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Looking ahead

January 2019

After a break for December, Looking Ahead is back. Inevitably, Brexit continues to dominate the political agenda, with the debate reaching fever pitch. Nevertheless, on the final sitting day of the Commons before the Christmas recess, the Civil Liability Act 2018 received Royal Assent. Although the whiplash reforms still have some way to go yet before implementation, the timetable has now started for the Lord Chancellor to launch the first review of the discount rate. In anticipation, the MoJ has issued a Call for Evidence on investment behaviour, and the Government Actuary's Department has set out its intended analytical approach to the review.

In the meantime, the Jersey States Assembly has this week approved the Draft Damages (Jersey) Law, which will introduce a new statutory discount rate and the power to award PPOs for the first time for high value personal injury claims in Jersey.

The FCA continues to make good progress with its preparation for taking over the regulation of CMCs in April 2019, publishing its Policy Statement on future regulation, and opening registration for claims management temporary permission. We were saddened though to hear of the death this month of Kevin Rousell who was head of claims management regulation at the MoJ, and had just received an OBE. We were fortunate enough to have had Kevin speak at a number of our events where he was warmly received. Our thoughts are with his family and friends.

And even though the Brexit implications for motor insurance currently remain unclear, there have been developments this month in the European Parliament in relation to the proposals to amend the scope of the Motor Insurance Directive following Vnuk.

We look at these developments below, along with our usual round up of forthcoming cases, and other issues on the horizon.

Forthcoming cases

Supreme Court

Local authority: protection from harassment. The Court of Appeal in CN v Poole Borough Council held that a local authority owed no duty of care in the exercise of its social services child protection functions, to protect two children from harassment by a neighbouring family. The Supreme Court heard the appeal on 16/17 July 2018. Read more on the Court of Appeal decision in our update from December 2017.

Professional negligence: solicitors. The appeal in Perry v Raleys Solicitors was heard on 27 November 2018. In this professional negligence claim concerning the alleged under-settlement of a vibration white finger claim the issues are: (1) where a solicitor negligently fails to advise a client of a potential claim against a third party, and where that client then brings a claim against the solicitor, seeking damages for the lost opportunity to pursue the former claim: must the client prove, on the balance of probabilities, that the former claim would have been an honest claim? and, (2) in which circumstances should an appellate court interfere with a trial judge’s findings of fact? Read more in this Crown Office Chambers update.

Motor insurance: unnamed defendant. In Cameron v Hussain & LV= the issue is whether a claimant is entitled to bring a claim for damages against an unnamed defendant, if the claimant has been the victim of an unidentified hit-and-run driver, and the car the unidentified driver was driving is covered by an insurance policy, albeit one in the name of someone untraceable. The appeal was heard on 28 November 2018.

Motor insurance: "use" of vehicle. The issue in R&S Pilling T/A Phoenix Engineering v UK Insurance Limited is whether on its true construction, a policy of motor insurance extends to liability for damage to the property of third parties because of fire caused by repair work to the car when it is immobilised. The appeal was heard on 13 December 2018.

New – Duty of care: parent companies. The Supreme Court heard an appeal in Vedanta Resources Plc & Anor v Lungowe & Ors on 15 and 16 January 2019. Amongst other issues, this case considers the duty of care owed by a parent company to employees of its subsidiary. Judgment is awaited.

Update - Asbestos related disease: disclosure. The appeal in Cape Intermediate Ltd v Dring (for and on behalf of Asbestos Victims Support Groups Forum UK) will take place on 18 February 2019. At the previous hearings, the issue was the extent to which the court should grant access to documents by non-parties. Litigation Futures reports on the issues involved in the appeal and cross-appeal. 

Court of Appeal

Update - Professional indemnity insurance: exclusion clauses. At first instance in Crowden v QBE Insurance, the defendant professional indemnity insurer successfully obtained summary judgment against claimants who had brought claims against the insurer direct, under the Third Parties (Rights against Insurers) Act 1930, after receiving negligent investment advice from a now insolvent financial adviser. The insurer successfully argued that the claim was excluded under the policy. In November we noted that the appeal which was due to take place on 21 November appeared to be listed for 18 December. It now appears from the Court of Appeal case tracker that the hearing was vacated and the appeal dismissed on 5 December 2018.

