Scottish Court of Session Decisions

OUTER HOUSE, COURT OF SESSION [2012] CSOH 26
	OPINION OF LORD WOOLMAN in the cause TODS MURRAY Pursuer; against ARAKIN Defender: ­­­­­­­­­­­­­­­­­________________

Act: Duncan et Watts, Simpson & Marwick, Solicitors

Alt: McNamara (Party)

14 February 2012

[1] Tods Murray seek to recover the balance of their professional fees for legal work which they undertook on behalf of Arakin. I set out the full history of this dispute in my earlier opinion: 2010 CSOH 90; 2011 SCLR 37. Following a lengthy debate, I excluded all bar one of the lines of defence. I also dismissed the counterclaim. The reclaiming motion against that decision lodged by Arakin was refused.

[2] The only outstanding matter therefore concerns the sum due to the pursuers. I identified the issue as follows in my earlier opinion: "The proof before answer will be restricted to the sole issue of the sums paid by the defenders in respect of the taxed accounts and whether any sum is due by them to the pursuers." (para. 144).

[3] Arakin maintains that it does not owe any sums to the pursuers. Mr McNamara, who again appeared on behalf of Arakin at the proof, contends that in fact Arakin has overpaid any sums due.

[4] It was agreed in advance of the proof that each party should lodge affidavits from their witnesses, which would be treated as their respective evidence in chief. There would then be cross-examination and re-examination as each party saw fit.

[5] The pursuers led the evidence of Mr Michael Simpson and Mr Robert Dobie. They were partners in Tods Murray at the material time and were responsible for the legal work undertaken by the firm on behalf of Arakin. I found them both to be patently honest and reliable witnesses.

[6] The pursuers also led the expert evidence of Mr Alex Quinn. He is a law accountant with extensive experience in the field, having set up his own practice in 1971. Prior to being instructed as an expert in this case in 2007, he had not had any professional contact with either Mr Simpson or Mr Dobie.

[7] The scope of the dispute is now in narrow compass. Essentially, it is an accounting exercise. It involves answering two simple questions. First, what are the fees to which the pursuers are entitled? Secondly, what sums have already been paid by Arakin?

[8] I found Mr Quinn to be a careful and helpful witness. He had prepared a document entitled "Updated Reconciliation" dated 6 July 2011. It set out the materials he had considered, the methodology he had followed and the conclusions he had reached. Mr Quinn explained that he began with the reports of the Auditor of Court. Taxations had taken place in respect of the three matters in which Tods Murray had provided legal services to Arakin: (a) the McLachlan and Brown action; (b) the Glasgow District Council arbitration; and (c) the Harvey Construction litigation.

[9] The Auditor of Court had taxed the pursuers' accounts in the following sums:

Account	Taxed Amount (£)
GDC Arbitration Account No. 6 (incl. VAT)	124,288.85
Additional Fee Uplift on No. 6	61,059.33
VAT at 17.5% on uplift	10,685.38
MaLachlan & Brown Account No. 12 (incl. VAT)	161,875.94
Harvie Construction Account No. 13 (incl. VAT)	60,000
Harvie Construction Account No. 14 (incl. VAT)	1,000
McLachlan & Brown Account No. 36 (incl. VAT)	44,687.61
TOTAL	409,597.11

[10] Having ascertained the total sum due by way of fees, Mr Quinn then sought to determine the sums paid by Arakin. After examining the pursuers' ledgers, he found that Arakin had paid £113,979.88 toward the GDC account and £201,103.31 toward the GDC account. In addition, Arakin was entitled to credits of £8,137.52, inclusive of interest. Added together, that brought out a figure of £323,220.71. Simple deduction yielded a sum due by Arakin to the pursuers of £86,376.40.

[11] Mr Quinn's evidence was highly persuasive. His calculations were set out in full in his affidavit and they appeared irresistible. If anything, his answers in cross-examination improved his testimony. Mr Quinn explained his clear reasons for arriving at his conclusion. That was against a background where it was difficult to understand the structure and foundation of the lines of questioning pursued by Mr McNamara.

