UK: Recent Developments For Personal Injury Claims In England And Wales

Last Updated: 26 February 2018
Article by Sophie Allkins and Ruth Bailey

2017 saw a number of decisions that highlight an appetite for reform in the legal framework surrounding personal injury claims in England and Wales. Although in most respects these have not yet resulted in concrete changes which bind defendants, insurers will want to consider the impact of them on strategy and quantum for claims which are still at an early stage.

The changing discount rate

Where personal injury (including fatal accident) claims involve an element of future loss, the amount of damages paid by a defendant is adjusted to avoid overcompensating (or undercompensating) a claimant who receives monies as a lump sum. A discount rate is applied to adjust the award to take into account the return expected over time when this lump sum is invested. As an example, in a loss of earnings claim, a claimant might be entitled to his or her lost salary (say £20,000 per annum) for a five year period in which he or she is unable to work. If he or she receives the full £100,000 up front as a lump sum settlement, the claimant is able to invest this money and earn interest from the investment. At the end of the five year loss period, the claimant has received £100,000 (£20,000 annual salary times five years) plus the interest that has been earnt, resulting in an overall overcompensation.

To try to ensure that a damages award accurately compensates the claimant, a discount is applied to the loss period amount to produce an adjusted multiplier. The multiplier values are set out in standard form actuarial tables known as the "Ogden Tables". Historically (since 2001), the discount rate had been set at 2.5%, which reduced the amount of the lump sum damages payment a defendant insurer had to pay at trial or settlement. However, in March 2017, the then Lord Chancellor, Elizabeth Truss, changed the discount rate to -0.75%. This was in response to concern from claimant groups that the 2.5% rate (which had been set at a time when the Bank of England base rate was around 5%) overestimated the likely return on a lump sum investment that a claimant could achieve leading to under-compensation in practice.

The effect of the March 2017 change has been to significantly drive up the value of personal injury claims for defendant insurers in England and Wales, much to the delight of claimant lawyers. However, since the decision was announced there has been a widespread view that, whilst a rate change may have been necessary in light of the change in economic circumstances since 2001, the swing to -0.75% is too severe and does not reflect the investment habits of claimants. Rather than being undercompensated, they are now overcompensated at the expense of defendants.

There is light at the end of the tunnel, however, for defendant insurers. In September 2017 the Ministry of Justice announced plans for an overhaul of the discount rate procedure following a lengthy consultation process. The central issue is whether claimants should be treated as "very risk averse" or "risk free" investors, for which a very small (or even negative) discount should be applied (as with the current -0.75% rate), or "low risk" investors, which would result in an increase in the discount rate. Draft legislation was subsequently published which proposed applying a rate based on a "low risk" return, which, if passed, could see the discount rate move to between 0% and 1%.

Predictably, this announcement was welcomed by defendant insurers whilst claimant lawyers were rather less enthused by the proposals. The draft legislation has not yet been put before Parliament and, given the competing priorities of Brexit, there is no certainty about when the provisions will come into force. At the end of November 2017, the Justice Committee published the findings of their pre-legislative scrutiny of the proposals. Although supportive of the aims of the legislation, the Committee proposed a number of changes to the draft wording and urged the gathering of further evidence about how claimants invest their lump sum damages in practice. Whilst an initial Ministry of Justice implementation target of early 2018 is looking unlikely, there is hope that changes will be made by the end of 2018/early 2019.

What does this mean for defendants?

Although 2017 has been a year of Government flip-flopping in terms of what the discount rate should be, it is important to note that the discount rate remains for now at -0.75%. Whilst it is a matter for each insurer as to how they wish to reserve, it would seem sensible to continue to reserve at -0.75% until a new rate is set, especially for claims which are at a more advanced stage and expected to go to trial before the end of 2018.

However, September's announcement has provided an opportunity for defendants with claims in their relative infancy. For claims which would otherwise go to trial after the end of 2018, insurers may wish to push for settlement using a discount rate in the range of 0-1%. Recent experience suggests, whilst claimant solicitors remain resistant on this point, that it has been possible to explore settlement using this range. This also accords with the view from our colleagues at the bar, who report anecdotally that judges have been willing to approve settlements calculated on this basis. Unfortunately, the prospect of delayed implementation has tempered this in recent months as claimant firms use November's report to argue that the rate change is too remote to apply to current cases. In this respect, defendants of more complicated claims may be in a comparatively favourable position as longer hearing requirements are likely to be listed for trial further in the future due to the constraints of court diaries.

Bereavement award: Jacqueline Smith v Lancashire Teaching Hospital NHS Trust

At the end of November, the Court of Appeal handed down judgment in the case of Jacqueline Smith v Lancashire Teaching Hospital NHS Trust. The claimant, Jacqueline Smith, sought damages from the defendant NHS Trust following the death of her partner, John Bulloch, as a consequence of the admitted negligence of the NHS Trust.

Mr Bulloch and the claimant had not been married but had lived together for a period of 11 years prior to his death.

