[2016] SC EDIN 83




In the cause












Edinburgh, 10 October 2016   

The Sheriff, having resumed consideration of the cause, grants decree against the defender for payment to the pursuer of the sum of THIRTEEN THOUSAND POUNDS  (£13,000.00) Sterling together with interest thereon at the rate of 8% per year from the date hereof until payment; finds the defender liable to the pursuer in the expenses of process as taxed, modified by twenty per cent (20%); certifies Mr Robert Carter, Consultant in Orthopaedic Medicine and Dr Natalie Limet, Consultant Psychiatrist as  skilled persons who prepared reports for the pursuer; allows an account of expenses to be given in and remits same, when lodged, to the Auditor of Court to tax and to report; finds no expenses due to or by either party in respect of the motion roll hearing on 20 September 2016.




[1]        This is a personal injuries action. It came before me on the pursuer’s opposed motion for expenses.


Submissions for Pursuer
[2]        There were six points to be noted:

a.   the case was not one which was suitable for the application of the Voluntary Protocol (“VP”);

b.   even if the VP was relevant, it merely provided a context for assessing the reasonableness of the conduct of the pursuer;

c.   the key question for the court was “has the pursuer behaved reasonably?” and the court had a wide discretion in assessing the answer to that;

d.   the insurers had refused to withdraw the allegation of contributory negligence altogether and court action was raised after that;

e.   that was the reason for the dispute between the parties; and

f.    the pursuer had behaved responsibly, there being nothing in the circumstances of the case which justified departing from the normal rule of “expenses follow success”.

[3]        Paragraphs 2.3 and 3.6 of the VP were relevant. The tender lodged and accepted had been for £13,000.

[4]        The insurers had suggested that there was contributory negligence. That had been rejected on behalf of the pursuer on 29 April: Production 6/3. The insurers had been given 14 days to confirm that they were not seeking to assert contributory negligence.

[5]        At the outset, the response to the offer to deal with the claim under the VP was late: Productions 5/7 and 6/1.

[6]        The insurers sought to rely on paragraph 3.10 of the VP but the pursuer had responded to the allegation of contributory negligence.

[7]        The VP suggested a series of dates and behaviours: paragraph 4.1

[8]        The pursuer himself was clearly irked about the allegation of contributory negligence and wanted to argue about it.

[9]        There were essentially two situations in which modification of the pursuer’s expenses would be appropriate and these were either behaviour or lack of notice: “Sheriff Court Practice”, McPhail, 2nd edition, paragraph 19.11. In the present case, the argument appeared to be based on the behaviour of the pursuer.

[10]      But the examples cited there were quite different from the situation in this case, namely the pursuer raising an action because he was accused of contributory negligence.

[11]      It might be suggested that the wording of the VP about what should happen when there was an allegation of contributory negligence was contradictory. However, very similar wording was used in paragraphs 9 and 18 of the new compulsory protocol which was about to come into force: Act of Sederunt (Sheriff Court Rules Amendment) (Personal Injury Pre-Action Protocol) 2016, Schedule 1, Appendix 4. This demonstrated that there was no contradiction.

[12]      In Calder v Rush 1970 SLT (Sh. Ct.) 51 even although the pursuer had ultimately been awarded a sum less than that offered prior to the action being raised, he had been found, on appeal, entitled to his whole expenses. The Sheriff Principal had observed that “… the pursuer was entitled to raise the action in order to establish judicially that the defender was wholly to blame for the collection and that he himself was free from blame.”

[13]      It was clear that the issue of reasonableness was the key: Phillips v Dumfries and Galloway Acute and Maternity Hospitals NHS Trust 2006 SC 611, paragraph 11.

[14]      When the insurers sent their letter of 10 June, they did not know that the writ had already been warranted. At that stage, they were seeking to formalise the agreement on contributory negligence: Production 6/4.

[15]      Their letter of 16 June, offering to negotiate settlement, was sent after proceedings had been raised.

[16]      The purpose of raising proceedings was to resolve the issue of contributory negligence. The court should look at whose conduct had led to the raising of proceedings: Gibson v Menzies Aviation (UK) Ltd [2016] SC EDIN 5.

[17]      Given the insurers position on contributory negligence, there would have been no purpose in disclosing the medical reports at that stage. To do so would have been against the pursuer’s own wishes and at best would have brought about an offer in settlement based on an 80/20 split in settlement.

