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Looking ahead

October 2016

This month’s headline was the news on 13 October that the Autumn Statement reforms had “run into a brick wall”. Initial speculation that the reforms were off the table was soon tempered by MoJ comments that the issue was still being carefully considered and that further plans would be outlined in due course.

There was also a flurry of news on 25 October when the Government finally published the changed MedCo Qualifying Criteria and the SRA published the research it had commissioned for its Personal Injury Thematic Review.

In the meantime, the ABI held its annual motor conference on 18 October which coincided with the publication of its ‘Lifting the Bonnet on Car Insurance’ report setting out a five point plan aimed at tackling higher insurance premiums.

Further details can be found below along with developments on:

• Appeals and judgments to watch out for
ASHE 2016
• A ministerial response on Vnuk
• Fixed recoverable costs in clinical negligence claims

Forthcoming cases

Supreme Court

Disability discrimination: buses. FirstGroup Plc v Paulley concerns the Equality Act 2010 and the reasonable adjustments a bus company is required to make in order to accommodate disabled wheelchair users. The appeal was heard on 15 June and judgment is awaited.

Update - Insurance: professional indemnity. The case of Impact Funding Solutions Ltd v AIG Europe Insurance Ltd was heard on 30 June and in a judgment handed down on 26 October the Supreme Court held that the professional indemnity insurers did not have to indemnify solicitors in respect of loans taken out to cover the cost of disbursements.

Insurance: professional indemnity. Permission to appeal was granted in AIG Europe v Woodman & Anor (aka AIG v OC320301 LLP) in July and an expedited hearing took place on 10 October. The issue is the true construction of the words "in a series of related matters or transactions" within the aggregation clause of a professional indemnity insurance policy. Read more in our article on April’s Court of Appeal decision.

Professional negligence: accountants. The issue in Swynson Ltd v Lowick Rose is whether the Court of Appeal erred in law in holding that a lender could recover damages from its negligent adviser representing loans that had been repaid by the borrower, on the basis that the borrower's repayments were collateral to (or res inter alios acta) the adviser's breach of contract. A hearing will take place from 21 to 24 November. Read more in our article on last year’s Court of Appeal decision.

Inheritance Act disputes: wills. The Court of Appeal in Ilott v Mitson considered the rules on reasonable provisions in wills for adult children. In this instance an estranged daughter claimed that her mother’s will, which left the majority of her estate to three charities failed to make reasonable financial provision for her. The hearing of the charities’ appeal will take place on 12 December. Read more in our article on last year’s Court of Appeal decision commenting on the implications for will drafting.

Professional negligence: solicitors. The case of BPE Solicitors v Hughes-Holland (aka Gabriel v Little) considers the scope of solicitors’ duties where losses relate to commercial risks. A hearing has been listed for 14 & 15 December.

Non-delegable duties: foster carers. The defendant’s solicitors have reported that the case of NA v Nottinghamshire County Council concerning the abuse of a child by foster parents and the duties owed by local authorities in those circumstances has been listed for 8 February 2017.

Supreme Court cases awaiting developments. We await further official details for a number of cases where permission to appeal has been granted:

  • Mapfre Mutualidad Compania De Seguros Y Reaseguros SA & anor v Keefe on whether a Spanish insured can be joined into the English proceedings already brought against the Spanish insurer. 

  • Brownlie v Four Seasons Holidays Inc involving jurisdiction issues arising out of a fatal accident claim.

  • Gavin Edmondson v Haven Insurance which concerns an insurer engaging directly with claimants to conclude their claims which had been commenced in the Portal.

  • Robinson v Chief Constable of West Yorkshire Police which concerns the issue of liability of the police in negligence following an incident in which the claimant was injured when she became caught up in the arrest of a drug dealer.

