to the terms of regulation 8 in Schedule 1 to the Act of Sederunt (Fees of Solicitors in the Sheriff Court)(Amendment and Further Provisions) 1993. The Auditor could disallow any charges which were irregular or unnecessary. The Auditor had a discretion. That should not be interfered with. He had determined that the starting point for preparation was when the diet of proof was allowed and had taxed off items of work before that. The award of expenses was in the nature of a penalty agreed to by the defenders when the proof was discharged. That had been because the defenders were not ready to proceed. It would be wrong and unjust if the pursuer were not restored to the position he would have been in had the proof proceeded. There was nothing inequitable in the situation that, if the pursuer recovered expenses which included preparatory work and outlays and then failed at any proof which proceeded, the defenders would be unable to recover the expenses which they had paid. The question was one of whether the Auditor had exercised his discretion unreasonably. He had not. I was referred to Macphail; Sheriff Court Practice (3rd Edn) para 19.40.
[5] In response Miss Robertson submitted that the reason for the discharge of the proof was irrelevant.
[6] Generally the decision of the Auditor will not be interfered with by the court unless some question of principle is involved, he has misdirected himself as to the considerations which must have regulated the exercise of his discretion, he has no or no reasonably sufficient material before him, he has mistaken or misunderstood such material or he has reached a decision which is unreasonable (Macphail para 19.40). In the present case the Auditor has determined that preparation for the discharged proof properly forms part of the expenses relating to that proof. That seems obvious and correct and I detect no error in that decision. Nor is it an unreasonable exercise of his discretion. He has further decided that preparation properly commences when the diet of proof is allowed. Again that does not seem unreasonable. Indeed such early preparation is to be encouraged. The programme of the courts, and the hopes of litigants that their cases will be dealt with speedily, are constantly disrupted by the failure of parties and their advisers to be ready for proof diets and the need to discharge them; often at the last minute. A party should not be penalised simply because he prepares early.
[7] It was not, in general, suggested by the defenders that what the pursuers did to prepare for the proof was unnecessary or irregular. Their complaint is that, if the case eventually goes to proof, much of what was done in preparation for the discharged diet will not be lost, will be of use and will not require to be done again. That is no doubt correct; although circumstances, affecting either the pursuer (this is a case of personal injury) or perhaps those experts who were ready to give evidence at the discharged diet or the solicitors and counsel who were committed to conduct the proof, may change for a variety of reasons. It is at least possible that further or other work might be required which would render what was done previously of little or no use. The question of work not lost is something which should be in the minds of parties when agreeing where liability for the discharged diet should lie. It is also something of which the court should be mindful if, in the absence of agreement, it is asked to determine the extent of liability for the expense of a discharged diet of proof.
[8] In the present case what was agreed by the parties is recorded in the interlocutor of 22 October 2007 in the words "Finds the defenders liable in the expenses of today's discharged diet". That includes all the expenses reasonably incurred. Clearly these must include preparation for the proof as it must include attendance to conduct it. None of the preparation carried out is said to have been irregular. Leaving aside the issue of whether work done might be of use in the future, very little of it was said to be unnecessary. In these circumstances the decision of the Auditor to allow preparatory work performed after the fixing of the proof cannot be said to be unreasonable and I will not interfere with it on the basis that some of the work may relate to the cause in general or is not lost and may be capable of re-use. I am unclear about how, after allowance of proof, one would distinguish between work relating to the cause in general and preparation for the proof. It is difficult to imagine what work at that stage would be carried out which was not in preparation for the proof. If it were, and if it were unnecessary, the person in the best position to identify it would be the Auditor, applying his mind to what was necessary to prepare for the proof. I would be reluctant to interfere with the exercise of his discretion unless on very particular and specific grounds. That is sufficient to dispose of most of the points of objection founded on by the defenders.
