One-way Costs Shifting (QOCS): a developing story north & south of the border

Scotland

In a letter of 13 May 2020 to the-then President of the Law Society of Scotland, the Lord President – writing as Chair of the Scottish Civil Justice Council – anticipated that QOCS would be in force in Scotland “no later than winter 2020.”

QOCS changes the idea that costs in litigation usually follow the event (also known as ‘the ‘loser pays’ principle). Under QOCS, a successful defender in a personal injury claim (defined to include disease and fatal cases) will not generally be awarded costs against an unsuccessful pursuer – hence ‘one-way’ – but costs may be awarded by exception – hence ‘qualified’ – if the pursuer has acted or behaved in inappropriate ways specified in costs legislation and in rules of court.

QOCS is intended to address a perceived need to enhance access to justice and to prevent potential liability for the other side’s costs being a barrier to individuals bringing cases. It was a key recommendation of the Jackson Review of Civil Litigation Costs in England which was published in 2009 and implemented in 2013.

Its Scottish origin is Sheriff Principal Taylor’s 2013 Review of Expenses and Funding of Civil Litigation in Scotland. This review postulated ‘the defenders in virtually all personal injury actions are, in reality, insurers. There is thus what Lord Justice Jackson described as an asymmetric relationship between the pursuer and the defender. In many cases there is a true David and Goliath relationship.’ To address this perceived imbalance of power or inequality of arms, the review concluded ‘there should be qualified one way costs shifting, whereby an unsuccessful pursuer will not be liable for the expenses of a defender except in exceptional circumstances.

The necessary legislation – The Civil Litigation (Expenses and Group Proceedings) (Scotland) Act 2018 – was enacted five years after the Taylor review and sets out three circumstances in which the one-way costs shift is to be dis-applied. Those are where the pursuer, or his or her legal representative:

  • makes a fraudulent representation* or otherwise acts fraudulently in connection with the claim or the proceedings, [*to be proven on the balance of probabilities]
  • behaves in a manner which is manifestly unreasonable in connection with the claim or the proceedings, or
  • otherwise, conducts the proceedings in a manner that the court considers amounts to an abuse of process.

The Scottish Civil Justice Council continues to work on detailed rules of court which will set out additional qualifications to the costs shift and also regulate certain aspects of the operation of QOCS in practice. Notably, the rules will address the interaction of QOCS with tenders (defenders’ judicial offers) and, separately, abandonment of a case by a pursuer.

Differences compared to England & Wales

QOCS has been an integral part of the English costs rules since the Jackson reforms were implemented as a whole on 1 April 2013. The underlying policy justification for QOCS south of the border – access to justice and a perceived imbalance of power because of the asymmetric nature of personal injuries litigation – are the same as for Scotland, but there are significant differences in application and detail.

One subtle but important difference of principle is that the English regime of QOCS does not prevent costs awards being made against unsuccessful claimants. Instead, it puts in place controls against their enforcement by defendants. This means that costs orders in both directions may continue to be made during the life of a claim, which raises the prospect of setting them off against each other at the conclusion of the case. Oddly, however, the English QOCS rules are silent on setting off costs against costs and refer only to setting off against damages and, some seven years on, the point has yet to be judicially resolved.

On matters of detail, the ‘fraud’ point in England turns on the claim being found to be “fundamentally dishonest”. Scotland has no direct statutory equivalent, hence the apparently similar Scottish qualification uses the single word “fraudulent”, perhaps suggesting there might be no inquiry as to the degree of the fraud? It remains to be seen how the Scottish courts will tackle the practical interpretation of “fraudulent representation” in this context as it is not defined further in the legislation.

The English rules do not have a qualification for “manifestly unreasonable” litigation behaviour. Although unreasonable conduct is used in other areas of costs, for QOCS purposes it was regarded as being a wide formulation which would risk satellite litigation. The much narrower test that the claimant had “disclosed no reasonable grounds for bringing the proceedings” was adopted instead. The two regimes appear however to be the same in so far as in both the costs protection afforded by QOCS is lost where the court finds there is an abuse of process.

Conclusion

In the absence of widespread civil legal aid, the adoption of QOCS in both jurisdictions is a practical solution to restrict the exposure of injured claimants/pursuers to the costs of losing their case. In general, both jurisdictions have sought to implement frameworks in which those who play by the rules can expect to be protected. What will be revealed when the QOCS provisions for Scotland are published is just how different these rules will be.


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Fiona McEwan, Associate, BLM

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Alistair Kinley, Director of Policy & Government Affairs alistair.kinley@blmlaw.com

 

Bill to introduce DBAs, QOCS and Group Proceedings to Scotland passed by Scottish Parliament

On 1 May 2018, in an important development for future litigation in Scotland, the Scottish Parliament passed the Civil Litigation (Expenses and Group Proceedings) (Scotland) Bill. Its provisions will be brought into force by the Scottish Government following Royal Assent. The Scottish Government’s present intention is for phased implementation from Summer 2018, such that different provisions may be brought into force at different times. Continue reading

Extending the scope of QOCS protection

The basis of QOCS is that the protection it affords against adverse costs applies to unsuccessful claims for personal injuries. These are conventionally argued in negligence against the defendant whose conduct caused the accident e.g. the negligent driver or employer. But should a statutory claim against an organisation which was not the tortfeasor be regarded as a claim for damages for personal injuries protected by QOCS?

Continue reading