Lands Tribunal for Scotland

OPINION

MRS Hamilton
v
The Keeper of the Registers of Scotland

This matter arises out of the inability of the parties to agree the amount of the appellants' entitlement to reimbursement of expenditure under the provisions of section 13 of the Land Registration (Scotland) Act 1979. We heard debate on 23rd and 24th July 2001. Sir Crispin Agnew, QC, appeared on behalf of the appellants and Miss Ruth Crawford, Advocate, on behalf of the Keeper.

The expenditure in dispute was in respect of a claim to indemnity under section 12 of the Act. In 1994 the appellants became heritable proprietors of certain subjects in Kirkmuirhill. The subjects are held by tenants under a 999 year lease registered in the Land Register. The lease, as registered, wrongly included a portion of the appellants' land. In the particular circumstances, the Register could not be rectified. The value of that portion of land to the appellants was effectively lost. They instructed solicitors to act on their behalf in pursuing a claim for indemnity. On 28th September 1994 these solicitors intimated a claim under the provisions of section 12. The Keeper resisted the claim. The appellants ultimately raised a Commercial Cause in the Court of Session. After Procedure Roll debate which resolved certain matters in favour of the appellants, a proof was fixed. The action was settled prior to proof by acceptance of a tender in the sum of £37,500. The appellants were found entitled to expenses. On 18th February 1999 decree was granted in favour of the taxed amount of expenses. Relations between the parties were apparently somewhat strained and eventually the appellants instructed Messengers at Arms to serve a charge for payment on the decree for expenses. The Keeper then paid the judicial expenses, as taxed, in the sum of £36,144.86.

It is not disputed that the appellants incurred further expenditure in pursuing and obtaining settlement of their claim. They sought reimbursement under the provisions of section 13 (1). This is in the following terms:

"(1) Subject to any order by the Lands Tribunal for Scotland or the court for the payment of expenses in connection with any claim disposed of by the Lands Tribunal under section 25 of this Act or the court, the Keeper shall reimburse any expenditure reasonably and properly incurred by a person in pursuing a prima facie well-founded claim under section 12 of this Act, whether successful or not."

The main heads of claim related to three sets of detailed solicitors' accounts. These accounts had been framed as a claim against the appellants, as clients. The total of the accounts as originally presented to the Keeper was in excess of £83,000. The appellants sought payment of the account in full after allowing credit for the said sum of £36,144.86 paid in name of judicial expenses.

The Keeper did not accept the claim in full. There was an exchange of correspondence between parties. The Keeper took the advice of law accountants and proposed detailed abatements to the accounts. Reasons for abatements were given. After further representation on behalf of the appellants, the Keeper instructed an experienced accountant who had had no previous involvement in the case, to carry out a notional taxation of each of the solicitors' accounts on an agent and client, third party paying, basis as if he were an Auditor of Court.

The correspondence revealed detail of figures proposed on both sides and of various points of principle which appeared to be in dispute. In broad terms it may be said that one important area of dispute related to the issue of taxation on an agent and client, third party paying basis as opposed to an agent and client, client paying basis. At the hearing before us, however, parties were clear in their submission that the proper approach to section 13 did not require a formal taxation on either of these bases.

In any event, it was clear that by October 2000 the parties were far apart on their figures. By letter of 24th October 2000, the appellants re-stated their position on various points and asked certain specific questions of the Keeper in relation to what he would regard as an appropriate rate of charge and how he would deal with payment for time spent by a director of the appellants. The letter concluded: "We call on the Keeper to accept liability for our clients' expenditure, all as intimated by their letter of 30 May, and after making allowance for Judicial Expenses received by our clients to pay to our clients the sum of £46,975.89. In the event that acceptance of said liability is not received within seven days of the date hereof our clients give notice of their intention to appeal to the Lands Tribunal the Keeper's failure to comply with Section 13 (1) of the 1979 Act".

As will be seen, parties were in dispute as to the competency of the application. It was presented as an appeal under section 25 of the Act which provides: "(1) … an appeal shall lie, on any question of fact or law arising from anything done or omitted to be done by the Keeper under this Act, to the Lands Tribunal for Scotland". No plea to competency had been taken in the initial Answers but a plea was added by way of answer to the appellants' amendment in April 2001. The challenge related to the terms of the crave and to the purported justification for the appeal.

In the initial Statement of Appeal the appellants craved the Tribunal to: "Pronounce an Order finding that the Respondents are liable to make payment to the Appellants of the sum of FORTY SIX THOUSAND NINE AND SEVENTY FIVE POUNDS AND EIGHTY NINE PENCE (£46,975.89) STERLING or such other sum as is found to be due consequent upon incidental procedure to follow hereon in reimbursement of the Appellant's expenditure reasonably and properly incurred by them in pursuing their claim against the Respondent for indemnity … under and in virtue of [said Section 13] with interest thereon at the rate of 8 per centum per annum from 4th November 1999 or such other date as to the Tribunal seems proper."

By amendment received by the Tribunal on 5th April 2001 the sum was amended by reducing it to £37,365.74. We were told that this followed the redrawing of certain solicitors' accounts to reduce or remove the percentage uplift.

In course of the debate, Sir Crispin tendered a further Minute of Amendment seeking, he said, to clarify the matter by substituting the following crave: "To pronounce an order finding that the sum of [£37,365.74] or such other sum as is determined consequent upon incidental procedure to follow here on was expenditure reasonably and properly incurred by the appellant in terms of [Section 13] in pursuing their claim for indemnity against the respondent under Section 12 (1) … and that the appellant is entitled to interest on that sum at the rate of Eight per cent a year from 4th November 1999 or from such other date or dates and at such other rate or rates, as the Tribunal may determine". The amendment was allowed unopposed.

The pleadings set out in some detail the procedures followed in the presentation of the claim for reimbursement. (The expenditure in respect of which such reimbursement was sought was detailed in productions but no examination of such detail was made at debate). The pleadings also included an averment under express reference to Section 25 (1) that: "The Act or Omission of the Respondent which is the subject matter of this Appeal is, accordingly, the Respondent's refusal to make payment as aforesaid as evidenced by the said letter of 31st October 2000".

The letter of 31st October from the Keeper's solicitors to the applicants' Edinburgh solicitors was in the following terms:

"You suggest that s.13(1) must mean that your clients are entitled to reimbursement on an agent/client client-paying basis (with the proviso that the instructions given by the client were reasonable at the time). The Keeper has suggested that this matter be settled on the basis of figures prepared after consideration of the account on an agent/client third party paying basis. The principal difference of opinion would appear to relate to which of these bases is closest to the terms of the legislation (this is rather on the assumption that your clients recognise that the accounts should be the subject of some sort of scrutiny). With reference to s. 13 it would seem that there are two tests which must be satisfied in relation to any particular item of expenditure. Firstly, was the expenditure properly incurred i.e. was it necessary and appropriate and, secondly, was the expenditure reasonable in the circumstances i.e. was the amount charged reasonable? In looking at an account on the basis which you suggest an auditor would not require to ask himself either of these questions (your proviso appears to recognise this fact but does not deal with the underlying difficulty). The basis suggested by the Keeper is in my submission closer to the terms of the legislation. Expenses which are recoverable under that basis are all expenses incurred by a "prudent man of business" which contemplates to some extent both reasonableness and propriety.

Incidentally, in your letter of 2 October 2000 in which you alleged "bad faith" on the part of the Keeper you indicated that your clients would have been prepared to accept the basis of taxation which was offered in a separate case. While those negotiations are irrelevant, it is interesting to note that the basis of taxation which was suggested was agent and client, third party paying.

If parties are unable to agree a suitable existing basis of taxation then, as you indicate, further procedure may be required to provide appropriate guidance for the auditor who ultimately requires to consider the accounts.

Lest there be any doubt, the Keeper is not willing to make any further offer in respect of Mr. Hamilton's own account. The Keeper does not concede that any sum is due in respect of time spent by Mr. Hamilton in connection with this matter. Similarly, while the Keeper might be able to agree that a particular contractual rate would be reasonable, he is not prepared to agree a 70% increase applied across the solicitors' accounts.

The Keeper has not rejected the advice of Senior Counsel in connection with your clients' claim. I can only assume that your assertion that he has is nothing more than speculation.

The Keeper recognises that he has obligations in terms of section 13. The issue for determination is the extent of those obligations. The Keeper has taken the view that the accounts submitted by your clients should be taxed and has instructed law accountants to examine the accounts. Offers have been made on the basis of the advice he has received and have been rounded up to make them more attractive to your clients. The intention has been to avoid further procedure and attendant costs. It is absurd to suggest that the Keeper is acting ultra vires unless he settles a claim at the exact figure which would be determined by a court.

The Keeper's offer of £20,000 in full and final settlement of your clients' accounts is still open for acceptance. Alternatively, the Keeper would be prepared to consider a joint remit of the accounts to an auditor on an agent/client, third party paying basis. The Keeper recognises your clients claim under section 13 but is not prepared to accept the accounts without taxation as you appear to be suggesting now. I trust this clarifies matters.

