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OUTER HOUSE, COURT OF SESSION
[2007] CSOH 06
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PD1106/06
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OPINION OF LORD EMSLIE
in the cause
DAVID MORRISON
Pursuer;
against
BRITISH
BROADCASTING CORPORATION
Defenders:
ннннннннннннннннн
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Pursuer:
Hawthorne; Digby Brown
Defenders: R G Milligan;
Simpson & Marwick, WS
16 January 2007
Introduction
[1] On 10 April 2005 the pursuer sustained injury when
he stepped into an unguarded trench at work.
Some 14 months later he raised the present action for damages against
the defenders, alleging that his accident was caused by their common law fault
and breach of statutory duty. The action
has recently been settled by Minute of Tender and Acceptance in conventional
form, with the defenders undertaking to pay the pursuer г7,000 "... with the
expenses as taxed of process to the date hereof in full of the conclusions of
the Summons". The pursuer now moves for
decree in terms of these documents, but the defenders oppose the motion quoad expenses.
Submissions
[2] Put shortly, the defenders'
position is that the raising of this action in June 2006 was precipitate and
unnecessary where (i) liability was not in issue; (ii) the defenders were demonstrably keen to
negotiate an early settlement of the claim;
but (iii) the pursuer had persistently failed to provide the defenders
with details of his loss of earnings for that purpose. Describing the action as a "costs-building
exercise", counsel submitted that his clients should not merely be relieved of
any liability to meet the pursuer's expenses, but that the whole expenses of
process to date should be awarded in their favour. Failing such an award in favour of the
defenders, counsel submitted that there should be a finding of no expenses to
or by either party, which failing that the Court should, in its discretion,
substantially modify any liability in expenses which the defenders might have
towards the pursuer.
[3] As
illustrated by recent decisions of the Inner House in McKenzie v H D Fraser &
Sons 1990 SC 311 and Brackencroft Ltd
v Silvers Marine Ltd 2006 CSIH 2, it
was well settled that the conventional (and ex
facie unqualified) offer of expenses in a Minute of Tender carried only
such expenses as the court might deem appropriate in the circumstances. A tenderer's liability might, for example, be
enhanced by the award of an additional fee, or conversely modified or
restricted by reference to the other party's unreasonable conduct at some
stage. In the latter context the court
might, at its discretion, order expenses to be taxed on a lower scale, or
otherwise modified to a specified fraction of the total. In Crombie
v British Transport Commission 1961
SLT 115, the pursuer's action of damages was raised without any prior
intimation of his claim. The defenders
averred this in their defences, and immediately lodged a purported tender of
"г500 in full of the conclusions of the Summons". When that offer was accepted by the pursuer,
both parties moved for the whole expenses of the action. Following an analogous decision of the First
Division in Gunn v Hunter 1886 13R 573, the Lord Ordinary
awarded the defenders their expenses, holding that the action had been
unnecessary and that an intimated claim would in all probability have been
settled on the same basis without any need for litigation. In counsel's submission, that case was
correctly decided, and showed how the court should approach the matter of
expenses in similar circumstances.
[4] Here,
according to counsel, the defenders had been placed in an intolerable
situation. The pursuer's claim was of
modest value, comprising principally solatium
and a few weeks' loss of earnings as a self-employed TV rigger and grips
man. Having received intimation of the
claim only five days after the accident, the defenders' claims adjusters had
repeatedly sought the necessary details to enable them to consider
settlement. No response at all was
forthcoming until May 2006 when a medical report was forwarded. Thereafter, in the full knowledge that no
earnings details were yet available despite repeated requests, the pursuer
commenced the present action on or about 11 June 2006.
This step was also taken against the background of a recent letter from
the defenders' claims adjusters dated 6 June
2006, responding to a threat to raise proceedings in the following
terms:-
"I note your
intention to commence proceedings. I
consider this to be a costs building exercise and I reserve the right to bring
this letter to thee (sic) attention
of the court when the question of your costs arises."
