Scottish Court of Session Decisions

OUTER HOUSE, COURT OF SESSION

[2015] CSOH 100

 PD360/13

OPINION OF LORD UIST

in the cause

DAVID BOYD

Pursuer;

against

(FIRST) GATES (UK) LIMITED;  (SECOND) SCOTTISH AGRICULTURAL INDUSTRIES LIMITED;  and (THIRD) NATIONAL GRID GAS PLC

Defenders:

Pursuer:  Marshall, Solicitor Advocate;  Thompsons

First Defenders:  No appearance

Second Defenders:  Cleland;  CMS Cameron McKenna LLP

Third Defenders:  No appearance

24 July 2015

Introduction
[1]        This action of damages for personal injuries arising out of the pursuer having developed an asbestos related condition has been settled extra judicially but a disputed issue between the pursuer and the second defenders requires to be resolved by the court.  The pursuer accepted from all three defenders an offer of £6,300 provisional damages together with a right on his part to apply to the court for further damages if he develops diffuse plural thickening, lung cancer or mesothelioma.  The second defenders have refused to accept the wording of a draft joint minute as they seek to reserve the right to put the pursuer to proof on liability in the event that he makes an application for further damages if he develops any of these three conditions.  The pursuer maintains that an offer by a defender to settle a case by way of a payment of provisional damages impliedly carries with it an admission of liability by that defender. 

The relevant law
[2]        It is well‑established that at common law a person has only one action in which to recover losses sustained as a consequence of the negligence or breach of statutory duty of another:  Aitchison v Glasgow City Council 2010 SC 411;  Smith v Sabre Insurance 2013 SC 569.  In Scotland that rule has been abridged by the provision in section 12 of the Administration of Justice Act 1982 (“section 12”), which empowers the court to make an award of provisional damages and at a subsequent date to make an award of further damages within a specified period if he develops a specified disease or suffers a deterioration in his condition.  Although it may be agreed between parties that a pursuer should receive a provisional award of damages, the right to make an application for further damages can be preserved only by the court making an order to that effect under section 12. 

[3]        Section 12 provides as follows:

“Award of provisional damages for personal injuries: Scotland.

(1) This section applies to an action for damages for personal injuries in which—

(a) there is proved or admitted to be a risk that at some definite or indefinite time in the future the injured person will, as a result of the act or omission which gave rise to the cause of the action, develop some serious disease or suffer some serious deterioration in his physical or mental condition; and

(b) the responsible person was, at the time of the act or omission giving rise to the cause of the action,

(i) a public authority or public corporation; or

(ii) insured or otherwise indemnified in respect of the claim.

(2) In any case to which this section applies, the court may, on the application of the injured person, order—

(a) that the damages referred to in subsection (4)(a) below be awarded to the injured person; and

(b) that the injured person may apply for the further award of damages referred to in subsection (4)(b) below,

and the court may, if it considers it appropriate, order that an application under paragraph (b) above may be made only within a specified period.

(3) Where an injured person in respect of whom an award has been made under subsection (2)(a) above applies to the court for an award under subsection (2)(b) above, the court may award to the injured person the further damages referred to in subsection (4)(b) below.

(4) The damages referred to in subsections (2) and (3) above are—

(a) damages assessed on the assumption that the injured person will not develop the disease or suffer the deterioration in his condition; and

(b) further damages if he develops the disease or suffers the deterioration.

(5) Nothing in this section shall be construed—

(a) as affecting the exercise of any power relating to expenses including a power to make rules of court relating to expenses; or

(b) as prejudicing any duty of the court under any enactment or rule of law to reduce or limit the total damages which would have been recoverable apart from any such duty.

(6) The Secretary of State may, by order, provide that categories of defenders shall, for the purposes of paragraph (b) of subsection (1) above, become or cease to be responsible persons, and may make such modifications of that paragraph as appear to him to be necessary for the purpose.

And an order under this subsection shall be made by statutory instrument subject to annulment in pursuance of a resolution of either House of Parliament.”

