Civil practice: Laying down the law on expenses

In May 2023, the Scottish Civil Justice Council celebrated its 10th anniversary. I suggest that its most notable achievements so far have been the creation and revision of entirely new rules for the Sheriff Appeal Court and for simple procedure cases. Both procedures seem to have bedded in well. While we are now close to having new procedure rules for family actions, it is disappointing that work on the new Civil Procedure Rules seems to be progressing slowly, with a first report being published in 2017 and a second report in July 2022, but still no sign of any consultation paper on the draft proposals.

The opportunity (as some saw it) presented by Covid to make remote hearings a norm was comprehensively rejected after consultation, and the new rules about attendance at hearings reflect the flexibility and adaptability that plainly made more sense to practitioners. They can be found in the Act of Sederunt (Rules of the Court of Session 1994 and Ordinary Cause Rules 1993 Amendment) (Attendance at Hearings) 2023 – who comes up with these snappy titles? – which came into force on 3 July 2023 and provide that substantive business is likely to be heard in person, with most procedural business attended virtually or by hybrid hearing. Users can apply by motion if they wish to change the mode of attendance for their hearing at any time.

Costs and expenses

Meantime, at the coalface, the costs of litigating and liability for expenses are often more significant factors than the merits of the dispute. England has a rigorous costs regime, and their judges are often involved in conducting forensic investigations into what particular costs are reasonable. Generally speaking, our judges tend not to be drawn into such sordid matters and are not at all enthusiastic about entering this particular fray.

In Mather v EasyJet Airline Co [2023] CSIH 20, the Inner House was asked to determine the incidence of expenses arising from this personal injury case, which included disputes about several matters including liability, contribution, apportionment, the appropriate national law that applied, and time bar. After the decision at first instance, there was an appeal and a cross appeal with divided success. The opinion of the court refers to a number of authorities on various aspects of expenses and, in relation to the expenses of the appeal procedure, the court applied the “customary broad axe with the blunt edge”. This can perhaps be contrasted with, let us say, the “keenly sharpened scalpel” applied to the merits of that complex and difficult case.

In Nimmo, Petitioner [2023] CSOH 27, on the fixing of remuneration and outlays of joint administrators, Lord Braid raised a “quizzical eyebrow” at some of the costs involved. The petitioners had been appointed by the company’s directors on 14 September 2021 but replaced by administrators appointed by the creditors on 25 November. The total remuneration claimed was just over £300,000, of which about a quarter related to the period after their replacement. Outlays claimed included legal fees of just over £70,000. The practice for determining the appropriate figures, if in dispute, was to remit to a reporter (an insolvency practitioner) and to the Auditor of the Court of Session. The reports were challenged on various grounds, the intricate details of which are laid out in the judgment, and Lord Braid remitted the matter back to the auditor and to the reporter to give further consideration to the criticism and comments presented. No “broad axes” deployed here! 

In School and Nursery Milk Alliance, Petitioners [2023] CSOH 32 the disposition of Lord Braid’s eyebrows is not recorded, but he had to consider a note of objection to the auditor’s decision on the level of fees charged by English solicitors in a judicial review. The petitioners had instructed English solicitors and counsel to undertake considerable work in relation to the petition. On taxation, the auditor refused to allow the recovery of any fees for that work. The issue was whether he had erred in so doing.

The test is a broad one (a bit like one of the “axes” referred to above?): rule 2.2(1) of the Act of Sederunt (Taxation of Judicial Expenses Rules) 2019 provides that the auditor is to allow only such expenses as are reasonable for conducting the proceedings in a proper manner. The application of these rules in any case is a matter for the auditor’s discretion. The only criticism of the auditor’s approach that was upheld by Lord Braid was that, although the auditor had said that in his experience the expense arising from the instruction of foreign agents was usually greater than if Scottish agents were instructed, there was no information before him to demonstrate whether that was so in this particular case. He remitted the matter back to the auditor to reconsider in light of his comments. One interesting point made was that if an auditor makes the fundamental decision that it was not reasonable to instruct English agents, no charges for any of their work can be allowed, even at Scottish rates.