This letter is written entirely without prejudice to my client's whole rights and pleas in this matter and may not be founded upon in any litigation to follow hereon other than at the instance of my client." (It may be noted that no attempt was made by the Keeper to found in any way on the terms of this last paragraph).

The respondents' preliminary pleas were in the following terms:

  1. "The Appellants not having condescended upon any question of fact or law in respect of any acts or omission on the part of the Respondent, there is no appeal under Section 25 of the Land Registration (Scotland) Act 1979 and the present application should be refused.
  2. Separatim, esto the Lands Tribunal has jurisdiction to determine the present application under Section 25 of the 1979 Act (which is denied), the Appellants' averments being irrelevant et separatim lacking in specification, the appeal should be dismissed."

Although the appellants had also tabled certain preliminary pleas (which we mention under the head 'decision' below) it was agreed that Miss Crawford should lead at the debate.

Submissions for Respondent

Miss Crawford summarised the history of the dispute to show that the Keeper had, with the assistance of expert advisers, paid careful attention to the detail of the various heads of claim and had dealt with that detail in his responses to the appellants. This was the background to her submission on the nature of proceedings before the Tribunal. Her first substantive submission was that the application was not truly an appeal for the purposes of section 25. She submitted that the appellants were, in effect, seeking an order for payment, initially of £46,975 reduced by amendment to £37,365. They had not pointed to any error in fact or law by the Keeper. The Tribunal had no power to order payment. Such a claim could go to the Sheriff Court, Court of Session or be dealt with by way of Judicial Review. At best, the Tribunal could remit back with directions to the Keeper.

If, despite the form of the application, the Tribunal did have jurisdiction to deal with the matter, there were, in any event, no relevant averments of error by the Keeper. The challenge to the letter of 31st October was non-specific. The letter itself was not a refusal to make payment. It revealed no error. The point could be illustrated by reference to the amendment of 5th April 2001. There could have been no error in the Keeper's refusal to pay £46,975 when the appellants, by amending, accepted that their claim was for a lower sum.

Under section 13, the Keeper required to exercise a judgement as to whether expenditure was reasonably and properly incurred etc. The Keeper had no power to carry out a judicial function and accordingly was exercising an administrative function. The proper bases of challenge of administrative decisions were well established. The Keeper had properly identified his jurisdiction, made a determination and had offered payment of £20,000. The appellants were obliged to point to some perversity in the Keeper's determination. Counsel made reference to Wordie Property Company Limited v Secretary of State for Scotland 1984 SLT 345 at 347 and to the 'Wednesbury' approach discussed therein. In response to the Tribunal, she said that the Keeper was exercising a "judgement" rather than a "discretion" although in her submission little turned on the distinction. She said that she wished to avoid use of the term "discretion" to avoid any confusion which might arise from dicta in the Keeper v M R S Hamilton Limited 1999 SLT 855.

Miss Crawford then dealt with the dicta in that case at page 857 G-I. In her submission this passage meant that the Keeper had no discretion as to whether or not to accept a claim but could then exercise his discretion in relation to the quantum. She accepted that the passage might be capable of being read in a way which did not give positive support to her submission but she contended that it certainly did not preclude the view that the Keeper had discretion to deal with each head of claim. The administrative nature of the Keeper's decisions under the 1979 Act was supported by reference to an unreported decision of the Tribunal Patterson v The Keeper (27th July 1993).

Counsel then turned to examination of the provisions of section 13. No assistance in construction of the section could be derived from the equivalent English provisions, Land Registration Act 1925, section 3 (9) or the Report on Registration of Title to Land in Scotland, Cmnd 4137 (The Henry Report) upon which the Registration Scheme as a whole was based. It was necessary to consider the provisions of section 13 itself. Plainly it dealt with "expenditure" and not "expenses". The established tests for taxation of judicial accounts did not apply direct. The section provided various checks or controls. The expenditure had to be incurred in pursuing a prima facie well founded claim. This meant, for example, that expenditure on preliminary enquiries, fishing for a possible claim, would not be included. The use of the words "expenditure" and "incurred" meant that the claim covered only sums actually paid out by the claimants or sums identifiably due and resting owing. The effect of the words "subject to any order…" was that normally the claim against the Keeper could only be for items which had not previously been paid for. She submitted that guidance could be found in taxation on a party and party basis but the assessment plainly had to be made in terms of section 13. Her substantive submission was that this was not equivalent to taxation on an agent and client, client paying, basis. She found support for that in dicta of Lord Hamilton in M R S Hamilton Limited v The Keeper (No. 2) 1999 SLT 840 at 841 e-f. In the present case, the award of judicial expenses had been made expressly to be without prejudice to a section 13 claim. She accepted that party and party taxation would not be conclusive as to rate.

Although the label 'party and party' might not help, assistance in construction of section 13 could be found in the terminology used in the Rules of Court in relation to judicial taxation. The former rule 347 (a), as amended, was in force at the time of the 1979 Act. As amended, it was similar to the current RC 42.11. Miss Crawford also referred to the Sheriff Court Act of Sederunt 1993 SI 3080, while accepting that the term "unnecessary" appeared there but not in section 13.

The main guidance might come from the comparison between the two bases of taxation, 'agent and client, third party paying', and 'agent and client, client paying'. Miss Crawford did not refer to any recent authority defining the former but expressed the test in terms of expenditure which a prudent client would have instructed. In other words, the test was whether any particular step would have been taken by a reasonable litigant. By contrast, taxation on an agent and client, client paying, basis covered all work which had been instructed by the client, either specifically or by implication. The only issue in that case would be whether the work was done on the instructions of the client.

In illustration of the differences, she referred to various authorities dealing with taxation of judicial accounts where special statutory provisions applied an agent and client test: Bell v Ogilvie (1863) 2 M 336; Walker v Waterlow (1869) 7 M 751; and Hood v Gordon (1886) 23 R 675.

The test in an agent and client, client paying, taxation was to be found in RC 42.7. That rule made no reference to expenditure being "properly" incurred. It did make reference to reasonableness but this had to be understood by reference to the express provision that reasonableness was to be presumed if the work was "with the express or implied approval of the client": 42.7.6. By contrast, section 13 did not envisage recovery unless expenditure was properly incurred and was reasonable in a question with the Keeper.

It was, she said, for the Keeper to assess, objectively, the expenditure and whether the steps taken were reasonable, whether or not instructed by the client. The question could be expressed: "was it objectively reasonable to incur this, expecting the Keeper to pay for it?" This test applied to both item of charge and amount. It required from the Keeper discretion and sound judgement. The test of "properly" required the question: "was it appropriately incurred in respect of a prima facie claim?" This could be expressed in terms of expenditure which "required to be incurred". It was an objective assessment. In response to the Tribunal, Miss Crawford initially accepted that in her submission, "properly" was to be taken as equivalent to "necessarily". However, she subsequently described "proper" as equivalent to "correct" and ultimately settled on "required" as the closest equivalent. She emphasised that her main point was to contrast the provisions of section 13 with the test for taxation on an agent and client, client paying, basis. She accepted that it might be difficult for the Tribunal to say, in abstract terms, what section 13 meant. Plainly the section would have to be applied on its own terms. When there was no concrete item under discussion, the Tribunal could not easily add words to the section.

Miss Crawford went on to consider dicta in Ahmed's Trustee v Ahmed (No. 1) 1993 SLT 390 at 393 G-I, and in Malpas v Fife Council 1999 SLT 499. The former was of interest for historical background. It did not, in her submission, help in relation to section 13. In the latter case the words "reasonably and properly" were taken together. She submitted that they had independent connotations. She did, however, submit that the Keeper was to be treated as having the role of auditor in the context of section 13 and that dicta in Malpas were accordingly appropriate to the exercise of the Keeper's judgement.

Miss Crawford then turned to specific points (which we list below) raised in correspondence or in the pleadings as illustrations of heads of claim which the Keeper had not accepted as reasonable and proper. She said that her submission did not require the Tribunal, at the present stage, to reach a decision on the merits of any of these points. They illustrated the Keeper's approach. It could not be said that this showed any element of "Wednesbury unreasonableness".

Finally, Counsel dealt with the claim for interest. Her main submission was that no interest could be due on expenditure unless the appellants had made actual disbursement. There was no suggestion of this. Neither the Keeper nor the Tribunal could tell whether accounts had been rendered or payment made. Business accounts did not attract interest until rendered: Blair's Trustees v Payne (1884) 12 R 104. Indeed, even if accounts had been rendered, no interest was due until payment had been demanded; Hunter v Livingston Development Corporation 1984 SLT 10. On any view the earliest date from which interest could run would be 5th April 2001 when the relevant re-drawn account was lodged.

