Legal firm fails in appeal to have time-barred damages claim against it dismissed

The Inner House of the Court of Session upheld a decision of the Lord Ordinary, who rejected the firm’s argument that the terms of an email constituted a “valid, unequivocal, unambiguous and irrevocable waiver” of the right to plead a limitation defence.

Lord Menzies, Lord Brodie and Lord Glennie heard that the pursuer Christopher Brits raised an action for damages for professional negligence against his former solicitors Kilcoyne & Co in respect of their failure to raise timeously a damages action for personal injuries which he sustained in an accident at work in April 2009.

Time bar

The triennium expired on 9 April 2012, but the defenders failed to raise a court action against the pursuer’s employers Harsco by that date.

Thereafter the pursuer instructed different solicitors to act on his behalf in this matter and on 1 May 2012 a summons was served on the employers.

Defences were lodged on behalf of the employers, which contained a defence of time bar, but that action was eventually concluded by extrajudicial settlement at a figure less than the full value of the claim.

However, the issue before the appeal judges was the effect of the averments on behalf of the defenders in answer 3 of their defences, which stated that Adrian Hotson, London Market Casualty Manager of Cunningham Lindsey LLP, emailed David Wilson of Digby Brown LLP and said that his client would “not be taking the time bar defence”.

Unequivocal waiver

The defenders averred that ex facie Mr Hotson’s email contained an “unequivocal waiver” of Harsco’s right to plead a limitation defence upon which the pursuer was entitled to found in the pursuit of his claim.

But in response to Harsco’s averments regarding time bar the pursuer pled that, in terms of section 19A of the Prescription and Limitation (Scotland) Act 1973, it was “just and equitable” that the action should be allowed to proceed.

The defenders averred that the pursuer failed to plead that the email constituted a waiver of Harsco’s right to plead a limitation defence, which was “unreasonable”, and that this “broke any causal connection” that existed between the defenders’ failure to raise proceedings prior to 9 April 2012 and any loss sustained by the pursuer.

Esto the causal chain was not so broken, by not pleading waiver the pursuer “failed to mitigate his loss.”

The Lord Ordinary

Following a Procedure Roll debate the Lord Ordinary sustained the pursuer’s first plea-in-law, which was to the effect that the defenders’ averments in respect of waiver were irrelevant et separatim, lacking in specification, and should not be admitted to probation.

The defenders challenged that decision, arguing that the Lord Ordinary erred in law in reaching this determination.

It was submitted that the email in question constituted a valid, unequivocal, unambiguous and irrevocable waiver of the insurer’s rights to plead time bar “at any time in the future” and that the judge’s reasons for reaching the conclusion which she did were “insufficient”.

Counsel for the reclaimers maintained that the words of the email “could not be clearer”, but added that the court needed to construe it in context and required to hear evidence on that context.

No error of law

Refusing the appeal, the judges observed that for a statement to constitute a binding waiver of a legal right, it must be expressed in “clear and unambiguous language”.

Delivering the opinion of the court, Lord Menzies said: “In many cases, it will be necessary to construe the statement by reference to the context in which it was made on the basis of what a reasonable recipient, with knowledge of the background, would have understood by the document in question. However, if a party intends to rely on surrounding facts and background, as context for the proper construction of a document, it is necessary for that party to make averments as to what those facts and circumstances are and why they are relevant to the construction of the document.

“In the present case, the reclaimers make no averments as to any circumstances which might be relevant in this regard. They aver simply that ex facie Mr Hotson’s email contained an unequivocal waiver of Harsco’s right to plead a limitation defence.

“We know that the email was written shortly after the expiry of the triennium and shortly before the raising of court proceedings, but there is no averment of other relevant background. Looking to the terms of the email, as quoted in the answers, we are unable to conclude that this is a clear unequivocal, unambiguous, irrevocable waiver of the right to plead limitation in all time coming. Indeed, we regard that construction as an inherently unlikely one.”

The appeal judges said they could find “no error of law” in the Lord Ordinary’s treatment of this issue.

Lord Menzies added: “The point is a short one. She dealt with it quite shortly, but her reasoning appears clear enough to us. In all the circumstances, we are not persuaded by the submissions for the reclaimers and we shall refuse this reclaiming motion.”