Sheriff Appeal Court overrules earlier decision on judicial expenses in undefended simple procedure claims in appeal over £87

About this case:

• Citation:
  [2025] SAC (Civ) 13
• Judgment:
  External link
• Court:
  Sheriff Appeal Court
• Judge:
  Sheriff Aisha Anwar

Cabot Financial UK Ltd obtained decree in an undefended action against defender Jordan Walls, for which it received an award of expenses short by £87.75 of the sum it had sought. The court was asked to determine whether the provisions for percentage reductions in rule 3.7 of the Taxation of Judicial Expenses Rules 2019 applied to undefended simple procedure claims.

The appeal was heard by Sheriffs Principal Aisha Anwar, Sean Murphy, and Nigel Ross. LC Kennedy, advocate, appeared for the appellant, with no appearance made by the respondent. In the absence of a contradictor, Shaw, advocate, was appointed as an amicus curiae to advise the court.

Task of the clerk

The appellant, a debt purchase company, raised a simple procedure claim against Mr Walls for payment of the sum of £1,052.58, having been assigned the debt by the lender. The expenses it sought includes a charge of 15 units of £18 for all work undertaken, a postal outlay of £4.60, and the court fee of £112, for a total of £386.60. At the expenses hearing, it relied on the decision of a single appeal sheriff in Cabot Financial UK Ltd v Johnstone (2023).

The summary sheriff refused to award expenses in the sum of £386.60. He considered that he was bound by the decision in Johnstone but that, by applying rule 3.3(5) of the 2019 Rules, Johnstone fell to be distinguished. He suspended the application of rules 3.3 and 3.7 to Cabot’s account and directed the sheriff clerk to calculate Cabot’s expenses on the basis of Table 1 of Schedule 5 to the 2019 Rules but with the deductions of 10 per cent and 25 per cent (of the net 90 per cent) to be made to Cabot’s account of expenses. The sum awarded was £298.85, £87.75 short of the sum sought by Cabot.

Counsel for the appellant submitted that the summary sheriff was bound by Johnstone, and had erred exercising his discretion to determine that it did not apply to this case. Rule 3.7 could not apply to undefended actions, as there was no assessment of the account of expenses. The amicus curiae agreed that the summary sheriff erred in failing to follow Johnstone but went on to submit that the court required to consider whether Johnstone had, in fact, correctly interpreted the 2019 Rules.

On this point, the amicus curiae submitted that, given the task of the sheriff clerk in undefended simple procedure claim is not to tax or assess the account, it could be contended that the drafters of Rule 3.7 did not intend for it to apply to undefended claims. Alternatively, the intention could simply be for there to be a rule that deductions to expenses would apply in all simple procedure cases. There was a strong argument that a sheriff clerk was required to carry out an assessment of expenses, even if that assessment is limited in scope.

Wrong end of the telescope

Delivering the opinion of the court, Sheriff Principal Anwar said of the sheriff’s approach: “We agree with parties’ submissions that the summary sheriff took account of an irrelevant consideration for the purposes of rule 3.3(5), namely, that Johnstone was incorrectly decided. That was the sole basis upon which he purported to exercise his discretion to disapply rule 3.7. He accordingly erred in the exercise of his discretion. It follows that there was no available argument to distinguish Johnstone. The summary sheriff’s decision also fell foul of the principle of stare decisis. Accordingly, this appeal must be allowed.”

However, she continued: “Counsel submitted that it was neither necessary nor appropriate for this court to consider whether Johnstone was correctly decided; he submitted that any opinion expressed by this court on Johnstone would be strictly obiter and not capable of providing a new binding precedent. We do not agree.”

Considering what the correct approach to expenses in undefended simple procedure claims was, Sheriff Principal Anwar said: “In our judgement, Cabot’s approach involves the wrong end of the telescope. The question of the correct interpretation of the 2019 Rules is not be addressed having regard to current practice, nor whether the exercise performed by the sheriff clerk may properly be described as an ‘assessment’. The answer to the question involves a relatively straightforward exercise of interpretation.”

She concluded: “Cabot’s counsel submitted that there was a legitimate policy aim in not applying the deductions in rule 3.7 to undefended actions. In defended actions, it can be assumed that the parties have a genuine dispute over whether payment is due; in an undefended action, it can be assumed that the respondent failed to pay and had no legitimate reason for failing to do so. In these circumstances, a claimant should be entitled to recover a higher level of expenses without deduction in an undefended action. While we do not regard it necessary to speculate as to the intention of the drafters of the rules, it is at least equally likely that the drafters sought to ensure that those who admit claims early benefit from a deduction in the allowable expenses and that there was no perverse incentive for respondents to lodge response forms which lacked merit.”

The court therefore allowed the appeal on the basis that Johnstone was wrongly decided but considered that the total figure for expenses should remain at £298.85.