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Looking ahead

February 2018

Today marks a year since Liz Truss announced the cut in the discount rate to minus 0.75%. Whilst it's true to say that the government has been working towards creating a system of setting the rate that is fairer for all, developments appear to have slowed down in the last couple of months following the Justice Committee's report in November with Lord Keen confirming this month that the government is not yet in a position to respond to the report.

The government has however finally published a response to its consultation on fixing costs in clinical negligence claims, taking the advice of Lord Justice Jackson and other stakeholders to set up a working party of claimant and defendant representatives to thrash out the issues.

With still no sign of the Civil Liability Bill, the focus has been instead on the claims management provisions of the Financial Guidance and Claims Bill which is currently proceeding through the House of Commons. Whilst there have been encouraging developments, such as the extension of CMC regulation to Scotland, the government has settled on, what is to some, a less than satisfactory solution to address cold calling and CMC charges in personal injury claims.

This month has also seen a number of significant judgments handed down in cases we have been tracking such as Barton v Wright Hassall, on the issues of service and litigants in person and also Bussey v Anglia Heating, on breach of duty in mesothelioma claims.

We look at these developments below along with our usual round up of forthcoming cases and other issues on the horizon.

Forthcoming cases

Supreme Court

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. Judgment is awaited.

Update - Police: human rights. Judgment in Commissioner of Police of the Metropolis v DSD & Anor was handed down on last week. The Supreme Court unanimously upheld the previous decisions that the failure of the Met Police to carry out effective investigations into complaints from the victims of John Worboys (the 'black cab rapist), amounted to inhuman or degrading treatment contrary to Article 3 of the ECHR.

Update - Police: duty of care. The issue in Robinson v Chief Constable of West Yorkshire Police was 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. In a judgment handed down on 8 February, the Supreme Court allowed the claimant's appeal holding that the reasonably foreseeable risk of injury to the claimant when the arrest was attempted was enough to impose a duty of care. Her injuries were caused by the officers' breach of duty of care – she was injured as a result of being exposed to the danger from which they had a duty of care to protect her.

Update - 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 was heard was heard in November and judgment will be handed down on 28 February. Update 28 Feb: judgment  has now been handed down.

Update - Procedure: service of claim form. In Barton v Wright Hassall LLP  a litigant in person purported to serve proceedings on the defendant's solicitors by email without obtaining confirmation that they were prepared to accept service by email. By a majority of three to two, the Supreme Court upheld the Court of Appeal's finding that there was no good reason to validate service under CPR r.6.15. There were also an issue over whether litigants in person should be granted special dispensation, and the majority held that unless the rules and practice  directions are particularly inaccessible or obscure, it is reasonable to expect a litigant in person to familiarise himself with the rules which apply to any step he is about to take. Simon Denyer considers the decision in light of the forthcoming reforms in this update and Sheona Woods and Ian Dinning from the professional negligence team focus on solicitors' obligations towards litigants in person in this update.

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 took place on 27 & 28 November 2017 and judgment is awaited. Read more from 12 KBW

Update - 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 took place  in December and judgment will be handed down on 28 February.Update 28 Feb: judgment has now been handed down.

Update - Portal claims: direct offers. In Gavin Edmondson Solicitors Limited v Haven Insurance Company Limited an insurer settled six portal personal injury claims on an all-inclusive basis directly with the clients of Gavin Edmondson Solicitors who had CFAs with its clients. The solicitors were therefore deprived of their costs and the Court of Appeal allowed Edmondson's claim for equitable interference against the insurer to recover its costs. Read more about the hearing which took place on 5 & 6 February in the Gazette. Judgment is awaited.

Police: duty of care to employees. The question in James-Bowen v Commissioner of Police for the Metropolis is whether a person who is sued in civil litigation for alleged misconduct by his employees (or others for whom he is vicariously liable) owes those employees a duty of care in the conduct of his defence. The hearing is listed for 6/7 March 2018

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

  • 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.

  • 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.

  • Perry v Raleys Solicitors is a professional negligence claim concerning the alleged under-settlement of a vibration white finger claim. Read more in this Crown Office Chambers update.

  • In R&S Pilling T/A Phoenix Engineering v UK Insurance Limited the issue in the Court of Appeal was whether motor insurance extended to liability for damage to the property of third parties as a result of fire caused by repair work being carrying out to a  stationary car, i.e. whether the repairs amounted to "use" of the vehicle. Update - We understand that the hearing is due to take place on 13 December 2018. 

