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Looking ahead

October 2017

After a quiet start to the month due to the party conference season, activity started to pick up pace with the return of Parliament and the start of the Michaelmas Court Term. Highlights of developments this month include:

  • The highly anticipated Supreme Court  judgment in Armes v Nottinghamshire County Council holding the council vicariously liable for acts of abuse committed by foster parents.

  • News of a settlement agreed before the scheduled Court of Appeal hearing in JR v Sheffield teaching Hospitals NHS Foundation Trust which was due to consider the Roberts v Johnstone approach to calculating accommodation claims in the new discount rate era.

  • Hints at developments on the Civil Liability Bill, the increase to the small claims track threshold and the review of LASPO following Lord Chancellor David Lidington's evidence session before the Justice Select Committee on the work of the MoJ.

  • News of a forthcoming oral evidence session before the Justice Select Committee on the proposed discount rate legislation.

  • Publication of the latest ASHE figures which we review in today's update ASHE: 2017 provisional results – care costs continue to rise

  • A new call for evidence on fixing costs in holiday sickness claims but also looking more widely at the handling of low value personal injury claims.

  • The long awaited government response to its review of driving offences and penalties setting out proposals to impose tougher sentences on drivers who kill or seriously injure victims of bad driving.

  • News that ministers have accepted Lord Justice Jackson's recommendation to establish a working party to look a clinical negligence claims handling and fixed costs.

  • The introduction of the new Automated and Electric Vehicles Bill to the Commons

  • An unexpected government U-turn on the issue of banning cold calling by claims management companies.

  • A Treasury Committee report published today on the implementation of Solvency II

Forthcoming cases

Supreme Court

Update - Non-delegable duties: foster carers. The case of Armes v Nottinghamshire County Council concerned the abuse of a child by foster parents and the duties owed by local authorities in those circumstances. In a judgment handed down on 18 October the Supreme Court allowed the appeal by a majority of 4-1, finding the local authority vicariously liable for the abuse committed by the foster parents, but rejecting the argument that the local authority was liable on the basis of a non-delegable duty. Read more in our recent summary. 

Personal injury: cross border claims. The appeal in Mapfre Mutualidad Compania De Seguros Y Reaseguros SA & Anor v Keefe on whether a Spanish insured can be joined into the English proceedings already brought against the Spanish insurer, was heard on 7 March 2017.

Police: human rights. In Commissioner of Police of the Metropolis v DSD & Anor, concerning the "black cab rapist" John Worboys, the Court of Appeal upheld a first instance decision that the failure of the Met Police to carry out effective investigations into the victims' complaints amounted to inhuman or degrading treatment contrary to Article 3 of the ECHR. The Met Police are appealing and the hearing took place on 14 March 2017.

Accidents abroad: jurisdiction. The hearing of the appeal in Four Seasons Holidays Inc v Brownlie took place in May with a further hearing on 20 July. The issue is whether the Court of Appeal erred in holding that the tort jurisdictional gateway test under the CPR, which requires that "damage" be sustained within the jurisdiction, is not satisfied by indirect or consequential damage. Judgment is awaited. 

Police: duty of care. The issue in Robinson v Chief Constable of West Yorkshire Police is whether the police should be liable in negligence following an incident in which the claimant was injured when she became caught up in the arrest of a drug dealer. The matter was heard on 12 July 2017.

Professional negligence: surveyors. The question in Tiuta International Ltd v De Villiers Surveyors Ltd is how the 'but for' test for causation is to be applied as between an allegedly negligent valuer and lender in a re-financing situation. The appeal will take place on 6 November 2017.

Professional negligence: solicitors. The issues in the Scottish case of Steel v NRAM PLC are whether the majority of the Extra Division correctly interpreted and applied the law relative to the existence of a duty of care or whether the majority have developed a new test; and whether the majority of the Extra Division exceeded the scope of their appellate jurisdiction. The appeal is listed for 7 November 2017.