New – Professional indemnity: accountants. An appeal in Manchester Building Society v Grant Thornton UK LLP, was heard on 15 and 16 January 2019. The case concerns accountants' liability when giving specialist advice on interest rate swap schemes to institutional lenders. At first instance the judge held that the negligent advice regarding treatment of the swaps could not extend to the fact that they were devalued following the 2008 crash, despite the fact that the Society would not have held those swaps had the correct advice been given. In a judgment handed down on 30 January, the Court of Appeal found that the judge had reached the right ultimate conclusion, but for the wrong reasons.  In coming to its decision the Court of Appeal re-stated the well-established distinction between SAAMCO "information" cases and "advice" cases.

New – Professional indemnity insurance: claims notification. An appeal in Euro Pools Plc v Royal and Sun Alliance Plc concerning issues around claims notification took place on 23 and 24 January 2019. Judgment was reserved. Read more about the issues and the first instance in this 4 New Square update from last year.

Limitation: mesothelioma contribution claim. The case of RSA Insurance plc v Assicurazoni Generali Spa concerns the recovery of payments between insurers in a mesothelioma claim. HHJ Rawlings held that the limitation period was two years from the date of settlement, as in a damages contribution claim, as opposed to six years for a debt claim. The appeal is due to take place on 6 or 7 February 2019.

New – Personal injury: contempt. In October 2018, a solicitor and a doctor were found to be in contempt of court and received prison sentences arising from their involvement in a fraudulent personal injury claim. Claims against two other defendants were dismissed. An appeal in Liverpool Victoria Insurance Company Limited v Khan & Ors is being heard on 12 February 2019 and we await further details of the issues to be considered on appeal.

Costs: success fees in low-value PI claims. Litigation Futures reported in July that the Court of Appeal is to consider the legality of what has become the industry model for handling low-value personal injury claims, with firms charging clients a 100% success fee as standard. The court has given permission for a second appeal in Herbert v HH Law which is now due to be heard on 19 or 20 March 2019.

Acoustic shock: breach of duty & causation. The defendant has been granted permission to appeal in the case of Goldscheider v Royal Opera House in which the claimant viola player successfully alleged that during a rehearsal of Wagner's Ring Cycle he was exposed to noise levels which created a risk to and resulted in injury to his hearing, namely acoustic shock. The appeal is due to take place on 19 or 20 March 2019.


The following consultations are currently open:

Automated vehicles: law commission consultation. On 8 November the Law Commissions of England & Wales and Scotland launched the first of a series of public consultations about crucial reforms which will ensure the country is prepared for the introduction of automated vehicles. Three themes are covered in the preliminary consultation: first, how safety can be assured before automated vehicles are placed on the market, as well as ongoing monitoring and maintenance requirements once they are on the road. Second, criminal and civil liability. Finally, the need to adapt road rules for artificial intelligence. The preliminary consultation closes on 8 February 2019.

New – Personal injury discount rate: call for evidence. On 6 December 2018 whilst the then Civil Liability Bill was awaiting Royal Assent, and in preparation for the first review of the discount rate under the new methodology, the MoJ issued a call for evidence seeking up-to-date data and information on a wide range of topics including in particular, investments available to claimants, investment advice provided to claimants, investments made by claimants and model investment portfolios. The consultation closes on 30 January 2019. In the meantime, on 22 January the Government Actuary's Department published a technical memorandum setting out the analytical approach they to adopt as a part of the first review of the discount rate, in terms of: the methodology they intend to use, the assumptions they intend to make, and the outputs and results they intend to inform their response. They are not specifically seeking views on their approach but comments would be welcome by 18 February 2019.

Update – Jersey discount rate: Draft Damages (Jersey) Law. On 26 October, the States Assembly of Jersey launched a consultation on a new legislative approach to setting the discount rate in Jersey, with the lodging of the Draft Damages (Jersey) Law. The draft Law introduces a statutory discount rate for lump sum damages awards and it provides a statutory power to award damages by way of PPOs. The deadline for comments was 9 November and public hearings followed after that. On 29 January, the draft law was debated and the States Assembly unanimously voted to adopt it. In terms of commencement, according to the report on the draft law (opens in pdf) "from the date on which the draft Law comes into force – that date being 7 days after registration in the Royal Court if adopted by the States and sanctioned by the Privy Council – a court, including an appeal court, will apply the new provisions." Read more in Graham Dickinson's October update The Discount Rate: The Channel Islands lead again

The following consultations await official responses:

If any client wishes to request any DWF consultation responses referred to below they can do so by emailing alex.fusco@dwf.law

Motor insurance: implications of ECJ Vnuk ruling for UK legislation. Although the government has never formally responded to its December 2016 consultation Motor Insurance: consideration of the 'Vnuk judgment'  we know that its preferred option was for the Motor Insurance Directive to be amended in a way to avoid having to broaden the scope of insurance requirements to reflect the decision in Vnuk. As attention has now turned to the European Commission's proposal to amend the Directive we consider developments below under "Legislation". 