[9] It was submitted by the defenders that such grounds might exist. Points 1 and 19 and 87 are examples of that. They related to what were described as unnecessary repeated phone calls to arrange a consultation with counsel or reminders to expert witnesses. The Auditor has allowed them. That is within his reasonable discretion.
[10] Point 29 relates to a letter about Reports, Productions, Witnesses and a Note on the Line of Evidence. It was said properly to be an agent and client expense. The same argument applied to items 56 (a consultation with counsel), 110 (a further consultation) and 80 (a letter in relation to adjustments and a Minute of Amendment). None appear unrelated to the action and the proof. I was told that the second consultation (110) took place at the request of the defenders and related to the possibility of settlement and the agreement of evidence. I cannot say that the Auditor exceeded his discretion in allowing that. The Auditor has seen the letter (80) and is best placed to assess its necessity in the preparation.
[11] Points 31, 32, 50, 73 and 75 related to the amendment of the Record and were said not to arise from the discharge. The Auditor has taken the view that they relate to preparation for the proof. It is difficult to see how consideration of a Minute of Amendment after the allowance of proof could not be relevant to preparation and there is no basis to interfere with the Auditor's decision.
[12] Points 51-53 and 58-64 related to the taking of precognitions with two entries for each witness. The entries were said to be duplicates, one relating to drawing the precognition and the other to attendance with the witness. I found this argument difficult to follow. Mrs Colledge told me that the account had been prepared under Chapter III of Schedule 1 of the 1993 Act of Sederunt. That allows a fee for drawing a precognition (para 3) and also for time occupied including attendances with the client and others (para 2). Part III of Chapter IV relates to defended personal injury claims raised after 10 June 2002 (of which this action appears to be one). It provides (para 6) a different basis of charging with a unit cost per sheet of precognition to include taking and drawing. So, if the account has been prepared in terms of Chapter III, the two entries would seem appropriate. In the absence of any further detailed challenge to the basis of charging I am not prepared to disturb the conclusion which the Auditor has reached.
[13] Points 128-144 relate to additional letters sent to witness on 19 October 2007 about their attendance at court. That was said to be unnecessary as the citations had later been cancelled. As this was a proof sitting communication with witnesses about exactly when they might require to attend seems reasonable. I cannot say that the Auditor has exercised his discretion wrongly.
[14] On the matter of Counsels' fees the same issues arose with the exception of the fees charged for attendance at the diet of proof (£5,833 for junior counsel and £8,750 for senior counsel). Abatement was sought to £5,000 for junior counsel and to £5,000 for senior counsel. The defenders' complaint about these fees was not clearly focussed by Miss Robertson in her submission. It was unclear whether it related to the time charged or the daily rate charged.
[15] As to time charged, Counsel had charged for 21/2 days despite the fact that the proof had been discharged and only one day had been occupied in that. I was told that the approach customarily taken where, as in the present case, a proof set down for 5 days is discharged, is that one half of the anticipated length of the proof is charged. It rests on the basis that counsel is unlikely to be engaged in other work during that time. But, in the course of the submission by Mrs Colledge, it was confirmed that on one of the days, 23 October, counsel had been occupied in work. That related to discussions about settlement of the present action. In fact, that was clear from the narrative of the account of expenses and the Auditor should have been aware of it. Nothing required to be done on 23 October in relation to the proof. Any work performed on 23 October related to settlement discussions and is not work performed in relation to the discharged diet of proof. It may have happened as a consequence of the discharge but it was not required because of it; nor was it occasioned by it. Properly it may relate to procedure after the discharged diet and might be recoverable in relation to that phase of the case; or it may properly be an agent and client expense which is not recoverable. It is unnecessary to decide whether it is either. What is clear to me is that it is not work which forms part of the expense of the discharge of the proof and is not recoverable from the defenders in terms of the interlocutor of 22 October. It was performed by counsel after the proof had been discharged. Certainly, they are entitled to be paid for it but not as a missed or lost day as part of the expenses of the discharged proof. The Auditor has either failed to take that into account or has misdirected himself on the issue in allowing that day as a proper charge. In taking that approach he has erred and exercised his discretion wrongly. For that reason I am entitled to look at the matter anew.
