December 18, 2019

Scotland: Expenses of process awarded against dominus litis

We are pleased to report that Clyde & Co has successfully assisted in obtaining an award of expenses of process against a dominus litis.  Accident Exchange was held liable for the Defenders’ expenses in bringing our client, a third party, into the action.

Our input as the representatives of the third party led to information being produced which made clear Accident Exchange was the dominus litis, and resulted in their liability for the Defenders' expenses of process.

Background

The Pursuer sought damages for the cost of repairs to her car and costs of a hire vehicle following a road traffic accident. The first and second Defenders were the driver and insurer of the other vehicle involved.

Our client, the third party, was the Pursuer's husband who was driving her vehicle at the time of the accident.  Accident Exchange owned the hire vehicle, and the vehicle rental agreement named both the Pursuer and third party as authorised party.  The third party had signed the rental agreement.

During the initial claim, the Defenders challenged the quantum of the claim raising impecuniosity, hire rates and hire duration.  They also disputed the validity/enforceability of the hire agreement and the Pursuer's right to claim hire charges.  The Defenders argued that the Pursuer had incurred no hire charges as the third party had entered into the arrangement with Accident Exchange. The third party submitted was that he was unaware it was a credit hire agreement, as he understood he would never be asked to pay the hire charges.

Following the first day of evidence the Pursuer abandoned her action and the Defenders were granted a decree of absolvitor with the Pursuer found liable for the Defenders' expenses. As a consequence of this motion the third party proceedings were automatically ended and the Defenders were found liable to the third party in the expenses of the action.

The motion

There was consensus that the Pursuer was liable for the Defenders' expenses.  The dispute related to who would ultimately pay the third party's expenses.  The Defenders  asked the court to either:

  • Hold Accident Exchange as the dominus litis and to find it liable to the Defenders in a sum equivalent to the Defenders' liability in expenses to Mr Moles.
  • Alternatively, if not granted, to find the Pursuer liable.
  • Thirdly, sanction the cause as suitable for sanction for counsel.

Prior to hearing submissions Accident Exchange accepted it was the dominius litis and if there was a liability to the Defenders this should be against Accident Exchange and not the Pursuer, and that liability for expenses already incurred by the Pursuer to the Defenders lay with it also.

Submissions

The Defenders submitted Accident Exchange should be liable for the third party's expenses on the basis of the unreasonable conduct of the claim; witnesses were called, whose evidence was of no relevance to the issues in dispute as it was clear the main dispute was about the terms of conditions. It was submitted that the decision to abandon the action was taken for the benefit of Accident Exchange alone.

Accident Exchange submitted that the motion should be refused as this would mean a dominus litis would have to meet a liability over which it would have no power in relation to taxation or input. Furthermore, actions are abandoned for a variety of reasons, and the Defenders could not claim to know why the action was abandoned.

Judgment

Sheriff McGowan found that the abandonment related to quantum issues. The witnesses would have been criticised due to issues with the paperwork, so the prudent course for Accident Exchange was to abandon the action. Regarding counsel, the Sheriff found it was reasonable to instruct counsel as there were numerous legal issues likely requiring addressing in submissions.

The award for expenses is a matter of judicial discretion, designed to achieve substantial justice. The particular circumstances of each case are relevant.

In this case, in order to consider whether an order in favour of the Defenders could be made the Sheriff stated "it is clear that "unreasonable conduct" is a factor that is relevant". The unreasonable conduct identified in this case did justify the making of such an award. "The action was raised and conducted in an unreasonable manner from the outset and that should be reflected in how expenses are dealt with in order to achieve substantial justice between the parties."  It should have been clear to Accident Exchange from the outset there were validity issues with the claim being brought in the Pursuer's name having known she had not entered into the hire agreement.

Accordingly, Accident Exchange (as the dominus litis) was found liable to the Defenders in a sum equivalent to the Defenders' liability in expenses as taxed to the third party, Mr Moles.

What can we learn?

  • Alarm bells may also potentially ring amongst hire providers following this decision, as it will raise quite sensible questions about the circumstances in which hire agreements are produced, and to whose benefit the agreement actually is.  The issue of contingent liability on the success of a claim, and what is notified orally/in writing to pursuers was considered in the English courts last year.
  • In response to the arguments about Accident Exchange meeting a liability over which it had no power, Sheriff McGowan also suggested that in order to avoid further arguments on this issue, the Defenders should seek the input of Accident Exchange in respect of any agreement reached on those expenses.

This article was written by Vikki Melville, Partner, and Marian Tytler, Associate.