piBlawg

the personal injury and clinical negligence blog

A collaboration between Rebmark Legal Solutions and 1 Chancery Lane

Costs Budgeting: reforms on their way…

Jackson L.J. delivered a speech on costs budgeting on Wednesday. For many of us engaged in CCMCs who encounter inconsistency, courts overwhelmed by the volume of hearings, unnecessary costs incurred and often the thinly disguised frustration of judges with the process, his conclusion that ‘costs management works’, may come as a surprise. His proposals for reform, including fixed costs in some multi-track cases, may not. In his speech he gave 7 benefits of costs management (see below) but he also dealt with objections and problems and made recommendations. I pick out a few: First, he mentioned the costs of the process in low value multi-track cases which he defined as up to ‘about £50,000’. Leeds District Judges recommended fixed costs for such cases and Jackson L.J. endorsed the recommendation for fixed costs in the lower reaches of the multi-track ‘strongly’. Secondly, the issue of judicial inconsistency, unduly long hearings and micro-management he thought should be dealt with by better compulsory judicial training. Thirdly, the problem of the wide variation in the forms of costs management orders he recommended should be dealt with by a standard form of costs management order. Fourthly, he thought that the time for filing and exchanging budgets should be increased so that they are lodged 14 days before the CCMC although there must be a discretion for the court to specify a different period. Fifthly, he was of the view that Precedent H could be improved but he recognised that solicitors had been developing their IT systems for the purpose of completing Precedent H and therefore he did not want to make successive changes. Sixthly, the problem of delays and backlogs of CCMCs he thought should be tackled by repealing PD 3E which says that courts will generally make a costs management order under rule 3.15 where costs budgets are filed and exchanged. The PD should be replaced with a judicial discretion on whether to make a costs management order and criteria to guide its exercise. Seventhly, he acknowledged the backlog of clinical negligence cases in London and suggested that all London Clinical negligence cases with CCMCs listed between October 2014 and January 2016 be released from costs management and called in for short old-style CMCs. He thought a similar solution might be required in Birmingham and Manchester. Eightly, he addressed the issue of incurred costs and the practice of doing as much work before the CCMC in order to shelter costs within the ‘incurred’ column. He did not think that it was appropriate for judges at detailed assessments to treat absence of ‘comment’ on incurred costs as approval. He suggested powers to comment on incurred costs, summarily assess them or set a global figure for any phase to act as an incentive not to put forward excessive incurred costs. In clinical negligence cases he thought that there was a need to introduce pre-action costs management. Ninthly, Jackson L.J. expressed concern about the increase of court fees introduced in March 2015. He thought they should be disregarded when considering whether a party’s costs are proportionate. These are just some of the areas touched upon in Jackson L.J.’s speech which can be read in full by following my hyperlink. He ended his talk by arguing that Costs Management was in the public interest. He thought that lawyers disliked it because it meant more work and required us to develop new skills. He predicted that within the next 10 years costs management would be accepted as an entirely normal discipline and people would wonder what all the fuss was about. For the time being Costs Budgeting is here to stay – but reform is now overwhelmingly likely to occur and we can expect to hear from the Coulson Committee in due course on what form the new rules are likely to take.   The benefits of Costs Management (refered to above) Both parties to litigation know where they stand financially It encourages early settlement It controls costs from an early stage It focuses attention on costs at the outset It stops CMCs from being formulaic leading to debate about what is really required It is fair to give your opposition notice of what you are claiming It prevents losing parties from being destroyed by costs  

Insurers’ proposals for further reform to the PI sector

The Association of British Insurers' website recently set out its top 10 insurance and savings priorities for the next parliamentary session. The most striking of these for personal injury lawyers is the proposal for “Modernising the civil justice system to get compensation to claimants rather than lawyers.” The ABI fleshes this out by suggesting increasing the small claims track limit for PI claims, considering a reduction in the current 3-year limitation period and using fixed legal fees to address the rise in industrial deafness claims and ensuring people suffering from asbestos related conditions get compensation quicker. Another of the ABI proposals which would also affect the PI sector is a proposal for “Cracking down on the behaviour of Claims Management Companies” by requiring them to comply with a more robust regulatory regime and stopping nuisance calls and texts. Some consider that pressure from the insurance industry played an important role in bringing about some of the reforms which occurred in the last parliament. The themes in the proposals are familiar and are not new. Indeed the last government consulted on some of these matters. However the ABI clearly wants to keep these issues on the agenda and it will be interesting to see what pressure is exerted in the next parliament for further reforms which could have far reaching consequences for PI lawyers and litigants. The whole list can be viewed on the ABI Website

