News Category 2
A realistic and common-sense approach. A reminder of the principles relating to the assessment of damages under section 3 FAA: Paramount Shopfitting Company Ltd v Rix [2021] EWCA Civ 1172 - Rochelle Powell, Temple Garden Chambers
14/09/21. This was an appeal against the order of Cavanagh J, whereby he ordered that the respondent, the widow of Martin Rix (“Mrs Rix”), had suffered a loss of financial dependency. It was the appellant’s case that Mrs Rix had no financial dependency claim because the family business had been profitable since the death of Mr Rix.
Factual Background
Mr Rix died at the age of 60 from mesothelioma contracted from asbestos exposure when working for the appellant. Mr Rix left the appellant’s employment in the 1970s. Thereafter, he spent his working life building up a successful business which he subsequently ran as a profitable company, MRER Ltd. At the time of his death Mr Rix and his wife each held a 40% shareholding, with their two sons holding 10% each. Following his death, Mrs Rix inherited his shareholding so that she owned 80% of the shares at the time of the trial. Despite Mr Rix’s death, turnover and gross profit continued to grow.
Mrs Rix’s claims were brought under the Law Reform (Miscellaneous Provisions) Act 1934 and the Fatal Accidents Act 1976 (“FAA”). It was agreed before the judge that one issue would be determined, namely whether Mrs Rix had a valid claim for financial dependency and, if so, how it should be quantified.
At first instance
Mr Justice Cavanagh examined the key authorities relating to the issue of quantifying dependency pursuant to section 3 of the FAA. Applying the principles therein, he found that Mrs Rix had suffered a loss of financial dependency, notwithstanding that the business was more profitable than it was at the time of her husband’s death. The authorities made it clear that...
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Cost Budgeting in the Asbestos List
02/09/21. This Judgment was given extempore during a CMC. However, the Master decided that given that it involves the common issue of cost budgeting within the Asbestos List, it was set into print. It has been distributed more widely than otherwise would be the case. The Judgment states that approach contained has the approval of the Asbestos Masters.
Smith v W Ford & Sons (Contractors) Ltd [2021] EWHC 1749 (QB) per Master Davison.
The Judgment notes that there is a convention (though no rule of law) that costs budgeting is generally dispensed with in the asbestos list. This convention is set out in the White Book, at 3DPD 5.3 “Costs budgeting at the CMC in mesothelioma and other asbestos disease cases”:
“The convention of dispensing with costs budgeting in asbestos disease cases has been reinforced by the introduction of PD 3E paragraph 2(b) which indicates that in all cases where there is limited or severely impaired life expectation (five years or less remaining) the Court will ordinarily disapply costs management.”
The Master noted that this convention reflects the speed at which the Asbestos List is dealt with. First CMCs can be within days or weeks of issue, and trials can be within 3 months. For administrative reasons, there is no distinction made by the Masters between the different forms of asbestos-related injury. Neither is a distinction made as to whether such conditions are expected to be fatal.
The Master notes that such listing arrangements cannot accommodate cost budgeting.
The Defendants’ Arguments
The Defendant raised that this was a deceased case, and so without the urgency of a living case. The Master dealt with this simply by repeating the above. If there was a distinction there would be an administrative burden attached which would affect the living cases.
The Defendants also set out that this was a ‘heavily contested trial’ and not a ‘straightforward disposal process’. The Master found that this did not take the case out of the ordinary. A large number of such cases were disputed on medical or engineering evidence. The Master noted that this case was, in fact, more straightforward than some since the Helsinki criteria would not apply.
The Defendants’ third point was in relation to what was described as a ‘general encomium’ in favour of cost budgeting. The Master stated in relation to asbestos claims there is a general convention that this would not apply. He found that the factors in favour of cost budgeting were subordinate to the other factors already raised. He also found that there was no evidence that detailed assessment does not adequately control costs in asbestos cases.
The Master’s view was that if there was an analysis between budgeted and non-budgetted industrial disease cases, he would be surprised if there was much difference. If the Defendants wanted to displace a convention based on an assertion, they would have to prove the point. The Master took the view that there was not a tight control of costs on one hand, and a free-for-all on the other.
The Decision
In short, the Master followed the convention and dispensed with costs budgeting.
Conclusion
It is clear from this short Judgment that the Asbestos Masters will not easily be persuaded to order cost budgeting in the Asbestos List.
