Meeting of the Parliament

Meeting date: Tuesday, January 16, 2018

Official Report 911KB pdf

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Civil Litigation (Expenses and Group Proceedings) (Scotland) Bill: Stage 1

The next item of business is a debate on motion S5M-09894, in the name of Annabelle Ewing, on the Civil Litigation (Expenses and Group Proceedings) (Scotland) Bill.

14:24  

I am pleased to open the stage 1 debate on the Civil Litigation (Expenses and Group Proceedings) (Scotland) Bill. I thank all the members of the Justice Committee for their careful consideration of the bill thus far. I also thank the very hard-working clerks on the Justice Committee and the many stakeholders who contributed to the proceedings.

Above all, I express my sincere thanks to Sheriff Principal Taylor for his diligent and thorough review, which lasted more than two years, of the issues to do with the expense and funding of civil litigation in Scotland. Sheriff Principal Taylor was kind enough to give very comprehensive evidence to the committee in spite of on-going health problems. I am sure that we all wish him well.

The context of the review was a 41 per cent decrease in civil litigation in Scotland since 2008-09. We know that, further to the review, the potential costs involved in civil court action can deter many people from pursuing legal action even where they have a meritorious claim.

When the bill was introduced, Sheriff Principal Taylor said:

“The proposals address some concerns which may cause people not to exercise their legal rights and ultimately their right to go to court. The fear of having to pay their own solicitor and also the legal costs of their opponents can be a significant deterrent. This Bill provides for the setting of a straightforward formula, in personal injury and other civil cases, to enable a client to work out what his or her own lawyers can charge. It also removes the risk of having to pay their opponent’s costs in personal injury cases, provided they have acted properly.”

Those contemplating civil litigation need to have more certainty about how they will be able to afford to exercise their rights, and the provisions contained in the bill will make the cost of civil litigation in Scotland more predictable and hence increase access to justice.

The three major reforms proposed in the bill that will bring that about are the introduction of sliding caps on success fees, allowing solicitors to offer damages-based agreements, and qualified one-way costs shifting.

The first proposed reform—the introduction of sliding caps on success fees—has been generally welcomed and, when the time comes to provide the caps in regulations to be made under the bill, I confirm that I am minded to set the levels at those suggested by Sheriff Principal Taylor in his report—that is, up to 20 per cent on the first £100,000, up to 10 per cent on the next £400,000 and up to 2.5 per cent on any amount more than £500,000.

The second major reform proposed will widen the availability of damages-based agreements by allowing solicitors to offer them directly. Currently, damages-based agreements are not enforceable by solicitors but are offered through claims management companies. They have proven to be very popular for those contemplating pursuing a claim, as they are simple to understand. Basically, the client pays nothing up front, but agrees to pay a percentage of the damages awarded, or agreed, to the provider of the legal services. The solicitor will be responsible for all outlays in personal injury actions, such as court fees.

Sheriff Principal Taylor stated in his evidence that one solicitor-owned claims management company has entered into 17,600 new damages-based agreements in the past three years and 23,800 such agreements in the past five years. This, he argued, goes some way towards explaining the rise in the number of claims in Scotland over the past five years, about which some giving evidence to the committee have expressed concern. The Government considers that the enforcement of legal rights by individuals is something to encourage.

While on the subject of claims management companies, I will mention the concern that has been expressed that the bill does not make provision for their regulation. We have, however, been in discussions with the United Kingdom Government about the extension to Scotland of the regulation of claims management companies by the Financial Conduct Authority, as proposed in the Westminster Financial Guidance and Claims Bill. I am pleased to say that appropriate amendments were accepted during the bill’s third reading in the House of Lords. Claims management companies will therefore be regulated in Scotland more quickly than would have been the case through our initial approach, which would have involved relying exclusively on the work of the Esther Robertson review of legal services regulation. However, at this stage, I cannot give a definite date when the Westminster legislation will be implemented.

The third major proposed reform is the introduction of qualified one-way costs shifting in personal injury cases. The vast majority of defenders in personal injury actions are well resourced and the majority of pursuers are of comparatively limited means. Although very few claimants are pursued for expenses by successful defenders, there is always a risk to a pursuer that they would be liable for considerable expenses and could face bankruptcy if they lose. Sheriff Principal Taylor’s review confirmed that there is real fear of that in the minds of potential pursuers, which stops too many meritorious claims from getting off the ground. Qualified one-way costs shifting removes that risk, so long as the pursuer and his or her legal team conduct the case appropriately.

The tests by which the benefit of qualified one-way costs shifting can be lost by pursuers due to their behaviour have been the subject of varying views from witnesses before the committee. Broadly, representatives of insurers have suggested that the bar is too high, while representatives of claimant groups have suggested that it is too low. We are therefore considering amendments at stage 2 to make it clearer that the Wednesbury test of reasonableness recommended by Sheriff Principal Taylor is to be applied to determine whether the benefit of qualified one-way costs shifting might be lost.

The bill also makes provision for the potential payment of expenses by third-party funders, which is intended to ensure that venture capitalists, whose only interest in a case is commercial, will be subject to adverse awards of expenses. There have been concerns that awards of expenses will be made against trade unions and providers of success fee agreements. That is not the Government’s intention; indeed, as trade unions have no financial interest in the proceedings, they will not, as the bill is drafted, be subject to such awards. We will, however, consider amendments at stage 2 to make it clear that trade unions and providers of success fee agreements will not be liable for expenses. Moreover, Sheriff Principal Taylor recommended that all funding of litigation be disclosed, and amendments will be considered to broaden the requirement for disclosure.

Part 3 of the bill relates to auditors of court, who determine a successful party’s expenses in litigation by order of the court or where there is a dispute with their opponent—a process referred to as taxation. The Scottish civil courts review, headed by the former Lord President, Lord Gill, expressed concern that the auditor of the Court of Session and the sheriff court auditors were able to make private profit out of a public office that provides a public service. The bill’s provisions will remedy that situation by providing that auditors will, in future, be employees of the Scottish Courts and Tribunals Service. Auditors of court who are currently self-employed will remain so until they retire, if they so wish; however, in future, auditors will be appointed under the same civil service rules that apply to the appointment of other officers of court.

Auditors will continue to have functional independence as part of the Scottish Courts and Tribunals Service and the auditing process will continue as it has in the past. As part of the service, auditors will be independent of the Scottish ministers in the same way as the rest of the service, which is an independent body corporate under the Judiciary and Courts (Scotland) Act 2008. Provision for an annual report on the activities of court auditors will make the system of taxation of judicial accounts more transparent.

