Scottish QOCS in place by Winter 2020? The impact on fraudulent claims

For some time now Scottish practitioners have been warning clients about the introduction of Qualified One Way Costs Shifting (QOCS) in Scotland. In 2018 the Civil Litigation (Expenses and Group Proceedings) (Scotland) Act was enacted, setting out the legal framework for QOCS. However, the necessary court rules implementing QOCS are yet to be published. The Lord President, and Chair of the Scottish Civil Justice Council, has now written to the President of the Law Society of Scotland advising that QOCS will be in force in Scotland “no later than Winter 2020”.

Put briefly, the impact of QOCS is that, even if unsuccessful, a pursuer will not be liable for a defender’s costs. However, as in England, one of the situations in which a pursuer/claimant can lose the benefit of QOCS is in cases involving fraud. The current wording of the Scottish Act states that if the pursuer “makes a fraudulent representation” or “otherwise acts fraudulently in connection with the claim or proceedings” then QOCS can be disapplied.

For those handling and defending fraudulent claims, the definition of “fraudulent representation” and “acts fraudulently” is of particular interest. The phrases are not defined, leaving them open to interpretation and dispute. There is also no reference to the English test of “fundamental dishonesty” as set out in the CPR. It is therefore likely that, as with England and Wales, there will be an initial flurry of hearings focusing on interpretation and the disapplication of QOCS. The following are but a few examples as to where the point could be taken with varied prospects of success: 

• The pursuer denies a medical history but, in fact, has a lengthy (and relevant) history
• The pursuer denies having been able to drive/socialise/work after the accident but has been found to have partaken in such activities
• The pursuer claims loss of earnings but has not lost income
• The pursuer has grossly exaggerated the level of injury
• The pursuer claims to have been injured in a low speed impact but the court finds no injury occurred
• The pursuer claims to have been present in a vehicle but was found not to be

In all but the last example it is likely that there will be arguments surrounding the true meaning of “fraudulent misrepresentation”.  

 A further point to bear in mind is whether defenders will be required to plead fraud. In England, whilst usually advisable, it is not necessary for a defendant to plead fraud. This is on the proviso that the claimant has been given proper warning of a possibility of a finding of fundamental dishonesty (Howlett 2017).  It is yet to be seen whether the Scottish courts will follow suit. However, given the general requirement for fair notice in pleadings, defenders would be best advised to specifically plead fraud when it is possible to do so.

It is also possible that the winter 2020 deadline will not be met. Given the ongoing impact of Covid-19, the date could understandably be subject to change. However, once introduced, insurers could well start to see an increase in their levels of Scottish litigation.

For further information please contact Emily Jeffrey.