Procedure: service of claim form. The issues in Barton v Wright Hassall LLP are whether the Court of Appeal erred in upholding the judgment of the courts below that there was no good reason to validate service under 6.15 of the Civil Procedure Rules; whether the Court of Appeal’s reasoning breached the appellant's Article 6 and Article 13 rights under the European Convention on Human Rights; and whether the costs awarded by the Court of Appeal to the respondent were disproportionate to the work undertaken. The appeal will be heard on 22 November 2017.

Directors' breach of duty: limitation. In Burnden Holdings (UK) Ltd v Fielding & Anor the issues concern the proper construction of s.21(1)(b) Limitation Act 1980. Is a wrongdoing trustee’s direct or indirect control of a company which receives trust property sufficient to engage that section, even though it requires the trust property or its proceeds to be in the possession of the trustee, or previously received by the trustee and converted to the trustee’s use? And also the meaning of "unlikely to be discovered for some time" in S.32(2) Limitation Act 1980. The hearing will take place on 7 December 2017.

Occupational disease: actionable injury. The issues in Dryden & Ors v Johnson Matthey PLC are whether the appellants have suffered actionable damage in the form of losses flowing from the physiological changes to their bodies caused by the respondent’s negligence; if not, whether the respondent is liable for the losses by reason of a breach of an implied term in the employment contract to keep the appellants safe at work; and/or whether the respondents owed a duty of care to hold the appellants harmless from the purely economic losses sustained. The hearing will take place on 27 & 28 November 2017.

Supreme Court cases awaiting developments. We await further official details for a number of cases where permission to appeal has been granted:

  • Gavin Edmondson v Haven Insurance which concerns an insurer engaging directly with claimants to conclude their claims which had been commenced in the Portal. We understand the appeal will take place on 5/6 February 2018.

  • Banca Nazionale del Lavoro SPA v Playboy Club London Ltd & Ors concerns a financial reference given by a bank to an agent acting for a club which ran a casino and whether a duty of care was owed to the club.

  • The issue in James-Bowen v Commissioner of Police for the Metropolis is whether the police failed in their duty to protect officers' interests when settling an assault claim. 

  • New – permission to appeal has been granted in Darnley v Croydon Health Services NHS Trust. The issue in the Court of Appeal was whether an A&E receptionist owed any tortious duty to provide accurate information to the claimant about waiting times.

Court of Appeal

Costs: assignment of CFA. The case of Budana v Leeds Teaching Hospitals NHS Trust on the validity of assigning a CFA was leapfrogged to the Court of Appeal and was heard on 5 July 2017 and judgment is awaited.

Update - Costs: proportionality. An appeal from the decision of Senior Costs Judge Master Gordon-Saker in June 2016 in BNM v MGN Ltd about the ‘new’ test on proportionality was leapfrogged to the Court of Appeal and heard on 11 October. We understand that judgment has been reserved pending the hearing of two appeals concerning clinical negligence ATE premiums. The appeals in Reynolds v Nottingham University Hospitals Foundation Trust and McMenemy v Peterborough & Stamford Hospitals NHS Foundation Trust took place on 17 and 18 October and it may be that all three judgments are eventually handed down together.

Local authority mental health provision: personal injury awards. The question in Tinsley v Manchester City Council was whether a local authority could refuse to provide after-care services to the claimant following compulsory detention in hospital under s.117 Mental Health Act 1983, on the basis that the claimant was in receipt of a personal injury award. At the previous hearing the court held that the personal injury award was to be disregarded. The appeal was heard on 10 October 2017 and judgment was reserved.

New – Catastrophic injury: accommodation claims. The High Court decision in JR v Sheffield Teaching Hospitals NHS Foundation Trust in May was notable for being the first (and so far only) decision to deal with the question of accommodation following the cut in the discount rate to minus 0.75%. William Davis J held that applying the Roberts v Johnstone approach, which he was bound to do, led to a nil award in relation to accommodation. The appeal was due to take place on 24 October 2017 but this week 7 Bedford Row Chambers reported that the case had been compromised and a settlement of £800,000 was obtained for accommodation. They also report Jackson LJ as saying “It is clear that sooner or later this court is going to have to grapple with the Roberts v Johnstone issues in the new world… Nothing that we say today must be taken as pre-empting what this court will decide following argument."

