I thank the members of the Justice Committee for their careful consideration of the bill. They have all become quite expert and conversant in dealing with a number of very technical civil law provisions, and I commend them for their determination to get to grips with the intricacies of Scots civil law. I thank the committee clerks for their extreme hard work—the bill was very large and dealt with a number of technical issues—and also the stakeholders who contributed views and opinions. Above all, I thank Sheriff Principal James Taylor, not only for conducting a most thorough and detailed review of the expenses and funding of civil litigation in Scotland, but for his continued involvement during the bill’s progress through Parliament. I hope that he will now enjoy his retirement and feel very proud of his significant contribution to improving access to justice in civil litigation in Scotland.
The context of the review was a continuing 41 per cent decrease in civil litigation in Scotland since 2008-09, as I pointed out in the stage 1 debate. That should be a cause for concern for all those who have an interest in the health and wellbeing of Scots civil law as an independent jurisdiction and in the ability of our fellow Scots to exercise their legal rights in an affordable way. We know, as a result of Sheriff Principal Taylor’s review, that the potential costs involved in civil court action can deter many people from pursuing legal action, even when they have a meritorious claim.
The fundamental aspiration of the bill is that people who contemplate litigation in the civil courts should have more certainty about what it will cost them and that it will, indeed, be possible for them to access justice. Litigants will be able to take a claim forward on a no-win, no-fee basis under damages-based agreements that solicitors will now be able to offer for the first time, as opposed to via claims management companies. Success fee agreements, including damages-based agreements, which are all types of no-win, no-fee agreements, are already very popular, because people understand how they work and, of course, they are a route to remedy that otherwise may be unaffordable. Litigants do not pay anything in advance and the provider of the legal service will pay for all of the outlays of raising the action, including court fees in personal injury cases. In return, the provider of the legal service will be entitled to a success fee, to be deducted from the damages that are awarded or agreed, as well as the judicial expenses that are recoverable from the defender.
The level of the success fee will, as recommended by Sheriff Principal Taylor, be capped in regulations; they will be introduced for parliamentary scrutiny under the affirmative procedure.
Success fee agreements are offered by claims management companies. Although many such companies offer a service that prospective litigants can trust, there has been some concern about the operating practices of some companies. There was therefore widespread consensus that claims management companies should be fully regulated. In parallel to scrutiny of the bill, Parliament agreed by legislative consent motion that claims management companies operating in Scotland will be regulated by the Financial Conduct Authority. That is being provided for by the Financial Guidance and Claims Bill, which had its Commons report stage on 24 April. Earlier this week, HM Treasury published the draft regulations that will provide for the detail of claims management regulation. Members can therefore be confident that any apparent regulatory gap between the implementation of the Civil Litigation (Expenses and Group Proceedings) (Scotland) Bill and full Financial Conduct Authority regulation will be short.
Whereas the first part of the bill is concerned with how much an individual might be liable to pay their own lawyer, part 2 is concerned with what a litigant might become liable to pay the other side if the case is lost. The most recent civil justice statistics for Scotland identified a fear of that as a possible reason for the reduction in litigation in Scotland, to which I have already referred. Part 2 of the bill will therefore introduce qualified one-way costs shifting, or QOCS, for personal injury cases.
The majority of defenders in personal injury actions are well resourced and the majority of pursuers are of limited means. Although, as a matter of practice, few claimants are pursued for expenses by successful defenders, a pursuer might be liable for considerable expenses and risk possible bankruptcy if they lose. Sheriff Principal Taylor’s review confirmed that there is real fear in the minds of potential pursuers and introduced the provision for QOCS, which removes that risk as long as the pursuer and his or her legal team conduct the case appropriately.
The tests by which the benefit of QOCS can be lost by pursuers owing to their behaviour has been the subject of much discussion and refinement at stages 2 and 3, but I am satisfied that the bill, as now finalised, faithfully implements Sheriff Principal Taylor’s recommendations.
Part 2 also makes provision for the potential payment of expenses by third-party funders. That is intended to ensure that venture capitalists, whose only interest in a case is commercial, will be liable to adverse awards of expenses. The Scottish Government and John Finnie lodged amendments at stage 2 to ensure that trade unions and providers of success fee agreements are excluded from that provision.
The bill has also been amended to ensure full disclosure of litigants’ funding, as Sheriff Principal Taylor identified that as an aid to early settlement and thus to enhancing the efficiency of the courts.
Part 3 of the bill has been the subject of less focus, although I am sure that there has been considerable interest on the part of members. It deals with issues around auditors of court, which are to be brought within the Scottish Courts and Tribunals Service. SCTS will be required to publish annual reports on taxation.
I am pleased to say that the final part of the bill introduces group proceedings—multi-party or class actions—for the first time in Scotland. The proposition received broad support in the committee and the view was very much that the introduction of such actions to the civil law of Scotland is long overdue. As members will recall, the Government has accepted that both opt-in and opt-out models are referred to in the bill. I pay tribute to the particular tenacity of Liam McArthur and all committee members who, I could see, were quite determined from fairly near the outset of proceedings to ensure that that happened.
Finally, the bill allows for post-legislative scrutiny to take place in five years’ time. That suggestion was also very much driven by the committee. It will not always be the case that such scrutiny will be the best use of resources—we do not want to devote all our resources to the post-legislative scrutiny of every single bill—but this is the kind of bill that merits such attention.
