SHERIFFDOM OF SOUTH STRATHCLYDE DUMFRIES AND GALLOWAY

 

PD16/11

	JUDGMENT OF SHERIFF PRINCIPAL B A LOCKHART
	in causa
	MALCOLM CAMPBELL
	Pursuer and Respondent
	against
	CHARLES GALLAGHER
	Defender and Appellant

 

For the appellant; Mr Edwards, Solicitor, Aberdeen

 

For the respondent; Mr McElroy, Solicitor, Glasgow

 

 

DUMFRIES 13 March 2012

The Sheriff Principal, having resumed consideration of the cause, refuses the appeal and adheres to the Sheriff's interlocutor of 29 September 2011 complained of; finds the defender and appellant liable to the pursuer and respondent in the expenses of the appeal and allows an account thereof to be given and remit same when lodged to the auditor of court to tax and to report.

 

NOTE:

 

BACKGROUND TO THE APPEAL

1.                  The pursuer sustained injuries in a road accident on 16 May 2008. A claim was intimated to the defender's insurers on 19 January 2009. The defender's insurers made pre-litigation offers of £1750 on 15 June 2009 and £2000 on 13 July 2009. On 13 August 2009, the defender's insurers increased their offer to £3,000, open for acceptance within 21 days. The offer was declined as the pursuer was awaiting medical evidence. On 9 February 2010 the pursuer's solicitors wrote to the defender's insurers with a copy of Mr Kapoor's first medical report dated 31 October 2009. The defender's insurers responded on 12 March 2010, valuing the claim at £2,000, but indicating that they were prepared to leave their original offer of £3,000 in place. The pursuer did not accept that offer because his solicitor wished to obtain the pursuer's physiotherapy notes and a further report on the pursuer's long term prognosis. This was duly initiated and on 6 September 2010 the pursuer's solicitor instructed a supplementary report and also informed the defender's insurers that they were doing so. This report was subsequently obtained on 29 January 2011, but the pursuer's solicitors had further questions for the consultant and wrote to him on 8 February 2011 in that regard. They had difficulties in obtaining a response, by which time the triennium was due to expire on 15 May 2011. Not having received the response in time, the pursuer's solicitor raised proceedings under the Ordinary Cause personal injury procedure. Neither party moved to sist the cause pending the further medical report and the time table was fixed with an extended adjustment period granted on the pursuer's motion 7/2 of process.

 

2.             On 24 August 2011 the defender lodged a tender, offering the pursuer £3,000 plus taxed expenses to date. On 19 September 2011 the pursuer lodged a minute of acceptance of that tender and a motion for decree in terms thereof. The defender lodged a notice of opposition to the motion with a view to a hearing being fixed in order that he might move the court to exercise it's discretion in terms of regulation 5(1) of the Act of Sederunt (Fees of Solicitors in the Sheriff Court) (Amendment and further provisions) 1993 that the respondents expenses be modified to nil.

 

3.      The Sheriff records in his note as follows:-

"[9] although the consultant's first two medical reports are lodged in process, his third is not. I assume a third report exists for in an e-mail from the defender's solicitor to the pursuer's solicitor dated 18 August 2011 reference is made to "a supplementary report" from the consultant and the defenders minute of tender was lodged on 24 August 2011, reflecting the defender's solicitor's valuation of the claim at £3,000.

[10] It appears therefore that the pursuer's solicitor's medical enquiries had concluded in August 2011 and very soon thereafter the appellant had tendered, and that tender had been accepted...

[11] the parties agreed that even though the defender had offered expenses in the tender, that was no bar to the court exercising discretion to modify expenses to nil: they were agreed I should follow the approach adopted by Lord Osborne in Neilson v Motion 1992 SLT124 and by Lord Tyre in McIlvaney v A Gordon & Co.Ltd 2010 CSOH118 that such a motion was competent and , if it were to be granted, the question for my consideration was whether the pursuer had acted reasonably in refusing the pre-litigation offer of £3,000...

[13] He submitted McIlvaney v A Gordon & Co Ltd was authority for the proposition that the courts should discourage unnecessary or prolonged litigation and that, in principle, protection should be afforded to a defender who makes a pre-litigation offer of the full value of the pursuer's claim and who then repeats that offer as a judicial tender including an offer of expenses.

[14] He submitted McIlvaney v A Gordon & Co Ltd was in point as in this case it could be seen with hindsight the action had been unnecessary because, had the pursuer accepted the offer of £3,000 offered by the defender's insurers on 13 August 2009, there would have been no need for the litigation and, indeed, by accepting the offer two years later the pursuer was worse off because he had been deprived of two years interest on that sum.

[15] He submitted if the court accepted the pursuer's argument, that the pursuer acted reasonably in rejecting the pre-litigation offer because his medical prognosis was uncertain then the court would encourage pursuer's generally to reject pre-litigation offers without fear if it could be stated that a medical prognosis' remained uncertain or if further medical evidence was awaited. He submitted such an approach by the court was not desirable as it would inevitably lead to potentially unnecessary or prolonged litigation.

[16] Mr Leckie, for the pursuer, submitted he had acted reasonably in investigating and pursuing the pursuer's claim. He submitted it had been his professional responsibility to obtain exact medical evidence on prognosis to form the basis of the suitability of accepting an offer and he had not acted in a delaying manner or, upon receipt of the prognosis, sought unnecessarily to prolong the litigation. He therefore urged me to refuse the defender's motion to modify expenses to nil.

 

4.      Having set out the submissions, the Sheriff, in the "Decision" section of his note stated inter alia:-

[30] "....I had in mind in reaching my decision to refuse to exercise discretion to modify the pursuer's expenses to nil, the consideration that a pursuer may be deprived of his expenses, or even found liable in the defender's expenses, if he acts "unnecessarily or unreasonably in causing litigation to take place or protracts it when it has been initiated." (Macphail 3^rd ED 19.12).

The Sheriff continued that this formulation appeared to him to be entirely consistent with the principle enunciated by Lord Tyre in McIlvaney v A Gordon & Co Ltd Supra that a pursuer who commences or prolongs an action unnecessarily may be refused his expenses (paragraph 6 of his judgement). While he agreed with Lord Tyre that, in principle, a pursuer who refuses a pre-litigation offer of the full value of his claim and then accepts that offer after litigation in a judicial tender may be said to have acted unreasonably in commencing litigation, he continued at paragraph 34 of his note:

"It is also my opinion while general principles are of assistance in making decisions in relation to judicial expenses, the decision to modify expenses....is essentially a discretionary one."

