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BRITISH TELECOMMUNICATIONS PLC AGAINST SCOTTISH WATER AND TPT CIVIL ENGINEERING LIMITED


Submitted: 24 April 2017

SHERIFFDOM OF LOTHIAN AND BORDERS AT EDINBURGH

 

[2017] SC EDIN 26

B420/16

NOTE BY SHERIFF PETER J BRAID

 

In the cause

 

BRITISH TELECOMMUNICATIONS PLC, a company incorporated under the Companies Act and having their registered office at 81 Newgate Street, London, EC1A 7AJ

 

Pursuers

 

Against

 

SCOTTISH WATER, incorporated under the Water Industry (Scotland) Act 2002, and having its place of business at 55 Buckstone Terrace, Edinburgh, EH10 6XH

 

Defenders

 

TPT CIVIL ENGINEERING LIMITED, a company incorporated under the Companies Acts and having their registered office at 28 Craigie Brae, Lesmahagow, ML11 OBU

 

Third Party

 

Edinburgh,      April 2017

The sheriff, having resumed consideration of the cause, grants the pursuer’s opposed motion, number 7/2 of process, in part; allows the minutes of tender and acceptance of tender to be received and form numbers 16 and 17 of process respectively and in terms thereof decerns against the third party for payment to the pursuers of the sum of TWENTY FIVE THOUSAND POUNDS (£25,000) Sterling, free and net of recoupment in terms of the Social Security (Recovery of Benefits) Act 1997; finds the third party liable to the pursuers in the expenses of the cause to date of tender as taxed; allows an account thereof to be given in and remits same, when lodged, to the Auditor of Court to tax and report; assoilzies the defenders from the crave of the initial writ; finds no expenses due to or by the pursuers and defenders in respect of each other to the date of tender; finds the third party liable to the defenders in the expenses occasioned to the date of tender as taxed; allows an account thereof to be given in and remits same, when lodged, to the Auditor of Court to tax and report; finds the defenders liable to the pursuers and third party in the expenses occasioned in relation to the abortive hearing on 14 March 2017 as taxed; allows an account thereof to be given in and remits same, when lodged, to the Auditor of Court to tax and report; finds the third party liable to the pursuers and defenders in the expenses occasioned in relation to the hearing on 16 March 2017 as taxed; allows an account thereof to be given in and remits same, when lodged, to the Auditor of Court to tax and report; quoad ultra finds the pursuers liable to the defenders and third party in the expenses from the date of tender as taxed; allows an account thereof to be given in and remits same, when lodged, to the Auditor of Court to tax and report.

 

Note

[1]        This case called before me on 16 March 2017, following the pursuers’ acceptance of a tender by the third party in which they offered to pay the pursuers the sum of £25,000 together with the expenses of process as taxed to the date of tender “in full and final satisfaction of the craves of the initial writ”.  The pursuers sought decree in terms of the tender and acceptance; and also sought decree of absolvitor in favour of the defenders with a finding of no expenses due to or by as between the pursuers and the defenders.  The main issue of controversy between the parties is who should bear liability for the defenders’ expenses.  The defenders seek recovery of their expenses from the pursuers, whom failing the third party.  The pursuers’ rejoinder to that is that if they are found liable to the defenders in expenses, they are entitled to be relieved by the third party.  The third party maintain that they should not be found liable for the defenders’ expenses, either directly or by way of relief.

[2]        When the motion first called before me, a fundamental difficulty was apparent, namely that the pursuers did not have a crave directed against the third party.  The sole crave was directed against the defenders who in turn claimed a right of relief, in the event of their being found liable to the pursuers.  It followed both on basic first principles, and following Findlay v National Coal Board 1965 SLT 328, that, on those pleadings, no decree could competently be granted against the third party in terms of the tender and acceptance.  After a brief adjournment, Mr Gratwick for the pursuers sought leave to amend his crave so that it was directed against the defenders and the third party in the alternative.  That motion was not opposed and I therefore granted it, enabling the hearing to proceed in relation to how liability for expenses should be dealt with.

[3]        The action arose out of damage to an optic cable and clay duct belonging to the pursuers, which occurred on or about 31 March 2012 in the course of works being carried out by the third party on behalf of the defenders.  The sole ground of action was that the defenders were strictly liable to compensate the pursuers in respect of any expense reasonably incurred in making good the damage to their plant caused by the execution of the defenders roadworks, under and in terms of sections 141 and 155 of the New Roads and Streetworks Act 1991.  The defenders make an admission on record that they are liable to compensate the pursuers under those provisions, which admittedly render them strictly liable for the damage caused.  Notwithstanding that acceptance, the defenders’ position both on record, and prior to the action being raised, has always been that the damage was caused by the fault of the third party.  It is worth noting at this stage that although the third party’s insurers entered into negotiations with the pursuers prior to proceedings being raised, liability has never been admitted by them at any time.  Indeed their first plea in law is that “the pursuers not having suffered any loss and damage as a result of any fault or breach of statutory duty on the part of the third party, decree of absolvitor should be granted”. 

