New personal injury costs rules have provided long-awaited clarity on when “the loser pays”

**Spoiler alert – the pursuer doesn’t pay often**

In March my colleague Katharine provided an update on the impending transition to the QOCS (Qualified One Way Costs Shifting) system for personal injury claims in Scotland.

In short, the principle is that a pursuer will only require to pay the defender’s legal expenses in very limited circumstances. This is a departure from the current default position where “the loser pays”.

As Katharine noted, this is likely to have a significant impact on which personal injury claims are litigated and how litigation is conducted for actions raised from 30 June 2021 (when the new rules come into force).

We already knew that, despite the move to QOCS, unsuccessful pursuers may require to pay their opponent’s legal costs when they:

• act fraudulently;
• behave in a manner which is manifestly unreasonable; or
• conduct the proceedings in a manner that the court considers amounts to an abuse of process.

These are high bars to clear. Quite how high will inevitably become clearer over time.

New rules have now been made which provide some, limited, good news for those defending personal injury claims. The headlines are as follows:

• Pursuers may require to pay their opponent’s legal costs if:
  • They do not beat a Tender (a formal judicial offer by a defender, akin to a Part 36 Offer) or unreasonably delay in accepting a Tender; or
  • They abandon (drop) the action; or
  • (For certain Sheriff Court actions only) the claim is ended by a “summary decree” application by the defender – which would involve the court concluding that the claim has no prospect of success at a preliminary stage.

In relation to costs awarded following a Tender:

• The rules do not define what amounts to unreasonable delay;
• The defender’s costs recovery is restricted to those incurred “post-Tender”
• The Pursuer’s liability to pay costs is limited to a sum equivalent to 75% of the damages which they have been awarded. If there are multiple defenders entitled to costs, that sum is apportioned between them.

It will be of some comfort to defenders that they can still utilise Tenders to apply some costs pressure to try and resolve claims for reasonable amounts. They will not be completely held to ransom.

However, where claims are of a low value and/or involve multiple defenders, the costs recovered by a defender will be significantly restricted. This will all require to go into the mix when deciding whether to defend a claim to proof (trial).

While the new rules provide some limited protection for defenders who are facing claims which are fraudulent or obviously have no prospects of success (another high bar for defenders to clear) or where a reasonable settlement offer hasn’t been accepted, it does not assist those who are defending claims which aren’t, for lack of a better word, dodgy but which otherwise fail on liability grounds.

Defenders who successfully rely on robust health and safety procedures, for example, to defend a claim will not recover any legal costs.

Whatever your view on whether QOCS is an equitable way of increasing access to justice, as we hit July it is going to be (another!) new normal for us to deal with.

If you are facing personal injury claims and need support getting to grips with the new regime please get in touch and we’d be happy to help guide you through it.

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