Justice Committee

Meeting date: Tuesday, March 6, 2018

Official Report 622KB pdf

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Civil Litigation (Expenses and Group Proceedings) (Scotland) Bill: Stage 2

The second item on the agenda is the continuation of stage 2 of the Civil Litigation (Expenses and Group Proceedings) (Scotland) Bill. I refer members to the bill, the marshalled list and the groupings of amendments.

I welcome back to the committee Annabelle Ewing, the Minister for Community Safety and Legal Affairs, and her officials.

After section 8

The first group of amendments is on the pursuer’s liability for court fees in personal injury claims. Amendment 11, in the name of Daniel Johnson, is grouped with amendments 64 and 16.

The purpose of amendment 11 is to reconsider the pay-as-you-go model for court fees. It is an issue that has been raised by trade unions and other bodies as a not insignificant hurdle in bringing forward court actions. Amendment 11, in my name, seeks to allow fees to be paid at the end of the court action, rather than have them paid during its course. In a successful action, the fees would be a lot easier to settle once damages have been awarded.

In broad terms, amendment 11 is very much in line with amendment 64, which has been lodged by John Finnie, although his amendment goes further. I urge members to support both the amendments.

Some comments contrary to the amendments have been made by the Scottish Courts and Tribunals Service, which argues that the pay-as-you-go model encourages early settlement and that debt recovery would carry a cost. However, the argument that the pay-as-you-go model encourages early settlement is not particularly strong, given that the bill as a whole seeks to lower the barriers to people bringing court cases. Amendment 11 proposes something that is in line with that aim.

The nature of court actions is that people bring them forward via solicitors. The very fact that there would be an intermediary would simplify the recovery of debts, as courts would be pursuing solicitors firms and, similarly, solicitors firms will be very mindful about people’s ability to pay court fees as they go. A person paying at the end of a service that has been undertaken and that they have procured does not mean that they stop looking at whether they can afford it. Regardless of whether it is a court action or work that they are having done to their house, people will always have to be mindful of the bill that they are likely to face at the end. Simply paying at the end does not necessarily have a significant impact on that.

To recap, I say that the primary reason for amendment 11 is to lower the barriers to people bringing court actions. As I have said, the provision is being sought by several groups, including trade unions, to aid their work.

I move amendment 11.

I align myself with everything that Daniel Johnson said. The issue is a concern for trade unions. The SCTS’s suggestion about debt recovery is a wee bit off the mark: the nature of the engagement in the process means that debt recovery is extremely unlikely to be an issue. Indeed, I imagine it would be said that the parties involved had not acted in good faith if that were the case, and that it would have wider implications.

I initially had an amendment that was similar to Daniel Johnson’s amendment 11, but I have been told that my amendment 64 is what is required to bottom out the issue. I support amendment 11 and encourage members to support my amendment 64.

The main intention of amendment 11 appears to be to make court fees payable at the end of a case rather than, as is the case under the present system, as an action proceeds through the courts. Amendment 11 would apply only to personal injury proceedings. However, in practice, personal injury claimants usually do not pay up-front fees because they benefit from a success fee agreement. Part 1 of the bill encourages that practice and makes it more likely that personal injury claimants will not pay any up-front fees at all, including court fees. Thus, it could be argued that the real beneficiaries of amendment 11 could well be law firms and claims management companies.

A consultation on court fees closed recently: the Government’s response to it was published last week, with impact assessments. I am sure that members will find it to be of interest because it sets out how the Government proposes to protect access to justice while retaining the current pay-as-you-go model of court fees in general terms. I have just signed new fees instruments for the period April 2018 to March 2021, which have now been laid for scrutiny by the Justice Committee and the Delegated Powers and Law Reform Committee.

The Scottish Government supports the current pay-as-you-go model because it encourages people to resolve their disputes outside the courts; it encourages settlement and it ensures that people value the resources of the court and use them wisely. The model also reinforces the level of financial risk if a party loses a case, it discourages unreasonable behaviour and it deters weak or vexatious claims.

The pay-as-you-go model actively supports those outcomes specifically because fees are charged in small increments as cases progress through each of the key steps in the legal process. The effect is to make the parties stop to consider whether it is appropriate for them to continue. Ultimately, under either pay as you go or payment of a bill at the end of the case, the losing party will normally pay the fees of both parties and the winner will be reimbursed or not billed. The two models affect the timing, but they do not change the eventual outcome.

It is worth pointing out again that under the proposals in section 6 for success fee agreements in personal injury actions, it will be the solicitor rather than the client who will be liable for all outlays that are incurred in provision of the relevant services to the client, including—of course—court fees. The client will therefore not pay for court fees in such cases, which are among the most commonly litigated in Scotland. There is therefore no barrier, under the bill, to access to justice for personal injury actions, because the individual pursuer will not pay fees up front.

Moreover, the solicitor, for his or her part, will recover the court fees as part of the expenses that are recovered from the opponent at the conclusion of the case, assuming that it is successful. Under the bill’s provisions on qualified one-way costs shifting, the client cannot become liable for their opponent’s court fees even if they lose their case.

It is worth pointing out that there are generous exemptions to the requirement for parties to pay court fees, which means that many vulnerable and disadvantaged groups of people do not pay court fees. The consultation analysis to which I referred a moment ago confirms that the Scottish Government will extend the exemptions regime to include recipients of Scottish welfare funds and people—often women—who are seeking civil protection orders, as was suggested by Scottish Women’s Aid. In addition, the income threshold below which fees are not to be paid will be increased.

