Court reform: does it add up?

Seismic change? A train wreck of a reform? Or necessary measures to facilitate access to justice for ordinary people? All these views have been expressed in relation to the headline reforms in the Courts Reform (Scotland) Bill, currently before the Scottish Parliament’s Justice Committee.

The key points have been well trailed since their emergence in Lord Gill’s review of the Scottish civil courts, published in September 2009. The privative jurisdiction of the sheriff court would rise to £150,000, 30 times the current £5,000. Given the resultant removal from the Supreme Courts of most personal injury litigation, a specialist PI court would be set up, within the sheriff court but with a national jurisdiction. Remit of cases below the threshold to the Court of Session, in terms of the bill, would be subject to dual “exceptional circumstances” and “special cause shown” tests, with the court also being able to refuse a remit for operational reasons. A new tier of summary sheriffs would hear cases below £5,000 in value, under a simplified procedure (possibly excepting PI cases). And a new Sheriff Appeal Court would deal with business currently appealed from the sheriff court to the Court of Session, becoming in nearly all cases the court of final appeal.

This comes at a time when the sheriff courts are beginning a major reorganisation with the closure of 10 courts, some having a low volume of business, but some on the basis of their proximity to other courts – in relation to which questions of capacity are already controversial.

The Scottish Court Service (SCS) insists that it has done its homework, and that the sheriff court system is capable of absorbing the further business that will devolve to it. Newly published statistics for 2012-13 show a continuing decline in total caseload (10% on the previous year, and 43% since 2008-09); and the number of cases predicted to arrive from the Court of Session is said to amount to 3% of that total – though relative complexity is not mentioned. The Lord President’s own submission to the Justice Committee commends the bill as a “robust, carefully balanced, and integrated approach which, if adopted, will provide Scotland with a civil justice system fit for the 21st century”. So what gives rise to the alarmist predictions?

Studying the opposing submissions to the committee, a diversity of views emerge, though with some leading themes.

Creaking at the seams?

Perhaps the broadest-based objections relate to allocated resources. The financial memorandum, which assumes that the bill’s provisions take effect in financial year 2015-16, discloses SCS forecasts that the specialist PI court would require 200 judicial sitting days (it is understood this means two sheriffs), and that £10,000 should cover set-up costs such as shrieval training, with a similar sum for “minor updates to one of its IT systems”. No further costs are anticipated for the sheriff courts at first instance. But concerns at the lack of additional support for the transitional stages can be heard both from supporters and opponents of the reforms.

“Our concern is that, certainly as presently constituted, the sheriff courts would find some difficulty in accepting what would be a significant number of new cases, cases which are going to require a reasonable level of judicial resources, to oversee and administer what is going on,” comments Peter Anderson of Simpson & Marwick, a firm that backs the Gill approach.

Solicitor advocate Craig Connal QC of Pinsent Masons agrees: “Certainly there is at least concern that if you simply put that quantity of cases into the sheriff court structure as currently run, it is difficult to know precisely how it would work.” Ronnie Conway for the Association of Personal Injury Lawyers chose much more colourful language, explaining his opposition to the Justice Committee: “The system is in crisis. What you are being asked to approve will turn it into a train wreck. I don’t apologise for the apocalyptic language – that’s what will happen.”

For the Law Society of Scotland, Fiona Robb, secretary to the Civil Justice Committee, points out: “In the short term there is no support envisaged in relation to such a dramatic change taking place by way of additional sheriffs... It’s difficult to see how there’s any scope for expansion in the system for sheriffs or summary sheriffs hearing cases in the sheriff court.”

As for those cases up to £150,000 that will become barred from the Court of Session commercial court, “Parties very much respect the expertise and the fast-track system which is in operation there, and fear that if there is no financial allowance for sheriffs to receive training or assistance, that level of expertise, speed and talent will not be replicated in the sheriff court.”

Right to choose?

This brings us to the question of litigant choice. Certainly in PI cases, and in commercial actions, there is a widely shared view that sums running into six figures are very significant matters of dispute, appropriate for the higher courts.

“The approach that’s being adopted is to fix the exclusive limit at £150,000, and in our view, that risks throwing the baby out with the bathwater,” Connal asserts. While cases up to £50,000 at least should move, “For many Scottish businesses in reality £150,000 is still a lot of money, and to have the option of litigating in the Court of Session removed up to that level is, we think, far too draconian and is going to drive cases that we would like to continue to take before Scotland’s best judges into another place.”

