Judicial College Guidelines 15th edition
The introduction notes that the figures in this latest volume have been adjusted to reflect the general increase in RPI of around 7% over the period from May 2017 to June 2019 and have been rounded up or down to provide realistic and practical brackets. Note that they continue to use RPI as a basis for the increase, notwithstanding CPI would have produced a rate of approximately 4.5% for the same period versus RPI at 6.4%. The increases are fairly consistent across the board, save for minor injuries as detailed below
Interestingly, the introduction refers to the proposed implementation of Part One of the Civil Liability Act in April 2020 and the effect this will have in relation to whiplash claims. They say this regarding multiple injury cases (whiplash and non-whiplash): "We recognize that the legislative scheme in practice may well throw up some interesting issues, not least the approach of the courts to an award for damages for whiplash injuries in combination with other injuries. However, whilst we await reported decisions of damages awards made under the Act, and their relationship with the Guidelines, with interest, it is appropriate to emphasize at this stage that the practical operation of the new damages tariff scheme falls well outside the scope of this publication and will be a matter for judicial determination. It is not for us to dictate or advise upon the practical effect of the scheme."*
So anyone, including perhaps the MOJ, hoping for guidance from the Judicial College on this issue can forget it.
As a reminder, the Lord Chancellor has to consult with the Lord Chief Justice regarding the proposed tariff levels. It is noted in Section 7 on orthopaedic injuries that post implementation of the reforms the guidelines will cease to apply to those cases caught by the Act. Interestingly, in the foreword written by the Lord Chief Justice himself, he notes that there is scope for judicial development of general damages in some areas and to continue recalibration to achieve consistency, and "that the Guidelines will be the first point of reference for any legal practitioner or litigant seeking to establish the parameters of an award of general damages".
The minor injuries section just gives a nod to the overall introduction and to the comments in section 7 mentioned above, but then goes on to increase the figures for the minor injuries by between 7 and 8.3% which perhaps unhelpfully is higher than the overall average increase.
*Judicial College, Guidelines for the Assessment of General Damages in Personal Injury Cases, Fifteenth Edition, Oxford University Press, 26 November 2019
Reforms Watch
With a general election announced for 12th December 2019, updates on the reform process from the MOJ and the MIB have ceased.
As we see it there remain many steps to be taken before implementation of the reforms when the election is out of the way, but firstly there would most likely need to be a Conservative or Conservative-led government to guarantee the passage of the reforms. Both Labour and the Liberal Democrats were strongly opposed to the whiplash reform element of the Civil Liability Act in both Houses. The ABI have suggested that the EL/PL increase in the small claims limit should be put on hold pending implementation for Motor partly in an effort to try and appease Labour MPs but it is unlikely to be enough.
The manifestos of the main parties are generally silent on this aspect of the reforms and perhaps it is unsurprising that they do not go into that level of detail. For the Conservatives, arguably there is nothing left to say on the issue now that the Civil Liability Act has been introduced.
While Labour say that "We will defend workers’ ability to recover legal representation costs from negligent employers" and "We will keep the right for workers to be represented and recover their costs in cases of employer negligence leading to injury at work" there is no broader reference to the RTA element of the reforms. The Liberal Democrats are more focused on defending the Human Rights Act and say they will "Establish a new right to affordable, reasonable legal assistance, and invest £500 million to restore Legal Aid, making the system simpler and more generous" but this is highly unlikely to apply to whiplash.
In any event, we do not take silence on the issue to be tacit acceptance of the implementation of the legislation as it stands, more a reflection of where it sits in the wider public's perception of what is important.
Whilst it is possible the reforms could continue in some form under a new non-Conservative government, any significant increase in the proposed tariff or decrease in the proposed level of the small claims limit, is likely to be the final nail coffin for the £35 saving per policy. Insurers would question whether funding further development and ongoing management of the new Portal is worth it.
What's outstanding?
If on the other hand we assume the reforms will continue, then the question is When? As a reminder we still have a number of steps needed to achieve implementation:
- A consultation between the Lord Chancellor and the Lord Chief Justice around the level of the tariff
- Secondary legislation to bring in the tariff, the ban on pre-medical offers and the increase in the small claims limit to £5,000
- New Rules and a Protocol from the CRPC which will have to address amongst other things how credit hire and rehabilitation claims will be dealt with outside the new Portal, the role of ADR in the new process (if any), and where infant claims fit into the new world
- The completion of the IT for the new Portal for unrepresented claimants including a period of public testing
- Presumably some educational marketing campaign so that consumers will know how to access the Portal post reform
Whilst the above order seems chronologically sensible, it seems to be a bit of a chicken and egg situation and the only one we have seen real assurances about is the Portal build.
