Milk supply body who hired English lawyers to fight Scottish judicial review petition succeed in challenge to auditor’s expenses decision

Milk supply body who hired English lawyers to fight Scottish judicial review petition succeed in challenge to auditor’s expenses decision

A note of objection challenging the decision of the auditor not to allow an organisation involved in supplying milk to Scottish schools and nurseries to recover fees for an English firm of solicitors as judicial expenses has been allowed by a lord ordinary.

The School and Nursery Milk Alliance Ltd, an organisation based in England, sought to recover solicitors’ fees for instructing English firm Bates Wells, as well as the fees for an English counsel instructed as part of a judicial review petition against a statutory school milk scheme. The auditor had previously rejected the recovery of their fees as an unnecessary extravagance.

The petition was considered by Lord Braid in the Outer House of the Court of Session. MacGregor KC appeared for the petitioner and Crawford KC and A McKinlay, advocate, for the Scottish Ministers as respondents.

Necessity rather than reasonableness

The petitioner had sought judicial review of the funding rates set in the Milk and Healthy Snack Scheme (Scotland) Regulations 2021, as it considered the proposed rates would render the scheme unworkable. It had also challenged a similar proposal introduced in England, although that proposal was ultimately abandoned.

In connection with both schemes, the petitioner instructed Bates Wells to act on their behalf, as they had received advice from a partner in that firm for approximately 20 years. Similarly, an English barrister, Mr Bates, was instructed to undertake certain work in relation to the Scottish scheme, although a Scottish firm of solicitors, Balfour & Manson, was also instructed as Edinburgh agents, who also instructed counsel.

It was argued by the respondents that the use of English agents and counsel had been an extravagance, superfluous, and unreasonable. The auditor stated that he was unable to identify any aspect of the litigation that required the input of English agents. He also concluded that the instruction of Mr Bates had resulted in the claim for expenses being higher than it would have been had the work been undertaken by Scottish counsel.

Counsel for the petitioner submitted that the auditor had erred by applying a test of necessity rather than reasonableness. He had failed to appreciate that the rates charged by Bates Wells were in the main lower than the hourly rates that Balfour & Manson was entitled to charge. In relation to Mr Bates’ work, the case had merited the instruction of junior and senior counsel and thus his work had not been superfluous and ought to have been allowed.

Factual matrix

In his decision, Lord Braid said of the auditor’s method: “Reading his minute as a whole, it is clear that the auditor had the correct test in mind. It is true that in considering reasonableness, he stated (among other factors) that he was unable to identify any aspect of the litigation which required the role of English agents. In any event, I see no reason why, in considering whether it was reasonable to obtain English advice, the need for such advice should not be a relevant factor.”

He continued: “More to the point, the auditor makes clear that he took into account the arguments before him about the particular knowledge of the English agents and the aspects of English public law involved, but was not persuaded that they were sufficient reasons to justify the instruction of English Agents. Nothing about the expression of that conclusion is redolent of the application of a test of necessity.”

Addressing the hourly rates issue, Lord Braid said: “The auditor had regard to what was either ‘invariably’ or ‘usually’ the case. What is lacking in that analysis is any consideration of what the respective costs of the English and Scottish agents were in this case. I consider that this was a misunderstanding, or at least a failure to appreciate, or investigate, the factual matrix which does go to the heart of the auditor’s decision. Had he concluded that that the costs were broadly similar, he might have come to a different decision on the reasonableness of instructing Bates Wells, if not that of instructing Mr Bates.”

He concluded: “The auditor did err in law, in failing to take into account a material factual matter (or misunderstanding or failing to investigate the respective rates in this case), which renders his decision susceptible to challenge. In relation to Bates Wells’ fees (but not those of counsel, where it is not suggested that the auditor misunderstood the respective costs of English and Scottish junior counsel), the matter must be remitted for reconsideration.”

The case was therefore remitted to the auditor to give further consideration to Bates Wells’ fees only.

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