It should be noted that Miss Crawford also made a series of submissions in anticipation of a challenge under Article 6 of the European Convention on Human Rights. These submissions covered the difficult questions of whether rights under section 13 were properly to be described as rights of a public character and whether matters before the Keeper had reached the stage of "contestation". However, it appeared that the intended challenge related to the obligation to give reasons. In course of her submission, it was made clear that the Keeper accepted an obligation to give reasons for decisions on claims made under section 13. The nature of the reasons would depend upon the nature and value of the claim. Both parties were agreed that the question of whether there was an obligation to give reasons was a different one from that of the adequacy of reasons given. Sir Crispin said that in light of the acceptance of an obligation to give reasons, he thought it unnecessary to refer to Article 6. It is accordingly unnecessary for us to make further reference to Miss Crawford's detailed submissions on this issue.

Miss Crawford also considered the possible procedure to be adopted if the Tribunal rejected her main submission and had to consider the claim de novo. It might be dealt with by a remit to a man of skill with appropriate directions. However, as matters stood it would be difficult to allow the appeal because it could not be said that the Keeper was wrong. If the Tribunal did not support her submission as to the discretion vested in the Keeper it would be necessary for the Tribunal to make an open assessment applying section 13.

Submissions for Appellants

Sir Crispin submitted that the appeal was competent and relevant because the Keeper had failed to approach the claim properly and, in essence, had refused to make a decision. The Keeper should have approached the claim by going through it item by item, saying: (i) what he accepted; (ii) which items required further information; (iii) what he was minded to reject. He should then have given opportunity for further submission in relation to items in the last category. Finally, he should have paid what he assessed as due and given reasons for his refusal of other items. Had that been done, the claimants would have known where they stood and could have appealed on more specific grounds. As it was, there was clearly a refusal to pay the sum claimed with vague offers of alternative procedures for which there was no provision in the Act. The letter of 31st October was an offer to settle at £20,000. It did not allow the appellants to accept an amount as admittedly due and then appeal over specific items in dispute.

He referred to the terms of section 25. Although, in form, an appeal, the role of the Tribunal was effectively to assess as a court of first instance. The Keeper was not a judicial authority. He acted in an administrative capacity. But for section 25 his actings would be able to be challenged simply by way of judicial review. Section 25 provides a much wider basis of review. Whether or not the Keeper can be said to be making a judgement he was making a factual determination. The Tribunal could hear appeal on questions of fact. Accordingly they were free to look at any disputed item de novo. If the Keeper determined that an item was not reasonably and properly incurred that would be a factual judgement. It might involve an element of law. Challenge to such a determination was covered by section 25. The Tribunal could substitute its judgement for that of the Keeper.

In his submission, section 13(1) clearly distinguished 'expenses' and 'expenditure'. Although the present case happened to involve solicitors' accounts it was necessary to look at the wider picture. A claimant might, for example, use surveyors or accountants in presenting his claim. The Court bases of taxation would plainly be irrelevant. The Keeper had to make a decision as to whether a particular claim fell within section 13. Sir Crispin said that the appropriate test was whether expenditure was reasonable and proper in the context of all facts and circumstances pertaining at the time it was incurred. He added that the test was whether it was reasonable for the claimant to incur expenditure in the circumstances and he submitted that it would be wrong to have any additional test of reasonableness as between Keeper and claimant.

Some guidance could be found in the decision in Malpas, supra, at page 501 A-C. It was to be noted that the context of that case was a rule similar in terms to the provisions of section 13(1). A claim should only be disallowed if a competent solicitor acting reasonably would not have incurred the item in question.

Sir Crispin initially appeared to accept that the dictum of Lord Penrose in Ahmed's Trustees, supra at page 391 H-I could properly be adapted to relate to the provisions of section 13 by reading the concluding words as referring to "the conduct of a claim against the Keeper in a proper manner". However, he later said that the observations of Lord Penrose related only to the narrower context of party and party taxation. In any event, it was clear that section 13 made no reference to a test of necessity. It was significant that in the letter of 31st October and in the pleadings, the Keeper had sought to impose such a test. This had also been apparent in the submissions made on behalf of the Keeper. It could plainly be inferred that a test of necessity had been part of his assessment. That was an important identifiable error.

One obvious distinction between expenses as assessed on a party and party basis and the expenditure incurred by a client would be the rate allowed on taxation. Judicial expenses were allowed at specified rates. The real question for the Keeper was not the rate, as such, but whether it was reasonable for the claimant to go to a particular solicitor with a recognised higher level of charge. He should have asked whether that firm was within a reasonable range of firms. Admittedly each item had to be considered. A particular charge by an otherwise reasonable firm might be outwith a reasonable range.

He submitted that there was no question of the Keeper having a discretion. This was clear from the terms of section 13 and was, in any event, plain from the decision in The Keeper v M R S Hamilton, supra. Plainly the Keeper had to make a decision on the statutory test. If appealed, the Tribunal had to make the decision de novo and on the material available to it. The question of whether the Keeper had reached the right decision on the material before him would not arise.

The Tribunal raised the question of whether, if the method adopted for pursuing a claim against the Keeper was litigation, the sum duly assessed as the appropriate expenses in that litigation in terms of a court decree, might properly be thought to be the measure of relevant expenditure for the purposes of section 13. Sir Crispin responded that this was inconsistent with the approach taken by the court in M R S Hamilton v Keeper (2), supra. Even if that was an appropriate way of assessing the allowable items of claim, the rate would not be the same. At the relevant date there were two different rates set out in the appropriate Tables of Fees. The client could not avoid incurring the higher rate in a question with his own solicitors. Miss Crawford indicated that it was not now the Keeper's position that the claim was limited to the taxed expenses in respect of the litigation.

In relation to the detailed points to which Miss Crawford made reference, Sir Crispin submitted that determination should be left until a later stage, when the issues in question were properly examined. He set out his position on each simply in response to the submission for the Keeper. He contended that the Keeper's approach was wrong in respect of each point.

In relation to interest, it was explained that the date in the crave, 4th November 1999, was the date when proceedings concluded and, accordingly, the date from which the Keeper's obligation arose. The appellants had intimated to the Keeper on that date that they were to make a claim under section 13. 30th May 2000 was the date when the accounts were submitted and, if three months was allowed as a reasonable period for the Keeper to deal with the claim, he ought to have paid by the end of August, 2000. In any event, it was clear that by October, 2000 he had considered the matter and was refusing to deal with it. He was, accordingly, wrongly withholding the money due from that time. The appeal itself could be seen as a judicial demand for payment and that would provide another possible date.

Sir Crispin told us that the appellants had, in fact, been required to make various payments and faced demands for payment of the solicitors' accounts. The claim for interest could be viewed as expenditure by him but the preferred course was to claim on the basis that the Keeper had wrongfully withheld payment. The account was rendered to the Keeper in May 2000 and due from that time: Blair's Trustees v Payne, supra.

On the question of future procedure, although the appellants had initially proposed that the case be put out By Order for further consideration, Sir Crispin concluded by suggesting that the better course would be to treat the matter like an accounting in a claim for Count, Reckoning and Payment. The Tribunal should, accordingly, call for a formal statement of claim and then proceed by way of Note of Objection and Answers. The hearing could then take place on the disputed items with an appropriate expert as assessor in terms of Rule 29 of the Lands Tribunal for Scotland Rules 1971.

It should be noted for completeness that both counsel made submissions directed to the particular facts and circumstances of this case and the detail of correspondence between the parties. This analysis was helpful in giving a clear picture of the various problems involved. Sir Crispin made particular reference to the fact that no challenge to the competency of the proceedings as an appeal had been taken until the Answers to the appellants' amendment of 5th April 2001.

Discussion

The main issues

Two broad issues lay at the heart of the submissions: the nature of the function of the Keeper in relation to assessment of claims under section 13; and what general guidance, if any, could be given in relation to such assessment by reference to taxation of solicitors' accounts. We shall look at these issues before turning to the circumstances of the present case. However, it may be helpful to start by considering how the Keeper has to approach a claim in practice.

What does the Keeper have to do when presented with a claim?

It was not disputed that the Keeper would require to consider each item of claim. Sir Crispin suggested that the appropriate approach would be for the Keeper to decide which items he accepts; which items require further information, discussion, or vouching; and which, if any, he proposes to reject. He should then seek further submissions. This approach makes sense. The Keeper, obviously, will not wish to be flooded with unnecessary detail on first presentation of a claim. The claimant has responsibility to present the claim in an appropriate way and will have to use his own judgement in deciding how much information to submit. The Keeper can then seek further explanation or vouching of any item. He may, at any stage, make his own enquiries to check any aspect of the claim. He will then have make a decision. In practice, it might well be reasonable to make a lump sum proposal in attempt to reach negotiated settlement. However, it was not disputed that a claimant is entitled to a decision on his heads of claim. Once the Keeper has accepted that a particular amount is due, there may be no good reason in principle why that should not be paid. However, in practice, a piecemeal approach is to be avoided. It is likely to add to overall administrative delay. The Keeper can normally be expected to make one decision after the stage of clarification.

