Pursuer’s offers not available in appeals to Inner House, court rules 

The First Division held that, while the chapter 34A of the Rules of the Court of Session did not expressly exclude pursuers’ offers, the language of the rules suggested that any bid to settle a claim against a defender must be made in respect of proceedings in the Outer House.

“We conclude that chapter 34A pursuers’ offers are not available in respect of a challenge to a final decision taken in the Outer House,” the appeal judges said.

Lord Brodie, Lord Drummond Young and Lord Malcolm made the ruling in an action brought by Craig Anderson against John and Antionette Imrie, in which the Lord Ordinary awarded damages to the pursuer of £325,000 against the second defender.

The court heard that after an appeal was marked the pursuer intimated and lodged a pursuer’s offer to settle the cause for £300,000, but the offer was rejected.

Ultimately the appeal was unsuccessful, following which the pursuer sought an award of expenses plus a 50 per cent uplift in the solicitors’ fees in terms of rule 34A.9.

In opposition to the uplift, the second defender argued that pursuers’ offers could only be operated in respect of claims pending in the Outer House.

The pursuer’s position was that the relevant rules referred to “the court”, not the Outer House and that it would be “unfair” if, unlike tenders, they were not available in the Inner House.

However, the appeal judges ruled that the application was “incompetent”.

Delivering the opinion of the court, Lord Malcolm said: “It is true that the rules do not expressly exclude pursuers’ offers in the Inner House, but there are a number of indications that this was the intention.

“Rule 34A.1 defines a pursuer’s offer as one seeking to ‘settle a claim against a defender’. Rule 34A.3 requires a pursuer’s offer to be lodged in process before the court makes avizandum (a reserved decision) or gives judgment, or, in a jury trial, the jury retires to consider its verdict.

“A pursuer’s offer can be accepted at any time before those events, after which decree can be granted in terms thereof – rule 34A.6. The court must not be informed of the offer until after judgment or the jury’s verdict – rule 34A.5.

“If a pursuer’s offer is not accepted and the judgment or verdict is at least as favourable to the pursuer as the offer, and the court is satisfied that it was a genuine attempt to settle the proceedings, the pursuer can move for an uplift of 50 per cent on the pursuer’s solicitor’s taxed fees, including any additional fee, in relation to the relevant period – rules 34A.8 and 34A.9.

“In our view the language of chapter 34A is redolent of proceedings in the Outer House. This is consistent with the purpose of encouraging early settlement of personal injury actions. We conclude that chapter 34A pursuers’ offers are not available in respect of a challenge to a final decision taken in the Outer House.

“A question might be posed as to the position if an interlocutory decision of a Lord Ordinary is reclaimed. Does this prevent the lodging of a pursuer’s offer while the matter is pending in the Inner House? We consider that the answer is no. The decision on the substantive merits of the case will still be for the Lord Ordinary, after which the implications, if any, of a pursuer’s offer would require to be addressed.”

That was sufficient for disposal of the matter before the court, but the judges offered some more general observations.

The court noted that much of the pursuer’s argument depended on the proposition it would be unfair if the second defender and reclaimer could tender in the Inner House, but the pursuer could not place similar pressure on his opponent, however, the judges disagreed.

Lord Malcom explained: “This submission ignores the difference in the operation of pursuers’ offers, all as discussed above, and which explains why, in respect of pursuers’ offers, it was necessary to provide for something in the nature of a penalty, as opposed to simply an allocation of liability for judicial expenses. In addition it fails to acknowledge the superior position in which the pursuer would be placed in an appeal of the present kind, where the only available outcome was complete success for one side or the other. The sole question was whether the pursuer was entitled to retain the damages awarded by the Lord Ordinary.

“As is often the case in the Inner House, there was no ‘halfway house’ other than by agreed extrajudicial settlement; something which is always open to parties. Whatever the result in the appeal, if the second defender had tendered a compromise figure, which was not accepted, it could have no decisive impact upon the ultimate expenses awarded.

“However, if the pursuer’s offer is permitted and put into effect as per the scheme set out in chapter 34A, it would give the pursuer a penalty uplift in the expenses awarded in his favour as the successful party. If this was allowed there would be an argument in favour of introducing a similar regime for tenders in ‘all or nothing cases’where the settlement offered does not reflect an available outcome in the litigation. (Similar comments could be made in respect of causes in the Outer House where there is no issue as to quantum or apportionment of liability.)”

He concluded: “The result is that the court will refuse the application for an uplift in fees in terms of rule 34A.8(3) on the basis that it is incompetent. For completeness it should be noted that the second defender contended that in any event the offer was not a genuine offer to settle the appeal given that it involved a relatively small reduction in the Lord Ordinary’s award in circumstances where, if successful, the reclaimer would avoid liability altogether. In the circumstances we do not require to rest our decision upon this, but we consider that there is force in the submission.”