Scottish court reforms—all change for dispute resolution

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What next for dispute resolution in Scotland? Stephen Goldie, head of dispute resolution at Brodies, discusses the reforms that came into force on 28 November 2016, and what they mean for clients.

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What reform changes have come into force in Scotland? How will they impact businesses and individuals?

On 28 November 2016, a number of significant changes came into force.

Simple procedure

A single new procedure called ‘simple procedure’ replaces the existing small claims and summary cause procedures for straightforward payment actions that are worth £5,000 or less. This is a new set of rules expressed in user-friendly language, created with the aim of making it easier for unrepresented parties to handle their own claims. Court users will need to get used to the unfamiliar terminology, which sees claims being made by claimants and defended by respondents.

Sheriffs (and their colleagues in the newly-created role of summary sheriff) have been given wide powers to case manage and decide cases under simple procedure. Evidential rules are relaxed and cases can be decided by a sheriff without hearing evidence from witnesses, if appropriate. Sheriffs are required to help parties negotiate a settlement if it appears to the sheriff that settlement is possible and they must also explore with parties the possibility of using alternative dispute resolution.

Claims with a value of £3,000 or less will be subject to restricted recovery of expenses very similar to those presently used in small claims. Successful parties in actions worth between £3,000 and £5,000 will continue to be able to recover judicial expenses at a level broadly similar to that which currently applies in summary cause.

More complicated low value claims, including personal injury claims, will not be dealt with under simple procedure. Instead, they will continue to be handled as summary cause actions for the time being. New rules are being drafted to bring these ‘special claims’ within simple procedure next year.

The introduction of the new procedure represents an opportunity for sheriffs to deal proactively with lower level claims and identify at an early stage the real legal and factual issues in dispute. It’s hoped that commercial clients looking to recover debts will find that the level of judicial involvement envisaged in the simple procedure rules will be advantageous. It will assist in weeding out unmeritorious defences and should help conclude claims more rapidly.

Extended interdict

Sheriffs are given the power under section 84 of the Courts Reform (Scotland) Act 2014 (CR(S)A 2014) to grant interdict and interim interdict (the Scottish equivalent of an injunction) having effect in relation to conduct at places outside the sheriff’s sheriffdom. This extends the sheriff’s existing power, which was historically restricted to the interdict of conduct within the sheriff’s sheriffdom.

This new power will result in the granting of what are to be known as ‘extended interdicts’. In the event that the interdict is breached, proceedings for breach of an extended interdict can be brought in a choice of sheriffdoms—where the breach occurred, where the interdict was granted, or where the defender is domiciled.

This new power is particularly significant following the increase in the exclusive competence of the sheriff court to £100,000 in September 2015. A party who is now required to raise their action in the sheriff court will now be able to seek an interdict with a wider geographical effect—including a Scotland-wide interdict previously available only in the Court of Session. It will be welcomed by commercial clients who will now be able to choose to litigate a wider range of interdict proceedings in the sheriff court.

It’s important to be aware that, at present at least, the change may be problematic for parties looking to oppose an award of interim interdict. Interim interdict is often granted in favour of a pursuer in the absence of the defender on an ex parte basis when an initial writ is first lodged with the court. A defender will only get an opportunity to appear and oppose the initial award if they have previously lodged a protective ‘caveat’ with the court. At present there is no Scotland-wide caveat system in place for the sheriff court, so commercial clients should consider lodging multiple caveats in those sheriff courts that may have jurisdiction to deal with an application for an extended interim interdict.

Lay representation for non-natural persons

In limited circumstances companies, partnerships and associations that are a party in any court proceedings will be entitled to ask for permission to be represented in court by someone other than a solicitor, solicitor advocate or advocate. However, the rules are tightly drawn so that the party must show that they are unable to pay for legal representation, the proposed lay representative must be a suitable person and the court must consider that it is in the interests of justice to grant permission. As well as being a suitable person the applicant must also be a director/secretary of the company, a partner/member of the partnership or a member/office holder of the association.

Given the restrictive nature of the rules, it seems unlikely that it will be common for lay representatives to be appointed to act on behalf of non-natural persons in larger value sheriff court or in Court of Session actions.

However, if the court action is being brought under simple procedure the rules are relaxed in that there is no requirement to establish that the party cannot pay for legal representation. In addition, the range of potentially suitable representatives is expanded beyond office holders to include employees.

It seems likely, therefore, that in simple procedure cases companies/partnerships/associations will be more likely to try to handle claims themselves.