[18]      As far as the settlement figure was concerned, the advice given to the pursuer was that £13,000 represented a reasonable settlement on a full liability basis. The claim was thought to be worth in the range £12,000 – £14,000 with a maximum of £17,000. The pursuer had a stateable PTSD claim which if valued separately would have increased the overall claim, but the case law did not support this being treated as a separate head of claim attracting a discrete award of damages. The advice to the pursuer to take the tender was based on what was thought to be the likely outcome.

[19]      In summary, the action had been raised for the reasons suggested. The raising of the action had worked in the pursuer’s favour and the case had been settled on a full liability basis. Accordingly, there was no stateable reason justifying departure from the normal rule on expenses.


Submissions for Defender

[20]      The first issue to be determined was whether the VP applied or not, although that might not matter. That issue probably required to be determined according to contractual principles.

[21]      The terms of Article 2.1 of the VP did not mean that it could not apply to claims of a higher value where parties so agreed.

[22]      The terms of paragraphs 18, 19 and 20 of the Compulsory Protocol indicated that the situation may not be as clear as had been suggested on behalf of the pursuer.

[23]      It was true that the pursuer’s agents had intimated an intention to commence proceedings by letter dated 9 June: Production 6/5. Nevertheless, given the terms of the adjusters’ letter of 16 June, they could have picked up the phone but did not do so. The medical evidence was not disclosed until 5 August – some two months later.

[24]      The defender’s motion was to modify the award of expenses in favour of the pursuer to nil on the basis that the litigation was premature and that the pursuer’s agents’ conduct was unreasonable.

[25]      The claim had originally been intimated on 4 November 2015. There had then followed the correspondence: Productions 6/1 – 6/6.

[26]      The letter of 29 April did not contain any warning of litigation: Production 6/3. In the response of 10 June, the adjusters sought disclosure of the medical reports and details of any other losses. By the letter of 16 June, the adjusters indicated a willingness to negotiate settlement and reiterated their request for further information.

[27]      In due course after the action had been raised the tender was lodged on 19 August and accepted on 31 August.

[28]      At all times, the insurers had been keen to explore settlement. They were signatories to the VP. The pursuer’s agents knew that. They had asked for disclosure of the medical evidence but that had not happened until the First Inventory of Productions was lodged.

[29]      Reliance was placed on 4.1 of the VP: no Statement of Valuation or medical reports had been produced prior to litigation.

[30]      Reliance was placed on paragraphs 19.08, 19.10 and 19.11 of “Sheriff Court Practice”. In this case, the raising of the action had been unnecessary. The relevant paragraphs of “Sheriff Court Practice” simply contained examples of the types of situation where the court might exercise its discretion to modify expenses.

[31]      There was no question of impending limitation. The pursuer’s agents had acted unreasonably. The situation in Brown v Sabre was distinguishable.

[32]      It was inappropriate for the medical reports to be withheld. That had delayed settlement of the case and the defender had been prejudiced by being forced to incur unnecessary expense.

[33]      The fairest disposal would be modification to nil. Although the pursuer would have been entitled to some expenses had the claim settled under the VP, the insurers here had been put to the unnecessary expense of instructing solicitors in connection with the court action. Thus, modification to nil would simply be a balancing exercise.

[34]      The five factors mentioned at page 31 of Gibson applied here. It was accepted that a time limit to admit liability in full had been imposed: Production 6/3. But in Gibson there had been a failure to disclose earnings information: paragraphs 43 and 50. In that case, expenses were modified by two thirds. The conduct complained of in the present case was worse.

[35]      The pursuer’s agents sought to justify their position on the grounds of the position articulated by the adjusters on contributory negligence. But contributory negligence was a separate matter. There should have been disclosure of medical reports and vouching. Had that happened and no settlement had been achieved, there would be no argument about expenses.

[36]      The primary position for the defenders was that expenses should be modified to nil; alternatively that this should be modified by at least two thirds; or alternatively modified to such extent as the court thinks fit.


Reply for Pursuer

[37]      The adjusters’ letter of 10 June did not say that they wanted to settle the case: Production 6/4. The party was entitled to litigate when notice of such had been given: Production 6/3.

