Kerry Underwood

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CREDIT HIRE AND PHYSIOTHERAPY: COURTS CUT CLAIMS

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I am trekking in the Sahara Desert to raise money for the Lord’s Taverners’ cricket charity for disabled and disadvantaged children. If you find my blogs helpful how about making a donation? All donations go straight to the charity as the trekkers pay all of their own expenses. Please donate here.

 

Credit Hire

 

In McBride v UK Insurance Ltd and Clayton v EUI Ltd [2017] EWCA Civ 144

 

the Court of Appeal upheld its own approach in Stevens v Equity Syndicate [2015] EWCA Civ 93, that is that the basic credit hire rate was to be calculated by reference to the lowest reasonable rate.

 

The Court of Appeal held that the exception to that rule applied only when the claimant was impecunious and was a narrow exception.

 

As a matter of principle a credit hire company cannot recover the full rate simply because it was not possible to obtain a basic higher rate with a nil excess.

 

The Court of Appeal said:

 

“76. Accordingly, in my judgment, where a nil excess is not available from car hire companies, the correct approach is to treat the nil excess separately from the comparison exercise between the default credit hire rate and the basic hire rate with an excess. It will almost invariably be the case that it was reasonable for the claimant to seek a nil excess for the reasons given in Bee v Jenson and, on that hypothesis, the only question for the Court will be how much should be recoverable as the cost of purchasing a nil excess.”

 

At paragraph 95 the court said:

 

“…one should never lose sight of the fact that the “stripping out” exercise advocated by Dimond v Lovell is necessarily an approximate and artificial one because, by definition, the claimant did not in fact hire a comparable car from a mainstream or reputable local car hire company. He actually hired from the credit hire company, so that inevitably the evidence is sought after the event of what rate of car hire could have been obtained, on the hypothetical basis that he had hired from a car hire company instead.”

 

The Court of Appeal said that the adjustments made by the judge, doing the best that he could on the evidence, were not to be criticized and nor would it have been appropriate for the judge simply to award the credit hire in full because of the absence of direct evidence of a seven day hire rate or an excess waiver product for the vehicles hired.

 

The Court of Appeal gave guidance as to the question of excess waiver insurance:

 

“…I consider that where there is evidence of the availability of an excess elimination insurance as a stand-alone product from Questor or other providers such as Insurance4carhire.com, the Courts should admit and accept such evidence as evidence of the reasonable cost of obtaining a nil excess, provided of course that the quote obtained from such a provider is for a car which is comparable with the one hired from the credit hire company and is for the same period as the period of actual hire from the credit hire company. Certainly the Court should not reject such evidence because the judge or the claimant has not heard of the product, as the district judge did here. The exercise is an objective one and such evidence should be admissible irrespective of the subjective knowledge or lack of it of the Court or the claimant. Information about the availability of such products can, in any event, be readily accessed on the internet. It is apparent that, whilst some judges in the County Courts have not been admitting such evidence, others have: see the findings of the judge in one of the cases appealed in Dickinson v Tesco [2013] EWCA Civ 36; [2013] RTR 27 referred to at [26] of the judgment of Aikens LJ. The admission and acceptance of evidence of these stand-alone products should be the norm.”

 

Physiotherapy costs: Credit Hire Principles Apply

 

In Nuttal v Chew, 22 March 2017, Leeds County Court, Unreported

 

the judge at a stage 3 road traffic damages assessment held that the recoverable physiotherapy treatment fees were limited to the rates charged by the physiotherapist offered by the defendant’s insurers.

 

The Claimant suffered a lower back injury in a road traffic accident on 28 April 2016.

 

By letter to the Claimant’s solicitors dated 5 May 2016, which was included in the Stage 2 documents, the Defendant’s insurers stated,

 

“Please note we are able to and willing to instruct a Rehabilitation Provider to assess your client’s needs for rehabilitation and provide rehabilitation as required at a cost of £41 per session.  We will therefore only consider any rehabilitation costs up to £41 per session, as per the Rehabilitation code 2007. We also bring your attention to the judgement in the case of Copley v Lawn  in respect of mitigation”.