It was conceded that the Keeper would require to give adequate reasons for his decision. We express no view on that. If there is a dispute, reasons will be required at some stage. The concession was consistent with the Keeper's position that he was exercising an administrative function broadly equivalent to exercise of a discretion.

It was pointed out that although the substantive heads of claim in the present case were solicitors' accounts, that would not always be the case. We think that it is helpful to keep in mind a concrete example of a different type of claim. A party disputing a boundary might use an aerial photograph. The sum claimed for this might be broken down to reveal hire of a plane, pilot's time, photographer's charges etc. However, although the claimant might have had good reason for thinking that such a photograph would be the easiest way to demonstrate the soundness of his argument, it might be concluded that such expenditure was not reasonably and properly incurred, perhaps because it had no direct bearing on the issue or, possibly, because a simple enquiry would have shown that suitable aerial photographs were already available to the Keeper, commercially or otherwise. In that case, the Keeper would not concern himself with the detail of the claim. He would seek to reject it in its entirety. This example cautions against any likelihood of being able to identify clear guide rules in relation to section 13. Some claims will require scrutiny of detail: some may be capable of being dealt with broadly.

The example has a bearing on construction. In relation to claims under section 13, the Keeper cannot be assumed to bring any level of expertise to particular items of expenditure. Indeed, in the present case, the Keeper made no secret of the fact that he had taken expert advice in relation to solicitors' accounts. Section 13 must be approached on the basis, not only that the Keeper is a party to the claim and not an independent assessor, but also that the claim may very well turn on matters in respect of which he has no expertise. A contrast between his role and the role of an auditor of court is apparent on both heads.

The nature of the Keeper's function

The Act provides no specific mechanism for resolution of disputes over the amount of claims. In particular, it does not purport to confer any special status on the Keeper's decision. Without the general jurisdiction conferred by section 25, a claimant would either have to go to the ordinary Courts or to judicial review, depending on the view taken of the role of the Keeper. In terms of section 13, the Keeper is to "reimburse expenditure". There is nothing to suggest that he is assessing compensation. There is no obvious peculiarity about an obligation to pay for costs "reasonably and property incurred". For example, if, by contract, or otherwise, a person had an obligation to make such payment in relation to tradesmen's services, any dispute would go to the ordinary courts and the claimant would require to establish his claim by evidence in the usual way.

In the Note of Argument submitted in advance of debate, the respondent's contention was that section 13 "afforded the Keeper with discretion to decide whether or not expenditure had been reasonably and properly incurred". It was said that in doing so he exercised an administrative function. Before us, parties were agreed that the Keeper did not exercise a judicial function. Miss Crawford stressed that the Keeper was exercising an administrative function but attempted to avoid use of the term "discretion". She referred to exercise by the Keeper of a "judgement". There was reference to a "sound judgement" and to an "administrative judgement". The use of the alternative expression "administrative judgement" was, in effect, an acknowledgement that exercise of such a judgement was not the same as a judicial function. We are satisfied that there is a distinction to be drawn between an administrative judgement and an administrative discretion and that it is a distinction of importance. The exercise of sound judgement is not the same as exercise of discretion. There is nothing in the provisions of section 13 itself to suggest any intention to confer a discretion on the Keeper. It may be added that although the connotations of "administrative judgement" were not explored, we would assume that it was not intended to be contrasted with sound judgement.

We heard no authority for any general proposition that all decisions by public officials necessarily involve exercise of something akin to a discretion or that all such decisions are subject to review only. The well known passage from Wordie (starting at the foot of page 347) was expressly made in the context of the exercise by an administrator of "the discretion confided to him". The Wednesbury case, cit. infra involved exercise of an administrative power which can be contrasted with the apparent duty imposed by section 13. These cases are not authority for any general proposition in relation to decisions by public officials. In relation to the Keeper, however, some support was taken from the decision of the Lands Tribunal in Patterson, supra. That case related to the registration of three plots created out of virgin land. The information available to the Keeper was inconclusive but it appeared that he had taken a view as to an appropriate reference point and had registered the first plot accordingly. Ultimately the registrations of the three plots left a strip of land unallocated. It was contended that the Keeper had failed to take sufficient account of all the circumstances known to him and that he should have taken a different line as his first reference point. He should have had regard to the applications for registration of all the plots together rather than treating the first one as an individual.

The relevant statutory provision was section 4 of the 1979 Act which provides as follows:

(1) Subject to subsection (2) below, an application for registration shall be accepted by the Keeper if it is accompanied by such documents and other evidence as he may require.

(2) An application for registration shall not be accepted by the Keeper if -

(a) it relates to land which is not sufficiently described to enable him to identify it by reference to the Ordnance Map;

The Tribunal noted the power to correct "inaccuracy" as used in section 9 of the Act and continued:

"An inaccuracy may also take the form of an omission from the register when the Keeper refuses to register land which is the subject of an application for registration on the ground that the land is not sufficiently described to enable him to identify it by reference to the Ordnance Map. In such a case the appellant will be likely to argue that the land was sufficiently described to enable the Keeper so to identify it. Conversely, the registration of a piece of land may be challenged on the ground that the land was not sufficiently described to enable the Keeper to identify it by reference to the Ordnance Map. In both of these latter examples the Keeper will have made the decision to register or not to register in the exercise of the discretion conferred on him by section 4(2)(a) of the Act. Parliament has given him the task of deciding whether land is sufficiently described to enable him to identify it by reference to the Ordnance Map. In that situation, the ability of the Tribunal to interfere with the Keeper's exercise of his discretion in the performance of his administrative function is in our view limited by the principles established in the well-known line of cases which followed and elaborated upon the dictum of Lord Green MR in Associated Provincial Picture Houses Limited v Wednesbury Corporation [1948] 1 KB 223".

Miss Crawford accepted that the relevant provision was not expressed in the same terms as section 13 and did not attempt to put much weight on this decision. The Tribunal proceeded by identifying the situation as one which involved the exercise of a discretion conferred on the Keeper by section 4. That was the basis of decision. We do not consider that this case has any bearing on the very different provisions of section 13.

Some reference was made to the Keeper's task as similar to that of an auditor of court. There is no doubt an auditor is expected to exercise a discretion. He is a public officer charged with the duty of determining disputed questions between parties. He can be expected to be impartial and independent. He is recognised as having an established skill and experience. (See generally, Maclaren, Expenses, Part VIII). His discretion, however, is not unlimited: MacLaren, op cit, page 426. Where he requires to make a direct assessment of the reasonableness of a particular decision by a solicitor, he may not be exercising a discretion as such: Malpas, page 501 A-C. However, as we have seen the role of auditor can readily be distinguished from that of Keeper in relation to claims under section 13. We are not persuaded that there is any assistance to be derived from this comparison.

We consider that the broad issue is put beyond doubt by consideration of the terms of section 25(1). The jurisdiction given to the Tribunal is much wider than a jurisdiction limited to review of an administrative decision. We recognise that determination of the scope of an appeal on fact and law is not always straightforward. However, where there is no provision for a record of evidence of fact we consider that such a provision does envisage this Tribunal making a fresh assessment based on the material presented to it. The Keeper is obliged to make a decision in respect of the claim applying the statutory test. Where a question arises in relation to that decision, express or implied, the appeal must, in effect, be determined by re-assessment by the Tribunal.

In any event, we are satisfied that the Keeper's contention cannot stand with the decision of the Inner House in The Keeper v Hamilton, supra. In that case, which concerned an application for an interim payment, the Court said of section 13(1): "What it does is to place an obligation on the Keeper to reimburse any expenditure reasonably and properly incurred. Accordingly, the appropriate way of proceeding is to apply to the Keeper and, if necessary, to appeal against his decision under section 25 or proceed by judicial review. What the Keeper has to do, in our view, is to apply the statutory test to any application made to him, and decide on that basis whether to make reimbursements or not. The decision is not a discretionary one in the way that an ordinary decision on the expenses of a judicial proceeding would be: and the decision of the Tribunal or the Court on an appeal would similarly be a decision on the statutory basis. On the other hand, it appears to us that the Keeper must have some discretion as to whether he is in a position to deal with any given application made to him in relation to expenses incurred in pursuing a claim to indemnity under section 12, so long as the claim is not finally determined. There may well be cases in which some part, or the whole, of an application under section 13 is susceptible of determination even though a judicial proceeding is still in process, and there does not appear to be any reason in principle why an application should not, if appropriate in all the circumstances, be made by instalments. On the other hand there may equally be cases in which no decision can properly be taken until the judicial process is completed. If the Keeper takes an unreasonable view in deciding whether or not to deal with an application for reimbursement, his decision may, of course, be subject to review". (page 857 G-J)

In light of this decision it was not disputed by Miss Crawford that the Keeper had no discretion as to whether or not to admit a claim. It was contended, however, that he had a discretion in relation to the detail of it. He was said to have a discretion as to quantum and a discretion in dealing with each item. The nature of the distinction contended for was not explored further. We do not think that it is a distinction which can stand practical scrutiny. For example, if the Keeper was faced with a claim for an aerial photograph, it is not clear in what sense he could be said to apply the statutory test to the application by deciding to make a disbursement, if he was then to be able to exercise a discretion to decide that nothing should be paid. It may be that the submission was intended simply to distinguish between acceptance of an item as a good head of claim and assessment of an appropriate level of remuneration for it. Parliament might well have approved of a scheme whereby the Keeper had to apply one test to the question of whether a particular head of claim was to be accepted and another to the question of how much should be paid. However, there is nothing in the section to suggest such a scheme. We were not persuaded there was any basis upon which it could be implied.

