The Background
In Apollo Engineering Ltd. (in liquidation) v James Scott Ltd, [2012] CSIH 4, the Inner House of the Court of Session ruled that non-natural persons, such as limited companies, partnerships and associations, must be represented by either a solicitor or counsel during the course of legal proceedings. The approach taken was consistent with the case law up until this point. However, given the concerns of small businesses over access to justice and the possible cost implications associated with legal representation, the Scottish Government changed the law. Under s97 of the Courts Reform (Scotland) Act 2014 a lay representative may, if the court grants permission, conduct civil legal proceedings on behalf of a non-natural person. The Act of Sederunt (2016/243) which was laid before the Scottish Parliament on 1 September 2016 and comes into force 28 November 2016 brings into effect section 97 of the 2014 Act.
The Act of Sederunt
Properly referred to as Act of Sederunt (Lay Representation for Non-Natural Persons) 2016, this Scottish Statutory Instrument (SSI) has been put before the Scottish Parliament by the Court of Session and will come into force on 28 November 2016.
The Sections
Section 2 of the Act of Sederunt provides definitions and lists the relevant parties who are able to authorise a lay person to appear on behalf of a non-natural person. These people are: directors and secretaries of companies; members/partners of LLP’s and partnerships; and, members or office holders of associations.
Section 3 deals with the form the application must take and goes on to say that, in granting permission for the lay representative to appear, the court can decide without hearing from the parties. The court can also grant permission to appear for specific hearings, rather than grant carte blanche permission. It can also revoke the permission of its own volition or on the application of one of the parties to the action.
Section 4 provides that in cases involving confidential information, a lay representative can see any documents without the non-natural person being in breach of any confidential information obligations. Likewise, a lay representative will not be in breach of any of his confidential information obligations, when making a disclosure of confidential information to the court. The Act of Sederunt also provides that the court can, in the interests of justice, impose conditions on the exercise of functions by a lay representative.
Finally, under section 5, a lay representative who has been found to have been acting unreasonably in the conduct of the proceedings, or where the court awards expenses against the non-natural person which the lay person represents, can be held jointly and severally liable for the costs of the action. In simple terms then, a lay representative takes on a financial risk when applying to represent a non-natural person, as they can find themselves liable for the costs of the litigation.
The Effect
The courts are retaining a large degree of proportion of the control over the lay representation system. This includes the ability to grant permission for lay representation without the parties being heard, imposing conditions on the lay representative where it is deemed appropriate by the court to do so and being able to revoke permission when it considers it appropriate. Arguably such control is necessary given that, by their very nature, lay representatives will not be as well versed in court procedure as their legally trained counterparts.
The rules that allow for awards of expenses against the lay representative are in stark contrast to the position of a solicitor or counsel. How the courts approach this power is likely to be the most significant factor in whether lay representation is sought. If the courts routinely find a lay representative liable for costs of the action this is likely to be a significant deterrent.