Civil Liability Bill completes its parliamentary progress as attention turns towards the new claims landscape
Yesterday saw the amendments made to the Civil Liability Bill in the House of Commons agreed to by the House of Lords so that it has now completed its parliamentary process and awaits Royal Assent. It now seems inevitable that Royal Assent will be given before Christmas: it may be given much sooner than that.
The government's position
This again was set out by Lord Keen. He noted in summary that the Bill would provide a fairer process, which was more certain and more sustainable – to claimants, defendants, motorists and to the taxpayer.
The need to move quickly after Royal Assent in relation to Part 1 of the Bill dealing with whiplash reform was accepted by Lord Keen. He said that the intention was to bring Part 2 relating to the discount rate into effect at the point of Royal Assent so indicating an acceptance of the need to move quickly though no specific details beyond that were given.
Lord Keen referred to the 2 stage process of setting the new discount rate and to the periods of 90 and 140 days, but was looking to deal with the issue "sooner rather than later".
In answer to a question from Labour Lords, Lord Keen said that the changes to the Small Claims Track limit would be dealt with through the Civil Procedure Rule Committee in the usual way, and that the statutory instrument designed to bring the changes forward should be anticipated in the second half of 2019.
Questioned as to whether the courts could cope with more self-represented claimants especially those bringing EL and PL claims with an intended Small Claims Track rise to £2,000, Lord Keen simply said that he considered that the courts were equipped to deal with them, and referred additionally to the new planned processes including a digital portal and the possibility of ADR for whiplash and indeed other RTA claims.
The consultation with the Lord Chief Justice on the tariff
This of course was a Commons amendment now needing to be agreed by the Lords though the concept had in fact arisen out of the earlier Lords debates.
Lord Hodgson raised the potential for the LCJ to be put in a position of difficulty by having to consider an issue which was political rather than legal in nature, or even being in a conflict of interest situation as the judges (whose views the LCJ represents) would later have to deal with cases based on those figures. However the former LCJ Lord Judge disagreed on the basis that all that was happening was that the then current LCJ would be consulted with on the tariff, rather than being asked to agree with it.
Lord Keen unsurprisingly adopted Lord Judge's viewpoint though he seemed to see the room for more impact from the LCJ's views than might have been expected. He said: "The consultation will allow the judiciary some input into the setting or comment on the setting of the level of damages against the background of their knowledge of the general level of damages for personal injury and diverse cases. And it should, one would hope, ensure that there is no material divergence of the level of damages so far as that is concerned."
Holding insurers to account on savings
This was the other main area of amendment in the Commons, though again the momentum towards it had come from debates in the Lords.
The new clauses introduced into the Bill in order to deal with the point were permissive in wording, Lord Keen accepted, though he said in fact the government would bring forward regulations to require the new process to be implemented. Before the regulations setting out further detail of the new process were brought forward there would be a further Treasury consultation with interested parties.
The need to ensure compliance would be part of the supervisory responsibility of the FCA said Lord Keen. He accepted that the required report to Parliament from the Treasury based on the FCA's enquiries would be as to the performance of insurers in the aggregate rather than individually. At that stage if a specific insurer was not considered to be in compliance it would not be named, he confirmed.
In response to unease on this point from Lord Sharkey in particular, Lord Keen explained that in these circumstances, to ensure compliance with Article 6 of the European Convention on Human Rights (the right to a fair hearing), the FCA might launch a detailed investigation before considering the appropriate remedy. The identity of the insurer in question would then become known during that process.
As to points from certain Lords about the degree of complexity of the new clauses within this part of the Bill, Lord Keen commented that the drafting had been arrived at after consultation with relevant parties and had been carefully crafted to ensure a rigorous and appropriate regime was in place.
At the end of Lord Keen’s response, no formal vote was required and the Commons amendments were agreed by the Lords leaving then the Bill to continue to Royal Assent.
Use of secondary legislation
By co-incidence, the House of Lords Consultation Committee had published a report earlier this week criticising the increasing use by Ministers of delegated powers, including the bringing forward of legislation which included the power for the government to achieve reform by secondary legislation, rather than the reform being set out in the Bill itself.
We did of course have that situation with this Bill, though it was not identified by name in this week’s report. It will be recalled that the House of Lords Delegated Powers and Regulatory Reform Committee had recommended that the definition of whiplash and the tariff should have been included in the Bill rather than being left for secondary legislation: the government then agreed to move the definition into the Bill though not the tariff.
While this week’s report was predictably referred to by peers in yesterday’s debate, the report should be seen as part of ongoing consideration of the extent of the use of secondary legislation within Parliament, and it comes too late to affect the future implementation of what will by then be the Civil Liability Act 2018.
It is clear from what Lord Keen said yesterday that as expected, as soon as Royal Assent is obtained the review of the discount rate will commence. While there are no guarantees, it should still be realistic to expect a new rate to be in place by the summer. As part of this aspect, we expect the MoJ to come forward imminently with their call for evidence as to how claimants invest their damages.
We should expect the Treasury consultation on the new processes as to the monitoring of savings being passed onto policyholders in the first half of next year, and the FCA will need then to consider how in fact to set up processes to operate the new system being established to meet the Act’s requirements.
While as confirmed yesterday by Lord Keen work by the Motor Insurers' Bureau will continue on development of the new digital portal with the expectation that testing will be complete for it to be operational in April 2020, we continue to await the government bringing forward the secondary legislation to do with both the tariff and the exceptional circumstances provision which in turn will need to deal with the overlap between tariff and non-tariff injuries.
As consultation with the Lord Chief Justice is needed on both those aspects which are to be dealt with by secondary legislation, it may be reasonable to expect that consultation to take place in the first half of 2019, with the secondary legislation being subject to the affirmative resolution procedure (requiring the active approval of both Houses of Parliament) following on later in the year.
We know from yesterday that the second half of 2019 is also expected to be the time when the statutory instrument designed to achieve the changes in the SCT limit will be brought forward before the CPRC consider the necessary changes to the CPR which will be needed as a result.
While the second half of next year therefore promises to be fairly busy in terms of preparatory steps before the whiplash and SCT reforms go live in April 2020, in fact the putting back of that date to 2020 in order to provide time for the technological resources around the digital portal to be put in place has also given the opportunity of ensuring that the other preparatory work can be properly considered and need not be hurried.
Also during 2019 we expect the MoJ to be focusing on their response to Part 2 of the whiplash consultation, including credit hire and rehab, as their focus extends beyond the issues addressed in what will shortly become the Civil Liability Act.
For more information please contact Simon Denyer, Strategic Legal Development Consultant DD 0161 604 1551 Simon.firstname.lastname@example.org
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.