In and out of court
With major reforms underway to the Scottish court and tribunal systems, what is the likely impact on dispute resolution not involving litigation?
This article considers the significant reforms currently affecting the court and tribunal systems in Scotland, and their potential effect on the use of alternative forms of dispute resolution to litigating in court.
Tribunals started out as a laudable attempt to provide an alternative means of resolution of disputes to courts, with advantages of informality, flexibility and saving of expense. But as matters have developed, those aims have not always been realised.
Two problems with the tribunals system in Scotland are its complexity and its fragmented nature. Tribunals tend to have been set up on an ad hoc basis to fulfil demand as it has arisen, and a report in 2008 found there were no fewer than 42 in operation in Scotland. Most ended up sitting in different places, with different rules and personnel. Since devolution, matters have become even more complex, since policy responsibility for tribunals is split between the Scottish and UK Governments.
We are currently in the middle of a programme of reform to try to address these problems (although it does not address another problem that besets many tribunals – the complexity of the legislation they have to apply). It is necessary to consider reserved and devolved tribunals separately.
Reform of reserved tribunals has mainly been achieved. In 2001, the Leggatt report found that reform was required to address the lack of independence of some tribunals from the administrative bodies over which they were supposed to exert control, and the absence of uniformity of administration. This led to the Tribunals, Courts and Enforcement Act 2007 (“TCEA”) and the setting up of a UK Tribunals Service. Reserved tribunals were brought within a coherent structure, divided into first-tier tribunals and an appellate Upper Tribunal.
There is now a body of case law about the operation of the TCEA system, for example on the test for where a second statutory appeal is available, and when decisions are judicially reviewable. In 2011, the Tribunals Service merged with HM Court Service, so in effect Scottish reserved tribunal cases are administered by the English court system.
The picture is very different for devolved tribunals, which were not part of this reform. In 2008, the Administrative Justice Steering Group (now disbanded) published a report, Options for the Future Administration and Supervision of Tribunals in Scotland. One option it recommended was a Scottish Tribunals Service, along the lines of the UK one. On 1 December 2010, such a service was set up, and now there are seven tribunals within its remit (out of a possible 16 devolved tribunals, based on the Options report): the Additional Support Needs Tribunals for Scotland, the Lands Tribunal for Scotland, the Mental Health Tribunal for Scotland, the Pension Appeal Tribunals Scotland, the Scottish Charity Appeal Panel, the Private Rented Housing Panel, and the Homeowner Housing Panel.
So far, the Scottish Tribunals Service is an administrative change only (largely to save costs of administering tribunals separately). There is no comparable structure of first-tier and Upper Tribunals as there is under TCEA.
But further change is coming. During 2012, the Scottish Government launched a consultation on reforming Scotland’s tribunal system. The proposals under consultation would effectively create a similar structure to that applying to reserved tribunals, under the overall leadership of the Lord President. After this structure is set up, the aspiration appears to be for Westminster to be persuaded to devolve responsibility for the reserved tribunals, so that all tribunals in Scotland are within one structure. The consultation period ended in June, so it can be expected that the Government will shortly publish its proposals for legislation.
The consequence of this reform will be more ADR, in the form of more use of tribunals. This is partly because the new structures replace the various different avenues of challenge to tribunal decisions with a system of internal appeals and limited rights of recourse to courts, and judicial review will often be excluded due to the existence of alternative remedies. ADR before tribunals should also be more streamlined, with procedural rules varying less between tribunals. Tribunals encourage lay participation and rights of audience are not required, so fewer cases will require legal representation.
Reform of the civil justice system
Tribunal reform is likely to expand the use of ADR, but there is other ongoing reform that may result in its contraction. The Government has a far-reaching “Making Justice Work” reform agenda, encompassing not only civil but also criminal justice. ADR is likely still to have an important role in the future, but if court reform is successful, it should reduce the need for ADR, because the courts will be offering a service that better meets the needs of litigants.
The Scottish Civil Courts Review
The Government has broadly accepted the Scottish Civil Courts Review proposals formulated by Lord Gill, whose appointment as Lord President last summer will give fresh impetus to implementation of the Review. Other members of the Review team are also in prominent positions to facilitate implementation, with Sheriff Principal Taylor having been tasked with producing the recommended costs review, and Sheriff Stephen having become Sheriff Principal of Lothian & Borders.
The reforms will affect ADR in a number of ways. Four of those are:
Expense. The Review reforms are likely to make litigating in court cheaper and more attractive to clients. There is to be a table of fees for counsel (and solicitor advocates) in both the sheriff courts and Court of Session, to control what is recoverable. Many more cases will be in the sheriff court at lower levels of fees, given that its privative jurisdiction is to be extended up to £150,000. The block fee for pre-action preparation is to be increased, to encourage earlier investigation and consequently settlement. Taxation is to be beefed up. For smaller claims, litigating may become more attractive, as there is to be a new unified and simplified procedure for summary causes and small claims. Expenses for claims under £5,000 are restricted on particular scales. Further work on judicial expenses is being carried forward via the Taylor review.
Simplified procedure. The Review recommends radical overhaul of court rules to make them simpler. There is to be plain English, with consistency across all courts, rather than the current multiple sets of rules. This will reduce the complexity of court proceedings.
