Personal Injury Brief market insights - February 2021
A summary of key developments including COVID-19 testing in courts, new Part 36 rules, an update on QOCS in Scotland, an update on the Northern Ireland personal injury discount rate, the outcome of the FCA’s business interruption test case, part 3 of the Law Commission consultation on Automated Vehicles, and a political landscape roundup.
Political landscape roundup
According to the Office of National Statistics, the UK economy shrank by 9.9% in 2020, which constitutes the biggest annual GDP fall since the Great Frost of 1709.
Against this backdrop, the Spring Budget will be delivered on 3 March, while England remains under lockdown. The budget is expected to prioritise the extension of existing COVID-19 support schemes. The pandemic has exacerbated the need to raise additional tax revenues and there is speculation that this includes a potential rise in corporation tax and Capital Gains Tax. Further, a new carbon tax for high-emitting sectors and a series of green taxes are expected to be announced in advance of COP26.
Moving on to Brexit and trade, the Prime Minister’s Representative for European Relations and Foreign Affairs, Lord David Frost, told the House of Lords European Union Committee that the UK-EU relationship has been “more than bumpy” and more “problematic” than he had hoped. On a more positive note, a “data adequacy” decision is expected to be granted by Brussels within days which will allow data to continue to flow freely from the EU to the UK. This decision will be most welcomed by businesses and insurers.
Contact: Deborah Newberry
Rapid COVID testing in courts to be piloted
HM Courts & Tribunals Service (HMCTS) is running four week pilot trials for the rapid testing of COVID-19 among court users at Manchester Civil Justice Centre and Southwark Crown Court. The pilots will support the Department of Health and Social Care’s national testing programme by providing information on how rapid testing works in different public sector settings. The findings will determine how rapid testing could be rolled out to courts and tribunals nationally.
These pilots follow concern about court safety, with reports of COVID-19 outbreaks in court buildings. Lateral flow tests are now being offered to all people attending these two courts who are not showing any symptoms of coronavirus, as well as being offered to all staff and legal professionals visiting the sites. Testing will be conducted on a voluntary basis and court users can be tested up to twice a week, receiving their results within 30 minutes by text or email.
Meanwhile, in its weekly update, HMCTS said two new ‘nightingale courts’ were opened last week and 20,000 hearings are being undertaken via the Cloud Video Platform (CVP) each month in order to make use of remote alternatives when possible.
Contact: James Shrimpton
Rule changes: latest CPR updates
The latest update to the Civil Procedure Rules (CPR) includes a new rule change on Part 36 offers, coming into force on 6 April 2021. The judiciary says that following inconsistency in case law, the rule change provides clarity: going forwards, a Part 36 offer can include accruals of interest but where it is silent on this point, the presumption will be that the offer is inclusive of all interest.
The new rules also contain changes in respect of vulnerable witnesses following a recommendation by the Civil Justice Council last February. The amendment makes clear that dealing with a case justly includes ensuring that the parties can participate fully, and that parties and witnesses can give their best evidence. It also deals with the costs (but not fixed recoverable costs) provision for additional work or expense incurred as a result of the vulnerability of a party or witness.
Contact: Joanne Kelly
Introduction of QOCS in Scotland expected in June
2020 came and went with no Scottish Qualified One-Way Costs Shifting (QOCS) in place. In a newsletter published by the Scottish Civil Justice Council (SCJC) on 22 January 2021, it appears the earliest QOCS will be implemented in Scotland will be June 2021.
Under QOCS, a successful defendant in a personal injury claim will not generally recover costs from an unsuccessful claimant, based on a key recommendation of the ‘Jackson Review’ in 2009, as implemented in 2013.
Contact: Rory Jackson
Related items: Fraud in Scotland – is there a storm on the horizon?
Personal injury discount rate in Northern Ireland to follow Scotland
On 28 January 2021 the Minister of Justice summarised the content of the recently finalised Damages (Return on Investment) Bill. The text and timetable of the Bill remain unavailable but based on minutes published on the Northern Ireland Assembly website, the personal injury discount rate will follow the approach adopted in Scotland. The only point of difference is an assumed period of investment of 43 years rather than 30 years.
Scotland’s method for calculating the rate shares several similarities with that of England and Wales. However, it is in the details where there are some important differences. That which has the greatest impact on the rate are the “Standard Adjustments” to be made to the return from the notional portfolio. 0.75% is to be deducted to reflect the impact of taxation, the cost of investment advice and management, and a deduction of 0.5% for a “further margin”.
We are yet to be informed what the future discount rate will be, and the point of difference does not provide a clear indication of what the rate will ultimately be.
Contacts: Amanda Wylie
- Northern Ireland moving towards new framework for setting the personal injury discount rate
- Kennedys urges Northern Ireland Executive to change approach to personal injury discount rate
COVID-19 Business interruption insurance test case: Supreme Court decision
The Supreme Court has handed down its much anticipated decision relating to the coverage of business interruption insurance (BI) claims made following the COVID-19 pandemic. In remotely delivering the summary, Lord Hamblen confirmed that the FCA’s and policyholder groups’ appeals were “substantially allowed”.
For insurers, the focus will likely turn to reinsurance recovery. Brokers can expect to see an increase in claims – whether in the near future from clients with an axe to grind (perhaps because they had no or no adequate BI cover, or in relation to advice on the submission of BI claims), or further down the line arising from the broker’s advice on the scope of new policy wordings or a failure to take into account the changed risk profile of a business post COVID-19.
Contact: Richard West
Law Commission consultation on Automated Vehicles – part 3
The Law Commission has published its third and final consultation, proposing a regulatory framework for Automated Vehicles (AVs). The consultation closes on 18 March 2021 and the Commission intends to publish its final report by the end of 2021.
Drawing on responses from a wide range of consultees to the earlier stages of the review, the consultation paper provides overarching proposals for the safe deployment of AVs on British roads. Specifically, the proposals include consideration of the responsibilities of users and fleet operators, civil and criminal liability, access to data and cybersecurity risks.
Having responded to the two previous consultations, Kennedys will be responding to this important final stage of the three-year review.
- Collaboration is key to safe regulation of autonomous vehicles
- Regulation of automated passenger-only transport services must be sufficiently flexible