Bereavement award: cohabitees. In Smith v Lancashire Teaching Hospitals NHS Trust & Ors the claimant had been cohabiting with her partner for over two years when he died as a result of the defendants' negligence. The case involves a challenge using the ECHR to the present position under the Fatal Accidents Act 1976 that cohabitees are not entitled to a bereavement award. The challenge failed at first instance but in his judgment, Edis J invited parliament to reconsider the law in this area. The appeal is fixed for 7 November 2017.

Costs of provisional assessment: Part 36 offers. An appeal will take place in the case of Lowin v Portsmouth & Co Ltd on 5 December 2017. At the previous hearing (an appeal) it was held that Part 36 trumped the provisions for a £1500 cap on the costs of provisional assessment and the claimant was entitled to indemnity costs. Read more on the case in the Gazette.

Mesothelioma: breach of duty. In Bussey v Anglia Heating Ltd a widow's claim for damages, following the death of her husband from mesothelioma, failed as she could not prove breach of duty. The judge made it clear that the CA authority of Williams v University of Birmingham (2011) is binding unless and until the Court of Appeal or Supreme Court decide otherwise. The appeal is listed for 23 January 2018.

High Court

MIB agreements: judicial review. The judicial review by road victims' charity RoadPeace in relation to the MIB agreements was heard in January. Judgment is awaited in R (on the application of RoadPeace) v Secretary of State for Transport & the MIB. 

Costs budgeting: detailed assessment. We understand that permission to appeal has been granted in the case of RNB v London Borough of Newham where it was held that a reduction in the hourly rate in relation to incurred costs was seen as a "good reason" to depart from an approved budget on detailed assessment. A hearing date is awaited. Read more in Litigation Futures which also reports on a case where District Judge Lumb came to a different decision on the issue. 


New -  Review of low value personal injury claims including package holiday claims. On 13 October the MoJ published a call for evidence following their announcement in July of measures to tackle the apparent increase in package holiday sickness claims. The MoJ has already asked the Civil Procedure Rules Committee to consider how these claims can be incorporated within the EL/PL portal protocol so that they fall within the existing fixed recoverable costs regime - they are looking to extend FRC to these claims by April 2018. The MoJ has also asked the Civil Justice Council to consider the rules on how low value claims are handled more generally to try and address the incentives behind the bringing of unmeritorious claims. On the issue of holiday sickness claims, the call for evidence invites views on proposed amendments to the EL/PL portal protocol and data on volumes of such claims. On the wider issue of low value personal injury claims generally, including whiplash, NIHL and gastric illness claims, the MoJ invites views on any issues that should form part of this project, suggesting for example, the nature and timing of evidence, along with any other issues considered relevant. Submissions are requested by 10 November.

Update - Motor prosecutions: review of driving offences and penalties. Having first been announced in August 2013, the long awaited consultation arrived in December 2016 announcing that “dangerous drivers who kill are set to face life sentences”. The consultation received over 9,000 responses and this month the government has responded. There was support for the proposals to create a new offence of causing serious injury by careless driving and to increase the maximum penalties  for the offences of causing death by dangerous driving and causing death by careless driving under the influence of drink or drugs from 14 years' imprisonment to life. Further consideration will be given to the appropriate maximum penalty for the new offence and also on the issue of minimum disqualification periods generally. The government also looked at the terminology used in the law and concluded that the objective test for careless and dangerous driving remains the most appropriate but will give consideration to how the legal test and decisions made under it can be made more transparent. The government will bring forward the necessary legislative proposals when parliamentary time allows, although that has to be seen in the light of the government's current priorities. The proposals form part of government-wide action to improve safety for all road users, including the recently announced review of cycling safety looking at whether to introduce a new offence for cyclists equivalent to causing death by careless or dangerous driving. Read more in this month's update on the proposals.