 

5.             The Sheriff concluded that he was not satisfied in the particular circumstances in this case that the pursuer and now respondent had acted unreasonably in refusing the pre-litigation offer or that there was anything in his own conduct that gave him the character of an improper litigant (Macphail 19.07) so as to refuse, in effect, to award him any expenses in respect of the litigation. The Sheriff concluded (paragraph 36) that the ultimate question for his determination was the reasonableness of the pursuer's conduct in refusing the pre-litigation offer. The Sheriff then continued :-

"[38] With these considerations in mind I did not exercise discretion to modify the pursuer's expenses to nil for the following reasons;

[39] In the first place, there was nothing in the case to suggest to me the pursuer's solicitor had acted unreasonably or improperly in pursuing the claim. If he was to make any reasonable assessment of the value of the claim, he needed a full prognosis. Perusal of productions lodged in connection with the hearing satisfied me he had done everything in his power to hurry things along. He kept on top of the file and did not leave matters languishing.

[40] The delays were largely attributable to the consultant. I did not find fault with the consultant. I believe it to be within judicial knowledge, and indeed judicial experience of this type of case, that there is demand on consultants to provide medical opinions and they are often busy. For part of the time the consultant appears to have been on holiday in India for three weeks.

[41] It was my opinion the pursuer's solicitor did have a professional duty to advise his client in light of up to date opinion based on the physiotherapy notes and will a prognosis. It is notable that as soon as the third report was available he disclosed it to the defender's solicitor, and settlement took place very soon there after. The proof was far enough away to be discharged without any inconvenience to witnesses.

[42] It was my opinion that these were all the actions of a responsible solicitor. I could not discern anything unreasonable in his handling of the case and there was nothing, in MacLaren's words, that characterised the pursuer as an improper litigant. I could find no fault with the pursuer in commencing proceedings, for that was necessarily to defeat the expiry of the triennium, and he did nothing unnecessarily to prolong the action and indeed c0ncluded it as soon as the third medical report was available....

[44] certainly, with hind sight, the action would not have been necessary had the earlier offer been accepted and the pursuer would have been better off because he would have had the benefit of interest on that sum, but against that the pursuer's solicitor kept the insurers informed of their wish to obtain additional medical evidence and it was always within the knowledge of those insurers that the pursuer would only settle having obtained a prognosis.

[45] The insurers were presumably aware proceedings had to be commenced to defeat the expiry of the triennium, yet thereafter they made to motion to sist the case. They went along with the timetable and the required work until the further medical report was produced and settlement agreed.

[46] Although additional expense was caused to both parties by the litigation, I did not think it could be said that this was a case in which the pursuer "should" have accepted the earlier offer as in my opinion it was reasonable for him to seek fuller medical information before deciding on the value of the claim.

[48] ...each case had to depend on its particular circumstances and I had to take into account the pre-litigation offer along with all the other circumstances of the case.

[51] In the present case, further investigations confirmed the initial offer turned out to be acceptable to the pursuer. This does not imply it was unreasonable of him to make that enquiry. There may well be cases of which this was not one where the value is substantially affected by further medical enquiry: it may well be undesirable to put pursuers under pressure to accept offers which, after further enquiry, turn out to be wholly inadequate. What is or is not a reasonable response must depend on the circumstances of each case."

 

6.      The Sheriff concluded;-

"[52} In considering whether to exercise discretion under regulation 5(a), I had regard to the pre-litigation offer as a factor which might in an appropriate case result in modification of expenses to nil. But insofar as there was any rule governing the exercise of my discretion in that matter, it was whether the pursuer had acted unreasonably or improperly in refusing the offer.

[53] In all the circumstances of this case, and having regard to the relevant case law, I concluded the pursuer had not acted unreasonably, and could not be characterised as an improper litigant, by not accepting the pre-litigation offer to settle. I therefore refused to exercise discretion and modify his expenses to nil."

 

7.      It is against that decision that the defender and appellant now appeals.

 

TIMETABLE

 

8.     

 

1.	16 May 2008	Respondent sustained injury in RTA.
2.	19 January 2009	Intimation of claim (defenders inventory No 1.)
3.	15 June 2009 13 July 2009 13 August 2009	Offers made by defenders insurers all without medical evidence. £1750 £2000 £3000
4.	31 October 2009	First Medical Report from Mr Kapoor Advising physiotherapy treatment.
5	11 February 2010	First Medical report sent to Zenith(defenders insurers)
6	12 March 2010	Letter by Zenith to DM confirming original offer of £3,000 (defenders inventory No 5)
7	6 September 2010	Letter from Dallas McMillan (DM) to Zenith observing that Mr Kapoor had stated that he would be in a position to provide a more long term prognosis once claimant had undergone physiotherapy. Physiotherapist notes now recovered and sent to Mr Kapoor. DM are awaiting his report.
8	29 January 2011	Mr Kapoor's second report received by DM.
9	8 February 2011	Letter by DM to Mr Kapoor asking for further information -No 16 of Pursuer's second inventory.
10	7 March 2011 29 March 2011 6 April 2011	Reminders by DM to Mr Kapoor   DM learn Mr Kapoor going on holiday for three weeks.
11	26 April 2011	E Mail by DM to Zenith (No 21 of Pursuers second inventory) indicating that awaiting update of medical evidence from Mr Kapoor and asking if willing to extend triennium by three months to 15 August 2011 to finalise medical evidence or if they wish to nominate solicitors to accept service.
12	27 April 2011	Formal letter by DM to Zenith from DM (No 21 of purser's inventory) explaining contents of e mail.
13	3 May 2011	Further E mail to Zenith asking for urgent response.(Triennium expires 15 May 2011).
14	4 May 2011	Letter to Sheriff Clerk with writ for a warrant.(No 23 of pursuer's second inventory)
15	4 May 2011	E mail from Zenith nominating Ledingham Chalmers to accept service and also agreeing to extend time limit to 15 August 2011 on the conditions set out on the E mail.
16	12 May 2011	Service accepted for defender by Ledingham Chalmers LLP
17	16 May 2012	Timetable set. At this time pursuer's solicitor have two reports from Mr Kapoor, but no reply to requests for further information. Pursuer decides to get further report from Mr J N E Gibson (see statement of claim paragraph 7).
18	2 June 2011 12 July 2011	Mr Gibson consulted Report received. Further information required from him by DM to allow pursuer to finalise medical evidence and produce a statement of valuation of claim. Mr Gibson on annual leave until 8 August and Motion made to Dumfries Sheriff Court to extend lodging of statement of valuation of claim by two weeks to 18 August 2011.
19	27 July 2011	In respect that Motion 7/2 of process not opposed, Sheriff grant's Motion, extends period of lodging of statement of valuation of claim for two weeks to 18 August.
20	16 August 2011	Form of statement of valuation of claim lodged in Dumfries Sheriff Court. Two medical reports lodged with that report were by Mr Kapoor dated 31 October 2009 and 29 January 2011. It is explained in submission that on receipt of Mr Gibson's opinion, it was readily apparent to the purser that Mr Gibson's opinion did not differ from Mr Kapoor's and accordingly Mr Kapoor's reports were lodged.
20	24 August 2011	Tender offer lodged.
21	19 September 2011	Minute of acceptance lodged

