Blog: New legislation represents fundamental change for civil litigation

Garry Ferguson

Garry Ferguson, member of the Forum of Insurance Lawyers committee and partner at BTO Solicitors, writes on the new Civil Litigation Bill.

On 1 May 2018, the Scottish Parliament unanimously passed the Civil Litigation (Expenses and Group Proceedings) (Scotland) Bill. Its provisions will be brought into force by the Scottish Parliament following Royal Assent. The present intention of the Scottish Parliament is to commence a phased implementation of the Bill from the summer of 2018.

The implementation of the Bill represents the conclusion of a long process, initiated in 2009 by Lord Gill’s Scottish Civil Court Review.

The provisions of the Bill have been the subject of much discussion and debate dating from the publication of Sheriff Principal Taylor’s Review of Expenses and Funding of Civil Litigation in Scotland in October 2013.

The Bill introduces significant changes to the funding of civil litigation in Scotland.

For the first time, solicitors, advocates and claims management companies in Scotland will be able to enter into enforceable agreements, (damages based agreements or DBAs) with their clients to take a share of any damages awarded.

The Bill also introduces qualified one way cost shifting (QOCS) in favour of the party pursuing a claim for the first time in Scotland. This introduction means, that a pursuer, even if unsuccessful, will no longer be liable for a defenders’ costs provided that they have conducted the litigation in an appropriate manner. This applies to all defenders, including those without the benefit of insurance.

A successful defender in a personal injury claim will not be able to recover costs from an unsuccessful pursuer unless that pursuer or his or her legal representative:

  1. makes a fraudulent representation or otherwise acts fraudulently in connection with the claim or the proceedings (proof on the balance of probabilities)
  2. behaves in a manner which is manifestly unreasonable in connection with the claim or the proceedings; or
  3. otherwise, conducts the proceedings in a manner that the court considers amounts to an abuse of process.

The exceptions to QOCS in Scotland are more prescriptive than the equivalent provisions contained within the MOJ Civil Procedure Rules. It remains to be seen how the Scottish Courts will interpret these definitions, particularly given the recent decision of the Inner House, where the Court held that exaggeration of a claim, even gross exaggeration, could not be considered to be fraudulent.

During the Bill’s progress it was not anticipated that there would be any departure from the above proposals, as has proven to be the case. However, debate did focus upon the issue of future losses and whether pursuer’s agents in terms of a DBA, ought to be permitted to take a percentage of any sum awarded for future losses. Proposed amendments that any such percentage be capped were ultimately not accepted and the provision as originally recommended by Sheriff Taylor, entitling pursuer’s agents to recover a percentage of such future losses was adopted.

The fine detail of implementation of the Bill will be the subject of secondary legislation in due course. It is anticipated that this will include the setting of a percentage scale of the maximum amount which pursuer’s agents can charge under DBAs. This secondary legislation will also address matters such as the inter-action of QOCS with tenders (defenders’ judicial offers) and, separately, abandonment of a case by a pursuer, which aspects are presently being considered at committee level of the Scottish Civil Justice Council.

The Bill represents a fundamental change for those involved in civil litigation. The effects will be significant and in recognition of that, the Bill also makes provision for a review of its operation to be undertaken as soon as practicable after a period of five years.