Even after the action was raised,
the pursuer's earnings details were still not made available until after the
end of August 2006. However, as soon as
they were in a position to do so, the defenders took steps to settle the
claim. They had, it was said, acted
reasonably throughout, and should incur no liability for the expenses of an
action which should never have been raised.
Failing that, the pursuer's entitlement to expenses should be restricted
to the Sheriff Court
ordinary cause scale, or alternatively modified to whatever fraction the court
thought fit.
[5] In
reply, counsel for the pursuer accepted that, as a matter of law, the expenses
carried by the defenders' tender were those which the court, in its discretion,
might regard as appropriate. In present
circumstances, however, the pursuer's entitlement to expenses should be
affirmed without modification. As was clear
from the parties' correspondence, the action had been raised in good faith at a
time when, despite a formal ultimatum in May 2006, no offer of settlement was
forthcoming from the defenders. In any
event, loss of earnings formed only a small part of the claim, and vouching of
that element was reasonably delayed because of the pursuer's self-employed
status.
[6] More
importantly, causation of the pursuer's accident had never been conceded on the
defenders' behalf, and the action once raised had been met with a full defence
on both merits and quantum. It could not therefore be said that the
raising of proceedings in such circumstances was unreasonable. Moreover, following efforts by the defenders
in August 2006 to recover details of the pursuer's loss of earnings, a
Statement of Value of Claim was submitted to the defenders' agents together
with a note of adjustments giving further specification on the earnings-loss issue. Despite these developments, however, the
action did not settle until approximately three months later. Significantly, the final Minute of Tender was
preceded by (i) an extra-judicial offer from the defenders' claims adjusters
dated 13 June 2006, proposing settlement of the claim "... in the sum of г5,500
together with your reasonable expenses and disbursements"; (ii) an earlier tender lodged by the
defenders on 11 August 2006, offering "г5,500... together with the expenses
of process to date in full of the conclusions of the summons"; (iii) a counter proposal by the pursuer on
29 August 2006, offering to settle at "г7,000 ... plus expenses", and (iv)
the defenders' offer on 18 October 2006 of "... the global sum of г10,000,
strictly inclusive of costs...". Against
that background, the pursuer had reasonably understood the final Minute of
Tender as including a substantial offer of expenses in his favour, and had
accepted it on that basis. If the
defenders' motion were to be granted in any of its alternative branches, none
of which had been focused at an earlier stage, the pursuer would suffer serious
prejudice and might in particular lose his right to receive all or part of the
principal sum tendered.
[7] In
the whole circumstances, while conceding the court's discretion in this area, counsel
invited me to refuse the defenders' motion and award the pursuer his whole
expenses in the ordinary way.
Discussion
[8] I
have no difficulty in accepting that the offer of expenses in a conventional
Minute of Tender refers, not to any fixed amount, but to such expenses as the
court, in its discretion, considers appropriate in all the circumstances. As the Lord President (Hope) put it in McKenzie, at page 319, the expenses
offered in a tender must be those which are "... appropriate to the case as
determined by the court". Similarly, at paragraph 8
of the Opinion of the Court in Brackencroft,
the Lord President (Hamilton) said:-
"The meaning of the expression 'the expenses of process' is not in
doubt. It is
'an elastic, a flexible
phrase, and is always subject to interpretation by the Court... the Court
determines what the phrase connotes and what expenses are covered by it.'
(Clegg v McKirdy & MacMillan per LJC Alness at p. 447, cited with
approval by the First Division in McKenzie
v H D Fraser & Sons). Because it is a judicial tender, the court
determines its particular content in the light of the circumstances of the case
before it.... The result is that, while a party lodging a tender in ordinary form
and a party considering or accepting it will not know with exactness the
content of the expenses comprised in that tender, he will know that it will be
determined by the Court applying judicial principles... in the circumstances of
the particular case".
