Today, Qualified One-Way Costs Shifting (QOCS) comes into force in Scotland. Scottish QOCS applies to all personal injury claims, including all disease, fatality and clinical negligence claims, for which litigation is issued in Scotland from today.
The one-way costs shift brought about by QOCS should be considered as giving general protection to pursuers against an adverse award of costs in the event their claim fails. There are several broad qualifications to this which, if made out, can in effect reinstate the usual “loser pays” approach to costs. To re-cap, the qualifications (bold emphasis added) are:
- Where the pursuer or their legal representative makes a fraudulent representation or otherwise acts fraudulently in connection with the claim or the proceedings,
- Where the pursuer or their legal representative behaves in a manner which is manifestly unreasonable in connection with the claim or the proceedings,
- Where the pursuer or their legal representative otherwise conducts the proceedings in a manner that the court considers amounts to an abuse of process,
- Where the pursuer fails to obtain an award of damages greater than the sum offered by way of a tender lodged in process (a tender is broadly equivalent to a defendant’s Part 36 offer when made during litigation),
- Where there is unreasonable delay on the part of the pursuer in accepting a sum offered by way of a tender lodged in process,
- Where the pursuer abandons the action or the appeal whether under court rules or at common law, or
- Where, in the limited circumstances that apply, the pursuer’s case is summarily dismissed by the court because it has “no real prospect of success” and “there exists no other compelling reason” not to grant summary dismissal.
However, even where one or more of the qualifications is made out, judicial discretion will determine whether an award of costs is made against a pursuer in any particular case. It should be noted that the defender will need to make a specific application to this effect.
Precision will be particularly important in making such an application on the basis of “a fraudulent representation”. Bearing in mind that this term is not defined in the Scottish legislation, the representation at issue should be identified precisely with cogent reasoning given on why the representation should be considered “fraudulent” (a matter which will decided on the civil standard of proof).
It is important to note the differences in the new QOCS regime in Scotland compared to that introduced in England & Wales in 2013. In particular:
- Unlike in England & Wales, Scotland has no statutory provision on “fundamental dishonesty” so those words are not used for the purposes of the Scottish honesty-related qualification to the costs shift.
- Also unlike England & Wales, mesothelioma claims are not excluded from QOCS protection in Scotland.
- When QOCS was implemented in England & Wales, fixed recoverable costs were introduced for a wide range of moderate value injury claims but there are no such government proposals for Scotland.
- The introduction of QOCS to England & Wales saw the removal of recoverability between the parties of conditional fee agreement success fees and after-the-event insurance premiums. Neither has ever been recoverable in Scotland and that will not change with the introduction of Scottish QOCS.
It is also important to keep in mind that the two Scottish tender-related qualifications are blunted by the statutory cap on any award of costs in favour of a defender against a pursuer at 75% of the damages awarded to the pursuer. This blunting brings out further points of difference between Scottish QOCS and QOCS in England & Wales.
In the latter jurisdiction, the amount of costs recoverable by a defendant whose Part 36 offer is accepted late or is not beaten at trial are not artificially capped at 75% of damages: the only limit is that they must not exceed the total damages and interest awarded to the claimant. In Scotland it is clear that there is to be no “set off” of pre-tender costs awarded to a pursuer against post-tender costs awarded to a defender in addition to the cap at 75% damages. The question of “set off” remains to be authoritatively resolved in England & Wales and, by coincidence, is under consideration today by the UK Supreme Court in Ho v Adelekun (link here).
As the Scottish QOCS story begins to unfold in practice, readers may wish to reflect not only on this blog but also on our previous commentaries, brought together here for convenience:
- Vlog of 8 June 2021, summarising the legislative phase of, and horizon-gazing on, Scottish QOCS, link here.
- Blog of 24 May 2021 on certain policy decisions for certain of the qualifications to the costs shift, link here.
- Vlog of 12 May 2021 on the knowns and unknowns of Scottish QOCS at that time, link here.
- Blog of 13 April 2021 on certain developing points on Scottish QOCS at that time, link here.
- Blog of 3 February 2021 on the likely timing for Scottish QOCS, link here.
- Blog of 8 June 2020, with some initial comparative points, link here.
Readers should also feel free to contact me to request a copy of a paper which we have produced on Scottish QOCS in which questions about the meaning and operation of the qualifications noted above are considered in further detail.