[38]      The proposed reduction of 20% for contributory negligence was material in this case, amounting to about £3000 in financial terms.

[39]      Finally, the Compulsory Protocol was not ambiguous.


Grounds of decision


[40]      The key events may be summarised as follows:

a.   2015, April 15 - date of accident

b.   November 4 - claim intimated to defender's insurers

c.   December 11 - acknowledgement by insurers, who offer to deal with it under the Voluntary Protocol ("VP").

d.   2016, January 21 - insurers confirmed that 'primary liability' was not in dispute but assessed contributory negligence at 20% and gave reasons for that view; sought  information about quantum including disclosure of any medical evidence

e.   April 29  - pursuer's agents' rejected assertion of contributory negligence and sought confirmation in 14 days that the insurers would meet the pursuer's losses in full

f.    June 9 - writ intimated to insurers

g.   June 10  - insurers re-iterated their position on contributory negligence; made formal offer of liability split of 80/20 in favour of the pursuer and again sought information about quantum including disclosure of any medical evidence

h.   June 16 - insurers acknowledged writ; sought response to offer of liability split of 80/20 in favour of the pursuer; said that 'if we unable to agree a liability split it remains our intention to try and negotiate a settlement of your client's claim on a without prejudice basis’ and again sought information about quantum including disclosure of any medical evidence and vouching for losses. 

i.    July 19 - writ served

j.    August 29 – defences and tender lodged

k.   August 31 – tender accepted



Was the VP engaged?

[41]      The first issue to be determined is whether the VP was engaged. It did not seem to be disputed that that was to be determined according to ordinary contractual principles.

[42]      The question then is whether there was consensus about the claim being dealt with under the VP. Absent an express agreement, it is necessary to look at (i) terms of the VP itself and (ii) the words and actings of the parties.

[43]      Paragraph 2.1 of the VP envisages the following process:

a.   Step 1: claim intimated inviting agreement that negotiations take place under VP;

b.   Step 2: defender/insurers accept by letter sent within 21 days;

c.   Step 3: claim thereafter precedes in terms of VP in respect of “negotiations, disclosure, repudiation of liability, settlement and calculation of fees”.

[44]      Paragraph 3.5 provides in terms that if there has been no reply from the defender/insurer within 21 days, proceedings may be commenced.

[45]      Assuming that agreement to proceed under the VP has been reached, the insurers then have three months from the date of their letter so acknowledging to investigate the merits of the claim and to intimate their position on liability.

[46]      In the present case, the “Step 2” letter was late. Accordingly, on one view no agreement was reached to deal with the claim under the VP.

[47]      Nevertheless, in that type situation it appears to me that an agent for the pursuer could waive the failure by the insurer to comply with the timetable and thereby accede to the continued application of the VP. Since the question of the (continued) application of the VP is to be determined by ordinary contractual principles, that ‘waiver’ could be expressly made or it might also be granted constructively. That could happen if, for example the pursuer’s agents continued to deal with the matter as if it was being dealt with under the VP, even if they did not expressly so acknowledge.

[48]      The difficulty for the insurers in the present case is that there is nothing by the way of words or actions by the pursuer’s agents which can be prayed in aid of an argument that the VP, having been breached, continued to apply. It does not appear to me that there is anything in the correspondence from the pursuer’s agents that, objectively considered, may be construed as indicating that that was their intention.

[49]      Accordingly, in my view the VP was not engaged.


Conduct and modification

[50]      As I understood it, there was no real dispute between the parties about the court’s powers in relation to expenses and the principles underlying how these should be exercised.

[51]      In particular, both parties appeared to accept the analysis and approach set out by me in Gibson.

[52]      Since I have concluded that the VP was not engaged in this case, I think it can safely be left to one side. It is true that even where it is not engaged, the VP might be helpful, in some circumstances, as providing guidance to what conduct might or might not be regarded as reasonable. But in the present case, I do not find it necessary to examine matters in that way or to seek to resolve any issues about whether the VP and/or the Compulsory Protocol contain ambiguities.

[53]      In my opinion, the starting point is to examine what might be called the “state of play” at the point when the action was raised.

[54]      Before turning to that in more detail, I have noted that it was submitted to me on behalf of the pursuer that the adjusters’ letter of 16 June had been sent after proceedings were raised: see paragraph [15], above. But I am left wondering if that is correct.

