On the 6 September 2017, the Ministry of Justice published the Civil Justice Council s Report on Noise Induced Hearing Loss Claims (NIHL). This is the body of work behind the proposals headlined in Lord Justice Jackson s Supplementary Report on Fixed Recoverable Costs for Civil Litigation, published on the 31 July 2017. This paper sets out the main proposals contained in both reports and also examines the likely implications for disease practitioners. The fixed cost proposals will be the subject of wider consultation at a later date. It is our understanding that implementation is thought unlikely to occur before April 2019 and possibly as late as October 2019, as it appears to remain the Government s intention to keep together the fixed costs, small claims and whiplash reforms. The proposals are for two separate fixed costs regimes to sit alongside each other. NIHL claims will have a bespoke protocol but it is envisaged that some types of NIHL claims will be deemed to be out of scope. Those cases deemed out of scope in the CJC Report include; Cases where de minimis arguments are raised. Test actions and military cases. Cases where there are more than three defendants. Cases where the defendant seeks its own medical evidence. Cases with a value of more than 25,000. The CJC Report recommends that accredited audiologists conduct the audiometric testing to ensure that it is robust and objective. The aim is to provide reassurance to compensators and reduce the number of cases where the defendant seeks their own medical evidence or repeat audiometry. Template letters of claim and letters of response are appended to the CJC Report: their aim is to provide more information to compensators at an earlier stage to assist early decision making. The new protocol would also require a claimant to provide an audiologist s report with the letter of claim.
Pre-issue 2,500-4,000 + 500 Post-issue, pre-allocation 5,650 + 830 Post-allocation, pre-listing 7,306 + 1,161 Post-listing, pre-trial 9,187 + 1,537 Trial advocacy fee Not agreed Lord Justice Jackson recommends that employers liability disease claims are categorised as Band 4 cases alongside professional negligence claims and the most complex Fast Track claims. Here, a slightly different approach to fixed recoverable costs is proposed which will involve an individual case by case evaluation according to the recovered. This approach mirrors the methodology for calculating costs currently in Fast Track RTA, EL and PL claims. 2,250 + 15 % of + 440 2,575 + 40 % of + 660 + 5,525 + 40 % of + 660 6,800 + 40 % of + 660 a) 1,380 in a claim with a value up to 3,000 b) 1,380 in a claim with a value 3,001-10,000 c) 1,800 in a claim with a value 10,001-15,000 d) 2,500 in a claim with a value of 15,001-25,000
This is best illustrated by a worked example which compares a claim for NIHL and a claim for HAVS, both of which settled at 7,500. The figures are net of VAT and disbursements. 2,500 3,000 3,500 3,375 3,815 4,255 3,500 4,000 4,500 3,375 3,815 4,255 4,000 4,500 5,000 3,375 3,815 4,255 5,650 6,480 7,310 5,575 6,235 6,895 7,306 8,467 9,628 8,525 9,185 9,845 9,187 10,724 12,261 9,800 10,460 11,120 NB: Assuming equal pro rata exposure, then costs will be split equally two or three ways for cases with two or three defendants. Lord Justice Jackson proposes the introduction of an intermediate track, subject to a new set of fixed recoverable costs for cases not deemed suitable for the Fast Track. This would include claims where are no higher than 100,000, the trial will not last more than three days and where there will not be more than two expert witnesses giving oral evidence for each party. Claims for mesothelioma or asbestos related lung disease are exempt. Four bands are proposed. The proposals indicate that most claims within the Intermediate Track will be band two or three, but band one may encompass quantum only PI claims. A specific example of a band four case is detailed in the report, of an EL disease claim with serious issues of fact/law and the trial is likely to last three days. The proposed fees are set out in the table below, with the following guidance from Lord Justice Jackson: The figures in each of stages S1, S3, S4, S5, S6 and S8 are the cumulative totals for costs incurred up to and including that stage. I have shaded these cumulative boxes for ease of use. The figures in stages S2, S7 and S9-S15 are separate sums for those items, if carried out. The figures in stages S2, S7 and S13 are ring-fenced for counsel or a specialist lawyer. The sums in the other boxes are for division between the solicitors and counsel/specialist lawyer as appropriate in the individual case. For non-personal injury cases which are settled before issue, the figures in stage S1 are capped costs, rather than FRC.