Court of Appeal

New – Disease: smoke inhalation. In July the High Court dismissed the test claims in the Sonae Group Litigation arising out of a fire at the defendant’s premises in Kirkby. The group litigation had been brought by over 16,000 claimants and Jay J’s judgment was notable for its criticism of the conduct of the claimants’ representatives in bringing the claims. This month the Court of Appeal refused the claimants permission to appeal.

Costs: fixed costs. Bird v Acorn concerns the stage of fixed costs that should apply when a case drops out of the portal, is listed for disposal and then settles. The hearing took place on 20 October and judgment is awaited.

Costs: fixed costs & the multi-track. The question in Qader v Esure is whether fixed costs apply to a claim which starts under the low value personal injury claims protocol but subsequently proceeds on the multi-track. The appeal was heard on 26 October and judgment is awaited.

New – Occupiers’ liability: tripping claim. The Times has reported on a case that was heard in the Court of Appeal on 26 October. Debell v Rochester Cathedral concerns a pensioner who tripped whilst taking a shortcut through the grounds of the cathedral and appears to involve consideration of the extent of the cathedral’s duty to the claimant. Judgment is awaited.

Catastrophic injury: accommodation; costs. The claimant in Manna v Manchester University Hospitals NHS Foundation Trust suffered severe brain damage at the time of his birth. Liability was agreed and judgment entered for 50% of the full value of the claim. The defendant is appealing findings in relation to the claim for accommodation and in relation to the award of indemnity costs. The first instance court allowed two Roberts v Johnstone awards for the homes of the claimant’s separated parents. A Court of Appeal hearing will take place on 7/8 December 2016.  Read more in Lord Justice Jackson’s judgment granting permission to appeal.

Motor liability: pedestrian children. In AB v Main a car collided with children who had been playing at the side of the road but then moved into the road. The driver was held liable with a 20% discount for contributory negligence. The defendant has leave to appeal the finding of primary liability. The appeal will be heard on 15/16 February 2017.

Credit hire: rates evidence. On 21/22 February 2017, the Court of Appeal will hear appeals in two important credit hire cases in respect of rates evidence and the approach that a court should take in the event that the rates evidence does not reflect the claimant’s case. Clayton v EUI Ltd and McBride v UK Insurance Ltd. 

Portal claims: £400 club. In April there were press reports of a decision in the Cardiff County Court in which the judge ordered reimbursement of pre 2013 stage 1 costs paid by insurers after an admission of liability, but following which the cases did not proceed to stage 2. The judge granted a leapfrog appeal in Iqbal & Anor v Leek & Anor which has now been listed for 23 February 2017.

QOCS: claims against the MIB. In Howe v MIB it was held that a claimant who brought a claim against the MIB arising out of an RTA in France did not have QOCS protection. There are appeals both on this issue and the substantive claim. They are currently being dealt with separately with one due to be heard by 13 March 2017 and the other by 11 April 2017.

Pre-action disclosure: fixed costs. FOIL has reported on an appeal decision in Sharp v Leeds City Council in which HHJ Saffman has held that fixed costs applied in a PAD application. The matter is now going to the Court of Appeal on 23/24 January 2017.

New – Costs: proportionality. An appeal from the decision of Senior Costs Judge Master Gordon-Saker about the ‘new’ test on proportionality has been leapfrogged to the Court of Appeal. BNM v MGN Ltd has been given a hear-by date of 6 March 2017.

Local authority liability: swimming pool accident. In RXDX v Northampton Borough Council & Anr a six year old claimant suffered a brain injury after nearly drowning in a public swimming pool. The local authority was held liable for the failure of the lifeguards on duty to adequately supervise the claimant’s use of the pool. The Court of Appeal hearing will take place on 14/15 June 2017. Read more in Lord Justice Jackson’s judgment granting permission to appeal.

New - Lung cancer: contributory negligence. Permission to appeal to the Court of Appeal has been granted in the case of Blackmore v Department for Communities & Local Government. The 2014 county court decision involved calculating the degree of contributory negligence in a case where the deceased developed lung cancer due to a combination of smoking and exposure to asbestos. The appeal will take place on 14/15 June 2017. Read more in our update on the first instance decision.