[55]      I observe first that the initial writ which is with papers does not have a copy of the execution of service appended to it. Accordingly, I am unable to say definitively from looking at the writ in process when the action was raised. In my opinion, this is unsatisfactory. Once an action has been raised, the execution of service becomes part of the writ and as such a court document. It is an important document. The court may need to know the precise date of service for a variety of reasons. Firstly, as in this case, there may be arguments about expenses. Secondly, if the matter proceeds to proof, the date may be required for the purpose of calculating interest. So, as a matter of practice, when the writ has been served and it is returned to court, it should have a certificate of citation appended to it.

[56]      Second, having looked at the other documentation in this case, it appears that according to the notice of intention to defend, the writ was served on 19 July 2016.

[57]      Third (i) the relevant correspondence should be produced and agreed: Calder v Rush; and (ii) the timeline of all relevant events pre-litigation and up to the date of settlement (including, I suggest, the date of service of the writ) should be agreed between agents in advance of any hearing on expenses.

[58]      Reverting back to the main issue, the adjusters’ position on behalf of the insurers was that there should be a deduction for contributory negligence: cf Gibson. I agree with the submission that in the context of this case, that was material. Accordingly, as at that stage, there was a live issue between parties which was, on the face of it, going to require resolution in court. To that extent, it appears to me that the pursuer was entitled to commence proceedings.

[59]      Even if, as I think may well have been the case, the action had not in fact been raised by the time the pursuer’s agents received the adjusters’ letter of 16 June, that letter did not  materially alter matters. The adjusters do not recant from the position that they think there is contributory negligence. They merely state that they are looking to negotiate a settlement on a without prejudice basis. That does not appear to me to be a genuine statement of an alteration of position.

[60]      But in my opinion, matters do not necessarily end there. I was referred only indirectly to the medical reports on the pursuer. I do not know when these were commissioned or received by the pursuer’s agents. Judging by the terms of the submissions, they were in the hands of the pursuer’s agents at the point when the decision was taken to commence proceedings. As I have observed elsewhere, medical reports on which reliance is to be placed should be disclosed as soon as available: Gibson, paragraph [44].

[61]      I was left unimpressed with the reasons put forward for a non-disclosure. Firstly, solicitors are officers of court and have obligations to the court and to their opponents. So if the circumstances reasonably required the disclosure of the medical reports, the fact that the pursuer himself did not want that is not a sound reason for failing to do so. Secondly, agents have a responsibility to ensure, so far as possible, that the court is asked to adjudicate only on matters in respect of which there is a live dispute between parties. Part of that duty entails the obligation to identify (or facilitate the identification of) matters which are not truly in dispute.

[62]      More specifically in the context of this case, the disclosure of the medical reports would have allowed the adjusters to say whether they were prepared to accept them and discuss valuation of the claim based on them; and if that had happened and agreement on quantum might have been reached either before or very soon after the action was raised. The pursuer would not have been prejudiced by the disclosure. Thus, far from there being no point in disclosing the medical reports, there was every point: even if it did not lead to settlement, it could have led to a narrowing of the issues between the parties.

[63]      The question then is to what extent, if any, the foregoing should invite the exercise of the court’s discretion to depart from the normal rule of “expenses follow success” and modify the award of expenses in favour of the pursuer.

[64]      I approached that matter in much the same way as I did in Gibson, paragraph [45] et seq. Even if the medical reports had been disclosed, it appears to me that the pursuer would have been entitled to commence proceedings given the live issue on contributory negligence. But it also appears to me that settlement of the action may have occurred sooner than it did had the medical reports been disclosed earlier. I was told that the reports were not disclosed until 5 August. That date was not disputed. The tender was lodged at the end of August and was accepted very quickly thereafter.

[65]      Accordingly, I have come to the conclusion that although the raising of the action was justified, some modification of the pursuer’s expenses is appropriate on the basis that settlement of the claim was delayed, and thus the defender’s insurers were put to more expense than they would otherwise have been.

[66]      This is not a matter which can be scientifically determined and in all the circumstances, I have concluded that the pursuer’s expenses should be modified by 20%.

[67]      As there has been mixed success in that the defender has achieved some modification but the pursuer has resisted successfully modification to nil, I shall find no expenses due to or by either party in respect of the motion roll hearing.