James Wolffe QC, Dean of the Faculty of Advocates, questions whether there is evidence that commercial litigants make inappropriate choices of forum. “They bring cases to the commercial court usually for good reasons, so I see the removal of that choice as a bad thing in itself.”

He adds: “At the moment, the commercial court is a tremendous resource. It’s set up with experienced judges and with procedures designed to resolve cases in a way that suits the needs of business. Also the reality of commercial litigation is that it’s not always the number in the financial claim that matters: the real point may be a claim for interdict, reduction of a contract or whatever, with financial claims attached, and it just doesn’t seem to me to be good policy to remove the choice of using that resource all the way up to £150,000.”

Anderson, on the other hand, is more sceptical as to how much say clients actually have in where they sue. Further, he believes that with most sheriffdoms having commercial court procedures, what is available in the Court of Session can largely be replicated in the sheriff court. “While I see the argument, and if it was genuinely client choice, I might be more sympathetic to it, I’m not convinced myself that the client actually makes the choice, or if they do that they have had it fully explained to them.”

Reparation issues

As has been seen, personal injury litigators are greatly exercised over the proposed £150,000 rule, for a number of reasons. Peter Crooks of Airdrie-based Bonnar Accident Law, which litigates extensively in both the Court of Session and sheriff court, values the former for its ability to settle points of law – legally complex claims are not necessarily those of high value – and for the availability of counsel.
“Our experience from cases we have taken in the Court of Session is that counsel have been extremely important, indeed invaluable, particularly in relation to higher value claims. At over, say £30,000-£40,000, you’re talking about potential multipliers, use of Ogden Tables, care costs. All these things are critically important to the client, to the quantification of the case, and counsel deal with them day in, day out: they are very knowledgeable.”

It might seem paradoxical, but the possibility of having to litigate in the sheriff court raises an access to justice issue, in the view of pursuer PI firms. In the Court of Session, the practice has developed of counsel accepting cases on a no win, no fee basis, relying on eventual recovery of expenses from the defender. Indeed, trade unions supporting their members in reparation cases rely almost exclusively on this funding method. In the sheriff court, however, recovery of counsel’s fees has to be sanctioned by the court, and pursuer firms fear being placed at a disadvantage.

Patrick McGuire of Thompsons explains: “There appears to be a comparison being made between a union funding a case and an insurance company, but nothing could be further from the truth. Insurance companies do not rely on cost recovery; they have deep pockets, and both experience and study show that they fund their cases employing the best possible solicitors in all cases and counsel in virtually all cases. Trade unions on the other hand rely on cost recovery at the end of the case. Their funds are stretched and they simply could not pay for items of work without the prospect of them being recovered.”

McGuire, in fact, is more relaxed than some about cases up to £150,000 transferring to a specialist court – with important provisos. “We say that all that is required is that if the new specialist PI court is created, the rules and procedures, and crucially the backroom staff, systems, IT, rules of court etc, are as good as victims currently enjoy, and that includes the need at an appropriate level and in appropriate types of cases for the automatic right to employ counsel. We say that means, first, all work related cases, because of the impact of s 69 of the Enterprise Act [which imposes the need to prove fault], but automatic sanction should also apply to all fatal cases and to all cases with a value of more than £20,000.”

Crooks, while noting a growing tendency for defender firms to deal with cases themselves prior to proof, agrees that the overall winner from the proposals is likely to be the insurance industry: “Even in modest value cases, the aim, if not the result, is going to be to exclude counsel, and for the reasons I’ve given, counsel add value particularly to quantum calculations. And to us it seems plain that the insurers want to cut Faculty out.”

Anderson, however, strongly protests the perception of “deep pocket” insurers. “I think that’s simply not true, and you could look at the stats for Court of Session litigation over the last two to three years and see increasing numbers of solicitor advocates appearing for defenders, not least because of the very considerable financial pressure that insurers are placing us under. So anybody that thinks an insurer has a wide open chequebook that he is willing to use to fund litigation without any thought to the cost is living in the 1970s. It is absolutely not true, and I think we probably operate under far greater stringencies and pressures than do claimants’ lawyers.”

What will actually happen about sanction for counsel is still unclear. There is no hint in the bill of any change in practice, but it was one of Sheriff Principal Taylor’s recommendations in his report on civil litigation funding that the resources deployed by the other side should be a relevant factor for a sheriff asked to grant sanction.