Finally, I want to say a word about group proceedings. I am pleased that the proposal to introduce class actions to the Scottish courts has broad support. I am convinced that the best way forward at this time is to introduce an opt-in system, as it is prudent when introducing a new procedure in the Scottish courts to select the option that will be more straightforward to implement and will therefore not cause undue delay in getting the procedure off the ground. Opting in means that individuals must have explicitly chosen to be part of the group, having weighed up the benefits and possible disbenefits of doing so. The approach has been supported by an overwhelming majority of stakeholders, including the Faculty of Advocates, the Law Society of Scotland, the Scottish Trades Union Congress, the Association of Personal Injury Lawyers and the Forum of Insurance Lawyers. Of course, we have not ruled out considering an opt-out procedure at a later date, once group proceedings have bedded in.

In summary, the bill seeks to put in statute approximately half of the recommendations in Sheriff Principal Taylor’s review. Some of his recommendations, for example on sanction for counsel, have already been implemented in the Courts Reform (Scotland) Act 2014, while the remainder will be considered for potential rules of court by the Scottish Civil Justice Council.

As I have mentioned, the civil justice statistics for Scotland show an overall—and continuing—decrease in civil litigation in Scotland of no less than 41 per cent since 2008-09. That should be a source of concern for all those who care about the provision of access to justice in Scotland and, indeed, the health of our Scots civil law jurisdiction. The bill will therefore implement Sheriff Principal Taylor’s major recommendations to begin to address this situation by making the cost of going to court more affordable, more predictable and more equitable.

I move,

That the Parliament agrees to the general principles of the Civil Litigation (Expenses and Group Proceedings) (Scotland) Bill.

14:34  

I am pleased to speak on behalf of the Justice Committee in this stage 1 debate on the Civil Litigation (Expenses and Group Proceedings) (Scotland) Bill. I begin by thanking all the witnesses who provided evidence to the committee. I also thank the Delegated Powers and Law Reform Committee for its report, which we endorsed. I pay particular tribute to the Justice Committee clerks, who have done a superb job in producing the stage 1 report on what is a technical and complicated bill.

By changing the rules on how people can fund their claim and the costs that they could be liable to pay the other side, the bill will directly affect many thousands of people in Scotland who bring a civil claim. The bill’s principal policy objective is to improve access to justice. The committee considers that, on balance and despite conflicting evidence, there are problems with access to justice in respect of civil litigation. However, it also considers that more up-to-date research on the consumer experience of legal services in Scotland is required in order to properly inform future policy.

I turn to the detail of the bill. The bill will regulate success fee agreements, which are often known as no-win, no-fee agreements. For the first time, solicitors in Scotland will be allowed to enforce damages-based agreements where the solicitor receives a percentage of the compensation awarded to their client if the case is won. One of the committee’s key concerns relates to the approach that the bill takes to damages for future loss in personal injury cases. For example, damages can cover lost earnings while an injured person is off work recovering. In more serious personal injury cases, damages can cover the loss of all future earnings, as well as care and medical costs. The bill will allow a solicitor to include damages for future loss when calculating their success fee, subject to certain conditions. Here, the bill implements Sheriff Principal Taylor’s considered recommendations, but the committee remains concerned that the failure to ring fence damages for future loss could reduce the money available to a person to pay for their future care and medical support. The committee therefore asks the Scottish Government to reconsider that approach.

The bill will also introduce qualified one-way costs shifting, known as QOCS. That means that, provided that the pursuer has acted appropriately, they will not be liable for the defender’s expenses if they lose their case. Committee witnesses had starkly opposing views on the introduction of QOCS. Pursuers’ representatives argued that QOCS is necessary to redress the David and Goliath relationship between pursuers, who tend to be individuals with little experience of the legal system, and defenders, who tend to be insurance bodies. However, representatives of defenders and insurers argued that QOCS could have adverse unintended consequences and could facilitate a compensation culture in Scotland.

The committee was persuaded that QOCS could improve access to justice for pursuers, but it considered that that must be balanced by other safeguards to prevent any rise in fraudulent claims—for example, through the introduction of pre-action protocols in certain cases to safeguard against fraudulent claims without adversely affecting access to justice. Crucially, the committee asked the Government to commit to post-legislative scrutiny of the bill.

The regulation of claims management companies is a vital safeguard against any rise in fraudulent claims. Regulation was introduced in England and Wales in 2007, but there is no regulation of claims management companies in Scotland. Witnesses spoke about the negative impact of the practices of some claims management companies on Scottish consumers, particularly as a result of cold calling, which Sheriff Principal Taylor stated was

“the biggest mischief of claims management companies.”—[Official Report, Justice Committee, 31 October 2017; c 15.]

In addition, research from Which? reveals that Scottish cities suffer the highest number of nuisance calls in the UK.

The UK Financial Guidance and Claims Bill, which will strengthen the regime in England and Wales by transferring responsibility for regulation to the Financial Conduct Authority, was being considered at the same time that the committee was considering the Civil Litigation (Expenses and Group Proceedings) (Scotland) Bill. Following correspondence between the committee and the Minister for Community Safety and Legal Affairs, the UK bill has been amended to extend regulation by the FCA to claims management companies in Scotland. Nonetheless, there remains a potential regulatory gap that could have detrimental consequences for Scottish consumers if the Civil Litigation (Expenses and Group Proceedings) (Scotland) Bill is implemented before such FCA regulation is in place. The committee therefore recommends that the Civil Litigation (Expenses and Group Proceedings) (Scotland) Bill should not be implemented until claims management companies in Scotland are regulated.

The bill allows group proceedings or multiparty actions to be brought in Scotland for the first time. Although that is welcome, to improve access to justice, the bill allows group proceedings to be brought only on an opt-in basis—that is, a person must expressly consent to being part of the action. In an opt-out system, the court agrees the definition of those affected, and anyone who is covered is deemed to have consented to court action on their behalf unless they expressly opt out.

The committee recognises the Government’s pragmatic reasons for starting with an opt-in approach. However, given the strong evidence from Which? on the benefits of an opt-out approach for low-value consumer claims, the committee considers that there could be advantages in the court deciding whether proceedings are to be opt in or opt out.

So far, the minister has made no commitment to post-legislative scrutiny, to commissioning more consumer research, to changing policy on future damages, QOCS and uninsured defenders, to delaying the bill’s implementation until the claims management companies are regulated, and to amending the bill to ensure that only regulated bodies can offer success fee agreements. Although the committee unanimously agrees with the general principles of the bill, it asks the Scottish Government to give serious consideration to the above recommendations to ensure that access to justice is improved and unintended consequences are avoided.

14:41  

At the outset, I declare an interest: I am a practising litigation solicitor and hold practising certificates with the Law Society of Scotland and the Law Society of England and Wales.

I am pleased to open for the Scottish Conservatives and to speak in favour of the principles of the Civil Litigation (Expenses and Group Proceedings) (Scotland) Bill. The Scottish Conservatives are committed to the principle of access to justice. Anything that ensures that those who have rights are better able to avail themselves of those rights must be a good thing.

In the 2013 Taylor review, Sheriff Principal Taylor concluded that there would often be a David and Goliath relationship that prejudiced the attractiveness and prospects of litigation for those with rights. He made 85 recommendations on funding civil litigation in Scotland, and the bill seeks to introduce some of them.

