Qualified One Way Costs Shifting (QOCS)

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Qualified One Way Costs Shifting (QOCS)

Published 24 marzo 2021

The Civil Litigation (Expenses and Group Proceedings) (Scotland) Act 2018, and more particularly, Section 8 will be commenced on 30 June 2021, bringing in the most significant changes to the way costs are dealt with in personal injury actions in Scotland.

Although it was widely anticipated that the provisions would be brought into force in December 2020, this was delayed. The Act provides that any further exceptions to the application of QOCS will be made by Statutory Instrument and we anticipate some further minor exceptions to the application of QOCS with the introduction of the Rules that will accompany the Act, most likely later this summer.

The new Expenses Rules will change the landscape for expenses in personal injury actions. Currently expenses are awarded at the discretion of the court and the normal rule is that expenses are awarded to the successful party.  The introduction of QOCS will change that approach and the overriding intention of the Act is that the Court will not make an award of expenses against the person bringing the action.  The Rules will only apply to personal injury actions but will also include fatal claims. The costs protection will be conferred so long as the Pursuer/Claimant and their representative have conducted the litigation in an appropriate manner.  Costs protection will apply to the initial action and also to any Appeal. 

In what circumstances can the costs protection be lost?

Costs protection will be lost in the following circumstances:-

  • If the Claimant or the legal representative makes a fraudulent misrepresentation or otherwise acts fraudulently in connection with the claim;
  • If the Pursuer or their legal representative behaves manifestly unreasonably in connection with the claim; or
  • If the Pursuer or their legal representative commits an abuse of process.

It is also anticipated that the rules that will accompany the Act will further extend the exceptions to QOCS in circumstances where Pursuer fails to beat a Tender or reasonably delays in accepting a Tender and possibly also where the Pursuer abandons the case.

The Act has already introduced a Statutory Framework for Success Fee arrangements, commonly known as damage based agreements, with the Scottish Ministers having the power to cap the level of the success fee. 

The reform of expenses and the funding of civil litigation in Scotland has been under review since 2012.   The Act seeks to implement a number of Sheriff Principal Taylor’s findings following his review of expenses and funding of civil litigation in Scotland, which reported in January 2014.   The overarching aim of the review was to widen access to justice in Scotland and QOCS, along with the introduction of success fee agreements, will make it easier for those sustaining injury to do that.

What does this mean for Defenders?

In general  Defenders and their insurers will be unable to recover expenses where the Pursuer’s case fails, except in very limited circumstances. Unreasonable conduct on the part of the Pursuer or their representative will not necessarily result in the loss of costs  protection.  The conduct must be “manifestly unreasonable”.  The introduction of the new Expenses Rules are likely to result in an increase in satellite litigation, similar to the experience in England following the introduction of QOCS there, and will focus on the circumstances in which the costs protection will be lost.

It also important to highlight that Scots Law does not recognise the principle of fundamental dishonesty.  Lord Kinclaven’s decision in Grubb v Finlay [2018] CSH29 illustrated a willingness to penalise a Pursuer who grossly exaggerated the extent of their claim but the court was not willing to follow the English principle of fundamental dishonesty, although the Pursuer’s entitlement to recover costs was severely curtailed.

We anticipate the introduction of QOCS will mirror many of the behaviours observed when this was introduced in England and Wales. Although the precise terms of the Rules will differ, with our dedicated in-house costs team and our in-house intelligence tools, we are able to utilise a large volume of data gathered around the operation of QOCS to help devise appropriate general and targeted strategies for clients to utilise, to minimise the impact of these forthcoming changes.

Whilst we anticipate an increase in litigation in Scotland as a consequence of increased satellite litigation around the circumstances in which the costs protection will be lost, we are working with clients to assist with the implementation of appropriate strategies to minimise the impact this change will have.

For more information or advice, please contact a member of DAC Beachcroft Scotland.

Authors

Louise Gallagher

Louise Gallagher

Glasgow

0141 223 8561

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