Parties subject to any litigated action are expected and encouraged to attempt to settle the dispute wherever possible. Pursuers' offers (which have a similar effect to the Claimant's ability to lodge a Part 36 offer in England and Wales) are a mechanism to encourage settlement in actions raised in the Scottish Courts. Where a Pursuer's offer is accepted by a Defender by "an appropriate date" and within a "reasonable period", then decree (judgment) will pass against the Defender for the sum offered together with a finding of expenses (costs). The Pursuer's offer will have no additional financial penalty for the Defender in this situation.
This post provides an overview of Pursuers' offers in Scotland and highlights some considerations that Defenders should be mindful of.
Late Acceptance and Non-Acceptance of Pursuers' Offers
In 2017, the Scottish courts introduced the Act of Sederunt (Rules of the Court of Session 1994 and Ordinary Cause Rules 1993 Amendment) (Pursuers’ Offers) 2017 ("the Rules"). The Rules allow Pursuers to lodge offers throughout the course of court proceedings which may allow recovery of an additional sum in expenses where more than a "reasonable period" has elapsed before acceptance, or, where an offer is not accepted, and the court subsequently awards damages for an amount identical to or higher than the offer.
The assessment of "reasonable period" is case specific, although it is unlikely that Defenders can reasonably accept an offer before the claim has been appropriately quantified or if material evidence relevant to liability is outstanding. It is unlikely that lodging an offer as an attempt to force a quick decision from Defenders will be considered to fall within the reasonable period for acceptance.
1. Late Acceptance
If a Pursuer has made an offer which is not accepted by the ''appropriate date'', they can seek to recover an additional 50% of their taxed (assessed) account incurred within the relevant period, plus interest on the settlement sum ("additional sum"). The relevant period is the period commencing when the Pursuer's offer is lodged and can reasonably be considered and ending when it has been accepted or when the court has made a final decision e.g. in a judgment.
2. Non-Acceptance
Where a Defender chooses not to accept a Pursuer's offer, and the Pursuer is successful at Proof (trial) and receives a sum equal to or more than the offer; the Defender will be liable to pay the additional sum to the Pursuer on top of expenses awarded by the court. As such, the earlier the offer is made, providing it can reasonably be considered, the greater the sum payable is likely to be.
What can Defenders do?
Pursuers do not an have an automatic right to an additional sum. A claim for this can be defeated in relation to late acceptance and non-acceptance of offers on "cause shown", by demonstrating that the offer was not "a genuine attempt to settle proceedings".
1. Cause Shown
Whilst cause shown is not defined in the rules, Pursuers may be denied recovery of an additional sum if proceedings have been poorly conducted or raised prematurely.
2. Genuine attempt to settle Proceedings
Guidance on what constitutes a genuine attempt to settle proceedings, which will be fact specific, can be gleaned from the approach taken by the courts in England and Wales to Part 36 offers which shows that courts will usually take a broad-brush approach to determining whether the offer produced was a genuine settlement attempt. The following considerations may also be relevant:
- If the offer reflects the full sum sued for, it will be unlikely to reflect a genuine settlement attempt.
- If an offer only contains a 1%-2% discount, it will not usually be considered a genuine attempt to settle unless there is a reason (e.g. contractual) which warrants an offer so close to the principal sum being made.
- If an offer has been made in the absence of disclosure of material evidence relevant to liability and quantum it will be unlikely to be interpreted as a genuine attempt to settle.
- If the offer reflects a concession from the Pursuer this may indicate a genuine settlement attempt.
3. Tenders
Providing the Pursuers' Offer has been lodged at a time when the Defender can assess this in a sufficiently informed way, it may be appropriate to consider lodging a tender at a lower level which could carry its own penalties in terms of expenses for the Pursuer, and which may serve to apply pressure and place the ball back in the Pursuer's court.
Conclusion
Defenders must act without delay when considering acceptance of a Pursuers' Offer by weighing up likely success of their defence, litigation risk, and the value of the claim, to ensure that they do not risk incurring additional expenses by late or non-acceptance of the offer. If Defenders are unable to consider the offer because of material evidence remaining outstanding, this may indicate that the offer cannot be reasonably accepted at that time and/or reflect that it was not a genuine attempt to settle. Where applicable, Defenders should be mindful of employing as a tactic their own weapon of responding with a tender which may avoid late acceptance of a Pursuers' offer and which can carry its own protection in terms of expenses.
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