While it can be accepted that the decision does not positively exclude the argument presented, we are satisfied that it gives that argument no support. On the contrary, as we read the passage cited, the Court was intending to draw a different distinction; that between the absence of any discretion in applying the statutory test to the claim as such, and the discretion which the Keeper had in deciding whether or not to make any payment at an interim stage. The Court was certainly satisfied that in part, at least, the application of the statutory test to a claim did not involve exercise of discretion. We have been unable to find a basis which would permit a conclusion that, at some other stage, application of the same test should approached in a different way.

From an administrative point of view, the advantage of a discretionary role is to limit to the extent to which the Keeper is open to challenge. Inadequately specified challenges or challenges on petty matters are, of course, things which the Tribunal would also wish to avoid. However, we have come to the conclusion that the role of the Keeper is to reach a decision applying his best judgement to the claim before him. If the claimant considers that the decision is wrong it will normally be possible to put the dispute in the form of a question which can be the basis of appeal to the Tribunal under section 25. The Tribunal will then have to apply a judicial judgement to the disputed issues, based on the evidence before it. It is important to remember that the Tribunal has a discretion in relation to expenses. It may be noted, for example, that if it appeared, in any particular case, that the Keeper had not been given a proper opportunity of reaching a concluded decision on material available to the claimant, this would be a factor we would be entitled to take into account in determining the ultimate question of judicial expenses. Our system of pleading can also be expected to limit the scope for unfounded challenge.

Comparison with taxation of solicitors accounts

Both counsel recognised the difficulty of attempting to add further definition to statutory provisions without reference to a concrete dispute. No attempt was made to focus this aspect of the debate on any particular head of claim. We clearly cannot add words to the section. Any attempt at general guidance by amplifying the statutory provisions is as likely to be misleading as helpful. Counsel recognised that the labels appropriate to taxation of expenses in litigation could not be applied direct to section 13. Dicta from cases or textbooks cannot be relied on in relation to any of the established bases of taxation without clear understanding of what criteria were, expressly or implicitly, applied at the relevant times. Labels are otherwise likely to be misleading. That said, a proper understanding of the principles behind taxation may well provide assistance in the application of section 13. In addition, as the correspondence between the parties recognised, it would be of considerable practical convenience if an established basis of taxation could be identified as an adequately robust guide.

In looking for guidance from recognised Court bases of taxation, it might be thought that the starting place should be "agent and client, third party paying". That is a factual description of the situation. It would be a matter of common sense to infer that the existence of separate bases arose because of a recognition of the need for a distinction to be drawn between the situation where the client, who has instructed the work and has had direct control of it, is himself to bear the cost, and situations where he is to look for reimbursement from another. A party incurring expense, knowing that a third party was to pay and that his expenditure would require to be justified, would, inevitably look at matters in a different light from a person who had only himself to please. As will be seen, we have come to the view that taxation on an agent and client, third party paying basis, does indeed provide a realistic prima facie basis for assessment of solicitors accounts under section 13. We reach that view after consideration of the older cases, the various provisions of Rules of Court, and dicta bearing on the modern rule in the Court of Session.

Older cases on bases of taxation

Walker v Waterlow, supra, was a case which turned on a provision of the Parliamentary Elections Act 1868 providing for expenses to be taxed on the "principles of taxation of expenses as between agent and client in the Court of Session". The case itself is a little confusing as to the specific operation of that method of taxation because of the provision in section 41 of the Act making express reference to "the discouragement of any needless expense". However, the principle which the Courts have derived from the case was identified in Hood v Gordon, supra. Lord Kyllachy expressed it thus: "That principle is that while the taxation must, as prescribed by the statute, be as between agent and client, yet as the expenses in a case like this have to be paid, not by the client, but by a third party, the principle of taxation, though not indeed identical with that between party and party, must yet be different from that applied in the ordinary case of agent and client". Lord McLaren put the matter as follows: "On the merits of the question my view is that when a statute authorises the taxation of expenses as between agent and client, what is given is the expenses which a prudent man of business, without special instructions from his client, would incur in the knowledge that his account would be taxed". This seems realistic. Where it is known that a third party will have to pay from whom it is not possible to take express instructions, a person incurring expenditure would in have regard to what was necessary and to the level of expenditure. He would act knowing that he would have to justify himself at the end of the day. It is clear that he would not proceed on the basis of a test of necessity because he is entitled to have regard to his own interests or, in the case of an agent, the interests of his client. Equally he would not look for the cheapest option. However, he would not proceed regardless of cost.

MacLaren, Expenses, at page 510 puts the matter on the basis that where a third party has to pay, the taxation will be limited to what is "needful and not excessive". It may be noted that the authority which he cites puts the test of need the other way: "In taxing an account of this sort where the rule is that it is to be taxed as between agent and client, all the expenses of the pursuer should be allowed unless those which can be shown to be either needless or excessive": Lord Ardwall in Stair v Stair and Other, 1905, 13 SLT 446. In other words, although reference to "necessity" was a factor to be considered when assessing reasonableness in the context of an agent and client taxation when a third party is paying, it was not treated as being in itself the test.

Rules of Court

Before considering the two modern cases cited to us, it is appropriate to set out, and comment briefly on, the provisions of the various Rules of Court bearing on taxation of solicitors' accounts. We deal first with the Sheriff Court Rules and Rules relating to Civil Legal Aid. In the Sheriff Court the Act of Sederunt (Fees of Solicitors in the Sheriff Court) (Amendment and Further Provisions) 1993 at Rule 8, provides as follows: "In order that the expense of litigation may be kept within proper and reasonable limits only such expenses shall be allowed in the taxation of accounts as are reasonable for conducting it in a proper manner". The Table of Fees regulates the taxation of accounts between party and party and Rule 6 provides: "The expenses to be charged against an opposite party shall be limited to proper expenses of process".

Section 13, of course, makes no reference to limits and little can be taken from this last provision in the present context. It can be said that Rule 8 plainly envisages that the test of whether the expenditure was "reasonable for conducting it in a proper manner" will, in itself, be a test which can provide proper and reasonable limits.

The Civil Legal Aid (Scotland) (Fees) Regulations 1989 provided, by Rule 4, that subject to certain specified provisions: "A solicitor shall be allowed such fees and outlays as are reasonable for conducting the proceedings in a proper manner, as between solicitor and client, third party paying." Notwithstanding that broad provision, Rule 5 went on to set out the rate by reference to various scheduled fees appropriate in different situations and Rule 5(4) made specific provision for an additional fee being allowed at the discretion of the Court to cover the responsibility undertaken by a solicitor in the conduct of the proceedings. In considering whether such fee should be allowed various factors were set out. These can be described as the "standard factors" because they appear in broadly similar guise in various sets of Rules. For present purposes the detail of the standard factors is of less significance than the fact that special provision is required. What can be taken from the Regulations is that the rates set out in the Schedule were intended to be rates which were reasonable for conduct of the case in a proper manner for the purpose of Rule 4 unless, for specific reason, an additional fee was allowed to cover the responsibility undertaken.

The current provisions governing taxation in the Court of Session are to be found in the Rules of Court at Chapter 42 The various provisions have no direct bearing on interpretation of section 13 but, as we shall see, RC 42.10 is in terms similar to the version of the Rules as they stood when the 1979 Act was enacted and which were
considered in Ahrens Trustees. In relation to party and party accounts, Rule 42.10 provides that: "Only such expenses as are reasonable for conducting the cause in a proper manner shall be allowed". It may be observed, in passing, that a footnote to RC 42.11, now revoked, makes reference to the policy "to eliminate the disparity between the expenses recoverable from a paying party and the cost to a successful party".

