Expenses Flashcards
When do you pay expenses?
There are usually expenses even if you are successful that you don’t recover. The risk of litigation is that if you lose you have to pay expenses of other side - this is a big penalty and a big disincentive.
What is the general rule about expenses?
Expenses follow success.
If you win you get your expenses if you lose you pay the other expenses.
It is a matter of the discretion of court and it is difficult to appeal.
How can you appeal an award of expenses?
In order to appeal you must show that the person who has exercised that discretion has either taken something into account they shouldn’t have done or failed to take something into account they should have done, or failed to exercise their discretion in a way which was manifestly wrong.
When will parties be refused expenses?
In some situations successful parties will be refused expenses, or at least in part e.g. They did not give the unsuccessful party proper opportunity before the litigation started to resolve matters before the litigation began.
In most initial writs there is the standard averment that the defender has been called upon to make reparation but has refused to do so, so the successful party may be refused expenses.
Equally if a defender encourages litigation against them and it turns out to be unjustified there is a possibility of a successful defender being refused expenses, at least in part.
This can result in an award of expenses either not being made or being modified in some way.
What is the tender procedure?
Tenders - remember this procedure. That is a formal ultimatum procedure which activates a situation in which a defender can protect himself from further award of expenses and get expenses awarded in his favour by laying down a marker in the form of a tender and say that if you do not take that offer or give an award as good as the offer then you have to pay my expenses from now on.
If the pursuer fails to meet the tender then the defender is successful beyond the date of the tender because he has predicted correctly the outcome of the litigation in a way which is in his favour.
This is a formal judicial offer.
If awarded less than the tender then they have to award the expenses from the date of the tender.
Can be a valuable tool in resolving the case.
If pursuer rejects tender and litigates on then the defender
So in almost every case the most significant expense will be the later stages of the case.
If the pursuer thinks it will be awarded more and rejects the tender then is awarded less the pursuer is liable for the expenses from the date of the tender.
Where there is more than one defender the defender will be sued jointly and severally. You can frame it so one defender offers to the pursuer a sum contingent on the other defender also participating in the tender.
(1) the defenders can get together and agree that they are jointly liable
(2) offer of pursuer is contingent on the other defender accepting a share of liability
Pursuer only gets something if the other defender joins in first. Multiple parties means more challenging to resolve the case.
What are the stages to the expenses procedure?
There are a number of stages to the expenses procedure:
- Assessment of liability for expenses - Sheriff in ordinary procedure determines this.
- One party moves for expenses and the sheriff determines that and an award of expenses is made in favour of one party for the other and the other party is found liable to the other in expenses - Modification - once that has been done those expenses can be modified to an extent either to nil or to a percentage or some way or another. That doesn’t happen very often but it can happen.
A party who is found liable in expenses can ask to have that liability modified in some way. But usually one party is found liable in the court decree to the other in expenses.
When that happens an account is made up by the successful party in relation to expenses and they are sent for taxation.
- Account of expenses prepared
- Diet of taxation - an independent auditor of the court determines at taxation what amount the expenses are going to be. There are several methods of taxation but you must understand that each item is itemsied and an amount is put in in respect of each item. An auditor can then remove from the account certain items which you are not entitled to.A diet of taxation is a hearing in front of an auditor - both solicitors turn up. The solicitor for the successful party whose account it is and the solicitor on the other side who will argue against you getting itemised goods. The auditor will make a decision and report and give this to the sheriff. The sheriff then makes a decision and discerns for the amount on the report (or such other amount as there has been a note of exceptions on report) as it is actually a matter for the sheriff.Decree on expenses has to be enforced the same as any decree - by doing diligence on it if necessary. The stages we are looking at are liability, modification, taxation, a report and then discerning for expenses.
- Sheriff Discerns
What is caution?
In most cases the defender is either insured or good for the money.
You must to be worth suing.
You must work out whether defender is worth suing and if being sued you should take steps to protect yourself if the pursuer is not good for the money. In certain situations there is nothing you can do but you can Enrol a motion for caution of the expenses of the action.
A caution is a protective measure which can be taken.
Protective measure
The difficulty is that often a pursuer would be deprived of access to the court if they haven’t filed a caution or they are previously bankrupt. But Sheriffs reluctant to deprive pursuers access to court.
Who is responsible for outlays?
Solicitors are responsible for payment of outlays so if you instruct a medical report or counsel then you are responsible to make payment for these fees.
You may win the case but not get the money back from the other side.
Obtain funds from client in advance in order to protect yourself
May have to withdraw from acting if client refuses to pay as you have to be in a situation where you know you are going to be paid.
Look out for your own professional interests.
However big banks and insurance companies used to be good for the money but it is still important to check they can pay as it is your responsibility to pay the outlays.
When might an agent be personally liable?
