An Update on Small Claims and Whiplash Reforms

Published: 08/07/2021 | News

In March 2021 we anticipated the incoming changes resulting from both the whiplash and small claims personal injury reforms. That article can be read here.

The changes came into force on 31st May 2021 and will apply to accidents which occurred on or after that date. The Whiplash Injury Regulations 2021 have been approved in their draft form, thereby substantially reducing the applicable figures for damages for all whiplash injuries of less than 2 years. Simultaneously, the ‘Pre-Action Protocol for Personal Injury Claims Below the Small Claims Limit in Road Traffic Accidents’ (‘RTA SC Protocol’/’Protocol’) brings in a new Portal scheme for (most, there are a number of exceptions, largely detailed previously) RTA claims valued below £10,000 which include a claim for injury/injuries valued below £5,000.

It is clearly no accident that the highest bracket under the new Whiplash Regulations is just under the new £5,000 limit for such claims. It is important to also note that ‘non-protocol vehicle costs’ (i.e. credit hire and insurer’s outlay) are not counted in the initial valuation of the claim for the purposes of starting under the RTA SC Protocol (s4.2(3)). As such, there are likely to be a significant number of cases which find themselves, at least initially, being started within the new Portal.

Please note that any views expressed below are influenced largely by experience of existing small claims hearings, and inferences from the language of the Protocol. Though the new scheme has been in effect for approximately five weeks (at time of writing), it will inevitably take several more months, if not years, for the intricacies and effectiveness of the system to be properly tested.

In broad outline, the new Protocol operates as follows:

  1. A Claim is entered on the online Portal – this does not count as starting court proceedings (RTA SC Protocol s5.5). The claimant may (and should) upload documents in support at this stage, and the court may decide not to allow new evidence to be considered if produced after proceedings are started (RTA SC Protocol 5.10). There are various stages of the Protocol where proceedings may need to be issued, and if there is a limitation risk the claimant is entitled to issue and seek a stay (RTA SC Protocol s5.6).
  2. The ‘compensator’ (a new catch-all term for Defendants, their insurers or the MIB) must provide its response on liability within 30 days [40 for the MIB] (RTA SC Protocol s6.2/3). Unless liability is fully conceded the response must set out the Defendant’s version of events and evidence in support (RTA SC Protocol s6.6(2)). In default of a response, the compensator is treated as having admitted liability in full (RTA SC Protocol s6.15).

a. Liability can be admitted within this response either ‘in full’ (accepting the accident happened, was entirely their fault, some injury was caused and no limitation defence), ‘in part’ (accepting the accident happened, was partly their fault, some injury was caused and no limitation defence), or accepting some (or all) fault but denying that the accident caused any injury.

b. Where liability is contested (other than exclusively a denial that the accident caused any injury) then up to 3 increasingly ‘better’ (i.e. more favourable to the other party) proposals as to the liability split may be made by each party through the Portal (RTA SC Protocol s6.8) – though other than the initial acceptance of some fault within the compensator’s response, any such proposals are without prejudice (RTA SC Protocol s6.9(1)).

  1. If necessary, the claimant can apply to the court for a determination of liability
    (RTA SC Protocol s6.12). Such applications should follow the procedure under the new Practice Direction 27B. This will generally result in an oral hearing substantially similar to current small claims hearings.

a. Where the court finds the Defendant liable in full or in part, rather than proceed to consider quantum, the court ‘will’ stay the proceedings and the Protocol process will continue, ‘unless the court considers that the value of the claim is likely to exceed the limit for the small claims track and for this Protocol’ (RTA SC Protocol s6.14(1)). ‘Claim’ is defined in the Protocol as ‘a claim made under this Protocol, for the payment of damages for injury and any other protocol damages’ (RTA SC Protocol s1.1(7)). It would appear therefore that the court will not consider non-protocol damages (i.e. credit hire/outlay) in determining whether to return the claim to the Portal.

  1. The claimant is then expected to obtain a fixed-cost medical report (indeed they must do so if their claim includes a whiplash injury (RTA SC Protocol s7.4(2))). The exceptions are where the compensator argues either that the claimant’s failure to wear a seatbelt contributed to their injuries, or that the accident did not cause any injury. In either case, the report should be obtained prior to any proceedings (RTA SC Protocol s6.11/6.21). Where the compensator denies the accident caused any injury the medical expert should be given both versions of events to enable them to comment on the effect on their opinion of either version being found to be true (RTA SC Protocol s7.9).
  2. The compensator and claimant are then expected to attempt to settle the claim for injuries and ‘other protocol damages’ (i.e. loss of earnings, treatment and similar, and where exceptionally they have been paid by the claimant themselves, vehicle related damages).

a. The claimant is required to send the medical report(s), a ‘List of Losses’ with details of any claim for other protocol damages and fees (cost of the medical report(s) and other disbursements permitted by Practice Direction 27B), and documents in support thereof (RTA SC Protocol s8.5).

b. Once these items are received, the compensator has 20 days in which they must make an offer to settle, unless they notify the claimant that they consider the value to be above the Protocol limit, or they continue to (or for the first time, following the medical report(s)) deny that the accident caused any injury (RTA SC Protocol s.8.7). A lack of documents in support of any items of other protocol damages does not remove the obligation to make an offer (RTA SC Protocol s8.7(3)).

c. Each party can make up to 3 offers/counter-offers in total, and it is expected that such ‘should’ be responded to within a maximum of 10 days (offers can be withdrawn after this period (RTA SC Protocol s8.18)). However, claimants can put an offer ‘on hold’ to await developments in their claim, including waiting to see if their injuries resolve in line with their prognosis (RTA SC Protocol s8.14(1)/(2)). The claimant may add further documents in support of a counter-offer (RTA SC Protocol s8.14).

d. If settlement is reached successfully, the claimant is entitled to continue to seek their non-protocol vehicle costs (i.e. credit hire/outlay) separately (RTA SC Protocol s10.9).