[4]        The parties helpfully entered into a joint minute agreeing the factual background.  I do not propose to narrate all forty four agreed facts here.  However, the salient facts are as follows.  The pursuers intimated a claim to the defenders by letter dated 11 April 2012.  The defenders wrote to the third party on 10 May, 2 October and 12 December 2012, and 22 March, 14 June and 7 August 2013 advising the third party of the pursuers’ claim.  The third party responded by letter dated 14 August 2013 advising the defenders that they would deal with matters directly and awaited correspondence from the pursuers.  That letter was forwarded to the pursuers by the defenders (apparently, three times).  The pursuers forwarded to the third party details of the claim on 13 August 2015 and negotiations followed.  On 4 March 2016 the third party’s claims handlers offered the sum of £6,100 to the pursuers inclusive of expenses.  That was rejected on the 18 March 2016, when the pursuers sought the sum of £34,037.90.  At that time the pursuers’ agents stated that they considered that the pursuers and the third party were too far apart for further negotiations to take place and intimated that proceedings would be raised.  The third party’s claims handlers e-mailed the pursuers on 23 March 2016 asking that the litigation be put on hold, on the basis that there were a number of issues which were capable of being narrowed prior to any legal action.  However, the pursuers chose to raise proceedings against the defenders on 20 July 2016.  Some further correspondence then took place between the pursuers and the third party’s representatives, to no great effect.  The defenders’ solicitors wrote to the third party on 4 August requesting that they settle the claim direct with the pursuers within seven days failing which the defenders would have no option other than to bring the third party into the action.  On 25 August 2016 the third party’s solicitors advised the defenders’ solicitors that they were endeavouring to investigate liability and ”would get back to them as soon as possible” (that being more than four years after the incident).   No agreement having been reached the third party procedure was then invoked.  Although the joint minute records that the third party lodged answers admitting liability on 12 October 2016, as I have pointed out liability has never been formally and unequivocally admitted.  The court fixed a diet of proof on liability and quantum to take place on 20, 21 and 22 February 2017. The tender was intimated on 13 December 2016 and accepted on 16 February 2017. 

[5]        Against that background, Mr Gratwick for the pursuers submitted that the question of liability for expenses was a matter for the court’s discretion.  That decision should be informed by whether or not the parties seeking expenses had been successful.  The defenders had not been successful.  They had admitted liability and had avoided decree only by bringing the third party into the action.  The pursuers on the other hand had acted reasonably in electing to pursue their statutory claim, which was much more straightforward than a claim against the third party would have been given the absence of an admission of liability.  In the event of the pursuers being found liable for the defenders’ expenses, they should be relieved by the third party.  There was nothing in the tender to exclude any such obligation of relief and it was reasonable in the circumstances for the court to make such an order.  Reference was made to the cases of Macdonald v The Scottish Motor Traction Company Limited 1948 SC 529; Maclinden v Colvilles Limited and Others 1967 SLT (Notes) 80;  Mitchell v Redpath Engineering Limited 1990 SLT 259 and Donnachie v Happit Limited 2002 SLT 1141.  Macdonald and Maclinden in particular were examples of cases where a pursuer, having been induced to bring in a second defender by averments on the part of the first defender, was found entitled to relief from the first defender in respect of the other defender’s expenses.  The cases also made clear that where the tendering defender wished to exclude such liability he must make that clear in his minute of tender, and there was no such exclusion in the present case. 

[6]        Mr McDougall for the defenders very helpfully lodged written submissions.  His primary position was that the first defenders should be entitled to recover their expenses from the pursuers.  The pursuers had effectively abandoned their action against the second defenders.  Matters had perhaps been simplified by the minute of amendment which made it clear that the pursuers were suing the parties in the alternative.  Having obtained decree against the third party and being successful against them, they had not been successful against the defenders.  It was accepted that the pursuers had been entitled to sue the defenders but the test was whether they had acted reasonably and in Mr McDougall’s submission, they had not.  There was no real argument by the third party that they were not liable.  The real issue between the parties was how much damage had been caused.  In the event that I was not with Mr McDougall in relation to his primary position, he submitted that the third party should meet the defenders’ expenses.  The position had been made clear to the third party in the pre-litigation correspondence.  It was their failure to settle the claim which had led to the action being raised and the third party procedure being invoked.  Finally, whatever other order was made for expenses, the pursuers should be found liable for the expenses of both the defenders and the third party from the date of tender onwards. 

[7]        Ms Fraser for the third party submitted that the issue was primarily one between the pursuers and the defenders but she opposed both parties’ secondary positions whereby the third parties should be found liable in the defenders’ expenses.  The cases of Mitchell and Donnachie in particular made it clear that the issue of relief arose only where a pursuer had been induced by one defender to sue another; and there had been no inducement of any sort by the third party in the present case.  The third party had no warning that the action would be directed against the defenders.  It was not appropriate for the third party to be liable for the defenders’ expenses, when they had never suggested that the defenders should be sued.  Although the event leading to litigation was caused by the third party, they had not caused the litigation itself.  Liability had never seriously been in dispute. 