 

Six sessions of physiotherapy were recommended by the Claimant’s medical report dated 24 May 2016.

 

The Claimant obtained treatment from a physiotherapist of her own choice and claimed special damages of  £455, comprised of invoices for £50 for “telephone triage”, £75 for “initial assessment”, and £55 each for six sessions of physiotherapy treatment.

 

The court accepted the argument that special damages for physiotherapy treatment should be limited to the cost of six sessions of treatment at the rate of £41 per session, which would have been charged by the physiotherapist offered by the Defendant’s insurers, totaling only £246.

 

The Deputy District Judge found that the principles, applied by the Court of Appeal to the rates of charge for credit hire vehicles which were recoverable in damages, in the case of Copley v Lawn [2009] EWCA Civ 580 were applicable to the rates recoverable for private physiotherapy treatment: and that a Claimant could not recover the full costs resulting from her making her own choice of physiotherapy treatment at a rate higher than the rates which she knew would have been charged had she accepted an offer of alternative treatment made by the Defendant’s insurers.

 

 

 

 

 

Written by kerryunderwood

March 24, 2017 at 6:44 am

Posted in Uncategorized

PART 36: WHAT HAPPENS WHEN THE OTHER SIDE’S OFFER IS BETTER THAN YOUR OWN?

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I am trekking in the Sahara Desert to raise money for the Lord’s Taverners’ cricket charity for disabled and disadvantaged children. If you find my blogs helpful how about making a donation? All donations go straight to the charity as the trekkers pay all of their own expenses. Please donate here.

 

This is all dealt with in my Personal Injury Reforms course this May, which can be booked here

 

Accepting a defendant’s higher offer

 

A claimant makes a Part 36 offer of £3,000.00 and this is not accepted within time.

 

A year later the defendant makes a Part 36 offer of £4,000.00, even though the claimant’s original offer of £3,000.00 remains available for acceptance.

 

What is the claimant then to do?

 

On the face of it, the answer is obvious – the claimant accepts an offer which is £1,000.00 more than their own unwithdrawn offer, which is still capable of acceptance.

 

However accepting a defendant’s Part 36 offer appears to restrict the claimant to ordinary costs, that is on the standard basis, or in a fixed costs case – fixed costs- whereas if the defendant had simply accepted the claimant’s one year old offer, for a lower sum, the defendant then risks being ordered to pay indemnity costs for the whole of the period of late acceptance.

 

The difference between fixed or standard costs and indemnity costs may well exceed the extra damages that the defendant is offering.

 

If the claimant does not accept the defendant’s offer then the defendant is free to accept the earlier offer and although the claimant’s solicitor stands to get more costs the client loses out and it is hard to see how such a course of action could be justified.

 

If the claimant solicitor immediately withdraws its own offer, so that the defendant cannot accept it, and then declines to accept the defendant’s offer, then it is back to square one with the claimant being at risk of failing to beat the defendant’s Part 36 offer but the defendant being at no risk of indemnity costs because there is no claimant’s offer on the table.

 

This is now happening quite a lot and the issue needs to be addressed, especially as fixed costs spread to other areas of work and to cases with a higher value.

 

As this happens there may be a very considerable advantage in the defendants making a Part 36 offer slightly above the claimant’s Part 36 offer.

 

Accepting a claimant’s lower offer

 

Of course this can work the other way round.

 

A defendant makes a Part 36 offer of £4,000.00 and a year later the claimant makes a Part 36 offer of £3,000.00 and if the defendant accepts that sum then the claimant avoids the adverse costs consequences of accepting a defendant’s offer late and also gets its costs for that one year period.

 

Wording along the following lines would deal with the problem:

 

“Where a claimant accepts a defendant’s Part 36 offer which is at least as high as its own outstanding Part 36 offer then the consequences shall be the same in terms of costs and additional damages etc. as if the defendant had accepted late the claimant’s offer save that the level of damages shall be that in the defendant’s offer.

