Scottish Court of Session Decisions

OUTER HOUSE, COURT OF SESSION [2011] CSOH 61
CA105/09	OPINION OF LORD HODGE in the cause QUANTUM CLAIMS COMPENSATION SPECIALISTS LIMITED Pursuers; against WREN INSURANCE SERVICES Defenders: ___________

Pursuers: A. Smith QC, Beynon; Lefevre Litigation

Defenders: Lake QC; Simpson & Marwick W.S.

30 March 2011

[1] This case is about a contract for legal expenses insurance. The pursuers ("Quantum") carry on business in funding and managing civil litigation. In return for a proportion of the damages which may be awarded, Quantum instructs legal representatives to represent its client and indemnifies the client against an adverse award of expenses. The defenders ("Wren") carried on business as insurers and contracted with Quantum to indemnify it against (i) all awards of expenses awarded against Quantum's client in favour of defenders in an action and (ii) outlays incurred by a solicitor acting for the client.

[2] In October 1999 Wren and Quantum entered into an indemnity insurance contract, which had the policy number WLP1999200131. The policy required Quantum to pay the first £10,000 of any claim and provided insurance up to one of four agreed levels of cover. In the action, which I describe below, which it pursued on behalf of Mr John Carter, Quantum elected to take out cover of £100,000. Quantum claims that it is entitled to receive £90,000 (£100,000 less the excess of £10,000). Wren denies liability under the policy. This action is the result of that dispute.

[3] Counsel handled the proof in this action efficiently. I had the benefit of both affidavit and oral evidence from Mr George Alexander Clark, the managing director of Quantum, Mr Thomas David Christie, an insurance broker, and Mr Iain Armstrong QC, who conducted the proof in Mr Carter's case. There was also uncontested affidavit evidence from Ms Gillian Peebles and Mr Derek Reekie. Further matters were agreed in a Joint Minute. As a result the proof lasted only one and a half days.

The relevant terms of the policy

[4] The insurance policy in the Schedule Item VI defined "Defendant" as

"All Defendants subject to a Court action managed by the Insured ... providing such action has been declared to Underwriters in accordance with the Declaration Clause forming part of this policy."

"Legal Action" was defined in the Schedule Item VII as:

"All Court action managed by the Insured ... providing such actions have been declared to Underwriters in accordance with the Declaration Clause forming part of this policy."

The sum insured under the policy was defined in the Schedule Item V in these terms:

"(A) Defendant costs and own disbursements: For a sum insured according to the cover level shown in endorsement 1 but in no circumstances exceeding £150,000 for each Client insured and declared under this policy.

(B) Own costs: not insured."

The Insuring Clause, so far as relevant, provided that in return for payment of the premium the Underwriters agreed to pay on behalf of the Insured:

"all Defendant Costs ordered by the Court to be paid by any Client of the Insured to the Defendant in any Legal Action but not exceeding the Sum Insured ... provided always that the Client and their Legal Action has been declared and accepted by Underwriters."

In the definition section of the policy "Defendant Costs" was defined as:

"All costs, expenses and disbursements ordered by the Court to be paid by the Client in any Legal Action."

The Declaration Clause, so far as relevant, was in the following terms:

"Underwriters agree to include any Client Legal Actions, formally accepted by Underwriters ... subject to the terms and conditions of this Policy, providing the Insured immediately completes a proposal form and sends this to the Underwriters ..."

[5] The insurance policy contained an exclusion clause (Clause 1(k)) that the Underwriters were not liable for:

"any Defendants Costs, Own Disbursements and Own Costs which have been incurred after the Insured and/or their Client becomes aware of any fact or matter which adversely affects the prospect of success in any Legal Action or the quantum of the Claim unless Underwriters have given their prior written consent which will not be unreasonably withheld."

The policy also in its Conditions section (Clause II) stated that if the Insured and/or their Client did not

"comply with any obligation or requirement in the following Clauses then Underwriters shall have no liability under this Policy."

The following clauses included these provisions:

"Conduct of any Legal Action

The Insured and/or their Client shall take all reasonable steps to minimise the costs and expenses payable under this policy and must conduct any Legal Action in accordance with the advice of the Legal Representative and/or counsel and with reasonable speed and economy ..."

"Providing Information to Underwriters

The Insured shall provide (or instruct their Client or any Legal Representative to provide) all information and documentation concerning any Legal Action which Underwriters reasonably request. The Insured and/or their Client must inform Underwriters as soon as possible if they become aware of any fact or matter which adversely affects the prospect of success in any Legal Action or the quantum of the claim."