Finally, in Young v Aviva and Axa [2022] SAC (Civ) 32 the Sheriff Appeal Court had to adjudicate on a question of expenses that often arises in personal injury cases but may not be fully appreciated by practitioners. The pursuer was a passenger in a parked car. The driver opened the door, and a passing van struck it. The van driver (per his insurers) “did not engage with” the pre-action PI protocol, as the court put it, and the pursuer sued the van driver for damages. Eventually, the van driver blamed the other driver in his pleadings, and the pursuer amended her claim to convene the car driver as jointly and severally liable. Both parties were sued in the name of their insurers. After the pre-trial meeting, the car driver settled the case and a joint minute was lodged, which, among other things, found her liable for the pursuer’s expenses, and reserved the question of the van driver’s expenses. The question at issue was “Who pays the van driver’s expenses?” The sheriff found the pursuer fully liable for all of them. The pursuer appealed.

The appeal was heard by Sheriff Principal Ross. He reiterated the general principles surrounding awards of expenses and went on to consider the terms of OCR, chapter 3A concerning the pre-action protocol. He said it was unsatisfactory that the aims of the protocol had been defeated by the van driver and that all of the procedure up to the convening of the car driver had been “wasted”. He modified the award by refusing the van driver’s expenses up to that point. The pursuer argued on appeal that she should have a right of relief against the other defender for the remaining expenses but, since this had not been raised at first instance, the sheriff principal said that, as a matter of principle, it was not open to her to raise the point on appeal.

It is arguable that, if the protocol is important in regulating the conduct of parties in PI cases pre-litigation, as it surely must be, then a stronger message could have been sent out to defaulters. Proper compliance with the protocol might well have obviated the need for any litigation whatsoever in this case.

Protective expenses orders

Halley v Scottish Ministers [2023] CSIH 9 was an appeal by the petitioner in an application for a protective expenses order in respect of proceedings to which I have referred in previous briefings. The court rejected the application and referred to the “Corner House principles”, derived from R (Corner House Research) v Secretary of State for Trade and Industry [2005] 1 WLR 2600, which are worth repeating here: “If a case has a real prospect of success a PEO may be made on such conditions as thought fit if (i) issues of general public importance require to be resolved; (ii) the applicant has no private interest in the outcome; (iii) having regard to the likely costs and the financial resources of the parties it is fair and just that a PEO be made; and (iv) absent a PEO the applicant will probably discontinue the proceedings and will be acting reasonably in so doing… It is for the court, in its discretion, to decide whether it is fair and just to make a PEO, and if so, the terms of the order will depend on what is appropriate and fair.” The court refused to grant the order.

Data protection in litigation

Riley v Student Housing Company [2023] SC DNF 8 was a claim for damages by an individual who alleged that the defenders (his employers) had breached his rights by using personal information about him in tribunal proceedings in which he had been a witness. The defence was that any disclosures of the pursuer’s personal data were made in connection with legal proceedings and for the purposes of defending legal rights. After a debate the sheriff dismissed the action.

The legislation is too complex to detail here, as are the arguments, but the court held that the defender was exempted from compliance with the provisions of the Data Protection Act 2018. For good measure, the action also failed because the pursuer’s averments regarding the data involved were so lacking in specification as to be irrelevant, and were insufficient to enable him to prove that any damage that he might have suffered was caused by the defender’s alleged infringement.

Time bar again

If anyone thought that arguments about prescription of claims for damages had been fully exhausted and that all possible combinations of factual circumstances had been explored, Highlands & Islands Enterprise v Galliford Try Infrastructure [2023] CSOH 21 will have come as a surprise, not to say a severe disappointment. The pursuers claimed damages of £11.5 million for defects in the Cairngorm Mountain Railway, whose construction had been completed in 2001 and whose operations had been suspended in 2018. Between these 17 years, various structural issues and alleged defects of major or minor significance had presented themselves and were set out in the pleadings.

The pursuer founded on the Prescription and Limitation Act 1973, s 6(4) (any period during which the claimant was induced to refrain from claiming as a result of error induced by the wrongdoer would not count) and s 11 (any period during which the claimant was unaware or could not with reasonable diligence have become aware of loss would not count). Lord Sandison inspected the pleadings and discussed them in some detail in his judgment, but took the view that proof before answer to hear evidence bearing on both arguments was appropriate. “The pursuer’s averments are sufficient – in some respects, barely so – to entitle it to proceed to a proof before answer with the first defender’s prescription plea standing.”

