No winners in costs dispute

07.11.17

Sheriff McGowan’s decision in the case of Dorota Tomczak v Nicholas Reid gives an indication as to how ASPIC will deal with cases that are litigated solely to resolve a dispute on costs. 


The claim arose from a straightforward road traffic accident; the pre-action protocol was agreed, liability was admitted, and damages were agreed at £4,700. However, settlement could not be achieved because the defender’s insurers refused to meet the fees claimed for police and medical reports. Their request for further information was not answered and, instead, the claimant litigated. The defender immediately lodged a tender (part 36 offer) for the agreed sum. The tender was accepted and the case called in Court for an argument regarding the disputed outlays. 


The claimant sought all costs whereas the defender said because the only real issue in dispute was costs, the litigation was unnecessary and the defender should be awarded costs. 


At the outset, Sheriff McGowan observed that he was being asked to resolve an issue which was not appropriate for the Court, and that the issue was one which should have been determined by the court’s auditor. 


As the pre-action protocol is silent on the issue of costs, except for noting that they should be paid within five weeks, Sheriff McGowan applied the common law position. In those circumstances the defender was only liable to pay the claimant’s “reasonable expenses” at settlement. Accordingly the defenders were entitled to dispute the outlays sought. 


The Sheriff’s view was that the litigation was not necessary or appropriate as parties could have agreed a joint remit to the auditor instead of litigation. As neither party had sought to resolve the issue in this way, he found that neither was entitled to costs.

 
The Sheriff observed, more generally, that actions of this type were not desirable and that, in such circumstances, steps should be taken to resolve the dispute appropriately rather than resorting to litigation. This emphasis on cooperation between parties is a theme in recent ASPIC decisions and the Court is obviously keen that parties follow the spirit and not only the letter of rules, protocols and practice notes. Any failure to act constructively with an opponent or any behaviour which could be viewed as obstructing settlement, even if compliant with the rules, is likely to meet with the disapproval of the Court, and the relevant sanction in expenses.