Manifestly unreasonable: the first QOCS disapplication

Qualified one-way costs shifting, or QOCS, was introduced in Scotland for personal injury actions raised after 30 June 2021, although it took until December 2022 until we had the first reported decision on application of the exceptions to the principle that pursuers would not require to meet the defenders' costs when their claim was unsuccessful. There have been several more reported decisions since, but until now the court has refused to disapply QOCS for any of the exceptions provided under the Civil Litigation (Expenses and Group Proceedings) Scotland Act 2018.

Those exceptions are that the pursuer:

• made a fraudulent misrepresentation (or otherwise acted fraudulently);
• behaved in a manifestly unreasonable manner in connection with the claim; or
• conducted the proceedings in a manner that amounts to an abuse of process.

Previous decisions have made disappointing reading for defenders and their representatives; however, on 16 October 2023 Sheriff Campbell KC issued his decision in Carty v Churchill Insurance Company Ltd [2023] SC EDIN 31, disapplying QOCS and awarding the expenses of the action to the defender. 

The case can be summarised as follows:

• The action arose from a road traffic accident on 10 May 2021.
• The pursuer intimated a claim form on 21 June 2021; and parties agreed to deal with the case under the compulsory pre-action protocol (“CPAP”).
• An offer was made to the pursuer of £3,700 on 8 April 2022 and that offer was rejected. A counter proposal was made by the pursuer for £10,000.
• Court proceedings were issued on 30 May 2022, but no productions were disclosed.
• Defences were lodged on 23 June 2022.
• A tender for the pre-litigation sum was lodged and intimated on 10 August 2022.
• In October 2022, the pursuer failed to lodge a valuation or the Record in line with the court timetable.
• In December 2022, the defender contacted the court to highlight the pursuer's failure to adhere to the timetable.
• The pursuer sought to vary the timetable in February 2023; this was opposed but later allowed by the court.
• The proof assigned for 21 March 2023 was discharged by the pursuer; a fresh diet was assigned for 9 May 2023.
• The pursuer intimated an intention to accept the tender on 4 May 2023.
• The pursuer's minute of acceptance of the tender was only lodged on the morning of 14 August 2023.

Throughout the case, there were issues relating to timely disclosure of evidence, and issues with response times by the pursuer's agent in relation to requests made by the defender's agent. 

The parties' submissions 

The defender argued that (i) the pursuer should be entitled to protocol expenses only; and (ii) the costs of the litigated court action should be awarded in the defender's favour, on the basis that the pursuer's decision to raise an action was manifestly unreasonable and an abuse of process.  The defender's position was advanced under several branches:

1. The pursuer failed to comply with the protocol, by failing to accept an offer of settlement made in accordance with CPAP.
2. The pursuer failed to comply with the court's timetable throughout the case, and therefore failed to make progress. Missing five dates was in the defender's submission “obviously unreasonable” and “exceptional”, to quote Sheriff Fife in Lennox v Iceland Foods Ltd [2022] SC EDIN 42 and Love v NHS Fife Health Board [2023] SC EDIN 18 and therefore manifestly unreasonable.
3. The pursuer's conduct amounted to an abuse of process given the failures outlined and that the pursuer accepted an offer five days prior to proof, identical to the offer made pre-litigation.

The pursuer's agent provided an explanation that they had suffered a period of ill health, and their firm had been dissolved, with their business partner leaving. They had apologised to the court previously. They also explained that the offer of £3,700 had been rejected as the evidence suggested the case was worth around £8,000; however, the tender was ultimately accepted by the pursuer because the litigation had become protracted, and he wanted to “be done with” the action. They submitted that the test for disapplying QOCS was very high and was in effect Wednesbury unreasonableness; and an abuse of process involved a party deliberately attempting to deceive the court. They accepted there had been delays, but explanation had been provided for that.

The decision 

In his analysis and decision Sheriff Campbell KC made it clear that the action had been handled unsatisfactorily by the pursuer's agent. However, that said, although liability was agreed, he was satisfied that at the point of litigation, quantum was firmly in dispute; and he was therefore not persuaded that the pursuer had failed to adhere to the protocol.

On the arguments about QOCS, although he did not consider the conduct amounted to an abuse of process (given there was a basis in evidence for the pursuer's view that the claim was worth more than the tender), the failures both to comply with the court timetable and to respond to the defender's agent in a timely fashion were “manifestly unreasonable”. He said: 

“[22] …However, practitioners’ obligations to their clients and to the court are not in any way diluted by such pressures. The onus is on the practitioner to make appropriate mitigations, and how they do so will depend on the nature of the circumstance faced at the time.

“[23] I am not satisfied that the explanation offered entitles the court to overlook the persistent failures to comply with the timetable or to engage in a timely fashion with the defender’s agents.”

On that basis he was content to disapply QOCS and award the defender the expenses of the court action.

Comment 

Although this case again reinforces that the court will deal with each case on its own facts and circumstances (Lennox, para 61; Gilchrist, para 27), it is a useful decision on what type of conduct the court may determine meets the “manifestly unreasonable” test.