Judicial Expenses – Recent Changes

It would have been easy for the coming into force of the Act of Sederunt (Taxation of Judicial Expenses Rules) 2019 to have gone unnoticed.  One would have been forgiven for simply adding it to myriad of statutory instruments that are introduced.

However, together with the Act of Sederunt (Rules of the Court of Session, Sheriff

Appeal Court Rules and Ordinary Cause Rules Amendment) (Taxation of Judicial Expenses) 2019, the Rules effect significant changes to the law and practice of expenses recovered in litigations across Scotland.

The Rules

The Rules apply to most proceedings commenced on or after 29 April 2019.  They attempt to create uniformity across the Sheriff Court, Sheriff Appeal Court and Court of Session.  Summary cause actions are excluded in their entirety and will be governed by the previous rules.

The Rules have been in the making for some time, bringing into effect the considerations of Sheriff Taylor’s Review of Expenses and Funding of Civil Litigation in Scotland from 2013.

The Rules codify and re-state various existing rules relating judicial expenses.  For instance, the form of the account of expenses is unchanged; and it stated that only expenses that are “reasonable for conducting the proceedings in a proper manner” will be allowed.

Unit Charges

One of the significant changes is how the entries making up the account of expense are valued.  As opposed to fees, the Rules provide for the recovery of charges.  Charges are expressed a multiple of a unit, with a value being ascribed to each unit.  A unit corresponds with the norm for time-recording, namely six minutes of chargeable time.  This take the place of the previous 15-minute blocks.

The value ascribed to a unit is £16.40, or the equivalent of £164 per hour.  There is a reduction in the unit value for simple procedure cases (with a further discount applied where the claim’s value is less than £2,500).

Outlays: counsel and experts

Of more practical significance is the changes relating to the recovery of fees of counsel/solicitor advocates and the fees of expert witnesses.

As is presently the case, counsel’s fees in the Sheriff Court or SAC are only recoverable if the action, or particular element of work, has been sanctioned as suitable for the employment of counsel.  The test for this unchanged (see s.108 of the Courts Reform (Scotland) Act 2014).

It is worthy to note that sanction for more than one counsel, or senior counsel, should be specifically recorded in the interlocutor.

For an expert the person required to certified as such by the Court.  However, the test for certification of an expert is now found in Rule 5.3: (1) that the person is a person of skill, and (2) that is was both “reasonable and proportionate” to employ the expert.

Of most significance in this section is that in respect of either (or both) certification and sanction, the general rule is that certification/sanction only applies to work carried out following certification/sanction.  The court has discretion to apply certification/sanction retrospectively to work already carried out, but the applicant must show cause for not having applied previously.

The court will specify what work is covered by a retrospective sanction of counsel, and the auditor can only allow fees for such work.  This will inevitably lead to confusion such that it should be avoided by timeous certification.

Procedure for taxation of expenses

The Rules deal with the substance of rules relative to taxation of expense.  The procedural changes are effected by the Act of Sederunt (Rules of the Court of Session, Sheriff Appeal Court Rules and Ordinary Cause Rules Amendment) (Taxation of Judicial Expenses) 2019.

The new procedural provisions standardise the procedure for taxation across the different judicial forums, which is uncontroversial and to be welcomed.

In particular:

1. In ordinary cause actions and SAC appeals there is now a four month time limit after the date of the final judgment for the lodging of an account of expenses.
2. Lodging an account later than that period requires the permission of the Court.
3. When the relevant information has been provided to the Auditor, it is for the Auditor to intimate the Diet of Taxation to parties.
4. The paying party is now required to lodge points of objection in advance of the Diet. They must demonstrate excusable cause where these are not lodged timeously, otherwise the Auditor must not take account of them.
5. The Auditor must prepare a statement of the amount of expenses as taxed.
6. Objections to that statement must be lodged within 14 days after the date of the statement.
7. Where objection is taken, the Auditor must lodge a statement of reasons for their decision.

Analysis

The Rules contemplate more transparency between parties and the Courts as to the involvement of counsel or expert witnesses.  The benefit of making costs, and the related risk attached to litigation, more visible is commendable.

From a practical perspective, a proactive approach is required in relation to certification and/or sanction.  These issues will need to be contemplated early in the action to avoid unnecessary steps to recovery.

The unit-based charging reflect a modernisation of the approach to judicial expenses.  It recognises that feeing arrangements between solicitors and clients normally have little bearing on how much a party is entitled to recover by way of judicial expenses.

However, it remains to be seen whether the new basis of recovering judicial expenses will increase or decrease the fees actually recoverable.

The procedural changes for the taxation of accounts of expenses are unsurprising but do not necessary provide as much clarity as could have been achieved.  The Auditor is required only to provide a “statement of the amount of expenses as taxed”, with a statement of reasons only following the lodging of a note of objections.

In reality, given the discretion held by the Auditor, their reasoning is an integral part of the taxation process.  Whilst practice varies widely across Scotland, a note of the Auditor’s reasoning at the point of taxation is helpful in practice.

The information and opinions contained in this blog are for information only. They are not intended to constitute advice and should not be relied upon or considered as a replacement for advice. Before acting on any of the information contained in this blog, please seek specific advice from Gilson Gray.