[6] In accordance with the Declaration Clause in the policy, Quantum completed the proposal form for Mr Carter's action on 22 March 2000. In that form it stated that the defender was Mrs Kathleen Carter. It also stated that the defender might bring into the action as a third party the garage which modified the car shortly before the accident. It estimated Mr Carter's total costs of the action at £20,000 and the defender's costs at £25,000. It sought cover of £100,000 less the excess of £10,000.

The insured litigation

[7] Mr John Carter was seriously injured on 26 May 1997 while he was travelling as a passenger in a car which his wife, Kathleen Carter was driving. Mrs Carter had been suffering from progressive multiple sclerosis. It was admitted in the pleadings that Mrs Carter had earlier suffered an accident through her inability to operate the foot brake. Hand controls had been fitted to her car shortly before the accident. The Summons alleged that Mrs Carter had placed her foot on the accelerator pedal and had been unable to remove it. The vehicle took off at speed, left the road and hit a tree. Mr Carter was admitted to Aberdeen Royal Infirmary on the same day. He thereafter endured headaches and other symptoms and suffered a stroke four or five weeks later. He raised an action for damages against his wife and obtained the assistance of Quantum after the solicitors whom he had initially instructed withdrew from acting for him. Mrs Carter's solicitors, Balfour & Manson, denied that she had been responsible for the accident and stated that they were considering bringing into the action as third parties Harpers Garage and a Mr Wood, who had fitted hand controls to the car but had not fitted a pedal guard. They also enquired whether Harpers Garage or Mr Wood had instructed Mr or Mrs Carter in the use of the hand controls.

[8] On the eve of the triennium, in April 2000, Mr Carter's solicitors instructed junior counsel, Ms Gillian Peebles, to consider Balfour & Manson's suggestion that others were to blame and asked whether they should bring other parties into the action as additional defenders. She prepared a note for the solicitors in which she suggested that it would be better if the defender brought the other parties in as third parties but that the pursuer would have to satisfy himself that he should not convene them as additional defenders. She also expressed concern about the views of Dr Hern, a consultant neurologist, on the causation of Mr Carter's stroke, which I discuss in paragraph [10] below. After discussing the matter with Mr Carter's solicitors, Ms Peebles prepared a Minute of Amendment to introduce as additional defenders (i) Harper Motor Company Limited ("Harper") which was thought to operate Harpers Garage which had supplied and fitted the hand controls, (ii) Harpers (Aberdeen) Limited, an associated company, which might have done so, and (iii) Mr David Wood who was alleged to have fitted the hand controls. She sent a note with a revised Minute of Amendment on 19 May 2000, advising that:

"... the case against the proposed second defender is barely stateable and has been added to prevent difficulties of time bar.

As previously pled it is of dubious relevance and would be unlikely to survive procedure roll debate."

[9] Mr Derek Reekie, who was then a solicitor practising in Russell Jones & Walker, wrote to Quantum on 25 May 2000, enclosing the Minute of Amendment, and stated:

"This case is clearly going to have to be carefully looked at on both liability and causation during the adjustment period and we look forward to receiving precognitions on the matters raised in the Defences and the further Consultant orthopaedic report you are obtaining as soon as these are available."

Quantum was accordingly aware that three additional defenders had been brought into the action.

[10] One of the issues in the action was whether the accident had caused Mr Carter's stroke. Mr Carter's legal team in embarking on the action relied on the opinion of Dr Dijkhuizen, consultant in acute stroke care, that there was a causal connection between the accident and his stroke. They also had other reports from medical practitioners, who treated Mr Carter, in which they expressed similar views. But Dr Hern, who was a consultant neurologist, had expressed the opinion to Mr Carter's previous solicitors that the accident had not caused or contributed to the stroke. Mrs Carter's legal representatives also had expert medical advice from Mr Coleman, a consultant neurologist, which they did not disclose. Neither the previous solicitors nor Quantum revealed Dr Hern's report to Mrs Carter's legal representatives in the course of the litigation. Nor did Quantum inform Wren of its existence and terms. Quantum's solicitors however obtained other expert medical evidence from Dr Richard Davenport, a consultant neurologist, and Professor Warlow, Professor of Medical Neurology at Edinburgh University, which supported the view that the accident had caused or contributed to Mr Carter's stroke.

