Reforms watch
With the third election in four years now behind us, a Conservative majority of 81 means it is unlikely that a further election will take place until 2024. As such, there should now follow a period of stability, at least in terms of government legislation passing unhindered. There is no longer a threat to the Civil Liability Act itself, only the potential of further delay given we are now in late December with Brexit still the key priority. Equally, however, there should be no fear of a delay threatening the implementation itself.
For obvious reasons there has been no change in the list of outstanding implementation work required since our last update. The MIB however confirmed on Wednesday that they had continued to build and develop the new system throughout the purdah period and that two phases of user testing took place in November, with the next phase of testing in January. There remains a finite amount of work they can do without any regulations or rules, and at the end of the day a Portal without rules will be of little use.
The perceived wisdom is of a delay to the end of 2020, although it may be that the MOJ take the opportunity to push back to April 2021 to bring through additional reforms at the same time such as credit hire, rehab and increasing the scope of fixed costs.
It is of course possible that Ministers could be more bullish given the size of the majority and the optimism surrounding the Portal build. But we are close to a point where April implementation would cause such disruption for both claimants and insurers that there would be no benefit.
Claimant solicitors have talked about just continuing to put claims through the existing Portal, and a number of Insurers have warned about the nigh on impossible task of integrating systems in time.
APIL and MASS continue to state that a flaw in the Civil Justice Act means "a majority of children injured in road traffic accidents could lose access to compensation". The question is who will represent minors when the claims below £1000 under the tariff are no longer cost bearing. There remains a threat of judicial review when the regulations are finally drafted.
The CPRC sub group will meet in February but it remains unclear whether that is to sign off the Rules/Protocol, or to start drafting them. One would have thought they would want to see the regulations first. We also understand that there will no longer be ADR within the new portal as originally planned, with the slightly controversial one way adjudication seemingly abandoned. This leaves us with no guidance on how disputes are to be managed within the portal other than moving straight to the under resourced small claims track.
We conducted a poll in last month's update (prior to the outcome of the election) asking for views on the implementation of the reforms. The majority (42.86%) felt that the reforms would be delayed to October 2020, with a further 28.57% believing they would be delayed a year or more. The balance was split with smaller numbers thinking they would happen in April or never happen at all. We shall see…
CMC Regulation
In encouraging news recently, the FCA has secured fines against two claims management companies for misleading consumers, data breaches and unauthorised copying of client signatures.
The FCA has fined Professional Personal Claims (PPC) £70,000 for misleading consumers and banks in the first claims management company case closed by the regulator.
PPC’s websites and printed materials prominently used the logos of five major banks which was liable to mislead consumers into believing they were submitting redress claims for mis-sold PPI directly to their banks, rather than engaging PPC as a CMC to pursue claims on their behalf in return for payment of a success fee.
Additionally, the First-tier Tribunal has upheld a decision to fine Hall and Hanley £91,000 for data breaches and unauthorised copying of client signatures. Hall and Hanley is a claims management company whose business focused on claims for mis-sold PPI. The £91,000 fine was initially imposed by the CMR under the previous regulatory regime.
This decision follows the transfer of regulatory responsibility for claims management companies (CMCs) to the FCA on 1 April 2019, and it should be noted that the Claims Management Regulator pre-transfer imposed the original fines. The FCA said, "The decision by the Tribunal to uphold the findings of the CMR is another important message to industry that firms must conduct all business with integrity and due care, skill, and diligence."
Linked to concerns around CMCs is the longstanding issue of Mackenzie friends and how they might be used in a post reform world. The Law Society, Bar Council and head of the Justice Select Committee, Bob Neill, have all demanded greater regulation and a prohibition on paid Mackenzie friends following a recent case where eventually a claimant was awarded £330,000 in costs and damages from his non legally qualified advisor. However, time is running out for action if any ban is to take place prior to the implementation of the reforms.