When the election was announced at the start of November, nothing had been heard definitively on the planned public user testing of the new portal that was originally supposed to commence at some point in October 2019. Nothing either has been heard regarding the Rule changes and new Protocols required from the CPRC. Whilst the noises coming from the MOJ and the MIB immediately prior to the election announcement were very much 'business as usual', commentators across the industry are virtually unanimous in their contention that the Civil Liability Act will be delayed until at least October 2020 with some confident that it will be longer, to April 2021. Certainly the MOJ have been given a "get out of jail free card" to blame the general election for delay.
This would potentially fit in with the planned expansion of fixed costs up to £100,000, which the MOJ might consider introducing in tandem with the whiplash portal. Similarly, it could allow for the long-awaited proposals from the MOJ in relation to credit hire and rehabilitation ("Whiplash consultation 2016 part 2") to be published and implemented alongside the new low value Injury Portal.
Whilst Insurers will not appreciate the delay, there is a groundswell of opinion that to rush the reforms through in a matter of months would be even worse than delay. The rules and portal must be fit for purpose. Whilst previously there was a desire to push through before any general election to eliminate the risk of a change in policy, presumably IF there is a Conservative-led government, then the implementation of the reforms will be secure and there might be a luxury of more time. That said, it will be over 5 years since Osbourne's Autumn statement that whiplash would be banned, and there is a danger that the proposed reforms will be solving a historic problem.
Children
One point that appears to have been partly clarified is regarding children – although excluded from the rise in the small claims limit, and using the new portal, they will still be caught by the damages tariff. This will leave them potentially vulnerable to a lack of representation where the claim will fall in the Small Claims Track – assuming injuries of say nine months duration will be worth less than £1000. A CFA deducting from a child's damages remains mostly unpalatable to the public (and is not really feasible anyway given the low level of damages) so it remains to be seen whether an answer will be found.
Rehabilitation
There have also been concerns expressed regarding rehabilitation and the current proposal that it should be kept out of the new portal. A group of the larger Rehab organisations called 'Together for Rehabilitation' has been formed with the main recommendation so far being a separate rehabilitation portal allowing online screening of Claimants needs at an early stage.
Appetite for yet another portal before completion of the first one may not be high one feels and it is noteworthy that a cross-industry group put together by FOIL submitted proposals to the MOJ 12 months ago for a new process with no feedback from the MOJ. The two groups are meeting to see if any consensus can be reached and the best hope may be that if there is a delay to the Portal then the inclusion of a process for Rehabilitation can be reconsidered.
Referrals
Elsewhere, Aviva have expressed concerns that the ban on solicitors paying referral fees for claims isn't working and believes that solicitors should be made to declare their leads, removing the option to reply 'prefer not to say' when asked to declare their source of work. This followed research from September 2019 which showed that 70% of adults had received cold calls or texts regarding accident claims. Following the Insurance Fraud taskforce recommendation there is a requirement for solicitors when submitting the CNF to indicate the referral source, however the inclusion of a "prefer not to say" option renders this close to meaningless.
Report on savings
Finally in this area there has been a response from HM Treasury following the consultation on draft regulations to impose reporting requirements on firms under the Civil Liability Act 2018. As a result, amendments will be made to the Statutory Instrument used to enact the legislation. Only insurance companies writing more than 100,000 policies will be required to report, which should cover 95% of the UK market. Insurers will be requested to provide figures relating to the entire premium earned, not just the personal injury aspect. This is to try and assess whether any savings from the Act have been passed on to customers, as well as look at the wider implications such as costs reducing in one area being replaced with costs rising in another such as motor damage and credit hire. Companies are not required to report until October 2023 but that report must contain details for each reporting year.
Case Law Watch
There have been a number of significant cases affecting the portal arena over the last month or so that are worth looking at in some detail.
Earlier this month the Court of Appeal looked at the issue of late service of evidence in portal claimsin Wickes Building Supplies Ltd v Blair (2019). Here the Claimant served evidence later than he should have and not in accordance with the Stage 3 procedure. The procedure itself is contained in the Part 8b Practice Direction. This stipulates how to start the claim and what documents must be included at the outset. Specifically Paragraph 6.3 states that '...the claimant must only file those documents… where they have already been sent to the defendant under the relevant protocol'.
Paragraph 7.2 goes on to say that where further evidence must be provided by any party, and the claim is not suitable to continue under the Stage 3 procedure, the court will order that the claim continue under Part 7.
Mr Blair included a statement that had not been served in accordance with the protocol. At first instance at the stage 3 hearing, the district judge agreed it had not been served in accordance with the rules and dealt with the claim as if it didn't exist, awarding £2000 damages. This decision was appealed by the Claimant and the Circuit Judge allowed the appeal. He moved the case to Part 7 as the claim as it stood (with disagreement over what evidence should be permitted) could not continue under Part 8b. Wickes had to pay the costs of the appeal.