It is also worth noting the recent Supreme Court judgment—of which I am sure members are aware—concerning fees in employment tribunals. In striking down the fees because they were exorbitant and acted as a barrier to justice, the Supreme Court went on to say something that I think is worth quoting. It said:

“Fees paid by litigants can, in principle, reasonably be considered to be a justifiable way of making resources available for the justice system and so securing access to justice.”

It must also be stressed that billing for court fees at the end of cases would place an immense burden on the Scottish Courts and Tribunals Service, and the long-standing arrangements for payment of court fees on the pay-as-you-go principle would have to be completely revised and reformed, with consequent expense and disruption to business.

Furthermore, the Scottish Courts and Tribunals Service must attempt to recover court fees that are due on behalf of the taxpayer and there will, inevitably, be a measure of loss through irrecoverable debt. If court fees were not paid on a pay-as-you-go basis, the SCTS, and therefore the Scottish taxpayer, would have to pay them and the debt might not be recovered in all cases. There would therefore be a high cost to the Scottish Courts and Tribunals Service and the taxpayer, and the efficient conduct of business in Scotland’s courts would be disrupted if the long-standing arrangements for court fees were to be fundamentally altered to make court fees payable at the end of cases, rather than on an on-going basis.

Will the minister take an intervention?

Certainly, I will.

I appreciate the clarification that the minister has given.

On the clawback provision, you have already suggested that the fees would be payable at each stage by the solicitor, who would then, in turn, recover them from the litigant. It seems unlikely that there would be considerable difficulty in clawing back from solicitors firms fees that are due to the courts. The problem would be for solicitors in recovering the fees, rather than for the Scottish Courts and Tribunals Service. Is that a fair reflection of the actual problem in chasing down debt?

I will turn that slightly on its head and look at it from the perspective of the motivation for amendments 11, 64 and 16, which is concern about access to justice. We all share that concern.

The most likely scenario for personal injury actions is that they will be done under success fee arrangements. In such circumstances—as Liam McArthur pointed out—the solicitor takes the hit in that they take on the obligation to pay up-front fees, including court fees. In terms of the barriers to justice that there have been concerns about, it is difficult to see how that will impede a person who is pursuing a personal injury action.

On Liam McArthur’s point about recovery, court fees are currently paid on a pay-as-you-go basis, which helps to resource the work of the Scottish Courts and Tribunals Service, as it said in its letter to the committee. If we take away that on-going resource, we will have a problem. At the end of the day, seeking to recover might look easy on paper, but it might prove not to be practicable in every single case, for whatever reason.

The pay-as-you go system means that the money is going into the court service. If we were to take that away, we would take away a big part of the Scottish Courts and Tribunals Service’s budget. That point is made in the relevant documentation about the fees instruments that the committee will consider shortly. The instruments look at the potential negative impact and possible shortfall for the operation of the Scottish Courts and Tribunals Service, which could run to £30 million-plus over the piece. That is a not insignificant budget item.

I understand the motivation for the amendments in the group, but bear in mind that the amendments are intended to cover personal injury actions and such cases will most likely benefit from success fee agreements. Therefore it is the solicitor that will, as part of the package, take on the onus of paying all fees, including court fees.

On the budgetary implications, if there were to be a gap in the budget of the Scottish Courts and Tribunals Service, it would ask central Government to fill it. Under the current financial budgetary constraints, if the service were to look for money from the justice portfolio to fill that gap, something else in the justice budget would have to give: there is not an infinite amount of money available.

Members have referred to the letter that the Scottish Courts and Tribunals Service sent to the committee about the impact that it, as the organisation that operates the system, says that such a move would have, and the fear of the unintended consequences of the amendments in the group.

On the procedural aspect, the service recommended use of secondary legislation on management of fees in order to retain the current flexibility and accessibility to a wider audience.

For those reasons, I respectfully ask Daniel Johnson to seek to withdraw amendment 11 and not to move amendment 16.

John Finnie’s amendment 64 would mean that a pursuer who had the benefit of QOCS would not be liable for court fees at all. I consider amendment 64 to be unnecessary. If a pursuer has the benefit of QOCS, they are liable to pay only the success fee at the end of the case, but only if they win.

As I said, it is the responsibility of the solicitor, not the pursuer, to pay up front all other expenses, including court fees. It is not clear to me why a substantial benefit should be provided to them when that benefit would come at a substantial cost to the Scottish Courts and Tribunals Service and, ultimately, the taxpayer.

10:15  

In addition, I say that exemptions from civil court fees are best made in the body of court fees orders, in line with the existing enabling power in section 107 of the Courts Reform (Scotland) Act 2014. The new fees instruments that I mentioned include new additional exemptions that will be particularly relevant to women who seek civil protection orders for domestic abuse.

Therefore, although amendment 64 is well intentioned, for the reasons that I have set out at some length—I thought it important to do so—I believe it to be unnecessary and potentially harmful to the funding of the Scottish Courts and Tribunals Service, so I ask Mr Finnie to not move it.

The arguments are relatively straightforward. I think that there is a slight contradiction between the minister’s statement that law firms would be the primary beneficiaries and her dismissal of the point that they would be liable and would have to recover their fees. Amendment 11 addresses a significant barrier as regards cash flow, particularly for trade unions. For that reason, I press it.

The question is, that amendment 11 be agreed to. Are we agreed?

Members: No.

There will be a division.