[16] The daily rate charged by junior counsel was £2,333; and by senior counsel £3,500. I was told that the Auditor had indicated that he really had no information or material before him on which to assess counsel's fees. None seems to have been presented to him. None was presented to me in the argument which I heard. So it seems that the Auditor has simply accepted the figures in the account as reasonable without further inquiry. He appears to have had no material before him to allow him to assess whether the fees are reasonable or otherwise. He does not appear to have had regard to such publicly available material as might have assisted him in exercising his discretion. That does not seem to me to be a reasonable exercise of discretion. Indeed it is difficult to detect, in what the Auditor did in relation to this, any exercise of discretion at all. To fail to exercise discretion must be unreasonable and so, again, I am entitled to look at the matter anew.
[17] The first question is whether what was or was not done by counsel during the 21/2 days for which the fees are claimed related to the discharged proof (as distinct from what may have been done after the proof was discharged). 22 October is clear enough. Both counsel were present in Dumfries and prepared and ready to conduct the proof. That is a reasonable expense of the discharged diet. For the reasons which I have already examined the same cannot be said about 23 October when other work, not relating to the discharged diet of proof, was carried out. That is not recoverable in terms of the interlocutor of 22 October. The customary rule which I have mentioned applies to the additional 1/2 day claimed. So it seems to me that, in the circumstances of this case, and against the background of what appears to be the customary approach to counsels' fees when a proof goes off, only 11/2 days of work is properly chargeable.
[18] The second question is what daily rate might be appropriate. Here little more information was supplied to me than was supplied to the Auditor. The fees claimed do seem high. They are in addition to separately charged case preparation time (£3,000 for junior and £4,500 for senior - 3 days in each case). There is no table of fees for counsel in actions in the Sheriff Court. Is there any other publicly available material which might act as a guide? Perhaps a useful starting point is the table of fees which is prescribed for solicitors (the 1993 Act of Sederunt). In Chapter III, regulation 1 prescribes fees for time occupied in court - an hourly rate of £140.60; and regulation 2 prescribes fees for time occupied in other work - an hourly rate of £128. (The latter is the rate charged by the solicitors for the pursuer in the taxed account.) The account of expenses contains no details of the actual time spent by counsel on 22 October. What, in hourly terms, would be a reasonable time for counsel to have spent on the day's proceedings? The court day is generally 5 hours. Consultation before and after the court day might, in the absence of contrary information, reasonably be assessed at 1 hour - 1/2 an hour before and 1/2 an hour after. The case was in Dumfries. Any travel time from Edinburgh is apparent from the taxed account of expenses where 4 hours is shown for the solicitors attending consultations in Edinburgh. The appropriate mileage element for travel is shown as £60. Applying the Chapter III rates to all that brings out a figure of £1,403. That is what a solicitor would be paid. Is that unreasonable for junior counsel? I do not think so. It is widely known that overhead rates for counsel are likely to be less than for solicitors who have office overheads not required by the nature of practice at the bar. On the other hand it is probably not unreasonable to recognise the specialism as pleaders which counsel may bring to a case; although that is probably an argument which has less relevance today, where specialism is so much more a feature of the practice of solicitors than in the past. Based on that publicly available material, which seems to be directly relevant, a rounded up daily rate for junior counsel of £1,500 seems reasonable and appropriate. It is well known, and is established practice, that the rate for junior counsel is 2/3rds of that of senior. So the corresponding reasonable and appropriate rate for senior would be £2,250.
[19] I appreciate that such calculations involve an element of inference but, in the absence of other information or material, I have only drawn on publicly available and directly relevant information and material.
