- Part 36 offers: extra 10% of damages for claimants' offers to be tapered off for higher value claims
The government announced on 10 July that the planned additional sanction to reward claimants’ Part 36 offers will be subject to a tapering off mechanism for higher value claims.
The Legal Aid, Sentencing and Punishment of Offenders Act 2012, which implements a number of the key Jackson reforms, enables court rules to require a defendant to make an additional payment to the claimant where the defendant has rejected a claimant’s Part 36 offer but failed to do better at trial.
The government’s announcement confirms that, as anticipated, this additional payment will be calculated as 10% of damages (or for non-damages claims, 10% of costs). However, it will be tapered down for claims over £500,000 so that the maximum sanction is likely to be £75,000. Accordingly, the new sanction will have little relevance to larger commercial claims. The existing sanctions for claimants’ offers (i.e. indemnity costs and enhanced interest on both damages and costs at up to 10% above base rate) will continue to apply to all claims.
- Part 36 offers will trump “qualified one-way costs shifting” in personal injury claims
The government has clarified certain aspects of its plans for qualified one-way costs shifting (QOCS), which will apply for personal injury claims from April 2013. QOCS means that personal injury claimants will be awarded their costs if the claim is successful but will not generally have to pay the defendant’s costs if the claim fails.
The government confirmed in an announcement on 10 July that QOCS protection will be lost if a claimant has failed to beat a defendant’s Part 36 offer. In other words, a claimant who refuses a defendant’s Part 36 offer but fails to do better at trial will be at risk for the defendant’s costs (but the costs liability will be capped at the level of damages recovered by the claimant). The key message for defendants is therefore to make a well-judged Part 36 offer at an early stage, in order to retain some costs protection.
QOCS protection will also be lost if a claim is found to be fraudulent, or is struck out as disclosing no reasonable cause of action or as an abuse of process. There will not however be a financial test for eligibility; QOCS will apply to all personal injury claimants, whatever their means.
- Report recommends new class action for Hong Kong
Class action reform has for some time been a hot topic both in the UK and in Europe, with recent government proposals for a new “opt-out” collective action for competition claims before the Competition Appeal Tribunal (see here) and ongoing debate over the possibility of Europe-wide reform (see here). Hong Kong has also moved closer to introducing a new class actions regime following publication of a Report on Class Actions by its Law Reform Commission on 28 May 2012. The report recommends the introduction of a new class action procedure on an incremental basis, initially only for “consumer cases” – tort and contract claims by consumers in relation to goods, services, and property – but it is expected that the procedure will eventually apply to all claims.
Significantly, the report recommends the adoption of an “opt-out” approach for domestic class actions, pursuant to which all class members would be bound by the litigation unless they had opted out. Such an approach generally results in larger classes, and correspondingly higher value claims, than a procedure which requires potential claimants to make a positive decision to opt in to proceedings. For more information see our Hong Kong litigation e-bulletin.
- Court statistics for 2011
The Ministry of Justice has published its Judicial and Court Statistics for 2011. These show an increase in claims in the Commercial Court and Technology and Construction Court, reverting to 2009 levels after a fall in 2010, but a slight drop in claims for the Queen’s Bench and Chancery Divisions. Some points of interest include:
- There were 1,331 claims issued in the Commercial Court, an increase of 26% from 2010 after a 16% fall between 2009 and 2010.
- 483 claims were received in the Technology and Construction Court, an increase of 15 per cent on 2010 but similar to the 2009 figure.
- There was a slight drop in the number of claims issued in the London Queens Bench and Chancery Divisions, of 3% (to 4,726) and 5% (to 4,568) respectively.
- 1,269 appeals were filed in the Court of Appeal on civil matters, a similar number to 2010.
- The Supreme Court received 208 petitions for permission to appeal and disposed of 202, of which 143 were refused outright. 77 appeals were presented and 81 disposed of.