I am convinced that such a review will show in due course that the legislation has been effective and successful in its objectives of making civil litigation in Scotland more accessible and the costs more predictable to those who are contemplating seeking to exert their legal rights.
That the Parliament agrees that the Civil Litigation (Expenses and Group Proceedings) (Scotland) Bill be passed.
At the outset, I declare an interest as a practising litigation lawyer. I hold current practising certificates with the Law Society of Scotland and the Law Society of England and Wales.
I am pleased to open for the Scottish Conservatives to speak in favour of passing the Civil Litigation (Expenses and Group Proceedings) (Scotland) Bill. I thank the bill team for their assistance throughout the process, in particular for their drafting support with the many amendments that were lodged, and I thank the clerks for getting the bill to this stage. I found the evidence sessions genuinely fascinating, but they required a great deal of work behind the scenes to ensure that we all understood the background and the concepts being explained.
Finally, I thank my colleagues on the committee. I feel that this was an example of a cross-party committee working well together to achieve a result that was better than what we started with. Although, as I shall elaborate on shortly, I was not in favour of some of the amendment decisions that were taken last Thursday, I am of the view that, for example, the debate on whether to ring fence future loss awards showed Parliament and the Justice Committee at their best. Members heard the evidence, debated it, moved from an initial position, then—in response to the evidence and the debate—moved again.
The journey from the 2013 Taylor review to this point has been long but worthwhile. Back then, Sheriff Principal Taylor concluded that there would often be a David and Goliath relationship that prejudiced the attractiveness and prospects of litigation for those with rights and that therefore there was a denial of rights—a denial of the principle of access to justice. The Justice Committee agreed, recommending that the general principles of the bill be approved because
“on balance, the Committee considers that there are problems with access to justice in respect of civil litigation.”
Anything that ensures that those with rights are able to avail themselves of those rights must be a good thing. The bill aims to do that by introducing some of Taylor’s recommendations, including the increase in funding options for success fee agreements; the ability to enter damages-based agreements; the introduction of QOCS, meaning that pursuers in personal injury cases will usually not have to pay legal costs if they lose; and the introduction of a class action procedure for the first time in Scotland.
Will the bill achieve those aims? The Law Society of Scotland certainly thinks so, stating in its evidence that the bill
“has the potential to significantly increase access to justice”.
I hope that it does.
In passing, I worry about whether there has been too easy or too quick a conflation of the phrase “access to justice” with the phrase “access to solicitors and to the courts”. I am not convinced that they are the same thing. I suggest—as I did during the committee meetings—that hiring solicitors and litigating through the courts are a means to achieve whatever “justice” means to a particular pursuer.
I note the member’s point, but I think that
Sheriff Principal Taylor dealt with that when he suggested that we should perhaps be considering the phrase “access to negotiation”. Perhaps that deals with the member’s point.
I take the point that the minister makes. I put exactly the same question to
Sheriff Principal Taylor and he did indeed deal with it. I think that there is a wider philosophical discussion to be had on that point, but this is perhaps not the time to have it.
I listened to Daniel Johnson gently suggest at stage 2 that the insurance industry might have been too influential and insufficiently questioned in this process—I am paraphrasing, so forgive me. I understand that point, but I do not accept it as a fair reflection of the considerable scrutiny that we all individually and as a committee subjected the witnesses to.
If that charge sticks, the same accusation might plausibly be levelled in relation to representations made by some of the legal fraternity. For example, last week, we heard a great deal about how we should not ring fence future loss awards because to do so might lead solicitors to wind back from offering damages-based agreements. We will never know whether that would have been the case, but, as I said last week, it worries me that we reduce any element of what are ultimately future care costs, and thus potentially prejudice the amount that is available to the pursuer for care and support, in order to incentivise pursuer solicitors.
There is a risk that the courts will, over time—gently and perhaps understandably—increase such awards to ensure that the full costs of care are recovered after the solicitors have taken their fee. I think that that is a realistic possibility, but if I am wrong, I will be happy to admit it to this chamber.
On the flipside, I was pleased to see Parliament, at stage 2, vote to ensure that the benefit of QOCS should be lost where a pursuer
“has acted fraudulently in connection with the claim or proceedings, or makes a fraudulent representation”.
That is important, as unintended consequences could arise from a significant increase in court actions, such as insurers picking up the cost of more court cases. Thinking purely commercially, that would presumably increase overheads, and I remain concerned that increased overheads could be loaded on to people’s premiums. I feel therefore that the full protection against unmeritorious or fraudulent claims that went through at stage 2 should help to prevent a rise in such claims.
The implementation of the act must be closely reviewed, to ensure that consumers, taxpayers and pursuers do not lose out. Earlier in the process, I flagged up the fact that witnesses from several national health service boards suggested that the anticipated increase in claims for clinical negligence would be difficult to cover. That will have an attendant impact on healthcare delivery, as NHS resources will be taken up with defending unsuccessful claims rather than the delivery of services to patients. That is a concern.
For a second time, I refer to the Law Society of Scotland’s submission, in which it noted:
“It is difficult to gauge the full impact of the Bill, as many of the details of the provisions will be made at a later stage, through regulations”.
To that end, like the minister, I was pleased that Margaret Mitchell’s amendments requiring a report after five years were agreed to last week. Again, that is a better outcome as a function of the process.
