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OUTER HOUSE, COURT OF SESSION
[2008] CSOH 136
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PD1519/07
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OPINION OF LADY
CLARK OF CALTON
in the cause
JEROEN VAN KLAVEREN
Pursuer;
against
SERVISAIR (UK)
LIMITED
Defenders:
ннннннннннннннннн________________
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Pursuer:
Di Rollo, Q.C.; Lefevre
Litigation
Defenders: Comiskey; Simpson & Marwick
12 September 2008
Summary
[1] In
this case the pursuer sues the defenders for the sum of two hundred thousand pounds
(г200,000) in respect of an accident on 12
August 2004 when the pursuer was working in the course of his
employment as a baggage handler with the defenders at Aberdeen
Airport. Founding on correspondence between the agents
and insurers of the parties in relation to an averred acceptance of liability,
counsel for the pursuer sought summary decree in terms of Rule of Court 21.2
and a restriction of the proof to quantum.
Pleadings
[2] The
parties averments about acceptance of liability are to be found in statement
and answer 5. In statement 5 the pursuer
avers:
"By letter dated
23rd March 2006 addressed to the pursuer's representatives Quantum
Claims, Aberdeen, Zurich Insurance Company, the Insurers acting on behalf of
the defenders in connection with the pursuer's claim, admitted liability for
the pursuer's accident in the following terms:
'We accept that
our Insured is liable for the purposes of this claim and will pay damages, to
be assessed when we receive details of the claim. We will also be paying costs in accordance
with the Civil Procedure Rules.'
The said letter
is produced and its terms held as incorporated herein brevitatis causa. The said letter constituted a binding
obligation on behalf of the defenders. The defenders are liable to the pursuer
for the consequences of the accident. He
is entitled to damage for his loss, injury and damage. Further and in any event, in reliance of the
said letter to the pursuer's representatives did not undertake any further
investigation into the circumstances of the pursuer's accident. Prior to lodging of Defences in this action in
which liability for the pursuer's accident is denied, the pursuer and his
representatives were given no notice and had no reason to anticipate that the
defenders were seeking to deny liability for the pursuer's accident. The pursuer and his representatives are now
likely to be prejudiced in investigating the circumstances of the accident."
[3] In
Answer 5, the defenders aver:
"The letter of 23 March 2006 is referred to for its
whole terms. Quoad ultra
denied. Explained and averred that the
letter was for the purposes of extra judicial discussions only and was provided
to the Pursuer's representatives at a stage before detailed investigation had
been carried out. That detailed
investigation has now taken place and liability is denied for the reasons explained
in detail in Answer 4. In any event, the
letter was written by reference to the Civil Procedures rules applicable to England. Those Rules would in any event allow a
subsequent withdrawal of any acceptance of liability now the Defenders'
position."
Procedure
[4] The
case first came before me for hearing of the motion for summary decree on 1 February 2008. I allowed a continuation to enable the
defenders' counsel to make more detailed submissions. The defenders' counsel produced a written
outline of submissions at the continued hearing on 20 March 2008. At that hearing, after further consideration
of the submissions and discussion about the possible assistance of affidavit
evidence, I pronounced an interlocutor ordaining both parties to provide affidavits
from all individuals party to the correspondence from which the disputed point
arises by 5 May 2008. The continued hearing took place on 21 May 2008. At that hearing the defenders' counsel was
not in a position to lodge any affidavits.
A copy affidavit of Dawn Kitchingham was available and had been
made available to the pursuer's counsel on 20 May 2008.
The defenders were given an opportunity to explain the failure to comply
with the terms of the interlocutor after a short continuation to provide
further information. I was not satisfied
with the explanation given for the delay and for the failure to comply. Nevertheless, with the consent of the
pursuer's counsel, I decided to proceed with the hearing on the basis of the
one late copy affidavit provided by the defenders on the basis. I advised that the failure to comply with the
interlocutor of 20 March 2008 would be further considered when
I dealt with expenses. An affidavit from
George Alexander Clark had been lodged at an earlier date on behalf of the
pursuer. The submissions were concluded
at a further continued hearing on 22
May 2008.