  • New – permission to appeal has been granted in Cameron v Hussain & LV= in which the Court of Appeal held that a claimant was able to bring her claim for damages arising out of a road traffic against an unidentified driver.

Court of Appeal

Update - Mesothelioma: breach of duty.At first instance 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 appeal took place in January and in a judgment handed down last week, the Court of Appeal allowed the claimant's appeal. Read more in Daren Charlton's update which outlines the findings, considers how the judgment fits with the 2011 Court of Appeal decision Williams v University of Birmingham and looks at where we stand in determining breach of duty.

Update - Professional negligence: construction of settlement. The appeal in Khanty-Mansiysk Recoveries Limited v Forsters LLP took place at the end of January and in a judgment handed down on 7 February the Court of Appeal upheld the previous decision that a settlement agreement over unpaid fees protected the defendant from a professional negligence claim. Read more in our update.

Update - Policy interpretation: aggregation clause. At first instance in Spire Healthcare Ltd v Royal & Sun Alliance Plc an insurance policy was held to contain an aggregation clause so that the maximum cover for claims encompassed by it, was the limit for any single claim. The appeal took place on 8 February 2018 and judgment is due to be handed down on 2 March.

Professional negligence: solicitors. Dreamvar (UK) Limited v Mishcon De Reya (a firm) and Anr concerns a fraudulent property transaction in which a fraudster impersonating a property owner purported to sell the property to the claimant. In seeking to recover the loss it had suffered as a result of the fraud, the claimant brought claims for negligence and breach of trust against its own solicitors and solicitors acting for the fraudster. The appeal is taking place on 27 & 28 February.

Professional negligence: court door settlement. At first instance in Dunhill v W Brook And Co & Anor a claim for professional negligence arising out of the settlement of a personal injury claim at the door of the court was dismissed against both the firm of solicitors and counsel who acted on behalf of the claimant. The claimant's appeal is taking place on 27 February 2018. Read more about the first instance decision in our 2016 update.

Procedure: non-party costs orders. The issue on appeal in XYZ v Travelers concerns the application for an order under s.51 Senior Courts Act 1981 for a non-party costs order against the insurers in a product liability claim. The appeal is due to take place on 1 March 2018.

Vicarious liability: connection with employment. At first instance in Bellman v Northampton Recruitment Ltd it was held that an employer was not vicariously liable for an assault committed by its director after a work Christmas party. 12 KBW outline the grounds on which permission to appeal has been granted and you can read more on the first instance decision in our update from last year. The appeal has now been listed for 12/13 June 2018.

High Court

Costs budgeting: detailed assessment. It was reported in September that permission to appeal had been granted in the case of RNB v London Borough of Newham where it had been 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, although we have not seen any news on the case for some time.

Consultations

The following consultations are currently open:

Update - Fixed recoverable costs for clinical negligence claims. The consultation on fixed recoverable costs in clinical negligence claims was published on last January. 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 fixed costs report Jackson LJ acknowledged the difficulties in clinical negligence claims and recommended 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 government published a summary of responses to the consultation along with proposed next steps. They have accepted Sir Rupert's recommendation and a new CJC working group to be chaired by Andrew Parker has been set up with draft terms of reference agreed. The working group is due to report by the end of September 2018. Read more, including details of the stakeholders' responses in Litigation Futures.

The following consultations are awaiting official responses:

If any client wishes to request any of the DWF consultation responses referred to below they can do so by emailing alex.fusco@dwf.law

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 proposing that: the rate should be set by reference to "low risk" rather than "very low risk" investments as at present; it should be reviewed at least every three years; and the Lord Chancellor should consult with an independent panel of experts. 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. An oral evidence session took place on 1 November in which Lord Keen indicated that the legislation would come into force in early 2018 with the first review taking place as soon as possible thereafter. However civil servants quickly backtracked commenting that the first review is unlikely to happen before the end of 2018/start of 2019. The Justice Committee published its report on 30 November making recommendations that included obtaining further evidence about claimant investment behaviour and that the independent expert panel should participate in the first review. The MoJ said they would respond within 2 months but last week in response to a ministerial question Lord Keen confirmed that the government "is not yet in a position" to respond and Justice Minister Rory Stewart has written to the Committee to apologise for the delay. Read more about the implications of the report in our recent update

Update – Small claims track limit increase. On 5 December the Justice Committee launched a new inquiry into the government's proposals for raising the small claims track limit for personal injury via secondary legislation. The Committee planned to take account of the written and oral evidence submitted to the unfinished 2017 inquiry into personal injury: whiplash and the small claims limit, but invited further written submissions. DWF made submissions on both occasions. On 16 January the Committee held an oral evidence session at which DWF's Nigel Teasdale gave evidence on behalf of FOIL. Read more about the session in Simon Denyer's update , and more on the issue generally in the Commons briefing notes: Small claims for personal injuries including whiplash and Motor car insurance. This month it emerged following an MoJ meeting with MASS, APIL and the Law Society that the RTA reforms are now expected to be implemented from 2019 with the reforms in non RTA claims coming later.

