The Ministry of Justice released a statement on 22 September, confirming the outcome of the year long negotiations held to develop a new low value RTA personal injury claims process.

The mediations and subsequent proposals stem from the response to the consultation paper “Case track limit and the claims process for personal injury claims”, which indicated that a new streamline claims process would be established for RTA personal injury claims valued between £1,000 and £10,000. It seems the parties, which were made up of representatives from APIL, MASS, TUC and the Law Society (the claimant group), and MIB, FOIL, ABI and individual insurers (the defendant group), have now reached broad agreement on the detail of the new scheme which is set to be introduced in April 2010.

The proposals apply to RTA claims valued up to £10,000, excluding small track claims, where there are no disputes on liability. The process has been divided into three stages, with fixed costs having been negotiated for each stage.

A success fee of 12.5% will apply to stages 1 and 2, and for cases going to stage 3 a 100% success fee will apply. It also seems that an additional £500 will be paid in addition to stages 1 and 2 costs for cases involving children.

Small track claims, claims involving employer liability and/or public liability, clinical negligence claims and MIB untraceable cases are excluded. As are claims where the claimant or defendant are deceased, bankrupt or are a protected party.

A claim would leave the process if it transpires it is worth more than £10,000; liability is not admitted in stage 1; fraud is alleged in stage 2; the defendant questions or denies causation in stage 2; and if there is any allegation of contributory negligence (other than a failure to wear a seatbelt.

It is expected that once a claim leaves this new procedure it cannot re-enter. It is reasonably clear that the existing costs regime will continue to apply for all cases not included within this new procedure.the process it cannot re-enter.

If this is the case then paradoxically, and contrary to the intention of the scheme, the defendant would be required to pay less in costs if liability is denied in those claims with a value of less than £2,000. On the current “predictive” costs scheme a claim of £1,001 would attract base costs of £1,000.20 (i.e. the fixed fee of £800 + 20% of the damages), whereas under the new proposals costs of £1,200 would be payable if the claim settled at stage 2.

Overall, however, the new fixed fees represent a marked reduction in costs for low value RTA claims. For those cases where £10,000 damages are agreed at stage 2, costs of £1,200 represents a 50% reduction to the costs of £2,550 which would be paid at the present time (i.e. fixed fee of £800 + 15% of the damages).

The further considerable advantage to a defendant admitting liability under the new scheme is that costs remain fixed if the parties are unable to agree settlement and proceedings are subsequently issued.

APIL responded on 23 September the MOJ statement, saying that they hope the new system will lead to a new spirit of co-operation. They also urged Lord Justice Jackson to take the work into account as he deliberates on his civil costs review.

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