[11] In October 2002, having ascertained that Harpers (Aberdeen) Limited were not responsible for the work of Harpers Garage, Mr Carter's legal representatives abandoned the action so far as directed against them with a finding of no expenses due to or by either party. Solicitors instructed Mr Armstrong to represent Mr Carter in March 2004 about six weeks before the proof. After Mrs Carter's death, her executors were brought into the action as first defenders in her place at the start of the proof in May 2004.

[12] Mr Armstrong explained that he had three consultations before the proof with agents, the pursuer and Dr Davenport respectively. He was satisfied at that time that Mr Carter had reasonable prospects of success against Harper and Mr Wood and also of establishing that Mr Carter's stroke resulted from the accident.

[13] The proof lasted eleven days between 4 and 12 May and between 5 and 11 October 2004. During the proof, the evidence against Mr Wood, which Mr Armstrong had expected, did not emerge. At the conclusion of the pursuer's proof Mr Armstrong abandoned the case against him, resulting in a decree of absolvitor and ultimately in a liability in expenses. There was conflicting evidence from expert witnesses on whether the accident caused Mr Carter's stroke. Dr Davenport and Professor Warlow gave evidence for the pursuer and opined that it was more likely than not that the stroke was caused by a dissection of a vertebral artery as a result of the accident. Professor Bone, who was called by the defenders, gave evidence in which he expressed a contrary opinion. In the event Temporary Judge Coutts QC preferred Professor Bone's evidence. This had a marked effect on the award of damages.

[14] In his opinion dated 11 January 2005 Temporary Judge Coutts awarded Mr Carter £1,500 in damages against Mrs Carter's executors. He assoilzied Harper, holding that while it had been established in evidence that Harper's employee, Mr Masson, had known that Mrs Carter had multiple sclerosis and had been unable to operate the foot brake, it had not been proved that he was aware that she had not been able to remove her foot from a pedal. As a result the pursuer had failed to make out his case that Harper should have advised that a foot pedal guard be fitted to the car to keep Mrs Carter's foot away from the accelerator. The pursuer's expert, Dr Jennifer Caldwell, had advised in her report that, having regard to Mrs Carter's illness and prior accident, it was not unreasonable that she should have been given driving instruction and that pedal guards should have been fitted to her car. But she had accepted on cross-examination that she had no information upon which she could assert that foot pedal guards should have been fitted in response to Mrs Carter's special needs. In relation to damages, as I have said, Temporary Judge Coutts accepted Professor Bone's view that it was not established on the balance of probabilities that the stroke was the result of the accident rather than a consequence of atheroma. He explained in his opinion that, if he had found a causal connection between the accident and the stroke, he would have awarded £15,000 for solatium and £150,000 for patrimonial loss.

[15] Mr Carter reclaimed against that decision. Mrs Carter's executors lodged a tender in process and on the second day of the hearing Quantum withdrew its funding. Mr Armstrong therefore advised Mr Carter to accept the tender and he reluctantly did so.

[16] Mr Carter was found liable to pay 90% of Harper's expenses and the executors 10%. The taxed expenses in favour of Harper, which Quantum had to pay, amounted to £96,809.70. The taxed expenses of Mr Wood amounted to £41,753.16. Quantum also incurred outlays on behalf of Mr Carter amounting to £73,032.56.

The negotiation and operation of the insurance policy

[17] Mr Clark explained that he had negotiated after the event litigation insurance with the Isle of Man Insurance Company in the mid-1990s. The arrangement was a delegated authority scheme under which Quantum completed a brief proposal form with a general declaration in relation to each action which it supported and sent the proposal form to the insurance company which was then bound to the policy. The insurance company withdrew from the litigation insurance market in about 1998 and Mr Clark negotiated a mutually acceptable arrangement with Wren. The wording of both the proposal form and the policy itself had been the subject of negotiation. The arrangement involved Quantum submitting a relatively simple proposal form which Wren endorsed to initiate cover. Wren operated the scheme from mid-1999 until 2002 when it withdrew from that market.

[18] Mr Christie confirmed that Mr Clark had involved him in the discussions with Wren in 1998 and that the scheme commenced on 1 October 1998. When the scheme was operated Quantum regularly sent him a letter listing new cases and attached the relevant proposal forms. He passed the material on to Wren, which sent him an endorsement detailing the cases.