Submissions on behalf of the Pursuer
[5] In making his submissions,
counsel for the pursuer made reference to correspondence, 6/6-6/20 of process. The initial letter (6/6 of process) from
the pursuer's solicitors, Quantum Claims was sent to the defenders setting out
a brief account of the circumstances as described to them and asking the
defenders to pass the matter to their insurer.
The insurer, Zurich, replied
in a letter dated 11 August 2005
(6/7 of process) giving thanks for the letter of claim and advising "that
we are currently completing our enquiries and will endeavour to convey our
decision on liability at the earliest opportunity". The letter also requested certain formal information
which was provided by letter dated 17 August
2005 (6/8 of process). Zurich
in a letter dated 14 November
2005 (6/9 of process) stated inter alia "Our enquiries into the circumstances of this accident
have been completed. However, in order
that we can detail our views and liability response, we should appreciate full
allegations of negligence alleged against our insured, not supplied
previously". Quantum Claims responded by
letter 6/10 of process dated 22
November 2005 (6/10 of process) setting out the circumstances of
events as described to them. The letter
concluded "No doubt you will wish to investigate matters further with your
insured and look forward to hearing from you in due course". A reminder letter, (6/11 of process) was sent
from Quantum Claims to Zurich on 12 January 2006. A similar letter (6/12 of process) was sent
on 21 February 2006. This prompted a response by letter from Zurich
(6/13 of process) dated 23 February
2006 stating inter alia that
"our enquiries into the circumstances of this accident are continuing". Quantum Claims responded in a letter dated 7 March 2006 (6/14 of
process). This letter stated:
"At this point
in time, we are prepared to bear with you a little longer, however if we cannot
make progress within the next four weeks, then we really cannot see any
alternative but to raise proceedings in order to progress our client's claim"
Counsel for the pursuer submitted that
the next part of the correspondence is critical. This is a letter (6/15 of process) from Zurich
to Quantum Claims dated 23 March
2006. It states inter alia:
"We accept that
our Insured is liable for the purposes of this claim, and will pay damages, to
be assessed when we received details of the claim. We will also be paying your costs in
accordance with the Civil Procedure Rules."
The letter gives details of Zurich's
preferred suppliers of medical evidence.
It states
"In the event
that either a report is not disclosed, or we do not accept the conclusions we
reserve the right to obtain our own"
The letter records that Zurich
requested details of the pursuer's earnings.
The letter concludes "Please do not simply acknowledge receipt of this
letter, as we will not consider your costs".
By letter dated 5 April 2006
(6/16 of process) Quantum Claims acknowledge the letter dated 23 March 2006 and confirm that the
letter will not be considered in costs.
Quantum Claims set out information about further problems with the
symptoms suffered by the pursuer and explain that further reports from a GP and
a psychiatrist are being requested. In a
letter from Zurich to Quantum
Claims dated 6 April 2006
(6/17 of process) there is further correspondence about expert reports. That correspondence is continued in a letter
from Quantum Claims to Zurich dated
13 April 2006 (6/18 of
process). The last of this
correspondence are letters 6/19 and 6/20 of process. These are concerned only with reports and
medical evidence. These letters are
dated respectively 15 January 2007
and 25 January 2007.
[6] Counsel
for the pursuer explained that in order to protect the pursuer's position in
relation to the limitation period, a summons was signetted on 7 August 2007 and an action was raised
against the defenders. The defenders in
their pleadings in Answer 4 dispute liability. The position of the defenders was confirmed
in a letter from Simpson & Marwick to Lefevre Litigation acting on behalf of the pursuer by letter
dated 2 November 2007 (6/21 of process). That letter stated:
"We have your letter of 31
October with the copy letter of 23 March from Zurich. That letter was written under the mistaken
belief that early compliance with Woolf protocol procedures was needed and
without the benefit of the fuller investigation we have now carried out. The defence on liability is to be maintained."
[7] Counsel
for the pursuer submitted that the defenders' insurers entered into a binding
obligation with the pursuer's agent which binds both the pursuer and the
defenders. Liability has been accepted,
with an obligation to pay damages assessed and an obligation to pay costs. The obligation having been created, the
defenders cannot now withdraw from it.
