Scottish Court of Session Decisions

OUTER HOUSE, COURT OF SESSION [2012] CSOH 65
A79/11	OPINION OF LORD BANNATYNE in the cause JAMES McDONALD Pursuer; against ZURICH INSURANCE CO (UK) LTD Defenders: ­­­­­­­­­­­­­­­­­________________

Pursuer: A. McKay, Thompsons

Defender: Murray; Ledingham Chalmers LLP

18 April 2012

Introduction
[1] A motion on behalf of the pursuer was lodged seeking decree in terms of a minute of tender and acceptance.

[2] This motion was opposed. The opposition to the motion was confined to the issue of expenses. The awarding of expenses to the date of tender was not opposed, however, it was contended that the award of expenses in favour of the pursuer should be modified by being taxed on the sheriff court ordinary scale, without sanction for counsel.

Background to the Motion
[3] The background to the motion can be summarised as follows: The action was warranted on 7 February 2011; the following timetable was set by the court: defences having been allowed late on 13 May 2011 the Open Record was to be lodged by 18 May 2011, adjustment was to be commenced on 25 May 2011 and the Record was to be closed on 20 July 2011; the pursuer concluded for damages in the sum of £7,000; the action arose out of a road accident on 13 July 2010 and the pursuer sought to recover damages principally in relation to a credit hire agreement which had been entered into for the purposes of the hire of a replacement car while his car was off the road for repair; a tender was lodged in the sum of £5,200 on 8 February 2012 and this was almost immediately accepted.

Submissions for the Defenders
[4] Counsel commenced his submissions by referring me to the Rule of Court governing modification, namely: 42.5.1:

"In any case where the court finds a party entitled to expenses, the court may direct that expenses shall be subject to such modification as the court thinks fit."

[5] Counsel submitted under reference to two cases Clegg v McKirdy and Macmillan 1932 SC 442 per the Lord Justice Clerk at 447 and McKenzie v HD Fraser & Sons 1990 SC 311 at 314 per Lord McCluskey and 317 in the Opinion of the Court that it was open to the court to modify expenses where a tender had been accepted. This was not disputed by counsel for the pursuer.

[6] In support of his motion for modification, counsel advanced seven propositions:

a. This was a straightforward case. It arose out of a road traffic accident. No complex issues arose relative to the issue of damages in credit hire agreement cases. The principles in relation to the issues of damages in such cases were well established.

b. The sum sued for was modest and the case settled just above the privative jurisdiction level of the sheriff court in terms of section 31 of the Sheriff Court (Scotland) Act 1971.

c. Credit hire agreement cases were regularly litigated in the sheriff court.

d. There was no need for counsel to be involved in the pleading of this case.

e. There was no saving of time or expense by the raising of this matter in the Court of Session.

f. The added expense of the instruction of counsel was unjustified given the lack of complexity.

g. The forum of the Supreme Court given the lack of complexity in the case was unjustified.

[7] Counsel directed my attention to certain observations of the court in McIntosh v BRB 1990 SC 338 at 343. The background to this case was a motion to remit a case to the sheriff court in terms of section 14 of the Law Reform (Miscellaneous) Provision (Scotland) Act 1995. The court observed at page 343:

"The privative jurisdiction of the sheriff court is defined by reference to a particular sum of money, so that everyone knows that all causes not exceeding that sum in value must be brought in the sheriff court. All causes exceeding that sum in value may be brought either in the Court of Session or in the sheriff court at the option of the pursuer. It would create uncertainty and give rise to unnecessary expense and delay if claims brought in the Court of Session which were above the privative limit in value were nevertheless at risk of being remitted to the sheriff court at the discretion of the court just because they appeared to be small and straightforward. These grounds were so general that they could apply to many actions which may competently be brought in this court."

[8] The court later at page 343 went on to observe:

"There is force in the point that actions should not be raised in the Court of Session where the costs of litigation are likely to be out of proportion to the sum likely to be recovered as damages. But the balance of advantage lies in certainty in this matter and thus in definition by reference to a particular sum of money as marking the point below which actions should not be raised in this court."

[9] The court having made these observations, however, further observed at page 340:

"That the power of the court to modify an award of expenses to a pursuer at the end of a case to the sheriff court ordinary or summary cause scales provided a valuable safeguard to a defender against him being exposed to claims in the Court of Session where the award was trivial in relation to expenses, and that section 14 should not be used as a means to the same end."