Rehab Update
Whilst the reforms were held up by purdah, last week the new 'Together for Rehabilitation' group met with the Rehabilitation cross-industry working group, formed by FOIL in early 2018, to discuss how rehabilitation should work in lower value soft tissue claims. Both groups felt that rehab should be included in the new MOJ portal but recognised that it would not be possible to deliver that for April 2020. There appear to be a number of areas of agreement around the process, but the thorny question of how much it will cost and how much Insurers are willing to pay awaits.
Brexit and Motor claims
It is now clear that, with a large Conservative majority, Brexit will proceed in some shape or form. It is also highly likely that the Withdrawal Agreement will be passed and the transition period to December 2020 triggered. From our understanding whilst that transition period operates, very little will change with cross-border claims continuing to operate in accordance with the Motor Directives in place. The next trigger point will be 1st July 2020, the date by which the UK government must request an extension to the transition period, although the newly introduced Withdrawal Bill contains a clause ruling out an extension.
The main areas of concern to insurers and their customers remain whether Green Cards will be necessary, and also cross-border claims where Rome II currently operates meaning that injured persons can bring their claim in their country of domicile rather than where the accident itself took place. The MIB have been attempting to ensure that the backward step of Green Cards does not happen. They can however only influence this in the case of a negotiated deal – if we crash out without one on WTO terms, Green Cards would appear to be necessary, still at this stage to be printed on green paper with separate cards for vehicles and trailers. Haulage companies in particular are likely to be adversely affected.
If the current terms on cross-border disputes are to be retained, then agreements will need to be reached with all Member States. Behind the scenes, negotiations have already taken place with a suggestion that France is refusing at this stage to agree a reciprocal deal, many more UK motorists having accidents in France than vice-versa.
Case law
Firstly, a reminder that unless it would be unjust to do so, the normal implications of the Claimant beating their own Part 36 offer apply. In Kivells Ltd v Torridge District Council (2019). Part 36.17(4) states that for the normal costs consequences not to apply, there must be something which takes the case out of the norm. There was not, so the full consequences applied including interest although at 8% matching the 'judgment rate of interest' rather than the maximum permitted of 10%.
Also on Part 36, the Court of Appeal has this week handed down a judgment in King v City of London Corporation (2019) on the question of whether a Part 36 offer can exclude interest. The Lord Justices determined it cannot, either generally or in the context of detailed assessment proceedings – this was an offer that had been made on costs. Lord Justice Arnold did concede when concluding the judgment that the issue merits consideration by the CPRC as there are arguments in favour of making Part 36 offers exclusive of interest, particularly in costs proceedings.
Cases on relief from sanctions continue to be prominent and many stem from failures to pay the hearing fee on time, which results in an automatic strike out and vacation of any pending trial dates. In the case of Badejo v Cranston (2019) at first instance relief was not granted. The court fee was due by 13th August, the Claimant realised their error on 20th August and applied on 22nd August for relief.
On appeal Fancourt J reversed this decision on the grounds that the third Denton criteria, all the circumstances of the case, could refer to disproportionality – given the case was worth around £120,000 it was reinstated. Also, the loss of trial date was caused by the Court vacating the hearing, not the actions of the Claimant.
Finally, the case of Essex County Council & Ors v Davies & Ors (2019)was a stark reminder of how difficult it is to appeal Personal Injury awards. The decision cited back to a much earlier case, that of Flint v Lovell (1934) which laid down the principle that only if the judge was wrong in law or made such an error that the amount of damages was 'entirely erroneous' the figure was very unlikely to be interfered with. Although not portal in nature, this would also extend to Stage 3 MOJ hearings. The costs of appealing are rarely likely to be worth it.
Ogden 8 and the Discount rate
Also of interest to insurers will be the new set of Ogden tables due to be published early next year. Recent data actually suggests a fall in projected life expectancy from the previous set. This should not however lead to a significant downturn in multipliers when set against previous increases in life expectancy as those increases were comparatively modest. One area that will be enhanced is in the different types of educational status of an individual, with categories increasing from three to five for greater clarity.