There was a hint of a wider view as to the utility of cost budgeting:
“QB Masters, Chancery Masters and Costs Judges do not necessarily share this defendant’s expressed confidence that costs budgeting controls costs better, or more effectively, than detailed assessment. This is a large topic and a complex and somewhat sensitive issue. The present hearing is not, perhaps, the forum to debate it at any length. “
This chimes with my own experience. Indeed, the QB Masters appear very willing to dispense with cost budgeting on other disease cases or indeed general personal injury cases, though usually in the event that both parties are content to do so.
This article was originally published at https://jimhester.me
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How Two Law Firms Have Adapted to the PI Reforms - Brian Rogers, Access Legal
27/08/21. From 31 May this year, the personal injury claims process changed for people who suffer from what is categorised as low-value injuries in road traffic accidents or RTAs.
Essentially, the changes have impacted the amount of compensation claimants can receive and it means RTA cases valued up to £5,000 will now be treated as small claims. In theory, claimants are now less likely to seek legal representation as they will have to pay for their legal costs out of reduced damages.
These reforms have had a major impact on the market, for firms of all sizes. According to a report by RTN Research[1], the reforms will ‘intensify’ the fight for market share as the market shrinks and make it vital for firms to improve operational efficiencies and service provision - something which larger firms are better placed to do, with more resources to invest in technology to streamline processes and reduce time adding up case-by-case.
To find out how the reforms have impacted law firms, we spoke with Mark Evans, co-owner and director at Easthams Solicitors, which serves Blackpool and the surrounding areas and Clint Milnes, chief information officer at Winn Group, national accident claims specialists.
What have the changes to the PI claims process meant for your firm?
Mark: Like many smaller firms which have historically specialised in RTA claims, we have had to rethink our strategy and refocus our services. Obviously, we have known for some time that these changes were coming in, so we had plenty of time to prepare.
With the small claims limit now increased, it means we can no longer claim our costs back if the claimant is successful, where historically we could. And when they are successful, they have to pay their fee to their solicitor out of the damages they receive. That will automatically deter many claimants from seeking legal representation, because they won’t want to lose a good chunk of their compensation.
The changes have impacted firms in two ways. It’s less attractive for claimants to use solicitors, especially when there’s a portal set-up for them to do it themselves, and for firms like us, because of the reduced levels of compensation, it isn’t financially viable to handle these claims. These types of cases can typically take six to nine months to conclude and where before we may have received a fee of around £2,000 per case, we would now be looking at probably less than £600, and that’s if the claimant wins. The risk is just too high for smaller firms to take on RTA cases in my opinion.
Clint: Essentially the changes are asking lawyers to take on cases where they won’t be entitled to recover legal costs and if we do win on our client’s behalf, we are looking at potentially 25 per cent of damages in the region of £500 - £750.00 as our income for that case. It’s a real challenge to make this work for law firms of all sizes. At Winn’s we will continue to provide a service to all clients, despite the reforms.
Of course, we have had to make far reaching changes to make it financially viable for our business. We’ve written a timeline of what the perfect low-value RTA claim case would look like for us, in terms of how much time it would take and how much time a lawyer needs to be involved.
A legal representative has to oversee the case but it’s about streamlining the entire claims process to reduce our work in progress and place more onus on clients, like in other walks of life such as insurance renewals, where clients would go online and complete forms themselves. As such technology is key to our strategy.
Have the changes accelerated any plans to adopt technology solutions in a bid to expand or grow areas of your business? Or have you turned to your technology solutions to help offset the forecasted loss in income created by the PI reforms?
Mark: As mentioned we have had to refocus our services due to the reforms, so we have moved our main focus away from RTA claims to other services like employers’ liability and public liability and strengthened our position in other areas including conveyancing and wills and probate.
For smaller firms making investments in tech, it has to be cost-effective. We can’t afford to take huge risks. For us, and I imagine most smaller firms, the cost involved in investing in the type of technology that would eventually make RTA claims financially viable, would be out of all proportion to the returns that we would get, given the reduction in the fees. So for us it's about using the technology we have and working with our technology partners like Access Legal to use technology for the services which are profitable, improving our efficiency and client experience in those areas.
