The recent case of Christopher Brits v Kilcoyne & Co  CSOH 24 is interesting because of its implications for solicitors and insurers conducting pre-litigation settlement negotiations.The case highlights the danger in relying on pre-litigation agreements and admissions, particularly in relation to an attempt to extend limitation.
The background to the case concerned an accident at work sustained by Mr Brits on 9 April 2009. Mr Brits instructed his solicitors, Kilcoyne & Co, to raise an action for damages, but they failed to do so within the three-year time limit for personal injury actions. Mr Brits accordingly brought a case against his solicitors for professional negligence.
Mr Brits instructed new solicitors, who raised an action after limitation had expired. The insurers for Mr Brit's employer sent an email on 26 April 2012 to Mr Brits' new solicitors stating they would "not be taking the time bar defence". However, a time bar defence was referred to in the written pleadings.
Kilcoyne & Co argued that the insurers' email constituted a waiver of the employer's right to plead the time bar defence and that by failing to rely on this waiver Mr Brits was acting unreasonably. Kilcoyne & Co suggested that Mr Brits had broken the chain of events which connected its failure to raise the action to his loss. Alternatively, Kilcoyne & Co said that in not relying on this waiver, Mr Brits had failed in his duty to mitigate his loss.
Kilcoyne & Co's defence failed on the basis that it had not set out sufficient information in its pleaded case to argue that the insurer's brief statement constituted a waiver. Indeed, its pleadings used the words "extra-judicial admission" rather than waiver.
Lady Stacey's opinion explores the relevant authorities in relation to the difference between the two. Put simply, admissions or concessions that are made in the course of negotiations are permitted a certain level of confidentiality. To promote freedom in negotiation, it is not possible to rely on these statements if the case is subsequently litigated. A waiver, on the other hand, is the irrevocable abandonment of a right and, as a result, the party making the statement must intend to be bound by it.
In Scotland there is still a firm focus on the content of written pleadings and this case is no exception.Lady Stacey's conclusion is not that the statement did not constitute a waiver, but that Kilcoyne & Co's pleaded case was insufficient to allow the court to examine the point.
So what can we take from this judgement?
- The Scottish courts remain very strict on limitation;
- Reliance on a broad pre-litigation agreement or admission is dangerous;
- Parties should insist on any such agreement or admission being expressed clearly as a waiver or undertaking which expressly intends to bind the parties;
- Once litigated, written pleadings should contain a firm basis for the arguments that parties wish to make before the court.
In closing, it is worth noting that although pre-litigation admissions of liability can be withdrawn, the Compulsory Pre-Action Protocol for Personal Injury Claims specifically provides that admissions of liability are binding. It is only a matter of time before the Scottish courts will need to consider this point in cases where new evidence or witnesses have come to light further down the line.
If you have any questions, please get in touch with your usual Brodies contact.