Delays to Personal Injury Reform - an opportunity to prepare your strategy
Monday, 15th May 2017
The General Election has seen the abandonment of the Prisons and Courts Bill, at least for the time being. This delays the robust new fixed tariff for RTA soft tissue injuries and a ban on making offers without medical reports.
The increase in the small claims limit for personal injury claims was to be implemented by secondary legislation but the intention was for all of these reforms to be presented as a "package". The election has shifted the horizon. We await further announcements.
As a reminder, the draft proposals are to increase the current PSLA (injury lump sum award) small claims cap of £1000 to £2000 for all non RTA cases and £5000 for RTA cases.
When implemented, the number of cases falling under the Small Claims rules (CPR Rule 27) will increase significantly. Compensators must review how this will impact on litigation costs. Will more cases be dealt with in-house? What will your strategy be in dealing with Litigants in Person?
Unrepresented litigants can be a thorn in the side of compensators, take longer to deal with and refuse reasonable settlement offers. Successful Defendants are not awarded costs in the Small Claims track unless they can show unreasonable behaviour by the other party. The case of Dammermann v Lanyon Bowdler LLP (April 2017) helps compensators to understand the meaning of this term.
This case was brought by a very "persistent' litigant in person and allocated to the Small Claims track. Mr D's claim failed; he appealed and was again unsuccessful before the High Court judge. Costs were awarded against him for "unreasonable behaviour". He appealed to the Court of Appeal, who reviewed the issue of costs.
Helpfully, in rejecting the High Court's decision on costs (thereby providing welcome financial relief to Mr D) the Appeal Court offered "sufficient guidance" for judges when considering when to make an exception to the small claims costs rules. In a joint judgment, the appeal judges quoted from Lord Bingham in the 1994 case of Ridehalgh v Horsefield:
"… conduct cannot be described as unreasonable simply because it leads in the event to an unsuccessful result or because other more cautious legal representatives would have acted differently. The acid test is whether the conduct permits of a reasonable explanation. If so, the course adopted may be regarded as optimistic and as reflecting in a practitioner's judgment, but it is not unreasonable,"
There was no real distinction found between the test for awarding wasted costs against legal practitioners and the test to be applied to litigants in person. However, the reality in practice is that unrepresented litigants are given significant leeway. Their Lordships also pointed out that:
"it would be unfortunate if litigants were too easily deterred from using the Small Claims Track by the risk of being held to have behaved unreasonably and thus rendering themselves liable for costs"
The bar appears to be set quite low. Some would say that this is only fair, as litigants in person are not lawyers and cannot be expected to understand the strength of their case, or the merits of settlement. The result for compensators could be that, whilst less costs are paid out to Claimant solicitors, more time and money will be spent on resources to defend these cases.