Reforming the soft tissue injury (whiplash) claims process - Part 2. In February 2017 the government published the first part of its response to the Reforming the soft tissue injury (whiplash) claims process consultation, and has since incorporated its proposed whiplash reforms within the Civil Liability Act 2018. In the meantime, a second part to the consultation response is still awaited and is due to look at the outstanding proposals including, the Insurance Fraud Taskforce recommendations, credit hire and rehabilitation. In July 2018, Part 2 of the consultation response received a mention in the government's response to the Justice Committee's small claims track inquiry with the government confirming that it "is currently working closely with stakeholders including from the insurance industry to take forward the IFT’s recommendations. Detail will be included in Part Two of the response to the whiplash consultation, which will be published shortly." As Simon Denyer pointed out in November's Civil Liability Bill update, we expect the MoJ to turn their attention to their response during 2019.

Update - Review of Fixed Recoverable Costs. Jackson LJ published his Review of Fixed Recoverable Costs, to which DWF contributed, on 31 July. His proposals are to extend fixed costs in claims worth up to £100,000 along with the remaining fast track cases not yet subject to FRCs. The report is being considered by the senior judiciary and the MoJ, and a consultation will follow. During 2018 there were a number of comments from ministers to the effect that the government was considering the report and would announce the next steps in due course. In the absence of any meaningful developments recently, in October Litigation Futures published a handy recap of the Jackson reforms and the present position. In November, albeit on the specific issue of clinical negligence costs rather than the whole of the fixed costs proposals, Lord O'Shaughnessy responding to a question to the Department of Health and Social Care, said "Following a recommendation by Right Honourable Lord Justice Jackson in Review of Civil Litigation Costs: Supplemental Report – Fixed Recoverable Costs, the Department and the Civil Justice Council (CJC) set up a working party to develop a new process for clinical negligence initially up to £25,000 alongside new fixed costs. This working party is underway and the CJC is due to make recommendations to the Government in December."  In the meantime, a Capped Costs Pilot Scheme has begun in the Business and Property Courts in Leeds and Manchester running from 14 January 2019 for two years. Under the voluntary scheme costs in cases valued up to £250,000, will be capped at £80,000. Read more about the pilot in our update this month.

Review of low value personal injury claims including package holiday claims. In last October's call for evidence on measures to address holiday sickness claims, the MoJ also invited views on low value claims more generally and asked the Civil Justice Council to consider steps that might be taken to prevent unmeritorious claims and to resolve meritorious ones more quickly and with reduced costs. The outcome of the work done on package holiday claims was the introduction of the new Pre-action protocol for resolution of package travel claims along with fixed costs which came into force in May. In July, the government published a summary of the consultation responses and details of the way forward confirming for the first time that fixed costs would not be extended beyond gastric illness claims. And as we reported in June, attention has now turned to the review of low value claims more generally. A cross industry working party met for the first time in May to identify areas of focus which will include CMCs, fraudulent behaviour, processes, MedCo and expert evidence generally, ADR, the portal, sanctions and technology. The group was then due to report on those areas to the CJC in the summer. The synopsis of the CJC meeting (opens in pdf) in October 2018 reported that "The final report on Low Value PI Claims was nearing completion and would be ready for the January 2019 meeting."

Credit hire: model directions. In June 2017, the Civil Procedure Rules Committee issued a consultation on the "model order for directions to be used in credit hire cases". Acknowledging that the whole area of credit hire "remains a highly contentious area of litigation" the CPRC identified what they see as relatively simple steps that can be taken to narrow the issues and present the judge with the necessary evidence to make a determination. The proposed directions concern witness evidence and disclosure on impecuniosity and the agreement of hire rates. Stakeholders were urged to confer to try to achieve a consensus or risk a solution being imposed. The consultation closed on 1 August 2017 and DWF responded. Although there is no sign of a formal response, we understand that some courts have already adopted them.