In terms of the discount rate, the ABI have confirmed that they will not be mounting a legal challenge against the decision to set the rate at -0.25%. The focus will no doubt shift to educating the new panel once formed, and particularly the Lord Chancellor's department to minimise the risk of the Lord Chancellor overriding future rates arrived at by the panel, as happened on this occasion.
Civil Justice Statistics
The number of personal injury claims issued has increased on last quarter's eight year low – but only by a small number and still considerably down by 5% on the same period last year:
Conversely however, specified money claims increased considerably (9% up on last year). Whilst that description covers a wide breadth of claims, the number of claims being issued for bent metal/credit hire alone will be partly responsible for that rise.
Of concern is that the statistics for the period July – September 2019 show an increase in the time taken for cases to reach trial across all tracks. In the third quarter of 2019 it took an average of 38.1 weeks to reach trial in the small claims track, up from the second quarter and 3.2 weeks longer than at the same point last year. For Fast and Multi Track claims, the average was 59.4 weeks to trial up around three weeks on the same point last year.
That could cause a real issue given disputes over liability for injury claims under £5,000 will be heading for the small claims court and there will be no ADR to take the strain. Perhaps the MOJ will consider putting the money saved from the lack of ADR into greater resources and District Judges to ensure the court system is fit for purpose.
Readers will recall that Lord Justice Briggs was commissioned by the Lord Chief Justice to review the civil courts in England and Wales and make recommendations for structural change, and his final recommendations were published in July 2016 with plans for implementation from 2020. There do not seem to be any encouraging signs that IT is improving the court processes and on the contrary the position is worsening as court resources (in terms of both courts themselves and the number of judges available to hear cases) have been reduced over recent years.
The number of adjourned hearings due to lack of judicial or court availability has been growing and the time taken to re-list such matters is alarming.
Looking at allocations to track per quarter, the number of cases allocated to the small claims track has been put at 31,201 for Q3 2019 compared to 24,028 for Q3 2018 – a significant jump. Over the same time the number of fast and multi track actions has fallen, but not by the same margin so overall we have more claims in the system.
Elsewhere, a record number of defences were filed in Q3 2019, over 80,000 up from around 74,000 in the same period in the previous year and the number of judgments has also risen, to a total of 341,241 in Q3 2019 compared to 318,165 in Q3 2018.
New RTA Claims in November
New claims notifications in November 2019 fell by 3.8% from the prior month to 60,407, also a drop of 3.1% against the same month in 2018. However, there were only 21 working days in November 2019, so 2,877 claims per day submitted on average. The daily number of claims submitted has actually risen as the October daily figure was 2,729 per working day.
November has still been the fourth highest month of the year for new claims so the data looks pretty stable for now as the cumulative rolling 12 month position shows, with the vehicle miles travelled showing little relevance to the number of claims presented:
New Casualty Claims in November
PL Claims
There were 4,434 new PL CNFs submitted in November 2019, an 8.4% drop on the October figure and a considerable drop of 14.4% on the previous year. There is a clear continuing downward trend for PL claims in the portal.
EL Claims
There were 3,652 new EL Accident claims in the Portal in November 2019, a reduction of 9.5% against October and a still significant reduction of 7.5% when taken against the previous year.
Stage 3 Usage and PSLA
The average general damages across the three areas showed a mixed bag with RTA fairly consistent at £2,833, a small rise of 0.4% on the previous month. EL rose significantly by 3.4% to £4,512 and PL was down 7.4% to £4,175. We would expect to see effects of the 15th edition of the JCG over the coming months, particularly in RTA claims where the greater dataset makes it more reliable.
The use of stage 3 fell again in RTA showing perhaps that Claimants are being discouraged by the length of time it takes to get a hearing date. For PL, the rise in court packs year-on-year continued by 30.5%.
Similarly in EL accident where Court packs rose again however by 19.2%. EL disease fell away by a very significant 28.6%. It should be heavily caveated that these are all based on very small numbers.
Contact
For more information please contact Nigel Teasdale, Partner, M +44 (0)7752 709114 Nigel.Teasdale@dwf.law