[10] Counsel took from the foregoing that: it was not for the court to deprive a pursuer of his right to choose his forum. However if a pursuer chose to litigate in the Court of Session then if the court thought fit, his expenses would be modified. It was his submission that if the pursuer in this simple case of small value chose to litigate in the Court of Session, as he was entitled to do, then his expenses should be modified.

Reply for the Pursuer
[11] Counsel began his reply by submitting that the approach which the court should take when considering modification was as set out in Coyle v William Fairey Installations Ltd 1991 SC 16. The court observed at page 19:

"The proper approach, as is made clear in the passage read as a whole, is that in respect of actions brought in the Court of Session the court should determine whether the initial choice of that forum was justified in all the circumstances of the case known to the pursuer's advisers when the action was raised, having regard to the high level of costs likely to be incurred by bringing an action there. The court's judgement on that matter may be assisted by consideration of events which have occurred subsequent to the date on which the choice was made, including the very important consideration of the result of the case; but the result, particularly if it is one which is achieved by settlement, does not necessarily resolve the issue whether the initial choice of forum was inappropriate on the ground that the value of the claim was not commensurate with Court of Session expenses."

[12] It was counsel's position that the choice of the Court of Session as at the date of the raising of the action was justified. In elaboration of that contention he submitted that the issue of quantification of damages in credit hire agreement cases was not settled as at the date of the raising of the action.

[13] In particular, it was his position that two aspects of the law on quantification of damages in such cases at that time were under consideration in the English courts, one of them in the Queen's Bench Division and one in the Court of Appeal. The pursuer's advisers were aware at the time of the raising of the present action of these two cases. It was counsel's position that these two pending decisions justified the raising of the present action in the Court of Session.

[14] The first case was W & Veolia Environmental Services (UK) PLC 2011 EWHC 2020 (QB) in which the judgement of his honour Judge Mackie QC was given on 27 July 2011. This it was submitted clarified the law as to the recoverability of credit hire charges in light of the provisions of the Cancellation of Contracts Made in a Consumer's Home or Place of Work etc
Regulations 2008.

[15] Secondly, there were the conjoined cases of Vasant Pattni and First Leicester Buses Ltd and between Darren Bent and Highways & Utilities Construction and Allianz Insurance [2011] EWCA Civ 1384 in which judgment was given on 24 November 2011. This it was submitted clarified the issue on valuation of damages in circumstances where a claimant was not impecunious.

[16] Counsel submitted that these particular matters were the subject of dispute in the present action and he referred to the defenders' general averments that the sum sued for was excessive and their further detailed averments in Answer 4 at page 11:

"The pursuer is called upon to make detailed averments about ...

(f) The precise circumstances in which the pursuer came to enter into an agreement with Accident Exchange Ltd in the aftermath of the accident;

(g) the details of his income and capital to hire a vehicle without making use of credit hire."

[17] These two calls he submitted were directed at the issues which were raised in the two English cases.

[18] Thus he submitted that what was foremost in the pursuer's advisors minds when they raised the action in the Court of Session was the difficulty in determining the value of the case due to the outcome of these cases not being known at that stage.

[19] Counsel argued that the two English decisions were of considerable importance particularly when taken in the context of the dearth of Scottish authority in credit hire agreement cases and the fact that in this area Scots law tended to follow English decisions.

[20] It was the foregoing factors that counsel particularly relied on in support of his position that the Court of Session was the appropriate forum. It was his position that credit hire agreement cases were not routinely raised in the sheriff court as counsel for the defenders had submitted. Rather they were normally raised in the Court of Session due to the complexity of the legal issues which arose with respect to the quantification of damages. Such complex legal issues arose in the present case because of the uncertainty in the law he had detailed.

[21] He did not seek to argue that the merits of the action were complex. However, he emphasised that the case had been settled at a sum above the privative jurisdiction of the sheriff court.

[22] For the foregoing reasons he submitted that it would not be appropriate to modify the award of expenses.

Discussion

[23] I accept that the proper approach to the issue before me was that to which I was referred by counsel for the pursuer as set out in Coyle v William Fairey Installations Ltd at page 19.

[24] The thrust of the argument before me on behalf of the pursuer, as I understood it, is this: the two English cases in which judgments were awaited at the date of the raising of the present action related to issues of quantification of damages in credit hire agreement cases. These particular issues were raised in the present case. Accordingly the pursuer was justified in raising the action in the Court of Session and there should be no modification in expenses. The question for me accordingly became this: did the two cases in which decisions were awaited from the English courts, justify the bringing of the action in the Court of Session?