Costs: assignment of CFA. The case of  Budana v Leeds Teaching Hospitals NHS Trust on the validity of assigning a CFA was leapfrogged to the Court of Appeal and will be heard on 4/5 July 2017.

Consultations

Update - MedCo framework review: qualifying criteria. Following the March publication of the outcome of the MoJ’s Call for Evidence relating to the operation of the MedCo Portal, the MoJ carried out a brief consultation, which was isolated to the definition of an MRO for the purpose of receiving instructions via MedCo. This short consultation closed on 15 April and the Government responded this week with the publication of a revised set of Qualifying Criteria for MROs. The criteria now include a definition of an MRO to demonstrate the types of acceptable model. It has also been confirmed that the new search offer announced in March – of two Tier 1 and ten Tier 2 MROs – will be implemented on 8 November. Read more in Nigel Teasdale’s update.

Update - Fixed costs in clinical negligence claims. It was June 2015 when the Department of Health first announced its intention to introduce fixed costs in clinical negligence claims. This was followed by a pre-consultation with selected stakeholders in August 2015. The intention was for the new regime to be implemented by October 2016 but in May the DoH conceded this would not be achievable. Since then there have been a number of responses to ministerial questions indicating that the consultation is on its way and our latest understanding is that it is due out in November. In the meantime the recently released minutes of the July Civil Procedure Rules Committee meeting revealed that “there had been a change of policy at the Department of Health and that they intend to consult in respect of claims up to £25,000.”  The Gazette subsequently reported that the DoH “insisted no final decision on the proposed threshold has been made”.   

Solvency II: Treasury Select Committee Inquiry. On 13 September the Treasury Committee launched an inquiry into the new regime for the regulation of insurance, which was implemented in January 2016. There were fears that the much delayed EU directive would impose substantial costs on the insurance industry, and the Committee has already heard evidence suggesting that Brexit provides the opportunity to leave the Solvency II arrangement and that doing so would help insurance companies. The inquiry will explore the impacts of the directive, and the options now available to the UK, in more detail. Written submissions are requested by 11 November.

The following consultations are awaiting official responses:

Claims Management Regulation: fees cap. In February the MoJ published a consultation on proposals to cap the level of fees that regulated CMCs can charge consumers. It is currently only proposed that the cap should apply to the financial products and services claims sector. However, the consultation did invite views on whether fee controls in the personal injury sector should be considered as well. The consultation closed on 11 April.

Court fees increase: Justice Committee Inquiry. In June the House of Commons Justice Committee published its report following its inquiry into the effects of the introduction and levels of increased fees across the employment tribunal and the civil courts (having already previously reported on the criminal courts charge). Whilst the Committee has no objection to the principle of charging fees to court users, there needs to be a clear and justifiable rationale for the setting of fees taking into consideration a number of factors, and concern was raised about the quality of the MoJ’s research. Specifically in relation to civil court fees, the Committee recommends a review of the April 2015 increase in fees and that the Government should not resurrect its proposal to double or even remove the £10,000 cap unless such a review has been undertaken. They also recommend piloting a system in which there is a graduated or sequential system of fee payments whenever there are substantial fees payable. The Government’s response is awaited.

Update - CMA legal services study. In January the Competition and Markets Authority launched a market study to “examine long-standing concerns about the affordability of legal services and standards of service.” An interim report was published on 8 July with the headline finding that “upfront information on price and quality is often not available to consumers in order to allow them to compare offers and choose the one that most suits their needs”. The CMA has decided not to carry out a full market investigation as it considers that it is well placed to address the issues identified in the interim report. Its focus now will be on improving the information that providers make available to consumers to help drive competition. The CMA sought views is seeking views on its interim findings and responses to the interim report have now been published on the Legal Services Market Study homepageThe CMA must publish its final report by 12 January 2017. 