There was consideration. Counsel
for the pursuer sought to distinguish the case of Gordon v East Kilbride
Development Corporation 1995 SLT62.
He submitted that the circumstances considered by Lord Caplan in that
case included negotiations between the parties expressed in terms "without
prejudice". That was the background and
the parties envisaged continuing inquiry into the merits as possible in the
future. In contrast in the present case,
it was plain that the insurers as agent for the defenders and the pursuer's
agents entered a binding obligation and the defenders were bound by the
admission of liability. He submitted
that parties should be bound by the clear terms of the correspondence and
should be held to the plain meaning of what they said in correspondence. There were no circumstances averred on record
or raised in submission on behalf of the defenders which would entitle the
pursuer to lead oral evidence. Oral
evidence was unnecessary and irrelevant in the context of this case. Counsel for the pursuer submitted that this
was plainly not a case involving a hypothetical admission or, an admission predicted
upon negotiation for the purposes of securing a settlement. That was plain from the correspondence.
[8] In
response to the submission by counsel for the defenders in relation to the
CPR Part 14 admissions and withdrawal therefrom, counsel for the
pursuer submitted that the law in England still recognised binding
compromise agreements between parties.
He referred to Burden v Harrods Ltd [2005] EWHC 410 (QB). Counsel for the pursuer did not dispute that,
if on proper analysis, the Court concluded that this was not a binding
agreement, the pursuer would not be entitled to summary decree. In that event further consideration would
require to be given to the status and effect of the extra judicial admission in
the circumstances of the case. He accepted
that was not an issue to be determined in the context of the summary decree
motion.
Submissions by
counsel for the defenders
[9] Counsel
for the defenders submitted that in considering the motion for summary decree,
I was not limited to a consideration of documents or the matters averred in the
Record. She referred to the summary
decree rules. This was not a Procedure
Roll debate. She did not dispute that
the correspondence 6/6-6/21 was correspondence which was exchanged in the
terms set out in the various letters by the various persons referred to
therein.
[10] The primary submission by counsel for the defenders was that
the submission in the correspondence does not constitute a binding contract on
liability. It was plain from the
affidavit that the writer of the letter 6/15 of process did not intend to
conclude a binding contract on liability.
There is no consensus between the parties to the correspondence to form
a binding contract on liability. She
made reference to various passages in McBride, The Law of Contract in Scotland (3rd edition),
paragraphs 6-08 to 6-11; 8-01
to 8-27. She quoted with approval
paragraph 6-11 in which the author states that consensus is tested
objectively under reference to Muirhead
and Turnbull v Dickson (1905)
7 F 686.
[11] Counsel
for the defenders referred to the English pre-action protocol for personal injury
claims dated April 2007 (7/3 of process).
This is a protocol developed in England following the Access to
Justice Report of July 1996. The aims of
pre-action protocols include more pre-action contact between parties, better
pre-action investigation by both sides and putting the parties in a position
where they may be able to settle cases fairly and early without
litigation. In terms of paragraph 2.3 of
the protocol, it is primarily designed for cases which include an element of
personal injury with a value of less than г15,000. Such cases are likely to be allocated to the "fast
track". In paragraph 2.4 the protocol
states that the spirit, if not the letter of the protocol should still be
followed for multi-track type claims. The
pre-action protocol sets out a list of matters recommended for parties to
follow pre-litigation. Counsel for the
pursuer referred also to the Civil Procedure Rules 1998/3132 which were in
force in England from April 1999 to April
2007. She submitted that Rule 44 states
that the court in England in determining costs
payable by one party to another should have regard to all the circumstances
including the conduct of the parties which includes the extent to which the
parties followed any relevant pre-action protocol. She also pointed out that the court in England had power to make awards for
costs incurred before proceedings had begun.
As I understood the submission on behalf of the pursuer, the pre-action
protocol is not mandatory or enforceable in England, even in fast track cases. Failure to follow the protocol and presumably
the spirit of the pre-accident protocol is a matter to which the court in England must have regard in
exercising its discretion as to costs.
