February Round up of Legislative Activity in Scotland
As momentum builds for the implementation of the Courts Reform (Scotland) Act 2014 and the issue of expenses reform is opened up for debate, two draft bills were also proposed by two Scottish MSPs. The Scottish Government has been busy with proposals for change that will be of significant importance to the insurance sector.
Recovery of Medical Costs for Asbestos Diseases (Scotland) Bill
A consultation on new legislation to allow the medical costs for treating the victims of asbestos-related diseases to be reclaimed from insurers is underway. Stuart McMillan, SNP MSP, has proposed the Member’s Bill and the consultation process will run until 30th March 2015.
What is worthy of note at this stage is that on the 9th February 2015 the Supreme Court found the Welsh Assembly lacked legislative competence to enact the Recovery of Medical Costs for Asbestos Diseases (Wales) Bill in its present form. Lord Mance (with whom Lords Neuberger and Hodge agreed) gave the lead judgment and held that the Bill is: outside the legislative competence of the Welsh Assembly concerning the “organisation and funding of the NHS”; and incompatible with A1P1 of the European Convention on Human Rights which protects the rights of insurers and compensators in relation to the peaceful enjoyment of their possessions.
The ABI welcomed the judgement stating that they believed the Bill would only have led to an increase in premiums with no extra compensation for mesothelioma sufferers.
The insurance industry remains committed to doing all it can to help the victims of this terrible disease and would be happy to work constructively with the Welsh Government on the issue, as it does on other public policy.”
When reflecting on the Scottish position, if the proposed Bill is challenged the issue of competency and compatibility will no doubt be raised again. On the former, the significant difference is that the Scottish government have fiscal powers and healthcare is a devolved issue in Scotland. However, the argument of compatibility from the European perspective will remain a problematic one should the Scottish Parliament seek to make the Bill law. The Supreme Court did mention that no special cause had been demonstrated in the welsh case to justify the retrospective effect of the Bill and it may be that if the Scottish Bill is challenged then special attention will be given to this element.
Read more in our update, Recovery of Medical Costs for Asbestos Diseases (Scotland) Bill
Damages Claims (EU Directive on Health and Safety at Work) (Scotland) Bill
A second significant Members’ bill was proposed by Labour MSP Richard Baker. His proposal is that the Scottish Parliament should give employees effective legal protection against a breach of their rights under the European Framework Directive on Safety and Health at Work and Daughter Directives by making any breach actionable in compensation for damages.
The main effect of the Bill would be to reverse the effect of section 69 of the Enterprise and Regulatory Reform Act 2013 (ERRA) in Scotland. Section 69 applies to accidents occurring on or after 1 October 2013 and removes the right of a claimant to rely solely upon a breach of health and safety regulations as evidence of negligence (except where the regulations provide that it does).
Mr Baker’s proposal, which is supported by Aiden O’Neill QC a leading authority on EU Law, suggests that section 69 of the ERRA is “in direct conflict with European Law”. If this view is correct, it could mean that the Scottish Government would be exposed to Francovich damages claims that could run into millions of pounds per year, the Bill argues. The proposal goes further and also suggests that the “direct effect” of the European Health and Safety Directives is to treat private sector workers and public sector workers differently.
The Bill has two objectives:
To ensure that all Scottish workers, no matter by whom they are employed have the same protection under European law; and
- To ensure that every Scottish worker can rely directly upon the European Directives in relation to worker safety to pursue a compensation claim, if they are injured in circumstances where those directives have been breached.
A consultation on the Bill runs to 31st March. There has already been much debate over the bold assertions made in the Bill and it has been criticised as being cumbersome and superfluous, especially given there is currently a complaint lodged by the Association of Personal Injury Lawyers (APIL) with the European Commission regarding section 69. It could be said that the issues raised in Mr Baker’s proposal are already being addressed through more appropriate channels.