[19] Mr Clark and Mr Christie agreed in their evidence that hundreds of cases were covered under this scheme during the period in which Wren operated in this market. Neither remembered Wren declining to cover any case and both recalled that Wren asked for further information in very few cases. Mr Christie suggested that Wren requested information in only a dozen or so cases. Both expressed the view that, as Quantum had to meet a substantial excess in each case, Wren relied in large measure on Quantum's judgement in its selection of the cases which it supported.

[20] Most of the evidence of Mr Clark and Mr Christie was unchallenged. I accept their evidence subject to the qualification that I am not satisfied that Wren delegated authority to Quantum to put them on risk in a particular case. The policy required the underwriters to accept the risk and Wren accepted that risk when it issued endorsements listing the cases.

The defenders' case

[21] Mr Lake QC submitted that Quantum was not entitled to indemnity after 26 May 2000, when the additional defenders were brought into the action. Under the insurance contract the risk covered and the indemnity to be paid were defined by the exclusions. In addition, compliance by the insured with the conditions, including "Conduct of any Legal Action" and "Providing Information to Underwriters" was a condition precedent to liability. He criticised Quantum for failing to minimise costs and expenses and for its failure to disclose to Wren facts which adversely affected the prospect of success in terms of exclusion (k) and the condition "Providing Information to Underwriters". Wren repudiated liability because of Quantum's failure to comply with the terms of the policy.

[22] He submitted that contracts of insurance were subject to the same rules of construction as other contracts: the court had to identify the objective intention of the parties; the entire agreement was to be considered; the court was to consider the plain meaning of the words used and the relevant surrounding circumstances; and it should favour a commercially sensible construction. He referred to Mannai Investment Co Ltd v Eagle Star Life Assurance Co Ltd [1997] AC 749, Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 WLR 896, Bank of Credit and Commerce International v Ali [2002] 1 AC 251 and Credential Bath Street Ltd v Venture Investment Placement Ltd [2007] CSOH 208. As the contact was subject to negotiation there was no proferens, if there were any remaining role for interpretation contra proferentem. Both contracting parties understood generally the rules in relation to the award of expenses in the courts. He accepted that the proposal form required only very limited information to be disclosed but submitted that the exclusion clause and the conditions to which he had referred provided the needed counterbalance to the brevity of the proposal form.

[23] He criticised the conduct of the litigation on four grounds. First, three additional defenders were brought into the action in May 2000 with no evidence to support the case against them. Secondly, no evidence against any of the defenders was obtained until Dr Caldwell's report was received in April 2004. Thirdly, that evidence was not consistent with the facts averred on record and did not support the duties averred against the second and fourth defenders. Neither the convening of the additional defenders nor the basis on which they were sued was disclosed to Wren. Fourthly, Quantum failed to disclose Dr Hern's adverse medical report to Wren. Quantum in so acting fell within exclusion (k) in the policy and breached the condition "Providing Information to Underwriters". In addition, Quantum, in convening three additional defenders to create an alternative basis of liability if Mrs Carter had been able to pass responsibility to them, failed to comply with the condition, "Conduct of any Legal Action", to take reasonable steps to minimise expenses payable under the policy.

[24] As a fallback, Mr Lake submitted that Wren's liability was restricted to Quantum's outlays (£73,032.56) less the excess of £10,000, namely £63.032.56. Quantum had declared in its proposal form an action at the instance of Mr Carter against only one defender, namely his wife. That was the only "Legal Action" which Wren had accepted and for which it was liable under the Insuring Clause. The only declared "Defendant" was Mrs Carter. As a result Quantum could not recover the expenses awarded in favour of the second and fourth defenders whose involvement was never declared.

[25] Mr Lake did not refer to cases relating to legal expenses insurance but relied on more general principles. Mr Smith QC for Quantum referred me to Laker Vent Engineering Ltd v Templeton Insurance Ltd [2009] Lloyd's Rep IR 704 as a rare reported decision relating to legal expenses insurance. That case concerned the attempt by an insurer to avoid a policy for material non-disclosure prior to its renewal and not the interpretation of particular contractual provisions.

Discussion

[26] There was no dispute on the general approach to construing insurance contracts. But it seems to me that Quantum's reliance on how the parties acted in implementing the contract is misplaced as such actings are generally not an aid to the construction of a contract. Events which occur after the contract has been concluded are not part of the matrix of fact of which Lord Hoffmann spoke in Investors Compensation Scheme Ltd at p.912H. The factual matrix however included the shared understanding that Quantum was taking a risk in backing a legal action both in respect of the £10,000 excess and in respect of sums which exceeded the insured sum in a given case. It would be a shared expectation therefore that Quantum would generally be discriminating about the selection of cases which it was prepared to support.

