Do expenses follow success?  Qualified One-Way Costs Shifting (QOCS)

You will often hear the expression in litigation “expenses follow success”.  The presumption is the successful party has achieved the outcome they sought when they raised the court action; but also the ability to issue a bill for their costs of the litigation to the losing side.  It is not always as straight forward, since expenses are awarded at the discretion of the court.  However, the introduction of QOCS is set to change the landscape of litigation.

What is QOCS?

The Civil Litigation (Expenses and Group Proceedings) (Scotland) Act 2018, alongside other changes, introduced rules that restrict a Pursuer’s liability for cost awards against them in personal injury claims, even if their claim is unsuccessful.

The intention of the Act is to allow access to the courts without fear of an expenses award if the claim is unsuccessful.  The presumption is that there will not be any award of expenses made against the person bringing the action.

When does it apply?

Despite the Act being about since 2018 it is only now, following further regulations that the part relating to costs is coming into force. The section of the 2018 Act that deals with QOCS comes into force on 30 June 2021, meaning that QOCS will apply to personal injury claims, including fatal claims, commenced on or after 30 June 2021 and to proceedings arising from those claims.

Are there exceptions to the rule?

Always!

In general costs protection will be lost if the Pursuer or their 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

Further rules are contained in separate legislation: Act of Sederunt (Rules of the Court of Session 1994, Sheriff Appeal Court Rules and Sheriff Court Rules Amendment) (Qualified One-Way Costs Shifting) 2021.

This also comes into force on 30 June and sets out further circumstances when a party can make an application for costs against the pursuer, specifically:

(a)   failure by the pursuer to obtain an award of damages greater than the sum offered by way of a tender lodged in process;

(b)   unreasonable delay on the part of the pursuer in accepting a sum offered by way of a tender lodged in process;

(c)   abandonment of the action by the pursuer; or in certain circumstances if the defender has obtained summary decree

Litigation, before and after these reforms, carries risk.  However, whether you are pursing or defending a claim, it is more important than ever that parties to litigation understand their role, responsibilities and above all the risks of litigation.