Expenses and Funding Consultation
On 30th January the Scottish Government announced a consultation on proposals for primary legislation on the expenses and funding of civil litigation in Scotland. Scottish Ministers are inviting views on proposal’s which are based on the recommendations of both Lord Gill’s Scottish Civil Courts Review in 2009 and Sheriff James Taylor’s Review of Expenses and Funding of Civil Litigation in Scotland in 2012/13. The consultation runs until 24th April 2015. The aim is to introduce a greater level of equality to the funding relationship between claimants and defenders in personal injury actions.
The Civil Courts in Scotland are currently undergoing the most significant programme of reform in a generation. Key steps taken to date include the establishment of the Scottish Civil Justice Council and most recently the enactment of the Courts Reform (Scotland) Act 2014. The implementation of the Gill/Taylor recommendations will complete this programme of reform.
The consultation paper sets out the proposals, the most significant of which are likely to be:
Speculative Fee Agreements – success fees in personal injury actions should be capped with suggested figures of:
- 20% (inc VAT) on the first £100,000 of any damages, and then
- 10% on damages between £100,001 and £500,000, and
- 2.5% on all damages over £500,000.
In all other civil actions the maximum success fee should be capped at 50%. All heads of damages are to be taken into account. Counsel’s fees should be paid from the success fee.
Qualified One way Costs Shifting –should be introduced in Scotland for all personal injury litigation.
Damage based Agreements (DBA) – should be enforceable in Scotland and the maximum which can be deducted from damages should be on the same sliding scale as with speculative fee arrangements. Counsel’s fees in personal injury actions should be paid from the DBA. In commercial actions funded by a DBA, the maximum percentage deducted from a monetary award should be 50%.
Multi-Party Actions – There is no formal procedure for multi-party actions in Scotland - the consultation seeks views on whether there is a need for this and how it would be structured.
Alternative sources of funding – a professional funder who finances part of the pursuers expenses of litigation should be potentially liable for the judicial expenses of the opposing party to the extent of the funding provided. Also in all civil litigation parties should be under an obligation to disclose to the court and intimate to other parties how the litigation is funded at the stage when proceedings are being raised.
Fifty five questions have been put forward for discussion in the consultation and DWF will be preparing a response. We would be happy to put to discuss any views that you may have about these proposals. View the consultation paper and questions.
Courts Reform (Scotland) Act 2014
The timetable for implementing the radical changes to the Scottish court system was revealed by Lord Gill on 28th January 2015. It will begin in July this year with the first Summary Sheriffs being appointed although it will be the month of September which will see implementation of the most widespread practical changes, which will include:
A new Scotland-wide Sheriff Court based in Edinburgh with exclusive jurisdiction for personal injury cases.
The extension of the exclusive jurisdiction of the Sheriff Court will increase up to a value of £100,000, which seeks to free up availability in the Court of Session.
A new criminal Sheriff Appeal Court. (Extended to civil cases in Jan 2016)
Introduction of a new permission stage for judicial review.
The draft bill, detailing the new powers for the Scottish parliament was published by the UK Government on 22nd January 2015 in a command paper entitled “Scotland in the United Kingdom: An Enduring Settlement”.
Danny Alexander, chief secretary to the treasury, announced the 44 draft clauses to the bill in Edinburgh and described them as “the faithful fulfilment of the Smith commission”. The Prime Minister has said the Bill will make the Scottish parliament “one of the most powerful devolved parliaments in the world.”
In essence, the Scotland Bill will give Holyrood more tax and spending powers. The Scottish Parliament will be given the freedom to decide what happens in Scotland’s schools, hospitals, surgeries and police stations. Holyrood will also gain responsibility for deciding how around 60% of public money in Scotland is spent because – for the first time – the majority of the money the Scottish Parliament spends will be raised in Scotland.
The Bill will be included in the Queen’s Speech in May and will not be enacted until after the General election that follows. It will fall to whoever forms the next UK Government to actually deliver the new powers after the election. All parties have said they are committed to doing so.
For further information please contact Caroline Coyle, Associate, Professional Support Lawyer, on +44 (0)7712 355 907.
This information is intended as a general discussion surrounding the topics covered and is for guidance purposes only. It does not constitute legal advice and should not be regarded as a substitute for taking legal advice. DWF is not responsible for any activity undertaken based on this information.