The bill aims to increase access to justice. Through a comprehensive process in which all parties and viewpoints were engaged and debated, we have arrived at a bill that I hope will do just that. My colleagues and I shall vote for its passing this evening and I look forward to the future that I am sure it will deliver.
Many members may be wondering whether, after Thursday’s lengthy and detailed stage 3 debate on amendments, there is anything left to say about the Civil Litigation (Expenses and Group Proceedings) (Scotland) Bill. However, I assure members that I have plenty left to say and I intend to use my full five minutes. I am just surprised that there are not more members in the chamber, although I am sure that they are all watching on their televisions.
As the minister said, many of us seem to have become experts and very impassioned on the topic. Civil litigation is dry and technical, but there is a reason why so many of us have become impassioned. We hope never to use civil litigation proceedings and to have to pursue compensation in that way, but, when people have to do that, they really have to. The proposals will make it easier for people to bring cases and will give them more certainty in doing so. People who have experienced catastrophic life changes through injury will have a distinct and very real improvement to their prospects of getting redress and compensation. I hope that the bill addresses the decline in civil litigation cases that the minister mentioned.
Scottish Labour fully supports the bill and the positive reforms that it will put in place. I, too, record my thanks to Sheriff Principal James Taylor, whose balanced and well-thought-through recommendations are at the heart of the bill. Today marks the concluding stage of many years of work for him, with the report having been published in 2013. I also add my thanks to the bill team and the clerks, whose work has enabled the detailed and thorough debate and inquiry.
I am perhaps in danger of repeating what others have said, but it is worth remarking on what I see as the three key propositions in the bill. The first is the introduction of qualified one-way costs shifting, or QOCS, which can sound a little bizarre to the uninitiated but is hugely important in increasing certainty for many people in relation to costs. It is also important that we properly enshrine in law the already popular no-win, no-fee agreements, so that solicitors as well as claims management companies can offer them. It is a mark of the balance in the bill that ministers will be able to bring forward secondary legislation to cap success fees, along with a sliding scale, so that any unintended consequences can be addressed. The introduction of group proceedings is also a welcome step, especially for those who have experienced a small loss and who may feel that it is not worth while bringing a case individually but for whom acting collectively would make bringing a case more of a possibility.
The thoroughness of the stage 3 amendment debate is a mark of the seriousness with which the bill has been taken. Indeed, I think that, throughout the process, I ended up being on the opposing side to just about every combination of parties, which is a mark of how thoroughly everyone approached the bill. Other members have mentioned the amendments, but I will briefly set out the ways in which I think that the bill has been genuinely improved.
The first is the introduction of an opt-out approach in relation to group actions, which was spearheaded by Liam McArthur. That is a welcome addition that will hugely strengthen the possibility of group actions. I thank John Finnie for the collaboration that he and I participated in to ensure protections for trade unions. It would have been an absurdity if the bodies that seek to help to people pursue litigation and support them when they experience injury in the workplace were prevented from doing so.
The amendments that we agreed to at stage 3 to protect no-win, no-fee agreements were important. Sheriff Principal Taylor’s involvement right the way through the process in highlighting the potential dangers of leaving the bill as it had been left at stage 2 was extremely helpful. I understand and acknowledge the concerns that many members have and highlighted, but one important aspect of the bill is that there is a possibility of introducing instruments to improve and amend the provisions on claims against future losses that solicitors can make.
The five-year review, introduced and stewarded by Margaret Mitchell, is an incredibly important improvement to the bill. Although I note the minister’s caution about overuse of that approach in future legislation, we should look at whether it is a right and proper way to consider legislation in the future to ensure that it does not have unintended consequences and has the proposed effect.
The bill is strong and I look forward to supporting it at decision time.
The bill is the important document, but I often look to the policy memorandum for more lay guidance on the policy objectives. It says:
“The principal policy objective of this Bill is to increase access to justice”—
I heard what my colleague Liam Kerr said about that, but that is a debate for another day—
“by creating a more accessible, affordable and equitable civil justice system. The Scottish Government aims to make the costs of court action more predictable, increase the funding options for pursuers of civil actions and introduce a greater level of equality to the funding relationship between pursuers and defenders in personal injury actions.”
That is intended to satisfy a number of national outcomes, not least
“National Outcome 11 on resilient communities by increasing public confidence in justice institutions and processes.”
That is important.
The bill has been referred to as long-awaited legislation. As many other people are, I am certainly grateful to Sheriff Principal Taylor for not only his work on the report but, as the minister said, his continuing involvement and wise counsel, which had us all reflect at stage 3. That showed maturity in how we deal with legislation.
As Daniel Johnson and other colleagues said, there was a lot of collaborative working. There was a genuine effort on the committee’s part to improve the bill. I am grateful, as others are, to the witnesses, staff, the bill team and the minister for how we went about that.
The minister said that she understood that Justice Committee members got to grips with the terms. I will own up and say that I did my very best. When I look at the policy memorandum, I find a three-page glossary of terms. The one that jumps out at me is “One way costs shifting”. As we now all know, that is
“A regime under which the defender pays the pursuer’s expenses if the action is successful, but the pursuer does not pay the opponent’s expenses if the action is unsuccessful.”
That became QOCS. Anyone who casually dropped in on a debate must have found that term peculiar.