Costs Budgeting - Time for change

Having at first hand experienced the heated battle of CCMCs, in which costs draftsmen and (usually) junior Counsel joust in front of a Master on the level of costs incurred thus far and those yet to come, it seems that change might be in the air. Lord Justice Jackson is preparing a speech / paper on costs budgeting, to be finalised by mid-May. He is looking, amongst other matters, at the circumstances in which the Court should decline to carry out costs budgeting (because of a concern at the delays being caused to listing generally by the new regime) and at whether there should be some sort of provisional costs budgeting exercise on paper.You will no doubt remember Ian Miller’s prediction on this very ‘blawg’ that costs budgeting was likely to be reformed or abolished in 2015. He may well yet be right. Claimants have got very good at shoehorning as much cost as possible into the “incurred” box, which is impossible to challenge, and Defendants have got very good at getting future costs disallowed on the basis that incurred costs are already too high. None of this makes for better value for the lay client, and only adds to the costs of litigation. The Personal Injury Bar Association has helpfully listed the other issues which those involved in the costs budgeting regime face:“(1)    The long listing delays caused by the new costs budgeting regime. (2)    The waste of money and time in budgeting cases through to the end of trial especially where liability has been admitted, quantum is relatively modest and it is highly likely that the case will settle without a trial after the exchange of expert evidence. (3)    The interplay between incurred costs and future estimated costs.  This is causing huge uncertainty and ought to be further clarified in the Rules. (4)    The extent to which hourly rates and times should be scrutinised at the budgeting stage.  Again, this is causing huge uncertainty and different courts are taking very different views. (5)    The difference between a costs management order being made and costs budgets being exchanged without a costs management order.   If costs budgeting is dispensed with altogether, then the other party has no costs information at all, because costs budgets have replaced the old estimates.”  Given all this, it is hard to imagine that there will be no change to the current system. We await Lord Justice Jackson’s pronouncements with interest…

New law - fundamental dishonesty in PI claims

The government brought into force last week a new law preventing claimants from recovering damages for personal injury when they have been fundamentally dishonest, unless it would cause substantial injustice. In the case of Summers v Fairclough Homes Ltd  [2012] UKSC 26 the claimant was injured in an accident at work and claimed more than £800,000 from his employer. Surveillance revealed him to have grossly exaggerated the effect of his injuries. At trial he was found to have fraudulently misstated the extent of his claim but the judge declined to strike out his claim and awarded £88,716. The defendant appealed and the Supreme Court held that it had jurisdiction to strike out the claimant’s statement of case but that it would only be done in exceptional circumstances, not least as the judgment on liability amounted to a possession for the purposes of the ECHR. The claim was not struck out. Section 57 of the Criminal Justice and Courts Act 2015 looks as though it would have changed the outcome of Summers dramatically. Here are some of the ingredients and likely problems: ‘fundamental dishonesty’ - the defendant has to prove on the balance of probabilities that the claimant has been ‘fundamentally dishonest’  - a concept which the courts have been grappling with since its introduction in CPR Part 44.16(1) as an exception to the rules on qualified one way costs shifting. Considerable uncertainty remains as to the difference between ‘dishonesty’ and ‘fundamental dishonesty’. ‘primary claim or a related claim’ – the fundamental dishonesty must be ‘in relation to the primary claim or a related claim’. It will be interesting to see how far the courts will go in construing ‘a related claim’ which is defined at s.57(8) as “a claim for damages in respect of personal injury which is made (a) in connection with the same incident or series of incidents in connection with which the primary claim is made, and (b) by a person other than the person who made the primary claim.” ‘application by the defendant’ - the court cannot dismiss the claim under s.57 unless an application is made by the defendant for its dismissal. ‘substantial injustice’ – the court ‘must dismiss the primary claim’ unless satisfied the claimant would suffer ‘substantial injustice’ if it were dismissed. Again, it is not clear what the difference is between ‘injustice’ and ‘substantial injustice’. How is a judge to decide? Would the depriving a claimant of £88,716 amount to a substantial injustice? It is likely that the courts will want to give very careful thought to the needs of the injured claimant (care, economic etc) and consider how well they will be met in the event that the money is not paid over. What will happen to claims for gratuitous care which a claimant is supposed to hold on trust for the providers of that care? They may have nothing to do with the claimant’s dishonesty and yet might find themselves deprived of thousands of pounds for the hours they have given. I anticipate that a large body of case law will quickly grow up around this section. Recording damages – the court must record the amount of damages it would have awarded the claimant and then deduct them from the amount it would otherwise have awarded the defendant in costs. The dismissal of the claim under s.57 must be taken into account in a sentence handed down in any subsequent criminal proceedings S.57 only applies to claims issued after 13th April 2015. Mr Summers may well have been £88,716 poorer had this section been enacted prior to the issue of his proceedings. It will be interesting to see how often section 57 is pleaded and what the courts make of the concepts of ‘fundamental dishonesty’, ‘substantial injustice’ and ‘related claims’.

