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Scotland Update

October 2017

Headlines - Abuse Claims

The Supreme Court's decision in Armes highlights the dramatically changing landscape for abuse claims across the UK and especially so in Scotland with The Limitation (Childhood Abuse) (Scotland) Act 2017 now in force.

Key Highlights of the Act:

  • retrospectively removes the 3-year time limit for victims of abuse which happened after 26 September 1964, whether physical, psychological or both.
  • Abuse is widely defined, on a non-exhaustive basis, as including sexual abuse, physical abuse, emotional abuse and abuse which takes the form of neglect.
  • While the desirability of an abuse protocol was discussed this has not been implemented as yet.  It is anticipated that since abuse still requires injury the voluntary or compulsory protocols could be applied where appropriate on a case by case basis. 
  • The onus will remain on the claimant to establish, on the balance of probabilities, a causative link between the abuse and the injury.
  • Safeguards are provided in the Act for defenders, in their entitlement to a “fair hearing” and to consideration of whether they will suffer “substantial prejudice” if the case proceeds, sufficient to outweigh the claimant’s interest.

Effects:

  • brings into sharp focus the implications on insurers, self-insureds and local authorities not only in financial terms but also in terms of policy and liability investigations, claims management and resources.
  • Scottish Government estimates that 2,200 cases could surface from the new legislation. However, some MSPs believe this figure is conservative and that the true number could be significantly higher. 
  • Scottish councils published statistics last year showing that they paid out more than £1.5 million in compensation to victims of child abuse during the last decade.  Police Scotland have also identified that there has been a rise in child sexual abuse incidents from 66,120 in 2012 to 113,291 in 2015.  It is thought that of the cases identified, the number of historic cases has risen by 165 %.

Landmark Case

Supreme Court - Armes v Nottinghamshire County Council [2017] UKSC 60  - a local authority can be held vicariously liable for abuse of a child by foster parents.

The Supreme Court decided by a majority of 4-1 that a local authority can now be held vicariously liable for abuse of a child by their foster parents.

Lord Reed stated that a closer involvement than that between a local authority and foster parents was not required for the local authority to be vicariously liable for abuse by a foster parent i.e. that the connection was close enough. He also cited the following relevant characteristics of this relationship:

• A council recruits and trains foster parents; social workers regularly visit foster parents, involve them in decisions and monitor them; a council can remove children from their care at any time;

• A council retains parental power;

• A council pays an allowance and provides equipment to foster parents;

• Foster parents undertake an activity on behalf of a council, are an integral part of that council's activities and the council exercises a degree of control.

This decision renders local authorities liable for abuse committed by foster parents even where there has been no negligence or shortcoming of any sort on the part of the local authority - in the same way that they are already liable for abuse perpetrated by employees. The consequences will be far reaching, not only in terms of exposure to wider liabilities but also in terms of increasing vetting and monitoring requirements and the possible discouragement or reduction of fostering.

Join us at the DWF Scottish Abuse Claims Conference - DWF will be hosting a conference on 15th November 2017 to look specifically at the new Act and current fraud issues.  We will provide guidance from our own expertise in the handling of difficult abuse cases, discuss the risk of fraud in abuse claims and explain how to recover damages from the abuser.  Click here to register.

Scottish Government Activity

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

The Justice Committee will take evidence throughout October and we will continue to keep you informed as the Bill progresses.  DWF Scotland will continue to present the concerns of the insurance industry to the Scottish Government.

On 26th September our Andy Lothian was the only defendant insurance lawyer to give evidence before the Justice Committee of the Scottish Parliament on the above Bill.  The Bill will, if passed, introduce QOCS and DBAs to Scotland.

Read more detailed submissions about the concerns for the industry in our response to the Scottish Government's call for evidence here.

Notable Caselaw

Expenses – Grubb v Finlay, Court of Session, Lord Kinclaven (unreported) considers the discretion enjoyed by courts in making an award of expenses against a party.  The general rule of expenses follows success was not observed by the court in this instance.  The pursuer claimed that he suffered a whiplash type injury, psychiatric injury and neurological damage following a road traffic accident in which liability was admitted.  The defenders disputed that the collision could have caused any injury.  The pursuer was successful in establishing causation but only to the extent of a 12-month injury and was awarded £7,321.32.  In an unusual move, the defenders sought the expenses of the case due to the pursuer's fundamental dishonesty throughout the litigation.

Despite the pursuer's success in achieving an award of damages, the judge found the pursuer liable to the defender in expenses due to his "lack of candour and dishonesty".  The judge restricted the expenses awarded in favour of the defender to two-thirds. 

Professional Indemnity – Interim payment of £1 million in respect of expenses

Robert Kidd v (First) Paull & Williamsons LLP and (Second) Burness Paull LLP

The Court of Session awarded interim expenses in the sum of £1million in a recent decision concerning solicitors' negligence.  The case concerns a US $210million claim against a firm of solicitors arising from an alleged breach of fiduciary duty. A hearing is set for January 2018. Lord Tyre pronounced an Interlocutor finding the defenders liable to the pursuer for expenses of procedural aspects and one half of the expenses of the action to date. 

The pursuer then enrolled a motion for payment of £2million as an interim payment of expenses. That motion was opposed. Lord Tyre granted the pursuer's Motion to the extent that the Defenders were ordered to make an interim payment of £1million to the Pursuer within 14 days.

Andrew Smith QC (instructed on behalf of the pursuer in this action) recently published a paper on the competency of interim awards of expenses in Scotland, which is available here.

 

Counter Fraud Scotland

At the Insurance Post Fraud Awards in London earlier this month the DWF Counter Fraud team picked up two awards. The first award was for Intelligence Team of the Year for the fantastic work that the Intelligence team, lead by Lisa Sanzeri, have carried out tracking the migration of organised fraud into Scotland.

The second award was for Investigation Team of the Year for the innovative, data led counter rehabilitation and costs layering products our consultancy team have developed which have generated significant savings for clients both north and south of the border. 

Scotland Photo 1

Forthcoming events:

22 November 2017 - Disrupt to Progress - Cyber Risk Scottish Counter Fraud Round Table
7th December -  Counsel Seminar - Challenging Expert Witnesses

Please get in touch with Jill if you would like to attend future events or would like bespoke training for your teams.

Scottish Civil Justice Council (SCJC)

The SCJC are seeking views on the fees for solicitors' that can be recovered in court.  Responses will be analysed before a decision is reached on whether to increase or decrease he levels.  Given the proposed changes afoot with the introduction of QOCS and DBA's it is important that the level of judicial fees pursuer solicitors recover is kept under close scrutiny. 

DWF will be submitting a response. 

 

For further information please contact Andrew Lothian, Head of General Insurance (Scotland) on 0131 474 2305, Caroline Coyle, Associate, Professional Support Lawyer Insurance on 0141 228 8132 or Jill Sinclair, Head of Counter Fraud (Scotland) on 0141 228 8196

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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.

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