Scottish court refuses costs recovery because claimant used English firm

Court of Session: Wider issue of solicitors from elsewhere conducting litigation in Scotland

A woman who lives in Scotland but chose to instruct an English law firm to conduct her personal injury case, using a Scottish law firm as agents, cannot recover the English firm’s fees, Scotland’s highest civil appeal court has ruled.

Lord Carloway, Lord President of the Court of Session, said there was “no indication” that Blacklocks, an Edinburgh firm acting as agents for Irwin Mitchell’s Birmingham office, “were even aware” of the work done by the English firm.

He said that although this case concerned whether the claimant (pursuer in Scotland) could recover fees charged by English solicitors, it involved a “wider issue concerning solicitors from another jurisdiction conducting litigation in Scotland”.

The Inner House of the Court of Session heard that Margaret Kirkwood was involved in a road accident in France in 2015.

She instructed Irwin Mitchell in Birmingham to pursue her claim in the Scottish courts. The national law firm has an office in Glasgow, but it was not involved. Instead, Irwin Mitchell engaged Blacklock Solicitors in Edinburgh to act as agents.

The claim settled in March 2020 for £475,000. Blacklocks sought to recover fees of £260,600, of which just £8,700 plus VAT was its own fees, with the rest Irwin Mitchell’s costs (or expenses) of £93,000 plus disbursements (called outlays).

Taxation of fees at the Court of Session is carried out by an auditor, who decided that none of Irwin Mitchell’s fees would be allowed, on the grounds that it was “not reasonable for the proper conduct of the cause” for Dr Kirkwood to have instructed English solicitors.

However, he did allow £136,800, made up of Blacklocks’ reduced fees and “a number of outlays which Irwin Mitchell had incurred, including counsel’s fees”.

The claimant appealed to the Outer House (the Scottish High Court), where Lord Menzies ruled that it “could not be said that the auditor had exercised his discretion unreasonably”. Blacklocks appealed to the Inner House.

Lord Carloway said it was “important that litigation in Scotland is conducted by those whom the court has authorised” and were subject to its costs regime.

“The court has a duty to ensure access to justice. Part of the court’s fulfilment of that duty is the maintenance of a detailed expenses regime which is designed to keep the costs of litigation at what the court considers to be a reasonable level.”

Lord Carloway said it was “manifest” that this litigation was not being conducted by solicitors authorised by the court.

“On that ground alone, the auditor would have been bound to tax off Irwin Mitchell’s fees in so far as they related to the general conduct of the litigation.

“All of this is not to say that in Scottish litigation the fees of English solicitors for particular pieces of work are not recoverable. Of course they are.”

However, Lord Carloway said that normally Scottish solicitors would be responsible for the “general conduct” of the litigation.

“There is no indication in this case that Blacklocks gave any thought to, or were even aware of, the work carried out by Irwin Mitchell.”

Had Blacklocks been instructed to conduct the case “in a proper manner”, it would have carried out “the bulk of the work” and instructed English solicitors to carry out “discrete pieces of work” for particular purposes.

Lord Carloway said the auditor had a “wide discretion” to determine the matter, and the grounds of challenge were “analogous to those in a judicial review”. The auditor’s decision to use his discretion would only be successfully reviewed “if no reasonable auditor could have reached it”.

The auditor had “extensive experience” of the higher rates charged by solicitors in England.

“Even if the court required to consider whether it was reasonable to instruct English agents to carry out particular items of work, like the auditor, the court would have quickly agreed with the auditor’s view that the significantly higher charge out rates in Irwin Mitchell’s account militated strongly against this being so.”

Neither the auditor’s nor Outer House’s approach could be faulted and Lord Carloway refused the appeal.

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