PI Court and broader court reforms

Readers may be aware that changes to court practice proposed under the terms of the Courts Reform (Scotland) Act 2014 are beginning to take shape. Although it will take some considerable time for the effects of the changes to be fully realised, a modest degree of interpretation suggests that the changes have the potential to benefit both the public purse and day-to-day users of the court system.

In 2007, Lord Gill was asked to undertake a wide review of the civil courts system in Scotland with particular emphasis on:

  • the cost of litigation;
  • alternative dispute resolution procedures;
  • the use of technology and case management systems to improve communication and speed up claims resolution; and
  •  the specialisation of courts and procedures, including the relationship between the civil and criminal courts.

In order to consider what changes might be made, Lord Gill considered the present state of the court system and his conclusions were damning. He stated: ‘The courts provide a service to the public which is slow, inefficient and expensive’ and that the system, ‘has to be reformed both structurally and functionally’.

Reform is now underway although it is important to consider that there will not be one single sweeping reform that will revolutionise court practice in Scotland, rather a series of changes that many anticipate will lead to a more efficient and user-friendly service.

Key changes include:

  • cases with a value lower than £100,000 being dealt with almost exclusively in the Sheriff Court, with the Court of Session (the Scottish equivalent of the English High Court) dealing with higher value claims;
  • a new Sheriff Appeal Court to relieve the burden on the Court of Session as a Court of Appeal;
  • Summary Sheriffs as a third-tier judiciary, dealing with civil claims under £5,000 and summary criminal cases;
  • the creation of a specialist personal injury Sheriff Court;
  • a specialised procedure being established for multi-party class actions;
  • active case management at all levels;
  • reform of judicial review procedure; and
  • the establishment of the Scottish Civil Justice Council to monitor and develop the new system.

Some of these changes are progressing more quickly than many had anticipated. In June, the third commencement order 
to implement the provisions of the Act 
was announced, under the provision of which, from September 2015 there 
will be:

  • a Sheriff Court with a Scotland-wide jurisdiction for qualifying personal injury cases only, based in Edinburgh;
  • the extension of the exclusive jurisdiction of the Sheriff Court to actions with a value of up to £100,000, meaning all cases at or below that level must be raised in the Sheriff Court.
  • the establishment of the Sheriff Appeal Court, with jurisdiction in civil cases after January 2016; and
  • the requirement for individuals to seek permission prior to instigating judicial review proceedings.

By July 2015 the process for the appointment of the first Summary 
Sheriffs (fast track magistrates) will 
have begun and the new ‘simple procedure’ that they will deal with will come into force in spring 2016.

Additional changes are likely to involve the establishment of guidelines for the use of counsel in complex Sheriff Court cases; further judicial specialisation by subject matter; increasing judicial case management; and the increasing utilisation of technology within court rooms.

All of that sounds fine in principle, but what of the practical effects?

It will take time for these reforms to take root and, accordingly, consideration of what their effects will be on a day-to-day basis is speculative. However, it is widely anticipated that the reforms will result in a significant shift of lower value claims from the Court of Session to the Sheriff Courts. This will mean:

  • a costs saving to parties;
  • the centralisation of qualifying injury claims to a personal injury court based in Edinburgh, reducing travel costs to remote areas;
  • specialised arbiters developing an authoritative body of case law, meaning cases will be efficiently and expeditiously progressed; and
  • an increasing emphasis on collaborative resolution, through pre-action protocols and alternative dispute resolution measures.

All of this should, at least in theory, ultimately represent a saving on the cost of litigating in Scotland, should parties proceed to litigation.

Since 2010 civil claims litigated in Scotland and in both the Sheriff Court and Court of Session have dropped by 41%. The logical conclusion to draw is that individuals and businesses are resolving their differences without recourse to litigation; or perhaps that good business practice and effective regulation mean that there are fewer reasons for litigation. Either way, the reforms outlined in Lord Gill’s review include an emphasis on a collaborative approach to dispute resolution. What that is likely to mean in practice is the implementation of compulsory pre-action protocols, currently more prevalent in England than Scotland, and an increased utilisation of alternative dispute resolution procedures such as mediation. The knock-on effect is likely to involve parties having an earlier opportunity to meet legal challenges head on and clarity of the key issues in dispute prior to litigation; in other words greater disclosure at an earlier stage than is currently the case in Scotland.

That being noted, the courts will and should retain a place in dispute resolution. The court system remains an integral part of the governance of society, whether for raising proceedings to avoid limitation, achieving the certainty of a court decree or making a point of principle. The reforms of the Scottish legal system recognise this and endeavour to make the litigation process more open, efficient and cost-effective for all.

Further, the Taylor review of the costs of litigation in Scotland should not be overlooked in the broader context of litigation reforms. The proposals outlined in Sheriff Principal Taylor’s report are designed to increase access to justice by making the costs of court actions more predictable; increase funding options for claimants in civil actions; clarifying the recoverability of the costs of litigation; and introducing qualified one-way costs shifting in personal injury claims – meaning that a claimant does not have to fund the legal costs of the other party where they do not win their case.

There is much discussion to be had before the proposals of the Taylor review are implemented as law but qualified one-way costs shifting, unknown in Scotland thus far, may potentially represent a nuisance 
for defendants.

At its simplest, costs shifting involves a defendant paying the claimant’s costs if 
the claim succeeds and neither party bearing any cost where the claim is unsuccessful. On the face of it that appears to be an invitation to claimants to raise proceedings on a no risk basis. However, there are qualifications.

Firstly, the Taylor review recommends that where a claim includes a successful personal injury claim together with an unsuccessful non-personal injury claim then the usual expenses rules will apply to the unsuccessful element of the claim.

Secondly, if a claim, or element of it, is made for the financial benefit of someone other than the claimant (ie subrogated claims) the benefit of Qualified One Way Costs Shifting (QOCS) will extend only to the element of the claim which will benefit the claimant.

Thirdly, by way of ‘qualified’ costs shifting, in order to enjoy costs protection a claimant must demonstrate that: they have not acted fraudulently; their conduct does not amount to an abuse of process; and that they have acted reasonably in conducting the litigation.

In short, a fraudulent claimant would lose costs protection, although the current proposed language suggests that an exaggerating claimant might not. On one hand the proposals may encourage claimants to set out their case in an open and frank manner at as early a stage as possible to demonstrate the reasonableness of their actions. On the other, they may encourage claimants to raise actions, even where the prospect of success is low, on the basis that they face little or no sanction in relation to costs, providing that the hurdles are overcome. Ultimately, if the recommendations are adopted, it is likely that defendants will endeavor to lodge reasonable offers at as early a stage as possible; as there would otherwise be limited financial risk to the ‘reasonable’ claimant. It is possible that there will be an increase in the number of claims being pursued if the costs shifting proposals are implemented but it is also possible that they will be resolved more quickly.

Ultimately, paraphrasing Lord Gill, the intention of the reforms is to ensure that cases find their appropriate place in the court system; resulting in lower expenses for parties, cases being dealt with expeditiously and specialist Sheriffs in partnership with the legal profession developing a body of specialist and authoritative case law.

We will all be watching closely to see if those will indeed be the fruits of these root and branch reforms.

By David Stihler, associate, Brodies LLP.

E-mail: david.stihler@brodies.com.