However, there are a number of areas in which the bill can be improved. First, like the Justice Committee, I am concerned about the lack of ring fencing for future loss and the consequent potential for award erosion. Under the bill as drafted, compensation that is intended to pay for the care of a seriously injured litigant will be reduced by a cut going to their solicitor. That could lead to injured parties being undercompensated and not receiving the full value of the damages that a court awards. We should bear in mind the fact that future losses are an assessment of what might be required to pay for future care needs. It could also lead to courts overcompensating claimants by increasing the damages award to negate that carve-out, or the statement of valuation of claim could perhaps be inflated to offset the deduction.

Many have expressed their concern over those points, including the Forum of Insurance Lawyers, which argued that

“To apply a crude percentage deduction from such huge sums could result in an enormous windfall for the solicitor and a funding gap (and significant anxiety) for the injured pursuer.”

I therefore agree with the Justice Committee’s recommendation that the future loss part of any award should be ring fenced and, notwithstanding the Scottish Government’s response to the stage 1 report, I urge further consideration of the matter.

The second question that merits further reflection is whether there are sufficient safeguards in place around QOCS to prevent a rise in unmeritorious and/or fraudulent claims. Some evidence suggests that, in Scotland, the number of personal injury claims has risen significantly during the past seven years, without QOCS. Logically, removing the financial risk in raising a claim will result in a further increase as access to justice is increased. By extension, there will, of course, be a rise in the number of fraudulent or unmeritorious claims. As drafted, the bill does not sufficiently define the circumstances in which a pursuer will lose QOCS protection. We therefore support the proposal from Sheriff Principal Taylor and the Justice Committee that section 8(4) should make it clear that the benefit of QOCS would be lost in fraudulent situations when the pursuer fails to beat a tender and when a pursuer’s claim is summarily dismissed.

I welcome the amendments to the Financial Guidance and Claims Bill, which will provide for the regulation of claims management companies in Scotland. That is a sensible move that will provide Scottish consumers with the same level of protection against nuisance calls that consumers in other of the UK receive.

However, reasonable concern has been raised that if the Civil Litigation (Expenses and Group Proceedings) (Scotland) Bill comes into force before UK-wide regulation is in place, there will be a regulatory gap, whereby there are no rules governing the activities of claims management companies in Scotland. According to Which?, that could lead to more claims management companies registering in Scotland, leading to even more nuisance calls for Scottish consumers and leaving Scottish consumers open to harmful practices by rogue firms. I hope that the Justice Committee’s recommendation that the bill should not be brought into force until UK-wide regulation of claims management companies is in place is looked upon favourably at stage 2.

Finally, I am concerned at the lack of detail in the financial memorandum on the cost implications for public bodies—in particular, the national health service. NHS Greater Glasgow and Clyde argues that a more comprehensive analysis of future costs is “essential” to quantify the financial impact. The Medical and Dental Defence Union of Scotland argues that QOCS, if introduced, will mean that NHS resources will be taken up in defending unsuccessful claims, rather than spent on delivering services to patients.

The purpose of the financial memorandum is to assess the financial implications for public bodies. It is surely possible to calculate the total number of claims made against public bodies and then to calculate the increased cost to the taxpayer if there is, for example, a 5 or 10 per cent uplift in the number of claims. Like the Justice Committee, I urge the Scottish Government to undertake more detailed modelling on the likely impact of the bill.

The general principles of the bill are sound and I shall vote accordingly today. However, there are some flaws, and we hope that the Government will reflect on the debate and lodge appropriate amendments.

14:47  

Before I begin, I draw members’ attention to the fact that my wife is a practising solicitor.

Justice that is only open to those who can afford it is not justice at all. A critical component of any justice system is the ability to seek redress against third parties who have harmed an individual or their interests. That is a fundamental point of the civil justice system, and we must ensure that that ability is available to as many people as possible. As Sheriff Principal Taylor put it:

“Court action is always going to be stressful for litigants. Much of the stress is a fear of the unknown: ‘Will I win my case and if I don’t, what will it cost me?’”

The Taylor proposals represent a sensible way of increasing certainty and rebalancing the risks, particularly through qualified one-way costs shifting. The bill takes forward those proposals and has the potential to mark a significant improvement in the ability and confidence of individuals to seek justice, so Labour will be supporting it at stage 1 at decision time.

However, as the bill progresses, we would like improvements to be made on a number of issues. In particular, we feel that trade unions must be explicitly exempted in section 10; that more could be done on the predictability and affordability of court fees; and that improvements might be possible with regard to group litigation.

For many people who pursue a case involving their employment or workplace, seeking assistance from their trade union is the single most important step that they will take. Trade unions provide support to the individual and can help them to meet their financial costs, so the role of trade unions in this area is highly complementary to the aims and objectives of the Government in introducing the bill.

It is right that the bill seeks to ensure that speculative involvement by third parties is limited or excluded from the changes, but trade unions are not a corporate interest and their explicit exclusion in section 10 is vital. I welcome the minister’s comments in her opening remarks, but I seek a firm commitment and would welcome the minister making such a commitment in her closing speech.

Currently, court fees are incurred and payable on an on-going basis as a case proceeds. The pay-as-you-go model can prove to be an insurmountable barrier, even for those with a good chance of success, as they find that that cash-flow hurdle stops them taking their complaint to court. One way to address that could be by making fees payable only at the end of litigation, and the Government could consider whether they should be payable only if the case is successful, with fees being recovered from an unsuccessful defender.

The provision for group proceedings on an opt-in basis is welcome, but further consideration should be given to adopting an opt-out model. The consumer group Which? contends that, given the often low value to individuals in consumer claims and the lack of awareness or knowledge of the claims process, individuals might not choose to opt in. The Government should clarify its thoughts on the area and give those proposals serious consideration.

There are two areas of very real concern: the financial memorandum and the provision for delegated powers. Although nobody would wish for the NHS, the Parliament or any other public body to have increased costs, making it easier to pursue litigation clearly gives rise to the risk of an increase in the number of court actions that are taken against the public sector. The financial memorandum must be improved to include actuarial projections and risk-based forecasting to assess the possible financial impact on the public purse.

I agree with the point that the member has just made. As an extension of that, does he recognise the evidence that was given to the committee that the bill could increase insurance premiums? Does he agree that that is an unintended consequence that the Government needs to reflect on before the next stage?

Naturally, any action that could increase the volume of civil litigation has that potential consequence. I was going to come on to the fact that there needs to be post-legislative scrutiny of the impact of the legislation and the general environment. I very much agree with the member on that point.

The Delegated Powers and Law Reform Committee concluded in its report on the bill that the provision in section 7(4) would enable the Government to amend part 1 of the bill and in that regard is “unusually wide”. Parliament must protect its right to legislate and hold the Executive to account, and section 7(4) must be amended to ensure that that happens.