Those choosing (or being asked) to act as legal representatives in these circumstances should be aware, however, that they may find themselves personally liable in expenses if the court finds that they acted unreasonably in the conduct of proceedings. In that event, if the court makes an award of expenses against the non-natural person then the court is allowed to find the party and the lay representative jointly and severally liable for those expenses. That will be particularly significant in those cases where the party itself does not have funds to pay for legal representation.

Companies looking to take advantage of these new provisions, particularly in simple procedure cases, must consider very carefully whether their chosen lay representative has the appropriate knowledge and skills to properly represent them in court. Even simple procedure cases will often involve quite complex legal issues and lay representation may prove to be a false economy. It is no substitute for proper legal advice and representation.

Compulsory pre-action protocol for personal injury actions

A voluntary pre-action protocol for personal injury cases has operated for around ten years in Scotland but a new, albeit largely similar, compulsory protocol will come into operation where injuries are sustained on or after 28 November 2016. It will apply where the total value of the claim is anticipated to be £25,000 or less but will not apply to clinical or professional negligence or disease claims.

Under the protocol, the defender (normally represented at this stage by their insurers) is given three months to investigate matters set out by a potential pursuer in a claim form. If the defender admits liability then the pursuer must produce a valuation of claim together with supporting documentation and the defender is given an opportunity to admit liability and make an offer in settlement. If that offer is not accepted then the pursuer must give a reasoned response and thereafter wait at least 14 days before raising court proceedings.

A specific table of recoverable expenses is provided for cases that settle at the protocol stage without the need for court proceedings being raised.

If no settlement is achieved then any party can rely on any failure to comply with the protocol once court proceedings are raised. If a sheriff finds that a party has failed to comply without ‘just cause’ then the sheriff can ‘take any steps the sheriff considers necessary to do justice between the parties’ including sisting the action until parties have complied or making an award of expenses against the non-compliant party. The sheriff will have regard to the nature of the breach, the conduct of the parties during the protocol stage and the aims of the protocol.

In addition, if a pursuer is found to have unreasonably failed to accept an offer in settlement that was made in accordance with the protocol and was lodged as a tender after the raising of proceedings but before defences are lodged, then a sheriff has power to reflect that failure in any award of expenses.

The introduction of the new protocol is a response to criticism that the voluntary protocol lacked sanction for breach. In recent years, Brodies’ insurance and risk team has helped lead the way in persuading the Scottish courts to consider pre-action behaviour when considering awards of expenses. As a result, there is now a body of case law supporting the need for parties to engage in constructive discussion prior to litigation. The introduction of the compulsory protocol will give much needed teeth to pre-litigation rules, and is to be welcomed. Of course it’s important that institutions and insurers dealing with personal injury claims pre-litigation are fully aware of the requirements of the protocol and the impact that any failure to comply with it may have.

What will the changes mean for those using the Scottish courts?

In 2017, simple procedure will be extended to include types of action that require distinct sets of rules including:

  • personal injury actions
  • actions of multiplepoindings (to determine the rights of parties to a fund or property in dispute and to release the holder of the fund from any claim)
  • actions of count, reckoning and payment (to compel the respondent to account to the claimant and the pay sums due)
  • proceedings for aliment (financial support of a spouse or child enforceable by law)
  • actions for the recovery of heritable property (land and houses as distinct from moveable property)
  • actions of furthcoming (by a person who is owed money against a third party)

The Scottish Courts and Tribunal Service will also be introducing its new civil online portal, which, in its initial phase, will allow parties in simple procedure cases to make and respond to claims and lodge documents online. Once in place, this will mean that 60% of sheriff court business will be handled online. The plan is that, once bedded in, the portal will be rolled out to other types of court action.

Online interaction with the court and the ability to lodge and access documents through the secure portal will be welcomed by legal practitioners and clients. Parties and their representatives are already very familiar with the electronic exchange of information, whether through email or data rooms. Scotland’s courts are still reliant on hard copy paper documents being produced and lodged as a matter of routine and the portal will offer real opportunities for improving the efficiency of the litigation process.

The Scottish Government plans to introduce the Expenses and Funding of Civil Litigation Bill into the Scottish Parliament in 2016/17. That Bill will look to build on the changes introduced by CR(S)A 2014 and, among other things, it will:

  • allow damages-based agreements to be used
  • introduce qualified one-way cost shifting in personal injury claims
  • introduce new court rules to govern third party funding of litigation, and
  • allow for the introduction of multi-party or group litigation for the first time

Interviewed by Nicola Laver. The views expressed by our Legal Analysis interviewees are not necessarily those of the proprietor.

This was originally published LexisPSL. Discover how LexisPSL can help you stay on top of the latest developments and find the answers you need fast, click here for a free trial to access

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