Default County Court Judgments. At the end of December 2017 the MoJ launched a consultation looking at the processes for money claims issued in the County Court. They have particular interest in views on limiting the circumstances in which an individual can have judgment entered in default against them without their knowledge. DWF submitted a response to highlight the issue of judgment being entered against policyholders in insurance claims when it is an insurer who will ultimately pay the claim – the MoJ had not identified this scenario in its consultation. The consultation closed on 21 February 2018.

McKenzie Friends. In February 2016 a Judiciary Consultation Reforming the courts’ approach to McKenzie Friends was launched following a Working Group review looking into the increasing numbers of fee charging McKenzie Friends. The consultation invited views on possible reform including the revision of Practice Guidance, or codification of the practice and procedure relating to McKenzie Friends. As part of that, the consultation asked whether there should be a ban on fee charging McKenzie Friends. DWF responded. In September 2017 the Judicial Executive Board announced that a large number of responses were received and that a further working group would review the proposals in light of the responses. In July, the issue received a mention in the government's response to the Justice Committee's small claims track report. The Committee had expressed concern regarding paid McKenzie friends and recommended that "the senior judiciary seek to conclude its examination of this issue as soon as possible." In response the government has confirmed that it "will work with the judiciary to make sure that their concerns are addressed." During the Civil Liability Bill debate in October, Bob Neill of the Justice Committee took the opportunity to press for a ban on paid McKenzie friends and received support from a number of MPs. In response Justice Minister Rory Stewart said "through consultation with the judiciary, we are looking at the issue of paid McKenzie friends. We are waiting for the judiciary to report back so that we can take action on that issue."

Update - Legal services: insurance and compensation. In March 2018 the SRA launched a consultation on changes to the legal insurance and compensation rules with proposals including limits to the compensation fund and reducing minimum PII cover. The SRA said these changes would give firms more flexibility to choose the right level of insurance to suit their business and clients, while making sure there are still appropriate protections for users of legal services. The consultation closed on 15 June and a response was awaited but in December, the SRA confirmed it had put its proposed reforms on the backburner. Read more in the Gazette, which reports that the regulator is unlikely even to discuss a response to the PII issue until spring at the earliest.

Solicitors Disciplinary Proceedings: standard of proof. In July the Solicitors Disciplinary Tribunal launched a consultation on the making of procedural rules in relation to first instance applications to the Tribunal. The current standard of proof used in disciplinary proceedings before the Tribunal is the criminal standard. The Tribunal is inviting views on whether instead it should apply the civil standard in line with other professional regulators. Whilst the move is clearly being considered for a number of reasons, it could be seen as complimenting the Insurance Fraud Taskforce's recommendation that the SRA toughen its stance on dishonest solicitors. The consultation closed on 8 October and over the past couple of months we have highlighted the responses from the SRA,  the Law Society and the Legal Services Consumer Panel. In October the Gazette reported on comments from SRA executive director Richard Collins that lowering standard of proof in disciplinary proceedings is ‘inevitable’, even if the change does not happen immediately.

Update – response -  Nuisance calls and messages: action against directors. Last May the government published a consultation proposing measures to hold company directors personally responsible for breaking the law in relation to unsolicited calls. The measures would provide the Information Commissioner’s Office (ICO) with the powers it needs to hold company directors directly responsible with further fines of up to £500,000. The consultation closed on 21 August and in December the government published its response and announced the coming into force of legislation implementing the proposals.

Update – response -  FCA: regulation of claims management companies & recovering the costs of regulation. In June 2018, in anticipation of the transfer of regulation of CMCs to the FCA on 1 April 2019, the FCA published a consultation setting out the draft rules and guidance they proposed to make in relation to claims management activities, and the standards they think CMCs regulated by the FCA should have to meet. Then in August 2018, it opened a consultation on proposals for recovering the costs of regulating claims management companies. In December, the FCA responded to both and published the new rules and fees that will apply to all claims management companies (CMCs) from April 2019. Read more on this in the FCA press release and a summary in Insurance Business.