For

Finnie, John (Highlands and Islands) (Green)
Johnson, Daniel (Edinburgh Southern) (Lab)

Against

Adam, George (Paisley) (SNP)
Corry, Maurice (West Scotland) (Con)
Gougeon, Mairi (Angus North and Mearns) (SNP)
Kerr, Liam (North East Scotland) (Con)
MacGregor, Fulton (Coatbridge and Chryston) (SNP)
Mackay, Rona (Strathkelvin and Bearsden) (SNP)
Macpherson, Ben (Edinburgh Northern and Leith) (SNP)
McArthur, Liam (Orkney Islands) (LD)
Mitchell, Margaret (Central Scotland) (Con)

The result of the division is: For 2, Against 9, Abstentions 0.

Amendment 11 disagreed to.

Amendment 64 not moved.

Section 9—Expenses where party is represented free of charge

The next group is on free representation. Amendment 37, in the name of the minister, is grouped with amendments 38 and 39.

In his report, Sheriff Principal Taylor recommended that

“in the interests of transparency, the arrangements as to how a litigation is to be funded must be disclosed to the court and intimated to all parties at the stage when proceedings are raised or notification given that a cause is to be defended. This applies equally to cases where legal representation is provided on a pro bono basis.”

Amendment 37 makes that clear in the bill. The rationale for disclosure of funding arrangements is that that might facilitate earlier settlement of a case. Amendment 37 requires a party to disclose to the court that part or all of its legal representation has been provided free of charge. Section 10 already requires third-party funding to be disclosed, and the proposed new provision will complement that.

Section 9 permits a payment to be made to a charity when a party is successful in litigation and has been represented free of charge—in other words, on a pro bono basis. There is a long and honourable tradition of pro bono representation in Scotland. The payment to charity would be in place of expenses being paid to the successful party. Sheriff Principal Taylor thought that it would be inappropriate to compensate a party for a liability for expenses that it had not incurred. Amendment 38 makes it clear that the size of the payment to charity should be decided by the court on the same basis as it would have been if the representation had not been free of charge. That arrangement broadly follows the model of section 194 of the Legal Services Act 2007 for England and Wales.

Amendment 39 seeks to disapply the provisions of section 9(2) when a party is provided with financial assistance by the Equality and Human Rights Commission. Representation that is funded by the commission still has to be disclosed, as is the case for all funding arrangements. In its submission to the committee, the EHRC queried how section 9 would interact with section 28 of the Equality Act 2006, which empowers it to provide assistance in civil proceedings concerning equality law. The EHRC was concerned that, under section 9 of the bill as drafted, it might not get the expenses to which it would otherwise be entitled under section 29 of the 2006 act.

Amendment 39 therefore rectifies the situation, and the EHRC will still be able to claim expenses in such cases. My officials have checked, and there appear to be no similar special expenses regimes for other public bodies; the Scottish Human Rights Commission, for example, is not empowered to fund civil proceedings by third parties.

I move amendment 37.

I would comment that the amendments seem to improve transparency.

Amendment 37 agreed to.

Amendments 38 to 40 moved—[Annabelle Ewing]—and agreed to.

Section 9, as amended, agreed to.

Section 10—Third party funding of civil litigation

The next group is on third-party funding. Amendment 41, in the name of the minister, is grouped with amendments 42 to 44, 61, 45, 46 and 12.

Sheriff Principal Taylor recommended both in his report and in evidence to the committee that all funding of civil litigation should be disclosed to the court, on the rationale that disclosure has implications for how parties proceed and their willingness not only to settle but to settle early. He said:

“disclosure expedites dispute resolution to the benefit of both parties and promotes efficiency in the legal system.”

As a result, section 10 has been reworked to cover all disclosure of all funding of litigation. In the bill as introduced, section 10 provided only for transparency in the case of third-party funders with “a financial interest” in the outcome of a case. Amendment 41 adjusts section 10(1) to ensure that the section now applies a duty of disclosure to all funding of litigation in Scottish courts.

It might also be the case that a pursuer is crowdfunded by people using pseudonyms or who remain anonymous, so he or she will not know the identity of all the funders. Amendment 42 provides for that possibility and makes an exception to the rule that the names of all funders must be disclosed, with the effect that it will apply only if those funders are known to the litigant.

Amendment 44 now makes separate provision for those narrower cases in which the funder has a financial interest in the proceedings—in other words, commercial funding. Proposed subsection (2A) includes the text that was formerly in section 10(2)(c) as well as section 10(3), which is removed by amendment 43 and allows the court to make awards of expenses against venture capitalists and commercial funders if a case is lost.

Concern was expressed at stage 1 that solicitors and other providers of success fee agreements would also be pursued for expenses by a successful defender—albeit, of course, that such defenders would not be able to claim expenses from the litigant in personal injury cases because of the effect of qualified one-way costs shifting in section 8. New subsection (2B) as proposed in amendment 44 therefore makes it clear that the provision of section 10 on liability to expenses will not apply to providers of success fee agreements.

Amendment 61, in the name of John Finnie, makes it clear that a trade union or similar body representing the interests of workers will also not be liable for any expenses if the pursuer whom they have supported is unsuccessful in court. Amendment 12, in the name of Daniel Johnson, is similar, but restricts the exemption only to trade unions and exempts funding from trade unions from the general disclosure requirement. Such a provision would depart from Sheriff Principal Taylor’s recommendations on transparency.

I have noted the concerns that were raised at stage 1 in relation to the application of section 10 to trade unions and similar bodies, and I am happy to support amendment 61. I am afraid that I cannot say the same of amendment 12. Although it seems likely that Mr Johnson was seeking to achieve the same results, I think that Mr Finnie’s amendment better reflects the bill’s overarching principles.

Finally, I note that in its written evidence to the Justice Committee, the Family Law Association expressed concerns about the application of section 10 in some situations. First, a pursuer, particularly one who has been dependent on their spouse or partner for support throughout their relationship, might require a litigation loan to raise proceedings against that spouse or partner. Secondly, parents might give a loan to a child to fund the deposit on a pre-marriage property that then becomes part of the dispute in subsequent proceedings.