[9] Echoing
dicta in some of the earlier cases,
the Lord President in McKenzie, at page 321,
went on to say:-
"The purpose of
the tender is to offer a specific sum with expenses, so that if he accepts it,
the pursuer will be placed in the same position as if, at the date of the
tender, he had obtained a decree for the amount tendered. There is nothing to stop a defender from
making an offer with modified expenses or to stop a pursuer from accepting an
offer on these terms, but the rules as to judicial tenders do not admit of this
approach because, in the absence of agreement, expenses are always at the
discretion of the court."
By comparison with an ordinary
decree pronounced by the court, however, it seems to me that there is one very
obvious and important difference where a tender is in issue, namely the fact
that the tendering party explicitly undertakes responsibility for his
opponent's expenses along with the principal sum, and by necessary implication
concedes that he will in any event bear his own. In my opinion recognition of that difference
is implicit in the last-mentioned observation of the Lord President in McKenzie, and in the other dicta to which he referred. In a case like this, the issue concerns the
construction and appropriate content of a judicial offer made by the tendering
party towards his opponent, and I am unable to conceive of circumstances in
which an express tender of expenses, made contractual by acceptance, could
legitimately be construed as permitting the tendering party to demand that the
whole expenses of process should instead be awarded in his own favour. Even where its content is subject to
assessment by the court, an offer to meet the pursuer's expenses must in my
view have the effect of precluding any award in the other direction. I therefore have no hesitation in rejecting the
primary argument which was advanced by counsel for the defenders in this case. Indeed counsel very fairly accepted, in the
course of the hearing, that he could "... see a logical difficulty" in the
position he was adopting.
[10] In this context, I regard the case of Crombie as clearly distinguishable, on the ground that the offer
there was of a lump sum only and thus did not qualify as a judicial
tender. Because expenses were not
mentioned, and in particular were not the subject of any offer by one party in
favour of the other, their regulation remained entirely at large for the court. It can only have been on that basis that the
Lord Ordinary felt free to award the "tendering" defenders their whole expenses
in that case.
[11] I turn now to the more difficult issue as to how far (if at
all) I should exercise my acknowledged discretion to modify or restrict the
pursuer's recoverable expenses in terms of the Minute of Tender and
Acceptance. On the one hand, I am
inclined to accept that the pursuer and/or his solicitors acted unreasonably in
raising this action at a time when they knew that, despite multiple requests
from the defenders' claims adjusters, details of the pursuer's loss of earnings
had not yet been made available. The triennium still had nearly two years to
run; the pursuer had by then been back
at work for about a year; and the
defenders seemed interested in trying to settle the claim on a without
prejudice basis. At the hearing before
me, counsel for the pursuer was unable to identify any positive reason, other
than the absence of a settlement offer from the defenders, why the present
action should have been commenced as early as June 2006, and she ultimately accepted that
the unavailability of earnings-loss details at that time was
"regrettable". Had the defenders in
their defences conceded liability to make reparation to the pursuer, narrating
the circumstances in which the raising of the action had frustrated a genuine
desire to settle the claim economically out of court, and if the action had
thereafter been settled expeditiously as soon as circumstances allowed, there
might have been much to be said in favour of modifying the pursuer's
recoverable expenses to a substantial degree.
[12] However, the defenders did not take that course, and on
analysis it seems to me that their own conduct fell short of being as
reasonable as their counsel suggested.
It is true that, for more than a year prior to the raising of the
action, the defenders' claims adjusters repeatedly asked for information which
would enable them to consider the quantum
of the claim. Significantly, however, as
reflected in these adjusters' letter of 16
February 2006, such requests were made on the basis that
"liability" was conceded "but not causation".