Reforming the soft tissue injury (whiplash) claims process - Part 2. In February 2017 the government published the first part of its response to the Reforming the soft tissue injury (whiplash) claims process consultation, to which DWF responded. It then incorporated its proposed reforms to the whiplash claims process within the Prisons and Courts Bill which we reviewed in our update last year. That Bill's progress ended with the dissolution of parliament but the whiplash provisions are due to be reintroduced within the Civil Liability Bill announced in the 2017 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. Last July, Justice Minister Sam Gyimah gave a familiar response to the question of when a response would be published…"in due course".

Update - Review of Fixed Recoverable Costs. Jackson LJ published his Review of Fixed Recoverable Costs, to which DWF contributed, on 31 July. His proposals are to extend fixed costs in claims worth up to £100,000 along with the remaining fast track cases not yet subject to FRCs. The report is being considered by the senior judiciary and the MoJ, and a consultation will hopefully be launchedbefore too long. In October Jackson LJ spoke at two events but was unable to say what the government's response would be. This month in its response to the fixed costs in clinical negligence consultation the government said it "is considering all of LJ Jackson's proposals and the Lord Chancellor will announce the next steps in due course."

Update - Review of low value personal injury claims including package holiday claims. In 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 had 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 and they were 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 invited 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 invited views on any relevant issues that should form part of this project, suggesting for example, the nature and timing of evidence. The consultation closed on 10 November and a response is awaited. DWF responded to this consultation and also the follow up call for evidence - which closed on 15 January - from the Civil Procedure Rules Committee on the proposed process for handling these claims. This month the minutes from December's CPRC meeting were published showing a delay in signing off the rule change required to bring holiday claims within the public liability fixed costs regime, as the CPRC were reluctant to do so before seeing the consultation responses and finalising the PAP amendments. Read more in Legal Futures

Credit hire: model directions. Last June, the Civil Procedure Rules 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 and DWF responded. 

Motor insurance: implications of ECJ Vnuk ruling for UK legislation. In December 2016 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, to which DWF responded, closed in April and the government's response is awaited, although we know that the preferred option is to amend the Directive. 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 in October. Also in October the Department for Transport responded to a written question confirming that its "priority for the REFIT review is the correction of the scope of the Directive." Whilst we await further developments, both on these consultations and on the next steps following the recent Roadpeace judgment which declared domestic law incompatible with Vnuk, the CJEU delivered a judgment at the end of November (Rodrigues de Andrade) in which it held that where an accident involving a tractor occurred while the tractor was being used as a machine for carrying out work (rather than as a means of transport) it was not subject to the compulsory insurance requirements.

Civil procedure: disclosure. A Judiciary press release published on 2 November 2017 details proposals for a mandatory disclosure pilot scheme to run for two years in the Business and Property Courts. A Disclosure Working Group was set up in May 2016 to look into widespread concerns about the excessive cost, scale and complexity of disclosure with a view to achieving a wholesale cultural change in the disclosure process. "The unanimous view of the Working Group is that a wholesale cultural change is required and that this can only be achieved by the widespread promulgation of a completely new rule and guidelines on disclosure which will apply for the majority of cases proceeding in the Business and Property Courts." The working group was seeking feedback until 28 February 2018 and the proposed scheme is expected to be submitted to the Civil Procedure Rules Committee for review and approval in March/April 2018. Read more about the pilot in Litigation Futures.

New – Default County Court Judgments – At the end of December the MoJ launched a consultation looking at the processes for money claims issued in the County Court. They have particular interest in views on limiting the circumstances in which an individual can have judgment entered in default against them without their knowledge. DWF submitted a response to highlight the issue of judgment being entered against policyholders in insurance claims when it is an insurer who will ultimate pay the claim – the MoJ had not identified this scenario in its consultation. The consultation closed on 21 February.