There has been a lot of support for the bill from within and outwith the legal profession. At the outset, the Law Society of Scotland said:
“the basic terms are good and will help provide certainty which is the priority for solicitors.”
Since then, with the combined efforts of the committee, improvements have been made. As is the way, a lot of effort was made to persuade colleagues about things that were not successful, such as the issue relating to trade unions and staff associations and fees. That was about whether the bill would frustrate what were referred to as difficult but nonetheless meritorious cases.
The bill has been improved. It is important that that has happened for a number of reasons, not least the one to which the minister alluded when she rightly flagged up concerns about the 41 per cent drop in the level of civil litigation. Civil litigation is vital. Daniel Johnson remarked on the importance of the trade union movement and staff associations.
Patrick McGuire, of Thompson’s Solicitors, said:
“I have absolutely no doubt that the provisions that are in the bill will enhance access to justice ... Equally important, it will also do what Sheriff Principal Taylor said was his prime focus and what I see as the mischief of the bill, which is redressing the imbalance in the asymmetrical relationship ... between pursuers of personal injury claims and the extremely large, powerful and wealthy insurers”.—[
, 19 September 2017; c 5.]
That concerns that level playing field that we are all keen to bring about.
I could say a lot more, but I will stop there. The Scottish Green Party will support the bill at decision time tonight.
I will start with an apology on behalf of Liam McArthur, whose tenacity has not extended to his being here today. It says in my speech notes that he has an important engagement in his constituency this afternoon. I think that means that he is opening something, but I cannot remember what it is. He has been unable to get down to Edinburgh this afternoon. Loganair schedules achieve many things, but not whisking one to Edinburgh in time for 4 o’clock on a Tuesday afternoon. He would certainly wish me to pass on his thanks to his committee colleagues, the clerks, the Scottish Parliament information centre and, of course, the people who gave evidence to the Justice Committee, including the minister and her colleagues, for the work that has been done in relation to the bill.
I also pay particular tribute to Sheriff Principal James Taylor, in recognition of his work in laying the foundations for the legislation. As he made clear to the committee, the recommendations in his report in 2013 were about improving access to justice through addressing the expense and funding of civil litigation in Scotland. The bill does that in a number of important ways, which is why Liberal Democrat members will be happy to support it at decision time.
In the brief time that is available, I want to make a few observations about the legislation—recognising, of course, that, unlike some colleagues in the chamber, I have not had the benefit of living and breathing qualified one-way costs shifting over recent months. In that regard, I say that I was taken with Daniel Johnson’s masterful pronunciation of the acronym for that, which I am certainly not going to attempt. I recognise that that system is the centrepiece of the changes that are set to be introduced through the bill, and that it strikes at the heart of the problem that was identified by Sheriff Principal Taylor; namely, that a lack of certainty about the likely costs in bringing a case, and the prospect of having to bear the legal costs of a defendant, can act as significant deterrents.
I should just say that the past couple of minutes represent one of the few occasions when I have learned something while reading my speech notes.
I acknowledge concerns that have arisen about the risk of creating a so-called compensation culture. However, the regulation of claims management companies in Scotland that is being taken forward elsewhere will help to address some of those fears.
The issue that arose most in the debate on amendments last week, and earlier, during stage 2, was the question whether damages for future loss should be ring fenced in success fees. I appreciate the inherent sensitivities. No one would wish individuals who have suffered the most grievous loss or harm to face the prospect of not receiving the full amount of the compensation that is awarded to them. However, on balance, the Scottish Liberal Democrats are persuaded that, in ring fencing lump-sum damages, we run the risk of diminishing the chances of cases being taken on. A consequence of that would be to reduce the prospect of individuals accessing the justice that they so desperately need and richly deserve.
Finally, I mention the bill’s proposals in relation to group proceedings. As with damages-based agreements, the bill’s introduction of group proceedings to Scots law is welcome, and reinforces its overarching objective of improving access to justice. Although the Government was initially minded only to allow for an opt-in approach, I am pleased that the committee backed Liam McArthur’s amendment to include, too, an opt-out approach in the bill. I am grateful for colleagues’ observations on Liam McArthur’s work in that regard. Obviously, that provision will take a little longer to introduce, but having the option available is essential if we are to deal with breaches of consumer law. Inevitably, those will have a relatively small impact on a large number of people, so the cumulative impact will be high. However, the incentive for any one individual to participate in court action is low. Thanks to the efforts of Which? and the amendments that were successfully promoted by Liam McArthur, we have a bill that offers the prospect of access to justice in such cases, as well.
Obviously, there is a lot more that I could say about Q-O-C-S, but in the interests of brevity, and owing to my lack of knowledge, I will leave it there, save for my confirmation that the Liberal Democrats will be happy to support the bill at decision time.
Access to justice is the hallmark of a civilised society and it is at the heart of the Civil Litigation (Expenses and Group Proceedings) (Scotland) Bill. Last Thursday, the stage 3 amendments were, for the most part, passed consensually, and I believe that the changes that have been made since stage 2 have strengthened the bill and closed possible loopholes. As deputy convener of the Justice Committee I, too, thank all the stakeholders who gave evidence, and I thank the clerks for their excellent work. They did a great job of simplifying the key points of the bill to help the committee’s understanding.