Wickes then appealed to the Court of Appeal. It held that the Circuit Judge was incorrect in aligning objections to late service of evidence with objecting to the case proceeding under Stage 3 at all. Wickes hadn't said they wanted to drop the case from the process, just that the statement should be excluded due to failures with service under the rules. Paragraph 9.1 of the Practice Direction was not triggered by this situation. To quote Lord Justice Baker directly, '...if Judge Hughes interpretation of paragraph 9.1 was correct, it would mean that whenever a defendant objected to late filing of evidence, the claim would be removed automatically from the Stage 3 Procedure'. The order of the district judge was therefore restored. It clearly would not make sense for a Claimant to benefit from failing to adhere to the protocol by being able to issue a Part 7 claim.
Although not a portal case, the Court of Appeal's decision in Jet 2 Holidays v Hughes & Anor (2019) will be of interest as it confirms that documents which are served with a statement of truth, but are proved to be false will expose the claimant to contempt proceedings, even if substantive proceedings are not brought. Read more in our update.
Also of significant interest to portal and low value practitioners has been the case of Aldred v Cham (2019) which has already been subject to a full DWF update. In brief, this was an infant case where True Solicitors submitted a cost schedule including £150 fee for advice. The Defendant objected to paying it, stating that it was not a recoverable disbursement pursuant to CPR 45 Section IIIA. At provisional assessment, the judge allowed the disbursement. An oral review was sought but this ended up with the same result, the Circuit Judge upholding the first decisionthat counsel's fee was a particular feature of the dispute.
On appeal, this was overturned. The fact that the Claimant was a child was not a 'particular feature of the dispute', it was instead a particular feature of the Claimant, Lord Justice Coulson stating it was 'caused by a characteristic of the claimant himself and does not fall within the exception'. Counsel's advice is no longer recoverable where it is incurred due to a feature of the party and not the dispute itself. It is expected that this principal can be extended to translation fees.
Our old friend Part 36 still vexes practitioners around the country. The case of Campbell v Ministry of Defence [2019] EWHC 2121 (QB) reinforced that the principles surrounding late acceptance by a Claimant of a Defendant's Part 36 offer were very rarely departed from. Even Part 36 offers made when evidence is incomplete and the future uncertain, remain subject to the ordinary rules that the Claimant pay the Defendant's costs from expiry of the relevant period onwards.
Finally, the Court of Appeal last week handed down Judgment in the case of Ho v Adelekun (2019)which held that fixed costs remained applicable even when the Tomlin Order contained the phrase 'costs to be subject to detailed assessment if not agreed' - overturning the initial appeal from the Court of first instance. There was a caveat however with LJ Males stating further 'parties who wish to settle on terms that fixed costs will be payable would be well advised to avoid reference to assessment 'on the standard basis' in any offer letter or consent order'. Read more in our update.
New RTA Claims in October
As a result the longer term trends remain slightly downwards but fairly consistent over the last 12-18 months.
There was a reduction in Court Packs being issued, 4.1% down on the previous month and 14.3% down on the same point last year. PSLA was slightly down at £2825 compared to the previous month's £2845. With the new JCG now out we would expect that to start to climb again.
New Casualty Claims in October
PL Claims
There were 4553 new PL CNF's submitted in October 2019, a small 1% rise on the September figure but a dramatic drop of 15.2% on the same month for the prior year demonstrating the continuing downward trend for PL claims in the portal. There was a hefty 45.8% increase in Court Packs issued when compared to the prior month and even 22.9% on the previous year but this is based on small numbers, many PL claims not commencing within or leaving the process part way through.
EL Claims
There were 3747 new EL Accident claims into the Portal in October 2019, a rise of 9.9% on the previous month but an equally considerable drop of 9.4% against the same month in 2018. Conversely, Court Packs fell on the prior month but rose 17.9% against the same month last year. Again, when looking at trends it must be remembered that we are looking at fairly small numbers outside RTA.
EL Disease rose to 417 new claims, a rise of 7.5%. There was a significant rise in PSLA to an average of £4767, a rise of 15.3%, but this is probably an anomaly created by a few higher value cases remaining in the portal process. The numbers mean that a couple of cases can skew the figures.
Retention Rates
Retention rates rose across all lines of work again in October as in September and this does seem to be a slightly longer term trend. EL and PL are at their highest rates since February and seem to have bounced back quite considerably. Whether this is because insurers are making better offers within the portal process or Claimants are more reluctant to remove them if they may end up with a fixed costs outcome anyway it hard to say.
Contact
For more information please contact Nigel Teasdale, Partner Nigel.Teasdale@dwf.law