Personal Injury and the Party Manifestos

Is there anything in the parties' manifestos which might affect the field of personal injury? Reforms since 2010 include a new fixed costs regime, costs management/budgeting and greatly increased court fees. Civil liability has been removed for breaches of health and safety regulations. But what is being promised for the future? The Conservative Manifesto includes a pledge to reform human rights law. It would scrap the Human Rights Act and introduce a British Bill of Rights. The intention is that this will break the formal link between British Courts and the European Court of Human Rights making the Supreme Court the ultimate arbiter of human rights matters in the UK.  More is said in the section on the European Union: the Bill will remain faithful to the basic principles of human rights but “will reverse the mission creep that has meant human rights law being used for more and more purposes, and often with little regard for the rights of wider society.” The manifesto also pledges to continue “the £375 million modernisation of our courts system, reducing delay and frustration for the public.” A commitment is also made for an ongoing review of legal aid. The Labour Manifesto takes the opposite view on the Human Rights Act. It states that Labour would protect it and reform rather than walk away from the European Court of Human Rights. The manifesto is silent on what that reform would be. The manifesto also includes a pledge that access to legal representation would not be determined by personal wealth but would remain available to those who need it. The Liberal Democrat Manifesto states that the Liberal Democrats would protect the Human Rights Act and enshrine the UN Convention on the Rights of the Child in UK Law. It specifically states that the Liberal Democrats would take “appropriate action to comply with decisions of the UK courts and the European Court of Human Rights.” The Liberal Democrats have a commitment to introduce a Freedoms Act which would “cut back on the petty over-regulation of everyday life… permitting swimming in open bodies of water.” (Tomlinson v Congleton springs to mind…). They would “carry out an immediate review of civil Legal Aid… and court fees, in consultation with the judiciary…” They would “reverse any recent rises in up-front court fees that make justice unaffordable for many, and instead” spread the fee burden more fairly. They would also retain access to recoverable success fees and insurance premiums in asbestosis claims and where an individual is suing the police. There is also a pledge to support innovation like the provision of “civil justice online” and expansion of ADR. The UKIP Manifesto states that the burden of complying with EU laws on health and safety can be overwhelming for small firms. The manifesto has a commitment to repeal EU Regulations which stifle business growth. As to human rights, UKIP would remove the UK from the jurisdiction of the European Court of Human Rights and make the UK’s Supreme Court the final authority on matters of human rights. It would repeal the Human Rights Act and introduce a UK Bill of Rights which would complement the UN Declaration of Human Rights and “encapsulate all the human and civil rights that UK citizens have acquired under UK law since Magna Carta.” The Green Manifesto states it will “move towards a written constitution with a Bill of Rights” it also has a commitment to keeping the Human Rights Act and retaining the UK’s membership of the ECHR. There is a pledge to “restore the cuts to Legal Aid, costing around £700 million a year” although it is not clear whether this has anything to do with personal injury. It is interesting that none of the political parties have a commitment to reinstate civil liability for breach of health and safety regulations made under the Health and Safety at Work Act 1974.   Trivia Comparative lengths of the manifestos: Conservatives:                 84 pages Labour:                            86 pages Liberal Democrats:          158 pages UKIP:                              76 pages Green:                              84 pages   Commitment requiring more explanation: “Ban high-frequency Mosquito devices which discriminate against young people.” (Liberal Democrats)

