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	Scottish Court of Session Decisions
You are here: BAILII >> Databases >> Scottish Court of Session Decisions >> McDonald v Salmond & Ors [1999] ScotCS 37 (29 January 1999) URL: http://www.bailii.org/scot/cases/ScotCS/1999/37.html Cite as: [1999] ScotCS 37, 1999 SLT 1238, 1999 SC 396

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In this case the pursuer has lodged a Note of Objections to the report of the Auditor of Court on the account of expenses submitted on his behalf following on an award made by an interlocutor dated 24 February 1998. In that interlocutor the Lord Ordinary interponed authority to a joint minute settling the pursuer's action against the defenders, assoilzied the defenders from the conclusions of the summons, and found the defenders liable to the pursuer in the expenses of the cause.

The action was an action for damages for personal injuries sustained by the pursuer in a road traffic accident on 8 April 1994. The summons was signetted on 15 February 1996. At the time of the signetting of the summons an offer of £5,500 was made by the defenders, and the action was sisted to enable negotiations to take place. There then followed a period of negotiations in which the offer was increased,

to £10,000 in October 1996, and to £15,000 in December 1996. In January 1997, the sist was recalled and the defenders admitted liability. On 20 February 1997 a tender was lodged for £15,000. The pursuer then consulted with senior counsel. On his advice the tender was not accepted, but a motion for interim damages was intimated. A sum of £5,000 in respect of interim damages was then agreed and paid. Subsequently, on 4 December 1997, a second tender was lodged, this time for £25,000. That tender was also rejected by the pursuer after a consultation with senior counsel. A diet of proof was fixed for 8 January 1998, but on 7 January 1998 the action was settled at a figure of £33,000 with expenses as taxed.

The pursuer's agents subsequently lodged an account of expenses with the Auditor. The account included the fees of senior and junior counsel for the two consultations already referred to, and also for a pre-proof consultation in November 1997. In relation to the diet of proof, the account of expenses included only junior counsel's fee, as senior counsel was not instructed.

After a diet of taxation at which the agent for the defenders objected to the employment of senior counsel, the Auditor abated senior counsel's fees. His reasons, which were set out in his Minute in answer to the Note of Objections on behalf of the pursuer, were as follows:

On behalf of the pursuer, Mr Bell informed me that in relation to quantum of damages, there was a dispute between the two consultant psychiatrists as to the effect of the accident on the pursuer's future employability. It was common ground that he suffered from post-traumatic stress disorder, but the consultant psychiatrist instructed by the defenders took the view that this condition did not affect his future employability. In the event, the settlement figure did include an element attributable to future wage loss.

Mr Bell submitted that the Auditor did not have a right to disallow senior counsel's fees as he had done. The position of the Auditor was regulated by section 5(g) and (h) of the Court of Session Act 1988 and by Rule of Court 42(2). There was no specific provision in either the Act or the Rules of Court which enabled the Auditor to determine whether senior counsel should be instructed in any particular case. His duty was to apply Rule of Court 42.10(1), which provided "Only such expenses as are reasonable for conducting the case in a proper manner shall be allowed". It was a matter for the instructing solicitor to decide whether senior counsel should be instructed or not. Only the court had power, in determining a motion for expenses, to exclude the fees of senior counsel. Reference was made to McLaren on Expenses at p.451 for the proposition that agents are entitled to exercise a certain discretion as to the fees which are paid to counsel, and it was only when that discretion was abused that the Auditor could interfere. The general principle was that it was for the agent to decide what representation there should be.

The real test was whether the norm had been so far departed from by the instructing agent that it could be said that the fees incurred were unreasonable, Caledonian Railway Company v Glasgow and South Western Railway Company 1922 S.C. 299. Although that case dealt with the level of fees, it enunciated principles equally applicable to the question as to whether senior counsel should be instructed.

It was commonplace for senior and junior counsel to be instructed in cases of this magnitude. It was a matter for the court, by Act of Sederunt, or for Parliament, by Statute, to alter the approach to the audit of counsels' fees. Agents should be able to instruct senior counsel with confidence in the knowledge that they would be able to recover his or her fees in the event of success. In the present case agents had not departed from the normal or proper course in instructing senior counsel to advise on the tenders and on the preparation for the proof.

In relation to the reasons given by the Auditor, Mr Bell submitted that the question as to whether this was a suitable case for Optional Procedure was not one which the Auditor ought to have taken into account. Senior counsel were frequently instructed in Optional Procedure cases. In any event, had liability not been admitted, this would have been a suitable case for jury trial. The fact that senior counsel had not been instructed for the proof, was also a matter which the Auditor should not have taken into account. In these circumstances the Auditor had misdirected himself and the Note of Objections should be sustained.

On behalf of the defenders, Mr McCreadie submitted that the starting point was the fundamental authority of the Auditor in relation to expenses. In terms of Rule of Court 3.7 the Auditor was responsible for the taxation of accounts. The jurisdiction of the court was of a supervisory nature only. The Auditor's power therefore involved a wide ranging discretion. The decision of Lord Cullen in Signet Group plc v C & J Clark Retail Properties Ltd 23 June 1995 unreported, made it clear that the Auditor was entitled to disallow the fees of senior counsel, and thus overrule the view as to the employment of counsel taken by the instructing agents. The Auditor had indicated the material upon which he had proceeded in his Minute and it could not be said that his decision was unreasonable. The Caledonian Railway Company case was decided at a time when the Rules of Court governing the responsibilities of the Auditor were different, and the approach to feeing was different. Moreover, the authorities cited by Mr Bell all related to questions of the level of fees as opposed to the question of the instruction of senior counsel.