The modern approach to taxation of accounts between agent and client, client paying, appears in RC 42.7. In taxing such an Account the Auditor is to allow "a sum in respect of such work and outlays as have been reasonably incurred". While this provision may appear somewhat similar to the provisions of section 13, we accept Miss Crawford's submission that it is of critical importance to have regard to the provisions of Rule 42.7(6)(d)(i) which provides that in taxing the account the auditor shall presume, subject to rebuttal, that "an item of work or outlay was reasonably incurred if it was incurred with the express or implied approval of the client". Similarly, in assessing the rate the substantive provision directs the auditor to allow "such sum as may be fair and reasonable having regard to all the circumstances of the case: RC 42.7(6)(b). The related provision of (d) provides that the auditor shall presume, again subject to rebuttal, that "(ii) the fee charged in respect of an item of work or outlay was reasonable if the amount of the fee or the outlay was expressly or impliedly approved by the client". We accept that it follows from these specific defining provisions that an account taxed by the auditor as between agent and client, client paying, provides no general guidance as to "reasonableness". The main criterion for such taxation is whether particular work was, expressly or by implication, authorised by the client. Accordingly, insofar as it relates to items of charge, the taxation is looking at reasonableness in a very limited way. The same is true in relation to rate of charge. The fact that a particular rate has been accepted at taxation on an agent and client, client paying, basis would, accordingly, be of no direct relevance in relation to assessment under section 13.

For present purposes we accept that the most relevant provisions relating to taxation, are those of the former Rule 347(a.). This provision, as amended, was in force at the time of the 1979 Act. The relevant history of provisions relating to party and party taxation is conveniently set out by Lord Penrose in Ahmed's Trustee v Ahmed at page 393 E - H and we need not repeat it here. Rule 347 originally provided that: "Only such expenses shall be allowed against the opposite party as are necessary for conducting the case in a proper manner with due regard to economy". By 1974 this had been replaced by a provision: "Only such expenses shall be allowed as are reasonable for conducting the case in a proper manner".

Whether or not the wording of section 13 owes its origin to this very similar wording of Rule 347(a) as amended, we are satisfied that guidance can be derived from dicta bearing on the application of that rule and its modern equivalent RC 42.10. In Ahmed's Trustee v Ahmed, supra, page 393 H to I, Lord Penrose said: "The development of the rule from 1966 onwards appears deliberately to have departed from the tests of necessity, whether absolute or otherwise, and excludes specific reference to economy. These changes were clearly significant. They support the approach adopted by both counsel in this case that the only relevant test presently applicable is the test of reasonableness in the context of the conduct of the case in a proper manner".

It must be recognised that any assessment of reasonableness requires some criteria explicit or implicit. It will seldom be possible to identify all the implicit criteria. However, we can find no assistance in the formulation advanced by Sir Crispin of "reasonable and proper in the context of all facts and circumstances pertaining at the time". Something more is required to determine what facts and circumstances are relevant to the issue. Although we recognise the significance of the changes in the rules to remove the restrictions imposed by the tests of necessity and economy, we are satisfied that in considering the question of reasonableness, the need or otherwise for a particular step will be a factor to take into account. Similarly, we are satisfied that in normal speech the question of whether a particular piece of expenditure was "reasonable" can only be determined by having some regard to economy. To make either of these factors determinative would be to supersede the test of reasonableness but that does not mean that they must be ignored.

We do not attempt to define the weight which may be attached to these elements. However, it can be said that there is force in the submission that the Keeper's emphasis on "necessary" as shown in the letter of 31 October, in the written answers, and in submission, tends to indicate that he has applied that as a test in the present case. On any view it seems probable, from these references, that he has given too much weight to that factor.

It is clear that other factors must be considered. One might be the importance of the outcome to the client. In a taxation the "standard factors" set out in the various Rules may have to be taken into account as a separate stage. However, these factors could all be expected to have a direct bearing when the Keeper is applying the test of reasonableness in relation to section 13.

It is, of course, arguable that the question of whether a particular person has expended money reasonably should turn solely on examination of the claimant's own circumstances and motivation. The need for a broader approach is, in our view, demonstrated by the additional test of "properly" provided by the statute. This directs attention to the context in which the expenditure is made. Applying the test of "reasonably and properly" we are satisfied that a decision under section 13 requires consideration, not only of the viewpoint of the claimant, but of whether particular items were reasonably incurred in a question with the Keeper.

Sir Crispin contended that the reference by Lord Penrose to "the context of the conduct of the case in a proper manner" could not be applied to the different question of the pursuit of a prima facie well founded claim against the Keeper. It was, he said, only relevant to the narrow area of taxation of judicial expenses. We accept that there is a distinction in that the process or conduct of a litigation involves well understood steps. Accordingly, unusual steps might not be accepted as "proper" unless specially justified. By contrast, the steps appropriate in the pursuance of a particular claim against the Keeper will always be a question of circumstances. Any guidance by the Keeper as to the way in which such claims should be presented or supporting material produced, would be part of these circumstances. However, the distinction as to how the matter will be approached in practice does not, in our view, detract from the guidance to be obtained from the observations of Lord Penrose. The context in which expenditure has been incurred is an essential element in assessment of the reasonableness of such expenditure.

The present context is the proper pursuit of a claim against the Keeper. The reasonableness of the expenditure must be approached broadly but it would be relevant to ask whether a particular head of claim was unnecessary or extravagant in that context. This reflects the approach of Lord Ardwall in Stair to which we have referred and is consistent with the approach taken in Malpas. It may be added that such an approach would allow the Keeper to reject claims which, in the various words of his pleadings and submissions, were "immoderate, expensive, specious, absurd, or vexatious".

Lord Bonomy in Malpas had to consider RC 42.10 which, as we have seen is in the same terms as the revised Rule 347(a). He required to consider the term "reasonable" for the purposes of that rule in the context of a dispute over the fees of senior counsel. At page 501 D-F, he said: "It was accepted by both parties that different charges are made by different counsel for similar work, and that a range of charges for any given work might be reasonable. Similarly it is common experience that different agents might approach preparation for a case in different ways and with differing degrees of diligence, but the additional work done by one would not obviously in these circumstances be described as "unreasonable". So there may be a range of different ways of conducting a case that might all be described as "reasonable". It seems to me to follow that, in deciding whether to allow or disallow any particular item, the auditor is undertaking a task similar to mine and 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".

In that case there was no need to deal separately with the test of whether the cause was conducted in a proper manner. However, while a broad test of reasonableness by reference to the conduct of a competent solicitor might suffice in the context of litigation, we consider that in the context of section 13 it is important, when considering the acceptability of an item of charge, to be able to identify it as a proper step to take in pursuing a claim against the Keeper.

Challenge based on rate of charge will raise different issues from the question of whether a particular item of charge is acceptable. Although the rates set out in Tables may be expected to give basic guidance as to what is reasonable and proper, it must not be forgotten that the Tables allow for a percentage increase. The base rate can therefore be no more than a starting point. Under section 13, what we have described as the "standard factors" have no binding or limiting effect but may be helpful as factors to bear in mind. Reference may also be made, for example, to the Civil Legal Aid (Scotland) (Fees) Regulations 1989. Rule 5(5) provides that the auditor has power to increase or decrease any inclusive fee "in any appropriate circumstances". A rate appropriate to the well established procedures of litigation may provide little guidance in the more unusual circumstances of a claim under section 12.

We hesitate to add further comment on the question of the rate at this stage. However, we should touch on two matters. We heard various submissions relating to onus and our reference, above, to whether a particular head of claim is unnecessary or extravagant, may be thought to accept an onus on the Keeper. There is, however, nothing in the provisions of the section to suggest anything other than that it is for a claimant to establish his claim. He must be prepared to show that particular expenditure was reasonably and properly incurred.

We also heard a submission that the real question was not the rate of charge, as such, but whether it was reasonable for a claimant to have instructed a particular firm of solicitors whose normal rates were higher than the Table of Fees. However, in considering that question in the context of a claim against the Keeper, the reasonableness of their rates of charge is likely to be the main, if not the only, substantive issue. It would not be reasonable in that context to instruct solicitors without giving consideration to their charges. A published Table of Fees for such work might be thought to be an obvious reference point. But other factors would be relevant. For example, it may have been the case that suitably skilled solicitors could not readily be found to carry out the work at the rate provided by such Tables. The matter would have to be assessed by reference to the state of affairs when the client required to instruct the solicitor. The client is entitled to take a robust view of his own interests and is not unreasonable simply because he does not hunt around for the cheapest rates. In the present case, evidence of how and when appropriate rates of charge were established between solicitor and client is likely to be important, together with evidence of whether any consideration was given to comparative levels of charge.

We turn from the broad issues to the specific disputes.

Is the challenge to the letter of 31st October 2000 a proper basis of Appeal under section 25?

