Court Expenses and the Pre-Action Protocol

As an award of expenses in an Action is a matter for the discretion of the Court, appeals on expenses are not encouraged and indeed are severely discouraged.  However, in Bent v Trevett 2015 SCSTIR 14, Sheriff Principal R A Dunlop, QC considered an Appeal on an award of expenses and issued his Decision on 23 February 2015.

A Summary Cause Personal Injury Action was settled on the basis of a Minute of Tender and Acceptance.  Although a Minute of Tender normally carries a narration to the effect that a specific principal sum and “expenses to date” are tendered, it is open on acceptance of a Tender for the party lodging the Tender (normally of course the Defender) to put forward an argument on an award of all or part of the expenses.

In this case, having lodged a Minute of Tender, which was then accepted, the Defender opposed an award of expenses to the Pursuer and the Sheriff found that no expenses should be due to or by either party. The Pursuer appealed.

The Sheriff Principal took the view that he should consider the Appeal on the basis it raised a point of general importance. This point was to what extent a Court should consider the Voluntary Pre-Action Protocol (between the Law Society of Scotland and the Forum of Scottish Claims Managers) “should be recognised as setting out a reasonable approach to pre-action conduct.”

The Pursuer’s Solicitors had sent a letter of claim to the Defender’s Insurers in terms of the Protocol.  The Insurers were Protocol signatories.  The Protocol provided (para 3.5) that an Insurer should acknowledge a letter of claim within twenty-one days of its receipt and should then advise whether it was agreed that the case was suitable for the Protocol.  It is provided that if there has been no reply (by the Defender or the Insurer) within twenty-one days, the Pursuer is entitled to raise an Action.

There was no reply to the letter of claim and an Action was raised.

Following argument at first instance before the Sheriff on the Defender’s Motion that no expenses should be awarded, the Sheriff took the view that if a party raised an Action without warning, they were at risk on being liable for expenses or a modification of expenses or no award of expenses.  He took the view that “Litigation is a last resort and that resort to litigation without meaningful attempts to avoid it should be discouraged.”  He considered that the letter of claim was insufficient to allow the Defender or his Insurers to respond on liability or to make any assessment of its value and that there should have been a further letter because the initial one was insufficient. He decided there should be no award of expenses due to or by either of the parties.

The Sheriff Principal noted that the stated aims of the Protocol were to put the parties in a position where they might be able to settle the case fairly and early without litigation, to ensure the early provision of reliable information and to allow appropriate offers to be made, whether before or after the beginning of an Action.  There was no statutory basis for the Pre-Action Protocol and it therefore had to be entered into voluntarily.

Essentially the Pursuer’s position on appeal was that the Insurers had signed the Protocol, that the Protocol provided for a response within twenty-one days of the letter of claim, that had not occurred and the Pursuer was entitled to raise an Action.  The Court was entitled to take account of the Protocol and if the Sheriff’s approach was correct “it risked depriving the Protocol of any value.”

On appeal the position of the Defenders changed.  It was accepted that the Insurers had signed the Protocol, that the letter of claim complied with the Protocol and that the Pursuer had been entitled to raise the Action.  It was in turn then accepted that the Defenders did not support the Sheriff’s opinion that a further warning letter had been required.

The Sheriff Principal considered that the Appeal was well founded.  Courts should take notice of the Protocol and encourage its use.  If following the Protocol reflected a normal and reasonable approach, for a Court to then seek to add additional requirements risked uncertainty and an undermining of confidence in the Protocol.

He pointed out that it was the Insurers’ failure to reply to the letter of claim within the twenty-one days set down in the Protocol which was the cause of the Action being raised.  Given the Insurers were signatories, they could not validly argue that the Pursuer had acted unreasonably.

As a result of the Defenders accepting that the Pursuer was entitled to raise an Action their position on Appeal then moved to an argument in the circumstances of this particular case the conduct of the Pursuer’s Solicitors after the Action was raised had unreasonably prolonged the Action and there ought to be a modification of expenses.

Having considered the position on any alleged delay in the release of medical evidence, the Sheriff Principal rather reluctantly found that a modification of 15% should be made to the Pursuer’s expenses.  In the main his decision appears to reflect the fact that the Pursuer’s Solicitors had offered a 15% modification to avoid the need for the original Opposed Motion Hearing before the Sheriff.

This Decision reinforces the views expressed in Brown v Sabre Insurance 2013 CSOH 5 and Burns v Royal Mail Group Limited, Edinburgh Sheriff Court 30 January 2014 to the effect that the Court should take notice of the Protocol which in turn would boost confidence in use of the Protocol.

It should be noted that as the Insurers in this Action were Protocol Signatories, different arguments on reasonableness might apply where Insurers are not signatories.  In such cases a decision on the reasonableness or otherwise of raising an Action may be fact specific.  It remains to be seen whether in such a case the Court would be prepared to look to the Protocol for guidance on what actings or lack of them might or might not be reasonable.

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