The association’s view is that it is neither helpful nor appropriate to require parties to family proceedings to disclose such funding arrangements. The Scottish Government agrees. Amendment 45 therefore disapplies section 10 in family proceedings that are funded by a close family member, who will therefore not be exposed to any risk of an adverse award of expenses. Additionally, in the interests of family privacy, the pursuer will not be required to disclose the funding. Close family members are defined as a spouse, civil partner, co-habitant, parent, child or sibling.

Amendment 46 is consequential on amendment 45 and defines family proceedings for the purposes of the exception for close family members.

I move amendment 41.

I align myself with the minister’s comments, and I think that everyone is supportive of the principle of disclosure.

Throughout our deliberations, we have heard that the intention was never for trade unions to be caught up in the provisions. Amendment 61 refers to a

“trade union or similar body”,

which will cover a range of staff associations. I hope that members will support that.

I strongly support the family privacy aspects that the minister outlined, which are an excellent addition to the bill.

It is important that we explicitly exempt trade unions. I am minded to move amendment 12, although I recognise that John Finnie’s amendment 61 largely achieves the same result; I will be mindful of that at the appropriate time.

We will come to that in due course.

Like John Finnie, I welcome the amendments that improve transparency, which was certainly a theme at stage 1.

The minister talked about crowdfunding. I would welcome a bit of additional clarification on what the provisions that are to be put into the bill imply for what an individual who receives crowdfunding might have to declare. With any crowdfunding initiative, there will be people who will not be known to the individual, and that issue is captured in the provisions. However, there is the prospect of there being very many funders of small amounts that cumulatively add up to a lot. Is it the expectation that all those individuals would have to be revealed to the court under the amendments that we are considering?

I am proposing that only those funders who are known to the pursuer need to be disclosed. If the pursuer does not know who the people are, perhaps because they are using pseudonyms, they cannot be expected to disclose that information. I am happy to reflect further on that aspect as we move to stage 3, just to take a belt-and-braces approach and to ensure that we are covering what we need to cover and excluding what we need to exclude.

That is helpful. I welcome that clarification. I entirely support the principle; I am just wary about whether the provisions are proportionate in those specific circumstances.

Were those your winding-up comments, minister?

Yes.

Amendment 41 agreed to.

Amendments 42 to 44 moved—[Annabelle Ewing]—and agreed to.

Amendment 61 moved—[John Finnie]—and agreed to.

Amendments 45 and 46 moved—[Annabelle Ewing]—and agreed to.

Amendment 12 not moved.

Section 10, as amended, agreed to.

Section 11—Awards of expenses against legal representatives

10:30  

Amendment 47 moved—[Annabelle Ewing]—and agreed to.

Section 11, as amended, agreed to.

Section 12—Minor and consequential modifications to rule making powers

Amendment 48 moved—[Annabelle Ewing].

The question is, that amendment 48 be agreed to. Are we all agreed?

Members: No.

There will be a division.

For

Adam, George (Paisley) (SNP)
Finnie, John (Highlands and Islands) (Green)
Gougeon, Mairi (Angus North and Mearns) (SNP)
Johnson, Daniel (Edinburgh Southern) (Lab)
MacGregor, Fulton (Coatbridge and Chryston) (SNP)
Mackay, Rona (Strathkelvin and Bearsden) (SNP)
Macpherson, Ben (Edinburgh Northern and Leith) (SNP)
McArthur, Liam (Orkney Islands) (LD)

Against

Corry, Maurice (West Scotland) (Con)
Kerr, Liam (North East Scotland) (Con)
Mitchell, Margaret (Central Scotland) (Con)

The result of the division is: For 8, Against 3, Abstentions 0.

Amendment 48 agreed to.

Section 12, as amended, agreed to.

After section 12

Amendment 49 moved—[Annabelle Ewing]—and agreed to.

Section 13 agreed to.

Schedule—Auditors of court: modification of enactments

The next group is on auditors of court. Amendment 51, in the name of the minister, is grouped with amendments 52, 50, 53 and 54.

Section 51(3) of the Solicitors (Scotland) Act 1980 and section 2(2)(b) of the Legal Profession and Legal Aid (Scotland) Act 2007 set out lists of auditors of court and other legal figures who are entitled to make certain complaints to the Scottish Solicitors Discipline Tribunal and the Scottish Legal Complaints Commission respectively. Those lists ought now to include the auditor of the sheriff appeal court, who, for the first time, is given statutory status by section 13 of the bill. Amendments 51 and 52 therefore allow the auditor of the sheriff appeal court to report any wrongdoing or inadequate professional services discovered on the part of a lawyer to the appropriate authorities.

Amendment 50 provides for situations in which there is a vacancy in the office of auditor of the Court of Session or where, for some other reason, the incumbent auditor of the Court of Session cannot carry out his or her functions—for example, due to illness or maternity or other family-related leave. Amendment 50 empowers the Lord President to appoint an ad hoc office-holder to act as auditor of the Court of Session for the relevant period. This amendment was requested by the Lord President of the Court of Session and has been agreed with his office and the Scottish Courts and Tribunals Service. The person so appointed on a temporary basis will be treated as the auditor of the Court of Session for most purposes, but he or she will not have any responsibility for the provision of the guidance under section 15 of the bill. A temporary auditor must, of course, comply with the statutory guidance.

