After almost a year of anticipation, the consultation on proposals for whiplash claims and the small claims track finally arrived this month. As if that wasn't enough food for thought for one month, it was announced that Lord Justice Jackson has been commissioned to undertake a review of fixed recoverable costs, a timely development after the Court of Appeal handed down two important judgments this month concerning the application of the current fixed costs regime.
And all of this in the same month as DWF’s Nigel Teasdale's election to the FOIL presidency, heralding a busy year ahead.
To round off the month, in this week’s 2016 Autumn Statement, Chancellor Philip Hammond announced a rise in the Insurance Premium tax from 10% to 12% from June 2017, a move which was instantly seen as having an impact on the industry’s ability to reduce insurance premiums.
Further details can be found below along with developments on:
• Appeals and judgments to watch out for
• Government response to Court Fees Inquiry
• Insurance Fraud Taskforce activity
• Removal of dissolved companies from the register
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.
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 took place between 21 and 24 November. Read more in our article on last year’s Court of Appeal decision.
New – Brexit: Art 50 notice. The Supreme Court will hear the Government’s appeal in R (on the application of Miller & Dos Santos) v Secretary of State for Exiting the European Union between 5 and December before all 11 Justices. Permission to intervene has also been granted to the Scottish and Welsh Governments, the ‘Expat Interveners’ and the Independent Workers Union of Great Britain.
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
Update - Costs: fixed costs. Bird v Acorn concerned the stage of fixed costs that should apply when a case drops out of the portal, is listed for disposal and then settles. Judgment was handed down on 11 November and you can read more in our recent update on this case and the Qader case below.
Update - Costs: fixed costs & the multi-track. The question in Qader v Esure was whether fixed costs apply to a claim which starts under the low value personal injury claims protocol but subsequently proceeds on the multi-track. Judgment was handed down on 16 November. Read more in our recent update.
Update – Occupiers’ liability: tripping claim. In Debell v Rochester Cathedral a pensioner tripped whilst taking a shortcut through the grounds of the cathedral. The case concerned the application of the reasonable foreseeability test in OLA claims. Judgment was handed down on 9 November. Read more in our update.
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.
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.
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.
New – Autumn Statement 2015: small claims track & low value whiplash claims. On 17 November the MoJ announced its long awaited consultation Reforming the soft tissue injury (whiplash) claims process. The consultation paper proposes that compensation for pain, suffering and loss of amenity (PSLA) for minor whiplash claims will either be removed entirely or replaced by a fixed sum. It also says “the two alternative proposals should be evaluated individually, in their own right, and also as part of a package with the other measures in the paper. Those measures include introducing a tariff of payments for PSLA in more significant claims, raising the small claims limit in personal injury claims from £1,000 to £5,000 and banning the settling of whiplash claims without a medical report from an accredited medical expert.” The consultation closes 6 January 2017 but it might be that more time has to be allowed following this week’s report in the Gazette that the MoJ appears to have conceded that the figures in the consultation were based on the 12th edition of the Judicial Guidelines and that the impact assessment will have to be updated with the latest figures from the 13th edition. You can read more about the proposals in Simon Denyer’s comprehensive update.
New – Review of Fixed Recoverable Costs. It was announced on 11 November that Lord Justice Jackson has been commissioned to undertake a review of fixed recoverable costs to be completed by 31 July 2017. The terms of reference are to “develop proposals for extending the present civil fixed recoverable costs regime in England and Wales…” and to “consider the types and areas of litigation in which such costs should be extended, and the value of claims to which such a regime should apply”. The review will inform a government consultation on proposed reforms after consideration of its recommendations. Written submissions were initially invited by 16 January but the deadline has been extended to 23 January 2017.
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 DH 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 DH “insisted no final decision on the proposed threshold has been made”. There has been no official word on whether LJ Jackson’s review of fixed recoverable costs will affect the DH’s consultation so we continue to wait for further news.
Update - 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. Specifically in relation to civil court fees, the Committee raised concern about the quality of the MoJ’s research and recommended 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 recommended piloting a system in which there is a graduated or sequential system of fee payments whenever there are substantial fees payable. On 9 November the Government responded to the report and in relation to money claims accepted the recommendation not to increase fees without completing a review of their impact. The responses in relation to the other types of fees (e.g. divorce) were seen as disappointing by the Committee.
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.
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 on its interim findings and responses to the interim report have been published on the Legal Services Market Study homepage. The 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.
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. The deadline for written submissions was 11 November.
Update - 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. This month the MoJ confirmed to us that the rate remains under review, but it is not possible to give a definite date for when a decision will be announced. We understand that in a separate exercise, the MoJ is currently trying to assess how changes to the rate might affect claimants and defendants before presenting the findings to the ministers.
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 our update from earlier this year.
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. The most recent information came in October 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 - Insurance Fraud Taskforce. Having published its final report at the beginning of the year, the Taskforce met on 10 November to look at what progress had been made to implement their 26 recommendations and the further work required to complete the task. Having accepted the Taskforce’s recommendations back in May, the Government in its “Reforming the Soft Tissue Injury (Whiplash) Claims Process” consultation is now seeking to implement the reforms announced in last year’s Autumn Statement (as recommended by the Taskforce), together with the recommended use of predictable damages in whiplash claims and mandatory notification of referral sources. As well as recommendations from the Taskforce itself, the Government has also indicated that it is considering a recommendation from the Taskforce’s Personal Injury Working Party and look at amending the QOCS rules where a claimant discontinues less than 28 days before the start of a trial.
Update - MedCo. Following on from the MoJ’s announcement last month of the revised Qualifying Criteria for MROs, effective from 8 November, MedCo has suspended 134 shell companies for failing to comply with the new Qualifying Criteria. This change, together with the change to the search criteria announced earlier in the year have been introduced to tackle the gaming of the MedCo system. Read more about the changes in Nigel Teasdale’s update.
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.
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.
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.
New – Mesothelioma claims: dissolved companies.In August there was an outcry when it was revealed that Companies House was considering proposals to erase the accounts of dissolved companies after six years. In a pleasing development this month the Department for Business, Energy and Industrial Strategy has confirmed that the “Government has no current plans to bring forward proposals to reduce the period of time that Companies House retains records of dissolved companies”. The issue will be kept under review and any future proposal to change the retention period will be subject to public consultation.
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 2015 with a final report by April 2016 and whilst there was some expectation that the report would be available in the autumn ewe do not now expect to see it before the new year. 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 September 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.
For further information please contact Alex Fusco, Professional Support Lawyer on 0161 603 5211.
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.