15 March 2018
The Justice Committee reported at the turn of the year on the Civil Litigation (Expenses and Group Proceedings) (Scotland) Bill (“the Bill”).
The Bill was presented to Parliament last summer. Its purpose was to address the perceived “access to justice” problem for Pursuers in Scotland. Following that the Bill then went to the first stage of debate on 16 January 2018. The Bill passed the first stage of the legislative process without the need for debate. It has now moved onto stage two where proposed amendments to the Bill are presently being considered. The next stage (stage 3) will be for the Bill to be considered by Parliament as a whole.
Part 1 of the Bill seeks to introduce damaged based agreements and speculative fee arrangements on a capped scale arrangement.
Part 2 of the Bill concerns expenses in civil actions. This is particularly pertinent for the insurance industry. In particular, this part of the Bill recommends that Qualified One Way Cost Shifting (QOCS) be implemented in personal injury claims to mirror the position in England and Wales.
The key points from the report are as follows:
Capping Success Fees and Damages Based Agreements
The Committee commented that the capping of success fees should apply to the cumulative total of all deductions whether made by solicitors or by a Claims Management Company. The Committee was "concerned" about deductions being made from future losses under a Damages Based Agreement and has asked the Scottish Government to consider whether future losses should be ring-fenced. If not, the Committee has recommended that the court must have the power to make a Periodical Payment Order, with reference given to the intended introduction of such powers in the Damages Bill currently proceeding through the legislative process before the Scottish Government.
QOCS
This is supported by the Committee. However, it has recommended that the effect on QOCS of a Pursuer failing to ‘beat’ a Tender (equivalent to a Part 36 offer) should be set out in the Bill, as should the effect of a Pursuer having their case summarily dismissed.
The Committee proposes that the Bill be amended to state clearly that the Pursuer would lose QOCS protection where they fail to beat a Defender’s Tender or if the Pursuer’s claim is summarily dismissed. The Bill does not directly deal with Tenders. Further consideration will have to be given to any proposed amendments to the Bill in this respect and any specific limit on the Pursuer’s expenses in the event they fail to beat the Defender’s Tender.
The Committee also raised the issue of fraudulent claims and claims lacking any real merit. Their suggestion was that sufficient safeguards should be installed to protect against these consequences, such as a ban on referral fees.
QOCS where the Defender is uninsured
The Committee has asked the Scottish Government to consider restricting the use of QOCS in respect of uninsured defenders or public bodies or by applying the same approach to an award of expenses as is used on individuals who are funded by Legal Aid.
Extending the Compulsory Pre-Action Protocol Limit
The Committee recommends that the Scottish Compulsory Pre-Action Protocol limit for injury claims be increased from £25,000 to £100,000 in order to reflect the jurisdiction of the All Scotland Sheriff Personal Injury Court.
Third Party Funding
The position is unclear on the definition of what is “Third Party Funding”. There requires to be a more specific and accurate definition of Third Party Funders who may ultimately be liable for an award of expenses. The Committee has, however, offered clarification that Third Party Funders does not cover Trade Unions and staff associations or to solicitors acting under a success fee arrangement.
Class Actions
The Committee has welcomed the introduction of group procedure and the enabling of public funding to be made available for group proceedings.
Summary
Whilst the Committee recommends that the general principles of the current Bill are approved, there is also a recommendation from the Committee that the Bill should not be enacted into law until the UK Government has passed the Financial Guidance and Claims Bill which will establish a new financial guidance body and introduce changes to the regulation of Claims Management Companies in Scotland.
Contact
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Omar Yassin |