Amendment 53 responds to concerns raised by the Lord President and the Scottish Courts and Tribunals Service that section 15, as drafted, would require the auditor of the Court of Session to produce a large tome of voluminous guidance on the taxation of judicial accounts, such as currently exists in England. It was feared by the Lord President and the Scottish Courts and Tribunals Service that the production of such a volume would take the auditor away from his or her normal duties, thus potentially causing delays in the taxation of accounts and even potentially inviting satellite litigation. The amendment amends section 15(2), which is the provision requiring the auditor of the Court of Session, as head of the auditor of court profession, to provide guidance on practice and policy relating to the taxation of accounts of expenses. It is intended that the auditor will provide guidance on questions of taxation of judicial accounts as they arise. That will build into a comprehensive set of guidance for practitioners, which is more consistent with the recommendations made by the Scottish civil courts review, headed by the former Lord President, Lord Gill. However, it should not be such an onerous task as to interfere with the auditor’s other duties.

Amendment 54 makes it clear that, when preparing guidance, the auditor of the Court of Session must nonetheless have regard to the need for auditors across Scotland to exercise their functions in a manner that is consistent and transparent. The Scottish civil courts review referred to the objective of guidance as being

“to ensure that a consistent approach is taken to the taxation of accounts across Scotland”.

Amendment 54 will achieve that objective, as regards the way in which we have now formulated the requirement.

I move amendment 51.

Amendment 51 agreed to.

Amendment 52 moved—[Annabelle Ewing]—and agreed to.

Schedule, as amended, agreed to.

After section 13

Amendment 50 moved—[Annabelle Ewing]—and agreed to.

Section 14 agreed to.

Section 15—Guidance

Amendments 53 and 54 moved—[Annabelle Ewing]—and agreed to.

Section 15, as amended, agreed to.

Section 16 agreed to.

Section 17—Group proceedings

Group 14 is on group proceedings: opt-out proceedings. Amendment 13, in the name of Liam McArthur, is grouped with amendments 14 and 15.

I welcome the provisions in the bill that allow group proceedings to take place under Scots law. That is welcome, and I do not diminish the importance of that, but I believe that an opportunity will be missed to underscore the ambition that we have on protections for consumers if we limit ourselves simply to an opt-in model. The minister has argued that an opt-in solution is quicker and easier to put in place, but that is contested by the consumer organisation Which?, which suggests that it risks delivering very little for very few in practice. As Which? makes clear, breaches of consumer law invariably have a small impact on a large number of people, so the cumulative impact may be high but the incentive for any single individual to bring legal action is perhaps very low.

For legislation that is meant to be about widening access to justice, and which looks set to do that in a number of areas, the current lack of ambition in relation to group proceedings is a concern. That is why my amendments seek to expand the options available, including the possibility of an opt-out route being taken. As colleagues will see, amendment 13 does not require opt-out rather than opt-in. Instead, it seeks to introduce discretion to the court, allowing it to take into consideration the nature and circumstances of a case. That reflects the approach taken in the Consumer Rights Act 2015 and seems a pragmatic and reasonable way of addressing the concerns that the committee heard at stage 1 from Which? and others.

For the sake of completeness, amendments 14 and 15 go on to lay out what would be required for a proficient opt-out mechanism, including the need to provide a description of a group of persons whose claims are eligible, as per the Consumer Rights Act 2015, as an additional condition of the court’s assessment that reasonable measures have been taken by the representative party to identify and notify any eligible persons, so that they can choose whether or not they want to opt out. Those additional measures should help to address some of the concerns that have been raised that an opt-out proceeding might disadvantage any person or be an administrative burden on the court, by providing definitive boundaries and leaving responsibility for identification and notification with the representative party.

After the Competition Act 1998 introduced an opt-in clause, just one action was brought in 17 years. Only with the introduction of an opt-out provision in the Consumer Rights Act 2015 have we seen a move forward in consumer protection, illustrated by the successful case brought against JJB Sports in 2007 over price fixing for football shirts. I believe that amendments 13 to 15 provide a pragmatic solution that will reinforce the measures in the bill around group proceedings. They have the potential more effectively to incentivise corporate social responsibility on the part of businesses and to underpin the rights of consumers.

I look forward to hearing contributions from colleagues and the minister.

I move amendment 13.

I speak in support of Liam McArthur’s amendments. The key word that he used was “opportunity”. We deal with complex legislation, and the issue should not be the ease with which a provision can be applied. We heard some compelling examples of practice that the amendments would support, and it is important that we try to make that better in the future, so I support the amendments.

I, too, would like to speak strongly in support of Liam McArthur’s amendments. I think that they would be extremely useful. The examples that he set out and the impact of opt-in legislation that we see south of the border lead us to the conclusion that opt-out legislation would be extremely useful. The situations in which a large number of people are suffering a low-level cost present quite a compelling argument. For those reasons, I strongly support the amendments.

I also welcome the amendments. We are presented with an opportunity, and I think that the amendments strike the right balance in giving the court the discretion to go to the opt-out procedure if that is deemed to be the best option.

I am pleased that the proposal to introduce group proceedings, otherwise known as class actions, to the Scottish courts has broad support. To pick up on Liam McArthur’s description of my position, I would say that I do not lack ambition either, but I am perhaps more of a pragmatist, as a result of my position as a Government minister. I will flesh out the reasons why I take that view at this stage.

It is the position of the Scottish Government and most stakeholders—including the Faculty of Advocates, the Law Society of Scotland, the Scottish Trades Union Congress and the Association of Personal Injury Lawyers—that the best way forward is to proceed at this time by way of the introduction of an opt-in system. Principally, that is because it will be more straightforward to implement, easier for potential litigants to understand and easier for practitioners to administer. Further, there would also not be undue delay in commencing the procedure.