[8]        In a brief response Mr Gratwick submitted that the defenders’ expenses from the date of tender should be none due to or by, the logic being that the prolongation of matters since then had related to the issue of expenses.

 

Discussion

[9]        All parties acknowledged that the court has a very wide discretion to deal with expenses as it deems appropriate: Macphail, Sheriff Court Practice 19.03.  That discretion must of course be exercised in accordance with certain well established principles.  So, it is generally accepted that expenses follow success, but that that rule may be departed from if the successful party has acted unreasonably or incurred the court’s displeasure in some other way.  It is also uncontroversial that where a party abandons, that party is normally required to pay the expenses of the party against whom he abandons, but that is not an invariable rule: Macphail, 14.21.

[10]      It is true that in a sense the defenders have been successful in as much as they have succeeded in securing decree of absolvitor.  However, they achieved that result only by declining to settle a claim for which they were admittedly strictly liable and to which they had no defence on the merits.  Had the pursuers elected to have the courage of their convictions, as it were, by declining to amend and insisting on payment by the third party (who everyone agrees is the party which should actually meet the cost of the damage at the end of the day) through the conduit of a decree against the defenders, the defenders would have had no answer to that.  That the pursuer’s agent, at the eleventh hour, opted to amend his crave, for the defenders’ benefit, should not in my view be regarded as a sign that the defenders have been successful in the litigation.  The litigation would have been avoided had the defenders settled it rather than opting to attempt to wash their hands of it by having the third party settle it direct.  In a question between the pursuers and the defenders, the defenders cannot be heard to complain that the claim was not settled sooner by the third party.  Looking at the matter from the pursuers’ perspective, they acted reasonably in electing to sue only the defenders, against whom they had a straightforward claim, and not the third party, who had not admitted liability and against whom any claim might not have been straightforward.  The situation is really the obverse of that in Donnachie, supra, where a pursuer who had sued both main contractors and subcontractors, and succeeded against only the former, was found liable in expenses to the subcontractors.  In reaching that decision, Lord Johnston observed that prudence would suggest that only to sue the contractors would have been a legitimate and correct line to take in as much as it was inconceivable that the pursuer would not succeed to some extent against the main contractor which in his view would have been sufficient to justify the pursuer pursuing that contractor alone.  In essence that was precisely what the pursuers decided to do in the present case, namely, to sue the party against whom they had a clear and an answerable claim, rather than the party against whom they did not, and they cannot be criticised for having elected to take that course of action. 

[11]      Accordingly, as between the pursuers and the first defender, notwithstanding the granting of absolvitor, I do not consider that the pursuer should be found liable in expenses and as between those parties I will make a finding of no expenses due to or by either party, down to the date of the tender.  That being so, it is unnecessary to consider the case law which was referred to in relation to whether or not the pursuers might have had a right of relief against the third party in circumstances where they were not induced by the third party to sue the defenders, and I will therefore refrain from expressing any opinion as to whether a right of relief might arise in circumstances other than where one defender has induced a pursuer to sue another. 

[12]      It remains to consider whether the third party should be found liable for the defenders’ expenses.  In my view they should (at least to the date of the tender).  This entire litigation was brought about by the third party’s failure unequivocally to admit liability.  Had they done so, there would then have been no good reason for the pursuers to have sued the defenders.  In the absence of an admission of liability it ought to have been foreseeable to the third party, whether or not it was explicitly stated in the correspondence, that the pursuers might well elect to sue the defenders, thus causing the defenders to incur expense.  It does not advance the third party’s position to say that liability was never seriously disputed.  That may be so but until there is an admission on which the pursuers could rely, any prudent pursuer requires to proceed on the basis that liability may require to be proved.  In principle, therefore, the third party should meet the defenders’ expenses. 

[13]      However, the effect of the tender cannot be ignored.  The prolongation of the litigation after that time is down to the pursuers’ delay in accepting the sum tendered.  I will overlook, in this context, the technical difficulty referred to at the beginning of this note that there was no crave against the third party since that did not occur to parties and did not lead to any prolongation of the case.  In my view the pursuers should (subject to the exceptions below) meet the expenses of both the defenders and the third party from the date of the tender, since it is they who have caused the procedure since that date.

[14]      There remains the issue over the expenses of an abortive hearing before Sheriff Reith on 14 March and of the hearing before me.  The abortive hearing, as I understand it, was caused by the fact that the representative of the defenders on that occasion was not properly briefed.  The defenders should bear the expenses of that hearing.  As regards the expenses of the hearing before me, both the defenders and the pursuers had a measure of success and I will find the third party liable for the expenses of that hearing.