Claims management companies: Senior Managers and Certification Regime. In September, the FCA launched a further consultation in preparation for them taking over the regulation of CMCs. All firms regulated by the FCA and authorised under the Financial Services and Markets Act 2000, along with individuals performing regulated activities, need to comply with the FCA's rules on professionalism, conduct and governance, known as the Senior Managers and Certification Regime (SM&CR). This consultation sets out the draft rules and guidance for CMCs relating to the SM&CR, and was open until 6 December. The FCA will publish a Policy Statement on its approach and the outcome of the consultation in the next few months. Read more on the consultation in this helpful summary from Legal Futures.

Financial Ombudsman Service: SMEs & financial award. Following a consultation earlier in 2018, in October the FCA published its policy statement on extending access to the FOS to SMEs. At the same time, it issued a consultation, which closed on 21 December. A Policy Statement is now expected in the spring. Read more on the detail of both of these in our October update Widening access to FOS for small businesses: FCA publishes policy statement, 'near final' rules and further consultation on FOS financial award limit

LASPO Part 2: post-implementation review. In June, the MoJ published an initial assessment of the Part 2 LASPO reforms for its post-implementation review. The Civil Justice Council then held a seminar, where a number of speakers including Sir Rupert Jackson, Prof Paul Fenn, Prof Rachael Mulheron and claimant and defendant solicitors spoke about the key impacts of Part 2 of LASPO. The discussions covered a range of familiar issues, including: CFAs, costs budgeting, QOCS, the referral fee ban, and Part 36 consequences. High on the agenda (and now out of Looking Ahead's long grass) was the issue of DBAs which are not being effectively utilised; in part due to technical deficiencies in the regulations and in part due to the government's reluctance to permit hybrid DBAs. The mesothelioma exemption on recoverability of additional liabilities also received a mention (albeit the PIR is not directly considering mesothelioma claims or the exemption), as did the potential extension of the QOCS regime to police and/or professional negligence claims (bringing this issue out of the long grass as well). The CJC published a summary of the day's discussions and different aspects of the day were also covered by the Gazette, Litigation Futures and Legal Futures. The MoJ invited views and evidence by 24 August and DWF responded. Since then, the CJC has published its response and the Gazette reports on the response from FOIL. In September, APIL (pdf) and the Law Society published their responses, both helpfully summarised by Litigation Futures. In a separate LASPO Part 2 development in November, the Lord Chancellor announced that success fees would no longer be recoverable in defamation and privacy cases but that ATE will remain recoverable for the time being.  


Two bills we have been following received Royal Assent on 20 December.

  • Civil Liability Act 2018. The bill, which was introduced in the House of Lords on 20 March, contained the government's whiplash proposals to ban pre-med offers and introduce a new fixed tariff of compensation for whiplash injuries with a duration of up to 2 years. It also contained the provisions for changing the method of setting the discount rate. Although there was always broad consensus on the discount rate, the whiplash provisions were expected to receive a bumpier ride. Whilst there was vocal opposition at each of the debates, particularly in relation to the introduction of a tariff but also in relation to the proposed small claims track increase, the bill ultimately progressed with relative ease. Read more about the next steps towards implementation of the reforms in Simon Denyer's November update Civil Liability Bill completes its parliamentary progress as attention turns towards the new claims landscape. The Lord Chancellor now has 90 days from Royal Assent (i.e. by 19 March) to start the first review of the discount rate. In anticipation, as we discuss above, the MoJ issued a call for evidence on investment behaviour and the GAD has set out its intended analytical approach.

  • Courts and Tribunals (Judiciary and Functions of Staff) Act 2018. This bill arrived in May 2018 when we were expecting a bill to pick up from Part 2 of the Prisons and Courts Bill. That bill had included provisions setting the legal foundations for the introduction of new online procedures and the creation of a new online court to deal with low value money claims below £25,000, as recommended by Lord Justice Briggs’ Civil Courts Structure Review. The new bill introduced provisions enabling judges to delegate tasks to court staff. In this article, Joshua Rozenberg explains the content of the Act, and how it fits into the bigger picture of the ambitious plans for court reform.

