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OUTER HOUSE, COURT OF SESSION
[2006] CSOH 14
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P914/03
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OPINION OF LADY
SMITH
in the Petitions of
ABERDEENSHIRE
COUNCIL
Petitioner;
for
An Order freeing
the children A, B and C for Adoption
Hearing on a Note
of Objections to the Auditor's Report
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Petitioners: J J Mitchell, Q.C.,
Digby Brown
Reporting Officer and curator ad litem: Howie, Q.C., Anderson Strathern
31 January 2006
Background
[1] In these
petitions, the petitioners sought orders to have three children from the same
family declared free for adoption. In accordance with the normal procedure, an
advocate was appointed as reporting officer and curator ad litem (together referred to in this
opinion as "curator") in terms of the Adoption Act 1978 and Rule of
Court 67.11. That appointment was
made by interlocutor dated 27 June
2003 which required him to lodge the necessary reports within six
weeks. The appropriate reports were
prepared by the curator and lodged late, on 22 December 2003.
Further procedure, including a contested proof, followed. Freeing orders were thereafter pronounced in
respect of all three children in terms of interlocutors dated 22 June 2004.
Introduction
[2] The
petitioners are liable for the fees of the curator. Two items of correspondence in which the
matter of the curator's fee is mentioned passed between the petitioners and the
curator were before the Auditor. In a
letter dated 17 September 2003
addressed to the curator's clerk, Mr Stobie, a
solicitor employed by the petitioners wrote:
" I said that I would get back to you this week about the
fee in relation to (the curator's) appointment. I am advised by my Council's Edinburgh
agents that there is no set rate for this appointment, but they do advise that
in other cases an hourly rate of £100 has been applied. I understand you may wish to consider this
matter and come back to me. It may be that we could seek assistance from a Law
Accountant to prepare a fee note, if this would assist. In the meantime, I am happy to consider any
comments you wish to make."
[3] The
clerk responded advising that the letter had been passed to the curator but
nothing further passed between him and the petitioners regarding the matter of
his fee until he presented his account to the petitioners, on 3 February 2004. It amounted to a total of £19,723.70 exclusive
of VAT which is substantially in excess of what, in
the experience of the petitioners' agents is the norm for such reports where
the parties and children are situated within Scotland.
That norm is, I was advised, of the order of £1,500 to £3,500 and a fee of
£5,000 was "not unheard of". A fee of the order of magnitude of this fee
was, however, I was advised, quite unheard of. The petitioners accordingly
submitted it for taxation by the Auditor of Court.
[4] The
petitioners lodged a document with the Auditor headed "Points of Objection" for
the purposes of the taxation hearing (No. 6/137 of process) in which they
stated general observations and specific objections. The general observations included the
following:
"The Counsel (sic) must express considerable surprise
and concern at the number of hours spent in investigating and preparing the
Reports in this case resulting in an ultimate fee approaching £20,000 plus VAT.
The fee has been split up to reflect 112 hours 15 minutes investigations and 79
hours 15 minutes preparing the Report. In the experience of Aberdeenshire
Council and their Law Accountants who have considerable experience of
preparation of Accounts involving Curator ad Litem
and Welfare Reports the number of hours engaged in this case substantially
exceed the level they would expect to find in a case of this nature. Generally
speaking the standard fee for such a Report would be somewhere in the region of
£1,500 to £2,500 plus VAT. The time engaged drafting such a Report would
normally be somewhere in the region of 3 to 5 hours."
At taxation ,
the Auditor taxed off £2523.70 the effect of which was to reduce the
recoverable fee to the sum of £17,200
exclusive of VAT.
[5] The
petitioners lodged a Note of Objections (No..32 of
process) thereafter and Rule of Court 42.4(2)(c) was applied so as to require
the Auditor to state by Minute the reasons for his decision, all in terms of an
interlocutor dated 9 February 2005. The
Auditor responded in a Minute which was lodged on 30 March 2005 (No.34 of process).
[6] This
opinion follows a hearing in respect of the Petitioners' Note of Objections to
the Auditor's Report relating to the account of expenses submitted by the
curator.
The Auditors' Minute
[7] In his
Minute, the Auditor states, at p.3:
"(The curator)
charged his account based on an hourly rate of £100, which the Auditor
understands was the rate suggested by the Petitioners. The Auditor is,
therefore, satisfied that the rate of £100 per hour is reasonable in this case.
No attempt was made by the agents to
agree a global fee with (the curator's) clerk."