The bill will create a more affordable and equitable civil justice system. How many times have we heard about people being put off bringing actions because they cannot afford it? As the minister said, there has been a 41 per cent decrease in civil litigation cases since 2008. Despite the Justice Committee’s having heard conflicting views from witnesses on the matter, I believe that that fact proves that there has been a problem. Now, costs in civil litigation will be more predictable. Therefore, the bill will provide crucial access to justice.
The bill provides the legal framework to implement a number of key recommendations from Sheriff Principal Taylor’s balanced review of the expenses and funding of civil litigation, which was published in 2013. Although the bill might seem to be a little technical—or, as Daniel Johnson said, “dry”—it will have a significant impact on the public and on anyone who gets involved in civil litigation, the background to which usually results in a stressful situation.
Approximately half the report’s recommendations do not require primary legislation and will be implemented mostly by rules of court to be drafted by the Scottish Civil Justice Council, and the recommendations regarding sanction for counsel in personal injury actions were provided for in the Courts Reform (Scotland) Act 2014. Most of the recommendations that require primary legislation will be implemented through the bill. The main exceptions are, as we heard, regulation of the claims management industry and referral fees, which will be the subjects of forthcoming legislation.
Specifically, the bill includes provisions for Scottish ministers to introduce caps for success fee agreements—which are commonly known as no-win, no-fee agreements—speculative fee agreements and damages-based agreements in personal injury and other civil actions. The bill will also allow solicitors to use DBAs in Scotland.
As we have heard, the bill will introduce QOCS when a pursuer is not liable for the defender’s expenses if they lose, but can still claim their own expenses from the defender if they win. That would apply in personal injury cases and appeals, including those involving clinical negligence, for example. The bill will allow for new court rules in respect of third party and pro bono funded litigation, and for legal representatives to bear the cost when their conduct in a civil action has caused needless cost.
The bill will enable the auditor of the Court of Session and sheriff court auditors to become salaried posts in the Scottish Courts and Tribunal Service, and it will allow for the introduction of a group procedure. The group procedure element, which is being introduced for the first time in Scotland, is an important part of the bill, and the Justice Committee welcomes it. The Scottish Government has been persuaded that having opt-in and opt-out systems is the best way forward, and I believe that that is an improvement on the stage 2 position. It is also a clear example of how consensual the bill’s passage has been. All factors have been considered carefully, as my colleague Liam Kerr stressed.
Another aspect of the bill is that litigants will now be aware of every funding option in as clear and comprehensive a way as possible—which will, again, improve access to justice.
The bill will facilitate access to justice and create a more affordable and equitable civil justice system. For those very important reasons, I am happy to support the bill at stage 3 and for it to go on the statute books.
I open by referring members to my entry in the register of members’ interests, as I am a practising advocate.
The stated aim of the bill is to provide greater access to justice in civil cases. Who could disagree with such a proposition? QOCS is the tool through which that access is to be opened up, but getting the balance right—a bit like getting the pronunciation of QOCS right, perhaps—is slightly more difficult. We want to ensure that the number of unmeritorious claims does not spiral out of control, which is one of the main concerns about the possible effects of the bill. Indeed, it is questionable whether allowing actions to be brought without a party having to weigh up the most important factor in litigation—court expenses—is, in principle, a good idea. As those who are involved in litigation know all too well, cases are sometimes settled on grounds that relate but little to their merit, simply because of the spiralling costs of an action.
The wording of the bill, which was debated in the chamber last week, is important, and the fraud test has, at least, been strengthened rather than diluted.
Equally important, however, is that in the future an assessment of the number of unmeritorious claims should be made, in order to enable accurate assessment of the bill’s impact on justice for everyone. For that to happen, it will be required that a variety of accurate information be gathered and collated. I suggest, because it is critical that justice be properly served, that among the things that need to be looked at are the number of cases that are settled without proof, and the number that are taken to a full hearing and are unsuccessful. If damages for future loss are not to be ring fenced, that will require particularly careful review, in due course.
Strong evidence-based arguments were made on both sides during consideration of the bill. Insurers have real concerns that high-value claims could lead to significant sums for critical care and support later in life being lost. We heard from my colleague Margaret Mitchell that a simple comparison with what has gone before in other parts of the UK does not take into account differences in the Scottish system.
Measurement of the success or failure of the decisions that are made in the chamber should be an important part of the policy-making process. We are meant to be here to make people’s lives better, which must include ensuring that unintended consequences do not produce results that are different from what was expected. That is why the part of the bill that allows for review is so important; it will ensure that the bill can, in the future, be assessed on whether it has increased access to justice for the people who need it and, indeed, whether they have been fairly compensated when they have accessed justice.
The UK Parliament’s Financial Guidance and Claims Bill will, as members will be aware, regulate claims management companies and use of cold calling. Everyone here will be familiar with the frustrating practices that are used by certain companies in that regard. I am pleased that the Scottish Government has finally agreed to the UK Government’s standards on the issue. However, as colleagues will know from stage 2, I would like to have seen the Civil Litigation (Expenses and Group Proceedings) (Scotland) Bill being delayed until the Westminster legislation had come into force. I hope that the regulatory void that will be created by the other parties in Parliament does not lead to negative consequences for the most vulnerable people in our society.
I am p leased to have the opportunity to speak in this debate on the Civil Litigation (Expenses and Group Proceedings) (Scotland) Bill. During the early stages of the bill, I was a member of the Justice Committee and heard evidence from a range of individuals during the early evidence sessions. I take this opportunity to commend the current members of the Justice Committee and the committee’s clerks for all their work on the bill throughout the legislative process.