Legal services regulation: removing barriers to competition. On 7 July, the day before the CMA published the interim findings of its legal services study (see above), the MoJ announced a consultation (promised in November 2015) on proposals to reduce barriers to market entry, and regulatory burdens on Alternative Business Structures in legal services. Lord Faulks’ ministerial statement also mentioned the Government’s intention to consult on regulatory independence, in the context of the CMA’s interim findings. On that issue, the CMA had identified benefits and risks within the current regulatory framework. Whilst the CMA is open to more fundamental change of the regime it acknowledges the complexity of the issues and notes the Government’s intention to consult on the issue. The current consultation closed on 3 August.

Driverless technology. On 11 July the Department for Transport published a consultation seeking views on proposals for the use of automated vehicle technologies, and advanced driver assistance systems. The proposals include changes to insurance law so that motor insurance will remain compulsory but will be extended to cover product liability for automated vehicles. The consultation closed on 9 September but less than a week later, the House of Lords Science and Technology Committee launched an inquiry into the future uses of driverless vehicles in the UK. That call for evidence closed on 26 October and the Committee’s questions include whether further revisions are needed to insurance, regulation and legislation in the UK to create an enabling environment for autonomous vehicles.

Discount rate consultations. The process of reviewing the discount rate and the methodology in setting it began in August 2012. In August 2014 it was revealed that a panel of experts was to be appointed to prepare a report giving expert investment advice to assist with the review but the panel only began its considerations in March 2015. An MoJ update in January 2016 confirmed that the expert panel’s report had been received and was being analysed by the MoJ to enable the Lord Chancellor to consider the matter further. We understand the MoJ is currently trying to assess how changes to the rate might affect claimants and defendants before presenting the findings to the ministers.

Legislation

Insurance contract law reform: draft Insurable Interest Bill. In April the Law Commission and the Scottish Law Commission published a draft Bill following their review of the issue of Insurable Interest, having previously made proposals for reform in 2008 and 2011. They were asked to return to the issue due to the increased numbers of requests to write policies which include cover for children, cohabitants and to insure ‘key employees’ for substantial amounts. The draft Bill is intended to reflect the proposals set out in the issues paper and the Law Commissions invited comments on the draft Bill by 20 May 2016 with a view to publishing a final draft Bill and report in autumn 2016. 

Enterprise Act 2016: late payment of insurance claims. The Act which includes provisions giving policyholders a right to damages for late payment of claims received Royal Assent on 4 May. The late payment provisions will come into force on 4 May 2017. Read more in this update from Jacquetta Castle and Robert Goodlad 

Update - Motor insurance: implications of ECJ Vnuk ruling for UK legislation. On 8 June 2016 the European Commission published a ‘Roadmap’ reviewing the ruling in Vnuk and suggesting a number of options for how to respond to it. The Commission has acknowledged the concern expressed by a number of governments that the judgment has extended the scope of the Directive to areas that are unrelated to “traffic”. Unsurprisingly then, the Roadmap’s preferred option is to limit the scope of the Directive to vehicles “in traffic”. The Commission was due begin a targeted consultation with insurers on this specific issue immediately, with a wider consultation later this year looking at all aspects of the Directive. However this predated the EU Referendum and we await developments on how this is to be taken forward. Update: the most recent information came this month in a ministerial response to a written question on the plans for implementing the Vnuk decision: “…The Secretary of State will consult in due course on whether or not to make changes to how the Motor Insurance Directive is implemented in domestic law.” Read more on the Roadmap in our update from Nicola Dunk and Amy Jeffs. 

Also on the horizon...

