Back to top
News In Focus

Settling after quantum defence bars simple procedure expenses cap: sheriff

25 March 2019

A respondent in a simple procedure claim who defended only on quantum and then settled, was not protected by the statutory cap on expenses – but in the instant case should not be found liable in any higher figure than if the cap had applied, a sheriff has ruled.

Summary Sheriff Adrian Cottam gave the decision at Edinburgh Sheriff Court in a claim by Jamie Davis against Skyfire Insurance arising out of a road traffic accident.

Liability had been adimitted, and the only dispute as to quantum was over the claimant's credit hire costs and claims for inconvenience and miscellaneous costs.

The claim was for £3,035, but after lengthy correspondence it was settled on the eve of proof for £1,700. The claimant sought expenses under chapter V of the Act of Sederunt (Fees of Solicitors in the Sheriff Court etc) 1993 on the basis that the cap on simple procedure expenses did not apply since the defender, having stated a defence, had not proceeded with it, it terms of s 81(5)(a)(ii) of the Courts Reform (Scotland) Act 2014.

Sheriff Cottam stated that while the cases founded on by the claimant, Tallo (2015) and Graham (2017) were not strictly binding on him, they were at least highly persuasive, and there was no difference in statutory interpretation whether the defence was to liability or quantum or both. "The respondent therefore has stated a defence and not proceeded with it and the cap on expenses in s 81 does not apply."

However, he continued, the case could not rest there. "Firstly there are significant differences in the approach and ethos of simple procedure. At every stage parties and the court have to consider the principles of simple procedure set out in rule 1.2. The duty on the court is to take those principles into account when managing the case as when interpreting the rules... One of the main principles... is rule 1.2(4): 'Parties are to be encouraged to settle their disputes by negotiation... and should be able to do so throughout the progress of a case'...

"It cannot make sense, applying the principles, to punish a party who avoids a hearing, and who ultimately is at least partially, if not wholly successful in a defence and who negotiates a settlement without taking up court and parties’ time and resources with a hearing. The difference in the award of expenses between the cap (£170) and the likely assessed expenses (in advance of £2,000 perhaps) means that punishment, if the claimant is right in this argument, is excessive and does nothing to encourage negotiation “throughout the progress of the case”. The rule encourages the claimant to only negotiate down after a case management hearing, with an eye to higher expenses, and places an obstacle in the path of the respondent as soon as they dare challenge what they see as an excessive sum sued for."

He concluded: "It is true both parties went to expense in preparing and arguing their cases. There can, however, in fact be little difference in the costs incurred. The claimant would have mitigated those costs had they settled earlier. They were the ones who in the end accepted an offer at the lower end of the scale argued throughout the progress of the court. Both parties could have avoided further costs by agreeing on expenses.

"Applying the principles of simple procedure to the question of my discretion in respect of expenses, it appears to me that the award of assessed expenses would be contrary to my duties set out in rule 1.4. I therefore prefer the respondent’s submissions and award expenses in the sum of £170 (the equivalent had this been a 'capped expenses' case) to the claimant."

Click here to view the sheriff's note.

Have your say