 

 

SUBMISSIONS FOR THE DEFENDER AND APPELLANT

9.                  Solicitor for the appellant submitted that there were two issues which he required to address:-

(i)                The appellant must show that the Sheriff erred in the exercise of his discretion in that he misdirected himself in law or misunderstood a material fact or facts in the case before him.

(ii)              The appellant, if he was able to establish the first issue, required to persuade me to regard the question of expenses as being at large, and to exercise my discretion in favour of the appellant.

It was submitted that, if I was with the appellant on both these issues I should sustain the appeal and vary the Sheriff's interlocutor of 29 September 2011 to the effect that I grant the appellants motion to modify the defenders liability for expenses to nil.

 

10. Error by the Sheriff. It was submitted the Sheriff erred in two ways:-

(A) In the exercise of his discretion he misdirected himself in law and he failed to take account of the general principle that expenses follow success. I was referred to the case Shepherd v Elliott (1986) 23R685 where the Lord President stated at page 696,

"The principle upon which the Court proceeds in awarding expenses is that the cost of litigation should fall on him who has caused it. The general rule for applying this principle is that costs follow the event, the ratio being the rights of parties are to be taken to have been all along such as the ultimate decree declares them to be, and that who so ever has resisted the vindication of those rights, whether by action or by defence, is prima facie to blame".

I was also referred to the dicta of the Lord Justice Clerk in the case of Ramm v Lothian And Borders Fire Board 1994SC224 at 227F,

"In the Lord Ordinary's opinion there is no reference to the general principle that expenses follow success. For example, he nowhere refers to what is stated in MacLaren on expenses at p21. The principle upon which expenses are awarded is that, if any party is put to expense in vindicating his rights, he is entitled to recover it from the person by whom it was created, unless there is something in his own conduct that gives him the character of improper litigant, in insisting on things which his title does not warrant."

It was submitted in this case there was no reference to the general principle that the expenses follow success. This was a material error in law on the part of the Sheriff.

 

(B) The Sheriff erred in the exercise of his discretion in that he misunderstood a material fact before him. It was submitted that he mistakenly assumed that a third medical report had been produced by the appellant's orthopaedic expert and disclosed to the appellant's agent prior to the tender being lodged. It was submitted that the Sheriff made an assumption - namely, that there was a third medical report, on the strength of an e-mail dated 18 August 2011. I was referred to paragraph 9 of the Sheriff's report which was in the following terms;

"Although the consultant's first two reports are lodged in process, his third is not. I assume a third report exists for in an e- mail from the appellant's solicitor to the respondent's solicitor dated 18 August 2011 reference is made to a "supplementary report" from the consultant and the defenders minute of tender was lodged on 24 August 2011, reflecting the defender's solicitor's valuation of the claim at £3,000."

The e-mail from the appellant's solicitor to the respondent's solicitor of 18 August 2011 stated;

"I have read the supplementary report by Mr Kapoor".

It was submitted that the Sheriff's assumption was wrong. The supplementary report referred to in the e-mail was not in fact a third medical report, but rather the second report by Mr Kapoor of 29 January 2011 which was entitled "supplementary report".

It was submitted that there was no third medical report produced in this case. Only two medical reports were lodged and disclosed and they were the two reports of Mr Kapoor. This erroneous assumption led the Sheriff into error.

The Sheriff had placed considerable reliance, in his decision, on the existence of this assumed third report. He had proceeded, as a result, on five erroneous factual conclusions:-

(i) In paragraph 10 of his Note the Sheriff states "it appears therefore that the pursuer's solicitor's medical enquiries had concluded in August 2011..." It was submitted that was an erroneous factual conclusion by the Sheriff. Only two reports had been produced in this case, both by Mr Kapoor and dated 31 October 2009 and 29 January 2011. The Sheriff was wrong to conclude that the purser's medical enquiries had concluded in August 2011 with the appearance of a third report.

(ii) It was submitted that the Sheriff also erroneously concluded that, as soon as the third medical report was available, it was disclosed to the defender's agents. I was referred to paragraph 41 of the Sheriff's Note;

"It is notable that as soon as the third report was available he disclosed it to the defender's solicitor, and settlement took place very soon thereafter..."

The Sheriff was wrong in reaching this conclusion. The second and final report by Mr Kapoor was produced in January 2011 and was not disclosed until 17 August 2011.

(iii) The Sheriff erroneously concluded that the defender had tendered as soon as the third report appeared. I was then referred to paragraph 10 of the Sheriff's Note;

"It appears therefore that the pursuer's solicitor's medical enquiries had concluded in August 2011 and very soon thereafter the defender had tendered, and that tender had been accepted..."

It was submitted that the Sheriff was wrong in this respect. The defender tendered as soon as receiving a medical report, but that was the second report dated 29 January 2011 and not a third report.

(iv) The Sheriff erred in concluding that the action was concluded by settlement as soon as the third report was available. In paragraph 42 the Sheriff states;

..."I could find no fault with the pursuer in commencing proceedings, for that was necessary to defeat the expiry of the triennium, and he did nothing unnecessarily to prolong the action and indeed concluded it as soon as the third medical report was available..."

