The Civil Liability Bill has passed through the House of Commons following rejection of amendments proposed by Labour.
The Bill will be returned to the House of Lords for consideration of those amendments made in the Commons, and it is possible it may receive Royal Assent by the end of the year.
The Justice Minister, Rory Stewart, stated that the Government had made a number of serious concessions during the progression of the Bill. He stated that the Government had struck the right balance between claimant and ther interests. Furthermore, the legislation will ensure that England and Wales are no longer "known throughout the world as a haven of unnecessary whiplash claims."
Mr Stewart stated that this increase in claims can only be "accounted for on the basis of fraudulent and exaggerated claims."
1. Small claims limit
The proposed changes to Clause 1 to the Bill, as advanced by Labour, would have limited increases in the whiplash small claims limit to inflation (CPI). The proposal also advanced that the limit would only increase when inflation had increased the existing rate by £500 since it was last set.
The Government rejected this proposal stating that including this Clause would go against the policy intent and tripartite aims of the Bill.
Furthermore, this amendment raise constitutional issues, as the small claims limit was ordinarily dealt with via primary legislation. These changes would be dealt with appropriately via the Civil Procedure Rules Committees.
Mr Stewart highlighted that previous Labour governments accepted that inflation should not be the basis of any raises in claims track for non-injury claims. The mechanism proposed would be a recipe, if anything, for "falling behind inflation".
2. Infant claims
The proposed new Clause 2 to the Bill would have exempted children and other protected parties from any increased limit in the small claims track. This would have reflected the exemption already proposed for vulnerable road users, including cyclists and horse riders.
The Government stated that the safeguards in place for children were more than adequate, citing the potential appointment of litigation friends and the Official Solicitor if necessary. Mr Stewart stated that "judges would still have a very serious role to play" in infant/protected party settlement approvals. The discretion to remove a claim from the small claims track into the fast track also remained.
3. Removal of tariff system
A further proposal to remove the creation of the tariff system for whiplash injuries and retain the existing system of compensation levels with reference with the Judicial College Guidelines was also rejected.
Section two of the Bill, in relation to the discount rate, once again received an easier ride.
The proposed amendment suggested by Labour during the second reading to ensuring the expert panel would be consulted on the first review was not advanced.
Bob Neill MP raised the issue of displacement of claims to other parties. He highlighted those EL/PL claims which will be subject to the proposed raise in small claims track limit to £2,000. He expressed concerns that claims would move from solicitors to claims management companies.
The Justice Minister stated he believed that this package of reforms (including the online portal for motor claims) would disincentivise CMCs.
In the likely event of agreement between both Houses on the wording, then the Bill is ready for royal assent. In the unlikely event that the Lords disagree with any of the proposed amendments or wish to make alternative proposals, then the Bill may be referred back.
Irrespective of when Royal Assent to the Bill is received, the implementation of the whiplash reforms will be delayed until April 2020 to ensure that the development of the new portal for RTA claims is completed. The proposed increase to the EL/PL small claims track limit to £2,000 may come into effect sooner as they will not be within the scope of the new online platform.
It is expected that continued lobbying by claimant representatives will now focus on the secondary legislation required to raise the small claims track limits as proposed.
In respect of the discount rate, the first review has to be started within 90 days following commencement of the Bill, and then make a decision on the rate within a further period of 140 days. If the Lord Chancellor uses the full period open to him – which we expect him to – we’re probably looking at July/August of next year for a determination.