The bill is welcome, and we all hope that it leads to greater access to justice. However, as I have just remarked, it is vital that Parliament reviews the impact of the changes, as there might well be unintended consequences, such as an increased compensation culture or a greater number of vexatious or weak claims. For that reason, the Government should commit to a review of the legislation in five years, particularly of qualified one-way costs shifting and damages-based agreements.

We support the aims and objectives of the bill and we will vote for it, but we ask the Government to consider our constructive comments so that the bill can be improved as it progresses through Parliament.

We move to the open part of the debate.

14:52  

I support the general principles of the Civil Litigation (Expenses and Group Proceedings) (Scotland) Bill at stage 1, because the purpose of the bill, which can seem complex and which is hard to boil down into a four-minute speech, is to increase access to justice and, in my view, that can never be a bad thing.

There is a need for civil litigation to be more accessible and affordable to everyone. How many times have we heard about people being put off bringing an action because they say that they cannot afford it? Since 2008-09, there has been a decrease of 41 per cent in civil litigation and, in my view—and, more importantly, in Sheriff Principal Taylor’s view—that is based on a fear of the costs that are involved.

I will briefly outline what to me seem the most relevant points in the bill. I am aware that other members will focus on one or two more specific issues. To me, the most relevant points are damages-based agreements, the power to cap success fees, damages for future loss, qualified one-way costs shifting, the regulation of claims management systems and group proceedings.

On damages-based agreements, the set-up of a Law Society of Scotland working group will work to protect against conflicts of interest. It is vital that the pursuer is aware of the full range of funding options that are open to them.

The bill includes the power to cap success fees, which means that clients are not required to pay two success fees from damages obtained. I am pleased that the Government has committed to consider whether legislation is required to ensure that caps would apply.

On damages for future loss, much of the committee’s evidence and questioning surrounded whether those should be ring fenced when calculating solicitors’ fees, particularly when someone has been injured so severely that they require lifelong care. As has been said, the committee is asking for that provision.

The bill introduces qualified one-way costs shifting for personal injury claims. Under QOCS, a pursuer is not liable for the defender’s expenses if they lose but can still claim for their own expenses from the defender if they win.

We heard opposing views on the introduction of QOCS. Supporters of its introduction argue that it is necessary to redress the David and Goliath relationship in personal injury cases between pursuers, who tend to be individuals with little or no experience of the legal system, and defenders, who tend to be insurance bodies. People who are against the introduction of QOCS argued that it could have unintended consequences and, in particular, could facilitate a compensation culture or fraudulent claims in Scotland. I believe that QOCS will improve access to justice for pursuers, but the committee heard concern about that. However, I agree with Sheriff Principal Taylor’s oral evidence that it would not facilitate a compensation culture or fraudulent claims, among other reasons because a solicitor would not take on a case that had little prospect of recovery.

I am pleased that the Government will consider amending section 10 of the bill to protect third-party funders such as trade unions or public bodies so that they are not affected by the introduction of QOCS.

We are all aware of the prominence of claims management companies and the negative impact of cold calling on customers, so I am encouraged that regulation will be introduced for claims management companies in Scotland. Apart from deterring nuisance calls, that will discourage spurious court actions. This year, £125,000 was provided to fund call blocking for people who are identified as vulnerable. The Government agrees that the Law Society should make it clear to solicitors that a case referred by a claims management company must not be a result of cold calling.

The bill will also allow one set of court proceedings to be brought on behalf of two or more people with similar claims—referred to as group proceedings—which the committee welcomed. It will allow group proceedings to be introduced only on an opt-in basis, whereby the pursuer must express their consent to be part of the action, as opposed to an opt-out system, in which the court agrees a definition of the people who are affected by the proceedings. It is simpler for an opt-in system to be introduced in the first instance.

I am sorry, but you must conclude.

The bill will facilitate access to justice, and I am happy to recommend its general principles to the chamber for that important reason.

The previous item of business overran, so we are on tight four-minute speeches.

14:57  

Ensuring that everyone has suitable access to justice is a principle that is vital to an open democracy, and it is one that I and the Scottish Conservatives are deeply committed to maintaining. That is why I will join my Conservative colleagues in supporting the bill at stage 1, but only on the understanding that the Government will lodge amendments during stage 2 to address the flaws that we are all aware exist in the bill.

Everyone accepts that the bill’s aims and objectives are well intentioned. The Association of Personal Injury Lawyers argued:

“the fear of swingeing expenses awards … currently results in cases not being brought or routine undersettlement in our jurisdiction”.

Unison Scotland similarly stated:

“the risk of being exposed to that legal bill is a real barrier to access to justice even to members supported by their trade union.”

As Ronnie Conway of the Association of Personal Injury Lawyers pointed out, the number of personal injury claims in Scotland has increased in the past few years. However, he emphasised that it was from “a very low base” and that the rate of claims per head of population in Scotland remains well below that in England. That view was shared by Sheriff Principal Taylor, who said that he had

“no doubt … that the fear of an adverse award of costs inhibits people from exercising their legal rights.”—[Official Report, Justice Committee, 31 October 2017; c 17-18.]

There is also a general consensus that the bill has the potential to improve access to justice. In its written submission, the Law Society of Scotland stated that the bill had

“the potential to significantly increase access to justice.”

Nevertheless, improvements will be required to ensure that the bill does not cause issues while solving others.

One potential issue, on which I would be interested to hear from the minister in her closing speech, is the potential for the bill to result in an increase in insurance premiums for the Scottish people. If there is a large increase in court action because there is no financial risk in going to court, insurers will pick up the cost of more court cases. That would increase their overheads, and I worry that it would lead to price pressure on premiums for everyone in Scotland.

In addition, I am interested to hear from the minister about what thought she has given to ensuring that proper resourcing follows group proceedings because of the possibility that they will require correspondingly greater judicial preparation time and consistent management by a nominated judge who deals with those particular proceedings. The increases in court delays, with only three courts—Portree, Lerwick and Lochmaddy—managing to meet the 26-week target for 100 per cent of cases in any month in 2017 is of particular note. It would be a comfort to us and the professional person working in the courts service to know that the Government has started to think about and plan for proper and effective resourcing.

I welcome the bill and its intentions, but I would like to hear from the minister on the issues that I have raised.

15:00  

I speak in this debate as a member of the Justice Committee and, like others, I want to put on record my thanks to those who provided evidence during the course of the scrutiny of the bill.

I am pleased that the committee agreed to the general principles of the bill, and we have made some suggestions about how it can be improved. The balance of evidence that we heard suggested that there is an access-to-justice issue in Scotland, and the bill, carrying out the conclusions of the review of Sheriff Principal Taylor, seeks to address that.

