Horwich Farrelly wins case to bring clarity to recovery of expenses in Scottish personal injury case

A case fought by specialist insurance law firm Horwich Farrelly has brought clarification to the recovery of expenses in personal injury cases in a blow for those put to considerable expense defending unnecessary Court actions in Scotland.  

In a decision from the specialist Personal Injury Court, a senior Sheriff clarified the approach of the Court in assessing such a situation, after an increased offer was made in a Tender due to the late disclosure of information.

Expenses awarded to the Pursuer were restricted to the start of the claim, when Aviva repeated a pre-litigation offer in a Tender, with Aviva being awarded the expenses from that date.

The Pursuer, Usman Akmal, was a passenger in his own vehicle, which was being driven at the time of the accident by his brother, Aviva’s policyholder.  They were involved in an accident in Paisley in May 2018 when Akmal’s brother lost control of the vehicle and collided with a post box and some nearby buildings.  Liability was admitted.  

Akmal sought damages for personal injuries sustained in the collision, including a fractured thumb that required surgery and a fractured vertebra, as well as a psychological injury. 

Aviva put forward a swift and reasonable settlement offer before proceedings were raised, but Akmal decided to proceed to litigation.

The offer was formally made at the outset of the action in a “Tender”, the Scottish equivalent of a Part 36 offer.  Akmal then sought to introduce new heads of claim for the value of his vehicle and recovery charges late in the course of the action. An increased Tender was lodged and accepted by Akmal, who moved the Court to award full expenses in his favour.

Horwich Farrelly and Aviva opposed the motion for expenses on the basis that Akmal’s conduct was unreasonable and had caused the litigation. Had the heads of claim, which were clearly within his knowledge, been intimated in a timely manner, an acceptable offer would have been made then, instead of at the end of a lengthy litigation.

The second Tender had only been increased by the value of the additional heads sought, after it was established that they were reasonably claimed and valued.

Following a hearing on 13 July, Sheriff McGowan, the administrative Sheriff of the All-Scotland Sheriff Personal Injury Court, held that the claim had been handled inefficiently and stated that expenses ought to be modified to reflect the disapproval of the Court.

He therefore restricted Akmal’s recoverable expenses to the date of the first Tender and awarded Aviva the expenses of the process thereafter, to the conclusion of the action some 16 months later.

He observed that when considering a formal offer made in a Tender, the Court retains the inherent discretion to “award, not award, increase, modify or restrict” expenses of the action as appropriate.

Speaking on the outcome, Steven Smart, partner and head of Horwich Farrelly’s Scottish office, said: “This significant decision from a senior Sheriff in the specialist Personal Injury Court is one that defenders and insurers frustrated at having had to incur unnecessary legal costs will take note of.

“The Court could not identify any reasonable explanation for the failure to identify the additional heads of claim earlier. Had they been intimated, it was reasonable to conclude that the claim would likely have settled when proceedings were raised at the latest, which would have avoided the expense Aviva incurred while legitimately maintaining their position. It is noteworthy that the Court retains its inherent discretion to assess expenses when a Tender has been lodged in the appropriate form to seek protection against ongoing costs.”

Rob Lee, head of casualty claims at Aviva, said: “This is an important ruling that demonstrates the Court’s support for insurers to act reasonably to contain costs. By keeping our costs down, we can remain competitive for all our customers.

“We are pleased with the outcome of this case, and the award of costs incurred since our first offer, which should dissuade claimants from entering unreasonable late additions to a claim.”