Procedure, damages and costs
In this chapter of our Annual Insurance Review 2023, we look at the main developments in 2022 and expected issues in 2023 for procedure, damages and costs.
Key developments in 2022
A tweaked version of the controversial disclosure pilot was made permanent from 1 October 2022 for all Business & Property Courts cases this year as the new Practice Direction 57AD. Those hoping that the time for disclosure of adverse documents would be brought forward to aid in earlier settlements will be disappointed. There remains no obligation to search for adverse documents until and unless extended disclosure in Models C, D or E is ordered. Adverse documents already identified must be disclosed within 60 days of the first CMC or when complying with an extended disclosure order.
The front-loaded costs of disclosure are therefore here to stay, although the recent addition of a "Less Complex Claims" route is a welcome potential off-ramp. The parties can agree – or the court can order – that a claim usually worth less than £1m is a "Less Complex Claim" which then benefits from a simpler Disclosure Review Document (a behemoth that is painstaking and costly to complete).
The disclosure pilot commenced on 1 January 2019, so its transition to a permanent feature of the Civil Procedure Rules marks the end of a three-year period of refinement based on practitioner and court feedback. For the new trial witness statements rules also just in the Business & Property Courts (PD57AC, which came into force on 6 April 2021 without a pilot) that process is just beginning. 2022 has seen the first few cases dealing with the new rules, with mixed results: some litigants being sanctioned for failure to comply with the rules (such as in Greencastle MM LLP v Payne and others [2022] EWHC 438 (IPEC)); while in Curtiss v Zurich Insurance plc [2022] EWHC 1514 (TCC), the complaining party was penalised with an order for indemnity costs for running up £275,000 worth of costs in its "oppressive and disproportionate" application.
What to look out for in 2023
While 2023 should bring us more guidance from the Courts on the trial witness statements rules and on the application of the new Guideline Hourly Rates (introduced in late 2021), it may also bring another contentious development: compulsory mediation in smaller cases.
While there is not yet a proposed start date, the Ministry of Justice consulted this year on its plans to impose a requirement on all County Court claims (starting with small claims) to engage in a "free" 1-hour telephone mediation.
The idea of compulsory mediation has been debated at length in many jurisdictions, with the overriding concern that it may be unlawful as it interferes with access to justice. However, a recent Civil Justice Council report concluded that compulsory mediation is legal provided it is not "disproportionately onerous" and does not preclude a party's "effective access" to the courts. The details of the MOJ's proposals have not yet been set out, although the sanction of striking out a claim or defence if a party does not "adequately engage" has been suggested. Clear guidance will be needed to govern the use of this draconian sanction as this has the obvious potential to impede access to justice.
Assuming the rules are sufficiently clear, the plans are likely to lead to more settlements (MOJ estimates 13-55% more settlements). Whilst imposing mediation will not change the fact that some parties simply will not want to settle, the involvement of an independent, trained mediator at an early stage in the process is likely to be beneficial, particularly for litigants-in-person, who will not have had the benefit of advice from a lawyer about ADR.
Costs for all County Court litigants are likely to increase earlier in the case to reflect the need to prepare for and attend what is essentially a mini mediation, but substantial costs will be saved in those cases that settle.
Authored by Aimee Talbot.
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