The Civil Justice Council (CJC) released its final report on Noise Induced Hearing Loss (NIHL) on Wednesday 6 September. This report was submitted to Rupert Jackson as part of his investigations in widening the scope of fixed costs.

The report is a collaboration between claimant solicitors and defendant insurers and their advisors, aimed at setting out the terms on which parties would engage in NIHL claims, along with a matrix of costs to enable efficient and proportionate running of claims. BLM’s Paul Wainwright was invited to represent the defendant group.

The proposed cost matrix is for ‘straight-forward’ NIHL claims involving ‘up to three’ defendants. The table of costs is for claims under £25,000 and is split into pre-litigation costs and post litigation costs with admissions. The aim of this regime is for the parties to effectively run NIHL claims, where defendants will control the flow of the litigation but if either party wishes to drop out they need only instruct their own medical expert to fall outside of the regime.

We estimate that about 80% of NIHL claims would be captured by this process.

When the response has been agreed, the matrix of costing is as follows:

Pre-action costs

Stage:

Requirement

1 Defendant

2A

Liability admitted: Settles before claimant’s solicitor has prepared papers to issue proceedings

£2,500

2B

Liability admitted: Settles after Csol has prepared papers to issue proceedings

£3,000

3A

Liability denied: Settles before Csol has prepared papers to issue proceedings

£3,500

3B

Settles after Csol has prepared papers to issue proceedings

£4,000

  • The new process and fixed cost regime will only apply to pre-lit claims with up to three defendants. If any of the three defendants raises the following:
    • de minimis
    • a 2nd audiogram
    • defendant's own medical evidence
    • the matter being treated as a test case

This will remove the entire case from the process and fixed costs.

  • With each additional defendant, up to three defendants, add £500 per defendant between stage A and B.
  • All figures above are exclusive of VAT and disbursements.
  • Subject to an amendment to the Third Party (Rights Against Insurers) Act 2010, restoration is envisaged and a fee is permissible per restored defendant of £1,280 exclusive of VAT and disbursements and Counsel's fee where reasonably incurred.(Current courts fees to restore for a claimant is £308).

Post Issue costs

(Figures below are the costs with an admission)

Stage

NIHL claims with value less than £25,000. The figures below are not cumulative.

Pre-issue

£4,000 + £500 per extra defendant (reduced by £1,000 if there is an early admission of liability or by £500 if settled before proceedings drafted)

Post-issue, pre-allocation

£5,650 + £830 uplift per extra defendant

Post-allocation, pre-listing

£7,306 + £1,161 uplift per extra defendant

Post-listing, pre-trial

£9,187 + £1,537 uplift per extra defendant

Trial advocacy fee

Not agreed

  • In addition to the above, a fee of £1,280 is recoverable for the restoration of a company to the register.
  • Fixed cost regime applies to claims up to three defendants and less. Again, If any of the three defendants raises the following:
    • de minimis
    • 2nd audiogram
    • own medical evidence
    • or a test case

This will remove the entire case from the process and fixed costs.

  • Military claims and claims allocated to multitrack and claims valued at more than £25,000 are excluded from the NIHL process.
  • Claims which were part of the NIHL process pre-litigation but fall out will attract the fixed cost regime for the pre-litigation portion of proceedings and will then be costs on the standard basis for the litigation costs.
  • Pre-action disclosure applications are also sometimes made in NIHL claims. The working party considered these should fall outside any fixed costs regime and be dealt with separately.

The matrix on costs is based in large part on a joint proposal for a new pre-litigation process involving greater transparency between the parties. This process and the matrix of costs were initially proposed for all NIHL claims however this has now been narrowed down to the more straightforward types of NIHL claim, which are still the majority. For more details on Jackson’s proposals on the fee structure See our previous article ‘Return of the Jack(sons reforms): Fixed Costs Regimes and Disease’.

The report identifies concerns about the current pre-litigation process and makes proposals for improvement. It sets out proposals for new letters of claim and letters of response under the relevant pre-action protocol arrangements and considers the use of ADR similar to the way in which the Pre-Action Protocols sought to reform pre-litigation.

Limitation

One important difference between the CJC’s report and the views expressed by Jackson can been seen on the issue of limitation. In his report Jackson states:

“5.14 Preliminary issues. The costs of any preliminary issue trials should be recovered separately. Having said that, absent special circumstances, I strongly discourage the ordering of preliminary issue trials in the fast track. In some parts of the country, apparently, it is the practice to try limitation as a preliminary issue in ELD claims. This is generally unwise for four reasons:

(i) There is much overlap of evidence between limitation and liability. (ii) The litigation will get hopelessly bogged down if the limitation decision goes on appeal. (iii) To have two trials of a fast track case drives up costs and is disproportionate. (iv) If the claimant wins on limitation and then loses on liability, the first trial has been a waste of time.”

There was no proposal by the CJC to limit the practice of preliminary hearings on limitation and the Judicial advisors to the Group were strongly of the opinion that preliminary issue hearings were beneficial and ultimately saved costs. Jackson’s proposal also contradicts the Court of Appeal’s ruling (KR v. Bryn Alyn [2003]) on the need for, and importance of, preliminary hearings on limitation.