Again the Sheriff was wrong as there was no third medical report. The action was settled as soon as the second report dated 29 January 2011 was intimated to the appellant's agents. It was lodged some six months after it had been received.

(v) The Sheriff erroneously concluded that delays were largely attributable to the consultant. This was apparently for the period between the second report of Mr Kapoor in January 2011 and what the Sheriff mistakenly assumed was the third report obtained in August 2011. I was referred to paragraph 8, 9 and 10 of the Sheriff's report. It was submitted again that the Sheriff was wrong in this respect. There was no delay in obtaining any of the medical evidence which was disclosed to the defender and lodged in court.

 

11.              It was accordingly submitted that the Sheriff had proceeded on these five erroneous facts. It was the appellant's position that the Sheriff had misdirected himself in law and misunderstood the factual material before him. As a result, he reached the decision which was in certain material respects, plainly wrong. In these circumstances I was invited to set aside the Sheriff's decision.

 

12.              Having set aside the Sheriff's decision, it was submitted that, in the whole circumstances, the question of expenses was at large for me. Solicitor for the defender moved that I modify the defenders liability for expenses to nil on the basis that pre litigation offers in the same terms had been made by the defender's insurers on 13 August 2009 and 10 March 2010 and refused. Solicitor for the defender based his submissions on the following:-

(i)    Power of the Court. I was referred to the well known passage in Macphail at paragraph 19.03

"in an ordinary action the court has an inherent discretionary common law power in which it may exercise in every case that comes before it unless the power is expressly taken away or qualified by statute, to determine whether to make an award of expenses and, if making an award, to determine, by whom, and on what basis and what extent expenses are to be paid.

I was also referred to the case of Neilson v Motion 1992 SLT124 which held that a court has a discretion to modify expenses to nil even when a minute of tender did include an offer of expenses of process to date. This was not disputed.

(ii) Two Extrajudicial Offers. I was referred to Macphail paragraph 14.72 where the learned author states;-

"An extrajudicial offer which has been rejected maybe taken into consideration when expenses are being awarded, whether the offer was made before the action was raised or during its course.."

I was referred to the decision of Lord Tyre in McIlvanney v A Gordon & Co.Ltd 210CSOH118. At paragraph 6 Lord Tyre stated;-

"It is clearly desirable that litigation should neither be commenced nor prolonged unnecessarily. The general rule that expenses follows success seems to me to reflect the fact that, once an action is concluded, it can be seen with the benefit of hindsight, at least any straight forward case, that the action was either necessary (if the pursuer succeeds) or unnecessary (if he does not). The rules regarding award of expenses following the lodging of a tender, and the discretion of the court in a case in which an Extra Judicial Offer was made before litigation commenced, also appear to me to be concerned with the discouragement of unnecessary commencement or prolongation of litigation..."

It was submitted that the present case has now been completed. It can now be clearly seen that the present action was unnecessary. The pursuer received the sum of £3,000 after accepting the tender. This sum had been originally offered to him in August 2009 and March 2010. The pursuer should not receive his expenses in these circumstances.

(iii) Principle of Expenses Following Success. It was submitted it was trite law that in general expenses follow success. It was submitted that one of the fundamental questions to ask in each case was "Has the pursuer been successful?" In the respondent's written submissions he argues that he was successful for two reasons;(1) the defender admitted liability and (2) upon receipt of medical evidence, the defender submitted the tender which was accepted. It was submitted that this argument failed to address the fact that the tender of £3,000 was the same sum as had been offered two years previously, pre-litigation. It was submitted that, on any view, the pursuer had been unsuccessful in his case. It was equitable that the cost of the litigation should fall on the respondent.

(iv) Conduct of Parties. I was referred to the dicta of Sheriff Principal Sir Alan Walker quoted in paragraph 14.72 of Macphail;-

"The question which the court will normally have to consider is whether, in all the circumstances, the party to whom the offer was made acted reasonably in refusing it, and whether as a result of the refusal unnecessary judicial expense was caused."

It was necessary to examine, not only the conduct of the pursuer, but also the conduct of the defender. Solicitor for the defender submitted as follows:-

(a) Conduct of the Pursuer. It was submitted that the pursuer had acted unreasonably in raising these proceedings. The action commenced in May 2011. At that time the pursuer had obtained two medical reports from Mr Kapoor and, crucially, the second medical report provided a clear and unambiguous opinion and prognosis. The pre-litigation correspondence demonstrated that the appellant's insurers made an offer of £3,000 on 13 August 2009. It was conceded that this offer was made without seeing any medical evidence. It was based on the description of the injuries given by the respondent's solicitors. That offer was rejected and the respondent pressed on with obtaining another medical report as the first medical report had mentioned the question of obtaining physiotherapy records. The first report was obtained by Mr Kapoor dated 31 October 2009, that report concluded;

"Mr Campbell had received no physiotherapy treatment and I think referral to physiotherapy will help improvement of his symptoms. I will be able to give a more definitive long term prognosis once he has had physiotherapy."

The appellant did not criticise the respondent for arranging physiotherapy and instructing a supplementary report. That report was sent to the appellant's insurers on 9 February 2010. An offer was asked for within 21 days, it was stated that the respondent valued the case at £5,000. On 12 March 2010 the appellant's insurers confirmed the original offer of £3,000. The respondent's solicitor advised that they were taking instructions. On 6 September 2010 the respondent's solicitors wrote to the defender's insurers indicating that they had now recovered the respondent's physiotherapy notes and had forwarded these to Mr Kapoor. He produced his supplementary report on 29 January 2011, he concluded;

"(1) Mr Campbell had soft tissue injury to lower back at the time of the accident.

(2) Acute symptoms from soft tissue injury to lower back usually settle in 3 months time and it can take up to 1 year for all symptoms to settle.

(3) On bias of probabilities, any symptoms lasting beyond 1 year in Mr Campbell's case are unlikely to be related to injury and are more likely to be related to mechanical back pain".

Following receipt of that report the respondent's solicitors wrote on 8 February 2011 to Mr Kapoor stating inter alia;

"You mention on the first page of your report that you could not find any evidence of pre-existing back pain in Mr Campbell's medical records, given that is the case, how likely do you believe it to be that Mr Campbell's on going back pain is due to some separate condition which appears to have been neither diagnosed nor symptomatic before the accident?. If Mr Campbell did have an undiagnosed and non symptomatic condition then might it be the case that the accident has now made that condition symptomatic? May the accident have exacerbated the onset of these symptoms?"