Update - Discount rate consultation. Following an announcement to the London Stock Exchange on the morning of 7 September the MoJ published its response to the discount rate consultation along with draft legislation. The headline proposals are that:

o the rate will be set by reference to "low risk" rather than "very low risk" investments as at present
o the rate should be reviewed at least every three years
o the Lord Chancellor will consult a panel of experts when setting the rate

The Lord Chancellor then invited the Justice Select Committee to undertake a pre-legislative scrutiny inquiry into the draft legislation by the end of November. The Committee sought submissions by 13 October and DWF responded. An oral evidence session has been scheduled for 1 November at 10:00 a.m. and details of those giving evidence can be found on the inquiry homepage. Read more about the detail of the proposals in our update Discount Rate proposals – certainty and fairness for all?

Update - Review of Fixed Recoverable Costs. Jackson LJ published his Review of Fixed Recoverable Costs on 31 July. His proposals are to extend fixed costs only in claims worth up to £100,000 along with the remaining fast track cases not yet subject to FRCs. The report is now being considered by the senior judiciary and the MoJ, and a consultation will follow in due course. Last month the Gazette reported on doubts that the reforms would be implemented by October 2018. This month Jackson LJ spoke at two events but was unable to say what the government's response would be. He did though hope the MoJ would set out their plans soon. Read more in Simon Denyer's comprehensive review Jackson's new report signifies likely move towards extended use of fixed costs into claims worth up to £100,000  

Update - Solvency II: Treasury Select Committee Inquiry. On 13 September 2016 the Treasury Committee launched an inquiry into the new regime for the regulation of insurance, which was implemented in January 2016. The inquiry was exploring the impact of the directive, and the options available to the UK following the Brexit decision in more detail but work on the Inquiry stopped due to the general election. However the Committee has today (27 October) published its report. The evidence submitted highlighted problems both with the legislation as drafted and with the way it has been implemented in the UK by the Prudential Regulation Authority (PRA), and the Committee is concerned at the extent of disagreement between the PRA and industry on certain key issues. The Committee therefore recommends the development of a clear strategy for making the necessary refinements. Read more in the Committee's press release and in the FT's comment: Insurance watchdog urged to rethink solvency rules. This report comes a couple of days after the PRA launched a short series of consultation papers on reform to the implementation of Solvency II.

The following consultations are awaiting official responses:

Reforming the soft tissue injury (whiplash) claims process - Part 2. In February the government published the first part of its response to the Reforming the soft tissue injury (whiplash) claims process consultation. It then incorporated its proposed reforms to the whiplash claims process within the Prisons and Courts Bill which we reviewed in our update earlier this year. Although the Bill's progress ended with the dissolution of parliament we now know that the whiplash provisions will be reintroduced within the Civil Liability Bill announced in the Queen's Speech. In the meantime a second part to the consultation response is still awaited and is due to look at the outstanding proposals considered, including, the Insurance Fraud Taskforce recommendations, credit hire and rehabilitation. In July, Justice Minister Sam Gyimah gave a familiar response to the question of when a response would be published…"in due course".

Update - Fixed recoverable costs for clinical negligence claims. The consultation on fixed recoverable costs in clinical negligence claims was published on 30 January 2017. It sought views on proposals to introduce fixed costs for claims valued between £1,000 and £25,000 and to streamline the claims handling process. In his recent report Jackson LJ acknowledged the difficulties in fixing costs in clinical negligence claims and recommended that the Department of Health and the Civil Justice Council set up a working party with both claimant and defendant representatives to develop a bespoke process for handling clinical negligence claims up to £25,000 accompanied by a grid of fixed recoverable costs. This month the Association of Costs Lawyers reports on the appearance of MoJ permanent secretary Richard Heaton before the Public Accounts Committee for its Cost of Clinical Negligence in Trusts Inquiry in which he confirmed that the government has accepted Jackson LJ's recommendation. 

Credit hire: model directions. In June, the Civil Procedure Rule 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.

Driverless technology: House of Lords inquiry. Soon after the Department for Transport consultation on driverless technology closed, the House of Lords Science and Technology Committee launched an inquiry into the future uses of driverless vehicles in the UK. The Committee published its report in March highlighting that this is a fast-moving area of technology and that there is a lot for Government to do. There needs to be central co-ordination of strategy across the various sectors that could benefit from Connected and Autonomous Vehicles (CAV) and not just a focus on private road vehicles. There also needs to be further research and sharing of expertise and knowledge. The Inquiry homepage still indicates that a government response is awaited, although in the meantime the new Automated and Electric Vehicles Bill has been published.