1,400 + 3% of 4,350 + 6% of 5,550 + 6% of 8,000 + 8% of 1,750 1,750 2,000 (1) 2,000 (2) 3,500 + 10% of 6,650 + 12% of 7,850 + 12% of 11,000 + 14% of 4,000 + 12% of 8,100 + 14% of 9,300 + 14% of 14,200 + 16% of 4,500 + 12% of 9,500 + 16% of 10,700 + 16% of 17,400 + 18% of 5,100 + 15% of 12,750 + 16% of 13,950 + 16% of 21,050 + 18% of 1,250 1,500 2,000 2,500 5,700 + 15% of 15,000 + 20% of 16,200 + 20% of 24,700 + 22% of 500 750 1,000 1,250 2,750 3,000 3,500 5,000 1,250 1,500 1,750 2,500 500 500 500 500 1,200 1,500 1,750 2,000 1,000 1,000 1,000 1,000 1,000 1,250 1,500 1,750 (a) 19,150 (b) 22,150 (c) 29,650 (a) 33,250 (b) 37,250 (c) 47,250 (a) 39,450 (b) 43,450 (c) 53,450 (a) 53,050 (b) 57,450 (c) 68,450
(1) 3,000 if there is a counterclaim and defence to counterclaim. The rules may need to specify how costs are split between claim and counterclaim. (2) 3,000 if there is a counterclaim and defence to counterclaim. The rules may need to specify how costs are split between claim and counterclaim. (3) If the receiving party did not prepare the bundle, subtract: (a) 500 for a Band 1 case, (b) 750 for a Band 2 case, (c) 1,000 for a Band 3 case, and (d) 1,250 for a Band 4 case. (4) In this table solicitor includes a representative of the solicitor s firm. (5 +6) To be halved if attendance is for half a day or less. (7) Assuming a one day trial in Band 1, a two day trial in Band 2, and a three day trial in Bands 3 and 4. For all bands, it is assumed that there was no counterclaim, that the receiving party prepared the trial bundles, that there was unsuccessful ADR and that there was no approval of settlement for a child or protected party. Any process which has been the subject of a mediated agreement between two sides with different objectives (as the CJC Report has) will inevitably result in a compromise. The NIHL recommendations (if enacted) will require compensators to trust that the use of accredited audiologists will lead to an end to the often unreliable audiology compensators have been presented with since 2011. It is hoped the use of accredited audiologists will provide sufficient reassurance and avoid the need for compensators routinely seeking repeat audiology -all of which comes at a cost to compensators in an environment built around one way costs shifting. It is also important that improvements and a greater degree of consistency should be applied to directions provided in litigated disease cases, both on the Fast and the envisaged Intermediate Track. At present, there is a substantial variance between courts around the country in their approach to allocation and as to whether alternative medical evidence is allowed on both NIHL and other disease claims. When the consultation commences, consideration should be given as to whether in cases where the defendant seeks their own medical evidence, they should be permitted to obtain it, albeit with the case potentially moving to the Intermediate Track, which will result in a higher fixed fee -should the case be successful from a claimant s perspective. The position of NIHL preliminary issue trials on limitation remains unclear, with no agreement between the claimant and defendant working groups. The view of the experienced District Judge well versed in NIHL claims who assisted the CJC was that preliminary issue trials should be caught on the NIHL Fast Track regime; Lord Justice Jackson s view is to the contrary. The reality is that for the overwhelming majority of NIHL cases, exposure to noise dates back several decades and the claim is only presented where the company is dissolved with no available documents and the witnesses having dispersed. Preliminary issue trials are a quick and inexpensive way of resolving issues. We recognise the possibility that the new scheme may provide opportunities for some claimant solicitors to seek to circumvent the protocol or increase the level of costs payable, perhaps in relation to the number of defendants or the value of the claim. However, as with the current EL, PL and RTA portals, the rules applicable to them can be drafted in such a way to deter, and penalise in costs, such behaviours. There have been calls in certain quarters for similar protocols to be introduced to other disease claims. Given the timescale involved in reaching the NIHL agreement, this time may be better spent improving the consistency of standard litigation directions for such cases.
As the worked examples illustrate, there are marked similarities between the costs proposed for the two fixed fee regimes for Fast Track disease cases. If implemented with the current figures, we envisage that NIHL and other disease claims may well be seen as sufficiently attractive to be pursued, although we expect a broadly neutral impact on volumes. The success of any accreditation scheme for audiologists and the extent to which the Civil Rules Committee can draw up standard directions remains uncertain, but it will be these two unknowns which will determine whether in the medium to long term real improvements have been made to the disease claims process. If the proposals are enacted, further debate is envisaged around whether disease cases on the Intermediate Track fall in either Band 3 or Band 4. It may well be the case, depending on the precise rules and levels of costs, that a fixed costs regime may benefit both compensators and claimant solicitors. A fixed costs regime provides claimant practitioners with an opportunity of modelling their business profitably, knowing what they will recover from a defendant in a particular claim. It is clear that fixed costs regimes generally provide greater financial certainty for compensators and make it easier to reserve. It is also likely to put a brake on the spiralling costs which we have seen in recent years. However, much will depend on whether the costs position following the Court of Appeal decision in Broadhurst v Tan remains. In Broadhurst, a claimant who obtains a judgment for equal or more than their own Part 36 is awarded costs on the indemnity basis following the expiry of the relevant period. This occurs even if the case is otherwise subject to fixed recoverable costs so that costs are payable on both a fixed recoverable costs and hourly rate basis, which can impact upon reserving. Lord Justice Jackson proposes removing the entitlement to indemnity costs. Instead in such a scenario, a claimant would be awarded a percentage uplift on the FRC costs, mooted at 30% or 40% and for a defendant would reintroduce costs certainty. The proposals are also likely to impose a greater degree of decision making at the pre litigation stage and bring into sharper focus the need for compensators to undertake a credible costs benefit analysis at an early stage. There are a myriad of civil reform proposals on the horizon including the Briggs online court, the increase to the Small Claims Track personal injury limit, moves to simplify disclosure and changes to the mechanism for calculating the discount rate, to name but a few. As Lord Justice Jackson rightly states, joined up law reform requires that the different civil justice initiatives should dovetail together and it is vital that compensators start to consider their business models and consider them in light of all the potential interlocking reforms, looking at risks, opportunities, market impact and unintended consequences. This is at a time where technology is never far from the legal headlines, and defendants and compensators look at innovative ways of dealing with some of the reform ahead. Lord Justice Jackson notes that to the extent that technological advances reduce legal costs at a faster rate than those of other services, the triennial review may wish to adjust the uprating accordingly. Should you wish to discuss how we can help you, or to schedule an individual session as you consider your strategies and solutions to the jigsaw of reform, please do not hesitate to get in touch.
jim.byard@weightmans.com kieran.jones@weightmans.com rob.williams@weightmans.com