A seismic change in the normal rules of allocating costs in litigation occurred when Qualified One-Way Cost Shifting (QOCS) landed in England and Wales in 2013, before coming to Scotland in 2021. QOCS applies in personal injury actions and was introduced to widen access to justice for personal injury claimants.
In essence, QOCS disapplies the traditional 'winner takes all approach' and provides that pursuers will not be liable for the defenders' legal costs even if their action is ultimately unsuccessful. The extent of QOCS application is constrained by certain exceptions listed in The Civil Procedure Rules, Part 44 (England) and Civil Litigation (Expenses and Group Proceedings) (Scotland) Act 2018, Section 8 (Scotland). The wording of these exceptions are different North and South of the border.
In Scotland, QOCS can only be disapplied where the pursuer has displayed manifestly unreasonable behaviour, there has been an abuse of process or there is evidence of fraudulent representation. In England, QOCS applies unless the claimant has disclosed no reasonable grounds for bringing the proceedings or the claim is found to be fundamentally dishonest. CPR44.15 - 44.17 contains a full list of exceptions.
A high bar indeed
Upon inception in Scotland, Sheriff Principal Taylor acknowledged the high bar for the disapplication of QOCS. The Sheriff Appeal Court's verdict in Natalie Manley v Thomas McLeese [2024] SAC (Civ) 16 exemplified this; determining that QOCS may not be disapplied even if the pursuer was incredible and unreliable. A similar trend was observed in England. In Ho v Adelekun [2021] UKSC 43, the Supreme Court recognised that the rules 'may lead to results that at first blush look counterintuitive and unfair.' This apparent unfairness prompted revision of CPR 44.14 in 2023 to (theoretically) provide successful defendants in England with greater entitlement to recover costs.
QOCS application in group litigation
So how do these principles apply in the context of class actions and group litigation?
The only reported case on this issue so far is Waterfield and 25 others v Dentality and 3 others (No 2) [2020] 11 WLUK 223, where several patients of a dental practice tried to bring damages claims after being exposed to a risk of contracting blood borne viruses. Before issuing any claims, the claimants applied for a GLO. Their application was refused on the basis it was inadequate and premature. An issue therefore arose as to whether the claimants were protected by QOCS, given that their application had been issued pre-action. Oxford County Court acknowledged that it would be 'perfectly possible to give the word 'proceedings' a wide meaning,' encompassing pre-action claims. However, the Court ultimately found in the defendant's favour. It was noted that excluding the claimants from QOCS protection did not undermine the purpose of the regime of ensuring access to justice. The option remained open to the claimants to make a GLO application which did benefit from QOCS protection.
It remains to be seen how the Courts in Scotland will interpret QOCS rules in a class action scenario. In group proceedings, where multiple parties unite to bring a personal injury type action, the default QOCS rules will make it easier for them to benefit from litigation funding. Recent case law indicates that seeking to disapply the QOCS rules is a very high hurdle for defenders that can only be overcome in very exceptional circumstances. It will not be an easier task in a group proceedings action, so long as those who are acting for/funding the group are carrying out all necessary diligence to ensure that only those with a valid claim join the group.
If you would like advice on Group Litigation and Qualified One-Way Cost Shifting, please get in touch with our market-leading Insurance or Group Proceedings teams, or your usual Brodies contact.
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