Pre-action conduct: play nice or pay the price …

This recent Scottish case highlights the important of communication between parties and the potential cost implications for failure to act in the spirit of the Compulsory Pre-Action Protocol (CPAP), even when matters have been litigated.

Background

Proceedings were raised in November 2022 due to the impending limitation date. Shortly thereafter, the matter was sisted (paused) to allow the parties to proceed under the CPAP, with a view to resolving matters without court intervention.

The pursuer intimated her valuation of the case along with medical evidence on 17 January 2023. An offer of £7,200 was made by the defender which was swiftly rejected by the pursuer by way of email. However, contrary to the CPAP, no substantial or reasoned response was offered by the pursuer for the rejection. Rather, the pursuer simply referenced the Judicial College (JC) Guidelines. The defender made a second offer of £8,800 which again was rejected by the pursuer. On the same day, a counter-offer was put forward and the defender lodged the defence.

Just under two months later, the defender’s agents lodged a tender (part 36 offer equivalent) in the sum of £8,800 (the same level as the second offer) which was accepted by the pursuer on 30 May 2023.

A hearing took place on 21 July 2023, where the defender argued that the action ought to have settled under CPAP and on this basis, the pursuer should only be entitled to expenses on the CPAP scale. It was argued that the pursuer’s failure to provide a suitable reason for the rejection of the proposal was a breach of the CPAP rules.

The pursuer submitted that it was not a blanket reference to the JC Guidelines, but a reference to a specific chapter. The pursuer further submitted that this allowed the defender to know the where the pursuer’s expectations were pitched. The pursuer advanced an argument that the defender was in breach of the CPAP by not responding to the their email rejecting the first offer.

The sheriff was of the opinion that the pursuer’s rejection should be supplemented by some indication as to why there is a basis for a higher value than the defender’s offer. Further, that negotiation, whether under the CPAP or otherwise, usually involves some engagement with the parties’ approach to the valuation or a clear indication of a global figure which might be acceptable. As such, the sheriff found in favour of the defender and restricted the pursuer’s expenses to the CPAP scale.

Comment

The aims of the CPAP are “to encourage the fair, just and timely settlement of disputes before court proceedings are raised, and to narrow the issues for litigation in cases which do not settle.”

This case serves as a reminder that the court will expect parties to adhere to the CPAP framework at all times, and once a case has been litigated, the court will carefully reflect on the parties’ pre-action conduct.