Sheriff Principal allows expenses appeal over sheriff’s ‘erroneous’ approach to pre-action protocol

Sheriff Principal Alastair Dunlop QC (pictured) found the defender liable to the pursuer in the expenses of the action after ruling that the sheriff at Stirling erred in his approach to a pre-action protocol by concluding that a further letter of warning was required before litigation was commenced.

The point at issue was the extent to which the court ought to have regard to the voluntary pre-action protocol as agreed between the Law Society of Scotland and the forum of Scottish Claims Managers and whether that protocol should be recognised as setting out a reasonable approach to pre-action conduct.

The court heard that the purser Paul Bent was injured in a road traffic accident in February 2014 and on 12 June 2014 his solicitors sent a letter of claim to the insurers of the defender Michael Trevett proposing that the claim should be negotiated in terms of the protocol, to which they were signatories.

The protocol states that the insurers should acknowledge the letter of claim within 21 days of the date of receipt of the letter of claim and should advise whether it is agreed that the case is suitable for the protocol. It explicitly provides that if there has been no reply by the defender or his insurer within 21 days, the claimant will be entitled to issue proceedings.

However, no reply was received to the letter of claim and on 18 July 2004 the action was raised without further warning, but the sheriff criticised the pursuer’s letter as being insufficient to allow the defender either to respond to liability or to make any assessment of quantification or in any way to give fair notice to the defender or his insurers of the detailed basis of the claim.

He stated that litigation was “a last resort” and that resort to litigation without meaningful attempts to avoid it should be “discouraged”.

The sheriff expressed the view that if a party raised litigation without warning they risked being liable for expenses or at the very least modification of expenses or no award at all.

Accordingly, he took the view that in these circumstances there should be no award of expenses due to or by either party.

In support of the appeal counsel for the pursuer submitted that the sheriff’s requirement for a further letter of warning that litigation was about to be commenced was “inconsistent” with the terms of the protocol and was liable to “undermine confidence” in it.

It was submitted that, as a signatory to the protocol, the insurers had acknowledged that what the pursuer’s solicitor had done reflected “reasonable practice” and that ought to be supported by the court.

At the hearing before the sheriff it had been submitted on behalf of the defender that expenses should be awarded in favour of the defender or that, at least, any expenses awarded to the pursuer should be modified to nil on the basis that litigation was “unnecessary” and by implication” unreasonable”.

But at the hearing of the appeal the solicitor for the defender acknowledged that the insurers were signatories of the protocol and that in terms of the protocol the pursuer had been entitled to raise the current action.

The sheriff principal held that the court ought to “take cognisance of the protocol” and to “encourage its use where possible”.

In a written judgment, Sheriff Principal Dunlop said: “While it seems therefore that parties are agreed on what was represented to be the point of general importance in the appeal, the sheriff has reached a different view and accordingly I should express my own opinion on the matter. In my view the common position of the parties on the principle point in the appeal is well founded.

“Where it is accepted that adherence to the protocol reflects the normal and reasonable approach it seems to me that there is a risk of causing uncertainty and undermining confidence in the protocol if the court superimposes additional requirements such as that suggested by the sheriff.”

He added: “One should not lose sight of the fact that an important principle in relation to expenses is that the cost of litigation should fall on him who has caused it, which is the principle underpinning the normal rule that expenses should follow success. It was the insurers’ failure to respond to the letter of claim within 21 days which was the proximate cause of the pursuer raising the action and, standing the scheme of the protocol to which they were signatories, in my view the insurers cannot be heard to say that the pursuer had acted unreasonably in raising the action.

“In the result I find myself in agreement with the common position of the parties on the principle point in the appeal and have therefore come to the view that the sheriff’s approach is erroneous. In the result I have allowed the appeal, recalled the sheriff’s interlocutor insofar as dealing with expenses and found the defender liable to the pursuer in the expenses of the action on the summary cause scale modified by 15%.”