15 February 2021

A defender in any litigation is mindful of protecting their position in relation to expenses. An obvious way to do this is lodging an early Tender (Part 36 offer). However, in cases where there is stateable defence on liability, there is likely to be no desire to pay the pursuer anything and a Tender is not an option. Another option would be to make a ‘drop hands’ offer, in other words the defender agrees to bear their own costs if the pursuer were to withdraw his her claim. Such an offer is infrequently accepted at the outset of a litigation.

One alternative option might be to apply to the court for ‘caution’ (pronounced ‘kay-shun’). Caution is a request made by a party to an action for a sum of money to be paid into the court by the other party to the action to cover the expenses that might be awarded against him. That sum of money is held by the court and will be used to pay the other party’s expenses if they are successful after proof. An application for caution will usually be made where one party is concerned that the other will not be able to meet their expenses, for example, if they are impecunious or bankrupt. The purpose of the caution being to provide security to the opponent if the litigant does not have a stateable case and there is no prospect of recovering expenses against him. Making an application for caution may therefore seem an attractive prospect in tricky liability cases.

The defender enrolled such a motion requesting that the pursuer should be required to find caution in a recent case in the All-Scotland Sheriff Personal Injury Court, Liliya Tsetvanova v Christoper Walden [2020] EDIN 37. The pursuer in that case sued for injuries she had sustained when the defender had attended at her flat, banged on the door, and put her in a state of fear and alarm such that she escaped from a window and injured herself when she fell from a drainpipe. The court held that it could not infer that the pursuer was impecunious as she was funding the litigation herself and she was in work. The court, however, clarified that impecuniosity alone was not a sufficient ground for ordering caution. The court therefore had to consider if exceptional circumstances existed. The defender argued that there were exceptional circumstances being that a duty of care did not exist between the defender and the pursuer. The court held that, based on its analysis of the pleadings alone, it could not find that the pursuer did not have a stateable case, but rather an examination of the facts at Proof would be required. It was thus held not to be in the interests of justice to grant caution, and the motion was refused.

Clearly, the introduction of Qualified One-Way Costs Shift (QOCS) in Scotland will significantly impact the number of cases in which an application for caution might be granted by a defender in a personal injury action. The Scottish Civil Justice Council recently confirmed that the draft rules are being actively considered by its members and its aim is to have approved rules by March 2021 with these coming into force by around June 2021.

The impact of QOCS is that a pursuer will not be liable for a defender’s expenses except in a few limited circumstances, fraud, manifestly unreasonable behaviour, or where there has been an abuse of process. As the decision in the Tsetvanova case shows, it is already very difficult to convince a court to order a finding of caution. This will become near impossible with QOCS and will be restricted further only to the cases which fall into one of the noted exceptions. A link to the decision in Tsetvanova can be found here.

For more information please contact:

Joanne Farrell, Senior Associate: jfa@bto.co.uk / 0141 221 8012