[20] It has to be assumed that for the additional 1/2 day claimed no other work was undertaken; and that counsel were at leisure during that time. I can see that it is reasonable to compensate for time when it was reasonably anticipated that work would be undertaken and paid for. What I find difficult to understand is that if the time is not occupied by the onerous and responsible business of conducting a proof, but rather in leisure, the same rate of payment is appropriate. That would be to ignore that no work was being carried out; and that leisure was being enjoyed. I am aware that, certainly in the past, part time judges or sheriffs were entitled to one half of their daily fee in such circumstances. That does not seem to be an unreasonable or inappropriate yardstick to apply.
[21] Taking all that into account, and the 40% increase allowed in recognition of the complexity etc of the case in the interlocutor of 17 January 2008, I have concluded that, in the circumstances of the present case, a reasonable daily rate for junior counsel would be £2,100 and for senior counsel £3,150. I will apply that rate to their attendance on 22 October and one half of that rate to the "lost" half day. I will abate the proof attendance fee of junior counsel from £5,833 to £3,150 and that of senior counsel from £8,750 to £4,725.
[22] The defenders' argument also applied to the case preparation time. Again there was a confusion between the appropriateness of the rate charged (£1,000 per day for junior and £1,500 per day for senior) and the submission that at least part of such preparation time would not be lost if the proof were to proceed at a later date. What I have already decided on the question of the correct exercise of the Auditors discretion about the inclusion of preparation, and the possibility of such preparation not being lost, applies. There is the additional consideration that there is no guarantee that the same counsel will be available at any subsequent proof. So it cannot be said with certainty that preparation time will not be lost. As to the rate charged, this appears to be in line with the assumptions which I have made in assessing the daily rate for the discharged diet. The taxed account states "approximately 3 full days". I have no specific information about what constitutes a "full" day in the working life of counsel but if one assumes the 7 or 8 hours which is customary for most of the working population and applies the hourly rate in Chapter III (£128) a figure of between £896 and £1024 is reached. It is in line with the £1,000 claimed by junior counsel. It does not seem unreasonable and I will not interfere with the Auditor's approval of it; nor his approval of the corresponding rate charged by senior. The fact that junior counsel has actually charged such a rate rather tends to confirm the calculations which I have made to assess what is a reasonable rate for attendance at court.
[23] In my opinion there are two general lessons to be drawn from the circumstances of this case. Firstly, parties should exercise great care in relation to the terms of any agreement about liability for expenses when a proof is discharged. It is clearly inequitable that one party should, on the basis of the discharge of a diet of proof, be able to recover expenses which, if the proof were to proceed at a later diet and that party were to fail at that diet, would not otherwise be recoverable. That applies particularly to any re-useable outlays for specialist reports (in the present case the substantial sum of approximately £6,000); or preparation time by the same counsel And the same applies to the position of the court if, failing agreement, it requires to decide where the liability for the expense of any discharged proof should lie. The better course may be to find the party responsible for the discharge liable for any expense occasioned by attendance at the discharged diet (to include the expense of counsel, solicitors and witnesses, attending or cancelled) and to reserve any question of the expense of preparation for the proof. That would allow a better future assessment of what additional preparation was properly allowable for any subsequent proof diet; or if there were no such diet what preparation for the discharged diet should appropriately be allowed.
[24] Secondly, it seems incredible that there is no publicly available table for the fees of counsel in the Sheriff Court. Such has existed for solicitors for very many years. Of course, cases will vary in their difficulty and complexity but that could easily be dealt with by the court in terms of general regulation 5 of Schedule 1 to the 1993 Act of Sederunt, where the court has allowed a percentage increase to the fees of the solicitor conducting the case, and applied as appropriate to the fees charged by counsel. In my opinion it is not in the public interest that litigants should be left completely in the dark as to the level of a significant element of the expense they are likely to bear if they are unsuccessful in any action which they pursue.
[25] As to the expenses of the hearing, both parties sought these if my decision were in their favour. I have sustained the defenders' objections to the Auditor's report but only in part; although to a not insubstantial extent. In these circumstances I will find no expenses due to or by either party.