 

Where a defendant accepts a claimant’s Part 36 offer which is lower than or equal to the defendant’s earlier unwithdrawn Part 36 offer then the costs consequences shall be the same as if the claimant had accepted the defendant’s offer late, save that the amount of damages will be that in the claimant’s lower offer.”

 

Set-off on late acceptance

 

A claimant accepts a defendant’s Part 36 offer late and thus is liable for the defendant’s costs from the date of expiry of the Part 36 offer to the date of late acceptance.

 

There is no time limit in relation to the defendant paying the claimant’s pre-Part 36 costs and therefore the defendant can withhold all the costs until its own post Part 36 costs are quantified.

 

However, in those circumstances, is the paying party allowed to withhold damages by way of set-off against post Part 36 expiry costs? A paying party would wish to do so if it expects its post Part 36 costs to be greater than the claimant’s pre Part 36 costs.

 

CPR 36.6(2) provides:

 

“(2) A defendant’s offer that includes an offer to pay all or part of the sum at a date later than 14 days following the date of acceptance will not be treated as a Part 36 offer unless the offeree accepts the offer.”

 

The general rule is that a paying party must make payment within 14 days of acceptance of the offer and there appears to be no provision for a paying party to withhold damages, as compared with costs, by way of potential set-off.

 

Part 36 offer v non-Part 36 offer

 

A defendant makes a non-Part 36 offer early on of £5,000.00 and very much later the claimant, who has ignored the offer, makes a Part 36 offer of £5,000.00 which the defendant accepts.
Does the defendant have to pay all of the costs or can they successfully argue that they should only pay costs up to the time of their non-Part 36 offer, relying on CPR 44.2 (4)(c) which says that the court must take into account any admissible offer to settle made by a party which is drawn to the court’s attention, and which is not an offer to which costs consequences under Part 36 apply?

 

In my view when, in those circumstances, the defendant accepts the Part 36 offer then they accept the costs consequences and therefore have to pay the claimant’s costs.

 

Had there been no offer by the claimant and therefore no acceptance by the defendant then the defendant’s offer could have been taken into account by the court in determining the issue of costs.

 

However on the defendant’s acceptance of the claimant’s offer, albeit in the same sum, then the court will not be dealing with the principle of costs.

 

Part 36 is of extreme complexity but CPR 36.2 reads:

 

“(2) Nothing in this Section prevents a party making an offer to settle in whatever way that party chooses, but if the offer is not made in accordance with rule 36.5, it will not have the consequences specified in this Section.

 

(Rule 44.2 requires the court to consider an offer to settle that does not have the costs consequences set out in this Section in deciding what order to make about costs.)”

 

CPR 36.13 reads, where appropriate:

 

“(1) Subject to paragraphs (2) and (4) and to rule 36.20, where a Part 36 offer is accepted within the relevant period the claimant will be entitled to the costs of the proceedings (including their recoverable pre-action costs) up to the date on which notice of acceptance was served on the offeror.

 

(Rule 36.20 makes provision for the costs consequences of accepting a Part 36 offer in certain personal injury claims where the claim no longer proceeds under the RTA or EL/PL Protocol.)”

 

Thus that rule applies whether it is the claimant’s offer, or the defendant’s offer, which is accepted as the reference there is to the offeror and not the claimant or defendant whereas other provisions refer to the claimant or defendant.

 

My view is that a valid Part 36 offer must trump a non-Part 36 offer. If it were otherwise then a defendant can make an offer that has no legal consequences but then seek to rely on it to avoid the costs consequences of the claimant’s valid Part 36 offer.

 

To interpret the provisions in any other way would render Part 36 largely meaningless, but there is a tension between CPR 36 and the general provisions on costs.

 

This has arisen in a number of cases, including the key issue of whether a claimant is entitled to indemnity costs on late acceptance by a defendant generally and whether a claimant is entitled to indemnity costs on obtaining judgment in a fixed costs case.