Update - Motor insurance: implications of ECJ Vnuk ruling for UK legislation. In December the Department for Transport published its consultation Motor Insurance: consideration of the 'Vnuk judgment' to look at “options for amending domestic motor insurance law in light of the European Court of Justice ruling…” The government is considering two options: one broadening the scope of insurance requirements to reflect the decision in Vnuk; the other would involve amending the Motor Insurance Directive. The consultation closed on 13 April 2017 and the government's response is awaited, but in the summer the Department for Transport published a summary of responses noting that the proposal to limit compulsory motor insurance to vehicles used ‘in traffic’ proved the most popular. In the meantime the European Commission requested feedback on the issue, and responses were published on the consultation homepage.  That exercise formed part of a wider evaluation of the Motor Insurance Directive known as a REFIT evaluation on which the Commission recently held a wider consultation  which closed on 20 October 2017. Responses have been published on the consultation home page but you can read the joint ABI and IFB response here (pdf). Also this month the Department for Transport responded to a written question confirming "The Department’s priority for the REFIT review is the correction of the scope of the Directive following the Vnuk judgment, such that it only applies to motor vehicles used in traffic. We collaborated with like-minded Member States to write a letter to the Commissioner putting forward this view." 

Claims Management Regulation: fees cap. In February 2016 the MoJ published a consultation on proposals to cap the level of fees that regulated CMCs can charge consumers. It was proposed that the cap should apply only to the financial products and services claims sector. However, it did invite views on whether fee controls in the personal injury sector should be considered as well. The consultation closed on 11 April 2016 and although a response is still awaited, the Financial Guidance and Claims Bill includes a new power which will allow the Financial Conduct Authority to cap fees. The Bill provides the power for the FCA to control charges in any of the sectors it regulates but places a duty on the FCA to do so in the financial claims sector. In last month's House of Lords Committee debate on the Bill, Lord Hunt moved an amendment to extend the proposals to cap fees to claims for personal injury, but subsequently withdrew it. Lord Young for the government argued that there is a difference between CMCs that manage financial claims and charge consumers directly and CMCs dealing with personal injury claims that do not usually charge consumers direct, noting that in any event the FCA will "have a broad power to restrict fees across the range of claims management services".

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.


The return of Parliament following the party conferences has seen developments on the Financial Guidance and Claims Bill and the Data Protection Bill as well as the introduction of new the Automated and Electric Vehicles Bill, although there is still no sign yet of the Civil Liability Bill. 

Update - Whiplash reform: Civil Liability Bill. The aim of this Bill is "to crack down on fraudulent whiplash claims" with a view to reducing motor insurance premiums by about £35 per year. The briefing notes to the Queen's Speech say the Bill will "ban offers to settle claims without the support of medical evidence and introduce a new fixed tariff of compensation for whiplash injuries with a duration of up to 2 years." It is therefore expected that the new Bill will broadly mirror the whiplash provisions of Part 5 of the Prisons and Courts Bill, and perhaps this time there will be an opportunity for improvement around the definition of claims falling into the new process. This month, Chair of the Justice Committee Bob Neill indicated at a Conservative Party Conference fringe event that the Committee will resume its inquiry into the whiplash provisions and the proposed increase in the small claims track. And during an evidence session with the Justice Committee on the work of the MoJ this week, Lord Chancellor David Lidington confirmed the government's intention remains to increase the small claims track limit and also that the Civil Liability Bill would be brought forward when parliamentary time was available but that Brexit legislation was the priority. Read more on the evidence session in Legal Futures  

Online court: Courts Bill. This Bill will "reform the courts system in England and Wales to ensure it is more efficient and accessible, and in doing so utilise more modern technology". Presumably, although it has not yet been confirmed, this Bill will pick up from Part 2 of the Prisons and Courts Bill which included provision for the legal foundations for the introduction of new online procedures and online dispute resolution (ODR), and for the creation of a new online court that could deal with low value money claims below £25,000, as recommended by Lord Justice Briggs’ Civil Courts Structure Review.

