Courts reform: a call to pre-action

From 28 November 2016, a new compulsory pre-action protocol will apply to certain personal injury claims estimated at a value of £25,000 or less.

The concept of a protocol to regulate the pre-action conduct of prospective parties to an action is not new to Scottish civil court procedure. For example, Practice Note No 6 of 2004, which applies to commercial actions in the Court of Session, contains provision on pre-action communications which parties are expected to follow. And personal injury practitioners will be familiar with the voluntary pre-action protocols introduced by the Law Society of Scotland in 2006 which encourage the early resolution of personal injury claims up to £10,000, professional negligence claims up to £20,000 and industrial disease claims of any value.

In 2009, the Scottish Civil Courts Review led by Lord Gill considered pre-action protocols and made the following recommendations:

• existing pre-action protocols in relation to personal injury and industrial disease claims should be compulsory;
• in principle the protocols should apply to all categories of personal injury claim;
• a protocol on clinical negligence actions should be developed;
• the court should have power to make orders in relation to expenses and interest for non-compliance with pre-action protocols.

Following the Gill Review, the Courts Reform (Scotland) Act 2014 gave the Court of Session further powers to make court rules regulating procedure and practice in civil proceedings. These include encouraging the settlement of disputes and the action to be taken by prospective parties before proceedings are raised (ss 103 and 104 of the 2014 Act). The rules introducing the compulsory protocol have been made by the Court of Session under this new power on the basis of draft rules recommended by the Scottish Civil Justice Council (SCJC).

The compulsory protocol is modelled very closely on the existing voluntary personal injury protocol, so practitioners in this area will be familiar with the concept and “look” of the protocol; but there are important differences.

The aims of the protocol are to encourage the fair, just and timely settlement of disputes, and to encourage good practice regarding disclosure, investigation and the narrowing of issues to be determined through litigation where settlement cannot be reached.

The new rules – where to find them

The Act of Sederunt (Sheriff Court Rules Amendment) (Personal Injury Pre-Action Protocol) 2016 introduces a new chapter 3A into the Ordinary Cause Rules, requiring parties to follow the Personal Injury Pre-Action Protocol. The same provisions are added to the Summary Cause Rules at chapter 4A. Similar provision will be included in the Simple Procedure Personal Injury Rules, which are due to be implemented in 2017.

The protocol itself will be added as appendix 4 of the Ordinary Cause Rules and appendix 1B of the Summary Cause Rules.

The new rules come into force on 28 November 2016, but only for accidents or other circumstances giving rise to liability occurring after that date. Existing claims and actions will be unaffected.     

Application of the protocol

The protocol applies to all claims for damages for personal injury, unless:

• the claimant reasonably estimates that the total liability value of the claim, exclusive of interest and expenses, exceeds £25,000;
• the accident or other circumstance giving rise to the liability occurred before 28 November 2016;
• the claimant is not represented by a solicitor during the stages of the protocol; or
• the injuries for which damages are claimed arise from alleged clinical or professional negligence, or take the form of a disease.

If, during the protocol, the claimant considers that the total value of the claim, exclusive of interest and expenses, has increased beyond £25,000, the claimant must advise the defender that the protocol threshold has been exceeded. However, as with the current voluntary protocol, it remains open to the parties to agree to continue following the stages of the protocol on a voluntary basis with a view to facilitating settlement before commencing proceedings.

The requirement to follow the protocol

The new chapters provide that in any case where the protocol applies, the court will normally expect parties to have complied with the requirements of the protocol before proceedings are commenced (new rule 3A.2 of the Ordinary Cause Rules and rule 4A.2 of the Summary Cause Rules).  

Where the protocol applies, the claimant will be expected not to commence proceedings unless:

• all stages of the protocol have been completed without reaching settlement;
• the defender fails to complete a stage of the protocol on time;
• the defender refuses to admit liability, or liability is admitted on the basis that the defender does not intend to be bound by the admission;
• the defender admits liability but alleges contributory negligence and the fact or level of contributory negligence is disputed;
• settlement is reached but the defender fails to pay damages and agreed expenses/outlays within five weeks of settlement; or
• it is necessary to do so for time-bar reasons (in which case, proceedings should be commenced and a sist applied for to allow the stages of the protocol to be followed).

The stages of the protocol

The stages which parties must follow under the protocol are:

Stage 1 – Claimant issues a claim form containing a clear summary of the facts on which the claim is based and details of the injuries suffered. ​
Stage 2 – Defender acknowledges claim form within 21 days of receipt.
Stage 3 – Defender investigates claim and issues response within three months of receipt of the claim form. The response must state whether liability is admitted or denied, giving reasons for any denial of liability. If liability is admitted, parties are expected to continue to follow the protocol.  
Stage 4 – Disclosure of documents and reports takes place following admission of liability. Medical reports must be instructed by the claimant within five weeks of the defender’s admission of liability and all medical reports upon which parties intend to rely must be disclosed within five weeks of receipt. Parties may agree an extension to the issuing of medical reports if necessary.
Stage 5 – Claimant must issue a statement of valuation of claim as soon as possible following receipt of all other relevant information.
Stage 6 – Where the defender decides to make an offer of settlement, this is to be made within five weeks of receipt of the statement of valuation of claim.
Stage 7 – Claimant responds. Within 14 days of receipt of the offer, the claimant must either accept the offer or issue a reasoned response explaining why the offer is rejected.
Stage 8 – A stocktaking period follows. The claimant must not raise proceedings until at least 14 days after the defender receives their reasoned response. This is to allow any final settlement negotiations
to take place.
Stage 9 – Payment is made. This must be within five weeks of settlement.

Failure to comply with the protocol

The new rules give the court an express power to make an award of expenses against a party who has failed, without just cause, to comply with the protocol or has unreasonably refused a settlement offer made during the protocol and repeated as a tender when proceedings are raised (new rule 3A.3 of the Ordinary Cause Rules and 4A.3 of the Summary Cause Rules).

Expenses under the protocol

The protocol provides that a valid settlement offer must include a payment in respect of the claimant’s liability for solicitors’ fees and reimbursement of all other reasonably incurred outlays. The payment to be made in respect of solicitors’ fees is calculated in accordance with para 31 of the protocol, and amounts to the sum of:
1. £546;
2. 3.5% of the total amount of agreed damages up to £25,000;
3. 25% of that part of the agreed damages up to £3,000;
4. 15% of the excess of the agreed damages over £3,000 up to £6,000;
5. 7.5% of the excess of the agreed damages over £6,000 up to £12,000;
6. 5% of the excess of the agreed damages over £12,000 up to £18,000;
7. 2.5% of the excess of the agreed damages over £18,000; and
8. VAT payable on the total sum of expenses.

It is hoped that the protocol will lead to an increase in the settlement of lower value personal injury claims, and mitigate the length and complexity of actions which do not manage to reach settlement under the protocol.

The SCJC plans to consider the introduction of additional protocols in due course, the next being a clinical negligence protocol (which is likely to be introduced during 2017).