 

The latter point has been found in claimants’ favour in the Court of Appeal case of Broadhurst v Tan and Taylor v Smith [2016] EWCA Civ 94 (23 February 2016).

 

Thus my view is that the defendant does indeed have to pay all of the costs.

 

Withdrawing Part 36 offer by email
In Thompson v (1) Reeve (2) The Motor Insurance Bureau (3) Mid Essex Hospital Services NHS Trust, Queen’s Bench Division of the High Court, Claim number HQ14P03864 20 March 2017

 

Master Yoxall allowed CPR 3.10 to be used to rectify the claimant’s admitted error in withdrawing a Part 36 offer by email where the parties receiving the notice had not indicated in writing that they were willing to accept service by email.

 

Thus the Claimant’s withdrawal of the Part 36 offer was deemed valid, which meant that it was not capable of acceptance by the defendants.

 

The situation arose due to the recent change in the discount rate.

 

Comment (1)

 

So the MIB and the NHS Trust – both state/quasi state bodies sought to use a technicality to avoid a very severely and negligently injured child from getting the correct level of damages.

 

It would be nice if the NHSLA and the MIB behaved other than in this way.

 

Comment (2)

 

Proposed amendment to the Civil Procedure Rules

 

“ Any body which does not consent to service by email shall recover no costs and should always be liable to pay costs on the indemnity basis.”

 

Please see my related blogs:-

 

Personal Injury Reforms Course – 2017 Tour

 

Personal Injury Reforms Announced

 

 

Written by kerryunderwood

March 23, 2017 at 6:34 am

Posted in Uncategorized

AFTER-THE-EVENT INSURANCE: TWO NEW CASES

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ATE and security for costs

 

In The RBS Rights Issue Litigation [2017] EWHC 463 (Ch)

 

the court ordered the claimants to give details of funders under the court’s inherent jurisdiction ancillary to CPR 25.14.

 

An application for security might face difficulty as the trial was imminent, but the court could not say it was so unrealistic or hopeless that the defendants should not have disclosure.

 

The court refused to order that details of ATE insurance be given.

 

This was sought under its case management powers and the judge concluded that the documents were not needed for case management purposes.

 

He was also concerned it could lead to further satellite litigation.

 

However, he expressed some reservations about whether there was sufficient funding and, in light of that, suggested there should be more transparency about the ATE insurance.

 

The decision provides detailed guidance regarding such applications, including that:

 

  • It was not a condition of making an order for disclosure of funders ancillary to CPR 25.14, that the applicant had unequivocally determined to bring an application for security once details were revealed. However, the applicant must, at least, demonstrate that its putative application for security was a real possibility and had realistic grounds, and was not being suggested simply for some tactical purpose.

 

  • In an appropriate case, the court’s case management powers under CPR 3.1 did extend to requiring disclosure of an ATE policy when this was necessary to enable the court to exercise its case management function. However, whether a party will be able to enforce damages and costs orders is not a matter which affects case management. Generally, an ATE policy, which does not impact on the issues in the case, will not be relevant. But there may be exceptions, for example, where the ATE policy has been deployed in the proceedings to influence or impact on a decision. That may be especially likely in group litigation.

 

  • It was unlikely that privilege attached to an ATE policy.

 

ATE and Third Party Rights

 

In Denso Manufacturing UK Ltd v Great Lakes Reinsurance (UK) plc [2017] EWHC 391 (Comm)

 

the Commercial Court, part of the High Court but shortly to be the Business and Property Court, held that After-the-Event insurers were entitled to deny liability to a third party on the basis that their own insured had breached the policy.

 

Following litigation between the insured and the third party, the insured was ordered to pay some of the third party’s costs, but went into liquidation without making payment.