The first challenge was to the form of crave. Section 25 provides for an appeal to the Tribunal "on any question of fact or law arising from anything done or omitted to be done by the Keeper". This is much wider than an appeal from, for example, "a decision" of the Keeper. We are satisfied that in relation to a claim under section 13 the appeal will often require complete rehearing where the Tribunal will require to apply the provisions of the section to the material before it. The outcome of any such appeal would be expected to be a finding as to the amount due to be reimbursed by the Keeper under that section. It was not disputed that we had no power to grant a decree for payment and as we have noted above, the appellants amended their crave in course of the hearing to make this clearer. They seek a finding as to the amount of expenditure reasonably and properly incurred by them in pursuing the claim. We are satisfied that this is a type of positive finding which we could pronounce. (We deal below with the crave insofar as it relates to interest). We did not find persuasive the submission for the Keeper that our finding should be limited to a declaration that the Keeper had erred in refusing to pay a particular sum.

The more substantive challenge turned on the stated basis of the application. For reasons set out above we are satisfied that the appellants pleadings cannot be criticised simply because they do not mount a challenge based on the tests set out in Wordie. That is probably sufficient to deal with the essence of the Keeper's submissions. It is unnecessary, at this stage, to comment in detail on the positive aspect of the Keepers case; that adequate reasons had in fact been provided to get over any such challenge.

The act or omission which was founded on by the appellants was said to be "the respondent's refusal to make payment" of the appellants' claimed expenditure. This refusal was said to be evidenced by the letter of 31 October 2000. For the Keeper it was averred that the letter was not a refusal "to reimburse the appellants for such expenditure as had been reasonably and properly incurred by them in terms of section 13(1)". It would, however, have been surprising to find the Keeper refusing to make reimbursement for such expenditure. The point is the refusal to accept that the appellants' claim was within the scope of the section. It is clear that the Keeper did, and does, refuse to accept this. He appears to accept that part of the amount claimed is due. But he has not made any payment and it is not easy to see what parts of the claim have been accepted.

The difficulty may be largely attributable to attempts to find a way to reach agreement and in that context to apply judicial taxation to the claim. It appears that the accounts as presented to the Keeper were deliberately drawn in a way which was intended to facilitate comparison with the taxed accounts of the proceedings in the Commercial Court. This has proved distracting in the assessment of them for the purposes of section 13.

The Keeper now pleads that the claim is excessive. He makes no explicit averments to say what parts of the claim are rejected. However, it is clear from the correspondence and the pleadings as a whole that detailed reasons for the objections to different aspects of the claim have been given. We are satisfied that the pleadings adequately disclose a range of real questions between the parties and that it is appropriate for the Tribunal to deal with these. We consider that the attempt to invoke our jurisdiction after receipt of the letter was, in light of previous correspondence between parties, a reasonable one. Subsequently actings have not altered this. The Keeper made no attempt to clarify his position by making any more formal findings. In their present form the pleadings do not focus the issues adequately; in particular, they are not tied in any way to quantification. This was, perhaps, an inevitable consequence of the approach followed by the Keeper. Having rejected that approach, we consider that the whole claim now falls to be assessed.

It is probable that in many cases claimants and Keeper will be in dispute over particular issues of evidence or principle rather than detailed quantification. If the Keeper gives a decision on such an issue it could be challenged by proceedings under section 25 without need for a decision on every point of detail. In the present case, however, the claimants seek to have the Tribunal determine the claim as a whole. The issues are wide ranging and complicated by the attempts to resolve them by reference to taxation. They will need to be resolved applying the provisions of section 13. We discuss the appropriate procedure below.

The claim for interest

The submissions revealed some confusion as to the basis of the claim for interest. However, although Sir Crispin was able to tell us that the applicants had, in fact, required to make payment of certain sums to the solicitors and had received demands for payment in respect of other sums which the applicants did not dispute, there were no averments dealing with such matters. It was not suggested to us that a claim for interest had been made to the Keeper as one of the outlays incurred in pursuing the claim under section 12. The claim for interest, as presented by the appellants, was based on the proposition that the Keeper had wrongly withheld money due to them.

Counsel did not attempt to explore the scope of the term "wrongful" in the present context. The acceptance that the Keeper would be entitled to a reasonable time to assess the claim was tacit acknowledgement that payment was not wrongfully withheld while the Keeper had a good reason for not paying. At present, the Keeper plainly contends that he has good reason for not paying more than £19,752.70 (which sum appeared to be accepted in terms of the letter of 18 October 2000). The Keeper does not accept that any higher sum is due. For present purposes, it may be taken that he has genuine reasons for that view.

If a Court or Tribunal ultimately decides that the claim as presented was a good one, it may follow that there is a sense in which the Keeper was in "error" in disputing it. In that sense he could be said to act "wrongfully". However, we are not satisfied that the dicta in Blair's Trustees v Payne, supra, permit such a simplistic approach. Lord Fraser, page 109, said: "Claims for interest cannot be brought under any general rule". He later continued: "It is sometimes said that interest is due as damages, for the undue detention of money, when a debt clearly ascertained remains unpaid. By those lawyers who hold this opinion, interest is considered incident, legally, to every debt, certain in amount and payable at a certain time. This is plainly not good law". He went on to discuss illustrations to the contrary and, after reference to the case of Camichael v The Caledonian Railway Company 8 Macph., HL 131, concluded: "It must be 'wrongfully withheld'." These dicta do not take the matter much further but we consider that they tend to indicate that the term carries a connotation of blame going beyond mere error in law.

Where parties are in discussion over the proper sum due, it is difficult to categorise delay in payment as wrongful. We accept, of course, that the correspondence in the present case shows the claimants becoming increasingly peremptory in their demands for resolution of the dispute. That, however, cannot alter the position of the respondent. There is, of course, a sense in which it can be said that the Keeper has wrongfully withheld payment of the said sum of £19,750.70. He appears to have accepted that sum as properly established. He may have expected some further discussion but the present application to the Tribunal should have made it clear that time for discussion was past. However, the problem as it seems to us, turns not simply on the scope of the term "wrongful" but on the proper view of our jurisdiction in terms of section 25. This provides for "appeal" to the Tribunal. The claim for interest as now conceived was not presented to the Keeper for decision. The way in which we are asked to deal with that claim is in no readily ascertainable sense an "appeal". Although we have set out above our reasons for accepting that in the circumstances of this case a broad approach should be taken to the crave and the primary remedy sought, we have not been able to accept that the claim for interest can be dealt with in the same way. It has been presented as ancillary to a claim for a sum of money. Indeed Sir Crispin supported the claim by a submission that the appeal was equivalent to a judicial demand for payment. We have no jurisdiction to order payment and we consider that the present claim for interest is not one with which we can competently deal.

Points of detail canvassed before us

We heard submissions bearing on some nine specific points. For completeness it may be noted that these related to the following topics: (a) the percentage uplift; (b) the proper forum; (c) the value factor; (d) posts and incidents; (e) the hourly rate; (f) specification of disbursements by B.G.Hamilton; (g) double attendance; (h) nature of claim for directors time; and (i) period of charge. It was apparent that points (a), (c) and (e) were closely related. Neither party invited us to deal fully with any of these points at this stage. Miss Crawford referred to them to illustrate her proposition that there were reasons for the Keeper to reject the claim as presented. Sir Crispin contended that as the reasons advanced were arguably, if not plainly, unsound, this added weight to the right to appeal.

As noted, we were not invited to reach any form of decision on the specific items. We do not attempt to do so. With some hesitation, however, we venture certain comments which may be relevant to further discussions between parties.

Some of the points taken were specific to the context of judicial taxation and did not properly acknowledge the primary test under section 13. It will also be apparent from the above discussion of the broad issues that, in our view, reference in submissions to the Keeper's attitude as "not being unreasonable" in relation to certain points is irrelevant to the primary question of whether expenditure actually incurred was reasonable. The Keeper's prime task is not to assess reasonable remuneration but to determine whether particular expenditure has been reasonably incurred. It is only where he has concluded that a particular sum was not a reasonable and proper item of expenditure because it was excessive, that he may have to make the assessment of what a reasonable figure would have been.

The uplift

As appears from correspondence, the parties sensibly attempted to find an agreed approach to the solicitors' accounts by reference to taxation. In the event, they were unable to agree which basis would be appropriate. The appellants aver that their solicitors drew their accounts on the basis of Table Fees, together with uplift of 70%. This was said to have been done so that the accounts presented to the Keeper could be linked to the judicial account already audited. It was said that this uplift brought out a figure in "approximate line with the charges on the hourly charging rate basis". The Keeper's challenge was based on the proposition that any claim under section 13 was a claim for expenditure. It was said that the Keeper could not be obliged to pay an uplift because the client could not be obliged to pay such an uplift without prior agreement. The measure of the Keeper's liability was limited to expenditure actually incurred.