The question then arose as to whether that letter was a reasonable response to Mr Kapoor's supplementary report of 29 January 2011. It was submitted that it was not a reasonable response. The pursuer required to be reminded that there was an offer on the table. While it was accepted that the pursuer was entitled to go back to Mr Kapoor and ask him questions, the fact of the matter was that in February 2011 the pursuer had a clear and unambiguous opinion from Mr Kapoor. In these circumstances it was suggested that this report enabled the pursuer to take a view of the defenders offer long before raising proceedings. The pursuer was entitled to ask questions about Mr Kapoor's report, or to seek a second report if he was not happy with Mr Kapoor's report. However, in doing so the pursuer took the risk that he might not ultimately improve on the offer which had been made. It was submitted that the pursuer in these circumstances took the risk of not recovering the expenses of the action.

(b)The conduct of the defender. It was submitted that the defender's insurers had acted reasonably. They had made an offer of £3000 in August 2009. This had been repeated in March 2010. When asked to agree to extend the time limit, they had done so. The conditions which they attached to that agreement were not unreasonable. It was suggested the defender's insurers had done all that they reasonably could have done to resolve the pursuers claim. Tendering was the only responsible step which the defender's insurers could have taken to protect their position.

 

13.         In summary the defenders position was that Sheriff had erred in the exercise of his discretion. He had misdirected himself in law and misunderstood material facts before him. Incorrect assumptions on his part led him to arrive at a number of incorrect conclusions. On that basis his decision should be set aside. I should consider matter of expenses to be at large. I should exercise my discretion in favour of the defender and modify the pursuer's expenses to nil.

 

SUBMISSIONS FOR THE PURSUER AND RESPONDENT

 

14.              Solicitor for the pursuer submitted that the Sheriff did not err in law in failing to take into account the general principal that expenses follow success; that the Sheriff did not err in the exercise of his discretion in misunderstanding the material facts of the case before him; and the Sheriff did not err in the exercise of his discretion by concluding that the pursuer had acted reasonably by refusing any pre-litigation offer made to him by the defender's insurers.

 

15.              The pursuer had been successful in his action. The defender admitted liability to make reparation to the pursuer. Upon receipt of finalised medical evidence in August 2011 the defender submitted a tender which was accepted by the pursuer. It had been argued that the Sheriff had failed to take into account the general principle that expenses follow success. This was not the case. At paragraph 35 of his judgement, the Sheriff stated;

"I was not satisfied in the particular circumstances of this case that the pursuer had acted unreasonably in refusing the pre-litigation offer or that there was "anything in his own conduct that gave him the character of an improper litigant" (Maclaren on expenses approved in Howitt v Alexander & Sons 1948 SC154 at 159 per LP Cooper quoted at length with approval at paragraph 19.07 of Macphail) so as to refuse, in effect, to award him any expenses in respect of the litigation."

In paragraph 1907 of Macphail the learned author notes;

"In straight forward and uncomplicated cases, accordingly, the successful party is usually entitled to his full expenses as taxed. The rule is often expressed in the phrases "Expenses follow success" or "Expenses follow the result"

 

16.              It was submitted the Sheriff had regard to the principle that expenses follow success. There had been no error in law on his part. It was submitted that the Sheriff fully understood the material facts in the case. The initial writ made reference in Para 7 of the statement of claim to the pursuer obtaining a medical report from Mr Gibson. The pursuer's solicitors lodged a motion (7/2 of process), which was unopposed by the defender, on 26 July 2011 seeking a variation of the court timetable to allow the pursuer to submit a statement of valuation having received up to date medical evidence from Mr Gibson. Upon receipt of medical evidence from Mr Gibson (the third report obtained by the pursuer) and upon noting that its contents were similar in conclusion to the reports prepared by Mr Kapoor, the pursuer intimated Mr Kapoor's two reports. The defender's solicitors were well aware from the statement of claim and motion 7/2 of process that a report, additional to the reports which had been obtained from Mr Kapoor, was being prepared by Mr Gibson.

 

17.              While it was conceded that the Sheriff appeared to have assumed that Mr Kapoor, rather than Mr Gibson, produced the third report, it was argued that this assumption did not lead the Sheriff into error. In particular, it was submitted that the Sheriff's following factual conclusions were not erroneous:-

(i)                The Sheriff was correct to proceed on the basis that the pursuer's agent's medical enquiries had not concluded until August 2011 with the appearance of a third report. In or around August 2011 the pursuer's solicitors obtained medical evidence from Mr Gibson which confirmed Mr Kapoor's findings. The pursuer's solicitors then immediately lodged Mr Kapoor's medical evidence with their statement of valuation of claim. Mr Kapoor's first report required the pursuer to undergo physiotherapy. The pursuer's solicitor, after receiving the second report from Mr Kapoor on 29 January 2011 wished to clarify certain issues with him before he would be in a position to offer advice to the pursuer. Unfortunately Mr Kapoor did not respond to this enquiry and Mr Gibson had to be instructed to assist the pursuer. When Mr Gibson's report was received in August 2011 the pursuers solicitors medical investigations were then concluded.

(ii)              Mr Gibson's report which was received in August 2011 was the third medical report obtained by the pursuer. Once that was available, as it did not challenge the conclusions in Mr Kapoor's report, the pursuers solicitor's lodged and intended to found on Mr Kapoor's two reports.

(iii)            In the Sheriff's Note, the Sheriff states at paragraph 10;

"It appears therefore that the pursuer's solicitors medical enquiries have concluded in August 2011 and very soon thereafter the defender's had tendered and that tender had been accepted."

It is submitted that the Sheriff had drawn the correct factual conclusion. The pursuer's solicitor's medical enquiries did not conclude until August 2011.

(iv)            The action did conclude as soon as a third medical report was made available. Because that report supported the conclusions of Mr Kapoor, only his two reports were lodged and intimated to the defender.

