Scottish QOCS - looking back and looking forward

The Scottish legal landscape continues to evolve in its approach to expenses in personal injury litigation, particularly under the Scottish version of “Qualified One-way Costs Shifting” (QOCS).

The Sheriff Appeal Court (SAC) decision in Manley v McLeese, 17 April 2024, link here, in which I acted for the defender, highlights tensions as the Scottish QOCS regime beds in.

These tensions are worth looking back on now, especially because, looking forward, a Scottish Government review of the regime, in the context of access to justice and the administration of the Scottish courts, is required by statute soon.

The legislatively required Scottish Government review of Scottish QOCS must involve publication by them of a report including statements on (a) whether they intend to bring forward proposals to modify the regime, and (b) if no such proposals are to be brought forward, the reasons for that.

Overview of Manley at first instance and on appeal, including on costs for the appeal

At first instance, the sheriff absolved the defender in a personal injury road traffic case and awarded expenses against the pursuer.

The costs protection of pursuers under Scottish QOCS had, as the sheriff saw it, been lost because of three of the seven qualifications to it – fraudulent representation, manifestly unreasonable behaviour and abuse of process.

The pursuer appealed the sheriff’s decisions on both liability and expenses.

The sheriff’s decision that the defender was not liable to the pursuer in damages survived the appeal but the sheriff’s decision on the pursuer’s loss of costs protection did not.

Overall, this, as the appeal court saw it, meant success in part for both parties in the appeal such that there was no award of expenses to or by either party for that process.

In the end, neither side has paid anything to the other and that’s the end of it. 

Why did the appeal court overturn the finding of expenses against the pursuer in Manley?

The sheriff held, when considering expenses at first instance, that “The pursuer made a fraudulent representation by lying about the circumstances of the accident. Her doing so was manifestly unreasonable behaviour. It was an abuse of process. She did not conduct the proceedings in an appropriate manner”.

Those conclusions, all made at the expenses or costs stage, were all overturned by the appeal court.

This was, as the appeal court saw it, because of the sheriff’s inadequate consideration of expert evidence and because the sheriff had not explicitly made a finding in fact of “a fraudulent representation” in her note on the merits of the case.

It is striking that the decision that no liability attached to the defender was left standing on appeal while the issues around expenses were analysed by the appeal sheriffs to more exacting standards.

Key, current, legal takeaways, looking back on Manley

Manley is, currently, sheriff-binding authority that:

• there must be an explicit and properly justified finding in fact, in the decision on the merits, of a fraudulent representation for that qualification to the costs protection to be established, and
• each qualification to the costs protection must be justified by reasoning in and of itself, albeit that only one of the seven qualifications need be established or happen to allow the court to consider making an award of expenses against a pursuer.

Certain other propositions on Scottish QOCS received SAC’s backing in Manley:

• Each case in which the issue of disapplying the costs protection arises must be considered on its own facts and circumstances.
• Manifestly unreasonable means obviously unreasonable. This is likely to be exceptional.
• Where there is a finding that the pursuer is incredible on a core issue in the action, the issue of manifestly unreasonable conduct may arise, but does not invariably arise. 
• The court preferring the defender’s witnesses over the pursuer’s account does not of itself give rise to disapplication of the costs protection. Whether it does will depend on the court’s reasons.
• Unusual circumstances may or may not be exceptional. Whether they are is context specific.

Looking forward

Readers may find this insight useful in the context of the Scottish Government’s review of QOCS, as and when that happens, assuming, as I think likely, that they consult as part of that review. 

Will Scottish Government bring forward proposals to modify the regime? If so, what would we like to see? If not, what reasons will they give for not doing so?

If, as appears almost inevitable, QOCS is here to stay, modifications of it could usefully, as I see it, include:

• Lowering the bar on the reasonableness qualification. Describing “manifestly unreasonable” as “obviously unreasonable” does not really take the law that much forward. Questions such as “obvious to who?” arise. I have seen many examples of behaviour by pursuers or pursuers’ agents that I consider “obviously unreasonable” but many of those do not appear to reach the current high bar of “obviously unreasonable” as the court sees it. Equally, though, I have had success in court on the reasonableness point, including in getting the first reported judicial finding of manifestly unreasonable behaviour on the part of a pursuer’s agent in Carty v Churchill, Sheriff Campbell KC, ASPIC, 16 October 2023, link here. That said, the Scottish Parliament’s point, that has now worked its way into Scots case law, that a finding of manifestly unreasonable behaviour is “likely to be exceptional” does not properly capture the point that how often a finding of such behaviour is justified surely just depends on how often it happens.
• Adding more qualifications to the costs protection, including amendment of written pleadings by pursuers and discharges (postponements) of court hearings at the instance of pursuers.
• Allowing applications, or motions, for awards of expenses against pursuers in personal injury litigation to be made orally when in court. At present, these applications may only be made in writing. As I see it, this just needlessly adds to costs.  
• Converting the “fraudulent representation” qualification to one revolving around the concept of “fundamental dishonesty”, with a provision enacted in primary Scottish legislation to establish this concept in Scots law in broadly the same terms as it was established for England & Wales in section 57 of the Criminal Justice and Courts Act 2015 in addition to the rewording of the honesty-based qualification to the costs protection under Scottish QOCS.

Clyde & Co are specialists in dealing with Catastrophic Injury claims in Scotland, and we closely monitor Scottish legal developments. For more on both subjects, you can read all of our previous Catastrophic Injury articles here, and if you have any questions you can contact Kelly Brotherhood or any of our Scottish Catastrophic Injury and Large Loss team.