It would appear that there are a number of pre-requisite steps and reforms which will be required before Jackson’s proposal for NIHL claims could be made workable. These steps are envisaged to compliment the function of the Pre-Action Protocol for Disease and Illness Claims, first introduced in 2003 rather than replace it with a separate protocol for NIHL claims.

Proposed Letters of Claim

Key issues with the current process are that letters of claim are generic and often unhelpful. The working party has devised some detailed proposals for change, with a focus on relevant information exchange. These changes are hoped to result in significant improvements in conduct on both sides. A key proposal is that the letter of claim should be accompanied by:

  • An audiogram produced by a suitably experienced and approved provider;
  • Schedule of employment from HMRC;
  • Search results from the Employer's Liability Tracing Office (ELTO).

The working party has acknowledged that in a case where liability is not in dispute and where there are no other unusual factors, the evidence of a suitably qualified audiologist would be sufficient to validate the level of NIHL and evidence of tinnitus, as well as whether or not hearing aids would be necessary. This is likely to be welcomed by defendants reluctant to pay the fees of more expensive medical experts.

There has been some discussion of the idea to extending the MedCo system to NIHL experts. However there is a difficulty in that MedCo only introduced its accreditation process for individual experts on 1 June 2016. The quality controls such as peer review and audit do not come into play until the point of renewal – i.e. at or after 12 months of operation – and so its effectiveness is essentially untested. The working party have agreed that an accreditation model should be adopted for NIHL claims but the machinery of MedCo is not seen as the right way of doing this.

There has been some work done on the proposed minimum standards required of any NIHL medical experts. However, this is preliminary and beyond the remit of the working party.

Proposed responses

There are also proposals to reform the letter of response: The response should address the issues fully, including identifying whether delegated authority applies (if relevant) under the ABI's Claims Handling Guidelines and the name of the coordinating insurer and reference. The new letter of response is focused on defendants making early admissions of breach of duty where they can do so and generally narrowing the areas of dispute. The letter is aimed at helping defendants consider all information provided in the new letter of claim and only make requests for further information if there is any material information missing. It is hoped that the new regime will create a process in which the defendants cannot simply use this information to make a "pre-medical" offer; that said, the claimant may opt to make an offer to settle around the time of the letter of claim, the defendants should not be prevented from responding to that offer at any stage.

The working party has focused on interaction between defendants and handling insurers and has pushed for the ABI Guidelines to be published. The guidelines now form part of the NIHL report. It is hoped that publication of the ABI Guidelines will encourage more insurers to sign up to the Guidelines and those who have signed up to abide by them more strictly. It is also hoped that those defendants which deal with claims without insurance cover, such as Government departments, might also be persuaded to adopt them.

It is envisaged that the new process proposed will only work if the new letter of claim and letter of response are used properly and provide meaningful information from both sides. The Ministry of Justice and/or the Civil Procedure Rules Committee will have to consider how best to enforce use of the new precedents. One option could be a specific annexe to the current Disease Protocol, as the procedures and timings of that protocol still apply. Such an annexe would focus on the content of the letter of claim and letter of response and the documents to be produced with both.

The working party commented on the limited use of alternative dispute resolution (ADR) but has not made any direct proposals on this front.

The Portal From 31 July 2013, the MOJ Claims Portal and associated low value protocol were expanded to include Employers Liability and Public Liability (EL/PL) claims for single-defendant claims. The provisions included fixed costs for accident cases, however, disease claims were largely excluded from the fixed costs due to their complexity.

We do not know how many NIHL claims have entered the portal but we estimate that around 30% of NIHL claims are defendant ones. We also know that as at the end of July 2017 59,458 claims were registered on the ELD portal but only 2,984 cases were settled at Stage 2.

Despite much discussion the working party was not convinced that the creation of an electronic portal for NIHL claims is either necessary or likely to lead to improvements in process and behaviour and taking into account the performance of the portal for disease to date it is difficult to argue that a portal could be the answer. It is however unclear if the ELD portal will survive once this new process is in place.

Implications and implementation

Given the need for change in the way noise claims are handled from their inception, there are those who question how long it could be before the government could feasibly implement Jackson’s and the CJC’s proposed reforms. It is still to be seen what the current minority government intends to do with Jackson’s proposals.

There is serious concern among both sides of the profession as to the status of limitation hearings as preliminary issue trials on limitation represent a quick and inexpensive way of determining whether the claim has been brought “in time” and if not, whether discretion should be exercised. They are concluded in a single day with limited evidence which makes these cases ideal for a fixed costs scheme. Despite this Jackson has proposed altering the regime to discourage limitation hearings.

There is a question surrounding the definition of ‘a defendant’, it is not clear whether this is a term which will include insured and insurer. This will impact on how the fees are calculated and which parties can and cannot operate within the scheme.

There has been no discussion of how the regime will be implemented; it will require further scrutiny to assess practicability and implementation cannot be attempted without a clearer picture of the impact this will have for claimants as well as for the costs of litigation.

What is certain is that if the fixed fees are implemented it will not be for some time, to allow for the introduction of these pre-requisite steps.

The MOJ will be invited to consult on the recommendations contained within the CJC report.