There have been interesting developments in the last week on the proposals to amend Motor Insurance Directive, currently proceeding through the European Parliament:

Update – Motor insurance: amendment of the Motor Insurance Directive. The now infamous decision of the CJEU concerning a Slovenian tractor in Vnuk in September 2014, produced an interpretation of "use of a vehicle", for the purposes of the compulsory motor insurance regime, which was wider than the definition contained within the Road Traffic Act 1988 and thereby set in motion a review of the legislation both in the UK and Europe. All of the indications were that the European Commission would propose amendments to the scope of the Directive so that it only related to accidents caused by motor vehicles "in the context of traffic". It came as a surprise therefore when in May 2018, the Commission presented its proposals to amend the Directive but to reflect the position in Vnuk so that, "[t]he 'use of a vehicle' means any use of the vehicle, intended normally to serve as a means of transport, that is consistent with the normal function of that vehicle, irrespective of the vehicle's characteristics and irrespective of the terrain on which the motor vehicle is used and of whether it is stationary or in motion." The proposal is currently proceeding through the European Parliament and has been scrutinised by the Internal Market and Consumer Protection Committee (IMCO). It quickly became clear (as we discussed in our November article) that the Committee had concerns about the extended scope of the Directive not least due to the implications for the motorsport industry and the use of e-bikes. On 22 January the Committee voted for amendments that would revise the Commission's proposal on scope. The subsequent Committee Report, on which the full Parliament will vote, explains:

"As regards the scope of the Directive, which could arguably be considered the most disputed part of the proposal, the rapporteur notes that following the rulings of the Court of Justice (cases Vnuk C-162/13, Rodrigues de Andrade C-514/16 and Torreiro C-334/16), there has been some confusion among Member States on which vehicles fall within the scope of the Directive. This concerns, in particular, vehicles like eBikes, segways or electric scooters, but also vehicles for instance used in motor sports. The rapporteur believes that in principle the Directive should not cover such vehicles, as the requirement of motor insurance could hinder the uptake, for instance, of eBikes or may unnecessarily increase the insurance premiums for all vehicles.

The rapporteur has therefore proposed that only vehicles, which are subject to type-approval requirements, should fall within the scope of the Directive. However, Member States should have the option of requiring also other vehicles to have compulsory insurance cover, if they deem it necessary. As regards the definition of “use of a vehicle”, the rapporteur believes it important to clarify that this implies a vehicle used in traffic, both on public and private roads, but not in cases where the vehicle is used exclusively in a closed area, with no access from the general public. If, however, such a vehicle - that is used both in closed areas as well as in traffic and consequently is obliged to have motor insurance cover - is involved in an accident in a closed area, the insurer of the vehicle should still be liable vis-a-vis injured parties."

MEPs now need to vote on the Committee report, and seem likely to back it in the plenary session in mid-February. Following that vote and assuming it is successful, there will then be negotiations between the Council, the Commission, and the Parliament, a process known as a trilogue. Ideally, the process will be completed by May 2019 as this is when the European Parliament elections take place, but this is not currently guaranteed. We briefly discuss the Brexit implications in our recent article.

We have also been following progress on two Law Commission draft Bills:

Update - Deprivation of liberty: Mental Capacity (Amendment) Bill. In 2014 the Law Commission began a review of the Deprivation of Liberty Safeguards (DoLS) under the Mental Capacity Act. The DoLS aim to protect people who lack mental capacity, but who need to be deprived of liberty so they can be given care and treatment in a hospital or care home. In March 2017 the Law Commission published its final report along with a draft Bill. It recommended that the DoLS be repealed and set out a replacement scheme called the Liberty Protection Safeguards. A year later the government responded to the Law Commission's review and in July 2018, the government started the Mental Capacity (Amendment) Bill in the House of Lords. In December, the Bill completed its passage through Lords and its first two stages in the Commons. Public views were sought in advance of the Committee stage, which is also now complete. You can follow the Bill's progress here, and there is a helpful round-up of recent developments on the parliament website, including a link to a Lords Library Briefing Note which covers the background to the Bill, the differences between the Bill and the Commission's recommendations. Counsel, Alex Ruck Keene, also provides helpful updates on his Mental Capacity Law and Policy blog.

Insurance contract law reform: draft Insurable Interest Bill. In April 2016 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 was 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. The project was then put on hold due to other priorities within the team but in June 2018 the Law Commission published their updated draft legislation. The extended deadline for comments was 31 October 2018. Read more in the Law Commission press release.

Also on the horizon...

Small claims track limit increase. The first mention of the increase in the small claims track limit was in George Osborne's 2015 Autumn Statement. A lot has happened since then, including a Justice Committee inquiry in late 2017, and attempts throughout the passage of the Civil Liability Bill to challenge the proposals and/or incorporate them within the bill. The present position is that whilst not forming part of the Civil Liability Act 2018, it does form an integral part of the reform package which is all due to come into force in April 2020. The plan remains for the limit to be increased to £5,000 for RTA personal injury related claims and to £2,000 for all other types of personal injury claims, and this will be achieved through secondary legislation, which is expected to be introduced in the second half of 2019. The House of Commons library published a helpful briefing note on small claims for personal injuries including whiplash last August, and you can read more about the next stage for implementation of the package of reforms in Simon Denyer's November update

Update - Insurance Fraud. We have for some time been waiting for the government's response to Part 2 of its whiplash consultation which sought views on certain recommendations made by the Insurance Fraud Taskforce in its final report in January 2016. The latest news on that came in the government's response in July to the Justice Committee's small claims track inquiry, confirming that it "is currently working closely with stakeholders including from the insurance industry to take forward the IFT’s recommendations. Detail will be included in Part Two of the response to the whiplash consultation, which will be published shortly." Also in July, the Solicitors' Disciplinary Tribunal launched a consultation on whether to lower the standard of proof in disciplinary proceedings to the civil standard, a move which could be seen as a response to the IFT's recommendation to toughen action against dishonest solicitors. In December 2018, days after an article in the Insurance Post titled The mystery of the missing Insurance Fraud Taskforce report (subscription may be required), the government published its Insurance Fraud Taskforce Report 2017. The report sets out the progress made during 2017 on the original 26 recommendations, acknowledging that some matters have moved on and that the information in the report is accurate as at December 2017.

Update - MedCo. In November, we reported on news from the Insurance Post (subscription may be required) that Medco had already started consulting over the creation of a 'litigants in person' portal on the back of the government's whiplash reform programme. Last month MedCo published an Audit Progress Update containing a summary (pdf) of key findings from audits undertaken between January 2017 and September 2018. The Gazette reports on the update noting that "just three per cent of companies wanting to diagnose whiplash claims have been given a clean bill of health by auditors".

Update - Claims Management Regulation. In March 2016, following the Carol Brady independent review of claims management regulation, the government announced that responsibility for regulating CMCs would be transferred from the MoJ to the FCA. Primary legislation was required to take this forward and the Financial Guidance and Claims Act 2018 was passed last May. In the meantime, the FCA has been busy preparing for the transfer through a number of consultations culminating in the approval in November of The Financial Services and Markets Act 2000 (Claims Management Activity) Order 2018 and last month the policy statement PS18/23: Claims management: how we will regulate claims management companies. Read more on this in the FCA press release and a summary in Insurance Business. On 2 January, the FCA opened the registration for temporary permission for CMCs to continue operating. CMCs have until the end of March to register for temporary permission. This will allow them to continue operating legally until they are fully FCA-authorised. Once registered for temporary permission, CMCs will need to submit their application for authorisation during one of two application periods between April and the end of July.

FCA activity: market study and claims inflation. In addition to the work being done in relation to claims management regulation, at the end of November the FCA launched a general insurance market study setting out the issues it will focus on as part of a review into how general insurance (GI) firms charge their customers for home and motor insurance. The FCA sought input on the issues discussed in the terms of reference by 3 December, and an interim report is forecast for summer 2019. We also await details of the assessment of claims inflation in general insurance that was included in the FCA's 2018/19 business plan and was scheduled for Q4 2018/19.  The FCA is due carry out diagnostic work to assess how far brokers and motor insurers are inflating claims through referrals to CMCs and keeping volume discounts from their own repairers. This, they say, will give the FCA an understanding of the issues CMCs will need to address when they take over their regulation.

Artificial intelligence in insurance and law. On 28 November the Department for Business, Energy & Industrial Strategy announced three new 3-year research projects, to be led by Loughborough, Sheffield and Oxford Universities, investigating how businesses can make best use of AI in insurance and law. The projects backed by £3m through the Industrial Strategy Challenge Fund will focus on (1) how AI can be applied to processes such as underwriting and claims processing, speeding up the process for customers (2) how AI can be put to use in legal services bringing academics, lawyers, businesses and programmers together to develop the skills, training and codes of practice to deliver benefits (3) future uncertainties about the roll-out of new AI technologies in accounting and legal services and analysis of potential barriers to AI-based business model innovation. Read more in Legal Futures.

