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You are here: BAILII >> Databases >> Scottish Law Commission >> Scottish Law Commission (Discussion Papers) >> Interest on Debt & Damages [2005] SLC 127(9) (DP) (January 2005) URL: http://www.bailii.org/scot/other/SLC/DP/2005/127(9).html Cite as: [2005] SLC 127(9) (DP)

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Part 9      Tenders

9.1      As a general rule, a pursuer who obtains decree for payment of a sum greater than an amount tendered by the defender is entitled to an award of the whole expenses of process. Conversely, if the pursuer fails to beat the tender, an award of expenses from the date of the tender will normally be made in favour of the defender on the ground that the pursuer, by failing to accept the tender has unnecessarily prolonged the litigation. The Interest on Damages (Scotland) Act 1958, section 1(1B)^[1] provides as follows:

"For the avoidance of doubt, it is hereby declared that where, in any action in which it is competent for the court to award interest under this Act, a tender is made in the course of the action, the tender shall, unless otherwise stated therein, be in full satisfaction of any claim to interest thereunder by any person in whose favour the tender is made; and in considering in any such action whether an award is equal to or greater than an amount tendered in the action, the court shall take account of the amount of any interest awarded under this Act, or such part of that interest as the court considers appropriate."

So far as we are aware the principle underlying this provision has not led to any difficulties. In practice, tenders are invariably calculated to take account of interest accrued to the date of the tender.

9.2      Section 1(1B) of the 1958 Act, quoted above, applies only to awards of interest "under this Act", ie to awards of interest on damages. We see no reason why its scope should not be extended to cover awards of interest on sums other than damages. We invite comment on the following proposal:

44. The principle to which section 1(1B) of the Interest on Damages (Scotland) Act 1958 gives effect should be retained and extended to awards of interest on sums other than damages.

9.3      An important point of construction of section 1(1B) arose in the case of Manson v Skinner.^[2] The pursuer was awarded damages of £2,800 for personal injuries. A tender of £3,000 had been lodged along with the defences. At that time the value of the award, with interest to date, would have been £2,992. By the date of decree the principal award together with interest amounted to £3,047. In the Second Division, section 1(1B) was described as "abridging" the general rule that a pursuer who obtains an award greater than the amount of the tender is entitled to the whole expenses of process. Delivering the opinion of the court, Lord Justice Clerk Gill observed:^[3]

"The concluding words of [section 1(1B)] are clearly directed to a case such as this where the value of the award ultimately made exceeds the amount of the tender by reason only of the accrual of interest. If the pursuer had accepted the tender when it was made, she would have been at least as well off as she ultimately was. In our view it is right to say in such a case that the refusal of the tender unnecessarily prolonged the proceedings to no purpose. These are the circumstances that Parliament seems to have envisaged in enacting s 1(1B)."

The defender was accordingly held entitled to expenses from the date of the tender.

9.4     The decision in Manson v Skinner provides an authoritative interpretation of section 1(1B) which seems to us to provide a fair and reasonable result. It is noteworthy that it has taken until 2002 for this construction to emerge. A contrary interpretation by Lord Morison in Hodge v British Coal Corporation (No 3)^[4] was disapproved by the Inner House in Manson v Skinner. The sheriff principal in Manson v Skinner had decided the point in the pursuer's favour. In these circumstances we wonder whether the wording of section 1(1B) requires to be amended in order to make it more transparent in the light of the construction adopted in Manson v Skinner. We invite views on the following question:

45. Should section 1(1B) be re-enacted with amended wording in order to make clear that the statutory intention is in accordance with the interpretation given to the existing section by the Inner House in Manson v Skinner?

Note 1   As substituted by the Interest on Damages (Scotland) Act 1971.    [Back]

Note 2   2002 SLT 448.    [Back]

Note 3   At 450.    [Back]

Note 4   1992 SLT 1005.    [Back]