New rules on costs in personal injury claims could hit your business this summer

We are likely to see a sharp rise in actions for damages for personal injury when the new rules are introduced in Scotland this summer.

The provisions of the Civil Litigation (Expenses and Group Proceedings) (Scotland) Act 2018 (“the 2018 Act”) and the associated rules on Qualified One Way Cost Shifting (QOCS) are due to come into force on 30 June 2021.

As yet the draft rules have not been published, which means that there is likely to be a very short period of advance public notice before they come into force. The detail of how QOCS will operate is eagerly awaited by those who deal regularly with personal injury actions.

The 2018 Act has already resulted in a number of important changes to civil litigation in Scotland, with the introduction of group proceedings in Scotland and Success Fee Arrangements. The QOCS provisions, as well as certain other provisions in relation to expenses, will be the last to come into force - but they are by no means the least important.

The new rules on QOCS will be significant because they will alter the “loser pays” principle in personal injury actions. The pursuer, in a personal injury action, if unsuccessful, will not be liable for the defender’s legal expenses, provided that the pursuer conducted the proceedings “in an appropriate manner”.

The rules will make it less risky for pursuers to bring these actions. We are therefore likely to see a rise in the number of actions for damages for personal injury. Combined with the new provisions on group procedure, which came into force last year, we can expect to see more product liability claims, which involve personal injury, being raised.

Certain important issues remain to be clarified, for example, whether the rules will apply where the defender is an uninsured individual, and how the new rules will work alongside Tenders (the Scottish equivalent of a part 36 offer).

The new rules will apply to personal injury proceedings raised on or after 30 June 2021. This has created a temptation to delay raising claims, particularly where the prospects of success are less clear cut, until after that date - and we may see a sharp increase in the number of personal injury cases raised from then.

Until the new rules are published, it is difficult to predict exactly how the provisions will be applied and there will no doubt be a period of learning beyond the commencement date.

There are likely to be test cases, particularly around the interpretation of provisions in the 2018 Act which set out the circumstances in which a pursuer is said not to have conducted the proceedings in an appropriate manner.

Clarification on how those provisions will be interpreted, particularly the phrases “fraudulent representation”, “manifestly unreasonable” and “abuse of process”, which have not been defined in the 2018 Act, will be eagerly anticipated by litigants on both sides of a potential personal injury action.

In the meantime, if you would like more information on the potential effects of the new provisions on QOCS, please get in touch.