The Scottish Government does not have any financial or political objections to opt-out, and the decision to go for opt-in at this stage has been for purely practical reasons.

It is to be borne in mind, of course, that group procedure—notwithstanding the clever drafting of Liam McArthur’s amendment 13—still involves the discretion of the court, and there still have to be court rules in place. That is where we get to one of the nubs of the matter. Group procedure—whatever kind of procedure is adopted—will require new court rules from the get-go, which will be drafted by the Scottish Civil Justice Council. Some of the issues relating to the opt-out option are much more complicated than those relating to the opt-in option. For example, the opt-out option will imply that people might become part of litigation without their consent, and, possibly, without their knowledge. That would have to be addressed in court rules. Further, the concept of aggregated or global damages sits uneasily with Scots law, which adheres to the compensatory principle. No stakeholder has yet proposed a scheme that would ensure that individual claimants are not under or over-compensated.

Members will have seen that the Lord President has written to the committee commenting that any extension of the group proceedings provisions in the bill should be approached with considerable caution. He went on to say that the practical and legal challenges that are presented by an opt-out model are significantly greater than those that are presented by an opt-in model. The Government therefore believes that it would take the Scottish Civil Justice Council far longer to draft rules for both the opt-in and the opt-out procedures from the same starting point, which is what would be required if amendment 13 were to be accepted by the committee, because we would still need to have court rules in place in order to follow a procedure, regardless of whether the court exercised discretion to follow the opt-out procedure. It has been explained why, from the same starting point, it would take longer to formulate those court rules.

If your view is that you will not support the amendments, when do you think would be the appropriate time to move to the system that is proposed?

10:45  

That is an extremely practical question. If we proceed on the basis of the bill as it currently stands, and proceed with the opt-in procedure—because that would allow us to start somewhere, as was highlighted by several of those who gave evidence to this committee—it will take some time even to get the opt-in procedures going. The next group of amendments address the issue of post-legislative scrutiny, and it might well be that that would be the perfect stage at which to assess where matters have got to.

There is no question of kicking the matter into touch for ever; my view is inspired by pragmatic considerations that have been raised. We heard in committee that the subject has been discussed for many decades. We need to get on with it and start somewhere. If it is too complicated from the start, we risk delaying the whole thing. Instead of being able to start with at least some opt-in proceedings, we may find ourselves in a position in which no class actions are possible for a considerably longer period of time, as an unintended consequence, because we are trying to be too ambitious at the outset. I am sure that that is not Mr McArthur’s intention, but my concern is that class actions per se could be delayed.

A number of people, including Paul Brown of the Legal Services Agency, have given evidence to the committee to the effect of taking that more pragmatic view. It was not that those people do not wish to see opt-outs—they do. There is a fear that the simultaneous introduction of two processes—one of which is extremely complex, because it introduces elements that we do not currently wrestle with in Scots civil procedure—would mean a delay to all class actions.

I will pick up on the reference—I think it was by Mr McArthur or Mr Johnson—to the experience of the United Kingdom Competition Appeal Tribunal where class actions have been possible. I think that Which? flagged up that experience. We are not sure that the experience of the tribunal is typical; a particularly large number of claimants are before it in competition actions, and competition law is highly specialised and a technical area of law. Scotland has a much smaller jurisdiction, so introducing an opt-in scheme as the starting point would be more straightforward. That is something to bear in mind.

For all those reasons, I ask the committee not to support Liam McArthur’s amendment 13. In response to Mr Finnie’s point, I recognise that this area of the bill would be right for post-legislative scrutiny, assuming that, in the grouping of amendments that we will shortly get to, an amendment on post-legislative scrutiny is agreed to by the committee.

I would be happy to support Liam McArthur’s amendments 14 and 15, which are potentially useful additions to the proposals for opt-in group proceedings. I emphasise that we are not closing the door on an opt-out scheme; I am simply guided by pragmatism whereby I wish to see class actions as a possibility in Scotland as soon as possible. Court rules will need to be drafted and it would be easier to start with an opt-in scheme and then move to opt-out. Post-legislative scrutiny would give members the assurance that this is not an attempt to kick opt-out into touch. If our starting point would be to have to come up with court rules for both opt-in and opt-out schemes, I fear that we would see no class actions for years to come because of the complexity of that approach.

I thank the minister and members for their contributions, and I thank the convener, John Finnie and Daniel Johnson for their strong support for my amendments. There seems to be a tussle over who has greater claim to the badge of pragmatism, and I stake my claim again. The way in which I have sought to cast the amendments strikes the right balance by recognising the complexities and the need for court discretion in taking the schemes forward. The minister pointed out, quite fairly, that we still require amendments to rules of court. I do not entirely dismiss the concerns of the opponents cited by the minister, but, given the strength of the evidence that we have heard from Which?, which is a representative of consumer interests, we need to ascribe a suitable weight to its concerns. Direct comparisons between the situations north and south of the border are probably fraught with difficulties—I hear what the minister has said about the actions before the tribunal—but it has taken 17 years south of the border to move from the Competition Act 1998 to the Consumer Rights Act 2015.

We should gain some optimism from the fact that the Consumer Rights Act 2015 demonstrates that it is not beyond the wit of man to construct an opt-out model and in such a way that allows for group proceedings. As Daniel Johnson reminded us, the issue affects high numbers but has a low impact. Unless we address that, we will miss the opportunity that John Finnie raised in his comments.

