Scottish Court of Session Decisions

[1] In this action the pursuer seeks damages from his former employer for injuries sustained in an accident at work on 18 October 1995. The action was begun in 1997 and at that time the pursuer had legal aid. His solicitor was Mr David Short, a partner in the firm of Lawford Kidd, solicitors, Edinburgh. The action was defended by the employers. In due course a proof before answer was allowed and the diet was arranged for March 1999. However, prior to that diet taking place certain communings took place in December 1998 and January 1999 between Mr Short and the solicitors acting for the defenders which the defenders maintain resulted in settlement of the claim. Shortly after the settlement which it is said was then achieved the pursuer's solicitors withdrew from acting, the pursuer being unwilling to accept that his claim had been duly settled by them. He now appears as a party litigant.

[2] In view of the foregoing events in the early part of 1999 the diet of proof which had been arranged for March 1999 did not take place. The defenders subsequently amended their pleadings to refer to the settlement of the claim. They now plead that, the pursuer's claim having been settled, any liability on the part of the defenders is discharged and the defenders should be assoilzied. By an interlocutor of 17 May 2000 the Court appointed proof to be heard on the sole question whether the claim for reparation had been settled, as pled by the defenders in terms of their second plea in law and the defenders were ordained to lead at that proof, which I heard on 27 September 2000.

[3] Three witnesses were tendered by the defenders, namely Mr Gordon Keyden, Mr David Short and Miss Claire Davidson, the first and last being respectively a partner and associate with the defenders' solicitors, Messrs. Simpson and Marwick. As I have already mentioned Mr Short was the partner of Lawford Kidd who acted for the pursuer prior to his firm's withdrawal from acting in February 1999.

[4] Mr Keyden's evidence was to the effect that, with the advent of the proof before answer fixed for March 1999, settlement discussions began to be pursued in around December 1998. On behalf of the defenders' insurers he made to the pursuer's solicitor, Mr Short, an offer of £5, 000, plus expenses, net of any benefits repayable to the Compensation Recovery Unit ("CRU"). The recoverable benefits were of the order of, or slightly more than, £13, 000 and the offer was thus worth about £20, 000 plus expenses. The offer was made without any admission of liability and was made in recognition of the fact that the pursuer was then in receipt of legal aid, which from the defenders' viewpoint meant that the expenses of successfully defending the claim would not be recoverable.

[5] No immediate response was received. Mr Keyden mentioned that one evening - he thought it would be around 19 January 1999 - as he was leaving his office he met Mr Short (whom he knew well) in the street and was offered and accepted a lift homewards in Mr Short's car. There was a brief discussion of the pursuer's case during which Mr Short mentioned that a consultation with counsel had taken place and matters were still being considered. (It is convenient to interpose at this point that, for his part, Mr Short had no particular recollection of such a conversation but accepted that it might well have occurred on an occasion when he had given a lift to Mr Keyden).

[6] The next stage, according to Mr Keyden, was on 26 January 1999 when Mr Short telephoned to see whether there was some scope for improvement on the earlier offer. Although it is averred by the defenders that Mr Keyden offered then to settle at £10, 000 net of recoverable benefits, plus expenses, Mr Keyden was clear that the terms of the averment were not accurate. Mr Keyden's evidence was that his response was not to increase the offer at that point since, at that stage, he was not informed whether or not the pursuer was prepared to accept the existing offer. He probably did indicate to Mr Short that if Mr Short wished an improved offer he would have to return to Mr Keyden with a figure, that is to say, a counter proposal.

[7] Mr Keyden heard later from his assistant, Miss Davidson, that on

29 January 1999 such a counter proposal had been made in the sum of £10, 000. It had been accepted by Miss Davidson who had prior authority from the insurers to go to that extent in effecting a settlement. He had also understood that Miss Davidson immediately notified the insurers in order that they could make payment to the CRU of the recoverable benefits before the imminent expiry of the then current CRU certificate. Mr Keyden went on to say that about a fortnight later he heard from Mr Short that there was "a problem". He was asked by Mr Short to put matters on hold meantime. However, by the date of that discussion a cheque for the principal sum of £10, 000 had already been sent to the Scottish Legal Aid Board, which was the normal procedure were a claim such as this had been settled.

[8] In her evidence (led after the evidence of Mr Short ) Claire Davidson testified to the effect that in January 1999 she had been asked to study the file relating to the pursuer's reparation claim and make certain preparations for the proof. On Friday 29 January 1999 she had received a telephone call from Mr Short concerning the case. The call was directed to her since Mr Keyden was to be absent from the office for the whole of that day. She was aware of the terms of the earlier offer on the defenders' behalf. According to Miss Davidson, in that telephone call Mr Short said that his instructions from the pursuer were that he refused the offer of £5, 000 but that the pursuer would, instead, accept £10, 000 in settlement of the claim. Since her firm, Simpson and Marwick, already had authority from its insurer clients which would permit her to settle at such a figure she therefore accepted Mr Short's offer and she and Mr Short accordingly settled the claim at the figure of £10, 000 (with expenses, and net of CRU benefits). She immediately sent a fax to the insurers advising them of the settlement and the need to repay the recoverable benefits to the CRU immediately, since the then current CRU certificate was about to expire. Mr Short was, as she recollected it, to inform the Keeper of the Rolls of the settlement.