[27] In this context and also having regard to the premium of £100 per case, which the parties had agreed, I do not think that either party envisaged that Wren would embark on the close supervision of how Quantum conducted their cases. To do so would have required considerable resources of suitably trained manpower and would duplicate the work which Quantum was expected to undertake in its own interest.

[28] In the course of an action there may, as Mr Smith submitted on behalf of Quantum, be many things which affect the prospects of success and which counsel has to address in deciding how best to proceed. If Quantum were required by the insurance contract to report to Wren every factor which adversely affected the prospect of success in each action which it supported, that would have imposed a significant burden on both parties. I am not persuaded that that is what the condition "Providing Information to Underwriters" required.

[29] Similarly, while the condition, "Conduct of any Legal Action" required Quantum and its client to take all reasonable steps to minimise expenses payable under the policy, I do not consider that that obligation is to be enforced by a refined analysis of the progress of the action with the benefit of hindsight once the judge's opinion is available. Full allowance must be made for the exigencies of litigation, particularly when Quantum has acted in accordance with the advice of counsel and its solicitors.

[30] The initial ground on which Wren refused to pay out under the policy was Quantum's failure to disclose Dr Hern's medical report. I am not persuaded that there is any substance in that ground. His report was not disclosed to the defenders and therefore did not affect their thinking on the prospects of the action. Quantum obtained the assistance of distinguished medical experts who supported the contention that Mr Carter's stroke had resulted from the accident. From the outset there was an issue whether the accident had caused the stroke as it occurred about five weeks after the accident. In this context, the existence of one undisclosed medical opinion was not a circumstance that had a materially adverse effect on the prospect of success of the action.

[31] Turning to Mr Lake's criticism of the conduct of the action, I am not persuaded that Quantum allowed the action to proceed to proof without any evidence which could bring home liability against Harper and Mr Wood. It is true that the three additional defenders were brought into the action on the eve of the triennium with insufficient information to establish their liability. But that of itself was not unreasonable in order to prevent the extinction of their alleged obligations through prescription. It is not clear when Quantum and its legal advisers gathered information which might have supported its cases against Harper and Mr Wood. Dr Caldwell's report was obtained late in the day and in the event did not establish that pedal guards ought to have been fitted to the car. But I am not persuaded that, because the Temporary Judge concluded that there was no duty on Harper or Mr Wood to advise Mrs Carter to have such guards fitted, that meant that this claim was doomed from the start. Mr Armstrong gave evidence that when he was instructed he considered that there were reasonable prospects of succeeding against Harper and Mr Wood but that the evidence had not emerged as he had expected. He was not challenged on this assertion. While I can readily understand why the Temporary Judge came to the conclusion which he did, I was not informed about the nature of the evidence Mr Armstrong had expected to which the witnesses did not speak at the proof. I am not aware of what Mr Carter may have said in his precognition. I note also that the Temporary Judge in paragraph [8] of his opinion rejected Mrs Carter's written statement of what had occurred in the prior accident. For similar reasons I am not able to judge the apparent strength of the pursuer's case against Mr Wood, which the Temporary Judge did not have to address.

[32] Quantum's conduct in relation to the convening of the three additional defenders however creates difficulties for it under the insurance contract. It is clearly a material concern of a legal expenses insurer to know how many defenders are involved in an action as that may significantly affect its exposure. This is so particularly if the defenders are sued on an alternative basis in substance. It is correct, as Mr Smith submitted, that the addition of the defenders increased the prospect of success in one sense as it reduced the risk of a failure to recover damages if Mrs Carter's representatives were able to exonerate her by blaming Harper and Mr Wood. But, in my opinion, the concept of "prospect of success" in exclusion clause (k) and in the condition, "Providing Information to Underwriters" has a broader meaning in the context of this particular type of insurance contract. The convening of a multiplicity of defenders and the recovery of a modest sum of damages from one while incurring significant liability in expenses to those who were absolved from liability might be a Pyrrhic victory for a litigant if he were personally liable for the expenses. It would certainly not be a success for Quantum or its insurers. Similarly, a finding that a defender was in breach of a duty of care and that it had occasioned no loss would not in most circumstances be considered a success either for the litigant or for Quantum, particularly if it were to be accompanied by an adverse award of expenses. In my opinion the phrase, "prospect of success in any Legal Action or the quantum of the claim" in both clauses refers not only to the prospect of establishing liability against a defender and the amount of the claim, but also to a broader consideration of recovery of damages or the achievement of another legal result at an economic cost.