Many people are put off pursuing legal action even when they have a genuine claim. As mentioned by the minister, civil justice statistics from 2015-16 demonstrate a decrease in civil law cases initiated across the Court of Session of 41 per cent from the 2008-09 figures, and we should all be worried about that. Many people fear that they will have to pay the solicitor and defender if they lose a case, and I cannot help but think that the current issues around austerity, welfare and other financial factors are at play here. On that basis, I would say that we need the bill, and I am glad that the committee has agreed to its principles.

Like Rona Mackay, I want to concentrate on the bill’s introduction of qualified one-way cost shifting for personal injury claims. Under that arrangement, the pursuer is not liable for the defender’s legal expenses if they lose, but can still claim the expenses from the defender if they win. On balance, the committee is persuaded that the introduction of QOCS could improve access to justice for pursuers, but notes concerns that it could have unintended consequences, as mentioned by Daniel Johnson for example, including a rise in unmeritorious and fraudulent claims. However, the arguments for QOCS were much stronger, and included the rectification of the David and Goliath situation that was raised by the Association of Personal Injury Lawyers and was referenced by Sheriff Principal Taylor. Further, during the committee’s sessions on the bill, Unison said that the issue was the cornerstone of Sheriff Principal Taylor’s report.

There were arguments against QOCS, such as those from the Glasgow Bar Association, which legitimately had concerns about weak claims because of a nothing-to-lose attitude. The main argument against QOCS, as I could tell, was that there would be a rise in spurious claims. However, we heard evidence from many people, such as Patrick McGuire of Thompsons Solicitors Scotland and Paul Brown of the Legal Services Agency, who argued that it was unlikely that there would be a rise in such claims, that the bill would protect against that and that the majority would indeed be genuine. As a further safeguard, as Daniel Johnson mentioned, the committee has asked the Government to consider post-legislative scrutiny of the bill, including of QOCS, at the five-year mark.

Does the member therefore support the expansion of the test for fraud in section 8(4), as Sheriff Principal Taylor recommended?

I am not going to comment on that at this stage. My point was on QOCS and the David and Goliath situation.

The David and Goliath argument really resonated with the committee and I note that that particular argument resonated with Liam Kerr. I think that we were all agreed on that issue and it was good that the committee was in agreement on that. We should be united in trying to restore a balance to access to justice.

However, what about cases where there is not a David and Goliath situation? I think that those situations were referred to at one stage as David v David. The Faculty of Advocates argued, for example, that QOCS should only be available in claims against public bodies and insured defenders. The committee therefore asked the Government to consider that as an option, but I welcome the Government’s response, which highlights why it is not minded to change its position. Some reasons that it gave were that defenders may

“choose not to be insured when they should be; take a larger excess than they should; or breach the terms of their policy so that the insurance company will not act”.

I note those concerns. The Government’s arguments for not being minded to change its position have been laid out well.

15:04  

I thank the Justice Committee and its clerks for the informative stage 1 report that was produced for the Civil Litigation (Expenses and Group Proceedings) (Scotland) Bill.

As a member of the committee during the evidence sessions and the drafting of the report, I heard from a wide range of voices that supported the bill. I am no longer a member of it, but I take this opportunity to pass on my best wishes to the committee as it continues its work.

Scottish Labour welcomes the bill and its aim of improving access to justice. The Scottish Government’s commitment to justice reform is commendable and the bill shows that the Government’s intent is honourable. Sheriff Principal Taylor’s detailed review, which shows the challenges facing Scots in accessing civil justice, is also welcome. During committee discussions about the bill, there were conflicting views on whether there was a problem with access to justice. I am glad that the majority opinion backed the position of Sheriff Principal Taylor, the Scottish Government and the bill.

However, as highlighted by the committee and previous speakers, there are numerous areas where the bill must be improved. That was acknowledged by the minister in the Government’s response to the stage 1 report. The most notable issue is with section 10. As a trade unionist, I deeply value the role played by unions in supporting members to access justice. I would like section 10 to be amended to make it explicit that the power to award expenses against third-party funders does not apply to trade union-funded litigation. I welcome the fact, as stated in the Government’s response to the stage 1 report, that the minister is considering amending section 10, and I am grateful for the minister’s comments on the issue today, but we need a clear commitment that no trade union or trade union member will suffer any unintended consequence of the bill.

It is commendable that the imbalance between individuals and large insurance firms is being redressed. The regulation of success fee arrangements is a step in the right direction to tilt justice back in favour of the individual. The introduction of qualified one-way costs shifting, or QOCS, will also help to address the imbalance.

The committee has rightly raised concerns about possible unintended consequences, such as a rise in unmeritorious and fraudulent claims. I have sympathy with the minister’s position in her response to the committee’s concerns, but I believe that the Scottish Government must be vigilant after the bill has been enacted, to ensure that the committee is not proved right and that pursuers are not at a loss because of unmeritorious claims.

I support the Government’s ambition to improve access to justice for all. I hope that the concerns raised today and in the committee report are properly considered and that the right safeguards are there for pursuers and solicitors against conflicts of interest.

At this rate, we are making up time at an accelerated pace. Members should not take that as a licence to go over their time.

15:07  

It is fair to say that this is one of the more complex matters that the committee has dealt with. It is probably also fair to say that it is an issue that does not pick up a lot of traction or interest in the press or among the public. When we say civil litigation, sometimes it feels like people’s eyes tend to glaze over. That is unfortunate, because it is a vitally important issue that is about fairness and access to justice. The legislation that we are looking at today could affect any one of us at any given time.

The element of the bill that I will focus on today is section 8 and the proposed introduction of qualified one-way costs shifting, or QOCS, for personal injury cases. Others have already talked about QOCS. In Scotland, we follow the principle that expenses follow success, and that the unsuccessful party in a case should bear the legal costs of the successful party. There are situations where that does not apply, such as when the unsuccessful party is in receipt of legal aid, has before-the-event insurance or is supported by a trade union. However, that is not always the case.

After-the-event insurance is another option. It can be purchased by the pursuer before any significant legal costs are incurred, but it is often prohibitively expensive—it can cost as much as 60 per cent of the cover sought. People can therefore be prevented from bringing forward a claim because they are effectively being priced out of taking any action for fear of the legal expenses that they might incur. It is because of that, along with the view that in personal injury cases the pursuer tends to be an individual versus a large organisation or insurer—the David v Goliath scenario—that Sheriff Principal Taylor, in his review of expenses and funding of civil litigation in Scotland, argued for the introduction of QOCS in relation to personal injury claims.

The introduction of QOCS will essentially mean that there will be no risk to the pursuer in bringing forward a claim. During our evidence sessions we heard fears that that would result in a rise in spurious claims, though that was refuted by some, such as Thompsons Solicitors, which stated that it was quite simply not in their interests to take forward a claim that had little chance of success or where the defender was an individual, as there would be little chance of recovering expenses.