Settlement. There will be more encouragement for parties to settle, in the form of new rules on pursuers’ and defenders’ offers. There are adverse expenses consequences if offers are unreasonably refused, the aim being to bring cases to earlier conclusion where possible. Defenders’ offers will continue with the expenses rules that apply to tenders; expenses will be on a party-party basis from the date of the offer, if the pursuer does not achieve as favourable an outcome. Pursuers’ offers will be reintroduced. If a pursuer achieves an outcome more favourable than in a pursuer’s offer, there will an uplift of 50% on the fee element of expenses on a party-party basis from the date of offer, with discretion to award a higher or lower uplift (for example, if the pursuer has not disclosed enough information to enable the offer to be considered properly).
ADR not compulsory. Finally, the Review, while acknowledging a role for ADR as supplementing an effective court system, did not come out strongly in favour of ADR. It did not recommend any rules either making ADR compulsory or even strongly encouraged. It considered the issue of expenses, but decided against recommending specific provision in court rules for sanctions in expenses where a party unreasonably refuses to engage in ADR. The general rule is to remain that parties bear their own expenses in relation to ADR, unless they agree otherwise, and that such expenses should not normally be part of an award of expenses by the court. In chapter 7, it recommended provision of more information about ADR, for example on the Scottish Courts website (not yet done), or by more Government leaflets. There is also to be guidance for the judiciary on the use of ADR.
Work has been proceeding on some of these proposals as set out below.
The Taylor costs review
Sheriff Principal Taylor’s review of the expenses of litigation is now expected to produce its final report in June 2013, a high level of responses having been received to its consultation paper. It is a parallel process to that already undergone in England through Lord Justice Jackson’s Review of Civil Litigation Costs: Final Report 2009.
The Scottish Government, when announcing the review, made it clear that it was interested in making Scotland a forum of choice for litigation, and ensuring access to justice for all of Scotland’s population: “This review will better inform the costs of litigation, the barriers which prevent access to the courts for some and consider what alternative options there may be in the context of the Scottish Civil Courts Review conducted by Lord Gill”. It is too early to second guess what Sheriff Principal Taylor will recommend, except to say he is likely to recommend ways to make litigation cheaper.
Civil Justice Advisory Group
There is also in operation a Civil Justice Advisory Group. Led by Lord Coulsfield, this is associated with Consumer Focus Scotland. It initially reported in 2005 on reforms required to the civil justice system in Scotland. After the Gill review, it met again and produced a further report in January 2011 with recommendations about how to carry forward some of the reforms in the review (Journal, March 2011, 12). The report stressed matters such as the need for a system-focused reform, triage of claims to point them towards the right part of the system, and the use of IT in dispute resolution.
Of interest in the present context was its recommendation that: “Court rules should be introduced which would encourage, but not compel, parties to seek to resolve their dispute by mediation or another form of alternative dispute resolution, prior to raising a court action”. It also recommended that there should be mediation services available before court action is raised. The recommendation about court rules encouraging mediation has been taken forward in the Scottish Civil Justice Council Bill, discussed below.
Rules of court
Since the Scottish Civil Courts Review, there have been a number of significant rule changes in the Court of Session to make litigation more predictable and cheaper. Rules tend to require parties to frontload preparation, so that if cases can settle, they will. The revised Inner House rules are an example. Most recently the Act of Sederunt (Rules of the Court of Session Amendment No 5) (Miscellaneous) 2012 (SSI 2012/275), in force from 19 November 2012, further reformed procedure in judicial review, commercial causes and other areas. The general effect is more frontloading of preparation and case management in these contexts also: for example in judicial review there is provision for making dates for answers, lodging documents and statements of issues, and transfers between the supervisory and ordinary jurisdictions.
More radical overhaul of court rules is pending, as a result of the Scottish Civil Justice Council and Criminal Legal Assistance Bill, introduced in May 2012 and likely to become law shortly. Part 1 sets up a Scottish Civil Justice Council. This body, among other functions, is to replace the Court of Session and Sheriff Court Rules Councils, and also take over functions of the Administrative Justice and Tribunals Council. It is to review procedural rules with a view to simplifying them and providing one set of rules for all the courts. It will also have a wider policy role to advise and make recommendations on improving the civil justice system.
The bill contains “principles”, an increasingly common feature of modern Acts. These are:
(a) the civil justice system should be fair, accessible and efficient;
(b) rules relating to practice and procedure should be as clear and easy to understand as possible;
(c) practice and procedure should, where appropriate, be similar in all civil courts; and
(d) methods of resolving disputes which do not involve the courts should, where appropriate, be promoted.
Many of the recommendations in the Scottish Civil Courts Review require court rules to put them into place. Once the Scottish Civil Justice Council is up and running, it can be expected to implement further parts of the Review reforms. In that connection, the Council is likely to promote ADR where appropriate, due to principle (d) above. This appears to take forward the recommendation of the Civil Justice Advisory Group noted above.
ADR: a continuing role
These various strands add up to a large amount of reform. The reforms all seek to bring back into litigation timeous resolution and reasonable costs. If successful, formal resolution of disputes should improve, and the knock-on effect may be less of a role for ADR. That could be a good thing for clients. With most forms of ADR, parties meet the expense of the exercise: they pay for the mediator, the arbitrator, the premises for meetings, and so on; and as noted above, the Civil Courts Review does not intend to change that position. While there are court fees for litigating, despite recent increases these are still less than the actual costs of the courts and judiciary, and there is a prospect of recovering expenses in proceedings. But the express inclusion of ADR in the principles set out in the Scottish Civil Justice Council and Criminal Legal Assistance Bill means that ADR is likely to retain an important role in the resolution of disputes in Scotland in future.
Anna Poole QC, Axiom Advocates. This article is based on a paper delivered to the Faculty of Advocates/In-house Lawyers Group “21st Century Bar” conference on 7 December 2012