 

Relying on the statutory scheme in the Third Parties (Rights against Insurers) Act 1930, the third party commenced proceedings directly against the insurers, who denied liability, alleging that the insured had breached a number of policy conditions precedent to liability relating to, among other things, obligations to co-operate in any claim and provide information.

 

The decision is an interesting example of the court’s approach to the interpretation of conditions in an insurance contract. In particular, although the policy included a general “Due Observance” condition, which sought to create conditions precedent, the court examined each of the individual conditions in order to determine whether they could be construed as conditions precedent.

 

The decision is also a reminder that, for the purpose of the 1930 Act, the transfer of rights to a third party is subject to the defences available to insurers against the insured.

 

Although, under the Third Parties (Rights against Insurers) Act 2010, a third party is also in no better position under the insurance contract than the insured, and, generally, an insurer is able to raise any defence against the third party that would have been available to it against an insured, there are some exceptions.

 

For example, an insurer cannot allege non-performance by the insured where the third party has fulfilled the relevant policy conditions.

 

In the circumstances, had the 2010 Act applied, it might have been possible for the third party, upon the insured’s insolvency, to comply with the policy conditions by promptly sending, directly to insurers, all communications relating to settlement offers and the detailed assessment proceedings.

 

However, in practice, this will only be possible where the third party has succeeded in obtaining the relevant policy information from the insured or its agents in time to enable it to comply with any conditions.

 

 

Written by kerryunderwood

March 22, 2017 at 6:43 am

Posted in Uncategorized

PROPORTIONALITY AND CLINICAL NEGLIGENCE: ANOTHER CASE FOR FIXED COSTS

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In Andrew Rezek-Clarke v Moorfields Eye Hospital NHS Foundation Trust [2017] EWHC B5

 

the Senior Courts Costs Office considered the costs in a clinical negligence case which had settled for £3,250.00.

 

At an oral hearing the Master broadly upheld his decision made on provisional assessment that the costs claimed of £72,320.85 were disproportionate and should be reduced to £24,604.40.

 

This included a reduction in the After-the-Event insurance premium from £31,976.49 to £2,120.00 and experts’ fees from £18,036.00 to £9,000.00.

 

All of the work was post 1 April 2013 and therefore governed by the new rule on proportionality which means that even if work is reasonably and necessarily done it can still be disproportionate.
The Master criticised the claimant’s solicitors for not planning the necessary work and the way to approach the matter, given that they knew that this was a low value claim which, at its highest, was worth £5,000.00.

 

Here the court quoted with approval the passage from HH Judge Alton in Birmingham County Court on 22 June 2000 in an unnamed case, itself approved by the Court of Appeal in Jefferson v National Freight Carriers Plc [2001] EWCA Civ 2082:

 

“In modern litigation, with the emphasis on proportionality, it is necessary for parties to make an assessment at the outset of the likely value of the claim and its importance and complexity, and then to plan in advance the necessary work, the appropriate level of person to carry out the work, the overall time which will be necessary and appropriate to spend on the various stages in bringing the action to trial, and the likely overall cost. While it is not unusual for costs to exceed the amount in issue, it is, in the context of modern litigation such as the present case, one reason for seeking to curb the amount of work done, and the cost by reference to the need for proportionality.” (Paragraph 19 of the judgment).

 

Here the Master said that that was even more relevant today as the rules regarding proportionality are now much more onerous.

 

The Master also held that additional liabilities, here the ATE premium, fall to be considered in the context of proportionality in relation to post 1 April 2013 cases.

 

ATE premiums remain recoverable in clinical negligence cases in relation to the costs of medical reports relating to liability and/or causation.

 

These are governed by the Recovery of Costs Insurance Premiums in Clinical Negligence Proceedings (No. 2) Regulations 2013.

 

The Master had this to say:

 

“Furthermore, it is often the case that the fee claimed for a medical report includes the fee charged by a medical agency. I query whether any attempt is made by the solicitors or the insurers when calculating the premium, to distinguish between the actual cost of the report and the fee paid to the medical agency.”