An agent could be personally liable for expenses if they conduct the proceedings without the authority of the client - must have clients instructions for doing things or the court can find you personally liable if you Conduct proceedings without authority of client
Errors - you could be found personally liable, e.g. If you do not turn up to court or mis-diarise something.
Abuse of process - counsel are not in the same position.
What are the modes of taxation?
Judicial / party and party
Agent and client
Agent and client third party paying
There is not much different between agents but there is substantive difference between judicial.
Judicial expenses are what you are entitled to recover from the other side. Agent and client expenses are what you are entitled to charge your own client and there is variably a short fall between what you are able to recover from the other side and what you are able to charge your client.
Some solicitors accept remuneration on a judicial basis and do not charge their clients any more - this tends to be done by firms with large volumes of personal injuries cases for whom hey are acting on a no win no fee basis.
In practice, the difference is that if in the course of a litigation you have to amend, normally the expenses of that amendment are not recovered from the other side, in fact, you have to pay the expenses of the other side. You would be entitled to charge your client the cost of that if they give you further information or they provide up to date reports.
You are entitled to charge your client for this but cannot put this into the judicial account.
Also - updating precognition or precognosing someone not called as a witness or second medical report - agent and client expenses only.
Agent and client is the scale for charging client.
Judicial is what you charge the other side.
It is important that any client can say they are going to have the auditor of court tax that account then that account is made up on an agency and client basis and taxed on that basis.
Agent and client third party paying is similar and is appropriate for legal aid work - there are specific regulations which deal with remuneration you are entitled to get for each item of business. A lawyer is also remunerated by this.
In civil cases it is a low rate of pay.
What happens when you recover judicial expenses?
When you recover judicial expenses you can get a percentage increase in certain situations which can help make up what the client was due to pay you and what you are due to get from the other side. This is called an Additional fee and found under Act of Sederunt (Fees of Solicitors in the Sheriff Court) (Amendment and Further Provisions) 1993.
What is the role of law accountants?
Role of law accountants - exist to make up these special accounts. Solicitors normally outsource this as it is time consumsing. In addition, your client may want to know what the likely costs are and you can refer this matter to your law accountant as it is a matter of experience.
What are the restrictions on expenses?
Pre-litigation expenses - you can recover theses but not a huge amount, e.g sending letters, correspondence, investigations, abortive investigations. You cannot recover this from the other side.
Consultations - only entitled to two consultations unless cause is shown in terms of judicial expenses. The other side should not have to pay for the client being a difficult person.
A regular or necessary expense is tax.
Certification of cause as suitable for employment of counsel - if you employ an advocate or solicitor advocate you do not recover this from the other side unless the sheriff certifies this before you recover the expense from the unsuspecting party. The test is whether it is justified by the circumstances.
One problem of moving business from court of session to sheriff court is that in sheriff court you require certification. At the moment the privative jurisdiction for court of session is £5000 the proposal is to change this to £150,000.
Certification of skilled witnesses - e.g. Medical expert or accountant in divorce case, if you want to recover a fee for the work they have done you need to get them certified as skilled witnesses at the end of the case.
When a motion for expenses is made you have to remember to ask for certification of counsel if appropriate and certification of skilled witnesses.
Who is liable for expenses?
At end of case you should ask for the expenses of the action and you should get these if successful.
Ongoing - after the amendment procedure or some other incidental matter.
These motions can be dealt with and be found entitled to expenses.
Reservation of expenses - there is not a lot of point in this so sheriff can reserve this until you have an explanation however decisions should be made there and then if you can. It is important to reopen the question of reservation when the general expenses matter is being dealt with
Expenses in the cause - whoever is successful at the end of the day will get those expenses
Modification - There is also the possibility of expenses being modified to nil or to a particular amount.
No expenses due to or by either party - they have to pay their lawyers only and say none are due by either party. This is better from a defender’s point of view.
Aim for expenses in the cause if you are going to win at the end of the day.
What is the test for expenses for persons on legal aid?
Test on merits - whether you have a good enough case. Need to have reasonable prospects of success but do not have to satisfy beyond 50%. The test is lower than more likely than not, need a presentable case.
Financial limits means it is difficult to qualify for legal aid. Only the very poor or very rich can litigate…
Lodge and intimate legal aid certificate - this is important
Modification of expenses - unless they are modified you must have expenses taxed to obtain decree where the auditor fixes the amount. This prevents the need for any taxation as you get a block amount of money. It is rare to happen.
Bell v Inkersall Investments Ltd (No. 2) 2007 S.C. 823 — an assisted persons liability for expenses should not exceed the amount which in the courts opinion is reasonable having regard to all the circumstances including the means of the party and conduct. This case is the authority for it. When making case for modification you must be in the situation where you have clean hands. If not, the penalty will be that your modification will not be allowed.