Fee increase to take place next Monday

A dramatic hike in court fees is to take place on Monday 9th March 2015. The Law Society has published the following table (see below) of the new court fees suggesting solicitors consider issuing cases this week.    Employment Tribunal fees were increased in July 2013 and the effect is thought to have been to reduce the number of tribunal claims substantially. It remains to be seen whether the increase of court fees will have the same effect.   The move will inevitably raise questions as to whether access to justice is being made more difficult. It may also sharpen the debate about whether our legal system should be funded by society as a whole or simply by its users: is the civil justice system simply about settling disputes between individuals or does it benefit all of society to the extent that it should be funded overwhelmingly by the state? Is it just a questions of degree?   The Law Society has sent a pre-action protocol letter to the Minister of Justice and it will be interesting to see how it puts its arguments if the matter reaches a hearing. 2 March 2015 Court fees increase from Monday 9 March Government increases in some civil court fees are due to come into effect on Monday 9 March. The increases affect money claims - both 'specified' and 'unspecified'. The Law Society, with other legal professional bodies, has criticised the fee increases and has sent a pre-action protocol letter to the Ministry of Justice. Firms may wish to consider whether they should issue claims this week in order to avoid the increase. Example fee increases: Value of claim £ Fee now £ (paper) New fee £ Increase in fee £ % increase 20,000 610 1,000 390 64% 40,000 610 2,000 1,390 228% 90,000 910 4,500 3,590 395% 150,000 1,315 7,500 6,185 470% 190,000 1,315 9,500 8,185 622% 200,000 1,515 10,000 8,725 576% 250,000 1,720 10,000 8,280 481% Read about our campaign against the increases and our consultation response  

Retiring gracefully ... and gradually?

Most personal injury lawyers think a lot about retirement. This can be their own, in my case usually when grappling with costs budgets, but is more likely to be that of the party whose claim they are advancing or opposing. The date of retirement is crucial to the value of a loss of earnings claim.   Most personal injury schedules claim full time working to age 68 or even 70. Most counter schedules contend for retirement at age 65.   However, new research shows the way people view retirement is changing. Nearly two-thirds of people aged over 50 no longer think that working full time and then stopping work altogether is the best way to retire and around half would still like to be in work aged between 65 and 70.   YouGov surveyed more than 2,000 retired and non-retired people aged over 50.   https://yougov.co.uk/news/2014/11/05/concept-gradual-retirement-attracts-non-retired-ad/   The survey showed:   39% of over 50s not currently retired said that working part time or flexible hours before stopping work altogether would be the best way to retire. 48% of those under 65 and not currently retired would still like to be in work between 65 and 70. 36% of retirees say their advice to others would be to “consider switching to flexible or part time work for a period first” before stopping work altogether. 33% of those over 70 and still working said they did so because they enjoyed it.   The survey also suggests that some non-retired people over 50 both in and out of work were ready to learn new skills. Nearly half (47%) said they were interested in attending training courses to learn new or to update existing skills.   There are lessons here for both schedulers and counter schedulers. An absolute retirement age of 65, 68 or even 70 may now be unrepresentative. Gradual retirement is increasingly the trend at least in England and Wales.   In “The Later Years of Thomas Hardy” (Macmillan, 1930), Florence Emily Hardy reports the author’s observation that:   “The value of old age depends upon the person who reaches it. To some men of early performance it is useless. To others, who are late to develop, it just enables them to finish the job”.   I cannot promise still to be working beyond age 70. If I am, I can promise it will not be on costs budgets!  

