Pursuers' offers: proceed with care

The Act of Sederunt (Rules of the Court of Session 1994 and Ordinary Cause Rules 1993 Amendment) (Pursuers’ Offers) 2017 came into force on 3 April, introducing pursuers’ offers into the Court of Session and sheriff court ordinary cause procedure.

Whilst the rules mirror the current system of defenders’ tenders, they are ultimately a creature of statute. As a result the draftsman has had the task of recreating many of the flexible customs surrounding tenders into
the legislation.

On the face of it the rules are straightforward. A pursuer may lodge an offer in process at any time before the court makes avizandum. Broadly speaking they will operate the same way as defenders’ tenders, in that there will be financial implications for late acceptance or failing to “beat” the offer following judgment. Should defenders fall foul, the pursuer can, on cause shown, move the court to decern for payment by the defenders to the pursuer of a sum that equates to 50% of the pursuer’s judicial fees (including any “additional fee”, but excluding disbursements) attributable to the period of time after the offer ought to have been accepted.

Background and rationale

The 2009 Scottish Civil Courts Review (the Gill Review) recommended a system of pursuers’ offers be introduced to encourage early settlement. In January 2016 Lord Carloway, Lord President and chair of the Scottish Civil Justice Council, asked the Costs & Funding Committee to consider the matter due to concerns over the late settlement of actions. The committee thereafter drew up a wish list of proposals, in line with Lord Gill’s recommendations, that have largely been followed through into the rules.

It is worth noting that the Gill Review also concluded that the system of defenders’ tenders was one-sided and unfair, and therefore recommended that the procedure of making formal offers, by any party, be codified to encourage early settlement. This is something the Costs & Funding Committee is aware of, so further changes may be forthcoming.

Ambiguities and points to clarify

As with any new rules, there will be various points of ambiguity until practice settles.

Form of offer and acceptance. The rules give some guidance regarding the contents of the offer, but it would appear largely up to practitioners to formulate the wording. For example, the rules make no reference to the recovery of benefits (CRU) in personal injury cases; one would expect pursuers’ offers to make express reference to CRU.

Nature of payment. It has been reported that a payment to the pursuer is an uplift in judicial fees. This would appear wrong: whilst the payment is calculated by reference to a pursuer’s fees, the payment itself is not a fee. This is a legacy argument from the original attempt to introduce pursuers’ offers in 1996 and the case of Taylor v Marshall Food Group 1998 SC 841. (I am grateful to Robert Milligan QC for bringing this to my attention.) Pursuers’ agents need to take care as to how this impacts on their funding arrangements with clients.

The 50% rule. Both the Gill Review and the Costs & Funding Committee believed that the court should have the power to vary the 50% figure, although this does not appear to be the case in the rules.

Time to accept. The “appropriate date” is the date by which the offer could reasonably have been accepted, with no further guidance in the rules. The Gill Review looked at other jurisdictions where often a specific time period is given. The time to accept may in large part depend on the level of disclosure, or the current practice with the time allowed to consider defenders’ tenders, but mostly will be left to the discretion of the court.

Defenders’ tenders. There is an argument that the pendulum will swing too far in favour of pursuers and that defenders will not get a corresponding benefit by way of an “uplift” in fees. It has been suggested that defenders could seek their own 50% uplift where appropriate. But that misses the point. First, the payment is not an uplift of expenses, and with a contra-account the losing party is already receiving payment from the successful party. Secondly, the system is not meant to provide a windfall but to provide equality of arms when negotiating, whilst incentivising early settlement. No system is perfect, and it could be argued that 50% of the judicial fees incurred post-offer is not sanction enough, especially in higher value cases.