COVID, QOCS and CPAP thoughts

So much of 2020 was new, and it is already becoming clear in 2021 that the claims landscape in Scotland will, again, look different to last year. The two key changes which we consider here are the commencement of qualified one-way costs shifting (QOCS) and the emergence of “COVID-19 claims”. When will each change occur, and what difference will each make to everyday practice?

QOCS

It is anticipated that QOCS will form part of personal injury litigation in Scotland in about three months' time. That is, from mid-June 2021. Whether or not implementation will occur within this timeframe does still depend on when the draft rules (setting out how QOCS will operate in practice) are approved. Presently, it is expected the approval date will be mid-March 2021.

Without sight of the finalised rules and, indeed, judicial interpretation of those rules over time, it is premature to say exactly how QOCS will operate before the Scottish courts. What we do know is that the traditional default Scottish costs position, that “expenses follow success”, will be replaced. In broad terms, the new position will be “the reasonable pursuer, with or without success, will not be found liable for their opponent's costs”.

With the threat of an adverse costs award stripped away in most cases, it does seem almost inevitable that Scotland will see an increase in personal injury litigation at least in the short term. That is, until the exceptions to QOCS are clearly fleshed out. Whether or not there is an “immediate onslaught” of claims, as some predict, does however depend on what the rules say in relation to commencement. Will QOCS protection apply to all pursuers who litigate after the commencement order comes into force? Or, only to pursuers whose accidents occur after the commencement date? The latter scenario does seem less likely. But, if that outcome did occur, it could mean that the rise in claims is not as high or as quick as would otherwise have been expected.

COVID-19 claims

Irrespective of the costs system in place, it is still expected and, indeed, formally predicted by some that personal injury litigation will increase in 2021, driven by COVID-19 related incidents. It has been reported that seven in 10 claims management companies are already dealing with, intimating, and referring COVID-19 related claims. One forecast made is that this new type of claim will prompt a 40% increase in litigation during 2021 across the UK. If that is borne out in Scotland, then having regard to pre-pandemic case numbers (for 2018-19, as confirmed by the Scottish Civil Justice Statistics), the increase by number of claims is likely to sit in the region of 28,840. That is a significant number.

The term “COVID-19 related claim” is wide. What does it mean? In practice, as we see it, those claims are, for the most part, likely to fall into three categories: (a) direct infection: where the pursuer says that he/she contracted the virus due to the negligence of their employer or a third party, including cases of secondary exposure; (b) increased effort: where musculoskeletal injury is claimed by participants from the supply chain or ill-equipped home workers; and (c) stress: where psychological damage is claimed owing to the effects of extended homeworking, prolonged periods of physical exertion and, potentially, emotional trauma amongst key workers.

For categories (b) and (c), the claims made will have many features of a traditional employer's liability claim. How the courts interpret the duty to take reasonable care in these cases will, however, be a point to watch. Industry standards will, like Government and HSE guidance, inform the standard of care. From a defence perspective, comparator evidence could play a key role in the determination of whether a business acted adequately and lawfully, particularly in the initial months when the pandemic first took hold.

For category (a), the subject matter of the claim will be new. The legal hurdles which the pursuer must overcome to succeed with their claim will, however, be the same as in any other negligence case, namely duty of care, breach and causation. Consideration of the familiar issues of what the defender did to identify, assess and control the risk of injury will remain crucial and, potentially, not too different from any other liability claim. But we do expect bespoke arguments to arise in relation to foreseeability, implementation periods, causation and, in claims for long COVID, claim value.

Compulsory pre-action protocol (CPAP)

If claims do increase, due to QOCS and COVID-19 related incidents, one key potential ally of insurers and claims handlers to limit cost and protracted litigation will be the proper use of CPAP or, where CPAP does not apply, voluntary agreement of a pre-action engagement timetable – whether to allow the claim to be settled, a clear and substantiated repudiation to be issued or, potentially, the claim avoided or the issues in dispute narrowed.

When responding to the Taylor Review, which recommended the introduction of QOCS, it is worth remembering that the Scottish Government did formally identify the importance of compulsory pre-action protocols. Their use was viewed as, and stated to be, a helpful means by which to balance the increase in frivolous litigation that QOCS may bring.

So will CPAP apply to COVID-19 related claims? For increased effort claims (as we have categorised them), CPAP will apply, but only where the total value of the claim is expected to be £25,000 or less. For cases of direct infection and stress, it is unclear whether CPAP will trigger. For CPAP to be applicable, the resultant injury needs to be “solely caused by an accident or other single event”. It is not yet known if contracting COVID-19 could be pinpointed to a specific event. However, it is worth remembering that CPAP does not need to trigger for a formal pre-action timetable to be a realistic possibility.

A voluntary pre-action protocol for disease claims exists which applies to illnesses not “solely caused by an accident or other single event”. It remains to be seen which protocol will apply to a direct infection claim. Neither was designed with COVID-19 in mind and fitting the virus into either is rather a case of square peg, round hole. It may be that one or both of the protocols are amended in the future to account for direct infection claims.

With that said, the Scottish courts have made clear that they will take a dim view of poor pre-action conduct and that litigation should be a last resort. If in doubt, the voluntary protocols can be utilised to provide structure to pre-action negotiations and ensure proper time for discussion before litigation commences.

Adopting a voluntary course does mean that no automatic sanction will apply to a failure by either party to follow the agreed structure. Nevertheless it will remain relevant to arguments for premature litigation. It remains to be seen whether, in a QOCS environment, premature litigation arguments will carry any cost penalty for pursuers in terms of reducing the sums they can recover. But, certainly, they will remain important to defence preparation time and the ability to persuade the court to sist actions or to extend lodging deadlines, where necessary.

Conclusion

2021 will bring more change: a new type of claim and a new costs system at the point of litigation in Scotland. New legal arguments will in turn arise, but insurers, claims handlers and business should take comfort from the fact that the same behaviours and practices as used previously to avoid litigation or to limit its effect will remain equally as important and relevant in 2021 as they did before. Those are:

(a) identification, assessment and reduction or control of risk;

(b) document preparation, retention and recovery; and

(c) properly considered and structured pre-action engagement.