Mesothelioma victims remain exempt from costs reform

There has been a significant legislative focus on mesothelioma claims recently, with a marked focus on protecting mesothelioma victims. The Mesothelioma Act 2014 has come into force and with it the Diffuse Mesothelioma Payment Scheme 2014, which provides a fund of compensation for victims who are unable to trace the relevant employer or insurer.

The High Court has now also stepped in to safeguard mesothelioma victims from what it believes was a failure on the part of the Lord Chancellor to carry out a proper review in respect of how litigation costs will be addressed in mesothelioma claims. One of the reforms brought in as part of the civil justice reform package in April 2013 was to render success fees and insurance premiums irrecoverable from defendants. However, this did not apply to victims of mesothelioma claims who were still able to recover these additional liabilities, pending a review by the Lord Chancellor. The review was to specifically consider what effect the new costs rules would have on mesothelioma victims. The High Court has declared that the review purportedly carried out was insufficient and attempts to apply the costs rules to mesothelioma victims are unlawful, pending further review.

Background

The Legal Aid, Sentencing and Punishment of Offenders Act 2012 (LASPO) came into force in April 2013. Sections 44 and 46 of the Act ban the recovery of additional liabilities such as success fees and insurance premiums from the paying party.Section 48 delayed the application of these sections to mesothelioma victims until the Lord Chancellor had conducted a review and published a report.  The statutory purpose of the review was to consider the likely impact of sections 44 and 46 on mesothelioma cases.

In December 2013, the Ministry of Justice (MOJ) announced its decision to end the LASPO exemption for mesothelioma claims and published the report on which it based the decision in March 2014. 

A House of Commons Justice Select Committee carried out an enquiry to scrutinise the MOJ’s review and concluded that it was not ‘prepared in a thorough and even handed manner’.

It has since been alleged that the Government had entered into an agreement with the Association of British Insurers (ABI) by which the ABI agreed to fund the levy under the Mesothelioma Act 2014 in exchange for removing the LASPO exemption for mesothelioma claims. 

The challenge

The MOJ, and specifically the Lord Chancellor, were heavily criticised for failing to carry out a proper review as required by section 48.

Proceedings were brought by the chairman of the Asbestos Victims Support Groups Forum, a group which acts as a representative body for those afflicted with asbestos related diseases in respect of legal and political issues arising from such diseases. It was alleged that the review carried out by the Lord Chancellor failed to comply with the requirements of section 48 as it did not sufficiently consider the likely effect of the LASPO changes on mesothelioma claims.

The Lord Chancellor sought to carry out the review by way of consultation exercise. The consultation document entitled‘Reforming mesothelioma claims – a consultation on proposals to speed up the settlement of mesothelioma claims in England and Wales’ dealt largely with the handling of mesothelioma claims, including the proposal for a pre-action protocol. Reference to the section 48 review formed only a small part of the document.

The decision

The court made it clear that the Lord Chancellor had discretion over how the review was carried out, but nevertheless found that the consultation upon which the Lord Chancellor relied was insufficient to enable a proper review of the likely effect of Sections 44 and 46 on mesothelioma claims.

Mr Justice Davis held that: ‘No reasonable Lord Chancellor faced with the duty imposed on him by Section 48 of the Act would have considered that the exercise in fact carried out fulfilled that duty. I do not find that a consultation exercise per se was an inappropriate means of fulfilling the duty. Rather, the nature of this consultation meant that it did not permit the Lord Chancellor to do so.’

As a result the court made a declaration that the Lord Chancellor had failed to carry out a review as required by section 48 with the consequence that sections 44 and 46 cannot be brought into force in relation to proceedings relating to a claim for damages in respect of diffuse mesothelioma.

What’s next?

The Lord Chancellor must now carry out the statutory review required by section 48 to consider the likely impact of sections 44 and 46 on mesothelioma cases. Until this is carried out, mesothelioma cases remain exempt from the costs provisions under sections 44 and 46. Additional liabilities will still be recoverable and the costs of claims will remain higher than other significant injury claims. From a defendant’s perspective, all cases involving significant or fatal conditions should benefit from the improved efficiency of the new system. Hopefully the review, properly carried out, will provide a much needed evaluation of the issues.