Andrew Smith Qc V. The Scottish Legal Aid Board
| Jurisdiction | Scotland |
| Judge | Lord Emslie,Lord President,Lady Paton |
| Neutral Citation | [2012] CSIH 14 |
| Court | Court of Session |
| Published date | 15 February 2012 |
| Year | 2012 |
| Date | 15 February 2012 |
| Docket Number | CA34/11 |
| FIRST DIVISION, INNER HOUSE, COURT OF SESSION | |
| Lord President Lady Paton Lord Emslie | [2012] CSIH 14 CA34/11 OPINION OF THE COURT delivered by THE LORD PRESIDENT in causa ANDREW SMITH, Q.C. Pursuer and Respondent; against THE SCOTTISH LEGAL AID BOARD Defender and Reclaimer: _______ |
Alt: Mure, Q.C., Barne; Scottish Legal Aid Board
15 February 2012
Regulation 11
[1] Regulation 11 of the Civil Legal Aid (Scotland) Fees Regulations 1989 (as amended) (the "1989 Regulations"), which were made under powers granted by the Legal Aid (Scotland) Act 1986, provides:
"(1) ... counsel instructed on behalf of a person receiving civil legal aid may prior to the completion of the proceedings for which the legal aid was granted submit a claim to the [Scottish Legal Aid] Board, in such form and complying with such terms and containing such information as the Board may require for assessment purposes, for payment of sums to account of his fees necessarily and reasonably incurred in connection with these proceedings.
(2) A claim may be made under this Regulation only in relation to any case where -
(a) in the proceedings for which the civil legal aid was granted the number of days on which a diet of proof, debate or like hearing is held exceeds 20 days; or
(b) a period of 2 years has elapsed since the date on which the Board gave notice in writing of the grant of civil legal aid.
...
(4) The amount of any payment in respect of a claim under this Regulation shall be 75 per cent of the fees that will become eligible for payment and earned during the period covered by the claim.
(5) The making of a claim under this Regulation shall not be regarded as an account of expenses ...
(6) Where payment has been made in accordance with the provisions of this Regulation but the payment made exceeds ... in the case of any counsel instructed on behalf of the assisted person the total fees allowable to that counsel in respect of the legal aid, the excess shall be repaid to the Fund by such ... counsel ...".
The background
[2] The respondent was instructed as senior counsel for a pursuer in a civil litigation in which the pursuer had received legal aid. A period of at least two years having elapsed since the date on which the Board gave notice in writing of the grant of legal aid, a claim was on 31 January 2006 submitted on behalf of the respondent to the Board under Regulation 11. The claim was submitted on a form devised by the Board. The claim as completed set out the whole particulars sought in the form, including the name of the assisted person, counsel's name, the total amount of the fee said to have been earned (in this case £7,500, excluding VAT) and the amount for which payment was sought (£5,625), being 75% of £7,500. No further details were sought in the form. In particular, no information was sought to vouch that the amount of the fee said to have been earned had been necessarily and reasonably incurred in connection with the proceedings. The claim was accompanied by a certificate given by Faculty Services Limited on behalf of the respondent that, to the best of its knowledge and belief, the information given in the claim was correct, Faculty Services Limited confirming that the claim was in accordance with Regulation 11 of the 1989 Regulations. In response to this claim the Board on 3 March 2006 paid a total of £260 plus VAT. The calculation of this figure remains obscure.
[3] On the first day of the proof in the proceedings (20 February 2007) the pursuer abandoned the action. The defender was assoilzied. The court by its interlocutor found no expenses to be due to or by either party. The proceedings for which civil legal aid had been granted to the pursuer were, accordingly, then complete.
[4] On 22 January 2008 the solicitors who had instructed the respondent submitted to the Board their account of expenses and outlays in respect of the action in question. That account gave details of the work done by the respondent, including that in respect of which the Regulation 11 claim had been made. In February 2008 the Board paid a further sum in respect of the respondent's fee. On 4 February 2011 it paid the remainder of the £7,500 plus VAT fee.