Update - Driverless technology: Automated and Electric Vehicles Bill. This Bill was introduced to the House of Commons on 18 October. Part 1 of the Bill deals with the insurance of automated vehicles and Part 2 makes provision in relation to charging of electric vehicles. It passed its second reading on 23 October without amendment and anticipation of the next stage, the Public Bill Committee has invited views on the Bill as soon as possible before the expected conclusion of the committee stage on 16 November. You can follow the progress of the Bill here and a Commons Briefing Note has been published on it. DWF's Caroline Coates reviews the new Bill in this article and asks if it provides what the insurance industry is looking for?

Update - Claims management regulation: Financial Guidance and Claims Bill. This Bill was introduced in the House of Lords in June and has now completed the Committee stage. The provisions of interest in the claims handling arena are those which came out of the 2016 Carol Brady review and the consultation on capping fees. These provisions will transfer claims management regulation to the Financial Conduct Authority; grant the FCA the power to cap the fees CMCs can charge; and ensure a more robust authorisation process for new firms entering the market. Last month's House of Lords Committee debate provided the opportunity to air the possibility of expanding the remit of the provisions to including banning cold-calling by CMCs, extending the fees cap to personal injury claims and bringing medical reporting organisations and credit hire companies within the scope of claims management regulation. The proposed amendments were knocked back by the government but with the promise of engagement in further discussion of the issues. This month the Bill began the report stage where there was an unexpected U-turn on the issue of a ban on CMC cold calling. However, whilst the government asked for more time to consider the issue and bring forward an amendment in the Commons, the House of Lords went ahead and voted for the appropriate amendment at this stage. A second day of report stage is scheduled for 31 October. You can follow progress of the Bill here

Update - Data Protection Bill. This Bill was introduced in the House of Lords on 13 September and passed its second reading on 10 October 2017. It will eventually replace the Data Protection Act 1998 as the primary data protection law within the UK. The Bill widens the reach of GDPR which as a Regulation is already directly applicable in the UK. The Bill also sets out the derogations that will apply in the UK and therefore should provide clarification as to how some of GDPR's provisions might be navigated by insurers. At 218 pages including 18 schedules the Bill is by no means straightforward and may yet be subject to further change as it proceeds through parliament. We will shortly be producing an insurance focused briefing note on the Bill. In the meantime, you can follow the Bill's progress here and the government has produced a number of overview notes here. A House of Lords briefing was also produced this month in advance of the Bill's second reading.

The following Law Commission draft Bills are also awaiting further developments:

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. If a person’s right to liberty needs to be infringed in other settings, an authorisation must be obtained from the Court of Protection. The DoLS have been criticised for being overly complex and excessively bureaucratic, placing increasing burdens on local authorities. In 2015 the Law Commission held a consultation and in 2016 published an interim statement. On 13 March 2017 the Law Commission published its final report along with a draft Bill. It recommends that the DoLS be repealed with pressing urgency and sets out a replacement scheme called the Liberty Protection Safeguards. In addition the draft Bill makes wider reforms to the Mental Capacity Act which ensure greater safeguards for persons before they are deprived of their liberty.  A government response is awaited but in the meantime this month a House of Commons briefing note has been published outlining the Law Commission's recommendations.

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 is 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 but there have been no further developments to date. 

Also on the horizon...

Update - Insurance Fraud Taskforce. The IFT published its final report in January 2016 and in a written ministerial statement in May 2016 the Government welcomed the report and accepted the recommendations in relation to low value personal injury claims. Since then the IFT has met to consider progress to date and the further work required. In the November 2016 whiplash consultation the Government took the opportunity to obtain views on the implementation of certain of the IFT's recommendations. These included a recommendation to amend the QOCS rules where a claimant discontinues less than 28 days before the start of a trial. As mentioned above, part two of the consultation response is due to cover the question of implementing the recommendations from the IFT. In the meantime, in August the IFT published a report (completed in February) outlining the progress made during 2016 on the original recommendations. Both the IFB and the MIB published their support for the report with the latter adding further updates on the current position of projects outlined in the report. Last month, following an IFT recommendation the Claims and Underwriting Exchange (CUE) was expanded to accept data relating to travel insurance claims. This month there is news of a new counter-fraud  governance structure to cover the IFB, IFED and IFR.