I would not be surprised if an appeal follows, given the value of the claim and the complexity of the legal principles surrounding this notoriously difficult area of law, but, on the other hand, I doubt if the Inner House would be inclined to carry out a microscopic examination of the pursuer’s pleadings at this stage.

Pleading fraud

In Leander CB Consultants v Bogside Investments [2023] CSOH 26 the facts are exotic enough to bear repeating. The alleged fraud surrounded the formation of a company which was supposedly to receive the sum of $2.4 billion held by a New York law firm, and to which the defenders were prevailed upon to lend the sum of $7.5 million, which (it was said) was required to secure the release of the $2.4 billion which had been earned from the supply of personal protective equipment. The loan was advanced in January and February 2021. In May 2021, it was discovered that the New York firm knew nothing of the transaction and did not hold, and had never held, the $2.4 billion in question.

The issue for decision by Lord Braid was whether the pursuers’ pleadings were sufficient to allow a proof. He reviewed the authorities on the requirements for pleading fraud, which can be summarised as follows: “the party making the case… must aver: that the alleged false statement was relied on in entering the transaction in question…; and that the representation was made knowing that it was false... As regards specification, the defenders must make specific averments setting out the acts or representations complained of, the occasions on which such acts or representations were made, and how they caused the defenders to enter into the transaction”. With no great difficulty, he considered that the pleadings in this case were sufficient.

Vexatious litigant

Lord Advocate v Sime [2023] CSIH 23 was an application under ss 100 and 101 of the Courts Reform (Scotland) Act 2014 for a vexatious litigant order. Reference was made to five prior actions raised by the party concerned and to outstanding awards of expenses against him. The order was granted, the court pointing out that that did not prevent the respondent from raising new proceedings or engaging with existing litigations. Instead, it represents a safeguard whereby the respondent will be able to do so only if he satisfies the court that there is a reasonable ground for taking such a step, in terms of s 101(4).

Contempt in civil proceedings

In UH v ST [2023] SAC (Civ) 16, a family case, the sheriff made certain orders regarding contact, the details of which can be found in the judgment. The sheriff decided inter alia that the appellant had been in breach of some of the orders and found her to be in contempt of court. The Sheriff Appeal Court allowed the appeal.

The SAC referred to Robertson and Gough v HM Advocate 2008 JC 146 at para 29: “Contempt of court is constituted by conduct that denotes wilful defiance of, or disrespect towards, the court or that wilfully challenges or affronts the authority of the court”.

The sheriff had made a number of findings of contempt in respect of the interlocutors but, in order to determine whether or not a party has complied with an order, one must first determine what was required of them: Sapphire 16 SARL v Marks & Spencer plc [2021] CSOH 103 at para 39. In essence, the terms of the interlocutors had not imposed any specific obligations on the appellant, so there was no contempt.

Default: party litigant

In RBS v Aslam [2023] SAC (Civ) 20 the defender was a party litigant who appealed to the SAC against the granting of a decree by default in relation to a summary application by the bank for recovery of possession of heritable property. A debate had taken place in which he behaved in a way described by the sheriff as “inappropriate” and “hysterical”; he began to shout and swear; he made accusations of corruption and racism; he threatened to “torch” the security subjects; he demanded that the police be called. He left the courtroom before the debate had concluded. Thereafter the sheriff found him in default and granted decree by default, with immediate extract.

The appeal sheriff, Sheriff Cubie, considered in some detail, and with reference to various authorities, the following issues:

• Was it open to the sheriff to grant decree by default at the hearing?
• If so, was there a default?
• If so, did the sheriff err in granting decree as a result of any such default?
• If not, was the sheriff correct to grant immediate extract?

He decided that there was a default “arising from actions which might on one view constitute contempt of court”, and the sheriff had not erred in granting decree, although the bank conceded that the sheriff had erred in granting immediate extract. I recommend reading his opinion in full.