(v)              The Sheriff was correct in stating that there were delays in obtaining medical evidence from Mr Kapoor. Mr Kapoor's second medical report dated 29 January 2011 was inconclusive. The respondent's solicitors sought further opinion from Mr Kapoor by writing to his secretary on 30 January, 8 February, 7 March and 29 March, all dates in 2011. On or around 6 April 2011 Mr Kapoor's secretary responded to the respondent's solicitor's advising them that Mr Kapoor was on annual leave for three weeks. The respondent's claim would become time barred on 16 May 2008. The respondent therefore required to raise court proceedings and did so without concluded medical evidence from Mr Kapoor. The respondent's solicitors then instructed Mr Gibson and upon receipt of his opinion, lodged Mr Kapoor reports in August 2011.

18.              It was submitted that the expenses awarded to the pursuer's should not be modified to nil for the following reasons:-

(a)  The pursuer had succeeded in his action. The pursuer had received a number of offers from the defendant pre-litigation on 15 June 2009 (£1750), 13 July 2009 (£2,000) and 13 August 2009 (£3,000), all such offers being made prior to the respondent obtaining medical evidence. The pursuer's solicitors intimated Mr Kapoor's first report to the defender's insurers on or around 9 February 2010. That report was inconclusive the defender's insurers made an offer of £3,000 to settle the case based on that report. However,that offer was rejected on the grounds that the pursuer's medical investigations were not complete. It was only upon completing their investigations in August 2011 that the pursuer's solicitors were able to provide medical evidence on which they intended to rely to the defender's solicitors. On doing so the defender's solicitors tendered. The pursuer accordingly succeeded in his litigation

(b)  It is denied that the pursuer acted unreasonably in raising proceedings. The two reports prepared by Mr Kapoor dated October 2009 and January 2011 are inconclusive. The pursuer did not have sufficient expert opinion to enable him to take a decision on the insurer's offer of £3,000 to settle the claim. The pursuer sought further advice from Mr Kapoor. Mr Kapoor failed to respond. The pursuer's claim was to become time barred on 16 May 2011. The pursuer's solicitor's made three requests to the defender's road traffic insurers dated 26 April, 27 April and 3 May 2011, each asking them to agree to extend the limitation period. The defender's road traffic insurers failed to respond to any of these requests timeously. The pursuer's solicitor's was then instructed to commence court proceedings and issued a writ on 4 May 2011. The pursuer was entitled to commence court proceedings and it was reasonable for him to do so.

(c)   When the pursuer's action was commenced he had two reports from Mr Kapoor, neither of which was conclusive. The pursuer stated in paragraph 4 of the statement of claim that he was unable to produce a medical report with the initial writ when seeking warrant and that he intended to instruct Mr Gibson to prepare a report. By adjustment the respondent later confirmed that Mr Gibson was to examine the pursuer on 2 June 2011. Upon receipt of Mr Gibson's opinion, it was readily apparent to the respondent that Mr Gibson's did not differ from Mr Kapoor's and accordingly Mr Kapoor's reports were lodged.

(d)  It is denied that the pursuer acted unreasonably in not intimating the second report from Mr Kapoor until August 2011. The second report was inconclusive and the pursuer required to carry out further medical investigations.

(e)  The defender's insurers made three offers to the pursuer dated 15 June, 13 July and 13 August all dates 2009 without sight of the medical evidence. At no point pre-litigation were the defender's insurers in possession of finalised medical evidence. It was not until August 2011 that such evidence was available. The mere fact that the sum tendered was equal to one of the offers made by the defender's insurers pre-litigation did not, it was submitted, indicate that the defender's insurers did all they reasonably could to resolve the pursuer's claim nor had the pursuer acted unreasonably.

 

19.              When this action was raised in May 2011, the pursuer's solicitors did not have finalised medical evidence on which to advise their client. Professionally, solicitors acting for a pursuer should only recommend settlement when medical evidence is concluded. Mr Kapoor's first report was not conclusive and reference was made to physiotherapy being necessary. While Mr Kapoor's second report, did reach certain conclusions, in page four he said:-

"It is nearly two and a half years since his accident and Mr Campbell still has ongoing symptoms. Although it is difficult to be sure, but on a balance of probabilities it is unlikely that his current symptoms are related to soft tissue injury to his back at the time of accident.

His current symptoms are suggestive of mechanical back pain which is a very common condition in our society. I agree with the diagnosis of chronic mechanical back pain made by the physiotherapist when he was seen by them in February 2010. However, there is a possibility that his symptoms may be related to underlying degenerative condition of spine or spinal canal stenosis which unlikely to be related to his accident. If his symptoms are significant, then he needs investigation and treatment under care of a spinal surgeon."

When that report was received, the pursuer's solicitors consulted with the pursuer and on 8 February 2011 they wrote to Mr Kapoor in the following terms:-

"You mention on the first page of your report that you could not find any evidence of pre-existing back pain in Mr Campbell's medical records. Given that is the case, how likely do you believe it to be that Mr Campbell's ongoing back pain is due to some separate condition which appears to have been neither diagnosed nor symptomatic before the accident? If Mr Campbell did have an undiagnosed and non symptomatic condition then might it be the case that the accident has now made that condition symptomatic? May the accident have exacerbated the onset of the symptoms?"

It was submitted that this was a reasonable request to make of Mr Kapoor standing the fact that the pursuer was still suffering symptoms in January 2011 in respect of an accident which took place in May 2008. Mr Kapoor failed to respond to that letter and to reminders of 7 and 29 March 2011. On 6 April the respondent's solicitors were advised that he was going on holiday for three weeks. The medical position was unresolved and the time limit expired on 15 May 2011.

 

20.             The pursuer's solicitor sent an e-mail to the defender's insurers on 26 April 2011 asking them to extend the triennium by three months to 15 August 2011 or to nominate solicitors to accept service. On 4 May 2011 an e-mail was received from the defender's insurers nominating solicitors to accept service. The defender's insurer's also stated:-

"...I am amenable to your request not to issue at this stage, I confirm I will not take issue with the triennium.

I confirm that I am happy with this agreement extends to 15 August 2011, provided I am supplied with a copy of the medical evidence 21 days before that date and given an opportunity to reconsider our offer if any medical evidence justifies.

I trust the medical evidence will contain a full review of your client's entire medical history. Clearly I will be prevented, allowing for the timescale, of asking any questions to clarify matters if the report is served close to the deadline so I hope all bases are covered."

