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Part 36 Offer Cost Liability to Remain Post Jackson

Says it all really.

I have been keeping quiet as things have been somewhat busy here at Box Legal. We are in the process of launching a number of new products including After the Event Insurance for the PIP Implant claims as well as for defective hip replacement implants. Looks like a busy 12 months ahead.

So why the headline? Well the Ministry of Justice has now heard back from the steering committee with recommendations concerning exceptions to our old favourite - Qualified One Way Costs Shifting (QOWCS). It appears that it wasn't as simple as Lord Jackson proposed (and as we predicted). Anyway, the long and short of it is that claimants will still be facing quite a few risks of paying adverse costs under the new regime as before.

First is the uncertainty which is prevailing regarding the behaviour of the claimant. Fraud is clearly a no-no and would not be covered by ATE insurance anyway but it seems the MoJ is keen to allow judges to award costs against an unreasonable claimant. No definition yet (great) and even if there is one, it is bound to be fairly woolly so claimants won't be sure whether or not they will have to pay costs.

Then there is the proposal of a minimum costs payment - i.e. QOWCS won't mean no costs but instead may mean 'fixed costs'. This is another example of brilliant lobbying by defendant insurers - watering down the plans.

Mixed claims won't get protection. 'Mixed' here means where subrogated items (such as the client's insurer's outlay) being added into the claim. We aren't sure if this includes employer's subrogated claims where they seek recovery of wages paid to an injured employee whilst off sick. No guide as yet on this one.

The final - and biggest - exception will be Part 36 offers (hence the headline). Basically, if the claimant fails to beat a part 36 offer, costs will be assessed and will have to be paid up to the total of the damages they were awarded. Brilliant. So again, as predicted, defendant insurers have an easy way of getting around QOWCS. They will simply make an offer of say £1000 on every claim which then puts the presure on the claimant - they are at risk of paying costs from day one. Some cases are of course quite large. If a claimant has only third party insurance, repairs or replacement of their vehicle will form part of the claim. This could add up to £5,000 quite easily. Will claimants really want to risk losing all of these damages? Without any ATE Insurance, they will be under enormous pressure to accept a low Part 36 offer. It is not just about the adverse costs of course - the claimant's solicitor's disbursements will add up to a pretty penny too!

Our view is, all claimants will have to take out a policy to cover them against these risks and that they will have to insure day one. If they don't and the defendant fires off a low Part 36 offer (which they will on most cases), we see very high premiums to protect claimants against a very real risk.

Over and out.

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