View from the bar

Where does Faculty stand in all this? Wolffe naturally recognises the advocates’ particular interest, but points to the support from solicitors and others for counsel’s continuing role in the affected litigation. His preference would be for a £30,000 privative jurisdiction threshold, at least initially (the Society proposes £50,000), but does not exclude the possibility of stepped increases as the new system beds in. He also welcomes the Taylor approach but, more radically, questions the whole sanction system.

“The question I want to ask is whether the notion of sanction for counsel in itself is too blunt an instrument, and whether it doesn’t inhibit the ability of solicitors to use counsel flexibly in cases across the board. If one thinks perhaps about the way solicitors use counsel in other jurisdictions in these islands, or perhaps the way some firms use counsel in PI cases, it might well be an attractive business model for litigation solicitors to use counsel much more flexibly than they currently can in the sheriff court.”

Faculty’s submission sounds a warning for the future of an accessible independent bar, “a key element of our constitutional democracy”, if such a large proportion of court business is taken to a forum where there is no automatic recovery of counsel’s fees. Wolffe sees this as having an immediate impact on advocates currently in practice, and equally, “from the point of view of the long-term health of the system, counsel should continue to be able to be instructed in cases in the sheriff court”.

Reminded of similar dire consequences that were predicted if divorce business went to the sheriff court, he responds: “I’m very conscious that over history there have been various events which have been seen as a threat to the bar. And I would dearly like to think that this falls into the same category. What might be said to be different about the present proposal is that it is essentially a structural shift of a very significant volume of cases, to be litigated in the sheriff court with the right of appeal then being to the Sheriff Appeal Court rather than to the Inner House, and that poses a significant challenge, if that’s the structure we end up with, to the independent bar.”

Solicitors quizzed on the subject tend to the view that the bar will survive, if in a leaner and indeed fitter shape than at present. Crooks accepts there is some risk to its future if the sanction rules remain as they are, but Connal observes that “many such challenges have arisen in the past and an independent bar has survived”. Anderson adds: “I think there will always be an independent bar in Scotland, as in England, for people with real talent and expertise and who know their talents are best used not in a law firm.”

For the Society, the issue is part of the reasons for introducing the jurisdiction change more gradually. “We are supportive of the bar, but obviously our main concern is to look after the interests of both the solicitors profession and the public,” Robb comments. “We recognise that at the moment there is a value that is being added by the use of advocates. We are, however, cognisant of the fact that there are solicitor advocates and solicitors who will be more than capable of bringing high-value cases in the sheriff court, but the skillset needs to develop over time and it shouldn’t be such a dramatic and immediate change.” “Seismic” is the word used in the Society’s submission on the £150,000 proposal.

Consumer approach

Although the opposition to the changes is being led by the pursuer reparation firms, Citizens Advice Scotland and Which? believe the reforms are in the consumer interest, which requires cases being taken to the lowest level possible. Lauren Wood, policy manager at CAS, argues: “What shouldn’t be lost sight of is that this is part of a much bigger programme that will change how the whole justice system functions, not just the courts. The bill is to do with the courts, but as consumer organisations we would like to see a lot more work done at the gateway of the system so that fewer things come to court. There are a lot of cases that come into the court system by default, and there is a lot that could be done by way of preventative work and even advice work so that people know what all their options are, and what the likely outcomes of those options will be.”

On the line being taken by PI solicitors, she adds: “I think those reasons are all very firmly rooted in how the system functions now, and what can’t be lost sight of is the fact that reforms will change how the system functions... I can appreciate the points that people make, but it can’t be forgotten that the aim is a new justice system, that will work better for people all round than the one that exists today.”

For Wood, equality of arms “doesn’t mean that you have the extremes of arms that are available”. Proportionality is the key, and if solicitors feel the need to instruct counsel in cases that would come to the sheriff courts, they just need the opportunity to build experience in the same way as their criminal counterparts do.

Wary of anything that would increase costs at sheriff court level, she adds: “I think case management is the key to making sure that sanction for counsel is decided on a case-by-case basis. I don’t think that it should at any point become normal that counsel should function in the sheriff court in the same way that they function in the Court of Session just now, because as soon as that happens, it undermines all the changes that aim for proportionality in the justice system.”

CAS is clearly approaching the subject from the opposite end of the spectrum, making it easier for people to bring lower value, consumer-type claims by themselves. The Society, Robb says, is broadly in agreement on that front, but as was said to the Justice Committee, “that is only likely to be successful if the sheriffs have time to operate an inquisitorial system in which they effectively assist the parties in resolving their dispute. And given our previous comments about the lack of additional sheriffs, we are concerned that the system is unlikely to be sufficiently resourced”.

