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Sheriff allows VAT and dues with simple procedure expenses

1 March 2018

A successful party can add VAT and court dues to the capped expenses prescribed in a simple procedure case, a sheriff has ruled.

Sheriff Norman McFadyen at Edinburgh Sheriff Court gave his decision in an action by Andrew Martin against Southern Rock Insurance Co Ltd, a road accident claim, which was settled at the sum of £1,000. The parties disagreed over whether the capped expenses of £150, set by the Sheriff Court Simple Procedure (Limits on Award of Expenses) Order 2016, included VAT and outlays, in particular the £100 court dues for raising the claim.

Conflicting decisions on the point had been reached in Ashleigh Potter v OSC Group UK Ltd (Aberdeen) and Gowans v Miller (Forfar; click here for report). The respondent argued that the matter was governed only by the 2016 Order, made under s 81 of the Courts Reform (Scotland) Act 2014, and not by the 1993 General Fees Regulations which referred separately to expenses and outlays. That outcome would reflect practice under the previous small claim procedure.

Giving his decision, Sheriff McFadyen stated: "While the way in which the rules with regard to expenses in simple procedure are set out appears to be unnecessarily complex and excessively dispersed across primary and secondary legislation, it seems clear to me that the provisions as to capped expenses in s 81 of the 2014 Act and the 2016 Order are not exhaustive as to what a successful party may recover in ordinary circumstances, given the very clear terms of article 2(1) of the 1993 Act of Sederunt and paras 11 and 13 of the General Regulations, which show respectively that outlays are not treated as synonymous with expenses, that solicitor’s outlays are allowed 'in all cases' and that value added tax may be added to the amount of fees.

He continued: "The phrase 'in all cases', with regard to outlays, is one which obviously includes simple procedure cases."

The sheriff concluded: "I am satisfied that, whatever may have been the position under small claims procedure (and my understanding is that practice there varied, although the matter was never authoritatively determined), under the new regime of simple procedure capped expenses will be subject to the additional outlay, where applicable of court dues for registration of a claim and VAT."

Click here to view the sheriff's judgment.

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