Written by kerryunderwood

March 20, 2017 at 6:55 am

Posted in Uncategorized

MIB CAVE IN FOLLOWING MY BLOG

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On 8 February 2017 I posted a blog – NEW MIB UNTRACED DRIVERS SCHEME: INSURERS AT IT AGAIN.

 

I was highly critical of clause 10(1) which I refer to as “a deliberate exclusion of solicitors from the process at the beginning.”

 

Following that blog that agreement dated 10 January 2017 and made between the Secretary of State for Transport and the Motor Insurers Bureau, which was due to come in on 1 March 2017, was revoked even before it came into force.

 

A fresh agreement dated 28 February 2017 has been entered into and the offending part of clause 10(1) has been removed.

 

The MIB only published the replacement scheme on 2 March 2017,  that is one day after it came into effect.
This followed some interesting comments and exchanges on my blog by Paul Ryman-Tubb, which you can see on the original blog.

 

In particular on 24 February 2017 Paul Ryman-Tubb accused me of writing an article which lacked accuracy but refused to say in what respects it was inaccurate.

 

Presumably Mr Ryman-Tubb knew at that stage that the MIB and the Government were in fact going to agree with my point and amend their agreement accordingly.

 

Apart from demonstrating the power of blogs this shows the importance of never letting the Government, insurers, consumer groups or anyone else get away with seeking to remove lawyers from the process.

 

Lawyers stand between civilization and tyranny.

 

Please see my related blogs:

 

NEW MIB UNTRACED DRIVERS SCHEME: INSURERS AT IT AGAIN.

 

MIB UNTRACED DRIVERS AGREEMENT FIXED COSTS SCHEME: THE SHAPE OF THINGS TO COME

Written by kerryunderwood

March 7, 2017 at 12:49 pm

Posted in Uncategorized

PERSONAL INJURY REFORMS COURSE – 2017 TOUR

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PERSONAL INJURY REFORMS COURSE – 2017 TOUR

  Book here now!

This course looks in detail at the personal injury reforms following the Government’s announcement on 23 February 2017.

Topics covered include:

  • Small claims limit and running small claims profitably
  • Small claims track procedure
  • Restriction of general damages in soft tissue claims
  • The tariff system
  • Extension of fixed costs to all personal injury work
  • Increase in value of claims covered by fixed costs
  • Update on funding and costs.

The course material includes model funding agreements.

The price is £200 + VAT including lunch and detailed course material, with a 10% discount for subsequent delegates. The course runs from 10.00am to 4.30pm and carries 5.5 CPD hours.

This subject is also covered in my new book – Personal Injury Small Claims, Portals and Fixed Costs – which can be ordered here.

Please select the course you would like to attend:

Date            2017 Location Course Book
Wednesday 10 May Birmingham Personal Injury Reforms Course Book
Thursday 11 May Leeds Personal Injury Reforms Course Book
Friday 12 May Newcastle* Personal Injury Reforms Course Book
Tuesday 16 May Liverpool** Personal Injury Reforms Course SOLD OUT
Wednesday 17 May Manchester Personal Injury Reforms Course SOLD OUT
Friday 19 May Cardiff*** Personal Injury Reforms Course SOLD OUT
Tuesday 23 May Plymouth**** Personal Injury Reforms Course Book
Thursday 25 May Exeter**** Personal Injury Reforms Course Book
Tuesday 27 June Liverpool** Personal Injury Reforms Course Book
Wednesday 28 June Manchester Personal Injury Reforms Course Book
Tuesday 4 July Cardiff Personal Injury Reforms Course Book

* sponsored by Trinity Chambers
** with Liverpool Law Society
*** sponsored by 9 Park Place Chambers
**** sponsored by Foot Anstey

Previous Delegate Feedback

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“Extremely informative, the best and most useful course from a business point of view I have ever attended.”

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“Truly amazing content and presentation”

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“Great day with Kerry who spoke brilliantly. A wealth of knowledge and a great teacher. Many thanks!”