Civil procedure: disclosure. In November 2017, the Judiciary set out detailed proposals for a mandatory disclosure pilot scheme to run for two years in the Business and Property Courts. A Disclosure Working Group had been set up in May 2016 to look into widespread concerns about the excessive cost, scale and complexity of disclosure with a view to achieving a wholesale cultural change in the disclosure process. "The unanimous view of the Working Group is that a wholesale cultural change is required and that this can only be achieved by the widespread promulgation of a completely new rule and guidelines on disclosure which will apply for the majority of cases proceeding in the Business and Property Courts." On 31 July, it was announced that the scheme had been approved and the pilot commenced on 1 January 2019. Read more on the Judiciary website and in our update The Disclosure Pilot cleared for take-off

Update - Civil Courts Structure Review: LJ Briggs' Final ReportIn July 2016, Lord Justice Briggs published his final report following his review of the structure of the civil courts. The headline recommendation was the introduction of an online court capable of handling claims with a value up to £25,000. A detailed summary can be found in the press release accompanying the report and you can read more in Simon Denyer’s analysis. In January 2017 the Lord Chief Justice and the Master of the Rolls issued a Joint Statement endorsing the report and supporting the recommendations. In the meantime a pilot began last September to trial a procedure that will allow legal representatives to file claims online at the CCMC. In April the pilot moved on to the 'Public Beta' phase and In November the Gazette reported on a paper prepared on the project by Birss J for the CPRC. The publication of the proposed Courts Bill enabling the creation of the new online court is still awaited, and in November we reported on the UKSC blog  interview with Lord Briggs in which he said, "The new Courts Bill has still not been launched, but we hope it will make provisions for an Online Court Rule Committee. Fundamental re-thinking of procedure rules will take some time, as the rules will need to be understandable by the people who produce the software for the online processes. At the moment we have adopted a temporary procedure as it will probably take one year from the passing of the Bill even to recruit the Online Court Rule Committee.”  In the meantime, the inaugural International Forum on Online Courts was held in London on 3 & 4 December when there were discussions on the successes, challenges and technological advances being made in justice systems globally. HMCTS has published an overview of the event and Legal Futures reported on The Lord Chief Justice's opening address Lord Chief backs "smartphone justice" but not so keen on AI. This month it will not have gone unnoticed that HMCTS experienced major IT network issues leading some, including John Hyde of the Gazette to point out that it did not bode well for the planned reforms.

SRA activityIn July, we reported that personal injury claims feature in the SRA's risk outlook for 2018/19 as part of a new priority risk: managing claims. In the accompanying press release Paul Philip, SRA Chief Executive says, "... For the first time, we are highlighting how claims are managed as a key risk. This follows concerns over issues such as firms failing to properly check on the validity of personal injury claims…" We followed last year's work on transparency, including proposals to require law firms to publish pricing information and complaints data. In August 2018 the Legal Services Board (LSB) approved the new transparency rules, by which point, personal injury claims were no longer covered by the new rules. The rules came into effect on 6 December. The SRA has also gone ahead with plans to allow solicitors to practise from unregulated firms and enable freelance solicitors to do more, although in September it came under further fire for those plans, and again in November. Read more on recent SRA activity in their round-up from November.

In the long grass?

Issues where there has been no activity for some time:

We have kicked QOCS and DBAs out of the long grass for now as it appears they may both be looked at as part of the MoJ's post-implementation review of Part 2 of LASPO discussed further above. But with no meaningful developments since September 2017 we have reluctantly moved CJC's NIHL claims handling proposals to the long grass.

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 response to those concerns the MoJ asked the Civil Justice Council to consider the issue and make recommendations. The CJC published its long awaited report in September 2017, although Jackson LJ had spoilt the surprise by announcing and endorsing the agreed fixed recoverable costs matrix as part of his own review (see Simon Denyer's review of the proposals). The new news then was the proposals for reform of the claims handling process. You can read more about the proposals in our comprehensive update. We also took the opportunity to comment on the handling of NIHL claims in the call for evidence in relation to holiday sickness claims and low value personal injury claims.

Legal services regulation: removing barriers to competition. In July 2016 the MoJ announced a consultation 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 consider a further consultation on regulatory independence. The current consultation closed on 3 August 2016 but to date there has been no response. In December 2017, while responding to the CMA Legal Services Market Study, the government confirmed it would not be going ahead with a consultation on regulatory independence as it believes there is scope to make more progress within the existing framework.


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

You can find all previous editions of Looking Ahead here


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.