Introduction

The case of Dr Margaret Janis Kirkwood against Thelem Assurances ([2022] ScotCS CSOH_53) adjudicated by the Scottish Court of Session's Outer House on August 10, 2022, addresses critical issues regarding the allocation and reasonableness of legal expenses incurred by employing foreign solicitors in Scottish litigation. Dr. Kirkwood, the pursuer, sustained injuries in France and initiated litigation to claim damages from her insurer, Thelem Assurances, the defender. The pivotal dispute centers on whether the expenses associated with engaging English solicitors, specifically Irwin Mitchell of Birmingham, were reasonable and thus recoverable under Scottish court rules.

Summary of the Judgment

Dr. Kirkwood's lawsuit against Thelem Assurances was settled in March 2020, with the defenders agreeing to pay both damages and expenses. Blacklocks Solicitors submitted an expense account totaling £260,629.11, which included fees for Irwin Mitchell. Thelem Assurances objected, contending that the use of English solicitors was unreasonable and thus the associated expenses should be disallowed. The Auditor sided with the defenders, reducing the allowable expenses to £136,783.20 by disallowing a significant portion of Blacklocks' fees and specific outlays related to Irwin Mitchell. Dr. Kirkwood appealed this decision, arguing that the Auditor erred in a blanket disallowance of foreign solicitor fees without assessing their reasonableness. The Court of Session, presided over by Lord Menzies, ultimately upheld the Auditor's decision, finding no error in law and affirming that the expenditure on English solicitors was not reasonable for the proper conduct of the case.

Analysis

Precedents Cited

The Judgment extensively references several key precedents to substantiate the Auditor's decision:

• Wimpey Construction (UK) Limited v Martin Black and Co (Wire Ropes) Limited 1988 SC 264: This case was misinterpreted by the Auditor, who inferred a two-stage test regarding the employment of English solicitors. However, Lord Menzies clarifies that Wimpey did not establish such a test, emphasizing that proper employment entitles English solicitors to reasonable remuneration.
• Scottish Lion Insurance Co Limited 2006 SLT 606: Focused on awarding additional fees for work by English solicitors, this case was also misapplied by the Auditor in the present context.
• McCallion v McCallion [2022] CSOH 36: Referenced to highlight that only in cases where the Auditor's decision stems from a misunderstanding or misapplication of legal principles does the court intervene.
• Stuart v Reid [2015] CSOH 175: Used to support the discretion afforded to the Auditor in determining the reasonableness of expenses.
• Shanley v Stewart 2019 SLT 1090 and CJC Media (Scotland) Limited v Sinclair [2020] CSOH 93: These cases reinforced the principle that the Auditor's discretion should be upheld unless there is a clear error in law or reasoning.

Legal Reasoning

The core legal question pertained to the application of rule of court 42.10(1), which mandates that only reasonable expenses incurred in the proper conduct of a case are allowable. The Auditor determined that hiring English solicitors Irwin Mitchell was not reasonable under the circumstances, primarily because:

• Dr. Kirkwood had permanent residence in Scotland, and the accident occurred in France, suggesting that Scottish solicitors could competently handle the case without the need for foreign expertise.
• The initial engagement was with a Scottish firm, reinforcing the notion that the litigation could be managed domestically.
• The Auditor did not find sufficient justification for the higher costs associated with English solicitors, deeming them unnecessary for the proper conduct of the case.

Lord Menzies emphasized that while English solicitors may in some instances charge higher fees, each expense must be assessed on its individual merit rather than applying a generalized disallowance based on nationality. The court concluded that the Auditor did not establish a precedent against foreign solicitor fees per se but rather made a reasoned judgment based on the specifics of the case.

Impact

This Judgment reaffirms the substantial discretion granted to Auditors in assessing the reasonableness of legal expenses. It underscores that while the use of foreign solicitors is not categorically disallowed, their expenses must be justifiable within the context of the case. Future litigants should be mindful that opting for foreign legal representation will require clear, case-specific justification to ensure expense claims are deemed reasonable and recoverable. Additionally, this decision serves as a caution against overgeneralizing the reasonableness of expenses based on the solicitor’s geographic location, promoting a more nuanced and individualized approach.

Complex Concepts Simplified

Conclusion

The Judgment in Kirkwood v Thelem Assurances serves as a pivotal reference point in Scottish legal proceedings concerning the allocation of expenses involving foreign solicitors. By upholding the Auditor’s decision to disallow charges for English solicitors in this instance, the court emphasized the necessity of demonstrating the reasonableness of such expenses on a case-by-case basis. This decision reinforces the principle that while litigants have the autonomy to choose their legal representation, the associated costs must align with the standards of proper conduct as defined by Scottish court rules. Consequently, this precedent will guide future litigations in evaluating the legitimacy and recoverability of foreign legal expenses, ensuring that expense claims remain fair, proportionate, and contextually justified.