Litigating for expenses; a lose/lose situation

In the recent case of Dorota Tomczak v Nicolas Reid [2017] SC Edin 63 Sheriff Kenneth G McGowan gave a clear indication of how the All-Scotland Personal Injury Court (ASPIC) would deal with cases raised solely to resolve a dispute on expenses.

The case arose out of a straightforward road traffic accident. Liability was admitted by the Defender pre-litigation and the claim proceeded in terms of the Voluntary Pre-Action Protocol for Scotland (VPAP). Prior to litigation, negotiation took place and a principal sum of £4,700 was offered and accepted in principle. However parties were unable to agree expenses. In particular, parties were unable to reach agreement as to the costs of a Medical Report prepared by Doctor Colin Rodger, Consultant Psychiatrist and on the inclusion of the outlay of £93 for a Police Report.

The Pursuer had indicated settlement could be agreed on the basis that Doctor Rodger’s full fee was paid along with various other outlays including the cost of an Abstract Police Report which totalled £93.

However the inclusion of both Doctor Rodger’s full fee and the Police Report fee was disputed by the Insurers. In respect of Doctor Rodger’s fee, it was argued that part of that fee consisted of an agency fee to Insight Psychiatry which was not recoverable in terms of the VPAP. It was disputed that it was necessary for the Pursuer to have obtained the Police Report.

Further information was requested by the Defender, in particular in relation to the Medical Report fee but this call for information was not answered and instead a Court Action was raised. The Defender immediately lodged a Tender for the agreed sum of £4,700 which was accepted. The case called before Sheriff McGowan on the Pursuer’s Motion for Decree in terms of the Minute of Tender and Acceptance and on the issue of expenses.

The Pursuer sought expenses on an Agent/client basis as well as certification of skilled witnesses. This aspect of the Motion was of course opposed by the Defenders who in turn sought an order that the Pursuer be liable to the Defender in the expenses of Process, failing which the Pursuer’s expenses should be modified to nil.

The parties set out in detail for the Court the history of the Action as well as their respective positions in terms of whether or not the Medical Report and Police Report fees should be recoverable. In coming to a decision Sheriff McGowan deliberately avoided making a decision on these points, observing that he was being asked to resolve an issue which was not appropriate for the Court and rather was one that should have been determined by the Court’s Auditor.

In reaching his decision he stated that it was clear that but for the failure in negotiation about these disputed outlays the Action would not have been raised. He stated that the VPAP was in fact silent as to the question of expenses other than stating agreed expenses must be paid within five weeks and as such the existing common law position about what expenses a pre-litigation offer in settlement should contain, must be held to apply. Applying that position he stated that a pre-litigation offer need only offer “reasonable expenses” which is what the Insurers/Defender had offered here.

He commented that the Pursuer’s Agents should have known that if an Action was raised it was likely as indeed happened, that they would face a Tender for the same amount as had been agreed. As such the result was twofold, namely the Pursuer had not beaten the pre-litigation offer and had in fact finished up back where she started.

Even if he were to grant the Pursuer’s Motion for Decree with expenses and certification it did not advance the matter in dispute as a Decree would simply find the Pursuer entitled to expenses as taxed and thus the question that he was being invited to determine, namely which outlays had been properly incurred, would simply be remitted to the Auditor for determination.

On this basis Sheriff McGowan therefore preferred for the most part the Defender’s submissions that the litigation had been misconceived from the outset.

Arguments had been made by the Pursuer that there was nothing else could have been done in the circumstances. Sheriff McGowan did not agree stating that a joint remit to the Auditor had been feasible. Whilst neither party could insist on that course of action, parties could have agreed to take the remaining issues in dispute to the Auditor. He commented that it was regrettable neither party had thought of or suggested that prior to the action.

On that basis therefore, whilst Sheriff McGowan held the Pursuer had failed to beat the pre-litigation offer and therefore refused the Motion for expenses, he also refused the Defender’s contra motion for expenses on the basis that he was not entirely free from blame. No alternative method of resolution had been proposed by the Defender/Insurers. Finally it was Sheriff McGowan’s view that actions of this type of dispute should be strongly discouraged.

In the circumstances he granted Decree for the principal sum with no expenses due to or by either party.

Certainly this Judgment is in line with recent Decisions in the ASPIC suggesting that a strong adherence to the Rules and principles of the Court should be encouraged, particularly if such attitude leads to settlement.

It will therefore remain to be seen whether this particular Decision goes some way to discouraging claimants from raising Actions simply in an effort to maximise or resolve a dispute on expenses alone.

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