03 June 2021

Until 1 June 2021, it has not been clear how the new system of qualified one-way cost-shifting (or QOCS), which is due to come into force on 30 June 2021, would work in practice. Yesterday, the Act of Sederunt (Rules of the Court of Session 1994, Sheriff Appeal Court Rules and Sheriff Court Rules Amendment) (Qualified One-Way Costs Shifting) 2021 was published setting down some new rules applicable in all civil claims for damages for personal injury or death.

The first point to note about the new rules is that they amend the following:

• The Rules of the Court of Session 1994;
• The Act of Sederunt (Sheriff Appeal Court Rules) 2015;
• The Ordinary Cause Rules 1993; and
• The Summary Cause Rules 2002.

The new rules add a chapter to each of the above outlining the procedure to be used where a party to an action considers that the court should make an award of expenses against the Pursuer who brought the action.

What are the new rules?

The rules apply to all personal injuries actions raised after 30 June 2021 and in such actions, a party requires to apply to the court for an award of expenses to be made against the Pursuer. The court will then determine the application.

The new rules provide that such applications are to be made in writing. This will either be by way of motion procedure in the Court of Session, the Sheriff Appeal Court and in Ordinary Causes in the Sheriff Court, or by way of incidental application procedure in Summary Causes.

An application of this kind must be made before the pronouncing of an interlocutor disposing of the expenses of the action (or, as the case may be, the appeal).

Where an application has been made, the court may make such orders it thinks fit for dealing with the application including an order:

a) Requiring the applicant to intimate the application to any other person;
b) Requiring any party to lodge a written response;
c) Requiring the lodging of any document;
d) Fixing a hearing.

The most significant provision in the new rules is that they provide some further exceptions to Section 8 of the Civil Litigation (Expenses and Group Proceedings) (Scotland) Act 2018 (hereafter the Act) which restricts the pursuer’s liability for expenses in personal injury claims.

We already knew that the Pursuer could be made to pay an award of expenses in the following situations:

1. Where the Pursuer makes a fraudulent representation or otherwise acts fraudulently in connection with the claim or proceedings;
2. Where the Pursuer behaves in a manner which is manifestly unreasonable in connection with the claim or proceedings; or
3. Where the Pursuer otherwise conducts the proceedings in a manner that the court considers amounts to an abuse of process.

However, the new rules add the following additional exceptions:

1. Where the pursuer fails to obtain an award of damages greater than the sum offered by way of a tender lodged in process;
2. Where there is unreasonable delay on the part of the pursuer in accepting a sum offered by way of a tender lodged in process;
3. In the Sheriff Court where decree of absolvitor or decree of dismissal is granted against the pursuer following a motion for summary decree;
4. In all actions, where the pursuer abandons the action.

The increased number of exemptions is good news for insurers. More exemptions mean more scope for departing from the default position of no risk to the Pursuer. Section 8(6) of the Act also makes provision for additional exemptions to be added in the future.

Some questions remain, however. For instance, What will constitute an “unreasonable delay” in accepting a tender? We will have to monitor for court decisions on such issues after the coming into force of the Act on 30 June 2021.

The last key point to note about the new rules is that they explain what should happen where the court decides to grant an application for an order of expenses to be made against the Pursuer. The procedure differs depending on which of the exemptions founds the basis of the application.

Where the court makes an award of expenses on the grounds of the Pursuer failing to beat a tender, or unreasonably delaying in accepting a tender, the new rules provide that the liability of the Pursuer to the applicant or applicants lodging the tender should not exceed the expenses incurred by the applicant after the date of that tender. The liability of the Pursuer is also limited to an aggregate sum, which is payable to all applicants (if more than one), of 75% of the amount of damages awarded to the Pursuer in the action.

Where the court makes an award of expenses against the pursuer on the ground of abandonment by the Pursuer, the rules provide that the court may make such orders it considers appropriate, including:

a) Making an award of decree of dismissal dependant on payment of expenses by the Pursuer within a specified period of time; and
b) Provision for the consequences of failure to comply with any conditions applied by the court.

The new rules do not explain, however, what should happen where one of the original Section 8 exemptions (fraud, unreasonable behaviour or abuse of process) founds the basis of an application for an order of expenses to be made against the Pursuer. One can perhaps assume that it will not fall into the rules which will apply following acceptance of a Tender, but will fall for the court to make such order as it considers appropriate, but the rules do not expressly state this. Again, we will have to monitor for decisions of the court on this point after 30 June 2021.

Conclusion

The Act of Sederunt (Rules of the Court of Session 1994, Sheriff Appeal Court Rules and Sheriff Court Rules Amendment) (Qualified One-Way Costs Shifting) 2021 answers some of the questions practitioners will have had about the new system of expenses in Scotland in advance of the key date of QOCS coming into force on 30 June 2021. As discussed in this note, however, some questions still remain. It will therefore be of critical importance to closely monitor the case law before the courts after the coming into force of the Act. Given the rules only apply to actions commenced after 30 June 2021, it is likely to be at least 6 months before the court is asked to make any such decisions. The new rules, however, certainly provide some comfort to defenders of additional grounds upon which expenses awards can be sought from Pursuers after the coming into force of QOCS.

Joanne Farrell, Senior Associate: jfa@bto.co.uk / 0141 221 8012