Submission for the second defenders
[4]        It was submitted on behalf of the second defenders that it was misconceived to think that it was incompetent for the court to make an order under section 12 in the absence of liability having been admitted or proved.  There was no requirement for a defender to admit liability when an action had settled extra judicially, as here, by way of a payment of provisional damages.  A defender could make such a payment for reasons of economy and to avoid the expense of putting a pursuer to proof on the issue of liability.  That was the case here.  At the time that settlement was reached, there was no condition precedent upon that settlement that liability was to be admitted.  It was neither explicit nor implicit in the terms of section 12 that it put to bed for all time all questions of liability.  An offer of provisional damages by a defender was not tantamount to an admission of liability.  It was important for the court to consider the public interest in the desirability of extra‑judicial settlements being reached.  If an offer of provisional damages carried with it an implied admission of liability that would be likely to deter potential settlements.  In the case of Coleman v Scottish and Southern Engery (27 January 2015, unreported) the joint minute between the parties concluded with the following paragraph:

“For the avoidance of doubt, the parties hereby acknowledge and agree that the award of provisional damages referred to herein is made on the basis of an extra judicial settlement and without enquiry into the merits of the cause of the action and that, in any application for further damages, the pursuer will still require to aver and prove negligent, causative exposure to asbestos by the first and/or second defenders.”  The interlocutor pronounced in that case on 27 January 2015 did not refer to or incorporate that paragraph in the joint minute. 

The second defenders entirely accepted that it was appropriate for a section 12 order to be made in the present case and that the court had to pronounce an interlocutor setting out those terms and the conditions which had to be fulfilled for the making of an application for further damages, but that did not require an admission of liability to be made as part of the interlocutor.

Submissions for the pursuer
[5]        The submission for the pursuer consisted of five points.

[6]        The first point was that, on a proper construction of section 12(1)(a) an offer or agreement by a defender to make a payment of provisional damages to a pursuer impliedly carried with it an admission of liability. 

[7]        The second point was that an order by the court under section 12 was necessary to enable a pursuer to make an application for a further award of damages:  there was no other available mechanism for him to do this.  Reference was made to Aitchison v Glasgow City Council 2010 SC 411 at paragraphs [22], [26] and [32].  This contrasted with the procedure relating to an award of interim damages, under which it was open to the court to make an award of interim damages under Rule of Court 43.11(2)(b) without liability having been admitted by the defender.  A pursuer might have to repay an award of interim damages, but that was not the case with an award of provisional damages. 

[8]        The third point was that the making of an offer of provisional damages by a defender amounted to an admission of liability if it was accepted by a pursuer.  Where a defender offered to settle by way of a payment of provisional damages under section 12 it was implicit that no issue of liability remained. 

[9]        The fourth point was that in an application for an award of further damages the only issues to be dealt with were whether the pursuer had developed the specified condition, whether it had been caused by an act or omission of the defender and the amount of further damages which it was appropriate to award.  The procedure was set out in Rule of Court 43.13. 

[10]      The fifth point was that the position of the second defenders would leave the status of a section 12 order in doubt.  If liability was reserved under such an order, and it was open to the court to hold in an application for further damages that a defender was not liable, what would be the status of the earlier decree, and what would happen to the damages paid?  It was not inconceivable, if the second defenders were correct, that a pursuer would have to repay the award of provisional damages previously paid to him. 

Decision
[11]      It is clear to me that the whole scheme of section 12 proceeds on the basis that in the particular case liability is no longer in issue.  Section 12(1)(a) uses the words “as a result of the act or omission which gave rise to the cause of action” and section 12(1)(b) refers to “the responsible person”.  An act or omission can give rise to a cause of action only if it is wrongful, either at common law or under statute.  Moreover, the section uses throughout the word “damages”.  A court does not make an award of damages for personal injuries unless liability has been admitted or proved.  An interlocutor pronounced under section 12, unlike other interlocutors following upon settlement in a personal injuries action, specifically uses the word “damages” and, in particular, allows a pursuer to apply for a further award of damages.  It would be strange indeed if, the court having made an award of damages against a defender and allowed the pursuer to apply to the court for a further award of damages, it would be open to the defender nevertheless to contest the issue of liability when an application for a further award of damages was made.  In my opinion section 12 is a scheme setting out the procedure to be followed in making awards of damages in certain circumstances and it operates only once the issue of liability has been determined or agreed.  An offer by a defender to make a payment of provisional damages therefore inherently carries with it an admission of liability.

[12]      In my opinion all five points made in the submission for the pursuer are well‑founded.  If the second defenders had not wished to be liable to pay damages for anything more than the plural plaques developed by the pursuer they should not have made an offer to pay provisional damages.  I fully appreciate the importance of encouraging extra‑judicial settlements in personal injuries actions, but that consideration cannot override the plain language of section 12.  It was not open to the second defenders to refuse to sign the proposed joint minute for the reason which they gave.  I shall therefore continue the cause to enable the joint minute to be signed by all parties and thereafter lodged so that decree can be pronounced.