Andrew Upton and Rachel Bell look at the implications of a recent court decision which has given simple procedure users in Scotland some much needed confirmation regarding expenses.
The case itself - Andrew Martin v Southern Rock Insurance Company Ltd - was for damages of £1665.88 in respect of loss arising from a car accident. The parties ended up reaching settlement terms but were not able to agree on the issue of expenses.
As outlined in the Court Reform (Scotland) Act 2014, and The Sheriff Court Simple Procedure (Limits on Award of Expenses) Order 2016, if a claim is greater than £200 but less than or equal to £1500, the expenses awarded by the sheriff may not exceed £150. In this case the parties had settled a claim for £1000 and agreed on £150 expenses as per the rules.
The parties disagreed on whether the £150 was inclusive of VAT and the £100 outlay in respect of the court fee for raising the claim, as argued by the respondent, or whether VAT and outlays should be added to the expenses award, as maintained by the claimant.
The solicitor for the claimant submitted to the sheriff the starting point was set out in Act of Sederunt (Fees of Solicitors in the Sheriff Court) 1993, which applied to "work done and expenses or outlays incurred." The claimant argued that in both the 2014 Act and the 2016 Order, only expenses are referred to, so if the intention had been to exclude VAT and outlays that should have been made clear.
This approach had previously been followed in the unreported case of Ashleigh Potter v OSC Group Ltd at Aberdeen Sheriff Court, where Sheriff Hodge saw no reason why the 1993 Act of Sederunt should not apply and held that outlays incurred and VAT can be included in the account of expenses.
Lastly, the claimant submitted that it was unfair if a successful claimant could be left out of pocket because they had to pay court fees. This would be inconsistent with the principles of a successful civil justice system as set out in the Report of the Scottish Civil Courts Review 2009.
The solicitor for the respondent instead argued that the sheriff should take no regard to the 1994 Act and this matter was governed by the 2014 Act and subsequent 2016 Order which allowed for a cap to be imposed. The respondent argued that this is where this matter started and where the matter should end. Also, the respondent submitted that having capped expenses excluding VAT and outlays would reflect the principle of certainty for court users, which was one of the principles the simple procedure rules were based on.
The sheriff discussed the numerous pieces of legislation, orders and schedules which applied to expenses at simple procedure and noted they appeared to be unnecessarily complex and excessively dispersed across primary and secondary legislation. Despite these complexities, the sheriff was minded to agree with the claimant in that the terms of the 2014 Act and 2016 were not exhaustive as to what a successful party may recover given that the 1993 Act does not treat outlays as tantamount to expenses.
The sheriff was therefore satisfied that under simple procedure, the capped expenses will be subject to the additional outlay of registration of a claim and VAT. Therefore, the sheriff awarded the agreed £1000 in settlement of the claim plus expenses of £150 and the outlay of £100 in respect of court fees and VAT.
Lessons from this decision
The question under the previous small claims procedure of what the capped fee included was never resolved. This decision represents a welcome clarification (albeit, not binding) as to how Simple Procedure expenses are to be dealt with.Full text of the decision is available here.