MedCo. Following the MoJ’s announcement last October of the revised Qualifying Criteria for MROs, effective from 8 November 2016, MedCo suspended 134 shell companies for failing to comply with the new Qualifying Criteria. This change, together with the change to the search criteria were introduced to tackle the gaming of the MedCo system (read more in this update). MedCo has since reported on a range of enforcement action: at the end of May it suspended 23 MROs and 14 Direct Medical Experts for failing to upload medical case data to the MedCo system; on 6 June it reported the suspension of a further 21 "shell" companies for failing to meet the Revised Qualifying Criteria; and a week later announced that it had removed Tier 1 status from four MROs, reclassifying them as Tier 2 and had suspended a further two Tier 1 MROs. In August MedCo warned against "inappropriate behaviour" during the audit process and last month MedCo published an FAQ document (pdf) to address common issues arising out of the Guidance supporting the revised Qualifying Criteria for Medical Reporting Organisations. More details can be found on the MedCo homepage.

Update - Claims Management Regulation. Carol Brady published a final report following her independent review of claims management regulation in March 2016. The Treasury and the MoJ had commissioned the review to examine the perception of widespread misconduct among CMCs and to make recommendations to improve the regulatory regime. It was then announced in the budget statement, also in March 2016 that responsibility for regulating CMCs would be transferred from the MoJ to the FCA and since then we had been awaiting information on when the primary legislation required to transfer regulation to the FCA would be ready. We now have that legislation in the form of the Financial Guidance and Claims Bill discussed further above, noting in particular this month's change of heart from the government on the question of banning cold calling. At last month's PI Futures conference Claims Management Regulator Kevin Rousell indicated that it would be 2018 or 2019 before the FCA take over regulation of CMCs and also confirmed that CMCs will have to be authorised afresh by the FCA. Read more in this Legal Futures report of his speech at the conference.

Update - Holiday sickness claims. Following recent media reports of an explosion in fake holiday sickness claims, the government moved swiftly to announce (July) that it had asked the Civil Procedure Rule Committee to look at the rules governing the costs of holiday claims with a view to bringing them into the fixed recoverable costs regime. The press release also indicated that ministers would soon be asking the Civil Justice Council to look at the rules around how low value personal injury claims more generally are handled to reduce the incentives to bring claims lacking merit. We report above on the newly announced call for evidence which also notes that the Claims Management Regulation Unit and the Solicitors Regulation Authority are already working together to deal quickly and effectively with any misconduct. 

Update - 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. They were to provide an initial report by November 2015 and a final report by April 2016 on how a fixed costs regime for NIHL cases might work and how the handling of these claims might be improved. Last month the CJC published the long awaited report, although Jackson LJ had spoilt the surprise at the end of July 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 are the proposals for reform of the claims handling process. Most of the reform is aimed at achieving a comprehensive exchange of information early on in the process to promote settlement without the need for litigation. The proposals include revised letters of claim and response to be added to the existing Pre-Action Protocol for Disease and Illness Claims. The letter of claim is to be accompanied by an audiogram from an accredited audiologist although the working party was unable to agree on a system of accreditation. There are also proposals concerning expert evidence, standard directions in litigation, the portal, limitation and the Third Parties (Rights Against Insurers) Act 2010. The MoJ has indicated that it proposes to consult on the fixed costs proposed or other recommendations, and the group has suggested some consultation questions to assist. Interestingly this month's call for evidence in relation to holiday sickness claims also invites submissions on the handling of low value personal injury claims generally, mentioning as an example NIHL claims. This may provide an early opportunity to comment on the proposed claims handling process.