At p. 4 ,
he remarks :
"The Auditor
accepts it was reasonable for (the curator) to decide on and follow the course
of action he considered best for safeguarding the interests of the children and
reporting to the Court. The Court's
interlocutor of 27 June 2003
imposed a strict timetable."
As I have already observed, the
curator did not adhere to the Court's timetable. Rather than reporting in six weeks, he took
almost six months. The Auditor remarked
further at p.4:
"Not having agreed a global fee, nor timetable
for perusal of documents and attendance on witnesses, it is unreasonable to
criticize (the curator's) approach."
At p.5 he explains:
"Having been
satisfied as to the reasonableness of the hourly rate, the Auditor required to
satisfy himself that the time spent ....was reasonable in preparing for and
drafting the reports. The Petitioners submit that the time expended ...in
preparation of the reports is excessive (79 hrs 15 mins).
The Auditor does not doubt that the time spent ....is accurate
. ...............it is not a matter for him to comment on how long the Reporting
Officer and Curator ad litem should
have taken in the preparation of his reports. No attempt was made by the agents
to agree a global fee..."
[8] In
respect that the Auditor restricted the fee by the sum to which I have
referred, that was on account of his finding that the time element for travel
to interview various persons had been overcharged against the actual time
spent, that there was duplication in certain respects of the work carried out
and that where a period of 3pm to 1.30am had been charged for in connection
with report writing, the assumption required to be made that the curator would
have had some break from work during that period.
Submissions for the Petitioners
[9] Senior
counsel for the petitioner, Mr Mitchell QC, recognised at the outset of his
submissions that the Rules of Court made no express provision for the approach
to be adopted when determining what is an appropriate fee for counsel to charge
when acting as Reporting and Curator ad litem in a case such as the present. When acting
in such role counsel was not, however
acting qua counsel and his
position was, he said, more comparable
to that of a solicitor carrying out work on a party/party basis, which failing
a solicitor carrying out work on an agent/client third party paying basis. He submitted that the underlying principle
must logically be the same as that which underlies Rule of Court 42.10, which
appears in the part of the rules that governs fees for solicitors and provides:
"42.10-(1) Only such expenses as are reasonable for conducting the
cause in a proper manner shall be allowed."
That being so, only fees which were
reasonable in connection with conducting the work in a proper manner were
recoverable. Such an approach also
seemed appropriate when the fact that the curator was an officer of the court
was taken into account.
[10] Mr Mitchell also drew attention to the provisions of Rule of
Court 42.7 which applies to the taxation of a solicitor's account as between
agent and client. He relied in particular on the parts of that rule which
provide only for recovery of such outlays as have been "reasonably incurred",
for such fees as are considered to be "fair and reasonable" and, where an
unusual fee is charged, that it is to be presumed that it was not reasonably
incurred unless the contrary is demonstrated (see rule 42.7(6)(a),
(b) and (d)(iii)) .
[11] Moving on his submission, he referred to the case of Dingley v
Chief Constable of Strathclyde Police 2003 SCLR 160 and the Report of the House
of Lords Select Committee on Appeal 1998 [HL 145] referred to in Dingley. He drew on these in three respects. Firstly, it was evident that, so far as
counsel's fees were concerned, the correct approach was to ascertain what was the usual or ordinary fee for the type of work in
question, colloquially "the going rate". Secondly, the position of the third party
payer who has no control over the fee required to be considered. Thirdly, that
the question of what amounts to a reasonable fee should not be answered by
taking the hours spent and multiplying it by an hourly rate. In that latter respect, he referred in
particular to paragraphs 40- 42 of the House of Lords report which states:
" 40. It is clear from the evidence put in on
behalf of the individual counsel that their clerks attributed great weight to
the number of hours worked in preparing the brief and then multiplied those
hours by an hourly rate to produce the brief fee claimed. The hourly rate did not appear to be a rate
always charged by that counsel for all his work but a rate adopted by the clerk
for the purposes of fixing the brief fee on that appeal. This despite Direction 9(d) 'the hours
spent by counsel in preparation are not generally of assistance to the Taxing
Officer ....'.
41. The use of hours worked multiplied by an
hourly rate will seldom be helpful in taxing counsel's fees. Regulation 4(2)(a)
requires the appropriate authority to have regard to 'the time involved' and
TONG 1.11(e) repeats this requirement.
