UK: April 2013 - Jackson Is Coming Or Is He?

We are now less than 3 months from implementation of major reforms to the Civil Justice system intended for April 2013. This briefing note summarises the widely canvassed headline changes under discussion in relation to personal injury litigation and their likely impact.

The scope and timing of the implementation of the proposals are still to be finalised and will be the subject of further briefings.

Portals [implementation postponed]

  • It is expected the financial limit will increase from GBP 10,000 to GBP 25,000
  • There will be a new EL and PL portal
  • The time limit for a response in the EL/PL portal is under consultation, but likely to be greater than 14 days allowed for a response in the Motor portal
  • As recovery of referral fees will be abolished, fees allowed in the Motor portal are likely to be reduced. Present consultation figures are; Stage 1 - GBP 200, Stage 2 - GBP 300, maximum fee - GBP 500 (down from GBP 1,200)
  • The consultation figure for maximum recovery in the EL/PL portal is currently GBP 900

Whiplash and Small Claims

  • A four month consultation on Whiplash claims is presently underway, closing 8 March 2013. The consultation proposals are:
    • Independent panel of medical experts to provide reports on whiplash injuries
    • Raise the Small Claims Track limit for RTA whiplash claims to GBP 5,000
    • Raise the Small Claims Track limit for all RTA injury claims to GBP 5,000
  • The Small Claims Track limit will be raised in April 2013 to GBP 10,000 for all non-injury claims

Damages

  • For Claims issued after 1 April 2013, general damages will increase by 10% (as per the Court of Appeal Guidance in Simmons v Castle 26/7/12)

Costs

  • Fixed fees will be introduced for all Fast Track cases up to GBP 25,000 [Implementation now likely postponed]
  • Success fees and ATE insurance premiums not recoverable for claims issued after 1 April 2013
  • Qualified one-way cost shifting (QOCS - the quid pro quo for abolition of success fees and ATE's) to be introduced. Its key features are:
    • Claimant's who lose personal injury claims will not have to pay defendant's costs if the claim fails, except:

      1. if the claim is found to be fraudulent on balance of probabilities
      2. the claimant fails to beat a defendant's part 36 offer
      3. the case is struck out as disclosing no reasonable cause of action
      4. the case is struck out as an abuse of process
    • If a claimant fails to beat a defendant's Part 36 offer, then the defendant can recover costs but only up to the level of any damages recovered by the claimant
    • QOCS protection applies to discontinued claims, and appeals

  • Part 36 Rules will be changed to encourage settlement, as follows:
    • If the claimant obtains judgment as advantageous as his offer, he is entitled to a further 10% of the damages and, in a non damages claim, 10% of the costs
    • The sanction is subject to a tapering system so that, for claims over GBP 500,000, the maximum sanction is likely to be GBP 75,000
  • New test on Proportionality for costs. Whether costs are proportionate will be considered AFTER a detailed assessment takes place
  • Cost budgeting is to be introduced for most multi-track litigation – potentially very significant
  • Referral fees are, for practical purposes, abolished inter partes
  • New damages based agreements for claimant's costs

Conduct/Case Management

  • Court to assume tighter control of litigation and costs through budgeting
  • Court directions to mean what they say!
  • Heavy penalty likely for any party in default
  • Additional emphasis on ADR

Points for defendants

  • Claims are likely to peak as we approach April 2013, with claimant solicitors' seeking to issue in time to recover success fees
  • Defendants will need effective processes for triaging and responding to EL and PL claims presented through the new portal when implemented
  • QOCS may after April 2013 lead to an increase in claims where the merits on liability are weaker. However, they should be cheaper to resolve. The likely effect on the overall cost of litigation for defendants is unclear at present
  • Cost budgeting combined with the revised CPR part 36 may mean that Claimants are likely to front load costs, present a completed claim and then make a Part 36 offer
  • Costs budgeting through the litigation process may assume far greater significance for the assessment of costs at the conclusion of proceedings
  • Early part 36 offers will become vital, as they are the only way a Defendant can protect itself against QOCS. Token Part 36 offers may have limited impact
  • QOCS means that fighting cases to trial may produce a pyrrhic victory, if the cost of winning exceeds the cost of an early settlement

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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