I had a particular concern that if I, as an individual, was taken to court by someone and the court found in my favour, I could still be liable for the pursuer’s legal fees. The Glasgow Bar Association had similar concerns and felt that QOCS subverts the principle that expenses follow success. As the association put it,

“Not every defender is a Goliath and not all defenders are insured or wish to rely on insurance ... Section 8 would protect even wealthy pursuers. And prejudice even poor defenders.”

Rather than there being a blanket application of QOCS, Simon Di Rollo of the Faculty of Advocates suggested in oral evidence to the committee that in order to create a balanced civil justice regime,

“QOCS could be available only to somebody who is insured, a public authority, somebody who has the backing of the Motor Insurers Bureau or somebody whose means and resources are such to enable them to make payment of expenses.”—[Official Report, Justice Committee, 26 September 2017; c 17.]

However, all those concerns were not shared by Sheriff Principal Taylor when he responded to that issue at committee. He said:

“We can look to England and Wales, where the rules of court are the same as what is proposed here, to find out what has happened there. We have heard of no difficulties with qualified one-way costs shifting being operated as it is proposed to be operated here.”—[Official Report, Justice Committee, 31 October 2017; c 10.]

The system has been operating in England and Wales with no issues having been raised, as far as the committee is aware, which makes the point that he raised hard to argue with.

Consideration of the Civil Litigation (Expenses and Group Proceedings) (Scotland) Bill has been one of the most difficult pieces of work that we have undertaken, because of the polarising views on each side of the issues raised, so finding a compromise on all of them was never going to be an easy task. I want to add to what my colleagues have said by thanking all those who took time to submit evidence to the committee, and the clerks for pulling it all together.

The introduction of QOCS will be a positive step, and the bill, if passed, will increase access to justice for people in Scotland. That is why I support the general principles of the bill.

15:12  

I took gratification from the convener saying earlier that the bill was technical and complicated. We have heard that from others, too. The bill has also broadened our parliamentary vocabulary to include QOCS, of which we have just heard an excellent explanation from Mairi Gougeon. I am grateful to all the people who continue to give us briefings, including the Law Society of Scotland, which said of QOCS that

“the basic terms are good and will help provide certainty which is the priority for solicitors.”

We need to have a discussion about the purpose of our legal system, and we did so in the course of examining the bill. It is to serve our citizens, and we heard from the minister that there was a reduction of 41 per cent in the level of litigation. Clearly, there are a lot of interests to be served, not least those of David and Goliath, which have been much mentioned in the debate thus far. Patrick McGuire, representing Thompsons Solicitors, told the committee:

“I have absolutely no doubt that the provisions that are in the bill will enhance access to justice ... Equally important, it will also do what Sheriff Principal Taylor said was his prime focus and what I see as the mischief of the bill, which is redressing the imbalance in the asymmetrical relationship ... between pursuers of personal injury claims and the extremely large, powerful and wealthy insurers”.—[Official Report, Justice Committee, 19 September 2017; c 5.]

The Scottish Government made it clear that the principle of the bill was to create a more accessible, affordable and equitable justice system, and at close of play today the Scottish Green Party will support the general principles of the bill. That is not to say that there are not things that we would wish to see improved, such as issues relating to court fees. Again, Thompsons Solicitors had a clear view on that and suggested that court fees should be treated in the same way as expenses are treated under QOCS, which would mean that pursuers’ court fees would be paid only at the end of the case, and then only when they could be recovered from an unsuccessful defender, so the pursuer would always be protected from liability. If the case was won the defender would pay the pursuer’s fees, and if the case was lost the pursuer would not have to pay court fees.

Money is at the heart of much of what we discussed. We were particularly concerned about issues surrounding future loss, and the committee suggested that that be ring fenced. That is a personal thing and something that could affect a person’s future career prospects, loss of earnings and health projections, and I hope that that can be taken on board.

A number of colleagues have mentioned third-party funders. Clearly, we have heard the assurance from the minister that those were not to include trade unions. That should be expressly said.

I welcome the issue of disclosure of funding, and post-legislative scrutiny, which is also important.

I want to touch on something that the minister will not be surprised to hear me mention, as I seem to mention it on every piece of civil legislation. I refer to the Aarhus convention, and the view that access to environmental justice in Scotland urgently requires a comprehensive response. It is certainly the view of Friends of the Earth Scotland and others that Parliament should extend qualified one-way costs shifting to environmental cases, in order to ensure that bringing such cases is not prohibitively expensive. We know that equality of arms has not applied thus far, and the bill goes some way to addressing that.

Criticism has rightly been directed to the Scottish legal system and its failure to comply with the Aarhus convention. Addressing that was a manifesto commitment of the previous Government. It said that it would consult on it and, in fairness, four years and 50 weeks into its five-year term, it did so. I hope that the minister takes that on board.

I confirm that the Scottish Green Party will support the general principles of the bill.

15:16  

I declare an interest as a previous practising solicitor who is still registered on the roll of Scottish solicitors, although not practising.

I thank my colleagues on the Justice Committee, the witnesses who gave evidence and the clerks for helping us through the process to this point.

I highly commend the Scottish Government for bringing forward the Civil Litigation (Expenses and Group Proceedings) (Scotland) Bill in order to enhance access to justice through a number of means, as we have already heard, and to undertake the constant evolution of our independent legal system to make sure that it keeps in touch with the needs of society and the development of our economy.

As others have done, I will focus on a specific part of the bill—in my case, part 4 on group proceedings, which came out of Sheriff Principal Taylor’s chapter 12 on multiparty actions. As the Scottish Government has said, the bringing forward of group proceedings in Scotland will help to broaden access to justice by allowing a litigant the opportunity to take part in a multiparty action at a lower cost than an individual case. It will also deliver a more streamlined and cost-effective outcome and reduce court time by enabling a number of related claims to be taken forward as one group procedure.

That has support from many stakeholders. As the Scottish Government’s response to the Justice Committee’s report says, the Scottish Law Commission supported group proceedings in the 1990s with the opt-in procedure, which the bill includes at present. That was also supported in written evidence that we received in August 2017 from the Law Society of Scotland, which said:

“The basic proposals for group actions seem sensible and should be able to work for solicitors in practice. A system which proceeds on the basis of ‘opt in’ (rather than ‘opt out’) is a positive development and is welcomed by agents.”

I appreciate that the difference between opt-out and opt-in procedure is a point of contention. I listened attentively in committee to the evidence from Which? on the benefits of an opt-out procedure. We also received an interesting briefing from Friends of the Earth Scotland about the value of an opt-out procedure. I asked a number of questions about that in committee.

However, I am convinced that there are practical issues around introducing a new area of Scots law such as this. There needs to be an opportunity for the legal system to build up experience of group proceedings. An opt-in is better for introducing something entirely new to Scots law.