There were certain parts of the pre-action protocol which counsel
submitted were particularly important in the context of the present case. She referred to 2.12; 3.1-3.8.
[12] Counsel
for the pursuer also drew attention to the Civil Procedure Rules part 14. It was submitted that these rules applied in England. Rule 14.1 A provides that a person may, by
giving notice in writing, admit the truth of the whole or any part of another
parties case before commencement of proceedings (a "pre-action
admission"). Paragraph 14.1A (4)
provides inter alia that after
commencement of proceedings the party who made the pre-action admission may
apply to withdraw it. As the submission was
developed over the continued days of the hearing, it became clear that the interaction
between the protocol and the English procedure rules was not so simple. The final position of counsel for the
pursuer, as I understood it, was that the date of the letter of 23 March 2006
(6/5 of process) and the explanation given in the copy affidavit of Dawn
Kitchingham indicates that the pursuer's claim, when properly analysed, is a multi-track
claim and was being dealt with by her according to the spirit of the English
protocol. Thus counsel submitted it fell
into a class of cases which had caused some concern from personal injury
practitioners in England. That concern arose because it appeared to be
the law in England, as at March 2006, that
defendants were free to withdraw pre-action admissions in multi-track claims and
could not be prevented from doing that at will.
Counsel for the defenders prayed in aid Zucherman, Civil Procedure, Principles of Practice at p.231 to
explain the law in England in 2006. She referred to Sowerby v Charlton [2006]
1 WLR 568 CA and Walley v Stoke on Trent City Council [2007] WLR 352. This result in England appears to have arisen
because the English courts concluded that the civil procedure rule 14 applied
only to admissions made in the course of proceedings and not to pre-action
admissions. In 2006 counsel
submitted that it was therefore open to a defendant to withdraw at will a
pre-action admission. The English courts
did not have power, under the Civil Procedure Rules to prevent that. It was accepted however that the English courts
had the power under a different part of the Civil Procedure Rules, to strike out
a defence either as an abuse of process or as being otherwise likely to
obstruct the just disposal of the case. To
demonstrate that the withdrawal of an admission would amount to an abuse of the
process, it would be necessary to prove that the defendant had acted in bad
faith or that the withdrawal of the pre-action admission was likely to obstruct
the just disposal of the case. For that,
it was necessary for the claimant to prove that he would suffer some prejudice
which would affect the fairness of the trial.
Counsel for the pursuer submitted that subsequently the Civil Procedure
Rules were amended and the law in England was changed but not
retrospectively.
[13] Having
given this explanation, counsel for the defenders submitted that at the time of
the letter of 23 March 2006 from the defenders' insurers to the pursuer's
agents, the writer of the letter, Dawn Kitchingham thought she was operating
under the English legal regime in which she could make an admission which she was
legally entitled to withdraw at will.
Counsel for the pursuer submitted that it was in this context and
against that background that the affidavit of Dawn Kitchingham was to be
understood. Turning to the affidavit
paragraph 2 counsel stated that Dawn Kitchingham "became solely
responsible for handling the case just prior to the admission of liability and
afterwards". At paragraph 4 Dawn Kitchingham
states:
"So far as the admission of
liability was made I considered myself to be complying with the pre-action
protocol applicable to personal injury claims and proposed court actions in England and Wales in which there is a three
month time scale, following which either admission of liability or a denial of
liability is made. I knew Servisair Ltd
to be an English registered company and subject to the jurisdiction of the
Courts of England and Wales. I did not consider the prospect of court
action in Scotland and the claimants
solicitors had not suggested this. I was
aware that at this point we were out with the three month time limit. Usually at the three month point an
application is made for pre-action disclosure.
I made the admission of liability in order to prevent the pursuer's
agents from making an application for a pre-action disclosure. Had the Pursuer's agents made this
application further costs would have been incurred.
