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Scotland Update

February 2018

Hot topic - Claims Management Regulation

On 9 February we hosted a Claims Management Company Regulation forum for clients.  We were delighted to be joined by Kevin Rousell, Head of Claims Management Regulation Unit at the Ministry of Justice (MoJ) who provided an overview of how claims management companies (CMCs) are regulated in England and Wales and what the future might hold for Scotland.  Our work around CMCs was a key factor in the Scottish Government's decision  to take forward regulation of CMCs in Scotland.

It was clear from the high number of attendees that the impending regulation and consequences for the market were at the forefront of our client's minds.  Given the level of interest our forum generated we decided that our fourth Disrupt to Progress Roundtable on 27th March will retain the focus on CMCs by bringing representatives together from the MoJ, the Association of British Insurers (ABI), the Financial Conduct Authority (FCA), the Law Society of Scotland, Police Scotland, the Insurance Fraud Bureau (IFB), the Insurance Fraud Enforcement Department (IFED) and the Information Commissioner's Office (ICO). 

Legislation Update

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

The Justice Committee unanimously agreed the general principles of the Civil Litigation (Expenses and Group Proceedings) (Scotland) Bill at the Stage 1 debate on 16 January 2018. The Bill moved to Stage 2 of its Parliamentary passage this month and when passed will introduce QOCS and DBAs to Scotland.

DWF's Head of General Insurance in Scotland, partner, Andrew Lothian worked with the ABI to analyse the Bill and the proposed amendments.  .  The full published amendments can be viewed below.   

Next Steps

The Justice Committee meets on 27th February to begin consideration of the Bill at Stage 2.  Stage 2 requires to be completed by 9 March 2018 with Stage 3 proceedings scheduled for around March or April 2018.

Justice Committee Stage 1 report  

Stage 1 Debate transcript

Stage 2 Proposed Amendments

Prescription (Scotland) Bill

The Bill was introduced in the Scottish Parliament on 8 February 2018 with Stage 1 scheduled for May 2018.

A recurring problem with claims for damages, is determining when the prescriptive period begins for loss or damage that was initially latent.

Following the decision of the Supreme Court in the case of David T Morrison & Co Ltd v ICL Plastics Ltd in 2014, the issue of prescription in relation to claims for latent damage has become very topical. This case overturned almost 30 years of judicial authority and it was recognised that legislative changed was required. Since Morrison it has been clear that the prescriptive period starts to run when the pursuer is aware of the occurrence of loss or damage.

This was further highlighted in the case of Gordon's Trustees v Campbell Riddell Breeze Paterson LLP [2017] UKSC 75. In this case the trigger date for prescription purposes was held to be either the date the defective notices had been served in November 2004 or alternatively when the tenants failed to vacate in November 2005. The UKSC proceeded on the basis of a uniform approach held that the claim had indeed prescribed and dismissed the respondents appeal.

The Bill will:

• Extend the scope of the five-year prescription in a number of ways

• Reform the so-called “discoverability test” relating to the state of knowledge of a creditor in cases of latent damage, such as when a defect emerges in a building long after it was built

• Set the start date of the 20-year prescriptive period in relation to claims for damages as the date of the act or omission giving rise to the claim

• Ensure that the 20-year prescriptive period cannot be interrupted and allow parties to agree to an extension to the five and two-year prescription periods in certain circumstances

• Clarify that the burden of proof as to whether or not a right has prescribed falls on the credito

Damages (Scotland) Bill

Walter Drummond-Murray (Scottish Government) advised the Personal Injury Committee of the SCJC that the Damages (Scotland) Bill will be introduced later this year before the summer recess.  This Bill will amend the law on the personal injury discount rate and enable the courts to impose periodical payment orders when making an award of damages in respect of personal injury.

Professional Indemnity Scotland

Construction Professional Indemnity Event

Alison Grant, Andrew McConnell and Mark Klimt from DWF were delighted to host the Brunel Professions Construction Roadshow in our Glasgow office last week. The event was well attended with over 40 delegates from the construction industry including architects, engineers, clerks of work and insurers. Should you be interested in similar events please contact Alison Grant.

Implications for Construction Contracts?

Contracts (Third Party Rights) (Scotland) Act 2017

This Act came into force on 26 February 2018

The new legislation abolishes the common law doctrine on third party rights known as jus quaesitum tertio (JQT) and the irrevocability requirement, to permit parties to a contract to confer a right or immunity from liability on a party who is not a party to the contract (a ‘third party').

In a construction contract, parties now have a clear choice. They can continue with Collateral Warranties which create rights in favour of third parties; or they can adopt this Act to provide enforceable rights to those third parties without the necessity for separate contracts. The option that is chosen will depend on the specific circumstances of each project. In construction contracts, third party rights will appear comparable to the provisions in a collateral warranty without the need for a separate document to be completed and executed by the relevant parties to effect the third party rights (as is the process with a collateral warranty).

One of the most significant developments with this new legislation is the potential for substantial time and cost savings for all parties involved in a construction project. The new legislation brings flexibility and clarity to the rights of third parties and creates clear intention by the contracting parties to establish third party rights. Third party rights created under Scottish contract law have been in use and remained unchanged for a significant period of time. The introduction of the Act will consequently bring much needed reform to an area of Scots law which has not changed in almost 100 years.

If you would like to discuss the implications of this further please contact Andrew McConnell

in our Professional Indemnity team in Glasgow.

Case law

Sanction for Junior Counsel refused in LVI  case -Abie McCracken v Piotr Kazanowski [2017] SC EDIN 80 In this case despite rather complex issues relating to speed, and weight of impact,Sheriff McGowan noted matters were largely to be vouched for by the direct witnesses to the incident. Any expert reports used would be of assistance, but not the deciding factor and the sum sought was modest at £7,500. Accordingly, he decided that this case was not complex, high value or important enough to warrant sanction for Counsel.  This gives a useful steer of the view from the Bench which has historically granted sanction for these low value claims. 

Counter Fraud Scotland

Legal Awards

The countdown is on to the Scott +Co Legal Awards 2018 taking place on 15 March where we are finalists in the Innovation in Practice category.  Having won with a unanimous vote last year we are keen to retain the title.  Our submission this year concentrates on the work our intelligence team have carried out tracking the migration of fraudsters north of the border.


Abuse Claims

The Inquiry is now well into Phase 2 and the hearings continue to examine the evidence relating to residential child care establishments run by Catholic Orders. Further hearings specifically relating to Sisters of Nazareth are due to commence on 24 April 2018.

The Inquiry will not publish its final report and recommendations until October 2019.

Details of those who have given evidence and transcripts of the hearings can be viewed here.

News and updates can be viewed via this link as the enquiry progresses.



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.