But the time expended by counsel is not necessarily the time to be
remunerated. Only the time reasonably
expended is to be remunerated: otherwise
the inefficient, slow worker, gets better pay for the
same work than the efficient worker. Add
to this the risk (not a feature of these present cases) of counsel consciously
or unconsciously exaggerating the time expended and the limitation on the hours
worked approach becomes even more apparent.
When the hours worked out of court are then multiplied by an hourly rate
substantially higher than that payable as refreshers for hours spent in court,
the dangers of the system are very obvious.
42. In our view the policy that hours spent
by counsel in preparation are not generally of assistance is a sound one and
should be re-affirmed".
[12] Mr Mitchell submitted that the present case raised the question
of the propriety and reasonableness of a time and line account that had the
effect of rewarding the inefficient worker. The fee required to be considered "in
the round". Although the amount of time
taken was a relevant factor, it was not a simple question of looking at how
many hours were spent and applying an hourly rate. He drew attention, by way of example, to the
fact that the fee included an hourly charge for over 79 hours spent in writing
up the reports and submitted that that was an example of where a reward for
inefficiency was clearly being produced. Similarly, over 18 hours was charged
for as having been spent considering the papers, namely the various reports
that had been written regarding the family, yet, to the petitioners' knowledge
(since it was done in their office), it had taken the respondents' counsel only
one day to do so. He pointed out that a time and line basis had never been
agreed. Further, it would not, Mr Mitchell said, have been appropriate for
a local authority, given their public spending constraints, to agree a global
fee in advance.
[13] Mr Mitchell also drew attention to the wide disparity not only
between the "going rate" for such reports and the fee charged by the curator in
this case but between that fee and the fees charged by counsel for the
petitioners which were, I was advised, considerably less in circumstances where
her job was difficult, time consuming and involved a high degree of
responsibility.
[14] Regarding the Auditor's approach, Mr Mitchell submitted that
whilst he began by asking the correct question as to what was a reasonable fee,
he never answered it. He had, in the approach that he adopted, abdicated his
function. It was not as if he had
actually applied a time and line approach since it would be normal, in such a
case, for the Auditor to comment on whether the time spent on a particular task
was reasonable or not. The time and line
approach did not mean that it was simply a question of asking how many hours
were in fact spent and multiplying it by a rate.
Further, he seemed to have assumed
that a rate of £100 per hour was agreed when it was not or at least not on the
basis that it be used as part of a time and line account approach.
[15] Mr Mitchell submitted that the note of objections should be
allowed, that it should be held that the curator is entitled to charge only
what constitutes a reasonable fee for work conducted in a proper manner, not on
a time and line basis and taking account of what is the current "going rate"
for fees for the preparation of such reports. There should then, he said, be a
further remit to the Auditor to determine the fee accordingly.
Submissions for the Curator
[16] Mr Howie submitted that the Note of Objections should be refused.
The Auditor had a wide discretion and he
had exercised it. Whilst he had proceeded on a time and line basis, that was
not a misdirection since it was the petitioners who
had suggested the rate of £100 per hour. He was not suggesting that the adoption of a
time and line approach meant that the Auditor had nothing to do but count the
number of hours spent. He did still
require, he accepted, to form a view about the time taken and had done so. The nearest equivalent basis in the solicitor
/ client context was, he submitted, agent/client third party paying.
[17] He submitted further that, in many such cases, the reporter and
curator ad litem
is reporting in the context of an unopposed petition, the inference being that
the job is an easier one in that event and a lower fee is then appropriate. He
did, though, accept that the Auditor requires, in any such case, to consider
reasonableness. Further, he accepted
that the petitioners were correct to identify the risk, in the time and line
approach, of rewarding inefficiency, it was also important to avoid penalising
thoroughness. The Auditor had not, he
submitted, erred. He had, in his
discretion, taken account of whether the fees were proper charges and whether
they were reasonable. He had certified
them as being reasonable and proper fees. He considered the reasonableness of the time
spent as was evident from the terms of his Minute. Whilst one interpretation of
the passage at p.5 which is quoted above was, he accepted,
that the Auditor had abdicated his responsibilities, the alternative and
correct view was that he simply meant that it was not for him to decide how
much work the curator required to do in preparing his reports. He did, though, seem to accept that the
reference to a global fee was problematic given the nature of the case and of
the petitioners.
