Scots law firm succeeds in claim for unpaid fees after former client fails in appeal

The Sheriff Appeal Court upheld the sheriff’s conclusion that the firm was entitled to payment of nearly £8,000 for their chargeable time for work undertaken on the proposed acquisition of land near Bathgate – despite the client’s claim that he owed them firm nothing because the transaction did not complete.

Sheriff Principal Mhairi Stephen QC sitting with Sheriff Principal Craig Scott QC and Sheriff Principal Marysia Lewis, heard that the appellant Michael Campbell was seeking to challenge the decision of the sheriff at Inverness to grant decree in favour of the respondentsLindsays.

Professional fees

The solicitors’ firm had raised an action seek to recover the sum of £7,680 being the balance of their professional fees in respect of work they undertook on behalf of the appellant, which related to the proposed acquisition of subjects at North Couston.

The pursuers relied on an exchange of letters in October 2012 being their letter of engagement incorporating their terms of business together with the appellant’s acceptance.

At proof the appellant did not dispute that there was a contract between him and the pursuers who had indeed provided him with legal services in terms of that contract, but he did not accept that he was liable to meet the outstanding fees as the transaction did not proceed and the pursuers did not “do enough to resolve the impasse” which developed with the seller.

Terms of business

The appellant was aware of and accepted the terms of clause 13 of the pursuers’ terms of business, which stated that “where a transaction does not complete for whatever reason “you will be liable for the costs of our chargeable time expended up to the date the transaction is aborted”, but nonetheless he did not accept that he should be liable to meet the fees in circumstances where the transaction did not proceed.

The sheriff found that the signing of the terms of business by the defender created a written contract between the pursuers and the defender and concluded that the relevant invoices, were issued properly in respect of the pursuers’ chargeable time expended on the transaction up to the date the transaction was aborted, remained unpaid.

Accordingly, the pursuers were entitled to payment of the amounts due on the two outstanding invoices, namely £7,680 and by interlocutor of 27 January 2016 the sheriff granted decree for the sum first craved together with interest at the rate of 4% per annum from September 2014.

Professional incompetence

However, the appellant argued that the sheriff erred by considering authorities relating to a defence which amounted to professional negligence, when the appellant had accused the firm of “professional incompetence”.

The specific criticism of the pursuers was that the principal solicitor dealing with the transaction did not verify that the sellers had title to sell the land.

It transpired that the supposed seller had no intention of concluding the transaction and any equity in the selling company was in the name of his wife.

The appellant maintained that had the pursuers satisfied themselves on his behalf whether the sellers had title to sell in the first instance “unnecessary work” could have been avoided and the fees would thereby be reduced.

Refusing the appeal, the appeal sheriffs observed that any distinction between professional incompetence and professional negligence was “a fine but unnecessary one in the circumstances of this case”.

Sheriff ‘undoubtedly correct’

Delivering the opinion of the court, Sheriff Principal Stephen said: “Incompetence means either a complete lack of qualification to do the task or inadequate ability. This equates with negligence where a professional fails to perform his responsibilities to the required standard.

“That required standard is of course set out in the classic exposition of the test of negligence in Hunter v Hanley 1955 SC 200 where Lord President Clyde states the test for professional negligence. That test requires it to be established that the course adopted is one which no professional man of ordinary skill would have taken if he had been acting with ordinary care.

“Whether the failing or inadequacy be described as incompetence or professional negligence in our view makes no difference. In order to establish a defence based upon professional incompetence or negligence the party claiming negligence requires to discharge the onus of establishing whether the professional has deviated from that which a professional of ordinary skill acting with ordinary care would have done.

“The authorities referred to by the sheriff re-affirm the approach to be taken by the court when allegations of professional negligence are put forward as a defence.”

The court added that the sheriff’s conclusions on the issue were “undoubtedly correct”.

Sheriff Principal Stephen said: “As we have said the distinction between negligence and incompetence in the context of the appellant’s complaint about the pursuers’ professional conduct is illusory and comes to the same thing. We therefore detect no error in the sheriff’s approach.”