Update - Mesothelioma claims: LASPO funding provisions. In late 2014 following a Justice Select Committee inquiry, the Government decided not to end the LASPO exemption on recoverability in mesothelioma claims. They said a further review of the likely effects of the funding reforms on mesothelioma claims would form part of the Post Implementation Review of LASPO. A Commons Briefing Note on mesothelioma claims last year speculated this would happen over 2017/2018. On 17 January, Justice Minister Sir Oliver Heald QC attended an All-Party Parliamentary Group meeting on Legal Aid and announced that a post-legislative memorandum on LASPO would be sent to the Justice Select Committee before May ahead of a full post-implementation review of the Act to be conducted by April 2018. This month during the evidence session before the Justice Committee mentioned above, David Lidington said the government would make an announcement in the “very near future” on its review of LASPO. 

Civil Courts Structure Review: LJ Briggs' Final Report. On 27 July 2016, Lord Justice Briggs published his final report following his review of the structure of the civil courts. There was no change from the headline recommendation of the interim report, namely 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 the Lord Chief Justice and the Master of the Rolls issued a Joint Statement confirming that the senior judiciary endorses the final report of the Civil Courts Structure Review, and supports the recommendations made by Briggs LJ. And as reported above, we expect the newly proposed Courts Bill to reintroduce the provisions enabling the creation of the new online court

SRA: thematic review of personal injury sector. In February the SRA announced that it was starting a review to better understand the personal injury market and in August it began approaching a number of firms to participate in its survey. In October the SRA published its research. According to the survey, conducted by ICF Consulting, the perception is that the market seems to be generally working well although there are concerns that require further investigation. These include the quality of medical reports and a lack of knowledge within firms which have moved into areas such as clinical negligence and disease. Read more in Simon Denyer’s update. Work is ongoing to determine the prevalence of the issues highlighted and the SRA is visiting Personal Injury firms to understand how they have adapted following LASPO. The SRA expects to report further this year. In the meantime, in June, campaign group Access to Justice was urging solicitors to report law firms who bring fake holiday sickness claims and says that the SRA is investigating around 15 reports of potential misconduct and as we mentioned above, the SRA has now issued a warning notice to solicitors who handle such claims.

CMA legal services study. In January 2016 the Competition and Markets Authority launched a market study to “examine long-standing concerns about the affordability of legal services and standards of service.” An interim report was published in July and the final report followed in December. The CMA found that competition in legal services for individual consumers and small businesses is not working well, and made recommendations to address the issues. In January 2017 the SRA confirmed that it was preparing rules on publishing price information for consultation in the summer. Last month (27 September) the SRA has launched a consultation "Looking to the future: better information, more choice" which includes proposals for law firms to publish information on prices and services for certain types of work, such as conveyancing, wills and personal injury work. It is also considering publishing data collated by firms on the complaints they receive. Controversially the consultation also proposes to allow solicitors to provide non-reserved legal services outside of firms regulated by the SRA. The consultation is open until 20 December. 

In the long grass?

Issues where there has been no activity for some time:

QOCS: Civil Justice Council report. In 2014 a new CJC working group was set up to advise on issues arising from the implementation of the Jackson reforms. Part of their remit, was to investigate and report on arguments for and against extending QOCS to other categories of case characterised by an asymmetric relationship between the parties such as actions against the police and solicitors’ professional negligence in injury claims. The report (pdf) was published on in June 2016 and concluded there is a strong case for extending the principle to police claims. For solicitors’ negligence claims, whilst there may be a case in principle for extending QOCS here, there does not appear to be a similar push for its application. In both cases, they say that any decision to extend QOCS would be a matter of policy for the Ministry of Justice.

Update - Damages Based Agreements: Civil Justice Council (CJC). The Government's response to the CJC review of DBAs is still awaited. In September 2015 the CJC made a number of recommendations but the main issue of interest going into the review was the Government’s decision not to permit hybrid DBAs, and in particular concurrent hybrid DBAs. The Working Group was divided on whether these should be allowed but it concluded “it was a policy decision which was ultimately one for the Government". Read more in the CJC media release. We understand  from a Practical Law update following a Westminster Policy Forum this month that the government might reconsider DBAs within its forthcoming review of Part 2 of LASPO.


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

By Alex Fusco

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