The bill will remove the considerable uncertainty that exists around the legal costs of civil litigation and will work to redress the notable imbalance that has existed between individual litigants, including those supported by their trade union, and large insurance firms. Scottish Labour supports both the core principle of the bill, which is to widen access to justice, and the numerous detailed sections that have been strengthened by amendments at stages 2 and 3. At stage 2, the most significant amendments were to section 10. Those amendments were crucial, as they clarified the wording of section 10 to make it explicit that the power to award expenses against third-party funders does not apply in trade union-funded litigation.
Further amendments to the bill were agreed to in the chamber at stage 3 last week. I was pleased that there was cross-party support from the Greens, the Liberal Democrats and the Scottish National Party for the Scottish Labour amendments in the name of my colleague Daniel Johnson, which served to provide a guarantee and protection for the status of no-win, no-fee cases. It is important to note that, without those Scottish Labour amendments, the bill could have severely limited access to damages-based agreements for accident victims, including in high-value cases, which regularly involve individuals who have suffered very serious injury at work.
The bill in its final, amended form protects the legal rights of individuals who have experienced serious injury in the workplace to pursue a fair and just compensation settlement without any concern about or fear of being burdened with significant financial debt. Scottish Labour’s amendments to the bill at both stage 2 and stage 3 have been vital in ensuring that the bill upholds its fundamental principle of improving and widening access to justice.
The Civil Litigation (Expenses and Group Proceedings) (Scotland) Bill is a vital piece of legislation. It serves a strategic purpose and it will have a positive impact on the thousands of individuals in Scotland each year who become involved in civil litigation, first by helping to redress the imbalance that existed for individual litigants, and secondly by providing a cast-iron guarantee and protection for the status of no-win, no-fee cases. Along with my colleagues on the Labour benches, I will be happy to support the bill at decision time tonight.
The minister was being very kind to us earlier when she claimed that we are now all experts on the bill, because it has been very difficult to get our heads around the subject matter. Tavish Scott passed on Liam McArthur’s thanks to the committee clerks and other members of the committee, and I am sure that Tavish also passed on his own thanks to Liam McArthur for allowing him to take part in the debate. However, we could tell that he is relatively new to the subject, as he has not quite got his head around the fancy acronyms that we have, or how to articulate them.
Daniel Johnson highlighted some of the reasons why the bill is vital. At its heart, it is about widening access to justice, and today I intend to focus on two elements that I believe will do that—the introduction of qualified one-way costs shifting, or QOCS, which we have heard a lot about this afternoon, and group proceedings.
Essentially, QOCS removes any financial risk to the pursuer who brings forward a claim, even if they are unsuccessful. I found that area particularly interesting in committee. Initially, what concerned me were cases that are brought forward where the defender is an individual as opposed to a large insured firm or organisation. Initially, I wondered whether it was fair to expect them to foot the cost of litigation even if they are successful in defending a claim that is brought against them. There was also a fear that, if QOCS was introduced, it would lead to a rise in spurious claims.
At stage 2, we considered amendments that would impose certain restrictions on who should be able to benefit from QOCS, including an amendment that would provide protection for defenders who were uninsured but remove protection for third-party funders. However, there was concern, as Liam McArthur rightly pointed out during the committee’s considerations, that that would provide an incentive for people not to take out insurance so that they could then escape that liability. That concern was also raised by Sheriff Principal Taylor during our evidence sessions when he stated:
“you could end up with parties not bothering to insure themselves when they ought to or with parties taking on a much higher excess in order to pay a much lower premium and thereby making themselves ... self-insured.”
It is also important to note that QOCS is in operation elsewhere. Sheriff Principal Taylor went on to say:
“We can look to England and Wales, where the rules of court are the same as what is proposed here, to find out what has happened there. We have heard of no difficulties with qualified one-way costs shifting being operated as it is proposed to be operated here.”—[
Official Report, Justice Committee
, 31 October 2017; c 10.]
It is important that a balance is struck that ensures that there is fairness and that access to justice is delivered. I believe that, following the stage 3 consideration of amendments, we now have that in place with the current, amended QOCS provisions.
The bill will also introduce group proceedings for the first time—a move that has been widely welcomed by insurers, unions and law firms. The main point of contention was about whether there should be an opt-in system, as the Scottish Government originally proposed, or an opt-out system. The consumer group Which? was in favour of an opt-out system in which, after the claim had been won and the defender had been ordered to pay compensation, affected consumers could come forward and claim the proportion of the compensation that was rightfully theirs. Which? felt that that removed the administrative burden of gathering together affected consumers before proceedings are commenced, when the incentive is low for consumers to get involved because the outcome of the action is uncertain.
During our discussions at the committee, the concern was raised that the opt-out mechanism might take a considerable time to put into practice. Paul Brown from the Legal Services Agency stated:
“It has taken an inordinate amount of time to get to where we are ... It would be a pity if one went for the most ambitious arrangement and that resulted in further delay.”—[
Official Report, Justice Committee
, 14 November 2017; c 31-2.]
At stage 3, we have managed to strike the correct balance, in which it is at the court’s discretion which system will be used—whether that is the opt-in system, the opt-out system, or the choice of either.
