Keoghs Insight

Author

Lutty Choudhury

Court fee hike and mesothelioma claims

AWARE08/12/2015
Disease Aware Issue 7

The premise

In a bid to equalise what the Government perceives to be a ‘two nation’ justice system at play, Justice Secretary Michael Gove has decided that to ensure the poor have access to justice, the onus should be on “those who have benefitted financially from the legal culture to invest in its roots”.

Cue, the Civil Proceedings and Family Proceedings Fees (Amendment) Order 2015 No.576 ‘the Fees Order’ and the Civil Proceedings Fees Order 2008 No.1053 as amended by the Courts and Tribunals Fee Remissions Order 2013 No.2302 –‘the Remissions Order’.

Announced in January 2015 and implemented within seven weeks, the ink had barely dried on the new elements of legislation by the time the changes took effect on 9 March 2015.

The new rules impose an increased fee for the commencement of proceedings for the recovery of compensation - 5% of the claim value for claims worth more than £10,000, capped at a maximum of £10,000.

The response

It appears that there was perhaps an under-estimation of the response of the legal sector by the Government. Claimant solicitors were quick to highlight that claims worth £200,000 were now costing six times more in court fees (under the new proposal) as against the previous regime. This would impact the vast majority of mesothelioma claims. Then, to add insult to their injury, the same sufferers were unlikely to qualify for fee remissions as they would already have recovered a lump sum under the Workers’ Compensation Act. This made them so ‘well off’ that they had to pay the court fee up front because they had disposable capital in excess of £16,000.

This resulted in the Asbestos Victims Support Group Forum UK taking legal action against the Government, arguing that the new legislation was unlawful, breaching victims’ rights to a fair trial under Article 6 of the Convention on Human Rights. They argued it should not apply to mesothelioma claims because, far from facilitating access to justice, the levy served to impede it. Mesothelioma victims with a limited life expectancy were forced to part with a sizeable sum in the last few months of their lives, thereby serving to discourage victims from pursuing a claim.

Although the Judicial Review hearing was due to take place on 23 and 24 July 2015, on 2 July 2015 the Government agreed to exclude from the definition of ‘disposable capital’, compensation awards made to mesothelioma sufferers under the PWC Act, the 2008 Scheme and the Diffuse Mesothelioma Payment Scheme.

The reality

However, to be eligible for a fee remission, the claimant must pass two tests, of which the disposable capital test is only one.

Only if the claimant passes the disposable capital test can he continue to the ‘gross monthly income’ test, which also needs to be passed in order to be eligible for a full (or part) remission.The gross monthly income test in itself comprises two tests.

Firstly, the claimant must be in receipt of one of the following benefits:

  • Income-based Jobseekers Allowance
  • Income-related Employment and Support Allowance
  • Income Support
  • Universal Credit – with gross annual earnings of less than £6,000
  • State Pension – Guarantee Credit
  • Scottish Civil Legal Aid

Alternatively, for a claimant with no dependent children his gross monthly income must fall below £1,245. If the gross monthly income exceeds this figure, partial fee remission is possible. For every £10 of income over the threshold, the claimant will be required to pay £5 towards the court issue fee – known as a partial remission. For a couple with no dependents, where the gross monthly income is over £5,245 there will not be any fee remission. In reality, we may see many individuals meet part or all of a £10,000 issue fee, regardless of the amendment made.

Implications

It is of course debatable whether paying a £10,000 fee in exchange for £200,000 (that stands to be gained) would pose much of an impediment to a claimant bringing a claim.

More so, when you consider that it is rare for the claimant to fund disbursements themselves in any event - these are generally met by the claimant’s solicitor and latterly reimbursed by a losing defendant or an ATE Insurance provider.

The theoretical deterrent would arguably be little more than an inconvenience to claimant firms’ cash-flow.

What other claimants who have suffered life-limiting injuries due to causes other than mesothelioma?

A cursory glance at the recent waves of legislation and case law sees that mesothelioma cases are in a different category to standard injury claims, repeatedly singled out for exceptions to general procedures and for special rules. Laws are passed to circumvent case law deemed incompatible with public policy; they enjoy relaxed rules in causation; mesothelioma cases are not subject to the same rules by the HMRC in respect of access to work records of a deceased by dependants; they were excluded from LASPO 2012 and, thanks to the recent Supreme Court decision in Coventry v Lawrence, continue to enjoy payment of success fees and ATE premiums.

There is no doubting the appalling nature of the disease and its effect on victims and their families. One must wonder however whether, if there were more effective lobbying groups on behalf of other injured parties, this might result in greater scrutiny of the application of the recent legal changes in their claims as well. We are now living in a climate of rapid and unprecedented legal change, with financial pressures playing an increased role in Government policy on the funding of claims. Those engaging in litigation should expect to see an increase in cost per claim. This may deter some litigation. It will certainly encourage claimant solicitors to increase the profit they make from each successful claim.