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Fixed Costs Proposals for Hearing Loss claims finally revealed

The Civil Justice Council (CJC) has published a final report putting forward recommendations for a fixed costs scheme for Hearing Loss claims. Sean Linley, Costs Consultant, reports.

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The Master of the Rolls Sir Terence Etherton has confirmed that he has ‘written to the Lord Chancellor to commend the report and ask for its recommendations to be considered as part of the forthcoming wider review of fixed costs’.

The CJC’s report is in response to the government’s request to look at how the handling of Noise Induced Hearing Loss (NIHL) claims could be improved and how a fixed costs regime might work. This brought together a working party which included both Claimant and Defendant representatives.

The report puts forward a number of proposals to make the process in NIHL claims more streamlined including proposals for both a new standard Letter of Claim & Response and standard directions in the majority of Fast Track cases.

The report also looked at other areas which could be streamlined or improved including stricter adherence to the Association of British Insurers’ guidelines on interaction between Defendant’s and handling insurers where there are multiple Defendants and a system of accreditation for audiologists.

In addition, initial proposals for a fixed costs regime were set out with the consensus that NIHL needed its own specific framework.

It is presently unknown when the proposals may be enacted with a number of details still to be finalised.

The Proposals

For claims which settle pre-issue separate allowances are made for cases where the Defendants make formal admissions of liability and claims which settle pre-litigation but only after the papers for litigation have been prepared.

Pre-Litigation fees will include any costs for the use of counsel, whereas counsel’s involvement post-litigation will be allowed in addition to the matrix of fixed recoverable costs, although any involvement must be ‘justified as reasonable’.

It was also noted that where a Defendant instructs a QC and the case remains in the fast track, that the Claimant may exceptionally recover ‘the reasonable fees of instructing their own QC’.

The working party failed to come to an agreement over the issue of trial fees and consequently the fixed costs proposed do not include any allowance for Trial itself.

Lord Justice Jackson has already weighed in on this issue in his Fixed Recoverable Costs Report which was published in July. LJ Jackson said:

“I recommend that counsel’s fees and trial advocacy fees in NIHL cases should be the same as those which I propose for ‘Band 4’ […] almost all NIHL claims are low value […] [so] the trial advocacy fee will generally be £1,380.”

No agreement was also reached as to how to deal with the issue of a preliminary issue trial and whether this would take the case outside fixed costs or whether the same could be accommodated within the proposed matrix.

However, it was agreed that: “Should the claim continue to run after a preliminary trial, the claim will recommence within the fee structure from the allocation stage (i.e. without the stage from issue to allocation) and the claimant if successful will receive the fixed costs for the further litigation stages in addition to those for the preliminary trial and pre-litigation”.

The working party were able to agree separate fixed costs pertaining to the restoration of a dissolved company to the Register of Companies. The fee per restored Defendant successfully pursued will be £1,280.00. This is inclusive of counsel’s fees but exclusive of disbursements so long as they are ‘reasonably incurred’.

Any costs relating to Pre-Action Disclosure applications or any other interlocutory applications are to fall outside the fixed costs scheme and are to be dealt with separately.

There was also a recognition that for cases with more than one Defendant costs would increase and that consequently some form of incremental increases were necessary. The report made it clear, however, that that the involvement of multiple Defendants does not mean that work is doubled. For pre-litigation stages, an additional £500.00 is allowed for each additional Defendant (up to a maximum of three Defendants) and post-litigation an additional 20% is allowed under each stage for each additional Defendant.

The fixed costs proposals have been broadly broken down into three stages:

Stage 1 (up to and including the letter of claim)

Stage 2 (cases where liability is admitted)

Stage 3 (liability not admitted)

Stage 2A/3A represent cases where papers have not been prepared to issue proceedings

Stage 2B/3B contain an additional allowance for the cost of preparing papers to issue where incurred.

The figures proposed are below and all of the figures are exclusive of VAT and disbursements (with the exception of counsel’s fees which the pre-litigation fees take into account).

Stage 1 Defendant 2 Defendants 3 Defendants
Pre-Litigation
2A £2,500 £3,000 £3,500
2B £3,000 £3,500 £4,000
3A £3,500 £4,000 £4,500
3B £4,000 £4,500 £5,000
Post-Litigation
L1 (Issue to Allocation) £1,650 £1,980 £2,310
L2 (Post-Allocation to Listing) £1,656 £1,987 £2,318
L3 (Listing to Trial) £1,881 £2,257 £2,633
Max possible(3B+L1+L2+L3) £9,187 £10,724 £12,261

One issue identified with other fixed costs regimes was that once set they would not be reviewed for long periods of time.

The working party agreed that the fixed costs matrix should be adjusted automatically in line with an appropriate index, most likely the Consumer Prices Index (CPI).

The Exclusions

The proposals are wide-reaching but there are a number of notable exemptions where it was felt that cases with either too difficult to fix or too complex.

Firstly, the regime will only to cases which remain in the Fast-Track. As per previous comments time relating to interlocutory applications such as Pre-Action Disclosure will be dealt with outside the fixed costs matrix and will be assessed on the standard basis (ordinarily by way of summary assessment).

All military claims and those valued at over £25,000.00 will also be exempt.

In addition, cases where there are four or more Defendants will be excluded from the fixed costs regime.

Moreover, where a Defendant requires a second audiogram or seeks its own medical evidence this would also take the case out of the fixed-cost regime with Defendant’s ‘encouraged to put questions to the Claimant’s expert as an alternative’.

Furthermore, any cases where a Defendant argues that the Claimant’s condition is de minimis or not actionable will also be excluded.

‘Test cases’ will also be amongst the categories of cases which are to be excluded from the fixed costs regime. The working party did not agree upon a definition but both the Claimant and Defendant representatives stated that ‘they felt could easily identify such cases in practice’ with it recognised that most ‘test cases’ were likely to proceed on the Multi-Track in any event.

Finally, in single Defendant cases, Defendant’s or insurers will be able to pre-elect to put their name on a list for all their cases to commence within the Portal. Where a Defendant is no longer trading and is represented by insurers only, all insurers of that Defendant must have pre-elected for this to apply. This would exclude single Defendant deafness claims from the fixed costs scheme in favour of the current portal scheme. Any case commenced in the portal which then subsequently falls outside the portal will see costs assessed on the standard basis, there will be no route to the NIHL fixed costs regime.

Conclusion

Wherever substantive changes are proposed there is a need for contemplation. The proposals made are unlikely to have many fans but are built on compromise.

The report should provide practitioners with some detail as how the future of NIHL cases will look but with the timetable on any form of implementation unclear there is plenty of time still to get systems in place.

No doubt more twists and turns are ahead as the Ministry of Justices fixed costs review continues to evolve. We will be keeping a watchful eye on these developments as they happen.


Sean Linley is a Costs Consultant at PIC.

To contact him regarding this blog or any other costs matter, please click here.

 

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