As I said, the bill is about increasing access to justice. I believe that, following the committee’s consideration, all the different stages of the bill and the consequent amendments that have been agreed to, we have got the balance just about right, and I gladly support the bill.
T he debate has continued the theme that has proceeded with the bill. There has been engaged discussion about very technical and potentially dry items.
I thank Mary Fee and other members for acknowledging the broad sweep of the committee’s work. The committee has done an excellent job, and I thank my fellow committee members. I took up work on the bill around halfway through its consideration, at stage 2, after stage 1 had been concluded. I thank everyone for the work that they have done.
The debate was best summed up by Mairi Gougeon. She opened by pretending that none of us is an expert, but she gave the game away by giving a comprehensive speech in which she went through technical details, explained why they are important and talked about the balance that the original proposals sought to strike and the balance that we as a committee sought to strike throughout the process. I thank her for her contribution.
Liam Kerr brought up on-going concerns about specific provisions in the bill and some general points. The point about access to justice not being the same as access to courts and solicitors was well made. We can sometimes blur the distinction between those two things, but they are not one and the same.
The bill broadly gets the balance right. The minister pointed to proposals from Sheriff Principal James Taylor that sought to strike that balance. That is a principle that we should continue to uphold, examine and challenge ourselves with. Indeed, I would go further. Although I think that the bill is a step forward on access to justice and that it will improve people’s ability to bring forward cases, it is certainly not the last word on access to justice. We have been able to strike a balance between the awards that people might be able to achieve through the courts and offsetting the costs against them. There is a broad range of actions that one might bring to court or that one might be involved in at court in which that sort of mechanism is not available. It is an on-going concern of mine and of Scottish Labour members more broadly that justice is increasingly becoming something that people can access if they can afford it. We must continue to examine that thoroughly and challenge it robustly.
I want to deal with some of Gordon Lindhurst’s points. We have an important opportunity with the five-year review, which is an important mechanism. Gordon Lindhurst very fairly identified some things that will need to be tested and challenged at that point. We will need a very clear assessment of what is happening in respect of the numbers of cases, how they are concluding, and how the legislation is operating. There may well be unintended consequences, and it is important that we capture them. I include future losses in that. I recognise that the changes that we have made at stage 3 are not uncontroversial and that it is important that we challenge so that there are no unintended consequences.
Other things should be examined, including the fraud arrangements. It is obvious that we must prevent those involved in fraudulent actions from receiving the benefit of QOCS, but the STUC and others argued that overegging that aspect would lead to people losing QOCS unfairly. We must look at whether that happens and whether it is an unintended consequence of the provisions.
I lodged amendments at stage 2 and stage 3 on pay-as-you-go arrangements. Trade unions face issues when funding court actions, and I would very much like that issue to be examined in the five-year review.
I have raised before the question whether environmental cases could be included in actions, especially group actions. There are good reasons why that should be examined.
This has been a good debate; it has continued the approach that has been taken as the bill has passed through the Parliament. We should all be very pleased with the end result. It is a good piece of legislation, and I look forward to voting on it. I am disappointed to conclude the debate without hearing Tavish Scott say the word “QOCS”, but that is my only regret this afternoon.
T he Civil Litigation (Expenses and Group Proceedings) (Scotland) Bill is complex and, as Daniel Johnson stated, very technical. Based on the Taylor review and the previous Gill review recommendations, the bill seeks to address a David-and-Goliath scenario whereby there is an imbalance in the relationship between pursuers and defenders. The former tend to be individuals with little experience of the legal system who have limited resources; the latter tend to be insurance bodies or large companies who have substantial resources. The legislation makes provision to redress that imbalance by introducing qualified one-way costs shifting, which overturns the established principle that the loser pays the winning side’s expenses.
The bill also allows group proceedings, or multi-party actions, to be brought in Scotland for the first time through an opt-in process. Prompted by evidence from Which?, the UK’s largest consumer organisation, which argued for the introduction of an opt-out mechanism to be included alongside the opt-in provision, Liam McArthur lodged an amendment to that effect, which was agreed to at stage 2. Stage 3 amendments were lodged to permit the Scottish Civil Justice Council to develop the rules for both opt-in and opt-out procedures. Crucially, both of those procedures are now in the bill.
The legislation allows for damages-based agreements to be enforced as part of success fee agreements, which means that solicitors can claim a percentage of the compensation awarded to their client, if the case is won.
As Liam Kerr pointed out, the future loss provision, on which concerns have been raised from the outset, has been one of the most contentious issues in the bill. However, let us be clear: future loss can include money that is awarded to an injured pursuer specifically to cover, for example, essential and expensive medical equipment and the cost of future care.
On the issue of ring fencing, witnesses’ evidence was diametrically opposed. Personal injury lawyers argued for future loss to be included as part of lawyers’ fees, while insurance company representatives, as well as the Equality and Human Rights Commission, argued for that to be protected by ring fencing. The committee considered both sides of the argument, and ultimately decided at stage 2 to ring fence the future loss element, so that it cannot be claimed as part of lawyers’ fees. However, following that stage 2 decision, Sheriff Principal Taylor wrote to the committee outlining his personal concerns and opposition to the approach. Consequently, the decision to ring fence was reversed at stage 3.