Legislation

The Financial Guidance and Claims Bill, Data Protection Bill, and Automated and Electric Vehicles Bill are all continuing their passage through parliament but there is still no sign of the Civil Liability Bill or Courts 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. Last month the Justice Committee published the written evidence of the MoJ in its small claims Inquiry. In it Lord Keen indicated that "further announcements in relation to the introduction of the Civil Liability Bill will be made in due course." As we mentioned above, the news this month is that the MoJ is now looking at implementing the reforms by April 2019.

Update - 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. It has not gone unnoticed by the media that all has gone quiet on this proposed reform. In the meantime, last month the government launched a new consultation on the future court estate strategy and consultations on a new round of court closures. This month, albeit not in the arena of civil justice, the MoJ has started testing a fully digital divorce application and a fully video courtroom for tax appeals.

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. In the last month it has finished its passage through the Commons and has already had its second reading in the House of Lords. It is due to be considered in Committee on a date to be announced. You can follow the progress of the Bill here and a new Lords Briefing note has been published on it. Caroline Coates reviewed the Bill when it came out in this article.

Update - Claims management regulation: Financial Guidance and Claims Bill. The provisions in the Bill relating to claims management regulation are those which came out of the 2016 Carol Brady review and the consultation on capping fees. The most straightforward provision has been the transfer of regulation to the FCA. More controversial have been the calls for a cap on the fees CMCs can charge in personal injury claims and for a complete ban on cold calling. After some confusion over what the government was promising in relation to a cold calling ban, the Committee stage this month resulted in a clause prohibiting calls for direct marketing of claims management services except where the recipient of the call has given consent i.e. not a blanket ban. The extension of regulation to CMCs in Scotland was also added in Committee. DWF had contributed to the debate by submitting written evidence before the Committee stage. The Bill now moves on to the Report stage on a date to be announced. You can continue to follow progress of the Bill here.

Data Protection Bill. Having been introduced in the House of Lords on 13 September the Bill has now completed its passage through the Lords and has had its first reading in the Commons. The Bill widens the reach of GDPR which as a Regulation is already directly applicable in the UK. 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. A helpful House of Lords briefing was produced in advance of the Bill's second reading in the Lords. You can follow the Bill's progress here and a roundup of recent developments here. The Bill moved from the Lords to the Commons with a new clause at paragraph 15 of Schedule 1 permitting the processing of special category data that is necessary for an insurance purpose. The Bill will have its Second Reading in the Commons on 5 March.

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 March 2017 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. At the beginning of October a House of Commons briefing note was published outlining the Law Commission's recommendations. Later that month the government published an interim response welcoming the report and confirming that a final response would be produced by Spring 2018. This month the Joint Select Committee on Human Rights has launched an inquiry into the proposed reform of the DoLS and whether it is striking the right balance between adequate protection for human rights with the need for a scheme which is less bureaucratic and onerous. The deadline for submissions is 2 March 2018.

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. The project webpage now notes that the project is on hold due to other priorities within the team but they aim to publish a revised draft of the bill for consultation in due course.

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. In the whiplash consultation in late 2016 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, which covers the IFT recommendations, is still awaited. In the meantime, last 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. In October, following an IFT recommendation the Claims and Underwriting Exchange (CUE) was expanded to accept data relating to travel insurance claims. In December Justice Minister Dominic Raab answered a question on the steps being taken to implement the IFT's recommendations and to reduce personal injury fraud generally. This month the SRA published a report on what it has been doing in response to the IFT report. Read more in Legal Futures.

Update - MedCo. In October 2016 the MoJ published revised Qualifying Criteria for MROs, effective from 8 November 2016. MedCo immediately suspended 134 shell companies for failing to comply with the new Qualifying Criteria and over the course of the next 6 months or so, MedCo reported on a range of enforcement action. Last August MedCo warned against "inappropriate behaviour" during the audit process and in October MedCo published an FAQ document (pdf) to address common issues arising out of the Guidance supporting the revised Qualifying Criteria. In November MedCo published its annual report and financial statements and in December gave an update on its audit programme. More details of these developments can be found on the MedCo homepageThis month has seen a blog post from Irwin Mitchell's Matt Currie on the MASS website asking Is MedCo really working? Also this month Litigation Futures has an exclusive report on numbers of MROs on the MedCo system following the recent annual audit programme.