[25] Before turning to the specific circumstances of the present case, I would generally observe that as a matter of broad principle, I believe that it could justify raising an action in the Court of Session if, despite the action being of limited value, it nevertheless raised a novel or complex legal issue which would, of necessity, require to be fully argued in the course of the action.

[26] Having considered the position in the present case, I am not persuaded that such a complex or novel legal issue would have required of necessity to have been argued in the course of it.

[27] Credit hire agreements over approximately the last 20 years have given rise to a considerable amount of litigation, particularly in England and this litigation has given rise to decisions of both the House of Lords and the Court of Appeal.

[28] I would observe that arising from this litigation, the legal framework with respect to recovery and quantification of damages involving credit hire agreements such as this, is well established. This legal framework is fully and conveniently set out at paragraph 14 in the Veolia case.

[29] As is clear from this summary, the general principles which govern this area of the law have been known for some time.

[30] I am not persuaded that where there is a clear legal framework, that issues of such novelty or complexity arose from these two pending cases as to justify the raising of this case in the Court of Session.

[31] Moreover, even if I were to accept that such complex or novel issues were raised in the pending English cases, it does not follow that these issues would have of necessity been fully argued in the present case. Given the timetable of the present case and given the dates at which the decisions in the pending English cases became available, it could not have been in the reasonable contemplation of the pursuer's advisers at the time of raising the present action that these issues would have to be fully argued in the present case. At the stage of it becoming necessary to put forward legal submissions in the present case the two awaited English decisions would have been available and the legal issues would have been clarified in terms of these judgments. Thus it seems to me most unlikely that any issue of legal complexity or novelty would have in fact been argued in the present case.

[32] In addition, I was not satisfied as to the relevancy of the decisions in the two pending English cases to the present case. In the Pattni and Bent case, it was accepted that the nominal claimants had hired replacement cars on credit terms even though they could have afforded to hire one without entering into a credit hire agreement (see: paragraph 5 of the judgment). Looking to two of the detailed arguments before the Court of Appeal in the Pattni case (see: paragraphs 61 and 64 of the judgment), it is plain that the decision was only of relevance where the claimant was not impecunious. Equally, when the Bent appeal is looked at (see: paragraph 73 of the judgment) again it is clear that the issues relate to where the claimant is not impecunious.

[33] The pursuer in the present case it is averred on his behalf in Article 4 of Condescendence at page 10B "is impecunious".

[34] In those circumstances, I am unable to see what relevance two appeals which were dealing with the quantification of damages where the claimant was not impecunious had for the present case.

[35] The defenders do make a call on the pursuer to provide details of his income and do make a general averment that he was in a financial position to meet the reasonable repair costs without the need to enter into a credit hire agreement.

[36] These averments do no more than raise the prospect that his impecuniosity may be challenged. For the purpose of looking at the relevance of the case of Pattni and Bent to the pursuer's advisors, what requires to be looked at is their understanding of the pursuer's financial position and that was that he was impecunious. In those circumstances, I do not believe that the principle issues litigated on in the Pattni and Bent case could have had relevance to the pursuer's advisers. That case would only have been of relevance had they been asserting that the pursuer was not impecunious.

[37] Apart from the two detailed arguments which related to impecuniosity, the only other detailed argument in the Pattni and Bent case as I understood it related to the terms of section 69 of the County Court Act 1904 (see: paragraph 70 of the judgment) which had no application to Scotland.

[38] Accordingly I am of the view that the Pattni and Bent cases had no relevance to the pursuer's case and for that further reason did not justify the raising of the action in the Court of Session.

[39] In the Veolia case two principal issues were raised. The first issue which is summarised at paragraph 40 is a very fact specific argument and I am not persuaded that this had any relevance to the pursuer's case.

[40] The second issue raised was the right given by the 2008 Regulations to consumers to cancel regulated contracts.

[41] I cannot exclude the possibility that this may have had some relevance to the present case. However, for reasons I have already given, it was not a novel or very complex matter which was likely to have been argued in detail in the present case.

Decision

[42] For the foregoing reasons, it seems to me that the two English cases did not justify the raising of the present action in the Court of Session. No other matter of significance was relied on by counsel for the pursuer as justifying the Court of Session as the appropriate forum and having regard to the straightforward nature of the merits and the low value of the case (the sum concluded for was only £7,000). I can identify no other circumstance which would have justified the choice of the Court of Session. Accordingly, I am of the view that the expenses should be modified as sought on behalf of the defenders. I reserve all questions of expenses in relation to the motion which I heard.