Having carefully considered Sheriff Principal Taylor’s letter, I remain unconvinced by his arguments. For example, he says that ring fencing future loss in England and Wales has meant that it is not worth solicitors taking on such cases. However, that fails to recognise that the situation in Scotland is different. Scottish solicitors, unlike their counterparts in England and Wales, can enter into DBAs, claim a percentage of their fees from a lump-sum settlement and, in addition, be awarded judicial expenses for all their outlays and costs, with the possibility of an additional uplift for complex cases. In other words, I maintain that the comparison is not analogous.
I am disappointed that the amendments that were lodged that would have required lawyers to be open and transparent about the future loss element in settled claims were rejected.
Post-legislative scrutiny of the bill is crucial. The bill might have unintended consequences, given some of the controversial provisions. I thank the minister for improving on the amendment that I lodged at stage 2 in that regard.
I thank everyone who gave evidence, written or oral. I also thank my fellow committee members and the bill team and I pay tribute to the stalwart work of the Justice Committee clerks in helping the committee to scrutinise the bill.
The bill seeks to increase access to justice for individual consumers and the general public, in civil litigation cases. The Scottish Conservatives will be pleased to support it this evening.
I refer members to my entry in the register of members’ interests. I declared an interest at the beginning of consideration of amendments at stage 3; I hope that the declaration carries forward to the debate.
I have listened with interest to members’ speeches in this final part of our consideration of the bill and I very much welcome the support for the bill that has been expressed by members of parties across the chamber. In closing the debate, I will pick up on a few issues about the bill, which will improve access to civil justice in Scotland and thereby increase the possibility of negotiating a settlement.
The power to cap success fees, in section 4, is important. I remind members that the Government will lay draft regulations on caps, which will be subject to the affirmative procedure. Our intention is to follow the recommendations of Sheriff Principal Taylor, which he thought would permit solicitors and claims management companies a reasonable return on their work and the outlay involved in the pursuit of claims under success fee agreements.
Sheriff Principal Taylor thought that his carefully considered proposals struck a balance between the needs of individuals and the incentivisation of their legal advisers. As he said, an individual is much more likely to welcome 80 to 85 per cent of their damages claim than 100 per cent of nothing, if they cannot pursue a claim because they have no means of funding. In the context of the sliding cap on success fees, it should be borne in mind that the percentages are maxima and competition among providers will drive down deductions, in practice.
Although practitioners were clear that people would not have to pay more than one success fee, amendments to the bill at stage 2 made that clear and put it beyond doubt.
On the future loss element of damages, which is important, we had a good debate during consideration of amendments at stage 3 last Thursday. In light of the concerns that were raised at stage 2, I and other members were happy to support the amendment in Daniel Johnson’s name that means that future loss in cases in which the award is paid as a lump sum is not ring fenced—subject of course to certain important safeguards, which are set out in the bill.
As I said to Liam Kerr during earlier stages of the bill, there is no evidence that the approach will lead to inflationary damages awards. Judges make awards according to the law as it stands. I think that Sheriff Principal Taylor said that the chance of such a direct correlation was zero. [
On the important issue of QOCS—I agree that we want to hear Tavish Scott pronounce that; he can always intervene—I do not think that the approach will lead to unmeritorious claims, as has been suggested. A number of important factors will discourage spurious court actions.
First, as Sheriff Principal Taylor said, solicitors are unlikely to run cases that have little chance of success on a no-win, no-fee basis, because they are unlikely to be paid.
Secondly, the regulation of claims management companies in Scotland will discourage unscrupulous companies from operating north of the border. Thirdly, the compulsory pre-action protocol that was introduced in the sheriff court for personal injury actions that involve claims of under £25,000 will enable the identification at an early stage of claims that have no merit. Finally, section 8(4) provides that the benefit of QOCS may be lost if the pursuer behaves inappropriately, which will also discourage the raising of vexatious claims.
In its plan of work for the coming year, the Scottish Civil Justice Council has confirmed that it will prioritise implementation of the bill. It will therefore look at the important issues of what happens in circumstances in which a case is summarily dismissed or abandoned or the pursuer fails to beat a tender, all of which were raised during consideration of amendments.
On the important issue of third-party funding, it was never the intention to see trade unions facing awards of expenses against them when they act as funders and amendments have put that absolutely beyond doubt.
On auditors of court, we will see changes to the system, but we also anticipate transitional arrangements to deal with those who are currently in post.
The Government’s amendments at stage 3 on procedure in group proceedings will permit the Scottish Civil Justice Council, if it so wishes, to prioritise rules on opt-in procedure. In so doing, it might wish to look at the draft act of sederunt that was produced by the Scottish Law Commission some time ago. The Government will also provide the council with a policy note on what it considers is required for rules on opt-in. It is to be hoped that that will facilitate expeditious action.
In summary, the bill will directly enhance the ability of people in Scotland who have meritorious civil claims to pursue such cases in the courts. It seeks to remove some of the barriers that, in the past, have deterred individuals from accessing justice in the civil courts. It extends the funding options for individuals and clarifies how much it will cost to enter into a success fee agreement. It makes it clear that a pursuer will not become liable for the costs of the defender if a personal injury case is lost. The bill also addresses concerns about transparency of the work of auditors of court, who currently derive a private income from what is, in effect, a public office. Finally, the bill will lead to the introduction of group proceedings in Scotland for the first time.
I repeat my thanks to all those who gave evidence to help improve the bill during its parliamentary process, and I commend the motion in my name.