[5] An issue arose between the present parties as to the dates from which interest should run in terms of section 4 of the Late Payment of Commercial Debts (Interest) Act 1998 in respect of the fee claimed in January 2006 and in respect of certain other fees. After a debate in the Outer House the Lord Ordinary held that interest should run on the value of the sum claimed in the Regulation 11 application (being 75% of the total fee) from 30 days after 1 February 2006, being the date on which the Regulation 11 application was received by the Board, and thereafter on the total value of the fee from 30 days after 23 January 2008, being the date on which the Board received the solicitors' account of expenses. This determination gave effect to a secondary submission advanced on behalf of the respondent. The Board's position before the Lord Ordinary, and before us, was that interest should run but only from 30 days after receipt by it of the solicitors' account.
[6] Before the Lord Ordinary there was discussion of two other fees rendered by the respondent. The Lord Ordinary made, in respect of the first of these, a finding equivalent to that made in respect of the claim made on 31 January 2006 and, in respect of the second of them, a finding which reflected the acknowledged circumstance that that fee had been rendered after the proceedings were complete. It was subsequently realised that the first of these two fees had also been claimed after the completion of the proceedings and that, accordingly, the claim was, in terms of Regulation 11(1), incompetent. At the outset of the reclaiming motion it was agreed that the Lord Ordinary's interlocutor should be varied to bring the finding as regards the first of these two fees in line with the second of them. Thus, the only issue for determination in this reclaiming motion concerns whether or not the Lord Ordinary's finding in relation to the Regulation 11 claim submitted on 31 January 2006 was correct.
The legislation
[7] The Late Payment of Commercial Debts (Interest) Act 1998 (as amended) provides:
"1(1) It is an implied term in a contract to which this Act applies that any qualifying debt created by the contract carries simple interest subject to and in accordance with this Part.
(2) Interest carried under that implied term (in this Act referred to as 'statutory interest') shall be treated, for the purposes of any rule of law or enactment (other than this Act) relating to interest on debts, in the same way as interest carried under an express contract term.
...
2(1) This Act applies to a contract for the supply of goods or services where the purchaser and the supplier are each acting in the course of a business ...
(2) In this Act 'contract for the supply of goods or services' means -
(a) a contract of sale of goods; or
(b) a contract (other than a contract of sale of goods) by which a person does any, or any combination, of the things mentioned in subsection (3) for a consideration that is (or includes) a money consideration.
(3) Those things are -
...
(c) agreeing to carry out a service.
...
(7) In this section -
'business' includes a profession and the activities of any government department or local or public authority;
...
'government department' includes any part of the Scottish Administration.
2A The provisions of this Act apply to a transaction in respect of which fees are paid for professional services to a member of the Faculty of Advocates as they apply to a contract for the supply of services for the purpose of this Act.
3(1) A debt created by virtue of an obligation under a contract to which this Act applies to pay the whole or any part of the contract price is a 'qualifying debt' for the purposes of this Act ...
...
4(1) Statutory interest runs in relation to a qualifying debt in accordance with this section (unless section 5 applies).
(2) Statutory interest starts to run on the day after the relevant day for the debt, at the rate prevailing under section 6 at the end of the relevant day.
(3) Where the supplier and the purchaser agree a date for payment of the debt (that is, the day on which the debt is to be created by the contract), that is the relevant day unless the debt relates to an obligation to make an advance payment.
...
(5) In any other case, the relevant day is the last day of the period of 30 days beginning with -
(a) the day on which the obligation of the supplier to which the debt relates is performed; or
(b) the day on which the purchaser has notice of the amount of the debt or (where that amount is unascertained) the sum which the supplier claims is the amount of the debt,
whichever is the later."
Section 5 makes provision for the remission in certain circumstances of statutory interest. Section 6 provides for the setting by order of the rate of statutory interest.
[8] Directive 2000/35/EC of the European Parliament and the Council of 29 June 2000 on combating late payment in commercial transactions provided by Article 6.1 that Member States should bring into force the laws, regulations and administrative provisions necessary to comply with the Directive by 8 August 2002. Section 2A of the 1998 Act was inserted in furtherance of that obligation. Paragraph (7) of the preamble to the Directive stated that heavy administrative and financial burdens are placed on businesses, particularly small and medium-sized ones, as a result of excessive payment periods and late payment; and paragraph (16) that late payment constitutes a breach of contract which has been made financially attractive to debtors in most Member States by low interest rates on late payments and/or slow procedures for redress. Paragraph (16) continues:
"A decisive shift,...
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