Asked whether it is feasible to raise the sheriff court privative ceiling to £150,000 in one go, Wood replies: “I think that depends on the implementation programme for the wider changes, which has yet to be decided. At present, there are too many unknowns to say for sure yes or no.”

Unknowns are what all court lawyers appear to be facing at the moment, and they clearly could do with some reassurance that the Government is prepared to support the justice system through a time of such significant upheaval.

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Some further comments of interest from our respondents:

On the £150,000 jurisdiction threshold

Fiona Robb

“We recognise the Court of Session as being a centre of excellence, and in order for it to be maintained as a highly regarded court whose opinions will be influential and useful for the Scottish legal system, we do recognise a need for the court to receive a reasonable number of cases.”

“We are arguing in favour of a £50,000 jurisdiction limit on the basis that it would be in keeping with the position both in England & Wales and in Northern Ireland, and it would allow the Scottish Civil Justice Council to review the impact of the reforms and if appropriate move the jurisdiction limit in the future, but it would be a more graduated and less dramatic reform of the Scottish courts.”

Craig Connal

“I'm certainly surprised at the level that has been selected. I think if it had been something like £50,000 perhaps people wouldn't have turned a hair. At £100,000 there would have been a lively discussion; I think much of the discussion has been because a figure of £150,000 has been employed and in my view in the Scottish marketplace a very large number of disputes will come under that headline.”

Peter Anderson

“I think it's quite difficult to draw parallels really [with other parts of the British Isles], because the sheriff court has always had an unlimited jurisdiction, so it would always have been possible for people to choose to raise these kinds of cases in the sheriff court. The fact is that, I think largely for other reasons, solicitors chose not to. That's entirely understandable. So I wouldn't be bothered by being out of step with the rest of the UK or the rest of the world. We are on corroboration anyway.”

“I think there will be a period of readjustment [for the Court of Session], but just as nature abhors a vacuum I think court lawyers are inventive and remarkably they come up with all sorts of things that High Court judges should be dealing with. You only have to look at the explosion in public law issues in Scotland over the last five to 10 years, which have to a significant degree replaced PI litigation anyway.”

“The reforms following Lord Coulsfield's report have made huge changes and have definitely improved the way we do PI litigation. If I have any disagreement with what the Lord President's report says, it is that sometimes I wonder whether it was a problem that actually needed fixing. But he's chosen to do it this way and to strip this work out of the Court of Session, and I think it's pretty hard to argue against doing that.”

On specialist sheriff courts and the Sheriff Appeal Court

Fiona Robb

"One of the things we touched on in our evidence session was in relation to predictability, and we argue that a large percentage of cases settle in the Court of Session because there is a high degree of predictability at what a Court of Session judge will award. Moving forwards to the proposed reforms, while there will be a specialist PI court, there will only be two sheriffs in that court, so we think there will be a complete lack of predictability between different sheriffs in Inverness, Dumfries, the PI court, Glasgow: it will be difficult to anticipate what a sheriff will award so there will initially be a huge increase in the number of cases that are litigated. Christine Grahame at the Justice Committee suggested that the Sheriff Appeal Court might be a way round that, but I think it's difficult to envisage how one sheriff sitting in an appeal in a case from one sheriffdom in Scotland could actually assist with predictability of outcome."

Craig Connal

“The existence of appeal rights from a single sheriff to a single sheriff principal has always seemed a little odd, although they are mirrored by some systems in England where a decision of a registrar may go to a judge.”

Peter Crooks

“A lot of the leading cases over all areas of the law, not just personal injury, are coming from the English Court of Appeal, and we would have to ask whether, if the Sheriff Appeal Court is going to be set up the way it has been proposed, decisions would come with the same authoritative nature as they do from the Inner House at present.”

James Wolffe

“So far as I understand it, England & Wales manages with a single national appeal court, and it just seems odd that we are setting up a parallel appellate structure.”

On counsel in the sheriff court

Craig Connal

“The vast majority of litigation in the sheriff court at the moment is conducted on precisely that basis [the rules on sanction for counsel], and sometimes you see counsel and sometimes you don't. So I don't see any reason in particular why the rules should change.”

“I'm not at the moment convinced that the issue of counsel is the driver for access to justice, and my guess is that the industry which is the PI claimant industry is quite capable of flexing to meet whatever changes are imposed on it.”

