It’s wise to keep legal costs down - Steven Smart

The legal costs, or in Scottish terminology the “expenses”, of a Court action, are generally considered to be incidental to the merits of an action - other than by those who require to pay them.

The sums involved can, in more modest claims, amount to more than the damages sought. Legislation was introduced in personal injury actions to compel further engagement before actions to avoid the cost of going to Court where possible and to provide protection to claimants who raise and conduct proceedings properly. Three further decisions have provided insight on how these rules are applied.

In Catriona McInness v EUI Ltd, a claim was intimated which the defenders accepted they were liable to meet. An offer of settlement was made in line with the compulsory pre-action protocol for personal injury claims, which requires a claimant rejecting an offer to provide a response “giving reasons for the rejection”. The claimant’s email referred the defenders to a Judicial scale providing ranges of appropriate awards and their own valuation of the claim.

The court did not consider this amounted to giving reasons for the rejection. Some commentary was required to allow the defender to understand why the offer was not acceptable. There needed to be clarity which may facilitate a response from the defender receiving the communication. That was missing and the claimant’s expenses were restricted to the capped pre-action level that would have applied had an offer been accepted without a Court action being raised.

Steven Smart is a Partner and Head of Glasgow office, Horwich Farrelly

In Alan McRae v Screwfix Direct Ltd and another, the pursuer sued two parties for damages. He reached a settlement in full with the Second Defender and sought to abandon the action against the First Defender. Abandonment is one of the exceptions which results in qualified costs protection for pursuers being removed. The first defender sought to recover the expenses of the action from the pursuer, which was opposed.

The argument originally presented was that the second defender should meet the expenses of both parties. However, there did not appear to be a basis to suggest they had caused the pursuer to seek to sue the first defender also. The decision therefore turned upon the construction of the legal test: was it as straightforward to say that if an action is abandoned, the protections applicable can be removed, or did the first defender have to show that there was some additional qualification attached to the abandonment, such as a fraudulent representation or manifestly unreasonable conduct? The court held the test was straightforward and the first defender was awarded expenses.

Finally, in Stephen Murray v Boots and Others, the pursuer’s solicitor ceased acting. Hearings were fixed to confirm whether the pursuer intended to continue with his action and to determine the expenses of the action. The pursuer received intimation of both hearings but failed to attend either. The defenders moved for expenses as the claimant had effectively abandoned his action. The court held that the claimant was in default and abandonment needed a positive step. However, the failure to attend or even contact parties to explain his position was manifestly unreasonable and the defenders were entitled to expenses.

After a period following the introduction of the rules where cases hadn’t been determined, the courts’ guidance is welcome and provides parties and lawyers alike with an understanding of the risks applicable relating to the costs of litigation. Three further cases will be determined shortly, providing further guidance still as the parameters of the rules are tested.

Steven Smart is a Partner, Horwich Farrelly