In these circumstances, it was submitted it was reasonable to issue proceedings.

 

21.              It was submitted that it was open to the defender's solicitors, in light of the information available to them, to move for the cause to be sisted when it called to avoid further expenses being incurred. They did not do so. In the whole circumstances it was submitted that the respondent had succeeded in his action and had acted reasonably throughout. I should adhere to the Sheriff's interlocutor.

 

DECISON

 

22.         The pursuer sustained a back injury in a Road Traffic Accident on 16 May 2008. Without sight of any medical evidence, the defender's insurers made an offer of £3,000 to the pursuer's solicitors on 13 August 2009. The first report from Mr S Kapoor dated 31 October 2009 which recommended that the pursuer undergo physiotherapy, was sent by the pursuer's solicitors to the defender's insurers on11 February 2010. On 12 March 2010 the defender's insurers confirmed their original offer of £3000. There was no other contact between the parties until shortly before the triennium was about to expire on 15 April 2011. The defender's solicitors accepted service of the writ on 12 May 2011. The case proceeded as a Personal Injuries Action in Dumfries Sheriff Court. On 24 August 2011 defender tendered the sum of £3000 with taxed expenses to date. The pursuer lodged a minute of acceptance of tender on 19 September 2011.

 

23.         On 29 September 2011, and in terms of the defenders minute of tender and the pursuer's minute of acceptance, the sheriff granted decree for the sum of £3000 with the expenses of the cause to the date of the lodging of the minute of tender as taxed. He refused the defender's motion, made at the bar to modify the defender's liability for these expenses to nil. It is against that decision that this appeal is taken. I have set out in detail the submissions which have been made on behalf of the parties. The principles of law involved they were not in dispute. As the Lord President stated in the case of Sherpherd v Elliott supra

"The principle upon which the court proceeds in awarding expenses is that the cost of litigation should fall on him who has caused it. The general rule for applying this principle is that costs follow the event, the ratio being that the rights of parties are to be taken to have been all along such as the ultimate decree declares them to be, and that who so ever has resisted the vindication of those rights, whether by action or by defence, is prima facie to blame."

As Macphail put it at paragraph 19.07;

"In straight forward and uncomplicated cases, accordingly, the successful party is usually entitled to his full expenses as taxed. The rule is often expressed in the phrases "expenses follows success" or "expenses follow the result."

However, that basic principal has to be read in the context of what the Lord President went on to say in Shepherd v Elliott supra...

..."In some cases the application of the general rule would not carry out the principle, and the court has always, on cause shewn, considered whether the conduct of the successful party, either during the litigation, or in the matters giving rise to the litigation, has not either caused or contributed to bring about the law suit."

When dealing with an extrajudicial offer, a court has to bear in mind the dicta of Macphail at 14.72

"An extrajudicial offer which has been rejected may be taken into consideration when expenses are being awarded, whether the offer was made before the action was raised or during its course..."

Referring to the case of Calder v Rush 1970SLT(Sh.Ct.)51 Macphail goes on to state;

"Sheriff Principal Sir Alan G Walker held, after an examination of authorities, that the question which the court will normally have to consider is whether, in all of the circumstances, the party to whom the offer was made acted unreasonably in refusing it, and whether as a result of the refusal, unnecessary judicial expense was caused. In order to reach a decision on that point, the agreed facts must be put before the court. If necessary, the whole correspondence relative to negotiations should be lodged and its accuracy agreed."

 

24.             Accordingly, in my view, it is necessary in this case to examine all the facts to decide whether the pursuer acted reasonably. Such an examination is necessary before the two important issues can be decided in this case, namely, whether it could be said the pursuer had succeeded in his action and secondly whether the Sheriff had reasonably exercised his discretion in finding the defender liable in expenses until the date the tender was lodged. I set out in paragraphs 25 to 35 the reasons why I consider the Sheriff reasonably exercised his discretion in this case. He did not misdirect himself in law and did not proceed on the basis of incorrect material facts. In the circumstances set out in these paragraphs, I conclude, for the reasons given in paragraph 36, that the pursuer succeeded in his action.

 

25.             I have set out the facts of this case in the section of this Note entitled "Timetable". An examination of the essential facts of this case, in my view, support the conclusion which the Sheriff reached, namely that the pursuer acted reasonably. I do not propose to go over again the whole history of the case, but I select what I regard to be the important steps in the history of the case.

 

26.             The pursuer's solicitors obtained the first medical report from Mr Kapoor on 31 October 2009. That report concluded that the pursuer had received no physiotherapy treatment. Mr Kapoor took the view that a referral to physiotherapy would help the improvement of his symptoms. He concluded he would be able to give a more definitive long term prognosis once he had had physiotherapy. It is clear that a solicitor could not advise on settlement of a claim on the basis of such a report.

 

27.              Mr Kapoor provided a second report on 29 January 2011. In that report, he did reach conclusions, namely,

"(1) Mr Campbell has soft tissue injury to lower back at the time of the accident.

(2) Acute symptoms from soft tissue injury to lower back usually settle in three months time and it can take up to one year for all symptoms to settle.

(3) On balance of probabilities any symptoms lasting beyond one year in Mr Campbell's case are unlikely to be related to injury and are more likely to be related to mechanical back pain."

However, in the "opinion and prognosis" section of his report he stated;

"It is nearly two and a half years since his accident and Mr Campbell still has ongoing symptoms. Though it is difficult to be sure, but on balance of probabilities, it is unlikely that his current symptoms are related to soft tissue injury to his back at the time of the accident.

His current symptoms are suggestive of mechanical back pain which is a very common condition in our society. I agree with the diagnosis of chronic mechanical back pain made by the physiotherapist when he was seen by them in February 2010. However, there is a possibility that his symptoms may be related to underlying degenerative condition of spine or spinal canal stenosis which is unlikely to be related to his accident. If his symptoms are significant, then he needs investigation and treatment under care of a spinal surgeon."

Following receipt of that report, solicitor for the pursuer on 8 February 2011 wrote to Mr Kapoor in the following terms;

"You mention on the first page of your report that you could not find any evidence of pre-existing back pain in Mr Campbell's medical records. Given that is the case, how likely do you believe it to be that Mr Campbell's ongoing back pain is due to some separate condition which appears to have been neither diagnosed nor symptomatic before the accident? If Mr Campbell did have an undiagnosed and non symptomatic condition, then might it be the case that the accident has now made that condition symptomatic?. May the accident have exacerbated the onset of these symptoms?"