How do you respond to the minister’s point about the delay? From what the minister was saying, it appears that if we agree to the amendment we potentially kick the whole thing quite a long way into the future. Is it not better to get the opt-in scheme going, then look at the opt-out model, perhaps at the stage of post-legislative scrutiny, rather than potentially put back the whole issue for some considerable time?

That is not an unreasonable point. The counter to it is that I dare say that Which? has no interest in seeing group proceedings delayed unduly. However, there is an opportunity at this stage to introduce a mechanism that embeds the opt-in model, but leaves the option open to courts to decide on an opt-out mechanism.

We saw the delays that occurred south of the border—they stretched for 17 years, which is a considerable amount of time. There is a bit of a risk that we hang our hat on post-legislative scrutiny because we see it as something that would allow us to return to the issue and address it at that stage. However, there will still be people at that stage, in five years’ time, who suggest that having an opt-out model is awfully complicated, that it would be terribly difficult to amend the rules of court and that it would be better to kick the can further down the road. We have an opportunity now, while there is pressure in the pipe, to introduce group proceedings under an opt-in model and take additional time—I accept that that is needed—to propose a mechanism that allows opt-out proceedings in certain circumstances and in accordance with the discretion of the court. On that basis, I press amendment 13.

The question is, that amendment 13 be agreed to. Are we agreed?

Members: No.

There will be a division.

For

Corry, Maurice (West Scotland) (Con)
Finnie, John (Highlands and Islands) (Green)
Johnson, Daniel (Edinburgh Southern) (Lab)
Kerr, Liam (North East Scotland) (Con)
McArthur, Liam (Orkney Islands) (LD)
Mitchell, Margaret (Central Scotland) (Con)

Against

Adam, George (Paisley) (SNP)
Gougeon, Mairi (Angus North and Mearns) (SNP)
MacGregor, Fulton (Coatbridge and Chryston) (SNP)
Mackay, Rona (Strathkelvin and Bearsden) (SNP)
Macpherson, Ben (Edinburgh Northern and Leith) (SNP)

The result of the division is: For 6, Against 5, Abstentions 0.

Amendment 13 agreed to.

Amendments 14 and 15 moved—[Liam McArthur]—and agreed to.

Section 17, as amended, agreed to.

Section 18 agreed to.

After section 18

The final group of amendments is on post-legislative review. Amendment 55, in the name of the minister, is grouped with amendments 62 and 56.

During the stage 1 debate, several calls were made for there to be post-legislative scrutiny of the bill in five years’ time. In its stage 1 report on the bill, the Justice Committee asked the Scottish Government to commit to post-legislative scrutiny of the bill within five years of its provisions coming into force. In particular, the committee was concerned that such a review should look at the impact of qualified one-way costs shifting.

I have listened to the arguments and I am persuaded that post-legislative scrutiny is appropriate for the special circumstances of the Civil Litigation (Expenses and Group Proceedings) (Scotland) Bill. That does mean that the Government accepts that a statutory requirement for post-legislative scrutiny is appropriate for all legislation passed by the Scottish Parliament. The Government continues to believe that there is a need to take a flexible and proportionate approach to post-legislative scrutiny, so that time and resources are targeted effectively. We look forward to working with the Public Audit and Post-legislative Scrutiny Committee on that.

Amendment 55 provides for post-legislative scrutiny of parts 1 to 3 of the bill, five years after each part is fully commenced. In respect of part 4, on group proceedings, the five-year period will commence from the day on which the first rules of court for group proceedings come into force. That different arrangement is considered necessary because the detail of the procedures for group proceedings will be provided in rules of court to be brought forward by the Scottish Civil Justice Council, which will draft and consult on the rules of court that are to govern group procedure. Group proceedings cannot take place until such rules are in force. Arguably, there is therefore no point in triggering the five-year period for post-legislative scrutiny of group proceedings until they have actually taken place and have had a chance to bed in over the proposed five-year period.

The post-legislative reports that are envisaged in amendment 55 will require consultation with appropriate stakeholders. They will have to be laid before the Scottish Parliament as soon as is practicable after the relevant report has been prepared and then published. The post-legislative scrutiny will provide an opportunity to look at how various key parts of the act are operating and whether amendment is necessary. That could include, for example, the part 1 provisions, as amended, on the future element of damages, taking into account the likely addition at that time of specific damages legislation.

The post-legislative scrutiny of part 2 will allow, as the committee has requested, a review of the operation of qualified one-way costs shifting and how the grounds on which QOCS protection is lost are operating in practice, since they are intended to facilitate meritorious claims while discouraging spurious ones. The post-legislative scrutiny of part 2 will also allow consideration of whether QOCS should be extended to areas of civil litigation other than personal injury actions.

As regards post-legislative scrutiny of part 4, most stakeholders have agreed that opt-in is the practical option for the introduction of group proceedings. However, we heard the committee’s view on that just a moment ago.

Amendment 55 seeks to link the post-legislative scrutiny to the timing of the entry into force of the various parts. I do not want to belabour the point.

Amendment 56 will mean that the whole of the new part will come into force automatically two months after royal assent.

Convener, your amendment 62 appears to have much the same purpose as the Government’s objective in amendment 55. Although it embodies differences from the Government’s proposal, I am willing to support it. As with other non-Government amendments that we are supporting at stage 2, the Government will consider whether any refinements are required and bring them forward at stage 3 if necessary. If Margaret Mitchell’s amendment 62 is duly agreed to, we may nonetheless be required to reflect on the rationale for the timing of the review as it pertains to particular parts of the bill.

That is where we are. On the basis that I need to move amendment 55 in order for the group to be considered, I will move it, although that is only to allow debate to take place on the rest of the group of amendments.

I move amendment 55.