The Auditor was perfectly entitled to take the view that optional procedure would have been appropriate. See Giles v Fleming Brothers 1987 S.L.T. 114. He was right to conclude that the medical issues were not complex. The Auditor was also entitled to have regard to the fact that only junior counsel had been instructed for the proof. This was analogous to the situation in Signet Group plc.

I did not understand it to be disputed that a Lord Ordinary is not at liberty to overturn a decision of the Auditor simply on the ground that he would have reached a different conclusion. He must be satisfied that the Auditor misdirected himself as to the considerations which regulated the exercise of his discretion. In Wood v Miller 1960 S.C. 86 Lord Justice Clerk Thomson said at p.98,

I must therefore consider the submissions of counsel for the pursuers as to the way in which the Auditor is said to have misdirected himself. The first and, as I understood it, the main argument advanced by Mr Bell, was that the Auditor was not entitled to interfere with the discretion of the agent to instruct senior counsel. In support of this argument he cited certain authorities which related to the function of the Auditor as regards the determination of the appropriate level of fees. The authorities cited were McLaren on Expenses pp.426 and 451, Caledonian Railway Company v Greenock Corporation 1922 S.C. 299 and MacNaughton v MacNaughton 1949 S.C. 42.

In my view, these authorities have no application to the question raised by the pursuer in the present case, namely, whether the Auditor has power to disallow the fees of senior counsel. At the time of publication of McLaren on Expenses and of the decision in the Caledonian Railway case, the provisions relating to the taxation of accounts were different from those which now apply. The relevant provisions were contained in the General Regulations as to the Preparation and Taxation of Accounts for Judicial Proceedings of 1876. Regulation 4 was in the following terms:

It is clear from that provision that unless the Auditor was entitled to disallow the fees of senior counsel he could not fulfil the duties incumbent on him. In my view, the same conclusion requires to be drawn from the provisions of the present Rule of Court. The Auditor is charged to determine what expenses are reasonable, and in order to enable him to do that, he must be able to disallow the fees of senior counsel in the appropriate case.

Further, in Caledonian Railway Company v Greenock Corporation Lord President Clyde said at p.311, in relation to the determination of the level of fees by the Auditor, that the "normal" or "proper" fee of counsel was ascertainable from the general practice of agents in instructing counsel. In other words, those fees were "just such fees as a practising law agent finds sufficient in order to command the services of competent counsel in cases of a similar character." The Auditor accordingly had to be guided by the market rate. That definition or test is clearly inapplicable to the question as to whether it is reasonable to instruct senior counsel in any given case, and for that reason also I gain no assistance from the authorities cited. In Signet Group plc v C & J Clark Retail Properties Limited Outer House 23 June 1995 unreported, it appears that the argument to the effect that the Auditor was not entitled to interfere with the discretion of agents in the instruction of counsel was not advanced, and Lord Cullen expressed no reservation about the Auditor's right to do so.

In my view the pursuer's first argument is ill-founded. If it were correct, it would interfere with the Auditor's ability to fulfil his duty to allow only such expenses as are reasonable for conducting the cause in a proper manner. As Lord President Cooper said in MacNaughton v MacNaughton 1949 S.C. 42, at p.46,

These words, in my view, apply equally to the Auditor in the present context.

In the course of his first argument Mr Bell submitted that it was commonplace for senior counsel to be instructed in cases of this magnitude. I understood him to make this submission in the context of his reliance upon the authorities relating to the determination of the level of fees by the Auditor. It is relevant in that context for the Auditor to compare the fees paid with the "normal" or "proper" fee in any given situation in order to determine whether they are excessive. I did not understand Mr Bell to make the point as a separate and independent basis of misdirection. Accordingly I need not deal with it as such.

The second argument advanced on behalf of the pursuer was that the question as to whether this was a suitable case for Optional Procedure was not one which the Auditor ought to have taken into account, since senior counsel were frequently instructed in Optional Procedure cases, and had liability not been admitted, this would have been a suitable case for jury trial. The Auditor's reference to Optional Procedure was in the context of a submission made to him on behalf of the pursuer to the effect that because this case proceeded as an ordinary action, the employment of senior counsel was reasonable. In that context, the Auditor was, in my view, entitled to test the submission by considering whether it was indeed appropriate that the case should have proceeded by ordinary action, and to form a view on that point. He cannot be said to have misdirected himself in doing so. I therefore reject the pursuer's second argument.

Lastly, Mr Bell argued that the fact that senior counsel had not been instructed for the proof was a matter which the Auditor should not have taken into account. That argument is in my view also ill-founded. In determining whether the fees of senior counsel should be allowed for consultations, it seems to me to be relevant to consider whether the case was thought to justify the employment of senior counsel for the conduct of the proof. In these circumstances I cannot see how the Auditor can be said to have misdirected himself in this regard.

On the basis of the submissions made on behalf of the pursuer, I am unable to conclude that the Auditor has misdirected himself and I therefore repel the Note of Objections.