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The Market: Which way is the wind blowing?
Costs Aware 1
The winds of change are blowing in the costs arena once again. However, it is a challenge to foresee where we will end up unless the various proposed reforms are joined up to achieve the objectives of the various reformers.
The Department of Health launched a pre-consultation exercise in August last year in which it proposed introducing a fixed fees regime from 1 October 2016 for clinical negligence cases up to £250,000 in damages. Whilst we were expecting a full consultation to be published in December, we understand that it is not planned until later this year.
Last November the Chancellor chose to use his autumn statement to propose an increase of the small claims track limit to at least £5,000 by April 2017. This was one of a number of measures the Government planned to bring forward to reduce the excessive costs arising from unnecessary whiplash claims. We are expecting the consultation in June or July.
In December 2015, Lord Briggs published his Civil Courts Structure Review interim report in which he set out that there is a clear and pressing need to digitise the civil courts and create an “Online Court” (OC) for litigants to have access to justice without lawyers. Whilst the ambition is for the OC to deal with cases up to £25,000, it is recognised that getting to this level may have to be done incrementally.
Lord Briggs sees no reason why personal injury cases below the small claims track limit should not ultimately be included within the OC. In his view, if the small claims track limit is increased to £5,000, then that will capture some of the claims on which the costs are the most disproportionate including a very large number of whiplash and industrial deafness cases. Lord Briggs is consulting now and his final report is due for publication in July 2016.
On 28 February 2016, Lord Jackson delivered a lecture called ‘The Time Has Come’, in which he proposed extending the fixed recoverable costs regime to all fast and multi-track claims where “the sum in issue” is below £250,000.
He warned against having a series of separate grids for different types of cases and suggested that it would be better to include clinical negligence claims in an all embracing fixed costs regime.
Provided the political will is there, Lord Jackson expressed the view that it could be achieved by the end of 2016. The MoJ has asked the Civil Justice Council to facilitate meetings to debate fixed costs figures for multi-track claims up to £250,000. An initial meeting took place last month and more meetings are planned.
Whilst the winds of change are blowing in the costs arena, it is not clear that they are blowing in the same direction. We are concerned that without a clear vision and an interlocking package of reform the potential benefits to insurers may not be fully achieved.
Here are a few of the burning questions that need to be resolved along the way.
- Will the small claims track be increased for whiplash claims only or for all personal injury claims and to what level? £5,000 or higher?
- Will the scope of the OC cover personal injury claims and what needs to be done to make it happen? Where, if at all, does the claims portal fit into current thinking on the OC?
- Will the fixed costs regime be extended to cover both fast and multi-track claims and if so to what level?
- Will we have a number of tables of fixed costs depending upon the type of claim or only one table which can be flexed depending upon the complexity of a case?
We shall continue to engage with the various reformers and will update you on further developments as they occur.