Patrick McGuire

“We are a specialist PI firm, we are highly experienced, skilled, but we deliberately choose to use counsel because we recognise what they bring and that there is a need for equality of arms. We know insurers instruct them in these cases and we believe it is an absolute right of a victim of an injury to receive appropriate representation to achieve justice, and that is representation at the same level as the defenders will be using.”

“There has been a revolution in PI litigation since Chapter 43 was introduced to the Court of Session, literally. It introduced timetables at various stages, a crucial part of which is the pre-trial meeting. And it is at that meeting with counsel representing both parties that the vast majority of cases settle, and of course crucially the vast majority of cases settle at that stage never having appeared before a judge at any point. These cases run through quickly, efficiently, without any need for any judicial time at all. And they settle quickly because you've good good solicitors, good counsel and good rules. And that's what we can't lose.”

Peter Anderson

“Most PI cases are going to be run by a small number of pursuer law firms who are very good at doing them. The contrary point can be made that they are as expert as any member, or most members, of Faculty.”

On the cost of litigation

James Wolffe

"I suppose it is a perennial issue in the context of litigation that professional advice comes with a cost attached. The question I would ask is, if one has a case that runs to proof in the Court of Session, there are likely to be issues of complexity that parties have been unable to resolve."

On access to justice

Craig Connal

“The fact that cases would be heard in the sheriff court rather than the Court of Session doesn't on the face of it seem to me to impact directly on the question of access to justice; in fact one view might be that by reducing the cost, as is clearly one of the objectives, people might have better access to justice.”

Patrick McGuire

“Sight should not be lost of very important and informative government research in the form of a paper by Elaine Samuel. She was looking at the small claims court, but the core of her paper applies absolutely here, a document entitled In the Shadow of the Small Claims Court. She pointed out in that paper the absolute and inextricable link between access to justice and access to representation. To reduce representation in PI cases is to reduce access to justice. And that applies equally without question to the need for equality in representation. If insurers are using counsel, for a fair level playing field and appropriate access to justice, victims too must have that right.”

“Another point is the appropriateness of PI cases being held not only before summary sheriffs but before the new simple procedure that the bill is proposing. As the bill is drafted, all cases with a value of less than £5,000 will be heard by summary sheriffs. It suggests that those cases will proceed under the simple procedure, so it's possible that PI cases will be heard that way too. That would be wholly inappropriate and wholly at odds with everything that has happened in relation to PI litigation since the revolution with chapter 43 in the Court of Session. We have specialist rules there, and in the ordinary procedure, and currently in the summary cause. And what we say simply is, has all that been a complete waste of time? If these cases are to be heard before summary sheriffs, they must be heard using appropriate procedures, which effectively is the current chapter 34. We actually believe that will be the case anyway; it's just not clear.”

Peter Crooks

"We are one of the few specialist firms that still do legal aid, though the majority of cases we do are now speculative. And almost all settle before proof so you always recover expenses. Another point is that SLAB already operate a stringent sanction policy for counsel; it is not easy to obtain legal aid with sanction in a sheriff court case. And on current guidance you would only get sanction for a Court of Session action for anything likely to be worth over £50,000."

Lauren Wood

“There'a lot more that could be done to provide people with options that aren't necessarily courts, and breaking the idea that justice equals court is an important thing to do, and I think these reforms as a whole facilitate that.”

“A big element of what we would like to see in the changes is a whole system approach, so it's not just about the courts but about the pathways that people take to get there, and whether there are other pathways people could take that would actually solve their disputes on their concerns in a more constructive way from the user than the court system does at present. I think that's one of the biggest things that are missing from the bill, which you can understand because it is a courts reform bill. The other thing that we are very supportive of is options for alternative dispute resolution at all stages of the process, before court and even during the court process. It's something I feel should be much more accessible for people than it is currently.”

Other points

Craig Connal

“If you just impose change it may be quite a long time before you get anything like the structure you would have drawn up on your blank piece of paper.”

Peter Anderson

“I reinforce my opposition to qualified one-way cost shifting, which in my view, if Sheriff Principal Taylor's views were to be adopted, would lead to very unfortunate developments, because at the minute the traditional and very simple rule of costs does have real impacts for claimants and their advisers. It's not unfair; on the contrary it's the only reasonable and fair way of apportioning risk, and the fact that it's relatively rare of itself for a successful defender to enforce an award of costs is not a reason why having the threat of it available is not a very valuable aid to settlement. And I can tell you that having spoken to a number of pursuers' solicitors they would agree – they find it very useful as well in helping their clients to concentrate.”