The Scottish Government’s remarks on legal aid, which we mention in paragraph 396 of our report, are reassuring, but there is a need to keep looking at the matter. I therefore welcome the fact that the Scottish Government has committed to looking at it on an on-going basis. Opt-in is better in order to not cause undue delay now but, as a Parliament and as a society, we need to keep looking at the possible value of using an opt-out system in the future for group proceedings. If there is a commitment to post-legislative scrutiny, which the convener of our committee suggested, perhaps an evaluation of opt-out procedure could be undertaken then.

Finally, I note that the Law Society of Scotland states in its briefing for this debate:

“the question of how issues of expenses in group actions will be dealt with has not been considered in the Bill and, we believe, would be helpful to address.”

I support the principles of the bill.

For a fleeting moment, Mr Macpherson, I thought that witches had given evidence, but I realised that it was Which? That was quite intriguing, as the bill is about group actions. [Laughter.]

I call Daniel Johnson to close for Labour.

15:20  

I should have pointed out at the beginning of my previous speech that I am a trade union member, being a member of both Community and the Union of Shop, Distributive and Allied Workers.

The high degree of consensus in this afternoon’s debate is notable. There is a huge common agreement that we must commit to the reforms in terms of both the specifics and the general principles. Mairi Gougeon put it very well. Quite often, when we discuss these matters, people’s eyes glaze over and they wonder what on earth it means to them, but the reality is that, when someone needs redress and needs to use the courts, it all becomes all too real.

For too many people, both the cost and the complexity of taking court action become prohibitive, and that is why the key measures that the Government is bringing forward in the bill will be helpful. I think that there is broad agreement about the sliding caps, the introduction of damages-based agreement for solicitors, qualified one-way costs shifting and group proceedings. They will improve the transparency of the costs that people are likely to face while pursuing a court case, and they will remove downside uncertainty, provide more options for individuals to access legal services and provide more routes to justice through the introduction of group proceedings. Those things are all welcome.

There has been a lot of talk of QOCS and David and Goliath relationships, but it is the central and key provision. Fulton MacGregor did an excellent job of outlining both the advantages of the introduction of QOCS and the pitfalls. The removal of the awarding of costs to people pursuing a case removes the huge consideration that many people would contemplate, which is clearly of considerable advantage, but it also comes with the possibility of some downsides. Fulton MacGregor provided a balanced analysis of that. The Government will need to watch for what might happen because of the reduction in the threshold for litigation, and the examples of David v David actions need to be considered.

Three key concerns that I did not cover in my opening remarks were well expressed in the debate. First, a number of members pointed out the issue around future losses. One of the key reasons why individuals pursue court actions is that they are facing increased living costs or care costs because of personal injury. It is vital that those people are still able to achieve awards to enable them to support themselves, and any consequences of the bill that led them to find it harder to achieve those awards would be of serious concern. Ring fencing must be looked at.

Likewise, a regulatory gap that might be introduced through the bill passing into law needs to be looked at. It would be absurd if claims management companies descended on Scotland because they found a loophole as we were attempting to democratise the law. Again, that point was well made.

We also heard about the possibility or risks of increased insurance premiums, and that needs to be watched. I mentioned in my opening speech the cost to the public sector. The point about what might happen if there are increased volumes and values of claims needs to be looked at, whether in relation to insurance premiums or costs to the public sector. For those reasons, it is vital that the Government commits to a review.

The points that John Finnie made on the possibility of QOCS for environmental cases were well made. It is clear that that would be of real interest in environmental cases in which communities look for redress. The costs can be prohibitive, and it is worth looking at whether those principles could be extended in those cases.

In conclusion, the measures are welcome and are a positive step forward. We must ensure that the law is accessible and open to all. The bill is but one step. As Ben Macpherson said, we must continually review the law and how it works and seek to improve it, whether there are specific issues or in general. I ask the Government to commit to excluding trade unions from section 10. I know that it has said that it will look sympathetically on amendments, but I would welcome a further and more robust commitment to that. It is also vital that we have a commitment to a five-year review of the legislation as a whole.

I call Gordon Lindhurst to close for the Conservatives.

15:26  

I begin by mentioning my register of interests: I am a practising advocate and a member of the Faculty of Advocates.

I want to provide an anecdote and to mention a mythical creature that has hardly featured in the debate, except in the minister’s speech: the auditor of the Court of Session. I do not know whether anyone else here has appeared before the auditor of the Court of Session, as I have. The auditor has a long history, of course. The office was created by an act of sederunt of the Lords of Council and Session in 1806, and confirmed by an act of Parliament in 1821. I note the minister’s comments and am pleased that she has confirmed that the auditor will remain independent of the Scottish ministers. I want to raise with her one or two brief points on that.

Having acted in a case a number of years ago, I appeared before the auditor of the Court of Session, who can determine whether fees are fair or reasonable. Therefore, I did not appear before the current auditor, but one of his predecessors. The solicitor had questioned the level of fee that I had charged on the basis that it was too much, although I thought that it was reasonable. We went into a room, and the auditor sat at one side of the table. I explained in detail to the auditor why I thought that the fee was appropriate, and the solicitor explained in detail why he thought that it was not. The auditor then basically made a decision as a judge does in a court case. The hearing was very professional, and it did not interfere with the relationship between the solicitor and me, as professionals.

The confidence in the process for the office of auditor of the Court of Session is probably not in question. My confidence in that process was certainly boosted by the outcome of that hearing. The auditor’s decision arrived to my surprise: although I had not asked for it, he decided that my fee was too low, so he increased it. I do not know whether it was for that reason that I never had to appear in front of him again. I should add, of course, that solicitors and I would discuss fees on occasion, because that is normally how one would adjust fees.

I have a question on which the minister may want to give reassurances. Section 13(4) deals with the appointment of an auditor of court. It says that the appointment

“lasts for such period, and ... is on such other terms and conditions ... as the”

Scottish Courts and Tribunals Service “may determine.” My concern about that is whether we will continue to have, as we have had with the previous 13 auditors, someone who is legally qualified and entitled to litigate in the courts, and is therefore in a position to judge matters properly, fairly and appropriately. The auditor holds a sort of quasi-judicial office. I am pleased to see that the auditor’s functions for the whole of Scotland in the auditing of court fees will be retained in the legislation. Will the minister give us an assurance on the length of tenure, which does not seem to be spelled out, and the security of conditions of the office, because the office is an integral part of ensuring that the legislation that is before the Parliament will be properly applied?

I think that most points have been covered in this fairly consensual debate. On the primary purpose of the legislation, which is said to be to resolve disparity between the positions of pursuer and defender, particularly in personal injuries litigations, the question has always been the fear of swingeing expenses awards, similar to those in a court of law. My understanding from the Justice Committee’s report is that the evidence was not entirely clear on that issue, but the committee has clearly come to a view on the value of the proposals based, in particular, on Sheriff Principal Taylor’s view that fear of adverse awards and costs inhibits people from exercising their legal rights.

It is right that members should also bear in mind the other side of the coin: we should avoid creating in Scotland the compensation culture that we see in other jurisdictions, and which is not necessarily of benefit to people who have valid claims. That point was addressed by Justice Committee members Rona Mackay and Fulton MacGregor.