A prediction for 2015: costs budgeting is doomed

With the new year come predictions as to what will happen in 2015. Tom Standage of the Economist predicts that our smart phones will become smarter with the use of anticipatory or predictive intelligence - our phones may suggest we leave earlier for a dinner date if the traffic is bad or offer sending a message to other participants if we are late for meetings. Paul Lee of Deloittes predicts drones will be used more by business, Neil Murray of Mimecast unsurprisingly thinks that internet security will become an even greater issue and Simon Culmer thinks more customer service will be provided by video. These are some predictions from the technology of business pundits*. What of the law? It may be folly to make any predictions as to changes to the law but I would nonetheless hazard a guess that costs budgeting will either be abolished or reformed in 2015. Some judges are open in their dislike of costs budgeting whilst others betray their views more subtly in comments or general demeanour. Cost budget hearings must take up a large amount of court time and it is questionable whether they are looked at again in many cases before detailed assessment takes place (if indeed it does). Whereas in the past directions might have been agreed between the parties or dealt with briefly at a telephone CMC in multi track cases they are now dealt with at lengthy CCMC's. Large numbers of cases settle before getting to trial and in those cases the budgeting process adds to the use of court time and the costs incurred unnecessarily. The Costs Budgeting procedure has provided the legal profession with additional tasks for which we can bill and it has thrown a lifeline to costs draftsmen in the Jackson era. If costs budgeting is abolished or reformed the alternative may well be more predictive costs. It may be that costs budgeting will be retained for much higher value multi track claims but a predictive costs regime for those with a lower value. I wonder what my smart phone has to say about the matter... * http://www.bbc.co.uk/news/business-30442178

Shooting Admiral Byng

Admiral Byng was held responsible for the loss of Minorca in 1756. He was relieved of his command, court martialled and shot by a firing squad. Voltaire remarked of the decision to shoot him that it was beneficial to kill an Admiral from time to time “pour encourager les autres”. Although Hildyard J. made reference to Admiral Byng in his judgment in the case of Caliendo v Mishcon de Reya [2014] EWHC 3414 he was not prepared metaphorically to shoot the Claimant’s solicitors, DLA Piper LLP, to encourage the rest of us. DLA were 3 ½ months late in serving notice on the defendant of the existence of a CFA and an ATE policy in a professional negligence claim. They made an application for relief from sanctions at the time of service of proceedings and admitted that they had no good reason for their failure. The judge accepted the serious effect of the ATE/CFA funding arrangements but considered that what mattered for the first limb of the Denton test was the seriousness and significance of late notification. He held that the defendant had not been able to show ‘material prejudice’. This seems a slightly different test from whether or not the breach was ‘serious and significant’ - a failure to pay court fees was given as an example in Denton of a breach which is serious and significant but it cannot be said to cause ‘material prejudice’ to the other party. The judge’s application of the third limb of the Denton test (evaluation all the circumstances of the case so as to deal justly with the case) was also interesting. When dealing with the impact on other court users, the judge was keen to emphasise that he was not aware of any specific detriment to court users such as in Mitchell where the adjournment of the cost budget hearing caused an adjournment and the vacating of an asbestosis claim. It is submitted that the test of the impact on other court users has always been difficult – on the one hand information of a specific detriment is rarely likely to be available outside, perhaps, the masters’ corridor in the RCJ whereas, on the other hand, without such specific detriment the courts and parties will often be merely speculating. The judge did not consider it would be just to withhold relief from sanction. Whereas Denton undoubtedly softened the Mitchell regime, judgments such as this are taking us still closer to the former relief from sanctions test which focused on the requirements of justice - too late to save some of the Admiral Byngs of the past year.

QOCS does not apply to additional claims

The QOCS rules apply to a single claim against a defendant which includes a claim for damages for personal injury. In Wagenaar v Weekend Travel Ltd (t/a Ski Weekend) ([2014] EWCA Civ 1105) the Court of Appeal held that these rules are not applicable to the entire action in which a claim for damages for personal injury is made. Thus the QOCS rules did not apply to an additional claim under CPR Part 20 in which parties were disputing responsibility for the payment of damages.     C had been injured in a skiing accident whilst on a package holiday arranged by D. D denied negligence and joined W's ski instructor (TP) as a third party. The judge dismissed C's claim against D, and D's claim against TP. He ordered that C should pay D's costs, and that D should pay TP's costs. He applied the rules on QOCS, directing that, pursuant to CPR 44.13 and CPR 44.14, neither costs order was to be enforced. He held that the new QOCS rules applied to CPR Part 20 claims in the same way as they applied to primary claims between claimant and defendant. On appeal this ruling was overturned.