[33] Mr Carter concluded in his Summons for payment of damages on the basis that the defenders were jointly and severally liable. But Mr Armstrong accepted on cross-examination that the case against the additional defenders was essentially an alternative to that against Mrs Carter. Thus from the time at which the additional defenders were convened there was a real prospect of an award of expenses against Mr Carter in favour of a defender or defenders who were assoilzied. I conclude that the convening of defenders, substantially on an alternative basis, adversely affected the prospects of success of the action and was a circumstance about which Quantum ought to have informed Wren.

[34] The consequence of Quantum being in breach of the condition, "Providing Information to Underwriters" was that Wren was not liable under the policy. Separately, exclusion clause (k) operated to exclude liability for awards of expenses and own disbursements and own costs after the convening of the additional defenders.

[35] In arguing against Wren's reliance on exclusion clause (k), Mr Smith also submitted that if the intention to convene the additional defenders had been declared, Wren could not reasonably have withheld its consent to bringing them into the action. He submitted that the clause did not apply. I am not persuaded that that is so. While Wren led no evidence from people within its organisation as to its practice, it seems to me to be likely that a prudent insurer would wish to be satisfied as to the risks which it was undertaking if the insured proposed to bring three additional defenders into an action essentially on the basis of alternative liability. Wren in its correspondence with Quantum did not assert that the convening of the defenders was a ground of repudiating liability until its letter of 14 November 2007 to Quantum's solicitors. But it was entitled to take the point in its defences in this action. Quantum did not advance the argument of waiver which was foreshadowed in its pleadings.

[36] Mr Lake invited the court to sustain Wren's fourth plea in law which was in the following terms:

"The pursuers not being entitled to indemnity in terms of the Policy in respect of expenses incurred after 26 May 2000, the defenders should be assoilzied."

I understand the basis of that plea to be that Mrs Carter's executors had not lodged defences when Mr Carter's legal advisers sought to introduce the additional defenders and that the aggregate of any expenses and own disbursements at that date fell within the excess for which Quantum was responsible.

[36] If I am wrong in my interpretation of exclusion clause (k) and the condition, "Providing Information to Underwriters", I am satisfied that Quantum failed to declare to Wren the legal action involving the additional defenders. Mr Smith sought to argue that the definition of "Defendant" in the Schedule Item VI meant that once Quantum had declared a legal action, all defenders in that action, whether declared at the outset or convened in the action without further declaration, were covered by Wren's obligation under the Insuring Clause. I am not persuaded that that is so. The definitions and the clause must be construed in their proper context, which is a contract of insurance. While the action against Mrs Carter remained the same action (with the number A 974/01) as a matter of court procedure after the additional defenders were brought into the cause, I consider that in the context of the insurance policy, and in particular the Insuring Clause and the Declaration Clause, the only "Legal Action" which Wren had accepted was that against Mrs Carter. The insurance contract required that Quantum should declare the legal action to Wren and that Wren should accept the risk. See the definition of "Legal Action", the Insuring Clause and the Declaration Clause. The convening of additional defenders, even where a pursuer sought to have them found cumulatively liable in damages, increased the exposure of the insurer. Quantum did not inform Wren of the action against the additional defenders; nor did Wren accept the risks of that action. Accordingly, if I had not concluded that Wren were entitled to exclude liability for all expenses and own disbursements after the convening of the additional defenders, I would have given effect to Mr Lake's fallback submission and awarded £63,032.56, being Quantum's outlays in the action less its excess. Interest would have been due on that sum from 9 August 2009, which was the date of citation in this action.

[37] Such an outcome would have been generous to Quantum as its outlays would have been incurred in preparing for and conducting a proof involving three defenders rather than one. But that outcome was Mr Lake's fallback submission.

Conclusion

[38] I therefore sustain the fourth plea-in-law for the defenders, repel the second, third and fourth pleas-in-law for the pursuers, and grant decree of absolvitor. As the pursuers did not argue waiver, I also repel their fifth plea-in-law. I will have the case put out by order to deal with expenses.