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After a prolonged period of back and forth between the House of Commons and the House of Lords, all outstanding issues on the Criminal Justice and Courts Bill, now the Criminal Justice and Courts Act 2015, were resolved in the House of Lords on 21 January 2015. The Bill was given Royal Assent on 12 February 2015.
Two sections will be of significant interest to Personal Injury lawyers. In this blog post we discuss what the implications of these will be for personal injury claims now the Bill has received Royal Assent.
Clause 57(1) (b) of the Act requires a court to dismiss the whole of a personal injury claim if it is satisfied, on the balance of probabilities, that the claimant has been fundamentally dishonest in relation to the primary claim or a related claim.
Clause 57(3) further clarifies that this ‘includes the dismissal of any element of the primary claim in respect of which the claimant has been dishonest’.
Dismissal of the claim is mandatory unless the court is satisfied ‘that the claimant would suffer substantial injustice if the claim were [sic] dismissed’. Thus the claim is lost completely. The court cannot find in favour of the claimant but reduce or eliminate damages, subject to the ‘substantial injustice’ exception above.
The provisions are retrospective in that they apply to causes of action arising before the act comes into force; but the provisions do not apply when proceedings are issued before the day on which this section comes into force.
There are concerns for how this is to work in practice, given the lack of clarity surrounding the term ‘fundamental dishonesty’. In a report on public perceptions of whiplash claims, AXA called for the term ‘fundamentally’ to be removed, if the government’s intention was that “any claim found to be dishonest, in any aspect” should be thrown out.
In the debate in the House of Lords on 23 July 2014 the point was argued that the whole clause is in fact designed to do substantial injustice – in that a claimant with a legitimate claim has the entire case dismissed due to ‘fundamental dishonesty’ found in just one part of that claim.
Lord Marks said:
‘… the subsection works against the interests of justice, or certainly risks doing so, in two ways. The first is by imposing a presumption in favour of dismissal, subject to a modest saving provision that, frankly, is difficult to understand.
‘…The saving subsection “unless it is satisfied that the claimant would suffer substantial injustice, if the claim were dismissed”, is very difficult to understand. On one view of justice, and the view of justice which appears to be intended by the proponents of the clause, if there is dishonesty, it is not unjust for the whole claim to go’.
‘If that is the meaning, how does the saving provision come in at all? If, on the other hand, it means that the interests of justice seem broadly to require the claimant still to get some of his damages, does that amount to a duty to dismiss, or is it merely a power to dismiss, which is what my amendments are directed to?’
Lord Marks also highlighted the lack of judicial discretion allowed to reduce damages rather than dismiss the claim:
‘The second area where I believe there is a risk that justice will not be done is that the clause as it stands allows for no middle course – no way of allowing a judge to reduce the damages rather than dismiss the claim, where a reduction in damages is really what is required to do justice between the parties.’
Lord Beecham asked the very pertinent question, why was ‘fundamental dishonesty’ only to apply to personal injury claims? If the concern by the legislature for such dishonesty is a legitimate one, why not also apply the requirement to claims of breach of contract or tortious misfeasance?
A further point raised highlighted just how unworkable the provision might be in practice. It is very likely that the provision will be invoked by defendant insurers in cases of catastrophic injury. If it is raised successfully, then the claim is dismissed, but the burden will fall on taxpayers to pay for the care of the seriously injured person at the heart of the claim. Susan Brown, the new chairman of the Motor Accident Solicitor’s Society, only last month warned that this rule could result in a ‘potential windfall for insurers’.
Less controversial but just as important is the amendment to the Bill banning inducements for personal injury claims. Until now claims management companies (CMCs) have been banned from offering inducements but solicitors, including alternative business structures (ABSs), have not. With the amendment to the Bill it will become an offence for a regulated person, whether an ABS or not, to offer another person a benefit as an inducement to:
either in respect of, or arising out of circumstances involving, personal injury or death (s 58(1)).
If the benefit is likely to induce a client to make a claim or seek advice, it does not matter that the regulated individual did not intend that this should be the outcome (s 58(2)).
The ban bites no matter how the offer is made, whether it is conditional, when it is to be made, and even when the benefit is to be received by a third party (s 58(3)).
If the benefit is offered by a third party on behalf of the regulated person, then the regulated person is treated as offering the benefit (s 58(4)).
Section 58(5) of the Bill indicates that further regulations may be made to clarify when it will be deemed that benefits offered in relation to legal fees, disbursements and insurance to cover costs and expenses will constitute an inducement.
The effect of the amendment is that it will no longer be permitted to offer someone a benefit, whether directly or indirectly, which is likely to induce a client to make a personal injury or death claim, or even seek advice with a view to such a claim.
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