Uncapped Expenses in Simple Procedure Claim

A Claimant in a Simple Procedure case which was initially defended and then settled by way of a Tender and Acceptance has been awarded expenses of the action as assessed (taxed) after the Court rejected the Respondent’s arguments that expenses should have been capped at 10% of the principal sum.

The case of Ian Douglas Graham v Paul Farrell [2017] SC Edin 75 is the first Simple Procedure case to deal with the question of whether or not the principles applied to the now defunct Small Claims cases would be interpreted the same way under the new Simple Procedure Claims.

The Claimant in this case had raised a Simple Procedure Claim in January 2017 and when no Form of Response was received an Order for payment of the sum claimed was granted together with the undefended expenses of the Action.

This Order was subsequently recalled with the consent of the Claimant and following an unsuccessful attempt at mediation an Evidential Hearing was fixed.

In advance of that Evidential Hearing, the Respondent lodged a Tender for the sum of £3,000 with the “taxed expenses of Process to date hereof”. This Tender was accepted and the Claimant then lodged an Application seeking an Order that the Claimant prepare an Account of Expenses and lodge same with the Sheriff Clerk. This Order was sought on the basis that this was not an Action where capped expenses were applicable in terms of Section 81(5)(a)(2) of the Courts Reform (Scotland) Act 2014 (“The 2014 Act”).

The Application was opposed in part by the Respondent who argued it was not open to the Court to order expenses as taxed and that expenses should be restricted to 10% of the sum discerned as per Section 3 of the Sheriff Court Simple Procedure (Limits on Award of Expenses Order 2016) (2016/388) (“The 2016 Order”).

The case called in front of Sheriff Kenneth McGowan at Edinburgh Sheriff Court where the Claimant submitted he was entitled to unrestricted expenses and that the level of expenses to be awarded in a defended Simple Procedure case is determined by the Act of Sederunt (Fees of Solicitors in the Sheriff Court) Amendment and Further Provisions (1993) as Amended.

Whilst the Claimant accepted that Part II of Chapter 5 of the 1993 Act of Sederunt was qualified by the 2016 Order which capped expenses at 10% of the principal sum, the Claimant argued the terms of the 2016 Order were further qualified by Section 81 of the 2014 Act. The Claimant argued that this Section stipulates the restriction on expenses shall not apply in a case where the Defender, having stated a defence, did not ultimately proceed with it. As such the expenses awarded would fall to be determined by Part II of Chapter 5 of the 1993 Act of Sederunt, ie. not capped at 10%.

The Claimant referred to the case of Tallow v Clark 2015 SLT (SHCT) 181 in which the Pursuer had relied on Section 36B of the Sheriff Courts (Scotland) Act 1971 under the terms of which, restrictions to expenses would not apply where a Defender having stated a defence had not proceeded with it. In that case the Sheriff Principal upheld a Sheriff’s Decision that the Pursuer was entitled to expenses on a Summary Cause scale stating that the reference to not proceeding with a defence “means not proceeding with the Hearing on Evidence and obtaining a Decision and Judgment of the Court.”

In reaching this Decision the Sheriff Principal followed the interpretation in the of Fenton v Uniroyal Englebert Tyres Limited 1995 SLT (SHCT) 21 where it was stated that the statutory provision must be interpreted according to its terms even if that interpretation may lead to undesirable consequences in certain circumstances.

In opposing the Claimant’s Motion the Respondent argued instead that expenses should be restricted in terms of the 2016 Order. In making this argument the Respondent attempted to distinguish the case from that of Tallow v Clarke, on the basis that in this current case a Tender had been lodged. To argue that a defence had not been proceeded with, disregarded both the terms and effect of the Tender which had been made without prejudice and under reservation of the Respondent’s whole rights and pleas. It was argued the Respondent still intended to run his defence and it was entirely open to the Claimant not to accept the Tender.

In his written Note Sheriff McGowan had little difficulty in accepting the Claimant’s submissions. He stated that to hold this claim to be one where expenses were restricted completely ignored the meaning and effect of Section 81 of the 2014 Act.

Whilst he accepted that Tallow was not binding, he stated it should be treated as highly persuasive and that there was no relevant factor in this case which distinguished it from that of Tallow. The fact that settlement was achieved by way of Tender and Acceptance was beside the point as many cases were settled by way of a “without prejudice” offer. Sheriff McGowan held that the crucial point was the meaning of the phrase “has not proceeded with a defence” and in his opinion those words were definitively determined in Tallow as meaning not proceeding with a Hearing on Evidence and obtaining a Decision or Judgment of the Court.

In the circumstances he found the Respondent liable to the Claimant for the expenses of the Process as assessed.


This case is disappointing for Respondents’ Agents who had hoped that under the new Simple Procedure Rules a different interpretation might have been taken.

The case does provide clarity as to how this issue will be dealt with under the new Simple Procedure Rules. Respondents’ Agents will now have to bear this in mind when proceeding to negotiate settlement of claims in which a defence has been lodged.

It is particularly regrettable however that lodging a Tender, without admission of liability, is treated as withdrawing a Defence and leaves a Respondent exposed to uncapped/unrestricted expenses.

We recently went to Proof (a Hearing of the Evidence) in a case where prior attempts to settle at less than 100% and on the basis of capped expenses, had been unsuccessful. There were reasonable prospects of a successful Defence although the Court ultimately found in favour of the Claimant.

As a result of proceeding to Hearing and obtaining a decision, the costs in that case of going to Proof, with the Claimant’s costs being capped and including our costs for the Respondent, were less than if we had lodged a Tender and been liable for uncapped expenses. Indeed, even being required to pay the full principal sum as opposed to previous offer figures still resulted in a saving.

The Legislation surely can’t have intended that in some Simple Procedure cases it might actually be cheaper to go to Proof.

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