[12] Mr McNamara did not provide a proper basis for selecting any alternative figures to those of Mr Quinn. Instead, in his affidavit Mr McNamara rehearsed a number of scurrilous allegations against Mr Simpson and Mr Dobie. I shall not dignify them by repeating them here. I criticised Mr McNamara for making unsubstantiated allegations in my earlier opinion. Apparently, my words have had no effect.

[13] I did not find either of the other two witnesses called on behalf of Arakin to be of assistance. Mr Stephen Clark was formerly a certified accountant, but no longer holds a practicing certificate. He appeared to have been cited to counter the evidence of Mr Quinn. The objections to classifying him as an expert witness are formidable. He is not a law accountant and has no experience of law accounts. In particular, he has no knowledge of the process by which solicitors' accounts are rendered. With regard to this case (a) he had not been sent all the relevant materials; (b) he had only skim read some of them; and (c) he had not conducted any detailed exercise. Further, in relation to a VAT point canvassed at the proof, Mr Clark relied on conversations with two former colleagues within Her Majesty's Customs and Revenue and a 2002 VAT handbook. Taking these matters together, I found him a less than convincing witness and am not prepared to accept that he was qualified to give expert evidence.

[14] The other witness called on behalf of Arakin was Mr Ian Gow. He acted as Arakin's conveyancing solicitor from 1987 onwards. Mr McNamara remains one of his individual clients. Mr Gow professed to have no knowledge of litigation. He stated that "I try to stay out of matters like this". His only involvement in the dispute was to take the minutes of two meetings which took place between parties. In those circumstances, he could be classified neither as a factual, nor as an expert, witness. In my view, his evidence had no bearing on the issues in dispute.

[15] After the proof, each side produced a detailed Note of Argument. In the case of Arakin, it ran to 100 pages. A day was then set aside for submissions. After counsel for the pursuers had finished his oral argument, Mr McNamara moved a Minute of Amendment at the bar. It alleged fraudulent misrepresentation on the part of the pursuers. I refused to allow the Minute. I did so having regard to the interests of justice and in particular (i) the stage at which the Minute was tendered; and (ii) the fact that the allegations appeared unfounded; and (iii) Mr McNamara's history of making such allegations.

Decision

[16] The pursuers' case was straightforward and cogent.

[17] I found it very difficult to discern the defence to the action. It became evident that Mr McNamara wished to revisit many points which had already been decided. In particular, he wished to reopen the taxations and to scrutinise the original invoices rendered by the pursuers. He did not appear to accept my ruling that the taxations superseded the individual fee notes and invoices.

[18] The issue relating to VAT mentioned above is as follows. Mr McNamara contends that Arakin will be unable to recoup any VAT on payments made to the pursuers, as no VAT invoices have been rendered. In my view, the point is irrelevant. Whether or not Arakin can recoup VAT does not bear upon identifying the correct sum owed by Arakin to the pursuers. In any event, both Mr Dobie and Mr Simpson stated that the pursuers had contacted Her Majesty's Revenue and Customs and also taken independent advice. They had been advised that Tods Murray are entitled to render a VAT invoice now. At that point, Arakin can make a claim.

[19] Regrettably, not only in the course of the proof but also in his submissions, Mr McNamara continued to make allegations about the conduct of the pursuers. A further matter caused me considerable disquiet. I was informed that shortly before the date for written submissions, Mr McNamara lodged a complaint against Mr Duncan, counsel for the pursuers, and also a further complaint against Mr Dobie. The complaints were sent to their respective professional bodies.

[20] I regard this conduct as highly troubling. If Mr McNamara had not already been declared a vexatious litigant, I would have taken this matter further. I have already given my view about Mr Dobie as a witness. With regard to Mr Duncan, in my view he acted with scrupulous care in his presentation of the case. He fulfilled his professional duty by assisting the court in trying to identify and clarify the case made on behalf of the defenders.

Conclusion

[21] I shall grant decree for £86,376.40 in favour of the pursuers. The pursuers asked that all questions of interest and expenses be reserved.