The Act of Sederunt (Rules of the Court of Session 1994, Sheriff Appeal Court Rules and Sheriff Court Rules Amendment) (Qualified One Way Cost Shifting) 2021 were laid before the Scottish Parliament on 1 June 2021 and will take effect on 30 June 2021 and alongside Section 8 of the Civil Litigation (Expenses and Group Proceedings) (Scotland) Act 2018, will bring in the most significant changes to the way costs are dealt with in personal injury actions in Scotland in recent time.

The new expenses rules will change the landscape for expenses and 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. The overarching aim of this change is to widen access to justice for those bringing personal injury actions in Scotland. The rules will not only apply to personal injury actions but will also include fatal claims. Section 8 of the Civil Litigation (Expenses in Court Proceedings) (Scotland) 2018 provides costs protection in circumstances where the pursuer and their representative have conducted litigation in an appropriate manner. Protection will apply to the initial action and also to any Appeal.

In What Circumstances will the Cost Protection be Lost?

Section 8 (4) of the 2018 Act provides for three exceptions to the cost protection:-

• If the claimant or their 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.

The rules provide four further scenarios where cost protection may be disapplied:-

• Where the pursuer fails to beat a minute of tender (broadly equivalent to a part 36 offer);
• Where the pursuer has “unreasonably delayed” in accepting a minute of tender;
• Where the pursuer seeks to abandon the action by way of decree of dismissal or decree of absolvitor in favour of the defender;
• Where the defender has applied for and obtained a summary decree against the pursuer and is granted decree of absolvitor or dismissal.

The rules further provide how expenses will be calculated where the pursuer fails to beat a tender or unreasonably delays in accepting a tender. The rules provide that the pursuer’s liability for expenses will not exceed the amount of expense the defender has incurred after the date of the tender and that the pursuer’s liability on expenses is capped at 75% of the damages awarded to the pursuer.

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 a number of limited circumstances. Unreasonable conduct on the part of the pursuer or their representative will not necessarily result in the loss of cost protection.

The conduct must be “manifestly unreasonable”.

Defenders will welcome the additional exceptions provided by the rules where properly valued early tenders will still provide the best protection against unnecessary costs.

With the introduction of such significant changes to the expenses regime, there will be a number of issues that the Courts will require to resolve. What will constitute an “unreasonable delay” in accepting a tender will no doubt be the subject of further argument, as to whether the 75% cap on expenses should be gross or net of CRU. We anticipate an increase in litigation in Scotland as a consequence of the introduction of qualified one way costs shifting and satellite litigation around circumstances in which the cost protection will be lost.

We seek solutions for our insurance customers to minimise their indemnity spend. To that end we will be running a series of seminars examining the new legislation – look out for dates for these. Drawing upon the experience of our English Costs Team who have lived with QOCS for the past 7 years we will discuss and identify risks and devise tactics and solutions to counter the likely behaviour of those seeking to manipulate the new regime to their benefit.

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