Discussion
[18] The
quantification and payment of lawyers' fees has been the source of regular and
unremitting anxiety, grief, frustration and even anger, for generations. This
case seems to be no exception. The fact
of the gulf that exists between the going rate for such reports and the fee
charged by the curator and between that fee and the fees that I was told were
charged by counsel for the petitioner makes the petitioners' reaction to the curator's
fee entirely understandable. Further, I note that their assessment of the going
rate, as advised to the Auditor in their "Points of Objection" document was on
the basis not only of their own experience but that of their Law Accountants.
Their reaction is, accordingly, clearly prompted by credible and reliable
information.
[19] The "going
rate" may not, however, seem fair in an individual case. Whilst it can clearly serve as an important
benchmark, it may appear as overgenerous in some cases and insufficient in
others. It is, accordingly, important to
identify the relevant applicable principle.
It seems to me that, for the purposes of assessing the appropriate fee
for a Reporting Officer and Curator ad litem, it would be right to adopt the principle
enshrined in Rule of Court 42.10 namely that only such fees should be allowed
as are reasonable for carrying out the required work in a proper manner.
[20] Regarding
the suggestion that the rate could be equiparated to
party/party or solicitor/client basis, I am not convinced that it would
necessarily be helpful to do so. I would though observe that I can see that
there must be some similarities with the approach that requires to be taken in
a case where the basis of taxation is solicitor/ client, third party paying
basis. That is because that approach, whilst it takes account of work being
done in the context of the provision of a professional service, it also takes
account of the interests of a payer who has no control over the work done. The Auditor ought to have regard, in my view,
to the interests of the local authority payer in a case such as the present in
the same way that it is relevant in his assessment of counsel's fees where they
are being taxed in a party/party account to have regard to the interests of the
paying third party(see: Dingley at p.171). The key is the payer's lack of control. A local authority in a case such as the
present has no control over the work carried out by the Reporting Officer and
Curator ad litem,
nor should it have. It would be quite
wrong for it to attempt to do so. Such a
person is an officer of the court , independent of the
parties. It would, for instance, have
been wrong for the petitioners to seek to control the timetabling for the
curator's perusal of documents or attendance on witnesses, notwithstanding the
apparent suggestion by the Auditor, at p.4 of his Minute (see the foregoing
quotation) that they should have done so. Similarly, I accept Mr Mitchell's
submission that it would appear to be inappropriate, given their public funding
constraints, for a local authority to agree, in advance, a global fee.
[21] Does the
application of the above principle exclude the use of a time and line approach?
It seems to me that the answer to that
question must be a rather unsatisfactory "maybe". I can see that, on the facts and
circumstances of a particular case, a time and line approach might produce a
reasonable fee for carrying out the required work in a proper manner. It must, though, always be necessary, in my view , to have regard nonetheless to the underlying
principle to which I have referred, to the going rate, to the interests of the
third party payer and to the risk of rewarding inefficiency if a time and line
approach is used.
[22] Turning to
the Auditor's Minute, I regret that I feel bound to conclude that it is
unsatisfactory and demonstrative of fundamental error in his approach. He has
proceeded on the basis of a time and line approach which does not even seem to
have involved checking whether the time spent was a reasonable amount of time
in the circumstances. He has, as was
submitted, abdicated that responsibility by expressly refraining from
commenting on how long the work should have taken (see p.5). His only
deductions from the account were not on the basis of exercising that
responsibility but were as a result of him having noted an overcharging in the
calculations and a duplication of some work.
It is as if he thought that parties had agreed that the curator would be
paid at £100 per hour for however many hours he in fact spent yet that was
patently not the case.
[23] Further,
the Auditor appears to have been heavily influenced by the fact that the
petitioners did not agree a global fee in advance with the curator. He mentions it three times in his Minute. That, however, was an irrelevant
consideration. It would not have been
appropriate for them to do so. Even if they could have done, I do not see that
that would relieve the Auditor of the responsibility of determining what was a reasonable fee for carrying out the required work in a
proper manner.
[24] The
Auditor has also wholly failed to take account of a relevant consideration,
namely, the level of the "going rate" for such reports. As I have already indicated, that rate will
not necessarily be determinative but where evidence of it is put before
the Auditor as it was in this case, he is bound to take it into account or at
least explain, if he has not done so, his reasons for discounting it.
[25] In these
circumstances, there is no alternative but to remit to the Auditor to tax the
curator's account again, using as his basis for taxation the principle that the
curator is entitled to a reasonable fee for carrying out the required work in a
proper manner, taking account of the whole relevant facts and circumstances
which include the "going rate" for such reports.