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Written by kerryunderwood

February 28, 2017 at 9:41 am

Posted in Uncategorized

PERSONAL INJURY REFORMS ANNOUNCED!

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I am trekking in the Sahara Desert to raise money for the Lord’s Taverners’ cricket charity for disabled and disadvantaged children. If you find my blogs helpful how about making a donation? All donations go straight to the charity as the trekkers pay all of their own expenses. Please donate here.

 

These reforms will all come in on 1 October 2018.

This is all dealt with in my new book – Personal Injury Small Claims, Portals and Fixed Costs which will be out in March. This is 3 volumes and over 1,400 pages. You can pre-order your copy at a discounted price of £68 including P&P (normal price £80 including P&P) by 6 March. Details here.

Contact me on 01442 430 900 or email me here.

This is also all dealt with in my Personal Injury Reforms course this May, which can be booked here – early bird discount if  paid for by 6 March.

Next month I will be trekking 160 kilometres through the Sahara Desert to raise money for the Lord’s Taverners charity and EY Foundation. If you would like to show your support and make a donation please click here. If you buy the Personal Injury Reforms book by 6 March, £5.00 will go to these charities.

Today the Government announced the result of its consultation into personal injury reforms which can be accessed here.

The personal injury small claims limit will rise from £1,000.00 to £5,000.00 in relation to all road traffic accident matters.

For all non-RTA personal injury matters the small claims limit will rise from £1,000.00 to £2,000.00

The personal injury small claims limit last went up in 1991 and this new limit represents a slightly below inflation increase.

This move is likely to end further debate about the small claims limit for a generation.

Whiplash tariff

The Government has now announced the tariff for soft tissue injuries and has decided on a unified figure that will cover both whiplash claims and minor psychological claims, and therefore there will be no separate figure for minor psychological injuries. This was only going to be £25.00 in the original consultation anyway.

The figures are:

Injury Duration 2015 average payment for PSLA – uplifted to take account of JCG uplift (industry data) Judicial College Guideline (JCG) amounts (13th edition) Published September 2015 New tariff amounts
0–3 months £1,750 A few hundred pounds to £2,050 £225
4–6 months £2,150 £2,050 to £3,630 £450
7–9 months £2,600 £2,050 to £3,630 £765
10–12 months £3,100 £2,050 to £3,630 £1,190
13–15 months £3,500 £3,630 to £6,600 £1,820
16–18 months £3,950 £3,630 to £6,600 £2,660
19–24 months £4,500 £3,630 to £6,600 £3,725

The Prisons and Courts Bill

The introduction of the tariff system, and the banning of pre-medical offers are dealt with in the Prisons and Courts Bill published and made before Parliament today.

However the detail will be in regulations to be made under the Act.

The bill is here.

The relevant part is part 5 – entitled Whiplash and containing clauses 61 to 67.

Points to note are that “whiplash injury” is defined as an injury, or set of injuries, of the neck or the neck and upper torso that is of a description specified in regulations made by the Lord Chancellor. (Clause 61(1)).

The provisions only apply to people injured while using or being carried in or on a motor vehicle other than a motorcycle. (Clause 61(3)).

Thus pedestrians and motorcyclists are not covered by these provisions and are not subject to the tariff system.

If the Act causing the injury is also a breach of one of the statutory provisions in section 53 of the Health and Safety at Work etc Act 1974, then it is excluded from the definition of a whiplash injury.

This mirrors the provisions of the portals.

Clause 63 allows for an uplift in damages in exceptional circumstances, and all of that is to be dealt with by regulations made by the Lord Chancellor.

Clause 64 contains detailed provisions on the prohibition of settlement before a medical report and makes it a breach of the Act, but not a criminal offence and does not give rise to a right of action for breach of statutory duty.

Any action against a regulated person is to be taken by the appropriate regulator, that is professional disciplinary action.

Clause 65(6) specifically provides that a breach of the rule against settling without a medical report does not make the agreement to settle void or unenforceable.