Update - Autumn statement: small claims track & low value whiplash claims. The Government's proposals to remove the right to general damages for minor soft tissue injuries and to increase the small claims track limit for personal injury claims to £5,000 were first announced in November’s Autumn Statement. Since then we have been waiting for further signs of the Government’s intentions. It was thought that the new Justice Minister Sir Oliver Heald’s attendance at the ABI motor conference this month might finally herald an announcement, but at the last minute he pulled out provoking an explanation from the MoJ that the Secretary of State would not be proceeding with the reforms at the moment. The news prompted much speculation about whether the reforms were completely off the table or merely on hold. The wait continues. Read more in Simon Denyer’s update

Fixed costs extension. Earlier this year the Civil Justice Council held a workshop to look at the ‘principle’ of extending fixed recoverable costs. In June, the CJC published a note of the points raised (pdf) at the workshop. The note highlights that the issue is that costs are disproportionate in low value claims but acknowledges that there are no easy solutions, as inevitably there is no “one size fits all” and there are risks to access to justice. Another issue, one which they had already encountered during the review of the Guideline Hourly Rates, was a sparsity of evidence and a reluctance from firms to provide it. The timing of the initiative was also questionable given the lack of any assessment yet of the 2013 reforms. Separately, at the end of May, Lord Justice Jackson gave a lecture on fixed costs at the Westminster Policy Forum. Last month, as part of its initiative on “Transforming our Justice System”, the MoJ set out its vision on the Civil Courts system. The vision includes looking “at options to extend fixed recoverable costs much more widely”, albeit with no concrete proposals as yet. Read more on the joint statement in Simon Denyer’s update

Update - Insurance Fraud Taskforce. Although the Taskforce's final report was published in January (read more in our update) it was only at the end of May that the Government published its response in the form of a written statement. The Government supported the report and accepted each of the recommendations but also said that proposals for implementation would be set out “in due course” and “there needs to be a concerted effort by all those involved in the insurance process to tackle this serious problem”. A subsequent reply to a written question in parliament stated “The Government will do what it can to assist and, in order to make sure that all of the recommendations are actively pursued, we will seek an update on progress later in the year.” To that end we understand that there have been discussions within Government and that a forum is proposed for later in the year for those involved in pursuing the recommendations. In light of the news on the Autumn Statement proposals, LV=’s Martin Milliner took the opportunity at the ABI motor conference to call for implementation of the recommendations of both the IFT’s report and Carol Brady’s report on claims management regulation. 

Claims Management Regulation. Carol Brady published the final report following her independent review of claims management regulation in March. The review had been commissioned by the Treasury and the MoJ to examine the perception of widespread misconduct among CMCs and make recommendations to improve the regulatory regime. Carol Brady has since indicated that a new team overseeing CMC regulation was already up and running within the FCA. She also indicated that there had been no opposition to the recommendation that it be made mandatory for all CMCs to disclose their referral source and that it was likely that this measure will be implemented. We understand that the new team is liaising with stakeholders to discuss the improved regime and to anticipate future CMC behaviours following the proposed reforms and we also understand that the primary legislation required to transfer regulation to the FCA may be some way off.

New – SRA: thematic review of personal injury sector. In February the SRA announced that it was starting a review to better understand the personal injury market and in August it began approaching a number of firms to participate in its survey. Earlier this week (25 October) the SRA published its research. According to the survey, conducted by ICF Consulting, the perception is that the market seems to be generally working well although there are concerns that require further investigation. These include the quality of medical reports and a lack of knowledge within firms which have moved into areas such as clinical negligence and disease. Read more in Simon Denyer’s recent update.

New – ASHE 2016: care claims & PPOs. The provisional 2016 ASHE figures were published on 26 October. After a few years of modest and occasionally negative growth, the figures for care workers show a 4.03% increase in the median hourly rate in the year to April 2016. With the majority of periodical payments linked to the 80th percentile, many annual payments will increase by 3.66% compared to 1.67% in 2015. Read more in our update.