  1. If, following service of the medical report(s), there is an outstanding dispute that the accident caused any injury, the court ‘may’ determine that the claim should no longer continue under the Protocol/Practice Direction 27B. This accords with the mirrored provision in respect of an outstanding allegation of fraud/fundamental dishonesty, which one would expect to find together with such a denial of injury. In those circumstances (where the court decides to no longer continue under the Protocol) the court must reallocate and give directions (Practice Direction 27B s1.8).
  2. The claimant may start proceedings after rejecting an offer and not making a counter-offer, or after the 20 days for the first offer by the compensator have passed without such being made (RTA SC Protocol s8.19(1)/(2)). However, when doing so, the value of the claim (only) for such proceedings re-introduces any outstanding (i.e. not settled) claim for non-protocol vehicle costs (RTA SC Protocol s11.1(2)). An admission of liability under the Protocol will be binding on the claim for non-protocol vehicle costs (RTA SC Protocol s6.7(2)/11.3(4)). Although it is not stated in the Protocol, presumably any finding of liability at a liability-only hearing in accordance with the Protocol (as described above) will equally be binding on the claim for non-protocol vehicle costs, since it would be clearly contrary to the overriding objective to proceed otherwise.

i. The Protocol states that where a claim is revalued as being above the Protocol limit, but below the upper limit for the ‘Pre-Action Protocol for Low Value Personal Injury Claims in Road Traffic Accidents’ (‘RTA Protocol’), the RTA Protocol will apply, so long as an admission of liability in full (or subject only to a contribution for an admitted failure to wear a seatbelt) was made under the Protocol (RTA SC Protocol s4.5-4.7).

ii. It is unclear whether the process of re-introducing the non-protocol vehicle costs prior to issuing proceedings to determine the value of the claim constitutes such a re-valuing. The Protocol indicates that in moving to the RTA Protocol, the claim will proceed ‘starting at paragraph 6.1 of that protocol’ (RTA SC Protocol s4.7). Paragraph 6.1 of the RTA Protocol concerns the CNF, essentially stage 1, which would appear to be largely redundant when disclosure and negotiation have already been completed under the Protocol.

iii. Further, the Protocol does not provide for a transfer to the RTA Protocol where liability was not admitted, which would appear to exclude cases where there has been a liability-only hearing (as detailed above). Given the aforementioned provision that the court (seemingly) should not take into account non-protocol vehicle costs when deciding how to proceed following such hearings, it would be unusual that the mere fact of such a hearing having happened should alter the subsequent procedure of the claim.

iv. It remains to be seen whether valuation proceedings under the Protocol, where non-protocol vehicle costs take the value of the claim overall above £10,000, will be conducted under the RTA Protocol procedure (either in full or Stage 3 only), or on the fast/multi track. It has however been made clear that where a claim leaves the Protocol and does not continue under the RTA Protocol, Section IIIA of Part 45 (Fixed costs for claims leaving the RTA Protocol) will apply, unless the claimant has acted unreasonably in not proceeding under the Protocol (CPR r45.29M/N).

In addition to the outstanding inconsistencies/obscurities of the Protocol outlined above, commentators have noted an issue arising from the whiplash reforms. When the draft Regulations were being debated by the House of Lords on 26th April 2021, Lord Wolfson stated ‘Section 3(8) of the [Civil Liability] Act [2018] provides that, where a claimant suffers injuries in addition to a whiplash injury, the court is not prevented from awarding damages that reflect the combined effect of the injuries sustained. The courts will therefore need to determine how mixed injuries are addressed. We are confident that judicial expertise will address these matters on a case-by-case basis, but we will look vigilantly to ensure that the regulations are not undermined … by people reordering their claims so that minor injuries become the main part of their claim.’ (Emphasis added)

The open question is what approach the courts will take where the claimant has a non-whiplash injury alongside a whiplash injury (with or without a minor psychological injury, which is provided for in the Regulations). The statutory wording and tenor of the approach to these Regulations by Parliament has been that whiplash injury (lasting less than 2 years) damages are immutably fixed. What impact therefore will those figures have on the usual assessment exercise of PSLA ‘globally’, taking account of, for example, any cross-over in symptoms?

This issue raises a concern over claims escaping the Protocol by overvaluing additional injuries, thereby overcoming the £5,000 injury damages limit. This is significant because of the potential costs consequences. CPR r45.29M permits the court to restrict costs in Part 7 proceedings to those recoverable under the Protocol, where a claimant ‘unreasonably’ values their claim over the Protocol limit. It is to be hoped therefore that guidance can be provided on the proper approach to this issue as soon as possible.

To that end, the MIB has set up a cross-sector working group intended to find test cases which will enable the Court of Appeal to give guidance that will clarify this issue, and thereby hopefully allow the Portal to operate more smoothly.

Samuel Irving is a Pupil at Farrar’s Building.