Jeroen Van Klaveren v Servisair UK Limited [2009] CSIH
37
Insurers often make pre-litigation admissions of liability when
attempting to negotiate settlement. If discussions collapse - or if
it transpires the injury is much worse than expected - are insurers
bound by their admission? The Inner House - the Scottish Court of
Appeal - revisited the law in Jeroen Van Klaveren v Servisair
UK Limited.
Mr Van Klaveren was employed as a baggage handler by the
defenders. On 12 August 2004 he was unloading an item of cargo
which was to be placed in a special container for explosives or
radio active materials. He alleged that he suffered from
psychological and physical symptoms after inhaling chemical
fumes.
He intimated his claim to the defenders' insurers on 28 July
2005. After an initial exchange of correspondence, the pursuer's
solicitors intimated that, if progress was not made within the next
four weeks, they could see no alternative to raising proceedings.
The defenders' insurers responded on 23 March 2006 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 your costs in
accordance with the Civil Procedure Rules."
The pursuer's solicitors subsequently commissioned a report from
a consultant psychiatrist and raised proceedings in August 2007.
The defenders' solicitors repudiated liability. They stated that
the letter of 23 March 2006 was written under the mistaken belief
that early compliance with English procedures was needed and
without the benefit of a fuller investigation. The pursuer's
solicitors argued that the letter of 23 March 2006 constituted a
binding obligation on behalf of the defenders and they were liable
for the consequences of the accident.
The court at first instance rejected the defenders' argument
that the letter disclosed a mere extra judicial admission and not a
binding contract. The court held that the only reasonable
interpretation of the parties' correspondence was an agreement in
which liability was accepted. However, the Court of Appeal held
that the letter was neither a bilateral agreement to the effect
that the defenders would accept liability nor a unilateral
obligation to accept liability, but was intended only as an extra
judicial admission which could be withdrawn at any time prior to
the finalising of the pleadings. The court stated:-
"An extra judicial admission is made in the course of the
preparation and presentation of the parties' cases. At that stage
the facts have not been conclusively determined, and investigation
may disclose additional information which indicates that the
existing view of the facts is incorrect. Similarly, the opinion of
a party's legal advisers on the law can change; that may occur as a
result of the decisions in other court cases or may simply be the
result of reflection on the case which results in the modification
of the legal advisers' views. In similar fashion, expert opinions
may change as the case develops. In these circumstances, it would
be unreasonable to hold a party to an admission made at a
relatively early stage in the case, before it had been fully
investigated and before the other party's final position was
known."
The court considered whether the letter of 23 March 2006 could
constitute a bilateral agreement or unilateral obligation. Under
Scots law a contract can be formed without consideration and so a
bilateral agreement can be binding if the circumstances demonstrate
that this was the parties' intention. Equally, Scots law allows a
party to enter into a binding unilateral obligation. On the facts,
however, both arguments failed.
First, the wording of the letter amounted to a straightforward
admission of liability with no suggestion that it required
acceptance. The pursuer's solicitors did not say anything in the
subsequent correspondence that could be construed as an acceptance
of any offer. Nor was there any wording to suggest that the
defenders were undertaking a binding obligation to pay damages.
Instead, the letter left open two critical matters, namely the
assessment of damages and expenses.
The court noted that there is a utility in allowing parties to
resile from pre-litigation admissions. An admission of liability is
normally provisional and is open to modification if new material
emerges.
The decision confirms the statements of law on extra judicial
admissions of liability set out in the earlier decision of
Gordon v East Kilbride Development Corporation 1995 SLT 62
and highlights the difficulties that face pursuers' solicitors if
they seek to rely on an extra-judicial admission of liability in a
claim which has progressed outside the pre-action protocol.
Contributed by Calum Mathieson