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Latest statements from the Ministry of Justice suggest maintenance of commitments to whiplash and discount rate reform, while action on extension of fixed costs also looks likely

Various recent developments including from earlier today are worth looking at together as part of an ongoing assessment of the likely future direction of reform affecting the way claims to which insurers have to respond are dealt with.

Summary

We now have up to date confirmation both from the Secretary of State for Justice and from a ministerial colleague of his within the MoJ that government remains committed to both whiplash/Small Claims Track limit reform, as well as to reform of the discount rate. Both are currently in a Brexit-induced queue waiting to be taken forward, with the discount rate likely to be leading the way.

In terms of LASPO, the anticipated review is likely to leave Part 2 which dealt with the Jackson reforms untouched with the possible exception of bringing mesothelioma claims within the current regime. While signs are that Jackson Mark 2 in the form of his latest report on extending fixed costs seems likely to be accepted by government.

Anticipated further reforms to whiplash claims and the Small Claims Track limit

It remains the case of course that we await publication of the Civil Liability Bill as the tool to bring through the part of these changes which require primary legislation. The latest position on this can be seen from the appearance of the Justice Secretary David Lidington before the Justice Select Committee on 25 October, the transcript from which has this week become available.

Asked by a Labour MP whether it was still the government's intention to proceed with the reform, Mr Lidington replied to two questions from the MP giving the same answer that it was.

As to timing of the Bill, this depended, he confirmed, on finding a legislative slot, and he went on that he was "in constant conversations with the (parliamentary) business managers about opportunities for legislation". As it had been in the Queen's Speech there was a commitment to it in the current parliamentary session, he said.

However, the priority had to be given to EU exit legislation due to the 2 year time limit on Article 50, so other bills had to be fitted in around Brexit-related bills. There would be a new impact assessment with the CLB when published, he confirmed.

Defence of the principles behind the CLB

Asked about the effect that the reform would have on access to justice, the Justice Secretary made a strong defence of the principles which stood behind the reform.

His argument, he said, was that an RTA claim affected by the reform was "not too dissimilar from an insurance claim of some kind". He referred in support to his belief that it should be "very straightforward" to get medical evidence in support, and to use the fixed tariff damages.

His position on behalf of the government in relation to the affected RTA claims seemed to be summed up by these comments: "We just think that they are not so complex. For under £5,000, they are not so complex as to always require a lawyer. For a relatively simple claim, it is a reasonable policy to say it is the sort of thing where people, for the most part – there will be exceptions – should be able to do it (themselves) without the need for representation."

As to other types of injury claim, Mr Lidington said that with the £2,000 limit, it would "still make it perfectly possible for people to pursue, for example, industrial injury claims against employers".  The reform he thought was comparable to what was now proposed for gastric illness claims brought by overseas holidaymakers.

The fact that government had responded to evidence and argument was his line. "Where a well-evidenced and persuasive argument has been brought forward by insurers and others that the public as a whole are being harmed because of, frankly, the exploitation of the system by a number of people at the moment, it is right to take this kind of action."

It seems fair to conclude that now that he has his feet securely under his relatively new desk, Mr Lidington is firmly behind the reforms initially announced in George Osborne's Autumn Statement in November 2015.

Review of LASPO

Going back one step to the last significant primary legislation in this space, LASPO, there have been recent developments too in relation to the anticipated review of the legislation.

On 30 October the MoJ published its post-legislative memorandum to the JSC as the initial part of the post legislative scrutiny of that legislation which the Justice Secretary had referred to during his appearance before that committee last week.

It was Part 2 of that Act which brought those aspects of the Jackson reforms which required primary legislation, and that Part as well as others also forming part of LASPO are included within the memorandum, though most space is devoted to Part 1 which dealt with Legal Aid reform and which is the area now under the political spotlight.

The MoJ have confirmed that the Review in relation to Part 2 will be separate from that which deals with Part 1. It will take place during 2018 (there is reference to pre-April) and there is also now confirmation that that review will include the ongoing issue of whether mesothelioma claims should now be brought within the new processes, this being a specific review required by section 48 of the Act.

Contents of the review

The post-legislative memorandum to the JSC is as it says a high level analysis, and we will have to wait for the post-implementation review document for more detail. The Justice Secretary said to the JSC that that review document would be followed by some kind of consultation seeking views on any changes.

As far as the current post-legislative memorandum to the JSC is concerned, it is noted that there was no need for an earlier review of Part 2 as there had not been "any body of opinion calling for any early review".

What are the possible reasons for this? Two are mentioned: the first is that "the provisions are seen to be working reasonably well", the other that it is still too soon to say because of the length of civil litigation.

The MoJ seem to lean towards the first of these possibilities. They say they are unaware of any "significant overarching concerns" in relation to Part 2. A quote from the former Justice Minister Lord Faulks is repeated, saying that he would be surprised if any of Jackson's recommendations which underpinned Part 2 were found to be unsound.

At the time of implementation of LASPO there was the possibility of continued attack on Part 2 from the Labour opposition, but this has receded. The recent Labour-backed report by Lord Bach concentrates on issues arising under Part 1 of the Act in relation to Legal Aid, and in our view it is to that aspect of LASPO that any prospects of further changes in the Act are confined.

The only exception to that is a possible change to bring mesothelioma claims within the post-LASPO regime. However relevant to that will be whether the claimant asbestos lobby desires change so that mesothelioma claimants become entitled to a 10% uplift in their PSLA awards which they are currently deprived of.