In my view, that letter was a reasonable response to the report which had been obtained from Mr Kapoor to enable proper advice to be given to the pursuer. It was then some two years eight months since the accident and back pain was still being experienced. The solicitor had a professional duty to investigate the matter fully before giving advice to his client. In my opinion, before giving that advice, it was reasonable for the solicitors for the pursuer to require answers to the questions which had been posed.

 

28.             Sadly, as the Sheriff points out, Mr Kapoor, no doubt for pressing business reasons, was unable to respond to that letter of 8 February 2011. On 6 April 2011 it was learned he was going on holiday for three weeks. The case became time barred on 15 May 2011. The solicitor's for the pursuer, not unreasonably, wrote to the defender's insurers explaining they were awaiting an update of medical evidence from Mr Kapoor and asking if they were willing to extend the triennium for three months to 15 August 2011 or to nominate solicitors to accept service.

 

29.             In reply the insurers did nominate solicitors to accept service. They also stated they were agreeable to extending the time limit for three months, but that agreement was couched in the following terms;

..."I am amenable to your request not to issue at this stage. I confirm I will not take issue with the triennium.

I confirm I am happy to confirm this agreement extends to 15 August 2011, provided I am supplied with a copy of the medical evidence 21 days before that date and given an opportunity to reconsider our offer if any medical evidence justifies.

I trust the medical report will contain a full review of your client's entire medical history. Clearly I will be prevented, allowing for the time scale, from asking any questions to clarify matters if the report is served close to the deadline so I hope all bases are covered."

In my opinion, it was not unreasonable for the pursuer's solicitor to proceed with the court action in view of the terms of that letter. The solicitors had no guarantee exactly when the up to date medical evidence would be available. They might well have difficulty obtaining a full review of their client's entire medical history.

 

30.             In the event solicitors acting for the defender's insurers accepted service. On 12 May 2011 a timetable was set in Dumfries Sheriff Court. In my opinion, if the defender's solicitors were anxious to prevent judicial costs accruing, it would have been open to them to move the court to have the case sisted before a timetable was set to allow the medical evidence to be finalised and exchanged. This is not an uncommon procedure in the Sheriff Court. In the absence of such a motion, I do not think the pursuer's solicitors can be criticised for proceeding with the action.

 

31.              In fact, the pursuer's solicitors were obliged to lodge a motion (7/2 of process) indicating that, on the basis that no response had been obtained by Mr Kapoor, they had consulted Mr J N E Gibson at St John's Hospital, Livingston on 2 June 2011. They had received a report from him of 12 July 2011 and they were requiring further information from him to allow the medical evidence to be finalised and a statement of valuation of claim to be produced. It was explained that Mr Gibson was on leave until 8 August 2011. No objection was taken to that Motion on behalf of the defender and it was granted by the Sheriff.

 

32.             When further information was obtained from Mr Gibson, it was explained that it was readily apparent that his opinion did not differ from Mr Kapoor's opinion. Accordingly the two reports from Mr Kapoor dated 31 October 2009 and 29 January 2011 were lodged in process on 18 August 2011 with the valuation of claim.

 

33.             Mr Kapoor's report of 29 January 2011 had concluded that symptoms lasting beyond one year in Mr Campbell's case were unlikely to be related to injury and more likely to be related to mechanical back pain. It was only when the final information was received from Mr Gibson, confirming the conclusions of Mr Kapoor, that the pursuer's solicitors were in a position to advise their client that Mr Kapoor's conclusions required to be accepted. In my opinion, that was a reasonable stance to take in the circumstances of this case.

 

34.             It certainly appears to be the case from his Note that the Sheriff was of the view that the third report which concluded the pursuers medical enquiries in August 2011 had been provided by Mr Kapoor. He was mistaken in this. The third report came from Mr Gibson. This was obvious from a consideration of paragraph 7 of the Statement of Claim as adjusted and from the terms of the pursuer's motion 7/2 of process which the defender did not oppose. The defender's solicitors were aware at that time that a further report was being obtained from Mr Gibson, not Mr Kapoor. In these circumstances, I take the view that the Sheriffs impression that the third report came from Mr Kapoor and not from Mr Gibson was not a material error on his part. The essential point was that evidence which was required to clarify the content of Mr Kapoor's report of 29 January 2011 was not received by the pursuer's solicitors until they received Mr Gibson's report in August 2011. The Sheriffs basic premise was that the pursuer's medical enquiries because of the lack of response by Mr Kapoor to the pursuer's enquiries were not concluded until August 2011. I accordingly do not accept that the Sheriff proceeded on the basis of material error in fact. I reject the submissions made on behalf of the defender.

 

35.             I also reject the submission was made that the Sheriff misdirected himself in law in that he did not have regard to the normal principle that expenses follow success. It is clear from his reference in paragraph 35 to MacLaren on expenses, Howitt v Alexander & Sons and Macphail 1907, that the Sheriff was well aware of the general principle that the successful party is usually entitled to his full expenses as taxed. It is also my opinion for the reasons I have given that the pursuer or his solicitor acted reasonably in the prosecution of this case.

 

36.             Against the factual background which I have outlined, I accepted the submission made on behalf of the pursuer that he was successful in this action. The defender admitted liability to make reparation to the pursuer. Upon receipt of finalised medical evidence, the defender submitted a tender which was accepted.

 

37.              I have set out in paragraphs 3, 4, 5 and 6 of this Note the Sheriff's reasons for the exercise of his discretion in this case. In my opinion the Sheriff was entitled to exercise his discretion in the manner which he did and I do not propose to intervene.

 

38.             Esto, the appellant's submissions were to be accepted that the Sheriff proceeded on the basis material incorrect factual information, in that situation the matter of expenses would be at large for me. I have to say, in light of the whole circumstances of this case which I have outlined, I would have exercised my discretion in favour of the pursuer and reached the same conclusion regarding expenses as that which was reached by the Sheriff.

 

39.             The appeal accordingly fails. Parties were agreed that, in respect of the appeal, expenses should follow success. I have accordingly awarded the expenses of the appeal to the pursuer and respondent.