I wonder about the test for qualified one-way costs shifting being based on Wednesbury unreasonableness. Fraud would be a very high standard to apply, but Wednesbury unreasonableness is equally hard in the specifics of a case, when one tries to argue for it before a judge, as I have done. It may be helpful to have more clarity on that test.

I welcome the committee’s proposal that the Government consider extending the mandatory pre-action protocol for personal injury claims. Consideration and definite proposals are needed for post-legislative scrutiny, as Daniel Johnson called for. Margaret Mitchell also touched on the issue on behalf of the committee.

We need to look at the bill very carefully. Liam Kerr referred to David against Goliath cases, but some cases are simply David against David—or, indeed, Goliath against Goliath.

Before I call the minister, I will say that we will be moving on shortly to the next debate. I do not see any front-bench members or other speakers for the next debate. I hope that they are paying attention, wherever they are, because in eight minutes they had better be on their toes. I call the Minister for Community Safety and Legal Affairs. You have eight minutes.

15:32  

I point members to my entry in the register of interests, wherein they will find that I am a member of the Law Society for Scotland and hold a current practicing certificate, albeit that I am not practising.

I have listened with great interest to the debate and contributions from across the chamber. I welcome the general support that has been expressed for the bill, although I appreciate that some members have concerns. It will be helpful to stress at the outset that the fundamental aspiration of the bill is to ensure that people who contemplate litigation in our civil courts will have more certainty about what it will cost them. With predictability about costs and increased funding options, we seek to address inequality of arms in personal injury cases. Those, in turn, will afford increased access to justice, which, I am pleased to hear, all members support.

The bill has received broad support from stakeholders who represent pursuers and those who represent defenders. I will now, in the time that I have available, which is about seven minutes, turn to issues that have been raised. I may not be able to deal with every issue, but I shall do my best.

On section 10 funding, I thought that I had made it clear at the Justice Committee, and again in today’s opening statement, that we do not intend to cover or encompass trade unions in the obligation. We and the parliamentary draftsmen will reflect on that point very carefully. They take the view that section 10 is clear, but I acknowledge the concerns that have been raised and undertake to ensure that it is absolutely clear that trade unions and legal service providers are not covered.

A number of members raised the important issue of the future-loss element of damages; the Justice Committee asked us to have another think about the matter. It is important to remember that, in his report, Sheriff Principal Taylor gave detailed and careful consideration to the future-loss element of damages and whether it should be paid by way of a periodical payment or a lump sum. Periodical payment orders are currently a matter of practice in our courts, albeit that the court cannot impose a PPO without the parties’ consent. We propose to introduce this year legislation to amend the position. The future-loss element of damages is already ring fenced under the bill’s provisions, because it may not be included in any success fee calculation, if there is a PPO. PPOs tend to be made in cases in which the longer-term care needs of individual pursuers have to be addressed.

Sheriff Principal Taylor concluded that future loss that is to be compensated for in a lump sum

“should not be excluded from the ambit of a damages based agreement”

and the calculation of a success fee under that agreement. He went on to say that

“This has the considerable advantage of simplicity.”

He came to that conclusion on the basis that the approach would not involve agreement on how a principal sum of lump-sum damages should be divided between past and future loss. Indeed, he remarked that there was a risk of incentivising delays in proceedings, such that people would seek to attribute more to past loss than to future loss.

Sheriff Principal Taylor also argued:

“To require parties to stipulate how an agreed lump sum settlement figure should be divided into different heads of loss could be impractical and pose a barrier to settlement.”

He concluded that

“Protection for the pursuer should be achieved by other means”.

Such “other means” are set out in the bill. Subsections (5) and (6) of section 6 make provision, in circumstances in which the lump sum exceeds £1 million, for independent assessment of whether it is in the best interests of the pursuer to have the future-loss element paid by periodical payment or in a lump sum. If the damages are awarded by the court, the court will make that assessment. If they are agreed in a settlement, the question will be referred to an actuary.

The bill faithfully follows Sheriff Principal Taylor’s recommendations in that regard. The Scottish Government, taking account of that and Sheriff Principal Taylor’s comprehensive evidence to the Justice Committee on the issue, is not persuaded that there is a need to change its policy on the matter. Reference has been made to what happens in England and Wales; Sheriff Principal Taylor said that Lord Justice Jackson had taken a different view some years ago, but had subsequently got cold feet.

It is important also to point out that the success fee that can be deducted as a percentage of the claim will be capped, on a sliding scale. Currently, if the claim is for £1 million, a fee of 15 per cent applies to the entire amount—it is £150,000. If the proposed cap and sliding scale are accepted by Parliament, the success fee in such a case would be £72,500. It is important to bear that in mind.

I welcome the Justice Committee’s conclusion that the introduction of qualified one-way costs shifting will “improve access to justice”, but I do not accept—and nor is this conclusion borne out by the key evidence—that the approach will lead to

“a rise in unmeritorious and fraudulent claims.”

A number of factors militate against that happening. First, why would a solicitor take on a case if there was no chance of success? The solicitor would not be paid, they would use up their time and they would spend money on outlays that they could not recover. Secondly, the regulation of claims management companies in Scotland will discourage unscrupulous companies from operating north of the border.

Does that mean that the minister agrees that we should wait for that regulation before passing the bill?

I was coming on to that, but time is short. No, we should not wait, because first, if there is to be a gap, I think that it will be very short and, secondly, we should remember that many claims management companies already operate subject to regulation, be it through their solicitor ownership or through the Ministry of Justice.

Also, the direction of travel in Scotland is clear. The message is out there for any claims management company that wishes to operate in a way that is inconsistent with the legislation that, should the bill be passed by Parliament, the legislation will be applied to it in very short order.

Also, with regard to the unlikelihood of there being a huge surge in unmeritorious claims, it is the case that the bill provides in section 8(4) for circumstances in which the benefit of qualified one-way costs shifting might be lost. I understand the comments that have been made about section 8(4), and we are looking into the matter.

On possible increases in insurance premiums, it is not founded that there will be an automatic rise in spurious claims. I therefore do not accept that the consequential conclusion that there will be a significant rise in insurance claims is founded.

I see that I am quickly running out of time. Before I do so, I thank the Justice Committee for its work, and I look forward to further discussion on all the issues at stage 2. I did not have time to deal with a number of issues today, but I am always happy to speak to members about concerns that they may have.

I thank the members for their support in principle for the bill. I commend the motion in my name.

That concludes the debate on the Civil Litigation (Expenses and Group Proceedings) (Scotland) Bill at stage 1. Before we move on to the next item of business, I will suspend briefly to allow members to take their places on the front benches. I apologise to Ms Hyslop, who is in already in the chamber, and to Mr Carlaw, who is looking a bit peeved.

15:41 Meeting suspended.  

15:42 On resuming—