In 2009, Lord Gill’s review of the civil courts marked the beginning of a long process to overhaul civil litigation in Scotland. That process reached a significant milestone in June this year when The Civil Litigation (Expenses and Group Proceedings) (Scotland) Bill received Royal Assent.
While much of the Act is not yet in force and details are yet to be defined by the Scottish Justice Council, it has the potential to make the process of defending claims more difficult for all public bodies in Scotland, including local authorities.
Perhaps the most important change in the Bill is the introduction of Qualified One way Costs Shifting (QOCS). This means that, except for in specified circumstances, even an unsuccessful claimant will not be liable to pay the defender’s costs.
Until the rules are completed it is not known how QOCS will operate in practice. In particular, what will happen when a defender offers a sum of money to a claimant and the claimant fails to achieve more than that amount when the case proceeds to a full hearing? Likewise, there is no provision for cases in which the claimant chooses not to proceed with his claim or it is dismissed by the court.
A fraudulent claim will not attract the protection of QOCS and for that reason the definition of the term was a controversial topic during scrutiny of the Bill. It was ultimately agreed that a claim will be exempt where the claimant makes a “fraudulent misrepresentation or otherwise acts fraudulently in relation to the claim or proceedings”. This is important because the Inner House (Scottish Civil Appeal Court) recently ruled that a claim, however exaggerated, cannot be termed “fraudulent” if there is something genuine at its core.
It is likely that the lack of sanction for unsuccessful claims will result in an increased volume of claims, which was the purpose of the legislation. However, the new system may also encourage spurious claims. It has been argued that there would be no purpose in making such claims as they would be unsuccessful, yet that must be considered alongside the fact that a defender may decide not to proceed with their defence – even a strong one - because the costs, even of winning, are too great. It is likely that more claims will be settled on purely economic grounds and, for that reason, the attraction of raising a fraudulent or borderline claim is increased.
For defenders for whom defending a claim is motivated not only by a desire to save the cost of the claim but also to protect reputation, the legislation will increase the cost of civil claims as the defender’s costs will rarely be recovered.
Although the exact details of what will happen when the Act is fully in force are not yet established, it is likely that it will become more difficult, both in terms of complexity and cost, for public bodies to defend claims made against them. They may also find that they receive more claims. Claims strategies will require review in light of the legislation and it is essential that anyone handling claims on behalf of public bodies is aware of the new system and its implications.
Kate Donachie is a managing associate in Brodies LLP’s litigation practice