The Civil Procedures rules are being updated for the 78th time since their inception in April 1999. Some of the amendments came into force on 11 January 2015, but the two which have the most relevance to compensation claims will come into force on 6 April 2015. The two key amendments are to Part 21 and Part 36.
Part 21 provides rules specific to claims involving children and protected parties and the amendment to Part 21 is intended to address concerns about deducting success fees from a child’s award of damages where the compensation is less than £25,000.
The amendments first reiterate that any success fee recoverable under a conditional fee agreement entered into by a solicitor and the child’s litigation friend must not exceed 25% of the amount recovered for general damages for pain, suffering and loss of amenity plus past financial losses, net of any recoverable benefits.
The amendments to the practice direction set out the evidence that the Court will require in order to give consideration to deduction of a success fee from a child’s damages award. The litigation friend must at any trial or approval hearing where damages are less or likely to be less than £25,000 and where costs are likely to summarily assessed, provide a witness statement. The statement must explain the nature of the expense to be deducted and why it has been incurred, and in the case of costs, provide a copy of the conditional fee agreement, the risk assessment which sets out the basis of the success fee, along with an explanation of why a conditional fee agreement was the appropriate means of funding. In addition, the statement must provide details of advice given to the litigation friend about funding and detail, if appropriate, costs recovered, fixed or agreed on behalf of the child. In addition, the statement must detail the amount agreed for general damages and past financial losses.
It is evident that this step must become a standard part of preparation for any child approval hearing where damages are less than £25,000, or for a hearing at which damages may be awarded and are likely to be less than this. Without the statement, the likely outcome will be that deduction of a success fee will not be allowed. Preparation therefore starts at the outset, ensuring that the risk assessment is clear on why the success fee is set at the level it is, advice on funding to the litigation friend is clear from the outset and other forms of funding considered as appropriate. Whilst this may be obvious to many and part of appropriate client care, without evidence that these initial steps have been properly considered, a success fee is unlikely to be paid.
The other amendments most relevant to injury claims are those to Part 36. Part 36 and its practice direction has been rewritten in its entirety. The explanation given for the amendments is that they are intended to simplify the rules and to make them more accessible particularly to litigants in person, citing the wealth of case law on the application of the rules that has developed since they were last substantially revised in 2007.
The new rule now accommodates Part 36 offers which have been made in split trials, The rules allow for the trial judge to know of the existence of a Part 36 offer at the end of the first trial, but not the terms of the offer, unless the offer relates only to the issues which have been decided, in which case the terms can be disclosed.
Further, up until now, an offer which is time limited is not defined as a Part 36 offer. The rules have been amended to now allow for an automatic withdrawal of an offer at a predetermined time after the expiry of the relevant period on the terms set out, bringing in time-limited offers. However, if such an offer is so withdrawn, the offer does not carry with it the Part 36 costs consequences, so it is not entirely clear what the practical effect of this will be.
There has also been an attempt by the rules committee to stop tactical Part 36 offers being made as the Court is allowed to take into account, when considering costs whether a Part 36 offer can be seen to be a genuine attempt to settle. The intention is that the party making the offer will only be able to have the benefit of costs if the Court is satisfied any offer made was a genuine attempt to settle. The idea behind this amendment to try and prevent a party making an offer to settle the claim which is either the full value of the claim or very near to it, in order to get the tactical advantage of Part 36 and if they then go on to succeed in full. The Court can, when deciding on whether to apply the costs consequences of Part 36 in such circumstances consider whether any offer was a genuine attempt to settle and if deemed not to be the offer or will not get the costs advantage of Part 36.
The other amendments that carry most relevance to injury claims are that rule will allow improved offers to be treated as Part 36 offers and will also limit the court’s discretion on costs when an offer is accepted late. The rule has been amended to reiterate that the usual rule that a party accepting an offer after 21 days must pay the costs arising from that date unless the Court considers it would be unjust to do so.
To what extent these rules simplify the application of Part 36 remains to be seen, but they will take effect for all offers made after 6 April 2015.