Under the Fatal Accidents Act 1976 ("FAA 1976"), the surviving spouse (or parent if the deceased is a child) can claim a statutory award (currently £12,980) for bereavement damages as part of their claim against a defendant. This is only available if the claimant and deceased were legally married or were in a civil partnership.

The claimant did not at first bring a claim for bereavement damages against the NHS Trust, since she was not entitled to this remedy at law. However, when her claim against the NHS Trust was compromised she joined the Secretary of State into the proceedings and brought an action for bereavement damages (in the then statutory amount of £11,800) or, if the court could not interpret the FAA 1976 to allow her the award, a declaration that the FAA 1976 was incompatible with Articles 8 and 14 (right to family life and freedom from discrimination respectively) of the European Convention on Human Rights.

Though the Court of Appeal declined to award the claimant damages, it did make a declaration of incompatibility under s.4 of the Human Rights Act 1998. In giving the leading judgement, Sir Terence Etherton, Master of the Rolls, said that:

" ...it is the intimacy of a stable and long term personal relationship, whose fracture due to death caused by another's tortious conduct will give rise to grief which ought to be recognised by an award of bereavement damages, and which is equally and analogously present in relationships involving married couples and civil partners and unmarried and unpartnered cohabitees."

What does this mean for defendants?

Strictly speaking, nothing as yet. A declaration of incompatibility does not itself change the law and it will be down to Parliament to look at amending the FAA 1976 to widen the definition of those entitled to seek bereavement damages. However, it has highlighted the perceived inequality of this provision and this may provoke a legislative response from the Government over the course of 2018.

In the short term, defendants should anticipate increased pressure from claimant lawyers to allow for an award of bereavement damages in settlement offers where the claimant and deceased were cohabiting for a period in excess of two years. Whilst insurers may wish to allow this sum on a goodwill basis as part of the wider negotiation strategy, it is important to note that this remains at defendants' discretion.

Cracking down on whiplash and holiday sickness claims

Following the General Election in June 2017, the Government has set out further plans to reform low-value whiplash and soft tissue personal injury claims procedure in the Civil Liability Bill. The reforms aim to cut down the number of minor, often exaggerated and sometimes fraudulent whiplash claims clogging up the court system. Proposed reforms include the introduction of a tariff of compensation for injuries of less than two years' duration, a fixed recoverable costs regime, and an increase to the small claims threshold (£5,000 for whiplash and £2,000 for other personal injuries) and a ban on the making of Part 36 settlement offers prior to medical evidence.

Draft procedural reforms following the Ministry of Justice consultation on holiday sickness claims are expected in early 2018. ABTA, the Travel Association (ABTA) estimates an increase of five hundred percent since 2013 in claims for gastric illness from holidaymakers. The Solicitors Regulation Authority issued a warning notice about the rise in unmeritorious holiday sickness claims, putting claimant lawyers on notice that the unscrupulous practices of claims management companies will be a target of both the reforms and the SRA's disciplinary powers. Holiday sickness claims are likely to be brought under the fixed recoverable costs regime proposed by Lord Justice Jackson and hopefully streamlined with the amendments necessary to the Civil Procedure Rules and protocol.

What does this mean for defendants?

In the case of both whiplash and holiday sickness claims, claimant legal costs can often run to double the claim value and vary wildly in each case. Examples cited in the Jackson Report (see further below) in respect of holiday sickness claims with claim values of £1,000-£1,500 when settled, were followed by costs claims in the region of £3,000-£6,000. The creation of fixed upper limits for both damages and costs in these types of cases will benefit defendants by introducing an element of certainty. Whiplash and soft tissue claims are often difficult to defend due to the nature of the injuries involved. The reform, in particular a proposed ban on Part 36 settlement offers prior to medical evidence, will discourage fraudulent claims. In terms of holiday sickness claims, once a date for the reforms is announced (likely April 2018), defendants may expect to see a short term spike in claims being notified prior to their entry into force.

A new "intermediate" claims track?

Together with the reforms mentioned above, Lord Justice Jackson's supplemental report on costs proposes the creation of a new "intermediate" claims track for cases of modest complexity above the fast track up to £100,000 in value. This reform would extend the fixed costs regime (FCR) above the current £25,000 limit. Many lower value injury claims currently see claimant costs far outstripping the claim value and placing these claims into a FCR regime will be helpful to defendants and insurers, particularly when reserving for costs. However, reform will need to be streamlined with amendments to claims procedure and protocol in order for the desired effect to be realised.

What's in store for 2018?

2018 is shaping up to be an interesting year for personal injury practitioners in England and Wales, and airlines and insurers with claims in this jurisdiction may find tactical advantages to timing the resolution of disputes around the anticipated changes highlighted above. The appointment of David Gauke, a qualified solicitor, as Lord Chancellor and Secretary of State for Justice is to be welcomed when considering the ambitious reforms underway and in consultation. Overall, 2017 has demonstrated an appetite for reform to the legislative framework for dealing with personal injury claims, but it remains to be seen with the challenges of Brexit whether these will come to fruition in the next 12 months.

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.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
Clyde & Co
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Clyde & Co
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions