Prospect Healthcare v Kier Build (No 2)
| Jurisdiction | Scotland |
| Judge | Lord Doherty |
| Judgment Date | 19 June 2018 |
| Neutral Citation | [2018] CSIH 43 |
| Date | 19 June 2018 |
| Court | Court of Session (Inner House) |
| Docket Number | No 31 |
[2018] CSIH 43
First Division
Lord Doherty
Albert Bartlett & Sons (Airdrie) Ltd v Gilchrist and Lynn Ltd [2010] CSIH 33; 2010 GWD 21–407
Britton v Central Regional Council 1986 SLT 207
Buchan v Thomson 1976 SLT 42
Cattan (LE) Ltd v A Michaelides & Co Ltd [1958] 1 WLR 717; [1958] 2 All ER 125; [1958] 1 Lloyd's Rep 479; 102 SJ 470
Edgington v Clark [1964] 1 QB 367; [1963] 3 WLR 721; [1963] 3 All ER 468; 107 SJ 617
Europools Ltd v Clydeside Steel Fabrications Ltd 2001 SLT (Sh Ct) 91
Findlay v National Coal Board 1965 SLT 328
Fraser v Bolt Burdon (a firm) [2009] EWHC 3481; [2010] All ER (D) 211
G v G (Minors: Custody Appeal) [1985] 1 WLR 647; [1985] 2 All ER 225; [1985] FLR 894; [1985] Fam Law 321; 83 LSG 2010; 135 NLJ 439; 129 SJ 315
Greenwich Millennium Village Ltd v Essex Services Group plc [2014] EWHC 1099; [2014] TCLR 4
Howitt v Alexander & Sons 1948 SC 154; 1948 SLT 334; 1948 SLT (Notes) 6; (1947) 97 LJ 705
Johnson v Ribbins [1977] 1 WLR 1458; [1977] 1 All ER 806; 121 SJ 817
Scottish Power Generation Ltd v British Energy Generation (UK) Ltd 2002 SC 517; 2002 SLT 870; 2002 SCLR 691
Witham v Vane (1883) 32 WR 617;
Civil Procedure Rule Committee, Civil Procedure Rules (Ministry of Justice, London, 1998), Pts 44–48; r 44.2) (Online: http://www.justice.gov.uk/courts/procedure-rules/civil/rules/part54#54.4 (21 August 2018))
Keating, D, Construction Contracts (10th Furst and Ramsey ed, Sweet and Maxwell, London, 2016), paras 19.146, 19.148
Maclaren, JA, Expenses in the Supreme and Sheriff Courts of Scotland (W Green, Edinburgh, 1912), p 21
Zuckerman, AAS, Civil Procedure: Principles and practice (3rd ed, Sweet and Maxwell, London, 2013), para 27.43
Expenses — Process — Third parties — Whether pursuers should be liable for the expenses of the third parties convened by the defenders against whom the pursuers had not directed a case
Prospect Healthcare (Hairmyres) ltd brought a commercial action in the Court of Session against Kier Build Ltd seeking damages for breach of contract. The defenders sought relief from the third parties, Carillion Construction Ltd. The pursuers lodged a minute of abandonment. The cause came before the commercial judge (Lord Doherty), on 15 June 2016, who allowed the action and third-party proceedings to be dismissed on the condition that the pursuers pay the full judicial expenses of the defenders and the defenders pay the full judicial expenses of the third parties. On 14 July 2017, the commercial judge dismissed the action and third-party proceedings following payment of the expenses. The defenders reclaimed. The pursuers and third parties lodged notes of objection to the competency of the reclaiming motion.
The cause called before the First Division (Lord President (Carloway), Lord Brodie and Lord Malcolm) for a hearing on the single bills, on 24 October 2017. On 17 November 2017, the First Division repelled the pursuers' note of objections and sustained the third parties' note of objection ([2017] CSIH 70; 2018 SC 155).
The pursuers had contracted the defenders to design and construct a hospital. The defenders engaged third parties as sub-contractors to install, inter alia, a hot water system. The pursuers raised a commercial action against the defenders seeking damages for breach of contract, claiming that the hot water pipework was structurally defective. The defenders sought relief from the third parties. Shortly before proof, the pursuers lodged a minute of abandonment and enrolled a motion seeking dismissal of the action on the basis of paying the full judicial expenses of the defenders. That motion was not opposed. The third parties enrolled a motion seeking dismissal of the action against it and an award of expenses against the defenders. The defenders opposed the third parties' motion, and enrolled a motion seeking payment of a sum equivalent to the third parties' expenses from the pursuers.