Clint: Technology solutions have been an important part of our business for some time, but the PI reforms have certainly played a part in influencing our strategy towards making clients more self-sufficient. We have moved away from the typical paper-based or over the phone communication for many of our services. Instead, we have in place secure documents that we can share via a secure link. We are able to accept e-signatures and we have accelerated the use and functionality of our client-facing applications. All of this is designed to save time - even if we can save just 20 minutes case-by-case, overall, it's a major saving. It’s about chipping away at those minutes over a period of time.
We are also aiming to streamline as many of our processes across our services as we can. We are currently working with our technology partners to do this - for example we know that Access Legal is working to integrate its case management software (that we use), with the Official Injury Claim (Portal) that the Ministry of Justice has set-up for small track RTA claims. This is the way I think the sector is going, partially driven by the pandemic and hybrid working too. Lawyers need to be more streamlined from both a cost and client experience perspective, to stay competitive and financially viable.”
For more information about the PI reforms, visit https://www.gov.uk/government/publications/whiplash-reform-programme-information-and-faq.
Brian Rogers
Regulatory Director, Access Legal
[1]http://www.irn-research.com/market-research-reports/uk-medico-legal-and-insurance-market/
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Increases in hourly rates amount to 'special circumstances': Raydens Ltd v Cole [2021] EWHC B14 (Costs) - Rochelle Powell, Temple Garden Chambers
27/08/21. The Claimant solicitors acted for the Defendant in matrimonial proceedings between 2013 and 2018. The proceedings concluded, in the course of an ancillary relief hearing with an order which incorporated agreed terms of settlement. The order provided required the Defendant’s ex-husband to pay to the Defendant a lump sum of £800,000. Of that sum £290,000 was to be applied in the first instance to clearing the Defendant’s incurred costs.
As a result of late payment, the Claimant issued proceedings for recovery of their outstanding fees. The Defendant filed a defence disputing the claimed amount which read, simply: “I have requested to Rayden Solicitors that I would like a full assessment of my costs to be carried out. I am awaiting confirmation from them that the process has been started.” The matter proceeded to a CCMC at which an order was made recording the finding that the Defendant was out of time to apply for detailed assessment pursuant to section 70(3) of the Solicitors Act 1974, unless she could establish special circumstances.
The Law
Under section 70(1) of the Solicitors Act 1974, a solicitor’s client has an unqualified right to an order for detailed assessment of a bill delivered to the client if an application is made before the expiration of one month from delivery. If the client makes an application after that point, it will be made under section 70(2), which gives the court the discretion to make an order. Section 70(3)(a) limits that discretion by providing that if an application is made for the assessment of an unpaid bill after the expiration of 12 months from delivery, no order shall be made except in special circumstances.
Special Circumstances: Hourly Rates
The matter came before Costs Judge Leonard to consider the preliminary issue of whether there were “special circumstances”. Setting out the principles as to what amounts to...
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Unreasonable non-use of the Portal means fixed costs apply: Harford v Music Store Professional UK/DV247 Ltd [2021] EWHC B17 (Costs). - Rochelle Powell, Temple Garden Chambers
25/08/21. The Claimant brought a claim for damages against his employer following an accident at work. He was initially diagnosed with a potential inguinal hernia. Subsequent investigations revealed that he had also sustained two lumber sacral prolapsed discs in his spine. A letter of claim was sent on his behalf stating that the claim was not suitable for the Portal. Part 8 proceedings were issued in which the stated value of the claim was between £10,000 and £50,000. The Claimant’s solicitors initially concluded that the value of the claim was in excess of £25,000. Once all the evidence was finalised and Counsel’s advice obtained, it was apparent that the claim was no longer worth in excess of the Portal limit. The Claimant accepted an earlier offer made by the Defendant in settlement of his damages in the sum of £11,200.
The sole issue for determination was whether the Claimant acted unreasonably in not using the Protocol for Low Value Personal Injury Claims (Employers Liability and Public Liability Claim (the EL/PL Protocol)) and whether he should be limited to the Portal costs per CPR 45.24(2)(b)(ii).
The arguments
For the Claimant it was submitted that the decision not to use the Portal was a reasonable decision because the claim was felt to be worth above the portal upper limit. That decision was objectively reasonable. It was also submitted that the valuation of a claim is more of an art than a science and is a prediction of what a Court is likely to award and no more. It was also submitted that the Defendant must show that the Claimant’s assessment of the likely value of the claim was so unreasonable that the Court should drastically limit their costs entitlement to Portal costs.
For the Defendant it was submitted that fixed costs apply by virtue of...
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