2024 Review of Qualified One-Way Cost Shifting

Qualified One-Way Cost Shifting (QOCS) was introduced to provide additional protection for personal injury pursuers by ensuring that, in most cases, they are not required to pay the defender’s legal expenses if their claim is unsuccessful. This reduces the financial risk for pursuers who are pursuing legitimate claims and is a significant step forward in improving access to justice for those concerned about the cost of losing a case.

In 2023, there was a flurry of judgments that tested the limits of the legislation and gave a clearer picture of when QOCS would and would not apply. What became clear is that every case would be determined on its own specific facts and the bar for disapplying QOCS is high. The credibility and reliability of witnesses will be under close scrutiny and, in the absence of a finding of the pursuer being unreliable and incredible, a motion for QOCS to be disapplied is unlikely to succeed.

In 2024, the case of Nicola Bruff v Royal and Sun Alliance Insurance Limited [2024] SC EDIN 31, tested the limits of the legislation once again.

This case concerned a road traffic accident at a junction between a minor and major road where temporary traffic lights were operating. There was a dispute between the pursuer and defender’s insurer regarding which driver was entitled to continue at the junction. The defender entered the junction when the temporary traffic light was amber. The pursuer entered the junction from the opposite side when the temporary traffic light was green. The defender was still between the temporary traffic lights when the pursuer started driving and a collision occurred.

The defender openly admitted that he drove through an amber traffic light signal. However, the Sheriff found that the pursuer had failed in her duty to drive with reasonable care and should have anticipated that an oncoming vehicle could still have been between the temporary traffic lights.

Although the circumstances of the accident appeared to be straightforward, it was the pursuer’s conduct throughout the evidential hearing which raised the question of whether QOCS should apply. Sheriff Campbell did not accept that the pursuer, or any of the witnesses called by the pursuer, as being credible and reliable witnesses. On the other hand, the defender was accepted as a credible and reliable witness.

Judgment was granted in favour of the defender. The defender moved for QOCS to be disapplied on the basis that the pursuer had:

1. Made a fraudulent representation or otherwise acted fraudulently in connection with the claim;
2. Behaved in a manner which is manifestly unreasonable in connection with the claim or proceedings; and
3. Had otherwise conducted the proceedings in a manner that amounted to an abuse of process.

The Court has discretion to disapply QOCS protection when proceedings are not conducted in an appropriate manner. Section 8(4) of the Civil Litigation (Expenses and Group Proceedings) (Scotland) Act 2018 sets out three scenarios which the Court may consider in this context. They are where the Claimant or his legal representative:

(a) makes a fraudulent representation or otherwise acts fraudulently in connection with the claim or proceedings;
(b) behaves in a manner which is manifestly unreasonable in connection with the claim or proceedings; or
(c) otherwise, conducts the proceedings in a manner that the Court considers amounts to an abuse of process.

Sheriff Campbell held that:

1. The ground in section 8(4)(a) ‘fraudulent misrepresentation’ was not established by the defender. Despite Sheriff Campbell not finding the pursuer or witnesses called by her as credible and reliable, he did not go so far as to find in fact that the pursuer had made a fraudulent misrepresentation. The defender principally relied on the statement of Daniel Donlin (relied on by the pursuer throughout the action) which was accepted to be false prior to the proof and was not relied on at proof. The defender submitted that reliance on the statement fulfilled the criteria of section 8(4)(a). However, applying Manley v McLease [2024] SAC (civ) 16, as the fraudulent statement had not formed part of the case at proof, no finding in fact that there had been fraudulent misrepresentation was made and therefore the court was not in a position to hold that the criteria in 8(4)(a) was met.
2. The defender did successfully establish the grounds in section 8(4)(b) ‘manifestly unreasonable behaviour’ and section 8(4)(c) ‘abuse of process’.

• • Manifestly unreasonable behaviour – the court applied the interpretation from Lennox v Iceland Foods [2022] SC EDIN 42; 2023 SLT (ShCt) 73, in which Sheriff Fife at para 60 held that manifestly unreasonable means ‘obviously unreasonable’. The court considered that it was obviously unreasonable for a party to an action knowingly to seek to rely on a witness whose testimony is completely untrue, whether that reliance occurs at the stage of formulation of the case, or thereafter in preparation for proof, rather than necessarily at proof itself.
  • Abuse of process – the court also considered that knowingly seeking to rely on a witness whose statement is entirely untrue amounts to an abuse of process.

With the findings that the criteria in sections 8(4)(b) and 8(4)(c) was met, QOCS was disapplied and the pursuer was held to be liable for the defender’s judicial expenses in their entirety.

The Bruff case serves as timely reminder that the credibility and reliability of witnesses is a vitally important consideration that cannot be overlooked throughout the preparation of a case. Whilst the bar remains high for QOCS to be disapplied, the protection afforded to a pursuer against adverse costs will quickly disappear if any reliance is placed on evidence that is plainly untrue.

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