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rebalancing the fast track

20 August 2007
DCA consultation on case track limits and the claims processed for personal injury claims

Summary

Browne Jacobson recently submitted its response to the Department of Constitutional Affairs considering the way in which lower value claims are handled. The full response can be found here.

The paper covered four core areas:

  1. Small claims track limits (in particular for personal injury and housing disrepair)
  2. Fast track limit
  3. An enhanced procedure for fast track personal injury (PI) claims where the claim is valued at under £25,000
  4. Areas of improvement in the procedure for intellectual property claims

The aim of the paper is to introduce a cost effective and rapid means of resolving claims, wherever possible, without recourse to the courts. Such procedures are much needed in this area where claimant costs can frequently exceed damages.

Small claims track limits

The small claims track provides a rapid and effective means of dealing with low value claims. Very limited recoverable costs ensure that parties investigations remain proportionate and individuals are generally expected to be able to deal with claims as litigants in person. From a defendant point of view, although our own legal spend is not recoverable this is more than off set by the avoidance of claimant solicitors costs.

The small claim track limit currently stands at £1,000 in respect of personal injury and housing disrepair claims and £5,000 for all other claims.

The Government proposes no change to these. In relation to personal injury, the difficulties of a litigant in person of considering quantum are cited in favour of this position. In relation to housing disrepair, the vulnerability of the claimant involved is relied on.

Our position is that the small claims track limit should be £5,000 for all claims. However, in relation to personal injury, there is a valid concern that the Judicial Studies Board (JSB) guidelines for claims in the region of £5,000 are not sufficiently clear for litigants in person to value claims. We have suggested that the JSB should be invited to provide further guidance on claims up to this value and the track limit uplifted thereafter. We have therefore proposed an immediate increase to £2,500 for personal injury claims.

If adopted, our proposals will result in an increased number of low value claims falling within the small claims track. That will allow for rapid, cost effective and fair resolution of claims of limited value. In particular the proposals address concerns that few personal injury claims currently fall within the small claims procedure.

Fast track

The Government has proposed an increase in the financial limit of the fast track to £25,000. It is not proposed to withdraw the discretion to allocate claims to the multi-track where their nature or complexity is such that this is justified.

The fast track recognises the fact that the majority of lower value claims have similar evidential requirements and can run to similar timetables. Analysis of our own claims both in terms of costs and time measures shows that claims begin to require bespoke handling where damages are above £25,000 to £30,000. The Governments proposals therefore fit with our experience of claims and we have supported these.

This will be significant in terms of the pre-action management of claims under the enhanced procedure discussed below.

Enhanced fast track personal injury procedure

The paper proposes a new procedure for personal injury claims valued up to £25,000 which, where liability is admitted this procedure will take a claim to its conclusion without proceedings being issued.

Key features of the proposed system are:

  1. A form notifying the defendant of the claim, to be provided by the claimant within five days of meeting with his solicitor
  2. A response on liability required in 15 days for claims relating to an RTA or 30 days for EL and PL claims
  3. Where liability is admitted, the claimant will provide a "settlement pack" to the defendant containing all evidence relevant to quantum
  4. The claimant will be required to put an offer with the settlement pack and the defendant will have the opportunity to make a counter offer subsequently
  5. In claims below £2,500 where quantum cannot be agreed there will be a procedure for referral of the settlement pack to a District Judge for a decision on quantum.
  6. Fixed costs will apply to the regime and ATE premiums will not be recoverable in relation to the early stages of the procedure
  7. Consideration is given to measures for the standardisation of contributory negligence, general damages and certain items of special damages using a tariff. A proposed tariff is set out for special damages items

The proposals are a response to the disproportionate costs which are often incurred by claimants solicitors in dealing with matters of this type. These costs will often far out weigh damages, particularly in claims towards the lower end of the fast track, and will also far outstrip defendant costs. This is a result of front loading and limited control of claimant investigations.

The procedure sets out promising proposals to address the above concern. Time limits will certainly go some way towards controlling front loading of investigations and unnecessarily extended enquiries into quantum.

However, the key to the success of the proposals will be the fixed costs structure adopted. The correct balance will have to be struck between the claimants ability to present a clear claim which can be effectively investigated by the defendant and the prevention of unnecessary or disproportionate investigations. We have made proposals in our response for a fixed fee structure applicable to the whole procedure. The precise level at which fees are set will depend upon the structure adopted by the DCA and we hope that they will consult further once that has been determined.

The time limits set out in the consultation paper are bound to cause some defendants concern, not only in relation to capacity management but also in terms of their ability to deal with claims which raise particular issues requiring additional investigation.

While we recognise that many of our clients will be able to adhere to the time limits in the vast majority of claims, we consider that there will be a gap in the scheme if claims fell out of it simply as a result of a minor breach. It is possible that certain claimant solicitors could try to take advantage of this gap by taking an obstructive approach to liability and failing to provide reasonably required information beyond the minimum set out in the forms proposed.

We have therefore proposed a slight extension to the initial time limits and this should give flexibility so that minor capacity management issues do not cause claims to fall outside the procedure. We have also proposed a second phase of investigation to be utilised by defendants where required. That would double the investigation time available to the defendant but, in order to maintain the balance of the procedure, it would come with a cost penalty in the form of a small enhancement to the claimants recoverable cost of the initial stages of the procedure. We consider this could be a particularly important facility in relation to potential fraud claims which will often take additional time to investigate.

The consultation raises specific questions about ATE premiums. The proposals are quite rightly based on the position that where there is no cost risk to a claimant there should be no recoverable ATE premium. In our proposals on costs we have sought throughout to avoid cost risk to a claimant with a view to arguing against recoverability of ATE premiums in all cases. Overall this can be expected to result in a significant saving to our clients.

In order to maintain this approach we have suggested that the cost of the medical reports might be borne by the defendant in all cases and of course that will be the position in any event where liability was admitted. We have offset this by emphasising the possibility of agreeing damages without medical evidence and appropriate cases and also by providing a procedure for early offers by defendants with a reduction of the claimants recoverable costs where these are not bettered.

Finally in relation to offers, we have proposed a system whereby any offer which is within 10 of the final determination of damages will amount to a successful offer. The proposed procedure does not allow the claimant to recover costs of an assessment where the offer they make with their settlement pack is not bettered. We understand that claimant solicitors are concerned at this proposal particularly given potential for injustice when a reasonable offer is made. We believe our suggestion addresses this concern and also provides some additional protection to Defendants where early offers are made on their behalf.

Recommendations

It is not clear when the new procedure will be adopted, although we understand the Government to be eager to implement change in this area at the earliest opportunity. Details of the changes are also unavailable at present.

We would ask our clients to monitor developments in this area and to remain vigilant for any opportunities to provide input. We will be doing likewise and will continue to represent our clients interests in any future consultations in this field.

Any amended procedure that is produced is likely to include strict time limits for defendant investigations. For those struggling with time limits under the pre-action protocol, now is the time to review procedures to see what simple efficiencies can be achieved.

Key to this process will be information gathering. That is typically the most time consuming exercise in determining a claim and in many cases is the area with the most potential for further efficiencies. For example, by ensuring accident report forms collect all information required to reach a decision on liability, significant delays can be avoided. Where the capability to produce an electronic accident report form exists this may also assist in the exchange of information.

Increased use of the telephone and email can also reduce information gathering times. Relevant contact information should be collected in accident report forms.

We are looking at ways we can support our client in light of the proposed changes to procedure and are establishing a client forum for this purpose. If you would like to join the client forum then please click here.

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