The Civil Litigation (Expenses Group) Proceedings (Scotland) Bill was introduced into the Scottish Parliament on 1 June 2017 and received Royal Assent on 5 June 2018. The Scottish Government has started to implement this Act however; full implementation of the Act is expected to take a number of years.
This Act introduces for the first time in Scotland what is called Qualified One-Way Costs Shifting (QOCS – pronounced “quawks”) . QOCS looks to address the asymmetric relationship between individuals in personal injury claims and their opponents, who are often large insurance companies. In Sheriff Principal Taylor’s Review of Expenses and Funding of Civil Litigation in Scotland in 2013, Sheriff Principal Taylor stated “in many cases there is a true David and Goliath relationship”.
The idea behind the introduction of QOCS is to work in the Pursuer’s favour. Under the current model of “expenses follow success”, if a Pursuer is unsuccessful in their court action they have to pay their own legal costs and the legal costs of their opponents.
QOCS provides that a Pursuer will not be liable for a Defender’s costs provided they have conducted litigation in an appropriate manner. It will apply to all Defenders, whether they are insured or not. The exceptions to the general rule, under S8(4) of the Act include:
- the making of a fraudulent representation or otherwise acting fraudulently in connection with the proceedings;
- behaving in a manifestly unreasonable manner in connection with the claim or proceedings;
- conducting the proceedings in a manner which the court considers amounts to an abuse of process.
The Scottish Government alongside the Scottish Civil Justice Council have recognised that it is necessary to provide further exceptions to the cost protection. Such as in cases where a Pursuer fails to beat a judicial tender lodged by a Defender. The Personal Injury Committee of the Scottish Civil Justice Council reviewed this issue in October 2018 and recommended that there should be an exception to cost protection for post tender expenses but that the Pursuer’s liability in these expenses should be capped at 75% of the damages awarded.
The introduction of this Act has left many unanswered questions for both solicitors and Insurance Companies. Many of these unanswered questions, particularly in relation to fraudulent claims exception, will only become clear once litigation comes before the Courts or through the implementation Secondary Legislation.