On 15 June 2016, the commercial judge: (1) allowed the pursuers to obtain dismissal of the action on the condition that full judicial expenses were paid to the defenders; (2) refused the defenders' motion for the pursuers to pay to the defenders the third parties' expenses; and (3) allowed the defenders to abandon the action against the third parties and to obtain dismissal on the condition that the defenders pay the third parties' full judicial expenses. The commercial judge refused leave to reclaim.
On 14 July 2017 the action and third-party proceedings were dismissed following payment of the accounts of expenses. The defenders reclaimed and sought review of the interlocutor of 15 June 2016. The pursuers and third parties lodged notes of objection to the competency of the reclaiming motion. The First Division repelled the pursuers' note of objection and sustained the third parties' note of objection ([2017] CSIH 70; 2018 SC 155).
The defenders argued that the Lord Ordinary erred in holding that the pursuers could not be liable for the third parties' expenses, as the pursuers were responsible for causing the defenders to litigate, the defenders acted entirely reasonably in convening the third parties and justice demanded that the defenders were not penalised for their successful defence of the action.
The pursuers contended that the Lord Ordinary's decision was a proper exercise of his discretion. As a general rule, the cost of litigation fell to be met by the party who had caused it and the pursuers had not directed a case against the third parties.
Held that: (1) a pursuer's liability is normally limited to the person whom he has convened as a defender, in the absence of unreasonable behaviour a pursuer is not liable in the ordinary course for the expenses of a party against whom he has directed no case (paras 17, 25, 36); (2) the expenses of third parties are generally only recoverable against the party who has directed a case against them (para 17); (3) the defenders could have raised a separate action against the third parties and sought to have it sisted pending resolution of the principal action thus minimising their exposure to an award of expenses, and by convening the third parties the defenders led the third parties to incur significant expense in defending a case against them made only by the defenders (paras 18, 19); (4) the commercial judge's exercise of discretion could not be faulted (paras 20, 22, 28); and reclaiming motion refused.
Observed that: (1) the Scottish courts should be very cautious when considering the practice of the English courts to find unsuccessful claimants liable for the expenses of all parties in a “string” of contracts where it could not be established what the practice of the English courts was (para 21); and (2) the English authorities appeared to establish no more than that a claimant could be liable for a third party's costs where the court considered it appropriate to do so in the exercise of its discretion (paras 21, 28, 30–33).
LE Catten Ltd v A Michaelides & Co Ltd [1958] 1 WLR 717 considered and
Albert Bartlett & Sons (Airdrie) Ltd v Gilchrist and Lynn Ltd 2010 GWD 21–407 applied.
The cause called before the First Division, comprising the Lord President (Carloway), Lord Brodie and Lord Malcolm, for a hearing on the summar roll, on 18 April 2018.
At advising, on 19 June 2018—
Lord President (Carloway)—
[1] This is a reclaiming motion against an interlocutor of the commercial judge, dated 15 June 2016, in relation to expenses following the pursuers' abandonment of the cause shortly before a proof. The issue is whether the judge correctly refused the defenders' motion to recover, from the pursuers, expenses subsequently taxed at £2.1 million, for which they had been found liable to a third party, against whom the pursuers had not directed a case.
[2] The background is set out in the opinion of the court ([2017] CSIH 70) which dealt with the competency of the reclaiming motion. In short, the pursuers sued the defenders for breach of contract in respect of what was alleged to be defective pipework in the construction of Hairmyres Hospital. The defenders introduced a third party (Carillion Construction Ltd) claiming relief from them in the event that the pursuers succeeded. The pursuers did not direct a claim against the third party. Shortly before the proof, the pursuers abandoned the action, using the procedure to ensure dismissal, rather than absolvitor, under RCS 29.1(1)(b) (Act of Sederunt (Rules of the Court of Session 1994) 1994 (SI 1994/1443 (S 69))); their expert having changed his mind on the central issue of whether the pipework constituted a ‘structural defect’.
[3] The third party moved for an award of expenses against the defenders. This motion was opposed by the defenders on the basis that the pursuers should be liable for all the expenses, including those of the third party. The defenders sought a direct award of the third party's expenses against the pursuers or an alternative finding that the pursuers should pay to the defenders ‘a sum equivalent’ to those expenses of the third party for which the defenders were found liable. The defenders proposed a third option whereby there would be a finding that some of the third party's expenses, such as those caused by the discharge of earlier proof diets, should be the subject of a direct award against the pursuers.
[4] By interlocutor dated 15 June 2016, the commercial judge, on the pursuers'...
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...& Property Consultants LLP [2010] BLR 179 at 181 [8]–[10], per Coulson J; Prospect Healthcare (Hairmyres) Ltd v Kier Build Ltd [2018] CSIH 43; Resorts World at Sentosa Pte Ltd v Kumar [2018] SGCA 58 at [28]. See also Jebsens (UK) Ltd v JR Inwards Ltd (Unreported, Eng. Ct App, Fox, Parker an......