Phoebe Crane

Typically, the award of judicial expenses follows success. However, this all changed in the context of personal injury and clinical negligence actions lodged on or after 30 June 2021 by the introduction of the rules of Qualified One-Way Costs Shifting (hereinafter referred to as QOCs). The pursuer will generally not be liable to pay defenders’ legal expenses, by virtue of the rules which were set down in Section 8 of the Civil Litigation (Expenses and Group Proceedings) (Scotland) Act 2018 and implemented by Act of Sederunt (Rules of Court of Session 1994, Sheriff Appeal Court Rules and Sheriff Court Rules Amendment) (Qualified One-Way Costs Shifting) 2021.

Despite implementation in 2021, the courts have not until very recently had an opportunity to adjudicate on the exceptional circumstances under Section 8 (4) of the 2018 Act in which a defender may recover legal expenses.

The February 2023 case of Beverly Gilchrist v Iain Livingston, Chief Constable Police Scotland (Unreported) and the first reported case dealing with the issue in December 2022 (Lennox v Iceland Foods Ltd [2022] SC Edin 42) shed some light on how the court may treat defenders’ attempts to claim expenses following successful defence of a claim.

Lennox v Iceland Foods

In the case of Lennox, raised in the All-Scotland Sheriff Personal Injury Court, the defender successfully defended a personal injury action in which the pursuer had tripped over several shopping baskets and sustained injury. The action was pled on the basis that the defender had failed to adhere to its own policy for removing hazards but the pursuer omitted to lead evidence of any policy. The pursuer relied on CCTV footage to substantiate the claim that the defender had breached the Occupiers’ Liability (Scotland) Act 1960 by failing to take reasonable care to remove hazards from the store.

Following their success, the defender attempted to recover legal expenses from the pursuer on two grounds. The first being that the pursuer behaved in a manner which was manifestly unreasonable in connection with the claim or proceedings (Section 8 (4) (b)). The second ground was that the pursuer conducted the proceedings in a way which amounts to an abuse of process (Section 8 (4) (c)).

The defender’s contention was that the pursuer had no chance of success and no merit in bringing proceedings based on the lack of positive evidence led to support her averments. The pursuer averred that the court should follow the Wednesbury test for unreasonableness which is conduct that is so unreasonable that no person acting reasonably would have done so in that way. However, Sheriff Fife determined that instead Section 8 (4) (b) plainly means conduct that is “obviously unreasonable”.

In making a finding against the defender, Sheriff Fife opined that the pursuer did not require to lead evidence beyond that of her own and her daughter’s evidence to succeed with the claim. Ultimately a different outcome could have been determined based upon the CCTV evidence. It was said that there is a distinction between advancing an argument that the court does not accept and advancing an argument that is bound to fail and therefore it had not been manifestly unreasonable to pursue the case. Sheriff Fife found the defender’s motion for recovery of expenses to be, “ill conceived”. It was impressed upon the defender that it is a high test to establish an exception to the pursuer’s protection afforded by QOCs.

It was said that the allegation of abuse of process is of a very serious nature and considered whether the action undermines the integrity of the court’s procedures. An abuse of process can arise when an action has proceeded when there is no, or substantially no chance of success.

Gilchrist v Iain Livingston, Chief Constable Police Scotland

The recent case of Gilchrist considered whether the defender could be awarded expenses on the basis that the pursuer had made fraudulent representation (Section 8 (4) (a)) and was manifestly unreasonable (Section 8 (4) (b)) in pursuit of the claim. Sheriff Campbell adopted Sheriff Fife’s approach in Lennox towards defining manifestly unreasonable behaviour and concluded that the threshold had not been met.

When considering whether there had been fraudulent representation, Sheriff Campbell adopted Professor McBryde’s analysis of fraud, which is making a straight lie, with the knowledge that the statement is a lie. Whereas making a false statement with the honest belief that it is true, is not fraud. Again, it was reiterated that the threshold for fraudulent representation is a high one. It would have to be shown that the pursuer or his agents acted intentionally to mislead the court. As the pursuer was not found to be incredible or that her evidence was not deliberately untrue, the threshold was not met.

The cases clearly provide that the exceptions under section 8 (4) of the 2018 Act will be hard to establish. Defenders and insurers should be mindful that the pursuer’s QOCs protection is only likely be set aside in very limited circumstances. Each case will be determined on its own facts and defenders should seek legal advice to duly consider the grounds for establishing an exception before making a decision to seek expenses in their favour.

Phoebe Crane is a solicitor in the clinical defence team at BTO Solicitors LLP