There was thus at all stages a dispute on the merits as well as on the quantum of the pursuer's claim. Once the action was in court the defenders
bore to admit the content of the letter of 16 February 2006, but (i) went on to
deny the pursuer's averments of common law fault and breach of statutory duty,
and (ii) averred that esto the
accident occurred as the pursuer claimed it was solely caused or materially
contributed to by his own fault. This
remained the defenders' formal position
throughout the period of nearly six months which elapsed before the claim was
settled. It is also relevant to note
that the defenders had possession of the pursuer's medical report from May 2006
onwards; that on 17 August 2005 they
were advised that the pursuer was self-employed, and had been working under
contract to a named company at the time of the accident; that by January 2006 it was known that the
pursuer had only been off work for a number of weeks; and that by the end of August 2006 (by means
of adjustments, e-mail correspondence and a Statement of Value of Claim) the
pursuer had made a fairly full disclosure of his claimed loss of earnings. Nevertheless, it still took a further three
months before final settlement of the claim was achieved.
[13] The defenders' final tender was, moreover, preceded by a series
of lesser offers and one counter-proposal by the pursuer. On 13
June 2006 the sum of г5,500 was offered, net of CRU benefits "...
together with your reasonable expenses and disbursements". On 11
August 2006 a conventional tender was lodged in the sum of г5,500,
net of CRU recoupment, "... together with the expenses of process to date". On 29
August 2006, in refusing the tender, the pursuer's agents put
forward a counter-proposal of г7,000 net of benefits plus expenses. Some six weeks later, on 18 October 2006, the defenders' agents made an 'ultimatum'
offer of "... the global sum of г10,000, strictly inclusive of costs...". And it was not until a further six weeks had
elapsed, at the end of November 2006, that the defenders lodged their final
tender, the terms of which mirrored the pursuer's counter-proposal of
29 August. Thereafter, once the
defenders' final tender had been accepted on the pursuer's behalf, and the
present motion enrolled, the defenders for the first time overtly sought to
make an issue of expenses along the lines of their warning letter of 6 June 2006. In these circumstances, while the pursuer and
his representatives must be deemed familiar with the law as to the meaning and
effect of a tender in conventional form, it seems to me that the history of
events from June 2006 onwards must have some bearing on the interpretation to
be placed on the wording of the tender in this case. If on 13 June 2006 the defenders were
prepared to offer to settle the claim for г5,500 "... together with (the
pursuer's agents') reasonable expenses and disbursements", the pursuer and his
agents may reasonably be forgiven for having apparently understood later
unqualified offers along similar lines, and as including at least a substantial
offer of expenses.
[14] Against that background, I have reached the conclusion that the
scope for modification of the pursuer's recoverable expenses in this case is,
for practical purposes, quite limited. For
one thing, I do not consider that justice would be done by anything in the
nature of restriction to the Sheriff Court
ordinary cause scale. That would affect
the pursuer's entitlement across the board in circumstances where no such
limitation was expressed or, I think, implied in any of the offers, or the
counter-proposal, to which I have referred.
In any event, I was not addressed on the practical effect of such a
limitation by comparison with expenses on the Court of Session scale for a
personal damages action under Rule of Court 43.
Equally, I do not think that this is a situation in which the incidence
of expenses could appropriately be regulated by reference to any specified
dates, periods or stages of process. On
the other hand I do consider that, on balance, the pursuer should suffer some
modification of his recoverable expenses 7to reflect the fact that a
Chapter 43 action, where costs are to some extent front-loaded, was raised
prematurely in the sense that key information repeatedly requested for
settlement purposes was then known to be unavailable, and did not subsequently
become available until at least the end of August 2006. Weighing all relevant factors up as best I
can, I consider that a proper exercise of the court's discretion would be to
find the defenders liable to the pursuer in the expenses of process restricted
to four-fifths. It would not in my view
be just for the pursuer to recover less than a substantial proportion of his
expenses in this case, but by the same token I do not think that it would be
just for the defenders' liability to be unrestricted as if no issue as to the
need for, or timing of, proceedings had arisen.
Decision
[15] In the result, I shall on
the pursuer's motion grant decree in terms of the Minute of Tender and
Acceptance, but restricting the pursuer's entitlement to expenses thereunder to
four-fifths. In addition, on an
unopposed basis, I shall certify Angus D McLean, Consultant Orthopaedic
Surgeon, as a skilled witness for the pursuer.