[9] Mr David Short, a partner in Lawford Kidd for ten years and with approximately twenty years' experience as a solicitor confirmed in his evidence the making by Simpson and Marwick of an initial offer of £5, 000, net of CRU benefits plus expenses, though he thought, simply from a recollection, that the offer had been made in November 1998. He had certainly told the pursuer of the offer and had received instructions to reject it. It emerged particularly from the terms of the

cross-examination of Mr Short by the pursuer that thereafter Mr Short arranged a consultation with counsel in the Lord President Reid Building at 142 High Street, Edinburgh, at which both the pursuer and the pursuer's expert witness on safety matters was present. The consultation appears to have taken place in early to mid January 1999. At the consultation the expert witness indicated his inability to continue to give any support to the pursuer's case and counsel had advised that the pursuer accept the then current offer, or such improvement thereon as might be negotiated, failing which the legal representatives would have little option but to withdraw from acting.

[10] As I understood him, Mr Short later had some further discussions with counsel and in light of those, and the terms of the discussions at the consultation, he wrote to the pursuer on 26 January 1999 summarising his and counsel's view of the case, the pursuer's prospects, and the offer of settlement previously made by the defenders. At the time of writing the letter Mr Short had made a telephone call to Mr Keyden to elicit whether Mr Keyden had any authority to make a higher offer. Although Mr Keyden did not make a better offer, Mr Short "sensed that matters could be progressed".

[11] As indicated in his attendance note (7/1 of process), following his letter of 26 January 1999 Mr Short had a discussion with the pursuer on 28 January 1999. From his experience of negotiating settlement with other solicitors generally, and also with Mr Keyden particularly, Mr Short knew that there was little point in going back to the defenders' solicitors without a counter proposal in the shape of a figure at which he had his client's authority to settle. Mr Short deponed that he had a clear recollection of eventually being given instructions to settle at the figure of £10, 000 (plus expenses, net of recoverable benefits). He explained that he recollected that the pursuer had initially said that he would "think about" £10, 000 but it had been made plain to the pursuer by Mr Short that it had to be a figure which he could put to the defenders' solicitors as a figure which the pursuer would accept. The pursuer then gave his agreement to the figure of £10, 000 being put forward on that basis.

[12] Consequent upon receiving those instructions Mr Short made a telephone call to Simpson & Marwick on 29 January 1999. He spoke with Miss Davidson and told her that he had instructions to accept £10, 000. Settlement was agreed with her in that sum (net of benefits and with expenses). His understanding was clear, namely that the claim had been settled with express authority from his client.

[13] Mr Short went on to say in his evidence that shortly after concluding that settlement he received a telephone call from the pursuer to the effect that he (the pursuer) was no longer willing to take £10, 000. According to Mr Short, the pursuer was told that the claim had been settled and the pursuer accepted that he had agreed to settle for £10, 000. The attendance note made reference to this telephone call and the earlier telephone conversation with Miss Davidson.

[14] If one were to assume that it was in ostensible in the authority of a solicitor acting for a party in a litigation to settle the claim no conceivable difficulty could arise in the present case since it is clear, common ground between the lawyers conducting the settlement discussion that a settlement was reached between them on 29 January 1999. However, under reference to the concluding phrase of the concluding sentence of paragraph 22.28 of Gloag and Henderson's Introduction to the Law of Scotland, counsel for the defenders stated that it was accepted by the defenders that in order validly to compromise an action a solicitor required the actual authority of his client. I was not further addressed on the authorities to which to that footnote refers, nor any other authorities which might be pertinent to the issue whether a solicitor, whose authority to conduct the litigation is undoubted, might in a question with his opposing solicitor be seen to be acting within the scope of his ostensible authority in concluding a compromise of the action. I therefore approach the present case on the basis that actual authority was required in order to conclude a compromise of the action.

[15] Approaching matters on that basis I have to evaluate on the one hand the evidence given by Mr Short of his communings with the pursuer, Mr Gowans, and on the other hand the evidence and contentions put forward by Mr Gowans on the same topic, Mr Gowans having, I think, the natural difficulty shared with many party litigants of distinguishing between the giving of evidence as a witness, the simple presentation of propositions in cross-examining opposing witnesses, and the making of closing submissions.