I considered that in order
to comply with the protocol we were at that time required to either admit or
deny liability. The Pursuer appeared to
have suffered symptoms which he had reported immediately to his superior. Given the fact that his superior had ordered
him to continue working it seemed possible that there may have been a breach of
regulation. As a consequence it did not
seem appropriate to deny liability and given that some sort of action was by
now required in terms of either an admission or a denial, the best course of
action seemed to be an admission of
liability. My admission was solely made
to adhere with what I considered to be the requirements of the pre-action
protocol. Our systems oblige us to
respond to the England and Wales protocol which covers
approximately 95% of our case load.
However, I did not consider
that this admission was in any way misleading or binding to either party. All admissions of liability are subject to
causation and as no medical evidence had been produced in support of the
pursuer's claim at this time the entire admission was dependant upon
causation. Every claim is subject to
causation and I considered that if causation were not shown it would then be
open to us to withdraw the admission made in my letter."
In the circumstances it was submitted by counsel for
the defenders that Zurich's employee in admitting
liability was plainly not agreeing to be bound.
Counsel described the circumstances described in said affidavit as
indicating a lack of consent. She also
submitted that the affidavit of Dawn Kitchingham disclosed that there was
no intention on the part of Zurich's employee to enter into
contractual arrangements as Dawn Kitchingham had been acting in terms of
or in the spirit of the protocol.
[14] If I did not accept the primary submission for the defenders,
counsel submitted that properly construed, the correspondence discloses merely
an extra judicial admission, not a binding contract. Reference was made to Liquid Gas Tankers v Forth
Ports Authority 1974 SLT 35.
Reference was also made to Walker and Walker, The Law of Evidence in Scotland pages 117-119 and Dickson, Law of Evidence in Scotland,
volume 1, paragraphs 297, 310.
[15] Counsel for the defenders prayed in aid the approach adopted by
Lord Caplan in Gordon v East Kilbride Development Corporation 1995
SLT 62, 64 F-64 J. She
submitted that was the proper approach in the present case both in relation to
interpretation and waiver. She prayed in
aid McBride, The Law of Contract in
Scotland (3rd edition) page 23, paragraphs 25-15
to 20. Counsel for the defenders
submitted that properly analysed, the correspondence disclosed no more than an
extra judicial admission in the context of the negotiations. This was not binding on the parties.
[16] Finally counsel for the defenders submitted that even if the
Court was satisfied that a contractual liability does exist between the parties
a proof is still necessary to establish the terms and extent of the
contract. The matter should not be
disposed of by way of summary decree.
Discussion
[17] The
relevant Rule of Court is 21.2. It was
not disputed that I was entitled to consider documents which were not agreed
and issues not referred to in the pleadings.
I have summarised the submission made by counsel for the defenders in
some detail as the defenders' pleadings are very sparse.
[18] It
should be noted that there are no averments in the case that English law
governs any relationship between the parties.
Counsel for the defenders accepted in discussion that Scots law applied
to this case. For the purposes of considering
the motion, I am prepared to accept as correct the explanation of the history
and development of English law and procedure given by counsel for the defenders. I have
summarised that in paragraphs 11 to 13. I
do that only in order to consider whether there is an issue to try. If the application and effect of English law and
procedure are at the heart of this case, I consider that it would be necessary
to have expert evidence about English law in order to reach a
determination. In this Opinion, I am not
expressing any view in favour of the interpretation of English law and
procedure put forward on behalf of the defenders.
[19] The
obvious starting point for consideration of whether there is a binding contract
on liability is the correspondence summarised in paragraph 5. On consideration of that correspondence, there
is no reference on behalf of the defenders or the insurers to the acceptance of
liability being made in the context of some particular protocol in England. I consider that is a serious difficulty for
the defenders. When I analyse this
correspondence objectively I can only conclude that the parties through their
correspondence, have reached a position whereby it is accepted by the insurers
that the defender is liable for the purposes of this claim. In this case the acceptance of liability in
the terms given on behalf of the defenders was accepted by the pursuer's agents.
Thereafter the parties conducted their
negotiations on the basis that liability was not an issue. That was so until the attempt by the
defenders' solicitors, after much time had passed, to defend the case as if
liability had not been agreed. The
interpretation exercise is made easier in this case because there was no
submission or averments that there had been any verbal communications between
the parties which might throw a different light on the written
correspondence. Similarly there were no
averments or submissions that prior communings or history between the parties
in some way altered the sense of the written words. In my opinion, if one considers the written
correspondence objectively, any reasonable interpretation could only conclude
that there was an acceptance of liability binding the defenders for the
purposes of this claim.
