Quantum matters

In July 2008, the Ministry of Justice announced its long-awaited proposals for reforming the procedure for personal injury claims (see [2008] SJ 29 July). The reforms in a nutshell are:

• the fast-track limit for personal injury cases to be increased from £15,000 to £25,000. Small claims track limits for personal injury cases to remain the same; and
• a new, streamlined procedure for road traffic accident claims worth between £1,000 and £10,000. Employers' Liability (EL) and Public Liability (PL) claims are not included in the new scheme.

Judging by the response to Ministry of Justice's consultation paper on the issue, the proposals have met with a fairly predictable response from solicitors and insurers­, depending on which side their bread is buttered. Those representing claimants' interests will undoubtedly be relieved that the small claims limit for personal injury claims remains at £1,000 and that the more complex EL and PL claims are not included in the new scheme. Those acting on behalf of defendants may well see the omission of EL and PL claims as a missed opportunity and baulk at the prospect of providing a response on liability within 15 days under the new scheme.

So how have the reforms been received by those at the Bar and what impact are they likely to have on our practices?

Increased fast-track limit

There is concern that the increase from £15,000 to £25,000 '“ representing a 67 per cent jump upwards - is too steep, too soon; some would have preferred a more gradual increase. Others would argue that cases with a value between £15,000 and £25,000 are in any event too complex to fit the tight rules imposed by the fast-track regime, which may lead to prejudice on either side as a result of the limitations on evidence. It is this writer's view that cases will require careful judicial scrutiny at the allocation stage so that complexity is considered as well as financial value so that cases are not routinely allocated to the fast-track where the issues are such that they should be in the multi track. As far as barristers' practices are concerned, it remains to be seen what impact this particular reform will have.

Anecdotal evidence suggests that far more fast-track claims proceed to trial than multi-track claims as the costs implications are far lower for the former than for the latter. Will this result in more cases fighting and more briefs for trial? Who knows.

New procedure for claims up to £10,000

Under the new scheme a claim will be initiated by a Claim Notification Form which must be submitted to the proposed defendant within five working days of completion. The defendant then has 15 working days to consider its decision on liability. The government has concluded that there should be no extension of the 15-day limit.

Is this realistic? Many insurers struggle to respond within the 90 days allowed under the pre-action protocol. However, in this writer's opinion, the real flaw in the scheme is the lack of any sanction for failing to comply with the time limits. The pre-action protocol was introduced to reduce the delay and cost of claims but, arguably, has not succeeded as it lacks any enforcement procedure.

If and when liability is admitted then the claimant is required to send the defendant a settlement pack which will include a medical report, a schedule of loss together with relevant documents and any offer of settlement from the claimant. The settlement pack needs to be sent within 15 working days of the medical report being obtained and checked for factual errors.

Very tight timescale

It is suggested that this is a very tight timescale for the claimant's solicitors to carry out a number of important and potentially complex or time-consuming tasks. Furthermore, while it may be good practice for the claimant to make the first offer, it should not, in this writer's opinion, be compulsory for him to do so.

The defendant has 15 working days to consider the claimant's offer; if it is not accepted, then there are a further 20 working days to consider any counter-offer made by the defendant. In default of settlement or failure to comply with the timescales set out above, application can be made for a 'quantum hearing'.

It seems likely, at least initially, that both sides will find the tight timescales difficult to abide by and there will be quantum hearings listed where, under the present regime, the parties might have continued negotiating. Is this really more cost effective?

There is still a lot of detail missing from the current proposals, in particular as to how the quantum hearing will be conducted. This stage can be decided on paper if both parties agree; however, it is not clear what the appeal process would be if either party did not agree with the judge's assessment once made. It is hard to imagine that many claimants would be advised to agree to an assessment on paper.

As far as costs are concerned, the new scheme allows for fixed recoverable costs only. The proposals currently lack detail as to the extent of those costs.

In particular, the proposals are silent as to how counsel's fees will be considered. Under the current RTA fixed costs regime under CPR 45, there is no allowance for counsel's opinion.

Will the new scheme lead to a decrease in work for barristers advising claimants on quantum either in conference or in writing? It seems more than likely. Is that in the interests of justice and in keeping with the principle of equality of arms? In this writer's opinion, probably not.

From the point of view of both claimants and defendants, the new scheme can be seen as something of a missed opportunity. Suggestions as to additional measures include:

• a simplified form of automatic pre-action disclosure order in the event that a proposed defendant does not respond on liability within the prescribed time;
• stronger costs sanctions for non-compliance with time limits;
• the introduction of Alternative Dispute Resolution (in particular mediation) into the scheme;
• a mechanism whereby, if liability is initially denied but subsequently admitted, a claim could enter the process at the quantum stage;
• clarification as to how the new scheme dovetails with the existing pre-action protocol; and
• the use of Part 36 offers to encourage settlement.