Pre-medical offers

Offers to settle whiplash claims before medical evidence has been obtained will be banned.
That ban and the whiplash compensation tariffs require an Act of Parliament and will be in the Prisons and Courts Bill.

The small claims limit increase can be dealt with by way of statutory instrument but the Government has announced that it will come in on 1 October 2018, along with all of the other changes.

Initial thoughts

For those lawyers not dealing with road traffic matters this announcement pretty much represents no change.

In the past there has always been damages inflation when the small claims limit goes up, that is that the courts work hard to get marginal claims above the new limit. I have always flagged that up and the decision to increase the small claims limit from £1,000.00 to £2,000.00 is  bad news for non-RTA insurers as it will lead to a significant increase in general damages in that band and it is not difficult for a judge to push a claim up from say £1,500.00 to £2,000.00.

Had the increase been from £1,000.00 to £5,000.00, then that would have been impossible.

A huge number of claims are clustered around the current small claims minimum level and are often settled for just above that level, for obvious reasons.
Thus, outside the field of road traffic work, damages will rise and lawyers will get the benefit of that in higher fixed costs and in a higher fee if they are charging the client 25% of damages, as is standard.
For non-road traffic lawyers the key issue now is Lord Justice Jackson’s review of Fixed Recoverable Costs and in particular the new upper level on damages covered by Fixed Recoverable Costs, whatever that will be.

It is now almost certain that the extension of Fixed Recoverable Costs will also come in on 1 October 2018

For lawyers dealing with primarily road traffic matters this is a major blow, and is more significant than if the personal injury small claims limit had gone up to £5,000.00 across the board but with no restriction on whiplash claims.

The effect of the tariff system, set out above, means that the general damages figure in soft tissue claims will never cross the £5,000.00 general damages threshold unless the injuries are very serious.

That being the case the overall claim needs to be above £10,000.00 – the general small claims limit – to escape the small claims limit and to be cost bearing.

For all intents and purposes all road traffic whiplash claims will be small claims.

Overall, as a percentage of the personal injury market, road traffic whiplash claims are thought to account for around 50%.

Losers

The biggest losers, apart obviously from the clients who will no longer get proper compensation for soft tissue injuries, are firms heavily dependent upon road traffic work and in particular on referred work.

Medical reports and agencies will lose out very heavily indeed as they can expect 50% of their work to go.

Winners

Firms doing a general mix of civil litigation, including personal injury but not specialising in such work and not taking referred work, will benefit significantly.

It is the soft tissue injury work that tends to be headed off the pass to reach the factory firms one way or another.

Those firms will, in many instances, cease trading and the traditional mixed practice firms will then benefit from picking up the general personal injury work that is freed up.

Like it or not, this is a very clever move by the Government. No one can seriously argue about increasing the small claims limit for personal injury work generally from £1,000.00 to £2,000.00 as that does not even keep the increase in line with inflation since 1991.

However the effect of the changes will still be to remove around half of all cases from being cost bearing.

That of itself would not, in my view, cause a significant problem as if there was still a reasonable amount of damages, but with a quicker and cheaper procedure, lawyers doing whiplash work could still make a decent living by charging the clients say 40%.

The real killer for personal injury lawyers is the tariff system in whiplash injuries.

In many instances soft tissue injuries will have a value below the existing personal injury small claims limit of £1,000.00.

In practice

The practical advice on funding is now to move to a 40% pre-issue Contingency Fee Agreement on every type of personal injury case without exception.

This is necessary to help compensate for the fact that in any road traffic accident claim under £5,000.00 there will be only small claims track recoverable costs.

It also reflects the fact that fixed recoverable costs will be brought in for much higher value claims and lawyers will need to make up the shortfall by charging their clients more.

As set out above it is very likely that the extension of Fixed Recoverable Costs will come in at the same time as all of these reforms, that is 1 October 2018.

Written by kerryunderwood

February 23, 2017 at 9:30 am

Posted in Uncategorized

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