Thank you, minister. I will speak to my amendment 62. I think that it complements the minister’s amendment 55. Both insert provisions for post-legislative review of the operation of the act as soon as is practicable after five years, and both require the laying before Parliament of a report on the review.

However, in our stage 1 report, the committee specifically asked the Scottish Government

“to commit to post-legislative scrutiny of the Bill (within five years of its provisions coming into force), in particular to review the impact of introducing”

qualified one-way costs shifting in section 8. Amendment 62, therefore, specifically calls for a review of the effect and operation of section 8 and QOCS, which represents a radical departure from the traditional loser-pays principle. It also specifically calls for a review of the effect and operation of section 17, on group proceedings, including the opt-in approach, and now that the committee has agreed to Liam McArthur’s amendment, it would include a review of the opt-out provision, as well a review of how sections 8 and 17 affect

“access to justice and the administration of Scottish courts”.

Amendment 62 states:

“The report must include a statement by the Scottish Ministers setting out—

(a) whether they intend to bring forward proposals to modify any provision of this Act, and

(b) where no such proposals are to be brought forward, their reasons for not doing so.”

As such, it covers all the provisions in the minister’s amendment, but it specifically provides for QOCS, as the most contentious aspect of the bill, to be reviewed, with further scrutiny of its operation, together with section 17 and group proceedings.

As there are no other comments from members, I ask the minister to wind up.

I just want to point out that, as you have highlighted, post-legislative scrutiny will permit a number of complex and technical aspects of the bill to be reconsidered in the light of five years of its operation. I must emphasise again that the Government does not believe that post-legislative scrutiny is necessary for every piece of legislation, but, as I have said, we will work with the Public Audit and Post-legislative Scrutiny Committee in that regard.

In the light of the convener’s comments, I will not press amendment 55. I support amendment 62, in the name of Margaret Mitchell, and as with all stage 2 amendments, I will, if the committee agrees to that amendment, reflect whether any refinements might be required at stage 3.

11:00  

Amendment 55, by agreement, withdrawn.

Amendment 62 moved—[Margaret Mitchell]—and agreed to.

Section 19—Regulations

Amendment 16 moved—[Daniel Johnson].

The question is, that amendment 16 be agreed to. Are we agreed?

Members: No.

There will be a division. [Interruption.] The clerks could not see who was voting. We will take the division again.

For

Corry, Maurice (West Scotland) (Con)
Finnie, John (Highlands and Islands) (Green)
Johnson, Daniel (Edinburgh Southern) (Lab)
Kerr, Liam (North East Scotland) (Con)
McArthur, Liam (Orkney Islands) (LD)
Mitchell, Margaret (Central Scotland) (Con)

Against

Adam, George (Paisley) (SNP)
Gougeon, Mairi (Angus North and Mearns) (SNP)
MacGregor, Fulton (Coatbridge and Chryston) (SNP)
Mackay, Rona (Strathkelvin and Bearsden) (SNP)
Macpherson, Ben (Edinburgh Northern and Leith) (SNP)

The result of the division is: For 6, Against 5, Abstentions 0.

Amendment 16 agreed to.

Section 19, as amended, agreed to.

Sections 20 and 21 agreed to.

Section 22—Commencement

Amendment 56 moved—[Annabelle Ewing]—and agreed to.

Amendment 17 moved—[Liam Kerr].

The question is, that amendment 17 be agreed to. Are we all agreed?

Members: No.

There will be a division.

For

Corry, Maurice (West Scotland) (Con)
Kerr, Liam (North East Scotland) (Con)
McArthur, Liam (Orkney Islands) (LD)
Mitchell, Margaret (Central Scotland) (Con)

Against

Adam, George (Paisley) (SNP)
Finnie, John (Highlands and Islands) (Green)
Gougeon, Mairi (Angus North and Mearns) (SNP)
Johnson, Daniel (Edinburgh Southern) (Lab)
MacGregor, Fulton (Coatbridge and Chryston) (SNP)
Mackay, Rona (Strathkelvin and Bearsden) (SNP)
Macpherson, Ben (Edinburgh Northern and Leith) (SNP)

The result of the division is: For 4, Against 7, Abstentions 0.

Amendment 17 disagreed to.

Amendment 65 moved—[Gordon Lindhurst].

The question is, that amendment 65 be agreed to. Are we all agreed?

Members: No.

There will be a division.

For

Corry, Maurice (West Scotland) (Con)
Kerr, Liam (North East Scotland) (Con)
Mitchell, Margaret (Central Scotland) (Con)

Against

Adam, George (Paisley) (SNP)
Finnie, John (Highlands and Islands) (Green)
Gougeon, Mairi (Angus North and Mearns) (SNP)
Johnson, Daniel (Edinburgh Southern) (Lab)
MacGregor, Fulton (Coatbridge and Chryston) (SNP)
Mackay, Rona (Strathkelvin and Bearsden) (SNP)
Macpherson, Ben (Edinburgh Northern and Leith) (SNP)
McArthur, Liam (Orkney Islands) (LD)

The result of the division is: For 3, Against 8, Abstentions 0.

Amendment 65 disagreed to.

Section 22, as amended, agreed to.

Section 23 agreed to.

Long title agreed to.

That ends stage 2 consideration of the bill. The bill as amended will now be printed. The Parliament has not yet agreed when stage 3 proceedings will take place, but members can lodge stage 3 amendments with the clerks in the legislation team at any time. The deadline for lodging amendments will be announced as soon as it is known.

I thank the minister and her officials for their attendance, and I suspend briefly to allow them to leave.

11:04 Meeting suspended.  

11:11 On resuming—