Scottish Case Update - Admissions of Liability
Jeroen Van Klaveren v Servisair (UK) Limited [2008] CSOH 136
The significant issue that arose in this Scottish action for damages was whether a pre-litigation admission of liability made by insurers in a non-pre-action protocol claim could be treated as legally binding.
Background
The claimant sought damages for injuries sustained in an accident at work in August 2004. His representatives entered into correspondence with his employer’s insurers. In March 2006, the insurers sent a letter to the claimant’s representatives admitting liability in the following terms:
“We accept that our Insured is liable for the purposes of this claim and will pay damages, to be assessed when we receive details of the claim. We will also be paying costs in accordance with the Civil Procedure Rules.”
The claimant subsequently raised court proceedings to avoid the impending triennium. The solicitors appointed by the insurers then lodged defences in which liability for the accident was denied.
The dispute
The claimant argued that the insurers had entered into a binding obligation to pay the him damages and costs and that they could not now withdraw. The letter sent by the insurers was in unequivocal terms and had not given the claimant any reason to anticipate that liability might be later denied. Furthermore, in reliance on the content of letter, the claimant’s representatives did not undertake any further investigation into the circumstances of the accident, and were therefore prejudiced.
The insurers argued that the letter was for the purposes of extra- judicial discussions only and was provided at a stage before detailed investigations had been carried out. They also argued that they had followed the multi-track procedure under the English pre-action protocol where admissions could be withdrawn at any stage.
The decision
The court concluded that any arguments regarding the use of the English procedure was irrelevant. This was a Scottish claim governed by Scottish law. The argument that the correspondence represented a mere extra-judicial admission was not accepted. The court stated that the only logical conclusion that could be drawn from the correspondence was that the insurers had accepted liability for the claimant’s accident. The correspondence therefore constituted a binding contract from which the insurers could not withdraw.
Implications
Given the potentially far-reaching consequences of this decision, the insurers intend to appeal. However, it will be a number of months before the appeal takes place.
Until the law is clarified, we recommend that care is taken not to make an unequivocal admission of liability in any Scottish claim to which the pre-action protocol does not apply until it is clear that the claimant will establish liability.
If the position on liability is to be reserved whilst settlement negotiations take place, it should be made clear to the claimant’s representatives that negotiations are being conducted on a “without prejudice" basis.
Further information
For further information, please contact Andrew Lothian or Douglas Keir.
This bulletin is for general information only and does not constitute legal, investment or other professional advice. Please contact us should you require advice on any particular legal issue. Anderson Strathern LLP accepts no responsibility for any loss that may arise if reliance is placed on any information or opinions expressed in this bulletin.
