There is a general rule in Scotland that a party's legal expenses will follow success. The expenses awarded generally comprise a proportion of the legal fees and other outlays incurred, so long as they are recoverable in terms of the Rules of the Court of Session 1994 and the Act of Sederunt (Taxation of Judicial Expenses Rules) 2019. Where expenses cannot be agreed between the parties, the Auditor of the Court of Session will determine the expenses payable at a process known as a Diet of Taxation.
Kirkwood v Thelem Assurances [2023] CSIH 30 considered the Auditor's discretion to disallow English solicitors' fee on the basis that it was not reasonable for conducting the cause in proper manner to instruct foreign, and in this case English solicitors.
The Pursuer whom was a Scottish resident was involved in an accident in France in 2015, causing her significant injuries. The Pursuer therefore instructed English Solicitors to progress the matter which was a litigation conducted in the Court of Session in Scotland. The English solicitors instructed a Scottish local agent to assist them in the litigation and to attend to matters of procedure. The action settled with the Pursuer being successful and the Defenders were found liable for the Pursuer's expenses.
The local agents lodged an account of expenses of approximately £260,000, their own fee being only £8,671.57 plus VAT and outlays of approximately £250,000 of which mosly related to the English solicitors' fees. The Auditor disallowed the majority of the English solicitors' fees on the basis that it was not reasonable for conducting the cause in a reasonable manner for the pursuer to have instructed English solicitors. In addition, the instruction of English solicitors invariably resulted in the party, who was found liable, requiring to pay expenses at a higher rate than they would have had the matter been dealt with by Scottish agents.
The Pursuer sought to challenge the Auditor's decision. The Inner House of the Court of Session in considering the matter, stated that:
"It is important that litigation in Scotland is: (a) conducted by those whom the court had authorised to do so; and (b) subject to the expenses regime which the court has devised."
The rules relate to the conduct for those who are authorised to do so, i.e. a Scottish agent.
The Court noted that on the basis that the English solicitors were not authorised by the Court, the Auditor would have been bound to disallow their fees so far as they related to the general conduct of the litigation.
It was also emphasised that part of the Court's role in ensuring access to justice is the maintenance of a detailed expenses regime which is designed to keep the costs of litigation at what the court considers to be a reasonable level.
The judgment however does make clear that this does not mean that the fees of English or other foreign solicitors are not recoverable for particular pieces of work. In those instances, the Auditor would have to decide whether these items of work carried out by foreign solicitors, "were reasonably instructed by Scottish agents for conducting a case in a proper manner" and whether the fee for the outlay charged was reasonable in the circumstances.
Comment
This case highlights the risk to clients of non-recoverability of fees in respect of "foreign" solicitor fees in Scottish proceedings. The judgment also draws an important point that Counsel (Advocates) cannot accept instructions in proceedings before the Scottish Courts from anyone other than a Scottish solicitor or other person authorised to conduct litigation in Scotland.
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