Discount rate

News as to the legislative vehicle through which the government's proposed reform of the discount rate is to be achieved is awaited though it is looking like it may be a stand-alone bill. It is fair though to expect it to be further forward in the pecking order hinted at by Mr Lidington, than the CLB.

The JSC has also been active on this issue having had it referred to them by the MoJ. Today they held evidence sessions with a number of witnesses as part of their pre-legislative scrutiny of the proposed reform which will affect the basis of setting the rate and how in future that should happen.

One of the witnesses today was Lord Keen, MoJ minister responsible for the proposed legislation. As to timing of the reform, he said "We certainly hope that this legislation will come into force by the early part of next year and the Lord Chancellor will then set about fixing the rate as soon as he can thereafter, so we don't anticipate a lengthy window before the discount rate is reviewed for the first time".

Lord Keen also had something to say about the potential rate that might come out of the first review which the government had identified of between zero and 1% when he was asked why an impact assessment on the basis of that bracket had not been done to accompany the current proposals. He stated that 0 – 1% should not be seen as an estimate of the rate that would be fixed at the end of the first review, but was an indication of the "direction of travel" only as the move was made from a very low risk to a low risk scenario. In fact, he said, with the benefit of hindsight it was perhaps unfortunate that the figure had been given. 

Further views on the proposed legislation can be expected from the JSC as part of its current work, and then from parliament itself once the implementing measure is brought forward.

Extension of fixed costs developments

Lord Justice Jackson has been commenting recently on the topic of his recent report on extending fixed recoverable costs across the remaining parts of the fast track and then to most claims worth up to £100,000.

Speaking at the Westminster Legal Policy Forum on 13 October, he noted it was nearly 3 months since the report had been published and in his view work on that report by the MoJ should start "quite soon". He hoped for a fairly swift indication as to whether those reforms were to be taken forwards.

Speaking at the same conference, Lord Briggs now of course a Supreme Court justice and no longer able to continue as architect of the Online Solutions Court as a result, was supportive of Jackson's latest work, saying that the implementation of what he called "Jackson 2" was clearly a priority – "let's go for it".

Response from the MoJ on fixed costs

While a formal response from ministers at the MoJ is therefore still awaited, the strong likelihood is that they will support this further reform which is consistent with the wider goal of reducing the cost of litigation and is from a source (Jackson) whose last major work seems likely to be judged a success in the LASPO review.

Permanent secretary to the MoJ, Richard Heaton, told the Public Accounts Committee on 16 October that not only were ministers in favour of the recommendation in the Jackson report setting out a way forward for introducing FRCs into clinical negligence claims, but that: "The next big thing we can do – and my department cares a great deal about costs across the board and disproportionate costs really impede access to justice – is to try to extend FRCs to as many areas of civil litigation as possible".

That would seem to leave little doubt as to the MoJ's likely decision. As we know, a consultation will then be required including on the detail of the proposals and on Jackson's proposed level of FRCs. Insurers will want to ensure that those proposed future FRCs are not over generous and do not allow perpetuation of disproportionate costs at various levels.

At the same Westminster Forum, Rob Cummings of the ABI suggested that Jackson had struck the right balance in his report as neither claimant lawyers nor the insurance industry strongly supported the reform. Jackson himself noted that his latest report had produced nothing like the same level of hostility attracted by his earlier report which had led to LASPO.

The jury should be seen as out on whether Jackson's proposed costs figures have been pitched at appropriate levels which are able to achieve the government's policy aim of driving down costs to a level where access to justice can be achieved at realistic levels of cost. Careful consideration should be given to the new figures and to the question of whether the currently proposed extent of the reform will be sufficient to achieve the stated aim and the forthcoming consultation which will probably follow early next year will present an opportunity for that.

An Online Solutions Court

As part of a new process to accompany a rise in the SCT limit, the use of IT and online processes will be relevant. As part of his comment to the Westminster Forum, Lord Briggs reported on progress with the proposed new OSC.

Where have we heard this before? The Courts Bill needed to establish the new court including an Online Court Rule Committee was "sitting in a siding somewhere" in the same queue caused by Brexit pressures. When established, as compared to the Civil Procedure Rule Committee, the new committee would rely for its membership more on litigants in person and IT experts.

Briggs reported that certain building blocks of the new OSC had been tried out as part of the current county court system, under temporary authority of the existing CPRC, as the new rule committee had not yet been established as the new Act was still awaited. However, an Online Procedure Advisory Group including IT expertise had been set up earlier in the year, though without statutory authority.

The fact that the work of the Advisory Group is still at an early stage can be seen from the position that emerged during the conference, namely it had yet to liaise fully with Claims Portal. Contact was made between Briggs and Claims Portal during the conference and will presumably be followed up.

We must wait to see whether progress in this direction is capable of assisting in the development of the new processes which will need to be friendly to self-representing claimants required as part of the planned rise in the SCT limits. Work in that direction continues separately under the auspices of the MoJ.

Regards

Contact

For more information please contact Simon Denyer, Partner on +44 (0)161 604 1551 or email simon.denyer@dwf.co.uk

By Simon Denyer

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This information is intended as a general discussion surrounding the topics covered and is for guidance purposes only. It does not constitute legal advice and should not be regarded as a substitute for taking legal advice. DWF is not responsible for any activity undertaken based on this information.

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