Whilst there is still much detail yet to be published, the Ministry of Justice appears committed to the April 2013 deadline for implementation of Lord Justice Jackson's package of civil justice reforms. In this article we provide details of the long awaited consultations on the extended portal for EL and PL claims worth up to £25,000 and proposals for fixed costs in the fast track, both inside and outside the portal.
Extending the current RTA personal injury portal scheme: the current portal based process covering only RTA cases between £1,000 and £10,000 in value will be extended to include claims up to £25,000 and will also include employers' liability (EL) and public liability (PL) claims between £1,000 and £25,000 for accidents occurring from 1 April 2013. The Civil Procedure Rules Committee is currently consulting on the draft protocols which will support the extended scheme. For a summary of the draft protocols and our comment on the proposals, click here.
Fixed recoverable costs (FRC): the MoJ has at last announced the proposed levels of Fixed Recoverable Costs (FRC) that are intended to apply to RTA, EL and PL claims, involving personal injury, after 1 April 2013. The announcement lays to rest any remaining doubts as to whether the Government intends to apply fixed costs in fast track cases worth up to £25,000 outside the portal - the answer is that they do. In a letter to stakeholders calling for comments on the proposals, Justice Secretary Helen Grant acknowledged that views on the appropriate costs model, and on the level of fixed recoverable costs (FRC), "were wide ranging and contradictory". In summary, the proposals are:
- To retain a flat rate FRC structure for RTA claims but with a dual tariff for claims up to £10k and for claims from £10-25k;
- To introduce a similar flat rate, dual tariff structure for EL and PL claims but with different rates from RTA cases "to reflect the potentially greater complexity of these types of claims";
- To retain the current FRC for RTA claims at Stage 3 (£250 for a paper hearing; and £500 for an oral hearing), and to apply this same rate for EL/PL claims at Stage 3;
- For EL/PL claims worth £1k-£10k, the FRC for claims within portal process would be £900 (£300 for stage 1; £600 for stage 2). For EL/PL claims worth £10k-£25k, the fees would be £1,600 (£300 for stage 1; £1,300 for stage 2);
- For RTA claims worth £1k-£10k, the FRC for claims within the portal process would be £500 (£200 for stage 1; £300 for stage 2). This is down from the current level of £1,200. For RTA claims worth £10k-£25k, the fees would be £800 (£200 for stage 1; £600 for stage 2);
- For RTA, EL and PL claims which exit the protocol process, the Government has "decided to introduce a matrix of fixed recoverable costs based on Jackson's Table B but amended both to take account of inflation since the table was first produced (in 2009), and reduced throughout by an amount intended to reflect the forthcoming ban on referral fees";
- A copy of the letter, including the tables, can be found here. The proposed FRC will be reviewed in light of further evidence received from stakeholders and any rates implemented in April 2013 would be subject to review after a year.
And to recap on the package at a glance
Recoverability: LASPO abolishes the recoverability of success fees and ATE insurance premiums from the losing side. (A limited exception will apply to clinical negligence cases where ATE insurance premiums relating to expert reports will remain recoverable and there is a moratorium concerning mesothelioma claims.) Premiums and success fees will continue to be recoverable where the policy or CFA is entered into before 1 April 2013.
25% cap on success fees in personal injury cases: Success fees in personal injury cases will be capped at 25% of the damages, excluding damages for future care and loss. The cap will apply to net damages after DWP benefit recovery.
Introduction of damages-based agreements (DBAs) in civil litigation: Damages-based agreements will now be allowed in all civil disputes. In personal injury claims there will be a 25% cap on the amount of damages, excluding damages for future care and loss, that can be taken as a lawyer's contingency fee. In all non-personal injury claims (excluding employment tribunal cases) there will be a 50% cap on the amount of damages.
10% increase in non-pecuniary general damages: To make up for the fact that an injured claimant will no longer be able to recover a success fee or premium, there will be a 10% increase in general damages for personal injuries. This will apply to contract as well as tort claims and the types of damages covered are extended to include pain and suffering, loss of amenity, physical inconvenience and discomfort, social discredit, mental distress, or loss of society of relatives. Simmons v Castle [CA 2012] confirmed that the 10% increase in general damages will not apply to those claimants who entered into a CFA before 1 April 2013 for the purposes of advocacy or litigation services in connection with the case.
Costs protection in personal injury claims: qualified one way costs shifting (QOCS): A system of QOCS in personal injury cases will be introduced so that claimants will in general not have to pay towards a defendant's costs if the claim fails but the defendant will continue to have to pay the claimant's costs if the claim succeeds. It will be available for all claimants whatever their means - there is to be no financial test to determine eligibility. Claimants who lose will not have to contribute towards defendants' costs as long as they behaved appropriately. However, QOCS protection will be lost if the claim is found to be fraudulent, the claimant has failed to beat a defendant's CPR Part 36 offer to settle but only up to the value of damages awarded; or the case has been struck out where the claim discloses no reasonable cause of action or where it is otherwise an abuse of the court's process.
Additional sanctions under CPR Part 36: Defendants who do not accept a claimant's reasonable offer which they fail to beat at trial will be subject to an additional sanction equivalent to 10% of the value of the claim or, for non-damages claims, 10% of costs.
Proportionality: There will be a new rule on proportionality to control the cost of activity that is clearly disproportionate to the value, complexity and importance of the claim.
Ban on referral fees: The payment and receipt of referral fees in personal injury cases will be banned and any breaches will be subject to enforcement action by the regulators. The SRA is currently consulting on how the ban will be implemented.
Reducing costs and numbers of whiplash claims: the Government has now published its consultation on measures to address the number and cost of whiplash claims, whether to amend the small claims threshold for damages for personal injury claims and seeks views on the introduction of independent medical panels.
The reforms offer something of a mixed bag for Local Authorities. All are likely to welcome the inability of the claimant to recover ATE premiums and success fees and the degree of certainty around the costs figures outside the portal. Fixed recoverable costs both within and outside the portal scheme are to be welcomed as they represent a wholesale reduction in claimants' costs and will enable a more accurate and appropriate allocation of resources. The biggest set back is the inability for the Defendant to recover its costs following a successful Defence. Given that the most routine type of claim for a Local Authority is the highway tripper, with many authorities having invested significant sums in robust systems aimed at defeating this claims, many will feel that this is an unhelpful development. Much will depend upon the number of claims each individual authority faces and the balance of those which are settled against those successfully defended to trial.
The fixed costs consultation remains live until 4 January 2013 with stakeholders encouraged to put forward their view with ALARM urging its members to feed into their response. We are finalising our own response to the consultation.
To view the rest of the articles in this Local Authority brief, click on the links below: