QOCS and the dishonesty exception: fair notice?

Work continues on the implementation of the Civil Litigation (Expenses and Group Proceedings) (Scotland) Bill, which is intended to introduce some recommendations of the 2013 Taylor Review of the Expenses and Funding of Civil Litigation in Scotland. Several of the measures will directly affect personal injury practice, and of particular interest is the proposed introduction of qualified one-way costs shifting (QOCS).

The operation of QOCS means that the pursuer would not have to pay the defender’s expenses even if his or her claim is ultimately unsuccessful in court. It is intended to level the playing field for pursuers who may decide not to pursue a damages claim currently because of the potential cost implications where defenders often have an insurance funded legal team. Similar provisions have already been introduced in England, and there have been regular attempts by defendants to have claims declared fundamentally dishonest to defeat the QOCS provisions, as the court can refuse to apply these if satisfied that the claim is fraudulent or fundamentally dishonest.

In Howlett v Davies [2017] EWCA Civ 1696, the English Court of Appeal recently refused the claimant’s appeal against the trial judge’s finding of fundamental dishonesty. The claimant argued that the judge could not make such a finding as the defendant had not expressly pled that that the claim was fraudulent or fundamentally dishonest, although the defence did include numerous issues which called the genuineness of the claims into question. The Appeal Court held that a defendant is not obliged to plead fraud or fundamental dishonesty in similar cases, which is of concern as it leaves claimants open to such allegations without fair notice. It remains to be seen whether, if QOCS is introduced north of the border, the courts follow the approach taken by the English courts.