[16] In what constituted Mr Gowan's evidence in chief he adverted to the consultation held at 142 High Street. The pursuer initially contended that the consultation took place in January 1998 but it seems to me to be clear that he was in fact mistaken as to the year and probably confused by the stress of giving evidence and I understood him eventually to accept that the consultation was in January 1999. The pursuer said that because of the "further engineers' report" he was told at the consultation that his case "could not go to court" and he had to take the £5, 000 offer or risk getting nothing. According to the pursuer his response was that he wish to see the "further engineers' report". He had thereafter received some medical reports and a report from Mr Walter Cameron. It was, said the pursuer, nonsense to think that £10, 000 would be proper compensation for all his injuries and his inability to work or that he could ever have agreed to settle at that figure. As I understood him, the pursuer denied that he had given any kind of authority to accept an offer of £10, 000, were it to be furthcoming.

[17] When cross-examined by counsel for the defenders, the pursuer agreed that he had been told by Mr Short that he should take £10, 000 otherwise he might get nothing. He further accepted that Mr Short had told him that it was necessary that he have a figure with which to go back to Mr Keyden being a figure at which the action would be settled. Mr Short had enquired whether he (the pursuer) would go away for £10, 000 to which Mr Gowans conceded that he had responded positively, but he then qualified that concession that by saying that the response had itself been qualified by the words "pending further engineers' reports". In relation to the evidence from Mr Short of his having received a telephone call on 29 January 1999 withdrawing the instructions to settle, the position adopted by the pursuer in his evidence was that he had no recollection of making such a call.

[18] It was evident from the outset of the proceedings before me that the pursuer considered the sum of £10, 000 to be wholly inadequate compensation if for his injuries. If liability were to be established, without contributory negligence, I have no real difficulty in understanding that the pursuer might be justified in that view. It is however plain from what I heard from the witnesses tendered by the defenders that in the settlement negotiations neither side considered the pursuer's claim to have any real prospect of success on its merits and the offer, and the advice to accept it, proceeded on that evaluation of the pursuer's prospects. (Whether that evaluation was correct is of course not a matter upon which I can express any view in these proceedings).

[19] My impression was that the pursuer continued to be reluctant to address that aspect of his claim and I suspect that the pursuer's sense of indignation at the inadequacy of the sum offered and his ensuing belief that the advice tendered by Lawford Kidd was unsound have, if anything, increased with the continuance of this litigation. That has, I think, affected the reliability of his evidence concerning his conversations with Mr Short at the relevant time. The pursuer's position appeared to vary between denying that he had ever indicated any willingness to accept £10,000; accepting that he had agreed to accept that figure subject to seeing the engineers' report; and then accepting that figure pending the obtaining of a further engineers' report.

[20] On the other hand, it was plain from Mr Short's evidence, supported by his contemporary file notes, that he had received instructions to settle the action; had then settled the action; and had then received a telephone call from the pursuer countermanding those instructions. The pursuer, in his evidence, rather faintly, and having regard to his general demeanour, to my mind unpersuasively sought to deny that he had ever made such a telephone call - which would have been unnecessary had he given no authority or only qualified authority.

[21] The unpersuasive nature of that denial receives confirmation in light of the consequences of the letter of 15 September 1999, lodged by the pursuer in person. The letter [No. 19(a) of process] is from solicitors subsequently consulted by the pursuer after the withdrawal of Lawford Kidd. In the letter information was sought by those solicitors for the purposes of preparing a Legal Aid Memorandum for the further prosecution of this action for damages. Those solicitors considered, respecting the settlement said to have been reached, that there were essentially two possibilities which they addressed to Mr Gowans in that letter, namely:-

"a. that your solicitor has settled your claim without your instruction; or

The letter then continues as follows:-

The ensuing Legal Aid Memorandum, duly signed by the pursuer, (No. 7/2 of process), which I allowed to be lodged in the course of the proof, plainly opts for version (b) - namely that the pursuer had instructed settlement but had then changed his mind shortly after giving those instructions, only to be told that the claim had been compromised.

[22] In these circumstances I am persuaded that I should accept Mr Short's evidence that he had the authority of the pursuer to tender £10, 000 as being a sum which the pursuer would accept (in substitution of the £5, 000 previously offered by the defenders' solicitors) and that the pursuer sought to withdraw the authority which he had been given. In so far as the pursuer's evidence is inconsistent with that account, I reject it for the reasons already indicated.

[23] I accordingly hold that, however unpalatable it may be to the pursuer, his claim for damages for injuries suffered by him was settled on 29 January 1999, with authority from him, by Mr Short and Miss Davidson on the defenders behalf in the sum of £10, 000, net of recoverable CRU benefits, but plus expenses.

[24] I therefore assoilzie the defenders by upholding their second plea on law, it being for the pursuer to take proceedings in contract in the - I trust unlikely - event that the defenders do not honour the settlement contract which they maintain, in my view rightly, to have been concluded on 29 January 1999.