This submission is, no doubt, correct as far as it goes. However, if we have understood the submissions correctly, the contention is that claim as presented was for a figure equal to the rate agreed between the appellants and their solicitors. The uplift was applied simply as an adminicle of evidence to show, in the context of a claim to be tested by reference to taxation, that the agreed rates were reasonable. It may be that the Keeper's challenge was due to misunderstanding. It is not easy to see how a claim based on agreed figures which were equivalent to a 70% uplift came to be replaced, following the Amendment, by one of figures equivalent to 5%. The Keeper did call for specific information as to the detail of instructions given to solicitors and the terms of any agreement or agreements regarding payment. We consider that these matters are relevant, in the circumstances of this case. Indeed such matters would normally be relevant in relation to any claim significantly in excess of the rate provided by the General Table. Sir Crispin freely accepted that, for example, it would not have been reasonable to agree a high rate just because it would be recoverable from the Keeper. If the rates were negotiated at the outset, evidence of this and of the reasons for them would be relevant.

Choice of forum

We did not require to hear submissions on the proper approach to section 13 where a claimant has decided to pursue a claim against the Keeper by way of litigation. Arguably, that may be seen not only as a reasonable step but as a distinct step which is subject to its own rules and procedures, including normal Court rules as to recovery of expenses. However, this issue was canvassed before Lord Hamilton at an earlier stage in the present case and it is clear that the award he made was expressly to be without prejudice to the claim under section 13. It follows that the question of the proper approach to that section where an unqualified award of judicial expenses has been made does not arise and it is unnecessary for us to comment on the matter. There may well be force in Sir Crispin's suggestion that the preferred course is for a Court to make no award of expenses. This would leave the whole matter to be considered under the provisions of section 13.

Any challenge to the reasonableness of a decision to go to the Commercial Court instead of to the Tribunal will be a matter for proof. We do not consider that it was a self-evidently unreasonable course. The legislation leaves the option open. Any claim which would justify litigation in the Commercial Court might well have been expected if brought before the Tribunal to justify taxation on the Court of Session scale, with certification for senior counsel. Procedures in the Commercial Court may well be as flexible as procedures before the Tribunal.

Charge for attendance of two sets of agents

This was a challenge couched in terms of Court taxation under reference to Employers Assurance Co of Great Britain Limited 1887 5 SLT 248 and Bannatyne, Kirkwood France & Co, Minuters 1907 SC 705. The former was a claim in a liquidation. There is nothing in the report of the case to show the basis of taxation and we heard no submission bearing on this matter. As we have noted above, there is a danger in any attempt to rely on older cases on Court taxation without clear understanding of the basis of taxation in question. This is, perhaps, illustrated by the second case - which also related to liquidation. This was a taxation "as between agent and client" in respect of a right to payment out of property recovered or preserved on behalf of the client. It may, therefore, be taken as a taxation on a client paying basis. It is not clear from the judgement what test was applied to the charge. The Lord President was satisfied that it would have been "utterly impossible" to conduct the proof without the presence of the Glasgow agent. We heard no submission that this was a standard relevant to section 13.

It may be observed in the present case that the justification advanced by Sir Crispin for the attendance of the local agent was that the expertise of the Edinburgh agents was in relation to procedure and that the local agent was required because he was the only one capable of dealing with the particular conveyancing issues in this case. It would be premature to comment on the double attendance, as such, but it may be that the relative skills professed, will have a bearing on assessment of the reasonableness or otherwise of rates charged.

Date of claims

There is plainly force in the contention that, as the expenditure covered by section 13 is expenditure "incurred by a person in pursuing a … claim under section 12", claims in respect of exploration of the appellants' rights and in respect of expenditure after settlement of the substantive claim, are not within the scope of section 13. We are not, however, persuaded that the date of Registration of the appellants' own title is a definitive start point. A claim under section 12 might arise in circumstances in which a claimant had no relevant registered title.

The claim for Director's time

It is averred that the appellants' sole Director, majority shareholder and person responsible for management of the company, B G Hamilton, incurred on behalf of the appellants expenditure on disbursements of £3,544.19, and that he incurred on behalf of the appellants expenditure in time estimated in value amounting to £2,340. Further detail was given showing 117 hours spent and charged at a rate of £20 per hour. The respondents had a call seeking further detail of the disbursements. This was answered by production of a travel schedule showing the basis of the claim for time and motoring expenses charged at 40p per mile. Some detail of outlays was given.

In the submissions, the fundamental challenge was to the nature of the relationship of B G Hamilton and the appellant company. Under section 13 the only claim available was a claim for expenditure. There was no provision for remuneration for time and effort. Payment for a controlling director's time was said to be, in effect, reward or enrichment.

The submissions made on this matter were somewhat exiguous and, as we have noted above, parties did not seek a decision at this stage. In the circumstances it is sufficient to note that a distinction can undoubtedly be drawn between recovery of outlays and recovery of a sum for time and trouble. Section 13 does not appear to have anything equivalent in its terms to the provisions of the Litigants in Person (Cost and Expenses) Act 1975 as amended. Prior to that Act party litigants could normally recover no more than outlays: MacBeth,Curry & Co v Matthew 1985 SLT (Sheriff Ct) 44.

Decision

In light of the above, the first plea for the respondent falls to be repelled. Although the second plea was in broader terms, the submissions in support of it covered essentially the same ground as the first and, as we see no basis for simple dismissal, we consider that this plea should also be repelled as it stands. However, we have referred above to the "specific points" discussed before us. We understood it to be accepted that they raised questions of mixed fact and law. More generally, the assessment of the sum due under section 13 will be likely to raise questions of fact and law in this case. Accordingly, whatever the state of the formal pleas we do not exclude further submission on relevance after proof.

The appellants' pleas can be dealt with as follows. The first two relate to the merits and will fall to be resolved after further procedure. The plea in relation to interest and the averments in support of it will be excluded from probation for the reasons discussed above.

The fourth plea sought to exclude the respondents averments in Answer 6 anent the basis for taxation of accounts and the exclusion of work covered by the account already taxed and paid. The latter is not now in issue. In relation to the basis of taxation, when the plea was first taken the contention in Answer 6 was apparently that taxation should be on an agent and client, third party paying basis. As discussed above we do consider that such a basis will frequently provide a prima facie guide in assessment of claims under section 13 but that it cannot replace the terms of that section. In the pleadings as they now stand, the averment in Answer 6 is that taxation should be on a party and party basis. The respondent departed from any such contention and we agree that references to that as the basis for assessment under section 13 should be excluded from probation.

The fifth plea related to the significance of expenditure by B G Hamilton. There is, of course, no reason why expenditure on disbursements by Mr Hamilton on behalf of the appellants, should not be recoverable if such expenditure was reasonably and properly incurred within the meaning of the section. There was some challenge to specification and we accept that challenge to the detail of such disbursement should be the subject of further procedure. In relation to the claim for expenditure of time it may be noticed that we were not addressed specifically by reference to the plea. The submissions were expressly made as being part of the list of issues which would require hearing. We accordingly allow the averments to go to probation under reservation of all questions of relevancy.

We heard no separate submission in support of the sixth plea. It may have been a challenge to specification. It sought to exclude from probation the averment that the Keeper accepted that "he may, in principle, be liable for expenses of the appellants in connection with their claim insofar as it has been reasonably and properly incurred by them for the purposes of section 13(1)". Read fairly it seems plain that the words "for the purposes" are intended to convey something like "within the meaning of" and we assume that the challenge was intended to relate to the contrast between acceptance of liability in principle and rejection in practice. We have dealt with the Keeper's contention in that respect. However as we heard nothing to suggest that the Keeper was not so liable in principle we repel the plea.

We give effect to the seventh plea by repelling the first and second pleas for the respondent.

Further procedure

It remains to determine how matters should now be progressed. Miss Crawford did not dispute that if we were against her main submission, matters would be at large for the Tribunal. Sir Crispin's eventual proposal, of procedure similar to that followed in an action of count reckoning and payment, was not questioned. We agree that the next stage will be to have some form of pleading which accurately identifies the matters in dispute by reference to the heads of claim. Having regard to the difficulties which have been faced by parties in attempting to identify the issues, it seems that, formally, the appellant will have to set out the details of his claim for expenditure incurred, by reference to amounts paid or by establishing an unconditional liability to pay in respect of each head and by giving adequate supporting vouching or information. The Keeper will then have to indicate which items are challenged and why. The appellants must then have an opportunity to answer the challenges. It is probable that the challenges and answers will require adjustment.

It will be our intention to make an order on these lines. However it is possible that there is already a tolerably clear understanding between counsel as to the points of dispute. The parties have already spent a good deal of time on the matter. Although it was made clear that the specific points under challenge, above, were not exhaustive of matters in issue, it is possible that they represent the substance of the dispute. If the Keeper is able, at this stage, to indicate what sums are accepted and to set out the detail of the amounts which are rejected and the reasons for such rejection, this might save a good deal of repetitive submission of material. We shall, accordingly, allow time for parties to discuss procedure further. We have in mind that a period of two weeks should be sufficient to allow counsel to decide whether they can agree an efficient procedure. They should be able to cause intimation of this to be made to our Clerk within a few days thereafter. If not, we shall proceed with a formal order. It may be noted that we consider that the question of appointment of an assessor to sit at any hearing is best left until the further pleadings are finalised.