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. The legislation that will transfer regulation is the Financial Guidance and Claims Bill discussed further above. At September'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. A CMR bulletin in December provides a helpful roundup of recent developments in relation to claims management regulation. Last month the Commons has issued a briefing note describing the regulatory framework which applies to CMCs, no doubt in preparation for the Financial Guidance and Claims Bill's journey through the Commons which we comment on further above. In addtion, this month DWF hosted a forum with the MoJ and the ABI to discuss CMC regulation in Scotland.

Update - Holiday sickness claims. Following media reports last year 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 have reported above on the 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. Last month holiday claims featured heavily in the CMR's quarterly enforcement update – read more on this in Legal FuturesThis month, as we report above, the government is hoping to have fixed costs for holiday sickness claims in force by April 2018. 

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. The CJC published its long awaited report in September 2017, although Jackson LJ had spoilt the surprise 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 was the proposals for reform of the claims handling process. You can read more about the proposals in our comprehensive update. We also took the opportunity to comment on the handling of NIHL claims in the recent call for evidence in relation to holiday sickness claims and low value personal injury claims.

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 30 October the MoJ published its post-legislative memorandum to the Justice Select Committee although Part 2 of LASPO (which brought in the Jackson reforms) will be reviewed separately from the Legal Aid provisions in Part 1. In December Bob Neill, Chair of the Justice Committee wrote (opens in pdf) to the Lord Chancellor to comment on the memorandum. The letter, which for the most part covers part 1 of LASPO, includes a request to be kept updated on plans for the review of Part 2 as "we have a particular interest in the proposed section 44 review on mesothelioma claims which, as you are aware, was the subject of a report by our predecessor." Last month, (before the reshuffle) Dominic Raab responded to a written question about CFAs and DBAs saying, "the government is committed to carrying out a post-implementation review of Part 2 of the LASPO Act, to be completed by summer recess 2018." 

New – Mesothelioma Payment Scheme: lump sum increases. The Scheme will be uprated from 1 April 2018 in line with the September CPI rate. The draft SI setting out the new figures was debated in Committee on 20 February and was approved on 21 February. Also this month in a ministerial question, the DWP were asked for an estimate of the proportion of EL GWP required to fund the scheme. The answer gives the percentages from 2014 to 2018.

Update - Civil Courts Structure Review: LJ Briggs' Final Report. In July 2016, Lord Justice Briggs published his final report following his review of the structure of the civil courts. The headline recommendation was 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 2017 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. The Courts Bill proposed in the Queen's Speech is expected to reintroduce the provisions enabling the creation of the new online court. In November the Gazette looked at recent developments and concerns about the online civil court. In the meantime a pilot began in September to trial a procedure that will allow legal representatives to file claims online at the CCMC. Last month HHJ Bird spoke (Q.50) about the online solutions court proposals in the Justice Committee's small claims limit inquiry. This month, as we mention above, the MoJ has started testing a fully digital divorce application and a fully video courtroom for tax appeals and Simon Denyer highlights the reference to the Online Solutions Court in last week's Supreme Court judgment in Barton v Wright Hassall.

Update - 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 and in December the SRA published its review which found that firms generally had adequate systems and processes in place, yet also found some issues which could lead to misconduct. At the same time the SRA issued a revised warning notice arising from concerns about how law firms handle personal injury claims, especially when dealing with CMCs. This month, as we have noted above, an SRA report on its work following the Insurance Fraud Taskforce report reveals the number of complaints it has received about referral fees and cold calling, and also the scale of law firms' dependence on the personal injury market.

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 2016. 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 December 2017 the government responded and ruled out a review of legal regulation, although Lord Keen did agree that improvements to the framework can be made through incremental changes. We have also been reporting on the SRA's work in this area: in January 2017 the SRA confirmed that it was preparing rules on publishing price information for consultation in the summer. In September the SRA 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 closed on 20 December. Last month the SRA published research on "Price transparency in the legal services market" which was carried out off the back of the CMA market study. See also SRA press release.

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 in October that the government might reconsider DBAs within its forthcoming review of Part 2 of LASPO. This month the Gazette reports on a suggestion that the way DBAs may be introduced into Scotland could demonstrate how their use in England and Wales could be increased.

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 but to date there has been no response. In December 2017, while responding to the CMA Legal Services Market Study, the government confirmed it would not be going ahead with a consultation on regulatory independence as it believes there is scope to make more progress within the existing framework.

Contact

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

You can find all previous editions of Looking Ahead here

 

By Alex Fusco

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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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