Background
In Scotland, the framework for pre-litigated personal injury claims is set out in CPAP, and its fundamental aim is "to encourage fair, timely, and just settlement before court proceedings are raised."
In March 2024, the pursuer (i.e. the claimant) was involved in a road traffic accident. The pursuer intimated his claim to the defender under CPAP, and the defender issued a binding admission of liability shortly thereafter.
After disclosure of medical evidence, the defender made its first settlement offer to the pursuer, which the pursuer rejected. When doing so, the pursuer merely referenced the Judicial College Guidelines and failed to provide a "reasoned response", contrary to CPAP.
The defender increased its settlement offer, which the pursuer did not respond to and raised court proceedings. At the outset of the litigated case, the defender lodged a tender (a Scottish Part 36 offer), which the pursuer accepted.
Decision
The matter proceeded to an opposed motion hearing on expenses (costs). The defender argued that the pursuer's expenses should be modified to the less than the CPAP scale on the grounds that the pursuer had breached CPAP by failing to issue a "reasoned response" to the defender's pre-litigation offers.
Paragraph 27 of CPAP states that when a settlement offer is made, the pursuer "must either accept the offer or issue a reasoned response within 14 days of receipt of the offer". Under paragraph 29, the reasoned response must "reject the offer outright, giving reasons for the rejection; or reject the offer and make a counter-offer, giving reasons."
The pursuer’s solicitors argued that a reasoned response had been provided on the grounds that: (1) they had explained the first offer was rejected because the amount offered for solatium was too low; and (2) the defender then returned with an increased second offer, which could be taken as an admission that the defender’s first offer was too low.
The Sheriff found in favour of the defender, and the pursuer's expenses were modified to the CPAP scale. When giving the decision, the Sheriff noted that:
"Paragraph 27 requires a reasoned response; in terms of para 29, where the response is a rejection, reasons require to be given for the rejection. It does not become a reasoned response because the defender made an increased offer.
Moreover, the pursuer made no response at all, reasoned or otherwise, to that increased offer. Two settlement proposals does not amount to very much of a series, and more importantly, CPAP does not say that only a first offer must receive a reasoned response. If a subsequent offer differs little from the preceding proposal, then the reasoned response need differ little from the previous rejection (assuming that remains the choice)."
Comments
The decision is a helpful one for insurers as it is now firm authority that pursuers are required to issue reasoned responses to all offers made by defenders under the CPAP, not just the first.
It also reaffirms that paragraphs 27 and 29 of CPAP are clear and unambiguous, and that it is not acceptable for a pursuer to reject an offer and merely refer to the Judicial College Guidelines without giving further reasons.
To discuss this further please do not hesitate to contact Darren Turnbull, Solicitor in our Scottish team.