[20] In her
submissions, counsel for the defenders placed much reliance on the affidavit by
Dawn Kitchingham. It is plain from that
affidavit that Dawn Kitchingham is describing her own personal motivation
to comply with the English pre-action protocol in order to prevent the
pursuer's agents from making an application for pre-action disclosure and to
save costs for the insurers. She appears
to accept that she did make an admission intentionally. She states that "every claim is subject to
causation and I consider that if causation were not shown it would then be open
to us to withdraw the admission made in my letter". It appears that even in her mind, there was
an admission made intentionally and never withdrawn by her. It is plain from the affidavit that Dawn
Kitchingham is describing what was in her mind and what was motivating her at
the time she entered into the correspondence with the pursuer's agents. Interesting though that may be, I consider it
irrelevant. In interpreting the
correspondence an objective approach is appropriate. The interpretation is not tested and ruled by
the subjective intention of one party not disclosed to the other party. It would have been open to
Dawn Kitchingham or the defenders' insurers to make it plain in their
documentation that any admission of liability was subject to English law and for
any protocol which they wished to rely upon.
If that had been done, I do consider it would be relevant to explore
further the effect and implications of the correspondence in that context. But in my opinion the correspondence between
the parties is not set in the context of some specific pre-English
protocol. That is subjectively in the
mind of one party only and not disclosed to the other party. I had some difficulty in following the
submission of counsel for the defenders as she appears to accept in her
submission, which I summarised in paragraph 10, that consensus is to be tested
objectively. Applying that test to the
correspondence, I am not persuaded by the submission by counsel for the
defenders that there is an issue about liability to try.
[21] It was also
submitted on behalf of the defenders that the correspondence discloses merely
an ex-judicial admission and not a binding contract. In interpreting the correspondence, I have
concluded that looked at objectively, the only reasonable interpretation is
that the parties have concluded an agreement in which liability is accepted in
the terms set out. I do not consider
that the correspondence reveals a mere extra judicial admission. The case of Gordon v East Kilbride
Development Corporation is very different.
Lord Caplan was considering in detail the particular correspondence
relevant to that case. Parties were
writing to each other on a "without prejudice" basis up to the end of the
correspondence (63H). The parties
contemplated possible investigation about liability at some later date
(63E). Lord Caplan found that at
the time when the defenders made their admission, they were expecting no
consideration in return. He did not
consider it likely that the insurers intended to contract such an obligation
but were merely representing the posture the pursuer might expect them to take
with regard to his claim (64H-I). I
consider the circumstances in the present case quite different. Both parties in this case moved on from the
issue of liability to other issues in the case.
Plainly both parties were minimising expense by not carrying on
investigations into liability. It is
also interesting to note that Dawn Kitchingham in her affidavit states in
terms that "I made the admission of liability in order to prevent the pursuer's
agents from making an application for a pre-action disclosure. Had the pursuer's agents made this
application further costs would have been incurred". There is an obvious interest and advantage to
insurers in minimising and reducing potentially expensive investigations into
matters affecting liability at the earliest stage. I consider that the parties' agreements in
this case had plain and intended advantages for the defenders and their
insurers. Standing my opinion about the
interpretation of the correspondence and its effect, I do not consider waiver
is a relevant issue. I do not consider
that the decision in Liquid Gas Tankers
Limited supports the defenders' submission.
It is plain from the decision in that case that unlike the present case,
the pursuer submits that there was an agreement about liability and set out the
correspondence in which the agreement is made.
[22] The
contractual agreement of the parties in relation to an acceptance of liability
on behalf of the defenders is contained in documents which are not
disputed. I do not consider that a proof
is necessary to establish the terms and extent of the contract in relation to
liability.
[23] In all
the circumstances, I am satisfied that summary decree in terms of the motion
enrolled on 18 January 2008 in favour of the pursuer should be granted. The case will call By Order to deal with any
outstanding matters.