Mesothelioma claims: LASPO funding provisions. In late 2014 following a Justice Select Committee inquiry, the Government decided not to end the exemption from the application of LASPO provisions on recoverability to mesothelioma claims. They said a further review of the likely effects of the funding reforms on mesothelioma claims would be carried out in due course and this will now form part of the Post Implementation Review of LASPO. According to a recent Commons Briefing Note on mesothelioma claims this is now likely to happen over 2017/2018.

NIHL claims: Government action. In June 2015 the ABI published its report Tackling the Compensation Culture: Noise Induced Hearing Loss, improving the claims system for everyone which highlighted concerns about the increasing numbers and cost of NIHL claims. In late July the MoJ announced that in response to those concerns it had asked the Civil Justice Council to consider the issue and make recommendations. They are to consider how a fixed costs regime for NIHL cases might work and how the handling of these claims might be improved. The group was aiming to prepare an initial report by November with a final report by April 2016 but we understand it is now expected in the autumn. In the meantime Dominic Regan reported on Twitter that a mediation on NIHL fixed costs took place on 19 July and was overseen by Ward LJ. 

QOCS: Civil Justice Council report. In 2014 a new CJC working group was set up to advise on issues arising from the implementation of the Jackson reforms. Part of their remit, was to investigate and report on arguments for and against extending QOCS to other categories of case characterised by an asymmetric relationship between the parties such as actions against the police and solicitors’ professional negligence in injury claims. The report (pdf) was published on 30 June and concluded there is a strong case for extending the principle to police claims. For solicitors’ negligence claims, whilst there may be a case in principle for extending QOCS here, there does not appear to be a similar push for its application. In both cases, they say that any decision to extend QOCS would be a matter of policy for the Ministry of Justice.

Civil Justice Council (CJC) review of Damages Based Agreements. The Government's response to the CJC review of DBAs is still awaited. In September 2015 the CJC made a number of recommendations but the main issue of interest going into the review was the government’s decision not to permit hybrid DBAs, and in particular concurrent hybrid DBAs. The Working Group was divided on whether these should be allowed but it concluded that “it was a policy decision which was ultimately one for the Government". Read more in the CJC media release

Civil Courts Structure Review: LJ Briggs' Final Report. On 27 July, Lord Justice Briggs published his final report following his review of the structure of the civil courts. There is no change from the headline recommendation of the interim report, namely the introduction of an online court capable of handling claims with a value up to £25,000, although Briggs LJ does mention that "the £10,000 threshold for the small claims track... may offer a worthwhile stepping stone" for a soft launch. A detailed summary can be found in the press release accompanying the report and you can read more in Simon Denyer’s analysis. The report also gets an oblique reference in the "Transforming our Justice System" joint statement in the sense that the MoJ intends to automate and digitise “the entire process of civil money claims by 2020”. 

Motor prosecutions: review of driving offences and penalties. It was as a far back as August 2013 that the Government promised a review of the sentencing guidelines for the offences of Causing Death by Careless Driving and Causing Death or Serious Injury by Dangerous Driving. Then in May 2014, Chris Grayling, the then Lord Chancellor, announced his intention to launch a full review of all driving offences and penalties. However there were no further developments until last month when in a Backbench debate on Dangerous Driving: Penalties, new Justice Minister, Sam Gyimah reaffirmed the Government’s commitment to consult on the penalties for dangerous driving offences and that the consultation will begin before the end of the year. 

Motor Insurers' Bureau: new agreements. In February 2013, the Department for Transport consulted on a review of the Uninsured and Untraced Drivers Agreements. We have previously reported on the new Uninsured Drivers Agreement which came into force for accidents occurring on or after 1 August 2015. The DfT also published a Supplementary Agreement to the Untraced Drivers Agreement, although work continues on a new Untraced Drivers Agreement, with a further DfT response expected in due course. The new agreements can be found on the MIB website. In the meantime, the agreements are the subject of an ongoing judicial review by the road victims’ charity RoadPeace for non-compliance with EU law.

Contact

For further information please contact Alex Fusco, Professional Support Lawyer on 0161 603 5211.

By Alex Fusco

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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